<Page>
Exhibit 10.19
[Warren Petroleum Company Letterhead]
December 15, 1997 "Pages where confidential treatment has been
requested are marked 'Confidential Treatment
Requested.' The redacted material has been
separately filed with the Commission, and the
appropriate section has been marked at the
appropriate place and in the margin with a
star (*)."
Mr. William Puckett
Cedar Bayou Fractionators, L.P.
c/o Warren Petroleum Company,
Limited Partnership
1000 Louisiana, Suite 5800
Houston, Texas 77002
PRODUCT AND RAW MAKE STORAGE AGREEMENT #84-969
WARREN'S MONT BELVIEU, TEXAS STORAGE FACILITY
Dear Bill:
Subject to the following general terms and conditions and the attached
specific terms and conditions, Warren Petroleum Company, Limited Partnership
("Warren") agrees to provide natural gas liquid storage for Cedar Bayou
Fractionators, L.P. ("CBF") at its underground storage facilities situated in
Mont Belvieu, Texas. Warren and CBF sometimes shall be referred to
hereinafter individually as a "Party" or collectively as the "Parties".
1. PRODUCT AND RAW MAKE STORAGE. For and in consideration of the rates and
fees to be paid by CBF to Warren as provided herein, Warren hereby agrees
to lease storage space at its Facilities (as defined below) for the
storage of up to, but not to exceed, the maximum quantity of natural gas
liquid specification products ("Product(s)") and Raw Make (as defined
hereinafter) set forth in Exhibit "B" which is attached hereto and made a
part hereof (the "Lease Volume").
2. DEFINITIONS. For the purpose of this Agreement, the following terms and
expressions shall have the following meanings:
"Affiliate" shall mean 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. The term "control" (including the terms
"controlled by" or "under common control with") means 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
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December 15, 1997
Page 2
50% or more of the voting securities of the specified Person and such
Person are under common control.
"Agreement" shall mean this Product and Raw Make Storage Agreement
#84-969.
"Back-End Mix" shall mean any mixture of Products which will be
fractionated by the Fractionation Facility without requiring the use of
the Fractionator's de-ethanizer or de-propanizer.
"Barrel" shall mean forty-two (42) U. S. Gallons.
"Base Rate" shall have the meaning specified in Section 11 hereinafter.
"BPD" shall mean Barrels per Day.
"Business Day" shall mean a Day on which Federal Reserve member banks in
New York City are open for business.
"Cedar Bayou Fractionator" shall mean that certain fractionator owned by
Cedar Bayou Fractionators, L.P. situated in the City of Mont Belvieu,
Chambers County, Texas.
"CBF Group" shall have the meaning specified in Section 4 hereinafter.
"Claims" shall have the meaning specified in Section 4.
"Commencement Date" shall mean January 1, 1998, the date this Agreement
commenced.
"Contract Year" shall mean a period of 365 Days commencing as of the
Commencement Date of this Agreement and each yearly anniversary thereof;
provided, however, that any calendar year which contains the date of
February 29, shall consist of 366 Days.
"Day or Daily" shall mean a twenty-four (24) hour period commencing 7:00
a.m. Central Standard or Daylight Savings time, as applicable, and
extending until 7:00 a.m. Central Standard or Daylight Savings time, as
applicable, on the following Day.
"Effective Date" shall mean the date on which CBF may begin to store
Product(s) and Raw Make under this Agreement as set forth in Exhibit "A".
"Facilities" shall mean the underground storage facilities owned by Warren
at or near Mont Belvieu, Texas, including, but not limited to, all storage
caverns, related surface and subsurface equipment, and loading and
unloading terminals.
"Force Majeure" shall have the meaning specified in Section 17
hereinafter.
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December 15, 1997
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"Gallon" shall mean the unit of volume used for the purpose of measurement
of liquid. One (1) U.S. liquid Gallon contains two hundred thirty-one
(231) cubic inches when the liquid is at a temperature of sixty degrees
Fahrenheit (60 DEG. F) and at the vapor pressure of the liquid being
measured.
"Lease Volume" shall have the meaning specified in Section 1 above.
"Month" or "Monthly" shall mean a period commencing on the first Day of a
calendar Month and extending until the first Day of the next succeeding
calendar Month.
"Offspec Product" shall have the meaning specified in Section 4
hereinafter.
"Person" shall mean any individual, corporation, partnership, limited
liability company, association, joint venture, trust, or other
organization of any nature or kind.
"Product(s)" shall have the meaning specified in Section 1 above.
"Raw Make" shall mean Y-Grade Raw Product, Back-End Mix and other
Unfractionated Products.
"Receiving Pipeline" shall have the meaning specified in Section 5
hereinafter.
"Unfractionated Products" shall mean unfractionated liquid hydrocarbons
products excluding Y-Grade Raw Product and Back-End Mix.
"Warren Group" shall have the meaning specified in Section 4.
"Y-Grade Raw Product" shall mean any mixture of liquid hydrocarbons which
will be fractionated at the Cedar Bayou Fractionator which will require
the use of a de-ethanizer, a de-propanizer, a de-butanizer, and a butane
splitter.
3. TERM. The term of this agreement shall commence on the Effective Date
and shall terminate on the date specified in Exhibit "A". Unless a new
storage agreement is entered into or this agreement is renewed, at the
expiration or termination of this Agreement, CBF shall remove all
Product(s) and Raw Make stored hereunder on or before the last Day of
the term of this Agreement subject to the payment of all accrued
storage fees and other charges hereunder and Warren's lien as set
forth herein. In the event CBF fails to remove its Product(s) and Raw
Make at the expiration of the term of this Agreement, Warren shall
have the right to sell all or any portion of such Product(s) and Raw
Make on terms and at such prices as Warren, in its sole discretion,
deems appropriate under the then existing circumstances. If Warren
sells all or a portion of CBF's Product(s) and/or Raw Make under the
terms of this Section 3, within sixty (60) Days of its receipt of the
proceeds
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December 15, 1997
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derived from the sale of such Product(s) and/or Raw Make, Warren shall
remit same to CBF less (i) all of Warren's costs and expenses associated
with any such sale(s), including, but not limited to, the cost of
fractionating the Raw Make, if required, (ii) a sales commission equal to
five percent (5%) of the gross proceeds of such sale(s), and (iii) any
fees then due and owing by CBF to Warren.
4. PRODUCT AND RAW MAKE SPECIFICATIONS.
(a) All deliveries of Product(s) and Raw Make by CBF hereunder shall
meet Warren's specifications for the type of Product(s) and Raw
Make stored, as such specifications may change from time to time,
the most current of which are set forth in Exhibit "B" attached
hereto and made a part hereof. Warren reserves the right to
perform an analysis of CBF's Product(s) and Raw Make prior to
accepting same for storage, but assumes no responsibility for
doing so, and may refuse to accept delivery of such Product(s)
and/or Raw Make if it is contaminated or otherwise fails to
conform with the applicable specifications. If Warren accepts into
storage Offspec Product or Offspec Raw Make delivered by the CBF
Group, CBF shall reimburse Warren for the reasonable costs and
expenses incurred in handling such Offspec Product and/or Offspec
Raw Make.
(b) CBF AGREES TO AND DOES INDEMNIFY FULLY AND HOLD HARMLESS WARREN
AND ITS AFFILIATES AND ITS AND THEIR RESPECTIVE AGENTS, OFFICERS,
DIRECTORS, EMPLOYEES, REPRESENTATIVES, SUCCESSORS AND ASSIGNS
("WARREN GROUP") AGAINST ANY AND ALL LIABILITIES, LOSSES, DAMAGES,
WHETHER PERSONAL INJURY DAMAGES OR DAMAGES OR LOSSES OF ANY
PROPERTY, DEMANDS, CLAIMS, PENALTIES, FINES, ACTIONS, SUITS,
LEGAL, ADMINISTRATIVE OR ARBITRATION OR ALTERNATIVE DISPUTE
RESOLUTION PROCEEDINGS, JUDGMENTS, ORDERS, DIRECTIVES,
INJUNCTIONS, DECREES OR AWARDS OF ANY JURISDICTION, COSTS AND
EXPENSES (INCLUDING, BUT NOT LIMITED TO, REASONABLE ATTORNEYS'
FEES AND ANY COST OR EXPENSE OF INCIDENT INVESTIGATION)
(COLLECTIVELY REFERRED TO HEREINAFTER AS "CLAIMS") ARISING OUT OF
OR IN ANY MANNER RELATED TO OR CAUSED BY CBF AND ITS AFFILIATES
AND ITS AND THEIR RESPECTIVE AGENTS, OFFICERS, DIRECTORS,
EMPLOYEES, REPRESENTATIVES, SUCCESSORS AND ASSIGNS ("CBF GROUP")
DELIVERING OR CAUSING TO BE DELIVERED INTO THE FACILITIES ANY
PRODUCT(S) WHICH IS CONTAMINATED AND/OR FAILS TO MEET THE
APPLICABLE SPECIFICATIONS ("OFFSPEC PRODUCT") AND ANY RAW MAKE IS
CONTAMINATED AND/OR FAILS TO MEET THE APPLICABLE SPECIFICATIONS
("OFFSPEC RAW MAKE").
