Delaware | 2911 | 61-1512186 | ||
(State or Other Jurisdiction of | (Primary Standard Industrial | (I.R.S. Employer | ||
Incorporation or Organization) | Classification Code Number) | Identification Number) |
Stuart H. Gelfond
Michael A. Levitt Fried, Frank, Harris, Shriver & Jacobson LLP One New York Plaza New York, New York 10004 (212) 859-8000 |
Peter J. Loughran
Debevoise & Plimpton LLP 919 Third Avenue New York, New York 10022 (212) 909-6000 |
Proposed Maximum
|
||||||
Title of Each Class of
|
Aggregate Offering
|
|||||
Securities to be Registered | Price (1)(2) | Amount of Registration Fee (3) | ||||
Common Stock, $0.01 par value
|
$375,000,000 | $40,125 | ||||
(1) | Includes offering price of shares which the underwriters have the option to purchase. | |
(2) | Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) of the Securities Act of 1933, as amended. |
(3) | Of the total registration fee of $40,125, $32,100 has previously been paid. |
The
information in this prospectus is not complete and may be
changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these
securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not
permitted.
|
Per
Share
|
Total
|
|||||||
Initial public offering price
|
$ | $ | ||||||
Underwriting discount
|
$ | $ | ||||||
Proceeds, before expenses, to us
|
$ | $ |
Goldman, Sachs & Co. | Deutsche Bank Securities |
Citi | Simmons & Company |
1
Table of Contents
High capital costs, historical excess capacity and environmental
regulatory requirements that have limited the construction of
new refineries in the United States over the past 30 years.
2
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Continuing improvement in the supply and demand fundamentals of
the global refining industry as projected by the Energy
Information Administration of the U.S. Department of
Energy, or the EIA.
Increasing demand for sweet crude oils and higher incremental
production of lower cost sour crude that are expected to provide
a cost advantage to sour crude processing refiners.
U.S. fuel specifications, including reduced sulfur content,
reduced vapor pressure and the addition of oxygenates such as
ethanol, that should benefit refiners who are able to
efficiently produce fuels that meet these specifications.
Limited competitive threat from foreign refiners due to
sophisticated U.S. fuel specifications and increasing foreign
demand for refined products.
Refining capacity shortage in the mid-continent region, as
certain regional markets in the U.S. are subject to insufficient
local refining capacity to meet regional demands. This should
result in local refiners earning higher margins on product sales
than those who must rely on pipelines and other modes of
transportation for supply.
The impact of a growing world population combined with an
expanded use of corn for the production of ethanol both of which
are expected to drive worldwide grain demand and farm
production, thereby increasing demand for nitrogen-based
fertilizers.
High natural gas prices in North America that contribute to
higher production costs for natural gas-based U.S. ammonia
producers should result in elevated nitrogen fertilizer prices,
as natural gas price trends generally correlate with nitrogen
fertilizer price trends (based on data provided by Blue Johnson
& Associates).
3
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4
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Pursuing organic expansion opportunities;
Increasing the profitability of our existing assets;
Seeking both strategic and accretive acquisitions; and
Pursuing opportunities to maximize the value of the nitrogen
fertilizer limited partnership.
5
Table of Contents
Debt was used as part of the acquisition financing in June 2005
which required the introduction of a financial risk management
tool that would mitigate a portion of the inherent commodity
price based volatility in our cash flow and preserve our ability
to service debt; and
Given the size of the capital expenditure program contemplated
by us at the time of the June 2005 acquisition, we considered it
necessary to enter into a derivative arrangement to reduce the
volatility of our cash flow and to ensure an appropriate return
on the incremental invested capital.
6
Table of Contents
Prior to the consummation of this offering, Coffeyville
Acquisition LLC will transfer half of its interests in each of
Coffeyville Refining & Marketing, Inc., Coffeyville
Nitrogen Fertilizers, Inc. and CVR Energy to Coffeyville
Acquisition II LLC. Coffeyville Acquisition LLC will be owned by
the Kelso Funds and our senior management and Coffeyville
Acquisition II LLC will be owned by the Goldman Sachs Funds and
our senior management.
We will then merge a newly formed direct subsidiary of ours with
Coffeyville Refining & Marketing, Inc. and merge a
separate newly formed direct subsidiary of ours with Coffeyville
Nitrogen Fertilizers, Inc. which will make Coffeyville
Refining & Marketing, Inc. and Coffeyville Nitrogen
Fertilizers, Inc. direct wholly owned subsidiaries of ours.
These transactions will result in a structure with CVR Energy
below Coffeyville Acquisition LLC and Coffeyville
Acquisition II LLC and above the two operating
subsidiaries, so that CVR Energy will become the parent of the
two operating subsidiaries. CVR Energy has not commenced
operations and has no assets or liabilities. In addition, there
are no contingent liabilities and commitments attributable to
CVR Energy. The mergers of the two operating subsidiaries with
subsidiaries of CVR Energy provide a tax free means to put an
appropriate organizational structure in place to go public and
give the Company the flexibility to simplify its structure in a
tax efficient manner in the future if necessary.
In addition, we will transfer our nitrogen fertilizer business
into a new limited partnership and we will sell all of the
interests of the managing general partner of this partnership to
a new entity owned by our controlling stockholders and senior
management at fair market value at such time.
7
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8
Table of Contents
*
Mr. John J. Lipinski, our
chief executive officer, owns approximately 0.31% of Coffeyville
Refining & Marketing, Inc. and approximately 0.64% of
Coffeyville Nitrogen Fertilizers, Inc. It is expected that these
interests will be exchanged for shares of our common stock (with
an equivalent value) prior to the consummation of this offering.
9
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10
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Issuer
CVR Energy, Inc.
Common stock offered by us
15,500,000 shares.
Option to purchase additional shares of common stock from the
selling stockholders
2,325,000 shares.
Common stock outstanding immediately after the offering
81,641,591 shares.
Use of proceeds
We estimate that the net proceeds to us in this offering, after
deducting the underwriters discount and the estimated
expenses of the offering, will be $282.35 million. We
intend to use the net proceeds from this offering for debt
repayment of $280 million and the remainder for general
corporate purposes. We will not receive any proceeds from the
purchase by the underwriters of up to 2,325,000 shares from
the selling stockholders in connection with any exercise by the
underwriters of their option. See Use of Proceeds.
Proposed New York Stock Exchange symbol
CVI.
Risk Factors
See Risk Factors beginning on page 23 of this
prospectus for a discussion of factors that you should carefully
consider before deciding to invest in shares of our common stock.
gives effect to a 658,619.93 for 1 split of our common stock;
excludes 10,300 shares of common stock issuable upon the
exercise of stock options to be granted to two directors
pursuant to our long-term incentive plan on the date of this
prospectus;
excludes 17,500 shares of non-vested restricted stock to be
awarded to two directors pursuant to our long-term incentive
plan on the date of this prospectus;
includes 27,150 shares of common stock to be awarded to our
employees in connection with this offering; and
assumes no exercise by the underwriters of their option to
purchase up to 2,325,000 shares of common stock from the
selling stockholders.
11
Table of Contents
17
18
19
12
Table of Contents
13
Table of Contents
Successor
Pro
Forma
Three Months
Three Months
Three Months
Ended
Ended
Ended
March 31,
March 31,
March 31,
(unaudited)
(unaudited)
(unaudited)
(in millions,
except as otherwise indicated)
$
669.7
$
390.5
$
390.5
539.5
303.7
303.7
44.3
113.4
113.4
8.5
13.2
13.2
12.0
14.2
14.2
$
65.4
$
(54.0
)
$
(54.0
)
0.6
0.5
0.4
(12.2
)
(11.9
)
(6.0
)
(17.6
)
(137.0
)
(137.0
)
$
36.2
$
(202.4
)
$
(196.6
)
(14.1
)
47.3
45.0
0.7
0.7
$
22.1
$
(154.4
)
$
(150.9
)
0.27
(1.89
)
(1.85
)
0.27
(1.89
)
(1.85
)
81,641,591
81,641,591
81,641,591
81,659,091
81,641,591
81,641,591
$
41.6
$
(63.5
)
$
(63.5
)
24.0
9.3
9.3
(0.2
)
0.2
0.2
$
65.4
$
(54.0
)
$
(54.0
)
$
7.8
$
9.8
$
9.8
4.2
4.4
4.4
$
12.0
$
14.2
$
14.2
$
36.9
$
(82.4
)
$
(78.9
)
8.0
43.6
(29.3
)
(107.4
)
9.6
29.5
29.3
107.4
14
Table of Contents
Successor
Three Months
Three Months
Ended
Ended
March 31,
March 31,
(unaudited)
(unaudited)
(in millions,
except as otherwise indicated)
98,454
53,689
85,276
47,267
$
11.19
$
12.69
$
9.05
$
12.15
$
4.00
$
22.73
$
6.18
$
(12.34
)
102.7
86.2
160.4
165.7
98.6
%
91.8
%
94.1
%
86.3
%
92.8
%
89.4
%
15
Table of Contents
Original
Predecessor
Immediate Predecessor
Successor
Successor
Pro Forma
Year
62 Days
304 Days
174 Days
233 Days
Year
Year
Ended
Ended
Ended
Ended
Ended
Ended
Ended
December 31,
March 2,
December 31,
June 23,
December 31,
December 31,
December 31,
(unaudited)
(in millions, except as otherwise indicated)
$
1,262.2
$
261.1
$
1,479.9
$
980.7
$
1,454.3
$
3,037.6
$
3,037.6
1,061.9
221.4
1,244.2
768.0
1,168.1
2,443.4
2,443.4
133.1
23.4
117.0
80.9
85.3
199.0
199.0
23.6
4.7
16.3
18.4
18.4
62.6
73.5
3.3
0.4
2.4
1.1
24.0
51.0
51.0
10.9
$
29.4
$
11.2
$
100.0
$
112.3
$
158.5
$
281.6
$
270.7
(0.5
)
(6.9
)
(8.4
)
0.4
(20.8
)
(20.8
)
(1.3
)
(10.1
)
(7.8
)
(25.0
)
(43.9
)
(32.1
)
0.3
0.5
(7.6
)
(316.1
)
94.5
94.5
$
27.9
$
11.2
$
83.5
$
88.5
$
(182.2
)
$
311.4
$
312.3
(33.8
)
(36.1
)
63.0
(119.8
)
(128.4
)
$
27.9
$
11.2
$
49.7
$
52.4
$
(119.2
)
$
191.6
$
183.9
$
2.27
$
2.15
2.26
2.15
84,563,025
85,478,437
84,580,525
85,495,937
$
21.5
$
7.7
$
77.1
$
76.7
$
123.0
$
245.6
238.3
7.8
3.5
22.9
35.3
35.7
36.8
33.2
0.1
0.3
(0.2
)
(0.8
)
(0.8
)
$
29.4
$
11.2
$
100.0
$
112.3
$
158.5
$
281.6
270.7
$
2.1
$
0.3
$
1.5
$
0.8
$
15.6
$
33.0
33.0
1.2
0.1
0.9
0.3
8.4
17.1
17.1
0.9
0.9
$
3.3
$
0.4
$
2.4
$
1.1
$
24.0
$
51.0
$
51.0
$
27.9
$
11.2
$
49.7
$
52.4
$
23.6
$
115.4
$
107.7
20.3
53.2
89.8
12.7
82.5
186.6
(0.8
)
(130.8
)
(12.3
)
(730.3
)
(240.2
)
(19.5
)
(53.2
)
93.6
(52.4
)
712.5
30.8
0.8
14.2
12.3
45.2
240.2
16
Table of Contents
Original
Predecessor
Immediate Predecessor
Successor
Year
62 Days
304 Days
174 Days
233 Days
Year
Ended
Ended
Ended
Ended
Ended
Ended
December 31,
March 2,
December 31,
June 23,
December 31,
December 31,
(in millions, except as otherwise indicated)
95,701
106,645
102,046
99,171
107,177
108,031
85,501
92,596
90,418
88,012
93,908
94,524
$
3.89
$
4.23
$
5.92
$
9.28
$
11.55
$
13.27
$
5.53
$
6.80
$
7.55
$
9.60
$
13.47
$
10.84
$
2.57
$
2.60
$
2.66
$
3.44
$
3.13
$
3.92
$
1.25
$
1.57
$
3.20
$
5.79
$
7.55
$
8.39
Production Volume:
335.7
56.4
252.8
193.2
220.0
369.3
510.6
93.4
439.2
309.9
353.4
633.1
90.1
%
93.5
%
92.2
%
97.4
%
98.7
%
92.5
%
89.6
%
80.9
%
79.7
%
95.0
%
98.3
%
89.3
%
81.6
%
88.7
%
82.2
%
93.9
%
94.8
%
88.9
%
Original
Immediate
Successor
Predecessor
Predecessor
Successor
Successor
Actual
As Adjusted
December 31,
December 31,
December 31,
December 31,
March 31,
March 31,
(unaudited)
(unaudited)
(in millions)
$
$
52.7
$
64.7
$
41.9
$
7.6
$
2.9
150.5
106.6
108.0
112.3
(169.8
)
(178.9
)
199.0
229.2
1,221.5
1,449.5
1,469.4
1,458.2
105.2
148.9
499.4
775.0
804.5
524.5
4.3
3.7
10.6
3.7
7.0
7.1
58.2
14.1
115.8
76.4
(77.4
)
192.2
(1)
The following are certain charges
and costs incurred in each of the relevant periods that are
meaningful to understanding our net income and in evaluating our
performance due to their unusual or infrequent nature:
Table of Contents
Original
Immediate
Successor
Pro Forma
Predecessor
Predecessor
Successor
Successor
Pro Forma
Three
Three
Year
62 Days
304 Days
174 Days
233 Days
Year
Year
Months
Months
Ended
Ended
Ended
Ended
Ended
Ended
Ended
Ended
Ended
December 31,
March 2,
December 31,
June 23,
December 31,
December 31,
December 31,
March 31,
March 31,
(unaudited)
(unaudited)
(unaudited)
(in millions)
$
9.6
$
$
$
$
$
$
$
$
$
7.2
8.1
23.4
3.0
16.6
2.3
0.5
1.8
6.6
6.6
66.0
66.0
25.0
235.9
(126.8
)
(126.8
)
24.5
119.7
119.7
(a)
During the year ended
December 31, 2003, we recorded an additional charge of
$9.6 million related to the asset impairment of our
refinery and nitrogen fertilizer plant based on the expected
sales price of the assets in the Initial Acquisition.
(b)
Represents the write-off of
$7.2 million of deferred financing costs in connection with
the refinancing of our senior secured credit facility on
May 10, 2004, the write-off of $8.1 million of
deferred financing costs in connection with the refinancing of
our senior secured credit facility on June 23, 2005 and the
write-off of $23.4 million in connection with the refinancing of
our senior secured credit facility on December 28, 2006.
(c)
Consists of the additional cost of
product sold expense due to the step up to estimated fair value
of certain inventories on hand at March 3, 2004 and
June 24, 2005, as a result of the allocation of the
purchase price of the Initial Acquisition and the Subsequent
Acquisition to inventory.
(d)
Consists of fees which are expensed
to Selling, general and administrative expenses in connection
with the funded letter of credit facility of $150.0 million
issued in support of the Cash Flow Swap. We consider these fees
to be equivalent to interest expense and the fees are treated as
such in the calculation of EBITDA in the Credit Facility.
(e)
Represents expenses associated with
a major scheduled turnaround at the nitrogen fertilizer plant
and our refinery.
(f)
Represents the expense associated
with the expiration of the crude oil, heating oil and gasoline
option agreements entered into by Coffeyville Acquisition LLC in
May 2005.
(2)
Depreciation and amortization is
comprised of the following components as excluded from cost of
products sold, direct operating expense and selling, general and
administrative expense:
Table of Contents
Original Predecessor
Immediate Predecessor
Successor
Year
62 Days
304 Days
174 Days
233 Days
Year
Ended
Ended
Ended
Ended
Ended
Ended
Three Months Ended
December 31,
March 2,
December 31,
June 23,
December 31,
December 31,
March 31,
(in millions)
(unaudited)
0.2
0.1
1.1
2.2
0.5
0.6
3.3
0.4
2.0
0.9
22.7
47.7
11.4
13.5
0.2
0.1
0.2
1.1
0.1
0.1
3.3
0.4
2.4
1.1
24.0
51.0
12.0
14.2
(3)
Net income adjusted for unrealized
gain or loss from Cash Flow Swap results from adjusting for the
derivative transaction that was executed in conjunction with the
Subsequent Acquisition. On June 16, 2005, Coffeyville
Acquisition LLC entered into the Cash Flow Swap with J. Aron, a
subsidiary of The Goldman Sachs Group, Inc., and a related party
of ours. The Cash Flow Swap was subsequently assigned from
Coffeyville Acquisition LLC to Coffeyville Resources, LLC on
June 24, 2005. Under these agreements, sales representing
approximately 70% and 17% of then forecasted refinery output for
the periods from July 2005 through June 2009, and July 2009
through June 2010, respectively, have been economically hedged.
The derivative took the form of three NYMEX swap agreements
whereby if crack spreads fall below the fixed level, J. Aron
agreed to pay the difference to us, and if crack spreads rise
above the fixed level, we agreed to pay the difference to J.
Aron. See Description of Our Indebtedness and the Cash
Flow Swap.
We have determined that the Cash
Flow Swap does not qualify as a hedge for hedge accounting
purposes under current GAAP. As a result, our periodic
statements of operations reflect in each period material amounts
of unrealized gains and losses based on the increases or
decreases in market value of the unsettled position under the
swap agreements which is accounted for as a liability on our
balance sheet. As the crack spreads increase we are required to
record an increase in this liability account with a
corresponding expense entry to be made to our statement of
operations. Conversely, as crack spreads decline we are required
to record a decrease in the swap related liability and post a
corresponding income entry to our statement of operations.
Because of this inverse relationship between the economic
outlook for our underlying business (as represented by crack
spread levels) and the income impact of the unrecognized gains
and losses, and given the significant periodic fluctuations in
the amounts of unrealized gains and losses, management utilizes
Net income adjusted for unrealized gain or loss from Cash Flow
Swap as a key indicator of our business performance. In managing
our business and assessing its growth and profitability from a
strategic and financial planning perspective, management and our
board of directors considers our U.S. GAAP net income results as
well as Net income adjusted for unrealized gain or loss from
Cash Flow Swap. We believe that Net income adjusted for
unrealized gain or loss from Cash Flow Swap enhances the
understanding of our results of operations by highlighting
income attributable to our ongoing operating performance
exclusive of charges and income resulting from mark to market
adjustments that are not necessarily indicative of the
performance of our underlying business and our industry. The
adjustment has been made for the unrealized loss from Cash Flow
Swap net of its related tax benefit.
Net income adjusted for unrealized
gain or loss from Cash Flow Swap is not a recognized term under
GAAP and should not be substituted for net income as a measure
of our performance but instead should be utilized as a
supplemental measure of financial performance or liquidity in
evaluating our business. Because Net income adjusted for
unrealized gain or loss from Cash Flow Swap excludes mark to
market adjustments, the measure does not reflect the fair market
value of our Cash Flow Swap in our net income. As a result, the
measure does not include potential cash payments that may be
required to be made on the Cash Flow Swap in the future. Also,
our presentation of this non-GAAP measure may not be comparable
to similarly titled measures of other companies.
The following is a reconciliation
of Net income adjusted for unrealized gain or loss from Cash
Flow Swap to Net income:
Original Predecessor
Immediate Predecessor
Successor
Successor
Pro Forma
Successor
Pro Forma
Year
62 Days
304 Days
174 Days
233 Days
Three Months
Three Months
Ended
Ended
Ended
Ended
Ended
Ended
Ended
December 31,
March 2,
December 31,
June 23,
December 31,
Year Ended December 31,
March 31,
March 31,
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(in millions)
$
27.9
$
11.2
$
49.7
$
52.4
$
23.6
$
115.4
$
107.7
$
36.9
$
(82.4
)
$
(78.9
)
(142.8
)
76.2
76.2
(14.8
)
(72.0
)
(72.0
)
$
27.9
$
11.2
$
49.7
$
52.4
$
(119.2
)
$
191.6
$
183.9
$
22.1
$
(154.4
)
$
(150.9
)
Table of Contents
(4)
Barrels per day is calculated by
dividing the volume in the period by the number of calendar days
in the period. Barrels per day as shown here is impacted by
plant down-time and other plant disruptions and does not
represent the capacity of the facilitys continuous
operations.
(5)
Refining margin is a measurement
calculated as the difference between net sales and cost of
products sold (exclusive of deprecation and amortization) which
we use as a general indication of the amount above our cost of
products sold at which we are able to sell refined products.
Each of the components used to calculate refining margin (net
sales and cost of products sold exclusive of deprecation and
amortization) can be taken directly from our statement of
operations. Refining margin per barrel is a measurement
calculated by dividing the refining margin by our
refinerys crude oil throughput volumes for the respective
periods presented. We use refining margin as the most direct and
comparable metric to a crack spread which is an observable
market indication of industry profitability.
Refining margin is a non-GAAP
measure and should not be substituted for gross profit or
operating income. Our calculations of refining margin and
refining margin per barrel may differ from similar calculations
of other companies in our industry, thereby limiting their
usefulness as comparative measures. The table included in
footnote 7 reconciles refining margin to gross profit for the
periods presented.
(6)
This information is industry data
and is not derived from our audited financial statements or
unaudited interim financial statements.
(7)
Direct operating expenses
(exclusive of depreciation and amortization) per throughput
barrel is calculated by dividing direct operating expenses
(exclusive of depreciation and amortization) by total crude oil
throughput volumes for the respective periods presented. Direct
operating expenses (exclusive of depreciation and amortization)
includes costs associated with the actual operations of the
refinery, such as energy and utility costs, catalyst and
chemical costs, repairs and maintenance and labor and
environmental compliance costs but does not include deprecation
or amortization. We use direct operating expenses (exclusive of
depreciation and amortization) as a measure of operating
efficiency within the plant and as a control metric for
expenditures.
Direct operating expenses
(exclusive of depreciation and amortization) per refinery
throughput barrel is a non-GAAP measure. Our calculations of
direct operating expenses (exclusive of depreciation and
amortization) per refinery throughput barrel may differ from
similar calculations of other companies in our industry, thereby
limiting its usefulness as a comparative measure. The following
table reflects direct operating expenses (exclusive of
depreciation and amortization) and the related calculation of
direct operating expenses per refinery throughput barrel.
Original Predecessor
Immediate Predecessor
Successor
Year
62 Days
304 Days
174 Days
233 Days
Year
Three Months
Ended
Ended
Ended
Ended
Ended
Ended
Ended
December 31,
March 2,
December 31,
June 23,
December 31,
December 31,
March 31,
(unaudited)
(in millions, except as otherwise indicated)
$
1,161.3
$
241.6
$
1,390.8
$
903.8
$
1,363.4
$
2,880.4
$
619.6
$
352.5
1,040.0
217.4
1,228.1
761.7
1,156.2
2,422.7
533.7
298.5
80.1
14.9
73.2
52.6
56.2
135.3
30.7
96.7
2.1
0.3
1.5
0.8
15.6
33.0
7.8
9.8
$
39.1
$
9.0
$
88.0
$
88.7
$
135.4
$
289.4
$
47.4
$
(52.5
)
80.1
14.9
73.2
52.6
56.2
135.3
30.7
96.7
2.1
0.3
1.5
0.8
15.6
33.0
7.8
9.8
$
121.3
$
24.2
$
162.7
$
142.1
$
207.2
$
457.7
$
85.9
$
54.0
$
3.89
$
4.23
$
5.92
$
9.28
$
11.55
$
13.27
$
11.19
$
12.69
$
1.25
$
1.57
$
3.20
$
5.79
$
7.55
$
8.39
$
6.18
$
(12.34
)
$
2.57
$
2.60
$
2.66
$
3.44
$
3.13
$
3.92
$
4.00
$
22.73
(8)
On-stream factor is the total
number of hours operated divided by the total number of hours in
the reporting period.
(9)
During the year ended
December 31, 2003, we recorded an additional charge of
$9.6 million related to the asset impairment of the
refinery and nitrogen fertilizer plant based on the expected
sales price of the assets in the Initial Acquisition. In
addition, we recorded a charge of $1.3 million for the
rejection of existing contracts while operating under
Chapter 11 of the U.S. Bankruptcy Code.
(10)
During the 304 days ended
December 31, 2004, the 174 days ended June 23,
2005 and the year ended December 31, 2006, we recognized a loss
of $7.2 million, $8.1 million and $23.4 million,
respectively, on early extinguishment of debt.
(11)
Operational information reflected
for the 233-day Successor period ended December 31, 2005
includes only 191 days of operational activity. Successor
was formed on May 13, 2005 but had no financial statement
activity during the 42-day period from May 13, 2005 to
June 24, 2005, with the exception of certain crude oil,
heating oil and gasoline option agreements entered into with J.
Aron as of May 16, 2005 which expired unexercised on
June 16, 2005.
(12)
Excludes liabilities subject to
compromise due to Original Predecessors bankruptcy of
$105.2 million as of December 31, 2003 in calculating
Original Predecessors working capital.
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(13)
While operating under
Chapter 11 of the U.S. Bankruptcy Code, Original
Predecessors financial statements were prepared in
accordance with
SOP 90-7
Financial Reporting by Entities in Reorganization under
Bankruptcy Code.
SOP 90-7
requires that pre-petition liabilities be segregated in the
Balance Sheet.
(14)
Minority interest reflects
(a) on December 31, 2006 and March 31, 2007,
respectively, common stock in two of our subsidiaries owned by
John J. Lipinski (which will be exchanged for shares of our
common stock with an equivalent value prior to the consummation
of this offering) and (b) on March 31, 2007, as
adjusted, the managing general partner interest in the
Partnership held by our controlling stockholders and senior
management.
(15)
A $1.00 increase (decrease) in the
assumed initial public offering price of $20.00 per share would
(decrease) increase total debt and would increase (decrease)
stockholders equity by approximately $14.5 million,
assuming that the number of shares offered by us, as set forth
on the cover page of this prospectus, remains the same and after
deducting estimated underwriting discounts and commissions. In
addition, depending on market conditions at the time of pricing
of this offering, we may sell fewer or more shares than the
number set forth on the cover page of this prospectus. The pro
forma information presented above is illustrative only and
following the completion of this offering will be adjusted based
on the actual initial public offering price and other terms of
the offering determined at pricing.
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Original Predecessor refers to the former Petroleum Division and
one facility within the eight-plant Nitrogen Fertilizer
Manufacturing and Marketing Division of Farmland which
Coffeyville Resources, LLC acquired on March 3, 2004 in a
sales process under Chapter 11 of the U.S. Bankruptcy
Code;
Initial Acquisition refers to the acquisition of Original
Predecessor on March 3, 2004 by Coffeyville Resources, LLC;
Immediate Predecessor refers to Coffeyville Group Holdings, LLC
and its subsidiaries, including Coffeyville Resources, LLC;
Subsequent Acquisition refers to the acquisition of Immediate
Predecessor on June 24, 2005 by Coffeyville Acquisition
LLC; and
Successor refers to Coffeyville Acquisition LLC and its
consolidated subsidiaries.
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our upgraded equipment may not perform at expected throughput
levels;
the yield and product quality of new equipment may differ from
design; and
redesign or modification of the equipment may be required to
correct equipment that does not perform as expected, which could
require facility shutdowns until the equipment has been
redesigned or modified.
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unforeseen difficulties in the acquired operations and
disruption of the ongoing operations of our petroleum business
and the nitrogen fertilizer business;
failure to achieve cost savings or other financial or operating
objectives with respect to an acquisition;
strain on the operational and managerial controls and procedures
of our petroleum business and the nitrogen fertilizer business,
and the need to modify systems or to add management resources;
difficulties in the integration and retention of customers or
personnel and the integration and effective deployment of
operations or technologies;
amortization of acquired assets, which would reduce future
reported earnings;
possible adverse short-term effects on our cash flows or
operating results;
diversion of managements attention from the ongoing
operations of our petroleum business and the nitrogen fertilizer
business; and
assumption of unknown material liabilities or regulatory
non-compliance issues.
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limiting our ability to obtain additional financing to fund our
working capital, acquisitions, expenditures, debt service
requirements or for other purposes;
limiting our ability to use operating cash flow in other areas
of our business because we must dedicate a substantial portion
of these funds to service debt;
limiting our ability to compete with other companies who are not
as highly leveraged;
placing restrictive financial and operating covenants in the
agreements governing our and our subsidiaries long-term
indebtedness and bank loans, including, in the case of certain
indebtedness of subsidiaries, certain covenants that restrict
the ability of subsidiaries to pay dividends or make other
distributions to us;
exposing us to potential events of default (if not cured or
waived) under financial and operating covenants contained in our
or our subsidiaries debt instruments that could have a
material adverse effect on our business, financial condition and
operating results;
increasing our vulnerability to a downturn in general economic
conditions or in pricing of our products; and
limiting our ability to react to changing market conditions in
our industry and in our customers industries.
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the requirement that a majority of our board of directors
consist of independent directors;
the requirement that we have a nominating/corporate governance
committee that is composed entirely of independent directors
with a written charter addressing the committees purpose
and responsibilities; and
the requirement that we have a compensation committee that is
composed entirely of independent directors with a written
charter addressing the committees purpose and
responsibilities.
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the failure of securities analysts to cover our common stock
after this offering or changes in financial estimates by
analysts;
announcements by us or our competitors of significant contracts
or acquisitions;
variations in quarterly results of operations;
loss of a large customer or supplier;
general economic conditions;
terrorist acts;
future sales of our common stock; and
investor perceptions of us and the industries in which our
products are used.
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Fertilizer GP, as managing general partner of the Partnership,
will hold all of the incentive distribution rights in the
Partnership. Incentive distribution rights will give Fertilizer
GP a right to increasing percentages of the Partnerships
quarterly distributions after the Partnership has distributed
all aggregate adjusted operating surplus generated by the
Partnership during the
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period from its formation through June 30, 2009, assuming
the Partnership and its subsidiaries are released from their
guaranty of our Credit Facility. Fertilizer GP may have an
incentive to manage the Partnership in a manner which increases
these future cash flows rather than in a manner which increases
current cash flows.
The initial directors and executive officers of Fertilizer GP
will also serve as directors and executive officers of CVR
Energy. The executive officers who work for both us and
Fertilizer GP, including our chief executive officer, chief
operating officer, chief financial officer and general counsel,
will divide their time between our business and the business of
the Partnership. These executive officers will face conflicts of
interests from time to time in making decisions which may
benefit either our company or the Partnership. However, when
making decisions on behalf of the Partnership, they will be
acting in their capacity as directors and officers of the
managing general partner and not us.
The owners of Fertilizer GP, who are also our controlling
stockholders and senior management, will be permitted to compete
with us or the Partnership or to own businesses that compete
with us or the Partnership. In addition, the owners of
Fertilizer GP will not be required to share business
opportunities with us, and our owners will not be required to
share business opportunities with the Partnership or Fertilizer
GP.
Neither the partnership agreement nor any other agreement will
require the owners of Fertilizer GP to pursue a business
strategy that favors us or the Partnership. The owners of
Fertilizer GP will have fiduciary duties to make decisions in
their own best interests, which may be contrary to our interests
and the interests of the Partnership. In addition, Fertilizer GP
will be allowed to take into account the interests of parties
other than us, such as its owners, in resolving conflicts of
interest, which will have the effect of limiting its fiduciary
duty to us.
The partnership agreement will limit the liability and reduce
the fiduciary duties of Fertilizer GP, while also restricting
the remedies available to the unit holders of the Partnership,
including us, for actions that, without these limitations, might
constitute breaches of fiduciary duty. Delaware partnership law
permits such contractual reductions of fiduciary duty. As a
result of our ownership interest in the Partnership, we may
consent to some actions that might otherwise constitute a breach
of fiduciary or other duties applicable under state law.
Fertilizer GP will determine the amount and timing of asset
purchases and sales, capital expenditures, borrowings, repayment
of indebtedness, issuances of additional partnership units and
cash reserves maintained by the Partnership (subject to our
specified approval rights as holder of special GP rights), each
of which can affect the amount of cash that is available for
distribution to us in our capacity as a holder of special units
and the amount of cash paid to Fertilizer GP in respect of its
IDRs.
In some instances Fertilizer GP may cause the Partnership to
borrow funds in order to permit the payment of cash
distributions, where the purpose or effect of the borrowing is
to make incentive distributions which benefit Fertilizer GP.
Fertilizer GP will also be able to determine the amount and
timing of any capital expenditures and whether a capital
expenditure is for maintenance, which reduces operating surplus,
or improvement, which does not. Such determinations can affect
the amount of cash that is available for distribution and the
manner in which the cash is distributed.
Fertilizer GP may exercise its rights to call and purchase all
of the Partnerships equity securities of any class if at
any time it and its affiliates (excluding us) own more than 80%
of the outstanding securities of such class.
Fertilizer GP will control the enforcement of obligations owed
to the Partnership by it and its affiliates. In addition,
Fertilizer GP will decide whether to retain separate counsel or
others to perform services for the Partnership.
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The partnership agreement permits Fertilizer GP to make a number
of decisions in its individual capacity, as opposed to its
capacity as a general partner. This entitles Fertilizer GP to
consider only the interests and factors that it desires, and it
has no duty or obligation to give any consideration to any
interest of, or factors affecting, us or our affiliates.
The partnership agreement provides that Fertilizer GP will not
have any liability to the Partnership or to us for decisions
made in its capacity as managing general partner so long as it
acted in good faith, meaning it believed that the decisions were
in the best interests of the Partnership.
The partnership agreement provides that Fertilizer GP and its
officers and directors will not be liable for monetary damages
to the Partnership for any acts or omissions unless there has
been a final and non-appealable judgment entered by a court of
competent jurisdiction determining that Fertilizer GP or those
persons acted in bad faith or engaged in fraud or willful
misconduct.
The partnership agreement generally provides that affiliate
transactions and resolutions of conflicts of interest not
approved by the conflicts committee of the board of directors of
Fertilizer GP and not involving a vote of unit holders must be
on terms no less favorable to the Partnership than those
generally provided to or available from unrelated third parties
or be fair and reasonable to the Partnership and
that, in determining whether a transaction or resolution is
fair and reasonable, Fertilizer GP may consider the
totality of the relationship between the parties involved,
including other transactions that may be particularly
advantageous or beneficial to the Partnership.
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The Partnerships managing general partner has broad
discretion to establish reserves for the prudent conduct of the
Partnerships business. The establishment of those reserves
could result in a reduction of the Partnerships
distributions.
The amount of distributions made by the Partnership and the
decision to make any distribution is determined by the
Partnerships managing general partner, which we do not
control.
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Under
Section 17-607
of the Delaware Limited Partnership Act, the Partnership may not
make a distribution to its unit holders if the distribution
would cause its liabilities to exceed the fair value of its
assets.
Although the partnership agreement requires the Partnership to
distribute its available cash, the partnership agreement may be
amended.
If the Partnership enters into its own credit facility in the
future, the credit facility may limit the distributions which
the Partnership can make. In addition, the credit facility will
likely contain financial tests and covenants that the
Partnership must satisfy; any failure to comply with these tests
and covenants could result in the lenders prohibiting
distributions by the Partnership.
The actual amount of cash available for distribution will depend
on factors such as the level of capital expenditures made by the
Partnership, the cost of acquisitions, if any, fluctuations in
the Partnerships working capital needs, the amount of fees
and expenses incurred by the Partnership, and the
Partnerships ability to make working capital and other
borrowings to make distributions to unit holders.
If the Partnership consummates one or more public or private
offerings, because at least 40% (and potentially all) of our
interest may be subordinated to common units (if any), we would
be harmed if the MQD could not be paid on all units.
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volatile margins in the refining industry;
exposure to the risks associated with volatile crude prices;
disruption of our ability to obtain an adequate supply of crude
oil;
decreases in the light/heavy and/or the sweet/sour crude oil
price spreads;
refinery operating hazards and interruptions, including
unscheduled maintenance or downtime, and the availability of
adequate insurance coverage;
the failure of our new and redesigned equipment in our
facilities to perform according to expectations;
interruption of the pipelines supplying feedstock and in the
distribution of our products;
the seasonal nature of our petroleum business;
competition in the petroleum and nitrogen fertilizer businesses;
capital expenditures required by environmental laws and
regulations;
changes in our credit profile;
the availability of adequate cash and other sources of liquidity
for our capital needs;
a decline in the price of natural gas;
the cyclical nature of the nitrogen fertilizer business;
adverse weather conditions;
the supply and price levels of essential raw materials;
the volatile nature of ammonia, potential liability for
accidents involving ammonia that cause severe damage to property
and/or
injury to the environment and human health and potential
increased costs relating to transport of ammonia;
the dependence of the nitrogen fertilizer operations on a few
third-party suppliers;
liabilities arising from current or future environmental
contamination;
our limited operating history as a stand-alone company;
our commodity derivative activities;
our dependence on significant customers;
our potential inability to successfully implement our business
strategies, including the completion of significant capital
programs;
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the success of our acquisition strategies;
our significant indebtedness;
the dependence on our subsidiaries for cash to meet our debt
obligations;
whether we will be able to amend our Credit Facility on
acceptable terms if the Partnership seeks to consummate a public
or private offering;
the potential loss of key personnel;
labor disputes and adverse employee relations;
potential increases in costs and distraction of management
resulting from the requirements of being a public company;
risks relating to evaluations of internal controls required by
Section 404 of the Sarbanes-Oxley Act;
the operation of our company as a controlled company;
new regulations concerning the transportation of hazardous
chemicals, risks of terrorism and the security of chemical
manufacturing facilities;
successfully defending against third-party claims of
intellectual property infringement;
our ability to continue to license the technology used in our
operations;
the Partnerships ability to make distributions equal to
the minimum quarterly distribution or any distributions at all;
the possibility that Partnership distributions to us will
decrease if the Partnership issues additional equity interests
and that our rights to receive distributions will be
subordinated to the rights of third party investors;
the possibility that we will be required to deconsolidate the
Partnership from our financial statements in the future;
the Partnerships preferential right to pursue certain
business opportunities before we pursue them;
reduction of our voting power in the Partnership if the
Partnership completes a public offering or private placement;
whether we will be required to purchase the managing general
partner interest in the Partnership, and whether we will have
the requisite funds to do so;
the possibility that we will be required to sell a portion of
our interests in the Partnership in the Partnerships
initial offering at an undesirable time or price;
the ability of the Partnership to manage the nitrogen fertilizer
business in a manner adverse to our interests;
the conflicts of interest faced by our senior management, which
operates both our company and the Partnership, and our
controlling stockholders, who control our company and the
managing general partner of the Partnership;
limitations on the fiduciary duties owed by the managing general
partner which are included in the partnership agreement;
whether we are ever deemed to be an investment company under the
1940 Act or will need to take actions to sell interests in
the Partnership or buy assets to refrain from being deemed an
investment company;
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changes in the treatment of the Partnership as a partnership for
U.S. income tax purposes;
transfer of control of the managing general partner of the
Partnership to a third party that may have no economic interest
in us; and
the risk that the Partnership will not consummate a public
offering or private placement.
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on an actual basis for Coffeyville Acquisition LLC; and
as adjusted to give effect to the sale by us of
15,500,000 shares in this offering at an assumed initial
offering price of $20.00 per share, the use of proceeds
from this offering, the Transactions, the transfer of the
nitrogen fertilizer business to the Partnership, the sale of the
managing general partner interest in the Partnership to a new
entity owned by our controlling stockholders and senior
management, the termination fee payable in connection with the
termination of the management agreements in conjunction with
this offering, the issuance of shares of our common stock to our
chief executive officer in exchange for shares in two of our
subsidiaries and the payment of a dividend to Coffeyville
Acquisition LLC and Coffeyville Acquisition II LLC.
As of March 31, 2007
(in thousands)
$
7,608
$
2,941
29,500
29,500
775,000
495,000
804,500
524,500
3,650
10,600
7,102
(80,901
)
2,148
1,311
(77,442
)
816
191,415
192,231
$
737,810
$
727,331
58
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(1)
As of March 31, 2007, we had availability of
$114.1 million under the revolving credit facility. As of
May 31, 2007, we had outstanding $42.0 million of
revolver borrowings and availability of $101.6 million
under the revolving credit facility.
(2)
The as adjusted column gives effect to (i) the exchange of
our chief executive officers shares in two of our
subsidiaries for shares of our common stock and (ii) the
sale of the managing general partner interest in the Partnership.
(3)
On an actual basis, the Members equity reflects the unit
ownership at Coffeyville Acquisition LLC which is structured as
a partnership for tax purposes. Upon completion of this
offering, the reporting entity will be CVR Energy, Inc., a
corporation. The ownership at Coffeyville Acquisition LLC and,
after the consummation of the Transactions, Coffeyville
Acquisition II LLC will not be reported, and as such, the
components of Members equity do not appear in the As
Adjusted column. Upon completion of this offering, common
stock in CVR Energy, Inc. will be issued and reflected in Common
stock in the As Adjusted column. Members
equity and Managements voting common units subject to
redemption will be eliminated and replaced with
Stockholders equity to reflect the new corporate
structure. Any difference in the total value of equity upon
completion of this offering and the par value of the common
stock issued will be reflected in Additional paid-in capital.
(4)
The number of shares of common stock to be outstanding after the
offering:
gives effect to the issuance of
15,500,000 shares of our common stock in this offering;
excludes 10,300 shares of common stock issuable
upon the exercise of stock options to be granted to two
directors pursuant to our long-term incentive plan on the date
of this prospectus;
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64
$
20.00
$
(2.64
)
$
3.96
$
1.32
$
18.68
Shares Purchased
Total Consideration
Average Price
66,141,591
81
%
$
258,160,000
45
%
$
3.90
15,500,000
19
310,000,000
55
20.00
81,641,591
100.0
%
$
568,160,000
100.0
%
$
6.96
(1)
Total consideration and average price per share paid by the
existing stockholders do not give effect to the
$250.0 million distribution made to certain of the existing
stockholders in December 2006 using proceeds from the Credit
Facility and the $10.6 million dividend we intend to
distribute to existing stockholders in connection with the
Transactions. If the table were adjusted to give
60
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effect to these payments, existing stockholders total
consideration for their shares would be $2,440,000 with an
average share price of ($0.04).
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Unaudited Pro Forma Condensed Consolidated Statement of
Operations
For the Year Ended December 31, 2006
Pro Forma
Adjustment
Pro Forma
to Give
Adjustment
Effect to
Successor
Pro Forma
to Give
Proceeds from
Pro Forma
Year Ended
Adjustments to
Effect to the
the Offering
and
Year Ended
December 31,
Give Effect
Sale of the
Payment of the
December 31,
2006
To the
Refinancing
GP
Interest
Termination
Fee
2006
$
3,037,567,362
$
$
$
$
3,037,567,362
2,443,374,743
2,443,374,743
198,979,983
198,979,983
62,600,121
941,667
(a)
10,000,000
(h)
73,541,788
51,004,582
51,004,582
2,755,959,429
941,667
10,000,000
2,766,901,096
281,607,933
(941,667
)
(10,000,000
)
270,666,266
(43,879,644
)
(11,860,425
)(b)
23,643,692
(f)
(32,096,376
)
94,493,141
94,493,141
(23,360,306
)
(23,360,306
)
2,550,359
2,550,359
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Pro Forma
Adjustment
Pro Forma
to Give
Adjustment
Effect to
Successor
Pro Forma
to Give
Proceeds from
Pro Forma
Year Ended
Adjustments to
Effect to the
the Offering
and
Year Ended
December 31,
Give Effect
Sale of the
Payment of the
December 31,
2006
To the
Refinancing
GP
Interest
Termination
Fee
2006
311,411,483
(12,802,091
)
13,643,692
312,253,084
119,840,160
(5,104,834
)(c)
4,226,750
(e)
9,427,922
(g)
128,389,998
191,571,323
(7,697,257
)
(4,226,750
)
4,215,770
183,863,086
$
2.27
$
2.15
$
2.26
$
2.15
84,563,025
85,478,437
84,580,525
85,495,937
(a)
To reflect the additional increase
in fees related to the refinancing transaction and the related
funded letter of credit in support of the cash flow swaps, which
are required under the terms of the senior secured credit
facility refinanced on December 28, 2006.
(b)
To increase the interest expense
for (1) additional interest resulting from the refinancing
of the Credit Facility on December 28, 2006 as if it had
occurred on January 1, 2006 and (2) amortization of
the related deferred financing costs of $11.1 million
amortized over the life of the related debt instrument. An
assumed average interest rate of 8.36% based on the interest
rate in effect on the term loans as of December 28, 2006
was used to calculate interest expense on an average annual
balance of $772 million of term debt. Actual interest
expense may be higher or lower depending upon fluctuations in
interest rates. A
1
/
8
%
change in interest rates would have resulted in a $978,504
change in interest expense for the twelve month period.
(c)
To reflect the income tax effect of
the pro forma pre-tax loss adjustments of $(12,802,091) for the
year ended December 31, 2006 using a combined federal and
state statutory rate of approximately 39.875%.
(d)
Pro forma net earnings includes a
$14.1 million loss on extinguishment of debt, net of
$9.3 million in taxes, related to refinancing of our senior
secured credit facility on December 28, 2006.
(e)
To reflect the income tax expense
related to the sale of the managing general partner interest in
the Partnership using a combined federal and state statutory
rate of approximately 39.875%.
(f)
To reflect the reduction in
interest expense related to the repayment of long-term debt of
$280 million from the offering proceeds as if it had
occurred on January 1, 2006. An assumed average interest
rate of 8.36% based on the interest rate in effect on the term
loans as of December 28, 2006 was used to calculate the
adjustment to interest expense. Actual interest expense may be
higher or lower depending upon fluctuations in interest rates. A
1
/
8
%
change in interest rates would have resulted in a $624,980
change in interest expense for the twelve month period.
(g)
To reflect the income tax effect of
the pro forma pre-tax income adjustments of $13,643,692 for the
year ended December 31, 2006, based on an effective tax
rate of 69.1%. The effective tax rate was determined by applying
a combined federal and state statutory rate of approximately
39.875% to pro forma pre-tax income adjustments of $23,643,692.
There was no tax effect on pro forma adjustments of pre-tax loss
of $10,000,000 relating to the non-deductible termination fee.
(h)
Reflects $10 million
termination fee in connection with the termination of the
management agreements payable to Goldman, Sachs & Co. and
Kelso & Company, L.P. in conjunction with this offering.
(i)
To calculate earnings per share on
a pro forma basis, based on an assumed number of shares
outstanding at the time of the initial public offering. All
information in this prospectus assumes that prior to the initial
public offering, two newly formed direct wholly owned
subsidiaries of ours will merge with Coffeyville Refinery and
Marketing, Inc. and Coffeyville Nitrogen Fertilizers, Inc., we
will effect a 658,619.93 for 1 stock split,
252,448 shares of our common stock will be issued to our
chief executive officer in exchange for his shares in two of our
subsidiaries, 27,150 shares of our common stock will be
issued to our employees, 17,500 non-vested restricted shares of
our common stock will be issued to two of our directors, and we
will issue 15,500,000 shares of common stock in this
offering. No effect has been given to any shares that might be
sold in this offering pursuant to the exercise by the
underwriters of their option to purchase additional shares in
the offering. The weighted average shares outstanding also gives
effect to the increase in the number of shares which, when
multiplied by the initial public offering price, would be
sufficient to replace the capital in excess of earnings
withdrawn, as a result of our paying dividends in the year ended
December 31, 2006 in excess of earnings for such period, or
2,921,434 shares. The weighted average number of shares
outstanding for the pro forma column also accounts for the
additional $10.6 million dividend that will be paid to
Coffeyville Acquisition LLC and Coffeyville Acquisition II
LLC.
Table of Contents
Unaudited Pro Forma Condensed Consolidated Statement of
Operations
For the Three Months Ended March 31, 2007
Historical
Successor
Pro
Forma
Three Months
Three Months
Ended
Pro Forma
Ended
March 31,
2007
Adjustments
March 31,
2007
$
390,482,819
$
$
390,482,819
303,670,229
303,670,229
113,411,569
113,411,569
13,149,892
13,149,892
14,235,431
14,235,931
444,467,121
444,467,121
(53,984,302
)
(53,984,302
)
(11,856,624
)
5,852,000
(a)
(6,004,624
)
(136,959,221
)
(136,959,221
)
452,748
452,748
(202,347,399
)
5,852,000
(196,495,399
)
(47,297,700
)
2,333,485
(b)
(44,964,215
)
675,747
(15,077
)(c)
660,670
(154,373,952
)
3,503,438
(150,870,514
)
$
(1.89
)
$
(1.85
)
$
(1.89
)
$
(1.85
)
81,641,591
81,641,591
81,641,591
81,641,591
(a)
To reflect the reduction in
interest expense related to the payment of long-term debt of
$280 million from the offering proceeds. An average
interest rate of 8.36% based on the interest rate in effect on
the term loans during the first quarter 2007 was used to
calculate the pro forma interest expense on an average balance
of $495 million of term debt. Actual interest expense may
be higher or lower depending upon fluctuations in interest
rates. A
1
/
8
%
change in interest rates would have resulted in a $154,688
change in interest expense for the three month period.
(b)
To reflect the income tax effect of
pro forma pre-tax income adjustment of $5,852,000 for the period
ended March 31, 2007 using a combined federal and state
statutory rate of approximately 39.875%.
