Document:

OILT 6.30.2013 10Q EX.10.1

Exhibit 10.1

OILTAKING NORTH AMERICA, LLC
LONG-TERM INCENTIVE PLAN

FORM OF PHANTOM UNIT AWARD AGREEMENT
(Consultants and Directors)

	
			
	To:
	Date of Grant: May 13, 2013
	Number of Units:

THIS PHANTOM UNIT AWARD AGREEMENT (the “Agreement”) is made as of the Date of Grant between Oiltanking North America, LLC, a Delaware limited liability company (the “Company”), an Affiliate of OTLP GP, LLC,  a Delaware limited liability company (the “General Partner”), the general partner of Oiltanking Partners, L.P., a Delaware limited partnership (the “Partnership”), and __________ (the “Participant”) pursuant to the terms and conditions of the Oiltanking North America, LLC Long-Term Incentive Plan (the “Plan”).  A copy of the Plan is being furnished to the Participant concurrently with the execution of this Agreement which shall be deemed a part of this Agreement as if fully set forth herein.  By the execution of this Agreement, the Participant acknowledges receipt of a copy of the Plan.  Unless the context otherwise requires, all terms defined in the Plan shall have the same meaning when used herein.
WHEREAS, the Board of Directors of the Company (the “Board”) has adopted the Plan to, among other things, encourage and enable certain employees, directors and consultants of the Company, the General Partner, the Partnership and their Affiliates to acquire Awards the value of which is tied to the performance of common units of the Partnership (each a “Unit”); and
WHEREAS, the Participant is one of such eligible directors.
NOW THEREFORE, the parties agree as follows:
1.Phantom Unit Award.  The Company hereby grants to the Participant (the “Award”), effective as of May 13, 2013 (the “Date of Grant”), in accordance with the terms and conditions set forth herein and in the Plan, the right to receive ______ phantom units (the “Phantom Units”).  The Award is specifically made subject to execution by the Participant of this Agreement.

2.Distribution Equivalent Rights.  The Phantom Units granted pursuant to this Agreement will not have Distribution Equivalent Rights. 

3.Vesting and Forfeiture of Phantom Units.  

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(a)Vesting Restrictions.  Subject to the earlier expiration of this Award as herein provided, this Award may be settled in accordance with the provisions of this Agreement. The restrictions on the Phantom Units granted pursuant to this Agreement will expire and the Phantom Units will become vested in accordance with the following schedule:

	
		
	Percentage of Phantom Units to Vest
	Vesting Date

	One Hundred Percent (100%) of the Phantom Units
	December 15, 2013

The date noted above shall be referred to as the “Vesting Date.” Phantom Units that become vested pursuant to this Section 3(a) are “Vested Units.”  Phantom Units that do not become vested pursuant to this Section 3(a) are “Unvested Units.”
(b)Termination of Service for Any Reason.  In the event the Participant's service is terminated by the Company, the General Partner, the Partnership or their Affiliates (the “Company Group”), or the Participant for any reason, all Phantom Units that have not become Vested Units according to Section 3(a) shall be forfeited to the Company without any consideration to the Participant.  For purposes of clarity, a transfer of services from one entity within the Company Group to another entity within the Company Group shall not be considered a termination of services for purposes of this Agreement.

(c)Change of Control Prior to Vesting.  Notwithstanding Section 3(a) above, in the event that a Change of Control occurs prior to the Unvested Units becoming Vested Units, the Unvested Units shall immediately become Vested Units. 

4.Settlement of Phantom Units.  

(a)Settlement. The Vested Units shall be settled by the Company on or prior to December 31, 2013.  The Vested Units will be settled through a cash payment that will equal the number of Vested Phantom Units held by the Participant on the applicable Vesting Date multiplied by the Fair Market Value of a Unit on the applicable Vesting Date.  Notwithstanding anything in the Plan to the contrary, for purposes of this Agreement “Fair Market Value” means the weighted average trading price of the Units during the period of five trading days preceding and including the Vesting Date. 

(b)Procedures. Settlement of Phantom Units shall be subject to and pursuant to rules and procedures established by the Board in its sole discretion.

