Agreement re: Chevron Aromax Process - Chevron Research Co. and South Hampton Refining Co.
AGREEMENT
Between
CHEVRON RESEARCH COMPANY
and
SOUTH HAMPTON REFINING COMPANY
Relating to
CHEVRON AROMAX PROCESS
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THIS AGREEMENT, is effective as of the Tenth day of March,
1988, between Chevron Research Company, a Delaware corporation, hereinafter
referred to as "Chevron Research", and South Hampton Refining Company, a Texas
corporation, hereinafter referred to as "South Hampton";
W I T N E S S E T H:
WHEREAS, Chevron Research has developed a new catalytic
process for converting petroleum naphtha and desires to have that new process
demonstrated in commercial operation by a licensee other than an Affiliate of
Chevron Research; and
WHEREAS, the process heretofore has only been demonstrated on
a bench and pilot plant scale and Chevron Research and South Hampton both
acknowledge that the process may not work as hoped in a refinery; and
WHEREAS South Hampton is willing to test and demonstrate the
process in an existing unit that will be converted from use as a catalytic
reforming unit and that is located at South Hampton's Silsbee, Texas, refinery
("Refinery"); and
WHEREAS, as Chevron Research's first non-affiliated licensee
and demonstrator of the new process in the United States of America, South
Hampton wishes to agree with Chevron Research on the terms and conditions for
conducting the demonstration and for licenses relating to the use of the process
in the converted unit;
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NOW, THEREFORE, for and in consideration of the premises and
the mutual covenants contained in this Agreement, the parties agree as follows:
ARTICLE 1-0 - DEFINITIONS
1.1. Whenever used in this Agreement, the following terms
shall have the meanings prescribed in Schedule "A" attached hereto and made a
part hereof: "AROMAX Process"; "AROMAX Catalyst"; "Type L zeolite"; "Patent
Rights"; "Catalyst Patent Rights"; "Technical Information"; "Subsidiary";
"Affiliate"; "Licensed Unit"; "Stock Charge"; "Barrel"; "United States";
"Procedures Manual"; and Demonstration Run".
ARTICLE 2-0 - LICENSES - Chevron Research to South Hampton
2.1. Subject to the terms and conditions of this Agreement,
Chevron Research grants to South Hampton a nonexclusive, nontransferable,
fully-paid license under Chevron Research's Patent Rights and Catalyst Patent
Rights to practice the AROMAX Process in the Licensed Unit. This license
includes the right under Chevron Research's Patent Rights to make or have made
any apparatus for South Hampton's use in practicing the AROMAX Process in the
Licensed Unit, and the right to export to,
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sell, or use in any country the products produced in the Licensed Unit when
practicing the AROMAX Process.
2.2. Nothing contained in this Agreement shall be construed as
granting any rights, express or implied, under any of Chevron Research's patents
or Patent Rights or Catalyst Patent Rights or as estopping Chevron Research from
claiming infringement of any of its patents or Patent Rights or Catalyst Patent
Rights in connection with any operation of South Hampton not conducted in the
Licensed Unit.
ARTICLE 3-0 - LICENSES - South Hampton to Chevron Research
3.1. South Hampton grants to Chevron Research and its
Subsidiaries a nonexclusive, nontransferable, royalty-free license under South
Hampton's Patent Rights and Catalyst Patent Rights to practice the AROMAX
Process in the United States and elsewhere. This license includes the right
under South Hampton's Patent Rights to make or have made any apparatus for
Chevron Research's use and/or sale to its AROMAX Process licensees for their use
in practicing the AROMAX Process; and the right to export to, sell, or use in
any country the products of such process.
3.2. South Hampton grants to Chevron Research, without
obligation to account, the nonexclusive right to grant (either directly or
indirectly through others) nonexclusive licenses
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under South Hampton's Patent Rights and Catalyst Patent Rights to Chevron
Research's other AROMAX Process licensees to use South Hampton Technical
Information, if those licensees grant back, without obligation to account, a
license under their Patent Rights and Catalyst Patent Rights inuring to South
Hampton's benefit under this Agreement.
ARTICLE 4-0 TECHNICAL INFORMATION
4.1. Upon South Hampton's request, Chevron Research's
Technical Information shall be available to South Hampton for use in the
operations of the Licensed Unit. South Hampton shall not use any Technical
Information furnished by Chevron Research in any additional processing unit
without first entering into an appropriate licensing arrangement with Chevron
Research covering such use. Except as provided by Section 5.1(7) below, such
licensing arrangement shall be under the terms and conditions then being offered
to other licensees by Chevron Research.
4.2. All Technical Information, including all data, plans,
specifications, flow sheets and drawings, furnished directly or indirectly, in
writing or otherwise, to South Hampton by Chevron Research, whether pursuant to
Article 5-0 of this Agreement or otherwise, are and shall remain Chevron
Research's property and shall be used only for the construction, erection,
alteration, maintenance, repair and operation of the Licensed
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Unit. South Hampton shall use all reasonable efforts to prevent duplication or
disclosure of all Technical Information furnished directly or indirectly, in
writing or otherwise, by Chevron Research which is confidential in nature and
has been so designated. South Hampton may furnish portions of Chevron Research's
Technical Information, to the extent necessary for South Hampton's operation of
Licensed Unit, to others who have entered into an appropriate agreement with
Chevron Research. Chevron Research shall not be unreasonable with respect to
the terms and conditions of any such agreement or with respect to the approval
or selection of any party to such agreement and Chevron Research shall not
require payment of a fee as a condition to entering into such an appropriate
agreement. South Hampton shall exercise all reasonable efforts to prevent others
from acquiring information concerning, and/or samples of, AROMAX Catalyst
acquired from Chevron Research or its nominee.
4.3. Notwithstanding any other provision in this Agreement,
South Hampton shall not, except as permitted in writing by Chevron Research,
perform or have performed any analyses or tests of any nature to determine the
structure or composition or physical-chemical characteristics of AROMAX
Catalyst whether such catalyst is new, used, or spent. However, upon request,
Chevron Research will assist South Hampton in arranging
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such analyses or tests as necessary for the purposes of metals recovery and
catalyst disposal.
4.4. Chevron Research's obligation pursuant to Section 4-1
above shall not include any obligation on the part of Chevron Research under
this Agreement to furnish or make available to South Hampton detailed
information with respect to the specific design, construction, and/or operation
of any commercial AROMAX Process plants. Any furnishing by Chevron Research to
South Hampton of such specific information for, or other services in connection
with, a commercial AROMAX Process plant shall be done pursuant to Article 5-0
of this Agreement or pursuant to agreements separate and apart from this
Agreement on terms and conditions mutually satisfactory to Chevron
Research and South Hampton.
4.5. All data, plans, specifications, flow sheets and
drawings, furnished directly or indirectly, in writing or otherwise, to South
Hampton by Chevron Research pursuant to Article 5-0 of this Agreement shall be
used by South Hampton only for the construction, erection, alteration,
maintenance, repair and operation of the Licensed Unit. Subject to Section 4.2,
South Hampton may furnish such portions of such data, plans, specifications,
flow sheets and drawings to others to the extent necessary for the construction,
erection, alteration, maintenance, repair and operation of the Licensed Unit.
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4.6. Upon Chevron Research's request, South Hampton's
Technical Information shall be available to Chevron Research. Chevron Research
agrees that it will use all reasonable efforts to prevent duplication or
disclosure to third parties, except entities having obligations of secrecy to
Chevron Research that are equivalent to the obligations of secrecy used by
Chevron Research to protect its own Technical Information, of all Technical
Information furnished, directly or indirectly, in writing or otherwise, by South
Hampton that is confidential in nature and has been so designated.
4.7. No obligation shall be imposed by this Article 4-0 upon
the recipient party with respect to the protection and use of any portion of
proprietary information which corresponds in substance to information (i) that
was developed by and in the recipient party's possession prior to receipt
hereunder of the corresponding information, (ii) that at the time of disclosure
is, or thereafter becomes through no act or failure to act by the recipient
party, published information generally known in the petroleum refining industry,
or (iii) that is furnished to the recipient party by another as a matter or
right without restriction on disclosure; provided, however, that the occurrence
of either (i) or (ii) or (iii), above, shall not be construed as granting any
rights, express or implied, under patents licensable by Chevron Research or by
South Hampton as the case may be. Such
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information shall not be deemed to be within one of the foregoing exceptions if
it is merely embraced by more general information available on a nonconfidential
basis or in the recipient party's possession. In addition, any combination of
features shall not be deemed to be within the foregoing exceptions unless the
combination itself and its principle of operation are embraced by corresponding
information which is within one of the foregoing exceptions.
ARTICLE 5-0 - TECHNICAL COOPERATION AND DEMONSTRATION
5.1. Because the Licensed Unit is the first demonstration unit
for the AROMAX Process, Chevron Research will make available to South Hampton
different services than it normally makes available to licensees of its fully
commercialized technology. Chevron Research and South Hampton agree that certain
obligations and responsibilities relating to the conversion, preparation,
startup, and operation of the Licensed Unit shall be as follows:
1. Laboratory Work
a. Chevron Research will conduct or have conducted, at its
expense, all standard laboratory tests and analyses appropriate to support the
Demonstration Run. In order to perform
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such analyses, Chevron Research may set up its own gas chromatographic
equipment at the Refinery. Test results shall be Chevron Research Technical
Information.
b. To the extent pilot plant work is necessary or appropriate,
in Chevron Research's opinion, to support the Demonstration Run, Chevron
Research will perform pilot plant tests or have them performed, at its expense.
Pilot plant results shall be Chevron Research Technical Information.
2. Engineering Support
a. Process Engineering--Chevron Research will provide, at
its expense, process engineering services required to prepare the Licensed Unit
for start-up. Those process engineering services include preparing sulfur
sorber and sulfur control catalyst reactor specifications, reviewing and
evaluating existing Refinery equipment for suitability for the Demonstration Run
and determining modifications that are necessary, preparing flow schemes for
feed and product streams of the Licensed Unit, defining the plant configuration
for the Demonstration Run, and preparing performance estimates. Chevron
Research, upon request and upon reasonable notice from South Hampton, will
prepare and furnish for South Hampton's use a Procedures Manual for the Licensed
Unit. South Hampton shall be responsible for process
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engineering evaluations relating to the operation of the debutanizer column on
the product streams from the Licensed Unit.
b. Plant Cleanup for Sulfur Removal--Chevron Research will
specify the procedures appropriate for cleaning the Licensed Unit and associated
equipment and pipes before catalyst may be loaded and the unit started up. South
Hampton will perform or have performed those cleanup procedures at its expense
and under the supervision or guidance of Chevron Research.
c. Plant operation--South Hampton will provide plant operators
at its expense. Chevron Research will station or have stationed, at its expense,
at least one engineer at the refinery during the first six weeks of the
Demonstration Run covering plant cleanup, startup, and the initial phases of
operation of the Licensed Unit. The Chevron engineer(s) will provide full shift
assistance during the two week period following startup of the Licensed Unit.
Full shift assistance will also be provided during the first regeneration of the
first charge of AROMAX Process Catalyst to the Licensed Unit. Chevron Research
will instruct South Hampton's employees at the Refinery in the operation of
Licensed Units, including reasonable training, at times mutually agreeable to
South Hampton and Chevron Research.
d. Routine operation--Chevron Research will make available
engineering assistance for normal operations and for
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emergencies from the San Francisco area or from the Port Arthur Refinery of
Chevron U.S.A. Inc., as appropriate, for the Licensed Unit during the
Demonstration Run.
3. Equipment
a. Chevron Research will provide online sulfur measurement
apparatus or equipment appropriate to monitor the sulfur content of the feed
stream to the Licensed Unit during the Demonstration Run. At the end of the
Demonstration Run, South Hampton may buy that online sulfur measurement
equipment from Chevron Research at a price to be mutually agreed, taking into
account depreciation of the equipment.
b. Except for the online sulfur measurement equipment provided
for by Section 5.1(3)(a), South Hampton will provide, at its expense, all
equipment, including but not limited to reactor vessels, sulfur sorber and
sulfur control vessels, sampling and monitoring equipment and associated piping,
sampling ports and valves, and all process control equipment, appropriate to
conduct the AROMAX Process in the Licensed Unit. South Hampton will bear the
costs of installing any equipment, including online sulfur measurement
apparatus, in the Licensed Unit.
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4. Catalysts and Sorbents
a. Sulfur Sorbent--Chevron Research will provide the first
charge of sulfur sorbent for use in the Demonstration Run. Chevron Research will
retain ownership of that first charge and upon its deactivation will be
responsible for proper disposal of it. South Hampton will provide all further
sulfur sorbent charges necessary for the operation of the Licensed Unit at its
expense.
b. Sulfur Control Catalysts--Chevron Research will provide the
first charge of each of the sulfur control catalysts to be installed for both
the cleanup phase and the Demonstration Run in the Licensed Unit. Chevron
Research shall retain all ownership rights in the catalysts, including catalyst
bases and platinum and other metals deposited on the catalyst bases, and upon
deactivation of the sulfur control catalysts will be responsible for proper
disposal of them. South Hampton will provide all further sulfur control catalyst
charges necessary for the operation of the Licensed Unit at its expense.
c. AROMAX Catalyst--Chevron Research will provide the first
charge of AROMAX Catalyst to be installed in the Licensed Unit ("First Charge").
Chevron Research shall retain all ownership rights in the First Charge,
including catalyst base and platinum and other metals deposited on the catalyst
base.
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Chevron Research expects that the First Charge will achieve a total service
life in excess of nine months from startup through use of multiple
regenerations.
