Exhibit 10.26
TERMINAL SERVICES AGREEMENT
This Terminal Services Agreement (this "Agreement") dated January 14, 2000,
is between Millennium Terminal Company, L.P., a Texas limited partnership
("Millennium Terminal Company"), and Xxxxx Refining & Marketing, Inc., a
Delaware corporation ("Xxxxx").
Background
1. Millennium Pipeline Company, L.P. ("Millennium Pipeline Company"), owns
and operates a common carrier pipeline (the "Pipeline") capable of
transporting crude oil or other mutually agreeable, merchantable liquid
hydrocarbons with the characteristics set forth in Annex A attachment
hereto ("Produce") from a point near Beaumont, Texas to a point near
Longview, Texas.
2. In connection with the operation of the Pipeline, Millennium Terminal
Company will provide - through an agreement with Oiltanking Beaumont,
L.P. ("Oiltanking") - approximately 1,100,000 barrels of shell capacity
(yielding approximately 1,040,000 barrels of working capacity) of
storage (the "Storage Facility") at Oiltanking's off-loading and storage
facility in Beaumont, Texas.
3. Xxxxx desires to deliver Product to Ole Storage Facility for
redelivery into and transportation on the Pipeline.
4. Millennium Terminal Company is willing to receive Product into storage
for redelivery into and transportation on the Pipeline subject to the
terms and conditions set forth in this Agreement.
Agreement
Section 1. Term of Agreement; Renewal.
1.1 Initial Term. The initial term of this Agreement (the "Initial
Term") will be for 5 Contract Years - beginning of the
Commencement Date (defined below) and continuing through the end
of the fifth Contract Year. As used in this Agreement,
"Commencement Date" means the first day of the first month
following the month in which the later of the following events
occurs:
(a) Millennium Terminal Company executes a definitive agreement
with Oiltanking in connection with the Storage Facility; and
(b) all capital projects necessary to render the Pipeline
operational are complete to the degree required to place the
Pipeline into service on the Commencement Date.
1
Millennium Terminal Company will endeavor to provide Xxxxx with as
much written notice of the Commencement Date as possible; however,
the obligations of Xxxxx and Millennium Terminal Company will
commence on the Commencement Date without regard to the length of
such notice. Millennium Terminal Company anticipates that the
Commencement Date will occur on or about April 1, 2000; this
Agreement will terminate, however -- and the parties respective
obligations will thereafter be excused - if the Commencement Date
does not occur on or before October 1, 2000.
1.2 Renewal; Termination.
(a) Unless terminated under Section 1.2(b) of this Agreement,
the term of the Agreement will be automatically renewed and
extended - without the taking of any additional action by
any party - for consecutive 1-year periods (each a "Renewal
Term"). The Initial Terms are collectively referred together
with all Renewal Terms throughout this Agreement as the
"Term."
(b) Either party may terminate this Agreement effective as of
the end of the Initial Term or any Renewal Term by
delivering to the other party a written notice of its
election to terminate at least 6 months prior to the
effective date of the termination.
(c) Either party may terminate this Agreement if the Incentive
Rate Contract between Xxxxx and Millennium Pipeline Company
is terminated.
Section 2 Delivery Obligations; Deficiency Payments; Conditional Rate
2.1 Delivery Obligations. Throughout the Term of this Agreement, Xxxxx
will deliver to the Storage Facility a minimum annual volume (the
"Minimum Annual Volume") equal to 50,000 barrels of Product per
day during each Contract Year. "Contract Year" means any calendar
year-beginning on January 1 and ending on December 31 - or, if the
Pipeline is not in service on January 1, 2000, any twelve-month
period beginning on the date the Pipeline is first available for
service or the anniversary date thereof. During each Contract
Year, Xxxxx will use reasonable efforts to schedule all deliveries
of Product to Millennium Terminal Company during a given month
ratably throughout that month.
2.2 Allocation of Capacity. Throughout the Term of this Agreement,
Millennium will provide Xxxxx with sufficient storage capacity at
the Storage Facility to enable Xxxxx to meet the Minimum Annual
Volume required by this Agreement.
2.3 Deficiencies. If the total volume of Product delivered by Xxxxx to
the Storage Facility during any Contract Year (the "Contract Year
Volume") is less than the Minimum Annual Volume, Xxxxx will pay to
Millennium Terminal Company an amount (a "Deficiency Payment")
equal to the product of (i) an amount equal to the Minimum
2
Annual Volume minus the Contract Year Volume multiplied by (ii) the
Terminal Rate (as defined in Section 3 of this Agreement).
2.4 Conditional Rate. The applicability of the Terminal Rate described
in Section 3.1 of this Agreement is expressly conditioned upon
Xxxxx'x agreement to fulfill its obligations under this Section 2
- including, without limitation, Xxxxx'x obligation to deliver to
Millennium Terminal Company a Minimum Annual Volume equal to
50,000 barrels of Product per day during each Contract Year and
the redelivery of a like volume of Product to the Pipeline.
Section 3. Rates
3.1 Terminal Rate. Subject to the provisions of Section 12 of the
General Terms and Conditions attached hereto as Annex A,
throughout the Terms of this Agreement the rate (the "Terminal
Rate") applicable to each barrel of Product delivered by Xxxxx to
Millennium Terminal Company and redelivered to the Pipeline (the
"Monthly Delivered Volume") is thirteen cents ($0.130) per net
barrel.
3.2 Alternate Connecting Carrier Rate. Xxxxx may, following receipt of
the written consent of Millennium Terminal Company, deliver
barrels of Product to Millennium Terminal Company for redelivery
to any connecting carrier, pipeline or terminal other than the
Pipeline (each an "Alternate Connecting Carrier") at a rate to be
mutually agreed upon by Xxxxx and Millennium Terminal Company from
time-to-time; provided, however, that any barrels of Product
delivered to Millennium Terminal Company pursuant to this Section
3.2 will not count toward the Minimum Annual Volume.
3.3 Long-Term Storage Rate. Xxxxx may, following receipt of the
written consent of Millennium Terminal Company and subject to the
availability of shell capacity at the Storage Facility, elect to
store barrels (collectively, the "Long-Term Storage Volume") of
Product at the Storage Facility at a rate (the "Long Term Storage
Rate") to be mutually agreed upon by Xxxxx and Millennium Terminal
Company from time-to-time. The Long-Term Storage Rate will be
assessed (i) on all barrels of shell capacity utilized to store
the Long-Term Storage Volume and (ii) for each 30-day period or
portion thereof during which the Long-Term, Storage Volume remains
at the Storage Facility; provided, however, that the first such
30-day period will not begin until the 16th day following the date
the Long-Term Storage Volume is delivered to the Storage Facility.
Payment of the Long-Term Storage Rate will not affect Xxxxx'x
obligation to pay to Millennium Terminal Company the applicable
rate when all or any portion of the Long-Term Storage Volume is
redelivered from the Storage Facility to the Pipeline or an
Alternate Connecting Carrier.
