EXHIBIT 10.6
Execution Copy
PIPELINES AND TERMINALS STORAGE AND THROUGHPUT AGREEMENT
This Pipelines and Terminals Storage and Throughput Agreement (this
"Agreement") is dated as of February 8, 2002, by and among Sunoco, Inc. (R&M), a
Pennsylvania corporation ("Sunoco R&M"), Sunoco Logistics Partners L.P., a
Delaware limited partnership (the "Partnership"), Sunoco Logistics Partners
Operations L.P., a Delaware limited partnership (the "Operating Partnership"),
Sunoco Partners LLC, a Pennsylvania limited liability company (the "General
Partner"), Sunoco Partners Marketing & Terminals L.P., a Texas limited
partnership ("Sunoco Marketing"), Sunoco Pipeline L.P., a Texas limited
partnership ("Sunoco Pipeline"), Sunoco Logistics Partners GP LLC, a Delaware
limited liability company ("Sunoco LLC"), and Sunoco Logistics Partners
Operations GP LLC, a Delaware limited liability company ("Sunoco Operations LLC"
and, together with the Partnership, the Operating Partnership, the General
Partner, Sunoco Marketing, Sunoco Pipeline and Sunoco LLC, the "Partnership
Entities").
RECITALS:
WHEREAS, as of the date hereof, by virtue of its indirect ownership
interests in the Partnership Group (as defined below), Sunoco R&M has an
economic interest in the financial and commercial success of the Partnership
Group;
WHEREAS, the Partnership Group is substantially dependent upon Sunoco R&M
for the volumes of Crude Oil (as defined below) and Refined Products (as defined
below) transported through the Partnership Group's pipelines and handled at the
Partnership Group's terminals such that a significant reduction in Sunoco R&M's
use of the Partnership Group's services to transport and handle the Crude Oil
and Refined Products would likely result in a correspondingly significant
reduction in the financial and commercial success of the Partnership Group; and
WHEREAS, Sunoco R&M and the Partnership Entities desire to enter into this
Agreement.
NOW, THEREFORE, in consideration of the covenants and obligations contained
herein, the parties to this Agreement hereby agree as follows:
Section 1. Definitions
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Capitalized terms used throughout this Agreement and not otherwise defined
herein shall have the meanings set forth below.
"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, the Person in question,
excluding, in the case of Sunoco R&M, the Partnership Group Members.
"Applicable Law" means any applicable statute, law, regulation, ordinance,
rule, judgment, rule of law, order, decree, permit, approval, concession, grant,
franchise, license, agreement, requirement, or other governmental restriction or
any similar form of decision of, or any provision or condition of any permit,
license or other operating authorization issued under any of the foregoing by,
or any determination by any Governmental Authority having or asserting
jurisdiction over the matter or matters in question, whether now or hereafter in
effect
and in each case as amended (including, without limitation, all of the terms and
provisions of the common law of such Governmental Authority), as interpreted and
enforced at the time in question.
"Arbitrable Dispute" means any and all disputes, Claims, counterclaims,
demands, causes of action, controversies and other matters in question between
any of the Partnership Entities, on the one hand, and Sunoco R&M, on the other
hand, arising out of or relating to this Agreement or the alleged breach hereof,
or in any way relating to the subject matter of this Agreement or the
relationship between any of the Partnership Entities, on the one hand, and
Sunoco R&M, on the other hand, created by this Agreement regardless of whether
(a) allegedly extra-contractual in nature, (b) sounding in contract, tort or
otherwise, (c) provided for by Applicable Law or otherwise or (d) seeking
damages or any other relief, whether at law, in equity or otherwise.
"bpd" means barrels per day.
"Claim" means any existing or threatened future claim, demand, suit,
action, investigation, proceeding, governmental action or cause of action of any
kind or character (in each case, whether civil, criminal, investigative or
administrative), known or unknown, under any theory, including those based on
theories of contract, tort, statutory liability, strict liability, employer
liability, premises liability, products liability, breach of warranty or
malpractice.
"Closing Date" means the date of the closing of the Partnership's initial
public offering of Common Units.
"Common Units" has the meaning set forth in the Partnership Agreement.
"Contract Year" means a year that commences on March 1 and ends on the last
day of February, except that for purposes of Section 2(a)(iii), "Contract Year"
means a year that commences on April 1 and ends on March 31.
"Control" (including with correlative meaning, the term "controlled by")
means, as used with respect to any Person, the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise.
"Controlled Affiliates" means with respect to any Person, any other Person
that directly or indirectly through one or more intermediaries is controlled by
such Person, excluding, in the case of Sunoco R&M, the Partnership Group
Members.
"Crude Oil" means crude oil and other refinery feedstocks.
"Crude Oil Pipelines" means the pipelines described on Exhibit A attached
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hereto.
"Deficiency Notice" has the meaning set forth in Section 8(a).
"Deficiency Payment" has the meaning set forth in Section 8(a).
"FERC" means the United States Federal Energy Regulatory Commission.
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"Force Majeure" means acts of God, strikes, lockouts or other industrial
disturbances, acts of the public enemy, wars, blockades, insurrections, riots,
storms, floods, washouts, arrests, the order of any court or Governmental
Authority having jurisdiction while the same is in force and effect, civil
disturbances, explosions, breakage, accident to machinery, storage tanks or
lines of pipe, inability to obtain or unavoidable delay in obtaining material,
equipment, right of way easements, franchises, or permits, and any other causes
whether of the kind herein enumerated or otherwise not reasonably within the
control of the party claiming suspension and which by the exercise of due
diligence such party is unable to prevent or overcome.
"Fort Mifflin Terminal Complex" means the storage tanks, ship docks and
pipelines located near Philadelphia, Pennsylvania as described on Exhibit B
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attached hereto.
"Governmental Authority" means any federal, state, local or foreign
government or any provincial, departmental or other political subdivision
thereof, or any entity, body or authority exercising executive, legislative,
judicial, regulatory, administrative or other governmental functions or any
court, department, commission, board, bureau, agency, instrumentality or
administrative body of any of the foregoing.
"Inkster Terminal" means the storage facility near Detroit, Michigan as
described on Exhibit C attached hereto.
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"Investment Grade Rating" means a rating equal to or higher than Baa3
(or the equivalent) by Xxxxx'x Investors Service, Inc. or BBB- (or the
equivalent) by Standard & Poor's Ratings Services or Fitch, Inc.
"Limited Partner" has the meaning set forth in the Partnership Agreement.
"Marcus Hook Refinery" means the refinery owned by Sunoco R&M or its
Controlled Affiliates in Marcus Hook, Pennsylvania.
"Marcus Hook Tank Farm" means the tanks and pipelines located near Marcus
Hook, Pennsylvania as described on Exhibit D attached hereto.
