Exhibit U
NATURAL GASOLINE FEEDSTOCK HANDLING AGREEMENT
THIS AGREEMENT is entered into this 21st day of September, 2005, by and
between South Hampton Resources, Inc., a Texas corporation, hereinafter referred
to as "Customer" and Xxxxxx Gas Sales, a division of Xxxxxx Operating
Partnership, L.P., a Delaware limited partnership, hereinafter referred to as
"Company."
WHEREAS, Company currently handles Customer's natural gasoline feedstock
needs;
WHEREAS, Company desires to handle Customer's needs for natural gasoline
feedstock to be delivered to Customer via the eight inch liquid products
pipeline originating at Teppco Beaumont Marine Terminal in Orange County, Texas,
and terminating approximately thirty-two miles north at South Hampton Refining
Co. facility at 0000 Xxxxxxx 000 xxxx Xxxxxxx, Xxxxx (the "GSPL Pipeline") on a
year around basis;
WHEREAS, handling all of Customer's need for natural gasoline feedstock to
be delivered via the GSPL Pipeline on a year around basis will require the
Company to construct an 80,000 barrel or larger storage tank with vapor recovery
(the "Tank"), which will be tied to the TEPPCO pipeline system; and
WHEREAS, construction of such storage tank and related improvements by the
Company will result in great expense.
NOW, THEREFORE, in consideration of these premises and the mutual promises
set forth herein, Customer and Company agree as follows:
1. Term: This Agreement shall commence on the Effective Date and terminate
seven years after the Tank Service Date (the "Primary Term"), subject to the
renewal terms provided for herein. This Agreement shall automatically renew for
successive one-year terms unless either party provides written notice of
non-renewal to the other party at least one hundred eighty (180) days prior to
the expiration of the then existing term.
2. Services: During the Term of this Agreement, Customer agrees to
transport all of its pipeline natural gasoline feedstock needs for its facility
located at 0000 Xxxxxxx 000, Xxxxxxx, Xxxxx, with such needs being no less than
180,000 barrels per
calendar quarter (the "Minimum Volume"), through Company's facilities located
adjacent to the Neches River in Jefferson County, Texas. Notwithstanding
anything herein to the contrary, in the event the volume of product handled by
Company for Customer for any calendar quarter falls below the Minimum Volume,
Customer agrees to pay Company as if Company had handled the Minimum Volume for
such calendar quarter at the rates contained in Paragraph 3. The rate in 3a
shall apply to actual barrels delivered, and 3b shall apply to the Minimum
Volume or actual volume, which ever is larger. Irrespective of the Effective
Date of this Agreement, Company's obligations under this paragraph to handle
Customer's natural gasoline feedstock and Customer's obligation to use Company
for such handling shall not commence until the Tank Service Date.
3. Fee: Customer shall pay Company the following amounts for all natural
gasoline feedstock handled for the Customer by the Company's facility:
a. all applicable TEPPCO tariff charges (expected to be $0.0150 per
gallon); and
b. a fee of $0.02 per gallon for the pipeline/storage tank
installation and operational expenses.
The Fee charged pursuant to Paragraph 3(b) shall be adjusted upward annually and
the percentage increase shall be based on 75% of the percentage change of the
U.S. Department of Labor, Bureau of Labor Statistics, Consumer Price Index -
Urban Wage Earners and Clerical Workers (Base Period 1967=100) based upon latest
available trailing 12 months and the change in the Fee shall become effective on
each annual anniversary of Tank Service Date.
