Document:

exv10w5

EXHIBIT 10.5

[***] DENOTES CONFIDENTIAL MATERIALS OMITTED AND FILED

SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT

Offtake Agreement

by and between

Alon Refining Krotz Springs, Inc.

and

Valero Marketing and Supply Company

dated

July 3, 2008

 

 

OFFTAKE AGREEMENT

          THIS OFFTAKE AGREEMENT (this “Agreement”) is entered into on July 3, 2008 to be
effective as of July 1, 2008 (the “Effective Date”), by and between ALON REFINING KROTZ
SPRINGS, INC., a Delaware corporation (“Seller”), and VALERO MARKETING AND SUPPLY COMPANY,
a Delaware corporation (“VMSC”, and sometimes “Buyer”).

WITNESSETH

     WHEREAS, Seller and Valero Refining and Marketing Company, a Delaware corporation
(“VRMC”), have entered into a Stock Purchase Agreement, dated as of May 7, 2008 (the
“SPA”), pursuant to which VRMC will sell and transfer, and Seller will purchase and take
title to and delivery of the Shares (as defined in the SPA).

     WHEREAS, Seller and VMSC (collectively, the “Parties”, and each individually a
“Party”) are desirous of entering into an agreement whereby Seller will sell and VMSC will
purchase a quantity of Products (as defined below); and

     WHEREAS, Seller desires to sell to VMSC and VMSC desires to purchase from Seller the Products
pursuant to the terms and conditions of this Agreement;

     WHEREAS, Seller and VMSC acknowledge and agree that VMSC will resell certain of the Products
to VMSC customers at the Refinery Truck Rack;

     NOW THEREFORE, in consideration of the premises, the terms and conditions hereinafter set
forth and for other good and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the Parties hereby agree as follows:

1 DEFINED TERMS

     As used in this Agreement, the following terms shall have the following meanings: “Affiliate”
has the same meaning as that term is defined in the SPA.

     “Applicable Law” shall mean any applicable statute, law, regulation, ordinance, rule,
judgment, rule of law, order, decree (including, without limitation, any consent decree), permit,
approval, license, requirement, or other governmental restriction or any similar form of decision
of, or any provision or condition of any permit, license or other operating authorization issued
under any of the foregoing by, or any determination by any Governmental Authority having or
asserting jurisdiction over the matter or matters in question, whether now or hereafter in effect
and in each case as amended (including without limitation, all of the terms and provisions of the
common law of such Governmental Authority), as interpreted and enforced at the time in question.

     “Argus” means the various daily reports published by Argus Media including the U.S.
Products Report.

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     “BPD” means Barrels per Day.

     “Business Day” has the same meaning as that term is defined in the SPA.

     “CMAI” means Chemical Market Associates, Inc.

     “Contract Year” means a period of 365 days (or 366 days in case the period includes a
February 29) beginning on the Effective Date, and ending on each subsequent anniversary thereof
during the effectiveness of this Agreement.

     “cpg” means United States cents per Gallon.

     “Day” means each period of twenty-four consecutive hours, beginning and ending at
12:00 am (midnight), Central Time.

     “Gallon” means one standard United States gallon at 60 degrees Fahrenheit.

     “Governmental Authority” means any federal, state, local, foreign government, any
provincial, departmental or other political subdivision thereof, or any entity, body or authority
exercising executive, legislative, judicial, regulatory, administrative or other governmental
functions or any court, department, commission, board, bureau, agency, instrumentality or
administrative body of any of the foregoing.

     “OPIS” means Oil Price Information Service.

     “Platt’s” means Platt’s Oilgram Price Report.

     “Refinery” means the petroleum refinery of Seller located in Krotz Springs, St. Landry
Parish, Louisiana.

     “Term” has the meaning set forth in Section 3.

     Any other capitalized terms in this Agreement not otherwise defined above shall have the meaning as
defined herein.

2 PURCHASE AND SALE

     2.1 Products. Seller will sell and deliver to VMSC, and VMSC will purchase and
receive from Seller, the products (the “Products”, and each individually a “Product”) set forth on
Schedule 2.1 and Schedule 2.2 attached hereto and incorporated by reference and
such other products as may be mutually agreed from time to time by the Parties.

     2.2 Specifications. The specifications for the Products are as set forth in
Schedule 2.1 and Schedule 2.2.

     2.3 Volumes. Subject to Schedule 2.1 and Schedule 2.2, the applicable
volumes of the Products to be purchased and sold hereunder shall be equal to 100% of the Refinery’s
production of the Products.

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     2.4 Liftings. Products will be delivered and lifted ratably throughout the applicable
month based upon the applicable Final Offtake Nomination (as defined in Section 2.6) and
Final Forecast (as defined in Section 2.7).

     2.5 Delivery Points. Product will be delivered to the requested delivery points (each
individually, a “Delivery Point” and collectively, the “Delivery Points”)
identified on Schedule 2.1 and Schedule 2.2. In the event Seller is unable to load
or deliver any Products at the specific Delivery Points designated by VMSC, Seller shall provide
VMSC prompt notice thereof. Deliveries shall be as specified in Schedule 2.1 and
Schedule 2.2.

     2.6 Nominations. Upon the Effective Date of this Agreement and on each anniversary
thereafter, VMSC shall provide Seller with a good faith non-binding forecast of its monthly
requirements (the “Initial Offtake Nomination”) for each of the Products listed on
Schedule 2.2 (stating volumes and gasoline grade splits) for the following Contract Year.
The estimates set out in Schedule 2.6 hereto shall be VMSC’s annual estimates for the first
Contract Year. On or before the twentieth Day of each calendar month, VMSC shall provide Seller
with monthly nominations by week for each Product for the following month stating volumes, gasoline
grade splits and Delivery Points (the “Final Offtake Nomination”); provided, however that
the Final Offtake Nomination for each month shall not vary by more than plus or minus twenty
percent (20%) in the aggregate from the Initial Offtake Nomination for such month and the aggregate
volume of each Product identified in all monthly nominations for months within any Contract Year
shall not vary by more than twenty percent (20%) from the aggregate volumes thereof to be purchased
and sold hereunder during the applicable Contract Year (or, with respect to any portion of a
Contract Year, the ratable portion thereof for which monthly nominations shall have been made).
Seller agrees to deliver the Products and VMSC agrees to lift the Products in accordance with the
Final Offtake Nomination for each month in which deliveries are scheduled unless mutually agreeable
changes are made.

     2.7 Scheduling. Upon the Effective Date of this Agreement and on the 15th
day of each month, Seller shall provide VMSC with a good faith non-binding forecast of its monthly
production (the “Forecast”) for each of the Products (stating volumes and grades, as
applicable) listed on Schedule 2.1, to the extent VMSC is required to purchase the same
volume, for the following month on a weekly basis and for any subsequent months on a monthly basis.
The estimates set out in Schedule 2.7 hereto shall be Seller’s Forecast for the three
month period ending on September 30, 2008. On or before the twentieth Day of each calendar month,
VMSC shall provide Seller with monthly nominations by week for each Product for the following month
stating volumes, gasoline grade splits, if applicable, and Delivery Points (the “Transitional
Offtake Nomination”). Based upon the Transitional Offtake Nomination, the Parties will develop
a delivery schedule for each of the Products (each a “Schedule”). The Schedules will be
updated in good faith by the parties as appropriate.

     2.8 Planned Maintenance. In each month during the Term, Seller will provide VMSC with
a twelve (12) month rolling forecast of scheduled downtime of the Refinery and Product availability
to the nearest Day (“Maintenance Outage Days”). Schedule 2.8 sets forth Seller’s
known Maintenance Outage Days as of the Effective Date.

3

 

     2.9 Remedies. The Parties acknowledge that the remedies available to them at law or
in equity for a breach of delivery or receipt may include “cover” and “resale” damages subject to
and in accordance with the applicable provisions of the Uniform Commercial Code as adopted by the
State of Texas.

