Exhibit 10.1
INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED PURSUANT TO
RULE 24(b)(2) OF THE SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED, IS OMITTED
AND IS NOTED WITH **. A COPY OF THIS AGREEMENT, INCLUDING ALL INFORMATION FOR
WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED HAS BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
Crude Oil Supply Agreement
Between
Xxxxxx Xxxxxxx Capital Group Inc.
And
The Premcor Refining Group Inc.
dated March 3, 2003
TABLE OF CONTENTS
Page No.
ARTICLE 1 DEFINITIONS AND CONSTRUCTION .................................................................... 2
ARTICLE 2 CONDITIONS TO CLOSING AND MSCG'S PERFORMANCE .................................................... 7
ARTICLE 3 TERM OF AGREEMENT ............................................................................... 10
ARTICLE 4 MSCG SALES OF CRUDE OIL TO PREMCOR .............................................................. 10
ARTICLE 5 ADDITIONAL PROVISIONS APPLICABLE TO PURCHASES OF FOREIGN-ORIGIN CARGOES ......................... 13
ARTICLE 6 PRICE OF AND PROVISIONAL PAYMENT FOR CRUDE OIL .................................................. 15
ARTICLE 7 MONTHLY TRUE-UP PAYMENT ......................................................................... 17
ARTICLE 8 COLLATERAL REQUIREMENTS ......................................................................... 18
ARTICLE 9 TAXES ........................................................................................... 20
ARTICLE 10 INSURANCE ...................................................................................... 20
ARTICLE 11 COMPLIANCE WITH APPLICABLE LAWS ................................................................ 21
ARTICLE 12 FORCE MAJEURE .................................................................................. 21
ARTICLE 13 MUTUAL REPRESENTATIONS, WARRANTIES AND COVENANTS ............................................... 22
ARTICLE 14 DEFAULT AND TERMINATION ........................................................................ 24
ARTICLE 15 FINAL SETTLEMENT AT TERMINATION ................................................................ 27
ARTICLE 16 INDEMNIFICATION AND CLAIMS ..................................................................... 28
ARTICLE 17 LIMITATION ON DAMAGES .......................................................................... 28
ARTICLE 18 AUDIT RIGHTS ................................................................................... 29
ARTICLE 19 CONFIDENTIALITY ................................................................................ 29
ARTICLE 20 GOVERNING LAW .................................................................................. 29
ARTICLE 21 ASSIGNMENT ..................................................................................... 30
ARTICLE 22 NOTICES ........................................................................................ 30
ARTICLE 23 NO WAIVER, CUMULATIVE REMEDIES ................................................................. 31
ARTICLE 24 NATURE OF THE TRANSACTION AND RELATIONSHIP OF PARTIES .......................................... 32
ARTICLE 25 MISCELLANEOUS .................................................................................. 32
Crude Oil Supply Agreement
Between
Xxxxxx Xxxxxxx Capital Group Inc.
And
The Premcor Refining Group Inc.
This Crude Oil Supply Agreement (this "Agreement") is entered into effective as
of March 3, 2003, between Xxxxxx Xxxxxxx Capital Group Inc., a company
incorporated under the laws of Delaware and located at 0000 Xxxxxxxx, Xxx Xxxx,
Xxx Xxxx 00000 ("MSCG") and The Premcor Refining Group Inc., a company
incorporated under the laws of Delaware and located at 0000 Xxxx Xxxxxx Xxxxxx,
Xxxxx 000, Xxx Xxxxxxxxx, XX 00000 ("Premcor") (each referred to individually as
a "Party" or collectively as "Parties").
WHEREAS on the Closing Date Premcor is purchasing the Refinery pursuant to that
certain Asset Purchase and Sale Agreement dated November 25, 2002 (the "APSA")
by and among Xxxxxxxx Refining & Marketing, L.L.C., Xxxxxxxx Generating Memphis,
L.L.C., Xxxxxxxx Memphis Terminal, Inc., Xxxxxxxx Petroleum Pipeline Systems,
Inc., Xxxxxxxx Mid-South Pipelines, LLC and The Xxxxxxxx Companies (collectively
referred to as "Xxxxxxxx"), Premcor and Premcor Inc.; and
WHEREAS Premcor desires to have MSCG supply Crude Oil for processing at the
Refinery beginning on the Closing Date and throughout the term of this Agreement
and MSCG is willing to supply Crude Oil to the Refinery;
NOW, THEREFORE, in consideration of the premises and the respective promises,
conditions, terms and agreements contained herein, and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, MSCG
and Premcor do hereby agree as follows:
ARTICLE 1
DEFINITIONS AND CONSTRUCTION
1.1 Definitions.
For purposes of this Agreement, including the foregoing recitals, the
following terms shall have the meanings indicated below:
"Affiliate" means, in relation to any Person, any entity controlled,
directly or indirectly, by such Person, any entity that controls, directly or
indirectly, such Person, or any entity directly or indirectly under common
control with such Person. For this purpose, "control" of any entity
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or Person means ownership of a majority of the issued shares or voting power or
control in fact of the entity or Person. For purposes of this Agreement, the
term "Affiliate" excludes Xxxxxx Xxxxxxx Derivative Products Inc.
"Agreement" or "this Agreement" means this Crude Oil Supply Agreement,
as may be amended, modified, supplemented, extended, renewed or restated from
time to time in accordance with the terms hereof, including any Exhibits hereto.
"API" means the American Petroleum Institute.
"Applicable Law" means (i) any law, statute, regulation, code,
ordinance, license, decision, order, writ, injunction, decision, directive,
judgment, policy, decree and any judicial or administrative interpretations
thereof, (ii) any agreement, concession or arrangement with any Governmental
Authority or (iii) any applicable license, permit or compliance requirement
applicable to either Party, including Environmental Laws.
"Bankrupt" means a Person that (i) is dissolved, other than pursuant to
a consolidation, amalgamation or merger, (ii) becomes insolvent or is unable to
pay its debts or fails or admits in writing its inability generally to pay its
debts as they become due, (iii) makes a general assignment, arrangement or
composition with or for the benefit of its creditors, (iv) institutes or has
instituted against it a proceeding seeking a judgment of insolvency or
bankruptcy or any other relief under any bankruptcy or insolvency law or other
similar law affecting creditor's rights, or a petition is presented for its
winding-up or liquidation, (v) has a resolution passed for its winding-up,
official management or liquidation, other than pursuant to a consolidation,
amalgamation or merger, (vi) seeks or becomes subject to the appointment of an
administrator, provisional liquidator, conservator, receiver, trustee, custodian
or other similar official for all or substantially all of its assets, (vii) has
a secured party take possession of all or substantially all of its assets, or
has a distress, execution, attachment, sequestration or other legal process
levied, enforced or sued on or against all or substantially all of its assets,
(viii) causes or is subject to any event with respect to it which, under
Applicable Law, has an analogous effect to any of the events specified in
clauses (i) through (vii) above, inclusive, or (ix) takes any action in
furtherance of, or indicating its consent to, approval of, or acquiescence in
any of the foregoing acts.
"Barrel" means forty-two (42) net U.S. gallons, measured at 60(degree)
F.
"Base Interest Rate" means **________________.
____________________
** This information is confidential and has been omitted and separately filed
with the Securities and Exchange Commission.
"Business Day" means a 24-hour period ending at 5:00 p.m. EST on a
weekday on which banks are open for general commercial business in New York.
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"Capline Pipeline System" means the crude oil pipeline transportation
system and related facilities located between Xx. Xxxxx, Xxxxxxxxx xxx Xxxxxx,
Xxxxxxxx that are owned and operated by Marathon-Ashland, Shell, BP and Unocal,
including the land, pipeline, injection stations, breakout storage tanks, crude
oil receiving and delivery facilities and any associated or adjacent facility.
"Cash Collateral" means cash delivered by Premcor to MSCG pursuant to
Article 8.
"Closing Date" means the Closing Date on which Premcor purchases the
Refinery from Xxxxxxxx pursuant to the APSA.
"Collateral" means Cash Collateral, Letters of Credit and any other
form of credit enhancement acceptable to MSCG in its sole discretion.
"Commitment Fee" means the initial non-refundable commitment fee in the
amount of $1,500,000 paid by Premcor to MSCG and any future commitment fee paid
by Premcor to MSCG in connection with renewal of this Agreement.
"Counterparty" has the meaning specified in Section 4.2(b).
"Crude Oil" means the domestic grades of crude oil deliverable at the
U.S. Gulf Coast and any foreign-origin cargoes that MSCG may sell to Premcor
pursuant to this Agreement.
"Crude Oil Purchase Costs" means the costs incurred by MSCG in
purchasing the Crude Oil sold to Premcor and the net costs of balancing MSCG's
WTI position, as described in Section 6.2.
"Default" or an "Event of Default" means an occurrence of the events or
circumstances described in Article 14.
"Default Interest Rate" means **_____________.
____________________
** This information is confidential and has been omitted and separately filed
with the Securities and Exchange Commission.
"Delivery Point" means (i) for domestic grades of Crude Oil delivered
into the pipeline, the intake flange of the meter where the Crude Oil is
injected into a Pipeline System, (ii) for foreign-origin Crude Oil vessel
cargoes sold FOB loadport, as the Crude Oil passes the vessel's permanent intake
flange of the vessel, and (iii) for foreign-origin Crude Oil vessel cargoes sold
DES, the last permanent flange connection between the cargo discharge manifold
of the vessel and the receiving hose at the LOOP or St. Xxxxx.
"Effective Date" means the date first written above, upon which this
Agreement becomes binding upon and enforceable against the Parties.
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"Environmental Law" means any existing or past Applicable Law, policy,
judicial or administrative interpretation thereof or any legally binding
requirement that governs or purports to govern the protection of persons,
natural resources or the environment (including the protection of ambient air,
surface water, groundwater, land surface or subsurface strata, endangered
species or wetlands), occupational health and safety and the manufacture,
processing, distribution, use, generation, handling, treatment, storage,
disposal, transportation, release or management of solid waste, industrial waste
or hazardous substances or materials.
