Exhibit 10.12
FEEDSTOCK PURCHASE AGREEMENT
(LVT)
between
CONOCOPHILLIPS COMPANY,
as Seller,
and
CALUMET PENRECO, LLC,
as Buyer.
January 1, 2008
SPECIFIC TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL TREATMENT
FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL HAS BEEN SEPARATELY
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN
MARKED AT THE APPROPRIATE PLACE WITH TWO ASTERISKS(**).

--------------------------------------------------------------------------------

 

FEEDSTOCK PURCHASE AGREEMENT
(LVT Feedstock)
     In consideration of the covenants contained in this Agreement,
ConocoPhillips Company (the “Seller”) and Calumet Penreco, LLC (the “Buyer”)
agree as follows:
ARTICLE I
EFFECTIVE DATE
     This Agreement shall be effective as of January 1, 2008 (the “Effective
Date”).
ARTICLE II
DEFINITIONS
     As used in this Agreement, the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined):
     Section 2.1. “Agreement” means this Feedstock Purchase Agreement and all
Exhibits attached hereto.
     Section 2.2. “ASTM” means American Society for Testing Materials.
     Section 2.3. “Barrel” means 42 U.S. standard gallons of 231 cubic inches
per gallon corrected for temperature to 60° Fahrenheit in accordance with the
latest edition of ASTM-D-1250 Petroleum Measurement Table 6B.
     Section 2.4. “Base Volume” means the volume of Feedstock required to
produce (i) 50,000,000 gallons of LVT Products at the LVT Unit during any of
(a) Contract Years 1 and 2 combined, (b) Contract Years 2 and 3 combined,
(c) Contract Years 3 and 4 combined, or (d) Contract Years 4 and 5 combined and
(ii) 50,000,000 gallons of LVT Products at the LVT Unit during any 24-month
period during the remainder of the Term. For purposes of this definition,
Overhead Product is included within the term “LVT Products” only to the extent
that Buyer actually purchases Overhead Product. Assuming the Overhead Product is
not purchased, Base Volume shall be based on the following assumptions with
respect to yield:
          (x) **
          (y) **
          (z) **
     Section 2.5. “Contract Year” means a twelve-month period beginning on the
Effective Date or any anniversary thereof.
     Section 2.6. “Delivery Point” means that point where the risk of loss of
the Feedstock passes from the Seller to the Buyer which is the inlet flange to
the feed tank.
     Section 2.7. “Effective Date” means that date defined in Article I.
     Section 2.8. “Feedstock” means LVT feedstock.
     Section 2.9. “LVT Facilities” has the meaning ascribed to that term in the
LVT Unit Agreement.
     Section 2.10. “LVT Products” means all material produced by the LVT Unit,
including Overhead Product, bottoms, sidedraw and untreated Feedstock, whether
meeting specifications or off-specification and includes molex raffinate
diverted to the Buyer prior to fractionation.
     Section 2.11. “LVT Unit” has the meaning ascribed to that term in the LVT
Unit Agreement.
     Section 2.12. “LVT Unit Agreement” means the agreement of that name entered
by and between the Parties of even date herewith.

1

--------------------------------------------------------------------------------

 

     Section 2.13. “Market Price” is defined as the price a willing buyer will
pay a willing seller for the product in question at the time and place of the
relevant transaction or transactions.
     Section 2.14 “Measurement Point” means that point where the volume of
Feedstock is measured, which is the point at which LVT Products are loaded into
tank cars or tank trucks.
     Section 2.15. “Month” or “month” means a calendar month.
     Section 2.16. “Overhead Product” means the light ends produced from the LVT
Unit’s fractionator.
     Section 2.17. “Party” or “Parties” means both the Seller and the Buyer
respectively whether singular or plural.
     Section 2.18. “Refinery” means the Seller’s crude oil refinery located at
or near Westlake, Louisiana.
     Section 2.19. “Sasol” means Sasol North America, Inc., or any successor
thereof or thereto.
     Section 2.20. “Term” has the meaning ascribed to that term in Article III.
ARTICLE III
TERM
     Section 3.1. This Agreement shall be in effect for a period beginning at
the beginning of the Effective Date and ending upon the expiration of ten years
thereafter (the “Term”).
     Section 3.2. Seller may terminate this Agreement effective at any time
after the first five Contract Years of the Term if Seller voluntarily closes the
Refinery or any unit of the Refinery or undertakes a significant processing
change and if such closure or processing change is expected materially to impact
the volume or quality of product Seller exchanges with Sasol in return for
Feedstock, provided that Seller shall give Buyer at least one year’s written
notice in advance of such closure or processing change.
ARTICLE IV
VOLUME AND QUALITY
     Section 4.1. Seller shall sell to Buyer and Buyer shall purchase from
Seller the Base Volume of Feedstock in approximately equal monthly volumes.
Seller may sell and Buyer may purchase such volume of Feedstock in addition to
the Base Volume as they may agree at the Feedstock price calculated according to
the formula set forth in Section 7.1.
     Section 4.2. For planning purposes only:
               (a) at the end of every month, the Parties shall jointly develop
a production plan for each of the next three months, based upon the Buyer’s
requirements for Feedstock, the Seller’s ability to supply Feedstock and the
capacity of the LVT Unit, and
               (b) as soon as practical after the Effective Date and before
September 1 of each calendar year of the Term, the Parties shall jointly develop
a production plan for each month of the following calendar year, based upon the
Buyer’s requirements for Feedstock, the Seller’s ability to supply Feedstock and
the capacity of the LVT Unit.
     Section 4.3. Buyer and Seller acknowledge that the production and use of
Feedstock are parts of larger operations and agree to use commercially
reasonable efforts to coordinate production schedules and lifting schedules of
LVT Products to minimize impacts on each other’s operations.
     Section 4.4. The Feedstock purchased and sold pursuant to this Agreement
shall have the technical properties specified in Exhibit 4.4 which is attached
hereto and made a part hereof.
     Section 4.5. Seller acknowledges that Buyer’s requirements for any
Feedstock are determined by Buyer’s customers’ needs. Seller agrees to use
commercially reasonable efforts to accommodate Buyer’s requirements for revised
Feedstock specifications within the generally accepted tolerances for each
Feedstock. All costs and expenses resulting from changes in specifications as
listed in Exhibit 4.4 will be paid by Buyer.

