Exhibit 3.1
Execution Copy
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
TESORO LOGISTICS LP
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ARTICLE I
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DEFINITIONS
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Section 1.1 Definitions
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1
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Section 1.2 Construction
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24
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ARTICLE II
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ORGANIZATION
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Section 2.1 Formation
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24
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Section 2.2 Name
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25
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Section 2.3 Registered Office; Registered Agent; Principal Office; Other Offices
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25
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Section 2.4 Purpose and Business
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25
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Section 2.5 Powers
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26
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Section 2.6 Term
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26
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Section 2.7 Title to Partnership Assets
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26
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ARTICLE III
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RIGHTS OF LIMITED PARTNERS
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Section 3.1 Limitation of Liability
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26
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Section 3.2 Management of Business
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27
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Section 3.3 Outside Activities of the Limited Partners
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27
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Section 3.4 Rights of Limited Partners
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27
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ARTICLE IV
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CERTIFICATES; RECORD HOLDERS; TRANSFER OF PARTNERSHIP
INTERESTS; REDEMPTION OF PARTNERSHIP INTERESTS
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Section 4.1 Certificates
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28
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Section 4.2 Mutilated, Destroyed, Lost or Stolen Certificates
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29
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Section 4.3 Record Holders
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30
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Section 4.4 Transfer Generally
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30
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Section 4.5 Registration and Transfer of Limited Partner Interests
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30
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Section 4.6 Transfer of the General Partners General Partner Interest
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32
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Section 4.7 Transfer of Incentive Distribution Rights
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32
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Section 4.8 Restrictions on Transfers
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32
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Section 4.9 Eligibility Certificates; Ineligible Holders
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34
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Section 4.10 Redemption of Partnership Interests of Ineligible Holders
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35
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ARTICLE V
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CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS
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Section 5.1 Organizational Contributions
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36
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Section 5.2 Contributions by the General Partner
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37
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Section 5.3 Contributions by Limited Partners
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37
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Section 5.4 Interest and Withdrawal
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38
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Section 5.5 Capital Accounts
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38
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Section 5.6 Issuances of Additional Partnership Securities
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42
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Section 5.7 Conversion of Subordinated Units
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43
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Section 5.8 Limited Preemptive Right
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43
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Section 5.9 Splits and Combinations
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43
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Section 5.10 Fully Paid and Non-Assessable Nature of Limited Partner Interests
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44
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Section 5.11 Issuance of Common Units in Connection with Reset of Incentive Distribution Rights
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44
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ARTICLE VI
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ALLOCATIONS AND DISTRIBUTIONS
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Section 6.1 Allocations for Capital Account Purposes
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46
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Section 6.2 Allocations for Tax Purposes
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56
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Section 6.3 Requirement and Characterization of Distributions; Distributions to Record Holders
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58
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Section 6.4 Distributions of Available Cash from Operating Surplus
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58
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Section 6.5 Distributions of Available Cash from Capital Surplus
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61
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Section 6.6 Adjustment of Minimum Quarterly Distribution and Target Distribution Levels
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61
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Section 6.7 Special Provisions Relating to the Holders of Subordinated Units
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61
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Section 6.8 Special Provisions Relating to the Holders of Incentive Distribution Rights
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62
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Section 6.9 Entity-Level Taxation
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62
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ARTICLE VII
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MANAGEMENT AND OPERATION OF BUSINESS
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Section 7.1 Management
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63
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Section 7.2 Certificate of Limited Partnership
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65
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Section 7.3 Restrictions on the General Partners Authority
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66
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Section 7.4 Reimbursement of the General Partner
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66
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Section 7.5 Outside Activities
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67
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Section 7.6 Loans from the General Partner; Loans or Contributions from the Partnership or Group Members
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68
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Section 7.7 Indemnification
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69
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Section 7.8 Liability of Indemnitees
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71
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Section 7.9 Resolution of Conflicts of Interest; Standards of Conduct and Modification of Duties
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71
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ii
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Section 7.10 Other Matters Concerning the General Partner
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73
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Section 7.11 Purchase or Sale of Partnership Securities
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74
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Section 7.12 Registration Rights of the General Partner and its Affiliates
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74
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Section 7.13 Reliance by Third Parties
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76
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ARTICLE VIII
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BOOKS, RECORDS, ACCOUNTING AND REPORTS
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Section 8.1 Records and Accounting
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77
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Section 8.2 Fiscal Year
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77
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Section 8.3 Reports
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77
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ARTICLE IX
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TAX MATTERS
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Section 9.1 Tax Returns and Information
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78
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Section 9.2 Tax Elections
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78
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Section 9.3 Tax Controversies
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79
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Section 9.4 Withholding
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79
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ARTICLE X
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ADMISSION OF PARTNERS
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Section 10.1 Admission of Limited Partners
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79
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Section 10.2 Admission of Successor General Partner
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80
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Section 10.3 Amendment of Agreement and Certificate of Limited Partnership
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80
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ARTICLE XI
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WITHDRAWAL OR REMOVAL OF PARTNERS
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Section 11.1 Withdrawal of the General Partner
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81
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Section 11.2 Removal of the General Partner
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82
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Section 11.3 Interest of Departing General Partner and Successor General Partner
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83
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Section 11.4 Termination of Subordination Period, Conversion of Subordinated Units and Extinguishment of Cumulative Common Unit Arrearages
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84
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Section 11.5 Withdrawal of Limited Partners
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85
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ARTICLE XII
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DISSOLUTION AND LIQUIDATION
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Section 12.1 Dissolution
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85
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Section 12.2 Continuation of the Business of the Partnership After Dissolution
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85
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Section 12.3 Liquidator
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86
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iii
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Section 12.4 Liquidation
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87
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Section 12.5 Cancellation of Certificate of Limited Partnership
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87
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Section 12.6 Return of Contributions
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88
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Section 12.7 Waiver of Partition
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88
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Section 12.8 Capital Account Restoration
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88
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ARTICLE XIII
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AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE
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Section 13.1 Amendments to be Adopted Solely by the General Partner
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88
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Section 13.2 Amendment Procedures
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89
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Section 13.3 Amendment Requirements
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90
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Section 13.4 Special Meetings
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91
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Section 13.5 Notice of a Meeting
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91
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Section 13.6 Record Date
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91
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Section 13.7 Adjournment
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92
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Section 13.8 Waiver of Notice; Approval of Meeting
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92
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Section 13.9 Quorum and Voting
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92
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Section 13.10 Conduct of a Meeting
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93
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Section 13.11 Action Without a Meeting
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93
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Section 13.12 Right to Vote and Related Matters
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94
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ARTICLE XIV
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MERGER, CONSOLIDATION OR CONVERSION
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Section 14.1 Authority
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94
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Section 14.2 Procedure for Merger, Consolidation or Conversion
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94
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Section 14.3 Approval by Limited Partners
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96
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Section 14.4 Certificate of Merger or Articles of Conversion
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98
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Section 14.5 Effect of Merger, Consolidation or Conversion
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98
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ARTICLE XV
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RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS
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Section 15.1 Right to Acquire Limited Partner Interests
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99
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ARTICLE XVI
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GENERAL PROVISIONS
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Section 16.1 Addresses and Notices; Written Communications
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101
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Section 16.2 Further Action
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102
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Section 16.3 Binding Effect
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102
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Section 16.4 Integration
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102
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Section 16.5 Creditors
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102
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iv
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Section 16.6 Waiver
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102
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Section 16.7 Third-Party Beneficiaries
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102
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Section 16.8 Counterparts
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102
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Section 16.9 Applicable Law
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103
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Section 16.10 Invalidity of Provisions
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104
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Section 16.11 Consent of Partners
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104
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Section 16.12 Facsimile and Email Signatures
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104
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v
FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP OF TESORO LOGISTICS LP
THIS FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF TESORO LOGISTICS LP dated
as of April 26, 2011, is entered into by and between Tesoro Logistics GP, LLC, a Delaware limited
liability company, as the General Partner, Tesoro Corporation, a Delaware corporation, as the
Organizational Limited Partner, Tesoro Alaska Company, a Delaware corporation, and Tesoro Refining
and Marketing Company, a Delaware corporation, together with any other Persons who become Partners
in the Partnership or parties hereto as provided herein. In consideration of the covenants,
conditions and agreements contained herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1
Definitions
.
The following definitions shall be for all purposes, unless otherwise clearly indicated to the
contrary, applied to the terms used in this Agreement.
Acquisition
means any transaction in which any Group Member acquires (through an asset
acquisition, merger, stock acquisition or other form of investment) control over all or a portion
of the assets, properties or business of another Person for the purpose of increasing over the
long-term the operating capacity or operating income of the Partnership Group from the operating
capacity or operating income of the Partnership Group existing immediately prior to such
transaction. For purposes of this definition, long-term generally refers to a period of not less
than twelve months.
Additional Book Basis
means the portion of any remaining Carrying Value of an Adjusted
Property that is attributable to positive adjustments made to such Carrying Value as a result of
Book-Up Events. For purposes of determining the extent that Carrying Value constitutes Additional
Book Basis:
(a) Any negative adjustment made to the Carrying Value of an Adjusted Property as a result of
either a Book-Down Event or a Book-Up Event shall first be deemed to offset or decrease that
portion of the Carrying Value of such Adjusted Property that is attributable to any prior positive
adjustments made thereto pursuant to a Book-Up Event or Book-Down Event; and
(b) If Carrying Value that constitutes Additional Book Basis is reduced as a result of a
Book-Down Event and the Carrying Value of other property is increased as a result of such Book-Down
Event, an allocable portion of any such increase in Carrying Value shall be treated as Additional
Book Basis;
provided
, that the amount treated as Additional Book Basis pursuant hereto as a result
of such Book-Down Event shall not exceed the amount by which the Aggregate Remaining Net Positive
Adjustments after such Book-Down Event exceeds the
remaining Additional Book Basis attributable to all of the Partnerships Adjusted Property
after
such Book-Down Event (determined without regard to the application of this clause (b) to such
Book-Down Event).
Additional Book Basis Derivative Items
means any Book Basis Derivative Items that are
computed with reference to Additional Book Basis. To the extent that the Additional Book Basis
attributable to all of the Partnerships Adjusted Property as of the beginning of any taxable
period exceeds the Aggregate Remaining Net Positive Adjustments as of the beginning of such period
(the
Excess Additional Book Basis
), the Additional Book Basis Derivative Items for such period
shall be reduced by the amount that bears the same ratio to the amount of Additional Book Basis
Derivative Items determined without regard to this sentence as the Excess Additional Book Basis
bears to the Additional Book Basis as of the beginning of such period. With respect to a Disposed
of Adjusted Property, the Additional Book Basis Derivative items shall be the amount of Additional
Book Basis taken into account in computing gain or loss from the disposition of such Disposed of
Adjusted Property.
Adjusted Capital Account
means the Capital Account maintained for each Partner as of the end
of each taxable period of the Partnership, (a) increased by any amounts that such Partner is
obligated to restore under the standards set by Treasury Regulation Section 1.704-1(b)(2)(ii)(c)
(or is deemed obligated to restore under Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5))
and (b) decreased by (i) the amount of all losses and deductions that, as of the end of such
taxable period, are reasonably expected to be allocated to such Partner in subsequent taxable
periods under Sections 704(e)(2) and 706(d) of the Code and Treasury Regulation Section
1.751-1(b)(2)(ii), and (ii) the amount of all distributions that, as of the end of such taxable
period, are reasonably expected to be made to such Partner in subsequent taxable periods in
accordance with the terms of this Agreement or otherwise to the extent they exceed offsetting
increases to such Partners Capital Account that are reasonably expected to occur during (or prior
to) the taxable period in which such distributions are reasonably expected to be made (other than
increases as a result of a minimum gain chargeback pursuant to Section 6.1(d)(i) or 6.1(d)(ii)).
