Term of Agreement. The initial term of this Agreement shall begin on the Effective Date and shall end at 11:59 p.m. CPT on [***] (the “Initial Term”) and shall automatically be renewed for successive one-year terms (each, a “Renewal Term”) after the Initial Term, unless cancelled in writing by either party by one hundred eighty (180) Days’ written notice prior to the end of then-existing term. The Initial Term and each Renewal Term hereunder shall be collectively, the “Term.”
Services. In consideration of the compensation provided in Section 4 hereof, Operator will purchase Product and either transport or exchange such Product into the Tank, and then transfer the Product from the Tank to Customer’s Pipeline at the Meter (as hereinafter defined) utilizing Operator’s Pipeline (the “Services”). Operator will be responsible for providing all manpower and utilities required to perform all of the Services, which are not provided by third-parties. In the performance of the Services, Operator shall comply in all material respects with all requirements of federal, state and local laws, ordinances, decrees, orders, regulations, permits or other requirements having the force of law (hereinafter the “Laws”) and shall be responsible for all regulatory compliance reporting.
Operator’s Compensation. As compensation for the Services performed hereunder, each Month Customer shall pay Operator the following:
Product Acquisition Cost of the Product delivered to Customer’s Pipeline;
The Feedstock Terminal Fee multiplied by the actual number of Gallons of Feedstock Supply delivered to Customer’s Pipeline;
The Fuel Terminal Fee multiplied by the actual number of Gallons of Fuel Supply delivered to Customer’s Pipeline; and
The [**SOURCE A**] Fee.
Shortfall Payments and Rebate. In the event that less than the Minimum Quarterly Volume of Feedstock Supply is delivered into Customer’s Pipeline during a Quarter through no fault of Operator, then for such Quarter Customer shall additionally pay Operator the Shortfall Fee. At the end of the Contract Year ending July 31, 2020, Customer shall be entitled to a rebate equal to the positive amount, if any, resulting from the sum of the actual Shortfall Fees paid hereunder during such Contract Year and less the product of (i) the difference of the Minimum Annual Volume less the actual quantity of Feedstock Supply delivered into Customer’s Pipeline during such Contract Year times (ii) the sum of the Feedstock Terminal Fee plus the Average Feedstock Marketing Fee. At the end of each Contract Year thereafter, Customer shall be entitled to a rebate equal to the positive amount, if any, resulting from the sum of the actual Shortfall Fees paid hereunder during the Contract Year and less the product of (i) the difference of the Minimum Annual Volume less the actual quantity of Feedstock Supply delivered into Customer’s Pipeline during such Contract Year times (ii) the sum of the Feedstock Terminal Fee plus the Feedstock Marketing Fee. An example calculation is attached hereto as Exhibit E.
Title to Product. Title to, possession and risk of loss of the Product shall pass from Operator to Customer when the Product passes through the transfer meter located where Operator’s Pipeline interconnects with Customer’s Pipeline (the “Meter”). The readings from the Meter shall be used for calculation of the amounts owed to Operator by Customer pursuant to Section 4 and in determining any Shortfall Fee due under Section 5. The Meter will be calibrated at least annually according to Operator’s standard practices. Customer shall have the right to attend said calibration check and Operator shall provide Customer at least three (3) Business Days prior notice of each calibration. In the event the Meter is out of service or upon inspection is off by more than one percent (1%), the quantity of Product delivered hereunder will be determined by using the first of the of the following methods available:
By using the measurement of any check meter if same is installed correctly and registering accurately;
By correcting the error of the Meter if ascertainable by calibration, test or mathematical calculation and the length of time the meter has been inaccurate is known; or
By using the combination of the Product received into the Tank, if known, and the Tank inventory for the respective period.
Representations and Warranties.
Operator represents and warrants to Customer that:
Operator has title to the Product delivered by it hereunder or the right to deliver same;
Product delivered hereunder shall be delivered in full compliance with all federal and state laws, rules and regulations and orders that may be applicable thereto; and
Product delivered under this Agreement will meet the specifications set forth in Exhibit C to this Agreement.
