Exhibit 10.14
MAYA CRUDE OIL SALES AGREEMENT
BETWEEN
P.M.I. COMERCIO INTERNACIONAL, S.A. DE C.V.
AND
▇▇▇▇▇ REFINING & MARKETING, INC.
DATED AS OF MARCH 10, 1998
MAYA CRUDE OIL SALES
AGREEMENT
MAYA CRUDE OIL SALES AGREEMENT, dated as of March 10, 1998 (the
"Agreement"), between P.M.I. COMERCIO INTERNACIONAL, S.A. DE C.V., a Mexican
corporation (together with in successors and assigns permitted hereunder,
"Seller"), and ▇▇▇▇▇ REFINING & MARKETING, INC., a Delaware corporation
(together with its successors and assigns permitted hereunder, "Buyer").
WITNESSETH
WHEREAS, Buyer is the owner of a fuels refinery located at Port ▇▇▇▇▇▇,
Texas;
WHEREAS, the parties desire to enter into the Agreement in connection with
a major upgrading program to be undertaken by Buyer which will enable the Port
▇▇▇▇▇▇ refinery to process certain quantities of Maya crude oil; and
WHEREAS, Buyer desires to purchase and receive from Seller and Seller is
willing to sell and deliver to Buyer, for processing at the Port ▇▇▇▇▇▇
refinery, Maya crude oil on the terms and conditions hereinafter set forth;
NOW, THEREFORE, the parties hereto, in consideration of the premises and
the mutual covenants and conditions hereinafter set forth, do hereby agree as
follows:
PART I: DEFINITIONS AND CONSTRUCTION;
REPRESENTATIONS AND WARRANTIES
ARTICLE 1
DEFINITIONS AND CONSTRUCTION
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1.1 Definitions. For purposes of the Agreement, the following terms shall
have the meanings indicated below:
"Abandonment" means the cessation of an activity relating to the
permitting, financing, engineering, procurement or construction of the Project,
it being understood that Abandonment shall not include the temporary suspension
of such activities.
"Affiliate" means, with respect to any Person, any other Person which,
directly or indirectly, is controlled by or is under common control with, such
Person. For purposes of this definition, "control" (including, with correlative
meanings, the terms "controlled by" and "under common control with") means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities or otherwise, it being understood that, in the
case of Seller, Affiliate shall not include Mexico.
TABLE OF CONTENTS
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PART I: DEFINITIONS AND CONSTRUCTION; REPRESENTATIONS AND
WARRANTIES.......................................................... 2
ARTICLE 1
DEFINITIONS AND CONSTRUCTION........................ 2
1.1 Definitions......................................................... 2
1.2 Singular and Plural................................................. 10
1.3 Headings and References............................................. 10
ARTICLE 2
REPRESENTATIONS AND WARRANTIES....................... 11
2.1 Representations and Warranties of Buyer............................. 11
2.2 Representations and Warranties of Seller............................ 12
PART II: THE PROJECT
ARTICLE 3
OBLIGATION TO UNDERTAKE THE PROJECT.................... 15
ARTICLE 4
COMPLETION AND DELAY OF THE PROJECT.................... 17
4.1 Completion.......................................................... 17
4.2 Adjustment for Force Majeure........................................ 18
4.3 Force Majeure Events................................................ 18
4.4 Right to Extend Scheduled Completion Date........................... 19
ARTICLE 5
BUYER'S RIGHT TO TERMINATE.......................... 20
5.1 Right to Terminate.................................................. 20
5.2 Termination for Other Reasons....................................... 20
5.3 Project Reinitiation................................................ 21
PART III: PURCHASE AND SALE
ARTICLE 6
PURCHASE AND SALE OF MAYA......................... 23
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ARTICLE 7
QUANTITY...................................23
7.1 Contract Quantity....................................................23
7.2 Phase-out of Contract Quantity.......................................25
ARTICLE 8
UNDERLIFTING.................................25
8.1 Remedies.............................................................25
8.2 Operational Tolerance................................................26
8.3 Apportionment of Underlifting........................................27
8.4 Determination of Operational Tolerance...............................28
ARTICLE 9
UNDERDELIVERY................................28
ARTICLE 10
PRICE....................................29
10.1 Regular Price.......................................................29
10.2 Alternative Pricing.................................................29
10.3 Reinstatement of Regular Price......................................30
10.4 Certification by Seller.............................................30
ARTICLE 11
PAYMENT TERMS.................................31
11.1 Adjustments in Respect of Differential Guarantee....................31
11.2 Currency Time and Place of Payment; Overdue Payments................31
11.3 Payment Expenses....................................................32
11.4 Security for Payment................................................32
11.5 Suspension of Deliveries............................................35
11.6 Shipping Documents..................................................35
ARTICLE 12
NO SET-OFF..................................36
ARTICLE 13
NOTICE OF CLAIMS...............................36
ARTICLE 14
TERMINATION BY SELLER OR BUYER...........................36
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ARTICLE 15
EFFECT OF TERMINATION........................... 37
15.1 Termination Not to Relieve Obligations............................. 37
15.2 Acceleration....................................................... 37
ARTICLE 16
FORCE MAJEURE............................... 37
16.1 Relief from Liability.............................................. 37
16.2 Notice............................................................. 38
16.3 Payment for Mava Sold and Delivered................................ 38
16.4 Pro-rata Apportionment............................................. 38
16.5 Extension of Guarantee Period...................................... 38
16.6 Meaning of Force Majeure........................................... 39
PART IV: DIFFERENTIAL GUARANTEE.............................................. 40
ARTICLE 17
SHORTFALL IN DIFFERENTIALS......................... 40
ARTICLE 18
SURPLUS IN DIFFERENTIALS.......................... 42
ARTICLE 19
CALCULATION OF DIFFERENTIAL GUARANTEE................... 43
19.1 Time of Delivery................................................... 43
19.2 Examples of the Operation of Part IV............................... 43
19.3 Quarterly Calculation.............................................. 43
ARTICLE 20
DIFFERENTIAL FORMULA............................ 44
20.1 Alternative Differential Calculation............................... 44
20.2 Reinstatement of Differential Calculation.......................... 44
PART V: DELIVERY TERMS....................................................... 45
ARTICLE 21
ARRIVAL PROCEDURES AND LIFTING....................... 45
21.1 Lifting Program.................................................... 45
21.2 Substitution of Tankers............................................ 47
21.3 Advice of ETA...................................................... 48
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21.4 Notice of Readiness............................................... 48
21.5 Oil Pollution..................................................... 49
ARTICLE 22
LOADING CONDITIONS: DEMURRAGE....................... 50
22.1 Berthing of Tankers; Commencement of Laytime...................... 50
22.2 Shifting Loading Point of Tankers................................. 51
22.3 Allowed Laytime................................................... 51
22.4 Adjustments to Laytime............................................ 52
22.5 Demurrage......................................................... 53
22.6 Buyer's Liability for Delay and Damage............................ 54
ARTICLE 23
QUANTITY MEASUREMENTS........................... 55
23.1 Determination of Quantity......................................... 55
23.2 Volume Corrections for Temperature................................ 57
23.3 Conclusiveness of Measurements.................................... 58
ARTICLE 24
QUALITY.................................. 58
24.1 Determination of Quality.......................................... 58
24.2 Analysis of Samples............................................... 59
24.3 No Warranties..................................................... 59
ARTICLE 25
DELIVERY.................................. 59
25.1 Passing of Title.................................................. 59
25.2 Port and Loading Expenses......................................... 60
25.3 Loading Port Regulations.......................................... 60
25.4 Buyer's Knowledge of Loading Port Facilities; Standard Procedures. 60
PART VI: MISCELLANEOUS TERMS................................................ 61
ARTICLE 26
DURATION.................................. 61
ARTICLE 27
SATISFACTORY DOCUMENTATION......................... 61
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ARTICLE 28
CONFIDENTIALITY.............................. 61
28.1 General Confidentiality Obligation................................ 61
28.2 Confidentiality of Differential Information....................... 66
ARTICLE 29
NO THIRD PARTY BENEFICIARIES; ASSIGNMENT.................. 69
29.1 No Beneficiaries.................................................. 69
29.2 Successors and Assigns............................................ 69
29.3 General Prohibition on Assignments................................ 69
29.4 Permitted Assignments by Seller................................... 69
29.5 Permitted Assignments by Buyer.................................... 70
29.6 Assignment by Buyer in Connection with Financing.................. 75
29.7 Right to Terminate................................................ 76
ARTICLE 30
RELATIONSHIP OF THE PARTIES........................ 76
ARTICLE 31
DISPUTE RESOLUTION; GOVERNING LAW..................... 76
31.1 Amicable Resolution............................................... 76
31.2 Settlement by Arbitration......................................... 77
31.3 Governing Law..................................................... 78
31.4 Waiver of Immunity................................................ 78
ARTICLE 32
LIMITATION OF LIABILITY; LIQUIDATED DAMAGES................ 78
ARTICLE 33
NO RECOURSE................................ 79
ARTICLE 34
MERGER................................... 79
ARTICLE 35
NO WAIVER; CUMULATIVE REMEDIES....................... 80
ARTICLE 36
SEVERABILITY OF PROVISIONS......................... 80
ARTICLE 38
AMENDMENTS AND WAIVERS........................... 81
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ARTICLE 39
LANGUAGE OF THE AGREEMENT......................... 82
ARTICLE 40
RESTRUCTURING OF THE AGREEMENT....................... ▇▇
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"▇▇▇▇" means Average Freight Rate Assessment as applied by the London
Tanker Brokers Panel.
"Agreed Laydays" means the three-Day range for the arrival of a tanker set
forth in an Agreed Lifting Program determined pursuant to Article 21.1.
"Agreed Lifting Program" means a final lifting program for a Month
determined pursuant to Article 21.1.
"Agreement" means this Maya Crude Oil Sales Agreement and all Annexes
attached hereto (which shall be integral parts of the Agreement), as the same
may be amended, modified or supplemented from time to time in accordance with
the terms hereof.
"Allowed Laytime" means the period of time which Seller shall be allowed,
in accordance with Article 22.3, to complete the loading of a tanker without
incurring demurrage.
"Alternative Supply Arrangement" means any contract, agreement or
arrangement (other than the Agreement) evidenced by a writing pursuant to which
Buyer, any purchaser of the Refinery or any part thereof, or any Affiliate of
either of them has the right to purchase, on a long-term basis, any substantial
portion of the Refinery's requirements for heavy crude oil attributable to the
Project or to any similar project designed to increase significantly the
Refinery's capacity to process heavy crude oil having characteristics similar to
Maya.
"API" means the American Petroleum Institute.
"ASTM" means the American Society for Testing and Materials.
"Barrel" means a quantity of crude oil equal to forty-two (42) Gallons.
"Base Heavy Crude" means crude oil having an API gravity of twenty-eight
(28) or less, but excluding Ecuadorean crude oil of the Oriente type, Argentine
crude oil of the ▇▇▇▇▇▇▇▇▇ type, Congolese crude oil of the Djeno type, and
Colombian crude oil of the Vasconia type.
"BPD" means Barrels per Day.
"Business Day" means any Day other than Saturday, Sunday or any Day on
which banking institutions in New York, New York or Mexico City, Mexico are
authorized or required by law to close.
"Buyer" has the meaning set forth in the caption to the Agreement, and
includes any assignee permitted under Articles 29.5 and 29.6, but does not
include ▇▇▇▇▇ R&M following any permitted assignment by ▇▇▇▇▇ R&M under Article
29.5.
3
"Capacity Quotient" means the quotient of (i) the Design Capacity of the
▇▇▇▇▇ multiplied by the ▇▇▇▇▇ Fraction, minus the capacity to process feedstocks
from a volume of heavy crude oil equal to the Current Capacity Decrease, divided
by (ii) 55,000 BPD.
"Cash Collateral Amount" has the meaning set forth in Article 29.5(c).
"▇▇▇▇▇ R&M" means, in the event of an assignment under Article 29.5, ▇▇▇▇▇
Refining & Marketing, Inc.
"▇▇▇▇▇ Performance Undertaking" means the performance undertaking executed
and delivered in the form of Annex 1 by ▇▇▇▇▇ Refining & Marketing, Inc., or its
successors or permitted assigns, in the circumstances set out in Article 29.5.
"▇▇▇▇▇" means the equipment comprising the delayed ▇▇▇▇▇ included within
the Project as described in Annex 5.
"▇▇▇▇▇ Fraction" means the fraction, if less than all, of the Design
Capacity of the ▇▇▇▇▇ designated for the processing of feedstocks from heavy
crude oil as determined by the third party engineering firm responsible for the
basic engineering for the ▇▇▇▇▇ and advised to Seller by Buyer pursuant to
Article 3(d).
"Compensating Collateral" has the meaning set forth in Article 29.5(c).
"Compensating Letter of Credit" has the meaning set forth in Article
29.5(c).
"Completion" has the meaning set forth in Article 4.1.
"Completion Date" means the first Day of the Month following the Month in
which Completion is achieved in accordance with Article 4.1.
"Confidential Information" has the meaning set forth in Article 28.
"Contract Quantity" means, with respect to any Month, the quantity of Maya
to be sold by Seller and purchased by Buyer hereunder in such Month in
accordance with Article 7.1.
"Credit Carryforward" has the meaning set forth in Article 17(c).
"Credit Interest" means, with respect to any Quarter, the amount of
interest calculated for such Quarter (other than any period during which
processing at the Refinery is curtailed resulting in an extension of the
Guarantee Period under Article 16.5) at LIBOR plus one percent on the sum (if
greater than zero) of (i) the aggregate of all credits calculated pursuant to
Article 17(a) for all prior Quarters, plus (ii) the aggregate amount of Credit
Interest for all prior Quarters, minus (iii) the aggregate of all premiums
calculated pursuant to Article 18(a) for all prior Quarters.
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"Current Capacity" means the average daily volume, stated in BPD, of Base
Heavy Crude which was processed through the Refinery to produce feedstocks for
processing through the cokers in service at the Refinery during the ten-Month
period beginning March 1, 1997 and ending December 31, 1997, excluding Days
during which operation of the Refinery was interrupted or curtailed due to force
majeure or for operational reasons, as determined by Buyer in good faith and
advised to Seller by Buyer pursuant to Article 3(d).
"Current Capacity Decrease" means the amount, if any, by which (i) the
Current Capacity exceeds (ii) the amount, stated in BPD, of Base Heavy Crude
which will be required to be processed through the Refinery commencing with the
first Month of the Start-up Period to produce feedstocks for processing through
the cokers in service at the Refinery on the date hereof, as determined by the
third party engineering firm responsible for the basic engineering for the
Project and advised to Seller by Buyer pursuant to Article 3(d), and as the same
may be revised in accordance with such Article 3(d).
"Day" means a calendar day.
"Design Capacity" has the following meaning:
(a) with respect to the Refinery, its design capacity, stated in BPD, to
process heavy crude oil following Completion as determined by the third party
engineering firm responsible for the basic engineering for the Project and
advised to Seller by Buyer pursuant to Article 3(d), which capacity shall not be
less than 150,000 BPD plus the Current Capacity; and
(b) with respect to the ▇▇▇▇▇, its nameplate capacity, stated in BPD, to
process feedstocks following Completion as determined by the third party
engineering firm responsible for the basic engineering for the ▇▇▇▇▇ and advised
to Seller by Buyer pursuant to Article 3(d), which capacity, after being
multiplied by the ▇▇▇▇▇ Fraction, shall not be less than the sum of (i) 55,000
BPD plus (ii) the capacity to process feedstocks from a volume of heavy crude
oil equal to the Current Capacity Decrease.
"Differential" has the meaning set forth in Annex 2.
"ETA" means estimated time of arrival.
"Five-Day Period" has the meaning given in Annex 6.
"F.O.B." means free on board, according to Incoterms 1990.
"Gallon" means a unit of volume, measured at 60 F (equivalent to 15.56 C),
equal to 231 cubic inches or 3.7853 liters.
"Guarantee Date" means July 1, 2001, as the same may be extended pursuant
to Article 4.2.
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"Guarantee Period" means the period beginning on the earliest of the
Completion Date, the Scheduled Completion Date and the Guarantee Date, and
ending eight Years after beginning, plus such additional period as may apply
pursuant to the terms of Article 16.5.
"ICC Rules" has the meaning set forth in Article 31.2.
"LIBOR" means, during any Quarter, the rate per annum equal to the offered
rate for three-month deposits in U.S. Dollars in the London interbank market as
published in the Money Rates column of The Wall Street Journal (based upon the
British Bankers' Association average for major banks or such other basis as may
be adopted by The Wall Street Journal from time to time) for contracts closing
two business Days after the first Day of such Quarter on which commercial banks
are open for international business in London.
"Loading Port" means one of the loading terminals customarily used by
Seller for export of Maya.
"Long Ton" means a unit of weight equal to 2,240 pounds (avoirdupois) or
1.01605 metric tons.
"Maya" means Mexican crude oil of the Maya type, typically having
characteristics within the ranges specified in Annex 3.
"Mexico" means the United Mexican States.
"Month" means a calendar month.
"Monthly Shortfall" means, for any Month all or part of which is within the
Guarantee Period, the amount equal to the product of (a) U.S.$15.00 less the
Differential for such Month (if greater than zero) multiplied by (b) thirty-six
and six tenths percent (36.6%) of the Contract Quantity delivered by Seller to
Buyer in such Month (prorated for any Month which is only partly within the
Guarantee Period); provided, however, that for purposes of determining any
Monthly Shortfall, in the event that Seller has underdelivered under Article 10,
then Buyer shall be deemed to have lifted the entire Contract Quantity for such
Month, less any volume the delivery of which is excused under Article 16 by
reason of force majeure.
"Monthly Surplus" means, for any Month all or part of which is within the
Guarantee Period, the amount equal to the product of (a) the Differential for
such Month less U.S.$15.00 (if greater than zero) multiplied by (b) thirty-six
and six tenths percent (36.6%) of the Contract Quantity delivered by Seller to
Buyer in such Month (prorated for any Month which is only partly within the
Guarantee Period); provided, however, that for purposes of determining any
Monthly Surplus, in the event that the Completion Date has not been achieved on
or before the Scheduled Completion Date or Buyer has underlifted under Article
8.1, then Seller shall be deemed to have delivered the entire Contract Quantity
for such Month, less any volume the lifting of which is excused under Article
8.2.
"Operating Capacity" has the meaning set forth in Article 7.1(c).
6
"Pemex Performance Guarantee" means the guarantee by Petroleos Mexicanos of
Seller's obligations under the Agreement which is executed and delivered on the
date hereof in the form of Annex 4.
"Permits" means all permits, licenses, authorizations, consents,
exemptions, registrations, approvals or other authorizations of any kind which
are required to be obtained from or granted by any governmental authority for
the construction, operation or ownership of the Project or the Refinery.
"Person" means any individual, firm, corporation, stock company, limited
liability company, trust, partnership, association, joint venture, other
business entity or governmental authority.
"Premium Carryforward" has the meaning set forth in Article 18(c).
"Project" means the design, construction and integration into the Refinery
of the ▇▇▇▇▇ and associated facilities, as described more specifically in Annex
5 having sufficient capacity to enable the ▇▇▇▇▇ and the Refinery to process at
least their Design Capacities.
"Project Assets" means the ▇▇▇▇▇ and, to the extent owned by Buyer, the
other facilities and equipment described in Annex 5 designed, constructed and
integrated into the Refinery as the result of the Project.
"Quarter" means any period of three consecutive Months commencing January
1, April 1, July 1 or October 1 of any Year.
"Quarterly Shortfall" means, with respect to any Quarter, the amount, if
any, by which (i) the sum of the Monthly Shortfalls in such Quarter exceeds (ii)
the sum of the Monthly Surpluses in such Quarter.
"Quarterly Surplus" means, with respect to any Quarter, the amount, if any,
by which (i) the sum of the Monthly Surpluses in such Quarter exceeds (ii) the
sum of the Monthly Shortfalls in such Quarter.
"Refinery" means Buyer's refinery located at Port ▇▇▇▇▇▇, Texas.
"Regular Price" means the price determined in accordance with the pricing
formula set out in Annex 6, as the same may be adjusted by Seller from time to
time, generally in effect for Seller's F.O.B. export sales destined for ports in
the Gulf Coast region of the United States of America.
"S & W" means sediments and water.
"Scheduled Completion Date" means January 1, 2001, as the same may be
extended pursuant to Article 4.2 or Article 4.4.
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"Seller" has the meaning set forth in the caption to the Agreement, and
includes any assignee permitted under Article 29.4.
"Start-up Period" means the period beginning the first day of the Month in
which Buyer expects to first introduce feed into the ▇▇▇▇▇ and ending on the
last Day of the Month in which Completion is achieved.
"Termination Fee" has the meaning set forth in Article 5.2.
"U.S. Dollars" or "U.S.$" means dollars of the United States of America.
"WORLDSCALE" means, at any time under the Agreement, the most recent
edition of the New Worldwide Tanker Nominal Freight Scale.
"Year" means any period of twelve consecutive Months.
1.2 Singular and Plural. Terms defined in this Article 1 may be used in
the Agreement in either their singular or plural forms as the context requires.
1.3 Headings and References. All headings herein are for convenience
only and shall not affect the construction or interpretation of the Agreement.
Unless otherwise specified, all references herein to Parts, Articles and Annexes
are to the Parts, Articles and Annexes of the Agreement.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
------------------------------
2.1 Representations and Warranties of Buyer. Buyer represents and
warrants to Seller that:
(a) Buyer is a corporation duly organized and validly existing under the
laws of the State of Delaware, as evidenced by its certificate of incorporation
and by-laws, each dated February 5, 1988, and has the legal capacity to enter
into and perform the Agreement.
(b) The execution and performance by Buyer of the Agreement has been duly
authorized by all necessary corporate action. The Agreement has been duly
executed by Buyer and, assuming the due authorization and execution of the
Agreement by Seller, constitutes the legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms.
(c) Neither the execution of the Agreement by Buyer nor the performance by
Buyer of its respective obligations hereunder will conflict with or result in
any breach of, or
8
constitute a violation of or default under, any applicable law, the charter or
by-laws of Buyer, or any indenture, mortgage, deed of trust, or other instrument
or agreement (including, without limitation, any negative pledge or similar
clause), to which Buyer or any of its Affiliates is a party, or by which any of
them may be bound, or to which any of their property or assets may be subject.
(d) No lawsuit or other proceeding is pending or, to the knowledge of
Buyer, threatened against Buyer which, if determined adversely thereto, may
materially and adversely affect its business or financial condition or the
consummation of the transactions contemplated by, or the performance of its
obligations under, the Agreement. No action or proceeding has been instituted
and no order, decree, injunction or judgment of any kind from any court or other
governmental authority has bees issued to avoid, restrain or in any other manner
prevent the consummation of the transactions contemplated by the Agreement.
(e) Buyer is purchasing Maya hereunder exclusively for processing by Buyer
or its Affiliates at the Refinery.
(f) Buyer has not been contacted by nor has it negotiated with any finder,
broker or other intermediary for the purchase of Maya hereunder who is entitled
to any compensation with respect to the Agreement or the sale of Maya hereunder.
(g) No director, employee or agent of Buyer has given or will give any
commission, fee, rebate, gift or entertainment of significant value in
connection with the Agreement.
2.2 Representations and Warranties of Seller. Seller represents and
warrants to Buyer that:
(a) It is a corporation duly organized and existing under the laws of
Mexico, as evidenced by Public Deed No. 1020, dated May 24, 1989, under the seal
of ▇▇▇▇ de Angoitia y ▇▇▇▇▇▇▇, Public Notary and of the Federal patrimony No.
109, and has the legal capacity to enter into and perform the Agreement.
(b) It has obtained all necessary authorizations from the competent
governmental authorities for the execution of the Agreement and the performance
of its obligations hereunder.
(c) The execution and performance by Seller of the Agreement has been duly
authorized by all necessary corporate action. The Agreement has been duly
executed by Seller and, assuming the due authorization and execution of the
Agreement by Buyer, constitutes the legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms.
(d) Neither the execution of the Agreement by Seller nor the performance
by Seller of its obligations hereunder will conflict with or result in any
breach of, or constitute a violation of or default under, any applicable law,
its charter or by-laws, or any indenture, mortgage, deed of trust, or other
instrument or agreement (including, without limitation, any
9
negative pledge or similar clause), to which Seller or any of its Affiliates is
a party, or by which any of them may be bound, or to which any of their property
or assets may be subject.