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December 15, 1997
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5. PRODUCT RAW MAKE DELIVERY AND REDELIVERY. Product(s) and Raw Make
redelivered to CBF out of the Facilities will only be made on the
request of CBF's designated representative or duly authorized agent.
Warren will not recognize sales, assignments or transfers of title to
Product(s) and Raw Make while in storage unless made in a manner
approved by Warren in advance (such approval is not to be unreasonably
withheld) and then only to another person or entity that has entered
into a valid storage agreement with Warren. Product(s) shall be
delivered and redelivered hereunder from or into any common carrier
pipeline currently connected to the Facilities, or from or into
barges, or from or into tank car or truck unloading or loading racks
in the Facilities. Raw Make shall be redelivered to CBF through
pipelines owned either by Warren or CBF which are connected to the
Facilities and the Cedar Bayou Fractionator. Warren's redelivery of
Product(s) to CBF shall be subject to operating conditions, rates of
delivery, delivery pressures, scheduling, etc. of the pipeline (the
"Receiving Pipeline") and the barges, tank cars and trucks into which
CBF requests Product(s) be redelivered and the loading facilities used
in connection therewith. Warren's redelivery of Raw Make to CBF shall
be subject to operating conditions, rates of delivery, delivery
pressures, scheduling, etc. of the pipeline (the "Raw Make Pipeline").
Custody of the Product(s) and Raw Make delivered or redelivered
hereunder shall be deemed to be transferred at the point where the
Product(s) and Raw Make enters into the Facilities and is measured or
the Receiving Pipeline, Raw Make Pipeline, barge, tank car, or truck,
as applicable. CBF shall use its best efforts to give Warren
reasonable notice of deliveries or withdrawals of Product(s) and Raw
Make. Warren shall not be required to receive or redeliver Product(s)
unless it has been given at least fifteen (15) Days advance written
notice of such Product(s) delivery or redelivery, but always subject
to the physical capabilities of the Facilities. Measurement of
Product(s) and Raw Make delivered or redelivered hereunder shall take
place as near to the points of delivery or redelivery as practicable
to Warren and shall be made by Warren in accordance with Warren's
standard measurement procedures, as such measurement procedures may
change from time to time, and shall conform to good measurement
practices in the industry and the then current API Manual of Petroleum
Measurement Standards. Warren shall furnish CBF with a copy of
Warren's measurement procedures by January 1, 1998, and Warren shall
furnish CBF with a current copy each time such procedures are changed
during the term of this agreement. All measurements made by Warren
shall be binding on the Parties hereto unless proven to be in error.
CBF shall have the right to witness all such measurements. If
deliveries of Product(s) and Raw Make for storage hereunder are made
by CBF through the use of tank cars or trucks, Warren shall have the
right to prorate tank car or truck shipments in proportion to the
Lease Volume for which each storage customer of Warren has contracted,
if deemed necessary by Warren in its sole discretion. Tank cars and
trucks will be handled on a first in first out basis. All tank cars
and trucks shall be suitable for loading and unloading at the
Facilities and shall be certified as such by CBF as provided in
Section 6 hereinafter.
6. CERTIFICATION OF EQUIPMENT. CBF agrees that all tank cars and trucks
used to make deliveries or withdrawals at the Facilities shall meet or
exceed all federal, state and
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December 15, 1997
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municipal safety, operating and insurance requirements and that Warren
requires CBF to certify same and to provide copies of all government
approvals to it before the tank cars and trucks will be accepted at the
Facilities.
7. STENCHING.
(a) Warren will odorize all shipments of propane out of storage by tank
car or truck in accordance with standard industry practice (currently
1.5 pounds ethyl mercaptan per 10,000 Gallons), or as required by
governmental agencies having proper jurisdiction, and will odorize
shipments of other Product(s) if requested in writing by CBF to do
so. CBF agrees to pay Warren for providing this odorization service
the fees set forth in Exhibit "A".
(b) WHERE WARREN PROVIDES DOCUMENTATION OF THE ODORIZATION REQUIRED BY
THIS AGREEMENT AND OTHERWISE HAS COMPLIED WITH ALL APPLICABLE
REGULATIONS REGARDING ODORIZATION, CBF AGREES TO DEFEND, INDEMNIFY
AND HOLD THE WARREN GROUP HARMLESS FROM AND AGAINST ANY AND ALL
CLAIMS WHICH ARISE IN CONNECTION WITH ANY OF THE CBF GROUP'S OR ITS
CUSTOMER'S TRANSPORTATION, STORAGE, USE, HANDLING, OR RESALE OF
ODORIZED PRODUCT(S) AFTER DELIVERY OF CUSTODY, POSSESSION AND
CONTROL OF SUCH ODORIZED PRODUCTS TO CBF OR ITS DESIGNEE. THIS
INDEMNIFICATION OBLIGATION INCLUDES AMONG ANY OTHER CLAIMS, THOSE
COMPRISING LACK OF OR INADEQUATE WARNING MATERIALS, IMPROPER
AMOUNTS, USE OR TYPE OF ODORANT, "ODORANT FADING," LACK OF WARNING
ON SUPPLEMENTAL WARNING SYSTEMS (SUCH AS GAS DETECTORS) AND
IMPROPER TRAINING OR MONITORING OF ANY OF THE CBF GROUP'S AND/OR
ITS CUSTOMERS WARNING AND/OR TRAINING PROGRAMS. CBF'S INDEMNITY
OBLIGATION SHALL BE APPLICABLE EVEN IF SUCH CLAIMS ARE DETERMINED
TO HAVE BEEN PARTLY CAUSED BY THE NEGLIGENCE OF WARREN OR IF
LIABILITY WITHOUT FAULT IS IMPOSED ON WARREN, THE ONLY EXCEPTION
TO SUCH OBLIGATION BEING WHERE THE NEGLIGENCE OF WARREN IS
DETERMINED TO BE THE SOLE CAUSE OF SUCH CLAIMS.
(c) WARREN AGREES TO DEFEND, INDEMNIFY AND HOLD THE CBF GROUP HARMLESS
FROM AND AGAINST ANY AND ALL CLAIMS RESULTING FROM WARRENS NEGLIGENT
OPERATIONS IN THE STORAGE OR HANDLING OF ODORIZED PRODUCTS WHILE IN
WARRENS CUSTODY OR CONTROL, INCLUDING, WITHOUT LIMITATION, THAT
PORTION OF ANY CLAIMS CAUSED BY THE
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December 15, 1997
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NEGLIGENCE OF WARREN JOINTLY OR CONCURRENTLY WITH THE NEGLIGENCE
OF CBF OR ANY MEMBER IN THE CBF GROUP. IT IS UNDERSTOOD AND
AGREED THAT THIS INDEMNITY SHALL NOT RELIEVE OR RELEASE CBF FROM
ITS INDEMNITY OBLIGATIONS SET FORTH IN 7(B) ABOVE.
8. LOSS ALLOWANCE. Due to normal operating losses which occur in receiving
Product(s) and/or Raw Make for storage, storing such Product(s) and
redelivering Product(s) out of storage, CBF's withdrawals from storage
shall be limited to the percent of the Product(s) and/or Raw Make
delivered to Warren hereunder specified in Exhibit "A".
9. TRANSPORTATION COSTS TO AND FROM STORAGE. All transportation charges and
other expenses incurred in connection with (i) CBF's delivery of
Product(s) and Raw Make to the Facilities for storage and (ii) CBF's
receipt of Product(s) and Raw Make from storage shall be paid by CBF
directly to such transporter.
10. STORAGE AND HANDLING CHARGES.
(a) CBF shall pay Warren Monthly the fees set forth in Exhibit "A".
(b) If at the end of any Month(i) the volume of a particular Product
and/or Raw Make stored by CBF exceeds the storage volume of such
Product and/or Raw Make allocated for that Month as designated by CBF
as provided herein (the initial allocation of which is set forth in
Exhibit "A"), and/or (ii) the total volume of all Products and Raw
Make stored by CBF exceeds the Lease Volume, CBF shall pay to Warren
an Excess Storage Fee as set forth in Exhibit "A".
(c) If at the expiration or termination of this Agreement CBF continues
to have Product(s) and/or Raw Make in storage (which the Parties
expressly do not contemplate and Warren in no way condones) which was
delivered into storage under the terms of this Agreement, then CBF
shall pay to Warren two times the Excess Storage Fee as set forth in
Exhibit "A" each Month thereafter based on the highest balance of all
Products and Raw Make held in storage at any time during such Month.
Warren's acceptance of funds pursuant to this Section shall (i) in no
way be construed as a renewal of this Agreement, PROVIDED, HOWEVER,
CBF shall continue to be bound by all terms and conditions of this
Agreement as long as any of CBF's Product(s) and/or Raw Make remains
in storage or (ii) in no way effect Warren's rights to sell CBFs
Product(s) and Raw Make as provided for in Section 3 above and any
other rights that CBF may have.
