*** Indicates material has been
omitted pursuant to a Confidential Treatment Request filed with the
Securities and Exchange Commission. A complete copy of this
agreement has been filed separately with the Securities and
Exchange Commission.
FORM OF STORAGE LEASE
(North Propane-Propylene Splitters)
This is a Storage
Lease (the “Lease”) between MONT BELVIEU CAVERNS,
LLC with an address at P.O. Box 4324, Houston, Texas 77210-4324
(“Lessor”) and ENTERPRISE PRODUCTS OPERATING
L.P. , (“Lessee”), with an address at P.O. Box
4324, Houston, Texas 77210-4324.
1. Term;
Quantity; Product.
For an initial
term commencing February 1, 2007 and ending December 31,
2016 (the “Initial Term”), Lessor leases to Lessee
storage space of up to *** barrels of refinery grade propylene
(“RGP”) and *** barrels of polymer grade propylene
(“PGP”) (collectively referred to as
“Product” in this Lease) at Lessor’s underground
storage wells, located near Interstate 10 and State Highway 146 at
Mont Belvieu, Texas, subject to the terms, provisions, and
conditions contained herein. For purposes of this Lease, a
“barrel” of Product is equal to 42 U.S. gallons of
equivalent liquid volume at 60 ° Fahrenheit.
Lessee’s
RGP is presently stored in well *** and Lessee’s PGP is
presently stored in well ***. Each well shall be dedicated for
Lessee’s sole use. Lessor reserves the right to designate
from time to time which well will be used for the storage of
Lessee’s Product; provided, however, to the best of
Lessor’s ability such well shall provide as a minimum, the
same amount of storage capacity and flow capabilities as the well
being replaced, unless otherwise mutually agreed to by the parties.
Each such designated well shall then be dedicated for
Lessee’s sole use. If it should become necessary for Lessor
to move Lessee’s Product to an alternate well, then Lessor
shall minimize any disruptions and shall pay for all costs and
expenses associated with such move.
Notwithstanding
anything to the contrary in this Lease, once every five
(5) years (unless otherwise required more often under
applicable law, rule, or regulation), Lessor may designate a period
of time as it or its contractors may reasonably require to perform
a mechanical integrity test (“MIT”) during which Lessor
shall have the opportunity to inspect the wells, and to conduct any
other operations as may be required by applicable law, rule, or
regulation. Accordingly, Lessee shall cause all of its Product to
be removed from the well at issue prior to the first day of the
MIT. Lessor shall make a reasonable effort to provide Lessee with
as much advance notice as possible of the upcoming MIT and the need
to empty the subject well, and to coordinate with Lessee (or
Lessee’s designated representative) the scheduling of such
MIT. Lessor will pay for the costs associated with the MIT. If
requested by Lessee, Lessor shall make reasonable efforts, at
Lessee’s sole cost, to make alternate storage for Product
available to Lessee at the same charges as then being paid to
Lessor by its olefin storage customers; provided, however, under no
circumstances will Lessor be required to make such alternate
storage available unless in Lessor’s sole opinion such
alternate storage will not present any hardship on Lessor. Except
as
Storage Lease
(Enterprise North Propane-Propylene Splitters)
required by
applicable law, rule, or regulation, Lessee shall not be required
to lease alternate storage for a period exceeding the
MIT.
Each twelve
(12) month period between January 1 and the following
December 31 shall be referred to herein as a “Lease
Year”. This Lease shall continue from year to year following
the expiration of the Initial Term, unless either party terminates
this Lease by giving written notice to the other party at least
ninety (90) days prior to the beginning of any ensuing Lease
Year.
Lessor operates
storage wells in which various types of products are stored other
than the types of Product covered by this Lease. Lessor’s
storage wells are connected to centrally located pipeline header
facilities operated by Lessor on its property in the vicinity of
said storage wells. All Product delivered by Lessee into or by
Lessor out of storage must be delivered by pipeline to such header
facilities, and all such deliveries shall be deemed a delivery into
or out of storage for the purposes of computing all applicable
charges under this Lease. As between Lessor and Lessee, control of
Lessor’s facilities will rest exclusively with
Lessor.
3. Product
Specifications.
Each Product
delivered by Lessee into storage or by Lessor from storage must
meet the respective specifications set out in Exhibit
“A” attached hereto and made a part hereof. Lessor
reserves the right to modify, add to, or revise such specifications
at any time and from time-to time upon giving not less than thirty
(30) days prior written notice.
4. Product
Deliveries and Receipts.
