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Exhibit 10.3

 

TERMINALING AND TRANSPORTATION SERVICES AGREEMENT

 

This Terminaling and Transportation Services Agreement (“Agreement”) entered into this 27 th day of May, 2005 (“Effective Date”) is made by and between TransMontaigne Partners L.P. on behalf of itself and its Affiliates (“Owner”), and TransMontaigne Product Services Inc. and Coastal Fuels Marketing, Inc., (“Customer”), sometimes referred to individually as “Party” and collectively as “Parties”.  In consideration of the mutual promises contained in this Agreement, the Parties agree to the following terms and conditions.

 

Section 1.               Definitions.            In this Agreement, unless the context requires otherwise, the terms defined in the preamble have the meanings indicated and the following terms will have the meanings indicated below:

 

“Affiliate” means, in relation to a Party, any Person that (i) directly or indirectly controls such Party; (ii) is directly or indirectly controlled by such Party; or (iii) is directly or indirectly controlled by a Person that directly or indirectly controls such Party.  For this purpose, “control” of any entity or Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of any Person, whether through the ownership of a majority of issued shares or voting power or control in fact of the entity or Person or otherwise.

 

“Applicable Law” means, with respect to any Governmental Authority, (i) any law, statute, regulation, code, ordinance, license, decision, order, writ, injunction, decision, directive, judgment, policy, decree and any judicial or administrative interpretations thereof, (ii) any agreement, concession or arrangement with any other Governmental Authority and (iii) any license, permit or compliance requirement, in each case applicable to either Party and as amended or modified from time to time.

 

“Arrival Notice” has the meaning assigned to such term in Section 4.2 .

 

“Barrel” means 42 U.S. Gallons.

 

“Business Day” means each calendar day, excluding Saturdays, Sundays, or other holidays observed by Owner.

 

“Commencement Date” means May 27, 2005 the date of the closing of Owner’s initial public offering of common units.

 

“Contract Quarter” means a three month period that commences January 1, April 1, July 1, or October 1, and ends March 31, June 30, September 30, or December 31 respectively.

 

“Contract Year” means a period of 365 consecutive days commencing on January 1, 2006 and each successive period of 365 consecutive days during the Term of this Agreement with the exception of any Contract Year in which February has 29 days when the period will be 366 days, except the initial Contract Year which shall begin on the Commencement Date, and end December 31, 2005.

 

“FERC” means the United States Federal Energy Regulatory Commission.

 

“Force Majeure” means (i) strikes, lockouts or other industrial disputes or disturbances, (ii) acts of the public enemy or of belligerents, hostilities or other disorders, wars (declared or undeclared), blockades, thefts, insurrections, riots, civil disturbances or sabotage, (iii) acts of nature, landslides, severe lightning, earthquakes, fires, tornadoes, hurricanes, storms, and warnings for any of the foregoing which may necessitate the precautionary shut-down of pipelines, docks, loading and unloading facilities or the Terminal or other related facilities, floods, washouts, freezing of machinery, equipment, or lines of pipe, inclement weather that necessitates extraordinary measures and expense to construct facilities or maintain operations, tidal waves, perils of the sea and other adverse weather conditions or unusual or abnormal conditions of the sea or other water, (iv) arrests and restraints of or other interference or restrictions imposed by governments (either federal, state, civil or military and whether legal or de facto or purporting to act under some constitutions, decree, law or otherwise), necessity for compliance with any court order, or any law, statue, ordinance, regulation, or order promulgated by a Governmental Authority having or asserting jurisdiction, embargoes or export or import restrictions, expropriation, requisition, confiscation or nationalization, or, (v) epidemics or quarantine, explosions, breakage or accidents to equipment, machinery, plants, facilities or lines of pipe,  electric power shortages, breakdown or injury of vessels or any other causes, whether of the kind enumerated above or otherwise, which were not reasonably foreseeable, and 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, and which continue for a period of thirty (30) consecutive days.  Such term will likewise include, in those instances where either Party is required to obtain servitudes, rights-of-way, grants, permits, or licenses to enable such Party to fulfill its obligations under this Agreement, 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 is required to furnish materials and supplies for the purpose of constructing or maintaining facilities to enable such Party to fulfill its obligations under this Agreement, 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.

 

“Gallon” means a U.S. gallon of 231 cubic inches corrected to 60 degrees Fahrenheit.

 

“Governmental Authority” means any foreign or U.S. federal, state, regional, local or municipal governmental body, agency, instrumentality, board, bureau, commission, department, authority or entity established or controlled by a government or subdivision thereof, including any legislative, administrative or judicial body, or any person purporting to act therefor.

 

“Indemnified Party” has the meaning assigned to such term in Section 18.1 .

 

“Indemnifying Party” has the meaning assigned to such term in Section 18.1 .

 

“Independent Inspector” means a licensed Person who performs sampling, quality analysis and quantity determination of the Products received or delivered.

 

“Interest Rate” means the one-month LIBOR rate.

 

“Liabilities” means any losses, charges, damages, deficiencies, assessments, interests, penalties, costs and expenses of any kind related to or that arise out of this Agreement (including reasonable attorneys’ fees, other fees, court costs and other disbursements), including any Liabilities that directly or indirectly arise out of or are related to any claim, proceeding, judgment, settlement or judicial or administrative order made or commenced by any third party or Governmental Authority related to or that arise out of this Agreement.

 

“Minimum Revenue Commitment” has the meaning set out in Section 3.4 .

 

“Month” means a calendar month.

 

“Product” has the meaning described in Attachments “A” and “B” .

