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EXHIBIT 10.56
NATURAL GAS TREATING AND
CONDENSATE HANDLING AGREEMENT
BETWEEN
GALVESTON BAY PROCESSING CORPORATION,
AS "PROCESSOR"
AND
SOUTHERN PRODUCER SERVICES, L.P.,
AS "OWNER"
March 14, 2000
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NATURAL GAS TREATING AND CONDENSATE HANDLING AGREEMENT
THIS NATURAL GAS TREATING AND CONDENSATE HANDLING AGREEMENT (herein
called this "Agreement"), made and entered into as of this 14th day of March,
2000, by and between Galveston Bay Processing Corporation, a Delaware
corporation (herein called "Processor") and Southern Producer Services, L.P.
(herein called "Owner"), a Delaware limited partnership, sets forth the terms
and conditions of the separation, stabilization and handling of liquid
hydrocarbons (herein called "Condensate"), the treating and dehydration of
natural gas (herein called "Gas") for the removal and disposal of CO(2), H(2)S,
water and other impurities (the CO(2), H(2)S, water and other impurities from
such Gas herein, collectively called "By-Products"), to be performed by
Processor at Processor's facility (herein called the "Winnie Facility"), located
at Winnie, Jefferson County, Texas, as more fully described in Exhibit B,
attached hereto and made a part hereof.
WITNESSETH:
WHEREAS, TransTexas Gas Corporation (herein called "TransTexas"), a
Delaware corporation and 100% owner of Processor, and Processor have heretofore
entered into that certain Natural Gas Treating and Condensate handling Agreement
dated as of October 18, 1998, whereby Processor has agreed to separate,
stabilize and handle certain volumes of liquid hydrocarbons of TransTexas and
treat and dehydrate certain volumes of natural Gas of TransTexas;
WHEREAS, TransTexas has heretofore filed for protection under Chapter
11 of the Bankruptcy Code in Case No. 99-21550 in the United States Bankruptcy
Court (herein called the "Court") for the Southern District of Texas (Corpus
Christi Division), entitled "In re: TransTexas Gas Corporation, et. al." (herein
called the "Bankruptcy Case");
WHEREAS, pursuant to the Bankruptcy Case, the Court has issued an order
(herein called the "Bankruptcy Order") granting TransTexas' motion for
permission to (1) sell the Production Payment (as hereinafter defined) and enter
into and deliver to Grantee (as hereinafter defined) the Conveyance (as
hereinafter defined) and other ancillary marketing, transportation and
processing agreements and (2) amend or amend and restate and affirm certain
existing marketing, transportation and processing agreements with third parties
in order to relinquish certain of TransTexas' capacity under such existing
marketing, transportation and processing agreements as is required for Owner to
market, transport and/or process the Production Payment hydrocarbons that Owner
and Fund V (as hereinafter defined) and Fund VI (as hereinafter defined) own or
control and such other volumes of hydrocarbons as Owner shall purchase from
TransTexas or other third parties;
WHEREAS, pursuant to the Bankruptcy Order, TransTexas and Grantee have
entered into that certain Production Payment Conveyance (herein, as from time to
time amended, restated or otherwise modified, called the "Conveyance"), dated as
of March 14, 2000, from and by TransTexas, as grantor, and Owner, TCW Portfolio
No. 15555 DR V Sub-Custody Partnership, L.P. (herein called "Fund V") and TCW DR
VI Investment Partnership, L.P. (herein called "Fund VI") (in such
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capacity, Fund VI together with Owner and Fund V, called the "Grantee"), whereby
TransTexas has granted, bargained, sold, conveyed, assigned, transferred, set
over and delivered to Grantee a term overriding royalty interest (herein called
the "Production Payment") in the Subject Interests (as defined in the Conveyance
and herein so called);
WHEREAS, pursuant to the terms of the Conveyance, production from the
Subject Interests shall be dedicated to the Grantee as (1) at fifty percent
(50%) from March 1, 2000 until 9:00 a.m., Central Time, on September 1, 2000,
(2) at sixty-two percent (62%) from 9:00 a.m., Central Time, on September 1,
2000 until 9:00 a.m., Central Time, on March 1, 2001 and (3) seventy percent
(70%) from and after 9:00 a.m., Central Time, on March 14, 2001 until the
Termination Time (herein called the "Dedication Percentage");
WHEREAS, pursuant to the Bankruptcy Order, TransTexas and Grantee have
entered into that certain Purchase Agreement (as defined in the Purchase
Agreement and herein, as from time to time amended, restated, supplemented or
otherwise modified, called the "Purchase Agreement"), dated as of March 14,
2000, between TransTexas and Grantee and TCW Asset Management Company, as agent
on behalf of Fund V and Fund VI (herein called the "Funds Agent"), whereby
TransTexas has sold the first component of the Production Payment to Grantee
pursuant to the Conveyance, and Grantee has purchased the same from TransTexas;
WHEREAS, the Grantee and Owner have entered into that certain
Production Sales Agreement (as defined in the Purchase Agreement and herein, as
from time to time amended, restated, supplemented or otherwise modified, called
the "Production Sales Agreement"), dated as of March 14, 2000, pursuant to which
Owner has agreed to purchase, and Grantee has agreed to sell, Grantee's interest
in the Production Payment hydrocarbons;
WHEREAS, TransTexas and Owner have entered into those certain
TransTexas Marketing Agreements (as defined in the Purchase Agreement and
herein, as from time to time amended, restated supplemented or otherwise
modified, called the "TransTexas Marketing Agreements"), dated as of March 14,
2000, whereby TransTexas has agreed to sell and Owner has agreed to purchase,
those net volumes of hydrocarbons produced from the Subject Interests that
TransTexas owns, controls or has the right to sell and which have not been made
subject to the Production Payment and Conveyance;
WHEREAS, Owner desires Processor to separate, stabilize and handle all
volumes of Condensate, and dehydrate and treat all volumes of Gas, that Owner
owns or controls and delivers to Processor; and
WHEREAS, Processor agrees, subject to the terms of this Agreement, to
accept all volumes of Condensate and Gas which Owner owns or controls and
delivers to Processor at Processor's Winnie Facility and to cause such
Condensate to be separated, stabilized and handled and to dehydrate and treat
such Gas for benefit of Owner;
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NOW, THEREFORE, in consideration of the premises and mutual covenants
herein set forth, Processor and Owner hereby agree and covenant as follows:
ARTICLE I
DEFINITIONS
1.1 The following terms (whether or not underscored) when used in this
Agreement, including its preamble, recitals, exhibits and schedules
shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
The term "Agreement" is defined in the Preamble.
