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PROCESSING AGREEMENT
BY AND BETWEEN
TRANSAMERICAN REFINING CORPORATION
AND
GLENCORE LTD.
Effective July 22nd, 1996
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PROCESSING AGREEMENT PAGE 1
PROCESSING AGREEMENT
THIS PROCESSING AGREEMENT ("Processing Agreement"), effective as of the
date set forth herein, is by and between Glencore Ltd. ("GLENCORE") and
TransAmerican Refining Corporation ("TARC").
RECITALS
WHEREAS, TARC is engaged in the business of refining, storing and
distributing petroleum products of various types, including, but not limited
to, crude oil, cutter stock or other additives, Feedstock (as defined below)
and Products (as defined below) derived or refined therefrom (collectively
"Petroleum"); and
WHEREAS, TARC owns and operates a refinery and storage tanks for
Petroleum in or near NORCO, LA; and
WHEREAS, GLENCORE intends to store Petroleum in TARC's Storage Tanks
(as defined below) and
WHEREAS, TARC AND GLENCORE desire to enter into this Processing
Agreement whereby GLENCORE will deliver Feedstock (as defined below) to TARC'S
Refinery and Storage Tanks (as defined below) for processing by TARC into
Products and subsequent sale or other disposition by GLENCORE;
NOW, THEREFORE, for and in consideration of the premises, and the
mutual covenants and promises hereinafter set forth; the sufficiency of which
is hereby acknowledged, GLENCORE and TARC hereby agree as follows:
1. Definitions. When used in this Processing Agreement, the following
terms shall have the meanings herein set forth:
"Delivered Product" shall be the quantity of Feedstock delivered by
Glencore to TARC and processed into Products by TARC under this Processing
Agreement.
"Feedstock" shall mean approximately 305,000 barrels of straight run
residue to be delivered by MT "Romito" to the Refinery.
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"Processing" shall mean and include the converting of Feedstock to
Products.
"Products" shall mean VGO and VTB.
"Refinery" shall mean and include the refinery of TARC in or near
NORCO, Louisiana, including all towers, units and processes therein.
"Storage Tanks" and "Storage Facility" shall mean and include each
storage tank, and all related property and facilities, together with
modifications, alterations or additions thereto, listed in Schedule A attached
hereto.
"VGO" shall mean Vacuum Gas Oil
"VTB" shall mean Vacuum Tower Bottoms
2. Term. The term of this Processing Agreement shall commence upon
July 22nd 1996 and shall end on the third working day after Glencore has
removed all Products processed under this Agreement from the Refinery. The
basis for calculation of the number of barrels of processed Feedstock shall be
outturn received basis as determined by independent inspector.
3. Processing Fee.
(a) GLENCORE shall pay to TARC a Processing Fee of USD 1.30 per barrel
of Feedstock processed which fee shall be due and payable to TARC as agreed,
but no later than three (3) working days after all Feedstock is processed into
Products.
(b) The parties shall agree on guaranteed quantity and quality yields
for the cargo of Feedstock prior to processing. To the extent TARC fails to
meet the guaranteed quality and quantity yield, GLENCORE shall be entitled to a
credit against the Processing Fee due TARC equal to the economic benefit
(profit) GLENCORE would have realized had the yield been met as defined below.
If such credits exceed the total amount of Processing Fees due TARC, TARC shall
pay GLENCORE such excess amount within one (1) business day. Failing such
payment GLENCORE shall have the right to set-off such amount against any other
amount owed by GLENCORE to TARC.
(c) Prior to processing, the parties shall agree on a guaranteed
quantity and quality conversion factor from the cargo of Feedstock to finished
Product. To the extent TARC fails to meet a 99.5 percent conversion factor of
Feedstock into finished Product, GLENCORE shall be entitled to a credit against
the processing fee due TARC equal to the profit GLENCORE would have realized had
they sold the unconverted Feedstock to a third party at the time all Feedstocks
or should have been processed. If such credits exceed the processing fee due
TARC, TARC shall pay Glencore such excess amount within one business day.
Failing such payment GLENCORE
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shall have the right to set-off such amount against any other amount owed by
GLENCORE to TARC.
(d) The quantity yields for the VGO and VTB are calculated
separately for each cargo as follows unless otherwise agreed:
Cutter stock yield = to be agreed case by case.
VGO Yield = IBP to 1050 degrees F
VTB Yield = 1050 degrees F +
As determined by ASTM D-1160
Loss: 0.5 percent of the outturn received quantity maximum.
