EXHIBIT 10.24
PAGES WHERE CONFIDENTIAL TREATMENT HAS BEEN REQUESTED ARE STAMPED
'CONFIDENTIAL TREATMENT REQUESTED. THE REDACTED MATERIAL HAS BEEN SEPARATELY
FILED WITH THE COMMISSION,' THE APPROPRIATE SECTION HAS BEEN MARKED AT THE
APPROPRIATE PLACE AND IN THE MARGIN WITH A STAR (*).
OPERATING AGREEMENT
BETWEEN
WEST TEXAS LPG PIPELINE LIMITED PARTNERSHIP
AND
CHEVRON PIPE LINE COMPANY
THIS AGREEMENT is made and entered into as of September 1, 1996 by and between
West Texas LPG Pipeline Limited Partnership, a Texas limited partnership
(hereinafter referred to as "Company"), and Chevron Pipe Line Company, a
Delaware Corporation (hereinafter referred to as "Operator").
WHEREAS, Company is the owner of certain LPG pipeline facilities ("Facilities")
more particularly identified in Attachment II and Attachment III; and
WHEREAS, Company does not have a working staff to operate the Facilities and
desires to engage Operator in these respects;
NOW, THEREFORE, in the consideration of the premises and mutual covenants
contained in this Agreement, Company and Operator agree as follows:
Section 1. Definitions
As used in this Agreement, the following words and terms shall have the meanings
set forth:
(a) "Accounting Procedure" means the accounting procedure set forth in
Attachment I, hereof.
(b) "AFE" means an approval for expenditure in the form approved by Company.
(c) "Affiliate" means with respect to any Person, (i) any other Person which
beneficially owns, directly or indirectly, 50% or more of such Person's stock or
50% or more of the ownership interest entitled to vote in such Person or (ii)
any other Person as to which 50% or more of the voting stock or 50% or more of
the ownership interest entitled to vote therein, is beneficially owned, directly
or indirectly, either by such Person or by an Affiliate of such Person as
defined in the preceding clause (i).
(d) "Agreement" means this Operating Agreement together with all Attachments.
(e) "Capital Commitment Budget" means the capital budget as further described
in Section 5A. of this Agreement.
(f) "Capital Expenditure Forecast" means the capital expenditure forecast as
further described in Section 5B. of this Agreement.
(g) "Cash Operating Costs" means amounts payable to Operator under Section 3 of
this Agreement.
(h) "Confidential Information" means any information relating to the identity
of shippers using the Facilities, the nature, kind, quantity, destination or
consignee or routing of Products using the Facilities, or any other information
which is in writing and has been labeled by Company as confidential.
Confidential Information shall not include any information which is acquired by
Operator in the course of its activities outside of the scope of this Agreement
or which becomes part of the public knowledge or literature without breach of
this Agreement.
(i) "Costs" means all costs charged to the Company as provided in the
Accounting Procedure.
(j) "Expenditure Authorities" means the expenditure authorities described in
Section 6. of this Agreement.
(k) "Facilities" means the facilities identified in Attachment II and
Attachment III hereto.
(l) "Force Majeure" means an occurrence not within the control of the party and
which by the exercise of reasonable efforts such party is unable to prevent or
overcome, and shall include, but not be limited to, acts of God, strikes,
lockouts, or other industrial disturbances, acts of the public enemy, wars,
blockades, insurrections, riots, epidemics, landslides, lightning, earthquakes,
fires, storms, floods, washouts, hurricanes, storm warnings requiring evacuation
of facilities, arrests or restraints of the government, either federal or state,
civil or military, civil disturbances, explosions, sabotage, breakage or
accident to equipment, machinery or lines of pipe, extreme heat or cold weather,
freezing of machinery, equipment or lines of pipe, electric power shortages,
inability of any Party to obtain necessary materials and supplies, inability of
any Party to obtain necessary permits and/or permissions due to existing or
future rules, orders, laws or governmental authorities (both federal, state and
local), temporary cleaning or testing of facilities, temporary failure of
supply, or any other causes, whether of the kind herein enumerated or otherwise,
which were not reasonably foreseeable on the effective date of this Agreement,
and which are not within the control of the Party claiming suspension and which
such Party is unable to overcome by the exercise of due diligence. The term
"Force Majeure" shall also include those instances in which either Party hereto
is required to furnish materials and supplies for the purpose of constructing
and maintaining facilities or is required to secure permits or permission from
any governmental agency to enable such Party to acquire, or the delays on the
part of such Party in acquiring, at reasonable cost and after the exercise of
due diligence, such materials and supplies, permits and permissions. It is
understood and agreed that the settlement of strikes or lockouts shall be
entirely
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within the discretion of the Party having the difficulty, and that the above
requirement that any Force Majeure shall be remedied with all reasonable
dispatch shall not require the settlement of strikes or lockouts by acceding to
the demands of opposing parties when such course is inadvisable in the
discretion of the Party having difficulty. The term "Force Majeure" shall also
include any such event occurring with respect to the facilities or services of
either Operator's or Company's third-party suppliers or customers delivering or
receiving any product, fuel, feedstock, or other substance necessary to the
continuous operation of either Party's plants or facilities or performance of
such Party's obligations, and shall also include curtailment or interruption of
deliveries or service by such third-party suppliers or customers as a result of
(i) another event of Force Majeure or (ii) a breach by such third-party under
the applicable agreement(s).