It shall be
Lessee’s responsibility to make all arrangements necessary to
deliver Product for storage and to receive Product from storage at
Lessor’s header facilities, and to pay any charges imposed by
any party for the collection, transfer, and injection of
Lessee’s Product to such header facilities for delivery into
storage or from such header facilities for delivery out of storage
under this Lease. The flow rates into and out of storage are
subject to Lessor’s scheduling and operational
restrictions.
5. Delivery
Restrictions; Allocation.
If
Lessor’s scheduling or operational restrictions will not
permit all of the parties (including Lessor) storing any types of
products in any of Lessor’s storage wells to deliver or
receive the volumes of Product requested, then Lessor may allocate
among such parties Lessor’s available flow rates in a fair
and equitable manner as determined by Lessor.
6.
Commingling; Sampling.
Lessor shall
not commingle Lessee’s Product with Product of other parties
and will redeliver to Lessee the identical Product received from
Lessee. Lessor shall have the right to sample all
Storage Lease
(Enterprise North Propane-Propylene Splitters)
2
Product to be
delivered for storage and may refuse to accept delivery of any
Product if the Product does not meet the required specifications
or, if in Lessor’s opinion, satisfactory control of Product
specifications will not be maintained during delivery. At
Lessor’s request, Lessee shall provide Lessor access to the
Product to be delivered for the purpose of sampling and provide
Lessor representative samples of such Product.
Measurement of
Product into and out of storage shall be made in accordance with
the procedures and methods set out in Exhibit “B”. All
Product gains and losses incurred while the product is under
Lessor’s control shall be for the account of Lessee except as
noted in Section 13. Lessor guarantees to return to Lessee in
accordance with the provisions of this paragraph 7 all Product
measured into storage. Lessor shall submit to Lessee monthly stock
reports supported with appropriate receiving and shipping
information showing movements of Product into and out of storage
and the amount of Product remaining in storage.
Lessee will not
be credited for any volume of carbon dioxide held in storage for
Lessee by Lessor.
Any references
to percentages herein shall mean liquid volume percent.
Title to
Lessee’s Product shall remain at all times in Lessee.
Notwithstanding the return guarantee set out in paragraph 7 above,
Lessor shall be responsible for the loss of or damage to such
Product only when and to the extent such loss or damage is caused
by the negligence of Lessor, its employees and agents.
Lessee agrees
to pay Lessor for the storage, handling, and services of Lessor an
annual rental as set forth in the attached Schedule 1. All
minimum rentals are payable in full regardless of whether or not
Lessee actually uses the amount of storage made available
hereunder. All of Lessee’s Product must be removed from
storage no later than the last day of the term of this Lease,
subject to the payment of accrued rental and other charges and the
other terms, provisions, and conditions of this Lease. The rate for
storage of any Product remaining in storage past the last day of
the term of this Lease shall be *** per barrel per month or any
portion thereof, payable in advance on the first day of each month
in the same manner and at the same place as set forth in
Section 11.
Storage Lease
(Enterprise North Propane-Propylene Splitters)
3
Lessee shall
pay all taxes, if any, levied or assessed on the Product stored
hereunder. In the event it becomes necessary for Lessor to pay any
such tax, Lessee shall immediately reimburse Lessor for such amount
upon receipt of notice of payment.
The total
minimum annual rental for storage is payable in equal monthly
installments during the term hereof, each of which installments is
due and payable in advance by Lessee at Lessor’s address set
forth on the face of each invoice on or before the first day of
each month.
Lessor shall
have a lien on all Product of Lessee stored hereunder to cover any
accrued and unpaid amounts payable hereunder and may withhold
delivery of any such Product until such accrued and unpaid amounts
are paid. If any such amounts remain unpaid for more than thirty
(30) days after they accrue, Lessor may sell said Product at a
public auction at the offices of Lessor in Houston, Harris County,
Texas, on any day not a legal holiday and not less than forty-eight
(48) hours after publication of notice in a daily newspaper of
general circulation published in Baytown, Texas, said notice giving
the time and place of the sale and the quantity and Product to be
sold. Lessor may be a bidder and a purchaser at such sale. From the
proceeds of such sale, Lessor may pay itself all charges lawfully
accruing and all expenses of such sale, and the net balance may be
held for whomsoever may be lawfully entitled thereto.
Product is not
insured by Lessor against loss or damage however caused, and any
insurance thereon must be provided and paid for by Lessee.
