Exhibit 10.2

EXECUTION VERSION

STORAGE AND SERVICES AGREEMENT

DATED SEPTEMBER 25, 2013

Between

TESORO HAWAII, LLC

and

BARCLAYS BANK PLC

 

LOGO [g603639ex10_10cov.jpg]

Allen & Overy LLP

0101802-0000002 NY:17027009.24

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CONTENTS

 

Section        Page   1.   Definitions and Interpretation      2   2.   Term of
Agreement      10   3.   Terminaling and Transport Services      11   4.  
Storage and Services Fees      19   5.   Title and Custody      21   6.   Taxes
and Assessments      23   7.   Representations and Warranties      23   8.  
Insurance      24   9.   Force Majeure      27   10.   Indemnification      28  
11.   Limitation      30   12.   Default and Termination      31   13.  
Specific Performance      32   14.   Assignment and Changes to the Parties     
32   15.   Successors and Assigns      32   16.   Notices      32   17.  
Language      35   18.   Severability      36   19.   Rights and Remedies
Cumulative; Effect of Waivers      36   20.   Complete Agreement      36   21.  
Amendment      36   22.   Survival      37    23.   Counterparts      37   24.  
Governing Law      37   25.   Enforcement      37  

Schedule

 

1.   Facility Data 2.   Additional Marine Terms for Delivery at the Hawaii
Independent Energy LLC Single Point Mooring (“SPM”) at Oahu, Hawaii 3.   General
Marine Terms for Delivery at the Hawaii Independent Energy LLC Single Point
Mooring (“SPM”) at Oahu, Hawaii

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THIS STORAGE AND SERVICES AGREEMENT (the Agreement) is dated as of September 25,
2013 and is entered into

BETWEEN:

 

(1) TESORO HAWAII, LLC, a Hawaii limited liability company (the Company); and

 

(2) BARCLAYS BANK PLC, a public limited company organized under the laws of
England and Wales (Barclays).

WHEREAS:

 

(A) Barclays has entered into one or more crude supply agreements (the Crude
Agreements) with one or more crude oil suppliers (the Crude Suppliers) pursuant
to which Barclays may purchase Crude Oil (defined below) from the Crude
Suppliers from time to time during the term of the applicable Crude Agreements.

 

(B) Further, Barclays has also entered into certain transactions with the
Company to:

 

  1. Purchase from the Company the volume of Crude Oil and the volume of
Products (defined below) in the Facilities (defined below) on the date hereof
(the Initial Purchase Inventory) pursuant to the Initial Purchase Confirmations
(defined below); and

 

  2. Supply to the Company Crude Oil purchased under the Crude Agreements and
deliver to and receive from the Company Products under a master exchange
mechanism, all pursuant to an ISDA Master Agreement (defined below) (including
certain Confirmations (defined below)).

The above list of documents entered into between the Parties is not an
exhaustive list as the Parties have entered into other documents and may enter
into other documents in the future.

 

(C) Pursuant to this Agreement, and in connection with the transactions
described above, the Company has offered to:

 

  1. receive Barclays’ Inventory (defined below) into the Facilities (defined
below);

 

  2. deliver Barclays’ Inventory from the Facilities into the Refinery (defined
below);

 

  3. store and handle Barclays’ Inventory at the Facilities;

 

  4. deliver Barclays’ Inventory out of the Facilities to the Company or
designated third parties;

 

  5. transport and deliver Barclays’ Inventory from one Facility to another and
(in the case of Pipelines) through each Facility;

 

  6. gauge Barclays’ Inventory; and

 

  7. account for and provide reports with respect to Barclays’ Inventory and all
customary record keeping and other ancillary services (including certain tolling
services);

 

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all in accordance with the terms and conditions of this Agreement, and Barclays
has agreed to accept such services in accordance with the terms and conditions
of this Agreement.

 

(D) For the avoidance of doubt, it is the Parties’ intention that the provision
of storage services under this Agreement is being offered by the Company on a
commingled basis whereby Barclays shall only have use of such storage as
detailed and provided for specifically in this Agreement.

IT IS AGREED as follows:

 

1. DEFINITIONS AND INTERPRETATION

 

1.1 Definitions

The following terms used in this Agreement have the meanings ascribed to them
below:

Additional Volume has the meaning given to it in Section 3.2(c) (Storage).

Additional Volume Storage and Services Fee has the meaning given to it in
Section 4(c) (Storage and Services Fees).

Affiliate has the meaning given to it in the Framework Agreement.

Agency and Advisory Agreement has the meaning given to it in the Framework
Agreement.

API means American Petroleum Institute.

Applicable Law means (a) any law, statute, regulation, code, ordinance, license,
decision, order, writ, injunction, directive, judgment, policy, decree and any
judicial or administrative interpretations thereof; (b) any agreement,
concession or arrangement with any Governmental Authority; and (c) any license,
permit or compliance requirement, in each case applicable to a Party or the
System or any component thereof.

ASTM means the American Society for Testing and Materials.

Barclays Authorization has the meaning given to it in the Framework Agreement.

Barclays’ Block Volume means the Products volumes that Barclays purchased from
the Company pursuant to the Initial Purchase Confirmations and any Subsequent
Purchase Confirmations (as defined in the Framework Agreement), less any
reductions in Products volumes due to any reduction in the amount of Barclays’
Inventory stored at the Facilities and plus any increases and less any
reductions in the Products volumes as a result of transactions under the
Products Exchange Master Confirmation.

Barclays’ Inventory means any Inventory that Barclays owns or in which Barclays
has any beneficial or legal title (including, for the avoidance of doubt, to the
extent of its interest in commingled Inventory under Section 3.3(b)
(Commingling)) as a result of or in connection with the transactions or matters
contemplated under or pursuant to the Transaction Documents and any substances
in any such Inventory.

 

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Barclays’ Percentage Capacity has the meaning given to it in Section 3.2(a).

Barges has the meaning given to it in the Framework Agreement.

Barrel means 42 Gallons measured at a temperature of sixty (60) degrees
Fahrenheit and an absolute pressure of 29.92 inches of mercury.

Business Day has the meaning given to it in the Framework Agreement.

Calculation Date has the meaning given to it in Section 3.3(d) (Commingling).

Claim Notice has the meaning given to it in Section 10.2(b) (Indemnification).

Company Authorization has the meaning given to it in the Framework Agreement.

Company Indemnified Person means the Company and its Affiliates from time to
time and their respective directors, officers, employees, representatives,
agents, brokers, successors and assigns.

Company’s Inventory has the meaning given to it in Section 3.3(b) (Commingling).

Confirmations has the meaning given to it in the Framework Agreement.

Contaminated or Contamination means contamination of any intermediate Product or
finished Product to such an extent that the relevant Product is not readily
marketable and/or requires reprocessing.

Crude Agreements has the meaning given to it in Recital A to this Agreement.

Crude GTCs means the general terms and conditions for sales and purchases of
crude oil, or any equivalent document, in use by any applicable Crude Supplier
from time to time.

Crude Oil has the meaning given to it in the Framework Agreement.

Crude Oil Percentage Capacity has the meaning given to it in Section 3.2(a).

Crude Oil Quality Balancing Adjustment has the meaning given to it in
Section 3.3(d)(i).

Crude Suppliers has the meaning given to it in Recital A to this Agreement.

Declined Storage Notice has the meaning given to it in Section 3.2(b) (Storage).

Default has the meaning given to it in the Framework Agreement.

Defaulting Party has the meaning given to it in Section 12.2(a) (Suspension and
Termination).

Default Rate means Barclays’ cost of funds, plus one percent (1%) per annum.

Delivery Date has the meaning given to it in the Initial Purchase Confirmations.

Delivery Location has the meaning given to it in the applicable Confirmation.

 

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Enforcement Event has the meaning attributed to it in the Framework Agreement.

Environment has the meaning given to it in the Framework Agreement.

Environmental Approval has the meaning given to it in the Framework Agreement.

Environmental Claim has the meaning given to it in the Framework Agreement.

Environmental Law has the meaning given to it in the Framework Agreement.

Environmental Matter has the meaning given to it in the Framework Agreement.

Event of Default means the occurrence of one of the events or circumstances
described in Section 12.1 (Default).

Facilities has the meaning given to it in the Framework Agreement.

Final Termination Date means (a) the last day of the Initial Term or (b) such
later date to which the Term may be extended pursuant to Section 2.1(b).

First Renewal Term has the meaning given to it in Section 2.1(b) (Term).

Fixed Crude Sum has the meaning given to it in Section 4(b)(i) (Storage and
Services Fee).

Fixed Products has the meaning given to it in Section 4(b)(ii) (Storage and
Services Fee).

Force Majeure means any event or circumstance which wholly or partly directly
prevents, hinders or delays the performance of any material obligation arising
under this Agreement, but only if and to the extent (a) such event is not within
the reasonable control, directly or indirectly, of the Party seeking to have its
performance obligation(s) excused thereby; (b) the Party seeking to have its
performance obligation(s) excused thereby has taken all reasonable precautions
and measures in order to prevent or avoid such event and mitigate the effect
thereof on its ability to perform its obligations under this Agreement and which
by the exercise of due diligence such Party could not reasonably have been
expected to avoid and which by the exercise of due diligence it has been unable
to overcome, and (c) such event is not the direct or indirect result of the
actions, inactions, negligence or the failure of, or caused by, the Party
seeking to have its performance obligations excused thereby, or any of its
agents, employees or contractors.

 

  (a) Subject to the foregoing, Force Majeure shall include, but not be limited
to the following:

 

  (i) acts of God, floods, fires, explosions, power shortages or outages,
strikes, lockouts, or other industrial disturbances, accident or breakage of
equipment or machinery failure of transporters to furnish transportation,
failure of suppliers or contractors to furnish supplies or services, or any law,
rule, order, or action of any court or instrumentality of the federal, state or
local government that wholly or partly directly prevents, hinders or delays the
performance of any material obligation arising under this Agreement;

 

  (ii) natural catastrophes including, but not limited to earthquake, hurricane,
tropical cyclone, typhoon, volcanic activity, or any other geological or weather
event which is unusually adverse for the area affected and the consequences of
which cannot be overcome by the exercise of ordinary care; or

 

  (iii) war (declare or undeclared), riot or similar civil disturbance, acts of
the public enemy (including acts of terrorism), sabotage, blockade, piracy,
insurrection, revolution, government rationing, expropriation or confiscation.

 

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  (b) The following events shall not qualify as Force Majeure:

 

  (i) the Company’s inability to obtain licenses, consents, permissions,
permits, exemptions and other authorizations (including environmental licenses)
required in respect of the construction, operation and maintenance of the System
or any component thereof, unless caused by a change in applicable federal, state
or local laws or regulations after the effective date of this Agreement and
which, by the exercise of due diligence the Company cannot avoid or overcome;

 

  (ii) the Company’s inability to obtain sufficient power, labor or materials to
construct, operate or maintain the System or any component thereof, except if
the Company’s inability to obtain sufficient power, labor or materials is caused
by an independent, identifiable Force Majeure event;

 

  (iii) weather conditions not addressed elsewhere in this definition, the
consequences of which could reasonably have been prevented by the Company by the
exercise of ordinary care and which were not unusually adverse for the area
affected;

 

  (iv) inability to pay, except if caused by a physical failure of equipment or
facilities necessary to make such payment that would otherwise qualify as a
Force Majeure; and

 

  (v) economic hardship.