2

--------------------------------------------------------------------------------

 

ARTICLE V
DELIVERY; TITLE AND RISK OF LOSS
     Feedstock purchased and sold under this Agreement shall be delivered by the
Seller, and title to and risk of loss of Feedstock shall pass to the Buyer, at
the inlet flange to the feed tank at the LVT Facilities.
ARTICLE VI
MEASUREMENT
     To simplify accounting, the volume of Feedstock delivered hereunder during
a month shall be deemed to be equal to the volume of LVT Products loaded into
tank cars or tank trucks at the LVT Facilities during such month as measured at
the point at which LVT Products are loaded into tank cars or tank trucks at the
LVT Facilities, provided that volume gain, co-product production and volume loss
will be determined in the manner provided in the LVT Unit Agreement.
ARTICLE VII
PRICE
     Section 7.1. Subject to the other provisions of this Article VII, the price
per gallon of Feedstock delivered to Buyer during any month shall be equal to **
     Section 7.2. The price formula may be reopened upon written notice from one
party to the other no more than once per Contract Year if any of the following
is true and results in the prices determined using the price formula being more
than five percent (5%) higher or lower than a Market Price for Feedstock:
               (a) The formula set forth in Section 7.1 no longer represents a
Market Price for Feedstock.
               (b) The Feedstock specifications are changed.
               (c) Any published data which is incorporated into the
then-current price formula set forth in Section 7.1 is no longer published in
the same form as of the date of this Agreement.
               (d) Feedstock characteristics become valued differently relative
to the reference product, or geographic supply/demand balances change.
               (e) A more representative reference product quote becomes
available more closely related to the Feedstock.
               (f) The co-product adjustments calculated according to the LVT
Unit Agreement no longer reflect of the marketplace.
               (g) The operating cost adjustments calculated according to the
LVT Unit Agreement are no longer reflective of typical industry operating costs.
     Section 7.3. The new pricing formula to be negotiated in the event of a
reopener as contemplated by Section 7.2 will be negotiated according to the
guiding principles set out below:
               (a) The revised formula should result in a Market Price for
Feedstock.
               (b) Cost of acquisition by the Buyer and the cost of disposition
by the Seller will both be considered.
               (c) Prices will recognize local supply and demand.
               (d) Prices will recognize quality differentials.

3

--------------------------------------------------------------------------------

 

     Section 7.4. If the Parties are unable to agree to a revised pricing
formula within 90 days of the date of the notice initiating the price
negotiations, then the matter will be deemed to be in dispute (a “Pricing
Dispute”). In the event of a Pricing Dispute, at the request of either Party,
the Parties will attempt to agree upon, and to engage, an individual with
experience in prices for refined petroleum prices on the United States Gulf
Coast (the “Pricing Arbitrator”) to resolve the Pricing Dispute according to the
procedure set forth in Exhibit 7.4 and in this section. Within seven days of the
selection of a Pricing Arbitrator, each Party shall submit to the Pricing
Arbitrator its position on the Pricing Dispute together with any documents
reasonably relevant to the Pricing Dispute (a “Pricing Submission”). The Pricing
Arbitrator shall be permitted to assess only those facts and opinions with
respect to a Pricing Dispute as are set forth in the Pricing Submissions,
provided that the Pricing Arbitrator may pose, and consider each Party’s
responses to, one set of written questions to both Parties, to which each Party
shall respond within 15 days of receipt. The Parties shall instruct the Pricing
Arbitrator to render a decision within 30 days of his or her receipt of the
Parties’ Pricing Submissions, regardless of whether the Pricing Arbitrator has
posed or the Parties have responded to written questions. In rendering his or
her decision with respect to a Pricing Dispute, the Pricing Arbitrator shall
only be permitted to choose between the positions set forth in the Parties’
respective Pricing Submissions and shall select the one Party’s position that
describes a formula most likely to reflect market level pricing for Feedstock,
applying the principles set forth in Section 7.3. Any decision rendered by the
Pricing Arbitrator shall be final and binding on the Parties.
     Section 7.5. Beginning on the first day of the sixth Contract Year, seven
cents ($0.07) shall be added to the price of each gallon of feedstock calculated
in accordance with the formula described in Section 7.1, as that formula may be
amended from time to time.
ARTICLE VIII
PAYMENT
     Section 8.1. By the fifteenth (15th) calendar day of a Month (“Month 2”),
Seller shall invoice Buyer for estimated volume of Feedstock for Month 2 as
determined pursuant to Section 4.2 above using the price calculated according to
the formula set forth in Section 7.1 for the immediately preceding Month (“Month
1”), plus or minus an invoice adjustment to the extent that the volume of
Feedstock with respect to Month 1 determined pursuant to Article VI multiplied
by the price calculated for Month 1 is less than or greater than the amount
actually invoiced with respect to Month 1. For example, if in January the volume
for January were estimated to be 10,000 gallons pursuant to Section 4.2, and if
the price in December were calculated to be $1.00 per gallon, the unadjusted
invoice would be $10,000. If in February the volume of Feedstock for January
were known to have been 8,000 gallons (and without regard to any other
adjustment in the January invoice), the adjustment to the February invoice would
be ($2,000).
     Section 8.2. Payments shall be made in full, by wire transfer no later than
three (3) business days after receipt by Buyer of the invoice, without any
adjustments, discounts or setoffs, except in cases of bona fide disputes, in
which cases only the disputed amount will be withheld. Such payments shall be
without prejudice to any claim for damages or any other right under this
Agreement or applicable law. In the event Buyer fails to make any payments on or
before the due date, Seller shall have the right to charge interest from the due
date on the amount of the overdue payment at a per annum rate which shall be the
lower of (a) the prime rate plus two percent (2%), or (b) the maximum interest
rate permitted by law. Prime rate shall mean, for any day, the rate of interest
announced by JP Morgan Chase Bank (or its successors or an acceptable substitute
agreed to by the Parties) as its prime lending rate.
     Section 8.3. The Seller reserves the right to withhold delivery of the
Feedstock to the Buyer at any time the Buyer’s account becomes past due.
ARTICLE IX
CLAIMS
     Section 9.1. The Seller shall have no liability to the Buyer for any defect
in the quality of Feedstock delivered pursuant to this Agreement unless:
               (a) the Buyer gives the Seller written notice of the Buyer’s
claim within ninety (90) days after delivery of the affected Feedstock or, as to
a latent defect, within seven (7) days after the Buyer has discovered such
latent defect, but in no event more than one hundred twenty (120) days after
delivery, and
               (b) the Seller is given reasonable opportunity to inspect the
affected Feedstock or analyze the Buyer’s retained samples within fifteen
(15) days after receiving notice.