Section 4. Monthly Billing; Deficiency Payments
4.1 Monthly Billing. Throughout the Term of this Agreement, Millennium
Terminal
3
Company will invoice Xxxxx monthly based on the volume of Product
delivered from the Storage Facility. The total amount reflected on
the monthly invoice will be due and payable within 10 days of the
date of such invoice. The monthly invoice will set forth:
(a) the Monthly Delivered Volume -- including, without
limitation, any barrels withdrawn from the Long-Term Storage
Volume and redelivered to the Pipeline - as measured by a
custody transfer meter (the "Out-Bound Meter") located
between the Storage Facility and the origin of the Pipeline;
(b) the volume of Product, if any, delivered to an Alternate
Connecting Carrier as measured by a mutually agreeable
measurement device located at the custody transfer point of
the Alternate Connecting Carrier;
(c) the Long-Term Storage Volume, if any, based upon the amount
of shell capacity utilized; and
(d) the rate applicable to each such volume as set forth in
Section 3 above.
4.2 Deficiency Payments. Millennium Terminal Company will invoice
Xxxxx during the first month of each Contract Year for any
Deficiency Payment due for the immediately previous Contract Year.
The amount of any such Deficiency Payment will be due and payable
within 30 days of the date of such invoice.
4.3 Late Payments. Any amount invoiced to Xxxxx and not paid within
the time periods set forth in Sections 4.1 and 4.2 above will
accrue interest at the Default Rate from the date such amount is
due until the date such amount is paid. As used in this Agreement,
"Default Rate" means an interest rate equal to the lesser of (a)
two percent (2.0%) plus the "Prime Rate" published in the Wall
Street Journal on the date such amount is due and (b) the maximum
rate allowable under applicable law.
Section 5. Events of Default.
5.1 Xxxxx Defaults. If, at any time during the Term of this Agreement,
one or more of the following events occurs:
(a) Xxxxx fails to pay promptly any amounts owed to Millennium
Terminal Company under this Agreement;
4
(b) Xxxxx (i) becomes insolvent (which term is defined for
purposes hereof as failure to meet its obligations as the same
fall due); (ii) files a voluntary petition in bankruptcy,
reorganization, receivership or arrangement; (iii) files an
answer admitting any material allegation of any insolvency
petition filed pursuant to any insolvency act, federal or
state; (iv) makes an assignment for the benefit of any
creditor; (v) applies for, consents to, or suffers the
appointment of a receiver or trustee for any part of its
property or assets; or (vi) fails to satisfy or to appeal from
any material judgment or attachment within thirty (30) days
from the date of entry; or
(c) Xxxxx violates or otherwise fails to substantially comply
with any material provision of this Agreement, without
regard to whether such violation or failure to comply is
specified as an event of default within this Section 5.1;
provided, however, that no act or omission by Xxxxx will
constitute an event of default under this Section 5.1(c)
unless Xxxxx fails to cure such violation or compliance
failure within 30 days after receiving notice of same from
Millennium Terminal Company;
then (i) Xxxxx will be deemed for all purposes to be in default of
this Agreement, (ii) Millennium Terminal Company will have good
cause to cancel this Agreement and will be afforded all remedies
provided under law, whether at law or in equity and (iii) the total
amount of Xxxxx'x obligations under this Agreement will, at the
option of Millennium Terminal Company, accelerate and become
immediately due and payable.
5.2 Millennium Terminal Company Defaults. If, at any time during the
Term of this Agreement, Millennium Terminal Company violates or
otherwise fails to substantially comply with any material
provision of this Agreement, then (a) Millennium Terminal Company
will be deemed for all purposes to be in default of this Agreement
and (b) Xxxxx will have good cause to cancel this Agreement and
will be afforded all remedies provided under law, whether at law
or in equity; provided, however, that no act or omission by
Millennium Terminal Company will constitute an event of default
under this Section 5.2 unless Millennium Terminal Company fails to
cure such violation or compliance failure within 30 days after
receiving notice of same from Xxxxx.
Section 6. Representations and Warranties.
6.1 Xxxxx represents and warrants to Millennium Terminal Company that
(a) it is a corporation duly organized and validly existing and
in good standing under the laws of the state of its
incorporation and has all requisite corporate power and
authority to enter this Agreement and to carry out the terms
and provisions hereof;
5
(b) there is no action, proceeding, or investigation pending or
threatened so far as Xxxxx is advised, and no term or
provisions of any charter, by-law, mortgage, indenture,
contract, agreement, instrument, judgment, decree, order,
statute, rule or regulation, which in any way prevents or
interferes with or adversely affects the entering into it, or
the carrying out of any of the terms or provisions of this
Agreement; and
(c) No approval of any governmental body is required for
carrying out this Agreement.
6.2 Millennium represents and warrants to Xxxxx that:
(a) is a limited partnership duly organized and validly existing
and in good standing under the laws of the state of its
formation and has all requisite power and authority to enter
this Agreement and to carry out the terms and provisions
hereof;
(b) there is no action, proceeding or investigation pending or
threatened so far as Millennium is advised, and no term or
provisions of any charter, by-law, mortgage, indenture,
contract, agreement, instrument, judgment, decree, order,
statute, rule or regulation, which in any way prevents or
interferes with or adversely affects the entering into it,
or the carrying out of any of the terms or provisions of
this Agreement; and
(c) No approval of any governmental body is required for
carrying out this Agreement.
Section 7. Force Majeure. If, by reason of Force Majeure, either
Millennium Terminal Company or Xxxxx is rendered unable, wholly or
in part, to carry out its obligations under this Agreement- other
than its obligation to pay any amount of money due and owning
under the terms of this Agreement-and, if the party so prevented
from performing (the "Affected Party") gives notice and reasonably
full particulars of such Force Majeure in writing or by telegraph
to the other party within 24 hours after the occurrence of the
event relied on, the Affected Party will be excused-to the extent
its performance is affected by the Force Majeure-during the
continuation of the event relied on; provided, however, that the
Affected Party shall use reasonable efforts to cure the Force
Majeure event as soon as possible; but provided further that
settlement of labor disputes will be strictly within the
discretion of the Affected Party. As used in this Section 7,
"Force Majeure" includes, without limitation, acts of God; acts of
a public enemy; fires; compliance with any court order, law,
regulation or ordinance of any governmental authority having
jurisdiction over the Affected Party; civil disturbances;
shutdowns for purposes of necessary repair, relocation or
construction of Pipeline or the Storage Facility; breakage or
accidental damage to any pipe, machinery or equipment comprising
the Pipeline, the cargo ship transporting Xxxxx'x Product to the
Storage Facility or the Storage Facility; the
6
necessity for testing (as required by any governmental authority
or as deemed necessary by Millennium Terminal Company for the safe
operation of the Pipeline or the Storage Facility); the necessity
of making repairs or alterations to any pipe, machinery or
equipment comprising the Pipeline or the Storage Facility;
inability of either party to obtain necessary material, supplies
or permits, or labor to perform or comply with any obligation or
condition of this Agreement; inability to obtain or retain
rights-of-way; and any other cause, whether of a kind recited
herein or not, that is not reasonably within the control of the
Affected Party.
Section 8. Miscellaneous.
8.1 Loss Allowance. Millennium Terminal Company will collect from
Xxxxx a loss allowance equal to one-tenth of one percent (0.1%) of
all barrels of Product delivered to the Storage Facility through a
custody transfer meter (the "In-Bound Meter") located between the
off-loading dock and the tank farm at the Storage Facility as an
allowance (the "Loss Allowance") for losses or gains of Product,
including shrinkage, metering inaccuracies, evaporation and
interface losses.
