Offtake Agreement

AMENDED AND RESTATED SUPPLY AND OFFTAKE AGREEMENT Dated as of October 7, 2014 Among PHILADELPHIA ENERGY SOLUTIONS REFINING AND MARKETING LLC, as PESRM and MERRILL LYNCH COMMODITIES, INC., as MLC and THE OTHER TRANSACTION PARTIES HERETO


Exhibit 10.5

 

SPECIFIC TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL HAS BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH TWO ASTERISKS (**).

 

EXECUTION VERSION

 

AMENDED AND RESTATED SUPPLY AND OFFTAKE AGREEMENT

dated as of October 7, 2014

 

among

 

PHILADELPHIA ENERGY SOLUTIONS REFINING AND MARKETING LLC,

as PESRM

 

and

 

MERRILL LYNCH COMMODITIES, INC.,

as MLC

 

and

 

THE OTHER TRANSACTION PARTIES HERETO

 



 

TABLE OF CONTENTS

 

Section

 

 

Page

 

 

 

ARTICLE I.

 

 

 

DEFINED TERMS; PRINCIPLES OF CONSTRUCTION

 

 

Section 1.01

Defined Terms

2

 

 

 

Section 1.02

Principles of Construction

38

 

 

 

Section 1.03

Accounting Terms; GAAP

39

 

 

 

Section 1.04

Single Agreement

39

 

 

 

Section 1.05

Inconsistency

39

 

 

 

Section 1.06

Additional Defined Terms

39

 

 

 

ARTICLE II.

 

TERM OF AGREEMENT; CONDITIONS TO THE EFFECTIVE DATE

 

 

 

Section 2.01

Term of Agreement

41

 

 

 

Section 2.02

PESRM Conditions to the Effective Date

41

 

 

 

Section 2.03

MLC Conditions to the Effective Date

46

 

 

 

ARTICLE III.

 

 

 

PURCHASE, SALE AND DELIVERY OF

CRUDE OIL

 

 

 

Section 3.01

Supply by MLC of Crude Oil Requirements

46

 

 

 

Section 3.02

Conditions to Crude Oil Supply Obligation

47

 

 

 

Section 3.03

[Reserved]

47

 

 

 

Section 3.04

Crude Oil Initial Sales

47

 

 

 

Section 3.05

Daily Actual Production Books

47

 

 

 

Section 3.06

Financial Report

48

 

 

 

Section 3.07

[Reserved]

48

 

 

 

Section 3.08

Certain Additional MLC Reports

48

 

 

 

Section 3.09

Crude Oil Sourcing Protocols

48

 

 

 

Section 3.10

CO Transactions

52

 

 

 

Section 3.11

Daily Trades Done To Date Report

52

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

i



 

Section 3.12

Crude Oil Title and Risk of Loss

52

 

 

 

Section 3.13

Crude Oil Good and Marketable Title

52

 

 

 

Section 3.14

CRUDE OIL NO WARRANTY OF MERCHANTABILITY

52

 

 

 

Section 3.15

Crude Oil Payment Responsibility and Invoicing

53

 

 

 

Section 3.16

Daily Actual Production Book; Further Assurances in Respect of On-Premise Infrastructure

53

 

 

 

Section 3.17

PESRM-MLC CO Secured Prepay Transactions; International Transactions

53

 

 

 

Section 3.18

[Reserved]

54

 

 

 

Section 3.19

First Purchaser Requirements

54

 

 

 

ARTICLE IV.

 

 

 

PURCHASE, SALE AND DELIVERY OF

REFINED PRODUCTS

 

 

 

Section 4.01

Supply by PESRM of Refined Products Produced by the Refinery

55

 

 

 

Section 4.02

Conditions to Refined Product Purchase Obligation

55

 

 

 

Section 4.03

Reserved

55

 

 

 

Section 4.04

Third Party Reports

55

 

 

 

Section 4.05

RP Transactions and Certain RP Sales Contracts

56

 

 

 

Section 4.06

Refined Product Title

56

 

 

 

Section 4.07

REFINED PRODUCT - NO WARRANTY OF MERCHANTABILITY

56

 

 

 

Section 4.08

[Reserved]

56

 

 

 

Section 4.09

Refined Product Sales Protocols

56

 

 

 

Section 4.10

Prepayments

59

 

 

 

Section 4.11

RP Payment Responsibility and Invoicing

60

 

 

 

Section 4.12

PESRM-MLC RP Secured Prepay Transactions; International Transactions

60

 

 

 

Section 4.13

Initial RP Purchases

61

 

 

 

Section 4.14

Butane Sale Transactions

61

 

 

 

Section 4.15

Off-Spec Product

62

 

 

 

Section 4.16

PESRM as Obligated Party

62

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

ii



 

ARTICLE V.

 

 

 

PAYMENTS AND INVOICING

 

 

 

Section 5.01

Daily Payment

62

 

 

 

Section 5.02

Monthly True-Up

65

 

 

 

Section 5.03

Auto Bin True-Ups

67

 

 

 

Section 5.04

Disputed Invoices

67

 

 

 

Section 5.05

Payment Netting

68

 

 

 

Section 5.06

Payment Convention

68

 

 

 

Section 5.07

Tax Status of the Parties

68

 

 

 

ARTICLE VI.

 

 

 

DOWNGRADE TERMINATION EVENT,

ACKNOWLEDGEMENT AND OTHER MATTERS

 

 

 

Section 6.01

Downgrade and Cost of Assurance Trigger Event

68

 

 

 

Section 6.02

Termination at Expiration of the Term

69

 

 

 

Section 6.03

Unexcused MLC Failure to Deliver or Accept

70

 

 

 

Section 6.04

Semi-Annual Inspections

71

 

 

 

Section 6.05

Required Infrastructure

72

 

 

 

Section 6.06

PESRM-MLC Secured Prepay Transactions

72

 

 

 

Section 6.07

Accounting Treatment

73

 

 

 

Section 6.08

[Reserved]

73

 

 

 

Section 6.09

Change in Law

73

 

 

 

Section 6.10

PESRM Acknowledgement

74

 

 

 

Section 6.11

Inventory Volumes

74

 

 

 

Section 6.12

[Reserved]

74

 

 

 

Section 6.13

Procedures for Resolving Claims Against Third Parties

74

 

 

 

Section 6.14

Operational Imbalances

75

 

 

 

Section 6.15

PESRM/PESIC Failure to Perform

75

 

 

 

Section 6.16

Foreign Trade Zone Operator; Imports and Exports

76

 

 

 

Section 6.17

MLC Guaranty

76

 

 

 

Section 6.18

Demurrage Cost Invoicing

76

 

 

 

Section 6.19

Inventory, Sale and Receipt Data Reconciliation

76

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

iii



 

Section 6.20

Anti-Corruption Laws

77

 

 

 

Section 6.21

[Reserved]

78

 

 

 

Section 6.22

Transmix

78

 

 

 

Section 6.23

[Reserved].

78

 

 

 

Section 6.24

Aggregate Liability Limitations

78

 

 

 

Section 6.25

[**] No Title to Hydrocarbons

79

 

 

 

ARTICLE VII.

 

 

 

INDEMNITIES

 

 

 

Section 7.01

Indemnities

79

 

 

 

ARTICLE VIII.

 

 

 

REPRESENTATIONS AND WARRANTIES OF THE TRANSACTION PARTIES

 

 

 

Section 8.01

Organization; Powers

87

 

 

 

Section 8.02

Authorization; Enforceability

87

 

 

 

Section 8.03

No Conflicts; Material Contracts

87

 

 

 

Section 8.04

Financial Statements; Projections

88

 

 

 

Section 8.05

Properties

88

 

 

 

Section 8.06

Intellectual Property

89

 

 

 

Section 8.07

Equity Interests and Subsidiaries

89

 

 

 

Section 8.08

Litigation; Compliance with Laws; Permits; and Agreements

89

 

 

 

Section 8.09

[Reserved]

90

 

 

 

Section 8.10

[Reserved]

90

 

 

 

Section 8.11

Investment Company Act

90

 

 

 

Section 8.12

[Reserved]

90

 

 

 

Section 8.13

Taxes

90

 

 

 

Section 8.14

No Material Misstatements

90

 

 

 

Section 8.15

Labor Matters

91

 

 

 

Section 8.16

Solvency

91

 

 

 

Section 8.17

Employee Benefit Plans

91

 

 

 

Section 8.18

Environmental Matters

92

 

 

 

Section 8.19

Insurance

94

 

 

 

Section 8.20

Security Documents

94

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

iv



 

Section 8.21

Anti-Terrorism Laws

95

 

 

 

Section 8.22

Location of Hydrocarbon Inventory

96

 

 

 

Section 8.23

[Reserved]

96

 

 

 

Section 8.24

Affiliate Transactions

96

 

 

 

Section 8.25

Common Enterprise

96

 

 

 

Section 8.26

Certain Additional Representations

97

 

 

 

ARTICLE IX.

 

 

 

REPRESENTATIONS AND WARRANTIES OF MLC

 

 

 

Section 9.01

Organization; Powers

98

 

 

 

Section 9.02

Authorization; Enforceability

98

 

 

 

Section 9.03

No Conflicts

98

 

 

 

Section 9.04

Litigation; Compliance with Laws

98

 

 

 

Section 9.05

Wholly-Owned Subsidiary

99

 

 

 

ARTICLE X.

 

 

 

PESRM AFFIRMATIVE COVENANTS

 

 

 

Section 10.01

Financial Statements, Reports, etc.

99

 

 

 

Section 10.02

Litigation and Other Notices

101

 

 

 

Section 10.03

Existence; Businesses and Properties

102

 

 

 

Section 10.04

Insurance

102

 

 

 

Section 10.05

Taxes; Filings

103

 

 

 

Section 10.06

Employee Benefits

103

 

 

 

Section 10.07

Maintaining Records; Access to Properties and Inspections

104

 

 

 

Section 10.08

[Reserved]

104

 

 

 

Section 10.09

Compliance with Environmental Laws and Environmental Permits; Environmental Reports

104

 

 

 

Section 10.10

Additional Collateral; Additional Guarantors

105

 

 

 

Section 10.11

Security Interests; Further Assurances

108

 

 

 

Section 10.12

Information Regarding Collateral

108

 

 

 

Section 10.13

Depository Banks

108

 

 

 

Section 10.14

Affirmative Covenants with Respect to Required Infrastructure

109

 

 

 

Section 10.15

[Reserved]

109

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

v



 

Section 10.16

Designation of Excluded Subsidiaries

110

 

 

 

Section 10.17

Anti-Terrorism Laws

110

 

 

 

Section 10.18

Third Party Consent Agreements

110

 

 

 

Section 10.19

Refinery Turnaround, Maintenance and Closure

110

 

 

 

Section 10.20

Certain PESRM Services

111

 

 

 

ARTICLE XI.

 

 

 

PESRM NEGATIVE COVENANTS

 

 

 

Section 11.01

Indebtedness

112

 

 

 

Section 11.02

Liens

115

 

 

 

Section 11.03

Sale and Leaseback Transactions

120

 

 

 

Section 11.04

Investment, Loan, Advances and Acquisition

121

 

 

 

Section 11.05

Mergers and Consolidations

123

 

 

 

Section 11.06

Asset Sales

123

 

 

 

Section 11.07

Dividends

125

 

 

 

Section 11.08

Transactions with Affiliates

127

 

 

 

Section 11.09

[Reserved]

129

 

 

 

Section 11.10

Prepayments of Other Indebtedness; Modifications of Organizational Documents and Other Documents, etc.

129

 

 

 

Section 11.11

Limitation on Certain Restrictions on Guarantors

130

 

 

 

Section 11.12

Business

130

 

 

 

Section 11.13

Fiscal Year

131

 

 

 

Section 11.14

Compliance with Anti-Terrorism Laws

131

 

 

 

Section 11.15

Speculative Transactions

131

 

 

 

Section 11.16

Title to Hydrocarbons

132

 

 

 

ARTICLE XII.

 

 

 

COVER TRANSACTIONS

 

 

 

Section 12.01

Cover Transactions

132

 

 

 

Section 12.02

Cover Protocols

133

 

 

 

Section 12.03

Applicable Conditions

136

 

 

 

Section 12.04

MLC Cover Transactions

136

 

 

 

Section 12.05

Cover Throughput Service Fees

136

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

vi



 

Section 12.06

Volume Limitations

137

 

 

 

Section 12.07

Cover Transaction Invoicing

137

 

 

 

Section 12.08

Termination of CO Supply Contracts and RP Sales Contracts

137

 

 

 

Section 12.09

[Reserved]

138

 

 

 

Section 12.10

Cover Transaction Event

138

 

 

 

Section 12.11

Renewable Fuels and RINS

138

 

 

 

ARTICLE XIII.

 

 

 

GUARANTEE

 

 

 

Section 13.01

The Guarantee

138

 

 

 

Section 13.02

Rights of MLC

139

 

 

 

Section 13.03

Obligations Unconditional

139

 

 

 

Section 13.04

Reinstatement

141

 

 

 

Section 13.05

Subrogation; Subordination

141

 

 

 

Section 13.06

Remedies

142

 

 

 

Section 13.07

Instrument for the Payment of Money

142

 

 

 

Section 13.08

Continuing Guarantee

142

 

 

 

Section 13.09

General Limitation on Guarantee Obligations

142

 

 

 

Section 13.10

Release of Transaction Parties

142

 

 

 

Section 13.11

Right of Contribution

143

 

 

 

Section 13.12

Default; Remedies; Bankruptcy; Etc.

143

 

 

 

ARTICLE XIV.

 

 

 

EVENTS OF DEFAULT; REMEDIES

 

 

 

Section 14.01

PESRM Events of Default

144

 

 

 

Section 14.02

MLC Events of Default

149

 

 

 

Section 14.03

Termination Events

151

 

 

 

Section 14.04

Remedies

153

 

 

 

ARTICLE XV.

 

 

 

FORCE MAJEURE

 

 

 

Section 15.01

Force Majeure

157

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

vii



 

Section 15.02

Force Majeure with Respect to Certain Facilities

158

 

 

 

Section 15.03

PESRM Force Majeure Indemnity

158

 

 

 

Section 15.04

Force Majeure Termination

159

 

 

 

Section 15.05

Payments Not Excused

159

 

 

 

Section 15.06

No Extension

159

 

 

 

ARTICLE XVI.

 

 

 

MISCELLANEOUS

 

 

 

Section 16.01

Governing Law and Submission to Jurisdiction

159

 

 

 

Section 16.02

Waivers

160

 

 

 

Section 16.03

Further Assurances

161

 

 

 

Section 16.04

Regulatory Filings

161

 

 

 

Section 16.05

No Waiver

161

 

 

 

Section 16.06

Severability

161

 

 

 

Section 16.07

Successors and Assigns

162

 

 

 

Section 16.08

Confidentiality

162

 

 

 

Section 16.09

Notices

163

 

 

 

Section 16.10

Amendments, Etc.

164

 

 

 

Section 16.11

Nature of the Transaction and Relationship of Parties

164

 

 

 

Section 16.12

Interest

165

 

 

 

Section 16.13

Recording of Conversations

165

 

 

 

Section 16.14

Counterparts

165

 

 

 

Section 16.15

No Third Party Beneficiaries

165

 

 

 

Section 16.16

Entire Agreement

165

 

 

 

Section 16.17

Survival

165

 

 

 

Section 16.18

Release of Collateral

166

 

 

 

Section 16.19

Costs and Expenses

166

 

 

 

Section 16.20

Amendment and Restatement

166

 

Schedules

 

 

 

 

 

Schedule 1.01(a)

-

Assigned Agreements

Schedule 1.01(b)

-

Guarantors

Schedule 1.01(c)

-

Hydrocarbon Specifications

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

viii



 

Schedule 1.01(e)

-

Form of Joinder Agreement

Schedule 1.01(g)

-

Form of Supply and Offtake Perfection Certificate

Schedule 1.01(h)

-

Mortgaged Properties

Schedule 1.01(i)

-

North Yard Parcel

Schedule 1.01(j)

-

West Yard Parcel

Schedule 1.01(k)

-

Racks and Rack Infrastructure Owners

Schedule 1.01(l)

-

Refinery

Schedule 1.01(m)

-

Refinery Real Property

Schedule 1.01(n)

-

[Reserved]

Schedule 1.01(o)

-

[Reserved]

Schedule 1.01(p)

-

[Reserved]

Schedule 1.01(q)

-

Approved Terms and Conditions

Schedule 1.01(r)

-

Business Days

Schedule 1.01(s)

-

Working Capital Amount Example

Schedule 1.01(t)

-

PESRM Infrastructure

Schedule 1.01(u)

-

Sunoco PMT Infrastructure

Schedule 1.01(v)

-

Sunoco Pipeline Infrastructure

Schedule 1.01(w)

-

Other Third Party Infrastructure

Schedule 1.01(x)

 

Butane Rail Facility

Schedule 2.02(a)

-

Post-Closing Third Party Consent Agreements

Schedule 2.02(d)

-

Solvency Certificate

Schedule 2.02(k)

-

Material Approvals

Schedule 3.01(b)

-

CO Delivery Points

Schedule 3.05(a)

-

Form of Daily Actual Production Book

Schedule 3.06(a)

-

Form of Financial Report

Schedule 3.08(b)(i)

-

Form of Daily Trades Done to Date Report

Schedule 3.08(b)(ii)

-

Form of Daily Raw Invoice Report

Schedule 3.08(b)(iii)

-

Form of Daily Sales Report

Schedule 3.08(b)(iv)

-

Form of Provisional FIFO Queue Report

Schedule 3.08(c)

-

Form of Monthly CO FIFO Report

Schedule 3.09(b)

-

Form of PESRM Buy Request / PESRM Sales Request

Schedule 3.09(c)

-

Form of MLC CO Trade Confirmation

Schedule 3.19

-

First Purchaser Jurisdictions

Schedule 4.01

-

RP Delivery Points

Schedule 4.04(a)(i)

-

Form of PPC Daily Rack Sales Report

Schedule 4.04(a)(ii)

-

Form of SXL Daily Rack Sales Report

Schedule 4.04(a)(iii)

-

Form of SXL Report

Schedule 4.09

-

Product Purchaser Delivery Points

Schedule 4.09(a)

-

Form of Oil Flow Report

Schedule 4.09(c)

-

Form of MLC RP Trade Confirmation

Schedule 5(a)

-

Calculation of Crude Oil Price Amount

Schedule 5(b)

-

Calculation of Refined Product Price Amount

Schedule 5(c)

-

Market Structure

Schedule 6.17

-

Form of MLC Guaranty

Schedule 8.03(a)

-

No Conflicts

Schedule 8.03(b)

-

Material Contracts

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

ix



 

Schedule 8.07

-

Subsidiaries

Schedule 8.08(a)

-

Litigation

Schedule 8.08(c)

-

Material Permits

Schedule 8.18

-

Environmental Matters

Schedule 8.19

-

Effective Date Insurance

Schedule 8.22

-

Location of Material Collateral

Schedule 9.03

-

No Conflicts

Schedule 9.04

-

Litigation

Schedule 10.04

-

Insurance Requirements

Schedule 10.18

-

Form of Third Party Consent Agreement

Schedule 11.01(z)

-

Existing Indebtedness

Schedule 11.02(c)

-

Existing Liens

Schedule 11.04(b)

-

Existing Investments

Schedule 11.08

-

Existing Transactions

Schedule 12

-

Cover Transaction Pricing and Fees

 

 

 

Annexes

 

 

 

 

 

Annex I

 

Terms Defined by Reference to Senior Secured Credit Facility

Annex II

 

Refinery Map and Legend

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

x


 

AMENDED AND RESTATED SUPPLY AND OFFTAKE AGREEMENT

 

THIS AMENDED AND RESTATED SUPPLY AND OFFTAKE AGREEMENT (as the same may be amended, restated, supplemented or otherwise modified from time to time, this “Agreement”) dated as of October 7, 2014 is by and among MERRILL LYNCH COMMODITIES, INC., a corporation organized under the laws of the State of Delaware (“MLC”), PHILADELPHIA ENERGY SOLUTIONS REFINING AND MARKETING LLC, a limited liability company organized under the laws of Delaware (“PESRM”), and the Guarantors party hereto from time to time (each of MLC and PESRM referred to individually as a “Party” or collectively as the “Parties” and each of PESRM and the Guarantors referred to individually as a “Transaction Party” or collectively as the “Transaction Parties”).

 

WHEREAS, J.P. Morgan Ventures Energy Corporation (“JPMVEC”) and PESRM are party to that certain Supply and Offtake Agreement, dated as of September 8, 2012 (as amended, restated, replaced, supplemented or otherwise modified from time to time prior to the date hereof, the “Original Agreement”), pursuant to which JPMVEC provided to PESRM an intermediation arrangement with respect to the crude oil and non-crude feed stock and refined products and blendstocks of that certain crude oil refinery currently owned and operated by PESRM in Philadelphia, Pennsylvania, which Original Agreement became effective on September 8, 2012 (the “Original Agreement Effective Date”);

 

WHEREAS, pursuant to and in accordance with the terms (including the satisfaction or waiver of certain terms and conditions) of that certain Assignment and Assumption Agreement dated as of the date hereof (as amended, restated, replaced, supplemented or otherwise modified from time to time, the “Assignment and Assumption Agreement”), among JPMVEC, MLC and PESRM, JPMVEC has agreed to assign to MLC all of JPMVEC’s rights, title and interest, and MLC has agreed to assume JPMVEC’s liabilities and obligations, under the Original Agreement and rights, titles, obligations, interests and liabilities under related infrastructure agreements with PESRM and other parties, in each case relating to the Original Agreement (collectively, the “Assignment”);

 

WHEREAS, pursuant to and in accordance with the terms (including the satisfaction or waiver of certain terms and conditions) of the Assignment and Assumption Agreement, (a) JPMVEC, MLC, PESRM and PES Administrative Services, LLC have entered into that certain Wind-Down Agreement, dated as of the date hereof (as amended, restated, replaced, supplemented or otherwise modified from time to time, the “Wind-Down Agreement”), whereby (i) JPMVEC and MLC have agreed to enter into the New MLC Transactions and (ii) JPMVEC has agreed to assign or novate to MLC certain existing CO Supply Contracts and certain existing RP Sales Contracts, and (b) pursuant to the Inventory Sales Agreement, JPMVEC has agreed to sell the In-Storage Inventory owned by JPMVEC to MLC (and MLC has agreed to purchase same) (collectively, together with the Assignment, the “Assignments and Transfers”);

 

WHEREAS, upon the consummation and effectiveness of the Assignments and Transfers, MLC and PESRM wish to amend and restate the Original Agreement, in its entirety upon the terms and conditions set forth in this Agreement, which amendment and restatement shall become effective on the Effective Date;

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 



 

WHEREAS, it is the intent of the parties hereto that this Agreement not constitute a novation of the obligations and liabilities of PESRM under the Original Agreement and that this Agreement amend and restate in its entirety the Original Agreement; and

 

WHEREAS, it is the intent of PESRM to confirm that all Obligations of PESRM under the Effective Date PESRM Transaction Documents, as amended, amended and restated, supplemented, refinanced or otherwise modified hereby or on or as of the date hereof, shall continue in full force and effect and that from and after the Effective Date, all references to the “Supply and Offtake Agreement” contained in the Effective Date PESRM Transaction Documents shall be deemed to refer to this Agreement;

 

WHEREAS, Holdings directly owns 100% of the Equity Interests in PESRM Holdings, LLC (“Intermediate Holdco”), Intermediate Holdco directly owns 100% of the Equity Interests in PESRM, and Intermediate Holdco directly or indirectly owns 100% of the Equity Interests of each of its Subsidiaries;

 

NOW, THEREFORE, in consideration of the mutual covenants and undertakings set forth in this Agreement, MLC, PESRM and the other Transaction Parties hereby agree to amend and restate the Original Agreement as follows:

 

ARTICLE I.

 

DEFINED TERMS; PRINCIPLES OF CONSTRUCTION

 

Section 1.01                             Defined Terms.  Capitalized terms used in this Agreement have the meanings ascribed to them below:

 

ABL/SOA Investment Accounts” has the meaning assigned to such term in Section 10.10(e).

 

ABL/SOA Priority Collateral” has the meaning assigned to such term (or any equivalent term) in (a) to the extent the Existing Term Loan Facility is outstanding (whether secured or unsecured), the Existing Term-ABL Intercreditor Agreement, (b) to the extent the Existing Term Loan Facility has been refinanced with a Permitted Secured Term Loan Facility pursuant to which a Term-ABL Intercreditor Agreement has been entered into, such Term-ABL Intercreditor Agreement and (c) otherwise, the Existing Term-ABL Intercreditor Agreement.

 

Action” has the meaning set forth in Section 16.01(b).

 

Adversely Affected Party” has the meaning set forth in Section 6.09.

 

Affected Party” means:

 

(i)                                     with respect to Illegality, the meaning set forth in Section 14.03(a)(i);

 

(ii)                                  with respect to Credit Event Upon Merger, the meaning set forth in Section 14.03(a)(ii); and

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

2



 

(iii)                               with respect to an ISDA Termination Event, the meaning set forth in Section 14.03(a)(iii).

 

Affected Transactions” means:

 

(i)                                     with respect to any Termination Event consisting of an Illegality under Section 14.03(a)(i) as a result of which (x) a Party cannot perform under a material portion of (1) the CO Transactions, (2) the RP Transactions or (3) the PESRM-MLC Secured Prepay Transactions or (y) MLC cannot perform under a material portion of (1) the CO Supply Contracts, (2) the RP Sales Contracts or (3) the PESRM-MLC Secured Prepay Transactions, this Agreement and all PESRM Transactions,

 

(ii)                                  with respect to any Termination Event consisting of an Illegality not covered by subclause (i) of this definition, all PESRM Transactions affected by the occurrence of such Termination Event, and

 

(iii)                               with respect to any other Termination Event, this Agreement and all PESRM Transactions.

 

Affiliate” means, when used with respect to a specified person, another person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the person specified; provided, that no direct or indirect parent of Philadelphia Energy Solutions, LLC shall be an Affiliate of PESRM or its Subsidiaries for purposes of this Agreement and provided further that PESIC shall not be an Affiliate of PESRM or its Subsidiaries for the purposes of this Agreement.

 

Affiliate Transferee” means an Affiliate of PESRM that is in the business of owning, developing, operating and maintaining any of the Affiliate Transferee Assets and any other businesses ancillary or reasonably related thereto; provided that, for the avoidance of doubt, for purposes of this Agreement and the other PESRM Transaction Documents, PESIC shall not be an Affiliate Transferee.

 

Affiliate Transferee Assets” means, collectively, the North Yard Assets and any Other Logistics Assets, to the extent transferred to an Affiliate Transferee.

 

Aggregate Liability Amount” has the meaning set forth in Section 6.24.

 

Agreement” has the meaning set forth in the introductory paragraph of this Agreement.

 

Amended and Restated Mortgage” has the meaning set forth in Section 2.02(g).

 

Annual Cover Throughput Service Fee” means a fee payable by PESRM in respect of all Cover Transactions to be entered into pursuant to this Agreement, [**], in an amount equal to [**].

 

Anti-Corruption Laws” has the meaning set forth in Section 6.20(a).

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

3



 

Anti-Terrorism Laws” means any Applicable Law related to terrorism financing or money laundering including the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub. L. 107-56), The Currency and Foreign Transactions Reporting Act (also known as the “Bank Secrecy Act”, 31 U.S.C. §§ 5311-5330 and 12 U.S.C. §§ 1818(s), 1820(b) and 1951-1959), the Trading With the Enemy Act (50 U.S.C. § 1 et seq., as amended) and Executive Order 13224 (effective September 24, 2001).

 

Applicable Condition” means the occurrence and continuance of any of the following events or circumstances: (i) any PESRM Event of Default, (ii) any PESRM/PESIC Failure to Perform, (iii) any event of Force Majeure, (iv) any MLC non-performance resulting from a lack of availability of working capacity of Required Infrastructure (including with respect to any PESRM-MLC Secured Prepay Transactions or any MLC-PESIC Secured Prepay Transactions), (v) any CO Supply Contract Event, (vi) any Cover Transaction Event, (vii) any Operational Imbalance, (viii) any excused or unexcused failure by PESRM under any PESRM-MLC Secured Prepay Transaction or PESIC-PESRM Secured Prepay Transaction, (ix) any excused or unexcused failure by PESIC under any MLC-PESIC Secured Prepay Transaction (other than the [**] (or equivalent condition) occurring thereunder) or (x) any excused or unexcused failure by PESRM under any PESIC-PESRM Secured Prepay Transactions.  For the avoidance of doubt, any Applicable Condition described in subclauses (ii) through (vii) above shall only excuse or suspend MLC’s duty to enter into and/or perform under the affected or corresponding PESRM Transaction(s), other PESRM Transaction Documents, CO Supply Contracts, PESRM-MLC Secured Prepay Transactions, MLC-PESIC Secured Prepay Transactions, RP Sales Contracts and/or Cover Transactions.

 

Applicable Initial Refined Product Price” has the meaning set forth in Schedule 5(b).

 

Applicable Laws” means all valid constitutions, statutes, laws (including common law), treaties, codes, regulations, ordinances, licenses, orders, directives, decrees, rules, rulings, decisions, judgments, policies, legally binding requirements, restrictions, writs, injunctions, permits or compliance requirements and any judicial or administrative decisions or interpretations of any Governmental Authority having jurisdiction over any transaction or matter contemplated in this Agreement, including any rights or obligations established hereunder.

 

Applicable Margin” has the meaning set forth in the definition of Working Capital Rate.

 

Applicable PESRM Transaction Documents” means: (i) with respect to the Effective Date, the Effective Date PESRM Transaction Documents, and (ii) with respect to each Day of the Term other than the Effective Date, the PESRM Transaction Documents.

 

Applicable Refined Product Index” has the meaning set forth in Schedule 5(b).

 

Approved Terms and Conditions” means those General Terms and Conditions which are set forth in Schedule 1.01(q) hereto, as amended from time to time [**].

 

ARPLA Revision” has the meaning set forth in the definition of Applicable Refined Product Locational Adjustment in Schedule 5(b).

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

4



 

ARPLA Revision Amount” has the meaning set forth in Schedule 5(b).

 

Asset Sale” means, in each case to the extent in excess of (i) $[**] in respect of transactions or series of related transactions in respect of ABL/SOA Priority Collateral and (ii) $[**] per transaction or series of related transactions in respect of transactions or series of related transactions not in respect of ABL/SOA Priority Collateral, (a) any conveyance, sale, assignment, transfer or other disposition (including by way of merger or consolidation and including any Sale and Leaseback Transaction) of any property (but excluding in any event sales of inventory, transactions pursuant to the PESRM Tranasaction Documents, dispositions of cash and cash equivalents (including Cash Equivalents) and licenses of any Intellectual Property by PESRM or any of its Subsidiaries in the ordinary course of business) and (b) any issuance or sale of any Equity Interests of any Subsidiary of Holdings, in each case, to any person other than (i) PESRM or (ii) any Guarantor.  For the avoidance of doubt, the granting of a Permitted Lien shall not constitute an “Asset Sale.”

 

Assigned Agreements” means each of the agreements set forth in Schedule 1.01(a).

 

Assigned CO Contracts” means each of the agreements set forth in Part I of Schedule 1.01(a).

 

Assigned RP Contracts” means each of the agreements set forth in Part II of Schedule 1.01(a).

 

Assignment” has the meaning set forth in the recitals of this Agreement.

 

Assignment and Assumption Agreement” has the meaning set forth in the recitals of this Agreement.

 

Assignment Documents” has the meaning assigned to the term “Transaction Documents” in the Assignment and Assumption Agreement.

 

Assignments and Transfers” has the meaning set forth in the recitals of this Agreement.

 

Auto Bin” means all transactions that are subject to Auto Bin Deemed Hedge Rolls.

 

Auto Bin Deemed Hedge Roll” has the meaning set forth in Schedule 5(c).

 

Auto Bin Deemed Roll Settlement Amount” means an amount equal to the [**].

 

Average Rack Sale Daily Amount” means, with respect to any quarter during the Term, an amount equal to the quotient of (i) the aggregate sum of all amounts of Refined Products (measured in U.S. Dollars) actually sold under all outstanding Rack Sales Contracts from MLC to PESRM on every Day in such calendar quarter, divided by (ii) the number of Days in such calendar quarter.

 

Bank of America” means Bank of America, N.A.

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

5



 

Bankruptcy Code” has the meaning set forth in Section 13.01.

 

Barrel” means one United States barrel (42 United States gallons).

 

Base Interest Rate” has the meaning set forth in the definition of Working Capital Rate.

 

Basic Infrastructure” means all of (a) the PESRM Infrastructure, (b) the Sunoco PMT Infrastructure, (c) the Sunoco Pipeline Infrastructure, (d) any Other Third Party Infrastructure owned by an Affiliate Transferee, and (e) to the extent PESRM is able to do so, all the Other Third Party Infrastructure not referred to in clause (d) above.

 

Belmont Truck Rack” means the truck rack that is located in Philadelphia, Pennsylvania adjacent to the Refinery and that is owned by Sunoco PMT.

 

BS&W” means bottoms sediment/sludge, suspended sediment and water and free water.

 

Business Day” means each Day set forth on Schedule 1.01(r), as may be amended from time to time.

