PHILLIPS 66 PARTNERS LP (Form: 8-K, Received: 12/02/2014 16:17:39)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

_______________________________________

Date of Report: December 1, 2014

(Date of earliest event reported)

Phillips 66 Partners LP

(Exact name of registrant as specified in its charter)



Delaware	001-36011	38-3899432
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

3010 Briarpark Drive

Houston, Texas 77042

(Address of principal executive offices and zip code)

(855) 283-9237

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:



o	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))



Item 1.01	Entry into a Material Definitive Agreement

As previously announced, on October 22, 2014, Phillips 66 Partners LP (the "Partnership") entered into a Contribution, Conveyance and Assumption Agreement (the "Contribution Agreement") with Phillips 66 Partners GP LLC (the "General Partner"); Phillips 66 Company ("P66 Company"), a wholly owned subsidiary of Phillips 66 ("PSX”); and Phillips 66 Pipeline LLC ("P66 Pipeline"). Pursuant to the terms of the Contribution Agreement, the Partnership agreed to acquire (a) from P66 Company, the Bayway Rail Rack and the Ferndale Rail Rack, and (b) from P66 Pipeline, the Cross Channel Connector Pipeline (collectively, the "Acquired Assets") (the "Transaction"). The total consideration for the Transaction was $340 million, which included $28 million in cash; the issuance of 1,066,412 common units of the Partnership ("Common Units") to P66 Company; the issuance of 21,764 general partner units of the Partnership to the General Partner to maintain its 2% general partner interest in the Partnership; and the assumption by the Partnership of a five-year, $244 million note payable to a subsidiary of P66 Company. The Partnership funded the cash consideration with amounts borrowed under its revolving credit facility. The Transaction closed on December 1, 2014. In connection with the Transaction, the Partnership and its subsidiaries entered into the various agreements described below.

The above summary is qualified in its entirety by reference to the Contribution Agreement, a copy of which was filed as Exhibit 2.1 to the Partnership’s Current Report on Form 8-K filed on October 27, 2014, and incorporated herein by reference.

Second Amendment to the Omnibus Agreement

On December 1, 2014, the Partnership entered into a Second Amendment to the Omnibus Agreement (the "Omnibus Amendment") with the General Partner; P66 Company; P66 Pipeline; Phillips 66 Partners Holdings LLC, a wholly owned subsidiary of the Partnership ("PSXP Holdings"); and Phillips 66 Carrier LLC, a wholly owned subsidiary of PSXP Holdings ("PSXP Carrier"). The Omnibus Amendment amends the parties’ existing Omnibus Agreement to, among other things, provide for additional services to be provided to the Partnership by P66 Company in connection with the Acquired Assets and increase the monthly operational and administrative support fee payable by the Partnership to P66 Company from $2,302,300 to $2,395,000.

The foregoing description is not complete and is qualified in its entirety by reference to the full text of the Omnibus Amendment, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.

Second Amendment to the Operational Services Agreement

On December 1, 2014, PSXP Holdings and PSXP Carrier entered into a Second Amendment to the Operational Services Agreement (the "Operational Services Amendment") with P66 Pipeline. The Operational Services Amendment amends the parties’ existing Operational Services Agreement to, among other things, provide that the services provided to the Partnership by P66 Pipeline under the Operational Services Agreement will also be provided in support of the Acquired Assets.

The foregoing description is not complete and is qualified in its entirety by reference to the full text of the Operational Services Amendment, a copy of which is filed as Exhibit 10.2 to this Current Report on Form 8-K and incorporated herein by reference.

Terminal Services Agreement (Bayway Rail Rack)

On December 1, 2014, PSXP Holdings and P66 Company entered into a Terminal Services Agreement (the "Bayway Terminal Services Agreement") pursuant to which PSXP Holdings will charge fees to P66 Company for receiving crude oil at the Bayway Rail Rack via rail car and unloading the crude oil and redelivering it into a pipeline for onward delivery to P66 Company's Bayway Refinery. P66 Company will pay a monthly fee based on the capacity of the Bayway Rail Rack. If the amount of crude oil actually unloaded during a month exceeds such capacity, P66 Company will pay an additional fee on the amount that exceeds the capacity. The fees payable by P66 Company to PSXP Holdings are subject to adjustment each year beginning on January 1, 2016, based on the Producer Price Index for Finished Goods. The Bayway Terminal Services Agreement has a primary term of ten years and may be renewed by P66 Company for up to two additional five-year periods upon 180 days' written notice from P66 Company to PSXP Holdings prior to the end of the initial term or any renewal term, as applicable.

The foregoing description is not complete and is qualified in its entirety by reference to the full text of the Bayway Terminal Services Agreement, a copy of which is filed as Exhibit 10.3 to this Current Report on Form 8-K and incorporated herein by reference.

Terminal Services Agreement (Ferndale Rail Rack)

On December 1, 2014, PSXP Holdings and P66 Company entered into a Terminal Services Agreement (the "Ferndale Terminal Services Agreement") pursuant to which PSXP Holdings will charge fees to P66 Company for receiving crude oil at the Ferndale Rail Rack via rail car and unloading the crude oil and redelivering it into a pipeline for onward delivery to P66 Company's Ferndale Refinery. P66 Company will pay a monthly fee based on the capacity of the Ferndale Rail Rack. If the amount of crude oil actually unloaded during a month exceeds such capacity, P66 Company will pay an additional fee on the amount that exceeds the capacity. The fees payable by P66 Company to PSXP Holdings are subject to adjustment each year beginning on January 1, 2016, based on the Producer Price Index for Finished Goods. The Ferndale Terminal Services Agreement has a primary term of ten years and may be renewed by P66 Company for up to two additional five-year periods upon 180 days' written notice from P66 Company to PSXP Holdings prior to the end of the initial term or any renewal term, as applicable.

The foregoing description is not complete and is qualified in its entirety by reference to the full text of the Ferndale Terminal Services Agreement, a copy of which is filed as Exhibit 10.4 to this Current Report on Form 8-K and incorporated herein by reference.

Lease Agreement

On December 1, 2014, PSXP Holdings and P66 Company entered into a Lease Agreement (the "Bayway Lease") pursuant to which PSXP Holdings will lease from P66 Company the real property underlying or associated with the Bayway Rail Rack. Rent under the Bayway Lease is payable by PSXP Holdings in monthly installments of $155,230 plus any and all property taxes and other costs or expenses related to the lease of the premises. The Bayway Lease has a base term of 40 years and may be renewed by PSXP Holdings for up to three ten-year periods upon 90 days' written notice from PSXP Holdings to P66 Company prior to the end of the base term or any renewal term, as applicable.

The foregoing description is not complete and is qualified in its entirety by reference to the full text of the Bayway Lease, a copy of which is filed as Exhibit 10.5 to this Current Report on Form 8-K and incorporated herein by reference.

Assignment, Assumption and Modification of Note

The information set forth under Item 2.03 below with respect to the Assignment, Assumption and Modification of Note is incorporated herein by reference.

Relationships

Each of the parties to the various agreements described above is a direct or indirect subsidiary or affiliate of PSX. As a result, certain individuals, including officers of PSX and officers and directors of the General Partner, serve as officers and/or directors of one or more of such entities. P66 Company currently (as of the date of this Current Report on Form 8-K) owns 20,925,369 Common Units and 35,217,112 subordinated units of the Partnership ("Subordinated Units"), collectively representing 74.8% of the limited partnership interests in the Partnership based on the number of Common Units and Subordinated Units outstanding as of December 1, 2014. P66 Company also owns an indirect 2% general partner interest in the Partnership and all of the Partnership’s incentive distribution rights through its ownership of the General Partner.



Item 2.01	Completion of Acquisition or Disposition of Assets

P ursuant to the terms and conditions of the Contribution Agreement, the Transaction closed on December 1, 2014. The description of the Transaction contained in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.



Item 2.03	Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

On December 1, 2014, the Partnership entered into an Assignment, Assumption and Modification of Note (the "Assumption Agreement") with P66 Company and Phillips Gas Company Shareholder, Inc. (the "Lender"), pursuant to which the Partnership assumed the obligations of P66 Company under a note payable to the Lender (the "Note") in the original principal amount of $244 million. The Note matures on December 1, 2019, and bears interest at the rate of 3.1 percent per annum. Interest on the Note is payable quarterly and all principal and any accrued and unpaid interest on the Note is due and payable at maturity.

The foregoing description is not complete and is qualified in its entirety by reference to the full text of the Assumption Agreement, which is filed as Exhibit 10.6 to this Current Report on Form 8-K and incorporated herein by reference.



Item 3.02	Unregistered Sales of Equity Securities

The description in Item 1.01 above of the Partnership’s issuance of Common Units to P66 Company on December 1, 2014, in connection with the closing of the Transaction is incorporated in this Item 3.02 by reference. The issuance of the Common Units was completed in reliance upon the exemption from the registration requirements of the Securities Act of 1933, as amended, under Section 4(a)(2), as a transaction by an issuer not involving a public offering.



Item 9.01	Financial Statements and Exhibits

(d) Exhibits



Exhibit No.		Description
10.1	--	Second Amendment to the Omnibus Agreement, dated as of December 1, 2014, by and among Phillips 66 Company, on behalf of itself and the other Phillips 66 Entities (as defined in the Omnibus Agreement), Phillips 66 Pipeline LLC, Phillips 66 Partners LP, Phillips 66 Partners Holdings LLC, Phillips 66 Carrier LLC and Phillips 66 Partners GP LLC
10.2	--	Second Amendment to the Operational Services Agreement, dated as of December 1, 2014, by and among Phillips 66 Carrier LLC, Phillips 66 Partners Holdings LLC, and Phillips 66 Pipeline LLC
10.3†	--	Terminal Services Agreement (Bayway Rail Rack), dated December 1, 2014, by and between Phillips 66 Partners Holdings LLC and Phillips 66 Company
10.4†	--	Terminal Services Agreement (Ferndale Rail Rack), dated December 1, 2014, by and between Phillips 66 Partners Holdings LLC and Phillips 66 Company
10.5	--	Lease Agreement, dated as of December 1, 2014, by and between Phillips 66 Partners Holdings LLC and Phillips 66 Company
10.6	--	Assignment, Assumption and Modification of Note, dated as of December 1, 2014, by and among Phillips 66 Company, Phillips 66 Partners LP, and Phillips Gas Company Shareholder, Inc.

_______________

† Confidential treatment has been requested for certain portions of this Exhibit pursuant to a confidential treatment

request filed with the Securities and Exchange Commission on December 2, 2014. Such portions have been

omitted and filed separately with the Securities and Exchange Commission.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



		Phillips 66 Partners LP
	By:	Phillips 66 Partners GP LLC, its general partner

Dated: December 2, 2014	By:	/s/ J.T. Liberti
		J.T. Liberti Vice President and Chief Operating Officer

Index to Exhibits



Exhibit No.		Description
10.1	--	Second Amendment to the Omnibus Agreement, dated as of December 1, 2014, by and among Phillips 66 Company, on behalf of itself and the other Phillips 66 Entities (as defined in the Omnibus Agreement), Phillips 66 Pipeline LLC, Phillips 66 Partners LP, Phillips 66 Partners Holdings LLC, Phillips 66 Carrier LLC and Phillips 66 Partners GP LLC
10.2	--	Second Amendment to the Operational Services Agreement, dated as of December 1, 2014, by and among Phillips 66 Carrier LLC, Phillips 66 Partners Holdings LLC, and Phillips 66 Pipeline LLC
10.3†	--	Terminal Services Agreement (Bayway Rail Rack), dated December 1, 2014, by and between Phillips 66 Partners Holdings LLC and Phillips 66 Company
10.4†	--	Terminal Services Agreement (Ferndale Rail Rack), dated December 1, 2014, by and between Phillips 66 Partners Holdings LLC and Phillips 66 Company
10.5	--	Lease Agreement, dated as of December 1, 2014, by and between Phillips 66 Partners Holdings LLC and Phillips 66 Company
10.6	--	Assignment, Assumption and Modification of Note, dated as of December 1, 2014, by and among Phillips 66 Company, Phillips 66 Partners LP, and Phillips Gas Company Shareholder, Inc.

_______________

† Confidential treatment has been requested for certain portions of this Exhibit pursuant to a confidential treatment

request filed with the Securities and Exchange Commission on December 2, 2014. Such portions have been

omitted and filed separately with the Securities and Exchange Commission.

Exhibit 10.1

SECOND AMENDMENT TO THE
OMNIBUS AGREEMENT

This Second Amendment (this “ Second Amendment ”) to the Omnibus Agreement (as amended, the “ Omnibus Agreement ”) by and among Phillips 66 Company (“ Company ”), on behalf of itself and the other Phillips 66 Entities (as defined in the Omnibus Agreement), Phillips 66 Pipeline LLC (“ Pipeline ”), Phillips 66 Partners LP (the “ Partnership ”), Phillips 66 Partners Holdings LLC (“ Holdings ”), Phillips 66 Carrier LLC (“ Carrier ”) and Philips 66 Partners GP LLC (the “ General Partner ”) is dated as of the 1st day of December, 2014.

WHEREAS , the Parties entered into that certain First Amendment to the Omnibus Agreement effective as of March 1, 2014; and

WHEREAS , the Parties seek to amend the Omnibus Agreement to include certain additional assets acquired by the Partnership in the fourth quarter of 2014.

NOW THEREFORE , for and in consideration of the forgoing, the mutual covenants, terms and conditions of the Agreement, as amended by this Second Amendment, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:


1.	Unless otherwise noted, the capitalized terms used herein shall have the definitions set forth in the Omnibus Agreement.


2.	Section 1.01(aaa) of the Omnibus Agreement is hereby amended and restated in its entirety as follows:

“(aaa) “ Services ” means (a) the operational and administrative support services that Company and its Affiliates have traditionally provided in connection with the Assets (and in connection with any other assets acquired or developed by the Partnership Group from time to time), including the services listed on Schedule III to this Agreement, and (b) any other operational and administrative support services that the Parties mutually agree will be provided by Company and its Affiliates from time to time in support of the Assets and any other assets acquired or developed by the Partnership Group from time to time.”


3.	Section 4.01(a) of the Omnibus Agreement is hereby amended and restated in its entirety as follows:

“(a) Company agrees to provide, and agrees to cause its Affiliates to provide, on behalf of the General Partner and for the Partnership Group’s benefit, the Services (such Services to be provided, to the extent applicable, in connection with the Assets and any other assets acquired or developed by the Partnership Group from time to time). As consideration for the Services, the Partnership will pay Company an operational and administrative support fee of $2,395,000.00 per Month (as adjusted pursuant to Section 4.01(b) and (c), the “Operational and Administrative Support Fee”), payable without discount no later than the 21st Day of the Month in which Services are rendered, provided that if such Day is not a Business Day, then the Partnership shall pay such amount without interest on the next Business Day. If the Effective Date is any day other than the first day of a Month, or if this Agreement is terminated on any day other than the last day of a Month, then the Operational and Administrative Support Fee for the relevant Month shall be prorated based on the ratio of the number of days in the relevant partial Month to the number of days in the relevant full Month.”


4.	This Second Amendment shall be effective as of December 1, 2014.


5.	Except as expressly set forth herein, all other terms and conditions of the Omnibus Agreement shall remain in full force and effect.

[ Signature Pages Follow ]

IN WITNESS WHEREOF, the duly authorized representatives of the Parties have executed this Second Amendment as of the date first above written.



PHILLIPS 66 COMPANY
By:	/s/ T.G. Taylor
	T.G. Taylor
	President



PHILLIPS 66 PIPELINE LLC
By:	/s/ Todd Denton
	Todd Denton
	President



PHILLIPS 66 PARTNERS LP
By:	Phillips 66 Partners GP, LLC, General Partner of Phillips 66 Partners LP
By:	/s/ J.T. Liberti
	J.T. Liberti
	Vice President and Chief Operating Officer



PHILLIPS 66 PARTNERS GP, LLC
By:	/s/ J.T. Liberti
	J.T. Liberti
	Vice President and Chief Operating Officer



PHILLIPS 66 PARTNERS HOLDINGS LLC
By:	Phillips 66 Partners LP, Sole Member of Phillips 66 Partners Holdings LLC
By:	Phillips 66 Partners GP, LLC, General Partner of Phillips 66 Partners LP
By:	/s/ J.T. Liberti
	J.T. Liberti
	Vice President and Chief Operating Officer



PHILLIPS 66 CARRIER LLC
By:	Phillips 66 Partners Holdings LLC, Sole Member of Phillips 66 Carrier LLC
By:	Phillips 66 Partners LP, Sole Member of Phillips 66 Partners Holdings LLC
By:	Phillips 66 Partners GP, LLC, General Partner of Phillips 66 Partners LP
By:	/s/ J.T. Liberti
	J.T. Liberti
	Vice President and Chief Operating Officer

Exhibit 10.2

SECOND AMENDMENT TO THE OPERATIONAL SERVICES AGREEMENT

This Second Amendment to the Operational Services Agreement (“Second Amendment”) is made and entered into as of the 1st day of December, 2014, by and between PHILLIPS 66 CARRIER LLC , a Delaware limited liability company (“ Carrier ”), PHILLIPS 66 PARTNERS HOLDINGS LLC, a Delaware limited liability company (“ Holdings ”) and PHILLIPS 66 PIPELINE LLC , a Delaware limited liability company (“ Operator ”). Carrier and Holdings are collectively referred to herein as “ Company .”

WITNESSETH:

WHEREAS , Company and Operator are parties to that certain Operational Services Agreement dated June 26, 2013, as amended by the First Amendment thereto effective as of March 1, 2014 (the “Operational Services Agreement”);

WHEREAS , Company is acquiring certain additional assets during the fourth quarter of 2014; and

WHEREAS , Company and Operator desire that Operator maintain, operate, manage and administer such assets for Company, and the parties hereto wish to amend the Operational Services Agreement accordingly.

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


1.	Unless otherwise noted, the capitalized terms used herein shall have the definitions set forth in the Operational Services Agreement.


2.	The First Amended Exhibit A to the Operational Services Agreement is hereby deleted in its entirety and replaced by the Exhibit A attached hereto.


3.	The First Amended Exhibit B to the Operational Services Agreement is hereby deleted in its entirety and replaced by the Exhibit B attached hereto.


4.	The First Amended Exhibit C to the Operational Services Agreement is hereby deleted in its entirety and replaced by the Exhibit C attached hereto.


5.	The First Amended Exhibit D to the Operational Services Agreement is hereby deleted in its entirety and replaced by the Exhibit D attached hereto.

US 3010982v.5


6.	The First Amended Exhibit E to the Operational Services Agreement is hereby deleted in its entirety and replaced by the Exhibit E attached hereto.


7.	The First Amended Exhibit F to the Operational Services Agreement is hereby deleted in its entirety and replaced by the Exhibit F attached hereto.


8.	The First Amended Exhibit G to the Operational Services Agreement is hereby deleted in its entirety and replaced by the Exhibit G attached hereto.


9.	This Second Amendment shall be effective as of December 1, 2014.


10.	Except as expressly set forth herein, all other terms and conditions of the Operational Services Agreement (including the exhibits attached thereto) shall remain in full force and effect.

[Signature pages follow.]

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



PHILLIPS 66 PIPELINE LLC
By:	/s/ Todd Denton
	Todd Denton
	President

US 3010982v.5



PHILLIPS 66 CARRIER LLC
By:	Phillips 66 Partners Holdings LLC, Sole Member of Phillips 66 Carrier LLC
By:	Phillips 66 Partners LP, Sole Member of Phillips 66 Partners Holdings LLC
By:	Phillips 66 Partners GP, LLC, General Partner of Phillips 66 Partners LP
By:	/s/ J.T. Liberti
	J.T. Liberti
	Vice President and Chief Operating Officer

Signature Page to Second Amendment to the Operational Services Agreement



PHILLIPS 66 PARTNERS HOLDINGS LLC
By:	Phillips 66 Partners LP, Sole Member of Phillips 66 Partners Holdings LLC
By:	Phillips 66 Partners GP, LLC, General Partner of Phillips 66 Partners LP
By:	/s/ J.T. Liberti
	J.T. Liberti
	Vice President and Chief Operating Officer

Exhibit A
Description of Pipelines, Terminals and Storage Facilities

Attached to and made a part of that certain Operational Services Agreement, dated June 26, 2013, by and among Phillips 66 Carrier LLC, Phillips 66 Partners Holdings LLC and Phillips 66 Pipeline LLC, as amended from time to time:

Crude Oil Pipelines

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

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

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

Refined Product Pipelines

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

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

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

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

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

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

Terminals

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

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

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

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

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

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

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

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

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

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

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

Storage Facilities

Medford Storage Spheres . Medford Storage Spheres are two above ground storage facilities located at the Central Division pipeline facility in Medford, Oklahoma. The working capacity of each sphere is 35,000 barrels, and the spheres are capable of receiving and storing natural gas liquids and petrochemicals, including refinery grade propylene.

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

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

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

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

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

Exhibit B
Maintenance Services


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


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


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


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


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


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


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


(h)	Reconstruction, reconditioning, overhaul or replacement of the Pipelines and Terminals.


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


(j)	Providing technical services for purposes of trouble-shooting problems, improving Pipeline and Terminal performance, upgrading the Pipelines and Terminals, repairing the Pipelines and Terminals or meeting regulatory or safety requirements.


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


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


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


(n)	Advise Company of major plans or significant changes in the maintenance or repair of the Pipelines and Terminals.


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


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


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


(r)	The Maintenance Services to be performed by Operator hereunder shall include, but shall not be limited to, Pipeline repairs, Terminal repairs, aerial pipeline patrols, population density counts, right-of-way maintenance, gas leakage surveys, pipeline pigging operations, cathodic protection work as required by all governmental regulatory agencies,

tank cleaning, tank repair and truck rack maintenance. Operator will maintain suitable meter station, valve inspection and meter proving maintenance programs. Any operating or maintenance deficiencies so discovered in the Pipelines or Terminals, or any appurtenances thereto, will be corrected by Operator. Operator will provide inspectors for monitoring work performed by others in the vicinity of the Pipelines and Terminals.

(s)

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

Exhibit C
Operating Services


(a)	Day-to-day routine and emergency supervision of the operation of the Pipelines and Terminals.


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


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


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


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


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


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

(h)

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


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


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

(k)

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


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

Exhibit D
Administrative Services


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


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


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


(d)	Product quality and assurance.


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

Exhibit E
Construction Services


(a)	Construction, reconstruction, reconditioning, overhaul and replacement of Pipelines and Terminals and their related facilities.


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


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


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


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

Exhibit F
Accounting Procedures

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


1.	General Provisions


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


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

(c)

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


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

2. Determination of Costs, Expenses and Expenditures . Subject to the limitations and determinations hereinafter prescribed and the provisions of the Agreement, Operator shall be reimbursed for all costs, expenses, expenditures and fees by or on behalf of Operator in connection with the provision of the Services. Such reimbursement shall include any necessary

Direct Costs (as defined in Paragraph 3 below) and the applicable portion of the Management Fee (as defined in the Omnibus Agreement).

(a)

It is the intent of the Parties that Services provided by employees of Operator shall be budgeted and billed by Operator on a Direct Cost basis pursuant to Section 3.03(a) of the Agreement to the extent that is feasible to measure and account for the Services directly provided by such employees to Operator by means of time sheets or other methods approved by Company. Direct Costs billed to Company shall normally include field operation and maintenance personnel, administrative personnel supporting Company on a full time or near full time basis, and Home Office personnel (such as engineering and drafting personnel) typically assigned directly to Company-related projects whose time is accounted for by time sheets or other methods approved by Company.


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


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

(d)

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

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


(a)	Labor and Benefits .

(i)

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

(ii)

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


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

(c)

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

(d)

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

(e)

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


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

(g)

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


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


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


(j)	Maintenance and Repair . All costs incurred to maintain the Pipelines and Terminals and related facilities, periodically inspect the Pipelines and Terminals for damages or other conditions that could affect the safe, efficient and economical operation of the Pipelines and Terminals, and perform such repairs to the Pipelines and Terminals as may be required.