8.2 Prorationing. If Millennium Terminal Company is required to
prorate one or more shipments of Product ("Prorated Barrels")
delivered to the Storage Facility by Xxxxx for transportation on
the Pipeline, the Minimum Annual Volume of Product Xxxxx is
obligated to deliver will be proportionately reduced to reflect
the effect of such prorationing.
8.3 Notices. Except as otherwise provided herein, any notice required
to be given under any provision of this Agreement must be in
writing and directed to:
Millennium Millennium Terminal Company, L.P.
c/o Equilon Pipeline Company LLC
Two Xxxxx Xxxxx
X.X. Xxx, 0000
Xxxxxxx, Xxxxx 00000-0000
Attn: General Manager, Joint Ventures
Telephone: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Millennium Terminal Company, L.P.
c/o Black Hills Millennium Terminal, Inc.
0000 Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxxxxxx, Executive Vice
President
Telephone: (000) 000-0000
Fax: (000) 000-0000
7
and
Xxxxx Xxxxx Refining & Marketing, Inc.
0000 Xxxxxxxx Xxxxxx
0xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxx Xxxxxxx, Vice President
Telephone: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Xxxxx Refining & Marketing, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Legal Department
Telephone: (000) 000-0000
Fax: (000) 000-0000
All notices will be deemed received by the addressee upon the
earlier of (i) actual receipt by the person or persons to whom the
notice is directed (including the receipt of a fax confirmation by
the sender of the notice) and (ii) 3 days following the deposit of
a properly addressed notice in the United States mail, postage
prepaid.
8.4 Consent to Assignment. Either party to this Agreement may assign
all or any portion of its interest in this Agreement to any
financially and operationally capable third-party; no such
assignment, however, will relieve the assignor from any portion of
its obligations under this Agreement. Nothing in this Section 8.4
will be construed as prohibiting any party from pledging or
mortgaging its rights under this Agreement to secure any
indebtedness.
8.5 Choice of Law. Except to the extent that the general maritime laws
of the United States of America may be applicable, this Agreement
is governed by and the terms of this Agreement are to be
construed, enforced and performed in accordance with the laws of
the State of Texas without regard to the principles of conflicts
of law.
8.6 Captions. The captions identifying the sections and subsections of
this Agreement are for convenience only and are not intended by
the parties to affect the meaning or interpretation of the
provisions of this Agreement.
8.7 Governmental Regulation. This Agreement is subject to all present
and future valid laws, rules, regulations and lawful orders
(collectively, the "Legal Requirements") of all governmental
authorities now or hereafter having jurisdiction over the Storage
Facility or the Pipleline. If any Legal Requirement is imposed -
or if any existing
8
Legal Requirement is amended-that renders Millennium Terminal
Company or Xxxxx unable to lawfully fulfill its obligations under
this Agreement (other than to pay sums of money due and owing at
the time such Legal Requirement is imposed or amended), then this
Agreement will be deemed reformed to conform to the then existing
Legal Requirements.
8.8 Amendment. This Agreement may be amended only by a written
agreement executed by Millennium Terminal Company and Xxxxx.
8.9 Counterparts. The parties may execute this Agreement in two or
more counterparts which shall, in the aggregate, constitute a
single document.
8.10 Severability. If any provision of this Agreement is determined to
be invalid or unenforceable to any extent, the remaining
provisions of this Agreement will remain in effect and will be
enforced to the maximum extent permitted by law.
8.11 Entire Agreement. This Agreement-including the General Terms and
Conditions attached to this Agreement as Annex A and made a part
of this Agreement for all purposes-constitutes the entire
agreement between Millennium Terminal Company and Xxxxx with
respect to the matters addressed herein, and this Agreement
supersedes any prior understanding or other written or oral
agreements related to these matters. In the event that there is a
conflict between the provisions of this Agreement and Annex A, the
terms of this Agreement shall prevail. Throughout attached Annex
A, Millennium Terminal Company is referred to as "Millennium," and
Xxxxx is referred to as Shipper.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
9
EXECUTED as of the date first set forth above.
XXXXX REFINING & MARKETING, INC.
A Delaware corporation
By: /s/ Xxxx Xxxxxxx
------------------------------------
Printed Name: Xxxx Xxxxxxx
--------------------------
Title: Vice President, Crude Oil Supply
---------------------------------
MILLENIUM TERMINAL COMPANY, L.P.
A Texas limited partnership
By: Equilon Pipeline Company LLC,
a General Partner
By: /s/ Xxxxxx Xxxxxxxx
------------------------------------
Printed Name: Xxxxxx Xxxxxxxx
--------------------------
Title: Director, Joint Ventures
---------------------------------
By: Black Hills Millennium Terminal, Inc.,
a General Partner
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------
Printed Name: Xxxxx X. Xxxxxxxxx
--------------------------
Title: Executive Vice President
---------------------------------
THIS IS THE SIGNATURE PAGE TO THE TERMINAL SERVICES AGREEMENT
ANNEX A
General Terms and Conditions
Section 1 Quality and Quantity.
1.1 Acceptance of Storage Facility. It is agreed that Shipper is
familiar in all respects with the Storage Facility and, in
particular, with Oiltanking's marine facilities and pipeline
systems to the extent they are to be provided under this
Agreement. Before Millennium's initial receipt of Product (as
defined in Section 3.1 of these General Terms and Conditions) from
any Shipper, Shipper will have a representative inspect and accept
the Storage Facility as clean and suitable in all respects for the
Product and for the needs of Shipper. If Shipper fails to conduct
such an inspection, the Storage Facility will be deemed clean and
suitable in all respects for the Product and for the needs of
Shipper.
1.2 Oiltanking has limited, on-premises facilities for mixing,
blending and/or circulating Product(s) and if requested to do so
by Millennium, will perform those operations at no additional
charge to Millennium and its Shippers. The degree of success, if
any, from Oiltanking's performance of such operations is dependent
upon the particular characteristics of the Product(s) involved,
and the parties agree that the results of such operations are
beyond the control of Oiltanking. Oiltanking will perform such
operations only upon receipt of written instructions from
Millennium or Shipper to do so. OILTANKING HAS DISCLAIMED AND
MILLENNIUM HEREBY DISCLAIMS ALL RESPONSIBILITY FOR THE RESULTS OF
SUCH MIXING, BLENDING AND/OR CIRCULATION OF PRODUCT(S) AND NEITHER
OILTANKING NOR MILLENNIUM MAKES ANY REPRESENTATION, WARRANTY OR
GUARANTEE OF ANY KIND, INCLUDING WITHOUT LIMITATION WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR PURPOSE, CONCERNING OR IN ANY WAY
RELATED TO SUCH MIXING, BLENDING AND/OR CIRCULATION OF PRODUCT(S).
By requesting that Oiltanking perform mixing, blending and/or
circulation of Product(s), Shipper acknowledges and agrees that it
is familiar with the capabilities and limitations of Oiltanking's
mixing, blending and circulating facilities. Shipper hereby agrees
that neither Millennium nor Oiltanking shall be liable for any
damage to Product(s) or any failure, either in part or in whole,
to attain any specific result from any mixing, blending and/or
circulation of Product(s) by Oiltanking, and Shipper hereby
indemnifies and agrees to defend and hold harmless Millennium and
Oiltanking, their officers and employees, against all claims,
suits, liabilities and expenses (including,
1
without limitation, reasonable attorneys' fees) concerning or in
any way related to the mixing, blending and/or circulation of
Product(s) by Oiltanking except for any claims, suits, liabilities
and expenses caused by the gross negligence or willful misconduct
of Oiltanking or Millennium.
