Exhibit 10.1

 

 

 

TEXAS PIPELINE PROJECT

THROUGHPUT AND DEFICIENCY AGREEMENT

Dated as of May 9, 2008

By and Among

MOTIVA ENTERPRISES LLC

And

MAGELLAN PIPELINE COMPANY, L.P.,

And

MAGELLAN TERMINALS HOLDINGS, L.P.

And

MAGELLAN PIPELINES HOLDINGS, L.P.

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TABLE OF CONTENTS

 

     PAGE
NO.

SECTION 1 DEFINITIONS

   5

SECTION 2 TERM

   10

SECTION 3 CONSTRUCTION

   10

SECTION 4 OPERATION

   13

SECTION 5 REVENUE COMMITMENT AND DEFICIENCIES

   14

SECTION 6 MAGELLAN PIPELINE PRORATION

   17

SECTION 7 PRODUCT gain and LOSS

   19

SECTION 8 PRODUCT TESTING AND MEASUREMENT

   19

SECTION 9 TITLE AND CUSTODY

   19

SECTION 10 THROUGHPUT FEE

   20

SECTION 11 PRICE AND PAYMENT

   22

SECTION 12 DEFAULT/TERMINATION

   23

SECTION 13 LIMITATION OF LIABILITY

   26

SECTION 14 TAXES/INSURANCE

   27

SECTION 15 INDEPENDENT CONTRACTOR

   29

SECTION 16 FORCE MAJEURE

   29

SECTION 17 GOVERNMENTAL LAWS, RULES, AND REGULATIONS

   32

SECTION 18 INDEMNIFICATION

   33

SECTION 19 GOVERNING LAW AND ARBITRATION

   34

SECTION 20 RIGHT TO AUDIT

   35

SECTION 21 ASSIGNMENT/CHANGE OF OPERATOR

   36

SECTION 22 FIRST RIGHT OF REFUSAL

   36

SECTION 23 MISCELLANEOUS

   37

 

 

 

 

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This Throughput and Deficiency Agreement (“Agreement”) is made and entered into
this 9th day of May, 2008 by and among the following Delaware limited
partnerships: MAGELLAN PIPELINE COMPANY, L.P. (“MAGELLAN PIPELINE”), MAGELLAN
PIPELINES HOLDINGS, L.P. (“MPH”), and MAGELLAN TERMINALS HOLDINGS, L.P. (“MTH”),
all with offices at One Williams Center, Tulsa, OK 74172; and MOTIVA ENTERPRISES
LLC, a Delaware Limited Liability Company (“MOTIVA”), with offices at 700 Milam
Street, 11th Floor, Houston, TX 77002. (MAGELLAN PIPELINE, MPH, MTH and MOTIVA
may from time to time be referred to individually as a “Party” or collectively
as the “Parties”. MAGELLAN PIPELINE, MPH and MTH may, together, be referred to
as the “MAGELLAN Parties”). Except where expressly provided in this Agreement,
in the event of any conflict between this Agreement (including any exhibits
attached thereto) and the Tariff (as defined in this Agreement), the Tariff will
prevail. The MAGELLAN Parties agree that, except as required by Law, they will
not make a change in the Tariff that would be inconsistent with the express
terms of this Agreement without MOTIVA’s prior approval.

WITNESSETH:

WHEREAS, MAGELLAN PIPELINE and/or MPH contemplates constructing or acquiring and
operating a Products pipeline of at least 16” diameter originating at a site on
or adjacent to the TEPPCO Port Arthur, Texas Products terminal in Jefferson
County, Texas (the “TEPPCO Terminal”) for which MAGELLAN PIPELINE and/or MPH, as
applicable, shall negotiate with TEPPCO in good faith to allow for its full
commercial use and operation for connections to the Port Arthur Pipeline and
will include a MAGELLAN PIPELINE-operated custody transfer meter and pump (the
“Port Arthur Origin Point”) and will be available for connection to the TEPPCO
Terminal for the receipt and delivery of Product from TEPPCO as well as any
facilities necessary to connect the Magellan Products pipeline to said Port
Arthur Origin Point and terminating at the MAGELLAN PIPELINE-operated terminal
located at 7901 Wallisville Road in east Houston, Texas (“East Houston
Terminal”), which Products pipeline would be capable of moving approximately two
hundred thousand (200,000) Barrels per day of Products manufactured by the
MOTIVA Port Arthur Refinery (the “Port Arthur Pipeline”);

 

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WHEREAS, MTH is the owner of the East Houston Terminal and MAGELLAN PIPELINE
controls and operates that facility, including the Product tankage and loading
rack at such terminal. MAGELLAN PIPELINE also operates a Products pipeline in
Texas, originating at the East Houston Terminal (and including the Hearne and
MAGELLAN PIPELINE South pipelines) and capable of transporting MOTIVA’S Products
northward from the East Houston Terminal and delivering such products to
multiple destinations in Texas, including Motiva’s Dallas terminal, Waco,
Reagan, and Hearne, Texas (the “North Pipeline System”);

WHEREAS, the East Houston Terminal and the North Pipeline System shall, on the
Service Commencement Date, be capable of providing Motiva with leased storage
for three hundred thousand (300,000) Barrels of Product in the Product-specific
amounts more fully described in Exhibit A of this Agreement (“Leased Storage”);

WHEREAS, MAGELLAN PIPELINE and/or any MAGELLAN Party, as applicable,
contemplates constructing or acquiring and operating a Products pipeline of at
least 8” diameter, originating at the East Houston Terminal and terminating at
MOTIVA’S Pasadena, Texas Products terminal at a connection point and facilities
provided by MOTIVA, and capable of moving up to fifty thousand (50,000) Barrels
of Product per day (the “Pasadena Pipeline”);

WHEREAS, MAGELLAN PIPELINE contemplates constructing or acquiring the Port
Arthur Pipeline and the Pasadena Pipeline, expanding the gasoline and distillate
truck loading rack at the East Houston Terminal (the “East Houston Terminal
Loading Rack”), and providing the Leased Storage and North Pipeline System
capacity to MOTIVA no later than the Service Commencement Date;

WHEREAS, MOTIVA is a refining and marketing company that owns refinery
facilities located at Port Arthur, Texas in Jefferson County, which facilities
will originate Product shipments through the TEPPCO Terminal to the Port Arthur
Origin Point;

WHEREAS, MOTIVA desires to facilitate the connection of the Pasadena Pipeline to
its Pasadena, Texas Products terminal and to originate the transportation of
Products from the Port Arthur Origin Point through the MAGELLAN Facilities
pursuant to Throughput Fees.

 

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NOW, THEREFORE, in consideration of the promises and of the mutual covenants and
agreements contained herein, and of other good and valuable consideration the
receipt, adequacy and sufficiency of which are acknowledged, and intending to be
legally bound hereby, MAGELLAN PIPELINE, MPH, MTH and MOTIVA agree as follows:

SECTION 1

DEFINITIONS

Unless otherwise required by the content, the terms defined in this SECTION 1
shall have, for all purposes of this Agreement, the respective meanings set
forth in this Section. All Section numbers used in this Agreement refer to
Sections of this Agreement unless otherwise specifically described:

“Agreement” shall mean this Throughput and Deficiency Agreement and all exhibits
hereto as originally executed or as may from time to time be supplemented or
amended by agreement of the Parties.

“Barrel” or “BBL” shall mean 42 United States standard gallons at 60 degrees
Fahrenheit.

“bpd” or “BPD” shall mean Barrels per day.

“Contract Year” shall mean the period beginning on the Service Commencement Date
or any anniversary thereof and ending 365 consecutive days (366 consecutive days
in the case a period has February 29th) later.

“Deficiency Payment” shall have the meaning set forth in Section 5.2.

“East Houston Terminal” shall have the meaning set forth in the first WHEREAS
clause of this Agreement.

“East Houston Terminal Loading Rack” shall have the meaning set forth in the
fifth WHEREAS clause of this Agreement.

“Effective Date” shall mean the date first set forth above in this Agreement.

 

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“Force Majeure” shall have the meaning set forth in Section 16.1.

“Governmental Authority” shall mean governmental agencies (including courts),
local, state, and federal, having jurisdiction over the services to be provided,
including the applicable MAGELLAN Facilities with which the services will be
provided, under this Agreement.

“Law” shall mean all applicable local, state and federal constitutions, laws
(including common law), treaties, statutes, orders, decrees, rules, regulations,
codes, and ordinances issued by any Governmental Authority, and including
judicial or administrative orders, consents, decrees, and judgments, and
determinations by, or interpretations of any of the foregoing by any
Governmental Authority having jurisdiction over the matter in question and
binding on a given Party, whether in effect as of the date hereof or thereafter
and, in each case, as amended.

“Leased Storage” shall have the meaning set forth in the third WHEREAS clause of
this Agreement. The form of agreement by which such Leased Storage will be
provided pursuant to this Agreement is attached hereto as Exhibit A (the “Leased
Storage Agreement”).

“Leased Storage Agreement” shall have the meaning set forth in the preceding
definition in this Agreement.

“MAGELLAN Facilities” shall mean the Port Arthur Pipeline, the East Houston
Terminal, the East Houston Terminal Loading Rack, the Pasadena Pipeline, the
North Pipeline System, and the Port Arthur Origin Point facilities.

“Minimum Annual Revenue” shall have the meaning set forth in Section 5.

“Minimum Total Revenue” shall have the meaning set forth in Section 5.

“MOTIVA Port Arthur Refinery” shall have the meaning set forth in the sixth
WHEREAS clause of this Agreement.

“North Pipeline System” shall have the meaning set forth in the second WHEREAS
clause of this Agreement.

 

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“Parties” shall mean MAGELLAN PIPELINE, MPH, MTH and MOTIVA or their permitted
assigns, and “Party” shall mean any one of the Parties as the case may be.

“Pasadena Pipeline” shall have the meaning set forth in the fourth WHEREAS
clause of this Agreement.

“Port Arthur Origin Point” shall have the meaning set forth in the first WHEREAS
clause of this Agreement.

“Port Arthur Pipeline” shall have the meaning set forth in the first WHEREAS
clause of this Agreement.

“Product” or “Products” shall mean gasoline and distillates which meet the
required specifications established pursuant to MAGELLAN PIPELINE’S Tariff and
are shipped to any one of the following destinations: East Houston Terminal;
MOTIVA’s Pasadena, Texas Products terminal; and the following destinations in
Texas on the North Pipeline System: Hearne; Reagan; Waco; Motiva’s Dallas
terminal; and Fort Worth, to the extent it is added to this Agreement. The
Magellan Parties shall endeavor in good faith to accommodate product grade
changes requested by MOTIVA.

“Related Party” or “Related Parties” means, with respect to a Party, any
corporation, partnership, limited liability company, trust, or other entity or
person controlling, controlled by, or under common control with that Party. The
term “control” (including the terms “controlled by” or “under common control
with”) means the possession of the power to direct or cause the direction of the
management and policies of a person, whether through ownership, by contract, or
otherwise (including acting as a general partner of a limited partnership).
Notwithstanding the foregoing, for the purposes of this Agreement: (a) The
MAGELLAN Parties and MOTIVA shall not be deemed to be Related Parties of one
another; and (b) Related Parties of MOTIVA shall include, but shall not be
limited to, Saudi Refining Company Inc., Shell Trading (US) Company, Shell Oil
Products US, and Deer Park Refining Limited Partnership.

“Service Commencement Date” means the following: The MAGELLAN Parties will give
MOTIVA written notice sixty (60) days in advance of the date that the MAGELLAN
Facilities are expected to be ready to commence commercial service with

 

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respect to the receipt, transportation, storage, handling, loading and delivery
of Products (the “Magellan Completion Date”). The MAGELLAN Parties will also
give MOTIVA written notice thirty (30) days in advance of the Magellan
Completion Date. MOTIVA will give MAGELLAN written notice sixty (60) days in
advance of the date that the MOTIVA Facilities are expected to be ready to
commence commercial service with respect to the receipt, transportation,
storage, handling, loading and delivery of Products (the “MOTIVA Completion
Date”). MOTIVA will also give MAGELLAN written notice thirty (30) days in
advance of the MOTIVA Completion Date. The Service Commencement Date will
commence fifteen (15) days after the “Completion Date” as hereinafter defined.
The Completion Date shall be the earlier of: (a) the date that the MAGELLAN
Facilities, the TEPPCO Terminal, and MOTIVA’s Port Arthur Refinery expansion are
ready to commence commercial service with respect to the receipt,
transportation, storage, handling, loading and delivery of Products in
accordance with this Agreement; or (b) March 31, 2011. If the MAGELLAN
Facilities are not ready to commence commercial service with respect to the
receipt, transportation, storage, handling, loading and delivery of Products by
March 31, 2011, this Agreement will remain in effect and the Minimum Annual
Revenue will be reduced by an amount that equates to the reduced volume(s) of
Product that MOTIVA is unable to transport and/or throughput at such of the
MAGELLAN Facilities that are not then ready to commence such commercial service
(up to the minimum, initial Forecasted Volumes set forth in Section 5.1 with
respect to such facilities). If MOTIVA is not ready to commence commercial
service with respect to the receipt, transportation, storage, handling, loading
and delivery of Products on the Completion Date, this Agreement and MOTIVA’s
Minimum Annual Revenue and Minimum Total Revenue obligations will remain in
effect. Any Throughput Fees paid to the MAGELLAN Parties prior to the Service
Commencement Date shall be deducted from the Minimum Total Revenue requirement;
however, the Minimum Annual Revenue Requirement shall not begin until the
Service Commencement Date. Notwithstanding anything in this Agreement to the
contrary, during the period commencing on the Effective Date and ending on the
day immediately preceding the Service Commencement Date, MOTIVA will receive
credit for each dollar of tariff revenue generated for MAGELLAN PIPELINE from
barrels of MOTIVA’s gasoline and distillates (that meet the required
specifications established for the

 

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North Pipeline System) that MOTIVA tenders into such North Pipeline System at
either the East Houston Terminal or at Galena Park in Houston (at the MTH Galena
Park terminal or the MAGELLAN Pipeline Kinder-Morgan connection) for delivery to
the East Houston Terminal, and or Regan, or to MOTIVA’s terminals at Hearne,
Waco or Dallas. The total amount of such credit shall be deducted from the
Minimum Total Revenue requirement.

“Tariff” shall mean the MAGELLAN PIPELINE incentive tariff (whether one or more)
to be tendered for filing with the Texas Railroad Commission by MAGELLAN
PIPELINE for purposes of performing the transportation services specified under
this Agreement from the Port Arthur Origin Point, including all current and
future supplements to and successive issues thereof. The material terms that
will be reflected in the Tariff are set forth in attached Exhibit B.
Notwithstanding anything in this Agreement to the contrary, in no event during
the Term hereof: (a) shall the Tariff from the Port Arthur Origin Point exceed
one hundred five percent (105%) of the MAGELLAN PIPELINE base tariff from East
Houston on the North Pipeline System respectively to Hearne, Reagan or Waco; or
(b) shall the Tariff from Port Arthur on the North Pipeline System to Motiva’s
Dallas terminal exceed Explorer Pipeline’s base tariff from Pasadena to Motiva’s
Dallas terminal. In the event the Tariff from the Port Arthur Origin Point
exceeds one hundred five percent (105%) of the MAGELLAN PIPELINE base tariff
from East Houston on the North Pipeline System respectively to Hearne, Reagan or
Waco or the Tariff from Port Arthur on the North Pipeline System to Motiva’s
Dallas terminal exceeds Explorer Pipeline’s base tariff from Pasadena to
Motiva’s Dallas terminal, Motiva’s rate shall be adjusted to incorporate such
lower rates, and the Minimum Annual Revenue commitment shall be adjusted to
reflect such lower rates. The MAGELLAN Parties specifically reserve the right to
file higher, non-incentive tariffs from the Port Arthur Origin Point to the
destinations described above on the North Pipeline System.

“TEPPCO Terminal” shall have the meaning set forth in the first WHEREAS clause
of this Agreement.

“Term” shall have the meaning set forth in SECTION 2.

 

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“Terminalling Agreement” shall mean the form of terminalling agreement attached
hereto as Exhibit C by which MOTIVA and/or the MOTIVA Related Parties shall
agree to any terminalling services at a MAGELLAN PIPELINE terminal on its North
Pipeline System and at the East Houston Terminal Loading Rack.

“Throughput Fee” shall have the meaning set forth in Section 10.

SECTION 2

TERM

Initial Term. The initial term of this Agreement (“Initial Term”) shall commence
on the Effective Date and, unless terminated earlier in accordance with express
provisions of this Agreement, shall terminate on the fifteenth
(15th) anniversary of the Service Commencement Date.

Renewal Terms. Following the Initial Term, this Agreement may continue
thereafter for successive five (5) year periods upon mutual agreement of the
Parties (each, a “Renewal Term”). Either Party interested in continuing the
Agreement for a Renewal Term shall notify the other Party in writing of such
interest at least three (3) years prior to the expiration of the Initial Term or
any Renewal Term. In the absence of mutual agreement to continue this Agreement
it shall expire at the termination of the Initial Term or the current Renewal
Term.

SECTION 3

CONSTRUCTION

3.1 Subject to the terms and conditions of this Agreement, including without
limitation, MOTIVA’S satisfaction of its obligations set forth in the second
paragraph of this section, the MAGELLAN Parties, at their sole cost and expense,
will acquire or construct the Port Arthur Pipeline, the Port Arthur Origin
Point, and the Pasadena Pipeline, will expand the East Houston Terminal Loading
Rack by constructing one proprietary gasoline additive tank for Motiva’s use,
one additional lane, in addition to the two existing lanes, to load Product and
to blend ethanol into gasoline, with at least two of the lanes capable of
loading gasoline, and will construct a ten-inch (10”) diameter pipeline from the
Frost terminal to the Hearne pipeline in order to move Product from Frost to

 

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Waco, Reagan and Hearne, such that the MAGELLAN Facilities will have sufficient
capacity to receive and deliver the volumes of MOTIVA’S Products as outlined in
Section 5.1 by the Service Commencement Date.

MOTIVA shall, at its sole obligation and expense: (a) grant, at no cost to the
MAGELLAN Parties, mutually agreed-upon easements, licenses, and rights on the
premises of MOTIVA’s Pasadena, Texas Products terminal for the MAGELLAN Parties
to construct, maintain and operate all connection and other facilities, up to
and including the meter, necessary to connect the proposed Pasadena Pipeline to
MOTIVA’S Pasadena, Texas Products terminal; (b) facilitate the granting of such
easements, licenses, and rights at, and for, the Port Arthur Origin Point as are
necessary for the MAGELLAN Parties to access, construct, maintain and operate
the Port Arthur Origin Point. The MAGELLAN Parties shall not enter into any
Connection Agreement with the TEPPCO Terminal containing connection fees without
the prior consent of MOTIVA. MOTIVA, upon agreement to the terms of such
Connection Agreement, shall pay and/or reimburse any such connection fees. It is
understood by the Parties that the MAGELLAN Parties shall not be responsible for
the construction, maintenance, and/or operation of any facilities upstream of
the meter and main line pump at the Port Arthur Origin Point. Such connection at
MOTIVA’s Pasadena, Texas Product terminal will be signified and governed by
connection agreements in the form attached hereto as Exhibit 3.1. Without
limitation of the foregoing, MOTIVA’s costs and obligations include
responsibility for installing and maintaining at its Pasadena terminal all
necessary facilities to connect from the MAGELLAN Parties’ meter station at such
terminal to MOTIVA’s Pasadena terminal. It is understood by the Parties that the
Magellan Parties, shall not be responsible for providing the facilities, rights
and agreements necessary to connect MOTIVA’s Port Arthur refinery to the Port
Arthur Origin Point.

3.2 The Port Arthur Pipeline, Pasadena Pipeline and North Pipeline System will
be a part of a common carrier pipeline system and MAGELLAN PIPELINE’S
obligations and duties as a common carrier to handle and carry volumes of
Product received from MOTIVA, as well as its obligation and duties to all
shippers which tender products, shall be determined pursuant to the Tariff.

 

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3.3 MAGELLAN PIPELINE and MOTIVA, and their respective contractors, shall
actively and regularly discuss, on an ongoing basis, the design and construction
of the connection/custody transfer facilities for the Port Arthur Pipeline at
the Port Arthur Origin Point and for the Pasadena Pipeline at MOTIVA’S Pasadena,
Texas Products terminal, including, without limitation, current activities,
projected timelines and subcontractor status, in each case in an advisory and
cooperative capacity only. Additionally, MAGELLAN and MOTIVA shall actively
discuss, on an ongoing basis during the Term of this Agreement, material
operational issues relating to such connection facilities, including, without
limitation, planned maintenance. Nothing herein shall be construed as MOTIVA
directing or controlling the design and construction and/or operation of the
Port Arthur Pipeline or the Pasadena Pipeline.

3.4 The design and construction of MAGELLAN Facilities and the MOTIVA facilities
at the connection points to be constructed or expanded pursuant to this
Agreement shall materially comply with all Law and generally-accepted industry
standards.

3.5 As of the Effective Date, MAGELLAN shall begin project design, permitting,
engineering and other work with respect to such MAGELLAN Facilities to be
acquired or constructed, expanded or otherwise made commercially ready for use
pursuant to this Agreement and shall endeavor in good faith to cause the
MAGELLAN Facilities to be ready to begin receiving and transporting Product by
the Completion Date, provided that such date shall be extended by any period of
Force Majeure, by delays due to regulatory matters or inclement weather, or as
may otherwise be agreed in writing by the Parties. MAGELLAN will inform MOTIVA
on a quarterly basis and, beginning in 2009, on a monthly basis of anticipated
delays in construction of the MAGELLAN Facilities, the nature and extent of such
delays, and plans to mitigate such delays. MAGELLAN will also provide MOTIVA
with monthly written updates on project progress.

3.6 In the event the MAGELLAN Parties are unable to obtain government and/or
regulatory permits and/or approvals necessary to begin construction by
January 1, 2010, the MAGELLAN Parties will notify MOTIVA and provide reasonable
detail relating to the status and issues concerning such permits/approvals.
MOTIVA shall have the option to terminate this Agreement with no penalty or
payment obligation to the MAGELLAN Parties provided that such option to
terminate is exercised, with notice thereof to the MAGELLAN Parties, within
sixty (60) days of the notice from the MAGELLAN Parties.

 

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SECTION 4

OPERATION

4.1 Subject to and without limitation of the terms and conditions of this
Agreement, beginning as of the Completion Date, the MAGELLAN Parties shall, at
their sole cost and expense, operate and maintain or cause to be operated and
maintained, the MAGELLAN Facilities in material compliance with all Law and
generally-accepted industry standards. During the Term of this Agreement, the
MAGELLAN Parties will endeavor in good faith (a) to provide MOTIVA with annual
schedules of the MAGELLAN Parties’ expected major maintenance activities planned
for the MAGELLAN Facilities and (b) to operate the MAGELLAN Facilities and make
available adequate personnel, materials and services so as not to disrupt the
flow of ratable deliveries from MOTIVA. Provided that MOTIVA provides the
MAGELLAN Parties with notice reasonably in advance of any turn-around or other
major maintenance scheduled for the MOTIVA Port Arthur Refinery, the MAGELLAN
Parties will endeavor in good faith to undertake major maintenance on the
MAGELLAN Facilities during the same maintenance period as MOTIVA’s Port Arthur
Refinery.

4.2 Product transported through the MAGELLAN Facilities for MOTIVA may be
commingled with substantially similar product of other shippers and shall be
subject to reasonable changes in quality and other characteristic as may result
from such intermixing, except MOTIVA’s TxLED distillate stored in tankage will
not be intermixed with ULSD but may be commingled with any product specifically
designated as TxLED by the Texas Commission on Environmental Quality.