The term "Agreed Rate" is defined in the Conveyance.
The term "Bankruptcy Case" is defined in the second recital.
The term "Bankruptcy Order" is defined in the third recital.
The term "By-Products" is defined in the preamble.
The term "CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
The term "Condensate" is defined in the preamble.
The term "Conveyance" is defined in the fourth recital.
The term "Court" is defined in the second recital.
The term "Dedication Percentage" is defined in the fifth recital
The term "Eagle Bay Field" is defined in the Purchase Agreement.
The term "Environmental Laws" means all applicable federal, state or
local statutes, laws, ordinances, codes, rules, regulations and
guidelines (including consent decrees and administrative orders)
relating to public health and safety and protection of the environment,
including, without limitation, CERCLA and RCRA.
The term "force majeure" is defined in Section 10.3.
The term "Fund V" is defined in the fourth recital.
The term "Fund VI" is defined in the fourth recital.
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The term "Funds Agent" is defined in the sixth Recital.
The term "Gas" is defined in the Preamble.
The term "Grantee" is defined in the fourth recital.
The term "Grantor" is defined in the fourth recital.
The term "Hazardous Materials" means (a) any "hazardous substance," as
defined by CERCLA; (b) any "hazardous waste," as defined by the
Resource Conservation and Recovery Act, as amended (herein called
"RCRA"); or (c) any pollutant or contaminant or hazardous, dangerous or
toxic chemical, material or substance within the meaning of any other
applicable federal, state or local law, regulation, ordinance or
requirement (including consent decrees and administrative orders)
relating to or imposing liability or standards of conduct concerning
any hazardous, toxic or dangerous waste, substance or material, all as
amended or hereafter amended.
The term "Indemnified Amounts" is defined in Section 7.2.
The term "Indemnified Party" is defined in Section 7.2.
The term "Owner" is defined in the preamble.
The term "Person" means an individual, corporation, partnership,
limited liability company, association, joint stock company, trust or
trustee thereof, estate or executor thereof, unincorporated
organization or joint venture, court or governmental unit or any agency
or subdivision thereof, or any other legally recognizable entity.
The term "Production Payment" is defined in the fourth recital.
The term "Processor" is defined in the preamble.
The term "Production Sales Agreement" is defined in the seventh
recital.
The term "Purchase Agreement" is defined in sixth recital
The term "RCRA" is defined in the definition of the term "Hazardous
Material".
The term "Subject Interests" is defined in the fourth recital.
The term "Termination Time" is defined in the Conveyance.
The term "TransTexas" is defined in the first recital.
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The term "TransTexas Marketing Agreements" is defined in the eighth
recital.
The term "TransTexas Party" means TransTexas, each subsidiary of
TransTexas (including, without limitation, Processor) any Person of
which TransTexas is at the time in question a Subsidiary and any other
Subsidiary of any such Person.
The term "Winnie Facility" is defined in the preamble.
1.2 All references herein to any document or instrument refer to the same
as from time to time amended, supplemented, restated or otherwise
modified.
1.3 Unless the context of this Agreement clearly requires otherwise, (a)
pronouns, wherever used herein, and of whatever gender, shall include
natural persons and corporations and associations of every kind and
character, (b) the singular shall include the plural and the plural
shall include the singular wherever and as often as may be appropriate,
(c) the word "includes" or "including" shall mean "including without
limitation", and (d) the words "hereof", "herein", "hereunder", and
similar terms in this Agreement shall refer to this Agreement as a
whole and not any particular section or article in which such words
appear. The section, article and other headings in this Agreement are
for reference purposes and shall not control or affect the construction
of this Agreement or the interpretation hereof in any respect. Article,
section, subsection, schedule and exhibit references are to this
Agreement unless otherwise specified.
