Arabian American Development Co. Contracts
Sample Business Contracts
Agreement re: Chevron Aromax Process [Addendum]- Chevron Research Co. and South Hampton Refining Co.
Services Forms
ADDENDUM TO THE AGREEMENT
RELATING TO AROMAX PROCESS
SECOND COMMERCIAL DEMONSTRATION
THIS ADDENDUM, effective as of the 13th day of June, 1989, is between Chevron
Research Company, a Delaware corporation, hereinafter referred to as "CHEVRON
RESEARCH", and South Hampton Refining Company, a Texas corporation, hereinafter
referred to as "SOUTH HAMPTON";
W I T N E S S E T H:
WHEREAS, CHEVRON RESEARCH and SOUTH HAMPTON have entered into an "Agreement
Relating to AROMAX Process" effective March 10, 1988 ("Agreement"), pursuant to
which SOUTH HAMPTON carried out a demonstration of the AROMAX Process using an
existing unit converted to reforming operations located at SOUTH HAMPTON's
Silsbee, Texas, refinery ("Refinery") and which shall have a design capacity of
420 Barrels of Demonstration Feed per operating day ("BPOD") at an operating
factor of 0.9 for purposes of the Long-Term Demonstration contemplated by this
ADDENDUM ("Licensed Unit"); and
WHEREAS, CHEVRON RESEARCH is interested in supporting a long-term second
commercial demonstration of the AROMAX process in Licensed
<PAGE> 2
Unit processing only Demonstration Feed in a multi-reactor system with at least
one full catalyst regeneration; and
WHEREAS, SOUTH HAMPTON as CHEVRON RESEARCH's first non-affiliated licensee is
willing to carry out a long-term commercial demonstration meeting CHEVRON
RESEARCH's objectives on the terms and conditions set forth in this ADDENDUM;
NOW, THEREFORE, in consideration of the premises and covenants herein, CHEVRON
RESEARCH and SOUTH HAMPTON agree as follows:
ARTICLE 1-0 DEFINITIONS
1.1 Whenever used in this ADDENDUM, any term which has been defined in the
AGREEMENT shall have the same definition. In addition, the following terms
shall have the definitions prescribed in Schedule I attached hereto and a
part hereof: "Rheniforming Unit", "AROMAX Equipment", "Rheniforming
Equipment", "Long-Term Demonstration", "Demonstration Feed", "Rheniforming
Catalyst", "AROMAX Product", "Support Price and "Received Price".
-2-
<PAGE> 3
ARTICLE 2-0 TECHNICAL ASSISTANCE
2.1 In order to support the Long-Term Demonstration of the AROMAX Process in
Licensed Unit, Licensed Unit must be modified by the addition of AROMAX
Equipment and new AROMAX Catalyst must be installed in Licensed Unit. In
addition, since Licensed Unit will not provide the estimated hydrogen
requirements for SOUTH HAMPTON's hydrotreating operations at the Refinery,
based upon SOUTH HAMPTON's planned expansion of such operations, it will be
necessary to return the Rheniforming Unit to service. Accordingly, as part
of the Long-Term Demonstration contemplated by this ADDENDUM, the
Rheniforming Unit must be modified by the addition of Rheniforming
Equipment and new Rheniforming F Catalyst must be installed in the
Rheniforming Unit. CHEVRON RESEARCH and SOUTH HAMPTON agree that the
relative responsibilities and obligations of the parties during the
Long-Term Demonstration relating to assistance during pre-startup, startup,
normal, and regeneration operations for Licensed Unit and for the
Rheniforming Unit shall be as follows:
2.1.1 (Pre-Startup) CHEVRON RESEARCH will specify the equipment
modifications required for the Long-Term Demonstration, and will
assist SOUTH HAMPTON to
-3-
<PAGE> 4
locate, inspect, and install AROMAX Equipment and Rheniforming
Equipment. Following installation and inspection of the AROMAX
Equipment and Rheniforming Equipment, CHEVRON RESEARCH will specify
cleanup and dryout procedures to ready Licensed Unit and the
Rheniforming Unit for catalyst loading, and will advise and assist
SOUTH HAMPTON during cleanup and dryout. CHEVRON RESEARCH will specify
and supply the initial charges of new AROMAX Catalyst, Rheniforming
Catalyst, and sorbents required for the Long-Term Demonstration and
will assist SOUTH HAMPTON during loading of such Catalysts and
sorbents. The extent of pre-startup assistance for Licensed Unit and
the Rheniforming Unit to be provided by CHEVRON RESEARCH will be
determined by CHEVRON RESEARCH as required to carry out the Long-Term
Demonstration after consultation with SOUTH HAMPTON. SOUTH HAMPTON
will be responsible for and will carry out pre-startup of Licensed
Unit and the Rheniforming Unit. CHEVRON RESEARCH will perform or have
performed cleanup of Licensed Unit for sulfur removal. When requested
by CHEVRON RESEARCH, SOUTH HAMPTON will provide reasonable assistance
during cleanup and dryout of Licensed Unit. CHEVRON RESEARCH will
reimburse SOUTH HAMPTON for the agreed actual out-of-pocket expenses
-4-
<PAGE> 5
incurred if SOUTH HAMPTON contracts with a third party approved by
CHEVRON RESEARCH for assistance during the cleanup, and will reimburse
SOUTH HAMPTON for the actual cost of any nitrogen purchased at CHEVRON
RESEARCH'S request during the initial dryout of Licensed Unit.
