EXHIBIT 10.6
PIPELINES AND TERMINALS USAGE AGREEMENT
This Pipelines and Terminals Usage Agreement ("AGREEMENT") is dated as
of this April 16, 2001, by and among Ultramar Diamond Shamrock Corporation, a
Delaware corporation ("UDS"), Shamrock Logistics Operations, L.P., a Delaware
limited partnership (the "OPERATING PARTNERSHIP"), Shamrock Logistics, L.P., a
Delaware limited partnership ("SHAMROCK LOGISTICS"), Riverwalk Logistics, L.P.,
a Delaware limited partnership (the "GENERAL PARTNER"), and Shamrock Logistics
GP, LLC, a Delaware limited liability company ("SHAMROCK LLC").
RECITALS:
WHEREAS, pursuant to the terms and conditions of those certain
Conveyance, Assignment and Xxxx of Sale Agreements dated effective as of July 1,
2000, by and among the Operating Partnership and certain subsidiaries of UDS,
certain crude oil pipeline and storage assets and refined product pipeline and
terminalling assets were contributed by those subsidiaries to the Operating
Partnership in exchange for limited partner interests therein (collectively, the
"CONTRIBUTIONS"); and
WHEREAS, by virtue of mergers (collectively, the "MERGERS") of certain
subsidiaries of UDS with and into the Operating Partnership effective July 1,
2000, certain additional crude oil pipeline and storage assets and refined
product pipeline and terminalling assets and certain ownership interests in
Xxxxxx-Belvieu Pipeline Company, L.L.C., a Delaware limited liability company
("XXXXXX-BELVIEU"), were transferred to the Operating Partnership; and
WHEREAS, concurrently with the execution and delivery of this
Agreement, all of the limited partner interests in the Operating Partnership
held by subsidiaries of UDS are being contributed to Shamrock Logistics in
exchange for limited partner interests in Shamrock Logistics; and
WHEREAS, as of July 1, 2000 and the date hereof, by virtue of its
indirect ownership interests in the General Partner, the Operating Partnership
or Shamrock Logistics, as applicable, UDS had and has an economic interest in
the financial and commercial success of the Operating Partnership; and
WHEREAS, the Operating Partnership is substantially dependent upon UDS
for the volumes of Crude Oil and Refined Products transported through the
Operating Partnership's pipelines and the volumes of Refined Products handled at
the Operating Partnership's Refined Product Terminals such that a significant
reduction in UDS' use of the Operating Partnership's assets would likely result
in a correspondingly significant reduction in the financial and commercial
success of the Operating Partnership; and
WHEREAS, in connection with the Contributions and the Mergers, UDS
desires to enter
into this Agreement;
NOW, THEREFORE, in consideration of the covenants and obligations
contained herein and in the agreements relating to the Contributions and the
Mergers, the parties to this Agreement hereby agree as follows:
SECTION 1. DEFINITIONS. Capitalized terms used throughout this
Agreement and not otherwise defined herein shall have the meanings set forth
below.
"ANNUAL MEASUREMENT PERIOD" shall mean each of (a) the period from
January 1, 2001 through December 31, 2001, (b) each calendar year during the
term of this Agreement and (c) the period ending on the last day of the calendar
year during which this Agreement terminates and beginning on the first day of
the calendar year in which such termination occurs.
"APPLICABLE LAW" shall mean 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" shall mean any and all disputes, Claims,
counterclaims, demands, causes of action, controversies and other matters in
question between any of the Partnership Parties, on the one hand, and UDS, 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 Parties, on the one hand, and
UDS, 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.
"CLAIM" shall mean 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.
CONTROLLED AFFILIATES" shall mean an entity that directly or indirectly
through one or more intermediaries is controlled by UDS, excluding the
Partnership Parties and Subsidiaries. For the purposes of this definition,
"control" (including with correlative meaning, the term "controlled by"), as
used with respect to any such entity, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such entity, whether
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through the ownership of voting securities, by agreement or otherwise.
"CRUDE OIL" shall mean crude oil and gas oil used by UDS as refinery
feedstock.
"CRUDE OIL PIPELINES" shall mean (a) the pipelines described on Exhibit
A attached hereto and (b) any other pipeline that transports Crude Oil in which
the Operating Partnership or any of its Subsidiaries acquires, after the date
hereof, an ownership interest or the right to use all or a portion of its
capacity.