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"Partnership Agreement" means the First Amended and Restated Agreement of
Limited Partnership of Sunoco Logistics Partners L.P., as it may be amended from
time to time.
"Partnership Group" means the Partnership, the Operating Partnership and
any Subsidiary of any such Person, treated as a single consolidated entity.
"Partnership Group Member" means any member of the Partnership Group.
"Person" means an individual or a corporation, limited liability company,
partnership, joint venture, trust, unincorporated organization, association,
government agency or political subdivision thereof or other entity.
"Philadelphia Refinery" means the refinery owned by Sunoco R&M or its
Controlled Affiliates in Philadelphia, Pennsylvania.
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"Prime Rate" means the prime rate per annum established by Bank of America,
N.A., or if Bank of America, N.A. no longer establishes a prime rate for any
reason, the prime rate per annum established by the largest U.S. bank measured
by deposits from time to time as its base rate on corporate loans, automatically
fluctuating upward or downward with each announcement of such prime rate.
"Refined Products" means gasoline, diesel fuel, jet fuel, kerosene, heating
oil, distillates, transmix, liquefied petroleum gas, natural gas liquids, blend
stocks, ethanol, xylene, toluene and petrochemical feedstocks.
"Refined Product Pipelines" means the pipelines described on Exhibit E
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attached hereto.
"Refined Product Terminals" means the terminals described on Exhibit F
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attached hereto.
"Refineries" means, collectively, the Marcus Hook Refinery, the
Philadelphia Refinery, the Toledo Refinery and the Tulsa Refinery.
"Refund" has the meaning set forth in Section 8(c).
"Subsidiary" means with respect to any Person, (a) a corporation of which
more than 50% of the voting power of shares entitled (without regard to the
occurrence of any contingency) to vote in the election of directors or other
governing body of such corporation is owned, directly or indirectly, at the date
of determination, by such Person, by one or more Subsidiaries of such Person or
a combination thereof, (b) a partnership (whether general or limited) in which
such Person or a Subsidiary of such Person is, at the date of determination, a
general or limited partner of such partnership, but only if more than 50% of the
partnership interests of such partnership (considering all of the partnership
interests of the partnership as a single class) is owned, directly or
indirectly, at the date of determination, by such Person, by one or more
Subsidiaries of such Person, or a combination thereof, or (c) any other Person
(other than a corporation or a partnership) in which such Person, one or more
Subsidiaries of such Person, or a combination thereof, directly or indirectly,
at the date of determination, has (i) at least a majority ownership interest or
(ii) the power to elect or direct the election of a majority of the directors or
other governing body of such Person.
"Toledo Refinery" means the refinery owned by Sunoco R&M or its Controlled
Affiliates in Toledo, Ohio.
"Tulsa Refinery" means the refinery owned by Sunoco R&M or its Controlled
Affiliates in Tulsa, Oklahoma.
"VLCC" means a vessel that is in the class of Very Large Crude Carrier, as
that term is used in the shipping industry.
Section 2. Agreement to Use Services Relating to Pipelines and Terminals.
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The parties are entering into this Agreement that sets forth a commercial
arrangement consistent with historical business transactions between Sunoco R&M
and the predecessor to the Partnership Group as well as the objectives of the
parties. The parties intend to be strictly bound
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by the commercial terms set forth in this Agreement, which set forth certain
minimum throughput and revenue commitments on the part of Sunoco R&M and require
the Partnership Group to provide certain services to Sunoco R&M. The principal
objective of the Partnership Group is for Sunoco to meet or exceed its minimum
commitments. The principal objective of Sunoco R&M is for the Partnership Group
to provide services to Sunoco R&M in a manner that enables Sunoco R&M to operate
its assets in a manner consistent with the historical course of dealing between
the parties in which Sunoco R&M has been the principal user of the Crude Oil
Pipelines, the Refined Product Pipelines, the Fort Mifflin Terminal Complex, the
Inkster Terminal, the Marcus Hook Tank Farm and the Refined Product Terminals.
This Agreement does not set forth every aspect of the commercial relationship
between the parties, and the Agreement is not intended to anticipate all changes
in business conditions or other circumstances that may occur during the term.
Where precise terms are not included, where there are ambiguities, where
circumstances have changed, or in circumstances that the parties did not
anticipate, this Agreement should be interpreted in a manner that achieves the
principal objectives of both parties. Where it is not possible to completely
achieve the principal objectives of both parties, this Agreement should be
interpreted in a manner that as closely as reasonably possible achieves the
principal objectives of both parties.
(a) Storage and Throughput Commitment. During the term of this Agreement
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and subject to the terms and conditions of this Agreement, Sunoco R&M agrees as
follows:
(i) Refined Product Pipelines and Refined Product Terminals.
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(A) Subject to Section 3, for a term of five Contract Years
commencing on March 1, 2002, Sunoco R&M will, and will cause its
Controlled Affiliates to, transport on the Refined Product Pipelines
and throughput in the Refined Product Terminals an amount of Refined
Products that will produce revenue to the Partnership Group in an
amount at least equal to the amount set forth below next to each
Contract Year.
Contract Year Amount
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Commencing
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March 1, 2002 $75,000,000
March 1, 2003 76,252,500
March 1, 2004 77,525,917
March 1, 2005 78,820,600
March 1, 2006 80,136,904
(B) Subject to Section 3, Sunoco R&M will, and will cause its
Controlled Affiliates to, transport on the Refined Product Pipelines
an amount of Refined Products that will produce at least $54,316,793
million of revenue to the
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Partnership Group during the Contract Year commencing on March 1,
2007, and at least $55,223,884 million of revenue to the Partnership
Group during the Contract Year commencing on March 1, 2008.
(C) The applicable tariffs and charges for transporting and
throughputting the Refined Products under this Section 2(a)(i) are set
forth on the throughput fee schedule attached hereto as Exhibit G.
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(D) If Sunoco R&M is unable for a period of time to transport on
the Refined Product Pipelines the volumes of Refined Products required
to meet its revenue obligations under Section 2(a)(i)(A) and Section
2(a)(i)(B) as a result of the Partnership Group's operational
difficulties, prorationing or difficulties with pipeline connections,
then upon written notice by Sunoco R&M to the Partnership Group,
Sunoco R&M's obligations under this Section 2(a)(i) will be reduced
for such period of time by the volumes of Refined Products that Sunoco
R&M and its Controlled Affiliates are unable to transport on the
Refined Product Pipelines as a result of the Partnership Group's
operational difficulties, prorationing or difficulties with pipeline
connections.
(ii) Marcus Hook Tank Farm.
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(A) Subject to Section 3, for a term of five Contract Years
commencing on March 1, 2002, Sunoco R&M will, and will cause its
Controlled Affiliates to, deliver an average of at least 130,000 bpd
of Refined Products to the Marcus Hook Tank Farm per Contract Year.