(e) No lawsuit or other proceeding is pending or, to the knowledge of
Seller, threatened against Seller which, if determined adversely to Seller, may
materially and adversely affect its business or financial condition or the
consummation of the transactions contemplated by, or the performance of its
obligations under, the Agreement. No action or proceeding has been instituted
and no order, decree, injunction or judgment of any kind from any court or other
governmental authority has been issued to avoid, restrain or in any other manner
prevent the consummation of the transactions contemplated by the Agreement.
(f) The Agreement and the transactions contemplated hereby constitute
commercial activities of Seller, rather than public or governmental activities,
and Seller is subject to private commercial law with respect thereto. Seller is
not entitled to any immunity, whether on grounds of sovereign immunity or
otherwise, from any legal proceedings in Mexico, except that under the
applicable laws of Mexico, in particular Article 4 of the Codigo Federal de
Procedimientos Civiles, no attachment prior to judgment, attachment in aid of
execution of judgment, or execution of judgment may be ordered by Mexican courts
against any of the property or assets of Seller. Based upon the waiver set out
in Article 31.4, Seller is not entitled to immunity from any legal proceeding
brought outside of Mexico to enforce any arbitral award under the Agreement.
(g) There is no existing nor, to the knowledge of Seller, proposed or
pending, legal restriction under applicable Mexican law on Seller's ability to
sell Maya for export from Mexico.
(h) Seller reasonably believes, after due inquiry, that its Affiliate,
Pemex Exploracion y Produccion, will have the ability during the term of the
Agreement to produce Maya for export and deliver it to Buyer at the Loading
Ports in the quantities set forth in Article 7.
(i) Seller has the contractual right and financial capacity to purchase
and receive Maya from Pemex Exploracion y Produccion for sale and export from
Mexico, including, without limitation, under the terms of the Agreement. Seller
has the contractual right, subject to payment of the expenses referred to in
Article 25.2, by agreement with Pemex Exploracion y Produccion to utilize the
Loading Ports for the delivery of Maya to export customers of Seller, including,
without limitation, under the terms of the Agreement. Neither Seller nor Pemex
Exploracion y Produccion is in breach of either of the contracts referred to in
this clause (i), nor is Seller aware of any intent of either party to terminate
either such contract.
(j) Seller has not been contacted by nor has it negotiated with any
finder, broker or other intermediary for the sale of Maya hereunder, and no such
Person is entitled to any compensation with respect to the Agreement or the sale
of Maya hereunder.
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(k) Seller has delivered to Buyer on the date hereof the Pemex Performance
Guarantee, which has been duly authorized and executed by Petroleos Mexicanos,
and which is in full force and effect.
PART II: THE PROJECT
ARTICLE 3 OBLIGATION TO UNDERTAKE THE PROJECT
-----------------------------------
Buyer shall, subject to its rights under Article 5, undertake the Project
in accordance with the following:
(a) Buyer shall use all commercially reasonable efforts to timely obtain
and thereafter maintain in effect all Permits.
(b) Buyer shall use all commercially reasonable efforts to perform all
acts necessary for the engineering, procurement, construction and testing
required to achieve Completion at the earliest commercially reasonable date.
(c) Buyer shall bear all costs and expenses of the Project and shall be
solely responsible for obtaining any and all financing necessary for it to carry
out the Project, which financing shall be without recourse to Seller and its
Affiliates.
(d) Buyer shall provide Seller with an officer's certificate stating the
Design Capacity of the Refinery, the Design Capacity of the ▇▇▇▇▇, the ▇▇▇▇▇
Fraction, the Current Capacity and the Current Capacity Decrease. Such
certificate shall be delivered as soon as the information required is available
to Buyer, but in any event not later than June 15, 1998. Buyer shall have the
right to change the scope of the Project; provided that (i) the Refinery and the
▇▇▇▇▇ each will remain capable of processing, upon Completion, at least their
respective minimum Design Capacities, and (ii) any change in amount of Base
Heavy Crude which will be required to be processed through the Refinery
commencing with the first Month of the Start-up Period to produce feedstocks for
processing through the cokers in service at the Refinery on the date hereof
shall be reflected in the Current Capacity Decrease; it being understood that
Seller shall have no obligation to agree to any extension of the Scheduled
Completion Date or the Guarantee Date as a result of any such change in scope.
(e) Within thirty (30) Days following the end of each Quarter prior to
Completion, Buyer provide to Seller a written progress report (i) summarizing
the status of Buyer's progress toward and any significant delays in achieving
financial closing, including, upon the closing of any financing relating to the
Project, advice as to the final general terms and conditions of such financing,
(ii) identifying any delay in the progress of the Project (including the
permitting, engineering, procurement, construction and testing thereof) which
Buyer reasonably expects may result in Completion occurring after the Scheduled
Completion Date, the reasons for such delay and the expected duration thereof,
(iii) stating Buyer's most recent projection as to the Month in which the Start-
up Period can be expected to begin, and (iv)
11
describing any material change in the scope of the Project in accordance with
(d) above from that which is described in Annex 5.
(f) During the Start-up Period, Seller's representative, who may be a
third party reasonably acceptable to Buyer, shall have the right to observe the
operation and testing of the Project and examine the records reflecting the
results thereof, it being understood that Seller's representative shall not
interfere with or have any responsibility concerning such operation and testing.
(g) It is expressly understood and agreed that Seller shall have no
obligation or responsibility whatsoever with respect to the carrying out of the
Project; it being understood, however, that Seller shall, upon request and
subject to the terms of Article 28, provide to Buyer, in connection with Buyer's
financing for the Project, such information relating to the financial status,
operations and prospects of Seller and its Affiliates as is generally made
available to their lenders or the public. Upon request of Buyer, Seller will
consider also the disclosure of such other similar information as may reasonably
be considered relevant to Buyer or its lenders, it being understood that Seller
will not disclose such other information which is confidential to Seller or any
of its Affiliates or the disclosure of which would be inconsistent with their
disclosure policies generally.
ARTICLE 4 COMPLETION AND DELAY OF THE PROJECT
-----------------------------------
4.1 Completion. The Project shall be deemed to have achieved
"Completion" when:
(a) all material aspects of the Project are mechanically complete in
substantial conformity with their design plans and specifications;
(b) commission testing of the processing units included within the Project
is complete in accordance with the terms of the applicable technology licensing
and/or engineering contracts; and
(c) either (i) both the Refinery and the ▇▇▇▇▇ have proven capable of
processing at least eighty percent (80%) of their respective Design Capacities
on average over a period of thirty (30) consecutive Days, or (ii) Buyer has
commenced operation of the Project Assets and Buyer and its contractors have
ceased making material further efforts toward achieving such average processing
capacities.
4.2 Adjustment for Force Majeure.
(a) If an event of force majeure delays or prevents Completion of the
Project, then the Scheduled Completion Date and the Guarantee Date shall,
subject to the provisions of clause (b) below, be extended by the period of such
delay; provided, however, that such extension shall only be granted if Buyer
notifies Seller of its intention to request such extension within thirty (30)
Days after Buyer learns of the occurrence of the force majeure in question.
12
(b) In the event the Project is delayed due to one or more events of force
majeure described in clause (vii) of Article 43 occurring prior to the beginning
of the Start-up Period, the aggregate period of extensions pursuant to clause
(a) above in respect of such events of force majeure under such clause (vii)
shall not exceed three hundred sixty-five (365) Days.
4.3 Force Majeure Events. For purposes of this Part II, force majeure
shall include any act or event that prevents or delays the Completion of the
Project by Buyer if and to the extent such act or event is beyond Buyer's
reasonable control, not the result of Buyer's fault or negligence, and Buyer has
been unable to overcome the consequences of such act or event by the exercise of
commercially reasonable efforts, which may include the expenditure of additional
funds. Subject to the satisfaction of the conditions established in the previous
sentence, force majeure shall include, but not be limited to, the following acts
or events, or any similar and equally serious acts or events, which prevent or
delay the Completion of the Project by Buyer (i) natural phenomena, such as
storms, floods, lightning and earthquakes; (ii) fires; (iii) wars, civil
disturbances, riots, insurrections and sabotage; (iv) transportation disasters,
whether by ocean, rail, air or land; (v) strikes or other labor disputes that
are not due to the breach of a labor contract by Buyer or any of its
contractors; (vi) actions of a governmental entity or agency, or national, port
or other local authority having jurisdiction, including, but not limited to, the
issuance or promulgation of any court order, statute, ordinance, rule,
regulation, directive or other law; and (vii) the inability of Buyer or its
contractors to obtain in a timely manner, or thereafter maintain in full force
and effect or reinstate, any Permit. It is expressly understood that force
majeure shall not include any of the following events: (1) economic hardship;
(2) changes in market conditions; (3) late delivery of machinery, equipment,
materials or spare parts except to the extent such late delivery is itself
caused by an event of force majeure (as defined in this Article 4.3); or (4)
breach of any contract entered into by Buyer in connection with the Project.
4.4 Right to Extend Scheduled Completion Date. In the event Buyer fails
to achieve Completion on or before the Scheduled Completion Date, then Buyer
shall have the right (without diminishing its obligations under clauses (a) and
(b) of Article 3) to extend the Scheduled Completion Date, on one or more
occasions, upon payment to Seller, within sixty (60) Days following the date on
which the Scheduled Completion Date would (absent such extension) otherwise
occur, of the amount equal to the product of four hundred thousand U.S. Dollars
(U.S.$400,000) multiplied by the Capacity Quotient in respect of each thirty-Day
extension of the Scheduled Completion Date (prorated in the case of extensions
for periods of other than thirty (30) Days or even multiple thereof) up to an
aggregate period of one hundred eighty (180) Days, and the amount equal to the
product of two hundred thousand U.S. Dollars (U.S.$200,000) multiplied by the
Capacity Quotient in respect of each further thirty-Day extension of the
Scheduled Completion Date (prorated in the case of extensions for periods of
other than thirty (30) Days or even multiple thereof); provided, however, that
if Buyer fails to so extend the Scheduled Completion Date within any sixty-Day
period following the date on which the Scheduled Completion Date would (absent
such extension) otherwise occur, Seller shall have the right, exercisable upon
notice to Buyer, to terminate the Agreement and, in the event of such
termination, Buyer shall be liable to Seller, subject to Article 32 and Buyer's
rights under Article 5, for Seller's damages resulting from such termination.
13
ARTICLE 5 BUYER'S RIGHT TO TERMINATE
--------------------------
5.1 Right to Terminate. In the event that (i) an Abandonment occurs or
(ii) Buyer determines to continue with the Project but without the benefit of
the Agreement or of any Alternative Supply Arrangement, then Buyer shall have
the right, exercisable upon notice to Seller given at any time prior to the
commencement of the Start-Up Period, to terminate the Agreement; provided,
however, that in the event such notice is given after August 31, 1998, Buyer
shall pay to Seller the amount equal to the product of two hundred thousand U.S.
Dollars (U.S.$200,000) multiplied by the Capacity Quotient in respect of each
thirty-Day period (prorated in the case of a period of less than thirty (30)
Days) from August 31, 1998 to the Day on which Buyer notifies Seller of such
termination, such payment to be made within fifteen (15) Days from the Day on
which such notice is given.
5.2 Termination for Other Reasons. Buyer shall have the right,
exercisable upon notice to Seller given at any time prior to the commencement of
the Start-Up Period, to terminate the Agreement without Abandonment having
occurred and to enter into an Alternative Supply Arrangement; provided, however,
that:
(a) in the event that Buyer so terminates the Agreement prior to May 1,
1998, it shall pay to Seller the amount of fifteen million U.S. Dollars
(U.S.$15,000,000), such payment to be made on the Day Buyer notifies Seller of
such termination; or
(b) in the event that Buyer so terminates the Agreement on or after May 1,
1998, it shall pay to Seller, in addition to any amount payable under Article
5.1, a termination fee equal to the amount for which Buyer would be liable to
Seller, subject to Article 32, for Seller's damages resulting from a breach of
the Agreement in its entirety on the date of such termination (the "Termination
Fee"). Within forty-five (45) Days from receipt of notice of such termination,
Seller shall provide Buyer with a statement for the Termination Fee setting
out the amount of such damages and the components thereof with reasonable
detail, and the Termination Fee shall be paid within thirty (30) Days from
receipt of such statement. In the event the parties do not agree on the amount
of the Termination Fee, the dispute shall be resolved pursuant to the terms of
Article 31.
5.3 Project Reinitiation.
(a) In the event that Buyer terminates the Agreement under Article 5.1 and
thereafter, during the period ending thirty (30) Months after the Month in
which notice of termination was given, an Alternative Supply Arrangement is
entered into, then the following shall apply:
(i) in the event that Buyer terminated the Agreement prior to May 1,
1998, it shall pay to Seller the amount of fifteen million U.S. Dollars
(U.S.$15,000,000), such payment to be made on the Day such Alternative
Supply Arrangement is entered into, together with interest thereon from the
Day of termination; or
14
(ii) in the event that Buyer terminated the Agreement on or after May
1, 1998, in addition to any amount payable under Article 5.1, it shall pay
to Seller, on the Day such Alternative Supply Arrangement is entered into,
the Termination Fee.
(b) In the event that (1) Buyer terminates the Agreement under Article
5.1, (2) Buyer or any Affiliate thereof sells or otherwise transfers the
Refinery or any part thereof or interest therein to a third party, and (3)
during the period ending thirty (30) Months after the Month in which notice of
termination was given, such third party or Affiliate thereof enters into an
Alternative Supply Arrangement or into a contract for any substantial part of
the engineering (other than preliminary feasibility studies), procurement or
construction of the Project or any similar project, then, at any time after the
condition set out in (1) above is met, promptly upon Seller's request or
otherwise at any time at Buyer's option, Buyer shall provide Seller with an
officer's certificate, together with reasonable supporting information and
documentation, establishing that the Abandonment was based upon Buyer's good
faith determination that, at the time of Abandonment, for commercial, technical
or economic reasons, it was unfeasible or unattractive (relative to Buyer's
assumptions and projections as of the date hereof) for Buyer to pursue the
Project. If Seller disputes the adequacy of or basis for such certification,
Seller may institute arbitration within ninety (90) Days from receipt of such
certificate; provided that no such arbitration may be instituted after such
ninety-Day period. In the event Seller prevails in such arbitration, and the
conditions set out in (2) and (3) above are met, then the following shall apply:
(i) in the event that Buyer terminated the Agreement prior to May 1,
1998, it shall pay to Seller the amount of fifteen million U.S. Dollars
(U.S.$15,000,000), such payment to be made on the Day the condition set out
in (3) above is met, together with interest thereon from the Day of
termination; or
(ii) in the event that Buyer terminated the Agreement on or after May
1, 1998, in addition to any amount payable under Article 5.1, it shall pay
to Seller, on the Day the condition (3) above is met, the Termination Fee,
together with interest thereon from the Day of termination.
5.4 Buyer's obligations under this Article 5.3 shall survive the
termination of the Agreement.
PART III: PURCHASE AND SALE
ARTICLE 6 PURCHASE AND SALE OF MAYA
-------------------------
Subject to the terms and conditions of the Agreement, beginning with the
first Month of the Start-up Period, Buyer shall purchase Maya from Seller and
Seller shall sell Maya to Buyer. All Maya purchased and sold under the Agreement
shall be purchased and sold exclusively for processing by Buyer or its
Affiliates at the Refinery.
15
ARTICLE 7 QUANTITY
--------
7.1 Contract Quantity. The quantity of Maya to be sold by Seller and
purchased by Buyer hereunder in any Month (the "Contract Quantity") shall,
subject to Article 8.2 and Article 16, be determined in accordance with the
following provisions:
(a) In the case of any Month within the Start-up Period, the Contract
Quantity shall be the quantity, if any, of heavy crude oil determined by Buyer
to be required for the start-up and operation of the Project Assets in excess of
the Current Capacity Decrease.
(b) Subject to clause (d) below, in the case of any Month during the
Guarantee Period commencing on or after the Completion Date, the Contract
Quantity shall be equal to (i) the Operating Capacity (determined in accordance
with the provisions of clause (c) below), multiplied by the ▇▇▇▇▇ Fraction, and
divided by 0.366, minus (ii) the Current Capacity Decrease, multiplied by (iii)
the number of Days in such Month.
(c) For purposes of clause (b) above, "Operating Capacity" shall be
determined in accordance with the following provisions of this clause (c): (i)
within ten (10) Days after the end of each six-Month period beginning on the
Completion Date, Buyer shall provide Seller with an officer's certificate
stating the average daily volume, determined in good faith, of feedstocks
processed through the ▇▇▇▇▇ during the immediately preceding six Months,
excluding Days during which the operation of the ▇▇▇▇▇ was interrupted or
curtailed due to force majeure or for operational reasons (the "Operating
Capacity"); (ii) the Operating Capacity stated in each such certificate shall,
absent manifest error, apply for purposes of clause (b) during the six-Month
period beginning with the Month following the Month in which such certificate
was required to be delivered; and (iii) prior to the six-Month period to which
the first such certificate applies, the Operating Capacity shall be deemed to be
the Design Capacity of the ▇▇▇▇▇.
(d) In the event that for any Month during the Guarantee Period commencing
on or after the Completion Date, Buyer's requirements for heavy crude oil for
processing at the Refinery through the ▇▇▇▇▇ exceed the sum of (i) Contract
Quantity determined in accordance with the provisions of clauses (b) and (c)
above plus (ii) the Current Capacity Decrease, then Buyer shall have the right
to notify Seller of such excess together with Buyer's proposed lifting program
for such Month. Notwithstanding the provisions of clause (b) above, in the event
of any such notice by Buyer, the Contract Quantity for such Month shall be
increased by the amount of such excess requirements notified by Buyer to Seller,
and the Contract Quantity for each Month thereafter shall be the greater of (x)
the Contract Quantity for the first Month following such notice determined in
accordance with the preceding provisions of this sentence or (y) the Contract
Quantity determined pursuant to clauses (b) and (c) above.
(e) In the case of any Month commencing after the Guarantee Period, the
Contract Quantity shall be the Contract Quantity determined in accordance with
clause (b) or clause (d) above, as the case may be, for the last Month of the
Guarantee Period, as the same may be reduced pursuant to the terms of Article
7.2.
16
7.2 Phase-out of Contract Quantity. Each party shall have the option,
exercisable upon not less than three Months' prior notice to the other party, to
reduce permanently the Contract Quantity subsequent to the end of the Guarantee
Period; provided, however, that (a) the Contract Quantity shall not be so
reduced in any three-Month period subsequent to the end of the Guarantee Period
by more than twenty-five percent (25%) of the Contract Quantity determined in
accordance with Article 7.1(b) or Article 7.1(d), as the case may be, for the
last Month of the Guarantee Period, and (b) the Contract Quantity shall not be
reduced to less than twenty-five percent (25%) of the Contract Quantity
determined in accordance with Article 7.1(b) or Article 7.1(d), as the case may
be, for the last Month of the Guarantee Period while any credit or premium
remains to be applied to purchases of Maya pursuant to Article 17(b) or 18(b).
ARTICLE 8 UNDERLIFTING
------------
8.1 Remedies. Buyer acknowledges that its commitment to purchase the
Contract Quantity for each Month is of the essence of the Agreement. Subject to
Article 8.2 and the following sentence of this Article 8.1, in the event that in
any Month Buyer lifts less than the Contract Quantity for such Month (including,
without limitation, as the result of any suspension of deliveries by Seller
under this Article 8.1 or Article 11.5), Buyer shall pay to Seller the amount of
fifteen percent (15%) of the Regular Price (calculated based upon the average of
the ▇▇▇▇▇'▇ Prices during such Month, rather than during the Five-Day Period)
multiplied by the number of Barrels of Maya underlifted in such Month; provided,
however, that Seller has provided Buyer with a statement of such amount within
thirty (30) Days from the end of the Month in which such underlifting occurs;
such payment to be made within fifteen (15) Days of receipt of such statement.
In the event that such underlifting is the result of Buyer having entered into a
term contract or engaged in a program resulting in the purchase of crude oil in
substitution of Maya, Seller shall have the right to terminate the Agreement
upon notice to Buyer and, in the event of such termination, Buyer shall be
liable to Seller, subject to Article 32, for Seller's damages resulting from
such termination. Seller shall not have the right to terminate the Agreement for
underlifting other than pursuant to the preceding sentence of this Article 8.1
or, in the event Buyer fails to pay any amount required to be paid under this
Article 8.1, Article 14. In the event Buyer suspends or reduces its liftings of
Maya relative to the applicable Agreed Lifting Program, Seller shall have no
obligation to resume delivery of the Contract Quantity underlifted for a period
of time following such suspension or reduction equal to the shorter of the
period of such suspension or reduction and three Months; it being understood
that Seller shall use commercially reasonable efforts to resume such delivery
earlier.
8.2 Operational Tolerance. Notwithstanding the foregoing provisions of this
Article 8, and subject to the provisions of Article 8.4, Buyer shall not be
required to lift, nor be subject to any liability for lifting less than, the
Contract Quantity in any Month if and to the extent that:
(a) such underlifting is due to the operational inability of the
Refinery to process the Contract Quantity despite the exercise of
commercially reasonable efforts to overcome such operational inability;
17
(b) such underlifting is due to demonstrated operational reasons
concerning only the Loading Ports or the tankers involved and does not in
any event exceed ten percent (10%) of the Contract Quantity for such Month;
(c) such underlifting comes as a consequence of Buyer performing
remedial work (whether planned or unplanned) or an annual turnaround at the
Refinery, provided that Buyer notifies Seller of any planned turnaround at
least ninety (90) Days prior to the Month in which the turnaround is
planned and of any planned remedial work as soon as reasonably possible;
(d) such underlifting is the result of Buyer decreasing inventories of
Maya at the Refinery, having previously increased such inventories by
lifting in excess of the Contract Quantity due to increased risk of
weather-related interruption of supply;
(e) such underlifting is the result of force majeure and excused
pursuant to Article 16; or
(f) such underlifting is due to an underdelivery by Seller, or due to
Buyer acting in response thereto in accordance with Article 9.
8.3 Apportionment of Underlifting. With respect to any Month in which Maya
is nominated for delivery under the Agreement and under any other crude oil
supply agreement between Seller and Buyer or any of its Affiliates where any
such deliveries are to be co-mingled in a single cargo pursuant to the
applicable Agreed Lifting Program, if an underlifting of the combined quantities
occurs, then the quantity underlifted shall be attributed first to the quantity
under such other crude oil supply agreement, subject to a showing by Buyer, to
the reasonable satisfaction of Seller, that such underlifting is attributable,
in whole or in part, to the Contract Quantity by reason of force majeure or
other events or circumstances affecting the ▇▇▇▇▇; except that, in the event the
underlifting is attributable solely to force majeure affecting the tankers or to
circumstances set out in Article 8.2(b), such volume underlifted shall be
attributed pro rata to the Contract Quantity and the quantity under such other
crude oil supply agreement.
8.4 Determination of Operational Tolerance. In determining whether
circumstances exist for relief under clause (a), (c) or (d) of Article 8.2,
Buyer shall first curtail processing and reduce purchases of heavy crude oil
other than Maya under the Agreement to the full extent Buyer is able to do so
operationally and pursuant to the terms of its other supply contracts without
material loss.
ARTICLE 9 UNDERDELIVERY
-------------
Throughout the term of the Agreement, Seller shall maintain the
contractual right to purchase Maya from Pemex Exploracion y Produccion for sale
to Buyer under the Agreement and the contractual right, by agreement with Pemex
Exploracion y Produccion, to utilize the Loading Ports for the delivery of Maya
to Buyer under the Agreement. Seller shall notify Buyer promptly of any event
which causes or, with the passage of time, will cause the loss of either
18
such right. In the event Seller suspends or reduces its deliveries of Maya
relative to the applicable Agreed Lifting Program, Buyer shall have no
obligation to resume lifting of the Contract Quantity underdelivered for a
period of time following such suspension or reduction equal to the shorter of
the period of such suspension or reduction and three Months; it being understood
that Buyer shall use commercially reasonable efforts to resume such lifting
earlier.
ARTICLE 10 PRICE
-----
10.1 Regular Price. Subject to Article 10.2, the price of each Barrel of
Maya sold and delivered hereunder in any Month shall be the Regular Price.
