**Exhibit 10.3**

 

**TERMINALING SERVICESAGREEMENT**

 

 

This Terminaling Services Agreement (“**Agreement**”)is made by and between **TransMontaignePartners L.P.** on behalf of itself and its Affiliates (“**Owner**”), and **Marathon Petroleum Company LLC** (“**Customer**”), sometimes referred to individually as “**Party**” and collectively as “**Parties**”, effective as of February 20, 2006(“**Effective Date**”).  In consideration of the mutual promisescontained in this Agreement, the Parties agree to the following terms andconditions.

 

 

**SECTION 1.         DEFINITIONS.**

 

In this Agreement, unlessthe context requires otherwise, the terms defined in the preamble have themeanings indicated and the following terms will have the meanings indicatedbelow:

 

**“Affiliate”** means, in relation to a Party, any Person that (a) directly orindirectly controls such Party; (b) is directly or indirectly controlled bysuch Party; or (c) is directly or indirectly controlled by a Person thatdirectly or indirectly controls such Party. For this purpose, “control” of any entity or Person means thepossession, directly or indirectly, of the power to direct or cause thedirection of the management and policies of any Person, whether through theownership of a majority of issued shares /units or voting power or control infact of the entity or Person or otherwise.

 

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

 

                “**Arrival Notice”** has the meaning assigned tosuch term in Section 4.2.

 

                **“Barrel”** means 42 U.S. Gallons.

 

**“Business Day”**means eachcalendar day, excluding Saturdays, Sundays, or other holidays observed byOwner.

 

                **“Contract Year”** means a period of twelve(12) consecutive Months, except for the first “**Contract Year**” which means the period of time commencing withthe Effective Date of this Agreement and ending on April 30, 2007.

 

                **“Force Majeure”** means:

 

(a) strikes, lockouts orother industrial disputes or disturbances;

 

 (b) acts of the public enemy or ofbelligerents, hostilities or other disorders, wars (declared or undeclared),blockades, thefts, insurrections, riots, civil disturbances or sabotage;

 

 (c) acts of nature, landslides, severeweather, earthquakes, fires, tornadoes, hurricanes, storms, and warnings forany of the foregoing which may necessitate the precautionary shut-down ofpipelines, docks, loading and unloading facilities or the Terminal or otherrelated facilities, floods, washouts, freezing of machinery, equipment, orlines of pipe, inclement weather that necessitates extraordinary measures andexpense to construct facilities or maintain operations, tidal waves, perils ofthe sea and other adverse weather conditions or unusual or abnormal conditionsof the sea or other water;

 

 (d) arrests and restraints of or otherinterference or restrictions imposed by a Governmental Authority (whether legalor de facto or purporting to act under some constitution, decree, law orotherwise), necessity for compliance with any court order, or any law, statute,ordinance, regulation, or order promulgated by a Governmental Authority havingor 

 

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asserting jurisdiction, embargoes or exportor import restrictions, expropriation, requisition, confiscation ornationalization; or

 

(e) epidemics or quarantine,explosions, breakage or accidents to equipment, machinery, plants, facilitiesor lines of pipe, electric power shortages, breakdown or injury of vessels orany other causes, whether of the kind enumerated in this definition orotherwise, which were not reasonably foreseeable, and which are not within thecontrol of the Party claiming suspension and which by the exercise of duediligence such Party is unable to prevent or overcome.

 

Such term will likewiseinclude, in those instances where either Party is required to obtainservitudes, rights-of-way, grants, permits, or licenses to enable such Party tofulfill its obligations under this Agreement, the inability of such Party toacquire, or delays on the part of such Party in acquiring, at reasonable costand after the exercise of reasonable diligence, such servitudes, rights-of-waygrants, permits or licenses, and in those instances where either Party isrequired to furnish materials and supplies for the purpose of constructing ormaintaining facilities to enable such Party to fulfill its obligations underthis Agreement, the inability of such Party to acquire, or delays on the partof such Party in acquiring, at reasonable cost and after the exercise ofreasonable diligence, such materials and supplies.

 

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

 

                **“Good Industry Practice”** means the exerciseof that degree of skill, care, diligence, prudence and foresight that wouldreasonably and ordinarily be expected from a skilled and experienced productterminal operator engaged in the same or similar type of undertaking under thesame or similar circumstances.

 

** “Governmental Authority”** means any foreign or U.S. federal, state, regional, local or municipalgovernmental body, agency, instrumentality, board, bureau, commission,department, authority or entity established or controlled by a government orsubdivision thereof, including any legislative, administrative or judicialbody, or any person purporting to act for them.

 

 **“Independent Inspector”** means a licensed Person who performssampling, quality analysis and quantity determination of the Products receivedor delivered.

 

**“Interest Rate”** means the one-month LIBORrate with respect to the applicable Month(s).

 

**“Liabilities”** means any losses, charges,damages, deficiencies, assessments, interests, penalties, costs and expenses ofany kind related to or that arise out of this Agreement (including reasonableattorneys’ fees, other fees, court costs and other disbursements), includingany Liabilities that directly or indirectly arise out of or are related to anyclaim, proceeding, judgment, settlement or judicial or administrative ordermade or commenced by any Third Party or Governmental Authority related to orthat arise out of this Agreement.

 

                **“Month”** means a calendar month, except fortime period commencing with the Effective Date of this Agreement and ending onFebruary 28, 2006, which will also mean a “**Month**.”

 

                **“Product”**means asphalt.

 

                **“Product Loss**” means any loss or downgradeof Product occurring as a result of any contamination, adulteration,mislabeling, misidentification or other loss of or damage to Product caused bythe failure of the Owner to use Good Industry Practice in the handling, testingor storage of Product, or in the performance of the services provided hereunderand shall not include loss of or damage to Product that is:

 

(a) associated with Productflushing to eliminate residual particles or other contaminants from pipelines,Tanks, valves or pumps according to Good Industry Practice;

 

(b) associated withcircumstances involving Force Majeure;

 

(c) caused by the act oromission of Customer;

 

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(d) associated with theblending of Product or regrades of Product resulting from commingling ofProduct in pipelines according to Good Industry Practice; or

 

(e) due to normal Productevaporation, shrinkage, line loss, clingage, or tolerance of Productmeasurement inaccuracies (in compliance with Applicable Law, or, in the absenceof either, Good Industry Practice).

 

                **“Tank”**has the meaning described in Attachment“A-1”.

 

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

 

                **“Terminal” or “Terminals”**has the meaningdescribed in Attachment “A” and references to it will be deemed toinclude the Terminal manager or his/her representative.

 

                **“Third Party”** means any entity other thanOwner, Customer, or their respective Affiliates.

 

                **“Third Party Claim”** has the meaningassigned to such term in Section 18.3.

 

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

 

 

**SECTION 2.         SERVICE, STATEMENTS, INVOICES,DOCUMENTS AND RECORDS.**

 

                2.1           Ownerwill provide services related to the receipt, storage, throughput, heating,additive and other injection, blending and delivery of Customer’s Product toand from Customer or on behalf of Customer into and out of the Tanks at theTerminal and provide the facilities reasonably necessary to perform suchservices and provide such additional services as may be provided under thisAgreement and its attachments, for the fees, rates and charges contained inthis Agreement.  Those services will beperformed in accordance with Good Industry Practice and in compliance with ApplicableLaw.  Subject to the provisions ofAttachment “A”, all Tanks will be heated, insulated, and thereby suitable forProduct storage, with the exception of Tank No. 8 at Jacksonville.  Owner will review and estimate the cost toheat and insulate Tank No. 8.  Whenestimates are complete, Owner, at its option, will either begin work to makethe tank available for service as soon as practical or notify Customer thatTank No. 8 will not be made available for service.  Until such time that Tank No. 8 is placedinto service, it shall be deemed Out of Service for purposes of Monthly ServiceCharge calculation.

