TARGA LIQUIDS MARKETING AND TRADE RAW PRODUCT PURCHASE AGREEMENT
Exhibit
10.14
TARGA LIQUIDS MARKETING AND TRADE
RAW PRODUCT PURCHASE AGREEMENT
EFFECTIVE
DATE: January 1, 2007 (“Effective Date”)
| Seller: | Targa Texas Field Services LP 0000 Xxxxxxxxx, Xxxxx 0000 Xxxxxxx, XX 00000-0000 Fax No. (000) 000-0000 Attn: Contracts Administration |
| Buyer: | Targa Liquids Marketing and Trade 0000 Xxxxxxxxx, Xxxxx 0000 Xxxxxxx, XX 00000-0000 Fax No. (000) 000-0000 Attn: Contracts Administration |
| 1. | SALE AND PURCHASE |
Seller agrees to sell and deliver to Buyer, and Buyer agrees to purchase and receive from
Seller, Raw Product on the terms and conditions set forth in this Raw Product Purchase Agreement
(the “Agreement”).
| 2. | TERM |
This Agreement shall
commence on the Effective Date and shall continue in full force and
effect for one year thereafter (the “Initial Term”). At the end of the Initial Term, this
Agreement shall automatically be extended for successive one year terms, unless either Party shall
have given the other Party no less than 60 Days written notice of its intent to terminate this
Agreement prior to the end of (i) the Initial Term, or (ii) the then-current one year extension
term, as applicable (the Initial Term, as extended by one year extension terms, the “Term”).
| 3. | TERMS OF SALE AND PURCHASE |
| 3.1. | VOLUMES |
Seller commits and dedicates to sell, and Buyer agrees to purchase, all volumes of Raw Product
owned or controlled by Seller and produced from the Originating Facility.
| 3.2. | DELIVERY OF RAW PRODUCT |
Raw Product will be delivered to Buyer from Seller at or near the tailgate of the Originating
Facility into an existing Pipeline designated by Buyer or such other locations as are mutually
agreed to by the Parties.
| 3.3. | SHIPMENT |
Buyer shall procure transportation for all Raw Product from the Originating Facility to the
applicable destination.
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| 4. | PRICE |
| 4.1. | PRICE DETERMINATION FOR INTERCOMPANY RAW PRODUCT SALES |
| (a) | Buyer shall pay to Seller for the Intercompany Raw Product delivered to Buyer hereunder, a purchase price equal to the OPIS Index Price for each Gallon of each NGL Component contained in the Raw Product, minus the Transportation Costs and the Fractionation Costs. | ||
| (b) | “OPIS Index Price” means the monthly average of the daily high and low prices per Gallon, for the Month in which delivery occurs, as quoted by OPIS in the OPIS LP-Gas Report for “Any Current Month” volumes in the “Mont Belvieu Spot Gas Liquids Prices” table using: (i) the Non-TET prices for the propane, isobutane, normal butane and natural gasoline NGL Components; and (ii) the Purity Ethane price for the ethane NGL Component. | ||
| (c) | “Transportation Costs” means all transportation costs incurred by Buyer in transporting the Raw Product delivered by Seller under this Agreement, including pipeline tariff charges, line fill, penalties and other charges attributable to the Raw Product. | ||
| (d) | “Fractionation Costs” means the fractionation costs and expenses incurred by Buyer in connection with the receipt and fractionation of Raw Product delivered by Seller under this Agreement that are charged to Buyer with respect to the Raw Product delivered under this Agreement. Depending on the entity fractionating Raw Product for Buyer, such fee shall be (i) the then current fee under Seller’s fractionation agreement with Gulf Coast Fractionators, (ii) the then current fee applicable to partners of Cedar Bayou Fractionators, L.P. or any other entity providing fractionation services in which an Affiliate of Buyer has an ownership interest, or (iii) the fractionation fees charged to Buyer by a third party providing fractionation services with respect to such Raw Product. |
| 4.2. | PRICE DETERMINATION FOR THIRD PARTY SALES |
| (a) | Buyer shall pay to Seller for all Raw Product (other than Intercompany Raw Product) delivered to Buyer hereunder a price equal to the Third Party Price. | ||
| (b) | “Third Party Price” means, for each Month, the aggregate proceeds received by Buyer from the sale to Buyer’s customers of Raw Product delivered by Seller hereunder, less Third Party Sales Costs. | ||
| (c) | “Third Party Sales Costs” means (i) the Transportation Costs (as defined in Section 4.1), (ii) the Fractionation Costs (as defined in Section 4.1), and (iii) all other costs and charges reasonably incurred by Buyer in connection with Buyer’s sale to its customers of Raw Product (other than Intercompany Raw Product) delivered by Seller hereunder. |
| 4.3. | ALTERNATE INDEX |
If for any reason the OPIS Index for a particular NGL Component or any other index used in the
calculations made pursuant to Section 4.1 should (i) cease to be published or (ii) be
materially changed, the Parties agree promptly and in good faith to negotiate a mutually
satisfactory alternate index or substitute methodology for calculating the price for such Component
(the “Alternate Index”). If, on or before 30 Days after the index used to determine the price
hereunder ceases to be published, the Parties are unable to agree on an Alternate Index upon which
to base the calculation of the price, the Parties
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shall submit such determination to arbitration in accordance with the provisions of
Article 20, which arbitration procedure will determine the Alternate Index. From the date
on which the index price used to determine the price for a particular NGL Component ceases to be
available until the Alternate Index is determined, the price for such NGL Component shall be the
average of the prices in effect hereunder (or that would have been in effect hereunder) during the
12 Months preceding the Month in which the index upon which the price was based ceased to be
available, which price shall be effective until the effective date of the Alternate Index
determined as set forth in this Section 4.3. Upon the determination of an Alternate Index,
the price will be adjusted retroactively to the date on which the index upon which the price
previously was based ceased to be available. Any payments hereunder that are delayed pending the
determination of an Alternate Index shall bear interest at the Base Rate from the date that such
payment would have been due without such delay until the date of payment.