(c)
To reflect the adjustment to
minority loss in subsidiaries for the net impact of the pre-tax
income adjustment of $5,852,000 and the related income tax
effect of the adjustment.
(d)
To calculate earnings per share on
a pro forma basis, based on an assumed number of shares
outstanding at the time of the initial public offering. All
information in this prospectus assumes that prior to the initial
public offering, two newly formed direct wholly owned
subsidiaries of CVR Energy will merge with Coffeyville
Refining & Marketing, Inc. and Coffeyville Nitrogen
Fertilizer, Inc., we will effect a 658,619.93 for 1 stock split,
252,448 shares of our common stock will be issued to our
chief executive officer in exchange for his shares in two of our
subsidiaries, 27,150 shares of our common stock will be
issued to our employees, 17,500 non-vested restricted shares of
our common stock will be issued to two of our directors, and we
will issue 15,500,000 shares of common stock in this
offering. No effect has been given to any shares that might be
sold in this offering pursuant to the exercise by the
underwriters of their option to purchase additional shares in
the offering. The 17,500 non-vested restricted shares of our
common stock to be issued to two of our directors have been
excluded from the calculation of pro forma diluted earnings per
share because the inclusion of such shares in the number of
weighted shares outstanding would be antidilutive.
65
Table of Contents
Unaudited Pro Forma Consolidated Balance Sheet at March 31,
2007
Pro
Forma
Three Months
Three Months
Ended
Pro Forma
Ended
March 31,
2007
Adjustments
March 31,
2007
$
7,607,943
$
(10,600,000
)(a)
$
2,940,662
10,600,000
(b)
310,000,000
(e)
(24,667,281
)(f)
(280,000,000
)(g)
(10,000,000
)(h)
25,197,308
25,197,308
184,418,775
184,418,775
19,229,965
(3,692,934
)(f)
15,537,031
3,765,991
3,765,991
17,210,500
(4,226,750
)(c)
12,983,750
257,430,482
(12,586,965
)
244,843,517
1,113,555,099
1,398,519
(d)
1,114,953,618
584,081
584,081
83,774,885
83,774,885
8,652,412
8,652,412
5,368,712
5,368,712
$
1,469,365,671
$
(11,188,446
)
$
1,458,177,225
$
7,720,986
$
(2,789,518
)(g)
$
4,931,468
29,500,000
29,500,000
194,575,263
(710,215
)(f)
193,865,048
20,220,754
20,220,754
7,902,013
7,902,013
131,071,839
131,071,839
13,879,211
13,879,211
22,345,237
22,345,237
427,215,303
(3,499,733
)
423,715,570
767,279,014
(277,210,482
)(g)
490,068,532
5,879,762
5,879,762
227,709,397
227,709,397
107,972,734
107,972,734
1,108,840,907
(277,210,482
)
831,630,425
3,650,441
10,600,000
(b)
10,600,000
(3,650,441
)(d)
7,101,545
(92,577
)(a)
(7,008,968
)(e)
(80,901,264
)
(10,412,886
)(a)
101,314,150
(e)
(10,000,000
) (h)
3,458,739
(94,537
)(a)
(3,364,202
)(e)
$
(77,442,525
)
$
77,442,525
$
816,416
(e)
816,416
(4,226,750
)(c)
191,414,814
5,048,960
(d)
218,242,604
(e)
(27,650,000
)(f)
192,231,230
192,231,230
$
1,469,365,671
$
(11,188,446
)
$
1,458,177,225
66
Table of Contents
(a)
Reflects estimated payment of a
$10.6 million dividend to Coffeyville Acquisition LLC and
Coffeyville Acquisition II LLC.
(b)
Reflects gross proceeds of
$10.6 million received for the sale of the managing general
partner interest in the Partnership, through sale of the
managing general partner, to Coffeyville Acquisition III
LLC at estimated fair market value as determined after
consultation with management and a third party valuation firm.
(c)
Reflects the tax liability
determined at a combined federal and state statutory rate of
approximately 39.875% associated with the estimated gain
recognized on the sale of the managing general partner interest
at estimated fair market value.
(d)
Reflects the exchange of our chief
executive officers shares in two of our subsidiaries for
shares of our common stock at fair market value, resulting in an
estimated step-up in basis in our property, plant and equipment
of approximately $1.4 million.
(e)
To reflect the public offering of
15,500,000 shares of common stock at an assumed initial
offering price of $20.00 per share resulting in aggregate gross
proceeds of $310.0 million, and in conjunction with the
offering to reflect the conversion from a partnership structure
to a corporate structure of Members equity and Management
voting common units subject to redemption.
(f)
To reflect the payment of
underwriters discounts and commissions and estimated
offering expenses totaling $27.65 million of which
$2,982,719 had been prepaid as of March 31, 2007 and
$710,215 has been accrued as of March 31, 2007.
(g)
To reflect the repayment of the
term debt of $280 million with the net proceeds of this
offering.
(h)
Reflects payment of a
$10 million termination fee in connection with the
termination of the management agreements payable to Goldman,
Sachs & Co and Kelso & Company L.P. in conjunction
with this offering.
67
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71
72
68
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69
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Successor
Three Months
Three Months
Ended
Ended
(unaudited)
(unaudited)
(in millions,
except as otherwise indicated)
$
669.7
$
390.5
539.5
303.7
44.3
113.4
8.5
13.2
12.0
14.2
$
65.4
$
(54.0
)
0.6
0.5
(12.2
)
(11.9
)
(17.6
)
(137.0
)
$
36.2
$
(202.4
)
(14.1
)
47.3
0.7
$
22.1
$
(154.4
)
0.27
(1.89
)
0.27
(1.89
)
81,641,591
81,641,591
81,659,091
81,641,591
$
7.6
(169.8
)
1,469.4
804.5
3.7
7.1
(77.4
)
$
12.0
$
14.2
36.9
(82.4
)
8.0
43.6
(29.3
)
(107.4
)
9.6
29.5
29.3
107.4
98,454
53,689
85,276
47,267
102.7
86.2
160.4
165.7
70
Table of Contents
Original Predecessor
Immediate Predecessor
Successor
62 Days
304 Days
174 Days
233 Days
Year
Year Ended
Ended
Ended
Ended
Ended
Ended
December 31,
March 2,
December 31,
June 23,
December 31,
December 31,
(in millions, except as otherwise indicated)
$
887.5
$
1,262.2
$
261.1
$
1,479.9
$
980.7
$
1,454.3
$
3,037.6
765.8
1,061.9
221.4
1,244.2
768.0
1,168.1
2,443.4
149.4
133.1
23.4
117.0
80.9
85.3
199.0
16.3
23.6
4.7
16.3
18.4
18.4
62.6
30.8
3.3
0.4
2.4
1.1
24.0
51.0
(375.1
)
(10.9
)
$
(449.9
)
$
29.4
$
11.2
$
100.0
$
112.3
$
158.5
$
281.6
0.1
(0.5
)
(6.9
)
(8.4
)
0.4
(20.8
)
(11.7
)
(1.3
)
(10.1
)
(7.8
)
(25.0
)
(43.9
)
(4.2
)
0.3
0.5
(7.6
)
(316.1
)
94.5
$
(465.7
)
$
27.9
$
11.2
$
83.5
$
88.5
$
(182.2
)
$
311.4
(33.8
)
(36.1
)
63.0
(119.8
)
$
(465.7
)
$
27.9
$
11.2
$
49.7
$
52.4
$
(119.2
)
$
191.6
$
2.27
2.26
84,563,025
84,580,525
$
1.50
$
0.70
$
0.48
$
0.70
$
3.1
$
246.9
$
0.0
$
0.0
$
52.7
$
64.7
$
41.9
122.2
150.5
106.6
108.0
112.3
172.3
199.0
229.2
1,221.5
1,449.5
105.2
105.2
148.9
499.4
775.0
4.3
3.7
7.0
49.8
58.2
14.1
115.8
76.4
$
30.8
$
3.3
$
0.4
$
2.4
$
1.1
$
24.0
$
51.0
(465.7
)
27.9
11.2
49.7
52.4
23.6
115.4
(1.7
)
20.3
53.2
89.8
12.7
82.5
186.6
(272.4
)
(0.8
)
(130.8
)
(12.3
)
(730.3
)
(240.2
)
274.1
(19.5
)
(53.2
)
93.6
(52.4
)
712.5
30.8
Table of Contents
Original Predecessor
Immediate Predecessor
Successor
62 Days
304 Days
174 Days
233 Days
Year
Year Ended
Ended
Ended
Ended
Ended
Ended
December 31,
March 2,
December 31,
June 23,
December 31,
December 31,
(in millions, except as otherwise indicated)
272.4
0.8
14.2
12.3
45.2
240.2
84,343
95,701
106,645
102,046
99,171
107,177
108,031
74,446
85,501
92,596
90,418
88,012
93,908
94,524
265.1
335.7
56.4
252.8
193.2
220.0
369.3
434.6
510.6
93.4
439.2
309.9
353.4
633.1
(1)
The following are certain charges
and costs incurred in each of the relevant periods that are
meaningful to understanding our net income and in evaluating our
performance due to their unusual or infrequent nature:
Original Predecessor
Immediate Predecessor
Successor
Year
62 Days
304 Days
174 Days
233 Days
Year
Three Months
Ended
Ended
Ended
Ended
Ended
Ended
Ended
December 31,
March 2,
December 31,
June 23,
December 31,
March 31,
(in millions)
$
375.1
$
9.6
$
$
$
$
$
$
$
0.3
7.2
8.1
23.4
3.0
16.6
2.3
0.5
17.0
1.8
6.6
66.0
25.0
235.9
(126.8
)
24.5
119.7
(a)
During the year ended
December 31, 2002, we recorded a $375.1 million asset
impairment related to the write-down of our refinery and
nitrogen fertilizer plant to estimated fair value. During the
year ended December 31, 2003, we recorded an additional
charge of $9.6 million related to the asset impairment of
our refinery and nitrogen fertilizer plant based on the expected
sales price of the assets in the Initial Acquisition.
(b)
Reflects the impact of an operating
lease structure utilized by Farmland to finance the nitrogen
fertilizer plant which operating lease structure is not
currently in use. The cost of this plant under the operating
lease was $263.0 million and the rental payment was
$0.3 million for the period ended December 31, 2002.
In February 2002, Farmland refinanced the operating lease into a
secured loan structure, which effectively terminated the lease
and all of Farmlands obligations under the lease.
Table of Contents
(c)
Represents the write-off of
$7.2 million of deferred financing costs in connection with
the refinancing of our senior secured credit facility on
May 10, 2004, the write-off of $8.1 million of
deferred financing costs in connection with the refinancing of
our senior secured credit facility on June 23, 2005 and the
write-off
of
$23.4 million in connection with the refinancing of our senior
secured credit facility on December 28, 2006.
(d)
Consists of the additional cost of
product sold expense due to the step up to estimated fair value
of certain inventories on hand at March 3, 2004 and
June 24, 2005, as a result of the allocation of the
purchase price of the Initial Acquisition and the Subsequent
Acquisition to inventory.
(e)
Consists of fees which are expensed
to Selling, general and administrative expenses in connection
with the funded letter of credit facility of $150.0 million
issued in support of the Cash Flow Swap. We consider these fees
to be equivalent to interest expense and the fees are treated as
such in the calculation of EBITDA in the Credit Facility.
(f)
Represents expense associated with
a major scheduled turnaround.
(g)
Represents the expense associated
with the expiration of the crude oil, heating oil and gasoline
option agreements entered into by Coffeyville Acquisition LLC in
May 2005.
(2)
Minority interest reflects common
stock in two of our subsidiaries owned by John J. Lipinski
(which will be exchanged for shares of our common stock with an
equivalent value prior to the consummation of this offering).
(3)
Net income adjusted for unrealized
gain or loss from Cash Flow Swap results from adjusting for the
derivative transaction that was executed in conjunction with the
Subsequent Acquisition. On June 16, 2005, Coffeyville
Acquisition LLC entered into the Cash Flow Swap with J. Aron, a
subsidiary of The Goldman Sachs Group, Inc., and a related party
of ours. The Cash Flow Swap was subsequently assigned by
Coffeyville Acquisition LLC to Coffeyville Resources, LLC on
June 24, 2005. Under these agreements, sales representing
approximately 70% and 17% of then forecasted refinery output for
the periods from July 2005 through June 2009, and July 2009
through June 2010, respectively, have been economically hedged.
The derivative took the form of three NYMEX swap agreements
whereby if crack spreads fall below the fixed level,
J. Aron agreed to pay the difference to us, and if crack
spreads rise above the fixed level, we agreed to pay the
difference to J. Aron. See Description of Our
Indebtedness and the Cash Flow Swap.
We have determined that the Cash
Flow Swap does not qualify as a hedge for hedge accounting
purposes under current GAAP. As a result, our periodic
statements of operations reflect material amounts of unrealized
gains and losses based on the increases or decreases in market
value of the unsettled position under the swap agreements, which
is accounted for as a liability on our balance sheet. As the
crack spreads increase we are required to record an increase in
this liability account with a corresponding expense entry to be
made to our statement of operations. Conversely, as crack
spreads decline we are required to record a decrease in the swap
related liability and post a corresponding income entry to our
statement of operations. Because of this inverse relationship
between the economic outlook for our underlying business (as
represented by crack spread levels) and the income impact of the
unrecognized gains and losses, and given the significant
periodic fluctuations in the amounts of unrealized gains and
losses, management utilizes Net income adjusted for gain or loss
from Cash Flow Swap as a key indicator of our business
performance. In managing our business and assessing its growth
and profitability from a strategic and financial planning
perspective, management and our Board of Directors considers our
U.S. GAAP net income results as well as Net income adjusted for
unrealized gain or loss from Cash Flow Swap. We believe that Net
income adjusted for unrealized gain or loss from Cash Flow Swap
enhances the understanding of our results of operations by
highlighting income attributable to our ongoing operating
performance exclusive of charges and income resulting from mark
to market adjustments that are not necessarily indicative of the
performance of our underlying business and our industry. The
adjustment has been made for the unrealized loss from Cash Flow
Swap net of its related tax benefit.
Net income adjusted for gain or
loss from Cash Flow Swap is not a recognized term under GAAP and
should not be substituted for net income as a measure of our
performance but instead should be utilized as a supplemental
measure of financial performance or liquidity in evaluating our
business. Because Net income adjusted for unrealized gain or
loss from Cash Flow Swap excludes mark to market adjustments,
the measure does not reflect the fair market value of our Cash
Flow Swap in our net income. As a result, the measure does not
include potential cash payments that may be required to be made
on the Cash Flow Swap in the future. Also, our presentation of
this non-GAAP measure may not be comparable to similarly titled
measures of other companies.
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Table of Contents
The following is a reconciliation
of Net income adjusted for unrealized gain or loss from Cash
Flow Swap to Net income:
Original Predecessor
Immediate Predecessor
Successor
62 Days
304 Days
174 Days
233 Days
Year
Three Months
Year Ended
Ended
Ended
Ended
Ended
Ended
Ended
December 31,
March 2,
December 31,
June 23,
December 31,
December 31,
March 31,
(in millions)
$
(465.7
)
$
27.9
$
11.2
$
49.7
$
52.4
$
23.6
$
115.4
36.9
(82.4
)
(142.8
)
76.2
(14.8
)
(72.0
)
$
(465.7
)
$
27.9
$
11.2
$
49.7
$
52.4
$
(119.2
)
$
191.6
$
22.1
$
(154.4
)
(4)
Barrels per day is calculated by
dividing the volume in the period by the number of calendar days
in the period. Barrels per day as shown here is impacted by
plant down-time and other plant disruptions and does not
represent the capacity of the facilitys continuous
operations.
(5)
Includes the following:
During the year ended
December 31, 2002, we recorded a $375.1 million asset
impairment related to the write-down of the refinery and
nitrogen fertilizer plant to estimated fair value.
During the year ended
December 31, 2003, we recorded an additional charge of
$9.6 million related to the asset impairment of the
refinery and fertilizer plant based on the expected sales price
of the assets in the Initial Acquisition. In addition, we
recorded a charge of $1.3 million for the rejection of
existing contracts while operating under Chapter 11 of the
U.S. Bankruptcy Code.
(6)
During the 304 days ended
December 31, 2004, the 174 days ended June 23,
2005 and the year ended December 31, 2006, we recognized a
loss of $7.2 million, $8.1 million and $23.4 million,
respectively, on early extinguishment of debt.
(7)
Historical dividends per unit for
the
304-day
period ended December 31, 2004 and the
174-day
period ended June 23, 2005 are calculated based on the
ownership structure of Immediate Predecessor.
(8)
Excludes liabilities subject to
compromise due to Original Predecessors bankruptcy of
$105.2 million as of December 31, 2002 and 2003 in
calculating Original Predecessors working capital.
(9)
While operating under
Chapter 11 of the U.S. Bankruptcy Code, Original
Predecessors financial statements were prepared in
accordance with
SOP 90-7
Financial Reporting by Entities in Reorganization under
Bankruptcy Code.
SOP 90-7
requires that pre-petition liabilities be segregated in the
Balance Sheet.
(10)
Operational information reflected
for the
233-day
Successor period ended December 31, 2005 includes only
191 days of operational activity. Successor was formed on
May 13, 2005 but had no financial statement activity during
the
42-day
period from May 13, 2005 to June 24, 2005, with the
exception of certain crude oil, heating oil and gasoline option
agreements entered into with J. Aron as of May 16,
2005 which expired unexercised on June 16, 2005.
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92
202
211
223
F-7
F-45
F-46
F-67
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
75
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a sale of some or all of our partnership interests to an
unrelated party;
a sale of the managing general partner interest to a third party;
the issuance by the Partnership of partnership interests to
parties other than us or our related parties; and
the acquisition by us of additional partnership interests
(either new interests issued by the Partnership or interests
acquired from unrelated interest holders).
81
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82
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83
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84
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85
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Original
Predecessor
Immediate
Predecessor
Successor
62 Days
304 Days
174 Days
233 Days
Year
Year Ended
Ended
Ended
Ended
Ended
Ended
Three Months
December
31,
March
2,
December 31,
June
23,
December
31,
December 31,
Ended
March 31,
Consolidated
Financial Results
2003
2004
2004
2005
2005
2006
2006
2007
(unaudited)
(in
millions)
$
1,262.2
$
261.1
$
1,479.9
$
980.7
$
1,454.3
$
3,037.6
$
669.7
$
390.5
1,061.9
221.4
1,244.2
768.0
1,168.1
2,443.4
539.5
303.7
133.1
23.4
117.0
80.9
85.3
199.0
44.3
113.4
23.6
4.7
16.3
18.4
18.4
62.6
8.5
13.2
3.3
0.4
2.4
1.1
24.0
51.0
12.0
14.2
(10.9
)
$
29.4
$
11.2
$
100.0
$
112.3
$
158.5
$
281.6
$
65.4
$
(54.0
)
27.9
11.2
49.7
52.4
(119.2
)
191.6
22.1
(154.4
)
27.9
11.2
49.7
52.4
23.6
115.4
36.9
(82.4
)
(1)
Depreciation and amortization is
comprised of the following components as excluded from cost of
products sold, direct operating expense and selling, general and
administrative expense:
Original Predecessor
Immediate Predecessor
Successor
Year
62 Days
304 Days
174 Days
233 Days
Year
Three Months
Ended
Ended
Ended
Ended
Ended
Ended
Ended
December 31,
March 2,
December 31,
June 23,
December 31,
December 31,
March 31,
(in
millions)
(unaudited)
0.2
0.1
1.1
2.2
0.5
0.6
3.3
0.4
2.0
0.9
22.7
47.7
11.4
13.5
0.2
0.1
0.2
1.1
0.1
0.1
3.3
0.4
2.4
1.1
24.0
51.0
12.0
14.2
(2)
During the year ended
December 31, 2003, we recorded an additional charge of
$9.6 million related to the asset impairment of the
refinery and nitrogen fertilizer plant based on the expected
sales price of the assets in the Initial Acquisition. In
addition, we recorded a charge of $1.3 million for the
rejection of existing contracts while operating under
Chapter 11 of the U.S. Bankruptcy Code.
88
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(3)
The following are certain charges
and costs incurred in each of the relevant periods that are
meaningful to understanding our net income and in evaluating our
performance due to their unusual or infrequent nature:
(a)
During the year ended
December 31, 2003, we recorded an additional charge of
$9.6 million related to the asset impairment of the
refinery and nitrogen fertilizer plant based on the expected
sales price of the assets in the Initial Acquisition.
(b)
Represents the write-off of
$7.2 million of deferred financing costs in connection with
the refinancing of our senior secured credit facility on
May 10, 2004, the write-off of $8.1 million of
deferred financing costs in connection with the refinancing of
our senior secured credit facility on June 23, 2005 and the
write-off
of
$23.4 million in connection with the refinancing of our senior
secured credit facility on December 28, 2006.
(c)
Consists of the additional cost of
product sold expense due to the step up to estimated fair value
of certain inventories on hand at March 3, 2004 and
June 24, 2005, as a result of the allocation of the
purchase price of the Initial Acquisition and the Subsequent
Acquisition to inventory.
(d)
Consists of fees which are expensed
to selling, general and administrative expense in connection
with the funded letter of credit facility of $150.0 million
issued in support of the Cash Flow Swap. We consider these fees
to be equivalent to interest expense and the fees are treated as
such in the calculation of EBITDA in the Credit Facility.
(e)
Represents expenses associated with
a major scheduled turnaround at the nitrogen fertilizer plant
and our refinery.
(f)
Represents the expense associated
with the expiration of the crude oil, heating oil and gasoline
option agreements entered into by Coffeyville Acquisition LLC in
May 2005.
(4)
Net income adjusted for unrealized
gain or loss from Cash Flow Swap results from adjusting for the
derivative transaction that was executed in conjunction with the
Subsequent Acquisition. On June 16, 2005, Coffeyville
Acquisition LLC entered into the Cash Flow Swap with J. Aron, a
subsidiary of The Goldman Sachs Group, Inc., and a related party
of ours. The Cash Flow Swap was subsequently assigned from
Coffeyville Acquisition LLC to Coffeyville Resources, LLC on
June 24, 2005. Under these agreements, sales representing
approximately 70% and 17% of then forecasted refinery output for
the periods from July 2005 through June 2009, and July 2009
through June 2010, respectively, have been economically hedged.
The derivative took the form of three NYMEX swap agreements
whereby if crack spreads fall below the fixed level,
J. Aron agreed to pay the difference to us, and if crack
spreads rise above the fixed level, we agreed to pay the
difference to J. Aron. See Description of Our Indebtedness
and the Cash Flow Swap.
We have determined that the Cash
Flow Swap does not qualify as a hedge for hedge accounting
purposes under current GAAP. As a result, our periodic
statements of operations reflect material amounts of unrealized
gains and losses based on the increases or decreases in market
value of the unsettled position under the swap agreements which
is accounted for as a liability on our balance sheet. As the
crack spreads increase we are required to record an increase in
this liability account with a corresponding expense entry to be
made to our statement of operations. Conversely, as crack
spreads decline, we are required to record a decrease in the
swap related liability and post a corresponding income entry to
our statement of operations. Because of this inverse
relationship between the economic outlook for our underlying
business (as represented by crack spread levels) and the income
impact of the unrecognized gains and losses, and given the
significant periodic fluctuations in the amounts of unrealized
gains and losses, management utilizes Net income adjusted for
gain or loss from Cash Flow Swap as a key indicator of our
business performance. In managing our business and assessing its
growth and profitability from a strategic and financial planning
perspective, management and our Board of Directors considers our
U.S. GAAP net income results as well as Net income adjusted
for unrealized gain or loss from Cash Flow Swap. We believe that
Net income adjusted for unrealized gain or loss from Cash Flow
Swap enhances the understanding of our
89
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results of operations by
highlighting income attributable to our ongoing operating
performance exclusive of charges and income resulting from mark
to market adjustments that are not necessarily indicative of the
performance of our underlying business and our industry. The
adjustment has been made for the unrealized loss from Cash Flow
Swap net of its related tax benefit.
Net income adjusted for unrealized
gain or loss from Cash Flow Swap is not a recognized term under
GAAP and should not be substituted for net income as a measure
of our financial performance or liquidity but instead should be
utilized as a supplemental measure of performance in evaluating
our business. Because Net income adjusted for unrealized gain or
loss from Cash Flow Swap excludes mark to market adjustments,
the measure does not reflect the fair market value of our cash
flow swap in our net income. As a result, the measure does not
include potential cash payments that may be required to be made
on the Cash Flow Swap in the future. Also, our presentation of
this non-GAAP measure may not be comparable to similarly titled
measures of other companies.
The following is a reconciliation
of Net income adjusted for unrealized gain or loss from Cash
Flow Swap to Net income:
Original
Predecessor
Immediate
Predecessor
Successor
62 Days
304 Days
174 Days
233 Days
Year
Three Months
Year Ended
Ended
Ended
Ended
Ended
Ended
Ended
December
31,
March
2,
December 31,
June
23,
December
31,
December
31,
March
31,
2003
2004
2004
2005
2005
2006
2006
2007
(in
millions)
(unaudited)
$
27.9
$
11.2
$
49.7
$
52.4
$
23.6
$
115.4
$
36.9
$
(82.4
)
(142.8
)
76.2
(14.8
)
(72.0
)
$
27.9
$
11.2
$
49.7
$
52.4
$
(119.2
)
$
191.6
$
22.1
$
(154.4
)
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Original Predecessor
Immediate Predecessor
Successor
62 Days
304 Days
174 Days
233 Days
Year
Year Ended
Ended
Ended
Ended
Ended
Ended
Three Months Ended
December 31,
March 2,
December 31,
June 23,
December 31,
December 31,
March 31,
(unaudited)
(unaudited)
(in millions, except as otherwise indicated)
$
1,161.3
$
241.6
$
1,390.8
$
903.8
$
1,363.4
$
2,880.4
$
619.6
$
352.5
1,040.0
217.4
1,228.1
761.7
1,156.2
2,422.7
533.7
298.5
80.1
14.9
73.2
52.6
56.2
135.3
30.7
96.7
2.1
0.3
1.5
0.8
15.6
33.0
7.8
9.8
$
39.1
$
9.0
$
88.0
$
88.7
$
135.4
$
289.4
$
47.4
$
(52.5
)
80.1
14.9
73.2
52.6
56.2
135.3
30.7
96.7
2.1
0.3
1.5
0.8
15.6
33.0
7.8
9.8
$
121.3
$
24.2
$
162.7
$
142.1
$
207.2
$
457.7
$
85.9
$
54.0
$
3.89
$
4.23
$
5.92
$
9.28
$
11.55
13.27
11.19
12.69
$
1.25
$
1.57
$
3.20
$
5.79
$
7.55
$
8.39
$
6.18
$
(12.34
)
$
2.57
$
2.60
$
2.66
$
3.44
$
3.13
$
3.92
$
4.00
$
22.73
21.5
7.7
77.1
76.7
123.0
245.6
41.6
(63.5
)
Original
Predecessor
Immediate
and Immediate
Predecessor
Original
Predecessor
and Successor
Successor
Predecessor
Combined
Combined
Successor
Three Months Ended
Year Ended December 31,
March 31,
(dollars per barrel)
$
30.99
$
41.47
$
56.70
$
66.25
$
63.48
$
58.27
5.53
7.43
11.62
10.84
9.05
12.15
2.67
3.96
4.73
5.36
6.72
4.18
6.78
11.40
15.67
14.99
15.71
12.82
2.16
3.20
2.18
1.13
1.69
0.51
0.62
(0.52
)
(0.53
)
1.52
0.33
(0.54
)
1.11
1.24
3.20
7.42
3.09
8.77
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Original
Predecessor
Immediate
Successor
and Immediate
Predecessor
Three
Original
Predecessor
and Successor
Months
Predecessor
Combined
Combined
Successor
Ended
Year Ended December 31,
March 31,
(in millions, except as otherwise indicated)
$
3.89
$
5.62
$
10.50
$
13.27
$
11.19
$
12.69
$
1.25
$
2.92
$
6.74
$
8.39
$
6.18
$
(12.34
)
2.57
2.65
3.27
3.92
4.00
22.73
0.91
1.19
1.61
1.88
1.71
1.59
0.84
1.15
1.71
1.99
1.80
1.78
Original
Immediate
Predecessor
Predecessor
and Immediate
and
Original
Predecessor
Successor
Successor
Predecessor
Combined
Combined
Successor
Three Months Ended
Year Ended December 31,
March 31,
2003
2004
2005
2006
2006
2007
Selected Company
Barrels
Barrels
Barrels
Barrels
Barrels
Barrels
48,230
50.4
48,420
47.1
45,275
43.8
48,248
44.7
46,459
47.2
23,499
43.8
34,363
35.9
38,104
37.1
39,997
38.7
42,175
39.0
39,158
39.8
21,976
40.9
13,108
13.7
16,301
15.9
18,090
17.5
17,608
16.3
12,837
13.0
8,214
15.3
95,701
100.0
102,825
100.0
103,362
100.0
108,031
100.0
98,454
100.0
53,689
100.0
85,501
93.4
90,787
92.8
91,097
92.6
94,524
92.1
85,276
91.5
47,267
92.7
6,085
6.6
7,023
7.2
7,246
7.4
8,067
7.9
7,930
8.5
3,716
7.3
91,586
100.0
97,810
100.0
98,343
100.0
102,591
100.0
93,206
100.0
50,983
100.0
Original
Predecessor
Immediate
and Immediate
Predecessor and
Original
Predecessor
Successor
Predecessor
Combined
Combined
Successor
Successor
Year Ended December 31,
Three Months Ended March 31,
2003
2004
2005
2006
2006
2007
Total
Total
Total
Total
Total
Total
18,187,215
58.3
15,232,022
45.8
13,958,567
42.0
17,481,803
50.7
2,762,927
36.0
2,782,136
65.4
12,311,203
39.4
17,995,949
54.2
19,291,951
58.0
16,695,173
48.4
4,911,870
64.0
1,454,878
34.2
709,300
2.3
324,312
0.9
17,016
0.4
31,207,718
100.0
33,227,971
100.0
33,250,518
100.0
34,501,288
100.0
7,674,797
100.0
4,254,030
100.0
Table of Contents
93
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94
Table of Contents
95
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96
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97
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98
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Original
Predecessor
Immediate
Predecessor
Successor
62 Days
304 Days
174 Days
233 Days
Year
Three Months
Year Ended
Ended
Ended
Ended
Ended
Ended
Ended
Nitrogen
Fertilizer
December
31,
March
2,
December 31,
June
23,
December
31,
December 31,
March
31,
Business
Financial Results
2003
2004
2004
2005
2005
2006
2006
2007
(in
millions)
(unaudited)
$
100.9
$
19.4
$
93.4
$
79.3
$
93.7
$
162.5
$
51.5
$
38.6
21.9
4.1
20.4
9.1
14.5
25.9
7.2
6.1
1.2
0.1
0.9
0.3
8.4
17.1
4.2
4.4
53.0
8.4
43.8
28.3
29.2
63.7
13.6
16.7
7.8
3.5
22.9
35.3
35.7
36.8
24.0
9.3
Three Months
Ended
Year Ended December 31,
March 31,
$
5.49
$
6.18
$
9.01
$
6.98
$
7.84
$
7.17
274
297
356
353
415
389
143
171
212
197
221
239
Original
Predecessor
Immediate
and Immediate
Predecessor
Original
Predecessor
and Successor
Predecessor
Combined
Combined
Successor
Three Months
Year Ended December 31,
Ended March 31,
335.7
309.2
413.2
369.3
102.7
86.2
510.6
532.6
663.3
633.1
160.4
165.7
846.3
841.8
1,076.5
1,002.4
263.1
251.9
134.8
103.9
141.8
117.3
35.6
20.7
528.9
541.6
646.5
645.5
170.1
166.8
663.7
645.5
788.3
762.8
205.7
187.5
$
235
$
266
$
324
$
338
$
410
$
347
107
136
173
$
162
$
195
$
169
90.1
%
92.4
%
98.1
%
92.5
%
98.6
%
91.8
%
89.6
%
79.9
%
96.7
%
89.3
%
94.1
%
86.3
%
81.6
%
83.3
%
94.3
%
88.9
%
92.8
%
89.4
%
83.6
%
76.8
%
102.9
%
92.0
%
103.8
%
87.0
%
93.3
%
97.0
%
121.2
%
115.6
%
118.8
%
122.7
%
$
12,535
$
11,429
$
15,010
$
17,890
$
3,650
$
3,139
88,373
101,439
157,989
144,575
47,843
35,436
100,908
112,868
172,999
162,465
51,493
38,575
99
Table of Contents
(1)
Plant gate sales per ton represents net sales less freight
revenue divided by sales tons. Plant gate pricing per ton is
shown in order to provide industry comparability.
(2)
On-stream factor is the total number of hours operated divided
by the total number of hours in the reporting period.
(3)
Based on nameplate capacity of 1,100 tons per day.
(4)
Based on nameplate capacity of 1,500 tons per day.
100
Table of Contents
101
Table of Contents
102
Table of Contents
103
Table of Contents
104
Table of Contents
105
Table of Contents
106
Table of Contents
107
Table of Contents
108
Table of Contents
109
Table of Contents
110
Table of Contents
111
Table of Contents
112
Table of Contents
113
Table of Contents
114
Table of Contents
115
Table of Contents
116
Table of Contents
117
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$685.8 million for cash proceeds to Immediate Predecessor
($1,038.9 million of assets acquired less
$353.1 million of liabilities assumed), including
$12.6 million of legal, accounting, advisory, transaction
and other expenses associated with the Subsequent Acquisition;
$49.6 million of other fees and expenses related to the
Subsequent Acquisition, including financing fees, risk
management fees associated with option premiums for crack spread
swaps, and title fees; and
$4.9 million of cash to fund our operating accounts.
Tranche D term loans bear interest at either (a) the
greater of the prime rate and the federal funds effective rate
plus 0.5%, plus in either case 2.00%, or, at the borrowers
option, (b) LIBOR plus 3.00% (with step-downs to the prime
rate/federal funds rate plus 1.75% or 1.50% or LIBOR plus 2.75%
or 2.50%, respectively, upon achievement of certain rating
conditions). Prior to the December 2006 amendment and
restatement, first lien term loans accrued interest at
(a) the greater of the prime rate and the federal funds
rate plus 0.5%, plus in either case 1.25%, or, at the
borrowers option, (b) LIBOR plus 2.25% (with
potential
118
Table of Contents
stepdowns to LIBOR plus 2.00% or the prime rate plus 1.00%), and
second lien term loans accrued interest at a rate of LIBOR plus
6.75% or, at the borrowers option, the prime rate plus
5.75%.
Revolving loan borrowings bear interest at either (a) the
greater of the prime rate and the federal funds effective rate
plus 0.5%, plus in either case 2.00%, or, at the borrowers
option, (b) LIBOR plus 3.00% (with step-downs to the prime
rate/federal funds rate plus 1.75% or 1.50% or LIBOR plus 2.75%
or 2.50%, respectively, upon achievement of certain rating
conditions). Prior to the December 2006 amendment and
restatement, revolving loans under the then-existing first lien
credit facility accrued interest at (a) the greater of the
prime rate and the federal funds effective rate plus 0.5%, plus
in either case 1.50%, or, at the borrowers option,
(b) LIBOR plus 2.50%, (with potential stepdowns to LIBOR
plus 2.00% or the prime rate plus 1.00%).
Letters of credit issued under the $75.0 million sub-limit
available under the revolving loan facility are subject to a fee
equal to the applicable margin on revolving LIBOR loans owing to
all revolving lenders and a fronting fee of 0.25% per annum
owing to the issuing lender.
Funded letters of credit are subject to a fee equal to the
applicable margin on term LIBOR loans owed to all funded letter
of credit lenders and a fronting fee of 0.125% per annum owing
to the issuing lender. The borrower is also obligated to pay a
fee of 0.10% to the administrative agent on a quarterly basis
based on the average balance of funded letters of credit
outstanding during the calculation period, for the maintenance
of a credit-linked deposit account backstopping funded letters
of credit.
100% of the net asset sale proceeds received from specified
asset sales and net insurance/condemnation proceeds, if the
borrower does not reinvest those proceeds in assets to be used
in its business or make other permitted investments within
12 months or if, within 12 months of receipt, the
borrower does not contract to reinvest those proceeds in assets
to be used in its business or make other permitted investments
within 18 months of receipt, each subject to certain
limitations;
100% of the cash proceeds from the incurrence of specified debt
obligations;
75% of consolidated excess cash flow less 100% of
voluntary prepayments made during the fiscal year; provided that
with respect to any fiscal year commencing with fiscal 2008 this
percentage will be reduced to 50% if the total leverage ratio at
the end of such fiscal year is less than 1.50:1.00 or 25% if the
total leverage ratio as of the end of such fiscal year is less
than 1.00:1.00; and
100% of the cash proceeds received by us from any initial public
offering or secondary registered offering of equity interests,
until the aggregate amount of such proceeds is equal to
$280 million.
119
Table of Contents
Minimum
Maximum
interest
leverage
2.25:1.00
4.75:1.00
2.50:1.00
4.50:1.00
2.75:1.00
4.25:1.00
2.75:1.00
4.00:1.00
3.25:1.00
3.25:1.00
3.25:1.00
3.00:1.00
3.25:1.00
2.75:1.00
3.25:1.00
2.50:1.00
3.75:1.00
2.25:1.00
to December 31, 2009,
2.00:1.00 thereafter
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Original
Predecessor
Immediate
and Immediate
Predecessor
Predecessor
and Successor
Original
Combined
Combined
Predecessor
(non-GAAP)
(non-GAAP)
Successor
Successor
Successor
Three Months
Ended
Year Ended
December 31,
March 31,
2003
2004
2005
2006
2006
2007
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(in
millions)
$
27.9
$
60.9
$
(66.8
)
$
191.6
$
22.1
$
(154.4
)
3.3
2.8
25.1
51.0
12.0
14.2
1.3
10.1
32.8
43.9
12.2
11.9
33.8
(26.9
)
119.8
14.1
(47.3
)
9.6
7.2
8.1
23.4
3.0
16.6
2.3
0.5
1.8
6.6
66.0
25.0
229.8
(128.5
)
20.3
126.9
1.1
1.8
16.9
1.0
3.7
1.2
3.5
(0.7
)
0.5
2.3
2.3
0.5
0.5
$
42.1
$
121.2
$
253.6
$
328.2
$
82.7
$
20.8
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123
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(in millions)
$
144.6
$
139.5
$
13.3
$
27.0
$
51.6
$
376.0
11.8
21.4
13.9
15.8
15.2
78.1
156.4
160.9
27.2
42.8
66.8
454.1
4.0
73.0
50.0
127.0
$
160.4
$
233.9
$
27.2
$
42.8
$
116.8
$
581.1
(in millions)
$
0.1
$
2.4
$
2.7
$
0.5
$
1.1
$
6.8
11.9
6.1
4.5
0.8
4.7
28.0
12.0
8.5
7.2
1.3
5.8
34.8
2.6
2.5
2.9
8.0
$
14.6
$
8.5
$
9.7
$
1.3
$
8.7
$
42.8
(in millions)
$
144.7
$
141.9
$
16.0
$
27.5
$
52.7
$
382.8
23.7
27.5
18.4
16.6
19.9
106.1
168.4
169.4
34.4
44.1
72.6
488.9
6.6
73.0
2.5
52.9
135.0
$
175.0
$
242.4
$
36.9
$
44.1
$
125.5
$
623.9
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125
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126
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127
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128
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129
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Payments Due by Period
Nine Months
Ending
December 31,
(in millions)
$
775.0
$
5.8
$
7.7
$
7.6
$
7.5
$
7.4
$
739.0
12.0
2.6
3.9
2.9
1.6
0.9
0.1
241.1
19.0
20.7
20.7
18.3
16.4
146.0
9.7
1.0
1.0
0.9
0.6
0.3
5.9
15.9
3.7
4.9
4.9
2.4
407.5
49.2
64.9
64.1
63.4
62.8
103.1
$
1,461.2
$
81.3
$
103.1
$
101.1
$
93.8
$
87.8
$
994.1
$
6.4
$
6.4
$
$
$
$
$
(1)
Long-term debt amortization is based on the contractual terms of
our Credit Facility. We may be required to amend our Credit
Facility in connection with an offering by the Partnership. See
Description of Our Indebtedness and the Cash Flow
Swap.
(2)
The nitrogen fertilizer business leases various facilities and
equipment, primarily railcars, under non-cancelable operating
leases for various periods.
(3)
The amount includes (1) commitments under several
agreements in our petroleum operations related to pipeline
usage, petroleum products storage and petroleum transportation
and (2) commitments under an electric supply agreement with
the City of Coffeyville.
(4)
Environmental liabilities represents our estimated payments
required by federal
and/or
state
environmental agencies related to closure of hazardous waste
management units at our sites in Coffeyville and Phillipsburg,
Kansas. We also have other environmental liabilities which are
not contractual obligations but which would be necessary for our
continued operations. See Business
Environmental Matters.
(5)
This amount represents the total of all fees related to the
funded letter of credit issued under our Credit Facility. The
funded letter of credit is utilized as credit support for the
Cash Flow Swap. See Quantitative and
Qualitative Disclosures About Market Risk Commodity
Price Risk.
(6)
Interest payments are based on interest rates in effect at
March 31, 2007 and assume contractual amortization payments.
(7)
Standby letters of credit include our obligations under
$3.2 million of letters of credit issued in connection with
environmental liabilities and $3.2 million in letters of
credit to secure transportation expenses related to the
Transportation Services Agreement with CCPS Transportation, LLC.
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lock in or fix a percentage of the anticipated or planned gross
margin in future periods when the derivative market offers
commodity spreads that generate positive cash flows; and
hedge the value of inventories in excess of minimum required
inventories.
Time Basis In entering
over-the-counter
swap agreements, the settlement price of the swap is typically
the average price of the underlying commodity for a designated
calendar period. This settlement price is based on the
assumption that the underling physical commodity will price
ratably over the swap period. If the commodity does not move
ratably over the periods then weighted average physical prices
will be weighted differently than the swap price as the result
of timing.
Location Basis In hedging NYMEX crack spreads, we
experience location basis as the settlement of NYMEX refined
products (related more to New York Harbor cash markets) which
may be different than the prices of refined products in our
Group 3 pricing area.
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Successors Petroleum Segment holds commodity derivative
contracts in the form of three swap agreements for the period
from July 1, 2005 to June 30, 2010 with J. Aron, a
subsidiary of The Goldman Sachs Group, Inc. and a related party
of ours. The swap agreements were originally executed on
June 16, 2005 in conjunction with the Subsequent
Acquisition of Immediate Predecessor and required under the
terms of our long-term debt agreements. These agreements were
subsequently assigned from Coffeyville Acquisition LLC to
Coffeyville Resources, LLC on June 24, 2005. The total
notional quantities on the date of execution were
100,911,000 barrels of crude oil; 2,348,802,750 gallons of
unleaded gasoline and 1,889,459,250 gallons of heating oil;
pursuant to these swaps, we receive a fixed price with respect
to the heating oil and the unleaded gasoline while we pay a
fixed price with respect to crude oil. In June 2006, a
subsequent swap was entered into with J. Aron to effectively
reduce our unleaded notional quantity and increase our heating
oil notional quantity by 229,671,750 gallons over the period
July 2, 2007 to June 30, 2010. Additionally, several
other swaps were entered into with J. Aron to adjust effective
net notional amounts of the aggregate position to better align
with actual production volumes. The swap agreements were
executed at the prevailing market rate at the time of execution
and management believed the swap agreements would provide an
economic hedge on future transactions. At March 31, 2007
the net notional open amounts under these swap agreements were
61,278,500 barrels of crude oil, 1,278,973,500 gallons
of heating oil and 1,294,723,500 gallons of unleaded
gasoline. The purpose of these contracts is to economically
hedge 30,451,750 barrels of heating oil crack spreads, the
price spread between crude oil and heating oil, and
30,826,750 barrels of unleaded gas crack spreads, the price
spread between crude oil and unleaded gasoline. These open
contracts had a total unrealized net loss at March 31, 2007
of approximately $228.8 million.
Successors Petroleum Segment also holds various NYMEX
positions through UBS Securities LLC. At
March 31, 2007, we were short 818 crude contracts,
76 heating oil contracts and 170 unleaded contracts,
reflecting an unrealized loss of $4.6 million on that date.
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Effective
Termination
Fixed
Date
Date
Rate
3/31/07
6/29/07
4.038%
6/29/07
3/30/08
4.195%
3/31/08
3/30/09
4.195%
3/31/09
3/30/10
4.195%
3/31/10
6/29/10
4.195%
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Ammonia
UAN 32
(thousand tons per year)
2,300
850
80
225
370
670
325
250
690
865
335
1,100
335
195
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Construction of a new 23,000 bpd high pressure diesel
hydrotreater and associated new sulfur recovery unit, which will
allow the facility to meet the EPA Tier II Ultra Low Sulfur
Diesel federal regulations; and
Expansion of one of the two gasification units within the
fertilizer complex, which is expected to increase ammonia
production by over 6,500 tons per year.
Refinery-wide capacity expansion by increasing throughput of the
existing fluid catalytic cracking unit (the unit that converts
gas oil from the crude unit or coker unit into liquified
petroleum gas, distillates and gasoline blendstocks), the
delayed coker (the unit that processes heavy feedstock and
produces lighter products and pet coke), and other major process
units; and
Construction of a new grass roots 24,000 bpd continuous
catalytic reformer to be completed by the end of 2007.
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Pursuing opportunities to expand UAN production and other
efficiency-based projects.
The nitrogen
fertilizer business is pursuing a project that is expected to
increase UAN production through the addition of a nitric acid
plant, as a result of which the UAN manufacturing facility would
substantially consume all of our net ammonia production. The UAN
expansion is expected to be completed in 2010 and would result
in an approximate 400,000 ton increase in annual UAN production.
We believe that this expansion would help to improve our margins
as UAN is a higher margin product as compared to ammonia. In
addition, the nitrogen fertilizer business is expected to pursue
several efficiency-based capital projects in order to reduce
overall operating costs, or incrementally increase ammonia
production for the nitrogen fertilizer business.
Leveraging the Partnerships relationship with our
petroleum business.
We expect that over time, as
our petroleum business grows, it will need incremental pipeline
transportation and storage infrastructure services. The
Partnership will be well-situated to meet these needs due to its
historic relationship with and proximity to our petroleum
facilities, combined with managements knowledge and
expertise in hydrocarbon storage and related disciplines. The
Partnership may seek to acquire new assets (including pipeline
assets and storage facilities) in order to service this
potential new source of revenue from our petroleum business.
Acquiring assets from the petroleum
business.
The Partnership may seek to purchase
specific assets from our petroleum business and enter into
agreements with the refinery for crude oil transportation, crude
oil storage and refined fuels terminalling services. Examples of
assets under consideration include our crude gathering pipeline
operations in Kansas and
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Oklahoma, the refined fuels terminal operations in Phillipsburg,
Kansas and our real estate in Cushing, Oklahoma purchased for
the future construction of crude oil storage tanks. We have no
agreements or understandings with respect to any such
acquisitions or agreements at the present time.
Pursuing opportunities in
CO
2
sequestration.
The nitrogen fertilizer business
is currently evaluating a development plan to either sell the
currently vented 850,000 tons per year of high purity
anthropogenic
CO
2
produced by the nitrogen fertilizer facilities into the enhanced
oil recovery market or to pursue an economic means of
geologically sequestering the
CO
2
.
This project is currently in development, but is expected to
result in economic benefits including the direct sale of
CO
2
and the sale of verified emission credits on the open market
should the credits accrete value in the future due to the
implementation of mandatory emission caps for
CO
2
.
Constructing a third gasification unit in the nitrogen
fertilizer plant.
The nitrogen fertilizer
business intends to pursue the feasibility of the construction
and operation of an additional gasification unit to produce a
synthesis gas from petroleum coke. It is expected that the
addition of a third gasification unit and an additional ammonia
and UAN manufacturing facility to the nitrogen fertilizer
operations could result, on a long-term basis, in an approximate
1.0 million ton per year increase in UAN production. This
project is in its earliest stages of review and is still subject
to numerous levels of internal analysis.
Prior to the consummation of this offering, Coffeyville
Acquisition LLC will redeem all of its outstanding common units
held by the Goldman Sachs Funds, who will receive the same
number of common units in Coffeyville Acquisition II LLC, a
newly formed limited liability company to which Coffeyville
Acquisition LLC will transfer half of its interests in each of
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Coffeyville Refining & Marketing, Inc., Coffeyville
Nitrogen Fertilizers, Inc. and CVR Energy. In addition, half of
the common units and half of the profits interests in
Coffeyville Acquisition LLC held by our executive officers will
be redeemed in exchange for an equal number and type of limited
liability interests in Coffeyville Acquisition II LLC.
Following these redemptions, the Kelso Funds will own
substantially all of the common units of Coffeyville Acquisition
LLC, the Goldman Sachs Funds will own substantially all of the
common units of Coffeyville Acquisition II LLC and our
executive officers will own an equal number and type of
interests in both Coffeyville Acquisition LLC and Coffeyville
Acquisition II LLC. Each of Coffeyville Acquisition LLC and
Coffeyville Acquisition II LLC will own 50% of each of
Coffeyville Refining & Marketing, Coffeyville Nitrogen
Fertilizers and CVR Energy.