 

“Product Loss” means any loss of Product occurring as a result of any contamination, adulteration, mislabeling, misidentification or other loss of or damage to Product caused by the failure of the Owner to use reasonable industry procedures in the handling, testing or storage of Product.  Product Loss is not the result of loss of or damage to Product (i) associated with Product flushing to eliminate residual particles or other contaminants from pipelines, Tanks, valves or pumps, (ii) associated with circumstances involving Force Majeure, (iii) caused by the act or omission of Customer, (iv) due to normal Product evaporation, shrinkage, line loss, clingage, or tolerance of Product measurement inaccuracies in compliance with federal or state law, or, in the absence of either, industry standards, and shall only be considered if in excess of 0.10% of Product receipts which 0.10% of Product receipts is referred to as “Product Loss Tolerance”, calculated on a terminal by terminal basis, or (v) regrades of Product resulting from commingling of Product in pipelines.

 

“Tank” has the meaning described in Attachment “A” .

 

“Term” has the meaning indicated in Attachment “A” .

 

“Terminal” has the meaning of an applicable Terminal or Terminals described in Attachment “A” .

 

“Third Party” means any entity other than Owner, Customer or their Affiliates.

 

“Third Party Claim” has the meaning assigned to such term in Section 18.3 .

 

“Throughput” shall be all Product delivered from a Terminal or Terminals.

 

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“Vessel” means an ocean-going tanker, barge or inland barge.

 

Section 2.               Service, Statements, Invoices, Documents and Records.

 

2.1            Owner will provide services related to the receipt, storage, throughput, heating, additive and other injection, blending and delivery of Customer’s Product to and from Customer or on behalf of Customer into and out of the Tanks at the Terminal and transportation of Customer’s Product, and provide the facilities reasonably necessary to perform such services and provide such additional services as may be provided under this Agreement and its attachments, for the fees, rates and charges contained in this Agreement.  Those services will be performed in a manner consistent with Owner’s current practices at the Terminal and in compliance with Applicable Law.

 

2.2            As requested by Customer, Owner will transmit to Customer a statement of receipts, deliveries and ending inventory, copies of individual Tank gauging documents, pipeline meter tickets, tank truck loading rack bills of lading, scale tickets, and railroad tank car gauging documents, if any are applicable.  These documents will be transmitted to Customer at the number or other address indicated in Attachment “A” .

 

2.3            Within 15 days following the end of each Month during the Term of this Agreement, Owner will submit to Customer, at the address indicated in Attachment “A,” statements recording the volume of Customer’s Product received into and delivered from the Terminal during the preceding Month, together with an invoice for amounts due for services provided during the preceding Month, as applicable and all as set forth on Attachment “A” .  In case of any conflict between the documents provided to Customer under Section 2.2 and the Monthly statements provided under this Section, the Monthly statements provided under this Section will prevail as to the volume of Product received and delivered by Owner, unless disputed by Customer.

 

2.4            Each Party will maintain a true and correct set of records pertaining to its performance of this Agreement and will retain copies of all such records for a period of not less than two (2) years following termination or cancellation of this Agreement.  Upon reasonable prior notice, a Party or its authorized representative may at its sole cost, during the Term of this Agreement and for the aforesaid two (2) year period, inspect such records of the other Party during normal business hours at the other Party’s place of business.

 

Section 3.               Fees, Charges and Taxes.

 

3.1            Customer will pay Owner for services provided under this Agreement as indicated in Attachment “A” .

 

3.2            All fees and charges reflected in Owner’s invoices are due and payable within 15 Business Days of the receipt of Owner’s invoice.  Payment must be made by electronic wire transfer of same day available Federal funds to Owner’s account and bank, both as indicated on Owner’s invoice.  Invoices may be sent by electronic mail and telephone facsimile. If Customer disputes any portion of an invoice, Customer must pay the undisputed portion of the invoice.  Overdue amounts or disputed amounts that are resolved in favor of the Owner will accrue interest at the Interest Rate from the date that payment is due until paid in full.  The defaulting Party will pay all of the other Party’s costs (including reasonable attorney’s fees and court costs) of collecting past due payments and late payment charges, whether or not suit is brought.

 

3.3            Customer will pay any and all taxes, fees or other charges and assessments, (including any charge or payment in lieu thereof), including inventory, sales taxes on Terminal services and Product ownership taxes, if any, on Customer’s Product and Customer’s property at the Terminal.  Owner shall be responsible for and pay all other applicable taxes levied upon Owner, including any increases in taxes levied on Owner’s Terminal (including real property, personal property of Owner or both) as a result of Customer’s activities at the Terminal that Owner may be required to pay or collect under Applicable Law.

 

3.4            Subject to the terms herein, Owner will transport and throughput an amount of Customer’s Product in the aggregate that will produce revenue to the Owner in an amount at least equal to $5.0 million per Contract Quarter (the “Minimum Revenue Commitment ”).  Any deficiency between the actual charges for services herein and the Minimum Revenue Commitment for a Contract Quarter shall be invoiced and paid in accordance with this Section.  Any such deficiency payment shall be credited against any payments owed by Customer in any of the next succeeding four (4) Calendar Quarters in excess of the respective Minimum Revenue Commitment for such Calendar Quarter.  Should the initial

 

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Calendar Quarter under this Agreement be less than a full calendar three month period, the Minimum Revenue Commitment for that Calendar Quarter shall be proportionately reduced to reflect the actual time period.

 

If Customer is unable for a period of time to transport or throughput the volumes of Product required to meet the Minimum Revenue Commitment as a result of Owner’s operational difficulties, prorationing or difficulties with pipeline connections, then upon written notice by Customer to Owner, the Minimum Revenue Commitment will be reduced proportionately for such period of time of the operational difficulties, prorationing or difficulties with pipeline connections.

 

3.5            Customer agrees not to challenge, protest or file a complaint, or cause, encourage or rec


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