| 5. | REPRESENTATIONS AND WARRANTIES |
| 5.1. | SELLER REPRESENTATIONS AND WARRANTIES |
Seller represents and warrants to Buyer that (i) Seller has Good And Marketable Title to the
Raw Product delivered by it to Buyer hereunder and the right to sell and deliver same to Buyer, and
SELLER AGREES TO RELEASE, INDEMNIFY, DEFEND AND HOLD BUYER HARMLESS FROM AND AGAINST ANY CLAIMS
ARISING OUT OF OR RELATED TO ANY FAILURE OF SUCH TITLE OR BREACH OF THIS WARRANTY; and (ii) Seller
shall deliver all Raw Product sold to Buyer hereunder in compliance with all Applicable Laws.
| 5.2. | BUYER REPRESENTATION AND WARRANTY |
Buyer represents and warrants to Seller that Buyer shall receive all Raw Product sold by
Seller hereunder in compliance with all Applicable Laws.
| 5.3. | BUYER ACKNOWLEDGMENT |
Buyer acknowledges that the Raw Product delivered hereunder is hazardous and that Buyer is
knowledgeable of (i) the hazards and risks associated with such Raw Product, and (ii) the handling,
receipt, transportation, storage and use of such Raw Product.
| 6. | WAIVER OF CONSUMER RIGHTS |
Each of Buyer and Seller hereby waives its respective rights, if any, under the Texas
Deceptive Trade Practices-Consumer Protection Act, Sections 17.41 et seq., except for Section
17.555 Texas Business & Commerce Code, a law that gives consumers special rights and protections.
After consultation with an attorney of its own selection, Buyer and Seller voluntarily consent to
this waiver.
| 7. | DELIVERY |
Delivery shall be deemed to have been completed when the Raw Product has been delivered to the
Measurement Points. As between the Parties, Seller shall be deemed to be in exclusive possession
and control (and responsible for any damages or injury resulting therefrom or caused thereby) of
the Raw Product prior to and at the Measurement Points and Buyer shall be deemed to be in exclusive
control (and responsible for any damages or injury resulting therefrom or caused thereby) of the
Raw Product from the Measurement Points.
| 8. | PASSAGE OF TITLE |
Title to, and risk of loss for, the Raw Product shall pass from Seller to Buyer at the
applicable Measurement Points. Notwithstanding the foregoing, title to, and risk of loss
associated with, any Offspec Raw Product shall remain with Seller.
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| 9. | MEASUREMENT & ANALYSIS |
| 9.1. | MEASUREMENT |
All Raw Product under this Agreement shall be measured as follows:
| (a) | On all deliveries into/out of Pipelines, quantity shall be determined by turbine or positive displacement pipeline meter in accordance with API Manual of Petroleum Measurement Standards. | ||
| (b) | Metering systems used for quantity determinations shall not allow vapor return or shall compensate for any vapor return. | ||
| (c) | All quantities shall be corrected to 60 degrees Fahrenheit and equilibrium vapor pressure of the applicable Raw Product at 60 degrees Fahrenheit. | ||
| (d) | Volume and compressibility correction factors shall be determined from referenced API tables or computer programs used to generate these tables. |
| 9.2. | PRODUCT SAMPLING & ANALYSIS |
| (a) | Buyer will obtain a sample or samples of the Raw Product from an appropriate location at the Originating Facility or Pipeline, as applicable; at an appropriate time or times and on a frequency established by Buyer; with the exact sampling locations, times and frequencies to be determined by Buyer, in its sole discretion, in order to obtain representative samples of the Raw Product being delivered by Seller under this Agreement. | ||
| (b) | Representative samples of the Raw Product shall be analyzed by Buyer. | ||
| (c) | Other provisions and standards referenced herein notwithstanding, the volume of the natural gasoline NGL Component contained in the Raw Product shall be calculated using the component densities of the pentanes and the hexanes plus (C6+). |
| 9.3. | STANDARDS |
Measurement, sampling and analysis, pursuant to the above provisions, shall be conducted in
accordance with the GPA Standards applicable to the methodology used; including GPA Standards 8182,
8173, 2177 and all other appropriate GPA, API and ASTM standards, with all such standards being
incorporated herein for all purposes, including all revisions of those standards adopted and in
effect during the Term of this Agreement.
