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EXHIBIT 10.23
EXHIBIT 4.02(d)
CRUDE OIL SUPPLY AND TERMINALLING AGREEMENT
This is an agreement (the "AGREEMENT") between ▇▇▇▇ Oil Company ("▇▇▇▇") and
EOTT ENERGY OPERATING LIMITED PARTNERSHIP ("EOTT") effective this 1st day of
December, 1998.
PREAMBLE:
▇. ▇▇▇▇ owns and operates a crude oil terminal at Cushing, Oklahoma. ▇▇▇▇
is a purchaser and marketer of crude oil.
B. For purposes of this Agreement, EOTT operates crude oil gathering lines
in Kansas, Oklahoma and Texas and is a purchaser and seller of crude
oil.
C. The Parties desire to enter into an agreement governing the purchase,
sale and terminalling of crude oil at Cushing, Oklahoma.
D. It is the intent of the Parties for ▇▇▇▇ to purchase from EOTT physical
domestic sweet crude oil at ▇▇▇▇'▇ Cushing Terminal ("THE TERMINAL")
and at [*].
E. It is the intent of the Parties that ▇▇▇▇ shall provide a terminalling
service for EOTT such that ▇▇▇▇ will, [*] and deliver crude oil at
EOTT's request and within the requirements of this Agreement.
F. Capitalized terms and phrases not otherwise defined in the body of this
Agreement are defined in the Definitions Schedule.
It is agreed as follows:
ARTICLE 1 - TERM
1.1 EFFECTIVE DATE. This Agreement is effective as of the date first
written above.
1.2 TERM. EOTT's obligations to sell and deliver crude oil, and ▇▇▇▇'▇
obligations to take delivery of, terminal and purchase crude oil under
this Agreement, shall begin December 1, 1998 (the "EFFECTIVE Date").
These obligations shall continue for an initial period of fifteen years
after the Effective Date, and then from month to month, unless
otherwise terminated pursuant to this Agreement. Either ▇▇▇▇ or EOTT
may terminate these
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obligations on written notice to the other Party effective at the end
of the initial fifteen year term or the last day of any month
thereafter.
A written notice of termination under this Section 1.2 shall be given
at least ninety days prior to the date of such termination, with such
termination being effective on the 1st day of the following month.
1.3 EARLY TERMINATION.
(a) [*]
(b) [*]
(c) APPLICABILITY. The provisions of this Section 1.3 are only
applicable to the Supply Volumes provisions of this Agreement.
For purposes of this Agreement any reference to Supply Volumes
provisions of this Agreement shall mean EOTT's obligation to
provide Supply Volumes and ▇▇▇▇'▇ obligation to purchase
Supply Volumes.
ARTICLE 2 - VOLUMES
2.1 SUPPLY VOLUMES. EOTT shall deliver and sell and ▇▇▇▇ shall take
delivery of and purchase [*] barrels per day ("BPD"), on average in
each month, of Domestic Sweet Crude Oil as defined in Section 2.1(a)
subject to the Adjusted Supply Volume requirements in Section 2.1(d).
The "SUPPLY VOLUMES" are the volumes of Domestic Sweet Crude Oil which
EOTT agrees to sell and deliver and ▇▇▇▇ agrees to take delivery of and
purchase at Cushing, Oklahoma. The Supply Volumes are subject to the
following:
(a) For purposes of this Agreement, "DOMESTIC SWEET CRUDE OIL"
means crude oil produced in the United States that (i) meets
all the quality specifications of this Agreement for Supply
Volumes; (ii) is acceptable by Arco Pipeline's (or its
successor in interest) Cushing terminal at the time of
delivery as domestic sweet
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crude oil; and (iii) is deliverable into the NYMEX's light
sweet crude oil future contract.
(b) Supply Volumes sold to ▇▇▇▇ by EOTT shall first be satisfied
with crude oil delivered by EOTT to the Terminal under the
terms of Article 6 of this Agreement ("TERMINAL VOLUMES.")
Supply Volumes necessary under this Agreement in excess of the
Terminal Volumes shall be sold to ▇▇▇▇ into/within Arco's
Cushing Terminal. However, in no event shall EOTT deliver less
than [*] bpd, subject to the adjustment in Section 2.1(d),
of Supply Volumes to ▇▇▇▇ at the Terminal and any Terminal
Volume in excess of [*] bpd shall be first applied to
satisfy the Supply Volumes.
(c) The price for the Supply Volumes ("SUPPLY VOLUME PRICE") shall
be determined pursuant to the Supply Volume Price Formula in
Article 3.
(d) ADJUSTED SUPPLY VOLUMES. Supply Volumes sold under this
Agreement shall be adjusted based on the rates of
decline/increase for onshore production in the lower
forty-eight United States as such rates of decline/increase
are calculated from oil production volume data published by
the Energy Information Administration of the Department of
Energy in their publication entitled Petroleum Supply Annual
(PSA). The adjustment for rates of decline/increase shall be
based upon the following methodology: For each year, effective
on the first day of the second calendar month after which the
actual annual production volumes of crude oil are published in
the PSA, the volume sold under this Agreement shall be
multiplied by the Decline/Increase Factor, as defined below,
to equal the adjusted Supply Volumes. The adjusted Supply
Volumes, rounded to the nearest 100 bpd, shall be the Supply
Volumes sold under the Agreement until the next year's
adjusted Supply Volumes are implemented. "DECLINE/INCREASE
FACTOR" (DIF) shall mean the average of the annual volumes for
onshore production for the lower forty-eight United States
from the most recent PSA data divided by the average of the
annual volumes for onshore production for the lower
forty-eight United States from the PSA data for the year
previous to the most recent PSA annual data. In the event the
PSA is delayed in its release or ceases to be published for a
period of more than fifteen months following the previous
year's publication of the PSA, the parties will agree to an
annual adjustment to be effective approximately one year after
the previous annual adjustment.
[*]
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(e) EOTT WARRANTIES. EOTT warrants that all Supply Volumes will,
at the time and point of delivery to ▇▇▇▇, be free and clear
of all liens, encumbrances, claims, royalties and taxes. EOTT
additionally warrants that it has the exclusive right to
receive payment in full for all Supply Volumes and that all
Supply Volumes and Terminal Volumes, as referenced in Section
6.1, will meet the quality specifications in Section 5.1 and
6.2, respectively.
2.2 SERVICES. During the term of the Agreement, ▇▇▇▇ shall provide the
following services to EOTT:
(a) ▇▇▇▇ shall provide to EOTT by the tenth (10th) day of each
month of this Agreement, a month end summary, showing a
breakdown on Terminal Volumes applied to Supply Volumes and
Terminal Volumes shipped to other carriers; and
(b) ▇▇▇▇ will provide at its sole cost, custody transfer meter
measurement facilities at the Terminal that are designed,
operated, maintained and calibrated in accordance with
industry standards to measure the quantities of oil delivered
by EOTT for the account of ▇▇▇▇ at the Terminal or for the
transfer to terminals to which ▇▇▇▇ is directly connected at
the time of transfer, subject to operational and logistical
constraints of the Terminal. During the Term of the Agreement,
▇▇▇▇ will maintain connections with Arco and Texaco.
(c) [*]
ARTICLE 3 - SUPPLY VOLUME PRICE
3.1 [*]
(a) [*]
(b) [*]
(c) [*]
3.2 [*]
(a) [*]
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(b) [*]
(i) [*]
(ii) [*]
(iii) [*]
(iv) [*]
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[*]
(c) [*]
(d) [*]
3.3 TAX LIABILITY. EOTT shall be liable for all taxes, assessments, duties
or other levies imposed on the Supply Volumes prior to delivery to
▇▇▇▇. ▇▇▇▇ shall be liable for all taxes, assessments, duties or other
levies imposed on the Supply Volumes after delivery to ▇▇▇▇.
ARTICLE 4 - PAYMENT
4.1 INVOICES AND PAYMENTS. EOTT shall invoice ▇▇▇▇ promptly after the end
of each month during the Term for deliveries of Supply Volumes made to
▇▇▇▇ pursuant to this Agreement during that month. ▇▇▇▇ shall pay the
invoice on or before the twentieth (20th) day of such month (or such
other date during a month as mutually agreed to by the parties). ▇▇▇▇
shall pay EOTT the amount invoiced by wire transfer, bank draft, or
other method of payment reasonably requested by EOTT, to EOTT's account
at Bank of America, San Francisco, California, [*] or such other
account or bank as EOTT may stipulate by notice to ▇▇▇▇.
▇▇▇▇ shall invoice EOTT promptly after the end of each month during the
Term for terminalling services provided to EOTT pursuant to this
Agreement during that month. EOTT shall pay the invoice on or before
the twentieth (20th) day of such month, (or such other date during a
month as mutually agreed to by the parties). EOTT shall pay ▇▇▇▇ the
amount invoiced by wire transfer, bank draft, or other method of
payment reasonably requested by ▇▇▇▇, to ▇▇▇▇'▇ account at Chase
Manhattan Bank, New York, New York, [*], ▇▇▇▇ Oil Company, [*], or such
other account or bank as ▇▇▇▇ may stipulate by notice to EOTT.