1.3 All inbound and outbound quantities of Product shall be determined
by meters proven in accordance with the recommendations and
requirements of the American Petroleum Institute (the "API
Recommendations"). Millennium will cause Oiltanking to
periodically prove and, if necessary, recalibrate the inbound
meter; and Millennium will, or will cause Millennium Pipeline
Company to, periodically prove and, if necessary recalibrate the
outbound meter. Shipper shall have the right to have an inspector
present at offloading of vessels and at all deliveries to the
Pipeline at Shipper's sole cost. All quantity determinations shall
be conclusively presumed to be correct after ninety (90) days from
the date of measurement unless within such 90-day period Shipper
objects to the quantity determination by notifying Millennium in
writing.
1.4 Notwithstanding any other provision of this Agreement and these
General Terms and Conditions, Millennium is not responsible for
normal crude degradation-including, without limitation,
interfacial mixing, tank bottoms, mid tank lines and headers-to
Shipper's Product transported through or stored in the Storage
Facility.
Section 2 Cleaning, Removal and Disposal.
2.1 Shipper agrees to use the equipment and facilities of Oiltanking
only for the storage of the Product (as defined in Section 3.1 of
these General Terms and Conditions). Shipper shall be responsible
for any damages resulting from storage and/or handling of any
commodity or material which is not expressly authorized under the
forms hereof. If, due to a change in the characteristics of the
Product or any other goods or materials of Shipper stored and/or
handled hereunder, cleaning of the tanks, equipment and/or
facilities is necessary during the term of this Agreement, Shipper
agrees to remove and dispose of, or cause to be removed and
disposed of, any Product goods, material or residue from the
tanks, equipment and/or facilities and to pay for such cleaning,
removal and disposal, all of which shall be done at Shipper's
expense.
2.2 To the extent Shipper is required under Section 2.1 of these
General Terms and Conditions to remove and dispose of any Product,
goods, material or residue, Shipper hereby agrees and warrants to
Millennium that such removal and disposal will be:
2
(1) in strict compliance with all federal, state, and local laws,
regulations and ordinances; and
(2) registered, logged, charted, or otherwise identified as
being the sole and exclusive property of Shipper.
Notwithstanding any other indemnification contained herein, Shipper
shall indemnify Millennium for all damages, costs and expenses
(including, without limitation, reasonable attorneys' fees) resulting
from Shipper's failure to comply with this Section 2.
Section 3 Product Specifications; Pour Suppressant; Etc.
3.1 Product Specifications. The "Product" to be delivered to the
Storage Facility by Shipper and handled by Oiltanking will be
crude oil or other mutually acceptable, merchantable liquid
hydrocarbons, subject to the following pour point limitations:
(1) during the months of October through March, the maximum
Product pour point will be 40 degrees Fahrenheit-after
treatment with a pour suppressant additive if necessary; and
(2) during the months of April through September, the maximum
Product pour point will be 60 degrees Fahrenheit-after
treatment with a pour suppressant additive if necessary.
3.2 Product Safety Data. Shipper shall provide Oiltanking's Traffic
Department with proper material safety data sheets and lab
analysis of Benzene content, RVP/True Vapor Pressure and H2S to
determine handling, storage and loading requirements. Shipper
warrants to Millennium that all materials will comply with
Oiltanking's permit-specifically.
(1) Benzene cannot exceed ten percent (10.0%) by weight;
(2) True Vapor Pressure during storage cannot exceed 11 PSIA,
provided that components with higher vapor pressure can be
discharged as long as they are blended down into low vapor
pressure Product residing in tankage at the time of
discharge; and
(3) H2S cannot exceed 10 ppm vapor.
3.3 Cost. All costs associated with the adding of Pour Suppressant and
the Pour Suppressant material shall be for Shipper's account.
3
3.4 Right to Reject Product. The viscosity, pour point and any pour
point suppressant being used must be reported to Millennium and
Oiltanking prior to the arrival of the vessel. Millennium has the
right to reject-or to direct Oiltanking to reject-any cargo if, in
the sole opinion of Millennium, Oiltanking's pumps will not be
able to adequately pump the cargo to the Storage Facility or the
Pipeline System.
Section 4 Title and Custody. Title to the Product stored and/or handled
hereunder shall always remain with Shipper or the party for whom
Shipper has custody of the Product. Oiltanking shall be deemed to
have custody of the Product from the time it enters (the In-Bound
Meter until it exits the Out-Bound Meter.
Section 5 Insurance. The rates and prices quoted herein do not include any
insurance on the Product. Insurance on Product(s) to be stored at
the Storage Facility, if any is desired by Shipper, will be
carried by Shipper at its sole cost and expense. If Shipper
carries any insurance on the Product, Shipper will waive, and will
cause its insurance carrier(s) to waive, any rights of subrogation
against Millennium. Shopper will deliver copies of such waivers to
Millennium on request.
Section 6 Liability and Damages.
6.1 Shipper shall, at no cost to Millennium, defend, exonerate,
indemnify and save harmless Millennium from and against:
(1) any and all liability for loss of, and any and all damage
to, the Product or property of Shipper, Millennium,
Oiltanking or others, and any and all liability for injury
(including death) to persons (including employees of
Millennium, Oiltanking and Shipper), and any and all claims
or actions in connection with such loss or damage, based
upon, arising out of or occurring in connection with the
deposit, storage, withdrawal or subsequent transportation or
disposal of Shipper's Product, except such claims as
directly arise out of Millennium's willful misconduct or
gross negligence in the safekeeping and handling of
Shipper's Product or property; and
(2) any and all fines, penalties or liabilities to any
governmental authority or a third person specifically caused
or resulting from any act or omission of Shipper or from
Shipper's breach of this Agreement.
Millennium shall defend and indemnify Shipper for any loss or
damage caused by Millennium's gross negligence or willful
misconduct. The burden of proving Millennium's willful misconduct
or gross negligence in the safekeeping and handling of Shipper's
Product or property shall be upon Shipper, however.
4
6.2 NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, IT IS
UNDERSTOOD AND AGREED THAT, IN THE EVENT OF ANY WILLFUL OR
NEGLIGENT LOSS OF OR DAMAGE TO SHIPPER'S PRODUCT, MILLENNIUM SHALL
NOT IN ANY EVENT BE LIABLE TO SHIPPER FOR MORE THAN EITHER (i) A
SIMILAR QUANTITY OF LIKE-KIND PRODUCT (AS WAS LOST OR DAMAGED) TO
BE PROVIDED BY MILLENNIUM TO SHIPPER OR (ii) THE FAIR MARKET VALUE
OF THE PRODUCT LOST OR DAMAGED MEASURED AS OF THE DATE OF LOSS, NOR
SHALL MILLENNIUM EVER BE LIABLE FOR PUNITIVE, INCIDENTAL, SPECIAL OR
CONSEQUENTIAL DAMAGES OR LOST PROFITS, REGARDLESS OF HOW OR BY
WHOM SUCH LOSS OR DAMAGE SHALL HAVE OCCURRED OR BEEN CAUSED. Fair
market value of the Product lost or damaged shall be conclusively
determined by Xxxxx'x Spot Assessments for the Texas Gulf Coast.