The foregoing definition of Adjusted Capital Account is intended to comply with the provisions of
Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
The Adjusted Capital Account of a Partner in respect of any Partnership Interest shall be the
amount that such Adjusted Capital Account would be if such Partnership Interest were the only
interest in the Partnership held by such Partner from and after the date on which such Partnership
Interest was first issued.
Adjusted Operating Surplus
means, with respect to any period, (a) Operating Surplus
generated with respect to such period (b) less (i) the amount of any net increase in Working
Capital Borrowings (or the Partnerships proportionate share of any net increase in Working Capital
Borrowings in the case of Subsidiaries that are not wholly owned) with respect to such period and
(ii) the amount of any net decrease in cash reserves (or the Partnerships proportionate share of
any net decrease in cash reserves in the case of Subsidiaries that are not wholly owned) for
Operating Expenditures with respect to such period not relating to an Operating Expenditure made
with respect to such period, and (c) plus (i) the amount of any net decrease in Working Capital
Borrowings (or the Partnerships proportionate share of any net decrease in Working Capital
Borrowings in the case of Subsidiaries that are not wholly owned) with respect to such period, (ii)
the amount of any net decrease made in subsequent periods in
cash reserves for Operating Expenditures initially established with respect to such period to
the
2
extent such decrease results in a reduction in Adjusted Operating Surplus in subsequent periods
pursuant to clause (b)(ii) above and (iii) the amount of any net increase in cash reserves (or the
Partnerships proportionate share of any net increase in cash reserves in the case of Subsidiaries
that are not wholly owned) for Operating Expenditures with respect to such period required by any
debt instrument for the repayment of principal, interest or premium. Adjusted Operating Surplus
does not include that portion of Operating Surplus included in clause (a)(i) of the definition of
Operating Surplus.
Adjusted Property
means any property the Carrying Value of which has been adjusted pursuant
to Section 5.5(d).
Affiliate
means, with respect to any Person, any other Person that directly or indirectly
through one or more intermediaries controls, is controlled by or is under common control with, the
Person in question. As used herein, the term control means the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of a Person, whether
through ownership of voting securities, by contract or otherwise.
Aggregate Remaining Net Positive Adjustments
means, as of the end of any taxable period, the
sum of the Remaining Net Positive Adjustments of all the Partners.
Aggregate Quantity of IDR Reset Common Units
has the meaning assigned to such term in
Section 5.11(a).
Agreed Allocation
means any allocation, other than a Required Allocation, of an item of
income, gain, loss or deduction pursuant to the provisions of Section 6.1, including a Curative
Allocation (if appropriate to the context in which the term Agreed Allocation is used).
Agreed Value
of any Contributed Property means the fair market value of such property or
other consideration at the time of contribution and in the case of an Adjusted Property, the fair
market value of such Adjusted Property on the date of the revaluation event as described in Section
5.5(d), in both cases as determined by the General Partner. The General Partner shall use such
method as it determines to be appropriate to allocate the aggregate Agreed Value of Contributed
Properties contributed to the Partnership in a single or integrated transaction among each separate
property on a basis proportional to the fair market value of each Contributed Property.
Agreement
means this First Amended and Restated Agreement of Limited Partnership of Tesoro
Logistics LP, as it may be amended, supplemented or restated from time to time.
Associate
means, when used to indicate a relationship with any Person, (a) any corporation
or organization of which such Person is a director, officer, manager, member, general partner or
managing member or is, directly or indirectly, the owner of 20% or more of any class of voting
stock or other voting interest, (b) any trust or other estate in which such Person has at least a
20% beneficial interest or as to which such Person serves as trustee or in a similar fiduciary
capacity, and (c) any relative or spouse of such Person, or any relative of such spouse, who has
the same principal residence as such Person.
3
Available Cash
means, with respect to any Quarter ending prior to the Liquidation Date:
(a) the sum of (i) all cash and cash equivalents of the Partnership Group (or the
Partnerships proportionate share of cash and cash equivalents in the case of Subsidiaries that are
not wholly owned) on hand at the end of such Quarter, and (ii) if the General Partner so
determines, all or any portion of additional cash and cash equivalents of the Partnership Group (or
the Partnerships proportionate share of cash and cash equivalents in the case of Subsidiaries that
are not wholly owned) on hand on the date of determination of Available Cash with respect to such
Quarter resulting from Working Capital Borrowings made subsequent to the end of such Quarter, less
(b) the amount of any cash reserves established by the General Partner (or the Partnerships
proportionate share of cash reserves in the case of Subsidiaries that are not wholly owned) to (i)
provide for the proper conduct of the business of the Partnership Group (including reserves for
future capital expenditures and for anticipated future credit needs of the Partnership Group)
subsequent to such Quarter, (ii) comply with applicable law or any loan agreement, security
agreement, mortgage, debt instrument or other agreement or obligation to which any Group Member is
a party or by which it is bound or its assets are subject or (iii) provide funds for distributions
under Section 6.4 or Section 6.5 in respect of any one or more of the next four Quarters;
provided
,
however
, that the General Partner may not establish cash reserves pursuant to subclause (iii) above
if the effect of such reserves would be that the Partnership is unable to distribute the Minimum
Quarterly Distribution on all Common Units, plus any Cumulative Common Unit Arrearage on all Common
Units, with respect to such Quarter; and,
provided further
, that disbursements made by a Group
Member or cash reserves established, increased or reduced after the end of such Quarter but on or
before the date of determination of Available Cash with respect to such Quarter shall be deemed to
have been made, established, increased or reduced, for purposes of determining Available Cash,
within such Quarter if the General Partner so determines.
Notwithstanding the foregoing,
Available Cash
with respect to the Quarter in which the
Liquidation Date occurs and any subsequent Quarter shall equal zero.
Board of Directors
means, with respect to the General Partner, its board of directors or
board of managers, if the General Partner is a corporation or limited liability company, or the
board of directors or board of managers of the general partner of the General Partner, if the
General Partner is a limited partnership, as applicable.
Book Basis Derivative Items
means any item of income, deduction, gain or loss that is
computed with reference to the Carrying Value of an Adjusted Property (e.g., depreciation,
depletion, or gain or loss with respect to an Adjusted Property).
Book-Down Event
means an event that triggers a negative adjustment to the Capital Accounts
of the Partners pursuant to Section 5.5(d).
Book-Tax Disparity
means with respect to any item of Contributed Property or Adjusted
Property, as of the date of any determination, the difference between the Carrying
4
Value of such Contributed Property or Adjusted Property and the adjusted basis thereof for
federal income tax purposes as of such date. A Partners share of the Partnerships Book-Tax
Disparities in all of its Contributed Property and Adjusted Property will be reflected by the
difference between such Partners Capital Account balance as maintained pursuant to Section 5.5 and
the hypothetical balance of such Partners Capital Account computed as if it had been maintained
strictly in accordance with federal income tax accounting principles.
Book-Up Event
means an event that triggers a positive adjustment to the Capital Accounts of
the Partners pursuant to Section 5.5(d).
Business Day
means Monday through Friday of each week, except that a legal holiday
recognized as such by the government of the United States of America or the State of Texas shall
not be regarded as a Business Day.
Capital Account
means the capital account maintained for a Partner pursuant to Section 5.5.
The Capital Account of a Partner in respect of any Partnership Interest shall be the amount that
such Capital Account would be if such Partnership Interest were the only interest in the
Partnership held by such Partner from and after the date on which such Partnership Interest was
first issued.
Capital Contribution
means any cash, cash equivalents or the Net Agreed Value of Contributed
Property that a Partner contributes to the Partnership or that is contributed or deemed contributed
to the Partnership on behalf of a Partner (including, in the case of an underwritten offering of
Units, the amount of any underwriting discounts or commissions).
Capital Improvement
means any (a) addition or improvement to the capital assets owned by any
Group Member, (b) acquisition of existing, or the construction of new or the improvement or
replacement of existing, capital assets (including pipelines, terminals, tankage, tanker trucks,
docks, truck racks and other storage, distribution or transportation facilities and related or
similar midstream or logistics assets) or (c) capital contribution by a Group Member to a Person
that is not a Subsidiary in which a Group Member has an equity interest, or after such capital
contribution will have an equity interest, to fund such Group Members pro rata share of the cost
of the addition or improvement to, the acquisition of existing, the construction of new or the
improvement or replacement of existing capital assets (including pipelines, terminals, tankage,
tanker trucks, docks, truck racks and other storage, distribution or transportation facilities and
related or similar midstream or logistics assets) by such Person, in each case if such addition,
improvement, replacement, acquisition or construction is made to increase over the long-term the
operating capacity or operating income of the Partnership Group, in the case of clauses (a) and
(b), or such Person, in the case of clause (c), from the operating capacity or operating income of
the Partnership Group or such Person, as the case may be, existing immediately prior to such
addition, improvement, replacement, acquisition or construction. For purposes of this definition,
long-term generally refers to a period of not less than twelve months.
Capital Surplus
has the meaning assigned to such term in Section 6.3(a).
5
Carrying Value
means (a) with respect to a Contributed Property or Adjusted Property, the
Agreed Value of such property reduced (but not below zero) by all depreciation, amortization and
cost recovery deductions charged to the Partners Capital Accounts in respect of such property and
(b) with respect to any other Partnership property, the adjusted basis of such property for federal
income tax purposes, all as of the time of determination; provided that the Carrying Value of any
property shall be adjusted from time to time in accordance with Sections 5.5(d)(i) and 5.5(d)(ii)
and to reflect changes, additions or other adjustments to the Carrying Value for dispositions and
acquisitions of Partnership properties, as deemed appropriate by the General Partner.
Cause
means a court of competent jurisdiction has entered a final, non-appealable judgment
finding the General Partner liable for actual fraud or willful misconduct in its capacity as a
general partner of the Partnership.
Certificate
means (a) a certificate (i) substantially in the form of Exhibit A to this
Agreement, (ii) issued in global form in accordance with the rules and regulations of the
Depositary or (iii) in such other form as may be adopted by the General Partner, issued by the
Partnership evidencing ownership of one or more Common Units or (b) a certificate, in such form as
may be adopted by the General Partner, issued by the Partnership evidencing ownership of one or
more other Partnership Securities.
Certificate of Limited Partnership
means the Certificate of Limited Partnership of the
Partnership filed with the Secretary of State of the State of Delaware as referenced in Section
7.2, as such Certificate of Limited Partnership may be amended, supplemented or restated from time
to time.
Citizenship Certification
means a properly completed certificate in such form as may be
specified by the General Partner by which a Limited Partner certifies that he (and if he is a
nominee holding for the account of another Person, that to the best of his knowledge such other
Person) is an Eligible Holder.
Citizenship Eligibility Trigger
is defined in Section 4.9(a)(ii).
claim
(as used in Section 7.12(c)) has the meaning assigned to such term in Section 7.12(c).
Closing Date
means the first date on which Common Units are sold by the Partnership to the
Underwriters pursuant to the provisions of the Underwriting Agreement.
Closing Price
has the meaning assigned to such term in Section 15.1(a).
Code
means the Internal Revenue Code of 1986, as amended and in effect from time to time.