"Force Majeure" means any cause or event reasonably beyond the control
of a Party, including fires, earthquakes, lightning, floods, explosions, storms,
adverse weather, landslides and other acts of natural calamity or acts of God;
navigational accidents or maritime peril; vessel damage or loss; strikes,
grievances, actions by or among workers or lock-outs (whether or not such labor
difficulty could be settled by acceding to any demands of any such labor group
of individuals and whether or not involving employees of Premcor or MSCG);
accidents at, closing of, or restrictions upon the use of mooring facilities,
docks, ports, pipelines, harbors, railroads or other navigational or
transportation mechanisms; disruption or breakdown of, explosions or accidents
to xxxxx, storage plants, terminals, machinery or other facilities; acts of war,
hostilities (whether declared or undeclared), civil commotion, embargoes,
blockades, terrorism, sabotage or acts of the public enemy; any act or omission
of any Governmental Authority; good faith compliance with any order, request or
directive of any Governmental Authority; curtailment, interference, failure or
cessation of supplies reasonably beyond the control of a Party; or any other
cause reasonably beyond the control of a Party, whether similar or dissimilar to
those above and whether foreseeable or unforeseeable, which, by the exercise of
due diligence, such Party could not have been able to avoid or overcome. For
purposes of this Agreement, the term "Force Majeure" expressly excludes any
event, howsoever caused, that interrupts, impairs, prevents or shuts down crude
oil processing at the Refinery, or the receipt of Crude Oil at the Refinery or
at any terminal facilities utilized in conjunction with operation of the
Refinery.
"Governmental Authority" means any federal, state, regional, local, or
municipal governmental body, agency, instrumentality, authority or entity
established or controlled by a government or subdivision thereof, including any
legislative, administrative or judicial body, or any person purporting to act
therefor.
"Letter of Credit" means an originally signed or telex of an
irrevocable standby letter of credit issued in favor of MSCG in a format
satisfactory to MSCG by a bank acceptable to MSCG and delivered to MSCG in an
amount acceptable to MSCG which has an expiration date of not less than fifteen
(15) days, for which all costs incurred in the issuance thereof have been or
will be paid by Premcor.
"Liabilities" means any losses, claims, charges, damages, deficiencies,
assessments, interests, penalties, costs and expenses of any kind (including
reasonable attorneys' fees and other fees, court costs and other disbursements),
directly or indirectly arising out of or related to any suit, proceeding,
judgment, settlement or judicial or administrative order, including any
Liabilities with respect to Environmental Laws.
"LOOP" means Louisiana Offshore Oil Port.
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"Material Adverse Effect" means a result or consequence that would
materially impair a Party's ability to perform its obligations and covenants
under this Agreement or to consummate any of the transactions contemplated by
this Agreement or would materially impair the usual, regular and ordinary
operations of the Refinery as a whole.
"Minimum Collateral" means the minimum amount of Collateral that
Premcor is required to deliver to MSCG and to maintain pursuant to Section 8.1
while this Agreement is in effect.
"Monthly True-Up Payment" means the monthly payment made by one Party
to the other Party as provided in Article 7.
"NYMEX" means the New York Mercantile Exchange.
"Pipeline System" means the Capline Pipeline System and any other U.S.
Gulf Coast pipeline system where MSCG sells Crude Oil to Premcor at the Delivery
Point.
"Person" means an individual, corporation, partnership, limited
liability company, joint venture, trust or unincorporated organization, joint
stock company or any other private entity or organization, Governmental
Authority, court or any other legal entity, whether acting in an individual,
fiduciary or other capacity.
"Potential Event of Default" means any Event of Default with which
notice or the passage of time would constitute an Event of Default.
"Refinery" means the Memphis, Tennessee crude oil refinery and all of
the related facilities acquired from Xxxxxxxx and owned and operated by Premcor,
including the processing, storage, receiving, loading and delivery facilities,
piping, marine facilities and related facilities, together with existing or
future modifications or additions.
"St. Xxxxx" means the Capline or the Xxxxxxxxx oil terminals located at
St. Xxxxx, Louisiana.
"Supply Service Fee" means the fee that Premcor pays MSCG pursuant to
Section 6.5.
"Taxes" means any and all foreign, federal, state and local taxes
(other than taxes on income), duties, fees and charges of every description on
or applicable to the Crude Oil, including all gross receipts, environmental,
spill, ad valorem and sales and use taxes, however designated, paid or incurred
directly or indirectly with respect to the ownership, purchase, exchange, use,
transportation, resale, importation or handling of the Crude Oil or WTI,
including for any Tax, any interest, penalties or additions to tax attributable
to any such Tax, including penalties for the failure to file any tax return or
report.
"Terminal Operator" means Oil Distribution Services ("ODS") or any
other entity that schedules and tracks Crude Oil in a Pipeline System.
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"Termination Date" means the date that is designated in a notice under
Section 3.4 or Section 14.2 on which termination of this Agreement is to be
effective.
"Trade Date" means the date when the Parties have agreed upon the
material economic terms of a Crude Oil sale from MSCG to Premcor or a WTI
Transaction between MSCG and Premcor, or when Premcor has agreed upon the
material economic terms of a Crude Oil purchase or WTI Transaction between MSCG
and a Counterparty.
"UCC" means the New York Uniform Commercial Code.
"Variation Margin" means, on any calculation date, the margin that the
Parties exchange pursuant to Section 8.2 based on changes in the market value of
Crude Oil purchased by MSCG for resale to Premcor at a fixed price.
"WTI" means West Texas Intermediate crude oil and any crude oil meeting
the specifications of the NYMEX WTI futures contract for delivery at Cushing,
Oklahoma.
"WTI Transactions" means purchases and sales of physical WTI or WTI
NYMEX futures contracts entered into by MSCG or by Premcor on MSCG's behalf in
order to balance MSCG's Crude Oil position.
1.2 All references in this Agreement to Exhibits, Articles and Sections
refer to the corresponding Exhibits, Articles and Sections of or to this
Agreement unless expressly provided otherwise. All headings herein are intended
solely for convenience of reference and shall not affect the meaning or
interpretation of the provisions of this Agreement.
1.3 All Exhibits to this Agreement are attached hereto and by this
reference incorporated herein for all purposes.
1.4 Unless expressly provided otherwise, the words "this Agreement,"
"herein," ""hereby," "hereunder" and "hereof," and words of similar import,
refer to this Agreement as a whole and not to any particular Section. The words
"this Article," and "this Section" and words of similar import, refer only to
the Article or Section hereof in which such words occur. The word "including" as
used herein means "including without limitation" and does not limit the
preceding words or terms.
1.5 The Parties acknowledge that they and their counsel have reviewed
and revised this Agreement and that no presumption of contract interpretation or
construction shall apply to the advantage or disadvantage of the drafter of this
Agreement.
ARTICLE 2
CONDITIONS TO CLOSING AND MSCG'S PERFORMANCE
2.1 The respective obligations of each Party contemplated under this
Agreement shall be subject to the satisfaction of the following conditions
precedent on or prior to the Closing Date, each as determined by a Party in its
sole discretion.
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(a) Consummation of the purchase and sale of the Refinery pursuant to
the APSA.
(b) No action or proceeding shall have been instituted nor shall any
action by a Governmental Authority be threatened, nor shall any order,
judgment or decree have been issued or proposed to be issued by any
Governmental Authority as of the Closing Date to set aside, restrain,
enjoin or prevent the transactions and performance of the obligations
contemplated by either Party under this Agreement.
(c) The Refinery shall not have been affected adversely or threatened
to be affected adversely by any loss or damage, other than to the extent
covered by insurance, unless such loss or damage would not have a Material
Adverse Effect on the Refinery.
(d) The representations and warranties of each Party set forth in this
Agreement shall be true and correct on and as of the Closing Date.
2.2 The obligations of MSCG contemplated under this Agreement shall be
subject to Premcor's satisfaction of the following conditions precedent on or
prior to the Closing Date, as determined by MSCG in its sole discretion.
(a) Premcor shall have delivered to MSCG a certificate signed by the
Controller of Premcor and dated the Effective Date, certifying as to the
truth and accuracy of Premcor's representations and warranties set forth in
this Agreement as of the Effective Date.
(b) Premcor shall have delivered to MSCG an accurate certificate dated
as of the Effective Date, in form and substance satisfactory to MSCG and
signed by the Secretary or an Assistant Secretary of Premcor certifying (i)
the incumbency and specimen signature of the officer of Premcor executing
this Agreement and (ii) that Premcor has obtained all requisite approvals
under its constitutional documents in respect of Premcor's execution,
delivery and performance of this Agreement.
(c) Premcor shall have provided to MSCG a letter agreement (in a format
satisfactory to MSCG at its sole discretion) duly executed by ODS, MSCG and
Premcor wherein Premcor agrees that MSCG unilaterally may instruct ODS to
cease scheduling any deliveries of Crude Oil from MSCG to Premcor upon the
occurrence of an Event of Default by Premcor and ODS agrees to comply with
such instructions from MSCG without prior notice to or consent from
Premcor.
(d) Premcor shall have delivered to MSCG the Minimum Collateral
required by Section 8.1(a).
2.3 Effect of Termination for Failure of Conditions Precedent.
(a) MSCG shall not be obligated to refund to Premcor the Commitment Fee
that Premcor paid to it on November 29, 2002 if either Party terminates
this Agreement pursuant to Section 2.1 or 2.2.
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(b) If either Party terminates this Agreement pursuant to Section 2.1
or 2.2, neither Party shall have any further obligation under this
Agreement to the other Party except that a Party shall remain liable to the
other Party for any damages incurred as a result of a breach by a Party of
its representations, warranties or obligations hereunder occurring prior to
such termination.
2.4 Condition Subsequent.
(a) Premcor shall make reasonable commercial efforts to cause to
deliver to MSCG, on or before March 14, 2003, a letter agreement (in a
format satisfactory to MSCG in its sole discretion) duly executed by each
of the owners of the Capline Pipeline System wherein Premcor and each owner
agrees to Premcor's assignment to MSCG of Premcor's nominated shipping
capacity on the Capline Pipeline System for shipment of Crude Oil that ODS
has scheduled for delivery from MSCG to Premcor but that MSCG will not
deliver to Premcor due to an Event of Default by Premcor without prior
notice to or any additional consent from Premcor.
