EXHIBIT 10.13
OPERATING AGREEMENT
THIS AGREEMENT is made and entered into as of the 1st day of January,
2002, by and among SHAMROCK LOGISTICS OPERATIONS, L.P., a Delaware limited
partnership (hereinafter referred to as "OPERATOR") and VALERO PIPELINE COMPANY,
a Delaware corporation ("VALERO") (with Operator and Valero each being referred
to herein as, a "Party" and collectively, the "Parties").
W I T N E S S E T H:
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WHEREAS, Valero leases certain refined product pipeline assets,
terminals, pump stations and associated equipment, facilities and real estate
interests (collectively the "System") pursuant to that certain Pipeline and
Terminal Lease Agreement dated May 25, 2001 by and between Coastal Liquids
Partners, L.P., as lessor and Valero Marketing and Supply Company and Valero
Pipeline Company, collectively as lessee (the "Lease"), a copy of which is
attached hereto as Exhibit A and made a part hereof;
WHEREAS, Valero desires to employ Operator to manage, operate, and
maintain the System; and
WHEREAS, Operator is willing to manage, operate, and maintain the
System under the terms and conditions of this Agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained, it is agreed by and among the Parties hereto as
follows:
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1.1 Valero hereby appoints and employs Operator to manage, operate and
maintain the System for and on behalf of Valero, and acting as Valero's
agent in Valero's name, hereby authorizing and empowering Operator to
do and perform any and all acts and things which Operator shall, in the
exercise of its judgement, and consistent with the standard of care set
forth in Section 2.2 below, know or determine is either necessary or
proper for the management, operation, and maintenance of the System,
subject to the specific limitations herein set forth and subject to the
general authority of Valero as lessee of the System.
1.2 Either Party may terminate this Agreement upon at least thirty (30)
days prior written notice to the other Party. Termination of this
Agreement shall not release or discharge any Party from, or affect a
Party's liabilities and obligations including, without limitation, its
own indemnity obligations under this Agreement relating to the period
prior to such termination.
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SECTION 2
AGREEMENT, DUTIES AND POWERS OF OPERATOR
2.1 During the term of this Agreement, Operator, as agent and as operator
for Valero, shall assume responsibility for the scheduling, operation,
maintenance and repair of the System. Without limiting the generality
of the foregoing and in accordance with Section 2.2 of this Agreement,
Operator shall:
(a) Perform such activities as might be required to schedule,
receive, transport, deliver, and otherwise handle the volume
of refined products tendered for transportation in the System.
(b) Cause to be purchased for and in the name of Valero necessary
materials, supplies, and services for the use and benefit of
the System, as well as incur such expenses and cause Valero to
enter into such commitments as necessary in connection with
the proper operation, maintenance and repair of the System;
provided that any expenditures to be charged to Valero are
subject to the provisions of Section 4 hereof;
(c) Maintain continuous surveillance of the System, and
periodically inspect the System for damage and other unsafe
conditions, report any observed unsafe conditions to Valero
and perform or cause to be performed such repairs to the
System as required;
(d) Provide movement and scheduling services, including
nomination, processing, dispatching, creation and/or
collection of delivery tickets, bills of lading, inventories,
line balances, preparation of gain and loss reports necessary
to properly balance and account for all movements associated
with any portion of the System, and forecasts of volume
requirements to sustain sufficient inventories for the
terminals that are part of the System, including 30-day,
weekly, and daily forecasts;
(e) Monitor daily operations and perform and/or witness meter
calibrations and other means of measurement at regular
intervals to ensure measurement accuracy of the System within
generally accepted industry tolerances and standards. For
those meter calibrations not performed and/or witnessed by
Operator, Operator will use commercially reasonable efforts to
obtain calibration reports from independent third party
inspectors and operators;
(f) Maintain in a manner such that they shall be available for
periodic inspection, all as-built drawings or descriptions of
the System, construction and maintenance records, inspection
and testing records, operating procedures and manuals, custody
transfer documents, and such other records as may be required
by governmental authorities that have proper jurisdiction over
any portion of the System or as may be reasonably
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requested by Valero that are either provided by Valero or
generated by Operator under the terms of this Agreement;
(g) Maintain other suitable and proper records, including
operating records, and file such reports as required by
governmental agencies that have proper jurisdiction over any
portion of the System; and applicable regulations, or as
further set forth in this Agreement;
(h) Respond to emergencies in accordance with the standards sets
forth in Section 2.2 of this Agreement;
(i) Maintain and implement emergency plans as required by
applicable laws and regulations;
(j) Act as coordinator for Valero in contacts with government
agencies relating to the physical operation and maintenance of
the System, as required by applicable laws, regulations,
permit conditions or right-of way agreements including any
"one-call" systems;
(k) Provide, operate, and maintain a telemetry and data
communications system which is functionally equivalent to the
telemetry and data communications systems used by the System
on the date hereof for the safe and efficient use of the SCADA
System;
(l) Maintain, update, or change, as necessary, operating manuals,
monitoring programs, contingency plans, and training programs
that are provided by Valero for the purpose of satisfying or
complying with applicable laws, rules, regulations, and other
requirements of governmental authorities that have proper
jurisdiction over the operation of the System;
(m) Comply in all material respects with Valero's obligations
regarding management, operation, and maintenance of the System
contained in the Lease provided that Operator determines, in
its sole judgment, that such conduct is legally permissible;
and
(n) Any and all other functions and services necessary and/or
appropriate for the safe, efficient, and legally permissible
operation of the System.