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4.2 LATE PAYMENTS. If ▇▇▇▇ fails to pay EOTT the total amount set forth in
the statement of account by the due date referred to in Section 4.1, or
if EOTT fails to pay or credit to ▇▇▇▇ the total amount set forth in
the statement of account by the due date referred to in Section 4.1
(the Fee), then interest on the unpaid portion shall accrue for each
day from the due date to the date of payment at the rate of Prime Rate
plus four percent (4 percentage points) per annum, which "PRIME RATE"
is equal to the Prime Rate of interest published in the Wall Street
Journal, the day before the payment is due, as being the reference rate
then in effect for determining interest rates on commercial loans made
by banks (the "DEFAULT RATE").
4.3 NON BUSINESS DAYS. If the date for payment of any monies under this
Agreement falls on a Saturday or on a bank holiday other than Monday
during which New York banks are closed for normal business
transactions, then payment shall be due on the immediately preceding
day on which New York banks are open for normal business transactions.
If the date for payment of any monies under this Agreement falls on a
Sunday or a Monday bank holiday during which New York banks are closed
for normal business transactions, then payment shall be due on the next
day on which New York banks are open for normal business transactions.
4.4 ADDRESSES FOR INVOICES.
(a) ▇▇▇▇ ADDRESS FOR INVOICES. All invoices shall be forwarded
promptly to:
▇▇▇▇ Oil Company
Attention: Crude Oil Accounting
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address as ▇▇▇▇ may stipulate by notice in
writing to EOTT.
(b) EOTT ADDRESS FOR INVOICES. All invoices shall be forwarded
promptly to:
EOTT Energy Operating Limited Partnership
Attention: Crude Oil Accounting
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax Number: ▇▇▇-▇▇▇-▇▇▇▇
or such other address as EOTT may stipulate by notice in
writing to ▇▇▇▇.
4.5 DISPUTES REGARDING INVOICES.
(a) If ▇▇▇▇ in good faith disputes the amount of any invoice, it
shall notify EOTT promptly of such disagreement including
particulars thereof. ▇▇▇▇ shall nevertheless pay to EOTT the
full amount of the statement within the time limited by this
Article 4. Upon the final determination of any dispute, the
price shall be appropriately adjusted
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promptly or in the next statement of account together with
interest on the amount due from the due date at the Default
Rate.
(b) If EOTT in good faith disputes the amount of any invoice, it
shall notify ▇▇▇▇ promptly of such disagreement including
particulars thereof. EOTT shall nevertheless pay to ▇▇▇▇ the
full amount of the statement within the time limited by this
Article 4. Upon the final determination of any dispute, the
price shall be appropriately adjusted promptly or in the next
statement of account together with interest on the amount due
from the due date at the Default Rate.
4.6 CREDIT. If the financial condition of either party should at any time
become materially adversely impaired such that in the reasonable good
faith opinion of the unimpaired Party ("UNIMPAIRED PARTY") the ability
of the impaired Party ("IMPAIRED PARTY") to perform its obligations
hereunder is materially impaired, then the Impaired Party shall, upon
written notice from the Unimpaired Party, immediately deliver to the
Unimpaired Party advance payments or other security as may be
reasonably requested by the Unimpaired Party to establish financial
security. Until such payments or security is delivered, the Unimpaired
Party may withhold deliveries of Supply or Terminal Volumes under this
Agreement. If such security is not received within 15 days from receipt
of such request, then the Unimpaired Party shall have the right to
immediately terminate this Agreement (regardless of anything to the
contrary stated or implied elsewhere in this Agreement) and to offset
pursuant to Section 4.1 herein any payments or deliveries due to the
Impaired Party under this Agreement.
ARTICLE 5 - SUPPLY VOLUME QUALITY
5.1 SPECIFICATIONS. Subject to the provisions of Section 5.2, the Supply
Volumes shall meet the following specifications at the delivery point
described in Section 7.1:
(a) [*]
(b) [*]
(c) [*]
(d) [*]
(e) [*]
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(f) [*]
(g) [*]
(h) [*]
(i) [*]
[*]
5.2 [*]
5.3 [*]
(a) the direct associated operating costs and acquisition costs on
a per barrel basis to terminal and deliver a crude oil stream
to the Arco Cushing terminal compliant
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with the specifications in Section 5.1(g) for the crude oil
stream delivered to ▇▇▇▇; as compared to
(b) the direct associated operating costs and acquisition costs on
a per barrel basis to terminal and deliver a crude oil stream
to the Arco Cushing terminal compliant with the specifications
in Section 5.1(g) for a crude oil stream that would have met
the specifications in Section 5.1(g).
The notice shall include the particulars of all direct ▇▇▇▇ operating
costs and Cover Costs and the charges described above. The notice shall
also include the estimated related costs of ▇▇▇▇ and third parties, if
any, for ▇▇▇▇ to redeliver, if possible, such Supply Volumes to EOTT so
that EOTT may treat or otherwise dispose of such crude oil. EOTT shall
notify ▇▇▇▇ within 24 hours of receipt of notice from ▇▇▇▇ under this
provision as to whether EOTT will take delivery of such crude oil, if
possible, or authorize ▇▇▇▇ to terminal such crude oil pursuant to
Section 5.3. If EOTT authorizes ▇▇▇▇ to terminal such crude oil, then
EOTT shall pay, or credit to ▇▇▇▇, the full respective amount described
in ▇▇▇▇'▇ notice in the month following the date on which ▇▇▇▇
delivered the notice. EOTT shall not pay the respective Fee more than
once for any Terminal Volumes.
5.4 INDEMNITY. EOTT shall indemnify, defend and hold ▇▇▇▇, its parent or
parents, Affiliates, officers, agents, and employees harmless from and
against all claims, demands, damages, judgments, causes of action,
liabilities, lawsuits, costs, fees, penalties (to the extent permitted
by law) and expenses (which shall not include attorney fees) for actual
damages (including, but not limited to property damage, disposal and/or
treatment costs, or failure to meet contractual obligations),
specifically excluding any consequential or incidental damages
associated with such actual damages, arising out of or in connection
with the timeliness of deliveries or quality of Supply Volumes
delivered by EOTT which fail to comply with the requirements of this
Agreement.
ARTICLE 6 - CRUDE OIL TERMINALLING
6.1 TERMINALLING SERVICES
(a) During the term of this Agreement, ▇▇▇▇ shall provide the
following services to EOTT:
(i) ▇▇▇▇ will receive Terminal Volumes into the Terminal
as may be delivered by EOTT; and
(ii) ▇▇▇▇ will provide certain crude oil storage tanks as
specified herein for the exclusive use of receiving
and delivering Terminal Volumes; and
(iii) ▇▇▇▇ will provide EOTT with a monthly summary of
Terminal Volume deliveries, including a physical
inventory summary; and
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(iv) ▇▇▇▇ will provide at its sole cost, custody transfer
meter measurement facilities at the Terminal that are
designed, operated, maintained and calibrated in
accordance with industry standards to measure the
Terminal Volumes delivered by EOTT for the account of
▇▇▇▇ at the Terminal and for the transfer to
connecting terminals at the time of delivery, and
(v) ▇▇▇▇ shall provide at its sole cost under the same
guidelines set forth herein custody meter facilities
at the Terminal for receipt from third party
connecting carriers into the Terminal for EOTT's
account, provided that ▇▇▇▇ has the connection and
the facilities to measure at the time of delivery and
the connection is economically justified.
(b) [*]
(c) [*]
EOTT shall deliver the Terminal Volume in accordance with the
requirements of Section 6.2 in a timely manner, subject to
delays and operational complications caused by necessary
maintenance and constraints of the Terminal and other Cushing
connected terminals and pipelines.
(d) The fee for Terminal Volumes shall be the Fee set out in
Section 6.4.
(e) ▇▇▇▇ shall take reasonable measures needed to segregate all
Terminal Volumes delivered by EOTT into the dedicated tankage
listed on Schedule B, or alternate tankage, as may be
designated by ▇▇▇▇ per Section 6.1(b), including manifolds,
transfer lines and tank inlets and outlets, up to the inlet
flange of the sales meter within the Terminal, subject to
operational and logistical constraints of the Terminal.
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6.2 QUANTITIES AND QUALITY OF TERMINAL VOLUMES
(a) During the term of this Agreement, EOTT shall deliver at the
Terminal and ▇▇▇▇ shall accept delivery of a minimum of [*]
bpd of Terminal Volumes, on average in each month, at the
Terminal, subject to the same adjustment method set out in
Section 2.1(d) and in accordance with the total minimum
quantities and qualities established in this Section 6.2.