Following the redemptions by Coffeyville Acquisition LLC, we
will merge a newly formed direct subsidiary of ours with
Coffeyville Refining & Marketing and merge a separate
newly formed direct subsidiary of ours with Coffeyville Nitrogen
Fertilizers which will make Coffeyville Refining &
Marketing and Coffeyville Nitrogen Fertilizers direct wholly
owned subsidiaries of ours. These transactions will result in a
structure with CVR Energy below Coffeyville Acquisition LLC and
Coffeyville Acquisition II LLC and above its two operating
subsidiaries, so that CVR Energy will become the parent of the
two operating subsidiaries. CVR Energy has not commenced
operations and has no assets or liabilities. In addition, there
are no contingent liabilities and commitments attributable to
CVR Energy. The mergers of the two operating subsidiaries with
subsidiaries of CVR Energy provide a tax free means to put an
appropriate organizational structure in place to go public and
give the Company the flexibility to simplify its structure in a
tax efficient manner in the future if necessary.
In addition, we will transfer our nitrogen fertilizer business
into a newly formed limited partnership and we will sell all of
the interests of the managing general partner of this
partnership to an entity owned by our controlling stockholders
and senior management at fair market value on the date of the
transfer.
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Crude Oil Gathering System.
We own and
operate a 25,000 bpd crude oil gathering system comprised
of over 300 miles of feeder and trunk pipelines, 40 trucks
and associated storage facilities for gathering light, sweet
Kansas and Oklahoma crude oils purchased from independent crude
producers. We have also leased a section of a pipeline from
Magellan Pipeline Company, L.P. that will allow us to gather
additional volumes of attractively priced quality crudes.
Phillipsburg Terminal.
We own storage
and terminalling facilities for asphalt and refined fuels at
Phillipsburg, Kansas. Our asphalt storage and terminalling
facilities are used to receive, store and redeliver asphalt for
another oil company for a fee pursuant to an asphalt services
agreement.
Three Months
Ended
Year Ended December 31,
March 31,
(in barrels)
27,172,830
31,207,718
33,227,971
33,250,518
34,501,288
7,674,797
4,254,030
1,093,629
483,362
317,874
455,587
373,667
150,581
37,152
530,575
467,176
483,131
163,116
124,956
1,037,855
1,627,989
1,615,898
1,398,694
1,460,893
305,916
112,975
68,636
170,542
8,117
155,344
425,319
79,200
51,211
98,371
109,974
105,981
99,362
30,717
14,924
29,402,685
33,429,043
35,798,299
35,895,317
37,445,557
8,388,534
4,588,441
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Nominal
350,000
125,000
145,000
25,000
15,000
97,000
120,000
Gasoline.
Gasoline typically accounts
for approximately 47% of our refinerys production. Our oil
refinery produces various grades of gasoline, ranging from 84
sub-octane regular unleaded to 91 octane premium unleaded and
uses a computerized component blending system to optimize
gasoline blending.
Distillates.
Distillates typically
account for approximately 41% of the refinerys production.
The majority of the diesel fuel we produce is ultra low-sulfur.
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Three Months
Ended
Year Ended December 31,
March 31,
(in barrels)
14,071,304
16,531,362
16,703,566
16,154,172
16,836,946
4,161,177
2,087,559
306,334
298,789
220,908
261,467
479,211
20,094
27,379
754,264
773,831
797,416
109,774
294,356
15,131,902
17,603,982
17,721,890
16,525,413
17,610,513
4,181,271
2,114,939
26,085
25,149
23,256
32,302
22,195
4,220
16,689
124,741
342,363
99,832
261,048
319,920
(2,625
)
30,925
6,526,883
7,899,132
8,896,701
9,129,518
11,583,942
2,459,226
1,813,100
2,268,116
3,017,785
3,500,351
3,916,658
3,441,683
1,039,822
1,923,370
1,258,279
1,425,897
1,259,308
26,113
23,565
117,156
10,869,195
12,542,708
13,946,037
14,598,834
15,393,853
3,524,208
1,977,870
583,095
734,737
1,137,645
696,637
705,869
153,527
80,373
445,784
532,236
500,692
562,657
706,332
173,665
73,869
84,146
42,571
8,212
26,438
150,700
134,899
74,979
25,654
79,906
230,785
357,411
7,330
25,841
84,673
66,274
1,205,910
1,335,982
1,868,943
1,691,252
1,844,591
360,176
180,082
2,068,031
1,956,619
2,384,414
2,439,297
2,491,867
639,611
270,564
74,226
131,137
88,744
100,035
94,117
23,280
13,129
2,142,257
2,087,756
2,473,158
2,539,332
2,585,984
662,891
283,693
52,682
(8,539
)
548,883
519,986
33,514
(1,044
)
114,945
(120,122
)
(12,369
)
265,280
(243,553
)
(243,543
)
74,543
1,268,388
1,489,030
1,636,665
1,557,689
1,719,345
342,320
202,046
(1,382,594
)
(1,501,754
)
(1,836,025
)
(1,831,366
)
(1,985,162
)
(472,303
)
(243,688
)
29,402,685
33,429,043
35,798,299
35,895,317
37,445,557
8,388,534
4,588,441
767,000
1,068,000
1,004,000
2,594,000
(1)
Crude oil storage consists of 674,000 barrels of refinery
storage capacity, 520,000 barrels of field storage capacity
and 1,400,000 barrels of leased storage at Cushing, Oklahoma.
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32,000
81,000
12,000
40,000
156
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157
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Three Months
Ended
Year Ended December 31,
March 31,
78.6%
90.1%
92.4%
98.1%
92.5%
98.6%
91.8%
66.0%
83.6%
76.8%
102.9%
92.0%
103.8%
87.0%
79.4%
93.3%
97.0%
121.2%
115.6%
118.8%
122.7%
(1)
On-stream factor is the total number of hours operated divided
by the total number of hours in the reporting period.
(2)
Based on nameplate capacity of 1,100 tons per day.
(3)
Based on nameplate capacity of 1,500 tons per day.
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159
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160
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Crude Capacity
Solomon
(barrels per
Complexity
Ponca City, OK
187,000
12.5
El Dorado, KS
110,000
13.3
Coffeyville, KS
108,000
10.0
Ardmore, OK
88,000
11.3
McPherson, KS
82,200
14.1
Wynnewood, OK
52,500
8.0
Tulsa, OK
50,000
8.3
677,700
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restrictions on operations
and/or
the
need to install enhanced or additional controls;
163
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the need to obtain and comply with permits and authorizations;
liability for the investigation and remediation of contaminated
soil and groundwater at current and former facilities and
off-site waste disposal locations; and
specifications for the products marketed by our petroleum
business and the nitrogen fertilizer business, primarily
gasoline, diesel fuel, UAN and ammonia.
164
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165
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166
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Total
Site
Total O&M
Estimated
Investigation
Capital
Costs
Costs
$
0.3
$
$
0.6
$
0.9
0.4
1.6
2.0
$
0.7
$
$
2.2
$
2.9
168
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services by our employees in capacities equivalent to the
capacities of corporate executive officers, except that those
who serve in such capacities under the agreement shall serve the
Partnership on a shared, part-time basis only, unless we and the
Partnership agree otherwise;
administrative and professional services, including legal,
accounting services, human resources, insurance, tax, credit,
finance, government affairs and regulatory affairs;
managing the property of the Partnership and Coffeyville
Resources Nitrogen Fertilizers, LLC, a subsidiary of the
Partnership, in the ordinary course of business;
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recommending capital raising activities to the board of
directors of the managing general partner of the Partnership
including the issuance of debt or equity securities, the entry
into credit facilities and other capital market transactions;
managing or overseeing litigation and administrative or
regulatory proceedings, and establishing appropriate insurance
policies for the Partnership, and providing safety and
environmental advice;
managing or providing advice for other projects as may be agreed
by us and the managing general partner of the Partnership from
time to time.
440
Own
Oil refinery, fertilizer plant and
office buildings
200
Own
Terminal facility
(Coffeyville Station)
20
Own
Crude oil storage
(Broome Station)
20
Own
Crude oil storage
25
Own
Truck storage and
office buildings
5
Own
Truck storage
185
Own
Crude oil storage
(Hooser Station)
80
Own
Crude oil storage
7
Own
Crude oil storage
6
Own
Crude oil storage
18,400 (square feet)
Lease
Office space
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172
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56
Chairman of the Board of
Directors, Chief Executive Officer and President
55
Chief Operating Officer
41
Chief Financial Officer
56
Vice President, General Counsel
and Secretary
48
Executive Vice President Refining
Operations
55
Executive Vice President Crude Oil
Acquisition and Petroleum Marketing
53
Executive Vice President, General
Manager Nitrogen Fertilizer
49
Vice President, Environmental,
Health and Safety
62
Director
31
Director
67
Director
50
Director
36
Director
36
Director
51
Director
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174
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175
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176
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To align the executive officers interest with that of the
stockholders and stakeholders, which provides long-term economic
benefits to the stockholders;
To provide competitive financial incentives in the form of
salary, bonuses, and benefits with the goal of retaining and
attracting talented and highly motivated executive
officers; and
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To maintain a compensation program whereby the executive
officers, through exceptional performance and equity ownership,
will have the opportunity to realize economic rewards
commensurate with appropriate gains of other equity holders and
stake holders.
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Significant operational improvement (in increased refinery
throughput and yield) for an asset that emerged from bankruptcy
just over 3 years ago, as described on page 2 of the
prospectus. Upon assuming leadership of our company,
Mr. Lipinski challenged existing management to optimize our
refinery operations by focusing on plant operating limits each
day. With 35 years of experience in the refining and
nitrogen fertilizer industries, Mr. Lipinski focused, and
led management to focus, on the details of
day-to-day
plant operations. Previously, the refinery had primarily
operated based on a predetermined monthly plan which resulted in
significant unused capacity. The result of this revised focus
was to immediately increase operating rates with essentially no
capital expenditures being incurred.
Initiation of refined fuels offsite rack marketing, as described
more fully on page 2 of this prospectus. Under
Mr. Lipinskis direction and leadership, we have built
our rack marketing sales sales of refined products
made at terminals into third party tanker trucks, as opposed to
sales through third party pipelines which has
directly impacted and improved our profitability. Although we
had the infrastructure in place to commence rack marketing, it
had not been implemented at the time that Mr. Lipinski
became our chief executive officer in June 2005.
Mr. Lipinski authorized additional company personnel to
expand the rack marketing operation and it has served as a key
factor in our companys success over the past two years.
Revised linear program model and focus on quality control.
Mr. Lipinski authorized a project to revise our linear
program model which we use for refinery planning and
optimization. A linear program is a computer program that
simulates plant operations and profitability based on different
pricing and operating environment assumptions. Mr. Lipinski
also directed that additional company resources be applied to
quality assurance and quality control activities throughout the
organization. As a result of these efforts, we now have a better
modeling tool to assess plant operating rates, sales
opportunities and crude oil purchases along with an improved
understanding of our operations and better control over product
quality.
Technical focus and environmental stewardship. After becoming
chief executive officer, Mr. Lipinski recognized that our
organization needed a more technical focus in order to achieve
superior performance and he approved the hiring of additional
engineering and technical staff, particularly with respect to
process engineering. He also fostered a renewed focus on
environmental stewardship (evidenced by the construction of our
plant wide flare) and safety (evidenced by a reduction in lost
time accidents and reportable incidents).
Implementation and initiation of a refinery expansion project,
as further described on page 2. In connection with the due
diligence review of our company prior to becoming our chief
executive officer, Mr. Lipinski recognized that there was a
significant opportunity to more fully utilize the
facilitys crude capacity by expanding our downstream
units. After assuming his position as CEO, Mr. Lipinski
sought approval of a project to expand the refinerys
capacity to 115,000 barrels per day, compared to an average
of less than 90,000 prior to June 2005.
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Through Mr. Lipinskis leadership, we substantially
implemented this project in less than twenty-months and
currently benefit from improved capacity throughout the plant.
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Non-Equity
Incentive Plan
All Other
Name and
Principal
Salary
Bonus ($)
Stock
Compensation
($)
Compensation
Total
2006
650,000
1,331,790
4,326,188(3
)
487,500
5,007,935(5
)(6)
11,803,413
2006
350,000
772,917
(2)
210,000
943,789(5
)(7)
2,276,706
2006
250,000
205,000
130,000
695,316(5
)(8)
1,280,316
2006
225,000
205,000
117,000
695,471(5
)(9)
1,242,471
2006
225,000
140,000
117,000
318,000(5
)(10)
800,000
(1)
Bonuses are reported for the year in which they were earned,
though they may have been paid the following year.
(2)
Includes a retention bonus in the amount of $122,917.
(3)
Reflects the amount recognized for financial statement reporting
purposes for the fiscal year ended December 31, 2006 with
respect to shares of common stock of each of Coffeyville
Refining and Marketing, Inc. and Coffeyville Nitrogen
Fertilizer, Inc. granted to Mr. Lipinski effective
December 28, 2006.
(4)
Reflects cash awards to the named individuals in respect of 2006
performance pursuant to our Variable Compensation Plan.
(5)
The amounts shown representing grants of profits interests in
Coffeyville Acquisition LLC and phantom points reflect the
dollar amounts recognized for financial statement reporting
purposes for the year ended December 31, 2006 in accordance
with FAS 123(R). Assumptions used in the calculation of
these amounts are included in footnote 5 to our audited
financial statements for the year ended December 31, 2006.
The profits interests in Coffeyville Acquisition LLC and the
phantom points are more fully described below under
Executives Interests in
Coffeyville Acquisition LLC.
(6)
Includes (a) a company contribution under our 401(k) plan
in 2006, (b) the premiums paid by us on behalf of the
executive officer with respect to our executive life insurance
program in 2006, (c) forgiveness of a note that
Mr. Lipinski owed to Coffeyville Acquisition LLC in the
amount of $350,000, (d) forgiveness of accrued interest
related to the forgiven note in the amount of $17,989,
(e) profits interests in Coffeyville Acquisition LLC
granted in 2005 in the amount of $630,059, (f) a cash
payment in respect of taxes payable on his December 28,
2006 grant of subsidiary stock in the amount of $2,481,346,
(g) profits interests in Coffeyville Acquisition LLC that
were granted December 28, 2006 in the amount of $20,510 and
(h) phantom points granted during the period ending
December 31, 2006 in the amount of $1,495,211.
(7)
Includes (a) a company contribution under our 401(k) plan
in 2006, (b) the premiums paid by us on behalf of the
executive officer with respect to our executive life insurance
program in 2006, (c) profits interests in Coffeyville
Acquisition LLC granted in 2005 in the amount of $279,670 and
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(d) phantom points granted to Mr. Riemann during the
period ending December 31, 2006 in the amount of $651,299.
(8)
Includes (a) a company contribution under our 401(k) plan
in 2006, (b) the premiums paid by us on behalf of the
executive officer with respect to our executive life insurance
program in 2006, (c) profits interests in Coffeyville
Acquisition LLC granted in 2005 in the amount of $143,571 and
(d) phantom points granted to Mr. Rens during the
period ending December 31, 2006 in the amount of $541,061.
(9)
Includes (a) a company contribution under our 401(k) plan
in 2006, (b) the premiums paid by us on behalf of the
executive officer with respect to our executive life insurance
program in 2006, (c) profits interests in Coffeyville
Acquisition LLC granted in 2005 in the amount of $143,571 and
(d) phantom points granted to Mr. Haugen during the period
ending December 31, 2006 in the amount of $541,061.
(10)
Includes (a) a company contribution under our 401(k) plan
in 2006, (b) the premiums paid by us on behalf of the
executive officer with respect to our executive life insurance
program in 2006, (c) profits interests in Coffeyville
Acquisition LLC granted in 2005 in the amount of $143,571 and
(d) phantom points granted to Mr. Jernigan during the
period ending December 31, 2006 in the amount of $162,319.
All other
Stock
Awards:
Grant Date
Number of
Fair Value
Shares of Stock
or
of Stock and
December 28, 2006
(1)
$4,326,188(1)
December 28, 2006
217,458(2)
$1,417,826(4)
December 11, 2006
2,737,142(3)
$4,252,562(4)
December 11, 2006
1,192,266(3)
$1,852,367(4)
December 11, 2006
990,476(3)
$1,538,851(4)
December 11, 2006
990,476(3)
$1,538,851(4)
December 11, 2006
297,142(3)
$461,656(4)
(1)
Mr. Lipinski received a grant of shares of common stock of
each of Coffeyville Refining and Marketing, Inc. and Coffeyville
Nitrogen Fertilizer, Inc. effective December 28, 2006. The
number of shares of Coffeyville Nitrogen Fertilizer, Inc.
granted was 0.2125376, which equaled approximately 0.64% of the
total shares outstanding. The number of shares of Coffeyville
Refining and Marketing, Inc. granted was 0.1044200, which
approximated 0.31% of the total shares outstanding. The dollar
amount shown reflects the grant date fair value recognized for
financial statement reporting purposes in accordance with
FAS 123(R). Assumptions used in the calculation of these
amounts are included in footnote 5 to our audited financial
statements for the year ended December 31, 2006.
(2)
Represents the number of profits interests in Coffeyville
Acquisition LLC granted to the executive on December 28,
2006.
(3)
Represents the number of phantom points granted to the executive
on December 11, 2006.
(4)
The dollar amount shown reflects the fair value as of
December 31, 2006 recognized for financial reporting
purposes in accordance with FAS 123(R). Assumptions used
in the calculation of this amount are included in footnote 5 to
our audited financial statements for the year ended
December 31, 2006.
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189
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190
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191
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192
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193
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194
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Stock
Awards
Number of Shares
or Units of
Market Value of
Shares or Units
Stock That Have
Not Vested
of Stock That
Have Not Vested
(1) (2)
(12)
(11)
947,455
(3)
$
28,038,350
217,458
(4)
$
1,417,826
2,737,142
(5)
$
4,252,562
420,556
(6)
$
12,445,652
1,192,266
(7)
$
1,852,367
215,896
(8)
$
6,389,080
990,476
(9)
$
1,538,851
215,896
(8)
$
6,389,080
990,476
(9)
$
1,538,851
215,896
(8)
$
6,389,080
297,142
(10)
$
461,656
(1)
The profits interests in Coffeyville Acquisition LLC generally
vest as follows: operating units generally become
non-forfeitable in 25% annual increments beginning on the second
anniversary of the date of grant, and value units are generally
forfeitable upon termination of employment. The profits
interests are more fully described above under
Executives Interests in Coffeyville
Acquisition LLC.
(2)
The phantom points granted pursuant to the Coffeyville
Resources, LLC Phantom Unit Appreciation Plan (Plan I) are
generally forfeitable upon termination of employment. The
phantom points are more fully described above under
Coffeyville Resources, LLC Phantom Unit
Appreciation Plan (Plan I) and Coffeyville Resources
Phantom Unit Appreciation Plan (Plan II).
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(3)
Represents profits interests in Coffeyville Acquisition LLC
(315,818 operating units and 631,637 value units) granted to the
executive on June 24, 2005. These profits interests have
been transferred to trusts for the benefit of members of
Mr. Lipinskis family.
(4)
Represents profits interests in Coffeyville Acquisition LLC
(72,492 operating units and 144,966 value units) granted to the
executive on December 28, 2006. These profits interests
have been transferred to trusts for the benefit of members of
Mr. Lipinskis family.
(5)
Represents phantom points (1,368,571 phantom service points and
1,368,571 phantom performance points) granted to the executive
on December 11, 2006.
(6)
Represents profits interests in Coffeyville Acquisition LLC
(140,185 operating units and 280,371 value units) granted to the
executive on June 24, 2005.
(7)
Represents phantom points (596,133 phantom service points and
596,133 phantom performance points) granted to the executive on
December 11, 2006.
(8)
Represents profits interests in Coffeyville Acquisition LLC
(71,965 operating units and 143,931 value units) granted to the
executive on June 24, 2005.
(9)
Represents phantom points (495,238 phantom service points and
495,238 phantom performance points) granted to the executive on
December 11, 2006.
(10)
Represents phantom points (148,571 phantom service points and
148,571 phantom performance points) granted to the executive on
December 11, 2006.
(11)
The dollar amount shown reflects the fair value as of
December 31, 2006, based upon an independent valuation
prepared with a combination of a binomial model and a
probability-weighted expected return method. Assumptions used in
the calculation of this amount are included in footnote 5 to our
audited financial statements for the year ended
December 31, 2006.
(12)
Following the consummation of the Transactions, each of the
named executive officers will hold half of the number of profits
interests set forth above in each of Coffeyville Acquisition LLC
and Coffeyville Acquisition II LLC.
Stock
Awards
Number of
Shares
Value Realized
Acquired
on Vesting
(1)
4,326,188(1)
(1)
Mr. Lipinski received a grant of shares of common stock of each
of Coffeyville Refining and Marketing, Inc. and Coffeyville
Nitrogen Fertilizer, Inc. effective December 28, 2006.
These shares were fully vested as of the date of grant. The
number of shares of Coffeyville Nitrogen Fertilizer, Inc.
granted was 0.2125376, which approximated 0.64% of the total
shares outstanding. The number of shares of Coffeyville Refining
and Marketing, Inc. granted was 0.1044200, which approximated
0.31% of the total shares outstanding. Prior to the consummation
of this offering, Mr. Lipinskis shares of common stock of
each of Coffeyville Refining and Marketing, Inc. and Coffeyville
Nitrogen Fertilizer, Inc. will be exchanged for shares of common
stock of CVR Energy having an equivalent value.
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Estimated Dollar
Value of
$
1,950,000
$
20,307
$
650,000
$
525,000
$
10,154
$
250,000
$
9,713
$
225,000
$
9,713
$
225,000
$
3,154
(1)
Mr. Clark was awarded 244,038 phantom service points and
244,038 phantom performance points under the Coffeyville
Resources, LLC Phantom Unit Plan (Plan I) in September
2005. Collectively, Mr. Clarks phantom points
represent 2.44% of the total phantom points awarded. The value
of the interest was $71,234 on the grant date. In accordance
with SFAS 123(R), we apply a fair-value-based measurement
method in accounting for share-based issuance of the phantom
points. An independent third-party valuation is performed at the
end of each reporting period using a binomial model based on
company projections of undiscounted future cash flows.
Assumptions used in the calculation of these amounts are
included in footnote 5 to our audited financial statements for
the year ended December 31, 2006. The phantom points are more
fully described above under
Coffeyville
Resources, LLC Phantom Unit Appreciation Plan (Plan I) and
Coffeyville Resources, LLC Phantom Unit Appreciation Plan
(Plan II)
.
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each of our directors;
each of our named executive officers;
each stockholder known by us to beneficially hold five percent
or more of our common stock;
each selling stockholder; and
all of our executive officers and directors as a group.
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Shares
Shares Beneficially
To Be Sold
Shares Beneficially
Shares Beneficially
Owned After this Offering
If the
Owned After this Offering
Owned Prior
Assuming the
Underwriters
Assuming the
to this
Underwriters Option Is
Option Is
Underwriters Option Is
Offering
Not Exercised(1)
Exercised In Full(1)
Exercised In Full (1)
Number
Percent
Number
Percent
Number
Number
Percent
32,930,996
49.8
32,930,996
40.3
1,162,500
31,894,721
39.1
32,930,996
49.8
32,930,996
40.3
1,162,500
31,894,721
39.1
32,608,906
49.3
32,608,906
39.9
1,151,129
31,457,777
38.5
Associates VII, L.P.
25,727,939
38.9
25,727,939
31.5
908,223
24,819,716
30.4
6,370,727
9.6
6,370,727
7.8
224,894
6,145,833
7.5
418,275
*
418,275
*
5,854
412,421
*
102,049
*
102,049
*
3,602
98,447
*
63,780
*
63,780
*
2,252
61,529
*
7,653
*
7,653
*
270
7,383
*
25,512
*
25,512
*
901
24,611
*
25,512
*
25,512
*
901
24,611
*
63,781
*
63,781
*
2,252
61,529
*
6,377
*
6,377
*
225
6,152
*
63,781
*
63,781
*
2,252
61,529
*
5,000
*
5,000
*
32,098,666
48.5
32,098,666
39.3
1,133,117
30,965,550
37.9
32,608,906
49.3
32,608,906
39.9
1,151,129
31,457,775
38.5
12,500
*
12,500
*
65,501,792
99.0
65,501,792
80.2
2,302,755
63,181,537
77.4
*
Less than 1%
(1)
The underwriters have an option to purchase up to an additional
2,325,000 shares from the selling stockholders in this
offering. If the underwriters exercise this option, shares would
be sold to the underwriters by Coffeyville Acquisition LLC and
Coffeyville Acquisition II LLC in equal proportion and
Coffeyville Acquisition LLC and Coffeyville Acquisition II
LLC would distribute the proceeds to their respective members.
(2)
Coffeyville Acquisition LLC directly owns 32,930,996 shares
of common stock. The number of shares indicated as owned by the
Kelso Funds reflects the number of shares of common stock that
corresponds to the number of common units held by the Kelso
Funds in Coffeyville Acquisition LLC. With respect to the total
number of shares of common stock deemed to be beneficially owned
prior to this offering, the share amount includes
(1) 25,727,939 shares of common stock deemed to be
beneficially owned by Kelso Investment Associates VII,
L.P., a Delaware limited partnership, or KIA VII, and
(2) 6,370,727 shares of common stock deemed to be
beneficially owned by KEP VI, LLC, a Delaware limited
liability company, or KEP VI. KIA VII and KEP VI,
due to their common control, could be deemed to beneficially own
each of the others shares but each disclaims such
beneficial ownership. Shares and percentages indicated represent
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the upper limit of the expected ownership of our equity
securities by these persons and entities. Messrs. Nickell,
Wall, Matelich, Goldberg, Wahrhaftig, Bynum, Berney, Loverro and
Connors may be deemed to share beneficial ownership of shares of
common stock owned of record, by virtue of their status as
managing members of KEP VI and of Kelso GP VII,
LLC, a Delaware limited liability company, the principal
business of which is serving as the general partner of
Kelso GP VII, L.P., a Delaware limited partnership,
the principal business of which is serving as the general
partner of KIA VII. Each of Messrs. Nickell, Wall,
Matelich, Goldberg, Wahrhaftig, Bynum, Berney, Loverro and
Connors share investment and voting power with respect to the
ownership interests owned by KIA VII and KEP VI but
disclaim beneficial ownership of such interests. If the
underwriters exercise their option to purchase additional shares
in full, (i) 908,223 shares of common stock will be
sold in respect of member units owned by KIA VII and
(ii) 224,894 shares of common stock will be sold in
respect of member units owned by KEP VI.
(3)
The board of directors of Coffeyville Acquisition LLC has the
power to dispose of the securities of Coffeyville Acquisition
LLC.
(4)
Coffeyville Acquisition II LLC directly owns 32,930,996 shares
of common stock. The number of shares indicated as owned by The
Goldman Sachs Group, Inc. reflects the number of shares of
common stock that corresponds to the number of common units held
by the Goldman Sachs Funds in Coffeyville Acquisition II LLC.
The Goldman Sachs Group, Inc., and certain affiliates, including
Goldman, Sachs & Co., may be deemed to directly or
indirectly own in the aggregate 32,608,906 shares of common
stock which are deemed to be beneficially owned directly or
indirectly by investment partnerships, which we refer to as the
Goldman Sachs Funds, of which affiliates of The Goldman Sachs
Group, Inc. and Goldman, Sachs & Co. are the general
partner, managing limited partner or the managing partner.
Goldman, Sachs & Co. is the investment manager for
certain of the Goldman Sachs Funds. Goldman, Sachs &
Co. is a direct and indirect, wholly owned subsidiary of The
Goldman Sachs Group, Inc. The Goldman Sachs Group, Inc.,
Goldman, Sachs & Co. and the Goldman Sachs Funds share
voting power and investment power with certain of their
respective affiliates. Shares deemed to be beneficially owned by
the Goldman Sachs Funds consist of:
(1) 17,170,547 shares of common stock deemed to be
beneficially owned by GS Capital Partners V Fund, L.P.,
(2) 8,869,589 shares of common stock deemed to be
beneficially owned by GS Capital Partners V Offshore Fund, L.P.,
(3) 5,888,018 shares of common stock deemed to be
beneficially owned by GS Capital Partners V Institutional, L.P.,
and (4) 680,752 shares of common stock deemed to be
beneficially owned by GS Capital Partners V GmbH & Co.
KG. Ken Pontarelli is a managing director of Goldman,
Sachs & Co. Mr. Pontarelli, The Goldman Sachs
Group, Inc. and Goldman, Sachs & Co. each disclaims
beneficial ownership of the shares of common stock owned
directly or indirectly by the Goldman Sachs Funds, except to the
extent of their pecuniary interest therein, if any. If the
underwriters exercise their option to purchase additional shares
in full, (1) 606,139 shares of common stock will be
sold in respect of member units owned by GS Capital Partners V
Fund, L.P., (2) 313,106 shares of common stock will be
sold in respect of member units owned by GS Capital Partners V
Offshore Fund, L.P., (3) 207,853 shares of common
stock will be sold in respect of member units owned by GS
Capital Partners V Institutional, L.P. and
(4) 24,031 shares of common stock will be sold in
respect of member units owned by GS Capital Partners V
GmbH & Co. KG.
(5)
The board of directors of Coffeyville Acquisition II LLC
has the power to dispose of the securities of Coffeyville
Acquisition II LLC.
(6)
Of the 418,275 shares of common stock indicated above,
252,448 shares are owned directly by Mr. Lipinski and
165,827 shares represent shares Mr. Lipinski owns
indirectly through his ownership of common units in Coffeyville
Acquisition LLC and Coffeyville Acquisition II LLC.
Mr. Lipinski does not have the power to vote or dispose of
shares that correspond to his ownership of common units in
Coffeyville Acquisition LLC and Coffeyville Acquisition II
LLC and thus does not have beneficial ownership of such shares.
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(7)
Reflects the number of shares of common stock that corresponds
to such holders interest in common units of Coffeyville
Acquisition LLC and Coffeyville Acquisition II LLC. Such holder
does not have the power to vote or dispose of such shares and
thus does not have beneficial ownership of such shares.
(8)
In connection with this offering, our board of directors has
awarded 5,000 shares of non-vested restricted stock to
Mr. Lippert. The restrictions on these shares will
generally lapse in one-third annual increments beginning on the
first anniversary of the date of grant. In addition, our board
of directors has awarded Mr. Lippert options to purchase
5,150 shares of common stock with an exercise price equal
to the initial public offering price. These options will
generally vest in one-third annual increments beginning on the
first anniversary of the date of grant.
(9)
In connection with this offering, our board of directors has
awarded 12,500 shares of non-vested restricted stock to
Mark Tomkins. The restrictions on these shares will generally
lapse in one-third annual increments beginning on the first
anniversary of the date of grant. In addition, our board of
directors has awarded Mr. Tompkins options to purchase
5,150 shares of common stock with an exercise price equal
to the initial public offering price. These options will
generally vest in one-third annual increments beginning on the
first anniversary of the date of grant.
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208
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Number of
Amount of
Common
Promissory
Units
Note
3,717,647
$
21,000
2,230,589
$
12,600
2,230,589
$
12,600
1,301,176
$
7,350
371,764
$
2,100
650,588
$
3,675
650,588
$
3,675
Bonus Amount
$
1,000,000
$
600,000
$
300,000
$
700,000
$
150,000
$
150,000
$
150,000
$
200,000
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the formation of the partnership, as described in
Formation Transactions;
a right for the managing general partner to cause the
Partnership to pursue an initial public or initial private
offering of its limited partner interests; and
a restructuring of our interest in the Partnership, including a
potential sale of a portion of our interest, in connection with
any initial public or initial private offering by the
Partnership, as described in Initial Offering
Transactions.
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Amount
Contributed
$
5,248,060
5,165,380
26,500
15,900
10,600
1,060
4,240
4,240
10,600
1,060
10,600
101,760
$
10,600,000
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216
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Initial
Following
Partnership Initial Offering
Special
Units
Common
Units
Subordinated
Units
30,303,000
special GP units
9,990,000
common GP units
13,320,000
subordinated LP units
30,333
special LP units
10,000
common LP units
13,333
subordinated LP units
10,000,000
common LP units
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approval rights over any merger by the Partnership into another
entity where:
for so long as we own 50% or more of all units of the
Partnership immediately prior to the merger, less than 60% of
the equity interests of the resulting entity are owned by the
pre-merger unit holders of the Partnership;
for so long as we own 25% or more of all units of the
Partnership immediately prior to the merger, less than 50% of
the equity interests of the resulting entity are owned by the
pre-merger unit holders of the Partnership; and
for so long as we own more than 15% of the all units of the
Partnership immediately prior to the merger, less than 40% of
the equity interests of the resulting entity are owned by the
pre-merger unit holders of the Partnership;
approval rights over any purchase or sale of assets or entities
with a purchase/sale price equal to 50% or more of the current
asset value of the Partnership;
approval rights over any fundamental change in the business of
the Partnership from that conducted by the nitrogen fertilizer
business;
approval rights over any incurrence of indebtedness or issuance
of Partnership securities with rights to distribution or in
liquidation ranking prior or senior to the common units, in
either case in excess of $125 million ($200 million in
the case of the Partnerships initial public or private
offering, exclusive of the underwriters overallotment
option, if any), increased by 80% of the purchase price for
assets or entities whose purchase was approved by us as
described in the second bullet point above;
approval rights over the appointment, termination of employment
and compensation of the chief executive officer and chief
financial officer of the managing general partner, not to be
exercised unreasonably (our consent is deemed given if the chief
executive officer or the chief financial officer of the managing
general partner is an executive officer of CVR Energy);
the right to appoint a director to the board of directors (or
comparable governing body) of the managing general partner; and
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the right to appoint an additional director to the board of
directors (or comparable governing body) of the managing general
partner if the Partnership does not make distributions of at
least the MQD for four consecutive quarters.
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$60 million; plus
all of the Partnerships cash receipts (from formation
before an initial offering, if any, reset to the date of the
initial offering if an initial offering occurs), excluding cash
from (i) borrowings that are not working capital
borrowings, (ii) sales of equity and debt securities and
(iii) sales or other dispositions of assets outside the
ordinary course of business; plus
interest (after giving effect to any interest rate swap
agreements) paid on debt incurred by the Partnership, and cash
distributions paid on the equity securities issued by the
Partnership, to finance all or any portion of the construction,
expansion or improvement of its facilities during the period
from such financing until the earlier to occur of the date the
capital asset is put into service or the date it is abandoned or
disposed of; plus
interest (after giving effect to any interest rate swap
agreements) paid on debt incurred by the Partnership, and cash
distributions paid on the equity securities issued by the
Partnership, in each case, to pay the construction period
interest on debt incurred, or to pay construction period
distributions on equity issued, to finance the construction
projects referred to above; plus
working capital borrowings made after the end of a quarter but
before the date of determination of operating surplus for the
quarter; less
all of the Partnerships operating expenditures after
formation (reset to the date of closing of the
Partnerships initial offering); less
the amount of cash reserves established by the managing general
partner to provide funds for future operating expenditures
(which does not include expansive capital expenditures).
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Marginal
Percentage Interest
in
Distributions
Total
Quarterly
Special GP
Units;
Distribution
Common and
Managing
Target
Amount
Subordinated
Units
General
Partner
$0.375
100
%
0
%
up to $0.4313
100
%
0
%
Second Target Distribution
above $0.4313 and
87
%
13
%
up to $0.4688
above $0.4688 and
77
%
23
%
up to $0.5625
above $0.5625
52
%
48
%
the minimum quarterly distribution;
the target distribution levels; and
the initial unit price, as described below under
Distributions of Cash Upon Liquidation.
Table of Contents
First
, to the special units, until each special unit has
received a total quarterly distribution equal to $0.4313 (the
first target distribution);
Second
, (i) 13% to the managing general partner interest
(in respect of the IDRs) and (ii) 87% to the special units until
each special unit has received a total quarterly amount equal to
$0.4688 (the second target distribution);
Third
, (i) 23% to the managing general partner
interest (in respect of the IDRs) and (ii) 77% to the
special units, until each special unit has received a total
quarterly amount equal to $0.5625 (the third target
distribution); and
Thereafter
, (i) 48% to the managing general partner
interest (in respect of the IDRs) and (ii) 52% to the
special units.
First
, to the common units, until each common unit has
received an amount equal to the MQD plus any arrearages from
prior quarters;
Second
, to the subordinated units, until each
subordinated unit has received an amount equal to the MQD; and
Thereafter
, to all common units and subordinated units,
pro rata
.
First
, to all common units, until each common unit has
received a total quarterly distribution equal to the MQD plus
any arrearages for prior quarters;
Second
, to all subordinated units, until each
subordinated unit has received a total quarterly distribution
equal to the MQD;
Third
, to all common units and subordinated units, pro
rata, until each common unit and subordinated unit has received
a total quarterly distribution equal to $0.4313 (excluding any
distribution in respect of arrearages) (the first target
distribution);
Fourth
, (i) 13% to the managing general partner
interest (in respect of the IDRs) and (ii) 87% to all
common units and subordinated units, pro rata, until each common
unit and subordinated unit has received a total quarterly
distribution equal to $0.4688 (excluding any distribution in
respect of arrearages) (the second target distribution);
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Fifth
, (i) 23% to the managing general partner
interest (in respect of the IDRs) and (ii) 77% to all
common units and subordinated units, pro rata, until each common
unit and subordinated unit has received a total quarterly
distribution equal to $0.5625 (excluding any distribution in
respect of arrearages) (the third target distribution); and
Thereafter
, (i) 48% to the managing general partner
interest (in respect of the IDRs) and (ii) 52% to all
common units and subordinated units, pro rata.
First
, to all common units, until each common unit has
received a total quarterly distribution equal to $0.4313 (the
first target distribution);
Second
, (i) 13% to the managing general partner
interest (in respect of the IDRs) and (ii) 87% to all
common units, pro rata, until each common unit has received a
total quarterly distribution equal to $0.4688 (the second target
distribution);
Third
, (i) 23% to the managing general partner
interest (in respect of the IDRs) and (ii) 87% to all
common units, pro rata, until each common unit has received a
total quarterly distribution equal to $0.5625 (the third target
distribution); and
Thereafter,
(i) 48% to the managing general partner
interest (in respect of the IDRs) and (ii) 52% to all
common units, pro rata.
the Partnership to have earned and paid
the MQD on all of the Partnerships outstanding units
during specified periods; and
there to be no arrearages in payment of the MQD on the common
units.
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operating surplus generated with respect to that period; less
any net increase in working capital borrowings with respect to
that period; less
any net reduction in cash reserves for operating expenditures
with respect to that period not relating to an operating
expenditure made with respect to that period; plus
any net decrease in working capital borrowings with respect to
that period; plus
any net increase in cash reserves for operating expenditures
with respect to that period required by any debt instrument for
the repayment of principal, interest or premium.
First
, to all unit holders, pro rata, until the minimum
quarterly distribution is reduced to zero, as described below;
Second
, to the common unit holders, pro rata, until the
Partnership distributes for each common unit an amount of
available cash from capital surplus equal to any unpaid
arrearages in payment of the minimum quarterly distribution on
the common units; and
Thereafter
, the Partnership will make all distributions
of available cash from capital surplus as if they were from
operating surplus.
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our nitrogen fertilizer business was contributed to the
Partnership on January 1, 2006;
the agreements described in Other Intercompany
Agreements were entered into on January 1,
2006; and
the termination of the management agreements with Goldman,
Sachs & Co. and Kelso and Company, L.P. occurred on or
prior to December 31, 2005.
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Unaudited Pro Forma Cash Available to Make
Distributions
Pro Forma
Nitrogen
Fertilizer
Nitrogen
Fertilizer
Segment Cash
Flow
Segment Cash
Flow
For Year Ended
Pro Forma
for the Year
Ended
December 31,
2006
Adjustments
December 31,
2006
(Unaudited)
$
162,464,532
$
$
162,464,532
25,898,902
(3,494,618
)(a)
22,404,284
63,683,224
(72,451
)(b)
63,610,773
18,914,256
(6,876,482
)(c)
12,037,774
17,125,898
17,125,898
125,622,280
(10,443,551
)
115,178,729
36,842,252
10,443,551
47,285,803
(5,437,500
)(d)
(5,437,500
)
180,680
180,680
37,022,932
5,006,051
42,028,983
17,106,734
17,106,734
19,164
19,164
(13,257,681
)
(13,257,681
)
8,917,655
(e)
8,917,655
(1,990,000
)
(1,990,000
)
1,056,791
1,056,791
2,935,008
8,917,655
11,852,663
$
39,957,940
$
13,923,706
$
53,881,646
a)
Reflects the lower price for pet coke to be supplied by the
refinery to the Partnership under the terms of the coke supply
agreement to be entered into between us and the Partnership. The
actual results for the year ended December 31, 2006
included a coke transfer price of $15 per short ton of
coke. The price would have been $5 per ton under the terms
of the coke supply agreement. The refinery transferred
349,462 tons of pet coke to the nitrogen fertilizer segment
during the year ended December 31, 2006. Under the terms of
the coke supply agreement the Partnership would not have been
required to purchase more than 349,462 tons of pet coke.
b)
Represents a decrease in costs of general environmental
insurance allocable to the Partnership under the terms of the
management services agreement. The actual results for the year
ended December 31, 2006 reflect a simple 1/3 allocation to
the nitrogen fertilizer segment. The allocation under the
management services agreement would have been based on payroll.
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c)
Represents a lower allocation of selling general and
administrative expenses under the terms of the management
services agreement. The actual results for the year ended
December 31, 2006 reflect a simple 1/3 allocation to the
nitrogen fertilizer segment. The allocation under the management
services agreement would have been based on payroll. In
addition, the pro forma adjustment reflects the reversal of the
allocation to the nitrogen fertilizer segment of a portion of a
related party management fee which will not be included in
actual charges for future years. The pro forma selling, general
and administrative expenses does not include any estimated
incremental general and administrative expenses that we expect
the Partnership would incur if the Partnership were a publicly
traded partnership, such as costs associated with annual and
quarterly reports to unit holders, tax return and
Schedule K-1
preparation and distribution, independent auditor fees, investor
relations activities, registrar and transfer agent fees, SEC
reporting and filing requirements, incremental director and
officer liability insurance costs and director compensation. We
estimate that these incremental general and administrative
expenses would not exceed approximately $2.0 million per
year.
d)
Reflects the interest expense related to an assumed
$75 million in borrowings under a term loan facility and on
assumed revolving credit facility borrowings to finance
discretionary capital expenditures (and to finance interest
expense on such borrowings), at an assumed interest rate of
7.50%. The Partnership will issue a $75 million
intercompany note to us pursuant to the contribution agreement,
but does not have a term loan facility or credit facility, or
any commitment letters with any prospective lenders. There can
be no assurance that the Partnership will be able to obtain a
term loan facility or a revolving credit facility or do so on
acceptable terms. If the assumed interest rate used to calculate
the interest on the borrowings were 1% higher or lower, the
annual interest cost would increase or decrease, respectively,
by approximately $750,000.
e)
For purposes of determining pro forma cash available for
distribution, we have assumed that the Partnership was operated
during 2006 consistent with the manner in which we assume it
would operate as a publicly traded partnership, including
borrowing the amounts necessary to cover discretionary capital
expenditures, as well as interest payments on such borrowings,
as reflected in the table. The nitrogen fertilizer segment
incurred significant expenditures related to discretionary
capital expenditure projects which we assume would not have been
funded from cash from operations if the Partnership were
operated as a publicly traded partnership. We assume the
Partnership would either reserve adequate cash to complete
discretionary capital expenditures or would raise additional
capital to fund projects that are not required to sustain
operations. The managing general partner will determine whether
capital expenditures will be funded from operating surplus.
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First
, to the managing general partner and the holders of
units who have negative balances in their capital accounts to
the extent of and in proportion to those negative balances;
Second
, to the common unit holders, pro rata, until the
capital account for each common unit is equal to the sum of:
(2)
the amount of the minimum quarterly distribution for the quarter
during which the liquidation occurs; and
Third
, to the subordinated unit holders, pro rata, until
the capital account for each subordinated unit is equal to the
sum of:
(2)
the amount of the minimum quarterly distribution for the quarter
during which the liquidation occurs;
Fourth
, to all unit holders, pro rata, until the
Partnership allocates under this paragraph an amount per unit
equal to:
(1)
the sum of the excess of the first target distribution per unit
over the minimum quarterly distribution per unit for each
quarter of the Partnerships existence; less
(2)
the cumulative amount per unit of any distributions of available
cash from operating surplus in excess of the minimum quarterly
distribution per unit that the Partnership distributed to the
unit holders, pro rata, for each quarter of the
Partnerships existence;
Fifth
, 87% to all unit holders, pro rata, and 13% to the
managing general partner, until the Partnership allocates under
this paragraph an amount per unit equal to:
(1)
the sum of the excess of the second target distribution per unit
over the first target distribution per unit for each quarter of
the Partnerships existence; less
(2)
the cumulative amount per unit of any distributions of available
cash from operating surplus in excess of the first target
distribution per unit that the Partnership distributed 87% to
the unit holders, pro rata, and 13% to the managing general
partner for each quarter of the Partnerships existence;
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Sixth
, 77% to all unit holders, pro rata, and 23% to the
managing general partner, until the Partnership allocates under
this paragraph an amount per unit equal to:
(1)
the sum of the excess of the third target distribution per unit
over the second target distribution per unit for each quarter of
the Partnerships existence; less
(2)
the cumulative amount per unit of any distributions of available
cash from operating surplus in excess of the second target
distribution per unit that the Partnership distributed 77% to
the unit holders, pro rata, and 23% to the managing general
partner for each quarter of the Partnerships existence; and
Thereafter
, 52% to all unit holders, pro rata, and 48% to
the managing general partner.
First
, to holders of subordinated units in proportion to
the positive balances in their capital accounts, until the
capital accounts of the subordinated unit holders have been
reduced to zero;
Second
, to the holders of common units in proportion to
the positive balances in their capital accounts, until the
capital accounts of the common unit holders have been reduced to
zero; and
Thereafter
, 100% to the managing general partner.
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the subordination period will end and all outstanding
subordinated units will immediately convert into common units on
a
one-for-one
basis; and
any existing arrearages in payment of the minimum quarterly
distribution on the common units will be extinguished.
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Issuance of additional units:
no vote required.
Amendment of the partnership
agreement:
certain amendments may be made by the
managing general partner without the approval of the unit
holders. Other amendments generally require the approval of a
unit majority.
Merger of the Partnership or the sale of all or substantially
all of the Partnerships assets
: unit majority in
certain circumstances. See Merger, Sale or
Other Disposition of Assets. In addition, the holder of
special GP rights has approval rights with respect to some
mergers.
Continuation of the Partnership upon
dissolution:
unit majority. See
Termination and Dissolution.
Withdrawal of the managing general
partner:
under most circumstances a unit majority
is required for the withdrawal of the managing general partner
prior to June 30, 2017 in a manner which would cause a
dissolution of the Partnership. See
Withdrawal of the Managing General Partner.
Removal of the managing general
partner:
generally not less than 80% of the
outstanding common and subordinated units, voting as a single
class, including units held by our managing general partner and
its affiliates. See Removal of the Managing
General Partner.
Transfer of the managing general partners general
partner interest:
the managing general partner
may transfer all, but not less than all, of its managing general
partner interest in the Partnership without a vote of the unit
holders to an affiliate or to another person in connection with
its merger or consolidation with or into, or sale of all or
substantially all of the managing general partners assets
to, such person. A unit majority is required in other
circumstances for a transfer of the managing general partner
interest to a third party prior to June 30, 2017. See
Transfer of Managing General Partner
Interests.
Transfer of ownership interests in the managing general
partner
: no approval required at any time. See
Transfer of Ownership Interests in the
Managing General Partner.
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a change in the Partnerships name, the location of its
principal place of business, its registered agent or its
registered office;
the admission, substitution, withdrawal or removal of partners
in accordance with the partnership agreement;
a change that the managing general partner determines to be
necessary or appropriate for the Partnership to qualify or to
continue its qualification as a limited partnership or a
partnership in which the limited partners have limited liability
under the laws of any state or to ensure that the Partnership
will not be treated as an association taxable as a corporation
or otherwise taxed as an entity for federal income tax purposes
(to the extent not already so treated or taxed);
an amendment that is necessary, in the opinion of the
Partnerships counsel, to prevent the Partnership or its
managing general partner or its directors, officers, agents, or
trustees or CVR Energy from in any manner being subjected to the
provisions of the Investment Company Act of 1940, the Investment
Advisors Act of 1940, or plan asset regulations
adopted under the Employee Retirement Income Security Act of
1974 (ERISA), whether or not substantially similar
to plan asset regulations currently applied or proposed;
an amendment that the managing general partner determines to be
necessary or appropriate for the authorization of additional
partnership securities or rights to acquire partnership
securities;
any amendment expressly permitted in our partnership agreement
to be made by the Partnerships managing general partner
acting alone;
an amendment effected, necessitated or contemplated by a merger
agreement that has been approved under the terms of the
partnership agreement;
any amendment that the Partnerships managing general
partner determines to be necessary or appropriate for the
formation by the Partnership of, or its investment in, any
corporation, partnership or other entity, as otherwise permitted
by the partnership agreement;
a change in the Partnerships fiscal year or taxable year
and related changes;
mergers with or conveyances to another limited liability entity
that is newly formed and has no assets, liabilities or
operations at the time of the merger or conveyance other than
those it receives by way of the merger or conveyance; or
any other amendments substantially similar to any of the matters
described above.
do not adversely affect the partners (or any particular class of
partners) in any material respect;
are necessary or appropriate to satisfy any requirements,
conditions, or guidelines contained in any opinion, directive,
order, ruling, or regulation of any federal or state agency or
judicial authority or contained in any federal or state statute;
are necessary or appropriate to facilitate the trading of
partner interests or to comply with any rule, regulation,
guideline, or requirement of any securities exchange on which
the partner interests are or will be listed for trading;
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are necessary or appropriate for any action taken by the
managing general partner relating to splits or combinations of
units under the provisions of the partnership agreement; or
are required to effect the intent of the provisions of the
partnership agreement or this registration statement or are
otherwise contemplated by the partnership agreement.
