Vertex Energy, Inc. 8-K
Exhibit 10.1
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT
HAVE BEEN OMITTED AND REPLACED WITH “[***]”. SUCH IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS
(I) NOT MATERIAL AND (II) THE REGISTRANT CUSTOMARILY AND ACTUALLY TREATS THAT INFORMATION AS PRIVATE OR CONFIDENTIAL.
MASTER OFFTAKE AGREEMENT
Between
VERTEX REFINING ALABAMA LLC
And
IDEMITSU APOLLO RENEWABLE
CORP.
Dated: February 4, 2022
Master Offtake Agreement
This Master Offtake Agreement
(this “Master Agreement”) is entered into effective as of February 4, 2022 (the “Effective Date”),
by and between Vertex Refining Alabama LLC, a Delaware limited liability company (“Vertex”), and Idemitsu Apollo
Renewable Corp., a Delaware corporation (“Idemitsu”). Vertex and Idemitsu are each referred to individually
as a “Party” and collectively as “Parties.”
WHEREAS, Vertex intends
to acquire ownership of the petroleum refinery assets located at 400 Industrial Parkway, Saraland, Alabama 36571, which assets are currently
owned by Shell Chemical LP (the “Refinery”); and
WHEREAS, promptly following
the closing of the acquisition of ownership of the Refinery by Vertex (the “Closing”), Vertex intends to modify
and upgrade the Refinery to allow for the Refinery to produce a modified slate of refined products, including 100% renewable diesel (or
RD100); and
WHEREAS, the proposed
modifications to the Refinery are expected to include revamping the hydrocracker and expanding hydrogen supply to the Refinery, resulting
in an output of Product estimated to be 10,000 Barrels per day following completion of Phase 1 and 14,000 Barrels per day following
completion of Phase 2 (the “RD Project”); and
WHEREAS, Vertex desires
to sell and Idemitsu desires to purchase all of the Product produced at the Refinery during the Term (as defined below), up to a maximum
volume of 14,000 Barrels of Product per day; and
WHEREAS, the Product
is expected, when delivered, to qualify as Vehicle Fuel and Regulatory Credit generation under the RFS2 and LCFS programs; and
WHEREAS, Idemitsu intends
to take receipt of the Product at the Delivery Point; and
WHEREAS, Vertex intends
to convey to Idemitsu all Regulatory Credits associated with the Product; and
WHEREAS, Vertex and
Idemitsu desire to memorialize the terms and conditions with respect to each Party’s respective rights and obligations for the purchase
and sale of the Product and Regulatory Credits in accordance with the terms hereof;
NOW, THEREFORE,
in consideration of the premises and the respective promises, conditions, terms and agreements contained herein and in the attached Exhibits
and Schedules, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Idemitsu and Vertex
do hereby agree as follows:
Article
1
DEFINITIONS AND CONSTRUCTION
1.1 Definitions. For purposes of this Master Agreement, including the foregoing recitals and all Exhibits and Schedules attached
hereto, capitalized terms used herein and not otherwise defined shall have the meaning set forth in Exhibit A.
1.2 Single Agreement. For all purposes, including bankruptcy, all Obligations (as defined below) are entered into in reliance
on the fact that this Master Agreement forms a single agreement between the Parties and the Parties would not otherwise agree to any Obligations.
This Master Agreement shall include the Exhibits and Schedules attached hereto, each of which shall be subject to the terms hereof.
1.3 Obligations. This Master Agreement shall include the obligations, transactions and provisions set forth herein (collectively,
“Obligations”), and Vertex shall sell and Idemitsu shall purchase the Product and Regulatory Credits associated
with the Product as provided in this Master Agreement.
1.4 Interpretation.
(a) All references in this Master Agreement to Exhibits, Schedules, Articles and Sections refer to the corresponding Exhibits, Schedules,
Articles and Sections of or to this Master Agreement or the applicable Exhibit or Schedule, as the case may be, unless expressly provided
otherwise. All headings herein are intended solely for convenience of reference and shall not affect the meaning or interpretation of
the provisions of this Master Agreement.
(b) All Exhibits and Schedules to this Master Agreement are attached hereto and by this reference incorporated herein for all purposes.
(c) Unless expressly provided otherwise, the words “this Master Agreement,” “herein,” “hereby,”
“hereunder” and “hereof,” and words of similar import, refer to this Master Agreement as a whole and not to any
particular Section. The words “this Article” and “this Section,” and words of similar import, refer only to the
Article or Section in which such words occur. The word “including” as used herein means “including without limitation”
and does not limit the preceding words or terms.
(d) The Parties acknowledge that they and their counsel have participated in the drafting of and have reviewed this Master Agreement
(including all attachments hereto) and that no presumption of contract interpretation or construction shall apply to the advantage or
disadvantage of the drafter of this Master Agreement.
(e) References to the singular includes a reference to the plural and vice versa.
(f) References to all dollars in any form shall be a reference to the lawful currency from time to time of the United States of America.
(g) Unless the context otherwise requires, any reference to a statutory provision or law is a reference to such provision or law as
amended or re-enacted or as modified by other statutory provisions or laws from time to time and includes subsequent legislation and regulations
made under the relevant statute or law.
(h) References to a Person shall include that Person’s successors and permitted assigns.
Article
2
CONDITIONS TO PERFORMANCE
2.1 Mutual Conditions Precedent. The respective Obligations of each Party contemplated under this Master Agreement shall be
subject to the satisfaction or waiver of the following conditions precedent, each as reasonably determined by a Party in its sole discretion:
(a) The Closing shall have occurred prior to April 30, 2022;
(b) The Parties have entered into a mutually acceptable storage agreement (the “Storage Agreement”) for the
storage of Product on or before the COD;
(c) Idemitsu shall have delivered to Vertex the Guaranty Agreement on or before the COD;
(d) As of the Effective Date and the COD, no action or proceeding shall have been instituted nor shall any action by a Governmental
Authority be threatened, nor shall any order, judgment or decree have been issued or proposed to be issued by any Governmental Authority
to set aside, enjoin or prevent the performance by either Party of its respective Obligations;
(e) As of the Effective Date and the COD, no RD Project assets, related facilities or Product shall have been affected adversely or
threatened to be affected adversely by any loss or damage such that Vertex is or would be unable to deliver Product in accordance with
the terms of this Master Agreement, except for any loss or damage that is sufficiently covered by insurance to allow for restoration of
the RD Project and will allow Vertex, once restoration of the RD Project is complete, to deliver Product in accordance with the terms
of this Master Agreement;
(f) As of the Effective Date and the COD, the mutual representations and warranties of each Party set forth in Section 11.1
of this Master Agreement shall be true and correct; and
(g) The COD shall have occurred within eighteen (18) months of the Closing.
2.2 Effect of Termination for Failure of Conditions Precedent. If a Party terminates this Master Agreement as a result of any
of the conditions set forth in Section 2.1 not being satisfied, neither Party shall have any further obligation under this
Master Agreement to the other Party, except that (a) Vertex shall be responsible for payment to Idemitsu of a Termination Payment (as
hereafter defined), in the event the Master Agreement is terminated due to the failure to satisfy or waive the condition precedent set
forth in Section 2.1(g), and (b) each Party shall remain liable to the other Party for any and all damages incurred as a result
of a breach by a Party of its representations, warranties or any other obligations hereunder occurring prior to such termination subject
to the limitation on damages provided in Article 12. For purposes hereof, “Termination Payment” shall
mean the actual and documented storage costs incurred by Idemitsu to acquire or lease 300,000 barrels of storage tanks for twelve (12)
months ; provided that Idemitsu shall use reasonable commercial efforts to sublease any such contracted storage and otherwise mitigate
any costs incurred. The Termination Payment shall be payable in monthly installments in an amount equal to the monthly storage costs incurred
by Idemitsu.
Article
3
TERM AND TERMINATION OF MASTER AGREEMENT
3.1 Termination. The performing Party may terminate this Master Agreement (a) by delivery of a written notice to the other Party
within thirty (30) days of any of the conditions set forth in Section 2.1 not being waived or satisfied by the date indicated for
such condition or a determination that a condition is not capable of being satisfied by the date indicated for such condition, or (b)
if there is an Event of Default, pursuant to Section 14.2.
3.2 Term of Master Agreement.
(a) Initial Term. This Master Agreement shall become effective on the Effective Date. The initial term (the “Initial
Term”) of the Agreement shall commence on the COD and shall continue for a period of five (5) years thereafter, subject
to the early termination provisions set forth below.
(b) First Early Termination Provision. Notwithstanding the provisions of Section 3.2(a) above, not less than [***] prior
to the commencement of the fourth (4th) contract year, either Party may deliver written notice to the other Party requesting
a review of the terms of the Master Agreement and revisions thereto. If no such notice is given, the current terms and provisions shall
remain in effect for the fourth (4th) contract year. If a notice is given pursuant hereto and the Parties fail to mutually
agree in writing to any such requested revisions, the Master Agreement shall expire three (3) years after COD.
(c) Second Early Termination Provision. If the Master Agreement does not expire at the third anniversary of the COD pursuant
to Section 3.2(b) above, not less than [***] prior to the commencement of the fifth (5th) contract year, either Party
may deliver written notice to the other Party requesting a review of the terms of the Master Agreement and revisions thereto. If no such
notice is given, the then current terms and provisions shall remain in effect for the fifth (5th) contract year. If a notice
is given pursuant hereto and the Parties fail to mutually agree in writing to any such requested revisions, the Master Agreement shall
expire four (4) years after COD.
(d) Renewal Term. If the Master Agreement does not expire early pursuant to Section 3.2(b) or Section 3.2(c) above,
the Parties may extend the term of this Master Agreement beyond the Initial Term by mutual agreement for an agreed upon term (“Renewal
Term”). Either Party may initiate discussions on a Renewal Term by providing a written notice at least [***] before expiration
of the Initial Term or the then-applicable Renewable Term. The Initial Term and all Renewal Terms, if any, shall constitute the “Term”
of this Master Agreement.
Article
4
PURCHASE AND SALE OF PRODUCT
4.1 Supply and Purchase of Product. During the Term, Product produced by the Refinery shall be sold by Vertex to Idemitsu in
accordance with the following provisions.
(a) Title and Risk of Loss to Product. Title and risk of loss of the Product sold shall pass from Vertex to Idemitsu upon delivery
at the Delivery Point. For purposes hereof, the term “Delivery Point” means (i) with respect to Product delivered
into a marine vessel, FOB (Incoterms 2020), the loading flange of Idemitsu’s designated carrier or, (ii) with respect to in-tank
transfers, FCA (Incoterms 2020) at the date and time so designated by the Parties.
(b) Representations on Delivery of Product. Vertex represents and warrants that at the time of delivery of the Product to the
Delivery Point: (i) the Product is sold free and clear of all Liens, except for any Liens arising by, through or under Idemitsu, and (ii)
the Product conforms to the Specifications. Except for any express warranties made in this Master Agreement, including the warranties
in the preceding sentence, VERTEX MAKES NO OTHER REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, AS TO MERCHANTABILITY,
FITNESS FOR PARTICULAR PURPOSE, OR ANY OTHER MATTER WITH RESPECT TO THE PRODUCT, WHETHER USED ALONE OR IN COMBINATION WITH ANY OTHER MATERIAL.
(c) Volume.
On a monthly basis during the Term, Vertex shall sell and Idemitsu shall purchase the Refinery’s production of Product and associated
Regulatory Credits in accordance with the following provisions:
| (i) | First Delivery. The volume for the first sale of Product and Regulatory Credits under this Master
Agreement (the “First Delivery Volume”) shall be subject to the mutual agreement of the Parties and the Parties
acknowledge and agree that the first delivery may not be a full vessel load, but is expected to be not less than 900,000 gallons of Product
(however, if delivery is by in tank transfer, the individual title transfers may be less than 900,000 gallons but the total First Delivery
Volume may not be less than 900,000 gallons). The provisions of Section 4.1(e) shall not apply to the first delivery and Vertex
shall have no liability or obligation with respect to any shortfall volumes. |
| (ii) | Phase 1 Deliveries. During Phase 1, Vertex shall sell and Idemitsu shall purchase during each calendar
month a quantity equal to (i) not less than 7,000 barrels times the number of days in the subject month, and (ii) not more than 10,000
barrels times the number of days in the subject month, plus all associated Regulatory Credits (the “Phase 1 Committed Volume”).
The Parties shall mutually agree to a monthly volume within the foregoing range. |
| (iii) | Phase 2 Deliveries. During Phase 2, Vertex shall sell and Idemitsu shall purchase each calendar
month a volume of Product equal to (i) not less than 9,500 barrels times the number of days in the subject month, and (ii) not more than
14,000 barrels times the number of days in the subject month, plus all associated Regulatory Credits. (the “Phase 2 Committed
Volume”). The Parties shall mutually agree to a monthly volume within the foregoing range. |
Idemitsu shall be the exclusive offtake
party for the First Delivery Volume, Phase 1 Committed Volume and the Phase 2 Committed Volume (collectively, the “Committed
Volume”); however, if Idemitsu fails to purchase or accept any portion of the Committed Volume in accordance with the terms
of this Master Agreement, Vertex shall have the right to sell such Product and Regulatory Credits to any third-party without any liability
to Vertex for breaching exclusivity for such third-party sale in accordance with the terms of this Master Agreement.