 

Business Day Convention” means that, as a general matter, any reference to a Day that is not a Business Day shall instead refer to the first (1st) Business Day following such Day (other than in the case of certain reports required to be delivered hereunder, and certain pricing determinations to be made hereunder, in which case references to a Day shall refer to that calendar Day), except that:

 

(i)                                     in the case of an ordinary (two-day) weekend or a three-day weekend in which Friday is not a Business Day, any reports required pursuant to Sections 3.05(a), 3.06, 3.07, 3.08 and 4.04(a), and the specified pricing determinations required to be made under Schedules 5(a), 5(b) and 5(c), with respect to a Day that is a Sunday shall be due or made, as applicable, on the following Tuesday (unless that Tuesday is not a Business Day, in which case such report shall be due, or such pricing determination shall be made, on the next Business Day following that Tuesday);

 

(ii)                                  in the case of a Day falling on a three-day weekend in which Monday is not a Business Day, any reports required pursuant to Sections 3.05(a), 3.06, 3.07, 3.08 and 4.04(a), and the specified pricing determinations required to be made under Schedules 5(a), 5(b) and 5(c), with respect to a Day that is a Sunday or Monday shall be due or made, as applicable, on the following Wednesday (unless that Wednesday is not a Business Day, in which case such report shall be due, or such pricing determination shall be made, on the next Business Day following that Wednesday); and

 

(iii)                               in the event that four or more consecutive Days are not Business Days, references to any of those consecutive Days which are not Business Days shall be resolved by any arrangement reasonably agreed to by the Parties.

 

This Business Day Convention shall apply only where the context so indicates.

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

6



 

Butane Cover Transaction” has the meaning set forth in Section 12.01(a)(i).

 

Butane Inventory” means, for any Day, the butane inventory (measured in Barrels) held by PESRM as at the end of such Day (including any butane that is subject to PESRM-MLC Secured Prepay Transactions or PESIC-PESRM Secured Prepay Transactions), as reflected in the Daily Actual Production Book (with respect to butane inventory located at the Refinery) and the SXL Report (with respect to butane inventory located off premises of the Refinery), as the same shall be revised from time to time pursuant to Section 4.14(b).

 

Butane Inventory Build” means, for any Day, any positive difference between the Butane Inventory on such Day and the Butane Inventory on the previous Day.

 

Butane Inventory Build Day” means any Day on which there is Butane Inventory Build.

 

Butane Inventory Draw” means, for any Day, any negative difference between the Butane Inventory on such Day and the Butane Inventory on the previous Day.

 

Butane Inventory Draw Day” means any Day on which there is Butane Inventory Draw.

 

Butane Rail Facility” means the butane rack loading and unloading rail facility located in the Girard Point South Yard portion of the Refinery to be constructed by PESRM, as further described on Schedule 1.01(x).

 

Butane Sale Price Amount” means, in respect of any delivery of butane made at the RP/B Delivery Point on any Day and sold by MLC to PESRM pursuant to a Butane Sale Transaction, an amount (expressed in US Dollars) equal to the product of (a) the aggregate volume (expressed in Barrels or other applicable unit of measure) of such delivery multiplied by (b) the Applicable Initial Refined Product Price.

 

Butane Sale Transaction” has the meaning set forth in Section 4.14(a).

 

Calendar Week” means a period of seven consecutive Days commencing at (and including) 00:00 Eastern Time on each Sunday and ending at (but excluding) 24:00 Eastern Time on the following Saturday.

 

Carlyle PES” means Carlyle PES, L.L.C.

 

CEA” has the meaning set forth in Section 8.26(a).

 

CERCLA” means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. § 9601 et seq. and all implementing regulations.

 

Certain PESRM Transaction Documents” means this Agreement (including all PESRM Transactions hereunder), the PESRM-MLC ISDA Master Agreement and the other PESRM-MLC ISDA Documents, the PESRM-MLC Secured Prepay Transactions, each Third Party Consent Agreement, the PESRM-MLC Consulting Agreement, the Master Netting Agreement, the Supply and Offtake Security Documents and the Intercreditor Agreement.

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

7



 

Change in Law” means the occurrence, after the date of this Agreement, of any of the following (a) the adoption or taking into effect of any Applicable Law, (b) any change in Applicable Law or in the administration, interpretation or application thereof by any Governmental Authority, (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided, that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder, issued in connection therewith or in implementation thereof (the “Dodd-Frank Act”), and (ii) all requests, rules, guidelines and directives promulgated pursuant to Basel III by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted, issued or implemented.

 

Change in Law Notice” has the meaning set forth in Section 6.09.

 

CO Cover Transaction Price Amount” has the meaning set forth in Schedule 12.

 

CO Cover Transaction Volume Limitation” has the meaning set forth in Section 12.06(a).

 

CO Cover Transactions” has the meaning set forth in Section 12.01(a)(ii).

 

CO Cover Throughput Service Fee” has the meaning set forth in Schedule 12.

 

CO Delivery Point” means the gauges or metering points listed on Schedule 3.01(b).

 

CO Operational Issue” means, as determined by MLC in good faith and a commercially reasonable manner based on information provided by PESRM, a circumstance or event that occurs with respect to the Refinery and/or any Required Infrastructure (including planned maintenance and mechanical failures) or with respect to any mode of transportation utilized to deliver Crude Oil to the Refinery under any CO Supply Contract, any PESRM-MLC CO Secured Prepay Transaction or any PESIC-PESRM Secured Prepay Transaction and that results (or could reasonably be expect to result) in an inability of PESRM, PESIC or MLC (as applicable) to accept delivery of, or process, the quantity, type or grade of Crude Oil scheduled to be delivered pursuant to any outstanding CO Supply Contract, any PESRM-MLC CO Secured Prepay Transaction or any PESIC-PESRM Secured Prepay Transaction.

 

CO [**] Transaction” has the meaning set forth in Section 3.09(a).

 

CO Supply Contract” has the meaning set forth in Section 3.09(c).

 

CO Supply Contract Event” has the meaning set forth in Section 3.09(g).

 

CO Transaction” has the meaning set forth in Section 3.10.

 

CO Transportation and Other Costs” means, on any Day, all direct out of pocket losses, costs and expenses incurred by, or amounts owed by, MLC on or before such Day (and not previously paid by PESRM) (including any expenses payable to PESRM or any PESRM Affiliate) that arise from the acquisition or sale of Crude Oil in connection with this Agreement or any CO Supply

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

8



 

Contract, PESRM-MLC CO Secured Prepay Transaction or MLC-PESIC Secured Prepay Transaction (but excluding any Demurrage Costs), including pipeline tariffs, vessel, rail or truck freight fees and charges, lightering costs, inspection fees, any charges imposed by a Governmental Authority, tankage and throughput charges, supplier administration charges, supplier funding charges, loss control charges, broker’s fees, penalties, terminal fees, costs of bank countersigned letters of indemnity, L/C Fees and Costs, any obligation to pay any Prepayment Amount (except in connection with the PESRM-MLC CO Secured Prepay Transactions) and any contractual obligation to indemnify or reimburse any Counterparty under any CO Supply Contract for any Indemnifiable Taxes (including any taxes thereon), damages, duties, imposts, tariffs, fees, charges, losses or liabilities of whatever nature together with any penalties and costs associated therewith.  Without limiting the foregoing, CO Transportation and Other Costs includes all direct out of pocket losses, costs and expenses associated with the settlement or discharge of CO Supply Contracts for physical delivery where such contracts arise as a consequence of any transaction relating to the ultimate delivery of Crude Oil to an applicable delivery point determined in accordance with the terms of this Agreement (but excluding any Demurrage Costs).  CO Transportation and Other Costs shall not include any costs or increases of costs that arise from any MLC Event.

 

Code” means the Internal Revenue Code of 1986.

 

Collateral” means, collectively, all (i) Supply and Offtake Security Agreement Collateral and (ii) other property of whatever kind and nature subject or purported to be subject from time to time to a Lien under any Supply and Offtake Security Document.

 

Commodities Account” has the meaning assigned to such term in the UCC.

 

Common Shares” means, with respect to any Person, the ordinary equity interests or membership interests issued by such person (not including any preferred or other special class of equity interests in such Person)

 

Consequential Steps” has the meaning set forth in Section 6.09.

 

Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise.  “Controlling” and “Controlled” have meanings correlative thereto.

 

Control Agreement” has the meaning given to such term in the Supply and Offtake Security Agreement.

 

Core PESRM Transaction Document” means this Agreement, any PESRM Transaction, the Rack Sales Contract, the PESRM-MLC ISDA Master Agreement and the other PESRM-MLC ISDA Documents, the PESRM-MLC Secured Prepay Transactions, each Third Party Consent Agreement, the PESRM-MLC Consulting Agreement, the Supply and Offtake Security Documents and the Intercreditor Agreement.

 

Cost of Assurance Trigger Event” means: (i) [**] (x) [**] or (y) [**] or (ii) [**].

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

9



 

Counterparty” has the meaning set forth in Section 3.09(a).

 

Counterparty Payment Date” has the meaning set forth in Section 3.09(d).

 

Cover Counterparties” has the meaning set forth in Section 12.02(a).

 

Cover [**] Transaction” has the meaning set forth in Section 12.01(a).

 

Cover Protocols” has the meaning set forth in Section 12.02.

 

Cover Request” has the meaning set forth in Section 12.02(d).

 

Cover Throughput Service Fee” means the Annual Cover Throughput Service Fee, any CO Cover Throughput Service Fee and/or any RP Cover Throughput Service Fee, as applicable.

 

Cover Transaction Event”  has the meaning set forth in Section 12.10.

 

Cover Transaction Price Amounts” means the RP Cover Transaction Price Amounts and the CO Cover Transaction Price Amounts.

 

Cover Transaction Notice” has the meaning set forth in Section 12.02(a).

 

Cover Transaction Price Amount” means an RP Cover Transaction Price Amount and/or a CO Cover Transaction Price Amount, as applicable.

 

Cover Transactions” means RP Cover Transactions and CO Cover Transactions.

 

Cover Transportation and Other Costs” means, on any Day, all direct out of pocket losses, costs and expenses incurred by, or amounts owed by, MLC on or before such Day (and not previously paid by PESRM) (including any expenses payable to PESRM or any PESRM Affiliate) that arise from the acquisition or sale of Crude Oil and/or Refined Products pursuant to any Cover Transaction from the acquisition point to the delivery point specified in the applicable Cover Transaction, any PESRM-MLC Secured Prepay Transaction or MLC-PESIC Secured Prepay Transaction related to such Cover Transaction (but excluding any Demurrage Costs), including pipeline tariffs, vessel, rail or truck freight fees and charges, lightering costs, inspection fees, any charges imposed by a Governmental Authority, tankage and throughput charges, supplier administration charges, supplier funding charges, loss control charges, broker’s fees, penalties, terminal fees, costs of bank countersigned letters of indemnity, L/C Fees and Costs, any contractual obligation to pay any Prepayment Amounts and any obligation to indemnify or reimburse any Cover Counterparty under any Cover Transaction for any Indemnifiable Taxes (including any taxes thereon), damages, duties, imposts, tariffs, fees, charges, losses or liabilities of whatever nature together with any penalties and costs associated therewith. Cover

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

10



 

Transportation and Other Costs shall be reflected in an Invoice or the Monthly True-Up Invoice, as applicable.  Without limiting the foregoing, Cover Transportation and Other Costs includes  all direct out of pocket losses, costs and expenses associated with the settlement or discharge of Cover Transactions. Cover Transportation and Other Costs shall not include any costs or increases of costs that arise from any MLC Event.

 

Credit Event Upon Merger” has the meaning set forth in Section 14.03(a)(ii).

 

Credit Requirements” means the credit requirements determined by MLC in its commercially reasonable discretion which include that (i) [**], (ii) [**], (iii) [**], (iv) [**], (v) [**] and (vi) [**].

 

Crude Oil” means crude oil of any type or grade.

 

Crude Oil Grade Differential” has the meaning set forth in Schedule 5(a).

 

Crude Oil Index” has the meaning set forth in Schedule 5(b).

 

“Crude Oil Price Amount” has the meaning set forth in Schedule 5(a).

 

Customs” has the meaning set forth in Section 6.16(a).

 

Daily Actual Production Book” means, for any Day, a written production book prepared by PESRM substantially in the form attached hereto as Schedule 3.05(a) (and as may be amended from time to time pursuant to Section 3.16), detailing [**], subject to Section 3.05(b).

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

11



 

“Daily Cover Throughput Service Fee” means, for any Day, a fee equal to [**].

 

Daily Raw Invoice Report” means, for any Day, a written report prepared by MLC substantially in the form attached hereto as Schedule 3.08(b)(ii), detailing [**].

 

Daily Sales Report” means, for any Day, a written report prepared by MLC substantially in the form attached hereto as Schedule 3.08(b)(iii), detailing [**].

 

Daily Trades Done To Date Report” means, for any Day, a written report prepared by MLC substantially in the form attached hereto as Schedule 3.08(b)(i), detailing [**].

 

DAP” means Delivered At Place (as such term is defined in Incoterms 2010).

 

Day” means a period of twenty-four (24) consecutive hours beginning and ending at midnight Eastern Time.

 

Deed of Pledge” means that certain Deed of Pledge dated as of the date hereof by and between PESRM and MLC.

 

Default” means any event, occurrence or condition which is, or upon notice, lapse of time or both would constitute, a PESRM Event of Default or MLC Event of Default, as applicable.

 

Default Interest Rate” has the meaning set forth in Section 16.12(a).

 

Defaulting Party” has the meaning set forth in Section 14.04(a)(i).

 

Demurrage Costs” means, on any Day, all direct out of pocket losses, costs and expenses incurred by MLC on or before such Day (and not previously paid by PESRM) relating to demurrage incurred in connection with (i) the transportation, delivery or receipt of Hydrocarbons pursuant to this Agreement and, without duplication, the PESRM Transactions, the CO Supply Contracts, the RP Sales Contracts and the Cover Transactions by any rail or waterborne means of transportation from the locations where such Hydrocarbons are acquired to the Refinery or the other Basic Infrastructure (or, with respect to any Cover Transactions, to the delivery point specified in such transaction) and (ii) the receipt and delivery of Hydrocarbons from the Refinery or the other Basic Infrastructure (or, with respect to any Cover Transactions, to the delivery point

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

12



 

specified in such transaction) into or out of any rail or waterborne means of transportation.  Demurrage Costs shall not include any costs or increases of costs that arise from MLC’s gross negligence or willful misconduct.

 

DES” means Delivered Ex Ship (as such term is defined in Incoterms 2000).

 

Designated Sales Representative” means the person responsible for receiving PESRM Buy Requests, PERSM Sales Requests and all other communication related thereto, as specified by MLC in writing to PESRM from time to time.

 

Development Financing” means (a) a loan or loans made through the U.S. EB-5 Program (“EB-5 Program”) to finance or refinance capital expenditures or other expenses eligible under the EB-5 Program, in respect of which no Liens are granted on any ABL/SOA Priority Collateral, (b) a financing of the North Yard Assets or (c) any other financing with respect to development of the Refinery, in each case which (i) is subject to an intercreditor agreement containing usual and customary terms for such type of financing facility (a “Development Intercreditor Agreement”), (ii) the material terms of such financing (including interest rates) are generally consistent with prevailing market terms for such type of financing facility at the time such financing facility is entered into and (iii) is not used to construct facilities without which the Refinery could not continue to process Crude Oil.

 

Development Intercreditor Agreement” has the meaning set forth in the definition of Development Financing.

 

Dodd-Frank Act” has the meaning set forth in the definition of Change in Law.

 

Eagle Point Terminal” means that certain Hydrocarbon terminal and dock facility, operated as of the date hereof by Sunoco PMT, which is located in Westville, New Jersey.

 

Early Termination Date” has the meaning set forth in Section 14.04(a)(i).

 

Eastern Time” or “ET” means Eastern Standard Time or Eastern Daylight Saving Time in effect in Philadelphia, Pennsylvania on the date in question.

 

EB-5 Program” has the meaning set forth in the definition of Development Financing.

 

Effective Date” means the date on which all of the conditions precedent set forth in Sections 2.02 and 2.03 shall have been satisfied or waived in writing in accordance with the terms hereof.

 

Effective Date Infrastructure” has the meaning set forth in Section 2.02(n).

 

Effective Date PESRM Transaction Document” means this Agreement, the Products Sales Agreement, each Third Party Consent Agreement, the PESRM-MLC Consulting Agreement, the Supply and Offtake Security Documents and the Intercreditor Agreement, the PESRM-MLC ISDA Master Agreement and the other PESRM-MLC ISDA Documents, the Master Netting Agreement and any other agreement to be entered into on the Effective Date in connection with this Agreement or any other of the foregoing agreements.

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

13


 

Eligible for Invoicing” means, as used in Article V, any amount that MLC is authorized to invoice under the terms of Sections 3.15, 4.11, 6.16, 6.18 or 12.07.

 

Employee Payment Distributions” means payments, dividends or distributions by any of PESRM, the Guarantors and their respective Subsidiaries (without duplication) directly or indirectly to Holdings for the payment of:

 

(x)               Management Personnel Costs (a) to the extent such Management Personnel Costs comply with Section 11.08(c) (provided, however, for purposes of this definition, references in Section 11.08(c) to the Board of Directors of PESRM shall be deemed to be a reference to the Board of Directors of Holdings), (b) only to the extent such amounts are attributable solely to services provided by such Management Personnel to Holdings related to the operations of PESRM or its Subsidiaries and (c) which are then due and owing or, in the reasonable judgment of PESRM, are expected to become due within thirty-one (31) days of the applicable payment, dividend or distribution; and

 

(y)               other Management Personnel Costs in an aggregate amount not to exceed $[**] in any fiscal year.

 

Environment” means ambient air, indoor air, surface water and groundwater (including potable water, navigable water and wetlands), the land surface or subsurface strata, natural resources or as otherwise defined in any Environmental Law.

 

Environmental Claim” means any claim, notice, demand, order, action, suit or proceeding alleging liability for or obligation with respect to any investigation, remediation, removal, cleanup, response, corrective action, damages to natural resources, personal injury, property damage, fines, penalties or other costs resulting from, related to or arising out of (i) the presence, Release or threatened Release in or into the Environment of Hazardous Material at any location or (ii) any violation or alleged violation of any Environmental Law, and shall include any claim seeking damages, fine, penalty, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from, related to or arising out of the presence, Release or threatened Release of Hazardous Material or alleged injury or threat of injury to the Environment or, as it relates to exposure to Hazardous Materials, to human health.

 

Environmental Laws” means any and all past, present and future Applicable Laws relating to the protection of public health or the Environment, the Release or threatened Release of Hazardous Material, natural resources or natural resource damages, or occupational safety or health relating to exposure of or to Hazardous Materials, and any and all Environmental Permits.

 

Environmental Permit” means any permit, license, approval, registration, notification, exemption, consent or other authorization required by or from a Governmental Authority under Environmental Law.

 

EPA” means the United States Environmental Protection Agency.

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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Equity Interest” means, with respect to any person, any and all shares, interests, participations or other equivalents, including membership interests (however designated, whether voting or nonvoting), of equity of such person, including, if such person is a partnership, partnership interests (whether general or limited) and any other interest or participation that confers on a person the right to receive a share of the profits and losses of, or distributions of property of, such partnership, whether outstanding on the date hereof or issued after the Effective Date, but excluding debt securities convertible or exchangeable into such equity.

 

Estimated Daily Rack Sale Amount” means, (i) for the period beginning on the Effective Date and ending on (and including) December 31, 2014, an amount equal to the Initial Rack Sale Amount and (ii) for any subsequent quarter, such amount as may be adjusted in accordance with Section 4.10.

 

Event of Default” means either a PESRM Event of Default or a MLC Event of Default, as applicable.

 

Excluded Subsidiaries” means (a) each Subsidiary formed or acquired after the Effective Date that is designated as an Excluded Subsidiary pursuant to Section 10.16 and (b) each Affiliate Transferee.  For the avoidance of doubt, each Excluded Subsidiary shall not be a Guarantor, and to the extent that an Excluded Subsidiary’s net income would otherwise be included in the definition of Consolidated Net Income or Consolidated EBITDA or any component thereof such Excluded Subsidiary’s net income shall not be included for purposes of calculating Consolidated Net Income or Consolidated EBITDA except to the extent provided in either such definition.

 

Existing Mortgage” means that certain Open-End Mortgage, Security Agreement, Assignment of Leases and Rents, Financing Statement and Fixture Filing (Secures Future Advances), dated as of July 31, 2013, by PESRM, as mortgagor, to MLC (as assignee of JPMVEC), as mortgagee, as amended and restated by the Amended and Restated Mortgage as of the Effective Date.

 

Existing Term-ABL Intercreditor Agreement” means that certain Intercreditor Agreement, dated as of April 4, 2013, among Bank of America, N.A. (as assignee of JPMorgan), as revolving collateral agent, JPMorgan, as term loan administrative agent, the SOA Collateral Agent (as assignee of JPMVEC), PESRM and the other parties thereto.

 

Existing Term Loan Credit Agreement” means that certain Term Loan Agreement among PESRM, the lenders party thereto from time to time and JPMorgan, as administrative agent, dated April 4, 2013, with J.P. Morgan Securities LLC, as Sole Lead Arranger and Sole Bookrunner.

 

Existing Term Loan Facility” means the facility established pursuant to the Existing Term Loan Credit Agreement.

 

Final Termination Date” has the meaning set forth in Section 6.02(a).

 

Financial Products ISDA Master Agreement” means that certain 2002 ISDA Master Agreement, dated as of the date hereof, including the Schedule, exhibits and annexes thereto and the transactions thereunder, between PESRM and MLC, as amended, restated, supplemented, replaced or otherwise modified from time to time.

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

15



 

Financial Report” means, for any Day, a written report prepared by MLC substantially in the form attached hereto as Schedule 3.06(a), detailing (i) [**], and (ii) [**].

 

First Purchaser Compliance Costs” means, on any Day, without duplication, all direct out of pocket losses, costs and expenses (including reasonable attorneys’ fees and disbursements) incurred by, or amounts owed by, MLC on or before such Day that arise from taking, or causing to be taken, such steps as are necessary or appropriate to comply with any First Purchaser Requirements that are applicable to MLC or any Affiliate of MLC as a first purchaser of Products pursuant to one or more transactions entered into at the request of or for the benefit of MLC or any Affiliate of MLC pursuant to this Agreement, as approved by PESRM pursuant to Section 3.19.

 

First Purchaser Requirements” has the meaning set forth in Section 3.19(b)(i).

 

FOB” means Free on Board as such term is defined in Incoterms 2010.

 

Force Majeure” has the meaning set forth in Section 15.01.

 

Framework Agreement” means that certain Framework and Collateral Agency Agreement, dated as of the date hereof, among PESIC, MLC and MLC, as the SOA Collateral Agent, as in effect on the date of this Agreement.

 

GAAP” means generally accepted accounting principles in the United States applied on a consistent basis.

 

General Terms and Conditions” means standardized general terms and conditions for [**].

 

Governmental Approval” means (i) any authorization, consent, approval, license, lease, ruling, permit, tariff, certification, exemption, filing, variance, claim, order, judgment, award, decree, by or with any Governmental Authority, (ii) any declaration of or with any Governmental Authority or (iii) any registration by or with, any Governmental Authority, in each case relating to the due execution and delivery of, or the performance by each intended party of, or the performance of its obligations or the exercise of its rights under, this Agreement and the other PESRM Transaction Documents to which it is (or is intended to be) a party.

 

Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state, provincial or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union, the European

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

16



 

Central Bank or the Organisation for Economic Co-operation and Development), and self-regulatory bodies including NYMEX, ICE or any other exchange or clearing organization on which hedging relating to this Agreement may occur or be cleared.

 

Government Official” has the meaning set forth in Section 6.20(a)(ii).

 

Governmental Real Property Disclosure Requirements” means any Environmental Law requiring notification of the buyer, lessee, mortgagee, assignee, or other transferee of any Real Property, facility, establishment or business, or notification, registration or filing to or with any Governmental Authority, in connection with the sale, lease, mortgage, assignment or other transfer (including any transfer of control) of any Real Property, facility, establishment or business, of the actual or threatened presence or Release in or into the Environment, or the use, disposal or handling of Hazardous Material on, at, under or near the Real Property, facility, establishment or business to be sold, leased, mortgaged, assigned or transferred.

 

Guarantee” has the meaning set forth in Section 13.01.

 

Guaranteed Obligations” has the meaning set forth in Section 13.01.

 

Guarantor” means (i) each Subsidiary listed on Schedule 1.01(b) hereto and (ii) each other Subsidiary that is or becomes a party to this Agreement pursuant to Section 10.10(b) and that has not been designated by PESRM, in accordance with Section 10.16, as an Excluded Subsidiary, and in any event, excluding any Subsidiary that is organized under the laws of a jurisdiction other than the United States or any state thereof or the District of Columbia.

 

Hazardous Materials” means the following: hazardous substances; hazardous wastes; any petroleum-based contaminant; polychlorinated biphenyls (“PCBs”) or any substance or compound containing PCBs; asbestos or any asbestos-containing materials in any form or condition; radon or any other radioactive materials including any source, special nuclear or by-product material; and any other chemicals, wastes, materials, compounds, constituents or substances, subject to regulation as hazardous, toxic, a pollutant or a contaminant, or which can give rise to liability under any Environmental Laws.

 

Hedging Activities” has the meaning set forth in Section 6.09.

 

Holdings” means Philadelphia Energy Solutions, LLC.

 

Hydrocarbon” means Crude Oil and Refined Products.

 

Hydrocarbon Deemed Hedge Contract” means, for any Hydrocarbon, the index specified under the heading “Hydrocarbon Deemed Hedge Contract” on Table 1 of Part 2 of Schedule 5(c).

 

Hydrocarbon Physical Inventory” has the meaning set forth in Schedule 5(c).

 

ICE” means InterContinental Exchange, Inc.

 

ICE LIBOR” has the meaning set forth in the definition of LIBOR.

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

17



 

Illegality” has the meaning set forth in Section 14.03(a)(i).

 

Imbalance Quantity” has the meaning set forth in Section 6.14.

 

In-Storage Inventory” has the meaning set forth in the Inventory Sales Agreement.

 

Indemnifiable Taxes” means all taxes imposed by reason of the procurement, purchase, ownership, storage, transfer, transport, sale or use of the Hydrocarbons or lease, use or ownership of any Required Infrastructure pursuant to this Agreement, any other PESRM Transaction Document, any CO Supply Contract, any PESRM-MLC Secured Prepay Transaction, any MLC-PESIC Secured Prepay Transaction, any PESIC-PESRM Secured Prepay Transaction, any RP Sales Contract, or any Cover Transaction, or by reason of any other transaction or service contemplated hereunder or thereunder, including all foreign, federal, territorial, provincial, state and local taxes on gross income, sales, use, gross receipts, municipal license, value added, severance, ad valorem, excise, inventory, property (whether real or personal), spill, environmental, carbon, production, transaction-based, occupation, gathering, pipeline regulating, windfall profits, gross production, energy, withholding and other taxes and governmental charges and assessments; provided, that Indemnifiable Taxes shall not include (i) any taxes imposed on or measured by net income or profits, capital value, net worth or overall net assets of any entity, whether denominated as franchise taxes, doing business taxes, mercantile taxes, business privilege taxes, capital stock taxes or the like (other than any franchise taxes, mercantile taxes or business privilege taxes (x) imposed on or measured by gross income or gross receipts (including the gross receipts portion of the City of Philadelphia Business Income and Receipts Tax) or (y) that MLC would not have been subject to but for its having entered into any PESRM Transaction Document, CO Supply Contract, PESRM-MLC Secured Prepay Transaction, MLC-PESIC Secured Prepay Transaction, PESIC-PESRM Secured Prepay Transaction, RP Sales Contract, or Cover Transaction, including any transaction or service contemplated thereunder), or (ii) business license or registration fees (other than any non-U.S. business license or registration fees that MLC would not have been subject to but for its having entered into any PESRM Transaction Document, CO Supply Contract, PESRM-MLC Secured Prepay Transaction, MLC-PESIC Secured Prepay Transaction, PESIC-PESRM Secured Prepay Transaction, RP Sales Contract, or Cover Transaction, including any transaction or service contemplated thereunder).

 

Indemnified Party” has the meaning set forth in Section 7.01(f).

 

Indemnifying Party” has the meaning set forth in Section 7.01(f).

 

Index” means, for any Hydrocarbon, the index specified under the heading “Index” in Table 1 of Part 2 of Schedule 5(c).

 

Initial Rack Sale Amount” means $[**].

 

Initial Refined Product Price Amount” has the meaning set forth in Schedule 5(b).

 

Initial RP Purchases” has the meaning set forth in Section 4.13(a).

 

Insurance Requirements” has the meaning set forth in Section 10.04(a).

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

18



 

Intermediate Holdco” has the meaning set forth in the recitals to this Agreement.

 

Inventory Sales Agreement” means that certain Inventory Sales Agreement dated as of the date hereof, between JPMVEC and MLC.

 

Investment Assets” has the meaning assigned to such term in Section 10.10(e).

 

Invoice” has the meaning set forth in Section 5.01.

 

ISDA Termination Event” has the meaning set forth in Section 14.03(a)(iii).

 

Joinder Agreement” means a joinder agreement substantially in the form of Schedule 1.01(e).

 

Jones Act” means the Merchant Marine Act of 1920, as amended.

 

JPMVEC” has the meaning set forth in the recitals of this Agreement.

 

L/C Fees and Costs” means, in respect of any letter of credit posted by [**] or any of its Affiliates to any third party in connection with the performance of [**].

 

Leased Affiliate Transferee Assets” means any Affiliate Transferee Assets leased by a Transaction Party to an Affiliate Transferee.

 

Liabilities” means any losses, claims, charges, damages, deficiencies, assessments, interest, fines, penalties, costs and expenses of any kind (including reasonable attorneys’ fees and disbursements and other fees, court costs and other disbursements), directly or indirectly arising out of or related to any Proceeding (or threatened Proceeding), judgment, investigation (or threatened investigation), settlement (whether or not Proceedings have been initiated) or judicial or administrative order, including any Environmental Claim, and, in each case, including any indemnification by MLC of PESIC or any other Indemnified Party (as defined in the Framework Agreement), other than any MLC Caused Indemnity.  Liabilities shall include costs of purchasing replacement commodities, receipt, storage, transportation and delivery costs relating thereto, liquidated damages, credit charges and hedging costs and [**].

 

LIBOR” means, for any Day, the rate per annum determined by MLC at approximately 11:00 a.m. (London time) on the date that is two London Banking Days prior to such Day by reference to the ICE Benchmark Administration LIBOR Rate, as published by Reuters (or other commercially available source providing quotations of ICE LIBOR as may be designated by MLC from time to time) (“ICE LIBOR”), for a period equal to the designated period; provided, that if the ICE LIBOR is not available to MLC for any reason, then the applicable LIBOR for

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

19



 

such Day shall instead be the average of the rates per annum at which deposits in US Dollars are offered for such designated period to major banks in the London interbank market in London, England by Bank of America, N.A., at approximately 11:00 a.m. (London time) on the date which is two London Banking Days prior to such Day.  Each determination by MLC pursuant to this definition shall be conclusive absent manifest error.

 

Lien” means, with respect to any asset, (i) any mortgage, deed of trust, lien, pledge, encumbrance, charge, collateral assignment, hypothecation, security interest or encumbrance of any kind or any arrangement effective to provide priority or preference or any filing of any financing statement under the UCC, as in effect from time to time in any applicable state or jurisdiction, or any other similar notice of lien under any similar notice or recording statute of any Governmental Authority, including any easement, right-of-way or other encumbrance on title to Real Property, in each of the foregoing cases whether voluntary or imposed by law, (ii) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such property, and (iii) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.

 

London Banking Day” means a Day on which dealings in US Dollar deposits are conducted by and between banks in the London interbank market.

 

Loss” means, with respect to this Agreement or one or more terminated PESRM Transactions (such transactions, the “Terminated Transactions”), as the case may be, and a Party, an amount that Party reasonably determines in good faith and a commercially reasonable manner to be its total losses and costs (or gain, in which case expressed as a negative number) in connection with this Agreement or that Terminated Transaction or group of Terminated Transactions, as the case may be, including, without limitation, any loss of bargain, cost of funding and (i) in any case where MLC is the Performing Party, without duplication, losses and costs (or gains) incurred by MLC as a result of its terminating, liquidating, obtaining, amending or reestablishing any CO Supply Contracts, PESRM-MLC Secured Prepay Transactions, RP Sales Contracts or Cover Transactions (but solely with respect to unreimbursed market structure risks (i.e., deemed basis risks and deemed roll risks), grade differentials and/or locational differentials related to such contracts or transactions, as applicable), any losses and costs (or gains) incurred in liquidating any Crude Oil or Refined Product inventory or removing any such inventory from storage and/or piping, and any unreimbursed CO Transportation and Other Costs, RP Transportation and Other Costs, Cover Transportation and Other Costs and any unpaid Throughput Service Fees and Cover Throughput Service Fees, and (ii) in any case where PESRM is the Performing Party, without duplication, losses and costs (or gains) that would have been incurred by MLC as a result of the termination or liquidation of all then outstanding CO Supply Contracts, PESRM-MLC Secured Prepay Transactions, RP Sales Contracts and Cover Transactions (but solely with respect to (and in each case only to the extent applicable) unreimbursed market structure risks (i.e., deemed basis risks and deemed roll risks), grade differentials and/or locational differentials related to such contracts or transactions, as applicable) and any unreimbursed CO Transportation and Other Costs, RP Transportation and Other Costs, Cover Transportation and Other Costs and any unpaid Throughput Service Fees and Cover Throughput Service Fees.  Loss includes losses and costs (or gains) in respect of any payment or delivery required to have been made (assuming satisfaction of each applicable condition precedent) on or before the relevant Early Termination

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

20



 

Date and not made.  A Party will determine its Loss as of the relevant Early Termination Date, or, if that is not reasonably practicable, as of the earliest date thereafter as is reasonably practicable, subject to Section 14.04(a).  A Party may (but need not) determine its Loss by reference to quotations of relevant rates or prices from one or more leading dealers in the relevant markets.  For the avoidance of doubt, Loss will be calculated separately from any indemnity determinations made under this Agreement.