     2.10 Retained Offtake Products. The Parties acknowledge the Retained Offtake
Products, as such term is defined in the Feedstock and Product Inventory Sales Agreement attached
to the SPA as Exhibit D, shall be treated by the Parties for purposes of this Agreement in
accordance with Section 5 of the Feedstock and Product Inventory Sales Agreement.

     2.11 Sale of Products by VMSC. Certain Products to be purchased by VMSC hereunder are
not produced at the Refinery. As such, the Parties have agreed that Seller will purchase from VMSC
and VMSC will sell and deliver to Seller such Products, pursuant to the terms and conditions of the
Sales Contract attached hereto as Exhibit B.

3 TERM

     The “Term” of this Agreement shall be from the Effective Date through the earlier of the date
that all of the purchase and sale obligations for all Products set forth in Schedule 2.1
and Schedule 2.2 end or the termination of this agreement pursuant to Section 6.1.
For avoidance of doubt, Schedule 2.1 and Schedule 2.2 contain specific terms for
the purchase and sale obligations for each Product, and the termination of such obligation as to
one Product, pursuant to such terms, shall not impact the obligations as to the other Products or
this Agreement.

4 PRICING/INVOICES/PAYMENT TERMS

     4.1 Pricing. The prices for the Products are as set forth on Schedule 2.1 and
Schedule 2.2. Prices shall be rounded to six (6) decimal places. For any Product having a
contract term exceeding one (1) year, the Parties shall meet anytime after the expiration of six
(6) months from the Effective Date to reexamine the price for such Product. If the Parties
determine that the pricing formula set forth herein results in a price which is materially
different than the then prevailing “market price” for such Product at one or more applicable
Delivery Points, the Parties shall mutually agree on a new price for any such Product at any such
Delivery Point, as appropriate. If the Parties cannot agree on a new pricing formula or if the
Parties cannot agree that the pricing formula set forth herein results in a material difference
when compared to the then prevailing “market price” for such Product at one or more applicable
Delivery Points, then the Parties shall hire a mutually acceptable independent third party to
determine the materiality of the difference and/or a prevailing market price formula based upon the
factors set forth above. The Parties shall share equally the costs of the independent third party.

     4.2 Replacement Publications. In the event that the publisher of any price set forth
on the schedules hereto ceases operation and/or publication of the relevant price or materially
alters the method for calculating a price, the Parties agree to meet within ten (10) days to agree
to a replacement publication for use hereunder. In addition, VMSC reserves the right to change
from Argus to Platt’s or another pricing index prior to execution.

4

 

     4.3 Invoice Address. Until such times that the Parties use electronic data
interchange (“EDI”), all invoices shall be transmitted to the following address:

Gasoline and Finished Distillate

Valero Marketing and Supply Company

One Valero Way

Mail Station F3R-118B

San Antonio, Texas 78249

Attention: Bulk Finished Product Accounting – Tina Richey

Telephone: (210) 345-2265

Facsimile: (210) 444-8512

Ammonium Thiosulfate and NGLs (BBs, PC4, Butane, PPs)

Valero Marketing and Supply Company

One Valero Way

Mail Station F3R-118C

San Antonio, Texas 78249

Attention: Specialty Product & Asphalt Accounting – Carrie Tate

Telephone: (210) 345-2051

Facsimile: (210) 444-8525

Intermediates (LCO, HSD Blendstock)

Valero Marketing and Supply Company

One Valero Way

Mail Station F3T-152C

San Antonio, Texas 78249

Attention: Domestic Crude & Other Feedstock Accounting – Felix Sekula

Telephone: (210) 345-4399

Facsimile: (210) 444-8513

Heavy Products

Valero Marketing and Supply Company

One Valero Way

Mail Station F3T-159A

San Antonio, Texas 78249

Attention: Foreign Crude & Secondary Accounting – Mike Zerda

Telephone: (210) 345-5818

Facsimile: (210) 370-4719

     4.4 Invoices. Seller shall submit an invoice, together with such information as the
Parties mutually agree is necessary to substantiate the invoice (collectively, the
“Invoice”), to

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VMSC for all Products delivered to VMSC within two (2) Business Days after delivery or lifting
and VMSC agrees to pay Seller within two (2) Business Days of receipt of any such Invoice.

Each Invoice shall show the quantity, Product type and grade of Products nominated by VMSC and
delivered by the Seller at each relevant Delivery Point together with the prices applicable for
these Products and quantities. Seller shall deliver each Invoice to VMSC via facsimile or
electronic transmission, unless otherwise agreed by the Parties. The Parties agree to work
together in good faith to arrange for each Invoice to be sent via EDI as soon as reasonably
practicable after entering into this Agreement.

5 MEASUREMENTS

     Quantity of Product delivered shall be determined pursuant to the methods set forth in the
General Terms and Conditions on a temperature adjusted (net) Gallon based on 60° Fahrenheit.

6 TERMINATION

     6.1 Termination. This Agreement may be terminated:

	 	A.	 	By either Party if the other Party declares an event of force
majeure (as set forth in paragraph 9 of the General Terms and Conditions,
attached hereto as Exhibit A) that occurs and continues for a period in
excess of sixty (60) consecutive Days; or
	 
	 	B.	 	By either Party if the other Party materially defaults in the
observance or in the due and timely performance of any of the material
covenants of such Party contained herein, and such default (other than payment
default) shall continue un-remedied fifteen (15) Business Days after the
defaulting Party’s receipt of written notice of default (or, in the event such
default cannot be remedied within fifteen (15) Business Days, the defaulting
Party has not commenced remedying such default within fifteen (15) Business
Days).
	 
	 	C.	 	By either Party in the event the other Party, (a) makes an
assignment or any general arrangement for the benefit of creditors, (b) files a
petition or otherwise commences, authorizes, or acquiesces in the commencing of
a proceeding or cause under any bankruptcy or similar law for the protection of
creditors or have such petition filed or proceeding commenced against it, (c)
otherwise becomes bankrupt or insolvent (however evidenced), or (d) has a
receiver, provisional liquidator, conservator, custodian trustee or other
similar official appointed with respect to it or substantially all of its
assets.
	 
	 	D.	 	By either Party in accordance with paragraph 6 of the General
Terms and Conditions attached hereto as Exhibit A.

     Written notice of termination shall be given by the terminating Party to the other Party.

6

 

7 RAILCARS

Subject to and in accordance with Section 7.13 of the SPA (as applicable), during the Transition
Term of this Agreement, VMSC will maintain the railcars it leases in connection with the
transportation of Propane/Propylene from the Refinery (the “Propylene Railcars”) in accordance with
the terms of such leases. At the end of the Transition Term of the Agreement VMSC will assign
(subject to any applicable restrictions or limitation applicable to such assignment and provided
that VMSC shall exercise its commercially reasonable efforts to overcome any such restrictions or
limitations) and Seller will accept the assignment of the Propylene Railcars to Seller. If the
lease of any Propylene Railcar expires during the Transition Term of the Agreement, VMSC will use
commercially reasonable efforts to renew the lease of such Propylene Railcar consistent with VMSC’s
past practices; provided, however, that VMSC will seek Seller’s input regarding the terms of any
such renewal and will try to incorporate the same into the renewal to the extent commercially
reasonable; provided further, that VMSC shall have the right to renew the lease on any such
Propylene Railcars on such terms that it deems commercially reasonable; and provided, further, that
VMSC shall have no liability whatsoever to Seller or any of its Affiliates if VMSC is unable to
renew the lease of a Propylene Railcar or if it is unable to find and lease a replacement railcar
using commercially reasonable efforts.

