Exhibit 10.4
Crude Oil Sale and Supply Agreement
This Crude Oil Sale and Supply Agreement (this "Agreement") is entered into
effective as of September 13, 2002, by and between Morgan Stanley Capital Group
Inc., a company incorporated under the laws of Delaware and located at 1585
Broadway, New York, New York 10036 ("MSCG"), and The Premcor Refining Group
Inc., a company incorporated under the laws of Delaware and located at 1700 East
Putnam, Suite 500, Old Greenwich, Connecticut 06870 ("Premcor") (each referred
to individually as a "Party" or collectively as "Parties").
WHEREAS, Premcor owns and operates a Refinery that is served by the Mesa
Pipeline System, the Mid-Valley Pipeline System and the West Texas Gulf Pipeline
System, each as further defined below (collectively, the "Pipeline Systems");
WHEREAS, Premcor is obligated to purchase from Koch Supply & Trading LP ("Koch")
approximately 2,659,386 Barrels of Line Fill Oi1 in the Pipeline Systems on or
before October 1, 2002;
WHEREAS, Premcor desires to have MSCG purchase from Koch approximately 2,659,386
Barrels of Line Fill Oil located within the Pipeline Systems on October 1, 2002
in lieu of Premcor's obligation to purchase such Line Fill Oil from Koch, and to
purchase such Line Fill Oil from MSCG on the Sale Date;
WHEREAS, MSCG is willing to purchase from Koch approximately 2,659,386 Barrels
of Line Fill Oil pursuant to the Crude Oil Purchase Agreement to be entered into
between MSCG and Koch concurrently herewith, and to sell such Line Fill Oil to
Premcor on the Sale Date pursuant to the terms and conditions hereof;
WHEREAS, MSCG's ownership of the Line Fill Oil will confer it with shipper
status on each of the Pipeline Systems and require that MSCG hold and maintain
title to any Crude Oil that is delivered to the Refinery through any of the
Pipeline Systems; and
WHEREAS, MSCG and Premcor agree to enter into monthly Buy/Sell Transactions
whereby, for each pipeline shipment, MSCG purchases Crude Oil from Premcor at
the Origin Point and resells such Crude Oil to Premcor at the Delivery Point;
NOW, THEREFORE, in consideration of the premises and the respective promises,
conditions and agreements contained herein, and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, MSCG
and Premcor do hereby agree as follows:
ARTICLE 1
DEFINITIONS AND CONSTRUCTION
1.1 Definitions.
For purposes of this Agreement, including the foregoing recitals, the
following terms have the meanings indicated below:
"Affiliate" means, in relation to any Party, any entity controlled,
directly or indirectly, by such Party, any entity that controls, directly or
indirectly, such Party, or any entity directly or indirectly under common
control with such Party. For this purpose, "control" of any entity or Party
means ownership of a majority of the issued shares or voting power or control in
fact of the entity or Party. In respect of MSCG, the term Affiliate does not
include Morgan Stanley Derivative Products Inc.
"Agreement" or "this Agreement" means this Crude Oil Sale and Supply
Agreement, as may be amended, modified, supplemented, extended, renewed or
restated from time to time in accordance with the terms hereof.
"Barrel" means forty-two (42) net U.S. gallons, measured at 60(degree)F.
"Business Day" means a 24-hour period ending at 5:00 p.m. EST on a weekday
on which banks are open for general commercial business in New York.
"Buy/Sell Oil" means Crude Oil that is the subject of a Buy/Sell
Transaction.
"Buy/Sell Transaction" means a transaction between MSCG and Premcor
pursuant to this Agreement and a Confirmation wherein Premcor sells Crude Oil to
MSCG at the Origin Point and MSCG purchases such Crude Oil from Premcor at the
Delivery Point.
"Confirmation" is defined in Section 4.2(d).
"Credit Agreement" means (i) any present or future agreement or undertaking
by Premcor for financing its Crude Oil Inventories, (ii) any present or future
extension of credit, credit facility, guaranty, loan or indenture to or for
Premcor, (iii) any obligation of Premcor (whether present or future, contingent
or otherwise, as principal or surety or otherwise) in respect of borrowed money,
or any guaranty of Premcor's obligations, with any bank, financial or lending
institution, bond or note issuer, indenture trustee, guarantor, underwriter,
Affiliate or any other Person, or (iv) any present or future credit agreement
entered into by Premcor or any of its Affiliates that may provide recourse by
the creditor or a guarantor to any of Premcor's Crude Oil Inventories.
"Crude Oil" means West Texas Intermediate ("WTI") crude oil and domestic or
foreign light sweet crude oil of equivalent or similar quality to WTI crude oil.
"Crude Oil Inventories" means all of the Crude Oil to which Premcor has
title or in which it has any ownership interest, wherever located, including the
Line Fill Oil.
"Crude Oil Purchase Agreement" means that certain Crude Oil Purchase
Agreement entered into effective on or about the date hereof, by and between
MSCG and Koch, concurrently herewith.
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"Default" or an "Event of Default" means an occurrence of the events or
circumstances described in Article 12 of this Agreement.
"Delivery Point" means the outlet flange of any of the Pipeline Systems
where the Buy/Sell Oil is transferred from such Pipeline System to the Refinery.
"Effective Date" means the date first written above upon which this
Agreement becomes binding upon and enforceable against the Parties.
"Environmental Laws and Regulations" means any existing or past Laws and
Regulations, policy, judicial or administrative interpretation thereof, or any
legally binding requirement that governs or purports to govern the protection of
persons, natural resources or the environment (including the protection of
ambient air, surface water, groundwater, land surface or subsurface strata,
endangered species or wetlands), occupational health and safety and the
manufacture, processing, distribution, use, generation, handling, treatment,
storage, disposal, transportation, release or management of solid waste,
industrial waste or hazardous substances or materials.
"Force Majeure" means any cause or event reasonably beyond the control of a
Party, including fires, earthquakes, lightning, floods, explosions, storms,
adverse weather, landslides and other acts of natural calamity or acts of God;
accidents at, closing of, or restrictions upon the use of pipelines, harbors,
railroads or other transportation mechanisms; disruption or breakdown of,
explosions or accidents to wells, storage plants, refineries, terminals,
machinery, production facilities or other facilities; acts of war, hostilities
(whether declared or undeclared), civil commotion, embargoes, blockades,
terrorism, sabotage or acts of the public enemy; any act or omission of any
Governmental Authority; good faith compliance with any order, request or
directive of any Governmental Authority, or any other cause reasonably beyond
the control of a Party, whether similar or dissimilar to those above and whether
foreseeable or unforeseeable, which, by the exercise of due diligence, such
Party could not have been able to avoid or overcome. A Party's inability
economically to perform its obligations under this Agreement shall not
constitute an event of Force Majeure.
"Governmental Authority" means any federal, state, regional, local, or
municipal governmental body, agency, instrumentality, authority or entity
established or controlled by a government or subdivision thereof, including any
legislative, administrative or judicial body, or any person purporting to act
therefor.