5.Transferability and Assignment.  This Agreement and the Phantom Units granted hereunder will not be transferable by the Participant other than by will or the laws of descent and distribution. Any attempt by the Participant to  transfer, assign, pledge, hypothecate, or otherwise dispose of such rights contrary to the provisions in this Agreement or the Plan, or upon the levy of any attachment or similar process upon such rights, such rights shall immediately become null and void and unenforceable against the Company. 

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6.Recapitalization or Reorganization.

(a)Existence of Plan and Award. The existence of the Plan and the Award shall not affect in any way the right or power of the Board or the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company's capital structure or its business, any merger or consolidation of the Company, any issue of debt or equity securities ahead of or affecting Units or the rights thereof, the dissolution or liquidation of the Company or any sale, lease, exchange or other disposition of all or any part of its assets or business or any other corporate act or proceeding.

(b)Adjustments.  The terms of this Award shall be subject to adjustment from time to time, in accordance with the following provisions:

(i)Recapitalizations.  If the Partnership recapitalizes, reclassifies its equity securities, or otherwise changes its capital structure (a “recapitalization”), the number and class of Units covered by this Award shall be adjusted so that the Award shall thereafter cover the number and class of Units and securities to which the Participant would have been entitled pursuant to the terms of the recapitalization if, immediately prior to the recapitalization, the Participant had been the holder of record of the number of Units then covered by the Award. 

(ii)Other Award Adjustments. Except as otherwise provided in the Plan, in the event of changes in the outstanding Units by reason of recapitalization, reorganizations, mergers, consolidations, combinations, exchanges or other relevant changes in capitalization occurring after the Date of Grant of this Award and not otherwise provided for by this Section 6, the outstanding Phantom Units and this Agreement shall be subject to adjustment by the Board at its discretion as to the number and price of Units or other consideration subject to this Award.  

(iii)Whenever the number of shares of Units subject to this Award are required to be adjusted as provided in this Section 6(b), the Company shall promptly prepare and deliver to the Participant a notice setting forth, in reasonable detail, the event requiring adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the change in the number of shares of Phantom Units specified in Section 1 above after giving effect to the adjustments.  The Company shall promptly give the Participant such a notice.

(iv)Adjustments under Sections 6(b)(i) and (ii) shall be made by the Company, and its determination as to what adjustments shall be made and the extent thereof shall be final, binding, and conclusive.

7.No Multiple Payments.  Settlement of the Phantom Units shall not occur under more than one provision of this Agreement.  

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8.Information Confidential.  As partial consideration for the granting of the Phantom Units hereunder, the Participant hereby agrees with the Company that the Participant will keep confidential all information and knowledge that the Participant has relating to the terms and conditions of this Agreement; provided, however, that such information may be disclosed as required by law and may be given in confidence to the Participant's spouse, tax and financial advisors, or to a financial institution to the extent that such information is necessary to secure a loan.  In the event any breach of this promise comes to the attention of the Company, it shall take into consideration that breach in determining whether to recommend the grant of any future similar award to the Participant, as a factor militating against the advisability of granting any such future award to the Participant.

9.No Right to Continued Services.  This Agreement shall not be construed to confer upon the Participant any right to continue as a service provider of the Company, the General Partner, the Partnership or their Affiliates.  Any question as to whether there has been a termination of such services, and the cause of such termination, shall be determined by the Board, the Company or an Affiliate and its determination shall be final and binding.

10.Payment of Taxes.  The Participant shall be solely responsible for paying any and all taxes that may be associated with the grant or settlement of the Award.

11.Administration.  This Agreement shall at all times be subject to the terms and conditions of the Plan.  The Board shall have sole and complete discretion with respect to all matters reserved to it by the Plan and decisions of a majority of the Board with respect thereto and this Agreement shall be final and binding upon the Participant and the Company.  In the event of any conflict between the terms and conditions of this Agreement and the Plan, the provisions of the Plan shall control. 