Any reference herein to a specific section or sections of the Code shall be deemed to include a
reference to any corresponding provision of any successor law.
Combined Interest
has the meaning assigned to such term in Section 11.3(a).
6
Commences Commercial Service
means the date upon which a Capital Improvement is first put
into commercial service by a Group Member following completion of construction development and
testing, as applicable.
Commission
means the United States Securities and Exchange Commission.
Common Unit
means a Partnership Security representing a fractional part of the Partnership
Interests of all Limited Partners, and having the rights and obligations specified with respect to
Common Units in this Agreement. The term Common Unit does not include a Subordinated Unit prior
to its conversion into a Common Unit pursuant to the terms hereof.
Common Unit Arrearage
means, with respect to any Common Unit, whenever issued, as to any
Quarter within the Subordination Period, the excess, if any, of (a) the Minimum Quarterly
Distribution with respect to a Common Unit in respect of such Quarter over (b) the sum of all
Available Cash distributed with respect to a Common Unit in respect of such Quarter pursuant to
Section 6.4(a)(i).
Conflicts Committee
means a committee of the Board of Directors of the General Partner
composed of one or more directors, each of whom (a) is not an officer or employee of the General
Partner, (b) is not an officer, director or employee of any Affiliate of the General Partner (other
than Group Members), (c) is not a holder of any ownership interest in the General Partner or its
Affiliates or the Partnership Group other than Common Units and other awards that are granted to
such director under the LTIP and (d) meets the independence standards required of directors who
serve on an audit committee of a board of directors established by the Securities Exchange Act and
the rules and regulations of the Commission thereunder and by the National Securities Exchange on
which the Common Units are listed or admitted to trading.
Contributed Property
means each property or other asset, in such form as may be permitted by
the Delaware Act, but excluding cash, contributed to the Partnership. Once the Carrying Value of a
Contributed Property is adjusted pursuant to Section 5.5(d), such property or other assets shall no
longer constitute a Contributed Property, but shall be deemed an Adjusted Property.
Contribution Agreement
means that certain Contribution, Conveyance and Assumption Agreement,
dated as of April 26, 2011, among the Partnership, the General Partner, Tesoro, Tesoro Alaska,
Tesoro R&M and Tesoro High Plains, together with the additional conveyance documents and
instruments contemplated or referenced thereunder, as such may be amended, supplemented or restated
from time to time.
Cumulative Common Unit Arrearage
means, with respect to any Common Unit, whenever issued,
and as of the end of any Quarter, the excess, if any, of (a) the sum resulting from adding together
the Common Unit Arrearages as to an Initial Common Unit for each of the Quarters within the
Subordination Period ending on or before the last day of such Quarter over (b) the sum of any
distributions theretofore made pursuant to Section 6.4(a)(ii) and the second sentence of Section
6.5 with respect to an Initial Common Unit (including any distributions to be made in respect of
the last of such Quarters).
7
Curative Allocation
means any allocation of an item of income, gain, deduction, loss or
credit pursuant to the provisions of Section 6.1(d)(xi).
Current Market Price
has the meaning assigned to such term in Section 15.1(a).
Curtailment Fees
means (A) (i) any Shortfall Payments (as defined therein) attributable to
Section 14(b) of that certain Transportation Services Agreement (High Plains Pipeline System),
dated April 26, 2011, by and between Tesoro High Plains and Tesoro R&M; (ii) any Curtailment Fees
(as defined therein) attributable to Section 30(b) of that certain Master Terminalling Services
Agreement, dated April 26, 2011, by and among Tesoro R&M, Tesoro Alaska and the Operating Company;
(iii) any Shortfall Payments (as defined therein) attributable to Section 14(b) of that certain
Transportation Services Agreement (SLC Short Haul Pipelines), dated April 26, 2011, by and between
the Operating Company and Tesoro R&M; (iv) any payments attributable to Section 21(b) of that
certain Salt Lake City Storage and Transportation Services Agreement, dated April 26, 2011, by and
between Tesoro R&M and the Operating Company; and (v) any Shortfall Payments (as defined therein)
attributable to Section 16(b) of that certain Trucking Transportation Services Agreement, dated
April 26, 2011, by and between the Operating Company and Tesoro R&M, in each case as such
agreements may be amended, supplemented or restated from time to time, and (B) any similar fees
that would be paid by Tesoro or its Affiliates under commercial contracts upon the suspension or
reduction of operations of Tesoro or its Affiliates.
Delaware Act
means the Delaware Revised Uniform Limited Partnership Act, 6 Del C. Section
17-101, et seq., as amended, supplemented or restated from time to time, and any successor to such
statute.
Departing General Partner
means a former general partner from and after the effective date
of any withdrawal or removal of such former general partner pursuant to Section 11.1 or Section
11.2.
Depositary
means, with respect to any Units issued in global form, The Depository Trust
Company and its successors and permitted assigns.
Disposed of Adjusted Property
is defined in Section 6.1(d)(xii)(B).
Economic Risk of Loss
has the meaning set forth in Treasury Regulation Section 1.752-2(a).
Eligibility Certificate
is defined in Section 4.9(b).
Eligible Holder
means a Limited Partner whose (a) federal income tax status would not, in
the determination of the General Partner, have the material adverse effect described in Section
4.9(a)(i) or (b) nationality, citizenship or other related status would not, in the determination
of the General Partner, create a substantial risk of cancellation or forfeiture as described in
Section 4.9(a)(ii).
Estimated Incremental Quarterly Tax Amount
has the meaning assigned to such term in Section
6.9.
8
Event of Withdrawal
has the meaning assigned to such term in Section 11.1(a).
Excess Additional Book Basis
is defined in the definition of Additional Book Basis
Derivative Items.
Excess Distribution
is defined in Section 6.1(d)(iii)(A).
Excess Distribution Unit
is defined in Section 6.1(d)(iii)(A).
Expansion Capital Expenditures
means cash expenditures for Acquisitions or Capital
Improvements. Expansion Capital Expenditures shall include interest (and related fees) on debt
incurred to finance the construction or development of a Capital Improvement and paid during the
period beginning on the date that a Group Member enters into a binding commitment to commence the
construction or development of such Capital Improvement and ending on the earlier to occur of the
date that such Capital Improvement Commences Commercial Service and the date that such Capital
Improvement is abandoned or disposed of. Debt incurred to fund such construction or development
period interest payments (including periodic net payments under related interest rate swap
agreements) paid during such period or to fund distributions on equity issued (including
incremental Incentive Distributions related thereto) to fund the construction or development of a
Capital Improvement as described in clause (a)(iv) of the definition of Operating Surplus shall
also be deemed to be debt incurred to finance the construction or development of a Capital
Improvement. Where cash expenditures are made in part for Expansion Capital Expenditures and in
part for other purposes, the General Partner shall determine the allocation between the amounts
paid for each.
Final Subordinated Units
has the meaning assigned to such term in Section 6.1(d)(x)(A).
First Liquidation Target Amount
has the meaning assigned to such term in Section
6.1(c)(i)(D).
First Target Distribution
means $0.338125 per Unit per Quarter (or, with respect to the
period commencing on the Closing Date and ending on June 30, 2011, it means the product of
$0.338125 multiplied by a fraction of which the numerator is the number of days in such period, and
of which the denominator is 91), subject to adjustment in accordance with Sections 5.11, 6.6 and
6.9.
Fully Diluted Weighted Average Basis
means, when calculating the number of Outstanding Units
for any period, a basis that includes (a) the weighted average number of Outstanding Units plus
(b) all Partnership Securities and options, rights, warrants, phantom units and appreciation rights
relating to an equity interest in the Partnership (i) that are convertible into or exercisable or
exchangeable for Units or for which Units are issuable, in each case that are senior to or pari
passu with the Subordinated Units, (ii) whose conversion, exercise or exchange price is less than
the Current Market Price on the date of such calculation, (iii) that may be converted into or
exercised or exchanged for such Units prior to or during the Quarter immediately following the end
of the period for which the calculation is being made without the satisfaction of any contingency
beyond the control of the holder other than the payment of consideration and the compliance with
administrative mechanics applicable to such conversion,
9
exercise or exchange and (iv) that were not converted into or exercised or exchanged for such
Units during the period for which the calculation is being made;
provided
,
however
, that for
purposes of determining the number of Outstanding Units on a Fully Diluted Weighted Average Basis
when calculating whether the Subordination Period has ended or Subordinated Units are entitled to
convert into Common Units pursuant to Section 5.7, such Partnership Securities, options, rights,
warrants and appreciation rights shall be deemed to have been Outstanding Units only for the four
Quarters that comprise the last four Quarters of the measurement period;
provided
,
further
, that if
consideration will be paid to any Group Member in connection with such conversion, exercise or
exchange, the number of Units to be included in such calculation shall be that number equal to the
difference between (x) the number of Units issuable upon such conversion, exercise or exchange and
(y) the number of Units that such consideration would purchase at the Current Market Price.
General Partner
means Tesoro Logistics GP, LLC, a Delaware limited liability company, and
its successors and permitted assigns that are admitted to the Partnership as general partner of the
Partnership, in its capacity as general partner of the Partnership (except as the context otherwise
requires).
General Partner Interest
means the ownership interest of the General Partner in the
Partnership (in its capacity as a general partner without reference to any Limited Partner Interest
held by it), which is evidenced by General Partner Units, and includes any and all benefits to
which the General Partner is entitled as provided in this Agreement, together with all obligations
of the General Partner to comply with the terms and provisions of this Agreement.
General Partner Unit
means a fractional part of the General Partner Interest having the
rights and obligations specified with respect to the General Partner Interest. A General Partner
Unit is not a Unit.
Gross Liability Value
means, with respect to any Liability of the Partnership described in
Treasury Regulation Section 1.752-7(b)(3)(i), the amount of cash that a willing assignor would pay
to a willing assignee to assume such Liability in an arms-length transaction.
Group
means a Person that with or through any of its Affiliates or Associates has any
contract, arrangement, understanding or relationship for the purpose of acquiring, holding, voting
(except voting pursuant to a revocable proxy or consent given to such Person in response to a proxy
or consent solicitation made to 10 or more Persons), exercising investment power or disposing of
any Partnership Interests with any other Person that beneficially owns, or whose Affiliates or
Associates beneficially own, directly or indirectly, Partnership Interests.
Group Member
means a member of the Partnership Group.
Group Member Agreement
means the partnership agreement of any Group Member, other than the
Partnership, that is a limited or general partnership, the limited liability company agreement of
any Group Member that is a limited liability company, the certificate of incorporation and bylaws
or similar organizational documents of any Group Member that is a corporation, the joint venture
agreement or similar governing document of any Group Member that is a joint venture and the
governing or organizational or similar documents of any other
10
Group Member that is a Person other than a limited or general partnership, limited liability
company, corporation or joint venture, as such may be amended, supplemented or restated from time
to time.
Hedge Contract
means any exchange, swap, forward, cap, floor, collar, option or other
similar agreement or arrangement entered into for the purpose of reducing the exposure of the
Partnership Group to fluctuations in interest rates or the price of hydrocarbons, other than for
speculative purposes.
Holder
as used in Section 7.12, has the meaning assigned to such term in Section 7.12(a).
IDR Reset Common Units
has the meaning assigned to such term in Section 5.11(a).
IDR Reset Election
has the meaning assigned to such term in Section 5.11(a).