Customer represents and warrants to Operator that:
Customer is knowledgeable and aware that the Product delivered hereunder is hazardous material and Customer is sophisticated and knowledgeable of (i) the hazards and risks associated with such Product, and (ii) the handling, receipt, transportation, storage and use of such Product; and
Product received hereunder shall be received in full compliance with all applicable federal and state laws, rules and regulations and orders that may be applicable thereto.
Nomination. Customer shall provide Operator a firm nomination, in writing, specifying the volume of Product that Customer desires delivered into Customer’s Pipeline each Month at least twelve (12) Business Days prior to the beginning of the applicable Month of delivery. For planning purposes, Customer shall also provide Operator with a three (3) Month rolling quantity of estimated future Product needs at least twelve (12) Business Days prior to the beginning of each Month. Customer further agrees to provide Operator with a report of Customer’s actual Product usage for each three (3) Month period during the Term of this Agreement to be delivered by the fifteenth (15) day of the Month following each such three (3) Month period.
Exclusivity. With the exception of the exclusions provided for in this paragraph, Customer shall be obligated to source all of its Product needs for Customer’s Facility through Operator. In the event that during any Quarter Customer’s Feedstock Supply needs exceed the Threshold Volume, then Customer may source up to [***] of its Feedstock Supply needs in excess of the Threshold Volume for the applicable Quarter through persons other than Operator. Notwithstanding the foregoing sentence, in the event that Customer provides Operator with written notice during January of 2022, beginning August 1, 2022 Customer may source up to [***] of its Product needs during a Quarter through persons other than Operator, so long as the amount of Feedstock Supply purchased from Operator during such Quarter is at least [***] Barrels per Day. In addition to the foregoing amounts, Customer may source de minimus amounts of Product from sources other than Operator, being no more than [***] Barrels per Quarter. In no event will Operator be obligated hereunder to deliver to Customer’s Pipeline more than [***] Barrels of Product in any Day. During any time period when Operator is unable to supply Customer with Product, Customer may source Product through persons other than Operator to meet its operational requirements. Nothing in this Section 9 shall in any way reduce the Minimum Annual Volume, the Minimum Quarterly Volume or the Threshold Volume.
Truck or Rail. In the event that Customer wishes to deliver Customer Supply to the Tank by truck or rail for subsequent delivery by Operator to Customer’s Pipeline, the Parties agrees that they will work in good faith to amend this Agreement to make the various revisions necessary to permit such. The cost of all upgrades to Operator’s facilities needed to facilitate receipt of Customer Supply into the Operator’s Pipeline by rail or truck shall be paid solely by Customer. The Parties acknowledge and agree that a separate terminalling fee shall be applicable to the receipt and redelivery of Customer Supply. Further, the Parties agree that all Customer Supply delivered by Operator to the Customer’s Pipeline shall be credited against the Minimum Quarterly Volume, but shall not reduce any volume obligations under any agreement between Operator and [**SOURCE A**] related to the purchase of Natural Gasoline to be supplied to Customer.
OPERATOR. OPERATOR AGREES TO INDEMNIFY AND HOLD HARMLESS CUSTOMER FROM AND AGAINST ANY AND ALL CLAIMS, SUITS, LIABILITIES, DEMANDS, LOSSES OR EXPENSES OF ANY KIND, INCLUDING, WITHOUT LIMITATION, INJURY OR DEATH OF PERSONS OR DAMAGE TO OR DESTRUCTION OF PROPERTY AS WELL AS REASONABLE ATTORNEYS’ FEES AND EXPENSES ARISING OUT OF OR IN ANY WAY CONNECTED WITH OR RESULTING FROM OPERATOR’S FAILURE TO OBSERVE ANY OF ITS MATERIAL OBLIGATIONS HEREUNDER OR OPERATOR’S MISCONDUCT OR NEGLIGENT ACTS OR OMISSIONS; PROVIDED, HOWEVER, THAT IN NO EVENT SHALL OPERATOR BE LIABLE TO CUSTOMER OR ANY OTHER PARTY FOR INDIRECT, SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OF ANY KIND OR CHARACTER FROM ANY CAUSE WHATSOEVER.