 

                2.2           As requested by Customer, Owner willtransmit to Customer a statement of receipts, deliveries and ending inventory,copies of individual Tank gauging documents, pipeline meter tickets, tank truckloading rack bills of lading, scale tickets, and railroad tank car gaugingdocuments, as applicable.  Thesedocuments will be transmitted to Customer at the address indicated in Attachment“A,” or such other address as may be mutually agreed upon by Customer andOwner at the time the request is made. Daily inventories by Terminal, Tank and Product shall be electronicallytransmitted to Customer within four (4) business hours of each Business Day.Customer sales information shall be transmitted at least twice daily viaelectronic interface with Customer’s accounting system.  Customer’s copy of applicable Bills of Ladingshall be sent to the address in Attachment “A” at the close of eachBusiness Day.  Owner shall be responsiblefor all hardware, software and supplies necessary to print Bills of Ladinglocally and transmit information to Customer.

 

                2.3           Within three(3) Business Daysfollowing the end of each Month during the Term of this Agreement, Owner will submitto Customer, at the address indicated in Attachment “A”, statementsreflecting beginning inventory balances, the volume of Customer’s Productreceived into the Terminal, throughput from the Terminal and ending inventorybalances during the preceding Month, together with an invoice for amounts duefor services provided during the preceding Month, as applicable, all as setforth on Attachment “A”.

 

In case of any conflictbetween the documents provided to Customer under Section 2.2 and the Monthlystatements provided under this Section 2.3, the Monthly statements providedunder this Section 2.3 will prevail as to the volume of Product received anddelivered by Owner, unless disputed by Customer.

 

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                2.4           Each Party will maintain a true and correct set of recordspertaining to its performance of this Agreement and will retain copies of allsuch records for a period of not less than two (2) years following terminationor cancellation of this Agreement.  Uponreasonable prior written notice, a Party or its authorized representative mayat its sole cost, during the Term of this Agreement and for the aforesaid two(2) year period, inspect such records of the other Party during normal businesshours at the other Party’s place of business.

 

                2.5           During the Term of this Agreement, Owner will not, andwill not allow any of its Affiliates or any Third Party, to store, throughput,or sell, construct or cause to be constructed any tanks, at the Terminalsspecifically for the storage of Product without the prior written consent ofCustomer.  Customer shall be theexclusive seller of Product at the Terminals.

 

 

**SECTION 3.         FEES,CHARGES AND TAXES.**

 

                3.1           Customer will pay Owner, for servicesprovided under this Agreement, the charges and fees indicated in Attachment “A”.

 

                3.2           All fees and charges reflected inOwner’s invoices are due and payable within fifteen (15) Business Days of thedate of Owner’s invoice.  Payment must bemade by electronic wire transfer of same day available U.S. funds to Owner’saccount and bank, both as indicated on Owner’s invoice.  Invoices may be sent by electronic mail andtelephone facsimile. If Customer disputes any portion of an invoice, Customermust pay the undisputed portion of the invoice. Overdue amounts or disputed amounts that are resolved in favor of theOwner will accrue interest at the Interest Rate plus 3% from the date thatpayment is due until paid in full. Likewise previously paid or disputed amounts in favor of the Customerwill accrue interest at the Interest Rate plus 3% from the date that paymentwas made until credit is issued to Customer’s Account.  The defaulting Party will pay all of theother Party’s costs (including reasonable attorney’s fees and court costs) ofcollecting past due payments and late payment charges, whether or not suit isbrought.

 

**               **3.3           Customer will pay any and all taxes, fees or other chargesand assessments, (including any charge or payment in lieu thereof), includinginventory, sales taxes on Terminal services and Product ownership taxes, ifany, on Customer’s Product and property at the Terminal.  Customer will indemnify and reimburse Ownerfor any costs or expense incurred by Owner in association with the foregoingtaxes, expenses, fees or costs.  Ownerwill be responsible for and pay all other applicable taxes levied upon Owner,including any increases in taxes levied on Owner’s Terminal (including real orpersonal property of Owner or both) as a result of Customer’s activities at theTerminal that Owner may be required to pay or collect under Applicable Law.

 

                3.4           Customeragrees not to challenge, protest or file a complaint, or cause, encourage orrecommend to any Affiliate or any other person that it challenge, protest orfile a complaint with respect to any rates, tariffs, rules, regulations ineffect during the term of this Agreement, if applicable, as the same may beamended from time to time provided that such tariffs, regulatory filings orrates do not conflict with the terms of this Agreement.

 

 

**SECTION 4.         OPERATIONS, RECEIPTS AND DELIVERIES.**

 

                4.1           Customer’sProduct will be delivered to the Terminal free of any charge to Owner.  Receipts and deliveries of Product will behandled within the operating hours of the Terminal as set forth on Attachment“A”.  Owner may make temporarychanges in operating hours or temporarily close the Terminal because of anextraordinary event or maintenance, without Customer’s approval.  Owner will notify Customer of such temporarychanges or closure in advance, or as soon after implementation as ispracticable.  Owner will notify Customerof any planned maintenance at least seven (7) days prior to altering businesshours or restricting deliveries or sales. Vessels, railroad tank cars, and tank trucks will be loaded and unloadedon first come, first serve basis and Owner will not be responsible for thepayment of any demurrage or costs incurred by Customer or its transportationcarrier for delays in receipt or throughput of the Product or other costs orfees in connection with receipt or throughput of the Product that are not thefault of the Owner.  Owner shall beresponsible for demurrage costs incurred and paid by Customer or itstransportation carrier for delays in receipt or throughput of the Product, orother costs or fees incurred and paid by Customer in connection with receipt orthroughput of the Product if the Owner is responsible for the delay or cost asa result of mechanical 

 

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malfunction, lack ofmanpower, Product spill or release, or other cause determined to be within thereasonable control of the Owner.

 

                4.2           Customer must arrange for and pay all Third Party costsrelated to the receipt or delivery of Customer’s Product to and from theTerminal. Owner is responsible only to receive or throughput, as the case maybe, the Product at its Terminal.  Ownershall also provide personnel required to load trucks at the Port EvergladesTerminals at rates specified in Attachment “A”, Section 5.K., except ondesignated holidays as described in Attachment “A”.  On those designated holidays, vessels will behandled at the rates described in Attachment “A”.  Unless otherwise provided to Owner inwriting, Customer must provide notice reasonably acceptable to Owner (in accordancewith Section 13) containing all necessary shipping instructions, includingwithout limitation, the identity and quantity of the Product and the tentativearrival date(s) (the “Arrival Notice”). If this Agreement involves marine receipts or throughput of Product, Ownerwill advise Customer concerning the Vessel that may be berthed, including itsmaximum size, draw, draft and length, the docks and associated positions to beused for each Product movement, as well as the minimum and maximum pumping ratesor pressure, as applicable, or both. Owner and/or the applicable port authority may change Vessel limitation,dock designation, and pumping rates and pressure criteria from time to timeupon prior reasonable notice to Customer. If Owner determines that a Vessel, truck or railroad car is unsuitablefor shipment of Products, as Owner deems appropriate, Owner may refuse to loador unload such equipment and will advise the carrier and Customer of thesituation immediately, and request further instructions from the Customer.  It is the responsibility of Customer tonotify the appropriate Governmental Authorities regarding Vessel arrivals.

 

                4.3           If Customer requires any change in the shippinginstructions, including, without limitation, the identity and timing of theProduct, Customer must provide notice of any change in the Arrival Notice (inaccordance with Section 13) to the Owner and the Terminal before the arrival ofthe Product at the Terminal.  Uponreceipt of Customer’s shipping instructions, Owner will immediately adviseCustomer of the Terminal’s availability. If the Terminal will not be available to receive or deliver Customer’sProduct on the communicated arrival date, Owner will advise as to the earliesttime when Customer’s Product may be received or delivered at the Terminal.  Customer will ensure that confirmation of thearrival date(s) and time of the Product will be communicated to Owner and theTerminal by Customer’s carrier periodically, at intervals of at least 48, 24and 12 hours in advance of the anticipated date and time of arrival of theProduct.  If Customer fails to provideOwner and the Terminal the notice containing shipping instructions in the formand manner required by this Section 4.3, Owner will not be obligated to receiveor deliver Customer’s Product.  Ownerwill not be responsible for any Product Loss directly attributable to Owner’sreceipt or delivery of Product based upon erroneous shipping instructions, thenotice of which is timely received by Owner in accordance with this Section4.3.