Incentive Distribution Right
means a non-voting Limited Partner Interest issued to the
General Partner, which Limited Partner Interest will confer upon the holder thereof only the rights
and obligations specifically provided in this Agreement with respect to Incentive Distribution
Rights (and no other rights otherwise available to or other obligations of a holder of a
Partnership Interest). Notwithstanding anything in this Agreement to the contrary, the holder of
an Incentive Distribution Right shall not be entitled to vote such Incentive Distribution Right on
any Partnership matter except as may otherwise be required by law.
Incentive Distributions
means any amount of cash distributed to the holders of the Incentive
Distribution Rights pursuant to Sections 6.4(a)(v), (vi) and (vii) and 6.4(b)(iii), (iv) and (v).
Incremental Income Taxes
has the meaning assigned to such term in Section 6.9.
Indemnified Persons
has the meaning assigned to such term in Section 7.12(c).
Indemnitee
means (a) the General Partner, (b) any Departing General Partner, (c) any Person
who is or was an Affiliate of the General Partner or any Departing General Partner, (d) any Person
who is or was a manager, managing member, director, officer, employee, agent, fiduciary or trustee
of any Group Member, the General Partner or any Departing General Partner or any Affiliate of any
Group Member, the General Partner or any Departing General Partner, (e) any Person who is or was
serving at the request of the General Partner or any Departing General Partner or any Affiliate of
the General Partner or any Departing General Partner as a manager, managing member, director,
officer, employee, agent, fiduciary or trustee of another Person owing a fiduciary duty to any
Group Member;
provided
that a Person shall not be an Indemnitee by reason of providing, on a
fee-for-services basis, trustee, fiduciary or custodial services, and (f) any Person the General
Partner designates as an Indemnitee for purposes of this Agreement.
Ineligible Holder
is defined in Section 4.9(c).
Initial Common Units
means the Common Units sold in the Initial Offering.
11
Initial Limited Partners
means the Organizational Limited Partner, the General Partner (with
respect to the Incentive Distribution Rights received by it pursuant to Section 5.2) and the
Underwriters upon the issuance by the Partnership of Common Units as described in Section 5.3(a) in
connection with the Initial Offering.
Initial Offering
means the initial offering and sale of Common Units to the public, as
described in the Registration Statement.
Initial Unit Price
means (a) with respect to the Common Units and the Subordinated Units,
the initial public offering price per Common Unit at which the Common Units were first offered to
the public for sale as set forth on the cover page of the prospectus included as part of the
Registration Statement and first issued at or after the time the Registration Statement first
became effective or (b) with respect to any other class or series of Units, the price per Unit at
which such class or series of Units is initially sold by the Partnership, as determined by the
General Partner, in each case adjusted as the General Partner determines to be appropriate to give
effect to any distribution, subdivision or combination of Units.
Interim Capital Transactions
means the following transactions if they occur prior to the
Liquidation Date: (a) borrowings, refinancings or refundings of indebtedness (other than Working
Capital Borrowings and other than for items purchased on open account in the ordinary course of
business) by any Group Member and sales of debt securities of any Group Member; (b) issuances of
equity interests of any Group Member (including the Common Units sold to the Underwriters pursuant
to the exercise of the Over-Allotment Option); and (c) sales or other voluntary or involuntary
dispositions of any assets of any Group Member other than (i) sales or other dispositions of
inventory, accounts receivable and other assets in the ordinary course of business and (ii) sales
or other dispositions of assets as part of normal retirements or replacements.
Liability
means any liability or obligation of any nature, whether accrued, contingent or
otherwise.
Limited Partner
means, unless the context otherwise requires, the Organizational Limited
Partner prior to its withdrawal from the Partnership, each Initial Limited Partner, each additional
Person that becomes a Limited Partner pursuant to the terms of this Agreement and any Departing
General Partner upon the change of its status from General Partner to Limited Partner pursuant to
Section 11.3, in each case, in such Persons capacity as a limited partner of the Partnership;
provided
,
however
, that when the term Limited Partner is used herein in the context of any vote
or other approval, including Articles XIII and XIV, such term shall not, solely for such purpose,
include any holder of an Incentive Distribution Right (solely with respect to its Incentive
Distribution Rights and not with respect to any other Limited Partner Interest held by such Person)
except as may otherwise be required by law.
Limited Partner Interest
means the ownership interest of a Limited Partner in the
Partnership, which may be evidenced by Common Units, Subordinated Units, Incentive Distribution
Rights or other Partnership Securities or a combination thereof or interest therein, and includes
any and all benefits to which such Limited Partner is entitled as provided in this Agreement,
together with all obligations of such Limited Partner to comply with the terms and
12
provisions of this Agreement;
provided
,
however
, that when the term Limited Partner Interest
is used herein in the context of any vote or other approval, including Articles XIII and XIV, such
term shall not, solely for such purpose, include any Incentive Distribution Right except as may
otherwise be required by law.
Liquidation Date
means (a) in the case of an event giving rise to the dissolution of the
Partnership of the type described in clauses (a) and (b) of the first sentence of Section 12.2, the
date on which the applicable time period during which the holders of Outstanding Units have the
right to elect to continue the business of the Partnership has expired without such an election
being made and (b) in the case of any other event giving rise to the dissolution of the
Partnership, the date on which such event occurs.
Liquidator
means one or more Persons selected by the General Partner to perform the
functions described in Section 12.4 as liquidating trustee of the Partnership within the meaning of
the Delaware Act.
Merger Agreement
has the meaning assigned to such term in Section 14.1.
Minimum Quarterly Distribution
means $0.3375 per Unit per Quarter (or with respect to the
period commencing on the Closing Date and ending on June 30, 2011, it means the product of $0.3375
multiplied by a fraction of which the numerator is the number of days in such period and of which
the denominator is 91), subject to adjustment in accordance with Sections 5.11, 6.6 and 6.9.
National Securities Exchange
means an exchange registered with the Commission under Section
6(a) of the Securities Exchange Act (or any successor to such Section) and any other securities
exchange (whether or not registered with the Commission under Section 6(a) (or successor to such
Section) of the Securities Exchange Act) that the General Partner shall designate as a National
Securities Exchange for purposes of this Agreement.
Net Agreed Value
means, (a) in the case of any Contributed Property, the Agreed Value of
such property or other consideration reduced by any Liabilities either assumed by the Partnership
upon such contribution or to which such property or other consideration is subject when contributed
and (b) in the case of any property distributed to a Partner by the Partnership, the Partnerships
Carrying Value of such property (as adjusted pursuant to Section 5.5(d)(ii)) at the time such
property is distributed, reduced by any Liability either assumed by such Partner upon such
distribution or to which such property is subject at the time of distribution, in either case as
determined and required by the Treasury Regulations promulgated under Section 704(b) of the Code.
Net Income
means, for any taxable period, the excess, if any, of the Partnerships items of
income and gain (other than those items taken into account in the computation of Net Termination
Gain or Net Termination Loss) for such taxable period over the Partnerships items of loss and
deduction (other than those items taken into account in the computation of Net Termination Gain or
Net Termination Loss) for such taxable period. The items included in the calculation of Net Income
shall be determined in accordance with Section 5.5(b) and shall not include any items specially
allocated under Section 6.1(d);
provided
, that the determination of
13
the items that have been specially allocated under Section 6.1(d) shall be made without regard
to any reversal of such items under Section 6.1(d)(xii).
Net Loss
means, for any taxable period, the excess, if any, of the Partnerships items of
loss and deduction (other than those items taken into account in the computation of Net Termination
Gain or Net Termination Loss) for such taxable period over the Partnerships items of income and
gain (other than those items taken into account in the computation of Net Termination Gain or Net
Termination Loss) for such taxable period. The items included in the calculation of Net Loss shall
be determined in accordance with Section 5.5(b) and shall not include any items specially allocated
under Section 6.1(d);
provided
, that the determination of the items that have been specially
allocated under Section 6.1(d) shall be made without regard to any reversal of such items under
Section 6.1(d)(xii).
Net Positive Adjustments
means, with respect to any Partner, the excess, if any, of the
total positive adjustments over the total negative adjustments made to the Capital Account of such
Partner pursuant to Book-Up Events and Book-Down Events.
Net Termination Gain
means, for any taxable period, the sum, if positive, of all items of
income, gain, loss or deduction (determined in accordance with Section 5.5(b)) that are (a)
recognized (i) after the Liquidation Date or (ii) upon the sale, exchange or other disposition of
all or substantially all of the assets of the Partnership Group, taken as a whole, in a single
transaction or a series of related transactions (excluding any disposition to a member of the
Partnership Group), or (b) deemed recognized by the Partnership pursuant to Section 5.5(d);
provided, however
, the items included in the determination of Net Termination Gain shall not
include any items of income, gain or loss specially allocated under Section 6.1(d).
Net Termination Loss
means, for any taxable period, the sum, if negative, of all items of
income, gain, loss or deduction (determined in accordance with Section 5.5(b)) that are (a)
recognized (i) after the Liquidation Date or (ii) upon the sale, exchange or other disposition of
all or substantially all of the assets of the Partnership Group, taken as a whole, in a single
transaction or a series of related transactions (excluding any disposition to a member of the
Partnership Group), or (b) deemed recognized by the Partnership pursuant to Section 5.5(b);
provided, however
, items included in the determination of Net Termination Loss shall not include
any items of income, gain or loss specially allocated under Section 6.1(d).
Non-citizen Assignee
means a Person whom the General Partner has determined does not
constitute an Eligible Holder and as to whose Partnership Interest the General Partner has become
the substituted limited partner, pursuant to Section 4.9.
Nonrecourse Built-in Gain
means with respect to any Contributed Properties or Adjusted
Properties that are subject to a mortgage or pledge securing a Nonrecourse Liability, the amount of
any taxable gain that would be allocated to the Partners pursuant to Sections 6.2(b) if such
properties were disposed of in a taxable transaction in full satisfaction of such liabilities and
for no other consideration.
Nonrecourse Deductions
means any and all items of loss, deduction or expenditure (including
any expenditure described in Section 705(a)(2)(B) of the Code) that, in accordance
14
with the principles of Treasury Regulation Section 1.704-2(b), are attributable to a
Nonrecourse Liability.
Nonrecourse Liability
has the meaning set forth in Treasury Regulation Section
1.752-1(a)(2).
Notice of Election to Purchase
has the meaning assigned to such term in Section 15.1(b).
Omnibus Agreement
means that certain Omnibus Agreement, dated as of April 26, 2011, among
Tesoro, Tesoro R&M, Tesoro Companies, Inc., a Delaware corporation, Tesoro Alaska, the General
Partner and the Partnership, as such agreement may be amended, supplemented or restated from time
to time.
Operating Company
means Tesoro Logistics Operations, LLC, a Delaware limited liability
company, and any successors thereto.
