CONTRIBUTION, CONVEYANCE AND ASSUMPTION AGREEMENT

by and among

PHILLIPS 66 COMPANY

PHILLIPS 66 PROJECT DEVELOPMENT INC.

PHILLIPS 66 PARTNERS GP LLC

and

PHILLIPS 66 PARTNERS LP

dated as of

October 11, 2016

TABLE OF CONTENTS

    

EXHIBITS AND SCHEDULES

CONTRIBUTION, CONVEYANCE AND ASSUMPTION AGREEMENT

This Contribution, Conveyance and Assumption Agreement (this “ Agreement ”) is made and entered into as of October 11, 2016 by and among Phillips 66 Company, a Delaware corporation (“ P66 Company ”), Phillips 66 Project Development Inc., a Delaware corporation (“ PDI ” and, together with P66 Company, the “ P66 Parties ”), Phillips 66 Partners GP LLC, a Delaware limited liability company (the “ General Partner ”), and Phillips 66 Partners LP, a Delaware limited partnership (the “ Partnership ”). P66 Company, PDI, the General Partner and the Partnership are sometimes referred to in this Agreement individually as a “ Party ” and collectively as the “ Parties .”

RECITALS :

WHEREAS, P66 Company owns, directly or indirectly, 100% of the limited liability company interests in each of: (a) Phillips Texas Pipeline Company Eagle 1 LLC, a Delaware limited liability company (“ Eagle 1 LLC ”), and (b) Phillips Texas Pipeline Company Eagle 2 LLC, a Delaware limited liability company (“ Eagle 2 LLC ” and, together with Eagle 1 LLC, the “ Contributed Entities ”), each of which is disregarded as an entity separate from P66 Company for U.S. federal income tax purposes;

WHEREAS, prior to the Effective Time (as defined below),(a) P66 Company or its Affiliates will convey (i) the Eagle Assets (as defined below) to Eagle 1 LLC and (ii) the Regulated Assets (as defined below) to Eagle 2 LLC and (b) P66 Company will convey 100% of the limited liability company interests in each of the Contributed Entities to PDI;

WHEREAS, prior to the Effective Time (as defined below), definitive conveyance documents will be entered into for the conveyances described in the second recital above, forms of which conveyance documents have been made available to the Partnership (collectively, the “ Prior Conveyances ”);

WHEREAS , PDI intends to contribute 100% of the limited liability company interests in each of the Contributed Entities to the Partnership in exchange for the consideration, and on the other terms and conditions, set forth in this Agreement; and

WHEREAS, on the Closing Date (as defined below), each of the events and transactions set forth in Section 2.1 below shall occur.

NOW, THEREFORE, in consideration of the mutual undertakings and agreements contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:

ARTICLE I

DEFINITIONS

Capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to such terms below:

“ 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 P66 Company, the term “Affiliate” shall not include any Group Member and (b) with respect to the Partnership Group, the term “Affiliate” shall not include P66 Company or any of its Subsidiaries (other than a Group Member).

“ Agreement ” has the meaning set forth in the preamble to this Agreement.

“ ASC 805-50 ” has the meaning set forth in Section 5.7(a) .

“ Assignment of Membership Interest ” means that certain Assignment of Membership Interest Agreement in substantially the form attached as Exhibit A hereto.

“ Assumed Liabilities ” has the meaning set forth in Section 2.4 .

“ Businesses ” means, collectively, the operations and business (a) as historically conducted by the P66 Parties and their Affiliates using the Contributed Assets and (b) as contemplated to be conducted, consistent with prudent industry practice, beginning on the Effective Time, by the Partnership and its Affiliates using the Contributed Assets.

“ Cap ” has the meaning set forth in Section 8.8(a) .

“ Cash Consideration ” has the meaning set forth in Section 2.2 .

“ Carrier ” means Phillips 66 Carrier LLC, a Delaware limited liability company.

“ Closing ” has the meaning set forth in Section 7.1 .

“ Closing Date ” has the meaning set forth in Section 7.1 .

“ Code ” means the Internal Revenue Code of 1986, as amended.

“ Commercial Agreements ” means, collectively, the Terminal Services Agreements and the Throughput and Deficiency Agreements.

“ Commission ” means the United States Securities and Exchange Commission.

“ Common Units ” has the meaning set forth in the Partnership Agreement.

“ Conflicts Committee ” has the meaning set forth in Section 3.6 .

“ Construction Costs ” means the costs associated with completing the capital expansion projects involving the Contributed Assets described on Schedule 2.5 .

“ Contract ” means any contract, commitment, instrument, undertaking, lease, note, mortgage, indenture, settlement, Permit or other legally binding agreement.

“ Contributed Assets ” means the Eagle Assets and the Regulated Assets, collectively.

“ Contributed Entities ” has the meaning set forth in the recitals to this Agreement.

“ Contributed Interests ” has the meaning set forth in Section 2.1(c) .

“ Control ” means, where used with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise, and the terms “Controlling” and “Controlled” have correlative meanings.

“ Damages ” has the meaning set forth in Section 8.1 .

“ Deductible ” has the meaning set forth in Section 8.8(a) .

“ Eagle Assets ” means each of the assets set forth under the heading “Eagle Assets” on Schedule 1.1(a) hereto.

“ Eagle 1 LLC ” has the meaning set forth in the recitals to this Agreement.

“ Eagle 2 LLC ” has the meaning set forth in the recitals to this Agreement.

“ Effective Time ” means 12:01 a.m. local time in Houston, Texas on the Closing Date, or such other time and date mutually agreed to by the Parties in writing.

“ Environmental Laws ” means any and all applicable federal, state and local laws and regulations and other legally enforceable requirements and rules of common law relating to the prevention of pollution or protection of human health or the environment or imposing liability or standards of conduct concerning any Hazardous Materials.

“ Excluded Liabilities ” has the meaning set forth in Section 2.5 .

“ Financial Advisor ” has the meaning set forth in Section 3.6 .

“ Financial and Operational Information ” has the meaning set forth in Section 3.6 .

“ Financial Statements ” has the meaning set forth in Section 5.7(b) .

“ Financing ” has the meaning set forth in Section 5.8 .

“ Fundamental Representations ” has the meaning set forth in Section 8.9(a) .

“ General Partner ” has the meaning set forth in the preamble to this Agreement.

“ General Partner Units ” has the meaning set forth in the Partnership Agreement.

“ Governmental Approval ” has the meaning set forth in Section 3.4 .

“ Governmental Authority ” means (a) the United States of America or any state or political subdivision thereof within the United States of America and (b) any court or any governmental or administrative department, commission, board, bureau or agency of the United States of America or of any state or political subdivision thereof within the United States of America.

“ GP Contribution ” has the meaning set forth in Section 2.1(a) .

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

“ Hazardous Material ” means (a) any “hazardous substance” as defined in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, (b) any “hazardous waste” as defined in the Resource Conservation and Recovery Act, as amended, (c) any petroleum or petroleum product, (d) any polychlorinated biphenyl and (e) any pollutant or contaminant or hazardous, dangerous or toxic chemical, material, waste or substance regulated under or within the meaning of any applicable Environmental Law.

“ Holdings ” has the meaning set forth in Section 2.1(d) .

“ Indemnity Claim ” has the meaning set forth in Section 8.3 .

“ Lease Agreements ” means, collectively, (a) that certain Lease Agreement with Option to Purchase relating to the lease of real property at the location of the Tremley Point Terminal and Linden Terminal, (b) that certain Lease Agreement with Option to Purchase relating to the lease of real property at the location of the Billings Crude Terminal, (c) that certain Lease Agreement with Option to Purchase relating to the lease of real property at the location of the Ponca City Terminal, and (d) that certain Lease Agreement with Option to Purchase relating to the lease of real property at the location of the Ponca Crude Terminal, each in substantially the form attached hereto as Exhibit B .

“ Liability ” or “ Liabilities ” means any direct or indirect liability, indebtedness, obligation, cost, expense, claim, loss, damage, deficiency, guaranty or endorsement of or by any Person, absolute or contingent, matured or unmatured, asserted or unasserted, accrued or unaccrued, due or to become due, liquidated or unliquidated.

“ Lien ” means any security interest, lien, deed of trust, mortgage, pledge, charge, claim, restriction, easement, encumbrance or other similar interest or right.

“ Litigation ” has the meaning set forth in Section 3.5 .

“ LP Contribution ” has the meaning set forth in Section 2.1(c) .

“ Material Adverse Effect ” means any change, circumstance, effect or condition that (a) is, or could reasonably be expected to be, materially adverse to the business, financial condition, assets, liabilities or results of operations of the Businesses, the Contributed Entities or the Contributed Assets, taken as a whole, or (b) materially adversely affects, or could reasonably be expected to materially adversely affect, P66 Company’s ability to satisfy its obligations under the Transaction Documents.

“ Material Contract ” means (a) any Contract relating to the capital expansion projects involving the Contributed Assets described on Schedule 2.5 , (b) any Contract relating to the ownership or operation of the Businesses or the ownership, use or operation of the Contributed Assets that, as of the date hereof, is reasonably expected to provide for revenues to or commitments of P66 Company or its Affiliates in an amount greater than $5,000,000 during any calendar year and (c) any other Contract (other than any Contract granting any Permits, servitudes, easements or rights-of-way) materially affecting the ownership or operation of the Businesses or the ownership, use or operation of the Contributed Assets, the loss of which could, individually or in the aggregate, have a Material Adverse Effect.

“ New Common Units ” has the meaning set forth in Section 2.2 .

“ New GP Units ” means a number of General Partner Units having an aggregate value equal to the amount required to maintain the General Partner’s 2% interest in the Partnership as of the Closing.

“ NYSE ” has the meaning set forth in Section 5.5 .

“ Omnibus Agreement ” means that certain Omnibus Agreement, dated effective July 26, 2013, as amended as of the date of this Agreement, by and among P66 Company, the Partnership, Carrier, Holdings, Pipeline and the General Partner.

“ Omnibus Agreement Amendment ” means that certain Fifth Amendment to the Omnibus Agreement in substantially the form attached as Exhibit C hereto.

“ Operational Services Agreement ” means that certain Operational Services Agreement, dated effective July 26, 2013, as amended through the date of this Agreement, by and among Carrier, Holdings and Pipeline.

“ Operational Services Agreement Amendment ” means that certain Fifth Amendment to the Operational Services Agreement in substantially the form attached as Exhibit D hereto.

“ Origination Services Agreement ” means that certain Gold Line Origination Services Agreement, as amended through the date of this Agreement, by and between Carrier and Pipeline.

“ Origination Services Agreement Amendment ” means that certain Amendment No. 1 to the Origination Services Agreement in substantially the form attached as Exhibit E hereto.

“ P66 Closing Certificate ” has the meaning set forth in Section 6.2(c) .

“ P66 Company ” has the meaning set forth in the preamble to this Agreement.

“ P66 Indemnitees ” has the meaning set forth in Section 8.1 .

“ P66 Parties ” has the meaning set forth in the preamble to this Agreement.

“ P66 Parties’ knowledge ,” “ knowledge of the P66 Parties ” and similar phrases means the knowledge of the P66 Parties after reasonable inquiry with respect to the particular matter in question.

“ Partnership ” has the meaning set forth in the preamble to this Agreement.

“ Partnership Agreement ” means that certain First Amended and Restated Agreement of Limited Partnership of Phillips 66 Partners LP, dated as of July 26, 2013, as amended by Amendment No. 1 to the First Amended and Restated Agreement of Limited Partnership of Phillips 66 Partners LP, dated as of March 1, 2016.

“ Partnership Closing Certificate ” has the meaning set forth in Section 6.3(c) .

“ Partnership Group ” means, collectively, the Partnership and its Subsidiaries, including, after the Closing, the Contributed Entities.

“ Partnership Indemnitees ” has the meaning set forth in Section 8.2 .

“ Partnership Material Adverse Effect ” means any change, circumstance, effect or condition that is, or could reasonably be expected to be, materially adverse to the business, financial condition, assets, liabilities or results of operations of the Partnership Group, taken as a whole.

“ Party ” or “ Parties ” has the meaning set forth in the preamble to this Agreement.

“ PDI ” has the meaning set forth in the preamble to this Agreement.

“ Permits ” means permits, tariffs, licenses, certificates, orders, approvals, authorizations, grants, consents, concessions, warrants, franchises and similar rights and privileges.

“ Permitted Liens ” has the meaning set forth in Section 3.9(b) .

“ Person ” means an individual or a corporation, firm, limited liability company, partnership, joint venture, trust, unincorporated organization, association, government agency or political subdivision thereof or other entity.

“ Pipeline ” means Phillips 66 Pipeline LLC, a Delaware limited liability company.

“ Post-Closing Settlement Obligation ” means an amount equal to the (a) aggregate revenues (including revenues generated from third parties) less (b) general and administrative expenses, operating and maintenance expense, taxes and interest (but excluding any Construction Costs), in each case, of the P66 Parties or their Subsidiaries attributable solely to the Contributed Assets with respect to the period beginning on October 1, 2016 and ending at the Effective Time with all of such revenues and expenses being determined in a manner consistent with the Financial and Operational Information. For purposes of this definition, all revenues attributable to volumes tendered by any P66 Party or any of its Affiliates for transportation on or terminaling at the Contributed Assets during such period shall be calculated based on the applicable tariff or fee included or referenced (as the case may be) in the applicable Commercial Agreement for such Contributed Asset.

“ Prior Conveyances ” has the meaning set forth in the recitals to this Agreement.