(d) Excess
Volumes. Vertex may also, in its sole discretion, offer to Idemitsu Product and associated Regulatory Credits produced by the Refinery
in excess of the Committed Volume (“Excess Volumes”), which Excess Volumes may be purchased by Idemitsu, in
its sole discretion, at the Purchase Price.
(e) Purchase
Shortfall. Except to the extent that Idemitsu is excused from taking delivery of Product and Regulatory Credits by the terms of this
Master Agreement, Idemitsu has an obligation each calendar month to take and pay for the Committed Volume (the “Take or Pay
Obligation”). Vertex will invoice Idemitsu for the Committed Volume, whether or not taken by Idemitsu (except to the extent
otherwise excused under this Master Agreement) and Idemitsu shall pay such invoice within three (3) days of receipt of invoice. In addition,
if Idemitsu fails to accept any Excess Volumes set forth in a Confirmed Order, Vertex shall invoice Idemitsu an amount equal to Vertex’s
actual and documented incremental costs incurred as a result of Idemitsu’s failure to purchase and received such Excess Volumes.
Notwithstanding the foregoing, Vertex shall use Reasonable Efforts (and shall be excused from its exclusivity obligation to the extent
required) to resell Product and Regulatory Credits subject to a Confirmed Order and not purchased and accepted by Idemitsu.
(f) Supply
Shortfall. To the extent that Vertex fails to sell and deliver the Committed Volume and/or any Excess Volumes that are specified in
a Confirmed Order in any month and such failure is not otherwise excused by the terms of this Master Agreement, then any such volumes
shall be “Supply Shortfall Volumes.” In such event, Idemitsu shall invoice Vertex an amount for each gallon
of Supply Shortfall Volumes equal to Idemitsu’s actual and documented incremental storage costs that it incurred to store the Supply
Shortfall Volume in Los Angeles or Long Beach California, that Vertex failed to sell or deliver, up to a maximum of twelve (12) months
of storage. Vertex will pay such invoice within three (3) days of receipt of invoice and supporting documentation.
4.2 Regulatory Credits. As stated in Section 4.1, Vertex shall transfer all Regulatory Credits associated with the Product purchased
hereunder to Idemitsu pursuant to the terms of this Master Agreement.
4.3 Purchase Price. The purchase price for the Product and Regulatory Credits sold hereunder shall be determined in accordance
with the pricing provisions set forth in Article 13 and Schedule 2. Idemitsu shall only have an obligation to pay the RIN
Credit Value as set forth in Schedule 2 for RINs verified pursuant to a QAP and shall not have an obligation to pay the RIN Credit
Value on any RINs not verified pursuant to a QAP.
4.4 Alternative Markets. Idemitsu reserves the right, in its sole discretion, to take Product to an Alternative Market; provided
that if it sells and delivers Product to an Alternative Market Idemitsu shall be responsible for compensating Vertex at least to the same
extent as if such Product had been sold and delivered to the California Vehicle Fuel market, in accordance with the terms set forth herein
and with respect to the market conditions existing at the time the Product was sold and delivered into the Alternative Market. In the
event any future value or Regulatory Credits are created on Product sold and delivered by Idemitsu into an Alternative Market that provide
additional incremental value above that contemplated herein with respect to the Product sold and delivered into an Alternative Market
by Idemitsu, the Parties will discuss an appropriate allocation for the incremental value from any such previously undefined value or
Regulatory Credits on an equal basis. Idemitsu shall have no obligations under this Section 4.4 if an entity that purchases Product
from Idemitsu or a subsequent purchaser of Product sells and delivers Product into an Alternative Market; provided that Idemitsu had no
knowledge of such intent to deliver to an Alternative Market.
4.5 Other Renewable Products. In the event the Refinery produces and Vertex offers for sale during the Term renewable products
other than Product (“Other Renewable Products”), including but not limited to renewable naphtha and renewable
jet fuel or sustainable aviation fuel, prior to offering the Other Renewable Products to any third party, Vertex shall first provide written
notice and offer of sale to Idemitsu of the material terms of sale, stating the specifications for such product, the quantity, the delivery
term, and the price ninety (90) days prior to the projected delivery date. Idemitsu shall have the exclusive right for a period of fourteen
(14) days following receipt of each such notice either to accept or reject the terms for such batch of Other Renewable Products, provided
that any failure of Idemitsu to provide notice of acceptance or rejection in a timely manner shall constitute a rejection of the subject
opportunity. During the fourteen (14) day notice and offer period, Vertex shall not offer the batch of Other Renewable Products to any
party other than Idemitsu. If Idemitsu refuses an offer, Vertex may sell such batch of Other Renewable Products on terms no more favorable
to purchaser than the terms offered to Idemitsu.
4.6 Idemitsu’s Responsibilities. In addition to, and without limiting Idemitsu’s other obligations hereunder, Idemitsu
shall:
(a) ensure
the receipt of Product in accordance with the applicable Delivery Schedule;
(b) be
responsible for the management of all carriers and transports engaged by Idemitsu to receive and ship Products in accordance with the
Delivery Schedule;
(c) provide
Vertex with information necessary to assist Vertex in preparing the Delivery Schedule;
(d) use
Reasonable Efforts to cooperate with Vertex in Vertex’s efforts to secure and maintain registration of the RD Project with CARB
to create a low Carbon Intensity pathway for generation of LCFS Credits from the Products delivered hereunder and to comply with related
reporting and recordkeeping requirements, including providing Vertex with documentation, support and any other information required by
CARB to support LCFS Credit generation;
(e) use
Reasonable Efforts to cooperate with Vertex in Vertex’s efforts to secure and maintain registration of the RD Project in order to
generate RINs from the RD Product delivered hereunder and to comply with related reporting and recordkeeping requirements, as the same
may be required to be updated from time to time; documentation such as contracts or affidavits regarding the transfer of title, volume,
and the sale of Product for use as Vehicle Fuel, and any other information required under RFS2;
(f) sell
or use the Product delivered hereunder as Vehicle Fuel, unless Idemitsu complies with RFS2 and LCFS requirements regarding RIN and LCFS
Credit retirement for using Product for a use other than Vehicle Fuel; and
(g) perform
all recordkeeping and reporting relevant to the sale of the Product purchased hereunder as it applies to LCFS Credits and RINs in accordance
with the requirements of the LCFS regulations and the EPA Renewable Fuel Standard, respectively.
4.7 Vertex’s Responsibilities. In addition to, and without limiting Vertex’s other obligations hereunder, Vertex
shall:
(a) inform
Idemitsu of all Scheduled Maintenance at least (i) two (2) months prior to the beginning of each fiscal year of Vertex and (ii) twenty-one
(21) days before the start of such Scheduled Maintenance, and of all unscheduled plant shutdowns at least forty-eight (48) hours after
an unscheduled Plant shutdown;
(b) provide
a designated individual for daily operational and logistic issues, and provide a designated individual for pricing and other contractual
issues, associated with deliveries;
(c) handle
and supervise the delivery, loading and dispatch of Product at the Delivery Point, and prepare delivery documentation required hereunder;
(d) (i)
register with the U.S. Environmental Protection Agency as a renewable fuel producer under RFS2, and (ii) use Reasonable Efforts to maintain
such registration and generate the maximum allowable number of D4 RINs under RFS2 on all Product delivered to Idemitsu; and (iii) maintain
all documentation such as contracts or affidavits regarding the production and transfer of title of Product and any other information
required under the EPA Renewable Fuel Standard; and
(e) file
for and use Reasonable Efforts to obtain a registered LCFS pathway with CARB for the RD Project, as necessary under the LCFS, in order
for Idemitsu to generate LCFS Credits in respect of Idemitsu’s importation into California and/or other U.S. state, as agreed to
by the Parties, and use of Product delivered hereunder as Vehicle Fuel in California.
4.8 Blender’s
Tax Credit. The following provisions shall govern any claims to the FBTC on the Product:
(a) Idemitsu
shall have the exclusive right to make any and all claims to the FBTC with respect to the Product supplied to Idemitsu under this Master
Agreement. Vertex shall make no claim to the FBTC or other Tax credits with respect to the Product or Other Renewable Products supplied
to Idemitsu under this Master Agreement and shall not take any action to claim any such FBTC or other Tax credits or to transfer any rights
to such credits to any entity other than Idemitsu.
(b) In
the event that the FBTC Value is zero (for purposes of the calculation of the Purchase Price in Schedule 2) at the time that Product is
delivered to and accepted by Idemitsu, and the FBTC Value later increases (i.e., through a retroactive reinstatement of the FBTC) then
the Purchase Price shall be recomputed to include the updated FBTC Value, and the difference between the Purchase Price as initially determined
and the Purchase Price as recomputed, shall be paid by Idemitsu to Vertex within 10 days after receipt of a written invoice from Vertex
to Idemitsu for the amount of such difference.
(c) In
the event that the FBTC Value is greater than zero (for purposes of the calculation of the Purchase Price in Schedule 2) at the time that
Product is delivered to and accepted by Idemitsu, and the FBTC Value later decreases (i.e., through an adjustment or other disallowance
by the Internal Revenue) then the Purchase Price shall be recomputed to include the updated FBTC Value, and the difference between the
Purchase Price as initially determined and the Purchase Price as recomputed, shall be paid by Vertex to Idemitsu within 10 days after
receipt of a written invoice from Idemitsu to Vertex for the amount of such difference. For purposes of this Section 4.8(c), the
FBTC Value shall be treated as adjusted or disallowed, inter alia, to the extent that the FBTC is treated by the Internal Revenue
Service, or reasonably determined by Idemitsu, to be includible in income or requiring a reduction of an otherwise allowable deduction.
(d) Idemitsu
shall have the right, but not the obligation, to purchase from Vertex quantities of Ultra Low Sulfur Diesel (“ULSD”),
up to an amount required by Idemitsu to blend with the Product to a ratio of at 0.1% ULSD or greater; provided that Vertex has such volumes
available for sale. The purchase price for any ULSD purchased by Idemitsu from Vertex shall be the monthly average of the daily prompt
CME ULSD futures (heating oil) settlement for each day during the month in which delivery occurred.
(e) The
Parties acknowledge and agree that any amounts owing with respect to the FBTC from one Party to another shall be included in the invoices
in accordance Article 13 unless the FBTC Value is zero at the time that the Product is delivered to and accepted by Idemitsu, in which
case Vertex shall not invoice any amount of the FBTC Value until such time that the FBTC Value increases and such increase shall be invoiced
by Vertex and paid by Idemitsu within three (3) days of receipt.
4.9 Tank
Space Sub-Lease. Vertex and Idemitsu shall enter into the Storage Agreement and Vertex shall provide storage space and services to
Idemitsu in accordance with the terms thereof.
Article
5
RENEWABLE IDENTIFICATION NUMBERS (RINS)
5.1 RINs. On each gallon of Product Vertex produces, Vertex shall use Reasonable Efforts to register to generate the maximum
permissible volume of RINs using the equivalence values for the Product, and corresponding to a “D” code of 4 under RFS2.
As of the Effective Date, the Parties anticipate that each gallon of Product sold and purchased hereunder shall enable Vertex to generate
one and seven-tenths (1.7) Renewable Identification Numbers (“RINs”) in which the “RR” component of each RIN as
defined at 40 CFR Section 80.1425(f), has a value of 17, in accordance with calculations contemplated under 40 CFR Section 80.1425(f)
and 40 CFR Section 80.1415(b)(4), and the “D” code of each RIN as defined in 40 CFR Section 80.1425(g)(2) has a value of 4.
Each Party will use reasonable commercial efforts to comply with the RIN Generation and Transfer Protocol set forth in Schedule 4,
which may be updated from time to time by mutual written agreement of the Parties. Pursuant to Section 5.4, Vertex shall transfer to Idemitsu
all RINs it generates; however, Idemitsu shall transfer back to Vertex and Vertex shall accept any RINs not verified pursuant to a QAP.
5.2 Representations and Warranties of Vertex Regarding RINs. With respect to the RINs transferred under this Master Agreement,
Vertex represents and warrants that upon delivery of RINs, each RIN sold pursuant to this Master Agreement:
| (i) | was properly generated pursuant to RFS2; |
| (ii) | was generated for Product meeting the specifications of Schedule 1 of this Master Agreement; |
| (iii) | is valid under RFS2; and |
| (iv) | has not been transferred to another party or retired. |
Vertex also represents and warrants that at the
time of delivery of RINs under this Master Agreement, it has the right to transfer such RINs pursuant to the applicable RFS2 Regulations
and that it has good title to the RINs and such RINs are free and clear of any claims, liens or encumbrances except to the extent arising
by, through and under Idemitsu.
5.3 Representations and Warranties of Both Parties Regarding RINs. Each Party represents and warrants to the other Party that:
(i) it is a registered user of the EPA Moderated Transaction System (“EMTS”) and has completed any registration
required by the RFS2 to perform each Party’s respective obligations under this Master Agreement; (ii) this Master Agreement and
such Party’s performance under this Master Agreement are in compliance with all its obligations under the RFS2 as the same may apply
to this Master Agreement and such Party’s performance thereunder; (iii) it has entered into this Master Agreement as principal (and
not as advisor, agent, broker or in any other capacity, fiduciary or otherwise), has a full understanding of the material terms and risks
of this Master Agreement, has made its own independent decision to enter into this Master Agreement and as to whether this Master Agreement
is appropriate or suitable for it based upon its own judgment and upon advice from such advisors as it has deemed necessary, and it is
capable of assuming those risks; and (iv) if a Party receives a request from EPA for documents pursuant to EPA’s authority under
the RFS2 Program, and the other Party has the documents being requested, the Party that received such EPA request shall notify the other
Party in writing and such other Party agrees to cooperate in responding to the EPA’s request.