(k)

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

(l)

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


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

(n)

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


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


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

Exhibit G
Arbitration Procedure

Either Party may initiate dispute resolution procedures by sending a Notice to the other Party specifically stating the complaining Party’s Claim and by initiating binding arbitration in accordance with the Center for Public Resources Rules for Non-Administered Arbitration of Business Disputes, by three arbitrators who shall be neutral, independent, and generally knowledgeable about the type of transaction which gave rise to the dispute. The arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. §§ 1-16, provided that the arbitrators shall include in their report/award a list of findings, with supporting evidentiary references, upon which they have relied in making their decision. Judgment upon the award rendered by the arbitrators may be entered by any court having jurisdiction thereof. The place of arbitration shall be Houston, Texas.

Notwithstanding anything herein and regardless of any procedures or rules of the Center for Public Resources, it is expressly agreed that the following shall apply and control over any other provision in the Agreement:

(a)

All offers, conduct, views, opinions and statements made in the course of negotiation or mediation by any of the Parties, their employees, agents, experts, attorneys and representatives, and by any mediator, are confidential, made for compromise and settlement, protected from disclosure under Federal and State Rules of Evidence and Procedure, and inadmissible and not discoverable for any purpose, including impeachment, in litigation or legal proceedings between the Parties, and shall not be disclosed to any Person who is not an agent, employee, expert or representative of the Parties, provided that evidence otherwise discoverable or admissible is not excluded from discovery or admission as a result of presentation or use in mediation.

(b)

Except to the extent that the Parties may agree upon selection of one or more arbitrators, the Center for Public Resources shall select arbitrators from a panel reviewed by the Parties. The Parties shall be entitled to exercise peremptory strikes against one-third of the panel and may challenge other candidates for lack of neutrality or lack of qualifications. Challenges shall be resolved in accordance with Center for Public Resource rules.


(c)	The Parties shall have at least 20 Days following the close of hearing within which to submit a brief (not to exceed 18 pages in length) and ten Days from date of receipt of the opponent’s brief within which to respond thereto.


(d)	The Parties expressly agree that the arbitrators shall not award punitive damages, consequential damages, or attorneys’ fees (except attorneys’ fees specifically authorized by the Agreement).


(e)	The fees and expenses of any mediator or arbitrator shall be shared equally by the Parties.


(f)	The Parties may, by written agreement (signed by both Parties), alter any time deadline or location(s) for meetings.

Time is of the essence for purposes of the provisions of this Exhibit.

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

Exhibit 10.3

________________________________________________________________________

TERMINAL SERVICES AGREEMENT

by and between

PHILLIPS 66 PARTNERS HOLDINGS LLC

and

PHILLIPS 66 COMPANY

for

Rail Rack Terminal in Linden, New Jersey

________________________________________________________________________

TABLE OF CONTENTS


ARTICLE I.	DEFINED TERMS 1


Section 1.01	Defined Terms 1


Section 1.02	Other Defined Terms 4


Section 1.03	Terms Generally 4


ARTICLE II.	TERM AND TERMINATION 4


Section 2.01	Term 4


Section 2.02	Termination Following a Force Majeure Event 4


Section 2.03	Special Termination by Company 4


ARTICLE III.	SERVICES 5


Section 3.01	Unloading and Delivery of Crude Oil 5


Section 3.05	Scheduling and Nomination 5


ARTICLE IV.	CHARGES 6


Section 4.01	Monthly Fee 6


Section 4.02	Partial Period Proration 6


Section 4.03	Special Reduction of Fee 6


Section 4.04	Recovery of Certain Costs 6


Section 4.05	Adjustments 7


ARTICLE V.	CRUDE OIL QUALITY 7


Section 5.01	Verification by Holdings 7


Section 5.02	Sampling by Company 7


Section 5.03	Non-Conforming Crude Oil 8


ARTICLE VI.	OTHER SERVICES 8


Section 6.01	Laboratory Fees and Services 8


Section 6.02	Additional Services 9


ARTICLE VII.	TERMINAL ACCESS 9


ARTICLE VIII.	MONTHLY STATEMENT; PAYMENT; LIENS 9


Section 8.01	Monthly Statement 9


Section 8.02	Payment 9


Section 8.03	Liens 10


ARTICLE IX.	TITLE; CUSTODY 10


Section 9.01	Title 10


Section 9.02	Custody 10


ARTICLE X.	VOLUME AND QUALITY DETERMINATIONS 10


Section 10.01	Volume Determinations - General 10


Section 10.02	Terminal Volumes 10


Section 10.03	Quality Determination 11


ARTICLE XI.	INSURANCE 11


Section 11.01	Insurance 11


ARTICLE XII.	TAXES 11


Section 12.01	Taxes 11


ARTICLE XIII.	HEALTH, SAFETY AND ENVIRONMENT 11


Section 13.01	Spills; Environmental Pollution 11


Section 13.02	Inspection 12


Section 13.03	Incident Notification 12


ARTICLE XIV.	FORCE MAJEURE 13


Section 14.01	Suspension during Force Majeure Events 13


Section 14.02	Obligation to Remedy Force Majeure Events 13


Section 14.03	Strikes and Lockouts 13


Section 14.04	Action in Emergencies 14


ARTICLE XV.	NOTICES 14


Section 15.01	Notices 14


Section 15.02	Effective upon Receipt 14


ARTICLE XVI.	APPLICABLE LAW 14


Section 16.01	Applicable Law 14


ARTICLE XVII.	LIMITATION OF LIABILITY 14


Section 17.01	No Liability for Consequential Damages 14


Section 17.02	Limitation of Liability 14


ARTICLE XVIII.	DEFAULT 15


Section 18.01	Default 15


Section 18.02	Non-Exclusive Remedies 15


Section 18.03	Right to Terminate 15


ARTICLE XIX.	PUBLIC USE 15


Section 19.01	Public Use 15


ARTICLE XX.	CONFIDENTIALITY 16


Section 20.01	Confidentiality 16


ARTICLE XXI.	MISCELLANEOUS 16


Section 21.01	Disputes between the Parties 16


Section 21.02	Assignment 16


Section 21.03	Partnership Change in Control 17


Section 21.04	No Third-Party Rights 17


Section 21.05	Compliance with Laws 17


Section 21.06	Severability 17


Section 21.07	Non-Waiver 17


Section 21.08	Entire Agreement 17


Section 21.09	Amendments 18


Section 21.10	Survival 18


Section 21.11	Counterparts; Multiple Originals 18


Section 21.12	Exhibits 18


Section 21.13	Table of Contents; Headings; Subheadings 18


Section 21.14	Construction 18


Section 21.15	Business Practices 18


Section 21.16	Right of First Offer 18


Section 21.17	Effect of Company Restructuring 19

Exhibit A – Dispute Resolution Procedures

iii

TERMINAL SERVICES AGREEMENT

(BAYWAY)

THIS TERMINAL SERVICES AGREEMENT is made and entered into as of the Effective Date by and between PHILLIPS 66 PARTNERS HOLDINGS LLC , a Delaware limited liability company (“ Holdings ”) and PHILLIPS 66 COMPANY , a Delaware corporation (“ Company ”).

Recitals

WHEREAS , Holdings owns a terminal in Linden, New Jersey consisting of a four track, rail car receiving facility which is suitable for unloading crude oil and delivering it into tankage at the adjacent Bayway Refinery (the “ Terminal ”);

WHEREAS, Company intends to deliver crude oil to the Terminal via rail car and desires to have such crude oil unloaded and redelivered into a pipeline for onward delivery to the Bayway Refinery, and Holdings desires to provide such services for Company, all upon the terms and conditions set forth in this Agreement.

NOW, THEREFORE , for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, Holdings and Company agree as follows:

Article I. Defined Terms

Section 1.01 Defined Terms . The following definitions shall for all purposes apply to the capitalized terms used in this Agreement:


(a)	“Agreement” means this Terminal Services Agreement, together with all exhibits attached hereto, as the same may be extended, supplemented or restated from time to time in accordance with the provisions hereof.


(b)	“Barrel” means 42 Gallons.


(c)	“Bayway Refinery” means the refinery facility owned by Phillips 66 Company in Linden, New Jersey located adjacent to the Terminal.


(d)	“Business Day” means any Day except for Saturday, Sunday or an official holiday in the State of Texas.


(e)	“Capacity” means the aggregate design capacity of the Terminal which is 75,000 Barrels per Day (measured on a Monthly average basis).


(f)	“Claims” means any and all judgments, claims, causes of action, demands, lawsuits, suits, proceedings, governmental investigations or audits, losses, assessments, fines, penalties, administrative orders, obligations, costs, expenses, liabilities and damages,

including interest, penalties, reasonable attorneys’ fees, disbursements and costs of investigations, deficiencies, levies, duties and imposts.


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


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


(i)	“Crude Oil” means any grade or grades of crude petroleum or condensate that is the direct liquid product of oil or gas wells.


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


(k)	“Effective Date” means December 1, 2014.

(l)

“Force Majeure” means: (i) acts of God, fires, floods or storms; (ii) compliance with orders of courts or Governmental Authorities; (iii) explosions, wars, terrorist acts or riots; (iv) inability to obtain or unavoidable delays in obtaining material or equipment; (v) accidental disruption of service; (vi) events or circumstances similar to the foregoing (including inability to obtain or unavoidable delays in obtaining material or equipment and disruption of service provided by third parties) that prevent a Party’s ability to perform its obligations under this Agreement, to the extent that such events or circumstances are beyond the Party’s reasonable control and could not have been prevented by the Party’s due diligence; (vii) strikes, lockouts or other industrial disturbances; and (viii) breakdown of refinery facilities, machinery, storage tanks or pipelines irrespective of the cause thereof.


(m)	“Gallon” means a United States gallon of two hundred thirty-one cubic inches of liquid at 60º Fahrenheit, and at the equivalent vapor pressure of the liquid.


(n)	“Governmental Authority” means any government, any governmental administration, agency, instrumentality or other instrumentality or other political subdivision thereof or any court, commission or other governmental authority of competent jurisdiction.


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


(p)	“Holdings Affiliated Parties” means Holdings, Phillips 66 Partners LP and its and their respective contractors, directors, officers, employees and agents.


(q)	“IIC” means a mutually acceptable independent inspection company.


(r)	“Initial Term” has the meaning set forth in Section 2.01.

(s)

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


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


(u)	“Monthly Fee” shall mean the fee described in Section 4.01.


(v)	“Nomination” has the meaning set forth in Section 3.05(c).


(w)	“Non-Conforming Crude Oil” means any Crude Oil that fails to meet specifications established by Holdings for delivery of that Crude Oil to the Bayway Refinery.


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


(y)	“Notice” means any notice, request, instruction, correspondence or other communication permitted or required to be given under this Agreement.


(z)	“Parties” means Holdings and Company, collectively.


(aa)	“Partnership Change in Control” means Phillips 66 ceases to Control the general partner of Phillips 66 Partners LP by virtue of any affiliate of Phillips 66 being removed as the general partner of Phillips 66 Partners LP under the terms of the limited partnership agreement of Phillips 66 Partners LP.


(ab)	“Party” means Holdings or Company, individually.


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


(ad)	“PPI-FG” has the meaning set forth in Section 4.05.


(ae)	“Regular Terminal Operating Hours” means 24 hours per Day, 7 Days per week.


(af)	“Renewal Term” has the meaning set forth in Section 2.01.


(ag)	“Taxes” means any income, sales, use, excise, transfer, and similar taxes, fees and charges (including ad valorem taxes), including any interest or penalties attributable thereto, imposed by any Governmental Authority.

Section 1.02 Other Defined Terms . Other terms may be defined elsewhere in this Agreement, and, unless otherwise indicated, shall have such meanings throughout this Agreement.

Section 1.03 Terms Generally . The definitions in this Agreement shall apply equally to both singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” All references to Articles, Sections and Exhibits shall be deemed to be references to Articles and Sections of, and Exhibits to, this Agreement unless the context requires otherwise.

Article II. Term and Termination

Section 2.01 Term . This Agreement shall have a primary term commencing on the Effective Date and continuing for ten (10) years (the “ Initial Term ”), and may be renewed by Company for up to two successive, five-year renewal terms (each a “ Renewal Term ”) at Company’s sole option, upon at least 180 Days’ written Notice from Company to Holdings prior to the end of the Initial Term or first Renewal Term, as applicable. The Initial Term, together with any Renewal Terms shall be referred to in this Agreement as the “Term.”

Section 2.02 Termination Following a Force Majeure Event . If a Force Majeure event prevents either Holdings or Company from performing its respective obligations under this Agreement for a period of more than 12 consecutive Months, this Agreement may be terminated by either Party at any time after the expiration of such 12-Month period upon at least 30 Days’ Notice to the other Party.

Section 2.03 Special Termination by Company . If (a) operations at the Bayway Refinery are totally or partially suspended for a period of at least 12 consecutive Months, the Parties will negotiate in good faith to agree upon a reduction in the applicable Monthly Fee to reflect such suspension of operations. If the Parties are unable to agree to an appropriate reduction of the applicable Monthly Fee, then after a public announcement of such suspension has been made, Company may provide written Notice to Holdings of its intent to terminate this

Agreement and this Agreement will terminate 12 Months following the date such Notice is received by Holdings. In the event of a public announcement, prior to the expiration of such 12-month period, of an intent to resume operations at the Bayway Refinery, then such Notice shall be deemed revoked and this Agreement shall continue unmodified in full force and effect as if such Notice had never been delivered.

Article III. Services

Section 3.01 Unloading and Delivery of Crude Oil . Holdings, or Holdings’ designee, shall use commercially reasonable efforts to unload Crude Oil from the rail cars received at the Terminal and deliver such Crude Oil into a pipeline for redelivery into tankage at the Bayway Refinery. The minimum level of service to be provided to Company shall be the Capacity of the Terminal. However, Holdings shall not be responsible when movements, delays or disruptions involving the railroad affect its ability to provide service to Company. Holdings, in its sole discretion, may accept for delivery volumes of Crude Oil in excess of the Capacity, provided that acceptance for delivery of any such excess volumes will be subject to availability of capacity at the Terminal, as determined by Holdings. Company shall not (and shall cause any applicable Company designee delivering Crude Oil by rail to the Terminal on Company’s behalf to not) deliver to the Terminal any Crude Oil on any rail car if such rail car is damaged, in disrepair, or otherwise cannot be unloaded consistent with customary and prudent industry practice and/or past practice.

Section 3.02 Company shall provide any documentation reasonably required by Holdings to authorize unloading and delivery of the Crude Oil on behalf of Company at the Terminal. Upon delivery to the Bayway Refinery, Holdings shall have no further responsibility for any Claims arising out of possession or use of such Crude Oil.

Section 3.03 Company shall have the exclusive right to deliver to and unload at the Terminal Crude Oil in an amount of volume not to exceed the safe operating capacity of the Terminal as determined by Holdings, taking into account such factors as (i) unloading rates (ii) time to react to a potential overflow of deliveries into the Bayway Refinery, and (iii) other operating conditions.

Section 3.04 Holdings shall maintain the Terminal in proper operating condition and in a manner that maintains the Capacity of the Terminal, to the extent commercially reasonable. At all times during the Term of this Agreement, Holdings and Company shall use commercially reasonable efforts to work together to coordinate maintenance and other activities to minimize potential and adverse effects to the Terminal and Bayway Refinery. In the event any portion of the safe working capacity of the Terminal is not available for a period exceeding thirty (30) consecutive Days, then following such 30-Day period, the Monthly Fee shall be proportionately reduced to reflect the amount of working capacity that

is not available for unloading at the Terminal. If and to the extent all or any portion of such working capacity again becomes available for use at the Terminal, the Monthly Fee shall be immediately increased to reflect the resumed working capacity availability.

Section 3.05 Scheduling and Nomination .


(a)	Scheduling and nomination of all deliveries, receipts, handling and throughput of Crude Oil hereunder shall be made in accordance with the terms of that certain Operational Services Agreement, dated effective July 26, 2013, as amended from time to time, by and among Holdings, a subsidiary of Company, and the other parties thereto.


(b)	All rail cars delivered to the Terminal must meet Holdings’ current specifications for unit trains for receipt of product at the Terminal, which such specifications have been provided to Company.

Article IV. Charges

Section 4.01 Monthly Fee. Beginning on the Effective Date, Company shall pay Holdings a monthly fee (“ Monthly Fee ”) equal to (i) a $ ** per Barrel fee multiplied by (ii) the Capacity of the Terminal. If, during any Month, the aggregate amount of Crude Oil actually unloaded at the Terminal exceeds the Capacity, the Monthly Fee shall be increased by an amount equal to a fee of $ ** on each Barrel above Capacity in that Month.

Section 4.01 Partial Period Proration . If the Effective Date is any Day other than the first Day of a Month, or if this Agreement is terminated on any Day other than the last Day of a Month, then any quantity based on a Monthly determination will be prorated by a fraction, the numerator of which is the number of Days in that part of the Month beginning on the Effective Date or ending on the date of such termination, as the case may be, and the denominator of which is the number of Days in the Month.

Section 4.02 Special Reduction of Fee. If Holdings’ use of all or part of the Terminal for the unloading and delivery of Crude Oil is restrained, enjoined, restricted or terminated by (a) any Governmental Authority, (b) right of eminent domain or (c) the owner of leased land, Holdings, upon being notified of such restraint, enjoinder, restriction or termination, shall notify Company and the applicable Monthly Fee shall be reduced to the extent that Holdings’ use of the Terminal is so restrained, enjoined, restricted or terminated.

Section 4.03 Recovery of Certain Costs .


(a)	If Holdings agrees to make any expenditures at Company’s request, Company will reimburse Holdings for such expenditures or, at Holdings’ option and if the Parties agree, the applicable Monthly Fee will be increased, or additional fees

shall be added, or an alternate mechanism shall be adopted to allow Holdings to recover such expenditures over time from Company or another entity.

(b)

If new Laws require Holdings to make substantial and unanticipated expenditures in connection with the services Holdings provides to Company under this Agreement, Holdings shall use commercially reasonable efforts to attempt to secure a waiver, exception or extension for the time of compliance with the new Law in an effort to secure continued operation under existing applicable Laws during the Term of this Agreement. If Holdings is unable to secure a waiver, exception or extension for continued operation using commercially reasonable efforts, then Holdings will find a commercially reasonable manner to conform to the new Laws and give Company commercially reasonable advance notice of any planned expenditures necessary for compliance. Company will reimburse Holdings for Company’s proportionate share of the costs of complying with such Laws, or at Holdings’ option and if the Parties agree, relevant periodic or unit charges will be increased or an alternate mechanism shall be adopted to allow Holdings to recover the amount paid for such costs over time from Company or another entity.


(c)	If new or increased property taxes result in material additional costs to Holdings, the Monthly Fee shall be adjusted, or additional fees shall be added to allow Holdings to recover such costs.

Section 4.04 Adjustments .


(a)	As of January 1, 2016, and as of January 1 of each year thereafter while this Agreement is in effect, Holdings may adjust the then-current per Barrel fees used to calculate the Monthly Fee pursuant to Section 4.05(b) below.

(b)

Holdings may adjust the applicable fee annually by a percentage equal to the greater of zero and the positive change in the Producer Price Index for Finished Goods (Series ID WPUSOP3000) (the “ PPI-FG ”), as reported during the Month of October immediately before the effective date of the adjustment, with respect to the 12-Month period ending at the end of the Month of September immediately preceding such publication, provided that if, with respect to any such 12-Month period or periods, the PPI-FG has decreased, Holdings may subsequently increase the applicable fee to the extent that the percentage change in the PPI-FG since the most recent previous increase in such fees is greater than the aggregate amount of the cumulative decreases in the PPI-FG during the intervening period or periods.

Article V. Crude Oil Quality

Section 5.01 Verification by Holdings . The quality of any Crude Oil tendered for Company’s account hereunder shall be verified by an IIC analysis indicating that such Crude Oil so tendered meets Holdings’ and Bayway Refinery’s minimum Crude Oil specifications. Company shall provide Holdings with a copy of each such analysis. All costs for each such analysis shall be borne by Company. Holdings shall have the right to sample any Crude Oil tendered to Holdings for Company’s account hereunder for the purpose of confirming the accuracy of the analysis. The costs of such confirmation shall be borne by Holdings. Holdings retains the right to inspect any Crude Oil tendered for delivery by rail to the Terminal and to reject any Non-Conforming Crude Oil.

Section 5.02 Sampling by Company . Company may, at its sole cost and expense, sample its Crude Oil unloaded at the Terminal to satisfy itself that the minimum Crude Oil specifications are maintained. If any such Company sample indicates the presence of any Crude Oil that does not meet or exceed Holdings’ minimum specifications for such Crude Oil in effect on the date of such sample, Company shall immediately notify Holdings by telephone and Company shall confirm such notification in writing by telecopy Notice. If Company does not so notify Holdings, Holdings’ Crude Oil sample analysis shall be deemed to be conclusive and binding upon both Parties.

Section 5.03 Non-Conforming Crude Oil .


(a)	Company agrees not to deliver, or cause to be delivered, any Non-Conforming Crude Oil, into the Terminal.

(b)

Company shall be liable for all commercially reasonable costs and losses in curing, removing, or recovering any Non-Conforming Crude Oil, and for all damages and injuries to the Terminal facilities and equipment resulting from such Non-Conforming Crude Oil, except to the extent that such non-conformity is due to the negligence or willful misconduct of Holdings. Holdings, at its sole discretion, may attempt to blend the Non-Conforming Crude Oil, remove and dispose of the Non-Conforming Crude Oil, and, except to the extent that such non-conformity is due to the negligence or willful misconduct of Holdings, Company shall reimburse Holdings for all reasonable costs associated therewith. Except to the extent that a non-conformity is due to the negligence or willful misconduct of Holdings, if Company’s Non-Conforming Crude Oil cause any contamination, dilution or other damages to Holdings, Company agrees to release, indemnify, defend and hold the Holdings Affiliated Parties harmless from and against any Claims incurred by, or charged against any of the Holdings

Affiliated Parties, as a result of such event and shall be responsible for all costs and liabilities associated with or incurred as a result of such event.

Article VI. Other Services

Section 6.01 Laboratory Fees and Services.

(a)

If Holdings provides sampling, testing and/or other laboratory services requested by Company for Crude Oil delivered to the Bayway Refinery via the Terminal, Holdings shall charge for each sampling and testing procedure performed as set forth in Holdings’ “Schedule of Rates for Laboratory Services” then in effect. If Holdings contracts with another Person to perform laboratory services, all fees for such services shall be billed to Company at Holdings’ cost.


(b)	Holdings’ liability for sampling and testing services is limited to the charge for the service provided.

Section 6.02 Additional Services. For any service or function that is not specifically provided for in this Agreement, requested by Company and agreed to by Holdings, there may be a charge or fee in an amount as agreed upon by the Parties in writing.

Article VII. Terminal Access

Section 7.01 Terminal Access . Terminal access by Company or its representatives shall be during Regular Terminal Operating Hours. As a condition to being granted access to a Terminal, Company shall require all contractors and representatives designated by it to deliver, receive, sample or inspect Company’s Crude Oil at such Terminal or to provide any other service for Company, to sign and comply with a terminal access agreement in such form as Holdings may reasonably specify from time to time. Further, Company shall cause all such designated contractors and representatives to comply with all applicable Terminal rules and regulations and Holdings shall make copies of such rules and regulations available to Company and its designated contractors and representatives at the Terminal.

Article VIII. Monthly Statement; Payment; Liens

Section 8.01 Monthly Statement . Promptly after the end of each Month, Holdings shall provide Company with a statement showing the Monthly Fee applicable to the previous Month.

Section 8.02 Payment .


(a)	Payment of the amount(s) identified on each Monthly statement shall be due, without discount, on the later of (i) two Business Days after such Monthly statement is received, or (ii) the 22 ^nd Day of the Month in which such Monthly

statement is received, provided that if such Day is not a Business Day, then such payment shall be due, without interest, on the next Business Day. Payments not paid by the due date shall bear interest at the rate of the lesser of 1.5% per Month or the maximum rate allowed by Law for each Month or portion of a Month thereafter during which such amount remains unpaid.

