Document:

Exhibit 10.2

	
 
    	
 
    	
 
    

 

AMENDED AND RESTATED

 

OPERATIONAL SERVICES AGREEMENT

 

by and among

 

PHILLIPS 66 CARRIER LLC,

 

PHILLIPS 66 PARTNERS HOLDINGS LLC

 

and

 

PHILLIPS 66 PIPELINE LLC

	
 
    	
 
    	
 
    

 

 

	
Article I Defined   Terms
    	
1
    
	
 
    	
 
    
	
Article II   Responsibilities of Operator
    	
5
    
	
 
    	
 
    
	
Article III   Financial Accounting and Billing Practices
    	
8
    
	
 
    	
 
    
	
Article IV Safety
    	
10
    
	
 
    	
 
    
	
Article V   Relationship of the Parties
    	
10
    
	
 
    	
 
    
	
Article VI   Liability Standard and Indemnification
    	
11
    
	
 
    	
 
    
	
Article VII   Insurance
    	
12
    
	
 
    	
 
    
	
Article VIII Term   and Termination
    	
13
    
	
 
    	
 
    
	
Article IX Alcohol   and Controlled Substances
    	
14
    
	
 
    	
 
    
	
Article X Force   Majeure
    	
14
    
	
 
    	
 
    
	
Article XI Notices
    	
15
    
	
 
    	
 
    
	
Article XII   Applicable Law
    	
16
    
	
 
    	
 
    
	
Article XIII   Confidentiality
    	
16
    
	
 
    	
 
    
	
Article XIV   Disputes Between the Parties
    	
17
    
	
 
    	
 
    
	
Article XV   Assignability
    	
17
    
	
 
    	
 
    
	
Article XVI   Compliance with Laws
    	
17
    
	
 
    	
 
    
	
Article XVII   Severability
    	
18
    
	
 
    	
 
    
	
Article XVIII   Non-Waiver
    	
18
    
	
 
    	
 
    
	
Article XIX Entire   Agreement; Amendments
    	
18
    
	
 
    	
 
    
	
Article XX   Survival
    	
18
    
	
 
    	
 
    
	
Article XXI   Counterparts; Multiple Originals
    	
18
    
	
 
    	
 
    
	
Article XXII   Construction
    	
19
    
	
 
    	
 
    
	
Article XXIII   Article Headings; Exhibits
    	
19
    

 

i

 

	
Exhibits
    
	
 
    	
 
    
	
A
    	
Description of Operated   Assets
    
	
B
    	
Maintenance Services
    
	
C
    	
Operating Services
    
	
D
    	
Administrative Services
    
	
E
    	
Construction Services
    
	
F
    	
Accounting Procedures
    
	
G
    	
Coverage of Louisiana   Workers’ Compensation Law
    

 

ii

 

AMENDED AND RESTATED OPERATIONAL SERVICES AGREEMENT

 

This AMENDED AND RESTATED OPERATIONAL SERVICES AGREEMENT is made and entered into as of the 1st day of October, 2017, by and between PHILLIPS 66 CARRIER LLC, a Delaware limited liability company (“Carrier”), PHILLIPS 66 PARTNERS HOLDINGS LLC, a Delaware limited liability company (“Holdings”) and PHILLIPS 66  PIPELINE LLC, a Delaware limited liability company (“Operator”).  Carrier and Holdings are collectively referred to herein as “Company”.

 

WITNESSETH:

 

WHEREAS, Company owns various crude oil, refined product and natural gas liquid pipeline and terminal assets and storage facilities, as well as natural gas liquid fractionation facilities and refinery assets;

 

WHEREAS, Operator has experience and expertise in the maintenance and operation of similar assets and facilities and can provide or make available to Company the personnel, technology, and other resources necessary to maintain and operate such assets and facilities; and

 

WHEREAS, Company and Operator desire that Operator maintain and operate such assets and facilities for Company;

 

WHEREAS, Company and Operator entered into that certain Operational Services Agreement, dated as of June 26, 2014, as amended by the First Amendment, Second Amendment, Third Amendment, Fourth Amendment, Fifth Amendment and Sixth Amendment thereto effective as of March 1, 2014, December 1, 2014, March 1, 2016, May 10, 2016, October 14, 2016 and November 17, 2016, respectively (the “Operational Services Agreement”); and

 

WHEREAS, Company and Operator desire to amend and restate the Operational Services Agreement in its entirety in the form of this Agreement.

 

NOW, THEREFORE, for and in consideration of the foregoing, the mutual covenants and promises contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by Company and Operator, Company and Operator agree as follows:

 

Article I
  Defined Terms

 

1.01                        Defined Terms.  The following definitions shall for all purposes, unless clearly indicated to the contrary, apply to the capitalized terms used in this Amended and Restated Operational Services Agreement:

 

(a)                                 “Accounting Procedures” has the meaning set forth in Section 3.01 hereof and Exhibit F hereto.

 

(b)                                 “Administrative Services” has the meaning set forth in Section 2.01(c) hereof.

 

 

(c)                                  “Affiliate” means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, Controls, is Controlled by or is under common Control with, such specified Person; provided, however, that for all purposes of this Agreement, (i) neither Phillips 66 Partners LP, a Delaware limited partnership, nor any Person controlled by Phillips 66 Partners LP shall be deemed to be an Affiliate of Phillips 66, a Delaware corporation, or any Person controlled by Phillips 66 (other than Persons controlled by Phillips 66 Partners LP) and (ii) neither Phillips 66 nor any Person controlled by Phillips 66 (other than Persons controlled by Phillips 66 Partners LP) shall be deemed to be an Affiliate of Phillips 66 Partners LP or any Person controlled by Phillips 66 Partners LP.

 

(d)                                 “Agreement” means this Amended and Restated Operational Services Agreement, together with all exhibits attached hereto, as the same may be amended, supplemented or restated from time to time in accordance with the provisions hereof.

 

(e)                                  “Bankruptcy” means, with respect to any Person, that:  (i) such Person (A) makes a general assignment for the benefit of creditors; (B) files a voluntary bankruptcy petition; (C) becomes the subject of an order for relief or is declared insolvent in any federal or state bankruptcy or insolvency proceedings; (D) files a petition or answer seeking for such Person, a reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any Law; (E) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against such Person in a proceeding of the type described in subclauses (A) through (D) of this clause (i); or (F) seeks, consents to, or acquiesces in the appointment of a trustee, receiver, or liquidator of such Person or of all or any substantial part of such Person’s properties; or (ii) against such Person, a proceeding seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any Law has been commenced, and 120 Days have expired without dismissal thereof or with respect to which, without such Person’s consent or acquiescence, a trustee, receiver, or liquidator of such Person or all or any substantial part of such Person’s properties has been appointed and 90 Days have expired after the date of expiration of a stay, if the appointment has not previously been vacated.

 

(f)                                   “Business Day” means any Day except for Saturday, Sunday or a legal holiday in the State of Texas.

 

(g)                                  “Carrier” has the meaning set forth in the introductory paragraph hereof.

 

(h)                                 “Category of Expenditure” means each of the types of capital and expense expenditures, or combinations thereof, for the Services set forth in Section 2.01 hereof and in accordance with the Accounting Procedures set forth in Exhibit F.

 

(i)                                     “Claim” means any and all judgments, claims, causes of action, demands, lawsuits, suits, proceedings, governmental investigations or audits, losses, assessments, fines, penalties, administrative orders, obligations, costs, expenses, liabilities and damages (whether actual or consequential), including interest, penalties, reasonable attorneys’ fees, disbursements and costs of investigations, deficiencies, levies, duties and imposts.

 

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(j)                                    “Claim Notice” has the meaning set forth in Section 6.05 hereof.

 

(k)                                 “Company” has the meaning set forth in the introductory paragraph hereof.

 

(l)                                     “Construction Services” has the meaning set forth in Section 2.01(d) hereof.

 

(m)                             “Control” including the correlative terms “Controlled by” or “under common Control with”, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.”

 

(n)                                 “Day” means the period of time commencing at 0000 hours on one calendar day and running until, but not including, 0000 hours on the next calendar day, according to Houston, Texas, local time.

 

(o)                                 “Dispute Resolution Procedures” has the meaning set forth in Section 14.01 hereof.

 

(p)                                 “DOT” means the United States Department of Transportation.

 

(q)                                 “Effective Date” means October 1, 2017.

 

(r)                                    “FERC” means the Federal Energy Regulatory Commission.

 

(s)                                   “Force Majeure” has the meaning set forth in Section 10.02 hereof.

 

(t)                                    “GAAP” means United States generally accepted accounting principles.

 

(u)                                 “Holdings” has the meaning set forth in the introductory paragraph hereof.

 

(v)                                 “Indemnified Parties” has the meaning set forth in Section 6.03 hereof.

 

(w)                               “Law” means any applicable constitutional provision, statute, act, code, law, regulation ordinance, rule, ordinance, order, decree, ruling, proclamation, resolution, judgment, decision or declaration.

 

(x)                                 “Liability Claim” means any Claim against Operator or Company, except Claims made by employees under any workers compensation Law or those fully covered by insurance.

 

(y)                                 “Maintenance Services” has the meaning set forth in Section 2.01(a) hereof.

 

(z)                                  “Material Default” means:  (i) the failure of a Party to pay the other Party any material amount of money payable by that Party, except a failure related to a bona fide business dispute about the amount of such payment or the liability for such payment, not accompanied by a general failure by that Party to pay the amounts it owes under this Agreement, (ii) the general, continuing failure of a Party to perform its material obligations under this Agreement, except when excused by Force Majeure or by some other provision of this Agreement, and except a failure related to a bona fide dispute about any obligation, or

 

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(iii) with respect to Company, its failure to approve any budgetary expense or capital project involving any pipeline integrity, compliance or regulatory issue that Operator, in its reasonable judgment, deems necessary or required by any Law.

 

(aa)                          “Month” or “Monthly” means a calendar month commencing at 0000 hours on the first Day thereof and running until, but not including, 0000 hours on the first Day of the following calendar month, according to Houston, Texas, local time.

 

(bb)                          “Normal Business Hours” means the period of time commencing at 0800 hours on one Day and running until 1700 hours on the same Day, according to Houston, Texas, local time.

 

(cc)                            “Notice” means any notice, request, instruction, correspondence or other communication permitted or required to be given under this Agreement in accordance with Article XI hereof, or received from a Person who is not a Party.

 

(dd)                          “Omnibus Agreement” shall mean the Omnibus Agreement by and among Phillips 66 Company, Phillips 66 Pipeline LLC, Phillips 66 Partners LP and Phillips 66 Partners GP LLC, as amended.

 

(ee)                            “Operated Assets” means the assets and facilities identified in Exhibit A hereto, and any other assets and facilities that Operator agrees to operate on behalf of Company upon reasonable request by Company.

 

(ff)                              “Operating Services” has the meaning set forth in Section 2.01(b) hereof.

 

(gg)                            “Operational Services Agreement” has the meaning set forth in the recitals hereof.

 

(hh)                          “Operator” has the meaning set forth in the introductory paragraph hereof.

 

(ii)                                  “Overrun” has the meaning set forth in Section 3.03(b) hereof.

 

(jj)                                “Parties” means Carrier, Holdings and Operator, collectively.

 

(kk)                          “Partnership Change of Control” means Phillips 66 Company ceases to Control the general partner of Phillips 66 Partners LP.

 

(ll)                                  “Party” means Carrier, Holdings or Operator, individually.

 

(mm)                  “Person” means, without limitation, an individual, corporation (including a non-profit corporation), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, labor union, or other entity or governmental body, and shall include any successor (by merger or otherwise) of such entity.

 

(nn)                          “Recovery Claim” means any liability or claim which Company has against one or more Persons.

 

(oo)                          “Seconded Employees” has the meaning set forth in Section 2.03(a) hereof.

 

 

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(pp)                          “Services” means the Maintenance Services, Operating Services, Administrative Services, Construction Services, and the other services included in Section 2.01 hereof, collectively.

 

(qq)                          “Year” means a period of three hundred sixty five (365) consecutive Days, commencing on the date hereof, and it shall also include each successive three hundred sixty five (365) Day period; provided, however, that any Year which contains a date of February 29 shall consist of three hundred sixty six (366) Days.

 

1.02                        Terms Generally.  The definitions in Section 1.01 shall apply equally to both singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The word “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” All references herein to Articles, Sections and exhibits shall be deemed references to Articles and Sections of, and exhibits to, this Agreement unless the context shall otherwise require.  Unless the context shall otherwise require, any reference to any federal, state or local statute, act, code or law shall be deemed also to refer to all rules, regulations and directives promulgated thereunder (and to any successor provision).

 

Article II
  Responsibilities of Operator

 

2.01                        Services to be Provided by Operator.  During the term of this Agreement, and subject to the terms and conditions hereof, Operator shall be obligated to perform and provide, or cause to be performed and provided, the following Services:

 

(a)                                 Such services as may be required by Company for the day-to-day routine and emergency maintenance and repair of the Operated Assets.  Operator’s obligation to maintain and repair the Operated Assets shall include the obligation to perform and provide such maintenance, repair and related services and activities as are described in Exhibit B (the “Maintenance Services”).

 

(b)                                 Such services as may be required by Company for the day-to-day operation of the Operated Assets.  Operator’s obligation to operate the Operated Assets shall include the obligation to perform and provide such operating services and activities as are described in Exhibit C (the “Operating Services”).

 

(c)                                  Such administrative services as may be required by Company in order for it to own the Operated Assets and conduct its business and affairs from time to time.  Operator’s obligation to provide administrative services shall include the obligation to perform and provide such administrative services as are described in Exhibit D (the “Administrative Services”).

 

(d)                                 Such construction and related services as may be required by Company from time to time in connection with the Operated Assets, consisting of the services described in Exhibit E (the “Construction Services”).

 

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(e)                                  Such other services related to the Operated Assets as the Parties may agree upon in writing from time to time.

 

2.02                        Manner of Performing/Providing Services.  The Services to be performed and provided by Operator hereunder shall be performed and provided in an efficient and prudent manner with the same degree of diligence and care that Operator would exercise if operating its own property and in all respects in accordance with all applicable Laws relating to Operator, Company and the Operated Assets, and Company’s ownership and operation thereof.  Operator shall operate the Operated Assets in a safe, professional and economical manner and, in a timely fashion, shall advise Company of all matters of significance that could affect the safety or economics relating to their operation so that Company can make appropriate decisions with respect thereto.  Operator shall provide such Services in accordance with and subject to the terms of the budget that is submitted by it to and approved by Company pursuant to Section 3.03 hereof.

 

2.03                        Personnel.

 

(a)                                 In connection with providing the Services, Operator agrees to second certain of its and/or its Affiliates’ employees, including direct, borrowed, special, seconded, or statutory employees (collectively, the “Seconded Employees”), to Company, and Company agrees to accept the secondment of the Seconded Employees for the purpose of performing Services and working on behalf of Company in the furtherance of Company’s business objectives. The Seconded Employees will remain at all times employees of Operator or its Affiliate, as applicable, and Operator shall have supervision over such Seconded Employees, subject to the direction and control of Company as provided in Section 5.02.  In addition, when the Seconded Employees are performing Services and working on behalf of Company, the Seconded Employees will also be joint employees of Company during such period of secondment for the limited purposes described in this Section 2.03. The period of secondment for a particular Seconded Employee shall be at the discretion of either Operator or Company. Certain of such Seconded Employees shall consist of managerial or supervisory personnel who will act on behalf of the Company when providing direction, supervision and control of the other Seconded Employees as contemplated hereby.

 

(b)                                 In addition to such Seconded Employees, Operator may utilize such other Persons (including consultants and professionals, service or other organizations) as Operator deems necessary or appropriate in order to permit Operator to perform the Services in an efficient and prudent manner. Operator shall have supervision over such other Persons, subject to the direction and control of Company as provided in Section 5.02.  Operator shall provide, or cause to be provided, all workers who will perform Services.