 

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SECTION 5

REVENUE COMMITMENT AND DEFICIENCIES

5.1 As an inducement to the MAGELLAN Parties to enter into this Agreement,
subject to the terms and conditions set out in this Agreement, including
Section 10 concerning Throughput Fees, MOTIVA agrees to transport or throughput,
or to cause the transportation or throughput of, ratable volumes of Product
through the MAGELLAN Facilities as will generate for the MAGELLAN Parties a
minimum annual revenue for each Contract Year of the Term (“Minimum Annual
Revenue”). The Minimum Annual Revenue as of the Effective Date has been
determined by the Parties to be $26,794,829 based upon the following forecasted
annual amounts and volumes (the “Forecasted Annual Volumes”):

 

Pipeline Transportation

   Annual
Volume
of BBLs    Throughput
Fees
(Cents/BBL)    Minimum Annual
Revenue

(a) Port Arthur to East Houston

   2,847,000    40.10    $ 1,141,647

(b) Port Arthur to Pasadena

   12,556,000    46.20    $ 5,800,872

(c) Port Arthur to Hearne

   2,883,500    95.94    $ 2,766,430

(d) Port Arthur to Reagan

   693,500    93.50    $ 648,423

(e) Port Arthur to Motiva’s Dallas terminal

   10,512,000    96.43    $ 10,136,722

(f) Port Arthur to Waco

   3,358,000    89.50    $ 3,005,410               

Subtotals:

   32,850,000       $ 23,499,503             

Lease Storage

        Monthly
Rates
(Cents/BBL)    Minimum Annual
Revenue

6

   300,000    40.0    $ 1,440,000

East Houston Truck Rack

        Rates
(Cents/BBL)    Minimum Annual
Revenue

(g) Throughput

   2,847,000    25.8    $ 734,526

(h) Gasoline Additive

   2,409,000    3.1    $ 74,679

(i) Ethanol Blending

   255,500    130.0    $ 332,150

(j) Diesel Lubricity Additive

   438,000    10.8    $ 47,304               

Subtotal

   5,949,500       $ 1,188,659

Total Minimum Annual Revenue as of Effective Date

              

Pipeline Transportation

           23,499,503

Leased Storage

           1,440,000

East Houston Truck Rack

           1,188,659

Additional Revenue Commitment (from any category above)

           666,667             

Grand Total

         $ 26,794,829

 

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Such Forecasted Annual Volumes, at the initial rates and fees as are set forth
above (as such rates and fees will be adjusted pursuant to Section 10.3 and the
express provisions of the agreements attached to and incorporated herein as
Exhibits A and C), will produce for the MAGELLAN Parties the Minimum Annual
Revenue amounting to $26,794,829 as of the Effective Date. Such Minimum Annual
Revenue will be adjusted each July 1st following the Effective Date by
multiplying the adjusted rates and fees pursuant to Section 10.3 by the
Forecasted Annual Volumes and adding the Additional Revenue Commitment of
$666,667 (which will not be adjusted and will be held constant). It is
understood by the Parties that Motiva’s commitment under this Agreement is one
of Minimum Annual Revenue. Without limitation of the express provisions of this
Agreement, Motiva shall not be required to ship any specific volume from any
specific location, provided Motiva meets the Minimum Annual Revenue requirement
or makes a Deficiency Payment for failure to do so. Notwithstanding anything in
this Agreement to the contrary, at such time as the volumes of Product
transported or throughput, or caused to be transported or throughput, by MOTIVA
through the MAGELLAN Facilities have produced for the MAGELLAN Parties a minimum
total amount of revenue of four hundred one million nine hundred and twenty-two
thousand four hundred and thirty five dollars ($401,922,435) (“Minimum Total
Revenue”), which minimum aggregate shall be adjusted each July 1st by first
decreasing the sum (as adjusted hereunder) by the previous twelve (12) months of
revenue received by the MAGELLAN Parties from MOTIVA under this Agreement and
multiplying that resulting balance by the ratio of the subsequent year’s Minimum
Annual Revenue to the previous year’s Minimum Annual Revenue, MOTIVA’S Minimum
Annual Revenue obligations shall thereupon terminate and this Agreement shall
automatically terminate sixty (60) days after MAGELLAN PIPELINE’S notice to
MOTIVA of MOTIVA’S satisfaction of the Minimum Total Revenue requirement unless,
prior to such notice, MOTIVA notifies the MAGELLAN Parties of MOTIVA’S desire to
renew this Agreement and the Parties mutually agree to all of the terms that
will apply to such renewal agreement. Notwithstanding the foregoing, it is
specifically understood between the Parties that so long as the MAGELLAN Parties
conclude the major portions of this project as set forth in Section 3.1, the
MAGELLAN Parties shall have the right to deploy or redeploy such assets in such
manner as they may determine so long as such deployment or redeployment does not
interfere with the MAGELLAN Parties’ performance of their obligations under this
Agreement. In the event

 

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the MAGELLAN Parties enter into an Agreement to purchase all or any portion of,
or an agreement to operate, ExxonMobil’s portion of the MagTex pipeline system,
the MAGELLAN Parties shall promptly notify MOTIVA of such agreement.

5.2 Should MOTIVA and/or the MOTIVA Related Parties fail to meet the Minimum
Annual Revenue at the end of any Contract Year during the Term, MAGELLAN shall
provide notice to MOTIVA of the amount of any deficiency. MOTIVA shall make a
deficiency payment equal to the Minimum Annual Revenue less the aggregate amount
of Throughput Fees paid to MAGELLAN in that same year, excluding revenue
shortages resulting from Force Majeure situations (the “Deficiency Payment”).
Such Deficiency Payment will be considered by MAGELLAN as prepaid Throughput
Fees, will not bear interest and will be credited to MOTIVA against Throughput
Fees on volumes that MOTIVA may elect to throughput in the three (3) future
Contract Years immediately following the Contract Year for which the Deficiency
Payment was made, but only after each of such future Contract Year’s Minimum
Annual Revenue has been delivered. Upon termination of this Agreement, any
prepaid Throughput Fees remaining to be credited to MOTIVA shall not be
reimbursable, except that for a period of thirty-six (36) Months thereafter,
MOTIVA shall have the right to a credit against the then-effective rate for
Product shipped by MOTIVA over the MAGELLAN Facilities, as long as any prepaid
Throughput Fees remain unutilized. It is specifically recognized and agreed that
MAGELLAN shall be under no obligation to reimburse MOTIVA if MOTIVA should have
any such prepaid Throughput Fees remaining at the expiration of said thirty-six
(36) month period.

5.3 If MOTIVA and/or the MOTIVA Related Parties are unable to meet the Minimum
Annual Revenue during any Contract Year due to the MAGELLAN Parties’ failure to
operate the MAGELLAN Facilities in accordance with Section 4.1, the Minimum
Annual Revenue will be reduced by an amount that reflects the difference between
(i) the volume nominated in accordance with the provisions of this Agreement,
provided that such nomination shall not exceed one hundred and twenty-five
percent (125%) of the previous ninety days’ shipments and (ii) the amount
actually shipped or throughput on such affected facilities for the month
multiplied by the volume-weighted average Throughput Fee for such affected
MAGELLAN Facilities.

 

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5.4 Market Commitment. During the Term of this Agreement, MOTIVA agrees to use
the MAGELLAN Parties’ pipeline and terminal facilities to transport and deliver
ratably all of the Product that MOTIVA owns or controls for its markets in
Houston, Hearne, Reagan, Waco, and to Motiva’s Dallas terminal, and including
MOTIVA’s Fort Worth market if the MAGELLAN Parties connect the North Pipeline
System to Fort Worth and the Parties reach mutual agreement on an applicable
Tariff, up to an aggregate of four million five hundred thousand
(4,500,000) BBLs per month provided that the Magellan Facilities provide the
aggregate capacity of four million five hundred thousand (4,500,000) BBLs per
month, on a continuing monthly basis for the term of this Agreement. MOTIVA
shall provide MAGELLAN PIPELINE with one hundred and twenty (120) days of notice
in advance of its intended ratable delivery to any of the markets served by
destinations in Texas on the Port Arthur Pipeline or the North Pipeline System
(e.g., Houston, Hearne, Reagan, Waco and MOTIVA’s Dallas terminal, and MOTIVA’s
Fort Worth terminal if applicable) of a ten percent (10%) or greater increase
(i) above the applicable Forecasted Volume(s) set forth in Section 5.1 during
the first Contract Year and (ii) following the first Contract Year, above the
monthly average of the MOTIVA deliveries through the MAGELLAN Facilities to that
market(s) in the twelve-month period immediately preceding such 120-day notice.

If, following such notice from MOTIVA, the MAGELLAN Parties fail to provide such
10%-or-greater increase, as described above with respect to volumes available
for shipment up to 4,500,000 BBLs per month on a continuing monthly basis for
the term of this Agreement, MOTIVA shall have no Market Commitment for each
affected market hereunder in excess of (i) the Minimum Annual Revenue amount for
the first Contract Year and (ii) in subsequent Contract Years, the greater of
its preceding 12-month average deliveries to that market or the volume equating
to the Minimum Annual Revenue amount.

SECTION 6

MAGELLAN PIPELINE PRORATION

6.1 Subject to Law specifically affecting MAGELLAN PIPELINE’S Port Arthur
Pipeline, Pasadena Pipeline, and/or North Pipeline System, the pro-rationing of
capacity affecting the MOTIVA capacities set forth below, will be governed by
MAGELLAN

 

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PIPELINE’S allocation policies. Subject to the foregoing, commencing on the
Service Commencement Date for the Term hereof, such policies will provide to
MOTIVA and the MOTIVA Related Parties the following capacities in accordance
with the terms set forth in Exhibit 6.1 hereto which MOTIVA will use on a
ratable basis: (a) 3,450,000 BBLS per month for Product shipped on the Port
Arthur Pipeline to the East Houston Terminal; (b) 1,500,000 BBLS per month for
Product shipped on the Pasadena Pipeline from the East Houston Terminal to
MOTIVA’S Pasadena, Texas terminal; and (c) for Product shipped northward from
the East Houston Terminal on the North Pipeline System through Frost, a total
volume of 1,680,000 BBLS per month to MOTIVA’s Dallas terminal, Waco, Reagan and
Hearne, of which such total up to 1,200,000 BBLS per month may be destined to
MOTIVA’s Dallas terminal and up to 724,500 BBLS per month may be destined to
Waco, Reagan and Hearne. Additionally, in regard to MOTIVA’s Dallas terminal
capacity, at the anniversary of the Service Commencement Date, the maximum
MOTIVA Dallas terminal capacity for any subsequent Contract Year will be the
lesser of (i) 1,200,000 BBLS of Product per month or (ii) one hundred ten
percent (110%) of the average of MOTIVA’s monthly volume of Product to MOTIVA’s
Dallas terminal for the previous two (2) Contract Years (but in no event under
this subpart (ii) less than 1,104,000 BBLS of Product per month).

If MOTIVA is prorated in any given month on MAGELLAN PIPELINE’S Port Arthur
Pipeline, Pasadena Pipeline, and/or North Pipeline System and cannot, as a
result, meet its Minimum Annual Revenue commitment, then the Minimum Annual
Revenue commitment will be reduced by an amount that reflects the difference
between (i) the lesser of the volume nominated in accordance with the provisions
of this Agreement on the prorated pipeline segment or the negotiated capacity as
set forth above in this section on such segment and (ii) the amount actually
shipped on such segment for the month multiplied by the volume weighted average
Tariff to the destinations served by that pipeline segment. In the event Motiva
is prorated for more than ninety (90) days in any one hundred and eighty
(180) day period (other than for reasons of Force Majeure) to any of the three
destinations set forth in the preceding paragraph and such proration prevents
MOTIVA from shipping a volume to that destination in such 180-day period (the
volume actually shipped by MOTIVA during such 180-day period constituting the
“Actual Volume”) equal to a volume for that 180-day period based upon the
historical average of MOTIVA’s shipments to such destination for the 12-month
period immediately preceding

 

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such 180-day period (the “Historical Average Volume”), Motiva shall have the
option to seek alternative means of transportation into such affected
destination for the difference between the Historical Average Volume and the
Actual Volume; and the Minimum Annual Revenue requirement shall be adjusted on a
permanent basis taking the amount of such difference into account.

SECTION 7

PRODUCT GAIN AND LOSS

The provisions that will govern the Parties under this Agreement with respect to
Product losses shall be as expressly provided by the Tariff, the Leased Storage
Agreement, and the Terminalling Agreement.

SECTION 8

PRODUCT TESTING AND MEASUREMENT

The quality of the Product handled pursuant to this Agreement shall be
determined in accordance with the applicable provisions of the Tariff, the
Leased Storage Agreement, and the Terminalling Agreement.

SECTION 9

TITLE AND CUSTODY

Title to the Product transported, stored and/or handled hereunder shall always
remain with MOTIVA and/or the MOTIVA Related Parties. MAGELLAN shall be deemed
to have custody of and responsibility for the Product starting at the point of
receipt into the MAGELLAN Facilities and ending at the point when the applicable
Product is delivered out of the MAGELLAN Facilities, as specified in the
applicable provisions of the Tariff, the Leased Storage Agreement, and the
Terminalling Agreement.

 

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SECTION 10

THROUGHPUT FEE

10.1 MOTIVA shall pay or shall cause the MOTIVA Related Parties to pay the
MAGELLAN Parties the applicable Throughput Fees as set out in Exhibit 10.1 for
the transporting, storing and handling Product through the MAGELLAN Facilities.

10.2 If, during the Term, MAGELLAN PIPELINE offers any of its customers
transporting Product from the Port Arthur Origin Point to the East Houston
Terminal or to the Hearne, Reagan, or Waco terminals or MOTIVA’s Dallas terminal
on the North Pipeline System, other than MOTIVA, a tariff lower than the
applicable MAGELLAN PIPELINE Tariff for volumes, services and delivery points
equivalent to those under this Agreement, then the applicable lower tariff shall
automatically apply to the applicable portion of MOTIVA’s affected volumes. If
such a reduction becomes effective for Product delivered pursuant to this
Agreement, then MOTIVA’s Minimum Annual Revenue will be adjusted accordingly.
Additionally, if after the Service Commencement Date and during the Term, the
MAGELLAN Parties publish a tariff from Hearne to Reagan, Waco or MOTIVA’s Dallas
terminal, and such tariff, when combined with a published tariff from Port
Arthur/Beaumont to Hearne, is less than the MAGELLAN Parties’ Tariffs from the
Port Arthur Origin Point to Reagan, Waco, and MOTIVA’s Dallas terminal, MOTIVA’s
tariff from the Port Arthur Origin Point to Reagan, Waco, and MOTIVA’s Dallas
terminal shall be adjusted to equal the lower tariff.

10.3 The MOTIVA Dallas terminal Tariff is not governed by or subject to any of
the limitations of this Section 10.3.

Notwithstanding the other provisions of this Agreement and in addition to any
increases determined in accordance with Section 10.4, on the first (1st) day of
the first July following the Effective Date and each subsequent July 1st
thereafter, the Throughput Fees, including those provided under the Terminalling
Agreements, as described in Exhibit 10.1, but expressly excluding the Additional

 

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Revenue Commitment which will not be adjusted hereunder, shall be increased by
the amount of increase in the Producer Price Index for Finished Goods (PPI-FG)
using the following formula. The Base Index shall be the published PPI-FG as of
December 31, 2006, which will be compared with subsequent anniversary date
indexes referred to as the Final Index (the first of which will be in 2007). The
percentage change will be calculated to the third decimal place and applied to
the Throughput Fees to determine the change to the Throughput Fees in accordance
with the following formula:

[Final Index – Base Index] X [Throughput Fee] = Change to Throughput Fees

[Base Index]

Notwithstanding anything in this Agreement to the contrary, if the actual PPI-FG
amount is a negative amount, such amount will not decrease the Throughput Fees.
Rather, such negative percentage amount(s) will be “banked” by the MAGELLAN
Parties. If, in subsequent Contract Years, the methodology described provides an
increase, then to the extent that such increase exceeds the banked percentage
decrease(s), the MAGELLAN Parties shall apply such difference in the subsequent
Contract Year.

In the event the U.S. Department of Labor no longer keeps or publishes the
Producer Price Index for Finished Goods, the Parties agree to establish an
alternative method of adjusting such fees based on a currently published U.S.
Government Index, which similarly reflects the rate of inflation applicable to
Oil Pipelines.

10.4 Notwithstanding anything herein to the contrary, in the event that at any
time after the Effective Date any of the MAGELLAN Parties is required by Law to
make improvements to all or a portion of the MAGELLAN Facilities or to otherwise
incur therefor additional expenses for public safety, pollution control or any
other similar or dissimilar reason, the MAGELLAN Parties, subject to the
provisions of this Section 10.4, may increase the Throughput Fees hereunder to
recover such costs and expenses. The MAGELLAN Parties shall notify MOTIVA not
less than ninety (90) days prior to the implementation of any increase under
this Section 10.4, of the amount of such increase, the reason for such increase
and the method of calculating such increase.

 

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During the first five years of the Term, MOTIVA shall have the right to notify
the MAGELLAN Parties, within thirty (30) days after MOTIVA receives the MAGELLAN
Parties’ notice, of MOTIVA’s decision not to pay such increase. If MOTIVA fails
to timely notify the MAGELLAN Parties of its decision then it shall be deemed
for purposes of this Agreement that MOTIVA accepts and approves such increase.
If, during such initial five-year period of the Term, MOTIVA notifies the
MAGELLAN Parties that MOTIVA will not accept such increase then the MAGELLAN
Parties shall have the right, without any liability to MOTIVA, to terminate this
Agreement, at any time in the MAGELLAN Parties’ sole discretion, after receipt
of MOTIVA’s notice. Except as otherwise provided, the timing of the
implementation of any increases allowed under this Agreement shall be at the
discretion of the MAGELLAN Parties but in no event shall such be retroactive.

Furthermore, the MAGELLAN Parties at their discretion may either implement an
increase for all or any portion of any increase allowed under Section 10.4 or
may elect not to implement any such increases at all. If the MAGELLAN Parties
propose any increase to Throughput Fees pursuant to this Section 10.4, MOTIVA
shall be entitled to audit the MAGELLAN Parties’ applicable books and records to
determine if the amount of the increase is justified by the actually-incurred
amounts of costs of the improvements and/or expenses relating to the MAGELLAN
Facilities. If such audit shall reflect that such increase was not justifiable
in accordance with the foregoing, MAGELLAN shall refund promptly to MOTIVA any
sums overpaid by MOTIVA, unless MAGELLAN disagrees with the result of such
audit, in which event the matter shall be resolved as a dispute pursuant to
SECTION 19 hereof.

SECTION 11

PRICE AND PAYMENT

11.1 Payments will be governed by and made in accordance with the express
provisions of the Tariff, the Terminalling Agreement or the Leased Storage
Agreement, as applicable. MOTIVA’s and/or the MOTIVA Related Parties’
obligations to make payments hereunder are absolute and shall not be subject to
any right of set-off or counterclaim by reason of any claim against the MAGELLAN
Parties under this Agreement or otherwise and MOTIVA hereby waives any such
right of set-off or counterclaim.

 

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11.2 In the event MOTIVA and/or the MOTIVA Related Parties dispute any portion
of any invoice, MOTIVA and/or the MOTIVA Related Parties shall promptly notify
the MAGELLAN Parties in writing of the disputed portion and pay the undisputed
portions according to the terms of this Section. After receipt of such notice,
the MAGELLAN Parties shall promptly work with MOTIVA to resolve the dispute. If
the Parties are unable to resolve such dispute within thirty (30) days after
receipt of such notice, the parties will submit to arbitration in accordance
with the Governing Law clause in SECTION 19 herein.

11.3 Unless otherwise required by Law, in the event MOTIVA and/or the MOTIVA
Related Parties owe any amounts, excluding any amounts subject to a good faith
dispute, which are past due in excess of ninety (90) days, the MAGELLAN Parties,
at their sole election, may, without limitation of their other rights and
remedies under this Agreement, (a) refuse to accept Product from MOTIVA and/or
the MOTIVA Related Parties for handling and transportation hereunder, (b) refuse
to deliver Product to MOTIVA and/or the MOTIVA Related Parties, or (c) require
MOTIVA and/or the MOTIVA Related Parties to pay or furnish additional guaranty
of payment to the MAGELLAN Parties prior to further acceptance of Product for
shipment or delivery hereunder, or (d) any combination of (a), (b) and (c).

11.4 Interest. Unless otherwise required by Law, all amounts owed under this
Agreement shall bear interest, beginning on the thirtieth (30th) day after
becoming due hereunder, calculated at the then-effective LIBOR rate.

SECTION 12

DEFAULT/TERMINATION

12.1 If MOTIVA and/or the MOTIVA Related Parties become insolvent or shall make
an assignment for the benefit of creditors, or if any of the business or
property of MOTIVA and/or the MOTIVA Related Parties shall come into the
possession of a receiver or of any other governmental or court agency acting on
behalf of creditors, or if any proceedings under any bankruptcy or insolvency
act

 

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or acts for the relief of debtors shall be commenced against, by or in respect
of MOTIVA and/or any of the MOTIVA Related Parties, or if any execution shall be
issued against the property of MOTIVA and/or any of the MOTIVA Related Parties,
the MAGELLAN Parties may terminate this Agreement by written notice to MOTIVA
and to any of the MOTIVA Related Parties with which the MAGELLAN Parties have
agreements pursuant to this Agreement involving any of the MAGELLAN Facilities.
MOTIVA may terminate this Agreement by written notice to the MAGELLAN Parties if
the MAGELLAN Parties shall become insolvent or shall make an assignment for the
benefit of creditors, or if any of the business or property of the MAGELLAN
Parties shall come into the possession of a receiver or of any other
governmental or court agency acting on behalf of creditors, or if any
proceedings under any bankruptcy or insolvency act or acts for the relief of
debtors shall be commenced against, by or in respect of the MAGELLAN Parties, or
if any execution shall be issued against the property of the MAGELLAN Parties.
Any termination pursuant to this paragraph shall become effective on the date
specified in the terminating Party’s notice, but in no event prior to actual
receipt by the other Parties.

12.2 Notwithstanding anything in this Agreement to the contrary, MOTIVA shall
have the right, without cause and for its sole convenience, to terminate this
Agreement in its entirety at any time prior to the Service Commencement Date.
Except as provided in Section 3.6 of this Agreement, if MOTIVA terminates this
Agreement prior to the Service Commencement Date, MOTIVA will reimburse the
MAGELLAN Parties for all the actual reasonable costs and expenses they have
incurred after the Effective Date or will incur after the Effective Date for
obligations arising after the Effective Date in connection with the MAGELLAN
Parties’ performance of their obligations under this Agreement, including both
internal and external costs that would be capitalized as a part of the project
but which will expressly exclude any pipe and facilities owned by the MAGELLAN
Parties at the time of the Effective Date (all of which such non-excluded
capital and other costs and expenses are hereinafter referred to as the
“MAGELLAN Cost”), at the time notice of termination is given by MOTIVA plus five
percent (5%) if termination occurs in 2008, and ten percent (10%) if the
termination shall occur thereafter. Provided, however, if the MAGELLAN Parties
elect to keep either or both of the Port Arthur Pipeline or the Pasadena
Pipeline, the amount that MOTIVA will be obligated to pay to the MAGELLAN
Parties will be reduced by

 

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the amount of MAGELLAN Cost attributable to such of the Port Arthur Pipeline or
Pasadena Pipeline as the MAGELLAN Parties choose to retain. Any termination
pursuant to this paragraph shall become effective on the date specified in
MOTIVA’s notice, but in no event prior to actual receipt by the MAGELLAN
Parties.

If this Agreement is terminated under this Section 12.2, MOTIVA shall have a
right to audit the MAGELLAN Parties’ books and records to determine if the
amount of their above-described costs and expenses reported by them to have been
incurred was accurate. If the audit reflects that the amount paid by MOTIVA to
the MAGELLAN Parties exceeded the amounts authorized by this Section 12.2, such
excess shall be refunded promptly to MOTIVA, unless the MAGELLAN Parties
disagree with such results of the audit, in which event the matter shall be
deemed a dispute resolved by the Parties pursuant to SECTION 19 hereof. If the
MAGELLAN Parties elect to sell to MOTIVA the Port Arthur Pipeline and/or
Pasadena Pipeline, then MAGELLAN Parties shall assign all right, title, and
interest in and to the Pasadena Pipeline and Port Arthur Pipeline to the extent
of the work completed in performance of this Agreement on the date of the
termination, including but not limited to permits, engineering documents, and
equipment delivered or on order (“Work Product”). The Work Product shall, in
that event, be the sole and exclusive property of MOTIVA, and may be used for
any purpose MOTIVA desires.