 

                4.4           If any of Customer’s Vessels (a) fails to vacate a dockupon completion of loading or discharge, (b) fails to discharge or load a bargewithin twenty-four (24) hours or within thirty-six (36) hours for an oceangoing barge or vessel, or (c) fails to vacate in order to conduct repairs,then, after having been notified by Owner to vacate, Customer shall beresponsible for the cost applicable to the berths together with any costsincurred by any Vessel which would otherwise be occupying such dock but for thefailure of Customer’s Vessel to vacate, save and except any such costs arisingdue to delay caused by Owner.

 

                4.5           Subject to Product Loss, Owner will deliver to Customer,or to such Third Parties as Customer may direct, the Product held by Owner atthe Terminal for the account of Customer. Customer is responsible for providing to Owner documentation required toauthorize deliveries for or on its behalf from the Terminal and only toproperly qualified individuals who have complied with the terms of Section 11.

 

                4.6           Customermay use the Tanks only for storage of Customer’s Product and may use the Tanksfor storage of other products only with the prior written consent ofOwner.  If a special method of storing orhandling Product is required, then Customer must notify Owner in sufficienttime to enable Owner to consider whether it will accept the proposed changes inthe Product stored or the method of storing or handling the Product and to takethe necessary preparatory measures if it agrees with such changes.  Failing such notice, Owner will not be liablefor losses or damage incurred during the storage and handling of the Products,nor will Owner be obligated to provide such special storage and handlingservice.  It is understood that the costof any additional or special equipment required by Customer or of alterationsmade necessary by the nature of Customer’s Product, will be for the account ofCustomer and Customer will be responsible for the expense of any necessarycleaning of the storage and handling equipment, including, without 

 

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limitation, Tanks,pipelines, pumps, hoses, meters, and loading arms, unless otherwise explicitlystated in this Agreement.  All fixtures,equipment and appurtenances attached to the Tanks, pipelines and otherfacilities of the Terminal by either Party are and will remain the property ofOwner.  No such items may be installed byCustomer without the prior written consent of Owner.

 

                4.7           (a) Upon execution of this Agreement, Customer agrees to purchase from Ownerany existing, on specification Product****inventoryat the Port Manatee and Jacksonville Terminals at a price of $150/ton up to amaximum of $1,500,000.  On May 1, 2006,Customer agrees to purchase from Owner any existing tank inventory at the CapeCanaveral and Port Everglades Terminals at a price of $130/ton up to a maximum$1,300,000.  In the case of PortEverglades and Cape Canaveral, if the Product is off specification, Customerand Owner will negotiate a different price in good faith.

 

(b)  Within ten (10) Business Days followingtermination or cancellation of this Agreement (subject to any lien that Ownermay have on the Product), Customer will remove and properly dispose of allProduct, including Product tank bottoms and line fill, residue, scale, and anyother accumulation from the Tank and pipelines and clean both Tank interior andpipelines then in use for Customer’s Product to a condition suitable for thestorage of No. 6 Oil.  Customer shall reimburseOwner for all costs and expenses reasonably incurred by Owner in taking suchaction, plus a 15% handling fee, as well as the cost of storage and handling ofthe Product removed, if any, at a rate of $0.03 per Barrel per day in additionto any other fees due hereunder, which fees and Business rates will continue tobe charged if Customer shall not have removed Customer’s Product from the Tankswithin ten (10) Business Days from the date of cancellation or termination ofthis Agreement.

 

(c)  Subject to the provision of Section 4.7(b)above, upon termination or cancellation of this Agreement, Owner shall have theoption of purchasing any of Customer’s Product remaining at the Port ManateeTerminal or the Jacksonville Terminal for $165/ton and the Cape CanaveralTerminal or the Port Everglades Terminal at a price of $135/ton.   If Owner elects to purchase remainingProduct at any Terminal, Section 4.7(b) will not apply.

 

                4.8           Ifany Governmental Authority requires installation of any improvement, alterationor addition to any Tank or other equipment at the Terminal for purposes ofcompliance with Applicable Law that would require Owner to make substantial andunanticipated capital expenditures, other than continued maintenance andcapital expenditures not affected by such requirement, Owner will notifyCustomer of (a) the cost of making any such improvement, alteration oraddition, after Owner’s efforts to mitigate such costs, (b) when suchimprovement, alteration or addition must be completed, and (c) Customer’s shareof such costs.  Owner will not berequired to make any improvements, alterations or additions to the Terminal insuch circumstance unless Customer either agrees to pay its share of such costsin the manner provided below or agrees in good faith with Owner for a ratablesurcharge to serve as a monthly fee increase.

 

                                If Customer elects, after negotiationwith Owner in good faith, not to share in such costs and Owner chooses not topay for such improvement, alteration or addition in lieu thereof, and if Ownerdoes not direct the affected Product to mutually acceptable terminal assetsowned by Owner or its Affiliates, either Party may terminate or release theaffected facilities or Tanks from this Agreement, with an equivalent reductionof the fees herein, by giving the other Party notice of its intention no laterthan thirty (30) calendar days after Owner’s receipt of notice of Customer’selection not to share in such costs.

 

                                If Customer elects to pay its shareof such costs, Owner shall likewise pay its share of such costs and proceedwith the installation of the required improvement, alteration or addition.  Customer may elect to either pay itsproportionate share of such costs in one lump sum or pay its proportionateshare of the costs on a prorated Monthly basis over the remaining Term of thisAgreement.  In addition to installationcosts, these costs will include engineering and interest expense at a rate of3% over the Interest Rate on the date of completion of such installation andsubsequent reasonable expenses, if any, of operating or maintaining suchinstallation.

 

                                This Section 4.8 shall not apply toestablish compliance with any Applicable Law at the time this Agreement isexecuted, e.g., Maritime Transportation Security Act.

 

4.9           Customer will beresponsible for providing all Tank bottoms and line fill.

 

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**SECTION 5.         PRODUCT QUALITY STANDARDS ANDREQUIREMENTS.**

 

                5.1           Customerwarrants to Owner that Product tendered by or for the account of Customer forreceipt by the Terminal will conform to the specifications for such Product setforth in Attachment “B”, attached to this Agreement and included in itfor all purposes by this reference, and will comply with Good Industry Practiceand all Applicable Law.  If tenderedProduct does not comply with the specifications set forth in Attachment “B”,Customer will be responsible for blending Product to meet specifications andApplicable Law.  Owner will not beobligated to receive Product into the Terminal that is contaminated or thatotherwise fails to meet those specifications which, as a result, places Ownerand/or its employees at undue risk. Customer will have the right to notify Owner of Product that does notmeet the specifications set forth in Attachment “B” and Owner will considerreceiving such product for the purposes of blending in order to meet thespecifications.  Owner’s agreement tosuch a request shall not be unreasonably withheld.  Any blending activity, and associated costs,will be subject to the terms and conditions outlined in this Agreement.  Owner may rely upon the specifications andrepresentations of Customer set forth in the Arrival Notice as to Productquality and shall verify quality prior to release for sale according to Section5.4.  Should Owner remove or dispose ofany water or other material in or associated with the Product at any time,Customer shall pay or reimburse all costs and expense associated with suchremoval or disposal unless water or other material was introduced by Owner orvia a mechanical or structural flaw in Owner’s assets.

