Exhibit 10.3

EXECUTION VERSION

 

 

 

OPERATION AND MANAGEMENT

SERVICES AND SECONDMENT AGREEMENT

 

 

 

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TABLE OF CONTENTS

 

Article 1

    

Definitions and Construction.

     1   

Article 2

    

Term.

     7   

Article 3

    

Personnel, Personnel Duties and Company Services.

     9   

Article 4

    

Self-Provided Services and Shared Items.

     12   

Article 5

    

Pricing, Billing and Reimbursement.

     12   

Article 6

    

Fee Adjustments.

     14   

Article 7

    

Access and Audit Rights.

     14   

Article 8

    

Additional Covenants.

     15   

Article 9

    

Representations.

     16   

Article 10

    

Insurance.

     16   

Article 11

    

Force Majeure.

     17   

Article 12

    

Services Council.

     17   

Article 13

    

Event of Default: Remedies Upon Event of Default.

     17   

Article 14

    

Indemnification.

     18   

Article 15

    

Limitation on Damages.

     20   

Article 16

    

Confidentiality.

     20   

Article 17

    

Choice of Law.

     21   

Article 18

    

Assignment.

     22   

Article 19

    

Notices.

     22   

Article 20

    

No Waiver; Cumulative Remedies.

     23   

Article 21

    

Nature of Transaction, Relationship of Parties and Regulatory Status.

     23   

Article 22

    

Dispute Resolution.

     24   

Article 23

    

General.

     25   

 

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Exhibit A

    

Stormwater Discharge and Wastewater Treatment

Exhibit B

    

Steam

Exhibit C

    

Potable Water

Exhibit D

    

Roads and Grounds

Exhibit E

    

Sanitary Sewer

Exhibit F

    

Electrical Power

Exhibit G

    

Emergency Response

Exhibit H

    

Filter Press

Exhibit I

    

Fuel Gas

Exhibit J

    

API Solids

Exhibit K

    

Fire Water

Exhibit L

    

Instrument/Compressed Air

Exhibit M

    

Rail Operations and Unloading

 

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OPERATION AND MANAGEMENT SERVICES AND SECONDMENT AGREEMENT

THIS OPERATION AND MANAGEMENT SERVICES AND SECONDMENT AGREEMENT (this
“Agreement”), dated as of May 14, 2014 (the “Commencement Date”), is made by and
among PBF Holding Company LLC, a Delaware limited liability company (the
“Company”), Delaware City Refining Company LLC, a Delaware limited liability
company (“Delaware City Refining”), Toledo Refining Company LLC, a Delaware
limited liability company (“Toledo Refining” and, together with Delaware City
Refining, the “Company Subsidiaries,” and together with the Company,
collectively, the “Company Parties”), PBF Logistics GP LLC, a Delaware limited
liability company (the “General Partner”), PBF Logistics LP, a Delaware limited
partnership (the “Operator”), and Delaware City Terminaling Company LLC, a
Delaware limited liability company (the “Operator Subsidiary” and, together with
the General Partner and Operator, collectively, the “Operator Parties”). The
Company, the Company Subsidiaries, the General Partner, the Operator and the
Operator Subsidiary may be referred to herein individually as “Party” or
collectively as the “Parties.”

RECITALS

WHEREAS, the Operator Parties own or lease the Terminal;

WHEREAS, the Company Parties own and operate the Refinery;

WHEREAS, the Operator Parties have agreed to provide logistics and terminaling
services to the Company Parties pursuant to the terms of the Delaware City Rail
Terminaling Services Agreement and the Toledo Truck Unloading & Terminaling
Agreement, each of which has been entered concurrently herewith;

WHEREAS, the Company Parties have experience and expertise in the operation and
maintenance of the Delaware City Rail Terminal and the Toledo Truck Terminal and
can provide or make available to the Operator Parties the personnel necessary to
operate and maintain the Delaware City Rail Terminal and the Toledo Truck
Terminal; and

WHEREAS, the Operator Parties desire that the Company Parties provide and make
available to the Operator Parties the personnel necessary to provide the
logistics and terminaling services.

NOW, THEREFORE, in consideration of the premises and the respective promises,
conditions, terms and agreements contained herein, and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Parties do hereby agree as follows:

 

Article 1 Definitions and Construction.

Section 1.1 Definitions. For purposes of this Agreement, including the foregoing
recitals, the following terms shall have the meanings indicated below:

“Affiliate” means, with respect to a specified Person, any other Person
controlling, controlled by or under common control with that first Person. As
used in this definition, the term “control” includes (a) with respect to any
Person having voting securities or the equivalent and

 

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elected directors, managers or Persons performing similar functions, the
ownership of or power to vote, directly or indirectly, voting securities or the
equivalent representing 50% or more of the power to vote in the election of
directors, managers or Persons performing similar functions, (b) ownership of
50% or more of the equity or equivalent interest in any Person and (c) the
ability to direct the business and affairs of any Person by acting as a general
partner, manager or otherwise. Notwithstanding the foregoing, for purposes of
this Agreement, each of the Company Parties, on the one hand, and each of the
Operator Parties, on the other hand, shall not be considered Affiliates of each
other.

“Agreement” has the meaning specified in the preamble to this document.

“Ancillary Company Services” has the meaning specified in Section 3.5.

“Annual Fee” has the meaning specified in Section 5.2.

“Applicable Law” means any applicable statute, law, regulation, Environmental
Law, ordinance, rule, judgment, rule of law, order, decree, permit, approval,
concession, grant, franchise, license, agreement, requirement, or other
governmental restriction or any similar form of decision of, or any provision or
condition of any permit, license or other operating authorization issued under
any of the foregoing by, or any determination by, any Governmental Authority
having or asserting jurisdiction over the matter or matters in question, whether
now or hereafter in effect and in each case as amended (including all of the
terms and provisions of the applicable common law of such Governmental
Authority), as interpreted and enforced at the time in question.

“Arbitrable Dispute” means any and all disputes, controversies and other matters
in question between the Operator Parties, on the one hand, and the Company
Parties, on the other hand, arising under or in connection with this Agreement,
which cannot be resolved by the Services Council within thirty (30) days (unless
a longer duration is otherwise agreed to) from being submitted to the Services
Council.

“Barrel” means forty-two (42) net U.S. gallons, measured at 60° F and 1
atmospheric pressure.

“bpd” means barrels per day.

“Business Day” means any day that is not a Saturday, Sunday, or other day on
which banks are authorized or required to close in the State of New York, State
of New Jersey, State of Ohio or the State of Delaware.

“Capital Expenditure” means any expenditure incurred to acquire or upgrade a
fixed asset.

“Claimant” has the meaning specified in Article 22.

“Commencement Date” has the meaning specified in the preamble of this Agreement.

“Company” has the meaning specified in the preamble to this Agreement.

 

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“Company Parties” has the meaning specified in the preamble of this Agreement.

“Company Services” has the meaning specified in Section 3.4.

“Company Subsidiaries” has the meaning specified in the preamble of this
Agreement.

“Company Indemnitees” has the meaning specified in Section 14.1.

“Confidential Information” means all information, documents, records and data
(including this Agreement, except to the extent required to be made public in a
filing with the Securities and Exchange Commission or another Governmental
Authority or pursuant to the rules and regulations of any national securities
exchange) that a Party furnishes or otherwise discloses to the other Party
(including any such items furnished prior to the execution of this Agreement),
together with all analyses, compilations, studies, memoranda, notes or other
documents, records or data (in whatever form maintained, whether documentary,
computer or other electronic storage or otherwise) prepared by the receiving
Party which contain or otherwise reflect or are generated from such information,
documents, records and data; provided, however, that the term “Confidential
Information” does not include any information that (a) at the time of disclosure
or thereafter is or becomes generally available to or known by the public (other
than as a result of a disclosure by the receiving Party), (b) is developed by
the receiving Party without reliance on any Confidential Information or (c) is
or was available to the receiving Party on a nonconfidential basis from a source
other than the disclosing Party that, insofar as is known to the receiving Party
after reasonable inquiry, is not prohibited from transmitting the information to
the recipient by a contractual, legal or fiduciary obligation to the disclosing
Party.

“control” (including with correlative meaning, the term “controlled by”) means,
as used with respect to any Person, the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise.

“Counterparty” means, with respect to any of the Company Parties, the Operator,
and with respect to any of the Operator Parties, the Company.

“Defaulting Party” has the meaning specified in Section 13.2.

“Delaware City Rail Terminal” means the double-loop rail terminal located in
Delaware City, Delaware (together with existing or future modifications or
additions) owned and operated by Delaware City Terminaling Company LLC.

“Delaware City Rail Terminaling Services Agreement” means the Delaware City Rail
Terminaling Services Agreement, dated as of the date hereof, by and between the
Company and the Operator Subsidiary.

“Delaware City Refinery” means the petroleum refinery located in Delaware City,
Delaware owned and operated by Delaware City Refining.

“Delaware City Refining” has the meaning specified in the preamble of this
Agreement.