(B) Sunoco R&M and its Controlled Affiliates will pay the
Partnership Group a fee of $0.1627 per barrel for the first 130,000
bpd received at the Marcus Hook Tank Farm and $0.0813 per barrel for
volumes in excess of 130,000 bpd received at the Marcus Hook Tank
Farm. These per barrel fees will escalate at the rate of 1.67%
(rounded to the nearest one-hundredth of one cent) on January 1 of
each year commencing January 1, 2003.
(C) The per barrel fees payable under Section 2(a)(ii)(B) for a
given month shall be based on an average of the number of barrels
received during the entire month from Sunoco R&M and its Controlled
Affiliates. Sunoco R&M and its Controlled Affiliates shall not be
entitled to pay the lower per barrel fee under Section 2(a)(ii)(B) in
any month in a given Contract Year until Sunoco R&M and its Controlled
Affiliates have paid the higher per barrel fee under Section
2(a)(ii)(B) for an average of 130,000 bpd for each prior month in that
Contract Year. Examples of this monthly calculation are set forth on
Exhibit H attached hereto.
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(D) The Partnership Group may have one tank at the Marcus Hook
Tank Farm out of service at a time for maintenance purposes.
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(iii) Inkster Terminal.
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(A) Subject to Section 3, for a term of seven Contract Years
commencing April 1, 2002, the Partnership Group will provide storage
services to Sunoco R&M to store up to 975,734 barrels of liquefied
petroleum gas at the Inkster Terminal.
(B) Sunoco R&M will pay the Partnership Group an annual fee of
$2.04 per barrel of storage capacity made available to Sunoco R&M at
the Inkster Terminal, a fee of $0.204 per barrel for receipts at the
Inkster Terminal greater than 975,734 barrels per Contract Year and a
fee of $0.204 per barrel for deliveries from the Inkster Terminal
greater than 975,734 barrels per Contract Year. The annual and per
barrel fees will escalate at the rate of 1.875% (rounded to the
nearest one-tenth of one cent) on January 1 of each year commencing
January 1, 2003. Mercaptan and Mercaptan injection at the transport
loading facility are included in these fees. The fees payable under
this Section 2(a)(iii) will be paid in monthly installments in
accordance with Section 2(i) of this Agreement.
(C) The Partnership Group may have one storage cavern at the
Inkster Terminal out of service for up to 60 days in each Contract
Year.
(iv) Fort Mifflin Terminal Complex.
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(A) Subject to Section 3, for a term of seven Contract Years
commencing on March 1, 2002, Sunoco R&M will, and will cause its
Controlled Affiliates to, deliver an average of at least 290,000 bpd
of Crude Oil or Refined Products to the Fort Mifflin Terminal Complex
per Contract Year.
(B) Sunoco R&M and its Controlled Affiliates will pay the
Partnership Group a fee of $0.1627 per barrel for the first 180,000
bpd received at the Fort Mifflin Terminal Complex and $0.0813 per
barrel for volumes in excess of 180,000 bpd received at the Fort
Mifflin Terminal Complex. These per barrel fees will escalate at the
rate of 1.67% (rounded to the nearest one-hundredth of one cent) on
January 1 of each year commencing January 1, 2003.
(C) The per barrel fees payable under Section 2(a)(iv)(B) for a
given month shall be based on an average of the number of barrels
received during the entire month from Sunoco R&M and its Controlled
Affiliates. Sunoco R&M and its Controlled Affiliates shall not be
entitled to pay the lower per barrel fee under Section 2(a)(iv)(B) for
any month in a given Contract Year until Sunoco R&M and its Controlled
Affiliates have paid the higher per barrel fee under Section
2(a)(iv)(B) for an average of 180,000 bpd for each prior month in that
Contract Year. Examples of this monthly calculation are set forth on
Exhibit H attached hereto.
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(D) For a term of seven Contract Years commencing on March 1,
2002, the Partnership Group will pay to Sunoco R&M, on a monthly
basis, $1.00
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for each barrel of Crude Oil offloaded from a VLCC at the Fort Mifflin
Terminal Complex that is not delivered to, or for the benefit of, any
refinery owned by Sunoco R&M and its Affiliates.
(E) The Partnership Group may have one tank out of service at the
Fort Mifflin Terminal Complex at a time for maintenance purposes.
(v) Crude Oil Pipelines.
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(A) Subject to Section 3, for a term of seven Contract Years
commencing on March 1, 2002, Sunoco R&M will, and will cause its
Controlled Affiliates to, use or cause others to use the services of
the Partnership Group to transport on the Crude Oil Pipelines at the
published tariffs an average of not less than 140,000 bpd of Crude Oil
per Contract Year, consisting of imported Crude Oil or Crude Oil
originating in Michigan to be refined by the Toledo Refinery and Crude
Oil to be refined by the Tulsa Refinery.
(B) If Sunoco R&M is unable for a period of time to transport the
volumes of Crude Oil required under Section 2(a)(v)(A) as a result of
the Partnership Group's operational difficulties, prorationing or
difficulties with pipeline connections, then upon written notice by
Sunoco R&M to the Partnership Group, Sunoco R&M's obligations under
this Section 2(a)(v) will be reduced for such period of time by the
volumes of Crude Oil that Sunoco R&M and its Controlled Affiliates are
unable to transport as a result of the Partnership Group's operational
difficulties, prorationing or difficulties with pipeline connections.
(C) The FERC tariff rates charged by the Partnership Group to
Sunoco R&M and its Controlled Affiliates for the transportation of
Crude Oil under Section 2(a)(v)(A) may not exceed the maximum
allowable FERC rate under index pricing.
(b) Rates Effective. Notwithstanding that the annual commitments of Sunoco
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R&M will be determined on a Contract Year basis, the applicable fees, tariff
rates and other charges provided for in this Agreement will become effective as
of the date of this Agreement.
(c) Obligations of the Partnership Group. During the term of this Agreement
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and subject to the terms and conditions of this Agreement, including Section
9(c), the Partnership Group agrees to own, operate and maintain the assets
necessary to accept the deliveries from Sunoco R&M and its Controlled Affiliates
and to provide the services required under this Agreement. To the extent that
Sunoco R&M is entitled to an exception under Section 3 of this Agreement to its
obligations under Sections 2(a)(ii), (iii) or (iv) of this Agreement, the
corresponding obligations of the Partnership Group under this Section 2(c) will
be proportionately reduced.
(d) Ancillary Services. The Partnership Group will provide ancillary
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services as have been provided historically, such as blending, tank sampling and
tank-to-tank transfers, to Sunoco R&M and its Controlled Affiliates. The fees
for such ancillary services are included in the fees established under this
Agreement for services provided under Section 2(a). If any ancillary
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services are requested by Sunoco R&M and its Controlled Affiliates that are
different in kind, scope or frequency from the ancillary services that have been
historically provided, then the parties shall negotiate in good faith to
determine the appropriate rates to be charged for such services.