| 10. | CLAIMS |
All claims by Buyer for deficiencies in Raw Product quantity or quality shall be made to
Seller within 180 days of delivery of the applicable Raw Product. All notices regarding Raw
Product deficiencies shall be made in accordance with Section 19. Failure by Buyer to
timely notify Seller of any deficiency shall be deemed a waiver by Buyer of any claims with regard
to such Raw Product deficiencies.
| 11. | QUALITY |
All Raw Product delivered to Buyer under this Agreement shall meet the specifications
governing the applicable Pipeline receipt point and shall not contain any contaminants that may
make it or its NGL Components commercially unacceptable. Seller may be required, on Buyer’s behalf
as shipper, to furnish
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any Pipeline on which Raw Product is transported with a certificate setting forth the
specifications of each shipment of Raw Product to be transported on such Pipeline. Seller
acknowledges that any such Pipeline shall have the right to: (i) refuse to accept any Raw Product
for transportation which do not meet such Pipeline’s specifications or which are not of good and
merchantable quality suitable for transportation through Pipeline’s existing facilities, and (ii)
sample and/or test any shipment of Raw Product prior to acceptance or during receipt of same, and
in the event of variance between the Seller’s certificate and the Pipeline’s test, the latter shall
prevail.
| 12. | OFFSPEC RAW PRODUCT |
In the event any of Seller’s Raw Product is contaminated or otherwise fails to conform to the
specifications governing the applicable Pipeline receipt point
(“Offspec Raw Product”), either
Party may notify the other Party of any such failure, and Seller immediately shall undertake and
diligently pursue such acts as may be necessary to correct such failure so as to deliver Raw
Product conforming to the applicable specifications. Buyer shall have the right, at any time and
from time to time, to reject any Raw Product not conforming to the specifications governing the
applicable Pipeline receipt point and to refuse or suspend receipt until it is established to
Buyer’s reasonable satisfaction that subsequent deliveries of Raw Product will conform to the
specifications governing the applicable Pipeline receipt point, and nothing contained in this
Section 12 or the Agreement is intended or shall be construed to limit such right. If it
is subsequently determined that Buyer unknowingly accepted Offspec Raw Product, the Parties will
mutually agree upon a discounted price for such Offspec Raw Product to reflect (i) its diminution
in value, if any, from Raw Product meeting the specifications governing the applicable Pipeline
receipt point or (ii) the cost incurred by Buyer in handling such Offspec Raw Product. SELLER
AGREES TO RELEASE, INDEMNIFY, DEFEND AND HOLD HARMLESS BUYER, ITS AFFILIATES, AND ITS AND THEIR
RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND CONTRACTORS FROM AND AGAINST ANY CLAIMS
ARISING OUT OF, OR RELATED TO, THE DELIVERY OF OFFSPEC RAW PRODUCT TO BUYER WHICH ARE UNKNOWINGLY
ACCEPTED BY BUYER.
| 13. | INSPECTIONS |
Each Party shall be entitled to have its representatives present during all loadings,
unloadings, tests, samples and measurements involving delivery of Raw Product under this Agreement.
Either Party may engage certified independent inspectors to perform gauging, sampling, and testing
up to four times during each 12 Month period during the Term, in which event such inspector’s
determinations shall be conclusive and binding on the Parties. Payments for such outside
inspector’s services will be shared equally among the Parties unless some other arrangement for
payment is mutually agreed upon.
| 14. | NOMINATIONS; DAMAGE PAYMENTS |
| 14.1 | MONTHLY NOMINATIONS |
Prior to the end of each Month Seller will nominate the total quantity of Raw Product to be
delivered to Buyer pursuant to this Agreement during the succeeding Month, giving sufficient time
to meet the applicable Pipeline’s nomination deadlines for such Month, and will also provide Buyer
with any other operational information which could have a significant effect on the quantity of Raw
Product delivered for the Month. Seller and Buyer will cooperate in communicating throughout each
Month regarding any changes in the quantity of Raw Product to be delivered at the Measurement
Point. Should Seller become aware that actual deliveries at the Measurement Point on any day will
be more or less than the nominated quantity, Seller will promptly notify Buyer.
| 14.2 | DAMAGE PAYMENTS |
In the event that (i) Buyer is unable to take all of the Raw Product nominated by Seller
during a particular Month due to any Person’s failure to take Raw Product from Buyer, and (ii)
Buyer receives Damage Payments in connection with such event, Buyer will pay Seller its pro rata
share of such Damage
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Payments based on the amount of nominated Raw Product not taken by Buyer from Seller and any other
Affiliates of Buyer as a result of such event.