(b) Throughout the term of this Agreement, the maximum Terminal
Volumes shall be [*] bpd on an average for any month. The
Parties may agree that any Terminal Volumes commingled in
excess of Supply Volume obligations shall be delivered to ▇▇▇▇
at the Terminal and ▇▇▇▇ shall return to EOTT an equal volume
of Domestic Sweet Crude Oil at Arco's or Texaco's Cushing
Terminal, as designated by EOTT, at an even trade differential
(even trade).
(c) [*]
(i) [*]
(ii) [*]
(iv) [*]
(v) [*]
(vi) [*]
(vii) [*]
(d) [*]
(e) [*]
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[*]
(f) [*]
6.3 FAILURE TO MEET SPECIFICATIONS. [*]
(a) the direct associated operating costs and acquisition costs on
a per barrel basis to terminal and deliver a crude oil stream
to the Arco Cushing terminal compliant with the specifications
in Section 5.1 for the crude oil stream delivered to ▇▇▇▇; as
compared to
(b) the direct associated operating costs and acquisition costs on
a per barrel basis to terminal and deliver a crude oil stream
to the Arco Cushing terminal compliant with the specifications
in Section 5.1 for a crude oil stream that would have met the
specifications in Section 5.1.
The notice shall include the particulars of all direct ▇▇▇▇ operating
costs and Cover Costs and the charges described above. The notice shall
also include the estimated related costs of ▇▇▇▇ and third parties, if
any, for ▇▇▇▇ to redeliver, if possible, such Terminal Volumes to EOTT
so that EOTT may treat or otherwise dispose of such crude oil. EOTT
shall notify ▇▇▇▇ within 24 hours of receipt of notice from ▇▇▇▇ under
this provision as to whether EOTT will take delivery of such crude oil,
if possible, or authorize ▇▇▇▇ to terminal such crude oil pursuant to
Section 6.3. If EOTT authorizes ▇▇▇▇ to terminal such crude oil, then
EOTT shall pay, or credit to ▇▇▇▇, the full respective amount described
in ▇▇▇▇'▇ notice in the month following the date on which ▇▇▇▇
delivered the notice.
6.4 TERMINALLING FEES
(a) EOTT shall pay ▇▇▇▇ an initial terminalling fee of [*] per
barrel, subject to adjustment in Section 6.4(d) (the "FEE"),
for all Terminal Volumes received by ▇▇▇▇ into the Terminal.
EOTT shall pay ▇▇▇▇ the Fee for [*] bpd (or for the volume
delivered, if greater) for the term of Agreement, subject to
decline in
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Section 2.1(d) and regardless of whether EOTT delivers the
Terminal Volumes required under this Agreement, except in the
following circumstances:
(i) This Agreement is terminated; or
(ii) Either Party suffers a Force Majeure event affecting
the terminalling obligations under this Agreement, in
which case no Fee shall be assessed during the term
of the Force Majeure event.
(b) ▇▇▇▇ shall send EOTT monthly invoices which set forth Fees due
to ▇▇▇▇ for the prior month's deliveries. EOTT shall pay
▇▇▇▇'▇ invoices in accordance with Section 4.1.
(c) EOTT shall pay for all services that may be required by EOTT
in order to make deliveries pursuant to this Agreement that
are not to be performed by ▇▇▇▇, including but not limited to,
independent inspection and laboratory testing and costs
associated with the disposal of and/or treatment of Terminal
Volumes and Supply Volumes under Sections 5.3 and 6.3.
(d) Fee Adjustment: Beginning on January 1, 2002, and every three
years thereafter, the Fee shall be adjusted by a factor
calculated in the formula below. The calculation of the factor
adjustment for the Fee shall be based upon the Producer Price
Index Revision - Current Series ("PPI") and the National
Employment, Hours, and Earnings Report ("▇▇▇▇▇"), published by
the United States Department of Labor, Bureau of Labor
Statistics ("BLS").
(i) Formula: The Fee shall be adjusted using the following
formula:
Fee(Y) = 0.85(E(Y)-1) + 0.15(L(Y)-1) x (Fee(Y)-1)
0.85(E(Y)-2) + 0.15(L(Y)-2)
Where:
Fee(Y) = Fee for the current three year period,
January 1 of year one through December 31 of year
three of such period.
Fee(Y)-1 = Fee for the period previous to the current
period.
E(Y)-1 = The average of all monthly values from the
PPI for Electric Power and Natural Gas Utilities,
West South Central region, Series ID #PCU4981-137,
for the three calendar years previous to the current
calendar year that are published by the BLS as of
December 30 of such year previous.
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L(Y)-1 = The average of all monthly values from the
▇▇▇▇▇ for Average Hourly Earnings of Production
Workers, Crude Petroleum and Natural Gas, Series ID
#EEU10131006, for the three calendar years previous
to the current calendar year that are published by
the BLS as of December 30 of such year previous.
E(Y)-2 = The average of all monthly values from the
PPI for Electric Power and Natural Gas Utilities,
West South Central region, Series ID #PCU4981-137,
for the three calendar years previous to the current
calendar year that are published by the BLS as of
December 30 of such year previous.
L(Y)-2 = The average of all monthly values from the
▇▇▇▇▇ for Average Hourly Earnings of Production
Workers, Crude Petroleum and Natural Gas, Series ID
#EEU10131006, for the three calendar years previous
to the current calendar year that are published by
the BLS as of December 30 of such year previous.
Three decimal places shall be carried throughout the calculation of the
Fee. The Fee shall be rounded to hundredths of cents to determine the
final Fee.
Example: [*]
[*]
(ii) In the event that the PPI, ▇▇▇▇▇ or the
above-referenced statistics shall no longer be
published or shall materially change in nature or
scope, both parties shall agree on a substitute index
or publication which shall be reasonably comparable
in form and substance to the PPI or ▇▇▇▇▇ as
published on the date of this Agreement.
6.5 MEASUREMENT OF SUPPLY AND TERMINAL VOLUMES
(a) ▇▇▇▇ shall measure deliveries of Terminal Volumes and Supply
Volumes by EOTT to ▇▇▇▇ or transfer to a connecting terminal
by using approved custody transfer meters (according to API
standards) designed, maintained and operated in accordance
with industry standards. In the event such meter measurement
facilities are not available, measurement of the Supply and
Terminal Volumes shall be based on tank gauges at the
Terminal.
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(b) EOTT may, at its expense, have a representative witness all
measurements of Supply and Terminal Volumes taken by ▇▇▇▇.
(c) All measurement facilities shall be in conformance with the
latest edition of API Recommended Practices, and all
measurements shall be in accordance with the latest edition of
the API Manual of Petroleum Measurements Standards, using net
barrels corrected to 60 degrees Fahrenheit. All meters shall
be proved at least once a month, and EOTT may have a
representative present during meter proving.
6.6 INDEMNITY.
(a) EOTT shall indemnify, defend and hold ▇▇▇▇, its parent or
parents, Affiliates, officers, agents, and employees harmless
from and against all claims, demands, damages, judgments,
causes of action, liabilities, lawsuits, costs, fees,
penalties (to the extent permitted by law) and expenses
(excluding attorney fees) for actual damages (including, but
not limited to property damage, disposal and/or treatment
costs, or failure to meet contractual obligations),
specifically excluding any consequential or incidental damages
associated with such actual damages, arising out of or in
connection with the timeliness of deliveries or quality of
Terminal Volumes delivered by EOTT which fail to comply with
the requirements of this Agreement.
(b) ▇▇▇▇ shall indemnify, defend and hold EOTT, its parent or
parents, Affiliates, officers, agents, and employees harmless
from and against all claims, demands, damages, judgments,
causes of action, liabilities, lawsuits, costs, fees,
penalties (to the extent permitted by law) and expenses
(excluding attorney fees) for failure to meet contractual
obligations, specifically excluding any consequential or
incidental damages associated with such actual damages,
[*].
ARTICLE 7 - DELIVERY POINT, TITLE, RISK AND MEASUREMENT
7.1 DELIVERY POINT. EOTT shall deliver Supply Volumes required to be
delivered hereunder and Terminal Volumes, subject to the requirements
of Sections 2.1, 2.2 and Articles 5 and 6, into/within the facilities
of ▇▇▇▇ at Cushing, Oklahoma, and Arco's Cushing Terminal, and/or by
in-line transfer or as mutually agreed to between the parties at
Texaco's Cushing terminal or Shell's Cushing terminal (or the
respective successors in interest of these terminals). ▇▇▇▇ shall
deliver any Terminal Volumes in excess of Supply Volumes to a carrier
designated by EOTT with which ▇▇▇▇ has a direct connection and capacity
to deliver to the desired terminal.
7.2 TITLE AND RISK. Title to and risk of loss of Supply and Terminal
Volumes delivered hereunder shall pass at the delivery points
contemplated by Section 7.1. EOTT shall retain
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title to and risk of loss of the Terminal Volumes until delivered to
▇▇▇▇ as Supply Volumes.