ARTICLE II
TREATING AND DEHYDRATION OF GAS,
SEPARATION AND HANDLING OF CONDENSATE
2.1 Owner has entered or will enter into various agreements relating to the
purchase of Gas and Condensate and the transportation, processing
and/or sales of Gas and Condensate that Owner owns, controls or has the
right to sell. Owner has or will have the right under said agreements
to bring such Gas and Condensate into Processor's facility at Winnie,
Texas (herein called the "Winnie Facility") for separation and
stabilization of such Condensate, the dehydration and treatment of such
Gas and for the removal of By-Products therefrom and to accept
redelivery of such dehydrated and treated Gas into the Centana
Intrastate Pipeline Company's ("CIPCO") pipeline connected to the
Winnie Facility (or such other pipeline as Owner may designate from
time to time), and to accept redelivery of such separated and
stabilized Condensate into the Sun Pipeline Company's (herein called
"Sun") pipeline connected to the Winnie Facility (or such other
pipeline as Owner may designate from time to time).
2.2 Processor agrees to receive daily, subject to all the provisions of
this Agreement, all of the Gas and Condensate that Owner may deliver or
cause to be delivered to the Winnie Facility,
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which Gas and Condensate is produced from the Subject Interests.
Processor shall cause such Condensate to be separated from the
associated Gas and water, stabilized, and stored, if required, on
behalf of Owner, and Processor shall deliver the stabilized Condensate
to Owner, or its designee, at the tailgate of the Winnie Facility at
the interconnection to Sun's pipeline at Meter Stations Number 900, 901
and 902 (or such other pipeline as Owner may designate from time to
time), all subject to Article III hereof. Processor shall also
dehydrate and treat Owner's Gas stream for the removal of water,
hydrogen sulfide and carbon dioxide and deliver such treated Gas to
Owner, or its designee downstream of the tailgate of the Winnie
Facility at the interconnection to CIPCO's pipeline at Meter Stations
Number 77565- 01, 77565-02 and 77567-01 (or such other pipeline as
Owner may designate from time to time), or at other delivery points as
may be mutually agreed to by Processor and Owner from time to time. The
separation, stabilization, dehydration and treatment of said Condensate
and Gas shall be performed by Processor and shall meet the delivery
specifications (including, without limitation, as to chemical
composition, water content, and delivery pressures) set by each of the
pipeline transporters or purchasers currently receiving Owner's volumes
of Gas and Condensate at the tailgate of the Winnie Facility. Processor
shall remove the associated water and By-Products from Owner's
Condensate and Gas and shall dispose of said associated water and
By-Products in accordance with all rules, regulations, and laws as may
be required by any governmental authorities.
2.3 To induce Owner to enter into this Agreement, the Purchase Agreement,
the Conveyance, the TransTexas Marketing Agreements and the Production
Sales Agreement, Processor covenants and agrees that until the
termination of this Agreement, the Purchase Agreement, the Conveyance,
the TransTexas Marketing Agreements and the Production Sales Agreement:
(a) Processor will not cause or permit the Winnie Facility to be
in violation of any Environmental Laws pertaining thereto or
do anything or permit anything to be done which will subject
the Winnie Facility to any remedial obligations under any
Environmental Laws pertaining thereto, and Processor will
promptly notify Owner in writing of any existing, pending or,
threatened investigation or inquiry by any private party or
governmental authority in connection with any Environmental
Laws. Processor will take all steps necessary to determine
that no Hazardous Materials are disposed of or otherwise
released or being released on or to the Winnie Facility in
violation of any Environmental Laws. Processor will not cause
or permit the disposal or other release of any Hazardous
Materials on or to the Winnie Facility in violation of any
Environmental Law and covenants and agrees to remove or
remediate any Hazardous Materials on the Winnie Facility;
(b) Processor will at all times be a corporation validly existing
and in good standing under the laws of its state of
incorporation and duly qualified to do business and in good
standing in the State of Texas;
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(c) Processor will at all times obtain and possess (or cause to be
obtained and possessed) all material consents, permits,
approvals, authorizations and waivers necessary under any
contract, indenture, instrument or agreement binding on or
affecting Processor or the Winnie Facility or under any
provision of law, rule, regulation, order, writ, judgment,
decree, determination or award binding on or affecting the
Processor, in order to permit the performance by Processor of
this Agreement;
(d) Processor will not, without the prior written consent of the
Owner (which consent shall not be unreasonably withheld),
enter into any agreement selling, transferring or encumbering
the Winnie Facility; provided, however, that any such
agreement shall expressly provide that the parties thereto
agree to be bound by all of the terms of this Agreement;
provided further that nothing herein shall be deemed to
prohibit mortgages, security interests or similar encumbrances
on the real or personal property owned by Processor, nor any
exercise of remedies by the mortgagee or secured party
thereunder so long as any mortgage, security agreement or
similar agreement encumbering the Winnie Facility expressly
provides that the parties thereto (and any purchaser at
foreclosure) agree to be bound by all of the terms of this
Agreement;
(e) Processor will file all tax returns which are required to be
filed by it and will pay or provide for the payment before the