2.2 Operator agrees to perform all services hereunder in a manner
consistent with the usual and customary practices, codes, and standards
of a prudent operator in the refined products pipeline industry and in
accordance with valid and applicable laws, rules, and regulations of
any government authorities having proper jurisdiction over any portion
of the System.
2.3 If and to the extent that any fees, tariff revenues, and other income
are received or collected by Operator which are related to the System,
including tariff revenues
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for shipment of refined products across the System and fees associated
with the System's terminal operations, all such fees, tariff revenues,
and other income shall inure to the benefit of and become the property
of Valero. Operator will submit all such fees to Valero immediately
upon receipt thereof.
2.4 Notwithstanding anything in this Agreement to the contrary, Valero
may, at its option except where prohibited by applicable law, rule,
or regulation, participate in any business plan development,
operational planning, and oversight activities related to the
System.
SECTION 3
ADDITIONAL SERVICES OF OPERATOR
3.1 CATHODIC PROTECTION. During the term of this Agreement, Operator will
maintain cathodic protection for the System in accordance with the
standard set forth in Section 2.2 hereof. Such maintenance includes,
but is not limited to, periodic inspection and testing of the cathodic
protection.
3.2 RIGHT OF WAY MAINTENANCE AND FLY OVERS.
(a) During the term of this Agreement, Operator will maintain the
System right of way, including all pump stations and Terminals
along its course. Such maintenance includes, but is not
limited to, mowing, repairing and maintaining signs and
markers, and repairing and maintaining fences.
(b) Lessee shall, in accordance with Section 2.2 hereof, inspect
the surface conditions on or adjacent to the System
right-of-way. Methods of inspection include walking, driving,
flying or other appropriate means of traversing the
right-of-way.
SECTION 4
COMPENSATION OF OPERATOR AND CAPITAL EXPENDITURES
4.1 COMPENSATION OF OPERATOR. For the services to be performed by Operator
and/or its affiliates pursuant to this Agreement, Valero shall pay
Operator as follows:
(a) On or before the 15th day of each calendar month, Operator
will allocate to Valero a monthly cost share for the following
internal support services: (i) pipeline right-of-way
management, (ii) general administrative services, (iii)
pipeline and terminals engineering services, (iv) corrosion
control management, (v) pipeline safety and regulatory
services, (vi) control center management, and (vii) SCADA and
terminal automation services (collectively, the "Internal
Support Services" and individually, a "Internal Support
Service"). The percentage of costs to be allocated to the
System for each Internal Support Service is different. The
formula for determine the percentage for each Internal Support
Service is set forth below:
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(1) For items nos. 4.1(a)(i),(ii), and (iii) generally
described above, the allocated percentage is determined by
dividing (x) the total number of miles of pipeline located
within the System by (y) the total number of miles of
pipeline that have been maintained by Operator during the
same period of time.
(2) For items nos. 4.1(a)(iv), (v), and (vi) generally
described above, the allocated percentage is based on (x)
a good faith estimate of the number of man-hours spent
managing any portion of the System for each Internal
Support Service compared to (y) a good faith estimate of
the number of total man-hours that were expended during
the same time period for the same Internal Support Service
in connection with all pipeline systems maintained by
Operator.