 

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“Environmental Law” means all federal, state, and local laws, statutes, rules,
regulations, orders, judgments, ordinances, codes, injunctions, decrees,
Environmental Permits and other legally enforceable requirements and rules of
common law now or hereafter in effect, relating to pollution or protection of
human health and the environment, safety, and occupational health, including the
federal Comprehensive Environmental Response, Compensation, and Liability Act,
the Superfund Amendments Reauthorization Act, the Resource Conservation and
Recovery Act, the Clean Air Act, the Federal Water Pollution Control Act, the
Toxic Substances Control Act, the Oil Pollution Act, the Clean Water Act, the
Safe Drinking Water Act, the Hazardous Materials Transportation Act, OSHA, and
other similar federal, state or local health and safety, and environmental
conservation and protection laws.

“Environmental Permit” means any permit, approval, identification number,
license, registration, consent, exemption, variance or other authorization
required under or issued pursuant to any applicable Environmental Law.

“Event of Default” has the meaning specified in Section 13.1.

“Force Majeure” means acts of God, strikes, lockouts or other industrial
disturbances, acts of a public enemy, wars, terrorism, blockades, insurrections,
riots, storms, floods, interruptions in the ability to have safe passage in
navigable waterways or rail lines, washouts, other interruptions caused by acts
of nature or the environment, arrests, the order of any court or Governmental
Authority claiming or having jurisdiction while the same is in force and effect,
civil disturbances, explosions, fires, leaks, releases, breakage, accident to
machinery, vessels, storage tanks or lines of pipe or rail lines, inability to
obtain or unavoidable delay in obtaining material or equipment, inability to
obtain or distribute crude oil, feedstocks, other products or materials
necessary for operation because of a failure of third-party pipelines or rail
lines or any other causes whether of the kind herein enumerated or otherwise not
reasonably within the control of the Party claiming suspension and which by the
exercise of commercially reasonable efforts such Party is unable to prevent or
overcome; provided, however, a Party’s inability to perform its economic
obligations hereunder shall not constitute an event of Force Majeure.

“Force Majeure Notice” has the meaning specified in Section 11.1.

“Force Majeure Party” has the meaning specified in Section 11.1.

“General Partner” has the meaning specified in the preamble of this Agreement.

“Governmental Authority” means any federal, state, local or foreign government
or any provincial, departmental or other political subdivision thereof, or any
entity, body or authority exercising executive, legislative, judicial,
regulatory, administrative or other governmental functions or any court,
department, commission, board, bureau, agency, instrumentality or administrative
body of any of the foregoing.

“Liabilities” means any losses, liabilities, charges, damages, deficiencies,
assessments, interests, fines, penalties, costs and expenses (collectively,
“Costs”) of any kind (including reasonable attorneys’ fees and other fees, court
costs and other disbursements), including any Costs directly or indirectly
arising out of or related to any suit, proceeding, judgment, settlement, cause
of action, equitable or injunctive relief, or judicial or administrative order
and any Costs arising from compliance or non-compliance with Environmental Law.

 

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“Non-Defaulting Party” means the Counterparty to a Defaulting Party.

“Omnibus Agreement” means that Omnibus Agreement, dated as of the date hereof,
by and among the Company, the General Partner, the Operator and PBF Energy
Company LLC.

“Operator” has the meaning specified in the preamble to this Agreement.

“Operator Indemnitees” has the meaning specified in Section 14.2.

“Operator Parties” has the meaning specified in the preamble of this Agreement.

“Operator Subsidiary” has the meaning specified in the preamble of this
Agreement.

“OSHA” means Occupational Safety and Health Act of 1970, 29 U.S.C. Section 651
et seq.

“Overhead Expenses” means all overhead costs and expenses of any of the Company
Parties (including all compensation costs, including payroll, benefits and
payroll taxes allocated to each of the Seconded Employees providing the
Personnel Duties, or the Company’s employees providing the Company Services or
the Ancillary Company Services, multiplied by the proportion of such Person’s
business time spent providing Personnel Duties, Company Services or Ancillary
Company Services, as applicable) to the extent related to the Personnel Duties,
the Company Services or the Ancillary Company Services.

“Party” or “Parties” has the meaning specified in the preamble to this
Agreement.

“Period of Secondment” has the meaning specified in Article 3.

“Person” means any individual, corporation, partnership, limited partnership,
limited liability company, joint venture, trust or unincorporated organization,
joint stock company or any other private entity or organization, Governmental
Authority, court or any other legal entity, whether acting in an individual,
fiduciary or other capacity.

“Personnel Duties” has the meaning specified in Article 3.

“Prime Rate” means the rate of interest quoted in The Wall Street Journal,
Bonds, Rates & Yields Section as the Prime Rate.

“Prudent Industry Practice” means, as of the relevant time, those methods and
acts generally engaged in or applied by the refining, pipeline or terminaling
industries (as applicable) in the United States that, in the exercise of
reasonable judgment in light of the circumstances known at the time of
performance, would have been expected to accomplish the desired result at a
reasonable cost consistent with functionality, reliability, safety and
expedition with due regard for health, safety, security and environmental
considerations. Prudent Industry Practice is not intended to be limited to the
optimum practices, methods or acts to the exclusion of others, but rather is
intended to include reasonably acceptable practices, methods and acts generally
engaged in or applied by the refining, pipeline or terminaling industries (as
applicable) in the United States.

 

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“Receiving Party Personnel” has the meaning specified in Section 16.4.

“Refinery” means, collectively, the Delaware City Refinery and the Toledo
Refinery. In addition, if any of the Company Parties acquires, leases or
constructs assets directly connected to and leased or constructed to reasonably
support the operation of, or to replace any portion of, the Delaware City
Refinery or the Toledo Refinery, those assets shall automatically become a part
of the Refinery.

“Required Permits” has the meaning specified in Section 8.1.

“Respondent” has the meaning specified in Article 22.

“Seconded Employee” has the meaning specified in Article 3.

“Seconded Employee Schedule” has the meaning specified in Section 3.3(a).

“Services Council” shall mean the council comprised of 2 representatives of the
Operator Parties and 2 representatives of the Company Parties.

“Special Damages” has the meaning specified in Article 15.

“Term” has the meaning specified in Section 2.1.

“Terminal” means, collectively, the Delaware City Rail Terminal and the Toledo
Truck Terminal.

“Toledo Refinery” means the petroleum refinery, located in Toledo, Ohio owned
and operated by Toledo Refining.

“Toledo Refining” has the meaning specified in the preamble of this Agreement.

“Toledo Truck Terminal” means the truck unloading facility generally consisting
of four crude truck unloading spots located in Toledo Refinery’s north tank farm
adjacent to the Toledo Refinery (together with existing or future modifications
or additions) owned and operated by the Operator.

“Toledo Truck Unloading & Terminaling Agreement” means the Toledo Truck
Unloading and Terminaling Agreement, dated as of the date hereof, by and between
the Company and the Operator.

Section 1.2 Construction of Agreement.

(a) Unless otherwise specified, all references herein are to the Articles,
Sections and Exhibits of this Agreement and all Exhibits are incorporated
herein.

 

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(b) All headings herein are intended solely for convenience of reference and
shall not affect the meaning or interpretation of the provisions of this
Agreement.

(c) Unless expressly provided otherwise, the word “including” as used herein
does not limit the preceding words or terms and shall be read to be followed by
the words “without limitation” or words having similar import.

(d) Unless expressly provided otherwise, all references to days, weeks, months
and quarters mean calendar days, weeks, months and quarters, respectively.

(e) Unless expressly provided otherwise, references herein to “consent” mean the
prior written consent of the Party at issue.

(f) A reference to any Party to this Agreement or another agreement or document
includes the Party’s permitted successors and assigns.

(g) Unless the contrary clearly appears from the context, for purposes of this
Agreement, the singular number includes the plural number and vice versa; and
each gender includes the other gender.

(h) Except where expressly stated otherwise, any reference to any Applicable Law
or agreement shall be a reference to the same as amended, supplemented or
reenacted from time to time.

(i) The words “hereof,” “herein” and “hereunder” and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement.

Section 1.3 No Presumption. The Parties acknowledge that they and their counsel
have reviewed and revised this Agreement and that no presumption of contract
interpretation or construction shall apply to the advantage or disadvantage of
the drafter of this Agreement.

 

Article 2 Term.

Section 2.1 Term of Agreement. The term (the “Term”) shall commence on the
Commencement Date and shall continue until the earlier of (a) written mutual
agreement by the Parties to terminate this Agreement, (b) the termination of the
Omnibus Agreement, (c) a termination pursuant to a default in accordance with
Section 13.2 or (d) a termination pursuant to Section 2.4.

 

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Section 2.2 Termination of Services by the Operator. In addition to the
Operator’s right to adjust or terminate any the Company Services or Ancillary
Company Services pursuant to Section 6.1(c), the Operator shall have the right
to terminate any or all of the Company Services, Ancillary Company Services or
Personnel Duties, without penalty, upon thirty (30) days prior written notice to
the Company.