4. Construction of Storage Facility: In order to maintain adequate supplies
of natural gasoline feedstock to meet Customer's needs, Company shall construct
the Tank, which shall be dedicated to the storage of natural gasoline consistent
with the TEPPCO pipeline specifications attached hereto as Exhibit "A" or with
specifications as may be mutually agreed from time to time on a case by case
basis by the parties. The Tank shall be tied to the TEPPCO pipeline system by a
new Company pipeline. Within sixty (60) days of the effective date of this
Agreement, Company shall provide to
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Customer a schedule for construction of the Tank and new Company pipeline, which
shall include the anticipated completion and start-up dates. "Tank Service Date"
shall be defined as the date the Tank has been completed along with all
necessary pipeline connections and product is available for delivery into the
GSPL Pipeline. The Company will promptly send written confirmation of the Tank
Service Date to the Customer, once such date occurs.
5. Product Ownership Transfer: Title to, possession and risk of loss of the
natural gasoline feedstock to be delivered to Customer via the GSPL Pipeline
shall pass from Company to Customer, when the product passes through the
transfer meter located at TEPPCO BMT (the "Meter") into the GSPL Pipeline unless
otherwise agreed by both parties. The readings from the Meter shall be used in
determining compliance with the minimum volumes required under Paragraph 2 and
for calculation of the fee owed to Company by Customer pursuant to Paragraph 3.
Such meter will be calibrated periodically according to TEPPCO standard
practice, and the Customer shall have the right to be notified of the
calibration date and be allowed to observe, if desired.
6. Force Majeure: No liability shall result to either party from delay in
performance or from nonperformance hereunder caused by circumstances beyond the
control of the party who has delayed performance or not performed. Such
circumstances may include, but are not limited to, flood or other act of God,
war, governmental action or inaction, inability to obtain natural gasoline, or
requirement of governmental authority, strike or lockout. The non-performing
party shall be diligent in attempting to remove any such cause and shall
promptly notify the other party of its extent and probable duration and shall
give the other party such evidence as it reasonably can of such force majeure.
7. Consequential Damages. The parties hereto waive all claims against one
another for any consequential damages, except those damages specifically
provided for herein, resulting from the breach of this Agreement by a party.
8. Confidentiality. The parties agree that the terms of this Agreement
shall remain confidential between the parties and shall not be disclosed to any
third party (excluding the professional advisors of either party who have a duty
to maintain its confidentiality) without first obtaining the other party's prior
written consent.
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9. Mediation: In the event of any dispute arising under this Agreement, the
parties agree to attempt to resolve the dispute through good faith mediation
prior to the initiation of suit. The Parties agree to make a good faith effort
to choose a mutually acceptable mediator. The costs of mediation shall be shared
equally by both Parties.
10. Entire Agreement: This Agreement constitutes the sole and only
agreement of the parties and supersedes any prior understandings or written or
oral agreements between the parties respecting the subject matter of this
Agreement.
11. Assignment: Neither this Agreement nor any duties or obligations under
this Agreement shall be assignable by the parties hereto without the prior
written consent of the other party, except that Company may assign its rights
and obligations under this Agreement to an affiliate without consent. In the
event of an assignment for which consent has been granted or is not required,
the assignee or the assignees legal representative shall agree in writing to
personally assume, perform, and be bound by all of the covenants, obligations,
and agreements contained in this Agreement.
12. Successors and Assigns: Subject to the provisions regarding assignment
in Paragraph 11, this Agreement shall be binding on and inure to the benefit of
the parties to it and their respective heirs, executors, administrators, legal
representatives, successors, and assigns.
13. Governing Law: The validity of this Agreement and of any of the terms
or provisions hereof, as well as the rights and duties of the parties, shall be
governed by the laws of the State of Texas. Exclusive venue for any dispute
hereunder shall be the State District Courts in Jefferson County, Texas.
14. Amendment: This Agreement may be amended by the mutual agreement of the
parties hereto and a writing to be attached to and incorporated into this
agreement.
15. Severability: In the event that any one or more of the provisions
contained in this Agreement shall for any reason be held to be invalid, illegal,
or enforceable in any respect, such invalidity, illegality, or unenforceability
shall not effect any other provisions, and this Agreement shall be construed as
if such invalid and illegal or unenforceable provisions have never been
contained in it.