2.1.2 (Startup) The Rheniforming Unit will be returned to service before
starting up Licensed Unit. CHEVRON RESEARCH has previously provided
startup procedures for the Rheniforming Unit and will advise and
assist SOUTH HAMPTON during startup of the Rheniforming Unit. However,
SOUTH HAMPTON will be responsible for carrying out the startup,
including the supply of required feed and all chemicals. Following
startup of the Rheniforming Unit, SOUTH HAMPTON will startup Licensed
Unit with the advice and assistance of CHEVRON RESEARCH. Startup
procedures for Licensed Unit will be specified by CHEVRON RESEARCH.
CHEVRON RESEARCH will also specify the Demonstration Feed, the feed
rate(s), and operating conditions for Licensed Unit during startup.
The extent of startup assistance for Licensed Unit and the
Rheniforming Unit to be provided by CHEVRON RESEARCH will be
determined by CHEVRON RESEARCH as required to carry
-5-
<PAGE> 6
out the Long-Term Demonstration after consultation with SOUTH HAMPTON,
and will include full shift coverage during startup of Licensed Unit.
CHEVRON RESEARCH will reimburse SOUTH HAMPTON for the actual cost of any
nitrogen or electrolytic hydrogen purchased at CHEVRON RESEARCH's
request during startup of Licensed Unit.
2.1.3 (Operation) Operations of the Rheniforming Unit will be controlled by
and will be the sole responsibility of SOUTH HAMPTON. Rheniforming
Process operations will be carried out by SOUTH HAMPTON pursuant to the
terms and conditions of the "Agreement Relating to Rheniforming Process"
dated May 16, 1978, as supplemented and amended by subsequent written
agreements entered into by CHEVRON RESEARCH and SOUTH HAMPTON.
Operations of Licensed Unit during the Long-Term Demonstration will be
controlled by and will be the sole responsibility of SOUTH HAMPTON.
SOUTH HAMPTON will operate Licensed Unit during the Long-Term
Demonstration to process only Demonstration Feed under operating
conditions to be specified by CHEVRON RESEARCH. Feed rate(s) to Licensed
Unit will be specified by CHEVRON RESEARCH in consultation with SOUTH
HAMPTON. However, once established, feed rate
-6-
<PAGE> 7
will be held relatively constant for at least seven (7) days, and
subsequent changes will be limited to twenty-five percent (25%) of the
rate of the previous period, unless otherwise agreed to by CHEVRON
RESEARCH. At no time will the feed rate to Licensed Unit exceed 420
BPOD.
2.1.4 (Regeneration) At times specified by CHEVRON RESEARCH, SOUTH HAMPTON
will regenerate AROMAX Catalyst in Licensed Unit with the advice and
assistance of CHEVRON RESEARCH. AROMAX Catalyst regeneration procedures
will be specified by CHEVRON RESEARCH. CHEVRON RESEARCH will reimburse
SOUTH HAMPTON for the actual cost of any nitrogen or electrolytic
hydrogen purchased at CHEVRON RESEARCH's request during regeneration of
AROMAX Catalyst.