| 15. | DEFAULT; TERMINATION |
| 15.1. | EVENTS OF DEFAULT |
It shall be an “Event of Default” if:
| (a) | Either Party becomes insolvent, makes an assignment for the benefit of creditors, or a receiver or trustee is appointed for the benefit of such Party’s creditors, or a Party makes a filing for protection from creditors under any bankruptcy or insolvency laws, or such filing is made against a Party; | ||
| (b) | Buyer fails to make any payment when due and such nonpayment shall have continued for 10 Days or more after notice of same from Seller; | ||
| (c) | Either Party fails to perform any of its material obligations hereunder and such nonperformance shall have continued for 30 Days or more after notice of same from the other Party. |
| 15.2. | TERMINATION FOR DEFAULT |
| (a) | If an Event of Default occurs and is continuing, the non-defaulting Party may, by written notice to the defaulting Party, designate a day no earlier than the day such notice is effective as an early termination date (“Early Termination Date”). On the Early Termination Date, all obligations due on or after the Early Termination Date under the Agreement shall be terminated except as provided herein. If an Early Termination Date has been designated, the non-defaulting Party shall in good faith calculate the amount due between the parties as of the Early Termination Date. The non-defaulting party shall notify the defaulting Party in writing of the amount due and whether it is owed to or from the defaulting Party (the “Termination Payment”). The party owing the Termination Payment shall pay it to the other party within two Business Days after the effective date of such notice, with interest at the Base Rate from the Early Termination Date until paid. | ||
| (b) | In addition, the defaulting Party hereunder shall reimburse the non-defaulting Party, on demand, for actual, reasonable out-of-pocket expenses (with interest at the Base Rate), including, without limitation, reasonable legal fees and expenses incurred by the other Party in connection with the enforcement of the Agreement. | ||
| (c) | If an Early Termination Date is designated, the non-defaulting party shall be entitled, in its sole discretion, to set-off any amount payable by the non-defaulting Party or any of its Affiliates to the defaulting Party under the Agreement or otherwise, against any amounts payable by the defaulting Party to the non-defaulting Party or any of its Affiliates under this Agreement or otherwise. This provision shall be in addition to any right of setoff or other right and remedies to which any party is otherwise entitled (whether by operation of law, contract or otherwise). If an obligation is unascertained, the non-defaulting party may in good faith estimate that obligation and set-off in respect of the estimate, subject to the non-defaulting party accounting to the defaulting Party when the obligation is ascertained. |
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| 16. | FORCE MAJEURE |
| 16.1. | SUSPENSION |
In the event of either Party being rendered unable, wholly or in part, by reason of force
majeure to carry out its obligations under this Agreement, other than to make payments due
hereunder, the obligations of the Party suffering force majeure shall be suspended to the extent
affected by and for the period of such force majeure condition. Such Party suffering force majeure
shall give notice and full particulars of such force majeure in writing or by facsimile to the
other Party as soon as possible after the occurrence of the cause. Such cause shall as far as
possible be remedied with all reasonable dispatch.
| 16.2. | DEFINITION |
The term “force majeure” as employed herein shall mean acts of God, strikes, lockouts or other
industrial disputes or disturbances, acts of the public enemy, wars, blockades, insurrections,
riots, epidemics, landslides, lightning, earthquakes, fires, tornadoes, hurricanes or storms, and
warnings for any of the foregoing which may necessitate the precautionary shut-down of xxxxx,
plants, gathering systems or other related facilities, floods, washouts, arrests and restraints of
governments and people, civil disturbances, explosions, sabotage, breakage or accidents to
equipment, machinery, plants, or lines of pipe, the making of repairs, expansions or alterations to
lines of pipe or plants, inability to secure labor or materials, freezing of xxxxx or lines of
pipe, partial or entire failure of the Originating Facility or the facilities used to accept
delivery of Raw Product and/or measure the same, electric power shortages, necessity for compliance
with Applicable Laws, inclement weather that necessitates extraordinary measures and expense to
construct facilities and/or maintain operations and any other causes, whether of the kind
enumerated herein or otherwise, not within the control of the Party claiming suspension and which
by the exercise of reasonable diligence such Party is unable to prevent or overcome. Such term
shall likewise include, in those instances where either Party hereto is required to obtain permits
or licenses from any governmental agency to enable such Party to fulfill its obligations hereunder,
the inability of such Party to acquire, or delays on the part of such Party in acquiring, such
permits or licenses. The term “force majeure” shall also include any event of force majeure
occurring with respect to the facilities or services of either Party’s suppliers or customers
delivering or receiving any Raw Product, fuel, feedstock, or other substance necessary to the
performance of such Party’s obligations, and shall also include curtailment or interruption of
deliveries or services by such third party suppliers or customers as a result of an event of force
majeure.
| 16.3. | LABOR DISPUTES |
It is understood and agreed that the settlement of strikes or lockouts shall be entirely
within the discretion of the Party having the difficulty, and that the above requirements that any
force majeure shall be remedied with all reasonable dispatch shall not require the settlement of
strikes or lockouts by acceding to the demands of an opposing party when such course is inadvisable
in the sole discretion of the Party having difficulty.
| 16.4. | MAINTENANCE |
Either Party and/or its designee may briefly interrupt its performance hereunder for the
purpose of making necessary or desirable inspections, alterations and repairs; and the Party
requiring such relief shall give to the other Party reasonable notice of its intention to suspend
its performance hereunder, except in cases of emergency where such notice is impracticable, in
cases where the operations of the other Party will not be affected, or as to Buyer’s performance,
in cases where the Raw Product is being delivered to a terminal or a fractionation facility
operated by a third party and the operator of such plant fails to give Buyer notice of such plant
maintenance. The Party requiring such relief shall endeavor to arrange such interruptions so as to
inconvenience the other Party as little as possible.