From time to time during the Demonstration Run, Chevron
Research will estimate the length of the then current run of the First Charge
and the length of the run immediately following the next regeneration of the
First Charge. The total service life of the First Charge will end with the then
current run when the estimated length for the run immediately following the next
regeneration is one and one-half months or less, unless South Hampton elects to
continue to use the First Charge. In the event South Hampton elects to continue
to use the First Charge for a run that Chevron Research has estimated will be
one and one-half months or less, the total service life of the First Charge
shall end when South Hampton ceases using the First Charge.
In the event the total service life of the First Charge is
less than nine months from startup, a replacement charge of AROMAX Catalyst is
recommended, and South Hampton elects to place a replacement charge of AROMAX
Catalyst in the Licensed Unit, Chevron Research will provide one replacement
charge at no cost to South Hampton. Chevron Research shall retain all ownership
rights in the replacement charge of AROMAX Catalyst, including catalyst base and
platinum and other metals deposited on the catalyst base.
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d. Except as provided in Section 5.1(4)(c), Chevron Research
will make AROMAX Catalyst, sulfur control catalysts or sulfur sorbents available
to South Hampton pursuant to catalyst supply contracts containing Chevron
Research's standard commercial terms and conditions if South Hampton wishes to
continue practicing the AROMAX Process in the Licensed Unit or South Hampton
wishes to continue using sulfur sorbent or sulfur control catalysts after
removal of the first charge of each. Except as provided in Section 5.l(4)(c),
all costs relating to all catalyst charges after the first, including metals
recovery and disposal, will be for South Hampton's account. Upon request,
Chevron Research will assist South Hampton in locating a source of metals for
such further charges.
5. Refinery integration
a. Feeds and Utilities--South Hampton will provide all feeds
and utilities, including nitrogen gas and electrolytic hydrogen for the cleanup,
startup, and regeneration phases of the demonstration, at its expense.
b. Hydrogen--The unit being converted produces hydrogen gas
that is supplied to other units at the Refinery. During the plant cleanup and
startup phases of the demonstration, South Hampton will arrange for a hydrogen
source to supply all hydrogen requirements of its other units at the Refinery
at its expense.
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In the event of either a process failure of the AROMAX Process after startup of
the Licensed Unit so that the Licensed Unit does not produce hydrogen (a need to
regenerate AROMAX Catalyst is not a process failure) or a delay in startup
beyond two weeks after commencement of plant cleanup, such delay being caused in
Chevron Research's opinion by inadequate plant cleanup even though Chevron
Research plant cleanup instructions are followed, Chevron Research shall arrange
for hydrogen to be provided to the Refinery until the unit resumes hydrogen
production. Notwithstanding the foregoing, Chevron Research's total liability in
the event of such a process failure (a need to regenerate AROMAX Catalyst is not
a process failure) or delay, including the cost of hydrogen provided, shall not
exceed the greater of either Thirty-five Thousand Dollars ($35,000) or an amount
agreed to in writing by an officer of Chevron Research. Chevron Research shall
keep South Hampton informed of the amounts of costs applied against said total
liability of Chevron Research.
6. Visitation rights
a. At any time following execution of this Agreement, Chevron
Research may, at its election, announce to the trade that South Hampton is an
AROMAX Process licensee. South Hampton grants to Chevron Research and its
representatives, visitors, customers, and nominees the right of access to the
Licensed Unit during normal business hours for a period ending either five
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years after startup of the Licensed Unit or upon conversion of the unit to a
process other than the AROMAX Process, whichever occurs first. South Hampton may
limit such visits to a maximum of two per calendar month, may require Chevron
Research personnel to accompany any such visitors, and may require any such
visitors to enter into a secrecy agreement appropriate to protect South
Hampton's proprietary information used at the Refinery.
7. Second unit license
During the term of this Agreement, Chevron Research agrees that upon
written request by South Hampton, Chevron Research shall grant South Hampton an
AROMAX Process license so that South Hampton's 4,000 BPOD catalytic reforming
unit located at the Refinery may be a licensed AROMAX Process unit. Chevron
Research and South Hampton agree that AROMAX Process royalty rates charged to
South Hampton for that unit, whether running or fully paid royalty rates, shall
be based on Chevron Research's then current AROMAX Process royalty rates as
follows:
Royalty rate: % of then
Barrels/Calendar Day current AROMAX Process rate
-------------------- ---------------------------
0 - 1,000 0%
1,001 - 20000 50
2,001 - 3,000 75
over 3,000 100
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ARTICLE 6-0 - CHARGES AND PAYMENTS
6.1 Except as provided by Article 5-0 above, South Hampton
shall pay Chevron Research for all work and services, including pilot plant
tests (if any), performed for South Hampton pursuant to this Agreement or as
otherwise mutually agreed. South Hampton shall, within thirty (30) days after
submission of Chevron Research's invoices therefor, pay to Chevron Research
a sum equal to the cost of all work and services performed by Chevron Research
during each calendar month plus an amount to equal twenty percent (20%) of the
cost invoiced to allow Chevron Research to recover costs incurred but not
billed. Included in the determination of such cost, but not by way of
limitation, shall be: all direct expenses such as blueprints, computer usage,
engineering and drafting supplies, analytical services, postage and shipping,
telegraph, telephone, transportation and living expenses of Chevron Research's
employees while engaged in services rendered at points other than at Chevron
Research's home office or laboratories, and all similar expenses directly
incurred in connection with such work and services; the salaries or wages
allocated for the actual time of Chevron Research's employees engaged in such
work and services; and an amount in respect of Chevron Research's overhead and
indirect expenses that shall be determined as a percentage of such salaries and
wages, such percentage to be the same as that applied by Chevron
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Research for similar services being performed at the time in question by Chevron
Research for others under similar conditions and on substantially the same terms
as this agreement. All charges and payments specified herein refer to lawful
money of the United States and all payments to be made by South Hampton
hereunder shall be paid to Chevron Research at the office of Chevron Research or
by wire transfer in immediately available funds to Chevron Research's bank, each
as designated in Article 8-0 hereof.
ARTICLE 7-0 - RESPONSIBILITY AND LIABILITY
7.1 Neither party shall be liable for failures and delays in
performance due to any cause or circumstance beyond its reasonable control,
including, without thereby limiting the generality of the foregoing, any
failures or delays in performance caused by differences with workmen, lockouts,
fires, acts of God or the public enemy, riots, incendiaries, interference by
civil or military authorities, compliance with the laws of the United States or
with the orders of any governmental authority, compliance with public policy,
delays in transit or delivery on the part of transportation companies or
communication facilities, or any failure of sources of material.
7.2. Although Chevron Research represents that the work and
services performed by it under this Agreement shall be
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performed in accordance with accepted engineering standards, South Hampton
acknowledges that the AROMAX Process is not yet commercialized and that the
Licensed Unit is a scale-up demonstration and test unit. Chevron Research's
only liability, if any, respecting the Licensed Unit and/or the operation of it
and/or the Demonstration Run, including but not limited to any breach of the
foregoing representation or for any losses, damages, claims or demands of any
nature arising out of work and services provided under this Agreement, to South
Hampton and/or South Hampton's contractors and/or third parties shall be that
set forth in Section 5.l(5)(b) above. In no event shall Chevron Research be
liable for or obligated in any manner to pay any consequential or indirect
damages.
7.3. Except as provided in Article 5-0, South Hampton shall
have complete control of the construction, erection, alteration, maintenance,
repair and operation of Licensed Unit at all times.
ARTICLE 8-0 - TERM AND TERMINATION
8.1. Chevron Research's obligations to South Hampton pursuant
to Article 5-0 to perform services, make payments, or incur costs for its own
account with respect to the Demonstration Run or the Licensed Unit shall
terminate upon completion of the Demonstration Run.
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8.2. In the event of a breach of any provision of or default
in any obligation under this Agreement, including a failure or refusal by South
Hampton to make payments to Chevron Research as required by Article 6-0, unless
the breaching party fully remedies such breach with reasonable promptness under
the circumstances after the breach is called to its attention in writing by the
other party, then such other party may terminate this Agreement by giving the
breaching party written notice of termination. No such termination for breach
shall relieve the breaching party of any liability for breach incurred prior to
the effective date of said termination or from the obligation to fulfill any
payment obligation based on operations prior to said effective date of
termination. No express or implied waiver of any breach of any of the provisions
of this Agreement shall constitute a waiver of any subsequent breach of the same
or different provisions hereof. The right of termination provided in this
section is in addition to any other rights available by law, including the right
to sue for breach without terminating.
8.3. South Hampton may terminate this Agreement at any time
after the expiration of seven (7) years from the date on which the Licensed Unit
first goes on stream, by giving sixty (60) days' prior written notice to Chevron
Research. The date on which the Licensed Unit first goes on stream shall be the
startup
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date for the Demonstration Run unless otherwise agreed by Chevron Research and
South Hampton.
8.4 If there is either a process failure of the AROMAX Process
after startup of the Licensed Unit so that the Licensed Unit does not produce
hydrogen (a need to regenerate AROMAX Catalyst is not a process failure) or a
delay in startup beyond two weeks after commencement of plant cleanup, as
provided in Section 5.l(5)(b), and if Chevron Research's total liability in the
event of such a process failure or delay pursuant to Section 5.1(5)(b) is or
will be exceeded, South Hampton may, at its election, terminate either the
Demonstration Run (if started) or this Agreement by written notice to Chevron
Research.
8.5. Upon any termination of this Agreement South Hampton
shall retain its right to use Chevron Research's Technical Information in the
Licensed Unit and its rights under Chevron Research's Patent Rights and Catalyst
Patent Rights but only to the extent to which, had this Agreement not been
terminated, South Hampton would have been entitled to process Stock Charge
without payment to Chevron Research. Termination of this Agreement shall not
terminate Chevron Research's right to use and to disclose South Hampton's
Technical Information provided in Article 4-0 or Chevron Research's rights under
South Hampton's Patent Rights and Catalyst Patent Rights as provided in Article
3-0. However, the rights retained by South Hampton and
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Chevron Research after termination shall not extend to any Patent Rights or
Catalyst Patent Rights based on inventions made after the effective date of
termination or to any information developed or acquired after the effective date
of such termination.
8.6. In the event of termination, South Hampton shall not be
entitled to refunds of any amounts paid hereunder and if South Hampton has
authorized Chevron Research to perform work for South Hampton for which payment
would be due to Chevron Research, South Hampton shall pay Chevron Research an
amount for reasonable costs incurred as preparation for work authorized but not
yet performed and incurred in shutting down services then being performed.
8.7. Termination of this Agreement shall not affect either
party's right to enforce any obligation or liability accruing under this
Agreement prior to the effective date of termination. Termination of this
Agreement shall not relieve South Hampton or Chevron Research with respect to
protection and use of confidential Technical Information as provided in Article
4-0.
8.8. Unless sooner terminated as hereinabove provided, this
Agreement shall continue in full force and effect for a period of fifteen (15)
years from the effective date, on which date this Agreement shall automatically
terminate.
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ARTICLE 9-0 - GENERAL PROVISIONS
9.1 The addresses of the parties hereto are as follows:
Chevron Research: Chevron Research Company
Licensing and Catalyst Division
P.O. Box 1627
Richmond, CA 94802-0627
Copy to: Chevron Corporation
Law Department, Contracts Division
P.O. Box 7141
San Francisco, CA 94120-7141
Chevron Research's
Bank Account: Wells Fargo Bank
3900 MacDonald Avenue
Richmond, CA 94804
Account No. 4335-028510
South Hampton: South Hampton Refining Company
P.O. Box 1636
Farm Road 418
Silsbee, TX 77656
Any notice required or permitted under this Agreement, shall be personally
delivered, sent by registered mail, sent by Telex, or sent by ordinary mail.
9.2 "AROMAX Process" and "AROMAX Catalyst" are proprietary
names, and South Hampton shall not contest Chevron Research's claim of ownership
of or claim any rights or interests in the words "AROMAX Process" or AROMAX
Catalyst" and South Hampton shall make no commercial use of the words "AROMAX
Process" or "AROMAX Catalyst" as trademarks, or otherwise, unless
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such commercial use and the manner thereof have first been approved in writing
by Chevron Research.
9.3 This Agreement shall not be assignable by either party
without the prior written consent of the other party hereto, except that it may
be assigned without such consent to the successor of either party or to a
person, firm, or corporation acquiring all or substantially all of the business
and assets of such party. Nothing herein contained, however, shall be deemed to
prevent Chevron Research from assigning this Agreement to any corporation which
shall acquire all or substantially all of Chevron Research's technical
information and unexpired patents in the petroleum refining field. No assignment
of this Agreement shall be valid until and unless this Agreement shall have been
assumed by the assignee. When duly assigned in accordance with the foregoing,
this Agreement shall be binding upon and shall inure to the benefit of the
assignee.
Any assignment of this Agreement shall provide that neither
South Hampton nor Chevron Research shall be relieved of their respective
obligations with respect to the use, duplication or disclosure of data or other
information of a confidential nature as provided in Article 4-0.
No sale, lease or other disposition by South Hampton of the
Licensed Unit shall relieve South Hampton of its obligation
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with respect to the use, duplication, or disclosure of data or other information
of a confidential nature as provided in Article 4-0 above.
9.4 Except as otherwise expressly provided herein, neither
Refiner nor any director, employee or agent of Refiner or of Refiner's
subcontractors or vendors, shall give to or receive from any director, employee
or agent of Chevron or any Affiliate any gift or entertainment of significant
value or any commission, fee or rebate in connection with this Agreement. In
addition, neither Refiner nor any director, employee or agent of Refiner or of
Refiner's subcontractors or vendors, shall enter into any business arrangement
with any director, employee or agent of Chevron or any Affiliate who is not
acting as a representative of Chevron or its Affiliate without prior written
notification thereof to Chevron. Any representative authorized by Chevron may
audit any and all records of Refiner or Refiner's subcontractors or vendors for
the sole purpose of determining whether there has been compliance with this
Section 9.4.