(3) For item no 4.1(a)(vii) generally described above, the
allocated percentage is determined by dividing (x) the
total number of SCADA and terminal automation units
located within the System by (y) the total number of SCADA
and terminal automation units that have been maintained by
Operator during the same period of time. .
(b) For all other out-of-pocket costs including, but not limited
to, materials, equipment rental, support services (including,
without limitation, outside legal, accounting, and
environmental, health, and safety ["EH&S"] fees), utility
costs, repairs made or incurred by Operator according to this
Agreement, expense projects (subject to the provisions of
Section 4.2(a), below), capital projects approved by Valero
and emergency expenditures incurred and paid by Operator
and/or its affiliates in connection with the performance of
its obligations hereunder, Operator shall provide Valero with
supporting documentation for all such costs, expenses, and
liabilities. Operator will invoice Valero by the 15th day of
each calendar month for all such reimbursable costs incurred
by Operator in connection with the System during the preceding
calendar month, and Valero will pay Operator or its designee
within ten (10) days after its receipt of Operator's invoice.
4.2 LIMITATIONS ON EXPENDITURES.
(a) Operator will obtain prior approval for expenditures of
$250,000 or more that Operator considers necessary for the
benefit of the System.
(b) Operator will comply with Valero's Authorization For
Expenditure ("AFE") policy, as such policy may be amended from
time to time. A current copy of the Valero's AFE policy is
attached to this Agreement as Exhibit "B" and made a part
hereof.
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4.3 EMERGENCY EXPENDITURES. In cases of emergency, as such is determined in
Operator's sole discretion, Operator may proceed with expenditures for
required work when such is necessary in Operator's judgement to keep
the System operating, to restore the System to operating condition, or
to eliminate or minimize damage to property or injury to death of
persons, without the necessity of submitting such proposed expenditures
in advance for approval by Valero. In such event, Operator shall, as
soon as practical, notify Valero promptly by telephone, then confirmed
in writing (by facsimile or overnight mail) of the existence or
occurrence of the emergency. Such notice shall set forth the nature of
the emergency, the corrective actions taken, and the estimated cost of
such corrective action.
SECTION 5
INSURANCE
5.1 INSURANCE.
(a) During the entire term of this Agreement, Valero, at its own
cost, shall insure the System against all risks of physical
loss or damage. Valero will have its insurers waive their
rights of subrogation against Operator.
(b) During the entire term of this Agreement, Operator, at its own
cost and expense, shall provide (i) at least $5 Million in
General Comprehensive Liability Insurance coverage in
connection with its operation and maintenance of the System,
and (ii) maintain Workers' Compensation and Occupational
Disease Insurance in accordance with applicable Texas law, to
the same extent Operator insures its own assets of a similar
nature; provided, however, Operator may self-insure itself
against such risks provided it qualifies as a self-insurer
pursuant to the applicable Texas law. Operator will have its
insurers waive their rights of subrogation against Valero.
5.2 INSURANCE REQUIREMENTS FOR CONTRACTORS. Operator shall require all
contractors and subcontractors employed by Operator under this
Agreement to maintain insurance coverage similar in nature and amount
that Operator generally requires such contractors to have for work
performed on its own assets of a similar nature.
Operator will make a reasonable good faith effort as promptly as
practical to obtain from such contractors and subcontractors insurance
certificates showing compliance with Operator's insurance requirements
and to cause their insurers to name Operator and Valero as additional
insured under all policies. Operator will make a reasonable good faith
effort as promptly as practical to cause such contractors and
subcontractors, to the extent permitted under applicable law, to
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have their underwriters or insurers waive subrogation rights against
Operator and Valero.
