AGREEMENT
This Agreement (hereinafter the "Agreement") is made as of this 1st day of
October, 1996 by and between Lube & Wax Ventures, L.L.C. (hereinafter "L&W"), a
Delaware limited liability company and Astor Corporation (hereinafter "Astor"),
a Delaware corporation.
WHEREAS, L&W, and L&W's affiliates, including Big West Oil Company and
Coastal Refining and Marketing, Inc., the member companies of L&W, desire L&W to
sell to Astor certain petroleum wax streams constituting heavy vacuum gas oil
and vacuum tower bottoms which meet the standards set forth herein (the
"Products"); and
WHEREAS, Astor and its affiliates desire Astor to purchase the Products
from L&W; and
WHEREAS, L&W and Astor wish to enter into an agreement pursuant to which
L&W shall sell the Products to Astor.
NOW THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Except as otherwise provided herein, capitalized terms used herein
shall have the following meanings:
"Daily Average Volume Per Month" with respect to any Product shall mean the
average number of barrels of such Product purchased by Astor per day over such
calendar month.
"Xxxx" shall mean the average for the calendar month of the daily posted
price per barrel for Xxxx Oil Company's West Texas Intermediate crude oil,
posted under the designation West Texas/New Mexico Intermediate; provided,
however, that if Xxxx Oil Company ceases to post prices for West Texas
Intermediate crude oil, then the term "Xxxx" shall refer to the replacement
index chosen by the parties hereto pursuant to the provisions of this Agreement.
"Producers Price Index" shall mean the index of producers prices that the
Bureau of Labor Statistics of the U.S. Department of Labor publishes monthly;
provided, however, that if the Producers Price Index ceases to be published the
term "Producers Price Index" shall refer to the replacement index chosen by the
parties hereto pursuant to the provisions of this Agreement.
ARTICLE II
TERM
2.1 The term of this Agreement shall be ten years commencing October 1,
1996 and ending October 1, 2006.
ARTICLE III
PRODUCTS
3.1 L&W shall make available for sale to Astor heavy vacuum gas oil
("HVGO") and vacuum tower bottoms ("VTB") refined at the Big West refinery in
Salt Lake City, Utah meeting the standards agreed upon in writing by both
parties hereto.
3.2 The Products shall be derived from yellow wax crude oil from the
Altmont, Blue Xxxx, Natural Buttes and Cedar Rim fields in North East Utah.
3.3 The Products shall meet the distillation parameters set forth in
Exhibit A attached hereto.
3.4 The parties hereto shall agree in writing to the level of asphaltines
permitted to be contained in the Products and to the sampling, analysis and
testing procedures that shall apply to the Products.
3.5 Astor shall have the option to reject any Products not meeting the
specifications agreed upon in writing or set forth in this Agreement or to
accept any such Products at an adjusted price to be negotiated by the parties
hereto.
ARTICLE IV
QUANTITIES AND PRICING
4.1 (a) Astor shall purchase from L&W and L&W shall make available to
Astor HVGO and VTB at the prices and in the minimum quantities set forth below:
PRODUCT MINIMUM DAILY AVERAGE PRICE F.O.B. FLYING J
------- VOLUME PER MONTH REFINERY
---------------- --------
HVGO 1800 barrels Xxxx plus a premium of
$7.85 per barrel
VTB for deliveries to Astor's 200 barrels Xxxx plus a premium of
plants and to $5.00 per barrel
customers East of the
Mississippi River
VTB for sale to firelog 400 barrels Xxxx plus a premium of
manufacturers or other $7.00 per barrel
customers West of the
Mississippi River
2
(b) If Xxxx Oil Company ceases to post prices for West Texas Intermediate
crude oil, the parties hereto shall use their best efforts to agree to an
acceptable replacement index as soon as is reasonably practicable.
(c) If, in addition to the minimum Daily Average Volume Per Month set
forth in Section 4.1(a), Astor lifts an amount constituting up to and including
10% of the Daily Average Volume Per Month of any Product, the price set forth in
Section 4.1(a) shall apply to such purchase. If, in addition to the minimum
Daily Average Volume Per Month set forth in Section 4.1(a), Astor lifts an
amount constituting more than 10% of the Daily Average Volume Per Month of any
Product, the price to apply to such purchase shall be negotiated by Astor and
L&W.
(d) If Astor lifts less than the minimum Daily Average Volume Per Month of
any Product and such shortfall exceeds 10% of such minimum Daily Average Volume
Per Month, with the exception of shortfalls attributed to railroad or refining
operations, Astor shall pay an additional $1.00 per barrel constituting such
shortfall.
(e) If L&W provides less than the minimum Daily Average Volume Per Month
of any Product and such shortfall exceeds 10% of such minimum Daily Average
Volume Per Month, with the exception of shortfalls attributed to railroad or
refining operations, L&W shall pay to Astor $1.00 per barrel constituting such
shortfall.