"Interest Rate" means simple interest at the lesser of (i) two percent (2%)
over the JPMorgan Chase Bank prime rate as published in the Wall Street Journal
in effect at the close of the Business Day on which payment was due and (ii) the
maximum rate permitted by law.
"Laws and Regulations" means (i) any law, statute, regulation, code,
ordinance, license, decision, order, writ, injunction, decision, directive,
judgment, policy, decree and any judicial or administrative interpretations
thereof, (ii) any agreement, concession or arrangement with any Governmental
Authority, and (iii) any applicable license, permit or compliance requirement
applicable to either Party.
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"Liabilities" means any losses, claims, charges, damages, deficiencies,
assessments, interests, fines, penalties, costs and expenses of any kind
(including reasonable attorneys' fees and other fees, court costs and other
disbursements), directly or indirectly arising out of or related to any suit,
proceeding, judgment, settlement or judicial or administrative order, including
any Liabilities with respect to Environmental Laws and Regulations.
"Lien" means any lien, pledge, claim, charge, Security Interest or other
encumbrance, option, defect or other rights of any third Person of any nature
whatsoever.
"Line Fill Oil" means the minimum volume of Crude Oil that is required to
be continually physically present within a Pipeline System, including the
pipelines, tanks, loading and receiving mechanisms and other facilities, to
ensure the customary uninterrupted operation of the Pipeline System and the
storage and transportation of Crude Oil.
"Mesa Pipeline System" means the Crude Oil pipeline transportation system
and related facilities located between Midland, Texas and Colorado City, Texas,
that are owned and operated by the Mesa Pipeline Company, including the land, 80
miles of pipeline, injection stations, breakout storage tanks, truck unloading
and other Crude Oil receiving facilities, Crude Oil delivery facilities and any
associated or adjacent facility, which connects to the West Texas Gulf Pipeline
System.
"Mid-Valley Pipeline System" means the Crude Oil pipeline transportation
system and related facilities located between Longview, Texas and Samaria,
Michigan, that are owned and operated by Mid-Valley Pipeline Company, including
the land, 994 miles of pipeline, injection stations, storage tanks, truck
unloading and other Crude Oil receiving facilities, Crude Oil delivery
facilities and any associated or adjacent facility.
"Origin Point" means the inlet flange of any of the Pipeline Systems where
the Buy/Sell Oil is injected for transportation and delivery to the Refinery.
"Person" means an individual, corporation, partnership, limited liability
company, joint venture, trust or unincorporated organization, joint stock
company or any other private entity or organization, Governmental Authority,
court or any other legal entity, whether acting in an individual, fiduciary or
other capacity.
"Property Taxes" means any and all tangible personal property taxes, ad
valorem property taxes or the like imposed on the value of the Crude Oil.
"Purchase Date" means October 1, 2002.
"Refinery" means the 170,000 Barrel per day refinery located in Lima, Ohio
that is owned and operated by Premcor.
"Sale Date" means the date on which MSCG transfers all right, title and an
undivided interest in the Line Fill Oil to Premcor pursuant to Section 5.1.
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"Security Interest" means any mortgage, security deed, deed to secure debt,
security interest, pledge, charge or encumbrance of any kind.
"Taxes" means any and all federal, state and local taxes, duties, fees and
charges of every description on or applicable to the Line Fill Oil or Buy/Sell
Oil, including all Property Taxes, severance, excise, gross receipts, franchise,
environmental, spill and sales and use taxes, however designated (other than
taxes on income), paid or incurred directly or indirectly with respect to the
purchase, storage, transportation, resale or handling of the Line Fill Oil or
Buy/Sell Oil.
"Throughput and Service Fee" means the monthly fee that Premcor pays MSCG
pursuant to Section 5.3.
"West Texas Gulf Pipeline System" means the Crude Oil pipeline
transportation system and related facilities located between Colorado City,
Texas and Nederland, Texas to Longview, Texas, that are owned and operated by
West Texas Gulf Pipeline Company, including the land, 581 miles of pipeline,
injection stations, storage tanks, truck unloading and other Crude Oil receiving
facilities, Crude Oil delivery facilities and any associated or adjacent
facility, which supplies Crude Oil to the Mid-Valley Pipeline System.
1.2 Unless otherwise specified, all references herein are to the Articles
and Sections of this Agreement.
1.3 All headings herein are intended solely for convenience of reference
and shall not affect the meaning or interpretation of the provisions of this
Agreement.
1.4 Unless expressly provided otherwise, the word "including" as used
herein does not limit the preceding words or terms.
ARTICLE 2
CONDITIONS TO MSCG'S PERFORMANCE
2.1 The obligations of MSCG contemplated under this Agreement shall be
subject to the satisfaction of the conditions precedent to its performance on or
before the Purchase Date, as set forth below, each as determined by MSCG in its
sole discretion.
(a) MSCG and Koch each shall have duly authorized the execution,
delivery and performance of the Crude Oil Purchase Agreement and their duly
authorized representatives shall have executed the Crude Oil Purchase
Agreement.
(b) MSCG shall have obtained from each Pipeline System such documents
as are required to establish that such Pipeline System has granted MSCG
shipper status under its tariff and maintains a customary shipper's storage
and throughput account for MSCG in respect of the appropriate volume of
Line Fill Oil allocated to such Pipeline System.
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(c) Premcor shall have provided MSCG with an original irrevocable
standby letter of credit letter in the amount of $3,900,000, in a format
and issued or confirmed by a bank acceptable to MSCG, in order to secure
its obligations under this Agreement (the "Premcor Letter of Credit").
(d) Koch shall have delivered to MSCG or caused to have been delivered
to MSCG from each Pipeline System a shipper account statement showing the
volume of Line Fill Oil that is held on the Pipeline System's records in
MSCG's name as of October 1, 2002 ("Shipper Account Statement").
(e) Premcor shall have delivered from Deutsche Bank Trust Company
Americas, as Administrative Agent and as Collateral Agent (the "Secured
Party") an Acknowledgment Regarding Liens and Security Interests in respect
of MSCG's undivided interest and title to the Line Fill Oil, in such form
satisfactory to MSCG in its sole discretion.
(f) MSCG shall have obtained the results of Uniform Commercial Code
("UCC") searches in Delaware, Texas, Kentucky and Ohio, each with the most
current possible date.
(g) MSCG shall have filed UCC-1 Financing Statements in the central
filing office in the Office of the Secretary of State of each of Delaware,
Texas, Kentucky and Ohio, that indicate its ownership and undivided
interest in the Line Fill Oil.
(h) Premcor shall have delivered to MSCG an opinion of counsel in a
form and substance satisfactory to MSCG covering the following matters: (i)
Premcor has duly authorized the execution, delivery and performance of this
Agreement, (ii) this Agreement constitutes the legally valid and binding
obligations of Premcor enforceable against Premcor in accordance with its
terms (subject to applicable bankruptcy, reorganization, insolvency,
moratorium or similar laws affecting creditors' rights generally and
subject, as to enforceability, to equitable principles of general
application regardless of whether enforcement is sought in a proceeding in
equity or at law), (iii) Premcor's execution, delivery and performance of
this Agreement does not and will not cause a breach of or default under any
presently existing Credit Agreement, and (iv) Premcor need not obtain any
consents to enter into this Agreement pursuant to any Credit Agreement.
