EXHIBIT 10.5
PIPELINE LEASE AGREEMENT
THIS PIPELINE LEASE AGREEMENT ("Agreement") is made and entered into this
22nd day of January, 2001 ("Effective Date"), by and between Chevron Pipe Line
Company, a Delaware corporation ("Lessor"), and Fin-Tex Pipe Line Company, a
Texas corporation ("Lessee").
WHEREAS, Lessor owns a pipeline, commonly referred to as the Big Spring to
Midland Products Pipeline System, located in the Counties of Howard, Martin, and
Midland in the State of Texas; and
WHEREAS, Lessee desires to lease the Big Spring to Midland Products
Pipeline System, said pipeline being more particularly identified in Exhibit "A"
attached hereto and incorporated herein ("Pipeline"); and
WHEREAS, Lessor is willing, subject to the conditions contained herein, to
lease the Pipeline to Lessee.
NOW, THEREFORE, in consideration of the mutual covenants and obligations
herein made, and other good and valuable consideration, the receipt of which is
hereby acknowledged, Lessor and Lessee agree as follows:
1. TERM
Unless sooner terminated as provided in Section 8, Lessor agrees to lease
said Pipeline for a term of five (5) years, beginning on January 28, 2001,
and ending on January 28, 2006 ("Term").
2. RENT
Lessee shall pay to Lessor as rent for the use of the Pipeline the sum of
Five Hundred Thousand Dollars ($500,000) per year ("Annual Fee"). On the
15th, day of January, 2001, Lessee shall pay the Annual Fee to Lessor at
the address set forth herein. Subsequent Annual Fees shall be due on
January 15th, of each year during the term of the Lease.
3. PIPELINE USE, AND IMPROVEMENTS
a) Lessor, for and in consideration of the rents, covenants, and premises
contained in this Lease and to be kept and observed by Lessee, does hereby
lease and demise to Lessee, and Lessee does hereby lease and accept from
Lessor the Pipeline, together with all rights, privileges, easements,
appurtenances and other interests belonging to or in any way pertaining
thereto, subject, however, to the exceptions and reservations hereinafter
set out.
b) The Pipeline shall be used for the transportation of petroleum products,
including, but not limited to refined petroleum products or liquified
petroleum gas. The parties agree that the Pipeline will not be used for
the transportation of crude oil.
c) Lessee agrees to comply with all laws, statutes, ordinances and
governmental rules, regulations or requirements now in force or which may
hereafter be in force, relating, to, or arising from the use of the
Pipeline. In addition, Lessee agrees to comply with the terms and
conditions of all right-of-way agreements, franchises, or other agreements
affecting the Pipeline. If Lessee receives notice of the violation of any
such law, statute, ordinance, or governmental rule, regulation or
requirement, it shall promptly notify Lessor thereof.
d) In complying with the above-referenced laws and agreements, Lessee agrees
to conduct such tests, file such reports, and take all actions necessary
to be in compliance with all applicable State, Federal and local laws and
regulations. Lessee also agrees to furnish to Lessor results of all tests
and, at Lessor's request, from time to time other information, such as
operating pressure and inspection reports, pertaining to the use of the
Pipeline.
e) Lessor reserves the right to audit Lessee's records that pertain to
Lessee's operation and maintenance of the Pipeline.
f) Lessee shall, at its expense, operate and maintain the Pipeline, make all
repairs, replacements, inspections and improvements thereto as required by
federal, state, and/or local regulations as well as good industry
practices, except for cathodic protection monitoring and rectifier
current. So long as this Lease is in force, Lessee shall monitor the
Pipeline for any leaks and shall repair and remediate, at Lessee's
expense, all leaks and damages, including all environmental damages,
resulting or arising from or in any way in connection with the Pipeline.
