Document:

EX 10.12-PINC-2013.9.30

Exhibit 10.12

RESTRICTED STOCK UNIT AGREEMENT
	
		
	Participant:    [                ]
	 

	Grant Date:     [                ]
	 

	Number of Award Shares:    
	[                ]

	Vesting Date:  
	[                ] (the “Vesting Date”).

1.Grant of Restricted Stock Units.  This restricted stock unit award (“Award”) is granted pursuant to the Premier Inc. 2013 Equity Incentive Plan (the “Plan”), by Premier Inc. (the “Company”) to the Participant as an employee of [                ] (the “Employer”).  The Company hereby grants to the Participant as of the Grant Date (set forth above) the Award consisting of a right to receive the number of shares set forth above (“Award Shares”) of the Company’s Class A common stock, $0.01 par value (“Shares”), upon the Vesting Date, pursuant to the Plan, as it may be amended from time to time, and subject to the terms, conditions, and restrictions set forth herein.  Capitalized terms in this restricted stock unit agreement (the “Award Agreement”) shall have the meaning specified in the Plan, unless a different meaning is specified herein. 

2.Terms and Conditions.  The terms, conditions, and restrictions applicable to this Award are specified in the Plan, this Award Agreement, including Exhibit A - Award Rules and Exhibit B - Section 280G Rules, and the prospectus dated October, 2013 and any applicable prospectus supplement (together, the “Prospectus”).  The terms, conditions and restrictions in the Plan and Prospectus include, but are not limited to, provisions relating to amendment, vesting, cancellation, and settlement, all of which are hereby incorporated by reference into this Award Agreement to the extent not otherwise set forth herein.  

By accepting the Award, the Participant acknowledges receipt of the Prospectus and that he or she has read and understands the Prospectus.

The Participant understands that this Award and all other incentive awards are entirely discretionary and that no right to receive an award exists absent a prior written agreement with the Company to the contrary.  The Participant also understands that the value that may be realized, if any, from this Award is contingent, and depends on, the future market price of the Shares, among other factors.  The Participant further confirms the Participant’s understanding that this Award is intended to promote employee retention and stock ownership and to align employees’ interests with those of shareholders, is subject to vesting conditions and will be cancelled if the vesting conditions are not satisfied.  Thus, the Participant understands that (a) any monetary value assigned to this Award in any communication regarding this Award is contingent, hypothetical, or for illustrative purposes only, and does not express or imply any promise or intent by the Company to deliver, directly or indirectly, any certain or determinable cash value to the Participant; (b) receipt of this Award or any incentive award in the past is neither an indication nor a guarantee that an incentive award of any type or amount will be made in the future, and that absent a written agreement to the contrary, the Company is free to change its practices and policies regarding incentive awards at any time; (c) vesting may be subject to confirmation and final determination by the Committee that the vesting conditions have been satisfied; and (d) Award Shares shall be subject to lock-up restrictions as described in Section 16 of this Award Agreement.  The Participant shall have no rights as a stockholder of the Company with respect to any shares covered by this Award unless and until this Award is vested and settled in Shares.  

3.Vesting.  This Award shall vest in full on the Vesting Date set forth above provided the Participant is continuously employed by a member of the Premier Group.  Notwithstanding the foregoing: 
 
(a)     In the event that a Participant terminates employment due to being a Good Leaver (as defined below), the Participant shall immediately vest in a portion of the Award equal to the number of Award Shares granted times a fraction, the numerator of which is the number of days of active service elapsed since the Grant Date and the denominator of which is 1,095.  A Participant is a “Good Leaver” on account of (i) terminating employment due to death, Disability or an Approved Retirement (as defined in Section 14 below) or (ii) the termination of the Participant’s employment with the Premier Group Without Cause (as defined in Section 14 below) prior to a Change in Control; and

(b)    In the event the Employer terminates the Participant’s employment Without Cause or the Participant terminates his employment for Good Reason (as defined in Section 14 below) within the twelve month period commencing upon a Change in Control (as defined in the Plan), the Award shall vest in full.

The Participant shall be credited with an amount in cash (without interest) equal to the dividends the Participant would have received if the Participant had been the owner of a number of Shares equal to the number of Award Shares; provided, however, that no amount shall be credited with respect to Shares that have been delivered to the Participant as of the applicable record date.  Dividend equivalents shall be subject to the same terms and conditions as the Award Shares, and shall vest (or, if applicable, be forfeited) at the same time as the Award Shares.  Notwithstanding the foregoing, vesting of the Award (and any dividend equivalents) shall be prohibited to the extent that it would violate applicable law or to the extent the Award is a Performance Share Award.  Further notwithstanding the foregoing, nothing in this Award Agreement shall be interpreted to require the Company to grant dividends or dividend equivalents on any Shares or Award Shares.

4.Forfeiture; Break in Service.  The unvested portion of this Award, as determined under Section 3 above, shall expire and be permanently forfeited upon employment termination with the Premier Group.  The unvested portion of this Award shall only continue to vest while the Participant is on an approved personal leave of absence to the extent and in the manner described in Exhibit A, which shall be enforceable as if set forth in this Award Agreement.

5.Settlement of Award.  Subject to Section 7 below, the Company shall deliver or cause to be delivered to or on the behalf of the Participant the number of vested Shares determined under Section 3 above as soon as administratively practicable upon the earlier of the Vesting Date or a qualifying termination of employment as designated in Section 3(a) or 3(b) above, but in no event later than sixty (60) days after such date.  The dividend equivalents described in Section 3 above shall be paid in cash at the same time as the delivery of the Shares under this Section 5 which correspond to such dividend equivalents.  Vested Shares to be delivered due to death shall be paid to the Participant’s Beneficiary designated according to the terms of the Plan.

6.Compliance with Certain Obligations; Compensation Recovery.  The Award Shares shall be subject to forfeiture as a result of the Participant’s violation of any obligations contained in any agreement between the Company and the Participant relating to non-competition, non-interference, non-solicitation and confidentiality (the “Employment Obligations”), and shall be subject to being recovered under any compensation recovery policy that may be adopted from time to time by the Company or any of its Affiliates.  

For avoidance of doubt, compensation recovery rights to Award Shares shall extend to the proceeds realized by the Participant due to the sale or other transfer of the Award Shares.  The Participant’s prior execution of agreements containing the Employment Obligations and confirmation of such obligations was a material inducement for the Company’s grant of the Award under this Award Agreement. 
 
7.Taxes; Limitation on Excess Parachute Payments.  The settlement of this Award is conditioned on the Participant making arrangements reasonably satisfactory to the Company for the withholding of all applicable federal, state, local or foreign taxes as may be required under applicable law.  The Participant shall bear all expense of, and be solely responsible for, all federal, state, local or foreign taxes due with respect to any payment received under this Award Agreement.  The Committee, in its sole discretion, may satisfy the Participant’s withholding tax obligations by reducing the number of Award Shares to which the Participant is entitled under the Award.  Notwithstanding any other provision in this Award Agreement to the contrary, any payment or benefit received or to be received by the Participant in connection with a Change in Control or the termination of employment (whether payable under the terms of this Award Agreement or any other plan, arrangement or agreement with a member of the Premier Group (collectively, the “Payments”) that would constitute a “parachute payment” within the meaning of Section 280G of the Code, shall be reduced to the extent necessary so that no portion thereof shall be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), but only if, by reason of such reduction, the net after-tax benefit received by the Participant shall exceed the net after-tax benefit that would be received by the Participant if no such reduction was made.  Whether and how the limitation under this Section 7 is applicable shall be determined under the Section 280G Rules set forth in Exhibit B, which shall be enforceable as if set forth in this Award Agreement.  

8.Consent to Electronic Delivery.  In lieu of receiving documents in paper format, the Participant agrees, to the fullest extent permitted by law, to accept electronic delivery of any documents that the Company may be required to deliver (including, but not limited to, prospectuses, prospectus supplements, grant or award notifications and agreements, account statements, annual and quarterly reports, and all other agreements, forms and communications) in connection with this and any other prior or future incentive award or program made or offered by the Company or its predecessors or successors.  Electronic delivery of a document to the Participant may be via a Company e-mail system or by reference to a location on a Company intranet site to which the Participant has access. 

9.Administration.  In administering the Plan, or to comply with applicable legal, regulatory, tax, or accounting requirements, it may be necessary for a member of the Premier Group to transfer certain Participant data to another member of the Premier Group, or to its outside service providers or governmental agencies.  By accepting the Award, the Participant consents, to the fullest extent permitted by law, to the use and transfer, electronically or otherwise, of the Participant’s personal data to such entities for such purposes. 

10.Entire Agreement/Amendment/Survival/Assignment.  The terms, conditions and restrictions set forth in the Plan, this Award Agreement and the Prospectus constitute the entire understanding between the parties hereto regarding this Award and supersede all previous written, oral, or implied understandings between the parties hereto about the subject matter hereof.  This Award Agreement may be amended by a subsequent writing (including e-mail or other electronic form) agreed to between the Company and the Participant.  Section headings herein are for convenience only and have no effect on the interpretation of this Award Agreement.  The provisions of this Award Agreement that are intended to survive a Participant’s termination of employment shall survive such date.  The Company may assign this Award Agreement and its rights and obligations hereunder to any current or future member of the Premier Group.  

11.No Right to Employment.  The Participant agrees that nothing in this Award Agreement constitutes a contract of employment with a member of the Premier Group for a definite period of time.  The employment relationship is “at will,” which affords the Participant or a member of the Premier Group the right to terminate the relationship at any time for any reason or no reason not otherwise prohibited by applicable law.  The Premier Group retains the right to decrease the Participant’s compensation and/or benefits, transfer or demote the Participant or otherwise change the terms or conditions of the Participant’s employment.