(e) GLENCORE shall pay TARC a storage fee of USD 0.22 per barrel
for any Products stored in the Storage Tanks in excess of 30 days from the date
of completion of processing the barrels delivered. This fee can be waived or
extended by mutual consent of TARC and GLENCORE.
4. Removal of Petroleum from Storage. TARC covenants and agrees to
follow the instructions of GLENCORE for the storage and delivery of Petroleum.
5. Scheduling Deliveries to and from Storage Tanks. Reasonable
efforts shall be used by GLENCORE and TARC to effect timely and efficient
delivery of Petroleum to and from the Storage Tanks.
6. Processing.
6.1. The Products of Processing including the quantities and
specifications thereof will be determined on a quantity and quality basis as
agreed to between the parties.
6.2. At the termination of this Processing Agreement, TARC
shall pay GLENCORE for any Petroleum of GLENCORE remaining in the Storage Tanks
and/or the Refinery at GLENCORE'S in tank cost and should TARC fail to do so
then GLENCORE is expressly granted a right of set-off against any sum due or
that may be due by GLENCORE to TARC. Prior to receipt by GLENCORE from TARC of
full payment for the said Petroleum, title to and possession of the Petroleum
in the Storage Tanks and in the Refinery shall be and remain with GLENCORE and
TARC understands and agrees that by the execution of this Processing Agreement
it does not have and it will not obtain any title to such Petroleum or any
legal or equitable interest therein.
7. Duties of TARC. TARC shall in a timely and efficient manner
receive and store Petroleum of GLENCORE subject to the following terms and
conditions:
7.1. TARC shall store the Petroleum owned by GLENCORE in the
segregated Storage Tanks.
7.2. TARC shall maintain the Storage Tanks in accordance with
general oil industry standards for safety and quality assurance. TARC
represents and warrants to
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GLENCORE that the Storage Tanks and related systems are clean, in good repair,
not ruptured, and satisfactory for the purpose of this Processing Agreement,
and the Storage Tanks will be so maintained by TARC throughout the Term. TARC
shall maintain all licenses, agreements, easements or other obligations
necessary and appropriate to attain and maintain the ability of the Storage
Tanks to operate at full capacity. TARC shall maintain the Storage Tanks in
such condition as to enable the Storage Tanks to operate at their full capacity
to receive, store and deliver Petroleum.
7.3. TARC shall handle and store Petroleum of GLENCORE in
accordance with general oil industry standards and in accordance with TARC's
status hereunder as bailee/warehouseman. Any barge/vessel demurrage or
detention incurred by or on behalf GLENCORE as a consequence of TARC being
unable to receive Feedstock or deliver Product shall be reimbursed by TARC to
GLENCORE. Any barge/vessel demurrage or detention directly attributable to
GLENCORE will be for account of GLENCORE or will be reimbursed by GLENCORE
to TARC.
7.4. Unless agreed otherwise in writing by GLENCORE, TARC
shall store Petroleum of GLENCORE in the identified Storage Tanks and shall not
commingle during storage or refining Petroleum of GLENCORE with Petroleum owned
by any other person or entity.
7.4.1. Title to Petroleum of GLENCORE shall remain
exclusively with GLENCORE and TARC shall not represent to any person or entity
that it is either the owner or consignee of Petroleum of GLENCORE. TARC is not
authorized to sell, pledge, exchange, remove, or otherwise dispose of Petroleum
of GLENCORE without the prior approval of GLENCORE or its authorized agent.
7.5. The quantity and quality of both Feedstock and Product
processed hereunder and of Products delivered from Storage Tanks to third
parties pursuant to GLENCORE's instructions shall be determined by gaugings and
samplings by a mutually agreed upon independent inspector immediately prior to
transfer of the Feedstock and Products to or from the Storage Tanks, as set
forth below. Unless otherwise specified by the independent inspector,
quantities delivered; (a) into or from tankers and barges shall be measured by
Storage Tanks tank gauges or if storage tanks are active by vessel/barge
figures adjusted for Vessel Equalization Factors as determined by independent
inspector; (b) into or from transport trucks shall be measured by calibration
tables or calibrated meters; (c) into or from tank cars shall be measured by
calibrated tank car tables or calibrated meters; (d) into or from pipelines
shall be measured by calibrated meters or Storage Tanks tank gauges; and (e)
from the processing units shall be measured by tank gauges. The parties shall
be bound by the results of such inspection in the absence of manifest error.
7.5.1. The mutually agreed upon independent
inspector, whose fees will be paid by GLENCORE will sample and analyze
Feedstock for quality (including but not limited to, when appropriate,
flashpoint, pourpoint, water, sediment, viscosity, gravity, and sulfur) prior
to discharge of the Feedstock from the transport vehicle, pipeline, or vessel
into the Storage
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Tanks. The parties shall be bound by the results of such inspection except in
the case of manifest error.