4

--------------------------------------------------------------------------------

 

     Section 9.2. Nothing contained in this Article shall operate to limit the
defenses which the Seller may have against such claims.
ARTICLE X
EXCLUSION OF WARRANTIES
     Seller warrants that it has title to Feedstock it delivers under this
Agreement, that such Feedstock will be free from all liens, encumbrances, and
security interests, and that such Feedstock shall be of the kind and quality
described herein. THESE WARRANTIES ARE EXCLUSIVE AND ARE IN LIEU OF ANY WARRANTY
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WHETHER EXPRESS OR
IMPLIED.
ARTICLE XI
LIMITATION OF LIABILITY; LIQUIDATED DAMAGES
     Section 11.1. With respect to each of any of (a) Contract Years 1 and 2
combined, (b) Contract Years 2 and 3 combined, (c) Contract Years 3 and 4
combined, or (d) Contract Years 4 and 5 combined, if Seller fails to deliver the
Base Volume of Feedstock for any reason (including reasons that would otherwise
excuse Seller’s performance, including Force Majeure), then as Buyer’s sole
remedy for such failure to supply:
               (a) as soon as reasonably practical after Buyer’s demand, Seller
shall pay to Buyer, as liquidated damages, an amount equal to (i) twenty-five
cents ($0.25), multiplied by (ii) the difference between (A) 50,000,000 gallons
of Feedstock (adjusted as provided in Section 11.1(b)) and (B) the sum of the
volume of all LVT Products delivered to Buyer during each of such months,
excluding any volume of LVT Products delivered to Buyer during any month of such
period that was greater than 125% of the average monthly volume of LVT Products
delivered to Buyer during all of the months of such period;
               (b) the volume described in Section 11.1(a)(ii)(A) shall be
reduced by the volume by which deliveries of LVT Products to Buyer in each month
during the relevant period are less than the volume of LVT Products Seller was
ready, willing and able to deliver to Buyer, up to a maximum volume of 3,000,000
gallons per month, provided that to the extent that (x) the LVT Facilities are
affected by Force Majeure, (y) such Force Majeure impairs the ability of the LVT
Unit to receive Feedstock or deliver LVT Products, and (z) Buyer is required to
bear the cost of repair or reconstruction pursuant to any applicable provision
of the LVT Unit Agreement, then Buyer failure to approve expenditures necessary
for such repair or reconstruction shall excuse Seller’s obligation under this
Section 11.1.
     Section 11.2. The Seller’s liability to the Buyer for a breach of this
Agreement by supplying off-specification Feedstock shall be limited to the
lesser of the cost to replace the particular delivery/deliveries of Feedstock
affected by such breach or the purchase price of the particular
delivery/deliveries.
     Section 11.3. In the event of a Party’s breach of this Agreement, the other
party shall take commercially reasonable steps to mitigate its damages, provided
that Buyer’s failure to mitigate its damages shall not affect its rights under
Section 11.1.
     Section 11.4. Subject to the provisions of Section 9.1, neither Party shall
be liable on any claim under or arising out of or for breach of this Agreement
unless action thereon shall be brought within one (1) year from the date the
cause of action arose.
     Section 11.5. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INCIDENTAL
OR CONSEQUENTIAL DAMAGES.
ARTICLE XII
TAXES
     Section 12.1. The Seller agrees to pay any and all taxes, fees, or other
charges imposed or assessed by governmental or regulatory bodies, the taxable
incident of which occurs prior to the transfer of title to the Buyer.
     Section 12.2. The Buyer agrees to pay any and all taxes, fees, or other
charges imposed or assessed by governmental or regulatory bodies, the taxable
incident of which occurs after transfer of title to the Buyer.
     Section 12.3. Any and all taxes, fees, or other charges imposed or assessed
by governmental or regulatory bodies, the taxable incident of which is the
transfer of title or delivery of the Feedstock, shall be paid by the Party upon
whom the tax, fee, or charge