8 MISCELLANEOUS

     8.1 Exhibits. The exhibits attached hereto, including without limitation the General
Terms and Conditions as Exhibit A and incorporated herein by this reference, are made a
part of this Agreement. In the event of conflict between the provisions of the main body of this
Agreement and any of the exhibits hereto, the provisions of the main body of this Agreement shall
prevail.

     8.2 Notices. Any and all notices herein prescribed shall be in writing and
transmitted by personal delivery, by U.S. Postal Service as overnight or certified mail, by a
nationally recognized delivery service for same Day or overnight delivery or by facsimile to the
respective parties as follow:

Valero Marketing and Supply Company  

Attn: Vice President — Product Supply  

One Valero Way

San Antonio, TX 78249

Telephone No.: (210) 345-3599

Fax No.: (210) 345-2413

Alon Refining Krotz Springs, Inc.

c/o Alon USA Energy, Inc.

7616 LBJ Freeway, Suite 300

Dallas, Texas 75251

Attention: General Counsel

Telephone: (972) 367-3702

Facsimile: (972) 367-3724

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          Receipt of all notices shall be determined by date/time stamp on received, confirmed fax or
receipt date on any other form of delivery.

     8.3 Relationship of the Parties. It is not the purpose or intention of this Agreement
to create (and it should not be construed as creating) a joint venture, partnership or any type of
association, and the Parties are not authorized to act as an agent or principal for each other with
respect to any matter related hereto.

     8.4 Amendment. This Agreement may be amended only by an instrument in writing
executed by the Parties hereto.

     8.5 Successors Bound; No Third-Party Beneficiaries. Subject to the provisions of
paragraph 15 of Exhibit A hereof, this Agreement shall be binding upon and inure to the
benefit of the Parties hereto and their respective successors and permitted assigns. Nothing in
this Agreement, express or implied, is intended to or shall confer upon any other person or entity
any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

     8.6 Entire Agreement. This Agreement, the exhibits and the documents specifically
referred to herein and any defined term of the SPA incorporated herein by reference constitute the
entire agreement, understanding, representations and warranties of the Parties hereto with respect
to the subject matter hereof.

     8.7 Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed an original, but all of which shall constitute one and the same instrument.

[Remainder of Page Intentionally Left Blank]

8

 

     IN WITNESS WHEREOF, the Parties have duly executed this Agreement effective as of the date
first specified above.

	 	 	 	 	 
	VALERO MARKETING AND SUPPLY COMPANY
	 
	 	 	 	 
	By:

	 	/s/ S. Eugene Edwards	 	 
	 

	 	 	 	 
	Name: S. Eugene Edwards
	Title: Executive Vice President
	 
	 	 	 	 
	ALON REFINING KROTZ SPRINGS, INC.
	 
	 	 	 	 
	By:

	 	/s/ Harlin R. Dean	 	 
	 

	 	 	 	 
	Name: Harlin R. Dean
	Title: Vice President

[Signature Page to Offtake Agreement]

9

 

Schedule 2.1

Products: As set forth in the table below. In addition, Premium Conventional and ULSD are not
produced at the Refinery and are included below to satisfy VMSC rack demand requirements, such
Products to be supplied to Seller by VMSC pursuant to the Sales Contract attached hereto as
Exhibit B.

	 	 	 	 	 
	Product	 	Grades	 	Specifications
	 
	RUL

	 	RUL 87(R+M)/2 or RUL 84(R+M)/2
	 	Colonial Pipeline
	 
	 	 	 	 
	PUL

	 	 	 	Colonial Pipeline
	 
	 	 	 	 
	RUL Ultra Low Sulfur

	 	 	 	Colonial Pipeline
	 
	 	 	 	 
	ULSD

	 	 	 	Colonial Pipeline
	 
	 	 	 	 
	Jet Fuel

	 	54 Grade
	 	Colonial Pipeline
	 
	 	 	 	 
	Light Cycle Oil (LCO)

	 	 	 	Gravity – greater than 16

Flash – greater than 140°F

Distillation – EP less than 700°F

Sulfur – 1.5% max

Nitrogen Blanketed
	 
	 	 	 	 
	High Sulfur No. 2 Oil Blendstock (SRD)

	 	88 grade
	 	Colonial Pipeline

Bromine No. = 3 max
	 
	 	 	 	 
	Butane/Butylene

	 	 	 	Typical Refinery production
	 
	 	 	 	 
	Poly C4

	 	 	 	Typical Refinery production
	 
	 	 	 	 
	Normal Butane

	 	 	 	Typical Refinery production
	 
	 	 	 	 
	LPG Mix

	 	 	 	Typical Refinery production
	 
	 	 	 	 
	Propane/Propylene

	 	 	 	Typical Refinery production
	 
	 	 	 	 
	High Sulfur Slurry

	 	 	 	Typical Refinery production
	 
	 	 	 	 
	Low Sulfur Atmospheric Tower Bottoms

	 	 	 	Typical Refinery production
	 
	 	 	 	 
	Ammonium Thiosulfate

	 	 	 	Sulfur, Wt.% — 25.5 Min 26.2 Max

Nitrogen, Wt.% — 11.5 Min 12.2 Max

pH — 6.8 Min 7.2 Max

 

			
	*	 	Specifications shall be consistent with local Delivery Point requirements (including, without
limitation RVP) at the time of delivery.

Schedule 2.1 - 1

 

Purchase and Sale obligations for the preceding Products shall be for a term of three (3) calendar
months (the “Transitional Term”). Either Party may terminate the purchase and sale
obligations contained in this Schedule 2.1 by providing the other with at least thirty (30)
Days’ prior written notice.

Price: Prices for all products other than RUL, PUL and ULSD where the Delivery Point for such
Products as reflected below is at the flange before the meter at the Truck Rack (“Rack System
Products”), will be equal to the three day average price for such Product, determined by
reference to the value derived from the pricing formula set forth below for such Product on the day
of delivery or lifting and for one Business Day prior to and one Business Day after the date of
delivery or lifting. If the transfer is Saturday, then the effective price for Thursday, Friday,
and Monday shall be used.  If the transfer is Sunday, then the effective price for Friday, Monday,
and Tuesday shall be used so as to always use three separate quotations. If a holiday should occur
on the day of delivery or lifting, and such holiday occurs on a Tuesday, Wednesday, Thursday, or
Friday, then the effective price for the two Business Days prior to and one Business Day after the
holiday shall be used. If a holiday should occur on the day of delivery or lifting, and such
holiday occurs on a Monday, then the effective price for the one Business Day prior to and two
Business Days after the holiday shall be used. Prices for the Rack System Products will be equal
to value derived from the pricing formula set forth below for such Rack System Product on the day
of lifting at the Truck Rack. If the lifting is Saturday, then the effective price shall be
Friday.  If the lifting is Sunday, then the effective price shall be calculated for Monday. If a
holiday should occur on the day of lifting, and such holiday occurs on a Tuesday, Wednesday,
Thursday, or Friday, then the effective price shall be calculated on the Business Day prior to the
holiday. If a holiday should occur on the day of lifting, and such holiday occurs on a Monday,
then the effective price shall be calculated for the Business Day following the holiday.

