EXHIBIT 10.41
THROUGHPUT AGREEMENT
--------------------
THIS THROUGHPUT AGREEMENT (the "Agreement") dated October 29, 1999 between
ARCO Pipe Line Company, a Delaware corporation ("Carrier"), and Vastar
Resources, Inc., a Delaware corporation ("Shipper"). Carrier and Shipper may
hereinafter be singularly referred to as "Party" and collectively referred to as
"Parties".
WITNESSETH THAT:
In consideration of the mutual covenants herein contained and other good and
valuable consideration, receipt of which is hereby expressly acknowledge, the
Parties agree as follows:
1. TERM. This Agreement shall become effective November 1, 1999 (the
----
"Effective Date") and shall continue for an initial term of five (5) consecutive
years thereafter (the "Term"). Each calendar year during the Term shall be
hereinafter referred to as an "Annual Period".
2. THROUGHPUT OBLIGATION. The transportation performed by Carrier for
---------------------
Shipper hereunder shall be at the rates set forth herein and shall otherwise be
subject to the rules and regulations in Carrier's applicable tariffs in effect
during the Term of this Agreement (which tariffs are incorporated herein by
reference for all purposes). If there is a conflict between the terms of this
Agreement and the terms of Carrier's published tariffs, the terms of this
Agreement shall be deemed controlling.
During the Term commencing November 1, 1999, Shipper shall tender and deliver to
Carrier one hundred percent (100%) of Shipper's equity Crude plus any third
party Crude controlled by the Shipper. The amount of Crude tendered by Shipper
to Carrier for transportation during each Annual Term shall hereinafter be
referred to as the "Throughput Obligation". Carrier agrees to transport the
volumes of Crude represented by the Throughput Obligation from Vastar Resources,
Inc.'s South Pass Platforms to Equilon Pipeline Company's Facilities, Xxxx Xxxx
Xxxxx 00, Xxxxxxxxxxx Xxxxxx, Xxxxxxxxx (the "Qualifying Movement"). Carrier
shall charge Shipper Forty-two Cents ($0.42) for each barrel of Crude
transported hereunder during the period from the Effective Date through and
including December 31, 1999. Carrier shall charge Shipper Thirty-four Cents
($0.34) for each barrel of Crude transported hereunder during the period
commencing January 1, 2000 and continuing thereafter for the remainder of the
Term.
The Parties acknowledge and agree that the third party Crude potentially
controlled by the Shipper, comprised of Apache and Ocean Energy production in
the South Pass area, is an important component of this Agreement as is Shipper's
SP 60 area production. Shipper covenants and agrees to use its reasonable
efforts to maintain and preserve its relationship and business arrangements with
Apache and Ocean Energy and companies marketing their production in order that
Apache/Ocean's Crude production from the South Pass area remain on Carrier's
pipeline
1
destined to Main Pass Block 69.
3. DEFICIENCY PAYMENTS. Subject to Section 4 hereof, if, for any reason,
-------------------
Shipper fails to fully perform its Throughput Obligation (as such Throughput
Obligations may be reduced in accordance with Section 2 above), Shipper shall
pay Carrier a Deficiency Payment (in cash) in an amount equal to the applicable
rate multiplied times the difference between: (a) the Throughput Obligation (as
applicable); and (b) the volume of Crude actually transported for Shipper on the
Qualifying Movement during such the Annual Term when the deficiency occurred.
This deficiency payment, if any, shall be made to Carrier not later than thirty
(30) days following Shipper's receipt of Carrier's invoice.
Shipper shall also pay interest at the lower of: (i) the maximum lawful
interest rate; or (ii) the rate equivalent to One Hundred Ten Percent (110%) of
the prime rate (as announced from time to time by Citibank N.A. of New York, New
York on 90-day loans to substantial and responsible commercial borrowers) on all
amounts due and payable by Shipper hereunder which are not paid when due, such
interest calculated from the due date of such payment until payment thereof.
4. INTERRUPTION OF SERVICE. Shipper shall be excused from performance of any
-----------------------
Throughput Obligation to the extent caused by failure of pipeline facilities to
operate or the non-availability of space in pipeline facilities; provided
however, at Carrier's option, the Term shall be extended for a like period.