Lessor’s liability, if any, for loss or damages to the stored
Product shall be limited to the market value of Product which shall
be equal to the highest USGC contract reference price for the
applicable Product as published in the last issue of the month in
which the Product was delivered of Chemical Marketing Associates
Inc.’s Monomers Market Report , or at Lessor’s
option, replacement of such lost or damaged Product in
kind.
Lessor shall
not be responsible to Lessee for any loss of Lessee’s
Product, for any loss to Lessee resulting from delays in returning
Lessee’s Product when requested, or for failure of Lessor to
perform its obligations hereunder, due, directly or indirectly, to
acts of God or other causes beyond the reasonable control of Lessor
including, without limitation, storm; earthquake; accidents; acts
of the public enemy; emergency or unplanned scheduling and
operational restrictions; rebellion; insurrections; sabotage;
invasion; epidemic; strikes; lockouts or other industrial
disturbances; war; riot; hurricane; fire; flood; explosion;
compliance with acts, rules, regulations, or orders of federal,
state, or local government,
Storage Lease
(Enterprise North Propane-Propylene Splitters)
4
any agency
thereof or other authority having or purporting to have
jurisdiction; mechanical failures or similar causes not due to
Lessor’s fault or negligence. The term of this Lease shall
not be extended by the duration of any force majeure, nor shall
Lessee be excused from making any payment due under this Lease.
When claiming force majeure, Lessor shall notify Lessee immediately
by telephone, and confirm same in writing, giving reasonable detail
regarding the type of force majeure and its estimated duration. The
settlement of differences with workers shall be entirely within the
Lessor’s discretion.
REGARDLESS
OF THE LEGAL THEORY OR THEORIES ALLEGED INCLUDING, WITHOUT
LIMITATION, THE NEGLIGENCE (WHETHER SOLE, JOINT, OR CONCURRENT) OF
ANY THIRD PARTY, LESSEE HEREBY AGREES TO INDEMNIFY, DEFEND, AND
SAVE HARMLESS LESSOR, ITS PARENT COMPANY, PARTNERS (GENERAL OR
LIMITED), MEMBERS, SUBSIDIARIES, AFFILIATES, SUCCESSORS, AND
ASSIGNS, INCLUDING ANY OFFICER, DIRECTOR, EMPLOYEE, OR AGENT OF ANY
SUCH ENTITY (HEREINAFTER COLLECTIVELY CALLED
“INDEMNITEE”) FROM AND AGAINST ANY CLAIM, DEMAND, CAUSE
OF ACTION, DAMAGE, FINE, PENALTY, LOSS, JUDGMENT, OR EXPENSE OF ANY
KIND OF ANY PARTY (HEREINAFTER COLLECTIVELY CALLED
“LIABILITY”), INCLUDING ANY EXPENSES OF LITIGATION,
COURT COSTS, AND REASONABLE ATTORNEY’S FEES, RESULTING FROM,
ARISING OUT OF, OR CAUSED BY THE DELIVERY OF ANY PRODUCT BY LESSEE
OR LESSEE’S AGENT, CONTRACTOR, OR CARRIER WHICH IS
CONTAMINATED OR OTHERWISE FAILS TO MEET THE SPECIFICATIONS SET
FORTH HEREIN, EXCEPT TO THE EXTENT SUCH LIABILITY IS DIRECTLY
CAUSED BY THE NEGLIGENCE OR WILLFUL MISCONDUCT OF AN
INDEMNITEE.
Notice of
claims by Lessee for any liability, loss, damage, or expense
arising out of this Lease must be made to Lessor in writing within
ninety-one (91) days after the same shall have accrued. Such
claims, fully amplified, must be filed with Lessor within said
ninety-one (91) days and unless so made and filed, Lessor
shall be wholly released and discharged therefrom and shall not be
liable therefor in any court of justice. No suit at law or in
equity shall be maintained upon any claim unless instituted within
two (2) years and one (1) day after the cause of action
accrued.
In no event
shall Lessor be liable to Lessee for any prospective or speculative
profits, or special, indirect, incidental, exemplary, punitive, or
consequential damages, whether based upon contract, tort, strict
liability, or negligence, or in any other manner arising out of
this Lease, and Lessee hereby releases Lessor from any claim
therefor.