 

(c)                                  Subject to Operator’s right to be reimbursed for such expenses in accordance with the Accounting Procedures (as defined in Section 3.01), Operator shall pay, or caused to be paid, all expenses incurred by it or its Affiliates, as applicable, in connection with the employment of such Seconded Employees or the retention of such other Persons, including, but not limited to, compensation, salaries, wages and overhead and administrative expenses, charges to or incurred by Operator, and, if applicable, social security taxes, workers compensation insurance, retirement and insurance benefits and other such expenses. Any such Seconded

 

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Employees supplied by Operator or its Affiliates may be union or non-union employees, and Operator or its Affiliates, as applicable, shall have the sole right to negotiate the terms and provisions of any labor or other agreements with the unions to which such Seconded Employees belong.

 

(d)                                 During the period of secondment, Operator shall provide, or cause to be provided, worker’s compensation insurance to cover all Seconded Employees performing Services on behalf of Company, and Operator will name, or caused to be named, Company as a named insured under such insurance policies.

 

(e)                                  With respect to Company’s operations in Texas, Operator shall obtain and maintain, or cause to be obtained and maintained, workers’ compensation insurance (as defined by Texas Labor Code Section 401.011(44)) on behalf of both Operator and Company, and Company shall be considered an employer of the Seconded Employees solely for the purposes of Texas Labor Code Section 401.011(18) and Section 408.001.

 

(f)                                   With respect to Company’s operations in Louisiana, Operator shall obtain and maintain, or cause to be obtained and maintained, worker’s compensation coverage (as defined by the Louisiana Worker’s Compensation Law, Louisiana Revised Statutes 23:1021 et seq.), and the provisions of Exhibit G (Coverage of Louisiana Worker’s Compensation Law) shall apply to the Parties and to the Seconded Employees.

 

(g)                                  With respect to Company’s operations performed in any jurisdiction other than Texas or Louisiana, to the extent that such jurisdiction may regard Company as an employer of any such Seconded Employee for the purposes of workers’ compensation coverage, including joint or dual employer or in a similar capacity, Operator shall obtain and maintain, or cause to be obtained and maintained, workers’ compensation coverage as defined and required by Law or as otherwise appropriate in the applicable jurisdiction, on behalf of both Operator and Company, provided that Company shall be considered an employer or in a similar capacity, solely for the purposes under the relevant workers’ compensation regime.

 

(h)                                 The Parties intend that the sole remedy of the Seconded Employees against either Operator or Company and their respective Affiliates for any workplace injury (including death) shall be under the worker’s compensation coverage provided by, or caused to be provided by, Operator.

 

(i)                                     Notwithstanding the foregoing, nothing herein shall preclude a Seconded Employee from participating in benefit plans generally available to employees of Operator.  For the avoidance of doubt, nothing in this Agreement is intended to have any effect on the right of a Seconded Employee to prosecute a workers’ compensation claim against Operator, Company or both.

 

2.04                        Affiliates.  In its performance of the Services hereunder, Operator may, but shall not be obligated to, use the services of Operator’s or its Affiliates’ accounting construction, purchasing, engineering, legal, planning, budgeting, operating, regulatory, and other departments.  Operator’s Services may include Services for and on behalf of Company’s Affiliates.

 

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2.05                        Contracts.  Operator is authorized to execute, in its name and for the benefit of Company, such contracts as may be necessary for Operator to carry out its responsibilities under this Agreement; provided, however, that Operator shall not execute any contract in excess of Five Million Dollars ($5,000,000.00), or that covers a period longer than the term of this Agreement, unless Operator obtains Company’s prior written approval.

 

2.06                        Claims.

 

(a)                                 Any Liability Claim or Recovery Claim, to the extent relating to the operation or maintenance of the Operated Assets, shall be defended, prosecuted or settled by Operator, subject to the ultimate direction and control of Company.

 

(b)                                 The costs of handling a Liability Claim or a Recovery Claim, including reasonable costs of legal counsel, together with the amount of any settlement of or judgment rendered on a Liability Claim, including court costs, shall be paid by Operator and shall be reimbursed by Company.  Any amounts received by Operator in settlement of a Recovery Claim or in payment of a judgment on a Recovery Claim shall be paid over to Company.

 

(c)                                  Operator shall promptly notify Company whenever Operator receives actual Notice of any claim against Company or Operator (in its capacity as Operator).

 

(d)                                 Before making any settlement of any Liability Claim and before filing any lawsuit or making any settlement with respect to any Recovery Claim, Operator shall give to Company written Notice of the fact that it desires to file such suit or make such settlement (as the case may be), which Notice shall set forth the nature of the claim and the amount for which Operator proposes to sue or settle, and Operator shall not file any such suit nor make any such settlement without the approval of Company.

 

2.07                        Company Property.  All property, equipment and material acquired solely on behalf of Company by Operator hereunder shall be deemed to be owned by Company.

 

Article III
  Financial Accounting and Billing Practices

 

3.01                        Accounting.  Operator shall keep a full and complete account of all costs and expenses incurred by it in connection with the performance and provision of the Services hereunder in the manner set forth in the Accounting Procedures.

 

3.02                        Compensation.  Operator shall be fully reimbursed by Company for all necessary and reasonable costs, expenses and expenditures incurred by Operator on behalf of Company in connection with the provision of the Services at the rates and in the manner set forth in the Accounting Procedures.

 

3.03                        Budgets.

 

(a)                                 By November 1st of each calendar Year, Operator shall prepare and submit to Company for approval a detailed maintenance, operating, and capital budget setting out the amounts

 

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Operator proposes to expend for such purposes during the next calendar Year, which budget shall, to the extent practicable, provide for a breakdown of expenses and expenditures on a Monthly basis, by Category of Expenditure and by asset as defined by Operator. Upon Company approval of such budget, Operator shall have the authority to award and execute contracts within the expenditure limits set forth in such budget.  When expense and capital appropriation requests are not required (such as with annual maintenance contracts), Operator shall have the authority to award and execute such contracts without additional Company approval, subject to Section 2.05 of this Agreement.

 

(b)                                 If it appears at any time after Operator receives a budget approved by Company that the total actual expenditures for any calendar Year will exceed the total annual budgeted amount for such calendar Year, Operator shall notify Company of such expected excess expenditure as part of the normal Monthly billing process.  If it subsequently appears that the total actual expenditures for any calendar Year will exceed ten percent (10%) of the total annual budgeted amount (“Overrun”), Operator shall submit to Company for approval an amendment to the then-applicable budget, together with an explanation of the reason(s) for the anticipated budget Overrun.  As soon as practicable following the last Day of each Month, Operator shall submit to Company a Monthly report comparing actual expenditures for such Month to budgeted operating expenses and capital projects for such Month.

 

(c)                                  Company shall notify Operator in writing of the approval or disapproval of any proposed budget or amendment thereto in writing within fifteen (15) Days after receipt thereof.  In the event Company does not so notify Operator within such time period, or if Company notifies Operator that such budget or amendment has been disapproved, then until Operator receives approval of a proposed budget or amendment:  (i) the current approved budget shall remain in effect, and (ii) Operator shall continue to have the authority to make expenditures with regard to items previously approved by Company.  If any such proposed budget or amendment is disapproved, Operator shall submit a revised proposed budget or amendment to Company for approval as soon as is reasonably practicable.

 

(d)                                 Operator shall meet with Company a minimum of four (4) times during each calendar Year, or more if Company requests, in order to review the budget and permit Company to monitor the accuracy of the budget for current Year operations.

 

(e)                                  Except as Company may otherwise direct in writing, the approval by Company of a budget or an amendment to a budget shall constitute Company’s authorization of Operator to incur the expenses contained in such budget or amendment.

 

3.04                        Safety, Environmental and Emergency Expenditures.  Notwithstanding any other provision in this Agreement, Operator may incur (and be reimbursed for) any expenditures or take any other actions as Operator in its reasonable judgment deems to be immediately necessary:  (a) to protect the environment from immediate and present harm; (b) to protect the health and safety of Persons from immediate and present harm; (c) to safeguard lives or property in connection with the initial response to any emergencies affecting the Operated Assets; and (d) proceed with maintenance or repair work necessary to keep the Operated Assets operating, or to restore the Operated Assets to operating conditions; however, it is also understood that every reasonable effort will be made by

 

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Operator to notify Company at the earliest possible convenience of such emergencies and expenditures involving same.

 

3.05                        Billing Practices.  Company shall pay and Operator shall receive as full and complete compensation for the performance of the Services hereunder, the sum of the amounts becoming due as described in the Accounting Procedures.  For Services provided by Operator in any Month, payment by Company shall be made no later than the 21st Day of the immediately following Month, provided that if such Day is not a Business Day, then Company shall pay such amount without interest on the next Business Day.  As long as Operator and Company are Controlled by the same Person, Operator and Company may settle Company’s financial obligations to Operator through Operator’s normal interaffiliate settlement processes.

 

3.06                        Records and Audit Rights.  Operator shall maintain a true and correct set of records pertaining to all activities relating to its performance hereunder and all transactions related thereto.  Operator further agrees to retain all such records for a period of time not less than two (2) Years following the end of the calendar Year in which the applicable Services were performed. Company, or its authorized representative or representatives, shall have the right during Operator’s Normal Business Hours to audit, copy and inspect, at Company’s sole cost and expense, any and all records of Operator relating to its performance of its obligations hereunder (but not any other books and records of Operator).  Audits shall not be commenced more than once by Company during each calendar Year and shall be completed within a reasonable time frame not to exceed thirty (30) Days.  Company may request information from Operator’s books and records relating to Operator’s obligations hereunder from time to time and such requests shall not constitute an audit for that calendar Year.  Company shall have two (2) Years after the end of a calendar Year during which to conduct an audit of Operator’s books and records for such calendar Year, and any Claim arising out of or based in whole or in part on the information produced or obtained by the performance of any such audit must be made, if at all, within such two (2) Year period.

 

Article IV

Safety

 

4.01                        Safety Requirements.  Company agrees that Operator will abide by, at a minimum, the safety requirements promulgated by Operator from time to time with respect to the Operated Assets and in compliance with applicable Laws.

 

Article V

Relationship of the Parties

 

5.01                        General Principles Regarding Relationship of the Parties.  The Parties agree that Operator shall provide the Services to Company as an independent contractor. Except for the limited purposes specifically set forth in this Agreement, the Parties agree that Operator’s provision of the Services to Company shall not be as an agent or representative of Company.  This Agreement is not intended to and shall not create or otherwise form a partnership or joint venture between Operator and Company.

 

5.02                        Standard of Operational Control.  The Parties agree that the Services shall be performed under the absolute direction and control of Company.  Company shall have the right to monitor,

 

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consult with and give operational instructions to Operator.  Operator shall not unreasonably refuse service requests or operational instructions of Company.

 

Article VI

Liability Standard and Indemnification

 

6.01                        Liability Standard.  Notwithstanding anything herein to the contrary, and in recognition of the fact that the Services to be performed and provided by Operator hereunder are to be furnished, performed and provided in exchange for the reimbursement provided for in the Accounting Procedures, Operator shall only be liable to Company for gross negligence or willful or wanton misconduct in the performance of its obligations hereunder, AND NEITHER OPERATOR NOR SUCH OF ITS AFFILIATES OR AGENTS AS IT SHALL APPOINT TO PERFORM DUTIES HEREUNDER OR THEIR RESPECTIVE DIRECTORS, STOCKHOLDERS, OFFICERS, MEMBERS, PARTNERS, EMPLOYEES, AGENTS, CONSULTANTS, REPRESENTATIVES, SUCCESSORS, TRANSFEREES AND ASSIGNEES SHALL BE LIABLE TO COMPANY OR PERSONS WHO HAVE ACQUIRED INTERESTS IN COMPANY, WHETHER AS PARTNERS, ASSIGNEES OR OTHERWISE, FOR ERRORS IN JUDGMENT OR FOR ANY ACTS OR OMISSIONS THAT DO NOT CONSTITUTE GROSS NEGLIGENCE OR WILLFUL OR WANTON MISCONDUCT, IT BEING THE INTENTION OF THE PARTIES THAT NEITHER OPERATOR NOR SUCH OF ITS AFFILIATES OR AGENTS AS IT SHALL APPOINT TO PERFORM DUTIES HEREUNDER OR THEIR RESPECTIVE DIRECTORS, STOCKHOLDERS, OFFICERS, MEMBERS, PARTNERS, EMPLOYEES, AGENTS, CONSULTANTS, REPRESENTATIVES, SUCCESSORS, TRANSFEREES AND ASSIGNEES SHALL BE LIABLE FOR THEIR OWN NEGLIGENCE (SOLE, PARTIAL OR CONCURRENT).

 

6.02                        Responsibility for Affiliates and Agents.  Operator may exercise any of the powers granted to it by this Agreement and perform any of the duties imposed upon it hereunder either directly or by or through its Affiliates or agents, and Operator shall not be responsible for any misconduct or negligence on the part of any such Affiliate or agent appointed by Operator with due care.

 

6.03                        Indemnification.  FROM AND AFTER THE DATE OF THIS AGREEMENT, COMPANY SHALL INDEMNIFY AND HOLD HARMLESS OPERATOR AND EVERY AFFILIATE OF OPERATOR AS IT SHALL APPOINT TO PERFORM SERVICES HEREUNDER AND ITS AND THEIR RESPECTIVE DIRECTORS, STOCKHOLDERS, OFFICERS, MEMBERS, PARTNERS, EMPLOYEES, AGENTS, CONSULTANTS, REPRESENTATIVES, SUCCESSORS, TRANSFEREES AND ASSIGNEES (COLLECTIVELY THE “INDEMNIFIED PARTIES”) FROM, AGAINST AND IN RESPECT OF ANY AND ALL LIABILITY CLAIMS ASSERTED BY OR ON BEHALF OF ANY PERSON OTHER THAN COMPANY ARISING FROM, RELATING TO, OR ASSOCIATED WITH THE PERFORMANCE OR PROVISION OR FAILURE TO PERFORM OR PROVIDE BY OPERATOR ANY OF THE SERVICES OR THE FAILURE BY COMPANY TO PERFORM ANY OF ITS OBLIGATIONS UNDER THIS AGREEMENT, IN EACH CASE REGARDLESS OF WHETHER ANY SUCH CLAIM RESULTS FROM THE NEGLIGENCE (SOLE, PARTIAL OR CONCURRENT) OF OPERATOR OR ANY OF THE

 

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INDEMNIFIED PARTIES; PROVIDED, HOWEVER, THAT SUCH INDEMNIFICATION SHALL NOT EXTEND TO ANY AMOUNT OF DAMAGES THAT ARE DETERMINED TO BE ATTRIBUTABLE TO THE GROSS NEGLIGENCE OR WILLFUL OR WANTON MISCONDUCT OF THE INDEMNIFIED PARTY.

 

6.04                        Consequential Damages.  Notwithstanding anything herein to the contrary, neither Party shall be liable to the other Party for special, indirect or consequential damages resulting from or arising out of this Agreement, including, without limitation, loss of profits or business interruptions, however they may be caused.

 

6.05                        Notice of Claims.  Promptly after any Indemnified Party becomes aware of facts giving rise to a Claim by it for indemnification pursuant to this Article, such Indemnified Party shall provide Notice to Company (a “Claim Notice”) outlining such Claim and a copy of all papers served with respect thereto (if any).  For purposes of this Section, receipt by an Indemnified Party of Notice of any Claim by or from any Person other than a Party to this Agreement which gives rise to a Claim on behalf of such Indemnified Party shall require prompt Notice from the Indemnified Party to Company of the receipt of such Notice as provided in the first sentence of this Section 6.05; provided, however, that the failure of any Indemnified Party to give timely Notice shall not affect its rights to indemnification hereunder except to the extent that Company is materially prejudiced thereby.  Each Claim Notice shall set forth all information regarding the Claim as the Indemnified Party shall then have and shall contain a statement to the extent that the Indemnified Party giving the Notice is making a Claim pursuant to a formal demand for indemnification under this Article VI.

 

Article VII

Insurance

 

7.01                        Insurance.

 

(a)                                 Operator shall at all times during the term of this Agreement obtain and maintain, or cause to be obtained and maintained, workers’ compensation insurance or similar insurance, including all such insurance as may be required by all applicable state and federal workers’ compensation Laws and such other Laws as may be applicable to the Services performed under this Agreement.  Operator shall cause its workers’ compensation and employers liability insurers to waive their rights of subrogation against Company.