5. FORCE MAJEURE. Neither Party shall be liable for discoloration,
--------------
contamination, damage to or destruction of the Crude or property, and neither
Party shall be liable for any delay or nonperformance of its obligations under
this Agreement when any of the foregoing is caused in whole or in part by any
act of God or the public enemy or by labor troubles, strikes, lockouts, non-
availability of labor, riots, fires, storms, lightning, floods, hurricanes,
washouts, tornadoes, explosions, breakdown or failure of or accident to storage
tanks, docks, pipelines, machinery or equipment, transportation embargoes or
congestions, governmental embargoes or interventions, failure or delay of
manufacturers or person from whom the Party is obtaining Crude, machinery,
equipment, materials or supplies to deliver the same or from any law,
proclamation, regulation (including environmental protection regulations) or
order of any government, governmental agency or court having or claiming to have
jurisdiction over any part of facilities of either Party, or affiliates of
either Party, cancellation or withdrawal of permits by government, governmental
agencies or any other cause beyond the Party's reasonable control, whether such
other causes be of the class herein specifically provided for or not and whether
the cause is or is not existing on the date of this Agreement; provided,
---------
however, at the option of the Party not claiming force majeure, the term of
-------
this Agreement may be extended for a like period of time.
6. LIABILITY AND DAMAGES. (a) EXCEPT AS EXPRESSLY PROVIDED HEREIN, THERE
----------------------
ARE NO GUARANTEES OR WARRANTIES OR REPRESENTATIONS OF THE PARTIES OF ANY KIND,
EXPRESS OR IMPLIED,
2
INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE, WHETHER ARISING BY OPERATION OF LAW OR OTHERWISE.
(b) Neither Party shall be liable to the other Party for loss or damage
related to or arising from special or consequential damages, no matter how or by
whom such loss or damage shall have occurred or been caused.
7. RATE. The rate for the Qualifying Movement shall be Forty-two Cents
----
($0.42) per barrel for the period from November 1, 1999 until December 31, 1999.
The rate for the Qualifying Movement shall be Thirty-four Cents ($0.34) per
barrel for the period January 1, 2000 until October 31, 2004. Shipper
acknowledges and agrees that such rates are just and reasonable. If these rates
are ever determined by a judicial or regulatory authority to be inconsistent
with a lawful rate, the tariff rates shall be changed to the highest lawful rate
such judicial or regulatory authority shall permit; however, Shipper shall in no
event pay any higher than Forty-two Cents ($0.42) per barrel for Qualifying
Movements of the Throughput Obligation for the period November 1, 1999 through
December 31, 1999, nor shall Shipper in any event pay any higher than Thirty-
four Cents ($0.34) per barrel for Qualifying Movements of the Throughput
Obligation for the period January 1, 2000 through October 31, 2004.
Should the volumes tendered to Carrier for transportation exceed the capacity
of the pipeline facilities, Carrier will prorate such volumes.
8 COMPLIANCE. Carrier shall comply, at its own cost and expense, with all
----------
applicable laws, rules and regulations of any federal, state or local
governmental agencies having jurisdiction over the pipeline facilities.
9. RIGHT OF FIRST REFUSAL. If, during the Term, Carrier decides to sell to
----------------------
an unrelated third party all or any portion of the pipeline system on which the
Qualifying Movement is made, Carrier shall notify Shipper of the terms of the
offer for such purchase (including a copy of the proposed Sales Agreement, if
available), and Shipper shall have the right of first refusal to purchase the
pipeline system on the same terms as such offer, provided Shipper notifies
Carrier of its intent to do so within thirty (30) days after Carrier first
notifies Shipper of such offer.
10. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
----------------
between Carrier and Shipper and supersedes any prior written or oral agreements
or contemporaneous communications with respect to this subject matter, including
the Throughput Agreement dated April 4, 1994. The terms of this Amendment may
only be amended by a separate instrument executed by the Parties hereto.
11. NOTICES. Notices and other communications provided for herein shall be
-------
in writing (which shall include notice by telex or facsimile machine with
answer back capability) and shall be delivered or mailed (or if by telex,
graphic scanning or other facsimile communications equipment of the sending
Party hereto, delivered by such equipment), addressed as follows:
3
If to Carrier:
ARCO Pipe Line Company
00000 Xxxx X. Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
Attention: Xxx Xxxxx, Business Development Consultant
If to Shipper:
Vastar Resources, Inc.
00000 Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
Attention: X. X. Xxxxxx, Area Manager, Offshore Gulf of
Mexico
or to such other address as a Party may from time to time designate in writing
in accordance with this section. All notices and other communications given to
any Party hereto in accordance with the provisions of this Agreement shall be
deemed to have been given on the date of receipt.