10.2 Alternative Pricing. If, during any six-Month period during which the
Regular Price is in effect under this Article 10, the average volume of sales of
Maya at the Regular Price under contracts with non-Affiliated buyers (including
Buyer) pursuant to which such buyers have the right to terminate upon prior
notice to Seller of three Months or less is below 200,000 BPD, or if the average
number of such non-Affiliated buyers of Maya at the Regular Price has been less
than three per Month, then Seller shall so notify Buyer within fifteen (15) Days
following the end of such six-Month period, and the parties shall meet promptly
thereafter to discuss and agree on whether an alternative pricing formula which
meets the same objective that the price of Maya hereunder be market-related is
required and, if so, the specifics of such alternative pricing formula. It is
expressly understood and agreed in this regard that (i) it is not the intention
of the parties that Maya be the most competitive crude oil for the Refinery at
all times, that the pricing mechanism for Maya respond to short-term variations
in the price of other crudes, or that the profitability of the Refinery be
guaranteed in any way through the price of Maya (other than pursuant to Part IV)
and (ii) the parties shall apply the methodology set out in Annex 7 in
determining the need for and specifics of an alternative pricing formula. In the
event that the parties are unable to reach agreement within sixty (60) Days
following such six-Month period, then the parties shall, within thirty (30) Days
following such sixty-Day period, submit the matter to arbitration pursuant to
Article 31.2. In such arbitration, each party shall submit its proposed pricing
mechanism, and the arbitration panel shall select one or the other of the
parties' proposals. Any alternative pricing mechanism established pursuant to
this Article 10.2 shall be effective as of the beginning of the first Month of
such six-Month period referred to above. During any period necessary to
establish an alternative pricing mechanism, the price of Maya sold and delivered
hereunder shall remain the Regular Price. Any underpayment or overpayment in
respect of the six-Month period and the period necessary to establish an
alternative pricing mechanism, shall be settled through adjustment to the price
of Maya over the three Months following the Month in which the alternative
mechanism is established.
10.3 Reinstatement of Regular Price. In the event an alternative pricing
formula for Maya is established pursuant to Article 10.2 and, during any six-
Month period ending after the six-Month period referred to in Article 10.2, the
average volume of sales of Maya at the Regular Price under contracts with non-
Affiliated buyers pursuant to which such buyers have the right to terminate upon
prior notice to Seller of three Months or less is equal to or greater than
200,000 BPD, and the average number of such non-Affiliated buyers of Maya at the
Regular Price is equal to or more than three per Month, then the price of each
Barrel of Maya
19
sold and delivered hereunder beginning in the Month following the six-Month
period to which this Article 10.3 applies shall be the Regular Price.
10.4 Certification by Seller. Seller shall provide to Buyer, within thirty
(30) Days following request by Buyer, which request shall not be made more often
than once in any six-Month period, an officer's certificate confirming that the
number of buyers of Maya referred to in Article 10.2 has been three or more in
each six-Month period ending within the preceding Year and that the average
volume of sales of Maya referred to in Article 10.2 has been greater than or
equal to 200,000 BPD in each six-Month period ending within such preceding Year.
ARTICLE 11 PAYMENT TERMS
-------------
11.1 Adjustments in Respect of Differential Guarantee. Buyer's payment
obligations in respect of Maya sold and delivered under the Agreement shall be
adjusted in accordance with the provisions of Part IV.
11.2 Currency Time and Place of Payment; Overdue Payments. Buyer shall make
all payments required to be made by it hereunder in immediately available U.S.
Dollars, without any discount or deduction whatsoever, by wire transfer to such
bank account at a bank branch located within the United States of America as may
be designated by Seller from time to time. Payments in respect of Maya sold and
delivered shall be made on or before the later of the Day which is thirty (30)
Days after the date of the ▇▇▇▇ of lading therefor or the Day which is five
Business Days after delivery to Buyer of the corresponding invoice pursuant to
Article 11.6. Except as otherwise expressly provided in the Agreement, all other
payments to Seller shall be made within thirty (30) Days after presentation by
Seller of a written demand setting forth the provisions of the Agreement giving
rise to the payment obligation, the nature of such obligation, and the amount
thereof. If any payment hereunder would be due on a Day, other than a Sunday or
Monday, which is not a Business Day, such payment shall be due on the
immediately preceding Business Day, and if any payment hereunder would be due on
a Sunday or Monday which is not a Business Day, such payment shall be due on the
immediately succeeding Business Day. In the event that Buyer fails to make any
payment under the Agreement when due, then, to the extent permitted by
applicable law and without prejudice to the application of any other provision
hereof or to any other remedy provided to Seller hereunder or otherwise
(including, without limitation, remedies provided pursuant to Articles 11.4 and
11.5), interest shall accrue daily on the amount of the overdue payment,
commencing on the date such payment was due, at a rate per annum equal to two
percent (2%) above the prime rate in effect from time to time as announced by
Citibank, N.A. at its offices in New York, New York, payable on demand.
11.3 Payment Expenses. Buyer shall bear all expenses and bank charges in
connection with any payments made to Seller under the Agreement, including,
without limitation, any costs of establishing and obtaining confirmation of any
letter of credit referred to in Article 11.4.
20
11.4 Security for Payment.
--------------------
11.4.1 If at any time (a) Buyer fails to make any payment in an aggregate
amount of one hundred thousand U.S. Dollars (U.S.$100,000) or more, which is
required to be made by Buyer under the Agreement, or under any other crude oil
agreement between Buyer and Seller, when and as the same shall become due and
payable and such failure is not remedied within five Business Days, (b) the
▇▇▇▇▇ Performance Undertaking is required under Article 29.5 but fails to be in
full force and effect, or (c) either (1) senior unsecured long-term debt
securities of Buyer for which there is no recourse to or credit enhancement from
any party other than Buyer, or, on an indicative basis, Buyer's ability to pay
senior unsecured long-term obligations of U.S.$100,000,000 for which there is no
recourse to or credit enhancement from any party other than Buyer, or (2) in the
event the ▇▇▇▇▇ Performance Undertaking is required pursuant to Article 29.5,
senior unsecured long-term debt securities of ▇▇▇▇▇ R&M for which there is no
recourse to or credit enhancement from any party other than ▇▇▇▇▇ R&M, or, on an
indicative basis, the ▇▇▇▇▇ Performance Undertaking are (i) not rated at least
Baa3 by ▇▇▇▇▇'▇ Investors Service, Inc. or BBB- by Standard & Poor's Rating
Services (or, if either such agency changes its rating system, the equivalent
successor rating applied by such agency at the time in question), (ii) placed on
credit watch for potential down-grading by either such rating agency while rated
Baa2 or lower in the case of ▇▇▇▇▇'▇ Investors Service, Inc. or BBB or lower in
the case of Standard & Poor's Rating Services (or, if either such agency changes
its rating system, the equivalent successor rating applied by such agency at the
time in question), or (iii) not rated by at least one such rating agency, then
Seller shall have the right in its sole discretion to require Buyer to secure
its obligations to make payment for Maya under the Agreement by means of one or
more stand-by letters of credit conforming to the requirements of Article
11.4.2; provided, however, that any such letter of credit shall no longer be
required and, if outstanding, shall be returned by Seller when and if (x) in the
case of (a) above, such failure to pay has been cured in full and no other such
failure to pay has occurred during the period of three Months from such cure,
(y) in the case of (b) above, the ▇▇▇▇▇ Performance Undertaking has come into
and remained in full force and effect for a period of three Months, and (z) in
the case of (c) above, the securities or obligations referred to therein become
rated Baa3 or higher by ▇▇▇▇▇'▇ Investors Service, Inc. or BBB- or higher by
Standard & Poor's Rating Services (or, if either such agency changes its rating
system, the equivalent successor rating applied by such agency at the time in
question) or, if so rated and placed on credit watch, such ratings are
confirmed.
11.4.2 Each such stand-by letter of credit shall be: (i) irrevocable and
unconditional; (ii) established in favor of Seller; (iii) issued by Bankers
Trust Company, Bank of Boston, N.A., Toronto-Dominion Bank or such other bank,
and branch of such bank, having a net asset value of not less than two hundred
fifty million U.S. Dollars (U.S.$250,000,000) and outstanding senior debt
securities rated not less than A2 by ▇▇▇▇▇'▇ Investors Service, Inc. and A by
Standard & Poor's Rating Services; (iv) in an amount of U.S. Dollars at all
times equal at least to the tool aggregate amount of all invoices outstanding
under the Agreement plus one hundred ten percent (110%) of the estimated invoice
value of Maya lifted by Buyer with respect to which an invoice has yet to be
issued by Seller; (v) payable, at Buyer's option, in New York, New York or
Mexico City, Mexico; (vi) in substantially the form of Annex 8 or other form
reasonably satisfactory to Seller; (vii) having an expiration which is not
sooner than sixty-two (62) Days, in the case of a letter of credit payable in
New York, or forty-two (42) Days, in the
21
case of a letter of credit payable in Mexico City, from the last Day of the
Agreed Laydays for the most recent cargo to which it applies (it being
understood that, in the event the vessel in question fails to arrive within the
Agreed Laydays, the applicable letter of credit shall be extended prior to the
commencement of loading by the number of Days of delay resulting from such late
arrival); (viii) payable in whole or in part against the presentation by Seller
of a request for payment accompanied by an officer's certificate of Seller
stating that payment of the amount stated in such request is past due; and (ix)
notified to Seller not less than five Days prior to the first Day of the Agreed
Laydays for the most recent shipment to which the stand-by letter of credit
relates, unless the event referred to in Article 11.4.1 occurs within such five-
Day period, in which case the letter of credit shall be notified as soon as is
reasonably possible and, in any event, prior to the commencement of loading of
any cargo vessel.
11.5 Suspension of Deliveries. In the event that (a) Buyer fails to make
any payment in an aggregate amount of one hundred thousand U.S. Dollars
(U.S.$100,000) or more required to be made by Buyer under the Agreement, or
under any other crude oil agreement between Buyer and Seller, when and as the
same shall become due and payable, or (b) Buyer fails to establish and maintain
in accordance with Article 11.4.2 any stand-by letter of credit required by
Seller pursuant to Article 11.4.1, then (in addition to all other rights or
remedies provided to Seller hereunder or otherwise) Seller shall have the right
at its sole discretion to suspend further deliveries of Maya unless and until
Buyer makes the required payment referred to in (a) above together with any
accrued interest thereon or establishes the stand-by letter of credit required
pursuant to Article 11.4, as the case may be. In the event of such suspension by
Seller and subsequent cure by Buyer, Seller shall not be obligated to resume
delivery of Maya for a period of time following such cure equal to the shorter
of the period of suspension preceding such cure or three Months; it being
understood that Seller shall use all commercial reasonable efforts to resume
such delivery earlier.
11.6 Shipping Documents. Seller shall deliver to Buyer the shipping
documents specified in Annex 9 and an invoice, which may be sent by telex or
other electronic means, and in the event that the original bills of lading are
not delivered to Buyer on or before the due date for payment, Buyer undertakes
to pay Seller upon presentation of an invoice and a letter of indemnity sent by
telex or other electronic means, in the form of Annex 10, in lieu of the
original bills of lading until such bills of lading are delivered to Buyer.
ARTICLE 12 NO SET-OFF
----------
Without prejudice to Buyer's right subsequently to assert claims it may
have under the Agreement in arbitration proceedings pursuant to the provisions
of Article 31.2, all payments required to be made by Buyer hereunder shall be
made punctually and without set-off or deduction whatsoever (other than to the
extent of any credit memorandum issued by Seller in favor of Buyer in connection
with any quantity, quality or price dispute or of any arbitral award rendered
pursuant to Article 31.2) for any claims which Buyer or any other party may now
have or hereafter acquire against Seller.
22
ARTICLE 13 NOTICE OF CLAIMS
----------------
Any claim which Buyer may have arising out of or relating to the Agreement
must be notified to Seller: (i) within sixty (60) Days after the date of the
▇▇▇▇ of lading for the shipment involved if such claim is for demurrage (any
such claim must be accompanied by complete substantiation and a copy of the
charter party if any for the tanker); or (ii) within thirty (30) Days after the
date on which the loading of any shipment is completed, if such claim relates to
the quantity or quality of Maya in such shipment. Seller shall not be liable to
Buyer in respect of (and Buyer shall be deemed to have waived) any claim which
is not so notified to Seller, and Buyer shall reimburse Seller for any expenses,
including attorneys' fees, which Seller incurs in connection with the defense of
any such claim.
ARTICLE 14 TERMINATION BY SELLER OR BUYER
------------------------------
Anything herein to the contrary notwithstanding, either party shall have
the right (in addition to any other rights or remedies provided to such party
under the Agreement or otherwise) to terminate the Agreement in its entirety,
effective immediately upon notice to the other party, in the event that such
other party defaults in any of its material obligations under Part III, and such
default continues unremedied for a period of sixty (60) Days or, in the case of
default by Seller in its obligation to deliver Maya, such default continues for
a period of sixty (60) Days. It is expressly understood and agreed that neither
party shall have the right to terminate the Agreement based upon default of the
other party in any of its obligations under Parts II, V or VI, other than as
expressly provided in any such Part.
ARTICLE 15 EFFECT OF TERMINATION
---------------------
15.1 Termination Not to Relieve Obligations. No termination of the
Agreement, whether pursuant to Article 14 or otherwise, shall relieve either
party of its obligation to make any payment then required of it under the
Agreement or which becomes payable as the result of such termination. Any
termination of the Agreement shall not affect any right or liability of either
party that accrued during, or relates to, the period prior to such termination,
it being understood that nothing in this Article 15 shall be construed as
limiting either party's right to recover damages resulting from any such
termination.
15.2 Acceleration. In the event that Seller exercises its right to
terminate the Agreement pursuant to any provision hereof, then, anything herein
to the contrary notwithstanding, any obligation of Buyer to make any payment
hereunder for or in respect of Maya sold and delivered as of the date of
termination shall be accelerated and such payment shall become immediately due
and payable.
ARTICLE 16 FORCE MAJEURE
-------------
16.1 Relief from Liability. Neither party to the Agreement shall be
liable for demurrage, loss, damage, claims or demands of any nature arising out
of delays or defaults in performance under Parts III or V due to force majeure.
23
16.2 Notice. Any party claiming force majeure shall promptly notify the
other of the occurrence of the event of force majeure relied upon. In addition,
each party shall give prompt notice to the other of the occurrence of any event
or the existence of any condition, whether the result of force majeure or
otherwise, known to it which is reasonably likely to materially and adversely
affect such party's ability to perform any of its material obligations under the
Agreement.
16.3 Payment for Mava Sold and Delivered. Nothing in this Article 16 shall
relieve Buyer of its obligation to pay in full for Maya sold and delivered
hereunder and for all other amounts due and payable to Seller from Buyer under
the Agreement.
16.4 Pro-rata Apportionment. If, as a result of force majeure, Seller at
any time does not have available a sufficient amount of Maya for export to
supply the aggregate amount of Maya to be sold by it hereunder to Buyer and
under such commitments as Seller may have with its other customers, Seller shall
not reduce the quantity of Maya sold to Buyer hereunder by a percentage greater
than the percentage by which Seller reduces the aggregate amount of its sales of
Maya to (i) other export customers under agreements to supply 50,000 BPD or more
of Maya, or (ii) in the event such agreements represent less than twenty percent
(20%) of Seller's exports of Maya, Seller's other export customers in general;
it being understood that the occurrence of an event of force majeure shall not
under any circumstances require Seller to purchase crude oil from any party to
sell to Buyer.
16.5 Extension of Guarantee Period. If an event of force majeure affecting
the delivery, lifting or processing of Maya results in a curtailment of
processing at the Refinery of more than twenty-five percent (25%) of the
Contract Quantity on average over any period of fifteen (15) consecutive Days or
more during the Guarantee Period, then the Guarantee Period shall be extended by
the number of Days necessary for the Refinery, assuming operation at Design
Capacity, to process the quantity of Maya not processed due to such curtailment;
provided, however, that the aggregate period of all such extensions shall not
exceed two hundred seventy (270) Days in respect of events of force majeure
affecting the production or delivery of Maya by Seller or the facilities at the
Loading Port, and three hundred sixty-five (365) Days in respect of events of
force majeure affecting the lifting, transportation, storage or processing of
Maya by Buyer; and, provided further, that Buyer, within thirty (30) Days
following the end of any such curtailment, shall notify Seller of the specific
event of force majeure which caused the curtailment, its duration and the number
of Barrels of Maya affected. Upon request from Seller, Buyer shall supply an
officer's certificate confirming the content of such notice.
16.6 Meaning of Force Majeure. For purposes of this Article 16, force
majeure shall include any act or event that prevents or delays the performance
by either party of its obligations under Part III and Part V if and to the
extent such act or event is beyond such party's reasonable control, not the
result of such party's fault or negligence, and such party has been unable to
overcome the consequences of such act or event by the exercise of commercially
reasonable effort, which may include the expenditure of funds. Subject to the
satisfaction of the conditions established in the previous sentence, force
majeure shall include, but not be limited to, the following acts or events, or
any similar and equally serious acts or events, which prevent or delay the
performance by a party of its obligations under Part III and Part V: acts of God
or of
24
the public enemy; floods or fire; hostilities or war (whether declared or
undeclared); blockade; strikes or other labor disturbances that are not the
result of breach of a labor contract by the affected party; riots, insurrections
or civil commotion; quarantine restrictions or epidemics; electrical shortages
or blackouts; earthquakes; tides, storms or bad weather at the Loading Port;
accidents; breakdown or injury to producing or delivering facilities in Mexico
or to receiving or processing facilities at the Refinery; interruption, decline
or shortage of Seller's supply of Maya available for export from Mexico
(including, without limitation, shortage due to increased domestic demand); or
laws, change in laws, decrees, regulations, orders or other directives or
actions of either general or particular application (other than as may be
directed to aspects of the Agreement not common to long-term crude oil supply
agreements generally) of the government of Mexico or the government of the
United States of America or any agency thereof (which shall not include Seller,
Pemex Exploracion y Produccion, or any of Seller's other Affiliates) or of a
Person or authority purporting to act therefor.
PART IV: DIFFERENTIAL GUARANTEE
ARTICLE 17 SHORTFALL IN DIFFERENTIALS
--------------------------
(a) In the event that, as of the end of any Quarter all or part of which is
within the Guarantee Period, there is a Quarterly Shortfall for such Quarter,
Buyer shall receive a credit against the purchase price of Maya delivered
beginning in the succeeding Quarter (as illustrated in line M of Annex 11) equal
to the sum, if greater than zero, of the amount of such Quarterly Shortfall
minus the amount, if any, by which the aggregate of all Quarterly Surpluses for
prior Quarters exceeds the aggregate of all Quarterly Shortfalls and Credit
Interest for prior Quarters (as illustrated in line K of Annex 11).
(b) The sum, if greater than zero, of (i) such credit determined in
accordance with (a) above, plus (ii) any Credit Carryforward from such Quarter
(as illustrated in line Q of Annex 11), minus (iii) any Premium Carryforward
from such Quarter (as illustrated in line W of Annex 11), shall be applied at
the rate of U.S.$5.00 per Barrel of Maya beginning with the first Barrel
delivered in such succeeding Quarter up to a maximum aggregate amount in such
succeeding Quarter of thirty million U.S. Dollars (U.S.$30,000,000). In the
event the sum referred to in the preceding sentence hereof is less than zero,
then Buyer shall pay a premium on the purchase price of Maya delivered in the
succeeding Quarter equal to the positive value of such sum applied at the rate
of U.S.$5.00 per Barrel of Maya beginning with the first Barrel delivered in
such succeeding Quarter up to a maximum aggregate amount in such succeeding
Quarter of twenty million U.S. Dollars (U.S.$20,000,000).
(c) In the event that, as of the end of any such succeeding Quarter, there
remains an amount which has not been applied, pursuant to (b) above or the
second sentence of Article 18(b), to Maya delivered in such succeeding Quarter,
then such remaining amounts, together with interest on such remaining amount at
LIBOR plus one percent (1%) calculated for the period of such succeeding
Quarter, shall constitute a "Credit Carryforward" from such succeeding Quarter
(as illustrated in line R of Annex 11).
25
(d) In the event that, as of the end of any Quarter all or part of which
is within the Guarantee Period, both the Quarterly Surplus and the Quarterly
Shortfall equal zero, and the sum of any Credit Carryforward minus any Premium
Carryforward is greater than zero, then Buyer shall receive a credit equal to
such sum, applied at the rate of U.S.$5.00 per Barrel of Maya, beginning with
the first Barrel of Maya delivered in such succeeding Quarter up to a maximum
aggregate amount in such succeeding Quarter of thirty million U.S. Dollars
(U.S.$30,000,000).
ARTICLE 18 SURPLUS IN DIFFERENTIALS
------------------------
(a) In the event that, as of the end of any Quarter all or part of which
is within the Guarantee Period, there is a Quarterly Surplus for such Quarter,
Buyer shall pay a premium on the purchase price of Maya delivered beginning in
the succeeding Quarter (as illustrated in line S of Annex 11) equal to the
lesser of (i) the amount of such Quarterly Surplus or (ii) the amount, if any,
by which the aggregate of all Quarterly Shortfalls and Credit Interest for prior
Quarters and such Quarter exceeds the aggregate of all Quarterly Surpluses for
prior Quarters (as illustrated in line L of Annex 11).
(b) The sum, if greater than zero, of (i) such premium determined in
accordance with (a) above, plus (ii) any Premium Carryforward from such Quarter
(as illustrated in line W of Annex 11), minus (iii) any Credit Carryforward from
such Quarter (as illustrated in line Q of Annex 11), shall be applied at the
rate of U.S.$5.00 per Barrel of Maya beginning with the first Barrel delivered
in such succeeding Quarter up to a maximum aggregate amount in such succeeding
Quarter of twenty million U.S. Dollars (U.S.$20,000,000). In the event the sum
referred to in the preceding sentence hereof is less than zero, then Buyer shall
receive a credit against the purchase price of Maya delivered in the succeeding
Quarter equal to the positive value of such sum applied at the rate of U.S.$5.00
per Barrel of Maya beginning with the first Barrel delivered in such succeeding
Quarter up to a maximum aggregate amount in such succeeding Quarter of thirty
million U.S. Dollars (U.S.$30,000,000).
(c) In the event that, as of the end of any such succeeding Quarter, there
remains an amount which has not been applied, pursuant to (b) above or the
second sentence of Article 17(b), to Maya delivered in such succeeding Quarter,
then such remaining amount, together with interest on such remaining amount at
LIBOR plus one percent (1%) calculated for the period of such succeeding
Quarter, shall constitute "Premium Carryforward" (as illustrated in line X of
Annex 11) from such succeeding Quarter.
(d) In the event that, as of the end of any Quarter all or part of which
is within the Guarantee Period, both the Quarterly Surplus and the Quarterly
Shortfall equal zero, and the sum of any Credit Carryforward is less than zero,
then Buyer shall pay a premium equal to the positive value of such sum, applied
at the rate of U.S.$5.00 per Barrel of Maya, beginning with the first Barrel of
Maya delivered in such succeeding Quarter up to a maximum aggregate amount in
such succeeding Quarter of twenty million U.S. Dollars (U.S.$20,000,000).
ARTICLE 19 CALCULATION OF DIFFERENTIAL GUARANTEE
-------------------------------------
26
19.1 Time of Delivery. For purposes of calculating any Monthly Shortfall
or Monthly Surplus. as well as for purposes of applying any credit or premium
pursuant to Article 17 and 18, respectively, Maya shall be considered to have
been delivered on the Day on which the ▇▇▇▇ of lading for the cargo in question
was issued at the Loading Port, as reflected in such ▇▇▇▇ of lading.
19.2 Examples of the Operation of Part IV. For purposes of convenience in
interpreting the Agreement, set forth in Annex 11 are examples of the operation
of Part IV.
19.3 Quarterly Calculation. Within the first fifteen (15) Days of each
Quarter following any Quarter within the Guarantee Period, Seller shall provide
to Buyer a detailed report, substantially in the form of Annex 11, including (i)
the calculation of the Differential for the preceding Quarter, (ii) the
calculation of any Quarterly Shortfall or Quarterly Surplus for such preceding
Quarter, (iii) the application of any credit or premium to the purchase price of
Maya delivered during such preceding Quarter, (iv) any Premium Carryforward or
Credit Carryforward from such preceding Quarter, (v) the calculation of any
Credit Interest for the prior Quarter, and (vi) the amount of credits or
premiums to be applied during the current Quarter. Within ten (10) Days from
receipt of such report, Buyer shall notify Seller of any claimed discrepancy
therein and any proposed amendment thereto; it being understood that the parties
shall, in such event, undertake in good faith to resolve such discrepancy
promptly and in any event prior to the payment date of the first invoice for
Maya delivered in such Quarter. Pending the resolution of any claimed
discrepancy, Buyer shall make payment to Seller in accordance with Article 11.2
based on the calculations made by Seller pursuant to this Part IV as set out in
Seller's report.
