Exhibit 10.9

 

 

TAX SHARING AGREEMENT

 

by and among

 

PHILLIPS 66

 

and

 

PHILLIPS 66 PARTNERS LP

 

July 26, 2013

 

 

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TAX SHARING AGREEMENT
BY AND AMONG
PHILLIPS 66 AND
PHILLIPS 66 PARTNERS LP

 

Tax Sharing Agreement (the “Agreement”), dated this 26th day of July, 2013, by
and among PHILLIPS 66, a Delaware corporation (“Phillips 66”), and PHILLIPS 66
PARTNERS LP, a Delaware limited partnership (the “Partnership”).

 

RECITALS

 

WHEREAS, Phillips 66 is the common parent of an affiliated group of corporations
within the meaning of Section 1504(a) of the Code (as defined below), which
currently files a consolidated federal income tax return;

 

WHEREAS, the Partnership Group (as defined below) includes various entities that
may be required to join with Phillips 66 in the filing of a consolidated,
combined or unitary state tax return;

 

WHEREAS, the Parties wish to set forth the general principles under which they
will allocate and share various Taxes (as defined below) and related
liabilities;

 

WHEREAS, Phillips 66, on behalf of itself and its present and future
subsidiaries other than the Partnership Group (“Phillips 66 Group”), and the
Partnership, on behalf of itself and its present and future subsidiaries (the
“Partnership Group”), are entering into this Agreement to provide for the
allocation among the Phillips 66 Group and the Partnership Group of all
responsibilities, liabilities and benefits relating to any Tax for which a
Combined Return (as defined herein) is filed for a taxable period including or
beginning on or after the Effective Date (as defined herein) and to provide for
certain other matters;

 

NOW, THEREFORE, in consideration of the mutual agreements, provisions, and
covenants contained in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.01                             Definitions.  The following terms shall
have the following meanings (such meanings to be equally applicable to both the
singular and the plural forms of the terms defined):

 

“Accounting Referee” is defined in Section 6.11 herein.

 

“Code” means the Internal Revenue Code of 1986, as amended, or any successor
thereto, as in effect for the taxable period in question.

 

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“Combined Group” means a group of corporations or other entities that files a
Combined Return.

 

“Combined Return” means any Tax Return (other than a Tax Return for Federal
income taxes) filed on a consolidated, combined (including nexus combination,
worldwide combination, domestic combination, line of business combination or any
other form of combination), or unitary basis that includes activities of any
member of the Phillips 66 Group and any member of the Partnership Group.

 

“Effective Date” means the date of the closing of the initial public offering of
common units representing limited partner interests of the Partnership.

 

“Final Determination” means the final resolution of any Tax (or other matter)
for a taxable period, including related interest or penalties, that, under
applicable law, is not subject to further appeal, review or modification through
proceedings or otherwise, including (i) by the expiration of a statute of
limitations or a period for the filing of claims for refunds, amending Tax
Returns, appealing from adverse determinations, or recovering any refund
(including by offset), (ii) by a decision, judgment, decree, or other order by a
court of competent jurisdiction, which has become final and unappealable,
(iii) by a closing agreement, an accepted offer in compromise, or a comparable
agreement under laws of the particular Tax Authority, (iv) by execution of a
form under the laws of a Tax Authority that is comparable to an Internal Revenue
Service Form 870 or 870-AD (or any successor forms thereto) (excluding, however,
with respect to a particular Tax Item for a particular taxable period any such
form that reserves (whether by its terms or by operation of law) the right of
the taxpayer to file a claim for refund and/or the right of the Tax Authority to
assert a further deficiency with respect to such Tax Item for such period) or
(v) by any allowance of a refund or credit, but only after the expiration of all
periods during which such refund may be adjusted.

 

“Notice” is defined in Section 6.01 herein.

 

“Partnership Group” is defined in the Recitals to this Agreement.

 

“Partnership Group Combined Tax Liability” means, with respect to any Tax, the
Partnership Group’s liability for such Tax owed with respect to a Combined
Return for a taxable period, as determined under Section 3.02 of this Agreement.

 

“Partnership Group Deposit” is defined in Section 3.04 herein.

 

“Partnership Group Members” means those entities included in the Partnership
Group.

 

“Partnership Group Pro Forma Combined Return” means a pro forma Combined Return
or other schedule prepared pursuant to Section 3.02 of this Agreement.