(d) Nothing in this Section 10 shall be construed to create an obligation
on Warren to accept more Product(s) and Raw Make into storage in
excess of (i) the Lease Volume and (ii) the allocation of each
Product as set forth in Section 6 of Exhibit
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December 15, 1997
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"A". At any time there is an excess balance, Warren may by telephone
notice to CBF require CBF to remove such excess balance within two
working days and if any excess balance remains at the end of such
period, then CBF shall reimburse Warren for any costs or liabilities
incurred by Warren as a result thereof. Notwithstanding the
foregoing, CBF shall never exceed the Lease Volume or the allocation
of each Product as set forth in Section 6 of Exhibit "A" without
Warren's prior written consent.
11. INVOICING AND PAYMENTS. Each Month during the term of this Agreement,
Warren shall invoice CBF for all amounts owed by CBF to Warren
hereunder and CBF shall pay to Warren the amounts due no later than (i)
ten (10) Days after CBFs receipt of invoice therefor, if the amount of
same is fifty thousand dollars ($50,000) or more or (ii) fifteen (15)
Days after receipt of invoice therefor, if the amount of same is less
than fifty thousand dollars ($50,000). If the Day on which any payment
is due is not a Business Day, then the relevant payment shall be due
upon the immediately preceding Business Day, except if such payment due
date is a Sunday or Monday, then the relevant payment shall be due upon
the immediately succeeding Business Day. Any amounts which remain due
and owing after the due date shall bear interest thereon at the lower
of the United States Treasury 90-Day T-Bill interest rate, as published
in the Wall Street Journal on the first day such rate is quoted at the
beginning of each calendar quarter, plus thirteen (13%), or the maximum
lawful rate of interest (the "Base Rate"). If a good faith dispute
arises as to the amount payable in any statement, the amount not in
dispute shall be paid. If CBF elects to withhold any payment otherwise
due as a consequence of a good faith dispute, CBF shall provide Warren
with written notice of its reasons for withholding payment, and, if the
amount of such invoice is equal to or greater than five thousand
dollars ($5,000) or the total aggregate amount of all invoices in which
CBF has withheld payment and is outstanding at any time is greater than
or equal to twenty five thousand dollars ($25,000), CBF shall
simultaneously place the disputed amount into an escrow account at a
mutually acceptable commercial bank, pending resolution of the dispute.
CBF's election to withhold payment from Warren and escrow same as
provided herein shall be exercised within thirty (30) Days from CBF's
receipt of the invoice giving rise to such good faith dispute. After
the thirty (30) Day period, CBF shall be required to pay Warren the
full amount of the invoice whether or not there is a good faith dispute
as to the amount payable. If it is subsequently determined, whether by
mutual agreement of the Parties or otherwise, that (i) CBF is required
to pay all or any portion of the disputed amounts to Warren or (ii) CBF
is entitled to reimbursement for an invoice it paid, in addition to
paying such amounts, the Party making such payment also shall pay
interest accrued on such amounts at the Base Rate from (1) the original
due date until paid in full, if CBF is required to pay, or (2) the date
CBF paid the disputed invoice until paid in full, if Warren is required
to pay.
12. LIEN FOR UNPAID CHARGES. CBF hereby grants unto Warren a lien against
any Product(s) and Raw Make of CBF remaining in storage at any time for
any unpaid
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December 15, 1997
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amounts which may be owing by CBF to Warren hereunder. Except in the case
where CBF withholds payment otherwise due as a consequence of a good faith
dispute and simultaneously places the disputed amount into an escrow
account as provided for in Section 11, Warren specifically reserves the
right to refuse to redeliver Product(s) and/or Raw Make stored by CBF at
any time that there remains any amounts due and owing by CBF to Warren
according to the terms hereof. Without prejudice to any other remedies
that Warren may have at law, in equity and/or pursuant to the terms and
provisions hereof, Warren may enforce the lien granted herein by public or
private sale of any or all of CBFs Product(s) and/or Raw Make remaining in
storage and at any time or place and on any terms which Warren, in its
sole discretion, deems commercially reasonable after giving CBF not less
than five (5) Days notice of such sale.
13. TITLE TO STORED PRODUCT AND RAW MAKE. It is understood and agreed that
(i) title to the Product(s) and Raw Make stored hereunder shall remain
in CBF, subject to the Product(s) being commingled with like
Product(s) belonging to Warren and/or other parties, which CBF hereby
grants unto Warren the right to do so, and (ii) Product(s) redelivered
to CBF by Warren may not be identical Product(s) delivered by CBF into
the Facilities, but shall be considered as fungible goods meeting the
same quality specifications. With respect to Product(s) and Raw Make
in storage pursuant to this agreement, it is specifically agreed as
follows:
(a) In the event there should be any loss of Product(s) and/or Raw Make
(other than normal operating losses) from Warren's storage facilities
and such loss is not attributable to the failure of Warren to
exercise that degree of care as would be exercised by a reasonably
careful Person under like circumstances, then CBF shall be prorated
by Warren on the basis of the ratio of CBF's stored Product(s) and/or
Raw Make to the total volumes of like stored Product(s) and/or Raw
Make in such Facilities, including those volumes owned by CBF, Warren
and other third parties.
(b) In the event there should be a loss from storage and it is ultimately
determined that such loss was solely attributable to Warren's failure
to exercise that degree of care as would be exercised by a reasonably
careful Person under like circumstances, then, subject to the
provisions of Section 15 hereinafter, it is agreed that Warren shall
have the option, in its sole discretion, to replace CBF's lost
volumes with like Product(s) and/or Raw Make or to pay CBF the fair
market value of such lost Product(s) and/or Raw Make at the time of
the loss.
14. TAXES. CBF shall be responsible for the payment of any and all ad valorem
or other taxes or assessments levied or assessed on and attributable to
CBF's Product(s) and Raw Make in storage pursuant to this agreement,
provided however, that Warren shall have the right, but not the
obligation, to pay such taxes on behalf of CBF (but at a like rate no
greater than that paid by Warren on its own like Product(s) and Raw Make
in storage) and CBF
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December 15, 1997
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agrees to reimburse Warren for any such taxes paid by Warren within ten
(10) Days from the date of Warren's invoice therefor.
15. INDEMNIFICATION AND LIMITATION OF LIABILITY.
(a) Warren shall not be liable to CBF for any loss of or damage to the
Product(s) and/or Raw Make stored by CBF, however caused, unless such
loss or damage directly results from the failure of Warren to
exercise that degree of care as would be exercised by a reasonably
careful Person under like circumstances. If any such loss or damage
could not have been avoided through the exercise of such care as a
reasonably careful Person would exercise under like circumstances,
Warren shall not be liable for such loss or damage.
(b) NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, WARREN
SHALL NOT BE RESPONSIBLE FOR ANY LOSSES OR DAMAGES TO THE PRODUCT(S)
AND RAW MAKE OR FOR ANY CLAIMS UNDER ANY INDEMNITY OBLIGATIONS THAT
WARREN MAY HAVE AS SET FORTH IN THIS AGREEMENT IN EXCESS OF THE
STORAGE FEES AND RATES PAID BY CBF TO WARREN AS PROVIDED HEREIN. THE
FOREGOING SHALL APPLY WHETHER OR NOT SUCH CLAIMS ARE FOUNDED IN WHOLE
OR IN PART UPON THE NEGLIGENCE OF WARREN. WARREN SHALL NOT BE
RESPONSIBLE FOR OBTAINING INSURANCE TO COVER THE PRODUCT(S) AND RAW
MAKE STORED HEREUNDER.
(c) CBF AGREES TO DEFEND, INDEMNIFY AND HOLD THE WARREN GROUP HARMLESS
FROM AND AGAINST ANY AND ALL CLAIMS WHICH ARISE IN CONNECTION WITH
ANY OF THE CBF GROUP'S OR ITS CUSTOMER'S TRANSPORTATION, STORAGE,
USE, HANDLING, OR RESALE OF ANY OF THE UNSTENCHED PRODUCT(S) AND RAW
MAKE AFTER DELIVERY OF CUSTODY, POSSESSION AND CONTROL OF SUCH
UNSTENCHED PRODUCTS AND/OR RAW MAKE TO CBF. CBF'S INDEMNITY
OBLIGATION SHALL BE APPLICABLE EVEN IF SUCH CLAIMS ARE DETERMINED TO
HAVE BEEN PARTLY CAUSED BY THE NEGLIGENCE OF WARREN OR IF LIABILITY
WITHOUT FAULT IS IMPOSED ON WARREN, THE ONLY EXCEPTION TO SUCH
OBLIGATION BEING WHERE THE NEGLIGENCE OF WARREN IS DETERMINED TO BE
THE SOLE CAUSE OF SUCH CLAIMS.
(d) WARREN AGREES TO DEFEND, INDEMNIFY AND HOLD THE CBF GROUP
HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS RESULTING FROM
WARREN'S NEGLIGENT OPERATIONS IN THE STORAGE OR HANDLING OF
UNSTENCHED PRODUCTS AND RAW
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December 15, 1997
Page 11
MAKE WHILE IN WARREN'S CUSTODY OR CONTROL, INCLUDING, WITHOUT
LIMITATION, THAT PORTION OF ANY CLAIMS CAUSED BY THE NEGLIGENCE OF
WARREN JOINTLY OR CONCURRENTLY WITH THE NEGLIGENCE OF CBF OR ANY
MEMBER IN THE CBF GROUP.