5

--------------------------------------------------------------------------------

 

legally falls. However, if the taxes, fees, or other charges are imposed upon
the Seller, such taxes (including sales, use, and other excise taxes but
excluding income taxes), fees and other charges shall be reimbursed to the
Seller by the Buyer.
     Section 12.4. Notwithstanding any other provision of this Agreement, any
tax or governmental charge or increase in the same which becomes effective after
the effective date of this Agreement, and which has the effect of increasing the
cost to the Seller of purchasing, producing, selling, transporting, or
delivering the Feedstock or procuring the materials used therein, including, by
way of example and not by way of limitation, any sales tax, use tax, retailer
occupational tax, gross receipts tax, value added tax, Superfund tax,
environmental tax, and/or port dues, if such taxes (excluding income taxes) or
dues are not automatically added to the price, may at the Seller’s option be
added to the price. If the Seller chooses not to add such taxes or charges to
the price, the Buyer shall be obligated to reimburse the Seller for any such
taxes (excluding income taxes) or charges.
     Section 12.5. The Buyer shall furnish the Seller with exemption or resale
certificates or other documents necessary to comply with any applicable sales
and use tax laws.
ARTICLE XIII
FORCE MAJEURE
     Except as provided in Section 11.1:
     Section 13.1. Neither Party shall be liable to the other for failure or
delay in performance hereunder to the extent that the failure or delay is due to
force majeure (“Force Majeure”), which is herein defined to include but not
limited to war (whether declared or undeclared), fire, flood, lightning,
earthquake, storm, or any act of God; strikes, lockouts, or other labor
difficulties, civil disturbances, riot, sabotage, accident, any official order,
directive or industry-wide request or suggestion by any governmental authority
or instrumentality thereof which in the reasonable judgment of the Party
affected makes it necessary to cease or reduce production; any disruption or
breakdown of labor; any inability to secure necessary materials, including
inability to secure materials by reason of allocations promulgated by authorized
governmental agencies; or any other contingency beyond the control of the
affected Party, which interferes with the performance hereunder. Buyer
acknowledges that Seller acquires the Feedstock sold hereunder from Sasol;
accordingly, Seller’s performance hereunder shall be excused to the extent that
Sasol’s ability to produce and deliver Feedstock to Seller is impaired due to
Force Majeure, provided that Seller’s failure to supply raw materials for
Feedstock production to Sasol shall not constitute a Force Majeure as to Sasol
unless such failure is caused by a Force Majeure affecting Seller or the LVT
Facilities.
     Section 13.2. Performance under this Agreement shall be suspended (except
for the payment of money due or to become due for past performance hereunder)
during the period of such Force Majeure to the extent made necessary by the
Force Majeure. A Party affected by Force Majeure shall use commercially
reasonable efforts to resume its performance, provided that the settlement of
strikes, lockouts, industrial disputes or labor disturbances affecting a Party
shall be entirely within the discretion of the Party so affected, and provided
further that Seller is under no duty to cause Sasol to resume production and
delivery of Feedstock when such production and delivery is impaired by a Force
Majeure affecting Sasol.
     Section 13.3. In the event of Force Majeure in the nature of strikes,
lockouts, industrial disputes or labor disturbances affecting a Party, the
affected Party affected will use commercially reasonable efforts to allocate the
available work force so as to continue performance hereunder.
     Section 13.4. No curtailment, suspension or acceptance of performance
pursuant to this Article shall operate to extend the Term of, or to terminate
this Agreement. Performance under this Agreement shall resume to the extent made
possible by the end or amelioration of the Force Majeure.
     Section 13.5. Upon the occurrence of any Force Majeure, the Party claiming
Force Majeure shall notify the other Party promptly in writing of such event and
to the extent possible, inform the other Party of the expected duration of the
Force Majeure and the performance to be affected by the suspension or
curtailment under this Agreement.
ARTICLE XIV
ASSIGNMENT
     Section 14.1. Except as provided in Section 14.3 below, neither Party may
assign this Agreement without the prior written consent of the other Party.
Neither Party shall unreasonably withhold its consent to the assignment of this
Agreement.

6

--------------------------------------------------------------------------------

 

     Section 14.2. No assignment of this Agreement shall relieve the assigning
Party of its obligations under this Agreement.
     Section 14.3. A party may assign this Agreement to an affiliate without
consent of the other party.
ARTICLE XV
NOTICE
     Section 15.1. Form of Notice. Any notice or correspondence to be given with
respect to this Agreement shall be in writing or shall be given orally and
confirmed in writing by letter, and delivered personally, by certified mail, or
by facsimile addressed to the respective Party at the address stated below or
such other address as either Party shall designate from time to time.
If to Seller, addressed to:

              ConocoPhillips Company     P.O. Box 2197, Houston, Texas 77252    
600 North Dairy Ashford Road, Houston, Texas 77079
 
  Attention:   Manager, Financial Planning and Analysis
 
      Lubricants and Specialty Products Business Unit
 
  Facsimile:   (281)293-3474

If to Buyer, addressed to:

              Calumet Penreco, LLC     % Calumet Specialty Products Partners,
L.P.     2780 Waterfront Pkwy. E. Dr., Suite 200     Indianapolis, IN 46214
 
  Attention:   Vice President and CFO
 
  Phone:   (317) 328-5660
 
  Facsimile:   (317) 328-5676

     Section 15.2. The foregoing notice requirements do not preclude normal
informal communications between Seller’s and Buyer’s employees with respect to
operational matters involving the Refinery and other property and facilities
used in the performance of this Agreement.
ARTICLE XVI
AGREEMENT AMENDMENT PROCEDURES
     The parties may amend Exhibit 4.4 or Exhibit 18.1 to this Agreement by each
party signing a revised Exhibit specifying the new terms with an effective date.
ARTICLE XVII
GOVERNING LAW
     All provisions of this Agreement shall be governed by and construed in
accordance with the laws of the State of Texas excluding any conflicts-of-law
rule or principle that might apply the laws of another jurisdiction.
ARTICLE XVIII
WARNINGS
     Section 18.1. A Material Safety Data Sheet for Feedstock is attached hereto
and made a part hereof as Exhibit 18.1. The Seller may from time to time provide
supplementary Material Safety Data Sheets. The Buyer shall advise its employees
about the hazards of Feedstock as well as the precautionary procedures for
handling Feedstock which are set out in such Material Safety Data Sheet or
supplementary Material Safety Data Sheets.