12.3 In addition to any other provisions of this Agreement relative to default,
it is understood and agreed that if any Party hereto shall fail to substantially
perform any of the material covenants or obligations imposed upon it under and
by virtue of this Agreement, and such non-performance is not the result of Force
Majeure, then in such event the other Parties hereto may, at their option,
terminate this Agreement by proceeding as follows: A Party not in default shall
cause a written notice to be served on the Party in default stating specifically
the cause for terminating this Agreement and declaring it to be the intention of
the Party giving notice to terminate the same; whereupon the Party in default
shall have thirty (30) days after the service of the notice in which to remedy
or remove the cause or causes stated in the notice for terminating the
Agreement. If within the thirty (30) day period the Party in default does so
remedy or remove said cause or causes, then such notice shall be withdrawn and
this Agreement shall continue in full force and effect. In case the Party in
default does not so remedy or remove the cause or causes within the thirty
(30) day period, then, at the option of the Party giving the notice, this
Agreement shall become null and void from and after the expiration of the thirty
(30) day period.

 

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If a default cannot be reasonably cured within the thirty (30) day period and
the Party in default has commenced to remedy the cause of default within such
thirty (30) day period and continues diligently pursuing such remedy after such
thirty (30) day period, then the Party not in default may not terminate this
Agreement until such time as the Party in default stops diligently pursuing a
remedy of the default or it becomes obvious after ninety (90) days following
such thirty (30) day period that a remedy of the default is not immediately
forthcoming. Any termination of this Agreement pursuant to the provisions of
this Section shall be without prejudice to the rights of any Party including,
but not limited to: 1) the right to collect any amounts then due such Party
under the provisions of this Agreement; provided, however, that MOTIVA shall
have no obligation to pay any Deficiency Payments if the MAGELLAN Parties are
the Party in default (which default caused the Deficiency Payment to arise) and
are unable to remedy such default; and 2) the right of MOTIVA to receive any
Product for which it has paid the charges hereunder but has not received prior
to the time of cancellation.

SECTION 13

LIMITATION OF LIABILITY

NO PARTY SHALL BE LIABLE TO ANY OTHER PARTY FOR LOSS OF PROFITS, INDIRECT,
INCIDENTAL, SPECIAL, EXEMPLARY OR PUNITIVE OR CONSEQUENTIAL DAMAGES RESULTING
FROM THE BREACH OF THIS AGREEMENT EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBLE EXISTENCE OF SUCH DAMAGES. ANY ACTION BY A PARTY AGAINST THE OTHER
PARTIES ARISING FROM OR CONNECTED TO THIS AGREEMENT MUST BE BROUGHT WITHIN TWO
(2) YEARS AFTER THE CAUSE OF ACTION AROSE.

 

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SECTION 14

TAXES/INSURANCE

14.1 Taxes: MOTIVA and/or the MOTIVA Related Parties shall pay any and all
taxes, assessment, or charges levied on the Products covered herein, including
property taxes on the inventory owned by MOTIVA and/or the MOTIVA Related Party.
The MAGELLAN Parties shall pay any and all taxes, assessments or charges levied
on the MAGELLAN Facilities (real property and /or personal property tax) or
services performed. The Throughput Fee in SECTION 10 shall include all
applicable taxes and fees and shall not be subject to additional adjustment for
any tax or fee unless such tax or fee are newly imposed after the Effective Date
of this Agreement.

14.2 Insurance. Each Party shall maintain or shall cause to be maintained, in
full force and effect throughout the term of this Agreement, at its sole cost
and expense, the insurance described below, with coverage’s and limits at levels
customary in the industry for performing work, activities, operations and
services similar to those to be performed as described in this Agreement but at
levels not less than the minimums indicated. A certificate of insurance
evidencing such coverage on behalf of each Party shall be provided to the
respective requesting Party upon written request:

(a) Worker’s Compensation. Each of the Parties shall obtain worker's
compensation insurance covering each of their respective operations and work
being performed pursuant to this Agreement which shall apply to all of its
employees and its Related Parties, including borrowed servants, alternate and
statutory employees, in accordance with the benefits afforded by the statutory
Worker’s Compensation Acts applicable to the state, territory or district of
hire, supervision or place of accident. Policy limits for worker’s compensation
shall not be less than statutory limits and for employer’s liability one million
dollars ($1,000,000) each accident, one million dollars ($1,000,000) disease
each employee, and one million dollars ($1,000,000) disease policy limit.

(b) Commercial General Liability Insurance applicable to each respective Party’s
operations under this Agreement including bodily injury, death, property damage,
independent contractors, products/completed operations, sudden and accidental
pollution, contractual, and personal injury liability, with a limit of
$1,000,000 per occurrence and in the annual aggregate.

 

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(c) Commercial/Business Automobile Insurance covering owned, hired, rented, and
non-owned automotive equipment with a limit of $1,000,000 per accident.

(d) Excess Umbrella Liability Insurance coverage in excess of the terms and
limits of insurance specified in 1(a), (b) and (c) above with a combined limit
of $4,000,000 per occurrence and annual aggregate.

14.3 If a Party sub-contracts or the Parties, jointly or collectively,
sub-contract any part of the operations, work or services to be performed under
this Agreement, the Party or Parties shall use reasonable commercial efforts to
require each of its respective contractors to maintain insurance substantially
equivalent to the insurance required to be provided, carried and maintained by
the Parties herein and further may be specified in any specific contractor
construction or service (C & S) agreements with the respective Party’s
applicable contractors. In addition, if not covered in said contractor C&S
agreements, require respective contractors to name the Parties as additional
insureds but only with respect to the respective contractor’s work, operations
and/or responsibilities being performed pursuant to this Agreement and said
contractor C&S agreements. Upon request by one Party, the other Party shall have
its respective contractors furnish the same evidence of insurance required of
the Parties herein.

In such instances where the Parties have been added as an additional insured on
independent contractor’s and/or sub-contractor’s policies, the independent
contractor’s or sub-contractor’s insurance shall be deemed primary insurance to
that of the respective Party’s insurance.

14.4 The maintenance by each Party of the insurance described above shall not
relieve each Party from any liability or obligation to each respective Party
under this Agreement. The failure of a Party or that Party’s contractors to
obtain and maintain the insurance coverage required herein shall not relieve
such Party of any obligations or liabilities set forth in or arising from this
Agreement. Provided, further, the denial of coverage by any insurance carrier of
a Party or its contractors shall not relieve such Party from any liability or
obligation to the respective Parties under this Agreement.

 

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14.5 Reimbursement for Insurance Policies. All insurance premiums,
self-insurance claim expenses, deductibles, self insurance retention costs,
captive reinsurance or fronting arrangements, and similar self funded programs
applicable to the insurance policies described in this Agreement shall be the
sole responsibility of the respective Party’s account.

14.6 Claims brought against the respective Party or Parties or relating to the
operations, and/or arising from activities carried on or work performed or
required by this Agreement by the Parties, or against the Company, and covered
by the respective Party’s insurance program required herein or otherwise are to
be processed and handled to conclusion by the Parties in accordance with SECTION
18 of this Agreement and elsewhere herein. If a Party so desires, irrespective
of whether such Party is a plaintiff or defendant in addition to counsel
employed by the other Party, it may be represented in any such lawsuit but at
its sole expense by counsel selected by it.

14.7 Insurance policies maintained by each Party hereunder shall include a
waiver of subrogation in favor of the other Party and the other Party’s Related
Parties.

SECTION 15

INDEPENDENT CONTRACTOR

In performing the services and their obligations pursuant to this Agreement, the
MAGELLAN Parties are each acting solely as an independent contractor maintaining
complete control over its employees and operations. No Party is authorized to
take any action in any way whatsoever for or on behalf of the other Parties,
except as may be necessary to prevent injury to persons or property, or, to
contain, reduce or clean up any spills that may occur.

SECTION 16

FORCE MAJEURE

16.1 For purposes of this Agreement, “Force Majeure” shall mean any event or
occurrence beyond the reasonable control of a Party (or its Related Parties)
that delays or prevents such Party from performing its obligations under this
Agreement including, without limitation, the following: Acts of God; strikes;
lockouts; boycotts; picketing; labor or other industrial disturbance;
explosions;

 

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nuclear reaction or radiation, radioactive contamination; acts of a public
enemy; fires; acts of terrorism; explosions; material breakage of or material
accidents to the MAGELLAN Facilities, the Port Arthur Origin Point or facilities
owned and/or being utilized by MOTIVA to fulfill the obligations under this
Agreement; wars (declared or undeclared); blockades; insurrections; riots;
epidemics; landslides; earthquakes; storms; hurricanes; lightning; floods;
extreme cold or freezing; extreme heat; washouts; arrests and restraints of
governments (but excluding restraints occurring as a result of any violations,
by the Party claiming the right to delay performance, of applicable Law or the
terms and provisions of this Agreement); confiscation or seizure by any
government or public authority; compliance with any federal, state, or local
law, or with any regulation, order, or rule of domestic or international
governmental agencies, or authorities or representatives of any domestic or
international government acting under claim or color of authority; inability to
obtain or delay in obtaining appropriate materials, supplies or labor due to a
force majeure event of the third party supplying such materials, supplies or
labor; events of Force Majeure declared by a third-party, whether upstream or
downstream of the MAGELLAN Facilities, that interfere with performance under
this Agreement; the commandeering or requisitioning by United States civil or
military authorities of any raw or component materials, product, or facilities
including, but not limited to, producing, manufacturing, transportation, and
delivery facilities, and perils of navigation, even when occasioned by
negligence, malfeasance, default, or errors in judgment; civil disturbances; or
any cause other causes, whether of the kind herein enumerated or otherwise, the
foregoing of which in any event are not the result of the gross negligence or
willful misconduct of the Party (or its Related Parties) claiming the right to
delay performance. Force Majeure shall not include (i) increases in costs of
materials, or (ii) a party’s financial inability to perform.

16.2 Subject to the provisions of this Section 16, if a Party is prevented from
performing its obligations under this Agreement due to an event of Force
Majeure, then, to the extent that it is so prevented, that Party’s failure to
perform shall not be considered a breach of its obligations under this Agreement
and the obligations of that Party shall be deferred during the continuance of
that Party's inability to perform caused by the event of Force Majeure, but for
no longer period. If a Force Majeure event renders any Party unable, in whole or
in part, to carry out its obligations under this Agreement, that Party must give
the other Party notice and full

 

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particulars in writing as soon as practicable after the occurrence of the causes
relied on, or give notice by telephone and follow the notice with a written
confirmation within forty-eight (48) hours. The Party providing the notice shall
use commercially reasonable efforts to (a) ameliorate the Force Majeure
conditions. No Party shall be compelled to resolve any strikes, lockouts, or
other industrial disputes other than as it shall determine to be in its best
interests.

16.3 If the MAGELLAN Parties notify MOTIVA of a Force Majeure event affecting
the MAGELLAN Parties’ ability to complete the MAGELLAN Facilities, excepting
where such event arises from failure to receive necessary governmental and/or
regulatory permits and/or authorizations as described in Section 3.6, such
period of Force Majeure will extend the Completion Date. If, after the Service
Commencement Date, the MAGELLAN Parties notify MOTIVA of a Force Majeure event
affecting the MAGELLAN Parties’ ability to perform under this Agreement
resulting in MOTIVA and/or the MOTIVA Related Parties being unable to transport
their nominated volumes during one or more months (up to two hundred seventy
(270) days), then the Minimum Annual Revenue will be proportionally reduced by
an amount equal to the volume unable to be transported for that period of time.
Such reduction will be determined by calculating the difference between MOTIVA’s
twelve (12)-month historical throughput on the affected pipeline segment and the
amount actually shipped, multiplied by the Tariff to destinations served by that
pipeline segment and MOTIVA and/or the MOTIVA Related Parties shall have no
obligation (including payment obligation) for any amount in excess of the
reduced revenue. If the MAGELLAN Party’s Force Majeure event extends (or is
reasonably expected to extend) beyond two hundred seventy (270) days, or upon
notice from the MAGELLAN Party that such Force Majeure event is reasonably
expected to extend beyond two hundred seventy (270) days, MOTIVA may terminate
this Agreement, negotiate a new Throughput Fee and/or negotiate to extend the
Term.

16.4 If MOTIVA notifies the MAGELLAN Parties of a Force Majeure event affecting
(a) the ability of the MOTIVA Port Arthur Refinery to produce Products or to
deliver those Products to or from the Port Arthur Origin Point for shipment on
the Port Arthur Pipeline and/or (b) the ability of MOTIVA’S Texas terminals
connected to the North Pipeline System or to the Pasadena Pipeline to receive
Product from MAGELLAN PIPELINE’S North Pipeline System or Pasadena Pipeline
System during one or more

 

31

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months (up to two hundred seventy (270) days), then the Minimum Annual Revenue
will be proportionally reduced by an amount equal to the volume of such MOTIVA
shortfall for that period of time as MOTIVA’s abilities, as described in (a) and
(b) above, are so affected, and MOTIVA and/or the MOTIVA Related Parties will be
excused from any obligation (including payment obligation) for any amount in
excess of the reduced revenue amount except as follows: The Term will be
extended to enable MOTIVA to transport or throughput quantities of Product
equivalent to those necessary to generate the Minimum Annual Revenue until the
amount of such reduced revenue is recovered by the MAGELLAN Parties. If MOTIVA’s
Force Majeure event extends (or is reasonably expected to extend) beyond two
hundred seventy (270) days, or upon notice from MOTIVA that such Force Majeure
event is reasonably expected to extend beyond two hundred seventy (270) days,
the MAGELLAN Parties may elect to extend the Term by the number of days that
would enable MOTIVA to make up delivery of its shortfall volumes, terminate this
Agreement, and/or negotiate a new Throughput Fee or other amendments to the
Agreement.

SECTION 17

GOVERNMENTAL LAWS, RULES, AND REGULATIONS

17.1 This Agreement shall be subject to all Law.

17.2 The Parties expressly excuse and relieve the each other of and from any and
all obligations hereunder to provide facilities or services when the facilities
or services are contrary to any Law.

17.3 In the event that any regulatory body having jurisdiction over this
Agreement prohibits the MAGELLAN Parties from collecting rates, charges or
Deficiency Payments for the service provided hereunder which are at least equal
to the rates, charges and Deficiency Payments provided for in this Agreement,
then the MAGELLAN Parties and MOTIVA shall meet and endeavor in good faith to
renegotiate such rates, charges and Deficiency Payments in order to maintain the
rights and obligations agreed upon herewith. Without prejudice to its rights
pursuant to Section 19, MOTIVA agrees and covenants that it will not protest or
file a complaint with any governmental agency or entity, or pursue any course of
litigation in any court that would challenge or have the effect of challenging
the validity of any Throughput Fee, deficiency charge, or any other charge
provided for under this Agreement or the Tariff.

 

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SECTION 18

INDEMNIFICATION

TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW AND EXCEPT AS SPECIFIED
OTHERWISE ELSEWHERE IN THE AGREEMENT:

MAGELLAN SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS MOTIVA, ITS MEMBERS,
AFFILIATES AND SUBSIDIARIES AND THEIR DIRECTORS, EMPLOYEES AND AGENTS (THE
“MOTIVA INDEMNITEES”) FROM AND AGAINST ANY LOSS, DAMAGE, CLAIM, SUIT, LIABILITY,
FINE, PENALTY, JUDGMENT AND/OR EXPENSE (INCLUDING REASONABLE ATTORNEYS’ FEES AND
OTHER COSTS OF LITIGATION) (COLLECTIVELY “LIABILITY(IES”), ARISING FROM
(I) INJURY, DISEASE OR DEATH OF ANY MAGELLAN EMPLOYEE, AGENT, REPRESENTATIVE OR
CONTRACTOR OR (II) DAMAGE TO OR LOSS OF ANY OF MAGELLAN’S PROPERTY (INCLUDING
MAGELLAN’S FACILITIES) REGARDLESS OF THE CAUSE, INCLUDING, BUT NOT LIMITED TO,
THE NEGLIGENCE OF MOTIVA (OTHER THAN THE NEGLIGENCE OF MOTIVA THAT CAUSES ANY
DISCHARGES, SPILLS OR LEAKS), IT BEING SPECIFICALLY UNDERSTOOD THAT MAGELLAN IS
INDEMNIFYING MOTIVA FOR ITS NEGLIGENCE. MAGELLAN SHALL ALSO DEFEND, INDEMNIFY
AND HOLD HARMLESS THE MOTIVA INDEMNITEES FROM AND AGAINST ANY LIABILITIES
ARISING FROM DISCHARGES, SPILLS OR LEAKS OF PRODUCT CAUSED BY MAGELLAN’S
NEGLIGENCE.

MOTIVA SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS MAGELLAN, ITS MEMBERS,
AFFILIATES AND SUBSIDIARIES AND THEIR DIRECTORS, EMPLOYEES AND AGENTS (THE
“MAGELLAN INDEMNITEES”) FROM AND AGAINST ANY LIABILITIES, ARISING FROM
(I) INJURY, DISEASE OR DEATH OF ANY MOTIVA EMPLOYEE, AGENT, REPRESENTATIVE OR
CONTRACTOR OR (II) DAMAGE TO OR LOSS OF ANY MOTIVA PROPERTY, REGARDLESS OF THE
CAUSE, INCLUDING, BUT NOT LIMITED TO, THE NEGLIGENCE OF MAGELLAN (OTHER THAN THE
NEGLIGENCE OF MAGELLAN THAT CAUSES ANY DISCHARGES, SPILLS OR LEAKS OF PRODUCT),
IT BEING SPECIFICALLY UNDERSTOOD THAT MOTIVA IS INDEMNIFYING MAGELLAN FOR ITS
NEGLIGENCE. MOTIVA SHALL ALSO DEFEND, INDEMNIFY AND HOLD HARMLESS THE MAGELLAN
INDEMNITEES FROM AND AGAINST ANY LIABILITIES ARISING FROM DISCHARGES, SPILLS OR
LEAKS OF PRODUCT CAUSED BY MOTIVA’S NEGLIGENCE.

 

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MAGELLAN AND MOTIVA SHALL EACH DEFEND, INDEMNIFY, AND HOLD HARMLESS THE OTHER
AND ITS RESPECTIVE MEMBERS, AFFILIATES AND SUBSIDIARIES AND THEIR DIRECTORS,
EMPLOYEES AND AGENTS FROM AND AGAINST ANY LIABILITIES TO THIRD PARTIES FOR
INJURY, DISEASE, DEATH OR DAMAGE TO OR LOSS OF PROPERTY, ARISING FROM THE
INDEMNIFYING PARTY’S NEGLIGENCE OR WILLFUL MISCONDUCT IN CONNECTION WITH ITS
PERFORMANCE OF THIS AGREEMENT. IN THE EVENT MAGELLAN AND MOTIVA ARE JOINTLY,
CONCURRENTLY, OR CONTRIBUTORILY RESPONSIBLE FOR ANY LIABILITIES TO THIRD
PARTIES, THEN THE PARTIES SHALL SHARE RESPONSIBILITY AND INDEMNIFY EACH OTHER
FOR THE LIABILITIES IN PROPORTION TO EACH PARTY’S CONTRIBUTION TO THE INJURY,
DISEASE, DEATH, OR DAMAGE TO OR LOSS OF PROPERTY.

THE LIMITATION OF LIABILITY PROVISIONS OF SECTION 13 APPLY, ACCORDING TO THEIR
TERMS, TO THIS SECTION 18.

The MAGELLAN Parties or MOTIVA, as soon as practicable after receiving notice of
any suit brought against it within this indemnity, shall furnish to the other
full particulars within its knowledge thereof and shall render all reasonable
assistance requested by the other in the defense. Each Party shall have the
right, but not the duty to participate, at its own expense, with counsel of its
own selection, in the defense and/or settlement thereof without relieving the
other of any obligations hereunder. The Parties’ obligations under this Section
shall survive any termination of the Agreement.

SECTION 19

GOVERNING LAW AND ARBITRATION

This Agreement shall be interpreted and construed in accordance with the laws of
the State of Texas, without regard to conflict of law principles.

In the event of a dispute, controversy, or claim arising out of or relating to
this Agreement (“Dispute”), the Parties shall first undertake to settle their
Dispute by good faith negotiations. Any Party may commence this process by
serving another Party with a Notice of Dispute that concisely describes the
nature of the Dispute and the relief or remedy requested. The Party or Parties
receiving such Notice of Dispute shall, within ten (10) days of its receipt
thereof, provide the giver of the notice a concise written response setting
forth the responder’s position with respect to the asserted Dispute. If for any
reason whatsoever the Dispute has not been

 

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settled within thirty (30) days of service of the Notice of Dispute, then the
applicable Parties agree to submit the Dispute to non-binding mediation with a
neutral mediator selected by such Parties. If the applicable Parties cannot
agree on a mediator or if the Dispute cannot be settled at mediation within one
hundred twenty (120) days of service of the Notice of Dispute, then such Parties
agree to submit the Dispute to final and binding arbitration in Houston, Texas
in accordance with the then-current Rules for Non-Administered Arbitration of
the CPR International Institute for Conflict Prevention and Resolution and this
provision.

The arbitration shall be governed by the United States Arbitration Act, 9 U.S.C.
sections 1-16, to the exclusion of any provisions of state law inconsistent
therewith or which would produce a different result. Judgment upon the award
rendered by the arbitrators may be entered by any court having jurisdiction. The
arbitration shall be held in Houston, Texas or such other location as may be
convenient and agreed to in writing by the applicable Parties. There shall be
three neutral arbitrators, the first two of which shall be acceptable to such
Parties with the third arbitrator being selected by the first two. The
arbitrators shall determine the Dispute of the Parties and render a final award
in accordance with the substantive law of the State of Texas, excluding the
conflicts provisions of such law, and subject to the limitation of liability
provisions of Section 13 of this Agreement. The arbitrators shall set forth the
reasons for the award in writing. The terms hereof shall not limit any
obligation of a Party to defend, indemnify or hold harmless another Party
against court proceedings or other claims, losses, damages, or expenses. In the
event such ancillary dispute between the applicable Parties arises out of the
Dispute, it may be resolved in the arbitration proceedings.

SECTION 20

RIGHT TO AUDIT

MOTIVA shall have the right, at reasonable times and on reasonable notice (but
in no event on less than two (2) weeks notice), to audit the books and records
of MAGELLAN as these records pertain to the terms and conditions of this
Agreement; provided, however, MAGELLAN shall not be required to maintain any
record for a period longer than twenty-four (24) months from the entry of such
record. An audit may be performed by the employees, independent accounting
firms, and other designated representatives of

 

35

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MOTIVA who agree, in writing, to comply with the terms of Section 23.13 of this
Agreement (including internal auditing personnel), the selection of these
personnel being subject to the mutual consent of the Parties. MAGELLAN shall, at
MOTIVA’s expense, fully cooperate with MOTIVA’s representatives to accomplish
the audit as expeditiously as possible.

SECTION 21

ASSIGNMENT/CHANGE OF OPERATOR

Neither Party may assign this Agreement, or any of its rights or obligations
hereunder (either in whole or in part), without the prior written consent of the
other Party, which consent may not be unreasonably withheld or delayed. It is
understood, however, that by such assignment, the assigning Party does not
thereby avoid obligations imposed by the terms and provisions of this Agreement,
past, present, or future, unless otherwise agreed in writing.

In addition, the MAGELLAN Parties shall not assign the right to operate the
Pasadena Pipeline or the Port Arthur Pipeline to any third party without the
express consent of Motiva, which such consent may be unreasonably withheld or
delayed.

SECTION 22

FIRST RIGHT OF REFUSAL

22.1 First Right of Refusal. If any of the MAGELLAN Parties, as applicable,
receives, from a non-related third party, a bona fide, arms-length written offer
to purchase the MAGELLAN Party’s Pasadena Pipeline assets or any part thereof,
then if the MAGELLAN Party concludes that it is an acceptable offer, MAGELLAN
shall furnish a full and complete copy of such offer to MOTIVA with a written
notice that such offer is acceptable. Upon receipt of the offer, MOTIVA shall
have the right of first refusal to elect to purchase the MAGELLAN Party’s
interest in the Pasadena Pipeline or any part thereof as related in the offer on
the same terms and conditions as are specified in the offer for a period of
forty-five (45) days following the receipt of the required notice. MOTIVA shall
have forty-five (45) days following the receipt of the required notice in which
to give written notice to MAGELLAN advising as to whether it elects to so
purchase. In the event that MOTIVA declines or otherwise fails to provide such
notice of its

 

36

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election to purchase on the stated third party terms, the MAGELLAN Party shall
be free to accept the third-party offer and proceed with the sale of its
interest on such terms and conditions as expressly set forth in the offer, but
not otherwise.