Millennium will receive a credit for the salvage value of any
damaged Product.
6.3 Shipper agrees to execute in its name, pay for and furnish to
Millennium and Oiltanking all information, documents, labels,
placards, containers and other materials which may be required by
statutes, ordinances, rules or regulations of the U.S. Coast
Guard, OSHA, Departments of Transportation or Energy or any other
governmental body or agency having jurisdiction, relating to the
describing, packaging, receiving, storing, handling, disposal or
shipping of the Product (the foregoing being hereinafter
collectively referred to as the "Regulations") at or from the
Storage Facility, together with detailed written instructions as
to their use and disposition. Shipper further agrees to indemnify
and hold harmless Millennium and its agents, employees, officers
and directors from and against any fines, loss, damage or expense
(including without limitation reasonable attorneys' fees)
resulting from the violation of the Regulations or from any
proceedings in which such a violation of the Regulations is
charged, except when directly arising from Millennium's failure to
reasonably follow the written instructions of Shipper.
6.4 EXCEPT AS EXPRESSLY HEREIN PROVIDED, THERE ARE NO GUARANTEES,
WARRANTIES OR REPRESENTATIONS BY MILLENNIUM OF ANY KIND, EXPRESS
OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WHETHER
ARISING BY OPERATION OF LAW OR OTHERWISE.
5
Section 7 Taxes, Assessments and Other Governmental Charges.
7.1 In addition to any other charges to be paid by Shipper hereunder,
Shipper shall pay for and shall hold Millennium harmless from any
and all taxes, duties, import fees, assessments or other charges
(collectively, "Taxes") levied by any governmental body upon
Shipper's Products stored at the Storage Facility, as well as for
any additional or increased Taxes levied upon or charged to
Millennium by reason of Shipper's storage of Product at the
Storage Facility; provided, however, that, if the Storage Facility
is used by more than one shipper, Shipper will have no obligation
to pay more than its proportionate share of such Taxes or
increased or additional Taxes. Such Taxes or increased or
additional Taxes shall be paid by Shipper upon receipt of written
notice thereof from Millennium. In the event Shipper does not
timely make any required payments for Taxes and Millennium is
required to make such payments, Shipper will reimburse Millennium
for all Taxes paid, plus interest for the period beginning on the
date Millennium pays such Taxes and continuing until paid by
Shipper. Interest on any of Shipper's Taxes paid by Millennium
pursuant to this Section 7.1 will accrue at a rate equal to the
lesser of (i) two percent (2.0%) plus the "Prime Rate" published in
the Wall Street Journal on the date Millennium pays such Taxes and
(ii) the maximum contract rate permitted by the applicable usury
laws of the State of Texas. Shipper is hereby advised that
Oiltanking is required by law to report Shippers Product inventory
to local taxing authorities.
7.2 If Oiltanking imposes any additional charge, fee or cost on
Millennium due to (a) the imposition of a new tax, fee or levy
upon Oiltanking by any governmental body or agency because of
Oiltanking's proximity to the Ship Channel or because of
Oiltanking's operation of the Storage Facility or (b) a
requirement imposed by any new governmental regulation that
Oiltanking install additional equipment or to modify its
facilities or standard handling procedures in order to continue to
provide the services contemplated by this Agreement, then
Millennium may request that Shipper pay its reasonable and
proportionate share of such additional charge, fee or cost. In the
event Shipper elects not to pay any such charge, fee or cost,
Millennium may terminate this Agreement upon thirty (30) days
written notice to Shipper without any liability.
6
Section 8 Loading and Unloading of Vessels and Barges.
8.1 Millennium will use its best efforts to cause Oiltanking to load
and unload vessels and barges at its dock in order of their
arrival. Millennium will not be responsible, however, for
demurrage or for delays to vessels or barges due to the
unavailability of the dock or for any other reason. Vessels and
barges delivering Shipper's Product to the Storage Facility must
supply all necessary manpower and machinery to pump to shore
tanks. Immediately upon completion of loading and/or unloading of
vessels or barges, Shipper will cause such vessel or barge to
vacate Oiltanking's dock. If (a) a vessel or barge transporting
Shipper's Product refuses to vacate the dock and (b) Oiltanking
has provided written notice of the vessel's refusal to (i)
Shipper, (ii) Millennium and (iii) the owner, agent, master or
mate of the vessel or barge, then Millennium may assess Shipper a
fee in an amount not greater than $1,500.00 per hour ($500.00 per
hour for barges) or any portion of an hour that the vessel or
barge remains docked after the parties listed above have been
notified.
8.2 Shipper will pay all inspection fees and all fees and charges
attributable to the vessel or barge (including, without
limitation, pilots, tugs, line handlers, towing, light and
port dues, licensed tankermen and/or agents).
8.3 All vessels and barges utilizing the Storage Facility shall be
solely responsible or providing, maintaining and tending their
mooring lines, and Shipper shall indemnify and save Millennium
harmless from all liability, cost or damages resulting from
Shipper's vessel's or barge's failure to comply with this
provision.
8.4 Notwithstanding anything to the contrary contained in this
Agreement, it is mutually understood and agreed by Shipper and
Millennium that Shipper will employ tankships which are (utilizing
the ship's pumps and the ship's power) capable of discharging
their cargo at an average rate of not less than 20,000 bbls/hour,
or maintaining 100 psig at ship's rail, provided shore facilities
are capable of receiving same. If any vessel discharging Shipper's
Product does not maintain this average pump rate for twelve (12)
consecutive hours, Oiltanking can interrupt the discharge and
require the vessel to leave if it has another need for the berth.
If this happens, the vessel will be placed at the end of rotation
of the vessels scheduled into Oiltanking's dock.
8.5 Oiltanking or Millennium may refuse to accept any barges or
vessels which are not properly equipped with U.S. Coast Guard
approved vapor collection and return equipment compatible with the
existing Oiltanking system.
7
Section 9 Substitution of Equipment and Facilities. In the event that
Oiltanking desires for its own convenience to transfer Shipper's
Product to other tanks, equipment and/or facilities, Oiltanking
may do so provided that the transfer of Product is at the risk and
expense of Oiltanking and that the substituted tanks, equipment
and/or facilities are at least equal in quality and size to the
tanks, equipment and facilities set forth elsewhere in this
Agreement.
Section 10 Delivery and Redelivery.
10.1 Shipper shall make good faith, reasonable efforts to schedule the
arrival of its vessels ratably.
10.2 Shipper shall give Millennium and Oiltanking advance written
notice of the receipt and/or delivery of each shipment of Product,
which notice shall specify:
(1) the name of the carrier;
(2) the carrying vessel or pipeline;
(3) the custody transfer point;
(4) the type, grade and quantity of Product;
(5) the estimated time of arrival thereof; and
(6) any other pertinent information, including without
limitation any and all documentation required by law
concerning the receipt, delivery, handling or storage of
Products.