“ Regulated Assets ” means each of the assets set forth under the heading “Regulated Assets” on Schedule 1.1(a) hereto.

“ Securities Act ” has the meaning set forth in Section 3.13 .

“ Shared Services Agreement Amendment ” means that certain Amendment No. 1 to the Shared Services Agreement (Bayway) in substantially the form attached as Exhibit F hereto.

“ Shared Services Agreement ” means that certain Shared Services Agreement (Ponca Pump Station) in substantially the form attached as Exhibit G hereto.

“ Shared Services Agreement (Bayway) ” means that certain Shared Services Agreement (Bayway), dated effective December 1, 2014, as amended as of the date of this Agreement, by and between P66 Company and Holdings.

“ Subsidiary ” means, with respect to any Person, (a) a corporation of which more than 50% of the voting power of shares entitled (without regard to the occurrence of any contingency) to vote in the election of directors or other governing body of such corporation is owned, directly or indirectly, at the date of determination, by such Person, by one or more Subsidiaries of such Person or a combination thereof, (b) a partnership (whether general or limited) in which such Person or a Subsidiary of such Person is, at the date of determination, a general or limited partner of such partnership, but only if more than 50% of the 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.

“ Tax ” or “ Taxes ” means any federal, state, local or foreign income tax, ad valorem tax, excise tax, sales tax, use tax, franchise tax, real or personal property tax, transfer tax, gross receipts tax or other tax, assessment, duty, fee, levy or other governmental charge, together with and including, any and all interest, fines, penalties, assessments, and additions to Tax resulting from, relating to, or incurred in connection with any of those or any contest or dispute thereof.

“ Tax Authority ” means any Governmental Authority having jurisdiction over the payment or reporting of any Tax.

“ Tax Proceeding ” has the meaning set forth in Section 5.6(b) .

“ Tax Return ” means any report, statement, form, return or other document or information required to be supplied to a Tax Authority in connection with Taxes.

“ Terminal Services Agreements ” means, collectively: (a) that certain Terminal Services Agreement (Amarillo Terminal, Albuquerque Terminal and Lubbock Terminal); (b) that certain Terminal Services Agreement (Buffalo Terminal); (c) that certain Terminal Services Agreement (Sheridan Terminal); (d) that certain Terminal Services Agreement (Cushing Terminal and Ponca Crude Terminal); (e) that certain Terminal Services Agreement (Oklahoma City Terminal, Ponca City Terminal, Glenpool Terminal and Mount Vernon Terminal); (f) that certain Terminal

Services Agreement (Tremley Point Terminal and Linden Terminal); (g) that certain Terminal Services Agreement (Casper Terminal); (h) that certain Terminal Services Agreement (Buxton Terminal); and (i) that certain Terminal Services Agreement (Wichita South Terminal), each in substantially the form attached hereto as Exhibit H .

“ Throughput and Deficiency Agreements ” means, collectively: (a) that certain Throughput and Deficiency Agreement (BAM, SAAL and ATA); (b) that certain Throughput and Deficiency Agreement (Cherokee North, Cherokee East, Cherokee South and Triangle); (c) that certain Throughput and Deficiency Agreement (CushPo, Oklahoma Crude and North Texas Gathering); (d) that certain Throughput and Deficiency Agreement (Glacier Pipeline); (e) that certain Throughput and Deficiency Agreement (Line O, Line WA, Line 80 and West Texas Gathering); and (f) that certain Throughput and Deficiency Agreement (Seminoe Pipeline), each in substantially in the form attached hereto as Exhibit I .

“ Transaction Debt ” has the meaning set forth in Section 5.6(c).

“ Transaction Documents ” means, collectively, this Agreement, the Commercial Agreements, the Omnibus Agreement Amendment, the Operational Services Agreement Amendment, the Lease Agreements, the Shared Services Agreement, the Shared Services Agreement Amendment, and the Origination Services Agreement Amendment.

“ Transaction Taxes ” has the meaning set forth in Section 2.6 .

“ Treasury Regulations ” has the meaning set forth in Section 5.6(c).

Article II.
CONTRIBUTIONS, CONVEYANCES, ACKNOWLEDGMENTS AND DISTRIBUTIONS

2.1      Contributions . On the Closing Date, on the terms and subject to the conditions of this Agreement, each of the following shall occur:

(a)      PDI shall contribute, assign, transfer and convey to the General Partner, as a capital contribution, limited liability company interests in the Contributed Entities with an aggregate value equal to an amount such that, immediately following the consummation of the transactions contemplated by this Agreement, the General Partner will maintain its 2% general partner interest in the Partnership (the “ GP Contribution ”), and the General Partner shall accept the contribution of the GP Contribution;

(b)      the General Partner shall contribute, assign, transfer and convey the GP Contribution to the Partnership in exchange for the consideration set forth in Section 2.2 , and the Partnership shall accept the contribution of the GP Contribution;

(c)      PDI shall contribute, assign, transfer and convey to the Partnership its remaining limited liability company interests in the Contributed Entities (collectively, the “ LP Contribution ” and, together with the GP Contribution, the “ Contributed Interests ”), in exchange for the consideration set forth in Section 2.2 , and the Partnership shall accept the contribution of the LP Contribution;

(d)      the Partnership shall contribute, assign, transfer and convey, as a capital contribution, the Contributed Interests to Phillips 66 Partners Holdings LLC, a Delaware limited liability company and wholly owned Subsidiary of the Partnership (“ Holdings ”), and Holdings shall accept the contribution of the Contributed Interests; and

(e)      Holdings shall contribute, assign, transfer and convey, as a capital contribution, 100% of the limited liability company interests in Eagle 2 LLC to Carrier, and Carrier shall accept the contribution of such limited liability company interests.

2.2      Consideration . At the Closing, in consideration for the contribution of the Contributed Interests, the Partnership shall: (a) issue to the General Partner the New GP Units, (b) issue to PDI a number of Common Units equal to 4,093,020 less the number of New GP Units (the “ New Common Units ”) and (c) pay to PDI an amount of cash equal to $1,109,000,000 (the “ Cash Consideration ”).

2.3      Effective Time of Conveyances . Notwithstanding anything to the contrary contained herein, to the extent the Closing occurs in accordance with the terms and conditions of this Agreement, the Parties acknowledge and agree that the Partnership shall be entitled to all of the rights of ownership of the Contributed Interests and shall be liable for and shall bear all of the Assumed Liabilities, in each case, from and after the Effective Time.

2.4      Assumed Liabilities . Except for Excluded Liabilities as provided in Section 2.5 , at the Effective Time, the Partnership Group agrees to assume and to pay, discharge and perform as and when due, all Liabilities that first accrue, are caused by, arise out of, are associated with, are in respect of, or are incurred, in each case, at any time from and after the Effective Time, in connection with the ownership of the Contributed Interests or the ownership or operation of the Contributed Assets or other activities occurring in connection with and attributable to the ownership of the Contributed Interests or the ownership or operation of the Contributed Assets (the “ Assumed Liabilities ”).

2.5      Excluded Liabilities . The Parties agree that any Liabilities arising out of or attributable to the ownership of the Contributed Interests, the ownership, use, operation, construction, development, completion or expansion of the Contributed Assets or the operation of the Businesses or other activities occurring in connection with and attributable to the ownership of the Contributed Interests, the ownership, use, operation, construction, development,

completion or expansion of the Contributed Assets or the operation of the Businesses prior to the Effective Time that are not expressly identified as Assumed Liabilities in Section 2.4 are not part of the Assumed Liabilities, and neither the Partnership Group nor any member thereof has assumed, and shall not assume or become obligated with respect to, any Liability first incurred, accrued or arising out of or attributable to the ownership of the Contributed Interests, the ownership, use, operation, construction, development, completion or expansion of the Contributed Assets or the operation of the Businesses or other activities occurring in connection with and attributable to the ownership of the Contributed Interests, the ownership, use, operation, construction, development, completion or expansion of the Contributed Assets or the operation of the Businesses prior to the Effective Time, including any Liabilities of the P66 Parties or their Affiliates existing immediately prior to the Effective Time (other than Liabilities that are expressly identified as Assumed Liabilities in Section 2.4 ), whether or not described specifically in this Section 2.5 (collectively, the “ Excluded Liabilities ”), all of which shall remain the sole responsibility of, and be discharged and performed as and when due by, the P66 Parties or their Affiliates from and after the Effective Time. The term “Excluded Liabilities” shall also include the Construction Costs.

2.6      Transaction Taxes . All sales, use, transfer, real property transfer, filing, recordation, registration, business and occupation and similar Taxes arising from or associated with the transactions contemplated by this Agreement other than Taxes based on income (“ Transaction Taxes ”), shall be borne fifty percent (50%) by the P66 Parties and fifty percent (50%) by the Partnership; provided , however , that in accordance with Section 8.2(d) , any sales or use Tax imposed on the contributions described in Article II or the Prior Conveyances shall be borne one hundred percent (100%) by the P66 Parties. To the extent under applicable law the transferee is responsible for filing Tax Returns in respect of Transaction Taxes, the Partnership shall prepare and file all such Tax Returns. The Parties shall provide such certificates and other information and otherwise cooperate to the extent reasonably required to minimize Transaction Taxes. The Party that is not responsible under applicable law for paying the Transaction Taxes shall pay its share of the Transaction Taxes to the responsible Party prior to the due date of such Taxes.

Article III.
REPRESENTATIONS AND WARRANTIES OF THE P66 PARTIES

The P66 Parties, jointly and severally, hereby represent and warrant to the Partnership that, as of the date hereof and as of Closing:

3.1      Organization and Existence .

(a)      P66 Company has been duly organized and is validly existing and in good standing under the laws of the State of Delaware, with full corporate power and authority to own,

lease and operate the properties and assets it now owns, leases and operates and to carry on its business as and where such properties and assets are now owned or held and such business is now conducted. P66 Company is duly qualified to transact business and is in good standing as a foreign entity in each other jurisdiction in which such qualification is required for the conduct of its business, except where the failure to so qualify or to be in good standing does not have a Material Adverse Effect.

(b)      PDI has been duly organized and is validly existing and in good standing under the laws of the State of Delaware, with full corporate power and authority to own, lease and operate the properties and assets it now owns, leases and operates and to carry on its business as and where such properties and assets are now owned or held and such business is now conducted. PDI is duly qualified to transact business and is in good standing as a foreign entity in each other jurisdiction in which such qualification is required for the conduct of its business, except where the failure to so qualify or to be in good standing does not have a Material Adverse Effect.

(c)      Each of the Contributed Entities has been duly organized and is validly existing and is in good standing under the laws of the State of Delaware, with full limited liability company power and authority to own, lease and operate the properties and assets it now owns, leases and operates and to carry on its business as and where such properties and assets are now owned or held and such business is now conducted. None of the Contributed Entities is or will be qualified to transact business as a foreign entity in any jurisdiction. The P66 Parties have delivered to the Partnership correct and complete copies of the organizational documents of each of the Contributed Entities, each as amended to date. There is no pending or, to the knowledge of the P66 Parties, threatened action for the dissolution, liquidation or insolvency of any of the Contributed Entities.

(d)      (i) Eagle 1 LLC was formed for the sole purpose of owning the Eagle Assets and (ii) Eagle 2 LLC was formed for the sole purpose of owning the Regulated Assets. As of the Closing, since its respective date of formation, neither Eagle 1 LLC nor Eagle 2 LLC has (x) conducted any business or owned any assets other than its direct or indirect ownership of the Eagle Assets or the Regulated Assets, as applicable, or (y)  incurred any material Liabilities.

3.2      Authority and Approval; Enforceability .

(a)      P66 Company has the corporate power and authority to execute and deliver this Agreement and any Transaction Document to which it is or will be a party, to consummate the transactions contemplated hereby and thereby and to perform all the terms and conditions hereof and thereof to be performed by it. The execution and delivery by P66 Company of this Agreement and any Transaction Document to which it is or will be a party, the

performance by it of all the terms and conditions hereof and thereof to be performed by it and the consummation of the transactions contemplated hereby and thereby have been duly authorized and approved by all requisite corporate action of P66 Company. Each of this Agreement and any Transaction Document to which P66 Company is or will be a party constitutes or will constitute, upon execution and delivery by P66 Company, the valid and binding obligation of P66 Company, enforceable against P66 Company in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting enforcement of creditors’ rights generally and by general principles of equity (whether applied in a proceeding at law or in equity).

(b)      PDI has the corporate power and authority to execute and deliver this Agreement and any Transaction Document to which it is or will be a party, to consummate the transactions contemplated hereby and thereby and to perform all the terms and conditions hereof and thereof to be performed by it. The execution and delivery by PDI of this Agreement and any Transaction Document to which it is or will be a party, the performance by it of all the terms and conditions hereof and thereof to be performed by it and the consummation of the transactions contemplated hereby and thereby have been duly authorized and approved by all requisite corporate action of PDI. Each of this Agreement and any Transaction Document to which PDI is or will be a party constitutes or will constitute, upon execution and delivery by PDI, the valid and binding obligation of PDI, enforceable against PDI in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting enforcement of creditors’ rights generally and by general principles of equity (whether applied in a proceeding at law or in equity).