(i) No action or proceeding shall have been instituted, nor shall any
action by a Governmental Authority be threatened, nor shall any order,
judgment or decree have been issued or proposed to be issued by any
Governmental Authority as of the Effective Date, to set aside, restrain,
enjoin or prevent the transactions and performance of the obligations
contemplated by this Agreement.
(j) None of the Pipeline Systems shall have been affected adversely or
threatened to be affected adversely by any loss or damage as of the
Effective Date, whether or not covered by insurance, unless such loss or
damages would not have a
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material adverse effect on the usual, regular and ordinary operations of
the affected System as a whole.
(k) Premcor shall have in place the insurance coverages identified in
Section 6.1, and shall have delivered to MSCG certificates of insurance in
compliance with Section 6.2.
(l) The representations and warranties of Premcor set forth in this
Agreement shall be true and correct on and as of the Effective Date.
2.2 The obligations of Premcor contemplated under this Agreement shall be
subject to the satisfaction of the conditions precedent to its performance on or
before the Purchase Date, as set forth below, each as determined by Premcor in
its sole discretion.
(a) MSCG and Koch each shall have duly authorized the execution,
delivery and performance of the Crude Oil Purchase Agreement and their duly
authorized representatives shall have executed the Crude Oil Purchase
Agreement.
(b) MSCG shall have paid Koch the purchase price pursuant to the terms
of the Crude Oil Purchase Agreement.
(c) The representations and warranties of MSCG set forth in this
Agreement shall be true and correct on and as of the Effective Date.
2.3 In the event that a Party is not obligated to perform under the
Agreement due to a condition precedent not being satisfied, then MSCG shall
remove the hedge it placed on the 2,659,386 barrels of Line Fill Oil on
September 16, 17 and 18, 2002. If MSCG incurred a loss as a result of such
hedge, then Premcor promptly shall pay MSCG an amount equal to such loss. If
MSCG had a gain as the result of such hedge, then MSCG promptly shall pay
Premcor an amount equal to such gain. In either case, Premcor shall reimburse
MSCG for any margin cost incurred for hedging the Line Fill Oil.
ARTICLE 3
TERM
3.1 This Agreement shall be effective from the date first written above
until October 1, 2003 ("Initial Term"), and shall automatically renew for an
additional 30-day period ("Renewal Term") at the end of the Initial Term and
each successive Renewal Term.
3.2 Subsequent to the Initial Term, either Party may elect to terminate
this Agreement upon thirty (30) days' prior written notice to the other Party,
and this Agreement shall terminate effective upon the last day of the calendar
month immediately following the end of the thirty-day notice period.
Notwithstanding the foregoing, termination shall not affect or excuse the
Parties' obligations in respect of any Buy/Sell Transactions entered into prior
to the effective date of termination specified in the notice and any such
Transactions shall continue to be governed by the terms of this Agreement; and
further provided, however, that the Parties shall perform and complete all
obligations in respect of the sale of the Line Fill Oil.
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ARTICLE 4
MONTHLY BUY/SELL TRANSACTIONS
4.1 Monthly Buy/Sell Transactions.
Beginning October 1, 2002, MSCG shall enter into Buy/Sell Transactions with
Premcor, whereby MSCG purchases from Premcor shipments of Crude Oil at the
Origin Point for transportation to the Refinery via one or more of the Pipeline
Systems, and MSCG sells such shipments of Crude Oil back to Premcor at the
Delivery Point.
4.2 Nominations and Scheduling.
(a) No later than the 24th of a month, Premcor shall notify MSCG in
writing via facsimile of its Crude Oil requirements for the following month
(the "Delivery Month"), specifying its anticipated Crude Oil requirements
by volume and pipeline batch, on a ratable basis.
(b) MSCG shall schedule Premcor's nominated shipments with the
relevant Pipeline System at the Origin Point, and shall provide Premcor
with a confirmation of the scheduled shipment once received from the
Pipeline System. Premcor immediately shall notify MSCG if it requires that
MSCG reschedule any changes in accepted nominations, and shall be liable
for any costs associated therewith. MSCG shall not be responsible if a
Pipeline System is unable to accept Premcor's nomination or if the Pipeline
System must allocate Crude Oil among its shippers.
(c) Premcor shall ensure that MSCG is able to utilize Premcor's
transportation option with Unocal in the Mesa Pipeline System.
(d) Buy/Sell Confirmations. Promptly following receipt of a Pipeline
System's written confirmation of all shipments scheduled for delivery to
the Refinery in a Delivery Month, MSCG shall send Premcor a written
confirmation ("Confirmation") memorializing the terms of each Buy/Sell
Transaction that is scheduled to occur within the Delivery Month,
including, for each shipment, the Origin Point and Delivery Point, the
designed quantity, the delivery period, the price at which MSCG will
purchase the Buy/Sell Oil from Premcor, the price at which MSCG will sell
the Buy/Sell Oil to Premcor and any costs associated with the Buy/Sell Oil,
including Pipeline gains and losses covered by Section 4.5, the Throughput
and Service Fee, storage fees, Taxes and pipeline differentials and
tariffs. The terms of MSCG's Confirmation shall be deemed conclusive and
binding if, within one (1) Business Day from receipt of the Confirmation,
Premcor does not respond or fails to notify MSCG by facsimile of any
objections.
(e) MSCG shall provide Premcor with copies of all inventory reports,
pipeline tickets and other appropriate documentation regarding Buy/Sell
Transactions that it receives from each Pipeline System.
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4.3 Title and Risk of Loss.
Title and risk of loss to a shipment of Crude Oil shall pass from Premcor
to MSCG at the Origin Point specified in the Confirmation, and from MSCG to
Premcor at the Delivery Point specified in the Confirmation.
4.4 Monthly Imbalances.
The aggregate volumes of Crude Oil sold by Premcor to MSCG at the
Origin Point and purchased by Premcor at the Delivery Point during a particular
calendar month may differ due to pipeline scheduling and the length of time it
takes to transport a pipeline shipment from the Origin Point to the Delivery
Point.
(a) If in a particular month MSCG purchases a greater volume of Crude
Oil at the Origin Point than is sold and delivered to Premcor at the
Delivery Point, than the volume of Crude Oil underdelivered during such
month shall be delivered to Premcor in the following month, and the price
of such shipment(s) shall be determined on a First-In, First-Out basis at
the price applicable to the original Delivery Month. Premcor shall be
liable for one month of interest at the Interest Rate on all volumes of
Crude Oil purchased by MSCG from Premcor at the Origin Point in a
particular month and sold by Premcor to MSCG in the following month.