 

(b)                                 Operator may elect to self-insure, or cause to be self-insured, all or any part of the insurance requirements set forth in Section 7.01(a) above to the extent allowed by applicable Law.  If self-insured, then Operator shall respond to, or cause to be responded to, any insurance claim, with regard to waiving rights of subrogation against the Company, in the same manner as a commercial market insurance policy that waived subrogation rights against the Company would have responded to such insurance claim.

 

7.02                        Cost Reimbursement.  Insurance as required in Section 7.01 hereof shall be a reimbursable cost pursuant to the Accounting Procedures.

 

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7.03                        Required Contractor Coverage.  Operator shall require all contractors and subcontractors employed by Operator in performing and/or providing Services hereunder to procure and maintain the following insurance:  (a) workers’ compensation insurance or similar insurance, including all such insurance as may be required by all applicable state and federal workers’ compensation Laws and such other Laws as may be applicable to the Services provided by such contractors and subcontractors; (b) employers’ liability insurance with amounts required by Law or One Million Dollars ($1,000,000.00) per occurrence, whichever is greater; (c) commercial general liability insurance on an occurrence form covering liabilities for death and personal injury and liabilities for loss or damage to property with a combined single limit of not less than One Million Dollars ($1,000,000.00) per occurrence, which insurance must cover all Services conducted by such contractors and subcontractors related to this Agreement; and (d) business vehicle insurance covering liabilities for death of or injury to any one Person and liabilities for loss of or damage to property resulting from any one (1) accident with a combined single limit of not less than One Million Dollars ($1,000,000.00) per occurrence.  Further, Operator shall require such contractors and subcontractors to cause their workers’ compensation and employers’ liability insurance insurers to waive their rights of subrogation against Company, and to name Company as an additional insured under any commercial general liability and business vehicle liability insurance policies carried by such contractors and subcontractors.

 

Article VIII

Term and Termination

 

8.01                        Term.  Unless terminated in accordance with Section 8.02, Section 8.03 or Section 8.04 below, this Agreement shall have a five (5) Year primary term, commencing on the date hereof, and this Agreement shall continue in full force and effect thereafter unless it is terminated by either Party at the end of the primary term or at any time thereafter by giving not less than six (6) Months prior Notice of such termination to the other Party.

 

8.02                        Termination by Company.  Company shall have the right to terminate this Agreement immediately upon the occurrence of any of the following events:  (a) upon the Bankruptcy of Operator or (b) upon a finding by Company that Operator (i) has been grossly negligent or engaged in willful or wanton misconduct in the performance of its obligations hereunder and that such gross negligence or willful or wanton misconduct has had a material adverse effect on the Operated Assets or Company’s business as it relates to the Operated Assets, or (ii) has engaged in a continued or regular pattern or gross negligence or willful or wanton misconduct that Company reasonably determines to pose a risk of resulting in a material adverse effect on the Operated Assets or Company’s business as it relates to the Operated Assets; provided that Company shall deliver to Operator Notice of any such affirmative finding, which shall include a reasonably detailed description of the basis therefor.

 

8.03                        Termination by Operator.  Operator shall have the right to terminate this Agreement or any Services provided hereunder:  (a) immediately upon the Bankruptcy of Company or (b) on six (6) Months prior Notice upon the occurrence of a Partnership Change of Control. Notwithstanding the foregoing, if Phillips 66 Partners LP ceases to Control, directly or indirectly, either Carrier or

 

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Holdings, as the case may be, then Operator shall have the right to terminate this Agreement with respect to any Services provided to Carrier or Holdings, as applicable.

 

8.04                        Right of Termination by Either Party.  Any Party may terminate this Agreement at any time upon sixty (60) Days prior Notice to the other Party if:

 

(a)                                 the other Party is in Material Default of any of its obligations under this Agreement; and

 

(b)                                 the non-defaulting Party gives Notice of such Material Default to the defaulting Party, which Notice shall set forth in reasonable detail the facts and circumstances of such Material Default; and

 

(c)                                  the defaulting Party fails to cure the Material Default within thirty (30) Days, or, for a Material Default not reasonably susceptible to cure within that period, to undertake to cure such Material Default and thereafter to diligently continue such efforts until the Material Default is cured.

 

8.05                        Effect of Termination.  The termination of this Agreement shall not relieve either Party of its obligations to pay amounts of money due hereunder which accrued prior to such termination.  Upon termination, Operator shall promptly make available to Company its books and records relating to the Operated Assets.

 

Article IX

Alcohol and Controlled Substances

 

9.01                        Substance Abuse.  Operator shall prohibit the use, possession, distribution, sale or storage of illegal or controlled substances, and substance-related paraphernalia, by its personnel while performing Services hereunder or while located on Company premises.  Operator shall perform or cause to be performed all actions necessary for compliance with any applicable Laws pertaining to illegal or controlled substances, specifically including, but not limited to, the Drug-Free Workplace Act of 1988 (41 U.S.C. §§ 701-707) and DOT regulations applicable to operators of pipeline facilities subject to applicable 49 C.F.R. Part 199.  Unless prohibited by Law, Operator shall require all personnel who enter Company premises to consent to searches, whether performed by Company or appropriate law enforcement officials, of the vehicles and other personal effects of such personnel for monitoring the presence of any illegal or controlled substances or substance-related paraphernalia.  Company reserves the right, exercisable in Company’s sole discretion, to bar any of Operator’s personnel from performing Services hereunder, so long as such discretion is not exercised in violation of any governing Law.  Such discretion shall apply with respect to, but not be limited to, any personnel whom Company reasonably suspects to be involved with illegal or controlled substances, and such discretion shall not be unreasonably exercised.

 

Article X

Force Majeure

 

10.01                 Force Majeure.  If, because of an event of Force Majeure, either Party is rendered unable, wholly or in part, to carry out its obligations under this Agreement, other than the obligation to make

 

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money payments when due, and if such Party gives Notice and reasonably full particulars of such Force Majeure in writing to the other Party within a reasonable time after the occurrence of the cause relied upon, the Party giving such Notice, so far and to the extent that it is affected by such Force Majeure, shall not be liable in damages due to such Party’s failure to carry out its obligations under this Agreement; provided, however, that the cause of the event of Force Majeure shall be remedied with all reasonable dispatch.

 

10.02                 Meaning of “Force Majeure”.  As used herein, the term “Force Majeure” shall mean acts of God; strikes, lockouts or other industrial disturbances; acts of a public enemy, wars, blockades, insurrections, riots, epidemics, landslides, lightning, earthquakes, fires, storms, crevasses, subsidences, floods, washouts; arrests and restraints of the government, necessity for compliance with any court order, Law promulgated by any governmental authority having jurisdiction, either federal or state, civil or military; civil disturbances; shutdowns for purposes of necessary repairs; relocation or construction of facilities; breakage or accident to machinery or lines of pipe; the necessity for testing (as required by governmental authority or as deemed necessary by the testing Party for the safe operation thereof), the necessity of making repairs or alterations to machinery or lines of pipe; failure of surface equipment or pipelines; accidents, breakdowns, inability of either Party to obtain necessary material, supplies, permits or labor to perform or comply with any obligation or condition under this Agreement, or rights of way; and any other causes, whether of the kind herein enumerated or otherwise, which are not reasonably in the control of the Party claiming suspension.

 

10.03                 Strikes or Lockouts.  It is understood and agreed that the settlement of strikes or lockouts shall be entirely within the discretion of the Party having the difficulty and that the requirement in Section 10.01 that any event of Force Majeure shall be remedied with all reasonable dispatch shall not require the settlement of strikes or lockouts by acceding to the demands of an opposing party when such course is inadvisable in the discretion of the Party having the difficulty.

 

10.04                 Performance by Company or Third Parties.  If, because of an event of Force Majeure, Operator is unable to perform the Services required of it hereunder, Company may perform such Services itself or arrange for such Services to be performed by a third party, but only for the duration of such event of Force Majeure.

 

Article XI

Notices

 

11.01                 Notices.  Unless otherwise specifically provided herein, all Notices between the Parties given under or in relation to this Agreement shall be made in writing and shall be deemed to have been properly given if:  (a) personally delivered; (b) delivered and confirmed by telecopier or similar transmission service; (c) delivered by a reputable overnight courier delivery service; or (d) sent by certified United States mail (postage prepaid, return receipt requested), addressed as follows:

 

If to Carrier:                                                                                                                                                                            Phillips 66 Carrier LLC

2331 CityWest Blvd.

Houston, TX 77042

Attn: President

 

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If to Holdings:                                                                                                                                                                 Phillips 66 Partners Holdings LLC

2331 CityWest Blvd.

Houston, TX  77042

Attn: President

 

If to Operator:                                                                                                                                                                 Phillips 66 Pipeline LLC

2331 CityWest Blvd.

Houston, TX  77042

Attn: President

 

11.02                 Effective Date.  Any Notice given in the manner set forth in Section 11.01 shall be effective upon actual receipt if received during the recipient’s Normal Business Hours or at the beginning of the recipient’s next Business Day if not received during the recipient’s Normal Business Hours.

 

11.03                 Change of Address Notice.  Either Party may change its Notice address by giving notice to the other Party in the manner set forth in Section 11.01; provided, however, that no change of address Notice shall be effective until actually received by the other Party.

 

Article XII

Applicable Law

 

12.01                 Applicable Law.  REGARDLESS OF THE PLACE OF CONTRACTING, PLACE(S) OF PERFORMANCE, OR OTHERWISE, THE PROVISIONS OF THIS AGREEMENT AND ALL AMENDMENTS, MODIFICATIONS, ALTERATIONS OR SUPPLEMENTS HERETO SHALL BE GOVERNED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW OR ANY OTHER PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR INTERPRETATION OF THIS AGREEMENT TO THE LAW OF ANOTHER JURISDICTION.

 

Article XIII

Confidentiality

 

13.01                 Confidentiality.  During the performance of this Agreement, each Party acknowledges that it will receive confidential business and technical information from or regarding the other Party.  All information disclosed between the Parties will be deemed confidential, unless expressly designated otherwise at the time of disclosure.  The receiving Party agrees not to disclose to any third Person, except as permitted herein, any confidential information it receives from the disclosing Party.  The receiving Party agrees that it will not use the confidential information for any purpose other than the performance of this Agreement.  The receiving Party may disclose confidential information:  (a) when compelled by Law (but the receiving Party must notify the disclosing Party promptly of any request for such information before disclosing it, if practicable); and (b) only to those employees, advisers, consultants, or representatives of the receiving Party who have a need to know (provided that such Persons are obligated to the receiving Party in a manner consistent with the terms of this Section).  This Section will be inoperative as to particular portion of the confidential

 

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information if such information (i) is or lawfully becomes available to the public through no fault of the receiving Party; (ii) was available to the receiving Party on a non-confidential bas is prior to its disclosure to the receiving Party by the disclosing Party; (iii) becomes available to the receiving Party on a non-confidential basis from a source other than the disclosing Party when such source is entitled, to the best of the receiving Party’s knowledge, to make the disclosure to the receiving Party; or (iv) independently developed by or for the receiving Party by Persons who have not had access to the disclosing Party’s confidential information.

 

Article XIV

Disputes Between the Parties

 

14.01                 Dispute Resolution.  THIS AGREEMENT, AND ANY ACTIONS, CLAIMS, DEMANDS OR SETTLEMENTS HEREUNDER, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REFERENCE TO ANY CONFLICTS OF LAW PRINCIPLES WHICH MIGHT REQUIRE THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION.  EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL AND STATE COURTS (AS APPLICABLE) LOCATED IN HOUSTON, TEXAS, AND TO ALL COURTS COMPETENT TO HEAR AND DETERMINE APPEALS THEREFROM, AND WAIVES ANY OBJECTIONS THAT A SUIT, ACTION OR PROCEEDING SHOULD BE BROUGHT IN ANOTHER COURT AND ANY OBJECTIONS TO INCONVENIENT FORUM.

 

Article XV

Assignability

 

15.01                 Assignability.  This Agreement shall inure to the benefit of and shall be binding upon the Parties and their respective successors and assigns; provided, however, that neither this Agreement nor any of the rights, benefits or obligations hereunder shall be assigned, by operation of Law or otherwise, by either Party without the prior written consent of the other Party, which consent shall not be unreasonably withheld.  Except as provided for herein, nothing in this Agreement is intended to confer any rights, benefits or obligations upon any Person other than the Parties and their respective successors and assigns.

 

Article XVI

Compliance with Laws

 

16.01                 Compliance with Laws.  This Agreement is in all respects subject to all Laws.  The Parties shall at all times comply with all of these Laws as are applicable to their performance of this Agreement.  If applicable, the Parties shall comply with the provisions of Executive Order 11246 (Equal Employment Opportunity), as amended, together with all rules, regulations and relevant orders of the United States Department of Labor.  Notwithstanding the provisions of any other Section of this Agreement, Company shall have no liability hereunder for any fines, penalties, or other assessments by regulatory agencies if and to the extent such fines, penalties, or other assessments result from Operator’s sole negligence in performing its obligations hereunder.

 

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Article XVII

Severability

 

17.01                 Severability.  If any provision of this Agreement or the application thereof shall be found by any arbitral panel or court of competent jurisdiction to be invalid, illegal or unenforceable, to any extent and for any reason, it shall be adjusted rather than voided, if possible, in order to achieve the intent of the Parties.  In any event, the remainder of this Agreement and the application of such remainder shall not be affected thereby and shall be enforced to the greatest extent permitted by Law.

 

Article XVIII

Non-Waiver

 

18.01                 Non-Waiver.  The failure of either Party to enforce any provision, condition, covenant or requirement of this Agreement at any time shall not be construed to be a waiver of such provision, condition, covenant or requirement unless so notified by such Party in writing.  No waiver by either Party of any default by the other Party in the performance of any provision, condition, covenant or requirement contained in this Agreement shall be deemed to be a waiver of, or in any manner release such other Party from performance of any other provision, condition, covenant or requirement herein contained, nor be deemed to be a waiver of the same provision, condition, covenant or requirement.

 

Article XIX

Entire Agreement; Amendments

 

19.01                 Entire Agreement.  This Agreement, together with all exhibits attached hereto, constitutes the entire Agreement between the Parties relating to the subject matter hereof and it supersedes all prior and contemporaneous agreements, understandings, negotiations and discussions, whether oral or written, between the Parties relating to the subject matter hereof, and there are no warranties, representations or other agreements between the Parties in connection with the subject matter hereof except as specifically set forth in, or contemplated by, this Agreement.

 

19.02                 Amendments.  This Agreement shall not be modified or amended, in whole or in part, except by a written amendment signed by the Parties.

 

Article XX

Survival

 

20.01                 Survival. Any indemnification granted hereunder by one Party to another Party shall survive the termination of all or any part of this Agreement.

 

Article XXI
  Counterparts; Multiple Originals

 

21.01                 Counterparts; Multiple Originals.  This Agreement may be executed in any number of counterparts, all of which together shall constitute one agreement binding on the Parties.  Each of the Parties may sign any number of copies of this Agreement.  Each signed copy shall be deemed to be an original, but all of them together shall represent one and the same agreement.

 

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Article XXII
  Construction

 

22.01                 Construction.  The Parties have participated jointly in the negotiation and drafting of this Agreement.  In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring a Party by virtue of the authorship of any of the provisions of this Agreement.

 

Article XXIII
  Article Headings; Exhibits

 

23.01                 Article Headings.  The Article Headings used in this Agreement have been inserted only for convenience to facilitate reference and they shall not be determinative in construing the meaning, interpretation or application of any Article or provision hereof

 

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

 

[Signature page follows.]

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be signed by their duly authorized officers as of the date first set forth above.

 

 

	
 
    	
PHILLIPS 66 PIPELINE LLC
    
	
 
    	
(“Operator”)
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Todd Denton
    
	
 
    	
Todd Denton
    
	
 
    	
President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
PHILLIPS 66 CARRIER LLC
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Todd Denton
    
	
 
    	
Todd Denton
    
	
 
    	
President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
PHILLIPS 66 PARTNERS HOLDINGS   LLC
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ J.T. Liberti
    
	
 
    	
J.T. Liberti
    
	
 
    	
Vice President
    

 

Signature Page to Amended and Restated Operational Services Agreement

 

 

Exhibit A
   Description of Operated Assets

 

Attached to and made a part of that certain Amended and Restated Operational Services Agreement (the “Agreement”), dated October 1, 2017, by and among Phillips 66 Carrier LLC, Phillips 66 Partners Holdings LLC and Phillips 66 Pipeline LLC

 

Crude Oil Pipelines

 

Clifton Ridge to Lake Charles Refinery — a 20” crude oil pipeline extending from the Clifton Ridge marine terminal to the Lake Charles Refinery in Calcasieu Parish, Louisiana.