5.4 RIN
Title and Risk Transfer. Vertex shall transfer title to Idemitsu and Idemitsu shall acquire from Seller all RINs generated pursuant
to the RFS2 on each gallon of Product sold hereunder, with a RIN equivalence value assigned to the Product in accordance with Vertex’s
registration with EPA, contemporaneously with transfer of title to Product under Section 4.1(a) of this Master Agreement. With respect
to the transfer of the RINs under this Master Agreement, Vertex will issue a corresponding Product Transfer Document containing all of
the information and statements required by RFS2 for Product Transfer Documents. Vertex and Idemitsu will subsequently effect the transfer
of custody to the RINs using the EMTS within the timeframe and in the manner required by RFS2. Vertex shall use Reasonable Efforts to
verify all RINs it generates pursuant to a QAP. In the event that Vertex transfers to Idemitsu RINs that are not verified pursuant to
a QAP, Idemitsu will separate such RINs as authorized under RFS2 and will subsequently transfer title and custody to such RINs back to
Vertex using the EMTS within five (5) Business Days of receipt of same, and Vertex shall accept and receive title and custody to such
RINs upon acceptance of the transfer in the EMTS. Provided that Idemitsu has not caused any unverified RINs to become invalid, Idemitsu
shall have no responsibility for any unverified RINs following transfer of the RINs back to Vertex.
5.5 Remedies
for Invalid RINs. Except for unverified RINs returned to Vertex as described above, if RINs transferred to Idemitsu are or become
invalid for purposes of RFS2 and Idemitsu was not the cause of the invalidity (each such affected RIN a “Deficient RIN”),
then, Vertex shall, at Vertex’s sole cost and expense, initiate a transfer of Qualified Replacement RINs to Idemitsu in a volume
equal to the deficient quantity within fifteen (15) Business Days after Vertex receives written notice (whether from Idemitsu or from
EPA) that the RINs are invalid for purposes of the RFS2 Program. In the event that Vertex fails or refuses to transfer sufficient Qualified
Replacement RINs, Vertex shall, within fifteen (15) days of Idemitsu’s written request, reimburse Idemitsu’s actual and documented
costs incurred in connection with Idemitsu obtaining Qualified Replacement RINs where the cost of such Qualified Replacement RINs purchased
by Idemitsu was no less favorable than that available to Idemitsu through good faith negotiations in an arms-length transaction.
If Vertex sells the Idemitsu
invalid RINs and such sale results in a Governmental Authority imposing fines and penalties upon Idemitsu, then notwithstanding anything
to the contrary contained herein, Vertex will reimburse Idemitsu for any and all such fines and penalties from the EPA or any other Governmental
Authority to the extent the fines and penalties are actually assessed against Idemitsu (as supported by reasonable documentation) as a
direct result of the Deficient RINs, except to the extent caused by the acts or omissions of Idemitsu.
In the event the provisions
of this Section 5.5 are invoked, Vertex and Idemitsu agree to work together in good faith to pursue an efficient, commercial and
practical resolution consistent with the foregoing options (or any combination thereof) in order to cure any default with respect to any
Deficient RINs; provided, however, the replacement RINs must be Qualified Replacement RINs unless otherwise mutually agreed.
In the event any Qualified
Replacement RINs transferred to Idemitsu are or become invalid for purposes of RFS2, such Qualified Replacement RINs will be treated as
Deficient RINs for purposes of this Section 5.5.
5.6 Product
Compliance. Vertex and Idemitsu each shall comply with all applicable provisions of RFS2, including, but not limited to, those provisions
related to generation, separation, transfer, retirement and reporting of RINs.
5.7 Obligation.
Notwithstanding anything in this Master Agreement to the contrary, if any Applicable Law, including without limitation RFS2, or EPA policy
or procedure implementing the RFS2 is enacted, implemented, modified, amended, or revoked so that the implementation of the Agreement
becomes impossible, impractical, or inconsistent with the requirements, protocols or procedures under the RFS2, the Parties shall work
in good faith to amend the Agreement to conform to the changed requirements or circumstances in order to maintain the original intent
of the Parties under the Agreement. If any Applicable Law, is enacted, implemented, modified, amended, or revoked such that RFS2 is no
longer in effect, each Party shall have the right to terminate the Agreement with no further obligation upon thirty (30) days’ notice
to the other Party; however if such repeal should happen it does not cancel the Parties rights and obligations related to invalid RINs
under this Master Agreement for a period of five (5) years from the date of receipt of notice of such invalidity.
Article
6
LCFS PATHWAY AND CARBON INTENSITY VALUES
6.1 CARB LCFS Pathways and Approved Carbon Intensity Values. As of the Effective Date, the Parties anticipate that each gallon
of Product sold and purchased hereunder shall have an assigned carbon intensity value from one or more approved fuel pathways in the CARB
LCFS, which will ultimately permit generation of LCFS Credits. Notwithstanding the foregoing, the Parties acknowledge and agree that pathway
approval, including any temporary pathway approval, may be delayed pending confirmation and validation of the required operational data,
and Vertex shall incur no liability to Idemitsu with respect to any delays that are beyond the reasonable control of Vertex. For each
transfer of Product, Vertex shall provide all documentation, data and information reasonably requested by Idemitsu to support the generation
of the LCFS Credits, including information on the feedstocks, production processes and emissions associated with the production of the
Product. The Parties shall develop a mutually acceptable LCFS Generation and Transfer Protocol, which may be updated from time to time
by mutual written agreement of the Parties. Vertex shall provide Idemitsu with the applicable carbon intensity value for each shipment
delivered (whether temporary CI or permanent CI).
6.2 LCFS Compliance Obligation. Vertex agrees and acknowledges that Idemitsu or its counterparties have the exclusive right
to serve as the importer and first fuel reporting entity for the Product and that Idemitsu owns the LCFS compliance obligations as the
regulated party pursuant to 17 CCR §§ 95480 et. seq., for the total volume of Product transferred to Idemitsu. Idemitsu agrees
to comply with all LCFS compliance obligations as a regulated party, including, as applicable, generating credits, the responsibility
for accounting for the base deficit in the annual credits and deficits balance calculation under 17 CCR §95485(b)(2) and any other
requirements of the LCFS. Vertex shall provide Idemitsu with a product transfer document (“PTD”) that prominently states the
volume, and applicable fuel pathway code(s) and average carbon intensity(ies) (except as provided below) of the Product sold to Idemitsu
pursuant to this Master Agreement.
6.3 Representations and Warranties of Vertex Regarding LCFS. With respect to the Product transferred under this Master Agreement,
Vertex represents and warrants that: (i) it is in compliance with the applicable requirements of the LCFS; (ii) all PTDs, documentation,
data, statements and information provided by Vertex to Idemitsu stating, regarding, containing information on, or in support of the carbon
intensity of the Product are true and accurate; and (iii) Vertex has not and will not generate LCFS Credits on the Product.
6.4 Product
Compliance. Vertex and Idemitsu each shall comply with all applicable provisions of LCFS, including, but not limited to, those provisions
related to generation, transfer, and reporting of LCFS Credits and Product volumes and transfers.
6.5 Remedies
for Invalid LCFS Credit. In the event that Idemitsu generates an invalid LCFS Credit and such invalidation is caused by Vertex, Vertex
shall, at Vertex’s sole expense, transfer to Idemitsu qualified replacement LCFS Credits in an amount equal to the amount of the
invalid LCFS Credits within thirty (30) days of the later of: (i) the discovery of the invalid LCFS Credits; or (ii) Idemitsu’s
demand for replacement. Notwithstanding the foregoing, Vertex shall not incur any liability to Idemitsu in the event that CARB demands
the retirement of replacement LCFS Credits by Vertex and does not require Idemitsu or any entities that have received the Product downstream
of Idemitsu to take any action with respect to the invalid LCFS Credits. In the event that Vertex fails, refuses, or is otherwise unable
to transfer sufficient qualified replacement LCFS Credits, Vertex shall, within ten (10) Business Days of Idemitsu’s written request,
reimburse Idemitsu’s actual and documented costs incurred in connection with Idemitsu obtaining qualified replacement LCFS Credits
where the cost of such qualified replacement LCFS Credits purchased by Idemitsu was no less favorable than that available to Idemitsu
through good faith negotiations in an arms-length transaction. Vertex also agrees to reimburse Idemitsu for all fines, penalties, settlement
costs, and reasonable legal fees actually incurred by Idemitsu, as supported by reasonable documentation from CARB or any other Governmental
Authority to the extent caused by such invalid LCFS Credits, except to the extent caused by the acts or omissions of Idemitsu.
6.6 Obligation. Notwithstanding anything in this Master Agreement to the contrary, Vertex’s obligation pursuant to this
Article 6 shall not apply in the event the CARB LCFS regulation is repealed or materially changed after the Effective Date. If
the CARB LCFS regulation is repealed or materially changed, such event will be treated as a change in law and handled in accordance with
Article 25.
Article
7
DELIVERY AND SCHEDULING
7.1 Delivery. Unless otherwise mutually agreed by the Parties in writing, following delivery of the First Delivery Volume, Vertex
shall deliver to Idemitsu the Committed Volume in accordance with the nominated schedule and the Delivery Schedule.
7.2 Quantity Measurement. The volume of Product being sold and delivered to Idemitsu shall be measured using outbound weight
certificates. The certificates shall be obtained from either scales, certified metering devices, or surveyor-gauged shore weights which
are certified as of the time of weighing and which comply with all Applicable Laws. The outbound weight certificates shall be determinative,
in the absence of manifest error, of the quantity of Product delivered by Vertex at the Delivery Location.
7.3 Quality Determination. The Product being sold and delivered to Idemitsu shall comply in all respects with the Specifications.
Idemitsu shall review the quality of the Product as more fully described in Section 7.9.
7.4 Third Party Inspector. A third party inspector shall determine the quantity and quality of Product delivered by Vertex,
with the costs associated with sampling and testing the quality and quantity by the third party inspector of the Product delivered to
be shared equally by the Parties.
7.5 Scheduling.
(a) Within three (3) months of COD, Vertex shall use Reasonable Efforts to produce the First Delivery Volume and provide Idemitsu with
written notice of production and availability for delivery to Idemitsu.
(b) No later than two (2) months prior to the delivery of a Phase 1 Committed Volume or Phase 2 Committed Volume, Vertex shall provide
Idemitsu with a rolling forecast (which may be by e-mail) of the expected volumes of Product and Regulatory Credits that Vertex will offer
to Idemitsu for the first month and the expected volumes of Products and Regulatory Credits that Vertex will offer to Idemitsu in the
subsequent two (2)() calendar months. The forecasted volumes for each month shall not be less than the minimum volume of the applicable
Committed Volume and shall include any forecasted Excess Volumes. The first month of such forecast period shall be considered binding
with the second month subject to increase or decrease of up to thirty percent (30%) and the third month forecast shall be non-binding.
For greater certainty, Vertex agrees and acknowledges that, except as otherwise excused herein, it will deliver to Idemitsu not less than
the minimum volume for the applicable Committed Volume each month; provided that Idemitsu has provided a Nominated Volume (as defined
below) not less than such minimum volume for the applicable Committed Volume for such month.
(c) By the third business day of each calendar month, Idemitsu shall provide Vertex with a written nomination (which may be by e-mail)
accepting the obligation to purchase the Committed Volumes (the “Nominated Volume”). In addition, Idemitsu,
at its option, may include some or all of the Excess Volumes offered in Vertex’s forecast for the subject month in its Nominated
Volume. With respect to any such Excess Volumes, Idemitsu’s nomination for the first month of such forecast period shall be considered
binding, with the second month subject to increase or decrease of up to thirty percent (30%) and the third month nomination for Excess
Volumes shall be non-binding. For greater certainty, Idemitsu agrees and acknowledges that it must nominate the Committed Volume each
month and that such nominations are firm and binding.
(d) Within two (2) business days of receipt of Idemitsu’s nomination, Vertex shall respond in writing to Idemitsu (which may
be by e-mail) which response shall (i) accept Idemitsu’s nomination of the Committed Volume, (ii) accept Idemitsu’s nomination
of Excess Volumes (if any) for the first month, and (iii) advise Idemitsu of the volume of Excess Volumes it will supply for months two
and three, if any. Vertex’s response for the first month shall constitute a “Confirmed Order.” Vertex
shall have no obligation to deliver Excess Volumes and Idemitsu shall have no obligation, to accept any Excess Volumes, unless such Excess
Volumes were included in a Confirmed Order. Unless otherwise mutually agreed by the Parties, Vertex shall aggregate daily volumes, with
deliveries to occur once per month. The quantities confirmed by Vertex in the Confirmed Order shall be considered binding on Vertex and
Idemitsu except to the extent otherwise excused by this Master Agreement.
(e) Idemitsu
shall purchase Products and Renewable Credits in accordance with a Confirmed Order. If so requested by Idemitsu in writing, Vertex shall
store Idemitsu’s Product for up to thirty (30) days in accordance with the terms and provisions of the Storage Agreement. The Parties
shall mutually cooperate to coordinate a delivery schedule (the “Delivery Schedule”) for the delivery of Confirmed
Orders into Idemitsu’s marine transport. Subject to Force Majeure and Scheduled Maintenance, Vertex shall deliver, and Idemitsu
shall receive, Confirmed Orders in accordance with the Delivery Schedule.