	 	 	 	 	 
	Product	 	Pricing Basis and Formulation
	 
	RUL
	 	 	[***]	 
	 
	PUL
	 	 	[***]	 
	 
	ULSD
	 	 	[***]	 
	 
	RUL Ultra Low Sulfur
	 	 	[***]	 
	 
	Jet Fuel
	 	 	[***]	 
	 
	Light Cycle Oil (LCO)
	 	 	[***]	 
	 
	High Sulfur No. 2 Oil Blendstock (SRD)
	 	 	[***]	 

Schedule 2.1 - 2

 

	 	 	 	 	 
	Product	 	Pricing Basis and Formulation
	 
	Butane/Butylene
	 	 	[***]	 
	 
	Poly C4
	 	 	[***]	 
	 
	Normal Butane
	 	 	[***]	 
	 
	LPG Mix
	 	 	[***]	 
	 
	Propane/Propylene
	 	 	[***]	 
	 
	High Sulfur Slurry
	 	 	[***]	 
	 
	Low Sulfur Atmospheric Tower Bottoms
	 	 	[***]	 
	 
	Ammonium Thiosulfate
	 	 	[***]	 

Delivery:

	 	 	 	 	 
	Product	 	Delivery Terms	 	Delivery Points
	 
	RUL

	 	FOB Refinery (Dock); FCA Refinery (Rack &
Pipeline)
	 	At the flange before the meter at the Refinery Truck Rack
and/or Refinery Dock and/or Colonial Pipeline
	 
	 	 	 	 
	PUL

	 	FCA Refinery
	 	At the flange before the meter at the Refinery Truck Rack
	 
	 	 	 	 
	RUL Ultra Low Sulfur

	 	FCA Refinery
	 	Colonial Pipeline
	 
	 	 	 	 
	ULSD

	 	FCA Refinery
	 	At the flange before the meter at the Refinery Truck Rack
	 
	 	 	 	 
	Jet Fuel

	 	FOB Refinery (Dock); FCA Refinery (Pipeline)
	 	Refinery Dock and/or Colonial Pipeline
	 
	 	 	 	 
	Light Cycle Oil (LCO)

	 	FOB Refinery
	 	Refinery Dock
	 
	 	 	 	 
	High Sulfur No. 2 Oil Blendstock (SRD)

	 	FOB Refinery (Dock); FCA Refinery (Pipeline)
	 	Refinery Dock and/or Colonial Pipeline
	 
	 	 	 	 
	Butane/Butylene

	 	FCA Refinery
	 	Refinery Truck Rack
	 
	 	 	 	 
	Poly C4

	 	FCA Refinery
	 	Refinery Truck Rack

Schedule 2.1 - 3

 

	 	 	 	 	 
	Product	 	Delivery Terms	 	Delivery Points
	 
	Normal Butane

	 	FCA Refinery
	 	Refinery Truck Rack
	 
	 	 	 	 
	LPG Mix

	 	FCA Refinery
	 	Promix Pipeline
	 
	 	 	 	 
	Propane/Propylene

	 	FCA Refinery
	 	Into Railcars and/or Trucks at the Refinery
	 
	 	 	 	 
	High Sulfur Slurry

	 	FOB Refinery
	 	Refinery Dock
	 
	 	 	 	 
	Low Sulfur Atmospheric Tower Bottoms

	 	FOB Refinery
	 	Refinery Dock
	 
	 	 	 	 
	Ammonium Thiosulfate

	 	FOB Refinery (Dock); FCA Refinery (Rack)
	 	Refinery Truck Rack and/or Refinery Dock

Schedule 2.1 - 4

 

Schedule 2.2

Products: Regular Unleaded Gasoline (“RUL”), Premium Unleaded Gasoline (“PUL”), Light Cycle Oil
(“LCO”) and Straight Run Diesel (“SRD”).

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Volume Per
	 	 	 	 	 	 	Contract
	 	 	 	 	 	 	Year – BPD
	Product	 	Grade	 	Specification	 	(+/- 20%)
	RUL and PUL (Rack)

	 	RUL 87(R+M)/2 and PUL 93(R+M)/2
	 	ASTM*
	 	[***]
	RUL (Dock)

	 	RUL 87(R+M)/2
	 	ASTM*
	 	[***]
	LCO

	 	N/A
	 	Gravity – greater than 16

Flash – greater than 140°F

Distillation – EP less than 700°F

Sulfur – 1.5% max

Nitrogen Blanketed

	 	[***]
	SRD

	 	88 grade
	 	Colonial Pipeline

Bromine No. = 3 max
	 	[***]

 

			
	*	 	Specifications shall be consistent with local Delivery Point requirements for rack and dock
deliveries (including, without limitation RVP) and Colonial Pipeline for pipeline deliveries at the
time of delivery.

Grade: For purposes of this Schedule 2.2, should Seller decide to provide Ethanol blended
gasoline or to produce RUL 84(R+M)/2 during the contract period, Seller shall provide Buyer with at
least sixty (60) Days’ prior written notice of such plans. The Parties shall work in good faith to
determine volume proportions or percentages of such grade of product that will be included in the
contract volumes stated above and, for clarification, are not incremental or additional to such
volumes.

Purchase and Sale obligations for the preceding Products shall commence upon the termination of the
Transitional Term and will be for the initial term as set forth below (the “Offtake Term”),
and thereafter the obligation shall continue on a month-to-month evergreen basis, unless and until
terminated. Either Party may terminate the purchase and sale obligations contained in this
Schedule 2.2 at the end of the Offtake Term or at the end of an extension term by providing
the other with at least thirty (30) Days’ prior written notice.

	 	 	 	 	 
	Product	 	Offtake Term	 
	RUL and PUL (Rack)
	 	1 year
	RUL (Dock)
	 	1 year
	LCO
	 	5 years
	Straight-Run Diesel
	 	5 years

Schedule 2.2 - 1

 

Price: Prices for all products will be equal to the three day average price for such Product,
determined by reference to the value derived from the pricing formula set forth below for such
Product on the day of delivery or lifting and for one Business Day prior to and one Business Day
after the date of delivery or lifting. If the transfer is Saturday, then the effective price for
Thursday, Friday, and Monday shall be used.  If the transfer is Sunday, then the effective price
for Friday, Monday, and Tuesday shall be used so as to always use three separate quotations. If a
holiday should occur on the day of delivery or lifting, and such holiday occurs on a Tuesday,
Wednesday, Thursday, or Friday, then the effective price for the two Business Days prior to and
one Business Day after the holiday shall be used. If a holiday should occur on the day of delivery
or lifting, and such holiday occurs on a Monday, then the effective price for the one Business Day
prior to and two Business Days after the holiday shall be used.

	 	 	 	 	 	 	 
	Product	 	Delivery Terms	 	Delivery Point	 	Pricing Basis and Formulation
	RUL and PUL

	 	FCA Refinery
	 	Refinery Truck Rack
	 	[***]
	RUL

	 	FOB Refinery
	 	Refinery Dock
	 	[***]
	RUL

	 	FCA Refinery
	 	Colonial Pipeline
	 	[***]
	LCO

	 	FOB Refinery
	 	Refinery Dock
	 	[***]
	SRD

	 	FOB Refinery
(Dock); FCA
Refinery (Pipeline)
	 	Refinery Dock or Colonial Pipeline
	 	[***]

Delivery: For dock delivery, included with the Final Offtake Nomination VMSC is to provide Seller
all necessary shipping instructions, including without limitation, the identity and quantity of the
Product and the tentative arrival date(s) (“Arrival Notice”). Upon receipt of VMSC’s
shipping instructions, Seller will advise VMSC as to the specific dock for delivery. If Seller
will not be able to deliver VMSC’s product on the communicated arrival date, Seller will advise as
to the earliest time when VMSC’s product may be delivered over the dock. VMSC will use
commercially reasonable efforts to ensure that confirmation of the arrival date and time of a
vessel will be communicated to Seller by VMSC’s carrier at intervals of at least 24 and 12 hours in
advance of the anticipated date and time of arrival of the vessel. Such communication may be
effected by telephone, e-mail or facsimile.

The following represents Buyer’s non-binding estimation of the ratable loading schedule for those
products to be delivered via the Refinery docks and are included in the volumes set forth on
Schedule 2.6.

