EXHIBIT 10.9
TRANSPORTATION AGREEMENT
AMONG
RIO GRANDE PIPELINE COMPANY,
AMOCO RIO GRANDE PIPELINE COMPANY,
XXXXXX PIPELINE COMPANY,
NAVAJO SOUTHERN, INC.,
MID-AMERICA PIPELINE COMPANY
AND
P.M.I. TRADING LIMITED
DATED NOVEMBER 21, 1995
TABLE OF CONTENTS
Page No.
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ARTICLE 1 DEFINITIONS ........................................ 2
ARTICLE 2 DEVELOPMENT AND CONSTRUCTION ....................... 7
(a) The U.S. Pipeline ................................... 7
(b) The Mexican Pipeline ................................ 7
(c) Subcontractors ...................................... 10
(d) Compliance with Mexican Laws ........................ 12
(e) Obligations of PMI .................................. 12
(f) Completion of Improvements to the Xxxxxx Terminal ... 15
(g) Transfer of Risk .................................... 15
(h) Project Team; Reporting ............................. 16
(i) Modifications ....................................... 17
(j) Warranty ............................................ 17
(k) Indemnity ........................................... 19
(l) Taxes, Duties, Levies and Charges ................... 21
ARTICLE 3 SHIPMENTS BY PMI ................................... 22
(a) Cumulative Volume; Yearly Committed Volume .......... 22
(b) Additional Volume ................................... 22
ARTICLE 4 COMMON CARRIER; TARIFF ............................. 23
(a) Common Carrier ...................................... 23
(b) Tariff .............................................. 23
(c) Tariff Modifications ................................ 23
(d) Unaffiliated Shipper ................................ 26
ARTICLE 5 TRANSPORTATION CHARGES ............................. 26
(a) Volume Incentive Rate ............................... 26
(b) Reduction of the Volume Incentive Rate .............. 27
(c) Deficiency Payments ................................. 28
(d) Adjustments ......................................... 29
ARTICLE 6 MEXICAN PIPELINE ................................... 30
ARTICLE 7 MEASUREMENT; REPORTS ............................... 32
ARTICLE 8 LIABILITY OF CERTAIN AFFILIATES .................... 33
ARTICLE 9 TIME OF COMPLETION ................................. 33
ARTICLE 10 FORCE MAJEURE ..................................... 35
(a) Events of Force Majeure ............................. 35
(b) Effects ............................................. 35
ARTICLE 11 PIPELINE INTERCONNECT AGREEMENT ................... 36
ARTICLE 12 ARBITRATION; GOVERNING LAW ........................ 36
(a) Settlement by Arbitration ........................... 36
(b) Finality of Award ................................... 37
(c) Governing Law ....................................... 37
ARTICLE 13 ENTIRE AGREEMENT .................................. 37
ARTICLE 14 NO WAIVER; CUMULATIVE REMEDIES;
LIMITATION OF LIABILITY ........................... 38
(a) No Waiver; Cumulative Remedies ...................... 38
(b) Limitation of Liability ............................. 38
ARTICLE 15 AMENDMENTS AND WAIVERS ............................ 39
ARTICLE 16 ASSIGNMENT ........................................ 39
ARTICLE 17 SEVERABILITY OF PROVISIONS ........................ 40
ARTICLE 18 NOTICES ........................................... 40
ARTICLE 19 HEADINGS .......................................... 41
ARTICLE 20 REFERENCES ........................................ 41
EXHIBITS
ii
EXHIBITS
EXHIBIT A Scope of the U.S. Pipeline Project
EXHIBIT B Scope of the Mexican Pipeline Project and the Improvements
to the Xxxxxx Terminal and Specifications for the Mexican
Pipeline Project
EXHIBIT C Specifications for the Improvements to the Xxxxxx Terminal
EXHIBIT D Product Specifications
EXHIBIT E Form of Tariff
EXHIBIT F Acceptance and Testing Procedures
EXHIBIT G Insurance Requirements
EXHIBIT H Goods and Materials to be Imported by PMI
EXHIBIT I Goods and Materials to be Made Available on Site by PMI
EXHIBIT J Adjustment Table
EXHIBIT K Form of Unaffiliated Shipper Letter
TRANSPORTATION AGREEMENT
TRANSPORTATION AGREEMENT, dated as of November 21, 1995, by and among
RIO GRANDE PIPELINE COMPANY, a Texas general partnership ("RGPC"), represented
herein by Xxxxxx Pipeline Company, a general partner, which is represented by
its President, X. X. Xxxxx, whose authority is evidenced by a duly executed
certificate signed by its Assistant Secretary, AMOCO RIO GRANDE PIPELINE
COMPANY, a Delaware corporation ("ARGPC"), represented herein by its President,
X. X. Xxxxxxx, whose authority is evidenced by a certificate duly executed by
its Secretary, XXXXXX PIPELINE COMPANY, a Delaware corporation ("JPC"),
represented herein by its President, X. X. Xxxxx, whose authority is evidenced
by a certificate duly executed by its Assistant Secretary, NAVAJO SOUTHERN,
INC., a Delaware corporation ("NSI"), represented herein by its President,
Xxxxxxx X. Xxxx, whose authority is evidenced by a certificate duly executed by
its Assistant Secretary, MID-AMERICA PIPELINE COMPANY, a Delaware corporation,
in its individual capacity ("MAPL") and represented herein by its President, X.
X. Xxxxx, whose authority is evidenced by a certificate duly executed by its
Assistant Secretary, and P.M.I. TRADING LIMITED, an Irish corporation ("PMI"),
represented herein by its Director General, Xxxxxxx Xxxxxxxx del Rio, whose
authority is evidenced by a resolution of its Board of Directors duly notarized
in Mexico City, Mexico.