SECTION 6
INDEMNIFICATION AND CLAIMS
6.1 INDEMNIFICATION BY VALERO. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED
FOR IN SECTIONS 6.2 AND 6.3, BELOW, AND REGARDLESS OF THEORY OR
THEORIES ALLEGED INCLUDING, WITHOUT LIMITATION, NEGLIGENCE (WHETHER
SOLE, JOINT, OR CONCURRENT), STRICT LIABILITY, BREACH, OR VIOLATION OF
LAW, RULE, OR REGULATION OF OR BY OPERATOR OR ANY THIRD PARTY, VALERO
SHALL RELEASE, INDEMNIFY, HOLD HARMLESS, AND DEFEND OPERATOR, ITS
SUBSIDIARIES AND CORPORATE AFFILIATES, AS WELL THE OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, AND REPRESENTATIVES OF OPERATOR, ITS SUBSIDIARIES
AND CORPORATE AFFILIATES (COLLECTIVELY, THE "SLO INDEMNITEES" AND
INDIVIDUALLY, THE "SLO INDEMNITEE"), FROM AND AGAINST ANY AND ALL
DAMAGES (AS DEFINED BELOW) ARISING OUT OF OR IN ANY WAY RELATING TO THE
OPERATION, MAINTENANCE, OWNERSHIP, INSPECTION, TESTING, ALTERATION,
REPLACEMENT, CHANGE IN SIZE OF, REPAIR, EXPANSION, TRANSITION,
ENVIRONMENTAL REMEDIATION, OR MANAGEMENT OF THE SYSTEM TO THE EXTENT
ANY SUCH DAMAGES ARE CAUSED BY (A) THE NEGLIGENCE OR WILLFUL MISCONDUCT
OF VALERO, OR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, AND
REPRESENTATIVES OR (B) ANY FACT, CIRCUMSTANCE, ACTION, OMISSION, OR
CONDITION OCCURRING OR EXISTING AND RELATING TO THE SYSTEM PRIOR TO THE
EFFECTIVE DATE OF THIS AGREEMENT, AS DETERMINED BY EITHER MUTUAL
AGREEMENT OF THE PARTIES OR A FINAL, NON-APPEALABLE JUDGMENT OF A
JUDICIAL BODY HAVING PROPER JURISDICTION OVER THE SUBJECT MATTER IN
QUESTION. FOR PURPOSES OF THIS SECTION 6.1 AND SECTIONS 6.2 AND 6.3,
BELOW, THE TERM "DAMAGES" SHALL MEAN ANY AND ALL (I) OBLIGATIONS, (II)
LIABILITIES, (III) DAMAGES (INCLUDING BUT NOT LIMITED TO, INJURY TO OR
DEATH OF PERSONS AND DAMAGES TO OR DESTRUCTION OR LOSS OF PROPERTY),
(IV) LOSSES, (V) ACTIONS, (VI) SUITS, (VII) CLAIMS, (VIII) JUDGMENTS,
ORDERS, DIRECTIVES, INJUNCTIONS, DECREES, FINES, PENALTIES,
ASSESSMENTS, OR AWARDS OF ANY AUTHORITY, BUREAU, OR AGENCY, AND (IX)
COSTS AND EXPENSES (INCLUDING, BUT NOT LIMITED TO, REASONABLE AND
NECESSARY ATTORNEYS' FEES).
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6.2 INDEMNIFICATION BY OPERATOR. OPERATOR SHALL RELEASE, INDEMNIFY, HOLD
HARMLESS, AND DEFEND VALERO AND ITS SUBSIDIARIES AND CORPORATE
AFFILIATES, AS WELL AS THEIR OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
AND REPRESENTATIVES (COLLECTIVELY, THE "VALERO INDEMNITEES") (UPON
VALERO'S REQUEST) FROM AND AGAINST ANY AND ALL DAMAGES ARISING OUT OF
OR IN ANY WAY RELATING TO THE OPERATION, MAINTENANCE, INSPECTION,
TESTING, ALTERATION, REPLACEMENT, CHANGE IN SIZE OF, REPAIR, EXPANSION,
TRANSITION, ENVIRONMENTAL REMEDIATION OR MANAGEMENT OF THE SYSTEM, TO
THE EXTENT CAUSED BY THE NEGLIGENCE OR WILLFUL MISCONDUCT OF OPERATOR,
ITS EMPLOYEES, AGENTS, CONTRACTORS, REPRESENTATIVES, OR ITS AFFILIATES,
OR ANY EMPLOYEES, AGENTS, CONTRACTORS, OR REPRESENTATIVES OF ITS
AFFILIATES AS DETERMINED BY EITHER MUTUAL AGREEMENT OF THE PARTIES OR A
FINAL, NON-APPEALABLE JUDGMENT OF A JUDICIAL BODY HAVING PROPER
JURISDICTION OVER THE SUBJECT MATTER IN QUESTION. NOTWITHSTANDING
OPERATOR'S INDEMNITY OBLIGATIONS SET FORTH IN THIS SECTION 6.2, UNDER
NO CIRCUMSTANCES SHALL SLO OR ANY SLO INDEMNITEE BE LIABLE TO VALERO OR
ANY THIRD PARTY FOR, AND SHALL BE SPECIFICALLY RELEASED BY VALERO FROM
AND AGAINST, ANY DAMAGES TO THE EXTENT THEY ARE CAUSED BY ANY FACT,
CIRCUMSTANCE, ACTION, OMISSION, OR CONDITION OCCURRING OR EXISTING THAT
(i) RELATES TO OR IS OTHERWISE ASSOCIATED WITH THE OPERATION,
MAINTENANCE, OWNERSHIP, INSPECTION, TESTING, ALTERATION, REPLACEMENT,
CHANGE IN SIZE OF, REPAIR, EXPANSION, TRANSITION, ENVIRONMENTAL
REMEDIATION, OR MANAGEMENT OF THE SYSTEM PRIOR TO THE EFFECTIVE DATE OF
THIS AGREEMENT, AND (ii) WAS CAUSED BY ANY ACT OR OMISSION OF VALERO,
ANY VALERO INDEMNITEE, OR ANY PERSON OR ENTITY THAT OWNED OR OPERATED
ANY PORTION OF THE SYSTEM PRIOR TO THE EFFECTIVE DATE OF THIS
AGREEMENT.