12.Transfer Restrictions.  The Participant may not sell, assign, transfer, pledge, encumber or otherwise alienate, hypothecate or dispose of this Award or the Participant’s right hereunder to receive Award Shares, except as otherwise provided in the Committee’s sole discretion consistent with the Plan and applicable securities laws.  

13.Conflict.  This Award Agreement is subject to the terms and provisions of the Plan, including but not limited to the adjustment provisions under Section 12 of the Plan.  In the event of a conflict between the Plan, this Award Agreement and/or the Prospectus, the documents shall control in that order (that is, the Plan, this Award Agreement and then the Prospectus).

14.Definitions.  The following terms shall be as defined below:

(a)    “Approved Retirement” shall mean a Participant’s voluntary termination of employment on or after attaining age 59 1⁄2 or age 55 with 5 or more years of service.

(b)    “Just Cause” means termination of the Participant’s employment with the Premier Group by a member of the Premier Group as a result of conduct by the Participant amounting to: (i) commission or omission of any act of dishonesty, moral turpitude, fraud, embezzlement, theft, misappropriation, breach of fiduciary duty, or breach of the duty of loyalty in connection with the Participant’s employment with a Premier Group member or against any Premier Group partner hospital, affiliated health care organization or customer; (ii) willful misconduct, insubordination, or repeated refusal or unwillingness to follow the reasonable directives of the Board of Directors / Managers of a Premier Group member and/or the Participant’s Premier Group employer, the Chief Executive Officer of the Participant’s Premier Group employer, or the Participant’s immediate supervisor(s); (iii) willful action or inaction with respect to the Participant’s performance of his or her employment duties that constitutes a violation of law or governmental regulations or that causes a Premier Group member to violate such law or regulation; (iv) a material breach of any securities or other law or regulation or any Premier Group policy governing inappropriate disclosures or “tipping” related to (or the trading or dealing of) securities, stock or investments; (v) excessive absenteeism not related to authorized sick leave, authorized family/medical leave, authorized disability leave, authorized vacation, authorized military leave or other authorized statutory leave within the parameters set forth in accordance with Premier Group policies and procedures regarding the same; (vi) a conviction, guilty plea or plea of nolo contendere by the Participant for any crime involving moral turpitude or dishonesty or for any felony; or (vii) material breach or violation of the terms of employment or other agreements to which the Participant and one or more members of the Premier Group are party; or (viii) breach or violation of material policies, rules, procedures or instructions of a Premier Group member.

For purposes of this definition only, no act or failure to act by a Participant shall be deemed “willful” if done or omitted to be done by the Participant in good faith and with the reasonable belief that the Participant’s 

act or omission was in the best interest of the Premier Group and consistent with Premier Group policies and applicable law. Further, any act or failure to act based on and consistent with (a) instructions pursuant to a resolution duly adopted by the Board of Directors / Managers of a Premier Group member, (b) instructions of the applicable Board Chair as authorized by such Boards, or (c) the advice of Premier Group counsel shall be presumed to be done or omitted to be done by the Participant in good faith and in the best interests of the Premier Group.

(c)    “Disability” means any of the following: (i) the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of at least twelve months, or the Participant’s entitlement to and receipt of disability benefits under a disability insurance program that pays benefits on the basis of the foregoing definition; (ii) the Participant is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of at least twelve months, receiving either (a) income replacement benefits for a period of at least three months under an accident and health plan covering employees of the Participant’s Premier Group employer, or (b) disability benefits under a disability insurance program that pays benefits on the basis of the foregoing definition; or (iii) the Participant is determined to be totally disabled by the Social Security Administration or Railroad Retirement Board.

(d)    “Good Reason” means a Participant’s termination of employment due to: (i) a material reduction of the Participant’s base salary without the Participant’s consent; (ii) a material reduction in the Participant’s authority, duties or responsibilities without the Participant’s consent, but excluding any such reductions made in good faith to conform with applicable law or accounting/public company standards; or (iii) a relocation of the Participant to a location outside a fifty (50) mile radius of the Participant’s primary office location. In all instances, a Participant must provide the Chair of the Board of Directors / Managers of the Participant’s Premier Group employer (in the case of the CEO) or the CEO of the Participant’s Premier Group employer (in the case of other Participants) written notice of the asserted instances constituting “Good Reason” within ninety (90) calendar days of the initial existence of the condition(s). Further, “Good Reason” shall not mean or include resignation by a Participant for conditions (i) - (iii) if cured or remedied by the appropriate Premier Group member(s) within thirty (30) calendar days of receiving the Participant’s notice.

(e)    “Premier Group” shall mean the Company, its Subsidiaries and Affiliates.

(f)    “Termination Date” shall have the meaning set forth in Exhibit A.

(g)    “Without Cause” means a termination of the Participant’s employment with the Premier Group by a member of the Premier Group for a reason other than death, Disability or for Just Cause.

15.Section 409A.  This Award Agreement will be construed to comply, and administered in compliance, with Section 409A of the Code.  Notwithstanding anything in this Award Agreement to the contrary, if as of employment termination the Participant is a “specified employee” as defined under the Company’s 409A specified employee policy in effect on the Grant Date and the deferral of any payment otherwise payable hereunder as a result of such termination of employment is necessary in order to prevent any accelerated or additional tax under Section 409A of the Code, then the Company will defer commencement of any such payments hereunder (without any reduction in such payments or benefits ultimately paid or provided to the Participant) until the first business day of the seventh month following employment termination (or the earliest date as is permitted under Section 409A of the Code).  For purposes of Section 409A of the Code, 

references herein to “employment termination”, “termination of employment” or the like refer shall refer to the Participant’s separation from service with the Employer within the meaning of Section 409A after applying a 20% ownership test for purposes of determining who is the service recipient and employer under Treas. Reg. Sect. 1.409A-1(h)(3) and the presumptions under Treas. Reg. Sect. 1.409A-1(h)(1)(ii).  For avoidance of doubt, a Participant who remains employed with the Employer does not incur a separation from service solely because the Company at a later time no longer holds a direct or indirect 20% ownership interest in the Employer.  

16.Lock-up Restriction.  The Participant agrees that, if the Company proposes to offer for sale any Shares pursuant to a public offering under the Securities Act of 1933 and if requested by the Company and any underwriter engaged by the Company for a reasonable period of time specified by the Company or such underwriter following the effective date of the registration statement filed with respect to such offering, the Participant will not, directly or indirectly, offer, sell, pledge, contract to sell (including any short sale), grant any option to purchase, or otherwise dispose of any securities of the Company held by the Participant or enter into any Hedging Transaction (as defined below) relating to any securities of the Company held by the Participant.  For purposes of this Section, a “Hedging Transaction” means any short sale (whether or not against the box) or any purchase, sale or grant of any right (including, without limitation, any put or call option) with respect to any security (other than a broad-based market basket or index) that includes, relates to or derives any significant part of its value from the Shares.

17.Nature of Award.  This Award represents the Company’s unfunded and unsecured promise to issue Shares at a future date, subject to the terms of this Award Agreement and the Plan.  The Participant has no rights under this Agreement other than the rights of a general unsecured creditor of the Company.  The Participant shall have the rights of a shareholder with respect to the Award Shares only to the extent that Shares are issued to the Participant in accordance with the terms and conditions of this Award Agreement and the Plan.

18.Governing Law.  This Award Agreement shall be legally binding and shall be executed and construed and its provisions enforced and administered in accordance with the laws of the State of Delaware without regard to the principles of conflicts of law thereunder.

EXHIBIT A - Award Rules
 
To Form of Restricted Stock Unit Agreement
 
When you terminate covered employment
 
References to “you” or “your” are to the Participant.  “Termination Date” means the date on which you terminate employment.  For purposes of the Award, “terminate employment”, “termination of employment” or the like means the cessation of your employment with the Employer as provided in Section 15 of the Award Agreement.  
If you terminate employment and immediately begin providing services as a consultant or director for a member of the Premier Group, you shall not be deemed to have terminated employment on the date on which your employment terminates.  
If you terminate your employment or if there is a break in your employment, your Award may be cancelled before the end of the vesting period and the vesting of your Award may be affected.
The provisions in the chart below apply to the Award granted to you in this Award Agreement under the Plan.
	
			
	If:
	 
	Here’s what happens to Your Award:

	 
	 
	 

	You are a Good Leaver (as defined in Section 3(a))
	 
	You shall immediately vest in a pro-rata portion of the Award as described in Section 3(a).

	 
	 
	 

	We terminate your employment for Just Cause or you leave the Premier Group other than as a Good Leaver prior to a Change in Control
	 
	Both the vested and unvested portions of your Award are immediately cancelled.

	
			
	You take an approved personal leave of absence
	 
	For the first six (6) months of an approved personal leave, vesting continues. If the approved leave exceeds six (6) months, vesting is suspended until you return to work and remain actively employed for 30 calendar days, after which time vesting will be restored retroactively.  If you terminate employment for any reason during the first year of an approved leave, the termination of employment provisions will apply.  If the leave exceeds one year, your Award will be cancelled immediately.

	
			
	You are on an approved family and medical leave, military leave, or other statutory leave of absence
	 
	Your Award will continue to vest on schedule.

	
			
	You are terminated involuntarily other than for Just Cause or you terminate your employment for Good Reason, in either case, within one (1) year following a Change in Control
	 
	Upon the Termination Date the unvested portion of your Award will vest immediately.