 

Pecan Grove to Clifton Ridge — a 12” crude oil pipeline extending from the Pecan Grove marine terminal to the Clifton Ridge marine terminal in Calcasieu Parish, Louisiana.

 

Shell to Clifton Ridge — a 20” crude oil pipeline extending from Shell’s Houma to Houston pipeline to the Clifton Ridge marine terminal in Calcasieu Parish Louisiana.

 

CushPo — a 18” crude oil pipeline extending from Phillips 66 Carrier LLC’s, Cushing Crude Terminal in Cushing, Oklahoma to Phillips 66 Carrier LLC’s Ponca Crude Terminal in Ponca City, Oklahoma.

 

Glacier Pipeline System — a multi-diameter crude oil pipeline system extending from the United States-Canadian border near Carway, Alberta to the Billings ExxonMobil Refinery in Billings, Montana.

 

Line O — a 10” crude oil pipeline extending from Phillips 66 Partners Holdings LLC’s Buxton Crude Terminal in Cushing, Oklahoma to the Borger Refinery located in Borger, Texas

 

Line WA — a multi-diameter crude oil pipeline extending from the Odessa Station near Goldsmith, Texas to the Borger Refinery located in Borger, Texas.

 

Line 80 — a 8” crude oil pipeline extending from Gains Station near Hobbs, New Mexico to the Borger Refinery located in Borger, Texas.

 

North Texas Gathering Pipeline System — a multi-diameter crude oil pipeline system that gathers products in the various fields of North Texas and transports products to the Wichita Falls Station in Wichita Falls, Texas.

 

Oklahoma Mainline Pipeline System - a 12” crude oil pipeline extending from the Wichita Falls Station in Wichita Falls, Texas to Phillips 66 Carrier LLC’s Ponca Crude Terminal in Ponca City Oklahoma.

 

West Texas Gathering —a multi-diameter crude oil pipeline system that gathers crude oil in the various fields of West Texas to supply Line WA and Line 80.

 

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Refined Product Pipelines

 

Sweeny to Pasadena — a 12” refined products pipeline extending from the Sweeny Refinery in Brazoria County, Texas to the Pasadena terminal in Harris County, Texas.

 

Sweeny to Pasadena — a 18” refined products pipeline extending from the Sweeny Refinery in Brazoria County, Texas to the Pasadena terminal in Harris County, Texas.

 

Wood River to Hartford — a 12” refined products pipeline extending from the Wood River Refinery in Madison County, Illinois to the Hartford terminal in Madison County, Illinois.

 

Hartford to Explorer — a 24” refined products pipeline extending from the Hartford terminal in Madison County, Illinois to the Explorer Pipeline system in Madison County, Illinois.

 

Gold Line — a multi-diameter refined products pipeline system extending from the Rocky Station fence line at Phillips 66 Pipeline LLC’s Borger Products Terminal in Borger, Texas to terminal facilities located in Wichita, Kansas; Paola, Kansas; Kansas City, Kansas; Jefferson City, Missouri; and Cahokia, Illinois.

 

Cross Channel Connector — a 20” refined products pipeline extending from the Pasadena Terminal in Pasadena, Texas to terminal facilities located at Kinder Morgan’s Pasadena Terminal and the Galena Park Station in Galena Park, Texas, and terminating at the Holland Avenue Junction in Galena Park, Texas.

 

Standish Pipeline — a 18” refined products pipeline extending from the Ponca City Refinery in Ponca City, Oklahoma to the Wichita North Terminal in Wichita, Kansas.

 

ATA Pipeline - a multi-diameter refined products pipeline extending from the Amarillo Terminal in Amarillo, Texas to the Albuquerque Terminal in Albuquerque, New Mexico.

 

BAM Pipeline — a multi-diameter refined products pipeline extending from the Borger Refinery in Borger, Texas to the Amarillo Terminal in Amarillo, Texas.

 

Cherokee East — a multi-diameter refined products pipeline system extending from the Ponca City Refinery in Ponca City, Oklahoma to terminal facilities in Jenks, Oklahoma and Mount Vernon, Missouri.

 

Cherokee North — a multi-diameter, two-leg refined products pipeline system extending from the Ponca City Refinery in Ponca City, Oklahoma to the Arkansas City Junction in Arkansas City, Oklahoma and the 21st Street Junction in Wichita, Kansas.

 

Cherokee South — a 8”, multi-leg refined products pipeline system extending from the Ponca City Refinery in Ponca City, Oklahoma to the Oklahoma City Terminal in Oklahoma City, Oklahoma, the Will Rogers Airport in Oklahoma City, Oklahoma and Tinker Air Force Base in Oklahoma City, Oklahoma.

 

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Medford Triangle — a multi-diameter, multi-leg refined products pipeline system extending from the Ponca City Refinery in Ponca City, Oklahoma to the Medford Storage Spheres in Medford, Oklahoma and the Oneok Terminal in Medford, Oklahoma.

 

SAAL Pipeline - a 6” refined products pipeline extending from the Amarillo Terminal in Amarillo, Texas to the Lubbock Terminal in Lubbock, Texas.

 

Seminoe Pipeline — a 8” refined products pipeline extending from the Billings Refinery in Billings, Montana to terminal facilities in Sheridan, Wyoming and Casper, Wyoming and to the Tisdale Junction and Sinclair Junction in Wyoming.

 

Other Pipelines

 

River Parish Pipeline System — a refined products pipeline system and associated facilities located in any one or more of the following nine (9) parishes: Ascension, Assumption, Iberville, Jefferson, Lafourche, Plaquemines, St. Charles, St. James, and St. John the Baptist, and including approximately 300 miles of multi-diameter pipeline (formerly the “Texaco Expanded NGL Distribution System” or “TENDS”), approximately eighty-six (86) miles of regulated pipeline comprised of one 8-inch to 20-inch diameter pipeline (formerly the “VP Pipeline”), and approximately one hundred thirteen (113) miles of regulated pipeline comprised of one 6-inch to 8-inch diameter pipeline (formerly the “EP Pipeline”).  The system includes approximately fifteen (15) miles of idled pipeline and segments of approximately ten (10) miles of 8-inch abandoned pipeline.

 

Terminals

 

Hartford Terminal.  Hartford Terminal is located at or near Hartford, Illinois.  The facility consists of a two-bay truck rack with 17,000 barrels of active terminal ling capacity, 13 above-ground storage tanks with approximately 1.1 million barrels of total storage capacity.  The Hartford barge dock consists of a single-berth barge loading facility, approximately 0.8 miles of 8-inch pipeline and approximately 0.8 miles of 14-inch pipeline from the Hartford terminal to the Hartford barge dock for delivery.

 

Pasadena Terminal.  Pasadena Terminal is located at or near Pasadena, Texas and consists of a five-bay truck rack and tankage with 65,000 barrels per day of active terminal ling capacity, 22 above ground storage tanks with approximately 3.2 million barrels of total storage capacity and a vapor combustion unit.

 

Clifton Ridge Terminal.  Clifton Ridge Terminal is located at or near Sulphur, Louisiana and consists of a single-berth ship dock, 12 above-ground storage tanks with approximately 3.4 million barrels of total storage capacity and a truck offloading facility.

 

Pecan Grove Terminal.  Pecan Grove terminal is adjacent to the Clifton Ridge Terminal.  The facility consists of a single-berth barge dock and three above-ground storage tanks with 142,000 barrels of total storage capacity.

 

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Wichita North Terminal. Wichita North Terminal is located in Wichita, Kansas adjacent to the Gold Line pipeline system.  It consists of a two bay truck rack with 12,000 barrels of total storage capacity.

 

Paola Terminal. Paola Terminal is located in Paola, Kansas adjacent to the Gold Line pipeline system.  It consists of 98,000 barrels of total storage capacity.

 

Kansas City Terminal.  Kansas City Terminal is located in Kansas City, Kansas adjacent to the Gold Line pipeline system.  It consists of a five bay truck rack with 66,000 barrels of total storage capacity.

 

Jeff City Terminal. Jeff City Terminal is located in Jefferson City, Missouri adjacent to the Gold Line pipeline system.  It consists of a two bay truck rack with 16,000 barrels of total storage capacity.

 

East St. Louis Terminal. East St. Louis Terminal is located in Cahokia, Illinois adjacent to the Gold Line pipeline system.  It consists of a six bay truck rack with 78,000 barrels of total storage capacity.

 

Bayway Terminal. Bayway Terminal is located in Linden, New Jersey adjacent to the Bayway Refinery.  It consists of a four-track, 120 rail car crude oil receiving facility with a planned unloading capacity of 75,000 barrels per day that delivers crude oil to storage tanks at the adjacent refinery.

 

Ferndale Terminal. Ferndale Terminal is located in Ferndale, Washington adjacent to the Ferndale Refinery.  It consists of a two-track, 54 rail car crude oil receiving facility with a planned unloading capacity of 30,000 barrels per day that delivers crude oil to storage tanks at the adjacent refinery.

 

Albuquerque Terminal. Albuquerque Terminal is located in Albuquerque, New Mexico, adjacent to the ATA Pipeline. It consists of a three-bay truck rack with 232,000 barrels of total storage capacity.

 

Amarillo Terminal. Amarillo Terminal is located in Amarillo, Texas, adjacent to the BAM Pipeline, the SAAL Pipeline and the ATA Pipeline. It consists of a five-bay truck rack with 268,000 barrels of total storage capacity.

 

Billings Crude Terminal. Billings Crude Terminal is located in Billings, Montana, at the Phillips 66 Company Billings Refinery. It consists of 245,000 barrels of total storage capacity.

 

Buffalo Terminal. Buffalo Terminal is located near Buffalo Montana.  It consists of two meter skid units, three injection pumps and two crude tanks with approximately 300,000 barrels of total storage capacity.

 

Buxton Terminal.  Buxton Terminal is located in Cushing, Oklahoma.  It consists of two crude storage tanks with a total capacity of 400,000 barrels.

 

Casper Terminal. Casper Terminal is located in Casper, Wyoming adjacent to the Seminoe Pipeline. It consists of a two bay-truck rack with 300,000 barrels of total storage capacity.

 

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Cushing Terminal. Cushing Terminal is located in Cushing, Oklahoma.  It consists of one tank with a lease automatic custody transfer unit and two storage tanks with a total storage capacity of 220,000 barrels.

 

Glenpool Terminal.  Glenpool Terminal is located in Jenks, Oklahoma adjacent to the Cherokee East pipeline system. It consists of a two-bay truck rack with 514,000 barrels of total storage capacity.

 

Linden Terminal. Linden Terminal is located Linden, New Jersey.  It consists of a nine-bay refined products truck rack and a three-bay NGL truck rack with 331,000 barrels of refined products storage.

 

Lubbock Terminal. Lubbock Terminal is located in Lubbock, Texas adjacent to the SAAL Pipeline.  It consists of a three-bay truck rack with 176,000 barrels of total storage capacity.

 

Mount Vernon Terminal.  Mount Vernon Terminal is located in Mount Vernon, Missouri, adjacent to the Cherokee East pipeline system.  It consists of a four-bay refined products truck rack and a two-bay NGL truck rack with 359,000 barrels of refined products storage capacity and 118,000 barrels of NGL storage capacity.

 

Oklahoma City Terminal.  Oklahoma City Terminal is located in Oklahoma City, Oklahoma adjacent to the Cherokee South pipeline system. It consists of a four-bay truck rack with 290,000 barrels of total storage capacity.

 

Ponca City Terminal.  Ponca City Terminal is located in Ponca City, Oklahoma adjacent to the Ponca City Refinery. It consists of a two-bay refined products truck rack and a two-bay NGL truck rack with 2,500 barrels of refined products storage capacity.

 

Ponca Crude Terminal. Ponca Crude Terminal is located in Ponca City, Oklahoma.  It consists of three lease automatic custody transfer units and 15 above-ground crude oil storage tanks with approximately 1.2 million barrels of total storage capacity.

 

Sheridan Terminal. Sheridan Terminal is located in Sheridan, Wyoming adjacent to the Seminoe Pipeline. It consists of a two-bay truck rack with 94,000 barrels of total storage capacity.

 

Tremley Point Terminal. Tremley Point Terminal is located in Linden, New Jersey. It consists of a three-bay refined products truck rack, 1,400,000 barrels of total storage capacity and a dock facility consisting of two vessel berths.

 

Wichita South Terminal.  Wichita South Terminal is located in Wichita, Kansas adjacent to the Cherokee North pipeline system. It consists of 230,000 barrels of total storage capacity.

 

Storage Facilities

 

Medford Storage Spheres.  Medford Storage Spheres are two above ground storage facilities located at the Central Division pipeline facility in Medford, Oklahoma.   The working capacity of each

 

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sphere is 35,000 barrels, and the spheres are capable of receiving and storing natural gas liquids and petrochemicals, including refinery grade propylene.

 

Storage Tank Nos. 1001, 1002 and 1004 at the Wichita North Terminal.  These storage tanks have a nominal shell capacity of 107,000 barrels, 107,000 barrels, and 108,000 barrels, respectively.

 

Storage Tank Nos. 8005 and 8010 at the Kansas City Terminal.  These storage tanks have a nominal shell capacity of 80,000 barrels and 101,000 barrels, respectively.

 

Storage Tank Nos. 1503, 2001, 1302 at the East St. Louis Terminal. These storage tanks have a nominal shell capacity of 172,000 barrels, two hundred thousand 200,000 barrels and 135,000 barrels, respectively.

 

Storage Tank No. 4901 at the Paola Terminal. This storage tank has a nominal shell capacity of 98,000 barrels.

 

Storage Tank Nos. 6813 and 6818 at the East St. Louis Terminal. Each of these storage tanks has a nominal shell storage capacity of 80,000 barrels.

 

Clemens Facility. The Clemens Facility includes underground salt dome storage caverns for LPG storage, brine ponds, a leach plant, multiple buildings, associated pipes/pumps, water supply wells, associated properties, and off-site disposal wells. These facilities are located near Brazoria, Texas. Products produced at the Sweeny Fractionator are stored in the underground caverns and then transported via pipeline to the Freeport LPG Export Terminal or the Mount Belvieu market hub.

 

Sorrento Storage Facility. The Sorrento Storage Facility includes the Sorrento underground salt dome storage caverns, all pumps, topside facilities, and an out-of-service brine pit located in Ascension Parish, Louisiana. The caverns consist of one cavern in active LPG storage service, two inactive caverns, and one plugged and abandoned cavern.

 

Refinery and Natural Gas Liquid Facilities

 

Sweeny Fractionator. The Sweeny Fractionator is a Natural Gas Liquid fractionation facility located in Old Ocean, Texas, close to the Sweeny Refinery. The Sweeny Fractionator includes the associated cooling tower (G0054022) and flare (G0056044), the substation (G006010), and the offplots (G0068044). It processes y-grade (mixed natural gas liquids) and produces purity ethane, propane, isobutane, normal butane and natural gasoline (C5+) for sale in local petrochemical markets or to supply the Freeport LPG Export Terminal.

 

Merey Sweeny Coker Facility. The Merey Sweeny Coker Facility is comprised of a petroleum coke producing facility comprised of a vacuum dilation unit, a 58,000 bpd, two (2) train, four (4) coke drum delayed coker unit, flare, cooling tower with five (5) bays, instrument air skid with two compressors, certain underground facilities for firewater and sewer services, and tanks for intermediate storage of vacuum resid at the solid waste disposal facility, each located within the Sweeny Refinery Complex near Old Ocean, Texas. Incoming atmospheric resid feed is processed through heaters and coke drums to produce coke for sale in local markets. Other products separated

 

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from the resid during the coke producing process are sent for further processing in other facilities in the Sweeny Complex.