WITNESSETH
WHEREAS, PMI intends to enter into agreements with third parties
pursuant
to which PMI will purchase certain quantities of LPG for export to the
Xxxxxx Terminal;
WHEREAS, PMI has agreed to transport or cause to be transported certain
minimum quantities of such LPG through the U.S. Pipeline which shall be operated
by RGPC and shall connect with the Mexican Pipeline;
WHEREAS, MAPL has agreed with RGPC to provide the transportation
services contemplated to be provided by RGPC by this Agreement and shall publish
the Tariff jointly with RGPC; and
WHEREAS, RGPC also has agreed to construct and to deliver to Pemex,
without any charge to PMI or any PMI Designated Affiliate, the Mexican Pipeline
and the Improvements to the Xxxxxx Terminal, subject to the terms and conditions
of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereby agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meanings indicated below which shall be equally applicable to the singular and
plural forms thereof:
(a) "AFFILIATE" shall mean, with respect to any Person, any
other Person or a group of Persons which directly or indirectly Controls, or is
under common Control with, or is Controlled by such Person;
(b) "AGREEMENT" shall mean this
Transportation Agreement,
including all
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Exhibits hereto, as the same may be amended from time to
time;
(c) "BPD" shall mean barrels per Day;
(d) "CONTROL" (including the correlative terms "controlled by",
"controlling", and "under common control with") shall mean, with respect to any
Person, possession of the power, directly or indirectly, to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise;
(e) "CUMULATIVE VOLUME" shall mean 45.625 million barrels;
(f) "DAY" shall mean a calendar day;
(g) "DELIVERY PERIOD" shall mean the period commencing with the
earlier of (i) the date on which Start-Up of Operations shall occur or (ii) the
date which is 630 Days after the date of this Agreement, and ending on the tenth
anniversary date of the commencement;
(h) "DELIVERY YEAR" shall mean each consecutive 365-Day period
commencing with the start of the Delivery Period and occurring within the
Delivery Period or such shorter consecutive Day period ending on the Day the
Cumulative Volume shall have been shipped;
(i) "EL PASO LINE" shall mean the new, approximately fifteen
(15) mile, eight (8) inch diameter petroleum products pipeline running from a
point of connection with the NSI line to the point on the U.S./Mexico border, as
generally described in Exhibit A, to be constructed by RGPC pursuant to Article
2 of this Agreement;
(j) "FERC" shall mean the United States Federal Energy
Regulatory
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Commission;
(k) "GOVERNMENTAL BODY" shall mean any national, state,
municipal, or other local government, any subdivision, agency, court, commission
or authority thereof, or any quasi-governmental or private body exercising any
regulatory or taxing authority thereunder;
(1) "ICA" shall mean the United States Interstate Commerce Act,
49 U.S.C. Section 1, et seq.;
(m) "IMPROVEMENTS TO THE XXXXXX TERMINAL" shall mean the
completion of the Xxxxxx Terminal to accept deliveries of LPG in accordance with
the scope set forth in Exhibit B and the specifications set forth in Exhibit C,
as such Exhibits may be modified in accordance with this Agreement, including,
without limiting the generality of the foregoing, the construction of the
pipeline connection and associated measurement equipment, six (6) truck loading
spots, two (2) truck unloading spots, buildings necessary for operation of the
Mexican Pipeline and the Xxxxxx Terminal, and safety and odorization systems;
(n) "JOINT VENTURE PARTICIPANTS" shall mean ARGPC, JPC and NSI
in their respective individual capacities;
(o) "JOINT VENTURE PARTICIPANT PARENT" shall mean, with respect
to ARGPC, Amoco Pipeline Company, a Maine corporation; with respect to JPC,
Mid-America Pipeline Company, a Delaware corporation; and with respect to NSI,
Navajo Refining Company, a Delaware corporation;
(p) "LPG" shall mean propane or a blend of propane and butane
meeting
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the specifications set forth in Exhibit D having a composition in the range of
70%/30% propane to butane to 100% propane;
(q) "MAPL LINE" shall mean the existing eight (8) inch diameter
petroleum products pipeline running from Xxxxx to Odessa, Texas, as generally
described in Exhibit A, and currently owned and operated by MAPL;
(r) "XXXXXX TERMINAL" shall mean the Pemex LPG terminal located
in Xxxxxx, State of Chihuahua, Mexico;
(s) "MEXICAN PIPELINE" shall mean the new, approximately 14.5
mile, eight (8) inch diameter petroleum products pipeline, which shall be
constructed by RGPC in accordance with Article 2 of this Agreement, running from
a point of connection with the El Paso line on the U.S./Mexico border to the
Xxxxxx Terminal, as generally described and meeting the specifications in
Exhibit B, as such Exhibit may be modified in accordance with this Agreement;
(t) "MEXICO" shall mean the United Mexican States;
(u) "MONTH" shall mean a calendar month;
(v) "NSI LINE" shall mean the existing, approximately 220 miles
of eight (8) inch diameter pipeline running from the point of interconnection
with the MAPL line near Odessa to Milepost 192 near El Paso, Texas, as generally
described in Exhibit A, that is currently owned by Navajo Pipeline Company and
used for refined products, and that is to be converted to LPG use by RGPC
pursuant to Article 2 of this Agreement;
(w) "PEMEX" shall mean Pemex Gas y Petroquimica Basica, a
decentralized public agency of the Government of Mexico;
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(x) "PERSON" shall mean any individual, corporation, trust,
partnership, association, joint venture, other business entity, or Governmental
Body;
(y) "PIPELINE INTERCONNECT AGREEMENT" shall mean the Pipeline
Interconnect Agreement, to be entered into between RGPC and a PMI Designated
Affiliate pursuant to Article 11 of this Agreement;
(z) "PMI DESIGNATED AFFILIATE" shall mean an Affiliate of PMI
(including, without limitation, Pemex) which PMI shall notify RGPC as a
transferee or assignee of any of PMI's rights or obligations under this
Agreement;
(aa) "START-UP OF OPERATIONS" shall mean the commencement of
continuous operations of the Mexican Pipeline and the Xxxxxx Terminal to receive
LPG from the interconnection point with the U.S. Pipeline upon the issuance of
the acceptance certificates in accordance with Articles 2(e)(vi) and 2(e)(vii);
(ab) "TARIFF" shall mean the tariff, substantially in the form
of Exhibit E, to be used by RGPC pursuant to FERC regulations for transportation
services on the U.S. Pipeline, as may be revised from time to time in accordance
with applicable FERC regulations and the terms of this Agreement;
(ac) "UNITED STATES" or "U.S." shall mean the United States of
America;
(ad) "U.S. PIPELINE" shall mean the eight (8) inch diameter
petroleum products pipeline to be developed by RGPC in accordance with Article 2
of this Agreement (including the integration of the MAPL line, the NSI line and
the El Paso line) and running from Xxxxx to a point of connection on the United
States/Mexico border, as generally described in Exhibit A;
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(ae) "U.S. DOLLARS" or "U.S.$" shall mean dollars of the United
States; and
(af) "YEARLY COMMITTED VOLUME" shall mean, for each Delivery
Year, 4.5625 million barrels shipped in accordance with Article 3(a).
ARTICLE 2
DEVELOPMENT AND CONSTRUCTION
(a) THE U.S. PIPELINE. RGPC, at its sole cost and expense, shall
construct, integrate and otherwise develop the U.S. Pipeline in accordance with
(i) generally accepted practices of the industry and trades involved and (ii)
the project scope jointly established in Exhibit A. RGPC shall ensure that the
U.S. Pipeline complies with the terms and conditions of this Agreement, is
complete in every respect and ready for use in the manner indicated or
manifestly implied in this Agreement and is generally safe to operate and
maintain.
(b) THE MEXICAN PIPELINE AND THE IMPROVEMENTS TO THE XXXXXX TERMINAL.
Except as provided in Article 2(e), RGPC, at its sole cost and expense, shall
construct, integrate and otherwise develop the Mexican Pipeline and the
Improvements to the Xxxxxx Terminal in accordance with generally accepted
practices of the industry and trades involved; the project scope jointly
established in Exhibit B; and the respective specifications contained in
Exhibits B and C. If and to the extent that the parties shall mutually determine
that any modifications to either or both of Exhibit B and Exhibit C is required,
the parties shall so modify such Exhibits; provided, however, that any such
modification shall be made not later than ninety (90) Days after the date of
this Agreement. RGPC shall ensure that the
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Mexican Pipeline and the Improvements to the Xxxxxx Terminal in each case
complies with the terms and conditions of this Agreement, is complete in every
respect and ready for use in the manner indicated or manifestly implied in this
Agreement and is generally safe to operate and maintain. Without limiting the
generality of the foregoing, the obligations of RGPC in carrying out the
construction of the Mexican Pipeline and the Improvements to the Xxxxxx Terminal
shall include:
(i) developing the basic engineering and detailed
engineering for the Mexican Pipeline and the
Improvements to the Xxxxxx Terminal based on the
respective specifications contained in Exhibits B and
C, as such Exhibits may be modified in accordance
with this Agreement;
(ii) constructing the Mexican Pipeline and integrating it
with the El Paso line and the Xxxxxx Terminal;
(iii) constructing the Improvements to the Xxxxxx Terminal;
(iv) installing a supervisory control and data acquisition
system (SCADA) consistent with that used for the U.S.