(b)

All payments shall be made to Holdings by automated clearing house to an account specified by Holdings from time to time, provided that as long as Holdings is an affiliate of Company, Holdings and Company may settle Company’s financial obligations to Holdings through Company’s normal interaffiliate settlement processes. Any bank charges incurred by Company in remitting funds by automated clearing house shall be for Company’s account. Acceptance by Holdings of any payment from Company for any charge or service after termination or expiration of this Agreement shall not be deemed a renewal of this Agreement or a waiver by Holdings of any default by Company hereunder.

(c)

If Company reasonably disputes any Monthly statement, in whole or in part, Company shall promptly notify Holdings in writing of the dispute and shall pay the undisputed portion according to the terms of this Section 8.02, and shall promptly seek to resolve the dispute including, if necessary, by arbitration as provided in Section 21.01. An arbitral panel may award reasonable interest on any unpaid amount determined to have been due to Holdings but withheld in good faith.

Section 8.03 Liens . Company hereby grants to Holdings an irrevocable (a) warehouseman’s lien on all of Company’s Crude Oil received at the Terminal and (b) power of attorney to dispose of such Crude Oil at fair market value to the extent of all amounts owed to Holdings by Company hereunder.

Article IX. Title; Custody

Section 9.01 Title . Title to all of Company’s Crude Oil received, handled, unloaded and delivered by Holdings at the Terminal shall remain at all times in Company’s name.

Section 9.02 Custody . Custody of all Crude Oil received by Holdings hereunder from a rail car shall pass from such rail car to Holdings when such Crude Oil passes the flange connection between such rail car and the Terminal. Custody of all Crude Oil delivered to the Bayway Refinery for Company hereunder shall pass from Holdings to Company when such Crude Oil passes through the flange connection between the Terminal and the Bayway Refinery.

Article X. Volume and Quality Determinations

Section 10.01 Volume Determinations - General .


(a)	All measurements, volume corrections and calibrations will be made in accordance with the most recent edition of the American Petroleum Institute’s Manual of Petroleum Measurement Standards.


(b)	All volume determinations shall be adjusted to a temperature of 60° Fahrenheit and a pressure of one standard atmosphere (14.7 PSIA) per the most recent edition of the American Petroleum Institute’s Manual of Petroleum Measurement Standards, Chapter 11 ( viz. , Table 6B, 6C, etc., whichever table is relevant to the Crude Oil being measured).

Section 10.02 Terminal Volumes


(a)	All Crude Oil unloaded at the Terminal and delivered to the Bayway Refinery will be determined by independent inspector IIC tank gauge measurements at the Bayway Refinery.


(b)	A Company representative may witness testing, calibration of equipment, and gauging of Crude Oil delivered to the Bayway Refinery via the Terminal, at Company’s expense. In the absence of a Company representative, Holdings’ measurements shall be deemed to be accurate.

Section 10.03 Quality Determination. Quality determination of all Crude Oil unloaded shall be based on a qualified laboratory’s analyses performed on representative sample obtained by the flow-proportional in-line sampler that performs according to API MPMS 8.2. If the flow-proportional in-line sampler is not available or if it malfunctions, Holdings and Company shall agree on alternate custody transfer samples sources.

Article XI. Insurance

Section 11.01 Insurance . Property insurance covering loss or damage to Company’s Crude Oil, if any, that may be desired by Company, shall be carried by Company at Company’s expense. Should Company elect to carry such insurance, then each policy of insurance shall be endorsed to provide a waiver of subrogation rights in favor of the Holdings Affiliated Parties. Notwithstanding anything in this Agreement to the contrary, Holdings shall not be liable to Company for Crude Oil losses or shortages for which Company is compensated by its insurer.

Article XII. Taxes

Section 12.01 Taxes . Company shall be responsible for and shall pay all applicable sales Taxes and similar Taxes on goods and services provided hereunder and any other Taxes

(other than taxes on income) now or hereafter imposed by any Governmental Authority in respect of or measured by Crude Oil handled hereunder or the manufacture, receipt, unloading, delivery or inspection thereof, and Company agrees to promptly reimburse Holdings for any such Taxes Holdings is legally required to pay, upon receipt of invoice therefor. Each Party is responsible for all Taxes in respect of its own real and personal property.

Article XIII. Health, Safety and Environment

Section 13.01 Spills; Environmental Pollution .


(a)	In the event of any Crude Oil spill or other environmentally polluting discharge caused by Holdings’ operation of the Terminal, any clean-up associated with any such spill or discharge and any liability resulting from such spill or discharge, shall be the responsibility of Holdings, except to the extent such spill or discharge is caused by Company or its affiliates other than Holdings.

(b)

In the event and to the extent of any Crude Oil spill or other environmentally polluting discharge caused by Company or its affiliates other than Holdings receiving Crude Oil on Company’s behalf, at its request or for its benefit, Holdings is authorized to commence containment or clean-up operations as deemed appropriate or necessary by Holdings or as required by any Governmental Authority, and Holdings shall notify Company of such operations as soon as practicable. All liability and reasonable costs of containment or clean-up shall be borne by Company except that, in the event a spill or discharge is caused by the joint negligence of both Holdings and Company, liability and costs of containment or clean-up shall be borne jointly by Holdings and Company in proportion to each Party’s respective negligence.


(c)	For purposes of this Section 13.01, the negligence of a third party rail car owner or rail car operator, delivering Crude Oil on Company’s behalf, at its request or for its benefit, shall be attributed to Company.

(d)

The Parties shall cooperate for the purpose of obtaining reimbursement if a third party is legally responsible for costs or expenses initially borne by Holdings or Company; provided , however , that Company shall be responsible and agrees to replace or repair, at its own expense (or to reimburse Holdings for Holding’s costs to replace or repair), any part of the Terminal that is destroyed or damaged through any negligence or willful misconduct of Company, any Company designee or contractor (acting in such capacity), or any of their respective agents or employees.

Section 13.02 Inspection . During Regular Terminal Operating Hours, Company may: (a) inspect the Terminal, including health, safety, and environmental audits by inspector(s) chosen by Company; (b) audit Holdings’ health, safety, environmental, and operational records relating to the performance of this Agreement and otherwise observe such performance, and (c) subject to the provisions of Article VII, enter upon the Terminal property for any of the foregoing purposes. For clarity, none of the rights identified in this Section 13.02 shall be exercised by Company in such manner as to substantially interfere with or diminish Holdings’ complete control and responsibility for the operation of the Terminal.

Section 13.03 Incident Notification . Both Parties undertake to notify the other as soon as reasonably practical, but in no event more than 24 hours, after becoming aware of any accident, spill or incident involving the other’s employees, agents, contractors, sub-contractors or their equipment, or Company’s Crude Oil at the Terminal and to provide reasonable assistance in investigating the circumstances of the accident, spill or incident. Notices required by this Section 13.03 shall be delivered in person, by telephone or by email:



If to Holdings: Phillips 66 Holdings LLC 3010 Briarpark Drive Houston, TX 77042 Attn: Manny Cortez Central Division Pipeline Manager Phone: 918-977-4196 E-mail: manuel.cortez@p66.com	If to Company: Bayway Refinery HSE Manager 1400 Park Ave Linden, NJ 08535 (908) 523-6000 (for incidents or emergencies within the Terminal fence line) 1-800-231-2551 (for incidents or emergencies involving a railcar outside the Terminal fence line)

When an accident, spill or incident involving Company’s Crude Oil requires a report to be submitted to a Governmental Authority, this notification shall be made as soon as reasonably practical in compliance with applicable Law, and a copy of the required report shall be delivered to Company at IncidentFollowup@P66.com. Either Party may change its contact information upon Notice to the other in accordance with this Section 13.03 and Section 15.01.

Article XIV. Force Majeure

to the extent that such an event prevents Holdings from performing its obligations under this Agreement. Each Party’s obligations (other than an obligation to pay any amounts due to the other Party which shall not be suspended under this Section 14.01) shall be temporarily suspended beginning 20 Days after the commencement of, and for the entire remaining duration of, a Force Majeure event to the extent that such event prevents Company from performing its obligations under this Agreement. For clarity, the Monthly Fee shall not accrue while each Party’s obligations are suspended. At the conclusion of the Force Majeure event, the Monthly Fee applicable to the Month in which the suspension due to the Force Majeure event remained in effect shall be ratably reduced to reflect such suspension.

Section 14.02 Obligation to Remedy Force Majeure Events . A Party affected by a Force Majeure event shall take commercially reasonable steps to remedy such situation so that it may resume the full performance of its obligations under this Agreement within a reasonable period of time.

Section 14.03 Strikes and Lockouts . The settlement of strikes, lockouts and other labor disturbances shall be entirely within the discretion of the affected Party and the requirement to remedy a Force Majeure event within a reasonable period of time shall not require the settlement of strikes or lockouts by acceding to the demands of an opposing Person when such course is inadvisable in the discretion of the Party having the difficulty.

Section 14.04 Action in Emergencies . Holdings may temporarily suspend performance of the services to prevent injuries to persons, damage to property or harm to the environment.

Article XV. Notices

Section 15.01 Notices . Unless otherwise specifically provided in this Agreement, all Notices between the Parties given under or in relation to this Agreement shall be made in writing and shall be deemed to have been properly given if: (i) personally delivered (with written confirmation of receipt); or (ii) delivered by a recognized overnight delivery service (delivery fees prepaid), in either case to the appropriate address set forth below:



If to Holdings: Phillips 66 Holdings LLC c/o Phillips 66 Pipeline LLC 3010 Briarpark Dr. Houston, TX 77042 Attn: President Copy to General Counsel	If to Company: Phillips 66 Company 3010 Briarpark Dr. Houston, TX 77042 Attn: General Counsel

Either Party may change its address for Notice upon Notice to the other in accordance with this Section 15.01.

Section 15.02 Effective upon Receipt . Any Notice given in the manner set forth in Section 15.01 shall be effective upon actual receipt if received during Normal Business Hours, or at the beginning of the recipient’s next Business Day if not received during Normal Business Hours.

Article XVI. Applicable Law

Section 16.01 Applicable Law . Regardless of the place of contracting, the place of performance or otherwise, this Agreement and all amendments, modifications, alterations or supplements to it, shall be governed and interpreted in accordance with the laws of the state of Texas, without regard to the principles of conflicts of law or any other principle that might apply the law of another jurisdiction.

Article XVII. Limitation of Liability

Section 17.01 No Liability for Consequential Damages . In no event shall either Party be liable to the other Party for, and no arbitral panel is authorized to award, any punitive, special, indirect or consequential damages of any kind or character resulting from or arising out of this Agreement, including, without limitation, loss of profits or business interruption, however they may be caused.

Section 17.02 Limitation of Liability . Notwithstanding anything to the contrary in this Agreement, Holdings shall in no event be liable for loss of, or damage to, any Crude Oil of Company except to the extent caused by Holdings’ negligence or willful misconduct, or the negligence or willful misconduct of Holdings’ employees, agents, contractors or subcontractors, in the safekeeping and handling of any Crude Oil of Company. In no event shall Holdings be liable for more than the replacement of lost or damaged Crude Oil or, at its option, payment of the replacement cost of any lost or damaged Crude Oil. Each Party shall be discharged from any and all liability with respect to services performed and any loss or damage Claims arising out of this Agreement unless suit or action is commenced with respect to such services, loss or Claim within two (2) years after the applicable cause of action arises.

Article XVIII. Default

defaulting Party to the defaulting Party, or should either Party become insolvent, commence a case for liquidation or reorganization under the United States Bankruptcy Code (or become the involuntary subject of a case for liquidation or reorganization under the United States Bankruptcy Code, if such case is not dismissed within thirty (30) Days), be placed in the hands of a state or federal receiver or make an assignment for the benefit of its creditors, then the other Party shall have the right, at its option, to terminate this Agreement immediately upon Notice to the other Party.

Section 18.02 Non-Exclusive Remedies . Except as otherwise provided, but subject to Article XX, the remedies of Holdings and Company provided in this Agreement shall not be exclusive, but shall be cumulative and shall be in addition to all other remedies in favor of Holdings or Company, at Law or equity.

Section 18.03 Right to Terminate . Subject to Section 21.01, in the event of a default by Company, the Monthly Fee charges theretofore accrued shall, at the option of Holdings, become immediately due and payable and Holdings shall also have the right, at its option, to terminate this Agreement. In the event of a default by Holdings, Company shall also have the right, at its option, to terminate this Agreement and withdraw its Crude Oil from the Terminal, provided Company has paid Holdings for any Monthly Fee charges that have accrued to the date of such withdrawal.

Article XIX. Public Use

Section 19.01 Public Use . This Agreement is made as an accommodation to Company. In no event shall Holdings’ services hereunder be deemed to be those of a public utility or a common carrier. If any action is taken or threatened by any Governmental Authority to declare Holdings’ services hereunder to be those of a public utility or a common carrier, then, in that event, at the option of Holdings and upon Company’s receipt of Holdings’ Notice, Holdings may restructure and restate this Agreement or terminate this Agreement on the effective date of such action as to any affected part of the Terminal or any services.

Article XX. Confidentiality

Section 20.01 Confidentiality . The Parties understand and agree that the Monthly Fee charges are confidential as between the Parties. Each Party agrees not to disclose such confidential information to any third Person. Each Party may disclose confidential information to its advisors, consultants or representatives ( provided that such Persons agree to maintain the confidentiality thereof) or when compelled to do so by Law (but the disclosing Party must notify the other Party promptly of any such request for confidential information before disclosing it, if practicable, so that the other Party may seek a protective order or other appropriate remedy or waive compliance with this Section 20.01). In the event that

the other Party does not obtain a protective order or other remedy or does not waive compliance with this Section 20.01, the disclosing Party shall disclose only that portion of the confidential information to which the compelling Person is legally entitled.

Article XXI. Miscellaneous

Section 21.01 Disputes between the Parties . Any dispute between the Parties in connection with this Agreement shall be resolved by arbitration in accordance with the procedures set forth in Exhibit A, provided that either Party may seek a restraining order, temporary injunction, or other provisional relief in any court with jurisdiction over the subject matter of the dispute and sitting in Houston, Texas, if such Party in its sole judgment believes that such action is necessary to avoid irreparable injury or to preserve the status quo ante .

Section 21.02 Assignment .


(a)	Neither Party may assign its rights or delegate its duties under this Agreement without prior written consent of the other Party, except either Party may assign this Agreement to any of its affiliates by providing Notice to the other Party, and except:


(1)	If Company transfers the Bayway Refinery, Company may assign all or a portion of this Agreement to such transferee subject to the provisions of Section 21.02(b); and


(2)	Holdings may make collateral assignments of this Agreement to secure working capital or other financing;

provided, however, that in no event shall Company be required to consent to Holdings’ assignment of this Agreement to any Person that is engaged in the business of refining and marketing petroleum products (or that directly or indirectly Controls or is Controlled by a Person that is engaged in the business of refining and marketing petroleum products) in the state of New Jersey.

(b)

Upon an assignment or partial assignment of this Agreement by either Party, the assigned rights and obligations shall be novated into a new agreement with the assignee, and such assignee shall be responsible for the performance of the assigned obligations unless the non-assigning Party has reasonably determined that the assignee is not financially or operationally capable of performing such assigned obligations, in which case the assignor shall remain responsible for the performance of such assigned obligations.

Section 21.03 Partnership Change in Control . Upon the occurrence of a Partnership Change in Control, Holdings shall provide Company with Notice of such Partnership Change

in Control at least 60 Days prior to the effective date thereof. Within 180 days following receipt of such Notice, Company may elect to terminate this Agreement, effective no earlier than the effective date of such Partnership Change in Control.

Section 21.04 No Third-Party Rights . Except as expressly provided, nothing in this Agreement is intended to confer any rights, benefits or obligations to any Person other than the Parties and their respective successors and assigns.

Section 21.05 Compliance with Laws . Each Party shall at all times comply with all Laws as are applicable to its performance of this Agreement.

Section 21.06 Severability . If any provision of this Agreement or the application thereof shall be found by any arbitral panel or court of competent jurisdiction to be invalid, illegal or unenforceable to any extent and for any reason, it shall be adjusted rather than voided, if possible, in order to achieve the intent of the Parties. In any event, the remainder of this Agreement and the application of such remainder shall not be affected thereby and shall be enforced to the greatest extent permitted by Law.

Section 21.07 Non-Waiver . The failure of either Party to enforce any provision, condition, covenant or requirement of this Agreement at any time shall not be construed to be a waiver of such provision, condition, covenant or requirement unless the other Parties are so notified by such Party in writing. Any waiver by a Party of a default by any other Party in the performance of any provision, condition, covenant or requirement contained in this Agreement shall not be deemed to be a waiver of such provision, condition, covenant or requirement, nor shall any such waiver in any manner release such other Party from the performance of any other provision, condition, covenant or requirement.

Section 21.08 Entire Agreement . This Agreement, together with all Exhibits attached hereto, constitutes the entire Agreement between the Parties relating to its subject matter and supersedes all prior and contemporaneous agreements, understandings, negotiations and discussions, whether oral or written, between the Parties relating to the subject matter hereof, and there are no warranties, representations or other agreements between the Parties in connection with the subject matter hereof except as specifically set forth in, or contemplated by, this Agreement.

Section 21.09 Amendments . This Agreement shall not be modified or amended, in whole or in part, except by a written amendment signed by both Parties.

Section 21.10 Survival . Any indemnification granted hereunder by one Party to the other Party or any provision hereof providing for any payment to any Party that has accrued at time of expiration or termination shall survive the expiration or termination of all or any part of this Agreement.

Section 21.11 Counterparts; Multiple Originals . This Agreement may be executed in any number of counterparts, all of which together shall constitute one agreement binding on each of the Parties. Each of the Parties may sign any number of copies of this Agreement. Each signed copy shall be deemed to be an original, but all of them together shall represent one and the same agreement.

Section 21.12 Exhibits . The Exhibits identified in this Agreement are incorporated in this Agreement and constitute a part of this Agreement. If there is any conflict between this Agreement and any Exhibit, the provisions of the Exhibit shall control.

Section 21.13 Table of Contents; Headings; Subheadings . The Table of Contents and the headings and subheadings of this Agreement have been inserted only for convenience to facilitate reference and are not intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision hereof.

Section 21.14 Construction . The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring either Party by virtue of the authorship of any of the provisions of this Agreement.

Section 21.15 Business Practices . Holdings shall use its best efforts to make certain that all billings, reports, and financial settlements rendered to or made with Company pursuant to this Agreement, or any revision of or amendments to this Agreement, will properly reflect the facts about all activities and transactions handled by authority of this Agreement and that the information shown on such billings, reports and settlement documents may be relied upon by Company as being complete and accurate in any further recording and reporting made by Company for whatever purposes. Holdings shall notify Company if Holdings discovers any errors in such billings, reports, or settlement documents.

Section 21.16 Right of First Offer . Company may not enter into any agreement with any Person other than Holdings with respect to rail unloading and delivery services in connection with the Bayway Refinery without allowing Holdings a prior opportunity to offer to provide such services. When Company provides Holdings notice of an opportunity to provide such services, Holdings must respond to Company within a commercially reasonable time period to be designated by Company or, if no time period is designated, within a commercially reasonable time.

Section 21.17 Effect of Company Restructuring . If Company decides to restructure its supply, refining or sales operations at the Bayway Refinery in such a way as could reasonably be expected to materially and adversely affect the economics of Company’s performance

of its obligations under this Agreement, then the Parties will negotiate in good faith concerning a reduction in Company’s commitment or an exchange of the Terminal (whichever is adversely affected) for other assets not so affected.

[Signature pages follow.]

IN WITNESS WHEREOF , Holdings and Company have signed this Agreement as of the Effective Date.



PHILLIPS 66 PARTNERS HOLDINGS LLC
By:	Phillips 66 Partners LP, Sole Member of Phillips 66 Partners Holdings LLC
By:	Phillips 66 Partners GP, LLC, General Partner of Phillips 66 Partners LP
By:	/s/ J.T. Liberti
	J.T. Liberti
	Vice President and Chief Operating Officer

Signature Page/ Terminal Services Agreement



PHILLIPS 66 COMPANY
By:	/s/ T.G. Taylor
	T.G. Taylor
	President

Signature Page/ Terminal Services Agreement

Exhibit A

Arbitration Procedure

(a)

(b)


(c)	The Parties shall have at least twenty (20) Days following the close of hearing within which to submit a brief (not to exceed eighteen (18) pages in length) and ten (10) Days from date of receipt of the opponent’s brief within which to respond thereto.


(d)	The Parties expressly agree that the arbitrators shall not award punitive damages, consequential damages, or attorneys’ fees (except attorneys’ fees specifically authorized by the Agreement).


(e)	The fees and expenses of any mediator or arbitrator shall be shared equally by the Parties.


(f)	The Parties may, by written agreement (signed by both Parties), alter any time deadline or location(s) for meetings.

Time is of the essence for purposes of the provisions of this Exhibit.

________________________________________________________________________

Exhibit 10.4

TERMINAL SERVICES AGREEMENT

by and between

PHILLIPS 66 PARTNERS HOLDINGS LLC

and

PHILLIPS 66 COMPANY

for

Rail Rack Terminal in Ferndale, Washington

________________________________________________________________________

TABLE OF CONTENTS


ARTICLE I.	DEFINED TERMS 4


Section 1.01	Defined Terms 4


Section 1.02	Other Defined Terms 6


Section 1.03	Terms Generally 6


ARTICLE II.	TERM AND TERMINATION 7


Section 2.01	Term 7


Section 2.02	Termination Following a Force Majeure Event 7


Section 2.03	Special Termination by Company 7


ARTICLE III.	SERVICES 7


Section 3.01	Unloading and Delivery of Crude Oil 7


Section 3.05	Scheduling and Nomination 8


ARTICLE IV.	CHARGES 8


Section 4.01	Monthly Fee 8


Section 4.02	Partial Period Proration 8


Section 4.03	Special Reduction of Fee 9


Section 4.04	Recovery of Certain Costs 9


Section 4.05	Adjustments 10


ARTICLE V.	CRUDE OIL QUALITY 10


Section 5.01	Verification by Holdings 10


Section 5.02	Sampling by Company 10


Section 5.03	Non-Conforming Crude Oil 10


ARTICLE VI.	OTHER SERVICES 11


Section 6.01	Laboratory Fees and Services 11


Section 6.02	Additional Services 11


ARTICLE VII.	TERMINAL ACCESS 11


ARTICLE VIII.	MONTHLY STATEMENT; PAYMENT; LIENS 12


Section 8.01	Monthly Statement 12


Section 8.02	Payment 12


Section 8.03	Liens 12


ARTICLE IX.	TITLE; CUSTODY 12


Section 9.01	Title 12


Section 9.02	Custody 12


ARTICLE X.	VOLUME AND QUALITY DETERMINATIONS 13


Section 10.01	Volume Determinations - General 13


Section 10.02	Terminal Volumes 13


Section 10.03	Quality Determination 13


ARTICLE XI.	INSURANCE 14


Section 11.01	Insurance 14


ARTICLE XII.	TAXES 14


Section 12.01	Taxes 14


ARTICLE XIII.	HEALTH, SAFETY AND ENVIRONMENT 14


Section 13.01	Spills; Environmental Pollution 14


Section 13.02	Inspection 15


Section 13.03	Incident Notification 15


ARTICLE XIV.	FORCE MAJEURE 16


Section 14.01	Suspension during Force Majeure Events 16


Section 14.02	Obligation to Remedy Force Majeure Events 16


Section 14.03	Strikes and Lockouts 16


Section 14.04	Action in Emergencies 16


ARTICLE XV.	NOTICES 16


Section 15.01	Notices 16


Section 15.02	Effective upon Receipt 17


ARTICLE XVI.	APPLICABLE LAW 17


Section 16.01	Applicable Law 17


ARTICLE XVII.	LIMITATION OF LIABILITY 17


Section 17.01	No Liability for Consequential Damages 17


Section 17.02	Limitation of Liability 17


ARTICLE XVIII.	DEFAULT 18


Section 18.01	Default 18


Section 18.02	Non-Exclusive Remedies 18


Section 18.03	Right to Terminate 18


ARTICLE XIX.	PUBLIC USE 18


Section 19.01	Public Use 18


ARTICLE XX.	CONFIDENTIALITY 18


Section 20.01	Confidentiality 18


ARTICLE XXI.	MISCELLANEOUS 19


Section 21.01	Disputes between the Parties 19


Section 21.02	Assignment 19


Section 21.03	Partnership Change in Control 19


Section 21.04	No Third-Party Rights 20


Section 21.05	Compliance with Laws 20


Section 21.06	Severability 20


Section 21.07	Non-Waiver 20


Section 21.08	Entire Agreement 20


Section 21.09	Amendments 20


Section 21.10	Survival 20


Section 21.11	Counterparts; Multiple Originals 20


Section 21.12	Exhibits 21


Section 21.13	Table of Contents; Headings; Subheadings 21


Section 21.14	Construction 21


Section 21.15	Business Practices 21


Section 21.16	Right of First Offer 21


Section 21.17	Effect of Company Restructuring 21

Exhibit A – Dispute Resolution Procedures

iii

TERMINAL SERVICES AGREEMENT

(FERNDALE)

Recitals

WHEREAS , Holdings owns a terminal in Ferndale, Washington consisting of a two track, rail car receiving facility which is suitable for unloading crude oil and delivering it into tankage at the adjacent Ferndale Refinery (the “ Terminal ”);

WHEREAS, Company intends to deliver crude oil to the Terminal via rail car and desires to have such crude oil unloaded and redelivered into a pipeline for onward delivery to the Ferndale Refinery, and Holdings desires to provide such services for Company, all upon the terms and conditions set forth in this Agreement.