7.3 VARIATION IN DELIVERIES. The Parties agree that the Supply and Terminal
Volumes shall be delivered in accordance with the applicable published
transportation tariffs of relevant pipelines into the Terminal.
Accordingly, the total volume delivered during each month shall be
deemed to have been delivered on each day during the month at an
average daily rate during that month.
7.4 MEASUREMENT OF SUPPLY AND TERMINAL VOLUMES. The quantity of Supply and
Terminal Volumes physically delivered under this Agreement shall be
determined by the official shipper's balance at the custody transfer
meter at the delivery points described in Section 7.1 maintained in
accordance with the published rules and regulations of the pipeline
carrier or terminal operator which takes delivery of such Supply or
Terminal Volumes at the delivery point. In the event that a Party owns
and maintains a meter that is to be used for measurement of Supply or
Terminal Volumes, measurement from that meter shall be conducted
according to the API Manual of Petroleum Measurement Standards in
effect at the time of the measurement, and the metering equipment used
for such measurement shall be proven.
Either party may request for a meter to be proven more than once a
month, using the following procedure: A Party owning a meter that is to
be proven shall give the other Party to this Agreement at least
forty-eight hours advance written or verbal notice prior to meter
proving, and the Party receiving such notice shall have the right to
witness that meter proving. The Parties shall use all reasonable
efforts to have such proving occur as soon as practicable after the
request thereof and in any event no later than ten (10) days after such
request. If, on any such proving, the meter factor is determined to be
correct (varies by less than 0.25% from the last meter proving), the
meter shall be deemed to be accurate for the purposes of this Article
7, and no adjustment shall be made in computing the quantity of the
Supply or Terminal Volumes delivered and the Party which requested the
proving shall pay the expenses of the proving. If, on any such proving,
the meter factor is determined not to be correct, the Party which did
not request the proving shall pay the expense thereof and the quantity
of Supply or Terminal Volumes delivered shall be adjusted for any
period which is known definitely or agreed upon by the Parties;
provided however that, if the period is not known definitely or agreed
upon by the Parties, such adjustment shall be for the period covering
the last half of the volumes measured by the meter being proven since
the date of the last proving.
7.5 [*]
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[*]
ARTICLE 8 - LIMITATION ON OBLIGATIONS
8.1 FORCE MAJEURE EVENTS. In the event of the occurrence of a Force Majeure
event which prevents performance hereunder, the Party or Parties whose
performance is thereby prevented or delayed shall, unless otherwise
provided below, be relieved for any obligation or liability under
Article 2 or Article 6 of this Agreement other than ▇▇▇▇'▇ obligation
to pay for Supply Volumes delivered prior to the Force Majeure event or
EOTT's obligation to pay for terminalling services provided prior to
the Force Majeure event. "FORCE MAJEURE" means an event which is beyond
the reasonable control of the Parties that either prevents the Party
from delivering the affected Supply Volumes or prevents the Party from
accepting the delivery of the affected Supply Volumes. The following
are the only instances that will be recognized as Force Majeure events:
earthquakes, floods, landslides, civil disturbances, sabotage, acts of
public enemies, war, blockages, insurrections, riots, epidemics, the
act of any governmental, statutory or regulatory authority, the
inability to obtain or the curtailment of electric power, water or
fuel, strikes, lockouts or other labor disruptions, fires, and
explosions. For greater certainty, a lack of funds, the availability of
more attractive markets, or inefficiencies in operations do not
constitute Force Majeure events. The Party claiming the Force Majeure
event agrees to notify the other Party of the occurrence of the Force
Majeure event as soon as possible, but in any event within two (2)
Business Days, specifying the causes of and expected duration of the
Force Majeure event.
(a) EXCEPTIONS. No Party shall be entitled to the benefits of the
provisions of this Section 8.1 under any or all of the
following circumstances:
(i) if the failure to observe or perform any of the
covenants or obligations therein imposed upon it was
caused by arrest or restraint by any government or
regulatory or statutory undertaking or order of any
court and such arrest, restraint or order was the
result of breach by the Party claiming Force Majeure
of the terms of a permit, license, certificate or
other authorization granted by a governmental or
regulatory body having jurisdiction, or of any
applicable laws, regulations or orders; or
(ii) if the failure to observe or perform any of the
covenants or obligations herein imposed upon it was
caused by the Party claiming Force Majeure having
failed to remedy the conditions and to resume the
performance of such covenants or obligations with
reasonable dispatch.
(b) RESUMPTION OF PERFORMANCE. Upon cessation of the causes of
such failure or delay by either Party, performance hereunder
shall be resumed. Such failure or
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delay shall not operate to extend the Term of this Agreement
nor obligate either Party to make up any quantities not
delivered or accepted. Nothing herein shall be interpreted as
requiring either Party to settle any strike or other labor
dispute contrary to what it deems its best interest or
requiring any Party to delay payment for Supply Volumes
delivered pursuant hereto.
8.2 ▇▇▇▇ CUSHING TERMINAL SHUTDOWN.
(a) ▇▇▇▇ CUSHING TERMINAL SHUTDOWN. If ▇▇▇▇ makes a bona fide
decision to permanently terminate operations at the Terminal,
▇▇▇▇ shall forthwith give notice of such decision to EOTT (a
"▇▇▇▇ CUSHING TERMINAL SHUTDOWN NOTICE"), including the
reasons therefor and the scheduled date for the permanent
termination of operations at Cushing (any such termination
referred to herein as a "▇▇▇▇ CUSHING TERMINAL SHUTDOWN") and
(i) ▇▇▇▇ shall be entitled to terminate this Agreement
upon the date of the ▇▇▇▇ Cushing Terminal Shutdown
PROVIDED THAT the shutdown does not occur until at
least ninety (90) days after the delivery of ▇▇▇▇
Cushing Terminal Shutdown Notice and no later than
one (1) year after the delivery of such notice;
(ii) EOTT shall be entitled to terminate this Agreement at
any time after the delivery of the of ▇▇▇▇ Cushing
Terminal Shutdown Notice;
(iii) EOTT shall also be entitled to suspend its
obligations to sell and deliver Supply Volumes
pursuant to this Agreement by notice to ▇▇▇▇ at any
time after the delivery of a ▇▇▇▇ Cushing Terminal
Shutdown Notice, which suspension shall commence
thirty (30) days after the delivery of the suspension
notice by EOTT and continue until the earlier of the
termination of this Agreement or thirty (30) days
after delivery of a notice by EOTT to ▇▇▇▇ of EOTT's
election to resume the sale and delivery of Supply
Volumes to ▇▇▇▇ pursuant to this Agreement;
(iv) EOTT, in addition to being entitled to suspend its
obligations to deliver and sell Supply Volumes under
this Agreement, shall be entitled to a right of first
refusal to purchase the Terminal from ▇▇▇▇ (or any
successor in interest to ▇▇▇▇ for as long as this
Agreement is in effect) when ▇▇▇▇ (or any successor
in interest to ▇▇▇▇ for as long as this Agreement is
in effect) receives any bona fide bid which ▇▇▇▇ (or
any successor in interest to ▇▇▇▇ for as long as this
Agreement is in effect) is willing to accept for the
sale of such terminal; and
(v) In the event EOTT does not exercise its right of
first refusal on the Terminal (as referenced in
Section 8.2(a)(iv) above), ▇▇▇▇ (or any successor in
interest) shall include, as a requirement in any sale
of the
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Terminal, that the purchaser agree to continue with
this Agreement for the remainder of its Term.
8.3 ANTICIPATED MARKET CHANGES
(a) [*]
(b) If the NYMEX Light Sweet Crude Oil Contract is transacted on a
gravity delivered basis, Section 3.1 shall be amended to
incorporate the related price adjustments for a gravity
delivered crude oil barrel.
8.4 MARKET CHANGE ON SUPPLY VOLUMES RENDERING EOTT PERFORMANCE UNECONOMIC.
(a) If a change in the Crude Oil Market at Cushing, Oklahoma
(hereinafter referred to as a "Changed Condition") occurs and,
as a direct result of that change, [*], then EOTT shall be
entitled to renegotiate the price under which the Parties sell
and purchase Supply Volumes under this Agreement by written
notice to ▇▇▇▇ ( the "EOTT RENEGOTIATION NOTICE"). "Economic
Harm" for EOTT results when an alternative publicly quoted
market pricing index for Domestic Sweet Crude Oil at Cushing,
readily obtainable at Cushing, reflects prices which are
greater than the price paid by ▇▇▇▇ to EOTT for Supply Volumes
and priced during the same relevant time period. For purposes
of this Agreement, rolling the barrels by selling front/back
spreads does not constitute an alternative publicly quoted
market.