CUSTOMER. CUSTOMER AGREES TO INDEMNIFY AND HOLD HARMLESS OPERATOR FROM AND AGAINST ANY AND ALL CLAIMS, SUITS, LIABILITIES, DEMANDS, DAMAGES, LOSSES OR EXPENSES OF ANY KIND, INCLUDING, WITHOUT LIMITATION, INJURY OR DEATH OF PERSONS OR DAMAGE TO OR DESTRUCTION OF PROPERTY AS WELL AS REASONABLE ATTORNEYS’ FEES AND EXPENSES ARISING OUT OF OR IN ANY WAY CONNECTED WITH OR RESULTING FROM CUSTOMER’S FAILURE TO OBSERVE ANY OF ITS MATERIAL OBLIGATIONS HEREUNDER OR CUSTOMER’S MISCONDUCT OR NEGLIGENT ACTS OR OMISSIONS; PROVIDED, HOWEVER, THAT IN NO EVENT SHALL CUSTOMER BE LIABLE TO OPERATOR OR ANY OTHER PARTY FOR THE LOSS OF PROFITS OR INDIRECT, SPECIAL CONSEQUENTIAL OR PUNITIVE DAMAGES OF ANY KIND OR CHARACTER FROM ANY CAUSE WHATSOEVER.
Payment Terms. Within five (5) Business Days after the end of each Month, Customer shall send Operator a detailed breakdown delineating how much of the Product purchased by the Customer for such Month constituted Feedstock Supply and how much constituted Fuel Supply. Within ten (10) Business Days following the end of each Month, Operator shall send to Customer an invoice for the Terminal Fees and Product Acquisition Cost attributable to such Month. Additionally, within ten (10) Business Days following the end of each Quarter, Operator shall, to the extent due from Customer, send Customer an invoice for any Shortfall Fee due. Customer agrees to pay a service charge to Operator equal to one percent (1.0%) per Month on all undisputed payments due Operator and not paid by Customer on or before the date due, which shall be thirty (30) Days after the invoice date. Notwithstanding the foregoing, if at any time the amount owed hereunder to Operator by Customer, whether invoiced or not, exceeds Customer’s credit limit established by Operator, which may be amended from time to time, Customer shall immediately pay Operator all amounts owed in excess of such credit limit by wire transfer.
Default/Termination. Either Party may terminate this Agreement upon thirty (30) days’ prior written notice to the other in the Event of Default. The following events are considered an “Event of Default” under this Agreement:
a breach of any material term or condition of this Agreement that remains uncured for a period of thirty (30) days;
if a Party becomes insolvent or if the normal conduct of a Party’s business, or its credit, becomes substantially impaired;
if a Party calls any meeting of creditors or if a receiver or trustee is appointed for such Party or its assets; or
if any petition, proceeding or action under any bankruptcy proceedings is filed or instituted by a Party or against such Party and such proceeding is not dismissed within sixty (60) days.
Natural. If either party is rendered unable, wholly or in part, by force majeure or any other cause of any kind not reasonably within its control to perform or comply with any obligation or condition of this Agreement, other than obligation to pay money, upon giving written notice to the other party, such obligation or condition shall be suspended during the continuance of the inability so caused and such party shall be relieved of any liability during such period. The term “force majeure” shall include, without limitation, by the following acts of God, or when the supply of product or any facility of production, manufacture/storage, transportation, distribution or delivery contemplated by either party is interrupted, unavailable, or inadequate because of war or the public enemy, strikes, lockouts, or other disturbances, riots, hurricanes, floods, fires, explosion, or destruction from any involuntary cause or any character either similar or dissimilar to the foregoing, reasonably beyond the control of the party failing to perform. Further, a force majeure event affecting [**SOURCE A**] ability to deliver Product into the Tank or Operator’s ability to acquire Product otherwise, which prevents Operator from performing its obligations hereunder shall also serve as a force majeure event hereunder.