"GOVERNMENTAL AUTHORITY" shall mean 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.
"MEASUREMENT PERIOD" shall mean an Annual Measurement Period or a
Quarterly Measurement Period.
"PARTNERSHIP PARTIES" shall mean the Operating Partnership, Shamrock
Logistics, the General Partner and Shamrock LLC.
"PRIME RATE" shall mean the prime rate per annum established by The
Chase Manhattan Bank, or if The Chase Manhattan Bank 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.
"QUARTERLY MEASUREMENT PERIOD" shall mean each of (a) the period from
April 1, 2001 through June 30, 2001 and (b) each calendar quarter during the
term of this Agreement that does not end on December 31.
"REFINED PRODUCTS" shall mean gasoline, distillates, natural gas
liquids, blend stocks and petrochemical feedstocks, excluding asphalt, fuel oil,
slop, lube oil, carbon black oil and vacuum residuals.
"REFINED PRODUCT PIPELINES" shall mean (a) the pipelines described on
Exhibit B attached hereto and (b) any other pipeline that transports Refined
Products in which the Operating Partnership or any of its Subsidiaries acquires,
after the date hereof, an ownership interest or the right to use all or a
portion of its capacity.
"REFINED PRODUCT TERMINALS" shall mean (a) the terminals described on
Exhibit C attached hereto and (b) any other terminal for the handling of Refined
Products in which the Operating Partnership or any of its Subsidiaries acquires,
after the date hereof, an ownership
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interest or the right to use all or a portion of its capacity.
"REFINERIES" shall mean the following three refineries owned by UDS or
Controlled Affiliates: the Three Rivers refinery located near Three Rivers,
Texas, the XxXxx refinery located near Dumas, Texas and the Ardmore refinery
located near Ardmore, Oklahoma.
"SHORTFALL" for any Measurement Period shall mean:
(a) with respect to Crude Oil Pipelines, the excess of the number of
barrels of Crude Oil required to be transported for such Measurement Period by
UDS and its Controlled Affiliates (as such number may be reduced pursuant to
Section 3) under this Agreement in such Crude Oil Pipelines over the number of
barrels of Crude Oil actually transported on behalf of UDS and its Controlled
Affiliates in such Crude Oil Pipelines during such Measurement Period,
(b) with respect to Refined Product Pipelines, the excess of the number
of barrels of Refined Product required to be transported for such Measurement
Period on behalf of UDS and its Controlled Affiliates (as such number may be
reduced pursuant to Section 3) under this Agreement in such Refined Product
Pipelines over the number of barrels of Refined Product actually transported by
UDS and its Controlled Affiliates in such Refined Product Pipelines during such
Measurement Period, and
(c) with respect to Refined Product Terminals, the excess of the number
of barrels of Refined Product required to be terminalled for such Measurement
Period by UDS and its Controlled Affiliates (as such number may be reduced
pursuant to Section 3) under this Agreement in the Refined Product Terminals
over the number of barrels of Refined Product actually terminalled by UDS and
its Controlled Affiliates in such Refined Product Terminals during such
Measurement Period.
"SHORTFALL OBLIGATION" with respect to any Measurement Period shall
mean the sum of (a) (i) any Shortfall with respect to the Crude Oil Pipelines
for such Measurement Period, multiplied by (ii) the Weighted Average Tariff for
Crude Oil Pipelines for such Measurement Period, plus (b) (i) any Shortfall with
respect to Refined Product Pipelines for such Measurement Period, multiplied by
(ii) the Weighted Average Tariff for Refined Product Pipelines for such
Measurement Period, plus (c) (i) any Shortfall with respect to Refined Product
Terminals for such Measurement Period, multiplied by (ii) the Weighted Average
Terminalling Fee for such Measurement Period.
"SUBSIDIARY" shall mean any entity in which the Operating Partnership,
directly or indirectly through one or more intermediaries, has an ownership
interest.
