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Exhibit V
PIPELINE USE, RIGHT OF WAY OPTION
AND RIGHT OF FIRST REFUSAL AGREEMENT
THIS AGREEMENT
is entered into this 21st day of September, 2005, by and
between Gulf States Pipe Line Co., Inc., a
Texas corporation, hereinafter
referred to as "GSPL" and Martin Gas Sales,
a division of Martin Operating
Partnership, L.P., a Delaware limited
partnership, hereinafter referred to as
"MGS."
WHEREAS, GSPL
owns and operates an eight inch liquid products pipeline
originating at Teppco Beaumont Marine
Terminal in Orange County, Texas, and
terminating approximately thirty-two miles
north at South Hampton Refining Co.
facility at 7752 Highway 418 near Silsbee,
Texas (the "GSPL Pipeline"); and
WHEREAS, GSPL
currently transports natural gasoline to the South Hampton
facility via the GSPL Pipeline; and
WHEREAS, MGS
owns and operates a four inch liquids product pipeline, which
intersects the GSPL Pipeline just north of
I-10 in Orange County, Texas (the
"MGS Pipeline"); and
WHEREAS, MGS
wishes to transport natural gasoline via the GSPL Pipeline.
NOW, THEREFORE,
in consideration of these premises and the mutual promises
set forth herein, MGS and GSPL agree as
follows:
1. Term: This Agreement shall be initially
for a period of ten (10) years but
shall be subject to the renewal terms
provided for herein. This Agreement shall
automatically renew for successive
five-year terms unless either party provides
written notice of non-renewal to the other
party during the one-year period
immediately prior to the expiration of the
then existing term and in which case,
this Agreement shall terminate one (1) year
after receipt of such notice.
2. Services: GSPL agrees that it will
provide access to the GSPL Pipeline by MGS
for the movement of MGS natural gasoline.
MGS may off take the natural gasoline
at the point where
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the MGS Pipeline intersects the GSPL
Pipeline, and/or may designate such point
further North as needed on the GSPL
Pipeline. All natural gasoline moved by MGS
via the GSPL Pipeline must meet Teppco
specification, as specified in Exhibit
"A", and be otherwise compatible with the
product which GSPL transports for
South Hampton Refining Co., unless
otherwise agreed by both parties. GSPL and
MGS agree that the product movement
agreement currently in place between GSPL
and South Hampton Refining Co. takes
precedence over MGS product movements and
the GSPL Pipeline schedule will be operated
accordingly.
3. Fee: MGS shall pay GSPL the following
amounts for all natural gasoline
delivered to any MGS pipeline through the
GSPL Pipeline:
a. A per barrel tariff which shall be calculated on March 1, of
each
year as fifty per cent of the actual
expenses of maintaining and operating the
GSPL Pipeline for the prior calendar year
per the audited records of GSPL, in
accordance with GAAP, divided by 2,190,000
barrels per year (6,000 bbl per day),
with such expenses to be made up
exclusively of the categories described in the
attached Exhibit "B". Any expense, which
does not clearly fall into one of the
categories defined in the attached Exhibit
"B" shall not be included when
calculating the tariff under this
paragraph, unless otherwise agreed to by the
parties in writing.
b. MGS shall also pay any specific expenses directly attributed to
the
interchange connection between the GSPL
Pipeline and the MGS Pipeline for the
benefit of MGS, such as valve replacement
or repair, meter installations or
maintenance, etc.
The Fee charged
pursuant to Paragraph 3 shall be invoiced by GSPL monthly
and shall be paid promptly by MGS upon
receipt. GSPL shall notify MGS as soon as
practical upon completion of the audit at
the end of each calendar year as to
the expected tariff for the coming twelve
month period and MGS shall have the
opportunity to examine the records of GSPL
at a time convenient to both parties.
Any dispute with the charges or expenses
shall be attempted to be resolved by
the parties in accordance with the methods
outlined in Paragraph 11.
4. Construction of Interconnection
Facility: MGS shall pay for the cost of the
pipeline interconnection between the MGS
Pipeline and the GSPL Pipeline, and the
design of such facility, which shall be
reviewed and approved by GSPL, with such
approval not to be unreasonably withheld,
prior to initiation of construction.
5. Product Transfer: Possession and risk of
loss of any natural gasoline
delivered into the GSPL Pipeline by MGS
shall pass from MGS to GSPL, when the
product passes through the
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transfer meter located at TEPPCO BMT (the
"Meter") into the GSPL Pipeline.
Possession and risk of loss of any natural
gasoline to be removed from the GSPL
Pipeline by MGS shall pass from GSPL to
MGS, when the product passes through the
transfer meter located at the MGS Pipeline
interconnection point with the GSPL
Pipeline (the "Interconnect Meter") or as
agreed later in the event of removal
of product from the GSPL Pipeline by MGS at
a point North of the Interconnect
Meter. All fees payable by MGS pursuant to
Paragraph 3 shall be based upon the
reading at the Interconnect Meter and such
meter shall be calibrated at least
quarterly with both parties observing such
calibration.
6. Rights of Way: In the event it is
determined by MGS that the GSPL Pipeline
does not satisfy the needs of MGS in
transporting its natural gasoline to the
intersection with the MGS Pipeline or
points North thereof on the GSPL Pipeline,
GSPL shall use its best efforts to secure
rights to assign or sell to MGS all
requested right of way, which GSPL
currently owns and which may be less than the
entire length of the GSPL Pipeline if such
is requested by MGS, at market price
to MGS so that MGS can construct, at its
sole expense, a pipeline which meets
MGS requirements. The parties will endeavor
to agree upon market price for such
right of way and in the event that they
fail to do so within forty-five (45)
days of the date that MGS exercises its
rights under this paragraph, then MSG
and GSPL each shall engage a certified
appraiser, who is qualified in evaluating
the value of a pipeline right of way, and
each appraiser shall determine his or
her opinion of the market price of the
right of way to be acquired. In the event
that the two appraisers' opinions of market
price are within ten percent (10%)
of each other, the then market price of the
right of way shall be determined by
averaging the two appraisals. In the event
that the appraisers' opinions of
market price vary by more than ten percent
(10%), then the two appraisers shall
mutually appoint a third appraiser within
thirty (30) days from the date that
both initial appraisers' reports are
completed. The third appraiser shall then
work with the first two appraisers to
determine the market price of the right of
way and the third appraiser's opinion of
market price of the right of way shall
be binding on both parties.
The assignment
rights or rights to purchase right of way from GSPL are
available to MGS for the term of this
Agreement, including any extension or
renewal thereof, and such rights, if not
exercised, expire upon the termination
of this Agreement. If MGS exerci
