1
EXHIBIT 10.6
PIPELINES AND TERMINALS USAGE AGREEMENT
This Pipelines and Terminals Usage Agreement ("Agreement") is dated as
of this _________ _____, 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 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;
2
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.
"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 through the ownership of voting securities, by
agreement or otherwise.
"CRUDE OIL" SHALL MEAN CRUDE OIL AND GAS OIL USED BY UDS AS REFINERY
FEEDSTOCKS.
"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
-2-
3
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.
"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.
"Refined Products" shall mean gasoline, distillates, natural gas
liquids, blend stocks and petrochemical feedstocks.
"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 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.
"Subsidiary" shall mean any entity in which the Operating Partnership,
directly or indirectly through one or more intermediaries, has an ownership
interest.
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:
-3-
4
(a) Crude Oil Pipelines. Subject to Section 3, UDS will, and will cause
its Controlled Affiliates to, transport in the Crude Oil Pipelines an aggregate
of not less than 75%, calculated on an average basis over each full fiscal year
during the term of this Agreement (commencing on January 1 and ending on
December 31 of each such year), 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, UDS will, and will
cause its Controlled Affiliates to, transport in the Refined Product Pipelines
an aggregate of not less than 75%, calculated on an average basis over each full
fiscal year during the term of this Agreement (commencing on January 1 and
ending on December 31 of each such year), 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, UDS will, and will cause
its Controlled Affiliates to, utilize the Refined Product Terminals for
terminalling services for not less than 50%, calculated on an average basis over
each full fiscal year during the term of this Agreement (commencing on January 1
and ending on December 31 of each such year), of all of the Refined Products
transported from the Refineries, whether transported from the Refinery by
pipeline, truck or other means.
For purposes of each of paragraph (a), (b) and (c) of this section 2,
for the initial year of the Agreement and for the year in which this Agreement
terminates, the respective percentage levels shall be calculated for the
respective effective periods of the Agreement in such years pro rata on an
annualized basis.
(d) Jointly Owned Assets. In any instance in which the Operating
Partnership or a Subsidiary 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, shall mean only the ownership interest therein held by
the Operating Partnership or the Subsidiary. In any such instance, 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 applicable, for purposes of
determining whether UDS's 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 on
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.
-4-
5
(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
on 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 on 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 a Refinery change in a material
manner after the date hereof such that it would have a material adverse effect
on UDS if UDS were to continue to transport in the Crude Oil Pipelines an
aggregate of not less than 75% of the Crude Oil transported to the Refineries
pursuant to Section 2(a), [after taking into consideration the ability of UDS,
if commercially practicable, to increase volumes of Crude Oil transported in
Crude Oil Pipelines not affected by the change in market conditions], 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 and
cannot be mitigated by UDS, if commercially practicable, by increasing volumes
of Crude Oil transported in Crude Oil Pipelines not affected by 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 a Refinery 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 it would have a material
adverse effect on UDS if UDS were to continue to transport in the refined
Product Pipelines an aggregate of not less than 75% of the Refined Products
produced by the Refineries pursuant to Section 2(b), [after taking into
consideration the ability of UDS, if commercially practicable, to increase
volumes of Refined Products transported in Refined Product Pipelines not
affected by the change in market conditions], 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 and cannot be mitigated
by UDS, if commercially practicable, by increasing volumes of Refined Products
-5-
6
transported in Refined Product Pipelines not affected by 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.
(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 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 Products Pipelines or Refined Product Terminals or otherwise.
SECTION 4. AGREEMENT TO REMAIN SHIPPER
Subject to the availability of adequate supplies of crude oil at
commercially reasonable prices, UDS 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, UDS
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.
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)
for transportation of Crude Oil or Refined Products of the Operating Partnership
and its Subsidiaries. UDS agrees neither to protest or to file a complaint, nor
to cause its Controlled Affiliates to protest or to file a complaint, 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 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 _______________, 2001. The
Agreement shall
-6-
7
extend for a term of seven years from such date and shall terminate at 12:01
a.m. San Antonio, Texas, time on 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
6):
(i) if to UDS:
Ultramar Diamond Shamrock Corporation
0000 Xxxxx Xxxx 0000 Xxxx
Xxx Xxxxxxx, Xxxxx 00000
Attn: President
Telecopy:
(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:
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. ANNUAL CERTIFICATION.
(a) Within 45 days of the end of each fiscal year, the chief financial
officer of UDS shall deliver a certificate (the "Compliance Certificate") to the
Operating Partnership, certifying
-7-
8
that, based upon due inquiry, the obligations of UDS under Sections 2(a), 2(b)
and 2(c) of this Agreement for such fiscal year, have been satisfied and setting
forth calculations and other information evidencing compliance with each such
provision, 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.