	 
	 
	 

	While employed and at any time during the Restricted Period, you breach the Agreement not to Compete
	 
	In addition to all rights and remedies available to the Company at law and in equity, you will immediately forfeit any of your outstanding rights under this Award Agreement.

Exhibit B-Section 280G Rules
To Restricted Stock Unit Agreement
When you receive benefits in connection with a Change in Control 
The following rules shall apply for purposes of determining whether and how the limitations provided under Section 7 are applicable to the Participant.  
1.    The “net after-tax benefit” shall mean (i) the Payments (as defined in Section 7) which the Participant receives or is then entitled to receive from the Company or an Affiliate that would constitute “parachute payments” within the meaning of Section 280G of the Code, less (ii) the amount of all federal, state and local income and employment taxes payable by the Participant with respect to the foregoing calculated at the highest marginal income tax rate for each year in which the foregoing shall be paid to the Participant (based on the rate in effect for such year as set forth in the Code as in effect at the time of the first payment of the foregoing), less (iii) the amount of Excise Tax imposed with respect to the payments and benefits described in (i) above.  
2.    All determinations under Section 7 of this Award Agreement and this Exhibit B will be made by an accounting firm or law firm that is selected for this purpose by the Company’s Chief Executive Officer prior to a Change in Control (the “280G Firm”).  All fees and expenses of the 280G Firm shall be borne by the Company.  The Company will direct the 280G Firm to submit any determination it makes under Section 7 of this Award Agreement and this Exhibit B and detailed supporting calculations to both the Participant and the Company as soon as reasonably practicable.  
3.    If the 280G Firm determines that one or more reductions are required under Section 7 of this Award Agreement, the 280G Firm shall also determine which Payments shall be reduced (first from cash payments and then from non-cash benefits) to the extent necessary so that no portion thereof shall be subject to the excise tax imposed by Section 4999 of the Code, and the Company shall pay such reduced amount to the Participant.  The 280G Firm shall make reductions required under Section 7 of this Award Agreement in a manner that maximizes the net after-tax amount payable to the Participant.  
4.    As a result of the uncertainty in the application of Section 280G at the time that the 280G Firm makes its determinations under this Section, it is possible that amounts will have been paid or distributed to the Participant that should not have been paid or distributed (collectively, the “Overpayments”), or that additional amounts should be paid or distributed to the Participant (collectively, the “Underpayments”).  If the 280G Firm determines, based on either the assertion of a deficiency by the Internal Revenue Service against the Company or the Participant, which assertion the 280G Firm believes has a high probability of success or controlling precedent or substantial authority, that an Overpayment has been made, the Participant must repay to the Company, without interest; provided, however, that no loan will be deemed to have been made and no amount will be payable by the Participant to the Company unless, and then only to the extent that, the deemed loan and payment would either reduce the amount on which the Participant is subject to tax under Section 4999 of the Code or generate a refund of tax imposed under Section 4999 of the Code.  If the 280G Firm determines, based upon controlling precedent or substantial authority, that an Underpayment has occurred, the 280G Firm will notify the Participant and the Company of that determination and the amount of that Underpayment will be paid to the Participant promptly by the Company.  
5.    The Participant will provide the 280G Firm access to, and copies of, any books, records, and documents in the Participant’s possession as reasonably requested by the 280G Firm, and otherwise cooperate with the 280G Firm in connection with the preparation and issuance of the determinations and calculations contemplated by Section 7 of this Award Agreement and this Exhibit B.ex10-1.htm

EXHIBIT 10.1

 

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MATERIAL BELOW MARKED BY AN “X” HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.  THIS ENTIRE EXHIBIT INCLUDING THE OMITTED CONFIDENTIAL INFORMATION HAS BEEN FILED SEPARATELY WITH THE COMMISSION.

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KMTEX

TOLLING AGREEMENT

This Agreement effective July 1, 2012, is between KMTEX LLC, a Texas Limited Liability Corporation, having an office at 333 North Sam Houston Parkway, East, Suite 1250, Houston, Texas 77060 (hereafter called MANUFACTURER) and Vertex Energy, Inc., a Nevada Corporation having an office for the purposes of this Agreement at 200 Atlantic Pipeline Road, Baytown, TX 77520 (hereafter called CUSTOMER); also collectively referred to as the “Parties”.

RECITALS

MANUFACTURER and CUSTOMER hereby desire to establish a relationship whereby MANUFACTURER shall provide certain Services for CUSTOMER in exchange for a fee from CUSTOMER in accordance with the terms and conditions set forth below.

AGREEMENT

The Parties, in consideration of the premises and the agreement contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, agree as follows:

ARTICLE I

DEFINITIONS

	
Section 1.1

	
“Agreement” in this Tolling Agreement, and shall have the meaning ascribed to it in the preamble.

Section 1.2             “CUSTOMER” shall have the meaning ascribed to it in the preamble.

	
Section 1.3

	
“CUSTOMER Raw Materials” (aka Feed) means the Raw Materials specified in Attachment-A as supplied to MANUFACTURER by CUSTOMER.

	
Section 1.4

	
“Effective Date” shall mean the date in the Preamble.

 

	
Section 1.5

	
“Feed” means any and all products as listed in Attachment-A to be supplied by CUSTOMER in accordance with the specifications set forth in said attachment.

	
Section 1.6

	
“Fees” shall mean all compensation for the Toll manufacture of the Finished Products including without limitation any and all costs related to (i) quality control, picking up, transporting and handling of the Raw Materials, (ii) conversion of Feed into Finished Product, and (iii) quality control, warehouse and handling of the Finished Products, under the schedule of fees shown in Attachment-D.

  

1

  

	
Section 1.7

	
“Finished Products” means any and all products as listed in Attachment-B to be produced by MANUFACTURER in accordance with the specifications set forth in said attachment.

	
Section 1.8

	
“Hazardous Waste(s)” means any hazardous waste as that term is defined under applicable Laws.

	
Section 1.9

	
“HSE” or “SHE” means health, safety, and environment.

	
Section 1.10

	
“Intermediates” shall mean the materials that are in the state of being processed by MANUFACTURER into Finished Products.

	
Section 1.11

	
“Laws” means federal, state, and local rules, orders, laws, ordinances, and regulations applicable to any activities carried out under or incidental to the provisions of this Agreement and/or any amendments to it.

	
Section 1.12

	
“MANUFACTURER” shall have the meaning ascribed to it in the preamble.

	
Section 1.13

	
“MANUFACTURER’S Facility” means the MANUFACTURER’S facility located at 2450 S. Gulfway Dr, Port Arthur, Texas, which is to be utilized for the performance of Services hereunder.

	
Section 1.14

	
“MSDS” means Material Safety Data Sheet.

	
Section 1.15

	
“Manufacturer Supplied Materials” shall mean those materials supplied by MANUFACTURER as identified in Attachment A, Raw Materials.

Section 1.16           “Parties” shall have the meaning ascribed to it in the preamble.

	
Section 1.17

	
“Reporting Procedures” means those procedures set out in Attachment-F.

	
Section 1.18

	
“Services” shall mean the services MANUFACTURER provides or performs pursuant to this Agreement.

	
Section 1.19

	
“Specification(s)” means the specifications for each Product covered in this Agreement.  Specifications for CUSTOMER’S and MANUFACTURER’S Feed(s) are located in Attachment A.  Specifications for Finished Product(s) is located in Attachment B.

	
Section 1.20

	
“Terminalling” means handling and storage of Raw Materials, Intermediates, and/or Finished Products.

	
Section 1.21

	
“Toll” or “Tolling” means to convert/process Raw Materials into Finished Products.

  

2

  

 

	
Section 1.22

	
“Tolling Waste(s)” (aka Waste(s)) means any waste, as that term is defined under applicable Laws, resulting from the Tolling of CUSTOMERS Raw Materials into Finished Products under the Tolling Agreement.

	
Section 1.23

	
Attachments:

	 	
Attachment-A

	
Raw Materials

	 	
Attachment-B

	
Finished Product

	 	
Attachment-C

	
Yields

	 	
Attachment-D

	
Fees & Quantities

	 	
Attachment-E

	
Energy Surcharge

	 	
Attachment-F

	
Reporting Procedures

ARTICLE II

TERM and TERMINATION

	
  

	
Section 2.1

	
This agreement commences on the Effective Date and its Initial Term shall expire on June 30, 2014, subject to the other provisions in this Agreement, or as otherwise agreed to by the Parties.

	
  

	
Section 2.2

	
Each Party has the right to terminate this Agreement upon ninety (90) days prior written notice to the other Party.  After termination or expiration, CUSTOMER’s sole obligation shall be to purchase Finished Products which MANUFACTURER has completed for CUSTOMER and to pay for the return to CUSTOMER of CUSTOMER’s Raw Materials in MANUFACTURER’s possession.  In no event shall either Party claim or receive actual, special, consequential or punitive damages, or anticipated profits for work not performed.

	
  

	
Section 2.3

	
Each Party has the right to terminate this Agreement immediately (or suspend its performance) if either Party materially breaches a provision of this Agreement.

	
  

	
Section 2.4

	
Upon the expiration date of the Initial Term and each Extension Term thereafter, this Agreement, if not terminated by either party by written notice to the other, received within ninety (90) days prior to the expiration of the Initial Term (or any Extension Term), shall be automatically renewed for a successive one (1) year period (an “Extension Term”).  This Agreement shall be above to be extended for up to six (6) Extension Terms.