ARTICLE 20 DIFFERENTIAL FORMULA
--------------------
20.1 Alternative Differential Calculation. In the event that (a) the
absolute value of the arithmetic average, for the immediately preceding twenty-
four (24) Month period, of the difference between (i) the Regular Price, and
(ii) the sum of (x) 0.679 multiplied by the price of No. 6 Oil (as determined
pursuant to Annex 2), plus (y) 0.185 multiplied by the sum of the price of RUL
and the price of No. 2 Oil (each as determined pursuant to Annex 2), minus (z)
2.874 (such sum, the "Maya Proxy") exceeds (b) U.S.$0.50 per Barrel for any
Month, then the price of No. 6 Oil to be used in calculating the Differential
beginning in the Month following such 24-Month period shall be equal to the sum
of (x) 1.473 multiplied by the Regular Price, plus (y) 4.233, minus (z) 0.272
multiplied by the sum of the price of RUL and the price of No. 2 Oil.
20.2 Reinstatement of Differential Calculation. In the event an
alternative Differential formula becomes applicable pursuant to Article 20.1 and
thereafter the absolute value of the arithmetic average, for the immediately
preceding twenty-four (24) Month period, of the difference between the Regular
Price and the Maya Proxy is equal to or less than U.S.$0.50 per Barrel, then the
price of No. 6 Oil to be used in calculating the Differential beginning in the
Month following such 24-Month period shall be as determined pursuant to Annex 2.
27
PART V: DELIVERY TERMS
ARTICLE 21 ARRIVAL PROCEDURES AND LIFTING
------------------------------
21.1 Lifting Program.
---------------
21.1.1 At least fifteen (15) Days before the end of each Month, Buyer
shall furnish Seller with a lifting program for the following two Months and a
preliminary lifting program for the next Month thereafter. Such lifting programs
shall be integrated with any such programs for Maya under any other crude oil
agreement between Seller and Buyer or its Affiliates and, accordingly, the
Contract Quantity may be lifted in cargoes together with quantities of Maya so
nominated under such other crude oil supply agreement. Such lifting programs
shall specify the following:
(a) the quantity of Maya to be lifted in each such Month;
(b) a three-Day range for the arrival of each tanker;
(c) the quantity of Maya to be lifted by each tanker;
(d) the port of discharge of each cargo; and
(e) in the case of the lifting program for the following Month, (i) the
name, size and dimensions of tankers designated for lifting during such Month
and (ii) the names of the tanker's agent and Buyer's representative.
21.1.2 If the name of a tanker is not known at the time the lifting
program for the following Month is furnished to Seller, Buyer shall notify
Seller of such name and the other data referred to in Article 21.1.1(e) as soon
as possible, but in any event not later than three Business Days prior to the
first Day of the Agreed Laydays for the unspecified tanker. In no event shall
Seller be liable for deadfreight if Buyer provides a tanker larger than that
required to lift the quantity of Maya scheduled to be lifted hereunder. If Buyer
does not furnish Seller with a lifting program complying with the requirements
of Article 2.1.1 for the following Month within the period specified above,
Buyer shall be required to accept the lifting program for such Month established
by Seller.
21.1.3 Seller shall be deemed to have accepted Buyer's lifting program
for the following Month unless Seller has notified Buyer of alterations thereto
at least five Days prior to the beginning of such Month. Seller shall in any
event notify Buyer within such time period of the Loading Ports to be used by
Buyer's tankers (subject to adjustment as provided in Article 21.1.5) and the
name(s) of the independent inspector(s) nominated by Seller for purposes of
Article 23.1 and Article 24.1. If Seller timely so notifies Buyer of alterations
to the lifting program, Buyer shall be deemed to have agreed to those
alterations unless, within three Days after Buyer's receipt of Seller's notice,
Buyer requests Seller to reconsider such alterations. Seller's decision
following any such reconsideration shall be final and binding on both parties.
Buyer may also notify Seller within such three-Day period that it objects to an
independent
28
inspector nominated by Seller. In such case, Seller shall select
another independent inspector. The lifting program as finally determined
pursuant to the provisions of Article 21.1.1 and this Article 21.1.3 for any
Month is referred to herein as the "Agreed Lifting Program" for such Month, and
the three-Day range for the arrival of any tanker contained in any Agreed
Lifting Program is referred to herein as the "Agreed Laydays" for such tanker.
21.1.4 In working toward each Agreed Lifting Program, the parties shall
cooperate with one another and exercise all commercially reasonable efforts to
ensure that each such Agreed Lifting Program provides that Seller will deliver
and Buyer will lift Maya ratably with the minimum objective that not less than
thirty-five percent (35%) of the Contract Quantity (subject to operational
tolerance pursuant to Article 8.2) for any Month be lifted in any period of
fifteen (15) Days within such Month.
21.1.5 Seller may notify Buyer that any tanker scheduled in an Agreed
Lifting Program shall load Maya at a Loading Port different from (but on the
same coast as) the Loading Port previously specified pursuant to Article 21.1.3
or shall load Maya at two Loading Ports (on the same coast), provided that such
notice is given by Seller (i) at least twenty-four (24) hours prior to the ETA
of such tanker, if Buyer has notified Seller of an ETA falling within or after
its Agreed Layday, or (ii) at least twenty-four (24) hours prior to the first
Day of the Agreed Laydays, if Buyer has notified Seller of an ETA which is
earlier than the first Day of the Agreed Laydays.
21.2 Substitution of Tankers. Buyer shall be entitled to substitute
another tanker for any tanker designated in an Agreed Lifting Program; provided,
however, that the substitute tanker shall have substantially the same
characteristics (including carrying capacity) as the tanker previously nominated
and accepted pursuant to Article 21.1 and shall meet the requirement for vessels
loading at the particular Loading Port involved; and provided, further, that
Buyer shall give Seller notice of the substitution not less than three Days
prior to the first Day of the Agreed Laydays for the substituted tanker. In the
event that Buyer substitutes a tanker other than in accordance with the
provisions of this Article 21.2, Seller may in its sole discretion refuse to
load such tanker, it may load such tanker at any Loading Port on any Day it may
specify, whether or not within the Agreed Laydays for such tanker; Seller shall
in no event be liable for demurrage, deadfreight or any other charges with
respect to the loading of any such tanker.
21.3 Advice of ETA. Buyer shall arrange for each tanker to advise the
Loading Port operator (through the communication frequencies listed in Annex 12)
and Seller of its ETA at each of the following times:
(a) immediately upon leaving its last port of call before the Loading
Port, if such departure is more than seventy-two (72) hours prior to ETA at the
Loading Port;
(b) seventy-two (72) hours before ETA;
(c) forty-eight (48) hours before ETA;
29
(d) twenty-four (24) hours before ETA; and
(e) twelve (12) hours before ETA.
Seller shall not be liable for demurrage, deadfreight or any other charges in
respect of any delay in loading attributable to the failure of a tanker to give
notice of its ETA at any of the times enumerated above.
21.4 Notice of Readiness. The Buyer, its representative or the Master of
the tanker (who shall be deemed to be acting on Buyer's behalf) shall, during
the hours in which the Loading Port is open, give Seller or Seller's agent, and
the Loading Port operator, notice of the readiness of the tanker to load. Notice
of readiness shall not be given until the tanker (i) has anchored at the
customary area at the Loading Port, (ii) has been granted free pratique, (iii)
has received the necessary clearance by customs and all other governmental
authorities, and (iv) is ready in all other respects to load; provided, however,
that notice of readiness may be given before the conditions specified in clauses
(ii) and (iii) above have been satisfied if, in accordance with the practice at
the Loading Port, such conditions may be satisfied only after the tanker has
been brought to the loading point. If, notwithstanding having tendered notice of
readiness, the tanker is found not to be ready to load, such notice of readiness
will be disregarded and Buyer shall be obligated to give a new notice of
readiness when it is in fact ready to load.
21.5 Oil Pollution. Buyer shall ensure that each vessel used for loading
Maya under the Agreement (i) is owned by a member of the International Tanker
Owners Pollution Federation Limited, (ii) is covered, without expense to Seller,
by insurance protecting against any and all liabilities from pollution issued by
an internationally recognized Protection and Indemnity Association in an amount
not less than seven hundred million U.S. Dollars (U.S.$700,000,000), or such
greater amount as may become available in the insurance market and generally
obtained by prudent owners of similar vessels, and (iii) carries all
certificates required by applicable laws for the carriage of petroleum and
petroleum products in Mexican waters and in international ocean transportation
and for conducting cargo operations at the Loading Ports, including, without
limitation, as required under the Convention on Civil Liability for Oil
Pollution Damage of 1969. Buyer shall further ensure that each vessel used for
loading Maya is in full compliance with the requirements of the International
Management Code for the Safe Operation of Ships and for Pollution Prevention.
Seller may at its sole option place pollution control personnel on board Buyer's
vessels to observe cargo loading and related operations. Seller's representative
may render advice to Buyer, its representative or the Master (who shall be
deemed to be acting on Buyer's behalf), and may assist them in the avoidance of
any type of pollution; provided, however, that Buyer shall remain fully
responsible for any action taken by it or on its behalf.
ARTICLE 22 LOADING CONDITIONS: DEMURRAGE
-----------------------------
22.1 Berthing of Tankers; Commencement of Laytime.
--------------------------------------------
22.1.1 Subject to the provisions of Articles 22.1.2 and 22.1.3, Seller
shall provide a safe loading point at the Loading Port for each tanker
designated in accordance with
30
the provisions of Article 21, which loading point may be a berth, dock,
anchorage, sea terminal, sea-buoy mooring, submarine loading line or other
place, including alongside lighters, any floating storage and offloading system
or other vessel. In the event that a tanker arrives within its Agreed Laydays,
then laytime shall commence at the earlier of (i) six hours after notice of
readiness is given or (ii) the commencement of loading; provided, however, that
in the event notice of readiness is given within the last two hours in which the
Loading Port is open or during the time the Loading Port is closed, then only
half of the time from the giving of notice to the time when the Loading Port
next opens shall be counted for purposes of (i) above and for purposes of
determining Allowed Laytime.
22.1.2 Seller shall not be obligated to provide a loading point for any
tanker arriving after the last Day of its Agreed Laydays. If such tanker is
permitted to berth, laytime shall commence at the commencement of loading.
Regardless of whether such tanker is permitted to berth, Seller shall in no
event be liable for demurrage, deadfreight or other charges in connection with
the loading thereof.
22.1.3 Seller shall not be obligated to provide any tanker arriving prior
to its Agreed Laydays with a loading point until the first Day of its Agreed
Laydays. Notwithstanding the time at which loading begins, if Seller provides
such tanker with a loading point prior to the first Day of its Agreed Laydays,
laytime shall commence at the earlier of (i) six hours after the Loading Port
opens on the first Day of the Agreed Laydays for such tanker or (ii) the
commencement of loading.
22.2 Shifting Loading Point of Tankers. Seller shall have the right to
shift tankers at the Loading Port from one loading point to another, provided
that all expenses incurred in connection therewith shall be borne by Seller and
all time expended in such shifting of tankers shall count as laytime.
Notwithstanding the provisions of the preceding sentence, the expenses incurred
in connection with a shifting of any tanker which is attributable to one of the
events referred to in Article 22.4 shall be borne by Buyer, the time consumed
during such shifting shall not count as laytime, and Seller shall not be
obligated to provide such tanker with a loading point until a loading point
becomes available.
22.3 Allowed Laytime. The Allowed Laytime for tankers loading up to
500,000 Barrels of Maya shall be thirty-six (36) hours. The Allowed Laytime for
tankers loading more than 500,000 Barrels of Maya shall be the number of hours
calculated as follows:
Step 1: subtract 500,000 from the number of Barrels to be loaded;
Step 2: multiply the amount calculated as provided in Step 1 by
0.0000272;
Step 3: add 36 to the amount calculated as provided in Step 2; and
Step 4: round the amount calculated as provided in Step 3 to the nearest
whole number.
31
Allowed Laytime shall cease upon the disconnection of delivery hoses after the
completion of loading. In the event that Seller has agreed to load a tanker at a
single Loading Port with Maya for both Buyer and one or more other customers of
Seller, then (i) the Allowed Laytime for such loading shall be the Allowed
Laytime applicable to the aggregate amount of Barrels loaded for Buyer and such
other customer or customers and (ii) the time consumed in switching from loading
for Buyer to loading for Seller's other customer or customers, or vice versa,
shall not be counted as used laytime. In the event that an Agreed Lifting
Program provides for loading of Buyer's tanker at two Loading Ports, or Seller
notifies Buyer pursuant to Article 21.1 that loading shall be at two Loading
Ports, the Allowed Laytime shall be the Allowed Laytime applicable to the
aggregate amount of Maya to be loaded.
22.4 Adjustments to Laytime. In the event that the loading of any
tanker is delayed, directly or indirectly, for any of the following reasons,
whether occurring prior to, during, or after the berthing or commencement of
loading of the tanker:
(a) regulations or decisions of Buyer, or of the owner or operator of
the tanker, prohibiting or restricting loading at any time;
(b) lightering at Buyer's request;
(c) delay or suspension in loading due to failure of Buyer to comply
with any provision of the Agreement, including, without
limitation, the failure of Buyer to provide and notify Seller of
any letter of credit pursuant to Article 11.4 or Article 11.5;
(d) more than one stoppage in loading as a result of Buyer's
instructions as to distribution of the Maya in the tanker;
(e) discharge of ballast or slops;
(f) the condition or facilities of the tanker, or any other reason
attributable to or within the reasonable control of Buyer or the
tanker;
(g) regulations of the Loading Port operator, port authorities or the
Government of Mexico or any political subdivision or agency
thereof, including, but not limited to, regulations or decisions
closing the Loading Port, prohibiting night traffic or berth
maneuvering or prohibiting or restricting loading for any reason;
(h) customs or customs clearance procedures, or time required in
order to be granted free pratique;
(i) inspection, gauging and measurement of tanks or valves before,
during and after loading;
32
(j) maneuvering of tanker from anchorage until all fast at the
loading point, beginning with the earlier of pilot on board or
anchor aweigh;
(k) bad weather, rough seas, fires or explosions; or
(l) any of the events listed in Article 16.6 and not specifically
listed above, or any other event of force majeure;
then the amount of time during which the loading of such tanker is so delayed
shall not count as laytime, except that, in the case of (i) above, one half the
amount of time during which the loading of such tanker is so delayed shall not
count as laytime.
22.5 Demurrage. Seller shall pay Buyer demurrage for any hour or
part of an hour of laytime in excess of the Allowed Laytime for the tanker
involved, at a rate equal to (a) in the case of a tanker under time charter, the
lower of (i) the rate determined by multiplying the AFRA for a hypothetical
tanker with a deadweight in metric tons equal to the weight in metric tons of
the Maya loaded times the WORLDSCALE rate for such hypothetical tanker and (ii)
the rate determined by multiplying the AFRA for the deadweight in metric tons of
the tanker times the WORLDSCALE rate for such deadweight, and (b) in the case of
a spot chartered or voyage chartered tanker, the rate specified in the charter
party for such tanker. For all loadings that commence during a particular Month,
the applicable AFRA shall be the one that is determined on the basis of freight
assessments for the period ended on the fifteenth Day of the preceding Month. In
the event that WORLDSCALE or AFRA is interrupted, or its structure changed so as
no longer to represent the relevant conditions under the Agreement, Seller and
Buyer shall consult and agree on another rate for the evaluation of the
demurrage in question. The right of Buyer to demurrage pursuant to this Article
22.5 shall constitute Buyer's exclusive remedy with respect to any failure of
Seller to complete the loading of any tanker within the Allowed Laytime.
22.6 Buyer's Liability for Delay and Damage.
22.6.1 Buyer shall pay Seller at the rate of U.S.$1,000 per hour for
each hour or part thereof that loading is delayed due to any of the reasons
specified in clause (a), (b), (c), (d), (e) (but only to the extent that more
than six hours are expended in discharging ballasts or slops) or (f) of Article
22.4.
22.6.2 Each tanker shall clear berth as soon as loading is completed
and the delivery hoses are disconnected. Buyer shall pay Seller at the rate of
U.S.$1,000 per hour for each hour or part thereof in excess of two hours that
the tanker remains in berth subsequent to completion of loading and
disconnection of the delivery hoses; provided, however, that such delay is
caused by Buyer or the tanker.
22.6.3 In the event that for any reason Buyer's tanker causes damage
to any facilities at the Loading Port, then (i) Buyer shall reimburse Seller for
the cost of repair or replacement of such facilities, (ii) any delay in loading
the tanker as a result of such damage shall not be counted as laytime for such
tanker, and (iii) Buyer shall pay Seller at the rate
33
U.S.$1,000 per hour for each hour or part thereof that any loading point may not
be used as a result of such damage. Should any such damage occur, Buyer shall
post such security for the payments provided in the preceding sentence as Seller
may request, it being understood that Seller may detain the tanker at the
Loading Port until such security shall have been posted.
ARTICLE 23 QUANTITY MEASUREMENTS
---------------------
23.1 Determination of Quantity. The volume of each loading of Maya
shall be determined by an independent inspector selected as provided in Article
21.1.3, whose fees shall be shared equally by the parties. Measuring and gauging
shall be performed in accordance with one of the following measurement systems
in decreasing order of preference, depending on the operational conditions
prevailing at the Loading Port involved. Seller and Buyer or their respective
representatives may witness the taking of the measurements.
(a) Flow meters installed on loading lines: Such meter measurements
shall be taken immediately before, during and after loading. When measurements
are made with positive displacement meters, the meters and associated
measurement testers will be installed, maintained and calibrated according to
the latest revision of API-Manual of Petroleum Measurement Standards ("MPMS"),
Chapter 5.2 "Measurement of liquid hydrocarbons by displacement meters." If
turbine meters are used, gauging will follow the latest revision of API-MPMS,
Chapter 5.3 "Measurement of liquid hydrocarbons by turbine meters" for the
meters and measurement testers.
(b) Shore tanks: The shore tanks shall have been calibrated on a
periodic basis according to the latest revision of API-MPMS, Chapters 2 and 3,
by an independent inspector selected by Seller, who shall have certified the
calibration. Volume measurements shall follow the latest revision of API
procedure STD 2S4S or ASTM 1085, at Seller's choice.
(c) Volume measured on board: Volume measurement on board the vessel
shall be made in accordance with the latest edition of the API-MPMS, Chapter 17
"Marine Measurement," on the basis of at least three measurements for each tank.
The onboard quantity (including free water) measured prior to loading shall be
deducted from the total observed volume measured after loading. Volume
corrections in respect of temperature shall then be effected at 60 (degrees) F
(equivalent to 15.56 (degrees) C) in accordance with ASTM-1250 or API-MPMS,
Chapter 11.1, at Seller's choice, thereby arriving at the gross standard volume.
Such gross standard volume shall then be further corrected by multiplying it by
the current vessel experience factor for the vessel, determined as follows:
Step 1: for at least the last five (5) loading operations for crude oil,
divide (i) the total calculated volume loaded during each such
operation as measured on shore in static shore tanks or by flow
proportional meters in accordance with the API or ASTM procedures
described above by (ii) the corresponding total calculated volume
loaded as measured on board in accordance with such procedures
(it being understood that Seller may require verification of the
volume figures provided by Buyer);
34
Step 2: shore/ship ratios calculated as provided in Step 1 shall be
accepted if they fall within the following ranges: (i) 1.000
(+/-) 0.0050 for tankers having a deadweight of up to 100,000
metric tons, and (ii) 1.000 (+/-) 0.0030 for tankers having a
greater deadweight; and
Step 3: calculate the arithmetic average of the figures produced in Step
1 that have been accepted in Step 2;
the average calculated in Step 3 being the vessel experience factor for the
vessel; provided, however, that (i) for purposes of Step 1 above, the first
voyage after any drydock, voyages before the last drydock which involved a
material change in the vessel tanks, and voyages involving lightering, on-carry
loadings, multiple loadings, or loadings of less than seventy-five percent (75%)
of total capacity, will not be considered, and (ii) if there are less than five
shore/ship ratios that are accepted pursuant to Step 2 above, the vessel
experience factor will be 1.000. S & W, determined in the manner provided in
Article 24, shall then be deducted from the volume determined above in order to
arrive at the volume for purposes of the ▇▇▇▇ of lading and the invoice.
23.2 Volume Corrections for Temperature. Except in the case that
quantity measurements are made pursuant to the provisions of Article 23.1(c), in
which case temperature corrections shall be made in the manner and at the time
specified in that Article, temperature readings shall be taken in accordance
with the methods listed below in decreasing order of preference, depending on
operational conditions prevailing at the Loading Port involved: (i) the average
of the temperatures taken at various times during loading at flow meters; and
(ii) the temperature taken in shore tanks. Temperature corrections at 60/o/ F
(equivalent to 15.56/o/ C) will then be effected for all volume determinations
in accordance with ASTM-1250 or API MPMS, Chapter 11.1, at Seller's choice,
provided that temperature corrections shall not be made in the case that volume
is determined by way of flow meters pursuant to Article 23.1(a) and temperature
compensators at 60/o/ F (equivalent to 15.56/o/ C) are integrated into the meter
system. S & W, determined in the manner provided in Article 24, shall be
deducted from the volume corrected for temperature as provided above in order to
arrive at the volume for purposes of the ▇▇▇▇ of lading and invoice.
23.3 Conclusiveness of Measurements. Quantity and temperature
measurements made by the independent inspector as provided in this Article 23
shall be final and binding on the parties, except in the case of manifest error.
In any event, without prejudice to the right of either party subsequently to
demonstrate manifest error in such measurements, the determination of the
independent inspector shall govern for purposes of the quantity stated in the
▇▇▇▇ of lading and the obligation of Buyer to make payment in accordance with
the provisions of Article 11.
ARTICLE 24 QUALITY
-------
24.1 Determination of Quality. Sampling and testing of the Maya loaded
in each shipment for quality shall be done in accordance with the latest
revision of ASTM procedures D-4057-88 or D-4177, at Seller's choice, and
witnessed by an independent inspector
35
selected as provided in Article 21.13, whose fees shall be shared equally by the
parties. Buyer and Seller or their representatives may witness the taking and
testing of samples. Quality shall be determined by using the methods listed
below in decreasing order of preference, depending on the operational conditions
prevailing at the Loading Port involved: (i) from samples drawn from automatic
samplers installed in the loading lines; (ii) from samples drawn from the
storage shore tanks delivering Maya; or (iii) from a composite sample obtained
in proportional parts from the vessel's tanks. The samples thus drawn shall be
mixed and equally filled in four containers of one Gallon each. Two of such
containers shall be sealed and handed over to the Master of the tanker and two
shall be kept by Seller for ninety (90) Days after the date of the ▇▇▇▇ of
lading.
24.2 Analysis of Samples. The independent inspector shall witness
quality tests for sulfur, salt and ▇▇▇▇ vapor pressure on the samples according
to the latest revision of ASTM or API procedures, at Seller's choice. Gravity
tests on all Maya shall be made in accordance with the latest revision of
API-MPMS, Chapter 9, Section 1 or ASTM procedures D-1298-80, at Seller's choice.
S & W shall be established in each case pursuant to the latest revision of
ASTM-D-4007 or API-MPMS, Chapter 10-3, at Seller's choice, in tests witnessed by
the independent inspector. Quality tests conducted in accordance with the above
provisions shall be final and binding upon the parties, except in the case of
manifest error.
24.3 No Warranties. Seller does not guarantee or warrant the
suitability of the Maya for any purpose whatsoever. Buyer hereby releases Seller
from any and all warranties whatsoever (except for Seller's warranty that the
Maya meets the typical characteristics contained in Annex 3), including, without
limitation, any implied warranties of merchantability or fitness for a
particular purpose.
ARTICLE 25 DELIVERY
--------
25.1 Passing of Title. Delivery of Maya shall be made in bulk to Buyer
F.O.B. the applicable Loading Port to tankers to be provided by Buyer. Delivery
shall be deemed completed when Maya passes the flange connection of the delivery
hose at the tanker's rail. At that point, Seller's responsibility with respect
to the Maya shall cease, and Buyer shall assume all risk of loss of or damage
to, and deterioration or evaporation of, Maya so delivered. Any loss of or
damage to Maya or any property of Seller or of any other Person during loading
which is in any way attributable to the tanker or its officers or crew shall be
borne by Buyer.