Pipeline;
(v) except to the extent that PMI provides any such
materials in accordance with this Agreement,
procuring and supplying all materials for the Mexican
Pipeline and the Improvements to the Xxxxxx Terminal
in conformity with the respective specifications
contained in Exhibits B and C, as such Exhibits may
be modified in accordance with this Agreement;
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(vi) providing for all inspections and testing of
materials during fabrication or preparation and on
site;
(vii) providing all civil works in connection with the
construction of the Mexican Pipeline and the
Improvements to the Xxxxxx Terminal;
(viii) providing, or causing to be provided, all management,
labor, equipment, materials, tools, consumables and
facilities required to perform its obligations
hereunder;
(ix) conducting and successfully completing the
performance testing of the Mexican Pipeline and the
Improvements to the Xxxxxx Terminal in accordance
with the procedures set forth in Exhibit F hereto;
(x) providing PMI or a PMI Designated Affiliate with all
documents, manuals, instructions and training
necessary to operate, manage, repair and maintain the
Mexican Pipeline and the Improvements to the Xxxxxx
Terminal at optimum capacity and efficiency, in the
most economical way and in accordance with the
generally accepted safety standards of the pipeline
industry (it being understood that the applicable
training methodology, procedures and certifications
will be set forth definitively in the Pipeline
Interconnect Agreement);
(xi) granting or causing to be granted to PMI or a PMI
Designated Affiliate any necessary patent rights and
licenses for the
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operation of the Mexican Pipeline and the
Improvements to the Xxxxxx Terminal; and
(xii) replacing or repairing such parts of the Mexican
Pipeline and the Improvements to the Xxxxxx Terminal
as shall be found to be defective or unsound prior to
acceptance by PMI or a PMI Designated Affiliate.
It is expressly understood that the obligations of RGPC under this
Agreement shall include and provide for all works which are not explicitly set
forth or described herein, but which are necessary or appropriate in the
judgment of RGPC and PMI, the inclusion of which such works shall be based on
mutually agreeable terms on cost and scheduling for the successful construction,
testing and start up of the Mexican Pipeline and the Improvements to the Xxxxxx
Terminal in accordance with this Agreement.
(c) SUBCONTRACTORS. In performing any of its obligations hereunder,
RGPC may subcontract the whole or any part of the work to be performed by it to
reputable subcontractors; provided, however, that RGPC shall (i) remain solely
responsible for the quality and the proper and timely execution of the work as
if such subcontracting had not taken place and (ii) be fully liable for the
acts, defaults, omissions and negligence of any and all subcontractors, their
respective agents, employees and workers. RGPC shall require its contractors,
affiliate subcontractors and any other party engaged to discharge the
obligations of RGPC under this Agreement to:
(i) have full regard for the safety of all persons
entitled to be upon the sites, keep the sites (so far
as the same is under its control) in an orderly state
appropriate for the avoidance of danger to
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such persons, and, in addition thereto with respect
to any work to be performed in Mexico, comply with
Pemex's Reglamento de Seguridad e Higiene, a copy of
which has been furnished to RGPC;
(ii) provide and maintain at their own cost all safety
equipment, lights, guards, fencing and warning signs,
when and where necessary or, with respect to any work
to be performed in Mexico, as may be from time to
time reasonably required by PMI or a PMI Designated
Affiliate, or by any duly constituted authority for
the protection of the Mexican Pipeline or the Xxxxxx
Terminal or for the safety and convenience of the
public or others;
(iii) keep the sites reasonably free from all unnecessary
obstructions, store or dispose of contractors'
equipment and surplus materials, and clear away and
remove from the sites any wreckage, rubbish or
materials no longer required and occasioned by the
performance of RGPC or its subcontractors of the
obligations of RGPC under this Agreement;
(iv) take all reasonable steps to protect the environment
on and off the sites and to avoid causing damage or
nuisance or committing waste to persons or to
property of the public or others resulting from
pollution, noise or other causes arising as
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consequence of its methods of construction; and
(v) maintain in force throughout the period beginning
with the commencement of construction and ending upon
final acceptance by PMI or a PMI Designated Affiliate
of the Mexican Pipeline and the Improvements to the
Xxxxxx Terminal, all insurance coverage required to
be maintained in accordance with Exhibit G or such
other coverage as Pemex may from time to time
generally require in connection with its construction
projects, which such coverage shall be provided by
such insurers as PMI or any PMI Designated Affiliate
may consent to in writing, which such consent shall
not be unreasonably withheld.
(d) COMPLIANCE WITH MEXICAN LAWS. RGPC shall perform its obligations
hereunder with respect to the Mexican Pipeline and the Improvements to the
Xxxxxx Terminal in strict compliance with all local, state and national laws,
rules, codes and regulations in force in Mexico at the time of signature of this
Agreement and from time to time thereafter enacted and published, including
without limitation, labor laws. RGPC shall cause all contractors and
subcontractors to acknowledge and observe all such laws, rules, codes and
regulations, and shall assure that all required licenses and permits are
obtained prior to and maintained until final acceptance of the Mexican Pipeline
and the Improvements to the Xxxxxx Terminal by PMI or the PMI Designated
Affiliates.
(e) OBLIGATIONS OF PMI. PMI shall cooperate, directly or through the
assistance
12
of PMI Designated Affiliates, with RGPC in the construction of the Mexican
Pipeline and the Improvements to the Xxxxxx Terminal by:
(i) defining the routing of the Mexican Pipeline and
acquiring, or causing to be acquired, as promptly as
possible, all easements, rights of way, rights of
passage, permits, licenses and other governmental
authorizations and approvals necessary for the
construction of the Mexican Pipeline and the
Improvements to the Xxxxxx Terminal by RGPC;
(ii) assisting RGPC generally in complying with Mexican
law and, to the extent possible, in resolving
disputes that may arise in the construction of the
Mexican Pipeline and the Improvements to the Xxxxxx
Terminal (it being understood that, notwithstanding
the foregoing, RGPC shall be responsible in all
respects for complying with all applicable Mexican
laws except to the extent that any non-compliance is
caused or contributed to by the negligence or willful
misconduct of PMI or any PMI Designated Affiliate and
such non-compliance could not have been avoided by
the exercise by RGPC of reasonable care, in which
case each party shall bear liability in proportion to
its fault);
(iii) providing to RGPC copies of, or access to, existing
engineering plans and other documents relating to the
construction of the Xxxxxx Terminal that are in the
possession of PMI or Pemex;
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(iv) importing into Mexico and entrusting to RGPC during
the period of construction of the Mexican Pipeline
and the Improvements to the Xxxxxx Terminal, those
goods and materials specified in Exhibit H and such
other goods and materials as may, from time to time,
be required in connection with the construction of
the Mexican Pipeline and the Improvements to the
Xxxxxx Terminal and which shall be used by RGPC
solely in the discharge of its obligations under this
Agreement; it being understood that, if such goods
and materials are acquired in the first instance by
RGPC, title thereto shall pass to PMI or a PMI
Designated Affiliate at or prior to the U.S./Mexico
border, at no cost to PMI or such PMI Designated
Affiliate, and that RGPC shall bear all risk and
liability with respect to such goods and materials up
to acceptance of the Mexican Pipeline and the
Improvements to the Xxxxxx Terminal, notwithstanding
the fact that PMI shall be the importer of record of
such goods and materials;
(v) making available to RGPC for use in the construction
of the Improvements to the Xxxxxx Terminal such goods
and materials of the type described in Exhibit I as
PMI and RGPC may, from time to time, mutually agree;
(vi) issuing and delivering to RGPC the acceptance
certificate for
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those Improvements to the Xxxxxx Terminal specified
in Exhibit F ("Xxxxxx Terminal" section) required for
expansion of its capacity to accept truck deliveries
within a period of two (2) weeks after successful
completion of the performance tests for such
Improvements set forth in Exhibit F (it being
understood that the issuance of such acceptance
certificate shall not release RGPC from its
obligations under Article 2(j); and
(vii) issuing and delivering to RGPC the acceptance
certificate for the Mexican Pipeline and the
Improvements to the Xxxxxx Terminal specified in
Exhibit F, within a period of two (2) weeks after
the successful completion of the performance tests
for the Mexican Pipeline and the Improvements to the
Xxxxxx Terminal set forth therein (it being
understood that the issuance of such acceptance
certificate shall not release RGPC from its
obligations with respect to hidden defects in the
Mexican Pipeline and the Improvements to the Xxxxxx
Terminal under Article 2(j)).