Forfeiture Action means any and all steps taken by any Landlord under any Lease:

 

  (a) to commence proceedings for termination or forfeiture of the Lease
(whether such termination or forfeiture is by court proceedings or peaceable
re-entry); and/or

 

  (b) to pursue court proceedings claiming termination or forfeiture or to
effect peaceable re-entry and/or other relief; and/or

 

  (c) to obtain a court order to enforce such termination or forfeiture; and/or

to commence proceedings for specific performance and/or a mandatory injunction
and/or a declaration requiring the eviction of Barclays or cessation of Barclays
from sharing the premises (or any portion thereof) leased by the Company
pursuant to the Lease (or similar relief).

Framework Agreement means the Framework Agreement dated as of the date hereof
between Barclays, the Company and Hawaii Pacific Energy, LLC, including any
subsequent amendment or supplement to or renewal or restatement thereto.

 

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Gallon means a U.S. gallon (with the volume delivered determined at 60 degrees
Fahrenheit using ASTM Standard D1250, Table 6B).

Good Industry Practice has the meaning given to it in the Framework Agreement.

Governmental Authority has the meaning given to it in the Framework Agreement.

Handling Loss Allowance has the meaning given to it in Section 3.7(a)
(Inventory, accounting and Losses).

Hazardous Substances has the meaning given to it in the Framework Agreement.

Indemnified Party has the meaning given to it in Section 10.2(a)
(Indemnification).

Indemnified Person has the meaning given to it in the Framework Agreement.

Indemnifying Party has the meaning given to it in Section 10.2(a)
(Indemnification).

Initial Purchase Confirmations has the meaning given to it in the Framework
Agreement.

Initial Purchase Date has the meaning given to it in the Framework Agreement.

Initial Purchase Inventory has the meaning given to it in Recital B to this
Agreement.

Initial Term has the meaning given to it in Section 2.1(a) (Term).

Insurance Proceeds has the meaning given to it in the Intercreditor Agreement.

Intercreditor Agreement means the intercreditor agreement dated as of the date
hereof by and among Barclays, the Administrative Agent, the Inventory Collateral
Agent, the ABL Collateral Agent and the HIE Parties (each as defined in the
Intercreditor Agreement).

Inventory means Crude Oil and Products.

Inventory Collateral Agent has the meaning given to it in the Framework
Agreement.

Inventory Document has the meaning given to it in the Framework Agreement.

ISDA Master Agreement has the meaning given to it in the Framework Agreement.

Landlord means each landlord under each Lease, including successors and assigns
of such landlord, in respect of any land on which or under which any of the
Facilities or the Refinery are situated.

Leases has the meaning given to it in the Framework Agreement.

Local Business Day has the meaning given to it in the ISDA Master Agreement.

Losses has the meaning given to it in the Framework Agreement.

Marine Vessel means any type of ship, barge, tug or other waterborne craft.

 

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Material Adverse Effect has the meaning given to it in the Framework Agreement.

Material Contracts has the meaning given to it in the Framework Agreement.

Oil Annex has the meaning given to it in the Framework Agreement.

On-Site Tanks has the meaning given to it in the Framework Agreement.

Party means any party to this Agreement, and Parties shall mean both of the
parties to this Agreement.

Performing Party has the meaning given to it in Section 12.2(a) (Suspension and
Termination).

Pipelines has the meaning given to it in the Framework Agreement.

Products has the meaning given to it in the Framework Agreement.

Products Exchange Master Confirmation has the meaning given to it in the
Framework Agreement.

Products Percentage Capacity has the meaning given to it in Section 3.2(a).

Quantity has the meaning specified in the Oil Annex.

Recovery has the meaning given to it in Section 11(c) (Limitation).

Refinery has the meaning given to it in the Framework Agreement.

Release has the meaning given to it in the Framework Agreement.

Second Renewal Term has the meaning given to it in Section 2.1(b) (Term).

Security Interest has the meaning given to it in the Framework Agreement.

SPM has the meaning given to it in the Framework Agreement.

SPM Pipelines has the meaning given to it in the Framework Agreement.

Storage and Services Fee has the meaning given to it in Section 4(a) (Storage
and Services Fees).

Storage Month has the meaning given to it in Section 3.2(b) (Storage).

System means “System” as defined in the Framework Agreement, but only to the
extent (a) located within Hawaii Foreign-Trade Zone #9 or (b) otherwise utilized
for the receipt, storage, refining, movement, transportation or any other
ancillary activities related to Barclays’ Inventory pursuant to any Inventory
Document.

Tank has the meaning given to it in Section 3.2 (Storage).

 

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Term means the period of time from (and including) the first day of the Initial
Term to (and including) the last day of the last renewal term or, if none, of
the Initial Term.

Terminaling and Transport Services means:

 

  (a) off-loading of Barclays’ Inventory from Marine Vessels at the SPM;

 

  (b) receipt into the Facilities of Barclays’ Inventory;

 

  (c) transport and delivery of Barclays’ Inventory from and through the
Facilities to the Refinery;

 

  (d) storage and handling of Barclays’ Inventory at the Facilities and (in the
case of Tolled Inventory) the Refinery;

 

  (e) delivery of Barclays’ Inventory from the Refinery to the Facilities;

 

  (f) delivery of Barclays’ Inventory out of the Facilities to the Company or
designated third parties;

 

  (g) transport and delivery of Barclays’ Inventory from one Facility to another
and (in the case of Pipelines) through each Facility;

 

  (h) on-loading and off-loading of Barclays’ Inventory into and out of the
Barges or any other Marine Vessels and transport of Barclays’ Inventory on the
Barges or any other Marine Vessels;

 

  (i) gauging of Barclays’ Inventory;

 

  (j) accounting for and providing reports with respect to Barclays’ Inventory;
and

 

  (k) all other customary record keeping and ancillary services in furtherance
of the above-listed services.

Terminals has the meaning given to it in the Framework Agreement.

Termination Date has the meaning given to it in Section 12.2(a) (Suspension and
Termination).

Third Party means any entity other than the Parties to this Agreement.

Third Party Claim has the meaning given to it in the Framework Agreement.

Third Party Inventory has the meaning given to it in Section 3.3(a)
(Commingling).

Transaction Documents has the meaning given to it in the Framework Agreement.

 

1.2 Interpretation

 

(a) In this Agreement, unless the contrary intention appears, a reference to:

 

  (i) an amendment includes a supplement, novation, extension (whether of
maturity or otherwise), restatement or re-enactment or replacement (however
fundamental and whether or not more onerous) and amended will be construed
accordingly;

 

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  (ii) assets includes properties, revenues and rights of every description,
including accretions and additions thereto;

 

  (iii) an authorization includes an authorization, consent, approval,
resolution, permit, license, exemption, filing, registration or notarization;

 

  (iv) a person includes any individual, company, corporation, unincorporated
association or body (including a partnership, trust, fund, joint venture or
consortium), government, state, agency, organization or other entity whether or
not having separate legal personality;

 

  (v) disposal means a sale, transfer, assignment, grant, conveyance, lease,
license, declaration of trust or other disposal, whether voluntary or
involuntary, and dispose will be construed accordingly;

 

  (vi) control means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a person, whether
through the ability to exercise voting power, by contract or otherwise;

 

  (vii) the term law includes any law, statute, regulation, regulatory
requirement, rule, ordinance, ruling, decision, treaty, directive, order,
guideline, policy, writ, judgment, injunction or request of any court or other
governmental, inter-governmental or supranational body, officer or official,
fiscal or monetary authority, or other ministry or public entity (and their
interpretation, administration and application), having the force of law;

 

  (viii) a regulation includes any regulation, rule or official directive having
the force of law of any governmental, inter-governmental or supranational body,
agency, department or regulatory, self-regulatory or other authority or
organization;

 

  (ix) an Event of Default being outstanding means that it has not been remedied
or waived;

 

  (x) references to Recitals, Sections, paragraphs or Schedules are to the
recitals, sections, paragraphs and schedules of this Agreement;

 

  (xi) all headings herein are intended solely for convenience of reference and
shall not affect the meaning or interpretation of the provisions of this
Agreement;

 

  (xii) the word “including” as used herein does not limit the preceding words
or terms and shall be read to be followed by the words “without limitation” or
words having similar import;

 

  (xiii) all references to days and months mean calendar days and months;

 

  (xiv) a Party or any other person includes its successors in title, permitted
assigns and permitted transferees;

 

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  (xv) a currency is a reference to the lawful currency for the time being of
the relevant country;

 

  (xvi) a reference to any agreement, document or security (including this
Agreement) includes (without prejudice to any prohibition on amendments) any
amendment or supplement to or renewal or restatement of to that agreement,
document or security;

 

  (xvii) the singular includes the plural and vice versa and each gender
includes the other gender;

 

  (xviii) any reference to any law or regulation or provision thereof shall be a
reference to the same as extended, applied, amended, supplemented, restated or
re-enacted from time to time and includes any subordinate legislation; and

 

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

 

(b) Unless the contrary intention appears, a reference to a month or months is a
reference to a period starting on one day in a calendar month and ending on the
numerically corresponding day in the next calendar month or the calendar month
in which it is to end, except that:

 

  (i) if the numerically corresponding day is not a Local Business Day, the
period will end on the next Local Business Day in that month (if there is one)
or the preceding Local Business Day (if there is not);

 

  (ii) if there is no numerically corresponding day in that month, that period
will end on the last Local Business Day in that month; and

 

  (iii) notwithstanding paragraph (i) above, a period which commences on the
last Local Business Day of a month will end on the last Local Business Day in
the next month or the calendar month in which it is to end, as appropriate.

 

(c) Unless the contrary intention appears:

 

  (i) a reference to a Party will not include that Party if it has ceased to be
a Party under this Agreement; and

 

  (ii) an amount in U.S. Dollars is payable only in U.S. Dollars.

 

(d) The Recitals contained in the “Whereas” section (as detailed on page 1 of
this Agreement) are hereby incorporated into this Agreement in full.

 

2. TERM OF AGREEMENT

 

2.1 Term

 

(a) Subject to the remainder of this Section 2.1 (Term) and Section 12.2
(Suspension and Termination), the Term of this Agreement shall be an initial
period of three (3) years commencing on and including the Initial Purchase Date
(the Initial Term).

 

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(b) Subject to Section 17 (Term and Renewal of Inventory Documents) of the
Framework Agreement, this Agreement may be renewed for two further one-year
terms by mutual agreement of the Parties (the First Renewal Term and Second
Renewal Term, respectively). The Company must provide written notice to Barclays
no later than 180 days prior to expiration of the Initial Term or the First
Renewal Term, as the case may be, whether it wishes to renew this Agreement. The
renewal of this Agreement for the First Renewal Term or Second Renewal Term is,
in each case, subject to the parties’ mutual agreement on the terms and
conditions of renewal within 120 days prior to the expiration of the Initial
Term or the First Renewal Term, as applicable, in their respective sole
discretion, and Section 17 of the Framework Agreement.