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(b) EOTT shall not be entitled to deliver an EOTT Renegotiation
Notice unless EOTT shall have delivered to ▇▇▇▇ a detailed
description of EOTT's calculations of EOTT's Uneconomic
Conditions, which shall specify the difference between the
market pricing provisions in section 3.1 and another publicly
quoted market pricing index for Domestic Sweet Crude Oil at
Cushing, Oklahoma, of the same quality priced during the same
time frame.
(c) Concurrent with the delivery of the EOTT Renegotiation Notice,
EOTT shall make a bona fide written offer to ▇▇▇▇, in good
faith, (collectively the "EOTT ADJUSTING OFFER") to amend the
Supply Volume Price Formula.
(d) ▇▇▇▇ shall be entitled to
(i) accept any EOTT Adjusting Offer at any time within
the thirty (30) days after the delivery thereof; or
(ii) terminate the Supply Volumes provisions of this
Agreement by 30 day written notice to EOTT at any
time after the delivery of an EOTT Renegotiation
Notice, which shall trigger ▇▇▇▇'▇ Right of First
Refusal in Schedule C.
8.5 MARKET CHANGE ON SUPPLY VOLUMES RENDERING ▇▇▇▇ PERFORMANCE UNECONOMIC.
(a) If a Changed Condition occurs and, as a direct result of that
change, [*], then ▇▇▇▇ shall be entitled to renegotiate the
price under which the Parties to sell and purchase Supply
Volumes under this Agreement by written notice to EOTT (the
"▇▇▇▇ RENEGOTIATION NOTICE"). "Economic Harm" for ▇▇▇▇ results
when an alternative publicly quoted market pricing index for
Domestic Sweet Crude Oil at Cushing, readily obtainable at
Cushing, reflects prices which are less than the price paid by
▇▇▇▇ to EOTT for Supply Volumes and priced during the same
relevant time period. For purposes of this Agreement, rolling
the barrels by selling front/back spreads does not constitute
an alternative publicly quoted market.
(b) ▇▇▇▇ shall not be entitled to deliver a ▇▇▇▇ Renegotiation
Notice unless ▇▇▇▇ shall have delivered to EOTT a detailed
description of ▇▇▇▇'▇ calculations of ▇▇▇▇'▇ Uneconomic
Conditions, which shall specify the difference between the
market pricing provisions in section 3.1 and another publicly
quoted market pricing index for Domestic Sweet Crude Oil at
Cushing, Oklahoma, of the same quality priced during the same
time frame.
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(c) Concurrent with the delivery of the ▇▇▇▇ Renegotiation Notice,
▇▇▇▇ shall make a bona fide written offer to EOTT, in good
faith, (collectively the "▇▇▇▇ ADJUSTING OFFER") to amend the
Supply Volume Price Formula.
(d) EOTT shall be entitled to
(i) accept any ▇▇▇▇ Adjusting Offer at any time within
the thirty (30) days after the delivery thereof; or
(ii) terminate the Supply Volumes provisions of this
Agreement by 30 day written notice to ▇▇▇▇ at any
time after the delivery of a ▇▇▇▇ Renegotiation
Notice.
(e) In the event EOTT rejects any ▇▇▇▇ Adjusting Offer, EOTT may
enter into agreements with third parties on all or a portion
of the Supply Volumes, for terms in total which shall not
exceed six (6) months from the date on which ▇▇▇▇ ceases
purchasing Supply Volumes. At any time ▇▇▇▇ may elect,
effective no sooner than six (6) months after the date on
which ▇▇▇▇ ceases purchasing Supply Volumes, to purchase crude
oil under its Right of First Refusal, as set out in Schedule
C.
8.6 CHANGES ON TERMINAL VOLUMES RENDERING ▇▇▇▇ PERFORMANCE UNECONOMIC. The
term "▇▇▇▇" for purposes of this Section 8.6 shall mean ▇▇▇▇ or its
successors in interest approved in writing by EOTT.
(a) If:
(i) [*]
(ii) [*]
(herein referred to as the "UNECONOMIC TERMINAL CONDITIONS");
then ▇▇▇▇ shall be entitled to suspend the obligations of the
Parties to deliver and terminal Terminal Volumes and sell and
purchase Supply Volumes under this Agreement by written notice
to EOTT (the "TERMINAL SUSPENSION NOTICE"). Such suspension of
obligations shall continue until the earlier of:
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(A) Thirty (30) days after the delivery of a
notice by ▇▇▇▇ to EOTT that the Uneconomic
Terminal Conditions have ceased (the "▇▇▇▇
RESUMPTION NOTICE"); or
(B) The Termination of this Agreement.
(b) ▇▇▇▇ shall not be entitled to deliver a Terminal Suspension
Notice unless ▇▇▇▇ shall have delivered to EOTT a full
explanation of the Uneconomic Terminal Conditions, including a
detailed description of ▇▇▇▇'▇ calculations of its direct
terminal costs.
(c) Concurrent with the delivery of the Terminal Suspension
Notice, ▇▇▇▇ shall make a bona fide written offer to EOTT (the
"ADJUSTING TERMINAL OFFER") to amend the Fee.
(d) EOTT shall be entitled to accept or reject any Adjusting
Terminal Offer at any time within the thirty (30) days after
the delivery thereof.
(e) In the event EOTT rejects an Adjusting Terminal Offer, ▇▇▇▇
shall have the right to either continue the Agreement using
the Fee currently in place, issue to EOTT a ▇▇▇▇ Cushing
Terminal Shutdown Notice, as set out in Section 8.2(a), or
continue terminalling for volumes reasonably adjusted using
the remaining unaffected assets at the Terminal which are
dedicated to EOTT pursuant to the Agreement.
(f) DEFINITION - TERMINAL CHANGE. "TERMINAL CHANGE" means a change
in conditions which causes or is projected to cause ▇▇▇▇ to
incur extraordinary costs at the Terminal. Such causes shall
include, but are not limited to:
(i) A change in the law (including but not limited to any
federal, state or local level statutes, regulations,
ordinances, orders and other legal requirements); or
(ii) A change in industry practices (including but not
limited to operational changes and specifications);
or
(iii) Physical damage to the Terminal resulting from
causes, whether occurring naturally or by other
means, which include, but are not limited, to any
weather conditions, electrical conditions,
explosions, fires and abnormal operational
occurrences. Provided, however, that EOTT shall be
allowed, at its sole discretion, to carry insurance
on the Terminal assets dedicated to EOTT, to protect
its position under this Agreement with ▇▇▇▇ as an
additional insured so that such insurance proceeds
are paid to ▇▇▇▇ and applied against ▇▇▇▇'▇ Cash
Costs and or Terminal Changes in Section 8.6(a). If
any non-▇▇▇▇ entity successor or assign to this
Agreement receives insurance proceeds for damage to
the assets dedicated to EOTT,
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such proceeds shall be applied to offset ▇▇▇▇'▇ Cash
Costs or Terminal Changes.
The foregoing notwithstanding, "Terminal Change" shall not
include costs which exceed costs necessary to (a) repair
damage to the Terminal, or (b) keep the Terminal in compliance
with law or industry practices.
8.7 SUPPLY VOLUMES SALES DURING FORCE MAJEURE EVENTS AND TERMINAL VOLUMES
SUSPENSIONS. Any Supply Volumes which are not sold and delivered to
▇▇▇▇ under this Agreement due to any Force Majeure event or Terminal
Volumes Suspension pursuant to Section 8.6 may be sold by EOTT to any
other Person free and clear of all rights or claims of ▇▇▇▇ under this
Agreement.
ARTICLE 9 - EVENTS OF DEFAULT AND REMEDIES
9.1 EVENTS OF DEFAULT BY ▇▇▇▇. Each of the following events shall
constitute an Event of Default by ▇▇▇▇:
(a) FAILURE TO TERMINAL. [*] fails to terminal [*] Terminal
Volumes that comply with the specifications of this Agreement,
pursuant to this Agreement (after giving effect to Articles 5
and 6 and Force Majeure events), or makes default in the due
and punctual payment or crediting of any amount owing by it
under Sections 4.1 and 4.2, and such failure or default
continues for a period of thirty (30) days after notice is
given to ▇▇▇▇ by EOTT. If ▇▇▇▇ defaults under the terms of
this Section 9.1(a), EOTT shall have the right to terminate
this Agreement and maintain the rights established in Section
10.9.
(b) INSOLVENCY. If a judgment, decree or order of a court of
competent jurisdiction is entered against ▇▇▇▇
(i) adjudging such Person bankrupt or insolvent, or
approving a petition seeking its reorganization,
winding up or other relief with respect to itself,
its debts or obligations under the Bankruptcy Code
(United States), including Chapter 11 thereof, or any
other bankruptcy insolvency or analogous Applicable
Law in the United States or elsewhere; or
(ii) appointing a receiver, trustee, liquidator, or other
Person with like powers, over all, or substantially
all, of the property of such Person; or
(iii) ordering the involuntary winding up or liquidation of
the affairs of such Person; or
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(iv) if any receiver or other Person with like powers is
appointed over all, or substantially all, of the
property of such Person, unless such appointment is
stayed.