(b) If the foregoing letter is not provided by March 31, 2003, Premcor
shall (i) deliver to MSCG a duly executed assignment to MSCG of that
portion of its nominated shipping capacity on the Capline Pipeline System
required to ship crude oil to the Refinery (in a format satisfactory to
MSCG in its sole discretion), which shall become effective upon an Event of
Default by Premcor, and (ii) transmit copies of the assignment executed by
both Parties to each of the owners of the Capline System. MSCG shall be
entitled to terminate this Agreement if Premcor does not deliver the
assignment by March 31, 2003.
2.5 Reimbursement of Fees.
Premcor agrees to reimburse MSCG for reasonable legal fees and reasonable
out-of-pocket expenses and costs that it incurred in connection with the
drafting, execution and delivery of this Agreement upon receipt of copies of
invoices for such fees, costs and expenses.
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ARTICLE 3
TERM OF AGREEMENT
3.1 Initial Term.
This Agreement shall become effective on the Effective Date and shall
continue for two years from the Closing Date ("Initial Term").
3.2 Renewal.
Subject to the Parties' mutual agreement on the terms and conditions of
renewal in their respective sole discretion, this Agreement may be renewed for
successive two-year terms or for such other period as may be agreed upon by the
Parties (each such renewal period, a "Renewal Term"). No later than ninety (90)
days prior to expiration of the Initial Term or a Renewal Term, either Party may
notify the other Party of the terms or conditions upon which it desires to renew
this Agreement. If the Parties do not agree upon the terms and conditions of
renewal, this Agreement shall terminate effective as of the conclusion of
Initial Term or Renewal Term, as the case may be; provided, however, that the
Parties shall perform their obligations relating to termination pursuant to
Article 15.
3.3 Renegotiation of Terms.
Within sixty (60) days prior to each one-year anniversary of this Agreement
during the Initial Term and any Renewal Term, a Party may notify the other Party
of any terms and conditions of this Agreement that it wishes to renegotiate. The
Parties may agree to amend any of the terms and conditions of this Agreement
effective as of the anniversary date, but neither Party shall be obligated to do
so.
3.4 Early Termination Option.
Either Party may terminate this Agreement upon one (2) Business Days'
notice to the other Party if the long term senior unsecured unsubordinated debt
rating of Xxxxxx Xxxxxxx (f/k/a Xxxxxx Xxxxxxx Xxxx Xxxxxx & Co.) assigned by
Xxxxx'x Investors Service, Inc. falls at or below Baa2 or such rating assigned
by Standard & Poor's Ratings Services falls at or below BBB. Such early
termination shall be effective upon the Termination Date designated in such
notice (not earlier than the date of such notice) and neither Party shall have
any further obligations to the other Party or shall have responsibility for any
Liabilities to the other Party as of the Termination Date, except as provided in
Article 15.
ARTICLE 4
MSCG SALES OF CRUDE OIL TO PREMCOR
4.1 Beginning the Closing Date and subject to MSCG's ability to purchase
Crude Oil in accordance with Premcor's nominations, MSCG agrees to sell and
deliver to Premcor, and Premcor agrees to purchase, Crude Oil for processing at
the Refinery. Except for sales at the LOOP as provided in Article 5, all sales
shall be FOB St. Xxxxx or, if Premcor provides MSCG in advance with letters from
the Pipeline System and Terminal Operator substantially equivalent to the
letters provided pursuant to Sections 2.2(c) and 2.4 and in such form as is
acceptable to
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MSCG in its sole discretion, such other U.S. Gulf Coast delivery location as
mutually agreed. Except as provided in Article 5 for vessel deliveries, title to
and risk of loss to the Crude Oil shall pass from MSCG to Premcor via in-line
transfer at the Delivery Point.
4.2 Acquisition of Crude Oil.
(a) Premcor shall act as an advisor and independent contractor to MSCG
in acquiring Crude Oil from the marketplace for processing at the Refinery
and entering into WTI Transactions. The quantity and quality of the Crude
Oil sold and delivered to Premcor shall conform to such specifications as
agreed upon by Premcor on a cargo or pipeline tender basis prior to MSCG's
contractual commitment to purchase the Crude Oil from the Crude Oil
supplier.
(b) Premcor shall negotiate and liaise in respect of Crude Oil
purchases and WTI Transactions in accordance with the guidelines
("Transaction Guidelines"), attached as Exhibit A. The Transaction
Guidelines authorize Premcor's employees to discuss and negotiate with
Crude Oil suppliers and WTI counterparties (each a "Counterparty" and
collectively, "Counterparties") the terms and conditions of MSCG contracts
("Contracts") on MSCG's behalf.
(c) The terms and conditions of Contracts must conform to the
Transaction Guidelines unless MSCG approves the language of the specific
contract in advance. Except as expressly authorized by the Transaction
Guidelines, and notwithstanding anything to the contrary in this Agreement,
all statements and representations made by Premcor's employees shall be
made by Premcor in its own capacity, and Premcor is not authorized to bind
MSCG in connection with the conclusion of any Contract nor to make any
representations to Counterparties on behalf of MSCG. Unless expressly
authorized by the Transaction Guidelines or otherwise authorized by MSCG in
writing, any advice, recommendations, warranties or representations made to
Counterparties by Premcor shall be the sole and exclusive responsibility of
Premcor and Premcor shall be liable for all errors, omissions or
misinformation that it provides to MSCG or to Counterparties.
(d) Without MSCG's prior approval, Premcor shall not negotiate or enter
into any Contracts with a term in excess of the lesser of (i) three (3)
months and (ii) the remainder of the Initial Term or Renewal Term.
4.3 EXCEPT FOR THE WARRANTY OF TITLE, MSCG MAKES NO WARRANTY, CONDITION OR
OTHER REPRESENTATION, WRITTEN OR ORAL, EXPRESS OR IMPLIED, OF MERCHANTABILITY,
FITNESS OR SUITABILITY OF THE CRUDE OIL AND WTI FOR ANY PARTICULAR PURPOSE OR
OTHERWISE. FURTHER, MSCG MAKES NO WARRANTY OR REPRESENTATION THAT THE CRUDE OIL
AND WTI CONFORM TO THE SPECIFICATIONS IDENTIFIED IN MSCG'S CONTRACT WITH THE
COUNTERPARTY.
4.4 The Parties shall consult with each other and coordinate how to handle
and resolve any claims made by a Counterparty against MSCG or any claims that
MSCG may bring against a Counterparty. MSCG shall reasonably consider in good
faith any proposals for resolving the claim timely offered by Premcor taking
into account the facts and circumstances and parties involved; provided,
however, that MSCG shall retain the
11
sole discretion to resolve or compromise any such claim. All costs, expenses and
damages arising from a claim shall be solely for Premcor's account except to the
extent arising from MSCG's gross negligence or willful misconduct, it being the
express intention of the Parties that Premcor shall solely assume all
performance and credit risk of a Counterparty's default or nonperformance,
regardless of the reason therefor.
4.5 Nominations.
(a) No later than the 24/th/ of a month, Premcor shall confirm with
MSCG via facsimile the volume of Crude Oil purchased for delivery during
the following month (the "Delivery Month"), specifying the anticipated
delivery by volume, grade, Pipeline System, and on a batch or ratable
basis, as appropriate. MSCG shall schedule Premcor's nominated shipments
through the Terminal Operator with the relevant Pipeline System at the
Delivery Point, and shall provide Premcor with a confirmation of the
scheduled shipment once received from the Terminal Operator. Premcor
promptly shall notify MSCG if it requires that MSCG schedule any changes in
accepted nominations, and shall be liable for any costs associated
therewith. MSCG shall not be responsible if a Pipeline System is unable to
accept Premcor's nomination or if the Pipeline System must allocate Crude
Oil among its shippers.
(b) Promptly following receipt of the Terminal Operator's written
confirmation of all shipments scheduled for a Delivery Month, MSCG shall
send Premcor a written confirmation ("Confirmation") memorializing the
terms of the sales between MSCG and Premcor that are scheduled to occur
within the Delivery Month. The terms of MSCG's Confirmation shall be deemed
conclusive and binding if, within one (1) Business Day from receipt of the
Confirmation, Premcor does not respond or fails to notify MSCG by facsimile
of any objections.
(c) Premcor shall notify MSCG immediately upon learning of any material
change in any previously provided projections or if it is necessary to
reschedule any pipeline nominations confirmed by the Terminal Operator.
MSCG shall schedule any changes in pipeline nominations through the
Terminal Operator, and all costs associated therewith shall be for
Premcor's account.
4.6 MSCG shall be responsible for paying only supplier invoices for the
Crude Oil. Premcor shall be responsible for paying all transportation costs,
scheduling charges, pipeline transfer fees, inspection fees, Taxes, any charges
imposed by a Governmental Authority and broker's fees (as agreed upon by the
Parties). All Crude Oil losses shall solely be for Premcor's account. The
foregoing costs shall be treated as Crude Oil Purchase Costs only to the extent
that MSCG pays them instead of Premcor. A Party promptly shall provide the other
Party with copies of supplier and vendor invoices payable by the other Party as
appropriate.
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ARTICLE 5
ADDITIONAL PROVISIONS APPLICABLE TO PURCHASES OF FOREIGN-ORIGIN CARGOES
5.1 In addition to the domestic Crude Oil acquired for Premcor pursuant to
Article 4, Premcor may request that MSCG also purchase on its behalf cargoes of
foreign-origin Crude Oil to be delivered either at the LOOP, St. Xxxxx or on an
FOB loadport basis. Premcor shall negotiate purchases of such cargoes in
accordance with Articles 4 and 5. MSCG is willing to purchase the Crude Oil for
Premcor either FOB loadport or DES LOOP or St. Xxxxx. In either event, unless
the Parties agree otherwise, MSCG shall sell the Crude Oil to Premcor at an
ex-duty price on a DES basis. Title to and risk of loss of the Crude Oil shall
pass to Premcor at the Delivery Point.
5.2 Premcor promptly shall provide MSCG with a copy of the proposed
Contract or other documentation memorializing the terms of the proposed
transaction with the Counterparty for MSCG's approval. MSCG promptly shall
respond to the Counterparty and furnish Premcor with a copy of the final
Contract. MSCG also promptly shall transmit to Premcor a Confirmation containing
the terms and conditions of the sale from MSCG to Premcor.