 

Management Personnel” means Persons, including employees of Holdings, who are engaged in the management or operations of PESRM or any of its Subsidiaries (among other things).

 

Management Personnel Costs” means (i) accrued salaries, bonuses and other compensation of, and expense and tax reimbursements to, Management Personnel and (ii) other costs of Holdings directly arising from the employment of such Management Personnel.

 

Master Netting Agreement” means that certain IECA Master Netting Agreement, dated as of the date hereof, between PESRM and MLC.

 

Material Adverse Condition” has the meaning set forth in Section 6.04(a).

 

Material Adverse Effect” means (i) a material adverse effect on the business, property, results of operations or financial condition of the Transaction Parties or MLC, as applicable, taken as a whole; (ii) a material adverse effect on the ability of the Transaction Parties or MLC, as applicable, to fully perform their respective payment or performance obligations under any Certain PESRM Transaction Document, the MLC-PESIC ISDA Master Agreement or the PESIC-PESRM ISDA Master Agreement; or (iii) a material adverse effect on the rights of or benefits or remedies available to MLC or PESRM, as applicable, under any Certain PESRM Transaction Document, the MLC-PESIC ISDA Master Agreement or the PESIC-PESRM ISDA Master Agreement, in each case other than due to a PESIC Failure.

 

Material Contracts” means (i) to the extent any Permitted Term Loan Facility is then outstanding, the Term Loan Credit Agreement and the other Term Loan Documents, (ii) the Senior Secured Credit Facility Documents and (iii) any other agreement or contract to which any Transaction Party is a party and the failure of which to keep in full force and effect could reasonably be expected to have a Material Adverse Effect.

 

Material Permit” means permits required for PESRM to conduct its businesses, operations and Real Property in accordance with Applicable Law, excluding such permits the absence of which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

 

MLC” has the meaning given to such term in the preamble to this agreement.

 

MLC Caused Indemnity” means any indemnification by [**] as a result of (a) [**], (b) [**] or (c) [**].

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

21



 

MLC Crude Oil Purchase” means the physical volume of all Crude Oil purchased by MLC pursuant to a CO Supply Contract .

 

MLC Deemed Daily Production” has the meaning set forth in Section 3.05(b).

 

MLC Event” means, in respect of any Core PESRM Transaction Document, CO Supply Contract, PESRM-MLC Secured Prepay Transaction, RP Sales Contract or Cover Transaction, (i) [**], or (ii) [**]; provided, that, [**]; and provided [**].

 

MLC Event of Default” has the meaning set forth in Section 14.02.

 

MLC Guarantor” has the meaning set forth in Section 6.17.

 

MLC Guaranty” has the meaning set forth in Section 6.17.

 

MLC Ratings Trigger Event” means [**]’s [**] debt rating is [**] by Moody’s or [**] by S&P.

 

MLC Transaction” has the meaning set forth in Section 14.01(h).

 

MLC-PESIC ISDA Master Agreement” means that certain 2002 MLC-PESIC ISDA Master Agreement, dated as of the date hereof, including the Schedule, exhibits and annexes thereto and the transactions thereunder, between MLC and PESIC, as amended, restated, supplemented, replaced or otherwise modified from time to time.

 

MLC-PESIC Secured Prepay Transaction Documents” has the meaning assigned to the term “PESIC Secured Prepay Transaction Documents” in the Framework Agreement as of the date of this Agreement.

 

MLC-PESIC Secured Prepay Transactions” means those certain [**] and [**] conducted under the [**].

 

Monthly CO FIFO Report” means, with respect to any calendar month, a report substantially in the form of Schedule 3.08(c), setting forth [**].

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

22


 

Monthly Cover Throughput Service Fee” means, for any calendar month, [**] of the Annual Cover Throughput Service Fee for such month ([**]).

 

Monthly True-Up” has the meaning set forth in Section 5.02.

 

Monthly True-Up Date” means the second (2nd) Business Day following the twentieth (20th) Day of each calendar month (or any other Day that may be agreed by MLC and PESRM).

 

Monthly True-Up Invoice” has the meaning set forth in Section 5.02.

 

Moody’s” means Moody’s Investors Service, Inc. or any successor that is a nationally recognized statistical rating organization.

 

Mortgage Policy” has the meaning set forth in Section 2.02(g).

 

Mortgaged Properties” means the parcels of Real Property described by metes and bounds on Schedule 1.01(h) and identified as Parcels A, B-1, C and D in the Owner’s Title Policy, as to which MLC shall be granted a Lien pursuant to the Mortgages.

 

Mortgages” means each of the mortgages and deeds of trust made by any Transaction Party in favor of, or for the benefit of, MLC.

 

New MLC Transactions” has the meaning set forth in the Wind-Down Agreement.

 

Non-Affected Party” has the meaning set forth in Section 6.09.

 

North Yard” means the parcels of real property commonly referred to as the “north yard” located north of Passyunk Avenue and adjacent to Philadelphia Gas Works property and described by metes and bounds on Schedule 1.01(i) and identified as Parcels B-2, B-3, B-4, H-1 and H-2 in the Owner’s Title Policy.

 

North Yard Assets” means, collectively, the North Yard, including all improvements thereon or incidental thereto, any railroads and any other assets or personal property necessary for or incidental to the operation and maintenance of the assets located on the North Yard.

 

NYMEX” means the New York Mercantile Exchange, Inc.

 

Obligations” means (a) obligations of PESRM and the other Transaction Parties from time to time arising under or in respect of the due and punctual payment of all monetary obligations, including fees, reimbursements, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar Proceeding, regardless of whether allowed or allowable in such Proceeding) of PESRM and the other Transaction Parties under this Agreement, the PESRM-MLC Secured Prepay Transactions, the other PESRM Transaction Documents and the RINs Secured Obligations Agreement and (b) the due and punctual performance of all covenants, agreements, obligations and liabilities of PESRM and the other Transaction Parties under or pursuant to this Agreement and the other PESRM Transaction

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

23



 

Documents and the RINs Secured Obligations Agreement. Solely for the purposes of the Term-ABL Intercreditor Agreement, the Term Loan Documents and the Intercreditor Agreement, the PESIC-PESRM ISDA Master Agreement, the PESIC-PESRM Consulting Agreement, the other PESIC-PESRM Secured Prepay Transaction Documents (as defined in the Supply and Offtake Security Agreement), the MLC-PESIC ISDA Master Agreement and the other MLC-PESIC Secured Prepay Transaction Documents (as defined in the Supply and Offtake Security Agreement) shall be deemed to be “Supply and Offtake Documents,” and “Obligations” shall be deemed to include PESRM’s obligations to PESIC under the PESIC-PESRM ISDA Master Agreement.

 

Oil Flow Report” means, for any Day, a written report substantially in the form attached hereto as Schedule 4.09(a) that sets forth [**].

 

On-Premise Infrastructure” means the PESRM Infrastructure, the Sunoco PMT Infrastructure (other than the Eagle Point Terminal and the Paulsboro Terminal) and any Other Third Party Infrastructure owned by an Affiliate Transferee.

 

Operational Imbalance” has the meaning set forth in Section 6.14.

 

Operational Issue” means an RP Operational Issue and/or a CO Operational Issue, as applicable.

 

Original Agreement” has the meaning set forth in the recitals of this Agreement.

 

Original Agreement Effective Date” has the meaning set forth in the recitals of this Agreement.

 

OSG Chartering Letter” means [**], and [**].

 

Other Logistics Assets” means, collectively, (a) the West Yard, including all improvements thereon or incidental thereto, (b) any railroads, railcars, rail loading and unloading facilities, (c) tanks that are (x) dedicated to any rail loading and unloading facility or (y) otherwise put into service after April 4, 2013, (d) pipeline infrastructure that connects any rail loading and unloading facility to these tanks and these tanks to the Refinery, (e) any assets and property interests which are subject to the rights of first refusal in favor of PESRM under the Terminaling Agreements, along with any pipeline infrastructure connecting these assets or property interests to the Refinery that are acquired by PESRM or any Guarantor after April 4, 2013, (f) any assets owned by PESRM and subject to a right of first offer or option pursuant to any agreement with PES Logistics, L.P. and (g) all contract rights and real estate rights related thereto.

 

Other Third Party” means (i) Kinder Morgan Liquids Terminals, LLC (“KMLT”) and (ii) any other Person listed in Schedule 1.01(w), as amended from time to time, including any Affiliate Transferee that owns Other Third Party Infrastructure (as set forth on an amended

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

24



 

Schedule 1.01(w) updated at any time any such Other Third Party Infrastructure is transferred to such Affiliate Transferee in accordance with this Agreement).

 

Other Third Party Infrastructure” means (i) the infrastructure assets available to PESRM under the Master Services Agreement dated as of January 1, 1996, between KMLT and PESRM (as successor in interest to Sunoco R&M), as amended from time to time, including the infrastructure assets listed in Schedule 1.01(w) (as amended from time to time) and (ii) any other infrastructure assets of any Other Third Party that are listed in Schedule 1.01(w), as amended from time to time, including any infrastructure assets comprised of Affiliate Transferee Assets owned by an Affiliate Transferee (as set forth on an amended Schedule 1.01(w) updated at any time such infrastructure assets are transferred to such Affiliate Transferee in accordance with this Agreement), but excluding, for the avoidance of doubt, any Leased Affiliate Transferee Assets.

 

Owner’s Title Policy” means that certain Owner’s Policy of Title Insurance issued by First American Title Insurance Company in favor of PESRM, Policy No. 5011442-0051311e, including any and all endorsements to the same.

 

Parties” has the meaning set forth in the introductory paragraph of this Agreement.

 

Party” has the meaning set forth in the introductory paragraph of this Agreement.

 

Paulsboro Terminal” means that certain Hydrocarbon terminal, operated as of the date hereof by Sunoco PMT, which is located in Paulsboro, New Jersey.

 

[**] Transaction” means each CO [**] Transaction and each Cover [**] Transaction.

 

Performing Party” has the meaning set forth in Section 14.04(a)(i).

 

Permit” means any permit, license, approval, registration, notification, exemption, consent or other authorization required by or from a Governmental Authority under any Applicable Law, not including any Environmental Law.

 

Permitted Liens” has the meaning set forth in Section 11.02.

 

Permitted Specified Transactions” has the meaning set forth in Section 11.15.

 

Permitted Term Loan Facility” means (a) the secured term loan facility evidenced by the Existing Term Loan Credit Agreement, (b) to the extent the Existing Term Loan Facility is refinanced, in whole or in part, with (x) unsecured Indebtedness, and/or (y) a secured term loan facility (and any refinancing or replacement of any such secured term loan facility), provided that, in each case, (1) the aggregate principal amount of such secured and unsecured Indebtedness does not exceed an amount equal to the Term Loan Permitted Indebtedness Limit minus the aggregate principal amount of any Indebtedness outstanding under (A) any Permitted Term Loan Facility then outstanding minus, (B) any then-outstanding Development Financing secured by Liens on property other than the property to which such Development Financing relates and (C) any then-outstanding Indebtedness incurred under Section 11.01(y) secured by Liens on property other than the property to which such Indebtedness relates and (c) with respect

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

25



 

to any secured term loan facility permitted under the preceding clause (b), such secured Indebtedness (i) is not secured by Liens on any ABL/SOA Priority Collateral unless such Liens are subordinated to the Obligations pursuant to an intercreditor agreement on terms and conditions substantially similar to those set forth in the Existing Term-ABL Intercreditor Agreement or any intercreditor agreement with respect to ABL/SOA Priority Collateral in force immediately prior to the incurrence of such Indebtedness (such intercreditor agreement, together with the Existing Term-ABL Intercreditor Agreement, a “Term-ABL Intercreditor Agreement”), provided that, in no event shall any such intercreditor agreement result in the removal of any assets or property from the definitions of ABL/SOA Collateral or MLC Separate Assets and Collateral set forth in the Existing Term-ABL Intercreditor Agreement, except as set forth in and pursuant to Section 16.18, (ii) the material terms of such financing (including interest rates) are generally consistent with prevailing market terms for such type of financing facility available to similarly-situated borrowers in the refining industry at the time such financing facility is entered into, documented pursuant to a loan agreement (together with the Existing Term Loan Credit Agreement, the “Term Loan Credit Agreement”) and (iii) any scheduled amortization payments thereunder shall not exceed an amount per annum equal to 5.00% of the principal amount of Indebtedness incurred under such facility.

 

Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

 

PESA” means PES Administrative Services, LLC.

 

PESIC” means PES Inventory Company, LLC, a special purpose vehicle owned by Intermediate Holdco.

 

PESIC Account” means that certain deposit account maintained at Bank of New York Mellon in the name of [**].

 

PESIC Account Control Agreement” means an agreement in form [**].

 

PESIC Failure” means any PESRM/PESIC Failure to Perform by PESIC that was not caused by the actions of, or inaction by, PESRM under the PESIC-PESRM Consulting Agreement or PESRM or an Affiliate of PESRM under the PESIC LLC Agreement and was caused by the actions or inactions of the holder(s) of Common Shares of PESIC.

 

PESIC Security Agreement” means that certain Security Agreement, dated as of the date hereof, by and among PESIC, as grantor, and MLC.

 

PESIC-PESRM Consulting Agreement” means the consulting agreement, dated as of the Effective Date, between PESIC and PESRM, as amended, restated, replaced, supplemented or otherwise modified from time to time.

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

26



 

PESIC-PESRM ISDA Master Agreement” means that certain 2002 PESRM-MLC ISDA Master Agreement, dated as of the date hereof, including the Schedule, exhibits and annexes thereto and the transactions thereunder, between PESRM and PESIC, as amended, restated, supplemented, replaced or otherwise modified from time to time.

 

PESIC-PESRM Secured Prepay Transaction Documents” means the PESIC-PESRM ISDA Master Agreement, the PESIC-PESRM Consulting Agreement and the Consent to Assignment (each as defined in the Framework Agreement as in effect on the date of this Agreement).

 

PESIC-PESRM Secured Prepay Transactions” means [**] and [**] conducted under [**].

 

PESRM” has the meaning set forth in the introductory paragraph of this Agreement.

 

PESRM Buy Request” has the meaning set forth in Section 3.09(b).

 

PESRM Event of Default” has the meaning set forth in Section 14.01.

 

PESRM/PESIC Failure to Perform” has the meaning set forth in Section 6.15.

 

PESRM FTZ” has the meaning set forth in Section 6.16(a).

 

PESRM Infrastructure” means (i) the Refinery and other infrastructure assets owned by PESRM that are reasonably necessary or desirable to the performance by the Parties of their respective obligations under this Agreement, including the infrastructure assets listed in Schedule 1.01(t), as amended from time to time and (ii) any Affiliate Transferee Assets that are not covered by clause (i) above, but that are owned by PESRM or any other Transaction Party (as set forth on an amended Schedule 1.01(t) updated at any time such infrastructure assets are acquired by PESRM or such other Transaction Party in accordance with this Agreement), including, for the avoidance of doubt, in respect of each of clauses (i) and (ii) above, any Leased Affiliate Transferee Assets.

 

PESRM Prepayment Amount Failure” has the meaning set forth in Section 3.09(d).

 

PESRM Sales Request” has the meaning set forth in Section 4.09(b).

 

PESRM Transaction Documents” means this Agreement, the PESRM Transactions, the PESRM-MLC ISDA Master Agreement and the other PESRM-MLC ISDA Documents, the PESRM-MLC Secured Prepay Transactions, each Third Party Consent Agreement, the PESRM-MLC Consulting Agreement, the Products Sales Agreement, the Supply and Offtake Security Documents, the Intercreditor Agreement, the Master Netting Agreement and any other agreement entered into in connection with this Agreement or any other such agreement.

 

PESRM Transactions” means (i) any CO Transaction, (ii) any RP Transaction, (iii) any Butane Sale Transaction and (iv) any PESRM-MLC Secured Prepay Transaction.

 

PESRM-MLC CO Secured Prepay Transaction” means a PESRM-MLC Secured Prepay Transaction for supply of Crude Oil to the Refinery.

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

27



 

PESRM-MLC Consulting Agreement” means that certain Amended and Restated Consulting Agreement dated as of the Effective Date, between MLC (as assignee of JPMVEC) and PESRM, as amended, restated, replaced, supplemented or otherwise modified from time to time, as assigned by JPMVEC to MLC pursuant to the Assignment and Assumption Agreement.

 

PESRM-MLC ISDA Master Agreement” means that certain 2002 PESRM-MLC ISDA Master Agreement, dated as of the date hereof, including the schedule, exhibits and annexes thereto and the transactions thereunder, between MLC and PESRM, pursuant to which MLC and PESRM may enter into PESRM-MLC Secured Prepay Transactions, as amended, restated, supplemented, replaced or otherwise modified from time to time.

 

PESRM-MLC ISDA Documents” has the meaning ascribed to such term in the PESRM-MLC ISDA Master Agreement.

 

PESRM-MLC [**] Transaction” has the meaning given to the term [**] in the [**].

 

PESRM-MLC RP Secured Prepay Transaction” means a PESRM-MLC Secured Prepay Transaction for the sale of Refined Products.

 

PESRM-MLC Secured Prepay Transaction” means a [**] and [**]. PESRM-MLC Secured Prepay Transaction may mean either a PESRM-MLC CO Secured Prepay Transaction, PESRM-MLC RP Secured Prepay Transaction or both, as the context may require.

 

PESRM-MLC [**] Transaction” has the meaning given to such term [**] in the [**].

 

Post Transfer Environmental Liabilities” has the meaning set forth in Section 11.08(p).

 

“PPC” means Lucknow-Highspire Terminals Co.

 

Prepayment Amount” means, in connection with [**] (i) [**], (ii) [**], and/or (iii) [**].

 

Priced Hydrocarbon Inventory” has the meaning set forth in Schedule 5(c).

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

28



 

Principal CO Cover Terms” means, in respect of any CO Cover Transaction, the Principal CO Terms for such CO Cover Transaction.

 

Principal CO Terms” means, in respect of any CO Supply Contract, those terms identified on [**], including (i) [**], (ii) [**], (iii) [**], (iv) [**], (v) [**], (vi) [**], (vii) [**] and (viii) [**].

 

Principal Cover Terms” means the Principal RP Cover Terms and/or the Principal CO Cover Terms, as applicable.

 

Principal RP Cover Terms” means, in respect of any RP Cover Transaction, the Principal RP Terms for such RP Cover Transaction.

 

Principal RP Terms” means, in respect of any RP Sales Contract , those terms identified on [**], including (i) [**], (ii) [**], (iii) [**], (iv) [**], (v) [**], (vi) [**], (vii) [**] and (viii) [**].

 

Principal Terms” means the Principal CO Cover Terms, Principal CO Terms, Principal RP Cover Terms and/or the Principal RP Terms, as the context may require.

 

Proceeding” means any suit, action, proceeding, claim, challenge or other matter whether brought before a Governmental Authority, arbitration panel or other body.

 

Product Purchaser” has the meaning set forth in Section 4.09(a).

 

Product Purchaser Delivery Point” means the gauges or metering points, as applicable, set forth in Schedule 4.09 that, in each case, are located immediately prior to the point where the applicable Refined Product is delivered by MLC to a Product Purchaser pursuant to a RP Sales Contract on an FOB basis at the Refinery or the other Basic Infrastructure.

 

Products Sales Agreement” means that certain Products Sales Agreement, dated as of the Effective Date, between PESRM and MLC.

 

Protocols” means the Sourcing Protocols, the Sales Protocols and the Cover Protocols.

 

Provisional FIFO Queue Report” means a report substantially in the form of Schedule 3.08(b)(iv).

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

29



 

Rack” means a facility that is operating and capable of loading tank trucks with blended refined petroleum products for marketing refined petroleum products by truck and which provides blending and additive services, as more specifically set forth on Schedule 1.01(k), as amended from time to time.

 

Rack Infrastructure Owner” means, with respect to each Rack, the entity set forth opposite the name of such Rack on Schedule 1.01(k), as amended from time to time.

 

Rack Sale Prepayment Amount” means, for any [**], (a) [**] and (b) [**] (i) [**] (ii) [**].

 

Rack Sales Contract” has the meaning set forth in Section 4.09(c).

 

Real Property” means any parcel or tract, or portion thereof, of real property owned by any Transaction Party, which for purposes of this Agreement and the other PESRM Transaction Documents shall not include the North Yard and any improvements thereto or the West Yard and any improvements thereto.

 

Recording Office” has the meaning set forth in Section 2.02(g).

 

Refined Product” has the meaning set forth in Schedule 1.01(c).

 

Refined Product Price Amount” has the meaning set forth in Schedule 5(b).

 

Refined Product Specifications” means, in respect of any Refined Product, the applicable specifications for such Refined Product, set forth in Schedule 1.01(c), as amended from time to time.

 

Refinery” means the refinery located in Philadelphia, Pennsylvania (consisting of two formerly separate refining operations commonly known as “Point Breeze” and “Girard Point”), as further described on Schedule 1.01(l) including the North Yard and the West Yard.

 

Refinery Real Property” means the real property interests at the site of the Refinery as described in Schedule 1.0.1(m).

 

Release” means any spilling, leaking, seepage, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing, depositing, dispersing, emanating or migrating of any Hazardous Material in, into, onto or through the Environment.

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

30



 

Relevant Day” has the meaning set forth in Section 3.05(a).

 

Renewable Fuel Standards” means the regulatory requirements set forth in 40 C.F.R. Part 80, Subpart M, §§ 80.1400 et seq.

 

Required Infrastructure” has the meaning set forth in Section 6.05(a).

 

Response” means (a) “response” as such term is defined in CERCLA, 42 U.S.C. § 9601(24), and (b) all other actions required by any Governmental Authority or voluntarily undertaken to (i) clean up, remove, treat, abate or in any other way address any Hazardous Material in the Environment, (ii) prevent the Release or threat of Release, or minimize the further Release, of any Hazardous Material, or (iii) perform studies and investigations in connection with, or as a precondition to, or to determine the necessity of the activities described in, subclause (i) or (ii) above.

 

RIN” has the meaning as set forth in 40 C.F.R. § 80.1401 and regulated as part of Renewable Fuel Standards.

 

RINs Secured Obligations Agreement” has the meaning given to such term in the Intercreditor Agreement.

 

RP Cover Throughput Service Fee” has the meaning set forth in Schedule 12.

 

RP Cover Transaction Price Amount” has the meaning set forth in Schedule 12.

 

RP Cover Transaction Volume Limitation” has the meaning set forth in Section 12.06(b).

 

RP Cover Transactions” has the meaning set forth in Section 12.01(a)(i).

 

RP Delivery Point” means the gauges or metering points, as applicable, set forth in Schedule 4.01.

 

RP Operational Issue” means, as determined by MLC in good faith and a commercially reasonable manner based on information provided by PESRM, a circumstance or event that occurs with respect to the Refinery and/or any Required Infrastructure (including planned maintenance and mechanical failures) or any mode of transportation utilized by the Refinery to effect delivery under any RP Sales Contract or PESRM-MLC RP Secured Prepay Transaction and that results in a failure by the Refinery to (i) produce the quantity of Refined Product required to be delivered under any RP Sales Contract or PESRM-MLC RP Secured Prepay Transaction or (ii) deliver any Refined Product on the delivery dates, and to the Product Purchaser Delivery Point or other delivery point specified in any applicable RP Sales Contract or PESRM-MLC RP Secured Prepay Transaction.

 

RP Sales Contract” has the meaning set forth in Section 4.09(c).

 

RP Sales Contract Prepayment Amount” means [**], (a) [**] and (b) [**].

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

31



 

RP Transaction” has the meaning set forth in Section 4.05(a).

 

RP Transportation and Other Costs” means any and all direct expenses incurred by MLC (and not previously paid by PESRM) (including any such expenses payable to PESRM or any PESRM Affiliate), relating to the receipt, storage, transportation and/or delivery of Refined Products to, at and/or from the Refinery or the other Basic Infrastructure (including any costs of bank countersigned letters of indemnity, L/C Fees and Costs, MLC’s share of any inspection costs and any contractual obligation to indemnify or reimburse any Product Purchaser under any RP Sales Contract for any Indemnifiable Taxes (including any taxes thereon), damages, duties, imposts, tariffs, fees, costs of posting any bonds, charges, losses or liabilities of whatever nature together with any penalties and costs associated therewith), but excluding (i) any expenses after such Refined Products are delivered to third party purchasers at the applicable Product Purchaser Delivery Point and (ii) any Demurrage Costs.  RP Transportation and Other Costs shall not include any costs or increases of costs that arise from any MLC Event.

 

RVO” means any Renewable Volume Obligation as defined in 40 C.F.R. § 80.1407 and regulated as part of Renewable Fuel Standards.

 

S&P” means Standard & Poor’s Rating Agency Group, a division of McGraw Hill Companies, Inc., or any successor that is a nationally recognized statistical rating organization.

 

Sales Protocols” has the meaning set forth in Section 4.09.

 

Section 3.09(d) Funding Costs” has the meaning set forth in Section 3.09(d).

 

Securities Account” has the meaning assigned to such term in the UCC.

 

Senior Secured Credit Facility” means that certain Amended and Restated Revolving Credit and Guaranty Agreement dated as of the Effective Date, among PESRM, the Guarantors, the Lenders (as defined therein) party thereto from time to time, Bank of America, as sole lead arranger and sole bookrunner, Bank of America, as swingline lender, Bank of America and  JPMorgan Chase Bank, N.A. as issuing banks, and Bank of America, as administrative agent and as collateral agent, as amended, supplemented or otherwise modified from time to time.

 

Senior Secured Credit Facility Documents” means the “Loan Documents” under the Senior Secured Credit Facility and as defined therein as of the Effective Date.

 

Sleeve Transaction” has the meaning set forth in the Wind-Down Agreement.

 

SOA Collateral Agent” means Merrill Lynch Commodities, Inc., in its capacity as collateral agent for the Supply and Offtake Secured Parties (as defined in the Supply and Offtake Security Agreement).

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

32


 

Sourcing Protocols” has the meaning set forth in Section 3.09.

 

Specified Losses and Costs” means any losses (or gains in which case expressed as a negative number), costs and expenses (including reasonable attorneys’ fees and disbursements) incurred by MLC in connection with (i) the occurrence of an Illegality under this Agreement or any PESRM Transaction, CO Supply Contract, PESRM-MLC Secured Prepay Transaction, RP Sales Contract, or Cover Transaction, or (ii) a breach, default (however defined) or other failure to perform by a counterparty under any CO Supply Contract, PESRM-MLC Secured Prepay Transaction, RP Sales Contract or Cover Transaction (excluding any loss, cost or expense to the extent caused by the bankruptcy or insolvency of the counterparty under such contract) and any losses, costs and expenses under this Agreement or a PESRM Transaction, or by PESRM under the PESRM-MLC ISDA Master Agreement or any PESRM-MLC Secured Prepay Transaction, to the extent related to or caused by such breach, default or other failure.

 

Specified Transaction” means (i) any transaction (including an agreement with respect to any such transaction) now existing or hereafter entered into between PESRM and any third party (x) which is a rate swap transaction, swap option, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option, credit protection transaction, credit swap, credit default swap, credit default option, total return swap, credit spread transaction, repurchase transaction, reverse repurchase transaction, buy/sell-back transaction, securities lending transaction, weather index transaction, forward purchase or sale of a security, commodity or other financial instrument or interest (including any option with respect to any of these transactions) or (y) which is a transaction similar to any transaction referred to in subclause (x) that is currently, or in the future becomes, regularly entered into in the financial markets (including terms and conditions incorporated by reference in such agreement) and which is a forward, swap, future, option or other derivative on one or more rates, currencies, commodities, equity securities or other equity instruments, debt securities or other debt instruments, or economic indices or measures of economic risk or value, or other benchmarks against which payments or deliveries are made and (ii) any combination of these transactions.  For the avoidance of doubt, “Specified Transaction” shall not include this Agreement, any PESRM Transaction, any PESIC-PESRM Secured Prepay Transaction, any MLC-PESIC Secured Prepay Transaction or the Financial Products ISDA Master Agreement.

 

Specified Transaction Obligation” means obligations under or with respect to Specified Transactions.

 

Subsidiary” means, with respect to any Person (the “parent”) at any date, (i) any Person the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, (ii) any corporation, limited liability company, association or other business entity of which securities or other ownership interests representing more than 50% of the voting power of all Equity Interests entitled (without regard to the occurrence of any contingency) to vote in the election of the board of directors thereof are, as of such date, owned, controlled or held by the parent and/or one or more subsidiaries of the parent, (iii) any partnership (a) the sole general partner or the managing general partner of which is the parent and/or one or more subsidiaries of

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

33



 

the parent or (b) the only general partners of which are the parent and/or one or more subsidiaries of the parent and (iv) any other Person that is otherwise Controlled by the parent and/or one or more subsidiaries of the parent.  Unless the context requires otherwise, “Subsidiary” refers to a Subsidiary of PESRM.

 

Sunoco” means Sunoco, LLC.

 

Sunoco Pipeline” means Sunoco Pipeline L.P.

 

Sunoco Pipeline Contracts” means (a) the Amended and Restated Inter-Refinery Pipeline Lease, between Sunoco Pipeline and PESRM, dated as of the Original Agreement Effective Date, as amended on November 30, 2012, (b) the Pipeline Connection Agreement (SRTF), between Sunoco Pipeline and PESRM, dated as of the Original Agreement Effective Date and (c) the Pipeline Connection Agreement (Outplant Lines), between Sunoco Pipeline and PESRM, dated as of the Original Agreement Effective Date, each as amended from time to time.

 

Sunoco Pipeline Infrastructure” means the infrastructure assets made available to PESRM under the Sunoco Pipeline Contracts, including the infrastructure assets listed in Schedule 1.01(v), as amended from time to time.

 

Sunoco PMT” means Sunoco Partners Marketing & Terminals L.P.

 

Sunoco PMT Contracts” means (a) the Ft. Mifflin - Marine Dock & Terminaling Agreement, between Sunoco PMT and PESRM, dated as of the Original Agreement Effective Date, (b) the Paulsboro/Belmont — Products Terminal Services Agreement, between Sunoco PMT and PESRM, dated as of the Original Agreement Effective Date, (c) the Eagle Point — Terminaling & Storage Agreement, between Sunoco PMT and PESRM, dated as of the Original Agreement Effective Date, and (d) the Terminal Servies Agreement dated as of May 8, 2014 by and between Sunoco PMT and PESRM, each as amended from time to time.

 

Sunoco PMT Infrastructure” means the infrastructure assets made available to PESRM under the Sunoco PMT Contracts, including the infrastructure assets listed in Schedule 1.01(u), as amended from time to time, and excluding any such infrastructure assets transferred to and owned by, or leased by a Transaction Party to, an Affiliate Transferee from and after the date such infrastructure assets are transferred or leased to such Affiliate Transferee in accordance with this Agreement (as set forth on an amended Schedule 1.01(u) updated on each such date).

 

Sunoco R&M” means Sunoco, LLC (f/k/a Sunoco, Inc. (R&M).

 

Supply and Offtake Documents” means the PESRM Transaction Documents.

 

Supply and Offtake Perfection Certificate” means a duly completed and executed certificate substantially in the form of Schedule 1.01(g).

 

Supply and Offtake Security Agreement” means that certain Second Amended and Restated Supply and Offtake Security Agreement, dated as of the date hereof, by and among PESRM, as Grantor, each other Grantor and the SOA Collateral Agent (as assignee of JPMVEC).

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

34



 

Supply and Offtake Security Agreement Collateral” means all property pledged, granted or reaffirmed as collateral pursuant to the Supply and Offtake Security Agreement (a) on the Effective Date or (b) pursuant to Section 10.10.

 

Supply and Offtake Security Documents” means the Supply and Offtake Security Agreement, the Mortgages, the Deed of Pledge and each other security document delivered in accordance with applicable local or foreign law to grant a valid, perfected security interest in any property as collateral for the Secured Obligations, and all UCC or other financing statements or instruments of perfection required by this Agreement, the Supply and Offtake Security Agreement, or any other such security document to be filed with respect to the security interests in property created pursuant to the Supply and Offtake Security Agreement and any other document or instrument utilized to pledge or grant or purport to pledge or grant a security interest or lien on any property as collateral for the Obligations. For the avoidance of doubt, “Supply and Offtake Security Documents” shall not include PESIC Security Agreement or [**].

 

Survey” means an as-built survey of such Mortgaged Properties certified to MLC and the Title Company in a manner reasonably satisfactory to them, dated a date satisfactory to MLC and the Title Company by an independent professional licensed land surveyor reasonably satisfactory to MLC.

 

SXL” means Sunoco Logistics Partners L.P. and any or all of its Subsidiaries, as the context requires.