 

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Exhibit B
  Maintenance Services

 

Attached to and made a part of that certain Amended and Restated Operational Services Agreement (the “Agreement”), dated October 1, 2017, by and among Phillips 66 Carrier LLC, Phillips 66 Partners Holdings LLC and Phillips 66 Pipeline LLC

 

(a)                                 Day-to-day routine and emergency supervision, administrative liaison and related services required in connection with the maintenance and repair of the Operated Assets.

 

(b)                                 Provision of communications, inspection, surveillance, flow control, corrosion control, and monitoring.

 

(c)                                  Maintenance and repair of the Operated Assets within such maintenance/repair parameters and specifications as may be in accordance with sound engineering and maintenance practices and applicable Laws.

 

(d)                                 Implementation of a preventative maintenance program for the Operated Assets, including, without limitation, periodic testing, adjustment and maintenance of the Operated Assets, in each case in accordance with prudent maintenance practices and applicable Laws.

 

(e)                                  Implementation of a tank maintenance and integrity program for the Operated Assets, including, without limitation, periodic testing, maintenance, repair and/or replacement in each case in accordance with prudent maintenance practices and applicable Laws.

 

(f)                                   Implementation of a marine facility maintenance and integrity program for the Operated Assets, including, without limitation, dredging, maintenance, repair, and/or replacement in each case in accordance with prudent maintenance practices and applicable Laws.

 

(g)                                  Preparation and retention of appropriate records and logs as required by applicable Laws and that a prudent provider of maintenance services would maintain regarding the Operated Assets, which records and logs shall be made available to Company upon request.

 

(h)                                 Reconstruction, reconditioning, overhaul or replacement of the Operated Assets.

 

(i)                                     Establishment of safety, health, environmental, training, emergency response, spill response and other programs in connection with the maintenance and repair of the Operated Assets, in each case as may be required by prudent maintenance practices or under applicable Laws.

 

(j)                                    Providing technical services for purposes of trouble-shooting problems, improving Operated Assets performance, upgrading the Operated Assets, repairing the Operated Assets or meeting regulatory or safety requirements.

 

(k)                                 Maintaining compliance with all applicable federal, state and local environmental, health and safety Laws; in addition, conducting all environmental investigation and remediation activities, as required by federal, state and local environmental Laws and/or prudent business practices.

 

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(l)                                     Facilitate the acquisition of all materials (including spare parts inventories), equipment, services, supplies and labor necessary for the maintenance and repair of the Operated Assets.

 

(m)                             Perform all planning, design and engineering functions related to the maintenance and repair of the Operated Assets; selecting contractors and material suppliers for such activities.

 

(n)                                 Advise Company of major plans or significant changes in the maintenance or repair of the Operated Assets.

 

(o)                                 Close pipeline valves in connection with a response to any emergency affecting the Operated Assets. The pipelines shall remain down until such time that it is determined safe by Company (in consultation with Operator) to resume operation. For normal scheduled maintenance, Operator will provide Company with sufficient advance Notice for Company’s planning purposes.

 

(p)                                 Prepare excavation plans for pipeline right-of-way work, and advise Company of any right-of-way work which could threaten the integrity of the pipelines.

 

(q)                                 Such other Operated Assets maintenance, repair and related services as Company may request from time to time.

 

(r)                                    The Maintenance Services to be performed by Operator hereunder shall include, but shall not be limited to, pipeline repairs, terminal repairs, aerial pipeline patrols, population density counts, right-of-way maintenance, gas leakage surveys, pipeline pigging operations, cathodic protection work as required by all governmental regulatory agencies, tank cleaning, tank repair and truck rack maintenance. Operator will maintain suitable meter station, valve inspection and meter proving maintenance programs. Any operating or maintenance deficiencies so discovered in the Operated Assets, or any appurtenances thereto, will be corrected by Operator. Operator will provide inspectors for monitoring work performed by others in the vicinity of the Operated Assets.

 

(s)                                   Right-of-Way maintenance shall include, but not be limited to, filling of washes, mowing weeds and brush, and repair fences. In all cases where Company’s pipelines are exposed above the ground, fences, barricades or other suitable protection shall be erected to protect the pipelines and associated equipment from damage due to mowers, trucks or other vehicles. In the event that any known excavation is to be performed in the vicinity of Company’s pipelines by Operator or third parties, Operator shall locate, flag and identify the pertinent lines. Operator shall also provide a qualified inspector on-site during periods of construction activity. If a Company pipeline should be damaged, a prompt report shall be forwarded to Company describing the incident, extent of damage, and recommended course of action.

 

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Exhibit C
  Operating Services

 

Attached to and made a part of that certain Amended and Restated Operational Services Agreement (the “Agreement”), dated October 1, 2017, by and among Phillips 66 Carrier LLC, Phillips 66 Partners Holdings LLC and Phillips 66 Pipeline LLC

 

(a)                                 Day-to-day routine and emergency supervision of the operation of the Operated Assets.

 

(b)                                 Operation of the Operated Assets’ pump stations and other facilities within such operating parameters and specifications as may be in accordance with sound engineering and operating practices and applicable Laws.

 

(c)                                  Preparation and retention of appropriate records and logs as required by applicable Laws and that a prudent provider of operating services would maintain regarding the Operated Assets, which records and logs shall be made available to Company upon request.

 

(d)                                 Operator shall perform monitoring and control services (SCADA) for the pipelines included in the Operated Assets. Operator shall be responsible for the maintenance of the pipeline meter station equipment required for performance of monitoring and control services, product analysis, and custody transfer measurements in accordance with Company requirements and/or generally accepted industry practices.

 

(e)                                  Operator shall conduct the actual operations and maintenance of the Operated Assets in accordance with the directions for product and feedstock movements given by Company, and shall employ such of its own or outside personnel as may be necessary to perform this operation and maintenance.

 

(f)                                   Determine net volume received and delivered by utilizing measurement facilities comprised of components of standard make, installed, operated and maintained in accordance with the latest edition of the American Petroleum Institute Manual of Petroleum Measurement Standards and standard industry practices, and reconcile book inventory with actual inventory.

 

(g)                                  Payment of damages in accordance with Section 2.06 of the Agreement occurring as a result of, or settlement of, claims made in connection with the Operated Assets and Operator’s operation, maintenance and repair activities.

 

(h)                                 Operator shall include the operation of the pipeline meter stations, including calibration of measurement and product analysis equipment, operation of booster pumps, providing custody measurement as required by Company and the coordination of product and feedstock movements as directed by Company. Operator will provide sufficient on-the-job and outside training to its employees and contractors operating and maintaining the Operated Assets for the operation thereof in a safe and efficient manner in accordance with applicable Operator and governmental rules and regulations and Laws. Operator shall prepare, file and renew, as applicable, all operating licenses and/or permits as directed by Company. Operator shall also

 

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be responsible for arranging for payment of any fees in regard to operation of the Operated Assets.

 

(i)                                     Operator will close pipeline valves in connection with a response to any emergency involving the Operated Assets. The pipelines shall remain down until such time as it is deemed safe by Company (in consultation with Operator) to resume operation.

 

(j)                                    Operation of the Operated Assets’ rail car receiving facilities within such operating parameters and specifications as may be in accordance with sound engineering and operating practices and applicable Laws.

 

(k)                                 Perform rail car inspections at Operated Assets, where applicable. For rail cars owned by Operator or its Affiliates, perform onsite running repairs on the following: break shoes and keys, air hose and air hose hangers, end running board welds, end still weld and loose platforms, knuckles, lock blocks, thowers, pins, cotter key replacement in break rigging, replacement of top and bottom outlet cover secure chains, replacement and/or securing of appliance bolts, securing of bottom and top railing, air hose replacement, tool tighten and torque packing nuts, manway gaskets, handhold, sill steps and end and side rails.

 

(l)                                     Such other operating services as Company may request from time to time.

 

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Exhibit D
  Administrative Services

 

Attached to and made a part of that certain Amended and Restated Operational Services Agreement (the “Agreement”), dated October 1, 2017, by and among Phillips 66 Carrier LLC, Phillips 66 Partners Holdings LLC and Phillips 66 Pipeline LLC

 

(a)                                 As directed by Company, preparation, filing and renewal, as applicable, of tariffs with FERC and/or state agencies.

 

(b)                                 As directed by Company, preparation and filing of permits, permit updates, and other documents required by any regulatory body or government agency, federal, state or local, if any, having jurisdiction over Operator, Company or their respective businesses.

 

(c)                                  Maintain fixed asset records of the Operated Assets and/or other regulated pipeline systems or terminals that Operator may operate upon request by Company and acceptance by Operator.

 

(d)                                 Product quality and assurance.

 

(e)                                  Such other administrative services as Company may request from time to time.

 

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Exhibit E
  Construction Services

 

Attached to and made a part of that certain Amended and Restated Operational Services Agreement (the “Agreement”), dated October 1, 2017, by and among Phillips 66 Carrier LLC, Phillips 66 Partners Holdings LLC and Phillips 66 Pipeline LLC

 

(a)                                 Construction, reconstruction, reconditioning, overhaul and replacement of Operated Assets and their related facilities.

 

(b)                                 Provide such oversight and management services as may be necessary in connection with the activities described in item (a) above.

 

(c)                                  Perform all planning, design and engineering functions related to the activities described in item (a) above as may be necessary.

 

(d)                                 Facilitate the acquisition of all materials, equipment, services, supplies and labor necessary for and related to the activities described in item (a) above.

 

(e)                                  Prepare and/or assist in the preparation of capital project (AFE) documents for approval by Company.

 

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Exhibit F
  Accounting Procedures

 

Attached to and made a part of that certain Amended and Restated Operational Services Agreement (the “Agreement”), dated October 1, 2017, by and among Phillips 66 Carrier LLC, Phillips 66 Partners Holdings LLC and Phillips 66 Pipeline LLC

 

This Exhibit shall govern the Accounting Procedures with regard to the billing and/or reimbursement of costs incurred by Operator in connection with the performance by Operator of the Services pursuant to the Agreement. These Accounting Procedures shall be effective from the date hereof until replaced or modified by mutual agreement of the Parties.

 

1.                                      General Provisions

 

(a)                                 Statements and Billings.  Operator shall record Company’s financial transactions resulting from the Agreement in Operator’s financial system and allow Company to access its records in that system.

 

(b)                                 Payments by Company.  Company shall pay all charges from Operator in accordance with Section 3.05 of the Agreement.

 

(c)                                  Adjustments.  Except as otherwise provided in the Agreement, the actual payment of any such bills shall not prejudice the right of Company to protest or question the correctness or appropriateness thereof; provided, however, that all bills and statements rendered to Company during any calendar Year shall conclusively be presumed to be true and correct after twenty-four (24) Months following the end of any such calendar Year, unless prior to the end of said twenty-four (24) Month period Company takes written exception thereto and makes a claim against Operator for adjustment.

 

(d)                                 Financial Records.  Operator shall maintain accurate books and records in accordance with GAAP (as may be modified by FERC requirements) and in accordance with the prescribed accounting requirements or system of accounts mandated by any regulatory body or government agency, both federal and state, if any, having jurisdiction over Operator, Company, or their respective businesses.

 

2.                                      Determination of Costs, Expenses and Expenditures.  Subject to the limitations and determinations hereinafter prescribed and the provisions of the Agreement, Operator shall be reimbursed for all costs, expenses, expenditures and fees by or on behalf of Operator in connection with the provision of the Services. Such reimbursement shall include any necessary Direct Costs (as defined in Paragraph 3 below) and the applicable portion of the Management Fee (as defined in the Omnibus Agreement).

 

(a)                                 It is the intent of the Parties that Services provided by employees of Operator shall be budgeted and billed by Operator on a Direct Cost basis pursuant to Section 3.03(a) of the Agreement to the extent that is feasible to measure and account for the Services directly provided by such employees to Operator by means of time sheets or other methods approved

 

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by Company. Direct Costs billed to Company shall normally include field operation and maintenance personnel, administrative personnel supporting Company on a full time or near full time basis, and Home Office personnel (such as engineering and drafting personnel) typically assigned directly to Company-related projects whose time is accounted for by time sheets or other methods approved by Company.

 

(b)                                 It is the intent of the Parties that routine, ongoing Services (Home Office Overhead, General and Administrative Costs (hereinafter “G&A Costs”)) benefiting Company that are not feasible to measure and account for on a Direct Cost basis shall be billed by Operator as part of the Operational and Administrative Services Fee under the Omnibus Agreement.

 

(c)                                  It is the intent of the Parties that any G&A Costs associated with Company capital projects be billed as a Direct Cost and submitted as a line item on capital appropriations submitted by Operator to Company for approval. Such G&A Costs shall not be included in the Operational and Administrative Services Fee under the Omnibus Agreement.

 

(d)                                 Operator reserves the right to submit for Company review and approval unusual G&A Costs that do not fit normal business billing patterns. Such costs might be for items that in Operator’s judgment are outside the scope of the Administrative Fee work such as engineering and drafting. (An example of this might be Operator’s attorney devoting several weeks exclusively to Company to handle a Company related issue.)

 

3.                                      Direct Costs.  Reimbursement of Operator shall include, but shall not be limited to, the right to reimbursement for the following Direct Costs:

 

(a)                                 Labor and Benefits.

 

(i)                                     Salaries and wages of Operator’s employees (or employees of Operator’s Affiliate) directly assigned to the operation, maintenance, project work, or other work relating to Operated Assets, including that portion of such employees’ time related to ancillary activities such as training required by Operator, and in any other activities required of Operator pursuant to the Agreement.

 

(ii)                                  Operator’s costs of all payroll taxes, and benefits and allowances and any other payment paid or contributed by Operator which is measured by Operator’s employees’ compensation; the above to include without limitation F.I.C.A., Operator’s costs of holiday, vacation, sickness and disability and other customary allowances, Operator’s current costs of established plans for employees’ group life insurance, hospitalization, retirement, stock purchase, and other benefit plans of a like nature. Such costs will be charged on a percentage assessment rate on the amount of salaries and wages chargeable to Company under Paragraph 3(a)(i) above. The percentage assessment rate shall be based on Operator’s actual cost experience. Company payment to Operator for Operator’s workers’ compensation insurance premium is provided for in Paragraph 3(h) below and not in this Paragraph 3(a)(ii).

 

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(b)                                 Plant, Property and Equipment.  The cost of plant, property and equipment purchased, leased or rented from suppliers and vendors expressly for the purpose of providing Services to Company under the Agreement.

 

(c)                                  Materials, Supplies, Tools and Miscellaneous Equipment.  Any materials, supplies, tools and miscellaneous equipment purchased or furnished by Operator for the benefit of Company shall be priced at cost. Equipment provided by Company warehouse shall be priced at replacement value. For equipment or materials that are transported to a location by Operator for the benefit of Company, any costs or expenses incurred by Operator in connection therewith shall be reimbursed at cost. Operator shall make reasonable efforts to ensure costs for such materials, supplies, tools and miscellaneous equipment are compatible with industry norms.

 

(d)                                 Reimbursable Expenses of Employees.  Operator shall bill Company for reasonable personal expenses of its (or its Affiliates’) employees whose salaries, wages and labor costs are chargeable under Paragraph 3(a)(i) above. Such reasonable personal expense shall include out-of-pocket expenditures incurred by employees in the performance of their duties on behalf of Company and which were reimbursed under the terms of Operator’s official policy governing reimbursable employee expenses.

 

(e)                                  Autos, Trucks and Heavy Mobile Work Equipment.  All automotive, truck and other mobile equipment shall be charged on a direct charge basis that is consistent with Operators practices in charging such costs to its own facilities. When a driver or operator is furnished with any such equipment, the rental rate of such equipment shall not include wages and expenses of the driver or operator if they will be charged separately.

 

(f)                                   Permits, Licenses and Bond.  Cost of permits, licenses and bond premiums necessary to perform and provide Services for the Operated Assets.

 

(g)                                  Outside Services.  The cost of outside services and expertise, including but not limited to engineering, fees from consultants on regulatory matters, provided that the outside services rendered were for the benefit of Company under the Agreement, including the cost of contract services required or necessary in the opinion of Operator in connection with the provision of the Services. Operator shall make reasonable efforts to ensure costs for such services are competitive with industry norms.

 

(h)                                 Insurance.  Workers’ compensation insurance premiums paid or allocated as respects Operator’s employees performing Services under the Agreement, not to exceed state manual rates for such insurance on a guaranteed cost basis and charged as an amount per $100 of payroll.