 

 

  ARTICLE III

  QUANTITY

	
  

	
Section 3.1

	
MANUFACTURER agrees to Toll Raw Materials specified in Attachment-A, “Raw Materials”, to the specified Finished Product specifications in Attachment-B, “Finished Product”, up to the projected

  

3

  

 

	
 

	

annual quantities estimated during the term of this contract as specified in Attachment-D, “Fees & Quantities”.

 

	
  

	
Section 3.2

	
Estimated annual volumes of Finished Products specified in Attachment-D, “Fees & Quantities”, were used to develop the terms and conditions of this Agreement.  Rules governing these volumes are as follows and shall be considered binding:

	
(i)  

	
Annual volumes will not exceed 200% of estimated pounds without prior written approval from both Parties.

	
(ii)  

	
Annual volumes shall not fall short of estimated volumes by more than 25% without prior written approval by both Parties.

	
(iii)  

	
The activation of either (i) or (ii) will be sufficient cause for MANUFACTURER to review utilization of MANUFACTURER’s Facilities and to adjust Fees as necessary for remainder of Agreement period.  CUSTOMER shall have the right to accept or reject adjusted Fees.  Should CUSTOMER reject adjusted Fees, MANUFACTURER has the right to cancel the remaining period of the Agreement upon 90 day written notice to CUSTOMER.  The Fees at the time of the notice of cancellation shall apply for the remainder of the 90 day notice period.

  ARTICLE IV

  CUSTOMER RAW MATERIALS

	
  

	
 Section 4.1

	
CUSTOMER shall, from time to time, furnish for its own account, quantities of one or more CUSTOMER Raw Materials specified in Attachment-A, “Raw Materials”.  MANUFACTURER will use these materials exclusively to manufacture Finished Product(s) for CUSTOMER.

	
  

	
Section 4.2

	
CUSTOMER Raw Materials shall be delivered to MANUFACTURER by rail, barge, drum, or truck at CUSTOMER’S expense.  The Parties shall mutually agree on delivery dates for delivery of CUSTOMER Raw Materials to MANUFACTURER’s Facility.  MANUFACTURER shall be deemed to have custody and responsibility (but not title) of CUSTOMER Raw Materials as follows:

	
(i)  

	
When arriving by truck, commencing at the time MANUFACTURER accepts receipt of CUSTOMER Raw Materials by signing a receipt for same.

	
(ii)  

	
When arriving by rail, commencing when MANUFACTURER breaks the seal of the rail car for unloading purposes.

	
(iii)  

	
When shipped by rail, terminating when MANUFACTURER seals the rail car.

	
(iv)  

	
When shipped by carrier other than rail, terminating when CUSTOMER’s customer or carrier signs a shipment receipt at MANUFACTURER’s Facility or signs an acceptance receipt at CUSTOMER’s facility, whichever occurs first.

  

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Section 4.3

	
For CUSTOMER Raw Material arriving by rail, MANUFACTURER agrees to inspect such rail upon arrival at MANUFACTURER’s Facility to determine whether or not the seals are broken and for other signs of vandalism or theft.  If any such vandalism or theft has occurred, MANUFACTURER shall promptly notify CUSTOMER.

	
Section 4.4

	
A Certificate of Analysis (C of A) shall accompany all Raw Materials provided by CUSTOMER.  If such C of A’s do not conform with said specifications, MANUFACTURER shall notify CUSTOMER of such nonconformity and MANUFACTURER shall not receive nor use such nonconforming Raw Materials in performance of this Agreement unless CUSTOMER gives written notice that it waives the nonconformity.  If CUSTOMER notifies MANUFACTURER in writing that it waives the nonconformity as to the particular lot of nonconforming Raw Material, MANUFACTURER shall not be liable for failure of the Finished Product produced from such particular lot to meet Finished Product specifications set forth in Attachment-B, provided that such failure results solely from the failure of such particular lot of nonconforming Raw Material to meet Raw Material specifications.  Any waiver of or failure to meet Raw Material specifications shall be singular in nature and shall not imply that a similar failure in a subsequent lot will be waived.

	
Section 4.5

	
Whether CUSTOMER Raw Materials shall be delivered to MANUFACTURER by rail, barge, drum, or truck, MANUFACTURER will obtain the Bill of Lading and Material Safety Data Sheet that accompany such Raw Materials.  MANUFACTURER shall not accept, or sign for, any potential Raw Material that is accompanied by a Uniform Hazardous Waste Manifest (promulgated by the Environmental Protection Agency or other Federal or State Government) on behalf of CUSTOMER.  Should CUSTOMER have any material delivered to MANUFACTURER, that was not accompanied by a Uniform Hazardous Waste Manifest, that is later classified as a hazardous waste, CUSTOMER will indemnify and hold harmless MANUFACTURER and be responsible for all costs and fines resulting from waste material being terminalled through KMTEX under this Agreement.

	
Section 4.6

	
Upon receipt of CUSTOMER Raw Materials at MANUFACTURER’s Facility as described in section 4.2, MANUFACTURER will be solely responsible for the receiving, handling, storing, and safekeeping of such materials.

 

	
Section 4.7

	
Sole right and title to CUSTOMER’s Raw Materials hereunder shall remain in CUSTOMER at all times until it becomes part of Finished Product(s).  MANUFACTURER shall not sell, transfer, grant any security interest in, encumber or otherwise dispose of any interest of CUSTOMER in the CUSTOMER Raw Materials.

	
Section 4.8

	
Except for provisions included in other sections of this Agreement, MANUFACTURER agrees to pay and satisfy any and all reasonable claims for labor, equipment and material employed or used in any way by it in connection with the storage and handling of CUSTOMER’s Raw Material and (except for CUSTOMER’s non-payments) to permit no liens of any kind to be fixed upon or against CUSTOMER’s Raw Materials.

  

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Section 4.9

	
Raw Materials not directly provided by CUSTOMER will be purchased using CUSTOMER’s Raw Material Specifications detailed in Attachment-A, “Raw Materials”.

  ARTICLE V

  WAREHOUSING/STORAGE

	
Section 5.1

	
To the extent that CUSTOMER Raw Materials and Finished Products are stored at MANUFACTURER’s Facility, MANUFACTURER shall provide sufficient and appropriate facilities for such storage taking into account segregation by type of Raw Materials and Finished Products.

	
Section 5.2

	
Fees, charges and other applicable compensation to MANUFACTURER for services covered in Section 5.1 above shall be specified in Attachment-D, “Fees & Quantities”, except that the “Charges” for energy shall be specified in Attachment E, “Energy Surcharge”.

  ARTICLE VI

  CONVERSION RATIOS and INVENTORY IMBALANCES

	
Section 6.1

	
MANUFACTURER shall Toll CUSTOMER Raw Materials into Finished Products solely for the account of CUSTOMER.

	
Section 6.2

	
Sole right and title to Finished Products hereunder shall remain in CUSTOMER at all times.  MANUFACTURER shall not sell, transfer, grant any security interest in, encumber or otherwise dispose of any interest of CUSTOMER in the Finished Product, unless CUSTOMER is in default of payment or breach of this Agreement.

	
Section 6.3

	
At least annually, MANUFACTURER will permit CUSTOMER or an independent inspector to inspect MANUFACTURER’s inventories and records to certify to CUSTOMER the inventory quantities of the CUSTOMER Raw Materials and Finished Products as of the date of certification.  CUSTOMER and MANUFACTURER will reconcile in writing any differences as to the exact quantities available as of the date of such certification.

	
Section 6.4

	
MANUFACTURER shall meet or exceed the Yield Targets defined in Attachment-C, “Yields”, of the Agreement.

	
Section 6.5

	
MANUFACTURER shall be liable to CUSTOMER for any CUSTOMER Raw Material net shortage imbalance incurred in MANUFACTURER’s control and possession.  The rules/procedures for determining and

  

6

  

	 	

resolving MANUFACTURER’s liability to CUSTOMER for such inventory imbalances are detailed in Attachment-C, “Yields”.

 

ARTICLE VII

  CONVERSION CHARGES and INVOICING

	
Section 7.1

	
MANUFACTURER shall invoice CUSTOMER for “processing/converting, storage, transportation and handling of Finished Products” in accordance with the schedule of fees in Attachment-D, “Fees & Quantities”.

	
Section 7.2

	
When applicable, MANUFACTURER shall invoice CUSTOMER for “all other items and special requests not included in Section 7.1” in accordance with the schedule of fees in Attachment-D, “Fees & Quantities”.

	
Section 7.3

	
Energy Surcharges will be calculated and invoiced in accordance to Attachment-E, “Energy Surcharge”.

	
Section 7.4

	
Demurrage charges that result from the actions of the MANUFACTURER shall be paid by the MANUFACTURER.  Demurrage charges that result from the actions of the CUSTOMER shall be paid by the CUSTOMER.

	
Section 7.5

	
All fees under this agreement include all applicable taxes, costs, and expenses unless noted otherwise.

	
Section 7.6

	
Any tax or other government levy, charge, fee or increase in same, hereafter becoming effective, which increases CUSTOMER’s cost to manufacture, waste storage, treatment and/or disposal, or sale covered by this Agreement may, at CUSTOMER’s option be added to the price of Finished Product shipped under this agreement upon thirty (30) days’ prior written notice to CUSTOMER unless such tax, levy charge, fee or increase is the result of a penalty incurred by the MANUFACTURER as a result of its negligence or its failure to comply with applicable laws and regulations or governmental orders or decrees.  Finally, nothing in this Article 7 will cause the CUSTOMER to be responsible for any of the aforementioned taxes and/or charges to the extent that MANUFACTURER has received or is eligible to receive, credit for the payments of these taxes/charges by normal and/or proper filing of documents with the relevant government authority.

