Exhibit 10.1
CRUDE OIL SUPPLY AGREEMENT
THIS CRUDE OIL SUPPLY
AGREEMENT (this “ Agreement ”), dated
as of April 30, 2008, is made and entered into by and between
CALUMET LUBRICANTS CO., LIMITED PARTNERSHIP , an Indiana
limited partnership (“ Customer ”), and
LEGACY RESOURCES CO., L.P. , an Indiana limited partnership
(“ Supplier ”). Each of Customer and
Supplier is sometimes referred to hereinafter individually as a
“ Party ” and they are collectively
referred to as the “ Parties .”
RECITALS
WHEREAS , Customer owns and
operates a refinery in Princeton, Louisiana (the “
Refinery ”) for the processing and refining of
crude oil into specialty lubricating oils and other refined
products;
WHEREAS , Supplier is able to
obtain certain commodities, including crude oil, from various
supply sources; and
WHEREAS , in order to meet
the inventory requirements of the Refinery, Customer desires to
enter into an arrangement pursuant to which it shall purchase from
Supplier, and Supplier shall sell and supply to Customer, crude oil
on a just in time basis.
AGREEMENT
NOW, THEREFORE , in
consideration of the foregoing recitals and the agreements
contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the
Parties, intending to be legally bound, do hereby agree as
follows:
1. Defined Terms .
Unless otherwise provided to the contrary in this Agreement,
capitalized terms used in this Agreement shall have the following
meanings:
“ AAA ” has
the meaning specified in Section 17(a) .
“ AAA Rules
” has the meaning specified in Section 17(a)
.
“ Agreement
” has the meaning specified in the Preamble.
“ Arbitration
Panel ” has the meaning specified in
Section 17(b) .
“ Average Purchase
Price ” means the sum of (i) the monthly average
per barrel price quoted for the first nearby month for West Texas
Intermediate crude oil on the New York Mercantile Exchange and (ii)
$2.50 per barrel, or such other price as may be agreed by the
Parties in accordance with Section 5 .
“ Business Day
” means any day other than a Saturday, Sunday, or other day
on which commercial banks in Houston, Texas are authorized or
required by law to close.
“ Claiming Party
” has the meaning specified in Section 12(a)
.
“ Claims ”
shall mean all claims or actions, threatened or filed and whether
groundless, false or fraudulent, that directly or indirectly relate
to the subject matter of an indemnity, and the
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resulting
losses, damages, expenses, fees of attorneys, experts and
consultants, and court costs, whether incurred by settlement or
otherwise, and whether such claims or actions are threatened or
filed prior to or after the termination of this Agreement.
“ Customer
” has the meaning specified in the Preamble.
“ Customer Indemnified
Person ” means, collectively, Customer, any
Affiliates of Customer (other than Supplier), any members,
shareholders, partners or other equity interest owners of Customer
or its Affiliates (other than Supplier), and their respective
managing members, general partners, managers, managing partners,
directors, officers, employees, agents, consultants, advisors,
contractors, representatives, successors and assigns.
“ Customer’s
Existing Inventory ” has the meaning specified in
Section 7(a) .
“ Customer’s New
Inventory ” has the meaning specified in
Section 10(d) .
“ Default Rate
” means an annual rate of interest equal to 10% per
annum.
“ Delivered Inventory
Report ” has the meaning specified in
Section 9(a) .
“ Delivery Point
” has the meaning specified in Section 8(a)
.
“ Dispute ”
has the meaning specified in Section 17(a) .
“ Effective Date
” has the meaning specified in Section 2 .
“ Force Majeure
” means an event or circumstance that prevents a Party from
performing its obligations under this Agreement, which event or
circumstance (a) was not anticipated as of the Effective Date,
(b) is not within the reasonable control of, or the result of
the negligence of, such Party, and (c) by the exercise of due
diligence, such Party is unable to overcome or avoid or cause to be
avoided, and shall include strikes, lockouts, labor disturbances,
acts of the public enemy, wars, blockades, insurrections, riots,
acts of God, epidemics, landslides, lightning, earthquakes, fires,
violent storms, floods, washouts, environmental catastrophes, civil
disturbances, explosions, breakdown of necessary equipment, acts or
failures to act on the part of any Governmental Authority
(including inability to obtain governmental permits), failure of
utility services, sabotage, or any other similar causes.