12. GOVERNING LAWS. THE INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF
--------------
THIS AGREEMENT AND THE RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
GOVERNED BY THE LAW OF THE STATE OF TEXAS WITHOUT REGARD TO THE APPLICATION OF
CONFLICT OF LAWS PRINCIPLES.
13. CHANGE OF CONTROL. In the event of the acquisition of the majority of
-----------------
the issued and outstanding shares of either Party by a third party, the Parties
acknowledge and agree that the terms and conditions of this Agreement shall
remain in full force and effect and shall be fully binding upon the respective
successor(s)-in-interest of the Party (-ies).
14. ASSIGNMENT.
-----------
A. Carrier may, without the consent of Shipper, assign all or a part of
its rights and/or obligations under this Agreement: (i) as collateral security
for a loan or loans for funds, or (ii) to a parent, subsidiary or related entity
of Carrier but the performance obligations under this Agreement of Carrier to
Shipper shall remain the responsibility of Carrier; otherwise, this Agreement
may not be assigned by Carrier without the prior written consent of Shipper,
which consent shall not be unreasonably withheld by Shipper.
B. Shipper may, without the consent of Carrier, assign all or a part of
its rights and obligations under this Agreement to a parent, subsidiary or
related entity of Shipper; otherwise, Shipper may assign its right under this
Agreement to a third party only with the prior written consent of Carrier, which
consent shall not be unreasonably withheld by Carrier.
4
C. Subject to the foregoing, this Agreement shall inure to the benefit of
and be binding upon its successors and permitted assigns of the Parties hereto.
In the event of any assignment by either Party hereto (whether with or without
the consent of the non-assigning Party) the assigning Party shall remain
permanently liable to the other Party for all obligations now contained herein
regardless of whether such obligations were part of or covered by the
assignment.
15. SECTION AND PARAGRAPH HEADINGS. The section and paragraph headings of
------------------------------
this Agreement are inserted for convenience only and are in no way to be
construed as part of this Agreement or as a limitation or enlargement of the
scope or meaning of the particular sections or paragraphs to which they refer
and shall not affect the interpretation of any provisions of this Agreement.
16. SEVERABILITY. If any provisions of this Agreement shall be invalid or
------------
unenforceable to any extent, the remainder of this Agreement shall not be
affected thereby and shall be enforced to the greatest extent permitted by the
law.
17. WAIVER. The waiver by or the failure of either Party to take action
------
with respect to any breach of any term, covenant or condition of this Agreement
shall not be deemed to constitute a waiver of such term, covenant or condition
on any subsequent breach of the term, covenant or condition. The subsequent
acceptance of payments by Carrier under this Agreement shall not be deemed a
waiver of any preceding breach of any term, covenant or condition of this
Agreement other than the failure by Shipper to pay the particular payment.
18. DUPLICATE ORIGINALS. This Agreement is executed in duplicate
-------------------
originals, with one original to be retained by each Party, but which together
shall constitute a single Agreement
19. ARBITRATION. Any controversy, dispute, or claim of whatever nature
------------
rising out of, in connection with, or in relation to the interpretation,
performance or breach of this Agreement, including any claim based on contract,
tort, or statute, shall be settled, at the request of either Party, by final and
binding arbitration conducted at a location determined by the arbitrator(s) in
Houston, Xxxxxx County, Texas, administered by and in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, and
judgment upon any award rendered by the arbitrator(s) may be entered by any
state or federal court having jurisdiction.
5
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
-------------------
Approved as to Form
-------------------
JAF
-------------------
Legal Department
-------------------
Attest: ARCO Pipe Line Company
/s/ Xxx Xxxxx 13/OCT/99 By /s/ Xxxxx Xxxxxxx
-------------------------------------- --------------------------------
Name: Xxx Xxxxx Name: Xxxxx Xxxxxxx
Title: Business Development Consultant Title: PRESIDENT
- Carrier
Attest: Vastar Resources, Inc.
/s/ Xxxxxxx X. XxXxxx By /s/ Xxxx Xxxxxxxx
-------------------------------------- ----------------------------------
Name: XXXXXXX X. XXXXXX Name: Xxxx Xxxxxxxx
Title: DIR OFFSHORE CRUDE MARKETING Title: Crude Oil Marketing Manager
- Shipper
6