3.3      No Conflict . This Agreement, the Transaction Documents to which any P66 Party is or will be a party and the execution and delivery hereof and thereof by such P66 Party do not, and the fulfilment and compliance with the terms and conditions hereof and thereof and the consummation of the transactions contemplated hereby and thereby will not:

(a)      conflict with any of the provisions of the certificate of incorporation or bylaws of any P66 Party or with any of the provisions of the organizational documents of any of the Contributed Entities;

(b)      conflict with any provision of any law or administrative regulation or any judicial, administrative or arbitration order, award, judgment, writ, injunction or decree applicable to any P66 Party or any of the Contributed Entities;

(c)      conflict with, result in a breach of, constitute a default under (whether with notice or the lapse of time or both) or accelerate or permit the acceleration of the performance required by, or require any consent, authorization or approval under, any material indenture,

mortgage, lien or material agreement, contract, commitment or instrument to which any P66 Party or any of the Contributed Entities is a party or by which any of them is bound or to which any of the Contributed Assets are subject;

(d)      result in the creation of, or afford any person the right to obtain, any material Lien on the capital stock or other equity interests, property or assets of any P66 Party or any of the Contributed Entities under any such material indenture, mortgage, lien, agreement, contract, commitment or instrument; or

(e)      result in the revocation, cancellation, suspension or material modification, singly or in the aggregate, of any Governmental Approval (as defined below) possessed by any P66 Party or any of the Contributed Entities that is necessary or desirable for the ownership, lease or operation of its properties and other assets in the conduct of its business as now conducted, including any Governmental Approvals under any applicable Environmental Law; except, in the case of clauses (b) , (c) , (d) and (e) , as would not have, individually or in the aggregate, a Material Adverse Effect and except for such as will have been cured at or prior to the Closing.

3.4      Consents . Except for notice to, or consent of, Governmental Authorities related to the transfer of environmental Permits, no consent, approval, license, permit, order, waiver, or authorization of, or registration, declaration, or filing with any Governmental Authority (each a “ Governmental Approval ”) or other person or entity is required to be obtained or made by or with respect to any of the P66 Parties, any Contributed Entity or any of the Contributed Interests or Contributed Assets in connection with:

(a)      the execution, delivery, and performance of this Agreement or the Transaction Documents, or the consummation of the transactions contemplated hereby and thereby;

(b)      the enforcement against the P66 Parties of their obligations hereunder and thereunder; or

(c)      following the Closing, the Partnership Group’s (i) ownership of the Contributed Entities, (ii) ownership of the Contributed Assets or (iii) conduct of the Businesses;

except, in each case, as would not have, individually or in the aggregate, a Material Adverse Effect.

3.5      Laws and Regulations; Litigation . As of the date hereof, there are no pending or, to the P66 Parties’ knowledge, threatened claims, fines, actions, suits, demands, investigations or proceedings or any arbitration or binding dispute resolution proceedings (collectively, “ Litigation ”) against any of the P66 Parties, the Contributed Entities or against or affecting the

Businesses, Contributed Interests or the Contributed Assets or the ownership of the Contributed Interests or the ownership or operation of the Contributed Assets or the operation of the Businesses (other than Litigation under any Environmental Law, which is the subject of Section 3.7 ) that (i) would individually, or in the aggregate, have a Material Adverse Effect or (ii) seek any material injunctive relief with respect to the Businesses, the Contributed Interests or the Contributed Assets. Except as would not, individually or in the aggregate, have a Material Adverse Effect, (x) none of the Contributed Entities is in any violation of or default under any law or regulation or under any order (other than Environmental Laws, which are the subject of Section 3.7 ) of any Governmental Authority and (y) there is no Litigation (other than Litigation under any Environmental Law, which is the subject of Section 3.7 ) pending or, to the P66 Parties’ knowledge, threatened against or affecting the Businesses, Contributed Assets, the Contributed Entities or, as of the Closing, PDI’s ownership of the Contributed Interests, at law or in equity, by or before any Governmental Authority having jurisdiction over the P66 Parties. Except as would not, individually or in the aggregate, have a Material Adverse Effect, no Litigation is pending or, to the P66 Parties’ knowledge, threatened to which any P66 Party is or may become a party that questions or involves the validity or enforceability of any of their respective obligations under this Agreement or seeks to prevent or delay, or damages in connection with, the consummation of the transactions contemplated hereby.

3.6      Management Projections and Budgets . The projections and budgets (the “ Financial and Operational Information ”) provided to the Partnership (including those provided to Evercore Partners (“ Financial Advisor ”), the financial advisor to the conflicts committee of the Board of Directors of the General Partner (the “ Conflicts Committee ”)) by P66 Company as part of the Partnership’s review of the Businesses, Contributed Interests and the Contributed Assets in connection with this Agreement have a reasonable basis, were prepared in good faith and are consistent with P66 Company’s management’s current expectations. The other financial and operational information provided by P66 Company to Financial Advisor as part of its review of the proposed transaction for the Conflicts Committee is complete and correct in all material respects for the periods covered and is derived from and is consistent with the books and records of P66 Company. Without limiting the foregoing, there are no approved capital expansion projects with respect to the Contributed Assets other than (i) those set forth on Schedule 2.5 , (ii) those disclosed to the Partnership in writing prior to the date hereof and (iii) other capital expansion projects not in excess of $1,000,000 individually or $5,000,000 in the aggregate.

3.7      Environmental Matters . Except as does not (individually or in the aggregate) have a Material Adverse Effect, (a) the P66 Parties’ and the Contributed Entities’ ownership and operation of the Contributed Assets is in compliance with Environmental Laws, (b) none of the P66 Parties, the Contributed Entities or, to the P66 Parties’ knowledge, the Contributed Assets is the subject of any outstanding administrative or judicial order of judgment, agreement or

arbitration award from any Governmental Authority under any Environmental Law relating to the Contributed Assets and requiring remediation, the payment of a fine or penalty or a change in method of operation, (c) each of the applicable P66 Parties or the Contributed Entities has received all Permits required to be received by them under applicable Environmental Laws and that are necessary to operate the Businesses and to own and operate the Contributed Assets as presently owned or operated or in light of such Contributed Asset’s current stage of development or construction, (d) each of the applicable P66 Parties or , the Contributed Entities is in compliance with all terms and conditions of any such Permits, (e) none of the P66 Parties or the Contributed Entities is subject to any pending Litigation under any Environmental Law with respect to the ownership or operation of the Contributed Assets, and (f) none of the P66 Parties, with respect to the Contributed Assets, and none of the Contributed Entities have any Liability in connection with the release of any Hazardous Material into the environment.

3.8      Contributed Interests .

(a)      The Contributed Interests (i) constitute 100% of the limited liability company interests in the Contributed Entities and (ii) were duly authorized and validly issued and are fully paid and non-assessable (except as such non-assessability may be affected by Sections 18-607 and 18-804 of the Delaware Limited Liability Company Act). None of the Contributed Interests are subject to or were issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of local or state law applicable to the Contributed Interests, the organizational documents of any Contributed Entity, or any contract, arrangement or agreement to which P66 Company, PDI or any Contributed Entity or any of their respective Subsidiaries is a party or to which it or any of their respective properties or assets (including the Contributed Assets) is otherwise bound.

(b)      P66 Company or its Affiliates have good and valid record and beneficial title to the Contributed Interests, free and clear of any and all Liens, and, except as provided or created by the limited liability company agreement or other organizational or governance documents of any Contributed Entity, the Securities Act or applicable securities laws, the Contributed Interests are free and clear of any restrictions on transfer, Taxes or claims. There are no options, warrants, purchase rights, contracts, commitments or other securities exercisable or exchangeable for any equity interests of the Contributed Entities or any other commitments or agreements providing for the issuance of additional equity interests in the Contributed Entities for the repurchase or redemption of the Contributed Interests, or any agreements of any kind that may obligate any Contributed Entity to issue, purchase, register for sale, redeem or otherwise acquire any of its equity interests. Immediately after the Closing, the Partnership will have good and valid record and beneficial title to the Contributed Interests, free and clear of any Liens.

3.9      Contributed Assets .

(a)      The Contributed Assets, when considered together with the Shared Services Agreement, Operational Services Agreement Amendment, Omnibus Agreement Amendment, Origination Services Agreement Amendment and Shared Services Agreement Amendment and the services provided by P66 Company and its Affiliates pursuant to the Operational Services Agreement, Omnibus Agreement, Origination Services Agreement and Shared Services Agreement (Bayway) (each as contemplated to be amended at the Closing), are sufficient to conduct the Businesses and own and operate the Contributed Assets in a manner materially consistent with the Financial and Operational Information (including to provide all necessary services under the Transaction Documents in the manner contemplated therein).

(b)      The P66 Parties and their Affiliates are the owners, and as of the Effective Time, the Contributed Entities will be the owners, of such valid easement rights, leasehold and/or fee ownership interests (including rights of way) in and to the lands constituting Contributed Assets or on which any Contributed Assets are located that, when considered together with the Lease Agreements and the services provided by P66 Company and its Affiliates pursuant to the Omnibus Agreement and the Operational Services Agreement (each as contemplated to be amended at the Closing), are sufficient to enable each of the Contributed Entities to use or operate the Contributed Assets in substantially the same manner that the Contributed Assets were used and operated historically by P66 Company and its Affiliates or as such Contributed Assets are intended to be used and operated as of the Effective Time or when fully constructed as contemplated by the Transaction Documents. P66 Company, its Affiliates have, and as of the Effective Time, the Contributed Entities will have good and marketable title in fee to all real property and interests in real property constituting part of the Contributed Assets, and purported to be owned in fee, and good and valid leasehold or other title, as applicable, to the leasehold estates in all other real property and interests in real property (including rights of way) constituting part of the Contributed Assets, in each case except as would not have a Material Adverse Effect. None of the P66 Parties has any knowledge of any default or breach (or event which, with the giving of notice or passage of time, or both, would become a default or breach) under any lease, right of way or similar instrument pursuant to which it holds any such non-fee real property interest, in each case except as would not have a Material Adverse Effect. P66 Company or its Affiliates own, and as of the Effective Time, the Contributed Entities will own, all such real property and interests in real property free and clear of any Liens except (i) those set forth in Schedule 3.9(b) , (ii) mechanics’, carriers’, workmen’s, repairmen’s or other similar Liens arising or incurred in the ordinary course of business that are not yet delinquent or can be paid without penalty or are being contested in good faith and by appropriate proceedings in respect thereof and for which an appropriate reserve has been established on the books and records of P66 Company and provided in the Financial and Operational Information in accordance with U.S. generally accepted accounting principles, (iii) Liens for current Taxes that are not yet due

and payable or are being contested in good faith and by appropriate proceedings in respect thereof and for which an appropriate reserve has been established on the books and records of P66 Company and provided in the Financial and Operational Information in accordance with U.S. generally accepted accounting principles and (iv) other imperfections of title or encumbrances that, individually or in the aggregate, could not reasonably be expected to materially interfere with the ordinary conduct or operation of the Businesses (the Liens described in clauses (i ), ( ii ), ( iii ) and ( iv ) above, being referred to collectively as “ Permitted Liens ”). Except as would not have, individually or in the aggregate, a Material Adverse Effect, there are no material gaps in contiguity between or among the tracts or parcels of real property or interests in real property comprising the routes or corridors used by or for any pipeline or gathering systems constituting part of the Contributed Assets. The P66 Parties or their Affiliates have, and as of the Effective Time, the Contributed Entities will have, all material consents, licenses and permits necessary to (x) own and operate the Businesses in the manner contemplated by the Transaction Documents and (y) allow for ingress and egress to and from the Contributed Assets.

(c)      The P66 Parties or their Affiliates have, and as of the Effective Time, the Contributed Entities will have, good and marketable title to all tangible personal property included in the Contributed Assets, free and clear of all Liens except Permitted Liens, other than tangible personal property owned on the date of this Agreement but subsequently sold or otherwise disposed of in the ordinary course of business consistent with prior practice. All tangible personal property included in the Contributed Assets is, in the aggregate, in good operating condition and repair (normal wear and tear excepted) and has been maintained in accordance with applicable laws and regulations, as well as generally accepted industry practice, and is sufficient for the purposes for which it is currently being used or held for use.

3.10      Permits . The P66 Parties or their Affiliates hold or have a valid right to use, and as of the Effective Time, the Contributed Entities will hold or have a valid right to use, all Permits (other than environmental Permits, which are the subject of Section 3.7 ) that are necessary for the conduct of the Businesses and the ownership or operation of the Contributed Assets, each in compliance with applicable laws and regulations of applicable Governmental Authorities, except for those the failure of which to have, individually or in the aggregate, does not have a Material Adverse Effect. The P66 Parties or their Affiliates have complied in all material respects with all terms and conditions thereof.

3.11      Insurance . The P66 Parties or their Affiliates maintain policies of fire and casualty, liability and other forms of property and liability insurance related to the Contributed Assets and the Businesses in such amounts, with such deductibles, and against such risks and losses as are, in their judgment, reasonable for the Businesses and the Contributed Assets. To the P66 Parties’ knowledge, all such policies are in full force and effect, all premiums due and payable thereon have been paid, and no notice of cancellation or termination has been received

with respect to any such policy that has not been replaced on substantially similar terms prior to the date of such cancellation. To the P66 Parties’ knowledge, the activities and operations of the Businesses have been conducted in a manner so as to conform in all material respects to all applicable provisions of those insurance policies.

3.12      Brokerage Arrangements . None of the P66 Parties or any of their Affiliates has entered, directly or indirectly, into any agreement with any person, firm or corporation that would obligate any Group Member to pay any commission, brokerage or “finder’s fee” or other fee in connection with this Agreement or the transactions contemplated hereby.