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| 16.5 | RATABLE TAKE |
Whenever a force majeure event or other circumstances prevent Buyer from taking delivery of
all of the Raw Product nominated by Seller during a particular Month, Buyer will use commercially
reasonable efforts to take Seller’s Raw Product ratably as to quantity with all other Raw Product
that is nominated by Affiliates of Buyer that are also affected by such event.
| 17. | INDEMNITIES |
SELLER SHALL INDEMNIFY, RELEASE, DEFEND AND HOLD HARMLESS BUYER AND ITS AFFILIATES, AND ITS
AND THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS FROM AND AGAINST ANY CLAIMS ARISING
OUT OF OR IN ANY WAY RELATING TO SELLER’S OWNERSHIP, POSSESSION OR CONTROL OF THE RAW PRODUCT UP TO
THE MEASUREMENT POINTS, AND BUYER SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS SELLER AND ITS
AFFILIATES, AND ITS AND THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS FROM AND AGAINST
ANY CLAIMS ARISING OUT OF OR IN ANY WAY RELATING TO BUYER’S OWNERSHIP, POSSESSION OR CONTROL OF THE
RAW PRODUCT AT AND AFTER THE MEASUREMENT POINTS.
| 18. | ASSIGNMENT |
Should the rights of Seller giving rise to its ownership and/or control of the Raw Product
being sold hereunder be assigned during the Term of this Agreement (such as sale of any interest in
an Originating Facility wherein Seller’s ownership and control of Raw Product therefrom arises from
Seller’s ownership interest in the Originating Facility), Seller shall make any such a transfer
expressly subject to the terms and conditions of this Agreement and shall (i) require its successor
in interest to expressly assume and agree to perform Seller’s obligations under this Agreement and
to the extent of such assignment or transfer should Seller transfer less than all of its such
rights. Nothing herein shall be construed to release Seller from its obligations hereunder. This
Agreement may be assigned by either Party to any of its Affiliates or any Party that is the
transferee or successor to all or substantially all of the assets of the assigning Party without
the prior written consent of the other Party; provided that the assignee shall expressly agree to
assume and perform all of the assigning Party’s obligations hereunder. Any other assignment of
this Agreement shall require the prior written consent of the non-assigning Party, which consent
shall not be unreasonably withheld or delayed. Any assignment in violation of this Section
18 shall be void ab initio.
| 19. | NOTICE |
Any notice, claim, demand or other correspondence hereunder shall be in writing and shall be
delivered personally by courier or overnight delivery service, by certified mail, return receipt
requested, or by fax (promptly followed by a copy sent by mail or personal delivery), to the
Party’s address set forth in this Agreement, unless changed by notice. Such notice, claim, demand
or correspondence shall be deemed to have been given on the date of the actual delivery thereof to
the Party receiving such notice, or, if receipt is refused or rejected, upon attempted delivery.
| 20. | DISPUTE RESOLUTION |
| 20.1. | INITIAL NOTICE |
Either Party may initiate dispute resolution procedures by sending written notice (the
“Initial Notice”) to the other Party specifically stating the complaining Party’s claim and
requesting dispute resolution in accordance with this Article 20. The Parties shall
attempt in good faith to resolve any dispute arising out of or relating to this Agreement promptly
by negotiation between executives who have authority to settle the controversy and who are at a
higher level of management than the persons with direct responsibility for administration of this
contract. Within 10 Business Days after delivery of the Initial
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Notice, the receiving Party shall submit to the other a written response. The Initial Notice
and response shall include (a) a statement of that Party’s position and a summary of arguments
supporting that position, and (b) the name and title of the executive who will represent that Party
and of any other person who will accompany the executive. Within 25 Business Days after delivery
of the Initial Notice, the executives of both Parties shall meet at a mutually acceptable time and
place, and thereafter as often as they reasonably deem necessary, to attempt to resolve the
dispute. All negotiations pursuant to this clause are confidential and shall be treated as
compromise and settlement negotiations for purposes of applicable rules of evidence.
| 20.2. | PROCEEDINGS |
Any dispute arising out of or relating to this Agreement, including the breach, termination or
validity thereof, which has not been resolved by negotiation between executives herein within 45
Business Days after delivery of the Initial Notice, shall be finally resolved by arbitration in
accordance with the CPR Rules for Non-Administered Arbitration then currently in effect by three
arbitrators appointed by CPR under the terms of CPR Rule 6; provided, however, that if one Party
fails to participate in negotiation as agreed herein, the other Party can commence arbitration
prior to the expiration of the time periods set forth above. The arbitration shall commence upon
the receipt of a notice of arbitration by either Party. The arbitration shall be governed by the
Federal Arbitration Act, 9 U.S.C. §§ 1 et seq. and the Texas Arbitration Act, TEX. CIV. PRAC. &
REM. CODE §§ 171.000 et seq., to the extent applicable and not in conflict with the Federal
Arbitration Act. The arbitrators shall render a reasoned award, and judgment upon the award may be
entered by any court having jurisdiction thereof. The place of the arbitration shall be Houston,
Texas. Unless the Parties to this Agreement agree in writing otherwise, the arbitrators shall not
have the power to award, nor shall they award, any punitive or consequential damages (however
nominated); however, the arbitrators may award specific performance where appropriate. Each Party
shall pay its own attorneys fees and costs, and each Party shall pay one-half of the arbitrators’
fees and costs, no matter which side prevails. Except as required by law or necessary to confirm
or enforce an award, all proceedings hereunder shall remain confidential.