NOW, THEREFORE , for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, Holdings and Company agree as follows:

Article I. Defined Terms

Section 1.01 Defined Terms . The following definitions shall for all purposes apply to the capitalized terms used in this Agreement:


(a)	“Agreement” means this Terminal Services Agreement, together with all exhibits attached hereto, as the same may be extended, supplemented or restated from time to time in accordance with the provisions hereof.


(b)	“Barrel” means 42 Gallons.


(c)	“Business Day” means any Day except for Saturday, Sunday or an official holiday in the State of Texas.


(d)	“Capacity” means the aggregate design capacity of the Terminal which is 30,000 Barrels per Day (measured on a Monthly average basis).

(e)

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


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


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


(h)	“Crude Oil” means any grade or grades of crude petroleum or condensate that is the direct liquid product of oil or gas wells.


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


(j)	“Effective Date” means December 1, 2014.


(k)	“Ferndale Refinery” means the refinery facility owned by Phillips 66 Company in Ferndale, Washington located adjacent to the Terminal.

(l)


(m)	“Gallon” means a United States gallon of two hundred thirty-one cubic inches of liquid at 60º Fahrenheit, and at the equivalent vapor pressure of the liquid.


(n)	“Governmental Authority” means any government, any governmental administration, agency, instrumentality or other instrumentality or other political subdivision thereof or any court, commission or other governmental authority of competent jurisdiction.


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


(p)	“Holdings Affiliated Parties” means Holdings, Phillips 66 Partners LP and its and their respective contractors, directors, officers, employees and agents.


(q)	“IIC” means a mutually acceptable independent inspection company.


(r)	“Initial Term” has the meaning set forth in Section 2.01.

(s)


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


(u)	“Monthly Fee” shall mean the fee described in Section 4.01.


(v)	“Nomination” has the meaning set forth in Section 3.05(c).


(w)	“Non-Conforming Crude Oil” means any Crude Oil that fails to meet specifications established by Holdings for delivery of that Crude Oil to the Ferndale Refinery.


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


(y)	“Notice” means any notice, request, instruction, correspondence or other communication permitted or required to be given under this Agreement.


(z)	“Parties” means Holdings and Company, collectively.


(aa)	“Partnership Change in Control” means Phillips 66 ceases to Control the general partner of Phillips 66 Partners LP by virtue of any affiliate of Phillips 66 being removed as the general partner of Phillips 66 Partners LP under the terms of the limited partnership agreement of Phillips 66 Partners LP.


(ab)	“Party” means Holdings or Company, individually.


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


(ad)	“PPI-FG” has the meaning set forth in Section 4.05.


(ae)	“Regular Terminal Operating Hours” means 24 hours per Day, 7 Days per week.


(af)	“Renewal Term” has the meaning set forth in Section 2.01.


(ag)	“Taxes” means any income, sales, use, excise, transfer, and similar taxes, fees and charges (including ad valorem taxes), including any interest or penalties attributable thereto, imposed by any Governmental Authority. Other Defined Terms . Other terms may be defined elsewhere in this Agreement, and, unless otherwise indicated, shall have such meanings throughout this Agreement.

Section 1.02 Terms Generally . The definitions in this Agreement shall apply equally to both singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” All references to Articles, Sections and Exhibits shall be deemed to be references to Articles and Sections of, and Exhibits to, this Agreement unless the context requires otherwise.

Article II. Term and Termination

Section 2.03 Special Termination by Company . If (a) operations at the Ferndale Refinery are totally or partially suspended for a period of at least 12 consecutive Months, the Parties will negotiate in good faith to agree upon a reduction in the applicable Monthly Fee to reflect such suspension of operations. If the Parties are unable to agree to an appropriate reduction of the applicable Monthly Fee, then after a public announcement of such suspension has been made, Company may provide written Notice to Holdings of its intent to terminate this Agreement and this Agreement will terminate 12 Months following the date such Notice is

received by Holdings. In the event of a public announcement, prior to the expiration of such 12-month period, of an intent to resume operations at the Ferndale Refinery, then such Notice shall be deemed revoked and this Agreement shall continue unmodified in full force and effect as if such Notice had never been delivered.

Article III. Services

Section 3.01 Unloading and Delivery of Crude Oil . Holdings, or Holdings’ designee, shall use commercially reasonable efforts to unload Crude Oil from the rail cars received at the Terminal and deliver such Crude Oil into a pipeline for redelivery into tankage at the Ferndale Refinery. The minimum level of service to be provided to Company shall be the Capacity of the Terminal. However, Holdings shall not be responsible when movements, delays or disruptions involving the railroad affect its ability to provide service to Company. Holdings, in its sole discretion, may accept for delivery volumes of Crude Oil in excess of the Capacity, provided that acceptance for delivery of any such excess volumes will be subject to availability of capacity at the Terminal, as determined by Holdings. Company shall not (and shall cause any applicable Company designee delivering Crude Oil by rail to the Terminal on Company’s behalf to not) deliver to the Terminal any Crude Oil on any rail car if such rail car is damaged, in disrepair, or otherwise cannot be unloaded consistent with customary and prudent industry practice and/or past practice.

Section 3.02 Company shall provide any documentation reasonably required by Holdings to authorize unloading and delivery of the Crude Oil on behalf of Company at the Terminal. Upon delivery to the Ferndale Refinery, Holdings shall have no further responsibility for any Claims arising out of possession or use of such Crude Oil.

Section 3.03 Company shall have the exclusive right to deliver to and unload at the Terminal Crude Oil in an amount of volume not to exceed the safe operating capacity of the Terminal as determined by Holdings, taking into account such factors as (i) unloading rates (ii) time to react to a potential overflow of deliveries into the Ferndale Refinery, and (iii) other operating conditions.

Section 3.04 Holdings shall maintain the Terminal in proper operating condition and in a manner that maintains the Capacity of the Terminal, to the extent commercially reasonable. At all times during the Term of this Agreement, Holdings and Company shall use commercially reasonable efforts to work together to coordinate maintenance and other activities to minimize potential and adverse effects to the Terminal and Ferndale Refinery. In the event any portion of the safe working capacity of the Terminal is not available for a period exceeding thirty (30) consecutive Days, then following such 30-Day period, the Monthly Fee shall be proportionately reduced to reflect the amount of working capacity that

Section 3.05 Scheduling and Nomination .


(a)	Scheduling and nomination of all deliveries, receipts, handling and throughput of Crude Oil hereunder shall be made in accordance with the terms of that certain Operational Services Agreement, dated effective July 26, 2013, as amended from time to time, by and among Holdings, a subsidiary of Company, and the other parties thereto.


(b)	All rail cars delivered to the Terminal must meet Holdings’ current specifications for unit trains for receipt of product at the Terminal, which such specifications have been provided to Company.

Article IV. Charges

Section 4.02 Partial Period Proration . If the Effective Date is any Day other than the first Day of a Month, or if this Agreement is terminated on any Day other than the last Day of a Month, then any quantity based on a Monthly determination will be prorated by a fraction, the numerator of which is the number of Days in that part of the Month beginning on the Effective Date or ending on the date of such termination, as the case may be, and the denominator of which is the number of Days in the Month.

Section 4.03 Special Reduction of Fee. If Holdings’ use of all or part of the Terminal for the unloading and delivery of Crude Oil is restrained, enjoined, restricted or terminated by (a) any Governmental Authority, (b) right of eminent domain or (c) the owner of leased land, Holdings, upon being notified of such restraint, enjoinder, restriction or termination, shall notify Company and the applicable Monthly Fee shall be reduced to the extent that Holdings’ use of the Terminal is so restrained, enjoined, restricted or terminated.

Section 4.04 Recovery of Certain Costs .


(a)	If Holdings agrees to make any expenditures at Company’s request, Company will reimburse Holdings for such expenditures or, at Holdings’ option and if the Parties agree, the applicable Monthly Fee will be increased, or additional fees

shall be added, or an alternate mechanism shall be adopted to allow Holdings to recover such expenditures over time from Company or another entity.

(b)

If new Laws require Holdings to make substantial and unanticipated expenditures in connection with the services Holdings provides to Company under this Agreement, Holdings shall use commercially reasonable efforts to attempt to secure a waiver, exception or extension for the time of compliance with the new Law in an effort to secure continued operation under existing applicable Laws during the Term of this Agreement. If Holdings is unable to secure a waiver, exception or extension for continued operation using commercially reasonable efforts, then Holdings will find the a commercially reasonable manner to conform to the new Laws and give Company commercially reasonable advance notice of any planned expenditures necessary for compliance. Company will reimburse Holdings for Company’s proportionate share of the costs of complying with such Laws, or at Holdings’ option and if the Parties agree, relevant periodic or unit charges will be increased or an alternate mechanism shall be adopted to allow Holdings to recover the amount paid for such costs over time from Company or another entity.


(c)	If new or increased property taxes result in material additional costs to Holdings, the Monthly Fee shall be adjusted, or additional fees shall be added to allow Holdings to recover such costs.

Section 4.05 Adjustments .


(a)	As of January 1, 2016, and as of January 1 of each year thereafter while this Agreement is in effect, Holdings may adjust the then-current per Barrel fees used to calculate the Monthly Fee pursuant to Section 4.04(b) below.

(b)

Article V. Crude Oil Quality

Section 5.01 Verification by Holdings. The quality of any Crude Oil tendered for Company’s account hereunder shall be verified by an IIC analysis indicating that such Crude Oil so tendered meets Holdings’ and Ferndale Refinery’s minimum Crude Oil specifications. Company shall provide Holdings with a copy of each such analysis. All costs for each such analysis shall be borne by Company. Holdings shall have the right to sample any Crude Oil tendered to Holdings for Company’s account hereunder for the purpose of confirming the accuracy of the analysis. The costs of such confirmation shall be borne by Holdings. Holdings retains the right to inspect any Crude Oil tendered for delivery by rail to the Terminal and to reject any Non-Conforming Crude Oil.

Section 5.02 Sampling by Company. Company may, at its sole cost and expense, sample its Crude Oil unloaded at the Terminal to satisfy itself that the minimum Crude Oil specifications are maintained. If any such Company sample indicates the presence of any Crude Oil that does not meet or exceed Holdings’ minimum specifications for such Crude Oil in effect on the date of such sample, Company shall immediately notify Holdings by telephone and Company shall confirm such notification in writing by telecopy Notice. If Company does not so notify Holdings, Holdings’ Crude Oil sample analysis shall be deemed to be conclusive and binding upon both Parties.

Section 5.03 Non-Conforming Crude Oil .


(a)	Company agrees not to deliver, or cause to be delivered, any Non-Conforming Crude Oil, into the Terminal.

(b)

Affiliated Parties, as a result of such event and shall be responsible for all costs and liabilities associated with or incurred as a result of such event.

Article VI. Other Services

Section 6.01 Laboratory Fees and Services.

(a)

If Holdings provides sampling, testing and/or other laboratory services requested by Company for Crude Oil delivered to the Ferndale Refinery via the Terminal, Holdings shall charge for each sampling and testing procedure performed as set forth in Holdings’ “Schedule of Rates for Laboratory Services” then in effect. If Holdings contracts with another Person to perform laboratory services, all fees for such services shall be billed to Company at Holdings’ cost.


(b)	Holdings’ liability for sampling and testing services is limited to the charge for the service provided.

Article VII. Terminal Access

Article VIII. Monthly Statement; Payment; Liens

Section 8.01 Monthly Statement . Promptly after the end of each Month, Holdings shall provide Company with a statement showing the Monthly Fee applicable to the previous Month.

Section 8.02 Payment .


(a)	Payment of the amount(s) identified on each Monthly statement shall be due, without discount, on the later of (i) two Business Days after such Monthly statement is received, or (ii) the 22 ^nd Day of the Month in which such Monthly

(b)

(c)

Article IX. Title; Custody

Section 9.01 Title . Title to all of Company’s Crude Oil received, handled, unloaded and delivered by Holdings at the Terminal shall remain at all times in Company’s name.

Section 9.02 Custody . Custody of all Crude Oil received by Holdings hereunder from a rail car shall pass from such rail car to Holdings when such Crude Oil passes the flange connection between such rail car and the Terminal. Custody of all Crude Oil delivered to the Ferndale Refinery for Company hereunder shall pass from Holdings to Company when such Crude Oil passes through the flange connection between the Terminal and the Ferndale Refinery.

Article X. Volume and Quality Determinations

Section 10.01 Volume Determinations - General .


(a)	All measurements, volume corrections and calibrations will be made in accordance with the most recent edition of the American Petroleum Institute’s Manual of Petroleum Measurement Standards.


(b)	All volume determinations shall be adjusted to a temperature of 60° Fahrenheit and a pressure of one standard atmosphere (14.7 PSIA) per the most recent edition of the American Petroleum Institute’s Manual of Petroleum Measurement Standards, Chapter 11 ( viz. , Table 6B, 6C, etc., whichever table is relevant to the Crude Oil being measured).

Section 10.02 Terminal Volumes


(a)	All Crude Oil unloaded at the Terminal and delivered to the Ferndale Refinery will be determined by independent inspector IIC tank gauge measurements at the Ferndale Refinery.


(b)	A Company representative may witness testing, calibration of equipment, and gauging of Crude Oil delivered to the Ferndale Refinery via the Terminal, at Company’s expense. In the absence of a Company representative, Holdings’ measurements shall be deemed to be accurate.

Article XI. Insurance

Article XII. Taxes

Section 12.01 Taxes . Company shall be responsible for and shall pay all applicable sales Taxes and similar Taxes (other than Washington Business & Occupation tax to be paid by

Holdings) on goods and services provided hereunder and any other Taxes now or hereafter imposed by any Governmental Authority in respect of or measured by Crude Oil handled hereunder or the manufacture, receipt, unloading, delivery or inspection thereof, and Company agrees to promptly reimburse Holdings for any such Taxes Holdings is legally required to pay, upon receipt of invoice therefor. Each Party is responsible for all Taxes in respect of its own real and personal property.

Article XIII. Health, Safety and Environment

Section 13.01 Spills; Environmental Pollution .


(a)	In the event of any Crude Oil spill or other environmentally polluting discharge caused by Holdings’ operation of the Terminal, any clean-up associated with any such spill or discharge and any liability resulting from such spill or discharge, shall be the responsibility of Holdings, except to the extent such spill or discharge is caused by Company or its affiliates other than Holdings.

(b)


(c)	For purposes of this Section 13.01, the negligence of a third party rail car owner or rail car operator, delivering Crude Oil on Company’s behalf, at its request or for its benefit, shall be attributed to Company.

(d)

If to Holdings:

Phillips 66 Holdings LLC

3010 Briarpark Drive

Houston, TX 77042

Attn: Manny Cortez
Central Division Pipeline Manager
Phone: 918-977-4196

E-mail: manuel.cortez@p66.com

If to Company:

Ferndale Refinery

HSE Manager

3801 Unick Rd

Ferndale, WA 98248

(360) 384-8323 (for incidents or emergencies within the Terminal fence line)

1-800-231-2551 (for incidents or emergencies involving a railcar outside the Terminal fence line)

Article XIV. Force Majeure

Section 14.01 Suspension during Force Majeure Events . As soon as possible upon the occurrence of a Force Majeure, a Party affected by a Force Majeure event shall provide the other Party with written notice of the occurrence of such Force Majeure event. Subject to Section 2.02, each Party’s obligations (other than an obligation to pay any amounts due to the other Party which shall not be suspended under this Section 14.01) shall be temporarily suspended during the occurrence of, and for the entire duration of, a Force Majeure event to the extent that such an event prevents Holdings from performing its obligations under this Agreement. Each Party’s obligations (other than an obligation to pay any amounts due to the other Party which shall not be suspended under this Section 14.01) shall be temporarily suspended beginning 20 Days after the commencement of, and for the entire remaining duration of, a Force Majeure event to the extent that such event prevents Company from performing its obligations under this Agreement. For clarity, the Monthly Fee shall not accrue while each Party’s obligations are suspended. At the conclusion of the Force Majeure event, the Monthly Fee applicable to the Month in which the suspension due to the Force Majeure event remained in effect shall be ratably reduced to reflect such suspension.

Section 14.04 Action in Emergencies . Holdings may temporarily suspend performance of the services to prevent injuries to persons, damage to property or harm to the environment.

Article XV. Notices



If to Holdings: Phillips 66 Holdings LLC c/o Phillips 66 Pipeline LLC 3010 Briarpark Dr. Houston, TX 77042 Attn: President Copy to General Counsel	If to Company: Phillips 66 Company 3010 Briarpark Dr. Houston, TX 77042 Attn: General Counsel

Either Party may change its address for Notice upon Notice to the other in accordance with this Section 15.01.

Article XVI. Applicable Law

Article XVII. Limitation of Liability

loss or damage Claims arising out of this Agreement unless suit or action is commenced with respect to such services, loss or Claim within two (2) years after the applicable cause of action arises.

Article XVIII. Default

Section 18.01 Default . Subject to Section 21.03, should either Party default in the prompt performance and observance of any of the terms and conditions of this Agreement, and should such default continue for thirty (30) Days or more after Notice thereof by the non-defaulting Party to the defaulting Party, or should either Party become insolvent, commence a case for liquidation or reorganization under the United States Bankruptcy Code (or become the involuntary subject of a case for liquidation or reorganization under the United States Bankruptcy Code, if such case is not dismissed within thirty (30) Days), be placed in the hands of a state or federal receiver or make an assignment for the benefit of its creditors, then the other Party shall have the right, at its option, to terminate this Agreement immediately upon Notice to the other Party.

Article XIX. Public Use

Article XX. Confidentiality

Article XXI. Miscellaneous

Section 21.02 Assignment .


(a)	Neither Party may assign its rights or delegate its duties under this Agreement without prior written consent of the other Party, except either Party may assign this Agreement to any of its affiliates by providing Notice to the other Party, and except:


(1)	If Company transfers the Ferndale Refinery, Company may assign all or a portion of this Agreement to such transferee subject to the provisions of Section 21.02(b); and


(2)	Holdings may make collateral assignments of this Agreement to secure working capital or other financing;


(b)	Upon an assignment or partial assignment of this Agreement by either Party, the assigned rights and obligations shall be novated into a new agreement with the

assignee, and such assignee shall be responsible for the performance of the assigned obligations unless the non-assigning Party has reasonably determined that the assignee is not financially or operationally capable of performing such assigned obligations, in which case the assignor shall remain responsible for the performance of such assigned obligations.

Section 21.03 Partnership Change in Control . Upon the occurrence of a Partnership Change in Control, Holdings shall provide Company with Notice of such Partnership Change in Control at least 60 Days prior to the effective date thereof. Within 180 days following receipt of such Notice, Company may elect to terminate this Agreement, effective no earlier than the effective date of such Partnership Change in Control.

Section 21.05 Compliance with Laws . Each Party shall at all times comply with all Laws as are applicable to its performance of this Agreement.

in connection with the subject matter hereof except as specifically set forth in, or contemplated by, this Agreement.

Section 21.09 Amendments . This Agreement shall not be modified or amended, in whole or in part, except by a written amendment signed by both Parties.

Section 21.16 Right of First Offer . Company may not enter into any agreement with any Person other than Holdings with respect to rail unloading and delivery services in connection with the Ferndale Refinery without allowing Holdings a prior opportunity to offer to provide such services. When Company provides Holdings notice of an opportunity to provide such services, Holdings must respond to Company within a commercially reasonable time period to be designated by Company or, if no time period is designated, within a commercially reasonable time.

Section 21.17 Effect of Company Restructuring . If Company decides to restructure its supply, refining or sales operations at the Ferndale Refinery in such a way as could reasonably be expected to materially and adversely affect the economics of Company’s performance of its obligations under this Agreement, then the Parties will negotiate in good faith concerning a reduction in Company’s commitment or an exchange of the Terminal (whichever is adversely affected) for other assets not so affected.

[Signature pages follow.]

IN WITNESS WHEREOF , Holdings and Company have signed this Agreement as of the Effective Date.



PHILLIPS 66 PARTNERS HOLDINGS LLC
By:	Phillips 66 Partners LP, Sole Member of Phillips 66 Partners Holdings LLC
By:	Phillips 66 Partners GP, LLC, General Partner of Phillips 66 Partners LP
By:	/s/ J.T. Liberti
	J.T. Liberti
	Vice President and Chief Operating Officer



PHILLIPS 66 COMPANY
By:	/s/ T.G. Taylor
	T.G. Taylor
	President

Exhibit A

Arbitration Procedure

(a)

(b)


(c)	The Parties shall have at least twenty (20) Days following the close of hearing within which to submit a brief (not to exceed eighteen (18) pages in length) and ten (10) Days from date of receipt of the opponent’s brief within which to respond thereto.


(d)	The Parties expressly agree that the arbitrators shall not award punitive damages, consequential damages, or attorneys’ fees (except attorneys’ fees specifically authorized by the Agreement).


(e)	The fees and expenses of any mediator or arbitrator shall be shared equally by the Parties.


(f)	The Parties may, by written agreement (signed by both Parties), alter any time deadline or location(s) for meetings.

Time is of the essence for purposes of the provisions of this Exhibit.