12.Unfunded Arrangement.  This Agreement and the Plan shall not give the Participant any security or other interest in any assets of the Company; rather the Participant's right to the Award is that of a general unsecured creditor of the Company.

13.No Liability for Good Faith Determinations.  The Company and the members of the Board shall not be liable for any act, omission or determination taken or made in good faith with respect to this Agreement or the Phantom Units granted hereunder. 

14.No Guarantee of Interests.  The Company and the members of the Board do not guarantee the Units from loss or depreciation.

15.Records.  Records of the Company or an Affiliate regarding the Participant's period of service, termination of service and the reason therefore, leaves of absence, and other matters shall be conclusive for all purposes hereunder, unless determined by the Company or an Affiliate to be incorrect.

16.Company Action.  Any action required of the Company shall be by resolution of the Board or by a person authorized to act by resolution of the Board. 

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17.Severability.  If any provision of this Agreement is held to be illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions hereof, but such provision shall be fully severable and this Agreement shall be construed and enforced as if the illegal or invalid provision had never been included herein.

18.Notices.  All notices required or permitted under this Agreement must be in writing and personally delivered or sent by mail and shall be deemed to be delivered on the date on which it is actually received by the person to whom it is properly addressed.  A notice shall be effective when actually received by the Company in writing and in conformance with this Agreement and the Plan. 

19.Waiver of Notice.  Any person entitled to notice hereunder may waive such notice.

20.Successors.  This Agreement shall be binding upon the Participant, the Participant's legal representatives, heirs, legatees and distributees, and upon the Company, its successors and assigns.

21.Headings.  The titles and headings of Sections are included for convenience of reference only and are not to be considered in construction of the provisions hereof.

22.Governing Law.  All questions arising with respect to the provisions of this Agreement shall be determined by application of the laws of the State of Delaware without regard to choice of law provisions thereunder, except to the extent Delaware law is preempted by federal law.

23.Word Usage.  Words used in the masculine shall apply to the feminine where applicable, and wherever the context of this Agreement dictates, the plural shall be read as the singular and the singular as the plural.

24.Return of Compensation.  Notwithstanding anything in this Agreement, the Plan or any other agreement between the Company, the General Partnership, the Partnership or an Affiliate and Participant to the contrary, Participant acknowledges that the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”) has the effect of requiring certain executives of the Partnership to repay the Partnership, and for the Partnership to recoup from such executives, erroneously awarded amounts of incentive-based compensation.  If, and only to the extent, the Act, any rules or regulations promulgated thereunder by the Securities and Exchange Commission or any similar federal or state law requires the Partnership to recoup any erroneously awarded incentive-based compensation (which may include the Award) that the Partnership has paid or granted to Participant, Participant hereby agrees, even if Participant has terminated his or her service with the Company, the Partnership or an Affiliate, to promptly repay such erroneously awarded incentive compensation to the Partnership upon its written request.  This Section 24 shall survive the termination of this Agreement.

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25.Amendment.  This Agreement may be amended by the Board; provided, however, that no amendment may decrease Participant's rights inherent in this Agreement prior to such amendment without Participant's express written consent.  Notwithstanding the provisions of this Section 25, this Agreement may be amended by the Board, without the consent of the Participant, to the extent necessary to comply with applicable laws and regulations and to conform the provisions of this Agreement to any changes thereto or to settle the Award pursuant to all applicable provisions of the Plan.

    

    

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer effective as of May 13, 2013.