 

(i)                                     Utilities, Communication and Power.  All costs incurred by Operator on behalf of Company for utility, communication and power services, plus fuel costs.

 

(j)                                    Maintenance and Repair.  All costs incurred to maintain the Operated Assets and related facilities, periodically inspect the Operated Assets for damages or other conditions that could

 

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affect the safe, efficient and economical operation of the Operated Assets, and perform such repairs to the Operated Assets as may be required.

 

(k)                                 Legal Expenses and Claims.  (i) All costs and expenses, net of insurance proceeds, of handling, investigating and settling litigation or Claims arising by reason of the provision of the Services, or necessary to protect or recover any of Company’s property, including, but not limited to, attorneys’ fees, court costs, cost of investigation or procuring evidence and any judgments paid or amounts paid in settlement or satisfaction of any such litigation or claims. (Note: a “baseload” level of in-house legal assistance for Company is provided and is included by Operator in the Operational and Administrative Services Fee under the Omnibus Agreement.)

 

(l)                                     Damages and Losses to Operated Assets.  To the extent not covered by insurance, all costs or expenses necessary for the repair or replacement of the Operated Assets made necessary because of damages or losses incurred by fire, floods, earthquake, storm, theft, chemicals spills, accident, or other cause, except those costs or expenses which Operator is liable for pursuant to Article VI of the Agreement to which this Exhibit is attached. Operator shall furnish Company Notice of damages or losses incurred as soon as practicable after a report thereof has been received.

 

(m)                             Right-of-Way Costs.  The costs of rights-of-way and land purchases, damages and appraisals, and legal, regulatory and permit fees specifically related thereto.

 

(n)                                 Taxes.  All Taxes of every kind and nature assessed or levied upon or incurred in connection with the Operated Assets that have been paid by Operator for the benefit of Company, including any charges or penalties for late payment thereof, provided such late charge or fee did not arise from Operator’s gross negligence of willful misconduct in the filing and payment of the appropriate Tax.

 

(o)                                 Regulatory Costs.  The cost of complying with mandated regulatory programs, including, but not limited to, DOT operator qualification training.

 

(p)                                 Other Expenditures.  Any other expenditure not covered or dealt with in the foregoing provisions of Paragraphs 3(a) through (o), and that is incurred by Operator in the necessary and proper conduct of the Services, and that may be captured and billed to Company on a Direct Cost basis.

 

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Exhibit G
   Coverage of Louisiana Workers’ Compensation Law

 

Attached to and made a part of that certain Amended and Restated Operational Services Agreement (the “Agreement”), dated October 1, 2017, by and among Phillips 66 Carrier LLC, Phillips 66 Partners Holdings LLC and Phillips 66 Pipeline LLC.

 

The following provisions and terms shall apply in all cases where employees of Operator and its Affiliates (“employees” defined to include direct, borrowed, special, seconded or statutory employees) are covered by the Louisiana Workers’ Compensation Law, Louisiana Revised Statutes (“La. R.S.”) 23:1021 et seq, as to Work or services performed under this Agreement:

 

1.             In all cases where employees (as defined above) are covered by the Louisiana Workers’ Compensation Law, La. R.S. 23:1021 et seq., Company and Operator agree that the work and operations performed by Operator and its employees pursuant to the Agreement are an integral part of and are essential to the ability of Company and its Affiliates to generate goods, products and services, and that Operator’s work and services shall be considered part of Company’s and its Affiliates trade, business, and occupation, for purposes of La. R.S. 23:1061. Furthermore, Company and Operator agree that Company and its Affiliates are the principal or statutory employer of Operator’s employees for purposes of La. R.S. 23:1061 only. Irrespective of Company’s and its Affiliates’ status either as the principal or statutory employer or as the special employer (as defined in La. R.S. 23:1031) of Operator’s employees, and regardless of any other relationship or alleged relationship between Company and Operator’s employees, Operator shall be and remain at all times primarily responsible for the payment of Louisiana workers’ compensation benefits to such employees. This Exhibit is limited to and shall apply only in and to the extent of instances involving coverage of the Louisiana Worker’s Compensation Law.

 

2.             Notwithstanding any other provision of this Agreement, Operator shall, in addition to and without limitation of other insurance requirements, under all circumstances cause insurance described in Article VII of the Agreement to be endorsed to designate, protect, and insure Company and its Affiliates in any employment or alleged employment capacity including, but not limited to, as an alternate employer, as a principal and statutory employer, as a borrowing or “special” employer, as a seconded employer and as a maritime employer against all claims whatsoever, whether for workers’ compensation benefits, maintenance and cure, wages, death benefits, disability, or otherwise, related to employment or use of Operator’s employees or any other workers furnished by Operator to perform work under this Agreement and shall cause such insurers and their underwriters to waive unconditionally any rights of subrogation against Company and its Affiliates.Exhibit 10.3

 

TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL HAS BEEN FILED SEPARATELYWITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH TWO ASTERISKS (**).

 

AMENDED AND RESTATED TOLLING SERVICES AGREEMENT

 

This Amended and Restated Tolling Agreement (this “Agreement”) is made and entered into as of this 1st day of October, 2017 by and between MEREY SWEENY, L.P. (“Owner”), a Delaware limited partnership and PHILLIPS 66 COMPANY (“Customer”), a Delaware corporation.

 

WHEREAS, Owner owns a petroleum coke producing facility comprised of a vacuum distillation unit, delayed coker unit, flare, cooling tower, instrument air skid, and certain underground facilities and tanks at the solid waste disposal facilities (collectively, the “Facilities”), each located within the Sweeny Refinery Complex near Old Ocean, Texas (as hereinafter defined);

 

WHEREAS, the parties desire that Owner process Customer’s Feedstock (as hereinafter defined) through the Facilities to produce petroleum coke and other products;

 

WHEREAS, the parties executed that certain Tolling Services Agreement effective August 1, 2017; and

 

WHEREAS, the parties deem it advisable to amend and restate the Tolling Services Agreement in its entirety as set forth herein.

 

NOW THEREFORE, in consideration of the premises and the mutual covenants and agreements herein contained, the parties hereto agree as follows:

 

Article I

 

  DEFINITIONS

 

When the following terms or expressions are used in this Agreement, they shall have the meanings defined below:

 

A.                                    “Affiliate” means, with respect to any Person, any other Person that, directly or indirectly, Controls, is Controlled by or is under common Control with, such specified Person through one or more intermediaries or otherwise; provided, however, that with respect to Customer, the term “Affiliate” shall not include Phillips 66 Partners LP and its subsidiaries.

 

B.                                    “Barrel” shall mean the unit of volume used for the purpose of measurement of liquid.  One “Barrel” contains 42 gallons of liquid.

 

C.                                    “BTU” means one British thermal unit.

 

D.                                    “Business Day” shall mean any day, Monday through Friday, of each week, excluding Federal Reserve Bank holidays.

 

 

TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL HAS BEEN FILED SEPARATELYWITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH TWO ASTERISKS (**).

 

E.                                     “Carrier(s)” shall mean that certain pipeline that delivers Customer’s Feedstock to the Facilities at the Receipt Point and/or the pipeline or handling facilities that accepts delivery of the Products at the applicable Delivery Points.

 

F.                                      “Coke” shall mean petroleum coke produced by the Facilities.

 

G.                                    “Contract Quantity” shall mean the Daily average of the volume of Feedstock delivered for Customer’s account during each delivery Month during the term of this Agreement, which volume shall be equal to or less than 110,000 Barrels per Day.

 

H.                                   “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract, or otherwise.

 

I.                                        “CPI-U” shall have the meaning set forth in Section 6.1(a)(ii).

 

J.                                        “Cure Period” shall have the meaning set forth in Article XI.

 

K.                                    “Day” or “Daily” shall mean, with respect to the determination of the Contract Quantity, a period of 24 consecutive hours commencing at 12:00 a.m. on a calendar day and ending at 12:00 a.m. Central Standard Time or Central Daylight Savings Time, as applicable, on the next succeeding calendar day, and for all other purposes, a calendar day.

 

L.                                     “Delivery Points” shall mean the location(s) at which Products are delivered from the Facilities to Customer or the applicable Carrier(s).

 

M.                                 “Effective Date” shall have the meaning set forth in Article II.

 

N.                                    “Facilities” shall have the meaning set forth in the Recitals.

 

O.                                    “Feedstock” shall mean residual oil from the atmospheric distillation column at the Sweeny Refinery Complex.

 

P.                                      “Force Majeure” means:  (i) acts of God, fires, floods or storms; (i) compliance with orders of courts, governmental authorities, laws or regulations; (i) explosions, wars, terrorist acts or riots; (i) inability to obtain or unavoidable delays in obtaining material, equipment, permits or labor; (i) accidental disruption of service; (i) strikes, lockouts or other industrial or civil disturbances; (i) breakage or accident to the Facilities or other facilities, machinery, tanks, or lines of pipe; (i) breakdowns or accidents, irrespective of the cause thereof and (i) any other causes, whether of the kind herein enumerated or otherwise, which are not reasonably in the control of the party claiming suspension and could not have been prevented by such party’s due diligence.

 

Q.                                    “Imaged Agreement” shall have the meaning set forth in Section 14.1.

 

R.                                    “Initial Term” shall have the meaning set forth in Article II.

 

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TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL HAS BEEN FILED SEPARATELYWITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH TWO ASTERISKS (**).

 

S.                                      “Laws” or “Law” shall mean all constitutions, laws (including common law), treaties, statutes, orders, decrees, rules, injunctions, licenses, permits, approvals, agreements, regulations, codes, ordinances issued by any governmental authority, including judicial or administrative orders, consents, decrees, and judgments, published directives, guidelines, governmental authorizations, requirements or other governmental restrictions which have the force of law, and determinations by, or interpretations of any of the foregoing by any governmental authority having jurisdiction over the matter in question and binding on a given person, whether in effect as of the date hereof or thereafter and, in each case, as amended.

 

T.                                     “Minimum Contract Quantity” shall be defined as a Daily average of 110,000 Barrels per Day of Feedstock delivered for Customer’s account during each delivery Month during the term of this Agreement.

 

U.                                    “Month,” “Months,” or “Monthly” shall mean, with respect to the determination of Contract Quantity, the period commencing at 12:00 a.m. on the first Day of a calendar month and ending at 12:00 a.m. on the first Day of the next succeeding calendar month, and for all other purposes, a calendar month.

 

V.                                    “Operational Imbalance(s)” shall mean the difference between (a) the mass of the Feedstock delivered by or on behalf of Customer and its Carrier(s) to the Receipt Point, and (a) the sum of the mass of the Products delivered to Customer and its Carrier(s) from the Facilities at the Delivery Points plus changes in Customer’s Feedstock and Products stored at the Facilities.

 

W.                                 “Operational Modification” shall have the meaning set forth in Section 4.3

 

X.                                    “Partnership Change in Control” shall have the meaning set forth in Section 14.5.

 

Y.                                    “Person” means an individual or a corporation, firm, limited liability company, partnership, joint venture, trust, unincorporated organization, association, government agency or political subdivision thereof or other entity.

 

Z.                                     “Product” or “Products” shall mean the Coke and other petroleum-based derivatives produced by the Facilities.

 

AA.                           “Quarter” shall mean a three-month period that commences on January 1, April 1, July 1, or October 1, as applicable, and ends on March 31, June 30, September 30, or December 31, respectively.

 

BB.                           “Receipt Point” shall mean the location immediately upstream of the vacuum distillation unit where the Feedstock is delivered by Customer or a Carrier for processing at the Facilities.

 

CC.                           “Renewal Term” shall have the meaning set forth in Article II.

 

DD.                           “Resolution” shall have the meaning set forth in Section 4.2.

 

3

 

TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL HAS BEEN FILED SEPARATELYWITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH TWO ASTERISKS (**).

 

EE.                             “Scheduled Turnaround” means planned major maintenance activities required to keep the Facilities properly maintained or running efficiently and that are typically characterized by being scheduled at least one Year in advance; involve significant mechanical maintenance, inspection and repair; and require complete outage of one or more units of the Facilities.

 

FF.                               “Service Fee” shall have the meaning set forth in Section 7.2.

 

GG.                           “Slop” shall mean oil from the slop systems at the Sweeny Refinery Complex.

 

HH.                         “Slurry” shall mean heavy oil from the fluid catalytic cracker at the Sweeny Refinery Complex.

 

II.                                   “Sweeny Refinery Complex” shall mean the manufacturing complex located near Old Ocean, Texas that is primarily owned and operated, in most part, as of the Effective Date, by Customer or its Affiliates.

 

JJ.                                   “Term” shall have the meaning set forth in Article II.

 

KK.                           “Tolling Fee” has the meaning set forth in Section 6.3.

 

LL.                             “Turnaround Budget” has the meaning set forth in Section 6.3.

 

ARTICLE II

 

  TERM

 

This Agreement shall be a binding agreement of the parties hereto upon execution.  The services described herein will commence on October 1, 2017 (the “Effective Date”), and will continue through and including September 30, 2032 (the “Initial Term”).  Prior to the expiration of the Initial Term, the parties may mutually agree to extend the term of this Agreement (the “Renewal Term”).  The Initial Term, together with the Renewal Term, if applicable, shall be referred to in this Agreement as the “Term.”

 

ARTICLE III

 

  PERFORMANCE OBLIGATIONS

 

3.1                               Subject to Section 6.2 and Article X, each Day during the term of this Agreement, Customer shall deliver or cause to be delivered at least the Minimum Contract Quantity of Feedstock to the Receipt Point for processing under the terms of this Agreement.  Unless otherwise agreed, such Feedstock shall meet the quality specifications and requirements of the Facilities, which shall match the specifications and requirements of the delivering Carriers.

 

3.2                               Customer warrants that it has the right to cause the Feedstock, Slop and Slurry to be delivered hereunder and processed.  Custody of the Feedstock shall transfer to Owner at the Receipt Point; custody of the Slop and Slurry shall transfer to Owner at the delayed coker unit; and custody

 

4

 

TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL HAS BEEN FILED SEPARATELYWITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH TWO ASTERISKS (**).

 

of the Products shall transfer to Customer at the Delivery Points.  At no time shall Owner take title to the Feedstock, Slop, Slurry, or Product.

 

3.3                               Owner shall accept custody of and shall provide processing of the Feedstock up to the Contract Quantity and any additional volumes to which the parties hereto may mutually agree.  Volumes above the Contract Quantity will be accepted by Owner for processing on a space available basis to the extent operationally feasible.  Owner will accept commercially reasonable amounts of Slop and Slurry for processing into the delayed coker unit at the Facilities to the extent operationally feasible.

 

3.4                               Subject to Section 3.6, the mass of Products delivered during any Month shall be deemed to be equal to the mass of Feedstock delivered to Owner for Customer’s account during such Month plus changes in Customer’s Feedstock and Products stored at the Facilities during the Month.

 

3.5                               In accordance with written authorizations and instructions given from time to time by Customer with reasonable advance notice, Owner shall be responsible for preparation and timely distribution of all shipping papers pertaining to movement of the Product from the Facilities to the Delivery Points.

 

3.6                               The parties acknowledge that Operational Imbalances may occur each Month.  Each party agrees to use commercially reasonable efforts to keep such imbalances to a minimum.  To minimize Operational Imbalances, Owner and Customer shall each use commercially reasonable efforts to perform a mass balance of receipts, inventory and deliveries at the end of the Month in accordance with the Facilities’ actual performance and expected operating conditions.

 

3.7                               During the period of time that Owner has custody of Customer’s Feedstock, Slop, Slurry and Product, Owner is not responsible for (a) any loss of or damage to such Feedstock, Slop, Slurry, and Product unless, and then only to the extent, such loss or damage is caused by Owner’s willful misconduct or gross negligence; (a) any loss of or damage to such Feedstock, Slop, Slurry, and Product that occurs naturally during processing at the Facilities; or (a) any loss to Customer resulting from delays by Owner in accepting the Feedstock, Slop and Slurry or redelivering such Product when requested.  Owner’s maximum liability, if any, for loss or damages to Feedstock, Slop, Slurry, and Product will be limited to the mutually agreed upon local market purchase price of the applicable Feedstock, Slop, Slurry, and Product(s) at the time of the loss.