 

SXL Report” means a report produced by SXL substantially in the form of Schedule 4.04(a).

 

Tank” means each of the tanks identified in Schedules 1.01(u), (v), (w) and (x) of this Agreement.

 

Term” has the meaning set forth in Section 2.01.

 

Term–ABL Intercreditor Agreement” has the meaning set forth in the definition of “Permitted Term Loan Facility”.

 

Term Expiration Date” has the meaning set forth in Section 6.02(a).

 

Term Loan Credit Agreement” has the meaning assigned to such term in the definition of “Permitted Term Loan Facility”.

 

Terminaling Agreements” means any agreements to which PESRM is a party as of the Effective Date with respect to the receipt, handling, storage or delivery of crude oil, refined petroleum products (or any other products reasonably related or ancillary thereto).

 

Terminated Transactions” has the meaning set forth in the definition of Loss.

 

Termination Event” has the meaning set forth in Section 14.03(a).

 

Termination Payment” has the meaning set forth in Section 14.04(b).

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

35



 

Third Party” means Sunoco PMT, Sunoco Pipeline and any Other Third Party.

 

Third Party Claim” has the meaning set forth in Section 7.01(f).

 

Third Party Consent Agreementmeans a consent agreement, in the form of Schedule 18 or otherwise in form and substance satisfactory to MLC, between an owner of Third Party Infrastructure and the SOA Collateral Agent.

 

Third Party Contract” means any agreement entered into between PESRM and a third party owner from time to time that provides for infrastructure or equipment that loads, unloads, stores, blends, transports or processes MLC Separate Assets and Collateral.

 

Third Party Infrastructure” means the Sunoco PMT Infrastructure, the Sunoco Pipeline Infrastructure and any Other Third Party Infrastructure.

 

Throughput Service Fee” means (i) [**] and (ii) [**].

 

Throughput Service Fee Implied Discount” means, in respect of [**], the sum of (a) the [**] plus (b) the [**].

 

Throughput Service Fee Implied Discount True-Up” means, in respect of [**], an amount equal to (a) the [**] minus (b) an amount equal to (I) [**], (II) [**] and (III) [**], payable by (x) [**] and (y) [**].

 

Title Company” means First American Title Insurance Company, or another title insurance company reasonably acceptable to MLC.

 

Transaction Documents” means (i) the PESRM Transaction Documents and (ii) the Senior Secured Credit Facility Documents.

 

Transaction Parties” has the meaning set forth in the introductory paragraph of this Agreement.

 

Transferred Guarantor” has the meaning set forth in Section 13.10.

 

True Up Calendar Month Crude Oil Differential” has the meaning set forth in Schedule 5(a).

 

True-Up Crude Oil Price Amount” has the meaning set forth in Schedule 5(a).

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

36



 

True-Up Refined Product Price Amount” has the meaning set forth in Schedule 5(b).

 

UCC” means the Uniform Commercial Code, as in effect from time to time (except as otherwise specified) in any applicable state or jurisdiction.

 

Uninvoiced Day” means any Day that is not a Business Day and for which an Invoice has not previously been prepared by MLC and delivered to PESRM pursuant to Section 5.01.

 

United States” means, the United States of America.

 

Unpaid Amounts” means, with respect to any Early Termination Date, but without duplication of any amounts included in the related calculation of Loss, the aggregate of the amounts that became payable (whether or not due) to PESRM or MLC hereunder prior to the occurrence of such Early Termination Date or as a result of the termination of this Agreement and that remain payable (whether or not due) as at such Early Termination Date (including any Working Capital Fee, any Auto-Bin Deemed Hedge Roll true-up and any indemnities) together with interest thereon from (and including) the date such amounts became due and payable to (but excluding) such Early Termination Date, at the interest rate set forth in Section 16.12.

 

US Dollars” and “$” means the lawful money of the United States of America.

 

VAT” means value added tax.

 

Vessel” has the definition set forth in the PESRM-MLC ISDA Master Agreement.

 

Volumetric Gain and Loss” means the value, as determined by MLC, of any gains or losses in respect of any volume of in-transit or in-storage Crude Oil, Refined Product or the measurement thereof (each relevant volume being measured in accordance with Section 6.11) in connection with the PESRM Transactions, CO Supply Contracts, RP Sales Contracts and Cover Transactions (including, in each case, any hedging gain or loss directly relating to any such volumetric gain or loss), for which, in the case of any loss, MLC has not been compensated by PESRM or any third party, and, in the case of any gain, MLC has not paid PESRM or any third party for the relevant excess volume (each such gain, a “Volumetric Gain”, and each such loss, a “Volumetric Loss”). PESRM shall have the right to require a review by a jointly appointed independent inspector of any MLC determination of a Volumetric Gain or Volumetric Loss by notice given to MLC within two (2) Business Days after PESRM is notified of such determination.

 

West Yard” means the parcel of real properly (and any improvements to such parcel of real property) commonly referred to as the “west yard” described by metes and bounds on Schedule 1.01(j) and identified in the Owner’s Title Policy as Parcel E.

 

Wind-Down Agreement” has the meaning set forth in the recitals hereto.

 

Wind-down Liquidation” has the meaning set forth in Section 6.02(b).

 

Working Capital Amount” means, [**]:

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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(a) the sum of (i) [**], and (ii) [**];

 

PLUS

 

(b)           [**];

 

MINUS

 

(c)           [**];

 

MINUS

 

(d)           [**];

 

MINUS

 

(e)           [**].

 

Working Capital Fee” means, [**], the product of (i) [**] and (ii) [**].

 

Working Capital Rate” means, [**], for each Day, the sum of (i) [**] and (ii) [**].

 

Section 1.02          Principles of Construction.  The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.”  The word “will” shall be construed to have the same meaning and effect as the word “shall.”  Unless the context requires otherwise (a) any definition of or reference to any PESRM Transaction Document, agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified or in effect (subject to any restrictions on such amendments, supplements or modifications set forth herein) unless the context expressly otherwise requires,

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

38



 

(b) any reference herein to any person shall be construed to include such person’s successors and assigns, (c) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Annexes and Schedules shall be construed to refer to Articles and Sections of, and Annexes and Schedules to, this Agreement, (e) any reference to any law or regulation herein shall refer to such law or regulation as amended, modified or supplemented from time to time, and (f) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

 

Section 1.03          Accounting Terms; GAAP.  Except as otherwise expressly provided herein, all financial statements to be delivered pursuant to this Agreement shall be prepared in accordance with GAAP as in effect from time to time and all terms of an accounting or financial nature shall be construed and interpreted in accordance with GAAP, as in effect on the date hereof unless otherwise agreed to by MLC.  If, after the Effective Date, any change in the accounting principles used in the preparation of the most recent financial statements referred to in Section 10.01 is hereafter required or permitted by the rules, regulations, pronouncements and opinions of the Financial Accounting Standards Board or the American Institute of Certified Public Accountants (or any successors thereto) and such change is adopted by PESRM and results in a change in any of the calculations required by Article XI that would not have resulted had such accounting change not occurred, if requested by PESRM or MLC, the parties hereto agree to enter into negotiations in good faith in order to amend such provisions so as to equitably reflect such change such that the criteria for evaluating compliance with such covenants by PESRM shall be the same after such change as if such change had not been made; provided, that (i) no change in GAAP that would affect a calculation that measures compliance with any covenant contained in Article XI shall be given effect until such provisions are amended to reflect such changes in GAAP and (ii) PESRM shall provide to MLC financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between such calculations made before and after giving effect to such change in GAAP.

 

Section 1.04          Single Agreement.  All PESRM Transactions and all transactions contemplated thereby are entered into in reliance on the fact that this Agreement, the PESRM Transaction Documents and all PESRM Transactions, the PESIC-PESRM ISDA Master Agreement and all PESIC-PESRM Secured Prepay Transactions (and all transactions contemplated thereby) form a single integrated agreement among MLC and the Transaction Parties.

 

Section 1.05          Inconsistency.  In the event of any inconsistency between the provisions of any PESRM Transaction and this Agreement, the terms of such PESRM Transaction will prevail for purposes of such transaction.

 

Section 1.06          Additional Defined Terms.  For purposes of the definitions of “Excluded Subsidiary” and “Material Contracts” in Section 1.01, Section 1.01(j), Sections 2.02, 14.01(i), 14.01(l), 14.01(m), 14.02(g), 16.08, 16.18 and Articles VIIIIX, X, XI and XIII, the defined terms set forth in Annex I (except as otherwise specified in Annex I) (including each defined term that is used, directly or indirectly, in each defined term listed in Annex I, but that is not defined in this Agreement) shall have the meaning ascribed to such terms in the Senior Secured

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

39



 

Credit Facility as in effect on the Effective Date without giving effect to any subsequent termination, amendment, modification, supplement or waiver to or of the Senior Secured Credit Facility.  References in the defined terms so incorporated herein pursuant to the preceding sentence (for purposes of such sections and articles hereof):

 

(a)                                 to “Administrative Agent”, “Collateral Agent”, “Lender” or “Lenders”, “Required Lenders”, “Secured Party” or “Secured Parties”, or “Swingline Lender” shall be deemed amended in each case to be a reference to MLC in its capacity as a Party to this Agreement, and the text of such defined terms shall be deemed amended, mutatis mutandis, to give effect to such deemed reference;

 

(b)                                 to “Borrower” shall be deemed amended in each case to be a reference to “PESRM” in its capacity as a Party to this Agreement, and the text of such defined term shall be deemed amended, mutatis mutandis, to give effect to such deemed reference;

 

(c)                                  to “Hedging Agreement” shall be deemed amended in each case to be a reference to “Specified Transaction”, as such term is defined in this Agreement, and the text of such defined term shall be deemed amended, mutatis mutandis, to give effect to such deemed reference;

 

(d)                                 to “Hedging Obligation” shall be deemed amended in each case to be a reference to “Specified Transaction Obligation”, as such term is defined in this Agreement, and the text of such defined term shall be deemed amended, mutatis mutandis, to give effect to such deemed reference;

 

(e)                                  to “Loan Document” or “Loan Documents” shall be deemed amended in each case to be a reference to “Senior Secured Credit Facility Documents”, as such term is defined in this Agreement, but without giving effect to any subsequent termination, amendment, modification, supplement or waiver to or of the Senior Secured Credit Facility, and the text of such defined terms shall be deemed amended, mutatis mutandis, to give effect to such deemed reference;

 

(f)                                   to “Loan Party” or “Loan Parties” shall be deemed amended in each case to be a reference to “Transaction Parties”, as such term is defined in this Agreement, and the text of such defined terms shall be deemed amended, mutatis mutandis, to give effect to such deemed reference;

 

(g)                                  to “Requirement of Law” or “Requirements of Law” shall be deemed amended in each case to be a reference to “Applicable Law”, as such term is defined in this Agreement, and the text of such defined terms shall be deemed amended, mutatis mutandis, to give effect to such deemed reference;

 

(h)                                 to “Security Document” or “Security Documents” shall be deemed amended in each case to be a reference to “Supply and Offtake Security Documents”, as such term is defined in this Agreement, and the text of such defined terms shall be deemed amended, mutatis mutandis, to give effect to such deemed reference; and

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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(i)                                     to sections of the Senior Secured Credit Facility or Senior Secured Credit Facility Documents shall be deemed in each case to be a reference to the corresponding section in this Agreement or the other PESRM Transaction Documents, as applicable, and shall be deemed amended, mutatis mutandis, to give effect to such deemed reference; and

 

(j)                                    to “Collateral” shall be deemed to be a reference to “ABL/SOA Priority Collateral” (such term having the meaning ascribed thereto by operation of this Section 1.06), but only where the term “Collateral” appears in the definitions of the terms “Asset Sale” and “Reserves” in Section 1.01 of the Senior Secured Credit Facility, and the text of such defined terms shall be deemed amended, mutatis mutandis, to give effect to such deemed reference.

 

ARTICLE II.

 

TERM OF AGREEMENT; CONDITIONS TO THE EFFECTIVE DATE

 

Section 2.01                             Term of Agreement.  The initial term of this Agreement shall commence on the Effective Date and shall remain in full force and effect until the third (3rd) anniversary of the Effective Date (subject to Section 6.02, the “Term”).

 

Section 2.02                             PESRM Conditions to the Effective Date.  MLC’s obligations hereunder shall be subject to the satisfaction by PESRM or waiver by MLC of the following conditions:

 

(a)                                 Assignments and Transfers Effective; Effective Date Deliverables.  The Assignments and Transfers shall have been consummated and be effective pursuant to the terms of the Assignment Documents. There shall have been delivered to MLC, with respect to each Transaction Party, as applicable, an executed counterpart of each of the following documents:

 

i.                              this Agreement;

 

ii.                           the PESIC-PESRM Consulting Agreement;

 

iii.                        the PESRM-MLC Consulting Agreement;

 

iv.                       a Third Party Consent Agreement, duly executed and delivered by each Third Party owner of Third Party Infrastructure, except as set forth on Schedule 2.02(a);

 

v.                          the Supply and Offtake Security Agreement and the Deed of Pledge;

 

vi.                       the Products Sales Agreement;

 

vii.                    the Intercreditor Agreement;

 

viii.                 the PESRM-MLC ISDA Master Agreement and the other PESRM-MLC ISDA Documents;

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

41



 

xi.                       the PESIC-PESRM ISDA Master Agreement;

 

xii.                    the OSG Chartering Letter;

 

xiii.                 the Master Netting Agreement;

 

xiv.                the MLC-PESIC ISDA Master Agreement;

 

xv.                   the Framework Agreement;

 

and in each case, such agreement shall be in full force and effect.

 

(b)                                 Corporate Documents.  MLC shall have received:

 

(i)                                     a certificate of the secretary or assistant secretary of each Transaction Party, dated the Effective Date, certifying (x) that attached thereto is a true and complete copy of each Organizational Document of such Transaction Party certified (to the extent applicable) as of a recent date by (if applicable) the Secretary of State of the state of its organization, (y) that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors of such Transaction Party authorizing the execution, delivery and performance of the Effective Date PESRM Transaction Documents and, if applicable, all documents related to the PESIC-PESRM Secured Prepay Transactions, to which such Person is a party and, in the case of PESRM, the Obligations hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect and (z) as to the incumbency and specimen signature of each officer executing any Effective Date PESRM Transaction Document, the PESIC-PESRM ISDA Master Agreement or any other document delivered in connection herewith on behalf of such Transaction Party (together with a certificate of another officer as to the incumbency and specimen signature of the secretary or assistant secretary executing the certificate in this subclause (i)); and

 

(ii)                                  a certificate as to the good standing of each Transaction Party (in each case, in so-called “long-form” if available) in its jurisdiction of organization as of a recent date, from such Secretary of State (or other applicable Governmental Authority).

 

(c)                                  Opinions of Counsel.  MLC shall have received a favorable written opinion of (i) Latham & Watkins LLP, special counsel for the Transaction Parties, (x) dated the Effective Date, (y) addressed to MLC and (z) covering such matters relating to the Effective Date PESRM Transaction Documents as MLC shall reasonably request and (ii) Buchanan Ingersoll & Rooney PC, special Pennsylvania counsel for the Transaction Parties, (x) dated the Effective Date, (y) addressed to MLC and (z) covering such matters relating to the Mortgage(as assigned and amended and restated on the Effective Date) as MLC shall reasonably request.

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

42


 

(d)                                Solvency Certificate.  MLC shall have received a solvency certificate in the form of Schedule 2.02(d), dated the Effective Date and signed by the chief financial officer or chief executive officer of PESRM.

 

(e)                                 Fees.  An amount equal to the aggregate of all amounts due and payable on or prior to the Effective Date, including, to the extent invoiced, reimbursement or payment of all reasonable and documented out of pocket expenses (including the reasonable and documented out of pocket legal fees and expenses of Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to MLC incurred prior to September 1, 2014, and the reasonable and documented out-of-pocket fees and expenses of any local counsel, foreign counsel, appraisers, consultants and other advisors and legal counsels to MLC), shall be paid by PESRM (or arrangement for payment therefor satisfactory to MLC shall have been made), including any of the aforementioned fees and expenses incurred on or prior to the Effective Date in connection with the negotiation, execution and delivery of the Assignment and Assumption Agreement and the other Transaction Documents (as such term is defined in the Assignment and Assumption Agreement), and all documents related to any PESIC-PESRM Secured Prepay Transactions.

 

(f)                                  Personal Property Requirements.  MLC shall have received:

 

(i)                                   with respect to each Transaction Party, UCC financing statements (or amendments to existing financing statements, as applicable) in appropriate form for filing under the UCC and such other documents under domestic Applicable Law in each domestic jurisdiction as may be necessary or appropriate, in the reasonable opinion of MLC, to perfect (or maintain the perfection of, as applicable) the Liens created, or purported to be created, by the Supply and Offtake Security Documents (including, without limitation, by amending UCC financing statements on file in the applicable jurisdiction);

 

(ii)                                with respect to each Transaction Party, certified copies of UCC, tax and judgment lien searches, bankruptcy and pending lawsuit searches or equivalent reports or searches, each of a recent date listing all effective financing statements, lien notices or comparable documents that name any of the Transaction Parties as debtor and that are filed in those state and county jurisdictions in which any of the Transaction Parties is organized or maintains its principal place of business, and such other searches that are required by the Supply and Offtake Perfection Certificate with respect to any of the Transaction Parties or that MLC deems necessary or appropriate, none of which encumber, or reflect a Lien on, the Collateral covered or intended to be covered by the Supply and Offtake Security Documents (other than, solely in respect of the Supply and Offtake Security Agreement Collateral, Permitted Liens on such Collateral or any other Liens acceptable to MLC);

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

43



 

(iii)                             with respect to each Transaction Party, evidence acceptable to MLC of payment or arrangements for payment of all applicable recording taxes, fees, charges, costs and expenses required for the recording of the Supply and Offtake Security Documents, if any; and

 

(iv)                            with respect to each Transaction Party, a Supply and Offtake Perfection Certificate, reflecting all Collateral pledged as of the Effective Date.

 

(g)                                 Real Property Requirements. PESRM shall have delivered or caused to be delivered the following: (i) an amended and restated Mortgage, in form and substance reasonably acceptable to MLC (the “Amended and Restated Mortgage”), duly executed by PESRM and in proper form for recording in the real estate records of the county in which the applicable Mortgaged Property is located (the “Recording Office”); (ii) UCC-3 financing statements and other termination documentation relating to the Existing Mortgage as may be reasonably requested by MLC; (iii) an endorsement to the mortgagee’s policy of title insurance (the “Mortgage Policy”), dated as of the Effective Date, insuring the assignment of the Existing Mortgage and the Amended and Restated Mortgage, and insuring MLC as the mortgagee of record as of the Effective Date, which endorsement shall reveal no liens or encumbrances other than Permitted Liens or other liens or encumbrances otherwise acceptable to MLC and shall otherwise be in form and substance reasonably acceptable to MLC and as is customarily issued in the Commonwealth of Pennsylvania by the Title Company; (iv) all affidavits and other documentation executed by JPMVEC, PESRM or MLC as reasonably requested by the Title Company in order for the Title Company to issue the title endorsement as described in the immediately preceding clause (iii); and (v) all other documentation reasonably necessary or advisable to effect the actions contemplated by this Section 2.02(g).

 

(h)                                Anti-Terrorism Laws.  MLC shall have timely received the information required under Section 10.17.

 

(i)                                    [Reserved]

 

(j)                                   Products Sales Agreement. The purchase and sale of the Products (as defined in the Products Sales Agreement) shall have been consummated prior to or substantially concurrently with the entry into this Agreement pursuant to terms of the Products Sales Agreement.

 

(k)                                Material Approvals.  All material Governmental Authority and, except as set forth on Schedule 2.02(k), all material third-party licenses, registrations, permits, consents and approvals necessary in connection with this Agreement, the PESRM Transaction Documents and the PESIC-PESRM ISDA Master Agreement and the transactions hereunder and thereunder shall have been obtained (without the imposition of any conditions that would materially impair the rights, or materially increase the liabilities or obligations, of MLC, without its prior consent (such consent not to be unreasonably withheld or delayed)) and no Applicable Laws are

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

44



 

then in effect that materially and adversely restrain or prevent this Agreement, the PESRM Transaction Documents and the PESIC-PESRM ISDA Master Agreement and the transactions hereunder and thereunder or impose conditions that materially impair the rights, or materially increase the liabilities or obligations, of MLC, without the prior consent of MLC (such consent not to be unreasonably withheld or delayed).

 

(l)                                    Outstanding Indebtedness.  After giving effect to this Agreement, the Effective Date PESRM Transaction Documents and the PESIC-PESRM ISDA Master Agreement and the transactions hereunder and thereunder, the Transaction Parties shall have no outstanding Indebtedness or preferred stock other than (i) the Obligations and obligations related to all PESIC-PESRM Secured Prepay Transactions, (ii) to the extent constituting Indebtedness, (x) Permitted Specified Transactions, and (y) obligations under the Senior Secured Credit Facility Documents, and (iii) other Indebtedness permitted by Section 11.01.

 

(m)                            Insurance Requirements.  MLC shall have received evidence reasonably satisfactory to it that PESRM has satisfied the Insurance Requirements, including receipt by MLC of insurance certificates, in form and substance acceptable to MLC, listing MLC as loss payee thereon and as an additional insured with respect to the applicable insurance policies maintained by PESRM in accordance with the Insurance Requirements.

 

(n)                                Effective Date Infrastructure.  None of the Refinery (including the Tanks, pipelines, racks, vessels, railroads, terminals and docks associated therewith), any other PESRM Infrastructure, any Sunoco PMT Infrastructure, any Sunoco Pipeline Infrastructure or any Other Third Party Infrastructure (collectively, the “Effective Date Infrastructure”) shall have been affected by loss or damage (whether or not covered by insurance) that reasonably would be expected to prevent PESRM from receiving and/or storing Crude Oil at the Effective Date Infrastructure, transporting Crude Oil to, within, among or from the Effective Date Infrastructure, delivering Crude Oil at the CO Delivery Point, receiving delivery of Refined Products at the RP Delivery Point, receiving and/or storing Refined Products at the Effective Date Infrastructure, transporting Refined Products to, within, among or from the Effective Date Infrastructure, or delivering Refined Products to any Product Purchaser Delivery Point, except to the extent that such damage can be remedied within 30 days and PESRM commits to make such repairs, in each case, in a manner and on terms reasonably satisfactory to MLC.

 

(o)                                Effective Date Material Adverse Effect.  Since December 31, 2013, no event, development, circumstance or other matter affecting PESRM, the Refinery or any other Effective Date Infrastructure or the transactions contemplated under this Agreement, the other PESRM Transaction Documents or the PESIC-PESRM ISDA Master Agreement has occurred which has had or would reasonably be expected to result in a Material Adverse Effect.

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

45



 

(p)                                Representations and Warranties.  Each of the representations set forth in Article VIII shall be true and correct in all material respects (except that any representation and warranty that is qualified as to “materiality” or “Material Adverse Effect” shall be true and correct in all respects as so qualified) on and as of the Effective Date with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date.

 

(q)                                [Reserved].

 

(r)                                   Officers’ Certificate.  MLC shall have received a certificate, dated the Effective Date and signed by the chief executive officer and the chief financial officer of PESRM, confirming compliance with the conditions precedent set forth in this Section 2.02.

 

(s)                                  Senior Secured Credit Facility.  Copies of the duly executed Senior Secured Credit Facility Documents shall have been delivered to MLC in form and substance reasonably satisfactory to MLC and shall be in full force and effect save for any conditions expressly related to the occurrence of the Effective Date hereunder.

 

(t)                                   Intercreditor Agreements.  There shall have been delivered to MLC, with respect to each Transaction Party and each other Person party thereto, an executed counterpart of each of (i) an amendment to Exhibit A of the Term-ABL Intercreditor Agreement and (ii) an amendment to Exhibit A of the Intercreditor Agreement, in each case in form and substance satisfactory to MLC.

 

(u)                                PESIC Transactions.  PESRM shall have entered into the PESIC-PESRM ISDA Master Agreement, in form and substance satisfactory to MLC.

 

Section 2.03                            MLC Conditions to the Effective Date.  PESRM’s obligations hereunder shall be subject to the satisfaction by MLC or waiver by PESRM of the following condition:

 

(a)                                Opinion of Counsel.  PESRM shall have received a favorable written opinion of Skadden, Arps, Slate, Meagher & Flom LLP, special counsel for MLC, (i) dated the Effective Date, (ii) addressed to PESRM and (iii) covering the matters reasonably requested by PESRM.

 

ARTICLE III.

 

PURCHASE, SALE AND DELIVERY OF
CRUDE OIL

 

Section 3.01                            Supply by MLC of Crude Oil Requirements.  From and after the Effective Date, MLC agrees to supply, sell and deliver to PESRM, and PESRM agrees to purchase and take delivery of, all of the Crude Oil requirements of the Refinery upon the terms and conditions set forth herein and MLC shall be the exclusive supplier of Crude Oil to the Refinery with respect to the requirements of the Refinery during the term; provided that, the foregoing shall not

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

46



 

be construed to prevent or limit any PESRM-MLC CO Secured Prepay Transactions otherwise entered into in accordance with the terms hereof or any other transaction permitted to be entered by PESRM pursuant to Section 3.09(c).  MLC shall sell the Crude Oil to PESRM at the CO Delivery Point in such volumes as PESRM may require for processing at the Refinery, subject to the provisions of Section 3.02.  MLC shall not be required to enter into any CO Supply Contract or PESRM-MLC CO Secured Prepay Transaction if, immediately after entering into such CO Supply Contract or PESRM-MLC CO Secured Prepay Transaction, the types and grades, and the aggregate volume of Crude Oil under all then-outstanding CO Supply Contracts and PESRM-MLC CO Secured Prepay Transactions would vary from the types and grades or exceed the reasonable volume expectations of the Crude Oil requirements for the Refinery for all months covered by such contracts, taking into account the refining capacity of the Refinery, the available capacity of the Basic Infrastructure and anticipated delivery dates of Crude Oil , but not taking into account any limitations imposed on any of the foregoing by any exercise by MLC of its rights under Sections 3.09(e) and 6.25.

 

Section 3.02                            Conditions to Crude Oil Supply Obligation.  Notwithstanding any other provision of this Article III, all of MLC’s obligations under this Article III are subject to (a) PESRM’s compliance with the Sourcing Protocols as set forth in Section 3.09, (b) the ability of third party suppliers of Crude Oil to MLC to meet MLC’s Credit Requirements, (c) the availability of Crude Oil supply in the market of the types and grades, and in the volumes, specified by PESRM in the applicable PESRM Buy Requests, and (d) no related Applicable Condition having occurred.

 

Section 3.03                            [Reserved].

 

Section 3.04                            Crude Oil Initial Sales.  MLC and PESRM agree that, notwithstanding anything in this Agreement to the contrary (i) MLC shall sell and deliver to PESRM, and PESRM shall purchase and receive from MLC, at the CO Delivery Point all of the types, grades and volumes of Crude Oil included in the In-Storage Inventory and acquired by MLC pursuant to any New MLC Transactions and (ii) each of the Inventory Sales Agreement and any New MLC Transactions for Crude Oil and the Assigned CO Contracts are hereby designated as CO Supply Contracts in respect of all Crude Oil purchased and to be purchased under such agreements, confirmations and contracts.

 

Section 3.05                            Daily Actual Production Books.

 

(a)                                At or before 1:00 p.m. ET of each Business Day during the Term commencing on the first Business Day following the Effective Date, [**].

 

(b)                                [**].

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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Section 3.06                            Financial Report.  At or before 8:00 p.m. ET of each Business Day during the Term commencing on the first Business Day following the Effective Date, MLC shall provide PESRM with a Financial Report for each Day of the Term prior to such Business Day for which no Financial Report has previously been provided to MLC, subject, in each case, to the Business Day Convention.

 

Section 3.07                            [Reserved].

 

Section 3.08                            Certain Additional MLC Reports.

 

(a)                                On each Business Day during the Term commencing on the first Business Day following the Effective Date, MLC shall make commercially reasonable efforts to provide PESRM with a Daily Trades Done To Date Report, a Daily Raw Invoice Report, a Provisional FIFO Queue Report and a Daily Sales Report for each Day of the Term prior to such Business Day for which no Daily Trades Done To Date Report, Daily Raw Invoice Report, Provisional FIFO Queue Report and/or Daily Sales Report, as applicable, has previously been provided by MLC (and on the first Business Day following the Effective Date, for the Effective Date), subject, in each case, to the Business Day Convention.

 

(b)                                On each Monthly True-Up Date MLC shall make commercially reasonable efforts to provide PESRM with a Monthly CO FIFO Report for the calendar month immediately prior to the calendar month in which such Monthly CO FIFO Report is to be delivered.

 

Section 3.09                            Crude Oil Sourcing Protocols.  [**].

 

(a)                                During the Term, PESRM shall identify opportunities to acquire Crude Oil from suppliers (each, a “Counterparty”) of the types and grades, and in the volumes, necessary to satisfy such requirements and shall promptly notify MLC of such opportunities.  [**].

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

48



 

(b)                                [**].

 

(c)                                 [**].

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

49



 

(d)                                [**].

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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(e)                                 [**].

 

(f)                                  [**].

 

(g)                                 [**].

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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Section 3.10                            CO Transactions. During the Term, MLC shall sell to PESRM and PESRM shall purchase and take delivery from MLC all of the MLC Crude Oil Purchase at the CO Delivery Point, measured for each Day during the Term as the amount of Crude Oil of which PESRM takes delivery on such Day according to the Daily Actual Production Book (each such Day’s purchase, a “CO Transaction”), and which shall be priced by reference to Schedule 5(a).

 

Section 3.11                            Daily Trades Done To Date Report.  At or before 4:00 p.m. ET on each Business Day during the Term commencing on the first Business Day following the Effective Date, [**].

 

Section 3.12                            Crude Oil Title and Risk of Loss.  Title and risk of loss with respect to the Crude Oil subject to each CO Supply Contract or [**] shall pass to MLC when it receives delivery of such products.

 

Section 3.13                            Crude Oil Good and Marketable Title.  MLC represents and warrants that, on delivery of any Crude Oil to PESIC or PESRM in accordance with Section 3.12 (as applicable), good and marketable title to such Crude Oil shall pass to PESIC or PESRM (as applicable) on such delivery, free and clear of all Liens and encumbrances (except for security interests of MLC provided for in the PESRM Transaction Documents and security interests of PESIC provided for in the PESIC-PESRM Secured Prepay Transaction documents).

 

Section 3.14                            CRUDE OIL NO WARRANTY OF MERCHANTABILITY.  WITH RESPECT TO CO SUPPLY CONTRACTS AND PESRM-MLC CO SECURED PREPAY TRANSACTIONS, PESRM AGREES THAT (A) IT SHALL TAKE DELIVERY OF SUCH CRUDE OIL “AS IS, WHERE IS” AND “WITH ALL FAULTS”, AND (B) MLC MAKES NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND ALL IMPLIED WARRANTIES ARE DISCLAIMED.

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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Section 3.15          Crude Oil Payment Responsibility and Invoicing.

 

(a)           MLC shall be responsible for paying invoices with respect to CO Supply Contracts, [**] relating to Crude Oil and all related CO Transportation and Other Costs (it being understood and agreed that PESRM shall be directly responsible for any and all costs, including, costs relating to demurrage, incurred in connection with the transportation, delivery and receipt of Hydrocarbons pursuant to any PESRM-MLC Secured Prepay Transaction), which CO Transportation and Other Costs shall be included in the payments due under this Agreement, as provided for in Article V. Upon request, MLC shall promptly provide PESRM with copies of Counterparty and third party invoices, which may be redacted as deemed necessary by MLC in accordance with its policies and procedures; provided that, in no event shall MLC be required to provided PESRM with copies of greater than twenty-five (25) Counterparty or third party invoices in any calendar quarter. All refunds or adjustments of any type received by MLC related to the CO Transportation and Other Costs shall be for the account of PESRM and shall be reflected in an Invoice and/or Monthly True-Up Invoice, as applicable.

 

(b)           CO Transportation and Other Costs may not be invoiced by MLC to PESRM until MLC itself is invoiced, which for this purpose shall include a pro forma invoice, for such costs.

 

Section 3.16          Daily Actual Production Book; Further Assurances in Respect of On-Premise Infrastructure.  When (a) any infrastructure assets comprised of Affiliate Transferee Assets owned by an Affiliate Transferee are added to Other Third Party Infrastructure in accordance with the definition thereof and/or (b) any Affiliate Transferee Assets are leased by a Transaction Party to an Affiliate Transferee, the form of the Daily Actual Production Book will be amended by the parties hereto to include such Affiliate Transferee Assets.  In addition, if reasonably requested by MLC, with respect to any On-Premise Infrastructure comprised of Affiliate Transferee Assets, PESRM hereby agrees to provide, or cause to be provided, to MLC data and information concerning any such Affiliate Transferee Assets that is comparable to the data and information that MLC receives, as of the Effective Date, concerning other comparable, existing On-Premise Infrastructure.

 

Section 3.17          PESRM-MLC CO Secured Prepay Transactions; International Transactions.

 

(a)           [Reserved].

 

(b)           CO Supply Contract; PESRM-MLC CO Secured Prepay Transaction.  Notwithstanding anything to the contrary herein or in any other PESRM Transaction Document, [**].

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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(c)           International Transactions.  [**].

 

Section 3.18          [Reserved].

 

Section 3.19          First Purchaser Requirements.