10.3 Shipper will deliver such notice to Millennium and Oiltanking not
less than seventy-two (72) hours in advance as to tank barges, four
(4) days in advance as to other vessels, and five (5) days in
advance as to pipelines. It is Shipper's sole responsibility to
arrange, coordinate and expedite all carrier movements. Oiltanking
will cooperate in arranging, coordinating and expediting such
movements, but any such cooperation will not constitute a waiver of
this clause.
10.4 Under ordinary circumstances, Millennium will cause Oiltanking to
receive shipments of Product from tank barges, other vessels or
pipelines in the order in which they arrive at the Storage
Facility, but Oiltanking will nevertheless be entitled to depart
from such order for the purpose of complying with the regulations
or directives of applicable government authorities or for insuring
the smooth working of the Storage Facility operations. From time
to time, Oiltanking may, in its sole discretion, direct Shipper's
vessels to dock
8
and offload at the dock of TE Products Pipeline Company ("TEPPCO")
across the Nueces River from the Oiltanking dock.
10.5 Although every effort will be made to remove as much material as
possible from storage tanks at the Storage Facility, Millennium
has no obligation to, nor to cause or require Oiltanking to,
squeegee out any of the foregoing. Millennium will, however, cause
Oiltanking to remove as much material as practicable using
Oiltanking's standard equipment and procedures. Millennium and
Shipper agree that only liquid material will be pumped through
Oiltanking's system.
10.6 Oiltanking will not perform any services aboard any vessel or
barge. Millennium will, however, cause Oiltanking to provide labor
necessary to perform the services agreed upon herein in accordance
with Oiltanking's established Storage Facility practices. Any
additional costs that may arise -- whether such costs are related
to labor or otherwise -- in connection with the control and
movement of material or the handling of equipment or hoses between
Oiltanking's permanent pipeline connection and any tank barge or
other vessel shall be solely for Shipper's account, and Millennium
will not be liable for all or any portion of any such costs.
Section 11 Product Lien. Shipper hereby grants to Millennium an express
contractual lien and security interest upon all Products at any time
stored or handled hereunder for all of the charges and amounts
payable by Shipper to Millennium hereunder. Said contractual lien
and security interest may be foreclosed by Millennium in accordance
with the provisions of Article 9 of the Texas Uniform Commercial
Code in effect from time to time. Such liens shall not be exclusive
but shall be cumulative and in addition to all other legal and
equitable liens, rights and remedies of Millennium. Notwithstanding
anything to the contrary contained herein, the lien granted in this
Section 11 is only applicable to indebtedness owed to Millennium by
Shipper under this Agreement.
Section 12 Adjustments.
12.1 If any new or amended Legal Requirement becomes effective at any
time during the Term of this Agreement and requires Millennium to
undertake new or additional efforts to become or remain in
compliance with all then effective Legal Requirements, Millennium
may, at its option, pass through to the Shipper all or any portion
of the cost of those additional compliance efforts on a pro rata
basis.
12.2 Throughout the Term of this Agreement, Millennium may adjust the
rates set forth in Section 3 of this Agreement. The adjustment, if
any, made during any Contract Year will not exceed an amount (the
"PPI Rate Adjustment")
9
equal to the difference (on a percentage basis) between (i) the
Producer Price Index for Industrial Commodities as compiled by the
United States Bureau of Labor Statistics (the "PPI") for the
immediately preceding calendar year (the "Prior Calendar Year")
and (ii) the PPI for the calendar year immediately preceding the
Prior Calendar Year. Notwithstanding any other provision of this
Section 12.2, however, if Millennium does not impose a PPI Rate
Adjustment during a given Contract Year, Millennium reserves the
right to impose a PPI Rate Adjustment during any subsequent
Contract Year in an amount not to exceed the aggregate PPI Rate
Adjustments not previously imposed on Shipper by Millennium.
Section 13 Eminent Domain. If use of Oiltanking's equipment and facilities
for storage and/or handling of the Product is restrained or
enjoined by judicial process or terminated by any governmental
authority or terminated by right of eminent domain, Millennium
may, at its option and without liability to Shipper, terminate
this Agreement upon thirty (30) days written notice to Shipper.
Section 14 Collection of Excise Taxes.
14.1 Shipper shall be solely responsible for collecting and disbursing
any and all federal, state and/or local excise taxes now or
hereafter enacted and payable in respect to any and all Product
delivered hereunder, and Shipper shall be solely responsible for
reporting and/or filing any tax returns in connection with same.
Shipper shall indemnify and hold Millennium harmless from any and
all expenses and liability (including without limitation fines,
penalties and reasonable attorneys' fees) in respect to the
collection, disbursement and reporting of all such taxes.
14.2 Millennium will not be obligated to release Shipper's Product
unless and until Shipper has provided both Millennium and
Oiltanking with its IRS Excise Tax Registration Number and/or a
Certificate of Registry.
14.3 Prior to transferring any Product, Millennium may require Shipper
to supply both Millennium and Oiltanking with a signed certificate
from the proposed transferee setting forth the following:
(1) the name and address of the transferee;
(2) a declaration that the transferee is registered with the IRS;
(3) the identity of the IRS District Director with whom the
transferee is registered; and
(4) transferee's IRS Excise Tax Registration Number.
10
14.4 In connection with the handling of Shipper's Product, in the event
that Millennium ever becomes liable for the federal excise tax,
Millennium will have the right to retain custody of Shipper's
Product until such time that Shipper has provided to Millennium an
irrevocable letter of credit (with a bank reasonably satisfactory
to Millennium) or other sufficient collateral reasonably
calculated to indemnify Millennium for any federal excise taxes,
fines and penalties that Millennium may be or become required to
pay in connection with Shipper's Product.
Section 15 Pollution. In the event of a discharge or threat of discharge of
Product or other pollutant or hazardous substance from Shipper's
vessel or the Storage Facility upon the waters adjacent to the
Storage Facility while Shipper's vessel is at or near the Storage
Facility, Shipper shall-and Millennium will cause Oiltanking to-
cooperate and promptly take such steps as are necessary to prevent
further discharge or threat, and to minimize damage resulting from
and to clean up any such discharge, regardless of fault. The cost
of such steps shall be recoverable between Oiltanking and Shipper
according to their comparative fault. Failing such an agreement
within ninety (90) days of the date of discharge, the matter shall
be subject to binding arbitration in accordance with the rules of
the American Arbitration Association. Notwithstanding anything in
this paragraph to the contrary, the provisions of this paragraph
shall not affect, as between the parties, any liability of either
party to third parties for costs or damages other than clean up
costs expended by the parties pursuant to this Section 15, whether
such be private or governmental parties.
[The remainder of page was intentionally left blank]
11
INCENTIVE RATE CONTRACT
This Agreement is entered into as of the ___ day of January 2000, by
and between Millennium Pipeline Company, L.P., a Texas limited partnership
and Xxxxx Refining and Marketing, Inc., a Delaware corporation.
WHEREAS, Millennium is the owner of a crude oil pipeline system
extending from a point near Beaumont, Texas to a point near Longview, Texas
known as the Millennium Pipeline System; and
WHEREAS, Xxxxx desires to ship crude oil on the Millennium Pipeline
System;
NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein the Parties agree as follows:
1. DEFINITIONS. When the following terms are used in this Agreement, they
shall have the meaning assigned below:
1.1 "Affected Party" shall have the meaning ascribed to it in Article
11.
1.2 "Agreement" shall mean this incentive Rate Contract.
