exv10w3



 





Exhibit 10.3




NONCOMPETITION AGREEMENT




between




CONOCOPHILLIPS COMPANY,




as Seller,




and




CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.,




as Purchaser.




January 3, 2008




 









 





NONCOMPETITION AGREEMENT




     THIS NONCOMPETITION AGREEMENT (this “Agreement”) is by and between ConocoPhillips
Company, a Delaware corporation (the “Seller”), and Calumet Specialty Products Partners,
L.P., a Delaware limited partnership (the “Purchaser”), and is being executed and delivered
as of January 3, 2008 by the Seller in favor of, and for the benefit of, the Purchaser, Penreco, a
Texas general partnership (the “Partnership”), and the other Indemnitees (as hereinafter
defined).



Recitals




     A. As a general partner of the Partnership, the Seller has obtained extensive and valuable
knowledge and confidential information concerning the businesses of the Partnership.



     B. The Purchaser, the Seller and the other general partner of the Partnership entered into an
Agreement with Respect to the Sale of Partnership Interests in Penreco, a Texas General
Partnership, dated as of October 19, 2007 (the “Purchase Agreement”), which provides that
the Purchaser or its assignee shall purchase all of the general partner interests in the
Partnership (the “Purchase”). Certain capitalized terms used in this Agreement are defined
in Section 18, and other defined terms not defined herein have the meanings given such terms in the
Purchase Agreement.



     C. In order to induce the Purchaser to cause its affiliate, Calumet Penreco, LLC, to
consummate the transactions contemplated by the Purchase Agreement, the Seller is entering into
this Agreement.



Agreement




     In order to induce the Purchaser to consummate the transactions contemplated by the Purchase
Agreement, and for other good and valuable consideration, the Seller agrees as follows:



     1. Restriction on Competition. In consideration of the purchase of the Partnership
interests and the business of the Partnership and goodwill associated therewith, the Seller
covenants to the Purchaser that, for a period of five years from the Transaction Date (the
“Non-Competition Period”), without the prior written consent of the Purchaser (which
consent may be withheld in the sole and absolute discretion of the Purchaser) and except as
provided in Section 2, neither the Seller nor any Affiliate of the Seller will (i) engage in the
business of marketing, manufacturing or distributing any Competing Product within the Restricted
Territory, (ii) solicit or influence, or attempt to solicit or influence, any customer, or any
Person that known by the Person engaged in such solicitation, influence, or attempted solicitation
or influence to be, or within the twelve-month period preceding the date of this Agreement to have
been, a purchaser of a Competing Product from the Partnership to purchase a Competing Product from
any Person other than the Purchaser or its Affiliates, (iii) solicit or influence, or attempt to
solicit or influence, any Person (excluding any Person seconded to the Partnership by Seller and
excluding any member of the management committee of the Partnership) that is, or within the
twelve-month period preceding the date of this Agreement was, an employee, officer, director,
agent, supplier or independent contractor of the Partnership to terminate its relationship with the
Purchaser or its Affiliates, or otherwise interfere or attempt to interfere in any way with the



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Purchaser’s or its Affiliates’ relationships with any of the foregoing, or any others or (iv)
employ or engage or otherwise retain the services of, or recruit or solicit therefore, any Person
who is, or within the twelve-month period preceding the date of this Agreement was, an employee or
officer of the Partnership, excluding any Person seconded to the Partnership by Seller and
excluding any member of the management committee of the Partnership, provided that Seller may
employ or engage or otherwise retain the services of, or recruit or solicit therefore, any Person
after such Person’s employment with the Partnership or any successor of the Partnership has been
terminated.



     2. Exceptions to Restriction on Competition. Nothing in this Agreement shall prevent Seller
or any of Seller’s Affiliates from engaging in any of the following activities:



          (a) reselling any base oil manufactured by Excel Paralubes, a Texas general partnership, or
any successor thereto, provided that no such base oil shall be sold as or represented to be USP, NF
or technical white oils or the international equivalents;




          (b) acting as a distributor of base oil manufactured by S-Oil Corporation, or any successor
thereto (including base oil with a viscosity less than 60 SUS at 100 F), provided that no such base
oil shall be sold as or represented to be USP, NF or technical white oils or the international
equivalents and no such base oil shall be sold as or represented to be a solvent;




          (c) manufacturing or purchasing white oils and selling or reselling white oils packaged in
drums or smaller containers (and not in bulk) in the same manner as such entity has engaged in such
activity during the twelve-month period preceding the date of this Agreement, including any
reformulations of such products adopted over time in the ordinary course of business;




          (d) manufacturing or purchasing Competing Products and selling or reselling Competing Products
to the extent that Seller needs to include such products in its line in industrial lubricants in
order to complete a customer offering, provided that revenues from sales of refrigeration oils and
compressor lubes shall not exceed five percent of revenues attributable to Seller’s total
industrial lubricant product line; or




          (e) carrying on the business of any entity or associated with any asset or group of
functionally related assets acquired by Seller or any entity which is wholly owned, directly or
indirectly, by Seller’s ultimate parent, provided that the revenue of such entity or asset(s)
attributable to the sale of Competing Products to third parties shall not constitute more than 15%
of the total revenue of such entity or asset(s) in substantially the same manner as during the
twelve-month period preceding the date of such acquisition.