(m) "GAAP" means generally accepted accounting principles.
(n) "Insurance Manual Rates" means the published insurance industry recognized
computations of standard accepted insurance rates.
(o) "LPG" means liquefied petroleum gas or petroleum products, namely, natural
gasoline, ethane, propane, isobutane, normal butane, and pentanes or mixtures
thereof, recovered from gasoline recovery plants and gas recycling plants.
(p) "Major Maintenance Budget" means the major maintenance budget as further
described in Section 5C. of this Agreement.
(q) "Operating Expense Budget" means the operating expense forecast as further
described in Section 5D. of this Agreement.
(r) "Operator" means Chevron Pipe Line Company acting in its capacity as
operator of Facilities hereunder.
(s) "Parties" or "Party" means the Operator and/or Company.
(t) "Partnership Committee" means the managing unit of Company.
(u) "Person" means any individual, partnership, association, trust, corporation
or other entity.
(v) "Products" means, without restriction, natural gas liquids, LPG or products
derived from LPG.
(w) "Year" means a calendar year.
Section 2. Operations
Operator, on behalf of Company, agrees to operate, maintain and repair the
Facilities, and any modifications or improvements thereof, and to perform any
other duties as may be requested by
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Company in a good and workmanlike manner and, in the absence of specific
instructions from Company, shall have the right and duty to act in accordance
with its best judgment as a reasonable and prudent operator would do under the
same or similar circumstances. Company does hereby authorize and empower
Operator, on behalf of Company, to do and perform or cause to be done and
performed by others any and all acts and things which Operator shall, in the
exercise of its discretion and best judgment, deem necessary or advisable for
the operation, maintenance, and repair of such Facilities in accordance with the
Expenditure Authorities as set forth in Section 6, to the end that the
Facilities may be used in a safe, efficient and economical manner for receipt,
delivery, measurement and transportation of Products. Without limiting the
foregoing, subject to the limits otherwise set forth in this Agreement, Operator
shall specifically perform the following acts on behalf of Company:
A. perform such mechanical activities as may be required to receive,
deliver, transport and/or otherwise handle Products tendered to and
accepted into the Facilities.
B. submit to Company recommended budgets and other information as set
forth in Section 5. hereof.
C. purchase or cause to be purchased for and in the name of Company
materials, supplies and services necessary for the operation of the
Facilities in accordance with the budgets approved by Company (or as
otherwise approved under this Agreement);
D. maintain surveillance of the Facilities, conduct assessment, and
periodically inspect the Facilities for damage or other conditions
which could affect the safe, efficient and economical operation of the
Facilities, perform such repairs to the Facilities as requested by
Company or as may from time to time be required and prepare
appropriate reports that document such activities;
E. act as representative for Company in contacts with government agencies
relating to the physical operation, maintenance and repair of the
Facilities, where required by audits, laws, rules, regulations,
orders, permit conditions, or right-of-way agreements;
F. prepare, maintain and implement operating manuals, monitoring
programs, contingency plans and training programs satisfying all
applicable laws, rules, regulations, orders and any other requirements
of governmental authorities together with such other operating
procedures or manuals as Company may require;
G. prepare custody transfer tickets, and other appropriate accounting
materials to document custody transfer and receipt of Products, and
sample and measure Products received and delivered to verify quality
and quantity as operations may require;
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H. provide Product shipments scheduling and 24-hour continuous monitoring
and control of pipeline flows for safe and efficient operations;
I. file, store and maintain in a manner such that they shall be available
for periodic inspection by Company all as-built drawings or
descriptions of the Facilities, construction and maintenance records,
inspection and testing records, operating procedures and manuals,
custody transfer documents, and such other records (all collectively
"records") as may be necessary or appropriate to the operation,
maintenance and repair of Facilities, or required by applicable laws,
rules, regulations, orders and any other requirements of governmental
authorities, or requested by Company. All of such records shall remain
the property of Company;
J. prepare and file all tariffs subject to approval of Company;
K. collect all tariffs, fees or other amounts derived from the operation
of the Facility, keep correct complete, and accurate accounts of all
receipts and disbursements made on the Company's behalf, and deposit
all moneys or other valuable effects in the name and to the credit of
Company in such depository banks, trust companies, savings and loan
associations or other similar institutions as may be designated by
Company, keep individual Book Capital Accounts for each partner of
Company, prepare partnership income tax returns for approval and
filing by Company, recommend for approval by the Company amounts of
cash distributions that should be made to the partners of Company, and
preparation of any other financial accounts or statements that may be
required by Company;
L. upon request, attend meetings of the Partnership Committee of Company,
or, whenever otherwise required by Company, prepare and distribute
reports of all financial transactions involving the Company hereunder
and other reports reasonably requested by Company or any partner of
Company, but only to the extent that Operator is legally authorized to
do so;
M. make all statutory and regulatory filings required of the Company,
including without limitation, all permit applications, and filings
with the Federal Energy Regulatory Commission, Texas Railroad
Commission and any other state Public Utilities Commissions,
Department of Transportation, or other regulatory agencies having
jurisdiction over Company;
N. sign all checks, drafts, or orders for the payment of Costs authorized
pursuant to this Agreement;
O. facilitate the financing and investments including the issuance of
commercial paper in accordance with the policies set forth by the
Company;
P. administer the Facilities' regulatory, financial, contractual and
legal affairs to the extent such administration is authorized by
Company; and
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Q. provide equipment, materials and services as legally required or as
Company may from time to time request, for discharge prevention and
response for Products and/or hazardous substances. These services
shall include, but not be limited to, preparation, submission, and
finalization of discharge prevention and/or contingency plans for
Products and/or hazardous substances, and preparation for, prevention
of, response to and/or cleaning up of any discharge or threatened
discharge of Products and/or hazardous substances. Without limiting
the foregoing, Operator shall serve as response action contractor for
Company;
R. obtain rights-of-way, make renewal payments and do such other tasks as
may required to maintain rights-of-way.