7

--------------------------------------------------------------------------------

 

     Section 18.2. The Buyer shall give to any third party to whom Buyer, its
parent, subsidiaries or affiliates convey Feedstock a copy of the Material
Safety Data Sheet or supplementary Material Safety Data Sheets it has received
from the Seller in connection with the sale of Feedstock.
ARTICLE XIX
ALLOCATION
     Section 19.1. If, due to the event of Force Majeure (as described in
Article XIII hereof), the Seller does not produce enough Feedstock to satisfy
its own internal and commercial requirements during any month of the Term of
this Agreement, and the Seller does not sell volumes of Feedstock to any other
third party during that month, then the Seller shall not be required to sell and
deliver any volumes of Feedstock to the Buyer during that month. However, if the
Seller does sell Feedstock to any third party during a month when, due to an
event of Force Majeure, it does not produce enough Feedstock to satisfy its own
internal and commercial requirements, then the Seller shall sell and deliver to
the Buyer its pro rata share of the Feedstock sold to third parties during the
month.
     Section 19.2. If, due to an event of Force Majeure (as described in
Article XIII hereof), the Seller does produce enough Feedstock to satisfy all of
its own internal and commercial requirements but does not produce enough
Feedstock during any month of the Term of this Agreement to satisfy all of its
external customers, then the Seller shall allocate to all of its Feedstock
customers, on a pro rata basis, the volumes of Feedstock which it does produce
in excess of its own internal and commercial requirements.
ARTICLE XX
AUDITS
     The Buyer shall have the right, at its sole cost and expense, to audit the
Seller’s relevant books and records in order to verify (a) the cost and other
data used by the Seller each month to calculate the Feedstock price under
Article VII of this Agreement, and (b) the amount of any taxes, fees, or other
charges billed to the Buyer pursuant to Article XII of this Agreement. The audit
shall take place during the Seller’s normal business hours on mutually agreeable
dates at the locations where the transactional records are located. Only the
results of the audit and not the specifically audited data shall be disclosed by
the Buyer’s auditors, unless the Buyer is required to judicially pursue a claim
against the Seller.
ARTICLE XXI
ARBITRATION
     Section 21.1 Negotiation. If any dispute relating to this Agreement arises
between the Parties, the Parties will first enter into good faith negotiations
to resolve the dispute in a commercially reasonable manner. The negotiations
will be held by representatives of each Party who have the authority to settle
any claims arising out of the dispute.
     Section 21.2 Arbitration. If a dispute cannot be resolved through good
faith negotiations, the dispute will be submitted for resolution by a panel of
three arbitrators in accordance with the Commercial Arbitration Rules of the
American Arbitration Association. The arbitrators will apply the laws of the
State of Texas to resolve the dispute. The arbitration will take place in
Houston, Texas, no later than one hundred twenty (120) days after a request for
arbitration is filed by a Party with the American Arbitration Association.
Judgment upon an arbitration award shall be final and may be entered in any
court having jurisdiction over the Party against which enforcement thereof is
sought. This arbitration provision will survive the termination of this
Agreement and the dissolution of the Parties.
     Section 21.3 Alternative Arbitration. As an alternative to the arbitration
procedure set forth in paragraph 21.2 above, the Parties may (but will not be
required to) agree to an expedited dispute resolution process which will be
completed no later than thirty (30) days after the date the Parties agree in
writing to pursue this expedited process. Under the expedited process, the
dispute will be submitted to a panel consisting of one executive level manager
from each Party who has the authority to settle any claims arising out of the
dispute. These managers will attempt to resolve the dispute within seven
(7) business days after the date the Parties agree to pursue the expedited
process. If the managers are unable to resolve the dispute with this time
period, such dispute will be submitted to a single arbitrator from a
pre-approved list of qualified, independent arbitrators. The arbitrator will
conduct the remainder of the expedited process in Houston, Texas, and will apply
the laws of the State of Texas and the Commercial Arbitration Rules of the
American Arbitration Association to resolve the dispute. The decision of the
arbitrator will be final and may be entered into any court having jurisdiction
over the Party against which enforcement thereof is sought.

8

--------------------------------------------------------------------------------

 