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the subordination period will end and all outstanding
subordinated units will immediately convert into common units on
a
one-for-one
basis; and
any existing arrearages in payment of the minimum quarterly
distribution on the common units will be extinguished.
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approved by Fertilizer GPs conflicts committee, although
Fertilizer GP is not obligated to seek such approval;
approved by the vote of a majority of the outstanding common
units, excluding any common units owned by Fertilizer GP and its
affiliates (including us so long as we remain on affiliate).);
on terms no less favorable to the Partnership than those
generally being provided to or available from unrelated third
parties; or
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fair and reasonable to the Partnership, taking into account the
totality of the relationships between the parties involved,
including other transactions that may be particularly favorable
or advantageous to the Partnership.
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The partnership agreement provides that Fertilizer GP shall
not have any liability to the Partnership or its unit holders
(including us) for decisions made in its capacity as managing
general partner so long as it acted in good faith, meaning it
believed that the decision was in the best interests of the
Partnership.
The partnership agreement generally provides that affiliated
transactions and resolutions of conflicts of interest not
approved by the conflicts committee of the board of directors of
Fertilizer GP and not involving a vote of unit holders must be
on terms no less favorable to the Partnership than those
generally being provided to or available from unrelated third
parties or be fair and reasonable to the
Partnership, as determined by Fertilizer GP in good faith, and
that, in determining whether a transaction or resolution is
fair and reasonable, Fertilizer GP may consider the
totality of the relationships between the parties involved,
including other transactions that may be particularly
advantageous or beneficial to the Partnership.
The partnership agreement provides that Fertilizer GP and its
officers and directors will not be liable for monetary damages
to the Partnership or its partners for any acts or omissions
unless there has been a final and non-appealable judgment
entered by a court of competent jurisdiction determining that
the general partner or its officers or directors acted in bad
faith or engaged in fraud or willful misconduct.
amount and timing of asset purchases and sales;
cash expenditures;
borrowings;
issuance of additional units; and
the creation, reduction, or increase of reserves in any quarter.
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on terms no less favorable to the Partnership than those
generally being provided to or available from unrelated third
parties; or
fair and reasonable to the Partnership, taking into
account the totality of the relationships between the parties
involved (including other transactions that may be particularly
favorable or advantageous to the Partnership).
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the making of any expenditures, the lending or borrowing of
money, the assumption or guarantee of, or other contracting for,
indebtedness and other liabilities, the issuance of evidences of
indebtedness, including indebtedness that is convertible into
securities of the Partnership, and the incurring of any other
obligations;
the making of tax, regulatory and other filings, or rendering of
periodic or other reports to governmental or other agencies
having jurisdiction over the Partnerships business or
assets;
the acquisition, disposition, mortgage, pledge, encumbrance,
hypothecation or exchange of any or all of the
Partnerships assets or the merger or other combination of
the Partnership with or into another person;
the negotiation, execution and performance of any contracts,
conveyances or other instruments;
the distribution of partnership cash;
the selection and dismissal of employees and agents, outside
attorneys, accountants, consultants and contractors and the
determination of their compensation and other terms of
employment or hiring;
the maintenance of insurance for the Partnerships benefit
and the benefit of its partners;
the formation of, or acquisition of an interest in, and the
contribution of property and the making of loans to, any further
limited or general partnerships, joint ventures, corporations,
limited liability companies or other relationships;
the control of any matters affecting the Partnerships
rights and obligations, including the bringing and defending of
actions at law or in equity and otherwise engaging in the
conduct of litigation, arbitration or mediation and the
incurring of legal expense and the settlement of claims and
litigation;
the indemnification of any person against liabilities and
contingencies to the extent permitted by law;
the purchase, sale or other acquisition or disposition of the
Partnerships securities, or the issuance of additional
options, rights, warrants and appreciation rights relating to
the Partnerships securities; and
the entering into of agreements with any affiliates to render
services to the Partnership or to itself in the discharge of its
duties as our managing general partner.
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State law fiduciary duty standards are generally considered to
include an obligation to act in good faith and with due care and
loyalty. The duty of care, in the absence of a provision in a
partnership agreement providing otherwise, would generally
require a general partner to act for the partnership in the same
manner as a prudent person would act on his own behalf. The duty
of loyalty, in the absence of a provision in a partnership
agreement providing otherwise, would generally prohibit a
general partner of a Delaware limited partnership from taking
any action or engaging in any transaction where a conflict of
interest is present.
The partnership agreement contains provisions that waive or
consent to conduct by the Partnerships general partners
and their affiliates that might otherwise raise issues as to
compliance with fiduciary duties or applicable law. For example,
the partnership agreement provides that when either of the
general partners is acting in its capacity as a general partner,
as opposed to in its individual capacity, it must act in
good faith and will not be subject to any other
standard under applicable law. In addition, when either of the
general partners is acting in its individual capacity, as
opposed to in its capacity as a general partner, it may act
without any fiduciary obligation to the Partnership or the unit
holders whatsoever. These standards reduce the obligations to
which the Partnerships general partners would otherwise be
held.
The partnership agreement generally provides that affiliated
transactions and resolutions of conflicts of interest not
involving a vote of unit holders and that are not approved by
the conflicts committee of the board of directors of the
Partnerships managing general partner must be (1) on
terms no less favorable to the Partnership than those generally
being provided to or available from unrelated third parties or
(2) fair and reasonable to the Partnership,
taking into account the totality of the relationships between
the parties involved (including other transactions that may be
particularly favorable or advantageous to the Partnership).
If the Partnerships managing general partner does not seek
approval from the conflicts committee or the common unit holders
and its board of directors determines that the resolution or
course of action taken with respect to the conflict of interest
satisfies either of the standards set forth in the bullet points
above, then it will be presumed that, in making its decision,
the board of directors of the managing general partner, which
may include board members affected by the conflict of interest,
acted in good faith, and in any proceeding brought by or on
behalf of any partner or the partnership, the person bringing or
prosecuting such proceeding will have the burden of overcoming
such presumption. These standards reduce the obligations to
which the Partnerships managing general partner would
otherwise be held.
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In addition to the other more specific provisions limiting the
obligations of the Partnerships general partners, the
partnership agreement further provides that the
Partnerships general partners and their officers and
directors will not be liable for monetary damages to the
Partnership or its partners for errors of judgment or for any
acts or omissions unless there has been a final and
non-appealable judgment by a court of competent jurisdiction
determining that the general partner or its officers and
directors acted in bad faith or engaged in fraud or willful
misconduct.
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we avoid the capital cost and operating expenses associated with
coke handling;
we enjoy flexibility in our refinerys crude slate and
operations as a result of not being required to meet a specific
coke quality (which most other pet coke users would otherwise
require);
we avoid the administration, credit risk and marketing fees
associated with selling coke; and
we obtain a contractual right of first refusal to a secure and
reliable long-term source of hydrogen from the fertilizer
business to back up the refinerys own internal hydrogen
production. This beneficial redundancy could only otherwise be
achieved through significant capital investment. Hydrogen is
required by the refinery to remove sulfur from diesel fuel and
gasoline and if hydrogen is not available to the refinery for
even short periods of the time, it would have a significant
negative financial consequence to the refinery.
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any fertilizer restricted business acquired as part of a
business or package of assets if a majority of the value of the
total assets or business acquired is not attributable to
fertilizer restricted business, as determined in good faith by
our board of directors, as applicable; however, if at any time
we complete such an acquisition, we must, within 365 days
of the closing of the transaction, offer to sell the
fertilizer-related assets to the Partnership for their fair
market value plus any additional tax or other similar costs to
us that would be required to transfer the fertilizer-related
assets to the Partnership separately from the acquired business
or package of assets;
engaging in any fertilizer restricted business subject to the
offer to the Partnership described in the immediately preceding
paragraph pending the managing general partners
determination whether to accept such offer and pending the
closing of any offers the Partnership accepts;
engaging in any fertilizer restricted business if the managing
general partner has previously advised us that the managing
general partners board of directors has elected not to
cause the Partnership or its controlled affiliates to acquire
such businesses; or
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acquiring up to 9.9% of any class of securities of any
publicly-traded company that engages in any fertilizer
restricted business.
any refinery restricted business acquired as part of a business
or package of assets if a majority of the value of the total
assets or business acquired is not attributable to refinery
restricted business, as determined in good faith by the managing
general partners board of directors; however, if at any
time the Partnership completes such an acquisition, the
Partnership must, within 365 days of the closing of the
transaction, offer to sell the refinery-related assets to us for
their fair market value plus any additional tax or other similar
costs to the Partnership that would be required to transfer the
refinery-related assets to us separately from the acquired
business or package of assets;
engaging in any refinery restricted business subject to the
offer to us described in the immediately preceding paragraph
pending our determination whether to accept such offer and
pending the closing of any offers we accept;
engaging in any refinery restricted business if we have
previously advised the Partnership that our board of directors
has elected not to cause us to acquire or seek to acquire such
business; or
acquiring up to a 9.9% ownership of any class of securities of
any publicly-traded company that engages in any refinery
restricted business.
services by our employees in capacities equivalent to the
capacities of corporate executive officers, except that those
who serve in such capacities under the agreement shall serve the
Partnership on a shared, part-time basis only, unless we and the
Partnership agree otherwise;
administrative and professional services, including legal,
accounting services, human resources, insurance, tax, credit,
finance, government affairs and regulatory affairs;
managing the property of the Partnership and Coffeyville
Resources Nitrogen Fertilizers, LLC, a subsidiary of the
Partnership, in the ordinary course of business;
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recommending capital raising activities to the board of
directors of the managing general partner of the Partnership,
including the issuance of debt or equity securities, the entry
into credit facilities and other capital market transactions;
managing or overseeing litigation and administrative or
regulatory proceedings, and establishing appropriate insurance
policies for the Partnership, and providing safety and
environmental advice;
recommending the payment of dividends or other distributions or
equity securities; and
managing or providing advice for other projects as may be agreed
by us and the managing general partner of the Partnership from
time to time.
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256
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257
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258
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100% of the net asset sale proceeds received by Holdings or any
of its subsidiaries from specified asset sales and net
insurance/condemnation proceeds, if the borrower does not
reinvest those proceeds in assets to be used in its business or
to make other certain permitted investments within
12 months or if, within 12 months of receipt, the
borrower does not contract to reinvest those proceeds in assets
to be used in its business or to make other certain permitted
investments within 18 months of receipt, each subject to
certain limitations;
100% of the cash proceeds from the incurrence of specified debt
obligations by Holdings or any of its subsidiaries;
75% of consolidated excess cash flow less 100% of
voluntary prepayments made during the fiscal year; provided that
with respect to any fiscal year commencing with fiscal 2008 this
percentage will be reduced to 50% if the total leverage ratio at
the end of such fiscal year is
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less than 1.50:1.00 and 25% if the total leverage ratio as of
the end of such fiscal year is less than 1.00:1.00; and
100% of the cash proceeds received by Parent, Holdings or any
subsidiary of Holdings from any initial public offering or
secondary registered offering of equity interests, until the
aggregate amount of such proceeds is equal to $280 million.
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Minimum
interest
Maximum
2.25:1.00
4.75:1.00
2.50:1.00
4.50:1.00
2.75:1.00
4.25:1.00
2.75:1.00
4.00:1.00
3.25:1.00
3.25:1.00
3.25:1.00
3.00:1.00
3.25:1.00
2.75:1.00
3.25:1.00
2.50:1.00
3.75:1.00
2.25:1.00 to 12/31/09,
2.00:1.00 thereafter
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crude oil for each quarter equals the average of the closing
settlement price(s) on NYMEX for the Nearby Light Crude Futures
Contract that is first nearby as of any
determination date during that calendar quarter quoted in U.S.
dollars per barrel;
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unleaded gasoline for each quarter equals the average of the
closing settlement prices on NYMEX for the Unleaded Gasoline
Futures Contract that is first nearby for any
determination period to and including the determination period
ending December 31, 2006 and the average of the closing
settlement prices on NYMEX for Reformulated Gasoline Blendstock
for Oxygen Blending Futures Contract that is first
nearby for each determination period thereafter quoted in
U.S. dollars per gallon; and
heating oil for each quarter equals the average of the closing
settlement prices on NYMEX for the Heating Oil Futures Contract
that is first nearby as of any determination date
during such calendar quarter quoted in U.S. dollars per
gallon.
guaranteed by Coffeyville Refining & Marketing, Inc.,
Coffeyville Nitrogen Fertilizers, Inc., Coffeyville Crude
Transportation, Inc. Coffeyville Terminal, Inc., CL JV Holdings,
LLC and their domestic subsidiaries;
secured by a $150 million funded letter of credit issued
under the Credit Facility in favor of J. Aron; and
to the extent J. Arons exposure under the derivative
transaction exceeds $150 million, secured by the same
collateral that secures our Credit Facility.
Coffeyville Resources, LLCs obligations under the
derivative transaction cease to be secured as described above
equally and ratably with the security interest granted under the
Credit Facility;
Coffeyville Resources, LLCs obligations under the
derivative transaction cease to be guaranteed by Coffeyville
Refining & Marketing, Inc., Coffeyville Nitrogen
Fertilizers, Inc., Coffeyville Crude Transportation, Inc.
Coffeyville Terminal, Inc., CL JV Holdings, LLC and their
domestic subsidiaries; or
Coffeyville Resources, LLC fails to maintain a $150 million
funded letter of credit in favor of J. Aron.
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264
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restricting dividends on the common stock;
diluting the voting power of the common stock;
impairing the liquidation rights of the common stock; or
delaying or preventing a change in control without further
action by the stockholders.
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266
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267
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268
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one percent of the number of shares of common stock then
outstanding, which will equal approximately 816,416 shares
immediately after this offering; or
the average weekly trading volume of the common stock during the
four calendar weeks preceding the sale.
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an individual who is a citizen or resident of the United States
or a former citizen or resident of the United States subject to
taxation as an expatriate;
a corporation created or organized in or under the laws of the
United States, any state thereof or the District of Columbia;
a partnership;
an estate whose income is includible in gross income for
U.S. federal income tax purposes regardless of its
source; or
a trust, if (1) a United States court is able to exercise
primary supervision over the trusts administration and one
or more United States persons (within the meaning of
the U.S. Internal Revenue Code of 1986, as amended, or the
Code) has the authority to control all of the trusts
substantial decisions, or (2) the trust has a valid
election in effect under applicable U.S. Treasury
regulations to be treated as a United States person.
special U.S. federal income tax rules that may apply to
particular
non-U.S. holders,
such as financial institutions, insurance companies, tax-exempt
organizations, and dealers and traders in securities or
currencies;
non-U.S. holders
holding our common stock as part of a conversion, constructive
sale, wash sale or other integrated transaction or a hedge,
straddle or synthetic security;
any U.S. state and local or
non-U.S. or
other tax consequences; and
the U.S. federal income or estate tax consequences for the
beneficial owners of a
non-U.S. holder.
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the gain is effectively connected with the
non-U.S. holders
conduct of a trade or business in the United States and, if
required by an applicable income tax treaty, is attributable to
a permanent establishment maintained by the
non-U.S. holder
in the United States; in these cases, the gain will be taxed on
a net income basis at the regular graduated rates and in the
manner applicable to U.S. persons (unless an applicable
income tax treaty provides otherwise) and, if the
non-U.S. holder
is a foreign corporation, the branch profits tax
described above may also apply;
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the
non-U.S. holder
is an individual who holds our common stock as a capital asset,
is present in the United States for more than 182 days in
the taxable year of the disposition and meets other requirements
(in which case, except as otherwise provided by an applicable
income tax treaty, the gain, which may be offset by
U.S. source capital losses, generally will be subject to a
flat 30% U.S. federal income tax, even though the
non-U.S. holder
is not considered a resident alien under the Code); or
we are or have been a U.S. real property holding
corporation for U.S. federal income tax purposes at
any time during the shorter of the five-year period ending on
the date of disposition or the period that the
non-U.S. holder
held our common stock.
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is a United States person;
derives 50% or more of its gross income in specific periods from
the conduct of a trade or business in the United States;
is a controlled foreign corporation for U.S. federal
income tax purposes; or
is a foreign partnership, if at any time during its tax year:
one or more of its partners are United States persons who in the
aggregate hold more than 50% of the income or capital interests
in the partnership; or
the foreign partnership is engaged in a U.S. trade or business,
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Number
of Shares
15,500,000
Full
Exercise
$
$
$
$
Full
Exercise
$
$
$
$
274
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the history and prospects for our industry;
our historical performance, including our net sales, net income,
margins and certain other financial information;
estimates of our business potential and earnings prospects;
an assessment of our management;
investor demand for our shares of common stock;
market valuations of companies that we and the representatives
believe to be comparable; and
prevailing securities markets at the time of this offering.
275
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276
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277
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278
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279
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2-1-1 crack spread
The approximate gross margin resulting from processing two
barrels of crude oil to produce one barrel of gasoline and one
barrel of diesel fuel.
Barrel
Common unit of measure in the oil industry which equates to 42
gallons.
Blendstocks
Various compounds that are combined with gasoline or diesel from
the crude oil refining process to make finished gasoline and
diesel fuel; these may include natural gasoline, FCC unit
gasoline, ethanol, reformate or butane, among others.
Bonus plan
The CVR GP, LLC Profit Bonus Plan, which the managing general
partner of the MLP intends to adopt prior to the consummation of
this offering, and which will relate to distributions of profit
made by Coffeyville Acquisition III LLC.
Bonus points
The class of interests to be issued under the bonus plan, which
will represent the opportunity to receive a cash payment when
distributions of profit are made pursuant to the limited
liability company agreement of Coffeyville Acquisition III
LLC.
bpd
Abbreviation for barrels per day.
Btu
British thermal units: a measure of energy. One Btu of heat is
required to raise the temperature of one pound of water one
degree Fahrenheit.
Bulk sales
Volume sales through third party pipelines, in contrast to
tanker truck quantity sales.
Bulk spot basis
Prompt bulk sales (as compared to outer month sales).
By-products
Products that result from extracting high value products such as
gasoline and diesel fuel from crude oil; these include black
oil, sulfur, propane, pet coke and other products.
Capacity
Capacity is defined as the throughput a process unit is capable
of sustaining, either on a calendar or stream day basis. The
throughput may be expressed in terms of maximum sustainable,
nameplate or economic capacity. The maximum sustainable or
nameplate capacities may not be the most economical. The
economic capacity is the throughput that generally provides the
greatest economic benefit based on considerations such as
feedstock costs, product values and downstream unit constraints.
Catalyst
A substance that alters, accelerates, or instigates chemical
changes, but is neither produced, consumed nor altered in the
process.
Coffeyville supply area
Refers to the states of Kansas, Oklahoma, Missouri, Nebraska and
Iowa.
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Coker unit
A refinery unit that utilizes the lowest value component of
crude oil remaining after all higher value products are removed,
further breaks down the component into more valuable products
and converts the rest into pet coke.
Common units
The class of interests issued or to be issued under the limited
liability company agreements governing Coffeyville Acquisition
LLC, Coffeyville Acquisition II LLC and Coffeyville
Acquisition III LLC, which provide for voting rights and
have rights with respect to profits and losses of, and
distributions from, the respective limited liability companies
Corn belt
The primary corn producing region of the United States, which
includes Illinois, Indiana, Iowa, Minnesota, Missouri, Nebraska,
Ohio and Wisconsin.
Crack spread
A simplified calculation that measures the difference between
the price for light products and crude oil. For example, 2-1-1
crack spread is often referenced and represents the approximate
gross margin resulting from processing two barrels of crude oil
to produce one barrel of gasoline and one barrel of diesel fuel.
Crude slate
The mix of different crude types (qualities) being charged to a
crude unit.
Crude slate optimization
The process of determining the most economic crude oils to be
refined based upon the prevailing product values, crude prices,
crude oil yields and refinery process unit operating unit
constraints to maximize profit.
Crude unit
The initial refinery unit to process crude oil by separating the
crude oil according to boiling point under high heat to recover
various hydrocarbon fractions.
Delayed coker
A refinery unit that processes heavy feedstock using high
temperature and produces lighter products and petroleum coke.
Distillates
Primarily diesel fuel, kerosene and jet fuel.
Ethanol
A clear, colorless, flammable oxygenated hydrocarbon. Ethanol is
typically produced chemically from ethylene, or biologically
from fermentation of various sugars from carbohydrates found in
agricultural crops and cellulosic residues from crops or wood.
It is used in the United States as a gasoline octane enhancer
and oxygenate.
Farm belt
Refers to the states of Illinois, Indiana, Iowa, Kansas,
Minnesota, Missouri, Nebraska, North Dakota, Ohio, Oklahoma,
South Dakota, Texas and Wisconsin.
Feedstocks
Petroleum products, such as crude oil and natural gas liquids,
that are processed and blended into refined products.
Fluid catalytic cracking unit
Converts gas oil from the crude unit or coker unit into
liquefied petroleum gas, distillates and gasoline blendstocks by
applying heat in the presence of a catalyst.
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Fluxant
Material added to coke to aid in the removal of coke metal
impurities from the gasifier. The material consists of a mixture
of fly ash and sand.
Heavy crude oil
A relatively inexpensive crude oil characterized by high
relative density and viscosity. Heavy crude oils require greater
levels of processing to produce high value products such as
gasoline and diesel fuel.
Independent refiner
A refiner that does not have crude oil exploration or production
operations. An independent refiner purchases the crude oil used
as feedstock in its refinery operations from third parties.
Light crude oil
A relatively expensive crude oil characterized by low relative
density and viscosity. Light crude oils require lower levels of
processing to produce high value products such as gasoline and
diesel fuel.
Liquefied petroleum gas
Light hydrocarbon material gaseous at atmospheric temperature
and pressure, held in the liquid state by pressure to facilitate
storage, transport and handling.
Magellan Midstream Partners L.P.
A publicly traded company whose business is the transportation,
storage and distribution of refined petroleum products.
Maya
A heavy, sour crude oil from Mexico characterized by an API
gravity of approximately 22.0 and a sulfur content of
approximately 3.3 weight percent.
Modified Solomon complexity
Standard industry measure of a refinerys ability to
process less expensive feedstock, such as heavier and
high-sulfur content crude oils, into value-added products. The
weighted average of the Solomon complexity factors for each
operating unit multiplied by the throughput of each refinery
unit, divided by the crude capacity of the refinery.
MTBE
Methyl Tertiary Butyl Ether, an ether produced from the reaction
of isobutylene and methanol specifically for use as a gasoline
blendstock. The EPA required MTBE or other oxygenates to be
blended into reformulated gasoline.
Naphtha
The major constituent of gasoline fractionated from crude oil
during the refining process, which is later processed in the
reformer unit to increase octane.
Netbacks
Refers to the unit price of fertilizer, in dollars per ton,
offered on a delivered basis and excludes shipment costs. Also
referred to as plant gate price.
Operating units
Override units granted pursuant to the limited liability company
agreements governing Coffeyville Acquisition LLC and Coffeyville
Acquisition II LLC, which vest based on service.
Override units
The class of interests issued or to be issued under the limited
liability company agreements governing Coffeyville Acquisition
LLC, Coffeyville Acquisition II LLC and Coffeyville
Acquisition
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III LLC, which represent profits interests in the respective
limited liability companies. With respect to the override units
issued under the limited liability company agreements of
Coffeyville Acquisition LLC and Coffeyville Acquisition II
LLC, the units are classified as either operating units or value
units.
PADD I
East Coast Petroleum Area for Defense District which includes
Connecticut, Delaware, District of Columbia, Florida, Georgia,
Maine, Massachusetts, Maryland, New Hampshire, New Jersey, New
York, North Carolina, Pennsylvania, Rhode Island, South
Carolina, Vermont, Virginia and West Virginia.
PADD II
Midwest Petroleum Area for Defense District which includes
Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota,
Missouri, Nebraska, North Dakota, Ohio, Oklahoma, South Dakota,
Tennessee, and Wisconsin.
PADD III
Gulf Coast Petroleum Area for Defense District which includes
Alabama, Arkansas, Louisiana, Mississippi, New Mexico, and Texas.
PADD IV
Rocky Mountains Petroleum Area for Defense District which
includes Colorado, Idaho, Montana, Utah, and Wyoming.
PADD V
West Coast Petroleum Area for Defense District which includes
Alaska, Arizona, California, Hawaii, Nevada, Oregon, and
Washington.
Pet coke
A coal-like substance that is produced during the refining
process.
Phantom performance points
Phantom points granted or to be granted pursuant to the Phantom
Unit Plan I and Phantom Unit Plan II, which vest based on
performance of the investment made by Coffeyville Acquisition
LLC and Coffeyville Acquisition II LLC, respectively.
Phantom points
The class of interests to be issued under the Phantom Unit
Plan I, and to be issued under the Phantom Unit
Plan II, which represent or will represent the opportunity
to receive a cash payment when distributions of profit are made
pursuant to the limited liability company agreements of
Coffeyville Acquisition LLC and Coffeyville Acquisition II
LLC. Phantom points are classified as either phantom service
points or phantom performance points.
Phantom service points
Phantom points granted or to be granted pursuant to the Phantom
Unit Plan I and Phantom Unit Plan II, which vest based on
service.
Phantom Unit Plan I
The Coffeyville Resources, LLC Phantom Unit Appreciation Plan
(Plan I), which relates to distributions made by Coffeyville
Acquisition LLC.
Phantom Unit Plan II
The Coffeyville Resources, LLC Phantom Unit Appreciation Plan
(Plan II), which we intend to adopt prior to the
consummation of this offering, and which will relate to
distributions made by Coffeyville Acquisition II LLC.
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Profits interests
Interests in the profits of Coffeyville Acquisition LLC,
Coffeyville Acquisition II LLC and Coffeyville Acquisition III
LLC, also referred to as override units.
Rack sales
Sales which are made into tanker truck (versus bulk pipeline
batcher) via either a proprietary or third terminal facility
designed for truck loading.
Recordable incident
An injury, as defined by OSHA. All work-related deaths and
illnesses, and those work-related injuries which result in loss
of consciousness, restriction of work or motion, transfer to
another job, or require medical treatment beyond first aid.
Recordable injury rate
The number of recordable injuries per 200,000 hours rate worked.
Refined products
Petroleum products, such as gasoline, diesel fuel and jet fuel,
that are produced by a refinery.
Refining margin
A measurement calculated as the difference between net sales and
cost of products sold (exclusive of depreciation and
amortization).
Reformer unit
A refinery unit that processes naphtha and converts it to
high-octane gasoline by using a platinum/rhenium catalyst. Also
known as a platformer.
Reformulated gasoline
The composition and properties of which meet the requirements of
the reformulated gasoline regulations.
Slag
A glasslike substance removed from the gasifier containing the
metal impurities originally present in the coke.
Slurry
A byproduct of the fluid catalytic cracking process that is sold
for further processing or blending with fuel oil.
Sour crude oil
A crude oil that is relatively high in sulfur content, requiring
additional processing to remove the sulfur. Sour crude oil is
typically less expensive than sweet crude oil.
Spot market
A market in which commodities are bought and sold for cash and
delivered immediately.
Sweet crude oil
A crude oil that is relatively low in sulfur content, requiring
less processing to remove the sulfur. Sweet crude oil is
typically more expensive than sour crude oil.
Syngas
A mixture of gases (largely carbon monoxide and hydrogen) that
results from heating coal in the presence of steam.
Throughput
The volume processed through a unit or a refinery.
Ton
One ton is equal to 2,000 pounds.
Turnaround
A periodically required standard procedure to refurbish and
maintain a refinery that involves the shutdown and inspection of
major processing units and occurs every three to four years.
UAN
UAN is a solution of urea and ammonium nitrate in water used as
a fertilizer.
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Utilization
Ratio of total refinery throughput to the rated capacity of the
refinery.
Vacuum unit
Secondary refinery unit to process crude oil by separating
product from the crude unit according to boiling point under
high heat and low pressure to recover various hydrocarbons.
Value units
Override units granted pursuant to the limited liability company
agreements governing Coffeyville Acquisition LLC and Coffeyville
Acquisition II LLC, which vest based on performance of
the investment made by Coffeyville Acquisition LLC or
Coffeyville Acquisition II LLC, respectively.
Wheat belt
The primary wheat producing region of the United States, which
includes Oklahoma, Kansas, North Dakota, South Dakota and Texas.
WTI
West Texas Intermediate crude oil, a light, sweet crude oil,
characterized by an API gravity between 38 and 40 and a sulfur
content of approximately 0.3 weight percent that is used as a
benchmark for other crude oils.
WTS
West Texas Sour crude oil, a relatively light, sour crude oil
characterized by an API gravity of 32-33 degrees and a sulfur
content of approximately 2 weight percent.
Yield
The percentage of refined products that is produced from crude
and other feedstocks.
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F-2
F-3
F-4
F-5
F-8
F-9
F-48
F-49
F-50
F-51
F-1
Table of Contents
CVR Energy, Inc.:
F-2
Table of Contents
Coffeyville
Acquisition LLC
Successor
December 31,
December 31,
2005
2006
$
64,703,524
$
41,919,260
71,560,052
69,589,161
154,275,818
161,432,793
14,709,309
18,524,017
31,059,748
18,888,660
32,099,163
336,308,451
342,453,054
772,512,884
1,007,155,873
1,008,547
638,456
83,774,885
83,774,885
19,524,839
9,128,258
8,418,297
6,328,989
$
1,221,547,903
$
1,449,479,515
$
2,235,973
$
5,797,981
87,914,833
138,911,088
10,796,896
24,731,283
4,841,234
9,034,841
4,939,614
96,688,956
36,894,802
12,029,987
8,812,350
8,831,937
6,017,435
228,279,430
230,199,780
497,201,527
769,202,019
7,009,388
5,395,105
209,523,747
284,122,958
160,033,333
72,806,486
873,767,995
1,131,526,568
4,326,188
4,172,350
6,980,907
(500,000
)
3,672,350
6,980,907
114,830,560
73,593,326
997,568
2,852,746
115,828,128
76,446,072
$
1,221,547,903
$
1,449,479,515
F-3
Table of Contents
Coffeyville Group
Farmland Industries
Holdings, LLC
Coffeyville Acquisition LLC
Original Predecessor
Immediate Predecessor
Successor
62 Days Ended
304 Days Ended
174 Days Ended
233 Days Ended
Year Ended
March 2,
December 31,
June 23,
December 31,
December 31,
2004
2004
2005
2005
2006
$
261,086,529
$
1,479,893,189
$
980,706,261
$
1,454,259,542
$
3,037,567,362
221,449,177
1,244,207,423
768,067,178
1,168,137,217
2,443,374,743
23,353,462
116,984,384
80,913,862
85,313,202
198,979,983
4,649,145
16,284,084
18,341,522
18,320,030
62,600,121
432,003
2,445,961
1,128,005
23,954,031
51,004,582
249,883,787
1,379,921,852
868,450,567
1,295,724,480
2,755,959,429
11,202,742
99,971,337
112,255,694
158,535,062
281,607,933
(10,058,450
)
(7,801,821
)
(25,007,159
)
(43,879,644
)
169,652
511,687
972,264
3,450,190
546,604
(7,664,725
)
(316,062,111
)
94,493,141
(7,166,110
)
(8,093,754
)
(23,360,306
)
9,345
52,659
(762,616
)
(563,190
)
(899,831
)
9,345
(16,455,645
)
(23,811,229
)
(340,660,196
)
29,803,550
11,212,087
83,515,692
88,444,465
(182,125,134
)
311,411,483
33,805,480
36,047,516
(62,968,044
)
119,840,160
$
11,212,087
$
49,710,212
$
52,396,949
$
(119,157,090
)
$
191,571,323
$
2.27
$
2.26
84,563,025
84,580,525
F-4
Table of Contents
Divisional
Voting
Nonvoting
Unearned
$
58,191,489
$
$
$
$
58,191,489
11,212,087
11,212,087
(53,216,357
)
(53,216,357
)
$
16,187,219
$
$
$
$
16,187,219
$
$
$
$
$
63,200,000
63,200,000
3,100,000
(3,037,000
)
63,000
2,047,450
(2,044,600
)
2,850
1,095,609
1,095,609
(94,686,276
)
(94,686,276
)
(5,301,233
)
(5,301,233
)
41,971,436
7,738,776
49,710,212
10,485,160
7,584,993
(3,985,991
)
14,084,162
3,985,991
3,985,991
728,724
728,724
(44,083,323
)
(44,083,323
)
(8,128,170
)
(8,128,170
)
44,239,908
8,157,041
52,396,949
$
$
11,370,469
$
7,613,864
$
$
18,984,333
F-5
Table of Contents
Management
Voting
Note
Receivable
Common Units
from
Management
Subject to
Redemption
Unit
Holder
Total
$
$
$
177,500
1,775,000
1,775,000
50,000
500,000
(500,000
)
3,035,586
3,035,586
(1,138,236
)
(1,138,236
)
227,500
4,172,350
(500,000
)
3,672,350
150,000
150,000
350,000
350,000
4,239,548
4,239,548
(26,437
)
(3,119,188
)
(3,119,188
)
1,688,197
1,688,197
201,063
$
6,980,907
$
$
6,980,907
F-6
Table of Contents
Management
Management
Nonvoting
Override
Nonvoting
Override
Voting Common
Units
Operating
Units
Value
Units
Total
$
$
$
$
23,588,500
235,885,000
235,885,000
919,630
1,839,265
602,381
395,187
997,568
(3,035,586
)
(3,035,586
)
(118,018,854
)
(118,018,854
)
23,588,500
114,830,560
919,630
602,381
1,839,265
395,187
115,828,128
2,000,000
20,000,000
20,000,000
1,160,530
694,648
1,855,178
(4,239,548
)
(4,239,548
)
(2,973,563
)
72,492
144,966
(246,880,812
)
(246,880,812
)
189,883,126
189,883,126
22,614,937
$
73,593,326
992,122
$
1,762,911
1,984,231
$
1,089,835
$
76,446,072
Table of Contents
Coffeyville
Group
Coffeyville
Farmland
Industries
Holdings, LLC
Acquisition
LLC
Original
Predecessor
Immediate
Predecessor
Successor
62 Days
Ended
304 Days
Ended
174 Days
Ended
233 Days
Ended
Year Ended
March 2,
December 31,
June 23,
December 31,
December 31,
$
11,212,087
$
49,710,212
$
52,396,949
$
(119,157,090
)
$
191,571,323
432,003
2,445,961
1,128,005
23,954,031
51,004,582
190,468
(190,468
)
275,189
100,255
1,332,890
812,166
1,751,041
3,336,795
1,188,360
7,166,110
8,093,754
23,360,306
350,000
1,095,609
3,985,991
997,568
6,181,366
19,635,303
(23,571,436
)
(11,334,177
)
(34,506,244
)
1,870,636
(6,399,677
)
20,068,625
(59,045,550
)
1,895,473
(7,156,975
)
25,716,107
(6,758,666
)
(937,543
)
(6,491,633
)
(5,383,117
)
715,132
(5,379,727
)
3,036,659
(4,651,733
)
1,971,859
(6,759,702
)
31,059,282
16,124,794
40,655,763
5,004,826
1,301,160
4,503,574
(136,398
)
(37,038,777
)
8,319,913
1,209,008
(9,073,050
)
9,983,132
(3,217,637
)
364,555
12,967,500
1,254,196
10,499,712
15,313,492
256,722,289
(147,021,001
)
(20,057
)
(1,746,043
)
(1,553,184
)
(538,365
)
(1,614,283
)
(689,372
)
(297,105
)
(295,776
)
(615,680
)
3,803,937
(98,424,817
)
86,770,299
53,215,664
89,785,901
12,708,948
82,532,142
186,592,309
(116,599,329
)
(685,125,669
)
(14,160,280
)
(12,256,793
)
(45,172,134
)
(240,225,392
)
(130,759,609
)
(12,256,793
)
(730,297,803
)
(240,225,392
)
(57,686,789
)
(343,449
)
(69,286,016
)
(900,000
)
57,743,299
492,308
69,286,016
900,000
171,900,000
500,000,000
805,000,000
(23,025,000
)
(375,000
)
(562,500
)
(529,437,500
)
(1,176,424
)
(53,216,357
)
(16,309,917
)
(24,628,315
)
(9,363,681
)
(1,095,000
)
(5,500,000
)
150,000
63,263,000
237,660,000
20,000,000
(99,987,509
)
(52,211,493
)
(250,000,000
)
(53,216,357
)
93,625,660
(52,437,634
)
712,469,185
30,848,819
(693
)
52,651,952
(51,985,479
)
64,703,524
(22,784,264
)
2,250
52,651,952
64,703,524
$
1,557
$
52,651,952
$
666,473
$
64,703,524
$
41,919,260
$
$
33,820,000
$
27,040,000
$
35,593,172
$
70,108,638
$
$
8,570,069
$
7,287,351
$
23,578,178
$
51,854,047
$
$
$
$
$
45,991,429
$
$
$
728,724
$
$
F-8
Table of Contents
F-9
Table of Contents
F-10
Table of Contents
F-11
Table of Contents
Inventories
$
100,491,131
1,085,598
38,239,154
$
139,815,883
Deferred revenue
$
9,910,897
1,176,424
10,846,980
1,282,253
$
23,216,554
$
116,599,329
F-12
Table of Contents
Cash
$
666,473
37,328,997
156,171,291
4,865,241
1,322,000
83,774,885
3,837,647
750,910,245
$
1,038,876,779
Accounts payable
$
47,259,070
16,017,210
5,076,012
276,888,816
7,843,529
$
353,084,637
$
685,792,142
F-13
Table of Contents
$
191,571,323
100
65,861,893
in exchange for subsidiary shares
252,448
27,150
15,500,000
2,921,434
84,563,025
17,500
84,580,525
$
2.27
$
2.27
F-14
Table of Contents
F-15
Table of Contents
Range
of useful lives, in years
15 to 20
20 to 30
5 to 30
5
3 to 7
F-16
Table of Contents
F-17
Table of Contents
F-18
Table of Contents
F-19
Table of Contents
F-20
Table of Contents
F-21
Table of Contents
F-22
Table of Contents
Estimated forfeiture rate
None
Explicit service period
Based on forfeiture schedule below
Grant-date fair value controlling basis
$5.16 per share
Marketability and minority interest discounts
$1.24 per share (24% discount)
Volatility
37%
F-23
Table of Contents
Estimated forfeiture rate
None
Explicit service period
Based on forfeiture schedule below
Grant-date fair value controlling basis
$8.15 per share
Marketability and minority interest discounts
$1.63 per share (20% discount)
Volatility
41%
Forfeiture
Percentage
75
%
50
%
25
%
0
%
Estimated forfeiture rate
None
Derived service period
6 years
Grant-date fair value controlling basis
$2.91 per share
Marketability and minority interest discounts
$0.70 per share (24% discount)
Volatility
37%
F-24
Table of Contents
Estimated forfeiture rate
None
Derived service period
6 years
Grant-date fair value controlling basis
$8.15 per share
Marketability and minority interest discounts
$1.63 per share (20% discount)
Volatility
41%
Subject to
Forfeiture
Percentage
75
%
50
%
25
%
0
%
F-25
Table of Contents
Override
Override
Operating
Units
Value
Units
$
1,198,045
$
883,684
670,385
883,684
344,178
883,684
102,079
883,684
385,383
$
2,314,687
$
3,920,119
F-26
Table of Contents
Successor
December 31,
December 31,
2005
2006
$
58,513
$
59,722
47,437
60,810
33,397
18,441
14,929
22,460
$
154,276
$
161,433
Successor
December 31,
December 31,
2005
2006
$
9,346
$
11,028
10,306
11,042
715,381
864,140
3,396
4,175
271
5,364
887
57,382
184,531
796,082
1,081,167
23,569
74,011
$
772,513
$
1,007,156
F-27
Table of Contents
Contractual
Agreements
165
64
33
33
33
310
638
F-28
Table of Contents
Successor
December 31,
December 31,
2005
2006
$
24,628
$
11,065
1,751
21
22,877
11,044
3,352
1,916
$
19,525
$
9,128
F-29
Table of Contents
Deferred
Financing
$
1,916
1,910
1,893
1,878
1,378
2,069
$
11,044
Successor
December 31,
December 31,
2005
2006
$
2,447
$
1,070
4,889
4,040
1,082
1,219
$
8,418
$
6,329
Prepaid
Insurance
$
6,197
292
292
292
194
7,267
6,197
$
1,070
F-30
Table of Contents
F-31
Table of Contents
Minimum
Interest
Maximum
Coverage
Ratio
Leverage
Ratio
2.25:1.00
4.75:1.00
2.50:1.00
4.50:1.00
2.75:1.00
4.25:1.00
2.75:1.00
4.00:1.00
3.25:1.00
3.25:1.00
3.25:1.00
3.00:1.00
3.25:1.00
2.75:1.00
3.25:1.00
2.50:1.00
3.75:1.00
2.25:1.00
3.75:1.00
2.00:1.00
F-32
Table of Contents
Amount
$
5,797,981
7,663,223
7,586,878
7,511,293
7,436,461
739,004,164
$
775,000,000
F-33
Table of Contents
Immediate
Predecessor
Successor
304 Days
174 Days
229 Days
Year
Ended
Ended
Ended
Ended
December 31,
June 23,
December 31,
December 31,
2004
2005
2005
2006
$
27,902
$
26,145
$
29,000
$
26,096
6,519
6,099
6,457
6,974
34,421
32,244
35,457
33,070
(499
)
3,083
(80,500
)
69,836
(117
)
721
(17,925
)
16,934
(616
)
3,804
(98,425
)
86,770
$
33,805
$
36,048
$
(62,968
)
$
119,840
Immediate
Predecessor
Successor
304 Days
174 Days
229 Days
Year
Ended
Ended
Ended
Ended
December 31,
June 23,
December 31,
December 31,
2004
2005
2005
2006
$
29,230
$
30,956
$
(63,744
)
$
108,994
8,750
4,162
4,433
(7,454
)
15,540
(825
)
(897
)
(1,089
)
(4,462
)
413
1,484
377
857
$
33,805
$
36,048
$
(62,968
)
$
119,840
F-34
Table of Contents
Successor
December 31,
December 31,
2005
2006
$
109
$
150
483
5,072
560
673
91,226
40,389
92,378
46,284
269,462
309,472
1,238
1,061
142
985
270,842
311,518
$
(178,464
)
$
(265,234
)
F-35
Table of Contents
Operating
Unconditional
Leases
Purchase
Obligations
$
3,892,374
$
19,279,245
3,855,630
19,034,729
2,880,456
19,001,745
1,525,474
16,610,265
853,094
14,740,348
107,113
132,414,592
$
13,114,141
$
221,080,924
F-36
Table of Contents
F-37
Table of Contents
F-38
Table of Contents
Amount
$
1,828
904
493
341
341
6,001
9,908
2,685
$
7,223
F-39
Table of Contents
Immediate
Predecessor
Successor
304 Days
Ended
174 Days
Ended
233 Days
Ended
Year Ended
December 31,
June 23,
December 31,
December 31,
2004
2005
2005
2006
$
$
$
(59,300,670
)
$
(46,768,651
)
(235,851,568
)
126,771,145
(25,000,000
)
(219,096
)
(7,664,725
)
(1,867,513
)
8,361,050
765,700
(1,697,640
)
2,411,340
(103,731
)
4,398,164
7,759,011
(679,908
)
$
546,604
$
(7,664,725
)
$
(316,062,111
)
$
94,493,140
F-40
Table of Contents
Notional
Fixed
Amount
Interest
Rate
$
375 million
4.038
%
325 million
4.038
%
325 million
4.195
%
250 million
4.195
%
180 million
4.195
%
110 million
4.195
%
F-41
Table of Contents
F-42
Table of Contents
F-43
Table of Contents
F-44
Table of Contents
Original
Predecessor
Immediate
Predecessor
Successor
62-Day
Period
304-Day
Period
174-Day
Period
233-Day
Period
Year
Ended
Ended
Ended
Ended
Ended
March 2,
December 31,
June 23,
December 31,
December 31,
$
241,640,365
$
1,390,768,126
$
903,802,983
$
1,363,390,142
$
2,880,442,544
19,446,164
93,422,503
79,347,843
93,651,855
162,464,533
(4,297,440
)
(2,444,565
)
(2,782,455
)
(5,339,715
)
$
261,086,529
$
1,479,893,189
$
980,706,261
$
1,454,259,542
$
3,037,567,362
$
217,375,945
$
1,228,074,299
$
761,719,405
$
1,156,208,301
$
2,422,717,768
4,073,232
20,433,642
9,125,852
14,503,824
25,898,902
(2
)
(4,300,516
)
(2,778,079
)
(2,574,908
)
(5,241,927
)
$
221,449,177
$
1,244,207,423
$
768,067,178
$
1,168,137,217
$
2,443,374,743
$
14,925,611
$
73,231,607
$
52,611,148
$
56,159,473
$
135,296,759
8,427,851
43,752,777
28,302,714
29,153,729
63,683,224
$
23,353,462
$
116,984,384
$
80,913,862
$
85,313,202
$
198,979,983
$
271,284
$
1,522,464
$
770,728
$
15,566,987
$
33,016,619
160,719
855,289
316,446
8,360,911
17,125,897
68,208
40,831
26,133
862,066
$
432,003
$
2,445,961
$
1,128,005
$
23,954,031
$
51,004,582
$
7,687,745
$
77,094,034
$
76,654,428
$
123,044,854
$
245,577,550
3,514,997
22,874,227
35,267,752
35,731,056
36,842,252
3,076
333,514
(240,848
)
(811,869
)
$
11,202,742
$
99,971,337
$
112,255,694
$
158,535,062
$
281,607,933
$
$
11,267,244
$
10,790,042
$
42,107,751
$
223,553,105
2,697,852
1,434,921
2,017,385
13,257,681
195,184
31,830
1,046,998
3,414,606
$
$
14,160,280
$
12,256,793
$
45,172,134
$
240,225,392
Table of Contents
Original
Predecessor
Immediate
Predecessor
Successor
62-Day
Period
304-Day
Period
174-Day
Period
233-Day
Period
Year
Ended
Ended
Ended
Ended
Ended
March 2,
December 31,
June 23,
December 31,
December 31,
$
145,861,715
$
664,870,240
$
907,314,951
83,561,149
425,333,621
417,657,093
(265,527
)
131,344,042
124,507,471
$
229,157,337
$
1,221,547,903
$
1,449,479,515
$
$
42,806,422
$
42,806,422
40,968,463
40,968,463
$
$
83,774,885
$
83,774,885
Original
Predecessor
Immediate
Predecessor
Successor
62-Day
Period
304-Day
Period
174-Day
Period
233-Day
Period
Year
Ended
Ended
Ended
Ended
Ended
March 2,
December 31,
June 23,
December 31,
December 31,
10%
18%
17%
16%
2%
25%
10%
5%
6%
5%
18%
17%
17%
15%
15%
8%
14%
17%
10%
9%
15%
11%
11%
10%
62%
68%
64%
65%
42%
48%
24%
16%
10%
5%
0%
5%
9%
10%
6%
48%
29%
25%
20%
11%
Table of Contents
Original
Predecessor
Immediate
Predecessor
Successor
62-Day
Period
304-Day
Period
174-Day
Period
233-Day
Period
Year
Ended
Ended
Ended
Ended
Ended
March 2,
December 31,
June 23,
December 31,
December 31,
34%
68%
82%
73%
0%
67%
34%
68%
82%
73%
67%
Original
Predecessor
Immediate
Predecessor
Successor
62-Day
Period
304-Day
Period
174-Day
Period
233-Day
Period
Year
Ended
Ended
Ended
Ended
Ended
March 2,
December 31,
June 23,
December 31,
December 31,
2006
4%
5%
4%
5%
8%
F-47
Table of Contents
F-48
Table of Contents
Three Months
Ended
Three Months
Ended
March 31,
March 31,
(unaudited)
(unaudited)
$
669,727,347
$
390,482,819
539,538,749
303,670,229
44,287,963
113,411,569
8,493,544
13,149,892
12,003,797
14,235,431
604,324,053
444,467,121
65,403,294
(53,984,302
)
(12,206,618
)
(11,856,624
)
590,075
451,984
(17,615,311
)
(136,959,221
)
57,615
764
(29,174,239
)
(148,363,097
)
36,229,055
(202,347,399
)
14,106,160
(47,297,700
)
675,747
$
22,122,895
$
(154,373,952
)
$
0.27
$
(1.89
)
0.27
(1.89
)
81,641,591
81,641,591
81,659,091
81,641,591
F-49
Table of Contents
Three Months
Ended
Three Months
Ended
March 31,
March 31,
(unaudited)
(unaudited)
$
22,122,895
$
(154,373,952
)
12,003,797
14,235,431
(82
)
(235,334
)
828,027
473,386
24,268
454,704
605,993
(675,747
)
14,265,218
44,627,187
(22,461,422
)
(22,985,982
)
1,272,209
(703,488
)
(2,064,719
)
923,600
(16,531,014
)
46,538,770
16,750,737
14,888,663
(6,266,630
)
5,066,861
(7,714,984
)
6,605,784
3,399,919
129,343,285
(360,789
)
484,657
(7,665,577
)
(41,290,892
)
8,032,289
43,552,490
(29,312,829
)
(107,363,807
)
(29,312,829
)
(107,363,807
)
29,500,000
10,000,000
(561,094
)
150,000
9,588,906
29,500,000
(11,691,634
)
(34,311,317
)
64,703,524
41,919,260
$
53,011,890
$
7,607,943
$
5,021,000
$
(20,895,471
)
$
12,278,266
$
39,318
$
$
13,204,066
F-50
Table of Contents
F-51
Table of Contents
F-52
Table of Contents
Three Months
Three Months
Ended
Ended
March 31,
2006
March 31,
2007
(unaudited)
(unaudited)
$
22,122,895
$
(154,373,952
)
100
100
65,861,893
65,861,893
in exchange for subsidiary shares
252,448
252,448
27,150
27,150
15,500,000
15,500,000
81,641,591
81,641,591
shares to board directors
17,500
81,659,091
81,641,591
$
0.27
$
(1.89
)
$
0.27
$
(1.89
)
The payment of a $10.6 million dividend to Coffeyville
Acquisition LLC and Coffeyville Acquisition II LLC;
The receipt of gross proceeds of $10.6 million for the sale
of the managing general partner interest in the Partnership,
through sale of the managing general partner, to Coffeyville
Acquisition III LLC at estimated fair market value, as
determined after consultation with management and a third party
valuation firm, resulting in a taxable gain to the Company;
The exchange of the Companys chief executive
officers shares in two of CVRs subsidiaries for
shares of CVR common stock at fair market value, resulting in an
estimated
step-up
in
basis in the Companys property, plant, and equipment of
approximately $1.4 million;
The issuance of 15,500,000 shares of CVR common stock as a
result of the public offering at an assumed initial offering
price of $20.00 per share, resulting in aggregate gross
proceeds of $310.0 million;
The payment of underwriters discounts and commissions and
estimated offering expenses totaling approximately
$27.65 million of which $3.0 million had been prepaid
as of March 31, 2007 and $0.7 million had been accrued
as of March 31, 2007;
The conversion from a partnership structure to a corporate
structure;
The repayment of term debt of $280 million with the net
proceeds of the offering; and
F-53
Table of Contents
The payment of a $10.0 million termination fee in
connection with the termination of the management agreements
payable to Goldman, Sachs & Co. and Kelso &
Company, L.P. in conjunction with the offering.
