Sunoco 2013 Annual Report Download - page 56

54
• In connection with our second quarter 2013 acquisition of the Marcus Hook Facility, we assumed an agreement to
provide butane storage and terminal services to PES at the facility. The 10 year agreement extends through September
2022.
• We have agreements with Sunoco whereby Sunoco purchases refined products, at market-based rates, at certain of our
terminal facilities. These agreements are negotiated annually and currently do not extend beyond 2014.
• We have agreements with PES whereby PES purchases crude oil, at market-based rates, for delivery to our Fort
Mifflin and Eagle Point terminal facilities. These agreements contain minimum volume commitments and extend
through 2014.
The renegotiated terms of the agreements with PES provide PES with the option to purchase the Fort Mifflin and
Belmont terminals if certain triggering events occur, including a sale of substantially all of the assets or operations of the
Philadelphia refinery, an initial public offering or a public debt filing of more than $200 million. The purchase price for each
facility would be established based on a fair value amount determined by designated third parties.
Omnibus Agreement
In 2002, we entered into an Omnibus Agreement with Sunoco and our general partner that addresses the following
matters:
• our obligation to pay the general partner or Sunoco an annual administrative fee for the provision by Sunoco and its
affiliates of certain general and administrative services;
• an indemnity by Sunoco for certain environmental, toxic tort and other liabilities; and
• our obligation to indemnify Sunoco and its affiliates for events and conditions associated with the operation of the
assets that occur on or after the closing of the IPO and for environmental and toxic tort liabilities related to the assets
to the extent Sunoco is not required to indemnify us.
Administrative Services
We have no employees and we reimburse the general partner and its affiliates for certain costs and other direct expenses
incurred on our behalf. In addition, we have incurred additional general and administrative costs which we pay directly.
Under the Omnibus Agreement, we pay Sunoco an annual administrative fee that includes expenses incurred by Sunoco
and its affiliates to perform centralized corporate functions, such as legal, accounting, treasury, engineering, information
technology, insurance, and other corporate services, including the administration of employee benefit plans. This fee was $15,
$5, $13 and $13 million for the year ended December 31, 2013, the periods from October 5, 2012 to December 31, 2012 and
from January 1, 2012 to October 4, 2012, and for the year ended December 31, 2011, respectively. These fees do not include
the costs of shared insurance programs (which are allocated to us based upon our share of the cash premiums incurred), the
salaries of pipeline and terminal personnel or other employees of the general partner, or the cost of their employee benefits.
The initial term of Section 4.1 of the Omnibus Agreement (which concerns our obligation to pay the annual fee for
provision of certain general and administrative services) was through the end of 2004. The parties have extended the term of
Section 4.1 annually by one year in each year following 2004. The costs may be increased if the acquisition or construction of
new assets or businesses requires an increase in the level of general and administrative services received by us.
In addition to the fees for the centralized corporate functions, selling, general and administrative expenses in the
consolidated statements of comprehensive income include the allocation of shared insurance costs of $9, $2, $5 and $4 million
for the year ended December 31, 2013, the periods from October 5, 2012 to December 31, 2012 and from January 1, 2012 to
October 4, 2012, and for the year ended December 31, 2011, respectively. Our share of allocated Sunoco employee benefit plan
expenses, including non-contributory defined benefit retirement plans, defined contribution 401(k) plans, employee and retiree
medical, dental and life insurance plans, incentive compensation plans and other such benefits was $36, $10, $28 and $26
million for the year ended December 31, 2013, the periods from October 5, 2012 to December 31, 2012 and from January 1,
2012 to October 4, 2012, and for the year ended December 31, 2011, respectively. These expenses are reflected in cost of
products sold and operating expenses and selling, general and administrative expenses in the consolidated statements of
comprehensive income.
Indemnification
Under the terms of the Omnibus Agreement and in connection with the contribution of assets by affiliates of Sunoco,
Sunoco has agreed to indemnify us for 30 years from environmental and toxic tort liabilities related to the assets contributed
that arise from the operation of such assets prior to closing of the IPO. Sunoco is obligated to indemnify us for 100 percent of
all losses asserted within the first 21 years of closing of the IPO. Sunoco’s share of liability for claims asserted thereafter will
decrease by 10 percent per year. For example, for a claim asserted during the twenty-third year after closing of the IPO, Sunoco