6.3 INDEMNIFICATION BY CONTRACTORS. TO THE SAME EXTENT OPERATOR REQUIRES
CONTRACTORS AND SUBCONTRACTORS TO INDEMNIFY OPERATOR WHILE PERFORMING
WORK ON OR SERVICES FOR ITS OWN PIPELINE AND TERMINALING ASSETS,
OPERATOR SHALL REQUIRE ALL CONTRACTORS AND SUBCONTRACTORS THAT WORK ON
OR PROVIDE SERVICES FOR ANY PORTION OF THE SYSTEM (COLLECTIVELY, THE
"OPERATOR'S CONTRACTORS") TO INDEMNIFY, DEFEND (UPON OPERATOR'S
REQUEST), AND HOLD HARMLESS BOTH OPERATOR,
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ITS EMPLOYEES AND ITS AFFILIATES, AND VALERO AND THE VALERO INDEMNITEES
FROM AND AGAINST ALL DAMAGES TO THE EXTENT CAUSED BY THE NEGLIGENCE OR
WILLFUL MISCONDUCT OF SUCH CONTRACTOR OR SUBCONTRACTOR, OR ONE OF THEIR
RESPECTIVE EMPLOYEES AS DETERMINED BY EITHER MUTUAL AGREEMENT OF THE
AFFECTED PARTIES OR A FINAL, NON-APPEALABLE JUDGMENT OF A JUDICIAL BODY
HAVING PROPER JURISDICTION OVER THE SUBJECT MATTER IN QUESTION. .
SECTION 7
PROPERTY ADMINISTRATION
7.1 Operator, in the name of and as agent for Valero, will perform all
Property Administration (as hereinafter generally defined) necessary
for the operation of the System. If Operator, in its sole discretion,
determines that any part of the Property Administration can be
performed more efficiently and economically by a contract agent,
Operator may employ such contract agent and review such agent's work at
any time and from time to time to ensure that the Property
Administration is performed at a reasonable cost. "Property
Administration" means the acquisition, maintenance and administration
(including, but not limited to, the making of required payments) of all
contracts and grants (including, but not limited to, right of way
agreements, easements, leases, permits, and licenses) concerning
Valero's rights to use or occupy the real property of other parties or
rights granted to other parties (other than Operator or affiliates of
Operator) to use Valero's real property.
SECTION 8
RECORDS
8.1 RECORDS. Valero shall remain responsible and liable for preparing,
filing (where applicable), and maintaining any and all records,
reports, data, manuals, policies, procedures or other materials of any
kind, nature, or format that was required by applicable law, rule, or
regulation for any period of time prior to the effective date of this
Agreement. In the event Operator becomes aware of any records, reports,
data, manuals, policies, procedures or other materials of any kind,
nature, or format that were required by applicable law, rule, or
regulation for any period of time prior to the effective date of this
Agreement that have not been properly prepared, filed or maintained,
Operator will promptly notify Valero of such fact. On a going forward
basis after the effective date of this Agreement, Operator will prepare
and preserve for and in the name of Valero a complete set of operating
records in accordance with the system of accounts prescribed by the
Federal Energy Regulatory Commission ("FERC"), and/or any other federal
or state agency having regulatory jurisdiction over the System, or as
may be reasonably required by Valero. Operator shall furnish all such
information and reports
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regarding the operation or maintenance of the System as might be
reasonably required by Valero or by any federal or state agency having
appropriate jurisdiction over the System. Operator shall provide Valero
the opportunity to remove and retain a copy of such records at any time
during the term of this Agreement or within a reasonable period of time
thereafter.