Section 2.3 Termination of Company Services and Ancillary Company Services by
the Company.

(a) Except as provided in Section 2.3(b), the Company shall have the right to
terminate any or all of the Company Services or Ancillary Company Services being
performed by the Company Parties without penalty, upon one hundred eighty
(180) days prior written notice to the Operator; provided, however, if one
hundred eighty (180) days prior notice is not sufficient time for the Operator,
using commercially reasonable efforts, to replace the Company Services or
Ancillary Company Services that are being terminated, the Company shall make its
equipment available to the Operator, at no cost, or continue to provide such
Company Services or Ancillary Company Services, as applicable, under the terms
of this Agreement, whichever is deemed practical by the Company in its
reasonable discretion, for a reasonable period of time after such one hundred
eighty (180) day period while replacement Company Services or Ancillary Company
Services are being arranged.

(b) The Company may not terminate Company Services or Ancillary Company Services
for Stormwater Discharge and Wastewater Treatment (Exhibit A), Steam (Exhibit
B), Potable Water (Exhibit C), Sanitary Sewer (Exhibit E), Electrical Power
(Exhibit F), Fuel Gas (Exhibit I), Fire Water (Exhibit K) and
Instrument/Compressed Air (Exhibit L) pursuant to this Section 2.3.

Section 2.4 Cessation of Company Services and Ancillary Company Services in
connection with the Terminaling Agreements. Upon the termination or expiration
of the Term (as defined therein) of the Delaware City Rail Terminaling Services
Agreement, the Company Services and the Ancillary Company Services that relate
to the Delaware City Rail Terminal shall also terminate as of the termination or
expiration of such Term. Upon the termination or expiration of the Term (as
defined therein) of the Toledo Truck Unloading & Terminaling Agreement, the
Company Services and the Ancillary Company Services that relate to the Toledo
Truck Terminal shall also terminate as of the termination or expiration of such
Term. If both of the foregoing agreements terminate or expire, the Term hereof
shall automatically terminate.

Section 2.5 Effect of Termination. Upon termination or expiration of the Term,
all rights and obligations of the Parties under this Agreement shall terminate;
provided, however, Articles 14 through 23 shall survive the termination or
expiration of the Term in accordance with their terms; provided, further,
termination or expiration of the Term shall not discharge or relieve either
Party from any obligations or liabilities which may have accrued under the terms
of this Agreement prior to such termination.

 

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Article 3 Personnel, Personnel Duties and Company Services.

Section 3.1 Seconded Employees. During the Term, the Company shall, directly or
indirectly through the other Company Parties, designate (a) certain of employees
or contractors of the Company Parties to be seconded to the Operator Parties to
(x) perform the Operator Parties’ respective obligations under each of the
Delaware City Rail Terminaling Services Agreement and the Toledo Truck
Unloading & Terminaling Agreement and (y) otherwise perform the Personnel
Duties, and (b) such other Persons (including consultants and professionals,
service or other organizations) as the Operator reasonably deems necessary or
appropriate in order to permit the Operator to (x) perform the Operator Parties’
respective obligations under each of the Delaware City Rail Terminaling Services
Agreement and the Toledo Truck Unloading & Terminaling Agreement and
(y) otherwise perform the Personnel Duties. Each employee or contractor who the
Company seconds to the Operator Parties pursuant to this Article 3 shall, during
the time that such employee or contractor is seconded to the Operator Parties
under this Agreement (the “Period of Secondment”), be referred to individually
herein as a “Seconded Employee” and, collectively, as the “Seconded Employees.”

Section 3.2 Personnel Duties. The Personnel Duties shall include the following:

(a) operation of the Terminal, procurement and furnishing of all materials,
equipment, services, supplies and labor necessary for the operation and
maintenance of the Terminal, engineering support for such activities, and
related warehousing and security, including the following:

(i) maintain and operate flow and pressure control, monitoring, and
over-pressure protection;

(ii) maintain, repair, recondition, overhaul, and replace equipment, as needed,
to keep the Terminal in good working order; and

(iii) conduct all other routine day-to-day operations and maintenance at the
Terminal; and

(b) management and conduct of the business operations associated with the
Terminal, including the following:

(i) transportation and logistics, including commercial operations;

(ii) project execution;

(iii) contract administration;

(iv) database mapping, reporting and maintenance;

(v) rights of way;

(vi) materials and capital management;

 

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(vii) emergency response, security, permitting and all other health, safety and
environmental services;

(viii) engineering support (including facility design and optimization); and

(ix) such other general services related to the Terminal as the Parties may
mutually agree are necessary from time to time.

Section 3.3 Secondment of Personnel.

(a) The Company Parties shall maintain a true, complete and accurate list of the
Seconded Employees on a schedule (the “Seconded Employee Schedule”). Seconded
Employees may be added to or removed from the Seconded Employee Schedule from
time to time by the Company Parties, as appropriate.

(b) Subject to the Company Parties’ right to be reimbursed by the Operator for
such expenses in accordance with Section 5.1, each Company Party shall pay all
expenses incurred by it in connection with the retention of the Seconded
Employees and such other Persons, including compensation, salaries, wages and
overhead and administrative expenses, charges to or incurred by such Company
Party, and, if applicable, social security taxes, workers compensation
insurance, retirement and insurance benefits and other such expenses. Any such
Seconded Employees and other Persons retained by any Company Party may be union
or non-union employees.

(c) Each Seconded Employee (other than contractors) will at all times remain an
employee of the applicable Company Party. Each Seconded Employee will, during
the applicable Period of Secondment, be called upon to perform services for both
the Operator Parties and the Company Parties. The Company Parties retain the
right to terminate the Secondment of any Seconded Employee for any reason and at
any time or to hire or discharge the Seconded Employees with respect to their
employment or engagement with the Company Parties. The Operator shall have the
right to terminate the Secondment to it of any Seconded Employee (including any
supervisor described in (e)) for any reason and at any time, upon prior written
notice to the Company Parties, but at no time will the Operator have the right
to terminate any Seconded Employee’s employment by the Company Parties or their
respective contractor.

(d) During a Period of Secondment, with respect to any Seconded Employee, such
Seconded Employee will report into the Operator’s management structure, and will
be under the direct management, supervision, direction and control of the
Operator with respect to such Seconded Employee’s day-to-day activities with
contractors remaining at the direction of the contracting entity.

(e) Those active employees whose titles in the Seconded Employee Schedule
reflect that they serve as supervisors or managers and who are called upon to
oversee the work of Seconded Employees working at the Terminal or to provide
management support on behalf of the Operator are designated by the Operator as
supervisors to act on the behalf of the Operator in supervising the Seconded
Employees pursuant to Section 3.3(d) above. Any Seconded Employee so designated
will be acting on behalf of the Operator when supervising the work of the
Seconded Employees or when they are otherwise providing management or executive
support on behalf of the Operator.

 

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(f) The Operator shall not be a participating employer in any benefit plan of
any Company Party. The Company Parties shall remain solely responsible for all
obligations and liabilities arising with respect to any benefit plans relating
to any Seconded Employees and the Operator shall not assume any benefit plan or
have any obligations or liabilities arising thereunder, in each case except for
costs properly chargeable to the Operator.

Section 3.4 Company Services. In addition to providing the Seconded Employees to
the Operator Parties pursuant to Section 3.3, the Company Parties shall also
provide (through employees, contractors, subcontractors or Affiliates) the
services enumerated in the Exhibits to this Agreement (the “Company Services”)
upon customary terms in accordance with Prudent Industry Practice. The Operator
shall reimburse the Company for the Company Services in accordance with
Section 5.1; provided, however, that in the event any Company Services requires
the Company Parties to make Capital Expenditures, such Capital Expenditures
shall be subject to Section 6.1 and the Company Parties shall not be required to
provide such Company Services until the Company Parties are able to do so after
using reasonable efforts in compliance with Section 6.1; provided, further, the
Company Parties shall not be required to perform any additional Company Services
if the Company reasonably believes the performance thereof will (i) materially
adversely interfere with, or be detrimental to, the operation of the Refinery or
(ii) violate Applicable Law.

Section 3.5 Ancillary Company Services. From time-to-time during the Term, the
Operator may request that the Company Parties provide (through employees,
contractors, subcontractors or Affiliates), ancillary services to the Operator
Parties (“Ancillary Company Services”) upon customary terms in accordance with
Prudent Industry Practice so long as such additional Ancillary Company Services
are reasonably related to the Company Services or existing Ancillary Company
Services. The Operator shall reimburse the Company for the Ancillary Company
Services in accordance with Section 5.1; provided, however, that in the event
any requested additional Ancillary Company Services requires the Company Parties
to make Capital Expenditures, such Capital Expenditures shall be subject to
Section 6.1 and the Company Parties shall not be required to provide such
additional Ancillary Company Services until the Company Parties are able to do
so after using reasonable efforts in compliance with Section 6.1; provided,
further, the Company Parties shall not be required to perform any additional
Ancillary Company Services if they reasonably believe the performance thereof
will (i) materially adversely interfere with, or be detrimental to, the
operation of the Refinery or (ii) violate Applicable Law.