(f) COMPLETION OF IMPROVEMENTS TO THE XXXXXX TERMINAL. Subject to the
provisions of Article 10, RGPC shall complete construction of the Improvements
to the Xxxxxx Terminal in accordance with the specifications in Exhibit C and
perform the tests set forth in Exhibit F not later than 270 Days from the date
of this Agreement.
(g) TRANSFER OF RISK. Except as otherwise contemplated by this
Agreement, upon
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issuance of the acceptance certificates referred to in Articles 2(e)(vi) and
(vii), risk of loss, damage and civil property liability with respect to the
corresponding facilities, shall pass to PMI or its PMI Designated Affiliate,
free of any charge or cost to PMI or such PMI Designated Affiliate which shall
have the sole ownership of the Mexican Pipeline or the Improvements to the
Xxxxxx Terminal, as the case may be. RGPC shall execute such documents and take
such steps as may be reasonably requested by PMI or the PMI Designated
Affiliates to disclaim any ownership interest in or any claim against the
Mexican Pipeline, the Xxxxxx Terminal or the Improvements to the Xxxxxx Terminal
except for any rights that may be granted to RGPC pursuant to Article 6.
(h) PROJECT TEAM; REPORTING. PMI shall form a project team which will
have the right to consult with RGPC's project management and request and receive
all information relating to all aspects of the project, as well as to witness
tests performed on the Mexican Pipeline and the Improvements to the Xxxxxx
Terminal. On or before the fifteenth Day of each Month, RGPC shall provide to
the project team a detailed report showing the progress of the work performed
during the preceding Month, including the status of permits and approvals,
engineering procurement and construction, and indicating any difficulties which
may cause delay in the project and the action proposed to be taken by RGPC to
deal with such difficulties. On or before the fifteenth Day of each Month, PMI
or its PMII Designated Affiliate shall provide a report to RGPC showing the
status of all easements, rights of way, rights of passage, permits, licenses and
other governmental authorizations and approvals to be acquired by PMI in
accordance with Article 2(e)(i). Except with respect to PMI's performance of its
obligations under Article 2(e), it is expressly understood that
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RGPC shall have sole responsibility for the project management and execution,
and that the foregoing rights of PMI and the PMI Designated Affiliates to
receive information and consult with RGPC shall not in any way limit the
responsibility of RGPC for proper completion of the Mexican Pipeline and the
Improvements to the Xxxxxx Terminal.
(i) MODIFICATIONS. Any modifications to drawings, documents and
specifications constituting the basis for the project design of the Mexican
Pipeline and the Improvements to the Xxxxxx Terminal and not otherwise
contemplated by Article 2(b) shall be jointly approved in a timely manner by
RGPC and PMI (or by a PMI Designated Affiliate) and shall only be modified with
the approval of PMI's project team. RGPC shall propose any of its standards, new
or different approaches to design, and mechanical specifications where such
alternatives will reduce costs, improve the schedule and reliability, or
otherwise benefit the project. All such proposals should be brought to the
attention of PMI's project team as early as possible in order to avoid any delay
in RGPC's design progress.
(j) WARRANTY. (i) RGPC warrants to PMI that all workmanship performed
in connection with this Agreement shall be in strict conformity with the
respective specifications contained in Exhibits B and C, as the same may be
modified in accordance with this Agreement, with respect to the Mexican Pipeline
and the Improvements to the Xxxxxx Terminal and otherwise in accordance with
accepted industry standards. This warranty shall apply to any nonconformity or
defect in workmanship that is discovered within twelve (12) Months after the
date of issuance of the acceptance certificates referred to in Articles 2(e)(vi)
and 2(e)(vii). PMI shall notify RGPC in writing, by telephone or telex,
confirmed in writing, whenever PMI discovers a nonconformity or defect covered
by
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this warranty. RGPC shall promptly propose a method of correcting the
nonconformity or defect which meets the requirements of this Agreement. PMI, at
its sole discretion, may elect to have RGPC complete any proposed repair or
replacement, or, with RGPC's prior approval, which shall not be unreasonably
withheld, perform any repair or replacement itself. All costs and expenses
incurred in connection with any repair or replacement made pursuant to this
warranty shall be for the account of RGPC. PMI may assign its rights under this
Article 2(j) to any of its Affiliates.
(ii) With respect to goods or materials used in connection with
the construction of the Improvements to the Xxxxxx Terminal or the Mexican
Pipeline (other than any goods or materials which may be supplied by PMI or its
PMI Designated Affiliate in accordance with this Agreement) RGPC shall secure
from the vendors thereof such warranties as are customarily made by such vendors
in connection with work similar to that to be performed under this Agreement.
RGPC shall use its best efforts to cause such warranties to be assigned to PMI
or its PMI Designated Affiliate. If and to the extent that RGPC is unable to
assign any such warranty to PMI or its PMI Designated Affiliate, RGPC, for so
long as any rights may exist under such warranty, shall hold such warranty in
trust for the benefit of PMI or its PMI Designated Affiliate, and, at the
request and expense of PMI or its PMI Designated Affiliate, shall enforce the
rights granted under such warranty. RGPC shall notify PMI or its PMI Designated
Affiliate of the expiration date of any unassigned warranty not later than
thirty (30) Days prior to such expiration date and, at the request and expense
of PMI or its PMI Designated Affiliate, shall exercise any option or other right
to extend such warranty.
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(iii) Neither PMI nor any PMI Designated Affiliate shall have any
liability whatsoever to RGPC, any of the Joint Venture Participants or any of
RGPC's contractors, subcontractors and their respective agents, employees or
workers with respect to any defect in any goods or materials provided to RGPC
for use in the construction of the Mexican Pipeline or the Improvements to the
Xxxxxx Terminal. IT IS UNDERSTOOD AND AGREED BY RGPC THAT PMI MAKES NO WARRANTY,
EITHER EXPRESS OR IMPLIED, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OF ANY GOODS OR MATERIALS PROVIDED TO RGPC PURSUANT TO THIS AGREEMENT.
Notwithstanding the foregoing, PMI or its PMI Designated Affiliate, as the case
may be, shall undertake to enforce any warranty given with respect to such goods
or materials by the vendors thereof.
(iv) EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, RGPC MAKES NO
OTHER WARRANTY, EITHER EXPRESS OR IMPLIED, WITH RESPECT TO ITS WORKMANSHIP OR
ANY GOODS OR MATERIALS, INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE. Neither RGPC nor any Joint Venture Participant shall have
any liability to PMI, its PMI Designated Affiliate or any of their respective
agents, employees or workers for any defect or nonconformity in any goods or
materials used in connection with the construction of the Improvements to the
Xxxxxx Terminal or the Mexican Pipeline which such defect or nonconformity would
not be identifiable in the course of using generally accepted industry practices
or in applying the specifications set forth in Exhibits B and C.