Oiltanking North America, LLC

                                
By:______________________________________

Name: Anne-Marie Ainsworth

Title:   President & Chief Executive Officer

PARTICIPANT

__________________________________________
    

7OILT 6.30.2013 10Q EX.10.3

EXHIBIT 10.3
SECOND AMENDMENT TO THE SERVICES AGREEMENT
This SECOND AMENDMENT TO THE SERVICES AGREEMENT (“Second Amendment”) is entered into on August 5, 2013, but effective as of July 1, 2013 (the “Second Amendment Effective Date”), by and between OILTANKING PARTNERS, L.P., a Delaware limited partnership (the “Partnership”), OTLP GP, LLC, a Delaware limited liability company and the general partner of the Partnership (the “General Partner”), OILTANKING BEAUMONT SPECIALTY PRODUCTS, LLC, a Texas limited liability company (“Specialty Products”), and OILTANKING NORTH AMERICA, LLC, a Delaware limited liability company (“OTNA”). The above-named entities are sometimes referred to in this Second Amendment each as a “Party” and collectively as the “Parties.”
R E C I T A L S:
1.    The Parties have heretofore entered into that certain Services Agreement, dated and effective as of July 19, 2011 (the “Original Services Agreement”), which among other things, evidences the Parties’ agreement with respect to (i) the amount to be paid by the Partnership for certain selling, general, administrative and operating services to be performed by OTNA and its affiliates as well as direct expenses incurred by OTNA and its affiliates for and on behalf of the Partnership and its subsidiaries and (ii) certain indemnification obligations regarding such services.
2.    The Parties have heretofore entered into a First Amendment to the Services Agreement on December 31, 2011, but effective as of July 19, 2011 (the “First Amendment”), which among other things, modifies the reimbursement provisions for certain expenditures that OTNA incurs or payments that OTNA makes on behalf of the Partnership and its subsidiaries, and provides for the payment to OTNA of a fixed fee for certain specified services.  The Original Services Agreement as amended by the First Amendment is herein referred to as the “Services Agreement.”
3.    The Parties desire to further amend the Services Agreement to increase the amount of the SG&A Fee (as defined in the Services Agreement) and the SP SG&A Fee (as defined in the Services Agreement) and (ii) amend and restate Schedule A to the Services Agreement to include administrative office space. 
In consideration of the agreements contained herein, and for other good and valuable consideration, the Parties hereby amend the Services Agreement as follows:
ARTICLE I
DEFINED TERMS

1.1    Defined Terms.  All capitalized terms which are used but not defined in this Second Amendment shall have meanings assigned to such terms in the Services Agreement.

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ARTICLE II
AMENDMENTS TO THE SERVICES AGREEMENT

2.1    The Services Agreement is hereby amended as follows:

(a)Section 2.1(d) of the Services Agreement is hereby revised and amended in its entirety to read as follows:

“(d)    Subject to the provisions of this Section 2.1(d) and effective as of Second Amendment Effective Date, OTNA shall be entitled to compensation for the Services listed in Schedule A (except as set specifically set forth in Schedule A) (i) from the Partnership Group equal to a fee of $18,453,000 per year, payable in equal monthly installments (the “SG&A Fee”) and (ii) from Specialty Products equal to a fee of $372,000 per year payable in equal monthly installments (the “SP SG&A Fee”). Also subject to the provisions of this Section 2.1(d), OTNA shall be entitled to reimbursement from Specialty Products for all cash expenses and expenditures that OTNA incurs or payments OTNA makes on behalf of Specialty Products for OTNA-sourced operator services only (i.e., not including third-party operators), estimated at $285,000 per year (the “SP Operator Expenses,” which is not an absolute limit). The SG&A Fee, the SP SG&A Fee and the SP Operator Expenses (each an “Expenses Amount” and collectively, the “Expenses Amounts”) shall each be subject to adjustment as follows: 
(i)Beginning January 1, 2015 and continuing on January 1 of each year thereafter, each Expenses Amount shall be increased by the percentage increase, if any, in the Consumer Price Index - All Urban Consumers, U.S. City Average, Not Seasonally Adjusted (the “CPI”). The base index (“Base CPI”) shall be the published CPI as of the month of Effective Date, which shall be compared with the first or subsequent anniversary date indices (each, a “Final CPI”). The percentage change will be calculated to the third decimal place and applied to such Expenses Amount to determine the adjustments to the Expenses Amount in accordance with the following formula:

Final CPI - Base CPI x Expenses Amount = Adjustment Amount
Base CPI
If the product of the foregoing formula is negative, there shall be no adjustment to the given Expenses Amount.  In the event that the CPI is no longer kept or published, OTNA shall establish an alternative method of adjusting the Expenses Amounts based on a then currently published inflation index.  