8.2 PERIODIC REPORTS AND STATEMENTS. On a going forward basis, Operator and
Valero will act diligently and in good faith to jointly prepare,
review, and file with the appropriate regulatory agency, in the name of
Valero, all reports required by applicable law in connection with
environmental, health and safety matters, construction permits, and/or
the ownership and operation of the System (collectively, the
"Regulatory Reports"). Notwithstanding the foregoing, Valero shall be
solely responsible and liable for preparing, reviewing, filing, and
maintaining all Regulatory Reports that were either due to be filed or
were based on the ownership or operation of the System prior to the
effective time of this Agreement. Operator will promptly notify Valero
of any deficiency in the preparation, filing or maintenance of such
reports upon discovery thereof by Operator.
SECTION 9
LAWS AND REGULATIONS
9.1 This Agreement is subject to all present and future valid orders,
rules, and regulations of any regulatory body having proper
jurisdiction over the ownership or operation of the System, and to the
laws of the United States or any states having proper jurisdiction over
the ownership or operation of the System; and in the event this
Agreement or any provision hereof shall be found to be contrary to or
in conflict with any such order, rule, regulation, or law, this
Agreement shall be deemed modified to the extent necessary to comply
with such order, rule, regulation, or law, but only for the period of
time such order, rule, regulation or law is in effect.
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SECTION 10
FORCE MAJEURE
10.1 To the extent that any Party is rendered unable, wholly or in part, by
an event of force majeure (as hereinafter defined) to perform any of
its obligations under this Agreement, it is agreed that such Party upon
giving notice and full particulars of such event of force majeure
(including its known or estimated duration) in writing, or by facsimile
transmission or similar electronic transmission device to the other
Parties, as soon as practicable after the occurrence of the cause
relied on, shall be relieved of its obligations hereunder during the
continuance of the cause of the event of force majeure, but for no
longer period. Such Party shall not be liable to the other Parties for
any losses or damages regardless of the nature thereof and however so
occurring, whether such losses or damages be direct or indirect,
immediate or remote, by reason of an event of force majeure. Such Party
shall use commercially reasonable efforts to mitigate the effects of
such event of force majeure. If an event of force majeure renders a
Party unable, wholly or in part, to carry out its obligations under
this Agreement, the Parties shall determine if any adjustments are
necessary in the charges to be paid as set forth in Section 4 hereof
during the period such Party is unable to perform because of the event
of force majeure.
The term "force majeure" as employed herein shall mean, cover, and
include the following:
(a) Acts of God, including but not limited to, earthquakes,
landslides, floods, washouts, lightning, tornadoes, and
storms;
(b) Acts of Government including but not limited to, imposition of
laws, orders, rules, judgments, judicial actions, and
regulations when conformity thereto directly or indirectly
renders any Party unable to perform any of its obligations
under this Agreement;
(c) Acts of Civil Disorder, including but not limited to, acts of
sabotage, acts of the public enemy or terrorists, acts of war
(declared or undeclared), insurrections, riots, mass protests,
or demonstrations;
(d) Acts or Threats of Industrial Disorders, including but not
limited to, strikes, lockouts and picketing, when such acts or
threats of industrial disorder directly or indirectly render a
Party unable to perform its obligations under this Agreement;
provided, however, that the settlement of labor disputes to
prevent or end any such industrial disorder shall be entirely
within the discretion of such Party that is experiencing or
suffering under such disorder and the above requirement that
such Party use reasonable efforts to mitigate the effects of
an event of force majeure, shall not require settlement of
labor disputes by acceding to the demands
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of the opposing party when such course is inadvisable in the
discretion of the adversely impacted Party;
(e) Shortages of product, equipment, and materials which are
beyond the reasonable control of such Party; and
(f) Any other cause (other than the ability to pay money) beyond
the reasonable control of such Party declaring force majeure.