Schedule 2.2 - 2

 

     [***] BPD RUL

	 	•	 	[***] barrel vessel arriving approximately every [***] days

     [***] BPD LCO

	 	•	 	[***] barrel vessel arriving approximately every [***] days

     [***] BPD SRD

	 	•	 	[***] barrel vessel day 1 and every [***] days thereafter
	 
	 	•	 	[***] barrel vessel day 3 and every [***] days thereafter
	 
	 	•	 	[***] barrel vessel day 6 and every [***] days thereafter

Seller agrees to exercise reasonable diligence to provide a safe berth at its owned facilities to
which vessels may proceed, at which they may lie, at which they may discharge, and from which they
may depart always safely afloat at all stages of the tide. Seller also agrees to provide free and
maintain in good working order, all of Seller’s facilities (including hoses, pipelines, and
tankage, as well as labor and supervision) necessary on shore for loading.

Schedule 2.2 - 3

 

Schedule 2.6

Buyer’s Good Faith Forecast for Product Demand

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Product	 	Bbls/day	 	Jul	 	Aug	 	Sep	 	Oct	 	Nov	 	Dec	 	Jan	 	Feb	 	Mar	 	Apr	 	May	 	Jun
	RUL
	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	PUL
	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	LCO
	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	SRD
	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 

Schedule 2.6 - 1

 

Schedule 2.7

Seller’s Good Faith Forecast for Product Production

(Barrels Per Day)

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Product	 	Jul	 	Aug	 	Sep
	RUL
	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	RUL Ultra Low Sulfur
	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	Jet Fuel
	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	Light Cycle Oil (LCO)
	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	High Sulfur No. 2 Oil Blendstock (SRD)
	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	Butane/Butylene
	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	Poly C4
	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	Normal Butane
	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	LPG Mix
	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	Propane/Propylene
	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	High Sulfur Slurry
	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	Low Sulfur Atmospheric Tower Bottoms
	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	Ammonium Thiosulfate
	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 

Schedule 2.7 - 1

 

Schedule 2.8

Maintenance Outage Days

	 	 	 	 	 
	Month/Year	 	Planned Maintenance Outages	 	Effects on Product Availability
	July 2008

	 	n/a
	 	n/a
	August 2008

	 	n/a
	 	n/a
	September 2008

	 	n/a
	 	n/a
	October 2008

	 	n/a
	 	n/a
	November 2008

	 	n/a
	 	n/a
	December 2008

	 	n/a
	 	n/a
	January 2009

	 	n/a
	 	n/a
	February 2009

	 	Reformer (10-day outage)

LRU (10-day outage)

Isom Unit (17-day outage)

Exact days are TBD
	 	No effect on Product availability

provided that naptha can be

exported from the refinery
	March 2009

	 	n/a
	 	n/a
	April 2009

	 	n/a
	 	n/a
	May 2009

	 	n/a
	 	n/a
	June 2009

	 	n/a
	 	n/a

Schedule 2.8 - 1

 

EXHIBIT A

GENERAL TERMS AND CONDITIONS

     1. Definitions: Capitalized terms that are used herein and otherwise not defined
shall have the meanings set forth in the main body of the Agreement (the “Main Document”).
The following additional terms used in these General Terms and Conditions (these “General
Conditions”) shall have the following meanings:

          “API” shall mean the American Petroleum Institute.

          “API/ASTM Standard” shall mean the API and ASTM standard references as such are in
effect as of the date hereof. In the event such standards are revised or modified during the Term
of this Agreement, the revised or modified standards shall apply if legally required, and if not,
after such revisions or modifications have been evaluated and accepted by the Parties.

          “ASTM” shall mean the American Society for Testing and Materials.

          “CPT” shall mean Carriage Paid To as described in Incoterms.

          “FCA” shall mean Free Carrier as described in Incoterms.

          “FOB” shall mean Free On Board as described in Incoterms.

          “Incoterms” shall mean the 2000 edition of the trade terms published by the
International Chamber of Commerce which shall apply to this Agreement to the extent that they do
not conflict with the provisions of this Agreement.

          “LIBOR” shall mean, as of any date of determination, the one-month London Interbank
Offered Rate for U.S. dollars, determined at 11:00 a.m. London time, on the first Day of the
calendar month in which the date of determination occurs (or, if the first Day of such calendar
month is not a London Banking Day, the immediately preceding London Banking Day) offered by the
National Westminster Bank or any successor thereto. For purposes of this definition, a “London
Banking Day” is a Day on which dealings in deposits in U.S. dollars are transacted on the
London interbank market.

     2. Payment and Credit Terms: Payment and credit shall be made without discount,
deduction, withholding, set-off or counterclaim in United States dollars by wire transfer of
immediately available funds on or before the payment due date, as set forth in the Main Document,
to the bank and account designated by Seller, against presentation to Buyer by Seller of a written
invoice therefor together with other documents expressly specified for presentation for payment in
the Main Document.

          Seller shall have the right to assess finance charges at the LIBOR rate as reported in “The
Wall Street Journal” for any month in which a balance is past due hereunder plus two percentage
(2%) points against all past due amounts and all accrued but unpaid finance charges,

Exhibit A - 1

 

but not to exceed the maximum finance charges permitted by law. Buyer shall pay all Seller’s
costs (including attorneys’ fees and court costs) of collecting past due payments.

          When the payment due date falls on a Saturday or on a weekday, other than Monday, which is not
a banking Day in New York then any such payment shall be made on the nearest preceding New York
banking Day. When the payment due date falls on a Sunday or a Monday which is not a banking Day in
New York such payment shall be made on the next following banking Day.

     3. Title and Risk of Loss: Title to, and all risk of loss of or damage to any Product
delivered shall pass as follows: when by or into any vessel, at the flange between the vessel’s
permanent hose connection and the shore line; when into any truck, tank car or pipeline, as the
Product enters the receiving equipment, or, if received by a common carrier, when accepted by the
carrier for shipment; when into storage (other than from vessels), as the Product enters the tank;
and when by book or stock transfer, on the effective date of the transfer. It is expressly
understood that the passage of title and risk of loss as set forth above is not conditioned on
delivery or receipt of Bills of Lading.

     4. Inspection and Measurement: API/ASTM Standards or the latest revisions thereof
shall be complied with at all times. All volumes or quantities shall be adjusted per API/ASTM
Standards. Metering systems shall conform to the API/ASTM Standards then in effect relative to
meter calibration/accuracy.

          Marine Vessels: Unless otherwise agreed, inspection and measurement of Product
delivered hereunder shall be made by an independent petroleum inspector, the cost of which shall be
borne equally by VMSC and Seller. At the designated point of custody and title transfer, a
mutually acceptable independent inspector shall hand gauge and record static shore tank
measurements immediately before and immediately after delivery of the Product to determine the
volume of Product delivered. If relevant shore tank gauge measurements are not possible, then
properly certified meter measurement is acceptable. If neither static shore tank measurement or
certified meters are available then determination of the volumes will be agreed to by the parties.

          Pipelines: Quantities delivered into or out of pipelines shall be measured by
pipeline meters if available.

          Tank Truck/Cars: Quantities delivered into or out of tank trucks/cars shall be based
on meters or shore tanks or scales located at or near the applicable Delivery Point.

          Seller shall permit Buyer to review and copy relevant meter proving records and witness
proving tests as requested. Samples of Product transferred hereunder shall be retained for ninety
(90) Days.

     5. Warranty: Seller warrants:

	 	A.	 	That the Product conforms to the specifications set forth in
the Main Document;

Exhibit A - 2

 

	 	B.	 	That Seller has free and clear title to the Product
manufactured and delivered under this Agreement; and
	 
	 	C.	 	That such Product shall be delivered free from lawful security
interests, liens, taxes and encumbrances.

     EXCEPT FOR THOSE EXPRESSLY STATED IN THIS AGREEMENT, NEITHER PARTY MAKES ANY OTHER
REPRESENTATIONS, GUARANTEES OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE IMPLIED WARRANTY OF
MERCHANTABILITY AND THAT OF FITNESS FOR A PARTICULAR PURPOSE, AS APPLICABLE. NOTWITHSTANDING ANY
COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE (OR LACK THEREOF) INCONSISTENT HEREWITH,
SELLER HEREBY EXPRESSLY DISCLAIMS ANY AND ALL REPRESENTATIONS, GUARANTEES OR WARRANTIES, EXPRESS OR
IMPLIED, OF MERCHANTABILITY OR FITNESS OF THE PRODUCT FOR A PARTICULAR PURPOSE. IN NO EVENT,
REGARDLESS OF NEGLIGENCE, SHALL EITHER PARTY BE LIABLE FOR PUNITIVE DAMAGES.