 

(c) If the parties do not agree upon the terms and conditions of renewal for the
First Renewal Term or the Second Renewal Term within 120 days prior to the
expiration of the Initial Term or the First Renewal Term, as applicable, this
Agreement shall, subject to paragraph (f) below, terminate effective as of the
expiry of the relevant term, as the case may be.

 

(d) If termination has not occurred pursuant to paragraph (c) above, subject to
paragraph (f) below, the Term of this Agreement shall expire, and this Agreement
shall terminate on the earliest of:

 

  (i) the Final Termination Date;

 

  (ii) any “Termination Date” under a Confirmation; and

 

  (iii) any “Early Termination Date” as defined in the ISDA Master Agreement.

 

(e) If and when all “Transactions” (as defined in the ISDA Master Agreement)
outstanding under the ISDA Master Agreement are terminated, this Agreement
shall, unless the Parties agree otherwise, automatically terminate
simultaneously therewith, subject to paragraph (f) below.

 

(f) Notwithstanding anything contained in this Section but subject to
Section 12.2 (Suspension and Termination), the Term of this Agreement shall not
expire and this Agreement shall not terminate before Barclays certifies that all
of Barclays’ Inventory has been removed from the System and it has not entered
into any contract for Inventory to be delivered to the System that has not then
been delivered.

 

3. TERMINALING AND TRANSPORT SERVICES

 

3.1 Terminaling and Transport Services

The Company hereby agrees:

 

  (a) in accordance with the terms and conditions of this Agreement, to provide
to Barclays the Terminaling and Transport Services in respect of the System;

 

  (b) to take proper care and safeguard Barclays’ Inventory, subject to the
terms and conditions of this Agreement;

 

  (c) to have and exercise ultimate care, custody, control and supervision over
the System and all of its components and to comply in all material respects with
all Applicable Laws and Environmental Approvals and Good Industry Practice in
connection with operations of the System; and

 

  (d) that it shall render the Terminaling and Transport Services to Barclays in
compliance with Applicable Laws, Environmental Approvals and Good Industry
Practice.

 

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3.2 Storage

 

(a) As part of the Terminaling and Transport Services provided by the Company to
Barclays at the Facilities, the Company shall store Barclays’ Inventory in the
Off-Site Tanks the Facilities, in the case of the On-Site Tanks and the
Terminals, in the storage tanks (each such tank referred to individually as a
Tank and collectively as the Tanks) identified in Schedule 1 (Facility Data) on
and subject to the terms of this Agreement and subject to pre-agreed
volume/capacity hereinafter defined. Barclays’ ability to store Barclays’
Inventory pursuant to this Agreement shall not exceed 87% for Products and 90%
for Crude Oil of the Facilities’ system-wide storage capability (such maximum
volume/capacity for Barclays defined as Barclays’ Percentage Capacity)
(Barclays’ Percentage Capacity as it relates to Products shall be defined as the
Products Percentage Capacity and Barclays’ Percentage Capacity as it relates to
Crude Oil shall be defined as the Crude Oil Percentage Capacity) (the
Facilities’ system-wide storage capability shall include Tanks in service and
those Tanks that may be put into service). In the event that the Parties agree
to store Barclays’ Inventory at a Facility other than the On-Site Tanks, the
Parties shall agree the appropriate Products Percentage Capacity and Crude Oil
Percentage Capacity with respect to such Facility.

 

(b) Each calendar month of the Term shall be defined as a “Storage Month”. For
each Storage Month, Barclays shall be deemed to intend to consume some or all of
Barclays’ Percentage Capacity for the purpose of storing Barclays’ Inventory at
the Facilities. Barclays agrees to pay for the storage and Terminaling and
Transport Services it intends to consume in the Storage Month in accordance with
the payment provisions in Section 4 (Storage and Services Fees); provided that
for any given Storage Month, Barclays may elect to notify the Company by no
later than the eighth (8th) Business Day of the month before the relevant
Storage Month (the Notice Month) of Barclays’ intention not to store Inventory
at the Facilities during the Storage Month (the notice provided in this Section
to be defined as the Declined Storage Notice). The Declined Storage Notice shall
detail that Barclays does not intend to store Crude Oil or Products during the
Storage Month. If Barclays delivers a Declined Storage Notice, no storage fees
shall be due and owing for the relevant Storage Month.

 

(c) Barclays may store Inventory in volumes (on a per Barrel or Gallon or metric
ton basis) exceeding Barclays’ Percentage Capacity if the Company agrees to the
same and the Parties agree to an appropriate market rate (such additional volume
stored to be defined as the Additional Volume). If, after delivering to the
Company a Declined Storage Notice, Barclays determines that it does need to
store Inventory at the Facilities and the Company agrees to the same, then
Barclays shall pay a rate equal to the Additional Volume Storage and Services
Fee (as defined in Section 4(c)).

 

3.3 Commingling

 

(a) The Company shall be entitled to store any Inventory or any other
hydrocarbon or product owned by a Third Party (or in which a Third Party has any
right, title or interest) (Third Party Inventory) in any Facility with Barclays’
prior written consent, which shall not be unreasonably withheld.

 

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(b) If the Company commingles Inventory or any other hydrocarbon or product
owned by it (Company’s Inventory) or Third Party Inventory into a Facility that
also contains Barclays’ Inventory, then the contents of that Facility shall be
owned by Barclays and the Company and/or the Third Party owner on a pro rata
basis in accordance with the amount of Inventory delivered into such Facility by
each of them, with Barclays at all times retaining title to Barclays’ Inventory.

 

(c) The Company shall keep accurate records of the volumes of Inventory or other
hydrocarbon or product belonging to it and to Barclays in each Facility, and
shall share such records with Barclays upon request from Barclays.

 

(d) If the Company stores Company’s Inventory and/or Third Party Inventory in
any Facility which also contains Barclays’ Inventory, the Parties shall be
subject to quality balancing in relation to their respective Barrels of Crude
Oil held at the Facilities. On the last Business Day of each month throughout
the Term (the Calculation Date), the Company shall:

 

  (i) calculate the quality differential resulting from commingling of the
Parties’ and Third Parties’ respective Barrels of Crude Oil at the Facilities
during the preceding month and the market value of such quality differential as
of the Calculation Date (a Crude Oil Quality Balancing Adjustment); and

 

  (ii) provide to Barclays copies of its calculations under paragraph (i) above
and the information and data used in such calculations.

 

(e) If the Crude Oil Quality Balancing Adjustment is positive, Barclays shall
pay to the Company, in accordance with Section 4 (Storage and Services Fees), an
amount equal to the Crude Oil Quality Balancing Adjustment. If the Crude Oil
Quality Balancing Adjustment is negative, the Company shall pay to Barclays, in
accordance with Section 4 (Storage and Services Fees), an amount equal to the
Crude Oil Quality Balancing Adjustment (for avoidance of doubt, the amount paid
by the Company shall be a positive amount).

 

3.4 Rights to remove

 

(a) At any time during the Term, Barclays shall have the right to request
redelivery of any amount of Barclays’ Inventory from any of the Facilities, upon
reasonable written notice. The Company shall provide such Terminaling and
Transport Services as may be reasonably required to effect such redelivery.

 

(b) If the Company is unable or unwilling to redliver Barclays’ Inventory
following an Enforcement Event or at any time after a Termination Date or Early
Termination Date, Barclays, with such employees, agents and contractors as it
considers reasonably necessary in order to undertake the removal of any amounts
of Barclays’ Inventory from any of the Facilities, may proceed to remove
Barclays’ Inventory from the Facilities (which removal may include processing
Crude Oil into Products on a tolling basis in accordance with Section 15 of the
Framework Agreement). The Company will ensure that Barclays, its employees,
agents and contractors are given access at Barclay’s cost and expense to such
parts of the Refinery and the Facilities as Barclays requires, subject to
Company’s scheduling and operational requirements but as soon as reasonably
practicable in accordance with Good Industry Practice in connection with such
removal. In carrying out any such works or removal activities Barclays and its
employees, agents and contractors shall:

 

  (i) carry out such removal in a proper and workmanlike manner;

 

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  (ii) comply with all Applicable Laws in all material respects;

 

  (iii) notify the Company in writing prior to commencement and after completion
of any such removal activities;

 

  (iv) comply with the reasonable requirements of the Company in relation to the
time and manner of the carrying out of any removal activities;

 

  (v) comply with any reasonable safety and security arrangements required by
the Company; and

 

  (vi) prior to entering into the Facilities, and as a condition of Company’s
agreement to permit such entry, execute a hold harmless and indemnity agreement
in favor of Company in a form reasonably acceptable to Company, therein
providing that Barclays shall indemnify, defend and hold harmless Company from
any and all Losses arising out of the removal of Barclays’ Inventory under this
Section 3.4, regardless of whether caused, in whole or in part, by the sole,
concurrent or comparative negligence, breach of contract, or strict liability in
tort of Company, or its officers, employees, agents or other contractors.

 

3.5 Receipts into and deliveries out of the Facilities

 

(a) In relation to the Initial Purchase Inventory, the Company acknowledges that
title and risk of loss to all volumes of the Initial Purchase Inventory passes
to Barclays on the Initial Purchase Date in accordance with the provisions of
the Initial Purchase Confirmations. In relation to other Inventory sold to
Barclays and the subject of a transaction under a Confirmation, the Company
acknowledges that title to and risk of loss for such Inventory shall pass
between Barclays and the Company in accordance with the provisions of the
relevant Confirmation.

 

(b) During the Term, the Company shall:

 

  (i) accept and receive for storage at the SPM all Barclays’ Inventory
purchases pursuant to the Crude Agreements and any other agreement for the
supply of Crude Oil entered into by Barclays, provided that the Company shall
only be obliged to accept and receive Barclays’ Inventory purchases made under
the Crude Agreements if the Company has advised Barclays, pursuant to the Agency
and Advisory Agreement, that the relevant cargo would be appropriate for storage
at the Facilities under this Agreement;

 

  (ii) arrange for the transportation of Barclays’ Inventory referred to in
paragraph (a) above from the SPM to one of the On-Site Tanks through the SPM
Pipelines;

 

  (iii) deliver Inventory from the On-Site Tanks for each exchange delivery by
Barclays to the Company under the ISDA Master Agreement or otherwise, to the
applicable Delivery Location and in the applicable Quantity, each as specified
in the relevant Confirmation;

 

  (iv) deliver Inventory from the Refinery for each exchange delivery by the
Company to Barclays under the ISDA Master Agreement or otherwise, to the
applicable Delivery Location and in the applicable Quantity, each as specified
in the relevant Confirmation;

 

14

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  (v) deliver Inventory from the Kalaeloa Pipeline, the Honolulu Products
Pipeline or the Terminals for each sale by Barclays to the Company under the
ISDA Master Agreement or otherwise, to the applicable Delivery Location and in
the applicable Quantity, each as specified in the relevant Confirmation;

 

  (vi) otherwise act on the written instructions of Barclays in connection with
the movement of (including the removal and return to Barclays of) Barclays’
Inventory to and from the Refinery and to, from and within the Facilities.

 

(c) Without prejudice to the remainder of this Agreement, if and to the extent
that sufficient Barclays’ Inventory is in the Company’s custody and Barclays has
otherwise taken no action to prevent delivery, the Company shall ensure that
Barclays complies in all respects with its obligations to deliver Inventory to
Party A (as defined in the Schedule to the ISDA Master Agreement) under the ISDA
Master Agreement.