25.2 Port and Loading Expenses. All expenses ashore pertaining to the
pumping of Maya from shore tanks to tankers shall be borne by Seller, including,
but not limited to, wharfage, dockage and quay dues at the Loading Port. Seller
shall also pay all export taxes or duties imposed by Mexico or any political
subdivision or taxing authority thereof. All other expenses pertaining to the
loading of any tanker, including, without limitation, all tanker agency fees,
anchorage, tonnage, towage, pilotage, customs, consular, entrance, clearance and
quarantine fees, port dues and all charges and expenses relating to berthing and
unberthing of tankers, shall be borne by Buyer.
25.3 Loading Port Regulations. All laws, rules and regulations now or
hereafter in existence relating to operations at the Loading Ports (including
those referred to in
36
Annex 13), shall apply to all tankers provided by Buyer, including, without
limitation, any regulations relating to (i) the prevention and control of fires
and water pollution, and (ii) lead-free and segregated or clean ballast. Buyer
shall reimburse Seller or its agent for any expenses they may incur as a result
of the noncompliance by any such tanker with any such applicable law, rule or
regulation, including, without limitation, any expenses incurred by Seller or
its agent in connection with the extinguishing of fires, the repair of damage
caused thereby, the cleaning up of water pollution and the payment of any
charges assessed by the Government of Mexico or any political subdivision or
agency thereof.
25.4 Buyer's Knowledge of Loading Port Facilities; Standard
Procedures. Buyer hereby acknowledges that it is fully familiar with the
facilities and conditions at the Loading Ports, including the loading conditions
and procedures and the facilities for the storage and delivery of the Maya.
Annex 13 contains certain information and current requirements relating to the
Loading Ports. The facilities and conditions at the Loading Ports may be changed
at any time. Buyer also acknowledges that standard procedures in effect at the
Loading Ports from time to time relating, inter alia, to quality and quantity
measurements, safety in loading, and inspection of vessel tanks, shall
supplement (but not conflict with) the procedure specified herein. Seller shall
supply Buyer with a copy of such procedures upon Buyer's request.
PART VI: MISCELLANEOUS TERMS
ARTICLE 26 DURATION
--------
Unless previously terminated pursuant to the termination provisions
contained herein, the Agreement shall continue in effect unless and until the
Contract Quantity is reduced to zero pursuant to Article 7.2.
ARTICLE 27 SATISFACTORY DOCUMENTATION
--------------------------
Each party shall deliver to the other, on the date hereof, each of the
following: (i) a list of those individuals authorized to represent such party in
its dealings with the other party; (ii) certificates of the Secretary or other
similar officer of the party certifying as to the incumbency of each officer
executing the Agreement on behalf of the party; and (iii) documentation
evidencing the authority of each officer executing the Agreement on behalf of
the party to act in such capacity. Each party shall at all times keep current
the list described in clause (i) of this Article 27 and promptly furnish to the
other party such other information or documentation concerning the financial and
corporate status of the party and its Affiliates as the other party may from
time to time reasonably request.
ARTICLE 28 CONFIDENTIALITY
---------------
28.1 General Confidentiality Obligation. The parties agree that the
terms of the Agreement and any other information with respect to the business
and operations of the parties related to the Agreement and disclosed by one
party to the other (such terms and information, subject to the exclusions stated
below, the "Confidential Information"), shall be treated
37
confidentially as provided in this Article 28, it being understood that the
disclosure of such Confidential Information would threaten significant economic
harm to the Nondisclosing Party. The obligations of confidentiality under this
Article 28 shall be of a continuing nature and shall survive the assignment or
termination of the Agreement. Subject to Article 28.2 and the additional
provisions of this Article 28.1, Confidential Information shall not be disclosed
by either party or its respective Affiliates (a "Disclosing Party") without the
prior written consent of the other party (the "Nondisclosing Party"). Except as
otherwise provided with respect to Confidential Differential Information, the
obligation hereunder not to disclose Confidential Information shall not apply
to:
(i) information that is publicly known or publicly disclosed
other than by reason of a breach of this Article 28 by the Disclosing
Party;
(ii) the disclosure of Confidential Information that a Disclosing
Party determines in good faith and on the advice of counsel is
required to be disclosed by it or by any of its Affiliates by any
court of law or any law, rule, or regulation, or, if requested by such
agency, to an agency of any government having or asserting
jurisdiction over a Disclosing Party or an Affiliate of such
Disclosing Party and having or asserting authority to require such
disclosure in accordance with that authority, or pursuant to the rules
of any recognized stock exchange or agency established in connection
therewith, provided that the Disclosing Party uses good faith efforts
to assure, to the extent reasonably available in the circumstances,
the confidential treatment of such Confidential Information by the
party to which it is disclosed (including, without limitation, in the
case of the United States Securities and Exchange Commission (the
"Commission"), making requests for confidential treatment). In
connection with the filing of a confidential treatment request with
the Commission, Buyer shall provide Seller with reasonable opportunity
to review and comment upon such confidential treatment request prior
to the submission of such request or the Agreement to the Commission.
In the event that such confidential treatment request is rejected, or
if confidential treatment was granted pursuant to such confidential
treatment request but later challenged, Buyer shall inform and consult
with Seller immediately;
(iii) the disclosure, whether in any press release or otherwise,
of the existence of the Agreement and of the general terms hereof, it
being understood that the terms of Articles 4.4, 5 (other than the
fact that Buyer has certain rights to terminate the Agreement), 8,
10.2, 10.3, 10.4, 11.4, 11.5, 16, 21.1.4, 29.4, 29.5, 29.6 and Part
IV, and of the definitions and Annexes referred to therein and
essential thereto, shall not be so disclosed under this clause (iii);
(iv) the disclosure in the ordinary course of business of
Confidential Information to the Disclosing Party's legal counsel,
accountants, investment bankers, commercial bankers or other
professional consultants, in each case with such protections of
confidentiality as generally apply thereto or are customarily
available by agreement therewith;
38
(v) the disclosure of Confidential Information to investment or
commercial bankers, underwriters, placement agents or other parties
engaged in connection with a securities offering or other financing by
any Disclosing Party or any Affiliate of any Disclosing Party, in any
offering memorandum or prospectus or similar document in connection
with any such offering of securities, and to any securities analyst
involved in research with respect to securities of the Disclosing
Party, in each case with such protections of confidentiality apply
thereto or are customarily available by agreement therewith;
(vi) the disclosure of Confidential Information to the purchasers
or prospective purchasers under any contracts for the sale of the
output of the Project or the further refined products derived from
such output to the extent reasonably necessary for purposes of such
sale, provided that such purchasers or prospective purchasers agree to
hold such Confidential Information under terms of confidentiality
equivalent to this Article 28 and to use such Confidential Information
only in connection with such sale;
(vii) the disclosure of Confidential Information to its
Affiliates, its shareholders, or its shareholders' Affiliates,
provided that such recipient agrees to hold such information or
documents under terms of confidentiality equivalent to this Article
28;
(viii) the disclosure of Confidential Information to any
purchaser or prospective purchaser of the Refinery or of a direct or
indirect interest therein (including, without limitation, an equity
interest in Buyer, ▇▇▇▇▇ R&M or ▇▇▇▇▇ U.S.A., Inc.), provided that
such purchaser or prospective purchaser agrees to hold such
Confidential Information under terms of confidentiality equivalent to
this Article 28;
(ix) the disclosure of Confidential Information to any
governmental authority or agency, to the extent such disclosure
assists Buyer in obtaining any Permits, provided the Disclosing Party
makes such authority or agency aware of the confidential nature of
such Confidential Information and uses good faith efforts to assure,
to the extent reasonably available in the circumstances, the
confidential treatment of such Confidential Information by such
authority or agency;
(x) the disclosure of Confidential Information to any credit
rating agency from whom a rating is sought with respect to any debt or
equity securities of Buyer, ▇▇▇▇▇ U.S.A., Inc. or any successor
thereof, ▇▇▇▇▇ R&M, or any of their respective direct or indirect
wholly-owned subsidiaries or any present or future parent entity
thereof, in each case with such protections of confidentiality as may
generally apply thereto or as may be available by agreement therewith;
(xi) the disclosure of Confidential Information to which the Non-
Disclosing Party consents, which consent shall not be unreasonably
withheld
39
or delayed, it being understood that it shall not be unreasonable for a
Nondisclosing Party to refuse such consent based upon a good faith
determination that the disclosure could jeopardize such Nondisclosing
Party's legitimate business or commercial interests; or
(xii) the disclosure of Confidential Information occurring after the
later of the Day on which the Agreement terminates and the Day which is ten (10)
Years from the date hereof.
28.2 Confidentiality of Differential Information. (a) Except as
hereinafter provided, neither the formula for the Differential set out in Annex
2 nor the U.S.$15.00 amount contained in the definitions of Monthly Shortfall
and Monthly Surplus (such formula and amount, the "Confidential Differential
Information") may be communicated by Buyer or any of its Affiliates to any third
party at any time during the period commencing on the date hereof and ending on
September 1, 1998 (the "Blackout Period") without the prior written consent of
Seller. The foregoing notwithstanding, Buyer shall have the right to disclose
Confidential Differential Information during the Blackout Period without
obtaining the prior written consent of Seller in the following circumstances:
(i) in any of the circumstances set out in clauses (i), (iv), (vii),
(viii) or (x) of Article 28.1;
(ii) where Buyer determines in good faith that such Confidential
Differential Information is required to be disclosed by it or by any of its
Affiliates by any court of law or any law, rule, or regulation, or if
requested by such agency, to an agency of any government having or
asserting jurisdiction over Buyer or an Affiliate thereof and having or
asserting authority to require such disclosure in accordance with that
authority, or pursuant to the rules of any recognized stock exchange or
agency established in connection therewith; provided that (x) such
disclosure is mandatory for such Disclosing Party or such Disclosing Party
is advised in writing by counsel that disclosure is necessary or advisable
under a prudent interpretation of applicable law, (y) such Disclosing Party
gives Seller prompt and timely notice of the impending disclosure, and (z)
to the extent available under the laws, rules or regulations applicable to
the entity to which the disclosure is made, the Disclosing Party uses
reasonable good faith efforts to assure the confidential treatment of such
information by such entity (including, without limitation, in the case of
the Commission, making requests for confidential treatment). In connection
with the filing of any confidential treatment request with a governmental
entity, Buyer shall provide Seller with reasonable opportunity to review
and comment upon any such confidential treatment request prior to the
submission of Confidential Differential Information to any such entity. In
the event that such confidential treatment request is rejected, or if
confidential treatment was granted pursuant to such confidential treatment
request but later challenged, Buyer shall inform and consult with Seller
immediately;
40
(iii) where such disclosure is (x) to the lead underwriters and co-
managers or lead placement agents and co-placement agents engaged in
connection with, or any credit rating agency from whom a rating is sought
with respect to, any debt or equity securities offering by Buyer, ▇▇▇▇▇
U.S.A., Inc., ▇▇▇▇▇ R&M or any of their respective direct or indirect
wholly-owned subsidiaries, provided each such lead underwriters, co-
managers, lead placement agents, co-placement agents or rating agencies
execute confidentiality agreements with Buyer in a customary form with
respect to such Confidential Differential Information, or (y) to one or
more investment banks or securities firms, for use only in connection with
research, analysis or recommendations with respect to any debt or equity
securities of Buyer, ▇▇▇▇▇ U.S.A., Inc., ▇▇▇▇▇ R&M or any of their
respective subsidiaries, provided such investment banks or securities firms
execute confidentiality agreements with Buyer in a customary form with
respect to such Confidential Differential Information. Such lead
underwriters and co-managers or lead placement agents and co-placement
agents may incorporate the Confidential Differential Information into the
financial models and projections used in connection with such securities
offering (including in projections included in any prospectus or offering
memorandum) and may keep such Confidential Differential Information in
their files with respect to their due diligence investigation with respect
to such offering, but may not disclose such Confidential Differential
Information to the other syndicate underwriters or placement agents in
connection with such securities offering during the Blackout Period; or
(iv) to any commercial bank engaged in a financing by any Disclosing
Party or any Affiliate of any Disclosing Party, provided each such
commercial bank executes a confidentiality agreement with Buyer in a
customary form with respect to such Confidential Differential Information.
(b) Nothing contained in this Article 28.2 is intended to include within
the definition of Confidential Differential Information: (i) the fact that a
formula exists for the Differential, the fact that a mechanism exists for
adjusting the price of Maya if the Differential is above or below a set level,
(iii) any annual aggregate value projected to be received in connection with the
Differential, or (iv) any other information related to the Confidential
Differential Information other than the matters expressly included in the
definition thereof.
ARTICLE 29 NO THIRD PARTY BENEFICIARIES; ASSIGNMENT
----------------------------------------
29.1 No Beneficiaries. Nothing in the Agreement is intended or shall be
construed to confer upon or give to any Person any rights as a third party
beneficiary of the Agreement or any part thereof, except as may apply pursuant
to Article 29.6.
29.2 Successors and Assigns. The Agreement shall be binding upon and
inure to the benefit of Buyer and Seller and their respective successors and
permitted assigns.
29.3 General Prohibition on Assignments. Neither Buyer nor Seller may
assign or transfer any of its rights or obligations under the Agreement, except
as expressly
41
permitted in Articles 29.4 and 29.6. For purposes of this Article 29, a merger,
consolidation or conveyance of substantially all of the assets of Buyer or
Seller shall not be deemed an assignment or transfer.
29.4 Permitted Assignments by Seller. Article 29.3 notwithstanding,
Seller may assign all (but not less than all) of its rights and obligations
under the Agreement if all of the following conditions are met: (i) such
assignment is to an Affiliate Seller having the legal right and operational and
financial ability to perform all of Seller's obligations under the Agreement;
(ii) the assignee shall have entered into an assumption agreement, in form and
substance reasonably satisfactory to Buyer, containing provisions whereby the
assignee confirms that it shall be deemed a party to the Agreement and agrees to
be bound by all of its terms and to undertake all of the obligations of Seller
contained in the Agreement, and in which the assignee makes representations and
warranties as to immunity substantially equivalent to those of Seller contained
herein; (iii) Buyer shall have been given thirty (30) Days written notice in
advance of such assignment; (iv) Seller delivers to Buyer on or prior to the
date of such assignment the certificate of a duly authorized officer of Seller
to the effect that each of the conditions set forth in clauses (i), (ii) and
(iii) of this Article 29.4 has been complied with as of the date of such
agreement; (v) the guarantor under the Pemex Performance Guarantee executes and
delivers a confirmation of the Pemex Performance Guarantee, in form and
substance reasonably satisfactory to Buyer, pursuant to which such guarantor
acknowledges and agrees that the Pemex Performance Guarantee remains in full
force and effect notwithstanding such assignment; (vi) Seller shall have
delivered to Buyer an opinion or opinions of counsel reasonably acceptable to
Buyer to the effect that the assumption agreement referred to in clause (ii) and
the guarantee confirmation referred to in Clause (v) have been duly authorized,
executed and delivered and are enforceable in accordance with their respective
terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization or similar laws affecting the rights of creditors generally or by
general principles of equity; and (vii) Seller agrees to reimburse Buyer for all
reasonable and documented out-of-pocket costs and expenses, including, without
limitation, attorneys' fees, incurred by it in connection with such assignment
by Seller.
29.5 Permitted Assignments by Buyer. (a) Seller agrees to waive the
restriction on assignment by Buyer in Article 29.3 with respect to an assignment
of all or any portion of Buyer's rights and obligations under the Agreement if
all of the following conditions are met:
(i) (x) such assignment is to an Affiliate of Buyer which carries out
the Project and owns the Project Assets (it being understood that transfer
of title for security purposes in connection with any sale-leaseback or
synthetic lease transaction shall not be a transfer of ownership for
purposes hereof), (y) such assignment is to a purchaser or transferee of
the Refinery or (z) such assignment is to an entity organized in order to
obtain financing for the Project and which will own the Project Assets;
(ii) Buyer shall have delivered written notice of such assignment to
Seller at least thirty (30) Days prior to such assignment and shall have
delivered to Seller the assignment and assumption agreement pursuant to
which such transfer is to be effected
42
(the "Assignment Agreement") at least ten (10) Days prior to such
assignment becoming effective;
(iii) the assignee shall have entered into the Assignment Agreement,
in form and substance reasonably satisfactory benefit of Seller, such
agreement to contain provisions whereby the assignee confirms that it shall
be deemed a party to the Agreement and agrees to be bound by all of the
terms of, and to undertake all of the obligations of Buyer contained herein
(except such terms and obligations for which the assignor remains solely
liable);
(iv) Buyer shall have delivered to Seller on the date of such
assignment the certificate of an officer of Buyer to the effect that each
of the conditions set forth in clauses (i), (ii) and (iii) of this Article
29.5 has been complied with as of such date;
(v) except in the case of an assignment in connection with the
conveyance or transfer of the Refinery to a transferee having a credit
quality and capacity at least equal to ▇▇▇▇▇ R&M, (x) Buyer shall have
delivered to Seller Compensating Collateral complying with Article 29.5(c)
or (y) if Compensating Collateral is in effect prior to the time of such
assignment, the obliger under the Compensating Collateral documents shall
have executed and delivered a confirmation thereof, in form and substance
reasonably satisfactory to Seller, pursuant to which such party
acknowledges and agrees that the Compensating Collateral documents remain
in full force and effect notwithstanding such assignment;
(vi) Buyer shall have delivered to Seller an opinion or opinions of
counsel reasonably acceptable to Seller that the Assignment Agreement and
the Compensating Collateral documents referred to in clause (v) have been
duly authorized, executed and delivered and are enforceable in accordance
with their respective terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization or similar laws affecting the rights
of creditors generally or by general principles of equity; and
(vii) Buyer agrees to reimburse Seller for all reasonable and
documented out-of-pocket costs and expenses including, without limitation,
attorneys' fees, incurred by Seller in connection with such assignment by
Buyer.
Upon satisfaction of the foregoing conditions, Seller shall execute and deliver
to Buyer a written consent agreement (the "Consent") in form reasonably
satisfactory to Buyer with respect to such assignment whereby the assignor shall
be released from all further liability in connection with the Agreement for and
with respect to the period following the date of such assignment and release,
except with respect to any Compensating Collateral (including, without
limitation, the ▇▇▇▇▇ Performance Undertaking) to which the assignor is a party
and except for liability for breach of the provisions of Article 29.5(b).
(b) Notwithstanding any assignment pursuant to this Article 29.5,
▇▇▇▇▇ R&M shall not permit any Alternative Supply Arrangement to be entered into
at any time during the term of the Agreement or, in the event the Agreement is
terminated pursuant to Article 5.3, at
43
any time during the period of thirty (30) Months commencing on the date of such
termination. In the event of a breach of this Article 29.5(b), Seller shall have
the right to recover from ▇▇▇▇▇ R&M the same U.S.$15,000,000 payment or
Termination Fee, as the case may be, for which Buyer would have been liable in
accordance with Article 5.3 had an Alternative Supply Arrangement been entered
into under the circumstances therein indicated.
(c) The parties agree that in exchange and in full compensation for
the Consent, Buyer shall provide to Seller one of the following forms of
additional collateral for Buyer's obligations hereunder (any such collateral,
"Compensating Collateral"): (i) the ▇▇▇▇▇ Performance Undertaking; (ii) a
Compensating Letter of Credit in an amount equal to the Cash Collateral Amount;
(iii) a first perfected lien on cash or equivalent collateral in an amount equal
to the Cash Collateral Amount; or (iv) such other form of equivalent security
arrangement as may be satisfactory to Seller in its sole discretion. Buyer shall
maintain the Compensating Collateral provided under this Article 29.5(c) in
effect (or shall provide another form of Compensating Collateral and maintain it
in effect) for the period commencing on the date of the Consent and ending sixty
(60) Days after the latest of (x) the date of termination of the Agreement, (y)
the end of the 30th Month after the date of any Abandonment in accordance with
Article 5, or (z) if Seller has commenced an arbitration proceeding pursuant to
Article 31 prior to the date referred to in (x) or (y) above, the date of any
final decision issued pursuant to such arbitral proceeding or any settlement of
the dispute submitted thereto. As used herein, "Compensating Letter of Credit"
shall mean one or more irrevocable and unconditional stand-by letters of credit
issued in favor of and in form reasonably satisfactory to Seller by a bank
having at least U.S.$250,000,000 in assets and the outstanding senior unsecured
debt securities of which are rated not less than A2 by ▇▇▇▇▇'▇ Investors
Service, Inc. and A by Standard & Poor's Ratings Services, and drawable in whole
or in part from time to time (A) upon presentation of a certificate of Seller
stating that Buyer is in breach of the Agreement and has agreed that it is
liable to Seller in an amount equal to or greater than the amount being drawn or
that Seller's liability to Buyer in an amount equal to or greater than the
amount being drawn has been determined in an arbitral award obtained pursuant to
Article 31.2 or (B) within thirty (30) Days prior to expiration of the then
existing Compensating Letter of Credit if not extended or replaced by a new
Compensating Letter of Credit having a term of not less than one Year. As used
herein, "Cash Collateral Amount" shall mean (1) prior to December 31, 1998,
U.S.$15,000,000, (2) during calendar year 1999, U.S.$20,000,000, (3) during
calendar year 2000, U.S.$25,000,000 and (4) during calendar year 2001 and
thereafter during the term of the Agreement, the sum of U.S.$40,000,000 plus any
amount determined in accordance with Article 18(b) and remaining to be applied
to the purchase of Maya under the Agreement (it being understood that for
purposes of this clause (4), the amount of any Compensating Letter of Credit
shall be adjusted on a Quarterly basis within fifteen (15) Days following
receipt of the report referred to in Article 19.3 to reflect such sum);
provided, however, that the cash collateral amount determined as above provided
shall be reduced by the amount of any drawing by Seller on a Compensating Letter
of Credit and any payment to Seller in application of other Compensating
Collateral. The parties further agree that, as an alternative to providing
Compensating Collateral in the form indicated above, Buyer may provide both (aa)
the Compensating Letter of Credit or the first perfected lien on cash or
equivalent collateral referred to above, except that in such case the Cash
Collateral Amount commencing January 1, 2001 shall be U.S.$40,000,000, without
any increase for any amount determined in accordance with Article 18(b), and
(bb) a perfected lien on the Project
44
Assets, subordinated to the liens of the lenders providing financing for the
Project (but not to any other lien consensually granted by any party on the
Project Assets), securing any liability of Buyer to Seller hereunder up to a
maximum amount equal at all times to the amount determined in accordance with
Article 18(b) and remaining to be applied to the purchase of Maya under the
Agreement, provided that the terms of such second lien shall provide that Seller
may not, in its capacity as lienholder, commence a foreclosure, exercise a power
of sale or otherwise enforce such lien against any of the Project Assets unless
the Project lenders have been paid in full (it being understood that nothing
herein shall prevent Seller from exercising its right to bring a claim against
Buyer hereunder or exercising any rights as a judgment creditor in respect of
such claim).
29.6 Assignment by Buyer in Connection with Financing. In addition
to Buyer's right to assign the Agreement pursuant to Article 29.5, Buyer
(including any permitted assignee) may assign the Agreement to a lender,
indenture trustee, security agent or other similar Person in connection with any
financing, capital lease or other transaction the purpose of which is to obtain
funds for the construction of the Project or the ▇▇▇▇▇, or in connection with
the refinancing of any such construction financing (which refinancing need not
be limited to the amount of the original construction financing). Any further
assignment of the Agreement by any such assignee shall comply with the
requirements of Article 29.5; provided, however, that such assignee shall also
be permitted to assign the Agreement to a purchaser of the Project Assets.
Seller agrees, in connection with any such assignment under this Article 29.6,
to enter into such consent and assignment agreement with respect thereto as may
be reasonably required by such assignee, provided that such consent and
assignment agreement in no way alters or amends the respective rights and
obligations of Seller and Buyer as set out in the Agreement. The parties further
agree, to the fullest extent permitted by applicable law, that in the event
Buyer is the subject of a bankruptcy, liquidation or other similar insolvency
proceeding, the Agreement may be assigned in connection with such proceeding
only to an assignee and in such circumstances which meet the requirements of
Article 29.5; provided, however, that such assignee shall also be permitted to
assign the Agreement to a purchaser of the Project Assets.
29.7 Right to Terminate. In the event of any assignment of the
Agreement by Buyer or Seller contrary to this Article 29, the non-assigning
party shall have the right, without prejudice to any other rights or remedies it
may have hereunder or otherwise, to terminate the Agreement effective
immediately upon notice to the assigning party.