| 20.3. | PRELIMINARY INJUNCTIONS; PERFORMANCE PENDING RESOLUTION |
Notwithstanding the foregoing, either Party may request preliminary injunctive and/or
equitable relief from a court of competent jurisdiction at any time before an arbitrator has been
selected in order to protect the rights or property of such Party pending the resolution of the
dispute as provided hereunder. Despite such action the Parties will continue to participate in the
procedures specified in this Agreement. Each Party is required to continue to perform its
obligations under this Agreement pending final resolution of any dispute arising out of or relating
to the Agreement, unless to do so would be impossible or impracticable under the circumstances.
| 21. | STATEMENTS, AUDIT |
On or before the 15th Business Day of the Month following the Month of delivery,
Buyer shall deliver to Seller a statement showing for the Month of delivery the amount and type of
Raw Product delivered for sale hereunder, and the applicable NGL Component price(s). Payment shall
be made by Buyer within 10 days after its delivery of the statement. Buyer may net against
payments owed to Seller under this Agreement any outstanding payments owed by Seller to Buyer under
this Agreement. If Seller in good faith disputes all or part of any statement or payment, then
Seller shall provide Buyer with a written notice and explanation of the basis for the dispute, but
shall have no right to suspend performance under this Agreement.
Subject to the limitations set forth in the following paragraph, if an error is discovered in
any statement or payment, then the Party entitled to receive such payment shall be paid by the
other Party within 10 days after issuance of a corrected invoice, together with interest at the
Base Rate.
For a period of 24 Months from the date of any statement or invoice, each Party and its duly
authorized representatives shall have access to the accounting records and other documents
maintained
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by the other Party which relate to the Raw Product being delivered under this Agreement and
any other matters covered by this Agreement and shall have the right to audit such records and
other documents once a year in the offices of the Party to be audited at any reasonable time or
times upon at least 15 Days prior written notice Neither Party shall make any claim on the other
for any adjustment 24 Months after the date of any statement or invoice.
| 22. | TAXES |
Seller shall be responsible for any royalties, overriding royalties, and other payments due or
to become due on the hydrocarbons which are subject to this Agreement. Seller shall be liable for
and shall pay, or cause to be paid, or reimburse Buyer if Buyer has paid, all taxes applicable to
the sale of Raw Product by Seller to Buyer hereunder. SELLER SHALL RELEASE, INDEMNIFY, DEFEND AND
HOLD BUYER, ITS DIRECTORS, OFFICERS, AGENTS AND EMPLOYEES HARMLESS FROM AND AGAINST ANY AND ALL
CLAIMS ARISING OUT OF OR RELATING TO THE PAYMENT OF ANY TAXES, ROYALTIES, OVERRIDING ROYALTIES AND
OTHER PAYMENTS DUE OR TO BECOME DUE ON THE RAW PRODUCT AND WHICH SELLER IS OBLIGATED TO PAY UNDER
THIS AGREEMENT.
| 23. | LIMITATION OF LIABILITY |
Neither Party shall be liable to the other Party for any indirect, incidental, punitive,
exemplary, consequential or special damages save and except only to the extent such damages are
imposed on a Party entitled to indemnity under the terms of this Agreement in favor of an
unaffiliated third party and such damages arise from an underlying claim, liability or damages
against which such Party entitled to indemnity is indemnified by a Party to this Agreement.
| 24. | CONFLICTS OF INTEREST |
No director, employee or agent of either Party shall give or receive any commission, fee,
rebate, gift or entertainment of significant cost or value in connection with this Agreement. Any
representative(s) authorized by either Party may, at its sole expense, audit the applicable records
of the other Party solely for the purpose of determining whether there has been compliance with
this Section 24.
| 25. | CONDUCT OF PARTIES’ BUSINESS |
Each Party in the performance of this Agreement is engaged in an independent business and
nothing herein contained shall be construed as giving either Party any right to control the other
Party in any way in the performance of the other Party’s business. Neither Party shall have any
right to exercise control over any of the other Party’s employees, representatives, agents or
contractors of any level except to the extent of any safety requirements for delivery of Raw
Product under this Agreement. All employees, representatives, agents or contractors of any level
of a Party shall be entirely under the control and direction of that Party, which shall be entirely
responsible for their actions and omissions.
| 26. | GOVERNING LAW |
THIS AGREEMENT SHALL BE SUBJECT TO THE JURISDICTION OF, GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, INCLUDING THE UNIFORM COMMERCIAL CODE EXCEPT AS
OTHERWISE SPECIFIED HEREIN, WITHOUT REGARD TO ANY CONFLICT OF LAWS RULES THAT MAY DIRECT THE
APPLICATION OF THE LAW OF ANY OTHER JURISDICTION.
| 27. | CONFIDENTIALITY |
Each Party agrees that it shall not disclose Confidential Information whether acquired before
or after the Effective Date, to any third party other than each Party’s officers, directors,
employees, advisors
10
or representatives who need to know and agree to maintain the confidentiality of the
Confidential Information (collectively,
“Representatives”) during the Term and for a period of not
more than three years after the end of the Term. Each Party shall be responsible for any breach of
this Agreement by its Representatives.