 

(a)           PESRM shall, on or before the Effective Date, provide to MLC a prioritized list of the United States jurisdictions in which PESRM anticipates requesting that MLC act as “first purchaser” of Product pursuant to CO Supply Contracts or PESRM-MLC CO Secured Prepay Transactions (such list being attached hereto as Schedule 3.19, it being understood that subsequent revisions to this list by PESRM shall not require an amendment to this Agreement).

 

(b)           MLC shall, promptly following the Effective Date, and promptly following the addition of any United States jurisdiction to Schedule 3.19, use commercially reasonable efforts to, with respect to each United States jurisdiction set forth on such list and in the priority order indicated thereon:

 

(i)            diligence such US jurisdiction’s Applicable Law with respect to the laws, rules and regulations applicable to “first purchasers” of Product (such laws, rules and regulations, “First Purchaser Requirements”);

 

(ii)           obtain all Governmental Approvals relating to such United States jurisdiction as are necessary or appropriate in order for MLC to act as a “first purchaser” of Product in connection with this Agreement and the other PESRM Transaction Documents, any PESRM-MLC CO Secured Prepay Transactions and any CO Supply Contracts; and

 

(iii)          put in place such operational and/or compliance policies, procedures, systems and/or personnel related to such United States jurisdiction as are

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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necessary or appropriate in connection with MLC’s compliance with the First Purchaser Requirements.

 

(c)           MLC and PESRM shall cooperate in good faith to facilitate the process described in this Section 3.19.

 

Prior to incurring any costs in connection with Section 3.19(b), MLC shall provide an estimate of such costs to PESRM for approval. Upon receipt of approval of such estimate from PESRM, MLC shall undertake the activities set forth in such estimate. PESRM shall reimburse MLC for all approved costs and expenses incurred by MLC in connection with the First Purchaser Requirements, including conducting diligence, obtaining Governmental Approvals, etc., in accordance with Article V.  Notwithstanding the above, PESRM acknowledges and agrees that MLC cannot make any assurances of being able to actually satisfy and implement all requirements under this Section 3.19(b) with respect to First Purchaser Requirements for any particular jurisdiction requested.

 

ARTICLE IV.

 

PURCHASE, SALE AND DELIVERY OF
REFINED PRODUCTS

 

Section 4.01          Supply by PESRM of Refined Products Produced by the Refinery.  From and after the Effective Date, PESRM agrees to supply, sell and deliver to MLC, and MLC agrees to purchase and take delivery of, all of the Refined Products processed by the Refinery upon the terms and conditions set forth herein and MLC shall be the exclusive purchaser of Refined Products produced by the Refinery during the Term; provided that, the foregoing shall not be construed to prevent or limit any PESRM-MLC RP Secured Prepay Transactions otherwise entered into in accordance with the terms hereof or any transaction permitted to be entered by PESRM pursuant to Section 4.09(c).

 

Section 4.02          Conditions to Refined Product Purchase Obligation. Notwithstanding any other provision of this Article IV, all of MLC’s obligations under this Article IV are subject to (a) PESRM’s compliance with the Sales Protocols as set forth in Section 4.09, (b) the ability of third party purchasers of Refined Products from MLC to meet MLC’s Credit Requirements, and (c) no related Applicable Condition having occurred.

 

Section 4.03          Reserved.

 

Section 4.04          Third Party Reports.

 

(a)           At or before 4:00 p.m. ET of each Business Day during the Term, commencing on the first Business Day following the Effective Date, PESRM shall use commercially reasonable efforts to cause Third Party Infrastructure owners to provide to MLC any and all inventory, receipt, delivery and sales reports (and the SXL Report) prepared by such owners, identifying the Hydrocarbons owned by MLC or which are part of the MLC Separate Assets and Collateral in such Third Party Infrastructure, which reports with respect to sales of Refined Products at Racks owned by PPC and SXL shall be substantially in the form of Schedule

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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4.04(a)(i) and Schedule 4.04(a)(ii), respectively; provided that if any such reports are not delivered at or before 4:00 p.m. ET on any such Business Day, MLC shall, in its reasonable discretion, estimate any such deliveries and sales to Third Parties on such Day based on any such reports delivered on the prior Day, provided further that in no event shall any estimate determined pursuant to this proviso apply to any period longer than one Day.

 

(b)           MLC shall, in its reasonable discretion, determine the types, grades and volumes of Refined Products that were delivered to each applicable delivery point, and purchased and sold, on any Day pursuant to this Agreement, any PESRM Transactions, any CO Supply Contracts, any RP Sales Contracts and/or any Cover Transactions, as applicable.

 

Section 4.05          RP Transactions and Certain RP Sales Contracts.

 

(a)           On each Day during the Term, PESRM shall sell to MLC and MLC shall purchase from PESRM all Refined Products produced by PESRM at the Refinery (other than butane, Refined Products subject to Section 4.13 and, for the avoidance of doubt, Section 12.01(a)(i)(C)) to be delivered to MLC by PESRM at the RP Delivery Point, in each case by type, grade and volume, on each Day as set forth in the Daily Actual Production Book for such Day (each such binding purchase and sale obligation, an “RP Transaction”), with the pricing for each such RP Transaction to be determined by reference to Schedule 5(b).

 

(b)           Each of the Assigned RP Contracts is hereby designated as a RP Sales Contract in respect of all Refined Products sold or to be sold thereunder.

 

Section 4.06          Refined Product Title.  PESRM represents and warrants that, on delivery of any Refined Product to MLC at the RP Delivery Point, good and marketable title to such Refined Product shall pass to MLC on such delivery, free and clear of all Liens and encumbrances (except for security interests of MLC provided for in the PESRM Transaction Documents).

 

Section 4.07          REFINED PRODUCT - NO WARRANTY OF MERCHANTABILITY.  PESRM MAKES NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OTHER THAN THAT THE REFINED PRODUCTS DELIVERED TO THE RP DELIVERY POINT OR PURSUANT TO ANY PESRM-MLC RP SECURED PREPAY TRANSACTION SHALL CONFORM TO THE APPLICABLE REFINED PRODUCT SPECIFICATIONS, AND ALL APPLICABLE ENVIRONMENTAL REGULATORY SPECIFICATIONS FOR SUCH REFINED PRODUCT OR TO SUCH OTHER SPECIFICATIONS AS ARE FROM TIME TO TIME AGREED UPON BY THE PARTIES.

 

Section 4.08          [Reserved].

 

Section 4.09          Refined Product Sales Protocols.  [**].

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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(a)           [**], PESRM shall identify opportunities to sell Refined Products to purchasers (each, a “Product Purchaser”) of the types and grades, and in the volumes, reflected in the then current Oil Flow Report and shall promptly notify MLC of such opportunities. [**].

 

(b)           [**].

 

(c)           [**].

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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(d)           [**].

 

(e)           [**].

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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(f)            [**].

 

Section 4.10          Prepayments.

 

(a)           [**].

 

(b)           Starting from the first quarter following December 31, 2014, [**].

 

(c)           [**].

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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[**].

 

Section 4.11          RP Payment Responsibility and Invoicing.

 

(a)           MLC shall be responsible for paying invoices with respect to Prepay Transactions relating to Refined Products and all RP Transportation and Other Costs (it being understood and agreed that PESRM shall be directly responsible for any and all costs, including, without limitation, costs relating to demurrage, incurred in connection with the transportation, delivery and receipt of Hydrocarbons pursuant to any PESRM-MLC Secured Prepay Transaction), which RP Transportation and Other Costs shall be included in the payments due under this Agreement, as provided for in Article V.  All refunds or adjustments of any type received by MLC related to the RP Transportation and Other Costs shall be for the account of PESRM and shall be reflected in an Invoice or the Monthly True-Up Invoice, as applicable.

 

(b)           RP Transportation and Other Costs may not be invoiced by MLC to PESRM until MLC itself is invoiced, which for this purpose shall include a pro forma invoice, for such costs.

 

Section 4.12          PESRM-MLC RP Secured Prepay Transactions; International Transactions.

 

(a)           [Reserved].

 

(b)           RP Sales Contract.  [**].

 

(c)           International Transactions.  [**].

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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Section 4.13          Initial RP Purchases.  Notwithstanding anything in this Agreement to the contrary, each of MLC’s purchases of Refined Products  (a) under the Inventory Sales Agreement, (b) under the Products Sales Agreement and (c) pursuant to any New MLC Transactions (other than any Sleeve Transactions) under the Wind-Down Agreement (such purchases described in clauses (a), (b) and (c), collectively, the “Initial RP Purchases”) shall be deemed to be an RP Cover Transaction that was entered into by MLC; provided, that no Cover Throughput Service Fee shall be payable in respect of any Initial RP Purchase.  MLC shall calculate the applicable Cover Transaction Price Amounts with respect to such transactions, which Cover Transaction Price Amounts shall be payable by MLC or PESRM, as applicable, in accordance with Section 12.07.  In addition, PESRM shall be responsible for all Cover Transportation and Other Costs incurred, or owed by MLC, in connection with the Initial RP Purchases, which costs shall be payable in accordance with Section 12.07.

 

Section 4.14          Butane Sale Transactions.

 

(a)           Butane Sale Transactions.  On each Butane Inventory Draw Day, MLC shall be deemed to have sold to PESRM and PESRM shall be deemed to have purchased from MLC a volume of butane equal to the Butane Inventory Draw on such Day (each such transaction, a “Butane Sale Transaction”), in each case, of the type and grade set forth in the Daily Actual Production Book and/or the SXL Report, as applicable, with the pricing for each Butane Sale Transaction to be determined by reference to Schedule 5(b).  Notwithstanding the foregoing, all of MLC’s obligations with respect to Butane Sale Transactions are subject to no related Applicable Condition having occurred.

 

(b)           Butane Sale Transaction True-Ups.  In connection with the Butane Sale Transactions, in the event that either Party obtains knowledge of a discrepancy between the Butane Inventory reflected in the Daily Actual Production Book and the SXL Report and the actual volumes of butane (measured in Barrels) produced or acquired and used or sold by PESRM on any Day, such party shall promptly notify the other Party of such discrepancy, and the Parties shall work in good faith to confirm whether or not such discrepancy exists and, if so, the extent of such discrepancy.  Upon agreement between the Parties as to the existence and extent of any discrepancy, PESRM shall make an adjustment in the Daily Actual Production Book on the next Business Day to eliminate any such discrepancy. For the avoidance of doubt, any resulting increase or decrease in the Butane Inventory shall be taken into account in determining whether there is a Butane Inventory Build or a Butane Inventory Draw on the Day on which any such adjustment occurs.

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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(c)                                  NO WARRANTY OF MERCHANTIBILITY.  WITH RESPECT TO ALL BUTANE SALE TRANSACTIONS, PESRM AGREES THAT (A) IT SHALL TAKE DELIVERY OF SUCH BUTANE “AS IS, WHERE IS” AND “WITH ALL FAULTS”, AND (B) MLC MAKES NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND ALL IMPLIED WARRANTIES ARE DISCLAIMED.

 

(d)                                 Costs and Invoicing.  Any and all direct expenses incurred by MLC (and not previously paid by PESRM) that, if such Butane Sale Transaction were a sale of butane by MLC to a third party pursuant to an RP Sales Contract would be RP Transportation and Other Costs, shall be deemed to be RP Transportation and Other Costs for all purposes of this Agreement and the other PESRM Transaction Documents, which RP Transportation and Other Costs shall be included in the payments due under this Agreement, as provided for in Article V.

 

Section 4.15                             Off-Spec Product.  If any Refined Products delivered to MLC at the RP Delivery Point, held in storage by PESRM at the Basic Infrastructure or delivered to any Product Purchaser at the Product Purchaser Delivery Point or at any other delivery point in connection with a RP Sales Contract that is entered into in connection with a PESRM-MLC RP Secured Prepay Transaction (as approved by MLC in its sole discretion) do not meet the required specifications for such Refined Products , MLC shall have the right, by notice to PESRM, to require PESRM promptly to take such actions, at PESRM’s sole cost and expense, as are reasonably necessary to bring such products into compliance with the applicable required specifications or to provide replacement products (including pursuant to Cover Transactions) that meet such specifications.

 

Section 4.16                             PESRM as Obligated Party.  PESRM shall be the “obligated party” as the refiner of all Refined Products certified or designated, as applicable, pursuant to 40 C.F.R. Part 80.  Nothing in this Agreement shall be interpreted to impart any responsibility to MLC to comply with Renewable Fuel Standards (including requirements therein for RVOs and RINs) as an “obligated party” pursuant to 40 C.F.R. Part 80 by virtue of the transactions contemplated by this Agreement.  PESRM shall, as a refiner, comply with all Renewable Fuel Standards (including requirements therein for RVOs and RINs) and all applicable fuel and fuel additive requirements set forth in 40 C.F.R. Part 80, and all other Applicable Laws (including Environmental Laws) related thereto.

 

ARTICLE V.

 

PAYMENTS AND INVOICING

 

Section 5.01                             Daily Payment.  On each Business Day of each Calendar Week, MLC shall prepare and deliver to PESRM an invoice (an “Invoice”) specifying:

 

The sum of [**] on the prior Day and each other Uninvoiced Day;

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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PLUS

 

The sum of [**] on the prior Day and each other Uninvoiced Day;

 

PLUS

 

The sum of [**] applied in respect of (i) [**], (ii) [**] and (iii) [**];

 

PLUS

 

The sum of [**] on the prior Day and each other Uninvoiced Day;

 

PLUS

 

The sum of [**] in respect of the prior Calendar Day and each other Uninvoiced Day;

 

PLUS

 

The sum of [**], that occurred during such prior Day and each other Uninvoiced Day;

 

PLUS

 

The sum of [**], in each case on the prior Day and each other Uninvoiced Day;

 

PLUS

 

The sum of [**], in each case in respect of the prior Day and each other Uninvoiced Day;

 

MINUS

 

The sum of [**] on the prior Day and each other Uninvoiced Day;

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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MINUS

 

The sum of [**] in respect of the prior Day and each other Uninvoiced Day;

 

MINUS

 

The sum of [**], that occurred during the prior Day and each other Uninvoiced Day;

 

MINUS

 

The sum of [**], in each case on the prior Day and each other Uninvoiced Day;

 

PLUS

 

The sum of [**] on the prior Day and each other Uninvoiced Day;

 

PLUS

 

The sum of [**] and [**] applied in respect of [**] (i) [**], (ii) [**] and (iii) [**], in each case on the prior Day and each other Uninvoiced Day;

 

PLUS

 

The sum of [**] on prior Day and each other Uninvoiced Day;

 

PLUS

 

The sum of [**] in respect to the prior Day and each other Uninvoiced Day;

 

MINUS

 

The sum of [**] in respect of the prior Day and each other Uninvoiced Day;

 

PLUS

 

The sum of [**] in respect of the following Day;

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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PLUS

 

The sum of [**] in respect to the prior Day and each other Uninvoiced Day;

 

MINUS

 

The sum of [**] on the prior Day and each other Uninvoiced Day;

 

PLUS

 

The sum of [**] for delivery on the following Day;

 

PLUS

 

The sum of [**] in respect of the prior Day and each other Uninvoiced Day;

 

MINUS

 

The sum of [**] in respect of the prior Day and each other Uninvoiced Day;

 

PLUS

 

[**], in respect of the prior Day and each other Uninvoiced Day;

 

MLC shall determine the amount payable in respect of each Invoice and the identity of the Party owing such payment, it being understood that if the above sum is positive, PESRM shall be the Party owing such payment, and if the above sum is negative, MLC shall be the Party owing such payment.  In the event that the terms of any CO Supply Contract, RP Sales Contract or Cover Transaction include any true-up that is not expressly contemplated by this Agreement, the financial consequences of such true-up will, without duplication, be passed through to PESRM in any Invoice or Monthly True-up Invoice issued following the occurrence of such true-up.  In the event that adjustments are required to any previously issued Invoice, MLC shall have the right to incorporate such adjustments in subsequent Invoices until all numbers are final and accurate.  All amounts due and owing in respect of each Invoice shall be paid by the owing Party to the other Party on the next Business Day following PESRM’s receipt of each Invoice.

 

Section 5.02                             Monthly True-Up.  For each calendar month during the Term, the monthly true-up (the “Monthly True-Up”) shall be a financial adjustment required to correct for actual [**] not already corrected in prior Invoices (with the sum of such corrections resulting in an amount payable either to MLC or to PESRM (and, if payable to PESRM, expressed as a negative number)),

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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PLUS

 

The sum of [**] with respect to the prior calendar month;

 

PLUS

 

The Working Capital Fee, and the sum of [**] in the prior calendar month,

 

PLUS

 

The sum of [**] in respect of the prior calendar month,

 

PLUS

 

The sum of [**] in the prior calendar month,

 

PLUS

 

Without duplication, the sum of [**] under this Agreement,

 

MINUS

 

Without duplication, the sum of [**] under this Agreement, including [**],

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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PLUS

 

The positive difference (if any) of (i) [**] (ii) the sum of [**] in the prior calendar month,

 

PLUS

 

Any [**] in respect of the prior calendar month,

 

MINUS

 

Any [**] of the prior calendar month.

 

On each Monthly True-Up Date, [**] shall determine the amount payable in respect of the Monthly True-Up for the calendar month immediately preceding the calendar month in which such Monthly True-Up Date occurs and the identity of the Party owing such payment, it being understood that if the above sum is positive, PESRM shall be the Party owing such payment, and if the above sum is negative, MLC shall be the Party owing such payment.  All amounts due and owing in respect of such Monthly True-Up shall be paid by the owing Party to the other Party [**] following PESRM’s receipt of the invoice (each, a “Monthly True-Up Invoice”) for such Monthly True-Up. In the event that adjustments are required to any previously issued Monthly True-Up Invoice, [**] shall have the right to incorporate such adjustments in subsequent Monthly True-Up Invoices until all numbers are final and accurate.

 

Hedging Gains and Losses for Hydrocarbons [**] on the Effective Date.   [**].

 

Section 5.03                             Auto Bin True-Ups.  [**].

 

Section 5.04                             Disputed Invoices.  If PESRM, in good faith, disputes the accuracy of the amount invoiced, PESRM shall pay the undisputed amount and the disputed amount in excess of $[**] and provide written notice stating the reasons why the disputed amount is incorrect, along with supporting documentation.  In the event the Parties are unable to resolve such dispute within ten (10) Business Days, either Party may pursue any remedy available at law or in equity

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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to enforce its rights hereunder.  In the event that it is determined or agreed that one of the Parties must or will pay or return all or any portion of the disputed amount, then such Party shall pay interest from and including the original payment due date until, but excluding, the date such amount is received by the owed party, at the Default Interest Rate.

 

Section 5.05                             Payment Netting.  The Parties agree to net all amounts that are due each other under this Agreement and any Rack Sales Contract on the same Business Day, and the Parties shall confirm at least one (1) Business Day prior to the payment date, in writing, the amounts to be netted and any amounts remaining after such net-out (if any).  Any remaining balance after net-out shall be paid by the Party owing such amount to the other Party on the applicable payment date.  The owing Party’s payment of a net amount shall satisfy each Party’s payment obligations included in the settlement on a payment date.

 

Section 5.06                             Payment Convention.  Unless otherwise expressly provided for in this Agreement (a) if any payment due date under this Agreement falls on a Saturday or non-Monday weekday that is not a Business Day, such payment shall be made on the immediately preceding Business Day and (b) if the payment due date falls on a Sunday or Monday which is not a Business Day, such payment shall be made on the immediately following Business Day.

 

Section 5.07                             Tax Status of the Parties.  Prior to the first due date of a payment under this Agreement (and from time to time thereafter upon the reasonable request of the other Party), each Party shall deliver to the other Party a duly executed original of IRS Form W-9 or successor form certifying or establishing that it is exempt from U.S. federal backup withholding tax.

 

ARTICLE VI.

 

DOWNGRADE TERMINATION EVENT,
ACKNOWLEDGEMENT AND OTHER MATTERS

 

Section 6.01                             Downgrade and Cost of Assurance Trigger Event.  If a MLC Ratings Trigger Event occurs and is continuing or a Cost of Assurance Trigger Event has occurred as of the end of the previous fiscal quarter, notwithstanding any other provision of this Agreement, [**].

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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Section 6.02                             Termination at Expiration of the Term.

 

(a)                                 On the expiration of the Term (such date, the “Term Expiration Date”), all then outstanding PESRM Transactions, this Agreement, all other PESRM Transaction Documents and all documents related to the PESIC-PESRM Secured Prepay Transactions shall be extended to the date (the “Final Termination Date”) that is necessary solely to allow for (i) the continued performance of all then outstanding PESRM Transactions, CO Supply Contracts, PESRM-MLC Secured Prepay Transactions, MLC-PESIC Secured Prepay Transactions, PESIC-PESRM Secured Prepay Transactions, RP Sales Contracts and Cover Transactions, and (ii) without duplication, the sale to PESRM and/or one or more mutually acceptable third party purchasers of all of then current in-transit and in-storage Crude Oil, Refined Product inventories with respect to this Agreement; provided, that at any time prior to the Final Termination Date, all of then current in-transit and in-storage Crude Oil and Refined Product inventories with respect to this Agreement may be sold to PESRM or a mutually acceptable third party, in each case on mutually agreed prices and terms (including arrangements for novations, back to back purchases and sales and/or settlement payments, as applicable, in respect of then outstanding CO Supply Contracts, PESRM-MLC Secured Prepay Transactions, RP Sales Contracts, Cover Transactions and/or PESRM Transactions, it being acknowledged that such novations and/or other transactions under such contracts (other than PESRM Transactions) will require the agreement of third parties), and MLC and PESRM shall cooperate in good faith to facilitate such sales.  During the period following the Term Expiration Date, but prior to the Final Termination Date, (x) each of the Parties shall cooperate in good faith with the other Party to implement an orderly transition, and (y) MLC shall assign and/or transfer to PESRM all of its rights, title, interest, liabilities and obligations under all Assigned Agreements and, to the extent reasonably requested by PESRM, shall request that each counterparty to any Assigned Agreement assign to PESRM any related assets (including using its commercially reasonable efforts, subject to applicable tariffs, to assign to or at the direction of PESRM any related records) which had been previously assigned or transferred to MLC in connection with the transactions contemplated under such Assigned Agreement.  If an Event of Default or Termination Event occurs during the period between the Term Expiration Date and the Final Termination Date, MLC and/or PESRM, as applicable, shall have all of the rights and remedies specified in Article XIV with respect to such Event of Default or Termination Event, as applicable.  Notwithstanding the occurrence of the Final Termination Date, MLC shall continue to issue invoices under this Agreement with respect to any amounts that remain outstanding between the Parties on and after the Final Termination Date and any true-ups or corrections required by this Agreement.

 

(b)                                 Notwithstanding any other provision of this Agreement, if the Final Termination Date has not occurred within sixty (60) days following the Term Expiration Date, MLC shall have the right, in its sole discretion, by written notice to PESRM to (x) terminate, liquidate and accelerate any or all of such PESRM Transactions, CO Supply Contracts, PESRM-MLC Secured Prepay Transactions, RP Sales

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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Contracts and Cover Transactions and any of the PESIC-PESRM Secured Prepay Transactions (or, to the extent not entered into with PESRM, sell, assign or novate any CO Supply Contracts, Secured Prepay Transactions, RP Sales Contracts and Cover Transactions), and/or (y) without duplication, sell all of then current in-transit and/or in-storage Crude Oil and Refined Product inventories to one or more third party purchasers (such terminations, close-outs and sales, collectively, a “Wind-down Liquidation”).  PESRM shall reimburse MLC for any and all losses, costs and expenses (including any market structure or related costs under Schedule 5(c)) incurred by MLC (and after giving effect to any gains realized by MLC) with respect to such Wind-down Liquidation, which amounts shall be payable, from time to time, within two (2) Business Days following MLC’s delivery of an invoice to PESRM with respect to such amounts.  Sales by MLC of Hydrocarbons pursuant to this Section 6.02(b) shall not be subject to any of the Protocols.

 

Section 6.03                             Unexcused MLC Failure to Deliver or Accept.  Unless excused by Force Majeure or any other Applicable Condition, if MLC fails to deliver or accept all or part of the volume of the Hydrocarbons as required in any PESRM Transaction, CO Supply Contract, RP Sales Contract or Cover Transaction on the applicable delivery date, then the financial remedy set forth below shall apply:

 

(a)                                 Unexcused MLC Failure to Deliver under any PESRM Transaction.  MLC, as the seller under any PESRM Transaction, shall pay to PESRM under such PESRM Transaction, as part of the Monthly True-Up for the month in which the failure occurs, an amount equal to the product of (i) the amount of the Hydrocarbons that MLC failed to deliver (if any) and (ii) an amount equal to (x) the market offer price for the applicable Hydrocarbon at the applicable delivery point at the time the failure occurred minus (y) the price for such Hydrocarbon under this Agreement (except that if the difference between the amounts in subclauses (x) and (y) is zero or negative, then MLC shall have no obligation to make any payment to PESRM), all as determined by MLC, acting in a commercially reasonable manner.

 

(b)                                 Unexcused MLC Failure to Accept Delivery under any PESRM Transaction.  MLC, as the buyer under any PESRM Transaction, shall pay to PESRM as part of the Monthly True-Up for the month in which the failure occurred, an amount equal to the product of (i) the amount of the Hydrocarbon that MLC failed to accept (if any) and (ii) an amount equal to (x) the price for such Hydrocarbon under this Agreement minus (y) the market bid price for the applicable Hydrocarbon at the applicable delivery point at the time the failure occurred (except that if the difference between the amounts in subclauses (x) and (y) is zero or negative, then MLC shall have no obligation to make any payment to PESRM), all as determined by MLC, acting in a commercially reasonable manner.

 

(c)                                  Unexcused MLC Failure to Deliver under any RP Sales Contract.  MLC, as the seller under any RP Sales Contract, shall pay to PESRM as part of the Monthly True-Up for the month in which the failure occurred, an amount equal to the

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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positive True-Up Refined Product Price Amount (if any), as applicable, that would have been payable to PESRM under such RP Sales Contract if the relevant Hydrocarbons had been delivered to the purchaser on the scheduled delivery date under such RP Sales Contract; provided, that such amounts shall not be payable with respect to a failure to deliver by MLC that results from a failure by MLC to perform under a corresponding Cover Transaction that is subject to Section 6.03(d).

 

(d)                                 Unexcused MLC Failure to Deliver or Receive under any Cover Transaction.  MLC, as the purchaser or seller, as applicable, under any Cover Transaction, shall pay to PESRM, as part of the Monthly True-Up for the month in which such failure occurred, an amount equal to the Cover Transaction Price Amount, if any, that would have been payable to PESRM if MLC had delivered or received such Hydrocarbons on the scheduled delivery date under such Cover Transaction.

 

Section 6.04                             Semi-Annual Inspections.

 

(a)                                 On a semi-annual basis during the Term, MLC shall have the right, for the purpose of protecting MLC Separate Assets and Collateral against potential loss and at its own cost and expense, to have an independent inspector conduct surveys and inspections of any of the Tanks, and to observe any Hydrocarbon transfer, handling or related activities; provided, that such surveys and inspections shall be made during normal working hours and upon reasonable notice and shall not disrupt the normal operations of the Refinery or the other Basic Infrastructure, as applicable, and comply with the rules and procedures of the Refinery or the other Basic Infrastructure, as applicable.  In the event that such independent inspector, applying commercially reasonable industry standards, identifies any material adverse condition (a “Material Adverse Condition”), MLC shall notify PESRM (and, with respect to infrastructure not consisting of PESRM Infrastructure, the third party provider of such infrastructure) of the independent inspector’s findings, and MLC shall have the right in its sole discretion, by written notice to PESRM, to request PESRM not to store any additional MLC Separate Assets and Collateral in any Tanks or related infrastructure affected by such Material Adverse Conditions, and such affected Tanks and related infrastructure shall, on and after PESRM’s receipt of such notice and until the time such Material Adverse Condition is corrected, be deemed to be unavailable for purposes of Section 6.06.  PESRM shall have a commercially reasonable period of time to correct (or, with respect to infrastructure not consisting of PESRM Infrastructure, the third party provider of such infrastructure shall have a commercially reasonable period of time to correct), at its own cost and expense, such Material Adverse Condition; provided, that if such condition is of such a nature as can be reasonably remedied by relocating MLC Separate Assets and Collateral, as applicable, to other, non-affected Basic Infrastructure without materially diminishing any of the rights and services to which MLC is entitled under this Agreement and the other PESRM Transaction Documents, then PESRM will be deemed to have satisfied such correction obligation by accomplishing such relocation within such time period.

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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Section 6.05                             Required Infrastructure.

 

(a)                                 MLC’s obligations under this Agreement, the other PESRM Transaction Documents, the MLC-PESIC Secured Prepay Transactions, the CO Supply Contracts, the PESRM-MLC Secured Prepay Transactions, RP Sales Contracts and/or Cover Transactions to supply Crude Oil to PESRM, to sell Crude Oil to purchasers, to purchase Refined Products from PESRM, to sell Refined Products to purchasers identified by PESRM and to purchase Refined Products from suppliers identified by PESRM are, in all respects, subject to any limits imposed by the working capacity available to MLC at any time on any vessels, barges, docks, racks, railcars, railroads, railroad loading and unloading facilities, terminals, pipelines, storage tanks and other facilities and equipment that are necessary to the performance by PESRM or MLC of its obligations under the PESRM Transactions, the MLC-PESIC Secured Prepay Transactions, the CO Supply Contracts, the PESRM-MLC Secured Prepay Transactions, the RP Sales Contracts and/or the Cover Transactions, including any such facilities at the Refinery, the other Basic Infrastructure and the Butane Rail Facility (collectively, as of any date of determination, the “Required Infrastructure”), and any failure of performance by MLC under any such contracts or transactions that results, directly or indirectly, from any limits imposed by the working capacity allocated to MLC on Required Infrastructure shall be excused and shall not give rise to a MLC Event of Default.

 

(b)                                 In the event that working capacity allocated to MLC on Required Infrastructure becomes unavailable for any reason (including any provision of this Section 6.05 or Section 6.04), PESRM shall be required to use commercially reasonable efforts to secure replacement capacity at PESRM’s sole cost and expense as necessary to permit MLC to meet its delivery, receipt and resale obligations under the PESRM Transactions, the MLC-PESIC Secured Prepay Transactions, the CO Supply Contracts, the PESRM-MLC Secured Prepay Transactions, the RP Sales Contracts and/or the Cover Transactions, as applicable.

 

Section 6.06                             PESRM-MLC Secured Prepay Transactions.                                     Notwithstanding anything to the contrary in this Section 6.06, the Parties hereby acknowledge and agree that each [**] (x) [**] and, accordingly, (y) [**].

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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Section 6.07                             Accounting Treatment. Each Transaction Party represents and warrants that it has taken all necessary steps including review of the PESRM Transaction Documents with a senior representative of its finance group and its external auditor, as necessary, to ensure the appropriate financial and accounting treatment, regulatory and disclosure standards are complied with in connection with the PESRM Transaction Documents for each Transaction Party and its Affiliates.

 

Section 6.08                             [Reserved].

 

Section 6.09                             Change in Law.  Each Party shall make reasonable efforts to monitor any proposed Change in Law which may reasonably be expected to have an impact on such Party’s performance of its obligations under the PESRM Transaction Documents or its ability to hedge its trading positions in a commercially reasonable manner, including those relating to purchases and sales under, and inventories maintained in connection with, this Agreement or its other business (“Hedging Activities”) and shall promptly notify the other Party upon becoming aware of any such proposed Change in Law.  Such notice shall identify the proposed Change in Law and set out, in reasonable detail, the effects the notifying Party anticipates such Change in Law would have upon the PESRM Transaction Documents (or such Party’s performance thereunder) or its Hedging Activities if enacted.  The Parties shall in good faith meet to discuss what measures (if any) can be taken by either Party (or both) to minimize and/or mitigate the effect of any such proposed Change in Law.  If a Change in Law results or would result in a Party (the “Adversely Affected Party”) (a) violating any Applicable Law in connection with its Hedging Activities, or (b) incurring incremental damages, losses, costs, expenses, fees, fines, payments, Indemnifiable Taxes, liabilities, penalties or other sanctions of a monetary nature in excess of $[**] per annum solely as a result of such Party’s performance of its obligations under the Transaction Documents or as a result of its Hedging Activities, in each case the Adversely Affected Party shall be entitled to request that the Parties meet for purposes of addressing such Change in Law by providing written notice (a “Change in Law Notice”) to the other Party (the “Non-Affected Party”).  Within seven (7) days of receipt of a Change in Law Notice, the Parties shall meet in good faith with a view to identifying any steps (the “Consequential Steps”) that would alleviate the effects of the relevant Change in Law on the Adversely Affected Party, which may include an agreement between the Parties to share the relevant incremental losses incurred by the Adversely Affected Party or the amendment of any PESRM Transaction Document.  In identifying the Consequential Steps, the Parties shall, as far as is reasonably practicable, do so in a manner that preserves the balance of the commercial agreement (including economic benefits, risk allocation, costs and liabilities) existing between the Parties under this Agreement as of the Effective Date.  In the event the Parties cannot reach agreement on the Consequential Steps and on the implementation of the same within thirty (30) days of receipt by the Non-Affected Party of the Change in Law Notice, either Party may terminate this Agreement in the manner provided for in Section 6.02 as if the Term Expiration Date had occurred by giving

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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the other Party thirty (30) days advance notice of such termination, and such thirtieth (30th) day shall be deemed to be the Term Expiration Date for purposes of Section 6.02.