	
Section 7.7

	
The terms of payment for any monies owed by CUSTOMER to MANUFACTURER under this Agreement shall be thirty (30) days from the date of MANUFACTURER’s invoice to CUSTOMER.

 

	
Section 7.8

	
If, in the opinion of MANUFACTURER, the financial status of CUSTOMER shall, at any time become impaired, MANUFACTURER will notify CUSTOMER in writing and allow CUSTOMER ten (10) days to respond prior to making the decision to restrict or cease providing

  

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services to MANUFACTURER under this Agreement except upon receipt of cash or security satisfactory to MANUFACTURER.

 

	
Section 7.9

	
Unless otherwise noted in Attachment-D “Fees and Quantities”, at the beginning of each twelve (12) month period from the Effective Date of this Agreement, the manufacturing costs for products and services covered in this Agreement will be reviewed and escalated as necessary to compensate for changes that occurred in the previous period as mutually agreed to by both parties.  The minimum escalation will be based on the increase in the CPIU for, All Urban Consumers, South, Size Class B/C - CUURX300SA0, (December 1996 = 100) not seasonally adjusted, as published by the United States Department of Labor, Bureau of Labor Statistics in January of each year (or in any subsequent month if, for any reason index is not published in January) for the immediately preceding calendar year.

ARTICLE VIII

QUALITY and MANAGEMENT OF CHANGE

	
Section 8.1

	
Finished Product(s) produced by conversion of Raw Materials will be in accordance with CUSTOMER’s Manufacturing and Product Specifications as indicated in Attachment-B, “Finished Product”.

	
Section 8.2

	
MANUFACTURER shall test or cause to be tested each “lot” of Finished Product as specified in Attachment-B, “Finished Product”, for compliance with specifications before shipment to CUSTOMER or its designee.  MANUFACTURER shall retain a sample of each “lot” tested for a period of six (6) months.  For each “lot” shipped, MANUFACTURER shall prepare a certificate of analysis setting forth the items tested, the specifications and test results and forward the certificates to CUSTOMER or its designee at the time the Finished Product is shipped.

	
Section 8.3

	
MANUFACTURER will be responsible for the handling, storage, and security of the Finished Product(s) while at MANUFACTURER’s Facility.

	
Section 8.4

	
Changes in Raw Material specifications and/or Finished Product specifications as described in Attachments-A, “Raw Materials”, & -B, “Finished Product”, will only be by mutual agreement, and will be reflected in modified versions of Attachments-A, “Raw Materials” & -B, “Finished Product”.  If more than sixty (60) days pass following the receipt of CUSTOMER’s request and MANUFACTURER and CUSTOMER have not agreed upon mutually acceptable terms and conditions associated with CUSTOMER’s request, then either Party, may, at any time thereafter, terminate this agreement or cancel its remaining purchase obligations with respect to such Finished Product(s) by sending ninety (90) days written notice and meeting the requirements of the conditions in the Rights After Termination section of this Agreement.

  

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Section 8.5

	
In the event it is anticipated by either Party that a change to the Raw Material specifications, Finished Product specifications, or to any other specification and/or process will result in a change in the Fee as specified in Attachment-D “Fees & Quantities”, the Parties shall, upon mutual written agreement adjust the Fee(s) set forth in this Agreement.  If agreement cannot be reached as to the adjusted price, then the existing Fee will continue to apply for Finished Product(s) manufactured to the specifications currently in this Agreement for the succeeding ninety (90) day period.  In the event agreement cannot be reached during that period, either Party may upon further ninety (90) days written notice, cancel this Agreement without penalty one to the other and meeting the requirements of the conditions in the Rights After Termination section of this Agreement.

	
Section 8.6

	
MANUFACTURER shall allow CUSTOMER to conduct reviews on a regular basis to determine the extent MANUFACTURER is satisfying the CUSTOMERS requirements as defined in this Agreement.

	
Section 8.7

	
Any Finished Product(s) that fails to meet the specifications set forth in Attachment-B “Finished Product”, of this Agreement due to MANUFACTURER’s error shall be deemed Non-Conforming, except to the extent CUSTOMER agrees to accept any portion of such Non-Conforming Finished Product that has been reworked to meet specifications.

  ARTICLE IX

  MEASUREMENTS

Section 9.1            In-Bound Feed Material-

	
a.  

	
If Feed material is delivered to MANUFACTURER’s facility by truck, the weight of Feed as determined from MANUFACTURER’s scale at the time of shipment shall be the applicable weight.

	
b.  

	
If Feed material is delivered to MANUFACTURER’s facility by rail, the calculated weight of the Feed material as measured by the rail car strapping charts at the time of shipment shall be the applicable weight.  If that weight is not provided, MANUFACTURER will strap the rail car and calculate the weight of the Feed.

	
c.  

	
If Feed material is delivered to MANUFACTURER’s facility by barge, the calculated weight of the Feed material as measured by the barge surveyor at the time of discharge shall be the applicable weight.  CUSTOMER is responsible for all costs associated with inspector/surveyor and tankerman.  Barge unloading/loading must begin during daylight hours.

 

Section 9.2            Out-Bound Finished Product-

	
  

	
   a.

	
If the Finished Product is shipped from MANUFACTURER’s facility to CUSTOMER or CUSTOMER’s designee by truck, the weight of

 

  

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the Finished Product as determined from MANUFACTURER’s scale at the time of shipment shall be the applicable weight, subject to random confirmation upon arrival at CUSTOMER’s designated destination.

 

	
b.  

	
If the Finished Product is shipped from MANUFACTURER’s facility to CUSTOMER or CUSTOMER’s designee by rail, the calculated weight of the Finished Product as measured by the rail strapping charts at the time of shipment shall be the applicable weight.

	
c.  

	
If the Finished Product is shipped from MANUFACTURER’s facility to CUSTOMER or CUSTOMER’s designee by barge, the calculated weight of the Finished Product as measured by the barge surveyor at the time of discharge shall be the applicable weight.  CUSTOMER is responsible for all costs associated with inspector/surveyor and tankerman.  Barge unloading/loading must begin during daylight hours.

  ARTICLE X

  RISK OF LOSS

	
Section 10.1

	
Risk of loss for all CUSTOMER Raw Materials shall pass to MANUFACTURER upon receipt of such materials at MANUFACTURER’s Facility as defined in Section 4.2 of this Agreement.  In the event of any loss of CUSTOMER Raw Materials while in the possession of MANUFACTURER other than consumption of the CUSTOMER Raw Materials in the production of Finished Products meeting the CUSTOMER specifications in this Agreement, MANUFACTURER shall either: (i) reimburse CUSTOMER for the cost of replacing such CUSTOMER Raw Materials or (ii) replace the lost CUSTOMER Raw Materials with raw materials meeting the specifications of Attachment-A.  The monetary value of CUSTOMER Raw Materials will be valued per instructions set forth in Attachment-A, “Raw Materials”.

	
Section 10.2

	
Risk of loss for all Finished Product produced by MANUFACTURER shall pass to MANUFACTURER upon the completion of production of such Finished Products until delivered to CUSTOMER.  Delivery of Finished Product to CUSTOMER occurs as follows at which time risk of loss passes from MANUFACTURER to CUSTOMER:

	
(i)  

	
As shipped by rail, when MANUFACTURER secures seal to rail car.

	
(ii)  

	
As shipped by carrier other than rail, when CUSTOMER, or the carrier assigned by CUSTOMER, signs for receipt of load at MANUFACTURER’s facility.

	
Section 10.3

	
MANUFACTURER’s risk of loss is limited to the CUSTOMER Raw Material costs and freight costs; specifically MANUFACTURER is not responsible for replacement, alternative supply costs, expediting costs,

  

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special, indirect, incidental, punitive, exemplary, consequential damages, or loss including but limited to lost profits, loss of business opportunity, or other similar damages.

 

 

ARTICLE XI

MANUFACTURER WARRANTIES

	
Section 11.1

	
Acknowledge and agrees that it is solely responsible for and in control of operations at MANUFACTURER’s Facility and for any leaks, spill, discharge, release emission or other disposal which may occur in connection with the performance of this Agreement, except those that are due to CUSTOMER’s gross negligence.

	
Section 11.2

	
Warrants that, at the time of delivery, any Finished Product supplied by MANUFACTURER shall (i) meet the Specifications for such Finished Product as defined in Attachment-B. “Finished Product” of this Agreement, and (ii) be conveyed with good title, free from any lawful security interest, lien or encumbrance, unless CUSTOMER is in default of payment or breach of this Agreement.

	
Section 11.3

	
Represent and agree that it has knowledge of and expertise as to the Raw Materials used, waste generated, procedures and processes employed and/or Finished Products manufactured hereunder, including without limitation, that is has trained its employees in the safe handling of all materials, that it has implemented every reasonable precaution to minimize any hazard in the performance of this Agreement and that it has protected its employees from such hazard.

	
Section 11.4

	
Prepare Finished Products for shipment and loading shipping containers in accordance with specifications or instructions provided by CUSTOMER, or industry practice when not specified by CUSTOMER and making products available to a common carrier.

	
Section 11.5

	
MANUFACTURER has sole responsibility for compliance with all applicable laws, rules and regulations in connection with manufacture and storage of Raw Materials and Finished Product(s) and the generation, storage, transportation, and disposal of all waste, including by-products, arising out of the manufacturing and packaging of Finished Product(s) hereunder, including the cleaning of manufacturing equipment.