7.6 Failure
to Deliver or Take Delivery. In the event that Idemitsu fails to receive any portion of a Confirmed Order or fails to comply with
Article 4 or Article 7 of this Master Agreement, Vertex shall be entitled to receive damages in accordance with Section
4.1(e). In the event that Vertex fails to deliver any portion of a Confirmed Order or fails to comply with Article 4 or Article
7 of this Master Agreement, Idemitsu shall be entitled to receive damages in accordance with Section 4.1(f). Each Party shall
use Reasonable Efforts to mitigate any damages resulting from a Party’s failure to deliver or receive Product hereunder.
7.7 Certificate
of Analysis. In addition to use of an independent inspector to sample the quality of the Product, Vertex shall cause a laboratory
to issue a certificate of analysis (“Certificate of Analysis”) to Idemitsu for each shipment of Product, confirming
that the Product conforms to the Specifications and complies with federal and state requirements applicable at time of delivery.
7.8 Samples. Vertex agrees to maintain original sealed numbered samples of all Product taken prior to delivery to Idemitsu’s
designated transport. Vertex will label these samples to indicate date of shipment and the identity of the transport. Vertex will retain
these samples for six (6) months and shall send one such sample of each requested shipment to Idemitsu or its designated representative
or agent promptly upon written request.
7.9 Non-Conforming Product.
(a) Within ten (10) days after receipt of each shipment of Product, Idemitsu shall examine such Product for any failure to conform
to the “CARB DIESEL SPECIFICATION” in Schedule 1 of this Master Agreement Specifications or shortage (“Non-Conforming
Product”). All claims for any alleged Non-Conforming Product or shortage (whether based on contract, negligence, strict
liability, other tort or otherwise) shall be deemed WAIVED unless made in writing and received by Vertex within sixty (60) days after
Idemitsu’s receipt of the Product in respect to which such claim is made, or, if such claim is for non-delivery of such Product,
within sixty (60) days after the date upon which such Product was to be delivered. Failure of Vertex to receive written notice of any
claim with respect to Non-Conforming Product within the applicable time period shall be deemed an ABSOLUTE AND UNCONDITIONAL WAIVER by
Idemitsu of such claim.
(b) FOR
AND IN CONNECTION WITH ANY CLAIM UNDER SECTION 7.9(a), IDEMITSU’S EXCLUSIVE REMEDY SHALL BE FOR DAMAGES (SUBJECT TO THE LIMITATIONS
SET FORTH BELOW), AND VERTEX’S TOTAL LIABILITY FOR ANY AND ALL LOSSES AND DAMAGES SHALL IN NO EVENT EXCEED THE PURCHASE PRICE OF
THE PRODUCT IN RESPECT TO WHICH SUCH CAUSE ARISES, OR, AT VERTEX’S OPTION, THE REPAIR OR REPLACEMENT OF SUCH PRODUCT, AND IN NO
EVENT SHALL VERTEX BE LIABLE FOR INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES RESULTING FROM ANY CAUSE. EXCEPT FOR REMEDIES EXPRESSLY
PROVIDED FOR IN THIS MASTER AGREEMENT, VERTEX SHALL NOT BE LIABLE FOR, AND IDEMITSU ASSUMES LIABILITY FOR AND AGREES TO RELEASE, DEFEND,
INDEMNIFY AND HOLD VERTEX HARMLESS FROM AND AGAINST, ALL DAMAGES, CLAIMS, COSTS AND EXPENSES (INCLUDING REASONABLE ATTORNEY’S FEES)
RESULTING FROM PERSONAL INJURY, ILLNESS, DEATH AND/OR PROPERTY DAMAGE SUFFERED BY ANY PERSON OR ENTITY IN CONNECTION WITH THE HANDLING,
TRANSPORTATION, POSSESSION, PROCESSING, FURTHER MANUFACTURE, OTHER USE OR RESALE OF THE PRODUCT AFTER DELIVERY TO IDEMITSU, WHETHER THE
PRODUCT IS USED ALONE OR IN COMBINATION WITH ANY OTHER MATERIAL. In no event shall Vertex be responsible for transportation charges for
the return of the Product, unless such transportation charges are authorized in advance and in writing by Vertex.
Article
8
LOGISTICS AND TRANSPORTATION
8.1 Logistics Responsibilities. Idemitsu agrees to secure and maintain all necessary agreements, licenses, documents and contracts
to transport Product in a Confirmed Order following delivery at the Delivery Point. Vertex shall be solely responsible for arranging all
transportation and logistics for the delivery of Product to the Delivery Point, including the cost thereof. Idemitsu shall be solely responsible
for the arrangement of transportation and logistics necessary to receive and transport Product in a Confirmed Order following receipt
by Idemitsu at the Delivery Point; provided that Vertex shall pay Idemitsu the cost of transportation and logistics to deliver the Product
to Port of Los Angeles or the Port of Long Beach, California regardless of whether the Product is actually delivered to Los Angeles or
Long Beach or another location at Idemitsu’s sole discretion.
8.2 Logistics Costs. Idemitsu will exercise Reasonable Efforts to minimize logistics and transportation costs in a similar manner
that it does for its own operations. Vertex shall credit Idemitsu for all reasonable and documented third party freight costs incurred
by Idemitsu to take delivery of the Product at the Delivery Point and deliver Product to the Port of Los Angeles or the Port of Long Beach,
California, as such freight costs are further described in Schedule 2 regardless of whether the Product is actually delivered to
Los Angeles or Long Beach or another location at Idemitsu’s sole discretion. Vertex shall not be liable for demurrage applicable
to unloading of the Product, however Vertex shall be liable for demurrage at loading at the Delivery Point to the extent such delay is
caused by Vertex.
8.3 Refinery and Terminal Access Requirements. Idemitsu and its transporters shall comply with all Applicable Laws and all Refinery,
dock and terminal access and loading requirements, a copy of which shall be made available to Idemitsu.
Article
9
COMPLIANCE WITH APPLICABLE LAWS
9.1 Compliance with Laws. Each Party shall, in the performance of its duties under this Master Agreement, comply in all material
respects with all Applicable Laws. For purposes of the audit provisions set forth in Article 24, each Party shall maintain the
records required to be maintained by Applicable Laws and shall make such records available to the other Party upon request.
9.2 Reports. All reports or documents rendered by either Party to the other Party shall, to the best of such rendering Party’s
knowledge and belief, accurately and completely reflect the facts about the activities and transactions to which they relate. Each Party
shall promptly notify the other Party if at any time such rendering Party has reason to believe that the records or documents previously
furnished to such other Party are no longer accurate or complete in any material respect.
9.3 Permits and Licenses. Vertex shall be responsible for obtaining and maintaining throughout the Term all registrations, permits
and licenses required to be maintained under Applicable Law in connection with the construction, ownership and operation of the Refinery
and RD Project and the production of Product and generation of RINs.
9.4 Environmental Matters. Vertex shall be responsible for complying with all Environmental Laws with respect to the ownership
and operation of the Refinery and the RD Project and production of Product. VERTEX SHALL INDEMNIFY AND HOLD HARMLESS IDEMITSU FOR ANY
LIABILITIES ARISING OUT OF THE OWNERSHIP AND OPERATION OF THE REFINERY AND RD PROJECT AND PRODUCTION OF PRODUCT, EXCEPT TO THE EXTENT
SUCH LIABILITIES ARE CAUSED BY THE NEGLIGENCE OR WILLFUL MISCONDUCT OF IDEMITSU, ITS EMPLOYEES, CONTRACTORS, TRANSPORTERS OR OTHER PARTIES
UNDER ITS CONTROL.
Article
10
FORCE MAJEURE
10.1 Event of Force Majeure. Performance by either Party under this Master Agreement may be suspended without liability to the
other Party to the extent, and for so long as an event of Force Majeure renders a Party unable to perform, in whole or in part, any of
its obligations hereunder; provided, however, that the Party unable to perform shall use all Reasonable Efforts to avoid
or remove the event of Force Majeure. During the period that performance by one of the Parties of a part or whole of its obligations has
been suspended by reason of an event of Force Majeure, the other Party likewise may suspend the performance of all or a part of its obligations
to the extent that such suspension is commercially reasonable, except for any payment and indemnification obligations incurred prior to
the event of Force Majeure.
10.2 Notice. If an event of Force Majeure renders a Party unable, in whole or in part, to carry out its obligations under this
Master Agreement, that Party must give the other Party notice and full particulars of the event of Force Majeure (including its known
or estimated duration) in writing promptly after the occurrence of the causes relied on, or promptly give notice by telephone and follow
the notice with a written confirmation within forty-eight (48) hours. The Party providing the notice shall use Reasonable Efforts to (i)
ameliorate the conditions, (ii) resume the continuation of its performance, and (iii) minimize the impact of the condition on the other
Party.
10.3 Resumption of Performance. Performance of a Party’s Obligations under this Master Agreement shall resume to the extent
performance may resume following the end of or the amelioration of the event of Force Majeure, in accordance with the terms of this Master
Agreement.
Article
11
REPRESENTATIONS, WARRANTIES AND COVENANTS
11.1 Mutual Representations, Warranties and Covenants. Each Party represents and warrants to the other Party as of the date hereof
and as of the date of each purchase and sale of Product hereunder, that:
(a) It is duly organized and validly existing under the laws of the jurisdiction of its organization or incorporation and in good standing
under such laws.
(b) It has the corporate, governmental or other legal capacity, authority and power to execute this Master Agreement, to deliver this
Master Agreement and to perform its obligations under this Master Agreement and has taken all necessary action to authorize the foregoing.
(c) The execution, delivery and performance described in the preceding paragraph (b) do not violate or conflict with any Applicable
Law, any provision of its constitutional documents, any order or judgment of any court or Governmental Authority applicable to it or any
of its assets or any contractual restriction binding on or affecting it or any of its assets.
(d) Its obligations under this Master Agreement constitute its legal, valid and binding obligations, enforceable in accordance with
its terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium, fraudulent conveyance or similar laws affecting creditors’
rights generally and subject, as to enforceability, to equitable principles of general application regardless of whether enforcement is
sought in a proceeding in equity or at law and an implied covenant of good faith and fair dealing).
(e) No Event of Default (as defined herein or in the Exhibits) with respect to it has occurred and is continuing, and no such event
or circumstance would occur as a result of its entering into or performing its Obligations under this Master Agreement.
(f) There is not pending or, to its knowledge, threatened against it any action, suit or proceeding at law or in equity or before any
court, tribunal, Governmental Authority, official or any arbitrator that is likely to affect the legality, validity or enforceability
against it of this Master Agreement or its ability to perform its Obligations under this Master Agreement.
(g) It is not relying upon any representations of the other Party, other than those expressly set forth in this Master Agreement.
(h) It has entered into this Master Agreement as principal (and not as advisor, agent, broker or in any other capacity, fiduciary or
otherwise), with a full understanding of the material terms and risks of the same and is capable of assuming those risks.
(i) It has made commercial determinations set forth in this Master Agreement based upon its own judgment and any advice from its advisors
as it has deemed necessary, and not in reliance upon any view expressed by the other Party.
(j) The other Party (i) is acting solely in the capacity of an arm’s-length contractual counterparty with respect to this Master
Agreement, and (ii) is not acting as a financial advisor or fiduciary or in any similar capacity with respect to this Master Agreement.
(k) Except with respect to any services provided by Basis Energy or Wilash, LLC, neither it nor any of its Affiliates has negotiated
with any finder, broker or other intermediary in connection with the Obligations. None of its directors, officers, employees or agents
or those of its Affiliates has received or will receive any commission, fee, rebate, gift or entertainment of significant value in connection
with this Master Agreement.
11.2 Representations, Warranties and Covenants of Vertex. Vertex represents and warrants to Idemitsu as of the date hereof and
as of the date of each purchase and sale of Product hereunder, that:
(a) Vertex will give Idemitsu at least twenty-one (21) days’ prior notice (or, if such notice is not possible, as much prior
notice as is reasonable under the circumstances) of any Scheduled Maintenance event that is expected to adversely impact the delivery
of Products at the Refinery.
(b) Vertex will use Reasonable Efforts to achieve the COD within eighteen (18) months of the Closing.
(c) Vertex will deliver a written notice to Idemitsu at least thirty (30) days before the COD.
(d) Vertex shall transfer custody of RINs generated on Product supplied to Idemitsu under this Master Agreement within five (5) days
of transfer of Product to Idemitsu.
Article
12
LIMITATION ON DAMAGES
EXCEPT
AS DAMAGES ARE EXPRESSLY PROVIDED FOR IN THIS MASTER AGREEMENT, THE PARTIES’ LIABILITY FOR DAMAGES IS LIMITED TO DIRECT, ACTUAL
DAMAGES ONLY, AND NEITHER PARTY SHALL BE LIABLE FOR SPECIFIC PERFORMANCE, LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES, OR SPECIAL,
CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, IN TORT, CONTRACT OR OTHERWISE, OF ANY KIND, ARISING OUT OF OR IN
ANY WAY CONNECTED WITH THIS MASTER AGREEMENT, INCLUDING THE PERFORMANCE, THE SUSPENSION OF PERFORMANCE, THE FAILURE TO PERFORM OR THE
TERMINATION OF THIS MASTER AGREEMENT; PROVIDED THAT, THE LIMITATIONS IN THIS PARAGRAPH SHALL NOT APPLY WHERE A CLAIM FOR DAMAGES IS MADE
BY A THIRD PARTY, FOR WHICH INDEMNITY WOULD OTHERWISE BE AVAILABLE HEREUNDER. EACH PARTY
ACKNOWLEDGES THE DUTY TO MITIGATE DAMAGES HEREUNDER.