 

                5.2           Thequality of Product tendered into the Terminal for Customer’s account must beverified either by Customer’s laboratory analysis, or by an IndependentInspector’s analysis indicating that the Product so tendered meets Owner’sminimum Product specifications set forth in Section 5.1 above.  Such analysis may be conducted on a periodicbasis in accordance with a Quality Control Plan implemented by Customer, whichprogram shall be subject to the approval of Owner, which approval shall not beunreasonably withheld.  Owner, at itsexpense, shall take samples from each Tank at least every thirty (30) days and,at Customer’s cost, ship to Catlettsburg Asphalt Certification Lab at 11631 USRoute 23 Catlettsburg, KY 41129 unless otherwise notified by Customer.  Except as identified otherwise, all costsassociated with such compliance program shall be borne by Customer.  Upon reasonable notice to Customer, Owner, atits expense, may sample any Product tendered to Owner for Customer’s accountfor the purpose of confirming the accuracy of the analysis.

 

                5.3           Atleast twenty-four (24) hours prior to the time of each receipt from Customer, acertificate setting forth the quality, grade and other specifications of theProduct must be delivered to Owner.  EachParty may at all reasonable times make appropriate tests to determine whetherProduct stored or delivered meets those specifications.  Owner will be liable to Customer and any ofCustomer’s purchasers for damages incurred by reason of contamination ofProduct, while in Owner’s custody, that fails to meet Customer’sspecifications, but only to the extent such contamination involves a ProductLoss

 

                5.4           QualityControl Plan and Testing

 

                                (a) Customer shall develop and provide a Terminal specific Quality ControlPlan, subject to approval of Owner, which approval shall not be reasonablywithheld.  A sample Quality Control Planis provided as Attachment “D”. Customer shall finalize a Quality Control Plan at each Terminal uponexecution of this Agreement.

 

(b)  As outlined in the Quality Control Plan andmentioned here for reference, Customer requires QC testing for Viscosity ofAsphalts by Vacuum Capillary @ 140F, AASHTO T-202 or ASTM D 2171.  Customer shall provide initial equipment andviscosity test training to Owner at each of its Terminals.  Owner shall provide ongoing training of itsoperating staff and will operate equipment to run all viscosity tests on site.Customer will be responsible for expenses related to the calibration,maintenance and replacement of the testing equipment unless such calibration,maintenance or repair is the result of mishandling or negligence of the Owner.Owner will be responsible for conducting, at its expense, normally occurringsemi-annual maintenance and calibration.

 

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(c)  Viscosity testing shall be conducted on eachTank following receipt of Product or Tank transfer.  In addition, static Tanks available for shipmentwill be tested weekly for viscosity.  Ifthe Product is off specification through no fault of Owner, Customer shall bearthe cost to bring Product to specification.

 

(d)           Viscosity test results shall becompiled when completed and made available to Customer in accordance with theQuality Control Plan or when requested.

 

 

**SECTION 6.         TITLE AND CUSTODY OF PRODUCT.**

 

                6.1           Title to Customer’s Product willremain with Customer at all times subject to any lien in favor of Owner createdpursuant to the terms of this Agreement or under Applicable Law.  Owner will assume custody of the Product atthe time such Product passes the last permanent discharge flange connection ofthe delivering Vessel, truck, or railroad tank car of Customer’s transportationcarrier. If Products are delivered to Customer, custody shall pass to Customerat the point where Products pass the first permanent flange connection of thereceiving Vessel, truck or railroad tank car.

 

 

**SECTION 7.         LIMITATION OF LIABILITY AND DAMAGES.**

 

                7.1           Uponthroughput of Customer’s Product, as provided above, Owner shall have nofurther responsibility for any loss, damage or injury to persons or property(including the Products) arising out of possession or use of the Product,except to the extent that such loss, damage or injury involves a Product Lossor loss or damage to other property or injury to persons is caused by Owner’ssole negligence.

 

                7.2           The maximum liability of Owner for Product Loss will notexceed, and is strictly limited to, the market value of the Product at the timeof the Product Loss or immediately prior to its contamination, plus the costsand expenses actually, reasonably and necessarily incurred by Customer orCustomer’s immediate purchaser in damage to equipment, cleaning and repairingtrucks, and facilities into which such Product was delivered at the Terminal,plus any fines and penalties actually levied against and paid by Customer orCustomer’s immediate purchaser by reason of such fault on Owner’s part.  Owner may, in lieu of payment for any ProductLoss, replace such Product with Product of like grade and quality.

 

                7.3           EXCEPT FOR THE PARTIES’ INDEMNIFICATION OBLIGATIONS WITHRESPECT TO CLAIMS OF THIRD PARTIES, THE PARTIES’ LIABILITY FOR DAMAGESHEREUNDER IS LIMITED TO DIRECT, ACTUAL DAMAGES ONLY AND NEITHER PARTY SHALL BELIABLE TO THE OTHER FOR SPECIFIC PERFORMANCE, LOST PROFITS OR OTHER BUSINESSINTERRUPTION DAMAGES, OR SPECIAL, CONSEQUENTIAL, INCIDENTAL, PUNITIVE,EXEMPLARY OR INDIRECT DAMAGES, IN TORT, CONTRACT OR OTHERWISE, OF ANY KIND,ARISING OUT OF OR IN ANY WAY CONNECTED WITH THE PERFORMANCE, THE SUSPENSION OFPERFORMANCE, THE FAILURE TO PERFORM, OR THE TERMINATION OF THIS AGREEMENT.  EACH PARTY ACKNOWLEDGES ITS DUTY TO MITIGATEDAMAGES HEREUNDER.

 

 

**SECTION 8.         PRODUCT MEASUREMENT.**

 

8.1           Quantities of Product received into and delivered from theTerminal shall be determined as follows:

 

 (a) for deliveries and receipts by Vessel,volumes shall be measured by the following methods in order of priority: (i)proven API-approved meters, (ii) static terminal tank gauges or scales, asapplicable.

 

(b) for deliveries andreceipts by truck, volumes shall be measured by the following methods in orderof priority: (i) static calibrated scales, (ii) proven API-approved meters, or(iii) static terminal tank gauges, as applicable.

 

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At no time shall Owner gauge, measure,witness, or confirm any measurements on a Vessel.  If tankage has movements in or out (activeTanks) during the measurement process, they shall be manually gauged andmetered, if applicable and as necessary, and corrected in the reasonablejudgment of Owner to reflect actual quantities received into and delivered fromsuch active Tanks.  Absent fraud ormanifest error, the quantities of Products in storage at any time will bedetermined from Terminal inventory records of receipts and throughput.  Unless indicated otherwise, quantitydeterminations will be based on a Barrel of Product and shall be determined inaccordance with the latest established API/ASTM standards for the method ofdelivery.  All volumes shall betemperature corrected to 60°F in accordance with the latest supplement oramendment to ASTM-IP petroleum measurement tables (ASTM designated D#1250.table 6(b)).  Gauging of Product receipt,throughput and storage will be taken jointly by representatives of the Parties;provided, however, that if Customer does not have representatives present forgauging, Owner’s gauging will be conclusive, absent fraud or manifest error.  Customer may use an Independent Inspector atits own expense.

 

                8.2           Terminal meters and scales will be calibratedperiodically, at least to the frequency defined by the State of Florida, andupon each completion of repair or replacement of a meter, at the meter or scaleowner’s expense.  Such calibration shallbe in accordance with the latest applicable API/ASTM standards.  If a meter or scale is determined by eitherParty to be defective or inoperative, such Party shall immediately notify theother Party, and it will be the responsibility of the Owner to promptly makerepairs or replacements.  Productreceived or delivered through a facility having an inoperative or defectivemeter or scale will be measured based upon before and after static Tank gaugesand any active Tanks measured in accordance with Section 8.1.  In such event, the Parties shall appoint amutually acceptable Independent Inspector to gauge the applicable Tanks and thefindings of the Independent Inspector shall be final and binding on theParties, except for fraud or manifest error. The Parties shall share equally the cost of the Independent Inspectorunder this Section 8.2.