Section 3.6 Third-Party Arrangements. Nothing herein shall be deemed to prevent
any of the Company Parties from providing services similar to the Company
Services or Ancillary Company Services to third parties. Further, nothing herein
shall be deemed to prohibit any of the Operator Parties from receiving services
similar to the Company Services or Ancillary Company Services from third
parties.

Section 3.7 Interruption of Company Services. The Parties shall use commercially
reasonable efforts to minimize the interruption of Company Services or Ancillary
Company Services. In addition, the Company shall inform the Operator at least
sixty (60) days in advance (or promptly, in the case of an unplanned
interruption) of any anticipated partial or complete interruption of Company
Services or Ancillary Company Services at the applicable facility, including
relevant information about the nature, extent, cause and expected duration of
the

 

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interruption and the actions the Company is taking to resume full operations;
provided, however, that the Company shall not have any liability for any failure
to notify, or delay in notifying, the Operator of any such matters except to the
extent, subject to Article 11, the Operator has been materially damaged by such
failure or delay.

Section 3.8 Manner of Performing/Providing Personnel Duties. The Personnel
Duties to be performed and provided by the Seconded Employees made available
pursuant to Section 3.3 by the Company Parties hereunder shall be performed and
provided consistent with Prudent Industry Practice.

 

Article 4 Self-Provided Services and Shared Items.

Section 4.1 Self-Provided Services. Subject to the Omnibus Agreement, except for
the Company Services and the Ancillary Company Services set forth in Sections
3.4, and 3.5, respectively, the Operator shall provide for itself, at its sole
cost and expense, any other services it requires as applicable for its
operations, including telephone and fax services, computers and computer
networks and tank gauging.

Section 4.2 Shared Items. Notwithstanding anything to the contrary contained in
Section 4.1 above, the Parties have agreed to share certain of the following
items:

(a) existing infrastructure for the Parties’ telephones and faxes, including
telephone switch;

(b) existing fiber optics system;

(c) radio messages, at times, during their normal operations at the Refinery and
the Terminals, respectively; and

(d) an emergency alarm system for the Parties’ respective operations at the
Refinery and the Terminal, respectively, including existing infrastructure used
by the Parties to connect to the emergency alarm system; provided, however, each
Party shall be responsible, at its sole cost, for interconnecting into the
emergency alarm system.

 

Article 5 Pricing, Billing and Reimbursement.

Section 5.1 Reimbursement for Personnel Duties, Company Services and Ancillary
Company Services. The Operator shall reimburse the Company for all third-party
costs and expenses incurred by any of the Company Parties in connection with the
performance by the Seconded Employees of the Personnel Duties, or the Company’s
employees of the Company Services and the Ancillary Company Services (including
any Overhead Expenses) and if mutually agreeable to the Parties shall cause any
third-party service providers to invoice the Operator Parties directly in
connection with the performance of any Personnel Duties by such third party or
the performance of any Company Service or Ancillary Company Services by such
third party. The Operator shall reimburse the Company for all taxes (other than
property taxes, ad valorem taxes, income taxes, gross receipt taxes, payroll
taxes and other similar taxes) that the Company incurs on the Operator Parties’
behalf for the performance by the Seconded Employees of the Personnel Duties, or
the Company’s employees of the Company Services and the Ancillary Company

 

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Services, unless prohibited by Applicable Law; provided, however, that in no
event shall the Company charge or be entitled to pass-through costs that
(i) result from any criminal act, willful misconduct or negligence of the
Company or any of its agents, employees or representatives, or (ii) are in the
nature of fines, late fees, penalties, interest or similar obligations that
could have been avoided by the Company in the exercise of Prudent Industry
Practice. If the Operator is exempt from the payment of any taxes allocated to
it under this Section 5.1, the Operator shall furnish the Company with the
proper exemption certificates.

Section 5.2 Annual Fee. In addition to reimbursement under Section 5.1, the
Operator shall pay to the Company an annual fee for the services as set forth
herein and in connection with the provision of certain utilities and other
infrastructure-related services equal to $490,000 (the “Annual Fee”) payable in
equal monthly installments in accordance with Section 5.3, commencing in the
first month following the Commencement Date. The Annual Fee for the 2014 fiscal
year shall be prorated based on the number of days from the Commencement Date to
December 31, 2014. At the end of each calendar year, the Company will have the
right to submit to the Operator a proposal to increase the amount of the Annual
Fee for the upcoming year if the Company believes, in good faith, that for the
services as set forth herein, the utilities and other infrastructure-related
services performed by the Company Parties for the benefit of the Operator
Parties for the upcoming year justify payment greater than the Annual Fee for
such year. If the Company submits such a proposal to the Operator, the Operator
agrees that it will negotiate in good faith with the Company to determine if the
Annual Fee for the upcoming year should be increased and, if so, the amount of
such increase. If the Parties cannot agree to the amount of an increase in the
Annual Fee for that year, then the increase amount shall become an Arbitrable
Dispute and governed in accordance with Section 22.3. Until the Parties are able
to agree on the Annual Fee increase amount, if any, the Annual Fee for the
preceding year shall continue to be the applicable fee and any subsequent
increase decided upon shall be applied retroactively to the start of the year.

Section 5.3 Billing. The Company shall provide monthly invoices to the Operator
for all reimbursements payable under this Agreement and the Operator shall
reimburse the Company as specified in the monthly invoices within ten (10) days
after its receipt of such invoice; provided, however, that notwithstanding
anything herein to the contrary, no reimbursements shall be made hereunder to
the extent such reimbursements are made pursuant to the Omnibus Agreement. The
Company shall also include in such monthly invoices the applicable amount of the
Annual Fee owed by the Operator and the Operator shall pay the Annual Fee as
specified in the monthly invoices within ten (10) days after its receipt of such
invoice. Any past due reimbursements or fees owed to the Company hereunder shall
accrue interest, payable on demand, at the Prime Rate plus 400 basis points from
the due date of the reimbursement or fee through the actual date of
reimbursement or payment of the fee. Reimbursement or payment of any fee
pursuant to this Section 5.3 shall be made by wire transfer of immediately
available funds to an account designated in writing by the Company. If any such
reimbursement or fee shall be due and payable on a day that is not a Business
Day, such reimbursement or fee shall be due and payable on the next succeeding
Business Day.

Section 5.4 Contents of Invoices. Any invoice delivered by the Company to the
Operator pursuant to Section 5.3 above shall set forth in detail the Company’s
calculation of the charges for the Personnel Duties, the Company Services and
the Ancillary Company Services, and shall be accompanied by information
reasonably sufficient for the Operator to determine the accuracy of such
invoice.

 

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Section 5.5 Reimbursement Disputes. Notwithstanding any other provision of this
Article 5, if the Operator in good faith disputes the correctness of any invoice
submitted by the Company, the Operator shall promptly submit to the Company a
written statement detailing the specific items disputed and shall reimburse the
undisputed portion of the invoice within the time period specified for
reimbursement hereunder. Any disputed items shall be subject to the dispute
resolution procedures in Article 22, and any reimbursement determined to be due
pursuant to said dispute resolution shall bear interest at the Prime Rate plus
400 basis points from the date on which said reimbursement otherwise would have
been payable hereunder to the date such reimbursement is actually received by
the Company.

Article 6 Fee Adjustments.

Section 6.1 Capital Expenditures.

(a) If during the course of the Term the Company determines that it is necessary
to make certain Capital Expenditures related to the Company Services and the
Ancillary Company Services, the Company may notify the Operator in writing of
its desire to have the Operator pay for the Operator’s applicable portion of the
cost of such Capital Expenditure.

(b) If within sixty (60) days after the Company provides the written notice
requesting Capital Expenditures the Parties have not reached agreement on the
need for such Capital Expenditures, then the matter shall become an Arbitrable
Dispute and governed in accordance with Article 22. For the avoidance of doubt,
if the Company’s Capital Expenditures are not approved, and the Company chooses
to make such Capital Expenditures, the Company agrees to bear all costs
associated therewith.

(c) Notwithstanding anything to the contrary contained herein, in lieu of
participating in the Capital Expenditures the Operator may choose at any time to
terminate all of the Personnel Duties, Company Services and the Ancillary
Company Services related to such Capital Expenditure.

Article 7 Access and Audit Rights.

The Parties and their respective representatives, upon reasonable notice and
during normal working hours, shall have access to the accounting records and
other documents maintained by the Counterparty, or any of its contractors and
agents, which relate to this Agreement, and shall have the right to audit such
records at any reasonable time or times during the Term and for a period of up
to two (2) years after termination of this Agreement. The Party performing such
audit shall have the right to conduct such audit no more than twice per calendar
year and each audit shall be limited in time to no more than the present and
prior two (2) calendar years. Claims as to defects in quality shall be made by
written notice within ninety (90) days after the delivery in question or shall
be deemed to have been waived. The right to inspect or audit such records shall
survive termination of this Agreement for a period of two (2) years following
the end of the Term. Each Party shall preserve, and shall cause all contractors
or agents to preserve, all of the aforesaid documents for a period of at least
two (2) years from the end of the Term. Notwithstanding any of

 

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the foregoing, if an Event of Default has occurred and is continuing with
respect to a specific Party, the Counterparty shall have unlimited and
unrestricted access to the accounting records and other documents maintained by
the Counterparty, for so long as such Event of Default continues.