     3. Confidentiality. The Seller agrees that it shall hold all Confidential Information
in strict confidence and shall not at any time (whether during or after the Non-Competition Period)
(a) reveal, report, publish, disclose or transfer any Confidential Information to any Person (other
than the Purchaser), (b) use any Confidential Information for any purpose or (c) use any
Confidential Information for the benefit of any Person (other than the Purchaser), except to the
extent necessary to enable Seller to file tax returns with respect to income attributable to the
Partnership or the proceeds of the sale of its general partnership interest in the



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Partnership, or to participate in any audit or resolution of any dispute related to such
taxes, and except to the extent otherwise required by applicable law.



     4. Representations and Warranties. The Seller represents to the Purchaser that it is
willing and able to engage in businesses that are not restricted pursuant to this Agreement and
that enforcement of the restrictive covenants set forth in this Agreement will not be unduly
burdensome to the Seller. The Seller acknowledges that its agreement to the restrictive covenants
set forth in this Agreement is a material inducement and condition to the Purchaser’s willingness
to enter into the Purchase Agreement and the other agreements contemplated thereby, to consummate
the transactions contemplated thereby and to perform its obligations thereunder. The Seller
acknowledges and agrees that the restrictive covenants and remedies set forth in this Agreement are
reasonable as to time, geographic area and scope of activity and do not impose a greater restraint
than is necessary to protect the goodwill and legitimate business interests of the Purchaser and
its Affiliates.



     5. Equitable Relief. The Seller acknowledges and agrees that the Purchaser would be
irreparably harmed by any violation of the restrictive covenants set forth in this Agreement and
that, in addition to all other rights and remedies available to the Purchaser at law or in equity,
the Purchaser will be entitled to injunctive and other equitable relief to prevent or enjoin any
such violation. If the Seller or any Affiliate of the Seller violates this Agreement, the period
of time during which the provisions thereof are applicable will automatically be extended for a
period of time equal to the time that such violation began until such violation permanently ceases.



     6. Indemnification. Without in any way limiting any of the rights or remedies
otherwise available to any of the Indemnitees, the Seller shall indemnify and hold harmless each
Indemnitee against and from any loss, damage, injury, harm, detriment, lost opportunity, liability,
exposure, claim, demand, settlement, judgment, award, fine, penalty, tax, fee (including attorneys’
fees), charge or expense (whether or not relating to any third-party claim) that is directly or
indirectly suffered or incurred at any time (whether during or after the Non-Competition Period) by
such Indemnitee, or to which such Indemnitee otherwise becomes subject at any time (whether during
or after the Non-Competition Period), and that arises directly or indirectly out of or by virtue
of, or relates directly or indirectly to, (a) any inaccuracy in or breach of any representation or
warranty contained in this Agreement, or (b) any failure on the part of the Seller to observe,
perform or abide by, or any other breach of, any restriction, covenant, obligation or other
provision contained in this Agreement.



     7. Non-Exclusivity. The rights and remedies of the Purchaser, the Partnership and the
other Indemnitees under this Agreement are not exclusive of or limited by any other rights or
remedies which they may have, whether at law, in equity, by contract or otherwise, all of which
shall be cumulative (and not alternative). Without limiting the generality of the foregoing, the
rights and remedies of the Purchaser, the Partnership and the other Indemnitees under this
Agreement, and the obligations and liabilities of the Seller under this Agreement, are in addition
to their respective rights, remedies, obligations and liabilities under the law of unfair
competition, under laws relating to misappropriation of trade secrets, under other laws and common
law requirements and under all applicable rules and regulations. Nothing in this Agreement shall
limit any of the Seller’s obligations, or the rights or remedies of the Purchaser,



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the Partnership or any of the other Indemnitees, under the Purchase Agreement; and nothing in
the Purchase Agreement shall limit any of the Seller’s obligations, or any of the rights or
remedies of the Purchaser, the Partnership, or any of the other Indemnitees, under this Agreement.
No breach on the part of the Purchaser, the Partnership or any other party of any covenant or
obligation contained in the Purchase Agreement or any other agreement shall limit or otherwise
affect any right or remedy of the Purchaser, the Partnership or any of the other Indemnitees under
this Agreement.