Signature Page/ Terminal Services Agreement

Exhibit 10.5

LEASE AGREEMENT

BETWEEN

PHILLIPS 66 COMPANY
AS LESSOR

AND

PHILLIPS 66 PARTNERS HOLDINGS LLC

AS LESSEE

DATED AS OF

December 1st, 2014

LEASE

TABLE OF CONTENTS

Page

RECITALS 1

ARTICLE I - DEFINITIONS AND INTERPRETATIONS 1

1.1 Definitions 1

1.2 Interpretations. 5

1.3 Entire Agreement 5

1.4 Conflicting Provisions 5

ARTICLE II - PREMISES AND EASEMENTS 5

2.1 Premises 5

2.2 Quiet Enjoyment 5

2.4 Lessee’s Access and Use Rights 6

2.5 Lessor Reserved Easements and Rights-of-Way 6

2.6 Lessor’s Reserved Access Rights 7

2.8 Access Procedures 7

2.9 Third Party or Affiliate Easements on the Premises 7

2.10 Appurtenant Easements 7

ARTICLE III - TERMINATION 7

3.1 Right of Termination or Surrender 7

3.2 Removal and Restoration 7

3.2 Removal and Restoration 8

ARTICLE IV - RENT AND PAYMENTS 8

4.1 Rent 8

4. 2 Rent Adjustment 8

4. 3 Additional Rent 8

4. 4 Late Payments 9

ARTICLE V - USE OF THE PREMISES 9

5.1 Use 9

5.1 Acknowledgement of Potential Future Restrictions 9

5.3 Compliance with Legal Requirements Other than Environmental Laws 9

5.4 Indemnity for Compliance with Legal Requirements Other than Environmental Laws 9

5.5 Suitability of the Premises 10

ARTICLE VI - MAINTENANCE, UTILITIES, IMPROVEMENTS, AND LIENS 10

6.1 Lessee’s and Lessor’s Obligations 10

6.2 Utilities Obligations 10

6.3 Improvements 10

6.4 Liens 11

ARTICLE VII - INSURANCE 12

7.1 Insurance Coverage 12

7.2 Failure to Obtain Insurance 12

7.3 Lessee’s Right to Self-Insure 12

7.4 Insurance Requirements 12

ARTICLE VIII - INDEMNITIES 13

8.1 Release and Indemnification by Lessee 13

8.2 Release and Indemnification by Lessor 13

8.3 Application of Indemnities 13

8.4 Extension of Releases and Indemnities 14

8.5 Limitation on Indemnities For Personal Injury/Death 14

8.6 Disclaimer of Consequential Damages 14

8.7 Survival 14

ARTICLE IX - PROPERTY TAXES 14

9.1 Payment of Property Taxes 14

9.2 Joint Assessment 15

9.3 Contesting Real Property Tax 15

9.4 Other Taxes 16

ARTICLE X - ASSIGNMENT 16

10.1 Assignment or Subletting 16

10.2 Assignment to an Affiliate or Sale to a Third Party 16

10.3 Covenants Running With The Land 17

ARTICLE XI - DEFAULT 17

11.1 Defaults 17

11.2 Remedies 18

ARTICLE XII - CONDEMNATION 18

12.1 Condemnation in Whole 18

12.2 Condemnation in Part 18

12.3 Application of Condemnation Proceedings 18

12.4 Notice of Condemnation 18

ARTICLE XIII - RIGHT OF FIRST OFFER 18

13.1 Right of First Offer 18

13.2 Exceptions to Right of First Offer 19

ARTICLE XIV - ENVIRONMENTAL 19

14.1 Release Reporting and Corrective Action 19

14.2 Daily Operations 20

ARTICLE XV - FORCE MAJEURE 20

iii

15.1 Excused Performance 20

15.2 Burden of Proof 21

ARTICLE XVI - NOTICES 21

1 6.1 Methods of Notice 21

1 6.2 Notice Addresses 21

1 6.3 Change of Address 21

ARTICLE XVIII - GENERAL PROVISIONS 21

1 7.1 Estoppel Certificate 21

1 7.2 Severability 22

1 7.3 Captions 22

1 7.4 Amendments 22

1 7.5 Waivers 22

1 7.6 Recording 22

1 7.7 Holding Over 22

1 7.8 Cumulative Remedies 23

1 7.9 Binding Effect; Choice of Law 23

1 7.10 Subordination 23

1 7.11 Signs and Fences 23

1 7.12 No Broker 23

1 7.13 Records and Audit 23

1 7.15 Counterparts 23

1 7.16 Confidentiality 23

1 7.17 Further Assurances 24

1 7.18 Survival 24

EXHIBIT A – LEGAL DESCRIPTION OF THE LEASED PROPERTY

EXHIBIT B – PERMITTED ENCUMBRANCES

EXHIBIT C – LESSOR RESERVED EASEMENTS AND RIGHTS OF WAY

This Lease is made and entered into this 1st day of December, 2014 by and between Phillips 66 Company, a Delaware corporation, herein referred to as Lessor, and Phillips 66 Partners Holdings LLC, a Delaware limited liability company, herein referred to as Lessee.

RECITALS

WHEREAS, Lessor and Lessee’s Affiliates have entered into a Contribution, Conveyance and Assumption Agreement (“Contribution Agreement”), dated October 22, 2014, for Lessor to sell and Lessee and Lessee’s Affiliates to purchase certain Assets located at or near the Refinery; and

WHEREAS, Lessee wishes to lease the land underlying or associated with the Assets from Lessor, and Lessor desires to lease the land underlying or associated with the Assets to Lessee.

NOW THEREFORE, in consideration of the mutual promises and covenants hereinafter set forth, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:

ARTICLE I

DEFINITIONS AND INTERPRETATIONS

1.1 Definitions . Capitalized terms used in this Lease without other definition shall have the meanings specified in this Section 1.1 unless the context requires otherwise .

“ Affiliate ” means, with respect to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with, such specified Person through one or more intermediaries or otherwise; provided, however, that (a) with respect to Lessor, the term “Affiliate” shall not include any Group Member and (b) with respect to the Partnership Group, the term “Affiliate” shall not include Lessor or any of its Subsidiaries (other than a Group Member).

“ Appurtenant Easements ” shall mean those third-party easements, licenses, leases or other interests in real property that are in Lessor’s or Lessor’s Affiliates names that are located at or near the Refinery and which benefit the Premises or the Assets and are described in Exhibit B, attached hereto and incorporated herein for all purposes.

“ Assessor ” shall mean the Union County (New Jersey) Supervisor of Assessments.

“ Assets ” shall mean the Bayway Rail Rack, consisting of (a) a four track, 120 unloading spot, crude oil railcar receiving facility to deliver crude to tankage at the Refinery with a capacity of 75,000 barrels per day located in Linden, New Jersey adjacent to the Refinery and (b) all other assets owned, held for use by Lessor or any of Lessor’s Affiliates in connection with the operation of the Bayway Rail Rack that are otherwise necessary for Lessee and Lessee’s Affiliates to use and operate the Bayway Rail Rack after the Effective Date in a manner substantially similar to the use and operation of the Bayway Rail Rack prior to the Effective Date and in a manner contemplated by the Contribution Agreement. However, fee ownership of the real property on which the Bayway Rail Rack is located shall remain vested in Lessor.

“ Base Price Index ” shall mean the Price Index for the month nearest before the Effective Date for which the Price Index is published.

“ Base Rate ” shall mean the lesser of (a) the per annum rate of interest calculated on a daily basis using the 3-month LIBOR rate published in the Wall Street Journal for the applicable day (with the rate for any day for which such rate is not published being the rate most recently published) plus two hundred (200) basis points; or (b) the maximum nonusurious rate of interest permitted by law, such Base Rate to be adjusted automatically as and to the extent that either (a) or (b) immediately above changes from time to time.

“Base Term ” shall mean the period commencing on the Effective Date and extending thereafter for Forty (40) years, unless terminated earlier pursuant to the terms of this Lease.

“ Base Year ” shall mean the full calendar year during which the Term of this lease commences.

“ Condemnation ” shall mean the taking or expropriation of property by any Person in the exercise of the power of eminent domain or a conveyance of property in lieu of such taking or expropriation.

“ Contribution Agreement ” shall mean the Contribution, Conveyance and Assumption Agreement, dated October 22, 2014, entered into by and between Lessor and Lessee’s Affiliates.

“ Corrective Action ” shall mean any response action, corrective action, investigation, monitoring, operation and maintenance, abatement, clean up, removal, disposal, treatment, equipment installation, covering or remediation with respect to a Release (other than a Release into the air) at, on, under or from the Premises or the Refinery Lands, including preparing and signing any manifests required for the off-site transportation, treatment or disposal of Hazardous Substances and actions to prevent or abate migration of Hazardous Substances (other than through the air) at or from the Assets to real property owned, leased or used by Lessor or any third party or at or from any of Lessor’s assets at the Refinery to real property owned, leased or used by Lessee or any third party.

“ Effective Date ” shall mean December 1 ^st , 2014, all in accordance with the terms for closing set forth in the Contribution Agreement.

“ Environmental Laws ” shall mean any Legal Requirements involving common law actions relating to pollution, protection or cleanup of the environment (including ambient air, surface water, groundwater, land surface or subsurface strata) or protection of human health, including the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”), 42 U.S.C. Section 9601 et seq ; the Toxic Substance Control Act, 15 U.S.C. Section 2601 et seq ; the Hazardous Materials Transportation Act, 49 U.S.C. Section 5101 et seq ; the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq ; the Clean Water Act, 33 U.S.C. Section 1251 et seq ; the Safe Drinking Water Act, 42 U.S.C. Section 300f et seq ; the Clean Air Act, 42 U.S.C. Section 7401 et seq ; the Oil Pollution Act of 1990, 33 U.S.C. Section 2701 et seq ; in each case, as amended.

“ Force Majeure ” shall mean any cause that is beyond the reasonable control of a Party, and either results from an event or condition which is unforeseeable, or if reasonably foreseeable cannot by the exercise of reasonable diligence be prevented or avoided, including flood, landslide, earthquake, hurricane, tornado, storm or other unusually adverse weather condition, fire, lightning and other acts of God, acts of war, invasion, acts of foreign enemies, hostilities (whether war be declared or not), acts of terrorism, civil war, rebellion, revolution, insurrection or military or usurped power, martial law, embargo, blockade, riot or civil disturbance, epidemic, famine, sabotage, explosions, theft, casualty, injunction, strikes, lockouts or other labor difficulties; or any restrictions by governmental agencies or authorities or changes in the law which would make the performance of an obligation impossible or illegal. Force Majeure shall not include the non‑availability of financing, lack of funds, or changes in market conditions.

“ Group Member ” means a member of the Partnership Group.

“ Hazardous Substance ” shall mean any hazardous material, substance or waste, toxic mold, industrial waste, petroleum or petroleum-derived waste, or any toxic or hazardous constituent of any such substance or waste, and any substance, material or waste that is regulated or listed under or defined by Environmental Laws.

“ Improvements ” shall mean all improvements, facilities, fixtures, machinery, equipment, buildings and any other property constructed, built, installed, placed, equipped or otherwise located on or within the Premises by Lessee or on Lessee’s behalf, whether classified as real or personal property.

“ Invitee ” shall mean any Person whose presence at the Premises or Refinery Lands, as applicable, is at the invitation of a Party hereto as a guest and not as a result of a contract or subcontract with such Party.

“ Late Payment Rate ” shall mean the lesser of (a) the Base Rate, plus two hundred (200) basis points per annum, or (b) the maximum rate of interest permitted by law, such rate to be adjusted automatically as and to the extent that either (a) or (b) immediately above changes from time to time.

“ Lease ” shall mean this Lease.

“ Legal Requirements ” shall mean any federal, state or local charter, act, statute, law, ordinance, code, rule, regulation or order or other applicable legislative or administrative action of the United States of America or the State of Illinois, or any agency, department, authority, political subdivision or other instrumentality thereof, or a final decree, judgment or order of a court.

“ Lessee ” shall mean Phillips 66 Partners Holdings LLC.

“ Lessee’s Operations ” means crude oil transportation and related operations, including the transportation, storage and shipping of crude oils and refined petroleum products and for any other uses or activities related to or associated with such operations conducted by Lessee.

“ Lessor ” shall mean Phillips 66 Company.

“ Parties ” shall mean Lessor and Lessee, collectively.

“ Partnership ” shall mean Phillips 66 Partners LP, a Delaware limited partnership.

“ Partnership Group ” shall mean, collectively, the Partnership and its Subsidiaries.

“ Party ” shall mean Lessor or Lessee, individually.

“ Permitted Encumbrances ” shall mean those easements, leases, restrictions, and encumbrances that are described in Exhibit B attached hereto and incorporated herein for all purposes, and any non-material easements, leases, restrictions, and encumbrances that are not filed of record.

“ Person ” shall mean any individual, partnership, corporation, limited liability company, association, business, trust, estate, government or political subdivision hereof, governmental agency or other entity.

“ Premises ” shall mean that certain real property that is at or near the Refinery situated in the County of Union, State of New Jersey, as described on Exhibit A and shown as the cross-hatched area on Attachment A-1 attached hereto and incorporated herein for all purposes.

“ Price Index ” shall mean the Consumer Price Index for all Urban Consumers for the New York- Northern New Jersey Metropolitan Area, published by the Bureau of Labor Statistics of the United States Department of Labor (all items figure – 1982-1984 = 100).

“ Property Taxes ” shall mean all property taxes, and other general and special assessments, of every kind related to the value of the Premises Assets and Improvements that are levied or assessed upon or against, or attributable to, all or any portion of the Premises, Assets or Improvements.

“ Reasonable Restrictions ” means, with respect to the Premises, an engineering control, or a deed restriction or institutional control that limits the use of the Premises or the Refinery, including the Premises, to industrial uses and/or restricts use of the groundwater, except as needed for refinery purposes, which is

(a) reasonable in scope and extent; and (b) does not unreasonably impair or unreasonably interfere with Lessee’s use of the Assets.

“ Refinery ” shall mean the refinery, including the real property, located in Linden, New Jersey, commonly known as the Bayway Refinery, including the Refinery Lands. The Refinery for purposes of this Lease shall not include Lessor’s facilities and the piping that is located outside of the Refinery fence lines.

“ Refinery Lands ” shall mean the approximately seventy (70) acre parcel, commonly referred to as the “40 Acre Tank Farm”, on which the Premises are situated.

“ Release ” shall mean any presence, spilling, leaking, seeping, pumping, pouring, emitting, emptying, injecting, discharging, escaping, leaching, dumping, disposing or releasing of a Hazardous Substance into the environment (including the soil, surface water, groundwater, sewer, septic system, or waste treatment, storage, or disposal systems, but not the air unless such air release is deposited on the Premises) of any kind whatsoever, including the abandonment or discarding of barrels, containers, tanks or other receptacles containing or previously containing a Hazardous Substance. Migration or continued Releasing after the Effective Date of a Release that occurred prior to the Effective Date shall not be considered a new Release for purposes of this Lease and instead shall be considered part of the prior Release.

“ Release of a Hazardous Substance from its Operations ” shall mean Releases from equipment, including pipe lines, owned by either Lessee or Lessor, or their respective Affiliates, as appropriate at the Premises or Refinery Lands.

“ Renewal Terms ” shall have the meaning as defined in Section 3.2.

“ Reportable Quantity ” shall mean, with respect to a Release, a Release that is one or more barrels, or less than one barrel if required to be reported to a government agency pursuant to Environmental Laws.

“ Shared Services Agreement ” shall mean, the Shared Services Agreement (Bayway) dated December 1 ^st , 2014, entered into by and between Lessor and Lessee.

“ Subsidiary ” shall mean, 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 general partner interests of such partnership 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.

“Term ” shall mean, collectively, the period commencing on the Effective Date and extending thereafter for Forty (40) years, plus any additional Renewal Terms, if said Renewal Terms are exercised by Lessee.

1.2 Interpretations . As used in this Lease, the terms “herein”, “herewith” and “hereof” are references to this Lease, taken as a whole, the term “includes” or “including” shall mean “including, without limitation”, and references to a “Section”, “subsection” or “Exhibit”, shall mean a Section, subsection or Exhibit of this Lease, as the case may be, unless in any such case the context requires otherwise. All references to a given agreement, instrument or other document shall be a reference to that agreement, instrument or other document as modified, amended, supplemented and restated through the date as of which such reference is made, and reference to a law, statute, code, regulation, rule, ordinance or similar Legal Requirement includes any amendment or modification thereof. A reference to a Person includes its successors and permitted assigns. The singular shall include the plural and the masculine shall include the feminine, and vice versa.

1.3 Entire Agreement . This Lease consists of this document and the exhibits which are listed in the table of contents and attached hereto or shall be attached hereto in accordance with the provisions hereof, and which are specifically incorporated herein and made a part hereof by this reference. This Lease sets forth the full and complete understanding of the Parties relating to the subject matter contained herein, and shall supersede any and all prior negotiations, understandings, other agreements, representations or warranties by such Parties with respect to the subject matter hereof.

1.4 Conflicting Provisions . In the event of any conflict between this document and the Contribution Agreement, the terms and provisions of the Contribution Agreement, as amended from time to time, shall control.

ARTICLE II

PREMISES AND EASEMENTS

2.1 Premises . As of the Effective Date, Lessor hereby exclusively leases to Lessee and Lessee exclusively leases from Lessor for the Term, at the rental, and upon all of the conditions set forth herein, the Premises. Lessor hereby warrants and represents to Lessee that Lessor owns, as of the Effective Date, good and marketable title to the Premises, free and clear of all leases, tenancies, agreements, servitudes, mortgages, restrictions and other liens, encroachments, encumbrances and easements, except for the Permitted Encumbrances, and that possession of the Premises shall be delivered by Lessor to Lessee on the Effective Date.

2.2 Quiet Enjoyment . Subject to the provisions of this Lease, and so long as Lessee is not in default under the provisions of this Lease, Lessor covenants and warrants that upon the payment of the rent

reserved herein and performance of its obligations hereunder, Lessee shall peaceably and quietly hold, use, enjoy and occupy the Premises for the Term hereof.

2.3 Lessee’s Easements and Rights-of-Way . Lessor shall promptly furnish or make available to Lessee or to third parties that are providing services to Lessee, at no additional cost to Lessee, all other easements and rights-of-way over the Refinery Lands reasonably necessary for Lessee’s Operations on the Premises, including pipeline, pipe rack, electrical, communication, roadway and construction easements, to construct any Improvements on the Premises, or to comply with the provisions of this Lease or the Shared Services Agreement. All such easements and rights-of-way shall be non-exclusive in a form mutually acceptable to both Parties, and none of these easements or rights-of-way shall unreasonably interfere with Lessor’s operations on the Refinery Lands. All such easements and rights-of-way shall be recorded at the sole expense of Lessee.

2.4 Lessee’s Access and Use Rights . By execution of this Lease, during the Term Lessor hereby grants to Lessee, its employees, invitees, licensees, agents and contractors as necessary for Lessee’s Operations on the Premises or the easements or rights-of-way that may be granted to Lessee pursuant to Section 2.3 above or for Lessee to comply with the provisions of this Lease or the Shared Services Agreement:

(a) The right at all times of access, ingress or egress on, over and across any and all portions of the Refinery Lands to the Premises, to the Appurtenant Easements, or to the easements or rights-of-way that may be granted to Lessee pursuant to Section 2.3 above;

(b) The right to walk on all walkways and drive all types of vehicles on all roads on the Refinery Lands;

2.5 Lessor Reserved Easements and Rights-of-Way . Lessor, by and through this Lease, hereby reserves unto itself, its successors and assigns, the right to maintain, utilize, inspect, operate, protect, repair, replace with same or different size facilities, dismantle and remove any of Lessor’s existing pipe lines, pipe racks, equipment, electrical facilities, rail facilities, communications facilities, roadways and construction rights-of-ways, including those set forth on Exhibit C, attached hereto and incorporated herein for all purposes, that are located on the Premises for Lessor’s operations on Refinery Lands; provided, however, that Lessor hereby agrees, at Lessee’s sole cost and expense, to remove and relocate any of Lessor’s reserved pipe lines, pipe racks, electrical facilities, rail facilities, communications facilities, roadways and construction rights-of-ways to a new location on the Premises specified by Lessee, at any time upon sixty (60) days’ notice in writing from Lessee to Lessor. In addition, Lessee shall promptly furnish or make available to Lessor or to third parties that are providing services to Lessor, at no additional cost to Lessor, all other easements and rights-of-way over and across the Premises that are reasonably necessary for Lessor to conduct its business on the Refinery Lands. All such easements and rights-of-way shall be non-exclusive and none of these easements or rights-of-way shall unreasonably interfere with Lessee’s Operations on the Premises. All such easements and rights-of-way shall be recorded at the sole expense of Lessor. Upon completion of any construction, maintenance, replacement or removal operations Lessor shall repair and restore the rights-of-way used by Lessor, as near as reasonably practical to do so, to substantially the same condition that existed prior to such activity. Nothing provided in this Lease is intended to modify, amend, waive, enlarge, limit or restrict the environmental provisions, including the environmental indemnities, contained in the Contribution Agreement; it being the intent of the Parties hereto that all environmental matters will be governed by the terms of the Contribution Agreement.

2.6 Lessor’s Reserved Access Rights . Lessor, by and through this Lease, hereby reserves unto itself, its successors and assigns, as necessary for Lessor’s operations at the Refinery Lands or for Lessor to comply with the provisions of this Lease or the Shared Services Agreement:

(a) the right, at all times of access, ingress or egress on, over and across any and all portions of the Premises, the easements or rights-of-way, and

(b) The right to walk on all walkways and drive all types of vehicles on all roads on the Premises;

2.7 Access Procedures . Lessor and Lessee shall mutually establish a procedure to enable the other Party and its employees, Invitees, licensees, agents and contractors reasonable access to the Premises and the Refinery Lands, as applicable, to conduct Corrective Action as required by this Lease or by Legal Requirements and to carry out the intent of this Lease, and the Contribution Agreement.

2.8 Third Party or Affiliate Easements on the Premises . Lessor shall not grant or assign to any third parties any new easements, rights-of-way, licenses or any similar real property interests on the Premises without the prior written consent of Lessee, which consent shall not be unreasonably withheld.

2.9 Appurtenant Easements. As of the Effective Date, Lessor hereby leases to Lessee and Lessee leases from Lessor for the Term, at the rental and upon all of the conditions set forth herein, the Appurtenant Easements. To the extent that any Appurtenant Easements that would otherwise be leased under this Lease, are not capable of being leased without the consent of, or waiver by, any other party thereto or any other Person, or if such lease or attempted lease would constitute a breach thereof or a violation of any Legal Requirement, this Lease shall not constitute a lease, or an attempted lease of any such Appurtenant Easements. Promptly after the Effective Date, and for a period of one (1) year, Lessor shall use reasonable commercial efforts to obtain a consent or waiver to a lease from Lessor to Lessee of each such Appurtenant Easement that, but for the second sentence of this Section, would be leased; provided, however, that Lessor shall not be required to pay or provide any consideration to obtain such consent or waiver. Lessee shall have the right to take any actions necessary to keep such Appurtenant Easements in effect, including obtaining such consent or waiver described above.

ARTICLE III

TERMINATION AND RENEWAL

3.1 Termination or Surrender . Notwithstanding anything to the contrary contained herein, Lessee may, by mutual consent of the parties and upon not less than thirty (30) days prior written notice to Lessor, surrender any portion of the Premises to Lessor and to terminate this Lease as to the portion surrendered or to terminate this Lease in its entirety. Such consent may be withheld at Lessor’s sole discretion.

3.2 Renewal Terms . So long as there is no event of default under this Lease, Lessee shall have the option to extend this Lease for up to three (3) ten (10) year periods (“Renewal Terms”) commencing upon the expiration of the Base Term. Each successive ten (10) year option shall be deemed exercised by Lessee provided that Lessee gives at least ninety (90) days written notice prior to the expiration of the Base Term or any Renewal Term, as the case may be, of its desire to renew for the next successive Renewal Term. If Lessee elects not to exercise any Renewal Term, then this Lease shall terminate at the end of the current

Base Term or Renewal Term, as the case may be, and in the event of such termination, Lessee’s options for any future Renewal Terms shall also terminate.

3.3 Removal and Restoration . On the last day of the Term hereof, or on any sooner termination or a surrender of a portion of the Premises as provided for in this Lease, Lessee shall surrender the Premises, or portion thereof, to Lessor in substantially the same condition as existed on the Effective Date, reasonable wear and tear excepted; provided, however, that Lessee shall have a reasonable period of time after such termination or expiration to remove its Assets, Improvements and other personal property and equipment from the Premises and to restore the surface of the Premises at Lessee’s sole expense. Lessor shall provide Lessee with reasonable access, ingress and egress for the purposes of such removal and restoration, and Lessee shall repair any damage to the Premises occasioned by such removal.

ARTICLE IV

RENT AND PAYMENTS

4.1 Rent . Lessee shall pay to Lessor as rent for the Premises and the Appurtenant Easements for the Term the sum of $1,862,758.80 per year, payable in monthly installments of $155,229.90 All monthly installments shall be due and payable on the first day of each month. Rent shall be payable in lawful money of the United States to Lessor at the address stated herein or to such other Persons or at such other places as Lessor may designate in writing.

4.2 Rent Adjustment . Rent payable pursuant to Section 4.1 will be adjusted on each anniversary of the Effective Date by a fraction whose numerator is the Price Index published for the then most recent anniversary month of the first month of the Term and whose denominator is the Base Price Index. Rent shall not be reduced below the amount first due pursuant to Section 4.1.