(b) If in a particular month MSCG purchases from Premcor a lesser
volume of Crude Oil at the Origin Point than is sold and delivered to
Premcor at the Delivery Point, MSCG shall credit Premcor with one month of
interest at the Interest Rate on the volume of such imbalance.
4.5 Pipeline Gains and Losses. All in-transit losses of Crude Oil due to
evaporation, shrinkage or other cause, or any contamination of the Crude Oil,
shall be for Premcor's account. MSCG shall negotiate with each Pipeline System
the volume of Crude Oil gains and losses in each month, and the market price of
such Crude Oil gains and losses (whether positive or negative). MSCG shall pass
through to Premcor the positive value of such Crude Oil gains and negative value
of such Crude Oil losses by adding or deducting, as appropriate, such amount
from the total of the monthly invoice for Buy/Sell Transactions pursuant to
Section 4.6(c).
4.6 Invoicing, Netting and Payment.
(a) The volumes of Crude Oil sold and purchased in a Buy/Sell
Transaction shall be determined by pipeline meter tickets as the Crude Oil
passes the downstream flange of the meter measuring the Crude Oil upon
intake at the Origin Point, and at the upstream flange of the meter
measuring the Crude Oil upon discharge at the Delivery Point.
(b) Within five (5) Business Days after the end of a Delivery Month,
Premcor shall provide MSCG with an invoice (facsimile and electronic copies
acceptable) for all Crude Oil purchased by MSCG from Premcor at the Origin
Point within the Delivery Month, together with any appropriate supporting
documentation, including pipeline meter tickets.
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(c) Within five (5) Business Days after the end of a Delivery Month,
MSCG shall provide Premcor with an invoice (facsimile and electronic copies
acceptable) for all Crude Oil sold by MSCG to Premcor at the Delivery Point
within the Delivery Month, together with any appropriate supporting
documentation, including pipeline meter tickets. The invoice also shall
include all other amounts owed by Premcor to MSCG under this Agreement,
including any pipeline differentials and tariffs and charges payable to
MSCG under Section 4.2(d) and the Throughput and Service Fee payable under
Section 5.3.
(d) The Parties intend that each of Premcor's monthly payment
obligations to MSCG under this Agreement in respect of Buy/Sell
Transactions and the Throughput and Service Fee, and each of MSCG's monthly
payment obligations to Premcor under this Agreement in respect of Buy/Sell
Transactions be aggregated, netted and offset on a monthly basis, with all
amounts due one Party to the other Party netted to a single liquidated
amount ("Monthly Net Payment"), payable by the Party owing the greater
aggregate amount to the other Party on the 20th of each month following the
Delivery Month. MSCG shall prepare and provide to Premcor by the 10th of
the month following the Delivery Month a statement for the Delivery Month
that sets forth each of the Parties' payment obligations to each other, and
the payor and amount of the Monthly Net Payment. If payment should fall due
on a Saturday or non-Monday holiday, payment is to be made the preceding
Business Day. If payment should fall due on a Sunday or Monday holiday,
payment is to be made on the following Business Day.
(e) If a Party in good faith disputes the amount of any Monthly Net
Payment that is owed to the other Party, it shall pay the undisputed
portion of such payment owed to the other Party by the due date and inform
the other Party in writing why it disagrees with the balance of the Monthly
Net Payment. The Parties shall cooperate in resolving the dispute
expeditiously. If the Parties mutually agree as to some or all of the
disputed amount, the Party owing such disputed amount shall pay such
amount, with interest from the original due date, within two (2) Business
Days from the date of their agreement.
(f) Subject to MSCG's credit limits with Premcor, which MSCG may
change from time to time, at MSCG's request, Premcor shall prepay, or
provide an irrevocable standby or documentary letter of credit in a format
satisfactory to MSCG and issued or confirmed by a bank acceptable to MSCG
in an amount equal to, the estimated Monthly Net Payment due MSCG by
Premcor.
4.7 Interest. In the event that a Party does not timely pay any Monthly Net
Payment due the other Party, or does not timely pay MSCG for the Line Fill Oil
on the Sale Date, the delinquent Party shall pay an additional interest charge
on any amount due at the Interest Rate. Interest shall run from and including
the due date of the Monthly Net Payment or the Sale Date, as appropriate, to but
excluding the date that payment is received.
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ARTICLE 5
SALE OF LINE FILL OIL TO PREMCOR
5.1 Sale of Line Fill Oil.
MSCG shall sell to Premcor and Premcor shall purchase from MSCG
approximately 2,659,386 Barrels of Line Fill Oil from MSCG on the
termination date of this Agreement as set forth in Article 3 ("Sale Date").
5.2 Price and Payment for the Line Fill Oil.
(a) No later than five (5) Business Days prior to the Sale Date, MSCG
shall provide Premcor with an invoice for the Line Fill Oil. The total
price shall equal the sum of (i) the Commodity Price as determined in
Section 5.2(b) plus (ii) any outstanding Monthly Net Payments, Throughput
and Service Fees and any interest pursuant to Section 4.7 due MSCG that
have not previously been invoiced to Premcor or paid by Premcor. On or
prior to the Sale Date, Premcor shall remit payment for the Line Fill Oil
into MSCG's account in full, without discount, offset, withholding,
counterclaim or deduction, in immediately available funds via electronic
funds transfer, pursuant to MSCG's written instructions.
(b) Commodity Price. The commodity price for the Line Fill Oil shall
equal (i) the market value of the actual volume of Line Fill Oil sold to
MSCG by Koch on the Purchase Date (the "Purchase Date Volume"), which shall
be based on the average of the front line NYMEX settlement price per barrel
for WTI posted on September 16, 2003 through September 18, 2003, inclusive,
plus and (ii) a per Barrel spread differential as mutually agreed by the
Parties by 5:00 pm EST September 19, 2002, multiplied by the Purchase Date
Volume.
(c) All physical losses of Line Fill Oil due to evaporation, shrinkage
or other cause, or any contamination of the Line Fill Oil, shall be borne
by Premcor.
(d) Title and Risk of Loss. Title to and risk of loss of the Line Fill
Oil shall pass to Premcor or Premcor's nominee from MSCG upon MSCG's
receipt of payment in full into its designated account. Upon receipt of
payment, MSCG shall (i) instruct each of the Pipeline Systems to execute
transfer orders showing an in-line transfer of title to the Line Fill Oil
held by such System to Premcor on the Sale Date, (ii) cancel the $3,900,000
Premcor Letter of Credit (on or within one Business Day after the Sale
Date), and (iii) promptly release any UCC-1 Financing Statements filed by
MSCG with respect to the Line Fill Oil and the Buy/Sell Oil (effective as
of the Sale Date).
5.3 Monthly Throughput and Service Fee.
In addition to its payment obligation to MSCG for Crude Oil purchased
under a Buy/Sell Transaction, Premcor shall pay MSCG a monthly Throughput
and Service Fee, which shall equal the total of the following:
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(a) Throughput Fee. A per Barrel Throughput Fee on 70,000 Barrels per
day of Buy/Sell Oil, as mutually agreed by the Parties by 5:00 pm EST
October 1, 2002.