(e) FOR BREACH OF ANY PROVISION FOR WHICH AN EXPRESS REMEDY OR MEASURE OF
DAMAGES IS PROVIDED IN THIS AGREEMENT, SUCH EXPRESS REMEDY OR MEASURE
OF DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY HEREUNDER, AND THE
OBLIGOR'S LIABILITY SHALL BE LIMITED AS SET FORTH IN SUCH PROVISION,
AND ALL OTHER REMEDIES OR DAMAGES ARE WAIVED. IF NO REMEDY OR MEASURE
OF DAMAGES IS EXPRESSLY PROVIDED HEREIN, THE OBLIGOR'S LIABILITY
SHALL BE LIMITED TO DIRECT ACTUAL DAMAGES ONLY, EXCLUDING LOST
PROFITS, AND SUCH DIRECT ACTUAL DAMAGES SHALL BE THE SOLE AND
EXCLUSIVE REMEDY HEREUNDER, AND ALL OTHER REMEDIES OR DAMAGES ARE
WAIVED. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY
UNDER ANY PROVISION OF THIS AGREEMENT FOR CONSEQUENTIAL, INCIDENTAL,
PUNITIVE, EXEMPLARY, OR INDIRECT DAMAGES IN TORT, CONTRACT OR
OTHERWISE.
16. NOTICE OF CLAIM AND FILING OF SUIT. Except for Claims that CBF may have
by virtue of any indemnity granted by Warren to CBF as provided in this
Agreement ("Indemnification Claims"), Claims by CBF and/or any other
Person in the CBF Group, and all other Persons claiming by, through or
under any Person in the CBF Group, must be presented in writing to
Warren within a reasonable time, and in no event later than ninety (90)
Days after (i) CBF's and/or any Person in the CBF Group's Product(s)
and/or Raw Make is redelivered or removed from the Facilities or (ii)
CBF is notified by Warren that loss of or damage to Product(s) and/or
Raw Make has occurred, whichever is shorter. Except for any
Indemnification Claims that CBF may have, no arbitration proceeding or
action of any kind may be maintained by CBF and/or any Person in the
CBF Group and any other Persons claiming by, through or under any
Person in the CBF Group, against Warren for loss of or damage to
Product(s) and/or Raw Make stored in the Facilities unless a written
claim therefor is received by Warren within the time periods set forth
herein and such arbitration proceeding is commenced within one year
after (a) CBF's and/or any Person in the CBF Group's Product(s) and/or
Raw Make is redelivered or removed from the Facilities or (b) CBF is
notified by Warren that loss of or damage to Product(s) and/or Raw Make
has occurred, whichever is shorter. In the situation where Warren
notifies CBF of a loss or damage to Product(s) and/or Raw Make, the
time limits for making written claims and the maintaining of actions
after notice, as set forth herein, begin on the date such notice is
sent by Warren. With respect to any Indemnification Claims that CBF may
have, no arbitration proceeding or action of any kind may be maintained
by CBF
<Page>
December 15, 1997
Page 12
and/or any Person in the CBF Group and any other Persons claiming by,
through or under any Person in the CBF Group, against Warren unless
such arbitration proceeding or action is commenced within two years
from the act or event giving rise to such Indemnification Claim.
17. FORCE MAJEURE.
(a) In the event either Party hereto is rendered unable, wholly or in
part, by reason of Force Majeure to carry out its obligations under
this Agreement, upon such party's giving notice and reasonably full
particulars of such Force Majeure in writing to the other Party after
the occurrence of the cause relied on, then the obligations of such
Party, other than the obligation to pay money due hereunder, insofar
and only insofar as they are affected by such Force Majeure, shall be
suspended during the continuance of any inability so caused, but for
no longer period; and such cause shall, so far as reasonably
possible, be remedied with all reasonable dispatch.
(b) The term "Force Majeure" 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, storms, and
warnings for any of the foregoing which may necessitate the
precautionary shut-down of wells, plants, pipelines, gathering
systems, loading facilities, terminals, the Facilities or any portion
thereof, or other related facilities, floods, washouts, arrests and
restraints of governments (either federal, state, civil or military),
civil disturbances, explosions, sabotage, breakage or accidents to
equipment, machinery, plants, the Facilities or any portion thereof,
or lines of pipe, the lack or failure of brine or brine handling
capacity, the making of repairs or alterations to any of the
foregoing, inability to secure labor or materials, freezing of
equipment, machinery, plants, the Facilities or any portion thereof,
or lines of pipe, partial or entire failure of wells or gas supply,
electric power shortages, necessity for compliance with any court
order, or any law, statute, ordinance, rule, regulation or order
promulgated by a governmental authority having or asserting
jurisdiction, inclement weather that necessitates extraordinary
measures and expense to construct facilities and/or maintain
operations, or any other causes, whether of the kind enumerated
herein or otherwise, which are not within the control of the Party
claiming suspension and which by the exercise of due 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 servitudes, rights-of-way, grants, permits or licenses 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, at reasonable cost and after the exercise of reasonable
diligence, such servitudes, rights-of-way grants, permits or
licenses, and in those instances where either Party hereto is
required to furnish materials and supplies for the purpose of
constructing or maintaining facilities to enable such Party to
fulfill its obligations
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December 15, 1997
Page 13
hereunder, the inability of such Party to acquire, or delays on the
part of such Party in acquiring, at reasonable cost and after the
exercise of reasonable diligence, such materials and supplies. 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 providing a service or providing any
equipment, goods, supplies or other items 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 defined as
Force Majeure hereunder.
(c) Notwithstanding subsection 17(a) above, 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
requirement 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 the opposing Party when such
course is inadvisable in the discretion of the Party having the
difficulty.
18. SUCCESSORS AND ASSIGNS. This Agreement shall extend to and be binding
upon the Parties hereto, their heirs, successors and permitted assigns.
Notwithstanding the foregoing, neither Party may assign or sublet this
Agreement in whole or in part without the prior written consent of the
other Party, which consent will not be unreasonably withheld or
delayed; provided, however, (i) either Party shall have the right to
assign this Agreement to any of its Affiliates and to any future owner
or owners of the Facilities without the necessity of obtaining any
consent from the other Party; further provided, however, that any such
assignment to an Affiliate shall in no way relieve or release the
assigning Party from any of its obligations hereunder unless consented
to in writing by the other Party and (ii) the foregoing shall be
subject to CBF's rights offer such services to its fractionation
customers as set forth in Section 15 B. of Exhibit "A".
19. NO COMMISSIONS, FEES OR REBATES. Except as expressly provided in this
Agreement, 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 or representative(s) authorized by either Party may
audit the applicable records of the other Party for the purpose of
determining whether there has been compliance with this Section.
20. SEVERABILITY. This Agreement and the operations hereunder shall be
subject to the valid and applicable federal and state laws and the
valid and applicable orders, laws, local ordinances, rules, and
regulations of any local, state or federal authority having
jurisdiction, but nothing contained herein shall be construed as a
waiver of any right to question or contest any such order, laws, rules,
or regulations in any forum having jurisdiction in the premises. If any
provision of this Agreement is held to be illegal, invalid, or
unenforceable under the present or future laws effective during the
term of this
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December 15, 1997
Page 14
Agreement, (i) such provision will be fully severable, (ii) this Agreement
will be construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a part of this Agreement, and
(iii) the remaining provisions of this Agreement will remain in full force
and effect and will not be affected by the illegal, invalid, or
unenforceable provision or by its severance from this Agreement.
Furthermore, in lieu of such illegal, invalid, or unenforceable provision,
there will be added automatically as a part of this Agreement a provision
similar in terms to such illegal, invalid, or unenforceable provision as
may be possible and as may be legal, valid, and enforceable. If a
provision of this Agreement is or becomes illegal, invalid, or
unenforceable in any jurisdiction, the foregoing event shall not affect
the validity or enforceability in that jurisdiction of any other provision
of this Agreement nor the validity or enforceability in other
jurisdictions of that or any other provision of this Agreement.
21. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND DUTIES OF THE PARTIES
ARISING OUT OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED,
ENFORCED, AND PERFORMED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS,
AS THE SAME MAY BE AMENDED FROM TIME TO TIME, WITHOUT GIVING EFFECT TO ANY
CHOICE OR CONFLICT OF LAW PROVISION OR RULE THAT WOULD CAUSE THE
APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF TEXAS.
22. ENTIRE AGREEMENT, AMENDMENT AND WAIVER. This Agreement, including,
without limitation, all exhibits hereto, integrates the entire
understanding between the Parties with respect to the subject matter
covered and supersedes all prior understandings, drafts, discussions,
or statements, whether oral or in writing, expressed or implied,
dealing with the same subject matter. This Agreement may not be amended
or modified in any manner except by a written document signed by both
Parties that expressly amends this Agreement. No waiver by either Party
hereto of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provision hereof (whether or not
similar) nor shall such waiver constitute a continuing waiver unless
expressly provided. No waiver shall be effective unless made in
writing and signed by the Party to be charged with such wavier.