3.13      Investment . PDI is an “accredited investor” as such term is defined in Rule 501 promulgated under the Securities Act, as amended (the “ Securities Act ”). PDI is not acquiring the New Common Units with a view to or for sale in connection with any distribution thereof or any other security related thereto within the meaning of the Securities Act. PDI is familiar with investments of the nature of the New Common Units, understands that this investment involves substantial risks, has adequately investigated the Partnership and the New Common Units, and has substantial knowledge and experience in financial and business matters such that it is capable of evaluating, and has evaluated, the merits and risks inherent in purchasing the New Common Units, and is able to bear the economic risks of such investment. PDI has had the opportunity to visit with the Partnership and meet with the officers of the General Partner and other representatives to discuss the business, assets, liabilities, financial condition, and operations of the Partnership, has received all materials, documents and other information that PDI deems necessary or advisable to evaluate the Partnership and the New Common Units, and has made its own independent examination, investigation, analysis and evaluation of the Partnership and the New Common Units, including its own estimate of the value of the New Common Units. PDI has undertaken such due diligence (including a review of the properties, liabilities, books, records and contracts of the Partnership) as PDI deems adequate. PDI acknowledges that the New Common Units have not been registered under applicable federal and state securities laws and that the New Common Units may not be sold, transferred, offered for sale, pledged, hypothecated or otherwise disposed of unless such transfer, sale, assignment, pledge, hypothecation or other disposition is registered under applicable federal and state securities laws or pursuant to an exemption from registration under any federal or state securities laws.

3.14      Taxes .

(a)      All Tax Returns that are required to be filed by or with respect to the Contributed Entities or the Contributed Assets on or prior to the Closing Date (taking into account any valid extension of time within which to file) have been or will be timely filed on or prior to the Closing Date and all such Tax Returns are or will be true, correct and complete in all material respects.

(b)      All Taxes due and payable with respect to the Contributed Entities or the Contributed Assets (whether or not shown on any Tax Return) have been fully paid and all deficiencies asserted or assessments made with respect to such Tax Returns have been paid in full or properly accrued for by the applicable Contributed Entity.

(c)      No examination, audit, claim, assessment, levy, or administrative or judicial proceeding regarding any of the Tax Returns described in Section 3.14(a) or any Taxes with respect to the Contributed Entities or the Contributed Assets are currently pending or have been proposed in writing or have been threatened.

(d)      No waivers or extensions of statutes of limitations have been given or requested in writing with respect to any amount of Taxes with respect to the Contributed Entities or the Contributed Assets or any Tax Returns with respect to the Contributed Entities or the Contributed Assets.

(e)      For U.S. federal income Tax purposes, each of the Contributed Entities is currently, and has been since its respective inception, properly classified as an entity disregarded as separate from its owner.

3.15      Material Contracts . The P66 Parties have made available to the Partnership a correct and complete copy of each Material Contract. Each Material Contract is in full force and effect, and none of the P66 Parties, any Contributed Entity or, to the knowledge of the P66 Parties, any other party, is in breach or default thereunder and no event has occurred that upon receipt of notice or lapse of time or both would constitute any breach or default thereunder, except for such breaches or defaults as would not, individually or in the aggregate, have a Material Adverse Effect. None of the P66 Parties or the Contributed Entities has given or received from any third party any notice of any action or intent to terminate or amend in any material respect any Material Contract.

3.16      No Adverse Changes . To the knowledge of the P66 Parties, since December 31, 2015:

(a)      there has not been a Material Adverse Effect;

(b)      the Businesses and the Contributed Assets have been operated and maintained in the ordinary course of business consistent with past practices and, as applicable, prudent industry standards; and

(c)      there has not been any material damage or destruction to any material portion of the Contributed Assets other than such damage or destruction that has been repaired.

3.17      Prior Conveyances . As of the Effective Time, each of the Prior Conveyances has been duly executed, acknowledged (where applicable) and delivered by the parties thereto in substantially the form provided by the P66 Parties to the Partnership prior to the date hereof.

3.18      No Other Representations or Warranties; Schedules . The P66 Parties make no other express or implied representation or warranty with respect to the Businesses, the Contributed Entities, the Contributed Assets or the transactions contemplated by this Agreement, and disclaim any other representations or warranties. The disclosure of any matter or item in any schedule to this Agreement shall not be deemed to constitute an acknowledgment that any such matter is required to be disclosed.

Article IV.
REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP

The Partnership hereby represents and warrants to the P66 Parties that as of the date hereof:

4.1      Organization and Existence . The Partnership is an entity duly organized, validly existing and in good standing under the laws of the State of Delaware, and has all limited partnership power and authority to own the Contributed Interests and the Contributed Assets. The Partnership is duly qualified to transact business as a limited partnership and is in good standing in each other jurisdiction in which such qualification is required for the conduct of its business, except where the failure to so qualify or to be in good standing does not have a Partnership Material Adverse Effect.

4.2      Authority and Approval; Enforceability . The Partnership has the requisite power and authority to execute and deliver this Agreement and any Transaction Document to which it is a party, to consummate the transactions contemplated hereby and thereby and to perform all the terms and conditions hereof and thereof to be performed by it. The execution and delivery by the Partnership of this Agreement and any Transaction Document to which it is a party, the performance by it of all the terms and conditions hereof and thereof to be performed by it and the consummation of the transactions contemplated hereby and thereby have been duly authorized and approved by all requisite action of the Partnership. Each of this Agreement and any Transaction Document to which the Partnership is a party constitutes the valid and binding obligation of the Partnership, enforceable against the Partnership in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting enforcement of creditors’ rights generally and by general principles of equity (whether applied in a proceeding at law or in equity).

4.3      Delivery of Fairness Opinion . Financial Advisor has delivered an opinion to the Conflicts Committee that the aggregate consideration to be paid by the Partnership as

consideration for the Contributed Interests pursuant to this Agreement is fair to the Partnership and to the common unitholders of the Partnership (other than the P66 Parties) from a financial point of view.

4.4      Brokerage Arrangements . The Partnership has not entered, directly or indirectly, into any agreement with any person, firm or corporation that would obligate the P66 Parties or any of their Affiliates (other than the Partnership) to pay any commission, brokerage or “finder’s fee” or other fee in connection with this Agreement or the transactions contemplated hereby.

4.5      New Common Units and New GP Units . The New Common Units and the New GP Units being issued at Closing will be, when issued in consideration for the contribution by the P66 Parties of the Contributed Interests, duly authorized, validly issued, fully paid and nonassessable (except as such nonassessability may be affected by the Delaware Revised Uniform Limited Partnership Act) and free of any preemptive or similar rights (other than those set forth in the Partnership’s limited partnership agreement).

Article V.
COVENANTS, ETC.

5.1      Certain Actions . The P66 Parties covenant and agree that from and after the execution of this Agreement and until the Closing:

(a)      without the prior written consent of the Partnership, the P66 Parties will not, and will not permit any of the Contributed Entities to, sell, transfer, assign, convey or otherwise dispose of any of the Contributed Interests or the Contributed Assets;

(b)      the P66 Parties will, and will cause the Contributed Entities to, maintain the Contributed Assets in as good working order and condition as they are as of the date of this Agreement, ordinary wear and tear excepted;

(c)      the P66 Parties will, and will cause the Contributed Entities to, operate the Contributed Assets in the ordinary course consistent with past practices;

(d)      the P66 Parties will not, and will not permit any of the Contributed Entities to, permit any Lien (other than Permitted Liens) to be imposed on the Contributed Interests or the Contributed Assets; and

(e)      the P66 Parties shall make, and shall cause their respective Affiliates to make, all payments required to be made in respect of the Construction Costs, and shall, and shall cause their respective Affiliates to, use all commercially reasonable efforts to ensure that the completion of the capital expansion projects involving the Contributed Assets described on

Schedule 2.5 continues in all material respects in accordance with the milestones, scope, budget and other terms and provisions of the Contracts relating thereto.

5.2      Independent Investigation . The Partnership acknowledges that in making the decision to enter into this Agreement and to consummate the transactions contemplated hereby, it has relied solely on its own independent investigation of the Contributed Entities, the Contributed Interests and the Contributed Assets and upon the express written representations, warranties and covenants in this Agreement or in the other Transaction Documents. Without diminishing the scope of the express written representations, warranties and covenants of the Parties and without affecting or impairing its right to rely thereon, THE PARTNERSHIP ACKNOWLEDGES THAT THE P66 PARTIES HAVE NOT MADE, AND THE P66 PARTIES HEREBY EXPRESSLY DISCLAIM AND NEGATE, ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, RELATING TO THE CONTRIBUTED ENTITIES, THE CONTRIBUTED INTERESTS OR THE CONTRIBUTED ASSETS (INCLUDING, WITHOUT LIMITATION, ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR CONFORMITY TO MODELS OR SAMPLES OF MATERIALS), OTHER THAN THE REPRESENTATIONS AND WARRANTIES IN THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS.

5.3      Post-Closing Payments .

(a)      The Parties acknowledge that the consideration payable by the Partnership for the Contributed Assets reflects the operational and other assumptions with respect to the Contributed Assets included in the Financial and Operational Information. Following the Closing, and in any event no later than December 31, 2016 if the Closing occurs, the P66 Parties shall pay to the Partnership an amount in cash equal to the greater of zero and the Post-Closing Settlement Obligation. The Parties agree that (i) the P66 Parties’ obligation to pay the Post-Closing Settlement Obligation is in lieu of any obligation of the P66 Parties or their respective Subsidiaries to settle any payment obligations due to the Contributed Entities from outstanding trade receivables, if any, as of the Effective Time and (ii) the payment of the Post-Closing Settlement Obligation shall in no event be deemed a payment under any Commercial Agreement or reduce any minimum volume commitment for any period thereunder (except with respect to the period beginning on October 1, 2016 and ending on the Effective Time).

(b)      Additionally, in the event that the Closing occurs and the Casper Terminal has not commenced commercial operations prior to October 17, 2016, in consideration of services that would have been provided by the Partnership to the P66 Parties under the Casper Terminal Services Agreement, the P66 Parties shall pay to the Partnership an amount in cash equal to (i) $1,500 multiplied by (ii) the number of days from and including October 17, 2016 to

the Commencement Date (as such term is defined in the Casper Terminal Services Agreement). Any amount payable by the P66 Parties under this Section 5.3(b) shall be paid no later than December 31, 2016.

(c)      Without limiting anything in the foregoing, should any of the P66 Parties or any of their respective Subsidiaries, after Closing, receive any payments or distributions related to the Contributed Entities or the Contributed Assets to which the Partnership or any of its Subsidiaries is entitled pursuant to this Agreement, then such P66 Party or its applicable Subsidiary shall, within thirty (30) days of receipt of such payments, forward such payments or distributions to the Partnership. If any demand is made on the P66 Parties or any of their respective Subsidiaries after Closing to pay any invoice or other obligation contracted or incurred in connection with the ownership of the Contributed Entities or Contributed Interests or the ownership or operation of the Contributed Assets on or after the Effective Time, the Partnership shall pay the same to the extent such invoice or obligation constitutes an Assumed Liability.

5.4      Further Assurances . On and after the Closing Date, the Parties shall cooperate and use their respective commercially reasonable efforts to take or cause to be taken all appropriate actions and do, or cause to be done, all things necessary or appropriate to make effective the transactions contemplated hereby, including the execution of any additional assignment or similar documents or instruments of transfer of any kind, the obtaining of consents which may be reasonably necessary or appropriate to carry out any of the provisions hereof and the taking of all such other actions as such Party may reasonably be requested to take by the other Party from to time to time, consistent with the terms of this Agreement, in order to effectuate the provisions and purposes of this Agreement and transactions contemplated hereby.

5.5      NYSE Listing . Prior to the Closing, the Partnership will use its reasonable best efforts to obtain approval for listing, subject to notice of issuance, the New Common Units on the New York Stock Exchange (the “ NYSE ”).

5.6      Tax Covenants .

(a)      The Parties agree that the income related to the Contributed Entities or the Contributed Assets for the period up to the Closing Date will be reflected on the federal income Tax Return of the appropriate P66 Party, and that such P66 Party shall bear the liability for any Taxes associated with such income. The Parties further agree that the income related to the Contributed Entities or the Contributed Assets for the period on and after the Closing Date will be reflected on the federal income Tax Return of the Partnership.

(b)      The Parties shall cooperate fully, and cause their Affiliates to cooperate fully, as and to the extent reasonably requested by the other Party, to accomplish the

apportionment of income described pursuant to Section 5.6(a) , requests for the provision of any information or documentation within the knowledge or possession of the other Party as reasonably necessary to facilitate compliance with financial reporting obligations arising under ASC 740 (formerly FASB Statement No. 109) (including compliance with FIN 48) promulgated by the Financial Accounting Standards Board, and any audit, litigation or other proceeding (each a “ Tax Proceeding ”) with respect to Taxes. Such cooperation shall include access to, the retention and (upon the other Party’s request) the provision of records and information which are reasonably relevant to any Tax Return or Tax Proceeding, and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. The Partnership and the P66 Parties will use their respective commercially reasonable efforts to retain all books and records with respect to Tax matters pertinent to the Contributed Entities and the Contributed Assets relating to any taxable period beginning before the Closing Date until the later of six years after the Closing Date or the expiration of the applicable statute of limitations of the respective taxable periods (including any extensions thereof), and to abide by all record retention agreements entered into with any Tax Authority. The Partnership and the P66 Parties each agree, upon request, to use their respective commercially reasonable efforts to obtain any certificate or other document from any Tax Authority or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed with respect to the transactions contemplated by this Agreement.