S. supervise the construction of any expansions, modifications, or
extensions of the Facilities that are approved by Company;
T. provide engineering services that may be necessary in operating,
expanding or modifying the Facilities as approved by Company; and
U. keep the Facilities free and clear of all material liens and
encumbrances not otherwise authorized by Company.
V. pay and discharge promptly all costs and expenses reasonably incurred
in operating the Facility.
Operator agrees to perform all services hereunder in a manner consistent with
the usual and customary practices, codes and standards in the pipeline industry
(including specifically the Federal Energy Regulatory Commission, the Texas
Railroad Commission and state Public Utilities Commissions as well as applicable
Department of Transportation and American National Standards Institute) and in
accordance with all valid and applicable laws, rules, regulations, orders and
any other requirements of governmental authorities. Operator in its capacity as
Operator pursuant to this Agreement, shall assume no other liability to Company
except in the case of Operator's own gross negligence or willful misconduct.
Notwithstanding the foregoing, the gross negligence standard shall apply only to
the operations performed hereunder and shall not apply to any actions, inactions
or negligence of the Operator in connection with the operation of any pipeline
other than Facilities. Operator shall furnish or arrange for the necessary
personnel to efficiently perform such services. None of such personnel shall be
employees or agents of Company, statutory or otherwise.
Section 3. Payment for Operator Services
A. Company shall pay and Operator shall receive as full and complete
compensation for the performance of Operator's services as Operator
hereunder, the sum of the amounts becoming due (hereinafter referred
to as "Cash Operating Costs") as
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described and authorized in Attachment I, Accounting Procedure.
Company shall make payment in the time and manner specified herein.
B. Within the month immediately following the previous month of service,
Operator shall invoice Company for the actual Cash Operating Costs for
the immediately prior month. Company shall pay to Operator the amount
of such invoice, payable upon receipt.
Section 4. Accounting
A. Operator shall keep and maintain proper and complete books and
accounts, in the name of Company, in conformity and consistent with
GAAP utilizing the principles and practices generally employed in
regulated oil pipeline accounting unless any regulatory agency with
jurisdiction over the System or the Partnership shall rule otherwise;
and shall furnish monthly financial statements and such other reports,
statistics and statements as Company or any partner of Company may
reasonably from time to time request.
B. Operator shall maintain accurate accounts of all expenditures and
liabilities incurred by it in operating, maintaining and repairing the
Facilities and shall render a monthly statement to Company and each
partner of the Company of all such expenditures and liabilities. The
failure to include any item in the current monthly statement rendered
for the month in which the same was incurred or expended shall not
preclude such item from being brought forward and included in any
subsequent monthly statement. All books, records and accounts shall be
open to inspection and audit by Company or Company's authorized
representatives at all reasonable times during business hours.
C. Operator shall establish a separate bank account(s) on behalf of
Company and all revenues received in the operation of the Facilities
shall be deposited in the name and to the credit of Company. All
interest or other benefits generated by this account shall accrue to
the benefit of Company. Operator shall not commingle any of its funds
in the account established hereunder.
Section 5. Budgets and Forecasts
On or before November 1 of each year, Operator shall prepare and submit to the
Partnership Committee of Company for review, approval, or modification the
following annual budgets and forecasts:
A. Capital Commitment Budget
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The Capital Commitment Budget shall consist of an itemization of
commitments for each capital project equal to or in excess of $50,000
(large projects) and a combined total of all Items less than $50,000
(small projects) for the following calendar year.
B. Capital Expenditure Forecast
The Capital Expenditure Forecast shall identify separately all
expenditures for capital items from prior budgets which are not yet
complete and all capital items anticipated to be approved in the
pending budget. Large projects shall be listed individually and small
projects may be combined. The forecast shall indicate expenditures by
quarter for the following calendar year and indicate any appropriate
carryover in subsequent years.
C. Major Maintenance Budget
The Major Maintenance Budget shall consist of an itemization of each
maintenance project equal to or in excess of $50,000 (large projects)
and a combined total of all items less than $50,000 each (small
projects) for the following calendar year.
D. Operating Expense Budget
The Operating Expense Budget shall identify for the following calendar
year the expected Operating Expenses including Direct Costs,
Management Fee, and Major Maintenance items.
E. Volume Forecast
All volumes expected to be handled through the Facilities shall be
identified for the following calendar year.
Company may at any time supplement or amend the budgets and forecasts as
necessary to carry out the purposes of this Agreement.