     All warranties made under this Agreement shall survive acceptance of or payment for the
Product by VMSC.

     6. Financial Responsibility: If either Party’s payments or deliveries to the other
Party shall be in arrears, or the financial responsibility of either Party becomes impaired or
unsatisfactory in the opinion of the other Party, advance cash payment or satisfactory security
shall be given upon demand, and shipments may be withheld until such payment or security is
received. If such payment or security is not received within two (2) Days from demand therefor,
the Party demanding such payment or security may terminate this Agreement. In the event either
Party becomes insolvent, makes an assignment or any general arrangement for the benefit of
creditors or if there are instituted by or against either Party proceedings in bankruptcy or under
any insolvency law or law for reorganization, receivership or dissolution, the other Party may
withhold shipments or terminate this Agreement, to the extent provided by Applicable Law. The
exercise by either Party of any right reserved under this paragraph 6 shall be without prejudice to
any claim for damages or any other right under this Agreement or Applicable Law.

     7. Taxes: Any and all taxes, fees or other charges imposed or assessed by a
Governmental Authority, the taxable incident of which is the transfer of title or the delivery of
the Product hereunder, or the receipt of payment therefor, regardless of the character, method of
calculation or measure of the levy or assessment, shall be paid by the Party upon whom the tax, fee
or charge is imposed by Applicable Law. Notwithstanding anything contained herein to the contrary
neither Party shall be responsible for the income, franchise, ad valorem or similar taxes of the
other Party and each Party agrees to defend, indemnify and hold the other Party harmless from and
against any such tax asserted by any Governmental Authority to be due and payable by the other
Party.

     VMSC shall provide to Seller all proper exemption certificates, prior to delivery,
establishing that it is licensed to engage in tax free transactions with respect to the Product
under all federal or state laws which may apply to this Agreement and the Product delivered
hereunder.

Exhibit A - 3

 

     VMSC shall (a) upon receipt of Seller’s invoice pay or reimburse Seller for any such taxes,
fees or charges Seller is required by Applicable Law to pay or (b) provide Seller upon demand with
a valid exemption certificate.

     8. Deliveries; Liftings: Deliveries shall be made within the delivery terminal’s
usual business hours provided that reasonable advance written notice of each delivery has been
given by VMSC. Nominations for pipeline delivery shall be given during normal business hours in
accordance with the pipeline’s policies and time constraints. Seller’s failure to deliver Product
and VMSC’s failure to lift Product, each in accordance with the terms and conditions of this
Agreement for any reason other than those included in Section 6, Financial Responsibility,
and Section 9, Force Majeure, shall constitute a default under this Agreement.

     9. Force Majeure: In the event either Party is rendered unable, wholly or in part, to
perform its obligations under this Agreement (other than to make payments due hereunder) for
reasons beyond its reasonable control, including, without limitation, those due to: acts of God,
floods, fires, explosions, extreme heat or cold, earthquake or storm; transportation difficulties,
strikes, lockouts or other similar industrial disturbances; wars, acts of terrorism or sabotage;
accident or breakage of equipment, machinery, or transportation facilities; or failure of
transporters to furnish transportation, failure of suppliers to furnish supplies; or any law,
rules, order or action of any court or instrumentality of the federal or any state government; or
for any other similar cause or causes beyond its reasonable control, it is agreed that on such
Party’s giving notice in reasonable detail of such force majeure to the other Party, the
obligations of the Party giving such notice shall be suspended from the date of receipt of such
notice and for the continuance of any inability so caused, but for no longer period as may
reasonably be required to, and such cause shall, so far as possible, be remedied with all
reasonable dispatch; provided, however, that neither Party will be obligated to settle a strike or
other labor disturbance in order to comply with such obligation. The term force majeure shall not
apply to those events which merely make it more difficult or costly for Seller or VMSC to perform
their obligations hereunder. VMSC and Seller further agree that at the conclusion of any force
majeure event, neither VMSC nor Seller shall have any obligation to each other with respect to any
quantities of Product not delivered as a consequence of such force majeure event. No condition of
force majeure shall operate to extend the Term of this Agreement.

     10. Hazard Warning Responsibility: With the other documents required hereunder,
Seller shall provide to VMSC a Material Safety Data Sheet for each Product delivered hereunder.
VMSC acknowledges that there may be hazards associated with the loading, unloading, transporting,
handling or use of the Product sold hereunder, which may require that warnings be communicated to
or other precautionary action taken with all persons handling, coming into contact with, or in any
way concerned with the Products sold hereunder.

     11. Drawback: Seller reserves the right to claim, receive and retain drawbacks on
imported duty-paid feedstocks used in the manufacture of Products which it delivers hereunder.
VMSC shall on request execute proofs of exportation, drawback claim forms and assignments in favor
of Seller to enable Seller to establish its drawback rights under applicable regulations.

     12. Limitation of Liability: IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER
FOR ANY INCIDENTAL, SPECIAL, PUNITIVE, EXEMPLARY OR

Exhibit A - 4

 

CONSEQUENTIAL DAMAGES, INCLUDING LOST PROFITS, ARISING UNDER THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

     13. INDEMNITY: SELLER AND VMSC MUTUALLY COVENANT TO AND SHALL PROTECT, DEFEND,
INDEMNIFY AND HOLD EACH OTHER AND THEIR RESPECTIVE AFFILIATES, DIRECTORS, OFFICERS, AGENTS AND
CONTRACTORS HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, SUITS, LOSSES (INCLUDING WITHOUT
LIMITATION, COSTS OF DEFENSE, ATTORNEYS’ FEES, PENALTIES AND INTEREST), DAMAGES, CAUSES OF ACTION
AND LIABILITY OF EVERY TYPE AND CHARACTER WITHOUT REGARD TO AMOUNT (TOGETHER, “LOSSES”)
CAUSED BY, ARISING OUT OF OR RESULTING FROM THE ACTS OR OMISSIONS OF NEGLIGENCE OR WRONGDOING OF
SUCH INDEMNIFYING PARTY, ITS OFFICERS, EMPLOYEES, CONTRACTORS OR AGENTS WITH RESPECT TO THE
PURCHASE AND SALE OF PRODUCTS HEREUNDER, EXCEPT TO THE EXTENT SUCH LOSSES ARE CAUSED BY, ARISE OUT
OF OR RESULT FROM THE ACTS OR OMISSIONS OF NEGLIGENCE OR WRONGDOING OF THE INDEMNIFIED PARTY.

     14. Waiver: The delay or failure of any Party to enforce any of its rights under this
Agreement arising from any default or breach by the other Party shall not constitute a waiver of
any such default, breach, or any of the Party’s rights relating thereto. No custom or practice
which may arise between the Parties in the course of operating under this Agreement will be
construed to waive any Parties’ rights to either ensure the other Party’s strict performance with
the terms and conditions of this Agreement, or to exercise any rights granted to it as a result of
any breach or default under this Agreement. Neither Party shall be deemed to have waived any
right conferred by this Agreement or under any Applicable Law unless such waiver is set forth in a
written document signed by the Party to be bound, and delivered to the other Party. No express
waiver by either Party of any breach or default by the other Party shall be construed as a waiver
of any future breaches or defaults by such other Party.