Article
13
PRICE AND PAYMENT OF INVOICES
13.1 Invoicing and Payment.
(a) Provisional Invoice. Promptly following the transfer of title to Product and associated Regulatory Credits to Idemitsu,
Vertex shall transmit to Idemitsu a provisional invoice for the Confirmed Order (a “Provisional Invoice”) (facsimile
or electronic copies acceptable). The Provisional Invoice Price and any other amounts due Vertex under the subject transaction (if any)
shall be provided together with any supporting Shipping Documents. For purposes hereof “Shipping Documents”
shall mean: (i) for delivery by ocean going vessels, properly issued and endorsed clean, original bills of lading, and copies of certificates
of quality and quantity; (ii) for domestic delivery by barge, copies of certificates of quality and quantity; (iii) for other modes of
delivery, meter tickets, ware house receipts or similar title documents issued by the loading terminal or truck rack; and certificates
of quality and quantity.
(b) Provisional Invoice Price. The provisional invoice price (the “Provisional Invoice Price”) shall
be the product of (i) the average mean price per gallon for Product and Regulatory Credit, as calculated in accordance with Schedule
2 and utilizing indices and postings for the previous calendar month; (ii) the Estimated Volume of Product and Regulatory Credits
delivered as of the date of the Provisional Invoice; and (iii) an initial Logistics Cost of [***]. For purposes here of the Estimated
Volume shall be equal to the volume specified in the applicable Confirmed Order.
(c) True-Up Invoice. Within ten (10) days of the end of each calendar month, Vertex shall prepare and deliver to Idemitsu an
invoice (the “True-Up Invoice”) that corrects the Provisional Invoices issued since the date of the last True-Up
Invoice to reflect the actual prices of Product and Regulatory Credits, actual volumes of Products and Regulatory Credits delivered to
Idemitsu in the month (provided that, such volumes shall not be less than the greater of the Committed Volume or the volume of Product
actually delivered to Idemitsu at the Delivery Point), and actual transport and logistics costs (as supported by reasonable documentation)
to the subject delivery, all in accordance with Schedule 2 (the “Purchase Price”). In addition, the True-Up
Invoice shall include a credit, in Idemitsu’s favor for the cost of capital with respect to each shipment for the time period from
when Vertex received payment for the subject Product to the date that the cargo was loaded onto Idemitsu’s vessel, calculated at
the rate of Libor plus 4% or the equivalent when Libor is replaced by a comparable index. Vertex shall have the right to issue additional
True-Up Invoices until all numbers are final and accurate. If the Purchase Price specified in the True-Up invoice is greater than the
corresponding Provisional Invoice Price, the difference shall be payable by Idemitsu to Vertex within three (3) days of receipt of the
True-Up Invoice. If the Provisional Invoice Price is greater than the Purchase Price, Idemitsu shall instruct Vertex to either issue a
credit for such amount, to be applied to the next invoice (except with respect to the final delivery hereunder, any outstanding amount
shall be paid in cash, rather than a credit to Idemitsu) or pay Idemitsu via wire transfer within three (3) days of receipt of the True-Up
Invoice.
(d) Form of Payment. Each Party shall pay, or cause to be paid, by electronic funds transfer of same day funds in U.S. Dollars,
all amounts that become due and payable by such Party to a bank account or accounts designated by and in accordance with instructions
issued by the other Party. Each payment of undisputed amounts (the disputed portion of which is addressed under Section 13.2) owing
hereunder shall be in the full amount due without reduction or offset for any reason (except as otherwise expressly provided herein),
including Taxes, exchange charges or bank transfer charges.
(e) Payment Date. Each invoice issued by a Party pursuant to this Article 13 shall be due and payable within three (3)
days of receipt of an invoice. If any payment due date should fall on a Saturday, Sunday or bank holiday, then such payment shall be made
on the nearest preceding banking day.
(f) Interest. All amounts invoiced under this Master Agreement and not paid by the due date as defined herein shall accrue interest
at the Default Interest Rate from the due date until the date of payment.
13.2 Disputed Payments. In the event of a disagreement concerning any statement or invoice issued pursuant hereto, the owing
Party shall make payment of the total undisputed amount and shall promptly notify the receiving Party of the reasons for such disagreement.
Statements may be contested by a Party only if, within a period of two (2) years after a Party’s receipt thereof, the owing Party
serves on the receiving Party notice questioning their correctness. If no such notice is served, statements shall be deemed correct and
accepted by all Parties. The Parties shall cooperate in resolving any dispute expeditiously. If the Parties are unable to resolve such
dispute within thirty (30) days after receipt of such notice, the Parties shall submit such dispute for resolution in accordance with
the dispute resolution procedures set forth in Section 19.3.
13.3 Rate or Index No Longer Available.
(a) If (1) a publication that contains a rate or index used in this Master Agreement ceases to be published for any reason or (2) such
a rate or index ceases to exist, is materially modified or no longer is used so as systematically to change its economic result, or is
disaggregated, displaced or abandoned, for any reason, then the Parties shall promptly discuss, with the aim of jointly selecting a rate
or index or rates or indices to be used in place of such rates and indices that maintains the intent and economic effect of those original
rates or indices. If the Parties fail to agree on a replacement rate or index, the matter shall be resolved by an industry expert in accordance
with Section 19.2.
(b) If any rate used in this Master Agreement is not published for a particular date, but the publication containing such rate continues
to be published and the rate itself continues to exist, the Parties shall use the published rate in effect for the date such rate was
most recently published prior to the particular date, unless otherwise provided in this Master Agreement.
13.4
Other Statements. If any other amount is due from one Party to the other Party in connection with the Obligations under
this Master Agreement, and if provision for the invoicing of that amount due is not made elsewhere in this Master Agreement (including
any applicable Exhibits or Schedules), then, subject to the provisions of this Article 13, the Party to whom such amount is due
shall furnish a statement therefor to the other Party, along with pertinent information showing the basis for the calculation thereof.
Upon request, the Party who issues a statement under this Section 13.4 shall provide reasonable supporting documentation to substantiate
any amount claimed to be due. Any invoice issued pursuant to this Section 13.4 shall be due and payable, in fully collected funds,
in accordance with the provisions of this Article 13.
13.5 Performance Assurance. Vertex reserves the right, among other remedies under this Master Agreement, to suspend further deliveries
in the event Idemitsu fails to pay for any one (1) payment when that payment becomes due. In exchange for extension of credit by Vertex,
Idemitsu agrees to furnish Vertex with sufficient financial information to allow Vertex to perform adequate due diligence necessary to
support credit needs. Should Idemitsu’s payment performance or financial condition following the Effective Date deteriorate and
become unsatisfactory to Vertex, remedies may include, but are not limited to, reducing available monthly credit, rescinding or reducing
payment terms, requiring cash payments in advance, or requiring other security satisfactory to Vertex for future deliveries and for the
Product already delivered.
Article
14
DEFAULT AND REMEDIES
14.1 Events of Default. Notwithstanding any other provision of this Master Agreement, an event of default (an “Event
of Default”) shall be deemed to occur with respect to a Party (provided that such Event of Default was not caused by the
other Party) when:
(a) Such Party fails to make payment or issue a credit when due under this Master Agreement, within five (5) days of a notice of nonpayment
with respect thereto.
(b) Other than a Default described in Sections 14.1(a), (c), (d) and (e), such Party fails to perform any
obligation or covenant to the other Party under this Master Agreement, which failure is not cured to the satisfaction of the other Party
(in its reasonable discretion) within thirty (30) Business Days from the date that such Party receives written notice that corrective
action is needed, if such cure is reasonably possible within such thirty (30) Business Days. If such Default cannot be reasonably cured
within thirty (30) Business Days of receipt of notice of Default, the Defaulting Party shall within such thirty (30) Business Days provide
a reasonably satisfactory action plan to cure such Default and complete such cure within ninety (90) Business Days of receipt of the notice
of Default.
(c) Except as otherwise set forth in this Master Agreement (including the applicable Exhibits and Schedules), such Party breaches any
material representation or material warranty made or repeated or deemed to have been made or repeated in this Master Agreement by such
Party, or any warranty or representation in this Master Agreement proves to have been incorrect or misleading in any material respect
when made or repeated or deemed to have been made or repeated under this Master Agreement; provided, however, that if such
breach is curable, it is only an Event of Default if such breach is not cured to the reasonable satisfaction of the other Party (in its
reasonable discretion) within sixty (60) Business Days from the date that such Party receives notice that corrective action is needed.
(d) Such Party becomes Bankrupt.
(e) A Change of Control or assignment in violation of the provisions of Article 23.
(f) Any default by Guarantor under the Guaranty Agreement, unless such Guaranty Agreement is replaced with a reasonably acceptable
form of credit assurance within three (3) Business Days after receipt of a notice of such default, unless otherwise provided herein.
14.2 Remedies for Events of Default“. Notwithstanding any other provision of this Master Agreement, upon the occurrence
of an Event of Default with respect to either Party (the “Defaulting Party”), the other Party (the “Performing
Party”) shall in its sole discretion, in addition to all other remedies available to it and without incurring any Liabilities
to the Defaulting Party or to third parties, be entitled to do one or more of the following: (a) suspend its performance under this Master
Agreement with prior notice (but after the expiration of any applicable cure period set forth in Section 14.1) to the Defaulting
Party, (b) proceed against the Defaulting Party for damages (subject to the limitations set forth in Section 7.3(c), Section
7.6 and Article 12), or (c) terminate this Master Agreement.
Article
15
INDEMNIFICATION AND CLAIMS
15.1 Duty to Indemnify. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW AND EXCEPT
AS SPECIFIED OTHERWISE ELSEWHERE IN THIS MASTER AGREEMENT, EACH PARTY SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS THE OTHER PARTY, ITS AFFILIATES,
MEMBERS, DIRECTORS, AGENTS, REPRESENTATIVES, STOCKHOLDERS AND EMPLOYEES, AGAINST ANY LIABILITIES (WHETHER STRICT, ABSOLUTE OR OTHERWISE)
CAUSED BY OR RESULTING FROM THE NEGLIGENCE OR WILLFUL MISCONDUCT OR VIOLATION OF APPLICABLE LAW BY SUCH PARTY OR ITS AGENTS, CONTRACTORS,
EMPLOYEES OR REPRESENTATIVES.
15.2 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 claim, demand,
suit or proceeding brought against it which may give rise to the Indemnifying Party’s obligations under this Master Agreement (such
claim, demand, suit or proceeding, a “Third Party Claim”), and shall furnish to the Indemnifying Party the 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.
15.3 Defense of Indemnity Claim. The Indemnifying Party shall have the right to assume the defense, at its own expense and by
its own counsel, of any Third Party Claim; provided, however, 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. If requested by the Indemnifying Party, the Indemnified Party shall reasonably
cooperate with the Indemnifying Party and its counsel in contesting any claim, demand or 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.
15.4 Settlement of Indemnity Claim. 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
if such proceedings involves an Event of Default by the Indemnifying Party which shall have occurred and be continuing. The mere purchase
and existence of insurance does not reduce or release either Party from any liability incurred or assumed under this Master Agreement.
Article
16
TAXES
16.1 Taxes Generally.
(a) Vertex shall pay or be responsible for the payment of any and all Taxes levied by any Governmental Authority with respect to the
Product arising at or prior to the delivery to Idemitsu at the Delivery Point. Idemitsu shall be responsible for all Taxes with respect
to the Product arising after the delivery to Idemitsu at the Delivery Point. Idemitsu shall provide a resale certificate if applicable.
Idemitsu shall have no responsibility for any Taxes levied by any Governmental Authority with respect to the RD Project, the Refinery
and other facilities and assets owned or operated by Vertex.
(b) Each Party shall indemnify and hold the other Party harmless from any and all Tax liability and reasonably incurred expenses with
respect thereto (including without limitation fines, penalties and reasonable attorneys’ fees) in respect to the collection, disbursement
and reporting of all such Taxes for which it is responsible pursuant to this Article 16, unless such expenses, fines, penalties
or attorneys’ fees are the result of the other Party’s intentional misconduct, willful disregard or gross negligence.
(c) Neither Party shall be liable for the other Party’s income Taxes or any franchise Tax measured by capital, capital stock,
net worth, gross margin or gross profit including any withholding Taxes imposed on gross amounts, any minimum or alternative minimum Tax
or any other items of Tax preference.
(d) The Parties agree that neither this Master Agreement nor the Obligations create a partnership for U.S. federal income Tax purposes
or otherwise. In the event that it is so construed, however, the Parties agree to be excluded from the provisions of Subchapter K of the
U.S. Internal Revenue Code of 1986.
(e) If Idemitsu is exempt from any of the Taxes, which are the responsibility of Idemitsu hereunder, Idemitsu shall promptly furnish
to Vertex a proper and valid exemption certificate associated with such exemption. If Idemitsu furnishes such a proper and valid exemption
certificate, Idemitsu shall be relieved of its obligations to pay Taxes hereunder related to such exemption and Vertex shall assist Idemitsu
in obtaining a refund from any Governmental Authority of any relevant Taxes previously paid by or on behalf of Idemitsu in the absence
of such certificate.