4.2 Either party may request a renegotiation of minimum Daily Average
Volume Per Month and/or price 90 days prior to each October 1, commencing
October 1, 1997, until the termination date of this Agreement. Should the
parties be unable to reach agreement on the renegotiation price or minimum Daily
Average Volume Per Month within 90 days, the then existing prices and minimum
Daily Average Volumes Per Month set forth in the then current Agreement shall
continue to be in effect until the next succeeding October 1, at which time the
Agreement shall terminate. Any changes to minimum Daily Average Volume Per
Month or prices agreed upon by the parties hereto shall be manifested in the
form of a written amendment to this Agreement as provided in Section 8.5.
4.3 Beginning November 1, 1997, any premium payment required to be made by
Astor pursuant to this Article IV shall reflect an annual adjustment for
inflation as described in this Section 4.3. After such date, the premium amount
specified in Section 4.1 shall be multiplied by the fraction represented by the
Producers Price Index for the September immediately preceding the date of such
payment divided by the Producers Price Index for September 1996. If the
Producers Price Index ceases to be published, the parties hereto shall use their
best efforts to agree to an acceptable replacement index to be used as described
in this Section 4.3 as soon as is reasonably practicable.
4.4 All prices referred to herein are F.O.B. the Big West refinery in Salt
Lake City, Utah.
4.5 Upon the lifting by Astor of any Product pursuant to this Agreement,
L&W shall have and is hereby granted a purchase money security interest in such
Product and the proceeds therefrom to secure the payment of the purchase price
as provided herein for such Product.
3
4.6 Astor shall deliver to L&W an irrevocable letter of credit in the
amount of One Hundred Seventy-Five Thousand Dollars ($175,000) (the "Default
Letter of Credit") containing terms and conditions to be negotiated by Astor and
L&W. In the event that Astor fails to pay the purchase price of any Product
when due as provided in this Agreement, L&W may immediately draw on the Default
Letter of Credit.
ARTICLE V
SCHEDULING
5.1 The parties hereto agree to work together to provide for the most
efficient manufacturing and delivery system for the Products in order to
facilitate rateable production and lifting of the Products.
5.2 Each party shall use its best efforts to advise the other party
concerning the scheduling of refinery unit turnarounds, modifications, or other
events which may have an impact on operations.
5.3 On or before the 20th day of each calendar month Astor shall provide
L&W with a forecast of its lifting requirements and schedule relating to the
Products for the next succeeding three calendar months. Astor shall communicate
to L&W any changes scheduled in volume of Products to be lifted constituting an
increase or decrease of more than 10% of scheduled volume. On or before the
30th day of each calendar month, L&W shall provide Astor with a forecast of the
quantities of the Products available for the next succeeding three calendar
months.
ARTICLE VI
MEASUREMENTS; TITLE; TAXES
6.1 The quantities of HVGO and VTB sold hereunder to Astor shall be
determined by metering or measuring quantities of such Products as such Products
enter rail cars, trucks or storage tanks provided by Astor at the Big West
refinery in Salt Lake City, Utah.
6.2 Title to and risk of loss for Products sold hereunder shall pass from
L&W to Astor as the Products pass the flange at the point of loading into rail
cars, trucks, or storage tanks provided by Astor at the Big West refinery in
Salt Lake City, Utah.
6.3 All references to quantities hereunder shall include adjustment of
volumes to 60DEG. F.
6.4 L&W warrants that federal, state, and local excise taxes on the
Products sold and delivered hereunder which accrue or have accrued on sales
under this Agreement have been paid or shall be paid by L&W.
4
ARTICLE VII
PAYMENTS
7.1 L&W shall invoice Astor for amounts due hereunder by the third day of
each calendar month following the month of delivery. Invoices are to be
telefaxed and mailed to:
Xxxx Xxxxxxxx
Astor Corporation
Petrowax Refining Division
Intersection of Xxxxxx 00 & 000
X.X. Xxx 0000
Xxxxxxx Xxxxxx, XX 00000
Phone: 000-000-0000
Telefax: 000-000-0000
7.2 Payments shall be due hereunder on the seventh day of the calendar
month as provided in Section 7.5; provided, however, that any delay in the
telefaxing and mailing of invoices as provided in Section 7.1 hereof shall cause
the due date for the payment relating to such invoice to be extended by an equal
number of days.
7.3 Invoiced payments due hereunder which are not timely made by Astor as
provided herein shall be subject to interest charges at the rate of 12% per
annum from the payment due date.
7.4 If a payment due date falls on a Saturday, Sunday, or a banking
holiday in the State of New York, payment shall be due on the next business day.
7.5 All payments to L&W shall be made by wire transfer in immediately
available funds in accordance with written instructions provided by L&W to
Astor.