 

“Party” means each of Phillips 66 and the Partnership, and solely for purposes
of this definition, “Phillips 66” includes the Phillips 66 Group and the
“Partnership” includes the Partnership Group.  Each of Phillips 66 and the
Partnership shall cause the Phillips 66 Group and the Partnership Group,
respectively, to comply with this Agreement.

 

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“Phillips 66 Group” is defined in the Recitals to this Agreement.

 

“Tax” or “Taxes” means all forms of taxation, whenever created or imposed, and
whether imposed by a domestic, local, municipal, governmental, state, federation
or other body, but excluding taxes imposed by the United States, and without
limiting the generality of the foregoing, shall include net income, alternative
or add-on minimum, gross income, sales, use, ad valorem, gross receipts, value
added, franchise, profits, license, transfer, recording, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property, windfall
profit, custom duty, or other tax, governmental fee or other like assessment or
charge of any kind whatsoever, together with any related interest, penalties, or
other additions to tax, or additional amounts imposed by any such Tax Authority.

 

“Tax Attribute” means a Tax Item of a member of the Partnership Group reflected
on a Combined Return that is comparable to one or more of the following
attributes with respect to a Federal income tax consolidated tax return:  a net
operating loss, a net capital loss, an unused investment credit, an unused
foreign tax credit, an excess charitable contribution, a U.S. federal minimum
tax credit or a U.S. federal general business credit (but not tax basis or
earnings and profits).

 

“Tax Authority” means a domestic governmental authority (other than the United
States) or any subdivision, agency, commission or authority thereof or any
quasi-governmental or private body having jurisdiction over the assessment,
determination, collection or imposition of any Tax (excluding the U.S. Internal
Revenue Service).

 

“Tax Controversy” means any audit, examination, dispute, suit, action,
litigation or other judicial or administrative proceeding initiated by Phillips
66 or the Partnership or any Tax Authority.

 

“Tax Item” means any item of income, gain, loss, deduction or credit, or other
item reflected on a Tax Return or any Tax Attribute.

 

“Tax Return” means any return, report, certificate, form or similar statement or
document (including any related or supporting information or schedule attached
thereto and any information return, amended Tax Return, claim for refund or
declaration of estimated tax) required to be supplied to, or filed with, a Tax
Authority in connection with the determination, assessment or collection of any
Tax or the administration of any laws, regulations or administrative
requirements relating to any Tax.

 

Any term used but not capitalized herein that is defined in the Code or in the
Treasury Regulations thereunder or, where relevant, in applicable state or local
statutes or regulations shall, to the extent required by the context of the
provision at issue, have the meaning assigned to it in the Code, Treasury
Regulations or such state or local statute or regulation.

 

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ARTICLE II

 

PREPARATION AND FILING OF TAX RETURNS

 

Section 2.01                             Manner of Filing.

 

(a)                                 For periods that include the Effective Date
and periods after the Effective Date, Phillips 66 shall have the sole and
exclusive responsibility for the preparation and filing of, and shall prepare
and file, all Combined Returns or cause to be prepared and filed all Combined
Returns.  Phillips 66 shall be authorized to take any and all action necessary
or incidental to the preparation and filing of a Combined Return, including,
without limitation, (i) making elections and adopting accounting methods,
(ii) filing all extensions of time, including extensions of time for payment of
tax, (iii) filing claims for refund or credit or (iv) giving waivers or bonds.

 

(b)                                 For periods that include the Effective Date
and periods after the Effective Date, the Partnership Group shall have the sole
and exclusive responsibility for the preparation and filing of, and shall
prepare and file or cause to be prepared and filed, all Tax Returns of the
Partnership Group Members that are not Combined Returns.

 

(c)                                  Phillips 66 shall have sole discretion to
include, or cause to be included, in a Combined Return for any Tax any member of
the Partnership Group for which inclusion in such Combined Return is elective;
provided, however, that the Partnership Group Combined Tax Liability for any
period shall not exceed the aggregate of (x) each such elective Partnership
Group Member’s liability for such Tax for such period, computed as if such
Partnership Group Member were not included in such Combined Return and (y) the
Partnership Group Combined Tax Liability calculated for the Partnership Group
Members for which inclusion is not elective.  Phillips 66 shall provide pro
forma Tax Returns pursuant to Section 3.053 of this Agreement to support the
calculation of the amount of any decrease in the Partnership Group Combined Tax
Liability pursuant to this Section 2.01(c).