same becomes delinquent all taxes due pursuant to such returns
or pursuant to any assessment received by Processor;
(f) Processor will furnish to Owner, promptly upon receipt and in
any event not later than ten (10) days following such receipt,
any information concerning any actions, suits or proceedings
by or before any court, arbitrator or any governmental
commission, board, bureau or other administrative agency
pending or threatened, against Processor, any subsidiary of
Processor or the Winnie Facility that could reasonably be
expected to have a material adverse effect on Processor,
including, without limitation, any foreclosure proceedings;
(g) Processor will cause the Winnie Facility to be maintained and
continuously operated for the dehydration and treatment of
Gas, the stabilization and separation of Condensate, the
removal of By-Products and the disposal of water in a good and
workmanlike manner and in a manner so as to meet the delivery
specifications (including, without limitation, as to chemical
composition, water content, and delivery pressure) set by each
of the current pipeline transporters or purchasers receiving
Owner's volumes of Gas and Condensate at the tailgate of the
Winnie Facility as would a prudent operator, all in accordance
with generally accepted standards and practices, applicable
agreements and in material compliance with all applicable
federal, state and local laws, rules and regulations
(including, without limitation, all Environmental Laws);
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(h) Processor will give prompt notice to the Owner of any default,
including, without limitation, any notice of any default
received by the Processor on or subsequent to the date of this
Agreement, under any instrument or agreement relating to the
Winnie Facility to which the Processor is a party or by which
the Processor is bound, which default could reasonably be
expected to have a material adverse effect on Processor; and
(i) Processor will not sell, transfer or encumber or create any
mortgage, pledge, title retention lien, or other lien,
encumbrance or security interest with respect to any of the
Condensate or Gas of Owner.
ARTICLE III
ALLOCATION OF GAS AND CONDENSATE
3.1 Condensate and Gas shall be allocated to Owner, or Owner's designee, on
the same basis as Owner's ownership portion of the total stream flowing
through the Winnie Facility. Condensate measurement by Sun (or Sun's
successor or permitted assign) will be used by Processor for all
Condensate fees provided for under this Agreement. Owner agrees to
accept Sun's Condensate measurement for the appropriate allocation of
its tailgate Condensate volumes. Gas measured by Tejas Ship Channel,
LLC at the applicable meters will be used by Processor for all Gas fees
provided for under this Agreement; however, Owner agrees to accept
CIPCO's (or CIPCO's successor or permitted assign) Gas measurement for
the appropriate allocation of its tailgate Gas volumes. The pro-rata
volume of water produced as a By-Product of the dehydration and
treatment of Owner's portion of the Gas relative to total volume of
water produced as a By-Product of the dehydration and treatment of the
total stream of Gas flowing through the Winnie Facility as measured by
Processor or Processor's agent at the Winnie Facility, will be used for
the application of disposal fees for such water under this Agreement.
3.2 Should conditions exist at any time that in Processor's reasonable and
prudent judgment, exercised in good faith, create a capacity bottleneck
or unsafe operating situation as to pipeline pressure or any other
operating condition at the Winnie Facility, Processor shall have the
option to request that TransTexas (with a copy of such notice
simultaneously delivered to Owner) restrict the production from
TransTexas' wells. TransTexas agrees that it shall immediately comply,
to the fullest extent reasonably possible, with Processor's request and
restrict production until such time that, in Processor's reasonable and
prudent judgment, exercised in good faith, the capacity bottleneck or
unsafe conditions no longer exist. In the event Owner's Gas and
Condensate is restricted due to capacity bottleneck or unsafe pipeline
pressure, Owner will have the right to take and sell its Gas and
Condensate by whatever means Owner deems prudent. If Owner continues to
deliver all or a portion of its Gas and Condensate to Processor's
Winnie Facility while the facility is experiencing a capacity
bottleneck, subject to and as further clarified in the subsequent
sentences in this
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Section 3.2, Owner will be allocated a pro-rata portion of the capacity
of the facility in the same relationship that Owner's deliverability
bears to the total deliverability of all shippers having the right to
move that production through the Winnie Facility. As of the date
hereof, Schedule 3.2 hereto is a true and correct list of persons
having a right to move production through Processor's Winnie Facility,
which right is based on such persons percentage of ownership or control
of the Eagle Bay Field (as defined in the Purchase Agreement), and the
volumetric allocation of each such person with respect to Gas,
Condensate and produced water. Processor agrees to give priority in
allocating capacity, to the extent permitted by law and applicable
contracts existing prior to March 1, 2000, first to volumes of Gas,
Condensate and water produced from the Subject Interests (as defined in
the Conveyance) and then to volumes of Gas, Condensate and water
produced from wells other than the Subject Interests. Processor further
agrees that any agreement to stabilize, separate, dehydrate or treat
additional volumes of Gas or Condensate at Processor's Winnie Facility
(other than those described on Schedule 3.2 to this Agreement), shall
be of no force and effect unless such agreement is expressly made
subject to the terms of this Section 3.2 concerning the first priority
rights of Owner.