 

 

**SECTION 9.         PRODUCT LOSS/GAIN.**

 

                9.1           Except as provided otherwise inSection 4.3 and Section 6, and during such time as Owner has custody of theProduct, Owner will indemnify Customer against and is responsible for anyProduct Loss that occurs while the Product remains in storage based onmeasurements of each Product grade.  Inthe case of Product that has been delivered to or for the account of Customer,Owner will be responsible for any Product Loss occurring while the Product wasin storage, provided Customer gives Owner notice of the claim within thirty(30) calendar days after such Product left the Terminal.  In the event of the foregoing Product Loss,the total Barrels of Product Loss will be determined and will either bereplaced by Owner or Owner will reimburse Customer the cost of such Product inaccordance with Section 7.

 

                9.2           Each Month, Owner will balance theTerminal in accordance with Section 8 to determine the net gain or loss of eachProduct, excluding any Product Loss in the calculation.  Owner shall be responsible for any volumelosses of Product due to the sole negligence of Owner, its employees, agents,contractors or subcontractors.  Anylosses other than those caused by the sole negligence of Owner or by a ForceMajeure event shall be for the account of Customer.  Any Product gains over the same period shallbe for the account of Customer.

 

 

**SECTION 10.       FORCE MAJEURE.**

 

10.1         If either Party is unable to perform oris delayed in performing, wholly or in part, its obligations under thisAgreement, other than the obligation to pay funds when due, as a result of anevent of Force Majeure, that Party may seek to be excused from such performanceby giving the other Party prompt written notice of the event of Force Majeurewith reasonably full particulars and timing of such Force Majeure event.  The obligations of the Party giving notice,so far as they are affected by the event of Force Majeure, will be suspendedduring, but not longer than, the continuance of the event of ForceMajeure.  The affected Party must actwith commercially reasonable diligence to resume performance and notify theother Party that the event of Force Majeure no longer affects its ability toperform under the Agreement.  If Owner isexcused from providing service pursuant to this Agreement due to an event ofForce Majeure, the fees hereunder not already due and payable will be excusedor proportionately reduced, as appropriate, for so long as the Owner’sperformance is excused due to the event of Force Majeure.

 

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10.2         The requirement that any event of Force Majeure be remediedwith all reasonable dispatch shall not require the settlement of strikes,lockouts, or other labor difficulty by the Party claiming excuse due to anevent of Force Majeure contrary to its wishes.

 

                10.3         If either Party is rendered unable to perform by reason ofan event of Force Majeure for a period in excess of one hundred eighty (180)consecutive calendar days, then the other Party may terminate this Agreementupon written notice to the Party claiming excuse due to the event of ForceMajeure.

 

 

**SECTION 11.       INSPECTION OF AND ACCESS TO TERMINAL.**

 

11.1         Customer may, during Owner’s normal business hours and afterreasonable written notice to Owner and the Terminal, so as not to disrupt theTerminal’s or Owner’s operations;

 

 (a) make periodic operational inspections ofthe Terminal;

 

(b) conduct audits of anypertinent books and records, including those related to receipts, throughputand inventories of Products; and

 

(c) conduct physicalverifications of the amount of Products stored in the Terminal.

 

                                Customer’s right and that of itsauthorized representatives to enter the Terminal will be exercised by Customerin a way that will not interfere with or diminish Owner’s control over or itsoperation of the Terminal and will be subject to reasonable rules and regulationspromulgated by Owner.  Customeracknowledges that under this Agreement none of Customer’s vehicles or vehiclesacting on behalf of Customer will be granted access to the Terminal until theowner of such vehicles and its employees or agents have been properly qualifiedand such owner has executed the then-current Owner’s “*TerminalAccess Agreement”*substantiallyin the form of Attachment “C”. Customer acknowledges its awareness of the terms of the Terminal AccessAgreement.  If there is any conflict betweenthe terms of this Agreement and those contained in the Terminal AccessAgreement, the terms and provisions of this Agreement shall takeprecedence.  Owner will be responsiblefor tracking execution of and compliance with all Terminal Access Agreementsand any associated insurance requirements, but will not be responsible ifCustomer or its agents are non-compliant and such non-compliant activity isbeyond the reasonable control of Owner.

 

11.2         As soon as possible after the Effective Date of this Agreement,Customer shall notify Owner of those Third Parties to whom Owner may deliverProducts from the Terminal.  Customermust furnish forty-eight (48) hours notice of any additions or deletions to itslist of approved Third Parties.

 

11.3         Customer acknowledges that any grant by Owner of the rightof access to the Terminal to Customer or any Customer Third Party under thisAgreement or under any document related to this Agreement is a grant of alicense only and shall convey no interest in or to the Terminal or any part ofit to Customer or any Customer Third Party, and may be withdrawn by Owner atits discretion at any time.

 

  Owner agrees to operate the Terminal incompliance with Applicable Law and Good Industry Practices.  Customer shall have the right to conductperiodic inspections and surveys of the Terminals, but Owner shall have noobligation to comply with any findings or recommendations that exceed thosepractices or specifications required by Applicable Law and Good IndustryPractice.

 

 

**SECTION 12.       ASSIGNMENT.**

 

This Agreement shall bebinding upon and shall inure to the benefit of the successors and assigns ofthe  Parties.  Customer and Owner covenant that they willnot by operation of law or otherwise assign, sublet, hypothecate, pledge,encumber or mortgage this Agreement, or any part of or right or obligationunder it, or permit the Tanks to be used by others without the prior writtenconsent of the other Party.  For purposesof this Section, “assign” will be considered to include any change in themajority ownership or control of Customer or Owner.  Any attempt by Customer 

 

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or Owner to assign, sublet, hypothecate,encumber or mortgage this Agreement will be null and void.  The consent by Owner or Customer to anyassignment, subletting, hypothecation, pledge, encumbrance, mortgage or use ofthis Agreement or the Tanks by others will not constitute a waiver of the otherParty’s right to withhold its consent to any other or further assignment, subletting,hypothecation, pledge, encumbrance, mortgage or use of the Agreement or Tanksby others.  The absolute andunconditional prohibitions contained in this Section 12 and the Parties’agreement to them are material inducements to the Parties to enter into thisAgreement and any breach of them will constitute a material default under thisAgreement permitting the Parties to exercise all remedies provided in thisAgreement or by Applicable Law.

 

 

**SECTION 13.       NOTICE.**

 

Except as provided below, any notice requiredunder this Agreement must be in writing and will be deemed received whenactually received and delivered by (a) United States mail, certified orregistered, return receipt requested, (b) confirmed overnight courier service,(c) confirmed facsimile transmission, or (d) electronic mail properly addressedor transmitted to the address of the Party indicated in Attachment “A”or to such other address, physical or electronic, or facsimile number as oneParty shall provide to the other Party in accordance with this provision.  Notifications and confirmation of delivery,receipt or shipping instructions as outlined in Section 4 may also be made viatelephone, if such telephone notification is confirmed by one or more of themethods described above within two hours.

 

 

**SECTION 14.       COMPLIANCE WITH LAW AND SAFETY.**

 

                14.1.        Customer warrants that the Products tendered by it have beenproduced, transported, and handled, and Owner warrants that the servicesprovided by it under this Agreement are in full compliance with all ApplicableLaws.  Each Party also warrants that itmay lawfully receive and handle such Products, and it will furnish to the otherParty any evidence required to provide compliance with Applicable Laws and tofile with applicable Governmental Authorities reports evidencing suchcompliance.

 

                14.2.        Customer certifies, on behalf of itself, its employees,agents and contractors, that all tank cars, vehicles and Vessels, used inconnection with this Agreement will comply with all Applicable Laws and thatthey will comply with Owner’s safety and security rules that have been providedto Customer prior to the execution of this Agreement and which are subject toreasonable change by Owner.  Customerwill furnish Owner with information (including Material Safety Data Sheets)concerning the safety and health aspects of Products stored or throughput underthis Agreement.  Owner will communicatesuch information to all persons who may be exposed to or may handle such Products,including without limitation, Owner’s employees, agents and contractors.