 

Article 8 Additional Covenants.

Section 8.1 Required Permits. During the Term, unless required by Applicable Law
to be held by the Company Parties, the Operator shall, at its sole cost and
expense, obtain, apply for, maintain, monitor, renew, and modify, as
appropriate, any license, authorization, certification, filing, recording,
permit, waiver, exception, variance, franchise, order or other approval with or
of any Governmental Authority pertaining or relating to the operation of the
Terminal (the “Required Permits”) as currently operated; provided, however, that
if any Required Permits require the signature of, or any action by, any of the
Company Parties, the Company shall cause such Company Party to reasonably
cooperate with the Operator (at the Operator’s expense) so that the Operator may
obtain and maintain such Required Permits either for the Operator or the
applicable Operator Party. Neither the Company nor the Operator shall do
anything in connection with the performance of their respective obligations
under this Agreement that causes a termination or suspension of the Required
Permits.

Section 8.2 Existing Obligations. The execution of this Agreement by the Parties
does not reduce any existing obligations of such Parties and does not confer any
obligation or responsibility on (a) the Company Parties in connection with:
(i) any existing or future environmental condition at the Terminal, including,
the presence of a regulated or hazardous substance on or in environmental media
at the Terminal (including the presence in surface water, groundwater, soils or
subsurface strata, or air), including the subsequent migration of any such
substance; (ii) any Environmental Law; (iii) the Required Permits; or (iv) any
requirements arising under or relating to any Applicable Law pertaining or
relating to the ownership and operation of the Terminal, or (b) the Operator
Parties in connection with: (i) any existing or future environmental condition
at the Refinery, including, the presence of a regulated or hazardous substance
on or in environmental media at the Refinery (including the presence in surface
water, groundwater, soils or subsurface strata, or air), including the
subsequent migration of any such substance; (ii) any Environmental Law;
(iii) the Required Permits; or (iv) any requirements arising under or relating
to any Applicable Law pertaining or relating to the ownership and operation of
the Refinery.

Section 8.3 Records.

(a) Each Party shall (i) maintain the records required to be maintained by
Applicable Law and shall make such records available to the other Parties upon
reasonable request and (ii) immediately notify the other Parties of any
violation or alleged violation of any Applicable Law relating to this Agreement
and, upon request, shall provide to the other Parties all evidence of
environmental inspections or audits by any Governmental Authority relating to
this Agreement.

(b) All records or documents provided by any Party to any other Party shall, to
the reasonable knowledge of the providing Party, accurately and completely
reflect the facts about the activities and transactions to which they relate.
Notwithstanding anything herein to the contrary, no Party shall be required to
provide to any other Party any document that is determined by the

 

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disclosing Party’s legal counsel to be protected by an attorney-client privilege
or attorney work product doctrine. Each Party shall promptly notify the other
Parties if at any time such Party has reason to believe that any records or
documents previously provided to the other Party are no longer accurate or
complete.

 

Article 9 Representations.

Section 9.1 Representations of the Operator Parties. The Operator Parties
jointly and severally represent and warrant to the Company Parties that (a) this
Agreement, the rights obtained and the duties and obligations assumed by the
Operator Parties hereunder, and the execution and performance of this Agreement
by the Operator Parties, do not directly or indirectly violate any Applicable
Law with respect to the Operator Parties or any of their properties or assets,
the terms and provisions of the Operator Parties’ organizational documents or
any agreement or instrument to which the Operator Parties or any of their
properties or assets are bound or subject; (b) the execution and delivery of
this Agreement by the Operator Parties has been authorized by all necessary
action; (c) the Operator Parties have the full and complete authority and power
to enter into this Agreement and to provide the services hereunder; (d) no
further action on behalf of the Operator Parties, or consents of any other
party, are necessary for the provision of services hereunder; and (e) upon
execution and delivery by the Operator Parties, this Agreement shall be a valid
and binding agreement of the Operator Parties enforceable in accordance with its
terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium
or similar laws affecting creditors’ rights generally and subject, as to
enforceability, to equitable principles of general application regardless of
whether enforcement is sought in a proceeding in equity or at law).

Section 9.2 Representations of the Company Parties. The Company Parties jointly
and severally represent and warrant to the Operator Parties that (a) this
Agreement, the rights obtained and the duties and obligations assumed by the
Company Parties hereunder, and the execution and performance of this Agreement
by the Company Parties, do not directly or indirectly violate any Applicable Law
with respect to the Company Parties or any of their property or assets, the
terms and provisions of the Company Parties’ organizational documents or any
agreement or instrument to which the Company Parties or any of their property or
assets are bound or subject; (b) the execution and delivery of this Agreement by
the Company Parties has been authorized by all necessary action; (c) the Company
Parties have the full and complete authority and power to enter into this
Agreement; (d) no further action on behalf of the Company Parties, or consents
of any other party, are necessary for the provision of services hereunder; and
(e) upon execution and delivery by the Company Parties, this Agreement shall be
a valid and binding agreement of the Company Parties enforceable in accordance
with its terms (subject to applicable bankruptcy, reorganization, insolvency,
moratorium or similar laws affecting creditors’ rights generally and subject, as
to enforceability, to equitable principles of general application regardless of
whether enforcement is sought in a proceeding in equity or at law).

 

Article 10 Insurance.

Unless the Operator Parties provide notice that they will obtain insurance
coverage independently from the Company Parties, the Company, directly or
through one of its Affiliates, shall procure and maintain in full force and
effect throughout the Term insurance in sufficient

 

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amounts and coverage consistent with Prudent Industry Practice similar to the
coverage currently in place for the officers, directors, and assets of the
Operator Parties; provided, however, that in either case, each Operator Party
shall be the insured party under its respective insurance policy.

 

Article 11 Force Majeure.

Section 11.1 Force Majeure. In the event that a Party (the “Force Majeure
Party”) is rendered unable, wholly or in part, by a Force Majeure event to
perform its obligations under this Agreement, then such Party shall within a
reasonable time after the occurrence of such event of Force Majeure deliver to
the Counterparty written notice (a “Force Majeure Notice”) including full
particulars of the Force Majeure event, and the obligations of the Parties, to
the extent they are affected by the Force Majeure event, shall be suspended for
the duration of any inability so caused. The Force Majeure Party shall identify
in such Force Majeure Notice the approximate length of time that it believes in
good faith such Force Majeure event shall continue. The Operator shall be
required to pay any amounts accrued and due under this Agreement at the time of
the start of the Force Majeure event. The cause of the Force Majeure event shall
so far as possible be remedied with all reasonable efforts, except that no Party
shall be compelled to resolve any strikes, lockouts or other industrial or labor
disputes other than as it shall determine to be in its best interests. Prior to
the second (2nd) anniversary of the Commencement Date, any suspension of the
obligations of the Parties under this Section 11.1 as a result of a Force
Majeure event that adversely affects the Company’s ability to perform the
services it is required to perform under this Agreement shall extend the Term
for the same period of time as such Force Majeure event continues (up to a
maximum of one year) unless this Agreement is terminated under in accordance
with Section 2.4.

 

Article 12 Services Council.

Section 12.1 Formation of Services Council. The Parties agree to form a Services
Council to handle the matters as described in this Article 12. Each Party may
choose to include in the Services Council meetings such knowledgeable Persons as
may assist either Party in their consultations.

Section 12.2 Meetings. The Services Council shall meet at such times as either
Party may reasonably request, or at such times as agreed by the Parties, to
discuss any aspect of the subject matter of this Agreement. It is the Parties’
intent that the Services Council shall serve as the vehicle for complete and
timely communications about the operating plans of one Party that could
materially affect the operations of the other (including maintenance or repair
activities, approval of Capital Expenditures, or major changes in operations
that could result in a disruption of any Service or Ancillary Service), as well
as a forum for prompt resolution of any disputes in the initial meeting between
the Parties.

 

Article 13 Event of Default: Remedies Upon Event of Default.