(c)      Prior to the Closing, the Partnership intends to incur a Liability or Liabilities with respect to the transactions contemplated by Section 2.1 , which will be considered recourse debt within the meaning of Section 1.752-1 of the Treasury regulations (the “ Treasury Regulations ”) promulgated under the Code (the “ Transaction Debt ”). The Parties intend that (i) the distribution of the Cash Consideration to PDI shall be made first out of proceeds of the Transaction Debt, and such portion of the Cash Consideration shall qualify as a “debt-financed transfer” under Section 1.707-5(b) of the Treasury Regulations; (ii) PDI’s share of the Transaction Debt under Sections 1.752-2 and 1.707-5(a)(2)(i) of the Treasury Regulations shall be the entire amount of the Transaction Debt; and (iii) the distribution of the Cash Consideration to PDI in excess of amounts distributed out of proceeds of the Transaction Debt, if any, shall be made to reimburse PDI for capital expenditures described in Section 1.707-4(d) of the Treasury Regulations to the extent such distribution does not exceed the amount of capital expenditures described in Section 1.707-4(d) of the Treasury Regulations. To the extent a change in law causes PDI’s share of the Transaction Debt to be determined under Sections 1.752-3(a)(3) and 1.707-5(a)(2)(ii) of the Treasury Regulations, instead of as described in clause (ii) hereto, the Parties agree, for purposes of Section 1.707-5(a)(2)(ii) of the Treasury Regulations, to take into account the Incentive Distribution Rights (as such term is defined in the Partnership Agreement) in determining PDI’s share of the Partnership’s profits under Section 1.752-3(a)(3) of the

Treasury Regulations.  The Parties agree to act at all times in a manner consistent with this intended treatment of the Cash Consideration and the Transaction Debt.

5.7      Financial Statements .

(a)      The P66 Parties and the Partnership intend for the transactions contemplated by this Agreement to be subject to the provisions of the Financial Accounting Standards Board’s Accounting Standards Codification, section 805-50, Business Combinations, Related Issues (“ ASC 805-50 ”), as a transaction between entities under common control.

(b)      The P66 Parties will cooperate with the Partnership to deliver on a timely basis the unaudited financial statements (including balance sheets, and statements of income, cash flows and changes in net investment), in each case with respect to the Businesses, Contributed Entities and the Contributed Assets, necessary for the Partnership to comply with the provisions of ASC 805-50, (the “ Financial Statements ”).

(c)      The Financial Statements will be prepared from the books and records of the P66 Parties and their Subsidiaries in accordance with U.S. generally accepted accounting principles applied on a consistent basis throughout the periods covered thereby.

5.8      Financing Cooperation . From and after the execution of this Agreement, the P66 Parties shall, and shall cause each of their Affiliates to, use commercially reasonable efforts to cause their representatives (including their auditors) to provide all customary cooperation as reasonably requested by the Partnership to assist the Partnership in the arrangement of any capital markets debt or equity financing, any bank debt, or any other financing arrangements (the “ Financing ”) necessary or desirable to fund any amounts contemplated to be paid in connection with or immediately following the consummation of the transactions contemplated by this Agreement (including the Cash Consideration), including any necessary offering documents related thereto.

5.9      Assignment of Contracts . Upon a mutual determination by the Parties that all of the P66 Parties’ obligations have been satisfied, and no P66 Party has any further Liability under, any Contract relating to the capital expansion projects involving the Contributed Assets described on Schedule 2.5 , the P66 Parties shall, or shall cause their Subsidiaries to, assign such Contracts to Holdings or Carrier, as applicable.

Article VI.
CONDITIONS TO CLOSING

6.1      Conditions to Each Party’s Obligation to Effect the Transactions . The respective obligation of each Party to proceed with the Closing is subject to the satisfaction or waiver by

each of the Parties (subject to applicable laws) on or prior to the Closing Date of all of the following conditions:

(a)      all necessary filings with and consents of any Governmental Authority required for the consummation of the transactions contemplated by this Agreement shall have been made and obtained; provided, however, that, prior to invoking this condition, the invoking Party shall have used commercially reasonable efforts to make or obtain such filings and consents;

(b)      no Party shall be subject to any decree, order or injunction of a court of competent jurisdiction that prohibits the consummation of the transactions contemplated hereby and no statute, rule, regulation, order, decree or injunction enacted, entered, or issued by any Governmental Authority, or other legal restraint or prohibition preventing the consummation of the transactions contemplated by this Agreement, shall be in effect; and

(c)      the New Common Units shall have been approved for listing upon notice of issuance on the NYSE.

6.2      Conditions to the Obligation of the Partnership . The obligation of the Partnership to proceed with the Closing is subject to the satisfaction or waiver by the Partnership on or prior to the Closing Date of the following conditions:

(a)      the P66 Parties shall have performed the covenants and agreements contained in this Agreement required to be performed by them on or prior to the Closing Date;

(b)      (i) the Fundamental Representations shall be true and correct (without regard to qualifications as to materiality or Material Adverse Effect contained therein) in all material respects as of the Closing Date (except to the extent such representations and warranties expressly relate to an earlier date, in which case as of such earlier date), and (ii) the other representations and warranties of the P66 Parties made in this Agreement shall be true and correct in all respects (without regard to qualifications as to materiality or Material Adverse Effect contained therein, except in the case of the representation and warranty contained in Section 3.16(a) ) as of the Closing Date (except to the extent such representations and warranties expressly relate to an earlier date, in which case as of such earlier date), except in the case of clause (ii) where the failure of the representations and warranties to be true and correct, individually or in the aggregate, has not had a Material Adverse Effect;

(c)      the P66 Parties shall have delivered to the Partnership a certificate dated the Closing Date and signed by an authorized officer of the P66 Parties confirming the foregoing matters set forth in clauses (a) and (b) of this Section 6.2 (the “ P66 Closing Certificate ”);

(d)      the P66 Parties shall have delivered or caused the delivery of the Closing deliverables set forth in Section 7.2 ;

(e)      between the date hereof and the Closing Date, there shall not have been a Material Adverse Effect; and

(f)      the Partnership shall have received sufficient proceeds in the Financing, on terms and conditions that are reasonably satisfactory to the Partnership, necessary or desirable to fund any amounts contemplated to be paid in connection with or immediately following the consummation of the transactions contemplated by this Agreement.

6.3      Conditions to the Obligation of the P66 Parties . The obligation of the P66 Parties to proceed with the Closing is subject to the satisfaction or waiver by the P66 Parties on or prior to the Closing Date of the following conditions:

(a)      the Partnership shall have performed in all material respects the covenants and agreements contained in this Agreement required to be performed by it on or prior to the Closing Date;

(b)      the representations and warranties of the Partnership made in this Agreement shall be true and correct in all respects (without regard to qualifications as to materiality or Partnership Material Adverse Effect contained therein) as of the Closing Date (except to the extent such representations and warranties expressly relate to an earlier date, in which case as of such earlier date), except where the failure of the representations and warranties to be true and correct, individually or in the aggregate, has not had a Partnership Material Adverse Effect;

(c)      the Partnership shall have delivered to the P66 Parties a certificate dated the Closing Date and signed by an authorized officer of the General Partner confirming the foregoing matters set forth in clauses (a) and (b) of this Section 6.3 (the “ Partnership Closing Certificate ”);

(d)      the Partnership shall have delivered or caused the delivery of the Closing deliverables set forth in Section 7.3 ; and

(e)      between the date hereof and the Closing Date, there shall not have been a Partnership Material Adverse Effect.

Article VII.
CLOSING

7.1      Closing . Subject to the terms and conditions of this Agreement and unless otherwise agreed in writing by the P66 Parties and the Partnership, the closing (the “ Closing ”) of the transactions contemplated by this Agreement will be held at the offices of Latham & Watkins LLP, 811 Main Street, 37th Floor, Houston, Texas at 9:00 a.m., Houston, Texas time on October 14, 2016, or such other time and date mutually agreed to by the Parties in writing. The date on which the Closing occurs is referred to as the “ Closing Date .”

7.2      Deliveries by the P66 Parties . At the Closing, the P66 Parties will deliver (or cause to be delivered) the following:

(a)      a counterpart to the Assignment of Membership Interest, duly executed by PDI;

(b)      a counterpart to the Operational Services Agreement Amendment, duly executed by Pipeline;

(c)      a counterpart to the Omnibus Agreement Amendment, duly executed by Pipeline;

(d)      a counterpart to each of the Commercial Agreements, duly executed by P66 Company;

(e)      a counterpart to the Shared Services Agreement, duly executed by P66 Company;

(f)      a counterpart to the Shared Services Agreement Amendment, duly executed by P66 Company;

(g)      a counterpart to the Origination Services Agreement Amendment, duly executed by P66 Company;

(h)      a counterpart to each of the Lease Agreements, duly executed by P66 Company;

(i)      the P66 Closing Certificate, duly executed by an officer of the P66 Parties;

(j)      an executed statement described in Treasury regulations section 1.1445-2(b)(2) certifying that PDI is neither a disregarded entity nor a foreign person within the meaning of the Code; and

(k)      such other documents, certificates and other instruments as may be reasonably requested by the Partnership prior to the Closing Date to carry out the intent and purposes of this Agreement.

7.3      Deliveries by the Partnership . At the Closing, the Partnership will deliver (or cause to be delivered) the following:

(a)      the New Common Units, by issuance of such New Common Units (in book-entry form) to PDI, by instruction to the Partnership’s transfer agent or otherwise;

(b)      the New GP Units, by issuance of such New GP Units (in certificated or book-entry form) to the General Partner, by instruction to the Partnership’s transfer agent or otherwise;

(c)      a counterpart to the Assignment of Membership Interest, duly executed by the Partnership, the General Partner, Holdings and Carrier;

(d)      a counterpart to the Operational Services Agreement Amendment, duly executed by Holdings and Carrier;

(e)      a counterpart to the Omnibus Agreement Amendment, duly executed by Carrier;

(f)      a counterpart to each of the Commercial Agreements, duly executed by Carrier or Holdings, as applicable;

(g)      a counterpart to the Shared Services Agreement, duly executed by Holdings;

(h)      a counterpart to the Shared Services Agreement Amendment, duly executed by Holdings;

(i)      a counterpart to the Origination Services Agreement Amendment, duly executed by Carrier;

(j)      a counterpart to each of the Lease Agreements, duly executed by Holdings;

(k)      the Partnership Closing Certificate, duly executed by an officer of the General Partner; and

(l)      such other documents, certificates and other instruments as may be reasonably requested by the P66 Parties prior to the Closing Date to carry out the intent and purposes of this Agreement.

Article VIII.
INDEMNIFICATION

8.1      Indemnification of P66 Company and Other Parties . Solely for the purpose of indemnification in this Section 8.1 , the representations and warranties of the Partnership in this Agreement shall be deemed to have been made without regard to any materiality or Partnership Material Adverse Effect or knowledge qualifiers. From and after the Closing Date, subject to the other provisions of this Article VIII , the Partnership shall indemnify and hold the P66 Parties and their respective Affiliates, directors, officers, employees, agents and representatives (together with the P66 Parties, the “ P66 Indemnitees ”) harmless from and against any and all damages (including exemplary damages and penalties), losses, deficiencies, costs, expenses, obligations, fines, expenditures, claims and liabilities, including reasonable counsel fees and reasonable expenses of investigation, defending and prosecuting litigation (collectively, the “ Damages ”), suffered by the P66 Indemnitees as a result of, caused by, arising out of, or in any way relating to (a) any breach of a representation or warranty of the Partnership in this Agreement, (b) any breach of any agreement or covenant under this Agreement on the part of the Partnership or (c) any of the Assumed Liabilities.

8.2      Indemnification of the Partnership and other Parties . Solely for the purpose of indemnification in this Section 8.2 , the representations and warranties of the P66 Parties in this Agreement (other than the representation and warranty contained in Section 3.16(a) ) shall be deemed to have been made without regard to any materiality or Material Adverse Effect or knowledge qualifiers. From and after the Closing Date, subject to the other provisions of this Article VIII , the P66 Parties shall, jointly and severally, indemnify and hold the Group Members and their respective directors, officers, employees, agents and representatives (together with the Partnership, the “ Partnership Indemnitees ”) harmless from and against any and all Damages suffered by the Partnership Indemnitees as a result of, caused by, arising out of, or in any way relating to (a) any breach of a representation or warranty of the P66 Parties in this Agreement, (b) any breach of any agreement or covenant in this Agreement on the part of the P66 Parties, (c) any of the Excluded Liabilities or (d) any sales or use Tax imposed on the contributions described in Article II or the Prior Conveyances.

8.3      Demands . Each indemnified party agrees that promptly upon its discovery of facts giving rise to a claim for indemnity under the provisions of this Agreement, including receipt by it of notice of any demand, assertion, claim, action or proceeding, judicial or otherwise, by any third party (such third party actions being collectively referred to herein as the “ Indemnity

Claim ”), with respect to any matter as to which it claims to be entitled to indemnity under the provisions of this Agreement, it will give prompt notice thereof in writing to the indemnifying party, together with a statement of such information respecting any of the foregoing as it shall have. Such notice shall include a formal demand for indemnification under this Agreement. The indemnifying party shall not be obligated to indemnify the indemnified party with respect to any Indemnity Claim if the indemnified party knowingly failed to notify the indemnifying party thereof in accordance with the provisions of this Agreement to the extent that knowing failure to notify actually results in material prejudice or damage to the indemnifying party.