“ Governmental
Authority ” shall mean any nation or government, any
state or other political subdivision thereof, and any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
“ Indemnified
Party ” has the meaning specified in
Section 11(c) .
“ Indemnitor
” has the meaning specified in Section 11(c)
.
“ Indication Date
” has the meaning specified in Section 6(a)
.
“ Indication of
Need ” has the meaning specified in
Section 6(a) .
“ Party ”
and “ Parties ” has the meaning specified
in the Preamble.
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“ Person ”
means any individual, corporation, company, voluntary association,
partnership, joint venture, trust, unincorporated organization or
government or any agency, instrumentality or political subdivision
thereof, or any other form of entity.
“ Pipelines
” means the Customer’s pipelines running from Cottage
Grove Station to the Refinery, and from and among any of Cottage
Grove Station, Shoreline Station and the Refinery.
“ Premium ”
means the amount calculated in accordance with the table set forth
on Exhibit A attached hereto.
“ Rail Cars
” has the meaning specified in Section 8(b)
.
“ Raw Material
” has the meaning specified in Section 4 .
“ Refinery
” has the meaning specified in the Recitals.
“ Shoreline/Cottage Grove
Tanks ” means Customer’s storage tanks located
at Shoreline Station, Louisiana and Cottage Grove Station,
Louisiana.
“ Site Tanks
” means Customer’s storage tanks located at the site of
the Refinery, which tanks are more specifically identified by
serial number on Exhibit B attached hereto..
“ Storage Tanks
” means the Shoreline/Cottage Grove Tanks and the Site Tanks,
collectively.
“ Supplier
” has the meaning specified in the Preamble.
“ Supplier Indemnified
Persons ” means, collectively, Supplier, any
Affiliates of Supplier (other than Customer), any members,
shareholders, partners or other equity interest owners of Supplier
or its Affiliates (other than Customer), and their respective
managing members, general partners, managers, managing partners,
directors, officers, employees, agents, consultants, advisors,
contractors, representatives, successors and assigns.
“ Supply Period
” means the period beginning on the Effective Date and ending
upon the expiration of the Wind Up Period.
“ Termination
Notice ” has the meaning specified in
Section 10(b) .
“ Transition
Period ” means the period commencing on the Effective
Date and ending on the date that Customer’s Existing Supply
is deemed to have been depleted in accordance with
Section 7(c) .
“ Wind Up Period
” has the meaning specified in Section 10(d)
.
2. Effectiveness . This
Agreement shall be binding on the Parties and effective as of 12:01
a.m., Houston, Texas time, on May 1, 2008 (the “
Effective Date ”).
3. Term . The term of
this Agreement shall commence on the Effective Date and shall
terminate at such time as terminated by either Party in accordance
with Section 10 .
4. Purpose . The Parties
hereby agree that Supplier shall obtain, sell, supply and deliver
to Customer, and Customer shall receive and purchase from Supplier,
crude oil meeting the specifications
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set
forth on Exhibit C hereto (the “ Raw
Material ”), on and subject to the terms and
conditions of this Agreement.
5. Contract Price .
Customer shall pay Supplier, for each barrel of Raw Material
delivered for sale by Supplier at the Delivery Point, an amount
expressed in U.S. Dollars equal to the sum of (a) the Average
Purchase Price for the applicable month, plus (b) the
Premium. Payment shall be made in accordance with the procedures
established in Section 9 . In the event that the
Parties determine that the sum of the Average Purchase Price plus
the Premium is not representative of the market prices for the Raw
Material by more than $.10 per barrel of crude oil, the Parties
shall negotiate in good faith for a substitute pricing mechanism
for the sale of Raw Material hereunder.