Section 6. Expenditure Authorities
A. Projects or Expenses not Exceeding $50,000
The Operator shall have the authority to make expenditures for any
individual capital project, major maintenance project or operating
expense not exceeding $50,000 to the extent that Operator deems such
expenditures necessary and appropriate for the operation or
maintenance of the Facilities. The sum of any such expenditures may
not, during any Year, exceed the amounts indicated for all such
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projects or expenses in the budget which have been approved by Company
for that Year.
B. Projects or Expenses in Excess of $50,000
The Operator shall have the authority to make expenditures for any
individual capital project, major maintenance project or operating
expense in excess of $50,000 if such project or expense was
specifically identified in an approved budget or Company has approved
an AFE for the project. The amount of the Operator's authority under
this subsection may be overrun by the greater of 10% or $10,000
without seeking prior approval by Company; provided, however that such
overrun does not cause any of the Capital Expenditure Forecast, Major
Maintenance Forecast or Operating Expense Forecast approved by the
Company to be exceeded.
C. Settlement of Claims
Operator shall have authority to make expenditures in settlement of
claims, demands and litigation resulting from or arising out of
operations of Facilities up to $25,000 for each such claim. Operator
shall notify Company and each partner of Company immediately of any
claim, demand or suit, and if the amount required for full settlement
exceeds the above specified amount, Operator shall notify the Company
and each partner of Company and the Company shall determine how to
further handle the claim, demand or suit.
D. Taxes
The Operator shall have the authority to make expenditures for, and
shall be entitled to receive full and complete compensation from
Company for, Taxes as described in Section 2.A.8 of "Cash Operating
Costs" in Attachment I, Accounting Procedure. Such authority to make
expenditures for, and entitlement to receive full and complete
compensation for, Taxes, shall be true whether or not the expenditure
is within an approved budget or the action has prior approval of
Company.
E. Operation In Lieu of An Approved Budget
In the event Company fails to deliver to the Operator on or before
December 31 an approved budget for the ensuing year, the previous
year's budget shall remain in effect until an approved budget is
delivered. Notwithstanding the foregoing, the Operator may take such
actions and make such expenditures as may be deemed necessary, under
laws, rules, regulations, orders or good industry practices, in order
to continue the orderly conduct of the business of Company hereunder
and to preserve and maintain the Facilities. In the event that any
such expenditure was not specifically approved in an earlier budget or
otherwise approved by the
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"Confidential Treatment Requested.
The redacted material has been
separately filed with the Commission."
Company, Operator's authority shall be limited to a maximum of
$500,000 for any one expenditure and a total maximum of $ 1,000,000
for all such expenditures in any one year. In the event of such
operation without an approved budget, the Operator shall, on a monthly
basis, give telephone notice or otherwise contact Company and each
partner of Company as soon as practicable and advise it of the
circumstances of such operation without an approved budget, the
actions taken or proposed and the expenditures made, incurred,
committed, or proposed. All expenditures made pursuant to this Section
6.E. shall be treated as Cash Operating Costs hereunder. Nothing in
this Section 6.E. shall in any way restrict the Operator's authority
as set forth in Section 6.F.
F. Emergencies
In an emergency, the Operator may take such actions and make such
expenditures as may be deemed necessary, under laws, rules,
regulations, orders or good industry practices, in order to cure such
emergency. This shall be true whether or not the expenditure is within
an approved budget or the action has prior approval of Company. In the
event of such an emergency, the Operator shall give telephone notice
or otherwise contact Company as soon as practicable and advise it of
the circumstances of such emergency, the actions taken or proposed and
the expenditures made, incurred, committed, or proposed. All
expenditures made pursuant to this Section 6.F. shall be treated as
Cash Operating Costs hereunder.
Section 7. Term
----
This Agreement shall take effect as of the day and year first above written
* and shall continue for a term of REDACTED and continue thereafter until
canceled on 180 days prior written notice by either Party which such notice
may be given for any reason or no reason in the sole discretion of either
Party; provided, however, in the event that Company has not selected a
replacement operator who is ready and capable of assuming the operation of
Facilities at the end of such notice period, Operator shall continue to
operate the Facilities hereunder for such period until a replacement operator
is selected who is ready and capable of assuming the operation of Facilities
but such continuation by Operator shall not extend beyond 180 days following
the end of the notice period. Company shall have the right to terminate this
Agreement if Operator ceases to own a majority of the interest in the Company.
Upon termination of this Agreement, Company shall pay Operator the amounts
chargeable to Company hereunder as of the date of termination which have not
already been paid by Company; Company shall also reimburse Operator for the full
amount of any obligations or commitments
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Operator has made in the interest of performing the services hereunder in
accordance with the annual budget and any approved projects which were not paid
by Company prior to the date of such termination or, if agreeable to Operator,
Company may assume such obligations or commitments. Upon termination of this
Agreement, Operator shall turn over to Company all records, data, and
information in Operator's possession pertaining to operations hereunder, as well
as materials, equipment, facilities, and operating supplies on hand which had
been purchased by Company or in its name. Termination of this Agreement shall
not affect the rights and privileges or duties, liabilities and obligations of
either Party which arose or accrued prior to the date of termination.