9.5 This Agreement is executed and delivered with the
understanding that it embodies the entire agreement between the parties and that
there are no prior representations, warranties, or agreements relating thereto.
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9.6 This Agreement shall be construed and the legal relations
of the parties determined in accordance with the laws of state of California.
9.7 This Agreement shall become effective on the date first
written above upon execution by South Hampton and by Chevron Research in
California, U.S.A. No change in, addition to, or waiver of the terms and
provisions hereof shall be binding upon Chevron Research or South Hampton
unless approved in writing by their respective authorized representatives, and
no modification shall be effected by the acknowledgment or acceptance of
purchase order forms containing other or different terms and conditions.
IN WITNESS WHEREOF, the parties hereto have caused their
respective corporate names to be hereto subscribed by their respective officers
and agents thereunto duly authorized.
CHEVRON RESEARCH COMPANY
By
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Title
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Date
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SOUTH HAMPTON REFINING COMPANY
By
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Title
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Date
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Attachments: Schedule A"
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SCHEDULE "A"
DEFINITIONS
1. "AROMAX Process" shall mean a catalytic process for
converting normally liquid hydrocarbons in a Charge Stock to a normally liquid
hydrocarbon product or products, having a higher aromatic hydrocarbon content
than the Charge Stock wherein the conversion is conducted at a temperature above
555(degrees)F, and at a total pressure below 800 psi, in the presence of
hydrogen and a solid catalyst containing a Type L zeolite and at least the metal
platinum, or compounds thereof.
2. "AROMAX Catalyst" shall mean a solid catalyst containing
at least a Type L zeolite and at least the metal platinum, or compounds thereof,
for use in the practice of the AROMAX Process.
3. Type L zeolite" shall mean a crystalline alumino-silicate
as disclosed in U.S. Patent 3,216,789, Breck, et al., issued November 9, 1965.
4. Patent Rights shall mean all claims, or the equivalent of
claims (hereinafter referred to as "claims"), of all patents and published
patent applications of all countries to the extent and only to the extent that
said claims are directed primarily to the AROMAX Process (including, without
limitation, claims to apparatus for carrying out the AROMAX Process and
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<PAGE> 29
product of the AROMAX Process, but excluding claims to catalyst compositions,
methods of catalyst loading, and methods of catalyst manufacture), based on
inventions conceived prior to five (5) years after the effective date of this
Agreement, and transferable interests in or rights with respect thereto; in each
case to the extent that, and subject to the terms and conditions (including the
obligation to account to and/or make payments to others) under which, the
person, firm, or company in question now has or hereafter shall have the right
to grant licenses, immunities, or licensing rights thereunder.
5. "Catalyst Patent Rights" shall mean all claims, or the
equivalent of claims (hereinafter referred to as "claims"), of all patents and
published patent applications of all countries to the extent and only to the
extent that said claims cover the composition of the AROMAX Process Catalyst
(excluding claims directed to methods of manufacture of AROMAX Process Catalyst)
based on inventions conceived prior to five (5) years after the effective date
of this Agreement, and transferable interests in or rights with respect thereto;
in each case to the extent that, and subject to the terms and conditions
(including the obligation to account to and/or make payments to others) under
which, said person, firm, or company in question now has or hereafter shall have
the right to grant licenses, immunities, or licensing rights thereunder.
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<PAGE> 30
6. "Technical Information" shall mean improvements and
developments relating to and operating techniques necessary for the operation of
the AROMAX Process, in a stage of development suitable for commercial use,
developed prior to five (5) years after the effective date of this Agreement, to
the extent that, and subject to the terms and conditions (including the
obligation to account to and/or make payments to others) under which, the
person, firm, or company in question has the right to disclose such information
to others. Technical Information" shall not include information relating to (i)
catalyst manufacture, (ii) catalyst loading, or (iii) catalytic reforming or
similar processes other than the AROMAX Process.
7. "Subsidiary" shall mean any company in which the company in
question, directly or indirectly, shall, at the time in question, own or have
the power to exercise control of a majority of the stock having the right to
vote for the election of directors. For purposes of this Agreement, Chevron
Corporation, incorporated in the State of Delaware, U.S.A., and its
Subsidiaries, as defined above, shall be deemed to be Subsidiaries of Chevron
Research.
8. "Affiliate" shall mean any company of which the designated
company now or hereafter owns or controls, directly or indirectly, fifty percent
(50%) or more of the stock having the right to vote for the election of
directors thereof. For the purpose of this definition, the stock owned or
controlled by a
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<PAGE> 31
particular company shall be deemed to include all stock owned or controlled,
directly or indirectly, by any other company of which the particular company
owns or controls, directly or indirectly, fifty percent (50%) or more of the
stock having the right to vote for the election of directors thereof. Further,
as used in connection with Chevron Research the term "Affiliate" shall include
Chevron Corporation, a Delaware corporation, and its Affiliates, as defined
above; and Irving Oil Limited, incorporated in New Brunswick, and its one
hundred percent (100%) owned Subsidiaries.
9. "Licensed Unit" shall mean South Hampton's AROMAX Process
unit having a design capacity of 131,400 Barrels of Charge Stock per calendar
year (400 Barrels per operating day at an operating factor of 0.9) located at
South Hampton's Silsbee Texas, refinery.
10. Stock Charge" shall mean all normally liquid hydrocarbons
charged or recycled to the Licensed Unit.
11. "Barrel" shall mean forty-two (42) gallons of two hundred
thirty-one (231) cubic inches each, measured at sixty degrees Fahrenheit (60
degrees F).
12. "United States" shall mean all territory to which patents
of the United States of America apply.
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<PAGE> 32
13. "Procedures Manual" shall mean, as applicable to the
Licensed Unit: recommended start-up, shutdown, and regeneration procedures and
recommended procedures for catalyst handling.
14. "Demonstration Run" shall mean that period of time during
which the AROMAX Process is being demonstrated in the Licensed Unit, beginning
on startup of the Licensed Unit with the first charge of AROMAX Catalyst after
plant cleanup and ending either (a) on the latter to occur of nine months after
startup or completion of regeneration(s) of the first charge of AROMAX Catalyst
to the Licensed Unit or (b) as mutually agreed.
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<PAGE> 33
Revisions
First introductory paragraph: effective date inserted--March 10, 1988
Section 4.3: sentence added at the end, per 3/4/88 fax--"However upon request,
Chevron Research will assist South Hampton in arranging such analyses or
tests as necessary for the purposes of metals recovery and catalyst
disposal."
Section 5.l(4)(b), sulfur control catalysts, line 3: phrase inserted per 3/4/88
fax--"both the cleanup phase and"
Section 5.1(4)(c): entire section revised per N.N. Carter/D.V. Law telephone
discussion
Section 5.1(7), line 1: introductory phrase added for consistency with revised
5.l(4)(c) and new 8.4--"During the term of this Agreement,"
Section 6.1, line 5, "twenty (20)" changed to "thirty (30)" per 3/4/88 fax
Article 8-0, a new Section 8.4 inserted per N.N. Carter/D.V. Law telephone
discussion, remaining sections in the article renumbered
Section 9.1, in South Hampton address, "Attn:" deleted, "Farm Road 418" inserted
Schedule A, paragraph 9, design capacity inserted
<PAGE> 34
[CHEVRON RESEARCH COMPANY LETTERHEAD]
March 8, 1988
Mr. David B. Carpenter
South Hampton Refining
Company
P.O. Box 1636
Farm Road 418
Silsbee, Texas 77659
Dear Mr. Carpenter:
Duplicate execution copies of the contract between South Hampton and
Chevron Research for the Chevron AROMAX Process demonstration are
attached. Please have both copies executed for South Hampton and
return them to me. I will arrange for execution for Chevron Research
and return a fully executed copy to you for your files.
The contract has been revised to make the changes of the March 4
facsimile message from David Law to you and to respond to concerns
expressed by Mr. N. N. Carter in a telephone conversation with Mr.
Law. The revisions are outlined on the attached sheet entitled
"Revisions."
We are looking forward to beginning the demonstration.
Very truly yours,
/s/ W. J. ROSSI
Enclosure
<PAGE> 35
FACSIMILE TRANSMITTAL SHEET
[CHEVRON RESEARCH COMPANY LETTERHEAD]
TO: Mr. N. N. Carter
South Hampton Refining Company DATE April 27, 1989
Silsbee, Texas -------------------
Page 1 of 18
------ ---------
Fax: (409) 385-2453
================================================================================
Subject: Continuation of AROMAX Demonstration
Attached is a draft of our proposed agreement covering continuation of the
AROMAX demonstration at your refinery. It takes the form of an Addendum to
the first agreement, "Agreement Relating to AROMAX Process," dated March 10,
1988.
Exhibits to the Addendum will be:
o Security Agreement: covering the equipment purchased with monies
loaned by Chevron.
o Financing Statements: for State and Hardin County.
o Contract of Sale: covering conditional offtake of AROMAX product
by Chevron Chemical.
These exhibits are still under preparation, and will be forwarded as soon
as possible.
Please review the Draft Addendum and give us your comments. Note that we
have updated the costs for the modifications of the AROMAX and RHENIFORMING
units following a more detailed analysis of the requirements. The amounts
are now $297,000 and $135,000, respectively.
Regards,
/s/ W.J. ROSSI/DAVID V. LAW
End. - Draft Addendum
DVLaw:
NNCarter-1 JCWatson/BEReynolds-1
WWSmith-1 PMSpindler-1
WLStumpf-1 WEBrown-1
WKTurner-1 No Encl. CMDetz-1
WJRossi-2 DVLaw-1
LCfile-1
<PAGE> 36
ADDENDUM TO THE AGREEMENT
RELATING TO AROMAX PROCESS
SECOND COMMERCIAL DEMONSTRATION
THIS ADDENDUM, effective as of the __ day of __________, 1989, is between
Chevron Research Company, a Delaware corporation, hereinafter referred to
as "CHEVRON RESEARCH", and South Hampton Refining Company, a Texas
corporation, hereinafter referred to as "SOUTH HAMPTON";
W I T N E S S E T H:
WHEREAS, CHEVRON RESEARCH and SOUTH HAMPTON have entered into an
"Agreement Relating to AROMAX Process" effective March 10, 1988
("Agreement"), pursuant to which SOUTH HAMPTON carried out a
demonstration of the AROMAX Process using an existing unit converted to
reforming operations located at SOUTH HAMPTON's Silsbee, Texas, refinery
("Refinery") and which shall have a design capacity of 420 Barrels of
Demonstration Feed per operating day at an operating factor of 0.9 for
purposes of the Long-Term Demonstration contemplated by this ADDENDUM
("Licensed Unit"); and
WHEREAS, CHEVRON RESEARCH is interested in supporting a long-term second
commercial demonstration of the AROMAX process in Licensed
4-21-89
<PAGE> 37
Unit processing only Demonstration Feed in a multi-reactor system with
at least one full catalyst regeneration; and
WHEREAS, SOUTH HAMPTON as CHEVRON RESEARCH's first non-affiliated
licensee is willing to carry out a long-term commercial demonstration
meeting CHEVRON RESEARCH's objectives on the terms and conditions set
forth in this ADDENDUM;
NOW, THEREFORE, in consideration of the premises and covenants herein,
CHEVRON RESEARCH and SOUTH HAMPTON agree as follows:
ARTICLE 1-0 DEFINITIONS
1.1 Whenever used in this ADDENDUM, any term which has been defined in
the AGREEMENT shall have the same definition. In addition, the
following terms shall have the definitions prescribed in Schedule I
attached hereto and a part hereof: "Rheniforming Unit", "AROMAX
Equipment", "Rheniforming Equipment", "Long-Term Demonstration",
"Demonstration Feed", "Rheniforming Catalyst", "AROMAX Product",
"Support Price", and "Received Price".
Rheniforming Unit = Large Reformer
Licensed Unit = Small Reformer
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<PAGE> 38
ARTICLE 2-0 TECHNICAL ASSISTANCE
2.1 In order to support the Long-Term Demonstration of the AROMAX
Process in Licensed Unit, Licensed Unit must be modified by the
addition of AROMAX Equipment and new AROMAX Catalyst must be
installed in Licensed Unit. In addition, since Licensed Unit will not
provide the estimated hydrogen requirements for SOUTH HAMPTON's
hydrotreating operations at the Refinery, based upon SOUTH HAMPTON's
planned expansion of such operations, it will be necessary to return
the Rheniforming Unit to service. Accordingly, as part of the
Long-Term Demonstration contemplated by this ADDENDUM, the
Rheniforming Unit must be modified by the addition of Rheniforming
Equipment and new Rheniforming F Catalyst must be installed in the
Rheniforming Unit. CHEVRON RESEARCH and SOUTH HAMPTON agree that the
relative responsibilities and obligations of the parties during the
Long-Term Demonstration relating to assistance during pre-startup,
startup, and normal operations for Licensed Unit and for the
Rheniforming Unit shall be as follows:
2.1.1 (Pre-Startup) CHEVRON RESEARCH will specify the equipment
modifications required for the Long-Term Demonstration, and
will assist SOUTH HAMPTON to locate, inspect, and install
AROMAX Equipment and
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<PAGE> 39
Rheniforming Equipment. Following installation and inspection
of the AROMAX Equipment and Rheniforming Equipment, CHEVRON
RESEARCH will specify cleanup and dryout procedures to ready
Licensed Unit and the Rheniforming Unit for catalyst loading,
and will advise and assist SOUTH HAMPTON during cleanup and
dryout. CHEVRON RESEARCH will specify and supply the initial
charges of new AROMAX Catalyst, Rheniforming Catalyst, and
sorbents required for the Long-Term Demonstration and will
assist SOUTH HAMPTON during loading of such Catalysts and
sorbents. The extent of pre-startup assistance for Licensed
Unit and the Rheniforming Unit to be provided by CHEVRON
RESEARCH will be determined by CHEVRON RESEARCH as required to
carry out the Long-Term Demonstration after consultation with
SOUTH HAMPTON. SOUTH HAMPTON will be responsible for and will
carry out pre-startup of Licensed Unit and the Rheniforming
Unit. CHEVRON RESEARCH and SOUTH HAMPTON will each bear their
own expenses incurred during pre-startup of Licensed Unit and
the Rheniforming Unit. CHEVRON RESEARCH will also bear the
expense of the initial charge of AROMAX Catalyst,
Rheniforming Catalyst, and sorbents. CHEVRON RESEARCH will
perform of have performed at its expense cleanup and dryout of
Licensed Unit.