ARTICLE 30 RELATIONSHIP OF THE PARTIES
---------------------------
The relationship of the parties established by the Agreement is that
of supplier and purchaser, and nothing in the Agreement shall be construed to
constituted the parties as principal and agent, partners, joint venturers, co-
owners or otherwise as participants in a joint undertaking.
ARTICLE 31 DISPUTE RESOLUTION; GOVERNING LAW
---------------------------------
31.1 Amicable Resolution. In the event of any dispute arising out of
or in connection with the Agreement, Seller or Buyer may notify the other party
of the nature of the dispute and the parties shall, in good faith and using all
reasonable efforts, seek to settle the
45
dispute amicably through negotiation between senior executives. Within twenty
(20) Days after delivery of such notice, such senior executives shall meet at a
mutually acceptable time and place, and thereafter as often as reasonably deemed
necessary, to exchange relevant information and to attempt to resolve the
dispute. All discussions pursuant to this Article 31.1 shall be confidential and
shall be treated as compromise and settlement negotiations for all purposes
including the admission of evidence in any subsequent arbitration. If the matter
has not been resolved within sixty (60) Days of the delivery of notice of the
dispute, or if the parties fail to meet within the twenty-Day period referred to
above, either party may initiate arbitration of the dispute pursuant to the
terms of Article 31.2.
31.2 Settlement by Arbitration. (a) All disputes arising out of or
in connection with the Agreement shall be settled finally by arbitration under
rules applicable to arbitrations of the Rules of Arbitration and Conciliation of
the International Chamber of Commerce (the "ICC Rules") in effect at such time.
The arbitration shall take place in New York City and shall be conducted in the
English language. Subject to the provisions of paragraph (b) below, the arbitral
tribunal shall consist of three arbitrators, one designated by each of the
parties and the third, who shall be the chairman of the tribunal, selected by
agreement of the two designated arbitrators. In the event the two arbitrators
fail to agree on the selection of the chairman, the chairman shall be selected
in accordance with ICC Rules. The substantive law applicable to the subject
matter of the arbitration shall be the law indicated in Article 31.3. Copies of
the request for arbitration and the answer thereto shall be served by a party on
the other party in accordance with Article 37. Subject to paragraph (b) below,
the award of the arbitral tribunal shall be rendered within one hundred eighty
(180) Days from signature or approval of the terms of reference, subject to
extension for good cause only. The award shall be final and binding on the
parties, and may be confirmed or embodied in any order or judgment of any court
of competent jurisdiction.
(b) In the case of any claim for damages in a principal amount of two
hundred fifty thousand U.S. Dollars (U.S.$250,000) or less, (i) the claim shall
be resolved by a sole arbitrator selected in accordance with ICC Rules, (ii) the
terms of reference shall be signed and any hearing of the matter shall be held
within one hundred twenty (120) Days following the later of service of the
answer and transmission of the file to the arbitrator, and (iii) the arbitrator
shall render the award within thirty (30) Days after the hearing or, in the
event a hearing is not held, signature or approval of the terms of reference,
subject extension for good cause only.
31.3 Governing Law. The place of execution, delivery or performance
of the Agreement or of the domicile of the parties notwithstanding, the
Agreement shall be governed by and interpreted in accordance with the laws of
the State of New York, it being understood and agreed that the United Nations
Convention on the International Sale of Goods shall not apply to the Agreement.
31.4 Waiver of Immunity. To the extent Seller or any of its assets
has or in the future may acquire any immunity (whether characterized as
sovereign immunity or otherwise) from any legal proceeding (including, without
limitation, immunity from service of process, immunity from jurisdiction,
immunity from attachment prior to judgment, immunity from attachment in
execution of judgment, and immunity from execution of judgment), Seller (except
46
to the extent of the exception contained in Article 2.2(f)) hereby expressly and
irrevocably waives any such immunity in respect of its obligations under the
Agreement.
ARTICLE 32 LIMITATION OF LIABILITY; LIQUIDATED DAMAGES
-------------------------------------------
(a) Neither party to the Agreement shall be liable for any
consequential or punitive damages of any kind arising out of or in any way
connected with the performance of or failure to perform the Agreement,
including, but not limited to, losses or damages resulting from shutdown of
plants or inability to perform sales or any other contracts arising out of or in
connection with the performance or nonperformance of the Agreement; it being
understood that nothing in this Article 32(a) shall be construed as limiting
either party's right to recover its incidental damages or damages associated
with the mechanism for adjustment to Buyer's payment obligations set out in Part
IV.
(b) It is understood and agreed that each of the U.S. Dollar amounts
specified in Articles 4.4, 5, 8.1 and 22.6 as payable by one party to the other
in the circumstances set out therein represents liquidated damages which do not
exceed reasonable expectations of the actual damages which would be suffered in
such circumstances, and does not constitute, nor is intended to constitute, a
penalty.
ARTICLE 33 NO RECOURSE
-----------
Anything to the contrary herein notwithstanding, (a) no (i) employee,
agent, officer, director, Affiliate, member, shareholder or controlling Person
of either party hereto or (ii) employee, agent, officer, director, Affiliate,
member, shareholder or controlling Person of any of the Persons referred to in
clause (i) (such Persons referred to in (i) and (ii), the "Exculpated Persons"),
shall have any liability for any obligations of either party hereto and (b) no
judgment for payment of money or damage shall lie against any Exculpated Person;
provided, however, that nothing in this Article 33 shall impair the
enforceability of any express guarantee or other written undertaking or
representation of any Exculpated Person. Each party hereto, for itself and any
Person claiming by, through or under such party, hereby waives any right now or
hereafter available under applicable law to impose any liability on any
Exculpated Person in contravention of the terms of this Article 33.
ARTICLE 34 MERGER
------
The Agreement is a complete and exclusive statement of all terms and
conditions relating to the subject matter of the Agreement and supersedes all
prior agreements between Seller and its Affiliates and Buyer and its Affiliates,
written or oral, relating thereto. Nothing herein shall be construed as
affecting Crude Oil Sales Agreement entered into on January 1, 1990 between
Seller and ▇▇▇▇▇ Oil & Refining Corporation, as amended and assigned, which
remains in full force and effect. Buyer affirms that no representations, other
than those expressly set out in Article 2.2 have been made by Seller or relied
on by Buyer in entering into the Agreement.
ARTICLE 35 NO WAIVER; CUMULATIVE REMEDIES
------------------------------
Except as specifically provided in the Agreement, no failure or delay
on the part of any party in exercising any right, power or remedy hereunder and
no course of dealing between the parties hereto shall operate as a waiver by any
party of any such right, power or
47
remedy; nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. Without prejudice to Article 32, and except to the
extent otherwise expressly provided in the Agreement, all rights, powers and
remedies provided hereunder are cumulative and not exclusive of any rights,
powers or remedies provided by law or otherwise. Except as required by the
Agreement, no notice or demand upon any part in any case shall entitle such
party to any other or future notice or demand in similar or other circumstances
or constitute a waiver of the right of any party to take any other or further
action in any such circumstances without notice or demand.
ARTICLE 36 SEVERABILITY OF PROVISIONS
--------------------------
The invalidity, illegality or unenforceability of any one or more of
the provisions of the Agreement shall in no way affect or impair the validity
and enforceability of the remaining provisions thereof.
ARTICLE 37 NOTICES
-------
All notices and other communications given under the Agreement shall
be in writing and shall be effective upon receipt by the addressee as provided
below or, in case of notice by telex or by confirmed facsimile, when sent as
provided below:
To Seller: P.M.I. Comercio Internacional, S.A. de ▇.▇.
▇▇▇▇▇ Ejecutiva - Piso ▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, D.F.
Mexico
Telex: 1773509 PMITME
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇ and (▇▇▇) ▇▇▇-▇▇▇▇
Attn.: Direccion Comercial de Petroleo Crudo
To Buyer: ▇▇▇▇▇ Refining & Marketing, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telex: 628-38123
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attn.: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇
With copy to: Legal Department
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
48
or at such other address, facsimile or telex as may be communicated by either
party to the other party in the manner above provided.
ARTICLE 38 AMENDMENTS AND WAIVERS
----------------------
Any amendment of the Agreement must be made upon the express written
agreement of both parties, and any waiver of any provision of the Agreement by
any party must be upon the express written agreement of such party.
ARTICLE 39 LANGUAGE OF THE AGREEMENT
-------------------------
The language of the Agreement shall be the English language, which
shall control over any Spanish language translation thereof.
ARTICLE 40 RESTRUCTURING OF THE AGREEMENT
------------------------------
In the event that at any time during the period commencing the date
hereof and ending on December 31, 1999, Buyer notifies Seller that, to assist in
procuring financing for the Project, Buyer wishes to restructure this Agreement
by substituting for the Agreement one or more other agreements with ▇▇▇▇▇ R&M
and an Affiliate thereof which carries out the Project and owns the Project
Assets, then the parties shall immediately meet to negotiate in good faith the
implementation of such restructuring; provided, however, that Seller shall not
be obligated to effect any restructuring that is not satisfactory to Seller in
its sole discretion.
49
IN WITNESS WHEREOF, the parties hereto have caused the Agreement to be
executed in Mexico City, Mexico, by their duly authorized officers or
representatives on the date first above written.
P.M.I. COMERICO INTERNACIONAL,
S.A. DE C.V.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ del Rio
------------------------------ --------------------------------------------
Witness ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ del Rio
General Director
Initialized by:
------------------------------
▇▇▇▇▇ REFINING & MARKETING INC.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------ --------------------------------------------
Witness ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Vice President of Refining
Initialized by:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
ANNEXES
ANNEX 1................FORM OF ▇▇▇▇▇ PERFORMANCE UNDERTAKING
ANNEX 2.........................................DIFFERENTIAL
ANNEX 3..................................MAYA.SPECIFICATIONS
ANNEX 4..................FORM OF PEMEX PERFORMANCE GUARANTEE
ANNEX 5..................................PROJECT DESCRIPTION
ANNEX 6........................................REGULAR PRICE
ANNEX 7......................ALTERNATIVE PRICING METHODOLOGY
ANNEX 8.............................FORM OF LETTER OF CREDIT
ANNEX 9...................................SHIPPING DOCUMENTS
ANNEX 10.........................FORM OF LETTER OF INDEMNITY
ANNEX 11...........EXAMPLES OF THE OPERATION OF DIFFERENTIAL
ANNEX 12...........................COMMUNICATION FREQUENCIES
ANNEX 13.......CONDITIONS RELATING TO OFFSHORE INSTALLATIONS
ANNEX 1
FORM OF ▇▇▇▇▇ PERFORMANCE UNDERTAKING
This PERFORMANCE UNDERTAKING, dated as of ______________________,
(herein, as the same may be amended from time to time as permitted hereby, this
"Agreement"), between ▇▇▇▇▇ Refining & Marketing, Inc., a Delaware corporation
("▇▇▇▇▇"), and P.M.I. Comercio Internacional, S.A. de C.V., a Mexican
corporation ("PMI").
WHEREAS, ▇▇▇▇▇ and PMI have entered into the Maya Crude Oil Sales
Agreement dated March , 1998 (the "Maya Agreement");
WHEREAS, capitalized terms used herein without definition shall have
the respective meanings given in the Maya Agreement;
WHEREAS, ▇▇▇▇▇ desires to assign all or a portion [specify] of its
rights and obligations under the Maya Agreement to (the "Transferee"), pursuant
to an Assignment Agreement between ▇▇▇▇▇ and PMI referred to in Article 29.5(a)
of the Maya Agreement (the "Assignment");
WHEREAS, the Transferee will be the entity to implement the Project
and own the Project Assets;
WHEREAS, ▇▇▇▇▇ agrees to remain liable under and with respect to the
Maya Agreement as provided herein and desires to execute and deliver this
Agreement;
WHEREAS, under Article 29.5 of the Maya Agreement, ▇▇▇▇▇ is not
permitted to make the Assignment except in consideration for the execution and
delivery of this Agreement, it being agreed that this Agreement is accepted by
PMI in exchange for its Consent to the Assignment and in consideration thereof;
NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged, ▇▇▇▇▇ agrees as follows:
1. (a) ▇▇▇▇▇ shall remain liable for all obligations of Buyer under
the Maya Agreement notwithstanding the Assignment. ▇▇▇▇▇ shall be entitled to
exercise such rights under the Maya Agreement as are reserved to it pursuant to
the Assignment (including, without limitation, any right set forth therein to
purchase and receive Maya under the terms of the Maya Agreement).
(b) ▇▇▇▇▇'▇ obligations under the Maya Agreement shall remain those
of a primary obliger, as opposed to a surety or a party only secondarily liable;
provided, however, that as a condition precedent to a demand for performance of
an obligation hereunder ▇▇▇▇▇ shall be provided by PMI with written notice of
failure of the Transferee to perform its obligations in accordance with the
terms of the Maya Agreement. It is understood that to the extent that ▇▇▇▇▇
performs any obligation under the Maya Agreement, the Transferee shall not be
considered in breach of such obligation so performed by ▇▇▇▇▇.
(c) ▇▇▇▇▇'▇ obligations under the Maya Agreement shall not be
released, discharged or otherwise affected by the existence of any claim, set-
off, defense or other right that ▇▇▇▇▇, Transferee, or any Affiliate of ▇▇▇▇▇ or
Transferee may have at any time and from time to time against PMI, whether in
connection herewith or with any unrelated transactions; provided that in respect
of any obligation of ▇▇▇▇▇ to PMI hereunder, ▇▇▇▇▇ shall be entitled to assert
any claim, set-off, defense or other right of ▇▇▇▇▇ or of the Transferee under
the Maya Agreement. ▇▇▇▇▇, by virtue of any payment to PMI hereunder, shall be
subrogated to PMI's claim relating thereto against Transferee. ▇▇▇▇▇ agrees that
it shall not exercise any rights of subrogation which
2
it may acquire due to any payment so made until all of the obligations of Buyer
under the Maya Agreement have been performed in full.
(d) ▇▇▇▇▇ hereby unconditionally waives any requirement that, as a
condition precedent to the enforcement of the obligations of ▇▇▇▇▇ hereunder,
Transferee be joined as a party in any proceedings for the enforcement of this
Agreement.
2. No amendment of or supplement to this Agreement, or waiver or
modification of, or consent under, the terms hereof, shall be effective unless
evidenced by an instrument in writing signed by ▇▇▇▇▇ and PMI.
3. The provisions of Article 28, 29.1 through 29.4, 29.7, 30, 31,
32, 33 and 35 through 39 of the Maya Agreement are hereby made applicable to
this Agreement in the same manner as in the Maya Agreement.
4. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns;
provided, however, that ▇▇▇▇▇ may not assign or transfer any of its obligations
under this Agreement, except for an assignment to a purchaser of the Refinery
which has a credit quality and capacity equal to or greater than that of ▇▇▇▇▇.
It shall be a condition to any such permitted assignment that the assignee have
entered into an agreement, in form and substance reasonably satisfactory to PMI,
for the benefit of PMI, whereby the assignee agrees to be bound by all of the
terms, and to undertake all of the obligations, of ▇▇▇▇▇ contained herein, and
that ▇▇▇▇▇ shall have delivered to PMI an opinion of counsel reasonably
acceptable to PMI that such agreement has been duly authorized, executed and
delivered and is enforceable in accordance with its terms, except as may be
limited by applicable bankruptcy, insolvency, reorganization or similar laws
affecting the rights of creditors generally or by general principles of equity.
▇▇▇▇▇ agrees to reimburse PMI for all reasonable and documented out-of-pocket
costs and expenses, including, without limitation, attorneys' fees, incurred by
PMI in connection with such assignment by ▇▇▇▇▇. It is understood that in the
event of a permitted assignment of this Agreement by ▇▇▇▇▇ in accordance with
this Section 4, ▇▇▇▇▇ shall be released of any liability under the Maya
Agreement other than liabilities which may have arisen prior to the date of such
assignment. For purposes of this paragraph 4, a merger, consolidation or sale of
substantially all of the assets of ▇▇▇▇▇ or any of its successors or permitted
assigns shall not be deemed an assignment or transfer.
5. This Agreement shall form an integral part of the Maya Agreement,
and nothing in this Agreement shall be construed to affect the rights and
obligations of all parties under the Maya Agreement, which shall remain in full
force and effect.
6. This Agreement may be executed in several counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
▇▇▇▇▇ REFINING & MARKETING, INC.
By:_________________________________________
Name:
Title:
P.M.I. COMERCIO INTERNACIONAL,
S.A. DE C.V.
3
By:__________________________________________
Name:
Title:
[ ]
By:__________________________________________
Name:
Title:
ANNEX 2
DIFFERENTIAL
A. As used in the Agreement, the term "Differential" means, with
respect to any Month, the amount in U.S. Dollars calculated for such Month by
applying the formula set forth below:
(0.5 * RUL) + No. 2 Oil - (1.5 * No. 6 Oil)
where
(a) "RUL" means the average of the ▇▇▇▇▇'▇ Prices for conventional,
non-RFG 87 octane unleaded gasoline for such Month;
(b) "No. 2 Oil" means the average of the ▇▇▇▇▇'▇ Prices for 0.2%
sulfur No. 2 fuel oil for such Month; and
(c) "No. 6 Oil" means the average of the ▇▇▇▇▇'▇ Prices for 3% sulfur
No. 6 fuel oil for such Month;
and where, for purposes of the above, the term "▇▇▇▇▇'▇ Prices" for any Day
means (i) the low spot prices for conventional, non-RFG 87 octane unleaded
gasoline or 0.2% sulfur No. 2 fuel oil, as the case may be, as quoted for such
Day in ▇▇▇▇▇'▇ Oilgram Price Report (Spot Price Assessments, U.S. Gulf Section,
Pipeline Column) and converted to U.S. Dollars per Barrel, and (ii) in the case
of No. 6 Oil, the low spot prices in U.S. Dollars per Barrel for No. 6 fuel oil
having 3% sulfur content as quoted for such Day in ▇▇▇▇▇'▇ Oilgram U.S.
Marketscan (U.S. Gulf Section, Waterborne Column).
B. In the event that a regular quotation for a particular product or
fuel oil referred to above is suspended or interrupted for any reason in the
relevant publication for less than ten of the Days in any Month, then such Days
for which such quotation is suspended or interrupted shall not be taken into
account in calculating the average of the ▇▇▇▇▇'▇ Prices for such product or
fuel oil, and such average shall be calculated for only the number of Days in
such Month for which quotations were not suspended or interrupted. In the event
that a regular quotation for a particular product or fuel oil referred to above
is suspended or interrupted for any reason in the relevant publication for ten
or more Days in any Month, then the parties shall meet promptly to discuss and
agree upon an appropriate alternative reference price for calculation of the
Differential.
ANNEX 3
MAYA SPECIFICATIONS
The oil to be sold by Seller and purchased by Buyer under the
Agreement shall be crude oil of the "Maya" type, having the typical
characteristics set forth below:
TYPICAL ANALYSIS "MAYA" CRUDE OIL
---------------------------------
/o/API (Gravity) 21.0 - 23.0
VISCOSITY (CST 100/o/F) 82.07
WATER AND SEDIMENT (% Vol.) 0.5
SULFUR (% wtg) 3.4
RVP (pound/in/2/) 6.0
POUR POINT (/o/F) -17
The foregoing typical analysis does not entail for Seller any
responsibility, guarantee or tacit or explicit assurance concerning the
marketability, fitness adaptability of Maya for any purpose or particular use by
Buyer.
ANNEX 4
FORM OF PEMEX PERFORMANCE GUARANTEE
GUARANTEE AGREEMENT, executed as of March 10, 1998 (this
"Guarantee"), by PETROLEOS MEXICANOS, a decentralized public entity of the
Federal Government of the United Mexican States ("Pemex"), for the benefit of
▇▇▇▇▇ Refining & Marketing, Inc., a Delaware corporation (together with any
assignee permitted under the Maya Agreement, as defined below, "Beneficiary"),
pursuant to that certain Maya Crude Oil Sales Agreement, dated as of March 10,
1998 (the "Maya Agreement"), between P.M.I. Comercio Internacional, S.A. de
C.V., an affiliate of Pemex ("PMI"), and Beneficiary. Capitalized terms used but
not defined in this Guarantee shall have the meanings ascribed to them in the
Maya Agreement.
WHEREAS, Beneficiary and PMI have entered into the Maya
Agreement;
WHEREAS, Beneficiary has requested that PMI's obligations under
the Maya Agreement be guaranteed by Pemex; and
WHEREAS, Pemex is willing to guarantee the performance by PMI of
its obligations under the Maya Agreement;
NOW, THEREFORE, in consideration of the foregoing premises, Pemex
hereby agrees as follows:
Section 1. Guarantee of Performance.
------------------------
(a) Pemex hereby acknowledges that it is fully aware of the terms
and conditions of the Maya Agreement and the transactions contemplated
thereby, and Pemex hereby unconditionally and irrevocably guarantees to
Beneficiary the performance by PMI when and as due of all of PMI's
obligations under the Maya Agreement, including, without limitation, the
payment of any damages of Beneficiary arising out of or based upon any
failure of PMI to perform any obligation required of it under the Maya
Agreement (the "Guaranteed Obligations").
(b) Subject to the provisions of Section 2 below, Pemex waives
notice of the acceptance of this Guarantee and of the performance or
nonperformance by PMI, demand for payment from PMI or any other Person and
notice of nonpayment or failure to perform on the part of PMI, diligence,
presentment, protest, dishonor (to the fullest extent permitted by law),
all other demands or notices whatsoever other than a demand or demands for
payment hereunder. The obligations of Pemex shall be absolute and
unconditional and shall remain in full force and effect until satisfaction
of all Guaranteed Obligations under this Section 1 and, without limiting
the generality of the foregoing, shall not be released, discharged or
otherwise affected by the existence of any claim, set-off, defense or other
right that Pemex, PMI, or any Affiliate of PMI may have at any time and
from time to time against Beneficiary or any of its Affiliates, whether in
connection herewith or with any unrelated transactions; provided, however,
that in respect of
2
any amount owed to Beneficiary, Pemex shall be entitled to assert any claim,
set-off, defense or other right of PMI under the Maya Agreement in respect of
any of its obligations hereunder.
(c) Subject to the provisions of Section 2 below, the obligations
of Pemex under this Section 1 shall not be affected by the genuineness,
validity, regularity or enforceability of any of PMI's obligations under the
Maya Agreement, or any amendment, waiver or other modification thereof (except
to the extent of such amendment, waiver or modification), or substitution,
release or exchange of collateral for or other guarantee of any of the
Guaranteed Obligations (except to the extent of such substitution, release or
exchange) without the consent of Pemex, and priority or preference to which any
other obligations of PMI may be entitled over PMI's obligations under the Maya
Agreement or, to the fullest extent permitted by applicable law, any other
circumstance which might otherwise constitute a legal or equitable defense to or
discharge of the obligations of a surety or guarantor, including, without
limitation, any defense arising out of any laws of any jurisdiction which would
either exempt, modify or delay the due or punctual payment and performance of
the obligations of Pemex hereunder.
(d) Without limiting the generality of the foregoing and to the
fullest extent permitted by law, it is agreed, subject to the provisions of
Section 2 below, that the occurrence of any one or more of the following shall
not affect the liability of Pemex under this Section 1: (i) the extension of the
time for or waiver of, at any time or from time to time, without notice to
Pemex, PMI's performance of or compliance with any of its obligations under the
Maya Agreement, (except that such extension or waiver shall be given effect in
determining the obligations of Pemex, hereunder), (ii) any assignment, transfer
or other arrangement by which PMI transfers its right, under the Maya Agreement,
(iii) any merger or consolidation of PMI or Pemex into or with any other Person,
or (iv) and change in the ownership of any shares of capital stock of PMI or any
Affiliate thereof. This Guarantee is an absolute, present and continuing
guarantee and, except as provided in Section 2 hereof, is in no way conditional
or contingent upon any attempt to collect from PMI any unpaid amounts due or
otherwise to enforce performance by PMI.
Section 2. Condition Precedent to Enforcement. The provisions of
Section 1 hereof notwithstanding, it shall be a condition precedent to
Beneficiary's right to enforce this Guarantee that Beneficiary shall first have
obtained an arbitral award or judgment against PMI with respect to the
Guaranteed Obligations sought to be enforced against Pemex hereunder; provided,
however, that the obtaining of such arbitral award or judgment shall not be a
condition precedent to Beneficiary's right to enforce this Guarantee if for any
reason, including, without limitation, the bankruptcy or insolvency of PMI,
Beneficiary is prevented or stayed by applicable law from obtaining such
arbitral award or judgment. Nothing herein is intended to prevent Beneficiary
from joining Pemex in any arbitral proceeding against PMI under the Maya
Agreement for the purpose of establishing PMI's liability and the liability of
Pemex in the event any such arbitral award is not paid in full by PMI.