(c) WINDING UP. If:
(i) an order or a resolution is passed for the
dissolution, winding up, reorganization or
liquidation of ▇▇▇▇ pursuant to Applicable Law; or
(ii) if ▇▇▇▇ institutes proceedings to be adjudicated
bankrupt or insolvent, or consents to the institution
of bankruptcy or insolvency proceedings against it
under the Bankruptcy Code (United States), including
Chapter 11 thereof, or any other bankruptcy,
insolvency or analogous Applicable Law; or
(iii) ▇▇▇▇ consents to the filing of any petition under any
such Applicable Law or to the appointment of a
receiver, or other Person with like powers, over all,
or substantially all, of such Person's property; or
(iv) ▇▇▇▇ makes a general assignment for the benefit of
creditors, or becomes unable to pay its debts
generally as they become due; or
(v) ▇▇▇▇ takes or consents to any action in furtherance
of any of the aforesaid purposes.
9.2 EVENTS OF DEFAULT BY EOTT. Each of the following events shall
constitute an Event of Default by EOTT:
(a) FAILURE TO DELIVER. If EOTT fails to make available for
delivery Supply Volumes pursuant to this Agreement (after
giving effect to Sections 5.1 and 7.3 and Force Majeure events
), or makes default in the due and punctual payment or
crediting of any amount owing by it under Sections 4.1, 4.2,
5.3 and 6.3 of this Agreement, and such failure or default
continues for a period of thirty (30) days after notice is
given to EOTT by ▇▇▇▇. If EOTT defaults under the terms of
this Section 9.2(a), ▇▇▇▇ shall have the right to terminate
this Agreement and maintain the rights established in Section
10.9.
(b) INSOLVENCY. If a judgment, decree or order of a court of
competent jurisdiction is entered against EOTT:
(i) adjudging EOTT bankrupt or insolvent, or consents to
the institution of bankruptcy or insolvency
proceedings against it under the Bankruptcy Code
(United States), including Chapter 11 thereof, or any
other bankruptcy, insolvency or analogous Applicable
Law; or
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(ii) appointing a receiver, trustee, liquidator, or other
person with like powers, over all, or substantially
all, of the property of EOTT; or
(iii) ordering the involuntary winding up or liquidation of
the affairs of EOTT; or
(iv) if any receiver or other Person with like powers is
appointed over all, or substantially all, of the
property of EOTT, unless such appointment is stayed.
(c) WINDING UP. If:
(i) an order or a resolution is passed for the
dissolution, winding up, reorganization or
liquidation of EOTT pursuant to Applicable Law; or
(ii) EOTT institutes proceedings to be adjudicated
bankrupt or insolvent, or consents to the institution
of bankruptcy or insolvency proceedings against it
under the Bankruptcy Code (United States), including
Chapter 11 thereof, or any other bankruptcy,
insolvency or analogous Applicable Law; or
(iii) EOTT consents to the filing of any petition under any
such Applicable Law or to the appointment of a
receiver, or other Person with like powers, over all,
or substantially all, of EOTT's property; or
(iv) EOTT makes a general assignment for the benefit of
creditors, or becomes unable to pay its debts
generally as they become due; or
(v) EOTT takes or consents to any action in furtherance
of any of the aforesaid purposes.
9.3 REMEDIES ON EVENT OF DEFAULT. Where an Event of Default has occurred in
respect of any Party (the "DEFAULTING PARTY"), the other Party (the
"NON DEFAULTING PARTY"), in addition to, and not in substitution for
any other rights and remedies available at law or in equity, may:
(a) subject to Sections 9.1(a) and 9.2(a), terminate this
Agreement on ten (10) days prior written notice to the
Defaulting Party, unless such Event of Default has been cured
or remedied prior to the date of such notice; and
(b) regardless of whether or not this Agreement is terminated
pursuant to Section 9.3(a), and subject to the limitations in
Section 9.5, recover damages from the Defaulting Party for
losses of the Non Defaulting Party arising from such Event of
Default.
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If this Agreement is terminated pursuant to Section 9.3(a), the Non
Defaulting Party shall have no further obligations under this Agreement
except as contemplated by Section 10.9.
9.4 WAIVERS. An Event of Default may only be waived by written notice from
the Non Defaulting Party to the Defaulting Party.
9.5 LIMIT ON PARTIES' RESPONSIBILITY. The Parties' obligations and
liability under this Agreement shall be subject to the following
limitations:
(a) ▇▇▇▇'▇ liability for any breach of its obligations to purchase
and take delivery of Supply Volumes from EOTT in the volumes
required under the terms of this Agreement shall be limited
to:
(i) all reasonable direct costs and expenses incurred by
EOTT in finding substitute purchasers of the Supply
Volumes;
(ii) any loss of profit by EOTT as measured by the
proceeds which EOTT would have received from the sale
of Supply Volumes to ▇▇▇▇ under this Agreement at the
Supply Volume Price, less the proceeds received by
EOTT on the sale of such Supply Volumes to the
substitute purchaser. In calculating the costs under
this item (ii), EOTT shall be required to include all
direct costs associated with such sale; and
(iii) interest as may be payable under this Agreement or
Applicable Law.
(b) EOTT's liability for any breach of its obligations to sell and
deliver Supply Volumes to ▇▇▇▇ in the volumes required under
this Agreement shall be limited to:
(i) all reasonable direct costs and expenses incurred by
▇▇▇▇ in finding substitute crude oil for the Supply
Volumes;
(ii) any loss in profits by ▇▇▇▇ as measured by the
profits which ▇▇▇▇ would have earned on the marketing
and sale of the Supply Volumes, less the profits
which ▇▇▇▇ earns on the marketing and sale of
substitute crude oil. In calculating the costs under
this item (ii), ▇▇▇▇ shall be required to include all
of the types of direct costs which are included in
the definition of ▇▇▇▇ Cash Costs; and
(iii) interest as may be payable under this Agreement or
Applicable Law.
(c) Except as expressly provided in Sections 9.5(a) and (b), in no
event, whether in tort, negligence, breach of contract,
warranty, indemnity, strict liability or otherwise, shall any
Party hereto be liable to any other Party for loss of profits,
revenues, use, production or contracts, downtime costs or
claims of customers of a Party for such damages or for any
financial or economic loss or for any indirect,
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consequential, punitive or exemplary damages whatsoever that
may be suffered by any other Party. Neither party shall be
liable to the other for court costs, attorneys fees or other
litigation related costs.
(d) Nothing in this Section 9.5 shall have the effect of limiting
or reducing the obligations of any Party to mitigate its
losses as a result of any breach by any other Party of their
obligations under this Agreement and losses contemplated by
Sections 9.5(a) and (b) shall be calculated after giving
effect to the results of such mitigation or required
mitigation. In addition, no Party shall be entitled to recover
losses in respect of transactions with Affiliates unless such
transactions are bona fide and on terms which are more
favorable to the Party than the terms which would have been
received by the Party in the most favorable alternative arms
length transaction.
ARTICLE 10 - GENERAL PROVISIONS
10.1 INTERPRETATION.
(a) DEFINITIONS. In this Agreement, including the Preamble,
capitalized terms used in this Agreement and not otherwise
defined in the Preamble or body of this Agreement, shall have
the meanings ascribed to them in the Definitions Schedule to
this Agreement.
(b) INDUSTRY USAGE. In this Agreement, any word, phrase or
expression which is not defined in the Definitions Schedule or
elsewhere herein shall, unless the context otherwise requires,
have the meaning ascribed to it in the usage or custom of the
business of the production, transportation, distribution or
sale of crude oil in the United States.
(c) SINGULAR OR PLURAL. Words importing the singular number shall
include the plural and vice versa.
(d) HEADINGS AND INDEX. The headings and table of contents in this
Agreement are for convenience only and shall not be considered
in the interpretation of the Agreement.
(e) SUBJECT TO ALL LAWS. This Agreement and the rights and
obligations of the Parties hereto are subject to all present
and future Applicable Laws.
(f) SCHEDULES. The following Schedules attached hereto are
incorporated by reference into and form part of this
Agreement:
Schedule A ▇▇▇▇ Cash Costs
Schedule B ▇▇▇▇'▇ ▇▇▇▇▇▇▇ Dedicated Crude Oil Tankage
Schedule C ▇▇▇▇'▇ Right of First Refusal on Supply Volumes
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10.2 APPLICABLE LAW. The validity, interpretation and performance of this
Agreement shall be governed by the laws of the state of Texas and the
federal laws of the United States applicable therein.
10.3 COMPLIANCE WITH APPLICABLE LAW. No Party, nor their duly authorized
representatives, is permitted to take any action hereunder which would
constitute a material breach of any Applicable Law.