7.5.2. All such quantity determinations shall be
adjusted to net barrels at 60 degrees Fahrenheit in accordance with ASTM IP
Petroleum Measurement Tables (ASTM designation D1250) as then currently in
effect.
7.6. TARC shall provide the maintenance, labor, material and
equipment necessary to receive Petroleum for delivery to and release from the
Storage Tanks, and to operate the Storage Tanks at a capacity and level that
will serve the needs of GLENCORE hereunder and enable TARC to fulfill its
duties and obligations hereunder.
7.7. TARC shall comply with all reasonable requests by GLENCORE
with regard to monitoring quality and quantity, including daily tank
measurements, sealing off lines and tanks, daily inventory reconciliation, etc.
and shall provide GLENCORE or its agents access to the Refinery and the Storage
Tanks at any time.
8. Representation and Warranties of TARC to GLENCORE. TARC represents
and warrants to GLENCORE each of the following:
8.1. TARC owns each of the Storage Tanks and has full title
and authority to operate the Storage Tanks as contemplated herein. Each of the
Storage Tanks set forth in Schedule A is in good working condition and order;
is properly licensed and maintained; and has the capacity to receive, store,
through-put and distribute Petroleum in the volumes set forth in Schedule A.
8.2. TARC shall cause no liens or claims of lien to be filed
or asserted with respect to the Petroleum stored in the Storage Tanks where
Petroleum of GLENCORE will be stored, and TARC shall not permit any such
liens, except (i) liens either affirmatively granted by or in favor of GLENCORE
and (ii) liens arising in TARC's favor by operation of law in the event of
GLENCORE's default hereunder. TARC expressly disclaims all claims of ownership
over the Petroleum stored. TARC confirms the terms of this Agreement do not and
will not conflict with the terms of any other agreement to which TARC is a
party with the possible exception of a similar agreement with J.Aron and
Company provided however that GLENCORE shall be provided with a copy of such
agreement at least 3 business days prior to such agreement coming into effect
and GLENCORE shall have the right to contact J.Aron and Company to confirm no
conflict.
9. Duties of GLENCORE. GLENCORE shall cause Feedstock to be delivered
to TARC for storage at the Storage Tanks and Processing at the Refinery subject
to the following terms and conditions:
9.1. GLENCORE shall, at its own expense, procure and maintain
with a responsible insurance company or companies, "all risks" insurance on all
Petroleum of GLENCORE against physical loss or damage to such Petroleum.
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9.2. GLENCORE understands that the addition of cutterstock or
the injection of additives for third party sales into its Products is its own
exclusive responsibility. The cutterstock/additives will be purchased by
GLENCORE.
9.3. GLENCORE shall cause Feedstock to be delivered to TARC
for storage in the Storage Tanks and processing at the Refinery with all
reasonable dispatch subject to the terms and conditions contained herein.
10. Events of Default. Each of the following shall constitute an event
of default under this Processing Agreement:
10.1. Any representation or warranty contained herein shall
prove at any time to be false or misleading in any material respect.
10.2. Either party fails timely to perform any of its
obligations under this Processing Agreement, or fails otherwise to comply in
any material respect with this Processing Agreement.
10.3. There shall occur any material adverse change in TARC's
business, properties or condition, financial or otherwise as determined in
GLENCORE's discretion.
Upon the occurrence of any event of default under this Processing Agreement,
the non-defaulting party shall give written notice to the defaulting party of
the default; and the defaulting party shall have ten (10) days to cure the
default.
10.4. In the event of any occurrence of any event of default
under this Processing Agreement, without limiting any other remedy available to
TARC or without limiting any other remedy available to TARC or GLENCORE at law
or equity the non-defaulting party may, at its sole discretion, terminate this
Processing Agreement and take any or all such other or further action as it
deems reasonably necessary.
11. Rights Survive Termination. Upon expiration of this Processing
Agreement, by default or termination, either party may exercise any of its
rights which have theretofore accrued hereunder without prejudice to any other
rights it may have at law or in equity. Upon termination of this Agreement for
any reason GLENCORE shall have the right to require the removal of all
Petroleum then located at the Refinery. The costs of removal of the Petroleum
shall be borne by the party whose breach or default caused the termination of
this Processing Agreement.