ARTICLE XXII
MISCELLANEOUS PROVISIONS
     Section 22.1. The section headings contained in this Agreement are for the
convenience of the Parties only and shall not be interpreted as part of this
Agreement.
     Section 22.2. This Agreement contains the entire agreement and
understanding of the Parties with respect to the sale and delivery of the
Feedstock and the same cancels and supersedes any agreement covering the
purchase of the Feedstock or other agreement incident thereto previously
executed by the Parties.
     Section 22.3. This Agreement shall not be modified except by written
instrument executed by duly authorized representatives of the respective
Parties.
     Section 22.4. Waiver by one Party of the other’s breach of any provision of
this Agreement shall not be deemed a waiver of any subsequent or continuing
breach of such provision or of the breach of any other provision or provisions
hereof.
     Section 22.5. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
     Section 22.6. This Agreement may be executed in any number of counterparts,
and each of such counterparts shall for all purposes be deemed to be an
original.
     Section 22.7. This Agreement shall inure to the benefit of and be binding
upon the successors and assigns of the respective Parties hereto.
     Section 22.8. The Buyer hereby waives the provisions of the Texas Deceptive
Trade Practices Act, Chapter 17, Subchapter E, Sections 17.41 through 17.63,
inclusive (other than Section 17.55A, which is not waived), Vernon’s Texas Codes
Annotated, Business and Commerce Code. In order to evidence its ability to grant
such a waiver, the Buyer hereby represents and warrants to the Seller that the
Buyer (i) is in the business of seeking or acquiring, by purchase or lease,
goods or services for commercial or business use, (ii) on the date hereof will
have assets of $5,000,000 or more according to its most recent financial
statement prepared in accordance with generally accepted accounting principles,
(iii) has knowledge and experience in financial and business matters that enable
it to evaluate the merits and risks of the transaction contemplated hereby, and
(iv) is not in a significantly disparate bargaining position.
     EXECUTED to be effective as of the date first above set forth.

              CALUMET PENRECO, LLC   CONOCOPHILLIPS COMPANY
 
            By:     /s/ R. Patrick Murray, II   By:     /s/ G.T. Goff
 
           
Title:
  Vice President & CFO   Title:   Vice President

9

--------------------------------------------------------------------------------

 

EXHIBIT 4.4
LVT FEEDSTOCK SPECIFICATIONS

                                      SPECIFICATIONS   PROPERTY   ASTM TEST
METHOD   MINIMUM     MAXIMUM     TYPICAL  
Aromatics, Volume%
  D1319             * *     * *
Sulfur, Total ppm by weight
  D1266 or D4294 or D2622             * *     * *
Flash Point, °F
  D56 or D3828     * *             * *
Gravity °API @ 60°F
  D1298 or D287     * *     * *     * *
Freezing Point, °C
  D2386             * *     * *
Cetane Index
  D976     * *             * *

 

--------------------------------------------------------------------------------

 

Exhibit 7.4
Expert Resolution Procedures
If, pursuant to the provisions of Section 7.4 of this Agreement, a matter is
required to be referred to an expert in the relevant subject matter for
determination, or a matter is expressly required to be determined by a Pricing
Arbitrator, and is so referred to a Pricing Arbitrator, the provisions set forth
below shall apply. Without the consent of both Parties, no individual designated
as an expert may be or have been employed by either Party.

a.          For any decision referred to a Pricing Arbitrator pursuant to the
provisions of this Agreement, the Parties hereby agree that the proceedings
shall be conducted and the decisions rendered expeditiously by such Pricing
Arbitrator.   b.          The Party desiring the determination of a Pricing
Arbitrator shall first give the other Party written notice of the request for
such determination.   c.          The Pricing Arbitrator shall be selected
unanimously by the Parties within a maximum period of five (5) days following
the receipt of the written notice in paragraph b above. Failing such unanimous
decision by the Parties within such period, then each party shall designate a
single individual meeting the qualifications of a Pricing Arbitrator and both
individuals so designated shall designate a third individual similarly
qualified, all three of whom shall serve as a panel. The agreed individual
Pricing Arbitrator or the panel of individuals as so determined shall be deemed
to be the Pricing Arbitrator for the purposes hereof, provided that a panel
shall be required to reach a single determination.   d.          The Pricing
Arbitrator, once appointed, shall have no ex parte communications with any of
the Parties concerning the expert determination. The Parties agree to cooperate
fully in the expeditious conduct of such expert determination and to provide the
Pricing Arbitrator with access to all facilities, books, records, documents,
information and personnel necessary to make a fully informed decision in an
expeditious manner.   e.          Before issuing a final decision, the Pricing
Arbitrator shall issue a draft report and allow the Parties to comment on it.
The Pricing Arbitrator shall endeavor to resolve the dispute within fifteen
(15) days or such shorter period as the Parties shall agree (but no later than
thirty (30) days) after his appointment, taking into account the circumstances
requiring an expeditious resolution of the matter in dispute.   f.          The
Pricing Arbitrator’s decision shall be final and binding on the Parties save in
the case of fraud or manifest error. The Parties expressly waive the right to
further submit the decision of the Pricing Arbitrator to arbitration pursuant to
this Agreement.   g.          The Parties shall bear their respective costs and
expenses related to, or arising in connection with, any proceedings before a
Pricing Arbitrator.

 

--------------------------------------------------------------------------------

 

EXHIBIT 18.1
MATERIAL SAFETY DATA SHEET

     
Material Safety Data Sheet
  (CONOCO LOGO) [h54539h5453901.gif]

MOLEX RAFFINATE
# 1. CHEMICAL PRODUCT/COMPANY IDENTIFICATION
MOLEX RAFFINATE

     
     MSDS Code:      GASC0205
  Revised: 03-Oct-2000

     CAS Number            : 64741-85-1

           MANUFACTURER/DISTRIBUTOR  
 
  Conoco, Inc.
 