Operating Expenditures
means all Partnership Group cash expenditures (or the Partnerships
proportionate share of expenditures in the case of Subsidiaries that are not wholly owned),
including taxes, compensation of employees and directors of the General Partner, reimbursement of
expenses of the General Partner, debt service payments, repayment of Working Capital Borrowings,
payments made in the ordinary course of business under any Hedge Contracts (provided that (i) with
respect to amounts paid in connection with the initial purchase of a Hedge Contract, such amounts
shall be amortized over the life of such Hedge Contract and (ii) payments made in connection with
the termination of any Hedge Contract prior to the expiration of its scheduled settlement or
termination date shall be included in equal quarterly installments over the remaining scheduled
life of such Hedge Contract), subject to the following:
(a) repayments of Working Capital Borrowings deducted from Operating Surplus pursuant to
clause (b)(iii) of the definition of Operating Surplus shall not constitute Operating Expenditures
when actually repaid;
(b) payments (including prepayments and prepayment penalties) of principal of and premium on
indebtedness other than Working Capital Borrowings shall not constitute Operating Expenditures; and
(c) Operating Expenditures shall not include (i) Expansion Capital Expenditures, (ii) payment
of transaction expenses (including taxes) relating to Interim Capital Transactions, (iii)
distributions to Partners (including any distributions made pursuant to Section 6.4(a)), (iv)
repurchases of Partnership Interests, other than repurchases of Partnership Interests by the
Partnership to satisfy obligations under employee benefit plans or reimbursement of expenses of the
General Partner for purchases of Partnership Interests by the General Partner to satisfy
obligations under employee benefit plans, or (v) any other payments made in connection with the
Initial Offering that are described under Use of Proceeds in the Registration Statement.
15
Operating Surplus
means, with respect to any period ending prior to the Liquidation Date, on
a cumulative basis and without duplication,
(a) the sum of (i) $30 million, (ii) all cash receipts of the Partnership Group (or the
Partnerships proportionate share of cash receipts in the case of Subsidiaries that are not wholly
owned) for the period beginning on the Closing Date and ending on the last day of such period, but
excluding cash receipts from Interim Capital Transactions and the termination of Hedge Contracts
(provided that cash receipts from the termination of a Hedge Contract prior to its scheduled
settlement or termination date shall be included in Operating Surplus in equal quarterly
installments over the remaining scheduled life of such Hedge Contract), (iii) all cash receipts of
the Partnership Group (or the Partnerships proportionate share of cash receipts in the case of
Subsidiaries that are not wholly owned) after the end of such period but on or before the date of
determination of Operating Surplus with respect to such period resulting from Working Capital
Borrowings and (iv) the amount of cash distributions paid (including incremental Incentive
Distributions) on equity issued, other than equity issued on the Closing Date or the Option Closing
Date, to finance all or a portion of the construction or development of a Capital Improvement and
paid in respect of the period beginning on the date that the Group Member enters into a binding
commitment to commence the construction or development of such Capital Improvement and ending on
the earlier to occur of the date such Capital Improvement Commences Commercial Service and the date
that it is abandoned or disposed of (equity issued, other than equity issued on the Closing Date or
the Option Closing Date, to fund interest payments on debt incurred or distributions on equity
issued, in each case during the period described above in this clause (iv), to finance the
construction or development of a Capital Improvement shall also be deemed to be equity issued to
finance the construction or development of such Capital Improvement for purposes of this clause
(iv)), less
(b) the sum of (i) Operating Expenditures for the period beginning on the Closing Date and
ending on the last day of such period, (ii) the amount of cash reserves (or the Partnerships
proportionate share of cash reserves in the case of Subsidiaries that are not wholly owned)
established by the General Partner to provide funds for future Operating Expenditures, and (iii)
all Working Capital Borrowings not repaid within twelve months after having been incurred, or
repaid within such 12-month period with the proceeds of additional Working Capital Borrowings;
provided
,
however
, that disbursements made (including contributions to a Group Member or
disbursements on behalf of a Group Member) or cash reserves established, increased or reduced after
the end of such period but on or before the date of determination of Available Cash with respect to
such period shall be deemed to have been made, established, increased or reduced, for purposes of
determining Operating Surplus, within such period if the General Partner so determines.
Notwithstanding the foregoing,
Operating Surplus
with respect to the Quarter in which the
Liquidation Date occurs and any subsequent Quarter shall equal zero.
Operational Services Agreement
means that certain Operational Services Agreement, dated as
of April 26, 2011, among Tesoro, the Partnership, Tesoro Companies Inc., Tesoro R&M, Tesoro Alaska,
Tesoro High Plains Pipeline Company LLC, Tesoro Logistics Operations LLC and the General Partner as
such agreement may be amended, supplemented or restated from time to time.
16
Opinion of Counsel
means a written opinion of counsel (who may be regular counsel to the
Partnership or the General Partner or any of its Affiliates) acceptable to the General Partner.
Option Closing Date
means the date or dates on which any Common Units are sold by the
Partnership to the Underwriters upon exercise of the Over-Allotment Option.
Organizational Limited Partner
means Tesoro in its capacity as the organizational limited
partner of the Partnership pursuant to this Agreement.
Outstanding
means, with respect to Partnership Securities, all Partnership Securities that
are issued by the Partnership and reflected as outstanding on the Partnerships books and records
as of the date of determination;
provided
,
however
, that if at any time any Person or Group (other
than the General Partner or its Affiliates) beneficially owns 20% or more of the Outstanding
Partnership Securities of any class then Outstanding, all Partnership Securities owned by such
Person or Group shall not be entitled to be voted on any matter and shall not be considered to be
Outstanding when sending notices of a meeting of Limited Partners to vote on any matter (unless
otherwise required by law), calculating required votes, determining the presence of a quorum or for
other similar purposes under this Agreement, except that Partnership Securities so owned shall be
considered to be Outstanding for purposes of Section 11.1(b)(iv) (such Partnership Securities shall
not, however, be treated as a separate class of Partnership Securities for purposes of this
Agreement or the Delaware Act);
provided
,
further
, that the foregoing limitation shall not apply to
(i) any Person or Group who acquired 20% or more of the Outstanding Partnership Securities of any
class then Outstanding directly from the General Partner or its Affiliates (other than the
Partnership), (ii) any Person or Group who acquired 20% or more of the Outstanding Partnership
Securities of any class then Outstanding directly or indirectly from a Person or Group described in
clause (i) provided that, upon or prior to such acquisition, the General Partner shall have
notified such Person or Group in writing that such limitation shall not apply, or (iii) any Person
or Group who acquired 20% or more of any Partnership Securities issued by the Partnership with the
prior approval of the Board of Directors of the General Partner.
Over-Allotment Option
means the over-allotment option granted to the Underwriters by the
Partnership pursuant to the Underwriting Agreement.
Partner Nonrecourse Debt
has the meaning set forth in Treasury Regulation Section
1.704-2(b)(4).
Partner Nonrecourse Debt Minimum Gain
has the meaning set forth in Treasury Regulation
Section 1.704-2(i)(2).
Partner Nonrecourse Deductions
means any and all items of loss, deduction or expenditure
(including any expenditure described in Section 705(a)(2)(B) of the Code) that, in accordance with
the principles of Treasury Regulation Section 1.704-2(i), are attributable to a Partner Nonrecourse
Debt.
Partners
means the General Partner and the Limited Partners.
17
Partnership
means Tesoro Logistics LP, a Delaware limited partnership.
Partnership Group
means the Partnership and its Subsidiaries treated as a single
consolidated entity.
Partnership Interest
means an interest in the Partnership, which shall include the General
Partner Interest and Limited Partner Interests.
Partnership Minimum Gain
means that amount determined in accordance with the principles of
Treasury Regulation Sections 1.704-2(b)(2) and 1.704-2(d).
Partnership Security
means any class or series of equity interest in the Partnership (but
excluding any options, rights, warrants and appreciation rights relating to an equity interest in
the Partnership), including Common Units, Subordinated Units, General Partner Units and Incentive
Distribution Rights.
Per Unit Capital Amount
means, as of any date of determination, the Capital Account, stated
on a per Unit basis, underlying any Unit held by a Person other than the General Partner or any
Affiliate of the General Partner who holds Units.
Percentage Interest
means as of any date of determination (a) as to the General Partner with
respect to General Partner Units and as to any Unitholder with respect to Units, as the case may
be, the product obtained by multiplying (i) 100% less the percentage applicable to clause (b) below
by (ii) the quotient obtained by dividing (A) the number of General Partner Units held by the
General Partner or the number of Units held by such Unitholder, as the case may be, by (B) the
total number of Outstanding Units and General Partner Units, and (b) as to the holders of other
Partnership Securities issued by the Partnership in accordance with Section 5.6, the percentage
established as a part of such issuance. The Percentage Interest with respect to an Incentive
Distribution Right shall at all times be zero.
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.
Plan of Conversion
has the meaning assigned to such term in Section 14.1.
Pro Rata
means (a) when used with respect to Units or any class thereof, apportioned equally
among all designated Units in accordance with their relative Percentage Interests, (b) when used
with respect to Partners or Record Holders, apportioned among all Partners or Record Holders in
accordance with their relative Percentage Interests and (c) when used with respect to holders of
Incentive Distribution Rights, apportioned equally among all holders of Incentive Distribution
Rights in accordance with the relative number or percentage of Incentive Distribution Rights held
by each such holder.
Purchase Date
means the date determined by the General Partner as the date for purchase of
all Outstanding Limited Partner Interests of a certain class (other than Limited Partner Interests
owned by the General Partner and its Affiliates) pursuant to Article XV.
18
Quarter
means, unless the context requires otherwise, a fiscal quarter of the Partnership,
or, with respect to the fiscal quarter of the Partnership which includes the Closing Date, the
portion of such fiscal quarter after the Closing Date.
Rate Eligibility Trigger
is defined in Section 4.9(a)(i).
Recapture Income
means any gain recognized by the Partnership (computed without regard to
any adjustment required by Section 734 or Section 743 of the Code) upon the disposition of any
property or asset of the Partnership, which gain is characterized as ordinary income because it
represents the recapture of deductions previously taken with respect to such property or asset.
Record Date
means the date established by the General Partner or otherwise in accordance
with this Agreement for determining (a) the identity of the Record Holders entitled to notice of,
or to vote at, any meeting of Limited Partners or entitled to vote by ballot or give approval of
Partnership action in writing without a meeting or entitled to exercise rights in respect of any
lawful action of Limited Partners or (b) the identity of Record Holders entitled to receive any
report or distribution or to participate in any offer.
Record Holder
means (a) with respect to Partnership Securities of any class for which a
Transfer Agent has been appointed, the Person in whose name a Partnership Security of such class is
registered on the books of the Transfer Agent as of the opening of business on a particular
Business Day or (b) with respect to other classes of Partnership Securities, the Person in whose
name any such other Partnership Security is registered on the books that the General Partner has
caused to be kept as of the opening of business on such Business Day.
Redeemable Interests
means any Partnership Interests for which a redemption notice has been
given, and has not been withdrawn, pursuant to Section 4.10.
Registration Statement
means the Registration Statement on Form S-1 (File No. 333-171525) as
it has been or as it may be amended or supplemented from time to time, filed by the Partnership
with the Commission under the Securities Act to register the offering and sale of the Common Units
in the Initial Offering.
Remaining Net Positive Adjustments
means as of the end of any taxable period, (i) with
respect to the Unitholders holding Common Units or Subordinated Units, the excess of (a) the Net
Positive Adjustments of the Unitholders holding Common Units or Subordinated Units as of the end of
such period over (b) the sum of those Partners Share of Additional Book Basis Derivative Items for
each prior taxable period, (ii) with respect to the General Partner (as holder of the General
Partner Units), the excess of (a) the Net Positive Adjustments of the General Partner as of the end
of such period over (b) the sum of the General Partners Share of Additional Book Basis Derivative
Items with respect to the General Partner Units for each prior taxable period, and (iii) with
respect to the holders of Incentive Distribution Rights, the excess of (a) the Net Positive
Adjustments of the holders of Incentive Distribution Rights as of the end of such period over (b)
the sum of the Share of Additional Book Basis Derivative Items of the holders of the Incentive
Distribution Rights for each prior taxable period.