 

                14.3         Owner acknowledges that it has an acceptable Policy andProcedure program for the handling and storage of hydrogen sulfide (H2S),which includes the use of personal monitoring devices, and further acknowledgesthat hazardous concentrations of hydrogen sulfide (H2S) can begenerated and accumulate in the vapor space of barges, storage tanks, transporttrucks, tank cars or other enclosed spaces where Product is stored ortransported under certain conditions. Owner agrees that it shall provide adequate warnings and safe handlinginformation about H2S to its employees, agents, contractors andinvitees, and shall require them to further communicate the warnings andinformation to all persons that they reasonably foresee may be exposed to orhandle any cargoes that may contain H2S.  The warnings and information shall include acommunication that lethal levels of H2S may be present, a statementof adequate precautions, and the information contained in the Material SafetyData Sheets.  Owner further agrees thatit is responsible for determining, implementing, and ensuring compliance withwork procedures to provide adequate precautions against H2S exposureby its employees, agents, contractors and invitees.

 

                14.4         Owner certifies, on behalf of itself, its employees, agentsand contractors, that all Tanks and associated piping used in connection withthis Agreement will comply with all Applicable Laws, including withoutlimitation, 40 CFR 112, Spill Prevention Control and Countermeasure (SPCC).

 

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**SECTION 15.       DEFAULT, WAIVER AND REMEDIES**

 

15.1         The occurrence of any of the followingevents shall constitute an “Event of Default” hereunder:

 

(a)                                  failure of either Party to pay anyinterest or fees when due under this Agreement, in each case whether at statedmaturity, by acceleration, or otherwise;

 

(b)                                 either Party fails to perform anyobligation to the other Party or breaches any covenant made to the Party underthis Agreement, which, if capable of being cured, is not cured to thesatisfaction of the other Party (in its sole discretion) within ten (10)Business Days from the date that such Party receives notice that correctiveaction is needed;

 

(c)                                  either Party becomes insolvent orbankrupt, or bankruptcy, receivership, or similar proceedings are initiated byor against either Party;

 

(d)                                 any material covenant, agreement orobligation of any Party contained in or evidenced by this Agreement shall ceaseto be enforceable in accordance with its terms;

 

(e)                                  either Party to this Agreement shallrepudiate, deny or disaffirm its obligations under this Agreement;

 

(f)                                    this Agreement is cancelled, terminated,revoked or rescinded without the express prior consent of the other Party, orany Proceeding shall have been commenced by any person (other than eitherParty) seeking to cancel, revoke, rescind or disaffirm the obligations of anyParty to this Agreement (unless such Party is contesting the Proceeding in goodfaith and such Proceeding is withdrawn or dismissed with prejudice withinninety (90) calendar days), except as otherwise described in this Agreement;

 

(g)                                 any Governmental Authority shall issue ajudgment, order, decree or ruling to the effect that any of the obligations ofany Party to this Agreement is illegal, invalid or unenforceable;  or

 

(h)                                 any claim or lien (other than a claimpursuant to Section 18 or any statutory liens for taxes not yet due) isasserted or placed on any portion of Customer’s Product while stored at the Terminal.

 

15.2         The waiver by thenon-defaulting Party of any right under this Agreement will not operate towaive any other such right nor operate as waiver of that right at any futuredate upon another default by either Party under this Agreement and a single orpartial exercise of any right, power or privilege will not be presumed topreclude any subsequent or further exercise of that right, power, or privilegeor the exercise of any other right, power, or privilege.  Nothing in this Section 15.2 is intended inany way to limit or prejudice any other rights or remedies the non-defaultingParty may have under this Agreement, under Applicable Law or in equity.  The remedies provided in this Agreement arenot exclusive and, except as otherwise expressly limited by this Agreement, arein addition to all other remedies of the non-defaulting Party at law or inequity.  Acceptance by Owner of anypayment from Customer for any charge or service after termination of this Agreementshall not be deemed a renewal of this Agreement under any circumstances.  Notwithstanding any provision in thisAgreement to the contrary, if Customer is not then in default, Customer shallbe entitled to remove its Product from the Terminal at any time if Owner is indefault under this Agreement.

 

15.3         Subject to Section 15.4 below, upon theoccurrence and during the continuance of an Event of Default, and at any timethereafter, the non-defaulting Party may, by delivery of written notice to thedefaulting Party, take any or all of the following actions, without prejudiceto the rights of the non-defaulting Party to enforce its claims against thedefaulting Party:

 

                (a)           withhold or suspend its performance under this Agreementwithout prior notice;

 

                (b)           immediately terminate this Agreement; and

 

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                                                (c)           enforce any and all rights and interests createdand existing under this Agreement or arising under Applicable Law, including,without limitation, all rights and remedies existing under any securitydocuments and all rights of setoff.  Theenumeration of the foregoing rights is not intended to be exhaustive and theexercise of any right shall not preclude the exercise of any other rights, allof which shall be cumulative.

 

15.4         If Customer should fail to pay suchsums owned by it to Owner, Owner shall provide Customer with notice of defaultas provided in this Agreement and an opportunity to cure such default within aperiod of fifteen (15) calendar days.  IfCustomer has not cured such default within such fifteen (15) day cure period,Owner may proceed in accordance with Applicable Law to recover its contractualand statutory obligations of Customer under this Agreement, including, withoutlimitation, all costs, reasonable attorney’s fees, and expenses incurred byOwner in the recovery of sums owed to Owner by Customer hereunder.

 

15.5         If any insolvency, bankruptcy,receivership, or similar proceedings are initiated by or against Customer, onthe day immediately before such event, any fees for services rendered or to berendered under this Agreement and any fees required to be paid for theremaining Term of this Agreement, will become immediately due and payable andthis Agreement will terminate, without prejudice to any other rights or remediesit may have under this Agreement or Applicable Law.

 

15.6         In the event litigation if initiated byeither Party related to any breach hereunder, the prevailing Party, after entryof a final, non-appealable order, shall be entitled to receive as part of suchjudgment reimbursement of all reasonable attorney’s fees and costs incurred bysuch Party in connection with the prosecution of such action.

 

                15.7         Notwithstanding anything hereinabove to the contrary, thesale or transfer by Owner of all or part of its Terminals and related assets toan Affiliate, whether by sale or by operation of law, shall not constitute anEvent of Default.  Likewise, the sale ortransfer by Owner of all or part of the Terminals and related assets, to anon-Affiliate shall not constitute an Event of Default unless:

 

 (a)                             such sale or transfer would have amaterial adverse effect on the economics of the transactions contemplated underthis Agreement; or

 

(b)                               such sale or transfer is made to a ThirdParty that Customer reasonably deems to be unacceptable based upon a review ofsuch Third Party’s creditworthiness, financial capabilities, and ability tooperate the Terminals.

 

15.8         Upon termination ofthis Agreement, Customer shall dispose of any of its remaining Product storedat a Terminal that is subject to this Agreement.

 

 

**SECTION 16.       INSURANCE.**

 

16.1         Insurance Required for Both Parties.  Throughout the Term, each Party and itsagents shall, at such Party’s sole expense, carry and maintain in full forceand effect insurance coverages, with insurance companies rated not less thanA-, IX by A.M. Best or otherwise reasonably satisfactory to the other Party, ormay meet the requirements of this Section 16.1 by being self-insured to thesatisfaction of the other Party, provided that the financial ability toself-insure meets or exceeds the limits of coverage specified in Sections 16.1,16.2 and, if applicable, Section 16.3, of the following types and amounts:

 

**               **(a)           Workers Compensation coverage in compliance with theApplicable Law of the states having jurisdiction over eachemployee and employer’s liability coverage, and coverage under the FederalLongshoremen and Harbor Workers’ Act, the Jones Act, and the Federal Death onthe High Seas Act for all marine and vessel matters, in a minimum amount of onemillion dollars ($1,000,000) per accident, one million dollars ($1,000,000)disease per employee and one million dollars ($1,000,000) disease policy limitand including general maritime remedies of seamen including transportation,wages, maintenance and cure whether the action is in rem or inpersonam;

 

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                (b)           Automobileliability coverage in a minimum amount of one million dollars ($1,000,000); and

 

                (c)           Comprehensive or commercial general liability coverage andumbrella excess liability coverage, which includes bodily injury, broad form property damage and contractualliability coverages in a minimum amount of two million dollars ($2,000,000).