 

Section 2.02                             Franchise Tax Taxable Period. 
References to “taxable period” for any franchise or other doing business Tax
shall mean the taxable period during which the income, operations, assets or
capital comprising the base of such Tax is measured, regardless of whether the
right to do business for another taxable period is obtained by the payment of
such franchise Tax.

 

ARTICLE III

 

ALLOCATION OF TAXES

 

Section 3.01                             Liability of the Partnership Group for
Combined Taxes.  For each Tax for each taxable period that includes or begins on
or after the Effective Date and for which a Combined Return is filed, the
Partnership Group Members included in such Combined Return shall be liable to
Phillips 66 for an amount equal to the Partnership Group Combined Tax Liability
in respect of such Tax.

 

Section 3.02                             Partnership Group Combined Tax
Liability.  With respect to each Tax for each taxable period that includes or
begins on or after the Effective Date and for which a

 

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member of the Partnership Group is included in a Combined Return, the
Partnership Group Combined Tax Liability for such Tax for such taxable period
shall be the Tax for such taxable period as determined on a Partnership Group
Pro Forma Combined Return prepared:

 

(a)                                 by including only the Tax Items of the
members of the Partnership Group that are included in the Combined Return and
computing the liability of the Partnership Group Members for such Tax as if such
Partnership Group Members were included in a separate consolidated or unitary
group;

 

(b)                                 except as provided in
Section 3.02(e) hereof, using all elections, accounting methods and conventions
appropriate for the includable Partnership Group Members as a stand-alone
taxpayer for such period;

 

(c)                                  applying the Tax rate in effect for the
Combined Return of the Combined Group for such taxable period;

 

(d)                                 assuming that the Partnership Group elects
not to carry back any net operating losses; and

 

(e)                                  assuming that the Partnership Group’s
utilization of any Tax Attribute carryforward or carryback is limited to the Tax
Attributes of the Partnership Group that would be available if the Partnership
Group Combined Tax Liability for each taxable period ending after the Effective
Date were determined in accordance with this Section 3.02.

 

Section 3.03                             Preparation and Delivery of Pro Forma
Tax Returns.  Not later than 90 days following the date on which a Combined
Return is filed with the appropriate Tax Authority, Phillips 66 shall prepare
and deliver to the Partnership the related Partnership Group Pro Forma Combined
Return calculating the Partnership Group Combined Tax Liability attributable to
the period covered by such filed Combined Return.

 

Section 3.04                             Payment of Tax.  Phillips 66 shall
timely pay (or shall cause to be timely paid) any Tax reflected on a Combined
Return and hold harmless the Partnership for all liability for such Tax.  In the
event Phillips 66 is required to make an estimated payment or deposit of any Tax
of any Combined Group which includes any member of the Partnership Group,
Phillips 66 shall calculate the portion, if any, of such estimated payment or
deposit attributable to the Partnership Group using a methodology similar to
that described in Section 3.02 (the “Partnership Group Deposit”) and shall
present such calculation to the Partnership.  Within 5 days thereafter, the
Partnership shall pay the Partnership Group Deposit to Phillips 66.  Within 30
days after delivery by Phillips 66 of a Partnership Group Pro Forma Combined
Return to the Partnership calculating the Partnership Group Combined Tax
Liability with respect to a Combined Return, the Partnership shall pay to
Phillips 66 such Partnership Group Combined Tax Liability less the amount of any
Partnership Group Deposit relating to the same Combined Return.

 

Section 3.05                             Subsequent Changes in Treatment of Tax
Items.  With respect to any Combined Return for any taxable period beginning on
or after the Effective Date, in the event of a change in the treatment of any
Tax Item of any member of a Combined Group as a result of a Final Determination,
within 30 days following such Final Determination (i) Phillips 66 shall

 

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calculate the change, if any, to the Partnership Group Combined Tax Liability
resulting from such change, (ii) Phillips 66 shall pay any decrease in the
Partnership Group Combined Tax Liability to the Partnership and (iii) the
Partnership shall pay any increase in the Partnership Group Combined Tax
Liability to Phillips 66.