16.2 Property Taxes. Vertex shall be liable for all Taxes assessed against the RD Project premises, facilities and any other
fixtures, equipment or machinery located thereon or used in connection therewith.
Article
17
INSURANCE
17.1 Insurance. Each Party shall procure and maintain in full force and effect throughout the Term of the Master Agreement insurance
coverages in the types and amounts specified in Schedule 3 and with insurance companies rated not less than A-, VII by A.M. Best,
or otherwise reasonably satisfactory to the other Party. Except as otherwise set forth on Schedule 3, all insurance purchased by
a Party shall include the other Party as an additional named insured as to risks and perils insured.
17.2 Additional Insurance Requirements.
(a) To the extent of the specific indemnities provide by each of the Indemnifying Parties hereunder, each policy provided pursuant
to Section 17.1 shall include an endorsement that the underwriters waive all rights of subrogation against the other Party. To the extent
of the specific indemnities provide by each of the Indemnifying Parties hereunder, each policy provided pursuant to Section 17.1
(except for Workers’ Compensation and Employer Liability Insurance) shall include an endorsement naming the other Party as Additional
Insured. With respect to policies provided pursuant to Section 17, each Party shall cause its insurance broker or agent to furnish
the other Party with insurance certificates satisfactory to the other Party, evidencing the existence of the coverages and endorsements
required. All certificates of insurance shall specify that no insurance will be canceled during the Term of this Master Agreement unless
the other Party is given thirty (30) days advance written notice prior to cancellation becoming effective. Such certificates shall be
provided prior to the COD. Each Party shall also provide the other Party with renewal certificates within thirty (10) days following expiration
of the policy.
(b) The mere purchase and existence of insurance does not reduce or release either Party from any liability incurred or assumed under
this Master Agreement.
(c) Each Party shall comply with all notice and reporting requirements with respect to its insurance policies and timely pay all premiums.
Article
18
CONFIDENTIALITY
18.1 Confidentiality Obligation. Each Party shall maintain the confidentiality of the Confidential Information of the
other Party as required by this Article 18. The term “Confidential Information” as used in this Master
Agreement shall mean all information provided by or on behalf of a Party, as it relates to the Refinery, the RD Project, and the purchase
and sale of Product hereunder, whether oral, written or otherwise recorded, including without limitation all reports, analysis, financial
information, forecasts and budgets, information recorded electronically, on computer or by CD and the substance and content thereof, all
discussions between the Parties concerning or relating to the Refinery, the RD Project, and the purchase and sale of Product, and all
information provided through such discussions and the existence of those discussions, and this Master Agreement. Except as otherwise set
forth in this Article 18, the Confidential Information shall be kept confidential and shall not be released to any entity other
than a Party or its Affiliates without the express prior written consent of the other Party. The confidentiality obligations under this
Master Agreement shall survive termination of this Master Agreement for a period of three (3) years following the termination date. Notwithstanding
the foregoing, each Party agrees that to the extent necessary for its performance hereunder, Confidential Information may be shared with
its Representatives (as hereafter defined); provided that, the disclosing Party shall remain responsible for any breach of the confidentiality
requirements set forth herein by its Representatives. For purposes hereof, “Representative” means a Party’s
Affiliates, and the Party’s and its Affiliates’ respective directors, officers, employees, contractors, agents, attorneys
and/or advisors.
18.2 Information Not Considered Confidential Information. Confidential Information shall not include, and the confidentiality
obligations under this Article 18 shall not apply to:
(a) information which is in the public domain through no fault of the receiving Party or its Representatives;
(b) information which is published or otherwise becomes part of the public domain through no fault of the receiving Party or its Representatives;
(c) information which the receiving Party can demonstrate was in its or its Affiliate’s possession at the time of disclosure
and was not acquired by receiving Party or such Affiliate directly or indirectly from a disclosing Party on a confidential basis;
(d) information which becomes available to a receiving Party on a non-confidential basis (whether directly or indirectly) from a source
which, to the best of the receiving Party’s knowledge, did not acquire the information on a confidential basis; or
(e) information which is independently developed by a receiving Party not having access to the confidential information of the disclosing
Party.
18.3 Permitted Disclosure. A Party may disclose Confidential Information to the extent necessary in the following circumstances:
(a) A Party (the “receiving Party”) is required to disclose Confidential Information by a Governmental Authority,
court order, Applicable Laws, or stock exchange rules; or in connection with the preparation of Tax returns, including communications
with any Governmental Authority with respect thereto or proceedings relating to Taxes. In the case of such disclosure, to the extent practicable,
the receiving Party shall provide the other Party (the “disclosing Party”) with prompt notice thereof so that
the disclosing Party may seek a protective order or other appropriate remedy. In the event that a protective order or other remedy is
not obtained, the receiving Party will furnish only that portion of the Confidential Information which the receiving Party is advised
by an opinion of its counsel is required, and the receiving Party will exercise its Reasonable Efforts to obtain reliable assurance that
confidential treatment shall be accorded the Confidential Information so furnished or disclosed.
(b) A Party may disclose Confidential Information to a third party connected with a potential financing, acquisition, divestiture,
sale, or similar type of transactions so long as such third party signs a confidentiality agreement with terms similar to the terms contained
in this Master Agreement, and so long as such third party is not a direct competitor of the other Party.
Article
19
GOVERNING LAW
19.1 Choice of Law. This Master Agreement shall be governed by, construed and enforced under the laws of the State of Texas without
giving effect to its conflicts of laws principles.
19.2 Industry Expert. In the event of a Dispute under this Master Agreement concerning the calculation of costs or payments under
the formulas contained in Schedule 2, either Party shall be entitled to refer such matter to a mutually acceptable industry expert.
In the event the Parties are unable to agree on the selection of an industry expert, each Party shall select an industry expert and the
two selected experts shall appoint an industry expert to resolve the dispute. The Parties shall cooperate with such expert in connection
with its efforts to resolve such Dispute and neither Party shall commence any litigation regarding such Dispute for a period of thirty
(30) days following the selection of the industry expert. The Parties shall share equally the costs of any such industry expert.
19.3 Dispute Resolution. Except with respect to disputes governed by the provisions of Section 19.2, in the event a Dispute
arises in connection with the performance or non-performance of or otherwise in connection with this Master Agreement, either Party has
the right to notify the other Party in writing of the substance of such Dispute. If said Dispute cannot be settled within thirty (30)
days after such notice, the Parties shall submit such matter to arbitration using three (3) arbitrators under the Commercial Arbitration
Rules of the American Arbitration Association, or using another set of rules mutually acceptable to the Parties. Each Party shall appoint
one arbitrator and the two arbitrators so appointed will select the third arbitrator. The arbitrators shall have no power to award damages
inconsistent with this Master Agreement. All aspects of the arbitration shall be treated as confidential and judgment on the arbitrators’
award may be entered in any court having jurisdiction. The expenses of the arbitration shall be shared equally by the Parties, and each
Party shall bear its own legal costs, unless the arbitrators determine that legal costs shall be otherwise assessed. Nothing contained
in any indemnification provision hereunder shall be construed as having any bearing on the award of fees under this Section. The foregoing
dispute resolution process shall in no event be deemed to excuse either Party from continuing to fulfill its respective obligations under,
or prevent or impede either Party from exercising its rights or remedies set forth in, this Master Agreement.
Article
20
NOTICES
All invoices, notices, requests
and other communications given pursuant to this Master Agreement shall be in writing and sent by facsimile, electronic mail or overnight
courier. A notice shall be deemed to have been received when transmitted on a Business Day (if receipt is confirmed by the notifying Party’s
transmission report), or on the following Business Day if received after 5:00 p.m. CST, at the respective Party’s address set forth
below and to the attention of the person or department indicated. A Party may change its address, facsimile number or electronic mail
address by giving written notice in accordance with this Article 20, which notice is effective upon receipt.
If to Vertex to:
Vertex Refining Alabama LLC
1331 Gemini St., Suite 250
Houston, TX 77058
E-Mail: XXXXXXXXX
If to Idemitsu :
Idemitsu Apollo Renewable Corp.
Attention: Bob Lackner
1831 16th Street
Sacramento, CA 95811
E-Mail: XXXXXXXXX
Article
21
NO WAIVER, CUMULATIVE REMEDIES
21.1 No Waiver. The failure of a Party hereunder to assert a right or enforce an obligation of the other Party shall not be deemed
a waiver of such right or obligation. The waiver by any Party of a breach of any provision under this Master Agreement shall not operate
or be construed as a waiver of any other breach of that provision under this Master Agreement, whether of a like kind or different nature.
21.2 Cumulative Remedies. Each and every right granted to the Parties under this Master Agreement or allowed to the Parties by
law or equity shall be cumulative and may be exercised from time to time in accordance with the terms thereof and Applicable Law.
Article
22
NATURE OF THE OBLIGATIONS AND RELATIONSHIP OF PARTIES
22.1 No Partnership. Without limiting the provisions of Section 16.1(d), this Master Agreement shall not be construed
as creating a partnership, association or joint venture between the Parties. It is understood that each Party shall have complete charge
of its own employees and agents in the performance of its duties hereunder, and nothing herein shall be construed to make either Party,
or any employee or agent of such Party, an agent or employee of the other Party.
22.2 No Authority. Neither Party shall have the right or authority to negotiate, conclude or execute any contract or legal document
with any third person on behalf of the other Party, to assume, create, or incur any liability of any kind, express or implied, against
or in the name of the other Party, or to otherwise act as the representative of the other Party, unless expressly authorized in writing
by the other Party.
Article
23
ASSIGNMENT AND CHANGE OF CONTROL
23.1 Successors and Assigns. This Master Agreement shall inure to the benefit of and be binding upon the Parties, their respective
successors and permitted assigns.
23.2 No Assignment. Neither Party shall assign this Master Agreement or its rights or interests hereunder in whole or in part,
or delegate its obligations hereunder in whole or in part, without the express written consent of the other Party (which shall not be
unreasonably withheld, conditioned or delayed) except in the case of assignment to an Affiliate if (i) such Affiliate assumes in writing
all of the obligations of the assignor, and (ii) the assignor provides the other Party with evidence of the Affiliate’s financial
responsibility at least equal to that of the assignor. The foregoing provisions to the contrary notwithstanding, (a) Vertex’s assignment
to a special purpose vehicle for purposes of financing will be deemed a permissible assignment for which no consent is required, and (b)
Vertex shall have the right to assign this Master Agreement without consent as collateral or in connection with any financing for the
RD Project.
23.3 Exception for Certain Events. Either Party may transfer all, but not less than all, of its interest in this Master Agreement
if (i) such assignment or transfer is associated with a Change of Control of a Party or the sale of substantially all of the assets of
the RD Project (with respect to Vertex) or the assets or equity of Idemitsu (with respect to Idemitsu), as the case may be, and (ii) the
transferee or assignee (x) assumes in writing all of the obligations of the assignor or transferor and (y) the successor entity resulting
from any such Change of Control or the Person that otherwise acquires all or substantially all of the assets of the RD Project or assets
or equity of Idemitsu, as the case may be, is at least as creditworthy as the assignor or transferor.
23.4 Failure to Assume Obligations. Contemporaneously with any assignment under this Article 23, the assigning Party shall
deliver to the other Party written acknowledgement of the assignee acceding to the rights and obligations of the assigning Party under
this Master Agreement. In the event that such evidence is not delivered to the non-assigning Party, the assigning Party shall remain liable
for all obligations hereunder until such satisfactory written acknowledgement is provided to the other Party.
Article
24
CHANGE IN LAW/MATERIAL ADVERSE CHANGE
In the event any Applicable
Law is changed in a manner that materially and adversely impacts performance of this Master Agreement by either Party or that prevents
the sale of the Product as a Vehicle Fuel in California or that prevents the generation of RINs or LCFS Credits on the Product in the
same volume and type anticipated by this Master Agreement such that it has a material adverse effect on a Party (any such change or update,
a “Change in Law”), then, promptly upon written request by the affected Party, the Parties shall enter into
good faith negotiations to amend this Master Agreement to maintain the original intent and economic position of each Party. If, after
sixty (60) days of the initiation of such negotiations (which shall commence no later than thirty (30) days after the notification of
any such Change in Law), the Parties cannot resolve to their mutual satisfaction a mutually agreeable solution to the Change in Law as
it affects the Parties’ ability to comply with the terms of this Master Agreement with respect to the RFS2 or LCFS Program, either
Party may terminate this Master Agreement on thirty (30) days’ written notice to the other Party.
Article
25
MISCELLANEOUS
25.1 Severability. If any Article, Section or provision of this Master Agreement shall be determined to be null and void, voidable
or invalid by a court of competent jurisdiction, then for such period that the same is void or invalid, it shall be deemed to be deleted
from this Master Agreement and the remaining portions of this Master Agreement shall remain in full force and effect, and the Parties
shall negotiate in good faith and in a timely manner to replace such Article, Section or provision with a valid and enforceable Article,
Section or provision that evidences or reflects the intent and purpose of such null, void, voidable or invalid Article, Section or provision.
25.2 Entire Agreement. The terms of this Master Agreement (including the attachments hereto) constitute the entire agreement
between the Parties with respect to the matters set forth in this Master Agreement, and no representations or warranties shall be implied
or provisions added in the absence of a written agreement to such effect between the Parties. This Master Agreement shall not be modified
or changed except by written instrument executed by a duly authorized representative of each Party.