23. SETOFFS AND COUNTERCLAIMS. Except as otherwise provided herein, Warren
reserves to itself all rights, set-offs, counterclaims, and other remedies
and/or defenses which Warren is or may be entitled to arising from or out
of this Agreement or as otherwise provided by law.
24. NO PARTNERSHIP, ASSOCIATION, ETC. Nothing contained in this Agreement
shall be construed to create an association, trust, partnership, or
joint venture or impose a trust or partnership duty, obligation, or
liability on or with regard to either Party.
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December 15, 1997
Page 15
25. EXHIBITS. All Exhibits attached hereto are incorporated herein by
reference as fully as though contained in the body hereof. If any
provision of any Exhibit conflicts with the terms and provisions
hereof, the provisions of this Agreement shall prevail.
26. DTPA WAIVER. EACH PARTY EXECUTING THIS AGREEMENT HEREBY WAIVES ITS
RESPECTIVE RIGHTS, IF ANY, UNDER THE DECEPTIVE TRADE PRACTICES-CONSUMER
PROTECTION ACT, SECTION 17.41 ET SEQ., TEXAS BUSINESS & COMMERCE CODE,
A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND PROTECTIONS. AFTER
CONSULTATION WITH AN ATTORNEY OF ITS OWN SELECTION, EACH PARTY
EXECUTING THIS AGREEMENT VOLUNTARILY CONSENTS TO THIS WAIVER. IN
ADDITION, EACH PARTY EXECUTING THIS AGREEMENT HEREBY REPRESENTS AND
WARRANTS TO THE OTHER PARTY THAT (i) SUCH PARTY'S LEGAL COUNSEL WAS NOT
DIRECTLY OR INDIRECTLY IDENTIFIED, SUGGESTED, OR SELECTED BY THE OTHER
PARTY OR BY AN AGENT OF SUCH OTHER PARTY, AND (ii) NEITHER PARTY
EXECUTING THIS AGREEMENT IS IN A SIGNIFICANTLY DISPARATE BARGAINING
POSITION.
27. PRINCIPLES OF CONSTRUCTION AND INTERPRETATION. 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; and
(d) the plural shall be deemed to include the singular and vice
versa, as applicable.
28. NOTICES. Any notice or other communication provided for in this
Agreement or any notice which either Party may desire to give to the
other shall be in writing and shall be deemed to have been properly
given if and when sent by facsimile transmission, delivered by hand, or
if sent by mail, upon deposit in the United States mail, either U.S.
Express Mail, registered mail or certified mail, with all postage fully
prepaid, or if sent by courier, by delivery to a bonded courier with
charges paid in accordance with the customary arrangements established
by such courier, in each case addressed to the Parties at the following
addresses:
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December 15, 1997
Page 16
FOR WARREN:
To: WARREN PETROLEUM COMPANY,
LIMITED PARTNERSHIP
Attention: Vice President, Asset Marketing and Services
1000 Louisiana, Suite 5800
Houston, Texas 77002
Phone: (713) 507-6408
FAX: (713) 767-8246
FOR CBF:
To: CEDAR BAYOU FRACTIONATORS, L.P.
c/o Warren Petroleum Company, Limited Partnership
Attention: Vice President, Asset Marketing and Services
1000 Louisiana, Suite 5800
Houston, Texas 77002
Phone: (713) 507-6408
FAX: (713) 767-8246
WITH A COPY TO:
To: Amoco Oil Company
Attention: Manager, NGL Planning and Optimization
Mail Code 1102
At: 200 East Randolph Drive
Chicago, Illinois 60601
or: P.0. Box 87707
Chicago, Illinois 60681-0707
Phone: (312) 856-6730
FAX: (312) 616-0624
or at such other address as either Party shall designate by written notice to
the other. A notice sent by facsimile shall be deemed to have been received by
the close of the business Day following the Day on which it was transmitted and
confirmed by transmission report or such earlier time as confirmed orally or in
writing by the receiving Party. Notice by U. S. Mail, whether by U. S. Express
Mail, registered mail or certified mail, or by overnight courier shall be deemed
to have been received by the close of the second business Day after the Day upon
which it was sent, or such earlier time as is confirmed orally or in
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December 15, 1997
Page 17
writing by the receiving Party. Any Party may change its address or
facsimile number by giving notice of such change in accordance herewith.
29. ALTERNATIVE DISPUTE RESOLUTION.
(a) COVERED DISPUTES - Any dispute, controversy or claim (whether
sounding in contract, tort or otherwise) arising out of or relating
to this Agreement, including, without limitation, the meaning of its
provisions, or the proper performance of any of its terms by either
Party, its breach, termination or invalidity ("Dispute") will be
resolved in accordance with the procedures specified in this Section,
which will be the sole and exclusive procedure for the resolution of
any such Dispute, except that a Party, without prejudice to the
following procedures, may file a complaint to seek preliminary
injunctive or other provisional judicial relief, if in its sole
judgment, that action is necessary to avoid irreparable damage or to
preserve the status quo. Despite the filing of any such injunctive or
other provisional judicial relief, the Parties will continue, subject
to Subsection (j) below, to participate in the applicable procedures
specified in this Section. The obligation to participate in such
applicable procedures shall not require either Party to participate
in the negotiation between executives procedures set forth in
Subsection (c) below or the mediation procedures set forth in
Subsection (d) below if either Party determines, in its sole
discretion, that such procedures would be futile.
(b) INITIATION OF PROCEDURES. Either Party desiring to initiate the
dispute resolution procedures set forth in this Section with respect
to a Dispute not resolved in the ordinary course of business (the
"Initiating Party") must give written notice of the Dispute (the
"Dispute Notice") to the other Party (the "Non-Initiating Party").
The Dispute Notice shall include (i) a statement of that Party's
position and a summary of arguments supporting that position, and
(ii) the name and title of the executive who will represent that
Party, and of any other person who will accompany the executive, in
the negotiations under Subsection (c) below.
(c) NEGOTIATION BETWEEN EXECUTIVES - If one Party has given a Dispute
Notice under Subsection (b) above, the Parties may attempt in good
faith to resolve the Dispute within forty-five (45) days following
receipt of the Dispute Notice by the Non Initiating Party by
negotiation between executives who have authority to settle the
Dispute and who are at a higher level of management than the persons
with direct responsibility for administration of this Agreement or
the matter in Dispute. Within fifteen (15) days after receipt of the
Dispute Notice, the Non-Initiating Party may submit to the other a
written response. If given, the response will include (i) a statement
of that Party's position and a summary of arguments supporting that
position, and (ii) the name and title of the executive who will
represent that Party and of any other person who will accompany the
executive. If such a response is given by the Non-Initiating Party,
within forty-five (45) days
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December 15, 1997
Page 18
following receipt of the Dispute Notice by the Non-Initiating Party,
the executives of both Parties will meet at a mutually acceptable
time and place, and thereafter, as often as they reasonably deem
necessary, to attempt to resolve the Dispute.
(d) MEDIATION - If the Dispute has not been resolved by negotiation under
the Subsection (c) above within forty-five (45) days following
receipt of the Dispute Notice by the Non-Initiating Party or if the
Non-Initiating Party fails to respond within the required fifteen
(15) day period, either Party may initiate the mediation procedure of
this Subsection by giving written notice to the other Party
("Mediation Notice"). The Parties will endeavor to settle the Dispute
by mediation within sixty (60) days of the Mediation Notice under the
then current Center for Public Resources ("CPR") Model Mediation
Procedure for Business Disputes. If the Parties have not agreed upon
a mediator within seven (7) days after the Mediation Notice, either
Party may request CPR assistance in the selection of a mediator under
its guidelines. Unless otherwise agreed to by the Parties, no
discovery shall be allowed during the sixty (60) day mediation
period. If both Parties elect to participate in the mediation
procedures set forth herein, the cost of the mediator will be shared
equally between the Parties, unless otherwise agreed to in writing by
the Parties. If one Party elects not to participate in the mediation
procedures, neither Party shall bear any cost associated with such
procedure, other than costs that each Party may have incurred in
connection therewith which shall be borne by the Party that incurred
such costs.
(e) ARBITRATION. If the Dispute has not been resolved by mediation under
the Subsection (d) above within the required sixty (60) day period or
if either Party fails and/or refuses to participate in such mediation
procedures, either Party may request that the matter be resolved
through arbitration by submitting a written notice (the "Arbitration
Notice") to the other. Any arbitration that is conducted hereunder
shall be governed by the Federal Arbitration Act, 9 U.S.C. Section 1
ET SEQ., as amended, and will not be governed by the arbitration
acts, statutes, or rules of any other jurisdiction.