  P.O. Box 2197
 
  Houston, TX 77252      PHONE NUMBERS                Product Information:
1-281-293-5550              Transport Emergency: CHENTREC 1-800-424-9300 or
1-703-527-3887 (call collect)              Medical Emergency: 1-800-342-5119 or
1-281-493-2767

2. COMPOSITION/INFORMATION ON INGREDIENTS

         
     COMPONENTS
    %    
             Hydrocarbons (Aromatic & Paraffinic)
>90

Petroleum distillate standard applies.
See Section 8 for exposure limits.
3. HAZARDS IDENTIFICATION
— EMERGENCY OVERVIEW —
     APPEARANCE / ODOR
Clear liquid; kerosene odor.
     OSHA REGULATORY STATUS
This material is classified as hazardous under OSHA Regulations.
May cause irritation to eyes, nose, throat, and lungs.
May cause central nervous system effects, such as headache, nausea, blurred
vision, drowsiness.
Combustible.
     HMIS Rating: Health 1; Flammability 2; Reactivity: 0
     Potential Health Effects
Primary Routes of Entry: Skin, inhalation
The product may cause irritation to the eyes, nose, throat, lungs, and skin
after prolonged or repeated exposure. Extreme overexposure or aspiration into
the lungs may cause lung damage or

 

--------------------------------------------------------------------------------

 

death, Overexposure may cause weakness, headache, nausea, confusion, blurred
vision, drowsiness, and other nervous system effects; greater overexposure may
cause dizziness, slurred speech, flushed face, unconsciousness, and convulsions.
     Carcinogenicity Information
None of the components present in this material at concentrations equal to or
greater than 0.1% are listed by IARC, NTP, OSHA or ACGIH as a carcinogen.
4. FIRST AID MEASURES
Inhalation
If inhaled, remove to fresh air. If not breathing, give artificial respiration.
If breathing is difficult, give oxygen. Call a physician.
     Skin Contact
Wash skin thoroughly with soap and water. If irritation develops and persists,
consult a physician.
     Eye Contact
In case of contact, immediately flush eyes with plenty of water for at least 15
minutes. Call a physician.
     Ingestion
If swallowed, do not induce vomiting. Immediately give 2 glasses of water. Never
give anything by mouth to an unconscious person. Call a physician.
     Notes to Physicians
Activated charcoal mixture may be administered. To prepare activated charcoal
mixture, suspend 50 grams activated charcoal in 400 mL water and mix thoroughly.
Administer 5 mL/kg, or 350 mL for an average adult.
5. FIRE FIGHTING MEASURES

     
Flammable Properties
   
Flash Point
  : 150 F (65 C)
Method
  : PM
Flammable limits in Air,
  % by volume
LEL
  : 0.5
UEL
  : 6
 
   
NFPA Classification
  : Class IIIA Combustible Liquid.
NFPA Rating
  : Health 0; Flammability 2; Reactivity 0

     Extinguishing Media
Water Spray, Foam, Dry Chemical, CO2.
     Fire Fighting Instructions
Use water to keep fire-exposed containers cool. If leak or spill has not
ignited, use water spray to disperse the vapors and to provide protection for
personnel attempting to stop a leak. Water spray may be used to flush spills
away from exposures.
Products of combustion may contain carbon monoxide, carbon dioxide and other
toxic materials. Do not enter enclosed or confined space

 

--------------------------------------------------------------------------------

 

without proper protective equipment including respiratory protection.
6. ACCIDENTAL RELEASE MEASURES
     Safeguards (Personnel)
NOTE: Review FIRE FIGHTING MEASURES and HANDLING (PERSONNEL) sections before
proceeding with clean-up. Use appropriate PERSONAL PROTECTIVE EQUIPMENT during
Clean-up.
Evacuate personnel, thoroughly ventilate area, use self-contained breathing
apparatus. Remove source of heat, sparks, flame, impact, friction or
electricity.
     Initial Containment
Dike spill. Prevent material from entering sewers, waterways, or low areas.
     Spill Clean Up
Recover free liquid for reuse or reclamation. Soak up with sawdust, sand, oil
dry or other absorbent material.
7. HANDLING AND STORAGE
     Handling (Personnel)
Avoid breathing vapors. Avoid contact with eyes. Avoid prolonged or repeated
contact with skin. Wash thoroughly after handling. Wash clothing after use.
     Handling (Physical Aspects)
Close container after each use. Keep away from heat, sparks and flames. Ground
container when pouring.
     Storage
Store in accordance with national Fire Protection Association recommendations.
Keep container tightly closed. Store in a cool, dry place. Store in a well
ventilated place. Store away from oxidizers, heat, sparks and flames.
8. EXPOSURE CONTROLS/PERSONAL PROTECTION
     Engineering Controls
VENTILATION
General mechanical ventilation normally adequate.
     Personal Protective Equipment
RESPIRATORY PROTECTION
Select appropriate NIOSH-approved respiratory protection for organic vapors
where necessary to maintain exposures below the exposure limits given below.
PROTECTIVE GLOVES
Should be worn when any potential exists for skin contact. NBR or neoprene
recommended.
EYE PROTECTION
Chemical splash goggles or face shield recommended where splashing can occur.

 

--------------------------------------------------------------------------------

 

OTHER PROTECTIVE EQUIPMENT
Sufficient protective clothing to minimize skin exposure.
Coveralls with long sleeves if splashing is probable.
     Applicable Exposure Limits

              Petroleum distillate standard applies.
 