19
Required Allocations
means any allocation of an item of income, gain, loss or deduction
pursuant to Section 6.1(d)(i), Section 6.1(d)(ii), Section 6.1(d)(iv), Section 6.1(d)(v), Section
6.1(d)(vi), Section 6.1(d)(vii) or Section 6.1(d)(ix).
Reset MQD
has the meaning assigned to such term in Section 5.11(e).
Reset Notice
has the meaning assigned to such term in Section 5.11(b).
Retained Converted Subordinated Unit
has the meaning assigned to such term in Section
5.5(c)(ii).
Second Liquidation Target Amount
has the meaning assigned to such term in Section
6.1(c)(i)(E).
Second Target Distribution
means $0.421875 per Unit per Quarter (or, with respect to the
period commencing on the Closing Date and ending on June 30, 2011, it means the product of
$0.421875 multiplied by a fraction of which the numerator is equal to the number of days in such
period and of which the denominator is 91), subject to adjustment in accordance with Section 5.11,
Section 6.6 and Section 6.9.
Securities Act
means the Securities Act of 1933, as amended, supplemented or restated from
time to time and any successor to such statute.
Securities Exchange Act
means the Securities Exchange Act of 1934, as amended, supplemented
or restated from time to time and any successor to such statute.
Share of Additional Book Basis Derivative Items
means in connection with any allocation of
Additional Book Basis Derivative Items for any taxable period, (i) with respect to the Unitholders
holding Common Units or Subordinated Units, the amount that bears the same ratio to such Additional
Book Basis Derivative Items as the Unitholders Remaining Net Positive Adjustments as of the end of
such taxable period bears to the Aggregate Remaining Net Positive Adjustments as of that time, (ii)
with respect to the General Partner (as holder of the General Partner Units), the amount that bears
the same ratio to such Additional Book Basis Derivative Items as the General Partners Remaining
Net Positive Adjustments as of the end of such taxable period bears to the Aggregate Remaining Net
Positive Adjustment as of that time, and (iii) with respect to the Partners holding Incentive
Distribution Rights, the amount that bears the same ratio to such Additional Book Basis Derivative
Items as the Remaining Net Positive Adjustments of the Partners holding the Incentive Distribution
Rights as of the end of such taxable period bears to the Aggregate Remaining Net Positive
Adjustments as of that time.
Special Approval
means approval by a majority of the members of the Conflicts Committee
acting in good faith.
Subordinated Unit
means a Partnership Security representing a fractional part of the
Partnership Interests of all Limited Partners and having the rights and obligations specified with
respect to Subordinated Units in this Agreement. The term Subordinated Unit does not include a
Common Unit. A Subordinated Unit that is convertible into a Common Unit shall not constitute a
Common Unit until such conversion occurs.
20
Subordination Period
means the period commencing on the Closing Date and expiring on the
first to occur of the following dates:
(a) the first Business Day following the distribution of Available Cash to Partners pursuant
to Section 6.3(a) in respect of any Quarter beginning with the Quarter ending June 30, 2014 in
respect of which (i) (A) distributions of Available Cash from Operating Surplus on each of the
Outstanding Common Units, Subordinated Units and General Partner Units and any other Outstanding
Units that are senior or equal in right of distribution to the Subordinated Units, in each case
with respect to each of the three consecutive, non-overlapping four-Quarter periods immediately
preceding such date equaled or exceeded the sum of the Minimum Quarterly Distribution on all
Outstanding Common Units and Subordinated Units and any other Outstanding Units that are senior or
equal in right of distribution to the Subordinated Units, in each case in respect of such periods
and (B) the Adjusted Operating Surplus for each of the three consecutive, non-overlapping
four-Quarter periods immediately preceding such date equaled or exceeded the sum of the Minimum
Quarterly Distribution on all of the Common Units and Subordinated Units and any other Units that
are senior or equal in right of distribution to the Subordinated Units, in each case that were
Outstanding during such periods on a Fully Diluted Weighted Average Basis, plus the related
distributions on the General Partner Interest and (ii) there are no Cumulative Common Unit
Arrearages;
provided
,
however
, that in the case of this paragraph (a), the Subordination Period
will not terminate unless the Conflicts Committee, or the Board of Directors, based on the
recommendation of the Conflicts Committee, reasonably expects that the tests set forth in
subclauses (i)(A) and (i)(B) of this paragraph (a) will be met with respect to the four-Quarter
period immediately succeeding the period referred to in this paragraph (a), in each case, without
regard to any Curtailment Fees expected to be received during such period.
(b) the first Business Day following the distribution of Available Cash to Partners pursuant
to Section 6.3(a) in respect of any Quarter beginning with the Quarter ending June 30, 2012 in
respect of which (i) (A) distributions of Available Cash from Operating Surplus on each of the
Outstanding Common Units and Subordinated Units and any other Outstanding Units that are senior or
equal in right of distribution to the Subordinated Units, in each case with respect to the
four-Quarter period immediately preceding such date equaled or exceeded 150% of the Minimum
Quarterly Distribution on all of the Outstanding Common Units and Subordinated Units and any other
Outstanding Units that are senior or equal in right of distribution to the Subordinated Units, in
each case in respect of such period, and (B) the Adjusted Operating Surplus for the four-Quarter
period immediately preceding such date equaled or exceeded 150% of the sum of the Minimum Quarterly
Distribution on all of the Common Units and Subordinated Units and any other Units that are senior
or equal in right of distribution to the Subordinated Units, in each case that were Outstanding
during such period on a Fully Diluted Weighted Average Basis, plus the related distributions on the
General Partner Interests and the corresponding Incentive Distributions and (ii) there are no
Cumulative Common Unit Arrearages;
provided
,
however
, that in the case of this paragraph (b), the
Subordination Period will not terminate unless the Conflicts Committee, or the Board of Directors,
based on the recommendation of the Conflicts Committee, reasonably expects that the tests set forth
in subclauses (i)(A) and (i)(B) of this paragraph (b) will be met with respect to the four-Quarter
period immediately succeeding the last period referred to in this paragraph, in each case, without
regard to any Curtailment Fees expected to be received during such four-Quarter period.
21
(c) the date on which the General Partner is removed in a manner described in Section 11.4.
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 partnership interests of such
partnership (considering all of the partnership interests of the partnership as a single class) 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.
Surviving Business Entity
has the meaning assigned to such term in Section 14.2(b).
Target Distributions
means, collectively, the First Target Distribution, Second Target
Distribution and Third Target Distribution.
Taxation Certification
means a properly completed certificate in such form as may be
specified by the General Partner by which a Limited Partner certifies that he (and if he is a
nominee holding for the account of another Person, that to the best of his knowledge such other
Person) is an Eligible Holder.
Tesoro
means Tesoro Corporation, a Delaware corporation.
Tesoro Alaska
means Tesoro Alaska Company, a Delaware corporation.
Tesoro High Plains
means Tesoro High Plains Pipeline Company LLC, a Delaware limited
liability company.
Tesoro R&M
means Tesoro Refining and Marketing Company, a Delaware corporation.
Third Target Distribution
means $0.506250 per Unit per Quarter (or, with respect to the
period commencing on the Closing Date and ending on June 30, 2011, it means the product of $0.
506250 multiplied by a fraction of which the numerator is equal to the number of days in such
period and of which the denominator is 91), subject to adjustment in accordance with Sections 5.11,
6.6 and 6.9.
Trading Day
has the meaning assigned to such term in Section 15.1(a).
Transaction Documents
has the meaning assigned to such term in Section 7.1(b).
22
transfer
has the meaning assigned to such term in Section 4.4(a).
Transfer Agent
means such bank, trust company or other Person (including the General Partner
or one of its Affiliates) as may be appointed from time to time by the General Partner to act as
registrar and transfer agent for any class of Partnership Securities;
provided
, that if no Transfer
Agent is specifically designated for any class of Partnership Securities, the General Partner shall
act in such capacity.
Underwriter
means each Person named as an underwriter in Schedule I to the Underwriting
Agreement who purchases Common Units pursuant thereto.
Underwriting Agreement
means that certain Underwriting Agreement dated as of April 19, 2011
among the Underwriters, Tesoro, the Partnership, the General Partner, Tesoro R&M and Tesoro Alaska
Company providing for the purchase of Common Units by the Underwriters.
Unit
means a Partnership Security that is designated as a Unit and shall include Common
Units and Subordinated Units but shall not include (i) General Partner Units (or the General
Partner Interest represented thereby) or (ii) Incentive Distribution Rights.
Unit Majority
means (i) during the Subordination Period, at least a majority of the
Outstanding Common Units (excluding Common Units owned by the General Partner and its Affiliates),
voting as a class, and at least a majority of the Outstanding Subordinated Units, voting as a
class, and (ii) after the end of the Subordination Period, at least a majority of the Outstanding
Common Units.
Unitholders
means the holders of Units.
Unpaid MQD
has the meaning assigned to such term in Section 6.1(c)(i)(B).
Unrealized Gain
attributable to any item of Partnership property means, as of any date of
determination, the excess, if any, of (a) the fair market value of such property as of such date
(as determined under Section 5.5(d)) over (b) the Carrying Value of such property as of such date
(prior to any adjustment to be made pursuant to Section 5.5(d) as of such date).
Unrealized Loss
attributable to any item of Partnership property means, as of any date of
determination, the excess, if any, of (a) the Carrying Value of such property as of such date
(prior to any adjustment to be made pursuant to Section 5.5(d) as of such date) over (b) the fair
market value of such property as of such date (as determined under Section 5.5(d)).
Unrecovered Initial Unit Price
means at any time, with respect to a Unit, the Initial Unit
Price less the sum of all distributions constituting Capital Surplus theretofore made in respect of
an Initial Common Unit and any distributions of cash (or the Net Agreed Value of any distributions
in kind) in connection with the dissolution and liquidation of the Partnership theretofore made in
respect of an Initial Common Unit, adjusted as the General Partner determines to be appropriate to
give effect to any distribution, subdivision or combination of such Units.
23
Unrestricted Person
means (a) each Indemnitee, (b) each Partner, (c) each Person who is or
was a member, partner, director, officer, employee or agent of any Group Member, a General Partner
or any Departing General Partner or any Affiliate of any Group Member, a General Partner or any
Departing General Partner and (d) any Person the General Partner designates as an Unrestricted
Person for purposes of this Agreement.
U.S. GAAP
means United States generally accepted accounting principles, as in effect from
time to time, consistently applied.
Withdrawal Opinion of Counsel
has the meaning assigned to such term in Section 11.1(b).
Working Capital Borrowings
means borrowings incurred pursuant to a credit facility,
commercial paper facility or similar financing arrangement that are used solely for working capital
purposes or to pay distributions to the Partners;
provided
that when such borrowings are incurred
it is the intent of the borrower to repay such borrowings within 12 months from the date of such
borrowings other than from additional Working Capital Borrowings.
Section 1.2
Construction
.
Unless the context requires otherwise: (a) any pronoun used in this Agreement shall include
the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and
verbs shall include the plural and vice versa; (b) references to Articles and Sections refer to
Articles and Sections of this Agreement; (c) the terms include, includes, including or words
of like import shall be deemed to be followed by the words without limitation; and (d) the terms
hereof, herein or hereunder refer to this Agreement as a whole and not to any particular
provision of this Agreement. The table of contents and headings contained in this Agreement are
for reference purposes only, and shall not affect in any way the meaning or interpretation of this
Agreement.
ARTICLE II
ORGANIZATION
Section 2.1
Formation
.
