EXHIBIT 10.75
AGREEMENT REGARDING THROUGHPUT CHARGE
(XXXXXX FAMILY TRUST)
This Agreement Regarding Throughput Charge ("Agreement) is made this
9th day of December, 1999, effective June 1, 1997 by and between 1) Forcenergy
Inc ("Force"), 2) SPC LLC ("SPC"), for itself and as successor to Xxxxxxx
Petroleum Company, the debtor-in-possession in Case No. A96-00795-DMD in the
United States Bankruptcy Court for the District of Alaska, and 3) the Xxxxxx
Family Trust ("MFT").
RECITALS
A. MFT and Xxxxxxx Petroleum Company ("Xxxxxxx") have entered into the
following Agreements:
a. Letter agreement dated February 11, 1994;
b. Security Agreement dated March 30, 1992;
c. Letter agreement dated July 1, 1994; and
d. Financing statements sled on April 15, 1992 and April
21, 1993, including continuation statements filed on
December 31, 1996 and April 21, 1998, State of
Alaska, Department of Natural Resources Statewide
filings.
The above Agreements are collectively referred to herein as the "Throughput
Agreements." The Throughput Agreements pertain to a petroleum and natural gas
pipeline (the "Pipeline") constructed to transfer petroleum and natural gas from
reserves underlying leases described as ADL-359131 and ADL-359112 (the "Leases")
which are subject to the West McArthur River Unit (the "Unit") as situated in
the Anchorage Recording District, Third Judicial District, State of Alaska.
Pursuant to the Throughput Agreements, MFT acquired an interest in all volumes
of
hydrocarbons transported via the Pipeline, for the life of the Pipeline,
including therein all revenue or value realized from transportation of
hydrocarbons through the Pipeline, which interest was to be paid by SPC to MFT
(the "Throughput Charge") according to the July 1, 1994 letter agreement.
B. On September 13, 1996 an involuntary bankruptcy petition was filed
against Xxxxxxx in United States Bankruptcy Court for the District of Alaska
(the "Bankruptcy Court"). The petition initiated Case No. A96-00795-DMD, the
"Bankruptcy Case." On January 24, 1997, an order for relief under Chapter 11 of
the United States Bankruptcy Code was entered in the Bankruptcy Case.
C. On May 6, 1997, Xxxxxxx entered into a purchase and sale agreement
("P/S Agreement") with Force pursuant to which Xxxxxxx was to sell and Force was
to purchase all or substantially all of the assets of Xxxxxxx according to the
terms and conditions set forth in the P/S Agreement. The Pipeline is one of the
assets Force acquired under the P/S Agreement which further required Force to
assume Xxxxxxx'x obligations to pay the Throughput Charge subject to Force's
review of the Throughput Agreements.
D. On May 12, 1997, the Bankruptcy Court entered an order approving the
sale of Xxxxxxx'x assets to Force pursuant to the P/S Agreement, but providing,
however, that such sale was not free and clear of the interests, claims, and
liens, of; inter cilia, RIFT insofar as such interest, claims, and liens relate
to Throughput Charges accruing from and after January 1, 1997.
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E. On June 5, 1997 SPC closed the sale of substantially all of its
assets to Force. As of that date Xxxxxxx held, through its managing agent, the
sum of $100,595 representing throughput fees otherwise due MFT for the period
September 1, 1996 through June 5, 1997. It was agreed between Xxxxxxx and Force
that Force, in exchange for consideration from Xxxxxxx, would release any claim
it had to throughput collected by Xxxxxxx on or after January 1, 1997 and before
June 5, 1997. MET subsequently reached agreement with SPC on distribution of the
funds held by the managing agent.
F. Beginning effective June 5, 1997, Force has been paying to MFT on a
monthly basis Throughput Charges for hydrocarbons carried through the Pipeline
in conformity with the provisions of the Throughput Agreements.