SECTION 11
CONFIDENTIALITY
11.1 Operator agrees that any information which has been or shall be
disclosed by Valero, directly or indirectly, to Operator, or developed
by Operator, and in either case is supplied or generated in the course
of performing services hereunder (collectively, "Confidential
Information"), shall be maintained in confidence by Operator and shall
be used by Operator only for the purposes of performing the services
described herein. Except where required by applicable law, rule,
regulation, order, judgment, or decree, Operator shall not disclose to
others (other than to Valero or its affiliates or designees unless such
disclosure is likewise restricted or prohibited by applicable law,
rule, regulation, order, judgment, or decree), duplicate, or use in any
manner, except as provided herein, all or any part of any Confidential
Information. Operator shall limit access to such Confidential
Information to those of Operator's employees, agents, contractors, or
other representatives who reasonably require the same to carry out the
purposes of this Agreement. No Confidential Information disclosed to
Operator hereunder shall be passed on to or disclosed by Operator to
any of its corporate affiliates (unless such information pertains
solely to such affiliate) except with the prior written approval of
Valero and the affected shipper on the System. Confidential Information
shall not include any information which is acquired by Operator in the
course of its activities outside of the scope of this Agreement or
which becomes part of the public domain or literature without breach of
this Agreement.
SECTION 12
ACTIONS UPON TERMINATION OF OPERATIONS
12.1 RETURN OF SUPPLIES AND MATERIALS. Upon termination of this Agreement,
Operator shall provide Valero the opportunity to remove and retain all
operating supplies and materials purchased by Operator on Valero's
behalf.
12.2 RETURN OF RECORDS. Upon termination of this Agreement, Operator shall
deliver to Valero, at a location designated by Valero, all records,
data, drawings, and information in Operator's custody that pertain to
the System and the prior operation thereof.
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SECTION 13
NOTICES
13.1 All notices or other communications required or permitted by this
Agreement shall be sufficiently given if in writing (including telex,
fax or telegram) and personally delivered or sent by operator telex or
by registered or certified mail, return receipt requested, as follows:
To Valero, as follows:
Valero Pipeline Company
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Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
With copy of all legal notices to:
Valero Energy Corporation
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Attention: Commercial Law Department
All copies of all invoices to:
Valero Energy Corporation
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Attention: Accounts Payable
To Operator, as follows:
Shamrock Logistics Operations, L.P.
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Attention: President
With a copy to:
Shamrock Logistics Operations, L.P.
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Attention: Legal Department
or to such other address as hereafter shall be furnished as provided in
this Section.
SECTION 14
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ENTIRETY OF AGREEMENTS
14.1 This Agreement, as well as the Lease and AFE policy, constitute the
entire agreement between the Parties with respect to the operation,
maintenance, and management of the System by Operator, and no
modification or amendment hereto shall be binding upon either Party
unless expressly agreed to in writing by all Parties.
SECTION 15
FEDERAL COMPLIANCE
15.1 Insofar as applicable hereto, each Party hereto shall comply with
Executive Order No. 11246, as amended, and the rules and regulations
issued thereunder, to ensure that applicants are employed, and that
employees are treated during employment without regard to their race,
creed, color, sex or national origin. Also, if applicable, each Party
hereto shall comply with all provisions of the Vietnam Era Veterans'
Readjustment Assistance Act of 1974 and the rules and regulations
issued thereunder, including 41 C.F.R., Chapter 60, Part 60-250. Each
Party hereto shall also, if applicable, comply with all provisions of
the Rehabilitation Act of 1973, and the rules and regulations issued
thereunder including 41 C.F.R., Chapter 60, Part 60-740. All acts,
orders, rules and regulations hereinafter referred to are hereby
incorporated by reference unless this Agreement is excepted by
appropriate Federal law, rules, regulations or orders.
SECTION 16
CAPTIONS OR HEADINGS
16.1 The headings appearing at the beginning of each Section and at the
beginning of various subsections are all inserted and included solely
for convenience and shall never be considered or given any effect in
construing this Agreement or any provisions hereof or liabilities of
the respective parties or in ascertaining intent, if any question of
intent should arise.
SECTION 17
ASSIGNABILITY
17.1 The rights, duties and privileges under this Agreement shall not be
assigned by either Party without the prior written consent of the other
Party.
SECTION 18
GOVERNING LAW
18.1 This Agreement shall be construed in accordance with, and governed by,
the laws of the State of Texas without regard to the conflicts-of-laws
rules of Texas.
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SECTION 19
WAIVER
19.1 No waiver by either party of any default of the other Party under this
Agreement shall operate as a waiver of any future default, whether of
like or different character.