4.3 Additional Rent .

(a) This Lease is what is commonly called a “triple net lease”, it being understood that Lessor shall receive the rent set forth in Paragraph 4.1and Lessee shall pay any and all Property Taxes and other costs or expenses of any nature whatsoever that are related solely to Lessee’s lease or Lessee’s Operations of the Premises. All of such charges, costs and expenses shall constitute additional rent, and upon the failure of Lessee to pay any of such costs, charges or expenses, Lessor shall have the same rights and remedies as otherwise provided in this Lease for the failure of Lessee to pay rent.

(b) If Lessee should default, as defined in Article XI, in performing any term, covenant or condition of this Lease which involves the expenditure of money by Lessee to third parties, Lessor may (but shall not be obligated to) make such payment or, on behalf of Lessee, expend such sum as may be necessary to perform or fulfill such term, covenant or condition. Any sums so paid or expended by Lessor, with interest at the maximum rate permitted by law from the date of such payment or expenditure, shall be additional rent and shall be payable by Lessee on demand. No such payment or expenditure by Lessor shall be construed as a waiver of Lessee’s default or of Lessee’s obligation to perform any term, covenant or condition of this Lease nor shall it affect any other right or remedy of Lessor under this Lease.

(c) No abatement, diminution or reduction in additional rent shall be claimed by or allowed to Lessee for any inconvenience or interruption, cessation, or loss of business caused directly or indirectly, by any present or future Legal Requirements, or by Force Majeure; and no diminution in the amount of the space used by Lessee caused by legally required changes in the construction, equipment, fixtures, operation or use of the Premises shall entitle Lessee to any abatement, diminution or reduction of additional rent required to be paid by Lessee under this Lease.

4.4 Late Payments . Any amounts not paid by one Party to the other Party when due under any provisions of this Lease shall bear interest at the Late Payment Rate from the date such payment is due until the date payment is made in full.

ARTICLE V

USE OF THE PREMISES

5.1 Use . The Premises may be used and occupied by Lessee for crude oil transportation and related operations, including the unloading and shipping of crude oils, offices, and for any other uses or activities related to or associated with such operations, subject to any Reasonable Restrictions.

5.2 Acknowledgement of Potential Future Restrictions . Lessor and Lessee acknowledge that any Corrective Action may be conducted pursuant to governmental order or action, agreement with the governmental agencies or on a voluntary basis. Lessee acknowledges that any such activity may result in a restriction on the future use of the land beneath the Refinery Lands, including the Premises, to non-residential, industrial or particular commercial uses, restriction on the use of groundwater, imposition of institutional controls, or imposition of engineering controls. This Lease is hereby made subject to any governmental order or action, or agreement with the governmental agencies concerning such Corrective Action. After consultation with Lessee, Lessor shall use reasonable efforts to ensure such restrictions are Reasonable Restrictions.

5.3 Compliance with Legal Requirements Other than Environmental Laws . Lessee shall, at Lessee’s expense, comply with all applicable Legal Requirements (other than Environmental Laws) in effect during the Term or any part of the Term hereof regulating the use and occupancy by Lessee of the Premises. Compliance with Environmental Laws is addressed in Section 14.2. In the event Lessee requires access to the Premises after the termination of this Lease to comply with its obligations under this Lease, Lessor shall provide such access to the Premises, at no cost to Lessee, as is reasonably necessary for Lessee to complete its obligations. Lessor agrees that it will, at Lessee’s sole cost and expense, cooperate with Lessee in supplying information and signing documentation as Lessee may reasonably request in order to satisfy its requirements under this Section 5.3, and Lessee shall indemnify and defend Lessor from and against any liability resulting from such cooperation with Lessee; provided, however, if Lessor’s action or inaction is the primary factor necessitating compliance with any Legal Requirements affecting the Premises, in which event Lessor shall pay the reasonable costs, charges and expenses connected with or arising out of such need to comply.

5.4 Indemnity for Compliance with Legal Requirements Other than Environmental Laws . Subject to the terms and provisions of Article VIII of the Contribution Agreement, Lessee shall indemnify, release, defend and hold Lessor harmless from and against any and all claims, demands, suits, causes of action, proceedings, judgments, damages, liabilities, expenses and costs (including court courts and reasonable attorneys' fees) for its failure to comply with Legal Requirements at the Premises. Lessor shall

indemnify, release, defend and hold Lessee harmless from and against any and all claims, demands, suits, causes of action, proceedings, judgments, damages, liabilities, expenses and costs (including court courts and reasonable attorneys' fees) for its failure to comply with Legal Requirements at the Refinery Lands.

5.5 Suitability of the Premises . NOTWITHSTANDING ANY OTHER PROVISION OF THIS LEASE, LESSEE HEREBY ACCEPTS THE PREMISES “AS IS, WHERE IS” IN ITS CONDITION EXISTING ON THE EFFECTIVE DATE, AND LESSOR DISCLAIMS ANY WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE PREMISES, INCLUDING ANY WARRANTY OF SUITABILITY FOR A PARTICULAR USE AND ANY OTHER WARRANTY PERTAINING TO THE USE OR CONDITION OF THE PREMISES WHATSOEVER; PROVIDED HOWEVER, NOTHING IN THIS SECTION 5.5 IS INTENDED TO NOR SHALL IT QUALIFY OR DIMINISH THE PARTIES’ RESPECTIVE RIGHTS AND OBLIGATIONS UNDER THE CONTRIBUTION AGREEMENT. Lessee acknowledges that Lessor has not made any representation or warranty as to the suitability of the Premises for the conduct of Lessee’s business.

ARTICLE VI

MAINTENANCE, UTILITIES, IMPROVEMENTS, AND LIENS

6.1 Lessee’s and Lessor’s Obligations . Lessee shall, at its sole cost and expense, maintain or cause to be maintained all Assets and Improvements located on the Premises. Any Party committing any injury to the Premises shall be responsible for repairing and/or restoring the Premises at its sole cost and expense. Lessor shall, at its sole cost and expense, maintain all of Lessor’s personal property located within the Premises.

6.2 Utilities Obligations . Lessor agrees to provide certain utilities and services to the Premises pursuant to the Shared Services Agreement. Lessee agrees to provide certain services to the Lessor pursuant to the Shared Services Agreement.

6.3 Improvements .

(a) Subject to the terms and conditions of this Section 6.3, Lessee may, at any time and from time to time, at its sole cost and expense, construct, build, place, install, equip, maintain, operate, locate or remove any Improvements deemed desirable by Lessee in, on and to the Premises, provided that the Improvements shall be made or removed in accordance with all applicable Legal Requirements. Lessor, as the landlord of the Premises, shall cooperate (at no cost to Lessor) with Lessee in applying for and obtaining any permits, licenses or approvals needed to construct, build, place, install, equip, maintain, operate or remove the Improvements.

(b) Ownership and title to the Improvements shall be and remain the sole property of Lessee regardless of whether such Improvements constitute fixtures or personalty. Lessee may add or remove all or any portion of the Improvements, or any part thereof, at any time and from time to time during the Term, irrespective of the manner or method of attachment of the same to the Premises.

(c) The Parties agree that title to all Improvements at any time on the Premises have been severed by the agreement and intention of the Parties and shall remain severed from the Premises, shall

be considered with respect to the interests of the Parties hereto as the personal property of Lessee and, even though attached to or affixed to or installed upon the Premises, shall not be considered to be fixtures or a part of the Premises.

6.4 Liens .

(a) Except for services provided by Lessor to Lessee under the Shared Services Agreement, if any lien shall at any time be filed against the Premises by reason of any work, labor, services or materials done for, or supplied to, or claimed to have been done for, or supplied to, Lessee or anyone holding the Premises through or under Lessee, Lessee shall cause the same to be discharged of record or adequately bonded (unless otherwise secured to the reasonable satisfaction of Lessor) within forty-five (45) days after receipt of notice of the lien filing from Lessor. If Lessee shall fail to do so, then, Lessor may, but shall not be obligated to, procure the discharge of the same either by paying the amount claimed to be due, by deposit in a court of competent jurisdiction or by bonding, and Lessor may defend the prosecution of an action for the foreclosure of such lien by the lienor and pay the amount of the judgment, if any, in favor of the lienor with interest, costs and allowances. Any amount paid or deposited by Lessor for any such purpose, and all other reasonable expenses of Lessor, including reasonable attorney’s fees and disbursements, together with interest at the maximum rate permitted by law from the date paid or deposited, shall be additional rent and shall be paid by Lessee on demand. Lessee shall cause any such lien filed against the Assets or Improvements to be discharged prior to termination of this Lease. If requested by Lessor, Lessee shall post on behalf of Lessor, and keep posted on the Premises, any notices that Lessor may require for the protection of Lessor and of the Premises from any such lien.

(b) Except for services provided by Lessee to Lessor under the Services Agreement, if any lien shall at any time be filed against the Premises, either individually against the Premises or as part of a lien filed that encompasses both the Premises and the Refinery Lands, by reason of any work, labor, services or materials done for, or supplied to, or claimed to have been done for, or supplied to, Lessor or anyone holding the Refinery Lands through or under Lessor, Lessor shall cause the same (at least as it pertains to the Premises) to be discharged of record or adequately bonded (unless otherwise secured to the reasonable satisfaction of Lessee) within forty-five (45) days after receipt of notice of the lien filing. If Lessor shall fail to do so, then, Lessee may, but shall not be obligated to, procure the discharge of the same, in whole or in part, either by paying all or a portion of the amount claimed to be due, by deposit in a court of competent jurisdiction or by bonding, and Lessee may defend the prosecution of an action for the foreclosure of such lien by the lienor and pay all or a portion of the amount of the judgment, if any, in favor of the lienor with interest, costs and allowances. Any amount paid or deposited by Lessee for any such purpose, and all other reasonable expenses of Lessee, including reasonable attorney’s fees and disbursements, together with interest at the maximum rate permitted by law from the date paid or deposited, shall be promptly paid by Lessor on demand. Lessor shall cause any such lien filed against the Assets or Improvements to be discharged prior to termination of this Lease.

(c) Nothing in this Lease shall be deemed to be, or be construed in any way as constituting, the consent or request of Lessor, expressed or implied, by inference or otherwise, to any Person for the performance of any labor or the furnishing of any materials for any Improvement of or to the Premises, or as giving Lessee any right, power or authority to contract for or permit the rendering of any services or the furnishing of any materials which might in any way give rise to the right to file any lien against Lessor’s interest in the Premises or giving Lessor any right, power or authority to contract for or permit the rendering of any services or the furnishing of any materials which might in any way give rise to the right to file any lien against Lessee’s interest in the Premises, including the Assets and Improvements located thereon.

ARTICLE VII

INSURANCE

7.1 Insurance Coverage . Lessee shall during the Term of this Lease, and Lessor shall for as long as it conducts operations on the Refinery Lands, provide at their sole cost and expense the following:

(a) Commercial General Liability insurance, including contractual liability, with limits of $1,000,000 each claim;

(b) Workers' Compensation insurance as required by laws and regulations applicable to Lessee and its employees hereunder and Employer's Liability insurance protecting Lessee against common law liability, in the absence of statutory liability, for employee bodily injury arising out of the master-servant relationship with a limit of $1,000,000 each claim;

(c) Business Automobile Liability insurance covering all vehicles used in the operations of Lessee with a limit of $1,000,000 each accident; and

(d) Excess Liability insurance covering Commercial General Liability, Workers' Compensation and Business Automobile Liability with a limit of $9,000,000 aggregate.

7.2 Failure to Obtain Insurance . If a Party shall fail to keep in effect any insurance required under Section 7.1(a), the other Party may (but shall not be obligated to) obtain and pay for such insurance. However, the other Party will provide the Party obligated to provide the insurance thirty (30) days prior written notice of such intent and allow that Party thirty (30) days to comply with such insurance requirement(s).

7.3 A Party’s Right to Self-Insure . Notwithstanding anything to the contrary contained herein, a Party shall have the right, but not the obligation, to self-insure any and all liabilities arising out of this Lease and/or the insurance required in Section 7.1. A Party may exercise such right by providing the other Party with a letter of self-insurance referencing the obligations and liabilities of this Lease with any financial information reasonably requested by the other Party to demonstrate the self-insuring Party’s ability to self-insure.

7.4 Insurance Requirements . On or before the Effective Date, each Party shall provide the other Party with certificates or other documentary evidence reasonably satisfactory to the other Party of the insurance coverages and endorsements set forth above that are required to be obtained by such Party. The above insurance shall include a requirement that a Party’s insurer provide the other Party with thirty (30) days advance written notice of cancellation, material change, or non-renewal. A Party’s Workers Compensation insurance shall contain a waiver of subrogation against the other Party. A Party’s Commercial

General Liability and Business Automobile Liability insurance shall name the other Party as an additional insured with respect to this Lease.

ARTICLE VIII

INDEMNITIES

8.1 Release and Indemnification by Lessee . Subject to the limitation set forth in Section 8.5, Lessee shall release, indemnify, defend and hold Lessor harmless from and against any and all claims, demands, suits, causes of action, proceedings, judgments, damages, liabilities, expenses and costs (including court costs and reasonable attorneys' fees) for:

(a) any damage to or loss of property of Lessee, Lessee’s Affiliates, and their respective employees, contractors, representatives, agents or Invitees at the Refinery, and

(b) any personal injury or death to the employees, contractors, representatives, agents or Invitees of Lessee or Lessee’s Affiliates at the Refinery, arising out of, in connection with or resulting from the Lessee’s activities or operations on the Premises or the Refinery Lands.

8.2 Release and Indemnification by Lessor . Subject to the limitation set forth in Section 8.5, Lessor shall release, indemnify, defend and hold Lessee and Lessee’s Affiliates harmless from and against any and all claims, demands, suits, causes of action, proceedings, judgments, damages, liabilities, expenses and costs (including court courts and reasonable attorneys' fees) for:

(a) any damage to or loss of property of Lessor, Lessor’s Affiliates, and their respective employees, contractors, representatives, agents or Invitees at the Refinery, and

(b) any personal injury or death to the employees, contractors, representatives, agents or Invitees of Lessor or Lessor’s Affiliates at the Refinery, arising out of, in connection with or resulting from the Lessor’s activities or operations conducted on the Premises or the Refinery Lands.

8.3 Application of Indemnities .

(a) THE PARTIES HEREBY EXPRESS THEIR INTENT THAT THE RELEASES OF LIABILITY AND INDEMNITIES CONTAINED IN SECTIONS 8.1 AND 8.2 ABOVE BE LIBERALLY CONSTRUED. SUCH RELEASES OF LIABILITY AND INDEMNITIES SHALL APPLY TO ANY LOSS, DAMAGE, PERSONAL INJURY OR DEATH WHICH ARISES FROM THE PERFORMANCE OF THIS LEASE, AND WITHOUT REGARD TO THE CAUSE OR CAUSES THEREOF, INCLUDING STRICT LIABILITY, BREACH OF WARRANTY (EXPRESS OR IMPLIED), IMPERFECTION OF MATERIALS, CONDITION OF ANY SITE, OR THE NEGLIGENCE OF THE INDEMNITEE (OR RELEASED PARTY), WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, ACTIVE OR PASSIVE, AND WHETHER THE CLAIM THEREFOR IS BASED ON COMMON LAW, CIVIL LAW, MARITIME LAW,

STATUTE OR CONTRACTUAL OBLIGATION BETWEEN THE INDEMNITEE AND A THIRD PARTY

(b) NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE RELEASES OF LIABILITY AND INDEMNITIES CONTAINED IN SECTIONS 8.1 AND 8.2 SHALL NOT APPLY TO ANY CLAIM OR LIABILITY CAUSED BY GROSS NEGLIGENCE, MALICE OR WILLFUL MISCONDUCT AND FURTHER SHALL NOT IN ANY EVENT APPLY TO AWARDS OR ASSESSMENTS OF PUNITIVE DAMAGES.

8.4 Extension of Releases and Indemnities . To the maximum extent permitted by applicable law, the releases of liability and indemnities contained in Sections 8.1 through 8.3 above shall extend to the directors, employees, contractors, subcontractors and Invitees of each Party and to their respective Affiliates and the directors, employees, contractors, subcontractors and Invitees of such Affiliates.

8.5 Limitation on Indemnities For Personal Injury/Death . Liability under the indemnities contained in Sections 8.1 and 8.2 above for the aggregate total of personal injuries and/or deaths arising from any single occurrence shall be limited to Five Million Dollars ($5,000,000). If in the course of defense by either Party of any claims subject to this Section 8.5 either Party believes its potential liability under the indemnity is likely to exceed the Five Million Dollar ($5,000,000) limitation, said Party shall have the option of notifying the other Party that it will unconditionally agree to pay the other Party the first Five Million Dollars ($5,000,000.) of judgments, losses, expenses and costs (including court costs and attorneys' fees). Said Party shall transfer the defense of all pending suits and claims subject to this Section 8.5 to the other Party, and will cooperate in arranging for an orderly transition in the responsibility for handling such suits and claims. The other Party may, at its option, require that said Party provide security in a form satisfactory to the other Party to guarantee payment of Five Million Dollars ($5,000,000) less any amount of judgments, expenses and costs already incurred by said Party (all of which will be credited against the Five Million Dollar ($5,000,000) maximum liability).

8.6 Disclaimer of Consequential Damages . Neither Party shall be liable to the other Party for any incidental, special, indirect or consequential damages of any nature, including loss of profits or business interruptions, connected with or arising out of this Lease.

8.7 Survival . The provisions of this Article VIII shall survive the termination or expiration of this Lease.

ARTICLE IX

PROPERTY TAXES

9.1 Payment of Property Taxes .

(a) Except as otherwise provided in Section 9.1(b), so long as the Premises, Assets and Improvements are taxed as a separate parcel from the Refinery Lands, Lessee will pay and discharge, as and when the same shall become due and payable without penalty, the Property Taxes with respect to any period during the Term in which they shall be or become due and payable and which:

(i) shall be levied, assessed or imposed on or against the Premises, Assets or Improvements or any interest of Lessor or Lessee in the Premises, Assets or Improvements; or

(ii) shall be or become liens on or against the Premises, Assets or Improvements or any interest of Lessor or Lessee in the Premises, Assets or Improvements;

(b) Nothing in this Lease shall require Lessee to pay any estate, inheritance, succession or transfer tax of Lessor or any income, excess profits or revenue tax on the rent payable by Lessee under this Lease; provided, however, that if at any time during the term the methods of taxation prevailing at the Effective Date shall be altered so that in lieu of, as a supplement to, or a substitute for the whole or part of any Property Tax which Lessee has agreed to pay pursuant to this Section 9.1, there shall be levied, assessed or imposed (i) a tax, assessment, levy imposition or charge, wholly or partially as a capital levy or otherwise, on the rents received under this Lease or (ii) a license fee measured by the rent payable by Lessee under this Lease, then Lessee shall pay the same.

(c) Upon written request from Lessor, Lessee shall promptly furnish Lessor with satisfactory evidence that such Property Taxes have been paid. If any Property Taxes paid by Lessee shall cover any period of time prior to or after the expiration of the Term hereof, Lessee’s share of such Property Taxes shall be equitably pro-rated to cover only the period of time within the tax fiscal year during which this Lease shall be in effect, and Lessor shall reimburse Lessee to the extent required. If Lessee shall fail to pay any such Property Taxes by their due date, Lessor shall have the right to pay the same, in which case Lessee shall repay such amount to Lessor on demand, together with any interest charge actually incurred by Lessor as to such Property Taxes.

9.2 Joint Assessment . If the Premises, Assets and Improvements are not separately assessed, Lessor shall pay the Property Taxes, but Lessor shall forward a copy of the property tax bills to Lessee within five (5) business days of Lessor’s receipt of the tax bills and, subject to Section 9.3 below, Lessee shall reimburse Lessor within thirty (30) days of receipt of Lessor’s invoice, together with proof of payment thereof, an amount equal to Ninety-Five percent (95%) of the Property Taxes for the Refinery Lands, on which the Premises are situated and as more particularly described in Attachment A-2, for that tax year and, with the express understanding and agreement between Lessor and Lessee that there will be a subsequent true-up of Lessee’s ultimate liability for Lessee’s proportion of the Property Taxes in accordance with the subsequent terms of this paragraph and that the percentages above set no precedent in the subsequent determination of the allocation. In the event the Premises, Assets and Improvements are subsequently separately assessed, the aforementioned true-up shall occur within thirty (30) days of receipt by either Party of such separate assessment. Lessee’s liability shall be an equitable proportion of the Property Taxes for the Premises, Assets and Improvements. Lessor and Lessee hereby agree that such proportion will be mutually agreed to by Lessor and Lessee, acting in good faith. In the event that Lessor and Lessee are unable to mutually agree upon such proportion, the Parties shall mutually engage a competent, independent appraiser, whose opinion of proportion shall be binding upon both Parties. The apportionment percentages set forth in this Section 9.2 are solely for the Parties’ benefit in estimating the liability for Property Taxes between them, and each Party hereby covenants and agrees to keep such allocation percentages confidential and to not disclose, communicate or otherwise provide such apportionment percentages at any time to any independent appraiser engaged under this Section 9.2 or in any court proceeding related thereto. The cost of engaging such appraiser shall be borne equally by Lessor and Lessee. These agreed upon allocated assessed values shall remain in effect until changed by the Parties, with either Party having the right to request a review of the allocation on an annual basis. Additionally, if the Premises, Assets or Improvements are not separately assessed, Lessor and Lessee also shall jointly attempt to have the Assessor separately assess the

Premises, Assets and Improvements in such a way as to clearly and separately identify the value of the Premises, Assets and Improvements.

9.3 Contesting Real Property Tax . Lessor and Lessee shall each have the right to contest or review, with due diligence and in good faith, the amount or validity of any Property Taxes associated with the Premises, Assets and Improvements, but only with the knowledge and consent of the other Party, it being the express intent of the Parties that they shall work together in cooperation with each other with any such contest or review. For Property Taxes that pertain to the years 2014 and beyond, Lessee shall have the right to contest or review, with due diligence and in good faith, the amount or validity of any Property Taxes associated with the Premises, Assets or Improvements by appropriate legal proceedings provided that if the contested Property Tax is not paid before the start of legal proceedings, then before instituting any proceedings Lessee shall furnish to Lessor a surety company bond, cash deposit or other security mutually agreed upon by Lessor and Lessee as reasonably satisfactory, as security for the payment of the Property Tax, in an amount sufficient to pay the Property Tax, that may be assessed against the Premises, Assets or Improvements in the legal proceedings. If the property valuation contested is jointly assessed, Lessee shall have a responsibility for surety bond only for that portion of valuation that constitutes the Premises, Assets or Improvements and in an amount determined by mutual consent of Lessor and Lessee. On termination of the legal proceedings or at any time when Lessor and Lessee shall reasonably deem the security to be insufficient for the purpose, Lessee shall, upon demand, deliver to Lessor additional security as is reasonably sufficient for the purpose, and upon failure of the Lessee to do so, the security originally deposited shall be applied to the payment, removal and discharge of the Property Tax and any interest, penalties, charges, and costs accruing in the legal proceedings and the balance, if any, shall be paid to Lessee. If the security shall be insufficient for this purpose, Lessee shall promptly pay over to Lessor an amount sufficient, together with the security originally deposited hereunder, to pay the same. In the event of any default by Lessee, as defined in Article XI of this Lease, for failure to pay the Property Taxes, Lessor is authorized to use the security deposited under this Section 9.3 to apply on account of such default or to pay the Property Tax. The balance, if any, shall be paid to Lessee. Lessor agrees that it will, at Lessee’s sole cost and expense, cooperate with Lessee in connection with Lessee’s contesting or reviewing any Property Taxes pursuant to this Paragraph 9.3, provided that Lessor shall not be subject to any liability arising out of any such cooperation, including any liability for the payment of any Property Taxes, costs or expenses.

9.4 Other Taxes . Lessee shall pay, prior to delinquency, any franchise taxes, excise taxes, business and occupation taxes, gross sales taxes, gross receipt taxes, occupational license taxes and similar taxes that are assessed or levied on Lessee’s use or operation of the Premises.