"WEIGHTED AVERAGE TARIFF" for any Measurement Period shall mean, with
respect to the Crude Oil Pipelines or Refined Product Pipelines, as applicable,
(a) the sum with respect to all of the Crude Oil Pipelines or Refined Product
Pipelines as applicable, of the product of (i) the
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length of each such pipeline (in miles) as applicable during such Measurement
Period, multiplied by (ii) the Operating Partnership's average capacity in each
such pipeline (in barrels per day) as applicable during such Measurement Period,
multiplied by (iii) the average tariff rate for such pipeline as applicable
during such Measurement Period, divided by (b) the sum, with respect to all
Crude Oil Pipelines or all Refined Product Pipelines, as applicable, of the
product of (i) the length of each such pipeline (in miles) as applicable during
such Measurement Period multiplied by (ii) the Operating Partnership's average
capacity in each such pipeline (in barrels per day) as applicable during such
Measurement Period.
"WEIGHTED AVERAGE TERMINALLING FEE" for any Measurement Period shall
mean, (a) the sum of the product of (i) the Operating Partnership's capacity in
each Refined Product Terminal as applicable during such Measurement Period,
multiplied by (ii) the terminalling fee for such terminal as applicable during
such Measurement Period, divided by (b) the sum of the Operating Partnership's
capacities in all of the Refined Product Terminals as applicable during such
Measurement Period.
SECTION 2. AGREEMENT TO USE PIPELINES AND TERMINALS
During the term of this Agreement and subject to the terms and
conditions of this Agreement, UDS agrees as follows:
(a) CRUDE OIL PIPELINES. Subject to Section 3, calculated on an average
basis over each Measurement Period, UDS will, and will cause its Controlled
Affiliates to, transport in the Crude Oil Pipelines, taken as a whole, an
aggregate of not less than 75% of all of the Crude Oil transported to the
Refineries, whether by pipeline, truck or other means.
(b) REFINED PRODUCT PIPELINES. Subject to Section 3, calculated on an
average basis over each Measurement Period, UDS will, and will cause its
Controlled Affiliates to, transport in the Refined Product Pipelines, taken as a
whole, an aggregate of not less than 75% of all of the Refined Products
transported from the Refineries, whether transported from the Refineries by
pipeline, truck or other means.
(c) TERMINALLING ASSETS. Subject to Section 3, calculated on an average
basis over each Measurement Period, UDS will, and will cause its Controlled
Affiliates to, utilize the Refined Product Terminals, taken as a whole, for
terminalling services for not less than 50% of all of the Refined Products
transported from the Refineries, whether transported from the Refinery by
pipeline, truck or other means.
(d) JOINTLY OWNED ASSETS. In any instance in which the Operating
Partnership or a Subsidiary that is, directly or indirectly through one or more
intermediaries, a wholly-owned Subsidiary, owns an interest in a pipeline or
terminal jointly with other parties, volumes transported or terminalled for UDS
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
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applicable, for purposes of determining whether UDS' obligations have been met
under this Agreement.
(e) JOINTLY OWNED SUBSIDIARIES. In any instance in which a Subsidiary
that is not, directly or indirectly through one or more intermediaries, a
wholly-owned Subsidiary of the Operating 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 in
such pipeline or terminalled through such terminal multiplied by the direct or
indirect ownership interest, on a percentage basis, of the Operating Partnership
in such Subsidiary.
(f) TRANSPORT THROUGH MULTIPLE PIPELINES OR HANDLING AT MULTIPLE
TERMINALS. No barrel of Crude Oil that has already been transported in one Crude
Oil Pipeline and that has been counted as a barrel transported in the Crude Oil
Pipelines for purposes of Section 2(a) shall be counted again as a barrel
transported for purposes of Section 2(a), notwithstanding that it is transported
in one or more additional Crude Oil Pipelines. No barrel of Refined Products
that has already been transported in one Refined Product Pipeline and that has
been counted as a barrel transported in the Refined Product Pipelines for
purposes of Section 2(b) shall be counted again as a barrel transported for
purposes of Section 2(b), notwithstanding that it is transported in one or more
additional Refined Product Pipelines.