(f) ARBITRATION PROCEDURE. The Arbitration Notice shall name the
noticing Party's arbitrator and shall contain a statement of the
issue(s) presented for arbitration. Within fifteen (15) Days of
receipt of an Arbitration Notice, the other Party shall name its
arbitrator by written notice to the other and may designate any
additional issue(s) for arbitration. The two named arbitrators shall
select the third arbitrator within fifteen (15) Days after the date
on which the second arbitrator was named. Should the two arbitrators
fail to agree on the selection of the third arbitrator, either Party
shall be entitled to request the Senior Judge of the United States
District Court for the Southern District of Texas to select the third
arbitrator. Should either Party fail and/or refuse to name its
arbitrator within the required fifteen (15) day period, the other
Party shall be entitled to request the Senior Judge
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December 15, 1997
Page 19
of the United States District Court for the Southern District of
Texas to select the arbitrator for such Party. All arbitrators shall
be qualified by education or experience within the natural gas
liquids portion of the energy industry to decide the issues presented
for arbitration. No arbitrator shall be: a current or former
director, officer, or employee of either Party or its Affiliates; an
attorney (or member of a law firm) who has rendered legal services to
either Party or its Affiliates within the preceding three Years; or
an owner of any of the common stock of either Party, or its
Affiliates.
(g) ARBITRATION HEARING. The three arbitrators shall commence the
arbitration proceedings within twenty-five (25) Days following the
appointment of the third arbitrator. The arbitration proceedings
shall be held at a mutually acceptable site and if the Parties are
unable to agree on a site, the arbitrators shall select the site. The
arbitrators shall have the authority to establish rules and
procedures governing the arbitration proceedings, including, without
limitation, rules concerning discovery. Each Party shall have the
opportunity to present its evidence at the hearing. The arbitrators
may call for the submission of pre-hearing statements of position and
legal authority, but no post-hearing briefs shall be submitted. The
arbitration panel shall not have the authority to award incidental,
consequential, special, punitive or exemplary damages. In addition,
if an issue under consideration is limited to a determination of an
amount of money owed by one Party to the other, each Party shall
submit to the arbitration panel a final offer of its proposed
resolution of the dispute. The arbitration panel shall be charged to
select from the two proposals the one which the panel finds to be the
most reasonable and consistent with the terms and conditions of this
Agreement, and the arbitration panel shall not average the Parties'
proposals or otherwise craft its own remedy. All evidence submitted
in an arbitration proceeding, transcripts of such proceedings, and
all documents submitted by the Parties in an arbitration proceeding
shall be kept confidential and shall not be disclosed to any third
Party by either Party hereto.
(h) ARBITRATION DECISION AND COST. The decision of the arbitrators or a
majority of them, shall be in writing and shall be final and binding
upon the Parties as to the issue(s) submitted. The cost of the
hearing shall be shared equally by the Parties, and each Party shall
be responsible for its own expenses and those of its counsel or other
representatives. Each Party hereby irrevocably waives, to the fullest
extent permitted by law, any objection it may have to the
arbitrability of any such disputes, controversies or claims and
further agrees that a final determination in any such arbitration
proceeding shall be conclusive and binding upon each Party.
(i) ENFORCEMENT OF AWARD. Judgment upon any award rendered by the
arbitrators may be entered in any court having jurisdiction. The
prevailing Party shall be entitled to reasonable attorneys' fees
in any contested court proceeding brought to
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December 15, 1997
Page 20
enforce or collect any award of judgment rendered by the
arbitrators,
(j) TOLLING AND PERFORMANCE. Except as otherwise provided in this Section
29, all applicable statutes of limitation and defenses based upon the
passage of time and all contractual limitation periods specified in
this Agreement, if any, will be tolled while the procedures specified
in this Section 29 are pending. The Parties will take all actions to
effectuate necessary to effectuate the tolling of any applicable
statute of limitation or contractual limitation periods. All
deadlines specified herein may be extended by mutual written
agreement of the Parties. Each Party is required to continue to
perform its obligations under this Agreement pending final resolution
of any Dispute, unless to do so would be impossible or impracticable
under the circumstances. Notwithstanding the foregoing, the statute
of limitations of the State of Texas applicable to the commencement
of a lawsuit will apply to the commencement of an arbitration under
this Agreement, except that no defenses will be available based upon
the passage of time during any negotiation or mediation called for by
the preceding Subsections of this Section.
30. HEADINGS, ARTICLES AND SECTIONS. All references to "Articles" and
"Sections" herein pertain to Articles and Sections of this Agreement,
unless expressly stated otherwise. Headings are for purposes of
reference only and shall not be used to construe the meaning of this
Agreement.
31. NO THIRD PARTY BENEFICIARY. This Agreement is for the sole benefit of the
Parties and their respective successors and permitted assigns, and shall
not inure to the benefit of any other person whomsoever, it being the
intention of the Parties that no third person shall be deemed a third
Party beneficiary of this Agreement.
32. RECORDS RETENTION. Each of the Parties hereto agrees to retain all
relevant files and records relating to this Agreement and the storage
and redelivery of Product(s) and Raw Make hereunder for a period of no
less than thirty six (36) Months.
(SIGNATURES ON FOLLOWING PAGE - REMAINING PORTION OF PAGE INTENTIONALLY LEFT
BLANK)
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December 15, 1997
Page 21
Please acknowledge the receipt and acceptance of this agreement by signing
and dating a copy of this agreement in the space provided below and returning
one copy to us for you files. Upon your acceptance, this agreement shall be
in full force and effect.
Very truly yours,
/s/ STEPHEN A. FURBACHER
Stephen A. Furbacher
President
Agreed to and Accepted this
16th Day of December, 1997.
CEDAR BAYOU FRACTIONATORS, L.P.
By: Downstream Energy Ventures Co., L.L.C. Managing General Partner
By: /s/ WILLIAM E. PUCKETT
- ------------------------------------
William E. Puckett
Title: Vice President
------------------------------
SIGNATURE PAGE TO PRODUCT AND RAW MAKE STORAGE
AGREEMENT #84-969 BETWEEN WARREN PETROLEUM
COMPANY, LIMITED PARTNERSHIP AND CEDAR BAYOU
FRACTIONATORS, L.P.
<Page>
'Confidential Treatment Requested'
December 15, 1997
Page 22
EXHIBIT "A"
to
Product and Raw Make Storage Agreement
by and between
Warren Petroleum Company, Limited Partnership,
and
Cedar Bayou Fractionators, L.P.
PRODUCT AND RAW MAKE STORAGE AGREEMENT NO. 84-969
The attached Product and Raw Make Storage Agreement and this Exhibit "A"
shall constitute the mutual agreement of Cedar Bayou Fractionators, L.P.
("CBF") and Warren Petroleum Company, Limited Partnership ("Warren") for CBF
to lease space in the Storage Facility owned and/or controlled by Warren.
1. DEFINITIONS: Capitalized terms used in this Exhibit "A" shall have
the same meanings given to them in the Product and Raw Make
Storage Agreement to which this Exhibit is attached.
2. TERM: This Agreement shall commence as of January 1, 1998, and
shall be coterminous with that certain Limited Partnership
Agreement of Cedar Bayou Fractionators, L.P.
3. PRODUCTS AND Initial Products and Raw Make will be E/P Mix,
RAW MAKE: propane, normal butane, isobutane, natural gasoline,
Y-Grade Raw Product, Back-End Mix and Unfractionated
Products.
4. STORAGE The Facilities
FACILITY:
5. LEASE A. 6,700,000 Barrels of Specification Product Storage;
VOLUME: B. 2,000,000 Barrels of Y-Grade Raw Product Storage (one
well-dedicated service);
C. 2,000,000 Barrels of Back-End Mix Storage (one
well-dedicated service); and
D. 1,000,000 Barrels of Unfractionated Products.
6: STORAGE Initial allocation of the 6,700,000 Barrels of Specification
SPACE Product storage space shall be as follows:
ALLOCATION:
* EP-Mix [REDACTED] Barrels
* Propane [REDACTED] Barrels
22
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* Isobutane [REDACTED] Barrels
* Normal Butane [REDACTED] Barrels
* Natural Gasoline [REDACTED] Barrels
Subject to available capacity at the time, after taking into
consideration third party commitments and Warren's and its
Affiliates' reasonable internal storage requirements, and
subject to the limitation of the Facilities from time to
time, CBF may alter the allocation of its storage space for
Specification Products at the beginning of each calendar
quarter by notifying Warren in writing of such change at
least forty five (45) days prior to the beginning of such
quarter. Warren reserves the right to reject the
allocations requested by CBF based on the limitations of
the Facilities and/or the unavailability of capacity by
notifying CBF in writing of such rejection at least
fifteen (15) days prior to the beginning of such quarter.
7. RECEIPT AND A. Subject to scheduling restrictions and
REDELIVERY facility capabilities, Warren will provide Specification
FEES FOR Product receipt rates at the Facilities from the Cedar
SPECIFICATION Bayou Fractionator as follows:
PRODUCTS AND
RAW PRODUCT PRODUCT RECEIPT RATES
* EP mix [REDACTED] BPD
* Propane [REDACTED] BPD
* Iso Butane [REDACTED] BPD
* Normal Butane [REDACTED] BPD
* Natural Gasoline [REDACTED] BPD
It is understood and agreed that the receipt rates set
forth above may vary at any time and from time to time
by a plus or minus 15%.
Subject to scheduling restrictions and facility
capabilities, Warren will provide redelivery of the
* Specification Products listed above at [REDACTED] of
the actual delivery rates from the Cedar Bayou
* Fractionator to the Facilities or [REDACTED] of the
Receipt Rates set forth above, whichever is lower.