	
Section 11.6

	
Maintain production, raw materials, product inventory, product quality control and raw material control records, tracking or lot assignment numbers and retain samples of all production lots for a period of one (1) year from date of production and report the same to CUSTOMER in writing if requested.

 

 

 ARTICLE XII

CUSTOMER WARRANTIES

  

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Section 12.1

	
Provide to MANUFACTURER technical information relating to the Raw Materials and Finished Products including procedures for manufacturing the Finished Product(s), quality control and test specifications, labeling instructions, MSDS’s and such other information as may be required to enable MANUFACTURER to manufacture Finished Product(s) during the term of this Agreement.

	
Section 12.2

	
Provide the identified Raw Materials per Attachment-A that meets   CUSTOMER’s specifications, also found in Attachment-A, at no cost to MANUFACTURER, with delivery at such times as to allow MANUFACTURER to perform the manufacture of Finished Products under the terms of this Agreement.

	
Section 12.3

	
Provide MANUFACTURER with projections on a quarterly basis or when requested by MANUFACTURER of the product mix to be manufactured for CUSTOMER that is mutually agreed on by both Parties.

	
Section 12.4

	
Issue orders based on specified lead-times for Finished Product with delivery dates that specify the quantity, time, and place for delivery of Finished Product.  MANUFACTURER will in a timely manner, confirm availability to manufacture and deliver Finished Product as directed in CUSTOMER’s orders for Finished Product.  Finished Product will be shipped in mutually acceptable types and sizes of tank trucks or trailers or other acceptable means of transportation.

	
Section 12.5

	
Provide to MANUFACTURER at no cost to MANUFACTURER, technical assistance to affect the efficient transfer of Finished Product manufacturing and quality control expertise, test specifications, labeling instructions, Material Safety Data Sheets and provide subsequent technical assistance as MANUFACTURER may reasonable require throughout the term of this Agreement.

	
Section 12.6

	
Provide Material Safety Data Sheets for the product on Attachment-A, “Raw Materials”.

	
Section 12.7

	
Provide documentation relative to the Toxic Substances Control Act (TSCA) and, if Finished Product is to be exported, similar foreign chemical control laws including but not limited to documentation relevant to compliance with the TSCA Chemical Substances Inventory for all raw materials, intermediates, and components in Finished Product and the Finished Product itself.  Such documentation will be subject to the approval and acceptance by MANUFACTURER.

  ARTICLE XIII

  DISCLAIMER OF WARRANTIES

	
Section 13.1

	
There are no warranties which extend beyond the face hereof, and with the exception of the warranties expressed in this agreement, neither party

  

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makes any other warranty, express or implied, statutory or otherwise, concerning either the Raw Materials or the Finished Product(s), including without limitation, any warranty of fitness for a particular purpose, warranty of merchantability or warranty against infringement of patent.

  ARTICLE XIV

  CLAIMS

	
Section 14.1

	
CUSTOMER shall test or cause to be tested all Finished Product processed by MANUFACTURER hereunder promptly upon receipt thereof.  All claims pertaining to product quality (“Claims”) of CUSTOMER shall be deemed waived and forever barred unless CUSTOMER notifies MANUFACTURER of the nature and details of the Claim in writing within ninety (90) days after delivery of the Finished Product to the CUSTOMER or CUSTOMER’s designee.

  ARTICLE XV

  INDEMNIFICATION

	
Section 15.1

	
To the fullest extent permitted by applicable law, MANUFACTURER shall defend, indemnify and hold harmless CUSTOMER, its parents, subsidiaries and affiliates, and each of its respective agents, servants, employees, officers and directors (as used in this Section 15.1, “Indemnified Parties”) from and against any and all liability, suits, losses, demands, causes of action, fines, penalties, damages, and claims of any kind or nature, including reasonable attorney’s fees and costs (as used in this Section 15.1, collectively “Claims”) which CUSTOMER may hereafter incur, pay out or become responsible for as a result of death or bodily injury to any person (including employees of MANUFACTURER), destruction or damage to property, contamination of, adverse effects on, or imminent or substantial endangerment of, or release or threat of release into the environment, or any threatened or actual release of hazardous substance, or any violation or alleged violation of or liability under any governmental laws, regulations, rules or orders to the extent caused by, arising out of or in any manner connected with MANUFACTURER’s negligent acts, omissions, breaches of this Agreement, or failure to comply with applicable laws in the performance of its obligations hereunder.

	
Section 15.2

	
To the fullest extent permitted by applicable law, CUSTOMER shall defend, indemnify and hold harmless MANUFACTURER, its parents, subsidiaries and affiliates, and each of its respective agents, servants, employees, officers and directors (as used in this Section 15.2, “Indemnified Parties”) from and against any and all liability, suits, losses, demands, causes of action, fines, penalties, damages, and claims of any kind or nature, including reasonable attorney’s fees and costs (as used in this Section 15.2, collectively “Claims”) which MANUFACTURER may hereafter incur, pay out or become responsible for as a result of death or bodily injury to any person (including employees of CUSTOMER),

  

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destruction or damage to property, contamination of, adverse effects on, or imminent or substantial endangerment of, or release or threat of release into the environment, or any threatened or actual release of hazardous substance, or any violation or alleged violation of or liability under any governmental laws, regulations, rules or orders to the extent caused by, arising out of or in any manner connected with CUSTOMER’s negligent acts, omissions, breaches of this Agreement, or failure to comply with applicable laws in the performance of its obligations hereunder.

	
Section 15.3

	
The indemnification obligations contained in this section shall specifically survive termination of this Agreement.

	
Section 15.4

	
Indemnified Parties shall have the right to select counsel and control any claims or obligations arising hereunder.

	
Section 15.5

	
IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER FOR SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE, EXEMPLARY, CONSEQUENTIAL DAMAGES OR LOSS INCLUDING, LOST PROFITS, LOSS OF BUSINESS OPPORTUNITY OR OTHER SIMILAR DAMAGES.  NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, NO LIMITATION OR DISCLAIMER OF LIABILITY SHALL APPLY TO CLAIMS OR LIABILITIES BASED UPON ACTUAL DAMAGES RELATED TO DAMAGES SUFFERED OR INCURED BY A THIRD PARTY FOR WHICH A PARTY TO THIS AGREEMENT IS ENTITLED TO INDEMNIFICATION UNDER THIS PARAGRAPH.

  ARTICLE XVI

  INSURANCE

MANUFACTURER shall maintain, at its sole cost, at all times while performing work hereunder, the insurance coverage set forth below with companies satisfactory to CUSTOMER with full policy limits applying.

	
a.  

	
Workers Compensation Insurance covering all employees in accordance with the statutory requirements of the State of Texas in which the services hereunder are rendered.

	
b.  

	
Employer’s Liability Insurance in an amount not less than $100,000 for each accident.

	
c.  

	
Comprehensive General Liability Insurance, including Property Liability, completed operations, blanket contractual, MANUFACTURER’S protective in the following amounts:

Bodily Injury                                         $3,000,000 each occurrence

                                                                                                 $3,000,000 aggregate

Property Damage                                  $3,000,000 each occurrence

  

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                                $3,000,000 aggregate

Pollution & Environmental Impairment Insurance

$1,000,000 per occurrence

$2,000,000 aggregate

$5,000,000 umbrella

	
d.  

	
All Risk Property Insurance in sufficient amounts to cover the loss of CUSTOMER’s property in MANUFACTURER’s care, custody, and control.

Nothing contained in these provisions relating to coverage and amounts set out herein shall operate as a limitation of MANUFACTURER’s liability in tort or contracted for under terms of this Agreement.

  ARTICLE XVII

  TAXES

	
Section 17.1

	
CUSTOMER will either pay directly all sales and use taxes properly levied by any properly constituted governmental authority upon the Services by MANUFACTURER under this Agreement or reimburse MANUFACTURER therefore if paid by MANUFACTURER at the written direction of CUSTOMER.

	
Section 17.2

	
CUSTOMER shall be responsible for taxes imposed on the inventories on CUSTOMER Supplied Materials stored at MANUFACTURER’s facilities.

	
Section 17.3

	
MANUFACTURER shall assume full responsibility for the payment of employer’s share of all federal social security taxes and all federal and state unemployment compensation taxes for all employees engaged by MANUFACTURER in performing Services under this Agreement and for the payment of all federal and state taxes of whatever sort, including gross receipts taxes, franchise taxes, and all other taxes or charges applicable to MANUFACTURER’s actions, employees, facilities and materials used for performing Services under this Agreement or applicable MANUFACTURER’s income under this Agreement.

  ARTICLE XVIII

  OVERTIME CHARGES

	
Section 18.1

	
Upon receipt of an authorization from CUSTOMER to perform services outside of MANUFACTURER’s normal hours of operation as specified in Article 12 hereof, MANUFACTURER shall charge CUSTOMER $XXXX per hour with a four (4) hour minimum for overtime services.

 

 

  ARTICLE XIX

  

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  HOURS OF OPERATION

	
Section 19.1

	
MANUFACTURER requires an appointment for all inbound and outbound shipments.  MANUFACTURER's hours of operation for shipping product are 7:00 AM through 5:00 PM, Monday through Friday.  MANUFACTURER's hours of operation for receiving materials are 24 hours per day, Monday through Friday, and processing are 24 hours per day, Monday through Sunday.  

  ARTICLE XX

  DRUG & ALCOHOL POLICY

	
Section 20.1

	
MANUFACTURER shall enforce its drug and alcohol policy at all times, which includes but is not limited to the following:

	
Section 20.2

	
MANUFACTURER shall ensure that its employees and agents do not perform any service for CUSTOMER while under the influence of alcohol or any controlled substance.  Employees and agents shall not use, possess, distribute or sell alcoholic beverages, controlled drugs or drug paraphernalia or misuse uncontrolled drugs while performing services for CUSTOMER.