12. Authority. Each party hereby represents and warrants that its
execution and delivery of this Processing Agreement and the performance of its
obligations hereunder will not violate its certificate of incorporation or
bylaws and will not conflict with or cause a breach under any agreement to
which it is party or by which its assets may be bound; and that it has the
power and authority to enter into this Processing Agreement and to carry out
its obligations thereunder.
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13. INDEMNIFICATION. EACH PARTY HEREBY COVENANTS AND AGREES TO SAVE,
DEFEND, INDEMNIFY AND HOLD THE OTHER PARTY HARMLESS FROM AND AGAINST ANY AND ALL
CLAIMS, SUITS, EXPENSES, COSTS, JUDGMENTS AND DAMAGES (EXCLUDING ANY INDIRECT,
CONSEQUENTIAL, OR SPECIAL DAMAGES) ARISING FROM ANY FAILURE BY THE INDEMNIFYING
PARTY OR ANY EMPLOYEE OR AGENT THEREOF TO COMPLY WITH ANY OBLIGATION OF SUCH
INDEMNIFYING PARTY UNDER THIS PROCESSING AGREEMENT, OR ARISING FROM ANY
NEGLIGENCE OR WRONGFUL ACT OF THE INDEMNIFYING PARTY, ITS EMPLOYEES, OR AGENTS
IN CONNECTION WITH THE MATTERS CONTEMPLATED BY THIS PROCESSING AGREEMENT, OR
ARISING FROM THE FAILURE OF ANY REPRESENTATION OR WARRANTY HEREIN TO BE TRUE
WHEN MADE OR WHEN EFFECTIVE HEREUNDER. WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, TARC SHALL SAVE, DEFEND AND INDEMNIFY GLENCORE FROM AND AGAINST ANY
AND ALL CLAIMS, FINES, ASSESSMENTS AND PENALTIES (INCLUDING BUT NOT LIMITED TO
CLAIMS FOR CLEAN-UP AND REHABILITATION OF THE ENVIRONMENT) RESULTING FROM ANY
POLLUTION OR OTHER DAMAGE CAUSED BY ITS WRONGFUL OR NEGLIGENT, ACT OR OMISSION,
CAUSING DISCHARGE OR RELEASE OF PETROLEUM PRODUCTS FROM EITHER THE REFINERY OR
THE STORAGE TANKS.
14. Compliance with Laws. TARC shall comply with, and use its best
efforts to ensure that third parties comply with, all applicable laws,
regulations, ordinances, mandates, and other requirements of any national,
state, regional or local government having jurisdiction over the
transportation, refining transfer or terminalling of Petroleum including,
without limitation, those regarding air, land and water pollution.
15. Relationship of Parties. Nothing in this Processing Agreement
shall be construed or interpreted as creating a joint venture, partnership,
agency or employment relationship between TARC and GLENCORE.
16. Successors and Assigns. This Processing Agreement shall be
binding upon and shall inure to the benefit of the successors and permitted
assigns of the parties hereto; provided, however, that this Processing
Agreement is personal to GLENCORE and TARC, and neither GLENCORE nor TARC shall
assign this Processing Agreement or any interest herein (either voluntarily or
by operation of law) without the other party's prior written consent.
17. Force Majeure. Neither TARC nor GLENCORE shall be responsible for
any failure to fulfill their respective obligations under this Processing
Agreement (other than the payment of money) if fulfillment has been delayed,
hindered, interfered with, curtailed, or prevented, by any circumstance
whatsoever which is not within the reasonable control of TARC or of GLENCORE as
the case may be, until the conditions preventing such party's performance of
this Processing Agreement are removed.
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17.1. By way of example, neither party will be responsible for
damages caused by delay or failure to perform its obligations in whole or in
part hereunder (other than its obligation to make accountings and payment
hereunder) if such delay or failure is attributable to a storm, flood,
hurricane or other act of God,
17.2. The party whose performance is affected by an event of
force majeure will make all reasonable efforts to remove the event of force
majeure or mitigate its effect. If an event of force majeure continues for a
period of more than one month, the party whose ability to perform is not
affected by such event shall have the right to terminate this Processing
Agreement on ten day's prior written notice.
18. Controlling Law. The interpretation, construction, and performance
of this Processing Agreement, and the rights and remedies of the parties
hereunder shall be governed by the laws of the State of New York without
reference to choice of law principles. Each party agrees that the New York
State Supreme Court located in New York county or the United States District
Court for the Southern District of New York shall have exclusive jurisdiction
to hear and determine any suit, action or proceeding arising out of or in
connection with this Processing Agreement and irrevocably submits to the
jurisdiction of such court.