     15. Assignment: This Agreement shall not be assigned by any party hereto (including
by operation of law or otherwise) except with the prior written consent of the other parties
hereto; provided, however, that (a) Seller may assign any of its rights and
obligations to any Affiliate of Seller but no such assignment shall relieve Seller of its
obligations hereunder and (b) Seller may assign its rights, title and interest hereunder to lenders
and other creditors, or agents or trustees acting on behalf of any of the foregoing (collectively,
a “Collateral Assignee”), as security for the performance of obligations of Seller to such
financing sources, on the condition and with the understanding that, (i) to the extent of any such
assignment, the Collateral Assignee shall be entitled, only upon written notice to VMSC of
Collateral Assignee’s exercise of any such security (a “Foreclosure Notice”), to exercise any and
all rights of Seller hereunder, (ii) VMSC and its Affiliates shall be entitled to rely
unconditionally upon a Foreclosure Notice in making any payments or performance hereunder to or for
the benefit of the Collateral Assignee (or its designee(s) identified in the Foreclosure Notice),
without thereby incurring any liability to Seller or any of Seller’s Affiliates, (iii) neither VMSC
nor any of its Affiliates shall be obligated to grant any extensions of time for performance, waive
any of their rights or remedies hereunder, or assume any additional obligations or liabilities
under this Agreement as a result of any collateral assignment of this Agreement to a Collateral
Assignee or a Collateral Assignee’s

Exhibit A - 5

 

exercise of its security so granted to it by Seller, and (iv) neither a collateral assignment
of this Agreement by Seller to a Collateral Assignee nor any exercise by a Collateral Assignee of
any security so granted to it by Seller shall release Seller from any of its obligations hereunder.

     16. [Intentionally Not Used]

     17. Section and Paragraph Headings: The section headings used in the Main Document
and the paragraph headings used in these General Conditions are for convenience only and shall not
limit or change the subject matter of this Agreement.

     18. Audit: Each Party and its duly authorized representatives shall have access
during customary business hours to the accounting records and other documents maintained by the
other Party which relate to this Agreement and shall have the right to audit such records at any
reasonable time or times within two (2) year after the delivery/receipt of Product provided for in
this Agreement. However, a Party can only conduct one audit per year, and the same year cannot be
re-audited.

     19. Compliance with Laws: During the performance of this Agreement, each Party agrees
to comply with all Applicable Laws.

     20. Commissions and Gifts: No director, officer, employee or agent of either Party
shall give or receive any commission, fee, rebate, gift or entertainment of significant value or
cost in connection with this Agreement. Further, neither Party shall make any commission, fee,
rebate, gift or entertainment of significant value or cost to any governmental official or employee
in connection with this Agreement.

     21. Choice of Law; Dispute Resolution: This Agreement shall be construed, interpreted
and the rights of the parties determined in accordance with the laws of the State of Texas,
exclusive of its conflict of laws principles. All controversies or disputes arising out of and
related to this Agreement shall be resolved in accordance with the dispute resolution procedures
set forth in Exhibit C of the SPA.

     22. Jurisdiction; Consent to Service of Process; Waiver: Each of the Parties hereto
agrees, subject to paragraph 21, that it shall bring any action or proceeding in respect of any
claim arising out of or related to this Agreement, whether in tort or contract or at law or in
equity, exclusively in any Federal or state court in the State of Texas and solely in connection
with such claims, if any, (i) irrevocably submits to the exclusive jurisdiction of such courts,
(ii) waives any objection to laying venue in any such action or proceeding in such courts, (iii)
waives any objection that such courts are an inconvenient forum or do not have jurisdiction over it
and (iv) agrees that service of process upon it may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form of mail), postage prepaid, to it at
its address specified in Section 7.2 of the Agreement. The foregoing consents to
jurisdiction and service of process shall not constitute general consents to service of process in
the State of Texas for any purpose except as provided herein and shall not be deemed to confer
rights on any Person (as such term is defined in the SPA) other than the Parties hereto. Each of
the Parties hereto knowingly and intentionally, irrevocably and unconditionally waives trial by
jury in any legal action or proceeding relating to this Agreement and for any counterclaim therein.

Exhibit A - 6

 

     23. Availability of Equitable Relief: Each of the Parties hereto recognizes that
irreparable injury will result from a breach of paragraph 24 of these General Conditions and that
money damages will be inadequate to fully remedy the injury. In order to prevent such irreparable
injury, the arbitrators selected pursuant to paragraph 21 shall have the power to grant temporary
or permanent injunctive or other equitable relief. Notwithstanding paragraph 21, prior to the
appointment of the arbitrators, a party hereto may, subject to paragraph 22, seek temporary
injunctive relief from any court of competent jurisdiction; provided that the party seeking such
relief shall (if arbitration has not already been commenced) simultaneously commence arbitration in
compliance with the dispute resolution procedures. Such court ordered relief shall not continue
more than 10 days after the appointment of the arbitrators (or in any event for longer than 60
days).

     24. Confidentiality: The terms of this Agreement and any financial, technical or
other proprietary information furnished or disclosed to a Party hereunder shall not be disclosed or
made available to any other person or entity without the prior written consent of the other Party
other than as contemplated hereunder; provided that nothing herein shall limit the disclosure of
any such information (i) to the extent required by statute, rule, regulation (including any rule or
regulation of, or agreement with, any self regulatory organization) or judicial, administrative or
regulatory process, (ii) to counsel for VMSC and Seller, (iii) to auditors or accountants, (iv) in
connection with any litigation to which VMSC or Seller is a party, (v) to an Affiliate of VMSC or
Seller, (vi) by Seller to a potential purchaser of the Refinery, excluding information related to
pricing and product specifications, (vii) to the extent necessary or desirable under the SPA or the
Other Agreements (as defined in the SPA), and (viii) to the extent necessary or desirable to
perform its obligations under this Agreement or the transactions contemplated hereby; provided,
further, that unless specifically prohibited by applicable law or court order, each of VMSC and
Seller shall, prior to disclosure thereof, notify the other Party of any request for disclosure of
any such non-public information (A) by any Governmental Authority or representative thereof or (B)
pursuant to legal process. Notwithstanding the above restrictions, neither Party shall have any
obligation in respect of any disclosure of confidential information which is, or becomes, generally
known to the public without breach of the terms of this Agreement, or if any disclosure of
confidential information is required by court order or by order of any governmental or
administrative tribunal having jurisdiction over the Parties. The confidentiality obligations in
this section shall survive termination of this Agreement for an additional 2 calendar years.

     25. Rights and Remedies Cumulative: The rights and remedies of the Parties under this
Agreement shall be cumulative and non-exclusive of any other rights or remedies which each such
Party may have at law or in equity.

Exhibit A - 7

 

EXHIBIT B

Exhibit B - 1exv10w6

EXHIBIT 10.6

[***] DENOTES CONFIDENTIAL MATERIALS OMITTED AND FILED

SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT

EARNOUT AGREEMENT

     This Earnout Agreement (this “Agreement”), is made, entered into and effective as of
July 3, 2008 (the “Effective Date”), by and between Valero Refining and Marketing Company,
a Delaware corporation (“Seller”) and Alon Refining Krotz Springs, Inc., a Delaware
corporation (“Buyer”).

WITNESSETH

     WHEREAS, Buyer and Seller have entered into a Stock Purchase Agreement, dated as of May 7,
2008 (the “SPA”), and, as a condition to the consummation of the transactions contemplated
by the SPA, Buyer and Seller (collectively, the “Parties”, and each individually a
“Party”) are entering into this Agreement;

     NOW THEREFORE, in consideration of the premises, the terms and conditions hereinafter set
forth and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties hereby agree as follows:

	1.	 	DEFINED TERMS

As used in this Agreement, the following terms shall have the following meanings:

“Barrel” means 42 United States’ standard gallons at 60 degrees Fahrenheit.