 

Section 6.10                             PESRM Acknowledgement.  PESRM acknowledges and agrees that (a) MLC is a merchant of crude oil, non-crude feedstock, refined products and blendstock and may, from time to time, be dealing with prospective counterparties, or pursuing trading or hedging strategies, in connection with aspects of MLC’s business which are unrelated hereto and that such dealings and such trading or hedging strategies may be different from or opposite to those being pursued by or for PESRM, (b) MLC may, but is not required to, determine whether to advise PESRM of any potential transaction with a counterparty and prior to advising PESRM of any such potential transaction MLC may, in its discretion, determine not to pursue such transaction or to pursue such transaction in connection with another aspect of MLC’s business and MLC would have no liability of any nature to PESRM as a result of any such determination, (c) MLC has no fiduciary or trust obligations of any nature with respect to the Refinery or PESRM, (d) MLC may enter into transactions and purchase or sell crude oil, non-crude feedstock, refined products and/or blendstock for its own account or the account of others at prices more favorable than those being paid by or to PESRM hereunder, and (e) nothing herein would be construed to prevent MLC, or any of its advisors, agents, attorneys, consultants, contractors, directors, employees, officers, representatives, partners or Affiliates, in any way from purchasing, selling or otherwise trading in crude oil, non-crude feedstock, refined products, blendstock or any other commodity for its or their own account or for the account of others, whether prior to, simultaneously with, or subsequent to any transaction under this Agreement or any other PESRM Transaction Document.  Notwithstanding the foregoing, MLC would have the obligation to execute CO Supply Contracts, PESRM-MLC Secured Prepay Transactions, and RP Sales Contracts in a manner consistent with the PESRM Transaction Documents and to otherwise perform its obligations hereunder.

 

Section 6.11                             Inventory Volumes.  For purpose of this Agreement, all Hydrocarbon inventory volumes shall be determined on a net standard volume basis, such that the saleable volume of Hydrocarbon inventory shall exclude BS&W, and shall be adjusted to a standard temperature of 60 degrees Fahrenheit by the appropriate volume correction factor for the observed temperature and API gravity.

 

Section 6.12                             [Reserved].

 

Section 6.13                             Procedures for Resolving Claims Against Third Parties.  The Parties shall consult with each other and coordinate how to handle and resolve any claims that MLC may have against any Person with respect to any CO Supply Contract, any PESRM-MLC Secured Prepay Transaction, any RP Sales Contract, any Cover Transaction or any exchange of futures for physicals related to any of the foregoing, any leases, subleases or assignments of any Third Party Infrastructure or Assigned Agreements or any CO Transportation and Other Costs, RP Transportation and Other Costs, Cover Transportation and Other Costs or Demurrage Costs.  To the extent that PESRM believes that any claim should be made by MLC for the account of PESRM against any Person with respect to any CO Supply Contract, any PESRM-MLC Secured Prepay Transaction, any RP Sales Contract, any Cover Transaction or any exchange of futures for physicals related to any of the foregoing, or any such leases, subleases or assignments, or any CO Transportation and Other Costs, RP Transportation and Other Costs, Cover Transportation

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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and Other Costs or Demurrage Costs, MLC shall, in its sole discretion after consultation with PESRM (provided, that any such consultation with PESRM shall not limit MLC’s exercise of its sole discretion), either (a) take any commercially reasonable actions as requested by PESRM directly to prosecute such claim or (b) assign its rights and interests as necessary to allow PESRM to contest, litigate or resolve such matter by a mutually acceptable alternative means that shall allow PESRM to pursue the claim, in each case at PESRM’s sole cost and expense, and all recoveries resulting from the prosecution of such claim shall be for the account of PESRM (and MLC shall only be liable to PESRM to the extent of, and in the same form as, such recoveries actually received by MLC).  In any case covered by clause (a) above, MLC shall not settle or otherwise compromise the relevant claim without PESRM’s consent (such consent not to be unreasonably withheld, delayed or conditioned), and in any case covered by clause (b) of the immediately preceding sentence, MLC shall be entitled to assist PESRM in the prosecution of the relevant claim and shall cooperate with PESRM in such prosecution, in each case in a commercially reasonable manner and at PESRM’s sole cost and expense.

 

Section 6.14                             Operational Imbalances.  MLC and PESRM recognize that due to the normal operation of one or more pipeline systems, storage facilities, dock facilities and other loading and unloading facilities and the like, certain operational imbalances (each, an “Operational Imbalance”) may arise from time to time with respect to Hydrocarbons to be sold and delivered under this Agreement due to, among other things, variations in rates of the flow of such Hydrocarbons, transit times, inaccuracies in the measurement and allocation of such Hydrocarbons and other physical reasons.  To the extent any such Operational Imbalance occurs and causes either Party to be unable to satisfy all or any part of its delivery or purchase obligations with respect to a PESRM Transaction, such Party shall not be deemed to be in default hereunder with respect to its delivery or purchase obligation for such PESRM Transaction and the shortfall or excess quantity of Hydrocarbon, as applicable (the “Imbalance Quantity”), shall be carried forward to the following delivery month or delivery months, as applicable, and settled in cash or physically settled by delivery or redelivery as soon as possible as agreed by the Parties.  MLC and PESRM shall take all necessary steps to account for and settle any such Imbalance Quantity in a commercially reasonable manner and shall adjust future nominations and deliveries of Hydrocarbon in accordance with the foregoing provisions.

 

Section 6.15                             PESRM/PESIC Failure to Perform.  Any failure by PESRM or PESIC, respectively, to receive from, or deliver to, MLC, at the CO Delivery Point, the RP Delivery Point or the Product Purchaser Delivery Point, as applicable, on any Day, any Hydrocarbons that were scheduled to be received from, or delivered to, MLC on such Day under any PESRM Transaction, MLC-PESIC Secured Prepay Transaction, PESIC-PESRM Secured Prepay Transaction or Cover Transaction and that MLC was, at the time of such PESRM or PESIC failure, obligated to buy and receive from a seller, or sell and deliver to a purchaser under (x) any CO Supply Contract, any RP Sales Contract, MLC-PESIC Secured Prepay Transaction or any Cover Transaction or (y) any other purchase or sale of such Hydrocarbons, as applicable, that was entered into by MLC pursuant to this Agreement shall excuse (as between MLC and PESRM) any failure by MLC to perform under any such contracts or transactions to the extent of any such PESRM or PESIC failure (any such PESRM or PESIC failure, a “PESRM/PESIC Failure to Perform”).

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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Section 6.16                             Foreign Trade Zone Operator; Imports and Exports.

 

(a)                                 Foreign Trade Zone Operator.  From and after the Effective Date, PESRM shall (i) be solely responsible for operating the Philadelphia Foreign Trade Zone No. 35 (the “PESRM FTZ”), (ii) prepare, maintain and file all necessary documentation in connection with operation of the PESRM FTZ, and (iii) maintain all records, inventories and accounts of operations within the PESRM FTZ in accordance with Applicable Laws and the requirements of the U.S. Customs and Border Protection Service (“Customs”) and any other Governmental Authority.

 

(b)                                 Imports.  PESRM shall be the importer of record (or, if applicable, the exporter of record) for any Crude Oil, imported by virtue of the transactions contemplated by this Agreement and shall (i) prepare, maintain and file all necessary documentation as importer of record, and (ii) pay any and all duties, fees or taxes imposed as a result of importation of Crude Oil in connection with the transactions contemplated by this Agreement.

 

(c)                                  Exports.  PESRM shall be the exporter of record with respect to any sales of Refined Products to third parties for export by virtue of transactions contemplated by this Agreement and, where applicable, shall prepare, maintain and file all necessary documentation as exporter of recordand (ii) pay any and all duties, fees or taxes imposed as a result of exportation of Refined Products in connection with the transactions contemplated by this Agreement.

 

Section 6.17                             MLC Guaranty.  During the Term, MLC shall provide and maintain with PESRM a guaranty agreement substantially in the form attached hereto as Schedule 6.17 (the “MLC Guaranty”), pursuant to which Bank of America Corporation (“MLC Guarantor”) shall guarantee the prompt payment when due of all of MLC’s obligations under the PESRM Transactions and the PESRM Transaction Documents in an aggregate amount not to exceed $[**].

 

Section 6.18                             Demurrage Cost Invoicing.  Demurrage Costs may not be invoiced by MLC to PESRM until MLC itself is invoiced, which for this purpose shall include a pro forma invoice, for such costs; provided, that if as of any Day, MLC reasonably determines that the aggregate amount of Demurrage Costs (that have been incurred by MLC, but for which it has not yet been invoiced) as of such Day exceeds $[**], MLC may invoice PESRM for such aggregate amount of Demurrage Costs.  The provisions of Section 5.04 shall not apply to any Demurrage Costs invoiced by MLC.  MLC shall not settle or otherwise compromise any demurrage claim without PESRM’s consent (such consent not to be unreasonably withheld, delayed or conditioned).

 

Section 6.19                             Inventory, Sale and Receipt Data Reconciliation.  Each Party will, and with respect to PESRM, will cause each of its Subsidiaries (other than Excluded Subsidiaries), upon the request of the other Party, to make commercially reasonable efforts to reconcile its inventory, sale and receipt data with the inventory, sale and receipt data of such other Party.

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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Section 6.20                             Anti-Corruption Laws.

 

(a)                                 The parties to this Agreement are committed to compliance with the Applicable Laws of the United States as well as the laws of other countries that are, or may be, of potential relevance, including all Applicable Laws to one or both Parties relating to bribery, money laundering and/or corrupt payments, such as the Foreign Corrupt Practices Act, 15 U.S.C. §§78dd-1 et. seq., and the UK Bribery Act of 2010 (all such laws being collectively referred to herein as the “Anti-Corruption Laws”).  Accordingly, each Party hereto hereby represents, warrants and covenants that:

 

(i)                                     It is now in compliance with the Applicable Laws required for its performance under this Agreement as well as the Anti-Corruption Laws of any other countries or jurisdictions that are applicable to the transactions that are contemplated herein and will remain in compliance with all such Applicable Laws for the duration of this Agreement.  The provisions of this Agreement and the transactions contemplated hereby are legal and binding under the laws of the relevant jurisdictions, including all applicable Anti-Corruption Laws and Applicable Laws and regulations relating to taxation and exchange control.

 

(ii)                                  It has not taken and will not take any actions in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any government official (including any officer or employee of a foreign government or government-controlled entity or of a public international organization, or any person acting in an official or representative capacity for or on behalf of any of the foregoing, or any political party or official thereof, or candidate for political office, or legislative, administrative or judicial officials whether or not elected or appointed, all of the foregoing being referred to as “Government Officials”) or to any other person while knowing that all or some portion of the money or value will be offered, given or promised to a Government Official for the purposes of obtaining or retaining business, an advantage in the conduct of business or securing any improper disadvantage.

 

(iii)                               It has not taken and will not take any actions in furtherance of an offer, payment, promise to pay or authorization of the payment or giving of, or a request or acceptance of, money or anything else of value, to or by any other person (whether or not a Government Official) while knowing that all or some portion of the money or value offered, given or promised to such other person is for the purpose of securing the improper performance of that person’s function or misuse of that person’s position.

 

(iv)                              No part of the payments received by a Party under this Agreement,  directly or indirectly, from the other Party will be used for any purpose which would cause a violation of the laws of the United States or any

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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other applicable jurisdiction including any applicable Anti-Corruption Laws.

 

(b)                                 [Reserved].

 

(c)                                  [Reserved].

 

(d)                                 Either Party may terminate this Agreement immediately upon written notice in the event that the other Party has breached any representation or warranty set forth in Section 6.20(a).  In the event of a breach of any of the representations and warranties set forth in this Section 6.20, any claims for payment by a Party with regard to any transaction for which a breach of the representations has occurred shall be void. The breaching Party shall further indemnify and hold the non-breaching Party harmless against any and all claims, losses or damages arising from or related to such breach.

 

Section 6.21                             [Reserved].

 

Section 6.22                             Transmix.  The volume of transmix that is created as the result of any shipment of Hydrocarbons pursuant to the terms of this Agreement shall be treated as a Volumetric Loss.  Any reimbursements received by MLC from third parties with respect to transmix volumes resulting from shipments pursuant to this Agreement shall be for PESRM’s account. Such transmix reimbursements shall be included in the Monthly True-Up Invoice that corresponds to the month in which such reimbursement was received by MLC.

 

Section 6.23                             [Reserved].

 

Section 6.24                             Aggregate Liability Limitations.

 

(a)                                 Unless otherwise agreed by MLC (in its sole discretion), notwithstanding anything to the contrary in this Agreement or any other PESRM Transaction Document or MLC-PESIC Secured Prepay Transaction, MLC shall have no obligation to enter into any CO Supply Contract, any RP Sales Contract, any PESRM-MLC Secured Prepay Transaction, MLC-PESIC Secured Prepay Transaction or any Cover Transaction if, as of any Monthly True-Up Date, the sum of (a) [**] plus (b) [**], the “Aggregate Liability

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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Amount”), exceeds $[**], as determined by MLC, which determination shall be binding on the Parties absent manifest error.

 

(b)                                 MLC shall have no obligation to enter into any CO Supply Contract, any RP Sales Contract, any PESRM-MLC Secured Prepay Transaction, any MLC-PESIC Secured Prepay Transaction or any Cover Transaction if, as of any Day, the aggregate notional value (measured in U.S. Dollars) of all [**] under and as defined in the [**] outstanding as of such Day exceeds $[**], as determined by MLC, which determination shall be binding on the Parties absent manifest error.

 

Section 6.25                             [**] No Title to Hydrocarbons.  For the avoidance of doubt, except as [**] may hold title to Hydrocarbons in connection [**], in no event shall [**].

 

ARTICLE VII.

 

INDEMNITIES

 

Section 7.01                             Indemnities.

 

(a)                                 PESRM’s Duty to Indemnify.  Without duplication of any indemnity provided for in Section 7.01(b), to the fullest extent permitted by Applicable Law, PESRM shall defend, indemnify and hold harmless MLC, its Affiliates, and their respective advisors, agents, attorneys, consultants, contractors, directors, employees, officers, managers and representatives from and against any Liabilities directly or indirectly arising out of (i) any breach by (x) PESRM of any covenant contained in this Agreement, any other PESRM Transaction Document, the PESIC-PESRM ISDA Master Agreement or other PESIC-PESRM Secured Prepay Transaction Document or the PESRM-MLC ISDA Master Agreement or in connection therewith or (y) PESIC of any covenant contained in the PESIC-PESRM ISDA Master Agreement, any other PESIC-PESRM Secured Prepay Transaction Document, the MLC-PESIC ISDA Master Agreement or any other MLC-PESIC Secured Prepay Transaction Document or made in connection therewith, (ii) any representation or warranty of (x) PESRM made in this Agreement, any other PESRM Transaction Document, the PESIC-PESRM ISDA Master Agreement or the PESRM-MLC ISDA Master Agreement or in connection therewith or (y) PESIC made in the PESIC-PESRM ISDA Master Agreement, any other PESIC-PESRM Secured Prepay Transaction Document, the MLC-PESIC ISDA Master Agreement or any other MLC-PESIC Secured Prepay Transaction Document, in each case, proving to be false or misleading, (iii) any failure by PESRM or PESIC to comply with or observe any Applicable Law

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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(including Environmental Laws and the failure to obtain or maintain any Environmental Permits), (iv) the failure to comply with Renewable Fuel Standards including requirements therein for RVOs and RINs, and all other requirements of 40 C.F.R. Part 80, (v) PESRM’s or PESIC’s negligence or willful misconduct, (vi) any indemnification by MLC of PESIC or any other Indemnified Party (as defined in the Framework Agreement) other than an MLC Caused Indemnity or (vii) injury, disease or death of any person, damage to or loss of any property or any fine or penalty, any of which is caused by PESRM, PESIC or either of its advisors, agents, attorneys, consultants, contractors, directors, employees, officers, managers or representatives in the exercise of any of the rights granted under this Agreement or any other PESRM Transaction Documents, the PESIC-PESRM ISDA Master Agreement, the other PESIC-PESRM Secured Prepay Transaction Documents, the MLC-PESIC ISDA Master Agreement, the other MLC-PESIC Secured Prepay Transaction Documents or the PESRM-MLC ISDA Master Agreement except to the extent that such injury, disease, death, or damage to or loss of property was caused by any MLC Event.

 

(b)                                 PESRM Indemnities with respect to Certain Contracts. Without duplication of any indemnity provided for in Section 7.01(c), to the fullest extent permitted by Applicable Law, PESRM shall defend, indemnify and hold harmless MLC, its Affiliates and their respective advisors, agents, attorneys, consultants, contractors, directors, employees, officers, managers and representatives from and against any Liabilities or claims directly or indirectly arising out of or relating to this Agreement, any other Transaction Documents, any CO Supply Contract, any PESRM-MLC Secured Prepay Transaction, any RP Sales Contract or any Cover Transaction, any MLC-PESIC Secured Prepay Transaction, any PESIC-PESRM Secured Prepay Transaction or MLC’s or any counterparty’s performance hereunder or thereunder (it being understood that any gains in connection therewith shall be for PESRM’s account), including:

 

(i)                                     any actual or alleged failure by PESRM or PESIC to receive from, or deliver to, MLC or PESIC, as applicable, at the CO Delivery Point, the RP Delivery Point or the Product Purchaser Delivery Point or any delivery point pursuant to a PESRM-MLC Secured Prepay Transaction or any delivery point pursuant to a PESIC-PESRM Secured Prepay Transaction or any delivery point pursuant to a MLC-PESIC Secured Prepay Transaction, as applicable, on any Day, any Hydrocarbons that were scheduled to be received from, or delivered to, MLC or PESIC, as applicable, on such Day under any PESRM Transaction, Cover Transaction, PESRM-MLC Secured Prepay Transaction, MLC-PESIC Secured Prepay Transaction or PESIC-PESRM Secured Prepay Transaction and that MLC or PESIC was, at the time of such PESRM failure, obligated to buy and receive from a seller, or sell and deliver to a purchaser under (x) any CO Supply Contract, any PESRM-MLC Secured Prepay Transaction, any MLC-PESIC Secured Prepay Transaction, any PESIC-PESRM Secured Prepay Transaction, any RP Sales Contract or any Cover Transaction or (y) any other purchase or sale of such

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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Hydrocarbons, as applicable, that was entered into by MLC pursuant to this Agreement;

 

(ii)                                  any actual or alleged failure of any Hydrocarbon delivered pursuant to a CO Supply Contract, PESRM-MLC Secured Prepay Transaction, RP Sales Contract, Cover Transaction or PESIC-PESRM Secured Prepay Transaction to conform to the specifications set forth in such CO Supply Contract, RP Sales Contract or Cover Transaction, PESRM-MLC Secured Prepay Transaction, MLC-PESIC Secured Prepay Transaction or PESIC-PESRM Secured Prepay Transaction;

 

(iii)                               any actual or alleged breach by MLC of any representations and warranties relating to the Principal Terms of, or contained in the general terms and conditions applicable to, any CO Supply Contract, PESRM-MLC Secured Prepay Transaction, RP Sales Contract or Cover Transaction, but in each case excluding any actual or alleged breach by MLC of any such representations and warranties in respect of organization, powers, due authorization, enforceability, no conflicts, litigation and compliance with laws and material agreements that are specific to MLC;

 

(iv)                              without duplication of any indemnity provided for in any other subclause of this Section 7.01(b), any actual or alleged breach by MLC of any term of any CO Supply Contract, any PESRM-MLC Secured Prepay Transaction, any RP Sales Contract, any Cover Transaction or any Third Party Consent Agreement;

 

(v)                                 any actual or alleged breach by any counterparty of any term of any CO Supply Contract, any RP Sales Contract, any Cover Transaction or any Third Party Consent Agreement;

 

(vi)                              any allocation of Refined Products among outstanding RP Sales Contracts in respect of any shortfall in supply; or

 

(vii)                           any actual or alleged breach by MLC of any actual or alleged contractual duty of MLC to use commercially reasonable efforts to mitigate damages to the counterparty to any RP Sales Contract in sourcing Refined Products to cover any failure to deliver Refined Products under such RP Sales Contract.

 

provided, that PESRM shall have no duty to indemnify MLC in accordance with this Section 7.01(b) to the extent due to (x) any MLC Event; or (y) arising, directly or indirectly, from the bankruptcy or insolvency of a third party seller or third party purchaser under any CO Supply Contract, RP Sales Contract or Cover Transaction.

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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(c)                                  Additional PESRM Indemnities.

 

(i)                                     Without limiting the above-described indemnities, PESRM shall defend, indemnify and hold harmless MLC, its Affiliates, and their respective advisors, agents, attorneys, consultants, contractors, directors, employees, officers, managers and representatives from and against any Liabilities (including the costs of any Response, natural resources damages, personal injury and property damages, civil and criminal penalties and defense costs including reasonable attorneys’ fees and disbursements) under any applicable Environmental Law (including the Resource Conservation and Recovery Act, 42 U.S.C. §§6901 et seq., CERCLA, and the Pennsylvania Land Recycling and Environmental Remediation Standards Act, 35 P.S. §§6026.101 et seq. or any successor statutes thereto) resulting from the transportation and/or delivery to and from, and operations at, the Refinery or any other PESRM Infrastructure, except to the extent that such liability is due to the negligence or willful misconduct on the part of MLC, its Affiliates or any of their respective agents, consultants, contractors, directors, employees, officers or representatives; provided, that MLC shall not be responsible for any failure relating to the negligence or willful misconduct of PESRM, its Affiliates or any of their respective agents, consultants, contractors, directors, employees, officers, managers or representatives, in each case when acting as a consultant to MLC.

 

(d)                                 PESRM Tax Indemnification.

 

(i)                                     To the fullest extent permitted by Applicable Law, PESRM shall defend, indemnify and hold harmless MLC and its Affiliates against the amount of all Indemnifiable Taxes, and all penalties and interest thereon, paid, owing, asserted against, or incurred by MLC and/or its Affiliates directly or indirectly by reason of the procurement, purchase, ownership, storage, transfer, transport, sale or use of the Hydrocarbons or lease or use of any Required Infrastructure pursuant to this Agreement or any other PESRM Transaction Document, or any CO Supply Contract, PESRM-MLC Secured Prepay Transaction, MLC-PESIC Secured Prepay Transaction or any MLC-PESIC Secured Prepay Transaction Document, PESIC-PESRM Secured Prepay Transaction, RP Sales Contract (including any such RP Sales Contract with PESRM, notwithstanding any other tax provision that might be included in such RP Sales Contract with PESRM unless such tax provision makes specific reference to this Section 7.01(d)(i)), or Cover Transaction, or by reason of any other transaction or service contemplated hereunder or thereunder (including any PESRM-MLC Secured Prepay Transaction, MLC-PESIC Secured Prepay Transaction or any MLC-PESIC Secured Prepay Transaction Document, or PESIC-PESRM Secured Prepay Transaction), other than any taxes withheld from a payment made by MLC to a supplier under any CO Supply Contract, PESRM-MLC Secured Prepay Transaction, MLC-PESIC Secured Prepay Transaction or any MLC-PESIC Secured Prepay Transaction Document, PESIC-PESRM Secured Prepay Transaction, or Cover Transaction (which taxes, for the avoidance of doubt, are addressed elsewhere in this Agreement, including

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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in the definitions and treatment of CO Transportation and Other Costs and Cover Transportation and Other Costs).  In the event that PESRM is not permitted to pay such Indemnifiable Taxes, other amounts due from PESRM to MLC under the PESRM Transaction Documents shall be adjusted such that PESRM shall bear the economic burden of the Indemnifiable Taxes.

 

(ii)                                  To the extent permitted by Applicable Law, PESRM shall be required to pay when due such Indemnifiable Taxes described in Section 7.01(d)(i) unless there is an applicable exemption from such Indemnifiable Tax, with written confirmation of such tax exemption to be contemporaneously provided to MLC.  To the extent that MLC is the Person required by law to collect and account to the applicable tax authority for any such Indemnifiable Taxes, MLC will pay such Indemnifiable Taxes, and any applicable penalties or interest owing or assessed in relation thereto, to the applicable taxing authority, and one-hundred percent (100%) of such Indemnifiable Taxes (and such penalties and interest, to the extent the obligation to make payment of such penalties and interest was not the result of a negligent failure by MLC to timely remit the appropriate amount of taxes to the applicable tax authority) together with an amount equal to any taxes payable by MLC in respect of amounts paid or payable to MLC under this Section 7.01(d)(ii), shall be added to invoices as separately stated charges and paid in full by PESRM in accordance with the terms of this Agreement, unless PESRM is exempt from such Indemnifiable Taxes and timely furnishes MLC with a certificate of exemption, and, to the extent (i) such invoices are satisfied in full by PESRM or (ii) other amounts due under the PESRM Transaction Documents are adjusted such that PESRM has borne the economic burden of the Indemnifiable Taxes, MLC shall assume any and all responsibility for any interest and penalty assessments made by a tax authority against either Party to the extent such interest and penalties are assessed due to a failure by MLC to promptly remit the applicable Indemnifiable Taxes to the relevant tax authority following PESRM’s satisfaction of such invoices or such adjustment of payments under the PESRM Transaction Documents.

 

(iii)                               Each Party will reasonably cooperate with the other to minimize liability for any Indemnifiable Taxes to the extent legally permissible.  Each Party will provide and make available to the other upon request any direct pay permits, resale certificates, multiple points of use certificates, treaty certification, information regarding out-of state (or out-of-country) sales or use of equipment, materials, or services, and other exemption certificates or information reasonably requested by the other Party.  To the extent PESRM is exempt from any Indemnifiable Taxes, it will provide MLC with a copy of the applicable tax exemption (or direct pay or resale certificate, as applicable), and, to the extent such exemption or certifications are reasonably acceptable to MLC, MLC will not bill or

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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charge PESRM for such Indemnifiable Taxes.  MLC will, upon written request of PESRM and at the sole cost and expense of PESRM, cooperate and use commercially reasonable efforts to assist PESRM’s (i) lawful claims for any exemptions from any sales or services taxes, and (ii) lawful attempts to recoup or recover any VAT, similar taxes or other recoverable taxes.  At the sole cost and expense of PESRM, MLC will register as promptly as possible for all benefits for which it is eligible under the Keystone Opportunity Improvement Zone and will take all commercially reasonable efforts to maintain such benefits.

 

(iv)                              If PESRM disputes MLC’s determination that any Indemnifiable Tax not the subject of a Proceeding is due with respect to transactions under the PESRM Transaction Documents, or any documents related to the MLC-PESIC Secured Prepay Transactions, the PESIC-PESRM Secured Prepay Transactions, PESRM shall have the right to seek an administrative determination from the applicable taxing authority that no such Indemnifiable Tax is due, subject to its agreeing to indemnify MLC for the entire amount of such disputed Indemnifiable Tax (including any associated interest and/or late penalties), and any tax payable by MLC in respect of any amounts paid or payable to MLC under this Section 7.01(d)(iv), should such Indemnifiable Tax be determined applicable.  MLC shall agree to reasonably cooperate with PESRM, at PESRM’s cost and expense, in the event PESRM determines to seek such an administrative determination in respect of the disputed Indemnifiable Taxes.

 

(v)                                 PESRM and MLC shall be required to promptly inform each other in writing of any assertion by a taxing authority of additional Liability for Indemnifiable Taxes relating to the PESRM Transactions, the CO Supply Contracts, the MLC-PESIC Secured Prepay Transactions, the PESRM-MLC Secured Prepay Transactions, the RP Sales Contracts, the Cover Transactions or PESIC-PESRM Secured Prepay Transactions.  Any such Proceeding against MLC with respect to such asserted Liability (including any settlement thereof) shall be under MLC’s direction, but PESRM shall be consulted and, if the Proceeding solely relates to Indemnifiable Taxes relating to the PESRM Transactions, the CO Supply Contracts, the PESRM-MLC Secured Prepay Transactions, the RP Sales Contracts, the Cover Transactions, the MLC-PESIC Secured Prepay Transactions or the PESIC-PESRM Secured Prepay Transactions, as applicable, and no other matters, then MLC shall not settle or otherwise compromise the relevant claim without PESRM’s consent (such consent not to be unreasonably withheld, delayed or conditioned).  Any Proceeding against PESRM with respect to such asserted Liability (including any settlement thereof) shall be under PESRM’s direction, but MLC shall be consulted.  In any event, PESRM and MLC shall fully cooperate with each other as to the asserted Liability.  PESRM shall bear all of the reasonable costs of any such Proceeding undertaken by either Party.  If MLC, acting in good faith and a

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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commercially reasonable manner, concludes that any rebates or refunds it receives from any tax authority are in respect of Indemnifiable Taxes that were paid or borne by PESRM, it will pay such rebate or refunds to PESRM or otherwise adjust the payments under this Agreement such that PESRM shall have the economic benefit of such rebates or refunds.

 

(vi)                              This Section 7.01(d) shall survive until ninety (90) days after the expiration of the statute of limitation for the assessment, collection and levy of any Indemnifiable Tax.

 

(e)                                  MLC’s Duty to Indemnify.  Subject to Section 14.04(i), to the fullest extent permitted by Applicable Law MLC shall defend, indemnify and hold harmless PESRM, its Affiliates, and their respective advisors, agents, attorneys, consultants, contractors, directors, employees, officers, managers and representatives from and against any Liabilities directly or indirectly arising out of (i) any breach by MLC of any covenant or agreement contained in this Agreement, any other PESRM Transaction Document, the PESRM-MLC ISDA Master Agreement or made in connection therewith, (ii) any representation or warranty of MLC made in this Agreement, any other PESRM Transaction Document, the PESRM-MLC ISDA Master Agreement or in connection therewith, in each case, proving to be false or misleading, (iii) any failure by MLC to comply with or observe any Applicable Law (including Environmental Laws), (iv) MLC’s negligence or willful misconduct, or (v) injury, disease, or death of any person, damage to or loss of any property, or any fine or penalty, any of which is caused by MLC or its advisors, agents, attorneys, consultants, contractors, directors, employees, officers, managers or representatives in the exercise of any of the rights granted under this Agreement or any other PESRM Transaction Documents except to the extent that such injury, disease, death, or damage to or loss of property was caused by the gross negligence or willful misconduct on the part of PESRM, its Affiliates or any of their respective advisors, agents, attorneys, consultants, contractors, directors, employees, officers, managers or representatives.

 

(f)                                   Notice of Indemnity Claim.  The Party to be indemnified (the “Indemnified Party” shall notify the other Party (the “Indemnifying Party”) as soon as practicable after receiving notice of any Proceeding brought against the Indemnified Party which may give rise to the Indemnifying Party’s obligations under this Agreement and for which the Indemnified Party, at its election and upon notice to the Indemnifying Party, intends to exercise such right to indemnification (such Proceeding a “Third Party Claim”), and shall furnish to the Indemnifying Party the complete details of such Third Party Claim within its knowledge. Any delay or failure by the Indemnified Party to give notice to the Indemnifying Party shall not relieve the Indemnifying Party of its obligations except to the extent (if any) that the Indemnifying Party shall have been materially prejudiced by reason of such delay or failure.

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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(g)                                 Defense of Indemnity Claim.  The Indemnifying Party shall have the right to assume the defense, at its own expense, of any Third Party Claim and to pursue the defense thereof in good faith by appropriate actions or proceedings promptly taken or instituted and diligently pursued, including to employ and engage counsel of its own choice; provided, that such counsel is reasonably acceptable to the Indemnified Party. Notwithstanding the Indemnifying Party’s appointment of counsel to represent an Indemnified Party, the Indemnified Party shall have the right to employ separate counsel, and the Indemnifying Party shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by the Indemnifying Party to represent the Indemnified Party would present a conflict of interest or (ii) the Indemnifying Party shall not have employed counsel to represent the Indemnified Party within a reasonable time after notice of the institution of such Third Party Claim, provided that appointment within 30 Days after notice of the institution of such Third Party Claim shall be considered reasonable for the purposes of this section, and provided further that the Indemnified Party shall have the right to appoint separate counsel only after the receipt by the Indemnifying Party of a notice provided by the Indemnified Party that counsel has not been employed within a reasonable time after the institution of such Third Party Claim. If requested by the Indemnifying Party, the Indemnified Party agrees to reasonably cooperate with the Indemnifying Party and its counsel in contesting any Proceeding suit that the Indemnifying Party defends, including, if appropriate, making any counterclaim or cross-complaint. All costs and expenses incurred in connection with the Indemnified Party’s cooperation shall be borne by the Indemnifying Party, provided that the Indemnified Party shall provide, promptly upon request of the Indemnifying Party, evidence (which may be in the form of an invoice or receipt for such costs) of any such costs incurred up to the date of such request. Without in any way limiting the foregoing obligation of the Indemnifying Party with respect to cooperation by the Indemnified Party in connection with such Third Party Claim, the Indemnified Party may, at its own cost and expense, participate in the investigation, trial and defense of such Third Party Claim.

 

(h)                                Settlement of Third Party Claims.  No Third Party Claim may be settled or compromised (i) by the Indemnified Party without the consent of the Indemnifying Party or (ii) by the Indemnifying Party without the consent of the Indemnified Party.  Notwithstanding the foregoing, an Indemnifying Party shall not be entitled to assume responsibility for and control of any judicial or administrative proceedings after the occurrence and during the continuance of an Event of Default by the Indemnifying Party.