All additions, replacements, and/or repairs shall conform to Lessor's
standards of pipeline design and construction. Lessee shall provide Lessor
prior advance notice of any planned addition or replacement to the
Pipeline. Lessor shall have the right to review all design and
construction plans related to the Pipeline. Lessor's review of said
designs and construction plans shall in no way relieve Lessee of any
liability arising, out of any additions or replacements. Lessee shall have
the right to make emergency repairs to the Pipeline without the consent of
the Lessor so long as such repairs conform to federal, state, and/or local
regulations as well as good industry practice. In the event Lessee makes
such emergency repairs, Lessee agrees to notify Lessor of such repairs as
soon as practical thereafter.
g) Any alterations required by governmental agencies (such as casing
extensions and replacements for highway alterations) will be the complete
responsibility of Lessee.
h) Lessee shall be responsible for all responsibilities and liabilities
associated with any leaks, spills or discharges of petroleum products or
other contaminants from the Pipeline which occur during the term of this
Lease. Lessee's responsibilities and liabilities include its
responsibilities to comply with all State, Federal, and local laws and
regulations regarding the reporting or remediation of any leak, spill or
discharge from the Pipeline. Lessee shall further be liable for all costs
and expenses relating to any leak, spill or discharge of petroleum
products or other contaminants from the Pipeline during the term of the
Lease, including, but not limited to remediation costs and expenses.
Lessee shall
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promptly notify Lessor of any spill, leak or discharge of hydrocarbons
from the Leased pipeline during the term of this Lease.
4. WARRANTY
It is understood and agreed that Lessor's Lease of the Pipeline is made
"AS IS, WHERE IS", WITHOUT ANY WARRANTY EXPRESS OR IMPLIED AND THAT LESSEE
WAIVES THE WARRANTY OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE and that this Lease is made only insofar as the Lessor has a legal
right to lease an interest in the rights-of-way over which the Pipeline
extends under the terms and conditions of the right-of-way agreements
under which Lessor now holds. Lessor is not conveying any interests in
real property, including but not limited to, any fee or leasehold interest
in the lands above, beneath, or adjacent to the Pipeline, except the
non-exclusive right to occupy and use such lands pursuant to and in
accordance with the right of way agreements held by Lessor pertaining to
the Pipeline.
Notwithstanding the above, Lessor hereby represents and warrants that it
is the owner of the Pipeline and that, to the best of Lessor's belief and
information, Lessee, on paying, the rent and other charges herein provided
for and observing, and keeping, the covenants, conditions, and terms of
this Lease on Lessee's part to be kept or performed, shall lawfully and
quietly hold, utilize, and enjoy the Pipeline so long as this Lease
remains in force without hindrance or molestation of Lessor or any person
claiming, under Lessor.
5. LIENS.
a) Lessee shall keep the Pipeline free from any liens arising, from any
work performed, materials furnished, or obligations incurred by or at
the request of the Lessee. All persons either contracting with Lessee
or furnishing or rendering, labor and materials to Lessee shall be
notified in writing by Lessee that they must look only to Lessee for
payment for any labor and materials.
b) If any lien is filed against the Pipeline or Lessee's leasehold
interest therein, Lessee shall discharge it within ten (10) days after
Lessee learns that a lien has been filed. If Lessee fails to discharge
any Lien within such period, then, in addition to any other right or
remedy of Lessor, Lessor may, at its election, discharge the lien by
either paying the amount claimed to be due or obtaining the discharge
by deposit with a court or a title company or by bonding,. Lessee shall
pay on demand any amount paid by Lessor for the discharge or
satisfaction of any lien, and all reasonable attorneys' fees and other
legal expenses of Lessor incurred in defending any such action or in
obtaining the discharge of such lien together with all necessary
disbursements in connection therewith.
6. INDEMNITY
LESSEE (HEREINAFTER "INDEMNITOR") SHALL DEFEND, INDEMNIFY AND SAVE
HARMLESS LESSOR, CHEVRON CORPORATION, ITS AFFILIATES, AGENTS AND EMPLOYEES
(HEREINAFTER "INDEMNITEES") FROM AND AGAINST ANY AND ALL LOSS, COST,
DAMAGE, EXPENSE (INCLUDING ATTORNEYS' FEES), AND CLAIMS FOR (1) INJURY TO
OR DEATH OF A PERSON, INCLUDING (A) INDEMNITEES, (B) THIRD PARTIES, (C)
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INDEMNITOR, ITS AGENTS OR EMPLOYEES, AND (D) INDEMNITEES AND INDEMNITOR'S
CONTRACTORS AND SUBCONTRACTORS AND THEIR EMPLOYEES; (2) LOSS OF OR DAMAGE
TO PROPERTY, INCLUDING, BUT NOT LIMITED TO ENVIRONMENTAL DAMAGES; AND (3)
PENALTIES IMPOSED OR PROCEEDINGS BROUGHT BY GOVERNMENT AGENCIES ARISING
OUT OF OR RESULTING DIRECTLY FROM (1) THIS LEASE, (2) THE DESIGN OF THE
PIPELINE, (3) THE EQUIPMENT OR PIPE USED IN THE PIPELINE'S CONSTRUCTION,
(4) THE MAINTENANCE OF THE PIPELINE, OR (5) THE OPERATION OF THE PIPELINE.