8.4      Right to Contest and Defend .

(a)      The indemnifying party shall be entitled at its cost and expense to contest and defend by all appropriate legal proceedings any Indemnity Claim with respect to which it is called upon to indemnify the indemnified party under the provisions of this Agreement; provided, however, that notice of the intention to so contest shall be delivered by the indemnifying party to the indemnified party within 20 days from the date of receipt by the indemnifying party of notice by the indemnified party of the assertion of the Indemnity Claim. Any such contest may be conducted in the name and on behalf of the indemnifying party or the indemnified party as may be appropriate. Such contest shall be conducted and prosecuted diligently to a final conclusion or settled in accordance with this Section 8.4 by reputable counsel employed by the indemnifying party and not reasonably objected to by the indemnified party, but the indemnified party shall have the right but not the obligation to participate in such proceedings and to be represented by counsel of its own choosing at its sole cost and expense. The indemnifying party shall have full authority to determine all action to be taken with respect thereto; provided , however , that the indemnifying party will not have the authority to subject the indemnified party to any obligation whatsoever, other than the performance of purely ministerial tasks or obligations not involving material expense. If the indemnifying party does not elect to contest any such Indemnity Claim or elects to contest such Indemnity Claim but fails diligently and promptly to prosecute or settle such claim, the indemnifying party shall be bound by the result obtained with respect thereto by the indemnified party. If the indemnifying party shall have assumed the defense of an Indemnity Claim, the indemnified party shall agree to any settlement, compromise or discharge of an Indemnity Claim that the indemnifying party may recommend and that by its terms obligates the indemnifying party to pay the full amount of the liability in connection with such Indemnity Claim, which releases the indemnified party completely in connection with such Indemnity Claim and which would not otherwise adversely affect the indemnified party.

(b)      Notwithstanding the foregoing, the indemnifying party shall not be entitled to assume the defense of any Indemnity Claim (and shall be liable for the reasonable fees and expenses of counsel incurred by the indemnified party in defending such Indemnity Claim) if

the Indemnity Claim seeks an order, injunction or other equitable relief or relief for other than money damages against the indemnified party which the indemnified party reasonably determines, after conferring with its outside counsel, cannot be separated from any related claim for money damages. If such equitable relief or other relief portion of the Indemnity Claim can be so separated from that for money damages, the indemnifying party shall be entitled to assume the defense of the portion relating to money damages.

8.5      Cooperation . If requested by the indemnifying party, the indemnified party agrees to cooperate with the indemnifying party and its counsel in contesting any Indemnity Claim that the indemnifying party elects to contest or, if appropriate, in making any counterclaim against the person asserting the Indemnity Claim, or any cross-complaint against any person, and the indemnifying party will reimburse the indemnified party for any expenses incurred by it in so cooperating. At no cost or expense to the indemnified party, the indemnifying party shall cooperate with the indemnified party and its counsel in contesting any Indemnity Claim.

8.6      Right to Participate . The indemnified party agrees to afford the indemnifying party and its counsel the opportunity to be present at, and to participate in, conferences with all persons, including Governmental Authorities, asserting any Indemnity Claim against the indemnified party or conferences with representatives of or counsel for such persons.

8.7      Payment of Damages . The indemnification required hereunder shall be made by periodic payments of the amount thereof during the course of the investigation or defense, within 10 days as and when reasonably specific bills are received or loss, liability, claim, damage or expense is incurred and reasonable evidence thereof is delivered. In calculating any amount to be paid by an indemnifying party by reason of the provisions of this Agreement, the amount shall be reduced by all reimbursements (including, without limitation, insurance proceeds) credited to or received by the other party related to the Damages.

8.8      Limitations on Indemnification .

(a)      To the extent the Partnership Indemnitees are entitled to indemnification for Damages pursuant to Section 8.2(a) (but not including Damages for breaches of Fundamental Representations), the P66 Parties shall not be liable for those Damages unless the aggregate amount of Damages exceeds $3,000,000 (the “ Deductible ”), and then only to the extent of any such excess; provided , however , that the P66 Parties shall not be liable for Damages pursuant to Section 8.2(a) (but not including Damages for breaches of Fundamental Representations) that exceed, in the aggregate, $130,500,000 (the “ Cap ”) less the Deductible.

(b)      Notwithstanding clause (a) above, to the extent the Partnership Indemnitees are entitled to indemnification for Damages for claims arising from fraud or related to or arising from Taxes (including, without limitation, Damages for breach of the

representations or warranties in Section 3.14 ), the P66 Parties shall be fully liable for such Damages without regard to the Deductible or the Cap. For the avoidance of doubt, the P66 Parties shall be fully liable for Damages pursuant to Sections 8.2(b) , 8.2(c) or 8.2(d) and for breaches of Fundamental Representations without regard to the Deductible or the Cap.

(c)      To the extent the P66 Indemnitees are entitled to indemnification for Damages pursuant to Section 8.1(a) , the Partnership shall not be liable for those Damages unless the aggregate amount of Damages exceeds, in the aggregate, the Deductible, and then only to the extent of any such excess; provided , however , that the Partnership shall not be liable for Damages that exceed, in the aggregate, the Cap less the Deductible.

(d)      Notwithstanding clause (c) above, to the extent the P66 Indemnitees are entitled to indemnification for Damages arising from fraud, the Partnership shall be fully liable for such Damages without regard to the Deductible or the Cap. For the avoidance of doubt, the Partnership shall be fully liable for Damages pursuant to Sections 8.1(b) or 8.1(c) without regard to the Deductible or the Cap.

8.9      Survival .

(a)      The liability of the P66 Parties for the breach of any of the representations and warranties of the P66 Parties set forth in Sections 3.1 , 3.2 , 3.8 and 3.9 (the “ Fundamental Representations ”) shall be limited to claims for which the Partnership delivers written notice to the P66 Parties on or before the date that is three years after the Closing Date. The liability of the P66 Parties for the breach of any of the representations and warranties of the P66 Parties set forth in Article III other than the Fundamental Representations shall be limited to claims for which the Partnership delivers written notice to the P66 Parties on or before the date that is eighteen months after the Closing Date. The liability of the P66 Parties for Damages for claims related to or arising from Taxes (including, without limitation, Damages for claims for breach of the representations or warranties in Section 3.14 ) shall be limited to claims for which the Partnership delivers written notice to the P66 Parties on or before the date that is ninety (90) days after the expiration of the applicable statute of limitations for assessment of the applicable Tax.

(b)      The liability of the Partnership for the breach of any of the representations and warranties of the Partnership set forth in Article IV shall be limited to claims for which the P66 Parties delivers written notice to the Partnership on or before the date that is eighteen (18) months after the Closing Date.

8.10      Sole Remedy . After the Closing, no Party shall have liability under this Agreement or the transactions contemplated hereby except as is provided in this Article VIII , other than claims or causes of action arising from fraud, and other than claims for specific

performance or claims arising under any Transaction Documents (which claims shall be subject to the liability provisions of such Transaction Documents).

8.11      Express Negligence Rule . THE INDEMNIFICATION AND ASSUMPTION PROVISIONS PROVIDED FOR IN THIS AGREEMENT HAVE BEEN EXPRESSLY NEGOTIATED IN EVERY DETAIL, ARE INTENDED TO BE GIVEN FULL AND LITERAL EFFECT, AND SHALL BE APPLICABLE WHETHER OR NOT THE LIABILITIES, OBLIGATIONS, CLAIMS, JUDGMENTS, LOSSES, COSTS, EXPENSES OR DAMAGES IN QUESTION ARISE OR AROSE SOLELY OR IN PART FROM THE GROSS, ACTIVE, PASSIVE OR CONCURRENT NEGLIGENCE, STRICT LIABILITY, OR OTHER FAULT OF ANY INDEMNIFIED PARTY. THE PARTNERSHIP AND P66 COMPANY ACKNOWLEDGE THAT THIS STATEMENT COMPLIES WITH THE EXPRESS NEGLIGENCE RULE AND CONSTITUTES CONSPICUOUS NOTICE. NOTICE IN THIS CONSPICUOUS NOTICE IS NOT INTENDED TO PROVIDE OR ALTER THE RIGHTS AND OBLIGATIONS OF THE PARTIES, ALL OF WHICH ARE SPECIFIED ELSEWHERE IN THIS AGREEMENT.

8.12      Knowledge . The Partnership Indemnitees’ and the P66 Indemnitees’ rights under this Agreement or otherwise shall not be diminished by any investigation performed or knowledge acquired or capable of being acquired, whether before or after the date of this Agreement, regarding the accuracy or inaccuracy of any representation or warranty or the performance or non-performance of any covenant.

8.13      Consideration Adjustment . The Parties agree to treat all payments made pursuant to this Article VIII as adjustments to the consideration set forth in Section 2.2 of this Agreement, as reasonably agreed to between the Parties, for U.S. federal income Tax purposes, except as otherwise required by Law following a final determination by the U.S. Internal Revenue Service or a Governmental Authority with competent jurisdiction.

Article IX.
TERMINATION

9.1      Events of Termination . This Agreement may be terminated at any time prior to the Closing Date:

(a)      by mutual written consent of the P66 Parties and the Partnership;

(b)      by either the P66 Parties or the Partnership in writing after December 31, 2016, if the Closing has not occurred by that date, provided that as of such date the terminating Party is not in default under this Agreement;

(c)      by either the P66 Parties or the Partnership in writing without prejudice to other rights and remedies the terminating Party or its Affiliates may have (provided the terminating Party and its Affiliates are not otherwise in material default or breach of this Agreement, or have not failed or refused to close without justification hereunder), if the other Party or its Affiliates shall have (i) materially failed to perform its covenants or agreements contained herein required to be performed by such Party or its Affiliates on or prior to the Closing Date or (ii) materially breached any of its representations or warranties contained herein; provided , however , that in the case of clauses (i) or (ii) , the defaulting Party shall have a period of 30 days following written notice from the non-defaulting Party to cure any breach of this Agreement if the breach is curable; or

(d)      by either the P66 Parties or the Partnership in writing, without liability, if there shall be any order, writ, injunction or decree of any Governmental Authority binding on the Parties that prohibits or restrains any Party from consummating the transactions contemplated hereby; provided , however , that the applicable Party shall have used its reasonable best efforts to have any such order, writ, injunction or decree removed but it shall not have been removed within 30 days after entry by the Governmental Authority.

9.2      Effect of Termination . In the event of the termination of this Agreement by a Party as provided in Section 9.1 , this Agreement shall thereafter become void except for this Section 9.2 and Section 10.4 . Nothing in this Section 9.2 shall be deemed to release any Party from any liability for any breach by such Party of the terms and provisions of this Agreement or to impair any rights of any Party under this Agreement. If this Agreement is terminated by either Party pursuant to Section 9.1(c) , then the other Party shall reimburse such Party for its out-of-pocket expenses incurred in connection with the negotiation, execution and performance of this Agreement (including legal fees and fees paid to Financial Advisor, in either case incurred by the Partnership or the Conflicts Committee).

Article X.
MISCELLANEOUS

10.1      Expenses . Unless otherwise specifically provided in this Agreement, each Party shall pay its own expenses incident to this Agreement or the other Transaction Documents and all action taken in preparation for effecting the provisions of this Agreement and the other Transaction Documents.

10.2      Deed; Bill of Sale; Assignment . To the extent required and permitted by applicable law, this Agreement shall also constitute a “deed,” “bill of sale” or “assignment” of the assets and the liabilities referenced herein.

10.3      Right of Offset . Each Party agrees that, in addition to, and without limitation of, any right of set-off, lien or counterclaim a Party may otherwise have, each Party shall have the right and be entitled, at its option, to offset (a) balances held by it or by any of its Affiliates for account of any other Party at any of its offices and (b) other obligations at any time owing by such Party in connection with any obligations to or for the credit or account of the other Party, against any principal of or interest on any of such other Party’s indebtedness or any other amount due and payable to such other Party hereunder that is not paid when due.

10.4      Notices . Unless otherwise specifically provided in this Agreement, any notice, request, instruction, correspondence or other document to be 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 any of the P66 Parties, addressed to:

Phillips 66 Company

P.O. Box 4428
Houston, Texas 77210

Attention: General Counsel

If to the Partnership or the General Partner, addressed to:

Phillips 66 Partners LP

c/o Phillips 66 Partners GP LLC

P.O. Box 4428
Houston, Texas 77210

Attention: General Counsel

Any Party may change any address to which notice is to be given to it by giving notice as provided above of such change of address.

10.5      Governing Law . This Agreement shall be governed and construed in accordance with the substantive laws of the State of Texas without reference to principles of conflicts of law that would result in the application of the laws of another jurisdiction.

10.6      Public Statements . The Parties shall consult with each other and no Party shall issue any public announcement or statement with respect to the transactions contemplated hereby without the consent of the other Parties, which shall not be unreasonably withheld or delayed, unless the Party desiring to make such announcement or statement, after seeking such consent from the other Parties, obtains advice from legal counsel that a public announcement or statement is required by applicable law or securities exchange regulations.

10.7      Form of Payment . All payments hereunder shall be made in United States dollars and, unless the Parties making and receiving such payments shall agree otherwise or the provisions hereof provide otherwise, shall be made by wire or interbank transfer of immediately available funds on the date such payment is due to such account as the Party receiving payment may designate at least three business days prior to the proposed date of payment.