5.3 Premcor and MSCG have entered into a Contract of Affreightment
effective the Closing Date, attached hereto as Exhibit B, such that Premcor is
able to and agrees to charter all self-propelled ocean-going marine vessels for
transportation of the Crude Oil that MSCG purchases FOB loadport for delivery to
St. Xxxxx or the LOOP.
5.4 Premcor shall be responsible for compliance with all Applicable Laws
regarding the importation of Crude Oil and all requirements of a Governmental
Authority, including the Louisiana Department of Revenue, the United States
Department of Energy and the United States Customs Service ("Customs"). Premcor
hereby agrees to indemnify and hold harmless MSCG, its Affiliates, and their
agents, representatives, contractors, employees, directors and officers, against
any Liabilities suffered or incurred by them directly or indirectly in
connection with Premcor's undertaking of these responsibilities except to the
extent that such Liabilities are attributable to MSCG's own gross negligence or
willful misconduct.
5.5 Crude Oil Inspection and Measurement.
(a) The quantity and quality of Crude Oil delivered by ocean-going
vessel shall be determined by shore tank receipt figures as determined by
an Independent Inspector mutually agreeable to both Parties, as provided
below. All measurements shall be in accordance with the latest API and ASTM
standards and principles then in effect. The delivered quantities shall be
adjusted to a net standard volume by deducting sediment and water, as
determined by the Independent Inspector's analysis of a representative
sample of the Crude Oil taken by the inline sampler located at the LOOP or
St. Xxxxx receiving facility. The Independent Inspector shall ensure that
the line contents are not sampled as part of the delivered Crude Oil. In
the event that an inline sampler is not fitted, is out of order,
malfunctions during the transfer or the Independent Inspector deems that
the samples drawn by the inline sampler are not or would not be
representative of the Crude Oil, then the sediment and water deduction
shall be
13
determined from a representative sample based on a composite of samples
obtained from the vessel tanks prior to commencement of discharge.
(b) The quantity of the Crude Oil shall be determined by static tank up
gauge measurements, in full accordance with API Chapters 17.1, 17.2, and
3.1A, with all shore tanks complying with the following:
(i) All tanks shall, if possible, contain sufficient Crude Oil
prior to receipt to ensure that the floating roofs are afloat and clear
of the critical zone by a minimum of twelve (12) inches. If this
situation is not practical, then the tanks shall contain sufficient
Crude Oil prior to receipt to ensure that the liquid level can be
accurately measured in the main body of the tank and clear of the tank
bottom calibrations.
(ii) All tanks shall be calibrated for critical measurement as set
forth by API 2.2 ASTM Designation 1220.
(iii) If the tanks are active or do not meet the requirements
specified above, or the Independent Inspector cannot verify the tank
measurements prior to or after receipt or determines that these tank
measurements are not representative of the volume delivered from the
vessel, then the supplied quantity shall be based upon the vessel's
figures adjusted for Vessel Experience Factor, as calculated by the
Independent Inspector.
(iv) When the TCV quantity of the Crude Oil is determined by tank
up gauge measurements, the lines between the docks and the receiving
tanks at the receiving terminal should be packed full prior to the
commencement of transfer. The tank down gauges at the receiving
terminal should always be manually taken, and the volumes delivered
shall be compared to the volumes determined by up gauge measurements.
The Independent Inspector shall take the comparison into account in
determining whether the terminal up gauges should be deemed
representative.
(v) Certificates of quality and quantity countersigned by an
Independent Inspector will be final and binding on both Parties absent
manifest error or fraud. Premcor shall instruct the Independent
Inspector to retain samples of Crude Oil for a period of ninety (90)
days from the date of measurement.
5.6 Premcor shall handle and pay any demurrage claims by a Crude Oil
supplier asserted against MSCG in a timely manner and, at MSCG's request, shall
provide MSCG with copies of all claims and supporting documentation. If Premcor
does not resolve or contest such claims in good faith within a reasonable
period, MSCG shall be entitled, at Premcor's expense but with Premcor's consent,
to resolve and settle any demurrage claim, including the payment of such claim
through netting against any outstanding demurrage claim that MSCG has made
against the same supplier (whether or not under this Agreement). Premcor shall
reimburse MSCG for any demurrage paid by MSCG as part of the Monthly True-Up
Payment.
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5.7 Premcor shall be responsible for paying all marine transportation
costs, including ocean-going freight, inspection fees, wharfage and dock fees,
port expenses and ship's agent fees, export charges, Customs duties and user
fees, Harbor Maintenance taxes, Taxes, any charges imposed by a Governmental
Authority, insurance, tankage and throughput charges, broker's fees (as agreed
upon by the Parties) and demurrage. All Crude Oil losses shall solely be for
Premcor's account. The foregoing costs shall be treated as Crude Oil Purchase
Costs only to the extent that MSCG pays them instead of Premcor. A Party
promptly shall provide the other Party with copies of supplier and vendor
invoices payable by the other Party as appropriate.
5.8 Premcor shall provide the Crude Oil supplier with the text of a letter
of indemnity acceptable to MSCG for the supplier's review, or, if the supplier
dictates the terms of the letter of indemnity, shall provide MSCG with the text,
no later than three (3) Business Days prior to the date of scheduled payment to
the supplier. If such time frame is met, and original bills of lading are not
available, Premcor shall arrange for the issuance of, and receipt by MSCG of,
the letter of indemnity (countersigned if required) at least one (1) Business
Day prior to the payment date. Premcor shall reimburse MSCG for any interest at
the Default Interest Rate that MSCG incurs as a result of its failure to receive
an acceptable letter of indemnity one (1) Business Day prior to the scheduled
payment date.
ARTICLE 6
PRICE OF AND PROVISIONAL PAYMENT FOR CRUDE OIL
6.1 The volume of Crude Oil sold to Premcor via pipeline shall be (i)
determined by pipeline meter tickets as the Crude Oil passes the downstream
flange of the meter measuring the Crude Oil upon intake at the Delivery Point or
(ii) based on the final statement of activity issued by the Pipeline System. In
the event that MSCG purchases Crude Oil basis FOB loadport but sells to Premcor
basis DES the LOOP or St. Xxxxx, Premcor shall pay for the Crude Oil based on
the xxxx of lading quantity. When MSCG purchases Crude Oil on a DES basis,
Premcor shall pay for the Crude Oil based on shore tank receipt figures as
provided in Section 5.5.
6.2 Crude Oil Purchase Price.
The price of the Crude Oil sold to Premcor shall equal (i) the purchase
price paid by MSCG for the Crude Oil plus any amounts that MSCG may incur in
connection with the purchase, transportation and delivery of the Crude Oil to
the Delivery Point, determined on a First-In, First-Out ("FIFO") basis,
including any items covered in Sections 4.6 or 5.7 that MSCG pays instead of
Premcor ("Crude Oil Purchase Costs"), plus or minus (ii) the net losses or
profits realized from the related WTI Transaction, if any (as described in
Section 6.3(a)), after taking into account all fees associated therewith, such
as NYMEX transaction fees and WTI exchange of futures for physical ("EFP")
costs.
6.3 Related WTI Transactions.
(a) Balancing Transactions.
Premcor shall assist MSCG in balancing the WTI position that MSCG may
have in connection with its purchases of Crude Oil for resale to Premcor.
The Parties shall mutually agree on the best method of balancing. One
method is for Premcor to arrange
15
for MSCG to purchase physical WTI priced on a calendar NYMEX average.
Alternatively, MSCG and Premcor may execute an EFP transaction wherein MSCG
sells Crude Oil to Premcor in exchange for purchasing from Premcor WTI
futures contracts at a fixed price. Concurrently, MSCG would execute an EFP
with a third party, purchasing physical WTI in exchange for the sale of the
futures contracts purchased from Premcor. If the Parties have not mutually
agreed on a method to balance MSCG's WTI position by the last day on which
scheduling may occur in respect of a Delivery Month, the position will be
settled based on the high assessment for prompt Xxxxxxx WTI effective on
the last Business Day prior to scheduling for the Delivery Month, as
published in Xxxxx'x Oilgram Price Report. If Xxxxx'x Oilgram Price Report
ceases to be published or is not published on the last Business Day prior
to scheduling for the Delivery Month, the Parties shall cooperate in good
faith to select an alternative publication or other reference source that
reflects as nearly as possible the same information as published in the
Xxxxx'x Oilgram Price Report.
(b) Credit Guidelines for WTI Transactions.
Attached to the Transaction Guidelines is a pre-approved Counterparty
list and credit trading limits and requirements for each ("Credit
Guidelines"), which MSCG shall update as necessary from time to time in its
sole discretion. Absent MSCG's consent, Premcor shall negotiate WTI
Transactions on MSCG's behalf only with the entities listed in the Credit
Guidelines, within the trading limits specified and in accordance with the
designated method of payment. Either Premcor or the Counterparty shall
provide MSCG with the text of letters of credit for review no later than
three (3) Business Days prior to the date of scheduled delivery period and
the letter of credit must be issued or confirmed by the Counterparty's
financial institution (which shall be acceptable to MSCG) at least one (1)
Business Day prior to the delivery period.
6.4 Payment Terms.
(a) Pipeline Deliveries. Premcor shall pay MSCG a weekly provisional
payment ("Provisional Payment") for the Crude Oil in the form of cash or a
Letter of Credit, at Premcor's option. The Provisional Payment shall equal
the estimated price for the volume of Crude Oil anticipated to be sold to
Premcor during the forthcoming week based on the nominations scheduled
through the Terminal Operator. Every Monday, MSCG shall provide Premcor
with a facsimile invoice for the volume of Crude Oil that Premcor estimates
it will purchase from MSCG during the seven-day period beginning the
following Saturday, indicating the per Barrel price based on MSCG's Crude
Oil Purchase Costs. Premcor shall prepay or post a Letter of Credit by
12:00 noon EST every Wednesday. MSCG may in its sole discretion amend the
payment terms of this Section 6.4 depending on the amount of MSCG's
exposure in excess of the credit line granted to Premcor (which MSCG may
change from time to time in its sole discretion).