Section 13.1 Event of Default. Notwithstanding any other provision of this
Agreement, but subject to Article 22, the occurrence of any of the following
shall constitute an “Event of Default”:

 

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(a) Operator fails to make a reimbursement or pay the Annual Fee when due
(i) under Article 5 within five (5) Business Days after a written demand
therefor or (ii) under any other provision hereof within seven (7) Business
Days;

(b) other than a default described in Sections 13.1(a) or 13.1(c), if the
Company Parties or the Operator Parties fail to perform any material obligation
or covenant made to the Counterparty under this Agreement, which is not cured to
the reasonable satisfaction of the Counterparty within fifteen (15) Business
Days after the date that such Party receives written notice that such obligation
or covenant has not been performed;

(c) any Party breaches any representation or warranty made by such Party
hereunder, or such warranty or representation proves to have been incorrect or
misleading in any material respect when made; provided, however, that if such
breach is curable, such breach is not cured to the reasonable satisfaction of
the Counterparty within fifteen (15) Business Days after the date that such
Party receives notice that corrective action is needed; or

(d) any Party files a petition or otherwise commences or authorizes the
commencement of a proceeding or case under any bankruptcy, reorganization or
similar law for the protection of creditors, or have any such petition filed or
proceeding commenced against it and such proceeding is not dismissed for sixty
(60) days.

Section 13.2 Termination. Except as set forth in Section 13.1(d), without
limiting any other provision of this Agreement, if an Event of Default with
respect to any Party (such defaulting Party, the “Defaulting Party”) has
occurred and is continuing, the Non-Defaulting Party shall have the right,
immediately and at any time(s) thereafter, to suspend its performance or
terminate this Agreement upon written notice to the Defaulting Party.

Section 13.3 Set Off. If an Event of Default occurs, the Non-Defaulting Party
may, without limitation on its rights under this Article 13, set off amounts
which the Defaulting Party owes to it against any amounts which it owes to the
Defaulting Party (whether hereunder, under any other agreement or contract or
otherwise and whether or not then due). Any net amount due hereunder shall be
payable by the Party owing such amount within one (1) Business Day of
termination.

Section 13.4 No Preclusion of Rights. The Non-Defaulting Party’s rights under
this Section 13.4 shall be in addition to, and not in limitation of, any other
rights which the Non-Defaulting Party may have (whether by agreement, operation
of law or otherwise), including any rights of recoupment, setoff, combination of
accounts, as a secured party or under any other credit support. The Defaulting
Party shall indemnify and hold the Non-Defaulting Party harmless from all costs
and expenses, including reasonable attorney fees, incurred in the exercise of
any remedies hereunder.

 

Article 14 Indemnification.

Section 14.1 Indemnification by Operator. The Operator shall defend, indemnify
and hold harmless the Company Parties, their respective Affiliates, and their
respective directors, officers, employees, representatives, agents, contractors,
successors and permitted assigns (collectively, the “Company Indemnitees”) from
and against any Liabilities directly or indirectly

 

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arising out of (a) any breach by the Operator Parties of any covenant or
agreement contained herein or made in connection herewith or any representation
or warranty of the Operator Parties made herein or in connection herewith
proving to be false or misleading, (b) any personal injury incurred by any
representative of the Operator Parties (including any Operator Inspector) while
at the Refinery, (c) any failure by the Operator Parties, their Affiliates or
any of their respective employees, representatives (including any Operator
Inspector), agents or contractors to comply with or observe any Applicable Law,
or (d) injury, disease, or death of any Person or damage to or loss of any
property, fine or penalty, any of which is caused by the Operator Parties, their
Affiliates or any of their respective employees, representatives (including any
Operator Inspector), agents or contractors in the exercise of any of the rights
or obligations hereunder or the handling or transportation of any crude oil
hereunder, except to the extent of the Company’s obligations under Section 14.2
below, and except to the extent that such injury, disease, death, or damage to
or loss of property, fine or penalty was caused by the gross or sole negligence
or willful misconduct on the part of the Company Indemnitees, their Affiliates
or any of their respective employees, representatives, agents or contractors.
Notwithstanding the foregoing, the Operator’s liability to the Company
Indemnitees pursuant to this Section 14.1 shall be net of any insurance proceeds
actually received by the Company Indemnitees or any of their respective
Affiliates from any third party with respect to or on account of the damage or
injury which is the subject of the indemnification claim. The Company agrees
that it shall, and shall cause the other Company Indemnitees to, (i) use all
commercially reasonable efforts to pursue the collection of all insurance
proceeds to which any of the Company Indemnitees are entitled with respect to or
on account of any such damage or injury, (ii) notify the Operator of all
potential claims against any third party for any such insurance proceeds, and
(iii) keep the Operator fully informed of the efforts of the Company Indemnitees
in pursuing collection of such insurance proceeds.

Section 14.2 Indemnification by Company. The Company shall defend, indemnify and
hold harmless the Operator Parties, their respective Affiliates, and their
respective directors, officers, employees, representatives, agents, contractors,
successors and permitted assigns (collectively, the “Operator Indemnitees”) from
and against any Liabilities directly or indirectly arising out of (a) any breach
by the Company Parties of any covenant or agreement contained herein or made in
connection herewith or any representation or warranty of the Company Parties
made herein or in connection herewith proving to be false or misleading, (b) any
personal injury incurred by any representative of the Company Parties (including
any Company Inspector) while at the Terminal, (c) any failure by the Company
Parties, their respective Affiliates or any of their respective employees,
representatives (including any Company Inspector), agents or contractors to
comply with or observe any Applicable Law, or (d) injury, disease, or death of
any Person or damage to or loss of any property, fine or penalty, any of which
is caused by the Company Parties, their respective Affiliates or any of their
respective employees, representatives (including any Company Inspector), agents
or contractors in the exercise of any of the rights or obligations hereunder or
the refining, transportation, handling and storage of any crude oil hereunder,
except to the extent of the Operator’s obligations under Section 14.1 above, and
except to the extent that such injury, disease, death, or damage to or loss of
property, fine or penalty was caused by the gross or sole negligence or willful
misconduct on the part of the Operator Indemnitees, their Affiliates or any of
their respective employees, representatives, agents or contractors.
Notwithstanding the foregoing, the Company’s liability to the Operator
Indemnitees pursuant to this Section 14.2 shall be net of any insurance proceeds
actually received by the Operator Indemnitees or any of their respective
Affiliates from any third party with respect to or on account

 

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of the damage or injury which is the subject of the indemnification claim. The
Operator agrees that it shall, and shall cause the other Operator Indemnitees
to, (i) use all commercially reasonable efforts to pursue the collection of all
insurance proceeds to which any of the Operator Indemnitees are entitled with
respect to or on account of any such damage or injury, (ii) notify the Company
of all potential claims against any third party for any such insurance proceeds,
and (iii) keep the Company fully informed of the efforts of the Operator
Indemnitees in pursuing collection of such insurance proceeds.

Section 14.3 EXPRESS REMEDY. THE FOREGOING INDEMNITIES ARE INTENDED TO BE
ENFORCEABLE AGAINST THE PARTIES IN ACCORDANCE WITH THE EXPRESS TERMS AND SCOPE
THEREOF NOTWITHSTANDING ANY EXPRESS NEGLIGENCE RULE OR ANY SIMILAR DIRECTIVE
THAT WOULD PROHIBIT OR OTHERWISE LIMIT INDEMNITIES BECAUSE OF THE SOLE,
CONCURRENT, ACTIVE OR PASSIVE NEGLIGENCE, STRICT LIABILITY OR FAULT OF ANY OF
THE INDEMNIFIED PARTIES.

 

Article 15 Limitation on Damages.

Notwithstanding anything to the contrary contained herein, neither Party shall
be liable or responsible to any Counterparty or such other Party’s affiliated
Persons for any consequential, punitive, special, incidental or exemplary
damages, or for loss of profits or revenues (collectively referred to as
“Special Damages”) incurred by such Party or its affiliated Persons that arise
out of or relate to this Agreement, regardless of whether any such claim arises
under or results from contract, tort, or strict liability; provided, however,
that the foregoing limitation is not intended and shall not affect Special
Damages in connection with any third-party claim or imposed in favor of
unaffiliated Persons that are not Parties to this Agreement; provided, further,
that to the extent an indemnitor hereunder receives insurance proceeds with
respect to Special Damages that would be indemnified hereunder if not for this
Article 15, such indemnitor shall be liable up to the amount of such insurance
proceeds (net any deductible and premiums paid with respect thereto).

 

Article 16 Confidentiality.

Section 16.1 Obligations. Each Party shall use commercially reasonable efforts
to retain the Counterparty’s Confidential Information in confidence and not
disclose the same to any third party nor use the same, except as authorized by
the disclosing Party in writing or as expressly permitted in this Section 16.1.
Each Party further agrees to take the same care with the Counterparty’s
Confidential Information as it does with its own, but in no event less than a
reasonable degree of care.

Section 16.2 Required Disclosure. Notwithstanding Section 16.1 above, if the
receiving Party becomes legally compelled to disclose the Confidential
Information by a court, Governmental Authority or Applicable Law, including the
rules and regulations of the Securities and Exchange Commission, or is required
to disclose pursuant to the rules and regulations of any national securities
exchange upon which the receiving Party or its parent entity is listed, any of
the disclosing Party’s Confidential Information, the receiving Party shall
promptly advise the disclosing Party of such requirement to disclose
Confidential Information as soon as the receiving Party becomes aware that such
a requirement to disclose might become effective, in order that,

 

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where possible, the disclosing Party may seek a protective order or such other
remedy as the disclosing Party may consider appropriate in the circumstances.
The receiving Party shall disclose only that portion of the disclosing Party’s
Confidential Information that it is required to disclose and shall reasonably
cooperate with the disclosing Party (at the disclosing Party’s cost) in allowing
the disclosing Party to obtain such protective order or other relief.