Section 8. Insurance
Operator shall procure and maintain all insurance required by applicable law or
regulation for operation of the Facilities, including but not limited to
Workers' Compensation and Employer's Liability Insurance in accordance with all
applicable state, federal, and maritime laws. Where permitted, Operator may
fulfill its Workers' Compensation obligations by approved self-insurance and
shall charge Company its actual costs of self-insurance which shall not exceed
Insurance Manual Rates applicable to such operations in the place where the same
are performed. The Operator shall procure and maintain in effect such types and
amounts of insurance as Company shall determine to be necessary to cover loss or
damage to the Facilities. No other insurance shall be carried by Operator for
the account of Company without prior approval from Company.
Section 9. Indemnity
Company ("Indemnitor") shall indemnify and save harmless Operator, its
affiliates, agents and employees ("Indemnitees") in its or their role as
Operator from and against any and all loss, damage, injury, liability, expense
(including attorney's fees), and claims thereof which arise from any injury to
or death of a person, including third parties, Indemnitor, its agents,
contractors or subcontractors, or employees, but excluding Indemnitees, from
loss of or damage to property or from penalties imposed or proceedings brought
by government agencies, resulting directly or indirectly from any operations
under or pursuant to this Agreement, including, but not limited to, the use of
equipment provided by others. The indemnity provided by Indemnitor shall remain
in full force and effect regardless of the passive, active or concurrent
negligence of, and regardless of whether liability without fault is imposed or
sought to be imposed on, one or more of the Indemnitees. However, such indemnity
shall not be given effect to the extent that such indemnity is void or otherwise
unenforceable under applicable law in effect or validly retroactive to the date
of the Agreement. Further excepted from such indemnity shall be any such loss,
damage, injury, liability or claim which is the result of the gross negligence
or willful misconduct of an Indemnitee. Operator shall give Company immediate
notice of any suit brought against Operator with respect to which Company is or
may be obligated to indemnify Operator hereunder.
Operator shall indemnify and save harmless Company, its affiliates, agents and
employees in its or their role as owner of Facilities from and against all loss,
damage, injury, liability, expense
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(including attorney's fees), and claims thereof which arise from any injury to
or death of a person, including third parties, Operator's agents, contractors,
subcontractors, or employees, or from loss of or damage to property of Operator
or Operator's agents, contractors, subcontractors or employees resulting
directly or indirectly from any operations under or pursuant to this Agreement.
The indemnity provided by Operator shall remain in full force and effect
regardless of the passive, active or concurrent negligence of, and regardless of
whether liability without fault is imposed or sought to be imposed on Company.
However, such indemnity shall not be given effect to the extent that such
indemnity is void or otherwise unenforceable under applicable law in effect or
validly retroactive to the date of this Agreement. Further excepted from such
indemnity shall be any such loss, damage, injury, liability or claim which is
the result of the gross negligence or willful misconduct of Company. Company
shall give Operator immediate notice of any suit brought against Company with
respect to which Operator is or may be obligated to indemnify Company hereunder.
Section 10. Confidentiality
A. Each Party agrees that it will maintain this Agreement, all terms and
conditions of this Agreement and all other Confidential Information (as
hereinafter defined) in strictest confidence and that it will not cause or
permit disclosure of Confidential Information to any third Party without
the express written consent of the other Party hereto. Disclosures of
Confidential Information otherwise prohibited by this Section 10 may be
made by either Party; (i) to the extent necessary for such Party to enforce
its rights hereunder against the other Party; (ii) to the extent a Party is
contractually or legally bound to disclose financial information to a third
Party (such as a shareholder or commercial lender); (iii) only to the
extent to which a Party hereto is required to disclose all or part of this
Agreement by a statute or by the order of a Court, agency, or other
governmental body exercising jurisdiction over the subject matter hereof,
by order, by regulations, or by other compulsory process (including, but
not limited to, deposition, subpoena, interrogatory, or request for
production of documents); (iv) to the extent required by the applicable
regulations of a securities or commodities exchange; or (v) to an Affiliate
(but only if such Affiliate agrees to be bound by the provisions of this
Section 10). "Confidential Information" shall mean any information
proprietary to either Party and maintained by it in confidence or as a
trade secret, including, without limitation, business plans and strategies,
proprietary software, financing statements, customer or client lists,
personnel records, analysis of general energy market conditions, sales,
transportation and service contracts and the commercial terms thereof,
relationships with current and potential business partners, supplies
customers, service providers and financial sources, data base contents and
valuable information of a like nature relating to the business of such
Party. It is understood and agreed that Confidential Information shall not
include information of a Party that (i) was generally available to the
public at the time of disclosure to the other Party, (ii) after the time of
disclosure to the other Party, becomes generally available to the public,
(iii) the Party receiving the information can know that the information was
in its possession at the time of disclosure, or (iv) was rightfully
acquired by the recipient from
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third Persons who did not themselves obtain such information under a
confidentiality or other similar agreement with the disclosing Party.
B. If either Party is or becomes aware of a fact, obligation, or circumstance
that has resulted or may result in a disclosure of Confidential Information
authorized by this Section 10, it shall so notify the other Party promptly
and shall provide documentation or an explanation of such disclosure as
soon as it is available. Each Party further agrees to cooperate to the
fullest extent in seeking confidential status to protect any Confidential
Information so disclosed.
C. The Parties hereto acknowledge that independent legal counsel may, from
time to time, be provided with a copy of this Agreement and agree that such
disclosure does not require consent by the other Party, provided that such
counsel agrees to be bound by the provisions of this Section 10.