(k) INDEMNITY. (i) RGPC, and each of the Joint Venture
Participants in its
19
individual capacity, jointly and severally, shall indemnify and hold harmless
PMI and each of its Affiliates, and their respective officers, directors,
agents and representatives, from and against any and all actions, suits, claims,
demands, losses, damages, costs and expenses, including attorney's fees and
court costs, and other liabilities of any kind arising out of or in connection
with any of the following, except to the extent that the same shall have been
caused or contributed to by the negligence or willful misconduct of PMI or any
PMI Designated Affiliate in which case each party shall bear liability in
proportion to its fault:
(A) any damage or injury to any person or to any property which
may arise out of or in consequence of the performance or
nonperformance of RGPC's obligations hereunder by RGPC or any
subcontractors engaged by RGPC and their respective agents,
workers and personnel;
(B) any injury suffered by the employees, agents, invitees or
licensees of RGPC or any subcontractor;
(C) any infringement of any patent, trademark or other protected
rights used in connection with or for incorporation into the
U.S. Pipeline, the Mexican Pipeline or the Improvements to the
Xxxxxx Terminal; and
(D) any violation by RGPC, its contractors or subcontractors of
any statute, law, rule, regulation or order of any duly
constituted authority that may be applicable to the U.S.
Pipeline, the Mexican Pipeline or the Improvements to the
Xxxxxx Terminal
20
or the performance of the obligations of RGPC hereunder,
including, without limitation, any statute, law, rule,
regulation or order applicable to the environment or the
generation, handling, storage, transportation, release or
disposal of any substance which is the subject of regulation
by a Governmental Body.
PMI may assign its rights under this Article 2(k) to any PMI Designated
Affiliate.
(ii) PMI or its PMI Designated Affiliate shall indemnify and hold
harmless RGPC, its contractors, subcontractors and their respective officers,
directors, agents and representatives from and against any and all actions,
suits, claims, demands, losses, damages and expenses, including attorney's fees
and court costs, and other liabilities of any kind as a result of and to the
extent that any such action, suit, claim, demand, loss, expense or liability
arises out of environmental conditions at the Xxxxxx Terminal existing as of the
date of this Agreement.
(l) TAXES, DUTIES, LEVIES AND CHARGES. RGPC shall bear and pay all
taxes, duties, levies, fees, tariffs, and charges of any nature, now existing or
which may hereafter come into effect, imposed by any Governmental Body on RGPC,
its subcontractors or their respective agents, employees and workers in
connection with the entering into or performance of this Agreement, including
without limitation, the following:
(i) taxes and levies on wages and salaries of, and other
payments to personnel and all applicable social
insurance contributions and labor charges; and
21
(ii) customs and import duties and value added taxes
(Impuesto al Valor Agregado) which may become due
upon the importation into Mexico of materials and
equipment for construction of the Mexican Pipeline
(except such duties and taxes imposed upon those
goods and materials provided or made available by PMI
in accordance with this Agreement which shall be
borne by PMI).
ARTICLE 3
SHIPMENTS BY PMI
(a) CUMULATIVE VOLUME; YEARLY COMMITTED VOLUME. During the Delivery
Period, PMI agrees to ship or cause to be shipped through the U.S. Pipeline the
Cumulative Volume. For each Delivery Year, shipments constituting the Yearly
Committed Volume shall average not less than 12,500 BPD on a ratable basis and
shall be within the capabilities of the system capacity of 24,000 BPD (or such
larger capacity as the U.S. Pipeline may have at a later date) until the
Cumulative Volume is shipped. All shipments are to be made in accordance with
the Tariff as applicable on the date of shipment. Notwithstanding the foregoing,
it is agreed and understood that any volumes delivered in accordance with
Article 9(b) shall constitute volumes shipped by or on behalf of PMI in
satisfaction of its obligations to ship the Cumulative Volume and Yearly
Committed Volumes.
(b) ADDITIONAL VOLUME. During the Delivery Period, PMI shall take
commercially
22
reasonable steps to increase its shipments through the U.S. Pipeline up to
16,000 BPD if it (x) has demand from Mexican buyers for imports of LPG from the
U.S. to the State of Chihuahua and (y) is able to acquire LPG for delivery
through the U.S. Pipeline to the Xxxxxx Terminal at a delivered price no less
favorable than would be available through alternative methods of delivery to the
Xxxxxx Terminal.
ARTICLE 4
COMMON CARRIER; TARIFF
(a) COMMON CARRIER. RGPC represents that the U.S. Pipeline will be
subject to the provisions of the ICA and, as such, will be operated as a
"common carrier" thereunder. Subject to the provisions of the ICA, RGPC shall
operate, or cause to be operated, the U.S. Pipeline so as to allow PMI, and any
shipper consigning products to or for the benefit of PMI, to fulfill PMI's
obligations under this Agreement.
(b) TARIFF. Prior to commencement of operations on the U.S. Pipeline,
but in time sufficient to commence operation of the U.S. Pipeline upon
completion thereof and the Mexican Pipeline, MAPL and RGPC shall file or cause
to be filed a tariff for transportation services on the U.S. Pipeline
substantially in the form of the Tariff set forth in Exhibit E. In accordance
with FERC regulations, RGPC shall simultaneously notify all shippers and
subscribers of record, including PMI, under the Tariff applicable to the U.S.
Pipeline of any change to the rules, regulations, and conditions of any Tariff
prior to the filing thereof.
(c) TARIFF MODIFICATIONS. (i) Except as specifically set forth below in
Article 4(c)(ii), neither MAPL nor RGPC shall, at any time during the Delivery
Period, increase
23
the volume incentive rate of U.S.$1.68 per barrel for an annual volume
commitment of 12,500 BPD on a ratable basis. In addition to the foregoing,
neither MAPL nor RGPC shall, except with the prior written consent of PMI,
voluntarily modify any of the terms of the Tariff in a manner which would
adversely affect the rights of PMI or its designated shipper under this
Agreement. Without limiting the generality of the foregoing, neither MAPL nor
RGPC shall modify any of the following terms of the Tariff except with the prior
written consent of PMI.
(A) Shippers shall be required to have title to product
while in transit;
(B) Each shipper shall hold a minimum inventory volume in
the U.S. Pipeline equal to such shipper's aggregate
volume of receipts for the immediately preceding
seven (7) Days;
(C) Subject to scheduling, product received by RGPC for a
shipper's account shall be available for delivery
seven (7) Days after the Day of receipt;
(D) Shippers shall be invoiced upon delivery to the
interconnection point on the U.S./Mexico border with
payment due in U.S. currency net fourteen (14) Days
after the date of invoice;
(E) MAPL shall provide to each shipper twenty-one (21)
Days of free storage of product at its Xxxxx, Texas
facility for a quantity of product based upon the
greater of such shipper's daily average throughput
for the past twelve (12) Months to the
24
interconnection point at the U.S./Mexico border, or
such shipper's annual volume commitment expressed as
a daily average;
(F) Shippers shall have the right to lease storage on the
MAPL system; and
(G) Product movements shall be subject to carrier
scheduling and minimum batch size requirements which
would be determined in accordance with operational
and scheduling requirements of the U.S. Pipeline.
It is agreed and understood that PMI shall not have the right to consent to any
modification to the Tariff to the extent that such modification is part of a
system-wide modification being implemented by MAPL.
(ii) Notwithstanding the provisions of Article 4(c)(i), RGPC may adjust
the volume incentive rate contained in the Tariff beginning on the second
anniversary of Start-Up of Operations in accordance with an annual inflation
adjustment to reflect increases in the Producer Price Index for Finished Goods
(as found in Table 1 of the Product Prices and Price Indexes published by the
U.S. Department of Labor, Bureau of Labor Statistics) for each successive twelve
(12) Month period commencing on the first anniversary date of Start-Up of
Operations. The amount of any such inflation adjustment for any such twelve (12)
Month period shall be equal to (x) the difference between the then applicable
volume incentive rate and U.S.$0.42 multiplied by (y) the percentage increase in
said Producer Price Index for such twelve (12) Month period. Such inflation
adjustment shall be added to the
25
then applicable volume incentive rate to determine the adjusted volume incentive
rate. PMI agrees that it shall not, at any time during the Delivery Period, file
or join in any protest before the FERC regarding the application of the
inflation adjustment mechanism provided for in this Article 4(c)(ii).