16. Notices: All notices or other communications provided for in this
Agreement shall be in writing and shall be deemed to have been given at the time
when
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personally delivered, or mailed in a registered or certified pre-paid envelope,
return receipt requested
and addressed to the other party at the address below:
If to Company: If to Customer:
Xxxxxx Operating Partnership, L.P. South Hampton Resources, Inc.
Attn: Xxx Xxxxxxxx Attn: Xxxx Xxxxxx
P. X. Xxx 000 X. X. Xxx 0000
Xxxxxxx, Xxxxx 00000 Xxxxxxx, Xxxxx 00000
or at such other address as hereafter may be notified in writing by one party to
the other.
17. Default:
a. If Customer fails to comply with its obligations hereunder, Company
may, after giving Customer sixty (60) days to cure such default after written
notice, terminate this Agreement. In the event of termination of this Agreement
due to Customer's default, Customer shall be liable to Company for all amounts
that the Company was required to pay, in order to construct the Tank, the new
Company pipeline and other related improvements for the purpose of performing
the obligations contained herein, up to a maximum of $4,000,000.00 (the
"Reimbursement Costs"). The Company, upon completion of the facilities will
notify the Customer the final amount expended, and the Customer will have an
opportunity to examine the records evidencing such final expenditures. In the
event that Customer disputes the amount of the Reimbursement Costs, the Customer
must notify the Company of such dispute within ninety (90) days after the
Company provides Customer with the notice of the final amount expended or else
the Customer waives any objection to the Reimbursement Costs. In the event a
dispute over the Reimbursement Costs occurs during such ninety (90) day period,
the parties will attempt to resolve such disagreement in the manner established
in Paragraph 9 of this Agreement. The Customer's duty to reimburse Company for
the Reimbursement Costs will be amortized over a period of seven years, such
that the Reimbursement Costs shall be incrementally reduced each year on the
anniversary of the Tank Service Date. On each anniversary of the Tank Service
Date, the Reimbursement Cost shall be reduced by one-seventh of the original
Reimbursement Cost. In the event of default by Customer and election of
termination by Company as provided herein, Customer shall pay to
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Company the unamortized portion of the Reimbursement Costs. On expiration of the
Primary Term without default by Customer, Customer shall no longer have any
obligation to Company to pay any Reimbursement Costs. Customer's payment of the
Reimbursement Costs described herein shall not be construed as an election of
remedies by Company, and Customer shall remain liable for all other damages and
Company may seek all other remedies available to Company under the law.
b. If Company fails to comply with its obligations hereunder, Customer
may, after giving Company sixty (60) days to cure such default after written
notice, terminate this Agreement. In the event of the termination of this
agreement due to the Company's default, the Company agrees to reimburse the
Customer for any additional transportation charges the Customer might suffer
above the contract amounts listed in this Agreement. Such reimbursements shall
be done quarterly and will be paid promptly upon presentation of evidence of
actual charges incurred less credit for the amount of fees identified in
Paragraph 3.
18. Further Assurances: The parties agree to execute such other documents
as may be required to implement the terms and provisions and fulfill the intent
of this Agreement.
19. Binding. This Agreement shall be binding on the parties on the
Effective Date.
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EXECUTED effective the 21ST day of September, 2005 (the "Effective Date").
XXXXXX GAS SALES, A DIVISION OF
XXXXXX OPERATING PARTNERSHIP L.P.
By Xxxxxx Operating GP LLC,
Its General Partner
By Xxxxxx Midstream Partners L.P.,
Its Sole Member
By Xxxxxx Midstream GP LLC,
Its General Partner
By: /s/ XXX XXXXXXXX
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Printed Name: Xxx Xxxxxxxx
Its Executive Vice President
SOUTH HAMPTON RESOURCES, INC.
By: /s/ XXXXXXXX XXXXXX
------------------------------------
Printed Name: Xxxxxxxx Xxxxxx
Its President
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