 

ARTICLE IV

 

CONTROL OF TAX PROCEEDINGS; COOPERATION AND EXCHANGE OF INFORMATION

 

Section 4.01                             Control of Proceedings.  Except as
provided in this Article IV, Phillips 66 shall have full responsibility and
discretion in handling, settling or contesting any Tax Controversy involving a
Tax Return for which it has filing responsibility under this Agreement as well
as any Tax Controversy attributable to a Tax Return for any taxable period
ending before the Effective Date.  The Partnership shall have full
responsibility and discretion in handling, settling or contesting any Tax
Controversy involving a Tax Return for which it has filing responsibility under
this Agreement.  Except as otherwise provided in this Article IV, any costs
incurred in handling, settling or contesting any Tax Controversy shall be borne
by the Party having full responsibility and discretion thereof.

 

Section 4.02                             Cooperation and Exchange of
Information.

 

(a)                                 Each Party shall cooperate fully at such
time and to the extent reasonably requested by any other Party in connection
with the preparation and filing of any Tax Return or claim for refund, or the
conduct of any audit, dispute, proceeding, suit or action concerning any issues
or other matters considered in this Agreement.  Such cooperation shall include,
without limitation, the following: (i) the retention and provision on demand of
Tax Returns, books, records (including those concerning ownership and Tax basis
of property which a Party may possess), documentation or other information
relating to the Tax Returns, including accompanying schedules, related
workpapers, and documents relating to rulings or other determinations by Taxing
Authorities, until the expiration of the applicable statute of limitations
(giving effect to any extension, waiver or mitigation thereof); (ii) the
provision of additional information, including an explanation of material
provided under clause (i) of this Section 4.02(a), to the extent such
information is necessary or reasonably helpful in connection with the foregoing;
(iii) the execution of any document that may be necessary or reasonably helpful
in connection with the filing of a Tax Return by Phillips 66, the Partnership or
of their respective subsidiaries, or in connection with any audit, dispute,
proceeding, suit or action and (iv) such Party’s commercially reasonable efforts
to obtain any documentation from a governmental authority or a third party that
may be necessary or reasonably helpful in connection with any of the foregoing.

 

(b)                                 Each Party shall make its employees and
facilities available on a reasonable and mutually convenient basis in connection
with any of the foregoing matters.

 

(c)                                  If any Party fails to provide any
information requested pursuant to Section 4.02 hereof within a reasonable
period, as determined in good faith by the Party requesting the information,
then the requesting Party shall have the right to engage a public accounting
firm to

 

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gather such information, provided that 30 days’ prior written notice is given to
the unresponsive Party.  If the unresponsive Party fails to provide the
requested information within 30 days of receipt of such notice, then such
unresponsive Party shall permit the requesting Party’s public accounting firm
full access to all appropriate records or other information as reasonably
necessary to comply with this Section 4.02 and shall reimburse the requesting
Party or pay directly all costs connected with the requesting Party’s engagement
of the public accounting firm.

 

ARTICLE V

 

WARRANTIES AND REPRESENTATIONS; PAYMENT OBLIGATIONS

 

Section 5.01                             Warranties and Representations Relating
to Actions of Phillips 66 and the Partnership.  Each of Phillips 66 and the
Partnership warrants and represents to the other that:

 

(a)                                 in the case of Phillips 66, it is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite power to carry out the
transactions contemplated by this Agreement;

 

(b)                                 in the case of the Partnership, it is a
limited partnership duly organized, validly existing and in good standing under
the laws of the State of Delaware and has all requisite power to carry out the
transactions contemplated by this Agreement;

 

(c)                                  it has duly and validly taken all action
necessary to authorize the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby;

 

(d)                                 this Agreement has been duly executed and
delivered by it and constitutes its legal, valid and binding obligation
enforceable in accordance with its terms subject, as to the enforcement of
remedies, to (i) applicable bankruptcy, reorganization, insolvency, moratorium
or other similar laws affecting the enforcement of creditors’ rights generally
from time to time in effect and (ii) to general principles of equity, whether
enforcement is sought in a proceeding at law or in equity and

 

(e)                                  the execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby, or the
compliance with any of the provisions of this Agreement will not (i) conflict
with or result in a breach of any provision of its certificate of incorporation,
by-laws, certificate of limited partnership, limited partnership agreement or
other organizational or governing documents, (ii) breach, violate or result in a
default under any of the terms of any agreement or other instrument or
obligation to which it is a party or by which it or any of its properties or
assets may be bound, or (iii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to it or affecting any of its properties
or assets.