(iii) Except as expressly set forth in Article 4(c)(ii), nothing in
this Agreement shall constitute any waiver by PMI of its right to file or join
in any protest before the FERC regarding any modification to the Tariff in
respect of which PMI shall not have consented and PMI hereby expressly reserves
such right.
(d) UNAFFILIATED SHIPPER. At the request of RGPC, PMI shall sign and
deliver to RGPC a letter, substantially in form of Exhibit K, stating its
intention to utilize the services of the U.S. Pipeline.
ARTICLE 5
TRANSPORTATION CHARGES
(a) VOLUME INCENTIVE RATE. MAPL and RGPC, jointly, shall establish and
publish the Tariff for transportation services on the U.S. Pipeline in
accordance with accepted FERC methodology. Notwithstanding the foregoing, the
transportation charges during the Delivery Period applicable to PMI or any other
shipper making an annual volume delivery commitment of 12,500 BPD on a ratable
basis through the U.S. Pipeline shall be initially U.S.$1.68 per barrel and,
after the filing of the initial Tariff, at the rate contained in the Tariff
approved by FERC (subject at all times to the limitations set forth in Article
4(c)) and a credit of U.S.$0.084 per barrel shall be provided for each barrel
shipped by a shipper
26
in any calendar quarter in which the average daily volume of the U.S. Pipeline
for total, aggregate volumes of all shippers to destinations at or beyond
Milepost 192 on the NSI line equals or exceeds 20,000 BPD. All such credits
shall be automatically applied against subsequent transportation charges
incurred by such shippers and such credits shall remain in effect for a period
of twelve (12) Months following the end of the calendar quarter in which the
same shall have been earned.
(b) REDUCTION OF THE VOLUME INCENTIVE RATE. During the Delivery Period,
the transportation charges (including the volume incentive rate) included in the
Tariff shall be reduced by U.S.$0.42 per barrel for LPG delivered, either
through the U.S. Pipeline to the U.S./Mexico interconnection point or otherwise
in accordance with Article 9(b), at such time as the aggregate volume of such
products (x) delivered through the U.S. Pipeline to the U.S./Mexico border
interconnection point or otherwise in accordance with Article 9(b) or (y) for
which a deficiency payment has been made in accordance with the terms of the
Tariff, equals or exceeds 36.125 million barrels. Notwithstanding the foregoing,
such aggregate volume shall be adjusted in accordance with Article 5(d) to
reflect:
(i) any increase or decrease in the capital cost for
construction as determined by reference to Exhibit J
of the Mexican Pipeline and the Improvements to the
Xxxxxx Terminal if the final cost is not U.S. $7.5
million; it being understood and agreed that, for
purposes of making any such adjustment, "final cost"
shall mean the total price for the construction of the
Mexican Pipeline and the Improvements to the Xxxxxx
Terminal as set forth in the awards to the contractors
27
constructing the same;
(ii) any changes required by the Internal Revenue Service
in the 10-year straight-line cost recovery methodology
used by RGPC for the agreed investment in the Mexican
Pipeline and the Improvements to the Xxxxxx Terminal
and reflected in Exhibit J;
(iii) the amount, if any, of value added tax that may be
imposed on RGPC by Mexico as a result of the
relinquishment of control by RGPC of the Improvements
to the Xxxxxx Terminal and the Mexican Pipeline upon
completion of the construction of the same for PMI;
provided, however, that PMI or its PMI Designated
Affiliate shall, at its option, have the right to pay
the full amount of any such tax upon its assessment by
Mexico in which event no adjustment to Exhibit J as
contemplated by this clause (iii) shall be made; and
(iv) any increase in insurance costs incurred by RGPC as a
result of any changes required by Pemex in the
insurance coverage required to be maintained in
accordance with Article 2(c)(v).
Each of the Joint Venture Participants will provide PMI annually with a
certificate, executed by an authorized officer, specifying the method by which
the cost of the Mexican Pipeline and the Improvements to the Xxxxxx Terminal are
recovered in its U.S. federal income tax return.
(c) DEFICIENCY PAYMENTS. Subject to the provisions of Article 10 and
the last sentence of this Article 5(c), if PMI or its designated shipper shall
fail to ship the Yearly
28
Committed Volume in any Delivery Year, PMI shall pay, or cause to be paid, to
RGPC, in accordance with the terms and conditions of the Tariff, a deficiency
payment equal to the difference between (x) the Yearly Committed Volume for such
Delivery Year and (y) the actual volume shipped during such Delivery Year
multiplied by the applicable volume incentive rate. Any deficiency payments made
in respect of any Delivery Year shall be deemed to be, and shall be applied on a
current basis as, prepaid transportation charges at the applicable tariff rates
for any volumes shipped in excess of PMI's Yearly Committed Volume for the
subsequent Delivery Year. Notwithstanding the foregoing, no deficiency payment
shall be payable with respect to any unshipped volumes if and to the extent that
the actual volume shipped during any Delivery Year is less than the Yearly
Committed Volume as a result of any allocation of capacity made in accordance
with the Tariff.
(d) ADJUSTMENTS. Any adjustment required by this Agreement (including
Article 9) to the aggregate volume referred to in Article 5(b) shall be made, in
the case of a dollar adjustment, by adding to or subtracting from, as the case
may be, U.S.$7.5 million, the amount of such dollar adjustment, with the
adjusted aggregate volume being that volume corresponding to the result of the
foregoing calculation as set forth in Exhibit J; and, in the case of a barrel
adjustment, by adding to or subtracting from, as the case may be, 36.125
million, the amount of such barrel adjustment, with the adjusted aggregate
volume being the result of the foregoing calculation.
29
ARTICLE 6
MEXICAN PIPELINE
To the extent that Mexican law permits the ownership by private parties
of an interest in the Mexican Pipeline or the Xxxxxx Terminal and PMI or its PMI
Designated Affiliate, during the period commencing with the date of this
Agreement and ending on the later of (a) eleventh anniversary date thereof or
(b) the termination of the Delivery Period, receives from an unaffiliated third
party (whether through public solicitation of bids or otherwise) an offer to
purchase a controlling interest in either or both of the Mexican Pipeline and
the Xxxxxx Terminal which such offer PMI or such PMI Designated Affiliate
desires to accept, PMI or such PMI Designated Affiliate, promptly after the
close of the period for receipt of offers in the case of offers received
through public solicitation of bids, or, in the case of an unsolicited offer,
promptly upon receipt of such unsolicited offer, shall notify RGPC in writing of
the terms of the offer PMI or such PMI Designated Affiliate desires to accept.
If and to the extent that RGPC (or, in the event that Mexican law limits foreign
ownership of an offeror, an Affiliate of RGPC or any Joint Venture Participant
which meets such foreign ownership requirements) meets the minimum criteria, if
any, that PMI or a PMI Designated Affiliate shall have established for offerors,
RGPC shall have the right to match the terms and conditions of such offer. Such
right shall be exercisable by written notice to PMI or its PMI Designated
Affiliate given (a), in the case of a public solicitation of bids, not later
than five (5) Days prior to the date by which PMI or its PMI Designated
Affiliate is required to award the winning bid in accordance with the terms of
the solicitation, or (b), in the case of an unsolicited offer, fifteen (15) Days
after receipt
30
from PMI or its PMI Designated Affiliate of notice of such offer or, in the
event that such unsolicited offer shall remain open for a period of less than
fifteen (15) Days, at such time within the period for which such offer remains
open as shall permit PMI or its PMI Designated Affiliate a reasonable
opportunity to review the offer by RGPC prior to the expiration of the period
for which such unsolicited offer remains open. If RGPC shall elect to exercise
the right described in the preceding sentence, PMI or its Designated Affiliate
shall sell, and RGPC shall purchase, the interest in the assets which are the
subject of the offer in accordance with terms and conditions thereof.