(b) Handling Fee. A Handling Fee of $0.01 per Barrel of Crude Oil
delivered to the Refinery through the Pipeline Systems under a Buy/Sell
Transaction, to cover miscellaneous expenses incurred by MSCG arising from
the Buy/Sell Transactions, including expenses, legal fees, set-up costs and
handling fees.
ARTICLE 6
INSURANCE
6.1 Premcor shall, at its sole cost and expense, carry and maintain in full
force and effect throughout the term of this Agreement, insurance coverages of
the following types and amounts and with insurance companies rated not less than
A-, IX by A.M. Best, or otherwise reasonably satisfactory to MSCG in respect of
Premcor's duties and obligations under this Agreement:
(a) Property damage coverage on an "all risk" basis in an amount
sufficient to cover the market value or potential full replacement cost of
the entire quantity of Line Fill Oil purchased by MSCG and the volumes of
Buy/Sell Oil.
(b) Commercial general liability coverage, which shall include bodily
injury, property damage, "sudden and accidental pollution," contractual
liability and contractor liability with limits of at least $50,000,000
combined single limit per occurrence.
6.2 Additional Insurance Requirements.
(a) All of the foregoing policies of Premcor shall be endorsed to
apply as primary insurance without right of contribution for any similar
policies of MSCG for all claims arising from or in any way related to
Premcor's duties and obligations under this Agreement.
(b) MSCG shall be named as an additional insured and loss payee as its
interests may appear for all claims arising from or in any way related to
this Agreement on Premcor's property insurance and commercial general
liability policies.
(c) All of the foregoing policies of Premcor shall include a provision
stating that the underwriters waive all rights of subrogation against MSCG.
(d) Prior to renewal of the policies required hereunder, Premcor shall
provide MSCG with certificates showing evidence of such coverages as of the
Effective Date of this Agreement. Premcor shall furnish MSCG with certified
copies of its insurance policies or insurance certificates evidencing the
existence of the coverages required and specifying that no insurance will
be canceled or materially changed during the term of this Agreement unless
MSCG is given at least thirty (30) days' written notice prior to
cancellation or prior to a material change becoming effective. All such
policies shall contain a cancellation notice period of at least thirty (30)
days, and Premcor shall provide renewal certificates within thirty (30)
days of expiration of the policy.
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(e) Premcor shall notify MSCG if any self-insured retentions or
deductibles exist in the foregoing policies and all such self-insured
retentions or deductibles shall be the sole responsibility of Premcor.
(f) The mere purchase and existence of insurance does not reduce or
release either Party from any liability incurred or assumed under this
Agreement.
ARTICLE 7
PREMCOR COVENANTS
7.1 Premcor represents and warrants that the volume of Line Fill Oil for
the capacity of each of the Mesa Pipeline System, the Mid-Valley Pipeline System
and the West Texas Gulf Pipeline System is not less than approximately 196,122
Barrels, approximately 1,540,925 Barrels and approximately 922,339 Barrels,
respectively.
7.2 Premcor covenants that it shall not grant, allow, or suffer to exist
any Lien on any quantity of the Line Fill Oil or allow MSCG's title and interest
in the Line Fill Oil to become encumbered in any way through action of Premcor,
its Affiliates, employees, agents or creditors. In the event that any Lien on
the Line Fill Oil is asserted or threatened to be asserted, Premcor immediately
shall notify MSCG in writing and take all steps necessary to remove or release
such Lien.
7.3 The execution, delivery and performance of this Agreement do not
violate or conflict with any Credit Agreement to which it is a party or by which
it may be bound, or to which any of its property or assets may be subject.
7.4 On and after October 1, 2002 and until the Sale Date, Premcor shall not
own or have any interest in any Crude Oil Inventories that are located within
any of the Pipeline Systems, except for the Line Fill Oil and Buy/Sell Oil.
ARTICLE 8
TAXES
Premcor shall be liable for all Taxes imposed on the Buy/Sell Oil after
delivery to Premcor at the Delivery Point or any Taxes that may be imposed on
the Line Fill Oil on and after the Sale Date.
ARTICLE 9
FORCE MAJEURE
9.1 Neither Party shall be liable to the other if it is rendered unable by
an event of Force Majeure to perform in whole or in part any obligation or
condition of this Agreement, for so long as the event of Force Majeure exists
and to the extent that performance is hindered by the Event of Force Majeure;
provided, however, that the Party unable to perform shall use any commercially
reasonable efforts to avoid or remove the event of Force Majeure and that the
Parties shall resume performance promptly once the Event of Force Majeure has
ceased. During the period that performance by one of the Parties of a part or
whole of its obligations has been suspended by reason of an event of Force
Majeure, the other Party likewise may suspend the
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performance of all or a part of its obligations to the extent that such
suspension is commercially reasonable, except for any payment and
indemnification obligations.
9.2 The Party rendered unable to perform shall give written notice to the
other Party within forty-eight (48) hours after receiving notice of the
occurrence of a Force Majeure Event, including, to the extent feasible, the
details and the expected duration of the Force Majeure Event and the volume of
Line Fill Oil or Crude Oil affected, if any. Such Party also shall promptly
notify the other when the Event of Force Majeure is terminated.
ARTICLE 10
MUTUAL REPRESENTATIONS AND WARRANTIES
10.1 Each Party represents and warrants to the other Party as of the
Effective Date of this Agreement and as of each Buy/Sell Transaction that:
(a) It is an "Eligible Contract Participant" as defined in Section 1a
(12) of the Commodity Exchange Act, as amended.
(b) It is a "forward contract merchant" in respect of each Buy/Sell
Transaction and the sale of the Line Fill Oil, and each Buy/Sell
Transaction and the sale of the Line Fill Oil is a forward contract for
purposes of the United States Bankruptcy Code, 11 U.S.C. ss.ss. 101 et
seq., as amended from time to time.
(c) It is duly organized and validly existing under the laws of the
jurisdiction of its organization or incorporation and in good standing
under such laws.
(d) It has the corporate, governmental or other legal capacity,
authority and power to execute this Agreement, to deliver this Agreement
and to perform its obligations under this Agreement, and has taken all
necessary action to authorize the foregoing.
(e) The execution, delivery and performance in the preceding paragraph
(d) do not violate or conflict with any law applicable to it, any provision
of its constitutional documents, any order or judgment of any court or
Governmental Authority applicable to it or any of its assets, or any
contractual restriction binding on or affecting it or any of its assets.
(f) All governmental and other authorizations, approvals, consents,
notices and filings that are required to have been obtained or submitted by
it in respect of this Agreement have been obtained or submitted and are in
full force and effect, and all conditions of any such authorizations,
approvals, consents, notices and filings have been complied with.
(g) Its obligations under this Agreement constitute its legal, valid
and binding obligations, enforceable in accordance with its terms (subject
to applicable bankruptcy, reorganization, insolvency, moratorium or similar
laws affecting creditors' rights generally and subject, as to
enforceability, to equitable principles of general application regardless
of whether enforcement is sought in a proceeding in equity or at law and an
implied covenant of good faith).