22.2 In the event of any permitted sale, assignment or other disposition of any
of the MAGELLAN Party’s interest in the Pasadena Pipeline or any part thereof,
the third party purchasing such interest shall, at the closing for any permitted
transfer, assume in writing and agree to be bound by the provisions of this
Agreement (and any other associated agreements pertaining to the MAGELLAN
Facilities) for all purposes relating to the assets acquired from the MAGELLAN
Party. Without strict compliance with this Section, any transfer or attempted
transfer of MAGELLAN’s interest in the Pasadena Pipeline except as otherwise
provided in this Section, shall be null and void.

SECTION 23

MISCELLANEOUS

23.1 Waivers and Remedies. The failure of either MOTIVA or the MAGELLAN Parties
to insist in any one or more instances upon strict performance of any of the
provisions of this Agreement or to take advantage of any of its rights hereunder
shall not be construed as a subsequent waiver of any provisions or the
relinquishment of any rights for the future. Unless specifically provided
otherwise in this Agreement, the rights and remedies provided by this Agreement
are cumulative, and the use of any one right or remedy by a Party shall not
preclude or waive its right to use any or all other remedies. Rights and
remedies hereunder are given in addition to any other rights a Party may have by
law or in equity unless provided otherwise in this Agreement.

23.2 Drafting. As between the Parties, it shall be conclusively presumed that
each and every provision of this Agreement was drafted jointly by the MAGELLAN
Parties and MOTIVA.

 

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23.3 Notices. Notices under this Agreement will be considered properly given
only when delivered by a nationally recognized overnight carrier, return receipt
requested, with postage prepaid, or sent by facsimile or telex, with confirmed
receipt thereof, and addressed as follows:

 

If to MOTIVA ENTERPRISES LLC:

MOTIVA Enterprises LLC

909 Fannin

Houston, Texas 77010

Attention: Director of Supply Strategy and Projects & General Manager, Motiva
Supply

Facsimile #: (713) 230-7898

If to MAGELLAN:

Magellan Pipeline Company, L.P. and

Magellan Terminals Holdings, L.P.

One Williams Center, Suite 3100

Tulsa, OK 74142

Attention: Vice President Transportation

Facsimile #: (918) 574 - 7444

or to any addresses as may hereafter be designated by like notice. Notice given
by facsimile will be effective upon actual receipt if received during the
recipients normal business hours, or at the beginning of the recipients next
business day after receipt if not received during the recipients normal business
hours; provided that notices by facsimile are confirmed promptly after
transmission by delivery to the recipient of a copy thereof in writing by
certified mail or personal delivery.

23.4 Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which together shall
constitute but one and the same instrument.

 

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23.5 Entirety of Agreement. This Agreement, including any exhibits hereto,
constitutes the sole and entire agreement among the Parties with respect to its
subject matter and all other matters contained herein, superseding all prior
negotiations, statements, representations, correspondence, offers, discussions,
agreements, and understandings relating to this transaction. This Agreement may
not be modified or altered orally or in any manner other than by an express
agreement in writing signed by all persons or entities that are Parties to this
Agreement at that time. This Agreement and the terms and conditions contained
herein shall apply to and are binding upon the legal representatives,
successors, and assigns of the Parties.

23.6 U.S. Dollars. All monetary amounts set forth herein are based on United
States Dollars.

23.7 Survival of Termination. The Parties acknowledge and agree that any rights
of a Party arising under this Agreement prior to its termination or expiration,
including but not limited to a right to indemnification with respect to any
matter and the limitation of liability set forth herein, shall survive the
termination or expiration of this Agreement.

23.8 Authority.

(a) Each of the MAGELLAN Parties represents and warrants to MOTIVA that it is a
limited partnership duly formed under the laws of its jurisdiction of formation
and that it is qualified to do business in all jurisdictions relevant to its
activities under this Agreement.

(b) MOTIVA represents and warrants to the MAGELLAN Parties that it is a limited
liability company duly organized under the laws of its jurisdiction of
organization and that it is qualified to do business in all jurisdictions
relevant to its activities under this Agreement.

(c) Each Party represents and warrants that it has the requisite power and
authority to enter into and perform its obligations under this Agreement and
that, when executed and delivered to the other Parties, this Agreement shall
constitute a valid and legally binding obligation of that Party.

 

39

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(d) Each Party represents and warrants that the execution, delivery, and
performance by it of its obligations hereunder will not result in a breach of or
constitute a default under any provision of its certificate of limited
partnership (for the MAGELLAN Parties) or limited liability company agreement
(for MOTIVA); or any agreement or instrument to which it is a Party and which is
material to its performance of its obligations hereunder or any order, judgment,
or ruling of any court or governmental agency to which it is a Party or by which
it is bound.

23.9 Savings Clause. If any term, covenant, or condition of this Agreement, or
the application thereof to any person or circumstance, shall to any extent be
held to be invalid or unenforceable, the remainder of this Agreement, or the
application of any such term, covenant, or condition to persons or circumstances
other than those as to which it has been held to be invalid or unenforceable,
shall not be affected thereby, and, except to the extent of any such invalidity
or unenforceability, this Agreement and each term, covenant, and condition of
the Agreement shall be valid and shall be enforced to the fullest extent
permitted by law.

23.10 Headings Not Part of Agreement. Headings of articles, sections and
subsections of this Agreement are inserted for convenience of reference only;
they constitute no part of this Agreement and are not to be considered in the
construction or interpretation of this Agreement

23.11 No Third Party Beneficiaries. This Agreement is not intended to confer any
rights or benefits on any persons other than the Parties, and all third-Party
beneficiary rights are expressly denied.

23.12 Costs and Expenses. Except as otherwise provided herein, each Party shall
bear its own costs and expenses, including but not limited to, attorney’s fees
incurred in connection with this Agreement.

23.13 Confidentiality.

(a) All information generated or provided to any Party or any Related Party of
any Party, including but not limited to, (i) documents (and amendments thereto)
executed by, correspondence to or from and memoranda prepared by the other
Party, relating to the construction or operation of the MAGELLAN Facilities,
including the transportation, handling, and storage of

 

40

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Product, or any audit, and (ii) this Agreement and any amendments hereto and all
documents relating hereto, including documents or reports regarding accounting
or throughput matters, shall be confidential and shall not be released to any
entity other than a Party or its Related Parties, without the express review and
prior written consent of the other Party.

(b) The confidentiality obligations shall not pertain to: (1) information which
is in the public domain; (2) information which is published or otherwise becomes
part of the public domain through no fault of the Parties or their Related
Parties, or the respective directors, officers, managers, employees, agents,
advisors, service providers or representatives of the Parties or their Related
Parties; (3) information which was in such Party’s (or an Related Party of such
Party’s) possession at the time of disclosure and was not acquired by such Party
directly or indirectly from the other Party on a confidential basis;
(4) information which becomes available to a Party on a non-confidential basis
(whether directly or indirectly) from a source which, to the best of such
Party’s knowledge, did not acquire the information on a confidential basis;
(5) information which is independently developed by a Party not having access to
the confidential information of the other Party; or (6) information which is
required to be disclosed (i) by federal or state law, rule or regulation, stock
exchange rules or by any applicable judgment, order or decree of any court or
Governmental Authority having jurisdiction in the proceeding or (ii) in
connection with the preparation of tax returns, communications with any
Governmental Authority with respect thereto or proceedings relating to taxes;
provided, however, that the Party required to disclose such information, to the
extent practicable, shall provide the other Party with prompt notice thereof so
that other such Party may seek a protective order or other appropriate remedy.
In the event that a protective order or other remedy is not obtained, the Party
required to disclose such confidential information will exercise its best
commercial efforts to obtain reliable assurance that confidential treatment
shall be accorded the information so furnished or disclosed.

 

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23.14 Publicity Releases. Neither MOTIVA (or the MOTIVA RELATED PARTIES) nor the
MAGELLAN Parties shall issue or cause the publication of any press release or
other announcement with respect to this Agreement or the transactions
contemplated hereby without the consent of the other Party(ies) hereto, which
such consent may not be unreasonably withheld. Notwithstanding the foregoing, if
any such press release or announcement is required by law or stock exchange rule
to be made by the Party proposing to issue the same, such Party shall use its
reasonable best efforts to consult in good faith with the other Party prior to
the issuance of any such press release or announcement.

23.15 Exhibits. The following exhibits, described in this Agreement, are
attached hereto and incorporated herein:

 

Exhibit A -   Leased Storage Agreement Exhibit B -   Material Tariff Provisions
Exhibit C -   Terminalling Agreement Exhibit 3.1 -   Connection Agreement
Exhibit 10.1 -   Throughput Fees

{REMAINDER OF PAGE LEFT INTENTIONALLY BLANK – SIGNATURES FOLLOW}

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of
the day and year first above written.

 

MOTIVA ENTERPRISES LLC     By:  

/s/ Brian P. Smith

      Brian P. Smith, Vice President Supply Distribution & U.S. Commercial
Marketing       Date:   May 9, 2008     MAGELLAN PIPELINE COMPANY, L.P.    
MAGELLAN TERMINALS HOLDINGS, L.P. By Its General Partner, Magellan Pipeline GP,
LLC     By Its General Partner, Magellan NGL, LLC By:  

/s/ Michael N. Mears

    By:  

/s/ Michael N. Mears

  Michael N. Mears, Chief Operating Officer       Michael N. Mears, Chief
Operating Officer Date:   May 9, 2008     Date:   May 9, 2008 MAGELLAN PIPELINES
HOLDINGS, L.P. By Its General Partner, Magellan NGL, LLC       By:  

/s/ Michael N. Mears

      Name:   Michael N. Mears       Title:   Chief Operating Officer      

 

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Exhibit A

to

Texas Pipeline Project Throughput and Deficiency Agreement

LEASED STORAGE AGREEMENT

MPC Contract No.                     

THIS AGREEMENT, made by and among Magellan Pipeline Company, L.P., a Delaware
limited partnership having an office at One Williams Center, Tulsa, OK 74172
(“Magellan” or “MPC” or “Lessor”), and Motiva Enterprises LLC, a Delaware
limited liability having offices at 700 Milam Street, 11th Floor, Houston, TX
77002 (“Motiva” or “Lessee”), covers lease storage for the products described
below under the following terms and conditions, and is made pursuant to that
certain Texas Pipeline Project Throughput and Deficiency Agreement, to be
effective as of the “Effective Date” set forth therein, between the “MAGELLAN
Parties” (as defined therein) and Motiva Enterprises LLC (the “T&D Agreement”)
for a term as specified in Section D) hereof. Motiva and Magellan are referred
to herein from time to time individually as a “Party” and collectively as the
“Parties”.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements hereinafter set forth to be kept and performed by the Parties hereto,
it is mutually covenanted and agreed as follows:

 

A) FACILITIES: Magellan’s East Houston Terminal, North Pipeline System, Hearne
and Frost Terminal(s) or any other mutually agreed location (collectively called
“Facilities” or “MPC System”).

 

B) FACILITY SERVICES:

 

1. Products: This Agreement pertains to the storage of up to a maximum of
300,000 Barrels of “Product” (as defined in the T&D Agreement).

 

2. Lease Storage:

Magellan will provide Motiva a maximum amount of 300,000 Barrels of total
commingled lease storage in the Facilities for the storage of Product (“Lease
Storage”). Motiva’s Lease Storage is allocated by Product as follows, with the
site-specific storage being principally in East Houston:

 

Product

 

Total Lease Storage

(Barrels of Working

Capacity)

 

Maximum Site Specific

Lease Storage

(Barrels of Working

Capacity)

RBOB

  160   100

PBOB

  30   30

RUL

  40  

PUL

  0  

TxLED

  70   70

ULSD

  0  

Total

  300,000   200,000

 

1

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C) CONSIDERATION:

 

1. Lease Storage Rate. Motiva will pay Magellan the following fees, as set forth
in Exhibit 10.1 of the T&D Agreement with respect to Lease Storage and
calculated in accordance with Section 10 of the T&D Agreement, for handling
Motiva’s Lease Storage requirements under this Agreement (such fees, the
“Storage Fees”).

 

  a. Non-Site Specific Storage: Motiva will pay Magellan the Non-Site Specific
Storage rate per Barrel of Lease Storage per Month for Lease Storage where
Motiva has not specified a specific location for that volume of Lease Storage.
Magellan will endeavor in good faith to accommodate any request from Motiva for
Non-Site Specific Lease Storage amounts beyond the 300,000 barrels maximum in
the table above.

Motiva agrees to provide Magellan with no less than five (5) days of advance
notice of Motiva’s desire to load or deliver at Magellan’s East Houston
terminal, Motiva’s Dallas or Pasadena or Waco terminals or at Hearne or Reagan,
or any other mutually agreed to destination (“Destination”) on a ratable basis a
specified number of Barrels of a specified Product that Motiva has in non-site
specific storage in the MPC System at the time of Magellan’s receipt of such
notice (“Motiva System Barrels”). Subject to the following limitations, if
Magellan’s deliveries of such Motiva System Barrels fall short of Motiva’s
duly-noticed requested delivery (the “Shortfall”), then until the full amount of
the Shortfall has been delivered, Magellan will pay for any difference between
the ratable volume of such Shortfall for that day and the number of Magellan’s
delivered Barrels of such specified Product at the specified Destination for
that day at a rate of Fifteen Cents ($0.15) per Barrel per day. Magellan shall
be entitled to the following number of days to ratably deliver Motiva System
Barrels which such number of days will be calculated by dividing total Motiva
System Barrels requested to be delivered at a particular Destination by the
average daily deliveries over the previous ninety (90) days. (“MSB Time Limit”)
In the event Magellan delivers Motiva System Barrels within the MSB Time Limit,
no Shortfall payment shall be due. In no event will Magellan have any obligation
under this paragraph for shortfalls in such requested deliveries caused by an
event or occurrence of “Force Majeure” as that term is defined in T & D
Agreement.

 

  b. Site Specific Storage: Motiva will pay Magellan the Site Specific Storage
rate per Barrel of Lease Storage per Month for Lease Storage where Motiva has
specified a specific location for that volume of Lease Storage. Such storage
must be for periods of not less than ninety (90) consecutive days at a time
unless Magellan agrees otherwise in writing. Motiva must give Magellan thirty
(30) days notice via the monthly pipeline nominations process in order to
specify a specific location for Site Specific Lease Storage. Magellan will
endeavor in good faith to accommodate any request from Motiva for Site Specific
Lease Storage amounts beyond the 200,000 barrels maximum in the table above.

Motiva shall have the option to load or deliver at any of the Destinations set
forth in Section 1.a above immediately (excluding transit time) upon notice by
Motiva, a specified number of Barrels of a specified Product that Motiva has in
site specific storage in the MPC System at the time of Magellan’s receipt of
such notice (“Motiva Site Specific Barrels”). If Magellan’s deliveries of such
Motiva Site Specific Barrels fall short of Motiva’s duly-noticed requested
delivery (the “Site Specific Shortfall”), then until the full amount of the
Shortfall has been delivered, Magellan will pay for any difference between the
ratable volume of such Shortfall for that day and the number of

 

2

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Magellan’s delivered Barrels of such specified Product at the specified
Destination for that day at a rate of Fifteen Cents ($0.15) per Barrel per day.
In no event will Magellan have any obligation under this paragraph for
shortfalls in such requested deliveries caused by an event or occurrence of
“Force Majeure” as that term is defined in that T & D Agreement.

 

D) TERM OF THE AGREEMENT:

This Agreement will be effective as of the “Service Commencement Date” (as
defined in the T&D Agreement) for a term that will thereafter run concurrently
and co-extensively with the “Term” of (and as defined in) the T&D Agreement.

 

E) ESCALATION:

The Storage Fees shall be subject to adjustment in accordance with the
provisions of Section 10 of the T&D Agreement.

 

F) MOST FAVORED NATIONS:

In the event a third party customer were to receive a rate lower than $0.50 per
Barrel for site specific leased storage at East Houston, Frost, and/or Hearne,
Motiva’s rate shall be lowered to equal the rate offered to such third party.
This Section shall not apply to rates offered to third parties whose volume
commitments are greater than Motiva’s aggregate storage of 300,000 BBLs. This
Section shall not apply to rates offered to third parties for non-site specific
storage.

Motiva’s Minimum Revenue Commitment (as that term is defined in the T&D
Agreement) shall not be affected by any reduction in the site specific storage
rate pursuant to this Section, unless such site specific storage rate is below
$0.40 per Barrel. In the event the site specific storage rate is lower than
$0.40 per Barrel, the Minimum Revenue Commitment shall be adjusted in accordance
with the terms of the T&D Agreement.

 

G. CONTACTS:

 

Magellan: Magellan Pipeline Company, L.P.       Scheduling:    Phone:   
(918)574-7521 Business Development:    Phone:    (918)574-7712

 

3

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MAGELLAN PIPELINE COMPANY, L.P.

GENERAL TERMS AND CONDITIONS

FOR

LEASE STORAGE

 

1. Rent Payment Terms: The first Storage Fees becoming due hereunder during the
Term shall be due and payable within fifteen (15) days from the date of Lessor’s
invoice or the first day of the initial month following the “Service
Commencement Date”, as that term is defined in the T&D Agreement,, with
continuing payments due and payable on or before the first day of each month
thereafter. Rent payments are exclusive of sales/use taxes which are the
responsibility of Lessee. If amounts payable by Lessee to Lessor are not paid by
the due date, Lessor shall have the right to assess late payment charges on the
entire past due balance until such balance is paid in full at the rate equal to
the then-effective LIBOR rate, or the maximum interest rate allowed by
applicable law if less. The Lease Rate, set forth on the Term Sheet, may be
changed from time to time at Lessor’s sole discretion after the Initial Term,
upon a minimum of forty-five (45) days prior written notice to Lessee of the
effective date of the new Lease Rate. Upon receiving such notice Lessee shall
have the right to terminate this Agreement provided Lessee gives Lessor written
notice thirty (30) days prior to the effective date of the new Lease Rate. If
Lessee does not give such written notice of termination within the time period
specified above, the new Lease Rate shall become effective and Lessee shall be
bound thereby pursuant to this Agreement.

 

2. Measurement: Lessor shall comply with Lessor’s applicable tariff, supplements
thereto or revisions thereof.

 

3. Product Transportation/Reconsignment/Specifications:

 

  A. Subject to the provisions of this Agreement and during its term, Lessor
shall increase Lessee’s maximum inventory allocation in the MPC System by the
volume of product and product grade leased on the Term Sheet.

 

4. Product Title/Insurance/Indemnification:

 

  A. Title to all Product placed in the MPC System by Lessee shall at all times
remain with Lessee. Lessee shall pay any taxes, including ad valorem taxes,
assessments or charges which may be assessed against the Product stored by
Lessee under this Agreement. Lessee agrees to reimburse Lessor for any such
taxes, assessments or charges paid by Lessor for the benefit of Lessee or as
required by law on behalf of Lessee, within thirty (30) days of Lessor’s demand
therefor.

 

  B.

Lessor shall carry such casualty insurance on the MPC System as it may deem
appropriate. Lessee shall insure all Product that Lessee places in the System in
such amounts as it deems appropriate and assume the risk of loss for such
Product

 

4

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while in the MPC System except to the extent that such loss is caused by
Lessor’s failure to use such care in the storage and handling of such Product as
a reasonably careful person would exercise under like circumstances. Lessee
agrees to name Lessor as an additional insured on its insurance policies and
waive subrogation rights against Lessor under such policies. Upon request from
either Party, the other Party shall furnish certificates of insurance evidencing
compliance with these insurance requirements.

TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW AND EXCEPT AS SPECIFIED
OTHERWISE ELSEWHERE IN THE AGREEMENT:

 

  C. MAGELLAN SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS MOTIVA, ITS MEMBERS,
AFFILIATES AND SUBSIDIARIES AND THEIR DIRECTORS, EMPLOYEES AND AGENTS (THE
“MOTIVA INDEMNITEES”) FROM AND AGAINST ANY LOSS, DAMAGE, CLAIM, SUIT, LIABILITY,
FINE, PENALTY, JUDGMENT AND/OR EXPENSE (INCLUDING REASONABLE ATTORNEYS’ FEES AND
OTHER COSTS OF LITIGATION) (COLLECTIVELY “LIABILITIES”), ARISING FROM
(I) INJURY, DISEASE OR DEATH OF ANY MAGELLAN EMPLOYEE, AGENT, REPRESENTATIVE OR
CONTRACTOR OR (II) DAMAGE TO OR LOSS OF ANY OF MAGELLAN’S PROPERTY (INCLUDING
MAGELLAN’S FACILITIES), REGARDLESS OF THE CAUSE, INCLUDING, BUT NOT LIMITED TO,
THE NEGLIGENCE OF MOTIVA (OTHER THAN THE NEGLIGENCE OF MOTIVA THAT CAUSES ANY
DISCHARGES, SPILLS OR LEAKS OF PRODUCT), IT BEING SPECIFICALLY UNDERSTOOD THAT
MAGELLAN IS INDEMNIFYING MOTIVA FOR ITS NEGLIGENCE AS SET FORTH ABOVE. MAGELLAN
SHALL ALSO DEFEND, INDEMNIFY AND HOLD HARMLESS THE MOTIVA INDEMNITEES FROM AND
AGAINST ANY LIABILITIES ARISING FROM DISCHARGES, SPILLS OR LEAKS OF PRODUCT
CAUSED BY MAGELLAN’S NEGLIGENCE.

 

  D. MOTIVA SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS MAGELLAN, ITS MEMBERS,
AFFILIATES, SUBSIDIARIES AND JOINT VENTURE PARTNERS AND THEIR DIRECTORS,
EMPLOYEES AND AGENTS (THE “MAGELLAN INDEMNITEES”) FROM AND AGAINST ANY
LIABILITIES, ARISING FROM (I) INJURY, DISEASE OR DEATH OF ANY MOTIVA EMPLOYEE,
AGENT, REPRESENTATIVE OR CONTRACTOR OR (II) DAMAGE TO OR LOSS OF ANY MOTIVA
PROPERTY, REGARDLESS OF THE CAUSE, INCLUDING, BUT NOT LIMITED TO, THE NEGLIGENCE
OF MAGELLAN (OTHER THAN THE NEGLIGENCE OF MAGELLAN THAT CAUSES ANY DISCHARGES,
SPILLS OR LEAKS OF PRODUCT), IT BEING SPECIFICALLY UNDERSTOOD THAT MOTIVA IS
INDEMNIFYING MAGELLAN FOR ITS NEGLIGENCE AS SET FORTH ABOVE. MOTIVA SHALL ALSO
DEFEND, INDEMNIFY AND HOLD HARMLESS THE MAGELLAN INDEMNITEES FROM AND AGAINST
ANY LIABILITIES ARISING FROM DISCHARGES, SPILLS OR LEAKS OF PRODUCT CAUSED BY
MOTIVA’S NEGLIGENCE.

 

  E.

MAGELLAN AND MOTIVA SHALL EACH DEFEND, INDEMNIFY, AND HOLD HARMLESS THE OTHER
AND ITS RESPECTIVE MEMBERS, AFFILIATES, SUBSIDIARIES AND JOINT VENTURE PARTNERS
AND THEIR DIRECTORS, EMPLOYEES AND AGENTS FROM AND AGAINST ANY LIABILITIES TO
THIRD PARTIES FOR

 

5

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INJURY, DISEASE, DEATH OR DAMAGE TO OR LOSS OF PROPERTY, ARISING FROM THE
INDEMNIFYING PARTY’S NEGLIGENCE OR WILLFUL MISCONDUCT IN CONNECTION WITH ITS
PERFORMANCE OF THIS AGREEMENT. IN THE EVENT MAGELLAN AND MOTIVA ARE JOINTLY,
CONCURRENTLY, OR CONTRIBUTORILY RESPONSIBLE FOR ANY LIABILITIES TO THIRD
PARTIES, THEN THE PARTIES SHALL SHARE RESPONSIBILITY AND INDEMNIFY EACH OTHER
FOR THE LIABILITIES IN PROPORTION TO EACH PARTY’S CONTRIBUTION TO THE INJURY,
DISEASE, DEATH, OR DAMAGE TO OR LOSS OF PROPERTY.