SECTION 3. EXCEPTIONS TO UDS' OBLIGATIONS
(a) CRUDE OIL PIPELINE MARKET CONDITIONS. If market conditions with
respect to the transportation of Crude Oil to one or more of the Refineries
change in a material manner after the date hereof such that compliance with
Section 2(a) would have a material adverse effect on UDS, UDS shall be relieved
of its obligations under Section 2(a) from the inception of the change in market
conditions and during the continuance thereof only to the extent the decrease
below 75% results from the change in market conditions; provided, that upon
partial or full reversal of the change in market conditions, the obligations of
UDS under Section 2(a) shall resume partially or in full, respectively.
(b) REFINED PRODUCT PIPELINE MARKET CONDITIONS. If market conditions
with respect to the transportation of Refined Products from one or more of the
Refineries to any of the markets to which UDS or any of its Controlled
Affiliates directly or indirectly market Refined Products change in a material
manner after the date hereof, or if market conditions in any of such markets
change in a material manner after the date hereof, in each case such that
compliance with Section 2(b) would have a material adverse effect on UDS, UDS
shall be relieved of its obligations under Section 2(b) from the inception of
the change in market conditions and during the continuance thereof only to the
extent the decrease below 75% results from the change in market conditions;
provided, that upon partial or full reversal of the change in market conditions,
the obligations of UDS under Section 2(b) shall resume partially or in full,
respectively.
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(c) FAILURE OF OPERATING PARTNERSHIP TO PROVIDE SERVICES. UDS shall not
be deemed to have failed to satisfy its obligations under Section 2(a), (b) or
(c), as applicable, if UDS and its Controlled Affiliates are unable to ship or
terminal the required volumes solely because of the inability of the Operating
Partnership to transport volumes of Crude Oil made available for shipment by UDS
and its Controlled Affiliates or to transport or terminal volumes of Refined
Products made available for shipment or terminalling by UDS and its Controlled
Affiliates, whether because of operational difficulties with the Crude Oil
Pipelines, Refined Product Pipelines or Refined Product Terminals or otherwise.
SECTION 4. AGREEMENT TO REMAIN SHIPPER
With respect to any Crude Oil that is transported in the Crude Oil
Pipelines for use at a Refinery, UDS agrees that it will, and will cause its
Controlled Affiliates to, continue their historical commercial practice of
purchasing such Crude Oil for their own account at or before the point at which
such Crude Oil first enters a Crude Oil Pipeline and to continue acting in the
capacity of the shipper of any such Crude Oil for their own account at all times
that such Crude Oil is in a Crude Oil Pipeline. With respect to any Refined
Products that are produced at a Refinery and transported in any Refined Product
Pipeline or handled at any Refined Product Terminal, UDS agrees that it will,
and will cause its Controlled Affiliates to, continue their historical
commercial practice of owning such Refined Products from such point as such
Refined Products leave the Refinery until at least such point as they will not
be further transported in a Refined Product Pipeline or handled at a Refined
Product Terminal and to continue acting in the capacity of the shipper of any
such Refined Products for their own account at all times that such Refined
Products are in a Refined Product Pipeline or being handled at a Refined Product
Terminal.
SECTION 5. AGREEMENT NOT TO CHALLENGE TARIFF RATES OR TERMINAL CHARGES
UDS agrees not to challenge, nor to cause its Controlled Affiliates to
challenge, nor to encourage or recommend to any other person that it challenge,
in any forum, interstate or intrastate tariff rates (including joint tariffs) of
the Operating Partnership and its Subsidiaries for transportation of Crude Oil
or Refined Products. UDS agrees neither to protest or to file a complaint, nor
to cause its Controlled Affiliates to protest or to file a complaint, concerning
regulatory filings of the Operating Partnership and its Subsidiaries to change
interstate or intrastate tariff rates (including joint tariffs) for
transportation of Crude Oil or Refined Products. UDS agrees not to seek, nor to
cause its Controlled Affiliates to seek, nor to encourage or recommend to any
other person that it seek regulatory review of, or the imposition of regulatory
jurisdiction over, the contractual rates charged by the Operating Partnership
and its Subsidiaries 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 April 16, 2001. The Agreement
shall extend for a term of seven years from such date and shall terminate at
12:01 a.m. San Antonio, Texas, time on
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the seventh anniversary of such date, unless extended by written mutual
agreement of the parties hereto.