The General Partner and the Organizational Limited Partner have previously formed the
Partnership as a limited partnership pursuant to the provisions of the Delaware Act and hereby
amend and restate the original Agreement of Limited Partnership of Tesoro Logistics LP in its
entirety. This amendment and restatement shall become effective on the date of this Agreement.
Except as expressly provided to the contrary in this Agreement, the rights, duties (including
fiduciary duties), liabilities and obligations of the Partners and the administration, dissolution
and termination of the Partnership shall be governed by the Delaware Act. All Partnership
Interests shall constitute personal property of the owner thereof for all purposes.
24
Section 2.2
Name
.
The name of the Partnership shall be Tesoro Logistics LP. Subject to applicable law, the
Partnerships business may be conducted under any other name or names as determined by the General
Partner, including the name of the General Partner. The words Limited Partnership, L.P.,
Ltd. or similar words or letters shall be included in the Partnerships name where necessary for
the purpose of complying with the laws of any jurisdiction that so requires. The General Partner
may change the name of the Partnership at any time and from time to time and shall notify the
Limited Partners of such change in the next regular communication to the Limited Partners.
Section 2.3
Registered Office; Registered Agent; Principal Office; Other Offices
.
Unless and until changed by the General Partner, the registered office of the Partnership in
the State of Delaware shall be located at 2711 Centerville Road, Suite 400, Wilmington, New Castle
County, Delaware 19801, and the registered agent for service of process on the Partnership in the
State of Delaware at such registered office shall be Corporation Service Company. The principal
office of the Partnership shall be located at 19100 Ridgeway Parkway, San Antonio, Texas 78259, or
such other place as the General Partner may from time to time designate by notice to the Limited
Partners. The Partnership may maintain offices at such other place or places within or outside the
State of Delaware as the General Partner determines to be necessary or appropriate. The address of
the General Partner shall be 19100 Ridgeway Parkway, San Antonio, Texas 78259, or such other place
as the General Partner may from time to time designate by notice to the Limited Partners.
Section 2.4
Purpose and Business
.
The purpose and nature of the business to be conducted by the Partnership shall be to (a)
engage directly in, or enter into or form, hold and dispose of any corporation, partnership, joint
venture, limited liability company or other arrangement to engage indirectly in, any business
activity that is approved by the General Partner and that lawfully may be conducted by a limited
partnership organized pursuant to the Delaware Act and, in connection therewith, to exercise all of
the rights and powers conferred upon the Partnership pursuant to the agreements relating to such
business activity, and (b) do anything necessary or appropriate to the foregoing, including the
making of capital contributions or loans to a Group Member;
provided
,
however
, that the General
Partner shall not cause the Partnership to engage, directly or indirectly, in any business activity
that the General Partner determines would cause the Partnership to be treated as an association
taxable as a corporation or otherwise taxable as an entity for federal income tax purposes. To the
fullest extent permitted by law, the General Partner shall have no duty or obligation to propose or
approve the conduct by the Partnership of any business and may decline to so propose or approve
free of any fiduciary duty or obligation whatsoever to the Partnership or any Limited Partner and,
in declining to so propose or approve, shall not be required to act in
good faith or pursuant to any other standard imposed by this Agreement, any Group Member
Agreement, any other agreement contemplated hereby or under the Delaware Act or any other law, rule
or regulation or at equity.
25
Section 2.5
Powers
.
The Partnership shall be empowered to do any and all acts and things necessary or appropriate
for the furtherance and accomplishment of the purposes and business described in Section 2.4 and
for the protection and benefit of the Partnership.
Section 2.6
Term
.
The term of the Partnership commenced upon the filing of the Certificate of Limited
Partnership in accordance with the Delaware Act and shall continue in existence until the
dissolution of the Partnership in accordance with the provisions of Article XII. The existence of
the Partnership as a separate legal entity shall continue until the cancellation of the Certificate
of Limited Partnership as provided in the Delaware Act.
Section 2.7
Title to Partnership Assets
.
Title to Partnership assets, whether real, personal or mixed and whether tangible or
intangible, shall be deemed to be owned by the Partnership as an entity, and no Partner,
individually or collectively, shall have any ownership interest in such Partnership assets or any
portion thereof. Title to any or all of the Partnership assets may be held in the name of the
Partnership, the General Partner, one or more of its Affiliates or one or more nominees, as the
General Partner may determine. The General Partner hereby declares and warrants that any
Partnership assets for which record title is held in the name of the General Partner or one or more
of its Affiliates or one or more nominees shall be held by the General Partner or such Affiliate or
nominee for the use and benefit of the Partnership in accordance with the provisions of this
Agreement;
provided
,
however
, that the General Partner shall use reasonable efforts to cause record
title to such assets (other than those assets in respect of which the General Partner determines
that the expense and difficulty of conveyancing makes transfer of record title to the Partnership
impracticable) to be vested in the Partnership or one or more of the Partnerships designated
Affiliates as soon as reasonably practicable;
provided
,
further
, that, prior to the withdrawal or
removal of the General Partner or as soon thereafter as practicable, the General Partner shall use
reasonable efforts to effect the transfer of record title to the Partnership and, prior to any such
transfer, will provide for the use of such assets in a manner satisfactory to the General Partner.
All Partnership assets shall be recorded as the property of the Partnership in its books and
records, irrespective of the name in which record title to such Partnership assets is held.
ARTICLE III
RIGHTS OF LIMITED PARTNERS
Section 3.1
Limitation of Liability
.
The Limited Partners shall have no liability under this Agreement except as expressly provided
in this Agreement or the Delaware Act.
26
Section 3.2
Management of Business
.
No Limited Partner, in its capacity as such, shall participate in the operation, management or
control (within the meaning of the Delaware Act) of the Partnerships business, transact any
business in the Partnerships name or have the power to sign documents for or otherwise bind the
Partnership. Any action taken by any Affiliate of the General Partner or any officer, director,
employee, manager, member, general partner, agent or trustee of the General Partner or any of its
Affiliates, or any officer, director, employee, manager, member, general partner, agent or trustee
of a Group Member, in its capacity as such, shall not be deemed to be participating in the control
of the business of the Partnership by a limited partner of the Partnership (within the meaning of
Section 17-303(a) of the Delaware Act) and shall not affect, impair or eliminate the limitations on
the liability of the Limited Partners under this Agreement.
Section 3.3
Outside Activities of the Limited Partners
.
Subject to the provisions of Section 7.5, which shall continue to be applicable to the Persons
referred to therein, regardless of whether such Persons shall also be Limited Partners, any Limited
Partner shall be entitled to and may have business interests and engage in business activities in
addition to those relating to the Partnership, including business interests and activities in
direct competition with the Partnership Group. Neither the Partnership nor any of the other
Partners shall have any rights by virtue of this Agreement in any business ventures of any Limited
Partner.
Section 3.4
Rights of Limited Partners
.
(a) In addition to other rights provided by this Agreement or by applicable law (other than
Section 17-305 of the Delaware Act, which is restricted to the extent set forth below), and except
as limited by Section 3.4(b), each Limited Partner shall have the right, for a purpose reasonably
related to such Limited Partners interest as a Limited Partner in the Partnership, upon reasonable
written demand stating the purpose of such demand, and at such Limited Partners own expense:
(i) to obtain true and full information regarding the status of the business
and financial condition of the Partnership;
provided, however
, that the requirements
of this Section 3.4(a)(i) shall be satisfied by furnishing to a Limited Partner upon
its demand pursuant to this Section 3.4(a)(i) either (A) the Partnerships most
recent filings with the Commission on Form 10-K and any subsequent filings on Form
10-Q and 8-K or (B) if the Partnership is no longer subject to the reporting
requirements of the Exchange Act, the information specified in, and meeting the
requirements of, Rule 144A(d)(4) under the Securities Act;
(ii) promptly after its becoming available, to obtain a copy of the
Partnerships federal, state and local income tax returns for each year;
(iii) to obtain a current list of the name and last known business, residence
or mailing address of each Partner;
27
(iv) to obtain a copy of this Agreement and the Certificate of Limited
Partnership and all amendments thereto, together with copies of the executed copies
of all powers of attorney pursuant to which this Agreement, the Certificate of
Limited Partnership and all amendments thereto have been executed;
(v) to obtain true and full information regarding the amount of cash and a
description and statement of the Net Agreed Value of any other Capital Contribution
by each Partner and that each Partner has agreed to contribute in the future, and
the date on which each became a Partner; and
(vi) to obtain such other information regarding the affairs of the Partnership
as is just and reasonable.
(b) The General Partner may keep confidential from the Limited Partners, for such period of
time as the General Partner deems reasonable, (i) any information that the General Partner
reasonably believes to be in the nature of trade secrets or (ii) other information the disclosure
of which the General Partner in good faith believes (A) is not in the best interests of the
Partnership Group, (B) could damage the Partnership Group or its business or (C) that any Group
Member is required by law or by agreement with any third party to keep confidential (other than
agreements with Affiliates of the Partnership the primary purpose of which is to circumvent the
obligations set forth in this Section 3.4).
ARTICLE IV
CERTIFICATES; RECORD HOLDERS; TRANSFER OF PARTNERSHIP
INTERESTS; REDEMPTION OF PARTNERSHIP INTERESTS
Section 4.1
Certificates
.
Notwithstanding anything to the contrary in this Agreement, unless the General Partner shall
determine otherwise in respect of some or all of any or all classes of Partnership Interests,
Partnership Interests shall not be evidenced by physical certificates. Certificates that may be
issued, if any, shall be executed on behalf of the Partnership by the Chairman of the Board, Chief
Executive Officer, President, Chief Financial Officer or any Vice President and the Secretary, any
Assistant Secretary, or other authorized officer or director of the General Partner. If a Transfer
Agent has been appointed for a class of Partnership Interests, no Certificate for such class of
Partnership Interests shall be valid for any purpose until it has been countersigned by the
Transfer Agent;
provided
,
however
, that, if the General Partner elects to cause the Partnership to
issue Partnership Interests of such class in global form, the Certificate shall be valid upon
receipt of a certificate from the Transfer Agent certifying that the Partnership Interests have
been duly registered in accordance with the directions of the Partnership. Subject to the
requirements of Section 6.7(b) and Section 6.7(c), if Common Units are evidenced by Certificates,
on or after the date on which Subordinated Units are converted into Common Units pursuant to the
terms of Section 5.7, the Record Holders of such Subordinated Units (i) if the Subordinated Units
are evidenced by Certificates, may exchange such Certificates for Certificates evidencing Common
Units, or (ii) if the Subordinated Units are not evidenced by Certificates, shall be issued
Certificates evidencing Common Units. With respect to any Units outstanding prior to the
28
effectiveness of this Agreement that are represented by physical certificates, the General Partner
may determine that such Units will no longer be represented by physical certificates and may, upon
written notice to the holders of such Units and subject to applicable law, take whatever actions it
deems necessary or appropriate to cause such Units to be registered in book entry or global form
and may cause such physical certificates to be cancelled or deemed cancelled.
Section 4.2
Mutilated, Destroyed, Lost or Stolen Certificates
.
(a) If any mutilated Certificate is surrendered to the Transfer Agent, the appropriate
officers of the General Partner on behalf of the Partnership shall execute, and the Transfer Agent
shall countersign and deliver in exchange therefor, a new Certificate evidencing the same number
and type of Partnership Securities as the Certificate so surrendered.