     8. Court Modification. Notwithstanding the foregoing, if any restrictive covenant
set forth in this Agreement is found by a court of competent jurisdiction to contain limitations as
to time, geographic area or scope of activity that are not reasonable or not necessary to protect
the goodwill or legitimate business interests of the Purchaser and its Affiliates, then such court
is hereby authorized and directed to reform such provisions to the minimum extent necessary to
cause the limitations contained in this Agreement as to time, geographical area and scope of
activity to be reasonable and to impose a restraint that is not greater than necessary to protect
the goodwill and legitimate business interests of the Purchaser and its Affiliates (including,
after the Closing, the Partnership). The Seller acknowledges that the Purchaser and its Affiliates
(including, after the Closing, the Partnership) have a worldwide market and therefore have need of
a worldwide geographic restriction.



     9. Governing Law; Waiver of Jury Trial. This Agreement shall be construed in
accordance with, and governed in all respects by, the laws of the State of Texas (without giving
effect to principles of conflicts of laws). THE SELLER IRREVOCABLY WAIVES THE RIGHT TO A JURY
TRIAL IN CONNECTION WITH ANY LEGAL PROCEEDING RELATING TO THIS AGREEMENT OR THE ENFORCEMENT OF ANY
PROVISION OF THIS AGREEMENT.



     10. Waiver. No failure on the part of the Purchaser, the Partnership or any other
Indemnitee to exercise any power, right, privilege or remedy under this Agreement, and no delay on
the part of the Purchaser, the Partnership or any other Indemnitee in exercising any power, right,
privilege or remedy under this Agreement, shall operate as a waiver of such power, right, privilege
or remedy; and no single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right, privilege or remedy.
No Indemnitee shall be deemed to have waived any claim of such Indemnitee arising out of this
Agreement, or any power, right, privilege or remedy of such Indemnitee under this Agreement, unless
the waiver of such claim, power, right, privilege or remedy is expressly set forth in a written
instrument duly executed and delivered on behalf of such Indemnitee; and any such waiver shall not
be applicable or have any effect except in the specific instance in which it is given.



     11. Successors and Assigns. Each of the Purchaser, the Partnership and the other
Indemnitees may freely assign any or all of its rights under this Agreement to any Person acquiring
all or substantially all of the Partnership or the assets and business of the Partnership, without
obtaining the consent or approval of the Seller. Except as so provided, this Agreement may not be
assigned without the consent of the Seller (which consent may be withheld in the sole and absolute
discretion of the Seller). This Agreement shall be binding upon the Seller and its



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successors and assigns, and shall inure to the benefit of the Purchaser, the Partnership and
the other Indemnitees.



     12. Attorneys’ Fees. If any legal action or other legal proceeding relating to this
Agreement or the enforcement of any provision of this Agreement is brought against the Seller, the
prevailing party shall be entitled to recover reasonable outside attorneys’ fees, costs and
disbursements (in addition to any other relief to which the prevailing party may be entitled).



     13. Captions. The captions contained in this Agreement are for convenience of
reference only, shall not be deemed to be a part of this Agreement and shall not be referred to in
connection with the construction or interpretation of this Agreement.



     14. Construction. Whenever required by the context, the singular number shall include
the plural, and vice versa; the masculine gender shall include the feminine and neuter genders; and
the neuter gender shall include the masculine and feminine genders. Any rule of construction to
the effect that ambiguities are to be resolved against the drafting party shall not be applied in
the construction or interpretation of this Agreement. Neither the drafting history nor the
negotiating history of this Agreement shall be used or referred to in connection with the
construction or interpretation of this Agreement. As used in this Agreement, the words “include”
and “including,” and variations thereof, shall not be deemed to be terms of limitation, and shall
be deemed to be followed by the words “without limitation.” Except as otherwise indicated in this
Agreement, all references in this Agreement to “Sections” are intended to refer to Sections of this
Agreement.



     15. Survival of Obligations. Except as specifically provided herein, the obligations
of the Seller under this Agreement (including its obligations under Sections 2 and 6) shall survive
the expiration of the Non-Competition Period. The expiration of the Non-Competition Period shall
not operate to relieve the Seller of any obligation or liability arising from any prior breach by
the Seller of any provision of this Agreement.



     16. Obligations Absolute. The Seller’s obligations under this Agreement are absolute
and shall not be terminated or otherwise limited by virtue of any breach (on the part of the
Purchaser, the Partnership, any other Indemnitee or any other Person) of any provision of the
Purchase Agreement or any other agreement, or by virtue of any failure to perform or other breach
of any obligation of the Purchaser, the Partnership, any other Indemnitee or any other Person.



     17. Amendment. This Agreement may not be amended, modified, altered or supplemented
other than by means of a written instrument duly executed and delivered on behalf of the Seller and
the the Purchaser.