5
ARTICLE VIII
GENERAL TERMS
8.1 Force Majeure
(a) Except in respect of the obligation to pay money due with respect to
Products previously delivered, neither party shall be responsible to the other
for any failure to fulfill any term of this Agreement caused by circumstances
beyond the reasonable control of the party failing to fulfill such term,
including, but not limited to, acts of God or the public enemy, declared or
undeclared war, embargoes, sabotages, strikes, lock-outs or stoppages or other
restraints of labor, explosion, or fire, storms, floods, lightning or other
severe adverse weather conditions, accident, breakdown or other failure of
plant, machinery, facilities, roadways, or railroads and acts under cover of
governmental authority. Upon the occurrence of any event of Force Majeure that
prevents L&W from supplying some or all of Astor's requirements of the Products
under the terms hereof, Astor shall have the right to purchase that portion of
its requirements from any available alternate source and shall not be liable to
L&W for payments on such portion purchased from such alternate source. If L&W
is unable to deliver orders from Astor for at least 45 consecutive days due to
an event of Force Majeure, Astor may terminate this Agreement by delivery to L&W
of written notice to such effect. If Astor is unable to perform its obligations
under this Agreement for at least 45 consecutive days due to an event of Force
Majeure, L&W may terminate this Agreement by delivery to Astor of written notice
to such effect. In the event of any such termination of this Agreement, neither
party shall be liable for any damages to the other party resulting from such
non-delivery or termination. Capacity constraints caused by orders from other
customers of L&W shall not constitute an event of Force Majeure excusing L&W's
delay or failure to perform hereunder.
(b) At any time when a party's obligations hereunder have been excused by
reason of force majeure, such party shall give prompt notice thereof to the
other party. The parties agree to work together to mitigate the adverse impact
of, and the delay caused by, a force majeure event.
8.2 Jurisdiction
This Agreement shall be governed and construed in accordance with the laws
of the State of Utah, without reference to any conflict of law rules.
8.3 Assignment
(a) This Agreement shall not be assignable by either party without the
prior written consent of the other party, which consent shall not be
unreasonably withheld; provided, however, that no such written consent shall be
required for assignments of this Agreement to a party's subsidiary, parent or
other affiliate. The party assigning this Agreement with the written consent of
the other party shall remain as guarantor of its obligations hereunder;
provided, however, that if L&W so assigns this Agreement, Big West Oil Company
and Coastal Refining and Marketing, Inc. shall also remain guarantors of its
obligations hereunder as defined in Section 4.1(e) hereof.
6
(b) Nothwithstanding the foregoing, L&W hereby consents to the assignment
of this Agreement by Astor to The Chase Manhattan Bank.
(c) The Agreement shall be binding upon and inure to the benefit of the
successors and assigns of the parties hereto.
8.4 Notices
Except as otherwise provided herein, all notices, consents, requests,
instructions, approvals and other communications provided for herein shall be
given in writing by telefax followed by hand or prepaid overnight delivery to
the following addresses:
If to L&W:
Lube & Wax Ventures, L.L.C.
X.X. Xxx 000
Xxxxxxx Xxxx, Xxxx 00000
Attn: R. E. Xxxxxx
Tel.: 000-000-0000
Fax: 000-000-0000
If to Astor Corporation:
Astor Corporation
0000 Xxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx
Tel.: 000-000-0000
Fax: 000-000-0000
or to such other address as either party hereto shall designate to the other
party in writing as hereinabove provided. Notices hereunder shall be deemed to
be received at the date of receipt of a written confirmation of the transmittal
of the telefax.
8.5 Amendment
(a) The provisions of this Agreement may be modified or amended only by a
written document signed on behalf of each of the parties hereto.
(b) The parties agree that in the event a new facility is constructed by
L&W or its affiliates for the deoiling, dewaxing, or deasphalting of the
Products (the "Facility"), this Agreement may be amended to provide for the
purchase by Astor under negotiated terms of petroleum wax products produced at
such Facility by L&W.
7
8.6 New Facility
The parties hereto agree that in the event the Facility is constructed,
Astor shall be offered an equity participation interest in such Facility at an
unpromoted basis.
8.7 Entire Understanding
This Agreement contains the entire understanding between the parties with
respect to the transactions contemplated hereby.
8.8 Other Documents
Each party agrees to execute and deliver all documents and to do all other
things reasonably necessary to effectuate the purposes of this Agreement in the
most expeditious manner.
8.9 Counterparts
This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed to be an original.
8.10 Headings
The article, section and other headings in this Agreement are for
convenience only and shall not be interpreted in any way to limit or change the
subject matter of this Agreement.
8.11 Waiver; Severability
(a) No waiver by either party of any breach of the terms and conditions of
this Agreement shall be construed as a waiver of any subsequent breach of the
same or any other terms and conditions.