ARTICLE X

ASSIGNMENT

10.1 Assignment or Subletting . Neither this Lease nor the leasehold created hereby shall be assigned or transferred by either Party, nor shall Lessee enter into any sublease of the Premises by any third party without the prior written consent of Lessor, which consent may be withheld at Lessor’s sole discretion.

10.2 Assignment to an Affiliate or Sale to a Third Party . Notwithstanding Section 10.1,

(a) Lessor may assign or sell its rights under this Lease to an Affiliate without Lessee’s consent, provided (i) such Affiliate is bound by all of the terms and provisions of this Lease, including Lessee’s rights under Article XIII, (ii) any such assignment shall not relieve the Lessor from any of its obligations under this Lease incurred prior to the date of such assignment, and (iii) Lessor is still liable to Lessee in the event of a default by such Affiliate, its successors or permitted assigns, of any of the obligations to be performed by Lessor under this Lease.

(b) Subject to Lessee’s rights under Article XIII, Lessor may assign or sell its rights under this Lease to a third party purchaser of all or substantially all of its interest in the Refinery or the Refinery Lands without Lessee’s consent, provided (i) such third party is bound by all of the terms and provisions of this Lease, including Lessee’s rights under Article XIII and (ii) any such assignment shall not relieve the Lessor from any of its obligations under this Lease incurred prior to the date of such assignment.

(c) Lessee may assign or transfer its rights and obligations hereunder to an Affiliate without Lessor’s consent provided (i) such Affiliate is bound by all of the terms and provisions of this Lease, including Lessor’s rights under Article XIII, (ii) any such assignment shall not relieve the Lessee from any of its obligations under this Lease incurred prior to the date of such assignment, and (iii) Lessee is still liable to Lessor in the event of a default by such Affiliate, its successors or permitted assigns, of any of the obligations to be performed by Lessee under this Lease.

10.3 Covenants Running With The Land . Subject to Section 10.1 above, all of the limitations, covenants, conditions, restrictions, rights, duties, powers and obligations created or which arise by reason of this Lease shall constitute covenants which shall run with the property burdened and benefited, and shall be binding on all Persons having any right, title or interest in the property burdened or any part thereof, their heirs, successors and assigns. By acceptance of a deed of conveyance or any other instrument granting an interest in property benefited or burdened by the interests or estates granted herein, each grantee or transferee, including mortgagees taking title by foreclosure, consents to and agrees to be so bound.

ARTICLE XI

DEFAULT

11.1 Defaults . A Party shall be in default under this Lease upon the occurrence of any one or more of the following events:

(a) The failure by such Party to make any payment of any amount required to be made by such Party hereunder, as and when due, where such failure shall continue for a period of thirty (30) days after receipt by such Party of written notice thereof from the other Party; or

(b) The failure by such Party to observe or perform any other material covenants, conditions or provisions of this Lease to be observed or performed by such Party, where such failure shall continue for a period of thirty (30) days after receipt by such Party of written notice thereof from the other Party; provided, however, that if the nature of the failure is such that more than thirty (30) days are reasonably required for its cure, then such Party shall not be deemed to be in default if such Party commences such cure within said thirty (30) day period and thereafter diligently prosecutes such cure to completion; or

(c) If by order of a court of competent jurisdiction, a receiver or liquidator or trustee of a Party shall be appointed, and such receiver or liquidator or trustee shall not have been discharged within a period of sixty (60) days; or if by decree of such a court, a Party shall be adjudicated bankrupt or insolvent or any substantial part of the property of such Party shall have been sequestered, and such decree shall have continued undischarged and unstayed for a period of sixty (60) days after the entry thereof; or if a petition to declare bankruptcy or to reorganize a Party pursuant to any of the provisions of the federal bankruptcy laws or pursuant to any other similar state statute applicable to such Party, as now or hereafter in effect, shall be filed against such Party and shall not be dismissed within sixty (60) days after such filing; or

(d) If a Party shall file a voluntary petition in bankruptcy under any provision of any federal or state bankruptcy law or shall consent to the filing of any bankruptcy or reorganization petition against it under any similar law; or, without limitation of the generality of the foregoing, if a Party shall file a petition or answer or consent seeking relief or assisting in seeking relief in a proceeding under any of the provisions of the federal bankruptcy laws or pursuant to any other similar state statute applicable to such Party, as now or hereafter in effect, or an answer admitting the material allegations of a petition filed against it in such a proceeding; or if a Party shall make an assignment for the benefit of its creditors; or if a Party shall admit in writing its inability to pay its debts generally as they become due; or if a Party shall consent to the appointment of a receiver or receivers, or trustee or trustees, or liquidator or liquidators of it or of all or any part of its property; or

(e) Failure by a Party hereunder to comply with the terms of any final decision or order issued pursuant to the dispute resolution procedures, if such Party does not cure such failure within sixty (60) days of the date of receipt of a notice from the other Party demanding such cure (or within such longer period of time, as is reasonably necessary to accomplish such cure, if it cannot be reasonably accomplished within such sixty (60) day period and such Party diligently commences such cure in such period and continues such cure to completion).

11.2 Remedies . In the event of any such default by a Party, the other Party may, upon the occurrence thereof and during the continuation of such default, exercise any right or remedy which the other Party may have under the laws of the State of New Jersey by reason of such default, but excluding any right to terminate or rescind this Lease or evict Lessee.

ARTICLE XII

CONDEMNATION

12.1 Condemnation in Whole . In the event of Condemnation of the entire Premises, this Lease shall terminate upon the final vesting of title in the condemning Person.

12.2 Condemnation in Part . If a portion of the Premises shall be taken in Condemnation, this Lease shall not automatically terminate but shall, at the option of Lessee, continue with respect to the portion of the Premises that was not so condemned or transferred, unless Lessee provides Lessor with written notice of its election to terminate this Lease within thirty (30) days after such Condemnation.

12.3 Application of Condemnation Proceedings . Any awards made in any Condemnation proceeding described herein shall be paid as follows:

(a) Lessor shall be entitled to the award made for, or equitably attributable to, the value of its fee interest in the Premises and any personal property of the Lessor on the Premises;

(b) Lessee shall be entitled to the award made for, or equitably attributable to, (i) the value of its leasehold estate in the Premises, (ii) the value of any Assets and Improvements and damages to any of Lessee’s other personal property on the Premises, and (iii) any other compensation or benefits paid as a consequence of the interruption of Lessee’s business or operations on the Premises; and

12.4 Notice of Condemnation . If either Party receives notice of any proposed Condemnation of the Premises, such Party shall promptly provide the other Party with notice of any impending proceeding related to such Condemnation and shall not, in the absence of the other Party, settle with the condemning Person or agree on just compensation for such Condemnation. Each Party shall have the right to make a claim against the condemning Person in any Condemnation proceeding for the amount of the actual provable damage suffered as a result of the Condemnation.

ARTICLE XIII

RIGHT OF FIRST OFFER

13.1 Right of First Offer . To the extent Lessor determines to sell all or any portion of the Premises, Lessor will grant Lessee the right of first offer to purchase that same portion of the Premises. Prior to seeking, entertaining or considering any offers for the sale or purchase of such property, Lessor shall notify Lessee in writing that it intends to sell such property, describing in sufficient detail the property to be sold. Lessor shall promptly make available all records pertaining to the property to be sold for Lessee’s review, and Lessee shall have thirty (30) days from receipt of such notice to review these records. Lessee shall have sixty (60) days after receipt of Lessor’s notice to submit a written offer to Lessor for the purchase of the property to be sold. Should Lessee fail to timely submit an offer to purchase such property, then Lessee shall be deemed to have waived its right of first offer for such property (subject to its reinstatement as provided below). Lessor shall have thirty (30) days from receipt of Lessee’s written offer to elect to sell the property to Lessee or to seek offers from other parties. Failure by Lessor to timely respond to Lessee’s written offer shall be deemed to be a rejection of Lessee’s offer. If Lessor accepts Lessee’s offer, the Parties shall promptly commence preparation of the closing documents. If Lessor does not accept Lessee’s offer, then Lessor shall have a period of six (6) months after such rejection in which to enter into a bona fide purchase and sale agreement to sell such property to another party, provided Lessor shall not agree to sell such property to any other party unless their offer is at least ten percent (10%) greater in value than the offer submitted by Lessee. In the event Lessor has not entered into a bona fide purchase and sale agreement with another party within six (6) months from rejecting Lessee’s offer, or the waiver by Lessee’s of its right of first offer as described above, then Lessee shall once again have the right of first offer with respect to such property under the same terms and conditions described above. Any exercise or failure to exercise this right of first offer with respect to some but not all of the Refinery, or Lessor’s sale under this provision of some but not all of the Refinery to another party, shall not be deemed to limit, impair, restrict or inhibit Lessee’s right of first offer with respect to the remainder of the Refinery. Any offer made by Lessee under this Article XIII shall be held confidential by Lessor and will not be disclosed to any prospective purchasers of the Premises.

13.2 Exceptions to Right of First Offer . Lessee’s right of first offer set forth in Section 13.1 above shall not apply to:

(a) an assignment or sale of the Premises to a Lessor Affiliate, provided Lessor and the Affiliate are subject to all of the terms and conditions set forth in Section 10.2 (a) of this Lease and the Affiliate agrees that it is bound by and subject to this Article XIII for any subsequent sale of the Premises by the Affiliate;

(b) a transaction which involves the sale of all or substantially all of the assets of Lessor and/or Lessor’s parent companies to a third party, provided Lessor and such purchaser are subject to all of the terms and conditions set forth in Section 10.2 (b) of this Lease and such purchaser agrees that it is bound by and subject to this Article XIII for any subsequent sale of the Premises; or

(c) a transaction in which property rights in the Premises are transferred as part of a financial arrangement including a mortgage of the Premises, provided that such mortgage holder acknowledges that Lessee’s rights under this Article XIII shall apply in the event of any foreclosure of Lessor’s property rights in the Premises.

ARTICLE XIV

ENVIRONMENTAL

14.1 Release Reporting and Corrective Action .

(a) Lessee shall report any Release of a Hazardous Substance from its Operations onto the Premises in an amount equal to or greater than the Reportable Quantity for that substance to Lessor and, as required by Legal Requirements, to the appropriate government agency(ies) and/or authority(ies). Lessor shall report any Release of a Hazardous Substance from its operations onto the Premises in an amount equal to or greater than the Reportable Quantity for that substance to Lessee and, as required by Legal Requirements, to the appropriate government agency(ies) and/or authority(ies).

(b) Lessee shall be responsible for prompt response to Releases of a Hazardous Substance from its Operations in accordance with Environmental Laws. Lessor shall be responsible for prompt response to Releases of a Hazardous Substance from its operations in accordance with Environmental Laws.

(c) Lessee shall simultaneously provide to Lessor a copy of any information submitted to such governmental agency or authority. To the extent practicable, Lessee will also provide Lessor with drafts of such reports prior to submitting them to such governmental agency or authority. Lessor shall simultaneously provide to Lessee a copy of any information submitted to such governmental agency or authority in connection with a Release on Refinery Lands.

(d) In the event a Release of Hazardous Substance occurs from Lessee’s Operations that affects and are of the Premises or Refinery Lands, Lessee will be responsible to remediate such affected areas to the degree required under Environmental Laws. In the event a Release of Hazardous Substance occurs from Lessor’s Operations that affects an area of the Premises, Lessor will be responsible to remediate such affected area to the degree required under Environmental Laws.

(e) Lessee shall immediately notify Lessor in the event that a governmental agency shall require additional response measures in response to a Release that occurs after the Effective Date.

14.2 Daily Operations . Lessee shall, at its sole cost and expense, comply with all Environmental Laws applicable to the Assets and the Improvements.

ARTICLE XV

FORCE MAJEURE

15.1 Excused Performance . Each Party shall be excused from performance hereunder and shall not be considered to be in default or be liable in damages or otherwise with respect to any obligation hereunder, except the obligation to pay money in a timely manner for liabilities actually incurred, if and to the extent that its failure of, or delay in, performance is due to an occurrence of Force Majeure, provided that:

(a) Such Party gives the other Party written notice describing the particulars of the occurrence causing the Force Majeure, including the expected duration, as soon as is reasonably practicable;

(b) The suspension of performance is of no greater scope and of no longer duration than is reasonably required by the occurrence of the Force Majeure;

(c) The Party affected by the occurrence of Force Majeure shall act diligently and use reasonable efforts to remedy or remove the same and to mitigate the effects thereof, provided that such Party shall not be required to settle any labor dispute on unfavorable terms;

(d) No obligations of the Party which arose before the occurrence of Force Majeure causing the suspension of performance are excused as a result of the occurrence; and

(e) When the affected Party is able to resume performance of its obligations under this Lease, such Party shall give the other Party written notice to that effect and shall promptly resume performance hereunder.

15.2 Burden of Proof . If the Parties are unable in good faith to agree there has been an occurrence of Force Majeure, the Party claiming Force Majeure shall have the burden of proof as to whether there was an occurrence of Force Majeure.

ARTICLE XVI

NOTICES

16.1 Methods of Notice . Unless otherwise specifically provided to the contrary in this Lease, all notices, instructions, requests, correspondence or other communications permitted or required to be given under this Lease shall be in writing and shall be deemed to be effective upon delivery and receipt as follows: (a) upon delivery when being delivered by hand to an authorized representative of the Party to whom directed; (b) upon delivery when delivered by United States certified mail, postage prepaid, return receipt requested, to the address of the receiving Party set forth below; (c) upon delivery when delivered by overnight delivery service, charges prepaid, to the address of the receiving Party set forth below; and (d) when faxed (with confirmation of receipt) to the facsimile number of the receiving Party shown in Section 16.2 below.

16.2 Notice Addresses .


(a)	If to Lessee, to:

Phillips 66 Partners Holdings LLC

3010 Briarpark Drive

Houston, TX 77042

Attn:

(b) If to Lessor, to:

Phillips 66 Company

3010 Briarpark Drive

Houston, TX 77042

Attn:

16.3 Change of Address . Each Party may change its address at any time by giving written to the other Party in accordance with this Article XVI.

ARTICLE XVII

GENERAL PROVISIONS

17.1 Estoppel Certificate . Lessor and Lessee each agree that from time to time, upon not less than fifteen (15) days’ prior written notice from the other Party, to execute, acknowledge and deliver to the other Party a statement in writing certifying and stating (a) that this Lease is unmodified and in full force and effect, or if there have been modifications, that the Lease is in full force and effect as modified and stating such modifications, (b) the dates to which the rent and additional rent have been paid and the current amount of the rent and additional rent, (c) whether or not, to the best knowledge of the signer, the other Party is in default in keeping, observing or performing any term, covenant, or condition contained in this Lease and, if in default, specifying each such default, (d) whether the signing party currently has any claim against the other Party under this Lease and, if so, the nature and the dollar amount, if any, of such claim, (e) whether there exist any offsets or defenses against enforcement of any of the terms of this Lease upon the part of the signing party to be performed, and, if so, specifying the same, and (f) such further information with respect

to this Lease as the other Party may reasonably request, it being intended that any statement delivered pursuant to this Section 17.1 shall be binding on the signing Party and may be relied upon by the other Party, any prospective purchaser of the Premises or any prospective mortgagee.

17.2 Severability . Every provision of this Lease is severable. If any term or provision hereof is held to be illegal, invalid or unenforceable for any reason by any duly constituted court, agency or tribunal, the legality, validity, or enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

17.3 Captions . The table of contents, section headings and other captions contained in this Lease are for reference purposes only and do not interpret, define or limit the scope, extent or intent of this Lease or any provision hereof.

17.4 Amendments . No change, amendment or modification of this Lease shall be valid or binding upon the Parties unless such change, amendment or modification shall be in writing and duly executed by both Parties.

17.5 Waivers . Any failure of either Party to enforce any of the provisions of this Lease or to require compliance with any of its terms at any time during the Term of this Lease, shall in no way affect the validity of this Lease, or any part hereof, and shall not be deemed a waiver of any of the rights of such Party thereafter to enforce any and each such provision or of any subsequent breach by the other Party of the same or any other provision. Each Party’s consent to or approval of any act shall not be deemed to render unnecessary the obtaining of such Party’s consent to or approval of any subsequent act by the other Party. The acceptance of rent hereunder by Lessor shall not be a waiver of any preceding breach by Lessee of any provision hereof, other than the failure of Lessee to pay the particular rent so accepted, regardless of Lessor’s knowledge of such preceding breach at the time of acceptance of such rent. Any consent or approval given pursuant to this Lease shall be limited to its express terms and shall not otherwise increase the obligations of the Party giving such consent or approval or otherwise reduce the obligations of the Party receiving such consent or approval.

17.6 Recording . Lessee shall be permitted to record this Lease or a memorandum thereof without Lessor’s prior written consent, and Lessor shall execute this Lease in recordable form or a memorandum hereof in recordable form. Upon termination of this Lease, Lessee agrees to execute a memorandum acknowledging such termination. All recording costs shall be borne by Lessee.

17.7 Holding Over . This Section 17.7 is made expressly subject to Lessee’s rights set forth in this Lease to remove its Assets and Improvements from the Premises, to restore the surface of the Premises and to perform any required environmental remediation under this Lease upon the termination or expiration of this Lease, and the exercise of such rights shall not be deemed to constitute a holdover under this Section 17.7. If Lessee remains in possession of the Premises or any part thereof after the expiration of the Term hereof without the express written consent of Lessor, such occupancy shall be a tenancy from month to month at a rental rate to be determined at the time of said termination based on actual fair market value per month plus additional rent and all other charges payable hereunder, and upon all the terms hereof applicable to the month to month tenancy.

17.8 Cumulative Remedies . No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity.

17.9 Binding Effect; Choice of Law . This Lease shall bind and inure to the benefit of the parties, their successors and assigns. This Lease shall be governed by, construed and enforced in accordance with the laws of the State of New Jersey, including with respect to matters of construction, validity and performance, without giving effect to any choice of law rules that may direct the application of the laws of another jurisdiction.

17.10 Subordination . This Lease shall be superior in interest to any ground lease, mortgage, deed of trust, or any other hypothecation for security now or hereafter placed upon the real property of which the Premises are a part and to any and all advances made on the security thereof and to all renewals, modifications, consolidation, replacements and extensions thereof.

17.11 Signs and Fences . Lessee shall be permitted to place any sign upon the Premises and/or erect a fence around all or any portion of the Premises without Lessor’s prior written consent, provided that any such sign or fence shall comply with all Legal Requirements. Lessee shall be permitted to place any sign upon the Refinery Lands with the Lessor’s prior written consent, which consent shall not be unreasonably withheld, delayed or conditioned.

17.12 No Broker . Lessor and Lessee each warrant and represent to the other that no broker was involved in the negotiation and/or consummation of this Lease. Lessor and Lessee each agrees to indemnify, defend and hold the other harmless from and against any claims, liabilities, costs, damages and expenses (including reasonable attorneys’ fees) arising out of or connected with a breach of the foregoing warranty and representation.

17.13 Records and Audit . Lessor shall maintain a true and correct set of records pertaining to any bills, statements or invoices sent to Lessee under this Lease and all transactions related thereto. Lessor further agrees to retain all such records for a period of not less than five (5) years after the date of such bill, statement or invoice. Any representative or representatives authorized by Lessee may audit, during reasonable business hours, any and all such records at any time or times during the Term of this Lease and during the five (5) year period following its termination or expiration. The foregoing obligations in this Section 17.13 shall survive the termination or expiration of this Lease.

17.14 Counterparts . This Lease may be signed in any number of counterparts and each counterpart shall represent a fully executed original as if signed by both Parties.

17.15 Confidentiality . During the Term of this Lease, it may become necessary or desirable, from time to time, for either Party to provide or disclose to the other Party non-public information that is either confidential or proprietary. The disclosing Party may orally request such information to be kept confidential if such information is not in a written format, and in such case shall identify and confirm such confidential information in writing to the other Party no later than fifteen (15) days after such disclosure. If the confidential or proprietary information is in a written format, the disclosing Party shall label such information as either confidential or proprietary. The other Party shall not reproduce, copy, use or disclose (except when required by Legal Requirements) any such information in whole or in part to a third party for any purpose without the consent of the disclosing Party. The other Party shall restrict the internal disclosure of any such confidential or proprietary information to only those employees, officers and directors who have a "need to know" such information, and shall restrict those individuals from disclosing, using or permitting the disclosure of such information. In the event the other Party is required by Legal Requirements to disclose any such confidential or proprietary information, the other Party shall cooperate with the disclosing Party to minimize the amount of such information furnished. At the specific request of the disclosing Party, the other Party shall endeavor to secure the agreement of the receiving Person to maintain specified portions of such information in

confidence. In the case of any disclosure of any such confidential or proprietary information, whether or not such disclosure is permitted by this Section 17.15, the other Party shall promptly give written notice thereof to the disclosing Party.

17.16 Further Assurances . Each Party agrees to take or cause to be taken such further actions to execute, deliver and file all further documents and instruments, and to take any further action that may be reasonably necessary or requested in order to fully effectuate the purposes, terms, conditions and intent of this Lease.

17.17 Survival . Notwithstanding any provision of this Lease to the contrary, the expiration or other termination of this Agreement shall not relieve the Parties of obligations that by their nature should survive such expiration or termination, whether or not specifically stated herein, including any indemnities, payment obligations, confidentiality, audit rights, and dispute resolution provisions.

IN WITNESS WHEREOF, this Lease has been signed on behalf of each of the Parties hereto on the date or dates shown below.

LESSOR:



PHILLIPS 66 COMPANY
By:	/s/ T.G. Taylor
	T.G. Taylor
	President

LESSEE:



PHILLIPS 66 PARTNERS HOLDINGS LLC
By:	Phillips 66 Partners LP, Sole Member of Phillips 66 Partners Holdings LLC
By:	Phillips 66 Partners GP, LLC, General Partner of Phillips 66 Partners LP
By:	/s/ J.T. Liberti
	J.T. Liberti
	Vice President and Chief Operating Officer

EXHIBIT A TO THE LEASE

LEGAL DESCRIPTION OF THE LEASED PROPERTY

TRACT 1

DESCRIPTION OF A RAIL TERMINAL PARCEL WITHIN LOT 42 IN BLOCK 580, SITUATED IN THE CITY OF LINDEN, COUNTY OF UNION AND STATE OF NEW JERSEY, MORE PARTICULARLY DESCRIBED AS FOLLOWS:

Beginning at a capped iron pin, set this survey, having a New Jersey State Plane Coordinate value of North 650,302.7787, East 565,416.6447, said iron pin being located, South 11 degrees 47 minutes 17 seconds West, a distance of 89.62 feet from the point of beginning of Lot 42 in Block 580 as described in Deed Book 5905 at Page 413, filed in the Union County Clerk’s Office on May 7, 2012, and from said capped iron pin running; thence.


1.	South 42 degrees 00 minutes 21 seconds East, a distance of 584.75 feet to a capped iron pin, set this survey; thence


2.	South 66 degrees 57 minutes 40 seconds West, a distance of 156.53 feet to a capped iron pin, set this survey; thence


3.	South 43 degrees 34 minutes 33 seconds West, a distance of 1,237.63 feet to a capped iron pin, set this survey; thence


4.	South 46 degrees 18 minutes 24 seconds East, a distance of 200.18 feet to a capped iron pin, set this survey; thence


5.	South 55 degrees 58 minutes 11 seconds West, a distance of 328.18 feet to a capped iron pin, set this survey marking the northwest corner of Lot 43 in Block 580; thence


6.	Along the westerly line of said Lot 43, South 5 degrees 11 minutes 56 seconds West, a distance of 300.00 feet to a capped iron pin, set this survey marking the southwest corner of said Lot 43 and in the northerly line of Lot 30 in Block 580, now or formerly the Central Railroad of New Jersey also known as Conrail; thence


7.	Along the northerly line of said Lot 30, North 84 degrees 48 minutes 04 seconds West, a distance of 1,003.07 feet to a point; thence


8.	Leaving said line of Lot 30 and through said Lot 42, passing over a capped iron pin set at 13.29 feet from the onset of this course, North 72 degrees 00 minutes 29 seconds East, a distance of 251.37 feet to a capped iron pin, set this survey; thence


9.	North 70 degrees 51 minutes 27 seconds East, a distance of 55.33 feet to a capped iron pin, set this survey; thence


10.	North 43 degrees 59 minutes 10 seconds, a distance of 1,572.93 feet to a capped iron pin, set this survey; thence


11.	North 46 degrees 17 minutes 22 seconds West, a distance of 341.47 feet to a capped iron pin, set this survey; thence


12.	North 44 degrees 33 minutes 37 seconds East, a distance of 539.66 feet to a capped iron pin, set this survey; thence


13.	South 46 degrees 26 minutes 41 seconds East, a distance of 57.24 feet to a capped iron pin, set this survey; thence


14.	North 45 degrees 05 minutes 58 seconds East, a distance of 127.31 feet to a capped iron pin, set this survey; thence


15.	North 78 degrees 00 minutes 48 seconds East, a distance of 114.48 feet to the point or place of Beginning.

Subject to any and all existing easements and restrictions of record.