     18. Defined Terms. For purposes of this Agreement:



          (a) “Affiliate” means, with respect to any specified Person, any other Person that,
directly or indirectly, through one or more intermediaries, controls, is controlled by or is under
common control with such specified Person; provided that in no event shall (i) Chevron Phillips
Chemical, L.L.C., or its subsidiaries, (ii) Excel Paralubes and/or (iii) WRB Refining LLC be deemed
to be “Affiliates” of Seller.




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          (b) “Competing Product” shall mean any and all of the products described on
Exhibit A attached hereto.




          (c) “Confidential Information” means any non-public information (whether or not in
written form and whether or not expressly designated as confidential) relating directly or
indirectly to the Purchaser, the Partnership or any of the Purchaser’s other subsidiaries or
relating directly or indirectly to the business, operations, financial affairs, performance,
assets, technology, processes, products, contracts, customers, licensees, sublicensees, suppliers,
personnel, consultants or plans of the Purchaser, the Partnership or any of the Purchaser’s other
subsidiaries (including any such information consisting of or otherwise relating to trade secrets,
know-how, technology, inventions, prototypes, designs, drawings, sketches, processes, license or
sublicense arrangements, formulae, proposals, research and development activities, customer lists
or preferences, pricing lists, referral sources, marketing or sales techniques or plans, operations
manuals, service manuals, financial information, projections, lists of consultants, lists of
suppliers or lists of distributors); provided, however, that “Confidential Information” shall not
be deemed to include information (a) that is or becomes generally available to the public other
than as a result of a disclosure by Seller in violation of this Agreement; (b) that Seller
possessed on a non-confidential basis prior to Seller’s receipt of that information from Purchaser
or the Partnership, unless Seller has reason to believe the information came into Seller’s
possession as a result of a breach of a contractual, legal or fiduciary obligation of
confidentiality to Purchaser or the Partnership or any other party with respect to the information;
or (c) that Seller receives on a non-confidential basis after the execution of this Agreement from
a source other than Purchaser or the Partnership that is not known by Seller, after due inquiry, to
be bound by a contractual, legal or fiduciary obligation of confidentiality to Purchaser, the
Partnership or any other party with respect to the information.




          (d) “Indemnitees” means (i) the Purchaser, (ii) the Partnership, and (iii) the
successors and assigns of each of the Purchaser and the Partnership.




          (e) “Person” means any (i) individual, (ii) corporation, general partnership, limited
partnership, limited liability partnership, trust, company (including any limited liability company
or joint stock company) or other organization or entity or (iii) governmental body or authority.




          (f) “Restricted Territory” means anywhere in the world.




[The remainder of this page is intentionally blank.]




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     IN WITNESS WHEREOF, the Seller and the Purchaser have duly executed and delivered this
Agreement as of the date first above written.



	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	Seller

ConocoPhillips Company
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Gregory J. Goff	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Gregory J. Goff	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	Vice-President	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	Purchaser

Calumet Specialty Products Partners, L.P.

By Calumet GP, LLC, its General Partner
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ R. Patrick Murray II	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	R. Patrick Murray II	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	Vice-President and
Chief Financial Officer	 	 
	 

	 	 	 	 	 	 





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Exhibit A




Competing Products




	 	 	 
	White Oils

	 	Includes all products sold or represented to be USP,
NF or technical white oils and the international
equivalents. This also includes similarly regulated
lube oils and greases.
	 
	 	 
	Petroleum Sulfonates

	 	Includes petroleum sulfonates formed from acid
treatment of petroleum fractions
	 
	 	 
	Solvents

	 	Includes petroleum derived, non fuels products within
the 250 F to 750 F boiling range and with a viscosity
less than 60 SUS at 100 F. Such products include,
but are not limited to, mining solvents, drilling
solvents, rolling oils and ink oils. Excluded are
benzene, toluene, xylene, high aromatics compressor
wash oil and cyclohexane.
	 
	 	 
	Cable Fillers

	 	Includes petrolatum and oil based fillers and
flooding compounds used in cable manufacturing
primarily to prevent water intrusion.
	 
	 	 
	Petrolatum

	 	Includes high molecular weight waxes and wax/oil
blends derived from dewaxing high viscosity base oils
such as bright stock. Most are refined to meet USP
purity requirements.
	 
	 	 
	Compressor Lubes

	 	Includes products conforming to USDA H-1 requirements
(or the international equivalent) or produced using a
white oil base.
	 
	 	 
	Refrigeration Oils

	 	Includes yellow and white refrigeration oils.
	 
	 	 
	Gelled Hydrocarbons

	 	All Geahlene based products. Geahlene means a number
of proprietary products consisting of a mixture of
hydrocarbon(s)






 









 






	 	 	 
	 

	 	and a blend of one or more polymers
which form a gel-type network as described in, but
not limited to, U.S. Patent #5,221,534 and in pending
and subsequent patents.





In addition to the above listing, Competing Products includes any products represented as meeting
technical, NF, USP or equivalent international specifications.





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