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(ii)If after the Second Amendment Effective Date, the Partnership Group or Specialty Products completes any acquisition of assets or businesses or the business of the Partnership Group or Specialty Products otherwise expands, then the Expenses Amounts shall be appropriately increased, as applicable, in order to account for adjustments in the nature and extent of the Services provided by OTNA to the Partnership Entities and Specialty Products, with any such increases in the Expenses Amounts to be subject to the prior approval of the Conflicts Committee.  Any issues that the Parties are not able to resolve pursuant to the foregoing sentence shall be resolved in accordance with Section 6.12.

(iii)The Parties will meet at least biannually to review the scope of the Services, the standards of performance, performance metrics and activity levels and, if applicable, any adjustments to the Expenses Amounts.  The Parties will use their good-faith efforts to resolve any issues concerning Service standards, performance metrics or changes in the Expenses Amounts, with any increase or decrease in the Expenses Amounts to be subject to the prior approval of the Conflicts Committee.  Any issues that the Parties are not able to resolve pursuant to the foregoing sentence shall be resolved in accordance with Section 6.12.

The SG&A Fee and the SP SG&A Fee are separate and apart from and do not include reimbursement for direct costs and expenses incurred by OTNA to provide the Services listed in Schedule B, publicly traded partnership expenses of the Partnership Group as provided in Section 2.2 or for insurance reimbursements as provided in Section 2.3.”
(b)Section 6.6 of the Services Agreement is hereby revised and amended in its entirety to read as follows:

“6.6 Notices. All notices or other communications required or permitted to be given hereunder shall be in writing and shall be delivered by hand or sent by facsimile or sent, postage prepaid, by registered, certified or express mail or reputable overnight courier service and shall be deemed given when so delivered by hand or facsimile, or if mailed, three days after mailing (one business day in the case of express mail or overnight courier service), as follows (or at such other address for a Party as shall be specified by notice given in accordance with this Section 6.6):
OTNA:
Oiltanking North America, LLC
333 Clay Street, Suite 2400
Houston, Texas 77002
Attention: Brian C. Brantley

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Partnership:
Oiltanking Partners, L.P.
333 Clay Street, Suite 2400
Houston, Texas 77002
Attention: Brian C. Brantley

General Partner:
OTLP GP, LLC
333 Clay Street, Suite 2400
Houston, Texas 77002
Attention: Brian C. Brantley

Specialty Products:
Oiltanking Beaumont Specialty Products, LLC
333 Clay Street, Suite 2400
Houston, Texas 77002
Attention: Brian C. Brantley”

(c)Schedule A to the Services Agreement is hereby amended and restated in its entirety as set forth in Schedule A attached hereto.

ARTICLE III
MISCELLANEOUS

3.1    Binding Effect.  This Second Amendment shall bind and inure to the benefit of and be enforceable by the Parties hereto and their respective successors and permitted assigns.

3.2    No Third Party Beneficiaries.  Except as otherwise provided, this Second Amendment is for the sole benefit of the Parties and their successors and permitted assigns, and nothing herein expressed or implied shall give or be construed to give to any Person, other than the Parties and their successors and permitted assigns, any legal or equitable rights hereunder, whether as third-party beneficiaries or otherwise.

3.3    Amendments.  No amendment to this Second Amendment shall be effective unless it is in writing and signed by each Party hereto.

3.4    Further Assurances.  The Parties agree to execute such additional instruments, agreements and documents and to take such other actions, as may be necessary to effect the purposes of this Second Amendment.

3.5    Counterparts.  This Second Amendment may be executed in two or more counterparts, and by facsimile, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement.

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3.6    Severability.  If any term or other provision of this Second Amendment is invalid, illegal or incapable of being enforced by any applicable rule of law or public policy, all other conditions and provisions of this Second Amendment shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties hereto shall negotiate in good faith to modify this Second Amendment so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the extent possible.