Storage Lease
(Enterprise North Propane-Propylene Splitters)
5
All notices,
demands, requests, and other communications necessary to be given
hereunder shall be in writing and deemed given if personally
delivered, forwarded by facsimile (with proof of transmission and
answer-back capability), or mailed by either certified mail, return
receipt requested, or sent by recognized overnight carrier to the
respective party at its address below:
If to
Lessor:
Mont Belvieu Caverns, LLC
P.O. Box 4324
Houston, Texas 77210-4324
Attn: Director - Hydrocarbon Storage
Telephone: (713) 381-6554
Fax: (713) 381-6960
If to
Lessee:
Enterprise Products Operating L.P.
P.O. Box 4324
Houston, Texas 77210-4324
Attn: Vice President, Petrochemicals
Telephone: (713) 381-6810
Fax: (713) 381-6655
Neither party
shall assign any portion of its rights or obligations under this
Lease without the prior written consent of the other, which consent
shall not be unreasonably withheld; provided, however, either party
may assign this Lease to its parent corporation, a wholly-owned
subsidiary, to an affiliate, to a successor who acquires all, or
substantially all, of the assets of the assigning party, or, if a
party hereto is a limited partnership, to one or its limited
partners or the members of its general partner, without the consent
of the other party, provided that it remains primarily obligated
hereunder. This Lease shall be binding upon and inure to the
benefit of the parties hereto, their successors and
assigns.
19. Rules and Regulations
.
This Lease and
the provisions hereof shall be subject to all applicable state and
federal laws and to all applicable rules, regulations, orders, and
directives of any governmental authority, agency, commission, or
regulatory body in connection with any and all matters or things
under or incident to this Lease.
This Lease
embodies the entire agreement between Lessor and Lessee and there
are no promises, assurances, terms, conditions, or obligations,
whether by precedent or otherwise, other than those
Storage Lease
(Enterprise North Propane-Propylene Splitters)
6
contained
herein. No variation, modification, or reformation hereof shall be
deemed valid until reduced to writing and signed by the parties
hereto.
THIS LEASE
AND THE RIGHTS AND DUTIES OF THE PARTIES ARISING OUT OF THIS LEASE
SHALL BE GOVERNED BY AND CONSTRUED, ENFORCED, AND PERFORMED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, AS THE SAME MAY BE
AMENDED FROM TIME TO TIME, WITHOUT GIVING EFFECT TO ANY CHOICE OR
CONFLICT OF LAW PROVISION OR RULE THAT WOULD CAUSE THE APPLICATION
OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF
TEXAS.
WITH RESPECT
TO ANY SUIT, ACTION, OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS LEASE, EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE FEDERAL AND STATE COURTS (AS APPLICABLE)
LOCATED IN HARRIS COUNTY, TEXAS, AND TO ALL COURTS COMPETENT TO
HEAR AND DETERMINE APPEALS THEREFROM, AND WAIVES ANY OBJECTIONS
THAT A SUIT, ACTION OR PROCEEDING SHOULD BE BROUGHT IN ANOTHER
COURT AND ANY OBJECTIONS TO INCONVENIENT FORUM.
THE PARTIES
FURTHER AGREE THAT, IN THE EVENT OF A LAWSUIT ARISING OUT OF THE
PERFORMANCE OF THIS LEASE, THE PREVAILING PARTY SHALL BE ENTITLED
TO RECOVER ITS REASONABLE ATTORNEYS’ FEES AND COURT COSTS,
INCLUDING FEES FOR EXPERT WITNESSES, FOR PROSECUTING OR DEFENDING
ANY SUCH LAWSUIT FROM THE PARTY NOT PREVAILING.
This Lease may
be executed in counterparts, each of which shall be deemed to be an
original and all of which, taken together shall constitute the same
agreement.
This Lease
shall be construed as jointly drafted by the parties according to
the language as a whole and not for or against any
party.
In the event
one or more of the provisions contained in this Lease shall be held
to be invalid or legally unenforceable in any respect under
applicable law, the validity, legality or enforceability of the
remaining provisions hereof shall not be affected or impaired
thereby. Each of the provisions of this Agreement is hereby
declared to be separate and distinct.
Nothing
contained in this Lease shall be construed to create an
association, trust, partnership, or joint venture or impose a
trust, fiduciary or partnership duty, obligation, or liability on
or with regard to any party.
Storage Lease
(Enterprise North Propane-Propylene Splitters)
7
This Lease is
for the sole benefit of the parties and their respective successors
and permitted assigns, and shall not inure to the benefit of any
other person whomsoever, it being the intention of the parties that
no third person shall be deemed a third party beneficiary of this
Lease.
A party will be
in default if it: (a) breaches this Lease, and the breach is
not cured within thirty (30)
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