(e) Jointly Owned Assets. In any instance in which the Partnership Group
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owns an interest in a pipeline or terminal jointly with other parties, the terms
"Crude Oil Pipelines," "Refined Product Pipelines" and "Refined Product
Terminals" when used in reference to such pipeline or terminal, as applicable,
means only the ownership interest therein held by the Partnership Group. In any
such instance, volumes transported or terminalled for Sunoco R&M and its
Controlled Affiliates by or for the account of other owners of the pipeline or
terminal shall not be considered as volumes transported in a Crude Oil Pipeline
or a Refined Product Pipeline or terminalled through a Refined Product Terminal,
as applicable, for purposes of determining whether Sunoco R&M's obligations have
been met under this Agreement.
(f) Jointly Owned Subsidiaries. In any instance in which a Subsidiary that
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is not directly or indirectly through one or more intermediaries, a wholly-owned
Subsidiary of the Partnership owns a pipeline or terminal, the volumes deemed
transported in a Crude Oil Pipeline or a Refined Product Pipeline or terminalled
through a Refined Product Terminal, as applicable, by such Subsidiary shall be
equal to the total volume transported on such pipeline or terminalled through
such terminal multiplied by the direct or indirect ownership interest, on a
percentage basis, of the Partnership in such Subsidiary.
(g) Product Losses. With respect to the Marcus Hook Tank Farm, the Inkster
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Terminal, the Fort Mifflin Terminal Complex and the Refined Product Terminals,
the Partnership Group will be responsible for all product losses, as determined
on a quarterly basis, that are greater than one fourth of one percent of the
product transported or throughput in accordance with this Section 2. The
Partnership Group's responsibility for product losses on the Refined Product
Pipelines and the Crude Oil Pipelines will be determined by the applicable
tariffs.
(h) Taxes. Sunoco R&M will, and will cause its Controlled Affiliates to,
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pay all taxes, import duties, license fees and other charges by any Governmental
Authority levied on the Refined Products or Crude Oil delivered by Sunoco R&M
and its Controlled Affiliates for transportation or storage by the Partnership
Group in the Refined Product Pipelines, Refined Product Terminals, the Marcus
Hook Tank Farm, the Inkster Terminal, the Fort Mifflin Terminal Complex and the
Crude Oil Pipelines (including, without limitation, charges by any Governmental
Authority imposed on the transfer of Crude Oil from water borne carriers).
(i) Timing of Payments. Sunoco R&M will, and will cause its Controlled
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Affiliates to, make payments to the Partnership Group on a monthly basis during
the term of this Agreement with respect to services rendered by the Partnership
Group under this Agreement in the prior month. Payments not received by the
Partnership Group on or prior to the applicable payment date will accrue
interest at the Prime Rate from the applicable payment date until paid.
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(j) Notification of Utilization. When requested by the Partnership Group,
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Sunoco R&M will provide to the Partnership Group written notification of Sunoco
R&M's reasonable good faith estimate of its anticipated future utilization of
the assets of the Partnership Group.
(k) Scheduling of Product Movements. The Partnership Group will use its
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reasonable commercial efforts to schedule Refined Products and Crude Oil
movements and accept deliveries of Refined Products and Crude Oil hereunder in a
manner that is consistent with the historical dealings between the parties, as
such dealings may change from time to time.
(l) Monthly Surcharge. If new laws or regulations are enacted that require
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the Partnership Group to make substantial and unanticipated capital expenditures
with respect to the Refined Products Terminals, the Marcus Hook Tank Farm, the
Inkster Terminal or the Fort Mifflin Terminal Complex, the Partnership Group may
impose a monthly surcharge to cover the cost of complying with these laws or
regulations. Sunoco R&M and the Partnership Group shall use their reasonable
commercial efforts to comply with these laws and regulations, and shall
negotiate in good faith to mitigate the impact of these laws and regulations and
to determine the level of the monthly surcharge. If Sunoco R&M and the
Partnership Group are unable to agree on the level of the monthly surcharge, the
Partnership Group will have the option to terminate this Agreement with respect
to the affected asset.
Section 3. Exceptions to Sunoco R&M's Obligations
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(a) Shut Down or Reconfiguration of Refineries. Sunoco R&M must deliver to
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the Partnership Group at least six months advance written notice of any planned
shut down or reconfiguration (excluding planned maintenance turnarounds) of any
Refinery or any portion of a Refinery. Sunoco R&M will use its commercially
reasonable efforts to mitigate any reduction in revenues or throughput
obligations under this Agreement that would result from such a shut down or
reconfiguration. If Sunoco R&M shuts down or reconfigures any Refinery or any
portion of a Refinery (excluding planned maintenance shutdowns) and Sunoco R&M
reasonably believes in good faith that such shut down or reconfiguration will
jeopardize its ability to satisfy its minimum revenue or throughput obligations
under this Agreement, then within 90 days of the delivery of the written notice
of the planned shut down or reconfiguration, Sunoco R&M shall (i) propose a new
minimum revenue or throughput obligation, as the case may be, such that the
ratio of the new minimum revenue or throughput obligations under this Agreement
over the anticipated production level following the shut down or reconfiguration
will be approximately equal to the ratio of the original minimum revenue or
throughput obligations under this Agreement over the original production level
and (ii) propose the date on which the new minimum revenue or throughput
obligation shall take effect. Unless objected to by the Partnership Entities
within 60 days of receipt by the Partnership Group of such proposal, such new
minimum revenue or throughput obligation shall become effective as of the date
proposed by Sunoco R&M. To the extent that the Partnership Entities do not agree
with Sunoco R&M's proposal, any changes in Sunoco R&M's obligations under this
Agreement, or the date on which such changes will take effect, will be
determined by binding arbitration in accordance with Section 9(f) of this
Agreement.