Notwithstanding anything contained in this Section 27, Confidential Information may be
disclosed to any governmental, judicial or regulatory authority requiring such Confidential
Information, provided that: (i) such Confidential Information is submitted under applicable
provisions, if any, for confidential treatment by such governmental, judicial or regulatory
authority; (ii) prior to such disclosure, the Party who supplied the information is given notice of
the disclosure requirement so that it may take whatever action it deems appropriate, including
intervention in any proceeding and the seeking of an injunction to prohibit such disclosure; and
(iii) the Party subject to the governmental, judicial or regulatory authority endeavors to protect
the confidentiality of any Confidential Information to the extent reasonable under the
circumstances and to use its good faith efforts to prevent the further disclosure of any
Confidential Information provided to any governmental, judicial or regulatory authority.
| 28. | SEVERABILITY |
The invalidity of any one or more covenants or provisions of this Agreement shall not affect
the validity of any other provisions hereof or this Agreement as a whole, and in case of any such
invalidity, this Agreement shall be construed to the maximum extent possible as if such invalid
provision had not been included herein.
| 29. | NO THIRD PARTY BENEFICIARY |
Nothing in this Agreement shall entitle any Person other than Seller or Buyer, or their
successors or assigns, to any claim, cause of action, remedy or right of any kind relating to the
transaction(s) contemplated by this Agreement.
| 30. | WAIVER |
Waiver by either Party of the breach of any provision(s) hereof by the other Party shall not
be deemed to be a waiver of the breach of any other provision(s) hereof or of any subsequent or
continuing breach of such provision(s).
| 31. | ENTIRE AGREEMENT — ALTERATIONS OR AMENDMENTS |
This Agreement contains the entire agreement of the Parties respecting the matters addressed
herein and no oral promises, agreements or warranties shall be deemed a part hereof, nor shall any
alteration or amendment of this Agreement, or waiver of any of its provisions, be binding upon
either Party hereto unless the same be in writing and signed by both Parties.
| 32. | COMPLIANCE WITH LAWS |
The Parties shall comply with all Applicable Laws in the performance of their respective
obligations under this Agreement.
| 33. | HEADINGS |
The headings of the Articles, Sections and Paragraphs of this Agreement are for convenience of
reference only and shall not constitute a part, nor modify, define or limit any of the terms or
provisions, hereof.
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| 34. | SURVIVAL |
The provisions of Articles 15, 17, 20, 23, 26 and
27 shall survive any expiration or termination of this Agreement.
| 35. | FURTHER ASSURANCES |
Each Party shall take such acts and execute and deliver such documents as may be reasonably
required to effectuate the purposes of this Agreement.
| 36. | RULES OF CONSTRUCTION |
In construing this Agreement, the following principles shall be followed:
| (a) | No consideration shall be given to the fact or presumption that one Party had a greater or lesser hand in drafting this Agreement. | ||
| (b) | Examples shall not be construed to limit, expressly or by implication, the matter they illustrate. | ||
| (c) | The word “includes” and its syntactical variants mean “includes, but is not limited to” and corresponding syntactical variant expressions. | ||
| (d) | The plural shall be deemed to include the singular and vice versa, as applicable. | ||
| (e) | Unless the context otherwise requires, any reference to a statutory provision (including those contained in subordinate legislation) is a reference to the provision as amended or re-enacted, or as modified by other statutory provisions from time to time, and includes subsequent legislation made under the relevant statute. |
| Accepted and Agreed to: | Accepted and Agreed to: | |||||||||||||
| Targa Texas Field Services LP | Targa Liquids Marketing and Trade | |||||||||||||
| By: | Targa Resources Texas GP, LLC, its general partner |
|||||||||||||
| By: | /s/ Xxxxx Xxxx | By: | /s/ X. X. Xxxxx | |||||||||||
Name: |
Xxxxx Xxxx | Name: | X. X. Xxxxx | |||||||||||
Title: |
Vice President | Title: | Vice President | |||||||||||
12
EXHIBIT A
DEFINITIONS
In addition to any terms defined in the Raw Product Purchase Agreement to which this Exhibit
A is affixed, as used herein, the following terms shall be given the following meanings:
“Affiliate” means any Person that directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with the Person specified, with the term
“control” (including the terms “controlled by” or “under common control with”) meaning the
possession, directly or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through ownership, by contract, or otherwise. Any Person shall
be deemed to be an Affiliate of any specified Person if such Person owns 50% or more of the voting
securities of the specified Person, if the specified Person owns 50% or more of the voting
securities of such Person, or if 50% or more of the voting securities of the specified Person and
such Person are under common control.
“Agreement” is defined in Section 1.
“Alternate Index” is defined in Section 4.3.
“API” means the American Petroleum Institute.
“Applicable Laws” means all applicable laws, statutes, regulations, rules, authorizations and
orders of, and all applicable restrictions imposed by, any Governmental Authority.
“ASTM” means ASTM International (formerly American Society for Testing and Materials).