 

3.8                               The parties acknowledge that prudent operation of the Facilities includes necessary repairs and maintenance consistent with generally accepted industry standards, which will result in temporary outages of the Facilities during which Owner will be unable to perform the services contracted for herein.  So long as Owner endeavors to work with Customer to minimize the duration, frequency, and effect of such outages on Customer and the duration, frequency, and effect of such outages on Customer are consistent with generally accepted industry standards, Owner shall not be deemed to breach this Agreement in respect thereof and shall not be liable to Customer for any failure to perform its obligations set forth herein.

 

5

 

TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL HAS BEEN FILED SEPARATELYWITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH TWO ASTERISKS (**).

 

ARTICLE IV

 

  STORAGE, CONSTRUCTION AND MAINTENANCE

 

4.1                               Owner will provide Customer with a commercially reasonable amount of temporary storage of Feedstock and Products.

 

4.2                               Owner shall operate, maintain, modify and improve the Facilities in accordance with the provisions of this Agreement.  Except as provided in Section 4.3 with respect to any Operational Modifications, Section 6.5 with respect to any expenditures requested by Customer, Article XIII with respect to any changes in law, and with respect to any turnarounds, in the event that continuing to provide the services under this Agreement would require Owner to make substantial and unanticipated expenditures related to the operation, maintenance, modification or improvement of the Facilities, then either party shall have the right to call a meeting between appropriate personnel of each party.  Any such meeting shall be held at a mutually agreeable location and will be attended by personnel of each party having sufficient authority to commit his or her respective party to a Resolution (as defined below).  At the meeting, the parties will negotiate in good faith with the objective of reaching a joint resolution, which will, among other things, specify steps to be taken by Owner and/or Customer to fully accomplish such resolution and the deadlines by which resolution must be completed (the “Resolution”).  Without limiting the generality of the foregoing, the Resolution shall set forth an agreed upon time schedule for the agreed upon activities.  Such time schedule shall be reasonable under the circumstances, consistent with customary industry standards and shall take into account Owner’s economic considerations relating to the costs and fees received for providing the services under this Agreement.  Owner shall use commercially reasonable efforts to continue to provide services to Customer at the Facilities, to the extent the Facilities are operationally capable of the provision of such services, during the period contemplated by the Resolution.  In the event the parties agree to a Resolution, then neither party shall have the right to terminate this Agreement pursuant to any provision of this Section 4.2 so long as any work contemplated by such Resolution is underway and is being completed in a timely manner in accordance with the specifications included in the Resolution (including, for the avoidance of doubt, any deadlines included therein).  If either Customer or Owner elects not to agree to a Resolution and (i) the Facilities are unable to perform all of the services hereunder, then this Agreement shall automatically terminate, or (i) the Facilities are able to perform some, but not all of the services hereunder, then Customer shall have the option, on 15 days’ prior written notice to Owner to terminate this Agreement or elect to have this Agreement apply only to the services that can be provided in the absence of the Resolution in which case the parties will cooperate in good faith to make such amendments to this Agreement as are reasonably necessary to reflect such election.  Notwithstanding anything in the foregoing, if the Facilities are unable to perform any of the services hereunder as a result of the operations or condition of facilities upstream or downstream of the Facilities or as a result of acts or omissions of Customer or its Affiliates, unless agreed upon in writing by Owner, Customer shall not have the option to terminate this Agreement nor have the option to elect to have this Agreement apply to services on less than the Minimum Contract Quantity.

 

6

 

TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL HAS BEEN FILED SEPARATELYWITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH TWO ASTERISKS (**).

 

4.3                               Customer may at any time make a written request to Owner for an operational modification, including the installation of additional equipment and/or capacity expansion at the Facilities (each, an “Operational Modification”), and shall include in such written request the parameters and specifications of the requested Operational Modification.  Upon receipt of such a request, Owner shall promptly evaluate the relevant factors related to such request, including, without limitation:  engineering and design criteria, limitations affecting the Operational Modification, cost and financing factors and the effect of the Operational Modification on the overall operation of the Facilities.  If Owner determines that such Operational Modification is operationally and commercially feasible, Owner shall present a proposal to Customer concerning the design and projected costs of such Operational Modification and how such costs might be funded by or recovered from Customer.  If Owner determines the Operational Modification is not commercially or operationally reasonable and prudent, it shall provide Customer with an explanation of and justification for such determination.  If Owner notifies Customer that the Operational Modification may be commercially and operationally reasonable and prudent, the parties shall negotiate in good faith to determine appropriate terms and conditions of Owner’s implementation of such Operational Modification, which shall include, without limitation, the scope and the appropriate timing of such Operational Modification as well as a reasonable recovery to Owner with regard to such Operational Modification, (which may include, without limitation, direct reimbursement of all or part of the costs by Customer, an increase in fees described in Article VI and/or an increase in the Minimum Contract Quantity).

 

ARTICLE V

 

  MEASUREMENT AND QUALITY

 

5.1                               Measurements, volume corrections, and calibrations shall be performed in accordance with the procedures and processes used at the Facilities as of the Effective Date consistent with general accepted industry practices, unless otherwise mutually agreed.  Receipts of Feedstock into the Facilities shall be measured at the meter currently owned by Customer and located on the line between Customer’s sour crude unit and Owner’s vacuum distillation unit.  Customer shall operate and maintain the meter in accordance with generally accepted industry practices.  Owner shall be permitted to access the meter and may request Customer provide meter provings at Customer’s cost on a commercially reasonable basis.  The parties acknowledge that Customer’s existing meter measuring Feedstock into the Facilities is not of custody quality.

 

5.2                               The quality of the Feedstock, Slop, and Slurry received at the Facilities for Customer’s account and the quality of Products delivered to Customer or its Carriers will meet generally accepted industry standards, as applicable.  Owner may, from time to time, establish additional specifications that the Feedstock, Slop and/or Slurry must satisfy due to any safety, environmental or operational considerations at or relating to the Facilities.  For any service or function requested by Customer not specifically provided for in this Agreement, Customer will pay a prompt charge if the service is able to be provided by Owner or a third-party as agreed in advance by the parties hereto in writing.  Notwithstanding the foregoing, Customer waives any right to claim

 

7

 

TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL HAS BEEN FILED SEPARATELYWITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH TWO ASTERISKS (**).

 

damages for contamination of Customer’s products due to line displacement and/or use of common lines.

 

ARTICLE VI

 

  COMPENSATION TO OWNER

 

6.1                               For each delivery Month during the term of this Agreement, Customer shall pay to Owner the following fees in consideration for Owner’s provision of the services described herein:

 

(a)                                 (i) a fixed tolling fee equal to $[**]/Barrel for the Minimum Contract Quantity, plus (ii) for any volumes of Feedstock in excess of the Minimum Contract Quantity that are delivered to the Facilities and accepted by Owner for processing hereunder, an excess tolling fee equal to $[**]/ Barrel.  In either case, the fixed tolling fee and excess tolling fee will be increased, but never decreased, by an amount equal to 100% of the annual change in the Consumer Price Index for All Urban Consumers (the “CPI-U”), as reported during the Month immediately preceding the effective date of the adjustment, with the annual adjustment effective August 1st of each year;

 

(b)                                 a variable tolling fee equal to (X) the Houston Ship Channel price for natural gas as reported by Inside FERC’s Gas Market report for the delivery Month (in dollars per million BTUs) multiplied by (X) 0.21 multiplied by (X) the total number of Barrels of Feedstock processed by Owner; and

 

(c)                                  a Service Fee (as calculated pursuant to Section 7.2 below).

 

6.2                               Subject to Section 6.4, for each delivery Month, if Customer delivers less than the Minimum Contract Quantity, Customer shall pay the fixed tolling fee and the Service Fee on the Minimum Contract Quantity.

 

6.3                               Fees.  In addition to the fixed tolling fee, excess tolling fee and variable tolling fee (collectively, the “Tolling Fee”), Customer shall pay a Turnaround Fee, which shall be assessed and adjusted, as applicable, in the manner set forth on Exhibit A. Prior to each such assessment or adjustment, Owner shall provide Customer with a written budget describing all of the rates, which shall be based on Owner’s good faith estimate of the costs of the applicable turnaround and calculated in accordance with Exhibit A (the “Turnaround Budget”).

 

6.4                               Partial Period Proration.  If the Effective Date is any Day other than the first Day of a Month, then the Feedstock delivered to the Facilities for Customer’s account from the first Day of the Month through the Effective Date shall be considered for purposes of determining whether Company tendered its Minimum Contract Quantity for the Month.  If this Agreement is terminated on any Day other than the last Day of a Month, then any calculation determined with respect to a Month will be prorated by a fraction, the numerator of which is the number of Days in that part of the Month ending on the date of such termination, and the denominator of which is the number of Days in the Month.

 

8

 

TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL HAS BEEN FILED SEPARATELYWITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH TWO ASTERISKS (**).

 

6.5                               Recovery of Certain Expenditures Requested by Customer.  If Customer requests that Owner make any expenditures in connection with its provision of new or additional services requested by Customer hereunder at the Facilities (other than as contemplated under Section 4.3), such request must be conveyed in writing by Customer and, if accepted by Owner in writing, Owner shall make such expenditures upon the parties’ agreement to allow Owner to recover such expenditures over time (which may include, without limitation, direct reimbursement of all or a part of the costs by Customer, an increase in fees described in this Article VI and/or an increase in the Minimum Contract Quantity).

 

ARTICLE VII

 

  TAXES AND OTHER PAYMENTS

 

7.1                               Customer shall be responsible for the payment of any royalties, overriding royalties and other payments due or to become due on the hydrocarbons which are subject to this Agreement.  Any tax applicable to the Feedstock, Slop, Slurry or Products (including but not limited to any tax applicable to stored volumes of Products, but excluding, for the avoidance of doubt, any income or similar taxes imposed on the income of Owner) shall be borne and paid by Customer unless such tax is by Law imposed upon Owner, in which event, such tax shall be paid by Owner and charged to and reimbursed by Customer.  CUSTOMER SHALL INDEMNIFY AND HOLD OWNER, ITS DIRECTORS, OFFICERS, AGENTS AND EMPLOYEES HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS OR CAUSES OF ACTION OF ANY KIND, TOGETHER WITH ALL LOSS, DAMAGE AND EXPENSE (INCLUDING COURT COSTS AND ATTORNEY’S FEES) ARISING WITH RESPECT TO THE PAYMENT OF ANY TAXES, ROYALTIES, OVERRIDING ROYALTIES AND OTHER PAYMENTS DUE OR TO BECOME DUE ON THE PRODUCTS WHICH ARE SUBJECT TO THIS AGREEMENT.

 

7.2                               In the fourth Quarter of each calendar year, Owner shall determine, in good faith, an estimate of the total annual property taxes owed for the immediately succeeding calendar year on the Facilities owned by Owner and located on the real property near the Sweeny Refinery Complex, and then use such estimate to calculate a per-Barrel fee (“Service Fee”) to be assessed on the Customer’s Minimum Contract Quantity, regardless of whether the Minimum Contract Quantity is actually delivered.  The Service Fee will be calculated by dividing such estimate by the Minimum Contract Quantity, i.e., 110,000 Barrels per Day * the number of  Days in the immediately succeeding calendar year.  Owner will provide written notice to Customer of the Service Fee to be assessed in the upcoming calendar year in accordance with the notice provisions in Section 14.7 below.  As between the parties, Owner shall pay all property taxes on the Facilities that become due after the Effective Date.  The Service Fee shall be $[**] per Barrel on the Customer’s Minimum Contract Quantity for the remaining portion of the 2017 calendar year.  The Service Fee shall be included on Customer’s Monthly statement described in Section 9.1 below.

 

9

 

TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL HAS BEEN FILED SEPARATELYWITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH TWO ASTERISKS (**).

 

ARTICLE VIII

 

  REPORTING AND AUDIT

 

8.1                               Volume and mass reconciliations shall be prepared by Owner and provided to Customer on a Monthly basis, including such supporting documentation as Customer may reasonably request.

 

8.2                               Either party hereto, upon notice in writing to the other party hereto, shall have the right at normal business hours to audit the accounts and records relating to accounting or billing practices under the provisions of this Agreement for any calendar year during the 24-Month period following the end of such calendar year; provided, however, that the auditing party must take written exception to and make claim upon the other party hereto for all discrepancies disclosed by such audit within such 24-Month period.  Such audit shall be conducted by the auditing party’s representative or auditor at the auditing party’s expense.  Any volume statements, payments, reconciliations or other related documents shall be final as to all of the parties hereto unless disputed in writing within the 24-Month period following the end of the calendar year in which payment has been made thereon.

 

ARTICLE IX

 

  MONTHLY STATEMENT; PAYMENT; LIENS

 

9.1                               Monthly Statement.  Promptly after the end of each Month, Owner shall provide Customer with a Monthly statement, including such supporting documentation as Customer may reasonably request.

 

9.2                               Payment.

 

(a)                                 Payment of the amount(s) identified on each Monthly statement shall be due, without discount, on the later of (i) two (2) Business Days after such Monthly statement is received, and (i) the 22nd Day of the Month in which such Monthly statement is received, provided that if such Day is not a Business Day, then such payment shall be due on the next Business Day.  Payments not paid by the later of (A) the last Day of the Month in which such Monthly statement is received and (A) the date that is two (2) Business Days after such Monthly statement is received shall bear interest at the rate of the lesser of 1.5% per Month and the maximum rate allowed by Law for each Month or portion of a Month thereafter during which such amount remains unpaid.

 

(b)                                 All payments shall be made to Owner by automated clearing house to an account specified by Owner from time to time, provided that as long as Owner is an Affiliate of Customer, Owner and Customer may settle Customer’s financial obligations to Owner through Customer’s normal interaffiliate settlement processes.  Any bank charges incurred by Customer in remitting funds by automated clearing house shall be for Customer’s account.  Acceptance by Owner of any payment from Customer for any charge or service after termination or expiration of this

 

10

 

TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL HAS BEEN FILED SEPARATELYWITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH TWO ASTERISKS (**).

 

Agreement shall not be deemed a renewal of this Agreement or a waiver by Owner of any default by Customer hereunder.

 

(c)                                  If Customer reasonably disputes any Monthly statement, in whole or in part, Customer shall promptly notify Owner in writing of the dispute.  In such case, Customer shall pay only the undisputed portion of the amount owed and the parties shall diligently and promptly work in good faith to resolve the disputed portion.

 

9.3                               Liens.  Customer hereby grants to Owner a warehouseman’s lien on all of Customer’s Products in storage at the Facilities.  If a warehouse receipt is required under applicable Law for such a lien to arise, this Agreement will be deemed to be the warehouse receipt for such Product.

 

ARTICLE X

 

  FORCE MAJEURE

 

10.1                        As soon as possible upon the occurrence of a Force Majeure, if any party hereto is affected by a Force Majeure event, such party shall provide the other party with written notice of the occurrence of such Force Majeure event.  Each party’s obligations (other than a party’s obligation to indemnify the other party or a party’s obligation to pay any amounts due to the other party which have accrued prior to the commencement of such Force Majeure event) shall be temporarily suspended during the occurrence of, and for the entire duration of, a Force Majeure event to the extent that such an event prevents Owner from performing its obligations under this Agreement (other than Customer’s payment obligations (aside from obligations relating to the Turnaround Fee, as defined in Exhibit A)).  Each party’s obligations (other than a party’s obligation to indemnify the other party or a party’s obligation to pay any amounts due to the other party which have accrued prior to the commencement of such Force Majeure event) shall be temporarily suspended (other than Customer’s payment obligations (aside from obligations relating to the Turnaround Fee), which shall be suspended beginning twenty (20) days after the commencement of a Force Majeure event) after the commencement of, and for the entire remaining duration of, a Force Majeure event to the extent that such event prevents Customer from performing its obligations under this Agreement.  For clarity, except as expressly provided in this Section 10.1, the fees set forth in Article VI shall not accrue while each party’s obligations are suspended, except that the payment obligations in respect of the Turnaround Fee shall be payable in all circumstances.  At the conclusion of the Force Majeure event, the fees applicable to the Month in which the suspension due to the Force Majeure event remained in effect shall be ratably reduced to reflect such suspension.