25.3 No Representations. No promise, representation or inducement has been made by either Party that is not embodied in this
Master Agreement, and neither Party shall be bound by or liable for any alleged representation, promise or inducement not so set forth.
25.4 No Third-Party Beneficiary. Nothing expressed or implied in this Master Agreement is intended to create any rights, obligations
or benefits under this Master Agreement in any Person other than the Parties and their successors and permitted assigns under this Master
Agreement.
25.5 Public Announcements. Except as required by Applicable Law, without the prior written approval of the other Party, neither
Party will issue, or permit any of its directors, officers, employees, Affiliates, agents, attorneys, accountants, lenders, advisors or
other representatives to issue, any press release or any public statement or announcement with respect to this Master Agreement or the
Obligations.
25.6 Expenses. Each Party shall be solely responsible for its own costs, including all legal fees and other costs in connection
with the Obligations.
25.7 Survival. All confidentiality, payment, indemnification obligations (including the payment and indemnification obligations
that arise out of termination), dispute resolution, governing law, notices and miscellaneous provisions shall survive the expiration or
termination of this Master Agreement.
25.8 Counterparts. This Master Agreement may be executed by the Parties in multiple counterparts and initially delivered by facsimile
transmission or otherwise, with original signature pages to follow, and all such counterparts shall together constitute one and the same
instrument.
25.9 Mutual
Cooperation. In the event that any scheduling or operational procedure set forth in this Master Agreement is not commercially feasible,
the Parties shall mutually cooperate to develop a more appropriate process.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, each
Party has caused this Master Agreement to be executed by its duly authorized representative, effective as of the Effective Date.
IDEMITSU APOLLO RENEWABLE CORP.
| By: |
/s/ Kenji Watanabe |
|
| |
Kenji Watanabe |
|
| |
|
|
| Title: |
President & CEO |
|
| |
|
|
| Date: |
2/4/2022 |
|
VERTEX REFINING ALABAMA LLC
| By: |
/s/ Benjamin P. Cowart |
|
| |
|
|
| Name: |
Benjamin P. Cowart |
|
| |
|
|
| Title: |
CEO |
|
| |
|
|
| Date: |
2/6/2022 |
|
ATTACHMENTS
EXHIBITS
| [Exhibit B | Form of Guaranty] |
SCHEDULES
| Schedule 4 | RIN Generation and Transfer Protocol |
EXHIBIT A TO MASTER AGREEMENT
DEFINITIONS
For purposes of this Master Agreement, including
the Exhibits and Schedules attached hereto, the following terms shall have the meanings indicated below unless otherwise provided:
“Affiliate”
means any Person which, directly or indirectly, controls, is controlled by or is under common control with another Person; and for
the purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” or
“under common control with”) means the power to direct or cause the direction of the management and policies of any Person
whether through the ownership of at least fifty percent (50%) of the voting shares or interests, whether held in trust, partnership, by
contract or otherwise.
“Alternative Market”
means any market other than Vehicle Fuel market in the states of California, Oregon, Washington or the country of Canada.
“Applicable Law”
means (i) any law, statute, regulation, code, ordinance, license, decision, order, writ, injunction, decision, directive, judgment, policy,
decree and any judicial or administrative interpretations thereof, (ii) any agreement, concession or arrangement with any Governmental
Authority or (iii) any applicable license, permit or compliance requirement applicable to either Party, including Environmental Laws.
“Bankrupt”
means a Person that (i) is dissolved, other than pursuant to a consolidation, amalgamation or merger, (ii) becomes insolvent or is
unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due, (iii) makes a general
assignment, arrangement or composition with or for the benefit of its creditors, (iv) institutes or has instituted against it a proceeding
seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting
creditor’s rights, or a petition is presented for its winding-up or liquidation, (v) has a resolution passed for its winding-up,
official management or liquidation, other than pursuant to a consolidation, amalgamation or merger, (vi) seeks or becomes subject to the
appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for all or
substantially all of its assets, (vii) has a secured party take possession of all or substantially all of its assets, or has a distress,
execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all of its assets,
(viii) causes or is subject to any event with respect to it that, under Applicable Law, has an analogous effect to any of the events specified
in clauses (i) through (vii) above, inclusive, or (ix) takes any action in furtherance of, or indicating its consent to, approval of,
or acquiescence in any of the foregoing acts.
“Barrel”
shall mean a barrel of 42 United States gallons measured at 60 degrees Fahrenheit.
“Business Day”
means a day, other than a Saturday, Sunday or Federal Reserve Bank holiday, on which banks are open for general commercial business in
New York, NY.
“CARB”
means the California Air Resources Board
“Carbon Intensity
or “CI” means the Carbon Intensity score issued by the California Air Resources Board, including, as specified,
a Provisional CI, Temporary CI or Certified CI score.
“Change in Law”
has the meaning set forth in Article 24.
“Change of Control”
means any direct or indirect change in the ownership (including control) of a Person (whether through merger, sale of shares or other
equity interests, or otherwise) through a single transaction or series of related transactions, from one or more transferors to one or
more transferees.
“Closing”
has the meaning set forth in the Recitals.
“COD” means
the commercial operation date of the RD Project when the applicable unit begins production of Product conforming to the Specifications
in commercial quantities.
.
“Committed Volume”
has the meaning set forth in Section 4.1(c).
“Confidential Information”
has the meaning set forth in Section 18.1.
“Confirmed Order”
has the meaning set forth in Section 7.5(d).
“Default” or
“Event of Default” means an occurrence of the events or circumstances described in Section 14.1.
“Defaulting Party”
has the meaning set forth in Section 14.2.
“Default Interest
Rate” means an annual rate equal to the lesser of (i) the Prime Rate plus four percent (4%) per year from the due date until
the date of payment, and (ii) the highest rate permissible under Applicable Law.
“Delivery Point”
has the meaning set forth in Section 4.1.
“Delivery Schedule”
has the meaning set forth in Section 7.3(c).
“Dispute”
means any claim, controversy, dispute or difference between the Parties which arises under or in connection with any one or more Obligation,
or which arises out of or in connection with the interpretation, existence, validity, enforceability, termination or formation of this
Master Agreement or any attachment hereto.
“Effective Date”
means the date first written above, upon which this Master Agreement becomes binding upon and enforceable against the Parties.
“EMTS”
has the meaning set forth in Section 5.3.
“Environmental Law”
means any existing or past Applicable Law, policy, judicial or administrative interpretation thereof or any legally binding requirement
that governs or purports to govern the protection of persons, natural resources or the environment (including the protection of ambient
air, surface water, groundwater, land surface or subsurface strata, endangered species or wetlands), occupational health and safety and
the manufacture, processing, distribution, use, generation, handling, treatment, storage, disposal, transportation, release or management
of solid waste, industrial waste, hazardous waste or hazardous substances or materials.
“EPC Agreement”
means the Engineering, Procurement and Construction Agreement for the RD Project to be entered into between Vertex and its EPC contractor
for the RD Project.
“Federal Blenders
Tax Credit” or “FBTC” means the tax credit available for blending volumes of ULSD with renewable diesel.
Currently the FBTC has a value of $1.00 for every gallon of renewable diesel blended into ULSD, except to the extent that, for federal
income tax purposes, the FBTC is includible in income or results in the disallowance of an otherwise allowable deduction, in which case
the FBTC value shall be reduced by the Tax cost of such inclusion or disallowance.
“First Delivery Volume”
has the meaning set forth in Section 4.1(c).
“Force Majeure”
means any event or occurrence that prevents, in whole or in part, the performance by a claiming Party, and that is (a) beyond the
reasonable control of the claiming Party despite the exercise of Reasonable Efforts and (b) such Party could not and cannot remedy, avoid
or overcome by the exercise of reasonable due diligence. Provided the criterion in the preceding sentence are satisfied, a Force Majeure
event may include strikes, lockouts or other industrial disturbances, wars, sabotage, terrorism, blockades, insurrections or acts of the
public enemy; epidemics, landslides, lightning, earthquakes, tornadoes, interruption of utility services, fires, explosions, storms, floods,
washouts or other acts of God; arrests or restraints of governments and people; riots or civil disturbances, failures, disruptions, breakdowns
or accidents to machinery, facilities or lines of pipe (whether owned, leased or rented), except if caused by the negligence of a party,
freezing of lines; embargoes, priorities, expropriation or condemnation by government or governmental authorities; interference by civil
or military authorities. If a Party is prevented from performing under this Master Agreement due to the failure of a third party, such
failure to perform shall only be excused hereunder if the third party is prevented by an event that would constitute an event of Force
Majeure as defined above. An event of Force Majeure does not include, without limitation, any delay, event, or circumstance which could
have been avoided through the exercise of Reasonable Efforts, including through ordinary care or proper planning by the impacted Party.
Neither Party shall be compelled to resolve any strikes, lockouts, or other industrial disputes other than as it shall determine to be
in its best interests. The inability of Idemitsu’s customers to receive Product shall not be an event of Force Majeure, except where
such failure is caused by an event that would be an event of Force Majeure hereunder.
“Governmental Authority”
means any federal, state, regional, local or municipal governmental body, agency, instrumentality, authority or entity established or
controlled by a government or subdivision thereof, including any legislative, administrative or judicial body, or any person purporting
to act therefore.
“Guarantor”
means Idemitsu Kosan Co., LTD.
“Guaranty Agreement”
means a Guaranty Agreement in the form of Exhibit B.
“Indemnified Party”
has the meaning set forth in Section 15.2.
“Indemnifying Party”
has the meaning set forth in Section 15.2.
“Indemnity Claim”
means a claim for defense, indemnification and/or hold harmless under this Master Agreement.
“Independent Inspector”
means an independent third party inspection company that is generally recognized in the petroleum industry as experienced in measuring
the quantity and quality of petroleum products. Unless specifically provided otherwise in this Master Agreement, the Parties shall mutually
appoint the Independent Inspector and the costs thereof shall be shared equally.
“LCFS”
means the low carbon fuel standard rule enacted by the California Air Resources Board to reduce carbon intensity in transportation fuels
as compared to conventional petroleum fuels set forth in the California Code of Regulations at Title 17, Division 3, Chapter 1, Subchapter
10, Article 4, §§ 95480 – 95503, as amended from time to time, and any analogous program enacted by any other Governmental
Authority [that require or incentivize reductions in carbon intensity of fuels, including but not limited to programs in Oregon, Washington
and British Columbia, or that may be enacted in the future.]
“LCFS Credits”
means credits generated or to be generated on the Product under an LCFS as well as the rights to generate, transfer and use all such credits.
“Liabilities”
means any losses, claims, charges, damages, deficiencies, assessments, interests, penalties, costs and expenses of any kind (including
reasonable attorneys’ fees and other fees, court costs and other disbursements related to any litigation or arbitration), directly
or indirectly arising out of or related to any suit, proceeding, judgment, settlement or judicial or administrative order, including any
Liabilities with respect to Environmental Laws.
“Lien”
means any lien, pledge, claim, charge, mortgage, security interest or other encumbrance of any third Person of any nature whatsoever.
“Master Agreement”
or “Agreement” means this Master Offtake Agreement, as may be amended, modified, supplemented, extended, renewed or
restated from time to time in accordance with the terms hereof, including any Exhibits and Schedules attached hereto.
“MMBtu”
means one million British thermal units, which is equivalent to one dekatherm.
“Non-Conforming Product”
means Product that does not conform to the Specifications.
“Obligations”
has the meaning set forth in Section 1.3.
“Party” or
“Parties” has the meaning set forth in the preamble of this Master Agreement.
“Performing Party”
has the meaning set forth in Section 14.2.
“Person” means
an individual, corporation, partnership, limited liability company, joint venture, trust or unincorporated organization, joint stock company
or any other private entity or organization, Governmental Authority, court or any other legal entity, whether acting in an individual,
fiduciary or other capacity.
“Phase 1”
means the first stage of conversion of the hydrocracker unit to renewable diesel production.
“Phase 1 Committed
Volume” has the meaning set forth in Section 4.1(c).
“Phase 2”
means the second stage of the conversion of the hydrocracker conversion which will be complete after the new hydrogen plant is operating
at ratable hydrogen supply.
“Phase 2 Committed
Volume” has the meaning set forth in Section 4.1(c).
“Prime Rate”
means the lesser of (i) the prime rate of interest published under “Money Rates” quoted on the due date (or closest date to
the due date if not quoted on the due date) by the Wall Street Journal per year from the due date until the date of payment, and
(ii) the highest rate permissible under Applicable Law.
“Product”
means 100% renewable diesel (or RD100) meeting the specifications in Schedule 1 of this Master Agreement.
“Product Transfer
Document” has the meaning under the RFS2 and LCFS.
“Provisional Invoice”
has the meaning set forth in Section 13.1(a).
“Provisional Invoice
Price” has the meaning set forth in Section 13.1(b).
“Purchase Price”
has the meaning set forth in Section 13.1(c).
“QAP” has
the meaning under the RFS2.
“Qualified Replacement
RIN” means a valid RIN of the same D-Code (as that term is defined in RFS2 Program) as that specified in this Master Agreement
and generated either in the same year specified in relevant Product Transfer Document, or if RINs generated in that year are not reasonably
available in the market or have expired, the then current compliance year.1
“RD Project”
has the meaning set forth in the Recitals.