THIS INDEMNITY PROVIDED BY INDEMNITOR SHALL REMAIN IN FULL FORCE AND
EFFECT REGARDLESS OF THE ACTIVE, PASSIVE OR CONCURRENT NEGLIGENCE OF
INDEMNITEES, AND REGARDLESS OF WHETHER LIABILITY WITHOUT FAULT IS IMPOSED
OR SOUGHT TO BE IMPOSED ON ONE OR MORE OF THE INDEMNITEES. This indemnity
shall not apply, however, to the to the extent that such indemnity is void
or otherwise unenforceable under applicable law in effect on or validly
retroactive to the date of this Lease, and shall not apply to the extent
such loss, damage, injury, liability or claim is the result of the loss,
negligence or willful misconduct of an Indemnitee. Lessor shall give
Lessee immediate notice of any suit brought against Lessor with respect to
which Lessee is or may be obligated to indemnify Lessor hereunder.
7. INSURANCE
Lessee shall maintain during the performance of this Lease Comprehensive
or Commercial General Liability Insurance (bodily injury and Property
damage) with contractual liability insurance to cover liability assumed
under this Lease. The limits of liability of such insurance shall not be
less than $10,000,000 combined single limit per occurrence.
The above insurance shall provide that Lessor will receive thirty (30)
days prior written, notice from the insurer before any cancellation or
material chance of the insurance provided herein. The insurance specified
herein shall name the Indemnitees as additional insureds with respect to
the obligations of Lessee under this Agreement.
8. TERMINATION
a) Upon the expiration of the Term of the Lease, or upon its termination for
other causes, the Lessee shall immediately surrender possession of the
Pipeline in the same condition as when received, reasonable wear and tear
excepted, and shall have no further right, title or interest in the
Pipeline.
b) At termination, if Lessor so elects, Lessee, at Lessee's sole cost, shall
remove all alterations, addition, and improvements to the Pipeline, placed
thereon by Lessee, repair all damages to the Pipeline caused by such
removal, and restore the Pipeline to the configuration in which it was at
the commencement of the Term of this Lease.
c) Should Lessee fail to maintain the Pipeline for a period in excess of one
(1) year, or fail to comply with any of the obligations of this Lease,
within fifteen (15) days of the mailing by Lessor of a written notice
demanding Lessor's immediate compliance with the terms and conditions of
the Lease, including, but not limited to the payment of Rent,
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Lessor shall have the right, at Lessor's option, to terminate this Lease,
in which event Lessor shall have the immediate right of reentry and may
remove all persons and property from the Pipeline and recover damages
caused by the acts or emissions of the Lessee. Failure to notify Lessee of
any default shall not constitute a waiver by Lessor as to later defaults.
The foregoing provisions are without prejudice to any remedy which might
otherwise be used under applicable law for breaches of contract, or to any
lien to which Lessor may be entitled.
d) In the event the entire Pipeline is appropriated or taken under the power
of eminent domain by any authorized or public authority, this Lease shall
terminate and expire as of the date of such taking. Lessee expressly
waives any right to participate in, or be entitled to any part of any
condemnation award. Additionally, if Lessor falls to maintain possession
of the Pipeline right of way, this lease shall terminate and Lessee is
released from any future lease payments.
9. RIGHT OF ENTRY
a) On not less than 24 hours' notice, Lessee shall make the Pipeline
available, at a time acceptable to Lessor during normal business hours,
i.e., 8 a.m. to 6 p.m., for entry by Lessor or its agent for any purpose
necessary for Lessor to conduct necessary business relative to the
Pipeline.
b) Lessor shall not be liable to Lessee for any compensation by reason of
inconvenience or annoyance arising from the necessity of Lessor entering,
the premises for any of the authorized purposes in the Lease, or for
repairing the Pipeline or any portion of the Pipeline, should the
necessity occur.
c) Lessor shall provide Lessee access to the Pipeline for the purpose of
operating maintaining, or making repairs or alterations to the Pipeline
during the Lease Term.