(b) MTBE Prohibition. Sunoco R&M shall deliver to the Partnership Group
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written notice of any planned prohibition by a Governmental Authority on the use
by Sunoco R&M of
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MTBE in the gasoline it produces no later than 90 days prior to the effective
date of such prohibition. Sunoco R&M will use its commercially reasonable
efforts to mitigate any reduction in revenues or throughput obligations under
this Agreement that would result from such a prohibition. If Sunoco R&M is
prohibited by a Governmental Authority from using MTBE in the gasoline it
produces and Sunoco R&M reasonably believes in good faith that such prohibition
will jeopardize its ability to satisfy its minimum revenue or throughput
obligations under this Agreement, then within 30 days of the delivery of the
written notice of the MTBE prohibition, Sunoco R&M shall (i) propose a new
minimum revenue or throughput obligation, as the case may be, such that the
ratio of the new minimum revenue or throughput obligations under this Agreement
over the anticipated production level following the MTBE prohibition will be
approximately equal to the ratio of the original minimum revenue or throughput
obligations under this Agreement over the original production level and (ii)
propose the date on which the new minimum revenue or throughput obligation shall
take effect. Unless objected to by the Partnership Entities within 60 days of
receipt by the Partnership Group of such proposal, such new minimum revenue or
throughput obligation shall become effective as of the date proposed by Sunoco
R&M. To the extent that the Partnership Entities do not agree with Sunoco R&M's
proposal, any changes in Sunoco R&M's obligations under this Agreement, or the
date on which such changes will take effect, will be determined by binding
arbitration in accordance with Section 9(f) of this Agreement.
(c) Force Majeure. In the event that any party is rendered unable, wholly
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or in part, by a Force Majeure event from performing its obligations under this
Agreement for a period of more than 30 days, the parties agree that upon the
delivery of notice and full particulars of the Force Majeure event in writing
within a reasonable time after the occurrence of the Force Majeure event relied
on, the obligations of the parties, so far as they are affected by the Force
Majeure event, shall be suspended during the continuance of any inability so
caused. Any suspension of the obligations of the parties as a result of this
Section 3(c) shall not extend the term of this Agreement. Sunoco R&M will be
required to pay any amounts accrued and due under this Agreement at the time of
the Force Majeure event. The cause of the Force Majeure event shall so far as
possible be remedied with all reasonable dispatch, except that no party shall be
compelled to resolve any strikes, lockouts or other industrial disputes other
than as it shall determine to be in its best interests.
Section 4. Agreement to Remain Shipper
---------------------------
Subject to the availability of adequate supplies of Crude Oil at
commercially reasonable prices, Sunoco R&M agrees that it will, and will cause
its Controlled Affiliates to, continue their historical commercial practice of
purchasing Crude Oil for their own account at Crude Oil receipt points
consistent with their past practices and to continue acting in the capacity of
the shipper of Crude Oil on the Crude Oil Pipelines. Subject to the availability
of adequate supplies of Refined Products at commercially reasonable prices,
Sunoco R&M agrees that it will, and will cause its Controlled Affiliates to,
continue their historical commercial practice of acting in the capacity of the
shipper of Refined Products for their own account to delivery points consistent
with their past practices and to continue acting in the capacity of the shipper
of Refined Products on the Refined Product Pipelines.
11
Section 5. Agreement not to Challenge Tariffs or Terminal Charges
------------------------------------------------------
Sunoco R&M agrees (a) not to challenge, nor to cause its Controlled
Affiliates to challenge, nor to encourage or recommend to any other Person that
it challenge, or voluntarily assist in any way any other Person in challenging,
in any forum, interstate or intrastate tariffs (including joint tariffs) of the
Partnership Group that the Partnership Group has filed or may file containing
rates, rules or regulations that are in effect at any time on or before February
28, 2009 and regulate the transportation of Crude Oil or Refined Products, (b)
not to protest or file a complaint, nor cause its Controlled Affiliates to
protest or file a complaint, nor encourage or recommend to any other Person that
it protest or file a complaint, or voluntarily assist in any way any other
Person in protesting or filing a complaint, with respect to regulatory filings
that the Partnership Group has made or may make at any time on or before
February 28, 2009 to change interstate or intrastate tariffs (including joint
tariffs) for transportation of Crude Oil or Refined Products and (c) not to
seek, nor cause its Controlled Affiliates to seek, nor encourage or recommend to
any other Person that it seek, or voluntarily assist in any way any other Person
in seeking, regulatory review of, or regulatory jurisdiction over, the
contractual rates charged at any time on or before February 28, 2009 by the
Partnership Group for terminalling services or to challenge, in any forum, such
rates or changes to such rates.
Section 6. Effectiveness and Term
----------------------
This Agreement shall be effective as of February 8, 2002 and shall
terminate at 12:01 a.m. Philadelphia, Pennsylvania, time on March 31, 2009,
unless extended by written mutual agreement of the parties hereto; provided,
however, that Section 5 shall survive the termination of this Agreement.
Section 7. Notices
-------
All notices or requests or consents provided for by, or permitted to be
given pursuant to, this Agreement must be in writing and must be given by
depositing same in the United States mail, addressed to the Person to be
notified, postpaid, and registered or certified with return receipt requested or
by delivering such notice in person or by telecopier or telegram to such party.
Notice given by personal delivery or mail shall be effective upon actual
receipt. Notice given by telegram or telecopier 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 after receipt if not received
during the recipient's normal business hours. All notices to be sent to a party
pursuant to this Agreement shall be sent to or made at the address set forth
below or at such other address as such party may stipulate to the other parties
in the manner provided in this Section 7:
if to Sunoco R&M:
Sunoco, Inc. (R&M)
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Senior Vice President - Refining
Telecopy: (000) 000-0000
12
with a copy to:
Xxxx Xxxxxxxxx
Vice President and General Counsel
Sunoco, Inc.
Ten Penn Center
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Telecopy: (000) 000-0000
if to the Partnership Entities:
Sunoco Logistics Partners L.P.
c/o Sunoco Partners LLC
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: President and Chief Executive Officer
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxx X. Xxxxxx
General Counsel and Secretary
Sunoco Partners LLC
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Telecopy: (000) 000-0000
Section 8. Deficiency Payments
-------------------
(a) As soon as practicable following the end of each Contract Year under
this Agreement, the Partnership Group shall deliver to Sunoco R&M a written
notice (the "Deficiency Notice") detailing any failure of Sunoco R&M to meet any
of its obligations under this Agreement. The Deficiency Notice shall (i) specify
in reasonable detail the nature of any deficiency (including identifying which
provision of Section 2 has not been satisfied) and (ii) specify the approximate
dollar amount that the Partnership Group believes would have been paid by Sunoco
R&M and its Controlled Affiliates to the Partnership Group if Sunoco R&M had
complied with the applicable provision(s) of Section 2 (the "Deficiency
Payment"). Sunoco R&M shall pay the Deficiency Payment to the Partnership Group
within 10 days of its receipt of the Deficiency Notice.
(b) If Sunoco R&M disagrees with the Deficiency Notice, then following the
payment of the Deficiency Payment to the Partnership Group, the chief financial
officers of Sunoco R&M and the General Partner (on behalf of the Partnership
Group) shall meet or communicate by telephone at a mutually acceptable time and
place, and thereafter as often as they reasonably deem necessary and shall
negotiate in good faith to attempt to resolve any
13
differences that they may have with respect to matters specified in the
Deficiency Notice. During the 30-day period following the payment of the
Deficiency Payment, Sunoco R&M shall have access to the working papers of the
Partnership Group relating to the Deficiency Notice. If such differences are not
resolved within 30 days following the payment of the Deficiency Payment, Sunoco
R&M and the Partnership Group shall, within 45 days following the payment of the
Deficiency Payment, submit any and all matters which remain in dispute and which
were properly included in the Deficiency Notice to arbitration in accordance
with Section 9(f).