SECTION 7. NOTICES
All notices, requests, demands, and other communications pertaining to
this Agreement shall be delivered personally, or by registered or certified mail
(postage prepaid and return receipt requested), or by express carrier or
delivery service, or by telecopy, to the parties hereto at the addresses below
(or at such other addresses as shall be specified by notice under this Section
7):
(i) if to UDS:
Ultramar Diamond Shamrock Corporation
0000 Xxxxx Xxxx 0000 Xxxx
Xxx Xxxxxxx, Xxxxx 00000
Attn: President
Telecopy: (000) 000-0000
(ii) if to the Operating Partnership, Shamrock Logistics, the
General Partner or Shamrock LLC:
Shamrock Logistics, L.P.
0000 Xxxxx Xxxx 0000 Xxxx
Xxx Xxxxxxx, Xxxxx 00000
Attn: President
Telecopy: (000) 000-0000
SECTION 8. SUCCESSORS AND ASSIGNS
This Agreement shall inure to the benefit of, and shall be binding
upon, UDS, the Operating Partnership, Shamrock Logistics, the General Partner
and Shamrock LLC and their respective successors and permitted assigns.
Successors shall include any corporation (limited liability or otherwise), any
partnership (limited or otherwise), or any person which succeeds to a
controlling interest in, or all of the economic interest of, UDS, the Operating
Partnership, Shamrock Logistics, the General Partner or Shamrock LLC, as
applicable. The parties hereto agree to require their respective successors, if
any, to expressly assume, in a form of agreement acceptable to the other
parties, the obligations under this Agreement.
SECTION 9. CERTIFICATION AND SHORTFALL PAYMENT.
(a) CERTIFICATION. Not later than 45 days after the end of each
Measurement Period, the chief financial officer of UDS shall deliver a
certificate (the "CERTIFICATE") to the Operating Partnership certifying whether
or not there has been a Shortfall with respect to such Measurement Period and if
so, the amount of any Shortfall Obligation that UDS is obligated to pay with
respect
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to such Measurement Period pursuant to Section 9(e).
The Certificate shall further set forth calculations and other
information evidencing compliance with each of Section 2(a), 2(b) and 2(c), and,
if any exception provided for pursuant to Section 3 of this Agreement is being
relied upon, (i) specifying which provision of Section 3 is applicable, (ii)
specifying in reasonable detail the basis for reliance on such provision, (iii)
specifying in reasonable detail the volume of Crude Oil or Refined Products, as
applicable, by which the applicable Section 2 obligation should be reduced by
reason of the applicable provision of Section 3, and (iv) specifying in
reasonable detail the basis for such volume reduction calculation.
(b) REVIEW OF INFORMATION. During the 45-day period following receipt
of the Certificate, the Operating Partnership and its independent public
accountants will be permitted to review the accounting records of UDS and any
applicable Controlled Affiliates, any working papers of independent public
accountants of UDS and its Controlled Affiliates prepared in connection with the
Certificate and such additional information as the Operating Partnership or its
independent public accountants shall reasonably request for the purpose of
determining whether UDS has correctly calculated whether there is a Shortfall
with respect to the Measurement Period covered by the Certificate and, if so,
the amount of any Shortfall Obligation for such Measurement Period. In this
connection, UDS and the Operating Partnership and their respective independent
public accountants shall, and UDS shall cause its Controlled Affiliates to,
cooperate with each other.
(c) NOTICE OF DISAGREEMENT. If, in connection with the period of review
and consultation provided for in Section 9(b), the Operating Partnership has
reason to believe that UDS has not correctly calculated the amount of any
Shortfall or Shortfall Obligation with respect to such Measurement Period in
accordance with this Agreement, then within 45 days following receipt of the
Compliance Certificate, the Operating Partnership may give UDS a written notice
of its disagreement (a "NOTICE OF DISAGREEMENT"). If such Notice of Disagreement
is not timely given by the Operating Partnership, UDS will not have any
liability under this Section 9. Any Notice of Disagreement shall specify in
reasonable detail the Operating Partnership's calculation of the Shortfall and
Shortfall Obligation. If a Notice of Disagreement is received by UDS in a timely
manner, then the determination of whether UDS has correctly calculated the
amount of any Shortfall or Shortfall Obligation with respect to such Measurement
Period in accordance with this Agreement, and, if it has not, the amount of the
Shortfall or Shortfall Obligation shall become final and binding upon all
parties hereto on either (i) the date the chief financial officers of UDS and
the General Partnership (on behalf of the Operating Partnership) resolve in
writing any differences they have with respect to the matters specified in the
Notice of Disagreement or (ii) the date any disputed matters are finally
resolved in writing by the Accounting Firm pursuant to Section 9(d), as
applicable.