ARTICLE IV
BILLING AND PAYMENT
4.1 On or before the tenth (10th) day of each month, Processor shall tender
to Owner a statement for the actual service rendered (including the
costs of disposal of water produced as a By- Product of dehydration and
treatment of Owner's Gas as referenced in Sec. 5.3 below) during the
preceding month if actual data is available. If actual data is not
available, billing will be on an estimated basis and such estimate will
be adjusted to actual totals on the billing immediately following
receipt of such actual data.
4.2 Owner shall pay Processor by wire transfer, to any banks and accounts
from time to time specified by Seller in writing, no later than the
thirtieth (30th) day of the month following the month in which such
actual services were provided; provided, however, Owner shall not be
required to pay any such invoice earlier than twenty (20) days
following receipt of such invoice, according to instructions on the
invoice.
4.3 Should Owner fail to pay the amount of any bill tendered by Processor
when such amount is due, interest shall accrue thereon until paid, at
the lesser of (i) the then-effective prime rate of interest established
from time to time by Wells Fargo Bank, Houston, Texas, plus five
percent (5%) or (ii) the Agreed Rate, computed on an annualized basis
and compounded monthly, not to exceed the maximum rate of interest
permitted by applicable law.
4.4 In the event of an overbilling error, the amount of such error shall be
adjusted within thirty (30) days after discovery of such error,
provided that the claim of such error was made within two (2) years
from the date such bill was received by Owner.
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4.5 Owner shall have the right to examine during normal business hours, the
books and records of Processor to the extent necessary to verify the
accuracy of any bill tendered for services performed under this
Agreement.
ARTICLE V
RATES FOR SERVICES
5.1 For the Condensate separation, stabilization, storage and distribution
services provided by Processor at its Winnie Facility, Owner shall pay
to Processor a fee of $1.20 per stabilized barrel for Owner's portion
of the Condensate allocation referenced in Articles II and III above
that is actually stabilized, treated and delivered to and accepted by
Owner or Owner's designee.
5.2 For the Gas dehydration and treating performed by Processor at its
Winnie Facility, Owner shall pay Processor a fee of $.175 per Mcf for
Owner's portion of the Gas measured at the applicable meter referenced
in Article III above and actually delivered to and accepted by Owner or
Owner's designee.
5.3 Owner shall pay to Processor a disposal fee of $1.00 per barrel for
Owner's portion of any water produced as a By-Product of the
dehydration and treatment of Owner's Gas and measured and disposed of
by Processor at the Winnie Facility.
ARTICLE VI
TERM
This Agreement shall be effective as of March 1, 2000, and shall remain
in full force and effect for a term equal to the greater of (i) the term of the
Production Payment or (ii) the TransTexas Marketing Agreements.
ARTICLE VII
LIABILITIES AND INDEMNITIES
7.1 Each party shall protect, indemnify and save the other party hereto
harmless from and against all claims, demands and causes of action of
every kind and character for injury to or death of the indemnifying
party's own employees or invitees, and for all damage or loss of
property of indemnifying party's own employees, arising directly or
indirectly out of the performance by the indemnifying party of this
Agreement from any cause, other than injury, death or damage caused by
gross negligence or willful misconduct of the other party. Employees of
contractors or subcontractors of Owner shall be considered invitees of
Owner. Employees of contractors or subcontractors of Processor shall be
considered invitees of Processor.
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Notwithstanding anything herein to the contrary, Owner assumes all risk
and agrees to protect, indemnify and save Processor harmless from and
against all costs, expenses, claims, demands and causes of action for
personal injury, death or property damage, excluding costs, expenses,
claims, demands and causes of action arising directly or indirectly out
of the gross negligence or wilful misconduct of Processor, in
connection with exercise of Owner's rights under Section 10.5.