G. A liquidating Plan of Reorganization was approved in the Bankruptcy
Case. Under the terms of the Plan of Reorganization, SPC LLC has succeeded to
the rights and interests of Xxxxxxx with respect to all interests of Xxxxxxx
that may be the subject of this Agreement.
H. MFT and SPC have negotiated and resolved certain disputes regarding
MFT's interest in the Throughput Charges. The agreement was approved by order
entered in the Bankruptcy Case on October 27, 1998. Under that Agreement, MFT
retains its interest in the Throughput Charges accruing on and after June 5,
1997, subject only to a subrogation claim of SPC, more specifically described
below.
I. SPC and MFT each agree and consent to the transfer to Force of all
rights held by Xxxxxxx and its successor SPC in the Throughput Agreements and
the assumption by
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Force of all obligations arising thereunder pursuant to the terms and conditions
set forth in this Agreement.
WHEREFORE, in consideration of the mutual covenants exchanged below,
and for other good and valuable consideration, the parties agree as follows:
COVENANTS
1. Pursuant to applicable law and under the terms and conditions stated
in this Agreement, SPC, for itself and as successor to Xxxxxxx, hereby assigns
to Force all its right, title, interest, obligations, and liabilities, if any,
under the Throughput Agreements. This assignment shall be deemed effective June
5, 1997.
2. MFT accepts partial cure and consents to assignment, amendment,
restatement, and replacement of Throughput Agreements as specified in this
Agreement. In consideration of same and the promises made in this Agreement, MFT
consents to the assignment by SPC of the Throughput Agreements to Force under
the terms and conditions set forth in this Agreement. MFT's acceptance of this
partial cure from SPC does not constitute a waiver or withdrawal of MFT's
allowed claims against the SPC arising from Throughput Charges or throughput
guarantees owed to MFT and allowed as claims under Class 6 pursuant to the
confirmed Plan of Reorganization. Notwithstanding anything contained herein to
the contrary, neither the prior defaults by SPC under the Throughput Agreements
nor the failure of SPC to make payments specified herein shall affect in any way
the rights of Force as an assignee of SPC under the Throughput Agreements, and
Force shall not be liable to MFT for any obligations or
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liabilities of SPC under the Throughput Agreements except for the period from
and after June 5, 1997, and then only to the extent provided for herein.
3. Force shall pay the Throughput Charge to MFT on all volumes,
including erode oil, condensate and associated and non-associated gas,
transported through the Pipeline from and after June 5, 1997, for the life of
the Pipeline as follows: A) on oil and condensate, ten (10) cents per barrel
until 10 million barrels of oil and condensate shall have been transported
through the Pipeline from inception of its operations and thereafter five (5)
cents per barrel, and B) on associated and non-associated gas, four (4) cents
per MCF. It is specifically agreed that Force shall pay the Throughput Charge on
all volumes transported by the Pipeline, regardless of origin or ownership of
said volumes.
4. Dedication of Reserves Underlying the Leases. Force hereby dedicates
for transporting through the Pipeline, subject to the Throughput Charge, and
herewith agrees to transport through the Pipeline when produced, and to pay to
MFT the Throughput Charge due thereon, all cruder oil, condensate, and
associated and non-associated gas severed from the lands covered by the Leases,
excepting from such dedication and agreement to transport only such reserves, if
any, which are produced from xxxxx drilled from offshore platform locations.
Subject to the immediately preceding sentence, the obligation to pay the
Throughput Charge shall remain in effect even if the Leases are incorporated
into a larger operating unit whose production is transported through another
pipeline, provided that there is reasonable allocation between production from
the Leases and production from the larger production unit overall. The
Throughput Charge shall apply only to production which has been reasonably
allocated to the
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Leases. Force is authorized to determine the allocation, provided it acts in a
reasonable and equitable manner. Except as stated in this paragraph, Force shall
not be obligated to dedicate any other reserves for transportation through the
Pipeline, or to transport through the Pipeline any production from any lease,
field or reservoir, but if production from any such non-dedicated reserves is
transported through the Pipeline, Force is obligated to pay the Throughput
Charge due thereon in accordance with Section 3 of this Agreement.