“Reasonable Efforts”
means with respect to a Party, the level and nature of diligence, good faith and fair dealing in fulfilling such Party’s Obligations,
and the level and nature of efforts with which such Party generally performs on its own behalf in managing or providing services to its
other business or operations; provided that, such efforts shall not be less than prevailing industry standards and compliance with Applicable
Law.
“Regulatory Credits”
means any and all current and future rights, credits, benefits, air quality credits, renewable fuel credits, renewable energy credits,
emission reductions, offsets and allowances, howsoever referred to, associated with the environmental benefits of the production, generation,
transportation, use of Product, the displacement of fossil-based fuel for any use, the reduction of air pollutants or the avoidance of
the emission of any gas, chemical or other substance, including without limitation any similar environmental benefits, whether arising
out of international, federal, state or local laws or regulations including without limitation all LCFS Credits and RINs generated or
to be generated on the Product and the rights to generate, transfer and use all LCFS Credits and RINs on the Product.
“Representative”
has the meaning set forth in Section 18.1.
“RFS2”
means the federal renewable fuel standard established under the Energy Policy Act of 2005 and the Energy Independence and Security Act
of 2007 and implementing regulations, including without limitation, 40 C.F.R. Part 80, Subpart M, as amended, restated or supplemented
from time to time.
“RIN” has
the meaning under the RFS2.
“Scheduled Maintenance”
means any scheduled maintenance, turnaround, repair, refurbishment or testing at the Refinery that impacts the ability of the Refinery
to produce Product; provided that, Vertex gives Idemitsu at least two (2) months’ written notice of any Scheduled Maintenance, including
any changes to previously scheduled maintenance. Scheduled Maintenance shall not include any emergency maintenance. In the event of a
scheduled shutdown of the Refinery, Vertex shall, to the extent feasible, complete the Production of Product to be delivered to Idemitsu
at that time.
“Shipping Documents”
has the meaning set forth in Section 13.1(a).
“Specifications”
means the Product Specifications attached hereto as Schedule 1.
“Storage Agreement”
has the meaning set forth in Section 2.1(b).
“Supply Shortfall
Volume” has the meaning set forth in Section 4.1(f).
“Take or Pay Obligation”
has the meaning set forth in Section 4.1(e).
“Taxes” means
any and all foreign, federal, state and local taxes (other than taxes on income), duties, fees and charges of every description, including
all gross receipts, environmental, spill, ad valorem, sales and use, occupation, transfer, real property, recording, gains, stamp and
documentary, windfall profits, franchise, license, excise, payroll, social security, withholding, service and service use taxes, and similar
levies and fees, including for any Tax, any interest, penalties or additions to tax attributable to any such Tax, including penalties
for the failure to file any tax return or report.
“Termination Payment”
has the meaning set forth in Section 2.2.
“Third Party Claim”
has the meaning set forth in Section 15.2.
“Transfer Date”
has the meaning set forth in Section 5.3.
“True-Up Invoice”
has the meaning set forth in Section 13.1(c).
“Vehicle Fuel”
has the same meaning as the term “transportation fuel” pursuant to RFS2 and that qualifies for valid generation of RINs under
RFS2 and valid generation of LCFS Credits under the LCFS.
EXHIBIT B
FORM OF PARENT GUARANTY
SCHEDULE 1
SPECIFICATIONS2
RENEWABLE DIESEL PRODUCT SPECIFICATIONS
The Product shall meet the following
specifications for renewable diesel at the time of delivery at the Delivery Point:
| • | Be derived from one hundred (100) percent renewable biomass meeting the definition
of renewable biomass and no portion shall be derived from non-renewable feedstock, including petroleum products; |
| • | Be eligible to generate a valid RIN with a D Code of 4 under RFS2; and |
| • | All requirements under Applicable Law governing the production and composition
of renewable diesel sold and used as Vehicle Fuel, including those imposed by CARB, the US Environmental Protection Agency and under the
LCFS and RFS2. |
CARB DIESEL SPECIFICATION
The Product shall also meet the
following specifications for CARB Diesel at the time of delivery at the Delivery Point:
| • | California CARB Diesel Specification and ASTM D975 with cloud point maximum of
-4°C Summer (April 1 - September 30) & -10°C Winter (October 1 – March 31) as outlined below. Should the CARB/ASTM D975
diesel specifications change from those outlined during the Term, the Product shall meet the updated version of the specifications. |
| |
| |
|
Property
APPEARANCE |
|
Value |
|
Test Method |
|
| Color, ASTM, rating |
|
MAX 2.5 |
|
D-1500 |
|
| Color, Visual, rating |
|
UnDyed |
|
Visual |
|
| Haze Rating @ 25°C (77°F) |
|
MAX 2 |
|
D-4176 |
|
2 Note from Vertex: To be reviewed by Vertex’s technical expert
|
COMPOSITION PROPERTIES |
|
|
|
|
|
| |
|
|
|
|
|
|
Sulfur, ppm
Alternate: D-7039 |
|
MAX 15 |
|
D-5453 |
|
| Aromatics, %vol (3) |
|
MAX 10 - See Note |
|
D-5186 |
|
| Copper Corrosion, 3 hours @ 50°C (122°F), rating |
|
MAX 1 |
|
D-0130 |
|
|
VOLATILITY |
|
|
|
|
|
| API Gravity @ 15.6°C (60°F) |
|
MIN 30 |
|
D-1298/D-4052 |
|
|
Flash Point, PMCC, °C (°F)
Distillation |
|
MIN 52 (125) |
|
D-0093 |
|
| Distillation, 50% recovered, °C (°F) |
|
Report |
|
D-0086 |
|
| Distillation, 90% recovered, °C (°F) |
|
282 (540) - 338 (640) |
|
D-0086 |
|
| |
|
|
|
|
|
| OR
Simulated Distillation |
|
|
|
D-2887 |
|
| Distillation,
50% recovered, °C (°F) |
|
Report |
|
D-2887 |
|
| Distillation,
90% recovered, °C (°F) |
|
300(572) - 356(673) |
|
D-2887 |
|
Cloud Point (4)
| Alternate:
ASTM D-5771, D-5772, and D-5773 |
|
|
|
|
|
| Cloud
Point, Summer °C (°F) |
|
MAX -4 (25) |
|
D-2500 |
|
| Cloud
Point, Winter °C (°F) |
|
MAX -7 (20) |
|
D-2500 |
|
Pour Point (5)
| Viscosity,
@ 40°C (104°F), cSt |
|
1.9 - 4.1 |
|
D-0445 |
|
| Lubricity,
HFRR @ 60°C, micron |
|
MAX 520 |
|
D-6079 (6) |
|
COMBUSTION PROPERTIES
| Cetane
Index, OR |
|
MIN 40. |
|
D-4737 |
|
| Cetane
Number |
|
MIN 40. |
|
D-0613 |
|
Carbon Residue, RAMS (10% btms), %wt
MAX 0.35 D-0524 Sediment and Water, by centrifuge, %vol
MAX 0.05 D-2709
| Millipore
Filter Solids, (Aging) mg/100ml OR |
|
MAX 2.0 |
|
D-2274 |
|
| Percent
Reflectance, 149°C (300°F) Filter Pad Rating |
|
MIN 70 |
|
D-6468 |
|
CONDUCTIVITY .........
SEE NOTE (7)
Conductivity at
Truck Rack Delivery, pS/m MIN 50 D-2624
ADDITIVES ..........SEE
NOTE (8)
Notes:
| 1. | This product shall conform to ASTM specifications at D-975, Grade Low Sulfur No. 2-D Diesel Fuel Oil.
This product shall meet the California Air Resources Board requirements for vehicular diesel fuel and for the CARB Urban Bus Rule effective
2002. This product shall meet the US EPA requirements for use as on-highway vehicle fuel. This product shall also meet the requirements
for operation of exhaust after-treatment devices for emissions reductions. |
| 2. | The following test methods and specifications must be met to ensure product passes the CARB Designated
Equivalent Limits (DEL): |
API Gravity ASTM - D287 Min 36.9
Aromatics ASTM - D5186 Max 21.0% vol
Polycyclic Aromatics Hydrocarbons ASTM
- D5186 Max 3.5% vol
Sulfur * ASTM - D5453 or D7039 Max 15
ppmw
Cetane Number ASTM - D613 Min 53.0
Nitrogen ASTM - D4629 Max 350 ppmw
The fuel may meet other specifications
as approved by the California Air Resources Board for diesel fuel formulations resulting in equivalent emissions reductions. One such
specification which has been used is Executive Order G-714-035 which has a confidential formulation and specifications.
| 3. | The fuel may meet other aromatic limits as specified in Title 13, California Code of Regulations, Section
2282. One option available under this regulation is a designated alternative aromatic hydrocarbon limit (DAL) which allows a diesel aromatic
credit bank, with an overall average that does not exceed 10%. |
A change in aromatic concentration due
to operational changes is acceptable as long as the difference between the previous aromatics concentration and the new aromatics concentration
is not greater than 10% volume on an absolute basis (e.g. normal aromatics concentration running at 15 vol% and the new aromatics level
is not less than 5 vol%, nor greater than 25 vol%). Changes in the absolute concentration in aromatics by more than 10 vol% may cause
gasket/o-ring seal leakage in some older vehicle fuels systems. This issue is not anticipated in vehicles with new or replacement seals
made after 1993.
| 4. | Summer - April 1st thru September 30th Winter - October 1st thru March 31st |
| 5. | No pour point spec on CARB Diesel as it is not being certified to meet a heating oil specification and
Kinder Morgan has no pour point spec. |
| 6. | Lubricity is an end user specification. The base fuel may meet the specification or a lubricity improver
may be used to meet the specification. |
| 7. | Bulk deliveries from a refinery shall conform to the receiving terminal, customer, or common carrier pipeline
requirements. |
| 8. | Diesel fuel additives must have prior approval from CARB and the US EPA; alternatively, the additives
shall require emission testing compliance before use. Use of additives must be monitored and reported routinely to US EPA. |
SCHEDULE 2
PURCHASE PRICE
Idemitsu shall pay to Vertex a per gallon Purchase
Price for Product and Regulatory Credits delivered to and accepted by Idemitsu under the Master
Agreement in an amount equal to = [***]
Where:
“CME ULSD” means the per gallon monthly average
of the daily prompt CME ULSD Futures (HO) settlement for each day during the month in which delivery occurred.
“LCFS Credits” means the number
of LCFS that may be generated on the Product delivered to and accepted by Idemitsu as determined by the product of [***] and difference
between the LCFS Carbon Intensity Benchmark and Carbon Intensity of the Product.3
“LCFS
Carbon Intensity Benchmark” means the average carbon intensity standard for diesel fuel and diesel substitutes used in California
in gCO2e/MJ for the year in which Idemitsu delivers Product to the California Vehicle Fuel Market as set forth in Table 2 of the LCFS,
as may be amended from time to time.
“Carbon
Intensity of the Product” means the carbon intensity for the Product as approved by CARB.
“LCFS
Credit Value” means the monthly average of the LCFS Credit prices for the month in which Idemitsu delivers Product to the California
Vehicle Fuel Market as listed in the “Mean California Low Carbon Fuel Standard Carbon Credit” price published by the Oil Price
Information Service.
“Logistics
Cost” means the actual cost per gallon incurred by Idemitsu to transport and deliver Product and Regulatory Credits to the California
Vehicle Fuel Market as evidenced by Shipping Documents provided by Idemitsu to Vertex. For purpose of the Provisional Invoice, this amount
shall be [***] of Product delivered and accepted by Idemitsu, which shall be adjusted for
actual costs in a True-Up Invoice.
“RIN Credit Value” means the value of the RINs verified
pursuant to a QAP that are delivered to Idemitsu as determined by product of the number of QAP RINs delivered to and accepted by Idemitsu
and the monthly average D4 RIN price as published by the Oil Price Information Service for biomass-based diesel RINs in the vintage of
the RINs delivered to Idemitsu.
“FBTC Value”
means the amount that Idemitsu may claim under the FBTC on Product delivered to Idemitsu and subsequently blended with ULSD, up
to [***] of Product. If the FBTC is expired or lapsed or repealed for the year, this amount shall be zero.
SCHEDULE 3
INSURANCE
Per Section 17. of this Master Agreement, each Party shall procure
and maintain in full force and effect throughout the Term of the Master Agreement, no less than the insurance coverages in the types and
amounts specified below and with insurance companies rated not less than A-, VII by A.M. Best, or otherwise reasonably satisfactory to
the other Party.
| (a) | Statutory Workers’ Compensation insurance as required by State and/or Federal laws and Employers’
Liability, including but not limited to Maritime Liabilities, USL&HW, Jones Act, Death on the High Seas Act, etc. |
| (b) | Commercial General Liability insurance including contractual liability, sudden & accidental pollution,
products liability and completed operations coverage, with limit of not less than $1,000,000 per occurrence. |
| (c) | Commercial Auto Liability insurance covering owned, non-owned and hired vehicles, used by it or its subcontractors
or agents in connection with this Agreement, with limit as required by law but not less than $1,000,000 per occurrence. |
| (d) | Excess/Umbrella Liability insurance providing limits of not less than $25 Million per occurrence with
coverage terms equivalent to those provided by the underlying insurance policies identified as (a) Employer Liability only, (b) Commercial
General Liability and (c) Commercial Auto Liability above |
| (e) | Protection and Indemnity insurance for vessels, if any, used by it, with limits of not less than $150,000,000
per occurrence. |
| (f) | Hull and Machinery Insurance for each vessel, if any, used by it, with limits of not less than the value
of the applicable vessel. |