 

                16.2         InsuranceRequired by Owner.  In addition to theinsurance required pursuant to Section 16.1, Owner shall provide comprehensiveor commercial general liability coverage and umbrella excess liabilitycoverage, which includes Product Loss for Product in Owner’s care, custody andcontrol, and “sudden and accidental pollution” liability coverages (excludingevents that result in acidic deposition) in a minimum amount of ten milliondollars ($10,000,000).

 

16.3         Other Insurance. To the extent Customer utilizes its own or contracted Vessels to deliveror receive Product, Customer shall maintain or cause to be maintained at itsexpense or at vessel owners’ expense the following insurance on theVessels:  Hull and Machinery insurance,to the market value of the Vessels, and P&I insurance (including pollutionliability but not tower’s liability covering cargo) including full mutual entryin an international or American Group P&I Club with IGA pooling, oralternatively, maritime liability coverage evidenced on the SP-23 form or itsequivalent, including collision liability, tower’s liability except cargo, andliability for seepage, pollution, containment and cleanup, with extensions formarine contractual liability with a minimum liability limit of one hundredmillion dollars ($100,000,000). Pollution liability coverage should cover, if outside of a P&I Clubentry, bodily injury, property damage, including cleanup costs and defensecosts resulting from sudden and gradual pollution conditions of contaminates orpollutants into or upon the land, atmosphere, or any water course or body ofwater.  WQIS should be utilized asnecessary to comply with U.S. regulations, with limits of at least ten milliondollars ($10,000,000).

 

16.4         AdditionalInsurance Requirements.

 

                Customer isself-insured in amounts which are in excess of the amounts requiredherein.  Owner will accept Customer’sself-insurance based upon discussion and review of Customer’s financial abilityto meet or exceed the limit requirements specified in Sections 16.1, 16.2 and,if applicable Section 16.3.

 

                                (a)           Each Party shall cause its insurancecarriers to furnish to the other Party insurance certificates or, in the caseof Customer, anofficer’s certificate, in a form reasonably satisfactory to the other Party,evidencing the existence of the coverages required pursuant to Sections 16.1,16.2, and, if applicable, Section 16.3. Such certificates shall specify that no insurance shall be canceled ormaterially changed during the Term unless prior written notice is given atleast thirty (30) calendar days’ prior to cancellation or prior to a materialchange becoming effective.  Renewalcertificates shall be provided within thirty (30) calendar days of expirationof the policy under which coverage is maintained.

 

                                (b)           The mere purchase and existence ofinsurance coverage, self-insurance or otherwise, shall not reduce or releaseeither Party from any Liabilities incurred or assumed under this Agreement.

 

                                (c)           In the event of a Product Loss forwhich Owner must indemnify Customer under this Agreement, Owner’s insuranceshall be the primary and exclusive coverage for such loss, notwithstanding theexistence of other valid and collectible insurance.

 

16.5         Notwithstanding anything to the contrary contained in thisAgreement, Customer may self-insure tosatisfy the minimum amounts outlined above.  Upon request by Owner,Customer shall provide Owner with a letter confirming Customer’s self insuredstatus.

 

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**SECTION 17.       SECURITY AND CREDIT.**

 

                17.1         If Customer should fail to pay suchsums owed by it to Owner, Owner shall provide Customer with notice of defaultas provided in this Agreement and an opportunity to cure such default within aperiod of thirty (30) calendar days.  IfCustomer has not cured such default within such thirty (30) day cure period,Owner may proceed in accordance with Applicable Law to recover its damages,including, without limitation, all costs, reasonable attorney fees, andexpenses incurred by Owner in the recovery of money owed to Owner by Customer.

 

                17.2         If at any time Owner believes in good faith that thefinancial responsibility of the Customer has been impaired or isunsatisfactory, advance cash payment or other security, including letters ofcredit, will be given by Customer upon demand to cover the value of allanticipated throughput and other fees, as well as the value of Productsdelivered for the account of Customer in the event that Customer has a negativeinventory of its own Products.  If thecurrent value of the Products in Owner’s custody is at any time less than thevalue of the security provided by Customer, Owner may refuse to deliver toCustomer any additional Products until such time as Customer providesadditional security.

 

                17.3         If any insolvency, bankruptcy, receivership, or similarproceedings are initiated by or against Customer, on the day immediately beforesuch event, any fees for services rendered or to be rendered under thisAgreement and any fees required to be paid for the remaining Term of thisAgreement, will become immediately due and payable and this Agreement willterminate, without prejudice to any other rights or remedies it may have underthis Agreement or the law.

 

 

**SECTION 18.       INDEMNITY.**

 

                18.1         Indemnity.

 

                                (a)           Owner shall indemnify and holdCustomer, its Affiliates, and their employees, directors, officers,representatives, agents and contractors harmless from and against any and allLiabilities arising from Owner’s (i) performance of the services provided underthis Agreement, (ii) breach of this Agreement, (iii) negligence or willfulmisconduct of it, its Affiliates and their employees, directors, officers,representatives, agents or contractors, (iv) failure to comply with ApplicableLaw with respect to the sale, transportation, storage, handling or disposal ofthe Product, (v) representations, covenants or warranties made under thisAgreement which prove to be materially incorrect or misleading when made,unless and to such extent that such Liability results from Customer’snegligence or willful misconduct, or is covered by the following indemnity.

 

(b)           Customer shall indemnify and hold Owner, its Affiliates,and their employees, directors, officers, representatives, agents andcontractors harmless from and against any and all Liabilities arising fromCustomer’s (i) breach of this Agreement, (ii) negligence or willful misconductof it, its Affiliates and their employees, directors, officers,representatives, agents or contractors, (iii) failure to comply with ApplicableLaw with respect to the sale, transportation, storage, handling or disposal ofthe Product, (iv) representations, covenants or warranties made under thisAgreement which prove to be materially incorrect or misleading when made,unless and to such extent that such Liability results from Owner’s negligenceor willful misconduct, or is covered by the preceding indemnity.

 

(c)           If any Product spills, leaks or is discharged, or otherenvironmentally polluting discharge related to the performance of thisAgreement occurs (an “Incident”), Owner shall have sole responsibility forresponding thereto and shall promptly undertake and complete such containmentand clean-up operations, as deemed appropriate by Owner and as requiredby Applicable Law.  Indemnity withrespect to such Incidents shall be provided in accordance with subsections (a)and (b) above.

 

                18.2         No Third Party Rights.  The Parties’ obligations to defend, indemnifyand hold each other harmless under the terms of this Agreement shall not vestany rights in any Third Party, whether a Governmental Authority or privateentity, nor shall they be considered an admission of liability orresponsibility for any purposes other than those enumerated in thisAgreement.  The terms of this Agreementare enforceable only by the Parties, and no limited partner 

 

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of Owner shall have a separate right toenforce any provision of this Agreement, or to compel any Party to comply withthe terms of this Agreement.

 

                18.3         Notice.  The indemnified Party shall notify theindemnifying Party as soon as practicable after receiving notice of any claimor proceeding brought against it that might give rise to an indemnity claimunder this Agreement (a “Third Party Claim”) and shall furnish to theindemnifying Party the complete details within its knowledge.  Any delay or failure by the indemnified Partyto give notice to the indemnifying Party shall not relieve the indemnifyingParty of its obligations except to the extent, if any, that the indemnifyingParty shall have been materially prejudiced by reason of such delay or failure.