Section 16.3 Return and Destruction of Information. Upon written request by the
disclosing Party, all of the disclosing Party’s Confidential Information in
whatever form shall be returned to the disclosing Party upon termination of this
Agreement or destroyed with destruction certified by the receiving Party,
without the receiving Party retaining copies thereof except that one copy of all
such Confidential Information may be retained by a Party’s legal department
solely to the extent that such Party is required to keep a copy of such
Confidential Information pursuant to Applicable Law, and the receiving Party
shall be entitled to retain any Confidential Information in the electronic form
or stored on automatic computer back-up archiving systems during the period such
backup or archived materials are retained under such Party’s customary
procedures and policies; provided, however, that notwithstanding any termination
or expiration of this Agreement, any Confidential Information retained by the
receiving Party shall be maintained subject to confidentiality pursuant to the
terms of this Section 16.3, and such archived or back-up Confidential
Information shall not be accessed except as required by Applicable Law for so
long as such Confidential Information is retained.

Section 16.4 Receiving Party Personnel. The receiving Party shall limit access
to the Confidential Information of the disclosing Party to those of its
employees, attorneys and contractors that have a need to know such information
in order for the receiving Party to exercise or perform its rights and
obligations under this Agreement (the “Receiving Party Personnel”). The
Receiving Party Personnel who have access to any Confidential Information of the
disclosing Party shall be made aware of the confidentiality provision of this
Agreement, and shall be required to abide by the terms thereof. Any third-party
contractors that are given access to Confidential Information of a disclosing
Party pursuant to the terms hereof shall be required to sign a written agreement
pursuant to which such Receiving Party Personnel agree to be bound by the
provisions of this Agreement, which written agreement shall expressly state that
it is enforceable against such Receiving Party Personnel by the disclosing
Party.

Section 16.5 Survival. All audit rights under Article 7 and the obligation of
confidentiality under this Article 16 shall survive the termination of this
Agreement for a period of two (2) years.

 

Article 17 Choice of Law.

This Agreement shall be subject to and governed by the laws of the State of
Delaware, excluding any conflicts-of-law rule or principle that might refer the
construction or interpretation of this Agreement to the laws of another state.
Subject to Article 22, the Parties agree to the venue and jurisdiction of the
federal or state courts located in the State of Delaware for the adjudication of
all disputes arising out of this Agreement.

 

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Article 18 Assignment.

Section 18.1 Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein. No Party shall have the right
to assign its rights or obligations under this Agreement without the prior
written consent of the other Parties hereto; provided, however, that the
Operator may make a collateral assignment of this Agreement solely to secure
financing for the Operator and its subsidiaries; provided, however, the Company
may subcontract any of the Company Services, Personnel Duties or Ancillary
Company Services provided by the Company hereunder so long as such Company
Services, Personnel Duties or Ancillary Company Services continue to be provided
in a manner consistent with past practices and Prudent Industry Practice.

Section 18.2 Terms of Assignment. Any assignment that is not undertaken in
accordance with the provisions set forth above shall be null and void ab initio.
A Party making any assignment shall promptly notify the other Party of such
assignment, regardless of whether consent is required. This Agreement shall be
binding upon and inure to the benefit of the Parties hereto and their respective
successors and permitted assigns.

 

Article 19 Notices.

All notices, requests, demands, and other communications hereunder shall be in
writing and shall be deemed to have been duly given: (a) if by transmission by
facsimile or hand delivery, when delivered; (b) if mailed via the official
governmental mail system, five (5) Business Days after mailing, provided said
notice is sent first class, postage pre-paid, via certified or registered mail,
with a return receipt requested; (c) if mailed by an internationally recognized
overnight express mail service such as Federal Express or UPS, one (1) Business
Day after deposit therewith prepaid; or (d) if by email, one (1) Business Day
after delivery with receipt confirmed. All notices shall be addressed to the
Parties at the respective addresses as follows:

If to the Company Parties:

PBF Holding Company LLC

One Sylvan Way, Second Floor

Parsippany, NJ 07054

Attn: Herman Seedorf, Senior Vice President

Telecopy No: (973) 455-7500

Email: herman.seedorf@pbfenergy.com

with a copy, which shall not constitute notice, to:

PBF Energy Company LLC

One Sylvan Way, Second Floor

Parsippany, NJ 07054

Attn: Jeffrey Dill, General Counsel

Telecopy No: (973) 455-7500

Email: jeffrey.dill@pbfenergy.com

 

22

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If to the Operator Parties:

PBF Logisitics LP

c/o PBF Logistics GP LLC

One Sylvan Way, Second Floor

Parsippany, NJ 07054

Attn: Jim Fedena, Senior Vice President

Telecopy No: (973) 455-7500

Email: jim.fedena@pbfenergy.com

with a copy, which shall not constitute notice, to:

PBF Logistics GP LLC

One Sylvan Way, Second Floor

Parsippany, NJ 07054

Attn: Matt Lucey, Executive Vice President

Telecopy No: (973) 455-7500

Email: matt.lucey@pbfenergy.com

or to such other address or to such other person as either Party shall have last
designated by notice to the other Party.

 

Article 20 No Waiver; Cumulative Remedies.

Section 20.1 No Waivers. The failure of a Party hereunder to assert a right or
enforce an obligation of the other Party shall not be deemed a waiver of such
right or obligation. The waiver by any Party of a breach of any provision of, or
Event of Default under, this Agreement shall not operate or be construed as a
waiver of any other breach of that provision or as a waiver of any breach of
another provision of, Event of Default or potential Event of Default under, this
Agreement, whether of a like kind or different nature.

Section 20.2 Cumulative Remedies. Each and every right granted to the Parties
under this Agreement or allowed it by law or equity, shall be cumulative and may
be exercised from time to time in accordance with the terms thereof and
Applicable Law.

 

Article 21 Nature of Transaction, Relationship of Parties and Regulatory Status.

Section 21.1 Independent Contractor. This Agreement shall not be construed as
creating a partnership, association or joint venture among the Parties. It is
understood that with respect to the services to be performed hereunder (a) the
Operator Parties are an independent contractor with complete charge of its
employees and agents in the performance of its duties hereunder, and nothing
herein shall be construed to make the Operator Parties, or any employee or agent
of the Operator Parties, an agent or employee of the Company Parties, and
(b) the Company Parties are an independent contractor with complete charge of
its employees and agents in the performance of its duties hereunder, and nothing
herein shall be construed to make the Company Parties, or any employee or agent
of the Company Parties, an agent or employee of the Operator Parties.

 

23

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Section 21.2 No Agency. No Party shall have the right or authority to negotiate,
conclude or execute any contract or legal document with any third person in the
name of other Party; to assume, create, or incur any liability of any kind,
express or implied, against or in the name of any of the other Party; or to
otherwise act as the representative of the other Party, unless expressly
authorized in writing by the other Party.

Section 21.3 Regulatory Status. It is understood and agreed that neither Party
is a utility and is not holding itself out to the other Party, to any entity or
to the public at large to provide any utility service, and that by entering into
this Agreement and taking the actions it takes pursuant to this Agreement shall
not make it a utility or constitute providing utility service. Each Party agrees
that it shall not propose, advocate, support or claim in any manner that any
Service or Ancillary Service provided hereunder is a utility service or should
be regulated in any manner. In the event that any government agency issues a
decision, order or finding in any form that any Service provided herein is a
utility service or is subject to regulation, the Service or Ancillary Service in
question shall immediately terminate, and the Parties agree to work with each
other and any public utility commission to provide transition services.

 

Article 22 Dispute Resolution.

Section 22.1 Procedure. In the event a dispute arises between the Company
Parties and the Operator Parties regarding the application or interpretation of
any provision of this Agreement, the Parties agree to use the procedures in this
Article 22 to resolve any such disputes. Notwithstanding anything to the
contrary contained herein, either Party may seek a restraining order, temporary
injunction, or other provisional judicial relief if the Party in its sole
judgment believes that such action is necessary to avoid irreparable injury or
to preserve the status quo. The Parties will continue to participate in good
faith in the procedures in this Article 22 despite any request for provisional
relief.

Section 22.2 Initial Resolution Attempts. Either Party may initiate the dispute
resolution procedures by sending written notice to the Counterparty specifically
stating the complaining Party’s claim and requesting dispute resolution in
accordance with this Article 22. The applicable statute of limitations shall be
tolled as of the date of such written notice. No Event of Default shall occur if
the subject matter underlying such potential Event of Default is the subject
matter of any dispute that is pending resolution or arbitration under this
Article 22 until such time that such dispute is resolved in accordance with this
Article 22.

(a) Within fourteen (14) days after the complaining Party delivers the
complaint, the Services Council shall hold a meeting to resolve the dispute.