Section 3. Subrogation. Pemex shall be subrogated to all the
rights of Beneficiary against PMI in respect of any amounts paid by Pemex
pursuant to this Guarantee; provided, however, that Pemex shall not enforce any
right or receive any payment arising out of
3
such subrogation until all amounts then due and payable from PMI in respect of
the Guaranteed Obligations have been paid in full.
Section 4. Return of Payments. Pemex agrees that, if at any time
Beneficiary is required by law to rescind or return all or any part of any
payment made by Pemex or PMI in respect of any of the Guaranteed Obligations for
any reason whatsoever (including, without limitation, the reorganization,
liquidation, dissolution, arrangement or winding-up of, or similar relief with
respect to, PMI), the obligation of Pemex to guarantee such payment shall, to
the extent that such payment is rescinded or returned, be deemed to have
continued in existence, and this Guarantee shall continue to be effective or be
reinstated, as the case may be, as to such Guarantee Obligation, all as though
such payment had not been made.
Section 5. Expenses. Pemex agrees to pay all reasonable and duly
documented fees and out-of-pocket expenses (including the reasonable and duly
documented fees and expenses of the Beneficiary's counsel) incurred in
connection with the enforcement or protection of the rights of Beneficiary under
this Guarantee; provided, however, that Pemex shall not be liable for any
expense incurred in connection with any such enforcement or protection if it is
determined that no payment under this Guarantee is due with respect thereto.
Section 6. Withholding Taxes. All payments hereunder shall be
made free and clear of, and without deduction or withholding for or an account
of, any taxes, levies, fees, imposts, duties, expenses, commissions,
withholdings, assessments or other charges, together with all penalties, fines,
additions to tax and interest thereon assessed or imposed by any Mexican
governmental authority (collectively, "Mexican Taxes"), except to the extent
that Pemex is required by law to make payment subject to any taxes. If any
Mexican Taxes shall be required by law to be deducted or withheld from any
payment to Beneficiary or any other Person entitled thereto hereunder, Pemex
shall pay such additional amounts as may be necessary to ensure that the
Beneficiary or such Person receives a net amount equal to the full amount which
it would have otherwise received had payment not been made subject to
withholding or other deduction.
Section 7. Judgment Currency. Payment obligations of Pemex under
this Guarantee shall be in U.S. Dollars and shall be made in the manner and at
the place specified pursuant to the Maya Agreement, and shall not be discharged
by an amount paid in another currency or in another place, whether pursuant to a
judgment or otherwise, to the extent that the amount so paid on conversion to
U.S. Dollars and transferred to the designated place of payment under normal
banking procedures does not yield the amount of U.S. Dollars due hereunder. If
for the purpose of obtaining judgment in any court it is necessary to convert a
sum due hereunder in U.S. Dollars into another currency (the "Judgment
Currency"), the rate of exchange which shall be applied shall be that at which,
in accordance with normal banking procedures, the party entitled thereto could
purchase U.S. Dollars with the Judgment Currency at New York, New York at or
about 11:00 a.m. (New York City time) on the Business Day immediately preceding
the Day on which final judgment is given. The obligation of Pemex in respect of
any sum due to Beneficiary shall, to the extent permitted by applicable law,
notwithstanding any judgment in a currency other than U.S. Dollars, be
discharged only to the extent that, on the Business Day following receipt of any
sum adjudged to be so due in the Judgment Currency, Beneficiary may
4
in accordance with normal banking procedures purchase U.S. Dollars with the
Judgment Currency. If the amount of U.S. Dollars so purchased is less than the
unpaid amounts then due to Beneficiary, Pemex agrees, as a separate obligation
and notwithstanding any such judgment, to indemnify Beneficiary against the
resulting loss; and if the amount of U.S. Dollars so purchased is greater than
the unpaid amounts then due to Beneficiary agrees promptly to repay to Pemex
such excess.
Section 8. Representations and Warranties. Pemex hereby
represents and warrants to Beneficiary that:
(a) It is a decentralized public entity of the Federal Government
of Mexico endowed with legal status and its own patrimony and has the legal
capacity to enter into this Guarantee in accordance with the Ley Org-nica de
Petroleos Mexicanos y Organismos Subsidiarios, published in the Diario Oficial
de la Federaci-n on July 16, 1992.
(b) No authorization from any Mexican governmental authority is
required under existing applicable laws for the authorization, execution and
performance of this Guarantee by Pemex, or for the legality, validity, binding
effect or enforceability hereof, except for the authorization of Pemex's Board
of Directors, which has been duly obtained and is in full force and effect.
(c) Neither the execution of this Guarantee by Pemex, nor the
performance of its obligations hereunder will (i) conflict with or result in any
breach of, or constitute a violation of or a default under, any applicable law
(including, without limitation, the Ley Organica ▇▇ ▇▇▇▇-▇▇▇▇ Mexicanos y
Organismos Subsidiarios) or any indenture, mortgage, deed of trust, or other
instrument or agreement (including, without limitation, any negative pledge or
similar clause) to which Pemex is a party or by which it may be bound or to
which any of its assets may be subject, or (ii) result in the creation or
imposition of any lien upon any of its assets.
(d) The execution and performance by Pemex of this Guarantee has
been duly authorized by all necessary corporate action. This Guarantee has been
duly executed by Pemex and constitutes the legal, valid and binding obligation
of Pemex, enforceable in accordance with its terms, subject, regarding
enforceability, to the limitations set forth in Section 8(f) below.
(e) No lawsuits or proceedings are pending or, to Pemex's
knowledge, threatened against it which either individually or in the aggregate,
if determined adversely to Pemex, may materially and adversely affect the
ability of Pemex to perform its obligations under this Guarantee.
(f) This Guarantee and the transactions contemplated herein
constitute commercial activities of Pemex, and Pemex is subject to private
commercial law with respect thereto. Pemex is not entitled to any immunity,
whether on grounds of sovereign immunity, act of state or otherwise, from any
legal proceedings in Mexico and, based upon Section 9 below, in the
jurisdictions referred to therein, except that under applicable laws of Mexico,
and in particular in accordance with Article 27 of the Political Constitution of
the United Mexican
5
States (the "Political Constitution"), Articles 1, 2, 3 and 4 (and related
articles) of the Regulatory Law to Article 27 of the Political Constitution
concerning Petroleum Affairs (the "Regulatory Law"), Articles 15, 16 and 19 of
the Regulations to the Regulatory Law, Articles 16 and 60 (and other related
articles) of the General Law on National Patrimony, Articles l, 2, 3 and 4 (and
other related articles) of the Organic Law of Petroleos Mexicanos and Subsidiary
Entities (the "Organic Law") and Article 4 of the Federal Code of Civil
Procedure of the United Mexican States set forth, inter alia, that: (i)
attachment prior to judgment, attachment in aid of execution and execution of a
final judgment may not be ordered by Mexican courts against property of Pemex,
(ii) all domestic petroleum and hydrocarbon resources (whether solid, liquid or
in gas form) are permanently and inalienably vested in the United Mexican States
(and, to that extent, subject to immunity); (iii) (a) the exploration,
exploitation, refining, transportation, storage, distribution and first-hand
sale of crude oil, (b) the exploration, exploitation, production and first-hand
sale of natural gas, as well as the transportation and storage inextricably
linked with such exploitation and production, and (c) the production,
transportation, storage, distribution and first-hand sale of the petroleum
derivatives (including petroleum products) used as basic industrial raw
materials and the derivatives of natural gas which are considered "basic
petrochemicals" (the "Petroleum Industry") are reserved exclusively to the
United Mexican States (and, to that extent, assets related thereto are entitled
to immunity); and (iv) the public entities created and appointed by the Federal
Congress of the United Mexican States to conduct, control, develop and operate
the Petroleum Industry of the United Mexican States are Pemex and the subsidiary
entities (and therefore, entitled to immunity in respect to such exclusive
rights and power).
Section 9. Governing Law; Submission to Jurisdiction; Waivers.
-------------------------------------------------------------
(a) THE PLACE OF EXECUTION AND DELIVERY HEREOF NOTWITHSTANDING, THIS
GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.
(b) Pemex hereby appoints the Consul General of Mexico in The City of New
York and its successors as its authorized agent ("Process Agent") upon which
process may be served in any action by Beneficiary arising out of or based upon
this Guarantee which may be instituted in any federal court sitting in The City
of New York or, absent jurisdiction in such federal courts, in any state court
sitting in The City of New York, and Pemex irrevocably submits to the
jurisdiction of any such court, and the appellate courts therefrom, and to the
jurisdiction of the Federal courts sitting in Mexico City, Mexico, in respect of
any such action, and irrevocably waives any objection which it may now or
hereafter have to the laying of venue of any such action in any such court, and
waives any right to which it may be entitled on account of residence or
domicile. The appointment made by Pemex shall be irrevocable so long as any
obligation of PMI under the Maya Agreement remains to be satisfied or the
satisfaction of which is disputed by Beneficiary under the terms thereof, unless
and until a successor agent shall have been appointed to act as the Process
Agent on behalf of Pemex, and such successor agent shall have accepted such
appointment. Pemex will take any and all action, including the filing of any and
all documents and instruments, that may be necessary to continue such
appointment in full force and effect as aforesaid. Service of process upon the
Process Agent for Pemex at ▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, and
written notice of such service mailed or delivered to Pemex at
6
its address set forth in Section 3 hereof shall be deemed, in every respect,
effective service of process upon Pemex.
(c) To the extent Pemex or any of its assets has or in the future may
acquire any immunity (whether characterized as sovereign immunity or otherwise)
from any proceeding to enforce this Guarantee (including, without limitation,
immunity from service of process, immunity from jurisdiction, immunity from
attachment prior to judgment, immunity from attachment in execution of judgment,
and immunity from execution of judgment), Pemex (except to the extent of the
exception contained in Section 8(f) above) hereby expressly and irrevocably
waives any such immunity.
(d) PEMEX HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES TRIAL BY JURY IN
ANY PROCEEDING BROUGHT TO ENFORCE THIS GUARANTEE.
Section 10. No Implied Waiver. No failure on the part of Beneficiary to
exercise, no delay in exercising, and no course of dealing with respect to, any
right or remedy hereunder will operate as a waiver thereof; nor will any single
or partial exercise of any right or remedy hereunder preclude any other further
exercise of any other right or remedy.
Section 11. Survival of Representations. All representations and warranties
contained herein shall survive the execution and delivery of this Guarantee
regardless of any investigation made by Beneficiary or any other Person.
Section 12. Severable Provisions. To the fullest extent permitted by
applicable law, any provision of this Guarantee which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or of any provision in the Maya Agreement, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 13. Integration. This Guarantee and the Maya Agreement represent
the agreement of Pemex, Beneficiary and their respective Affiliates with respect
to the subject matter hereof, and there are no premises, undertakings,
representations or warranties by Pemex or Beneficiary relative to the subject
matter hereof not expressly set forth or referred to herein or in such other
documents.
Section 14. No Third-Party Beneficiaries. This Guarantee shall be binding
upon the successors and assigns of Pemex and shall inure to the benefit of, and
shall be enforceable by, Beneficiary to the fullest extent permitted by
applicable laws. This Guarantee shall not be deemed to create any right in any
Person except Beneficiary, its successors and assigns and shall not be construed
in any respect to be a contract in whole or in part for the benefit of any other
Person; provided, however, that this Guarantee may be assigned in connection
with any assignment of the Maya Agreement permitted therein.
7
Section 15. Amendments Only in Writing. No amendment of or supplement to
this Guarantee, or waiver or modification of, or consent under, the terms
hereof, shall be effective unless evidenced by an instrument in writing signed
by Pemex and Beneficiary.
Section 16. Notices. Any notice or other communication to Pemex hereunder
must be in writing and may be given by hand, courier, or registered or certified
mail (or a substantially similar form of mail), or by facsimile transmission
addressed as follows:
Petroleos Mexicanos
Avendia Marina Nacional 329
Torre Ejecutiva, Piso 38
Col. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, D.F., Mexico
Attn: Finance Manager
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
Pemex may, by written notice to Beneficiary, change the address to which
notices to it shall be directed. Any notice or other communication hereunder
shall be deemed to have been given when received by the addressee.
Section 17. Counterparts; Language. This Guarantee may be executed in
several counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. This Guarantee is
executed in English and in the event of any conflict between the English version
and any translation hereof, the English version shall control.
8
IN WITNESS WHEREOF, Pemex has executed this Guarantee as of the date
first above written.
PETROLEOS MEXICANOS
By:
------------------------------
Name:
Title:
AGREED AND ACCEPTED:
▇▇▇▇▇ REFINING & MARKETING, INC.
By:
----------------------------------
Name:
Title:
ANNEX 5
PROJECT DESCRIPTION
The description provided herein represents the intended scope of the
Project. The primary purpose of the Project will be to make physical
modifications and additions to the Refinery to enable it to process the Design
Capacity with respect to heavy crude rate and coking rate.
Delayed Coking Unit
-------------------
A new delayed coking unit will be constructed using "off the shelf, designs
and low-pressure technology. The coking unit will be a 4-drum or 6-drum unit,
with size determined by economic return associated with each option. As a
result, new capacity is estimated at 59,000 to 79,000 bpsd. Existing delayed
coking units will be modified as necessary to provide the capability to process
feedstock produced from predominantly Maya crude oil. These modifications
include a significant revamp of the coke drum deheading operation to handle the
production of shot coke. (▇▇▇▇▇ will provide a mere detailed Project description
with respect to delayed coking, including an indication of which of these
options will be pursued, together with its determination of Design Capacity
pursuant to Article 3(d).)
Crude and Vacuum Unit
---------------------
The crude and vacuum unit will be revamped to increase crude processing
capability from 225,000 bpsd to 250,000 bpsd. Modifications to these units will
also be made in consideration of the yield and corrosion effects associated with
a heavier crude slate.
Distillate Hydrotreating Units
------------------------------
The distillate hydrotreating units will be modified to upgrade unfinished
distillate stocks to low sulfur diesel specifications (0.05 wt% sulfur). These
modifications will be made primarily in consideration of the higher level of
sulfur and nitrogen in distillate feedstocks associated with the transition to a
heavier, more sour, crude state.
Gasoil Processing Units
-----------------------
Gasoil processing capability will be expanded by either (1) constructing a
new gasoil hydrotreater and increasing the capacity of the Refinery's existing
FCC unit to its practical maximum, or (2) constructing a new gasoil hydrocracker
with minor debottlenecking of the Refinery's existing FCC unit. Both of these
alternatives will be considered with respect to the additional gasoil production
related to additional crude rate and expanded coking capacity also associated
with the Project. (▇▇▇▇▇ will provide a more detailed Project description with
respect to gasoil processing, including an indication of which of these options
will be pursued, together with its determination of Design Capacity pursuant to
Article 3(d).)
2
Naphtha Hydrotreating Unit
--------------------------
The naphtha hydrotreater unit will be modified to enable it to process
lower quality feedstocks in consideration of the higher levels of sulfur,
nitrogen, non-paraffinic material associated with the transition to a more sour
crude slate and expanded ▇▇▇▇▇ capacities. Design capacity of the naphtha
hydrotreater will not change.
Sulfur Plants
-------------
Additional sulfur recovery required as a result of the transition to a more
sour crude slate will be accomplished with the construction of new sulfur
recovery units, modifications to existing units, or some combination of both.
(▇▇▇▇▇ will provide a more detailed Project description with respect to sulfur
recovery together with its determination of Design Capacity pursuant to Article
3(d).)
Offsites
--------
The Project will include necessary support facilities to allow for
efficient operation of new or modified units. These facilities will include, but
not be limited to, interconnecting piping, electrical distribution, steam
distribution, fuel gas distribution, cooling water requirements, and flaring
facilities.
3
Summary Table
-------------
The following table summarizes the differences between the existing unit
capacities and post-Project unit capacities. The table reflects, to the best of
▇▇▇▇▇'▇ knowledge, the capabilities of each unit.
---------------------------------------------------------------------------------
Capacity (bpsd of feed, unless Current Capacity Post Project Capacity
otherwise noted)
---------------------------------------------------------------------------------
Crude/Vaccum unit 225,000 250,000
▇▇▇▇▇ Units (existing) 37,500 37,500
▇▇▇▇▇ Unit (new) 79,000
FCC Unit 68,000 75,000
Gasoil Hydrotreating Unit 60,000 65,000
Gas Oil Hydrocracking Unit 24,100
HF Alkylation Unit 19,800 19,800
Distillate Hydrotreating Units 92,000 94,900
Naphtha Hydrotreater Unit 50,000 50,000
Reformer Unit 50,000 50,000
Saturate Gas Plant 34,800 34,800
Sulfur Recovery Units (long 425 810
tons per day)
---------------------------------------------------------------------------------
Note: ▇▇▇▇▇ will provide an updated unit capacity summary table together with
its determination of Design Capacity pursuant to Article 3(d).
ANNEX 6
REGULAR PRICE
A. The price of Maya to be sold and purchased hereunder shall be
calculated with respect to each delivery in accordance with the formula set
forth below:
P=0.40(WTS+FO No.6 3%S) + 0.10(LLS + ▇▇▇▇▇ DTD) - U.S.$3.50/1/
Where:
(1) "P" Means the price per barrel in U.S. Dollars, rounded to the
nearest cent;
(2) "WTS" Means the average of the ▇▇▇▇▇'▇ prices for West Texas Sour
Crude Oil for the Five-Day Period;
(3) "LLS" Means the average of the ▇▇▇▇▇'▇ prices for Light Louisiana
Sweet Crude Oil for the Five-Day period;
(4) "▇▇▇▇▇ DTD" Means the average of the ▇▇▇▇▇'▇ prices for ▇▇▇▇▇
Crude Oil for the Five-Day Period;
(5) "FO No.6 3% S" means the average of the ▇▇▇▇▇'▇ prices for Fuel
Oil having 3% Sulfur content for the Five-Day Period;
And where, for purposes of (2) through (5) above:
(a) The "▇▇▇▇▇'▇ Price" for any Day means (i) in the case of West
Texas Sour and Light Louisiana Sweet Crude Oils, the average of the high and low
spot prices for such Crude Oils as quoted for such Day in ▇▇▇▇▇'▇ Crude Oil
Marketwire (Spot Assessment Section); (ii) in the case of ▇▇▇▇▇ Crude Oil, the
average of the high and low spot prices for such Crude Oil as quoted for such
Day in ▇▇▇▇▇'▇ Crude Oil Marketwire (Spot Assessment Section) (The Quotation to
be used shall be the Dated ▇▇▇▇▇ Assessment); (iii) in the case of Fuel Oil No.
6 having 3% Sulfur content, the average of the high and low spot prices for such
Fuel Oil as quoted for such Day in ▇▇▇▇▇'▇ Oilgram U.S. Marketscan (U.S. Gulf
Section, Waterborne Column); and
(b) "Five-Day Period" means, with respect to the price determination
for any delivery, the following Five Days:
(i) the Day on which the ▇▇▇▇ of lading is issued in the case of
tankers the loading of which commences within the Agreed Laydays, or, the middle
Day of the Agreed Laydays in the case of tankers the loading of which commences
before the first Day of the Agreed Laydays and tankers the loading of which
commences after the last Day of the Agreed Laydays; provided, however, that if
any such Day is a Day for which the relevant quotations do not regularly appear
in the publications referred to above, then in determining the Day applicable
pursuant to this clause (i), reference in each case shall be made to the
succeeding Day for which such quotations are regularly published, except that in
the case of Saturdays or Fridays for which such quotations
-------------------
/1/ The pricing constant on the date hereof, which is subject to adjustment by
Seller from time to time.
2
are not so published, reference shall be made to the preceding Day for which
such quotations are regularly published;
(ii) the two Days (other than Saturdays, Sundays or other Days for
which the relevant quotations do not regularly appear in the publications
referred to above) preceding the Day determined pursuant to clause (i) above;
and
(iii) the two Days (other than Saturdays, Sundays or other Days for
which the relevant quotations do not regularly appear in the publications
referred to above) succeeding the Day determined pursuant to clause (i) above.
B. In the event that a regular quotation for a particular crude oil
or fuel oil referred to above is suspended or interrupted for any reason in the
relevant publication for less than three of the Days in any Five-Day Period,
then such Days for which such quotation is suspended or interrupted shall not be
taken into account in calculating the average of the ▇▇▇▇▇'▇ prices for such
Five-Day Period for such crude oil or fuel oil, and such average shall be
calculated for only the number of Days in such Five-Day Period for which
quotations were not suspended or interrupted. In the event that a regular
quotation for a particular crude oil or fuel oil referred to above is suspended
or interrupted for any reason in the relevant publication for more than two of
the Days in any Five-Day Period, then the formula for the pricing of Maya shall
be temporarily adjusted by Seller for the affected delivery or deliveries in
such manner as to fairly reflect the assumptions underlying the formula or
similar assumptions; it being understood that Buyer's obligation to purchase
Maya hereunder shall not be suspended or interrupted pending such adjustment.
ANNEX 7
ALTERNATIVE PRICING METHODOLOGY
In determining pursuant to Article 10.2 the need for and the specifics of
an alternative pricing formula, the methodology to be employed by the parties
shall be the following:
A. Determination of a Marker Crude. The parties shall identify and agree
on a type of crude oil from which a correlation among crude oil and product
prices can be drawn. In so doing, the parties shall identify the crude oil (the
"Marker Crude") which most closely resembles Maya in terms of API gravity and
sulfur content/2/ which has (i) a transparent and discoverable price, (ii)
significant short-term and spot USGC market depth and (iii) available market
data which, in each case, is sufficient in the estimation of the parties to
afford a robust correlation among prices for such Marker Crude, RUL and No. 2
Oil ("Light Products"), and No. 6 Oil ("Heavy Products").
B. Correlation by Regression Analysis. The parties shall determine, by
regression analysis as defined by the following equation/3/ Maya price =
constant + x(Marker Crude) + y(0.5*RUL + No. 2 oil) + z(1.5*No. 6 oil)--the
correlation between the Regular Price of Maya and the prices of the Marker
Crude, Light Products, and Heavy Products over a period not exceeding ten Years
based on data captured Monthly. The parties shall then determine, using the
regression equation above and the actual prices for the Marker Crude, Light
Products and Heavy Products, a Monthly predicted price for Maya (the "Predicted
Price"). Using the Predicted Price, the parties shall arrive at an average
predicted price over the six-Month period referred to in Article 10.2 (the
"Average Predicted Price"). Finally, the parties shall determine whether the
average of the Regular Price over such six-Month period is outside 1.5 standard
deviations (as determined by the regression analysis) of the Average Predicted
Price.
C. Determination Whether Adjustment is Required. If the average of the
Regular Price over the six-Month period is outside 1.5 standard deviations of
the Average Predicted Price for such period, then the price of Maya, effective
as of the beginning of the six-Month period, shall be the Predicted Price. If
the average of the Regular Price over the six-Month period is within 1.5
standard deviations of the Average Predicted Price for such period, then the
price of Maya shall remain the Regular Price.
---------------
/2/ The Marker Crude need not, however, be a heavy sour crude.
/3/ Where x, y, and z represent coefficients predicted by the regression
equation.
ANNEX 8
FORM OF LETTER OF CREDIT
IRREVOCABLE STANDBY LETTER OF CREDIT
------------------------------------
Date:___________________
ISSUING BANK CONFIRMING OUR CABLE OF TODAY
_________________________
_________________________ Credit Number:_________________________
_________________________
Opener's Reference
No.______________________
Dear Sir or Madam:
BY ORDER OF:
[SPC BUYER]
_____________________________
_____________________________
We hereby open in favor of:
P.M.I. COMERCIO INTERNACIONAL S.A.
DE C.V. ("PMI")
MARINA NACIONAL NUM. 329
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇
▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇
our Irrevocable Standby Letter of Credit ("Letter of Credit") for the
account of ▇▇▇▇▇ REFINING & MARKETING, INC. ("Openers") for a sum of UP TO
A MAXIMUM OF US DOLLARS _______________ (________ _______________ (AND
NO/100 US DOLLARS) available by your draft(s) at SIGHT on [ISSUING OR
ADVISING BANK] effective __________ and expiring, subject to force majeure
as set forth below, at [NEW YORK, NEW YORK] [MEXICO CITY, MEXICO] on _____,
________ [62 DAYS] [42 DAYS IF A MEXICO BANK] AFTER LAST DAY OF THE AGREED
LAYDAYS AS SHOWN ON THE AGREED LIFTING PROGRAM].