 

(d) Subject to paragraph 3.5(b)(i) above, Barclays shall comply in all respects
with its obligations relating to arrival of vessel, berth and discharge, health,
safety and environment, and destination under the applicable Crude GTCs and any
supplements or amendments thereto.

 

(e) The Company shall respond to each request from Barclays to confirm that in
the opinion of the Company each Marine Vessel identified in a nomination
received from any Crude Supplier under a Crude Agreement is acceptable to the
Company to discharge Inventory within the time period provided in the relevant
Crude Agreement. Such approval shall be subject to the Vessel meeting all
relevant requirements on timely arrival and tender of NOR at the discharge
terminal.

 

(f) Barclays shall provide (i) if Barclays’ Inventory is placed in commingled
storage in accordance with Section 3.3 (Commingling), its pro rata share, and
(ii) if Barclays’ Inventory is segregated, the full amount, of the Tank bottoms
of the Tanks in which such Barclays’ Inventory is stored, in each case for such
time as Barclays’ Inventory is stored in such Tanks.

 

3.6 Measurement

 

(a) Volumes delivered into or from Marine Vessels or Pipelines pursuant to this
Agreement shall be measured by static Refinery or Facility tank gauges. The
Company may prohibit any outbound movement for a period of four (4) hours from
the time of delivery to allow for settling. Volume determinations will be
temperature corrected to 60 degrees Fahrenheit in accordance with the latest
supplement or amendment to the appropriate ASTM-IP Petroleum Measurement Tables.

 

(b) The Company shall calibrate the Tanks and meters and verify the accuracy of
the sampling and measurement equipment used to receive Barclays’ Inventory
pursuant to applicable standards set by the ASTM, including the latest revisions
thereto and shall generally conduct all tests for quality in accordance with
established ASTM standards and methods, except to the extent that they conflict
with applicable governmental standards and methods. In the event of such
conflict, governmental standards and methods shall control. Quality tests shall
include testing for API gravity.

 

15

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3.7 Inventory, accounting and Losses

 

(a) Subject to and in accordance with paragraph (b) below, Barclays shall bear
losses in respect of Barclays’ Inventory due to:

 

  (i) customary handling in accordance with this Agreement; and

 

  (ii) evaporation and shrinkage while in the Company’s custody in accordance
with this Agreement and/or evaporation and shrinkage otherwise suffered or
incurred during the receipt, handling, storage or delivery of Barclays’
Inventory in accordance with this Agreement,

in an amount up to 0.01% (the Handling Loss Allowance).

 

(b) The Company shall be:

 

  (i) liable for all losses in respect of Barclays’ Inventory due to the factors
referred to in paragraph (a) above that exceed the Handling Loss Allowance,
unless such losses are due to the wrongful acts or omissions, gross negligence
or willful misconduct of Barclays or its employees, agents and contractors;

 

  (ii) liable for all losses in respect of Barclays’ Inventory to the extent not
due to the factors referred to in paragraph (a) above arising as a result of the
Company’s wrongful acts or omissions, negligence, gross negligence or willful
misconduct, unless such losses are due to the wrongful acts or omissions,
negligence, gross negligence or willful misconduct of Barclays or its employees,
agents and contractors; and

 

  (iii) in performing its obligations hereunder, strictly liable for all
Contamination of Barclays’ Inventory (howsoever caused, including, without
limitation, by Force Majeure), unless such contamination is due to the wrongful
acts or omissions, gross negligence or willful misconduct of Barclays or its
employees, agents and contractors,

and in each case, the Company’s liability shall be to:

 

  (A) pay to Barclays (in accordance with paragraph (d) below) the then present
fair market value of the aggregate loss of Barclays’ Inventory (as determined at
the time of the loss), or alternatively, to replace such loss with Inventory of
equal or greater fair market value had such loss not taken place; and

 

  (B) promptly on demand by Barclays, defend, indemnify and hold harmless
Barclays (for and on behalf of itself and any other Indemnified Person) for and
against all Losses resulting from loss or Contamination of any of Barclays’
Inventory, including removal and replacement of any Contaminated Barclays’
Inventory and any hedge breakage costs incurred by Barclays in reducing the
principal amount of its price hedging in respect of Barclays’ Inventory to
reflect such loss or Contamination.

In addition to the remedies in paragraphs (A) and (B) above, the Company shall
exchange and/or process any Contaminated Inventory for purposes of and in
accordance with each Confirmation as though such Contaminated Inventory were not
Contaminated.

 

(c) The Company, on or prior to the tenth (10th) Business Day of each month
during the Term of this Agreement, shall provide Barclays, at the address
indicated in Section 16 (Notices), reports reflecting, with respect to the
preceding month:

 

  (i) all receipts and deliveries of Barclays’ Inventory into and out of the
Facilities;

 

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  (ii) all receipts and deliveries of the Company’s Inventory and/or Third Party
Inventory into and out of the Facilities;

 

  (iii) stock transfers and tank-to-tank transfers, and the dates of each such
transfer in respect of both Barclays’ Inventory and the Company’s Inventory
and/or Third Party Inventory;

 

  (iv) the beginning storage inventory and the ending inventory for each
Facility in respect of both Barclays’ Inventory and the Company’s Inventory
and/or Third Party Inventory; and

 

  (v) the Tanks, Pipelines and Marine Vessels in which Barclays’ Inventory is
located.

 

(d) At Barclays’ request, the Company shall provide such reports on a more
frequent basis. The Company shall in good faith adjust the book inventory to the
physical inventory no less frequently than weekly. Each adjustment will be
provided to Barclays for its comments. Any such comments or the failure to
provide comments shall not affect Barclays’ right to subsequently challenge the
accuracy of the book inventory. In the event of a dispute, the book inventory
shall not be determinative of the ownership interests of Barclays and the
Company in relation to Inventory in the Facilities.

 

(e) The Company and Barclays shall negotiate in good faith to resolve any
dispute over the volumes of Barclays’ Inventory received, stored or delivered
within ninety (90) days from the date that Barclays receives the monthly report
described in Section 3.7(c). Inventory gains and losses determined by the
process described in Section 3.7(c) shall be accumulated on a quarterly basis
(unless the Agreement is terminated prior to the end of a quarter, in which case
any Inventory gains and losses shall be determined and assessed and as
appropriate paid by the Company to Barclays no later than the Termination Date
or Early Termination Date, whichever the case), and the Company shall pay to
Barclays the fair market value of the aggregate loss of Inventory for which the
Company is responsible pursuant to Section 3.7(b) on or prior to the tenth
(10th) Business Day following the end of each quarter.

 

3.8 Tank condition and cleaning, maintenance and inspection reports

 

(a) The Company shall ensure that the Tanks in which Barclays’ Inventory shall
be stored and handled are suitable for such storage at all times during the
Term.

 

(b)

The Company may clean the Tanks during the Term of this Agreement for the
following reasons: to perform maintenance, to perform inspections, in case of an
emergency, and to ensure product quality and otherwise as may be required by any
Governmental Authority or under any Environmental Approval. In the event of Tank
cleaning pursuant to this Section 3.8(b), the Company shall be responsible for
the full cost of removing Barclays’ Inventory, cleaning the Tanks, and disposing
of any contaminants. The Company shall provide substitute tank(s) for Barclays
during such time that a Tank is unavailable due to Tank cleaning pursuant to
this Section 3.8(b). The transfer of Barclays’ Inventory from unavailable
Tank(s) to substitute tank(s) shall be at the Company’s sole expense, and the
substitute tank(s) shall be of a capacity sufficient in the aggregate to hold
Barclays’ Inventory from the unavailable Tank(s) and suitable for storage of
Barclays’ Inventory. Any such substitute tank(s) and the transfer to and from
such substitute tank(s) will be covered by all of the terms and conditions of
this Agreement (including, without limitation, Sections 3.3 (Commingling) and
5.1(b) (Title)). For the avoidance of doubt, any

 

17

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  transfer of Barclays’ Inventory from a Tank to another tank pursuant to this
paragraph (b) shall not constitute customary handling for the purposes of
Section 3.7 (Inventory, accounting and Losses).

 

(c) Upon termination of this Agreement, the Company shall be responsible for the
full cost of cleaning the Tanks and disposing of any contaminants in the Tanks,
including water and sediment.

 

(d) If during the Term of this Agreement the Company or a Third Party performs
inspections on any of the Tanks or on any portion of the System, Barclays shall
have the right, upon request, to inspect copies of any inspection reports
related to any such inspections.

 

3.9 Inspection and audit

Barclays shall have the right, during the Company’s normal business hours and
after reasonable notice to the Company (together with such inspectors and
advisers as it chooses) so as not to disrupt its operations, to:

 

  (a) make periodic inspections of the System and each of its components;

 

  (b) conduct audits of any pertinent books and records, including those related
to receipts and inventories of its Inventory; and

 

  (c) conduct physical verifications of the amount of Barclays’ Inventory stored
in the Tank(s) or elsewhere in the Facilities.

 

3.10 Obligations as service provider

 

(a) The Company agrees that it shall take the following actions, acting as
principal, as necessary in furtherance of performance of the Company’s
obligations under this Agreement:

 

  (i) liaise with third parties as necessary for the performance of the
Terminaling and Transport Services in respect of Barclays’ Inventory, including,
without limitation, any third party operators of Facilities, Landlords and
owners of the Barges;

 

  (ii) pay any relevant storage and transport fees, including freight and
demurrage, to such third parties as necessary for the performance of the
Terminaling and Transport Services in respect of Barclays’ Inventory;

 

  (iii) take any actions necessary to enable the operation of the parties’
rights under any Material Contract;

 

  (iv) ensure that the Inventory owned by Barclays is at all times to be
maintained in the relevant Facility;

 

  (v) ensure that the relevant third party operator issues, as applicable,
warehouse receipts or bills of lading (via endorsement) to Barclays (in form and
substance satisfactory to Barclays) in respect of the Inventory stored at the
relevant third party operated Facilities;

 

  (vi) take and ensure that all reasonable actions necessary to maintain the
quality and specifications of the Inventory owned by Barclays is taken;

 

18

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  (vii) pay all costs for (A) the repair and maintenance of the System,
including, but not limited to, the fees to be paid to any maintenance contractor
and other charges for testing, cathodic protection, monitoring and engineering
services; and (B) all use, throughput fees, tolls, wharfages and other charges
attributable to the discharging or loading of Inventory between the Facilities
and the Barges or other Marine Vessels; and

 

  (viii) notify Barclays as soon as practicable upon becoming aware of any fact,
circumstance or event which could be or is prejudicial to Barclays or any
default of the terms of this Agreement or any agreements with any third parties
necessary for the performance of the Terminaling and Transport Services in
respect of Barclays’ Inventory.

 

3.11 Standard of care

 

(a) Except as provided in this Section 3, nothing in this Agreement makes the
Company a trustee or fiduciary for Barclays. Nothing in this Agreement makes
Barclays a trustee or fiduciary for the Company. Barclays need not hold in trust
any moneys paid to it for the Company or be liable to account for interest on
those moneys.