(d) SETTLING OF DISAGREEMENTS. If a Notice of Disagreement is
delivered, within 15 days thereafter, the chief financial officers of UDS and
the General Partnership (on behalf of the Operating Partnership) shall meet or
communicate by telephone at a mutually acceptable time
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and place, and thereafter as often as they reasonably deem necessary and shall
negotiate in good faith to attempt to resolve any differences which they may
have with respect to matters specified in the Notice of Disagreement. During the
30-day period following delivery of the Notice of Disagreement, UDS and its
independent public accountants shall have access to the working papers of the
Operating Partnership relating to the Notice of Disagreement and the working
papers of the Operating Partnership's independent public accountants prepared in
connection with the Notice of Disagreement. If such differences are not resolved
within 30 days following delivery of the Notice of Disagreement, UDS and the
Operating Partnership shall, within 45 days following the delivery of the Notice
of Disagreement, submit to a dispute resolution group of an independent public
accounting firm (the "ACCOUNTING FIRM") for review and resolution any and all
matters which remain in dispute and which were properly included in the Notice
of Disagreement, in the form of a written brief. The scope of the Accounting
Firm's review shall include determining whether there has been a Shortfall with
respect to such Measurement Period and, if so, the amount of the Shortfall
Obligation with respect to such Measurement Period. The Accounting Firm shall be
such nationally recognized independent public accounting firm as shall be agreed
upon by UDS and the Operating Partnership in writing. The Accounting Firm's
decision shall be accompanied by a certificate of the Accounting Firm that it
reached its decision in accordance with the provisions of this Section 9(d). The
parties agree to use commercially reasonably best efforts to cause the
Accounting Firm to render a decision resolving the matters submitted to the
Accounting Firm within 30 days following submission. The parties agree that
judgment may be entered upon the determination of the Accounting Firm in any
District Court in Bexar County, Texas. The fees and expenses of the Accounting
Firm shall be borne by UDS and the Operating Partnership in inverse proportion
as they may prevail on matters resolved by the Accounting Firm, which
proportionate allocations shall also be determined by the Accounting Firm at the
time the determination of the Accounting Firm is rendered on the merits of the
matters submitted. Any fees and disbursements of independent public accountants
of UDS or the Operating Partnership incurred in connection with their
preparation or review of the Compliance Certificate or the Notice of
Disagreement shall be borne by the party retaining such independent public
accountants.
(e) (i) If it is finally determined pursuant to this Section 9 that
there is a Shortfall Obligation with respect to any Quarterly
Measurement Period (including any Shortfall Obligation carried forward
from a prior Quarterly Measurement Period), UDS shall promptly pay such
Shortfall Obligation to the Operating Partnership; provided, however,
that if the amount of such Shortfall Obligation with respect to any
Quarterly Measurement Period is less than $2.5 million, UDS is not
obligated to pay such Shortfall Obligation at such time, in which event
such Shortfall Obligation shall be carried forward to the next
Quarterly Measurement Period in the Annual Measurement Period
containing such Quarterly Measurement Period.
(ii) If it is finally determined pursuant to this Section 9 that
there is a Shortfall Obligation with respect to any Annual Measurement
Period, then (A) if the amount of such Shortfall Obligation exceeds
the amount of the Shortfall Obligations for the three prior Quarterly
Measurement Periods actually paid by UDS, then UDS shall promptly pay
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the amount of such excess to the Operating Partnership and (B) if the
amount of the Shortfall Obligations for the three prior Quarterly
Measurement Periods actually paid by UDS exceeds the amount of such
Shortfall Obligation, then the Operating Partnership shall promptly pay
the amount of such excess to UDS.
(iii) If it is finally determined pursuant to this Section 9 that
there is no Shortfall Obligation with respect to any Annual
Measurement Period, then the Operating Partnership shall promptly
refund to UDS any Shortfall Obligations actually paid by UDS for the
three prior Quarterly Measurement Periods.