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<PAGE> 40
when requested by CHEVRON RESEARCH, SOUTH HAMPTON will at its
expense provide reasonable assistance during cleanup and
dryout of Licensed Unit.
2.1.2 (Startup) The Rheniforming Unit will be returned to service
before starting up Licensed Unit. CHEVRON RESEARCH has
previously provided startup procedures for the Rheniforming
Unit and will advise and assist SOUTH HAMPTON during startup
of the Rheniforming Unit. However, SOUTH HAMPTON will be
responsible for carrying out the startup, including the supply
of required feed and all chemicals. Following startup of the
Rheniforming Unit, SOUTH HAMPTON will startup Licensed Unit
with the advice and assistance of CHEVRON RESEARCH. Startup
procedures for Licensed Unit will be those previously
specified by CHEVRON RESEARCH for the first Demonstration Run
conducted pursuant to the Agreement unless otherwise specified
or approved by CHEVRON RESEARCH. CHEVRON RESEARCH will specify
the Demonstration Feed, the feed rate(s), and operating
conditions for Licensed Unit during startup and at all times
during the Long-Term Demonstration. The extent of startup
assistance for Licensed Unit and the Rheniforming Unit to be
provided by CHEVRON RESEARCH will be determined by
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<PAGE> 41
CHEVRON RESEARCH an required to carry out the Long-Term
Demonstration after consultation with SOUTH HAMPTON, and will
include full shift coverage during startup of Licensed Unit.
CHEVRON RESEARCH and SOUTH HAMPTON will each bear their own
expenses incurred during startup of Licensed Unit and the
Rheniforming Unit.
2.1.3 (Operation) Operations of the Rheniforming Unit will be
controlled by and will be the sole responsibility of SOUTH
HAMPTON. Rheniforming Process operations will be carried out
by SOUTH HAMPTON pursuant to the terms and conditions of the
"Agreement Relating to Rheniforming Process" dated May 16,
1978, as supplemented and amended by subsequent written
agreements entered into by CHEVRON RESEARCH and SOUTH HAMPTON.
Operations of Licensed Unit during the Long-Term Demonstration
will be controlled by and will be the sole responsibility of
SOUTH HAMPTON. SOUTH HAMPTON will operate Licensed Unit during
the Long-Term Demonstration to process only Demonstration
Feed at a feed rate(s) and under operating conditions to be
specified by CHEVRON RESEARCH.
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<PAGE> 42
ARTICLE 3-0 CATALYSTS AND SORBENTS
3.1 The initial charge of AROMAX Catalyst and sorbents for use in
Licensed Unit for the Long-Term Demonstration will be supplied by
and delivered to the Refinery by CHEVRON RESEARCH. CHEVRON RESEARCH
will retain ownership and risk of loss at all times. At the
conclusion of the Long-Term Demonstration CHEVRON RESEARCH will
assist SOUTH HAMPTON to unload AROMAX Catalyst and Sorbents and
CHEVRON RESEARCH may then use and/or dispose of the AROMAX Catalyst
and sorbents in any manner without accounting to SOUTH HAMPTON.
3.2 The initial charge of Rheniforming Catalyst, for the Rheniforming
Unit will be supplied by and delivered to the Refinery by CHEVRON
RESEARCH. Title and risk of loss will pass to SOUTH HAMPTON upon
delivery to the Refinery gate. Rheniforming Catalyst supplied
hereunder, upon transfer of title to SOUTH HAMPTON, will be deemed
subject to the terms and conditions of the "Rheniforming Catalyst
Supply Contract", dated May 6, 1978 entered into by CHEVRON RESEARCH
and SOUTH HAMPTON. Accordingly, SOUTH HAMPTON will not resell or
otherwise transfer ownership, possession, or control of any portion
of Rheniforming Catalyst without CHEVRON RESEARCH'S prior written
approval.
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<PAGE> 43
3.3 Licensed Unit presently contains Rheniforming Catalyst which will be
removed during pre-startup in order to convert to the practice of
the AROMAX Process for the Long-Term Demonstration. SOUTH HAMPTON
owns such Rheniforming Catalyst and will deliver same to CHEVRON
RESEARCH at the Refinery gate immediately upon removal. Title and
risk of loss will pass to CHEVRON RESEARCH upon such delivery.
CHEVRON RESEARCH may use and/or dispose of the Rheniforming Catalyst
acquired hereunder in any manner without accounting to SOUTH HAMPTON.
ARTICLE 4-0 LOAN AND SECURITY INTEREST
4.1 CHEVRON RESEARCH will loan to SOUTH HAMPTON up to One Hundred
Thirty-five Thousand Dollars ($135,000.00) for the sole purpose of
purchasing Rheniforming Equipment and covering the expenses of SOUTH
HAMPTON related to Rheniforming Unit cleanup as per the following
terms and conditions:
4.1.1 SOUTH HAMPTON will purchase only such Rheniforming Equipment
as has been previously approved by CHEVRON RESEARCH, which
approval will not be unreasonably withheld.
-8-
<PAGE> 44
4.1.2 CHEVRON RESEARCH will loan to SOUTH HAMPTON the purchase price
of Rheniforming Equipment delivered to the Refinery and funds
necessary to cover SOUTH HAMPTON's actual out-of-pocket
expenses related to Rheniforming Unit cleanup. However, in no
event will CHEVRON RESEARCH'S loan obligation hereunder exceed
$135,000.00.
4.1.3 CHEVRON RESEARCH will lend the purchase price as stated above
and SOUTH HAMPTON will execute and record a Security
Agreement(s) in the form attached hereto at the time of sale
to SOUTH HAMPTON of any equipment within Rheniforming
Equipment.
4.1.4 SOUTH HAMPTON will pay to CHEVRON RESEARCH the full amount
loaned to SOUTH HAMPTON hereunder by CHEVRON RESEARCH without
interest or penalty in three equal consecutive monthly
payments due on the first day of each of the first three
calendar months following the calendar month during which the
average feed rate of penhex fed to the Refinery over thirty
(30) consecutive operating days equals or exceeds 2000 Barrels
per day. The foregoing payment obligation will apply during
and/or after completion of the Long-Term Demonstration.
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<PAGE> 45
4.2 CHEVRON RESEARCH will loan to SOUTH HAMPTON up to Two Hundred
Ninety-seven Thousand Dollars ($297,000) for the sole purpose of
purchasing AROMAX Equipment as per the following terms and
conditions:
4.2.1 SOUTH HAMPTON will purchase only such AROMAX Equipment as has
been previously approved by CHEVRON RESEARCH, which approval
will not be unreasonably withheld.
4.2.2 CHEVRON RESEARCH will loan to SOUTH HAMPTON the purchase price
of AROMAX Equipment delivered to the Refinery. However, in no
event will CHEVRON RESEARCH's loan obligation hereunder exceed
the aggregate price F.O.B. the Refinery for all AROMAX
Equipment purchased by SOUTH HAMPTON or $297,000.00 whichever
is the lesser amount.
4.2.3 CHEVRON RESEARCH will lend the purchase price as stated above
and SOUTH HAMPTON will execute and record a Security
Agreement(s) in the form attached hereto at the time of sale
to SOUTH HAMPTON of any equipment within AROMAX Equipment.
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<PAGE> 46
4.2.4 SOUTH HAMPTON will pay to CHEVRON RESEARCH the full amount
loaned to SOUTH HAMPTON hereunder by CHEVRON RESEARCH without
interest or penalty in nine (9) equal consecutive monthly
payments due on the first day of each calendar month following
the first seventy-five (75) days of operations of Licensed
Unit after startup of the Long-Term Demonstration.
ARTICLE 5-0 AROMAX PRODUCT AND CONTRACT OF SALE
5.1 All AROMAX Product will be sold by SOUTH HAMPTON at the highest
available price on a monthly basis.
5.2 CHEVRON RESEARCH will arrange with its affiliated company, Chevron
Chemical Company ("CHEVRON CHEMICAL), to enter into a Contract of
Sale with SOUTH HAMPTON for AROMAX Product which SOUTH HAMPTON cannot
within a reasonable time sell to a third party purchaser. Such
Contract of Sale acceptable to CHEVRON CHEMICAL and SOUTH HAMPTON is
attached hereto.
ARTICLE 6-0 PRICE SUPPORT, CREDIT, AND REFUND
6.1 In the event that the Received Price for AROMAX Product sold during
any calendar month in which SOUTH HAMPTON has a payment obligation to
CHEVRON RESEARCH pursuant to
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<PAGE> 47
Section 4.2.4 is less than the Support Price for the same calendar
month, CHEVRON RESEARCH will grant to SOUTH HAMPTON a credit which
will be applied against SOUTH HAMPTON'S next monthly payments due
pursuant to Sections 4.1.4 and 4.2.4. The amount of such credit will
be the lesser of either the amount of the payments due to CHEVRON
RESEARCH or the arithmetic product obtained by multiplying the
number of gallons of AROMAX Product sold by SOUTH HAMPTON during the
month in question times the arithmetic difference obtained by
subtracting the Received Price from the Support Price.
6.2 Following completion of the Long-Term Demonstration or at the end
of the twelfth month of the Long-Term Demonstration, whichever
occurs first, if the Received Price averaged over such period is
equal to or greater than the Support Price averaged over such period,
within thirty (30) days of the completion of the Long-Term
Demonstration or the end of the twelfth month of the Long-Term
Demonstration as the case may be SOUTH HAMPTON will pay to CHEVRON
RESEARCH a refund in the amount of the total of all the credits taken
by SOUTH HAMPTON pursuant to Section 6.1 above.
6.3 SOUTH HAMPTON will keep, and on request provide to CHEVRON RESEARCH,
verified copies of all books and records required
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<PAGE> 48
to establish the amount of and the schedule of, any credit(s) or
payment(s) due hereunder.
ARTICLE 7-0 MISCELLANEOUS
7.1 The provisions of this ADDENDUM are in addition to the provisions in
the Agreement. This ADDENDUM is not intended to amend, modify, or
delete any right or obligation of either CHEVRON RESEARCH or SOUTH
HAMPTON under the Agreement.
7.2 This ADDENDUM upon full execution will be deemed appended to the
Agreement and will be deemed a part thereof. Any provision of the
Agreement which by reasonable interpretation relates to the conduct
of the Long-Term Demonstration will be so applied. In particular, the
provisions of Article 4-0, Article 7-0, and Article 9-0 will apply
to this ADDENDUM and the Long-Term Demonstration hereunder.
7.3 The Long-Term Demonstration will terminate when one of the following
events occurs: (1) the initial charge of AROMAX Catalyst provided
hereunder is spent and no longer regenerable, or, (2) the initial
charge of AROMAX Catalyst has produced AROMAX Product for twelve (12)
calendar months, or, (3) CHEVRON RESEARCH terminates the Long-Term
Demonstration, which it may do at its sole discretion; provided,
however,
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<PAGE> 49
that by mutual agreement of the parties the Long-Term Demonstration
may continue for an additional period(s). During any such additional
period(s) the terms of Article 5-0 of this ADDENDUM shall not apply.
7.4 Upon completion of the Long-Term Demonstration, CHEVRON RESEARCH
shall remove its AROMAX Catalyst from Licensed Unit at the earliest
reasonable opportunity.
7.5 At no time prior to, during, or after the Long-Term Demonstration
will CHEVRON RESEARCH have any responsibility or liability to supply
or compensate SOUTH HAMPTON for purchased hydrogen supplied for use
in the Refinery.
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<PAGE> 50
IN WITNESS WHEREOF, the parties hereto have caused their respective
corporate names to be subscribed hereto by the respective officers or
agents thereunto duly authorized.
CHEVRON RESEARCH COMPANY
By
-------------------------------------
Title
----------------------------------
Date
-----------------------------------
SOUTH HAMPTON REFINING COMPANY
By
------------------------------------
Title
---------------------------------
Date
----------------------------------
Attachments: Schedule I
Security Agreement
Contract of Sale
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<PAGE> 51
SCHEDULE I
1. "Rheniforming Unit" means SOUTH HAMPTON's existing 4,000-Barrel
per operating day reforming unit located at its Silsbee, Texas,
refinery. The Rheniforming Unit is presently out of service but has
operated under license from CHEVRON RESEARCH using Rheniforming F
Catalyst.
2. "AROMAX Equipment" means new and/or used equipment specified by
CHEVRON RESEARCH as additional equipment for AROMAX Process
operations in Licensed Unit necessary for the Long-Term
Demonstration.
3. "Rheniforming Equipment" means new and/or used equipment specified by
CHEVRON RESEARCH as additional equipment necessary for Rheniforming
Process operations in the Rheniforming Unit.
4. "Long-Term Demonstration" means SOUTH HAMPTON's commercial
demonstration of AROMAX Process operations in Licensed Unit on feeds
and at feed rates and under operating conditions specified by CHEVRON
RESEARCH carried out under this ADDENDUM.
I-1
<PAGE> 52
5. "Demonstration Feed" means such feed(s) to Licensed Unit as are
specified by CHEVRON RESEARCH as feed(s) to be processed during the
Long-Term Demonstration.
6. "Rheniforming Catalyst" means Rheniforming F Catalyst supplied by
CHEVRON RESEARCH.