 

(i)                                    Insurance.  The mere purchase and existence of insurance does not reduce or release either Party from any liability incurred or assumed under this Agreement.

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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ARTICLE VIII.

 

REPRESENTATIONS AND WARRANTIES OF THE TRANSACTION PARTIES

 

Each Transaction Party represents and warrants to MLC as of the Effective Date and as of each Day of the Term on which there is any outstanding transaction pursuant to any Applicable PESRM Transaction Document or the PESIC-PESRM ISDA Master Agreement:

 

Section 8.01                             Organization; Powers.  Each Transaction Party (a) is duly organized and validly existing under the laws of the jurisdiction of its organization, (b) has all requisite power and authority to carry on its business as now conducted and to own and lease its property and (c) is qualified and in good standing (to the extent such concept is applicable in the applicable jurisdiction) to do business in every jurisdiction where such qualification is required, except in such jurisdictions where the failure to so qualify or be in good standing, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

 

Section 8.02                             Authorization; Enforceability.  Each Applicable PESRM Transaction Document and the PESIC-PESRM ISDA Master Agreement and each transaction contemplated hereunder and thereunder entered into by each Transaction Party are within such Transaction Party’s powers and have been duly authorized by all necessary limited liability company action on the part of such Transaction Party.  This Agreement has been duly executed and delivered by each Transaction Party and constitutes, and each other Applicable PESRM Transaction Document to which any Transaction Party is to be a party, when executed and delivered by such Transaction Party (and the PESIC-PESRM ISDA Master Agreement, when executed and delivered by PESRM), will constitute, a legal, valid and binding obligation of such Transaction Party, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

 

Section 8.03                            No Conflicts; Material Contracts.

 

(a)                                Each Applicable PESRM Transaction Document and the PESIC-PESRM ISDA Master Agreement and each transaction contemplated hereunder and thereunder (i) does not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority having authority over any Transaction Party, except (1) such as has been obtained or made and is in full force and effect, (2) filings necessary to perfect or maintain Liens created by the Applicable PESRM Transaction Documents and (3) consents, approvals, registrations, filings, permits or actions the failure of which to obtain or perform could not reasonably be expected to result in a Material Adverse Effect, (ii) does not violate the Organizational Documents of any Transaction Party, (iii) does not violate any Applicable Law, except for any such violation which could not reasonably be expected to result in a Material Adverse Effect, (iv) except as set forth on Schedule 8.03(a), does not violate or result in a default or require any consent or approval under any Material Contract binding upon any Transaction Party or its property, or the Senior Secured Credit Facility Documents, or give rise to a right under any of the foregoing to require any payment to be made by

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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any Transaction Party, except for violations, defaults or the creation of such rights that could not reasonably be expected to result in a Material Adverse Effect, and (v) does not result in the creation or imposition of any Lien on any property of any Transaction Party, except Permitted Liens.

 

(b)                                As of the Effective Date, except as specified on Schedule 8.03(b), PESRM is party to such contracts, agreements or arrangements as are required for the operation of the Refinery and the business of PESRM, and all such agreements are in full force and effect.

 

Section 8.04                            Financial Statements; Projections.

 

(a)                                Financial Statements.  All financial statements delivered pursuant to Sections 10.01(a), (b) and (c) have been prepared in accordance with GAAP consistently applied and present fairly and accurately in all material respects the financial condition and results of operations and cash flows of PESRM and its Subsidiaries as of the dates and for the periods to which they relate, except for, in the case of the statements delivered pursuant to Sections 10.01(b) and (c), the absence of footnote disclosures and normal year-end adjustments.

 

(b)                                No Material Adverse Effect. Since the Effective Date, there has been no event, change, circumstance or occurrence that, individually or in the aggregate, has had or could reasonably be expected to result in a Material Adverse Effect.

 

Section 8.05                            Properties.

 

(a)                                Generally.  Each Transaction Party has good title to, a license to or valid leasehold interests in, all its property material to its business, free and clear of all Liens except for, in the case of Collateral, Permitted Liens and, in the case of all other material property, Permitted Liens and minor irregularities or deficiencies in title that, individually or in the aggregate, do not interfere with its ability to conduct its business as currently conducted or to utilize such property for its intended purpose and except where the failure to have such title or other interest could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.  The property of the Transaction Parties, taken as a whole, (i) is in good operating order, condition and repair (ordinary wear and tear excepted) and (ii) constitutes all the property which is required for the business and operations of the Transaction Parties as presently conducted.

 

(b)                                No Casualty Event.  No Transaction Party has received any written notice of, nor has any knowledge of, the occurrence or pendency or contemplation of any Casualty Event affecting all or any portion of its property, which Casualty Event could reasonably be expected to have a Material Adverse Effect.

 

(c)                                 Collateral.  No claim has been made and remains outstanding that any Transaction Party’s use of any Collateral does or may violate the rights of any third party that could, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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Section 8.06                            Intellectual Property.  Each Transaction Party owns, licenses or possesses the right to use all of the IP Rights that are necessary for the operation of its respective business, as currently conducted, and such IP Rights do not conflict with the rights of any other Person, except to the extent such failure to own, license or possess or such conflicts, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.  The conduct of the business of any Transaction Party as currently conducted or as contemplated to be conducted does not infringe upon or violate any rights held by any other Person except for such infringements and violations which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.  No claim or litigation regarding any of the foregoing is pending or, to the knowledge of PESRM, threatened in writing which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

 

Section 8.07                            Equity Interests and Subsidiaries. As of the Effective Date, each Transaction Party has no Subsidiaries other than those set forth on Schedule 8.07 and all of the outstanding Equity Interests in such Subsidiaries that are owned by a Transaction Party have been validly issued, are fully paid and non-assessable (to the extent such concepts are applicable in the relevant jurisdiction) and are owned free and clear of all Liens except Permitted Liens.

 

Section 8.08                            Litigation; Compliance with Laws; Permits; and Agreements.

 

(a)                                Except as set forth on Schedule 8.08(a), there are no Proceedings at law or in equity by or before any Governmental Authority now pending or, to the knowledge of any Transaction Party, threatened in writing against or affecting any Transaction Party or any business, property or rights of any Transaction Party (i) that involve this Agreement, any other Applicable PESRM Transaction Document or the PESIC-PESRM ISDA Master Agreement or, as of the Effective Date, any of the other transactions contemplated hereunder or thereunder or (ii) as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect (but only with respect to clauses (ii) and (iii) thereof).

 

(b)                                Except for matters covered by Section 8.18, no Transaction Party or any of its property is in violation of, nor will the continued operation of its property as currently conducted or contemplated by the Applicable PESRM Transaction Documents or the PESIC-PESRM ISDA Master Agreement violate any Applicable Law where such violation or default, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.

 

(c)                                 Except as set forth on Schedule 8.08(c) and except for matters covered by Section 8.18, PESRM has all Material Permits required for PESRM to conduct business at and operate all PESRM Infrastructure, including the Refinery, under Applicable Law.  (i) No event has occurred within the one (1) year prior to the date hereof that remains unresolved, and no circumstance or condition exists, that (with or without notice or lapse of time or both) would reasonably be expected to constitute or result in a material violation by PESRM or a failure of PESRM to comply with the terms of any such Material Permit, the result of which could not

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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reasonably be expected to result in a Material Adverse Effect;  (ii) no Transaction Party has received any written notification that any such Material Permit is not in full force and effect, has been violated in any material respect, or is subject to any suspension, revocation, modification or cancellation, except, in each case, as could not reasonably be expected to result in a Material Adverse Effect; and (iii) there is no Proceeding pending or, to the knowledge of the Transaction Parties, threatened regarding suspension, revocation, modification or cancellation of any such Material Permit, the result of which could be reasonably expected to result in a Material Adverse Effect.

 

(d)                                Each Transaction Party is in compliance with all indentures, agreements and other instruments binding upon it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.  As of the Effective Date, no Default has occurred and is continuing.  On any Day of the Term following the Effective Date that this representation is made, no Event of Default has occurred and is continuing.

 

Section 8.09                            [Reserved].

 

Section 8.10                            [Reserved].

 

Section 8.11                            Investment Company Act.  No Transaction Party is an “investment company” or a company “controlled” by an “investment company,” as defined in, or is subject to regulation under, the Investment Company Act of 1940, as amended.

 

Section 8.12                            [Reserved].

 

Section 8.13                            Taxes.  Each Transaction Party has (a) timely filed or caused to be timely filed all federal Tax Returns and all material state, local and foreign Tax Returns required to have been filed by it and all such Tax Returns are true and correct in all material respects, (b) duly and timely paid, collected or remitted or caused to be duly and timely paid, collected or remitted all Taxes (whether or not shown on any Tax Return) due and payable, collectible or remittable by it and all assessments received by it, except Taxes (i) that are being contested in good faith by appropriate Proceedings and for which such Transaction Party has set aside on its books adequate reserves in accordance with GAAP or (ii) which could not, individually or in the aggregate, have a Material Adverse Effect and (c) satisfied all of its withholding tax obligations except for failures that could not be reasonably expected to, individually or in the aggregate, result in a Material Adverse Effect.  Each Transaction Party has made adequate provision in accordance with GAAP for all material Taxes not yet due and payable.  Each Transaction Party is unaware of any proposed or pending tax assessments, deficiencies or audits that could be reasonably expected to, individually or in the aggregate, result in a Material Adverse Effect.

 

Section 8.14                            No Material Misstatements.  No written information, report, financial statement, certificate, instrument, exhibit or schedule furnished by or on behalf of any Transaction Party to MLC in connection with the negotiation of any Transaction Document or the PESIC-PESRM ISDA Master Agreement or included therein or delivered pursuant thereto, taken as a whole, contained or contains any material misstatement of fact or omitted or omits to state any material

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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fact necessary to make the statements therein, in the light of the circumstances under which they were or are made, not misleading in any material respect as of the date such information is dated or certified; provided, that to the extent any such written information, report, financial statement, exhibit or schedule was based upon or constitutes a forecast or projection (including pro forma financial information), each Transaction Party represents only that such information, report, financial statement, exhibit or schedule has been prepared in good faith by PESRM, based on the assumptions stated therein (which assumptions are believed by PESRM as of the time of the preparation thereof to be reasonable), it being understood that such projections or forecasts may vary from actual results and that such variances may be material.

 

Section 8.15                            Labor Matters.  As of the Effective Date, there are no strikes, lockouts or slowdowns against any Transaction Party pending or, to the knowledge of any Transaction Party, threatened.  The hours worked by and payments made to employees of each Transaction Party have not been in violation of the Fair Labor Standards Act of 1938, as amended, or any other Applicable Law dealing with such matters in any manner which could reasonably be expected to result in a Material Adverse Effect.  All payments due from any Transaction Party, or for which any claim may be made against any Transaction Party, on account of wages and employee health and welfare insurance and other benefits, have been paid or accrued as a liability on the books of such Transaction Party except where the failure to do so could not reasonably be expected to result in a Material Adverse Effect.  The consummation of this Agreement, the Applicable PESRM Transaction Documents or any documents related to the PESIC-PESRM Secured Prepay Transactions and each transaction contemplated hereunder and thereunder will not give rise to any right of termination or right of renegotiation on the part of any union under any collective bargaining agreement to which any Transaction Party is bound.

 

Section 8.16                            Solvency.  Immediately after the consummation of the transactions contemplated by the Effective Date PESRM Transaction Documents and all documents related to the PESIC-PESRM Secured Prepay Transactions, (a) the sum of the present fair saleable value of the assets owned by the Transaction Parties on a consolidated basis, on a going concern basis, is greater than the total amount of liabilities (including contingent and unliquidated liabilities) of the Transaction Parties on a consolidated basis as they become absolute and matured, the amount of contingent or unliquidated liabilities having been computed at an amount that, in light of all of the facts and circumstances existing at the Effective Date, represents the amount that can reasonably be expected to become an actual or matured liability, (b) the Transaction Parties do not, on a consolidated basis, have unreasonably small capital in relation to their business, and (c) the Transaction Parties, on a consolidated basis, have not incurred, do not intend to incur, and do not believe they will incur, debts beyond their ability to pay such debts as such debts mature in the ordinary course of business.

 

Section 8.17                            Employee Benefit Plans.

 

(a)                                 Except as could not reasonably be expected to result, individually or in the aggregate, in a Material Adverse Effect, (i) each Transaction Party and its ERISA Affiliates, and each Plan, is in compliance with the applicable provisions of ERISA and the Code and the regulations and published interpretations thereunder, (ii) no ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events, could reasonably be expected to

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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result in any liability of any Transaction Party or the imposition of a Lien on any of the property of any Transaction Party, (iii) the present value of all accumulated benefit obligations (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) of each Pension Plan did not, as of the date of the most recent financial statements reflecting such amounts, exceed the fair market value of the property of such Pension Plan, (iv) using actuarial assumptions and computation methods consistent with subpart I of subtitle E of Title IV of ERISA, no Transaction Party would have liability to any Multiemployer Plan in the event of a complete withdrawal therefrom, as of the close of the most recent fiscal year of such Multiemployer Plan and (v) each Plan that is intended to be qualified under Section 401(a) of the Code is so qualified.

 

(b)                                Except as could not reasonably be expected to result, individually or in the aggregate, in a Material Adverse Effect, and to the extent applicable, (i) each Foreign Plan has been maintained in substantial compliance with its terms and with the requirements of any and all Applicable Law and has been maintained, where required, in good standing with applicable regulatory authorities, (ii) no Transaction Party has incurred any material obligation in connection with the termination of or withdrawal from any Foreign Plan, (iii) the present value of the accrued benefit liabilities (whether or not vested) under each Foreign Plan which is funded, determined as of the end of the most recently ended fiscal year of the respective Transaction Party on the basis of actuarial assumptions, each of which is reasonable, did not exceed the current value of the property of such Foreign Plan, (iv) for each Foreign Plan which is not funded, the obligations of such Foreign Plan are properly accrued, and (v) any employer and employee contributions under any Applicable Law or by the terms of any Foreign Plan have been made, or if applicable accrued, in accordance with accepted accounting practices.

 

Section 8.18                            Environmental Matters.

 

(a)                                Except as set forth in Schedule 8.18 (as may be updated by the Transaction Parties from time to time with the prior written consent of MLC), or except in the event of (i) through (v) below, inclusive, as, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect:

 

(i)                                   The Transaction Parties and their businesses, operations and Real Property are in compliance with, and the Transaction Parties have no liability under, any Environmental Law; and under the currently effective business plan of the Transaction Parties, no expenditures or operational adjustments which are not provided for in such business plan will be required during the next five years in order to comply with applicable Environmental Laws in effect as of the date of this Agreement;

 

(ii)                                PESRM has all Environmental Permits required for PESRM to conduct its business at and operate all PESRM Infrastructure, including the Refinery, in accordance with Environmental Law.  (i) All such Environmental

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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Permits are valid and in good standing and, where subject to renewal and/or transfer, the Transaction Parties have timely submitted complete renewal and/or transfer applications; and (ii) there are no Proceedings pending or, to the knowledge of the Transaction Parties, threatened which could reasonably be expected to affect the validity of any such Environmental Permit or the ability of the Transaction Parties to renew, modify or transfer any Environmental Permits as required under any Environmental Law.  Under the currently effective business plan of PESRM, no material expenditures or operational adjustments which are not provided for in such business plan will be required during the next five years in order to renew or modify such Environmental Permits under applicable Environmental Law in effect as of the date such renewal or modification is required;

 

(iii)                             There has been no Release or threatened Release of Hazardous Material on, at, under or from any Real Property, or other facilities currently owned, leased or operated by the Transaction Parties that are material to their business, including the PESRM Infrastructure, that could result in liability of the Transaction Parties under any Environmental Law;

 

(iv)                            There is no Environmental Claim pending or, to the knowledge of the Transaction Parties, threatened against the Transaction Parties, or relating to any Real Property, or other facilities currently owned, leased or operated by the Transaction Parties that are material to their business, including the PESRM Infrastructure, and there are no actions, activities, circumstances, conditions, events or incidents that could form the basis of such an Environmental Claim; and

 

(v)                               No Person with an indemnity or contribution obligation to the Transaction Parties relating to compliance with or liability under Environmental Law is in default with respect to such obligation.

 

(b)                               Except as set forth in Schedule 8.18 or except, in the case of (i) through (v) below, inclusive, as individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect:

 

(i)                                   No Transaction Party is obligated to perform any action or otherwise incur any expense under Environmental Law pursuant to any order, decree, judgment or agreement by which it is bound or has assumed by contract, agreement or operation of law, and no Transaction Party is conducting or financing any Response pursuant to any Environmental Law with respect to any Real Property or any other location;

 

(ii)                                No Real Property or facility owned, leased or operated by the Transaction Parties that is material to their business, including the PESRM Infrastructure, is listed or proposed for listing on the National Priorities List promulgated pursuant to CERCLA, or included on any similar list

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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maintained by any Governmental Authority including any such list relating to petroleum;

 

(iii)                             No Lien has been recorded or, to the knowledge of any Transaction Party, threatened under any Environmental Law with respect to any Real Property or other assets of the Transaction Parties;

 

(iv)                            The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby will not require any notification, registration, filing, reporting, disclosure, investigation, remediation or cleanup pursuant to any Governmental Real Property Disclosure Requirements or any other applicable Environmental Law; and

 

(v)                               The Transaction Parties have made available to MLC all material records and files in the possession, custody or control of, or otherwise reasonably available to, the Transaction Parties concerning compliance with or liability under Environmental Law, including those concerning the actual or suspected existence of Hazardous Material at Real Property or facilities currently or formerly owned, operated, leased or used by the Transaction Parties.

 

Section 8.19                             InsuranceSchedule 8.19 sets forth a true, complete and correct description of all insurance maintained by each Transaction Party as of the Effective Date.  All insurance maintained by the Transaction Parties is in full force and effect, all premiums have been duly paid, no Transaction Party has received notice of any material violation or cancellation thereof, any properties insured, and the use, occupancy and operation thereof, comply in all material respects with all Insurance Requirements, and, to PESRM’s knowledge after due investigation, there exists no material default under any Insurance Requirement.

 

Section 8.20                             Security Documents.

 

(a)                                 Security Agreement.  The Supply and Offtake Security Agreement is effective to create in favor of MLC, legal, valid and enforceable (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law) Liens on, and security interests in, the Collateral to the extent that an enforceable Lien in such Collateral may be created under any applicable law of the United States or any state thereof, including the applicable UCC and when (i) financing statements (including any amendments to existing financing statements) and other filings in appropriate form are filed in the offices specified on Schedule 5 to the Supply and Offtake Perfection Certificate with payment of any associated filing fee and (ii) upon the taking of possession or control by MLC of the Collateral with respect to which a security interest may be perfected only by possession or control (which possession or control shall be given to MLC to the extent possession or control by MLC is required by the Supply and Offtake Security Agreement), the Liens created by the Supply and Offtake Security Agreement shall constitute perfected

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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Liens on, and security interests in, all right, title and interest of the grantors in the Collateral (other than such Collateral in which a security interest cannot be perfected under the UCC as in effect at the relevant time in the relevant jurisdiction), in each case having priority over all other Liens on the Collateral (other than Permitted Liens) and subject to no Liens other than Permitted Liens.

 

(b)                                 Valid Liens.  Each of the Supply and Offtake Security Documents delivered pursuant to Sections 10.10 and 10.11 will, upon execution and delivery thereof, be effective to create in favor of MLC, legal, valid and enforceable (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a Proceeding in equity or at law) Liens on, and security interests in, all of the Transaction Parties’ right, title and interest in and to the Collateral thereunder, to the extent that a legal, valid and enforceable Lien in such Collateral may be created under any applicable law of the United States or any state thereof, including the applicable UCC, and (i) when all appropriate filings or recordings are made in the appropriate offices as may be required under Applicable Law and (ii) upon the taking of possession or control by the Collateral Agent (as defined in the Senior Secured Credit Facility) of such Collateral with respect to which a security interest may be perfected only by possession or control (which possession or control shall be given to the Collateral Agent to the extent required by such Supply and Offtake Security Document), such Supply and Offtake Security Document will constitute fully perfected Liens on, and security interests in, all right, title and interest of the Transaction Parties in such Collateral (other than such Collateral in which a security interest cannot be perfected under the UCC as in effect at the relevant time in the relevant jurisdiction), solely, in the case of Supply and Offtake Security Agreement Collateral, in each case having priority over all other Liens on the Collateral (other than Permitted Liens) and subject to no Liens other than the Permitted Liens.

 

Section 8.21                             Anti-Terrorism Laws.

 

(a)                                 No Transaction Party, none of its Subsidiaries and, to the knowledge of each Transaction Party, none of its Affiliates and none of the respective officers, directors, brokers or agents of such Transaction Party, such Subsidiary or Affiliate (i) has violated or is in violation of Anti-Terrorism Laws or (ii) has engaged or engages in any transaction, investment, undertaking or activity that conceals the identity, source or destination of the proceeds from any category of offenses designated in the “Forty Recommendations” and “Nine Special Recommendations” published by the Organisation for Economic Co-operation and Development’s Financial Action Task Force on Money Laundering.

 

(b)                                 No Transaction Party, none of its Subsidiaries and, to the knowledge of each Transaction Party, none of its Affiliates and none of the respective officers, directors, brokers or agents of such Transaction Party, such Subsidiary or such Affiliate acting or benefiting in any capacity, in connection with this Agreement,

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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the Applicable PESRM Transaction Documents, the PESIC-PESRM ISDA Master Agreement or the PESRM-MLC ISDA Master Agreement, and any transaction hereunder or thereunder, is an Embargoed Person.

 

(c)                                  No Transaction Party, none of its Subsidiaries and, to the knowledge of each Transaction Party, none of its Affiliates and none of the respective officers, directors, brokers or agents of such Transaction Party, such Subsidiary or such Affiliate acting or benefiting in any capacity in connection with this Agreement, the Applicable PESRM Transaction Documents, the PESIC-PESRM ISDA Master Agreement and any transaction hereunder or thereunder, (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Embargoed Person, (ii) deals in, or otherwise engages in any transaction related to, any property or interests in property blocked pursuant to any Anti-Terrorism Law or (iii) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.

 

Section 8.22                             Location of Hydrocarbon InventorySchedule 8.22 sets forth, as of the Effective Date, all locations in the United States where all hydrocarbon Inventory that constitutes MLC Separate Assets and Collateral is located or stored.  No hydrocarbon Inventory that constitutes MLC Separate Assets and Collateral is located or stored on any locations or premises not owned by the Transaction Parties, other than such locations and premises which are subject to a Third Party Consent Agreement.

 

Section 8.23                             [Reserved].

 

Section 8.24                             Affiliate Transactions.  As of the Effective Date, except as permitted by Section 11.08, there are no existing or proposed agreements, arrangements, understandings, or transactions between any Transaction Party, Affiliate of any Transaction Party or any of their respective officers, members, managers, directors, stockholders, parents, other interest holders or employees, or any members of their respective immediate families, and none of the foregoing Persons are directly or indirectly indebted to or have any direct or indirect ownership, partnership, or voting interest in any Affiliate of any Transaction Party or any Person with which any Transaction Party has a business relationship or which competes with any Transaction Party.

 

Section 8.25                             Common Enterprise.  The successful operation and condition of each of the Transaction Parties is dependent on the continued successful performance of the functions of the group of the Transaction Parties as a whole and the successful operation of each of the Transaction Parties is dependent on the successful performance and operation of each other Transaction Party.  Each Transaction Party expects to derive benefit (and its board of directors or other governing body has determined that it may reasonably be expected to derive benefit), directly and indirectly, from (a) successful operations of each of the other Transaction Parties and (b) the accommodations and rights extended by MLC to PESRM hereunder, both in their separate capacities and as members of the group of companies.  Each Transaction Party has determined that execution, delivery, and performance of this Agreement and any other Applicable PESRM Transaction Documents to be executed by such Transaction Party is within

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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its purpose, in furtherance of its direct and/or indirect business interests, will be of direct and/or indirect benefit to such Transaction Party, and is in its best interest.

 

Section 8.26                             Certain Additional Representations.

 

(a)                                 Each Transaction Party is an “Eligible Contract Participant” as defined in Section 1a of the Commodity Exchange Act (the “CEA”), as amended from time to time.

 

(b)                                Each Transaction Party is a “forward contract merchant” in respect of the PESRM Transactions and each purchase and sale or exchange of Crude Oil, and Refined Product is a “forward contract” for purposes of the Bankruptcy Code.

 

(c)                                 Each Transaction Party is acting for its own account, and it has made its own independent decisions to enter into the PESRM Transactions and the Applicable PESRM Transaction Documents and as to whether the PESRM Transactions and the Applicable PESRM Transaction Documents are appropriate or proper for it based upon its own judgment and upon advice from such advisors as it has deemed necessary; it is not relying on any communication (written or oral) of the other party as investment advice or as a recommendation to enter into the PESRM Transaction or the Applicable PESRM Transaction Documents, it being understood that information and explanations related to the terms and conditions of any PESRM Transaction or any Applicable PESRM Transaction Document would not be considered investment advice or a recommendation to enter into any PESRM Transaction or any Applicable PESRM Transaction Document; no communication (written or oral) received from the other party would be deemed to be an assurance or guarantee as to the expected results of any PESRM Transaction or any Applicable PESRM Transaction Document; it is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts the terms, conditions and risks of any PESRM Transaction or any Applicable PESRM Transaction Document; it is also capable of assuming, and assumes, the risks of any PESRM Transaction or any Applicable PESRM Transaction Document; and the other Party is not acting as a fiduciary for or an advisor to it in respect of any PESRM Transaction or any Applicable PESRM Transaction Document.

 

(d)                                No Transaction Party has been contacted by or negotiated with any finder, broker or other intermediary in connection with this Agreement, any other Applicable PESRM Transaction Document or any transaction contemplated hereunder or thereunder, who is entitled to any compensation with respect thereto.

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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ARTICLE IX.

 

REPRESENTATIONS AND WARRANTIES OF MLC

 

MLC represents and warrants to each Transaction Party as of the Effective Date and as of each Day of the Term on which there is any outstanding transaction pursuant to any Applicable PESRM Transaction Document or the MLC-PESIC ISDA Master Agreement:

 

Section 9.01          Organization; Powers.  MLC (a) is duly organized and validly existing under the laws of the jurisdiction of its organization, (b) has all requisite power and authority to carry on its business as now conducted and to own and lease property and (c) is qualified and in good standing (to the extent such concept is applicable in the applicable jurisdiction) to do business in every jurisdiction where such qualification is required, except in such jurisdictions where the failure to so qualify or be in good standing, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

 

Section 9.02          Authorization; Enforceability.  Each Applicable PESRM Transaction Document, the MLC-PESIC ISDA Master Agreement and the Framework Agreement and each transaction contemplated hereunder and thereunder entered into by MLC are within MLC’s powers and have been duly authorized by all necessary corporate action on the part of it.  This Agreement has been duly executed and delivered by MLC and constitutes, and each other Applicable PESRM Transaction Document to which MLC is to be a party, the Framework Agreement and the MLC-PESIC ISDA Master Agreement, when executed and delivered by MLC, will constitute, a legal, valid and binding obligation of MLC, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a Proceeding in equity or at law.

 

Section 9.03          No Conflicts.  Except as set forth on Schedule 9.03, each Applicable PESRM Transaction Document, the MLC-PESIC ISDA Master Agreement, the Framework Agreement each transaction contemplated hereunder and thereunder (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except (i) such as have been obtained or made and are in full force and effect, and (ii) consents, approvals, registrations, filings, permits or actions the failure of which to obtain or perform which could not reasonably be expected to result in a Material Adverse Effect, (b) will not violate the Organizational Documents of MLC, (c) will not violate any Applicable Law, except for any such violation which could not reasonably be expected to result in a Material Adverse Effect, and (d) will not violate or result in a default or require any consent or approval under any indenture, agreement or other instrument binding upon MLC or its property, or give rise to a right thereunder to require any payment to be made by MLC, except for violations, defaults or the creation of such rights that could not reasonably be expected to result in a Material Adverse Effect.

 

Section 9.04          Litigation; Compliance with Laws.  Except as set forth on Schedule 9.04, as of the Effective Date there are no Proceedings at law or in equity by or before any Governmental Authority now pending or, to the knowledge of MLC, threatened in writing against or affecting MLC or any business, property or rights of MLC (i) that involve this Agreement, any other

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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Applicable PESRM Transaction Document, the MLC-PESIC ISDA Master Agreement, the Framework Agreement or any of the transactions contemplated hereunder or thereunder, or (ii) as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect (but only with respect to clauses (ii) and (iii) thereof). Neither MLC nor any of its businesses, operations and Real Property is in violation of, nor will the continued operation of its businesses, operations or Real Property as currently conducted or contemplated by the Transaction Documents violate, any Applicable Law, where such violation or default, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.

 

Section 9.05          Wholly-Owned Subsidiary.  MLC (or any successor or permitted assign thereof) is a direct or indirect wholly-owned subsidiary of Bank of America Corporation.

 

ARTICLE X.

 

PESRM AFFIRMATIVE COVENANTS

 

Each Transaction Party covenants and agrees that so long as this Agreement shall remain in effect and until all Obligations have been paid in full, unless MLC shall otherwise consent in writing, each Transaction Party will, and will cause each of its Subsidiaries (other than Excluded Subsidiaries) to:

 

Section 10.01       Financial Statements, Reports, etc.  Furnish to MLC:

 

(a)                                 Annual Reports.  As soon as available and in any event within 90 days after the end of each fiscal year (i) the consolidated balance sheet of PESRM (provided that, in the event PESRM is a Wholly-Owned Subsidiary of a Permitted Reporting Company, PESRM shall be entitled to satisfy this requirement by delivering the corresponding consolidated and consolidating financial statements of the Permitted Reporting Company and its consolidated Subsidiaries) as of the end of such fiscal year and related consolidated and, if a Permitted Reporting Company, consolidating statements of income, cash flows and members’ equity for such fiscal year, in comparative form with such financial statements (if any) as of the end of, and for, the preceding fiscal year, and notes thereto, accompanied by an opinion of KPMG LLP or other independent public accountants of recognized national standing reasonably satisfactory to MLC (which opinion shall not be qualified as to scope or contain any going concern or other qualification), stating that such financial statements fairly present, in all material respects, the consolidated financial condition, results of operations and cash flows of PESRM (or, as applicable, of the Permitted Reporting Company and its consolidated Subsidiaries) as of the dates and for the periods specified in accordance with GAAP consistently applied; and (ii) a narrative report and management’s discussion and analysis, in a form reasonably satisfactory to MLC, of the financial condition and results of operations of PESRM for such fiscal year, as compared to amounts for the previous fiscal year;

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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(b)                                 Quarterly Reports. Until the date of the consummation of the IPO, as soon as available and in any event within 60 days after the end of each of the first three fiscal quarters of each fiscal year, beginning with the fiscal quarter ending September 30, 2014, and thereafter, promptly after the filing of such information with the Securities and Exchange Commission, in each case (i) the consolidated (and, in the case of a Permitted Reporting Company, consolidating) balance sheet of PESRM (or, as applicable, of a Permitted Reporting Company and its consolidated Subsidiaries) as of the end of such fiscal quarter and related consolidated (and, in the case of a Permitted Reporting Company, consolidating) statements of income and cash flows for such fiscal quarter and for the then elapsed portion of the fiscal year, in comparative form with the consolidated statements of income and cash flows (if any) for the comparable periods in the previous fiscal year, and notes thereto, and accompanied by an Officer’s Certificate stating that such financial statements fairly present, in all material respects, the consolidated financial condition, results of operations and cash flows of PESRM (or, as applicable, of the Permitted Reporting Company and its consolidated Subsidiaries) as of the date and for the periods specified therein in accordance with GAAP consistently applied, and on a basis consistent with audited financial statements referred to in clause (a) of this Section 10.01, subject to normal year-end audit adjustments and the absence of footnote disclosures and (ii) a narrative report and management’s discussion and analysis, in a form reasonably satisfactory to the Administrative Agent, of the financial condition and results of operations for such fiscal quarter and the then elapsed portion of the fiscal year, as compared to the comparable periods in the previous fiscal year;

 

(c)                                  Monthly Reports.  Beginning with the month in which the Effective Date occurs, within 30 days after the end of each month of each fiscal quarter, the consolidated balance sheet of PESRM as of the end of each such month and the related consolidated statements of income and cash flows of PESRM for such month and for the then elapsed portion of such fiscal year, accompanied by a certificate of a Financial Officer stating that such financial statements fairly present, in all material respects, the consolidated results of operations and cash flows of PESRM as of the date and for the periods specified therein in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnote disclosures;

 

(d)                                 Financial Officer’s Certificate.  Concurrently with any delivery of financial statements under Sections 10.01(a), (b) or (c), a Compliance Certificate certifying that no Default has occurred or, if such a Default has occurred, specifying the nature and extent thereof and any corrective action taken or proposed to be taken with respect thereto;

 

(e)                                  Financial Officer’s Certificate Regarding Collateral.  Concurrently with any delivery of financial statements under Section 10.01(a), a certificate of a Financial Officer setting forth the information required pursuant to the Supply and Offtake Perfection Certificate or any supplement thereto or confirming that there has been

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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no change in such information since the date of the Supply and Offtake Perfection Certificate or latest supplement thereto;

 

(f)                                   Management Letters.  Promptly after the receipt thereof by any Company, a copy of any “management letter” received by any such person from its certified public accountants and the management’s responses thereto;

 

(g)                                  Budgets.  Within 60 days after the beginning of each fiscal year, a budget for PESRM in form reasonably satisfactory to MLC, but to include balance sheets, statements of income and sources and uses of cash, for each month of such fiscal year prepared in detail with appropriate presentation and discussion of the principal assumptions upon which such budgets are based, accompanied by the statement of a Financial Officer of PESRM to the effect that the budget of PESRM is a reasonable estimate for the periods covered thereby and have been prepared in good faith on the basis of assumptions stated therein, which such assumptions were believed to be reasonable at the time of preparation of such budget, it being understood that actual results may vary from the budget and such variances may be material;

 

(h)                                 Notices under the Senior Secured Credit Facility Documents.  Promptly, and in any event within five (5) Business Days of the delivery thereof, provide copies of any notices delivered pursuant to the Senior Secured Credit Facility Documents with respect to any “Default,” “Event of Default,” (as each such term is defined in the Senior Secured Credit Facility) or similar other condition or event; and

 

(i)                                     PESIC Financial Statements.  Promptly after the same are available pursuant to the PESIC-PESRM Consulting Agreement, copies of all financial statements of PESIC and other reports produced by PESRM on behalf of or for the benefit of PESIC thereunder.