7.2 In addition to, and without limiting any other rights or remedies which
Owner and each Grantee may have hereunder or under applicable law, the
Processor hereby agrees to indemnify Owner, each Grantee and each of
their respective officers, directors, employees, members, agents and
representative s (herein collectively the "Indemnified Parties" or
individually an "Indemnified Party") and to exonerate, and hold each
Indemnified Party harmless from and against, any and all actions,
causes of action, suits, costs, expenses, damages, losses, claims,
liabilities (including, but not limited to, fines, penalties and
interest) and related costs and expenses (irrespective of whether any
Indemnified Party is a party to the action for which indemnification is
sought), including attorneys' fees and expenses incurred by any
Indemnified Party in enforcing Processor's obligations hereunder (all
of the foregoing being collectively referred to as the "Indemnified
Amounts") awarded against or incurred by any Indemnified Party arising
out of, relating to or as a result of, any one or more of the following
occurring after scheduled deliveries to Processor's Winnie Facility and
prior to redelivery of treated volumes at the tailgate of Processor's
Winnie Facility to Owner or Owner's designee: (i) any Environmental Law
applicable to Processor or any of its properties or the Winnie
Facility, including without limitation, the treatment or disposal of
Hazardous Materials on or at any of the properties owned or operated by
Processor, (ii) the presence, use, release, storage, treatment or
disposal of Hazardous Materials on or at any of the properties owned or
operated by Processor, (iii) any other environmental, health or safety
condition in connection with this Agreement or the Winnie Facility,
(iv) failure to deliver Gas or Condensate which meets the delivery
specifications set by any of Owner's current pipeline transporters or
purchasers receiving volumes at the tailgate of Processor's Winnie
Facility or (v) failure to pay any taxes, governmental charges,
assessments or other costs or expenses applicable to the dehydration
and treatment of Gas and the stabilization and separation of Condensate
delivered by Owner to Processor; provided, however, that (except as
specifically otherwise provided herein) the Processor shall not be
obligated to indemnify any Indemnified Party for any Indemnified Amount
to the extent that a court of competent jurisdiction determines that
such Indemnified Amount resulted from the gross negligence or willful
misconduct of such Indemnified Party; but in no event will this
restrict or limit the obligations undertaken hereunder to the other
Indemnified Parties if such other Indemnified Parties are not jointly,
concurrently or derivatively liable for such gross negligence or
willful misconduct. THE INDEMNITIES BY THE PROCESSOR IN FAVOR OF THE
INDEMNIFIED PARTIES IN THIS SECTION 7.2 SHALL BE APPLICABLE
NOTWITHSTANDING THAT AN INDEMNIFIED AMOUNT OTHERWISE COVERED BY THIS
SECTION 7.2 IS ATTRIBUTABLE TO THE NEGLIGENCE (OTHER THAN GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT) OF AN
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INDEMNIFIED PARTY (WHETHER SUCH NEGLIGENCE IS SOLE, JOINT, CONCURRENT,
ACTIVE OR PASSIVE), ANY PRE-EXISTING CONDITION OR DEFECT OR ANY FORM OF
STRICT LIABILITY.
If any action or proceeding is brought against any Indemnified Party
with respect to which indemnity may be sought from the Processor
pursuant to this Section 7.2, or any Indemnified Party receives notice
from any potential claimant that such Indemnified Party reasonably
believes will result in the commencement against such Indemnified Party
of any such action or proceeding, such Indemnified Party shall, as
promptly as practicable after receiving notice thereof, give notice to
the Processor of the commencement of such action or proceeding or of
the existence of any such claim (and furnish the Processor with copies
of any summons or other legal process received by such Indemnified
Party and other documents and information in the possession of such
Indemnified Party as to the nature and basis of the claim); provided
that no failure to give or delay in giving such notice or such
documents and information shall relieve the Processor from any of its
indemnification obligations hereunder.
Any amount payable under the indemnification provisions of this Section
7.2 shall be paid by the Processor to Owner for the account of the
appropriate Indemnified Party within thirty (30) days following such
Indemnified Party's demand therefor given in writing to the Processor
with a copy to Owner. The obligations of the Processor to indemnify the
Indemnified Parties pursuant to this Section 7.2 shall survive the
termination of this Agreement.
7.3 Processor agrees with Owner that Gas and Condensate delivered hereunder
by Owner is delivered as is and without any representations or
warranties of any kind. Processor further agrees with Owner that Owner
and each of its respective officers, directors, employees, members,
agents and representatives shall not be liable to any TransTexas Party
for any costs, expenses, damages, losses, claims, liabilities
(including, but not limited to, attorney's fees, fines, penalties and
interest) of any kind arising from or in any way related to (including,
without limitation, failure to deliver Gas or Condensate and delivery
of Gas or Condensate which fails to meet any specification of
Processor) the delivery of or stabilization, dehydration, treatment or
separation of, Owner's Gas or Condensate at Processor's Winnie
Facility.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
8.1 The Processor is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, is duly
qualified to do business and is in good standing under the laws of the
State of Texas and in each other state where its failure to be so
qualified or in good standing would have a material adverse effect on
its ability to perform its obligations hereunder or to make any payment
required hereunder and the Processor has the
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corporate power to enter into and perform this Agreement and to perform
its obligations hereunder.
8.2 The making and performance by the Processor of this Agreement have been
duly authorized by all necessary corporate action and will not (a)
violate any provision of its certificate of incorporation or by-laws,
or any provision of law applicable to the Processor or by which it or
its property may be bound, (b) result in the breach of or constitute a
default or require any consent (other than any consent previously
obtained) under, or result in the creation of any security interest,
lien, charge or encumbrance upon any property or assets of the
Processor pursuant to any indenture, agreement or instrument to which
the Processor is a party or by which the Processor's property or
business is bound, which breach, default or lack of consent could have
a material adverse effect on the Processor's ability to perform its
obligations hereunder or (c) require any license, consent or approval
of any governmental agency or regulatory authority, other than
licenses, consents and approvals that have previously been obtained.
This Agreement has been duly executed and delivered by the Processor
and constitutes its legal, valid and binding obligation, enforceable in
accordance with its terms, except as such enforceability may be limited
by (a) bankruptcy, insolvency, reorganization, moratorium or similar
laws of general applicability affecting the enforcement of creditor's
rights and (b) the application of general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
8.3 The Owner is a limited partnership duly organized, validly existing and
in good standing under the laws of the State of Delaware, is duly
qualified to do business and is in good standing under the laws of the
State of Texas as a foreign limited partnership and in each other state
where its failure to be so qualified or in good standing would have a
material adverse effect on its ability to perform its obligations
hereunder or to make any payment required hereunder and the Owner has
the partnership power to enter into and perform this Agreement and to
perform its obligations hereunder.