D. Each Party will be deemed solely responsible and liable for the actions of
its employees, independent contractors, officers, agents and Affiliates for
maintaining the confidentiality commitments of this Section 10, but will be
required in that regard only to exercise such care in maintaining the
confidentiality of the Confidential Information as such Party normally
exercises in preserving the confidentiality of its other commercially
sensitive information.
Section 11. Force Majeure
A delay in or failure of performance of either Party hereto shall not constitute
default, nor shall either Party be held liable for loss or damage arising from
such delay or failure to the extent such delay, failure, loss or damage is
caused by Force Majeure.
The Party claiming Force Majeure as an excuse for delay in or failure of
performance shall immediately notify the other Party of the event and any steps
being taken to remove the impediment to performance.
Force Majeure shall not prevent either Party from terminating this Agreement
under Section 7.
Section 12. Assignment
This Agreement shall be binding upon and shall inure to the benefit of the
successors and assigns of the Parties hereto; provided, however, that such
Agreement and the obligations of the Parties hereunder shall not be assignable
by either Party hereto without the express prior written consent of the other
Parties hereto, except that any Party may assign this Agreement without consent,
including the performance thereof, in whole or in part to (i) an Affiliate of
the Party or the Party's shareholders; (ii) the successor of all or
substantially all of the Party's business and assets; or (iii) a corporation
which such Party may merge or be consolidated into. An assignment hereunder
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shall not be effective unless and until the assignee agrees to be bound by all
the terms and conditions of this Agreement. Further, no assignment hereunder
shall relieve the assignor of any duties, liabilities or obligations accruing
hereunder before the effective date of the assignment. Any assignments
prohibited hereunder shall be void. This Agreement shall not be assignable by
operation of law and shall not become an asset in any bankruptcy or receivership
proceedings. The consent requirement set forth in this Section 12 shall apply
to a sale or assignment of a controlling interest in an Affiliate to whom a
Party's interest has been assigned.
Section 13. Notices
Any notice, request, consent, approval or other similar communication of a
routine nature required or permitted under this Agreement shall be in writing
(including facsimile) and shall be deemed to have been properly given or
delivered to a Party when delivered personally to the person designated below to
receive such communication for each Party or when sent by telegram or United
States mail with postage prepaid and properly addressed to the Party to whom
given. Any such notice or other communication sent or mailed shall be deemed
given at the time it is received by the office of the individual to whom sent.
For purposes hereof the proper addresses of the Parties (unless otherwise
designated in writing which each Party may do from time to time) shall be as
follows:
If to Company:
West Texas LPG Pipeline Limited Partnership
Attention: Chairman of the Partnership Committee
0000 Xxxxxxxx Xxxxxx Xxxxx
Xxx Xxxxxxxxx, Xxxxx 00000
Fax: (000) 000-0000
with a copy to:
WTLPS, Inc.
Attention: President
00000 Xxxxxxxxx Xxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
If to Operator:
Chevron Pipe Line Company
0000 Xxxxxxxx Xxxxxx Xxxxx
Xxx Xxxxxxxxx, Xxxxx 00000
Attention: Corridor Team Leader
14
Section 14. Governing Law
The validity, nature, obligations, effect and construction of this Agreement
shall be governed by the laws of the State of Texas without giving effect to any
choice or conflict of law provision or rule that would cause the application of
the laws of any other jurisdiction other than the State of Texas.
Section 15. Attachments
Attachment I, Attachment II, and Attachment III attached hereto are incorporated
in and made a part of this Agreement. In the event of any inconsistency between
the Attachments and this Agreement, the Agreement shall control.
Section 16. Gifts Prohibited
The Parties shall maintain complete and accurate records in connection with any
commission, fee, rebate, gift or entertainment of significant cost or value in
connection with the performance of this Agreement and all transactions related
thereto for at least twenty-four months from the date of invoice to Company and
Operator. No director, officer, employee or agent of any Party hereto shall give
or receive any commission, fee, rebate, gift or entertainment of significant
cost or value in connection with the performance of this Agreement.
Section 17. Federal Compliance
A. Insofar as applicable hereto, each Party hereto shall comply with
Executive Order No. I1246, as amended by Executive Order No. I1375,
and the rules and regulations issued thereunder, to ensure that
applicants are employed, and that employees are treated during
employment without regard to their race, creed, color, sex or national
origin. Also, if applicable, each Party hereto shall comply with all
provisions of the Vietnam Era Veterans' Readjustment Assistance Act of
1974 and the rules and regulations issued thereunder, including 41
C.F.R., Chapter 60, Part 60-250. Each Party hereto shall also, if
applicable, comply with all provisions of the Rehabilitation Act of
1973, and the rules and regulations issued thereunder including 41
C.F.R., Chapter 60, Part 60-74. Operator agrees and covenants that
none of its employees or employees of its subcontractors who provide
services to Company pursuant to this Agreement are unauthorized aliens
as defined in the Immigration Reform and Control Act of 1986. All
acts, orders, rules and regulations hereinabove referred to are hereby
incorporated by reference unless this Agreement is excepted by
appropriate federal law, rules, regulations or orders.
15
B. Company and Operator shall comply with all laws and regulations
applicable to Company and Operator relating to Facilities hereunder,
including but not limited to any regulations of the United States
Department of Transportation applicable to facilities operated by
Company that are connected to or a part of Facilities hereunder.