  ARTICLE XXI

  FORCE MAJEURE

The obligation of the parties pursuant to this Agreement may be suspended by either party without liability hereunder due to:

	
a.  

	
fire, explosion, floods, storms, earthquakes, tidal waves, war, military operations, national emergency, acts of terrorism, civil commotions, strikes, or differences with workmen or unions, or any delay or failure in delivery or receipt of Feed or Finished Product hereunder when supplies of CUSTOMER or MANUFACTURER , or the facilities of production, manufacture, transportation, or distribution of CUSTOMER or MANUFACTURER are impaired by causes beyond CUSTOMER’s or MANUFACTURER’s control or,

	
b.  

	
the order, requisition, request, or recommendation of any governmental agency or acting governmental authority or court order, or CUSTOMER’s, or MANUFACTURER’s compliance therewith or,

	
c.  

	
by governmental authority, or CUSTOMER’s or MANUFACTURER’s compliance therewith, or by governmental proration, regulation, or priority or,

	
d.  

	
the inability of CUSTOMER or MANUFACTURER to obtain on terms deemed by MANUFACTURER to be commercially practicable, any raw material (including energy sources) or,

  

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e.  

	
any other delay or failure due to any cause beyond the control of the party suffering the Force Majeure, similar or dissimilar to any such causes.

When such cause or causes exist, the party affected shall have the right in its sole discretion to restrict or cease deliveries or acceptance of Feed or Finished Product hereunder; provided, however, that in any event, CUSTOMER shall accept the return or delivery of any affected Raw Material and Finished Product.

  ARTICLE XXII

  EARLY TERMINATIONS

	
Section 22.1

	
If either Party fails to perform any of its obligations under this Agreement, the other Party may eliminate shipments or receipt of deliveries until such default is cured.

	
Section 22.2

	
Either Party may terminate this Agreement at any time, without further liability, by providing the other Party with (30) day’s written notice upon the occurrence of any of the following events:

	
a.  

	
The filing of bankruptcy for or on the part of the other Party (or its parent or affiliate organization).

	
b.  

	
The appointment of a receiver, trustee or liquidator for all or substantially all of the assets of the other Party (or its parent or affiliate organization).

	
c.  

	
An assignment by the other Party (or its parent or affiliate organization) for the benefit of its creditors.

	
d.  

	
The filing of any petition by or against the other Party (or its parent or affiliate organization) asking for a reorganization under any state insolvency laws or under the Federal Bankruptcy Act.

	
e.  

	
Written notice by the party not affected by a Force Majeure Event to the party affected by the Force Majeure Event if a Force Majeure Event lasts for more than thirty (30) days.

	
f.  

	
If CUSTOMER determines, in its sole discretion, to exit the business of producing or selling Finished Product, then CUSTOMER may terminate this Agreement upon providing MANUFACTURER ninety (90) days written notice.  CUSTOMER shall purchase all remaining Raw Materials supplied by MANUFACTURER dedicated to the manufacturing/processing of Finished Products covered in this Agreement and all Finished Product inventories from MANUFACTURER per pricing in Schedule D, “Fees & Quantities”.

	
g.  

	
If MANUFACTURER determines, in its sole discretion, to exit the business of producing Finished Product, then MANUFACTURER may terminate this Agreement upon providing CUSTOMER ninety (90) days written notice.  CUSTOMER will not be under any obligation to purchase any remaining Raw Materials supplied by MANUFACTURER.

 

 

ARTICLE XXIII

  

17

  

RIGHTS AFTER TERMINATION

	
Section 23.1

	
Upon termination of this agreement, all obligations of each Party shall cease except as stated herein and except that all warranties and all limitations of liabilities shall continue to be of full force and effect.

	
Section 23.2

	
Such termination shall not relieve the parties of any liability accrued prior to the effective date of such termination.

	
Section 23.3

	
Such termination shall not affect the continued operation of enforcement of any provision of this Agreement which survives the termination of this Agreement.

	
Section 23.4

	
Upon termination of this Agreement, MANUFACTURER shall promptly return all CUSTOMER supplied Feed to CUSTOMER at (i) CUSTOMER’s cost if CUSTOMER exits the business or (ii) at MANUFACTURER’s cost if MANUFACTURER exits the business.  CUSTOMER will be allowed to remain in MANUFACTURER’s storage for a minimum of sixty (60) days at contracted storage rates to allow ample time for materials to move out.

  ARTICLE XXIV

  PRODUCT LIEN

MANUFACTURER shall have an expressed contract lien upon all materials and products at this time stored and handled hereunder for all of the charges and amounts payable by CUSTOMER to MANUFACTURER hereunder, or under any other agreements between CUSTOMER and MANUFACTURER.  Such lien shall not be exclusive, but shall be cumulative and in addition to all other legal and equitable liens, rights and remedies of MANUFACTURER’S.  Should MANUFACTURER exercise its lien rights hereunder, which shall require a minimum of thirty (30) days prior written notice to CUSTOMER, MANUFACTURER has the right to foreclose upon the product and subject to the Lien.  MANUFACTURER has the right to sell the material and/or product stored to apply against outstanding indebtedness.

  ARTICLE XXV

  BANKRUPTCY

If CUSTOMER should make a general assignment for the benefit of its creditors, or if a receiver should be appointed for the account of CUSTOMER insolvency, or should CUSTOMER fail to make prompt payment for Services defined in this agreement, MANUFACTURER may, with thirty (30) days written notice to CUSTOMER terminate this agreement.  If CUSTOMER files a petition for an order of relief under the United States Bankruptcy Code, (11 or 13 U.S.C.), MANUFACTURER shall have all rights afforded to MANUFACTURER under the Bankruptcy Code, including, but not limited to, the right to file proof of a claim for any and all amounts due MANUFACTURER for any damages which may be due under this agreement and the right to file a motion to force assumption or rejection agreement.

  

18

  

ARTICLE XXVI

ASSIGNMENT

This Agreement shall not be assigned, transferred, or delegated by either Party without the prior written consent of the other Party to this Agreement.

ARTICLE XXVII

NOTICES

Any notice to be given under this Agreement shall be in writing and shall be delivered personally, by certified mail (return receipt delivered), by courier or overnight delivery service, or by facsimile.  Any notice shall be effective only if and when it is received by the addressee.  For the purposes hereof, the addresses and facsimile numbers of MANUFACTURER and CUSTOMER are as follows:

If to MANUFACTURER:                    Mr. Will Baker

333 North Sam Houston Parkway, E

Suite 1250

Houston, TEXAS  77060

Phone-  (281) 272-4107

Fax-       (281) 272-4103

E-Mail-  willb@kmcoinc.com

If to CUSTOMER:                                Greg Wallace

200 Atlantic Pipeline Road

Baytown, TX  77520

Phone- (281) 383-5050

E-Mail- gregw@vertexenergy.com

ARTICLE XXVIII

PLANT VISITS

	
Section 28.1

	
Upon reasonable notice, which shall be no less than forty-eight (48) hours’ notice and when no act of Force Majeure is occurring at MANUFACTURER’s facility, MANUFACTURER shall allow CUSTOMER and/or its designated representative’s access to inspect the following:

	
a.  

	
All records, including, but not limited to, financial and accounting records, which pertain direct and specifically to this Agreement and MANUFACTURER’s performance hereunder; and

	
b.  

	
MANUFACTURER’s facilities at which the materials (Raw Material and Finished Product) covered by this Agreement are produced and or stored.

  

19

  

ARTICLE XXIX

INDEPENDENT CONTRACTOR

	
Section 29.1

	
MANUFACTURER is, and shall perform this Agreement as an independent contractor.  As such, it shall have and maintain sole control over all of its employees, agents and operations.  Neither MANUFACTURER nor anyone employed by it shall be, represent, act and/or purport to act, or be deemed to be the agent, representative, employee or servant of CUSTOMER.

	
Section 29.2

	
Nothing contained herein shall create the relationship of joint ventures, principal and agent, or master and servant between CUSTOMER and MANUFACTURER.

ARTICLE XXX

CONFIDENTIALITY

	
Section 30.1

	
MANUFACTURER agrees that all specifications, formulations, recommended manufacturing procedures, including rework procedures, pertaining to the Product(s) and related data and information supplied to it by CUSTOMER or acquired by it from CUSTOMER under the Confidentiality Agreement mentioned in Section 22.1 or this Agreement shall be deemed information as that term is defined in the Confidentiality Agreement and shall be treated in accordance with the terms and conditions thereof except that MANUFACTURER’s obligations of secrecy there under and hereunder shall last five (5) years from the date of termination of this Agreement.

	
Section 30.2

	
MANUFACTURER shall have the right to use information in order to perform its obligations under this Agreement or as required by law.

	
Section 30.3

	
MANUFACTURER’s obligation under this secrecy provision shall not apply, however, to Confidential Information when, after, and to the extent that the Confidential Information either:

	
a.  

	
is known to the public, including legal proceedings, through no fault or participation of MANUFACTURER or its employees or agents; or

	
b.  

	
was known to MANUFACTURER prior to the first disclosure to MANUFACTURER by or on behalf of CUSTOMER and MANUFACTURER can establish fact by reasonably convincing evidence; or

	
c.  

	
is received by MANUFACTURER in good faith from third party, which is not subject to a secrecy obligation with respect to such information.