THE LIMITATION OF LIABILITY PROVISIONS OF SECTION 9 APPLY, ACCORDING TO THEIR
TERMS, TO THIS SECTION.

The obligations of the parties as set forth in Paragraph 4.C and 4.D shall
survive the termination or expiration of this Agreement.

 

5. Lessee Default: If Lessee fails, at any time, to make prompt payment of any
monthly rental payment due hereunder or to perform and observe any of the terms
and conditions of this Agreement, and should such default continue for thirty
(30) or more days after written notice thereof by Lessor to Lessee, Lessor shall
have the right, in addition to and without limitation of, all its other rights
and remedies, to terminate this Agreement.

 

6. Expiration/Termination of Term: Upon expiration or termination of this
Agreement, Lessee shall remove from the MPC System all of its Product stored
hereunder not later than the last day of the term. If Lessee fails to so remove
all its Product, Lessee shall be liable for Demurrage Charges per Lessor’s
applicable tariff, supplements thereto or revisions thereof, unless Lessor
elects in writing in its sole discretion to waive such charges. Lessor’s
acceptance of any such payment of Demurrage Charges does not, however, extend or
renew this Agreement, or satisfy Lessee’s obligation to remove its Product.
Notwithstanding the above, if Lessee fails to so remove its Product or if Lessee
fails to pay any amount owing to Lessor hereunder when due, Lessor may, after
giving ten (10) days prior written notice to Lessee, sell Lessee’s Product
stored hereunder by private sale(s) but without limitation of its other rights
and remedies hereunder. If such a sale is effected, Lessor shall withhold from
the proceeds therefrom all amounts owed to it hereunder and all expenses of sale
including, but not limited to, reasonable attorneys’ fees, rent or holdover rent
as described above, and any amount necessary to discharge all liens against said
Product. The balance of proceeds, if any, shall be remitted to Lessee.

 

7. Force Majeure/Rent Abatement: If either party hereto is rendered unable,
wholly or in part, by Force Majeure, to carry out its obligations hereunder
(except for an obligation to pay money), then by such party giving written
notice and full particulars of such Force Majeure to the other party as soon as
reasonably possible after the occurrence relied on as the cause, the obligation
of the party giving such notice, so far as it is affected by such Force Majeure,
shall be suspended during the continuance of any inability so caused but for no
longer period and in no event beyond the expiration of the term of this
Agreement; and such cause shall, to the extent commercially practicable, be
remedied with all reasonable dispatch.

 

6

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The term “Force Majeure” as employed herein has the meaning as defined in the
T&D Agreement.

If all or any substantial part of Lessor’s facilities necessary to support the
Lease Storage under this Agreement is damaged or destroyed by fire or other
casualty, or is otherwise rendered unfit, and Lessor provides notice to Lessee
that some amount of Lease Storage must be allocated, then Lessee shall remove
its allocated share of Product from the MPC System and the rental payable
hereunder shall abate proportionately, without extending the term of this
Agreement, until said facilities have been fully restored; provided, however,
that Lessor may, in its sole discretion, decide whether or not it shall effect a
restoration. If Lessor elects not to restore all or any part of its affected
facilities, Lessor shall notify Lessee in writing and this Agreement shall
terminate without further obligations or liabilities of either party to the
other, except as set forth in Paragraph 4.

 

8. Rules and Regulations: All other rules and regulations governing
transportation, reconsignment, and/or handling of Product through Lessor’s
pipeline system shall be as published in Lessor’s applicable tariff, supplements
thereto or revisions thereof.

 

9. Limitation on Damages: Neither party shall be liable to the other party for
any incidental, special or consequential damages of any kind directly or
indirectly arising out of this Agreement, including but not limited to loss of
profits or loss of market, even if the other party has been advised of such
possibility.

 

10. Assignment: Neither Party may assign this Agreement, or any of its rights or
obligations hereunder (either in whole or in part), without the prior written
consent of the other Party, which consent shall not be unreasonably withheld or
delayed. It is understood, however, that by such assignment, the assigning Party
does not thereby avoid obligations imposed by the terms and provisions of this
Agreement, past, present, or future, unless otherwise agreed in writing.

Lessee shall have the right to sublease its storage under this Agreement subject
to Lessee’s prior written consent, which such consent may not be unreasonably
withheld. If such a sublease is to a third party, rather than to a Related Party
(as that term is defined in the T&D Agreement), the Most Favored Nations clause
set forth in the first paragraph of Section F) of this Agreement shall not apply
during the term of such 3rd-party sublease.

 

11. Notices: Notices under this Agreement shall be deemed to have been
sufficiently given or served for all purposes if hand-delivered to the party, or
if sent by facsimile with telephone confirmation of receipt, addressed to the
party as set forth below or to such other address as one party may have directed
in writing to the other party prior to the mailing of any such notice.

 

To Lessor:    Magellan Pipeline Company, L.P.    One Williams Center, Suite 3100
   Tulsa, OK 74172    Attention: Manager, Commercial Development    Phone: (918)
574-7712    Fax: (918) 574-7444

 

7

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To Lessee:    Motiva Enterprises LLC    909 Fannin Street    Houston, TX 77010
   Attention: Manager, Business Strategy    Phone: (713) 230-2976    Fax: (713)
230-7898

 

12. Confidentiality: Shall be governed by the Confidentiality provision(s) of
the T & D Agreement.

 

13. No Third Party Beneficiary: Nothing contained in this Agreement shall be
considered or construed as conferring any right or benefit on a person not a
party to this Agreement and neither this Agreement nor the performance hereunder
shall be deemed to have created a joint venture or partnership between the
parties.

 

14. Severability: Both parties expressly agree that it is not the intention of
either party to violate public policy, Lessor’s published tariffs, or state or
federal statutory or common laws and that if any sentence, paragraph, clause or
combination thereof in this Agreement is in violation of the same, such
paragraph, clause, or sentence, or combination of the same shall be inoperative
and the remainder of this Agreement shall remain binding upon the parties
hereto.

 

15. Compliance. During the term hereof, Lessee and Lessor shall comply with all
laws and regulations which may be applicable to Lessee’s use of its leased
System storage space. Lessor acknowledges that it has responsibility for
compliance with all applicable environmental, health and safety laws and
regulations relating to its System and agrees that it will notify Lessee of such
non-privileged compliance matters as may adversely affect Lessee’s Product or
its ability to safely store the same in the System pursuant to this Agreement

If Lessee becomes aware of actual or potential noncompliance or environmental,
health or safety risk at the facility, Lessee shall have the right, but not the
obligation, to take any of the following steps: (1) removal of Lessee’s Product
from the System until such noncompliance is corrected; and/or (2) immediately
terminate this Agreement.

 

16. Governing Law: This Agreement shall be governed by, and in accordance with,
the laws of the State of Texas, without regard to choice of law principles.

All disputes relating to this System Lease Agreement shall be governed by the
dispute resolution provisions of the T&D Agreement.

 

17. Product Losses: Any losses of Product covered by this Agreement will be
handled according to the terms of the T&D Agreement.

 

8

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Exhibit B

to

Texas Pipeline Project Throughput and Deficiency Agreement

RULES AND REGULATIONS

GOVERNING THE TRANSPORTATION AND HANDLING OF

PRODUCTS

BY PIPELINE FROM

ORIGINS IN TEXAS TO DESTINATIONS IN TEXAS

Carrier will accept and transport Products offered for transportation through
Carrier’s facilities as provided in this Rules and Regulations Tariff.

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

DEFINITIONS

ITEM 15 – DEFINITIONS

“ATLAS” means Automated Transportation Logistics Activity System. ATLAS is a
computerized information system to which all Shippers have access upon request.
ATLAS enables Shippers to nominate and release product and to monitor and
coordinate the movement of Products while on Carrier’s system.

“Barrel” means forty-two (42) United States gallons at sixty (60) degrees
Fahrenheit.

“Carrier” means and refers to Magellan Pipeline Company, L.P..

“Consignee” means and refers to the party having ownership of Product
transferred to them.

“Consignor” means the party, which tendered Products to Carrier.

“Destination” means the facility in Texas at which Carrier delivers Products out
of Carrier’s pipeline.

“Inventory Owner” me and the party, either Shipper or Consignee, holding title
to Products in Carrier’s terminal.

“Origin” means the facility of Carrier in Texas at which Carrier receives
Products into Carrier’s pipeline.

“Origin Release” means the written commitment of a Consignor to schedule a batch
of Products into Carrier’s facilities.

“Product(s)” means the commodities more specifically defined in Item 20 and
meeting the specifications referenced in Item 40.

“Shipment Request” represents a commitment by an established Shipper to receive
Product from an Origin point into the Carrier’s system.

“Shipper” means the party who contracts with the Carrier for transportation of
Products pursuant to the terms of this tariff.

“Tender” means an offer by a Shipper to a Carrier of a stated quantity of
Products from a specified Origin or Origins to a specified Destination or
Destinations pursuant to the terms of this tariff.

“Transit Time” means the time a shipment would take to move from Origin to
Destination.

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COMMODITY DESCRIPTION AND MEASUREMENT

ITEM 20 – PRODUCTS DEFINED

The term “Products” refers to Products meeting applicable Carrier
specifications, as set forth in Item 40.

ITEM 25 – TRANSMIX HANDLING

Transmix occurring in the Carrier’s system that cannot be combined with
compatible products shall be retained in Carrier’s custody for disposal by the
Carrier on behalf of the Shippers to ensure efficient operations of the
pipeline.

The total Transmix accumulated in Carrier’s system will be allocated to all
Shippers in proportion to each Shipper’s barrels received into the system from
all Shippers in a calendar month. Carrier shall dispose of the Transmix for
Shippers and provide each Shipper with its proportionate share of net proceeds
from the sale of the Transmix.

ITEM 30 – VOLUME CORRECTIONS AND TENDER DEDUCTIONS

In measuring the quantity of Products received and delivered, correction shall
be made from volume at actual or observed temperature to volume at sixty
(60) degrees Fahrenheit.

A tender deduction of one-tenth of one percent (0.1%) by volume will be made on
the quantity of Products accepted for transportation from all Origins.

PRESHIPMENT REQUIREMENTS AND PROCEDURES

ITEM 35 – COMMODITY

Carrier is engaged in the transportation of Products and therefore will not
accept any other commodities for transportation. No Products will be received
for transportation except good, merchantable Products of substantially the same
kind and quality as that being currently transported through the same facilities
for other Shippers. Consignor and Shipper warrant to Carrier that any Products
tendered to Carrier conform with the specifications for such Products and are
merchantable. Products of substantially different grade or quality will be
transported only in such quantities and upon such terms and conditions as
Carrier and Shipper may agree.

ITEM 40 – TESTING AND MEASURING

Products shall be accepted for transportation only when such Products meet all
required specifications as uniformly established by Carrier as stated in the
following documents and found at the public website www.magellanlp.com/specs.asp
or on request.

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Notification to Shippers of changes in these documents are made via this tariff.
If a prospective Shipper should desire current specifications, such Shipper may
access the website mentioned above. Demonstration of conformance with the
product specifications shall be made through the submission of a Certificate of
Analysis that accurately represents the product characteristics. Accuracy of the
Certificate of Analysis is the sole responsibility of the party who establishes
the Origin Release. Costs associated with handling, distribution, and disposal
of products that enter the system that do not meet the product specifications
shall be borne entirely by the party who establishes the Origin Release.

ITEM 45 – SCHEDULING OF SHIPMENTS

Products shall be accepted for transportation at such time as Products of the
same specifications are currently being transported from point of Origin to a
Destination or Destinations in accordance with schedules of shipments and
consignments to be issued from time to time to each Consignor by the Carrier.
Such schedules may be modified from time to time in the manner and to the extent
reasonably desirable to facilitate the efficient and economical use and
operation of the Carrier’s facilities and to reasonably accommodate Consignor’s
needs for transportation. Shippers may elect to utilize Carrier’s “ATLAS” system
to schedule shipments. Origin Releases and Shipment Requests should be completed
fourteen (14) days before the scheduled entry date of product into Carrier’s
facilities. If an Origin Release or Shipment Request is not timely submitted,
Carrier will handle in a manner to facilitate the efficient, economic use and
operation of the Carrier’s facilities and to reasonably accommodate Consignor’s
needs for transportation of product. MPL will provide a pump date for a
completed nomination a minimum of seven (7) days prior to the release date.

ITEM 50 – PRORATION OF PIPELINE CAPACITY

When the total volume of the various commodities offered for shipment on
Carrier’s facilities, in accordance with the procedures for scheduling of
shipments, is greater than can be transported within the period covered by such
schedules, then commodities offered by each Shipper for transportation will be
transported in such quantities and at such times, to the limit of Carrier’s
normal operating capacity, so as to avoid unjust discrimination or undue
preference among Shippers and to fulfill requirements of governmental agencies.
If pipeline capacity must be allocated, the allocation will be based on
Shipper’s historical shipments through Carrier’s facility to which access must
be allocated.

New Shippers (i.e., Shippers without a loading history over the preceding twelve
(12) months), in aggregate, shall be allocated capacity up to a maximum of 5% of
the pipeline capacity. All subsequent allocations of capacity shall be based on
the history developed by the Shipper.

ITEM 60 – ACCEPTANCE FREE FROM LIENS AND CHARGES

The Carrier shall have the right to reject any Products when tendered for
shipment which may be involved in litigation, the title of which may be in
dispute, or which may be encumbered by lien or charge of any kind.

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ITEM 65 – CORROSION INHIBITORS

Consignor may be required to inject oil-soluble corrosion inhibitor, approved by
Carrier, in the Products to be transported.

ITEM 70 – FACILITIES REQUIRED AT ORIGIN AND DESTINATION

SECTION A. The Carrier will not, under this tariff, provide storage or other
tankage facilities at points of Origin and/or at Destinations. Products will be
accepted for transportation only when the Carrier has ascertained, to its
satisfaction, that there are facilities at the Destination which are available
for receipt of the shipment as it arrives without delay.

SECTION B. In the event Consignor or Consignee fails to provide adequate
facilities at the Destination for receipt as provided in Section A hereof,
Carrier shall have the right, on 24 hours notice, to divert or re-consign,
subject to the rates, rules and regulations applicable from point of Origin to
actual final Destination, or make whatever arrangements for disposition as are
deemed appropriate to clear the Carrier’s facilities, including the right of
private sale for the best price reasonably obtainable. The Carrier may be a
purchaser at such sale. Out of the proceeds of said sale, the Carrier shall pay
itself all transportation and other applicable lawful charges and necessary
expenses of the sale and the expense of caring for and maintaining the Products
until disposed of and the balance shall be held for whomsoever may be lawfully
entitled thereto.

ITEM 75 – PAYMENT OF TRANSPORTATION AND OTHER CHARGES

The transportation and all other applicable lawful charges, except demurrage
charges, accruing on Products accepted for transportation shall be paid before
release of Products from the custody of Carrier. If required, all such
applicable charges shall be prepaid at point of Origin. Products accepted for
transportation shall be subject to a lien for all applicable current and
antecedent lawful charges.

ITEM 80 – TAX REGISTRATION

Consignors and Consignees shall be required to provide proof of registration
with or tax exemption from the appropriate Federal and/or State tax authorities
related to the collection and payment of fuels excise tax or other similar
taxes, levies, or assessments. Failure of the Consignor and Consignee to do so
shall not relieve the Consignor or Consignee from the obligation to pay any such
tax, levy, or assessment. Any tax, levy, assessment, or other charge imposed by
such authority against Carrier as the result of such failure shall be collected
by Carrier under the provisions of Item 75.

ITEM 85 – PIPEAGE CONTRACTS REQUIRED

Separate pipeage contracts in accordance with this tariff and these regulations
covering further details may be required of a Shipper before any duty to
transport shall arise.

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TRANSPORTATION SERVICES AND RELATED REQUIREMENTS

ITEM 90 – MINIMUM SHIPMENT

SECTION A. A shipment of 25,000 Barrels or more of Products, of the same
required specifications only, shall be accepted for transportation at one point
of Origin from one Consignor.

SECTION B. A shipment of not less than 5,000 Barrels of Products, of the same
specifications only, shall be accepted for transportation at one point of Origin
from one Consignor subject to delay until Carrier has accumulated at receiving
point the minimum shipment described in Section A of the same specifications
from the same or other Consignors.

ITEM 95 – MINIMUM CONSIGNMENT

SECTION A. A consignment of Products of the same specifications may be made as
provided in Section B herein to one Consignee at any Destination subject to the
rates, rules and regulations applicable from point of Origin to final
Destination.

SECTION B. A consignment of Products of the same specifications may be made as
follows:

 

(1) Except as otherwise provided, a minimum of 10,000 Barrels of the same
product must be consigned to a Destination.

 

(2) Any quantity of barrelage may be consigned to a Destination provided that
the Carrier can consolidate such consignment with other barrelage so that the
total barrelage is 10,000 or more Barrels of the same specifications consigned
to the same Destination by the same or other Consignors.

ITEM 110 – RECONSIGNMENT

If no out-of-line or backhaul movement is required and if the current scheduled
operations will permit, Consignor may reconsign, without charge, any shipment
that is in Carrier’s possession to Destinations subject to the rates, rules and
regulations applicable from point of Origin to actual final Destination.

Additional Transit Time is applied on reconsignments.

Backhaul reconsignments are not allowed. A reconsignment is considered a
backhaul when the Transit Time from the Origin of the inventory to the new
location is less than the Transit Time from the Origin to the original location.

Reconsignment shall not prevent or change the running of time used in computing
the demurrage charge, except that no demurrage charge shall accrue thereon from
midnight of the day such consignment is removed from the tankage for
transportation to the Destination to which reconsigned.

ITEM 120 – APPLICATION OF RATES FROM OR TO INTERMEDIATE POINTS

Shipments of Products accepted for transportation from any Origin or to any
Destination not named in any tariff making reference hereto, which Origin or
Destination is directly intermediate to any Origin or Destination from or to
which a rate applying though such unnamed point is published, the Carrier will
apply, from or to such unnamed intermediate point, the rate published from or to
the next more distant point specified in the tariff.

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ITEM 125 – IDENTITY OF SHIPMENT

Because it is impracticable to maintain the identity of each shipment or
consignment of Products, substitution of barrelage, but not substitution of one
kind of Product for another by Carrier, shall be permitted.

ITEM 130 – DELIVERY TO DESTINATION

Upon arrival at Destination, Products shall be delivered into terminal or other
facilities provided by the Consignor or Consignee, or into terminal facilities
furnished by the Carrier where Carrier furnishes terminal facilities, pending
receipt by Carrier from Consignor or Consignee of instructions relative to the
further transportation thereof.

ITEM 135 – DEMURRAGE CHARGES

In order to provide space for delivery of succeeding shipments in Carrier’s
tankage or to otherwise prevent or relieve congestion at Destinations where
Carrier provides tankage, Carrier may give notice to Consignors or Consignees to
remove Products from such terminal facilities. Products specified in the notice
which are not removed at the close of a five (5) day period, beginning the day
after such notice is sent by the Carrier, shall be subject to a demurrage charge
of five cents (5¢) per Barrel per day until removed. Demurrage charges shall be
payable upon presentation of an invoice by the Carrier.

SPECIAL AND ANCILLARY SERVICES AND RELATED REQUIREMENTS

ITEM 140 – DIESEL HANDLING

Pursuant to the Environmental Protection Agency’s (EPA’s) regulation of 40 CFR
Part 80 Subpart I, Carrier has established a diesel handling surcharge to
recover prudently incurred costs necessary for carrier to facilitate the
handling of both high and low sulfur diesel products, (excluding home heating
oil, and gasoline).

The diesel surcharge of eighty-one hundredths cents per barrel (.81 cpb) will
apply only to the shipments of diesel products.

The surcharge will have a ten year life, whereupon at the end of the tenth year
the surcharge will be cancelled. At the end of each annual period, Carrier will
adjust the diesel surcharge upward or downward based on the previous year’s
applicable actual volumes and costs.

ITEM 145 – CHARGES FOR SPILL COMPENSATION ACTS AND REGULATIONS

In addition to the transportation charges and all other charges accruing on
Products accepted for transportation, a per Barrel charge will be assessed and
collected in the amount of any tax, fee, or other charge levied against the
Carrier in connection with such

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Products pursuant to any Federal, State, or Local act or regulation which levies
a tax, fee, or other charge on the receipt, delivery, transfer, or
transportation of such Products within their jurisdiction for the purpose of
creating a fund for the prevention, containment, clean up, and/or removal of
spills and/or reimbursement of persons sustaining such costs or losses
therefrom.

ITEM 150 – COMMUNICATION FACILITIES

Shippers may use the Message Facility of Carrier’s “ATLAS” system to conduct
pipeline business only. All messages are subject to audit. Use of the Carrier’s
“ATLAS” system for any purpose, other than to conduct pipeline business will
cause Shipper’s privilege of use to be suspended for twelve (12) months. Carrier
will not be liable for nondelivery of messages or for errors or delays in
transmission or interruption of such service.

LIABILITY AND CLAIM SETTLEMENT

ITEM 155 – DUTY OF CARRIER

The Carrier shall transport and deliver into terminal facilities at Destination,
with reasonable diligence, the quantity of Product accepted for transportation,
less the appropriate tender deduction, but will not be liable for delays in
transportation of Products to a particular market.

In the event of non-delivery due to interface cuts or other operating losses in
excess of the tender deduction, the Carrier shall have the right to satisfy any
claim by product replacement or cash payment.

ITEM 160 – LIABILITY OF CARRIER

The Carrier shall not be liable for any delay in transportation services or loss
of Products caused by any event or occurrence beyond Carrier’s reasonable
control (“Force Majeure”); public authority, or risks of contraband or illegal
transportation or trade; or any cause not due to fault or negligence of Carrier.
In the event of such loss, each owner shall bear the loss in the same proportion
as its share of the total quantity of the kind of product involved in the loss
in the custody of the Carrier at the time of such loss. Each Shipper or
Consignee shall be entitled to receive only so much of its share remaining after
its due proportion of the loss is deducted. The Carrier shall compute the
quantities of loss and shall prepare and submit a statement to the Shippers of
Consignees showing the apportionment of the loss among the Shippers or
Consignees involved.

The Carrier shall not be liable for discoloration, contamination or
deterioration of Products transported unless such discoloration, contamination
or deterioration results from the negligence of the Carrier. In the event of
such damage, each Shipper’s or Consignee’s share of the damaged Product shall be
in the same proportion as its share of the total quantity of shipments involved
and each such Shipper or Consignee shall be allocated only its proportionate
share of damaged Product.

In no event shall Carrier be liable to any Shipper or Consignee for any losses
or damages, including special, punitive, exemplary, consequential, incidental or
indirect losses or damages howsoever caused, (including but not limited to loss
of revenue, loss of profits

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

or present or future opportunities) whether or not foreseeable, and irrespective
of the theory or cause of action upon which such damages might be based, except
for such actual losses or damages sustained as a result of, and to the extent
of, Carrier’s negligence.

ITEM 165 – CLAIMS: TIME FOR FILING

Claim for any delay, damage to, or loss of Products must be made in writing to
the Carrier within nine (9) months after delivery from the Carrier’s facilities
of the shipment involved at the Destination to which such shipment was
consigned, or in case of failure by Carrier to deliver, then within nine
(9) months after the date upon which delivery would have reasonably been
completed by Carrier. Such written claim, as aforesaid, shall be a condition
precedent to any suit.

Suit for any delay, damage to, or loss of Products shall be instituted within
two (2) years and one (1) day after notice in writing is given by the Carrier to
the claimant that the Carrier has disallowed the claim or any part thereof
specified in the notice.

Claims or suits for delay, damage to, or loss of Products not filed or
instituted in accordance with the foregoing provisions will not be paid, and
Carrier will not be liable.

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Exhibit C

To

Texas Pipeline Project Throughput and Deficiency Agreement

Terminalling Agreement

This Terminalling Agreement (“Agreement”) between Magellan Pipeline Company,
L.P., a Delaware limited partnership with offices at One Williams Center, Tulsa,
OK 74172 (“Magellan”), and Motiva Enterprises LLC, a Delaware limited liability
company with offices at 700 Milam Street, 11th Floor, Houston, TX 77002
(“Customer”), covers the handling and throughput of the products described below
under the following terms and conditions, and is made pursuant to that certain
Texas Pipeline Project Throughput and Deficiency Agreement, effective as of the
“Effective Date” set forth therein, by and between the “MAGELLAN Parties” (as
defined therein) and Motiva Enterprises LLC (“T&D Agreement”). Magellan and
Customer hereinafter are referred to individually as a “Party” or collectively
as the “Parties”.