10.8      Entire Agreement; Amendments and Waivers . This Agreement and the documents and instruments and other agreements specifically referred to herein or delivered pursuant hereto, including the exhibits and schedules hereto, (a) constitute the entire agreement among the Parties with respect to the subject matter hereof and supersede all prior agreements and understandings, both written and oral, among the Parties with respect to the subject matter hereof and (b) are not intended to confer upon any other Person or entity any rights or remedies hereunder except as Article VIII or Article X contemplates or except as otherwise expressly provided herein or therein. Each Party agrees that (i) no other Party (including its agents and representatives) has made any representation, warranty, covenant or agreement to or with such Party relating to this Agreement or the transactions contemplated hereby, other than those expressly set forth in the documents and instruments and other agreements specifically referred to herein or delivered pursuant hereto, including the exhibits and schedules hereto, and (ii) such Party has not relied upon any representation, warranty, covenant or agreement relating to this Agreement or the transactions contemplated hereby other than those referred to in clause (i) above. No supplement, modification or waiver of this Agreement shall be binding unless executed in writing by the Parties. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (regardless of whether similar), nor shall any such waiver constitute a continuing waiver unless otherwise expressly provided.

10.9      Binding Effect and Assignment . This Agreement shall be binding upon and inure to the benefit of the Parties and their respective permitted successors and assigns, but neither this Agreement nor any of the rights, benefits or obligations hereunder shall be assigned, by operation of law or otherwise, by any Party without the prior written consent of the other Parties.

10.10      Severability . If any provision of the Agreement is rendered or declared illegal or unenforceable by reason of any existing or subsequently enacted legislation or by decree of a court of last resort, the Parties shall meet promptly and negotiate substitute provisions for those rendered or declared illegal or unenforceable, but all of the remaining provisions of this Agreement shall remain in full force and effect and will not be affected or impaired in any way thereby.

10.11      Interpretation . The Parties agree that they have been represented by counsel during the negotiation and execution of this Agreement and, therefore waive the application of

any law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the Party drafting such agreement or document.

10.12      Headings and Schedules . The headings of the several Articles and Sections herein are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement. The schedules referred to herein are attached hereto and incorporated herein by this reference, and unless the context expressly requires otherwise, those schedules are incorporated in the definition of “Agreement.”

10.13      Counterparts . This Agreement 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 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.

10.14      Consent of Conflicts Committee . Any amendment or waiver by the Partnership made prior to Closing shall be approved by the Conflicts Committee.

[Signature pages follow]

IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the date first written above.

EXHIBIT A

FORM OF ASSIGNMENT OF MEMBERSHIP INTEREST

[See attached]

FORM OF ASSIGNMENT OF MEMBERSHIP INTERESTS

Phillips Texas Pipeline Company Eagle 1 LLC

Phillips Texas Pipeline Company Eagle 2 LLC

THIS ASSIGNMENT OF MEMBERSHIP INTERESTS (this “ Agreement ”) is made effective as of [ ], 2016 (the “ Effective Time ”), by and between Phillips 66 Project Development Inc. , a Delaware corporation (“ PDI ”), Phillips 66 Partners GP LLC , a Delaware limited liability company (the “ General Partner ”), Phillips 66 Partners LP , a Delaware limited partnership (the “ Partnership ”), Phillips 66 Partners Holdings LLC , a Delaware limited liability company (“ Holdings ”) and Phillips 66 Carrier LLC , a Delaware limited liability company (“ Carrier ”). Capitalized terms used but not otherwise defined herein shall have the meanings given to such terms in the Contribution Agreement (as defined below).

RECITALS

WHEREAS, reference is made to that certain Contribution, Conveyance and Assumption Agreement (the “ Contribution Agreement ”), dated as of October [•], 2016, by and among Phillips 66 Company, a Delaware corporation (“ P66 Company ”), PDI, the General Partner, and the Partnership;

WHEREAS, reference is also made to that certain Limited Liability Company Agreement (the “ Eagle 1 LLC Agreement ”) of Phillips Texas Pipeline Company Eagle 1 LLC, a Delaware limited liability company (“ Eagle 1 LLC ”), effective as of [•], 2016;

WHEREAS, reference is also made to that certain Limited Liability Company Agreement (the “ Eagle 2 LLC Agreement ” and, together with the Eagle 1 LLC Agreement, the “ LLC Agreements ”) of Phillips Texas Pipeline Company Eagle 2 LLC, a Delaware limited liability company (“ Eagle 2 LLC ” and, together with Eagle 1 LLC, the “ Contributed Entities” ), effective as of [•], 2016;

WHEREAS, pursuant to the LLC Agreements, PDI is the sole member of the Contributed Entities;

WHEREAS, pursuant to this Agreement:

(a) PDI desires to assign all of its right, title and interest in and to (i) [2]% of the limited liability company interests in each of Eagle 1 LLC and Eagle 2 LLC (collectively, the “ GP Membership Interests ”) to the General Partner and (ii) [98]% of the limited liability company interests in each of Eagle 1 LLC and Eagle 2 LLC (collectively, the “ LP Membership Interests ” and, together with the GP Membership Interests, the “ Membership Interests ”) to the Partnership; and the Partnership desires to accept PDI’s assignment of the LP Membership Interests;

(b) the General Partner desires to (i) accept the GP Membership Interests and (ii) effective immediately following such acceptance (the “ Interim Effective Time ”), assign all of its right, title and interest in and to the GP Membership Interests to the Partnership; and the Partnership desires to accept the General Partner’s assignment of the GP Membership Interests;

(c) effective immediately following the Partnership’s acceptance of the GP Membership Interests (the “ Partnership Interim Effective Time ”), the Partnership desires to assign all of its right, title and interest in and to the Membership Interests to Holdings, and Holdings desires to accept the Partnership’s assignment of the Membership Interests (collectively, the “ Holdings Assignments ”); and

(d) effective immediately following Holdings’ acceptance of the Membership Interests (the “ New Effective Time ”), Holdings desires to assign all of its right, title and interest in and to the membership interests in Eagle 2 LLC (the “ Eagle 2 LLC Membership Interests ”) to Carrier, and Carrier desires to accept Holdings’ assignment of the Eagle 2 LLC Membership Interests (collectively with the Holdings Assignments, the “ Assignments ”);

WHEREAS, after giving effect to (a) PDI’s assignment of the GP Membership Interests and LP Membership Interests to the General Partner and the Partnership, respectively, and the admission of the General Partner and Partnership as substitute members of the Contributed Entities, as applicable, PDI shall cease to be a member of the Contributed Entities, (b) the General Partner’s assignment of the GP Membership Interests to the Partnership, the General Partner shall cease to be a member of the Contributed Entities, and (c) the Partnership’s assignment of the Membership Interests to Holdings and the admission of Holdings as a substitute member of the Contributed Entities, the Partnership shall cease to be a member of the Contributed Entities;

WHEREAS, after giving effect to Holdings’ assignment of the Eagle 2 LLC Membership Interests to Carrier and the admission of Carrier as a substitute member of Eagle 2 LLC, Holdings shall cease to be a member of Eagle 2 LLC;

WHEREAS, after giving effect to the Assignments (a) Holdings will hold all of the membership interests in Eagle 1 LLC and be the sole member of Eagle 1 LLC and (b) Carrier will own all of the Eagle 2 LLC Membership Interests and will be the sole member of Eagle 2 LLC.

NOW, THEREFORE, in consideration of the mutual agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows:

1. Assignment .

(a) Effective as of the Effective Time, PDI hereby irrevocably assigns, transfers, and conveys (i) to the General Partner all of its right, title and interest in and to the GP Membership Interests and (ii) to the Partnership all of its right, title and interest in and to the LP Membership Interests, together with, in the case of clauses (i) and (ii) , all

such rights and obligations as set forth in the LLC Agreements and the Delaware Limited Liability Company Act, as amended (the “ Act ”).

(b) Effective as of the Interim Effective Time, the General Partner hereby irrevocably assigns, transfers, and conveys to the Partnership all of its right, title and interest in and to the GP Membership Interests, together with all such rights and obligations as set forth in the LLC Agreements and the Act.

(c) Effective as of the Partnership Interim Effective Time, the Partnership hereby irrevocably assigns, transfers, and conveys to Holdings all of the Partnership’s right, title and interest in and to the Membership Interests, together with all such rights and obligations as set forth in the LLC Agreements and the Act.

(d)      Effective as of the New Effective Time, Holdings hereby irrevocable assigns, transfers, and conveys to Carrier all of Holdings’ right, title and interest in and to the Eagle 2 LLC Membership Interests, together with all such rights and obligations as set forth in the Eagle 2 LLC Agreement and the Act.

2. Acceptance, Assumption and Acknowledgment .

(a)      Effective as of the Effective Time, the General Partner hereby accepts PDI’s assignment of the GP Membership Interests pursuant to Section 1(a) and hereby acknowledges and agrees to be bound by the terms of the LLC Agreements as a member of the Contributed Entities and assumes and agrees to perform all of PDI’s agreements and obligations existing or arising with respect to the GP Membership Interests.

(b)      Effective as of the Effective Time, the Partnership hereby accepts PDI’s assignment of the LP Membership Interests pursuant to Section 1(a) and hereby acknowledges and agrees to be bound by the terms of the LLC Agreements as a member of the Contributed Entities and assumes and agrees to perform all of PDI’s agreements and obligations existing or arising with respect to the LP Membership Interests.

(c)      Effective as of the Interim Effective Time, the Partnership hereby accepts the General Partner’s assignment of the GP Membership Interests pursuant to Section 1(b) and hereby acknowledges and agrees to be bound by the terms of the LLC Agreements as a member of the Contributed Entities and assumes and agrees to perform all of the General Partner’s agreements and obligations existing or arising with respect to the GP Membership Interests.

(d)      Effective as of the Partnership Interim Effective Time, Holdings hereby accepts the Partnership’s assignment of the Membership Interests pursuant to Section 1(c) and hereby acknowledges and agrees to be bound by the terms of the LLC Agreements as the sole member of the Contributed Entities, and assumes and agrees to perform all of the Partnership’s agreements and obligations existing or arising with respect to the Membership Interests.

(e)      Effective as of the New Effective Time, Carrier hereby accepts Holdings’ assignment of the Eagle 2 LLC Membership Interests pursuant to Section 1(d) and hereby acknowledges and

agrees to be bound by the terms of the Eagle 2 LLC Agreement as the sole member of Eagle 2 LLC, and assumes and agrees to perform all of Holdings’ agreements and obligations existing or arising with respect to the Eagle 2 LLC Membership Interests.

3. Effect of Assignment .

(a)      Effective as of the Effective Time and notwithstanding any provision of the LLC Agreements to the contrary: (i) the General Partner and the Partnership shall own the GP Membership Interests and the LP Membership Interests, respectively, in accordance with this Agreement; (ii) the General Partner is hereby admitted as a member of the Contributed Entities with respect to the GP Membership Interests, and this Agreement shall be included in the books and records of the Contributed Entities to reflect such admission; (iii) the Partnership is hereby admitted as a member of the Contributed Entities with respect to the LP Membership Interests, and this Agreement shall be included in the books and records of the Contributed Entities to reflect such admission; (iv) immediately following the admission of the General Partner and the Partnership as members of the applicable Contributed Entities, PDI hereby ceases to be a member of the Contributed Entities and ceases to have any right, title or interest in or to the Membership Interests and shall have no further obligations with respect to the Membership Interests or otherwise under the LLC Agreements, and (v) each of the Contributed Entities is hereby continued without dissolution.

(b)      Effective as of the Interim Effective Time and notwithstanding any provision of the LLC Agreements to the contrary: (i) the Partnership shall own the GP Membership Interests in accordance with this Agreement; (ii) the Partnership is hereby admitted as a member of the Contributed Entities with respect to the GP Membership Interests, (iii) immediately following such admission, the General Partner hereby ceases to be a member of the Contributed Entities and ceases to have any right, title or interest in or to the GP Membership Interests and shall have no further obligations with respect to the GP Membership Interests or otherwise under the LLC Agreements, (iv) the Partnership hereby continues as the sole member of the Contributed Entities, and (v) the Contributed Entities are hereby continued without dissolution.

(c)      Effective as of the Partnership Interim Effective Time and notwithstanding any provision of the LLC Agreements to the contrary: (i) Holdings shall own the Membership Interests in accordance with this Agreement; (ii) Holdings is hereby admitted as the sole member of each of the Contributed Entities, and this Agreement shall be included in the books and records of each of the Contributed Entities to reflect such admission; (iii) immediately following the admission of Holdings as a substitute member of the Contributed Entities, the Partnership hereby ceases to be a member of the Contributed Entities and ceases to have any right, title or interest in or to the Membership Interests and shall have no further obligations with respect to the Membership Interests or otherwise under the LLC Agreements, (iv) each of the Contributed Entities is hereby continued without dissolution, and (v) all references in the LLC Agreements to PDI are hereby deleted and "Phillips 66 Partners Holdings LLC" is hereby substituted in lieu thereof.

(d)      Effective as of the New Effective Time and notwithstanding any provision of the Eagle 2 LLC Agreement to the contrary: (i) Carrier shall own the Eagle 2 LLC Membership Interests in accordance with this Agreement; (ii) Carrier is hereby admitted as a member of Eagle 2 LLC, and this Agreement shall be included in the books and records of Eagle 2 LLC to reflect such

admission; (iii) immediately following the admission of Carrier as a substitute member of Eagle 2 LLC, Holdings hereby ceases to be a member of Eagle 2 LLC and ceases to have any right, title or interest in or to the Eagle 2 LLC Membership Interests and shall have no further obligations with respect to the Eagle 2 LLC Membership Interests or otherwise under the Eagle 2 LLC Agreement; (iv) Eagle 2 LLC is hereby continued without dissolution; and (v) all references in the Eagle 2 LLC Agreement to Holdings are hereby deleted and “Phillips 66 Partners Carrier LLC” is hereby substituted in lieu thereof.