 

Section 5.02                             Calculation of Payment Obligations. 
Except as otherwise provided under this Agreement, to the extent that the payor
Party has a payment obligation to the payee Party pursuant to this Agreement,
the payee Party shall provide the payor Party with its calculation of the amount
of such obligation.  The documentation of such calculation shall provide
sufficient detail to permit the payor Party to reasonably understand the
calculation.  All payment

 

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obligations shall be made to the payee Party or to the appropriate Tax Authority
as specified by the payee Party within 30 days after delivery by the payee Party
to the payor Party of written notice of a payment obligation.  Any disputes with
respect to payment obligations shall be resolved in accordance with Section 6.11
below.

 

Section 5.03                             Prompt Performance.  All actions
required to be taken by any Party under this Agreement shall be performed within
the time prescribed for performance in this Agreement, or if no period is
prescribed, such actions shall be performed promptly.

 

Section 5.04                             Interest.  Payments pursuant to this
Agreement that are not made within the period prescribed therefor in this
Agreement shall bear interest (compounded daily) from and including the date
immediately following the last date of such period through and including the
date of payment at a rate equal to the Federal short-term rate or rates
established pursuant to Section 6621 of the Code for the period during which
such payment is due but unpaid.

 

Section 5.05                             Tax Records.  The Parties to this
Agreement hereby agree to retain and provide on proper demand by any Tax
Authority (subject to any applicable privileges) the books, records,
documentation and other information relating to any Tax Return until the later
of (a) the expiration of the applicable statute of limitations (giving effect to
any extension, waiver or mitigation thereof), (b) the date specified in an
applicable records retention agreement entered into with a Tax Authority, (c) a
Final Determination made with respect to such Tax Return and (d) the final
resolution of any claim made under this Agreement for which such information is
relevant.

 

Section 5.06                             Continuing Covenants.  Each Party
agrees (1) not to take any action reasonably expected to result in a new or
changed Tax Item that is detrimental to any other Party and (2) to take any
action reasonably requested by any other Party that would reasonably be expected
to result in a new or changed Tax Item that produces a benefit or avoids a
detriment to such other Party; provided that such action does not result in any
additional cost not fully compensated for by the requesting Party.  The Parties
hereby acknowledge that the preceding sentence is not intended to limit, and
therefore shall not apply to, the rights of the Parties with respect to matters
otherwise covered by this Agreement.

 

ARTICLE VI

 

MISCELLANEOUS PROVISIONS

 

Section 6.01                             Notice.  Any notice, demand, claim, or
other communication required or permitted to be given under this Agreement (a
“Notice”) shall be in writing and may be personally served provided a receipt is
obtained therefor, or may be sent by certified mail return receipt requested
postage prepaid, to the Parties at the following addresses (or at such other
address as one Party may specify by notice to any other Party):

 

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Phillips 66 at:                       Phillips 66

3010 Briarpark Dr.

Houston, Texas 77042

Attention:  General Counsel

 

Partnership at:                 Phillips 66 Partners LP

c/o Phillips 66 Partners GP LLC

3010 Briarpark Dr.

Houston, Texas 77042

Attention:  President

 

A Notice which is delivered personally shall be deemed given as of the date
specified on the written receipt therefor.  A Notice mailed as provided herein
shall be deemed given on the third business day following the date so mailed. 
Notification of a change of address may be given by any Party to another in the
manner provided in this Section 6.01 for providing a Notice.

 

Section 6.02                             Required Payments.  Unless otherwise
provided in this Agreement, any payment of Tax required shall be due within 30
days of a Final Determination of the amount of such Tax.

 

Section 6.03                             Injunctions.  The Parties acknowledge
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with its specific terms or were
otherwise breached.  The Parties hereto shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically the terms and provisions of this Agreement in any court
having jurisdiction, such remedy being in addition to any other remedy to which
they may be entitled at law or in equity.