8.4 The making and performance by the Owner of this Agreement have been
duly authorized by all necessary partnership action and will not (a)
violate any provision of its certificate of limited partnership,
partnership agreement, or any other document chartering Owner or
governing its business activities, or any provision of law applicable
to the Owner or by which it or its property may be bound, (b) result in
the breach of or constitute a default or require any consent (other
than any consent previously obtained) under, or result in the creation
of any security interest, lien, charge or encumbrance upon any property
or assets of the Owner pursuant to any indenture, agreement or
instrument to which the Owner is a party or by which the Owner's
property or business is bound, which breach, default or lack of consent
would have a material adverse effect on the Owner's ability to perform
its obligations hereunder or (c) require any license, consent or
approval of any governmental agency or regulatory authority, other than
licenses, consents and approvals that have previously been obtained.
This Agreement has been duly executed and delivered by the Owner and
constitutes its legal, valid and binding obligation, enforceable in
accordance with its terms,
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except as such enforceability may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium or similar laws of general
applicability affecting the enforcement of creditor's rights and (b)
the application of general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
8.5 Attached hereto as Exhibit B are true and correct meets and bounds
descriptions for the Winnie Facility.
ARTICLE IX
NOTICES
All notices, requests, statements, or other communications provided for
(other than billing invoices) shall be in writing and shall be deemed to have
been properly served when sent by mail or telecopy to the address of the parties
hereto, which are as follows:
PROCESSOR
All Notices: Galveston Bay Processing Corporation
1300 North Sam Houston Parkway East, Suite 340
Houston, Texas 77032-2949
Attention: Contract Administration
Telephone: (281) 987-8600
Facsimile: (281) 986-8840
OWNER
All Notices: Southern Producer Services, L.P.
1200 Smith Street, Suite 2890
Houston, Texas 77002
Attention: David W. Stewart
Telephone: (713) 276-1902
Facsimile: (713) 276-1990
Either party may change the above address upon written notification to
the other party.
ARTICLE X
MISCELLANEOUS
10.1 THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO THE PRINCIPLES OF
CONFLICT OF LAWS.
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10.2 This Agreement shall inure to and be binding upon the successors and
assigns of the assigning Parties. The rights of Owner under this
Agreement may be transferred or assigned in whole or in part, but any
such transfer or assignment shall be expressly made subject to the
provisions of this Agreement; provided, however, that (a) no such
transfer or assignment shall be binding on Processor until the Owner
has provided to Processor a copy of the fully executed instrument of
transfer; (b) any such assignee shall agree in writing to be bound by
the terms and conditions hereof; and (c) such transfer or assignment
shall relieve the Owner of responsibility and liability for any
obligations and liabilities arising under the terms of this Agreement
after the effective date of the transfer.
10.3 The term "force majeure", as employed herein, shall mean acts of God;
strikes, lockouts or other industrial disturbances; acts of the public
enemy, wars, blockades, insurrections, civil disturbances and riots,
and epidemics; landslides, lightning, earthquakes, fires, storms,
hurricanes and threats of hurricanes, floods and washouts; arrests,
orders, requests, directives, restraints and requirements of the
government and governmental agencies, either federal or state, civil
and military; any application of governmental conservation or
curtailment rules and regulations; outages (including, without
limitation, planned or unplanned shutdowns) or failure with respect to
any third party transporting or processing Gas and/or Condensate for
Owner or purchasing Gas and/or Condensate from Owner if caused by an
event of force majeure with respect to such third party; explosions,
breakage or failure of machinery, equipment or lines of pipe; outages
(including, without limitation, planned or unplanned shutdowns) of
equipment, machinery or lines of pipe for inspection, maintenance or
repair; freezing of wells or lines of pipe; premature, partial or
entire failure of natural Gas wells, Gas supply or depletion of Gas
reserves; any of the foregoing events or circumstances to the extent
such event or circumstance affects Processor's treating plant, if any;
and other causes of a similar nature not reasonably within the control
of the party claiming suspension. Force majeure shall likewise include
(a) in those instances where either party hereto is required to obtain
servitudes, right-of-way grants, permits or licenses to enable such
party to fulfill its obligations hereunder, the inability of such party
to acquire, or the delays on the part of such party in acquiring, at
reasonable cost and after the exercise of reasonable diligence, such
servitudes, right-of-way grants, permits or licenses; and (b) in those
instances where either party hereto is required to furnish materials
and supplies for the purpose of constructing or maintaining facilities
or is required to secure permits or permissions from any governmental
agency to enable such party to fulfill its obligations hereunder, the
inability of such party to acquire or the delays on the part of such
party in acquiring, at reasonable cost and after the exercise of
reasonable diligence, such materials and supplies, permits and
permissions.