4. Choice of Law . This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to the principles of conflict of laws of that state.

5. Further Assurances. The General Partner, Partnership, PDI, Holdings and Carrier agree to take such further action as may be necessary or appropriate to effect the purposes of this Agreement.

6. General . This Agreement is binding on and shall inure to the benefit of the signatories hereto and their respective successors and assigns. This Agreement is expressly subject to the terms, provisions and limitations of the Contribution Agreement and, in the event of any conflict between the terms of this Agreement and the terms of the Contribution Agreement, the terms of the Contribution Agreement shall control. 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.

[Remainder of page intentionally left blank.]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Time.

PDI:

Phillips 66 Project Development Inc.

By:      Exhibit Copy Only, Not for Execution     

             Title:     

THE GENERAL PARTNER:

Phillips 66 Partners GP LLC

    

By:      Exhibit Copy Only, Not for Execution     

Name:     

             Title:

THE PARTNERSHIP:

Phillips 66 Partners LP

By: Phillips 66 Partners GP LLC, its General Partner

    

By:                         

Name:     

             Title:     

    

    

HOLDINGS:

Phillips 66 Partners Holdings LLC

By: Phillips 66 Partners LP, its Sole Member

By: Phillips 66 Partners GP LLC, General Partner of

Phillips 66 Partners LP

By:      Exhibit Copy Only, Not for Execution     

Name:     

             Title:     

CARRIER:

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:      Exhibit Copy Only, Not for Execution             

Name:     

             Title:     

EXHIBIT B

FORM OF LEASE

[See attached]

EXHIBIT B

LEASE AGREEMENT WITH OPTION TO PURCHASE

BETWEEN

PHILLIPS 66 COMPANY

AS LESSOR

AND

PHILLIPS 66 PARTNERS HOLDINGS LLC

AS LESSEE

DATED AS OF

October 1st, 2016

LEASE

TABLE OF CONTENTS

Page

EXHIBIT A - LEGAL DESCRIPTION OF THE LEASED PROPERTY

EXHIBIT B - PERMITTED ENCUMBRANCES

EXHIBIT C - MEMORANDUM OF LEASE WITH OPTION TO PURCHASE

This Lease is made and entered into this 1st day of October, 2016 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, dated ___________, 2016 (“Contribution Agreement”) 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 Premises associated with the Assets with an option to purchase the Premises from Lessor, and Lessor desires to lease the Premises associated with the Assets with an option for Lessee to purchase the Premises.

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 . 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 Affiliates names that are located at or near the Refinery and which benefit the Premises or the Assets.

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

“ Assets ” shall mean the Linden Terminal and Tremley Point Terminal, and all other assets owned, held for use by Lessor or any of Lessor’s Affiliates in connection with the operation of the Linden Terminal and Tremley Point Terminal that are necessary for Lessee and Lessee’s Affiliates to use and operate the Linden Terminal and Tremley Point Terminal after the Effective Date in a manner substantially similar to the use and operation of the Linden Terminal and Tremley Point Terminal prior to the Effective Date and in a manner contemplated by the Contribution Agreement. However, fee ownership of the real property on which the Linden Terminal and Tremley Point Terminal are 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 Term ” shall have the meaning as defined in Section 2.2.

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

“ Closing ” shall have the meaning as defined in Section 3.2(b).

“ Closing Date ” shall have the meaning as defined in Section 3.2(b).

    

“ 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 have the meaning set forth in the First Recital.

“ 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, including preparing and signing any manifests required for the off-site transportation, treatment or disposal of Hazardous Materials and actions to prevent or abate migration of Hazardous Materials (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 October 1st, 2016, all in accordance with the terms for closing set forth in the Contribution Agreement.

“ Environmental Laws ” all applicable federal, state and local laws and regulations and other legally enforceable requirements and rules of common law relating to the prevention of pollution or protection of human health or the environment or imposing liability or standards of conduct concerning any Hazardous Materials.

“ 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 Material ” means (a) any “hazardous substance” as defined in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, (b) any “hazardous waste” as defined in the Resource Conservation and Recovery Act, as amended, (c) any petroleum or petroleum product, (d) any polychlorinated biphenyl and (e) any pollutant or contaminant or hazardous, dangerous or toxic chemical, material, waste or substance regulated under or within the meaning of any applicable Environmental Law.

“ 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, 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 the maximum legal interest rate and 1.5% per month.

“ 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 New Jersey, 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 the operation of the Linden Terminal and Tremley Point Terminal for the purpose of transportation of raw product and specification product, and for any other uses or activities related to or associated with such operations, subject to any Reasonable Restrictions.

“ Lessor ” shall mean Phillips 66 Company.

“ Linden Terminal ” shall mean terminal located in Linden, New Jersey consisting of a nine-bay refined products truck rack and a three-bay NGL truck rack with 331,000 barrels of refined products storage.

“ Option ” shall have the meaning as defined in Section 3.1.

“ 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 shown and described on Exhibit A.

“ 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 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 in accordance with the terms of this Lease.

“ Refinery ” shall mean the refinery, including the real property, located in in Linden, New Jersey, commonly known as the Bayway Refinery, excluding the Premises. 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.

“ Release ” shall mean any presence, spilling, leaking, seeping, pumping, pouring, emitting, emptying, injecting, discharging, escaping, leaching, dumping, disposing or releasing of a Hazardous Material 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 Material. 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 Material 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.

“ Renewal Terms ” shall have the meaning as defined in Section 2.3.

“ 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 Facilities and Services Agreement (Bayway) dated December 1, 2014, as amended, 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 Base Term, plus any additional Renewal Terms if said Renewal Terms are exercised by Lessee, unless terminated earlier pursuant to the terms of this Lease.

“ Title Company ” shall have the meaning as defined in Section 3.2(b).

“ Tremley Point Terminal ” shall mean the terminal located in Tremley Point, New Jersey, consisting of a three-bay refined products truck rack, 1,400,000 barrels of total storage capacity and a dock facility consisting of two vessel berths.

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.

Premises to Lessee on the effective date of the termination of this Lease, such conveyance to be made in accordance with and closed on the same terms as would be applicable if Lessee had exercised the Option pursuant to Section 3.1 of this Lease; provided, however, that Lessor shall not have the option to convey the Premises to Lessee, if in the subjective good faith judgment of Lessee or its counsel, the sale of the Premises would result in Lessee or the Premises being in violation of any applicable permits or Legal Requirements. Lessee agrees to reasonably cooperate with Lessor to structure lawful and commercially reasonable solutions to the above stated restriction on Lessor’s option to convey the Premises, if applicable;

2.3     Renewal Terms . So long as Lessee is not in 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 then 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.

2.4      Termination; Expiration . Upon the termination or expiration of this Lease, unless the Premises has been or is to be conveyed to Lessee, then Lessee shall return the Premises to Lessor as follows:

2.5      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 Lessee’s performance of all of its obligations hereunder, Lessee shall peaceably and quietly hold, use, enjoy and occupy the Premises in accordance with the terms and provisions of this Lease for the Term hereof without disturbance by Lessor or by anyone lawfully claiming by, through or under Lessor.

2.6      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 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; provided, however, all such easements and rights-of-way shall be non-exclusive on Lessor’s standard approved form for granting easements and rights-of-way to third parties, and none of these easements or rights-of-way shall unreasonably interfere with Lessor’s operations on the Refinery. All such easements and rights-of-way shall be recorded at the sole expense of Lessee. Upon completion of any construction, maintenance, replacement or removal operations Lessee shall repair and restore the easements and rights-of-way used by Lessee, as near as reasonably practical to do so, to substantially the same condition that existed prior to such activity.

2.7      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 2.6 above, or for Lessee to comply with the provisions of this Lease or the Shared Services Agreement, the following rights, subject to compliance with Lessor’s applicable Refinery safety, health and security rules and regulations:

2.8      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, that are located on the Premises for Lessor’s operations at the Refinery; 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 and suitable location on the Premises that is 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 at the Refinery. All such easements and rights-of-way shall be non-exclusive, on Lessee’s standard approved form for granting easements and rights-of-way to third parties, 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.

2.9      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 or for Lessor to comply with the provisions of this Lease or the Shared Services Agreement the following rights, subject to compliance with Lessee’s applicable Premises safety, health and security rules and regulations:

2.10      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, 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.

2.11      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, delayed or conditioned.

2.12      Appurtenant Easements. As of the Effective Date, to the extent Lessor has the legal right to do so, 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 to Lessee 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

OPTION TO PURCHASE

3.1      Option . Lessor, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby grants Lessee an exclusive and irrevocable option to purchase the Premises (the “Option”) for the price and upon the terms and conditions specified in this Article III. Lessee may exercise this Option at any time during the Term by giving Lessor written notice of exercise. Upon exercise of this Option by Lessee, Lessor shall be obligated to sell and convey the Premises to Lessee, and Lessee shall be obligated to purchase the Premises for the price and upon the terms and conditions specified in this Article III; provided, however, that Lessee shall not have the right to exercise this Option, if in the subjective good faith judgment of Lessor or its counsel, the sale of the Premises would result in Lessor or the Premises

being in violation of any applicable permits or Legal Requirements. Lessor agrees to reasonably cooperate with Lessee (but at no cost or liability to Lessor) in Lessee’s efforts to structure lawful and commercially reasonable solutions to the above stated restriction on Lessee’s right to exercise the Option, if applicable.

3.2      Terms of Sale and Conveyance; Closing . If Lessee exercises the Option in accordance with Section 3.1 above, the following covenants and agreements shall apply:

    

3.3      Assignment by Lessee . Lessee shall have the right to assign the Option only in connection with a permitted assignment of all of Lessee’s rights, interests and estates under this Lease. The Option is appurtenant to and cannot be separated from the leasehold estate of Lessee without prior written consent from Lessor (which consent may be granted, withheld, delayed or conditioned in Lessor’s sole and absolute discretion).

3.4      Rule Against Perpetuities . The rights granted to Lessee under this Article III are intended to be fully and immediately vested as of the date hereof. However, in the event it should ever be determined that the rule against perpetuities is applicable to the Option, then notwithstanding any of the other provisions of this Article III, it is agreed that the term of the Option shall expire on the soonest occurrence of (a) the date that is twenty-one years after the date of death of the last to die of all of the present members of the United States House of Representatives, as of the date hereof, and all of their presently existing lineal descendants, or (b) the date of expiration of the Term.

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 $675,537.00 per year, payable in monthly installments in the amount of $56,294.75. The first installment shall be due and payable on October 1 ^st , 2016. 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 above 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 Section 4.1 and Lessee shall pay any and all Property Taxes and other costs or expenses of any nature whatsoever to the extent related 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 of this Lease 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 Late Payment Rate 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 Lessee’s Operations, offices, and for any other uses or activities related to or associated with Lessee’s 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, 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 13.2 below. 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 sole 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 ____ 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.

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, NEGATE OR DIMINISH ANY REPRESENTATION OR WARRANTY GIVEN IN, OR 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, EXCEPT AS EXPRESSLY SET FORTH IN THE CONTRIBUTION AGREEMENT.

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 during the Term shall be responsible, to the extent it causes such injury, for repairing and/or restoring the Premises at its sole cost and expense to the condition that existed prior to such injury. 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 on or within 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 reasonably cooperate (at no cost or liability 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. Subject to Lessor’s rights under Section 2.4(f) above, 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 Late Payment Rate 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 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, Lessor or anyone holding the Refinery 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 Late Payment Rate 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

LESSEE’S INSURANCE

        

7.1      Insurance Coverage . Lessee shall during the Term of this Lease provide and maintain at Lessee’s 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 Lessee’s Operations 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 Lessee shall fail to keep in effect any insurance required under Section 7.1 above, Lessor may (but shall not be obligated to) obtain and pay for such insurance. However, Lessor will provide Lessee thirty (30) days prior written notice of such intent and allow Lessee thirty (30) days to comply with such insurance requirement(s).

 

7.3      Lessee’s Right to Self-Insure . Notwithstanding anything to the contrary contained herein, Lessee 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. Lessee may exercise such right by providing Lessor with a letter of self-insurance referencing the obligations and liabilities of this Lease with any financial information reasonably requested by Lessor to demonstrate the self-insuring Party’s ability to self-insure.

7.4      Insurance Requirements . On or before the Effective Date, Lessee shall provide Lessor with certificates or other documentary evidence reasonably satisfactory to Lessor of the insurance coverages and endorsements set forth above that are required to be obtained by Lessee. The above insurance shall include a requirement that Lessee’s insurer provide Lessor with thirty (30) days advance written notice of cancellation, material change, or non-renewal. Lessee’s insurance shall be primary, without right of contribution from any other insurance carried by or on behalf of Lessor with respect to its interest in the Premises. Lessee’s Workers Compensation insurance shall contain a waiver of subrogation against Lessor. Lessee’s Commercial General Liability and Business Automobile Liability insurance shall name Lessor 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 and Lessor’s Affiliates 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 arising out of, in connection with or resulting from activities or operations conducted on the Premises, the Appurtenant Easements or the Refinery, and