 

I. Term. This Agreement will be effective as of the “Service Commencement Date”
(as defined in the T&D Agreement) for a term that will thereafter run
concurrently and co-extensively with the “Term” of (and as defined in) the T&D
Agreement.

 

II. Terminal. Magellan will provide the terminalling services described in this
Agreement at its terminal(s) located at Magellan’s East Houston Terminal (the
“Terminal”).

 

III. Product. Magellan will store and handle “Product” (as defined in the T&D
Agreement) for Customer, including the following:

 

  A. RFG regular unleaded gasoline (RBOB)

 

  B. RFG premium unleaded gasoline (PBOB)

 

  C. Texas low emissions diesel fuel (TxLED)

 

  D. Denatured ethanol (Ethanol)

 

  E. Ultra low sulfur diesel requiring TxLED additive

Product will comply with the Magellan Pipeline Company, L.P. specifications for
fungible commodity of that grade, as succeeded or amended. In addition,
denatured ethanol will comply with the Magellan product grade specification for
fungible commodity of that grade, as succeeded or amended.

 

IV. Volume Commitment/Capacity Limitation. Customer is not required to
throughput a minimum volume of Product at the Terminal truck loading rack;
however, Magellan will provide Customer the ability to load 255,500 Barrels of
Product per month at the Terminal truck loading rack. Customer may load
additional Product if additional truck loading rack capacity is available per
Magellan.

 

V. Truck Rack Throughput Fee. Customer will pay Magellan the rate per Barrel of
Product loaded out the Terminal truck loading rack at the Truck Rack Throughput
Rate as set forth in Exhibit 10.1 of the T&D Agreement and as calculated in
accordance with Section 10 of the T&D Agreement.

 

VI. Additional Fees. Except as specifically provided in this Agreement, Customer
will pay Magellan the fees as set forth in Exhibit 10.1 of the T&D Agreement and
as calculated in accordance with Section 10 of the T&D Agreement for the
following services performed by Magellan:

 

  •  

Injection of gasoline with Customer’s proprietary additive supplied by Customer.

 

  •  

Injection of gasoline with a generic gasoline additive supplied by Magellan.

 

  •  

Blending of Denatured Ethanol delivered into and stored at Terminal for
customer’s account.

 

  •  

Injection of Distillate with lubricity additive supplied by Magellan.

 

  •  

Injection of Distillate with red-dye additive supplied by Magellan.

 

Page 1 of 11

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  •  

Injection of Distillate with TxLED additive supplied by Magellan.

 

  •  

To the extent that the costs incurred by Magellan in purchasing any of the
generic additives actually added to Customer’s Product exceed the amount of the
increase calculated in accordance with Section 10 of the T&D Agreement, such
excess shall be a fee that Magellan may bill to Customer.

 

VII. MOST FAVORED NATIONS

In the event Magellan offers a Terminal Throughput Rate and/or proprietary
gasoline additive fee to a third party that is lower than that paid by Motiva,
Motiva’s rates shall be lowered to an amount equal to the rate offered to said
third party. However, this Section shall only apply where Motiva’s average
monthly throughput for a calendar year is equal to, or greater than, 300,000
BBLs. This Section shall not apply to rates offered to third parties who are
existing customers, or third parties currently in negotiation with Magellan, at
the time this Agreement is executed. Magellan shall provide Motiva with a list
of such existing customers upon execution of this Agreement. In addition, this
Section shall not apply where a third party’s aggregate throughput commitment
value exceeds that of Motiva. For example: If third party customer were to
commit 600 MBPM to East Houston for a term of 10 years at a rate of $0.20, the
aggregate commitment would be $14.4 MM. If Motiva were to throughput 300 MBPM at
a rate of $0.25 for 15 years, the aggregate commitment would be $13.5 MM. In
such an instance, this Most Favored Nations Section would not be applicable.

In the event Motiva’s Terminal Throughput Rate and/or proprietary gasoline
additive fee is reduced in accordance with this provision, Motiva’s Minimum
Revenue Commitment, as defined in the T&D Agreement shall be adjusted in
accordance with the terms of the T&D Agreement.

 

VIII. Notices. Any notice made under this Agreement will be in writing either
delivered by overnight courier to the relevant address set forth below or faxed
with uninterrupted transmission confirmed by transmission report to the number
set forth below. Either Party may change their notice address and fax number
upon notice to the other Party at least ten (10) days in advance of the
effective date of the change.

 

Magellan Pipeline Company, L.P.    Motiva Enterprises LLC    Attn: Manager,
Commercial Development    Attn: Manager, Business Strategy    One Williams
Center      700 Milam Street, 11th Floor    Tulsa, OK 74172      Houston, TX
77002    Phone: (918) 574-7712    Phone: (713) 230-2976    Fax: (918) 574-7444
   Fax: (713) 230-7898   

 

IX. Schedules. The following schedules are attached hereto and incorporated
herein: Schedule “A”-General Terms and Conditions.

 

X. ATLAS. Product inventories at the Terminal are managed through Magellan’s
Automated Transportation Logistics Activity System (“ATLAS”) software. Prior to
shipping any Product to the Terminal, Customer will be required to enter into an
ATLAS access agreement with Magellan.

 

Magellan Pipeline Company, L.P.     Motiva Enterprises LLC By Magellan Pipeline
GP, LLC, Its General Partner       By:  

/s/ Michael N. Mears

    By:  

/s/ Brian P. Smith

Name:   Michael N. Mears     Name:   Brian P. Smith Title:   Chief Operating
Officer     Title:   Vice President Supply Distribution & U.S. Commercial
Marketing

 

Page 2 of 11

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Schedule “A”

General Terms and Conditions

 

1. Definitions. In addition to the definitions provided elsewhere in this
Agreement, the following definitions will apply:

 

  1.1 “Actual Volume” means the actual volume of Product throughput at the
Terminal in a Quarter.

 

  1.2 “Additive” means any generic additive, proprietary additive, red dye,
de-icer, lubricity or conductivity additive as may be injected into Customer’s
Product.

 

  1.3 “Affiliate” shall mean “Related Party” as defined in the T&D Agreement.

 

  1.4 “Barrel” shall mean 42 United States standard gallons at 60 degrees
Fahrenheit.

 

  1.5 “Business Hours” means 8:00 AM to 5:00 PM (Central or Eastern Standard
Time, as applicable to the Terminal), Monday through Friday, excluding holidays.

 

  1.6 “Carrier” means any trucker, trucking company or motor vehicle receiving
or delivering Product at the Terminal on behalf of, at the request of, or for
the benefit of Customer.

 

  1.7 “Contractor” means any contractor requesting access to the Terminal in
connection with this Agreement on behalf of, at the request of, or for the
benefit of Customer or Customer’s Carriers.

 

 

1.8

“Contract Year” shall mean the period beginning on the Service Commencement Date
or any anniversary therof and ending 365 consecutive days (366 days in the case
a period has February 29th) later.

 

  1.9 “EPA” means the United States Environmental Protection Agency.

 

  1.10 “Environmental Law” means any and all applicable laws, policy, permit,
judicial or administrative interpretation thereof, or any legally binding
requirement that governs or purports to govern the protection of persons,
natural resources or the environment (including the protection of ambient air,
surface water, ground water, land surface or subsurface strata, endangered
species or wetlands), occupational health and safety, and the manufacture,
processing, distribution, use, generation, handling, treatment, storage,
disposal, transportation, release or management of solid waste, industrial waste
or hazardous substances or materials.

 

  1.11 “Gallon” means 231 cubic inches temperature corrected to 60 degrees
Fahrenheit.

 

  1.12 “Law” shall have the meaning set forth in the T&D Agreement.

 

  1.13 “Liabilities” means, subject to the limitation of liability contained in
this Agreement, any claims, actions, judgments, liabilities, losses, costs,
damages, fines, penalties and expenses of any kind related to or that arise out
of this Agreement (including reasonable attorneys’ fees, expert fees and court
costs).

 

  1.14 “Low Sulfur Diesel or LSD” means #2 diesel fuel with a sulfur content of
500 ppm or less, and greater than 15 ppm, which may be designated as MV or NRLM.

 

  1.15 “MV” means motor vehicle fuel.

 

  1.16 “NRLM” means Nonroad, Locomotive and Marine fuel.

 

  1.17 “ppm” means parts per million.

 

  1.18 “Quarter” means each successive three (3) month period during the Term.

 

  1.19 “RVP” means reid vapor pressure.

 

  1.20 “TCEQ” means Texas Commission on Environmental Quality.

 

Page 3 of 11

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  1.21 “Terminal” means Magellan’s terminals as specified in Section II of this
Agreement.

 

  1.22 “Transmix” means the resulting mixture of various Products as commingled
together in a storage tank after the occurrence of interface cuts, downgrades or
some other Product specification change. For purposes herein, off-specification
Product means such Product failing to meet the required applicable Product
specification or any other Product specification as can be handled by the
Terminal, and therefore, such off-specification Product must be placed into
Transmix storage

 

  1.23 “TxLED” means Texas Low Emission Diesel fuel.

 

  1.24 “Ultra-Low Sulfur Diesel or ULSD” means #2 MV diesel fuel with a sulfur
content of 15 ppm or less.

 

  1.25 “VOC” means volatile organic compound.

 

2. Terminalling Services.

 

  2.1 Receipt and Delivery of Product.

(A) All pipeline receipts and deliveries will be made in accordance with the
following procedures: Except where Products are delivered by Magellan, customer
will notify Magellan of all proposed pipeline receipts and deliveries as soon as
reasonably possible after Customer receives a schedule from the pipeline
company. Magellan will notify Customer as soon as reasonably possible after each
notice of proposed pipeline receipt or delivery either that it will accommodate
such or that it conflicts with a previously scheduled pipeline movement or use
of available tankage. In the case of a conflict, Magellan will advise Customer
of the next open dates that the Terminal can accommodate the proposed pipeline
receipt or delivery. Magellan will use reasonable efforts to accommodate
Customer’s proposed pipeline receipts and deliveries, taking into account the
needs of Customer, Magellan and other parties terminalling products at the
Terminal. Pipeline receipts and deliveries of Product may be made 24 hours per
day, 7 days per week.

(B) All Carrier receipts and deliveries will be made in accordance with the
Terminal’s operating procedures. Delivery of Product from the Terminal may be
made 24 hours per day, 7 days per week. Magellan may restrict deliveries of
Product from the Terminal to maintain a positive inventory balance for Customer.
Receipt of Product by the Terminal from a Carrier will be in accordance with the
operating hours established and posted by the Terminal.

(C) Magellan may require each Carrier and Contractor to execute an access
agreement prior to entering the Terminal, and loading or unloading Product at
the Terminal. Carriers and Contractors must comply with the access agreement,
rules and procedures of the Terminal, and Carriers must undergo training
regarding loading and unloading at the Terminal. Customer will require its
Carriers and Contractors to comply with Law, and carry all necessary liability
and pollution insurance as may be required by Law. Magellan may exclude any
Carrier or Contractor from the Terminal who fails to execute or to comply with
an access agreement, fails to comply with the rules and procedures of the
Terminal, fails to attend or comply with training, or, in Magellan’s reasonable
opinion, poses a risk to the Terminal, its personnel, the public or the
environment.

(D) Customer and Customer’s Carrier and agents shall be registered with the EPA
in accordance with 40 CFR § 80.597 and provide such registration number to the
Terminal prior to any deliveries of designated Product. Customer and Customer’s
Carrier and agents shall provide to the Terminal a Product Transfer Document
(“PTD”) as required by Law upon the delivery and custody transfer of designated
Product to the Terminal.

2.2 Quality. Customer warrants that Product delivered to the Terminal complies
with Law, including RVP and VOC regulations, all applicable tariff rules and is
of the grade specified in this Agreement. Magellan may change the type or grade
of Product handled at the Terminal upon thirty (30) days notice to Customer.
Customer further warrants that designated ULSD delivered to the Terminal
complies with the quality specifications as required herein and shall not exceed
a sulfur content of 13 ppm.

If Product that Customer tenders for delivery to the Terminal fails to comply
with the quality requirements as required herein, Magellan shall promptly notify
Customer thereof and may, in Magellan’s sole discretion, (i) reject the
non-conforming Product

 

Page 4 of 11

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and refuse to take delivery, (ii) take delivery of the non-conforming Product
and downgrade or redesignate such to an appropriate designation of fuel or
(iii) take delivery of the non-conforming Product and take steps necessary to
remediate such in order to meet such quality requirements. Magellan will
cooperate, to the extent possible, with Customer in the determination of the
resulting product from any downgrade or redesignation of Customer’s Product that
may occur in accordance with (ii) above. Magellan reserves the right at any time
during delivery of non-conforming Product in accordance with (ii) or
(iii) above, to halt delivery and refuse to take further delivery of the same.

Customer will bear the cost for Magellan to receive, deliver, store, handle,
downgrade, redesignate or remediate non-conforming Product. Magellan shall have
no liability to Customer arising out of the refusal to accept delivery of
Product that fails to meet the quality requirements as herein required, or
arising from the downgrade or remediation of the Product in accordance with
(ii) or (iii) above. Magellan reserves the right, at its election, to refuse to
redeliver Customer’s Product that fails to comply with Law. Should Magellan,
upon Customer’s request, deliver out of the Terminal Product that fails to
comply with Law, Customer will release, indemnify, defend and hold harmless
Magellan, its parents and Affiliates, and its and their respective officers,
directors, employees, agents and other representatives from and against any
Liabilities arising out of the delivery.

2.3 Quality Testing. Magellan may perform quality control testing. Quality
testing will be made in accordance with American Society for Testing and
Materials (ASTM) standards. Magellan may maintain a quality assurance program to
include a periodic sampling and testing program. The results of any tests
performed by Magellan will be conclusive and binding on both Parties, except in
the event of fraud or manifest error. Customer may at any time appoint a
mutually acceptable qualified lab or independent inspector (in a case dealing
with ULSD, it will be an EPA qualified lab or inspector) to test quality of a
Product. Customer will pay for the cost of any independent lab or inspector. If
an independent inspector is not present to test quality when Product is
delivered to or loaded from the Terminal, the results of tests made by Magellan
will be conclusive and binding on both Parties, except in the event of fraud or
manifest error. Any discrepancy or dispute over quality shall be resolved prior
to Customer’s independent inspector leaving the Terminal; otherwise, results of
tests made by Magellan will be conclusive and binding on both Parties.

2.4 Quantity. Quantity determination will be made in accordance with American
Petroleum Institute (“API”) standards. The quantity of Product delivered to the
Terminal will be determined by pipeline or truck custody transfer meter
readings. The quantity of Product received from the Terminal will be determined
by truck rack meter readings. Quantity determinations will be binding on both
Parties absent fraud or manifest error.

2.5 Custody Transfer Point. For deliveries to the Terminal, Customer shall be
deemed to have custody, control and responsibility for Product until it enters
Magellan’s pipeline receiving flange or receiving hose, as the case may be, and
for receipts from the Terminal, Customer shall be deemed to have custody,
control and responsibility for Product when it leaves Magellan’s pipeline
delivery flange, loading arm or delivery hose, as the case may be (the “Custody
Transfer Point”). Magellan will not be liable for any damage or loss to
Customer’s Product arising before it enters Magellan’s custody and control or
after it has left Magellan’s custody and control.

2.6 Terminal Operations. Control and operation of the Terminal will rest
exclusively with Magellan. Magellan will be an independent contractor with
respect to all services it provides under this Agreement. Magellan may suspend
operations at the Terminal if Magellan reasonably believes that any person,
equipment or the environment is at risk of injury or damage. This Agreement is
made as an accommodation to Customer, and in no event will Magellan’s services
be deemed to be those of a public utility or common carrier. If any action is
taken by a governmental authority to declare Magellan’s services those of a
public utility or common carrier, Magellan may by notice to Customer terminate
this Agreement on the effective date of such action.

2.7 Compliance with Law. Each Party will comply with Law in all material
respects in the performance of this Agreement. Customer will provide Magellan
with any information, documentation, or other materials as required by Law for
the receipt, storage and handling of Product. At Magellan’s request, Customer
will provide Magellan with a material safety data sheet for each Product prior
to delivery of that Product to the Terminal. Customer acknowledges that Magellan
may have an obligation under Law to disclose information regarding Product to
governmental authorities, parties handling Product, parties exposed to Product,
and to the general public, and Customer will promptly provide Magellan with any
information required by Law for such disclosures. Customer will prepare, file
and maintain copies of all reports required by Law to be filed with any federal,
state or local governmental authority concerning the receipt, delivery, storage,
handling and blending of Product, and Customer will provide a copy of any such
reports to Magellan upon their preparation.

 

Page 5 of 11

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2.8 RVP/VOC Blend Down. In order to reduce Gasoline RVP or VOC levels at the
Terminal by the date required by Law, Magellan may require that the Gasoline a
Customer delivers to the Terminal have an RVP or VOC less than the current RVP
or VOC allowed by Law.

2.9 Commingled Storage. Product may be commingled in Terminal tankage with the
Product of other Terminal customers. Should the Product delivered by Customer
into Terminal tankage contaminate, dilute or otherwise damage the Product of the
other Terminal customers in the tankage, Customer shall be liable for,
indemnify, defend and hold harmless Magellan, its parents and Affiliates, and
its and their respective officers, directors, employees, agents, and other
representatives from and against all Liabilities arising from or in connection
with curing, removing, redesignating, downgrading or to remediate the product as
contaminated by Customer’s Product, except to the extent that any such
Liabilities arise from the negligence or willful misconduct of Magellan. If such
an event should occur, Magellan will promptly notify Customer and in Magellan’s
sole discretion, will proceed with either curing, redesignating, downgrading or,
if possible, to remediate the product. Magellan will cooperate, to the extent
possible, with Customer in the determination of the resulting product from any
downgrade or redesignation of Customer’s Product that may occur from such an
event.

Should Customer’s Product be contaminated, diluted or otherwise damaged while
held in commingled Terminal tankage by another Terminal customer’s product, the
Customer will be promptly notified and in Magellan’s sole discretion, will
proceed with either curing, redesignating, downgrading or, if possible, to
remediate the product. Magellan will cooperate, to the extent possible, with
Customer in the determination of the resulting product from any downgrade or
redesignation of Customer’s Product that may occur from such an event.

2.10 ULSD Services.

(A) Intentional Downgrade Limitation. After Customer’s ULSD has been received by
the Terminal, Customer shall not make any intentional downgrade of ULSD to any
other designated MV fuel without the prior approval of Magellan.

(B) Redesignation Limitation. In order for Magellan to maintain compliance with
EPA redesignation limits under regulation 40 CFR § 80.598 (as succeeded or
amended), Customer shall not make any redesignations of NRLM fuel to MV fuel
without the prior approval of Magellan after Customer’s ULSD has been received
by the Terminal. If redesignation of NRLM to MV occurs, Customer shall
redesignate the same volume of MV to NRLM within two (2) pipeline cycles or ten
(10) days prior to the end of that EPA quarterly compliance period, which ever
comes first. Customer will cooperate with Magellan in order to maintain a
positive or neutral MV volume balance over the course of each EPA quarterly
compliance period. If Customer redesignates product without the approval of
Magellan or fails to redesignate the same volume of MV to NRLM within the time
period specified herein, Customer shall indemnify, defend and hold harmless
Magellan from any Liabilities arising from such non-compliance. If Customer
fails to cure the volume imbalance within the time specified above, Magellan
may, in its sole discretion, refuse to release or accept Product for Customer
until such time as Customer cures the volume imbalance.

2.11 Transmix and Product Losses. Transmix will be handled according to the
terms of the Tariff and Product losses will be handled according to the terms of
the T&D Agreement.

2.12 Tank Turns. If Product remains in the Terminal for more than ten (10) days,
Magellan will provide notice to Customer and a five (5) day opportunity to cure.
If Customer fails to remove such Product within the cure period, Customer will
pay Magellan an additional charge of $0.05 per Barrel per day until such Product
is removed.

2.13 Removal of Product. Upon the expiration or termination of this Agreement,
Customer will promptly remove all Product from the Terminal. If any Product
remains in the Terminal after the expiration or termination of this Agreement,
Customer will remain obligated to comply with the terms of this Agreement until
all Product is removed, and Customer will pay an additional holdover charge of
$0.05 per Barrel per day of Product remaining in the Terminal until all of
Customer’s Product is removed. If Customer fails to remove all Product from the
Terminal within fifteen (15) days of the expiration or termination of this
Agreement, Magellan may sell the Product on any terms that are commercially
reasonable. Magellan may withhold from the proceeds of the sale an amount
necessary to satisfy any amounts due under this Agreement and any costs incurred
in connection with the sale.

 

Page 6 of 11

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2.14 Negative Inventory Balance. If Customer has a negative inventory balance as
of the date of termination or expiration of this Agreement, Customer will within
thirty (30) days of such date either (a) supply Magellan with a quantity of
Product equal to the negative inventory balance by pipeline allocation; or
(b) pay Magellan for the quantity of Product equal to the negative inventory
balance at the PLATTS Gulf Coast Monthly Average in effect as of the date of
expiration or termination plus the actual cost of transportation to the
Terminal.

2.15 Gasoline Additives. Any generic gasoline additive supplied by Magellan will
be registered in accordance with 40 C.F.R. § 80.141 (as succeeded or amended).
Unless otherwise directed by Customer in writing, Magellan will inject any
gasoline additive at the minimum concentration specified in the manufacturer’s
registration statement. Magellan will maintain volumetric additive
reconciliation records as required by Law.

2.16 Oxygenate Blending. If requested by Customer and agreed to by Magellan,
Magellan will blend reformulated gasoline blendstock with denatured ethanol
(oxygenate) provided by Customer in the concentration specified by Customer.
Blending is subject to the limitations of the facilities and equipment at the
Terminal. The Parties will comply with the requirements of 40 CFR 80 (as
succeeded or amended) as applicable to oxygenate blending. Customer will
indemnify, defend, and hold harmless Magellan, its parents and Affiliates, and
its and their respective general partners, officers, directors, employees,
agents, and other representatives from and against any Liabilities arising out
of or in connection with the blended Product or the infringement or alleged
infringement of any third party intellectual property rights (including right
under patent) arising out of blending performed pursuant to this Agreement,
except to the extent that such Liabilities were caused by the negligence of
Magellan or the failure of Magellan to comply with Customer’s concentration
blending instructions.

2.17 Conductivity Additive. Magellan, in its discretion, may inject Distillate
products received at the Terminal with a conductivity additive to achieve a
minimum level of 50 pS/m. If Customer requests such additive injection into all
of Customer’s Distillate Products, then Customer will pay Magellan a fee as
mutually agreed upon by the Parties.

2.18 TxLED Registration. Magellan will not be providing injection of TxLED
additive into Customer’s TxLED. Customer’s TxLED delivered to the Terminal shall
meet all of the TCEQ quality requirements. Customer will register with the TCEQ
as a “Producer” either utilizing TCEQ Approved Alternative formulation or CARB
Certified Alternative formulation, based on the formulation used by Customer, in
accordance with applicable Laws governing TxLED. The Parties will cooperate in
providing to each other necessary information, documentation or data, in order
for the Parties to adequately report to TCEQ or other governmental authorities
relating to TxLED services. It shall remain Customer’s responsibility to ensure
that Customer’s TxLED Product as delivered to the Terminal meets the
requirements of all Laws.

 

3. Payment.

3.1 Compliance Costs. In the event Magellan is required by Law to incur any
additional expense in order to provide the services contemplated under this
Agreement, Magellan will provide notice of such expense to Customer. Customer
will elect whether or not to pay its pro rata share of the expense within thirty
(30) days (or a shorter period of time if necessary to receive the election
prior to the effective date of compliance) of such notice. If Customer elects
not to pay its pro rata share of the expense, Magellan may terminate this
Agreement as of the effective date of compliance.

3.2 Additional Services, Terminal Improvements & Change in Title. In the event
that Magellan performs any services at the request of Customer in addition to
the services contemplated under this Agreement, Customer will pay the cost of
providing those additional services plus fifteen percent (15%). Except as
otherwise agreed to in writing, Magellan will own all improvements to the
Terminal, including those for which Customer has made a financial contribution.