(b) Vessel Deliveries. Premcor shall pay MSCG for Crude Oil delivered
by vessel within one (1) Business Day prior to arrival of the vessel at the
relevant loading port or discharge port, as the case may be. Payment shall
be made against presentation of (i) MSCG's invoice (facsimile acceptable),
(ii) the Independent Inspector's Certificate of
16
Quality and Quantity and (iii) 3/3 clean on board bills of lading (or 2/3
original bills or lading and master's receipt for 1/3 original xxxx of
lading) or MSCG's facsimile letter of indemnity, if original bills of
lading are not available on the payment due date.
6.5 Supply Service Fee.
(a) In consideration of the services provided by MSCG under this
Agreement, Premcor shall pay MSCG a Supply Service Fee of $**_______ per
Barrel of Crude Oil that MSCG sells to Premcor under this Agreement,
whether or not such Crude Oil is processed in the Refinery (for avoidance
of doubt, excluding WTI Transactions). Regardless of the volume of Crude
Oil supplied by MSCG, Premcor shall pay MSCG a minimum Supply Service Fee
of $** _______ per month ("Minimum Supply Service Fee").
_____________________
** This information is confidential and has been omitted and separately filed
with the Securities and Exchange Commission.
(b) Premcor shall pay the Supply Service Fee to MSCG on a weekly basis
when it remits the Provisional Payment to MSCG in respect of the volume of
Crude Oil prepaid or when it pays for Crude Oil delivered by vessel, as the
case may be. Any adjustment to the Supply Service Fee to account for actual
delivered volumes shall be added to or deducted from the Monthly True-Up
Payment for the applicable Delivery Month.
ARTICLE 7
MONTHLY TRUE-UP PAYMENT
7.1 Within five (5) Business Days after the end of a Delivery Month, MSCG
shall provide Premcor with a final invoice (facsimile and electronic copies
acceptable) for all Crude Oil sold by MSCG to Premcor at the Delivery Point
within the Delivery Month, together with any appropriate supporting
documentation regarding Crude Oil deliveries by pipeline and WTI Transactions,
including pipeline meter tickets or pipeline statements received from Terminal
Operators.
7.2 Within five (5) Business Days after the end of a Delivery Month, MSCG
also shall prepare and provide to Premcor a reconciliation statement for the
Delivery Month that sets forth (i) any adjustments to the Supply Service Fee,
(ii) the portion of the Minimum Supply Service Fee that remains unpaid by the
end of such Delivery Month, (iii) a true-up of the Provisional Payments Premcor
paid to MSCG and actual Crude Oil Purchase Costs, (iv) a true-up of provisional
payments made for Crude Oil cargoes when final discharge volumes have not been
established and the final payments due, (v) in respect of Crude Oil prepaid in
cash (but not by Letter of Credit), a credit to Premcor at the Base Interest
Rate to reflect the difference between the date on which MSCG pays a supplier
for the Crude Oil and date on which Premcor pays MSCG cash for the Crude Oil and
(vi) adjustments for any other amounts owed one Party
17
to the other Party under this Agreement during such Delivery Month or prior
months, including any Crude Oil Purchase Costs that MSCG has not yet invoiced
Premcor.
7.3 Payment shall be made by the owing Party within two (2) Business Days
from receipt of MSCG's invoice, reconciliation statement and any appropriate
documentation.
7.4 If Premcor in good faith disputes the amount of any Monthly True-Up
Payment that is owed to MSCG, it nonetheless shall pay MSCG the full amount of
such payment by the due date and inform MSCG in writing of the portion of the
Monthly True-Up Payment with which it disagrees and why. The Parties shall
cooperate in resolving the dispute expeditiously. Once the Parties mutually
agree as to the disputed amount, the Party owing such disputed amount shall pay
such amount, with interest at the Default Interest Rate from the original due
date to but not including the date of payment, within two (2) Business Days from
the date of their agreement.
7.5 All payments under this Agreement shall be made by telegraphic transfer
of same day funds in U.S. Dollars to such bank account at such bank as the payee
shall designate in writing to the payor from time to time. Except as expressly
provided in this Agreement, all payments shall be made in full without discount,
offset, withholding, counterclaim or deduction whatsoever for any claims which
Premcor may now have or hereafter acquire against MSCG, whether pursuant to the
terms of this Agreement or otherwise.
7.6 If the payment due date should fall on a Saturday or non-Monday weekday
which is not a Business Day in New York, payment is to be made on the preceding
Business Day. If the payment due date should fall on a Sunday or Monday which is
not a Business Day in New York, payment is to be made on the following Business
Day.
7.7 All payments under this Agreement not paid by the due date shall accrue
interest at the Default Interest Rate. Interest shall run from and including the
due date of the payment to but excluding the date that payment is received.
ARTICLE 8
COLLATERAL REQUIREMENTS
8.1 Minimum Collateral.
As security for the prompt payment and performance in full when due of its
obligations under this Agreement, prior to the Closing Date and at all times
during this Agreement Premcor must provide MSCG with a Letter of Credit in the
amount of **______________ (the "Minimum Collateral L/C"). The term of the
Minimum Collateral L/C shall be the maximum allowable term (with automatic
renewal, if allowed) under that certain Amended and Restated Credit Agreement
dated February 11, 2003 between Premcor and the financial institutions party
thereto or any successor credit facility.
______________________
** This information is confidential and has been omitted and separately filed
with the Securities and Exchange Commission.
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8.2 Variation Margin.
(a) The Parties shall exchange and maintain Variation Margin in respect
of Crude Oil purchased from a supplier and resold to Premcor at a fixed
price.
(b) On a weekly basis, or more frequently as MSCG may determine is
warranted due to prevailing market conditions, MSCG shall provide Premcor
with notice of the total dollar amount by which the market value of all of
the Crude Oil then contracted for purchase and resale to Premcor
(determined by MSCG at its sole discretion) is greater or less than the
aggregate cost of such Crude Oil. If the market value of the Crude Oil is
less than MSCG's cost, Premcor shall deliver to MSCG Collateral in an
amount equal to MSCG's cost minus the market value within two (2) Business
Days from Premcor's receipt of MSCG's Variation Margin calculation.
(c) Premcor grants to MSCG a continuing first priority security
interest in and a first lien on and right of setoff against, all of
Premcor's right, title and interest in all Cash Collateral that it delivers
to MSCG as Variation Margin and that MSCG is entitled to hold. MSCG may
commingle the Variation Margin with its own funds, use the Variation Margin
in its business and treat the Variation Margin as its own property. MSCG
shall not be liable to pay Premcor any interest on Variation Margin held by
it.
(d) If the market value of the Crude Oil is greater than MSCG's cost of
such Crude Oil, MSCG shall return to Premcor Cash Collateral in an amount
equal to the market value minus MSCG's cost up to, but no greater than, the
total amount of Cash Collateral then posted by Premcor to MSCG ("Excess
Collateral") by deducting such amount from the next Provisional Payment due
MSCG for Crude Oil (provided that an Event of Default or a Potential Event
of Default has not occurred in respect of Premcor). The return of Excess
Collateral by MSCG shall be deemed a release by MSCG of its first security
interest, first lien and right of offset only with respect to the returned
Collateral. MSCG's obligations to Premcor shall be limited to the return of
Excess Collateral as provided in this Section 8.2(d) and in no event shall
MSCG be required to post Variation Margin to Premcor.
8.3 Renewal of Letter of Credit.
(a) At all times under this Agreement, the Minimum Collateral L/C shall
have an expiration date of not less than fifteen (15) days. No later than
fifteen (15) days prior its expiry, Premcor shall instruct the issuing bank
to renew or extend the Minimum Collateral L/C. Premcor's failure to amend
and extend the Minimum Collateral L/C no later than fifteen (15) days prior
to the expiration thereof (such an event, a "Non-Renewal Event") shall (x)
entitle MSCG to treat the full amount available for drawing under the
Minimum Collateral L/C as the outstanding amount due MSCG and to draw
immediately on such Minimum Collateral L/C in full without any prior notice
or demand to Premcor and (y) constitute an Event of Default under Article
14 without any notice or grace period.
19
(b) Notwithstanding the foregoing and Section 2.2(d) of this Agreement,
in the event that MSCG makes a draw on the Minimum Collateral L/C as a
result of a Non-Renewal Event and elects in such event, in its sole
discretion, to hold the proceeds of such draw as Cash Collateral for
Premcor's obligations under this Agreement and not exercise its remedies
under Article 14, then (i) the Non-Renewal Event shall not be an Event of
Default and (ii) Premcor shall not be obligated to increase the amount
available to be drawn under the Minimum Collateral L/C to the extent of
such Cash Collateral.
ARTICLE 9
TAXES
Premcor shall be liable for all Taxes imposed on the Crude Oil as a result
of the transfer of title to the Crude Oil from MSCG to Premcor at the Delivery
Point and after delivery to Premcor at the Delivery Point.
ARTICLE 10
INSURANCE
10.1 Premcor shall, at its sole cost and expense, carry and maintain in
full force and effect throughout the term of this Agreement insurance coverages
of the following types and amounts and with insurance companies rated not less
than A-, IX by A.M. Best, or otherwise reasonably satisfactory to MSCG in
respect of Premcor's purchase of Crude Oil cargoes under this Agreement:
(a) Property (cargo) damage coverage on an "all risk" basis in an
amount sufficient to cover the market value or potential full replacement
cost of Crude Oil cargoes to be delivered to Premcor at the Delivery Point.
(b) Comprehensive or commercial general liability coverage and umbrella
or excess liability coverage, which includes bodily injury, broad form
property damage and contractual liability, marine or charterers' liability,
Liabilities under any Environmental Laws or for any environmental damages
and "sudden and accidental pollution" liability coverage in a minimum
amount of Two Hundred Million Dollars ($200,000,000) per occurrence and
Three Hundred Million Dollars ($300,000,000) in the aggregate.
10.2 Additional Insurance Requirements.
(a) The foregoing policies shall include an endorsement that the
underwriters waive all rights of subrogation against MSCG.
(b) Premcor shall cause its insurance carriers to furnish MSCG with
insurance certificates, in a form and from a party reasonably satisfactory
to MSCG, evidencing the existence of the coverages and endorsements
required. The certificates shall specify that no insurance will be canceled
or materially changed during the term of this Agreement unless MSCG is
given written notice prior to cancellation or to a material change becoming
effective. Premcor also shall provide renewal certificates within thirty
(30) days of expiration of the policy.