“Business Day” means a day other than Saturday, Sunday or any day on which banks located in
the State of New York are authorized or obligated to close.

“Daily Average Crude Price” means the average of the high and low prices for First Month
WTI-Cushing as quoted in Platt’s for each day during an Earnout Year, converted to Barrels as
applicable; provided that daily calculations on weekends and holidays will use prices published for
the immediately preceding Friday or Business Day, respectively.

“Daily Average Gasoline Price” means the average of the high and low prices for Regular
Unleaded Gasoline, US Gulf Coast Pipeline, as quoted in Platt’s for each day during an Earnout
Year, converted to Barrels as applicable; provided that daily calculations on weekends and holidays
will use prices published for the immediately preceding Friday or Business Day, respectively.

“Daily Average ULSD Price” means the average of the high and low prices for Ultra Low
Sulfur Diesel, US Gulf Coast Pipeline, as quoted in Platt’s for each day during an Earnout Year,
converted to Barrels as applicable; provided that daily calculations on weekends and holidays will
use prices published for the immediately preceding Friday or Business Day, respectively.

 

 

“Earnout Year” means a 365-day period (or 366 days in case the period includes a February
29) beginning on the Effective Date, and ending on each subsequent anniversary thereof during the
Term of this Agreement.

“Platt’s” means Platt’s Oilgram Price Report.

“Term” means three (3) years from the Effective Date, plus the amount of time required to
calculate and pay the Earnout Payment for the final Earnout Year.

Any other capitalized terms in this Agreement not otherwise defined above shall have the meanings
as defined herein.

	2.	 	EARNOUT PAYMENTS
	 
	2.1	 	For each of the three (3) Earnout Years during the Term of this Agreement, Buyer shall
calculate and pay an earnout payment (the “Earnout Payment”), as required pursuant to
the terms and conditions of this Agreement.
	 
	2.2	 	Within thirty (30) days after the expiration of each Earnout Year during the Term of this
Agreement, Buyer shall calculate the amount of the Earnout Payment payable to Seller for such
Earnout Year according to the formula set forth below (the “Earnout Payment Formula”):
	 
	 	 	[***]
	 
	2.3	 	For purposes of illustration only, the following is an example of how the Earnout Payment
shall be calculated (all prices are $/barrel):
	 
	 	 	[***]
	 
	2.4	 	On the thirtieth (30th) day after the expiration of each Earnout Year during the
Term of this Agreement (each, a “Notice Date”), Buyer shall transmit to Seller
(pursuant to the notice provisions hereof) a statement of Buyer’s calculation of the Earnout
Payment using the Earnout Payment Formula in reasonable detail such that Seller can confirm
the method of calculation. Such notice shall be transmitted regardless of whether the Earnout
Payment is a positive or negative amount.
	 
	2.5	 	If the Earnout Payment is a positive amount, Buyer shall pay to Seller the amount of the
Earnout Payment within seven (7) days of the Notice Date for the relevant Earnout Year (each,
a “Due Date”) in immediately available U.S. funds, by wire transfer to the following
account:
	 
	 	 	[***]
	 
	 	 	or to such other U.S. Bank account as may hereafter be designated by Seller in writing.
Each Earnout Payment shall be made without offset, setoff, counterclaim or deduction of

 

 

	 	 	any kind. If the Earnout Payment is a negative amount, no payment shall be made by Buyer.
Negative Earnout Payment amounts shall not carry forward to the following Earnout Year. If
the Earnout Payment is not made within five (5) days of the relevant Due Date, then interest
shall accrue on the unpaid balance thereof at the Applicable Rate (as defined in the SPA)
from the day following the relevant Due Date until the Earnout Payment is made. If the
Applicable Rate exceeds the highest legal interest rate, the interest rate shall be the
then-current highest legal interest rate.
	 
	2.6	 	Seller shall notify Buyer of any dispute regarding Buyer’s calculation of the Earnout Payment
within thirty (30) days of receipt of the notice referenced in Section 2.4 hereof.
	 
	2.7	 	If any published price that is used in the calculation of the Earnout Payment is
discontinued, the Parties shall negotiate in good faith a substitute method for determining
such price based upon an arms-length, third-party price for a like product duly taking into
account quality and transportation differentials, with preference given to quoted average
prices available from publications similar to Platt’s (including, if applicable, any successor
to Platt’s).
	 
	3.	 	MISCELLANEOUS
	 
	3.1	 	Notices. Any and all notices herein prescribed shall be in writing and transmitted
by personal delivery, by U.S. Postal Service as overnight or certified mail, by a nationally
recognized delivery service for same day or overnight delivery or by facsimile to the
respective parties as follows:

Valero Refining and Marketing Company

c/o Valero Energy Corporation

One Valero Way

San Antonio, Texas 78249

Attention: Senior Vice President and General Counsel

Telephone: (210) 345-2246

Facsimile: (210) 345-5889

Alon Refining Krotz Springs, Inc.

c/o Alon USA Energy, Inc.

7616 LBJ Freeway, Suite 300

Dallas, Texas 75251

Attention: General Counsel

Telephone: (972) 367-3702

Facsimile: (972) 367-3724

	 	 	Receipt of all notices shall be determined by date/time stamp on received, confirmed fax or
receipt date on any other form of delivery.

 

 

	3.2	 	Amendment. This Agreement may be amended only by an instrument in writing executed
by the Parties hereto.
	 
	3.3	 	Assignment. Seller may assign, in whole or in part, any of the rights, obligations
or benefits arising under this Agreement without the consent of Buyer. Buyer shall not
assign, in whole or in part, any of the rights, obligations or benefits arising under this
Agreement without the prior written consent of Seller.
	 
	3.4	 	Successors Bound. This Agreement shall be binding upon and inure to the benefit of
the Parties hereto and their respective successors and permitted assigns.
	 
	3.5	 	Entire Agreement. This Agreement, the exhibits and the documents specifically
referred to herein and any provision of the SPA incorporated herein by reference constitute
the entire agreement, understanding, representations and warranties of the Parties hereto.
	 
	3.6	 	Counterparts. This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which shall constitute one and the same instrument.
	 
	3.7	 	Choice of Law; Venue. This Agreement shall be construed, interpreted and the rights
of the parties determined in accordance with the laws of the State of Texas, exclusive of its
conflict of laws principles. Each of the Parties hereto agrees that it shall bring any action
or proceeding in respect of any claim arising out of or related to this Agreement, whether in
tort or contract or at law or in equity, exclusively in the Federal or state courts sitting in
Houston, Harris County, Texas, and solely in connection with claims arising under such
agreement or instrument or the transactions contained in or contemplated by such agreement or
instrument, (i) irrevocably submits to the exclusive jurisdiction of such courts, (ii) waives
any objection to laying venue in any such action or proceeding in such courts, (iii) waives
any objection that such courts are an inconvenient forum or do not have jurisdiction over it
and (iv) agrees that service of process upon it may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form of mail), postage prepaid, to
it at its address specified in Section 3.1 of this Agreement.

[Remainder of Page Intentionally Left Blank]

 

 

     IN WITNESS WHEREOF, the Parties have duly executed this Agreement effective as of the date
first specified above.

	 	 	 	 	 
	VALERO REFINING AND MARKETING COMPANY
	 
	 	 	 	 
	By:

	 	/s/ S. Eugene Edwards	 	 
	 

	 	 	 	 
	Name: S. Eugene Edwards
	Title: Executive Vice President
	 
	 	 	 	 
	ALON REFINING KROTZ SPRINGS, INC.
	 
	 	 	 	 
	By:

	 	/s/ Harlin R. Dean	 	 
	 

	 	 	 	 
	Name: Harlin R. Dean
	Title: Vice President

[Signature Page to Earnout Agreement]

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