(b) If the matter has not been resolved by the Services Council within thirty
(30) days of notice being delivered in accordance with Section 22.2(a), unless
the Services Council agrees to a longer period of time, the dispute shall become
an Arbitrable Dispute and become subject to Section 22.3.

 

24

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Section 22.3 Arbitration. Any and all Arbitrable Disputes (except to the extent
injunctive relief is sought) shall be resolved through the use of binding
arbitration using, in the case of an Arbitrable Dispute involving a dispute of
an amount equal to or greater than $1,000,000 or non-monetary relief, three
arbitrators, and in the case of an Arbitrable Dispute involving a dispute of an
amount less than $1,000,000, one arbitrator, in each case in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, as
supplemented to the extent necessary to determine any procedural appeal
questions by the Federal Arbitration Act (Title 9 of the United States Code). If
there is any inconsistency between this Article 22 and the Commercial
Arbitration Rules or the Federal Arbitration Act, the terms of this Article 22
shall control the rights and obligations of the Parties. Arbitration must be
initiated within the time limits set forth in this Agreement, or if no such
limits apply, then within a reasonable time or the time period allowed by the
applicable statute of limitations. Arbitration may be initiated by a Party
(“Claimant”) serving written notice on the other Party (“Respondent”) that
Claimant elects to refer the Arbitrable Dispute to binding arbitration.
Claimant’s notice initiating binding arbitration must identify the arbitrator
Claimant has appointed. Respondent shall respond to Claimant within thirty
(30) days after receipt of Claimant’s notice, identifying the arbitrator
Respondent has appointed. If Respondent fails for any reason to name an
arbitrator within the 30-day period, Claimant shall petition the American
Arbitration Association for appointment of an arbitrator for Respondent’s
account. The two arbitrators so chosen shall select a third arbitrator within
thirty (30) days after the second arbitrator has been appointed, and, in the of
an Arbitrable Dispute involving a dispute of an amount less than $1,000,000,
such third arbitrator shall act as the sole arbitrator, and the sole role of the
first two arbitrators shall be to appoint such third arbitrator. Claimant shall
pay the compensation and expenses of the arbitrator named by or for it, and
Respondent shall pay the compensation and expenses of the arbitrator named by or
for it. The costs of petitioning for the appointment of an arbitrator, if any,
shall be paid by Respondent. Claimant and Respondent shall each pay one-half of
the compensation and expenses of the third arbitrator. All arbitrators must
(a) be neutral parties who have never been officers, directors or employees of
the Operator, the Company or any of their Affiliates and (b) have not less than
seven (7) years’ experience in the energy industry. The hearing shall be
conducted in the State of Delaware or the Philadelphia Metropolitan area and
commence within thirty (30) days after the selection of the third arbitrator.
The Company, the Operator and the arbitrators shall proceed diligently and in
good faith in order that the award may be made as promptly as possible. Except
as provided in the Federal Arbitration Act, the decision of the arbitrators
shall be binding on and non-appealable by the Parties hereto. The arbitrators
shall have no right to grant or award Special Damages. Notwithstanding anything
herein the contrary, the Company may not dispute any amounts with respect to an
invoice delivered in accordance with Article 5 that the Company has not objected
to within one hundred twenty (120) days of receipt thereof.

 

Article 23 General.

Section 23.1 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be valid and effective under
Applicable Law, but if any provision of this Agreement or the application of any
such provision to any person or circumstance shall be held invalid, illegal or
unenforceable in any respect by a court of competent jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
hereof, and the Parties shall negotiate in good faith with a view to substitute
for such provision a suitable and equitable solution in order to carry out, so
far as may be valid and enforceable, the intent and purpose of such invalid,
illegal or unenforceable provision.

 

25

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Section 23.2 Entire Agreement. This Agreement and the Omnibus Agreement together
constitute the entire agreement among the Parties pertaining to the subject
matter hereof and supersede all prior agreements and understandings of the
Parties in connection therewith. No promise, representation or inducement has
been made by any of the Parties concerning the subject matter of this Agreement
and none of the Parties shall be bound by or liable for any alleged
representation, promise or inducement not so set forth.

Section 23.3 Time is of the Essence. Time is of the essence with respect to all
aspects of each Party’s performance of any obligations under this Agreement.

Section 23.4 No Third-Party Beneficiaries. It is expressly understood that the
provisions of this Agreement do not impart enforceable rights in anyone who is
not a Party or successor or permitted assignee of a Party.

Section 23.5 Further Assurances. In connection with this Agreement and all
transactions contemplated by this Agreement, each signatory Party hereto agrees
to execute and deliver such additional documents and instruments and to perform
such additional acts as may be necessary or appropriate to effectuate, carry out
and perform all of the terms, provisions and conditions of this Agreement and
all such transactions.

Section 23.6 Counterparts. This Agreement may be executed in one or more
counterparts (including by facsimile or portable document format (pdf)) for the
convenience of the Parties hereto, each of which counterparts will be deemed an
original, but all of which counterparts together will constitute one and the
same agreement.

[Remainder of Page Intentionally Left Blank]

 

26

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IN WITNESS WHEREOF, the Parties have duly executed this Agreement on the date
first set forth above.

 

COMPANY:

 

PBF HOLDING COMPANY LLC

By:   /s/ Jeffrey Dill Name:   Jeffrey Dill Title:   Secretary

 

DELAWARE CITY REFINING:

 

DELAWARE CITY REFINING

COMPANY LLC

By:   /s/ Jeffrey Dill Name:   Jeffrey Dill Title:   Secretary

 

TOLEDO REFINING:

 

TOLEDO REFINING COMPANY LLC

By:   /s/ Jeffrey Dill Name:   Jeffrey Dill Title:   Secretary

SIGNATURE PAGE TO THE OPERATION AND MANAGEMENT SERVICES AND SECONDMENT AGREEMENT

--------------------------------------------------------------------------------

GENERAL PARTNER:

 

PBF LOGISTICS GP LLC

By:   /s/ Jeffrey Dill Name:   Jeffrey Dill Title:   Secretary

 

OPERATOR:

 

PBF LOGISTICS LP

By: PBF Logistics GP LLC, its general partner

By:   /s/ Jeffrey Dill Name:   Jeffrey Dill Title:   Secretary

 

OPERATOR SUBSIDIARY:

 

DELAWARE CITY TERMINALING COMPANY LLC

By:   /s/ Jeffrey Dill Name:   Jeffrey Dill Title:   Secretary

SIGNATURE PAGE TO THE OPERATION AND MANAGEMENT SERVICES AND SECONDMENT AGREEMENT

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Exhibit A

Stormwater discharge and wastewater treatment

Delaware City Refining – not applicable

Toledo Refining

 

  •   Sewer collection sumps in the area of the Truck Unloading Terminal and the
connecting piping to the Refinery waste water treatment plant.

 

  •   Operating Agreement with Veolia for on-site treatment of wastewater

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Exhibit B

Steam

 

  •   Not applicable

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Exhibit C

Potable Water

Delaware City Refining

 

  •   Water supply contract with United Water (for bathroom use, not potable)

Toledo Refining

 

  •   Potable water supply to the safety shower in proximity to the Truck
Unloading Terminal

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Exhibit D

Roads and Grounds

 

  •   Not applicable

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Exhibit E

Sanitary Sewer

 

  •   Not applicable

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Exhibit F

Electrical Power

Delaware City Refining

 

  •   One boiler and one turbo generator of the refinery electric power
generation unit.

 

  •   Electrical distribution system from the Boiler House, through switchgear 2
and feeder 66

Toledo Refining

 

  •   Electrical power supply from Toledo Edison.

 

  •   Electrical distribution system through substation 2, located on refinery
property, and substation 8, located on Tank Farm #2 property.

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Exhibit G

Emergency Response

Delaware City Refining

 

  •   Mutual Aid responders and equipment which would be needed in the event of
a spill, fire, medical or other emergency, including ambulance, foam and pumper
truck, foam supply.

Toledo Refining

 

  •   Mutual Aid responders and equipment which would be needed in the event of
a spill, fire, medical or other emergency, including ambulance, foam and pumper
truck, foam supply.

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Exhibit H

Filter Press

 

  •   Not applicable

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Exhibit I

Fuel Gas

 

  •   Not applicable

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Exhibit J

API Solids

 

  •   Not applicable

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Exhibit K

Fire Water

Delaware City Refining

 

  •   Raw water supply from United Water

Toledo Refining

 

  •   Fire water supply from the firewater pond at Tank Farm 2 and connected
pumps P-16053, P-16054, P-16055 and P-16056.

 

  •   Fire water supply and connected refinery pumps P-1916, P-1917, P-1918 and
P-1919.

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Exhibit L

Instrument/Compressed Air

 

  •   Not applicable

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Exhibit M

Rail Operations and Unloading

Delaware City Refining

 

  •   Railcar switching services to move railcars to and from the loop track, as
needed and unloading crude from railcars.

Toledo Refining

 

  •   Maintenance and operational assistance to track crude unloading.