5. Preservation and Limitation of MFT's Interest. The interests created
by the Throughput Agreements, including any liens and security interests, are
hereby ratified and confirmed by Force and the same remain in full force and
effect except that all such interests, including any liens and security
interests, may be used by MFT to enforce only those obligations incurred by
Force on or after June 5, 1997 pursuant to the Throughput Agreements. The liens
and security interests retained by MFT pursuant to this Agreement shall
expressly include any and all rights of Force to collect from third parties,
whether by cash, offset, or any other value, charges for transportation of oil,
gas or other hydrocarbons through the Pipeline,
6. Assignment. In the event that Force conveys or assigns all of its
interest in the Lease and the Pipeline, it shall have the right to assign all,
but not less than all, of its interest in and duties under the Throughput
Agreements and this Agreement to the same assignee to which it assigns its
interest in the Leases and the Pipeline, provided that such assignee expressly
assumes all duties and obligations to MFT under the Throughput Agreements and
this Agreement, and provided MFT gives its prior written consent to such
assignment, which consent shall not be unreasonably withheld. Upon Force's
assignment of its interest in and duties under the
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Throughput Agreements and this Agreement pursuant to this paragraph of this
Agreement, and provided further that there is no default then existing under the
Throughput Agreements and this Agreement, Force shall be released from all
liability under the Throughput Agreements and this Agreement.
7. Warranties. MFT hereby represents and warrants to Force that (A) no
one claims an interest in or through the Throughput Agreements and this
Agreement except for subrogation claims by SPC, (B) except as stated in (A), the
Throughput Agreements are the only agreements between MFT and SPC related to the
matters described therein, (C) MFT has good and valid title under the Throughput
Agreements to a Throughput Charge of at least ten (10) cents per barrel of oil
and condensate transported through the Pipeline (subject only to subrogation
rights of SPC), and of at least four (4) cents per MCF on associated and non-
associated gas transported through the Pipeline, and (D) Xxxxx X. Xxxxxx and
Xxxxxx X. Xxxxxx are the co-trustees of MFT and as such are duly authorized to
execute this Agreement on behalf of MFT. Force hereby represents and warrants to
MFT that Force has acquired SPC's title to the Pipeline and that it has good
right and authority to enter into this Agreement.
8. Inapplicable Sections of Letter Agreement. MFT acknowledges that the
February 11, 1994 Letter Agreement is replaced in its entirely by the July 1,
1994 Letter Agreement, and that Sections 6, 7, 8, 9, and 10 of the July 1, 1994
Letter Agreement have no application to Force. Force does not assume and is not
liable for the obligations of SPC under such sections. However, Force agrees to
operate the Pipeline in compliance with all requirements arising under Federal,
State, and other applicable law and in compliance with public or private
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permits or agreements affecting operation of the Pipeline. MFT shall not be
obligated to pay, or be liable for, any expenses for repair or operation of the
Pipeline, any further construction costs for continued operation of the
Pipeline, or any costs to deactivate or remove the Pipeline.
9. By agreement between MFT and SPC, SPC has acquired rights of
subrogation to MFT's right to receive payment with respect to throughput for
crude oil and condensate only (not for associated or non-associated gas). Under
these rights, SPC may in the future acquire the right to receive 50. per barrel
for every 100 per barrel payable to MFT. SPC agrees that its rights are solely
as subrogee and that SPC will be bound by this agreement to the same extent as
MFT. Force shall continue to pay MFT until notified in writing by MFT and SPC
that SPC's right to receive 50 per barrel has been triggered and thereafter the
Throughput Charge for crude oil and condensate only shall be split evenly
between MFT and SPC until the Throughput Charge steps down to 50 per barrel at
which point the Throughput Charge shall be paid exclusively to MFT.