B. Subject to scheduling restrictions and facility
capabilities, Warren will provide Raw Make receipt
rates as follows:
* [REDACTED] BPD for Y-Grade Raw Product;
* [REDACTED] BPD for Back-End Mix; and
* [REDACTED] BPD for Unfractionated Products.
23
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8. LEASE RATE: For the Initial Contract Year the Lease Rate shall be
* [REDACTED] per Year and billed Monthly [REDACTED] per
Month). Each Year thereafter, the rate shall escalate based
on the following formula:
* Lease Fee = [REDACTED] (CPIU/1997 CPIU)
WHERE:
CPIU = The Consumer Price Index for the final Month
of the previous calendar Year
1997 CPIU = The Consumer Price Index for December, 1997
9. EXCESS For all barrels in CBF's account at month-end in excess of
STORAGE: (i) the then current Lease Volume and/or (ii) the allocated
volume of each Product as set forth in 6 above (it being
understood and agreed that CBF shall never be allowed to
store excess Y-Grade Raw Product, Back-End Mix or
Unfractionated Product), CBF will pay an excess storage fee
* of [REDACTED] per Gallon per Month ("Excess Storage Fee")
calculated as follows:
* [REDACTED]
* [REDACTED]
* [REDACTED]
* Only positive numbers can be used in this formula. If
any of V, W, X, Y or Z are negative numbers, substitute zero
instead. Each of V, W, X, Y and Z shall be referred to
hereinafter as "Component Over-storage."
* [REDACTED]
** Only if a positive number; if negative, no excess
storage fee will be payable
WHERE:
TVS = Total Volume Stored at Month-end for each
category of Storage as set forth in 6 above
(i.e. Specification Products, Y-Grade Raw
Product, Back-End Mix and
24
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'Confidential Treatment Requested'
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Page 25
Unfractionated Products)
LV = Lease Volume for each category of Storage as
set forth in 6 above
EPS = EP-Mix Stored at Month-end
AEPV = Allocated Volume of EP-Mix as set forth in 6
above multiplied times 1.25 ***
PS = Propane Stored at Month-end
APV = Allocated Volume of Propane as set forth in 6
above multiplied times 1.25 ***
IS = Isobutane Stored at Month-end
AIV = Allocated Volume of Isobutane as set forth in
6 above multiplied times 1.25 ***
NBS = Normal Butane Stored at Month-end
ANBV = Allocated Volume of Normal Butane as set
forth in 6 above multiplied times 1.25 ***
NGS = Natural Gasoline Stored at Month-end
ANGV = Allocated Volume of Natural Gasoline as set
forth in 6 above multiplied times 1.25 ***
*** Each of AEPV, APV, AIV, ANBV, AND ANGV shall never be
less than 50,000 Barrels. If the formula set forth
above results in zero or less than 50,000, the number
50,000 will be used instead.
Notwithstanding the foregoing, if (i) unused storage
capacity for a particular Product was available during the
relevant time period and (ii) Warren (including its
Affiliates) and Warren's storage customers were not
adversely impacted by CBF's Component Over-storage
attributable to such Product, Warren will waive that
portion of the Excess Storage Fee applicable to such
Product.
*10. RETURN [REDACTED] on barrels originating from the Facilities or
PERCENTAGE: the Cedar Bayou Fractionator. CBF will be responsible for
the actual gain or loss on wells that are in Raw Make
service and are dedicated to CBF.
11. REDELIVERY No charge for redelivery to the following locations: TET,
FEES: Enron, EPC and Diamond. CBF shall have the right to tender
propane (subject to Warren's allocation) into the Dixie
pipeline for and on behalf of CBF's customers for a
* delivery fee of [REDACTED] per Barrel. Such Dixie pipeline
tenders shall be limited to the quantity of propane
produced at the Cedar Bayou Fractionator during the
preceding Month, less any volumes of Propane produced at
the Cedar Bayou Fractionator delivered during the current
Month into barges, tank cars, tank trucks or other
pipelines.
25
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December 15, 1997
Page 26
12. OTHER FEES: CBF will pay Warren Product and Raw Make handling fees
as follows:
1. Loading/unloading of NGL barges will be at a fee of
* [REDACTED] per Gallon. The volume of Products CBF shall
have the right to load into barges will be limited by
type of Product to the volume of each such Product
produced at the Cedar Bayou Fractionator during the
preceding Month less any volumes of Products produced
at the Cedar Bayou Fractionator delivered during the
current Month into tank cars, tank trucks or pipelines.
2. Loading/unloading of NGL trucks or NGL railcars will be
* at a fee of [REDACTED] per Gallon for un-stenched
* Product and/or Raw Make and at a fee of [REDACTED] per
Gallon for stenched Product. The volume of Products CBF
shall have the right to load into NGL trucks and NGL
railcars will be limited by type of Product to the
volume of each such Product produced at the Cedar Bayou
Fractionator during the preceding Month less any
volumes of Products produced at the Cedar Bayou
Fractionator delivered during the current Month into
barges or pipelines.
There will be no volume limit on the Products and Raw Make
unloaded by any method outlined above; provided, however, the
unloading of Products and Raw Make will be subject to
scheduling, well availability, and the then current operating
configurations and capabilities. Specification products
unloaded by NGL trucks, NGL railcars, barges or any other
method will not be maintained as specification products and
will be treated for all purposes hereunder as Unfractionated
Product.
13. PAYMENT As set forth in Section 11 of the Agreement to which this
TERMS: Exhibit is attached.
14. SCHEDULING: CBF shall schedule all movements through Warren's
Product Distribution Group. Delivery orders for CBF's account
will not be honored unless the volume of Product(s) and Raw
Make requested to be redelivered from storage is owned or
controlled by CBF and credited to CBF's Storage Account.
*15. SPECIAL A. At the end of the [REDACTED], the fees for Product and
PROVISIONS: Raw Make receipts, deliveries, excess storage and
barge/rail/truck loading/unloading (other fees) will be
subject to renegotiation to the then current market rates
for the same services at the Facilities.
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December 15, 1997
Page 27
B. This agreement is intended to cover storage and terminal
services required for the Mont Belvieu Fractionator to
* process [REDACTED] Barrels per Day ([REDACTED] Barrels
* per Day Y-Grade Raw Product and [REDACTED] Barrels per
Day of Back-End Mix and Unfractionated Products,
combined) having a composition as existed during 1997.
C. It is understood and agreed that CBF shall not have the
right to deliver Specification Products to the Facilities
other than from the Cedar Bayou Fractionator.
D. It is further understood and agreed that this Agreement
is being entered into to enable CBF to offer the
services set forth above to its fractionation customers
with the understanding that any such services performed
by Warren for the benefit of CBF's customers shall be
charged to CBF as though such services were performed
for CBF's benefit. Notwithstanding the foregoing, CBF
shall not be charged for any services performed by
Warren on behalf of a CBF fractionation customer if
such services are performed by Warren pursuant to a
separate agreement entered into between such customer
and Warren.
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December 15, 1997
Page 28
EXHIBIT "B"
to
Product and Raw Make Storage Agreement
by and between
Warren Petroleum Company, Limited Partnership,
and
Cedar Bayou Fractionators, L.P.
PRODUCT AND RAW MAKE STORAGE AGREEMENT NO. ________
SPECIFICATIONS FOR PRODUCTS
ETHANE-PROPANE
80-20 MIXTURE
SPECIFICATION
Product characteristics with test methods are herein specified for
ethane-propane 80-20 mixtures received by Warren.
<Table>
<Caption>
TEST METHODS
PRODUCT CHARACTERISTICS MINIMUM MAXIMUM LATEST REVISION
- ----------------------- ------- ------- ---------------
1. COMPOSITION ASTM E-260
Percent by Liquid Volume
Methane (Percent of Ethane) 2.0 GPA 2177
Ethylene (Percent of Ethane) 1.0
Methane, Ethane & Ethylene 78.0 82.0
Propane, Propylene, & Butanes 18.0 22.0 ASTM D-2163
Propylene 1.0
Butanes 0.8
2. CORROSION
Copper Strip @ 100 DEG. F 1-b ASTM D-1838
(Invalid if additive or inhibitor
is used.)
Corrosion Additive or Inhibitor,
PPM by Weight 1 Applicable Industry Practices
3. TOTAL SULFUR
PPM by Weight in Liquid 120 ASTM D-3246
4. DRYNESS No Free Water Visual
5. CARBON DIOXIDE
PPM by Weight in Liquid 1,000 GPA 2177
</Table>
PRODUCT ACCOUNTING
For accounting purposes, methane and ethylene shall be considered ethane,
propylene and butanes shall be considered propane within the above listed
specification limits.
Any excess of these hydrocarbon components above the specification limits
shall not be accounted for.
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December 15, 1997
Page 29
PROPANE
SPECIFICATION
Product characteristics with test methods are herein specified for propane
received by Warren. This product meets the requirement of the GPA HD-5
propane specification.
<Table>
<Caption>
TEST METHODS
PRODUCT CHARACTERISTICS MINIMUM MAXIMUM LATEST REVISION
- ----------------------- ------- ------- ---------------
1. COMPOSITION ASTM E-260
Percent by Liquid Volume Ethane As limited by other
components & vapor
pressure.