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(h) No Event of Default under Article 12 with respect to it has
occurred and is continuing, and no such event or circumstance would occur
as a result of its entering into or performing its obligations under this
Agreement.
(i) There is not pending or, to its knowledge, threatened against it
any action, suit or proceeding at law or in equity or before any court,
tribunal, Governmental Authority, official or any arbitrator that is likely
to affect the legality, validity or enforceability against it of this
Agreement or its ability to perform its obligations under this Agreement.
(j) It is not relying upon any representations of the other Party
other than those expressly set forth herein or any communication (written
or oral) of the other Party as investment advice or as a recommendation to
enter into this Agreement, it being understood that information and
explanations related to the terms and conditions of this Agreement shall
not be considered investment advice or a recommendation to enter into this
Agreement and that no communication (written or oral) received from the
other Party shall be deemed to be an assurance or guarantee as to the
expected results of this Agreement.
(k) It has entered into this Agreement as principal (and not as
advisor, agent, broker or in any other capacity, fiduciary or otherwise)
and with a full understanding of the material terms and risks of this
Agreement, and has made its own independent decision to enter into this
Agreement and as to whether this Agreement is appropriate or suitable for
it based upon its own judgment and upon advice from such advisers as it has
deemed necessary.
(l) It is capable of assessing the merits of and understanding (on its
own behalf or through independent professional advice) this Agreement,
understands and accepts the terms, conditions and risks of this Agreement,
and is capable of assuming, and assumes, the risks of this Agreement.
(m) The other Party (i) is acting solely in the capacity of an
arm's-length contractual counterparty with respect to this Agreement, (ii)
is not acting as a financial advisor or fiduciary or in any similar
capacity with respect to this Agreement, and (iii) has not given to it any
assurance or guarantee as to the expected performance or result of this
Agreement.
(n) It is not bound by any other agreement that would preclude or
hinder its execution, delivery, or performance of this Agreement.
(o) Neither it nor any of its Affiliates has been contacted by or
negotiated with any finder, broker or other intermediary in connection with
the sale of the Line Fill Oil hereunder or the Buy/Sell Transactions who is
entitled to any compensation with respect thereto.
(p) None of its or its Affiliates' directors, officers, employees or
agents has received or will receive any commission, fee, rebate, gift or
entertainment of significant value in connection with this Agreement.
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ARTICLE 11
DEFAULT AND TERMINATION
11.1 Event of Default.
Notwithstanding any other provision of this Agreement, a Default or Event
of Default shall be deemed to occur when:
(a) Premcor fails to fully complete its obligations and conditions to
MSCG's performance as set forth in Section 2.1 as soon as practicable after
the Effective Date, and prior to October 1, 2002, or MSCG fails to fully
complete its obligations and conditions to Premcor's performance as set
forth in Section 2.2.
(b) Either Party fails to make payment when due under this Agreement
within two (2) Business Days of a written demand therefor.
(c) Premcor breaches any of the covenants made in Section 7.2, which
is not cured to MSCG's satisfaction in its sole discretion within ten (10)
Business Days from the date that either Party receives written notice that
corrective action is needed.
(d) Either Party fails to perform any obligation to the other under
this Agreement (other than an Event of Default described in clauses (a),
(b) or (c) above), which is not cured to the satisfaction of the other
Party (in its sole discretion) within ten (10) Business Days from the date
that such Party receives written notice that corrective action is needed.
(e) Either Party breaches any representation, covenant (except in
respect of Section 8.2) or warranty made or repeated or deemed to have been
made or repeated by the Party in any material respect, or any
representation proves to have been incorrect or misleading in any material
respect when made or repeated or deemed to have been made or repeated under
this Agreement.
(f) Either Party defaults under any other agreement or transaction now
existing or hereafter entered into between MSCG and Premcor in any material
respect (excluding any agreement or transaction that constitutes the
obligation, whether present or future, contingent or otherwise, as
principal or surety or otherwise, in respect of borrowed money and any
securities repurchase or reverse repurchase agreement or similar
transaction between the Parties), which is not cured within the applicable
time period, if any.
(g) Either Party:
(i) is dissolved (other than pursuant to a consolidation,
amalgamation or merger);
(ii) becomes insolvent or is generally unable to pay its debts or
fails or admits in writing its inability generally to pay its debts as
they become due;
16
(iii) makes a general assignment, arrangement or composition with
or for the benefit of its creditors;
(iv) institutes or has instituted against it a proceeding seeking
a judgment of insolvency or bankruptcy or any other relief under any
bankruptcy or insolvency law or other similar law affecting creditors'
rights, or a petition is presented for its winding-up or liquidation,
and, in the case of any such proceeding or petition instituted or
presented against it, such proceeding or petition (A) results in a
judgment of insolvency or bankruptcy or the entry of an order for
relief or the making of an order for its winding-up or liquidation or
(B) is not dismissed, discharged, stayed or restrained within thirty
(30) days;
(v) has a resolution passed for its winding-up, official
management or liquidation (other than pursuant to a consolidation,
amalgamation or merger);
(vi) seeks or becomes subject to the appointment of an
administrator, provisional liquidator, conservator, receiver, trustee,
custodian or other similar official for all or substantially all its
assets;
(vii) has a secured party take possession of all or substantially
all its assets or has a distress, execution, attachment, sequestration
or other legal process levied, enforced or sued on against all or
substantially all its assets and such secured party maintains
possession, or any such process is not dismissed, discharged, stayed
or restrained;
(viii) causes or is subject to any event with respect to it
which, under the applicable laws of any jurisdiction, has an analogous
effect to any of the events specified in clauses (i) to (vii)
inclusive; or
(ix) takes any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the foregoing
acts.
(h) Either Party consolidates or amalgamates with, merges with or
into, or transfers all or substantially all its assets to, another entity
and, at the time of such consolidation, amalgamation, merger or transfer,
(i) the resulting, surviving or transferee entity fails to assume all the
obligations of such Party under this Agreement, either by operation of law
or by an agreement satisfactory to the other Party or otherwise, or (ii) in
the reasonable opinion of the other Party, the creditworthiness of the
successor, surviving or transferee entity is materially weaker than the
predecessor entity immediately prior to the consolidation, amalgamation,
merger or transfer.
(i) The occurrence and continuation of a default or other similar
condition or event in respect of a Party or any of its Affiliates under one
or more agreements or instruments, individually or collectively, relating
to indebtedness for borrowed money or the payment of money under any
forward contract, swap agreement, or commodities contract (in each case as
defined in the United States Bankruptcy Code) which results in such
indebtedness or payments of money becoming immediately due and payable, in
an
17
aggregate amount of not less than the $25,000,000 (after giving effect to
any applicable notice requirement or grace period).