(f) PAYMENT. Any payment by UDS of a Shortfall Obligation required
pursuant to Section 9(e) shall be made in immediately available funds, plus
interest on such amount at the Prime Rate from the 45th day after the end of the
Measurement Period in which such Shortfall Obligation arose to the date of
payment. Any refund by the Operating Partnership of any payment by UDS of a
Shortfall Obligation shall be made in immediately available funds, plus interest
on such amount at the Prime Rate from the date of payment of such Shortfall
Obligation to the date of refund.
SECTION 10. MISCELLANEOUS
(a) UDS INTENTION AS TO REFINERIES. UDS represents to the Partnership
Parties that, as of the date of this Agreement, it does not intend to close or
dispose of any of the Refineries or to cause any changes 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
Operating Partnership, approved by the Conflicts Committee of Shamrock
Logistics. 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 Operating Partnership, approved
by the Conflicts Committee of Shamrock Logistics. 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) PERMITTED ASSIGNMENTS. Neither this Agreement nor any of the rights
or obligations hereunder shall be assigned without the prior written consent of
UDS (in the case of any assignment by the Operating Partnership, Shamrock
Logistics, the General Partner or Shamrock LLC) or the Operating Partnership,
with the approval of the Conflicts Committee (in the case of any assignment by
UDS); provided, however, that the Operating Partnership may make such an
assignment to an affiliate of the Operating Partnership. Any attempt to make an
assignment otherwise than as permitted by the foregoing shall be null and void.
Any assignment agreed to by UDS or the Operating Partnership as applicable,
shall not relieve the assignor of its
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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) NO INCONSISTENT ACTIONS. No party hereto shall undertake any course
of action inconsistent with the provisions of this Agreement. Without limiting
the foregoing sentence, no party hereto shall enter into, modify, amend, or
waive any contract right or obligation if such action would conflict with or
impair the rights and protections granted to any other party under this
Agreement.
(f) ARBITRATION PROVISION. Except as provided in Section 9, 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 applicable time limits set forth in
this Agreement and not thereafter or if no time limit is given, within 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 UDS, the Operating Partnership or any of their
affiliates and (b) have not less than seven years experience in the energy
industry. The hearing will be conducted in San Antonio, Texas and commence
within 30 days after the selection of the third arbitrator. UDS, the Operating
Partnership and the arbitrators should 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.
-12-
IN WITNESS WHEREOF, the undersigned parties have executed this
Agreement as of the date first written above.
ULTRAMAR DIAMOND SHAMROCK
CORPORATION
By:/s/Xxxxxx X. Xxxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Executive Vice President
SHAMROCK LOGISTICS OPERATIONS, L.P.
By: Riverwalk Logistics, L.P.,
its general partner
By: Shamrock Logistics GP, LLC,
its general partner
By:/s/ Xxxxxx X. Xxxxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: President and Chief Executive
Officer
SHAMROCK LOGISTICS, L.P.
By: Riverwalk Logistics, L.P.,
its general partner
By: Shamrock Logistics GP, LLC,
its general partner
By:/s/Xxxxxx X. Xxxxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: President and Chief Executive
Officer
RIVERWALK LOGISTICS, L.P.
By: Shamrock Logistics GP, LLC,
its general partner
By:/s/Xxxxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: President and Chief Executive Officer
SHAMROCK LOGISTICS GP, LLC
By:/s/Xxxxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: President and Chief Executive Officer
EXHIBIT A
CRUDE OIL PIPELINES
OWNERSHIP INTEREST OF THROUGHPUT
LENGTH OPERATING PARTNERSHIP CAPACITY
ORIGIN AND DESTINATION (MILES)(1) AND ITS SUBSIDIARIES (BARRELS/DAY)
---------------------- ---------- --------------------- -------------
Cheyenne Xxxxx, CO to XxXxx,
TX 252.2 100% 17,500
Xxxxx, TX to XxXxx, TX 44.2 100% 85,000
Hooker, OK to Xxxxxxx, TX(2) 30.8 50% 22,000(2)
Xxxxxxx, TX to XxXxx, TX 40.7 100% 36,000
Corpus Christi, TX to Three Rivers, TX
69.7 100% 120,000
Ringgold, TX to Xxxxxx, OK 44.2 100% 90,000
Healdton, OK to Ringling, OK 3.5 100% 52,000
Xxxxxx, OK to Ardmore, OK 24.5(3) 100% 90,000(3)
-------------------------
(1) Length not adjusted for ownership interest.