7. "AROMAX Product" means the liquid reformate product from Licensed
Unit produced during the Long-Term Demonstration.
8. "Support Price" means the average of high and low values of the daily
estimated U.S. Gulf Coast pipeline price in cents per gallon of
regular unleaded gasoline as reported in Platts Oilgram Price Report
plus nineteen and one-half cents (19.5 cents) per gallon averaged
over a calendar month.
9. "Received Price" means the price in cents per gallon of AROMAX
Product sold by SOUTH HAMPTON and averaged over a calendar month.
I-2
<PAGE> 53
CONTRACT OF SALE
This Contract of Sale is entered into as of ________________, 1989, by
and between Chevron Chemical Company, 1301 McKinney, Houston, Texas 77253
("Buyer") and South Hampton Refining Company, P. O. Box 1636, Farm Road 418,
Silsbee, Texas 77656 ("Seller").
Seller agrees to sell and deliver and Buyer agrees to purchase and
receive the product described below in the quantities and during the period set
forth in this Contract of Sale.
1. The product to be sold and delivered hereunder is AROMAX test
debutanized reformate having the typical composition shown on Exhibit "A"
attached hereto ("AROMAX Product"). The AROMAX Product shall be produced in
Seller's AROMAX Process Unit when processing feed(s) selected by Chevron
Research Company during the long-term, second commercial demonstration of the
AROMAX Process conducted in the AROMAX Process Unit pursuant to the "Addendum to
the Agreement Relating to AROMAX Process Second Commercial Demonstration"
between Chevron Research Company and South Hampton Refining Company dated
_______________________. The typical feed composition is shown in Exhibit B,
attached hereto.
2. The quantity of AROMAX Product to be sold hereunder shall be the
total AROMAX Product output from the AROMAX Process Unit during the test run,
less any quantities sold by Seller TO others.
<PAGE> 54
3. As AROMAX Product is manufactured, Seller shall transport the
AROMAX Product that is to be sold to Buyer under this Contract by tanktruck from
Seller's refinery in Silsbee, Texas, to Seller's storage facilities in Beaumont,
Texas. Seller shall invoice Buyer for each tanktruck load delivered to said
storage facilities for purchase by Buyer and Buyer shall pay Seller for the
amount of such delivered load within thirty (30) days after the date of invoice.
AROMAX Product purchased by Buyer pursuant to this Contract shall be purchased
at the F.O.B. Beaumont price set forth below. Title to the AROMAX Product shall
pass from Seller to Buyer upon delivery of the AROMAX Product into Seller's
storage facilities at Beaumont. Said AROMAX Product shall be stored in
segregated tanks for Buyer and shall not be commingled with materials belonging
to Seller or others. No storage costs or fees shall be assessed against or
payable by Buyer.
4. The F.O.B. Beaumont price for the AROMAX Product shall be
determined as follows:
Price in cents/gallon = .99 (X(BZ)) + .95 (X(TOL))(P(TOL))
+ X(R)(P(NG)) - .13 (1 - X(R))
Where: X(BZ) = Volume fraction of Benzene
X(TOL) = Volume fraction of Toluene
X(R) = Volume fraction of Raffinate =
1 - .99 (X(BZ)) - .95 (X(TOL))
P(BZ) = Average FOB Gulf Coast Contract Benzene Price published in the
Benzene & Derivatives Newsletter published by DeWitt & Company
Incorporated for the date of the tanktruck delivery.
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<PAGE> 55
P(TOL) = Average FOB Gulf Coast Spot Commercial grade Toluene
price published in the Toluene/Xylene Newsletter
published by Dewitt & Company Incorporated for the date
of the tanktruck delivery.
P(NG) = Average Hi-Low Spot Gas Liquid Natural Gasoline price at
Mont Belvieu published in Platts' Oilgram for the date
of the tanktruck delivery.
Where the date of tanktruck delivery is a Saturday, Sunday, or
Holiday for which any of the foregoing publications does not publish the
specified price, the specified price published by the publication for the last
business day before such Holiday or Saturday/Sunday shall be used in the
calculation.
5. Seller shall deliver AROMAX Product to Buyer in Beaumont from
Seller's storage facilities in bargeload quantities unless otherwise agreed by
Buyer.
6. Notwithstanding the foregoing and despite the fact that, Seller may
have invoiced Buyer for AROMAX Product and that Buyer may have paid Seller
therefor, Seller shall have the risk of loss, including but not limited to
contamination, for all AROMAX Product invoiced to Buyer until such AROMAX
Product is delivered out of Seller's storage facilities to Buyers barge upon
Sellers downguage.
7. Each tanktruck load of AROMAX Product shall be analyzed by
acceptable gas chromatography techniques to determine the Benzene and Toluene
contents as mass fractions. The amount of such AROMAX Product transported by
tanktruck to storage shall be determined by difference (full versus empty) by
weighing on
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certified scales. The Benzene and Toluene contents of the tanktruck load shall
be determined by multiplying the weight of AROMAX Product delivered into storage
by the appropriate chromatographically determined mass fraction. Weights shall
be converted to volumes for price calculations using densities from ASTM Data
Series Publication DS4A (benzene = 7.3653 lb/gal., toluene = 7.2601 lb./gal.).
8. Buyer's obligation to purchase and Seller's right to sell pursuant
to this Contract of Sale shall apply only to AROMAX Product produced during the
long-term second commercial demonstration referred to in Paragraph 1 above. In
no event shall this Contract of Sale apply to any AROMAX Product produced more
than one year after the date of the AROMAX Process Unit startup for said
demonstration.
9. Buyer shall pay Seller, in addition to the price provided herein, an
amount equal to any tax, duty or other charge (including Superfund levies or the
like) assessed on Seller related to sales made pursuant to this Contract unless
such tax, duty, or charge is related to the storage of AROMAX Product, as
provided for above, or is measured by net income.
10. Seller warrants that at the time of delivery of AROMAX Product out
of Seller's storage facilities to Buyer Seller shall have good title thereto,
said AROMAX Product shall have been produced in Seller's AROMAX Process Unit
from feeds specified by Chevron Research Company, and said AROMAX Product shall
not have been comingled or mixed with any other materials and shall not have
been contaminated with any materials not named in Exhibit A.
-4-
<PAGE> 57
SELLER DOES NOT MAKE, AND EXPRESSLY DISCLAIMS, AND BUYER EXPRESSLY
WAIVES ANY OTHER WARRANTIES WHATSOEVER, INCLUDING (WITHOUT LIMITATION) ANY
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, REGARDLESS OF
WHETHER ORAL OR WRITTEN, EXPRESSED OR IMPLIED, OR ALLEGEDLY ARISING FROM ANY
USAGE OF ANY TRADE OR ANY COURSE OF DEALING.
11. Seller's total liability for any claim of any nature made by Buyer
or Buyer's customers after delivery of AROMAX Product out of storage to Buyer's
barges shall not exceed the purchase price of the AROMAX Product sold hereunder.
This shall also constitute Seller's maximum liability even if Buyer or Buyer's
customers mix AROMAX Product with other materials or use AROMAX Product in
specialized equipment. In no event shall Seller be liable for any lost profits
or any indirect, consequential, special, incidental, contingent or punitive
damages incurred by Buyer.
12. a. Neither party shall be in breach of its obligations hereunder
to the extent that performance is prevented, delayed or (in the sole but
reasonable judgment of the party concerned) made substantially more expensive as
a result of any of the following contingencies: (i) any cause beyond the
reasonable control of the party concerned; (ii) labor disturbance, whether or
not involving the employees of the party concerned or otherwise, and whether or
not the disturbance could be settled by acceding to the demands of a labor
group; (iii) compliance with a request or order of a person purporting to act on
behalf of any government or governmental department or
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<PAGE> 58
agency (including but not limited to EPA, OSHA, etc.); or (iv) shortage in raw
material, transportation, or power.
b. performance will be excused as provided above even though the
occurrence of the contingency in question may have been foreseen or foreseeable
at the time of contracting or subsequently become foreseeable, so long as such
occurrence is not definite or specific at the time of contracting.
c. Quantities not purchased or sold due to the provisions of this
Section need not be made up later.
d. Nothing in this Section shall excuse Buyer from its obligations to
make payments when due.
13. a. This Contract, integrates the entire understanding between the
parties with respect to the subject matter covered. It supersedes all prior
understandings, drafts, discussions or statements, whether oral or in writing,
expressed or implied, dealing with the same subject matter. It may not be
amended or modified in any manner except by a written agreement signed by both
parties which expressly amends this Contract.
b. No rights or obligations under this Contract may be assigned without
the prior written consent of the other party.
c. Any questions concerning the interpretation and enforcement of this
Contract shall be governed by the internal laws of the State of Texas.
d. Neither party shall give any director, employee or representative of
the other party any commission, fee, rebate, gift or entertainment of
significant cost or value in connection with this Contract, or enter into any
other business arrangement with any director, employee or representative of the
other,
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<PAGE> 59
without prior written notification to the other party. Any representative(s)
authorized by either party may cause an audit of any and all records of the
other party as necessary and proper to verify that there has been compliance
with this paragraph.
e. Notices given hereunder are effective when sent by telex or received
by mail.
The agreement of the parties is shown by the signatures of their authorized
representatives below.
CHEVRON CHEMICAL COMPANY
By:
-------------------------------------
Title:
----------------------------------
Date:
-----------------------------------
SOUTH HAMPTON REFINING COMPANY
By:
-------------------------------------
Title:
----------------------------------
Date:
-----------------------------------
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<PAGE> 60
EXHIBIT A
EXPECTED C5+ RECOVERED PRODUCT COMPOSITION
ISOHEXANE FEED
SOUTH HAMPTON AROMAX
Composition, LV %
iC5 9.0
nC5 10.1
CP 0.1
Benzene 44.2 (41.0 -- 46.0)
2-2 DMB 2.3
2-3 DMB 9.1
2-MP 10.6
3-MP 7.4
N-C6 5.3
MCP 1.9
<PAGE> 61
EXHIBIT B
ISOHEXANE FEED COMPOSITION
SOUTH HAMPTON AROMAX
Composition, LV %
iC5 1.0
nC5 2.2
CP 10.5 (Max.)
2-2 DMB 2.3
2-3 DMB 12.1
2-MP 54.0 (Min.)
3-MP 16.1 (Min.)
N-C6 1.5
MCP 0.1
C7+ 0.2
<PAGE> 62
(CONOCO LOGO)
[CONOCO LETTERHEAD]
October 7, 1988
Dr. Richard Crain
South Hampton Refining Company
P.O. Box 1636
Silsbee, TX 77656
Dear Dick:
Attached is two copies of the Processing Agreement. Please fill in the date and
the state in which South Hampton is incorporated on the front page of the
agreement and sign. Forward one copy back to me at Conoco.
With this agreement in place and Conoco Treasury's approval of the Letter of
Credit, we will wire you the 85,000 dollars to begin construction of the unit.
I am optimistic for the mutual success of this processing deal and look forward
to working with you and South Hampton Refining. If you have any questions,
please let me know.
Sincerely,
/s/ MICHAEL R. MITCHAEL
-------------------------------
Michael R. Mitchael
/ng
Attachments
10
<PAGE> 63
SOUTH HAMPTON REFINING CO.
PROCESSING AGREEMENT
THIS AGREEMENT is entered into this 11 day of October 1988, by and between
CONOCO INC., a Delaware corporation (hereinafter referred to as "Conoco"), whose
address is P.O. Box 2197, Houston, Texas 77252, and SOUTH HAMPTON REFINING CO.,
a Texas corporation (hereinafter referred to as "South Hampton"), whose address
is P.O. Box 1636, Silsbee, Texas 77656.
WITNESSETH:
WHEREAS, South Hampton has the ability to process LVT(R) oil for Conoco at South
Hampton's Silsbee, Texas plant ("Plant"); and
WHEREAS, Conoco desires to have its LVT(R) oil ("Feedstock") processed through
processing equipment constructed by South Hampton at its Plant;
NOW, THEREFORE, for and in consideration of the mutual covenants and promises
set forth herein, the parties hereto agree as follows:
<PAGE> 64
1. TERM OF AGREEMENT
This Agreement shall have a primary term of one year beginning on
October 10, 1988, or on the date that the Letter of Credit described in
Section 3.2 is issued, whichever is later ("Commencement Date"), and
continuing from month to month thereafter unless cancelled by either
party by giving the other party sixty (60) days prior written notice.
2. FEEDSTOCK
2.1 The Feedstock to be processed by South Hampton shall be LVT(R)
oil, having the typical specifications set forth in Exhibit A,
attached hereto and made a part hereof.
2.2 Conoco, at its sole expense, shall supply and deliver
Feedstock to South Hampton's Plant from Conoco's Lake Charles
Refinery by tank truck.
2.3 Over the term of this Agreement, Conoco agrees to deliver to
South Hampton a minimum of 72,000 barrels of Feedstock for
processing the first six (6) months, and 55,000 barrels the
second six (6) months. Any light stream material which is
rerun for saturation shall be counted in these amounts.
2.4 South Hampton shall provide a clean 10,000-barrel tank
dedicated to Conoco's exclusive use for bulk storage of the
Feedstock prior to processing.
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2.5 South Hampton will sample and test the Feedstock in tankage at
its Plant once every twenty-four (24) hours while receiving
Feedstock to determine that its sulfur and ASTM D-86 End Point
meet the specifications described in Exhibit A. South Hampton
must notify Conoco within two (2) working days after delivery
of any off specification Feedstock. If Conoco receives no
notice during the two (2) working day period, then the
Feedstock will be deemed to meet the specifications on Exhibit
A. A laboratory analytical report will be forwarded to Conoco
on all Feedstock each week. An independent laboratory analysis
shall be used to resolve any discrepancies between Conoco and
South Hampton concerning the specifications of the Feedstock.