2.2 Neither CHEVRON RESEARCH nor SOUTH HAMPTON will be obligated to
compensate or reimburse the other for services performed or expenses
incurred as a result of the Long-Term Demonstration except as expressly
provided for in this Addendum.
-7-
<PAGE> 8
ARTICLE 3-0 CATALYSTS AND SORBENTS
3.1 The initial charge of AROMAX Catalyst and sorbents for use in Licensed Unit
for the Long-Term Demonstration will be supplied by and delivered to the
Refinery by CHEVRON RESEARCH. CHEVRON RESEARCH will retain ownership and
risk of loss at all times. At the conclusion of the Long-Term Demonstration
CHEVRON RESEARCH will assist SOUTH HAMPTON to unload AROMAX Catalyst and
Sorbents and CHEVRON RESEARCH may then use and/or dispose of the AROMAX
Catalyst and sorbents in any manner without accounting to SOUTH HAMPTON.
3.2 The initial charge of Rheniforming Catalyst, not to exceed Two Thousand
(2,000) pounds, for the Rheniforming Unit will be supplied by and delivered
to the Refinery by CHEVRON RESEARCH. Title and risk of loss will pass to
SOUTH HAMPTON upon delivery to the Refinery gate. Rheniforming Catalyst
supplied hereunder, upon transfer of title to SOUTH HAMPTON, will be deemed
subject to the terms and conditions of the "Rheniforming Catalyst Supply
Contract", dated May 6, 1978 entered into by CHEVRON RESEARCH and SOUTH
HAMPTON. Accordingly, SOUTH HAMPTON will not resell or otherwise transfer
ownership, possession, or control of any portion of Rheniforming Catalyst
without CHEVRON RESEARCH's prior written approval.
-8-
<PAGE> 9
3.3 Licensed Unit presently contains Rheniforming Catalyst which will be
removed during pre-startup in order to convert to the practice of the
AROMAX Process for the Long-Term Demonstration. SOUTH HAMPTON owns such
Rheniforming Catalyst and will deliver same to CHEVRON RESEARCH at the
Refinery gate immediately upon removal. Title and risk of loss will pass to
CHEVRON RESEARCH upon such delivery. CHEVRON RESEARCH may use and/or
dispose of the Rheniforming Catalyst acquired hereunder in any manner
without accounting to SOUTH HAMPTON.
ARTICLE 4-0 LOAN AND SECURITY INTEREST
4.1 CHEVRON RESEARCH will loan to SOUTH HAMPTON up to One Hundred Thirty-five
Thousand Dollars ($135,000.00) for the sole purpose of purchasing
Rheniforming Equipment and covering the expenses of SOUTH HAMPTON related
to Rheniforming Unit cleanup and startup as per the following terms and
conditions:
4.1.1 SOUTH HAMPTON will purchase only such Rheniforming Equipment as has
been previously approved by CHEVRON RESEARCH, which approval will not
be unreasonably withheld.
-9-
<PAGE> 10
4.1.2 CHEVRON RESEARCH will loan to SOUTH HAMPTON the purchase price of
Rheniforming Equipment delivered to the Refinery and funds necessary
to cover SOUTH HAMPTON's actual out-of-pocket expenses related to
Rheniforming Unit cleanup and nitrogen and electrolytic hydrogen
requirements for startup. However, in no event will CHEVRON
RESEARCH's loan obligation hereunder exceed $135,000.00.
4.1.3 CHEVRON RESEARCH will lend the purchase price as stated above and
SOUTH HAMPTON will execute and record a Security Agreement(s) in the
form attached hereto at the time of sale to SOUTH HAMPTON of any
equipment within Rheniforming Equipment.
4.1.4 SOUTH HAMPTON will pay to CHEVRON RESEARCH the full amount loaned to
SOUTH HAMPTON hereunder by CHEVRON RESEARCH without interest or
penalty in three equal consecutive monthly payments due on the first
day of each of the first three calendar months following the calendar
month during which the average feed rate of penhex fed to the
Refinery over thirty (30) consecutive operating days equals or
exceeds 2000 Barrels
-10-
<PAGE> 11
per day. The foregoing payment obligation will apply during and/or
after completion of the Long-Term Demonstration.