11.2 Remedies Upon Event of Default.
Notwithstanding any other provision of this Agreement, upon the occurrence
of an Event of Default with respect to either Party (referred to as the
"Defaulting Party"), the other Party (the "Performing Party") shall in its sole
discretion and upon one (1) Business Day's written notice to the Defaulting
Party, be entitled to take the following actions:
(a) If Premcor is the Defaulting Party, MSCG may declare an
accelerated Sale Date, which date shall be at its sole discretion, and (i)
demand that Premcor repurchase the Line Fill Oil on such date, or if it
refuses to do so in a timely manner, (ii) withdraw the Purchase Date Volume
of Line Fill Oil from the Pipeline Systems and terminate this Agreement.
(b) If MSCG is the Defaulting Party, Premcor may declare an
accelerated Sale Date, which date shall be at its sole discretion,
provided, however, that Premcor complies with all of the payment terms of
this Agreement.
(c) In the event of an accelerated Sale Date, the price set forth in
Section 5.2 shall be adjusted to reflect the (i) market value of the Line
Fill Oil on the accelerated Sale Date, which shall be determined based on
the front line NYMEX settlement price per barrel for WTI posted on such
date, minus (ii) the original per Barrel differential agreed upon pursuant
to Section 5.2(b), (iii) plus or minus the actual spread differential
between the September 2003 NYMEX settlement price per barrel for WTI and
the front line NYMEX settlement price on the accelerated Sale Date, or such
other date as MSCG may reasonably determine in its sole discretion.
11.3 Close Out of Other Contracts Between the Parties.
(a) In addition to the foregoing remedies, the Performing Party shall,
in its sole discretion and upon one (1) Business Day's written notice to
the Defaulting Party, be entitled to immediately liquidate any or all any
other outstanding contracts between the Parties ("Contracts") as of a
designated date ("Early Termination Date") by closing out each such
Contract at its market value, as determined by the Performing Party in a
commercially reasonable manner as of or close to the Early Termination
Date, and calculating an amount equal to the difference, if any, between
the market value and the value specified in such Contract ("Settlement
Payment"). The Performing Party then shall be entitled to set off, net or
aggregate (i) all Settlement Payments so determined and payable by each
Party to the other, (ii) all damages, losses and expenses incurred by the
Performing Party as a result of termination and liquidation of Contracts,
including reasonable attorneys' fees, court costs, collection costs,
interest charges and other disbursements and any damages, losses and
expenses incurred in obtaining, maintaining or liquidating commercially
reasonable hedges or related trading positions relating to the Contracts
that are being liquidated, all as determined in a commercially reasonable
manner by the Performing Party, (iii) all margin or collateral held by
either Party to
18
secure the obligations of the other Party, and (iv) any other amounts one
Party owes the other under a Contract (which unpaid amounts shall be deemed
to be held by a Party as margin to secure the other Party's obligations
from time to time incurred), whereupon all such amounts shall be aggregated
or netted to a single liquidated amount ("Termination Payment").
(b) On the Early Termination Date or as soon as reasonably practicable
thereafter, the Performing Party shall provide the Defaulting Party with a
statement showing, in reasonable detail, the calculation of the Termination
Payment. Any Termination Payment due to the Defaulting Party shall be paid
concurrently with the delivery of statement contemplated by this paragraph.
If the Defaulting Party owes the Termination Payment to the Performing
Party, the Defaulting Party shall pay the Termination Payment on the first
Business Day after it receives the statement.
11.4 The Performing Party's rights under this Article 12 are in addition
to, and not in limitation or exclusion of, any other rights that it may have
(whether by agreement, operation of law or otherwise), including any rights and
remedies under the UCC. The Performing Party may enforce any of its remedies
under this Agreement successively or concurrently at its option. No delay or
failure on the part of a Performing Party to exercise any right or remedy to
which it may become entitled on account of an Event of Default shall constitute
an abandonment of any such right, and the Performing Party shall be entitled to
exercise such right or remedy at any time during the continuance of an Event of
Default. All of the remedies and other provisions of this Article 12 shall be
without prejudice and in addition to any right of setoff, recoupment,
combination of accounts, Lien or other right to which any Party is at any time
otherwise entitled (whether by operation of law, in equity, under contract or
otherwise).
11.5 The Defaulting Party shall indemnify and hold harmless the Performing
Party for all Liabilities incurred as a result of the Default or in the exercise
of any remedies under this Article 12, including any damages, losses and
expenses incurred in obtaining, maintaining or liquidating commercially
reasonable hedges relating to the Line Fill and Buy/Sell Oil to be sold
hereunder, all as determined in a commercially reasonable manner by the
Performing Party.
ARTICLE 12
INDEMNIFICATION
12.1 To the fullest extent permitted by applicable law, Premcor shall
defend, indemnify and hold harmless MSCG, its Affiliates, and their directors,
officers, employees, representatives, agents and contractors, for and against
(i) any Taxes imposed on the Buy/Sell Oil or the Line Fill Oil, and all
penalties or interest thereon, and (ii) any Liabilities, including those related
to injury, disease, or death of any person or damage to or loss of any property,
that directly or indirectly arise out of (X) any adverse claims or Liens to the
Line Fill Oil or Buy/Sell Oil that are asserted by Premcor, its Affiliates,
employees, agents or creditors or any other Person claiming throughout or on
behalf of Premcor, (Y) Premcor's breach of any representations, warranties or
covenants made herein, or (Z) Premcor's breach of any of its obligations under
this Agreement.
19
12.2 MSCG agrees to notify Premcor as soon as practicable after receiving
notice of any suit brought against it within the indemnities of this Agreement,
shall furnish Premcor with complete details within its knowledge and shall
render all reasonable assistance requested by Premcor in the defense. MSCG shall
have the right but not the duty to participate with counsel of its own
selection, at Premcor's expense, in the defense and settlement of any claim or
in any proceeding against MSCG without relieving Premcor of any obligations
hereunder. If Premcor fails to assume the defense promptly after a claim is
brought against MSCG, MSCG may conduct such defense, with all reasonable costs,
including attorneys' fees, at Premcor's expense. Premcor is not authorized to
compromise or settle any claim against MSCG without MSCG's approval.
ARTICLE 13
LIMITATION ON DAMAGES
Except in respect of claims made by third parties for which Premcor must
indemnify MSCG pursuant to Article 13, the Parties' liability for damages is
limited to direct, actual damages only and neither Party shall be liable for
special, consequential, incidental, punitive, exemplary or indirect damages, in
tort, contract or otherwise, of any kind, arising out of or in any way connected
with the performance, the suspension of performance, the failure to perform, or
the termination of this Agreement. Each Party acknowledges the duty to mitigate
damages hereunder.
ARTICLE 14
CONFIDENTIALITY
14.1 The Parties agree that the specific terms and conditions of this
Agreement and any Buy/Sell Transaction are confidential and shall not disclose
them to any third party, except (i) as may be required by court order, Laws and
Regulations or a Governmental Authority, or (ii) to such Party's or its
Affiliates' employees, auditors, consultants, banks, financial advisors and
legal advisors. The confidentiality obligations under this Agreement shall
survive termination of this Agreement for a period of two (2) years following
termination.