20
(c) The mere purchase and existence of insurance does not reduce or
release either Party from any liability incurred or assumed under this
Agreement.
(d) Premcor shall comply with all notice and reporting requirements in
the foregoing policies and timely pay all premiums. Premcor shall provide
MSCG with copies of all current certificates of insurance for each vessel
showing that all vessels have a minimum of One Billion Dollars
($1,000,000,000) in pollution coverage.
ARTICLE 11
COMPLIANCE WITH APPLICABLE LAWS
11.1 Each Party shall, in the performance of its duties under this
Agreement, comply in all material respects with all Applicable Laws in effect on
the Closing Date and as they may be amended from time to time. Each Party shall
maintain the records required to be maintained by the Environmental Laws and
shall make such records available to the other Party upon its request.
11.2 All reports or documents rendered by either Party to the other shall,
to the best of its knowledge and belief, accurately and completely reflect the
facts about the activities and transactions to which they relate. Each Party
promptly shall notify the other if at any time it has reason to believe that the
records or documents previously furnished no longer are accurate or complete in
any material respect.
11.3 In the event of any Crude Oil spill or discharge reportable under
Applicable Laws, or other environmental pollution occurring in connection with
any transfer, delivery, transportation or receipt of Crude Oil, Premcor shall
take all steps (if any) required under Applicable Laws, including undertaking
measures to prevent or mitigate resulting pollution damage. Even if not required
by Applicable Laws, Premcor nevertheless may determine to undertake such
measures to prevent or mitigate pollution damage as it deems appropriate or
necessary or is required by any Governmental Authority. Premcor shall notify
MSCG immediately of any such operations, and shall perform such operations in
accordance with the National Contingency Plan and any other Applicable Laws, or
as may be directed by the U.S. Coast Guard or any other Governmental Authority.
11.4 In the event that either Party incurs costs to clean up or contain a
spill or discharge or to prevent or mitigate resulting pollution damage, such
Party reserves any rights provided by law to recover such costs from the other
Party, as well as any third party. In the event a third party is legally liable
for such costs and expenses, either Party shall cooperate with the other for the
purpose of obtaining reimbursement. Each Party also shall cooperate with the
party for the purpose of obtaining reimbursement from any other applicable
entity or source under Applicable Laws.
ARTICLE 12
FORCE MAJEURE
12.1 Neither Party shall be liable to the other if it is rendered unable by
an event of Force Majeure to perform in whole or in part any obligation or
condition of this Agreement, for so long as the event of Force Majeure exists
and to the extent that performance is hindered by the
21
event of Force Majeure; provided, however, that the Party unable to perform
shall use any commercially reasonable efforts to avoid or remove the event of
Force Majeure. During the period that performance by one of the Parties of a
part or whole of its obligations has been suspended by reason of an event of
Force Majeure, the other Party likewise may suspend the performance of all or a
part of its obligations to the extent that such suspension is commercially
reasonable, except for any payment and indemnification obligations.
12.2 The Party rendered unable to perform shall give notice to the other
Party within twelve (12) hours after receiving notice of the occurrence of a
Force Majeure event, including, to the extent feasible, the details and the
expected duration of the Force Majeure event and the volume of Crude Oil
affected. Such Party also shall promptly notify the other when the event of
Force Majeure is terminated.
12.3 In the event that a Party's performance is suspended due to an event
of Force Majeure in excess of thirty (30) consecutive days from the date that
notice of such event is given, and so long as such event is continuing, either
Party, in its sole discretion, may terminate this Agreement by notice to the
other, and neither Party shall have any further liability to the other in
respect of this Agreement except for the rights and remedies previously accrued
under this Agreement, including any payment and indemnification obligations by
either Party under this Agreement and the obligations under Article 15.
12.4 Premcor shall continue to be liable to pay MSCG the Supply Service Fee
(for avoidance of doubt, including the Minimum Supply Service Fee) during the
period of Force Majeure when Premcor is the affected Party.
12.5 If this Agreement is not terminated pursuant to this Article 12 or any
other provision of this Agreement, performance shall resume to the extent made
possible by the end or amelioration of the Event of Force Majeure in accordance
with the terms of this Agreement; provided, however, that the term of this
Agreement shall not be extended.
ARTICLE 13
MUTUAL REPRESENTATIONS, WARRANTIES AND COVENANTS
13.1 Each Party represents and warrants to the other Party as of the
Closing Date of this Agreement and as of the Trade Date of each sale of Crude
Oil hereunder, that:
(a) It is an "Eligible Contract Participant" as defined in Section 1a
(12) of the Commodity Exchange Act, as amended.
(b) It is a "forward contract merchant" in respect of this Agreement
and each sale of Crude Oil hereunder, and each sale of Crude Oil hereunder
is a forward contract for purposes of the United States Bankruptcy Code, 11
U.S.C. (S)(S) 101 et seq., as amended from time to time.
(c) It is duly organized and validly existing under the laws of the
jurisdiction of its organization or incorporation and in good standing
under such laws.
22
(d) It has the corporate, governmental or other legal capacity,
authority and power to execute this Agreement, to deliver this Agreement
and to perform its obligations under this Agreement, and has taken all
necessary action to authorize the foregoing.
(e) The execution, delivery and performance in the preceding paragraph
(d) do not violate or conflict with any law applicable to it, any provision
of its constitutional documents, any order or judgment of any court or
Governmental Authority applicable to it or any of its assets or any
contractual restriction binding on or affecting it or any of its assets.
(f) All governmental and other authorizations, approvals, consents,
notices and filings that are required to have been obtained or submitted by
it with respect to this Agreement have been obtained or submitted and are
in full force and effect, and all conditions of any such authorizations,
approvals, consents, notices and filings have been complied with.
(g) Its obligations under this Agreement constitute its legal, valid
and binding obligations, enforceable in accordance with its terms (subject
to applicable bankruptcy, reorganization, insolvency, moratorium or similar
laws affecting creditors' rights generally and subject, as to
enforceability, to equitable principles of general application regardless
of whether enforcement is sought in a proceeding in equity or at law and an
implied covenant of good faith and fair dealing).
(h) No Event of Default under Article 14 with respect to it has
occurred and is continuing, and no such event or circumstance would occur
as a result of its entering into or performing its obligations under this
Agreement.
(i) There is not pending or, to its knowledge, threatened against it
any action, suit or proceeding at law or in equity or before any court,
tribunal, Governmental Authority, official or any arbitrator that is likely
to affect the legality, validity or enforceability against it of this
Agreement or its ability to perform its obligations under this Agreement.
(j) It is not relying upon any representations of the other Party other
than those expressly set forth in this Agreement.
(k) It has entered into this Agreement as principal (and not as
advisor, agent, broker or in any other capacity, fiduciary or otherwise),
with a full understanding of the material terms and risks of the same, and
is capable of assuming those risks.
(l) It has made its trading and investment decisions (including their
suitability) based upon its own judgment and any advice from its advisors
as it has deemed necessary and not in reliance upon any view expressed by
the other Party.
(m) The other Party (i) is acting solely in the capacity of an
arm's-length contractual counterparty with respect to this Agreement, (ii)
is not acting as a financial advisor or fiduciary or in any similar
capacity with respect to this Agreement and (iii) has
23
not given to it any assurance or guarantee as to the expected performance
or result of this Agreement.
(n) Neither it nor any of its Affiliates has been contacted by or
negotiated with any finder, broker or other intermediary in connection with
the sale of Crude Oil hereunder who is entitled to any compensation with
respect thereto (other than brokers' fees agreed upon by the Parties).
(o) None of its directors, officers, employees or agents or those of
its Affiliates has received or will receive any commission, fee, rebate,
gift or entertainment of significant value in connection with this
Agreement.
ARTICLE 14
DEFAULT AND TERMINATION
14.1 Notwithstanding any other provision of this Agreement, an Event of
Default shall be deemed to occur when:
(a) Either Party fails to make payment when due under this Agreement,
including any Variation Margin due under Article 8, within two (2) Business
Days of a written demand therefor.
(b) Subject to Section 8.3(b), a Non-Renewal Event in respect of the
Minimum Collateral L/C.
(c) Any action by Premcor or its directors, officers, employees or
agents, in contravention of (i) its obligations under Articles 4 and 5
relating to the limitations on Premcor's authority, the Transaction
Guidelines or the Credit Guidelines or (ii) the covenant made in Section
14.4, without any notice or grace period.
(d) Other than a default described in Sections 14.1(a), (b) and (c),
either Party fails to perform any obligation or covenant to the other under
this Agreement, which is not cured to the satisfaction of the other Party
(in its sole discretion) within ten (10) Business Days from the date that
such Party receives written notice that corrective action is needed.
(e) Either Party breaches any representation or warranty made or
repeated or deemed to have been made or repeated by the Party, or any
warranty or representation proves to have been incorrect or misleading in
any material respect when made or repeated or deemed to have been made or
repeated under this Agreement; provided, however, that if such breach is
curable, such breach is not cured to the satisfaction of the other Party
(in its sole discretion) within ten (10) Business Days from the date that
such Party receives notice that corrective action is needed.
(f) Either Party defaults under any other agreement or transaction
(whether or not documented under or effected pursuant to a master
agreement) now existing or hereafter entered into between MSCG and Premcor,
including that certain Crude Oil Supply Agreement between MSCG and Premcor
dated September 13, 2002, as amended
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October 1, 2002, but excluding any agreement or transaction that
constitutes the obligation (whether present or future, contingent or
otherwise, as principal or surety or otherwise) in respect of borrowed
money and any securities repurchase or reverse repurchase agreement or
similar transaction between the Parties, which is not cured within the
applicable time period, if any.
(g) Either Party becomes Bankrupt.
14.2 Notwithstanding any other provision of this Agreement, upon the
occurrence of an Event of Default with respect to either Party (the "Defaulting
Party"), the other Party (the "Performing Party") shall in its sole discretion
be entitled to do one or more of the following: (i) suspend its performance
under this Agreement and, upon one (1) Business Day's notice to the Defaulting
Party, (ii) terminate this Agreement and designate a Termination Date (not
earlier than the date of such notice) and liquidate and close out all purchase
and sale obligations and payment obligations then outstanding between the
Parties under this Agreement in accordance with Article 14, and (iii) close out
other contracts between the Parties pursuant to Section 14.5.