AVAILABLE BY BENEFICIARY'S DRAFTS DRAWN AT SIGHT ON [ISSUING OR ADVISING
BANK] ACCOMPANIED BY THE FOLLOWING DOCUMENT:
A STATEMENT PURPORTEDLY SIGNED BY AN AUTHORIZED OFFICER OF PMI STATING THAT
(A) "ALTHOUGH THE INVOICE(S) PRESENTED UNDER THIS LETTER OF CREDIT WAS DUE
ACCORDING TO CONTRACT
2
TERMS, AND PMI PRESENTED NORMAL SHIPPING DOCUMENTS AS REQUESTED BY [BUYER]
COVERING THE SHIPMENT OF MAYA CRUDE OIL, [BUYER] FAILED TO MAKE PAYMENT AS
AND WHEN DUE, I.E., 30 (THIRTY) DAYS AFTER ▇▇▇▇ OF LADING DATE, PAYMENT
REMAINS OUTSTANDING AT TIME OF DRAWING, AND FUNDS DRAWN UNDER THIS LETTER
OF CREDIT WILL BE EXCLUSIVELY UTILIZED AS PAYMENT FOR THE ACCOMPANYING
INVOICE(S)," AND (B) "THE AMOUNT BEING DRAWN HEREUNDER IS EQUAL TO THE
AGGREGATE AMOUNT UNPAID OF INVOICES PAST DUE."
SPECIAL CONDITIONS:
PARTIAL AND MULTIPLE DRAWING IS AUTHORIZED.
ALL BANKING CHARGES, INCLUDING NEGOTIATION, TELEX, ETC., ARE FOR THE ACCOUNT OF
OPENERS.
THE AMOUNT AVAILABLE FOR DRAWING UNDER THIS LETTER OF CREDIT WILL BE
AUTOMATICALLY REDUCED IN AN AMOUNT CORRESPONDING TO: (1) THE AMOUNT OF ANY
PAYMENTS MADE OUTSIDE OF THIS CREDIT TO THE BENEFICIARY IF SUCH PAYMENTS ARE
EFFECTED BY THE ISSUING BANK AND MAKE REFERENCE TO THIS CREDIT AND THE
BENEFICIARY'S ORDER NUMBER FOR THE SHIPMENT COVERED BY THIS CREDIT, AND (2) ANY
PAYMENT MADE UNDER THIS LETTER OF CREDIT.
BENEFICIARY'S DRAFTS AND ACCOMPANYING DOCUMENTS MUST BE SUBMITTED TO
_____________ [THE ISSUING OR ADVISING BANK] AT ITS OFFICES IN [MEXICO CITY/NEW
YORK CITY] DURING SUCH BANK'S BUSINESS HOURS. IN THE EVENT PMI SUBMITS ITS
DRAFTS AND ACCOMPANYING DOCUMENTS BEFORE/[MEXICO CITY/NEW YORK CITY] TIME, SUCH
BANK SHALL DELIVER THE CORRESPONDING FUNDS TO PMI NO LATER THAN __________
[MEXICO CITY/NEW YORK CITY] TIME ON THE BUSINESS DAY IMMEDIATELY FOLLOWING THE
BUSINESS DAY ON WHICH SUCH DRAFTS AND ACCOMPANYING DOCUMENTS WERE SUBMITTED,
PROVIDED THAT THE DOCUMENTATION INCLUDED MEETS THE REQUIREMENTS CONTAINED IN
THIS LETTER OF CREDIT. IN THE EVENT PMI SUBMITS ITS DRAFTS AND ACCOMPANYING
DOCUMENTS AFTER __________ [MEXICO CITY/NEW YORK CITY] TIME, SUCH BANK SHALL
DELIVER THE CORRESPONDING FUNDS TO PMI NO LATER THAN [MEXICO CITY/NEW YORK CITY]
TIME ON THE SECOND BUSINESS DAY IMMEDIATELY FOLLOWING THE BUSINESS DAY ON WHICH
SUCH DRAFTS AND ACCOMPANYING DOCUMENTS WERE SUBMITTED, PROVIDED THAT THE
DOCUMENTATION INCLUDED MEETS THE REQUIREMENTS CONTAINED IN THIS LETTER OF
CREDIT.
3
THE EXPIRATION DATE SET FORTH AT THE BEGINNING OF THIS LETTER OF CREDIT SHALL
AUTOMATICALLY BE EXTENDED BY AND TO THE EXTENT OF THE OCCURRENCE OF ANY EVENT OF
FORCE MAJEURE (AS SET FORTH IN THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY
CREDITS (1993 REVISION), INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION NO. 500
("UCP 500"), ARTICLE 17) APPLICABLE TO THE ISSUING OR ADVISING BANK WHICH IN ANY
WAY PREVENTS OR INTERFERES WITH THE RECEIPT OR HONORING OF ANY PAYMENT REQUESTS
HEREUNDER. PMI MAY NOT SUBMIT ANY PAYMENT REQUEST, NOR SHALL THE ISSUING BANK BE
OBLIGATED TO MAKE ANY PAYMENT HEREUNDER, ONCE THIS LETTER OF CREDIT HAS EXPIRED.
THE ISSUING BANK SHALL MAKE ALL PAYMENTS UNDER THIS LETTER OF CREDIT WITH ITS
OWN FUNDS. IF THE PAYMENT REQUEST FAILS TO COMPLY WITH ANY OF THE REQUIREMENTS
ESTABLISHED IN THIS LETTER OF CREDIT, THE ISSUING BANK WILL IMMEDIATELY NOTIFY
PMI AT THE ADDRESS LISTED HEREIN OR AT SUCH OTHER ADDRESS AS PMI HAS SUPPLIED TO
THE ISSUING BANK FOR SUCH PURPOSE. THE ISSUING BANK SHALL EXPLAIN IN SUCH NOTICE
WHY IT REJECTED THE PAYMENT REQUEST AND SHALL RETURN TO PMI THE DOCUMENTS
INCLUDED WITH THE PAYMENT REQUEST. PMI MAY SUBMIT ANOTHER PAYMENT REQUEST THAT
CONFORMS TO THIS LETTER OF CREDIT. ALL PAYMENTS THAT THE ISSUING BANK MAKES TO
PMI HEREUNDER SHALL BE MADE BY WIRE TRANSFER TO THE BANK ACCOUNT PMI HAS
SPECIFIED IN THE CORRESPONDING PAYMENT REQUEST. TO THE EXTENT THAT, AT THE TIME
OF THE RECEIPT OF DRAFTS AND ACCOMPANYING DOCUMENTS, THERE ARE INSUFFICIENT
FUNDS REMAINING TO BE DRAWN UNDER THIS LETTER OF CREDIT TO SATISFY ANY PAYMENT
REQUESTED BY SUCH DRAFTS AND ACCOMPANYING DOCUMENTS IN FULL, SUCH PAYMENT
REQUESTED SHALL BE HONORED TO THE EXTENT FUNDS ARE AVAILABLE.
MATTERS NOT ADDRESSED IN THIS LETTER OF CREDIT SHALL BE GOVERNED BY UCP 500;
PROVIDED, HOWEVER, THAT THE PROVISIONS OF ARTICLE 17 THEREOF ARE SPECIFICALLY
EXCLUDED AND, TO THE EXTENT NOT INCONSISTENT WITH UCP 500, THIS LETTER OF CREDIT
SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PROVISIONS THEREOF. ANY
CONTROVERSY ARISING FROM THIS LETTER OF CREDIT SHALL BE RESOLVED EXCLUSIVELY IN
THE FEDERAL COURTS IN THE STATE OF [NEW YORK]. ANY COMMUNICATION MADE BY PMI
WITH THE ISSUING BANK WITH RESPECT TO THIS LETTER OF CREDIT SHALL BE IN WRITING
AND SENT BY HAND DELIVERY, WITH CONFIRMED RECEIPT, TO THE ADDRESS AT WHICH
PAYMENT REQUEST IS TO BE DELIVERED.
4
THIS TELEX IS THE OPERATIVE INSTRUMENT AND WILL NOT BE FOLLOWED BY A WRITTEN
CONFIRMATION.
KINDLY ADDRESS ALL CORRESPONDENCE REGARDING THIS LETTER OF CREDIT TO THE
ATTENTION OF __________________________, MENTIONING OUR REFERENCE NUMBER AS IT
APPEARS ABOVE. TELEPHONE INQUIRIES CAN BE MADE TO ___________, AT
____________________.
VERY TRULY YOURS,
______________________
AUTHORIZED OFFICIAL
ANNEX 9
SHIPPING DOCUMENTS
DOCUMENTATION REQUIRED: ORIGINAL COPIES
----------------------- -------- ------
1. ▇▇▇▇ OF LADING 3/3 5
Note: For ▇▇▇▇ of lading date purposes, cargo completion time shall be applied
2. CARGO MANIFEST 1 3
3. STATEMENTS OF FACT 1 3
4. NOTICE OF READINESS 1 3
5. MASTER'S RECEIPT OF DOCUMENTS 1 3
6. COMMERCIAL INVOICE (TELEX ACCEPTABLE
BUT ORIGINALS TO BE PROVIDED LATER)
- ISSUED TO _____________
- PRODUCT UNITS, SHOULD BE THE SAME AS
PURCHASE'S ORDER
7. CERTIFICATE OF ORIGIN 1 3
DOCUMENTATION REQUIRED: ORIGINAL COPIES
----------------------- -------- ------
1. DOCUMENTS WILL BE HANDED OVER VSL'S
MASTER FOR HIS USE:
▇▇▇▇ OF LADING 2
CARGO MANIFEST 1
STATEMENT OF FACTS 1
2. DOCUMENTS FOR PAYMENT: ORIGINAL COPIES
-------- ------
COMMERCIAL INVOICE 1 3
(TELEX ACCEPTABLE)
▇▇▇▇ OF LADING 3/3 1
ANNEX 10
FORM OF LETTER OF INDEMNITY
P.M.I. COMERCIO INTERNACIONAL, S.A. DE C.V.
-------------------------------------------
______, ___200__
_____________________________
Attn:________________________
Re: Payment for cargo without producing the relevant bills of lading.
M/T ___________, PMI Re:________________________________________
LETTER OF INDEMNITY
-------------------
Dear sirs:
Goods:___________barrels of Maya crude oil loaded in the M/T________.
The above goods were shipped on the above vessel by P.M.I. Comercio
International, S.A. de C.V. ("PMI") at (name the port and date of loading) and
consigned to the order of______("Buyer") but the relevant bills of lading will
not be delivered to Buyer before payment due date.
Due to the above, we hereby request you to make payment for such goods to
PMI without the presentation of the original bills of lading.
In consideration of your complying with our above request we hereby agree
as follows:
1. To indemnify you from and against, and to hold you harmless in respect
of, any and all liability, loss or damage of whatsoever nature which you sustain
by reason of making payment for such goods to the order of PMI in accordance
with our request.
2. In the event of any proceeding being commenced against you in
connection with such payment, to provide you from time to time with sufficient
funds to defend the same.
3. The liability under this indemnity shall expire one Year after the date
hereof, or when the original bills of lading are delivered to you, whichever
occurs first.
ANNEX 11
EXAMPLES OF THE OPERATION OF THE DIFFERENTIAL
EXAMPLE 1
All Figures in US$ Millions Unless Otherwise Noted
Assumptions
LIBOR 9%
----------------------------------------------------------------------------------------------------------------------
DIFFERENTIAL GUARANTEE ELEMENT Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 5
----------------------------------------------------------------------------------------------------------------------
A Quarterly Shortfall 0.00 0.00 75.00 0.00 50.00
B Quarterly Surplus 20.00 40.00 0.00 10.00 0.00
C Aggregate of Quarterly shortfalls for prior Quarters 0.00 0.00 0.00 75.00 75.00
D Aggregate of Quarterly Surpluses for prior Quarters 0.00 20.00 60.00 60.00 70.00
E Aggregate of 17(a) credits for prior Quarters 0.00 0.00 0.00 15.00 15.00
F Aggregate of 17(a) credits and Credit Interest for prior quarters 0.00 0.00 0.00 15.00 15.38
G Aggregate of 18(a) premiums for prior quarters 0.00 0.00 0.00 0.00 10.00
H Credit Interest for Quarter 0.00 0.00 0.00 0.38 0.13
I Aggregate Credit Interest 0.00 0.00 0.00 0.38 0.51
J Aggregate of Quarterly Shortfalls and Credit Interest 0.00 0.00 75.00 75.38 125.51
K Aggregate of Quarterly Surpluses for prior Quarters minus Aggregate 0.00 20.00 60.00 0.00 0.00
of Quarterly Shortfalls and Credit Interest for prior Quarters
L Aggregate of Quarterly Shortfalls and Credit Interest minus 0.00 0.00 15.00 15.38 55.51
Aggregate of Quarterly Surpluses for prior Quarters
M 17(a) credit 0.00 0.00 15.00 0.00 50.00
N 17(b) sum 0.00 0.00 15.00 0.00 50.00
O 18(b) sum (second sentence) 0.00 0.00 0.00 0.00 0.00
P Credit applied during succeeding Quarter 0.00 0.00 15.00 0.00 30.00
Q Credit Carryforwards (current Quarter) 0.00 0.00 0.00 0.00 0.00
R Credit Carryforwards (succeeding Quarter) 0.00 0.00 0.00 0.00 20.00
S 18(a) premium 0.00 0.00 0.00 10.00 0.00
T 18(b) sum 0.00 0.00 0.00 10.00 0.00
U 17(b) (second sentence) 0.00 0.00 0.00 0.00 0.00
V Premium applied during succeeding Quarter 0.00 0.00 0.00 10.00 0.00
W Premium Carryforwards (current Quarter) 0.00 0.00 0.00 0.00 0.00
X Premium Carryforwards (succeeding Quarter) 0.00 0.00 0.00 0.00 0.00
----------------------------------------------------------------------------------------------------------------------
EXAMPLE 2
All Figures in US$ Millions Unless Otherwise Noted
Assumptions
LIBOR 9%
DIFFERENTIAL GUARANTEE ELEMENT Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 5
----------------------------------------------------------------------------------------------------------------------
A Quarterly Shortfall 10.00 20.00 0.00 0.00 50.00
B Quarterly Surplus 0.00 0.00 75.00 10.00 0.00
C Aggregate of Quarterly shortfalls for prior Quarters 0.00 10.00 30.00 30.00 30.00
D Aggregate of Quarterly Surpluses for prior Quarters 0.00 0.00 0.00 75.00 85.00
E Aggregate of 17(a) credits for prior Quarters 0.00 10.00 30.00 30.00 30.00
F Aggregate of 17(a) credits and Credit Interest for prior quarters 0.00 10.00 30.25 31.01 31.01
G Aggregate of 18(a) premiums for prior quarters 0.00 0.00 0.00 31.01 31.01
H Credit Interest for Quarter 0.00 .25 .76 0.00 0.00
I Aggregate Credit Interest 0.00 .25 1.01 1.01 1.01
J Aggregate of Quarterly Shortfalls and Credit Interest 10.00 30.25 31.01 31.01 81.01
K Aggregate of Quarterly Surpluses for prior Quarters minus 0.00 0.00 0.00 43.99 53.99
Aggregate of Quarterly Shortfalls and Credit Interest for
prior Quarters
L Aggregate of Quarterly Shortfalls and Credit Interest minus 10.00 30.25 31.01 0.00 0.00
Aggregate of Quarterly Surpluses for prior Quarters
M 17(a) credit 10.00 20.00 0.00 0.00 0.00
N 17(b) sum 10.00 20.00 0.00 0.00 0.00
O 18(b) sum (second sentence) 0.00 0.00 0.00 0.00 0.00
P Credit applied during succeeding Quarter 10.00 20.00 0.00 0.00 0.00
Q Credit Carryforwards (current Quarter) 0.00 0.00 0.00 0.00 0.00
R Credit Carryforwards (succeeding Quarter) 0.00 0.00 0.00 0.00 0.00
S 18(a) premium 0.00 0.00 31.01 0.00 0.00
T 18(b) sum 0.00 0.00 31.01 11.28 0.00
U 17(b) (second sentence) 0.00 0.00 0.00 0.00 0.00
V Premium applied during succeeding Quarter 0.00 0.00 20.00 11.28 0.00
W Premium Carryforwards (current Quarter) 0.00 0.00 0.00 11.28 0.00
X Premium Carryforwards (succeeding Quarter) 0.00 0.00 11.01 0.00 0.00
----------------------------------------------------------------------------------------------------------------------
EXAMPLE 3
All Figures in US$ Millions Unless Otherwise Noted
Assumptions
LIBOR 9%
DIFFERENTIAL GUARANTEE ELEMENT Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 5
-----------------------------------------------------------------------------------------------------------------------
A Quarterly Shortfall 25.00 65.00 0.00 40.00 0.00
B Quarterly Surplus 0.00 0.00 50.00 0.00 50.00
C Aggregate of Quarterly shortfalls for prior Quarters 0.00 25.00 90.00 90.00 130.00
D Aggregate of Quarterly Surpluses for prior Quarters 0.00 0.00 0.00 50.00 50.00
E Aggregate of 17(a) credits for prior Quarters 0.00 25.00 90.00 90.00 130.00
F Aggregate of 17(a) credits and Credit Interest for prior quarters 0.00 25.00 90.63 92.89 133.96
G Aggregate of 18(a) premiums for prior quarters 0.00 0.00 0.00 50.00 50.00
H Credit Interest for Quarter 0.00 0.63 2.27 1.07 2.10
I Aggregate Credit Interest 0.00 0.63 2.89 3.96 6.06
J Aggregate of Quarterly Shortfalls and Credit Interest 25.00 90.63 92.89 133.96 136.06
K Aggregate of Quarterly Surpluses for prior Quarters minus Aggregate 0.00 0.00 0.00 0.00 0.00
of Quarterly Shortfalls and Credit Interest for prior Quarters
L Aggregate of Quarterly Shortfalls and Credit Interest minus 25.00 90.63 92.89 83.96 86.06
Aggregate of Quarterly Surpluses for prior Quarters
M 17(a) credit 25.00 65.00 0.00 40.00 0.00
N 17(b) sum 25.00 65.00 0.00 40.00 0.00
O 18(b) sum (second sentence) 0.00 0.00 0.00 0.00 0.00
P Credit applied during succeeding Quarter 25.00 30.00 0.00 30.00 0.00
Q Credit Carryforwards (current Quarter) 0.00 0.00 35.88 0.00 10.25
R Credit Carryforwards (succeeding Quarter) 0.00 35.00 0.00 10.00 0.00
S 18(a) premium 0.00 0.00 0.00 0.00 50.00
T 18(b) sum 0.00 0.00 14.13 0.00 39.75
U 17(b) (second sentence) 0.00 0.00 0.00 0.00 0.00
V Premium applied during succeeding Quarter 0.00 0.00 14.13 0.00 20.00
W Premium Carryforwards (current Quarter) 0.00 0.00 0.00 0.00 0.00
X Premium Carryforwards (succeeding Quarter) 0.00 0.00 0.00 0.00 19.75
-----------------------------------------------------------------------------------------------------------------------
EXAMPLE 4
All Figures in US$ Millions Unless Otherwise Noted
Assumptions
LIBOR 9%
DIFFERENTIAL GUARANTEE ELEMENT Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 5
---------------------------------------------------------------------------------------------------------------------
A Quarterly Shortfall 0.00 0.00 25.00 0.00 50.00
B Quarterly Surplus 20.00 40.00 0.00 10.00 0.00
C Aggregate of Quarterly shortfalls for prior Quarters 0.00 0.00 0.00 25.00 25.00
D Aggregate of Quarterly Surpluses for prior Quarters 0.00 20.00 60.00 60.00 70.00
E Aggregate of 17(a) credits for prior Quarters 0.00 0.00 0.00 0.00 0.00
F Aggregate of 17(a) credits and Credit Interest for prior quarters 0.00 0.00 0.00 0.00 0.00
G Aggregate of 18(a) premiums for prior quarters 0.00 0.00 0.00 0.00 0.00
H Credit Interest for Quarter 0.00 0.00 0.00 0.00 0.00
I Aggregate Credit Interest 0.00 0.00 0.00 0.00 0.00
J Aggregate of Quarterly Shortfalls and Credit Interest 0.00 0.00 25.00 25.00 75.00
K Aggregate of Quarterly Surpluses for prior Quarters minus Aggregate 0.00 20.00 60.00 35.00 45.00
of Quarterly Shortfalls and Credit Interest for prior Quarters
L Aggregate of Quarterly Shortfalls and Credit Interest minus 0.00 0.00 0.00 0.00 0.00
Aggregate of Quarterly Surpluses for prior Quarters
M 17(a) credit 0.00 0.00 0.00 0.00 5.00
N 17(b) sum 0.00 0.00 0.00 0.00 5.00
O 18(b) sum (second sentence) 0.00 0.00 0.00 0.00 0.00
P Credit applied during succeeding Quarter 0.00 0.00 0.00 0.00 5.00
Q Credit Carryforwards (current Quarter) 0.00 0.00 0.00 0.00 0.00
R Credit Carryforwards (succeeding Quarter) 0.00 0.00 0.00 0.00 0.00
S 18(a) premium 0.00 0.00 0.00 0.00 0.00
T 18(b) sum 0.00 0.00 0.00 0.00 0.00
U 17(b) (second sentence) 0.00 0.00 0.00 0.00 0.00
V Premium applied during succeeding Quarter 0.00 0.00 0.00 0.00 0.00
W Premium Carryforwards (current Quarter) 0.00 0.00 0.00 0.00 0.00
X Premium Carryforwards (succeeding Quarter) 0.00 0.00 0.00 0.00 0.00
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EXAMPLE 5
All Figures in US$ Millions Unless Otherwise Noted
Assumptions
LIBOR 9%
DIFFERENTIAL GUARANTEE ELEMENT Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 5
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A Quarterly Shortfall 0.00 65.00 0.00 100.00 0.00
B Quarterly Surplus 30.00 0.00 150.00 0.00 100.00
C Aggregate of Quarterly shortfalls for prior Quarters 0.00 0.00 65.00 65.00 165.00
D Aggregate of Quarterly Surpluses for prior Quarters 0.00 30.00 30.00 180.00 180.00
E Aggregate of 17(a) credits for prior Quarters 0.00 0.00 35.00 35.00 35.00
F Aggregate of 17(a) credits and Credit Interest for prior quarters 0.00 0.00 35.00 35.88 35.88
G Aggregate of 18(a) premiums for prior quarters 0.00 0.00 0.00 35.88 35.88
H Credit Interest for Quarter 0.00 0.00 0.88 0.00 0.00
I Aggregate Credit Interest 0.00 0.00 0.88 0.88 0.88
J Aggregate of Quarterly Shortfalls and Credit Interest 0.00 65.00 65.88 165.88 165.88
K Aggregate of Quarterly Surpluses for prior Quarters minus Aggregate 0.00 30.00 0.00 114.13 14.13
of Quarterly Shortfalls and Credit Interest for prior Quarters
L Aggregate of Quarterly Shortfalls and Credit Interest minus 0.00 35.00 35.88 0.00 0.00
Aggregate of Quarterly Surpluses for prior Quarters
M 17(a) credit 0.00 35.00 0.00 0.00 0.00
N 17(b) sum 0.00 35.00 0.00 0.00 0.00
O 18(b) sum (second sentence) 0.00 0.00 0.00 0.00 0.00
P Credit applied during succeeding Quarter 0.00 30.00 0.00 0.00 0.00
Q Credit Carryforwards (current Quarter) 0.00 0.00 5.13 0.00 0.00
R Credit Carryforwards (succeeding Quarter) 0.00 5.00 0.00 0.00 0.00
S 18(a) premium 0.00 0.00 35.88 0.00 0.00
T 18(b) sum 0.00 0.00 30.75 0.00 0.00
U 17(b) (second sentence) 0.00 0.00 0.00 11.02 0.00
V Premium applied during succeeding Quarter 0.00 0.00 20.00 11.02 0.00
W Premium Carryforwards (current Quarter) 0.00 0.00 0.00 11.02 0.00
X Premium Carryforwards (succeeding Quarter) 0.00 0.00 10.75 0.00 0.00
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