10. Confidentiality. The parties agree that the terms of this Agreement
shall be kept confidential, except that the terms hereof may be revealed by
either party in any proceeding in any court of competent jurisdiction wherein a
matter pertaining to such party's interest in this Agreement is being
adjudicated. Nothing herein, however, shall bar MFT or SPC from filing or
recording this Agreement of Record in order to protect and/or preserve its
interests or rights herein.
11. Governing Law; Venue. This Agreement shall be construed and
enforced according to the law of Alaska. Sole venue for any lawsuit or
proceeding of any nature based
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upon or arising from this Agreement shall be in the courts of Alaska, Third
Judicial District at Anchorage.
12. Further Assurances. The parties pledge mutual good faith and
cooperation in taking any other or further acts, including the execution of
documents, instruments and court pleadings, which at any time appear reasonably
necessary for the other party to this Agreement to receive, perfect or preserve
a benefit intended by this Agreement for such party to receive.
13. Address for Notice. Notices or demands relating to the Throughput
Agreements or this Agreement shall be addressed as follows:
Forcenergy Inc
Attention: President
0000 XX 0xx Xxxxxx, Xxxxx 000
Xxxxx, XX 00000
Facsimile: 000-000-0000
Telephone: 000-000-0000
The Xxxxxx Family Trust
Xxxxx X. and Xxxxxx X. Xxxxxx, Co-Trustors
XX Xxx 0000
Xxxxx, XX 00000
Facsimile: 000-000-0000
Telephone: 000-000-0000
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FORCENERGY INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Xxxxxx X. Xxxxxx
Its: Vice President
STATE OF FLORIDA )
) ss.
COUNTY OF MIAMI-DADE )
Before me, a notary public within and for the State of Florida,
personally appeared Xxxxxx X. Xxxxxx who stated he/she was authorized to sign on
behalf of Forcenergy Inc. and that he/she signed the above and foregoing as
his/her free act and deed.
Subscribed and sworn to before me this 9th day of December, 1999.
/s/ Xxxxx Xxxxxx
---------------------------------------------
Notary Public, State of Florida
[SEAL}
SPC LLC for itself and as successor
to Xxxxxxx Petroleum Company
By: /s/ Xxxxx Xxxxxx
------------------------------------
Its: Managing Agent
STATE OF ALASKA )
) ss.
THIRD JUDICIAL DISTRICT )
Before me, a notary public within and for the State of Alaska,
personally appeared Xxxxxxx Xxxxxx who stated he/she was authorized to sign on
behalf of Forcenergy Inc. and that he/she signed the above and foregoing as
his/her free act and deed.
Subscribed and sworn to before me this 24h day of Nov, 1999.
/s/ signature
---------------------------------------------
Notary Public, State of Alaska
My Commission Expires: May 3, 2002
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THE XXXXXX FAMILY TRUST
By: /s/ Xxxxx X. Xxxxxx
------------------------------------
Xxxxx X. Xxxxxx, Co-Trustee
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Xxxxxx X. Xxxxxx, Co-Trustee
STATE OF HAWAII )
) ss.
COUNTY OF MAUI )
Before me, a notary public within and for the State of Hawaii,
personally appeared Xxxxx X. Xxxxxx and that he signed the above and foregoing
as his free act and deed.
Subscribed and sworn to before me this 19th day of November, 1999.
/s/ Xxxxxxxx Xxxxxx
---------------------------------------------
Notary Public, State of Hawaii
[SEAL}
My Commission Expires: 5/20/2000
STATE OF HAWAII )
) ss.
COUNTY OF MAUI )
Before me, a notary public within and for the State of Hawaii,
personally appeared Xxxxxx X. Xxxxxx and that he signed the above and foregoing
as his free act and deed.
Subscribed and sworn to before me this 19th day of November, 1999.
/s/ Xxxxxxxx Xxxxxx
---------------------------------------------
Notary Public, State of Hawaii
[SEAL}
My Commission Expires: 5/20/2000
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