Notwithstanding anything that may be contained herein to the contrary, the right
herein granted to RGPC shall be at all times subject to all requirements of all
applicable laws of Mexico, including, without limitation, the Ley de
Adquisiciones y Obras Publicas, the Ley de Bienes Nacionales and Article 134
of the Political Constitution of Mexico, and any applicable approvals required
by any Governmental Body of Mexico. Nothing herein shall, or shall be deemed or
construed to, (a) require PMI or its PMI Designated Affiliate to solicit or
consider any offer from any unaffiliated third party to purchase either or both
of the Xxxxxx Terminal and the Mexican Pipeline; (b) limit the ability of PMI or
its PMI Designated Affiliate to establish such minimum criteria for offerors or
offers to purchase, or both, as PMI or its PMI Designated Affiliate, in the
exercise of its sole discretion, may deem advisable or as may be required by
law; or (c) impair in any way the right of PMI or its PMI Designated Affiliate
to reject any and all offers received therefor for any reason whatsoever. The
provisions of this Article 6 shall not apply to (i) any transfer by PMI or its
PMI Designated Affiliate of any interest in either or both of the Xxxxxx
Terminal and the Mexican Pipeline to any one or
31
more of its Affiliates; (ii) any transfer which occurs in connection with any
transaction entered into by PMI or its PMI Designated Affiliate or any
Affiliate which is in the nature of a financing; nor (iii) any offer to purchase
an interest in assets of PMI or its PMI Designated Affiliate of which such
assets either or both of the Mexican Pipeline and the Xxxxxx Terminal do not
constitute substantially all of the assets which are the subject of such offer.
ARTICLE 7
MEASUREMENT; REPORTS
For purposes of determining the transportation charges applicable to
any delivery, measurement of the volume of all LPG transported through the U.S.
Pipeline to the Xxxxxx Terminal shall take place at the custody transfer meter
located on the U.S. side at the U.S./Mexico border in accordance with the
methodology set forth in the Pipeline Interconnect Agreement and, absent
manifest error, such measurement shall be conclusive. Within five (5) working
Days after the end of each Month during the Delivery Period, RGPC shall provide
a report to PMI setting forth (a) the volumes of all LPG transported during such
Month and (b) the aggregate volume of all LPG transported or for which a
deficiency payment has been made through the end of such Month. Notwithstanding
the foregoing, RGPC shall not be obligated to provide any information regarding
any shipper from which a consent to the release of such information has not been
received. RGPC shall immediately notify PMI when the aggregate volume reaches
36.125 million barrels or such lesser or greater volume determined in accordance
with Article 5(b) of this Agreement.
32
ARTICLE 8
LIABILITY OF CERTAIN AFFILIATES
(a) It is understood that Pemex, except to the extent that Pemex is the
PMI Designated Affiliate, shall have no obligation or liability to RGPC, MAPL
or any of the Joint Venture Participants under this Agreement and that nothing
in this Agreement shall create any obligation of Pemex to third parties
resulting from performance by RGPC, its contractors or subcontractors or MAPL of
their respective obligations under this Agreement.
(b) If at any time during the term of this Agreement, PMI shall
determine, in the exercise of its good faith judgment, that the financial
condition of any Joint Venture Participant is insufficient to satisfy its
obligations under this Agreement, PMI may request from such Joint Venture
Participant, and such Joint Venture Participant shall provide, a duly executed
guarantee of the obligations of such Joint Venture Participant from its Joint
Venture Participant Parent.
ARTICLE 9
TIME OF COMPLETION
(a) If Start-Up of Operations shall occur prior to the date which is
450 Days from the date of this Agreement, then for each thirty (30) consecutive
Day period, or part thereof, during which the U.S. Pipeline and the Mexican
Pipeline are operational and occurring prior to the 450th Day after the date of
this Agreement, the aggregate volume that must be shipped prior to any reduction
of the volume incentive rate contemplated by Article 5(b), shall be adjusted in
accordance with Article 5(d) by an amount equal to the greater of (x) 10,000 BPD
or (y) the actual volume, which, in each case, is delivered between the
33
Start-Up of Operations and the 450th Day after the date of this Agreement.
(b) Notwithstanding the provisions of Article 10, if Start-Up of
Operations of the U.S. Pipeline and the Mexican Pipeline shall not have occurred
by the date which is 630 Days after the date of this Agreement, RGPC, for so
long as Start-Up of Operations shall not have occurred, shall deliver or cause
to be delivered, to the Xxxxxx Terminal by such alternate means of
transportation as it deems appropriate all volumes (up to a maximum of 12,500
BPD) of LPG that would otherwise have been delivered through the U.S. Pipeline
to the U.S./Mexico border at the same transportation costs for such LPG that PMI
would have incurred had Start-Up of Operations occurred. If PMI shall request
deliveries of LPG in excess of 12,500 BPD, the parties shall negotiate in good
faith to arrive at a mutually agreeable transportation cost therefor. All other
terms and conditions of this Agreement shall apply to the volumes delivered
pursuant to this paragraph, including, without limitation, Article 5(c).
(c) The provisions of Article 9(b) shall be the sole and exclusive
remedy of PMI in the event that Start-Up of Operations shall not have occurred
by the date set forth therein.
(d) It is agreed and understood that the 450 Day and 630 Day periods
referred to above shall be extended by an amount of time equal to the duration
of any delays in Start-Up of Operations caused or contributed to by PMI or its
PMI Designated Affiliate in the performance of the obligations of PMI under this
Agreement.
34
ARTICLE 10
FORCE MAJEURE
(a) EVENTS OF FORCE MAJEURE. Except as expressly set forth otherwise in
this Agreement, neither party hereto shall have any liability for any delay or
nonperformance hereunder when caused in whole or in part by force majeure. Force
majeure shall include, without limitation, acts of God or the public enemy;
floods or fire; hostilities; war (declared or undeclared); blockade; quarantine
restrictions or epidemics; compliance with any order, decree, law or regulation
issued by a Governmental Body in Mexico or the United States which prohibits the
transactions contemplated hereby; delays in the permitting, acquisition of
rights of way, rights of passage or other authorizations necessary for
construction and operation of the U.S. Pipeline, the Mexican Pipeline or the
Improvements to the Xxxxxx Terminal; any other cause beyond the reasonable
control of the affected party whether or not reasonably foreseeable; or labor
trouble, strike, lockout or injunction (whether or not such labor event is
within the reasonable control of such party). Notwithstanding the foregoing, no
party shall be relieved of its obligation to diligently pursue the issuance of
all permits or authorizations or the acquisition of all rights of way and rights
of passage required for the performance by such party of its obligations of this
Agreement. Any party claiming force majeure shall promptly notify the other of
the occurrence of the event of force majeure relied upon, and shall estimate the
length of time that the force majeure condition is expected to continue. Such
party shall also promptly notify the other of the cessation of force majeure
conditions.
(b) EFFECTS. If, as a result of the effects of one or more events of
force majeure,
35
LPG is not being transported through the U.S. Pipeline and the Mexican Pipeline,
then, for all purposes of this Agreement including, without limitation, the
calculation of deficiency payments under Article 5(c) in any Delivery Year,
PMI's Yearly Committed Volume shall be adjusted on a pro rata basis for such
Delivery Year without altering the applicable volume incentive rate. It is
further agreed and understood that if the Cumulative Volume shall not have been
reached at the end of the Delivery Period as a result of the effects of one or
more events of force majeure, then the Delivery Period shall be extended until
such time as the Cumulative Volume shall be shipped.