4.2 CHEVRON RESEARCH will loan to SOUTH HAMPTON up to Two Hundred
Ninety-seven Thousand Dollars ($297,000) for the sole purpose of
purchasing AROMAX Equipment as per the following terms and
conditions:
4.2.1 SOUTH HAMPTON will purchase only such AROMAX Equipment as has
been previously approved by CHEVRON RESEARCH, which approval
will not be unreasonably withheld.
4.2.2 CHEVRON RESEARCH will loan to SOUTH HAMPTON the purchase price
of AROMAX Equipment delivered to the Refinery. However, in no
event will CHEVRON RESEARCH'S loan obligation hereunder exceed
the aggregate price F.O.B. the Refinery for all AROMAX Equipment
purchased by SOUTH HAMPTON or $297,000.00 whichever is the
lesser amount.
4.2.3 CHEVRON RESEARCH will lend the purchase price as stated above
and SOUTH HAMPTON will execute and record a Security
Agreement(s) in the form attached
-11-
<PAGE> 12
hereto at the time of sale to SOUTH HAMPTON of any equipment
within AROMAX Equipment.
4.2.4 SOUTH HAMPTON will pay to CHEVRON RESEARCH the full amount
loaned to SOUTH HAMPTON hereunder by CHEVRON RESEARCH without
interest or penalty in nine (9) equal consecutive monthly
payments due on the first day of each calendar month starting on
the first day of the calendar month following the first seventy-
five (75) days of operations of Licensed Unit after startup of
the Long-Term Demonstration. If the Long-Term Demonstration
terminates before or during the nine (9) month payment period,
SOUTH HAMPTON'S obligation to make money payments ceases with
the first payment due following such termination.
ARTICLE 5-0 AROMAX PRODUCT AND CONTRACT OF SALE
5.1 All AROMAX product will be sold by SOUTH HAMPTON at the highest available
price on a monthly basis.
5.2 CHEVRON RESEARCH will arrange with its affiliated company, Chevron Chemical
Company ("CHEVRON CHEMICAL), to enter into a Contract of Sale with SOUTH
HAMPTON for AROMAX product
-12-
<PAGE> 13
which SOUTH HAMPTON cannot within a reasonable time sell to a third party
purchaser. Such Contract of Sale acceptable to CHEVRON CHEMICAL and SOUTH
HAMPTON is attached hereto.
ARTICLE 6-0 PRICE SUPPORT, CREDIT, AND REFUND
6.1 In the event that the Received Price for AROMAX Product sold during any
calendar month in which SOUTH HAMPTON has a payment obligation to CHEVRON
RESEARCH pursuant to Section 4.2.4 is less than the Support Price for the
same calendar month, CHEVRON RESEARCH will grant to SOUTH HAMPTON a credit
which will be applied against SOUTH HAMPTON's next monthly payments due
pursuant to Sections 4.1.4 and 4.2.4. The amount of such credit will be the
lesser of either the amount of the payments due to CHEVRON RESEARCH or the
arithmetic product obtained by multiplying the number of gallons of AROMAX
Product sold by SOUTH HAMPTON during the month in question times the
arithmetic difference obtained by subtracting the Received Price from the
Support Price.
6.2 Following completion of the Long-Term Demonstration or at the end of the
twelfth month of the Long-Term Demonstration, whichever occurs first, if
the Received Price averaged over such period is equal to or greater than
the Support Price averaged over such period, within thirty (30) days of the
-13-
<PAGE> 14
completion of the Long-Term Demonstration or the end of the twelfth month
of the Long-Term Demonstration as the case may be SOUTH HAMPTON will pay
to CHEVRON RESEARCH a refund in the amount of the total of all the credits
taken by SOUTH HAMPTON pursuant to Section 6.1 above.
6.3 SOUTH HAMPTON will keep, and on request provide to CHEVRON RESEARCH,
verified copies of all books and records required to establish the amount
of and the schedule of, any credit(s) or payment(s) due hereunder.
ARTICLE 7-0 MISCELLANEOUS
7.1 The provisions of this ADDENDUM are in addition to the provisions in the
Agreement. This ADDENDUM is not intended to amend, modify, or delete any
right or obligation of either CHEVRON RESEARCH or SOUTH HAMPTON under the
Agreement.