2.6 The amount of Feedstock received shall be determined by South
Hampton scale tickets showing the difference between the
certified full weight and the certified empty weight of the
tank trucks.
3. PROCESSING FACILITY
3.1 South Hampton shall construct a process facility for the
processing of Conoco's Feedstock ("Facility") at South
Hampton's Plant. In consideration for the
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<PAGE> 66
Construction Funding ($85,000) supplied by Conoco as set forth
in Section 3.2 below, South Hampton will not use the Facility
for any purpose which will interfere with the processing of
Conoco's Feedstock nor will it sell, dismantle, relocate or in
any other manner decommission the Facility, during the term of
this Agreement.
3.2 Conoco agrees to pay to South Hampton on the Commencement Date
of this Agreement Construction Funding ($85,000) to be used by
South Hampton to finance the construction of the Facility.
South Hampton agrees to refund this amount to Conoco from the
fees for the first 30,000 barrels of Feedstock that are
processed, by subtracting the maximum Construction Funding
($85,000) from the invoices associated with the first 30,000
barrels of Feed-stock processed. South Hampton agrees to issue
an Irrevocable Standby Letter of Credit covering the
Construction Funding ($85,000) until the obligation to Conoco
is paid in full. Conoco agrees to maintain the U.S. dollar
value of the Letter of Credit in an amount equal to the
unrefunded portion of the Construction Funding. The Letter of
Credit must be issued by a bank acceptable to Conoco.
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3.3 South Hampton agrees to make best efforts to have the Facility
operational and capable of processing Feedstock into two (2)
streams as described in Section 4 below (collectively
"Operational") within five (5) weeks from the Commencement Date
of this Agreement. If the Facility is not Operational within
eight (8) weeks after the Commencement Date, or ceases to be
Operational at any time for longer than thirty (30) days
despite repair efforts by South Hampton, Conoco, at its sole
option, may terminate this Agreement with no further liability
hereunder or may extend the time for the Facility to be
Operational to a date acceptable to both parties. If Conoco
elects to terminate the Agreement prior to the Construction
Funding being totally refunded, South Hampton shall immediately
refund to Conoco the unrefunded portion of the Construction
Funding provided by Conoco to South Hampton under this
Agreement.
3.4 South Hampton agrees to manufacture under and keep records of
statistical process control. South Hampton shall make all such
records available to Conoco upon request.
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4. FINISHED PRODUCTS
4.1 South Hampton shall process Feedstock into two separate
streams: a light stream and a heavy stream (LVT200(R) oil)
(collectively "Products"). The LVT200(R) oil shall meet the
specifications set forth in Exhibit B, which is attached
hereto and made a part hereof. For every gallon of Feedstock
received by South Hampton, South Hampton shall return
ninety-nine (99) liquid volume percent Products.
4.2 South Hampton can control the following items of Exhibit B of
the Agreement: (a) IBP, (b) Wt. % Aromatics, (c) P-M Flash,
Deg. F. Minimum, and (d) ppm Sulfur. All other items, i.e., (a)
EP, (b) API Gravity, and (c) nitrogen content, are functions of
the Feedstock and cannot be controlled by South Hampton.
5. SAMPLING AND ANALYSIS
5.1 South Hampton will sample and conduct laboratory analysis in
its own laboratory for each batch of the Products manufactured
hereunder to determine if they meet the specifications set
forth in Exhibit B.
5.2 Once each month, South Hampton, at its sole expense, shall
arrange for verification of its analysis of a random sample of
the Products by an independent laboratory.
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<PAGE> 69
5.3 South Hampton shall provide Conoco with a weekly laboratory
analytical report on all Products manufactured.
5.4 All off specification Products shall be rerun through the
process at South Hampton's expense.
6. STORAGE/DELIVERY
6.1 South Hampton shall store the Products in clean segregated
tankage, not commingled with any product not owned by Conoco,
until release to Conoco customers as scheduled by Conoco. Such
storage shall be appropriate for loading of Products into rail
cars or tank trucks.
6.2 Each week South Hampton shall forward to Conoco's Sales
Manager, Wax and Specialty Products, North American Marketing,
a report of inventory of Products in storage.
6.3 South Hampton agrees to keep confidential any Conoco customer
information which it receives from Conoco because of the direct
shipment of Products from South Hampton's Plant to Conoco
customers.
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<PAGE> 70
7. FEES
7.1 Conoco shall pay South Hampton a fee for all of the services
performed hereunder on a cents-per-gallon of Feedstock
processed basis, according to the following schedule:
Gallons of Feedstock Processed Fee per Gallon Processed
------------------------------ ------------------------
0-50,000 Barrels* $0.18
50,001+ Barrels* $0.16
*One Barrel Equals 42 U.S. Standard Gallons.
The aforesaid fees are based on Feedstock containing eighteen
(18) volume percent aromatics. For each volume percent of
aromatics over eighteen (18) percent in the LVT200 stream
prior to entering the hydrogen treater (raw LVT200), Conoco
shall pay an additional fee of $0.004375 per gallon. For each
volume percent of aromatics below eighteen (18) in the raw
LVT200, the fee paid by Conoco shall be less by $0.004375 per
gallon. Such fee adjustment will be calculated at the end of
each month, based upon the average of recorded tests made
twice each day by South Hampton on the raw LVT200.
7.2 In addition to the fees stated in Section 7.1 above, for each
volume percent yield of LVT200(R) comprising over fifty (50)
percent of the Feedstock, an additional $0.0015 per gallon
shall be
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<PAGE> 71
added to the fee on volumes of Feedstock yielding over fifty
(50) percent LVT200(R). Likewise, for each volume percent
yield of LVT200(R) under fifty (50) percent of the Feedstock,
$0.0015 per gallon shall be subtracted from the fee on volumes
of Feedstock yielding under fifty (50) percent LVT200(R). Such
fee adjustment shall be calculated at the end of each month
based on the actual yield results.
7.3 The process fee for 0-50,000 barrels of Feedstock processed
shall never be lower than $0.15 per gallon of Feedstock
processed; and for 50,001+ barrels of Feedstock processed,
never lower than $0.13 per gallon of Feedstock processed.
7.4 Included in this fee is South Hampton's profit and other costs
including, without limitation, insurance, storage space, labor
and overhead, all Federal, State, and local excise taxes, and
any other charges assessed by or to South Hampton in the
performance of this Agreement.
8. PAYMENT
8.1 South Hampton shall invoice Conoco semi-monthly (first and
fifteenth) at the appropriate rate based on past volume of
Feedstock processed as of the
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<PAGE> 72
invoice date. Conoco shall pay each invoice by check upon
receipt.
8.2 On the date of this Agreement, there is in effect between
Conoco and South Hampton a Promissory Note dated September 23,
1988 covering the repayment of a debt owed to Conoco by South
Hampton. In the event of South Hampton's default under said
Promissory Note, South Hampton agrees that Conoco may offset
against the fees due to South Hampton under this Agreement, any
amounts which are or become due and payable under said
Promissory Note, until said Promissory Note is fully paid.
9. TITLE
9.1 Title to all Feedstock delivered to South Hampton and all
Products manufactured therefrom shall remain in Conoco. South
Hampton shall at all times be responsible for Conoco's property
in its care, custody, and control, and shall reimburse Conoco
for any unaccounted for loss of property (excluding loss
allowance if applicable), contamination or damage thereto.
9.2 At Conoco's request, South Hampton will execute any document
which shows title as referenced herein to be in Conoco,
including, but not limited to a UCC-1 form.
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10. LOSS AND DAMAGE
10.1 South Hampton shall be responsible for any loss of, or damage
to Conoco property, as set forth in Section 9 hereof, within
its possession. South Hampton will take title to and be
responsible for legally disposing of any contaminated Feedstock
or Products or any off specification Products which cannot be
rerun pursuant to Section 5.4 above, which occurred while the
Feedstock or Products were in South Hampton's care.
10.2 Reimbursement for loss or contamination of Feedstock shall
be at Conoco's Gulf Coast jet fuel price posted in Platt's
Oilgram, plus freight from Lake Charles to South Hampton's
Plant. Reimbursement for loss or contamination of Products or
for any off specification Product which cannot be rerun shall
be at Conoco's cost as stated in the previous sentence, plus
any fees paid to South Hampton pursuant to Section 7 hereof.
Conoco will invoice South Hampton for any losses within sixty
(60) days after determination of the loss or contamination.
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11. INDEMNITY
11.1 South Hampton hereby agrees to indemnify, defend, and save
Conoco, and its officers, directors, and employees, harmless
from any and all loss or liability, including legal expenses,
arising out of any claim or cause of action for loss, loss of
use of or damage to property or natural resources, personal
injuries, violation of any governmental laws, or patent or
trademark infringement caused by or arising in any manner from
South Hampton's operations or ownership of its Plant and the
Facility and performance of the services under this Agreement.
11.2 Conoco hereby agrees to indemnify, defend, and save South
Hampton, and its officers, directors, and employees, harmless
from any and all loss or liability including legal expense
arising out of any claim or cause of action for loss, loss of
use of, or damage to property or natural resources, personal
injuries, violation of any governmental laws, or patent or
trademark infringement caused by or arising in any manner from
Conoco's sale or use of the Products produced under this
Agreement, except to the extent caused by South Hampton's sole
negligence.
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<PAGE> 75
12. INSURANCE
South Hampton shall maintain in full force and effect the following
forms and amounts of insurance and shall furnish to Conoco current
certificates evidencing the insurance maintained. Such certificates
must provide for not less than ten (10) days' prior written notice to
Conoco in the event of cancellation or material change affecting
Conoco's interests. The insurance requirements below are Conoco's
minimum requirements and shall not be considered indicative of the
ultimate amounts and types of insurance needed by South Hampton.
Neither failure to comply nor full compliance with the insurance
provisions of this Agreement shall limit or relieve South Hampton from
indemnifying and holding Conoco harmless in compliance with the
provisions of this Agreement.
a. Worker's Compensation Insurance covering all employees in
accordance with the statutory requirements of the state in which
the services hereunder are rendered.
b. Employer's Liability Insurance in an amount not less than
$1,000,000 per occurrence.
c. Comprehensive General Liability insurance, including Product
Liability, completed operations, blanket contractual, contractors
protection, with a
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<PAGE> 76
combined single limit for bodily injury and property damage of not
less than $1,000,000 per occurrence.
d. Named Peril Property Insurance of not less than $1,000,000 per
occurrence to cover the loss of Conoco's Feedstock and Products in
South Hampton's care, custody, and control. Such coverage shall
name Conoco as an additional named insured and loss payee with
respect to Conoco's interest.
13. FORCE MAJEURE
Neither party hereto shall be responsible or liable for failure to
perform its obligations under this Agreement or losses resulting from
any such failure to perform, or failure to make delivery, if prevented
from doing so by acts of God, floods, fires, explosions, storms,
vandalism, transportation difficulties, inability to obtain the
necessary supplies or other required raw materials, strikes, lockouts,
or other industrial disturbances, wars, or any law, rule, or action of
any court or instrumentality of the federal, state or local government,
or any other cause or causes beyond its reasonable control whether
similar or dissimilar to those above stated, provided only that the same
is not willfully done or brought about for the purpose of excusing
failure or omission to perform under this Agreement. In
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<PAGE> 77
the event either party hereto is rendered unable to perform in whole or
in part, such party shall give notice in writing to the other party of
the full particulars of such force majeure as soon as possible after
the occurrence of such cause relied on, and the obligation of such
party to perform under this Agreement shall be suspended during the
continuance of any inability so caused, but no longer period, and such
cause shall insofar as possible be remedied with all reasonable
dispatch. If any of the events specified in this paragraph shall have
occurred, South Hampton shall allocate its available services to the
extent it is capable in a fair and equitable manner among its own needs
and its customers.
14. INSPECTION AND AUDIT
Conoco reserves the right to inspect South Hampton's Facility, Plant
and operations or audit South Hampton's business records pertaining to
South Hampton's performance of the terms and conditions of this
Agreement, at any time during South Hampton's operating hours, by
giving reasonable notice of its intent to do so and by doing so in a
manner which will not interfere with South Hampton's normal business
routine.
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15. TERMINATION
15.1 If any provision of this Agreement is or becomes violate of
any law, or any rule, order, or regulation issued thereunder,
either party shall have the right, upon notice to the other to
terminate such provision, without affecting other provisions
of the Agreement, or to terminate the Agreement in its
entirety.
15.2 In the event of the failure of South Hampton to perform any of
its obligations hereunder, and the continuance of such failure
after fifteen (15) days' written notice from Conoco, Conoco may
terminate this Agreement upon written notice to South Hampton.
In the event of insolvency, assignment for the benefit of
creditors, or impending bankruptcy proceedings by or against
South Hampton, Conoco may, at its option, terminate this
Agreement upon written notice to South Hampton. South Hampton
hereby agrees to give Conoco prompt written notice of the
occurrence of the aforesaid events. Termination of this
Agreement in accordance with this Paragraph shall not affect
any obligations accruing hereunder prior to such termination,
including, but not limited to, South Hampton's obligations
under Section 11 (Indemnity). Addi-
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tionally, should Conoco terminate this Agreement due to South Hampton's
failure to perform any of its obligations hereunder, South Hampton
shall immediately refund to Conoco the unrefunded portion of the
Construction Funding provided by Conoco to South Hampton under Section
3.2 of this Agreement.
15.3 In the event of the failure of Conoco to perform any of its obligations
hereunder, and the continuance of such failure after fifteen (15) days'
written notice from South Hampton, South Hampton may terminate this
Agreement upon written notice to Conoco. In the event of insolvency,
assignment for the benefit of creditors, or impending bankruptcy
proceedings by or against Conoco, South Hampton may, at its option,
terminate this Agreement by written notice to Conoco. Conoco hereby
agrees to give South Hampton prompt written notice of the occurrence of
the aforesaid events. Termination of this Agreement in accordance with
this Paragraph shall not affect any obligations accruing hereunder
prior to such termination, including, but not limited to, Conoco's
obligations under Paragraph 11 (Indemnity). Additionally, should South
Hampton terminate this Agreement due to Conoco's failure to perform any
of its obligations hereunder, the unrefunded
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portion of the Construction Funding provided by Conoco under Section
3.2 will be forfeited to South Hampton.
16. ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns; provided,
however, neither party may assign this Agreement without the prior
written consent of the other party.
17. NOTICES
All notices required to be given hereunder shall be in writing, by
telegram, air express service or by certified mail; and shall be
addressed as follows:
CONOCO: Conoco Inc.
P.O. Box 2197, TA 2108
Houston, Texas 77252
Attention: Michael R. Mitchael
SOUTH HAMPTON: South Hampton Refining Co.
P.O. Box 1636
Silsbee, Texas 77656
Attention: Richard N. Cram
18. WAIVER
The failure of either South Hampton or Conoco to enforce at any time
any provisions of this Agreement shall not be construed to be a waiver
of those provisions or the right thereafter to enforce any such
provisions.
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19. SAFETY AND HEALTH INFORMATION
Conoco has furnished to South Hampton information (including Material
Safety Data Sheet(s)) concerning the safety and health aspects of the
Feedstock and Products handled by South Hampton hereunder, including
safety and health warnings. South Hampton acknowledges receipt of such
information and agrees to communicate such warnings and information to
South Hampton's employees, agents and contractors.
20. RELATIONSHIP OF THE PARTIES
20.1 Conoco and South Hampton are completely separate entities. They
are not partners, general partners, limited partners, joint
venturers, nor agents of each other in any sense whatsoever and
neither has the power to obligate or bind the other.
20.2 South Hampton is an independent contractor and shall be solely
responsible at all times for the safe and prudent operation and
maintenance of its Plant and the Facility. South Hampton shall
always be, and Conoco shall never be, in charge of all
equipment, including the Facility owned by South Hampton,
direction of all employees and other persons who may be on
South Hampton's premises at any time. Conoco, its employees,
and agents shall
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always abide by instruction and direction of South Hampton while on
South Hampton's premises. South Hampton shall take all necessary
precautions including adoption of and compliance with all reasonable
and customary fire prevention and safety measures to avoid property
damage and bodily injury.
20.3 If for United States tax purposes operations hereunder are regarded as
a partnership, each of the parties elects to be excluded from the
application of all of the provisions of Subchapter K, Chapter 1,
Subtitle A, of the Internal Revenue Code of 1986 as amended, as
permitted and authorized by Section 761 of the Code and regulations
thereunder. Each party will provide such evidence of this election as
may be required by law.
Should there by any requirement that each party further evidence such
election, such party shall execute such documents and furnish such
other evidence as may be required to evidence such election. Each party
shall not give any notices or take any other action inconsistent with
the election made hereby. If any present or future income tax laws of
the state or states which are applicable to the transactions of this
Agreement, or any
20
<PAGE> 83
future income tax law of the United States, shall contain a provision
similar to that in Section 761 of the Internal Revenue Code of 1986, as
amended, each party shall make such election as may be permitted or
required by such law.
In making such election, each party states that income or loss derived
by such party from operations under this Agreement can be adequately
determined without the computation of partnership taxable income or
loss.
21. GOVERNING LAW
This Agreement shall be governed by and interpreted according to the
laws of the State of Texas.
22. ENTIRE AGREEMENT
This Agreement constitutes and embodies the entire agreement and
understanding between South Hampton and Conoco. There are no
agreements, understandings or conditions, oral or written, express or
implied, that are not included herein. No alteration or amendment of
this Agreement shall be effective unless it is in writing and signed by
South Hampton and Conoco.
21
<PAGE> 84
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.
CONOCO INC. SOUTH HAMPTON REFINING CO.
By: /s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
----------------------------- -----------------------------
Title: Sales Manager - WAX Title:
-------------------------- --------------------------
and Specialties - NAM
--------------------------
22
<PAGE> 85
EXHIBIT A
TYPICAL FEED SPECIFICATIONS
D-86, (degrees)F
IBP 374
5% 384
50% 419
95% 495
EP 523
API Gravity 41.6
WT% Aromatics 17.8 20 Max
ppm Sulfur 1 ppm or less
P-M Flash, (degrees)F Min --
Nitrogen, Total ppm 3
Viscosity @ 40(degrees) 2.1
23
<PAGE> 86
EXHIBIT B
PRODUCT SPECIFICATIONS
HEAVY (LVT200(R)
D-86, (degrees)F
IBP 427*
5% 440
50% 459
95% 525
EP 545
API Gravity 41.2*
WT% Aromatics Less than 1
ppm Sulfur 1 ppm or less
P-M Flash, (degrees)F Min 200 to 210
Nitrogen, Total ppm Less than .5
*Reported only, not a final specification.
24
<PAGE> 87
Conoco Inc. REQUEST FOR FACSIMILE
[CONOCO LOGO] TRANSMISSION
-------------------------
Date
5-12-89
-------------------------
FROM
--------------------------------------------------------------------------------
Employee Ext.
Mike R. Mitchell 1542
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City, State, Country Room No.
Houston, Texas 2108
--------------------------------------------------------------------------------
Acct No.
--------------------------------------------------------------------------------
TO
--------------------------------------------------------------------------------
Name Phone No.
Dick Croin
--------------------------------------------------------------------------------
Department Room No.
SHR
--------------------------------------------------------------------------------
City, State, Country
--------------------------------------------------------------------------------
-------------------------
No. of Pages
21 + cover
-------------------------
NOTE
1. Your originals must have good contrast (dark detail on light background).
2. Legible
3. 1/2-inch margin on all sides of sheet
4. Number all pages
SPECIAL INSTRUCTIONS
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--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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11-11 PB. 10-86
<PAGE> 88
SOUTH HAMPTON REFINING CO.
PROCESSING AGREEMENT
THIS AGREEMENT is entered into this __ day of __________, 1989, by and between
CONOCO INC., a DELAWARE corporation (hereinafter referred to as "Conoco"), whose
address is P.O. Box 4784, Houston, Texas 77210-4784, and SOUTH HAMPTON REFINING
CO., a Texas corporation (hereinafter referred to as "South Hampton"), whose
address is P.O. Box 1636, Silsbee, Texas 77656.
WITNESSETH:
WHEREAS, South Hampton has the ability to process Catalytic Polymerization
Gasoline ("Feedstock") for Conoco at South Hampton's Silsbee, Texas plant
("Plant"); and
WHEREAS, Conoco desires to have its Feedstock processed through processing
equipment constructed by South Hampton at its Plant;
NOW, THEREFORE, for and in consideration of the mutual covenants and promises
set forth herein, the parties hereto agree as follows:
<PAGE> 89
1. TERM OF AGREEMENT
This Agreement shall be for a primary term of one (1) year, commencing
on _____________, 1989 ("Commencement Date"), and shall automatically
continue thereafter until cancelled by either party by giving the other
party six (6) months written notice after the end of the primary term
or at any time thereafter.
2. FEEDSTOCK
2.1 The Feedstock to be processed by South Hampton shall be
Catalytic Polymerization Gasoline, having the typical
specifications set forth in Exhibit A, attached hereto and
made a part hereof.
2.2 Conoco, at its sole expense, shall supply and deliver
Feedstock to South Hampton's Plant from Conoco's Refinery at
an average minimum rate of 500 barrels per day for the first
six (6) months of this Agreement, and at an average minimum
rate of 250 barrels per day for the remainder of the Agreement
term.
2.3 South Hampton shall provide a clean 25,000-barrel tank and a
clean 10,000-barrel tank dedicated to Conoco's exclusive use
for bulk storage of the Feedstock prior to processing.
2
<PAGE> 90
2.4 South Hampton will, sample and test the Feedstock in tankage
at its Plant once every twenty-four (24) hours while receiving
Feedstock to determine its sulfur and distillation
characteristics and to verify that it meets the specifications
described in Exhibit A. South Hampton must notify Conoco
within two (2) working days after delivery of any off
specification Feedstock. If Conoco receives no notice during
the two (2) working day period, then the Feedstock will be
deemed to meet the specifications on Exhibit A. A laboratory
analytical report will be forwarded to Conoco on all
Feedstock each week. An independent laboratory analysis shall
be used to resolve any discrepancies between Conoco and South
Hampton concerning the specifications of the Feedstock.
2.5 The amount of Feedstock received shall be determined by South
Hampton scale tickets showing the difference between the
certified full weight and the certified empty weight of tank
trucks.
3. PROCESSING FACILITY
3.l South Hampton shall construct a process facility for the
processing of Conoco's Feedstock ("Facility") at South
Hampton's Plant. In consideration for the
3
<PAGE> 91
Construction Funding ($150,000) supplied by Conoco as set
forth in Section 3.2 below, South Hampton will not use the
Facility for any purpose which will interfere with the
processing of Conoco's Feedstock nor will it sell, dismantle,
relocate or in any other manner decommission the Facility,
during the term of this Agreement.
3.2 Conoco agrees to pay to South Hampton on the Commencement Date
of this Agreement Construction Funding ($150,000) to be used
by South Hampton to finance the construction of the Facility.
South Hampton agrees to refund this amount to Conoco from the
fees for the first 50,000 barrels of Feedstock that are
processed, by subtracting the maximum Construction Funding
($150,000) from the invoices associated with the first 50,000
barrels of Feedstock processed. South Hampton agrees to issue
an Irrevocable Standby Letter of Credit covering the
Construction Funding ($150,000) until the obligation to Conoco
is paid in full. Conoco agrees to maintain the U.S. dollar
value of the Letter of Credit in an amount equal to the
unrefunded portion of the Construction Funding. The Letter of
Credit must be issued by a bank acceptable to Conoco.
4
<PAGE> 92
3.3 South Hampton agrees to make best efforts to have the Facility
operational and capable of processing Feedstock into the
streams described in Section 4 below (collectively
"Operational") within three (3) months from the Commencement
Date of this Agreement. If the Facility is not Operational
within three (3) months after the Commencement Date, or ceases
to be Operational at any time for longer than thirty (30) days
despite repair efforts by South Hampton, Conoco, at its sole
option, may terminate this Agreement with no further
liability hereunder or may extend the time for the Facility
to be Operational to a date acceptable to both parties. If
Conoco elects to terminate the Agreement prior to the
Construction Fundind being totally refunded, South Hampton
shall immediately refund to Conoco the unrefunded portion of
the Construction Funding provided by Conoco to South Hampton
under this Agreement.
3.4 South Hampton agrees to manufacture under and keep records
of statistical process control. South Hampton shall make all
such records. available to Conoco upon request.
3.5 In the event that Conoco elects not to have South Hampton
produce nonene and tetramer, the tanks and
5
<PAGE> 93
equipment designated for those Products will be dedicated to
other processing for Conoco.
4. FINISHED PRODUCTS
4.1 South Hampton shall process Feedstock into streams
in accordance with the following fractionation plan:
1) First pass: a) Initial Boiling Point ("IBP") - 275 Deg. F.,
b) 275-295 Deg. F. (nonene), and c) 295 + Deg. F.; and
2) Second pass using 1c: a) 295-350 Deg. F., b) 350-400 Deg.
F. (tetramer), and c) 400 + Deg. F. (collectively "Products").
The nonene (lb above) and tetrainer (2b above) shall meet the
specifications set forth in Exhibit B, which is attached
hereto and made a part hereof. For every gallon of Feedstook
received by South Hampton, South Hampton shall return
ninety-nine (99) liquid volume percent Products.
5. SAMPLING AND ANALYSIS
5.1 South Hampton will sample and conduct laboratory analysis in
its own laboratory for each batch of the nonene and tetramer
manufactured hereunder to
6
<PAGE> 94
determine if they meet the specifications set forth in
Exhibit B.
5.2 South Hampton shall provide Conoco with a weekly laboratory
analytical report on all Products manufactured.
5.3 All off specification Product caused by South Hampton shall
be rerun through the process at South Hampton's expense.
6. STORAGE/DELIVERY
6.1 South Hampton shall store the Products in clean segregated
tankage, not commingled with any product not owned by Conoco,
until release to Conoco customers as scheduled by Conoco. Such
storage shall be appropriate for loading of Products into rail
cars or tank trucks.
6.2 Each week South Hampton shall forward to Conoco's Sales
Manager, Wax and Specialty Products, North American Marketing,
a report of inventory of Products in storage.
6.3 South Hampton agrees to keep confidential any Conoco customer
information which it receives from Conoco because of the
direct shipment of Products from South Hampton's Plant to
Conoco customers.
7
<PAGE> 95
7. FEES
7.1 Conoco shall pay South Hampton a fee for all of the services
performed hereunder at the rate of twelve cents (12 cents) per
gallon of Feedstock processed.
7.2 Included in this fee is South Hampton's profit and other costs
including, without limitation, insurance, storage space, labor
and overhead, all Federal, State, and local excise taxes, and
any other charges assessed by or to South Hampton in the
performance of this Agreement.
7.3 If during the term of this Agreement there should be a change
in the cost of fuel gas (natural gas) to South Hampton,
Conoco agrees to adjust the fee set forth in Section 7.1
above by an appropriate amount to cover such cost changes.
South Hampton shall provide documentation to substantiate
these cost changes.
7.4 The two Feedstock tanks and the tankage containing nonene and
tetramer shall be blanketed with nitrogen for the flat fee
of $2,000 per month for the first eighteen (18) months of
this Agreement, and at no cost to Conoco for any subsequent
months that this Agreement is in effect.
