THIS PIPELINE
LEASE AGREEMENT (“Lease”) is entered into the 8th day
of November, 2006 to be effective November 1, 2006, by and
between TE Products Pipeline Company, Limited Partnership, a
Delaware limited partnership, hereinafter referred to as
“Lessor”, and Enterprise GC, L.P., a Delaware limited
partnership, hereinafter referred to as “Lessee”.
Lessor and Lessee may be referred to singularly as
“Party” or collectively as
“Parties”.
WHEREAS, Lessor is
the owner of a certain pipeline known as the P-8 Pipeline, located
in Harris County, Texas, and related valves and equipment
(“Pipeline”), as well as rights-of-way, easements,
licenses, permits and/or surface sites attributable to the Pipeline
(referred to as the “Rights-of-Way”), all as described
in Exhibit “A” attached hereto and made a part hereof
(collectively, the “Property”); and
WHEREAS, Lessor
desires to lease to Lessee and Lessee desires to lease from Lessor
approximately 11.6 miles of the Property upon the terms set forth
herein.
NOW, THEREFORE,
for and in consideration of the mutual covenants and promises
herein contained, the sufficiency of which are hereby acknowledged,
the Parties hereto do mutually covenant and agree as
follows:
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1.
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Property Leased
. Lessor leases to
Lessee, and Lessee leases from Lessor, the Property, and Lessor
grants to Lessee for the term of this Lease, the non-exclusive
right to use the Rights-of-Way associated with the Property,
subject to any approvals required pursuant to
Section 4b.
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2.
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Term of Lease
. The term of this Lease
shall commence the later of the date that Lessor no longer requires
the lines for its use and Lessee is ready to use the lines
for its purposes, which is projected to be December 15, 2006
(“Effective Date”), and continue for a period of nine
(9) months from the Effective Date (“Primary
Term”) and month to month thereafter until either Party gives
the other Party at least sixty (60) days prior written notice
of termination.
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3.
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Consideration for Lease
. In consideration for
the Lease of the Property, Lessee agrees to pay Lessor a pipeline
lease fee of $9,000 per month, payable by the 10
th
day of each month (or
if not a business day then on the next business day following the
10th) during the term of the Pipeline Lease Agreement.
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4.
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Ownership of Property
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a.
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Lessee shall have no right or
interest in the Property except as expressly set forth in this
Lease. Warranties made by the seller or manufacturer of any of the
Property shall be assigned, for the term of this Lease, by Lessor
to Lessee.
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b.
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It
is understood that Lessor does not own the majority of the land on
which the Pipeline is located in fee, and that Lessor’s
rights in the Rights-of-Way may be subject to conditions imposed by
the fee owner of the land on which the Pipeline is located. Such
conditions may include, but are not limited to, obtaining consent
of the landowner of lease of the Property (the
“Consents”). Lease of the Property to Lessee is
contingent on Lessor successfully obtaining all Consents, and this
Lease is subject to all conditions set forth in the Rights-of-Way
documents.
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c.
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To
the extent the Parties consummate the transactions contemplated
hereby prior to obtaining a Consent required in connection with the
lease of any Property (a “ Non-Leased Asset
”), such Non-Leased Asset shall be deemed to be held by
Lessor at all times in accordance with this Section 4(c).
Lessor shall provide Lessee with the economic benefits and risks
associated with leasing the Non-Leased Asset, (b) Lessor shall
continue to use commercially reasonable efforts to obtain the
Consent(s) related to such Non-Leased Asset, and (c) upon
Lessee’s request, Lessor shall enforce, at Lessee’s
sole cost and expense, any and all rights of Lessor against third
parties with respect to such Non-Leased Asset. Lessee shall
indemnify and hold harmless Lessor from and against any damage,
loss or liability that Lessor may suffer resulting from, arising
out of, relating to, or caused by, Lessee’s performance,
breach or default under, operation of, or conditions existing,
arising or occurring with respect to, any Non-Leased Asset. Upon
receipt of the Consent related to a Non-Leased Asset, the
assignment of such Non-Leased Asset shall automatically become
effective without the need for any further action on the part of
the Parties.
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5.
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Use, Care, Operation and Maintenance
of Property .
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a.
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Lessee shall use the Pipeline for
transporting natural gas liquids (“NGLs”) that are of a
quality customarily accepted in its NGL pipeline business. Lessee
shall operate the Pipeline in accordance with customary and then
current good operating practices in the NGL pipeline
industry.
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b.
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Lessee shall comply with all laws,
rules, orders and regulations prescribed by any governmental
authority having jurisdiction over the Property, and Lessee agrees
to indemnify Lessor for any violation of any such law, rule, order
or regulation
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pursuant to the terms of
Section 9. In addition, Lessee will maintain all required
plans, procedures and records to ensure compliance with all
applicable laws, rules, orders and regulations. Lessor shall have
the right, but not the obligation, to review all plans, records and
other documentation required to be kept by Lessee to
(i) maintain compliance with any federal, state and local
laws, regulations and orders, or (ii) maintain compliance with
Lessee’s obligations hereunder.
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c.
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During the term hereof, Lessee shall
operate and maintain the Property at its sole cost, except that
Lessor shall be responsible for maintaining Rights-of-Way. During
the term hereof, Lessee shall also perform, or cause to be
performed, at its sole risk, cost and expense, any and all
maintenance and repair necessary, in Lessee’s reasonable
judgment, to keep the Property in safe operating order and in
compliance with all applicable laws and regulations of any local,
state or federal agencies having jurisdiction thereof. Maintenance
and repair costs shall be subject to the limits contained in
Section 14.
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e.
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Lessee shall bear the full cost of
making the Property operational to fit Lessee’s
needs.
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f.
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Lessee will perform at its expense
any necessary aerial patrol of the Rights-of-Way associated with
the Property.
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g.
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Lessee will respond to all one-call
notifications and all notices of odor, leaks or possible failures
of the Pipeline. Lessee will immediately notify Lessor of any
reported leak or failure (“Failure”). In addition,
Lessee shall make all required notifications to the appropriate
federal, state or local governmental bodies or agencies of any
Failures. Lessor shall have the right, but not the obligation, to
respond in cooperation with Lessee to any reported or suspected
Failure with Lessor’s personnel and clean-up contractors.
Lessee shall be responsible for and shall direct and control any
clean-up and repair of the Pipeline following any Failure;
provided, however, Lessor may respond to any Failure without
Lessee’s direction and control but at Lessee’s cost if
Lessor determines, in its good faith discretion, that Lessee is not
properly responding to such Failure.
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6.
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Alterations to the
Property .
Lessee may perform alterations to the Property, at its sole risk
and expense, only upon the prior written consent of Lessor, which
consent shall not be unreasonably withheld. Any tests to the
Pipeline made by Lessee, for any reason, shall be at the sole cost
and risk of Lessee. Lessee shall have the right to remove any
alteration or addition installed by Lessee within ninety
(90) days of the termination date of this Lease; provided,
however, Lessee shall restore and repair any damage caused to the
Property as a result of the installation, use or removal of
Lessee’s alterations or additions. Any of Lessee’s
alterations or additions not removed from the Property
within
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ninety (90) days of the
termination of this Lease shall upon Lessor’s election, in
its sole discretion, become the property of Lessor without
compensation or reimbursement of any kind to Lessee.
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7.
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Damage to or Destruction of
Property . In
the event of damage to the Pipeline during the term of this Lease,
Lessee agrees to repair the Pipeline at Lessee’s sole cost
and expense as soon as practicable, such repair to be carried out
in accordance with industry standards and in compliance with all
applicable local, state and federal regulations.
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