3.3 Taxes & Assessments. Customer will pay all taxes and assessments assessed
against Product, all taxes and assessments assessed against any other property
of Customer at the Terminal, and its pro-rata share of all taxes and assessments
assessed against Magellan (except for income, franchise and real estate taxes on
the Terminal) with respect to the receipt, storage,

 

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handling and disposal of Product, including any value added tax, sales tax,
excise tax, ad valorem tax, spill tax, pollution control tax or emission fee. If
requested by Magellan, Customer will supply Magellan with a completed and signed
original Notification Certificate of Gasoline and Diesel Fuel Registrant as
required by the Internal Revenue Service’s excise tax regulations.

3.4 Invoicing & Payment. Magellan will invoice Customer monthly, in arrears, for
any amounts owed by Customer to Magellan under this Agreement. Customer will pay
the amount of each invoice by ACH debit, without setoff or deduction, ten
(10) days from the date of the invoice. Customer will be assessed a late charge
of one and one-half percent (1.5%) interest per month (or the highest rate
permitted by Law, whichever is less) for any invoice not paid within ten
(10) days of the date of the invoice. Magellan’s acceptance of payment for any
service performed after the expiration or termination of this Agreement will not
be deemed a renewal of this Agreement. Magellan will retain its books and
records related to the charges to Customer for services provided under this
Agreement for a period of two (2) years from the date the services are rendered.
Upon written request, Customer may audit these books and records at Magellan’s
property during normal business hours. Any such audit will be at Customer’s
expense. Customer’s payment obligations for services performed will survive the
expiration or termination of this Agreement.

3.5 Default. A Party will be in default if it: (a) fails to pay any undisputed
sums payable hereunder when due or otherwise breaches this Agreement and fails
to cure such default within ten (10) days of a written notice from the
non-defaulting Party; (b) becomes insolvent; or (c) files or has filed against
it a petition in bankruptcy, for reorganization, or for appointment of a
receiver or trustee. In the event of any such default, the non-defaulting Party
may, without prejudice to its rights hereunder and in addition to such other
rights and remedies as may be available under Law, terminate this Agreement upon
notice to the defaulting Party.

3.6 Adequate Assurance.

(A) Definition. “Adequate Assurance” means at Customer’s option, either (i) an
irrevocable letter of credit, in the form and for the term reasonably acceptable
to Magellan, or (ii) prepayment in an amount equal to an average of the
Customer’s payment history for the previous six (6) months or as otherwise
agreed by the Parties.

(B) Demand. Magellan, in its sole reasonable discretion, may demand Adequate
Assurance from Customer when Customer’s ability to make timely payment merits
such precautionary measures. Magellan will make demand for Adequate Assurance by
providing Customer with notice. If Customer fails to provide Adequate Assurance
within five (5) Business Days from the date of such demand, Magellan may
terminate this Agreement or refuse further services or release of product
pending receipt of such Adequate Assurance.

 

4. Liability.

For purposes of this Agreement, “Force Majeure” shall be as defined in the T & D
Agreement

Subject to the provisions of this Section, if a Party is prevented from
performing its obligations under this Agreement due to an event of Force
Majeure, then, to the extent that it is so prevented, that Party’s failure to
perform shall not be considered a breach of its obligations under this Agreement
and the obligations of that Party shall be deferred during the continuance of
that Party’s inability to perform caused by the event of Force Majeure, but for
no longer period. If a Force Majeure event renders any Party unable, in whole or
in part, to carry out its obligations under this Agreement, that Party must give
the other Party notice and full particulars in writing as soon as practicable
after the occurrence of the causes relied on, or give notice by telephone and
follow the notice with a written confirmation within forty-eight (48) hours. The
Party providing the notice shall use commercially reasonable efforts to
(a) ameliorate the Force Majeure conditions. No Party shall be compelled to
resolve any strikes, lockouts, or other industrial disputes other than as it
shall determine to be in its best interests.

4.2 Limitation of Liability. Title to Product will not pass to Magellan, and
Magellan will not be liable as an insurer of Product. Magellan will not be
liable to Customer under this Terminalling Agreement for damages in excess of
(i) the replacement cost of damaged, lost or destroyed Product or (ii) the loss
of value of downgraded or redesignated Product. Loss of value will be determined
based on PLATTS Gulf Coast Monthly Average for the product price differential
between the original Product and the final designated product grade. Magellan
will only be liable to Customer for damaged, downgraded, redesignated, lost or
destroyed Product to the extent such was caused by the negligence of Magellan in
the storage and handling of the Product.

 

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Notwithstanding the forgoing, Magellan will not be liable to Customer for any
downgrade and/or redesignation of Product occurring from interface cuts made
during normal handling operations at the Terminal; provided, however, Magellan
will use reasonable efforts to minimize the quantity of Product downgraded or
redesignated.

4.3 Indemnification.

TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW AND EXCEPT AS SPECIFIED
OTHERWISE ELSEWHERE IN THE AGREEMENT:

MAGELLAN SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS MOTIVA, ITS MEMBERS,
AFFILIATES AND SUBSIDIARIES AND THEIR DIRECTORS, EMPLOYEES AND AGENTS (THE
“MOTIVA INDEMNITEES”) FROM AND AGAINST ANY LOSS, DAMAGE, CLAIM, SUIT, LIABILITY,
FINE, PENALTY, JUDGMENT AND/OR EXPENSE (INCLUDING REASONABLE ATTORNEYS’ FEES AND
OTHER COSTS OF LITIGATION) (COLLECTIVELY “LIABILITIES”), ARISING FROM
(I) INJURY, DISEASE OR DEATH OF ANY MAGELLAN EMPLOYEE, AGENT, REPRESENTATIVE OR
CONTRACTOR OR (II) DAMAGE TO OR LOSS OF ANY OF MAGELLAN’S PROPERTY (INCLUDING
MAGELLAN’S FACILITIES), REGARDLESS OF THE CAUSE, INCLUDING, BUT NOT LIMITED TO,
THE NEGLIGENCE OF MOTIVA (OTHER THAN THE NEGLIGENCE OF MOTIVA THAT CAUSES ANY
DISCHARGES, SPILLS OR LEAKS OF PRODUCT), IT BEING SPECIFICALLY UNDERSTOOD THAT
MAGELLAN IS INDEMNIFYING MOTIVA FOR ITS NEGLIGENCE AS SET FORTH ABOVE. MAGELLAN
SHALL ALSO DEFEND, INDEMNIFY AND HOLD HARMLESS THE MOTIVA INDEMNITEES FROM AND
AGAINST ANY LIABILITIES ARISING FROM DISCHARGES, SPILLS OR LEAKS OF PRODUCT
CAUSED BY MAGELLAN’S NEGLIGENCE.

MOTIVA SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS MAGELLAN, ITS MEMBERS,
AFFILIATES, SUBSIDIARIES AND JOINT VENTURE PARTNERS AND THEIR DIRECTORS,
EMPLOYEES AND AGENTS (THE “MAGELLAN INDEMNITEES”) FROM AND AGAINST ANY
LIABILITIES, ARISING FROM (I) INJURY, DISEASE OR DEATH OF ANY MOTIVA EMPLOYEE,
AGENT, REPRESENTATIVE OR CONTRACTOR OR (II) DAMAGE TO OR LOSS OF ANY MOTIVA
PROPERTY, REGARDLESS OF THE CAUSE, INCLUDING, BUT NOT LIMITED TO, THE NEGLIGENCE
OF MAGELLAN (OTHER THAN THE NEGLIGENCE OF MAGELLAN THAT CAUSES ANY DISCHARGES,
SPILLS OR LEAKS OF PRODUCT), IT BEING SPECIFICALLY UNDERSTOOD THAT MOTIVA IS
INDEMNIFYING MAGELLAN FOR ITS NEGLIGENCE AS SET FORTH ABOVE. MOTIVA SHALL ALSO
DEFEND, INDEMNIFY AND HOLD HARMLESS THE MAGELLAN INDEMNITEES FROM AND AGAINST
ANY LIABILITIES ARISING FROM DISCHARGES, SPILLS OR LEAKS OF PRODUCT CAUSED BY
MOTIVA’S NEGLIGENCE.

MAGELLAN AND MOTIVA SHALL EACH DEFEND, INDEMNIFY, AND HOLD HARMLESS THE OTHER
AND ITS RESPECTIVE MEMBERS, AFFILIATES, SUBSIDIARIES AND JOINT VENTURE PARTNERS
AND THEIR DIRECTORS, EMPLOYEES AND AGENTS FROM AND AGAINST ANY LIABILITIES TO
THIRD PARTIES FOR INJURY, DISEASE, DEATH OR DAMAGE TO OR LOSS OF PROPERTY,
ARISING FROM THE INDEMNIFYING PARTY’S NEGLIGENCE OR WILLFUL MISCONDUCT IN
CONNECTION WITH ITS PERFORMANCE OF THIS AGREEMENT. IN THE EVENT MAGELLAN AND
MOTIVA ARE JOINTLY, CONCURRENTLY, OR CONTRIBUTORILY RESPONSIBLE FOR ANY
LIABILITIES TO THIRD PARTIES, THEN THE PARTIES SHALL SHARE RESPONSIBILITY AND
INDEMNIFY EACH OTHER FOR THE LIABILITIES IN PROPORTION TO EACH PARTY’S
CONTRIBUTION TO THE INJURY, DISEASE, DEATH, OR DAMAGE TO OR LOSS OF PROPERTY.

 

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THE LIMITATION OF LIABILITY PROVISIONS OF SECTION 13 APPLY, ACCORDING TO THEIR
TERMS, TO THIS SECTION 18.

NEITHER PARTY WILL BE LIABLE FOR OTHER PARTY’S LOST PROFITS, LOST BUSINESS
OPPORTUNITIES, OR OTHER INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR
CONSEQUENTIAL DAMAGES IN CONNECTION WITH THIS AGREEMENT.

EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY MAKES ANY
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT
LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.

(E) The indemnities expressed in this Agreement will survive the expiration or
termination of this Agreement.

4.4 Insurance. Magellan will not insure the Product. If Customer desires to
insure the Product while it is in Magellan’s custody, Customer will bear the
cost of such insurance.

The Parties will obtain and maintain in full force and effect statutory Worker’s
Compensation insurance commercial or comprehensive general liability insurance
on an occurrence form with a combined single limit of $5,000,000 each
occurrence, and annual aggregates of $5,000,000, for employer’s liability, auto
Liability, bodily injury and property damage, including coverage for blanket
contractual liability, broad form property damage, personal injury liability,
independent contractors, products/completed operations, and sudden and
accidental pollution, in which such policy shall have the explosion, collapse
and underground exclusion deleted. The Parties will obtain and maintain in full
force and effect statutory workers’ compensation and employers’ liability with a
limit of $5,000,000 and automobile liability with a $5,000,000 combined single
limit. Insurance limits can be satisfied by a combination of primary and
umbrella or excess policies.

The required policies will, where allowed by law: (a) waive subrogation rights
against the other Party and its parent, subsidiary and affiliated companies;
(b) name the other Party, its parent, subsidiary and affiliated companies as
additional insureds (except for the Worker’s Compensation insurance); and
(c) include an amendment stating the insurance is primary insurance with respect
to the other Party, its parent, subsidiary and affiliated companies, and any
other insurance maintained by the other Party, its parent, subsidiary or
affiliated companies is excess and not contributory with this insurance. The
Parties will provide to each other certificates showing evidence of the required
insurance coverage as of the Effective Date of this Agreement. The required
limit is a minimum limit and will not be construed to limit either Party’s
liability. The cost of the required insurance will be borne by the Party
procuring such policy.

4.5 Confidentiality. Shall be governed by the Confidentiality provisions of the
T&D Agreement

 

5. Miscellaneous.

5.1 No Waiver. No waiver by either Party of any right hereunder at any time will
serve to waive the same right at any future date.

5.2 Remedies. Except as otherwise provided herein, the remedies provided in this
Agreement are cumulative, not exclusive, and in addition to all other remedies
in either Party’s favor at law or in equity.

5.3 Amendment. No amendment to this Agreement will be effective unless made in
writing and signed by both Parties.

5.4 Severability. If any provision of this Agreement is partially or completely
unenforceable pursuant to Law, that provision will be deemed amended to the
extent necessary to make it enforceable, if possible. If not possible, then that
provision will be deemed deleted. If any provision is so deleted, then the
remaining provisions will remain in full force and effect.

5.5 No Third Party Beneficiary. Nothing in this Agreement is intended to provide
legal rights to, be for the benefit of or create any liability for anyone not a
Party hereto.

 

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5.6 Assignment. Neither Party shall assign or transfer this Agreement, in whole
or in part, without the prior written consent of the other Party, which consent
shall not be unreasonably withheld or delayed, and any purported assignment in
violation of this provision will be void. Consent to assignment or transfer
shall not relieve the assigning Party from any of its duties or obligations
under this Agreement, unless otherwise specifically stated in the written
consent.

5.7 Conflict of Interest. Neither Party will pay any commission, fee or rebate
to an employee of the other Party, or favor an employee of the other Party with
any gift or entertainment of significant value.

5.8 Governing Law. This Agreement will be governed and construed in accordance
with the laws of the State of Texas, without reference to the choice of law
principles thereof.

Any dispute arising under this Agreement shall be governed by the dispute
resolution provisions of the T&D Agreement.

5.9 Counterparts. This Agreement may be executed in one or more counterparts,
each of which will be deemed an original and part of one and the same document.

5.10 Entire Agreement. This Agreement represents the entire agreement of the
Parties with respect to the matters addressed herein.

5.11 Drafting. No provisions of this Agreement will be construed against or
interpreted to the disadvantage of any Party by reason of such Party having
drafted such provision. As between the Parties, it shall be conclusively
presumed that each and every provision of this Agreement was drafted jointly by
Magellan and Customer.

5.12 Survival. The Parties acknowledge and agree that any rights of a Party
arising under this Agreement prior to its termination or expiration, including
but not limited to a right to indemnification with respect to any matter, any
payment obligations and the limitation of liability set forth herein, shall
survive the termination or expiration of this Agreement.

5.13 Miscellaneous. References in this Agreement to “days,” “months” or “years”
will mean calendar days, months and years unless otherwise indicated. Unless
expressly provided otherwise, the word “including” does not limit the preceding
words or terms. All section titles and headings in this Agreement are merely for
convenience, and will not limit in any way the interpretation of this Agreement.
Neither this Agreement nor the Parties’ performance hereunder shall be deemed to
have created a joint venture or partnership between the Parties.

-End of Schedule “A”-

 

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Exhibit 3.1

to

Texas Pipeline Project Throughput and Deficiency Agreement

CONNECTION AGREEMENT

THIS AGREEMENT, made by and between Magellan Pipeline Company, L.P., a Delaware
limited partnership having an office at One Williams Center, Tulsa, OK 74172
(“Magellan” or “MPC” or “Lessor”), and Motiva Enterprises LLC, a Delaware
limited liability having offices at 700 Milam Street, 11th Floor, Houston, TX
77002 (“Motiva” or “Lessee”), covers the connections as described below under
the following terms and conditions, and is made pursuant to that certain Texas
Pipeline Project Throughput and Deficiency Agreement, to be effective as of the
“Effective Date” set forth therein, between the “MAGELLAN Parties” (as defined
therein) and Motiva Enterprises LLC (“T&D Agreement”). This Agreement will be
effective as of the “Effective Date” defined in the T&D Agreement for a term as
set forth in Section 6.0 hereof. Motiva and Magellan are referred to herein from
time to time individually as a “Party” and collectively as the “Parties”.

RECITALS

WHEREAS, MPL owns and operates a common carrier pipeline system comprised of
various pipelines and pipeline-related facilities and desires to connect to the
Motiva Pasadena Products Terminal by constructing a delivery facility at Motiva
Pasadena Products Terminal (“MPL Pasadena Delivery Facility”); and

WHEREAS, Motiva owns and operates the Pasadena Products Terminal (which terminal
and all Motiva facilities are referred to herein as the “Motiva Pasadena
Products Terminal”) and Motiva desires to connect to the MPL Pasadena Delivery
Facility; and

WHEREAS, MPL and Motiva desire to enter into this Agreement to describe and
govern the respective responsibilities of the Parties as they relate to the
construction and operation of the Motiva Receipt Facilities; and

NOW THEREFORE, in consideration of the promises and covenants set forth herein,
the Parties agree as follows:

 

1.0 DEFINITIONS:

 

  1.1 “Affiliate” means “Related Party” as defined in the T & D Agreement

 

  1.2 “Barrel” shall mean forty-two (42) U.S. gallons at sixty (60) degrees
Fahrenheit.

 

1

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  1.3 “Commencement Date” shall mean the Service Commencement Date as defined in
the T&D Agreement.

 

  1.4 “Custody Meter” has the meaning set forth in Exhibit “B” hereof.

 

  1.5 “MPL Pasadena Delivery Facility” means MPL meter station existing at the
Motiva Pasadena Products Terminal which will be the point of measurement of
Petroleum Product where the custody of which is transferred from MPL to Motiva.

 

  1.6 “Laws” or “Law” shall be as defined in the T & D Agreement.

 

  1.7 “Delivery Valve” shall mean MPL motor operated mainline block valve
located downstream of MPL Custody Meter which is connected to the Motiva Receipt
Facilities.

 

  1.8 “Petroleum Product” has the meaning set forth in MPL Tariff Rules and
applicable state tariff, including any supplements thereto and revisions
thereof, and shall meet the specifications referenced therein, and shall include
any other petroleum product as may be mutually agreed to by the Parties .

 

  1.9 “RVP” shall mean reid vapor pressure.

 

  1.10 “Transfer Point” shall mean the downstream flange of the MPL Delivery
Valve as shown on “Exhibit A”.

 

  1.11 “Motiva Pasadena Products Terminal” is defined in the RECITALS hereto
which is connected to the downstream side of MPL Delivery Valve at MPL Pasadena
Delivery Facility.

 

  1.12 “Motiva Receipt Facilities” shall mean the piping constructed, owned and
operated by Motiva which connects the downstream side of MPL Delivery Valve to
Motiva Pasadena Products Terminal.

 

  1.13 “VOC” shall mean volatile organic compound.

 

  1.14 “MPL East Houston Refined Products Facility” means MPL facility located
at 8160 N Loop East Houston, TX 77029.

 

2. MPL OBLIGATIONS:

 

  2.1 MPL, at its sole cost and expense, shall construct, operate, maintain and
repair the MPL Pasadena Delivery Facility in accordance with this Agreement, and
shall be considered the operator of such facilities as defined by DOT and OPS
regulations.

 

  2.2 MPL will own, operate and maintain the Delivery Valve on the MPL Custody
Meter.

 

2

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  2.3 At the MPL Pasadena Delivery Facility, MPL will transfer custody of
Petroleum Product delivered to Motiva at the Custody Meter. The quantity of
Petroleum Product delivered to Motiva by MPL shall be determined based on the
procedures as outlined in Exhibit B.

 

  2.4 MPL shall notify Motiva at least two (2) weeks in advance of any planned
maintenance work involving the MPL Pasadena Delivery Facility that will, or has
the potential to, disrupt operation of the Motiva Pasadena Products Terminal.

 

  2.5 MPL shall, at its sole cost and expense make such modifications as it
deems commercially reasonable to the MPL Pasadena Delivery Facility to
accommodate its delivery of Petroleum Product to Motiva.

 

  2.6 In accordance with Section 3.10, MPL shall have access to the Motiva
Pasadena Products Terminal; provided however, MPL shall access the premises in
such a manner as to cause minimum interference with the operations of Motiva.
While accessing the Motiva Pasadena Products Terminal, MPL (including its
contractors and its contractors’ employees, agents and representatives) shall
take all necessary precautions (including those required by Motiva’s safety
regulations) to protect the premises, all persons and property thereon from
damage or injury. MPL shall maintain the MPL Pasadena Delivery Facility in such
a manner that it shall be clean and free of all waste materials and rubbish. MPL
understands and agrees that the use, possession, transportation, promotion, or
sale of alcoholic beverages, firearms, live ammunition, explosives, weapons and
illegal drugs or drug paraphernalia, and/or otherwise legal, but illicitly used
substances by anyone while on Motiva’s premises is absolutely prohibited. MPL
employees, contractors, agents or representatives who are found in violation of
these prohibitions will not be allowed on Motiva’s premises and may be referred
to law enforcement agencies for their action. The term “Motiva’s premises” in
this Paragraph is used in the broadest sense and includes all land, property,
buildings, structures, installations, cars, trucks, and all other means of
conveyance owned by or leased to Motiva, or otherwise being utilized in Motiva’s
business. Entry onto Motiva’s premises constitutes consent to and recognition of
the right of Motiva and its authorized representatives to search the person,
vehicle and other property of individuals while on Motiva’s premises. Such
searches may be initiated by Motiva without prior announcement and will be
conducted at such times and locations as deemed appropriate. MPL personnel who
refuse to cooperate with searches will not be allowed on Motiva’s premises. MPL
is required to take whatever steps it deems necessary (including adopting its
own drug control program, if necessary) to ensure that involvement with drugs on
the part of Motiva’s personnel working on or having access to Motiva’s premises
does not create a presence of drug-related problems in the work place.

 

3

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3.0 MOTIVA OBLIGATIONS:

 

  3.1 Motiva, at its sole cost and expense, shall construct the Motiva Receipt
Facilities from the Transfer Point to Motiva Pasadena Products Terminal,
operate, maintain and repair the Motiva Receipt Facilities and the Motiva
Pasadena Products Terminal in accordance with this Agreement, and shall be
considered the operator of such facilities as defined by DOT and OPS
regulations.

 

  3.2 Motiva will own, operate and maintain the Motiva Receipt Facilities at
Motiva Pasadena Products Terminal.

 

  3.3 Motiva shall make modifications as it deems commercially reasonable to the
Motiva Receipt Facilities and, at Motiva’s sole cost and expense, to accommodate
any and all modifications by MPL to the MPL Pasadena Delivery Facility.

 

  3.4 Motiva shall notify MPL at least two (2) weeks in advance of any planned
maintenance work that will, or has the potential to, disrupt operation of the
MPL Pasadena Delivery Facility.

 

  3.5 All proposed new pipeline receipt facilities relating to the movement and
delivery of Petroleum Product at the Motiva Pasadena Products Terminal, piping,
pumps, valves and other equipment, shall be designed and constructed in a manner
acceptable to MPL.

 

  3.6 Motiva shall be responsible for the Petroleum Product at the time of its
delivery to the Transfer Point and shall bear responsibility for changes in the
Petroleum Product specification only after delivery.

 

  3.7 The Motiva shall provide adequate receipt capacity from the MPL Pasadena
Delivery Facility to enable MPL to achieve a minimum incoming rate of 57,500
barrels per day (or 2400 barrels per hour).

 

  3.8 Any approvals given by MPL pursuant to the provisions of this Agreement
shall not relieve Motiva from any responsibility or liability under this
Agreement.

 

  3.9 Motiva will provide the following:

 

  A. Electric power needed to operate the MPL Pasadena Delivery Facility
including, but not limited to, any motor operated valves and telemetry devices
operated and maintained by MPL.

 

  B. In those instances in which matters involve the safe operation of each
Party’s respective facilities covered by this Agreement, Motiva agrees to
cooperate with MPL in providing appropriate telemetry data (e.g. transmission of
data necessary for the monitoring of system integrity such as custody meter
readings, temperature readings, line pressure data, valve status, valid flow
path, line pressure safety device settings, tank levels and alarms, and other
areas as reasonably identified by MPL).

 

4

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  C. A minimum of 300 barrels of tank storage and a connection point to delivery
into the tank storage for MPL surge relief as shown on “Exhibit A”.

 

  D. An easement at no cost to MPL on the Motiva Pasadena Products Terminal for
the MPL Pasadena Delivery Facility.

 

  E. Work space on the Motiva Pasadena Products Terminal at no cost to MPL for
the installation of MPL Pasadena Delivery Facility.

 

  3.10 Motiva will allow MPL employees ingress and egress between public roads
and the Motiva Pasadena Products Terminal on roads and walkways inside the
Motiva Pasadena Products Terminal at their own risk, but only through the Motiva
Pasadena Products Terminal gate and in accordance with Section 2.6.