1.3 "Barrel" shall mean forty-two (42) U.S. gallons of 231 cubic
inches per gallon corrected for temperature to 60(degrees)
Fahrenheit in accordance with A.S.T.M.D-1250 Petroleum Measurement
Table 6B (unabridged) or latest revision thereof.
1.4 "Xxxxx" shall mean Xxxxx Refining and Marketing, Inc.
1.5 "Commencement Date" shall mean the first month following the month
in which the later of the following events occurs: (i) Millennium
Terminal Company executes a definitive agreement with Oiltanking
in connection with the Storage
1
Facility; and (ii) all capital projects necessary to render the
Pipeline operational are complete to the degree required to place
the Pipeline into service.
1.6 "Contract Year" shall mean a period of twelve (12) consecutive
months beginning on the Commencement Date and each period of
twelve (12) consecutive months thereafter.
1.7 "Deficiency Payment" shall mean the amount of money owed by Xxxxx
to Millennium for volumes not shipped as required by Section 4.5.
1.8 "Deficiency Volumes" shall mean the number of barrels not shipped
by Xxxxx as required by Section 4. 1.
1.9 "Force Majeure" shall have the meaning ascribed to it in Article
11.
1.10 "Initial Term" shall have the meaning ascribed to it in Section 2.1.
1.11 "Maximum Viscosity Surcharge" shall have the meaning ascribed in
Section 3.2.
1.12 "Millennium" shall mean Millennium Pipeline Company, L.P.
1.13 "Party" or "Parties" shall mean Millennium and Xxxxx individually
or jointly, as the case may be.
1.14 "Pipeline" shall mean the pipeline owned by Millennium.
1.15 "PPI" shall mean the Producer Price Index for Industrial
Commodities as published by the United States Bureau of Labor
Statistics.
1.16 "PPI Rate Adjustment" shall have the meaning ascribed to it in
Section 33.
1.17 "Prior Calendar Year" shall have the meaning ascribed to it in
Section 3.3.
1.18 "SSU" shall mean saybolt seconds universal.
2
1.19 "Term of this Agreement" shall mean a combination of the Initial
Term and all Renewal Terms.
1.20 "Transportation Credits" shall have the meaning ascribed to them
in Section 4.3.
2. TERM
2.1 Initial Term. The Initial Term of this Agreement shall be for 5
Contract Years beginning on the Commencement Date and continuing through the
end of the fifth Contract Year. Millennium will endeavor to provide Xxxxx with
as much written notice of the Commencement Date as possible; however, the
obligations of Xxxxx and Millennium will commence on the Commencement date
without the regard to the length of such notice. Millennium anticipates that
the Commencement Date will occur on or about April 1. 2000; this Agreement
will terminate, however, and the parties respective obligations will thereafter
be excused-if the Commencement Date does not occur on or before October 1,
2000.
2.2 Renewal. This Agreement will be automatically renewed and extended,
without the taking of any additional action by any party, for consecutive one
(1) year periods.
2.3 Termination. Either Party may terminate this Agreement, effective as
of the end of the Initial Term or any Renewal Term, by delivering to the other
Party written notice at least six (6) months prior to the effective date
of the termination.
3. RATES
3.1 Contract Rate. For movements of the first 18,250,000 barrels in any
Contract Year, Xxxxx shall pay to Millennium forty-three cents ($0.43) per
barrel. For movements over the first 18,250,000 barrels in any Contract Year,
Xxxxx will pay forty and eighty-five one-hundredths cents ($0.4085) per
barrel.
3
3.2 Viscosity Surcharge. In addition to the rates set out in Section
3.1, all crude having a viscosity greater than forty (40) SSU at 100(degrees)F
shall be subject to an additional charge of fifty-two hundredths of a cent
($0.0052) per each unit change in viscosity above 40 SSU (rounded to the nearest
one hundredth of a cent). No crude will be accepted for transportation if its
viscosity exceeds one hundred (100) SSU at 100(degrees)F.
3.3 Rate Adjustment. At the end of each Contract Year throughout the
Term of this Agreement, Millennium may adjust the tariff rate set forth in
Section 3.1 above. The adjustment, if any, made during any Contract Year will
not exceed an amount (the "PPI Rate Adjustment") equal to the difference (on a
percentage basis) between (i) the Producer Price Index for Industrial
Commodities as compiled by the United States Bureau of Labor Statistics (the
"PPI") for the immediately preceding calendar year (the "Prior Calendar Year")
and (ii) the PPI for the calendar year immediately preceding the Prior Calendar
Year. Notwithstanding my other provision of this Section 3.3, however, if
Millennium does not impose a PPI Rate Adjustment during a given Contract Year,
Millennium reserves the right to impose a PPI Rate Adjustment during any
subsequent Contract Year in an amount not to exceed the aggregate PPI Rate
Adjustments not previously imposed on Xxxxx by Millennium.
3.4 Additional Charges. If Millennium's costs go up due to any (a) new
tax, fee or levy is made by any governmental body or agency or (b) requirement
imposed by any new governmental regulation requiring Millennium to install
equipment or to modify its facilities in order to continue to provide the
services contemplated by this Agreement, then Millennium may request Xxxxx to
pay its reasonable and proportionate share of such additional charge, fee or
cost. In the event that Xxxxx elects not to pay any such charge, fee or cost,
Millennium may terminate this
4
Agreement upon thirty (30) days written notice to Xxxxx, and neither party
would have any further liability other than to make payments then due and
payable.
4. VOLUME COMMITMENTS; DEFICIENCY
4.1 Volume Commitment. Throughout the Term of this Agreement, Xxxxx
shall tender to Millennium 18,250,000 barrels of Crude oil for movement
through the Pipeline during each Contract Year. If Xxxxx'x shipments
throughout the Pipeline do not reach 18,250,000 barrels for any Contact Year,
Xxxxx shall pay to Millennium forty-three (43) cents per barrel for each
barrel below such commitment. The barrels shipped by Xxxxx under this
commitment are to be shipped ratably at a monthly average of 50,000 barrels
per day.
4.2 Volumes Not Shipped. In calculating Xxxxx'x average tenders under
Section 4.1, any days on which a force majeure is declared by Xxxxx pursuant
to Section 11 shall be excluded. In addition, any volumes which Millennium
does not accept for any reason, including, without limitation, a force majeure
declared pursuant to Section 11, shall be included in Xxxxx'x volumes shipped
for the purpose of calculating the average barrels per day of Xxxxx'x shipments.
4.3 Transportation Credits. Any Deficiency Payment made by Xxxxx to
Millennium pursuant to Section 4.1 shall be deemed to be a prepayment for
transportation and will be applied accordingly as a credit against any tariff
rates applicable to any volumes transported by Millennium for Xxxxx in excess
of the commitment of 18,250,000 barrels for a Contract Year referenced in
Section 4.1 of this Agreement. Such Transportation Credits shall expire upon the
termination of this Agreement.
4.4 Deficiency Calculation. At the end of each Contract Year, Millennium
shall calculate, after applying the allowable credits and exclusions
referenced in Sections 4.2, the
5
Deficiency Volumes. Millennium shall render an invoice to Xxxxx within thirty
(30) days of the end of any Contract Year which shows the computation of the
Deficiency Volumes and the amount of Deficiency Payment due.