 

(b) During the Term, the Company shall:

 

  (i) exercise all reasonable care and skill and act diligently and in good
faith on behalf of Barclays; and

 

  (ii) act towards Barclays conscientiously and in good faith and not allow its
interests (including in its dealings with third parties and any rights it may
have in respect of Barclays’ Inventory) to conflict with the duties that it owes
to Barclays under this Agreement.

 

4. STORAGE AND SERVICES FEES

 

(a) Subject to Section 9.1 (Relief from performance), Section 12.2 (Suspension
and Termination) and any agreed early termination per Section 3.2(b) (Storage),
if Barclays elects to store Inventory at the Facilities during a Storage Month,
then Barclays shall pay Company the “Storage and Services Fee”, which is
calculated as detailed in Section 4(b). The Storage and Services Fee shall be
exclusive of any applicable taxes. The parties shall agree upon the Storage and
Services Fee by no later than the eighth (8th) Business Day of the Notice Month.

 

(b) For a Storage Month in which Inventory is stored at the Facilities, Barclays
shall owe to Company a “Storage and Services Fee”, which is comprised of the sum
of the following three (3) components:

 

  (i) $760,000 for Barclays’ Percentage Capacity related to Crude Oil (the Fixed
Crude Sum);

 

  (ii) $1,009,200 for Barclays’ Percentage Capacity related to Products (the
Fixed Products Sum); and

 

  (iii) an amount in USD as determined and agreed by and between the parties
based on rates negotiated between the parties as applied against Barclays’ Block
Volume intended to be stored at the Facilities during such Storage Month, as
calculated on the sixth (6th) Business Day of the Notice Month (the Products
Inventory Sum).

 

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(c) Subject to Section 9.1 (Relief from performance), Section 12.2 (Suspension
and Termination) and any agreed early termination per Section 3.2(b) (Storage),
Barclays shall pay (in accordance with Section 12 (Payments) of the Framework
Agreement) the Company for any Additional Volume (metric ton basis) stored at a
rate of $0.40 per Barrel, such rate to be exclusive of applicable taxes (the
Additional Volume Storage and Services Fee).

 

(d) Each month during the Term of this Agreement, the Company shall issue an
invoice to Barclays in respect of:

 

  (i) amounts due from Barclays for the Terminaling and Transport Services
(including any Storage and Services Fee and Additional Volume Storage and
Services Fee) provided by the Company under this Agreement for the preceding
Storage Month, including any Additional Volume Storage and Services Fee; and

 

  (ii) any Crude Oil Quality Balancing Adjustment payable by Barclays to the
Company under Section 3.3 (Commingling).

 

(e) Subject to Section 9.1 (Relief from performance), Section 12.2 (Suspension
and Termination) and any early termination per Section 3.2(b) (Storage), payment
for Terminaling and Transport Services during a Storage Month shall be due on
the fifteenth (15th) day of the month following the relevant Storage Month
unless the parties mutually agree to different date(s) of payment.

 

(f) Subject to Section 9.1 (Relief from performance), Section 12.2 (Suspension
and Termination) and any early termination per Section 3.2(b) (Storage), payment
of the Company Storage and Services Fee for a Storage Month shall be due on the
fifteenth (15th) day of the month following the relevant Storage Month unless
the parties mutually agree to different date(s) of payment.

 

(g) Each month during the Term of this Agreement, Barclays shall issue an
invoice to the Company in respect of any:

 

  (i) Crude Oil Quality Balancing Adjustment payable by the Company to Barclays
under Section 3.3 (Commingling); and

 

  (ii) any repayment (with interest) due from the Company to Barclays to repay
any protective amounts advanced paid by Barclays under Section 5.3 (Lease
Payments).

 

(h) Barclays shall not be liable for any other fees or charges whatsoever,
including tank-to-tank or intra-system pump-overs, pump-out fees, heating costs
(for natural gas or otherwise) or any other charges once the Inventory has been
delivered to the System or delivered out of the System.

 

(i) Barclays acknowledges and agrees that the Company shall have a
warehouseman’s lien over Barclays’ Inventory in the amount of any unpaid Storage
and Services Fees then due and owing in accordance with the provisions of the
Uniform Commercial Code as in effect in Hawaii or pursuant to any other
statutory or possessory lien or charge on or Security Interest in Barclays’
Inventory as otherwise may arise under the laws of the State of Hawaii.

 

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5. TITLE AND CUSTODY

 

5.1 Title

 

(a) The Company, for itself and on behalf of its Affiliates, fully acknowledges
Barclays’ right, title to and interest in Barclays’ Inventory and further agrees
that neither it nor any of its Affiliates shall have any claim to or interest in
Barclays’ Inventory and waives any statutory or possessory lien or charge on or
Security Interest in Barclays’ Inventory, except as provided in Section 4(i).

 

(b) Subject to the Company’s rights under Section 4(i), the Company undertakes
not to allow Barclays’ right, title or interest in and to Barclays’ Inventory to
become encumbered through any action or inaction of the Company, any Affiliate
of the Company or the employees, agents or creditors of the Company or its
Affiliates or otherwise while in custody of the Company.

 

(c) Any unremedied failure by the Company to comply with paragraph (b) above
shall be treated as a loss of Barclays’ Inventory for the purposes of
Section 3.7 (Inventory, accounting and Losses).

 

5.2 Custody

Custody of Barclays’ Inventory shall pass to the Company at the same time and
location as Barclays takes title to such Barclays’ Inventory under the Crude
Agreements, the ISDA Master Agreement or the Initial Purchase Confirmations (as
applicable) or, if later in respect of the relevant Barclays Inventory, upon
delivery of the relevant Barclays Inventory to the Facilities.

 

5.3 Lease Payments

For any Lease, if the Company has failed to timely make any payment due under
such Lease, then Barclays shall be entitled (but not obliged) to make a
protective advance to pay rents and other amounts due under such Lease, as agent
on behalf of the Company, and the sums paid by Barclays shall be made a debt due
from the Company to Barclays and payable immediately upon demand, with interest
thereon at the Default Rate.

 

5.4 Possible Forfeiture of Leases

 

(a) During the Term, the Company shall use its best efforts at its sole cost to
prevent the Landlord under each of the Leases from:

 

  (i) interfering with Barclays’ use of the premises demised under the Leases or
any portion thereof; and/or

 

  (ii) obtaining a charging order or lien against any of the Company’s or
Barclays’ assets.

 

(b) If the Landlord under any Lease commences any Forfeiture Action or threatens
to commence any Forfeiture Action, the Company shall immediately (but in no
event later than 24 hours after becoming aware of the same) give notice of the
same to Barclays with full details and copies of each and every communication
and/or document received in connection with such Forfeiture Action or threatened
Forfeiture Action;

 

  (i) the Company shall keep Barclays regularly and fully informed and updated
in respect of the progress of any pending or threatened Forfeiture Action and
shall:

 

  (A) immediately upon receipt or issuance provide copies of each and every
communication and/or document served or sent by the Company and/or its legal
counsel and/or agents to the Landlord of the relevant Lease and/or its legal
counsel and/or agents in relation to any Forfeiture Action;

 

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  (B) immediately upon receipt or issuance provide copies of each and every
communication and/or document and/or order received by the Company and/or its
legal counsel from the court, or sent or filed by the Company and/or its legal
counsel to the court, which relate to any Forfeiture Action;

 

  (C) promptly consult with Barclays regarding a Forfeiture Action and take into
account Barclays’ recommendations on strategy and tactics when making any
decisions in relation to the same;

 

  (D) not make any decision of a material nature including, without limitation,
any decision to issue proceedings, file any pleadings and issue or resist any
notice of appeal, any material tactical or strategic decision or any decision in
respect of settlement or compromise without the prior written approval of
Barclays (which approval shall not be unreasonably withheld);

 

  (E) take such action and advance such arguments to contest, defend or appeal
any Forfeiture Action (or any aspect of it) as may be reasonably requested by
Barclays and agrees not to make any admission of liability, agreement,
settlement or compromise in relation to any Forfeiture Action without the prior
written approval of Barclays (which approval shall not be unreasonably
withheld); and

 

  (F) appeal (or apply for leave to appeal, as appropriate) any Forfeiture
Action resulting in forfeiture or termination of the relevant Lease or grant of
an order for specific performance or a mandatory injunction or a declaration
and/or to apply for relief from forfeiture and/or to appeal any refusal to grant
such relief in relation thereto.

 

  (ii) The Company agrees to indemnify and hold harmless Barclays against and
from any and all liability, damage, expense, cause of action, suits, claims or
judgments arising out of or in any way connected with any Forfeiture Action and
shall promptly reimburse Barclays for all reasonable out-of-pocket expenses
(including legal fees, disbursements and applicable taxes) incurred by Barclays
relating to any Forfeiture Action, including any order to pay the legal costs of
the Landlord under the relevant Lease (including disbursements and applicable
taxes).

 

(c) During the Term, the Company shall:

 

  (i) not sublet, assign or transfer any of its interest in the Lease or the
premises demised under the Lease, nor suffer or permit any of the Leases (or any
portion of the premises demised under the Lease) to be assigned, transferred,
licensed, let or underlet without Barclays’ prior written consent (not to be
unreasonably withheld); and

 

  (ii) promptly notify Barclays of any occurrence of a default or an event of
default under any of the Leases on the part of Landlord or the Company.

 

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6. TAXES AND ASSESSMENTS

 

(a) Barclays shall be responsible for ensuring that any taxes, duties, fees and
charges (other than in respect of any environmental taxes, duties, fees and
charges, the responsibility and liability for which is addressed in the
Framework Agreement), including excise taxes and taxes on Barclay’s income, are
paid with respect to Barclays’ Inventory during the time such Inventory is owned
by Barclays and to the extent that such tax relates to Barclays.

 

(b) The Company shall be responsible for ensuring that no products are removed
from the System without the applicable taxes and duties due being paid, secured
or otherwise accounted for. In addition, the Company shall ensure that all
relevant records are kept as required by the U.S. Internal Revenue Code of 1986
and/or Hawaiian tax law and reported to the U.S. Internal Revenue Service and/or
the Hawaii Department of Taxation.

 

(c) The Company shall be responsible for and pay all other applicable taxes that
may be levied upon it, including any increases in taxes levied on the System or
any component thereof (real property, personal property or both), as a result of
Barclays’ activities at the Refinery and/or the Facilities that it may be
required to pay or collect under Applicable Law.

 

7. REPRESENTATIONS AND WARRANTIES

 

(a) Each Party represents and warrants to the others on the date of this
Agreement and on the Initial Purchase Date, as follows:

 

  (i) It has the corporate, governmental and other legal capacity, authority and
power to execute this Agreement, to deliver this Agreement and to perform its
obligations under this Agreement, and has taken all necessary action to
authorize the foregoing.

 

  (ii) The execution, delivery and performance of this Agreement, and the
transactions contemplated by this Agreement, by it do not and shall not violate
or conflict with any Applicable Law applicable to it or any of its assets, any
provision of its constitutional documents or any contracts binding on or
affecting it or any of its assets.

 

  (iii) All Company Authorizations or Barclays Authorizations, as applicable,
that are required to have been obtained or effected by it in respect of this
Agreement and the Parties’ performance of their respective obligations have been
obtained or effected and are in full force and effect on the date they are
required.

 

  (iv) This Agreement constitutes its legally binding, valid and enforceable
obligation (subject to any general principles of law limiting its obligations
and referred to in any legal opinion required under the Framework Agreement).