(c) If it is finally determined pursuant to this Section 8 that Sunoco R&M
is not required to make any or all of the Deficiency Payment (the "Refund"), the
Partnership Group shall promptly pay to Sunoco R&M the Refund in immediately
available funds.
(d) Deficiency Payments will be credited against any payments owed by
Sunoco R&M in the following Contract Year of this Agreement (but only in the
following Contract Year of this Agreement) in excess of the minimum commitments
established by this Agreement; provided, however, that (i) a Deficiency Payment
may only be credited against a payment owed by Sunoco R&M in excess of the
minimum commitments under the same provision of this Agreement and (ii) Sunoco
R&M will not receive credit for any Deficiency Payment until it has met the
annual minimum requirements under the applicable provision in the succeeding
Contract Year. For example, a Deficiency Payment made with respect to the Marcus
Hook Tank Farm may only be credited against payments owed with respect to the
Marcus Hook Tank Farm in excess of the minimum commitments under Section
2(a)(ii) in the following Contract Year if Sunoco R&M and its Controlled
Affiliates have delivered the annual minimum volume commitment at the Marcus
Hook Tank Farm in that Contract Year.
Section 9. Miscellaneous
-------------
(a) Sunoco R&M Intention as to Refineries. Sunoco R&M represents to the
-------------------------------------
Partnership Entities that, as of the date of this Agreement, it is not
considering a shut down of any of the Refineries or any changes to any of the
Refineries that would have a material adverse effect on the operation of any of
the Refineries.
(b) Amendments and Waivers. No amendment or modification of this Agreement
----------------------
shall be valid unless it is in writing and signed by the parties hereto and, in
the case of any amendment or modification adverse to the Partnership Group,
approved by the Conflicts Committee of the General Partner. No waiver of any
provision of this Agreement shall be valid unless it is in writing and signed by
the party against whom the waiver is sought to be enforced, and, in the case of
any waiver by the Partnership Entities, approved by the Conflicts Committee of
the General Partner. No failure or delay in exercising any right hereunder, and
no course of conduct, shall operate as a waiver of any provision of this
Agreement. No single or partial exercise of a right hereunder shall preclude
further or complete exercise of that right or any other right hereunder.
(c) Successors and Assigns. This Agreement shall inure to the benefit of,
----------------------
and shall be binding upon, Sunoco R&M, the Partnership Entities and their
respective successors and permitted assigns. Neither this Agreement nor any of
the rights or obligations hereunder shall be assigned without the prior written
consent of Sunoco R&M (in the case of any assignment by the
14
Partnership Entities) or the Conflicts Committee of the General Partner (in the
case of any assignment by Sunoco R&M); provided, however, that (i) the
Partnership Entities may make such an assignment to an Affiliate of the
Partnership Entities and (ii) Sunoco R&M may make such an assignment to any
Person to which Sunoco R&M has sold any of its assets that relies on the
services provided by the Partnership Group under this Agreement if such Person
(A) is reasonably capable of performing Sunoco R&M's obligations under this
Agreement assigned to such Person, which determination shall be made by Sunoco
R&M in its reasonable judgment, (B) has an Investment Grade Rating and (C) has
agreed in writing with the Partnership Group to assume the obligations of Sunoco
R&M assigned to such Person. Any attempt to make an assignment otherwise than as
permitted by the foregoing shall be null and void. The parties hereto agree to
require their respective successors, if any, to expressly assume, in a form of
agreement acceptable to the other parties, their obligations under this
Agreement.
(d) Severability. If any provision of this Agreement shall be held invalid
------------
or unenforceable by a court or regulatory body of competent jurisdiction, the
remainder of this Agreement shall remain in full force and effect.
(e) Choice of Law. This Agreement shall be subject to and governed by the
-------------
laws of the Commonwealth of Pennsylvania, excluding any conflicts-of-law rule or
principle that might refer the construction or interpretation of this Agreement
to the laws of another state. Each Party hereby submits to the jurisdiction of
the state and federal courts in the Commonwealth of Pennsylvania and to venue in
Philadelphia, Pennsylvania.
(f) Arbitration Provision. Any and all Arbitrable Disputes must be resolved
---------------------
through the use of binding arbitration using three arbitrators, in accordance
with the Commercial Arbitration Rules of the American Arbitration Association,
as supplemented to the extent necessary to determine any procedural appeal
questions by the Federal Arbitration Act (Title 9 of the United States Code). If
there is any inconsistency between this Section and the Commercial Arbitration
Rules or the Federal Arbitration Act, the terms of this Section will control the
rights and obligations of the parties. Arbitration must be initiated within the
time limits set forth in this Agreement, or if no such limits apply, then within
a reasonable time or the time period allowed by the applicable statute of
limitations. Arbitration may be initiated by a party ("Claimant") serving
written notice on the other party ("Respondent") that the Claimant elects to
refer the Arbitrable Dispute to binding arbitration. Claimant's notice
initiating binding arbitration must identify the arbitrator Claimant has
appointed. The Respondent shall respond to Claimant within 30 days after receipt
of Claimant's notice, identifying the arbitrator Respondent has appointed. If
the Respondent fails for any reason to name an arbitrator within the 30-day
period, Claimant shall petition to the American Arbitration Association for
appointment of an arbitrator for Respondent's account. The two arbitrators so
chosen shall select a third arbitrator within 30 days after the second
arbitrator has been appointed. The Claimant will pay the compensation and
expenses of the arbitrator named by or for it, and the Respondent will pay the
compensation and expenses of the arbitrator named by or for it. The costs of
petitioning for the appointment of an arbitrator, if any, shall be paid by
Respondent. The Claimant and Respondent will each pay one-half of the
compensation and expenses of the third arbitrator. All arbitrators must (a) be
neutral parties who have never been officers, directors or employees of Sunoco
R&M, the Partnership Entities or any of their affiliates and (b) have not less
than seven years experience in the energy industry. The hearing will be
conducted in Philadelphia, Pennsylvania and commence within 30
15
days after the selection of the third arbitrator. Sunoco R&M, the Partnership
Entities and the arbitrators shall proceed diligently and in good faith in order
that the award may be made as promptly as possible. Except as provided in the
Federal Arbitration Act, the decision of the arbitrators will be binding on and
non-appealable by the parties hereto. The arbitrators shall have no right to
grant or award indirect, consequential, punitive or exemplary damages of any
kind.