19. Notices. Except as otherwise provided herein, all notices required
or permitted to be given hereunder shall be in writing and shall be deemed
delivered when personally delivered, or received from an overnight delivery
courier service, or when delivered by telex or telecopier addressed as follows
(or such other address as the party may, by written notice to the other party,
designate as the address for purposes of notice hereinafter):
If to GLENCORE: Glencore Ltd.
3 Stamford Plaza
301 Tresser Boulevard
Stamford, CT 06901
Telephone: (203) 328-4920
Fax No.: (203) 328-3177
Attn: David Porter
If to TARC: TransAmerican Refining Corporation
1300 East North Belt, Suite 320
Houston, Texas 77032
Telephone: (713) 986-8811
Fax No.: (713) 986-8820
Attn: Bill Hoffman
20. Severability. If any provisions of this Processing Agreement
shall be held invalid under applicable law, such invalidity shall not affect
any other provision of this Processing Agreement which can be given effect
without the invalid provision and, to this extent the provisions are severable.
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21. Non-Waiver. Neither GLENCORE nor TARC shall be deemed to have
waived or modified any of its rights hereunder, by course of conduct or
otherwise, or under any other writing unless such waiver or modification be in
writing as signed by its authorized officer and then such waiver or modification
shall be effective only for the period and under the terms and conditions as are
specifically set forth therein. No delay or omission on the part of TARC or
GLENCORE in exercising any right shall operate as a waiver or modification of
such right or any other right. No waiver of any default on one occasion shall
operate as a waiver of any other default or of the same default on a future or
different occasion. All TARC's and GLENCORE's rights and remedies, whether
evidenced hereby or by any other writing, shall be cumulative and may be
exercised from time to time singularly, concurrently, or successively.
22. Notwithstanding anything to the contrary in this or any other
agreement between TARC and GLENCORE, GLENCORE shall have the right to set-off
against any funds it holds for the account of TARC or that it may owe TARC under
this Agreement against any right or claim of GLENCORE as a result of TARC's non
compliance or breach of this Processing Agreement.
23. Entire Agreement. This Processing Agreement sets forth the
entire agreement between TARC and GLENCORE regarding the subject matter covered
herein, and supersedes any and all prior oral or written communications between
the parties regarding the subject matter covered herein, and may not be
modified and amended except in a writing signed by the party against whom the
modification or amendment is being enforced.
24. Audit. GLENCORE shall have the right to audit the books and
records of TARC relating to the performance, storage and Processing services.
Any errors discovered shall be immediately corrected by appropriate payment to
the injured party.
25. Grant of Precautionary Security Interest. Solely as a
precaution, in the event that a court of applicable jurisdiction should hold
for any reason that Glencore is not the owner of the Petroleum processed and/or
stored at the Refinery, the Storage Tanks or the Storage Facility
(collectively, "TARC's Facility"), TARC hereby grants and continues to grant
Glencore a security interest in and to all Petroleum owned by GLENCORE at
TARC's Facility and all products and proceeds therefrom. At Glencore's request,
there shall be filed, and TARC hereby agrees to execute and deliver, Uniform
Commercial Code financing statements (and all such other documents as Glencore
requests in its sole discretion) in such form and in such jurisdictions as
Glencore deems appropriate to evidence the granting of the security interest
by TARC in GLENCORE's Petroleum including but not limited to the Feedstock and
Products. TARC represents and warrants to Glencore that neither TARC nor any
affiliate of TARC has granted or suffered or permitted to exist (or will grant,
suffer or permit) any liens or encumbrances which could conflict with
Glencore's ownership of the Petroleum processed and/or stored at TARC's
Facility or with the security interest in such Petroleum granted to Glencore
hereby.
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IN WITNESS THEREOF, the parties hereto have caused this Processing Agreement to
be duly executed as of the day and year first above written.
TRANSAMERICAN REFINING CORPORATION
By: /s/ JOHN R. STANLEY
Name: JOHN R. STANLEY
Title: CHIEF EXECUTIVE OFFICER
ATTEST:
By: /s/ DOUGLAS WIDLASKI
GLENCORE LTD.
By: /s/ DAVID PORTER
Name: DAVID PORTER
Title: AUTHORIZED SIGNATORY
ATTEST:
By:
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ATTACHMENT A
Tank No. Nominal Capacity
-------- ----------------
425-1 425,000 bbls.
425-3 425,000 bbls.
425-4 425,000 bbls.
625-1 625,000 bbls.
150-7 150,000 bbls.
150-8 150,000 bbls.
55-8 55,000 bbls.
150-13 150,000 bbls.
150-15 150,000 bbls.