  OSHA PEL   : 500 ppm, 2000 mg/m3, 8 Hr. TWA
 
  ACGIH tlv   : None Established

9. PHYSICAL AND CHEMICAL PROPERTIES
     Physical Data

         
 
  Boiling Point   : 330-550 F (166-288 C)
 
  Vapor Pressure   : 2 mm Hg
 
  Vapor Density   : 5.2 (Air = 1)
 
  % Volatiles   : (by volume) Nil
 
  Evaporation Rate   : Not Applicable
 
  Solubility in Water   : Insoluble
 
  Odor   : Paraffinic kerosene
 
  Form   : Liquid
 
  Color   : Clear
 
  Specific Gravity   : 0.81-0.82 (Water = 1)

10. STABILITY AND REACTIVITY
     Chemical Stability
Stable.
     Conditions to Avoid
Avoid excessive heat, sparks, and flame.
     Incompatibility with Other Materials
Incompatible with oxidizing materials.
     Decomposition
Normal combustion forms carbon dioxide; incomplete combustion may produce carbon
monoxide.
     Polymerization
Polymerization will not occur.
11. TOXICOLOGICAL INFORMATION
     Animal Data
Animal studies have shown that prolonged or repeated inhalation exposures to
high concentrations of some petroleum distillates have caused liver tumors in
mice and kidney damage and tumors in male rats. However, kidney effects were not
seen in similar studies involving female rats, guinea pigs, dogs, or monkeys,
Present studies indicate the kidney effects will only occur in male rats. Also,
human studies do not indicate this peculiar sensitivity for kidney damage and
studies reported in 1992 showed that this particular type of rat kidney damage
is not useful in predicting a human health hazard. The significance of liver
tumors in mice exposed to high doses of chemicals is highly speculative and
probably not a good indicator for predicting a potential human carcinogenic
hazard.
Mouse skin painting studies have shown that petroleum middle

 

--------------------------------------------------------------------------------

 

distillates (boiling range 100-700 F; naphtha, jet fuel, diesel fuel, kerosene,
etc.) can cause skin cancer when repeatedly applied and never washed from the
animal’s skin. The relative significance of this to human health is uncertain
since the petroleum distillates were not washed from the skin and resulting skin
effects (irritation, cell damage, etc.) may play a role in the tumorigenic
response. A few studies have shown that washing the animal’s skin with soap and
water between treatments greatly reduces the carcinogenic effect of some
petroleum oils. Other laboratory studies indicate that middle distillates caused
the skin tumors by promoting, rather than initiating, the formation of tumors,
so the effect is probably dose-related and low level exposure should not be
carcinogenic.
12. DISPOSAL CONSIDERATIONS
     Waste Disposal
Treatment, storage, transportation, and disposal must be in accordance with
applicable Federal, State/Provincial, and Local regulations. Do not flush to
surface water or sanitary sewer system. Recover nonusable free liquid and
dispose of in approved and permitted incinerator.
13. TRANSPORTATION INFORMATION
     Shipping Information
FOR RAIL CARS OF MOLEX RAFFINATE:
Kerosene, Combustible liquid, UN 1223, PG III
Molex Raffinate
PLACARDED: COMBUSTIBLE
Kerosene, Hazmat STCC # 4914165
Refined oil (Petroleum), Freight STCC # 2911225
FOR TRUCK TRANSPORTS, ISO CONTAINERS, AND INTERMEDIATE BULK CONTAINERS (>119
GAL) OF MOLEX RAFFINATE:
Kerosene, Combustible liquid, UN 1223, PG III
Molex Raffinate
PLACARDED: COMBUSTIBLE
(Petroleum oil)

         
 
  NOTE:   Shipments in single containers <119 gallons are not regulated
 
       
 
  NOTE:   Not regulated for overseas shipments
 
       
 
  MEXICO:   Same as DOT

     Shipping Information — Canada

         
 
  Special Information   : Not regulated in quantities less than
 
      450 liters (119 gallons) in one
 
      container.

14. REGULATORY INFORMATION
     U.S. Federal Regulations
OSHA HAZARD DETERMINATION

 

--------------------------------------------------------------------------------

 

This material is hazardous as defined by OSHA’s Hazard Communication Standard,
29 CFR 1910.1200.
CERCLA/SUPERFUND
Not applicable; this material is covered by the cercla petroleum exclusion.
Releases are not reportable.
SARA, TITLE III, 302/304
This material is not Known to contain extremely hazardous substances.

              SARA, TITLE III, 311/312  
 
  Acute   : Yes
 
  Chronic   : Yes
 
  Fire   : Yes
 
  Reactivity   : No
 
  Pressure   : No

SARA, TITLE III, 313
This material is not known to contain any chemical(s) at a level of 1,0% or
greater (0,1% for carcinogens) on the list of Toxic Chemicals and subject to
release reporting requirements.
TSCA
This material is in the TSCA Inventory of Chemical Substances (40 CFR 710)
and/or is otherwise in compliance with TSCA.
RCRA
This material has been evaluated for RCRA characteristics and does not meet
hazardous waste criteria if discarded in its purchased form. Because of product
use, transformation, mixing, processing, etc., which may render the resulting
material hazardous, it is the product user’s responsibility to determine at the
time of disposal whether the material meets RCRA hazardous waste criteria.
CLEAN WATER ACT
The material contains the following ingredient(s) which is considered hazardous
if spilled into navigable waters and therefore reportable to the National
Response Center (1-800-424-8802).

         
 
  Ingredient(s)   : Petroleum Hydrocarbons
 
  Reportable Quantity   : Film or sheen upon or discoloration of the water
surface

     State Regulations (U.S.)
CALIFORNIA “PROP 65”
This material is not known to contain any ingredient(s) subject to the Act.
PENNSYLVANIA WORKER & COMMUNITY RIGHT TO KNOW ACT
To the best of our knowledge this material is not sold or produced in
Pennsylvania. Please notify Conoco if the material results in Pennsylvania
commerce.
15. OTHER INFORMATION
     Additional Information: Hone.
The data in this Material Safety Data Sheet relates only to the

 

--------------------------------------------------------------------------------

 

specific material designated herein and does not relate to use in combination
with any other material or in any process.

         
 
  Responsibility for MSDS   : MSDS Coordinator
 
  Address   : Conoco inc.
 
  >   : PO Box 2197
 
  >   : Houston, TX 77252
 
  Telephone   : 1-281-293-5550

# Indicates updated section.
End of MSDS