(g) Rights of Limited Partners. The provisions of this Agreement are
--------------------------
enforceable solely by the parties to this Agreement, and no Limited Partner of
the Partnership shall have the right, separate and apart from the Partnership,
to enforce any provision of this Agreement or to compel any party to this
Agreement to comply with the terms of this Agreement.
(h) Further Assurances. In connection with this Agreement and all
------------------
transactions contemplated by this Agreement, each signatory party hereto agrees
to execute and deliver such additional documents and instruments and to perform
such additional acts as may be necessary or appropriate to effectuate, carry out
and perform all of the terms, provisions and conditions of this Agreement and
all such transactions.
16
IN WITNESS WHEREOF, the undersigned parties have executed this Agreement as
of the date first written above.
SUNOCO, INC. (R&M)
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxx
------------------------------------
Title: Senior Vice President & CFO
-----------------------------------
SUNOCO LOGISTICS PARTNERS L.P.
By: SUNOCO PARTNERS LLC,
its general partner
By: /s/ Xxxxx X. Xxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxx
--------------------------------
Title: Vice President
-------------------------------
SUNOCO LOGISTICS PARTNERS
OPERATIONS L.P.
By: SUNOCO LOGISTICS PARTNERS GP LLC,
its general partner
By: /s/ Xxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxx
-------------------------------------
Title: Vice President
------------------------------------
SUNOCO PARTNERS LLC
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxx
------------------------------------
Title: Vice President
------------------------------------
Signature Page 1 of 2 to the Pipelines and Terminals Storage and Throughput
Agreement
SUNOCO PARTNERS MARKETING &
TERMINALS L.P.
By: SUNOCO LOGISTICS PARTNERS
OPERATIONS GP LLC,
its general partner
By: /s/ Xxxxx X. Xxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxx
--------------------------------
Title: Vice President
-------------------------------
SUNOCO PIPELINE L.P.
By: SUNOCO LOGISTICS PARTNERS
OPERATIONS GP LLC,
its general partner
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
-------------------------------
Title: Vice President
-------------------------------
SUNOCO LOGISTICS PARTNERS GP LLC
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxx
------------------------------------
Title: Vice President
------------------------------------
SUNOCO LOGISTICS PARTNERS
OPERATIONS GP LLC
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxx
------------------------------------
Title: Vice President
------------------------------------
Signature Page 2 of 2 to the Pipelines and Terminals Storage and Throughput
Agreement
EXHIBIT A
CRUDE OIL PIPELINES
Miles Diameter
Origin and Destination of Pipeline in inches
----------------------------------------------------------------------------
Marysville, MI to Toledo, OH.................... 123 16
Nederland, TX to Longview, TX................... 199 10, 12
Cushing, OK to Tulsa, OK........................ 45 10, 12
Barnsdall, OK to Tulsa, OK...................... 34 8
Bad Creek, OK to Tulsa, OK...................... 53 8, 10
A-1
EXHIBIT B
FORT MIFFLIN TERMINAL COMPLEX
1. Four 80,000 barrel tanks at the Fort Mifflin Terminal.
2. Twenty-one tanks at the Xxxxx Creek Tank Farm with a total capacity of
2,380,000 barrels.
3. Two ship docks at the Fort Mifflin Terminal and two ship docks at Hog Island
Wharf.
4. The following pipelines:
(a) One 30-inch pipeline and one 16-inch pipeline that delivers Crude Oil
from the Fort Mifflin Terminal to the Philadelphia Refinery.
(b) Two 24-inch pipelines that deliver Crude Oil from Hog Island Wharf to
Xxxxx Creek Tank Farm.
(c) One 16-inch pipeline that delivers Crude Oil from the Xxxxx Creek Tank
Farm to the Philadelphia Refinery.
(d) One 30-inch bi-directional pipeline that delivers Crude Oil between
the Hog Island Wharf and the Fort Mifflin Terminal.
(e) One 30-inch and one 16-inch pipeline that deliver Refined Products
from the Fort Mifflin Terminal to the Philadelphia Refinery.
(f) One dual diameter, 24- and 26-inch pipeline that delivers Refined
Products from the Hog Island Wharf to the Philadelphia Refinery.
B-1
EXHIBIT C
INKSTER TERMINAL
1. Eight salt caverns with a total capacity of 975,734 barrels as listed
below:
a. 100,443 barrels of LPG mix
b. 157,136 barrels of Butane
c. 120,000 barrels of Propane
d. 135,423 barrels of Propane
e. 123,138 barrels of Butane
f. 162,638 barrels of Butane
g. 117,100 barrels of BB
h. 59,856 barrels of Iso-butane
2. A propane truck rack.
3. Pipeline connections for movements to or from Toledo, Sarnia, Marysville
and Buckeye Pipeline at Xxxx Junction.
C-1
EXHIBIT D
MARCUS HOOK TANK FARM
1. Seventeen tanks with a total capacity of 2,057,722 barrels.
2. The following pipeline connections:
a. Twin Oaks Refined Product terminal.
b. Twin Oaks to Newark 14" pipeline.
c. Twin Oaks to Montello 8" pipeline.
d. Twin Oaks to Buckeye's Laurel pipeline.
D-1
EXHIBIT E
REFINED PRODUCT PIPELINES
Miles of
Origin and Destination Pipeline Diameter Capacity
-------------------------------------------- -------- -------- ----------
(inches) (bpd)
Philadelphia, PA to Montello, PA............ 210 12, 8 164,400
Montello, PA to Buffalo, NY................. 300 14, 8 62,400
Montello, PA to Kingston, PA................ 84 6 8,800
Montello, PA to Syracuse, NY................ 230 8, 6 14,100
Montello, PA to Pittsburgh, PA.............. 221 8 35,000
Toledo, OH to Blawnox, PA................... 260 10, 8 32,900
Toldeo, OH to Sarnia, Canada................ 241 8, 6 66,600
Twin Oaks, PA to Newark, NJ................. 118 14 140,000
Philadelphia, PA to Linden, NJ/(1)/......... 88 16, 12 60,000
----------
/(1)/The Partnership Group owns a one-third undivided interest in 80 miles of
this pipeline. The capacity represents the proportionate share of capacity
attributable to the Partnership Group's ownership interest.