 

  (v) No Event of Default where it is the Defaulting Party or any event or
circumstance which with notice or the passage of time would constitute an Event
of Default where it is the Defaulting Party has occurred and is continuing.

 

(b) The Company represents and warrants to Barclays on the date of this
Agreement and on each date during the Term as follows:

 

  (i) It is a limited liability company duly incorporated and validly existing
under the laws of Hawaii and has the power to own its assets and carry on its
business as it is being conducted.

 

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  (ii) The System and all components thereof are in good serviceable condition
and have been maintained and operated in a manner which complies in all material
respects with Good Industry Practice; the System and all components thereof are
structurally sound; it and the facilities that shall be used for the Terminaling
and Transport Services provided by it under this Agreement are in material
compliance with all Applicable Laws and such facilities are suitable for the
purposes for which they are to be utilized under this Agreement; and save as
disclosed it is not aware of any leak in any tank, pipeline or other plant or
equipment, or of any other situation in the System or any component thereof
which could cause Barclays to incur material Losses or otherwise be materially
detrimental to Barclays’ interests.

 

  (iii) It has good title to, or freedom to use under any Applicable Laws, the
System and all components thereof.

 

  (iv) There are no existing or threatened labor disputes at the Refinery or the
Facilities that could interfere with its performance under this Agreement, and
there is no litigation, arbitration, regulatory action or administrative
proceeding current or, to its knowledge, pending or threatened, that could have
or, if adversely determined, are reasonably likely to have a Material Adverse
Effect.

 

  (v) It is not aware of any fact or circumstance with respect to itself, the
System or any component thereof which, if disclosed, would be reasonably likely
to cause reputational harm to the Company or to Barclays.

 

(c) Where a representation and warranty is made after the date of this Agreement
under paragraph 7(a) or 7(b) above it is made by reference to the facts and
circumstances then existing.

 

(d) Barclays shall deliver the terms attached in Schedule 2 to Lukoil Pan
Americas LLC (“Lukoil”) for further dissemination to all Marine Vessels
nominated to deliver Inventory to the Facilities hereunder wherein the Crude
Supplier is Lukoil. Barclays shall deliver the terms attached in Schedule 3 to
all Crude Suppliers (with the exception of Lukoil) for further dissemination to
all Marine Vessels nominated to deliver Inventory to the Facilities hereunder.
The terms provided in Schedule 2 and Schedule 3 may be amended from time to time
by the mutual written agreement of the Parties, and thereafter such amended
terms shall be disseminated as noted above.

 

(e) Nothing contained herein shall limit or restrict the Company’s right to
approve or reject any Marine Vessel nominated to discharge at the Facilities for
failure to comply with the applicable requirements as set forth under paragraph
(d) above.

 

8. INSURANCE

 

(a)

Barclays shall, at its sole expense, carry and maintain and keep in full force
and effect throughout the Term of this Agreement all risk property insurance for
the full market value with respect to Inventory that it owns, whether it is in
transit to or from the System or in storage in the System. During ocean transit,
Barclays shall carry and maintain at its sole cost and expense or ensure that
its Crude Supplier carries and maintains at its sole cost and expense insurance
coverage to the full

 

24

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  value of the cargo plus 10% against ordinary marine risks and including the
risk of shortage, leakage and contamination, subject to a deductible of 0.5% of
the full value of the cargo. Barclays or its Crude Supplier shall pay all
premiums required to maintain these policies in effect and shall require the
insurers to provide the Company with certificates of cover when requested but at
least annually. To the extent such cargo policies are carried by Barclays (and
not the relevant Crude Supplier), such policies shall (i) include an endorsement
that the insurers waive all rights of subrogation against the Company, its
Affiliates and each of their directors, officers, employees, representatives,
agents and contractors and (ii) be primary and non-contributory as to any other
insurance that the Company may have in place that would otherwise provide
coverage for such loss.

 

(b) Barclays warrants that all Marine Vessels nominated for discharge at the
Facilities whereby Lukoil is the Crude Supplier to Barclays shall meet the
insurance requirements specified in the LITASCO General Terms and Conditions for
Sales and Purchases of Crude Oil and Petroleum Products, 2007 Edition or as
otherwise agreed between the Parties.

 

(c) The Company shall, at its sole cost and expense, carry and maintain (or
cause to be carried or maintained on its behalf and shall be included as a named
insured in all such cases) in full force and effect insurance coverage, with
licensed and permitted insurance companies rated not less than A-, IX by A.M.
Best or “A” by Standard & Poor’s (in each case in the most recent ratings
publication promulgated by such entity) or equivalent from a nationally
recognized ratings agency or otherwise reasonably satisfactory to Barclays, of
the following types and amounts:

 

  (i) Workers Compensation with statutory limits as required by the jurisdiction
where employees of the Company are hired and Employer’s Liability coverage for
injury, sickness, disability or death of employees in a minimum amount no less
than $1,000,000 per accident, $1,000,000 per employee and $1,000,000 per disease
or in amounts otherwise required by local legislation;

 

  (ii) Commercial automobile liability insurance, including coverage for owned,
non-owned and hired automobiles for both bodily injury and property damage in
accordance with statutory legal requirements, with combined single limits of no
less than $1,000,000 per accident with respect to bodily injury, property damage
or death;

 

  (iii) Commercial general liability coverage written on an “occurrence” policy
for bodily injury and property damage, including premises/operations,
products/completed operations, contractual liability, personal injury, liability
arising out of wharfinger, terminal operator and/or stevedoring operations and
loss, Contamination or degradation of Inventory and “sudden and accidental
pollution” liability coverage (excluding events that result in acidic
deposition). Such insurance shall be maintained with policy limits not lower
than those required by applicable law, but in no event lower than $1,000,000 per
occurrence and $2,000,000 in the annual aggregate plus a $2,000,000 annual
aggregate for products/completed operations;

 

  (iv)

Umbrella and/or excess liability policies providing coverage in excess of the
types and amounts required (i) as to Employer’s Liability, (i) and (iii) above,
not including Contamination or degradation of Inventory but including “sudden
and accidental pollution” liability coverage required in (iii) above (excluding
events that result in acidic deposition), with policy limits not lower than
those required by applicable law and in line with industry standards as applied
to a comparable asset, but in no event less than

 

25

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  $300,000,000 per occurrence and in the aggregate; provided that, to the extent
the policy aggregate is reduced to less than $200,000,000 by insured claims, the
Company shall use commercially reasonable efforts to reinstate the aggregate
and/or purchase additional insurance such that available policy limits are not
less than $200,000,000, in the aggregate; provided that failure by the Company
to reinstate the aggregate or purchase additional insurance to such level within
ninety (90) days shall constitute an Event of Default under Section 12.1(c)
hereof;

 

  (v) Environmental liability coverage for bodily injury, property damage,
on-site clean-up and off-site clean-up as the result of gradual seepage and
pollution (excluding events that result in acidic deposition), with policy
limits not lower than those required by applicable law and in line with industry
standards as applied to a comparable asset, but in no event lower than
$50,000,000 per claim;

 

  (vi) All-Risk property insurance (including, but not limited to, windstorm,
earthquake and flood) covering damage to the Facilities on a repair or
replacement cost basis (no co-insurance or a waiver thereof) and in an amount
sufficient to repair major components of the Facilities as reasonably determined
pursuant to an engineering report prepared by an expert recognized by
underwriters for such purpose or a loss limit reasonably acceptable to Barclays.
Such all-risk property insurance shall be subject to sublimits, aggregates,
deductibles and other terms, conditions and exclusions that are reasonably
acceptable to Barclays; and shall include business interruption and extra
expense insurance in an amount equal to the projected annual net income from the
Refinery, the Facilities and Tanks plus any carrying costs and extraordinary
expenses, for a period of eighteen (18) months, based upon Company’s reasonable
estimate thereof as approved by Barclays; and

 

  (vii) mortgage title insurance covering the Refinery naming the ABL Collateral
Agent, the Inventory Collateral Agent and Barclays as the beneficiary.

 

(d) The insurance policy limit requirements under Section 8(a) may be satisfied
by a combination of primary and excess policies issued by insurance carriers
having the qualifications required under Section 8(a). Any deductible or
retentions applicable to the policies shall be the sole responsibility of the
Company.

 

(e) The Company shall cause its insurance carriers or its authorized insurance
broker to furnish Barclays with insurance certificates (and such other
information reasonably requested by Barclays in the form of copies of insurance
binders and policies), in a form reasonably satisfactory to Barclays, evidencing
the existence of the coverage required pursuant to Section 8(a). To the extent
commercially available, the policies required pursuant to Section 8(a) shall
provide at least thirty (30) days’, or in the case of non-payment of premium at
least ten (10) days’, written notice of cancellation to Barclays. The Company
shall be required to provide prompt written notice to Barclays of any
termination or material change in the insurance required to be obtained and
maintained pursuant to Section 8(a). The Company shall also provide renewal
certificates as soon as possible but in no event more than thirty (30) days
after expiration of the policy under which coverage is maintained.

 

(f)

Each of the insurance policies indicated in Section 8(c)(i) through
Section 8(c)(vi) shall include an endorsement that the insurer(s) agree to
include the ABL Collateral Agent, the Inventory Collateral Agent, Barclays, its
Affiliates, and each of their directors, officers, employees,

 

26

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  representatives, agents and contractors as additional insureds (whether
through a blanket endorsement as required by contract or through an endorsement
specifically naming the required parties), shall state that such insurances
shall be primary and non-contributory with respect to insurance maintained by
such additional insureds and shall include a separation of insureds or
severability of interest clause with no exclusions for cross-liability (to the
extent commercially available).

 

(g) Each of the insurance policies indicated in Section 8(c)(i) through
Section 8(c)(vi) shall include an endorsement that the insurers agree to waive
all rights of subrogation against Barclays, its Affiliates, and each of their
directors, officers, employees, representatives, agents and contractors. In
addition, Company hereby agrees to waive all rights of subrogation against
Barclays, its Affiliates, and each of their directors, officers, employees,
representatives, agents and contractors.

 

  (h) The Company will maintain insurance coverage in substantially similar form
and substance as in effect as of the Initial Purchase Date and in line with
industry standards for a refinery, storage and terminaling entity of similar
size, configuration and complexity, taking into account any unique
characteristics, but in no event in scope or amount less than the requirements
set forth in the other provisions of this Section 8.

 

(i) All Insurance Proceeds shall be applied in the manner contemplated in
Section 5 of the Intercreditor Agreement.

 

(j) The mere purchase and existence of insurance coverage does not release any
Party from any Losses incurred or assumed under this Agreement.

 

9. FORCE MAJEURE

 

9.1 Relief from performance

 

(a) No Party shall be liable to any other Party if it is rendered unable by an
event of Force Majeure to perform, in whole or in part, any obligation or
condition of this Agreement (other than any obligation or condition under
Sections 3.5(c) to 3.5(d) (Receipts into and deliveries out of the Facilities)
and 5.1(b) (Title)), provided that:

 

  (i) the Company shall be released from any such obligation only to the extent
Barclays is or would be excused from performance thereof as a result of Force
Majeure under the ISDA Master Agreement or the Crude Agreements, as applicable,
for so long as the event of Force Majeure exists and to the extent such
performance is hindered by the Force Majeure; and

 

  (ii) the entity unable to so perform shall use commercially reasonable efforts
(and for the Company, in accordance with Good Industry Practice), to avoid,
overcome or ameliorate the event of Force Majeure.