 

10.2                        A party affected by a Force Majeure event shall take commercially reasonable steps to remedy such situation so that it may resume the full performance of its obligations under this Agreement within a reasonable period of time.

 

10.3                        The settlement of strikes, lockouts and other labor disturbances shall be entirely within the discretion of the affected party and the requirement to remedy a Force Majeure event within a reasonable period of time shall not require the settlement of strikes or lockouts by acceding

 

11

 

TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL HAS BEEN FILED SEPARATELYWITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH TWO ASTERISKS (**).

 

to the demands of an opposing person or entity when such course is inadvisable in the discretion of the affected party.

 

10.4                        Owner may suspend performance of the services to the extent reasonably necessary to prevent injuries to persons, damage to property or harm to the environment.

 

10.5                        If a Force Majeure event prevents either Owner or Customer from performing its respective obligations under this Agreement for a period of more than 12 consecutive Months, this Agreement may be terminated by either party hereto at any time after the expiration of such 12-Month period upon at least 30 Days’ notice to the other party.

 

ARTICLE XI

 

  DEFAULT

 

If either party hereto is in material default of the provisions of this Agreement and such default has not been remedied within 60 Days after written notice from the non-defaulting party (the “Cure Period”), then the non-defaulting party may, in addition to any other rights or remedies available to it, terminate this Agreement by giving written notice of termination to the defaulting party within five (5) Days following expiration of said Cure Period.

 

ARTICLE XII

 

  INDEMNIFICATION

 

12.1                        EXCEPT AS PROVIDED IN SECTION 3.7, CUSTOMER RELEASES AND AGREES TO DEFEND, PROTECT, INDEMNIFY AND HOLD OWNER, ITS DIRECTORS, OFFICERS, AGENTS AND EMPLOYEES HARMLESS FROM AND AGAINST ALL CLAIMS, LIABILITY, LOSS, DAMAGE AND EXPENSE, INCLUDING COURT COSTS AND ATTORNEY’S FEES IN CONNECTION THEREWITH, ARISING OUT OF CUSTOMER’S OWNERSHIP, CUSTODY OR USE OF THE FEEDSTOCK, SLOP, SLURRY, AND PRODUCTS.

 

12.2                        SUBJECT TO SECTION 3.7 AND EXCEPT TO THE EXTENT CAUSED BY FAILURE OF FEEDSTOCK, SLOP OR SLURRY TO MEET THE QUALITY SPECIFICATIONS IN SECTION 3.1 OR SECTION 5.2, OWNER RELEASES AND AGREES TO DEFEND, PROTECT, INDEMNIFY AND HOLD CUSTOMER, ITS DIRECTORS, OFFICERS, AGENTS AND EMPLOYEES HARMLESS FROM AND AGAINST ALL CLAIMS, LIABILITY, LOSS, DAMAGE AND EXPENSE, INCLUDING COURT COSTS AND ATTORNEY’S FEES IN CONNECTION THEREWITH, ARISING OUT OF OWNER’S CUSTODY OR USE OF THE FEEDSTOCK, SLOP, SLURRY, AND PRODUCTS.

 

12.3                        NEITHER PARTY WILL BE LIABLE FOR ANY PROSPECTIVE OR SPECULATIVE PROFITS, LOST PROFITS OR SPECIAL, INDIRECT, INCIDENTAL, TREBLE, SPECULATIVE, REMOTE, EXEMPLARY, PUNITIVE, OR CONSEQUENTIAL DAMAGES, INCLUDING, WITHOUT LIMITATION, LOSS OF USE, INCREASED COST OF OPERATIONS,

 

12

 

TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL HAS BEEN FILED SEPARATELYWITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH TWO ASTERISKS (**).

 

LOSS OF PROFIT OR REVENUE OR BUSINESS INTERRUPTION, WHETHER BASED UPON STATUTE, CONTRACT, TORT, STRICT LIABILITY, OR NEGLIGENCE (INCLUDING, BUT NOT LIMITED TO THE SOLE, JOINT, OR CONCURRENT NEGLIGENCE), OR IN ANY OTHER MANNER ARISING OUT OF THIS AGREEMENT, ANY INDEMNITY PROVISION, OR OTHERWISE.

 

12.4                        Notice of claims by Customer or Owner for any liability, loss, damage, or expense arising out of this Agreement must be made to the other party in writing within 180 Days after the same shall have accrued.  Such claims, described in reasonable detail, must be sent to the other party within said 180 days and unless so made and filed, the other party shall be wholly released and discharged therefrom and shall not be liable therefore in any court of justice.  No suit at law or in equity shall be maintained upon any claim unless instituted within two years and one Day after the cause of action accrued.

 

ARTICLE XIII

 

  CHANGE IN LAW

 

If new Laws require Owner to make substantial and unanticipated expenditures in connection with the services Owner provides to Customer under this Agreement, Owner shall use commercially reasonable efforts to attempt to secure a waiver, exception or extension for the time of compliance with the new Law in an effort to secure continued operation under existing applicable Laws during the term of this Agreement.  If Owner is unable to secure a waiver, exception or extension for continued operation using commercially reasonable efforts, then Owner will find a commercially reasonable manner to conform to the new Laws and give Customer commercially reasonable advance notice of any planned expenditures necessary for such compliance.  Customer will reimburse Owner for Customer’s proportionate share of the costs of complying with such Laws, or at Owner’s option, and if the parties agree, the relevant fees will be increased or an alternate mechanism shall be adopted to allow Owner to recover the amount paid for such costs over time from Customer or another entity.  The Customer’s “proportionate share” of the costs of complying with such Laws referenced in the immediately preceding sentence shall be 100% if Customer is Owner’s sole customer for services of the type that Owner provides under this Agreement.

 

ARTICLE XIV

 

  MISCELLANEOUS

 

14.1                        This Agreement may be scanned and stored electronically, or stored on computer tapes and disks, as may be practicable (the “Imaged Agreement”).  The Imaged Agreement if introduced as evidence in printed format, in any judicial, arbitration, mediation or administrative proceedings, will be admissible as between the parties to the same extent and under the same conditions as other business records originated and maintained in documentary form.  Neither party shall object to the admissibility of any Imaged Agreement (or photocopies of the transcription of such Imaged Agreement) on the basis that such were not originated or maintained in documentary

 

13

 

TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL HAS BEEN FILED SEPARATELYWITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH TWO ASTERISKS (**).

 

form under either the hearsay rule or the best evidence rule.  However, nothing herein shall be construed as a waiver of any other objection to the admissibility of such evidence.

 

14.2                        Owner shall in good faith endeavor to promptly notify Customer of any Product spills or other environmentally polluting discharges.  Notice may be sent by email to Customer’s scheduler or operational personnel.

 

14.3                        THIS AGREEMENT, AND ANY ACTIONS, CLAIMS, DEMANDS OR SETTLEMENTS HEREUNDER, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REFERENCE TO ANY CONFLICTS OF LAW PRINCIPLES WHICH MIGHT REQUIRE THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION.  EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL AND STATE COURTS (AS APPLICABLE) LOCATED IN HOUSTON, TEXAS, AND TO ALL COURTS COMPETENT TO HEAR AND DETERMINE APPEALS THEREFROM, AND WAIVES ANY OBJECTIONS THAT A SUIT, ACTION OR PROCEEDING SHOULD BE BROUGHT IN ANOTHER COURT AND ANY OBJECTIONS TO INCONVENIENT FORUM.

 

14.4                        No waiver by either party of any default under this Agreement shall be deemed to be a waiver of any future default, whether of a like or a different character.

 

14.5                        This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns.  No party may assign this Agreement, nor any interest herein, without the prior written consent of the other party hereto, which consent shall not be unreasonably withheld, except that either party hereto may (i) assign its rights and delegate its duties hereunder to an affiliate without the consent of the other party or (i) make collateral assignments of this Agreement to secure working capital or other financing without the consent of the other party.  Such assignment shall be effective upon notice sent by the assigning party.  Upon the occurrence of a Partnership Change in Control (as hereinafter defined), Owner shall provide Customer with a notice of any Partnership Change in Control at least 60 Days prior to the effective date thereof.  Within 180 Days following receipt of such notice, Customer may elect to terminate this Agreement, effective no earlier than the effective date of such Partnership Change in Control. In the event this Agreement is terminated early as a result of Partnership Change in Control, Customer shall have no further payment obligations to Owner except for those incurred prior to the date of such early termination.  A “Partnership Change in Control” means Customer ceases to Control the general partner of Phillips 66 Partners LP.

 

14.6                        It is not the intention of the parties to create, and this Agreement shall not be deemed or construed to create, a partnership, joint venture or association or a trust.  This Agreement shall not be deemed or construed to authorize any party to act as an agent, servant or employee for any other party for any purpose whatsoever except as explicitly set forth in this Agreement.

 

14

 

TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL HAS BEEN FILED SEPARATELYWITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH TWO ASTERISKS (**).

 

14.7                        Any notice, request, instruction, correspondence, or other documentation to be given hereunder by either party to the other shall be in writing and delivered personally or mailed by registered or certified mail, postage prepaid and return receipt requested or facsimile as follows:

 

If to Owner, addressed to:  

 

Merey Sweeny LP  
 c/o Houston Operations Center  
 1075 W. Sam Houston Parkway N., Suite 200  
 Houston, TX 77043  
 Attn:  President  
 Copy to Deputy General Counsel, Midstream

 

If to Customer, addressed to:  

 

Phillips 66 Company  
 c/o Houston Operations Center  
 1075 W. Sam Houston Parkway N., Suite 200  
 Houston, TX 77043  
 Attn:  General Manager, Sweeny Refinery  
 Copy to Deputy General Counsel, Commercial

 

15

 

TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL HAS BEEN FILED SEPARATELYWITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH TWO ASTERISKS (**).

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Day and year first above written.

 

	
MEREY SWEENY LP
    	
PHILLIPS 66 COMPANY
    
	
 
    	
 
    
	
By: Sweeny Coker LLC,   its general partner
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ David P. Effert
    	
 
    	
By:
    	
/s/ R.A. Herman
    
	
Name:
    	
David P. Erfert
    	
 
    	
Name:
    	
Robert. A. Herman
    
	
Title:
    	
Vice President
    	
 
    	
Title:
    	
Executive Vice   President, Refining
    

 

Signature Page

to

Tolling Services Agreement

 

 

TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL HAS BEEN FILED SEPARATELYWITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH TWO ASTERISKS (**).

 

EXHIBIT A

 

“Accrued Major Turnaround Cost” shall mean the product of (i) the Major Turnaround Fee, (i) the Minimum Contract Quantity and (i) the number of Days in the 18-Month period immediately preceding and including the month of the commencement of the applicable Scheduled Turnaround.

 

“Accrued Minor Turnaround Cost” shall mean the product of (i) the Minor Turnaround Fee, (i) the Minimum Contract Quantity and (i) the number of Days in the 18-Month period immediately preceding and including the month of the commencement of the applicable Scheduled Turnaround.

 

“Accrued Turnaround Cost” shall be the sum of (i) the Accrued Major Turnaround Cost and (i) the Accrued Minor Turnaround Cost.

 

“Aggregate Major Turnaround Cost” shall mean the total actual costs and expenses, including catalysts, incurred in the current Scheduled Turnaround with respect to items identified as a “Major Component” as determined within approximately two Months following completion of the Scheduled Turnaround.

 

“Aggregate Minor Turnaround Cost” shall mean the total actual costs and expenses, including catalysts, incurred in the current Scheduled Turnaround with respect to items identified as a “Minor Component” as determined within approximately two Months following completion of the Scheduled Turnaround.

 

“Major Turnaround Fee” shall mean the per Barrel charge set forth in the Turnaround Budget.

 

“Major Turnaround Reimbursement” shall have the meaning set forth in this Exhibit A.

 

“Major Turnaround Surcharge” shall have the meaning set forth in this Exhibit A.

 

“Minor Turnaround Fee” shall mean the per Barrel charge set forth in the Turnaround Budget.

 

“Minor Turnaround Reimbursement” shall have the meaning set forth in this Exhibit A.

 

“Minor Turnaround Surcharge” shall have the meaning set forth in this Exhibit A.

 

“Turnaround Fee” shall be the sum of (i) the Major Turnaround Fee and (i) the Minor Turnaround Fee.

 

1.                   Turnaround Fee.

 

 

TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL HAS BEEN FILED SEPARATELYWITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH TWO ASTERISKS (**).

 

Not less than 18 Months prior to the commencement of each Scheduled Turnaround during the Term, Owner shall provide written notice of such Scheduled Turnaround to Customer, which written notice shall include a Turnaround Budget in accordance with Section 6.3 of this Agreement.  The Tolling Fee shall be increased for the 18-Month period immediately preceding and including the month of the commencement of such Scheduled Turnaround to include the Turnaround Fee shown on such Turnaround Budget to be assessed on each Barrel of Feedstock (using the Minimum Contract Quantity) in order to allow Owner to earn the Accrued Turnaround Cost.

 

Owner anticipates the next Scheduled Turnaround will commence on or around January 19, 2019 and, because such Scheduled Turnaround will occur less than 18 Months from the Effective Date, the Tolling Fees assessed beginning on the Effective Date shall include the Turnaround Fee set forth on the Turnaround Budget provided to Customer contemporaneous with execution of this Agreement.

 

2.                   Accrued Major Turnaround Cost True Up.

 

After each Scheduled Turnaround on the Facilities during the Term, Owner will calculate its actual Aggregate Major Turnaround Cost incurred in connection therewith.

 

a.              In the event such actual Aggregate Major Turnaround Cost is greater than 120% of the Accrued Major Turnaround Cost for such Scheduled Turnaround, then Customer will pay to Owner a turnaround surcharge equal to the amount by which such actual Aggregate Major Turnaround Cost is greater than 120% of the Accrued Major Turnaround Cost (the “Major Turnaround Surcharge”) in order to allow Owner to recover a portion of the actual Aggregate Major Turnaround Cost in excess of the Accrued Major Turnaround Cost.

 

b.              In the event such actual Aggregate Major Turnaround Cost is less than 80% of the Accrued Major Turnaround Cost for such Scheduled Turnaround, then Owner will pay to Customer a turnaround reimbursement equal to the amount by which such actual Aggregate Major Turnaround Cost is less than 80% of the Accrued Major Turnaround Cost (the “Major Turnaround Reimbursement”) in order to allow Customer to recover a portion of the Accrued Major Turnaround Cost in excess of the actual Aggregate Major Turnaround Cost.

 

c.               Such Major Turnaround Surcharge or Major Turnaround Reimbursement, as applicable, shall be paid, or credited, to the appropriate party in accordance with Article IX.

 

3.                   Accrued Minor Turnaround Cost True Up.

 

After each Scheduled Turnaround on the Facilities during the Term, Owner will calculate its actual Aggregate Minor Turnaround Cost incurred in connection therewith.

 

a.              In the event such actual Aggregate Minor Turnaround Cost is greater than 120% of the Accrued Minor Turnaround Cost for such Scheduled Turnaround, then Customer will pay to Owner a turnaround surcharge equal to the amount by which such actual Aggregate Minor Turnaround Cost is greater than 120% of the Accrued Minor Turnaround Cost (the “Minor

 

 

TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL HAS BEEN FILED SEPARATELYWITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH TWO ASTERISKS (**).

 

Turnaround Surcharge”) in order to allow Owner to recover a portion of the actual Aggregate Minor Turnaround Cost in excess of the Accrued Minor Turnaround Cost.

 

b.              In the event such actual Aggregate Minor Turnaround Cost is less than 80% of the Accrued Minor Turnaround Cost for such Scheduled Turnaround, then Owner will pay to Customer a turnaround reimbursement equal to the amount by which such actual Aggregate Minor Turnaround Cost is less than 80% of the Accrued Minor Turnaround Cost (the “Minor Turnaround Reimbursement”) in order to allow Customer to recover a portion of the Accrued Minor Turnaround Cost in excess of the actual Aggregate Minor Turnaround Cost.

 

c.               Such Minor Turnaround Surcharge or Minor Turnaround Reimbursement, as applicable, shall be paid, or credited, to the appropriate party in accordance with Article IX.

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