ARTICLE 11
PIPELINE INTERCONNECT AGREEMENT
Promptly after the execution and delivery of this Agreement but in no
event less than one hundred twenty (120) Days prior to the start-up of
operations of the U.S. Pipeline and the Mexican Pipeline, RGPC, MAPL and a PMI
Designated Affiliate shall enter into the Pipeline Interconnect Agreement
pursuant to which the parties shall establish those operating procedures
intended to ensure efficient operation of the U.S. and Mexican Pipelines.
ARTICLE 12
ARBITRATION; GOVERNING LAW
(a) SETTLEMENT BY ARBITRATION. All disputes arising under or relating
to this Agreement shall be settled finally by arbitration in
New York,
New York,
conducted in
36
accordance with the Rules of Conciliation and Arbitration of the International
Chamber of Commerce ("ICC") in effect at such time. The number of arbitrators
shall be three (3). Each of (i) RGPC (including, for purposes hereof, all Joint
Venture Participants who may be parties to any arbitration) and MAPL, and (ii)
PMI (including, for purposes hereof, all PMI Designated Affiliates who may
be parties to any arbitration) shall have the right to name a single arbitrator
and the ICC shall name a third, who shall act as chairman. If either (i) RGPC,
the Joint Venture Participants, and MAPL or (ii) PMI and the PMI Designated
Affiliates cannot agree on a single arbitrator, such arbitrator shall be named
by the ICC. Any arbitration shall be conducted in the English language.
(b) FINALITY OF AWARD. The arbitrators award shall be final,
non-appealable and binding on the parties. Judgment may be entered upon the
award in any court of competent jurisdiction.
(c) GOVERNING LAW. This Agreement shall be governed by and interpreted
in accordance with the laws of
New York, without giving effect to its principles
of conflicts of laws.
ARTICLE 13
ENTIRE AGREEMENT
This Agreement and the Exhibits hereto constitute the entire agreement
between the parties pertaining to the subject matter hereof and supersede all
prior agreements between the parties. No prior contract or course of dealing
between the parties, and no statement of any agent, employee or representative
of any party or any of their respective Affiliates made prior to the execution
of this Agreement shall be admissible in construing the terms
37
of this agreement.
ARTICLE 14
NO WAIVER; CUMULATIVE REMEDIES; LIMITATION OF LIABILITY
(a) NO WAIVER; CUMULATIVE REMEDIES. No failure or delay on the part of
any party exercising any right, power or remedy hereunder and no course of
dealing between RGPC and PMI or any of their respective Affiliates shall operate
as a waiver of any such right, power or remedy; nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy hereunder.
Without prejudice to Article 12 and subject to Article 9 hereof, all rights,
powers or remedies provided hereunder are (whether or not expressly stated
elsewhere in this Agreement with respect to any particular remedy) cumulative
and not exclusive of any other rights, powers or remedies provided by law or
otherwise. Except as required by this Agreement, no notice or demand by one
party in any case shall entitle any other party to any other or future notice or
demand in similar or other circumstances or constitute a waiver of the right of
the first party to take other or further action in any such circumstances
without notice or demand.
(b) LIMITATION OF LIABILITY. No party shall be liable for prospective
profits or special, punitive, indirect or consequential losses or damages of any
kind arising out of or in any way connected with the performance of or failure
to perform this Agreement, including, but not limited to, losses or damages
resulting from a shutdown of plants or inability to perform sales or any other
contracts arising out of or in connection with the
38
performance or nonperformance of this Agreement. Notwithstanding anything in
this Article 14(b) that may be to the contrary, in the event of a breach by PMI
of its obligations under Article 3(b), nothing herein shall preclude RGPC from
seeking, as part of its actual damages, the transportation charges that would
have been applicable to any additional volumes that would have been shipped but
for the breach of Article 3(b) by PMI.
ARTICLE 15
AMENDMENTS AND WAIVERS
Any amendment of this Agreement must be made upon the express written
agreement of the parties, and any waiver of any provision of this Agreement by
any party must be upon the express written agreement of the party against which
enforcement of such waiver is sought.
ARTICLE 16
ASSIGNMENT
Except in the case of a transfer or assignment by PMI to one or more
PMI Designated Affiliates of any of PMIs rights or obligations under this
Agreement, no party may transfer or assign this Agreement or any of its rights
or obligations hereunder without the prior written consent of the parties. No
assignment by PMI as contemplated herein shall relieve PMI of any of its
liability under this Agreement except as may be mutually agreed. Any purported
assignment not in accordance with this Article shall be void and of no force and
effect.
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ARTICLE 17
SEVERABILITY OF PROVISIONS
The invalidity, illegality or unenforceability of any one or more of
the provisions of this Agreement shall in no way affect or impair the validity
and enforceability of the remaining provisions hereof.
ARTICLE 18
NOTICES
Except as otherwise provided, all notices and other communications
hereunder to a party shall be in writing and unless otherwise specified herein
shall be effective when received by registered mail, telex, facsimile or courier
to such party at its address listed below:
If to PMI: P.M.I. Trading Ltd.
Xxxxxxx Xxxxxx Xxxxxxxx Xx. 000
Xxxxx Xxxxxxxxx Xxxx 00
Xxxxxx D.F., CP. 11311
Telex No.: 1773509
Facsimile No.: (000)000-0000/(000)000-0000
Attn: Director of Products
If to RGPC, any of the Joint Venture Participants or MAPL:
c/o Mid-America Pipeline Company
0000 Xxxxx Xxxxxxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Facsimile No.: 000-000-0000
Attn: President
or at such address as may be notified by one party to the other in the manner
above
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provided. In the case of communications from RGPC relating to construction,
copies shall be sent to Pemex by registered mail, telex, facsimile or courier at
the address listed below:
Pemex Gas y Petroquimica Basica
Avenida Marina Nacional 329
Xxxxxxxx X0, 0 Xxxx
00000 Xxxxxx, X.X. Xxxxxx
Facsimile No.: (525) 722-2500 ext. 22359
Attn: Manager of Projects and Construction
ARTICLE 19
HEADINGS
All Article headings used in this Agreement are for convenience only
and shall not affect the construction or interpretation of any of the terms
hereof.
ARTICLE 20
REFERENCES
Unless otherwise specified, all Article and Exhibit references
contained in this
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Agreement are to the Articles hereof and the Exhibits hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers or representatives on the date first
above written.
P.M.I. TRADING, LTD. RIO GRANDE PIPELINE COMPANY
by XXXXXX PIPELINE COMPANY,
GENERAL PARTNER
/s/ XXXXXXX XXXXXXXX DEL RIO /s/ X. X. XXXXX
--------------------------------- ----------------------------------
By: Xxxxxxx Xxxxxxxx del Rio By: X. X. Xxxxx
Title: General Director Title: President
AMOCO RIO GRANDE PIPELINE COMPANY XXXXXX PIPELINE COMPANY
/s/ X. X. XXXXXXX /s/ X. X. XXXXX
--------------------------------- ----------------------------------
By: X. X. Xxxxxxx By: X. X. Xxxxx
Title: President Title: President
NAVAJO SOUTHERN, INC. MID AMERICA PIPELINE COMPANY
/s/ XXXXXXX X. XXXX /s/ X. X. XXXXX
--------------------------------- ----------------------------------
By: Xxxxxxx X. Xxxx By: X. X. Xxxxx
Title: President Title: President
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