***Indicates
material has been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission. A
complete copy of this agreement will be filed separately with the
Securities and Exchange Commission.
FORM OF STORAGE LEASE
(Belvieu Environmental Fuels)
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 isom grade butane
(“Isom Grade”) and High Purity Isobutane (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.
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. Isom
Grade Butane; Analysis and Certification.
Prior to each
delivery of Isom Grade by or on behalf of Lessee into storage
hereunder, Lessee agrees to certify to Lessor the quality of the
butane to be delivered and to furnish to Lessor a laboratory
analysis of the butane to be delivered to Lessor for storage at
least forty-eight (48) hours prior to delivery. The laboratory
analysis shall be in form satisfactory to Lessor, shall employ the
test methods specified on Exhibit “A”, and shall show
the levels, if any, of the components listed on Exhibit
“A”. If (i) a laboratory analysis required under
this paragraph is not timely received by Lessor; (ii) the
laboratory analysis received is not in a form acceptable to Lessor;
or (iii) the laboratory analysis shows the butane to be
delivered does not meet the specifications for Isom Grade, Lessor
has the right to refuse receipt of the butane. Also, if, at any
time during Lessee’s delivery of Isom Grade, the butane being
tendered ceases to conform to the specifications for Isom Grade,
Lessor will stop receiving the butane tendered for storage, until
such time as the tendered product can be shown to again meet the
Isom Grade specification.
5. 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.
6. 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.
7.
Commingling; Sampling.
Lessor shall
have the privilege of commingling Lessee’s Product with
Product of other parties and is not obligated to redeliver to
Lessee the identical Product received from Lessee. Lessor shall
have the right to sample all 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.
At
Lessor’s sole discretion, Lessor shall have the option to
blend Lessee’s Product that fails to meet the Product
specifications with Product within Lessor’s facilities to get
Lessee’s Product back on specification, or to deliver
Lessee’s off specification Product to Lessor’s off
specification Product storage well (the “Slop Well”)
where the Product will reside until such
Storage Lease
(Belvieu Environmental Fuels)
2
time as Lessor
arranges for the Product in the Slop Well to be sent to one of the
Mont Belvieu fractionators for fractionation.
Lessor will
continue to blend the off specification Product, or to make
deliveries to the Slop Well, only until the Product once again
meets the specifications in the attached Exhibit “A”,
or until such time as Lessor is notified by Lessee that other
delivery arrangements have been made for the Product and the
delivery of off specification Product to Lessor’s facilities
stops.
The fee for
receiving off specification Product into Lessor’s facilities
will be *** per barrel on each barrel received. Lessee will share
in any losses of Product from the Slop Well in proportion to the
amount of the off-specification Product that was delivered into the
Slop Well since the last time the Slop Well was emptied for
Lessee’s account hereunder.
If Lessee
elects to have the Products redelivered to Lessor’s
facilities following fractionation, all such receipts shall be done
under the terms of this Lease.
If it is
necessary for Lessor to pay any charges, including but not limited
to, fractionation fees, when the off specification Product is
delivered from the Slop Well and fractionated, Lessee will
immediately upon receipt of an invoice reimburse Lessor for any
such charges.
Measurement of
Product into and out of storage shall also 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 in
proportion to the amount of Product delivered into storage by
Lessee since the last time any such losses were calculated except
as noted in Section 17. 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 subparagraphs 8
(a) and 8 (b) 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.
Storage Lease
(Belvieu Environmental Fuels)
3
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 15.
Lessee agrees
to pay Lessor a handling charge of *** per barrel for each barrel
of Product that is physically delivered or allocation transferred
into storage, and *** per barrel for each barrel of Product that is
physically delivered out of storage under this Lease. Each delivery
or receipt of Product that is transferred in-well by means of a
letter transfer (an “Inventory Delivery”) will be
charged a fee of *** per transaction. Lessee agrees to promptly pay
to Lessor, upon receipt of an invoice, at Lessor’s address
set forth on the face of such invoice for the charges hereunder.
Both the throughput fee and the Inventory Delivery Fee will be
escalated annually as set forth in Schedule 1.
In addition to
all other fees hereunder, Lessee agrees to pay Lessor an
infrastructure handling fee (the “Facility Fee”) of ***
per barrel on all barrels of Product that are physically received
or allocation transferred into storage, and on all barrels that are
physically delivered out of storage. The Facility Fee will be
escalated annually in accordance with Schedule 1 attached
hereto.
An overstorage
charge of *** per barrel shall be charged for the total number of
barrels stored by Lessee at the end of any month that exceeds the
amount of storage space leased for each specific Product hereunder.
Any excess storage acquired in this manner shall be understood to
be temporary only, and shall not constitute a waiver of
Lessor’s right to restrict storage to the amount leased
hereunder at any time thereafter, and Lessee shall promptly remove
any such excess Product upon Lessor’s written
request.
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.
Storage Lease
(Belvieu Environmental Fuels)
4
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 will also invoice Lessee each month for all
applicable throughput fees, overstorage fees and other fees or
charges during the term of this Lease.
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.
Any loss of
Product from Lessor’s storage wells for which Lessor is not
responsible shall be apportioned among all of the parties storing
such Product in such storage wells on the date of loss in
proportion to the amount of Product each such party has in storage
on such date. 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 monthly
average NON TEPPCO price on the Texas Gulf Coast for such Product
on the date of such loss or damage as reported or published by Oil
Price Information Service (“OPIS”) (the
“Published Price”), or at Lessor’s option,
replacement of such lost or damaged Product in kind within
forty-five (45) days of such loss. If the Published Price is
not reported or published by OPIS for the date in question, the
parties will endeavor to promptly agree upon such a
price.
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
(Belvieu Environmental Fuels)
5
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
(Belvieu Environmental Fuels)
6
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: Director – Petrochemical Business Manager
Telephone: (713) 381-6517
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.
23. 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.
Storage Lease
(Belvieu Environmental Fuels)
7
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 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 TH
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