14.2 In the case of disclosure covered by subclause (i) of Section 15.1 and
if the disclosing Party's counsel advises that it is permissible to do so, the
disclosing Party shall notify the other Party in writing of any proceeding of
which it is aware which may result in disclosure, and use reasonable efforts to
prevent or limit such disclosure. The Parties shall be entitled to all remedies
available at law, or in equity, to enforce or seek relief in connection with the
confidentiality obligations contained herein.
ARTICLE 15
GOVERNING LAW
15.1 THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED UNDER THE
LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ITS CONFLICTS OF LAWS
PRINCIPLES.
15.2 EACH OF THE PARTIES HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF ANY FEDERAL COURT OF COMPETENT JURISDICTION SITUATED IN THE
BOROUGH
20
OF MANHATTAN, NEW YORK, OR, IF ANY FEDERAL COURT DECLINES TO EXERCISE OR DOES
NOT HAVE JURISDICTION, IN ANY NEW YORK STATE COURT IN THE BOROUGH OF MANHATTAN
(WITHOUT RECOURSE TO ARBITRATION UNLESS BOTH PARTIES AGREE IN WRITING), AND TO
SERVICE OF PROCESS BY CERTIFIED MAIL, DELIVERED TO THE PARTY AT THE ADDRESS
INDICATED ABOVE. EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY OBJECTION TO PERSONAL JURISDICTION, WHETHER ON
GROUNDS OF VENUE, RESIDENCE OR DOMICILE.
15.3 EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY PROCEEDINGS RELATING
TO THIS AGREEMENT.
ARTICLE 16
ASSIGNMENT
16.1 This Agreement shall inure to the benefit of and be binding upon the
Parties hereto, their respective successors and permitted assigns.
16.2 Neither Party shall assign this Agreement or its rights or interests
hereunder in whole or in part, or delegate its obligations hereunder in whole or
in part, without the express written consent of the other Party except in the
case of assignment to Affiliate if (i) such Affiliate assumes in writing all of
the obligations of the assignor and (ii) the assignor provides the other Party
with evidence of the Affiliate's financial responsibility at least equal to that
of the assignor. If written consent is given for any assignment, the assignor
shall remain jointly and severally liable with the assignee for the full
performance of the assignor's obligations under this Agreement, unless the
Parties otherwise agree in writing.
16.3 Any attempted assignment in violation of this Article shall be null
and void ab initio and the non-assigning Party shall have the right, without
prejudice to any other rights or remedies it may have hereunder or otherwise, to
terminate this Agreement effective immediately upon notice to the Party
attempting such assignment.
ARTICLE 17
NOTICES
17.1 All invoices, notices, requests and other communications given
pursuant to this Agreement shall be in writing and sent by facsimile, electronic
mail or overnight courier. A notice shall be deemed to have been received when
transmitted (if confirmed by the notifying Party's transmission report), or on
the following Business Day if received after 5:00 p.m. EST, at the respective
Party's address set forth below and to the attention of the person or department
indicated. A Party may change its address or facsimile number by giving written
notice in accordance with this section, which is effective upon receipt.
Invoices received after 12:00 EST shall be considered to be received on the
following Business Day.
If to Premcor to:
The Premcor Refining Group Inc.
1700 East Putnam, Suite 500
Old Greenwich, Connecticut 06870
21
Attn: Michelle Cardoso
Phone: (203) 698-7527
Fax: (203) 698-7912
E-mail: michelle.cardoso@premcor.com
If to MSCG to:
Morgan Stanley Capital Group Inc.
Commodities Department, 4th Floor
1585 Broadway
New York, New York 10036
Attn: James Dutton
Phone: (212) 761-5794
Fax: (212) 761-0294
E-Mail: james.dutton@morganstanley.com
ARTICLE 18
NO WAIVER, CUMULATIVE REMEDIES
18.1 The failure of a Party hereunder to assert a right or enforce an
obligation of the other Party shall not be deemed a waiver of such right or
obligation. The waiver by any Party of a breach of any provision of, or Event of
Default under, this Agreement, shall not operate or be construed as a waiver of
any other breach of that provision or as a waiver of any breach of another
provision of, or Event of Default under, this Agreement, whether of a like kind
or different nature.
18.2 Each and every right granted to a Party under this Agreement or
allowed it by contract, at law or in equity shall be cumulative and may be
exercised from time to time in accordance with the terms thereof and applicable
law.
ARTICLE 19
NATURE OF THE TRANSACTION AND RELATIONSHIP OF PARTIES
This Agreement shall not be construed as creating a partnership,
association or joint venture between the Parties. It is understood that Premcor
has complete charge of its employees and agents in the performance of its duties
hereunder, and nothing herein shall be construed to make Premcor, or any
employee or agent of Premcor, an agent or employee of MSCG.
ARTICLE 20
MISCELLANEOUS
20.1 If any Article, Section or provision of this Agreement shall be
determined to be null and void, voidable or invalid by a court of competent
jurisdiction, then for such period that the same is void or invalid, it shall be
deemed to be deleted from this Agreement and the remaining portions of this
Agreement shall remain in full force and effect.
20.2 The terms of this Agreement constitute the entire agreement between
the Parties with respect to the matters set forth in this Agreement, and no
representations or warranties shall
22
be implied or provisions added in the absence of a written agreement to such
effect between the Parties. This Agreement shall not be modified or changed
except by written instrument executed by the Parties' duly authorized
representatives.
20.3 Nothing expressed or implied in this Agreement is intended to create
any rights, obligations or benefits under this Agreement in any person other
than MSCG, Premcor and their successors and permitted assigns.
20.4 No promise, representation or inducement has been made by either Party
that is not embodied in this Agreement, and neither Party shall be bound by or
liable for any alleged representation, promise or inducement not so set forth.
20.5 Time is of the essence with respect to all aspects of each Party's
performance of any obligations under this Agreement.
20.6 All audit rights, payment, confidentiality and indemnification
obligations shall survive the expiration or termination of this Agreement.
20.7 Each Party shall exercise reasonable care and diligence to prevent any
illegal or unethical actions or conditions that could result in a conflict with
the other Party's best interests.
20.8 The Parties acknowledge that they and their counsel have reviewed and
revised this Agreement and that no presumption of contract interpretation or
construction shall apply to the advantage or disadvantage of the drafter of this
Agreement.
20.9 This Agreement may be executed by the Parties in separate counterparts
and initially delivered by facsimile transmission or otherwise, with original
signature pages to follow, and all such counterparts shall together constitute
one and the same instrument.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, each Party hereto as caused this Agreement to be executed by
its duly authorized representative.
Morgan Stanley Capital Group Inc.
By: /s/ John Shapiro
--------------------------------
Title: Vice President of Morgan Stanley
Capital Group Inc.
--------------------------------
Date: September 13, 2002
--------------------------------
The Premcor Refining Group Inc.
By: /s/ Donald F. Lucey
--------------------------------
Title: Vice President - Commercial
--------------------------------
Date: September 13, 2002
--------------------------------
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