(2) The Operating Partnership owns 50% of the pipeline. However the
Operating Partnership receives a split tariff with respect to 100% of
the barrels transported on the pipeline. The throughput capacity given
is for 100% of the pipeline.
(3) Represents combined length and throughput capacity of two parallel
pipelines.
Exhibit A-1
EXHIBIT B
REFINED PRODUCT PIPELINES
OWNERSHIP INTEREST
OF OPERATING THROUGHPUT
LENGTH PARTNERSHIP AND CAPACITY
ORIGIN AND DESTINATION (MILES)(1) SUBSIDIARIES (BARRELS/DAY)(2)
---------------------- ---------- ------------------ ----------------
XXXXX, TX TO EL PASO, TX ................... 407.7 66.67% 40,000
XXXXX, TX TO COLORADO SPRINGS, CO........... 256.4 100% 52,000
COLORADO SPRINGS, CO TO AIRPORT............. 1.7 100% 12,000
COLORADO SPRINGS, CO TO DENVER, CO.......... 100.6 100% 32,000
XXXXX, TX TO DENVER, CO (XXXXXXXX).......... 321.1 30% 12,450
XXXXX, TX TO AMARILLO, TX (6").............. 49.1 100% 51,000(3)
XXXXX, TX TO AMARILLO, TX (8").............. 49.1 100% (3)
AMARILLO, TX TO ABERNATHY, TX............... 102.1 38.7% 9,288
AMARILLO, TX TO ALBUQUERQUE, NM............. 292.7 50% 16,083
XXXXX, TX TO SKELLYTOWN, TX................. 52.8 100% 52,000
SKELLYTOWN, TX TO MONT BELVIEU, TX(4)....... 571.2 50% 26,000
THREE RIVERS, TX TO SAN ANTONIO, TX......... 81.1 100% 33,600
THREE RIVERS, TX TO LAREDO, TX.............. 98.1 100% 16,800
THREE RIVERS, TX TO CORPUS CHRISTI, TX...... 71.6 100% 15,000
THREE RIVERS, TX TO PETTUS, TX (8")......... 28.8 100% 15,000
THREE RIVERS, TX TO PETTUS, TX (12")........ 28.8 100% 24,000
ARDMORE, OK TO WYNNEWOOD, OK................ 31.1 100% 90,000
EL PASO, TX TO XXXXXX XXXXXX................ 12.1 66.67% 40,000
AMARILLO, TX TO ALBUQUERQUE, NM(5).......... 263.6 50% (5)
-------------------------
(1) Length not adjusted for ownership interest.
(2) Throughput capacity adjusted for relative ownership interest.
(3) Throughput capacity shown for 6" pipeline is combined throughput
capacity for 6" and 8".
(4) Pipeline is owned 100% by xxxxxx-belvieu pipeline company, l.L.C. Of
which operating partnership owns 50%. Throughput capacity given is
for 50% of pipeline.
(5) Pipeline is currently idle.
Exhibit B-1
EXHIBIT C
REFINED PRODUCTS TERMINALS(1)
NUMBER
CAPACITY OF
LOCATION (BARREL) TANKS
-------- -------- ------
Xxxxxxxxx, TX............ 172,000 13
Amarillo, TX............. 271,000 15
Albuquerque, NM.......... 193,000 10
Denver, CO............... 111,000 10
Colorado Springs, CO..... 324,000 0
Xx Xxxx, XX (1).......... 346,684 22
Corpus Christi, TX....... 372,000 16
San Antonio, TX.......... 221,000 10
Laredo, TX............... 203,000 6
Harlingen, TX............ 314,000 7
---------------
(1) All terminals owned 100% by the Operating Partnership other
than El Paso terminal of which the Operating Partnership owns
66.67%. Capacity shown for the El Paso terminal is adjusted
for relative ownership interest.
Exhibit C-1