6. Scheduling; Storage of
Raw Material .
(a) Orders and Scheduling
.
(i) No later than the twentieth day
of each calendar month during the Supply Period (or if such
twentieth day is not a Business Day, then on the immediately
succeeding Business Day) (the “ Indication Date
”), Customer shall send to Supplier an indication of its
needs for Raw Material for the next succeeding calendar month (an
“ Indication of Need ”). The Parties
hereby agree that the Indication of Need shall not constitute a
binding obligation of Customer and is intended to provide Supplier
with guidance for purposes of seeking out and procuring the Raw
Material.
(ii) Based on Customer’s
Indication of Need, Supplier shall be solely responsible for
procuring the necessary quantity of Raw Material and for storing
such Raw Material until such time as it is delivered to Customer in
accordance with the terms hereof. Supplier shall have the right to
source Raw Material from any producer of crude oil selected by
Supplier in its sole discretion.
(b) Transportation and Storage of
Raw Material . Supplier shall be solely responsible for
transportation and storage of the Raw Material until such time as
the Raw Material is delivered to Customer in accordance with the
terms hereof. In order to facilitate and expedite the delivery of
Raw Material to Customer, during the Supply Period:
(i) Supplier shall have the exclusive
right to store the Raw Material in the Storage Tanks; and
(ii) Supplier shall be permitted to
use the Pipelines for purposes of transporting the Raw Material
from the Shoreline/Cottage Grove Tanks to the Refinery or from
Cottage Grove Station or Shoreline Station to the Site Tanks or the
Refinery.
During the
Supply Period, Customer shall maintain the Storage Tanks and
Pipelines in good working order in accordance with customary
industry practices. Notwithstanding Supplier’s use of the
Storage Tanks and Pipelines for the storage and transportation of
Raw Material, the Parties hereby agree and acknowledge that
(A) the Storage Tanks and the Pipelines shall at all times
remain the property of and under the sole custody and control of
Customer, and Supplier shall not by virtue of this Agreement obtain
any rights to the Storage Tanks or the Pipelines other than the
right to use the same for the limited purposes specified in this
Section, and (B) title to and risk of loss of the Raw Material
shall not pass to Customer except as contemplated by
Section 8(c) below.
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7. Transition Period
.
(a) Beginning as promptly as
practicable after the Effective Date, Customer shall commence to
draw down, reduce and deplete the crude oil product stored in the
Storage Tanks. The crude oil stored in the Storage Tanks shall be
strapped at 8:00 a.m. Central time on the Effective Date, such
crude oil on such date being hereinafter referred to as “
Customer’s Existing Inventory .”
(b) Customer shall use its
commercially reasonable efforts to deplete Customer’s
Existing Inventory within 30 days after the Effective
Date.
(c) As Customer’s Existing
Inventory is reduced and depleted, Supplier shall begin to store
and commingle the Raw Material with Customer’s Existing
Inventory in the Storage Tanks. For purposes of distinguishing
between the Raw Material and Customer’s Existing Inventory
during the Transition Period and determining when Customer’s
Existing Inventory has been depleted, the Parties agree that the
crude oil in the Storage Tanks shall be deemed to have been drawn
down and reduced on a first-in-first-out basis.
8. Receipt and Delivery;
Title and Risk of Loss .
(a) Delivery and Calculation of
Usage .
(i) Supplier shall deliver the Raw
Material to Customer free and clear of any mortgages, pledges,
liens, charges or other security interests or encumbrances. During
the Supply Period, Customer may take delivery of Raw Material at
any time by removing the Raw Material from the Storage Tanks, and
the Raw Material shall be deemed to have been delivered to Customer
at the point where the Raw Material passes the flange from each of
the Storage Tanks to the Refinery (the “ Delivery
Point ”).