 

(j)                                    Other Information.  Promptly, from time to time, such other information regarding the operations, business affairs and financial condition of any Company, or compliance with the terms of any PESRM Transaction Document or the PESIC-PESRM ISDA Master Agreement, as MLC may reasonably request, including copies of any reports or other information delivered or required to be delivered by any Loan Party (as such term is defined in the Senior Secured Credit Facility) under any Senior Secured Credit Facility Document.

 

Section 10.02       Litigation and Other Notices.  Furnish to MLC written notice of the following promptly (and, in any event, within five (5) Business Days of the occurrence thereof (and in the case of any written threat or notice of intention referred to in clause (b) below, within five (5) Business Days of the date on which any Responsible Officer of a Transaction Party becomes aware or should have become aware of such occurrence)):

 

(a)                                 any Default, specifying the nature and extent thereof and the corrective action (if any) taken or proposed to be taken with respect thereto;

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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(b)                                 the filing or commencement of, or any written threat or notice of intention of any person to file or commence, any Proceeding, whether at law or in equity by or before any Governmental Authority, (i) against any Transaction Party or any Subsidiary that could reasonably be expected to result in a Material Adverse Effect or (ii) with respect to any PESRM Transaction Document or the PESIC-PESRM ISDA Master Agreement, provided that with respect the PESIC-PESRM ISDA Master Agreement, if such Proceeding is in respect of PESIC, PESRM has knowledge thereof;

 

(c)                                  any development that has resulted in, or could reasonably be expected to result in, a Material Adverse Effect;

 

(d)                                 the occurrence of a Casualty Event (i) to any portion of Collateral in excess of $[**] or (ii) to any portion of the assets of the Transaction Parties of any type whatsoever, in excess of $[**];

 

(e)                                  (i) all material amendments to any agreements related to Material Indebtedness (together with a copy of each such amendment) and (ii) any default, event of default, termination event, early termination event or force majeure, under any of the foregoing agreements (other than the Senior Secured Credit Facility Documents) or any event related thereto which with the giving of notice, the passage of time, or both, could result in such a default; and

 

(f)                                   any Lien (other than Permitted Liens) or claim that to PESRM’s knowledge has been made or asserted against any of the Collateral.

 

Section 10.03       Existence; Businesses and Properties.  Except as otherwise permitted under Sections 10.12, 11.05 or 11.06, at all times preserve and keep in full force and effect (a) its existence (except, in the case of any Subsidiary, where the failure to do so could not reasonably be expected to result in a Material Adverse Effect) and (b) except to the extent that non-compliance could not reasonably be expected to result in a Material Adverse Effect, all rights and franchises, and Permits and Environmental Permits material to its business; provided, no Transaction Party or any of its Subsidiaries shall be required to preserve any such existence, right or franchise, or Permits and Environmental Permits, if such Transaction Party or Subsidiary shall determine that the preservation thereof is no longer desirable in the conduct of the business of such Transaction Party or Subsidiary, and that the loss thereof is not disadvantageous in any material respect to such Transaction Party or Subsidiary or to the MLC.

 

Section 10.04       Insurance.

 

(a)                                 Generally.  Keep its property insured at all times in accordance with the insurance requirements set forth in Schedule 10.04 (the “Insurance Requirements”).

 

(b)                                 Requirements of Insurance.  All insurance policies maintained by PESRM from time to time shall (i) provide that no cancellation, material reduction in amount or material change in coverage thereof shall be effective until at least 30 days after receipt by MLC of written notice thereof or as otherwise reasonably acceptable to MLC, (ii) name MLC as mortgagee (in the case of property insurance) or

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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additional insured (in the case of liability insurance) or loss payee (in the case of property insurance), as applicable, (iii) if reasonably requested by MLC, include a breach of warranty clause and (iv) be reasonably satisfactory in all other respects to MLC.

 

(c)                                  Notice to MLC.  Notify MLC promptly whenever any separate insurance concurrent in form or contributing in the event of loss with that required to be maintained under this Section 10.04 is taken out by any Company; and promptly deliver to MLC a duplicate original copy of such policy or policies.

 

Section 10.05       Taxes; Filings.

 

(a)                                 Payment of Taxes.  Pay and discharge promptly when due all Taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or in respect of its property, before the same shall become delinquent or in default; provided, that such payment and discharge shall not be required with respect to any such Tax, assessment, charge, levy or claim so long as (i)(x) the validity or amount thereof shall be contested in good faith by appropriate Proceedings timely instituted and diligently conducted and the applicable Company shall have set aside on its books adequate reserves or other appropriate provisions with respect thereto in accordance with GAAP, and (y) such contest operates to suspend collection of the contested obligation, Tax, assessment or charge and enforcement of a Lien other than a Permitted Lien or (ii) the failure to pay could not reasonably be expected to individually or in the aggregate result in a Material Adverse Effect.

 

(b)                                 Filing of Returns.  Timely and correctly file all material Tax Returns required to be filed by it.  Withhold, collect and remit all material Taxes that it is required to collect, withhold or remit.

 

Section 10.06       Employee Benefits.  Comply in all material respects with the applicable provisions of ERISA and the Code (except where any failure to comply could not reasonably be expected to result in a Material Adverse Effect), and furnish to MLC (a) as soon as possible after, and in any event within 5 days after any Responsible Officer of any Company or any ERISA Affiliates of any Company knows or has reason to know that, any ERISA Event has occurred or could be reasonably expected to occur that, alone or together with any other ERISA Event could reasonably be expected to result in liability of the Companies or any of their ERISA Affiliates in an aggregate amount exceeding $[**] or the imposition of a Lien on the assets of any Transaction Party, a statement of a Financial Officer of PESRM setting forth details as to such ERISA Event and the action (if any) that the Companies propose to take with respect thereto, (b) upon request by MLC, copies of (i) the most recent annual report (Form 5500 Series) filed by any Company or any ERISA Affiliate with the Department of Labor with respect to any Plan, (ii) the most recent actuarial valuation report for each Pension Plan, (iii) all notices received by any Company or any ERISA Affiliate from a Multiemployer Plan sponsor or any governmental agency concerning an ERISA Event, and (iv) such other documents or governmental reports or filings relating to any Plan as MLC shall reasonably request and (c) promptly following any request therefor, copies of (i) any documents described in Section 101(k) 

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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of ERISA that any Company or its ERISA Affiliate may request with respect to any Multiemployer Plan and (ii) any notices described in Section 101(1) of ERISA that any Company or its ERISA Affiliate may request with respect to any Multiemployer Plan; provided, that if any Company or its ERISA Affiliate has not requested such documents or notices from the administrator or sponsor of the applicable Multiemployer Plan, the applicable Company or ERISA Affiliate shall promptly make a request for such documents or notices from such administrator or sponsor and shall provide copies of such documents and notices promptly after receipt thereof.

 

Section 10.07       Maintaining Records; Access to Properties and Inspections.  Keep proper books of record and account in which full, true and correct entries in conformity with GAAP consistently applied and all Applicable Law are made of all material dealings and transactions in relation to its business and activities.  Upon at least five (5) Business Days’ prior written notice, each Transaction Party will permit any representatives designated by MLC to visit and inspect the financial records (other than the records of the Board of Directors) and the property of such Transaction Party at reasonable times and as often as reasonably requested and to make extracts from and copies of such financial records, and permit any representatives designated by MLC to discuss the affairs, finances, accounts, prospects and condition of any Transaction Party with the officers and employees thereof and advisors therefor (including independent accountants); provided, that PESRM shall pay only for costs and expenses of one such inspection or visit per calendar year in the absence of an Event of Default pursuant to Section 14.01(a) or (f); provided, further, that when an Event of Default exists and is continuing, MLC (or any of their respective representatives) may do any of the foregoing at the expense of PESRM at any time during normal business hours and upon reasonable advance notice.  MLC shall give the Transaction Parties the opportunity to participate in any discussions with PESRM’s advisors (including independent public accountants).  Notwithstanding anything to the contrary in this Section 10.07, none of the Transaction Parties will be required to disclose, permit the inspection, examination or making copies or abstracts of, or discussion of, any document, information or other matter (i) in respect of which disclosure to MLC (or its respective representatives) is prohibited by Applicable Law or binding agreement or (ii) that is subject to attorney-client privilege or constitutes attorney work product.

 

Section 10.08       [Reserved].

 

Section 10.09       Compliance with Environmental Laws and Environmental Permits; Environmental Reports.

 

(a)                                 In accordance with the standards applicable to a reasonable and prudent refinery operator in the refining industry, comply, and use commercially reasonable efforts to cause all lessees, sub-lessees and other persons occupying Real Property owned, operated or leased by any Transaction Party to comply, in all material respects, with all Environmental Laws and Environmental Permits applicable to PESRM’s operations and PESRM Infrastructure, including the Refinery; obtain, renew, extend and/or transfer, as applicable, all Environmental Permits applicable to PESRM’s operations and PESRM Infrastructure, including the Refinery its operations and Real Property; and conduct any Responses undertaken by the Transaction Parties by, and in accordance with, Environmental Laws.

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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(b)                                 If a PESRM Event of Default (if any) caused by reason of a breach of Section 8.18 or Section 10.09(a) shall have occurred and be continuing for more than 30 days without the Companies commencing activities reasonably likely to cure such Event of Default (if any) in accordance with Environmental Laws, at the written request of MLC, provide to MLC within 60 days after such request, at the expense of PESRM, an environmental assessment report regarding the matters which are the subject of such PESRM Event of Default, including, where required by applicable Environmental Law, soil and/or groundwater sampling, prepared by an environmental consulting firm and, in the form reasonably acceptable to MLC.

 

Section 10.10       Additional Collateral; Additional Guarantors.

 

(a)                                 Subject to the terms and conditions of the Intercreditor Agreement, to the extent applicable, any Term-ABL Intercreditor Agreement then in effect and this Section 10.10, with respect to any property acquired after the Effective Date by any Transaction Party that is of the same type as that included as “Pledged Collateral” in the Supply and Offtake Security Agreement and that is intended to be subject to the Lien created by any of the Supply and Offtake Security Documents but is not so subject (which, for the avoidance of doubt, does not include assets held by any Excluded Subsidiary or Foreign Subsidiary), promptly (and in any event within 30 days after the acquisition thereof (or such longer period of time not to exceed an additional 30 days as may be permitted by written consent of MLC)) (i) execute and deliver to MLC such amendments or supplements to the relevant Supply and Offtake Security Documents or such other documents as MLC shall deem reasonably necessary or advisable to grant to MLC, for its benefit, a Lien on such property subject to no Liens other than Permitted Liens, and (ii) at the request of MLC, take all actions necessary to cause such Lien to be duly perfected to the extent required by such Supply and Offtake Security Document in accordance with all Applicable Law, including the filing of financing statements in such jurisdictions as may be reasonably requested by MLC.  The Transaction Parties shall otherwise take such actions and execute and/or deliver to MLC such documents as MLC shall require to confirm the validity, perfection and priority of the Lien of the Supply and Offtake Security Documents on such after-acquired properties.

 

(b)                                 Subject to the terms and conditions of the Intercreditor Agreement, to the extent applicable, any Term-ABL Intercreditor Agreement then in effect and PESRM’s election under Section 10.18, with respect to any person that is or becomes a Subsidiary (other than an Excluded Subsidiary or Foreign Subsidiary) after the Effective Date, promptly (and in any event within 30 days after such person becomes a Subsidiary) (or such longer period of time not to exceed an additional 30 days as may be permitted by written consent by MLC)) cause such new Subsidiary (other than an Excluded Subsidiary or Foreign Subsidiary) (A) to execute a Joinder Agreement or such comparable documentation to become a Guarantor and a joinder agreement to the Supply and Offtake Security Agreement, substantially in the form annexed thereto, and (B) to take all actions reasonably necessary or advisable in the opinion of MLC to cause the Lien

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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created by the Supply and Offtake Security Agreement to be duly perfected to the extent required by such agreement in accordance with all Applicable Law, including the filing of financing statements in such jurisdictions as may be reasonably requested by MLC.

 

(c)                                  Subject to the terms and conditions of the Intercreditor Agreement, to the extent applicable, any Term-ABL Intercreditor Agreement then in effect, and PESRM’s election under Section 10.18, with respect to any new Subsidiary (other than an Excluded Subsidiary or Foreign Subsidiary) created or acquired after the Effective Date by PESRM or any Subsidiary other than an Excluded Subsidiary (which, for the purposes of this paragraph (c), shall include any existing Subsidiary that ceases to be an Excluded Subsidiary) or Foreign Subsidiary, promptly (i) execute and deliver to MLC such amendments to the Supply and Offtake Security Agreement as MLC deems, in its reasonable discretion, to be necessary or advisable to grant to MLC a perfected third lien security interest in the Equity Interests of such new Subsidiary that is owned by any Transaction Party, (ii) either (A) to the extent any Permitted Secured Term Loan Facility is then outstanding, deliver to the Term Loan Administrative Agent the certificates representing such Equity Interests, together with undated stock powers, in blank, executed and delivered by a duly authorized officer of the relevant Subsidiary, and (B) otherwise, deliver to Bank of America, N.A., as agent under the Senior Secured Credit Facility, the certificates representing such Equity Interests, together with undated stock powers, in blank, executed and delivered by a duly authorized officer of the relevant Subsidiary (iii) cause such new Subsidiary (other than an Excluded Subsidiary or Foreign Subsidiary) (A) to execute a Joinder Agreement or such comparable documentation to become a Guarantor, and a joinder agreement to the Security Agreement, substantially in the form annexed thereto, (B) to take such actions reasonably necessary or advisable to grant to MLC a perfected security interest in the Collateral described in the Supply and Offtake Security Agreement with respect to such new Subsidiary, including the filing of Uniform Commercial Code financing statements in such jurisdictions as may be required by the Supply and Offtake Security Agreement or by law or as may be reasonably requested by MLC, and (C) if requested by MLC, deliver to MLC legal opinions relating to the matters described above, which opinions shall be in form and substance comparable to the applicable opinions delivered on the Effective Date and shall be from counsel reasonably satisfactory to MLC.

 

(d)                                 Subject to the terms and conditions of the Intercreditor Agreement and, to the extent applicable, any Term-ABL Intercreditor Agreement then in effect, with respect to any fee interest in any real property having a value (together with improvements thereof or thereon) of at least $[**] (1) acquired after the Effective Date by PESRM or any Subsidiary which is not an Excluded Subsidiary or a Foreign Subsidiary or (2) owned by any Subsidiary that becomes a party to the Supply and Offtake Security Agreement (in each case other than (x) any such real property subject to a Lien expressly permitted by Section 11.02(d) and (y) real property acquired by any Excluded Subsidiary or Foreign Subsidiary),

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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PESRM or such Subsidiary shall promptly (i) execute and deliver a Mortgage, in favor of MLC covering such real property, (ii) deliver to MLC a “Life-of-Loan” Federal Emergency Management Agency Standard Flood Hazard Determination with respect to the Mortgaged Properties or parcels thereof with improvements thereon (together with a notice about special flood hazard area status and flood disaster assistance duly executed by PESRM in the event any portion of such Mortgaged Properties are located in a special flood hazard area) and (iii) deliver to MLC such other documentation related to such real property as MLC may reasonably request.  For the avoidance of doubt, this clause (e) shall not apply to the North Yard or the West Yard.

 

(e)                                  At any time that a Trigger Event shall have occurred, at the request of MLC, PESRM and each other Transaction Party shall, in the reasonable discretion of PESRM: (a) (i) execute and deliver to MLC such agreements and instruments (or amendments or supplements to the Supply and Offtake Security Agreement) as MLC may deem necessary or advisable to grant to MLC a perfected first priority Lien on all Securities Accounts, Commodities Accounts and other investment accounts of the Transaction Parties (the foregoing accounts, collectively, the “ABL/SOA Investment Accounts”), and on any and all cash, Cash Equivalents, checks, negotiable instruments, security entitlements, securities and other financial assets or other property or investment property credited to or held therein (all of the foregoing, the “Investment Assets”), and (ii) deliver, or cause to be delivered, to MLC a Control Agreement duly authorized, executed and delivered by each bank or financial institution where a Securities Account for the benefit of any Transaction Party is maintained or (b) liquidate all Investment Assets credited to or held in any and all ABL/SOA Investment Accounts and deposit or cause the deposit or credit of the proceeds thereof into the Collection Account for application and distribution in accordance with the Intercreditor Agreement; provided that, any such documentation delivered by any Transaction Party pursuant to this Section 10.10(e) shall provide that any Lien on assets granted pursuant to this Section 10.10(e) shall be released and the Transaction Parties’ obligations with respect to such Trigger Event under this Section 10.10(e) shall cease upon the cure or waiver of such Trigger Event.

 

(f)                                   Notwithstanding anything in this Agreement or any Supply and Offtake Security Document to the contrary, in no event shall the Collateral include, and no Transaction Party or any Subsidiary shall be required to take any action to create, grant or perfect a security interest in, (i) any property or assets that are subject to a jurisdiction other than the United States, any state thereof and the District of Columbia, (ii) any properties and assets as to which MLC determines in its reasonable discretion that the costs of obtaining such security interest are excessive in relation to the value of the security to be afforded thereby, or (iii) Excluded Property (as defined in the Supply and Offtake Security Agreement), other than any Deposit Account which ceases to be an Excluded Deposit Account; provided that, upon the reasonable request of MLC, each Transaction Party shall be required to take any action to create, grant or perfect a security interest in any of MLC Separate Assets and Collateral that are subject to a jurisdiction other than

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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the United States, any state thereof and the District of Columbia in any case where MLC determines in its reasonable discretion that the costs of obtaining such security interest are not excessive in relation to the value of the security to be afforded thereby.

 

Section 10.11       Security Interests; Further Assurances.  Subject to the terms and conditions of the Intercreditor Agreement and, to the extent applicable, any Term-ABL Intercreditor Agreement then in effect, promptly, upon the reasonable request of MLC, at PESRM’s expense, execute, acknowledge and deliver, or cause the execution, acknowledgment and delivery of any document or instrument supplemental to or confirmatory of the Supply and Offtake Security Documents, or otherwise deemed by MLC reasonably necessary or desirable for the continued validity, perfection and priority of the Liens on the Collateral covered thereby subject to no other Liens except Permitted Liens, or obtain any consents or waivers as may be necessary or appropriate in connection therewith.  Upon the exercise by MLC of any power, right, privilege or remedy pursuant to any Supply and Offtake Security Document which requires any consent, approval, registration, qualification or authorization of any Governmental Authority, execute and deliver all applications, certifications, instruments and other documents and papers that MLC may reasonably require.

 

Section 10.12       Information Regarding Collateral.  Not effect any change (a) in any Transaction Party’s legal name, (b) in the location of any Transaction Party’s chief executive office, (c) in any Transaction Party’s organizational structure, (d) in any Transaction Party’s Federal Taxpayer Identification Number or organizational identification number (if any) or (e) in any Transaction Party’s jurisdiction of organization (in each case, including by merging with or into any other entity, reorganizing, dissolving, liquidating, reorganizing or organizing in any other jurisdiction), in each case, until (i) PESRM shall have given MLC not less than 30 days’ prior written notice (in the form of an Officers’ Certificate), or such lesser notice period agreed to by MLC, of its intention so to do (or, with respect to the change in PESRM’s name and organizational structure anticipated to occur in anticipation of or substantially concurrently with the IPO, ten (10) Business Days’ notice), clearly describing such change and providing such other information in connection therewith as MLC may reasonably request and (ii) the Transaction Parties shall have taken all action reasonably satisfactory to MLC to maintain the perfection and priority of the security interest of MLC in the Collateral, including such actions required to comply with the requirements of Section 3.4 of the Supply and Offtake Security Agreement and the Mortgage in favor of the SOA Collateral Agent.  Each Transaction Party agrees to promptly provide MLC with certified Organizational Documents reflecting any of the changes described in the preceding sentence.  Each Transaction Party also agrees to promptly notify MLC of any change in the location of any office in which it maintains books or records relating to Collateral owned by it or any office or facility at which Collateral is located (including the establishment of any such new office or facility), other than changes in location to a leased property subject to a Third Party Consent Agreement.

 

Section 10.13       Depository Banks. The Transaction Parties shall, on or prior to the Effective Date, (a) establish and maintain the Collection Account and the Operating Account with Bank of America or an Affiliate thereof and (b) within sixty (60) days of the Effective Date, designate and maintain Bank of America, as collateral agent under the Senior Secured Credit Facility, as its principal depository bank, including for the maintenance of all operating, administrative, cash

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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management, collection activity, and other deposit and securities accounts for the conduct of its business, including with respect to any proceeds of any ABL/SOA Priority Collateral (including hydrocarbon Inventory).

 

Section 10.14       Affirmative Covenants with Respect to Required Infrastructure.

 

(a)                                 PESRM irrevocably grants MLC the right (without any obligation to do so) to remove MLC Separate Assets and Collateral from the PESRM Infrastructure at any time or times during the occurrence and continuation of an Event of Default.

 

(b)                                 PESRM shall make commercially reasonable efforts to cause each Third Party (or, if such Third Party is an Affiliate Transferee, PESRM shall cause such Affiliate Transferee) which provides Required Infrastructure to PESRM or MLC to (i) grant to MLC the right (without any obligation to do so) to remove MLC Separate Assets and Collateral and ABL/SOA Priority Collateral from Third Party Infrastructure, at any time or times during the period (1) during which a PESRM Event of Default has occurred and is continuing, or (2) commencing on the date on which an Early Termination Event has been designated and ending 90 days thereafter, and (ii) covenant and agree that such 90 day period described in clause (2) above will be tolled during any period in which MLC has been stayed from taking action to remove such MLC Separate Assets and Collateral and ABL/SOA Priority Collateral from the Third Party Infrastructure by any court or other governmental authority, and MLC shall have an additional period of time thereafter in which to repossess and/or dispose of the MLC Separate Assets and Collateral and ABL/SOA Priority Collateral equal to the period of such toll.

 

(c)                                  PESRM further covenants and agrees that (i) the storage tanks used to store MLC Separate Assets and Collateral, and the pipelines used to transport MLC Separate Assets and Collateral to or from such tanks, included in the PESRM Infrastructure (other than any Affiliate Transferee Assets leased by a Transaction Party to an Affiliate Transferee) and the Third Party Infrastructure (other than any Affiliate Transferee Assets owned by an Affiliate Transferee) shall be dedicated to  MLC Separate Assets and Collateral, and (ii) except to the extent necessary in response to, or to avoid a situation that threatens to imminently result in injury to individuals or material damage to property, under no circumstances shall PESRM commingle or permit the commingling of any of MLC Separate Assets and Collateral with hydrocarbon products of any other Person provided, that PESRM shall (x) promptly deliver notice to MLC of such commingling and (y) promptly upon the remedy of such emergency, segregate the affected MLC Separate Assets and Collateral from any other person’s hydrocarbon products. Notwithstanding the foregoing, MLC Separate Assets and Collateral may be commingled in tanks or pipelines constituting Third Party Infrastructure to the extent that a Third Party Consent Agreement which does not restrict such commingling has been entered into with respect to such Third Party Infrastructure.

 

Section 10.15       [Reserved].

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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Section 10.16                      Designation of Excluded Subsidiaries.  PESRM may designate any Domestic Subsidiary acquired or formed after the Effective Date, within 30 days of the formation or acquisition thereof (or such longer period of time as may be permitted by MLC), as an Excluded Subsidiary by written notice to MLC; provided, that (i) immediately before and after such designation, no Default with respect to PESRM or PESRM Event of Default shall have occurred and be continuing; (ii) no Subsidiary may be designated as an Excluded Subsidiary if it owns any Required Infrastructure and (iii) except with respect to a transfer of Affiliate Transferee Assets to an Affiliate Transferee, after giving effect to such designation, the cash or assets contributed by the Transaction Parties to all Excluded Subsidiaries (other than Affiliate Transferees) shall not in the aggregate exceed the amount permitted to be contributed to such Excluded Subsidiaries pursuant to Section 11.04(n), measured, in each case, as of the date of each such designation; provided, further, that such Excluded Subsidiary may be re-designated by PESRM as a “Guarantor” upon 10 Business Days (or such shorter period of time as may be permitted by MLC) prior written notice to MLC as long as (x) the requirements of Section 10.10 are satisfied either before or concurrently with it becoming a Guarantor and (y) the Consolidated Fixed Charge Coverage Ratio for the Transaction Parties after such re-designation would be greater than such ratio for the Transaction Parties immediately prior to such re-designation.

 

Section 10.17                      Anti-Terrorism Laws. The Transaction Parties shall, and shall cause Carlyle PES to, deliver to MLC any certification or other evidence requested from time to time by MLC in its reasonable discretion, confirming the Transaction Parties’ and Carlyle PES’ compliance with Section 11.14.

 

Section 10.18                      Third Party Consent Agreements.  If after the Effective Date, any Transaction Party enters into an agreement for Required Infrastructure and such infrastructure is not already subject to a Third Party Consent Agreement and any Transaction Party intends to store or transport any MLC Separate Assets and Collateral in or through such Required Infrastructure, then, with respect to such Required Infrastructure (other than, with the exception of Sunoco Pipeline Infrastructure, in respect of any vessels, barges, railcars, railroads or pipelines), such Transaction Party shall (a) in the case in which such Required Infrastructure is owned by a Third Party that is not an Affiliate of PESRM, use commercially reasonable efforts to obtain and deliver to MLC a Third Party Consent Agreement executed by PESRM and the Third Party counterparty to such agreement and (b) in the case in which Required Infrastructure is owned by, or leased by a Transaction Party to, an Affiliate Transferee, obtain and deliver to MLC a Third Party Consent Agreement executed by PESRM and such Affiliate Transferee, in each case, contemporaneously with the execution of such agreement. PESRM shall use commercially reasonable efforts to deliver to MLC the executed Third Party Consent Agreements set forth on Schedule 2.02(a).

 

Section 10.19                      Refinery Turnaround, Maintenance and Closure.

 

(a)                                 PESRM shall provide to MLC (i) on the Effective Date (for the balance of the calendar year in which the Effective Date occurs) and (ii) on an annual basis thereafter, on or prior to the earlier of (x) 60 Days after the beginning of each fiscal year and (y) at least thirty (30) Days prior to any anticipated or scheduled maintenance and turnaround referred to below in such fiscal year, its anticipated timing of scheduled maintenance and turnaround that may affect deliveries and

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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receipts of Hydrocarbons at the Refinery or any other PESRM Infrastructure or the processing of Hydrocarbons at the Refinery during the upcoming year.  PESRM shall provide MLC with any updates to such schedule promptly after any decision is made to update such schedule, and in any event at least thirty (30) Days prior to the scheduled date of the earliest planned maintenance or turnaround that is modified or amended by such update.  PESRM shall cooperate with MLC in establishing maintenance and turnaround schedules that do not unnecessarily interfere with the delivery or receipt of Hydrocarbons that MLC has committed to purchase or sell.

 

(b)                                 PESRM shall promptly, and in any event within one (1) Business Day of PESRM first having knowledge of such unscheduled downtime, maintenance or turnaround with respect to the Refinery or any other PESRM Infrastructure, notify MLC orally (followed by prompt written notice) of any previously unscheduled downtime, maintenance or turnaround and the expected duration of such unscheduled downtime, maintenance or turnaround.

 

Section 10.20                      Certain PESRM Services.  PESRM shall at all times during the Term use commercially reasonable efforts to maintain sufficient staff and operational capabilities to meet its obligations under this Agreement, including sufficient staff to manage PESRM’s obligations under this Section 10.22 and under Article III and Article IV.  During the Term PESRM shall:

 

(a)                                 maintain staff necessary to prepare the reports and summaries required to be prepared by PESRM pursuant to Articles III and IV and to provide MLC, upon request, with all supporting documentation relating to such reports and summaries (including any related pipeline tickets and inspection reports);

 

(b)                                 maintain sufficient manual inputs into PESRM’s systems necessary to perform the reconciliations required under this Agreement;

 

(c)                                  maintain sufficient knowledge of the reporting requirements for relevant jurisdictions with respect to the purchase, sale and transport of Hydrocarbon necessary to satisfy such reporting requirements;

 

(d)                                 file, or cause to be filed, all reports required to be filed by any Transaction Party with respect to this Agreement, any PESRM Transaction or any PESRM Transaction Document;

 

(e)                                  upon MLC’s reasonable request, provide confirmation that PESRM has fulfilled all obligations, requirements and standards imposed by any Governmental Authority with respect to the Refinery, this Agreement and the transactions contemplated hereunder;

 

(f)                                   maintain appropriate information technology staff to:

 

(i)                                     support and maintain each Transaction Party’s information technology systems and infrastructure,

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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(ii)                                  develop and maintain such data feeds as may be required by MLC with respect to the performance of MLC’s obligations under this Agreement, and

 

(iii)                               maintain and/or develop a data exchange to the extent required by MLC; and

 

(g)                                  provide to MLC such automated data feeds as MLC may reasonably require with respect to the performance of its obligations under this Agreement and the other PESRM Transaction Documents, including daily inventory balance feeds, run schedule information feeds and feeds detailing the movement of Hydrocarbon into and out of the Refinery and the movement of Hydrocarbon within the Refinery.

 

ARTICLE XI.

 

PESRM NEGATIVE COVENANTS

 

Each Transaction Party covenants and agrees that, so long as this Agreement shall remain in effect and until the Obligations and all obligations under any PESIC-PESRM Secured Prepay Transactions and any MLC-PESIC Secured Prepay Transactions have been paid in full, unless MLC shall otherwise consent in writing, no Transaction Party will, nor will it cause or permit any of its Subsidiaries (other than Excluded Subsidiaries) to:

 

Section 11.01                      Indebtedness.  Incur, create, assume or permit to exist, directly or indirectly, any Indebtedness, except:

 

(a)                                 Indebtedness incurred under this Agreement and the other PESRM Transaction Documents;

 

(b)                                 Indebtedness in respect of Specified Transaction Obligations permitted under Section 11.15;

 

(c)                                  Indebtedness permitted by Section 11.04(f), solely to the extent such Indebtedness is evidenced by the Intercompany Note;

 

(d)                                 Indebtedness in respect of Purchase Money Obligations, Attributable Indebtedness and Capital Lease Obligations, and any other Indebtedness financing the acquisition, construction, repair, replacement or improvement of any fixed or capital assets and refinancings or renewals thereof, in an aggregate amount not to exceed $[**] except that such limit shall not apply to any purchase money security interest of (x) MLC under the Supply and Offtake Agreement, (y) MLC under the PESRM-MLC ISDA Master Agreement or (z) PESIC under the PESIC-PESRM ISDA Master Agreement;

 

(e)                                  Indebtedness in respect of (x) bid, performance or surety bonds, workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of any Company in the ordinary course of business, including guarantees or obligations of any Company with respect to letters of credit

 


** Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 

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supporting such bid, performance or surety bonds, workers’ compensation claims, self-insurance obligations and bankers acceptances (in each case other than for an obligation for money borrowed), in an aggregate amount not to exceed $[**] at any time outstanding and (y) federal excise tax bonds in an aggregate amount not to exceed $[**];

 

(f)                                   Contingent Obligations (including guarantees) of any Transaction Party in respect of Indebtedness otherwise permitted under this Section 11.01;

 

(g)                                  Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, that such Indebtedness is extinguished within five Business Days of incurrence;

 

(h)                                 Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;

 

(i)                                     unsecured Indebtedness and Subordinated Indebtedness of any Transaction Party in an aggregate amount not to exceed $[**]; provided, that such Indebtedness has a later final maturity date than the Indebtedness incurred under this Agreement and the other PESRM Transaction Documents; provided, further, that Specified Transaction Obligations permitted under Section 11.01(b) shall not be included in any calculation of the foregoing cap;

 

(j)                                    Indebtedness representing deferred compensation to employees of any Transaction Parties, Holdings, IPO Issuer or any of their respective Subsidiaries incurred in the ordinary course of business and/or incurred by such Person in connection with any Permitted Acquisitions or any other Investment expressly permitted hereunder in an aggregate principal amount not to exceed $[**];

 

(k)                                 Indebtedness representing deferred compensation to employees of any Transaction Parties incurred in the ordinary course of business and/or incurred by such Person in connection with any Permitted Acquisitions or any other Investment expressly permitted hereu