10.4 ADDRESS AND FORM OF NOTICE. Any notice permitted or required to be
given under this Agreement shall be in writing, either delivered,
mailed or sent via telecommunication and shall be addressed to the
Parties hereto as follows:
EOTT: EOTT Energy Operating Limited Partnership
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: President
Telecopier No: (▇▇▇) ▇▇▇-▇▇▇▇
Koch: ▇▇▇▇ Oil Company
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Vice President
Telecopier No: (▇▇▇) ▇▇▇-▇▇▇▇
The address and telecopier numbers at which written notice may be
delivered may be changed through written notice made pursuant to this
Section 10.4.
10.5 DEEMED RECEIPT OF NOTICE. Any notice shall:
(a) if hand delivered, be deemed to have been given or made at the
time of delivery;
(b) if sent by telecopy, telex, telecommunication device or other
similar form of communication, be deemed to have been given or
made on the working day following the day on which it was
sent; and/or
(c) if mailed, be deemed to have been made four (4) Business Days
after the postmarked date thereof.
10.6 RESTRICTIONS ON ASSIGNMENT.
(a) Except as provided in this Section 10.6, no Party may assign
its interest in this Agreement without the prior written
consent of the other Party, which consent shall not be
unreasonably withheld.
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(b) A Party may at any time, without the consent of the other
Party, assign its interest in this Agreement to any Affiliate,
provided that such Affiliate shall execute and deliver to the
other Parties a written agreement agreeing to be bound by the
terms and conditions of this Agreement. Notwithstanding any
such assignment, the Party making such assignment shall not,
without the consent of the other Party (which consent shall
not be unreasonably withheld), be released from the
performance of its obligations under this Agreement.
(c) A Party may at any time, without the consent of the other
Party, assign its rights under this Agreement as collateral
security for the payment or performance of any indebtedness or
obligations payable or to become payable by such Party. In
connection therewith, if requested by the Person receiving the
assignment, (the "SECURED PARTY") the non-assigning Party
shall execute an appropriate consent to such assignment in a
form requested by the assigning Party acting reasonably. Each
Party agrees that the assigning Party shall remain liable to
the non-assigning Party notwithstanding such assignment and
that the Secured Party shall not be deemed to assume the
performance of the obligations of the assigning Party
hereunder solely as a result of such assignment.
10.7 INUREMENT. Subject to Section 10.6, this Agreement shall be binding
upon and inure to the benefit of the respective successors and
permitted assigns of the Parties hereto. Each Party covenants that it
shall cause each of its Affiliates to comply with the terms and
conditions of this Agreement.
10.8 CONFIDENTIALITY OBLIGATIONS.
Any and all confidential information that either Party may acquire
under the terms of this Agreement shall be treated as follows:
(a) For the purposes of this Agreement, the term "CONFIDENTIAL
INFORMATION" shall mean any information and knowledge relating
to the business of a Party, including without limiting the
generality of the foregoing:
(i) [*]
(ii) information relating to the operation of the
Terminal; and
(iii) the terms and conditions of this Agreement.
(b) The provisions of this Section 10.8 shall not apply to any
confidential information:
30
31
(i) which at the time of disclosure is generally
available to the public, or which after the time of
disclosure becomes generally available to the public
through no fault of the recipient Party;
(ii) which at the time of disclosure is in the possession
of the recipient Party or any Affiliate of such
recipient Party, or which after the time of
disclosure becomes available to the recipient Party
or any Affiliate of such recipient Party, and which
was not acquired directly or indirectly from another
party or in breach of any contractual or other duty
of confidentiality; and
(iii) which at any time is authorized by a Party in writing
to be disclosed to a specified third party.
(c) Notwithstanding any other provision of this Article, a Party
shall be entitled to disclose any confidential information:
(i) to the extent necessary, in confidence to any banker,
underwriter or financial institution which will or
may provide financing to such Party;
(ii) to the extent necessary to acknowledge to third
parties that an agreement as to the Supply and
Terminal Volumes exists between the Parties;
(iii) to the extent necessary to comply with any Applicable
Law, including any applicable regulation, permit,
license or authorization of any governmental or
regulatory body having jurisdiction; or
(iv) to the extent necessary in any legal proceedings
between EOTT and ▇▇▇▇ with respect to this Agreement
or the transactions contemplated hereby.
(d) Each party shall use the same reasonable efforts to keep the
terms of this Agreement confidential as that party uses to
keep its other business matters confidential.
10.9 SURVIVAL OF TERMINATION. Sections 2.1(e), 3.3, 4.1, 4.2, 4.4, 4.5, 5.1,
5.2, 5.3, 5.4, 6.2, 6.3, 6.6, 7.2, 9.3, 9.5, Article 10 and Schedule C
shall survive the expiration or termination of this Agreement and shall
bind the Parties to this Agreement for a period commencing with the
effective date of this Agreement and ending on the date which is four
(4) years after the end of the Term. In addition, termination of this
Agreement for any reason shall not relieve a Party of any obligation
accrued or accruing prior to such termination.
10.10 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the Parties with respect to the subject matter hereof and
supersedes all negotiations, discussions and undertakings between the
Parties in relation to the purchase, terminalling and sale of Supply
and Terminal Volumes, and there are not other understandings or
agreements, oral
31
32
or written, with respect thereto. There shall be no modification,
amendment or waiver of the terms and conditions of this Agreement
except by written agreement signed by the Parties hereto.
10.11 AMENDMENTS. Unless otherwise provided herein, no changes, alteration or
modifications to this Agreement shall be effective unless in writing
and signed by the respective duly authorized representatives of the
Parties hereto. Except as otherwise expressly provided herein, the
failure of a Party to insist upon the strict performance of any
provision of this Agreement or to exercise any right, power or remedy
granted hereunder shall not operate as or be construed as a waiver of
any such provisions, right, power or remedy, or in any manner impair
the ability of the Party to enforce it, or any other provision, right,
power or remedy at any subsequent time or times.
10.12 SEVERABILITY. If one or more of the non-material provisions contained
herein shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this
Agreement, and shall be deemed severed from this Agreement which shall
be construed as if such invalid, illegal or unenforceable provision or
provisions had never been contained herein.
10.13 DUE AUTHORIZATION AND ENFORCEABILITY. Each Party represents and
warrants that it is a corporation or partnership duly organized in
accordance with the laws of its jurisdiction of organization; that it
is empowered, authorized and entitled to enter into this Agreement and
any and all transactions contemplated hereby; that all corporate and
other proceedings required to be taken by or on its behalf to authorize
it to enter into and carry out this Agreement have been duly and
properly taken; and that this Agreement has been duly executed and
delivered by it and is legal, valid and binding upon it and enforceable
against it in accordance with its terms.
10.14 FURTHER ASSURANCES. The Parties respectively agree to execute and
deliver such further instruments, papers and documents, and to do such
further acts and things, as may reasonably be necessary or as may
reasonably be requested for the purpose of carrying out the provisions
of this Agreement.
10.15 NO PARTNERSHIP. Nothing in this Agreement shall be deemed in any way or
for any purpose to constitute any Party a partner of any other Party to
this Agreement in the conduct of any business or otherwise.
10.16 TIME. Time shall be of the essence in this Agreement.
10.17 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but which
together shall constitute but one and the same instrument.
10.18 GOOD FAITH. The Parties agree to act in good faith towards one another
with regards to this Agreement.
* Confidential treatment has been requested with respect to certain portions of
this exhibit.
32
33
AGREED TO by the Parties effective on the date written above.
▇▇▇▇ OIL COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------------
Printed Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
EOTT ENERGY OPERATING LIMITED PARTNERSHIP
By: EOTT Energy Corp., its General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------------
Printed Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
33
34
DEFINITIONS SCHEDULE
TO THE CRUDE OIL SUPPLY
AND TERMINALLING AGREEMENT
DATED THE __ DAY OF _____, 1998, BETWEEN
EOTT ENERGY OPERATING LIMITED PARTNERSHIP
AND ▇▇▇▇ OIL COMPANY
DEFINED TERMS
"ADJUSTING TERMINAL OFFER" has the meaning ascribed thereto in Section 8.6(c).
"AFFILIATE" means a Corporation or partnership that is affiliated with the party
in respect of which the expression is being applied, and, for the purpose of
this definition:
(a) A corporation or partnership is affiliated with another corporation or
partnership if it directly or indirectly controls or is controlled by
that other corporation or partnership, and for the purpose of
determining whether a corporation or partnership so controls or is so
controlled, it shall be deemed that
(i) a corporation is directly controlled by another corporation or
partnership if shares of the corporation to which are attached
are more than 50% of the votes that may be cast to elect
directors of the corporation are beneficially owned by that
other corporation or partnership and the votes attached to
those share are sufficient, if exercised, to elect a majority
of the directors of the corporation,
(ii) a partnership is directly controlled by a corporation or
another partnership if that corporation or other partnership
beneficially owns more than 50% interest in the partnership,
and
(iii) a corporation or partnership is indirectly controlled by
another corporation or partnership if control, as defined in
(a)(i) or (ii) above, as the case may be, is exercised through
one or more other corporations or partnerships; and
(b) Where two or more corporations or partnerships are affiliates at the
same time with the same corporation or partnership, they shall be
deemed to be affiliated with each other.