Section 18. Section Headings
The headings contained in this Agreement are for reference purposes only and
shall not affect the meaning or interpretation of this Agreement.
Section 19. Waiver
No waiver by either Party of any breach of any of the terms and conditions
contained in this Agreement shall be construed as a waiver of any subsequent
breach of the same or any other terms or conditions.
Section 20. Entire Agreement
This Agreement and its Exhibits constitute the sole and entire Agreement among
the Parties pertaining to the subject matter hereof. Effective as of the
commencement of the term hereof, this Agreement supersedes and cancels any and
all other prior or contemporaneous oral or written agreements or understandings
between or assumed by the Parties or any of them with respect to the foregoing
matters or any part thereof. No amendment to this Agreement shall be effective
unless in writing and executed by a duly authorized representative of each
Party.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as of the day and year first above written.
COMPANY, OPERATOR,
WEST TEXAS LPG PIPELINE CHEVRON PIPE LINE COMPANY
LIMITED PARTNERSHIP
By: By:
---------------------------- ------------------------------
Its: Its:
---------------------------- ------------------------------
16
ATTACHMENT I
OPERATING AGREEMENT
ACCOUNTING PROCEDURE
1. Definitions
Unless defined otherwise below, terms used in this Accounting Procedure
shall have the same meaning as defined in the Agreement.
"Management Fee" means the management fees referenced in Section 2.B. of
this Attachment.
"Person" means any individual, partnership, association, trust,
corporation, government authority or other entity.
"Personal Expenses" means travel expenses and other reasonable reimbursable
expenses of Operator's employees in the operation and maintenance of
Facilities and in any other activities required of the Operator pursuant to
this Agreement; and such expenses of employees of Operator's Affiliate(s)
when such Affiliates perform activities pursuant to this Agreement.
2. Cash Operating Costs
A. Direct Costs
Operator shall charge Company with the following items but only to the
extent such charges are incurred in the operation and maintenance of
Facilities and in any other activities required of the Operator
pursuant to the Agreement and then, only that portion thereof that is
attributable to work and/or time allocated on a proportional basis to
the Facilities if the work performed can in any way benefit pipelines
operated by Operator other than the Facilities:
1. Labor and Benefits
a. Salaries and wages of Operator's employees (or employees of
Operator's Affiliate) directly assigned to the operation,
support and maintenance of Facilities, including that
portion of such employees' time related to ancillary
activities such as training required by Operator, and in any
other activities required of the Operator pursuant to the
Agreement.
17
"Confidential Treatment Requested.
The redacted material has been
separately filed with the Commission."
b. Overhead related to direct labor salaries and wages, to be
* calculated as REDACTED of the amount provided for in A.1.a.
above.
c. Operator's cost of all payroll taxes, and benefits and
allowances and any other payment paid or contributed by the
Operator which is measured by Operator's employees'
compensation; the above to include without limitation
F.I.C.A., Operator's cost of holiday, vacation, sickness and
disability and other customary allowances, Operator's
current costs of established plans for employees' group life
insurance, hospitalization, retirement, stock purchase, and
other benefit plans of a like nature. Such costs will be
charged on a percentage assessment rate on the amount of
salaries and wages chargeable to the Company under Paragraph
1.a. of this Section. The percentage assessment rate shall
be based on the Operator's actual cost experience.
2. Employee Expenses
a. Reasonable Personal Expenses of those employees whose
salaries and wages are chargeable to the Company under
Paragraph 1.a. of this Section, and for which expenses the
employees are reimbursed under the Operator's usual
practices.
3. Customer Service Center
The allocated share attributable to the West Texas LPG Pipeline
of Operator's cost for its Customer Service Center, including but
not limited to:
a. Labor and benefits of Operator's employees directly assigned
to the operation and support of Facilities, following the
methodology in Sections 2.A.1.a. and 2.A.1.c.
b. An allocation of depreciation for Customer Service Center
capitalized costs of facility and equipment used in the
scheduling of shipments and 24-hour continuous monitoring
and control of pipeline flows for the Facilities.
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c. An allocation of other Customer Service Center costs,
including support personnel and other expenses, required for
support of the Facilities.
4. Materials and Supplies
Material purchased by Operator for use in the operation and
maintenance of Facilities shall be charged to the Company at the
price paid by Operator after deduction of all discounts received.
Material furnished by Operator from its stocks or inventory shall
be charged in accordance with the accounting guidelines
established by XXXXX (Council of Petroleum Accountants Societies
of North America). Cost of warehousing and handling material
shall be chargeable to the Company. The accumulation of surplus
stocks shall be avoided, and if surplus stocks are accumulated,
such stocks shall be timely disposed of. Proceeds from such
disposition shall be credited to the Company at the time they are
received by Operator. Operator does not warrant the material
furnished. In the case of material found to be defective, or
returned to a vendor or the Operator for any other reason,
Operator shall credit the Company when adjustment is received by
Operator.
5. Contracts and Services
The cost of contracts and subcontracts, contract services
(including those for technical personnel), professional
consultants, equipment, and utilities employed in the operation
and maintenance of the Facilities under the general direction of
Operator.