 

(b) During the period that performance by the Company of the whole or part of
any obligation has been suspended by reason of an event of Force Majeure
pursuant to paragraph (a) above, Barclays likewise may suspend the performance
(including payment) of the whole or part of its obligations to the extent that
such suspension is commercially reasonable.

 

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(c) If the Company is affected by an event of Force Majeure and some or all of
the Facilities are restricted or unavailable for Barclays’ use, the Company
shall adjust the storage charges payable under Section 4 (Storage and Services
Fees) proportionately so that Barclays is obligated to pay the Company only for
Terminaling and Transport Services actually available to Barclays.

 

9.2 Notice of Force Majeure

 

(a) If the Company is unable to perform due to an event of Force Majeure, it
shall notify Barclays within one (1) Business Day of becoming aware of the
occurrence of Force Majeure, including all such known details and expected
duration of the Force Majeure and the volume of Inventory affected. The Company
also shall promptly notify Barclays when the Force Majeure ends.

 

(b) If Barclays is unable to perform due to an event of Force Majeure, Barclays
shall notify the Company within one (1) Business Day of becoming aware of the
occurrence of Force Majeure, including all such known details and expected
duration of the Force Majeure and the volume of Inventory affected. Barclays
also shall promptly notify the Company when the Force Majeure ends.

 

9.3 Substitute Tank(s)

 

(a) If a Tank(s) is unavailable due to an event of Force Majeure, the Company
shall use commercially reasonable efforts to provide or procure suitable
substitute tank(s) for Barclays.

 

(b) The transfer of Barclays’ Inventory from the affected Tank(s) to any
substitute tank(s) shall be at the Company’s sole expense.

 

(c) Any such substitute tank(s) and the transfer to and from such substitute
tank(s) will be covered by all of the terms and conditions of this Agreement
(including, without limitation, Section 3.3 (Commingling) and 5.1(b) (Title)).
For the avoidance of doubt, any transfer of Barclays’ Inventory from a Tank to
another tank pursuant to this Section 9.3 shall constitute customary handling
for the purposes of Section 3.7 (Inventory, accounting and Losses).

 

(d) Upon the termination of the Force Majeure event, the Company shall also be
responsible for any transfer of Barclays’ Inventory from the substitute tank(s)
back to the original Tank(s). Such transfers shall also constitute customary
handling for the purposes of Section 3.7 (Inventory, accounting and Losses).

 

10. INDEMNIFICATION

 

10.1 Indemnity

 

(a) To the fullest extent permitted by Applicable Law, the Company shall defend,
indemnify, pay, reimburse and hold harmless Barclays (for and on behalf of any
Indemnified Person) from and against all Losses directly or indirectly suffered
or incurred by any Indemnified Person related in any way to the System, any
related assets or otherwise relating to this or any other Inventory Document to
the extent arising out of (i) a breach by the Company of its obligations,
agreements, representations or warranties under this Agreement, (ii) the failure
of the Company to act in accordance with Good Industry Practice, or (iii) the
gross negligence, willful misconduct or bad faith of the Company, except to the
extent that such Losses are caused by the gross negligence, willful misconduct
or bad faith on the part of Barclays, its employees or its agents.

 

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(b) To the fullest extent permitted by Applicable Law, Barclays shall defend,
indemnify, pay, reimburse and hold harmless the Company (for and on behalf of
any Company Indemnified Person) from and against all Losses directly or
indirectly suffered or incurred by any Company Indemnified Person related in any
way to the System, any related assets or otherwise relating to this or any other
Inventory Document caused by (i) a breach by Barclays of its obligations,
agreements, representations or warranties under this Agreement, or (ii) the
gross negligence, willful misconduct or bad faith of Barclays, its employees or
its agents.

 

(c) To the fullest extent permitted by Applicable Law, the Company shall, on
demand, defend, indemnify, pay, reimburse and hold harmless Barclays (for and on
behalf of itself and any other Indemnified Person) for and against all Losses
suffered or incurred directly or indirectly by any Indemnified Person (acting
reasonably) in connection with any Environmental Matter to the extent arising at
any time when the Company has custody and control of Barclays’ Inventory.

 

(d) In the event of any Release or threatened Release of any Hazardous Substance
from the System or any component thereof while Crude Oil and/or Products owned
by Barclays or any of its Affiliates (or which Barclays or any of its Affiliates
have any interest in or rights concerning) are in the custody and/or control of
the Company (and/or of its Affiliates), the following shall apply:

 

  (i) the Company shall take all necessary action and/or work (including, but
not limited to, all remedial action) in order to prevent any further Release of
Hazardous Substance and to mitigate the presence and/or effect of any Hazardous
Substance which has been Released to a standard required pursuant to
Environmental Laws and/or the requirements of any Environmental Approval and/or
any regulatory authority;

 

  (ii) the Company shall immediately notify (in writing) Barclays of any
material Release or threatened Release of any Hazardous Substance which is
likely to be subject to the action and/or steps described in this
Section 10.1(d); and

 

  (iii) any action and/or work carried out under this Section 10.1(d) or
otherwise shall be performed in accordance with all applicable Environmental
Laws and the requirements of any regulatory authority (including any port or
marine authorities).

 

(e) In the event that a Party suffers or incurs any Losses as a result of the
Release or threatened Release of any Hazardous Substance (in the circumstances
described above), nothing in this Section 10 shall prohibit or restrict the
recovery of such Losses from any other Party (or third party) under
Environmental Laws except that no Party shall be entitled to recover where the
Losses arose from their failure to comply with the terms of this Agreement.

 

10.2 Indemnity Procedure

All claims for indemnification under this Agreement shall be asserted and
resolved as follows:

 

  (a) For purposes of this Agreement, the term Indemnifying Party when used in
connection with particular Losses shall mean the Party or Parties having an
obligation to indemnify another Party or Parties with respect to such Losses
under this Agreement, and the term Indemnified Party when used in connection
with particular Losses shall mean the Party or Parties having the right to be
indemnified with respect to such Losses by another Party or Parties pursuant to
this Agreement.

 

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  (b) To make claim for indemnification under this Agreement, an Indemnified
Party shall notify the Indemnifying Party of its claim under this Section 10.2
(Indemnity Procedure) including the specific details of and specific basis under
this Agreement for its claim (the Claim Notice). In the event that the claim for
indemnification is based upon a Third Party Claim, the Indemnified Party shall
provide its Third Party Claim Notice promptly after the Indemnified Party has
actual knowledge of the Third Party Claim and shall enclose a copy of all papers
(if any) served with respect to the Third Party Claim; provided that the failure
of any Indemnified Party to give notice of a Third Party Claim as provided in
this paragraph (b) shall not relieve the Indemnifying Party of its obligations
under this Agreement except to the extent such failure results in insufficient
time being available to permit the Indemnifying Party to effectively defend
against the Third Party Claim or otherwise materially prejudices the
Indemnifying Party’s ability to defend against the Third Party Claim. In the
event that the claim for indemnification is based upon an inaccuracy or breach
of a representation, warranty, covenant or agreement, the Third Party Claim
Notice shall specify the representation, warranty, covenant or agreement that
was inaccurate or breached.

 

  (c) The Parties shall consult with each other regarding any claims made by a
counterparty, pipeline operator, terminal operator, vessel owner, supplier,
Crude Supplier or transporter against Barclays or any claims that Barclays may
bring against any such person. Barclays agrees to take commercially reasonable
actions in the handling of such claims, including the prosecution or defense
thereof. At Barclays’ request, Company may assist in the prosecution or defense
of such claims.

 

11. LIMITATION

 

(a) Other than in relation to any Losses arising from any Third Party Claims,
neither Party shall be liable to the other in any way for loss of use, loss of
profit or incentive payments, loss of production or business interruption or for
any kind of incidental, indirect, consequential or punitive loss or damage,
which is connected with any claim or indemnity arising under or given in this
Agreement or the subject matter of this Agreement (howsoever caused).

 

(b) Each Party shall take such steps as may be reasonably required to mitigate
any Losses it may suffer from time to time.

 

(c) Notwithstanding any other provision of this Agreement, in the event of any
Loss or losses of Barclays inventory covered by Section 3.7 hereof which is the
subject of insurances, the Party experiencing such Loss or losses shall first
seek recovery under the relevant insurance before seeking recovery under the
indemnification or payment provisions of this Agreement or the Agency and
Advisory Agreement. Any recovery by such Party (net of the costs to such Party
of pursuing such claim) (the Recovery) from the insurers in respect of such a
claim shall reduce the amount of Losses for the purpose of any indemnity
contained in the Inventory Documents. Each of Barclays and the Company shall
provide an accounting and reconciliation of all such Recoveries on a monthly
basis, with the amounts of such Recoveries credited or debited, as applicable,
in the monthly invoicing provisions contained in the Inventory Documents.

The Parties acknowledge and agree that nothing in this Section 11 is intended to
prevent the recovery by Barclays of any hedge breakage costs under
Section 3.7(b)(iii)(B) (Inventory, accounting and Losses).

 

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12. DEFAULT AND TERMINATION

 

12.1 Default

Notwithstanding any other provision of this Agreement, an Event of Default shall
occur in respect of this Agreement when:

 

  (a) A Party fails to make payment when due under this Agreement within two
(2) Business Days of a written demand therefor (excluding any payment that is
the subject of a good faith dispute but only to the extent of such disputed
amount).

 

  (b) Either Party fails to perform any obligation under this Agreement:

 

  (i) in the case of a cancellation or material change in insurance policies
required under Section 8 (Insurance) without notice to the other Party pursuant
to Section 16 (Notices), in all respects; or

 

  (ii) in the case of an obligation under any other provision of this Agreement,
in any material respect, provided that such failure to perform has or could be
reasonably expected to have a Material Adverse Effect,

which is not cured within ten (10) Business Days from the earlier of (i) the
date that such Party receives notice that corrective action is needed and
(ii) the date such Party becomes aware of such failure, or if curing such
non-compliance reasonably requires more than ten (10) Business Days, then the
defaulting Party commences such cure within such ten (10) Business Day period
and diligently prosecutes and completes such cure within sixty (60) days
thereafter.

 

  (c) The Company does not, within ninety (90) days of an event as described in
Section 8(c)(iv), reinstate its umbrella and/or excess liability policy to no
less than $200,000,000 in the aggregate.

 

12.2 Suspension and Termination

 

(a) Notwithstanding any other provision of this Agreement, upon the occurrence
of an Event of Default, the Party which is not in default (the Performing Party)
shall in its sole discretion and upon five (5) Business Days’ notice to the
Party in default (the Defaulting Party), be entitled to terminate this Agreement
effective upon the date specified in such notice (a Termination Date).

 

(b) Upon the occurrence of an Event of Default in respect of the Defaulting
Party, the Performing Party may suspend its performance under this Agreement,
including making payments under this Agreement.

 

(c) As soon as reasonably practicable after receipt of a notice of termination,
Barclays shall be required, in consultation with the Company, to take
commercially reasonable steps to liquidate its inventory.