E-1
EXHIBIT F
REFINED PRODUCTS TERMINALS
Storage
Capacity Number of
Location (barrels) Tanks
----------------------------------------------------------------- --------- ---------
Akron, OH......................................................... 98,200 8
Altoona, PA....................................................... 103,400 9
Belmont, PA/(1)/.................................................. 0 0
Binghamton, NY.................................................... 60,000 4
Blawnox, PA....................................................... 72,100 4
Buffalo, NY....................................................... 358,500 8
Cleveland, OH..................................................... 255,000 10
Columbus, OH...................................................... 78,900 6
Dayton, OH........................................................ 248,700 15
Delmont, PA....................................................... 233,900 8
Exton, PA......................................................... 132,200 7
Fullerton, PA..................................................... 161,700 7
Huntington, IN.................................................... 207,000 8
Inwood, NY/(2)/................................................... 54,200 18
Kingston, PA...................................................... 148,800 7
Malvern, PA....................................................... 62,900 5
Mechanicsburg, PA................................................. 166,200 9
Montello, PA...................................................... 67,900 7
Newark, NJ........................................................ 581,100 16
Northumberland, PA................................................ 170,300 6
Owosso, MI........................................................ 233,300 8
Paulsboro, NJ..................................................... 81,000 6
Piscataway, NJ.................................................... 95,000 4
Pittsburgh, PA.................................................... 205,500 5
River Rouge, MI................................................... 178,400 10
Rochester, NY..................................................... 173,000 7
Tamaqua, PA....................................................... 113,600 8
Toledo, OH........................................................ 102,400 10
Twin Oaks, PA..................................................... 90,000 4
Vanport, PA....................................................... 179,300 8
Willow Grove, PA.................................................. 85,000 7
Youngstown, OH.................................................... 22,700 5
--------- ---
Total.................................................... 4,820,200 244
========= ===
----------
/(1)/ This terminal receives product from Sunoco's R&M Philadelphia refinery and
does not have any tankage.
/(2)/ The Partnership Group owns a 45% undivided interest in this terminal. The
capacity represents the proportionate share of capacity attributable to the
Partnership Group's ownership interest.
F-1
EXHIBIT G
THROUGHPUT FEE SCHEDULE
1. The posted tariff for all pipeline movements.
2. $0.35656 per shell barrel per month for all of the available storage at the
Vanport terminal (179,300 barrels) and $0.05094 per barrel for throughput
at the Vanport terminal.
3. $0.00611 per delivered net gallon for gasoline plus $0.00051 per delivered
net gallon for additive injection equipment and services, provided that
Sunoco R&M supplies the additive.
4. $0.00611 per delivered net gallon for diesel fuel and heating oil including
red dye and anti-static additive and additive injection equipment. $0.00051
per delivered net gallon for cetane improver additive injection equipment,
provided that Sunoco R&M supplies the additive.
5. $0.00611 per delivered net gallon for jet fuel plus $0.00051 per delivered
net gallon for filtering.
6. $0.00662 per delivered net gallon for xylene, toluene and mineral spirits
at the Toledo terminal.
7. $0.00662 per delivered net gallon for transmix, ethanol and kerosene.
8. Throughput fees at the Inwood terminal will be $0.00204 per delivered net
gallon higher.
9. All fees and requirements listed on this Exhibit G relate to the
---------
Partnership Group's assets and capabilities as of the date of this
Agreement. Any fees or requirements with respect to new or modified assets
will be determined at the time of acquisition or modification of that
asset.
10. Each of the fees listed on this Exhibit G (except for the posted tariffs
---------
for pipeline movements) will escalate at the rate of 1.875% (rounded to the
nearest one-thousandth of one cent) on January 1 of each year commencing
January 1, 2003.
G-1
EXHIBIT H
FEE CALCULATION EXAMPLES
Deliveries through the Marcus Hook Tank Farm (130,000 bpd minimum requirement)
------------------------------------------------------------------------------
Example A
(For purposes of this example, we have assumed that each month consists of 30
days)
1. In the first month of a Contract Year, Sunoco R&M and its Controlled
Affiliates deliver an average of 120,000 bpd to the Marcus Hook Tank Farm. The
rate charged will be $0.1627 per barrel, and the shortfall of 10,000 bpd will be
carried over to the next month.
2. In the second month of the Contract Year, Sunoco R&M and its Controlled
Affiliates deliver an average of 135,000 bpd to the Marcus Hook Tank Farm. The
rate charged will be $0.1627 per barrel, and the shortfall of 5,000 bpd from the
first month will be carried over to the next month.
3. In the third month of the Contract Year, Sunoco R&M and its Controlled
Affiliates deliver an average of 140,000 bpd to the Marcus Hook Tank Farm. The
rate charged will $0.1627 per barrel for the first 135,000 bpd and $0.0813 per
barrel for the remaining 5,000 bpd. The shortfall from the first month has been
eliminated.
4. In the fourth month of the Contract Year, Sunoco R&M and its Controlled
Affiliates deliver an average of 150,000 bpd to the Marcus Hook Tank Farm. The
rate charged will be $0.1627 per barrel for the first 130,000 bpd and $0.0813
per barrel for the remaining 20,000 bpd.
Note: The same example is applicable to deliveries through the Fort Mifflin
Terminal Complex (with a 180,000 bpd requirement).
Example B
(The Contract Year extends from March 1 to the last day of February)
1. Sunoco R&M and its Controlled Affiliates deliver an average of 130,000 bpd to
the Marcus Hook Tank Farm for each of the first nine months (March - November)
of the Contract Year. The rate charged will be $0.1627 per barrel for each
month.
2. Sunoco R&M and its Controlled Affiliates deliver an average of 160,000 bpd to
the Marcus Hook Tank Farm in the tenth month (December) of the Contract Year.
The rate charged will be $0.1627 per barrel for the first 130,000 bpd and
$0.0813 per barrel for the remaining 30,000 bpd.
H-1
3. Sunoco R&M and its Controlled Affiliates deliver an average of 100,000 bpd to
the Marcus Hook Farm Tank for each of the remaining two months (January -
February) of the Contract Year. In each month, the rate charged will be $0.1654
per barrel1.
4. For the Contract Year, Sunoco R&M and its Controlled Affiliates delivered an
average of 30,000 bpd above the minimum requirement in December (31 days), and
delivered an average of 30,000 bpd below the minimum requirement in January (31
days) and February (28 days). Thus, there were a net total of 28 days on which
Sunoco R&M delivered below the minimum requirement and for which Sunoco R&M and
its Controlled Affiliates must pay a fee of $0.1654 per barrel because the
shortfall occurred in the new calendar year at the escalated rate. In addition,
Sunoco R&M and its Controlled Affiliates must pay the Partnership Group an
additional $0.0814 per barrel2 for the 30,000 bpd that were charged the lower
fee in December. Sunoco R&M and its Controlled Affiliates will pay a Deficiency
Payment equal to:
28 days times (30,000 x $0.1654) + 31 days times (30,000 x $0.0814) = $214,638
--------
/1/ The rate increases by 1.67% in January of each Contract Year.
/2/ This represents the difference between $0.1627 (the rate in effect for the
first 130,000 bpd in December) and $0.0813 (the rate paid on the 30,000 bpd
over the minimum requirement in December).
H-2