“Base Rate” means the lesser of (i) 2% above the per annum rate of interest announced from time to
time as the “prime rate” for commercial loans by JPMorgan Chase, as such “prime rate” may change
from time to time, or (ii) the maximum applicable non-usurious rate of interest.
“Business Day” means any day other than a Saturday, Sunday or a weekday that is observed as a
holiday by federal reserve banks located in Houston, Texas.
“Buyer” means Targa Liquids Marketing and Trade, a Delaware general partnership.
“Central Time” means Central Time as adjusted for daylight savings time.
“Claims” means any and all losses, damages, fines, liens, levies, penalties, claims, demands,
causes of action, suits, legal or administrative proceedings, orders, governmental actions and
judgments of every kind and character, and any and all costs and expenses (including, without
limitation, attorneys’ fees, expert witness fees, and court costs) related thereto.
“Confidential Information” means this Agreement and any other written data or information (or an
oral communication if the Party requesting confidentiality for such oral communication promptly
confirms such communication in writing) which is privileged, confidential or proprietary, except
information which (i) is a matter of public knowledge at the time of its disclosure or is
thereafter published in or otherwise ascertainable from any source available to the public without
breach of this Agreement, (ii) constitutes information which is obtained from a third party (who or
which is not an Affiliate of one of the Parties) other than by or as a result of unauthorized
disclosure, or (iii) prior to the time of disclosure had been independently developed by the
receiving Party or its Affiliates not utilizing improper means.
“Damage Payments” means all liquidated damages or other payments received by Buyer from any Person
as a result of such Person’s failure to take Raw Product from Buyer, minus any amounts of such
liquidated damages or other payments received by Buyer that are payable to any un-Affiliated third
parties in connection with such event.
Exhibit A-1
“Day” or “Daily” means a 24 hour period commencing 7:00 a.m. Central Time and extending until 7:00
a.m. Central Time on the following Day.
“Early Termination Date” is defined in Section 15.2(a).
“Effective Date” is defined in the preamble of this Agreement.
“Event of Default” is defined in Section 15.1.
“Fractionation Costs” is defined in Sections 4.1.
“Gallon” means one U.S. liquid Gallon, which is the unit of volume used for the purpose of
measurement of liquid. One U. S. liquid Gallon contains 231 cubic inches when the liquid is at a
temperature of sixty 60 degrees Fahrenheit (60°F) and at the vapor pressure of the liquid being
measured.
“Good and Marketable Title” means such title free from all liens, mortgages, security interests,
encumbrances and adverse claims or other charges.
“Governmental Authority” means any federal, national, state, regional, municipal or local
governmental or quasi-governmental authority or regulatory department, agency, legislative,
judicial or administrative body, taxing authority or other governmental or quasi-governmental
authority in any jurisdiction having jurisdiction over any Party or the performance of the
obligations set forth in this Agreement.
“GPA” means the Gas Processors Association, headquartered in Tulsa, Oklahoma, U.S.A.
“Initial Notice” is defined in Section 20.1.
“Initial Term” is defined in Section 2.
“Intercompany Raw Product” means Raw Product purchased by Buyer on its own behalf or sold by Seller
to Buyer for sale and delivery to an Affiliate of Buyer.
“Measurement Points” means the point where the Raw Product has passed the downstream flange of the
meter measuring the Raw Product for delivery at the location specified in Section 3.2.
“Month” or “Monthly” means a period commencing at 7:00 a.m. Central Time on the first Day of a
calendar month and extending until 7:00 a.m. Central time on the first Day of the next succeeding
calendar month.
“NGL Component” means each of the five individual hydrocarbon constituents contained in the Raw
Product, including ethane, propane, isobutane, normal butane and natural gasoline (with natural
gasoline including all pentane and heavier hydrocarbon components).
“Offspec Raw Product” has the meaning ascribed to it in Section 12.
“OPIS” means the Oil Price Information Service.
“OPIS Index” means the Oil Price Information Service Index.
“OPIS Index Price” is defined in Section 4.1.
“OPIS LP Gas Report” means the OPIS LP — Gas Price Report published by Oil Price Information
Service.
“Originating Facility” means the Seller’s Mertzon Gas Processing Plant located in Xxxxx County,
Texas, the Seller’s Sterling Gas Processing Plant located in Sterling County, Texas, and such other
locations as are mutually agreed to by the Parties.
“Parties” means Buyer and Seller collectively.
Exhibit A-2
“Party” means each of Buyer or Seller, as applicable.
“Person” means any individual, corporation, partnership, limited liability company, association,
joint venture, trust, or other organization of any nature or kind.
“Pipeline” shall mean any Raw Product pipeline into which the Raw Product is being delivered in
accordance with Article 3.
“Raw Product” means a mixture of liquid hydrocarbons meeting the specifications governing the
applicable Pipeline receipt point.
“Representatives” is defined in Section 27.
“Seller” means Targa Texas Field Services LP, a Delaware limited partnership.
“Third Party Price” is defined in Section 4.2.
“Third Party Sales Cost” is defined in Section 4.2.
“Transportation Costs” is defined in Sections 4.1.
“Term” is defined in Section 2.
“Termination Payment” is defined in Section 15.2(a).
Exhibit A-3