 

Section 6.04                             Further Assurances.  Subject to the
provisions hereof, the Parties hereto shall make, execute, acknowledge and
deliver such other instruments and documents, and take all such other actions,
as may be reasonably required in order to effectuate the purposes of this
Agreement and to consummate the transactions contemplated hereby.  Subject to
the provisions hereof, each of the Parties shall, in connection with entering
into this Agreement, perform its obligations hereunder and take any and all
actions relating hereto, comply with all applicable laws, regulations, orders,
and decrees, obtain all required consents and approvals and make all required
filings with any governmental agency, other regulatory or administrative agency,
commission or similar authority and promptly provide the other Parties with all
such information as such Parties may reasonably request in order to be able to
comply with the provisions of this sentence.

 

Section 6.05                             Parties in Interest.  Except as herein
otherwise specifically provided, nothing in this Agreement expressed or implied
is intended to confer any right or benefit upon any person, firm or corporation
other than the Parties and their respective successors and permitted assigns.

 

Section 6.06                             Setoff.  Except as provided by
Section 2.01(c) of this Agreement, all payments to be made under this Agreement
shall be made without setoff, counterclaim or withholding, all of which are, to
the fullest extent permitted by law, expressly waived.

 

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Section 6.07                             Change of Law.  If, due to any change
in applicable law or regulations or the interpretation thereof by any court of
law or other governing body having jurisdiction subsequent to the date of this
Agreement, performance of any provision of this Agreement or any transaction
contemplated hereby shall become impracticable or impossible, the Parties hereto
shall use their best efforts to find and employ an alternative means to achieve
the same or substantially the same result as that contemplated by such
provision.

 

Section 6.08                             Termination and Survival. 
Notwithstanding anything in this Agreement to the contrary, this Agreement shall
remain in effect and its provisions shall survive for the full period of all
applicable statutes of limitation (giving effect to any extension, waiver or
mitigation thereof) or until otherwise agreed to in writing by Phillips 66 and
the Partnership, or their respective successors and permitted assigns.

 

Section 6.09                             Amendments; No Waivers.

 

(a)                                 Any provision of this Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by Phillips 66 and the Partnership, or in
the case of a waiver, by the Party against whom the waiver is to be effective.

 

(b)                                 No failure or delay by any Party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.

 

Section 6.10                             Governing Law and Interpretation.  This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware applicable to agreements made and to be performed in the State
of Delaware.

 

Section 6.11                             Resolution of Certain Disputes.  To the
fullest extent permitted by law, any disagreement between the Parties with
respect to any matter that is the subject of this Agreement, including, without
limitation, any disagreement with respect to any calculation or other
determinations by Phillips 66 hereunder, which is not resolved by mutual
agreement of the Parties, shall be resolved by a nationally recognized
independent accounting firm chosen by and mutually acceptable to the Parties
hereto (an “Accounting Referee”).  Such Accounting Referee shall be chosen by
the Parties within 15 business days from the date on which one Party serves
written notice on another Party requesting the appointment of an Accounting
Referee, provided that such notice specifically describes the calculations to be
considered and resolved by the Accounting Referee.  In the event the Parties
cannot agree on the selection of an Accounting Referee, then the Accounting
Referee shall be any office or branch of the public accounting firm of Ernst &
Young LLP.  The Accounting Referee shall resolve any such disagreements as
specified in the notice within 30 days of appointment; provided, however, that
no Party shall be required to deliver any document or take any other action
pursuant to this Section 6.11 if it determines that such action would result in
the waiver of any legal privilege or any detriment to its business.  To the
fullest extent permitted by law, any resolution of an issue submitted to the
Accounting Referee shall be final and binding on the Parties hereto without
further recourse.  The Parties shall share the costs and fees of the Accounting
Referee equally.

 

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Section 6.12                             Confidentiality.  Except to the extent
required to protect a Party’s interests in a Tax Controversy, each Party shall
hold and shall cause its consultants and advisors to hold in strict confidence,
unless compelled to disclose by judicial or administrative process or, by other
requirements of law, all information (other than any such information relating
solely to the business or affairs of such Party) concerning another Party or its
representatives pursuant to this Agreement (except to the extent that such
information can be shown to have been (i) previously known by the Party to which
it was furnished, (ii) in the public domain through no fault of such Party or
(iii) later lawfully acquired from other sources by the Party to which it was
furnished), and each Party shall not release or disclose such information to any
other person, except its auditors, attorneys, financial advisors, bankers and
other consultants and advisors who shall be advised of the provisions of this
Agreement.  Each Party shall be deemed to have satisfied its obligation to hold
confidential information concerning or supplied by another Party if it exercises
the same care as it takes to preserve confidentiality for its own similar
information.