3.7    Governing Law.  THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS, INCLUDING VALIDITY, INTERPRETATION AND EFFECT, BY THE LAWS OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS EXECUTED AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PRINCIPLES OF SUCH STATE WHICH WOULD RESULT IN THE APPLICATION OF THE LAWS OF ANY OTHER STATE.

3.8    Effect of Amendment.  This Second Amendment only amends the Services Agreement as specifically provided herein and all other provisions of the Services Agreement are hereby ratified and confirmed and shall remain in full force and effect.

[Signature page follows]
    

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IN WITNESS WHEREOF, the undersigned have executed this Second Amendment as of the day and year first above written.
	
				
	 
	OILTANKING PARTNERS, L.P.
	 

	 
	By:  OTLP GP, LLC, its General Partner
	 

	 
	 
	 
	 

	 
	By:
	/s/  Anne-Marie Ainsworth
	 

	 
	Name:
	Anne-Marie Ainsworth
	 

	 
	Title:
	President and Chief Executive Officer
	 

	 
	 
	 
	 

	 
	By:
	/s/  Jonathan Z. Ackerman
	 

	 
	Name:
	Jonathan Z. Ackerman
	 

	 
	Title:
	Administrative Representative
	 

	 
	 
	 
	 

	 
	OILTANKING NORTH AMERICA, LLC
	 

	 
	 
	 
	 

	 
	By:
	/s/  Anne-Marie Ainsworth
	 

	 
	Name:
	Anne-Marie Ainsworth
	 

	 
	Title:
	President and Chief Executive Officer
	 

	 
	 
	 
	 

	 
	By:
	/s/  Donna Hymel
	 

	 
	Name:
	Donna Hymel
	 

	 
	Title:
	Administrative Representative
	 

	 
	 
	 
	 

	 
	OTLP GP, LLC
	 

	 
	 
	 
	 

	 
	By:
	/s/  Anne-Marie Ainsworth
	 

	 
	Name:
	Anne-Marie Ainsworth
	 

	 
	Title:
	President and Chief Executive Officer
	 

	 
	 
	 
	 

	 
	OILTANKING BEAUMONT SPECIALTY
	 

	 
	PRODUCTS, LLC
	 

	 
	 
	 
	 

	 
	By:
	/s/  Anne-Marie Ainsworth
	 

	 
	Name:
	Anne-Marie Ainsworth
	 

	 
	Title:
	President and Chief Executive Officer
	 

Signature Page to Second Amendment to the Services Agreement

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SCHEDULE A
Services Included within the SG&A Fee and the SP SG&A Fee

		
	1)
	executive officer compensation and related expenses, 

		
	2)
	investor relations (provided that the SG&A Fee and the SP SG&A Fee shall not include, and shall be paid separate and apart from, reimbursement of expenses for investor relations services that are to be reimbursed pursuant to Section 2.2),

		
	3)
	sales and marketing, 

		
	4)
	corporate legal for support of existing assets of the Partnership Group and Specialty Products for support of existing assets of the Partnership Group and Specialty Products,

		
	5)
	accounting (provided that the SG&A Fee and the SP SG&A Fee shall not include, and shall be paid separate and apart from, reimbursement of expenses for accounting services that are to be reimbursed pursuant to Section 2.2),

		
	6)
	treasury and cash management,

		
	7)
	creditor management and collections,

		
	8)
	internal audit,

		
	9)
	tax reporting and administration for support of existing assets of the Partnership Group and Specialty Products,

		
	10)
	insurance administration and claims processing,

		
	11)
	risk management,

		
	12)
	health, safety, security and environmental affairs for support of existing assets of the Partnership Group and Specialty Products,

		
	13)
	human resources management for support of existing assets of the Partnership Group and Specialty Products,

		
	14)
	payroll administration,

		
	15)
	internal training,

		
	16)
	engineering services for support of existing assets of the Partnership Group and Specialty Products,

		
	17)
	Enterprise Resource Planning for support of existing assets of the Partnership Group and Specialty Products, 

		
	18)
	information technology for support of existing assets of the Partnership Group and Specialty Products, and

		
	19)
	administrative office space for support of existing assets of the Partnership Group and Specialty Products.

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