 

(d) Paragraph (a) above is the sole and exclusive circumstance in which this
Agreement shall terminate prior to the expiry of the Term.

 

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(e) Notwithstanding any provision of the ISDA Master Agreement, the Framework
Agreement, the Agency and Advisory Agreement or this Agreement to the contrary,
Barclays shall be entitled to remove all of its Inventory from the Facilities at
any time pursuant to the terms of this Agreement.

 

13. SPECIFIC PERFORMANCE

The Parties agree that the failure of the Defaulting Party to comply with the
terms of this Agreement will cause irreparable injury to the Performing Party,
which may not properly or adequately be compensated by the mere payment of
money. The Parties agree, therefore, that upon the occurrence of an Event of
Default, the Performing Party, in addition to any other remedies that may be
available to the Performing Party, shall have the right to obtain from any
competent court an order that the terms of this Agreement be specifically
enforced.

 

14. ASSIGNMENT AND CHANGES TO THE PARTIES

 

(a) Subject to paragraph (c) below, either Party may assign, transfer,
sub-contract or delegate any of its rights or obligations under this Agreement
without the prior written consent of the other Party, and any purported
assignment, transfer, sub-contract or delegation in violation of this provision
shall be void and of no effect.

 

(b) Without prejudice to paragraph (a) above, in the event of any assignment by
the Company, the assignor shall remain jointly and severally liable with the
assignee for the full performance of the assignor’s obligations under this
Agreement, unless Barclays otherwise agrees in writing.

 

(c) Barclays may (i) at its discretion assign, transfer or delegate to any of
its Subsidiaries any of its rights or obligations under this Agreement without
the prior written consent of the Company, and (ii) at any time pledge or grant a
Security Interest in all or any portion of its rights under this Agreement to
secure obligations of Barclays, including any pledge or assignment to a U.S.
Federal Reserve Bank, and the provisions in this Section (other than the
provisions of this subsection) shall not apply to any such pledge or grant of a
Security Interest. Notwithstanding the foregoing, in the event of any
assignment, pledge or grant by Barclays as contemplated in this paragraph (c),
Barclays shall not, to the extent permissible by law, assign, grant or pledge
any rights that are greater than or in violation of Barclays’ rights under this
Agreement.

 

15. SUCCESSORS AND ASSIGNS

This Agreement shall be binding on and inure to the benefit of the Parties and
their respective successors and permitted assigns.

 

16. NOTICES

 

16.1 In writing

 

(a) Any communication in connection with this Agreement shall be in writing and,
unless otherwise stated, may be given:

 

  (i) in person, by post or fax; or

 

  (ii) to the extent agreed by the Parties making and receiving the
communication, by email or any other electronic communication.

 

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(b) For the purpose of this Agreement, an electronic communication will be
treated as being in writing.

 

(c) Unless it is agreed to the contrary, any consent or agreement required under
this Agreement shall be given in writing.

 

16.2 Contact details

 

(a) Except as provided below, the contact details of each Party for all
communications in connection with this Agreement are set out in paragraph
(b) below.

 

(b) The contact details of the Company for this purpose are:

 

Address:    Tesoro Hawaii, LLC    One Memorial City Plaza    800 Gessner Road,
Suite 875    Houston, Texas 77024 Fax number:    +1 832 565 1207 Email:   
btarzwell@txnenergy.com Attention:    Brice Tarzwell, Chief Legal Officer

 

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(c) The contact details of Barclays for this purpose are:

 

  (i) for all legal notices:

 

Address:    Barclays Bank PLC    Attention: Americas, General Counsel    745
Seventh Avenue    New York, NY 10019    USA with a copy to    Address:   
Barclays Bank PLC Attention:    Commodity Linked Finance    745 Seventh Avenue
   New York, NY 10019    USA Attention:    John Eleoterio Phone:    +1 212 412
1586 Fax Number:    +1 866 395 4482 Email:   
ProjectSurfNotices@barclayscapital.com

 

  (ii) for formal notices:

 

Address:    Barclays Bank PLC    Attention: Commodity Linked Finance    745
Seventh Avenue    New York, NY 10019    USA Attention:    John Eleoterio Phone:
   +1 212 412 1586 Fax number:    +1 866 395 4482 Email:   
ProjectSurfNotices@barclayscapital.com with a copy to    Address:    Barclays
Bank PLC Attention:    Americas, General Counsel    745 Seventh Avenue    New
York, NY 10019    USA

 

  (iii) for all operational matters:

 

Address:    Barclays Bank PLC    1301 McKinney (Suite 300)    Houston, TX 77010
   USA Switchboard    +1 713 401 6800 Email:   
ProjectSurfNotices@barclayscapital.com Attention:    Oil Logistics Department

 

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For urgent matters requiring immediate attention:

 

Attention:    David Wilson Telephone:    + 1 713 401 6790 (Office) Telephone:   
+1 210 365 7427 (Mobile) Email:    david.b.wilson@barclays.com Attention:   
Karen Snow Telephone:    +1 713 401 6792 (Office) Telephone:    +1 646 937 3430
(Mobile) Email:    karen.snow@barclays.com

 

(d) Any Party may change its contact details by giving five (5) Local Business
Days’ notice to the other.

 

(e) Where a Party nominates a particular department or officer to receive a
communication, a communication will not be effective if it fails to specify that
department or officer.

 

16.3 Effectiveness

 

(a) Except as provided below, any communication in connection with this
Agreement will be deemed to be given as follows:

 

  (i) if delivered in person, at the time of delivery;

 

  (ii) if posted, five (5) days after being deposited in the post, postage
prepaid, in a correctly addressed envelope;

 

  (iii) if by fax, when received in legible form; and

 

  (iv) if by email or any other electronic communication, when received in
legible form.

 

(b) A communication given under paragraph (a) above but received on a
non-working day or after business hours in the place of receipt will only be
deemed to be given on the next working day in that place.

 

(c) A communication to Barclays will only be effective on actual receipt by it.

 

17. LANGUAGE

 

(a) Any notice given in connection with this Agreement shall be in English.

 

(b) Any other document provided in connection with this Agreement shall be:

 

  (i) in English; or

 

  (ii) (unless Barclays otherwise agrees) accompanied by a certified English
translation. In this case, the English translation prevails unless the document
is a statutory or other official document.

 

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18. SEVERABILITY

If a term of this Agreement is or becomes illegal, invalid or unenforceable in
any jurisdiction, that will not affect:

 

  (a) the legality, validity or enforceability in that jurisdiction of any other
term of this Agreement; or

 

  (b) the legality, validity or enforceability in other jurisdictions of that or
any other term of this Agreement.

 

19. RIGHTS AND REMEDIES CUMULATIVE; EFFECT OF WAIVERS

The rights of either Party under this Agreement (a) may be exercised as often as
necessary, (b) are cumulative and not exclusive of its rights under law or in
equity, and (c) may be waived only in writing and specifically. Delay in
exercising or non-exercise of any right is not a waiver of that right. Any
waiver, consent or amendment shall be effective only in the specific instance
and for the specific purpose for which it was given and shall not entitle either
Party to any further or subsequent waiver, consent or amendment.

 

20. COMPLETE AGREEMENT

 

(a) This Agreement, and the documents referred to in it, contains the complete
agreement between the Parties on the matters to which it relates and supersedes
all prior commitments, agreements and understandings, whether written or oral,
on those matters. Except as required by statute, no terms shall be implied
(whether by custom, usage or otherwise) into this Agreement.

 

(b) Each Party:

 

  (i) acknowledges that, in agreeing to enter into this Agreement, it has not
relied on any express or implied representation, warranty, collateral contract
or other assurance made by or on behalf of any other party at any time before
the signature of this Agreement; and

 

  (ii) waives all rights and remedies which, but for this paragraph (ii), might
otherwise be available to it in respect of any such express or implied
representation, warranty, collateral contract or other assurance.

 

(c) Nothing in the preceding paragraph limits or excludes any liability for
fraud.

 

21. AMENDMENT

This Agreement may not be altered, amended, modified or otherwise changed in any
respect except in writing duly executed by an authorized representative of each
Party and no representations or warranties shall be implied or terms added in
the absence of a writing signed by all Parties.

 

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22. SURVIVAL

 

(a) This Section 22 and the following provisions of this Agreement (and any
defined terms, Section and/or Schedules referred to in them and/or necessary in
order to give effect to them) including all rights and obligations arising under
those provisions will survive termination or expiration of this Agreement and
shall continue in full force and effect notwithstanding termination of this
Agreement:

 

  (i) Sections 3.7 (Inventory, accounting and Losses), 10 (Indemnification), 24
(Governing Law) and 25 (Enforcement); and

 

  (ii) the obligations of each Party that is required to take effect on or give
effect to termination or the consequences of termination or which by their very
nature shall survive termination.

 

(b) Termination or expiration of this Agreement shall not affect any rights or
obligations that may have accrued prior to termination, including any in respect
of antecedent breaches and, for the avoidance of doubt but subject to the terms
of this Agreement, any rights or obligations under this Agreement in respect of
transactions entered into up to and including the date of termination or
expiration of this Agreement.

 

23. COUNTERPARTS

This Agreement may be executed in any number of counterparts. This has the same
effect as if the signatures on the counterparts were on a single copy of this
Agreement.

 

24. GOVERNING LAW

This Agreement, the relationship between the Parties and any claim or dispute
(whether sounding in contract, tort, statute or otherwise) relating to this
Agreement or that relationship shall be governed by and construed in accordance
with the laws of the State of New York, including section 5-1401 of the New York
General Obligations Law but excluding any other conflict of law rules that would
lead to the application of the law of another jurisdiction.

 

25. ENFORCEMENT

 

25.1 Jurisdiction

The Parties irrevocably submit to the exclusive jurisdiction of any New York
State or U.S. Federal court sitting in the City and County of New York for the
settlement of any dispute in connection with this Agreement. The New York courts
are the most appropriate and convenient courts to settle any such dispute and
each Party waives objection to those courts on the grounds of inconvenient forum
or otherwise in relation to proceedings in connection with this Agreement.

 

25.2 Waiver of immunity

The Company irrevocably and unconditionally:

 

  (a) agrees not to claim any immunity from proceedings brought by Barclays
against the Company in relation to this Agreement and to ensure that no such
claim is made on its behalf;

 

  (b) consents generally to the giving of any relief or the issue of any process
in connection with those proceedings; and

 

  (c) waives all rights of immunity in respect of it or its assets.

 

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25.3 WAIVER OF TRIAL BY JURY

EACH PARTY WAIVES ANY RIGHT IT MAY HAVE TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION IN CONNECTION WITH ANY INVENTORY DOCUMENT OR ANY TRANSACTION CONTEMPLATED
BY ANY INVENTORY DOCUMENT. THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO
TRIAL BY THE COURT.

[SIGNATURE PAGES FOLLOW]

 

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THIS AGREEMENT has been entered into on the date stated at the beginning of this
Agreement and is effective as of the date set forth above.

 

TESORO HAWAII, LLC By:  

/s/ Geoffrey Beal

  Name:   Geoffrey Beal   Title:   Vice President and Treasurer BARCLAYS BANK
PLC By:  

/s/ John Eleoterio

  Name:   John Eleoterio   Title:   Managing Director

[Signature Page to Storage and Services Agreement]