7.2 This ADDENDUM upon full execution will be deemed appended to the Agreement
and will be deemed a part thereof. Any provision of the Agreement which by
reasonable interpretation relates to the conduct of the Long-Term
Demonstration will be so applied. In particular, the provisions of Article
4-0, Article 7-0, and Article 9-0 will apply to this ADDENDUM and the
Long-Term Demonstration hereunder.
-14-
<PAGE> 15
7.3 The Long-Term Demonstration will terminate when one of the following events
occurs: (1) the initial charge of AROMAX Catalyst provided hereunder is
spent and no longer regenerable, or, (2) the initial charge of AROMAX
Catalyst has produced AROMAX Product for twelve (12) calendar months, or,
(3) CHEVRON RESEARCH terminates the Long-Term Demonstration, which it may
do at its sole discretion; provided, however, that by mutual agreement of
the parties the Long-Term Demonstration may continue for an additional
period(s). During any such additional period(s) the terms of Article 5-0
of this ADDENDUM shall not apply.
7.4 Upon completion of the Long-Term Demonstration, CHEVRON RESEARCH shall
remove its AROMAX Catalyst from Licensed Unit at the earliest reasonable
opportunity.
7.5 At no time prior to, during, or after the Long-Term Demonstration will
CHEVRON RESEARCH have any responsibility or liability to supply or
compensate SOUTH HAMPTON for purchased hydrogen supplied for use in the
Refinery.
-15-
<PAGE> 16
IN WITNESS WHEREOF, the parties hereto have caused their respective corporate
names to be subscribed hereto by the respective officers or agents thereunto
duly authorized.
CHEVRON RESEARCH COMPANY
By /s/ [ILLEGIBLE]
--------------------------------------
Title President
------------------------------------
Date 6/13/89
------------------------------------
SOUTH HAMPTON REFINING COMPANY
By /s/ [ILLEGIBLE]
----------------------------------
Title President
-------------------------------
Date 6/7/89
-------------------------------
Attachments Schedule I and Exhibit A
Security Agreement
Financing Statements
Contract of Sale
-16-
<PAGE> 17
SCHEDULE I
1. "Rheniforming Unit" means SOUTH HAMPTON'S existing 4,000-Barrel per
operating day reforming unit located at its Silsbee, Texas, refinery. The
Rheniforming Unit is presently out of service but has operated under
license from CHEVRON RESEARCH using Rheniforming F Catalyst.
2. "AROMAX Equipment" means new and/or used equipment specified by CHEVRON
RESEARCH as additional equipment for AROMAX Process operations in Licensed
Unit necessary for the Long-Term Demonstration.
3. "Rheniforming Equipment" means new and/or used equipment specified by
CHEVRON RESEARCH as additional equipment necessary for Rheniforming Process
operations in the Rheniforming Unit.
4. "Long-Term Demonstration" means SOUTH HAMPTON'S commercial demonstration
of AROMAX Process operations in Licensed Unit on feeds and at feed rates
and under operating conditions specified by CHEVRON RESEARCH carried out
under this ADDENDUM.
I-1
<PAGE> 18
5. "Demonstration Feed" means a feed to Licensed Unit which is a refinery
produced isohexane stream having typical inspections as set forth in
Exhibit A attached hereto and a part hereof, or such other feed(s) as may
be specified by CHEVRON RESEARCH from time-to-time to be processed during
the Long-Term Demonstration.
6. "Rheniforming Catalyst" means Rheniforming F Catalyst supplied by CHEVRON
RESEARCH.
7. "AROMAX Product" means the liquid reformate product from Licensed Unit
produced during the Long-Term Demonstration.
8. "Support Price" means the average of high and low values of the daily
estimated U.S. Gulf Coast pipeline price in cents per gallon of regular
unleaded gasoline as reported in Platts Oilgram Price Report plus cents ( )
per gallon averaged over a calendar month.
9. "Received Price" means the price in cents per gallon of AROMAX Product sold
by SOUTH HAMPTON and averaged over a calendar month.
I-2
<PAGE> 19
EXHIBIT A
ISOHEXANE FEED COMPOSITION
Composition, LV %
iC5 1.0
nC5 2.2
CP 10.5 (max.)
2-2 DMB 2.3
2-3 DMB 12.1
2-MP 54.0 (min.)
3-MP 16.1 (min.)
N-C6 1.5
MCP 0.1
C7+ 0.2 (min.)