10.4 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 the above-requirement of the use of diligence in
restoring normal operating conditions shall not require the settlement
of strikes or lockouts by acceding to the terms of the opposing party
when such course is inadvisable in the discretion of the party having
the difficulty.
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10.5 Owner or its designee shall have access to Processor's facilities, upon
at least 24 hours prior notice to Processor when such notice is
practicable, to examine all pertinent equipment utilized in connection
with Processor's operations at its Winnie Facility.
10.6 This Agreement contains the entire agreement between the parties with
respect to the subject matter hereof, and there are no agreements,
modifications, conditions or understandings, oral or written, expressed
or implied, pertaining to the subject matter hereof which are not
contained therein.
10.7 The Parties stipulate and agree that this Agreement shall be deemed and
considered for all purposes as prepared through the joint effort of the
Parties and shall not be construed against one Party or the other as a
result of the preparation, submittal or other event of negotiation,
drafting or execution hereof.
10.8 Modifications of this Agreement shall be or become effective only upon
the due and mutual execution of appropriate supplemental agreements or
amendments hereto by duly authorized representatives of the respective
Parties.
10.9 The headings and subheadings contained in this Agreement are used
solely for convenience and do not constitute a part of the Agreement
between the Parties nor should they be used to aid in any manner in
construing this Agreement.
10.10 ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION
WITH, THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF OWNER OR THE
PROCESSOR MAY BE BROUGHT AND MAINTAINED IN THE COURTS OF THE STATE OF
TEXAS OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT
OF TEXAS; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST
ANY PROPERTY MAY BE BROUGHT, AT OWNER'S OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE SUCH PROPERTY MAY BE FOUND. THE PROCESSOR HEREBY
EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF
THE STATE OF TEXAS AND OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF TEXAS FOR THE PURPOSE OF ANY SUCH LITIGATION AS
SET FORTH ABOVE. THE PROCESSOR FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF TEXAS. THE PROCESSOR HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE
LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT
REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN
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INCONVENIENT FORUM. TO THE EXTENT THAT THE PROCESSOR HAS OR HEREAFTER
MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY
LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO
JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO
ITSELF OR ITS PROPERTY, THE PROCESSOR HEREBY IRREVOCABLY WAIVES SUCH
IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT.
10.11 PROCESSOR, OWNER AND EACH INDEMNIFIED PARTY HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
OWNER, THE INDEMNIFIED PARTY OR THE PROCESSOR. EACH OF THE PROCESSOR,
THE INDEMNIFIED PARTY AND OWNER ACKNOWLEDGES AND AGREES THAT IT HAS
RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT
THIS PROVISION IS A MATERIAL INDUCEMENT FOR SUCH PARTY'S ENTERING INTO
THIS AGREEMENT AND THE TRANSTEXAS MARKETING AGREEMENTS.
10.12 This Agreement may be executed in any number of counterparts and by
different parties hereto on separate counterparts, each of which when
so executed and delivered shall be deemed to be an original, but all of
which shall together constitute one and the same instrument. Any
signature delivered by a party by facsimile transmission shall be
deemed to be an original hereto.
10.13 The terms and provisions of this Agreement shall be deemed to be
covenants running with the land and shall be binding upon and inure to
the benefit of the parties and their respective successors and assigns,
including, without limitation, all subsequent owners of all or any
portion of the Winnie Facility.
[Signature pages follow]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the date first written above.
GALVESTON BAY PROCESSING SOUTHERN PRODUCER SERVICES, L.P.
CORPORATION
By: SC Ashwood Holdings, Inc., as
general partner
By: By:
------------------------------- -------------------------------
Name: Name: Dave W. Stewart
Title: Title: Vice President
ACKNOWLEDGED AND AGREED TO:
TRANSTEXAS GAS CORPORATION
By:
-------------------------------
Name: Ed Donahue
Title: Vice President
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STATE OF TEXAS )
)
COUNTY OF _______ )
The foregoing instrument was acknowledged before me on this ____ day of
_____________, 2000, by __________________, the ____________________ of
GALVESTON BAY PROCESSING CORPORATION, a Delaware corporation, on behalf of such
corporation.
Witness my hand and official seal.
-----------------------------------
Notary Public
Residing at _________ County, Texas
My commission expires:
- -----------------------------------
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STATE OF TEXAS )
)
COUNTY OF ________ )
The foregoing instrument was acknowledged before me on this ____ day of
_____________, 2000, by David W. Stewart, the Vice President of SC Ashwood
Holdings, Inc., a Delaware corporation, the general partner of Southern
Producers Services, L.P., on behalf of such corporation.
Witness my hand and official seal.
-----------------------------------
Notary Public
Residing at _________ County, Texas
My commission expires:
- -----------------------------------
S-3
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STATE OF TEXAS )
)
COUNTY OF ________ )
The foregoing instrument was acknowledged before me on this ____ day of
_____________, 2000, by Ed Donahue, the Vice President of TransTexas Gas
Corporation, a Delaware corporation, on behalf of such corporation.
Witness my hand and official seal.
-----------------------------------
Notary Public
Residing at _________ County, Texas
My commission expires:
- -----------------------------------
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