Propane 90.0 100
Propylene 5.0 ASTM D-2163
Butanes & Heavier 2.5
2. VAPOR PRESSURE
Psig @ 100 DEG. F 208 ASTM D-1267
3. CORROSION
Copper Strip @ 100 DEG. F 1-b ASTM D-1838
(Invalid if additive or inhibitor is
used.)
Corrosion Additive or Inhibitor,
PPM by Weight. 1 Applicable Industry Practices
4. TOTAL SULFUR
PPM by Weight in Liquid 120 ASTM D-3246
5. HYDROGEN SULFIDE
PPM by Weight in Liquid 1 Field - Length of Stain Tube
(Lab test required if field test is Lab Chromatography with
positive.) Flame Photometric Detector
6. CARBONYL SULFIDE
PPM by Weight in Liquid 2 Field - Length of Stain Tube
(Field test invalid if C(4) + exceeds
1.0 LV%) (Lab test required if field test Lab - UOP 212 or UOP 791
is positive.) Lab - Gas Chromatography with
Flame Photometric Detector
7. NON-VOLATILE RESIDUE
a) Milliliters @ 100 DEG. F 0.05 ASTM D-2158
b) Oil Stain Pass
THE FOLLOWING TESTS ARE OPTIONAL, DEPENDING
UPON THE PRODUCT SOURCE:
8. DRYNESS
Freeze Valve, Seconds 60 (Note 2) ASTM D-2713
9. VOLATILE RESIDUE
95% Evaporated - Temperature, DEG. F -37 ASTM D-1837
10. AMMONIA
PPM by Weight in Liquid 1 Field - Length of Stain Tube
Lab - UOP 430
11. FLUORIDES
PPM by Weight in Liquid as 5 Field - Length of Stain Tube
Monatomic Fluorine
12. OTHER DELETERIOUS SUBSTANCES (PPM
BY WEIGHT IN LIQUID)
Includes but not limited to 1 Gas chromatography with flame
(Isoprene, Butadiene, Vinyl ionization or electron capture
Chloride, glycol, amine, caustic) detection or other
</Table>
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December 15, 1997
Page 30
NOTES: (1) The test methods for items 2 and 7 are not necessary if a
compositional analysis is available which indicates compliance with these
requirements.
(2) The addition of methanol in the distribution system should be
on a spot basis and must not exceed a rate of 5 gallons per 10,000 gallons of
product.
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December 15, 1997
Page 31
NORMAL BUTANE
SPECIFICATION
Product Characteristics with test methods are herein specified for
normal butane received by Warren.
<Table>
<Caption>
TEST METHODS
PRODUCT CHARACTERISTICS MINIMUM MAXIMUM LATEST REVISION
- ----------------------- ------- ------- ---------------
1. COMPOSITION ASTM E-260
Percent by Liquid Volume
Isobutane and Lighter 5.0 ASTM D-2163
Butylene (Percent of N. Butane) 1.0
N. Butane & Butylene 95.0 100 GPA 2165
Pentanes & Heavier 2.0
2. VAPOR PRESSURE
Psig @ 100 DEG. F 50 ASTM D-1267
3. CORROSION
Copper Strip @ 100 DEG. F 1-b ASTM D-1838
(Invalid if additive or inhibitor is
used.)
Corrosion Additive or Inhibitor,
PPM by Weight 1 Applicable Industry Practices
4. TOTAL SULFUR
PPM by Weight in Liquid 140 ASTM D-3246
5. VOLATILE RESIDUE
95% Evaporated - Temperature, DEG. F +36 ASTM D-1837
6. DRYNESS No Free Water Visual
</Table>
NOTE: The test methods for Items 2 and 5 are not necessary if a compositional
analysis indicates compliance with these requirements.
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December 15, 1997
Page 32
ISOBUTANE
SPECIFICATION
Product characteristics with test methods are herein specified for
isobutane received by Warren.
<Table>
<Caption>
TEST METHODS
PRODUCT CHARACTERISTICS MINIMUM MAXIMUM LATEST REVISION
- ----------------------- ------- ------- ---------------
1. COMPOSITION ASTM E-260
Percent by Liquid Volume
Propane, Propylene and Lighter 3.0 ASTM D-2163
Isobutane 96.0 100
Butylene, Normal Butane & Heavier 4.0
2. VAPOR PRESSURE
Psig @ 100 DEG. F 62 ASTM D-1267
3. CORROSION
Copper Strip @ 100 DEG. F 1-b ASTM D-1838
(Invalid if additive or inhibitor is
used.)
Corrosion Additive or Inhibitor,
PPM by Weight 1 Applicable Industry Practices
4. TOTAL SULFUR
PPM by Weight in Liquid 140 ASTM D-3246
5. VOLATILE RESIDUE
95% Evaporated - Temperature DEG. F +16 ASTM D-1837
6. DRYNESS No Free Water Visual
</Table>
NOTE: The test methods for Items 2 and 5 are not necessary if an adequate
compositional analysis is available which indicates compliance with these
requirements.
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December 15, 1997
Page 33
NATURAL GASOLINE
SPECIFICATION
Product characteristics with test methods are herein specified for
natural gasoline received by Warren.
<Table>
<Caption>
TEST METHODS
PRODUCT CHARACTERISTICS MINIMUM MAXIMUM LATEST REVISION
- ----------------------- ------- ------- ---------------
1. COMPOSITION ASTM E-260
Percent by Liquid Volume
Butanes & Lighter 3.0 GPA 2165
Pentanes & Heavier 97 100
2. VAPOR PRESSURE
Psi@ 100 DEG. F, Reid 14 ASTM D-323
3. CORROSION
Copper Strip @ 104 DEG. F 1-b ASTM D-130
(Invalid if additive or inhibitor is
used.)
Corrosion Additive or Inhibitor,
PPM 1 Applicable Industry Practices
by Weight.
4. DOCTOR TEST Negative GPA 1138
5. DRYNESS No Free Water Visual
6. COLOR +25 No Color Field White Cup Method
Lab - ASTM D-156
7. DISTILLATION
End Point, DEG. F 375 ASTM D-216
</Table>
NOTE: The test methods for Items 2 and 7 are not necessary if an adequate
compositional analysis is available which indicates compliance with these
requirements.
33
<Page>
DEMETHANIZED RAW PRODUCT
SPECIFICATIONS
WARREN PETROLEUM COMPANY, LIMITED PARTNERSHIP
Product characteristics with test methods are herein specified for any
demethanized raw material of natural gas liquids received by Warren for
delivery into pipeline(s).
<Table>
<Caption>
TEST METHODS
PRODUCT CHARACTERISTICS MINIMUM MAXIMUM LATEST REVISION
- ----------------------- ------- ------- ---------------
1. COMPOSITION ASTM E-260
Percent by Liquid Volume Predominantly
Ethane, Propane, Butanes & Natural Gasoline
(Pentanes & Heavier) GPA 2177
Methane & Ethylene 2.0 of Ethane
Ethylene 1.0 of Ethane
Propylene 5.0 of Propane
Butylene 1.0 of Butanes ASTM D-2163
2. CORROSION
Copper Strip @ 100 DEG. F (Invalid if additive or 1-b ASTM D-1838
inhibitor is used.)
Corrosion Additive or Inhibitor, PPMW 1 Applicable Industry
3. TOTAL SULFUR
PPM by Weight in Liquid 150 ASTM D-3246
4. CARBON DIOXIDE
PPM by Weight in Liquid 1000 GPA 2177
5. DRYNESS No Free Water Visual
6. PENTANES & HEAVIER No Color Visual Using White Cup
Perform the Saybolt color test after weathering Method
sample to 70 DEG. F if white cup indicates possible
color.
COLOR Plus 25
Saybolt No. ASTM D-156
DISTILLATION 375
End Point, DEG. F ASTM D-216
7. VAPOR PRESSURE
Warren reserves the right to limit the amount of product having a vapor pressure above four-hundred (400) psia
at 85 DEG. F delivered at any point for injection into the pipeline to the extent necessary to ensure that the vapor
pressure of the composite stream transported in Chevron's pipeline does not exceed four-hundred (400) psia at
95 DEG. F. Such limitation shall be on a prorata basis as directed by Chevron Pipeline Company. Vapor pressure shall
be determined by ASTM Method D-1267 with an 85 DEG. F constant temperature bath.
8. DELETERIOUS SUBSTANCES (ppmw in liquid)
COS 1
Ammonia 1
Fluorides 1
</Table>
PRODUCT ACCOUNTING
For accounting purposes, methane and ethylene shall be considered ethane,
propylene shall be considered propane, and butylenes shall be considered normal
butane within the above listed specification limits.
Any excess of these hydrocarbon components above the specification limits shall
not be accounted for.
TARIFF SPECIFICATIONS
Products delivered to Warren shall also meet any individual requirements of
Chevron Pipeline Company's published tariff product specifications in effect at
time of delivery if the individual tariff specification is more stringent than
that of Warren.
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December 15, 1997
Page 35
METHANOL
Shippers should reduce methanol levels to the lowest practical level. Injection
rates above the minimum are expensive and wasteful and methanol can destroy
catalyst beds in downstream operations.
35