F-54
Table of Contents
None
Based on forfeiture schedule below
$5.16 per share
$1.24 per share (24% discount)
37%
F-55
Table of Contents
None
Based on forfeiture schedule below
$8.15 per share
$1.63 per share (20% discount)
41%
Minimum
Period
Forfeiture
75%
50%
25%
0%
None
6 years
$2.91 per share
$0.70 per share (24% discount)
37%
F-56
Table of Contents
None
6 years
$8.15 per share
$1.63 per share (20% discount)
41%
Minimum
Subject
to
Period
Forfeiture
Percentage
75
%
50
%
25
%
0
%
F-57
Table of Contents
Override
Override
$
812,974
$
662,763
670,385
883,684
344,178
883,684
102,079
883,684
385,383
$
1,929,616
$
3,699,198
F-58
Table of Contents
December 31,
March 31,
(Unaudited)
$
59,722
$
57,049
60,810
85,921
18,441
20,683
22,460
20,766
$
161,433
$
184,419
F-59
Table of Contents
Operating
Unconditional
$
2,601,617
$
18,954,147
3,888,005
20,734,729
2,940,633
20,701,745
1,591,818
18,310,265
857,494
16,440,347
106,038
13,772,144
2,025
132,242,448
$
11,987,630
$
241,155,825
F-60
Table of Contents
$
958
999
894
562
341
760
5,184
9,698
2,641
$
7,057
F-61
Table of Contents
F-62
Table of Contents
Three Months
Ended
Three Months
Ended
March 31,
March 31,
2006
2007
(unaudited)
(unaudited)
$
1,251,509
$
(8,534,341
)
(24,465,639
)
(119,703,829
)
791,991
(2,763,019
)
642,160
(5,331,572
)
653,351
1,240,925
3,511,317
(1,867,385
)
$
(17,615,311
)
$
(136,959,221
)
F-63
Table of Contents
Notional
Fixed
325 million
4.038
%
325 million
4.195
%
250 million
4.195
%
180 million
4.195
%
110 million
4.195
%
F-64
Table of Contents
F-65
Table of Contents
Three Months
Three Months
Ended
Ended
March 31,
March 31,
(unaudited)
(unaudited)
$
619,604,912
$
352,488,278
51,493,030
38,574,321
(1,370,595
)
(579,780
)
$
669,727,347
$
390,482,819
$
533,680,513
$
298,459,569
7,241,946
6,060,426
(1,383,710
)
(849,766
)
$
539,538,749
$
303,670,229
$
30,665,604
$
96,673,455
13,622,359
16,738,114
$
44,287,963
$
113,411,569
$
7,801,997
$
9,793,908
4,189,106
4,394,719
12,694
46,804
$
12,003,797
$
14,235,431
$
41,618,934
$
(63,467,983
)
24,020,714
9,319,190
(236,354
)
164,491
$
65,403,294
$
(53,984,302
)
$
25,460,971
$
106,502,177
2,425,114
402,013
1,426,744
459,617
$
29,312,829
$
107,363,807
F-66
Table of Contents
Three Months
Year Ended
Ended
December 31,
March 31,
(unaudited)
$
907,314,951
$
1,003,325,328
417,657,093
411,091,768
124,507,471
54,948,575
$
1,449,479,515
$
1,469,365,671
42,806,422
$
42,806,422
40,968,463
40,968,463
83,774,885
$
83,774,885
Three Months
Three Months
Ended
Ended
March 31,
March 31,
(unaudited)
(unaudited)
16
%
9
%
16
%
4
%
10
%
6
%
4
%
11
%
46
%
30
%
5
%
19
%
10
%
4
%
15
%
23
%
Three Months
Three Months
Ended
Ended
March 31,
March 31,
(unaudited)
(unaudited)
68
%
51
%
Table of Contents
Item 13.
Other Expenses
of Issuance and Distribution.
$
40,125
38,000
250,000
1,850,000
3,850,000
1,350,000
10,000
10,000
101,875
$
7,500,000
Item 14.
Indemnification
of Directors and Officers.
for any breach of the directors duty of loyalty to the
Registrant or its stockholders;
for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law;
under section 174 of the Delaware General Corporation Law
regarding unlawful dividends and stock purchases; or
for any transaction for which the director derived an improper
personal benefit.
the Registrant is required to indemnify its directors and
officers to the fullest extent permitted by the Delaware General
Corporation Law, subject to very limited exceptions;
the Registrant may indemnify its other employees and agents to
the fullest extent permitted by the Delaware General Corporation
Law, subject to very limited exceptions;
the Registrant is required to advance expenses, as incurred, to
its directors and officers in connection with a legal proceeding
to the fullest extent permitted by the Delaware General
Corporation Law, subject to very limited exceptions;
the Registrant may advance expenses, as incurred, to its
employees and agents in connection with a legal proceeding; and
the rights conferred in the Bylaws are not exclusive.
II-1
Table of Contents
Item 15.
Recent Sales of Unregistered Securities.
Item 16.
Exhibits and Financial Statement Schedules.
1
.1*
Form of Underwriting Agreement.
3
.1
Form of Amended and Restated
Certificate of Incorporation of CVR Energy, Inc.
3
.2
Form of Amended and Restated
Bylaws of CVR Energy, Inc.
4
.1
Specimen Common Stock Certificate.
5
.1
Form of opinion of Fried, Frank,
Harris, Shriver & Jacobson LLP.
10
.1**
Second Amended and Restated Credit
and Guaranty Agreement, dated as of December 28, 2006,
among Coffeyville Resources, LLC and the other parties thereto.
10
.2**
Amended and Restated First Lien
Pledge and Security Agreement, dated as of December 28,
2006 among Coffeyville Resources, LLC, CL JV Holdings, LLC,
Coffeyville Pipeline, Inc., Coffeyville Refining and Marketing,
Inc., Coffeyville Nitrogen Fertilizers, Inc., Coffeyville Crude
Transportation, Inc., Coffeyville Terminal, Inc., Coffeyville
Resources Pipeline, LLC, Coffeyville Resources
Refining & Marketing, LLC, Coffeyville Resources
Nitrogen Fertilizers, LLC, Coffeyville Resources Crude
Transportation, LLC and Coffeyville Resources Terminal, LLC, as
grantors, and Credit Suisse, Cayman Islands Branch, as
collateral agent.
10
.3
Coffeyville Resources, LLC Phantom
Unit Appreciation Plan (Plan I).
10
.4**
License Agreement For Use of the
Texaco Gasification Process, Texaco Hydrogen Generation Process,
and Texaco Gasification Power Systems, dated as of May 30,
1997 by and between Texaco Development Corporation and Farmland
Industries, Inc., as amended.
10
.5**
Swap agreements with J.
Aron & Company.
10
.6**
Amended and Restated
On-Site
Product Supply Agreement dated as of June 1, 2005, between
The BOC Group, Inc. and Coffeyville Resources Nitrogen
Fertilizers, LLC.
10
.7**
Employment Agreement amended as of
December 13, 2006, by and between Coffeyville Resources,
LLC and John J. Lipinski.
10
.8**
Employment Agreement amended as of
December 13, 2006, by and between Coffeyville Resources,
LLC and Stanley A. Riemann.
II-2
Table of Contents
10
.9**
Employment Agreement amended as of
December 13, 2006, by and between Coffeyville Resources,
LLC and Kevan A. Vick.
10
.10**
Employment Agreement amended as of
December 13, 2006, by and between Coffeyville Resources,
LLC and Wyatt E. Jernigan.
10
.11**
Employment Agreement amended as of
December 13, 2006, by and between Coffeyville Resources,
LLC and James T. Rens.
10
.12**
Separation and Consulting
Agreement dated as of November 21, 2005, by and between
Coffeyville Resources, LLC and Philip L. Rinaldi.
10
.13**
Crude Oil Supply Agreement, dated
as of December 23, 2005, as amended, between J.
Aron & Company and Coffeyville Resources Refining and
Marketing, LLC.
10
.13.1**
Amendment Agreement dated as of
December 1, 2006 between J. Aron & Company and
Coffeyville Resources Refining and Marketing, LLC.
10
.14**
Pipeline Construction, Operation
and Transportation Commitment Agreement, dated February 11,
2004, as amended, between Plains Pipeline, L.P. and Coffeyville
Resources Refining & Marketing, LLC.
10
.15**
Electric Services Agreement dated
January 13, 2004, between Coffeyville Resources Nitrogen
Fertilizers, LLC and the City of Coffeyville, Kansas.
10
.16**
Employment Agreement amended as of
December 13, 2006, by and between Coffeyville Resources,
LLC and Robert W. Haugen.
10
.17**
Stockholders Agreement of
Coffeyville Nitrogen Fertilizer, Inc., dated as of March 9,
2007, by and among Coffeyville Nitrogen Fertilizer, Inc.,
Coffeyville Acquisition LLC and John J. Lipinski.
10
.18**
Stockholders Agreement of
Coffeyville Refining & Marketing, Inc., dated as of March
9, 2007, by and among Coffeyville Refining & Marketing,
Inc., Coffeyville Acquisition LLC and John J. Lipinski.
10
.19**
Subscription Agreement, dated as
of March 9, 2007, between Coffeyville Nitrogen Fertilizer, Inc.
and John J. Lipinski.
10
.20**
Subscription Agreement, dated as
of March 9, 2007, between Coffeyville Refining & Marketing,
Inc. and John J. Lipinski.
10
.21**
Recapitalization Agreement, dated
as of September 25, 2006, by and among Coffeyville
Acquisition LLC, Coffeyville Refining & Marketing, Inc.,
Coffeyville Nitrogen Fertilizers, Inc. and CVR Energy, Inc.
10
.22**
Purchase, Storage and Sale
Agreement for Gathered Crude, dated as of March 20, 2007,
between J. Aron & Company and Coffeyville
Resources Refining & Marketing, LLC.
10
.23**
Stock Purchase Agreement, dated as
of May 15, 2005 by and between Coffeyville Group Holdings, LLC
and Coffeyville Acquisition LLC.
10
.23.1**
Amendment No. 1 to the Stock
Purchase Agreement, dated as of June 24, 2005 by and between
Coffeyville Group Holdings, LLC and Coffeyville Acquisition LLC.
10
.23.2**
Amendment No. 2 to the Stock
Purchase Agreement, dated as of July 25, 2005 by and between
Coffeyville Group Holdings, LLC and Coffeyville Acquisition LLC.
10
.24
Form of Limited Partnership
Agreement of CVR Partners, LP, dated as
of ,
2007, by and among CVR GP, LLC, CVR Special GP, LLC and CVR LP,
LLC.
10
.25
Form of Coke Supply Agreement,
dated as
of ,
2007, by and between Coffeyville Resources Refining &
Marketing, LLC and Coffeyville Resources Nitrogen Fertilizers,
LLC.
10
.26
Form of Cross Easement Agreement,
dated as
of ,
2007, by and between Coffeyville Resources Refining &
Marketing, LLC and Coffeyville Resources Nitrogen Fertilizers,
LLC.
II-3
Table of Contents
II-4
Table of Contents
21
.1**
List of Subsidiaries of CVR
Energy, Inc.
23
.1
Consent of KPMG LLP.
23
.2
Consent of Fried, Frank, Harris,
Shriver & Jacobson LLP (included in Exhibit 5.1).
23
.3**
Consent of Blue, Johnson &
Associates.
24
.1**
Power of Attorney.
24
.2**
Power of Attorney of Mark Tomkins.
*
To be filed by amendment.
**
Previously filed.
Certain portions of this exhibit have been omitted and
separately filed with the Securities and Exchange Commission
pursuant to a request for confidential treatment.
Item 17.
Undertakings.
II-5
Table of Contents
By:
Chief Executive Officer, President
and Director (Principal Executive Officer)
June 5, 2007
Chief Financial Officer (Principal
Financial and Accounting Officer)
June 5, 2007
Director
June 5, 2007
Director
June 5, 2007
Director
June 5, 2007
Director
June 5, 2007
Director
June 5, 2007
Director
June 5, 2007
* By:
John J. Lipinski,
As Attorney-in-Fact
II-6
Table of Contents
1
.1*
Form of Underwriting Agreement.
3
.1
Form of Amended and Restated
Certificate of Incorporation of CVR Energy, Inc.
3
.2
Form of Amended and Restated
Bylaws of CVR Energy, Inc.
4
.1
Specimen Common Stock Certificate.
5
.1
Form of opinion of Fried, Frank,
Harris, Shriver & Jacobson LLP.
10
.1**
Second Amended and Restated Credit
and Guaranty Agreement, dated as of December 28, 2006,
among Coffeyville Resources, LLC and the other parties thereto.
10
.2**
Amended and Restated First Lien
Pledge and Security Agreement, dated as of December 28,
2006, among Coffeyville Resources, LLC, CL JV Holdings, LLC,
Coffeyville Pipeline, Inc., Coffeyville Refining and Marketing,
Inc., Coffeyville Nitrogen Fertilizers, Inc., Coffeyville Crude
Transportation, Inc., Coffeyville Terminal, Inc., Coffeyville
Resources Pipeline, LLC, Coffeyville Resources
Refining & Marketing, LLC, Coffeyville Resources
Nitrogen Fertilizers, LLC, Coffeyville Resources Crude
Transportation, LLC and Coffeyville Resources Terminal, LLC, as
grantors, and Credit Suisse, as collateral agent.
10
.3
Coffeyville Resources, LLC Phantom
Unit Appreciation Plan (Plan I).
10
.4**
License Agreement For Use of the
Texaco Gasification Process, Texaco Hydrogen Generation Process,
and Texaco Gasification Power Systems, dated as of May 30,
1997 by and between Texaco Development Corporation and Farmland
Industries, Inc., as amended.
10
.5**
Swap agreements with J.
Aron & Company.
10
.6**
Amended and Restated
On-Site
Product Supply Agreement dated as of June 1, 2005, between
The BOC Group, Inc. and Coffeyville Resources Nitrogen
Fertilizers, LLC.
10
.7**
Employment Agreement amended as of
December 13, 2006, by and between Coffeyville Resources,
LLC and John J. Lipinski.
10
.8**
Employment Agreement amended as of
December 13, 2006, by and between Coffeyville Resources,
LLC and Stanley A. Riemann.
10
.9**
Employment Agreement amended as of
December 13, 2006, by and between Coffeyville Resources,
LLC and Kevan A. Vick.
10
.10**
Employment Agreement amended as of
December 13, 2006, by and between Coffeyville Resources,
LLC and Wyatt E. Jernigan.
10
.11**
Employment Agreement amended as of
December 13, 2006, by and between Coffeyville Resources,
LLC and James T. Rens.
10
.12**
Separation and Consulting
Agreement dated as of November 21, 2005, by and between
Coffeyville Resources, LLC and Philip L. Rinaldi.
10
.13**
Crude Oil Supply Agreement, dated
as of December 23, 2005, as amended, between
J. Aron & Company and Coffeyville Resources
Refining and Marketing, LLC.
10
.13.1**
Amendment Agreement dated as of
December 1, 2006 between J. Aron & Company and
Coffeyville Resources Refining & Marketing, LLC.
10
.14**
Pipeline Construction, Operation
and Transportation Commitment Agreement, dated February 11,
2004, as amended, between Plains Pipeline, L.P. and Coffeyville
Resources Refining & Marketing, LLC.
10
.15**
Electric Services Agreement dated
January 13, 2004, between Coffeyville Resources Nitrogen
Fertilizers, LLC and the City of Coffeyville, Kansas.
10
.16**
Employment Agreement amended as of
December 13, 2006, by and between Coffeyville Resources,
LLC and Robert W. Haugen.
Table of Contents
10
.17**
Stockholders Agreement of
Coffeyville Nitrogen Fertilizer, Inc., dated as of March 9,
2007, by and among Coffeyville Nitrogen Fertilizers, Inc.,
Coffeyville Acquisition LLC and John J. Lipinski.
10
.18**
Stockholders Agreement of
Coffeyville Refining & Marketing, Inc., dated as of March
9, 2007, by and among Coffeyville Refining & Marketing,
Inc., Coffeyville Acquisition LLC and John J. Lipinski.
10
.19**
Subscription Agreement, dated as
of March 9, 2007, by Coffeyville Nitrogen Fertilizers, Inc. and
John J. Lipinski.
10
.20**
Subscription Agreement, dated as
of March 9, 2007, by Coffeyville Refining & Marketing, Inc.
and John J. Lipinski.
10
.21**
Recapitalization Agreement, dated
as of September 25, 2006, by and among Coffeyville
Acquisition LLC, Coffeyville Refining & Marketing, Inc.,
Coffeyville Nitrogen Fertilizers, Inc. and CVR Energy, Inc.
10
.22**
Purchase, Storage and Sale
Agreement for Gathered Crude, dated as of March 20, 2007,
between J. Aron & Company and Coffeyville Resources
Refining & Marketing, LLC.
10
.23**
Stock Purchase Agreement, dated as
of May 15, 2005 by and between Coffeyville Group Holdings, LLC
and Coffeyville Acquisition LLC.
10
.23.1**
Amendment No. 1 to the Stock
Purchase Agreement, dated as of June 24, 2005 by and between
Coffeyville Group Holdings, LLC and Coffeyville Acquisition LLC.
10
.23.2**
Amendment No. 2 to the Stock
Purchase Agreement, dated as of July 25, 2005 by and between
Coffeyville Group Holdings, LLC and Coffeyville Acquisition LLC.
10
.24
Form of Limited Partnership
Agreement of CVR Partners, LP, dated as
of ,
2007, by and among CVR GP, LLC, CVR Special GP, LLC and CVR LP,
LLC.
10
.25
Form of Coke Supply Agreement,
dated as
of ,
2007, by and between Coffeyville Resources Refining &
Marketing, LLC and Coffeyville Resources Nitrogen Fertilizers,
LLC.
10
.26
Form of Cross Easement Agreement,
dated as
of ,
2007, by and between Coffeyville Resources Refining &
Marketing, LLC and Coffeyville Resources Nitrogen Fertilizers,
LLC.
10
.27
Form of Environmental Agreement,
dated as
of ,
2007, by and between Coffeyville Resources Refining &
Marketing, LLC and Coffeyville Resources Nitrogen Fertilizers,
LLC.
10
.28
Form of Feedstock and Shared
Services Agreement, dated as
of ,
2007, by and between Coffeyville Resources Refining &
Marketing, LLC and Coffeyville Resources Nitrogen Fertilizers,
LLC.
10
.29
Form of Raw Water and Facilities
Sharing Agreement, dated as
of ,
2007, by and between Coffeyville Resources Refining &
Marketing, LLC and Coffeyville Resources Nitrogen Fertilizers,
LLC.
10
.30
Form of Services Agreement, dated
as
of ,
2007, by and among CVR Partners, LP, CVR GP, LLC, and CVR
Energy, Inc.
10
.31
Form of Omnibus Agreement, dated
as of , 2007 by and
among CVR Energy, Inc., CVR GP, LLC, CVR Special GP, LLC and CVR
Partners, LP.
10
.32
Form of Coffeyville Resources, LLC
Phantom Unit Appreciation Plan (Plan II).
10
.33
Form of CVR Energy, Inc. 2007 Long
Term Incentive Plan.
10
.33.1
Form of Nonqualified Stock Option
Agreement.
10
.33.2
Form of Director Stock Option
Agreement.
Table of Contents
10
.33.3
Form of Director Restricted Stock
Agreement.
10
.34
Form of Third Amended and Restated
Limited Liability Company Agreement of Coffeyville Acquisition
LLC, dated as
of ,
2007.
10
.35
Form of First Amended and Restated
Limited Liability Company Agreement of Coffeyville
Acquisition II LLC, dated as
of ,
2007.
10
.36
Form of Limited Liability Company
Agreement of Coffeyville Acquisition III LLC, dated as
of ,
2007.
10
.37
Form of Redemption Agreement,
dated as
of ,
2007, by and among Coffeyville Acquisition LLC and the Redeemed
Parties signatory thereto.
10
.38
Form of Stockholders Agreement of
CVR Energy, Inc., dated as
of ,
2007, by and among CVR Energy, Inc., Coffeyville Acquisition LLC
and Coffeyville Acquisition II LLC.
10
.39
Form of Registration Rights
Agreement, dated as
of ,
2007, by and among CVR Energy, Inc., Coffeyville Acquisition LLC
and Coffeyville Acquisition II LLC.
10
.40
Form of Subscription Agreement,
dated as
of ,
2007, by and between CVR Energy, Inc. and John J. Lipinski.
10
.41
Form of Letter Agreement, dated as
of ,
2007, by and among CVR Energy, Inc., Goldman, Sachs &
Co. and Kelso & Company, L.P.
10
.42
Form of Registration Rights
Agreement, dated as
of ,
2007, by and among CVR Partners, LP, CVR Energy, Inc. and CVR
GP, LLC.
10
.43
Form of CVR GP, LLC Profit Bonus
Plan.
10
.44
Form of Contribution, Conveyance
and Assumption Agreement, dated as
of ,
2007, by and among Coffeyville Resources, LLC, CVR GP, LLC, CVR
Special GP, LLC, CVR LP, LLC, and CVR Partners, LP.
10
.45
Form of Management Registration
Rights Agreement, dated as of ,
2007, by and between CVR Energy, Inc. and John J. Lipinski.
10
.46
Collective Bargaining Agreement,
effective as of March 3, 2004, by and between Coffeyville
Resources Refining & Marketing, LLC and various unions of
the Metal Trades Department.
10
.47
Collective Bargaining Agreement,
effective as of March 3, 2004, by and between Coffeyville
Resources Crude Transportation, LLC and the Paper,
Allied-Industrial, Chemical & Energy Workers International
Union.
21
.1**
List of Subsidiaries of CVR
Energy, Inc.
23
.1
Consent of KPMG LLP.
23
.2
Consent of Fried, Frank, Harris,
Shriver & Jacobson LLP (included in Exhibit 5.1).
23
.3**
Consent of Blue, Johnson &
Associates.
24
.1**
Power of Attorney.
24
.2**
Power of Attorney of Mark Tomkins.
*
To be filed by amendment.
**
Previously filed.
Certain portions of this exhibit have been omitted and
separately filed with the Securities and Exchange Commission
pursuant to a request for confidential treatment.
-2-
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-5-
-6-
-7-
CVR Energy, Inc. | ||||||
|
||||||
|
By: | |||||
|
|
|||||
|
Title: Vice President, General Counsel
and Secretary |
|||||
|
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-8-
-9-
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-17-
NUMBER | SHARES |
By:
|
(SEAL) | By: | ||||||
|
||||||||
Name: | Name: | |||||||
Title: | Title: |
TEN COM
|
| as tenants in common | UNIF GIFT MIN ACT Custodian (Minor) | |||
TEN ENT
|
| as tenants by the entireties | under Uniform Gifts to Minors Act (State) | |||
JT TEN
|
| as joint tenants with right of survivorship | UNIF TRF MIN ACT Custodian (Minor) | |||
|
and not as tenants in common | under (State) Uniform Transfer to Minors Act |
|
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE |
|||
For value received, the undersigned hereby sells, assigns and transfers unto
|
||||
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PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
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Shares | |
represented by the within Certificate, and hereby irrevocably constitutes and appoints
|
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Attorney to transfer the said | |
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shares on the books of the within-named Corporation with full power of substitution in the premises.
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Dated,
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In presence of | X | ||||
|
||||||
X
|
||||||
RE: | Registration Statement on Form S-1, File No. 333-137588 (the Registration Statement) |
Very truly yours, | ||
/s/ FRIED, FRANK, HARRIS, SHRIVER & JACOBSON LLP |
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1. | Purpose; Operation . The purpose of the Coffeyville Resources, LLC Phantom Unit Appreciation Plan (Plan I) (the Plan) is to provide an incentive to employees of the Company and its Affiliates who contribute to the Companys success to increase their efforts on behalf of the Company and to promote the success of the Companys business. Participants in the Plan have the opportunity to receive cash payments in respect of Phantom Points they hold in the event of certain distributions pursuant to the Parent LLC Agreement to Members (as defined in the Parent LLC Agreement) in Coffeyville Acquisition LLC, an indirect equity owner of the Company. Whether payments will be made will depend on the amount of net proceeds realized in connection with the event that gives rise to such distributions. Defined terms are defined in Exhibit A hereto. | |
2. | Administration . The Plan shall be administered by the Committee. The Committee shall have the authority in its discretion, subject to and not inconsistent with the express provisions of the Plan, to administer the Plan and to exercise all the powers and authorities either specifically granted to it under the Plan or necessary or advisable in the administration of the Plan, including, without limitation: |
| the authority to grant Phantom Points; | ||
| to determine the persons to whom and the time or times at which Phantom Points shall be granted; | ||
| to determine the number and type of Phantom Points to be granted and the terms, conditions and restrictions relating thereto; | ||
| to determine whether, to what extent, and under what circumstances Phantom Points may be settled, cancelled, forfeited, exchanged, or surrendered; | ||
| to make adjustments in the terms and conditions applicable to Phantom Points; | ||
| to construe and interpret the Plan and Award Agreements; | ||
| to prescribe, amend and rescind rules and regulations relating to the Plan; | ||
| to determine the terms and provisions of the Award Agreements; | ||
| to determine the Baseline Primary Phantom Percentage, the Total Phantom Percentages and the Final Phantom Percentages; | ||
| to determine the amounts allocable for payment pursuant to this Plan; | ||
| to assign Phantom Benchmark Amounts; and |
| to make all other determinations deemed necessary or advisable for the administration of the Plan. |
All determinations made by the Committee in respect of the Plan shall be final and binding on all Participants and their beneficiaries. No manager or member of the Company or member of the Committee shall be liable for any action taken or determination made in good faith with respect to the Plan or any Phantom Points granted hereunder. The Committee, with the consent of Parent LLC, shall make determinations with respect to percentages (including the Total Phantom Percentages and the Final Phantom Percentages) and cash amounts allocated, if any, to the Plan with reference to the applicable definitions set forth in Exhibit A ; provided that any and all determinations with respect to applicable percentages and cash amounts allocated to the Plan shall be made in the Committees discretion and may vary from such definitions. The Committee may make adjustments in the operation of provisions of the Plan if the Committee determines in its sole discretion that such adjustments will further the intent of such provisions. | ||
3. | Eligibility . Phantom Points may be granted at any time to directors, employees (including officers) and service providers of an Employer, in the discretion of the Committee. | |
4. | Phantom Service Points; Payment . |
(a) | Phantom Service Point Pool . A pool of points shall exist consisting of Phantom Service Points. Phantom Service Points shall represent the right to receive a cash payment from the Employer within thirty (30) days following the date on which a distribution is made pursuant to the Parent LLC Agreement. The pool of Phantom Service Points shall initially be 10,000,000 but may be increased in the discretion of the Committee at any time. The total number of Phantom Service Points outstanding (after taking into account any adjustments made pursuant to Section 7) shall be referred to as the Total Phantom Service Point Pool. | ||
(b) | Phantom Service Percentage . The Phantom Plan Service Percentage for each Participant shall be the Final Phantom Service Percentage multiplied by the quotient obtained by dividing (x) the number of Phantom Service Points allocated to such Participant by (y) 10,000,000, or, if the Total Phantom Service Point Pool is greater than 10,000,000, the Total Phantom Service Point Pool. | ||
(c) | Phantom Service Point Payments . The cash amount payable to a Participant in respect of his or her Phantom Service Points at any time that a distribution is made pursuant to the Parent LLC Agreement in respect of Operating Units shall be determined by multiplying (x) such Participants Phantom Plan Service Percentage and (y) the amount of Exit Proceeds. For the avoidance of doubt, the foregoing is simply a calculation of amount of the cash payment payable to a Participant holding Phantom Service Points, and in no event shall such |
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Participant, in its capacity as such, have any rights to receive a payment or distribution from Parent LLC. 1 |
5. | Phantom Performance Points; Payment . |
(a) | Phantom Performance Point Pool . A pool of points shall exist consisting of Phantom Performance Points. Phantom Performance Points shall represent the right to receive a cash payment within thirty (30) days following the date on which a distribution is made pursuant to the Parent LLC Agreement in respect of Value Units. The pool of Phantom Performance Points shall initially be 10,000,000, but may be increased in the discretion of the Committee at any time. The total number of Phantom Performance Points outstanding (after taking into account any adjustment made pursuant to Section 7) shall be referred to as the Total Phantom Performance Point Pool. | ||
(b) | Phantom Performance Percentage . The Phantom Plan Performance Percentage for each Participant shall initially be the Final Phantom Performance Percentage multiplied by the quotient obtained by dividing (x) the number of Phantom Performance Points allocated to such Participant by (y) 10,000,000, or, if the Total Phantom Performance Point Pool is greater than 10,000,000, the Total Phantom Performance Point Pool, and shall be further subject to reduction pursuant to Section 5(c) below. | ||
(c) | Performance Factor; Investment Multiple . As provided in the definition of Final Phantom Performance Percentage, each Participants Phantom Plan Performance Percentage reflects the Performance Factor, which operates to adjust Participants performance percentages based on the performance of the investment in the Parent LLC by the Investor Members. For purposes of this Plan: |
(1) | The Performance Factor equals a number (between zero and one) equal to the quotient obtained by dividing (i) the excess, if positive, of the Final Investment Multiple (as defined below) over the Minimum Investment Multiple by (ii) two (2); provided that if such quotient is greater than one, the Performance Factor will equal one. | ||
(2) | The Final Investment Multiple is computed, after giving effect to any payments to be made pursuant to this Plan, by dividing (x) the total fair market value of all net distributions received, or to be received upon the applicable distribution, by the Investor Members from the Company in respect of their aggregate investment in the Company divided by (y) the aggregate of such investment of the Investor Members in the Company (it being understood that all |
1 | Schedule A provides an illustration of how a calculation of a Phantom Service Point payment would be made under the Plan. It is not intended to be an indication of actual payments under the Plan. |
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such amounts are themselves simultaneously being calculated by reference to amounts that may be payable pursuant to the Plan). |
(d) | Phantom Performance Point Payments . The cash amount payable to a Participant in respect of his or her Phantom Performance Points at any time that a distribution is made pursuant to the Parent LLC Agreement in respect of Value Units shall be determined by adding (x) the product of (i) such Participants Phantom Plan Performance Percentage and (ii) the amount of Exit Proceeds plus (y) an additional amount to provide a catch-up similar to that provided in respect of Value Units pursuant to Section 9.1(d) of the Parent LLC Agreement. For the avoidance of doubt, the foregoing is simply a calculation of the amount of the cash payment payable to a Participant holding Phantom Performance Points, and in no event shall such Participant, in its capacity as such, have any rights to receive a payment or distribution from Parent LLC. 2 |
6. | Additional Awards; Adjustments . |
(a) | Additional Awards . An Employer may determine that a Participants performance warrants an award of additional Phantom Points, in which case the Employer may recommend to the Committee that an additional award be made. | ||
(b) | Prior Appreciation Adjustments . Each Participant will be assigned a Phantom Benchmark Amount, which shall be an amount determined by the Committee with respect to the Participant each time the Committee awards any Phantom Points to the Participant and relates to the valuation of Parent LLC at such time. Notwithstanding anything to the contrary set forth in the Plan, for purposes of the calculations under Section 4(c) and Section 5(d), the Committee shall make such adjustments to the amounts otherwise determined thereunder to account for the Phantom Benchmark Amount assigned in respect of a Participants Phantom Points. | ||
(c) | In the event of any material acquisition, disposition, merger, recapitalization, capital contribution or other similar event, the Committee may make such adjustment(s) to the terms of the Plan or any awards granted under the Plan as the Committee shall determine appropriate in its sole discretion. |
7. | Termination of Employment . If a Participant ceases to be employed by an Employer (other than in connection with a transfer to another Employer) prior to an Exit Event, such Participant shall forfeit all Phantom Points granted to the Participant. |
2 | Schedule A provides an illustration of how a calculation of a Phantom Performance Point payment would be made under the Plan. It is not intended to be an indication of actual payments under the Plan. |
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8. | General Provisions . |
(a) | Nontransferability . Unless otherwise provided in an Award Agreement, Phantom Points shall not be transferable by a Participant under any circumstances, except by will or the laws of descent and distribution. | ||
(b) | No Right to Continued Employment, etc . Nothing in the Plan or in any Award Agreement entered into pursuant the Plan shall confer upon any Participant the right to continue in the employ of or to be entitled to any remuneration or benefits not set forth in the Plan or such Award Agreement, or to interfere with or limit in any way the right of an Employer to terminate such Participants employment. | ||
(c) | Taxes . The Company or any Affiliate is authorized to withhold from any payment relating to Phantom Points under the Plan amounts of withholding and other taxes due to enable the Company and Participants to satisfy obligations for the payment of withholding taxes and other tax obligations. | ||
(d) | Excise Tax . To the extent that, in the Committees determination, payment to a Participant in respect of his or her Phantom Points would result in application of an excise tax to the Participant pursuant to Section 4999 of the Code, then the payment shall be reduced to such extent to avoid the application of such excise tax; provided that the Company shall use its reasonable best efforts to obtain shareholder approval of the payment in respect of Phantom Points in a manner intended to satisfy requirements of the shareholder approval exception to Section 280G of the Code and the regulations promulgated thereunder, such that payment may be made to the Participant in respect of his or her Phantom Points without the application of the excise tax. | ||
(e) | Amendment and Termination . The Plan shall take effect on the date of its adoption by the Board of Directors of the Company (the Board). The Board may at any time and from time to time alter, amend, suspend, or terminate the Plan in whole or in part, including but not limited to, amending the Plan and awards to alter the structure of the Plan if the Board determines that the Plan is not meeting its objectives. | ||
(f) | No Rights to Awards; No Stockholder or Member Rights . No Participant shall have any claim to be granted any Phantom Points under the Plan, and there is no obligation for uniformity of treatment of Participants. A Participant or a transferee of Phantom Points shall have no rights as a stockholder or member of the Company or any Affiliate. | ||
(g) | Unfunded Status of Awards . The Plan is intended to constitute an unfunded plan for incentive compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Phantom Points shall give any such Participant any rights that are greater than those of a general creditor of the Company. |
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(h) | Governing Law . The Plan and all determinations made and actions taken pursuant hereto shall be governed by the laws of the State of Delaware without giving effect to the conflict of laws principles thereof. | ||
(i) | Beneficiary . Upon the death of a Participant, all of his of her rights under the Plan shall inure to his or her designated beneficiary or, if no beneficiary has been designated, to his or her estate. | ||
(j) | No Guarantee or Assurances . There can be no guarantee that any distributions in respect of Operating Units or Value Units will occur under the Parent LLC Agreement or that any payment to any Participant will result under the Plan. | ||
(k) | Expiration of Plan . Unless otherwise determined by the Board, the Plan shall expire on July 25, 2015 and all outstanding Phantom Points shall then expire and be forfeited with no consideration paid in respect of such forfeiture. |
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ARTICLE I
|
||||||
DEFINITIONS
|
||||||
Section 1.1 |
Definitions
|
1 | ||||
Section 1.2 |
Construction
|
22 | ||||
ARTICLE II
|
||||||
ORGANIZATION
|
||||||
Section 2.1 |
Formation
|
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Section 2.2 |
Name
|
22 | ||||
Section 2.3 |
Registered Office; Registered Agent; Principal Office; Other Offices
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Section 2.4 |
Purpose and Business
|
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Section 2.5 |
Powers
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Section 2.6 |
Power of Attorney
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Section 2.7 |
Term
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Section 2.8 |
Title to Partnership Assets
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ARTICLE III
|
||||||
RIGHTS OF LIMITED PARTNERS
|
||||||
Section 3.1 |
Limitation of Liability
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Section 3.2 |
Management of Business
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Section 3.3 |
Outside Activities of the Limited Partners
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Section 3.4 |
Rights of Limited Partners
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ARTICLE IV
|
||||||
CERTIFICATES; RECORD HOLDERS; TRANSFER OF PARTNERSHIP INTERESTS;
|
||||||
REDEMPTION OF PARTNERSHIP INTERESTS
|
||||||
Section 4.1 |
Certificates
|
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Section 4.2 |
Mutilated, Destroyed, Lost or Stolen Certificates
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Section 4.3 |
Record Holders
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Section 4.4 |
Transfer Generally
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Section 4.5 |
Registration and Transfer of Limited Partner Interests
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Section 4.6 |
Registration and Transfer of the Special General Partner Interest
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Section 4.7 |
Transfer of the Managing General Partner Interest
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Section 4.8 |
Restrictions on Transfers
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Section 4.9 |
Eligible Holders
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Section 4.10 |
Redemption of Partnership Interests of Ineligible Holders
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ARTICLE V
|
||||||
CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS
|
||||||
Section 5.1 |
Contributions by the General Partners and their Affiliates
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Section 5.2 |
Interest and Withdrawal
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Section 5.3 |
Capital Accounts
|
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Section 5.4 |
Issuances of Additional Partnership Securities
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Section 5.5 |
Conversion of Special Units
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Section 5.6 |
Conversion of Subordinated Units
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Section 5.7 |
Conversion of Common GP Units and Subordinated GP Units into Common LP Units and Subordinated LP Units
|
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Section 5.8 |
Preemptive Right
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Section 5.9 |
Splits and Combinations
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Section 5.10 |
Fully Paid and Non-Assessable Nature of Limited Partner Interests
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ARTICLE VI
|
||||||
ALLOCATIONS AND DISTRIBUTIONS
|
||||||
Section 6.1 |
Allocations for Capital Account Purposes
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Section 6.2 |
Allocations for Tax Purposes
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Section 6.3 |
Requirement and Characterization of Distributions; Distributions to Record Holders
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Section 6.4 |
Distributions of Available Cash from Operating Surplus
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Section 6.5 |
Distributions of Non-IDR Surplus Amount
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Section 6.6 |
Distributions of Available Cash from Capital Surplus
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Section 6.7 |
Adjustment of Minimum Quarterly Distribution and Target Distribution Levels
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Section 6.8 |
Special Provisions Relating to the Holders of Subordinated Units
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Section 6.9 |
Entity Level Taxation
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Section 6.10 |
Distributions in Connection with Initial Offering
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Section 6.11 |
Limitation on Increases in Distributions
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ARTICLE VII
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MANAGEMENT AND OPERATION OF BUSINESS
|
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Section 7.1 |
Management
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Section 7.2 |
Certificate of Limited Partnership
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Section 7.3 |
Restrictions on the Managing General Partners Authority; Approval Rights of Special General Partner
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Section 7.4 |
Reimbursement of the Managing General Partner
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Section 7.5 |
Outside Activities
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Section 7.6 |
Loans from the Managing General Partner; Loans or Contributions from the Partnership or Group Members
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Section 7.7 |
Indemnification
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Section 7.8 |
Liability of Indemnitees
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Section 7.9 |
Resolution of Conflicts of Interest; Standards of Conduct and Modification of Duties
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Section 7.10 |
Other Matters Concerning the General Partners
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Section 7.11 |
Purchase or Sale of Partnership Securities
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Section 7.12 |
Registration Rights of the General Partners and their Affiliates
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Section 7.13 |
Reliance by Third Parties
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ARTICLE VIII
|
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BOOKS, RECORDS, ACCOUNTING AND REPORTS
|
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Section 8.1 |
Records and Accounting
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Section 8.2 |
Fiscal Year
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Section 8.3 |
Reports
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ARTICLE IX
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TAX MATTERS
|
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Section 9.1 |
Tax Returns and Information
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Section 9.2 |
Tax Elections
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Section 9.3 |
Tax Controversies
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Section 9.4 |
Withholding
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ARTICLE X
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ADMISSION OF PARTNERS
|
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Section 10.1 |
Admission of Limited Partners
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Section 10.2 |
Admission of Successor Managing General Partner
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Section 10.3 |
Amendment of Agreement and Certificate of Limited Partnership
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ARTICLE XI
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WITHDRAWAL OR REMOVAL OF PARTNERS
|
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Section 11.1 |
Withdrawal of the Managing General Partner
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Section 11.2 |
Removal of the Managing General Partner
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Section 11.3 |
Interest of Departing General Partner and Successor Managing General Partner
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Section 11.4 |
Termination of Subordination Period, Conversion of Subordinated Units and Extinguishment of Cumulative Common Unit Arrearages
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Section 11.5 |
Withdrawal of Limited Partners or Special General Partner
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ARTICLE XII
|
||||||
DISSOLUTION AND LIQUIDATION
|
||||||
Section 12.1 |
Dissolution
|
82 | ||||
Section 12.2 |
Continuation of the Business of the Partnership After Dissolution
|
82 | ||||
Section 12.3 |
Liquidator
|
83 | ||||
Section 12.4 |
Liquidation
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83 | ||||
Section 12.5 |
Cancellation of Certificate of Limited Partnership
|
84 | ||||
Section 12.6 |
Return of Contributions
|
84 | ||||
Section 12.7 |
Waiver of Partition
|
84 |
Section 12.8 |
Capital Account Restoration
|
84 | ||||
ARTICLE XIII
|
||||||
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE
|
||||||
Section 13.1 |
Amendments to be Adopted Solely by the Managing General Partner
|
85 | ||||
Section 13.2 |
Amendment Procedures
|
86 | ||||
Section 13.3 |
Amendment Requirements
|
86 | ||||
Section 13.4 |
Special Meetings
|
87 | ||||
Section 13.5 |
Notice of a Meeting
|
88 | ||||
Section 13.6 |
Record Date
|
88 | ||||
Section 13.7 |
Adjournment
|
88 | ||||
Section 13.8 |
Waiver of Notice; Approval of Meeting; Approval of Minutes
|
88 | ||||
Section 13.9 |
Quorum and Voting
|
89 | ||||
Section 13.10 |
Conduct of a Meeting
|
89 | ||||
Section 13.11 |
Action Without a Meeting
|
89 | ||||
Section 13.12 |
Right to Vote and Related Matters
|
90 | ||||
ARTICLE XIV
|
||||||
MERGER
|
||||||
Section 14.1 |
Authority
|
90 | ||||
Section 14.2 |
Procedure for Merger or Consolidation
|
91 | ||||
Section 14.3 |
Approval by Partners of Merger or Consolidation
|
92 | ||||
Section 14.4 |
Certificate of Merger
|
93 | ||||
Section 14.5 |
Amendment of Partnership Agreement
|
93 | ||||
Section 14.6 |
Effect of Merger
|
93 | ||||
ARTICLE XV | ||||||
RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS | ||||||
Section 15.1 |
Right to Acquire Limited Partner Interests
|
94 | ||||
ARTICLE XVI
|
||||||
GENERAL PROVISIONS
|
||||||
Section 16.1 |
Addresses and Notices
|
95 | ||||
Section 16.2 |
Further Action
|
96 | ||||
Section 16.3 |
Binding Effect
|
96 | ||||
Section 16.4 |
Integration
|
96 | ||||
Section 16.5 |
Creditors
|
96 | ||||
Section 16.6 |
Waiver
|
96 | ||||
Section 16.7 |
Counterparts
|
96 | ||||
Section 16.8 |
Applicable Law
|
96 | ||||
Section 16.9 |
Invalidity of Provisions
|
96 | ||||
Section 16.10 |
Consent of Partners
|
96 | ||||
Section 16.11 |
Facsimile Signatures
|
97 | ||||
Section 16.12 |
Third Party Beneficiaries
|
97 |
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MANAGING GENERAL PARTNER:
CVR GP, LLC |
||||
By: | ||||
Name: | ||||
Title: | ||||
SPECIAL GENERAL PARTNER:
CVR Special GP, LLC |
||||
By: | ||||
Name: | ||||
Title: | ||||
ORGANIZATIONAL LIMITED PARTNER:
CVR LP, LLC |
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By: | ||||
Name: | ||||
Title: | ||||
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FUTURE LIMITED PARTNERS AND SPECIAL GENERAL PARTNERS | |
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All Limited Partners and Special General Partners now and hereafter admitted as Partners of the Partnership, pursuant to powers of attorney now and hereafter executed in favor of, and granted and delivered to the Managing General Partner. |
CVR GP, LLC
|
||||
By: | ||||
Name: | ||||
Title: | ||||
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COFFEYVILLE RESOURCES REFINING
& MARKETING, LLC |
COFFEYVILLE RESOURCES
NITROGEN FERTILIZERS, LLC |
|||||||
|
||||||||
By:
|
By: | |||||||
|
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|
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14
- Sulfur
|
3.5 wt. % (dry, typical); provided, however, that the sulfur will not exceed 4.5% on a monthly average basis and will not exceed 6% on a weekly composite basis | |
|
||
- Ash
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0.35 wt. % (dry, maximum) | |
|
||
- Chloride content
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30.0 ppm by wt. dry basis (maximum) | |
|
||
- Moisture content
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Refinery Company to provide report of moisture content for available Coke on a monthly basis. | |
|
||
- Volatile matter
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9 to 14% | |
|
||
- Hardness
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30.0 HGI (maximum) | |
|
||
- Purchase Price
|
The Purchase Price per ton of Coke will be the lesser of the Index Price or the UAN Netback Based Price. The Index Price shall be the mid-point for the most recent published quarter in the Pace Petroleum Coke Quarterly under the heading Midwest Green Coke, Chicago Area, FOB Source. (in the event Pace Petroleum Coke Quarterly ceases to be published or ceases to include a heading for Midwest Green Coke, Chicago Area, the Parties will agree on a substitute Coke index). The UAN Netback Based Price shall be $25 per ton at a UAN netback plant price of $205, adjusted up or down $0.50 per ton for each $1 change in the UAN netback plant price, up to a UAN Netback Based Price cap of $40 per ton or down to a UAN Netback Based Price floor of $5 per ton. The UAN netback plant price will be the netback price realized by the Fertilizer Company at the Fertilizer Plant for the calendar month preceding the month of Coke delivery based upon the books and records of the Fertilizer Company. In no event shall the Purchase Price per ton of Coke be below $0. The Purchase Price shall be subject to adjustment as provided in Sections 2.4(b) and (c). |
A-1
- Quantity measurement
|
Refinery Company shall, upon opening a coke drum and prior to emptying the contents of such coke drum into the coke pit, determine Coke quantity by measuring the outage for a coke drum which is the distance from the designated spot near the top of each coke drum down to the level in the drum where the Coke begins. An outage table, attached as Appendix 1 to this Exhibit B , will then be utilized along with the measured outage to determine the quantity of Coke in the coke drum. The Coke quantity so determined shall be recorded in the Refinery Companys outage log. A copy of the outage log shall be provided to Fertilizer Company with each invoice. Refinery Company shall maintain for three (3) years all records related to the determination of Coke quantity along with the outage log and the Fertilizer Company, upon reasonable request, may review such records and logs and may observe the physical measurement of the coke drum outage. | |
|
||
- Sampling and testing
|
Representative drum cut samples will be composited and tested for ash, sulfur and chlorine per the following methodology: | |
|
||
|
Sample Preparation: ASTM D346-90 Collection and Preparation of Coke Samples For Laboratory Analysis Deviation: A 2.5 gallon sample will be used. | |
|
||
|
Ash: ASTM D3174-02 Ash in the Analysis Sample of Coal and Coke from Coal Deviation: Ashed at 750C to constant weight. | |
|
||
|
Sulfur and Chlorine: X-ray analysis of whole coke as pressed pellet against known Standards. |
B-1
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(i) | Bodily injury by accident $1,000,000 each accident; | ||
(ii) | Bodily injury by disease $1,000,000 each employee; and | ||
(iii) | Bodily injury by disease $1,000,000 policy limit. |
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EXHIBIT A | | Legal Description of the Fertilizer Parcel | |||
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EXHIBIT B | | Legal Description of the Refinery Parcel | |||
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EXHIBIT C | | Plot Plan |
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EXHIBIT D | | Legal Description of Shared Operation Zone Easement Area (Fertilizer Parcel) | |||
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EXHIBIT E | | Legal Description of Shared Operation Zone Easement Area (Refinery Parcel) | |||
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EXHIBIT F | | Legal Description of Area for Pipe Rack Easement (service between Fertilizer Parcel Nos. 4 and 5) Area | |||
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EXHIBIT G | | Legal Description of Coke Conveyor Belt Easement Area | |||
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EXHIBIT H | | Legal Description of Sunflower Street Pipeline Crossing Easement (Fertilizer Parcel) Area | |||
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EXHIBIT I | | Legal Description of Sunflower Street Pipeline Crossing Easement (Refinery Parcel) Area | |||
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EXHIBIT J | | Legal Description of East Tank Farm Roadway (Fertilizer Parcel) Area | |||
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EXHIBIT K | | Legal Description of East Tank Farm (Refinery Parcel) Area | |||
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EXHIBIT L | | Legal Description of Railroad Trackage Easement (Fertilizer Parcel) Area | |||
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EXHIBIT M | | Legal Description of Railroad Trackage Easement (Refinery Parcel) Area | |||
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EXHIBIT N | | Legal Description of Fertilizer Company Clarifier Tract | |||
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EXHIBIT O | | Fertilizer Water Easement Area | |||
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EXHIBIT P | | Legal Description of Coke Haul Road | |||
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EXHIBIT Q | | Legal Description of Refinery Shared Parking Area | |||
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EXHIBIT R-1 | | Legal Description of Buffer ZoneFertilizer Parcel | |||
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EXHIBIT R-2 | | Legal Description of Buffer ZoneRefinery Parcel |
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COFFEYVILLE RESOURCES
REFINING & MARKETING, LLC a Delaware limited liability company |
COFFEYVILLE RESOURCES NITROGEN
FERTILIZERS, LLC a Delaware limited liability company |
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COFFEYVILLE RESOURCES | COFFEYVILLE RESOURCES | |||||
REFINING & MARKETING, LLC | NITROGEN FERTILIZERS, LLC | |||||
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COFFEYVILLE RESOURCES | COFFEYVILLE RESOURCES NITROGEN | |||||
REFINING & MARKETING, LLC | FERTILIZERS, LLC | |||||
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A-1
Hydrogen
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Gaseous
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- Purity
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not less than 99.9 mol.% | |
- Flow
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21 mmscf/day maximum | |
- Pressure
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450 psig ± 30 psi | |
- Carbon Monoxide
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less than 50 ppm | |
- Carbon Dioxide
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less than 10 ppm | |
- Price
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The Hydrogen price shall be $0.46 per 100scf based on an Ammonia Price of $300.00 per short ton. The Hydrogen price per 100scf shall adjust as of the first day of each calendar month up or down in the same percentage as the Ammonia Price for the immediately preceding calendar month adjusts up or down from $300.00 per short ton. Until the Hydrogen Reduction Date, the Hydrogen price shall be discounted to seventy percent (70%) of the Hydrogen price otherwise calculated pursuant to the foregoing provisions. | |
- Monthly Demand Charge
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(4,478) X (Ammonia Price adjusted as of each monthly due date for the Monthly Demand Charge) X (1/12 of the Prime Rate as of such monthly due date) | |
- Additional Requirement Price
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The Hydrogen price for any Additional Requirement shall be $0.55 per 100scf based on an UAN Price of $150.00 per short ton. The Hydrogen price per 100scf of any Additional Requirement shall adjust as of the first day of each calendar month up or down in the same percentage as the UAN Price for the immediately preceding calendar month adjusts up or down from $150.00 per short ton. | |
- Flow measurement
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All Hydrogen flows shall be measured by a standard sharp edge orifice plate and differential pressure transmitter located at the Fertilizer Plant. The measured flow shall be pressure and temperature compensated and totalized by the Fertilizer Plants Honeywell process control computer (TDC 3000) or any replacement computer. All transmitter signals and computer calculations are available to the Refinery through the existing communications bus for verification. Calibration of the transmitter shall be done at least annually and may be done more frequently at Refinery Companys request. |
B-1
Nitrogen
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Gaseous
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- Purity
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99.99 mol. % (minimum) (5 ppm oxygen maximum) | |
- Pressure
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180 psig (+ 10 psig) | |
- Flow
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20,000 scfh (normal); 40,000 scfh (maximum) | |
- Temperature
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Ambient | |
- Price
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$0.25 per cscf based on a total electric energy cost of $0.035 per KWH; provided, however, that this price will increase or decrease in the same percentage as the Fertilizer Companys electric bill from the City of Coffeyville (or from such other electric utility provider as the Fertilizer Company may have from time to time in the future) increases or decreases on a per/KWH basis and each such price adjustment shall apply to any gaseous nitrogen sold by Fertilizer Company after the date of such adjustment to the date of the next adjustment. | |
- Flow measurement
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All Nitrogen flows shall be measured by a standard sharp edge orifice plate and differential pressure transmitter located at the Fertilizer Plant. The measured flow shall be pressure and temperature compensated and totalized by the Fertilizer Plants Honeywell process control computer (TDC 3000) or any replacement computer. All transmitter signals and computer calculations are available to the Refinery through the existing communications bus for verification. Calibration of the transmitter shall be done at least annually and may be done more frequently at Refinery Companys request. |
B-2
Oxygen
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-Gaseous
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-Purity
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99.6 mol. % (minimum) | |
-Pressure
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65 psig (± 5 psig) | |
-Flow
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29.8 STPD (maximum) | |
-Temperature
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Ambient | |
- Price
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$0 per short ton for daily tons up to 10 STPD $70 per short ton for daily tons from 10 STPD to 29.8 STPD Such prices per short ton are based on a total electric cost of $0.035 per KWH; provided, however, that these prices per short ton will increase or decrease in the same percentage as the Fertilizer Companys electric bill from the City of Coffeyville (or from such other electric utility provider as the Fertilizer Company may have from time to time in the future) increases or decreases on a per/KWH basis and each such price adjustment shall apply to any gaseous Oxygen sold by Fertilizer Company after the date of such adjustment to the date of the next adjustment. |
B-3
- Flow measurement
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All Oxygen flows shall be measured by a standard sharp edge orifice plate and differential pressure transmitter located at the Fertilizer Plant. The measured flow shall be pressure and temperature compensated and totalized by the Fertilizer Plants Honeywell process control computer (TDC 3000) or any replacement computer. All transmitter signals and computer calculations are available to the Refinery through the existing communications bus for verification. Calibration of the transmitter shall be done at least annually and may be done more frequently at Refinery Companys request. | |
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Sour water
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Composition
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.80% ammonia (maximum)
0.05 mol. % H 2 S (maximum) |
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-Pressure
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90 psig (maximum) | |
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35 psig (minimum) | |
-Temperature
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125°F (normal) | |
-Flow
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20 gpm (maximum) | |
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12 gpm (normal) | |
-Price
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zero dollars ($0) | |
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High Pressure Steam
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Pressure
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600 psig ± 10 psi (normal) | |
- Flow (Gasifier Startup)
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As available, up to 75,000 pounds per hour (to Fertilizer Company) | |
(normal)
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As available, 50,000 + 20,000 pounds per hour (to Refinery Company) | |
-Price
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The price is dependent upon the natural gas price (symbolized by NGP in the formulae below) and steam flow in the formulae below is determined by the Fertilizer Plants process control computer: | |
To Fertilizer Company:
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Price = (1.22)(NGP)(steam flow)/1000 | |
To Refinery Company:
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Price = (1.10)(NGP)(steam flow)/1000 |
B-4
- Flow measurement
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All High Pressure Steam flows shall be measured by a standard sharp edge orifice plate and differential pressure transmitter located at the Fertilizer Plant. The measured flow shall be totalized by the Fertilizer Plants Honeywell process control computer (TDC 3000) or any replacement computer. All transmitter signals and computer calculations are available to the Refinery through the existing communications bus for verification. Calibration of the transmitter shall be done at least annually and may be done more frequently at Refinery Companys request. | |
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Low Pressure Steam
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-Flow
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Variable | |
-Pressure
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Approximately 120-170 psi | |
-Price
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zero dollars ($0) | |
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SERVICES:
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Firewater
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Pressure
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185 psig (maximum) | |
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100 psig (minimum) |
B-5
- Temperature
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70°F (normal) | |
- Flow
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2,000 gpm (maximum) | |
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0 gpm (normal) | |
-Price
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zero dollars ($0) | |
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Instrument Air
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Purity
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-40°F dew point (normal operating) | |
- Pressure
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125 psig + 10 psi (normal operating) | |
- Flow
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4000 scfm maximum (normal operating) | |
- Temperature
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ambient | |
- Price
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To the Refinery Company:
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$18,000 per month (prorated on a per diem basis to reflect the number of days, including partial days, in the applicable month that Instrument Air is provided) based on $.035 total laid in cost per KWH; provided, that this price will increase or decrease in the same percentage as the Fertilizer Companys total laid in cost for electricity from the City of Coffeyville (or from such other electric utility provider as the Fertilizer Company may have from time to time in the future) increases or decreases on a per/KWH basis and each such price adjustment shall apply to any Instrument Air sold by Fertilizer Company after the date of such adjustment until the date of the next adjustment; provided, however, that such cost shall be reduced on a pro-rata basis for each day that such Instrument Air is not available from the BOC Facility. | |
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To the Fertilizer Company:
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$18,000 per month (prorated on a per diem basis to reflect the number of days, including partial days, in the applicable month that Instrument Air is provided) based on $.039 total laid in cost per KWH; provided, that this price will increase or decrease in the same percentage as the Refinery Companys total cost for electricity from Kansas Gas and Electric Company (or from such other electric utility provider as the Refinery Company may have from time to time in the future) increases or decreases on a per/KWH basis and each such price adjustment shall apply to any Instrument Air sold by Refinery Company after the date of such adjustment until the date of the next adjustment. | |
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B-6
- Flow measurement
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All Instrument Air flows shall be measured by a standard sharp edge orifice plate and differential pressure transmitter located at the Fertilizer Plant. The measured flow shall be totalized by the Fertilizer Plants Honeywell process control computer (TDC 3000) or any replacement computer. All transmitter signals and computer calculations are available to the Refinery through the existing communications bus for verification. Calibration of the transmitter shall be done at least annually and may be done more frequently at Refinery Companys request. |
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If to Refinery Company, to:
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Coffeyville Resources Refining & Marketing, LLC
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Attention: Chief Executive Officer
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If to Fertilizer Company, to:
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Coffeyville Resources Nitrogen Fertilizers, LLC
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Attention: Chief Executive Officer
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COFFEYVILLE RESOURCES | COFFEYVILLE RESOURCES | |||||||
REFINING & MARKETING, LLC | NITROGEN FERTILIZERS, LLC | |||||||
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If to GP or MLP:
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If to CVR:
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CVR PARTNERS, LP
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By: | CVR GP, LLC | |||
its Managing General Partner | ||||
By: | ||||
Name: | ||||
Title: | ||||
CVR GP, LLC
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By: | ||||
Name: | ||||
Title: | ||||
CVR ENERGY, INC.