Each Compliance Certificate will, in addition, be accompanied by an information
package containing such additional information as the parties may mutually agree
before the delivery thereof.
(b) During the 30-day period following expiration of the 45-day period
referred to in Section 9(a), 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
Compliance 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 satisfied its obligations under each
of Sections 2(a), 2(b) and 2(c) of this Agreement. 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) 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 fulfilled its obligations under any of Sections 2(a), 2(b) or
2(c), then within 30 days following the expiration of the period provided in
Section 9(a), 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 (i) specify in reasonable
detail the nature of any disagreement so asserted (including by specifying which
provision of Section 2 has not been satisfied), (ii) specify in reasonable
detail the basis for the Operating Partnership's belief that UDS has failed to
fulfill its obligations under the applicable provision of Section 2, (iii)
specify the approximate dollar amount which the Operating Partnership believes
would have been paid by UDS and its Controlled Affiliates to the Operating
Partnership if it had complied with the applicable provision(s) of Section 2
(the "Shortfall Payment") and (iv) specify in reasonable detail, in a manner
consistent with Section 9(e), the basis for such calculation. If a Notice of
Disagreement is received by UDS in a timely manner, then the determination of
whether UDS has fulfilled its obligations under Sections 2(a), 2(b) and 2(c)
and, if it has not, the amount of the Shortfall Payment, 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.
-8-
9
(d) 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 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
Delivery, 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 Delivery, UDS and the Operating Partnership shall, within 45 days
following the delivery of the Notice of Delivery, 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 (i) determining whether
the Compliance Certificate that is the subject of the Notice of Disagreement has
been prepared in accordance with Section 9(a), (ii) determining whether UDS
fulfilled it obligations under Sections 2(a), 2(b) and 2(c), (iii) if a
determination is made that UDS has not so fulfilled its obligations,
determining, in a manner consistent with Section 9(e), the amount of the
Shortfall Payment and (iv) allocating the responsibility for paying the fees and
expenses of such Accounting Firm; provided that, except as provided in the
preceding clause (iv), such review shall be limited to only those matters which
remain in dispute and which were properly included in the Notice of
Disagreement. 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 the Court of _______________ of Bexar
County, Texas and the United States District Court for the __________ District
of 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) For purposes of this Section 9, the amount of any Shortfall Payment
for a Fiscal year shall be based on the aggregate dollar amount of tariffs or
terminalling fees, as applicable,
-9-
10
that would have been paid by UDS and its Controlled Affiliates to the Operating
Partnership if UDS and its Controlled Affiliates had transported or terminalled,
as applicable, during such Fiscal year, such aggregate number of barrels of
Crude Oil or Refined Products, as applicable, in the Crude Oil Pipelines,
Refined Product Pipelines or Refined Product Terminals, as applicable, as UDS
and its Controlled Affiliates did on average during the twelve months prior to
such Fiscal year, excluding any period as to which an exception under Section 3
to the obligations of UDS is, or is asserted to be, applicable; provided,
however, that UDS shall not be obligated to pay any amount with respect to
throughput that would have been in excess of the minimum usage obligations set
forth in Sections 2(a), 2(b) or 2(c), as applicable.
(f) If it is finally determined pursuant to this Section 9 that UDS is
required to make a Shortfall Payment, UDS shall promptly make the Shortfall
Payment to the Operating Partnership in immediately available funds, plus
interest on the Shortfall Payment at the Prime Rate from the first day on or
after the midpoint of the calendar quarter to which the Notice of Disagreement
relates to the date of payment.
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 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 (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
obligations under this Agreement.
(d) Severability. If any provision of this Agreement shall be held
invalid or
-10-
11
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.
-11-
12
IN WITNESS WHEREOF, the undersigned parties have executed this
Agreement as of the date first written above.
ULTRAMAR DIAMOND SHAMROCK
CORPORATION
By:
--------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President
SHAMROCK LOGISTICS OPERATIONS, L.P.
By:
--------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: President and Chief Operating
Officer
SHAMROCK LOGISTICS, L.P.
By:
--------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: President and Chief Operating
Officer
RIVERWALK LOGISTICS, L.P.
By:
--------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: President and Chief Operating
Officer
-12-
13
SHAMROCK LOGISTICS GP, LLC
By:
--------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: President and Chief Operating
Officer
-13-
14
EXHIBIT A
CRUDE OIL PIPELINES
OWNERSHIP INTEREST
OF OPERATING THROUGHPUT
LENGTH PARTNERSHIP AND ITS CAPACITY
ORIGIN AND DESTINATION (MILES)(1) 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.
A-1
15
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.
B-1
16
EXHIBIT C
REFINED PRODUCTS TERMINALS(1)
NUMBER
CAPACITY OF
LOCATION (BARRELS) 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 8
El Paso, TX(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.
C-1