8
<PAGE> 96
8. PAYMENT
8.1 South Hampton shall invoice Conoco semi-monthly (first and
fifteenth) at the appropriate rate based on past volume of
Feedstock processed as of the invoice date. South Hampton
shall provide to Conoco, along with each invoice, a Plant
Operation Report, in a mutually agreed upon form, showing
semi-monthly activity under this Agreement. Conoco shall pay
each invoice by check upon receipt.
8.2 On the date of this Agreement, there is in effect between
Conoco and South Hampton a Promissory Note dated September 23,
1988 covering the repayment of a debt owed to Conoco by South
Hampton. In the event of South Hampton's default under said
Promissory Note, South Hampton agrees that Conoco may offset
against the fees due to South Hampton under this Agreement,
any amounts which are or become due and payable under said
Promissory Note, until said Promissory Note is fully paid.
9. PRODUCT TRANSFERS
When jointly agreed to, Conoco will transfer to South Hampton from
time to time volumes of the streams designated (1a), (2a), and (2c)
in Section 4.1 above and manufactured under this Agreement at an
agreed value to
9
<PAGE> 97
be negotiated. The agreed value for these streams will be credited
against the fee charged pursuant to Section 7.1 above at the time of
transfer.
10. TITLE
10.1 Title to all Feedstock delivered to South Hampton and all
Products manufactured therefrom shall remain in Conoco. South
Hampton shall at all times be responsible for Conoco's
property in its care, custody, and control, and shall
reimburse Conoco for any unaccounted for loss of property
(excluding loss allowance if applicable), contamination or
damage thereto.
10.2 At Conoco's request, South Hampton will execute any document
which shows title as referenced herein to be in Conoco,
including, but not limited to a UCC-1 form.
11. LOSS AND DAMAGE
11.1 South Hampton shall be responsible for any loss of, or damage
to Conoco property, as set forth in Section 10 hereof, within
its possession. South Hampton will take title to and be
responsible for legally disposing of any contaminated
Feedstock or Products or any off specification Products which
10
<PAGE> 98
cannot be rerun pursuant to Section 5.3 above, which occurred
while the Feedstock or Products were in South Hampton's care.
11.2 Reimbursement for loss or contamination of Feedstock
shall be at the Gulf Coast unleaded gasoline (waterborne)
price posted in Platt's Oilgram, plus freight from Conoco's
Refinery to South Hampton's Plant. Reimbursement for loss or
contamination of Products or for any off specification
Products which cannot be rerun shall be at Conoco's cost as
stated in the previous sentence, plus any fees paid to South
Hampton pursuant to Section 7 hereof. Conoco will invoice
South Hampton for any losses within sixty (60) days after
determination of the loss or contamination.
12. INDEMNITY
12.1 South Hampton hereby agrees to indemnify, defend, and save
Conoco, and its officers, directors, and employees, harmless
from any and all loss or liability, including legal expenses,
arising out of any claim or cause of action for loss, loss of
use of or damage to property or natural resources, personal
injuries, violation of any governmental laws, or patent or
trademark infringement caused by
11
<PAGE> 99
or arising in any manner from South Hampton's operations or
ownership of its Plant and the Facility and performance of the
services under this Agreement.
12.2 Conoco hereby agrees to indemnify, defend, and save South
Hampton, and its officers, directors, and employees, harmless
from any and all loss or liability including legal expense
arising out of any claim or cause of action for loss, loss of
use of, or damage to property or natural resources, personal
injuries, violation of any governmental laws, or patent or
trademark infringement caused by or arising in any manner from
Conoco's sale or use of the Products produced under this
Agreement, except to the extent caused by South Hampton's sole
negligence.
13. INSURANCE
South Hampton shall maintain in full force and effect the following
forms and amounts of insurance and shall furnish to Conoco current
certificates evidencing the insurance maintained. Such certificates
must provide for not less than ten (10) days' prior written notice to
Conoco in the event of cancellation or material change affecting
Conoco's interests. The insurance requirements
12
<PAGE> 100
below are Conoco's minimum requirements and shall not be considered
indicative of the ultimate amounts and types of insurance needed by
South Hampton. Neither failure to comply nor full compliance with the
insurance provisions of this Agreement shall limit or relieve South
Hampton from indemnifying and holding Conoco harmless in compliance
with the provisions of this Agreement.
a. Worker's Compensation Insurance covering all employees in
accordance with the statutory requirements of the state in
which the services hereunder are rendered.
b. Employer's Liability Insurance in an amount not less than
$1,000,000 per occurrence.
c. Comprehensive General Liability insurance, including Product
Liability, completed operations, blanket contractual,
contractors protection, with a combined single limit for
bodily injury and property damage of not less than $1,000,000
per occurrence.
d. Named Peril Property Insurance of not less than $1,000,000 per
occurrence to cover the loss of Conoco's Feedstock and
Products in South Hampton's care, custody, and control. Such
coverage shall name Conoco as an additional named insured and
loss payee with respect to Conoco's interest.
13
<PAGE> 101
14. FORCE MAJEURE
Neither party hereto shall be responsible or liable for failure to
perform its obligations under this Agreement or losses resulting from
any such failure to perform, or failure to make delivery, if
prevented from doing so by acts of God, floods, fires, explosions,
storms, vandalism, transportation difficulties, inability to obtain
the necessary supplies or other required raw materials, strikes,
lockouts, or other industrial disturbances, wars, or any law, rule, or
action of any court or instrumentality of the federal, state or local
government, or any other cause or causes beyond its reasonable control
whether similar or dissimilar to those above stated, provided only
that the same is not willfully done or brought about for the purpose
of excusing failure or omission to perform under this Agreement. In
the event either party hereto is rendered unable to perform in whole
or in part, such party shall give notice in writing to the other
party of the full particulars of such force majeure as soon as
possible after the occurrence of such cause relied on, and the
obligation of such party to perform under this Agreement shall be
suspended during the continuance of any inability so caused, but no
longer period, and such cause shall insofar as possible be remedied
with all reasonable
14
<PAGE> 102
dispatch. If any of the events specified in this paragraph shall have
occurred, South Hampton shall allocate its available services to the
extent it is capable in a fair and equitable manner among its own
needs and its customers.
15. INSPECTION AND AUDIT
Conoco reserves the right to inspect South Hampton's Facility, Plant
and operations, inventory Conoco Feedstock and Products therein, or
audit South Hampton's business records pertaining to South Hampton's
performance of the terms and conditions of this Agreement, at any time
during South Hampton's operating hours, by giving reasonable notice of
its intent to do so and by doing so in a manner which will not
interfere with South Hampton's normal business routine.
16. TERMINATION
16.1 If any provision of this Agreement is or becomes violate of
any law, or any rule, order, or regulation issued thereunder,
either party shall have the right, upon notice to the other to
terminate such provision, without affecting other provisions
of the Agreement, or to terminate the Agreement in its
entirety.
15
<PAGE> 103
16.2 In the event of the failure of South Hampton to perform any of
its obligations hereunder, and the continuance of such failure
after fifteen (15) days' written notice from Conoco, Conoco
may terminate this Agreement upon written notice to South
Hampton. In the event of insolvency, assignment for the
benefit of creditors, or impending bankruptcy proceedings by
or against South Hampton, Conoco may, at its option, terminate
this Agreement upon written notice to South Hampton. South
Hampton hereby agrees to give Conoco prompt written notice of
the occurrence of the aforesaid events. Termination of this
Agreement in accordance with this Paragraph shall not affect
any obligations accruing hereunder prior to such termination,
including, but not limited to, South Hampton's obligations
under Section 12 (Indemnity). Additionally, should Conoco
terminate this Agreement due to South Hampton's failure to
perform any of its obligations hereunder, South Hampton
shall immediately refund to Conoco the unrefunded portion
of the Construction Funding provided by Conoco to South
Hampton under Section 3.2 of this Agreement.
16.3 In the event of the failure of Conoco to perform any of its
obligations hereunder, and the continuance
16
<PAGE> 104
of such failure after fifteen (15) days' written notice from
South Hampton, South Hampton may terminate this Agreement upon
written notice to Conoco. In the event of insolvency,
assignment for the benefit of creditors, or impending
bankruptcy proceedings by or against Conoco, South Hampton
may, at its option, terminate this Agreement by written notice
to Conoco. Conoco hereby agrees to give South Hampton prompt
written notice of the occurrence of the aforesaid events.
Termination of this Agreement in accordance with this
Paragraph shall not affect any obligations accruing hereunder
prior to such termination, including, but not limited to,
Conoco's obligations under Paragraph 12 (Indemnity).
Additionally, should South Hampton terminate this Agreement
due to Conoco's failure to perform any of its obligations
hereunder, the unrefunded portion of the Construction Funding
provided by Conoco under Section 3.2 will be forfeited to
South Hampton.
17. ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns; provided,
however, neither party
17
<PAGE> 105
may assign this Agreement without the prior written consent of the
other party.
18. NOTICES
All notices required to be given hereunder shall be in writing, by
telegram, air express service or by certified mail; and shall be
addressed as follows:
CONOCO: Conoco Inc.
P.O. Box 4784, TA 2108
Houston, Texas 77210-4784
Attention: Michael R. Mitchael
SOUTH HAMPTON: South Hampton Refining Co.
P.O. Box 1636
Silsbee, Texas 77656
Attention: Richard N. Crain
29. WAIVER
The failure of either South Hampton or Conoco to enforce at any time
any provisions of this Agreement shall not be construed to be a waiver
of those provisions or the right thereafter to enforce any such
provisions.
20. SAFETY AND HEALTH INFORMATION
Conoco has furnished to South Hampton information (including Material
Safety Data Sheet(s)) concerning the safety and health aspects of the
feedstock and Products handled by South Hampton hereunder, including
safety and health warnings. South Hampton acknowledges receipt of
18
<PAGE> 106
such information and agrees to communicate such warnings and
information to South Hampton's employees, agents and contractors.
21. RELATIONSHIP OF THE PARTIES
21.1 Conoco and South Hampton are completely separate entities.
They are not partners, general partners, limited partners,
joint venturers, nor agents of each other in any sense
whatsoever and neither has the power to obligate or bind the
other.
21.2 South Hampton is an independent contractor and shall be solely
responsible at all times for the safe and prudent operation
and maintenance of its Plant and the Facility. South Hampton
shall always be, and Conoco shall never be, in charge of all
equipment, including the Facility owned by South Hampton,
direction of all employees and other persons who may be on
South Hampton's premises at any time. Conoco, its employees,
and agents shall always abide by instruction and direction of
South Hampton while on South Hampton's premises. South Hampton
shall take all necessary precautions including adoption of and
compliance with all reasonable and customary fire prevention
and safety measures to avoid property damage and bodily
injury.
19
<PAGE> 107
21.3 If for United States tax purposes operations hereunder are
regarded as a partnership, each of the parties elects to be
excluded from the application of all of the provisions of
Subchapter K, Chapter 1, Subtitle A, of the Internal Revenue
Code of 1986 as amended, as permitted and authorized by
Section 761 of the Code and regulations thereunder. Each party
will provide such evidence of this election as may be required
by law.
Should there by any requirement that each party further
evidence such election, such party shall execute such
documents and furnish such other evidence as may be required
to evidence such election. Each party shall not give any
notices or take any other action inconsistent with the
election made hereby. If any present or future income tax laws
of the state or states which are applicable to the
transactions of this Agreement, or any future income tax law
of the United States, shall contain a provision similar to
that in Section 761 of the Internal Revenue Code of 1986, as
amended, each party shall make such election as may be
permitted or required by such law.
20
<PAGE> 108
In making such election, each party states that income or loss
derived by such party from operations under this Agreement can
be adequately determined without the computation of
partnership taxable income or loss.
22. GOVERNING LAW
This Agreement shall be governed by and interpreted according to the
laws of the State of Texas.
23. ENTIRE AGREEMENT
This Agreement constitutes and embodies the entire agreement and
understanding between South Hampton and Conoco. There are no
agreements, understandings or conditions, oral or written, or implied,
that are not included herein. No alteration or amendment of this
Agreement shall be effective unless it is in writing and signed by
South Hampton and Conoco.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.
CONOCO INC. SOUTH HAMPTON REFINING CO.
By: By:
------------------------------ -----------------------------
Title: Title:
--------------------------- --------------------------
21
<PAGE> 109
EXHIBIT A
TYPICAL FEEDSTOCK SPECIFICATIONS
CATALYTIC POLYMERIZATION GASOLINE
TEST SPECIFICATION
---- -------------
Distillation, (degree)F
10% 226
50% 288
90% 391
Gravity (degree)API 63
Sulfur, ppm 2000
Reid Vapor PresBure, psi 6-9
<PAGE> 110
Page 1 of 2
EXHIBIT B
NONENE SPECIFICATIONS
TEST ASTM TEST METHOD SPECIFICATION
---- ---------------- -------------
Appearance Visual Clear and free
of suspended
matter
Specific Gravity D-1298 0.738-0.743
Distillation, (degree)F D-86
IBP 275 min.
EP 295 max.
Olefins, Vol% D-1319 98 min.
Color, (Pt-Co) D-1209 15 max.
Sulfer, ppm D-3120 10 max.
Water, Vol% D-1744 0.1 max.
Inhibitor, ppm (BHT) 15 min.
Peroxides, Active
Oxygen, ppm D-1563 10 max.
<PAGE> 111
Page 2 of 2
EXHIBIT B
TETRAMER SPECIFICATIONS
TEST ASTM TEST METHOD SPECIFICATION
---- ---------------- -------------
Appearance Visual Clear and free
of suspended
matter.
Specific Gravity D-1298 0.770-0.785
Distillation, (degree)F D-86
IBP 350 min.
EP 400 max.
Olefins, Vol% D-1319 98 min.
Color Pt-Co D-1209 45 max.
Sulfer, ppm D-3120 10 max.
Water, Vol% D-1744 0.1 max.
Peroxides, Active
Oxygen, ppm D-1563 10 max.