10. RELATIONSHIP OF PARTIES
It is expressly understood and agreed between the parties hereto that
Lessor shall not be construed or held to be a partner or associate of
Lessee in the conduct of its business, it being understood and agreed that
the relationship between the parties hereby is and shall at all times
remain that of Lessor and Lessee.
11. NOTICE
Any notices to be given under this Lease shall be considered as duly given
if made in writing, addressed to either, and personally delivered or
mailed by certified mail to the following:
Chevron Pipe Line Company Fin-Tex Pipe Line Company.
0000 Xxxxx Xxxx 0000 XXX Xxxx, Xx. 000
Xxxxxxx, Xxxxx 00000 Xxxxxx, Xxxxx 00000 -1100
Attn: Xxxx Xxxxx Attn: President,
Fin-Tex Pipe Line Company
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12. ASSIGNMENT
Lessee shall not assign, mortgage or otherwise pledge or encumber this
Lease, nor shall it sublet the Pipeline, without the prior written consent
of Lessor, which consent may be withheld in Lessor's sole and absolute
discretion. Should Lessor choose to permit Lessee to assign, mortgage, or
encumber this Lease, Lessee shall not be relieved of its obligations under
this Lease.
13. APPLICABLE LAW
This Lease shall be governed by and interpreted in accordance with the
laws of the State of Texas, excluding any conflict-of-laws rule or
principle, which may refer the laws of the State of Texas to the laws of
any other jurisdiction.
14. DISPUTE RESOLUTION
In the event of any dispute, claim, questions, or disagreement arising,
out of or related to this Lease or the breach thereof, the parties shall
use their best efforts to settle such disputes, claims, questions, or
disagreement. To this effect they shall consult and negotiate with each
other in good faith and, recognizing their mutual interests, attempt to
reach a just and equitable solution satisfactory to both parties. If after
a period of sixty (60) days, then upon notice by either party to the
other, disputes, claims, questions, or differences shall be finally
settled by binding arbitration administered by the American Arbitration
Association (or another arbitration service jointly agreed upon) in
accordance with the provisions of its applicable rules. Each party agrees
that no award or decision resulting therefrom shall include punitive
damages. The losing, party shall promptly pay the prevailing party all
costs and reasonable attorneys' fees incurred by the prevailing party in
such action.
15. CONFLICTS OF INTEREST
Conflicts of interest relating to this Lease are strictly prohibited.
Except as otherwise expressly provided herein, neither Lessee, nor any
director, employee or agent of Lessee, shall give to or receive from any
director, employee or agent of Lessor any gift, entertainment or other
favor of significant value, or any commission, fee or rebate. Likewise,
neither Lessee, nor any director, employee or agent of Lessee shall enter
into any business relationship with any director, employee or agent of
Lessor or of any affiliate or Lessor, unless such person is acting for and
on behalf of Lessee, without the prior written notification thereof to
Lessor. Any representative(s) authorized by Lessor may audit any and all
records of Lessee for the sole purpose of determining whether there has
been compliance with this Section.
16. AMENDMENTS
No amendment or modification of this Lease shall be binding- or valid
unless expressed in writing and executed by both Parties hereto.
17. HEADINGS
All Section headings used in this Lease are for convenience only and shall
not affect the construction or interpretation of any of the terms hereof
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18. ENTIRE AGREEMENT
This instrument shall supersede all prior understandings between the
parties hereto with respect to the leasing of the Pipeline and shall
constitute the entire Lease, unless otherwise hereafter modified by both
parties in writing.
IN WITNESS WHEREOF, the Parties have executed this Lease effective as of the
date first above written.
LESSOR: LESSEE:
CHEVRON PIPE LINE COMPANY FIN-TEX PIPE LINE COMPANY
a Delaware Corporation a Texas Corporation
By: /s/ XXXXXXX X. XXXXXX By: /s/ XXXX X. XXXXXX
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Its: Manager, Eastern Profit Center Its: President, CEO PSS
Chevron Pipeline Company
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