"AGREEMENT" means this Agreement, including the schedules and attachments
hereto, as amended from time to time, and expressions "herein," "hereof,"
"hereby," "hereunder" and similar expressions refer to this Agreement and not to
any particular subdivision hereof.
"APPLICABLE LAW" means, in relation to any Person, transaction or event, all
applicable provisions of laws, statutes, rules, regulations, official directives
and orders of all federal, provincial, municipal and local governmental bodies
(whether administrative, legislative, executive or otherwise) and judgments,
orders and decrees of all courts, arbitrators, commissions or bodies
35
exercising similar functions in actions or proceedings in which the Person in
question is a party or by which it is bound or having application to the
transaction or event in question.
"BARREL" means Forty-two (42) United States gallons measured at 60 degrees F.
"BASKET" has the meaning ascribed thereto in Section 3.2(b)(i).
"BPD" means barrels per day.
"BUSINESS DAY" means any day on which banks are open for business in New York,
New York.
"CONFIDENTIAL INFORMATION" has the meaning ascribed thereto in Section 10.8(a).
"COVER COSTS" means the difference between the cost of acquiring substitute
goods and/or services due under this Agreement and the price for such goods
and/or services.
"DAY" means a period of twenty four (24) consecutive hours beginning and ending
at 7:00 a.m. Central Time.
"DECLINE/INCREASE FACTOR" has the meaning ascribed thereto in Section 2.1(d).
"DEFAULTING PARTY" has the meaning ascribed thereto in Section 9.3.
"DEFAULT RATE" has the meaning ascribed thereto in Section 4.2.
"DOMESTIC SWEET CRUDE OIL" has the meaning ascribed thereto in Section 2.1(a).
"EFFECTIVE DATE" means the date on which this Agreement becomes effective, which
shall be December 1, 1998.
"EOTT" means EOTT Energy Operating Limited Partnership, its successors and
permitted assigns.
"EOTT ADJUSTING OFFER" has the meaning ascribed thereto in Section 8.4(c).
"EOTT RENEGOTIATION NOTICE" has the meaning ascribed thereto in Section 8.4(a).
"EOTT UNECONOMIC CONDITIONS" has the meaning ascribed thereto in Section 8.4(a).
"EVENTS OF DEFAULT" shall, in respect of ▇▇▇▇, have the meaning ascribed thereto
in Section 9.1 and, in respect of EOTT, have the meaning ascribed thereto in
Section 9.2.
"F" means Fahrenheit.
"FEE" has the meaning ascribed thereto in Section 6.4(a).
II
36
"FORCE MAJEURE" has the meaning ascribed thereto in Section 8.1.
"IMPAIRED PARTY" has the meaning ascribed thereto in Section 4.6.
"KII" means ▇▇▇▇ Industries, Inc. and its successors.
"▇▇▇▇" means ▇▇▇▇ Oil Company, a subsidiary of ▇▇▇▇ Industries, Inc., its
successors and permitted assigns.
"▇▇▇▇ ADJUSTING OFFER" has the meaning ascribed thereto in Section 8.5(c).
"▇▇▇▇ CASH COSTS" has the meaning ascribed thereto in Schedule A.
"▇▇▇▇'▇ ▇▇▇▇▇▇▇ TERMINAL" ("THE TERMINAL") has the meaning ascribed thereto in
the Agreement.
"▇▇▇▇ ▇▇▇▇▇▇▇ TERMINAL SHUTDOWN" has the meaning ascribed thereto in Section
8.2(a).
"▇▇▇▇ ▇▇▇▇▇▇▇ TERMINAL SHUTDOWN NOTICE" has the meaning ascribed thereto in
Section 8.2(a).
"▇▇▇▇ RENEGOTIATION NOTICE" has the meaning ascribed thereto in Section 8.5(a).
"▇▇▇▇ RESUMPTION NOTICE" has the meaning ascribed thereto in Section
8.6(a)(ii)(A).
"▇▇▇▇ UNECONOMIC CONDITIONS" has the meaning ascribed thereto in Section 8.5(a).
"▇▇▇▇'▇ POSTING" has the meaning ascribed thereto in Section 3.2(a).
"MEDIAN POSTING" has the meaning ascribed thereto in Section 3.2(b).
"MG" means one (1) milligram.
"MONTH" shall have the meaning set forth in the Agreement.
"NON DEFAULTING PARTY" has the meaning ascribed thereto in Section 9.3.
"PARTY" OR "PARTIES" means ▇▇▇▇, EOTT, or their respective successors or
permitted assigns.
"PERSON" shall mean an individual, corporation, partnership, trust or
unincorporated organization.
"PLATTS P+" has the meaning ascribed thereto in Section 3.2(c).
"PRIME RATE" has the meaning ascribed thereto in Section 4.2.
III
37
"SECURED PARTY" has the meaning ascribed thereto in Section 10.6(c).
"SUPPLY VOLUME PRICE" means the price for Supply Volumes delivered or required
to be delivered pursuant hereto determined in accordance with this Agreement.
"SUPPLY VOLUMES" has the meaning ascribed thereto in Section 2.1.
"TERM" means the period starting on the Effective Date and ending on the
termination of this Agreement.
"TERMINAL CHANGE" has the meaning ascribed thereto in Section 8.6(f).
"TERMINAL SUSPENSION NOTICE" has the meaning ascribed thereto in Section 8.6(a).
"TERMINAL VOLUMES" has the meaning ascribed thereto in Section 2.1(b).
"TOTAL CASH COSTS" has the meaning ascribed thereto in Schedule A.
"TOTAL VOLUMES" has the meaning ascribed thereto in Schedule A.
"UNECONOMIC TERMINAL CONDITIONS" has the meaning ascribed thereto in Section
8.6(a).
"UNIMPAIRED PARTY" has the meaning ascribed thereto in Section 4.6.
IV
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SCHEDULE A
TO THE CRUDE OIL SUPPLY
AND TERMINALLING AGREEMENT
DATED THE __ DAY OF _____, 1998, BETWEEN
EOTT ENERGY OPERATING LIMITED PARTNERSHIP
AND ▇▇▇▇ OIL COMPANY
▇▇▇▇ CASH COSTS
FOR ▇▇▇▇'▇ ▇▇▇▇▇▇▇ TERMINAL
UTILITIES/ENERGY
All charges for consumed fuel gas (purchased and produced),
electricity, communications and water.
MAINTENANCE
All direct maintenance including maintenance labor, maintenance
materials, contract maintenance and direct maintenance overhead.
OPERATIONS LABOR
Operator and supervisor labor and related direct expenses for the
terminal.
EXTERNAL LABOR
Contract and Professional labor charges.
SUPPLIES
Includes all operating supplies associated with operating the Terminal.
DIRECT FACILITIES
Insurance and property taxes.
OTHER
Includes all direct miscellaneous expenses and environmental costs.
SUPPORT GROUPS
All direct costs charged to ▇▇▇▇▇▇▇ terminal support groups including
labor, supplies, and other expenses.
NON-RECURRING EXPENSES
Any non-recurring events such as power failures, major unit outages,
and/or generally uncontrollable factors.
A-1
39
CALCULATIONS
▇▇▇▇ Cash Costs, for purposes of this Agreement, shall be calculated
using the following formula for any respective monthly or annual period:
[*]
"TOTAL CASH COSTS" means "The total of the costs described in this Schedule
reasonably attributable to ▇▇▇▇'▇ direct operation of its ▇▇▇▇▇▇▇ Terminal."
"TOTAL VOLUMES" means "The total volume of crude oil and all other associated
liquid hydrocarbons delivered into ▇▇▇▇'▇ ▇▇▇▇▇▇▇ Terminal."
A-2
40
SCHEDULE B
TO THE CRUDE OIL SUPPLY
AND TERMINALLING AGREEMENT
DATED THE __ DAY OF _____, 1998, BETWEEN
EOTT ENERGY OPERATING LIMITED PARTNERSHIP
AND ▇▇▇▇ OIL COMPANY
▇▇▇▇'▇ ▇▇▇▇▇▇▇ DEDICATED CRUDE OIL TANKAGE
TANK NUMBER TANK VOLUME (BARRELS)
41123 250,000
41121 150,000
41120 100,000
41111 15,000
41076 100,000
B-1
41
SCHEDULE C
TO THE CRUDE OIL SUPPLY
AND TERMINALLING AGREEMENT
DATED THE __ DAY OF _____, 1998, BETWEEN
EOTT ENERGY OPERATING LIMITED PARTNERSHIP
AND ▇▇▇▇ OIL COMPANY
▇▇▇▇'▇ RIGHT OF FIRST REFUSAL ON SUPPLY VOLUMES
[*]
C-1
42
[*]
C-2