Containing 1,140,178 square feet or 26.1749 acres of land more or less.

This description prepared in accordance with a survey entitled “Boundary and Easement Survey, Bayway Refinery, Block 580 Lot 42, City of Linden, Union County, New Jersey” prepared by Keller & Kirkpatrick, Inc., Morris Plains, New Jersey, dated October 20, 2014.

TRACT 2

DESCRIPTION OF A STORMWATER DETENTION PARCEL WITHING LOT 42 IN BLOCK 580, SITUATE IN THE CITY OF LINDEN, COUNTY OF UNION, AND STATE OF NEW JERSEY, MORE PARTICULARLY DESCRIBED AS FOLLOWS:

Beginning at a capped iron pin, set this survey, having a New Jersey State Plane Coordinate value of North 649,171.1960, East 565,876.5700, said iron pin being located North 56 degrees 23 minutes 12 seconds West, a distance of 117.70 feet from the beginning of the Fourth Course of Lot 42 in Block 580 as described in Deed Book 5905 at Page 413, as filed in the Union County Clerk’s Office on May 7, 2012, said beginning of the Fourth Course also marks an angle point in the westerly line of Lower Road opposite the intersection with Tremley Point Road, and from said capped iron pin running; thence


1.	Through said Lot 42 the following seven (7) courses, South 45 degrees 08 minutes 37 seconds West, a distance of 453.95 feet to a capped iron pin, set this survey; thence


2.	South 68 degrees 35 minutes 02 seconds West, a distance of 42.48 feet to a capped iron pin, set this survey; thence


3.	South 53 degrees 20 minutes 36 seconds West, a distance of 71.82 feet to a capped iron pin, set this survey; thence


4.	South 77 degrees 04 minutes 16 seconds West, a distance of 59.33 feet to a capped iron pin, set this survey; thence


5.	North 44 degrees 35 minutes 26 seconds West, a distance of 202.00 feet to a capped iron pin, set this survey; thence


6.	North 44 degrees 43 minutes 44 seconds East, a distance of 612.84 feet to a capped iron pin, set this survey; thence


7.	South 44 degrees 59 minutes 08 seconds East, a distance of 264.95 feet to the point or place of beginning.

Subject to any and all existing easements and restrictions of record.

Containing 157,186 square feet or 3.6085 acres of land more or less.

ATTACHMENT A-1

PLAT OF THE PREMISES

ATTACHMENT A-2

TAX PARCEL MAP

EXHIBIT B TO THE LEASE

PERMITTED ENCUMBRANCES


1.	The lien of taxes and assessments for the current year and subsequent years;


2.	Taxes or special assessments that are not shown as existing liens by the public records;


3.	Matters that would be shown by an accurate survey and inspection of the property; and


4.	All covenants, restrictions, conditions, easements, reservations, rights-of-way, and other matters of record, to the extent valid, subsisting and enforceable.


5.	All covenants, restrictions, conditions, easements, reservations, and rights-of-way, records of which are in Grantee’s custody or control, to the extent valid, subsisting and enforceable.

EXHIBIT C TO THE LEASE

LESSOR RESERVED EASEMENTS AND RIGHTS-OF-WAY

1. NONE

Exhibit 10.6

ASSIGNMENT, ASSUMPTION AND MODIFICATION OF NOTE

THIS ASSIGNMENT, ASSUMPTION AND MODIFICATION OF NOTE (“ Assumption ”) is dated effective as of December 1, 2014 by and among Phillips 66 Company, a Delaware corporation (“ Original Borrower ”), Phillips 66 Partners LP, a Delaware limited partnership (“ New Borrower ”), and Phillips Gas Company Shareholder, Inc., a Delaware corporation (“ Lender ”).

WITNESSETH:

WHEREAS, Original Borrower executed and delivered to Lender a Term Loan Note dated October 23, 2014 in the original principal amount of Two Hundred Forty Four Million and No/100’s Dollars ($244,000,000.00) (the “ Original Note ”), which Original Note is attached hereto as Exhibit A ;

WHEREAS, as partial consideration for the contribution by Original Borrower to New Borrower of certain assets, New Borrower will, with Lender’s consent, assume Original Borrower’s obligations and liabilities under the Original Note, as amended hereby;

NOW THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Original Borrower hereby irrevocably assigns to New Borrower, without recourse to Original Borrower, all of Original Borrower’s obligations under the Original Note, as amended by this Assumption. New Borrower hereby assumes, as its direct and primary obligation, all of Original Borrower’s obligations under the Original Note, as amended by this Assumption, and agrees to pay Lender the outstanding principal balance due on, and all interest which accrues on and in accordance with the terms of, the Original Note as amended hereby. From and after the date hereof, all references in the Original Note to “Borrower” as defined in the Original Note shall be deemed to be a reference to New Borrower as the Borrower.

2. The parties hereto agree that, as of the date hereof (a) the outstanding principal balance on the Original Note is Two Hundred Forty-Four Million and No/100’s Dollars ($244,000,000.00) and (b) there is no “Event of Default” (as defined under the Original Note) or any event which, with the passage of time or the giving of notice, or both, would become an “Event of Default.”

3. The Original Note is amended as follows:


(a)	Subsection (c) under “Event of Default” on page 2 is hereby amended in its entirety to read as follows:

Exhibit 10.6

“ (c)(i) Phillips 66, a Delaware corporation, ceases to own, directly or indirectly, a majority of the equity interests of, or ceases to Control, the Borrower’s general partner (the “ General Partner ”); or (ii) the General Partner ceases to be the sole general partner of, or ceases to Control, the Borrower. “ Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a person or entity, whether through the ability to exercise voting power, by contract or otherwise.”


(b)	A new paragraph is added at the end of the Original Note as follows:

“It is hereby understood and agreed that the General Partner shall have no liability, as general partner or otherwise, for the payment of any amount owing or to be owing hereunder. Lender agrees for itself and its successors and assigns that no claim arising against Borrower under this Note shall be asserted against the General Partner or its assets. Notwithstanding the foregoing, nothing in this paragraph shall be construed so as to prevent Lender from commencing any action, suit or proceeding with respect to or causing legal papers to be served upon the General Partner for the purpose of obtaining jurisdiction over Borrower.”


(c)	The Original Note as amended hereby will be guaranteed by a guaranty to be executed and delivered by the Original Borrower as of the date hereof in the form attached hereto as Exhibit B (the “ Guaranty ”).


4.	The parties hereto intend that, except as provided in this Assumption, this Assumption shall not release, diminish, impair, reduce, or, except as expressly stated herein, otherwise affect any of the obligations under the Original Note. The parties hereto agree to take such further action as may be necessary or appropriate to effect the purposes of this Assignment.


5.	Lender hereby releases the Original Borrower from its obligations under the Original Note, as amended hereby, and agrees that Original Borrower is no longer a “Borrower” under the Original Note. From and after the date hereof, Original Borrower will be liable only as guarantor under the Guaranty.


6.	This Assumption and the rights and obligations of the parties under this Assumption shall be governed by and construed and interpreted in accordance with the laws of the State of Texas, without giving effect to the principles of conflicts of laws of that state. This Assumption is binding on and shall inure to the benefit of the signatories hereto

Exhibit 10.6

and their respective successors and assigns. This instrument may be executed in one or more counterparts, including electronic, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. In the event that any signature is delivered by facsimile or other electronic transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.


7.	THIS ASSUMPTION REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES HERETO.

[ Remainder of Page Intentionally Left Blank. Signature Pages Follow.]

Exhibit 10.6

ORIGINAL BORROWER:



PHILLIPS 66 COMPANY
By:	/s/ Brian R. Wenzel
	Brian R. Wenzel
	Vice President and Treasurer

NEW BORROWER:



PHILLIPS 66 PARTNERS LP
By:	Phillips 66 Partners GP, LLC, General Partner of Phillips 66 Partners LP
By:	/s/ Brian R. Wenzel
	Brian R. Wenzel
	Vice President and Treasurer

LENDER:



PHILLIPS GAS COMPANY SHAREHOLDER, INC.
By:	/s/ Brian R. Wenzel
	Brian R. Wenzel
	Vice President and Treasurer

EXHIBIT A

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. IT MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT.

TERM LOAN NOTE

$244,000,000.00 October 23, 2014

For value received, the undersigned Phillips 66 Company, a Delaware corporation, with principal offices at 3010 Briarpark Drive, Houston, TX 77042 (“ Borrower ”), hereby promises to pay to the order of Phillips Gas Company Shareholder, Inc., a Delaware corporation, with principal offices at 3010 Briarpark Dr., Houston, TX 77042 (“ Lender ”), the principal amount of Two Hundred Forty Four Million and No/100’s Dollars ($244,000,000.00) (the “ Loan ”) all as required by this Term Loan Note (this “ Note ”). The Loan is not revolving and any amounts repaid may not be reborrowed by Borrower.

Subject to the terms and conditions of this Note, Borrower agrees to repay to Lender the aggregate outstanding principal balance of the Loan, together with accrued and unpaid interest thereon as set forth below, on December 1, 2019 (the “ Maturity Date ”) or such earlier date upon which the maturity of the Loan may have been accelerated pursuant to the terms hereof.

The Loan shall bear interest on the unpaid principal balance, from the date of borrowing to the date of payment at the rate of three and one/tenth percent (3.1%) per annum. Such interest shall be (i) calculated based upon a year of 360 days for the actual number of days elapsed and (ii) paid, as applicable, (A) quarterly in arrears on the first day following the last day of each calendar quarter, beginning on April 1, 2015, and (B) on the Maturity Date; provided that Borrower shall make an interest payment on January 2, 2015 for the stub interest period beginning on December 1, 2014 and ending on December 31, 2014. If Borrower fails to pay any principal or interest payment as and when due, any amount not paid shall bear interest at the rate of five and one/tenth percent (5.1%) per annum instead of the interest rate stated above, from the date due to the date on which such amount is paid in full.

Notwithstanding the foregoing or any other provision of this Note, interest on the Loan and other amounts due hereunder at any time shall be limited to the highest lawful rate that may be charged under the laws of the State of Texas at such time (the “ Highest Lawful Rate ”). It is the intention of Lender and Borrower to conform strictly to any applicable usury laws. Accordingly, notwithstanding any term of this Note to the contrary, if Lender contracts for, charges, or receives

any consideration that constitutes interest in excess of the Highest Lawful Rate, then any such excess shall be canceled automatically and, if previously paid, shall at Lender's option be applied to the outstanding amount of the Loan or refunded to Borrower. In determining whether any interest exceeds the Highest Lawful Rate, such interest shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread in equal parts throughout the term of this Note.

Lender shall record in its records the amount of all payments of principal and interest on the Loan. Any failure of Lender to make such recordings, however, shall not affect Borrower's repayment obligations. Lender's records shall be presumptive evidence of the principal and interest owed by Borrower, absent manifest error.

All payments made under this Note shall be made without setoff or counterclaim not later than 5:00 P.M. (Houston, Texas, time) on the day when due in lawful money of the United States of America to Lender at its address set forth above or such other location as Lender shall designate in writing to Borrower. Whenever any payment to be made under this Note shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of the payment of interest. “ Business Day ” means a day other than a Saturday, Sunday or other day on which commercial banks in Houston, TX are authorized or required by law to close.

If any one or more of the following events (each, an “ Event of Default ”) shall occur and be continuing:


(a)	Borrower shall fail to pay (i) any principal of the Loan as and when due in accordance with the terms hereof; (ii) any interest on the Loan within five Business Days after any such interest becomes due in accordance with the terms hereof; or (iii) any other amount payable hereunder, within ten Business Days after any such other amount becomes due in accordance with the terms hereof; or

(b)

Borrower shall (i) apply for or consent to the appointment of a receiver, trustee, liquidator or custodian or the like of itself or of all or a substantial part of its property, (ii) become unable, admit in writing its inability or fail to pay its debts generally as they become due, (iii) make a general assignment for the benefit of creditors, (iv) be adjudicated a bankrupt or insolvent, (v) commence a voluntary case under the federal bankruptcy laws of the United States of America or file a voluntary petition or answer seeking reorganization, an arrangement with creditors or an order for relief or seeking to take advantage of any insolvency law or file an answer admitting the material allegations of a petition filed against it in any bankruptcy, reorganization or insolvency proceeding, or action shall be taken by it for the purpose of effecting any of the foregoing, or (vi) if without the application, approval or consent of Borrower, a proceeding shall be instituted in any court of competent jurisdiction, under any law relating to bankruptcy, insolvency, reorganization or relief of

debtors, seeking in respect of Borrower an order for relief or an adjudication in bankruptcy, reorganization, dissolution, winding up, liquidation, a composition or arrangement with creditors, a readjustment of debts, the appointment of a trustee, receiver, liquidator or custodian or the like of Borrower or of all or any substantial part of its assets, or other like relief in respect thereof under any bankruptcy or insolvency law, and, if such proceeding is being contested by Borrower in good faith, the same shall (A) result in the entry of an order for relief or any such adjudication or appointment or (B) continue undismissed or unstayed for any period of 90 consecutive days; or


(c)	Phillips 66 ceases to own, directly or indirectly, a majority of the equity interests of, or ceases to Control, the Borrower. “ Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a person or entity, whether through the ability to exercise voting power, by contract or otherwise;

then, and in any such event, (A) if such event is an Event of Default specified in clauses (iv), (v) or (vi) of clause (b) above, automatically the Loan (with accrued interest thereon) shall immediately become due and payable and (B) if such event is any other Event of Default, Lender may by notice of default to Borrower, declare the Loan (with accrued interest thereon) to be due and payable forthwith, whereupon the same shall immediately become due and payable. Presentment, demand, protest, notice of intent to accelerate, notice of acceleration, and all other notices of any kind are hereby expressly waived by Borrower.

No failure or delay by Lender to exercise any right or power shall operate as a waiver thereof, nor shall any partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such right or power preclude any other or further exercise of such right or power. No waiver of any right or power of Lender in this Note shall be effective unless given in writing signed by Lender. This Note may not be amended or modified except by a writing signed by the parties hereto. All notices under this Note shall be in writing and delivered to the parties hereto at their respective principal offices stated at the beginning hereof.

Borrower shall reimburse Lender on demand for any fees or other expenses reasonably incurred by Lender in connection with the enforcement of this Note and the collection of the Loan and any other amounts due Lender hereunder.

This Note shall be binding on and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Lender may assign its rights and obligations under this Note without Borrower’s consent. Borrower may not assign this Note or delegate any of its duties hereunder without the express written consent of Lender.

Borrower expressly represents and warrants to Lender that (i) no promise or agreement not expressed in this Note has been made by Lender, (ii) Borrower is not relying upon any statement

or representation of Lender and (iii) Borrower is relying on its own judgment and has been represented by legal counsel other than Lender in this matter.

This Note shall be construed in accordance with and governed by the laws of the State of Texas. BORROWER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE OR THE TRANSACTIONS CONTEMPLATED HEREBY.

If any term or provision of this Note shall be determined to be illegal or unenforceable, all other terms and provisions of this Note shall nevertheless remain effective and shall be enforced to the fullest extent permitted by applicable law.

Borrower agrees (a) to furnish upon request to Lender such further information, (b) to execute and deliver to each other such other documents, and (c) to do such other acts and things, all as Lender may reasonably request for the purpose of carrying out the intent of this Note.

THIS NOTE REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES HERETO.

[Remainder of page intentionally blank; signature page follows]

Executed as of the day and year first above written.

BORROWER:



PHILLIPS 66 COMPANY
By:	/s/ Brian R. Wenzel
	Brian R. Wenzel
	Vice President and Treasurer

EXHIBIT B

GUARANTY

This Guaranty (“ Guaranty ”) dated effective as of December 1, 2014, is made by Phillips 66 Company, a Delaware corporation (“ Guarantor ”), in favor of Phillips Gas Company Shareholder, Inc., a Delaware corporation (“ Guaranteed Party ”).

WITNESSETH:

WHEREAS, Phillips 66 Partners LP, a Delaware limited partnership (“ PSXP ”), is an indirect subsidiary of Guarantor and a publicly traded master limited partnership; and

WHEREAS, Guaranteed Party is a wholly-owned subsidiary of Guarantor and is currently owed $244,000,000.00 by Guarantor pursuant to that certain Term Promissory Note dated as of October 23, 2014 ( as amended, modified, restated or renewed, the “ Note ”);

WHEREAS, as partial consideration for the contribution by Guarantor to PSXP of certain assets, PSXP will, with Guaranteed Party’s consent, assume Guarantor’s obligations and liabilities under the Note;

WHEREAS, Guaranteed Party’s consent to such assignment and assumption is subject to the condition that Guarantor execute this Guaranty in favor of Guaranteed Party;

NOW THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Guarantor agrees as follows:

1. Guaranty . Guarantor unconditionally and absolutely guarantees, as a continuing guaranty of payment and not merely collection, the payment of all monies owed by PSXP to Guaranteed Party that become due and payable in accordance with the terms of the Note (the “ Guaranteed Obligations ”) plus Guaranteed Party’s reasonable costs and expenses, including reasonable attorney’s fees, incurred by Guaranteed Party to collect the underlying indebtedness or to enforce any of its rights hereunder (the “ Collection Costs ”). If Guaranteed Party notifies Guarantor in writing by proper notice that Guaranteed Party is drawing on this Guaranty for the payment of all or any part of the Guaranteed Obligations, Guarantor shall pay or cause to be paid the amount of such Guaranteed Obligations to Guaranteed Party within five Business Days after receipt of such notice. “ Business Day ” means a day other than a Saturday, Sunday or other day on which commercial banks in Houston, TX are authorized or required by law to close.

2. Limit . Guarantor’s liability under this Guaranty is specifically limited to the payment of the Guaranteed Obligations that PSXP is expressly required to pay under the Note (even if such Guaranteed Obligations are deemed to be damages), plus any Collection Costs. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS GUARANTY, GUARANTOR SHALL NOT BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES, BY STATUTE, IN TORT OR CONTRACT, UNDER ANY INDEMNITY PROVISION OR OTHERWISE EXCEPT TO THE EXTENT EXPRESSLY PROVIDED FOR IN THE NOTE TO BE DUE FROM PSXP TO GUARANTEED PARTY.

3. Term . This Guaranty shall terminate on full and final payment of the Guaranteed Obligations.

4. Nature of Guaranty . Guarantor’s obligations hereunder with respect to any Guaranteed Obligation shall not be limited, diminished, or otherwise affected by the existence, validity, enforceability, perfection, release, or extent of any collateral for such Guaranteed Obligations. Guaranteed Party will not be obligated to file any claim relating to the Guaranteed Obligations owing to it in the event that PSXP becomes subject to a bankruptcy, reorganization, or similar proceeding, and the failure of Guaranteed Party to so file shall not affect Guarantor’s obligations hereunder. If after receipt from PSXP of any payment of all or any part of the Guaranteed Obligations, Guaranteed Party is compelled to surrender or voluntarily surrenders such payment to any person because such payment is or may be avoided, invalidated, set aside, or determined to be a preference, fraudulent conveyance, or impermissible set-off under bankruptcy, insolvency, reorganization or similar laws affecting creditor’s rights, then the Guaranteed Obligations or part thereof intended to be satisfied shall be reinstated or returned by Guaranteed Party, and this Guaranty shall continue to be effective as if such payment had not been made or value received notwithstanding any revocation thereof.

5. Representations and Warranties . Guarantor represents and warrants to Guaranteed Party on the date hereof that (a) it is duly organized and validly existing and in good standing under the laws of the jurisdiction in which it was organized and has the power and authority to execute, deliver and perform this Guaranty; (b) the execution, delivery and performance of this Guaranty require no action by, or filing with, any governmental body or any court having jurisdiction over Guarantor; and (c) this Guaranty constitutes the legal, valid and binding obligations of Guarantor, enforceable against Guarantor in accordance with its terms, subject, as to enforceability only, to applicable bankruptcy, moratorium, insolvency or similar laws affecting the rights of creditors generally and to general principles of equity.

6. Subrogation . Subject to the second sentence of this paragraph, Guarantor waives its right to be subrogated to the rights of Guaranteed Party against PSXP with respect to any Guaranteed Obligations paid by Guarantor until all Guaranteed Obligations have been paid in full to Guaranteed Party and Guarantor has fully satisfied all of Guarantor’s obligations under this Guaranty. If Guarantor shall make any payment to Guaranteed Party pursuant to this Guaranty, it shall (to the

extent of the payment(s) so made) be subrogated to Guaranteed Party’s rights against PSXP; provided, however, that Guarantor agrees that it shall take no action to exercise such rights until the payment in full to Guaranteed Party of all Guaranteed Obligations of PSXP under the Note.

7. Amendment of Guaranty . No term or provision of this Guaranty shall be amended, modified, waived, or supplemented except in writing signed by Guarantor and Guaranteed Party.

8. Waivers . Guarantor hereby waives (a) notice of acceptance of this Guaranty; (b) presentment and demand concerning the liabilities of Guarantor; (c) any right to require that any action or proceeding be brought against PSXP or any other person, or to require that Guaranteed Party seek enforcement of any performance against PSXP or any other person, prior to any action against Guarantor under the terms hereof; (d) notice of any modifications, renewals, replacements, or extensions of the Note; (e) notice of any extension of time for the payment of sums due and payable to Guaranteed Party; (f) with respect to any notes or evidences of indebtedness received by Guaranteed Party from PSXP, notice of presentment, demand for payment or notice of protest; and (g) notice of any dishonor or default by, or disputes with, PSXP. Except as to applicable statutes of limitation, no delay of Guaranteed Party in the exercise of, or failure to exercise, any rights hereunder shall operate as a waiver of such rights or a release of Guarantor from any obligations hereunder. Guarantor consents to the renewal, compromise, extension, acceleration or other changes in the time of payment or other terms of the Guaranteed Obligations, any acceptance or release of collateral, or any changes or modifications to the terms of the Note, without in any way releasing or discharging Guarantor from its obligations hereunder.

9. Notice . Any notice, request, instruction, correspondence or other document to be given hereunder (herein collectively called “ Notice ”) shall be in writing and delivered personally or mailed by certified mail, postage prepaid and return receipt requested, or by facsimile, to Guarantor or to Guaranteed Party at their respective addresses set forth below. Notice given by personal delivery or mail shall be effective upon actual receipt. Notice given by facsimile 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. Guarantor and Guaranteed Party may change any address to which Notice is to be given to such party by giving Notice thereof as provided above.



If to Guaranteed Party: Phillips 66 Gas Shareholder, Inc. Attn: Vice President and Treasurer 3250 Briarpark Dr., RW-01-1058 Houston, TX 77042 Facsimile: 918-977-9634	If to Guarantor: Phillips 66 Company Attn: Vice President and Treasurer 3250 Briarpark Dr., RW-01-1058 Houston, TX 77042 Facsimile: 918-977-9634

10. Assignability . This Guaranty (a) may be assigned by Guaranteed Party without Guarantor’s consent and (b) may not be assigned by Guarantor without the prior written consent of Guaranteed Party.

11. GOVERNING LAW . THIS GUARANTY SHALL BE IN ALL RESPECTS GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

12. FINAL AGREEMENT . THIS GUARANTY REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES HERETO.

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PHILLIPS 66 COMPANY
By:	/s/ Brian R. Wenzel
	Brian R. Wenzel
	Vice President and Treasurer