 

4.0 OPERATIONS:

 

  4.1 Each party’s facilities shall be maintained, repaired and operated by the
respective owner and operator thereof in accordance with prudent pipeline
operating practices, applicable American Petroleum Institute (“API”) Standards,
the latest edition of the Manual of Petroleum Measurement Standards (“MPMS”) as
published by the API, the requirements set forth in the latest edition of the
Department of Transportation (“DOT”) Pipeline Safety Regulations (49 C.F.R. §
195), and with all other applicable local, state and federal laws, orders,
directives, rules and regulations.

 

  4.2 Each party shall monitor its own facilities for any abnormalities that
would indicate the likelihood of a future disruption of Petroleum Product flow
into the other party’s facilities covered by this Agreement or a measurement
discrepancy. The party that detects any such abnormality or discrepancy shall
immediately notify the other party’s control center of such matter.

 

  4.3 Each party shall monitor its own facilities for any abnormalities that
would indicate the likelihood of a future disruption of Petroleum Product flow
into the other party’s facilities covered by this Agreement or a measurement
discrepancy. The party that detects any such abnormality or discrepancy shall
immediately notify the other party’s control center of such matter.

 

  4.4 The Delivery Valve is the point at which custody, control and risk of loss
with respect to Petroleum Product is transferred between the Parties.

 

5.0 MEASUREMENT PROCEDURES, BACK UP MEASUREMENT PROCEDURES and CALIBRATION

 

  5.1

In addition to the services provided pursuant to the other express terms of this
Agreement, all measurement services as Motiva desires and MPL agrees to provide
will be governed by and provided in accordance with the terms of a

 

5

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Measurement Agreement substantially in form attached hereto as Schedule “B”,
which such Measurement Agreement must be executed by Motiva and MPL prior to
Motiva’s shipment of any Petroleum Product for delivery at the MPL Pasadena
Delivery Facility to the Motiva Pasadena Products Terminal.

 

6.0 TERM:

 

  6.1 The initial term of this Agreement (the “Term”) will run concurrently and
co-extensively with “Term” of (and as defined in) the T&D Agreement and shall
automatically extend for additional five (5) year periods, subject to the
termination provisions of Section 6.2.

 

  6.2 Either Party may elect to terminate this Agreement by providing written
notice of termination to the other Party at least one (1) year prior to the end
of the then-current term, to be effective as of the end of such term.

 

7.0 SHUT-IN RIGHTS:

 

  7.1 Each Party shall have the right to shut-in its facilities at the Transfer
Point at any time that (a) such Party deems it necessary for health, safety
and/or environmental protection or (b) the other Party is in material default of
its obligations under this Agreement Before shutting in its facilities, such
Party shall use reasonable efforts to give the other Party at least 24-hour
advance notice of shutdown except in the case of emergency when such Party shall
be entitled to shut down immediately and provide notice as soon as practicable
thereafter. A Party shall not be liable to the other Party for any loss, cost or
damage incurred as a result of such exercise of its shut-in rights. The
facilities at the Transfer Point shall be reactivated as soon as practicable
after the defaulting Party remedies its default and/or the threat to health,
safety or environmental protection has ceased. To the extent the cause of a
shut-in is within the reasonable control of a Party, such Party shall promptly
and diligently pursue a remedy thereof.

 

8.0 INDEMNIFICATION:

TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW AND EXCEPT AS SPECIFIED
OTHERWISE ELSEWHERE IN THE AGREEMENT:

MAGELLAN SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS MOTIVA, ITS MEMBERS,
AFFILIATES AND SUBSIDIARIES AND THEIR DIRECTORS, EMPLOYEES AND AGENTS (THE
“MOTIVA INDEMNITEES”) FROM AND AGAINST ANY LOSS, DAMAGE, CLAIM, SUIT, LIABILITY,
FINE, PENALTY, JUDGMENT AND/OR EXPENSE (INCLUDING REASONABLE ATTORNEYS’ FEES AND
OTHER COSTS OF LITIGATION) (COLLECTIVELY “LIABILITIES”), ARISING FROM
(I) INJURY, DISEASE OR DEATH OF ANY MAGELLAN EMPLOYEE, AGENT, REPRESENTATIVE OR
CONTRACTOR OR (II) DAMAGE TO OR LOSS OF ANY OF MAGELLAN’S PROPERTY

 

6

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(INCLUDING MAGELLAN’S FACILITIES), REGARDLESS OF THE CAUSE, INCLUDING, BUT NOT
LIMITED TO, THE NEGLIGENCE OF MOTIVA (OTHER THAN THE NEGLIGENCE OF MOTIVA THAT
CAUSES ANY DISCHARGES, SPILLS OR LEAKS OF PRODUCT), IT BEING SPECIFICALLY
UNDERSTOOD THAT MAGELLAN IS INDEMNIFYING MOTIVA FOR ITS NEGLIGENCE AS SET FORTH
ABOVE. MAGELLAN SHALL ALSO DEFEND, INDEMNIFY AND HOLD HARMLESS THE MOTIVA
INDEMNITEES FROM AND AGAINST ANY LIABILITIES ARISING FROM DISCHARGES, SPILLS OR
LEAKS OF PRODUCT CAUSED BY MAGELLAN’S NEGLIGENCE.

MOTIVA SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS MAGELLAN, ITS MEMBERS,
AFFILIATES, SUBSIDIARIES AND JOINT VENTURE PARTNERS AND THEIR DIRECTORS,
EMPLOYEES AND AGENTS (THE “MAGELLAN INDEMNITEES”) FROM AND AGAINST ANY
LIABILITIES, ARISING FROM (I) INJURY, DISEASE OR DEATH OF ANY MOTIVA EMPLOYEE,
AGENT, REPRESENTATIVE OR CONTRACTOR OR (II) DAMAGE TO OR LOSS OF ANY MOTIVA
PROPERTY, REGARDLESS OF THE CAUSE, INCLUDING, BUT NOT LIMITED TO, THE NEGLIGENCE
OF MAGELLAN (OTHER THAN THE NEGLIGENCE OF MAGELLAN THAT CAUSES ANY DISCHARGES,
SPILLS OR LEAKS OF PRODUCT), IT BEING SPECIFICALLY UNDERSTOOD THAT MOTIVA IS
INDEMNIFYING MAGELLAN FOR ITS NEGLIGENCE AS SET FORTH ABOVE. MOTIVA SHALL ALSO
DEFEND, INDEMNIFY AND HOLD HARMLESS THE MAGELLAN INDEMNITEES FROM AND AGAINST
ANY LIABILITIES ARISING FROM DISCHARGES, SPILLS OR LEAKS OF PRODUCT CAUSED BY
MOTIVA’S NEGLIGENCE.

MAGELLAN AND MOTIVA SHALL EACH DEFEND, INDEMNIFY, AND HOLD HARMLESS THE OTHER
AND ITS RESPECTIVE MEMBERS, AFFILIATES, SUBSIDIARIES AND JOINT VENTURE PARTNERS
AND THEIR DIRECTORS, EMPLOYEES AND AGENTS FROM AND AGAINST ANY LIABILITIES TO
THIRD PARTIES FOR INJURY, DISEASE, DEATH OR DAMAGE TO OR LOSS OF PROPERTY,
ARISING FROM THE INDEMNIFYING PARTY’S NEGLIGENCE OR WILLFUL MISCONDUCT IN
CONNECTION WITH ITS PERFORMANCE OF THIS AGREEMENT. IN THE EVENT MAGELLAN AND
MOTIVA ARE JOINTLY, CONCURRENTLY, OR CONTRIBUTORILY RESPONSIBLE FOR ANY
LIABILITIES TO THIRD PARTIES, THEN THE PARTIES SHALL SHARE RESPONSIBILITY AND
INDEMNIFY EACH OTHER FOR THE LIABILITIES IN PROPORTION TO EACH PARTY’S
CONTRIBUTION TO THE INJURY, DISEASE, DEATH, OR DAMAGE TO OR LOSS OF PROPERTY.

THE LIMITATION OF LIABILITY PROVISIONS OF SECTION 13 APPLY, ACCORDING TO THEIR
TERMS, TO THIS SECTION 18.

 

9.0 NOTICES

Any notice or communication required or permitted to be given hereunder shall be
in writing and shall be properly given when hand delivered, sent by overnight
mail by recognized carrier, or sent by facsimile transmission with confirmed
receipt thereof, and addressed to the Party for whom intended at its address
listed below or such other address or addressee as may be specified by notice
given to the other Party in accordance with this provision.

 

7

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Magellan Pipeline Company, L.P.

Attn: Manager, Commercial Development

One Williams Center, Suite 3100

Tulsa, OK 74172

Phone: 918-574-7712

Fax: 918-574-7491

Motiva Enterprises LLC

Attn: Director, Commercial Development

P.0. Box 2463

Houston, Texas 77252-2463

Phone: 713-230-2976

Fax: 713-230-7898

 

10.0 GENERAL

 

  10.1 Settlements, Billings and Reports. All financial settlements, billings or
reports rendered by either Party to the other Party pursuant to this Agreement
will, to the best of the knowledge and belief of the Party rendering such
settlement, billing, or report, properly reflect the facts about the applicable
activities and transactions. Each Party shall exercise reasonable care and
diligence to prevent its employees from making, receiving, providing or offering
substantial gifts, entertainment, payments, loans or other considerations for
the purpose of influencing individuals to act contrary to the best interest of
either Party in the carrying out of this Agreement.

 

  10.2 Limitation of Liability. Neither Party shall be liable to the other Party
for any indirect, incidental, special, punitive or consequential damages
suffered or incurred by the other Party and arising out of this Agreement,
including, but not limited to, loss of profits or loss of market, even if the
other Party has been advised of such possibility.

 

  10.3 Assignment. Neither Party may assign this Agreement, or any of its rights
or obligations hereunder (either in whole or in part), without the prior written
consent of the other Party, which consent shall not be unreasonably withheld or
delayed. It is understood, however, that by such assignment, the assigning Party
does not thereby avoid obligations imposed by the terms and provisions of this
Agreement, past, present, or future, unless otherwise agreed in writing.

 

  10.4 Confidentiality. Shall be governed by the Confidentiality provisions of
the T & D Agreement.

 

  10.5 No Third Party Beneficiaries or Ventures. Except as otherwise provided
herein, nothing contained within this Agreement shall be considered or construed
as conferring any right or benefit on a person not a Party to this Agreement and
neither this Agreement nor the performance hereunder shall be deemed to have
created a joint venture or partnership, agencies or employment arrangement
between the Parties.

 

8

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  10.6 Public Policy. The Parties expressly agree that it is not the intention
of either Party to violate public policy, any applicable published tariffs, or
state or federal statutory or common laws and that if any sentence, paragraph,
clause or combination thereof within this Agreement is in violation of the same,
such sentence, paragraph, clause or combination thereof shall be inoperative and
the remainder of this Agreement shall remain binding upon the Parties provided
the economic benefit to the Parties remains substantially the same.

 

  10.7 Applicable Law. Both Parties shall, in carrying out the terms and
provisions hereof, abide by all present and future applicable and valid laws and
all applicable and valid rules, regulations, and orders of any governmental
regulatory body having jurisdiction. This Agreement shall be governed and
construed according to the laws of the State of Texas, without regard to
principles of conflict of laws, which if applied, might require the application
of the laws of another jurisdiction.

 

  10.8 Entire Agreement; Amendment. This Agreement, including the exhibits
attached hereto, sets forth the entire agreement and understanding between the
Parties with respect to the subject matter hereof, and supersedes all prior
discussions, negotiations, representations and agreements concerning the same
between them. Neither of the Parties shall be bound by any conditions,
definitions, warranties, or representations with respect to this Agreement,
other than as expressly provided herein. This Agreement may be modified or
amended only in a writing executed by each Party.

 

  10.9 Force Majeure. Shall be governed by the Force Majeure provisions of the T
& D Agreement.

 

  10.10 No Waiver. The waiver by either Party of any right hereunder or failure
to perform or breach by the other Party shall not be deemed as a waiver of any
other right hereunder or of any other breach or failure of the Party, whether of
a similar nature or otherwise.

 

  10.11 No Recording. This Agreement shall not be recorded.

 

  10.12 Exhibits. The exhibits referred to herein are attached hereto and by
this reference are incorporated herein and made a part hereof. In the event
there is any conflict between this Agreement and any exhibit, the provisions of
this Agreement shall be controlling.

 

  10.13 Survival. All provisions that may reasonably be interpreted as surviving
the termination or expiration of this Agreement shall survive such termination
or expiration, including, but not limited to, those provisions relating to
indemnification and limitation of liability.

 

9

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  10.14 Alternate Dispute Resolution. Any dispute arising under this Agreement
shall be governed by the Alternative Dispute Resolution provisions of the T&D
Agreement.

 

  10.15 Counterparts. This Agreement may be executed via facsimile and in any
number of counterparts, each of which shall be an original and all of which
shall constitute the same instrument.

 

  10.16 Audit. Shall be governed by the Audit provisions of the T&D Agreement.

IN WITNESS WHEREOF, the Parties have entered into and made this Agreement
effective as of the Effective Date.

 

Motiva Enterprises LLC     Magellan Pipeline Company, L.P.     By Its General
Partner, Magellan Pipeline GP, LLC By:  

/s/ Brian P. Smith

    By:  

/s/ Michael N. Mears

Name:   Brian P. Smith     Name:   Michael N. Mears Title:  

Vice President Supply Distribution

& U.S. Commercial Marketing

    Title:   Chief Operating Officer

 

10

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Schedule of Exhibits

Exhibit “A”: Description of Assets

Exhibit “B”: Measurement Agreement

 

11

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EXHIBIT “A”

PIPELINE FACILITIES

 

1

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EXHIBIT “B”

MEASUREMENT AGREEMENT

Article 1

GENERAL

 

1.1 Custody. The MPL Delivery Valve shall be the point at which custody of all
refined products delivered by MPL from the MPL Connecting Pipeline will transfer
to Motiva. The Custody Meter, located upstream of the MPL Delivery Valve,
complies with, and shall be operated and maintained in accordance with MPL’s
current measurement policy and the recommendation of the American Petroleum
Institute Manual of Petroleum Measurement Standards (“API MPMS”).

 

1.2 Flowing Conditions and Product Quality. MPL shall operate the Custody Meter
within the manufacturer’s stated linear flow range for comparable fluid
applications. A minimum back pressure equal to API MPMS Chapter 5, Section 3
recommended minimum back pressure shall be maintained on the Custody Meter at
all times. Motiva shall keep the Motiva Receipt Facilities free from excursions
and contaminants.

 

1.3 Responsibilities of Ownership. Motiva shall have sole responsibility for its
filters, filtering equipment, strainers, valves, piping, tankage and equipment
located downstream of the Delivery Valve. MPL shall have sole responsibility for
the Custody Meter and all of its filters, filter equipment, strainers, valves,
piping, tankage and equipment located both upstream of the Custody Meter.

Article 2

QUANTITY TRANSACTION RECORDS (“TICKETS”)

 

2.1 Reporting Frequency and Content. Meter tickets shall be generated by MPL for
each batch delivered through the Custody Meter. Along with the date and time of
the opening and closing operations, each meter ticket shall contain sufficient
data to allow for manual calculations to verify accuracy. MPL will provide
Motiva with a copy of each meter ticket in a timely manner.

 

2.2 Units of Measure. Meter tickets shall report metered volumes in whole
barrels (42 U.S. gallons).

 

2.3 Custody Meter or Measurement Facility Failure. If the Custody Meter
malfunctions during a delivery, MPL shall end the meter ticket as soon as
possible and the volume shall be derived, consistent with accepted industry
practice, in a manner mutually agreeable to the Parties depending upon the
nature of the failure. While the Custody Meter is out of service, measurement of
refined products volumes shall be made in accordance with the backup measurement
provisions set forth in Article 3 below.

 

2

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2.4 Volumetric Discrepancies between the Parties. Any volumetric discrepancy
between the volume of refined product determined by the Custody Meter and the
volume determined under Article 3 below which is greater than 0.3% shall be
sufficient cause for an investigation of the Custody Meter and MPL’s metering
facility.

 

2.5 Calculation of Tickets during Periods of Investigation. During an
investigation of a measurement error, the volumes reflected by the metered
tickets shall continue to be treated as the correct measure of volume. If the
investigation reveals a malfunction at MPL’s Custody Meter, then custody
measurement shall be determined in accordance with the Backup Measurement
provisions of Article 3 below until the problem with the Custody Meter is
resolved.

Article 3

BACKUP MEASUREMENT

 

3.1 Method. Backup Measurement shall be determined by hand lining a tank
(“Delivery Tank”) or by using a second meter that meets API recommended
guidelines (“Backup Meter”). The Delivery Tank is owned and operated by Motiva.
The Backup Meter is owned and operated by MPL. The Delivery Tank is located at
Motiva Pasadena Products Terminal. The Backup Meter is located at MPL East
Houston Refined Products Facility. The handline gauge shall be performed by
Motiva in accordance with API MPMS Chapter 3. MPL shall notify Motiva when
backup measurement procedures are required to be utilized. MPL shall have the
option to witness the handline gauge performed by Motiva.

 

3.2 Backup Ticket Calculation and Reporting Application. When backup measurement
procedures are used to derive custody transfer tickets for delivered volumes,
MPL shall provide to Motiva an agreed upon manual ticket as the record of
custody transfer. The volume of refined products shall be calculated using the
current strapping chart for the Delivery Tank and the combined correction
factors shall be calculated to provide the net refined products volume. The
handline gauge shall be performed prior to and at the conclusion of a product
transfer. MPL personnel shall be offered the opportunity to witness each
handline gauge.

 

3.3 Right to Verification. Motiva shall have the right, at its sole cost, to
install all necessary measurement equipment needed in order to perform a
measurement check on the Custody Meter. MPL shall have the option to witness all
measurement checks.

Article 4

METER PROVING and INSTRUMENT CALIBRATION

 

4.1 Proving - Condition &Frequency. MPL shall calibrate the Custody Meter with a
National Institute of Standard and Technology (NIST) traceable certified prover
a minimum of once per refined product grade delivery per month or when
circumstances warrant a verification of the previously applied meter factor. The
Custody Meter shall be proven only after line conditions have stabilized. The
proving report shall contain sufficient data to allow manual calculations to
verify accuracy.

 

3

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4.2 Proving - Right to Witness. Motiva shall have the option to witness all
calibrations of the Custody Meter.

 

4.3 Proving - Reporting. MPL shall provide Motiva a copy of each proving report
upon request.

 

4.4 Proving - Meter Factor Validity. A valid meter calibration must fall within
+/- 0.05% repeatability for five (5) consecutive runs. Meter factor variance
shall not exceed 0.25% from the previously applied meter factor.

 

4.5 Proving - Meter Factor Application. The calculated meter factor shall be
applied to all metered volumes associated with the active shipment.

 

4.6 Proving - Prover Sphere. The prover sphere shall be inspected semi-annually,
and if necessary, resized or replaced.

 

4.7 Prover Calibration. MPL stationary prover shall be waterdrawn a minimum of
once every five (5) years or upon maintenance of the provers calibrated section
(i.e. switch replacement, breaking flanges in calibrated section, etc.) with a
NIST certified or NIST traceable test measures per API MPMS Chapter 4 standards.
Motiva may request a waterdraw at any time. However, if the calibration does not
reveal a change of more than +/- 0.025% of the base volume, Motiva shall be
responsible for any and all cost associated with the waterdraw calibration.

 

4.8 Temperature Transmitter Calibration. The temperature transmitter associated
with the Custody Meter shall be checked by MPL against a NIST traceable
certified instrument once per calendar month in accordance with MPL current
measurement policy and the recommendation of the API MPMS Chapter 7 industry
standards.

 

4.9 Pressure Transmitter Calibration. The pressure transmitter associated with
the Custody Meter shall be checked by MPL against a NIST traceable certified
instrument semi-annually in accordance with MPL current measurement policy and
the recommendation of the API MPMS Chapter 21 industry standards.

 

4

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Exhibit 6.1

Texas Pipeline System – Intrastate Movements

May, 2008

This procedure sets forth key provisions for the equitable allocation of
available intrastate capacity on the Texas Pipeline System when the aggregate
volume of Petroleum Products nominated to be transported in intrastate service
exceeds the available intrastate capacity. To the extent that a segment of the
Texas Pipeline System is capacity-constrained, including the North Pipeline
System that transports both interstate and intrastate volumes, capacity will be
allocated between interstate movements and intrastate movements based on
interstate shippers’ and intrastate shippers’ respective shares of total
movements for the affected segment of the Texas Pipeline System during the
preceding twelve (12) month period of time, as specified in this Exhibit 6.1.

 

(a) Definitions

1. “Texas Pipeline System” – Includes the pipeline to be constructed between
Port Arthur and the East Houston Terminal and the North Pipeline System, which
originates at the East Houston Terminal and transports Petroleum Product to
multiple destinations in Texas, and the pipeline to be constructed between East
Houston Terminal and Motiva’s Pasadena Terminal. The North Pipeline System also
transports Petroleum Products shipped from the East Houston by interstate
shippers.

2. “Committed Shipper” – any Shipper that has committed to ship, for at least
fifteen (15) years, a minimum of 90,000 barrels per day from Port Arthur to the
East Houston Terminal and 45,000 barrels per day on the North Pipeline System.

3. “New Shipper” – any Shipper that does not qualify under the definition of a
Committed Shipper or a Regular Shipper.

4. “Regular Shipper” – any Shipper that shipped any volume during the applicable
base period. A Committed Shipper shall be considered to be a Regular Shipper
only with respect to the portion of its shipped volumes, if any, that are in
excess of its minimum commitment for the applicable base period.

 

(b) Allocation Method

1. Capacity will be allocated for each segment of the Texas Pipeline System, as
necessary to accomplish the purposes specified in this Exhibit 6.1.

2. A maximum of five percent (5%) of the intrastate capacity to be allocated
will be reserved for New Shippers. Each New Shipper will be allocated a portion
of the reserved intrastate capacity. If the total allocation for individual New
Shippers exceeds the intrastate capacity reserved for New Shippers, each New
Shipper’s allocation will be reduced on a proportional basis.

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

3. The majority of the intrastate capacity to be allocated will be allocated to
Committed Shippers, based on the lesser of each Committed Shipper’s minimum
commitment and its actual nomination for the month for which nominations were
made. Volumes nominated by a Committed Shipper in excess of its minimum
commitment shall be treated as a nomination by a Regular Shipper.
Notwithstanding anything contained in this Agreement to the contrary, the
minimum intrastate capacity reserved for Committed Shippers by line segment will
be as follows:

(A) Port Arthur to East Houston Terminal segment – not less than 115,000 barrels
per day

(B) North Pipeline System segment – not less than 56,000 barrels per day

(C) East Houston Terminal to Motiva’s Pasadena Terminal segment – not less than
50,000 barrels per day

4. All capacity not allocated to New Shippers and Committed Shippers will be
allocated to Regular Shippers. The capacity will be allocated based on each
Regular Shipper’s respective proportion of total shipments on the North Pipeline
System during the applicable base period.

5. Allocated space of one Shipper may not be assigned or used by another Shipper
during such time as this Pro-ration Policy is in effect.

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Exhibit 10.1

to

Texas Pipeline Project Throughput and Deficiency Agreement

THROUGHPUT FEES

 

1.      Pipeline Transportation

   ¢/bbl   

•     Port Arthur to East Houston

   40.10   

•     Port Arthur to Pasadena

   46.20   

•     Port Arthur to Hearne

   95.94   

•     Port Arthur to Reagan

   93.50   

•     Port Arthur to Waco

   89.50   

•     Port Arthur to Dallas

   96.43   

2.      Other Fees

   ¢/bbl/day   

•     Demurrage

   5.00   

3.      Lease Storage

   ¢/bbl/month   

•     Non-Site Specific Storage

   40.00   

•     Site Specific Storage

   50.00   

4.      East Houston Terminal & Loading Rack

   ¢/bbl    $/gal

•     Truck Rack Throughput Rate

   25.80   

•     Proprietary Gasoline Additive Injection

      0.00074

•     Generic Gasoline Additive Injection

      0.00320

•     Ethanol Blending

      0.03095

•     Lubricity Additive Injection

      0.00257

•     Red-Dye Additive Injection

      0.00360

•     TxLED Additive Injection

      0.03000