 

                18.4         Claims.  The indemnifying Party shall have the rightto assume the defense, at its own expense and by its own counsel, of any ThirdParty Claim; provided, however, that such counsel is reasonably acceptable tothe indemnified Party.  Notwithstandingthe indemnifying Party’s appointment of counsel to represent the indemnifiedParty, the indemnified Party shall have the right to employ separate counselreasonably acceptable to the indemnifying Party, and the indemnifying Partyshall bear the reasonable fees, costs and expenses of such separate counsel ifin the indemnified Party’s reasonable judgment (a) the use of counsel chosen bythe indemnifying Party to represent the indemnified Party would present suchcounsel with a conflict of interest or (b) the indemnifying Party shall nothave employed counsel to represent the indemnified Party within a reasonabletime after notice of the institution of such Third Party Claim.

 

                If requested bythe indemnifying Party, the indemnified Party agrees to reasonably cooperatewith the indemnifying Party and its counsel in contesting any claim orproceeding that the indemnifying Party defends, including, if appropriate,making any counterclaim or cross-complaint. All reasonably incurred costs and expenses incurred in connection withthe indemnified Party’s cooperation shall be borne by the indemnifyingParty.  

 

                18.5         Settlement.  No Third Party Claim may be settled orcompromised by the indemnified Party without the consent of the indemnifyingParty or by the indemnifying Party without the consent of the indemnifiedParty.

 

 

**SECTION 19.       CONSTRUCTIONOF AGREEMENT.**

 

19.1         Headings.  The headings of the sections and subsectionsof this Agreement are for convenience only and shall not be used in theinterpretation of this Agreement.

19.2         Amendment or Waiver.  This Agreement may not be amended, modifiedor waived except by written instrument executed by officers or duly authorizedrepresentatives of the respective Parties, and required (if applicable)approval by the Conflicts Committee of Owner.

19.3         Severability.  Any provision of this Agreement that isprohibited or not enforceable in any jurisdiction shall, as to thatjurisdiction, be ineffective only to the extent of the prohibition or lack ofenforceability without invalidating the remaining provisions of this Agreement,or affect the validity or enforceability of those provisions in anotherjurisdiction or the validity or enforceability of this Agreement as a whole.

 

                19.4        Entire Agreement and Conflictwith Attachments.  This Agreement(including the Attachments) contains the entire and exclusive agreement betweenthe Parties with respect to the subject matter hereof, and there are no otherpromises, representations, or warranties affecting it.  The terms of this Agreement may not becontradicted, explained or supplanted by any usage of trade, course of dealingor course of performance and any other representation, promise, statement orwarranty made by either Party or their agents that differs in any way from theterms contained herein will be given no force or effect.  Subject to Section 11.1, in the case of anyconflict between the body of this Agreement and any of its Attachments, thosecontained in the Attachments will govern. Notwithstanding anything in this Agreement or the Attachments to thecontrary, nothing contained in the Attachments will diminish or otherwiseaffect either Party’s indemnification obligations contained in this Agreement.

 

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**SECTION 20.       LAW.**

 

                This Agreementwill be construed and governed by the laws of the State of Florida except thechoice of law rules of that State that may require the application of the lawsof another jurisdiction.

 

 

**SECTION 21.       DISPUTERESOLUTION**

 

                21.1         Covered Disputes. Any dispute, controversy or claim (whether sounding in contract, tort orotherwise) arising out of or relating to this Agreement, including withoutlimitation the meaning of its provisions, or the proper performance of any ofits terms by either Party, its breach, termination or invalidity (“**Dispute**”) will be resolved in accordancewith the procedures specified in this Section 21, which will be the sole andexclusive procedure for the resolution of any such Dispute, except that aParty, without prejudice to the following procedures, may file a complaint toseek preliminary injunctive or other provisional judicial relief, if in itssole judgment, such action is necessary to avoid irreparable damage or topreserve the status quo.  Despite thataction the parties will continue, subject to Section 21.5, to participate ingood faith in the procedures specified in this Section 21.

                21.2         Initiation of Procedures.  Either Party wishing to initiate the disputeresolution procedures set forth in this Section 21 with respect to a Disputenot resolved in the ordinary course of business must give written notice of theDispute to the other Party (“**Dispute Notice**”).  The Dispute Notice will include (i) astatement of that Party’s position and a summary of arguments supporting thatposition, and (ii) the name and title of the executive or non-lawyerrepresentative who will represent that Party, and of any other person who willaccompany the executive or representative, in the negotiations under Section21.3 hereof.

                21.3         Negotiation BetweenExecutives/Representatives.  If oneParty has given a Dispute Notice under the preceding subsection, the partieswill attempt in good faith to resolve the Dispute within forty-five (45)calendar days of the notice by negotiation between executives and appointedrepresentatives who have authority to settle the Dispute.  Within fifteen (15) calendar days afterdelivery of the Dispute Notice, the receiving Party will submit to the otherParty a written response.  The responsewill include (i) a statement of that Party’s position and a summary ofarguments supporting that position, and (ii) the name and title of theexecutive or appointed representative who will represent that Party and of anyother person who will accompany the executive or appointed representative.  Within forty-five (45) calendar days afterdelivery of the Dispute Notice, the executives or appointed representatives ofboth parties will meet at a mutually acceptable time and place, and thereafter,as often as they reasonably deem necessary, to attempt to resolve the Dispute.

 

                21.4         Arbitration.  If the Dispute has not been resolved underthe preceding Sections 21.2 and 21.3 within ninety (90) calendar days of theDispute Notice, and only in such event, either Party may initiate thearbitration procedure of this subsection by giving written notice to the otherParty (“**Arbitration Notice**”).  The Dispute will be finally resolved bybinding arbitration in accordance with the then current Arbitration Rules ofthe American Arbitration Association (“**AAA**”).  If the amount in controversy is less than$500,000, there will be a single arbitrator, chosen by mutual agreement of bothparties.  If the parties cannot select anarbitrator within thirty (30) calendar days of the Arbitration Notice, the AAAwill select the arbitrator.  If theamount in controversy is $500,000 or more, there will be three arbitrators bythe AAA. The arbitration will be governed by the United States Arbitration Act,9 U.S.C. Sec. 1-16, as amended (the “**Act**”),and to the extent not inconsistent with the Act, the Colorado statutesapplicable to commercial arbitration. Judgment upon the award rendered by the arbitrator(s) may be entered byany court of any state having jurisdiction. The statute of limitations of the State of Colorado for the commencementof a lawsuit will apply to the commencement of an arbitration under thisAgreement, except that no defenses will be available based upon the passage oftime during any negotiation called for by this Section 21.  Each Party will assume its own costs of legalrepresentation and expert witnesses and the parties will share equally theother costs of the arbitration.  Thearbitrator will award pre-judgment interest in accordance with the law ofColorado; however, the arbitrator may not award punitive damages.  The arbitration will take place in a locationmutually agreeable to the Parties.

 

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                Either Party may apply to thearbitrators seeking injunctive relief until the arbitration award is renderedor the controversy is otherwise resolved. Either Party also may, without waiving any remedy under this Agreement,seek from any court having jurisdiction any interim or provisional relief thatis necessary to protect the rights or property of that Party, pending theestablishment of the arbitral tribunal (or pending the arbitral tribunal’sdetermination of the merits of the controversy). This Agreement has beenexecuted by the authorized representatives of each Party as indicated beloweffective as of the Effective Date.

 

 
| TRANSMONTAIGNE PARTNERS  L.P. |                     | MARATHON PETROLEUM COMPANY  LLC |
|-------------------------------|--------------------------|---------------------------------|
|                          |                     |                            |   |   |
| By:                           | TransMontaigne GP L.L.C. |                            |   |   |
|                          | Its General Partner      |                            |   |   |
|                          |                     |                            |   |   |
| By:                           | /s/ William S. Dickey    |                            | By: | /s/ Mary Ellen Peters |
| Name:                         | William S. Dickey        |                            | Name: | Mary Ellen Peters |
| Title:                        | President                |                            | Title: | Senior Vice President,  Marketing |
|                          |                     |                            |   |   |

 

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