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By: | ||||
Name: | ||||
Title: |
| services in capacities equivalent to the capacities of corporate executive officers, except that the persons serving in such capacities shall serve in such capacities as Shared Personnel on a shared, part-time basis only, unless and to the extent otherwise agreed by CVR; | ||
| safety and environmental advice; | ||
| administrative and professional services, including legal, accounting, human resources, insurance, tax, credit, finance, government affairs, and regulatory affairs; | ||
| manage the Services Recipients day-to-day business and operations, including managing its liquidity and capital resources and compliance with applicable law; | ||
| establishing and maintaining books and records of the Services Recipients in accordance with customary practice and GAAP; | ||
| recommend to the Services Recipients Board of Directors (x) capital raising activities, including the issuance of debt or equity securities of the Services Recipients, the entry into credit facilities or other credit arrangements, structured financings or other capital market transactions, (y) changes or other modifications in the capital structure of the Services Recipients, including repurchases; | ||
| recommend to the Services Recipients Board of Directors the engagement of or, if approval is not otherwise required hereunder, engage agents, consultants or other third party service providers to the Services Recipients, including accountants, lawyers or experts, in each case, as may be necessary by the Services Recipients from time to time; | ||
| manage the Services Recipients property and assets in the ordinary course of business; | ||
| manage or oversee litigation, administrative or regulatory proceedings, investigations or any other reviews of the Services Recipients business or operations that may arise in the ordinary course of business or otherwise, subject to the approval of the Services Recipients Board of Directors to the extent necessary in connection with the settlement, compromise, consent to the entry of an order or judgment or other agreement resolving any of the foregoing; | ||
| establish and maintain appropriate insurance policies with respect to the Services Recipients business and operations; |
| recommend to the Services Recipients Board of Directors the payment of dividends or other distributions on the equity interests of the Services Recipients; | ||
| attend to the timely calculation and payment of taxes payable, and the filing of all taxes return due, by the Services Recipients; and | ||
| manage or provide advice or recommendations for other projects of the Services Recipients, as may be agreed to between the GP and CVR from time to time. |
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CVR ENERGY, INC. | ||||
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[Name]
[Title] |
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CVR GP, LLC | ||||
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[Name]
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CVR PARTNERS, LP | ||||
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By: | CVR GP, LLC, its Managing General Partner | ||
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By: | |||
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[Name] | |||
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CVR SPECIAL GP, LLC | ||||
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[Name]
[Title] |
Signature Page to Omnibus Agreement
1. | Purpose; Operation . The purpose of the Coffeyville Resources, LLC Phantom Unit Appreciation Plan (Plan II) (the Plan) is to provide an incentive to employees of the Company and its Affiliates who contribute to the Companys success to increase their efforts on behalf of the Company and to promote the success of the Companys business. Participants in the Plan have the opportunity to receive cash payments in respect of Phantom Points they hold in the event of certain distributions pursuant to the Parent II LLC Agreement to Members (as defined in the Parent II LLC Agreement) in Coffeyville Acquisition II LLC, an indirect equity owner of the Company. Whether payments will be made will depend on the amount of net proceeds realized in connection with the event that gives rise to such distributions. Defined terms are defined in Exhibit A hereto. | |
2. | Administration . The Plan shall be administered by the Committee. The Committee shall have the authority in its discretion, subject to and not inconsistent with the express provisions of the Plan, to administer the Plan and to exercise all the powers and authorities either specifically granted to it under the Plan or necessary or advisable in the administration of the Plan, including, without limitation: |
| the authority to grant Phantom Points; | ||
| to determine the persons to whom and the time or times at which Phantom Points shall be granted; | ||
| to determine the number and type of Phantom Points to be granted and the terms, conditions and restrictions relating thereto; | ||
| to determine whether, to what extent, and under what circumstances Phantom Points may be settled, cancelled, forfeited, exchanged, or surrendered; | ||
| to make adjustments in the terms and conditions applicable to Phantom Points; | ||
| to construe and interpret the Plan and Award Agreements; | ||
| to prescribe, amend and rescind rules and regulations relating to the Plan; | ||
| to determine the terms and provisions of the Award Agreements; | ||
| to determine the Baseline Primary Phantom Percentage, the Total Phantom Percentages and the Final Phantom Percentages; | ||
| to determine the amounts allocable for payment pursuant to this Plan; | ||
| to assign Phantom Benchmark Amounts; and |
| to make all other determinations deemed necessary or advisable for the administration of the Plan. |
All determinations made by the Committee in respect of the Plan shall be final and binding on all Participants and their beneficiaries. No manager or member of the Company or member of the Committee shall be liable for any action taken or determination made in good faith with respect to the Plan or any Phantom Points granted hereunder. The Committee, with the consent of Parent II LLC, shall make determinations with respect to percentages (including the Total Phantom Percentages and the Final Phantom Percentages) and cash amounts allocated, if any, to the Plan with reference to the applicable definitions set forth in Exhibit A ; provided that any and all determinations with respect to applicable percentages and cash amounts allocated to the Plan shall be made in the Committees discretion and may vary from such definitions. The Committee may make adjustments in the operation of provisions of the Plan if the Committee determines in its sole discretion that such adjustments will further the intent of such provisions. | ||
3. | Eligibility . Phantom Points may be granted at any time to directors, employees (including officers) and service providers of an Employer, in the discretion of the Committee. | |
4. | Phantom Service Points; Payment . |
(a) | Phantom Service Point Pool . A pool of points shall exist consisting of Phantom Service Points. Phantom Service Points shall represent the right to receive a cash payment from the Employer within thirty (30) days following the date on which a distribution is made pursuant to the Parent II LLC Agreement. The pool of Phantom Service Points shall initially be 10,000,000 but may be increased in the discretion of the Committee at any time. The total number of Phantom Service Points outstanding (after taking into account any adjustments made pursuant to Section 7) shall be referred to as the Total Phantom Service Point Pool. | ||
(b) | Phantom Service Percentage . The Phantom Plan Service Percentage for each Participant shall be the Final Phantom Service Percentage multiplied by the quotient obtained by dividing (x) the number of Phantom Service Points allocated to such Participant by (y) 10,000,000, or, if the Total Phantom Service Point Pool is greater than 10,000,000, the Total Phantom Service Point Pool. | ||
(c) | Phantom Service Point Payments . The cash amount payable to a Participant in respect of his or her Phantom Service Points at any time that a distribution is made pursuant to the Parent II LLC Agreement in respect of Operating Units shall be determined by multiplying (x) such Participants Phantom Plan Service Percentage and (y) the amount of Exit Proceeds. For the avoidance of doubt, the foregoing is simply a calculation of amount of the cash payment payable to a Participant holding Phantom Service Points, and in no event shall such |
2
Participant, in its capacity as such, have any rights to receive a payment or distribution from Parent II LLC. 1 |
5. | Phantom Performance Points; Payment . |
(a) | Phantom Performance Point Pool . A pool of points shall exist consisting of Phantom Performance Points. Phantom Performance Points shall represent the right to receive a cash payment within thirty (30) days following the date on which a distribution is made pursuant to the Parent II LLC Agreement in respect of Value Units. The pool of Phantom Performance Points shall initially be 10,000,000, but may be increased in the discretion of the Committee at any time. The total number of Phantom Performance Points outstanding (after taking into account any adjustment made pursuant to Section 7) shall be referred to as the Total Phantom Performance Point Pool. | ||
(b) | Phantom Performance Percentage . The Phantom Plan Performance Percentage for each Participant shall initially be the Final Phantom Performance Percentage multiplied by the quotient obtained by dividing (x) the number of Phantom Performance Points allocated to such Participant by (y) 10,000,000, or, if the Total Phantom Performance Point Pool is greater than 10,000,000, the Total Phantom Performance Point Pool, and shall be further subject to reduction pursuant to Section 5(c) below. | ||
(c) | Performance Factor; Investment Multiple . As provided in the definition of Final Phantom Performance Percentage, each Participants Phantom Plan Performance Percentage reflects the Performance Factor, which operates to adjust Participants performance percentages based on the performance of the investment in the Parent II LLC by the Investor Members. For purposes of this Plan: |
(1) | The Performance Factor equals a number (between zero and one) equal to the quotient obtained by dividing (i) the excess, if positive, of the Final Investment Multiple (as defined below) over the Minimum Investment Multiple by (ii) two (2); provided that if such quotient is greater than one, the Performance Factor will equal one. | ||
(2) | The Final Investment Multiple is computed, after giving effect to any payments to be made pursuant to this Plan, by dividing (x) the total fair market value of all net distributions received, or to be received upon the applicable distribution, by the Investor Members from the Company in respect of their aggregate investment in the Company divided by (y) the aggregate of such investment of the Investor Members in the Company (it being understood that all |
1 | Schedule A provides an illustration of how a calculation of a Phantom Service Point payment would be made under the Plan. It is not intended to be an indication of actual payments under the Plan. |
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such amounts are themselves simultaneously being calculated by reference to amounts that may be payable pursuant to the Plan). |
(d) | Phantom Performance Point Payments . The cash amount payable to a Participant in respect of his or her Phantom Performance Points at any time that a distribution is made pursuant to the Parent II LLC Agreement in respect of Value Units shall be determined by adding (x) the product of (i) such Participants Phantom Plan Performance Percentage and (ii) the amount of Exit Proceeds plus (y) an additional amount to provide a catch-up similar to that provided in respect of Value Units pursuant to Section 9.1(d) of the Parent II LLC Agreement. For the avoidance of doubt, the foregoing is simply a calculation of the amount of the cash payment payable to a Participant holding Phantom Performance Points, and in no event shall such Participant, in its capacity as such, have any rights to receive a payment or distribution from Parent II LLC. 2 |
6. | Additional Awards; Adjustments . |
(a) | Additional Awards . An Employer may determine that a Participants performance warrants an award of additional Phantom Points, in which case the Employer may recommend to the Committee that an additional award be made. | ||
(b) | Prior Appreciation Adjustments . Each Participant will be assigned a Phantom Benchmark Amount, which shall be an amount determined by the Committee with respect to the Participant each time the Committee awards any Phantom Points to the Participant and relates to the valuation of Parent II LLC at such time. Notwithstanding anything to the contrary set forth in the Plan, for purposes of the calculations under Section 4(c) and Section 5(d), the Committee shall make such adjustments to the amounts otherwise determined thereunder to account for the Phantom Benchmark Amount assigned in respect of a Participants Phantom Points. | ||
(c) | In the event of any material acquisition, disposition, merger, recapitalization, capital contribution or other similar event, the Committee may make such adjustment(s) to the terms of the Plan or any awards granted under the Plan as the Committee shall determine appropriate in its sole discretion. |
7. | Termination of Employment . If a Participant ceases to be employed by an Employer (other than in connection with a transfer to another Employer) prior to an Exit Event, such Participant shall forfeit all Phantom Points granted to the Participant. | |
8. | General Provisions . |
(a) | Nontransferability . Unless otherwise provided in an Award Agreement, Phantom Points shall not be transferable by a Participant under any circumstances, except by will or the laws of descent and distribution. |
2 | Schedule A provides an illustration of how a calculation of a Phantom Performance Point payment would be made under the Plan. It is not intended to be an indication of actual payments under the Plan. |
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(b) | No Right to Continued Employment, etc . Nothing in the Plan or in any Award Agreement entered into pursuant the Plan shall confer upon any Participant the right to continue in the employ of or to be entitled to any remuneration or benefits not set forth in the Plan or such Award Agreement, or to interfere with or limit in any way the right of an Employer to terminate such Participants employment. | ||
(c) | Taxes . The Company or any Affiliate is authorized to withhold from any payment relating to Phantom Points under the Plan amounts of withholding and other taxes due to enable the Company and Participants to satisfy obligations for the payment of withholding taxes and other tax obligations. | ||
(d) | Excise Tax . To the extent that, in the Committees determination, payment to a Participant in respect of his or her Phantom Points would result in application of an excise tax to the Participant pursuant to Section 4999 of the Code, then the payment shall be reduced to such extent to avoid the application of such excise tax; provided that the Company shall use its reasonable best efforts to obtain shareholder approval of the payment in respect of Phantom Points in a manner intended to satisfy requirements of the shareholder approval exception to Section 280G of the Code and the regulations promulgated thereunder, such that payment may be made to the Participant in respect of his or her Phantom Points without the application of the excise tax. | ||
(e) | Amendment and Termination . The Plan shall take effect on the date of its adoption by the Board of Directors of the Company (the Board). The Board may at any time and from time to time alter, amend, suspend, or terminate the Plan in whole or in part, including but not limited to, amending the Plan and awards to alter the structure of the Plan if the Board determines that the Plan is not meeting its objectives. | ||
(f) | No Rights to Awards; No Stockholder or Member Rights . No Participant shall have any claim to be granted any Phantom Points under the Plan, and there is no obligation for uniformity of treatment of Participants. A Participant or a transferee of Phantom Points shall have no rights as a stockholder or member of the Company or any Affiliate. | ||
(g) | Unfunded Status of Awards . The Plan is intended to constitute an unfunded plan for incentive compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Phantom Points shall give any such Participant any rights that are greater than those of a general creditor of the Company. | ||
(h) | Governing Law . The Plan and all determinations made and actions taken pursuant hereto shall be governed by the laws of the State of Delaware without giving effect to the conflict of laws principles thereof. | ||
(i) | Beneficiary . Upon the death of a Participant, all of his of her rights under the Plan shall inure to his or her designated beneficiary or, if no beneficiary has been designated, to his or her estate. |
5
(j) | No Guarantee or Assurances . There can be no guarantee that any distributions in respect of Operating Units or Value Units will occur under the Parent II LLC Agreement or that any payment to any Participant will result under the Plan. | ||
(k) | Expiration of Plan . Unless otherwise determined by the Board, the Plan shall expire on July 25, 2015 and all outstanding Phantom Points shall then expire and be forfeited with no consideration paid in respect of such forfeiture. |
6
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CVR ENERGY, INC.
|
GRANTEE | |||||
|
||||||
|
||||||
By:
|
Print Name: | |||||
Title:
|
CVR ENERGY, INC.
|
GRANTEE | |||||
|
||||||
|
||||||
By:
|
Print Name: | |||||
Title:
|
CVR ENERGY, INC.
|
GRANTEE | |||
|
||||
|
||||
By:
|
Print Name: | |||
Title:
|
Page | ||||
ARTICLE I
FORMATION OF THE COMPANY |
||||
|
||||
Section 1.1 Formation
|
2 | |||
Section 1.2 Company Name
|
2 | |||
Section 1.3 The Certificate, etc
|
2 | |||
Section 1.4 Term of Company
|
2 | |||
Section 1.5 Registered Agent and Office
|
2 | |||
Section 1.6 Principal Place of Business
|
3 | |||
Section 1.7 Qualification in Other Jurisdictions
|
3 | |||
Section 1.8 Fiscal Year; Taxable Year
|
3 | |||
|
||||
ARTICLE II
PURPOSE AND POWERS OF THE COMPANY |
||||
|
||||
Section 2.1 Purpose
|
3 | |||
Section 2.2 Powers of the Company
|
3 | |||
Section 2.3 Certain Tax Matters
|
3 | |||
|
||||
ARTICLE III
MEMBERS AND INTERESTS GENERALLY |
||||
|
||||
Section 3.1 Powers of Members
|
3 | |||
Section 3.2 Interests Generally
|
4 | |||
Section 3.3 Meetings of Members
|
5 | |||
Section 3.4 Business Transactions of a Member with the Company
|
6 | |||
Section 3.5 No Cessation of Membership upon Bankruptcy
|
6 | |||
Section 3.6 Additional Members
|
6 | |||
Section 3.7 Other Business for Members
|
7 | |||
ARTICLE IV
MANAGEMENT |
||||
|
||||
Section 4.1 Board
|
8 | |||
Section 4.2 Meetings of the Board
|
8 | |||
Section 4.3 Quorum and Acts of the Board
|
8 | |||
Section 4.4 Electronic Communications
|
9 | |||
Section 4.5 Committees of Directors
|
9 | |||
Section 4.6 Compensation of Directors
|
9 | |||
Section 4.7 Resignation
|
9 | |||
Section 4.8 Removal of Directors
|
10 | |||
Section 4.9 Vacancies
|
10 |
i
ii
Page | ||||
Section 9.6 Tax Distributions
|
21 | |||
|
||||
ARTICLE X
BOOKS AND RECORDS |
||||
Section 10.1 Books, Records and Financial Statements
|
21 | |||
Section 10.2 Filings of Returns and Other Writings; Tax Matters Partner
|
21 | |||
Section 10.3 Accounting Method
|
22 | |||
|
||||
ARTICLE XI
LIABILITY, EXCULPATION AND INDEMNIFICATION |
||||
|
||||
Section 11.1 Liability
|
22 | |||
Section 11.2 Exculpation
|
22 | |||
Section 11.3 Fiduciary Duty
|
23 | |||
Section 11.4 Indemnification
|
23 | |||
Section 11.5 Expenses
|
23 | |||
Section 11.6 Severability
|
23 | |||
|
||||
ARTICLE XII
TRANSFERS OF INTERESTS |
||||
|
||||
Section 12.1 Restrictions on Transfers of Interests by Members
|
24 | |||
Section 12.2 Overriding Provisions
|
24 | |||
Section 12.3 Estate Planning Transfers; Transfers upon Death of a Management Member
|
24 | |||
Section 12.4 Involuntary Transfers
|
25 | |||
Section 12.5 Assignments.
|
25 | |||
Section 12.6 Substitute Members
|
25 | |||
Section 12.7 Release of Liability
|
26 | |||
|
||||
ARTICLE XIII
DISSOLUTION, LIQUIDATION AND TERMINATION |
||||
|
||||
Section 13.1 Dissolving Events
|
26 | |||
Section 13.2 Dissolution and Winding-Up
|
26 | |||
Section 13.3 Distributions in Cash or in Kind
|
27 | |||
Section 13.4 Termination
|
27 | |||
Section 13.5 Claims of the Members
|
27 |
iii
Page | ||||
ARTICLE XIV
MISCELLANEOUS |
||||
|
||||
Section 14.1 Notices
|
28 | |||
Section 14.2 Securities Act Matters
|
29 | |||
Section 14.3 Headings
|
29 | |||
Section 14.4 Entire Agreement
|
29 | |||
Section 14.5 Counterparts
|
29 | |||
Section 14.6 Governing Law; Attorneys Fees
|
29 | |||
Section 14.7 Waivers
|
29 | |||
Section 14.8 Invalidity of Provision
|
30 | |||
Section 14.9 Further Actions
|
30 | |||
Section 14.10 Amendments
|
30 | |||
Section 14.11 No Third Party Beneficiaries
|
30 | |||
Section 14.12 Injunctive Relief
|
31 | |||
Section 14.13 Power of Attorney
|
31 | |||
|
||||
ARTICLE XV
DEFINED TERMS |
||||
|
||||
Section 15.1 Definitions
|
32 |
iv
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Percentage of such | ||||
Inactive Management | ||||
Members Operating Units | ||||
If the termination occurs | to be Forfeited | |||
Before the second anniversary of the grant of
such Inactive Management Members Operating Units
|
100 | % | ||
On or after the second anniversary, but before
the third anniversary, of the grant of such
Inactive Management Members Operating Units
|
75 | % | ||
On or after the third anniversary, but before the
fourth anniversary, of the grant of such Inactive
Management Members Operating Units
|
50 | % | ||
On or after the fourth anniversary, but before
the fifth anniversary, of the grant of such
Inactive Management Members Operating Units
|
25 | % | ||
On or after the fifth anniversary of the grant of
such Inactive Management Members Operating Units
|
0 | % |
16
Percentage of such | ||||
Inactive Management | ||||
Members Value Units | ||||
Not Subject to Forfeiture | ||||
Pursuant to Section | ||||
If death or Disability occurs | 7.2(a)(ii) | |||
Before the second anniversary of the grant of
such Inactive Management Members Value Units
|
0 | % | ||
On or after the second anniversary, but before
the third anniversary, of the grant of such
Inactive Management Members Value Units
|
25 | % | ||
On or after the third anniversary, but before
the fourth anniversary, of the grant of such
Inactive Management Members Value Units
|
50 | % | ||
On or after the fourth anniversary, but before
the fifth anniversary, of the grant of such
Inactive Management Members Value Units
|
75 | % | ||
On or after the fifth anniversary of the grant
of such Inactive Management Members Value Units
|
100 | % |
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
(a) | the sale, transfer or other disposition by the Investor Members to one or more Persons that are not, immediately prior to such sale, Affiliates of the Company or any Investor Member of all of the Interests of the Company beneficially owned by the Investor Members as of the date of such transaction; or | ||
(b) | the sale, transfer or other disposition of all of the assets of the Company and its Subsidiaries, taken as a whole, to one or more Persons that are not, immediately prior to such sale, transfer or other disposition, Affiliates of the Company or any Investor Member. |
(a) | for purposes of determining the value of any property owned by, contributed to or distributed by the Company, ( i ) in the case of publicly-traded securities, the average of their last sales prices on the applicable trading exchange or quotation system on each trading day during the five trading-day period ending on such date and ( ii ) in the case of any other property, the fair market value of such property, as determined in good faith by the Board, or | ||
(b) | for purposes of determining the value of any Members Interest in connection with Section 12.4 (Involuntary Transfers), ( i ) the fair market value of such Interest as reflected in the most recent appraisal report prepared, at the request of |
34
the Board, by an independent valuation consultant or appraiser of recognized national standing, reasonably satisfactory to the Board, or ( ii ) in the event no such appraisal exists or the date of such report is more than one year prior to the date of determination, the fair market value of such Interest as determined in good faith by the Board. |
35
36
(a) | without the Management Members prior written consent, a reduction by the Company or any such Subsidiary of his or her current salary, other than any such reduction which is part of a general salary reduction or other concessionary arrangement affecting all employees or affecting the group of employees of which the Management Member is a member (after receipt by the Company of written notice from such Management Member and a 20-day cure period); or | ||
(b) | the taking of any action by the Company or any such Subsidiary that would substantially diminish the aggregate value of the benefits provided him or her under the Companys or such Subsidiarys accident, disability, life insurance and any other employee benefit plans in which he or she was participating on the date of his or her execution of this Agreement, other than any such reduction which is ( i ) required by law, ( ii ) implemented in connection with a general concessionary arrangement affecting all employees or affecting the group of employees of which the Management Member is a member, ( iii ) generally applicable to all beneficiaries of such plans (after receipt by the Company of written notice and a 20-day cure period) or ( iv ) in accordance with the terms of any such plan. |
37
38
INVESTOR MEMBERS | ||||||||||
|
||||||||||
KELSO INVESTMENT ASSOCIATES VII, L.P. | ||||||||||
|
||||||||||
By: | Kelso GP VII, L.P., its General Partner | |||||||||
|
||||||||||
By: |
Kelso GP VII, LLC, its
General Partner |
|||||||||
|
||||||||||
|
By: | |||||||||
|
||||||||||
|
Name: | |||||||||
|
Title: | |||||||||
|
||||||||||
KEP VI, LLC | ||||||||||
|
||||||||||
|
By: | |||||||||
|
Name: | |||||||||
|
Title: |
MANAGEMENT MEMBERS | ||||||
|
||||||
JOHN J. LIPINSKI | ||||||
|
||||||
THE TARA K. LIPINSKI 2007 EXEMPT TRUST | ||||||
|
||||||
|
By: | |||||
|
||||||
|
Name: Tara K. Lipinski | |||||
|
Title: Trustee | |||||
|
||||||
THE LIPINSKI 2007 EXEMPT FAMILY TRUST | ||||||
|
||||||
|
By: | |||||
|
||||||
|
Name: Patricia E. Lipinski | |||||
|
Title: Trustee | |||||
|
||||||
STANLEY A. RIEMANN | ||||||
|
||||||
JAMES T. RENS | ||||||
|
||||||
KEITH D. OSBORN | ||||||
|
||||||
KEVAN A. VICK |
|
||||
|
ROBERT W. HAUGEN | |||
|
||||
|
||||
|
WYATT E. JERNIGAN | |||
|
||||
|
||||
|
ALAN K. RUGH | |||
|
||||
|
||||
|
DANIEL J. DALY, JR. |
OUTSIDE MEMBERS | ||||||
|
||||||
MAGNETITE ASSET INVESTORS III L.L.C. | ||||||
|
||||||
|
By: | BlackRock Financial Management, Inc., as Managing Member | ||||
|
||||||
|
By: | |||||
|
||||||
|
Name: | |||||
|
Title: | |||||
|
||||||
WESLEY CLARK |
Date of
Initial
Capital
Name
Admission
Mailing Address
Balance
Contribution
Common Units
Associates VII,
L.P.
June 24, 2005
c/o Kelso & Company, L.P.
320 Park Avenue, 24th Floor
New York, New York 10022
Attention: James J. Connors II
Fax: (212) 223-2379
N/A
$
100,846,088.29
8,912,707.00
June 24, 2005
c/o Kelso & Company, L.P.
320 Park Avenue, 24th Floor
New York, New York 10022
Attention: James J. Connors II
Fax: (212) 223-2379
N/A
$
24,971,411.71
2,206,956.00
N/A
$
125,817,500.00
11,119,663.00
Override Units
Date of
Capital
Common
Date of
Operating
Value
Benchmark
Name
Admission
Mailing Address
Contribution
Units
Issuance
Units
Units
Amount
July 25, 2005
806 Skimmer Court
$
650,000
57,446
Jul. 25, 2005
315,818
631,637
$
11.3149
Sugar Land, TX 77478
Dec. 29, 2006
72,492
144,966
$
34.72
July 25, 2005
15714 Quail Ridge Drive
$
400,000
35,352
Jul. 25, 2005
140,185
280,371
$
11.3149
Smithville, MO 64089
July 25, 2005
8112 NE 73rd Terrace
$
250,000
22,095
Jul. 25, 2005
71,965
143,931
$
11.3149
Kansas City, MO 64158
July 25, 2005
1208 West 2nd Street
$
250,000
22,095
Jul. 25, 2005
71,965
143,931
$
11.3149
Coffeyville, KS 67337
July 25, 2005
4704 Cherry Hills Court
$
250,000
22,095
Jul. 25, 2005
71,965
143,931
$
11.3149
Lawrence, KS 66047
July 25, 2005
5610 Lone Cedar Drive
$
100,000
8,838
Jul. 25, 2005
71,965
143,931
$
11.3149
Kingwood, TX 77478
July 25, 2005
250 South Post Oak Lane
$
100,000
8,838
Jul. 25, 2005
71,965
143,931
$
11.3149
Houston, TX 77056
July 25, 2005
2003 Sea King Street
$
100,000
8,838
Jul. 25, 2005
51,901
103,801
$
11.3149
Houston, TX 77008
July 25, 2005
5364 McCulloch Circle
$
50,000
4,419
Jul. 25, 2005
51,901
103,801
$
11.3149
Houston, TX 77056
September 12, 2005
8824 Rosewood Drive
$
30,000
2,651
Sep 12, 2005
N/A
N/A
N/A
Prairie Village, KS 66207
July 25, 2005
6902 Cherry Hills Road
$
25,000
2,209
Jul. 25, 2005
N/A
N/A
N/A
Houston, Texas 77069
July 25, 2005
401 Oldham Street,
$
70,000
6,187
Jul. 25, 2005
N/A
N/A
N/A
Waxahachie, Texas 75165
$
2,275,000
201,063
992,122
1,984,931
Override Units
Capital
Common
Date of
Value
Benchmark
Name
Contribution
Units
Issuance
Operating Units
Units
Amount
806 Skimmer Court
$
325,000
28,723
Jul. 25, 2005
N/A
N/A
N/A
Sugar Land, TX 77478
806 Skimmer Court
Jul. 25, 2005
78,954.5
157,909.25
$
11.3149
Sugar Land, TX 77478
N/A
N/A
Dec. 29, 2006
18,123
36,241.5
$
34.72
806 Skimmer Court
Jul. 25, 2005
78,954.5
157,909.25
$
11.3149
Sugar Land, TX 77478
N/A
N/A
Dec. 29, 2006
18,123
36,241.5
$
34.72
15714 Quail Ridge Drive
$
200,000
17,676
Jul. 25, 2005
70,092.5
140,185.5
$
11.3149
Smithville, MO 64089
8112 NE 73rd Terrace
$
125,000
11,047.5
Jul. 25, 2005
35,982.5
71,965.5
$
11.3149
Kansas City, MO 64158
1208 West 2nd Street
$
125,000
11,047.5
Jul. 25, 2005
35,982.5
71,965.5
$
11.3149
Coffeyville, KS 67337
4704 Cherry Hills Court
$
125,000
11,047.5
Jul. 25, 2005
35,982.5
71,965.5
$
11.3149
Lawrence, KS 66047
5610 Lone Cedar Drive
$
50,000
4,419
Jul. 25, 2005
35,982.5
71,965.5
$
11.3149
Kingwood, TX 77478
250 South Post Oak Lane
$
50,000
4,419
Jul. 25, 2005
35,982.5
71,965.5
$
11.3149
Houston, TX 77056
2003 Sea King Street
$
50,000
4,419
Jul. 25, 2005
25,950.5
51,900.5
$
11.3149
Houston, TX 77008
5364 McCulloch Circle
$
25,000
2,209.5
Jul. 25, 2005
25,950.5
51,900.5
$
11.3149
Houston, TX 77056
8824 Rosewood Drive
$
15,000
1,325.5
Sep 12, 2005
N/A
N/A
N/A
Prairie Village, KS 66207
6902 Cherry Hills Road
$
12,500
1,104.5
Jul. 25, 2005
N/A
N/A
N/A
Houston, Texas 77069
401 Oldham Street,
$
35,000
3,093.5
Jul. 25, 2005
N/A
N/A
N/A
Waxahachie, Texas 75165
$
1,137,500
100,531.75
496,061
992,465.5
Date of
Capital
Name
Admission
Mailing Address
Contribution
Common Units
June 24, 2005
Magnetite Asset Investors III
L.L.C.
c/o BlackRock Financial
Management, Inc.
40 East 52
nd
Street
New York, New York 10022
Attention: Jeff Gary
$
2,000,000
176,758.00
September 20, 2005
[ ]
$
125,000
11,047.50
|
||||
|
Name: |
Page | ||||||
ARTICLE I | ||||||
|
||||||
FORMATION OF THE COMPANY | ||||||
|
||||||
Section 1.1
|
Formation | 2 | ||||
Section 1.2
|
Company Name | 2 | ||||
Section 1.3
|
The Certificate, etc | 2 | ||||
Section 1.4
|
Term of Company | 2 | ||||
Section 1.5
|
Registered Agent and Office | 2 | ||||
Section 1.6
|
Principal Place of Business | 2 | ||||
Section 1.7
|
Qualification in Other Jurisdictions | 2 | ||||
Section 1.8
|
Fiscal Year; Taxable Year | 3 | ||||
|
||||||
ARTICLE II | ||||||
|
||||||
PURPOSE AND POWERS OF THE COMPANY | ||||||
Section 2.1
|
Purpose | 3 | ||||
Section 2.2
|
Powers of the Company | 3 | ||||
Section 2.3
|
Certain Tax Matters | 3 | ||||
|
||||||
ARTICLE III | ||||||
|
||||||
MEMBERS AND INTERESTS GENERALLY | ||||||
|
||||||
Section 3.1
|
Powers of Members | 3 | ||||
Section 3.2
|
Interests Generally | 3 | ||||
Section 3.3
|
Meetings of Members | 5 | ||||
Section 3.4
|
Business Transactions of a Member with the Company | 6 | ||||
Section 3.5
|
No Cessation of Membership upon Bankruptcy | 6 | ||||
Section 3.6
|
Additional Members | 6 | ||||
Section 3.7
|
Other Business for Members | 7 | ||||
|
||||||
ARTICLE IV | ||||||
|
||||||
MANAGEMENT | ||||||
|
||||||
Section 4.1
|
Board | 7 | ||||
Section 4.2
|
Meetings of the Board | 8 | ||||
Section 4.3
|
Quorum and Acts of the Board | 8 | ||||
Section 4.4
|
Electronic Communications | 8 | ||||
Section 4.5
|
Committees of Directors | 9 | ||||
Section 4.6
|
Compensation of Directors | 9 | ||||
Section 4.7
|
Resignation | 9 | ||||
Section 4.8
|
Removal of Directors | 9 |
|
Table of Contents
(continued) |
|||||
Page | ||||||
Section 4.9
|
Vacancies | 9 | ||||
Section 4.10
|
Directors as Agents | 10 | ||||
Section 4.11
|
Officers | 10 | ||||
Section 4.12
|
Strategic Planning Committee | 10 | ||||
|
||||||
|
ARTICLE V | |||||
|
||||||
|
INVESTMENT REPRESENTATIONS, WARRANTIES AND COVENANTS | |||||
|
||||||
Section 5.1
|
Representations, Warranties and Covenants of Members | 10 | ||||
Section 5.2
|
Additional Representations and Warranties of Non-Investor Members | 12 | ||||
Section 5.3
|
Additional Representations and Warranties of Investor Members | 12 | ||||
Section 5.4
|
Additional Covenants of Management Members | 13 | ||||
|
||||||
|
ARTICLE VI | |||||
|
||||||
|
CAPITAL ACCOUNTS; CAPITAL CONTRIBUTIONS | |||||
|
||||||
Section 6.1
|
Capital Accounts | 13 | ||||
Section 6.2
|
Adjustments | 13 | ||||
Section 6.3
|
Additional Capital Contributions | 14 | ||||
Section 6.4
|
Negative Capital Accounts | 14 | ||||
|
||||||
|
ARTICLE VII | |||||
|
||||||
|
ADDITIONAL TERMS APPLICABLE TO OVERRIDE UNITS | |||||
|
||||||
Section 7.1
|
Certain Terms | 14 | ||||
Section 7.2
|
Effects of Termination of Employment on Override Units | 15 | ||||
|
||||||
|
ARTICLE VIII | |||||
|
||||||
|
ALLOCATIONS | |||||
|
||||||
Section 8.1
|
Book Allocations of Net Income and Net Loss | 17 | ||||
Section 8.2
|
Special Book Allocations | 17 | ||||
Section 8.3
|
Tax Allocations | 18 | ||||
|
||||||
|
ARTICLE IX | |||||
|
||||||
|
DISTRIBUTIONS | |||||
|
||||||
Section 9.1
|
Distributions Generally | 19 | ||||
Section 9.2
|
Distributions In Kind | 19 | ||||
Section 9.3
|
No Withdrawal of Capital | 19 | ||||
Section 9.4
|
Withholding | 20 |
Page | ||||||
Section 9.5
|
Restricted Distributions | 20 | ||||
Section 9.6
|
Tax Distributions | 20 | ||||
|
||||||
|
ARTICLE X | |||||
|
||||||
|
BOOKS AND RECORDS | |||||
|
||||||
Section 10.1
|
Books, Records and Financial Statements | 21 | ||||
Section 10.2
|
Filings of Returns and Other Writings; Tax Matters Partner | 21 | ||||
Section 10.3
|
Accounting Method | 22 | ||||
|
||||||
|
ARTICLE XI | |||||
|
||||||
|
LIABILITY, EXCULPATION AND INDEMNIFICATION | |||||
|
||||||
Section 11.1
|
Liability | 22 | ||||
Section 11.2
|
Exculpation | 22 | ||||
Section 11.3
|
Fiduciary Duty | 22 | ||||
Section 11.4
|
Indemnification | 23 | ||||
Section 11.5
|
Expenses | 23 | ||||
Section 11.6
|
Severability | 23 | ||||
|
||||||
|
ARTICLE XII | |||||
|
||||||
|
TRANSFERS OF INTERESTS | |||||
|
||||||
Section 12.1
|
Restrictions on Transfers of Interests by Members | 23 | ||||
Section 12.2
|
Overriding Provisions | 24 | ||||
Section 12.3
|
Estate Planning Transfers; Transfers upon Death of a Management Member | 24 | ||||
Section 12.4
|
Involuntary Transfers | 24 | ||||
Section 12.5
|
Assignments | 25 | ||||
Section 12.6
|
Substitute Members | 25 | ||||
Section 12.7
|
Release of Liability | 26 | ||||
|
||||||
|
ARTICLE XIII | |||||
|
||||||
|
DISSOLUTION, LIQUIDATION AND TERMINATION | |||||
|
||||||
Section 13.1
|
Dissolving Events | 26 | ||||
Section 13.2
|
Dissolution and Winding-Up | 26 | ||||
Section 13.3
|
Distributions in Cash or in Kind | 27 | ||||
Section 13.4
|
Termination | 27 | ||||
Section 13.5
|
Claims of the Members | 27 |
Page | ||||||
|
ARTICLE XIV | |||||
|
||||||
|
MISCELLANEOUS | |||||
|
||||||
Section 14.1
|
Notices | 27 | ||||
Section 14.2
|
Securities Act Matters | 28 | ||||
Section 14.3
|
Headings | 29 | ||||
Section 14.4
|
Entire Agreement | 29 | ||||
Section 14.5
|
Counterparts | 29 | ||||
Section 14.6
|
Governing Law; Attorneys Fees | 29 | ||||
Section 14.7
|
Waivers | 29 | ||||
Section 14.8
|
Invalidity of Provision | 29 | ||||
Section 14.9
|
Further Actions | 29 | ||||
Section 14.10
|
Amendments | 30 | ||||
Section 14.11
|
No Third Party Beneficiaries | 30 | ||||
Section 14.12
|
Injunctive Relief | 30 | ||||
Section 14.13
|
Power of Attorney | 31 | ||||
|
||||||
|
ARTICLE XV | |||||
|
||||||
|
DEFINED TERMS | |||||
|
||||||
Section 15.1
|
Definitions | 31 |
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Percentage of such | ||||
Inactive Management | ||||
Members Operating Units | ||||
If the termination occurs | to be Forfeited | |||
Before the second anniversary of the Issuance
Date of such Inactive Management Members
Operating Units
|
100 | % | ||
|
||||
On or after the second anniversary, but before
the third anniversary, of the Issuance Date of
such Inactive Management Members Operating Units
|
75 | % | ||
|
||||
On or after the third anniversary, but before the
fourth anniversary, of the Issuance Date of such
Inactive Management Members Operating Units
|
50 | % | ||
|
||||
On or after the fourth anniversary, but before
the fifth anniversary, of the Issuance Date of
such Inactive Management Members Operating Units
|
25 | % | ||
|
||||
On or after the fifth anniversary of the Issuance
Date of such Inactive Management Members
Operating Units
|
0 | % |
16
Percentage of such | ||||
Inactive Management | ||||
Members Value Units | ||||
Not Subject to Forfeiture | ||||
Pursuant to Section | ||||
If death or Disability occurs | 7.2(a)(ii) | |||
Before the second anniversary of the Issuance
Date of such Inactive Management Members Value
Units
|
0 | % | ||
|
||||
On or after the second anniversary, but before
the third anniversary, of the Issuance Date of
such Inactive Management Members Value Units
|
25 | % | ||
|
||||
On or after the third anniversary, but before
the fourth anniversary, of the Issuance Date of
such Inactive Management Members Value Units
|
50 | % | ||
|
||||
On or after the fourth anniversary, but before
the fifth anniversary, of the Issuance Date of
such Inactive Management Members Value Units
|
75 | % | ||
|
||||
On or after the fifth anniversary of the
Issuance Date of such Inactive Management
Members Value Units
|
100 | % |
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
(a) | the sale, transfer or other disposition by the Investor Members to one or more Persons that are not, immediately prior to such sale, Affiliates of the Company or any Investor Member of all of the Interests of the Company beneficially owned by the Investor Members as of the date of such transaction; or | ||
(b) | the sale, transfer or other disposition of all of the assets of the Company and its Subsidiaries, taken as a whole, to one or more Persons that are not, immediately prior to such sale, transfer or other disposition, Affiliates of the Company or any Investor Member. |
(a) | for purposes of determining the value of any property owned by, contributed to or distributed by the Company, ( i ) in the case of publicly-traded securities, the average of their last sales prices on the applicable trading exchange or quotation system on each trading day during the five trading-day period ending on such date and ( ii ) in the case of any other property, the fair market value of such property, as determined in good faith by the Board, or | ||
(b) | for purposes of determining the value of any Members Interest in connection with Section 12.4 (Involuntary Transfers), ( i ) the fair market value of such Interest as reflected in the most recent appraisal report prepared, at the request of the Board, by an independent valuation consultant or appraiser of recognized national standing, reasonably satisfactory to the Board, or ( ii ) in the event no such appraisal exists or the date of such report is more than one year prior to the date of determination, the fair market value of such Interest as determined in good faith by the Board. |
34
35
36
(a) | without the Management Members prior written consent, a reduction by the Company or any such Subsidiary of his or her current salary, other than any such reduction which is part of a general salary reduction or other concessionary arrangement affecting all employees or affecting the group of employees of which the Management Member is a member (after receipt by the Company of written notice from such Management Member and a 20-day cure period); or | ||
(b) | the taking of any action by the Company or any such Subsidiary that would substantially diminish the aggregate value of the benefits provided him or her under the Companys or such Subsidiarys accident, disability, life insurance and any other employee benefit plans in which he or she was participating on the date of his or her execution of this Agreement, other than any such reduction which is ( i ) required by law, ( ii ) implemented in connection with a general concessionary arrangement affecting all employees or affecting the group of employees of which the Management Member is a member, ( iii ) generally applicable to all beneficiaries of such plans (after receipt by the Company of written notice and a 20-day cure period) or ( iv ) in accordance with the terms of any such plan. |
37
38
INVESTOR MEMBERS | ||||||||||
|
||||||||||
GS CAPITAL PARTNERS V FUND, L.P. | ||||||||||
|
||||||||||
By: | GSCP V Advisors, L.L.C., its General Partner | |||||||||
|
||||||||||
|
By: | |||||||||
|
Name: | |||||||||
|
Title: | |||||||||
|
||||||||||
GS CAPITAL PARTNERS V OFFSHORE FUND, L.P. | ||||||||||
|
||||||||||
By: | GSCP V Offshore Advisors, L.L.C., | |||||||||
its General Partner | ||||||||||
|
||||||||||
|
By: | |||||||||
|
Name: | |||||||||
|
Title: | |||||||||
|
||||||||||
GS CAPITAL PARTNERS V INSTITUTIONAL, L.P. | ||||||||||
|
||||||||||
By: | GS Advisors V, L.L.C., its General Partner | |||||||||
|
||||||||||
|
By: | |||||||||
|
Name: | |||||||||
|
Title: |
GS CAPITAL PARTNERS V GmbH & CO. KG | ||||||||||
|
||||||||||
By: | Goldman, Sachs Management GP GmbH, | |||||||||
its General Partner | ||||||||||
|
||||||||||
|
By: | |||||||||
|
Name: | |||||||||
|
Title: |
ROBERT W. HAUGEN | ||||||||||
|
||||||||||
WYATT E. JERNIGAN | ||||||||||
|
||||||||||
ALAN K. RUGH | ||||||||||
|
||||||||||
DANIEL J. DALY, JR. |
OUTSIDE MEMBERS | ||||||||||
|
||||||||||
WESLEY CLARK |
Name
Date of Admission
Mailing Address
Capital Contribution
Common Units
, 2007
c/o GS Capital Partners V, L.P.