4.5 Deficiency Payment. Xxxxx shall pay the amount of the Deficiency
Payment due within thirty (30) days of the receipt of the invoice referred to
in Section 4.4.
5. XXXXXXXX AND PAYMENTS
5.1 Xxxxxxxx. Xxxxxxxx for movements shall be governed by the applicable
tariffs. Xxxxxxxx for Deficiency Payments shall be governed by Section 4.4.
5.2 Payments. Likewise, payments shall be governed by the applicable
tariff or Section 4.5, as the case may be.
5.3 Late Payments. If payment is not made as required by the tariff, the
tariff provisions shall apply. If payment is not made as required by Section
4.5, the unpaid balance shall bear interest from the date due at a rate equal
to the lesser of (i) two percent (2.0%) plus the "Prime Rate" published in the
Wall Street Journal on the date such amount is due, and (ii) the maximum
contract rate permitted by the applicable usury laws of the State of Texas,
plus attorneys' fees, court costs and other costs in connection with the
collection of unpaid amounts.
6. COMPLIANCE WITH LAW. Xxxxx acknowledges that Millennium is a common
carrier pipeline subject to regulation by agencies and commissions having
jurisdiction over Millennium. This Agreement is subject to all valid laws,
ordinances, regulations, rules and orders of government authorities applicable
to the operation of common carrier crude oil pipelines and to all of the
provisions of Millennium's filed tariffs.
6
7. CHOICE OF LAW. THIS AGREEMENT, AND THE LEGAL RELATIONS BETWEEN THE
PARTIES WITH RESPECT TO THIS AGREEMENT, SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO RULES
CONCERNING CONFLICTS OF LAWS.
8. ASSIGNMENT. Either party to this Agreement may assign all or any
portion of its interest in this Agreement to any financially and operationally
capable third-party; no such assignment, however, will relieve the assignor
from any portion of its obligations under this Agreement. Nothing in this
Section 8 will be construed as prohibiting any party from pledging or
mortgaging its rights under this Agreement to secure any indebtedness.
9. NOTICES. Any notice required to be given under any provision of
this Agreement must be in writing and directed to:
To Millennium: Millennium Pipeline Company, L.P.
c/o Equilon Pipeline Company LLC
Two Xxxxx Xxxxx
X.X. Xxx 0000
Xxxxxxx, XX 00000-0000
Attn: General Manager, Joint Ventures
Telephone: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Millennium Pipeline Company, L.P.
c/o Black Hills Millennium Pipeline, Inc.
0000 Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn., Xxxxx X. Borinaster, Executive
Vice President
Telephone: (000) 000-0000
Fax: (000) 000-0000
7
To Xxxxx: Xxxxx Refining & Marketing, Inc.
0000 Xxxxxxxx Xxxxxx
0xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000 .
Attn: Xxxx Xxxxxxx, Vice President
Telephone: 000-000-0000
Fax: 000-000-0000
With a copy to:
Xxxxx Refining & Marketing, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Legal Department
Telephone: (000) 000-0000
Fax: (000) 000-0000
All notices will be deemed received by the addressee upon the earlier of (i)
the actual receipt by the person or persons to whom the notice is directed
(including the receipt of a fax confirmation by the sender of the notice) and
(ii) 3 days following the deposit of a properly addressed notice in the United
States mail, postage prepaid.
10. COUNTERPARTS. The Parties may execute this Agreement in two or more
counterparts, which shall, in the aggregate, constitute a single agreement.
11. FORCE MAJEURE. If, by reason of Force Majeure, either Party is
rendered unable, wholly or in part, to carry out its obligations under this
Agreement, other than its obligation to pay any amount of money due and owing
under the terms of this Agreement and, if the Party so prevented from the
performing (the "Affected Party") gives notice and reasonably full particulars
of such Force Majeure in writing to the other Party within 24 hours after the
occurrence of the event relied on, the Affected Party will be excused, to the
extent its performance is affected by the Force Majeure, during the
continuation of the event relied on; provided, however, that the Affected
Party
8
shall use its best efforts to cure the Force Majeure event as soon as
possible; but provided further that settlement of labor disputes will be
strictly within the discretion of the Affected Party. As used in this Section
11, "Force Majeure" includes, without limitation, acts of God; acts of a
public enemy; fires; compliance with any court order, law, regulation or
ordinance of any governmental authority having jurisdiction over the Affected
Party; civil disturbances; shutdowns for purposes of necessary repair,
relocation or construction of the Pipeline; breakage or accidental damage to
any pipe, machinery or equipment comprising the Pipeline or the cargo ship
transporting Xxxxx'x Product to the Storage Facility or the Storage Facility;
the necessity for testing (as required by any governmental authority or as
deemed necessary by Millennium) for the safe operation of the Pipeline; the
necessity of making repairs or alterations to any pipe, machinery or equipment
comprising the Pipeline or the Storage Facility; inability of either Party to
obtain necessary material, supplies or permits, or labor to perform or comply
with any obligation or condition of this Agreement; inability to obtain or
retain rights-of-way; and any other cause, whether of a kind recited herein or
not, that is not reasonably within the control of the Affected Party.
12. GOVERNMENTAL REGULATION. This Agreement is subject to all present
and future valid laws, rules, regulations and lawful orders (collectively, the
"Legal Requirements") of all governmental authorities now or hereafter having
jurisdiction over the Pipeline. If any Legal Requirement is imposed or if any
existing Legal Requirement is amended that renders Millennium or Xxxxx unable
to lawfully fulfill its obligations under this Agreement (other than to pay
sums of money due and owing at the time such legal Requirement is imposed or
amended), then this Agreement will be deemed reformed to conform to the then
existing Legal Requirements.
9
13. CAPTIONS. The captions identifying the sections and subsections of
this Agreement are for convenience only and are not intended by the Parties to
affect the meaning or interpretation of the provisions of this Agreement.
14. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the Parties with respect to the matters addressed herein, and this
Agreement supersedes any prior understanding or other written or oral
agreements related to these matters.
15. SEVERABILITY. If any provision of this Agreement is determined to be
invalid or unenforceable to any extent, the remaining provisions of this
Agreement will remain in effect and will be enforced to the maximum extent
permitted by law.
16. AMENDMENT. This Agreement may be amended only by a written agreement
executed by Millennium and Xxxxx.
[SIGNATURES BEGIN ON THE FOLLOWING PAGE]
10
IN WITNESS WHEREOF, the Parties have executed this Agreement through
their authorized representatives as of the date first above written.
MILLENNIUM PIPELINE COMPANY, L.P.,
By: Equilon Pipeline Company LLC,
a General Partner
By: /s/ Xxxxxx Xxxxxxxx
________________________________
Printed Name: Xxxxxx Xxxxxxxx
Title: Director, Joint Ventures
By: Black Hills Millennium Pipeline, Inc.
a General Partner
By: /s/ Xxxxx X. Xxxxxxxxx
________________________________
Printed Name: Xxxxx X. Xxxxxxxxx
Title: Executive Vice President
XXXXX REFINING & MARKETING INC.
By: /s/ Xxxx Xxxxxxx
________________________________
Printed Name: Xxxx Xxxxxxx
Title: Vice President, Crude Oil Supply
THIS IS THE SIGNATURE PAGE TO THE INCENTIVE RATE CONTRACT