(b) The provisions of this Agreement are severable and, in the event that
any arbitration panel or court of competent jurisdiction shall determine that
any one or more of the provisions or part of a provision contained in this
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision or part of a provision of this Agreement. This Agreement
shall be reformed and construed as if such invalid or illegal or unenforceable
provision, or part of a provision, had never been contained herein, and such
provisions or part reformed so that it would be valid, legal and enforceable to
the maximum extent possible.
8
8.12 Default
(a) In the event either party hereto should fail to keep and perform any
agreement contained herein, the non-defaulting party may give written notice of
such default to the defaulting party and, in the event such default is not cured
by the defaulting party within 10 days after receipt of such notice, the non-
defaulting party may, at its option and without further notice, declare this
Agreement canceled and terminated. Any such action on the part of a non-
defaulting party shall in no way diminish any other legal or equitable right
which the non-defaulting party may have against the defaulting party for such
breach of contract.
(b) In the event either party becomes insolvent, or goes into bankruptcy,
voluntarily or involuntarily, or is placed in the hands of a receiver, or makes
an assignment for the benefit of its creditors, then the other party shall have
the right, at its option, to terminate this Agreement.
(c) As provided herein, in the event that L&W fails to supply all or a
portion of the Products to Astor pursuant to the terms of this Agreement, Astor
shall not be required to lift or to pay L&W for any such Products not so
supplied, and Astor's failure to so lift or pay shall not constitute a default
or event of default hereunder.
8.13 Remedies
Enforcement of any provisions of this Agreement shall not be affected by
any previous waiver or course of dealings, and election of any particular remedy
shall not be exclusive of any other. The rights granted herein shall be in
addition to any rights each party may have against the other on account of a
material breach or default by the other party.
8.14 Arbitration
(a) Subject to subsection (b) of this Section 8.14, in the event a dispute
arises that concerns this Agreement, the party prevailing in such dispute shall
be entitled to recover all of its reasonable fees and expenses, including,
without limitation, reasonable attorneys' fees and expenses, incurred in
connection therewith, whether or not such dispute is litigated to a final
judgment.
9
(b) Any and all disputes arising between the parties in any way, manner or
respect, out of or from or related to this Agreement, including the negotiation,
interpretation, performance, breach or termination hereof shall be settled
through amicable discussion between the parties. If amicable settlement cannot
be reached, the matters in dispute shall be resolved exclusively by binding
arbitration pursuant to the Rules of the American Arbitration Association. Any
arbitration shall be conducted by a panel of three arbitrators, one of such
arbitrators to be chosen by each of Astor and L&W and the third arbitrator to be
chosen by the first two arbitrators, and shall be held in the City of New York,
State of New York or such other location as may be mutually agreeable. The
parties agree to exclude any right of application or appeal to any court in
connection with any question of law arising in the course of the arbitration
except for purposes of enforcing this arbitral agreement or the award and except
that either party may apply to any court of competent jurisdiction for
injunctive relief or other interim measures in support of arbitration. Any such
application shall not be deemed incompatible with this Agreement or as a waiver
of this Agreement. The arbitrators shall have the right to assess the costs of
arbitration, including the legal fees and other costs incurred by any party,
against the losing party or in such other manner as they deem just. The award
of the arbitrators shall be final and binding and may be entered and enforced by
any court of competent jurisdiction. The parties agree to submit to the
jurisdiction of any such court for purposes of enforcement of any award, order
or judgment. Any arbitration proceeding hereunder shall be conducted on a
confidential basis.
10
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first above written.
LUBE & WAX VENTURES, L.L.C. ASTOR CORPORATION
By: /s/ Illegible By: /s/ Xxxxxx X. Xxxxx
----------------------------- -----------------------------
Name: R. E. Illegible Name: Xxxxxx X. Xxxxx
----------------------------- -----------------------------
Title: Title: Vice President
--------------------------- ---------------------------
By: /s/ K.O. Xxxxxxx
--------------------------------
Name: K.O. Xxxxxxx
--------------------------------
Title: Executive Committee
-------------------------------
11
EXHIBIT A
-------------------------------------------------------------------------------------------------------------------
HVGO VTB
-------------------------------------------------------------------------------------------------------------------
Parameter Method Minimum Typical Maximum Minimum Typical Maximum
-------------------------------------------------------------------------------------------------------------------
Distillation D 1160
-------------------------------------------------------------------------------------------------------------------
5% 725 1015 1017 ---
-------------------------------------------------------------------------------------------------------------------
95% --- 1052 1090 --- --- ---
-------------------------------------------------------------------------------------------------------------------
Viscosity @ D 2161 --- --- --- 155 158 170
210 DEG. F.
SUS
-------------------------------------------------------------------------------------------------------------------
A-1