$
67,303,592.42
5,948,244
85 Broad Street
New York, New York 10004
Attention: Kenneth Pontarelli
Facsimile No.: (212) 357-5505
, 2007
c/o GS Capital Partners V, L.P.
$
34,766,224.76
3,072,615
85 Broad Street
New York, New York 10004
Attention: Kenneth Pontarelli
Facsimile No.: (212) 357-5505
, 2007
c/o GS Capital Partners V, L.P.
$
23,079,323.46
2,039,735
85 Broad Street
New York, New York 10004
Attention: Kenneth Pontarelli
Facsimile No.: (212) 357-5505
, 2007
c/o GS Capital Partners V, L.P.
$
2,668,359.36
235,827
85 Broad Street
New York, New York 10004
Attention: Kenneth Pontarelli
Facsimile No.: (212) 357-5505
$
127,817,500.00
11,296,421
Override Units
Date of
Capital
Common
Operating
Value
Benchmark
Name
Admission
Mailing Address
Contribution
Units
Issuance Date
Units
Units
Amount
, 2007
806 Skimmer Court
$
325,000
28,723
Jul. 25, 2005
N/A
N/A
N/A
Sugar Land, TX 77478
, 2007
806 Skimmer Court
N/A
N/A
Jul. 25, 2005
78,954.5
157,909.25
$
11.3149
Sugar Land, TX 77478
Dec. 29, 2006
18,123
36,241.5
$
34.72
, 2007
806 Skimmer Court
N/A
N/A
Jul. 25, 2005
78,954.5
157,909.25
$
11.3149
Sugar Land, TX 77478
Dec. 29, 2006
18,123
36,241.5
$
34.72
, 2007
15714 Quail Ridge Drive
$
200,000
17,676
Jul. 25, 2005
70,092.5
140,185.5
$
11.3149
Smithville, MO 64089
, 2007
8112 NE 73rd Terrace
$
125,000
11,047.5
Jul. 25, 2005
35,982.5
71,965.5
$
11.3149
Kansas City, MO 64158
, 2007
1208 West 2nd Street
$
125,000
11,047.5
Jul. 25, 2005
35,982.5
71,965.5
$
11.3149
Coffeyville, KS 67337
, 2007
4704 Cherry Hills Court
$
125,000
11,047.5
Jul. 25, 2005
35,982.5
71,965.5
$
11.3149
Lawrence, KS 66047
, 2007
5610 Lone Cedar Drive
$
50,000
4,419
Jul. 25, 2005
35,982.5
71,965.5
$
11.3149
Kingwood, TX 77478
, 2007
250 South Post Oak Lane
$
50,000
4,419
Jul. 25, 2005
35,982.5
71,965.5
$
11.3149
Houston, TX 77056
, 2007
2003 Sea King Street
$
50,000
4,419
Jul. 25, 2005
25,950.5
51,900.5
$
11.3149
Houston, TX 77008
, 2007
5364 McCulloch Circle
$
25,000
2,209.5
Jul. 25, 2005
25,950.5
51,900.5
$
11.3149
Houston, TX 77056
Override Units
Date of
Capital
Common
Operating
Value
Benchmark
Name
Admission
Mailing Address
Contribution
Units
Issuance Date
Units
Units
Amount
, 2007
8824 Rosewood Drive
$
15,000
1,325.5
Sep 12, 2005
N/A
N/A
N/A
Prairie Village, KS 66207
, 2007
6902 Cherry Hills Road
$
12,500
1,104.5
Jul. 25, 2005
N/A
N/A
N/A
Houston, Texas 77069
, 2007
401 Oldham Street,
$
35,000
3,093.5
Jul. 25, 2005
N/A
N/A
N/A
Waxahachie, Texas 75165
$
1,137,500
100,531.75
496,061
992,465.5
Date of
Capital
Name
Admission
Mailing Address
Contribution
Common Units
, 2007
[ ]
$
125,000
11,047.5
|
|
Page | ||||||
ARTICLE I
|
||||||
FORMATION OF THE COMPANY
|
||||||
Section 1.1 |
Formation
|
1 | ||||
Section 1.2 |
Company Name
|
1 | ||||
Section 1.3 |
The Certificate, etc
|
1 | ||||
Section 1.4 |
Term of Company
|
2 | ||||
Section 1.5 |
Registered Agent and Office
|
2 | ||||
Section 1.6 |
Principal Place of Business
|
2 | ||||
Section 1.7 |
Qualification in Other Jurisdictions
|
2 | ||||
Section 1.8 |
Fiscal Year; Taxable Year
|
2 | ||||
ARTICLE II
|
||||||
PURPOSE AND POWERS OF THE COMPANY
|
||||||
Section 2.1 |
Purpose
|
2 | ||||
Section 2.2 |
Powers of the Company
|
2 | ||||
Section 2.3 |
Certain Tax Matters
|
2 | ||||
ARTICLE III
|
||||||
MEMBERS AND INTERESTS GENERALLY
|
||||||
Section 3.1 |
Powers of Members
|
3 | ||||
Section 3.2 |
Interests Generally
|
3 | ||||
Section 3.3 |
Meetings of Members.
|
4 | ||||
Section 3.4 |
Business Transactions of a Member with the Company
|
5 | ||||
Section 3.5 |
No Cessation of Membership upon Bankruptcy
|
5 | ||||
Section 3.6 |
Additional Members.
|
5 | ||||
Section 3.7 |
Preemptive Rights.
|
6 | ||||
Section 3.8 |
Other Business for Members.
|
7 | ||||
ARTICLE IV
|
||||||
MANAGEMENT
|
||||||
Section 4.1 |
Board.
|
8 | ||||
Section 4.2 |
Meetings of the Board
|
9 | ||||
Section 4.3 |
Quorum and Acts of the Board.
|
10 | ||||
Section 4.4 |
Electronic Communications
|
10 | ||||
Section 4.5 |
Committees of Directors
|
10 | ||||
Section 4.6 |
Compensation of Directors
|
11 | ||||
Section 4.7 |
Resignation
|
11 | ||||
Section 4.8 |
Removal of Directors
|
11 |
Page | ||||||
Section 4.9 |
Vacancies
|
12 | ||||
Section 4.10 |
Directors as Agents
|
12 | ||||
Section 4.11 |
Officers
|
12 | ||||
Section 4.12 |
Certain Covenants
|
12 | ||||
Section 4.13 |
Strategic Planning Committee
|
15 | ||||
ARTICLE V
|
||||||
INVESTMENT REPRESENTATIONS, WARRANTIES AND COVENANTS
|
||||||
Section 5.1 |
Representations, Warranties and Covenants of Members.
|
15 | ||||
Section 5.2 |
Additional Representations and Warranties of Non-Investor Members
|
16 | ||||
Section 5.3 |
Additional Representations and Warranties of Investor Members.
|
17 | ||||
Section 5.4 |
Additional Covenants of Management Members
|
18 | ||||
ARTICLE VI
|
||||||
CAPITAL ACCOUNTS; CAPITAL CONTRIBUTIONS
|
||||||
Section 6.1 |
Capital Accounts
|
18 | ||||
Section 6.2 |
Adjustments.
|
18 | ||||
Section 6.3 |
Additional Capital Contributions
|
19 | ||||
Section 6.4 |
Negative Capital Accounts
|
19 | ||||
ARTICLE VII
|
||||||
ADDITIONAL TERMS APPLICABLE TO OVERRIDE UNITS
|
||||||
Section 7.1 |
Certain Terms.
|
19 | ||||
Section 7.2 |
Inactive Management Members
|
19 | ||||
ARTICLE VIII
|
||||||
ALLOCATIONS
|
||||||
Section 8.1 |
Book Allocations of Net Income and Net Loss.
|
20 | ||||
Section 8.2 |
Special Book Allocations.
|
20 | ||||
Section 8.3 |
Tax Allocations
|
21 | ||||
ARTICLE IX
|
||||||
DISTRIBUTIONS
|
||||||
Section 9.1 |
Distributions Generally.
|
21 | ||||
Section 9.2 |
Distributions In Kind
|
22 | ||||
Section 9.3 |
No Withdrawal of Capital
|
22 |
Page | ||||||
Section 9.4 |
Withholding.
|
22 | ||||
Section 9.5 |
Restricted Distributions
|
23 | ||||
Section 9.6 |
Tax Distributions
|
23 | ||||
ARTICLE X
|
||||||
BOOKS AND RECORDS
|
||||||
Section 10.1 |
Books, Records and Financial Statements
|
23 | ||||
Section 10.2 |
Filings of Returns and Other Writings; Tax Matters Partner.
|
24 | ||||
Section 10.3 |
Accounting Method
|
24 | ||||
ARTICLE XI
|
||||||
LIABILITY, EXCULPATION AND INDEMNIFICATION
|
||||||
Section 11.1 |
Liability
|
25 | ||||
Section 11.2 |
Exculpation
|
25 | ||||
Section 11.3 |
Fiduciary Duty
|
25 | ||||
Section 11.4 |
Indemnification
|
25 | ||||
Section 11.5 |
Expenses
|
25 | ||||
Section 11.6 |
Severability
|
26 | ||||
ARTICLE XII
|
||||||
TRANSFERS OF INTERESTS
|
||||||
Section 12.1 |
Restrictions on Transfers of Interests by Members.
|
26 | ||||
Section 12.2 |
Overriding Provisions.
|
27 | ||||
Section 12.3 |
Estate Planning Transfers; Transfers upon Death of a Management Member
|
27 | ||||
Section 12.4 |
Involuntary Transfers
|
27 | ||||
Section 12.5 |
Assignments.
|
28 | ||||
Section 12.6 |
Substitute Members
|
29 | ||||
Section 12.7 |
Release of Liability
|
29 | ||||
Section 12.8 |
Right of First Offer; Tag-Along and Drag-Along Rights.
|
29 | ||||
Section 12.9 |
Initial Public Offering.
|
33 | ||||
ARTICLE XIII
|
||||||
DISSOLUTION, LIQUIDATION AND TERMINATION
|
||||||
Section 13.1 |
Dissolving Events
|
34 | ||||
Section 13.2 |
Dissolution and Winding-Up
|
35 | ||||
Section 13.3 |
Distributions in Cash or in Kind
|
35 | ||||
Section 13.4 |
Termination
|
36 | ||||
Section 13.5 |
Claims of the Members
|
36 |
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
(a) | the sale, transfer or other disposition by the Investor Members to one or more Persons that are not, immediately prior to such sale, Affiliates of the Company or any Investor Member of all of the Interests of the Company beneficially owned by the Investor Members as of the date of such transaction; or | ||
(b) | the sale, transfer or other disposition of all of the assets of the Company and its Subsidiaries, taken as a whole, to one or more Persons that are not, immediately prior to such sale, transfer or other disposition, Affiliates of the Company or any Investor Member. |
(a) | for purposes of determining the value of any property owned by, contributed to or distributed by the Company, ( i ) in the case of publicly-traded securities, the average of their last sales prices on the applicable trading exchange or quotation system on each trading day during the five trading-day period ending on such date and ( ii ) in the case of any other property, the fair market value of such property, as determined in good faith by the Board, or | ||
(b) | for purposes of determining the value of any Members Interest in connection with Section 12.4 (Involuntary Transfers), ( i ) the fair market value of such Interest as reflected in the most recent appraisal report prepared, at the request of the Board, by an independent valuation consultant or appraiser of recognized national standing, reasonably satisfactory to each of GSCP and Kelso, or ( ii ) in the event no such appraisal exists or the date of such report is more than one year prior to the date of determination, the fair market value of such Interest as determined in good faith by the Board. |
43
44
45
46
47
INVESTOR MEMBERS | ||||||||
|
||||||||
GS CAPITAL PARTNERS V FUND, L.P. | ||||||||
|
||||||||
By: | GSCP V Advisors, L.L.C., its General Partner | |||||||
|
||||||||
|
By: | |||||||
|
Name: | |||||||
|
Title: | |||||||
|
||||||||
GS CAPITAL PARTNERS V OFFSHORE FUND, L.P. | ||||||||
|
||||||||
By: | GSCP V Offshore Advisors, L.L.C., | |||||||
its General Partner | ||||||||
|
||||||||
|
By: | |||||||
|
Name: | |||||||
|
Title: | |||||||
|
||||||||
GS CAPITAL PARTNERS V INSTITUTIONAL, L.P. | ||||||||
|
||||||||
By: | GS Advisors V, L.L.C., its General Partner | |||||||
|
||||||||
|
By: | |||||||
|
Name: | |||||||
|
Title: |
|
||||||||
ROBERT W. HAUGEN | ||||||||
|
||||||||
|
||||||||
WYATT E. JERNIGAN | ||||||||
|
||||||||
|
||||||||
ALAN K. RUGH | ||||||||
|
||||||||
|
||||||||
DANIEL J. DALY, JR. |
OUTSIDE MEMBERS | ||||||||
|
||||||||
MAGNETITE ASSET INVESTORS III L.L.C. | ||||||||
|
||||||||
By: | BlackRock Financial Management, Inc., | |||||||
as Managing Member | ||||||||
|
||||||||
|
By: | |||||||
|
Name: | |||||||
|
Title: | |||||||
|
||||||||
|
||||||||
WESLEY CLARK |
Date of
Capital
Name
Admission
Mailing Address
Contribution
Common Units
Fund, L.P.
, 2007
c/o GS Capital Partners V, L.P.
85 Broad Street
New York, New York 10004
Attention: Kenneth Pontarelli
Facsimile No.: (212) 357-5505
$
Offshore Fund,
L.P.
, 2007
c/o GS Capital Partners V, L.P.
85 Broad Street
New York, New York 10004
Attention: Kenneth Pontarelli
Facsimile No.: (212) 357-5505
$
Institutional,
L.P.
, 2007
c/o GS Capital Partners V, L.P.
85 Broad Street
New York, New York 10004
Attention: Kenneth Pontarelli
Facsimile No.: (212) 357-5505
$
GmbH & Co. KG
, 2007
c/o GS Capital Partners V, L.P.
85 Broad Street
New York, New York 10004
Attention: Kenneth Pontarelli
Facsimile No.: (212) 357-5505
$
$
Name
Date of Admission
Mailing Address
Capital Contribution
Common Units
, 2007
c/o Kelso & Company, L.P.
320 Park Avenue, 24th Floor
New York, New York 10022
Attention: James J. Connors II
Fax: (212) 223-2379
$
, 2007
c/o Kelso & Company, L.P.
320 Park Avenue, 24th Floor
New York, New York 10022
Attention: James J. Connors II
Fax: (212) 223-2379
$
$
Capital
Common
Override
Benchmark
Name
Date of Admission
Mailing Address
Contribution
Units
Units
Amount
, 2007
806 Skimmer Court
Sugar Land, TX 77478
$
$
2007
Exempt Trust
, 2007
806 Skimmer Court
Sugar Land, TX 77478
$
$
Exempt Family Trust
, 2007
806 Skimmer Court
Sugar Land, TX 77478
$
$
, 2007
15714 Quail Ridge
Drive
Smithville, MO 64089
$
$
, 2007
8112 NE 73rd Terrace
Kansas City, MO 64158
$
$
, 2007
1208 West 2nd Street
Coffeyville, KS 67337
$
$
, 2007
4704 Cherry Hills
Court
Lawrence, KS 66047
$
$
, 2007
5610 Lone Cedar Drive
Kingwood, TX 77478
$
$
, 2007
250 South Post Oak
Lane
Houston, TX 77056
$
$
, 2007
2003 Sea King Street
Houston, TX 77008
$
$
, 2007
5364 McCulloch Circle
Houston, TX 77056
$
$
$
Date of
Capital
Name
Admission
Mailing Address
Contribution
Common Units
, 2007
Magnetite Asset Investors III L.L.C.
c/o BlackRock Financial Management,
Inc.
40 East 52
nd
Street
New York, New York 10022
Attention: Jeff Gary
$
, 2007
$
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Name: |
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-3-
-4-
COFFEYVILLE ACQUISITION LLC | ||||||
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By: | |||||
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Title: | |||||
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GS CAPITAL PARTNERS V FUND, L.P. | ||||||
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By: GSCP V Advisors, L.L.C., its General Partner | ||||||
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By: | |||||
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Title: | |||||
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GS CAPITAL PARTNERS V OFFSHORE FUND, L.P. | ||||||
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By: GSCP V Offshore Advisors, L.L.C., its General Partner | ||||||
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By: | |||||
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Title: |
[Signature Page to Redemption Agreement]
GS CAPITAL PARTNERS V INSTITUTIONAL, L.P. | ||||||
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By: GS Advisors V, L.L.C., its General Partner | ||||||
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By: | |||||
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Title: | |||||
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GS CAPITAL PARTNERS V GmbH & CO. KG | ||||||
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By: Goldman, Sachs Management GP GmbH,
its General Partner |
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By: | |||||
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|||||
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Title: | |||||
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[Signature Page to Redemption Agreement]
JOHN J. LIPINSKI | ||||||
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THE TARA K. LIPINSKI 2007 EXEMPT TRUST | ||||||
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By: | |||||
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||||||
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Name: Tara K. Lipinski
Title: Trustee |
|||||
|
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THE LIPINSKI 2007 EXEMPT FAMILY TRUST | ||||||
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By: | |||||
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||||||
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Name: Patricia E. Lipinski
Title: Trustee |
|||||
|
||||||
STANLEY A. RIEMANN | ||||||
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JAMES T. RENS | ||||||
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KEITH D. OSBORN | ||||||
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KEVAN A. VICK | ||||||
|
||||||
WESLEY CLARK |
[Signature Page to Redemption Agreement]
Units of
Membership Interests in the Company
Common
Operating
Value
Name
Units
Units
Units
5,948,244
N/A
N/A
3,072,615
N/A
N/A
2,039,735
N/A
N/A
235,827
N/A
N/A
57,446
N/A
N/A
157,909
315,818.5
N/A
36,246
72,483
157,909
315,818.5
N/A
36,246
72,483
35,352
140,185
280,371
22,095
71,965
143,931
22,095
71,965
143,931
22,095
71,965
143,931
8,838
71,965
143,931
8,838
71,965
143,931
8,838
51,901
103,801
4,419
51,901
103,801
2,651
N/A
N/A
2,209
N/A
N/A
6,187
N/A
N/A
22,095
N/A
N/A
11,519,579
992,122
1,984,231
Units of
Membership Interests in the Company
Common
Operating
Value
Name
Units
Units
Units
5,948,244
N/A
N/A
3,072,615
N/A
N/A
2,039,735
N/A
N/A
235,827
N/A
N/A
57,446
N/A
N/A
78,954.5
157,909.25
N/A
18,123
36,241.5
78,954.5
157,909.25
N/A
18,123
36,241.5
17,676
70,092.5
140,185.5
11,047.5
35,982.5
71,965.5
11,047.5
35,982.5
71,965.5
11,047.5
35,982.5
71,965.5
4,419
35,982.5
71,965.5
4,419
35,982.5
71,965.5
4,419
25,950.5
51,900.5
2,209.5
25,950.5
51,900.5
1,325.5
N/A
N/A
1,104.5
N/A
N/A
3,093.5
N/A
N/A
11,047.50
N/A
N/A
11,408,000.00
496,061
992,115.50
Units of
Membership Interests in CA II
Common
Operating
Value
Name
Units
Units
Units
5,948,244
N/A
N/A
3,072,615
N/A
N/A
2,039,735
N/A
N/A
235,827
N/A
N/A
28,723
N/A
N/A
78,954.5
157,909.25
N/A
18,123
36,241.5
78,954.5
157,909.25
N/A
18,123
36,241.5
17,676
70,092.5
140,185.5
11,047.5
35,982.5
71,965.5
11,047.5
35,982.5
71,965.5
11,047.5
35,982.5
71,965.5
4,419
35,982.5
71,965.5
4,419
35,982.5
71,965.5
4,419
25,950.5
51,900.5
2,209.5
25,950.5
51,900.5
1,325.5
N/A
N/A
1,104.5
N/A
N/A
3,093.5
N/A
N/A
11,047.50
N/A
N/A
11,408,000.00
496,061
992,115.50
Page | ||||||
ARTICLE I
|
REPRESENTATIONS AND WARRANTIES | 1 | ||||
|
||||||
Section 1.1
|
Due Organization; Power and Authority, etc | 1 | ||||
Section 1.2
|
Authorization; Enforceability | 1 | ||||
Section 1.3
|
Compliance with Laws and Other Instruments | 2 | ||||
|
||||||
ARTICLE II
|
GOVERNANCE | 2 | ||||
|
||||||
Section 2.1
|
Board of Directors | 2 | ||||
Section 2.2
|
Additional Management Provisions | 4 | ||||
|
||||||
ARTICLE III
|
TRANSFERS | 4 | ||||
|
||||||
Section 3.1
|
Limitations on Transfer | 4 | ||||
Section 3.2
|
Tag Along Rights | 6 | ||||
Section 3.3
|
Substitute Stockholder | 7 | ||||
Section 3.4
|
Release of Liability | 7 | ||||
Section 3.5
|
Termination of Transfer Restrictions | 7 | ||||
|
||||||
ARTICLE IV
|
GENERAL PROVISIONS | 7 | ||||
|
||||||
Section 4.1
|
Termination | 7 | ||||
Section 4.2
|
Subsequent Acquisition of Shares | 7 | ||||
Section 4.3
|
Waiver by Stockholders | 8 | ||||
Section 4.4
|
Freedom to Pursue Opportunities | 8 | ||||
Section 4.5
|
Notices | 8 | ||||
Section 4.6
|
Securities Act Matters | 9 | ||||
Section 4.7
|
Headings | 9 | ||||
Section 4.8
|
Entire Agreement | 10 | ||||
Section 4.9
|
Counterparts | 10 | ||||
Section 4.10
|
Governing Law; Attorneys Fees | 10 | ||||
Section 4.11
|
Waivers | 10 | ||||
Section 4.12
|
Invalidity of Provision | 10 | ||||
Section 4.13
|
Amendments | 10 | ||||
Section 4.14
|
Assignments | 10 | ||||
Section 4.15
|
No Third Party Beneficiaries | 11 | ||||
Section 4.16
|
Specific Performance | 11 | ||||
Section 4.17
|
Marketing Materials | 11 | ||||
Section 4.18
|
Notice of Events | 11 | ||||
|
||||||
ARTICLE V
|
DEFINED TERMS | 11 |
2
3
4
5
6
7
(a) |
If to the Company to:
10 E. Cambridge Circle, Ste. 250 Kansas City, Kansas 66103 Attention: Edmund S. Gross Facsimile No.: 913-981-0000 |
8
(b) |
If to CA to:
c/o Kelso & Company, L.P. 320 Park Avenue, 24 th Floor New York, New York 10022 Attention: James J. Connors II Facsimile No.: 212-223-2379 with a copy (which shall not constitute notice) to: Debevoise & Plimpton LLP 919 Third Avenue New York, New York 10022 Attention: Kevin M. Schmidt Facsimile No.: (212) 909-6836 |
||
(c) |
If to CA II to:
c/o GS Capital Partners V Fund, L.P. c/o Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 Attention: Kenneth Pontarelli Facsimile No.: 212-357-5505 with a copy (which shall not constitute notice) to: Fried, Frank, Harris, Shriver & Jacobson LLP One New York Plaza New York, New York 10004 Attention: Robert C. Schwenkel Steven Steinman Facsimile No.: (212) 859-4000 |
9
10
11
12
13
CVR ENERGY, INC.
|
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By: | ||||
Name: | ||||
Title: | ||||
COFFEYVILLE ACQUISITION LLC
|
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By: | ||||
Name: | ||||
Title: | ||||
COFFEYVILLE ACQUISITION II LLC
|
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By: | ||||
Name: | ||||
Title: | ||||
Page | ||||||||||
Section 1. | Registrations Upon Request | 1 | ||||||||
|
1.1. | Requests by the Stockholders | 1 | |||||||
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1.2. | Registration Statement Form | 4 | |||||||
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1.3. | Expenses | 4 | |||||||
|
1.4. | Effective Registration Statement | 5 | |||||||
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1.5. | Right to Withdraw | 5 | |||||||
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1.6. | Priority in Demand Registrations | 5 | |||||||
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Section 2. | Incidental Registrations | 6 | ||||||||
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Section 3. | Registration Procedures | 8 | ||||||||
|
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Section 4. | Underwritten Offerings | 13 | ||||||||
|
4.1. | Underwriting Agreement | 13 | |||||||
|
4.2. | Selection of Underwriters | 14 | |||||||
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Section 5. | Holdback Agreements | 14 | ||||||||
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Section 6. | Preparation; Reasonable Investigation | 15 | ||||||||
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Section 7. | No Grant of Future Registration Rights | 16 | ||||||||
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Section 8. | Indemnification | 16 | ||||||||
|
8.1. | Indemnification by the Company | 16 | |||||||
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8.2. | Indemnification by the Sellers | 17 | |||||||
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8.3. | Notices of Claims, etc | 17 | |||||||
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8.4. | Other Indemnification | 18 | |||||||
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8.5. | Indemnification Payments | 18 | |||||||
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8.6. | Other Remedies | 18 | |||||||
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Section 9. | Representations and Warranties | 19 | ||||||||
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Section 10. | Definitions | 20 | ||||||||
|
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Section 11. | Miscellaneous | 22 | ||||||||
|
11.1. | Rule 144, etc | 22 | |||||||
|
11.2. | Successors, Assigns and Transferees | 22 | |||||||
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11.3. | Stock Splits, etc | 23 | |||||||
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11.4. | Amendment and Modification | 23 | |||||||
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11.5. | Governing Law; Venue and Service of Process | 23 | |||||||
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11.6. | Invalidity of Provision | 24 | |||||||
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11.7. | Notices | 24 |
i
11.8. Headings: Execution in Counterparts
|
25 | |||
11.9. Injunctive Relief
|
25 | |||
11.10. Term
|
25 | |||
11.11. Further Assurances
|
26 | |||
11.12. Entire Agreement
|
26 | |||
11.13. No
Third Party Beneficiaries
|
26 |
ii
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
(i) | If to the Company, to it at: |
(ii) | If to CA, to it at: |
24
(iii) | If to CA II, to it at: |
25
26
CVR ENERGY, INC.
|
||||
By: | ||||
Name: | ||||
Title: | ||||
COFFEYVILLE ACQUISITION LLC
|
||||
By: | ||||
Name: | ||||
Title: | ||||
COFFEYVILLE ACQUISITION II LLC
|
||||
By: | ||||
Name: | ||||
Title: | ||||
2
3
4
5
6
7
CVR ENERGY, INC.
|
||||
By: | ||||
Name: | ||||
Title: | ||||
JOHN J. LIPINSKI
|
||||
Very truly yours, | ||||
|
||||
COFFEYVILLE ACQUISITION LLC | ||||
|
||||
|
By | |||
|
||||
|
Name: | |||
|
Title: |
Agreed and accepted: | ||||||||
|
||||||||
GOLDMAN, SACHS & CO. | ||||||||
|
||||||||
|
By: | |||||||
Name: | ||||||||
Title: | ||||||||
|
||||||||
KELSO & COMPANY, L.P. | ||||||||
|
||||||||
By: | Kelso & Companies, Inc., | |||||||
its general partner | ||||||||
|
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|
By: | |||||||
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|
Name: | |||||||
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Title: |
[Signature Page to Letter Agreement]
Page | ||||||
|
||||||
Section 1.
|
Registrations Upon Request | 1 | ||||
1.1.
|
Requests by the Unitholders | 1 | ||||
1.2.
|
Registration Statement Form | 4 | ||||
1.3.
|
Expenses | 5 | ||||
1.4.
|
Effective Registration Statement | 5 | ||||
1.5.
|
Right to Withdraw | 6 | ||||
1.6.
|
Priority in Demand Registrations | 6 | ||||
|
||||||
Section 2.
|
Incidental Registrations | 6 | ||||
|
||||||
Section 3.
|
Registration Procedures | 8 | ||||
|
||||||
Section 4.
|
Underwritten Offerings. | 14 | ||||
4.1.
|
Underwriting Agreement | 14 | ||||
4.2.
|
Selection of Underwriters | 14 | ||||
|
||||||
Section 5.
|
Holdback Agreements. | 15 | ||||
|
||||||
Section 6.
|
Preparation; Reasonable Investigation | 16 | ||||
|
||||||
Section 7.
|
Reserved. | 16 | ||||
|
||||||
Section 8.
|
Indemnification. | 16 | ||||
8.1.
|
Indemnification by the Partnership | 16 | ||||
8.2.
|
Indemnification by the Sellers | 17 | ||||
8.3.
|
Notices of Claims, etc | 18 | ||||
8.4.
|
Other Indemnification | 18 | ||||
8.5.
|
Indemnification Payments | 18 | ||||
8.6.
|
Other Remedies | 19 | ||||
|
||||||
Section 9.
|
Representations and Warranties | 19 | ||||
|
||||||
Section 10.
|
Definitions | 20 | ||||
|
||||||
Section 11.
|
Miscellaneous. | 21 | ||||
11.1.
|
Rule 144, etc | 21 | ||||
11.2.
|
Successors, Assigns and Transferees | 22 | ||||
11.3.
|
Splits, etc | 22 | ||||
11.4.
|
Amendment and Modification | 22 | ||||
11.5.
|
Governing Law; Venue and Service of Process | 23 | ||||
11.6.
|
Invalidity of Provision | 24 | ||||
11.7.
|
Notices | 24 |
i
Page | ||||||
|
||||||
11.8.
|
Headings: Execution in Counterparts | 24 | ||||
11.9.
|
Injunctive Relief | 25 | ||||
11.10.
|
Term | 25 | ||||
11.11.
|
Further Assurances | 25 | ||||
11.12.
|
Entire Agreement | 25 |
ii
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
(i) | If to the Partnership, to it at: |
(ii) | If to the Special General Partner, to it at: |
(iii) | If to the Organizational Limited Partner, to it at: |
24
25
CVR PARTNERS, LP | ||||||
|
||||||
By: CVR GP, LLC, | ||||||
its General Partner | ||||||
|
||||||
|
By: | |||||
|
||||||
|
Name: | |||||
|
Title: | |||||
|
||||||
CVR Special GP, LLC | ||||||
|
||||||
|
By: | |||||
|
Name: | |||||
|
Title: | |||||
|
||||||
CVR LP, LLC | ||||||
|
||||||
|
By: | |||||
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Name: | |||||
|
Title: |
1. | Purpose; Operation . The purpose of the CVR GP, LLC Profit Bonus Plan (the Plan) is to provide an incentive to employees of an Employer who contribute to the Companys success to increase their efforts on behalf of the Company and to promote the success of the Companys business. Participants in the Plan have the opportunity to receive cash payments in respect of their interests in the Plan in the event of certain distributions pursuant to the Parent LLC Agreement to the Members (as defined in the Parent LLC Agreement) of Coffeyville Acquisition III LLC. Whether payments will be made hereunder will depend on the amount of net proceeds realized in connection with the event that gives rise to such distributions. Defined terms are defined in Exhibit A hereto. | |
2. | Administration . The Plan shall be administered by the Committee. The Committee shall have the authority in its discretion, subject to and not inconsistent with the express provisions of the Plan, to administer the Plan and to exercise all the powers and authorities either specifically granted to it under the Plan or necessary or advisable in the administration of the Plan, including, without limitation: |
| the authority to grant Bonus Points; | ||
| to determine the persons to whom and the time or times at which Bonus Points shall be granted; | ||
| to determine the number of Bonus Points to be granted and the terms, conditions and restrictions relating thereto; | ||
| to determine whether, to what extent, and under what circumstances Bonus Points may be settled, cancelled, forfeited, exchanged, or surrendered; | ||
| to make adjustments in the terms and conditions applicable to Bonus Points; | ||
| to determine the size of the Bonus Pool subject to the terms of the Plan; | ||
| to construe and interpret the Plan and Award Agreements; | ||
| to prescribe, amend and rescind rules and regulations relating to the Plan; | ||
| to determine the terms and provisions of the Award Agreements; | ||
| to determine the amounts allocable for payment pursuant to this Plan; and | ||
| to make all other determinations deemed necessary or advisable for the administration of the Plan. |
Company or member of the Committee shall be liable for any action taken or determination made in good faith with respect to the Plan or any Bonus Points granted hereunder. The Committee, with the consent of CVR GP, shall make determinations with respect to cash amounts allocated, if any, to the Plan, with reference to the applicable definitions set forth in Exhibit A ; provided that any and all determinations with respect to cash amounts allocated to the Plan shall be made in the Committees discretion and may vary from such definitions. The Committee may make adjustments in the operation of provisions of the Plan if the Committee determines in its sole discretion that such adjustments will further the intent of such provisions. | ||
3. | Eligibility . Bonus Points may be granted at any time to directors, employees (including officers) and service providers of an Employer, in the discretion of the Committee. | |
4. | Bonus Points; Payment . |
(a) | Awards of Bonus Points . The Committee shall grant Bonus Points to Participants pursuant to Award Agreements. The total number of Bonus Points available for grant hereunder shall initially be 1,000,000 but may be increased in the discretion of the Committee at any time. | ||
(b) | Creation of Bonus Pool . Upon each Distribution, a Bonus Pool shall be created, which shall equal 4.069% of the amount distributed to the Members in the Distribution. Bonus Points shall represent the right to receive a cash payment from the Employer within thirty (30) days following the date on which a Distribution is made. | ||
(c) | Bonus Point Payments . The cash amount payable to a Participant in respect of his or her Bonus Points at any time that a Distribution is made shall be determined by multiplying the amount of the Bonus Pool by a fraction, the numerator of which is the total number of Bonus Points held by the Participant and the denominator of which is 1,000,000; provided that the Committee may in an Award Agreement provide for a limitation on the amount payable in respect of any Participants Bonus Points based on such criteria as the Committee in its sole discretion may determine. Any portion of a Bonus Pool that is not distributed to Participants in connection with any Distribution for any reason (e.g. there are Bonus Points that have not yet been awarded or have been forfeited or are otherwise not outstanding) shall revert to the Company and no Participant shall have any right to such undistributed amount. For the avoidance of doubt, the forgoing is simply a calculation of the amount of cash payment payable to a Participant holding Bonus Points, and in no event shall such Participant, in its capacity as such, have any rights to receive a payment or distribution from Parent. |
5. | Additional Awards; Adjustments . |
2
(b) | In the event of any material acquisition, disposition, merger, recapitalization, capital contribution or other similar event, the Committee may make such adjustment(s) to the terms of the Plan or any awards granted under the Plan as the Committee shall determine appropriate in its sole discretion. |
6. | Termination of Employment . If a Participant ceases to be employed by an Employer (other than in connection with a transfer to another Employer), such Participant shall forfeit all Bonus Points granted to the Participant. | |
7. | General Provisions . |
(a) | Nontransferability . Unless otherwise provided in an Award Agreement, Bonus Points shall not be transferable by a Participant under any circumstances. | ||
(b) | No Right to Continued Employment, etc . Nothing in the Plan or in any Award Agreement entered into pursuant the Plan shall confer upon any Participant the right to continue in the employ of or to be entitled to any remuneration or benefits not set forth in the Plan or such Award Agreement, or to interfere with or limit in any way the right of an Employer to terminate such Participants employment. | ||
(c) | Taxes . The Company or any Affiliate is authorized to withhold from any payment relating to Bonus Points under the Plan amounts of withholding and other taxes due to enable the Company and Participants to satisfy obligations for the payment of withholding taxes and other tax obligations. | ||
(d) | Excise Tax . To the extent that, in the Committees determination, payment to a Participant in respect of his or her Bonus Points would result in application of an excise tax to the Participant pursuant to Section 4999 of the Code, then the payment shall be reduced to such extent to avoid the application of such excise tax; provided that the Company shall use its reasonable best efforts to obtain shareholder approval of the payment in respect of Bonus Points in a manner intended to satisfy requirements of the shareholder approval exception to Section 280G of the Code and the regulations promulgated thereunder, such that payment may be made to the Participant in respect of his or her Bonus Points without the application of the excise tax. | ||
(e) | Amendment and Termination . The Plan shall take effect on the date of its adoption by CVR GP. CVR GP may at any time and from time to time alter, amend, suspend, or terminate the Plan in whole or in part, including but not limited to, amending the Plan and awards to alter the structure of the Plan if CVR GP determines that the Plan is not meeting its objectives. Following any amendment of the Plan, Participants will have only such rights as are provided under such amended Plan and in the event of the termination of the Plan, Participants will have only such rights, if any, as are provided in connection with such termination. | ||
(f) | No Rights to Awards; No Stockholder or Member Rights . No Participant shall have any claim to be granted any Bonus Points under the Plan, and there is no obligation for uniformity of treatment of Participants. A Participant or a |
3
transferee of Bonus Points shall have no rights as a stockholder or member of the Company, an Employer or any Affiliate of any of them. | ||
(g) | Unfunded Status of Awards . The Plan is intended to constitute an unfunded plan for incentive compensation. With respect to any payments not yet made to a Participant pursuant to an award, nothing contained in the Plan or any Award Agreement shall give any such Participant any rights that are greater than those of a general creditor of the Company. | |
(h) | Governing Law . The Plan and all determinations made and actions taken pursuant hereto shall be governed by the laws of the State of Delaware without giving effect to the conflict of laws principles thereof. | |
(i) | Beneficiary . Upon the death of a Participant, all of his of her rights under the Plan shall inure to his or her designated beneficiary or, if no beneficiary has been designated for purposes of this Plan, to his or her estate. | |
(j) | No Guarantee or Assurances . There can be no guarantee that any Distributions will occur under the Parent LLC Agreement or that any payment to any Participant will result under the Plan. | |
(k) | Expiration of Plan . Unless otherwise determined by CVR GP, the Plan shall expire on [ ], 2017 and all outstanding Bonus Points shall then expire and be forfeited with no consideration paid in respect of such forfeiture. |
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CVR PARTNERS, LP | ||||
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By: | CVR GP, LLC, | ||
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its Managing General Partner | |||
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COFFEYVILLE RESOURCES, LLC | ||||
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CVR GP, LLC | ||||
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CVR SPECIAL GP, LLC | ||||
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CVR LP, LLC | ||||
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Section 1. Incidental Registrations
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1 | |||
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Section 2. Registration Procedures
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2 | |||
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Section 3. Underwritten Offerings
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7 | |||
3.1. Underwriting Agreement
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7 | |||
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Section 4. Holdback Agreements
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8 | |||
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Section 5. Preparation; Reasonable Investigation
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9 | |||
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Section 6. Indemnification
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9 | |||
6.1. Indemnification by the Company
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9 | |||
6.2. Indemnification by the Sellers
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10 | |||
6.3. Notices
of Claims, etc.
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11 | |||
6.4. Other Indemnification
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11 | |||
6.5. Indemnification Payments
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11 | |||
6.6. Other Remedies
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12 | |||
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Section 7. Representations and Warranties
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12 | |||
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Section 8. Definitions
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13 | |||
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Section 9. Miscellaneous
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15 | |||
9.1.
Rule 144, etc.