14.3 If Premcor is the Defaulting Party and the Termination Date upon which
MSCG terminates this Agreement occurs within the first six (6) months of the
Initial Term, Premcor shall be liable to pay MSCG as liquidated damages (and not
as a penalty) a lump sum representing lost Minimum Supply Service Fees of One
Million Dollars ($1,000,000). If Premcor is the Defaulting Party and the
Termination Date upon which MSCG terminates this Agreement occurs within the
second six (6) months of the Initial Term, Premcor shall be liable to pay MSCG
as liquidated damages (and not as a penalty) a lump sum representing lost
Minimum Supply Service Fees in an amount equal to the lesser of (i) Five Hundred
Thousand Dollars ($500,000) and (ii) the total of the Minimum Supply Service
Fees for the portion of the second six-month period after the Termination Date.
In addition, if Premcor is the Defaulting Party, MSCG shall be entitled to treat
the full amount available for drawing under any Letter of Credit (including the
Minimum Collateral L/C) as an outstanding amount due MSCG and to draw
immediately on such Letter of Credit in full without any prior notice or demand
to Premcor.
14.4 If MSCG determines that an Event of a Default under Sections 14.1(a),
(b) or (h) by Premcor has occurred, MSCG shall instruct (i) the Terminal
Operators to cancel any Crude Oil nominations scheduled for delivery from MSCG
to Premcor and re-nominate such Crude Oil to MSCG's consignee as MSCG may direct
and (ii) the relevant Pipeline Systems that MSCG will be using Premcor's
nominated shipping capacity to ship the Crude Oil that otherwise would be sold
to Premcor pursuant to the nomination that MSCG furnishes or has furnished to
the Terminal Operators. Premcor covenants that it shall not contest MSCG's
unilateral right to enforce its remedies, and hereby expressly waives the right
to contest the exercise by MSCG of its rights, under the letters provided
pursuant to Sections 2.2(c), 2.4 and 4.1 and under this Section 14.4.
14.5 Close Out of Other Contracts Between the Parties.
(a) Upon the occurrence of an Event of Default, the Performing Party
shall, in its sole discretion and upon one (1) Business Day's notice to the
Defaulting Party, be entitled to immediately liquidate all other
outstanding contracts between the Parties
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("Other Contracts") as of a designated date ("Early Termination Date") by
closing out each such Other Contract at its market price, as determined by
the Performing Party in a commercially reasonable manner as of or close to
the Early Termination Date, and calculating an amount equal to the
difference, if any, between the market price and the price specified in
such Other Contract ("Settlement Payment"). The Performing Party then shall
be entitled to set off, net or aggregate (i) all Settlement Payments so
determined and payable by each Party to the other, (ii) all damages, losses
and expenses incurred by the Performing Party as a result of termination
and liquidation of Other Contracts, including reasonable attorneys' fees,
court costs, collection costs, interest charges and other disbursements and
any damages, losses and expenses incurred in obtaining, maintaining or
liquidating commercially reasonable xxxxxx or related trading positions
relating to the Other Contracts that are being liquidated, all as
determined in a commercially reasonable manner by the Performing Party,
(iii) all margin or collateral held by either Party to secure the
obligations of the other Party and (iv) any other amounts one Party owes
the other under Other Contracts (which unpaid amounts shall be deemed to be
held by a Party as margin to secure the other Party's obligations from time
to time incurred), whereupon all such amounts shall be aggregated or netted
to a single liquidated amount ("Other Contract Termination Payment").
(b) On the Early Termination Date or as soon as reasonably practicable
thereafter, the Performing Party shall provide the Defaulting Party with a
statement showing, in reasonable detail, the calculation of the Other
Contract Termination Payment. The Other Contract Termination Payment shall
be netted with and offset against the Final Settlement Amount due under
Article 15.
14.6 The Performing Party's rights under this Article 14 shall be in
addition to, and not in limitation or exclusion of, any other rights that it may
have (whether by agreement, operation of law or otherwise), including any rights
and remedies under the UCC. The Performing Party may enforce any of its remedies
under this Agreement successively or concurrently at its option. No delay or
failure on the part of a Performing Party to exercise any right or remedy to
which it may become entitled on account of an Event of Default shall constitute
an abandonment of any such right, and the Performing Party shall be entitled to
exercise such right or remedy at any time during the continuance of an Event of
Default. All of the remedies and other provisions of this Article 14 shall be
without prejudice and in addition to any right of setoff, recoupment,
combination of accounts, lien or other right to which any Party is at any time
otherwise entitled (whether by operation of law, in equity, under contract or
otherwise).
14.7 The Defaulting Party shall indemnify and hold harmless the Performing
Party for all Liabilities incurred as a result of the Default or in the exercise
of any remedies under this Article 14, including any damages, losses and
expenses incurred in obtaining, maintaining or liquidating commercially
reasonable xxxxxx relating to the Crude Oil sold and WTI Transactions entered
into hereunder, all as determined in a commercially reasonable manner by the
Performing Party.
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ARTICLE 15
FINAL SETTLEMENT AT TERMINATION
15.1 Upon expiration or termination of this Agreement for any reason, the
Parties promptly shall reconcile and determine all amounts owed to each other
under this Agreement (the "Final Settlement Amount"), as provided in this
Article 15. The Parties shall determine as soon as practicable whether any
executory Contracts will be assigned by MSCG to Premcor. If the terms of a
Contract permit and are satisfactory to MSCG in its sole discretion, MSCG shall
assign to Premcor its rights and obligations under any executory Contracts for
Crude Oil purchases and WTI Transactions to be effective as of the Termination
Date. If either an executory Contract is not assignable, MSCG is not satisfied
with the terms of an assignment or the Counterparty does not consent to an
assignment, then Premcor shall prepay MSCG in cash or post a Letter of Credit to
MSCG in payment for the Crude Oil to be purchased under such Contracts as part
of the Final Settlement Amount. The Parties also shall liquidate all WTI
Transactions between them. Except for executory Contracts that MSCG does not
assign to Premcor, MSCG shall not be obligated to purchase, take title to or pay
for any Crude Oil or WTI as of the Termination Date.
15.2 The Parties promptly shall exchange all information necessary to
determine the final calculations of all Crude Oil Purchase Costs, the Supply
Service Fee, Variation Margin, the amount of Collateral held by MSCG,
prepayments or Letters of Credit required in respect of any executory Contract
that will not be assigned, and any and all necessary adjustments to amounts that
are or were due one Party from the other Party since the Closing Date (whether
or not previously invoiced or paid). Unless the Parties agree otherwise, MSCG
shall prepare and provide Premcor with a statement showing the calculation of
the Final Settlement Amount within five (5) Business Days from the Termination
Date; provided, however, that if the Parties have not yet been able to determine
which executory Contracts will be assigned from MSCG to Premcor by the date that
the statement must be prepared, then all such Contracts shall be deemed to be
unassignable and Premcor shall prepay MSCG in cash or post Letters of Credit in
payment for the Crude Oil to be purchased under such Contracts as part of the
Final Settlement Amount.
15.3 The Final Settlement Amount shall equal (i) any unpaid amounts for
Crude Oil or WTI Transactions payable by Premcor to MSCG plus (ii) any amounts
that Premcor owes MSCG for the Supply Service Fee, plus (iii) any prepayments
and Letters of Credit in payment for Crude Oil under unassignable executory
Contracts minus (iv) the amount of Cash Collateral held by MSCG (including any
Variation Margin), minus (v) the amount of any prepayments that Premcor has made
to MSCG for Crude Oil purchases that are assigned to Premcor, plus or minus (vi)
any Other Contract Termination Payment under Section 14.5 (if termination is due
to an Event of Default) and (vii) plus or minus any other amounts or adjustments
that are owed one Party by the other Party under this Agreement.
15.4 The Party owing the Final Settlement Amount shall pay the other Party
within one (1) Business Day from the date that Premcor receives MSCG's statement
showing the calculation of the Final Settlement Amount and appropriate
supporting documentation. On the Termination Date, MSCG shall (i) instruct the
Terminal Operators and the Pipeline Systems that the letters provided pursuant
to Sections 2.2(c), 2.4 and 4.1, respectively, no longer are effective as of the
Termination Date, (ii) cancel any outstanding Letters of Credit (other than
Letters of
27
Credit posted by Premcor to MSCG in payment for Crude Oil to be sold under
executory Contracts that were not assigned to Premcor) and, (iii) as soon as
practicable on or after the Termination Date, return to Premcor any Collateral
that has not been applied against and in satisfaction of the Final Settlement
Amount due MSCG.
15.5 If either Party terminates this Agreement pursuant to Section 3.4, the
provisions of this Article 15 shall apply except that the time frame for
determining and paying the Final Settlement Amount shall be as follows. MSCG
shall prepare and provide Premcor with the final statement showing the
calculation of the Final Settlement Amount within two (2) Business Days from the
Termination Date specified in the early termination notice. The Party owing the
Final Settlement Amount shall pay the other Party within one (1) Business Day
from the date that Premcor receives MSCG's statement showing the calculation of
the Final Settlement Amount and appropriate supporting documentation.
ARTICLE 16
INDEMNIFICATION AND CLAIMS
16.1 To the fullest extent permitted by Applicable Laws, Premcor shall
defend, indemnify and hold harmless MSCG, its Affiliates, and their directors,
officers, employees, representatives, agents and contractors, for and against
any Liabilities, including those related to injury, disease, or death of any
person or damage to or loss of any property, that directly or indirectly arise
(i) out of Premcor's breach of any of its obligations or covenants under this
Agreement, (ii) as a result of any action, statements, representations, or
omissions by or of Premcor, or any of its directors, officers, employees,
agents, representatives or contractors unless expressly authorized by MSCG or
such action or representation is made in accordance with the Transaction
Guidelines, or (iii) if any of Premcor's representations, covenants or
warranties made herein proves to be materially incorrect or misleading when
made.