 

Section 6.13                             Costs, Expenses and Attorneys’ Fees. 
Except as expressly set forth in this Agreement, each Party shall bear its own
costs and expenses incurred pursuant to this Agreement.  In the event a Party to
this Agreement brings an action or proceeding for the breach or enforcement of
this Agreement, the prevailing party in such action, proceeding, or appeal,
whether or not such action, proceeding or appeal proceeds to final judgment,
shall, to the fullest extent permitted by law, be entitled to recover as an
element of its costs, and not as damages, such reasonable attorneys’ fees as may
be awarded in the action, proceeding or appeal in addition to whatever other
relief the prevailing party may be entitled.  For purposes of this Section 6.13,
the “prevailing party” shall be the Party who is entitled to recover its costs;
a Party not entitled to recover its costs shall not recover attorneys’ fees.  No
sum for attorneys’ fees shall be counted in calculating the amount of the
judgment for purposes of determining whether a Party is entitled to recover its
costs or reasonable attorneys’ fees.

 

Section 6.14                             Counterparts.  This Agreement may be
executed in one or more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the same
instrument.

 

Section 6.15                             Severability.  The Parties hereby agree
that, if any provision of this Agreement should be adjudicated to be invalid or
unenforceable, such provision shall be deemed deleted herefrom with respect, and
only with respect, to the operation of such provision in the particular
jurisdiction in which such adjudication was made, and only to the extent of the
invalidity, and any such invalidity or unenforceability in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.  All other remaining provisions of this Agreement shall
remain in full force and effect for the particular jurisdiction and all other
jurisdictions.

 

Section 6.16                             Entire Agreement.

 

(a)                                 This Agreement contains the entire agreement
between the Parties with respect to the subject matter hereof and supersedes all
other agreements, whether or not written, in respect of any Tax between the
Phillips 66 Group and the Partnership Group.

 

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(b)                                 In the event of any conflict or
inconsistency between the provisions of this Agreement and the provisions of any
other agreement between the Phillips 66 Group and the Partnership Group the
provisions of this Agreement shall take precedence and to such extent shall be
deemed to supersede such conflicting provisions under the other agreement.

 

Section 6.17                             Assignment.  This Agreement is being
entered into by Phillips 66 and the Partnership on behalf of themselves and each
member of the Phillips 66 Group and the Partnership Group.  This Agreement shall
constitute a direct obligation of each such member and shall be deemed to have
been readopted and affirmed on behalf of any entity that becomes a member of the
Phillips 66 Group or the Partnership Group in the future.  Each of Phillips 66
and the Partnership hereby guarantee the performance of all actions, agreements
and obligations provided for under this Agreement of each member of the Phillips
66 Group and the Partnership Group, respectively.  Each of Phillips 66 and the
Partnership shall, upon the written request of the other, cause any of their
respective group members to formally execute this Agreement.  This Agreement
shall be binding upon, and shall inure to the benefit of, the successors,
assigns and persons controlling any of the entities bound hereby for so long as
such successors, assigns or controlling persons are members of the Phillips 66
Group or the Partnership Group or their successors and assigns.

 

Section 6.18                             Fair Meaning.  The parties intend that
this Agreement shall be construed in accordance with its fair meaning and shall
not be construed strictly against the drafter.

 

Section 6.19                             Titles and Headings.  Titles and
headings to sections herein are inserted for the convenience of reference only
and are not intended to be a part or to affect the meaning or interpretation of
this Agreement.

 

Section 6.20                             Construction.  In this Agreement,
unless the context otherwise requires the terms “herein,” “hereof,” and
“hereunder” refer to this Agreement.

 

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IN WITNESS WHEREOF, the Parties hereto have executed and delivered this
Agreement as of the day and year first above written.

 

 

 

PHILLIPS 66

 

 

 

By:

/s/ Tim G. Taylor

 

 

Tim G. Taylor

 

 

Executive Vice President, Commercial,

Marketing, Transportation and Business

Development

 

 

 

 

 

PHILLIPS 66 PARTNERS LP

 

 

 

By:

Phillips 66 Partners GP LLC,

 

 

its general partner

 

 

 

 

 

 

 

By:

/s/ J.T. Liberti

 

 

J.T. Liberti

 

 

Vice President and Chief Operating Officer

 

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