SECTION 20
CLAIMS; ALTERNATIVE DISPUTE RESOLUTION
20.1 MEDIATION. If there is ever a controversy, dispute, and claim
(collectively, "Claim") that arises out of, in connection with, or in
relation to the interpretation, performance, nonperformance, validity
or breach of this Agreement, or otherwise arising out of, or in any way
related to, this Agreement, including any claim based in contract,
tort, strict liability, statute, or constitution (collectively, a
"Dispute"), the Party initiating the Claim or Dispute shall first give
notice of the Claim or Dispute to the other Party. Executives (of each
Party) having authority to settle such Claim or Dispute shall then meet
and negotiate to resolve the Claim or Dispute. If such executives fail
to meet or are unable to resolve all issues surrounding the Claim or
Dispute in question within 30 days after the notice from the Party
initiating the Claim or Dispute, the Parties shall endeavor to settle
the matter by mediation. Each Party shall be liable for fifty percent
(50%) of all costs and expense attributed to selecting and retaining a
mediator. All other costs of the mediation shall be borne by the Party
incurring such costs. If the Claim or Dispute has not been resolved by
mediation within 60 days after the mediator has commenced such
mediation, either Party shall be free to pursue arbitration as
specified under Section 20.2, below
20.2 ARBITRATION. Any Claim or Dispute which could not be fully resolved
under the provisions of Section 20.1, above, shall be determined by
arbitration conducted in Houston, Texas, before and in accordance with
the then-existing Rules for Complex Arbitration (the "Rules") of the
American Arbitration Association (the "AAA"), and any judgment rendered
by the arbitrators shall be final, binding and unappealable, and
judgment may be entered by any state or Federal court having
jurisdiction thereof. Valero and Operator shall each select one such
arbitrator, and the two arbitrators so selected shall select the third
arbitrator. Each arbitrator shall sign an oath agreeing to be bound by
the Code of Ethics for Arbitrators in Commercial Disputes promulgated
by the AAA for Neutral Arbitrators. It is the intent of the Parties to
avoid the appearance of impropriety due to bias or partiality on the
part of any arbitrator. Prior to each arbitrator's formal appointment,
such arbitrator shall disclose to the Parties and the other arbitrators
any financial, fiduciary, kinship or other relationship with any Party.
For the purpose of this Section, "appearance of impropriety" shall be
defined as such relationship or behavior as would cause a reasonable
person to believe that bias or partiality on the part of the arbitrator
may exist in favor of any Party. Any award or portion thereof, whether
preliminary or final, shall be in a written opinion
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containing findings of fact and conclusions of law signed by each
arbitrator. The arbitrators shall hear and determine any preliminary
issue of law asserted by a Party to be dispositive of any claim or for
summary judgment, pursuant to such terms and procedures as the
arbitrators deem appropriate. It is the intent of the Parties that,
barring extraordinary circumstances, any arbitration hearing shall be
concluded within two months of the date the statement of claim is
received by the AAA. The arbitrators shall use their best efforts to
issue the final award or awards within a period of 30 days after
closure of the proceedings. Failure to do so shall not be a basis for
challenging the award. The Parties and the arbitrators shall treat all
aspects of the arbitration proceedings, including discovery, testimony,
and other evidence, briefs and the award, as strictly confidential. The
Parties intend that the provisions to arbitrate set forth in this
Section be valid, enforceable and irrevocable. In their award, the
arbitrators shall allocate, in their discretion, among the parties to
the arbitration all costs of the arbitration, including the fees and
expenses of the arbitrators and reasonable attorneys' fees, costs and
expert witness expense of the Parties. In addition, the arbitrators
shall be entitled, if appropriate, to award (i) only actual monetary or
compensatory damages or (ii) specific performance as called for under
the terms of this Agreement. The undersigned agree to comply with any
award made in any such arbitration proceedings that has become final in
accordance with the Rules and agree to the entry of a judgment in any
jurisdiction upon any award rendered in such proceedings becoming final
under the Rules.
IN WITNESS WHEREOF, the parties have executed this agreement effective as of the
date first written above.
SHAMROCK LOGISTICS OPERATIONS, L.P.
By and through its General Partner,
Riverwalk Logistics, G.P.
By and Through its General Partner,
Shamrock Logistics GP, L.L.C.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
President
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VALERO PIPELINE COMPANY
By:/s/ J. R. Bluntzer
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Name: J.R. Bluntzer
Title: Vice President
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