16.2 MSCG agrees to notify Premcor as soon as practicable after receiving
notice of any suit brought against it within the indemnities of this Agreement,
shall furnish Premcor with complete details within its knowledge and shall
render all reasonable assistance requested by Premcor in the defense. MSCG shall
have the right but not the duty to participate with counsel of its own
selection, at Premcor's expense, in the defense and settlement of any claim or
in any proceeding against MSCG without relieving Premcor of any obligations
hereunder. If Premcor fails to assume the defense promptly after a claim is
brought against MSCG, MSCG may conduct such defense, with all reasonable costs,
including attorneys' fees, at Premcor's expense. Premcor is not authorized to
compromise or settle any claim against MSCG without MSCG's approval.
ARTICLE 17
LIMITATION ON DAMAGES
Except for Premcor's obligations to indemnify MSCG for actual damages as
set forth in this Agreement, the Parties' liability for damages is limited to
direct, actual damages only and neither Party shall be liable for specific
performance, lost profits or other business interruption damages, or special,
consequential, incidental, punitive, exemplary or indirect damages, in tort,
contract or otherwise, of any kind, arising out of or in any way connected with
the performance,
28
the suspension of performance, the failure to perform or the termination of this
Agreement. Each Party acknowledges the duty to mitigate damages hereunder.
ARTICLE 18
AUDIT RIGHTS
During the term of this Agreement, MSCG and its duly authorized
representatives, upon reasonable notice and during normal working hours, shall
have access to the accounting records and other documents maintained by Premcor,
or any of Premcor's contractors and agents, which relate to this Agreement.
ARTICLE 19
CONFIDENTIALITY
19.1 In addition to Premcor's confidentiality obligations under the
Transaction Guidelines, the Parties agree that the specific terms and conditions
of this Agreement and any information exchanged between the Parties relating to
the fees and other amounts paid by Premcor to MSCG under this Agreement are
confidential and shall not disclose them to any third party, except (i) as may
be required by court order, Applicable Laws or a Governmental Authority or (ii)
to such Party's or its Affiliates' employees, auditors, consultants, banks,
financial advisors and legal advisors. The confidentiality obligations under
this Agreement shall survive termination of this Agreement for a period of one
(1) year following the Termination Date.
19.2 In the case of disclosure covered by subclause (i) of Section 19.1 and
if the disclosing Party's counsel advises that it is permissible to do so, the
disclosing Party shall notify the other Party in writing of any proceeding of
which it is aware which may result in disclosure, and use reasonable efforts to
prevent or limit such disclosure. The Parties shall be entitled to all remedies
available at law, or in equity, to enforce or seek relief in connection with the
confidentiality obligations contained herein.
19.3 Notwithstanding the foregoing, each Party agrees that it and its
subsidiaries and their directors, officers, employees, agents or attorneys may
disclose to any and all persons the structure and any of the tax aspects of this
Agreement transaction that are necessary to describe or support any U.S. federal
income tax benefits that may result therefrom, or any materials relating
thereto, that either Party has provided or will provide to the other Party and
its subsidiaries and their directors, officers, employees, agents or attorneys
in connection with this Agreement, except where confidentiality is reasonably
necessary to comply with Applicable Laws.
ARTICLE 20
GOVERNING LAW
20.1 This Agreement shall be governed by, construed and enforced under the
laws of the State of New York without giving effect to its conflicts of laws
principles.
20.2 EACH OF THE PARTIES HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF ANY FEDERAL COURT OF COMPETENT JURISDICTION SITUATED IN THE
00
XXXXXXX XX XXXXXXXXX, XXX XXXX, XX, IF ANY FEDERAL COURT DECLINES TO EXERCISE OR
DOES NOT HAVE JURISDICTION, IN ANY NEW YORK STATE COURT IN THE BOROUGH OF
MANHATTAN (WITHOUT RECOURSE TO ARBITRATION UNLESS BOTH PARTIES AGREE IN
WRITING), AND TO SERVICE OF PROCESS BY CERTIFIED MAIL, DELIVERED TO THE PARTY AT
THE ADDRESS INDICATED BELOW. EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION TO PERSONAL
JURISDICTION, WHETHER ON GROUNDS OF VENUE, RESIDENCE OR DOMICILE.
20.3 EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY PROCEEDINGS RELATING
TO THIS AGREEMENT.
ARTICLE 21
ASSIGNMENT
21.1 This Agreement shall inure to the benefit of and be binding upon the
Parties hereto, their respective successors and permitted assigns.
21.2 Neither Party shall assign this Agreement or its rights or interests
hereunder in whole or in part, or delegate its obligations hereunder in whole or
in part, without the express written consent of the other Party except in the
case of assignment to an Affiliate if (i) such Affiliate assumes in writing all
of the obligations of the assignor and (ii) the assignor provides the other
Party with evidence of the Affiliate's financial responsibility at least equal
to that of the assignor. Further, no consent shall be required for transfer of
an interest in this Agreement by merger provided that the transferee entity (i)
assumes in writing all of the obligations of the transferor and (ii) provides
the other Party with evidence of financial responsibility at least equal to that
of the transferor. If written consent is given for any assignment, the assignor
shall remain jointly and severally liable with the assignee for the full
performance of the assignor's obligations under this Agreement, unless the
Parties otherwise agree in writing.
21.3 Any attempted assignment in violation of this Article 21 shall be null
and void ab initio and the non-assigning Party shall have the right, without
prejudice to any other rights or remedies it may have hereunder or otherwise, to
terminate this Agreement effective immediately upon notice to the Party
attempting such assignment.
21.4 If a dispute, claim, or controversy should arise hereunder between
MSCG and any Counterparty and MSCG is unwilling to contest or litigate such
matter, the Parties shall agree to an assignment of MSCG's rights and interests
as necessary to allow Premcor to contest, litigate or resolve such matter by a
mutually acceptable alternative means that will allow Premcor to pursue the
claim.
ARTICLE 22
NOTICES
22.1 All invoices, notices, requests and other communications given
pursuant to this Agreement shall be in writing and sent by facsimile, electronic
mail or overnight courier. A notice shall be deemed to have been received when
transmitted (if confirmed by the notifying Party's transmission report), or on
the following Business Day if received after 5:00 p.m. EST, at
30
the respective Party's address set forth below and to the attention of the
person or department indicated. A Party may change its address, facsimile number
or electronic mail address by giving written notice in accordance with this
Section 22.1, which is effective upon receipt.
22.2 If to Premcor to (invoices only):
The Premcor Refining Group Inc.
0000 Xxxxxxxx Xxx.
Xxxxxxx, XX 00000
Attn: Xxxx Xxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
E-Mail: xxxx.xxxxxxx@xxxxxxx.xxx
All other notices to:
The Premcor Refining Group Inc.
0000 Xxxx Xxxxxx Xxx., Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxxxxx
Phone: (000) 000-0000
Fax (000) 000-0000
E-Mail: xxxx.xxxxxxxxxx@xxxxxxx.xxx
If to MSCG to:
Xxxxxx Xxxxxxx Capital Group Inc.
Commodities Department, 4/th/ Floor
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
E-Mail: xxxxx.xxxxxx@xxxxxxxxxxxxx.xxx
ARTICLE 23
NO WAIVER, CUMULATIVE REMEDIES
23.1 The failure of a Party hereunder to assert a right or enforce an
obligation of the other Party shall not be deemed a waiver of such right or
obligation. The waiver by any Party of a breach of any provision of, Event of
Default or Potential Event of Default under this Agreement, shall not operate or
be construed as a waiver of any other breach of that provision or as a waiver of
any breach of another provision of, Event of Default or Potential Event of
Default under this Agreement, whether of a like kind or different nature.
31
23.2 Each and every right granted to the Parties under this Agreement or
allowed it by law or equity, shall be cumulative and may be exercised from time
to time in accordance with the terms thereof and applicable law.
ARTICLE 24
NATURE OF THE TRANSACTION AND RELATIONSHIP OF PARTIES
24.1 This Agreement shall not be construed as creating a partnership,
association or joint venture between the Parties. It is understood that Premcor
is an independent contractor with complete charge of its employees and agents in
the performance of its duties hereunder, and nothing herein shall be construed
to make Premcor, or any employee or agent of Premcor, an agent or employee of
MSCG.
24.2 Except as authorized by the Transaction Guidelines, neither Party
shall have the right or authority to negotiate, conclude or execute any contract
or legal document with any third person on behalf of the other Party, to assume,
create, or incur any liability of any kind, express or implied, against or in
the name of the other Party, or to otherwise act as the representative of the
other Party, unless expressly authorized in writing by the other Party.
ARTICLE 25
MISCELLANEOUS
25.1 If any Article, Section or provision of this Agreement shall be
determined to be null and void, voidable or invalid by a court of competent
jurisdiction, then for such period that the same is void or invalid, it shall be
deemed to be deleted from this Agreement and the remaining portions of this
Agreement shall remain in full force and effect.
25.2 The terms of this Agreement constitute the entire agreement between
the Parties with respect to the matters set forth in this Agreement, and no
representations or warranties shall be implied or provisions added in the
absence of a written agreement to such effect between the Parties. This
Agreement shall not be modified or changed except by written instrument executed
by a duly authorized representative of each Party.
25.3 No promise, representation or inducement has been made by either Party
that is not embodied in this Agreement, and neither Party shall be bound by or
liable for any alleged representation, promise or inducement not so set forth.
25.4 Time is of the essence with respect to all aspects of each Party's
performance of any obligations under this Agreement.
25.5 Nothing expressed or implied in this Agreement is intended to create
any rights, obligations or benefits under this Agreement in any person other
than the Parties and their successors and permitted assigns.
25.6 All confidentiality, payment and indemnification obligations
(including the payment and indemnification obligations that arise out of
termination) shall survive the expiration or termination of this Agreement.
32
25.7 This Agreement may be executed by the Parties in separate counterparts
and initially delivered by facsimile transmission or otherwise, with original
signature pages to follow, and all such counterparts shall together constitute
one and the same instrument.
[Remainder of Page Intentionally Left Blank]
33
IN WITNESS WHEREOF, each Party hereto as caused this Agreement to be executed by
its duly authorized representative, effective as of the date first written
above.
Xxxxxx Xxxxxxx Capital Group Inc.
By: _______________________
Title: _______________________
Date: _______________________
The Premcor Refining Group Inc.
By: _______________________
Title: _______________________
Date: _______________________
Crude Oil Supply Agreement Signature Page
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