(ii) At 8:00 a.m. Central time on the
first calendar day of each month, Customer will strap the Storage
Tanks. The Customer shall calculate on such day the amount of Raw
Material consumed by Customer during the preceding month by
(A) adding to the ending inventory from the immediately
preceding month the sum of all Raw Material delivered by Supplier
to the Storage Tanks during such month, based on Supplier’s
purchase records for such month (subject to adjustment for
variances objectively demonstrated by Supplier or Customer), and
(B) subtracting from such sum the ending inventory balance of
Raw Material determined by strapping the Storage Tanks. In the
event of any disagreement by the Parties regarding the results of
the foregoing, the Parties shall work together in good faith to
attempt to resolve any differences.
(b) Transportation Costs .
Supplier shall arrange and pay for transportation of the Raw
Material to the Delivery Point. Customer may, but shall have no
obligation to, make available for use by Supplier up to 175
railroad cars (“ Rail Cars ”) to be used
by Supplier for transportation of Raw Material to the Storage
Tanks. In the event that Customer elects to make such Rail Cars
available, Supplier shall pay to Customer a monthly fee in
consideration therefor established by Customer based upon the
actual rates charged by lessors of such Rail Cars used by Supplier.
Supplier acknowledges that the availability of Rail Cars for its
use shall be at the sole discretion of Customer and that Customer
may at any time require Supplier to discontinue its use of the Rail
Cars; provided , however , that if Customer requires
Supplier to discontinue its use of Rail Cars at any time then from
and after such time Supplier shall have the option, exercisable
by
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written notice
to Customer in Supplier’s sole discretion, to be excused from
supplying the Raw Material. Customer and Supplier agree that the
Rail Cars shall at all times remain in the sole control, and
constructive possession, of Customer, in good working order in
accordance with customary industry standards.
(c) Transfer of Title; Risk of
Loss; Indemnity .
(i) As between the Parties, Supplier
shall be deemed to be in exclusive control of the Raw Material
purchased and sold hereunder up to delivery thereof to Customer at
the Delivery Point, and Customer shall be deemed to be in exclusive
control of the Raw Material purchased and sold hereunder at and
after the time the Raw Material is delivered at the Delivery Point.
Title to and risk of loss related to the Raw Material purchased and
sold hereunder shall transfer from Supplier to Customer upon
delivery thereof by Supplier at the Delivery Point.
(ii) Prior to delivery of the Raw
Material at the Delivery Point, Customer shall have no rights to or
interest therein and Supplier shall have the right to remove Raw
Material from the Storage Tanks from time to time and to sell such
Raw Material to third parties, and Supplier shall be given
sufficient ingress and egress rights by Customer, all to the extent
necessary to facilitate Supplier’s removal of the Raw
Material.
(iii) Supplier shall fully protect,
indemnify and defend Customer and each Customer Indemnified Person
and hold each such Person harmless from and against any and all
Claims relating to the Raw Material arising from any act or
omission of Supplier occurring prior to or at the time the Raw
Material is delivered at the Delivery Point, except to the extent
caused by the joint, sole, concurrent, comparative or contributory
fault or negligence, fault imposed by law, strict liability, gross
negligence, or willful misconduct of Customer or any Customer
Indemnified Person. Customer shall fully protect, indemnify and
defend Supplier and each Supplier Indemnified Person and hold each
such Person harmless from and against any and all Claims related to
the Raw Material arising out of any act or omission of Customer
occurring before or after the time the Raw Material is delivered at
the Delivery Point, except to the extent caused by the joint, sole,
concurrent, comparative or contributory fault or negligence, fault
imposed by law, strict liability, gross negligence, or willful
misconduct of Supplier or any Supplier Indemnified Person.
(d) Taxes . Supplier shall be
responsible for all sales, use, excise, ad valorem, and any other
taxes, imposed or levied by any Governmental Authority applicable
to the Raw Material sold and delivered hereunder up to the sale and
delivery thereof to Customer at the Delivery Point. Customer shall
be responsible for all sales, use, excise, ad valorem and any other
taxes
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