  

20

  

  ARTICLE XXXI

  SEVERABLE PROVISIONS

	
Section 31.1

	
Should any provision of this Agreement be or become invalid, void or otherwise unenforceable, the remainder of this Agreement shall continue to be binding on and inure to the benefit of both Parties.  The Parties will sever any such invalid, void or unenforceable provision from this Agreement and, if necessary, use their best efforts to agree upon any changes in the Agreement which are required in order to achieve the same effect as the invalid, void or unenforceable provisions.

  ARTICLE XXXII

  WAIVER OF BREACH

	
Section 32.1

	
A failure by one of the Parties to this Agreement to assert its rights upon any breach of a covenant or condition of this Agreement shall not be deemed to be a waiver of such rights, nor shall any waiver be implied from acceptance of any payment or benefit.  No such failure or waiver in writing by any one of the Parties hereto with respect to any such rights shall extend to or affect any subsequent breach or impair any right consequent thereto.

	
Section 32.2

	
Binding Agreement:  Subject to the Force Majeure Section of this Agreement, the terms hereof shall be binding upon and inure to the benefit of CUSTOMER’s and MANUFACTURER’s permitted successors and assigns.

  ARTICLE XXXIII

  GOVERNING LAW

	
Section 33.1

	
This Agreement is to be construed in accordance with the laws of the State of Texas, without giving effect to the principles of conflict of laws.  In the event that the Parties are unable to resolve such dispute prior to the initiation of legal action, both CUSTOMER and MANUFACTURER submit to jurisdiction and venue in the state or federal courts of Texas.

  ARTICLE XXXIV

  CAPTIONS

	
Section 34.1

	
The captions of this Agreement are for reference purposes only and shall not affect the meaning of any provision of this Agreement.

  

21

  

  ARTICLE XXXV

  ENTIRE AGREEMENT

	
Section 35.1

	
This Agreement reflects the entire agreement between the parties with respect to the matters set forth herein and shall supersede any prior agreements or understandings, whether oral or in writing, except that this Agreement shall not supersede the Confidentiality Agreement signed by both Parties on April 17, 2013.  Said additional agreement is expressly ratified and incorporated by reference herein.  This Agreement may not be modified or amended in any manner, including prior or current course of dealing between the Parties or usage of trade, except by a writing executed by the Parties hereto.  No purchase order or other form from CUSTOMER will modify, supersede, add to or in any way vary the terms of this Agreement.  Any acknowledgement by an employee or agent of MANUFACTURER of such form shall be solely for informational purposes.

  ARTICLE XXXVI

  EFFECT OF FACSIMILE AND PHOTOCOPIED SIGNATURES

	
Section 36.1

	
This Agreement may be executed in several counterparts, each of which is an original.  It shall not be necessary in making proof of this Agreement or any counterpart hereof to produce or account for any of the other counterparts.  A copy of this Agreement signed by one Party and faxed to another Party shall be deemed to have been executed and delivered by the signing Party as though an original.  A photocopy of this Agreement shall be effective as an original for all purposes.

	
  

	
Executed _April 17____ , 2013 (“Effective Date”) at Houston, Texas

  

 CUSTOMER                                                                                                                                      MANUFACTURER

By:_/s/Greg Wallace____________________                                                                           By:_/s/ Will Baker__________________

Printed Name: _Gregory Wallace___________                                                                           Printed Name: Will Baker

Title:____VP__________________________                                                                          Title: Sales – Custom Processing

  

22

  

 

**************************************************

MATERIAL BELOW MARKED BY AN “X” IN THE BELOW ATTACHMENTS HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.  THIS ENTIRE EXHIBIT INCLUDING THE OMITTED CONFIDENTIAL INFORMATION HAS BEEN FILED SEPARATELY WITH THE COMMISSION.

**************************************************

 

 

 

  

  

  

 

   Attachment-A

  Raw Materials

Petroleum distillates with a BP range of 90F to 690F.  These specifications may be changed with written approval from both parties.

An uncontrolled list of the Raw Material Feed material specifications is as follows:

	
Material

	
Supplier

	 

	
I.  

	
VSR Feedstock                                                                                                         CUSTOMER

	
a.  

	
Typical Properties not supported by incoming COA

	
i.  

	
BP Range 90F – 590F

	
II.  

	
Pygas Feedstock                                                                                                       CUSTOMER

	
a.  

	
Typical Properties not supported by incoming COA

	
i.  

	
BP Range 105F – 590F

  

23

  

 

 

   Attachment-B

  Finished Product

Pygas, Gasoline blend stock and Heavy/Bottoms/Cutter Stock processed to CUSTOMER’s Specifications.  These specifications may be changed with written approval from both Parties.  In the event that the Finished Product either does not meet specification or is contaminated by MANUFACTURER, MANUFACTURER will be responsible for reprocessing the material at no additional cost to CUSTOMER or MANUFACTURER will purchase the off-spec material at the documented cost of the Feed material.

An uncontrolled list of the finished product specifications is as follows:

	
I.  

	
 Pygas Finished

	
a.  

	
Dry Point: 390F-420F

	
II.  

	
VSR Gasoline Blend Stock Finished

	
a.  

	
Dry Point: 365F-405F

	
III.  

	
Heavy/Bottoms/Cutter Stock

	
a.  

	
Flashpoint: 140F or greater

  

24

  

Attachment-C

Yields

KMTEX’s production yield shall account for at least XX% of all feed provided by CUSTOMER to KMTEX.  Such accounting shall be provided to CUSTOMER on a Quarterly basis.  If production yield is below XX%, KMTEX will reimburse CUSTOMER for the value of the feed ($/lb) multiplied by the pounds short of the XX% target.  The value of the feed in this calculation is the current documented value of the effected feed from CUSTOMER based on the posting that the feed is purchased from delivered to KMTEX.

A 0.5% aggregate handling loss outside the production yield targets shall be allowed.

  

25

  

Attachment-D - Fees & Quantities

	
·  

	
PYGAS FEED

	
o  

	
Processing fee:  $XXXX per pound of Pygas Feed processed.

	
o  

	
Includes a dedicated XXXX barrel tank for Pygas feed, a XXXX barrel tank for overheads, and a XXXX barrel tank for Heavy’s/Bottoms/Cutter Stock products.  These tanks will be provided at no charge as long as a minimum cumulative throughput of XXXX barrels of material is processed quarterly.  In the event the throughput falls below target, KMTEX reserves the right to charge tank rental or designate the tanks for other service.

	
·  

	
VSR FEED

	
o  

	
Processing Fee:  $XXXX per pound of VSR Feed processed.  In the event that the processing rates of a feed material are significantly reduced due to a change in composition that directly effects processing, KMTEX reserves the right to renegotiate the processing fee of that particular feed material.

	
§  

	
Tank rental and handling rates as follows:

	
·  

	
$XXXXX/month for XXXXX barrel tank to accumulate add’l feed

	
·  

	
$ XXXXX /month for a XXXXX barrel tank to accumulate VSR Feed

	
·  

	
$ XXXXX /month for XXXXX gallons of additional storage for VSR feed.

	
·  

	
GENERAL TERMS:

	
o  

	
KMTEX will terminal, accumulate and blend materials and charge for tank rental and handling.

	
§  

	
In and out charges for additional terminalled product as follows:

	
·  

	
$ XXXXX per tank truck of incoming unprocessed material

	
·  

	
$ XXXXX per railcar unloaded of unprocessed material

	
§  

	
Wet, low flash fuel: Either KMTEX (at a cost plus basis) or CUSTOMER will handle the proper disposal of the water co-product from this processing.

	
o  

	
Tank rental rates as follows

	
§  

	
$ XXXX /month ($XXXX /day) for an 11,000 barrel tank

	
§  

	
$ XXXX /month ($XXXX /day) for a 7,300 barrel tank

	
§  

	
$ XXXX /month ($XXXX /day) for a 5,900 barrel tank

	
§  

	
$ XXXX /month ($XXXX /day) for  a 110,000 gallon tank

	
§  

	
$ XXXX /month ($XXXX /day) for a 72,000 gallon tank

	
·  

	
The expected rate of production for the terminalled and processed materials are as follows:

	
o  

	
XXXX - XXXX barrels per quarter of material to be terminalled

	
o  

	
XXXX - XXXX barrels per quarter of material to be processed

	
·  

	
Regarding Additives

	
o  

	
All additives being delivered to KMTEX will have to be scheduled with the KMTEX logistics department and an unloading time assigned.

	
o  

	
All additives will have to be labeled with CUSTOMER name on the side of the drum / tote.

	
o  

	
There will be a charge of XXXX per gallon for each additive administered with a minimum charge of $ XXXX for each additive.

	
o  

	
It will be the responsibility of the CUSTOMER for the disposal of their empty drums.  In the event that KMTEX has to dispose of any drums, there will be a charge of $ XXXX per drum.

	
·  

	
Anytime CUSTOMER requests a nitrogen roll on a take there will be a charge of $XXXX per hour.

  

26

  

Attachment-E

Energy Surcharge

	
·  

	
Energy surcharge fee as follows:  When the natural gas rate for MMBTU billed to KMTEX from the gas company is greater than $ XXXX /MMBTU

	
o  

	
Variable Surcharge=(Natural Gas Price - $ XXXX) x (Natural Gas Factor) x (Pounds of Feed Processed)

	
o  

	
The Natural gas Factor is XXXX BTU for Pound of Feed Processed

 

 

 

 

 

 

  

27

  

  Attachment-F

  Reporting Procedures

	
·  

	
Upon completion of the processing, CUSTOMER will be provided a spreadsheet detailing the material balance

 

28

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