6. Equipment Furnished by Operator
a. Use of equipment owned by Operator at the lower of (1) rates
commensurate with costs of ownership and operation. Such
rates shall include costs of maintenance, repairs, other
operating expense, insurance, taxes, and depreciation, or
(2) commercial rates prevailing in the geographic area of
the Company Facilities as published in Petroleum Motor
Transport Association rate schedules.
b. Whenever requested, Operator shall inform Company of the
rates it proposes to charge.
7. Legal Expenses
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Expenses of investigating litigation or claims incurred in or
resulting from the operation and maintenance of Facilities under
the Agreement; provided, however that no direct charge for
services of Operator's legal staff or fees or expense of
attorneys shall be made unless previously agreed to by Company.
All other legal expense incurred by Operator hereunder is
considered to covered by the overhead provisions of Section 2.B.
below, unless otherwise agreed to by Company.
8. Taxes
All taxes of every kind and nature assessed or levied upon, or in
connection with the Company operations, property or Facilities
and which have been paid for the benefit of Company, excluding
any income or franchise taxes.
9. Insurance
In accordance with Section 8 of the Agreement, net premiums paid
for insurance required by law or by the Company to be carried for
operation, maintenance and repair of Facilities and for the
protection of the Company.
10. Communications
Costs of purchasing, leasing, installing, operating, and
maintaining communications equipment and services necessary for
the conduct of Facilities' operation and maintenance.
11. Utilities
Costs incurred for electricity and other utilities necessary for
the operations hereunder.
12. Ecological and Environmental
Costs incurred for the benefit of the Company as a result of
statutory regulation for archeological and geophysical surveys
relative to the identification and protection of cultural
resources, or other ecological surveys as may be required by
regulatory authority. Also, costs to provide or have available
pollution containment and removal equipment, plus costs of actual
control, cleanup and resulting responsibilities of oil spills as
required by applicable laws and regulations.
13. Permits and Rights-of-Way
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Costs incurred in obtaining or maintaining permits, licenses,
leases, certificates, rights-of-way, easements, and other similar
items necessary for the operation or maintenance of the
Facilities.
14. Dismantling, Removal, and Restorative Costs
Costs incurred for dismantling, removal, and restoration of
Company property to the extent such costs are incurred.
15. Rentals
Rentals paid by Operator for the benefit of the Company in the
conduct of Facilities' operation and maintenance.
16. Discounts and Allowances
Operator shall take advantage of and credit to the Company all
cash and trade discounts, freight allowances and equalization,
annual volume and other allowances, credits, salvages,
commissions, insurance discount dividends and retrospective
premium adjustments, and other such items which accrue.
17. Other Expenditures
Any other expenditures directly attributable to Facilities'
operation and maintenance not covered and dealt with in the
foregoing provisions of this Section 2.A., and which are incurred
by the Operator in the necessary and proper conduct of
Facilities' operation and maintenance, and which are:
(a) within the scope of the Agreement; and
(b) are included in the approved operating budget.
B. Management Fee
The purpose of this Section 2.B. is to provide for the reimbursement
of Operator's overhead in conjunction with services rendered. Operator
shall charge the Company as follows to cover any portion of costs and
expenses resulting from the performance of services for Facilities not
otherwise chargeable under Section 2.A. herein:
21
"Confidential Treatment Requested.
The redacted material has been
separately filed with the Commission."
1. Operator's Management Fee
* Operator shall receive REDACTED as an annual charge billed
monthly, hereinafter referred to as "Operator's Management Fee"
to cover all of Operator's overhead and indirect costs incurred
in the performance of services for the Facilities. Such
Operator's management duties hereunder shall not be subcontracted
by Operator to any other entity, without prior approval of
Company. The Operator's Management Fee shall be adjusted annually
by a calculated amount based upon the Producers Price Index
(excluding the Fuels And Related Products And Power component) in
effect on October 1 with a base year of October 1, 1997. Such
adjusted amount shall be effective beginning January 1 of each
ensuing year, starting for the calendar year 1998.
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ATTACHMENT II
PIPELINE FACILITIES
I) PIPELINE: There is about 1,950 miles of various sizes of pipe ranging from
2" TO 14", 0.156 GR B TO 0.365 X 46 w.t., and 1957 - 1992 vintage. The
lateral lines are up to 8" and the trunk portion is all 10" and 14".
II) BOOSTER STATIONS: There are 18 pump stations, 24 pump and electric motor
units and associated electrical switchgear and control equipment. Total
horsepower is 28,200. Pumps are all horizontal centrifugal type.
III) COAHOMA FACILITY: There are 2 - 1,000 horsepower pump units with
centrifugal pumps and electric motors. It is an 80 acre site with three
storage xxxxx (nominal 300,000 Bbls), two brine pits (nominal 350,000 Bbls
capacity), and all associated piping and electrical equipment.
** Of the 19 booster stations (including Coahoma), 13 are on separately
identifiable property.
IV) METER STATIONS: There are about 62 receipt, custody transfer meter
stations of which about 54 are at plant sites. There are another 18 check
meter locations with a total of 34 meter runs. Each facility generally
includes turbine meter runs, instrumentation, and equipment buildings.
V) MISCELLANEOUS:
* Sending and receiving swab trap facilities (22 on the trunk line alone).
* Portable meter provers
* Spare parts inventory
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ATTACHMENT III
MAP OF FACILITIES
24