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15 | |||
9.2. Successors, Assigns and Transferees
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15 | |||
9.3. Stock Splits, etc.
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16 | |||
9.4. Amendment and Modification
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16 | |||
9.5. Governing Law; Venue and Service of Process
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17 | |||
9.6. Invalidity of Provision
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17 | |||
9.7. Notices
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17 | |||
9.8. Headings: Execution in Counterparts
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18 | |||
9.9. Injunctive Relief
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18 | |||
9.10. Term
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19 | |||
9.11. Further Assurances
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19 | |||
9.12. Entire Agreement
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19 | |||
9.13. No
Third Party Beneficiaries
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19 |
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CVR ENERGY, INC. | ||||||
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By: | |||||
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Name: | |||||
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Title: | |||||
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John J. Lipinski |
Article 1
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Recognition | 1 | ||||
Article 2
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Binding Effect of Agreement | 2 | ||||
Article 3
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Union Representatives | 2 | ||||
Article 4
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No Strikes | 2 | ||||
Article 5
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No Solicitation or Distribution | 3 | ||||
Article 6
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Management Rights | 3 | ||||
Article 7
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Employment Procedure | 3 | ||||
Article 8
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No Discrimination | 4 | ||||
Article 9
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Discipline and Discharge | 4 | ||||
Article 10
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Drug and Alcohol Policy | 5 | ||||
Article 11
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Safety | 6 | ||||
Article 12
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Education and Training | 7 | ||||
Article 13
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Wages | 7 | ||||
Article 14
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Payroll Week | 7 | ||||
Article 15
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Hours of Work | 7 | ||||
Article 16
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Meals | 8 | ||||
Article 17
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Holidays | 9 | ||||
Article 18
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Paid Time Off | 10 | ||||
Article 19
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Seniority, Layoffs, Transfers, and Promotions | 12 |
- ii -
Article 20
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Leaves of Absence | 12 | ||||
Article 21
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Jury Duty | 13 | ||||
Article 22
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Bereavement Pay | 13 | ||||
Article 23
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Uniforms | 13 | ||||
Article 24
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Indemnification | 14 | ||||
Article 25
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Grievance and Arbitration Procedure | 14 | ||||
Article 26
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Bulletin Boards | 16 | ||||
Article 27
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Individual Agreements | 16 | ||||
Article 28
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Savings Clause | 16 | ||||
Article 29
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Expiration | 16 | ||||
Article 30
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Complete Agreement | 16 | ||||
Exhibit 1
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Job Classifications and Wage Rates | |||||
Exhibit 2
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Testing Procedure | |||||
Exhibit 3
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Medical and Dental Insurance | |||||
Exhibit 4
|
401(k) Plan |
- iii -
- 1 -
- 2 -
- 3 -
- 4 -
- 5 -
- 6 -
- 7 -
- 8 -
A. | If a holiday occurs during an Employees vacation, he shall receive Holiday Pay in addition to Vacation Pay or shall be given an additional days vacation or an extra days pay, at managements discretion. The Holiday Pay shall not exceed eight (8) hours. | ||
B. | If a holiday occurs during a leave of absence, the Employee shall not be paid for that holiday. | ||
C. | Holidays not worked that fall during an Employees regularly scheduled workweek shall be paid at eight (8) hours straight-time and shall be counted as days worked for the purpose of computing overtime for that week. |
1. | If a holiday occurs on a regularly scheduled day off, and the Employee does not work, he shall receive an additional eight (8) hours straight-time pay for that workweek. | ||
2. | Employees required to work on a holiday, shall be paid eight (8) hours straight-time Holiday pay, plus time and a half for the hours worked on that day. |
a. | If an Employee is scheduled to work on a holiday and does not report to work, he shall not receive Holiday Pay without his Department Heads written approval. | ||
b. | To receive Holiday Pay, an otherwise eligible Employee must be at work on the scheduled workday immediately preceding and immediately following the day on which the holiday is observed. If an Employee is absent on one (1) or both of these days because of an illness or injury, the Employer reserves the right to request that the Employee provide medical verification. |
- 9 -
c. | If an Employee leaves work early, he shall receive Holiday Pay only for the actual hours worked unless the reason for the early out is at managements request. In such cases, the Employee shall receive eight (8) hours Holiday Pay plus the hours worked. |
D. | Employees hired from Farmland immediately after the purchase of the refinery shall be entitled to receive holiday pay upon initial hire by the Company. Probationary employees and temporary employees will not be eligible to receive holiday pay. | ||
E. | The Employer shall have the right to determine which employees are scheduled to observe the holidays specified in this Article as non-work days. |
One (1) year of service
|
One (1) week | |
Two (2) to fifteen (15) years of service
|
Two (2) weeks | |
Fifteen (15) to twenty (20) years of service
|
Three (3) weeks | |
Over twenty (20) years of service
|
Four (4) weeks |
A. | Paid vacation eligibility is calculated on the employees anniversary date. For purposes of vacation entitlement, Farmland years of service shall be recognized. Vacation may be taken as it is accrued. Vacation shall be accrued monthly. No advances of vacation time will be made. | ||
B. | Vacation Pay is computed at the Employees current regular hourly rate of pay. | ||
C. | Employees must indicate their desired vacation periods to the Employer between December 1 and 15 of each year for vacations to be taken during the next calendar year. | ||
D. | Vacations shall be taken in increments of at least one (1) full week unless otherwise approved by the Employees Department Head. | ||
E. | An Employees preference shall be considered in scheduling vacations, but the vacation schedule shall be subject to the Employers work requirements. |
1. | When scheduling conflicts occur, the first Employee to submit the request shall have a preference for the requested vacation. In the event that Employees simultaneously submit requests, which would create a scheduling conflict, the Employee with the greatest length of service (including Farmland service) shall have first preference. However, once a vacation request has been approved, the Employee may not be bumped in favor of another who has greater seniority. |
- 10 -
2. |
Vacation time can be carried over from year to year in the
following increments: 1 year to 15 years of service
5 days
greater than 15 years of service 10 days |
||
Carry over of a greater number of days will not be made with the following two (2) exceptions: |
a. | If the Employee is required to forego any portion of his vacation for the Employers convenience, he shall be allowed to carry any unused time forward into the next anniversary year. The Employees Department Head should write a memo to the file documenting the carry over, with a copy to the Union and the Employee. | ||
b. | If an Employee is unable to use all of his accrued vacation due to a work-related disability, the unused portion of the vacation shall carry over into the next anniversary year. |
3. | Pay in lieu of time off shall not be granted unless there is mutual agreement between the Union and the Employer. |
F. | The Employer may block certain periods of time throughout the year when vacation cannot be taken. If the Employer chooses to block certain periods, notice will be given at the time Employees are to indicate there desired vacation periods. |
- 11 -
- 12 -
A. | The Employee shall be paid a sum equal to his straight-time earnings for eight (8) hours as if he were on the job, less the amount actually paid to the Employee for his jury duty service. | ||
B. | Compensation for jury service shall not exceed ten (10) days in any twelve (12)-month period. | ||
C. | Court or jury duty adjustment is applicable only to an Employees regularly scheduled days of work, and no adjustment shall be made for time spent on jury duty on days which the Employee was not regularly scheduled to work. | ||
D. | Time spent on court or jury duty shall not be considered as part of the workweek for purposes of computing overtime. | ||
E. | Employees must present their jury summons to their manager as soon as they receive it. | ||
F. | Employees must notify their manager of the number of hours that they are required to serve jury duty, and their availability to work on their next scheduled shift as soon as possible. |
- 13 -
STEP 1:
|
Matters for discussion must first be orally submitted to the employees immediate supervisor. Such a meeting shall normally include the employee, the local union or unit representative, and the foreman and shall be held within five (5) working days of the time that the aggrieved party has knowledge of the grievance. If the grievance is not resolved at this step, then the employee may file a formal written grievance within five (5) days under the procedures set forth below. If the matter is not resolved, the immediate supervisor shall render a written response to the grievance within five (5) business days after the grievance is presented. | |
|
||
STEP 2:
|
If the grievance is not settled at Step 1 and the Employee or the Union wish to file a written grievance to Step 2 of the grievance procedure, it shall be submitted in writing to the Employees department head. Such an appeal must be submitted in writing to the Employees department head within five (5) business days after receipt of the Companys answer in Step 1, or within five (5) business days of the time when such answer would have been due. The grievance shall state the provision or provisions of this Agreement, which are alleged to have been violated, the relief requested, and the basis upon which the grievant believes the grievance was improperly denied at the previous step in the grievance procedure. The department head shall investigate the grievance and, in the course of such investigation, may offer to discuss the grievance within five (5) days with the grievant and an authorized Union representative at a time mutually agreeable to the parties. If no settlement of the grievance is reached, the department head shall provide a written answer to the grievant and to the Union within ten (10) business days following receipt of the Step 2 grievance. | |
|
||
STEP 3:
|
If the grievance is not settled at Step 2 and the Union wishes to appeal the grievance to Step 3 of the grievance procedure, it shall be submitted in writing (signed by both) to the executive committees representative within five (5) business days after receipt of the Companys answer in Step 2, or within five (5) business days of the time that such answer would have been due. The grievance |
- 14 -
|
shall specifically state the basis upon which the grievant believes the grievance was improperly denied at the previous step in the grievance procedure. An appropriate representative of the executive committee shall investigate the grievance and, in the course of such investigation, shall offer to discuss the grievance within five (5) days with the grievant and an authorized Union representative at a time mutually agreeable to the parties. If no settlement of the grievance is reached, the executive committees representative shall provide a written answer to the grievant and the Union within ten (10) business days following receipt of the Step 3 grievance. | |
|
||
STEP 4:
|
If the grievance is not settled at Step 3 and the Union desires to appeal, the Union may refer the grievance to arbitration, as described below, within ten (10) business days of receipt of the Companys written answer as provided to the Union at Step 3: |
(a) | The parties shall attempt to agree upon an arbitrator within five (5) business days after receipt of the notice of referral. In the event the parties are unable to agree upon the arbitrator within said five (5) business day period, the parties shall jointly request the Federal Mediation and Conciliation Service to submit a panel of five (5) arbitrators. Each party retains the right to reject one (1) panel in its entirety and request that a new panel be submitted. Both the Union and the Company shall have the right to alternately strike names from the panel, with the party requesting arbitration striking the first name. The person remaining shall be the arbitrator. | ||
(b) | The arbitrator shall be notified of his/her selection and shall be requested to set a time and place for the hearing, subject to the availability of Union and Company representatives. | ||
(c) | The Company and the Union shall have the right to request the arbitrator to require the presence of witnesses or documents. The Company and the Union retain the right to employ legal counsel. | ||
(d) | The arbitrator shall submit his/her decision in writing within thirty (30) calendar days following the close of the hearing or the submission of briefs by the parties, which ever is later. This decision shall be final and binding on the Company, the grievant, the Employees covered by this Agreement, and the Union. | ||
(e) | More than one grievance may be submitted to the same arbitrator if both parties mutually agree in writing. | ||
(f) | The fees and expenses of the arbitrator and the cost of a written transcript, if any, shall be divided equally between the Company and the Union; provided, however, that each party shall be responsible for compensating its own representative and witnesses. |
- 15 -
(g) | The arbitrator shall have no power to add to, subtract from, amend, change or alter any of the terms of this Agreement. | ||
(h) | Any Employee covered by this Agreement who is discharged by the Employer and who disputes that his/her discharge was for just cause shall have an affirmative duty to mitigate any potential damages which might result to the Employer, in the event the discharge involved is subject to Grievance and Arbitration, and an arbitrator overrules the discharge. In any dispute over the amount of back pay due to an Employee under an arbitration award, the arbitrator shall have no authority to award any back pay to that Employee unless that Employee or the Union has affirmatively proven by a preponderance of the evidence that the Employee has fulfilled his/her duty to mitigate damages at all times since his/her discharge. |
- 16 -
|
||
Coffeyville
Resources Refining
and Marketing, LLC
|
International Union of Operating Engineers, Local 123 | |
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||
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||
|
International Brotherhood of Boilermakers, Iron Shipbuilders, Blacksmiths, Forgers and helpers, Local 83 | |
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||
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||
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United Association of Journeyman Plumbers and Steamfitters of the United States and Canada, Local No. 441 | |
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International Brotherhood of Electrical Workers, Local No. 226 | |
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International Association of Machinists, Local No. 693 | |
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International Brotherhood of Teamsters, Local No. 823 | |
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President, Coffeyville Metal Trades Council |
Date:
|
Date: | |||||||
|
- 17 -
Wage Rate Increases
Operations Department
Current Wage Rates
Years 3 & 4 & 5
+.75
If qualified 2.5% to base rate
+.50
If qualified 2.5% to base rate
23.78
2.0%
23.22
2.0%
22.45
2.0%
20.78
2.0%
+.75
If qualified 2.5% to base rate
+.50
If qualified 2.5% to base rate
23.78
2%
23.22
2%
22.45
2%
20.78
2%
+.75
If qualified 2.5% to base rate
+.50
If qualified 2.5% to base rate
23.78
2%
23.22
2%
22.45
2%
20.78
2%
+.75
If qualified 2.5% to base rate
+.50
If qualified 2.5% to base rate
22.20
2%
21.64
2%
Wage Rate Increases
Operations Department
Current Wage Rates
Years 3 & 4 & 5
19.93
2%
+.75
If qualified 2.5% to base rate
+.50
If qualified 2.5% to base rate
22.76
2%
21.59
2%
20.78
15.00
+.75
If qualified 2.5% to base rate
+.50
If qualified 2.5% to base rate
22.91
2%
22.91
2%
22.91
2%
22.91
2%
22.91
2%
22.91
2%
23.22
2%
22.55
2%
24.20
2%
16.00
2.5%
14.00
2%
12.00
1. | All Operating Unit Employees must attain Board Operator certification. An Employee must reach this level within 2 years following the availability of the appropriate tests. Each Unit will determine the method of progression through Helper to Board Operator with the Superintendents approval. | ||
2. | Reasonable training time will be provided for jobs that Employees are not familiar. Job Documentation Coordinators, Unit Supervisors, and Unit Superintendents will develop and update these procedures, training material, content requirements, and testing with the appropriate input from Top Operators in each unit. | ||
3. | Testing will be written knowledge and hands on skills testing utilizing the current testing program with appropriate changes. | ||
4. | The maximum time allowed for Top Operator certification is six (6) months following Board certification. This applies to those employees who are selected for these positions. | ||
5. | Unit Progression Test/Fail Rules |
a. | Failure to pass test the first time, employee will receive up to six (6) weeks on the job training. If needed, training assistance with area JDC or other competent personnel will be made available. | ||
b. | Failure to pass test the second time, employee will be subject to discharge. | ||
c. | Re-certification will be required every two (2) years and will be subject to the same test/fail rules. A minimum of four-(4) weeks-prior notification will be given to the employee before the re-certification deadline. Recertification must be achieved prior to the deadline. |
6. | Initial Board Testing Employee Advancement from field job to board job will receive up to six (6) weeks out of the schedule training before testing. Training period will be scheduled at Foremans discretion. |
a. | If an employee fails board test, he/she will receive up to six (6) more weeks out of schedule training. Test will be given again. If employee fails test second time, he/she will be subject to discharge. |
7. | Top Operator and Board Position Evaluation |
a. | Top Operator and Board Position Employees will be evaluated annually to insure they continue to meet the performance standards of their position. Employees who are disqualified by the Area Superintendent will receive outside Operator pay for a maximum of 1 year at which time they must certify at Board Operator. |
b. | Top Operator and Board employees will be selected by the Area Superintendent. Outside Operators will be selected for Top Operator and Board positions. Once they become qualified they will receive the appropriate pay rate. In accepting this pay rate these employees, if selected to become Board or Top Operators, will be required to perform these jobs. Failure to accept either of these jobs after becoming qualified will subject the Employee to discharge. |
1. | Current Journeymen hired will be placed into their craft pay rate. Employees must certify within 3 months of development of new certification tests. These tests will be approved by the Maintenance Superintendent. If an Employee does not pass a certification test their pay will drop to a Yard rate until the Employee passes certification test. Maximum time schedule will be 3 months to pass this test. | ||
2. | Recertification will be required every 2 years.. | ||
3. | Failure to pass a Journeyman certification test after training will be subject to discharge. | ||
4. | Master Mechanic will consist of certification training and/or appropriate testing and will entail specified skill levels in addition to the primary Craft job. |
NOTE: | Turnaround or serious long-term disability will not impact an Employees certification schedule |
Coffeyville Facility
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||||||||||||
Benefit Rates for 2004
|
||||||||||||
|
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Medical ( 20% Employee/80% Employer ) | Distribution of Premium | |||||||||||
BCBS Kansas
|
Employee | Employer | TOTAL | |||||||||
|
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Option 1. $200/$600 deductible
|
||||||||||||
|
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Employee Only
|
$ | 58.45 | $ | 233.78 | $ | 292.23 | ||||||
Employee/Child
|
$ | 111.55 | $ | 446.19 | $ | 557.74 | ||||||
Employee/Spouse
|
$ | 125.92 | $ | 503.68 | $ | 629.60 | ||||||
Family
|
$ | 178.00 | $ | 712.00 | $ | 890.00 | ||||||
|
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Option 2. $500/$1000 deductible
|
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|
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Employee Only
|
$ | 53.09 | $ | 212.34 | $ | 265.43 | ||||||
Employee/Child
|
$ | 102.29 | $ | 409.17 | $ | 511.46 | ||||||
Employee/Spouse
|
$ | 113.96 | $ | 455.82 | $ | 569.78 | ||||||
Family
|
$ | 163.17 | $ | 652.66 | $ | 815.83 | ||||||
|
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Dental ( 20% Employee / 80% Employer )
|
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Delta Dental of Kansas
|
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|
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Employee Only
|
$ | 4.44 | $ | 17.77 | $ | 22.21 | ||||||
Employee/Child
|
$ | 8.53 | $ | 34.10 | $ | 42.63 | ||||||
Employee/Spouse
|
$ | 8.80 | $ | 35.19 | $ | 43.99 | ||||||
Family
|
$ | 14.57 | $ | 58.30 | $ | 72.87 |
ARTICLE 1 SCOPE OF AGREEMENT
|
1 | |||
|
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ARTICLE 2 BINDING EFFECT OF THIS AGREEMENT
|
2 | |||
|
||||
ARTICLE 3 NO STRIKES OR LOCKOUTS; CONTINUITY OF OPERATION
|
2 | |||
|
||||
ARTICLE 4 NO SOLICITATION OR DISTRIBUTION
|
3 | |||
|
||||
ARTICLE 5 MANAGEMENT RIGHTS
|
3 | |||
|
||||
ARTICLE 6 PROBATIONARY PERIOD
|
3 | |||
|
||||
ARTICLE 7 SENIORITY, LAYOFFS, TRANSFERS AND PROMOTIONS
|
3 | |||
|
||||
ARTICLE 8 SCOPE OF WORK AND WORK SCHEDULES
|
4 | |||
|
||||
ARTICLE 9 OVERTIME
|
5 | |||
|
||||
ARTICLE 10 MEAL PERIODS
|
6 | |||
|
||||
ARTICLE 11 HOLIDAYS
|
6 | |||
|
||||
ARTICLE 12 PAID TIME OFF
|
7 | |||
|
||||
ARTICLE 13 JURY DUTY
|
9 | |||
|
||||
ARTICLE 14 PHYSICAL EXAMINATIONS
|
9 | |||
|
||||
ARTICLE 15 DRUG AND ALCOHOL POLICY
|
10 | |||
|
||||
ARTICLE 16 LEAVE OF ABSENCE
|
11 | |||
|
||||
ARTICLE 17 MILITARY LEAVE
|
11 | |||
|
||||
ARTICLE 18 BEREAVEMENT LEAVE
|
11 |
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INITIALS | |
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ARTICLE 19 SAFETY
|
11 | |||
|
||||
ARTICLE 20 EDUCATION AND TRAINING
|
12 | |||
|
||||
ARTICLE 21 NONDISCRIMINATION
|
12 | |||
|
||||
ARTICLE 22 DISCIPLINE AND DISCHARGE
|
13 | |||
|
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ARTICLE 23 GRIEVANCE PROCEDURE
|
14 | |||
|
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ARTICLE 24 BULLETIN BOARD
|
17 | |||
|
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ARTICLE 25 VALIDITY
|
17 | |||
|
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ARTICLE 26 WAGE RATE
|
17 | |||
|
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ARTICLE 27 INSURANCE
|
17 | |||
|
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ARTICLE 28 401K
|
17 | |||
|
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ARTICLE 29 MISCELLANEOUS
|
17 | |||
|
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ARTICLE 30 TERM OF AGREEMENT
|
18 |
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INITIALS | |
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1.1 | The Union is recognized as acting as the sole bargaining agency for all full time employees of the Employer engaged in the operations as set forth in this Article except supervisory employees, foremen, plant protection employees and employees whose duties are of a clerical, professional or technical nature. |
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1.2 | This Agreement shall apply to those operations at the time of entering into this Agreement of Coffeyville Resources Crude Transportation, LLC in Butler, Cowley, Sedgwick, Chautaugua. Elk, Montgomery, Sumner, and Wilson counties in the State of Kansas, and Osage, Washington, Craig, Tulsa, Kay, Pawnee, Creek, Rodgers and Nowata counties in the State of Oklahoma. |
1.3 | In this Agreement, whenever the context so requires, the masculine gender includes the feminine. |
2.1 | This Agreement shall be binding upon the parties signatory hereto. In the event that the Employers business is sold, assigned or transferred, the parties shall have all rights and obligations conferred by law. In the event the facility is sold, the Company shall give notice of the existence of this Agreement to any purchaser. |
3.1 | During the existence of this Agreement, there shall be no lockouts or strikes, including sympathy strikes, picketing, work stoppages, slowdowns or disruptive activity by the Union or by any employee. It is specifically understood and agreed that a work stoppage or disruption of work or slowdown occasioned by the honoring of another unions (whether or not affiliated or associated with the Union) picket line shall constitute a forbidden work stoppage under this Article. |
3.2 | Any and all Employees who violate any of the provisions of this Article may be disciplined by the Company, up to and including discharge. |
3.3 | Upon expiration of the Agreement and because of the nature of the petroleum business, need for safety in the community, and desirability of orderly turnover of the operation there shall be no strike or lockout until after a lapse of a period of not less than 72 hours following a notice of strike or lockout from the party giving such notice to the other party and that this Article 3 shall be considered as in full force until expiration of such period of 72 hours. |
3.4 | Nothing contained herein shall preclude the Company from obtaining judicial restraint and damages in the event any provision of this Article is violated. Any alleged violation of this Article (with the exception of just cause discipline issues) shall not be subject to the provisions of the grievance and arbitration provisions of this Agreement. |
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4.1 | Employees may not solicit or distribute printed materials of any kind to employees during work time or in work areas. Employees who are not on work time may not solicit or distribute printed materials to employees who are on work time. |
5.1 | The Employer has the sole discretion to manage and operate the Company, including all of its operations, activities and the direction of its Employees, with the right to hire, or suspend, discipline or discharge for just cause; to promote, demote, assign work, separate, classify, reclassify, transfer, and layoff Employees, and to recall or relieve Employees from duty and to and maintain discipline and efficiency among Employees; to decide the number of Employees to be utilized; to establish reasonable facility rules; to determine the type and scope of work to be performed; to establish schedules of operation; to determine work schedules of Employees and to change such schedules as determined appropriate; to require overtime; and to determine the methods, procedures and means of operation. The Company shall also have the right to introduce new or improved working methods or facilities. Nothing in this Section is intended to limit any rights of the Company not specifically and expressly covered. |
6.1 | Each employee will be regarded as a probationary employee until he has completed one hundred twenty (120) working days of continuous employment. During this period of probationary employment, the services of the employee may be terminated, with or without cause, and without recourse to the grievance procedure; no advance notice of layoff or termination, or payment in lieu thereof, shall be required; and seniority rights provided elsewhere in this Agreement shall not apply. |
6.2 | The period of probation shall be extended by the number of days the Employee is absent from scheduled work while on probationary status. |
7.1 | Company Seniority is the length of continuous full-time service from an Employees most recent date of hire by the Employer. Company Seniority shall apply to determine eligibility for benefits as specified in this Agreement, including vacation benefits. Farmland service with each employee hired in conjunction with the sale of the facility from Farmland to the Employer shall be credited as Company seniority. |
7.2 | The following categories of seniority will be established: The Employees date of hire will establish his seniority based upon his successful completion of his probationary |
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period. Company seniority will be utilized in the event of layoff or recall, subject to the
ability and qualifications of the employee to
perform the duties of the position in question. |
7.3 | Layoff and Rehire . In the event layoffs become necessary, which Employees will be laid off or retained and which Employees shall be recalled shall be determined by the appropriate Company seniority. An employee whose position is eliminated due to a reduction in force or is bumped by a senior qualified employee will apply the following procedure: the employee may displace the most junior employee in his current classification first if he is qualified. If he is not qualified to perform the work, he may displace the most junior employee in each lower classification he is qualified to perform until he has obtained a job or is laid off from the facility. |
7.4 | Temporary Transfers . The Employer, in its sole discretion, may transfer Employees temporarily between shifts and between jobs and departments in order to maintain efficient and/or economical operations of the system. Temporarily as used in the Article is defined and understood to mean any period of time, which does not exceed thirty (30) consecutive work days provided, however, that by mutual agreement between the Company and the Union, the period of time may be extended. Transferred employees will receive either the rate of pay for the position to which he is transferred or his regular rate of pay, whichever is higher, for no more than thirty (30) days. |
7.5 | With regard to the electrician and welder positions (or trainee positions for said positions), the Employer shall exercise its management right to place and/or promote those individuals who, in the sole discretion of the Employer, are the most qualified to fill available position(s). With respect to these electrician and welder positions, in the event that Management, in its sole discretion, deems individuals to be equally qualified, seniority shall be used as the determining factor. For all other positions, seniority shall be used to determine placement into available positions where employees are minimally qualified for any such available positions. Whenever practicable, Management shall post available job openings for all interested Employees to apply. Said posting shall state the minimum qualifications for the available opening. |
7.6 | An Employee voluntarily leaving the service of the Employer or discharged for cause shall forfeit all seniority and service rights, and shall, if he is reemployed be considered as a new Employee. |
8.1 | No foreman or supervisor shall, except in the case of emergencies, training employees, or in the interest of avoiding accidents, do any work peculiar to any job classification, the performance of which would cause an employee to suffer layoff or loss of pay. |
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8.2 | The established work week shall consist of seven (7) consecutive days beginning at 12:01 a.m. on Mondays. The normal daily and weekly work schedule shall be determined by management and the normal weekly work schedule shall consist of forty (40) hours of work. |
8.3 | Nothing in this Agreement shall be interpreted to restrict the amount of time an Employee can be required work to eight (8) hours in one day or forty (40) hours in one week. It is also understood that the foregoing does not constitute a guarantee of any fixed number of hours of work in any week. |
8.4 | The working time of any Employee shall commence when he has reported for work at the designated time and regular place. |
8.5 | Vacation days for an 8 hour shift job will be charged as 8 hours vacation. Vacation days for a 10 hour shift job will be charged 10 hours vacation. |
8.6 | Callout Pay . An Employee who reports to work pursuant to a callout, is guaranteed two hours and forty minutes of pay at his overtime hourly rate. Further, to qualify for the callout guarantee, an Employee must accept such work assignment as may be made by the Company and report at the facility or work location within an hour. |
9.1 | Employees shall be paid at a rate of one and one-half (1 1 / 2 x) times the Employees regular hourly rate for all hours worked in excess of their regularly scheduled work day (consisting of at least eight (8) hours in a day) or forty hours in a workweek, or for all hours worked on any of the holidays specified in this Agreement for up to their regularly scheduled work day. Overtime or holiday compensation shall not be pyramided; i.e., hours worked at a rate of time and one-half time shall not be computed more than once in calculating overtime or holiday pay earned, nor shall any premium rate be further expanded to time and one-half or double time of such premium rate under any Article of this Agreement. |
9.2 | No overtime shall be worked or permitted except by direction of proper authority, except in case of emergency where advance authority is not obtainable. An Employee on continuous operations shall remain at his post of duty until relieved. In cases where shift men are required to work for a longer time due to the failure of relief men to appear, such overtime shall be paid at the rate of one and one-half, however, the relief man shall be paid only for the number of hours worked. |
9.3 | The Employer shall, in-so-far as practicable, distribute overtime uniformly within each classification. When overtime is required, the employee within that classification who is lowest on the overtime list will be asked first, if he declines, all employees in that |
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classification will be asked. If no employee accepts, the low man within that classification will be required to work overtime. |
9.4 | No Employee shall be required to take time off from his regular work week for the purpose of off-setting overtime previously worked. |
9.5 | When an Employee takes vacation time, as defined in this Agreement, the Employee shall be paid up to eight (8) hours (10 hours for a four X ten hour shift employee) of straight-time pay and such hours shall be counted as hours worked for the purpose of computing overtime for that week. Holidays shall also be counted as hours worked. Use of PTO days (other than vacation), jury duty, leaves of absence or layoff shall not be counted as hours worked for the purpose of computing overtime for that week. |
10.1 | Employees shall receive one (1) thirty (30) minute meal period per shift when they work a full scheduled shift. Employees required to work at least four (4) hours over his regularly scheduled shift shall be provided with a meal paid for by the Employer. |
11.1 | The Employer recognizes the following holidays: |
When a holiday falls on a Saturday, the holiday will be observed on the previous Friday. When a holiday falls on a Sunday the following Monday will be observed as the holiday. This Article will not apply to employees with rotating days off. When a holiday falls on an employees regularly scheduled day off, the employee will be entitled to one additional personal PTO day. Use of the personal holiday and PTO time must be arranged for and approved in advance by the employees supervisor. |
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11.2 | Employees who wish to observe certain holidays of worship or commemoration not included in the Employers holiday schedule may do so with approval from management as an unpaid, excused absence or use a PTO day. |
11.3 | For the purpose of this Agreement a holiday shall consist of a twenty-four (24) hour period commencing at 12:01 a.m. the morning of the recognized holiday. |
11.4 | Each Employee who is not required to work on a particular holiday shall be paid straight-time pay for their regular number of work hours (either 8 or 10 hours), provided that no such payment shall be made to an Employee, with respect to a holiday, if such Employee: |
a. | Was not present for work on both his last scheduled work day before the holiday and his next scheduled work day after the holiday unless there is reasonable excuse for absence. | ||
b. | Is scheduled to work on that holiday and without permission of the Employer fails to report for work, unless there is reasonable excuse for such absence. | ||
c. | Is removed from the active payroll during the period in which the holiday occurs, such as when on leave of absence or layoff. |
11.5 | An Employee required to work on any day observed as his holiday as outlined above shall, in addition to the holiday pay, receive straight-time pay (except for those hours worked in excess of 40, which will be paid at time and one half times the Employees regular rate of pay). |
11.6 | It is expressly understood that pay for time off not worked shall be construed to mean hourly pay and that reference to days herein this Agreement shall be construed as reference to an employees regular work day (either eight (8) or ten (10) hour days). |
11.7 | Employees hired from Farmland immediately after the purchase of the facility shall be entitled to receive holiday pay upon initial hire by the Company. Probationary employees and temporary employees will not be eligible to receive holiday pay. |
12.1 | Paid Vacation . Full-time regular Employees who have twelve (12) months of continuous Company service are entitled to paid vacation according to the following schedule: |
One (1) year of service
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One (1) week | |
Two (2) to fifteen (15) years of service
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Two (2) weeks | |
Fifteen (15) to Twenty (20) years of service
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Three (3) weeks | |
Over Twenty (20) years
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Four (4) weeks |
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A. | Paid vacation eligibility is calculated on the employees anniversary date. For purposes of vacation entitlement, Farmland years of service shall be recognized. Vacation may be taken as it is accrued. Vacation shall be accrued monthly. No advances of vacation time will be made unless otherwise provided in this agreement. | ||
B. | Vacation and PTO pay and use will be based upon the employees regular hourly rate of pay for their regular work day (either 8 or 10 hours). | ||
C. | Probationary employees and temporary employees will not be eligible to use vacation time. | ||
D. | Employees must indicate their desired vacation periods to the Employer between December 1 and 15 of each year for vacations to be taken during the next calendar year. | ||
E. | Vacations shall be taken in increments of at least one (1) full week unless otherwise approved by the Employees supervisor. | ||
F. | An Employees preference shall be considered in scheduling vacations, but the vacation schedule shall be subject to the Employers work requirements. |
1. | When scheduling conflicts occur, the first Employee to submit the request shall have a preference for the requested vacation. In the event that Employees simultaneously submit requests, which would create a scheduling conflict, the Employee with the greatest length of service (including Farmland service) shall have first preference. However, once a vacation request has been approved, the Employee may not be bumped in favor of another who has greater seniority. | ||
2. | Vacation time can be carried over from year to year in the following increments: |
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1 year to 15 years of service 5 days;
greater than 15 years of service 10 days |
a. | If the Employee is required to forego any portion of his vacation for the Employers convenience, he shall be allowed to carry any unused time forward into the next |
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b. | If an Employee is unable to use all of his accrued vacation due to a work-related disability, the unused portion of the vacation shall carry over into the next anniversary year. |
3. | Pay in lieu of time off shall not be granted unless there is mutual agreement between the Union and the Employer. |
G. | Vacation may not be used in conjunction with any disability pay the Employee receives. | ||
H. | The Employer may block certain periods of time throughout the year when vacation cannot be taken. If the Employer chooses to block certain periods, notice will be given at the time Employees are to indicate their desired vacation periods. |
12.2 | Paid Time Off (PTO) . PTO can be used for any purpose and is available as a flexible addition to vacation time. For example, PTO can be used for sick days, religious holidays and personal emergencies. All employees are allotted five (5) PTO days each calendar year. An employee cannot use PTO unless prior approval is given by the employees supervisor to the extent possible. Employees will be permitted to carry over up to ten (10) PTO days from year to year. If an employee is unable to attend work due to illness, injury or other reason, the employee shall notify his supervisor of the leave as far in advance as reasonably ascertainable. If an employee decides to take such leave on the morning of the scheduled workday, the employee shall notify the employees supervisor or another appropriate manager at least two (2) hours before the employee is scheduled to start work. An employee will not be paid for unused PTO time. |
13.1 | It is agreed that no loss of base pay shall be incurred by an Employee as a result of jury service when loss of time is caused by actual service on a jury, and he shall be permitted to retain his jury fee. Employees will be paid their regular hourly rate for their regular work schedule (either eight (8) or ten (10) hour days). Employees called but not chosen for jury duty are required to work any remaining hours of his regular work schedule. |
14.1 | Applicants for employment shall be examined by a reputable physician. |
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14.2 | Upon the request of the Employer, the employee shall furnish the Employers regular medical examination form signed by an accredited physician. |
14.3 | In case a dispute arises over the physical fitness of an Employee to return to work or to continue to work, a board of three accredited physicians shall be selected, one by the Company, one by the Employee, and one selected by the two so named. The decision of the majority of the board shall be final. The Company shall bear the expense of the physician it selects and one-half of the expense of the physician chosen by the first two. The Employee shall bear the expense of the physician he selects and one-half the expense of the physician chosen by the first two. |
15.1 | Drug or Alcohol Test . The Employer will adopt a drug and alcohol policy. Employees are required to adhere to that policy and shall be subject to the testing procedures contained therein. Any Employee suspected of consuming, using or being under the influence of drugs or alcohol must submit to an immediate drug and/or alcohol test. The Employer may monitor an Employees work performance and behavior to determine whether the Employer suspects that the Employee is under the influence of drugs or alcohol. Such testing shall be conducted by a certified lab to insure the integrity of the specimen. |
15.2 | Job-Related Accident . Any Employee involved in a job-related accident requiring attention at a medical facility may be required to submit to a drug and/or alcohol test. |
15.3 | Consequence of Positive Test . The Employer shall have just cause to discharge an Employee in the event that the drug or alcohol test indicates the presence of drugs or alcohol. |
15.4 | Refusal to Submit . Any Employee subject to drug and/or alcohol testing as outlined above who refuses to submit to such test shall be considered to have failed the test for purposes of this Article. |
15.5 | Random Drug Testing . The Employer shall implement a random drug testing policy, to the extent permitted by law. Such random testing shall be conducted quarterly and up to 25% of the bargaining unit members may be subject to such testing each quarter. |
15.6 | Compliance with Applicable laws . The Employer agrees to comply with all applicable laws, including Department of Transportation regulations with regard to employee drug testing. |
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16.1 | The parties will comply with the requirements of the Family and Medical Leave Act of 1993, hereinafter, the FMLA. Employees shall be permitted to take the leaves allowed by law, subject to the Companys right to adopt a policy detailing any procedures, requirements or restrictions on such leaves, as are permitted by law or this Agreement. An Employee seeking FMLA leave must provide sufficient information concerning the reason for the leave so that the Company can determine whether the leave qualifies under the FMLA. |
16.2 | If an employee desires an unpaid leave of absence in order to engage in any work pertaining to the business of the Union, said request will be presented to local Management for approval and such approval will not be unreasonably withheld. Such leave may not exceed one (1) year and will not affect the employees seniority status. Only one employee at a time shall be given such union leave. |
17.1 | An Employee who enters the Armed Forces of the United States shall retain and accumulate seniority under this Agreement during such period of military service and shall have the right to reinstatement to his former employment in accordance with established laws applicable to veterans of the United States Armed Forces. |
17.2 | An Employee who is a member of the National Guard or military reserve corps requiring periodic training courses necessitating his being absent from work will be entitled to a leave from work on his own time or to the right to apply the time lost against earned vacation, whichever the Employee prefers. |
18.1 | In the event of a death in a full-time Employees immediate family (defined as the Employees spouse, child, step child, parent or step parent or parent in law, or blood brother or sister), an Employee shall be granted up to three (3) consecutive work days off as funeral leave if the employee attends the funeral. Proof of the death and of the family relation may be required by the Company. |
19.1 | No Employee shall be required to perform services that seriously endanger his physical safety, and his refusal to do such work shall not warrant or justify discharge. In all such cases, an immediate conference between the Employer and the Union shall be held to settle the issue in question. |
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19.2 | An Employee shall not be disciplined, if physically and mentally capable of continuing his duties, because of any accident unless the accident was caused by negligence, carelessness, or malicious intent of the Employee. |
19.3 | The Employer and the Union agree to the immediate formation of a joint committee, which shall be known as the Joint Safety Committee. The purpose of the committee to study and make recommendations that will ensure safe and efficient operation of the Employers operation. Such joint safety committee shall meet on the first Tuesday of every month. Unless mutually agreed to change to a different date. It is understood and agreed that the committee shall not have the right to alter, vary or modify provisions of this Agreement. It is further understood that the establishment and function of the committee provided herein shall in no way alter, vary or modify the right of any Employee, the Union or the Company to pursue any matter through the grievance and arbitration provisions of this Agreement. Activities of the Employee-members of the safety committee shall not interfere with the proper performance of the Employees work. |
20.1 | The Company and the Union agree to the establishment of a Joint Education and Training Committee to develop education and training initiatives that are determined by the Company to be necessary for future business needs and to provide opportunities for Employees to gain additional employment skills. Toward that end, the Joint Education and Training Committee shall be established and shall consist of two (2) representatives appointed by the Union and two (2) representatives of management. This Committee shall meet primarily for the purpose of fostering and promoting the advancement of effective education and training programs. It is understood and agreed that the committee shall not have the right to alter, vary or modify provisions of this Agreement. It is further understood that the establishment and function of the committee provided herein shall in no way alter, vary or modify the right of any Employee, the Union or the Company to pursue any matter through the grievance and arbitration provisions of this Agreement. Activities of the Employee-members of the Education and Training committee shall not interfere with the proper performance of the Employees work. |
21.1 | It is mutually agreed that there shall be no coercion, intimidation, or discrimination practiced by the Employer or the Union because of membership or non-membership in the Union. |
21.2 | It is the mutual intent of both the Employer and the Union to comply with all State and Federal laws, including the Americans with Disabilities Act. |
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21.3 | The Employer and the Union agree that they will not discriminate against any employee or applicant because of race, sex, color, creed, age, nationality, or religion, or any other legally protected status under local, state or federal law. All actions affecting personnel are administered fairly and in accordance with applicable laws. This policy applies to all terms and conditions of employment. |
21.4 | The parties agree that during the term of this Agreement, the Company is permitted to take all actions necessary to comply with the Americans With Disabilities Act of 1990, 42, USC 12101 legislation. It is not the intent of the parties to displace regular full-time Employees in order to comply with the Act. |
21.5 | The Employer is committed to maintaining a work environment free from harassment, including sexual harassment. The Employer shall have good cause to discipline, up to and including discharge, any Employee who engages in harassment directed toward any Employee, customer, visitor or vendor. Harassment is defined as unwelcome verbal or physical conduct of a discriminatory nature based upon age, race, religion, national origin, disability, veteran status, or any other protected classification, which creates a work environment that is offensive, hostile or intimidating. Sexual harassment includes, but is not limited to, solicitation of sexual favors, offensive touching, lewd or suggestive comments, sexual jokes or innuendoes, visual displays of pornographic materials, and visual displays of sexual materials. It is incumbent upon an Employee to immediately report to his or her supervisor any other Employees who are engaging in harassment. Employees who fail to satisfy this obligation may be subject to discipline, up to and including termination. |
22.1 | No regular Employee, after having completed the probationary period under Article 7, shall be disciplined and/or discharged except for just cause. The Employer shall follow a system of progressive discipline. The parties agree that progressive discipline normally requires, prior to discharge, that an Employee be given a verbal, written and then final written warning to correct the deficiency, but that with the principle of progressive discipline, the Employer may impose immediate suspension or discharge for dishonesty, incompetence, misconduct, insubordination, failure to report to work without just cause, walking off the job during a shift, or drinking alcohol or use of controlled substance, or being under the influence thereof, during the Employees shift. |
22.2 | An Employee may be placed on final written warning status for up to one (1) month at any time when his performance has deteriorated to the extent that his supervisor believes, and the Employers Human Resources Director agrees, that it is necessary to impress upon him the significance of poor performance and the need for improvement. The Employer shall advise the Employee and the Union of his deficiencies and the areas where improvement is required with specificity. The Employer shall advise the Union |
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22.3 | Any Employee who is requested to participate in an investigatory interview, that the Employee reasonably anticipates will result in the imposition of a disciplinary penalty, may request that a Union representative be present. The Employer may grant or deny the Employees request. If the Employer denies the Employees request, the Employee shall have the option of continuing the interview without the presence of a Union representative, or discontinuing the interview. If the Employees request is granted, the Union representative shall be summoned by the Employer and allowed to be present during the investigatory interview. The interview shall be scheduled for a date and time acceptable to the Employer and the Union. The Employer may proceed with the interview without the presence of a Union representative, if the Union representative is unavailable for 36 consecutive hours following notification. In that event, the Employee may decide whether he desires to participate in the interview without the presence of a Union representative. |
23.1 | A grievance shall be defined as a dispute regarding the interpretation and application of the provisions of this Agreement raised by the Union alleging a violation of the terms and provisions of this Agreement. However, disputes specifically excluded in other Articles of this Agreement from the grievance and arbitration procedure shall not be construed as falling within this definition. |
23.2 | All grievances shall be handled exclusively in the following manner: |
STEP 1:
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Matters for discussion must first be orally submitted to the employees immediate supervisor. Such a meeting shall normally include the employee, the local union or unit representative, and the foreman and shall be held within five (5) working days of the time that the aggrieved party has knowledge of the grievance. If the grievance is not resolved at this step, then the union may file a formal written grievance within five (5) days under the procedures set forth below. If the matter is not resolved, the immediate supervisor shall render a written response to the Union within five (5) business days after the grievance is presented. |
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STEP 2:
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If the grievance is not settled at Step 1 and the Employee or Union wishes to file a written grievance to Step 2 of the grievance procedure, it shall be submitted in writing to the Employees department head within five (5) business days after receipt of the Companys answer in Step 1, or within five (5) business days of the time when such answer would have been due. The grievance shall state the provision or provisions of this Agreement, which are alleged to have been violated, the relief requested, and the basis upon which the grievant believes the grievance was improperly denied at the previous step in the grievance procedure. The department head shall investigate the grievance and, in the course of such investigation, may offer to discuss the grievance within five (5) days with the grievant and an authorized Union representative at a time mutually agreeable to the parties. If no settlement of the grievance is reached, the department head shall provide a written answer to the grievant and to the Union within ten (10) business days following receipt of the Step 2 grievance. | |
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STEP 3:
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If the grievance is not settled at Step 2 and the Union wishes to appeal the grievance to Step 3 of the grievance procedure, it shall be submitted in writing (signed by both) to the General Manager or his designated representative within five (5) business days after receipt of the Companys answer in Step 2, or within five (5) business days of the time that such answer would have been due. The grievance shall specifically state the basis upon which the grievant believes the grievance was improperly denied at the previous step in the grievance procedure. The General Manager or his designated representative shall investigate the grievance and, in the course of such investigation, shall offer to discuss the grievance within five (5) days with the grievant and authorized Union representatives at a time mutually agreeable to the parties. If no settlement of the grievance is reached, the General Manager or his designated representative shall provide a written answer to the grievant and the Union within ten (10) business days following receipt of the Step 3 grievance. | |
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STEP 4:
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If the grievance is not settled at Step 3 and the Union desires to appeal, the Union may refer the grievance to arbitration, as described below, within thirty (30) business days of receipt of the Companys written answer as provide to the Union at Step 3: |
(a) | The parties shall attempt to agree upon an arbitrator within five (5) business days after receipt of the notice of referral. In the event the parties are unable to agree upon the arbitrator within said five (5) business day period, the parties shall jointly request the Federal Mediation and Conciliation Service to submit a panel of seven (7) arbitrators. Each party retains the right to reject one (1) panel in its entirety and request that a new panel be submitted. Both the Union and the Company shall have the right to alternately strike names from the panel, with the party requesting arbitration striking the first name. The person remaining shall be the arbitrator. |
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(b) | The arbitrator shall be notified of his/her selection and shall be requested to set a time and place for the hearing, subject to the availability of Union and Company representatives. | ||
(c) | The Company and the Union shall have the right to request the arbitrator to require the presence of witnesses or documents. The Company and the Union retain the right to employ legal counsel at their own expense. | ||
(d) | The arbitrator shall submit his/her decision in writing within thirty (30) calendar days following the close of the hearing or the submission of briefs by the parties, which ever is later. This decision shall be final and binding on the Company, the grievant, the Employees covered by this Agreement, and the Union. | ||
(e) | More than one grievance may be submitted to the same arbitrator if both parties mutually agree in writing. | ||
(f) | The fees and expenses of the arbitrator and the cost of a written transcript if requested by both parties shall be divided equally between the Company and the Union; provided, however, that each party shall be responsible for compensating its own representative and witnesses. | ||
(g) | The arbitrator shall have no power to add to, subtract from, amend, change or alter any of the terms of this Agreement. | ||
(h) | Any Employee covered by this Agreement who is discharged by the Employer and who disputes that his/her discharge was for just cause shall have an affirmative duty to mitigate any potential damages which might result to the Employer, in the event the discharge involved is subject to Grievance and Arbitration, and an arbitrator overrules the discharge. In any dispute over the amount of back pay due to an Employee under an arbitration award, the arbitrator shall have no authority to award any back pay to that Employee unless that Employee or the Union has affirmatively proven by a preponderance of the evidence that the Employee has fulfilled his/her duty to mitigate damages at all times since his/her discharge. |
23.3 | Time limitations set forth in this Article may be waived or modified by mutual agreement between the parties involved. Absent a waiver to the contrary, if either party fails to comply with the time limitations as established herein, the other party shall be deemed to have prevailed on the grievance in question. |
23.4 | It is understood that the grievance can be withdrawn or settlement agreed upon between the parties at any time prior to the formal hearing of the grievance by the Arbitrator. |
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24.1 | The Employer shall make a bulletin board available to the Union where the Union may post notices of Union elections and results, meetings and recreational and social affairs. |
25.1 | If any court shall hold any part of this Agreement invalid, such decision shall not invalidate the entire Agreement. |
26.1 | Rates of pay for Employees in positions covered thereunder are set forth in Appendix A attached hereto. |
27.1 | Employees will be offered the opportunity to enroll in, and participate in the Employers medical insurance plan on the terms and conditions of the plan as set forth in Appendix B attached hereto. It is understood and agreed that increases to the insurance premiums set forth in Appendix B after year 1 of this Agreement shall be shared between the Employer and Employees in the following manner: Employer to pay 70% of the increase; and Employees to pay 30% of the increase. It is understood and agreed that during the term of this Agreement Employees covered by this Agreement shall not be required to pay more than 25% of the total premium cost for medical insurance. |
28.1 | Employees will be eligible to participate in the Coffeyville Resources Crude Transportation, LLC 401K plan under the terms and conditions of the plans as set forth in Appendix C attached hereto. |
29.1 | Reimbursement for Safety Equipment . The Company shall reimburse each employee fifty dollars ($50.00) per year toward the purchase of ANSI approved steel-toe shoes, provided that the employee provides a receipt. The Company shall provide each employee with one pair of safety eyeglasses each year. |
29.2 | Check-Off . To the extent approved and authorized by individual employees and as permitted by State law, the Company agrees to check-off dues by voluntary authorization. Said arrangement shall be continued in effect for the term of this Agreement. The Union and the Company will agree upon a check off authorization form which complies with applicable law to be provided to members. The Union shall provide copies of individual |
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30.1 | Subject to provisions of Article 3. No Cessation of Work, herein above, this Agreement is effective , 2004 , and shall remain in effect through , and from year to year thereafter, unless a written request to alter, modify or terminate the Agreement is received on or before sixty (60) days prior to , or any subsequent , either party shall make written request for alternations. |
COFFEYVILLE RESOURCES
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THE PAPER, ALLIED-INDUSTRIAL, | |
CRUDE TRANSPORTATION, LLC
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CHEMICAL & ENERGY WORKERS | |
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INTERNATIONAL UNION, | |
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ALF-CIO-CLC AND LOCAL 5-432 | |
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DATE
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Proposed | ||||||||
Wage Rate | ||||||||
Increase Each | ||||||||
Classifications | Wage Rate | Year | ||||||
Gauger
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18.62 | 3 | % | |||||
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Electrician
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18.04 | 3 | % | |||||
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Welder
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18.04 | 3 | % | |||||
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Mechanic (Truck)
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18.04 | 3 | % | |||||
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Stock Gauger Eng.
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17.71 | 3 | % | |||||
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Back Hoe, Truck
Driver (1 Ton +)
Tractor Operator
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17.31 | 3 | % | |||||
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Pipeliner
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16.98 | 3 | % | |||||
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Transport Driver
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16.59 | 3 | % | |||||
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Probationary Employees *
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11.75 minimum** |
* | This probationary rate will not apply to Farmland Employees hired by Coffeyville Resources Crude Transportation, LLC. | |
** | To be determined in the sole discretion of the facility manager. |
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Bartlesville Facility | ||||||||||||||||
Proposed Benefit Rates for | ||||||||||||||||
2004 | ||||||||||||||||
Medical (20% Employee / 80% Employer) | Distribution of Premium | |||||||||||||||
BCBS - Kansas | Employee | Employer | TOTAL | |||||||||||||
Option 1. $200/$600 deductible | ||||||||||||||||
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Employee Only
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$ | 58.45 | $ | 233.78 | $ | 292.23 | ||||||||||
Employee/Child
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$ | 111.55 | $ | 446.19 | $ | 557.74 | ||||||||||
Employee/Spouse
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$ | 125.92 | $ | 503.68 | $ | 629.60 | ||||||||||
Family
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$ | 178.00 | $ | 712.00 | $ | 890.00 | ||||||||||
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Option 2. $500/$1000 deductible | ||||||||||||||||
Employee Only
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$ | 53.09 | $ | 212.34 | $ | 265.43 | ||||||||||
Employee/Child
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$ | 102.29 | $ | 409.17 | $ | 511.46 | ||||||||||
Employee/Spouse
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$ | 113.96 | $ | 455.82 | $ | 569.78 | ||||||||||
Family
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$ | 163.17 | $ | 652.66 | $ | 815.83 | ||||||||||
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Monthly Expense
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$ | 59,755 | $ | 239,018 | $ | 298,772 | ||||||||||
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Annual Expense
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$ | 717,058 | $ | 2,868,212 | $ | 3,585,270 | ||||||||||
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Dental (20% Employee / 80% Employer) | ||||||||||||||||
Delta Dental of Kansas
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Employee only
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$ | 4.44 | $ | 17.77 | $ | 22.21 | ||||||||||
Employee/child
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$ | 8.53 | $ | 34.10 | $ | 42.63 | ||||||||||
Employee/Spouse
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$ | 8.80 | $ | 35.19 | $ | 43.99 | ||||||||||
Family
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$ | 14.57 | $ | 58.30 | $ | 72.87 | ||||||||||
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Monthly Expense
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$ | 4,727 | $ | 18,912 | $ | 23,639 | ||||||||||
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Annual Expense
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$ | 56,728 | $ | 226,945 | $ | 283,673 | ||||||||||
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Life and AD&D (all Employer Paid) | ||||||||||||||||
Minnesota Life | Life Rate | ADD Rate | Total Rate | |||||||||||||
Amount in Force
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$ | 11,173,423 | $ | 0.27 | $ | 0.02 | $ | 0.29 | ||||||||
Monthly Expense
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$ | 3,006 | $ | 268 | $ | 3,274 | ||||||||||
Annual Expense
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$ | 36,068 | $ | 3,218 | $ | 39,286 | ||||||||||
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