Regulatory. In the event that after the date on which this Agreement becomes effective any new and/or modified federal, state and/or local statutes, ordinances, regulations, laws or court or regulatory decisions (a “Subsequent Law”) become applicable to the Tank or Operator’s Pipeline, and as a result thereof Operator is required to make capital expenditures in excess of $250,000.00 to bring those items into compliance with such Subsequent Law, then in such event Operator shall give written notice of such occurrence to Customer setting for the amount of such required capital expenditures. If the required capital expenditures exceed $250,000.00, the parties agree to renegotiate in good faith the terms of this Agreement in light of said required capital expenditures to equitably share such costs.
Customer’s Compliance with Laws. In the operation of Customer’s Pipeline, Customer agrees to comply in all material respects with all applicable Laws.
Notices. All notices pertaining to this Agreement shall be sent by certified U.S. mail or overnight courier service, on a prepaid basis along with a fax copy. Said notices shall be effective on the Day sent and shall be addressed as follows unless another address is specified in writing by either party:
No Agency. The subject matter of this Agreement is purchase and delivery of the Product identified herein. There is no agency, distributorship, partnership, or joint venture being created by the existence of this Agreement. Neither party shall represent itself to be the agent, servant or partner of the other.
Construction. The paragraph headings of this Agreement shall not be considered to be part hereof for the purposes of interpreting or applying this Agreement, or any section hereof but are for convenience only.
Severability. In the event that any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal, or enforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provisions, and this Agreement shall be construed as if such invalid and illegal or unenforceable provisions have never been contained in it.
Entire Agreement. This Agreement shall constitute the entire agreement concerning the subject hereof between the parties superseding all previous agreements, negotiations and representations made prior or contemporaneous to the date hereof. This Agreement shall be modified or amended only in written agreement executed by both parties hereto.
Assignment. Neither party shall assign this Agreement without the express written consent of the other party which shall not be unreasonably withheld. This Agreement shall not be assigned by operation of law and shall not become an asset in any bankruptcy or receivership proceedings. In the case of any permitted assignment hereof, the rights and obligations of the parties hereto shall be binding upon such successors and assigns.
Survival. The provisions of this Agreement which by their nature are intended to survive the termination or expiration of this Agreement will continue as valid and enforceable obligations notwithstanding any such termination or expiration, including, without limitation, the indemnification obligations contained in Section 11.
Authority. Each party by executing this Agreement represents that the execution and delivery of this Agreement has been duly authorized by all necessary action on its part and that this Agreement is a legal, valid and binding obligation of such party, enforceable in accordance with the terms hereof, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to the enforcement of creditor’s rights generally and by general principles of equity.
No Third Party Beneficiaries. Except for [**SOURCE A**], nothing in this Agreement will create, or be construed as creating any express or implied rights in any person or entity other than the parties and their respective successors and permitted assigns.
Controlling Law and Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas and exclusive venue for any dispute hereunder shall be the State District Courts of Jefferson County, Texas, to whose jurisdiction all parties hereto consent.
Information/Audit Rights. Customer shall keep detailed books and records relating to all Feedstock Supply and Fuel Supply provided hereunder by Operator and all natural gasoline consumed by Customer in its operations. Such books and records must be maintained for a minimum of twenty-four (24) Months and shall, upon request at reasonable times, be made available for an audit by a representative of Operator. The Parties agree that Operator may share any information it obtains hereunder from Customer with [**SOURCE A**]. Further, Customer agrees that [**SOURCE A**] shall have the right to audit Customer’s books and records in accordance with the Condition Precedent section of the [**SOURCE A**] Agreement, which was effective on and after April 21, 2017.
Confidentiality. The Parties agree to treat this Agreement and any information exchanged under this Agreement as confidential information and Customer shall hold as confidential any information concerning the [**SOURCE A**] Exchange Agreement and the [**SOURCE A**] Purchase Agreement; provided, however, that the Parties may disclose any information concerning this Agreement required by (i) law or (ii) listing agreements with national security exchanges as determined by the discloser’s legal advisor. Each Party will be responsible for any breach of the foregoing confidentiality obligations by itself, its employees, officers, agents or representatives and agrees that it will be liable to the other Party for all damages suffered by such other Party as a result of its breach.
Title: President & Chief Executive Officer
Title: Executive Vice President & Chief Financial Officer