(b) The appropriate officers of the General Partner on behalf of the Partnership shall execute
and deliver, and the Transfer Agent shall countersign, a new Certificate in place of any
Certificate previously issued, if the Record Holder of the Certificate:
(i) makes proof by affidavit, in form and substance satisfactory to the General
Partner, that a previously issued Certificate has been lost, destroyed or stolen;
(ii) requests the issuance of a new Certificate before the General Partner has
notice that the Certificate has been acquired by a purchaser for value in good faith
and without notice of an adverse claim;
(iii) if requested by the General Partner, delivers to the General Partner a
bond, in form and substance satisfactory to the General Partner, with surety or
sureties and with fixed or open penalty as the General Partner may direct to
indemnify the Partnership, the Partners, the General Partner and the Transfer Agent
against any claim that may be made on account of the alleged loss, destruction or
theft of the Certificate; and
(iv) satisfies any other reasonable requirements imposed by the General
Partner.
If a Limited Partner fails to notify the General Partner within a reasonable period of time
after such Limited Partner has notice of the loss, destruction or theft of a Certificate, and a
transfer of the Limited Partner Interests represented by the Certificate is registered before the
Partnership, the General Partner or the Transfer Agent receives such notification, to the fullest
extent permitted by law, the Limited Partner shall be precluded from making any claim against the
Partnership, the General Partner or the Transfer Agent for such transfer or for a new Certificate.
(c) As a condition to the issuance of any new Certificate under this Section 4.2, the General
Partner may require the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including the fees and expenses of
the Transfer Agent) reasonably connected therewith.
29
Section 4.3
Record Holders
.
The Partnership shall be entitled to recognize the Record Holder as the Partner with respect
to any Partnership Interest and, accordingly, shall not be bound to recognize any equitable or
other claim to, or interest in, such Partnership Interest on the part of any other Person,
regardless of whether the Partnership shall have actual or other notice thereof, except as
otherwise provided by law or any applicable rule, regulation, guideline or requirement of any
National Securities Exchange on which such Partnership Interests are listed or admitted to trading.
Without limiting the foregoing, when a Person (such as a broker, dealer, bank, trust company or
clearing corporation or an agent of any of the foregoing) is acting as nominee, agent or in some
other representative capacity for another Person in acquiring and/or holding Partnership Interests,
as between the Partnership on the one hand, and such other Persons on the other, such
representative Person shall be (a) the Record Holder of such Partnership Interest and (b) bound by
this Agreement and shall have the rights and obligations of a Partner hereunder as, and to the
extent, provided herein.
Section 4.4
Transfer Generally
.
(a) The term
transfer
, when used in this Agreement with respect to a Partnership Interest,
shall be deemed to refer to a transaction (i) by which the General Partner assigns its General
Partner Units to another Person and includes a sale, assignment, gift, pledge, encumbrance,
hypothecation, mortgage, exchange or any other disposition by law or otherwise or (ii) by which the
holder of a Limited Partner Interest assigns such Limited Partner Interest to
another Person who is or becomes a Limited Partner, and includes a sale, assignment, gift,
exchange or any other disposition by law or otherwise, excluding a pledge, encumbrance,
hypothecation or mortgage but including any transfer upon foreclosure of any pledge, encumbrance,
hypothecation or mortgage.
(b) No Partnership Interest shall be transferred, in whole or in part, except in accordance
with the terms and conditions set forth in this Article IV. Any transfer or purported transfer of
a Partnership Interest not made in accordance with this Article IV shall be null and void.
(c) Nothing contained in this Agreement shall be construed to prevent a disposition by any
stockholder, member, partner or other owner of the General Partner or any Limited Partner of any or
all of the shares of stock, membership interests, partnership interests or other ownership
interests in the General Partner or Limited Partner and the term transfer shall not mean any such
disposition.
Section 4.5
Registration and Transfer of Limited Partner Interests
.
(a) The General Partner shall keep or cause to be kept on behalf of the Partnership a register
in which, subject to such reasonable regulations as it may prescribe and subject to the provisions
of Section 4.5(b), the Partnership will provide for the registration and transfer of Limited
Partner Interests. The Partnership shall not recognize transfers of Certificates evidencing
Limited Partner Interests unless such transfers are effected in the manner described in this
Section 4.5.
30
(b) The General Partner shall not recognize any transfer of Limited Partner Interests
evidenced by Certificates until the Certificates evidencing such Limited Partner Interests are
surrendered for registration of transfer. No charge shall be imposed by the General Partner for
such transfer;
provided
, that as a condition to the issuance of any new Certificate under this
Section 4.5, the General Partner may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed with respect thereto. Upon surrender of a
Certificate for registration of transfer of any Limited Partner Interests evidenced by a
Certificate, and subject to the provisions of this Section 4.5(b), the appropriate officers of the
General Partner on behalf of the Partnership shall execute and deliver, and in the case of
Certificates evidencing Limited Partner Interests for which a Transfer Agent has been appointed,
the Transfer Agent shall countersign and deliver, in the name of the holder or the designated
transferee or transferees, as required pursuant to the holders instructions, one or more new
Certificates evidencing the same aggregate number and type of Limited Partner Interests as was
evidenced by the Certificate so surrendered.
(c) Upon the receipt of proper transfer instructions from the registered owner of
uncertificated Common Units, such uncertificated Common Units shall be cancelled, issuance of new
equivalent uncertificated Common Units or Certificates shall be made to the holder of Common Units
entitled thereto and the transaction shall be recorded upon the Partnerships register.
(d) By acceptance of the transfer of any Limited Partner Interests in accordance with this
Section 4.5 and except as provided in Section 4.9, each transferee of a Limited Partner Interest
(including any nominee holder or an agent or representative acquiring such Limited Partner
Interests for the account of another Person) (i) shall be admitted to the Partnership as a Limited
Partner with respect to the Limited Partner Interests so transferred to such Person when any such
transfer or admission is reflected in the books and records of the Partnership and such Limited
Partner becomes the Record Holder of the Limited Partner Interests so transferred, (ii) shall
become bound, and shall be deemed to have agreed to be bound, by the terms of this Agreement, (iii)
represents that the transferee has the capacity, power and authority to enter into this Agreement
and (iv) makes the consents, acknowledgements and waivers contained in this Agreement, all with or
without execution of this Agreement by such Person. The transfer of any Limited Partner Interests
and the admission of any new Limited Partner shall not constitute an amendment to this Agreement.
(e) Subject to (i) the foregoing provisions of this Section 4.5, (ii) Section 4.3, (iii)
Section 4.8, (iv) with respect to any class or series of Limited Partner Interests, the provisions
of any statement of designations or an amendment to this Agreement establishing such class or
series, (v) any contractual provisions binding on any Limited Partner and (vi) provisions of
applicable law including the Securities Act, Limited Partner Interests shall be freely
transferable.
(f) The General Partner and its Affiliates shall have the right at any time to transfer their
Subordinated Units and Common Units (whether issued upon conversion of the Subordinated Units or
otherwise) to one or more Persons.
31
Section 4.6
Transfer of the General Partners General Partner Interest
.
(a) Subject to Section 4.6(c) below, prior to June 30, 2021 the General Partner shall not
transfer all or any part of its General Partner Interest (represented by General Partner Units) to
a Person unless such transfer (i) has been approved by the prior written consent or vote of the
holders of at least a majority of the Outstanding Common Units (excluding Common Units held by the
General Partner and its Affiliates) or (ii) is of all, but not less than all, of its General
Partner Interest to (A) an Affiliate of the General Partner (other than an individual) or (B)
another Person (other than an individual) in connection with the merger or consolidation of the
General Partner with or into such other Person or the transfer by the General Partner of all or
substantially all of its assets to such other Person.
(b) Subject to Section 4.6(c) below, on or after June 30, 2021 the General Partner may
transfer all or any part of its General Partner Interest without Unitholder approval.
(c) Notwithstanding anything herein to the contrary, no transfer by the General Partner of all
or any part of its General Partner Interest to another Person shall be permitted unless (i) the
transferee agrees to assume the rights and duties of the General Partner under this Agreement and
to be bound by the provisions of this Agreement, (ii) the Partnership receives an Opinion of
Counsel that such transfer would not result in the loss of limited liability
of any Limited Partner under the Delaware Act or cause the Partnership to be treated as an
association taxable as a corporation or otherwise to be taxed as an entity for federal income tax
purposes (to the extent not already so treated or taxed) and (iii) such transferee also agrees to
purchase all (or the appropriate portion thereof, if applicable) of the partnership or membership
interest of the General Partner as the general partner or managing member, if any, of each other
Group Member. In the case of a transfer pursuant to and in compliance with this Section 4.6, the
transferee or successor (as the case may be) shall, subject to compliance with the terms of Section
10.2, be admitted to the Partnership as the General Partner effective immediately prior to the
transfer of the General Partner Interest, and the business of the Partnership shall continue
without dissolution.
Section 4.7
Transfer of Incentive Distribution Rights
.
The General Partner or any other holder of Incentive Distribution Rights may transfer any or
all of its Incentive Distribution Rights without Unitholder approval.
Section 4.8
Restrictions on Transfers
.
(a) Except as provided in Section 4.8(d), notwithstanding the other provisions of this Article
IV, no transfer of any Partnership Interests shall be made if such transfer would (i) violate the
then applicable federal or state securities laws or rules and regulations of the Commission, any
state securities commission or any other governmental authority with jurisdiction over such
transfer, (ii) terminate the existence or qualification of the Partnership under the laws of the
jurisdiction of its formation, or (iii) cause the Partnership to be treated as an association
taxable as a corporation or otherwise to be taxed as an entity for federal income tax purposes (to
the extent not already so treated or taxed).
32
(b) The General Partner may impose restrictions on the transfer of Partnership Interests if it
receives an Opinion of Counsel that such restrictions are necessary to (i) avoid a significant risk
of the Partnership becoming taxable as a corporation or otherwise becoming taxable as an entity for
federal income tax purposes or (ii) preserve the uniformity of the Limited Partner Interests (or
any class or classes thereof). The General Partner may impose such restrictions by amending this
Agreement;
provided
,
however
, that any amendment that would result in the delisting or suspension
of trading of any class of Limited Partner Interests on the principal National Securities Exchange
on which such class of Limited Partner Interests is then listed or admitted to trading must be
approved, prior to such amendment being effected, by the holders of at least a majority of the
Outstanding Limited Partner Interests of such class.
(c) The transfer of a Subordinated Unit that has converted into a Common Unit shall be subject
to the restrictions imposed by Section 6.7(b) and Section 6.7(c).
(d) Nothing contained in this Article IV, or elsewhere in this Agreement, shall preclude the
settlement of any transactions involving Partnership Interests entered into through
the facilities of any National Securities Exchange on which such Partnership Interests are
listed or admitted to trading.
(e) Each certificate evidencing Partnership Interests shall bear a conspicuous legend in
substantially the following form:
THE HOLDER OF THIS SECURITY ACKNOWLEDGES FOR THE BENEFIT OF TESORO LOGISTICS LP THAT
THIS SECURITY MAY NOT BE SOLD, OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED IF
SUCH TRANSFER WOULD (A) VIOLATE THE THEN APPLICABLE FEDERAL OR STATE SECURITIES LAWS
OR RULES AND REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE
SECURITIES COMMISSION OR ANY OTHER GOVERNMENTAL AUTHORITY WITH JURISDICTION OVER
SUCH TRANSFER, (B) TERMINATE THE EXISTENCE OR QUALIFICATION OF TESORO LOGISTICS LP
UNDER THE LAWS OF THE STATE OF DELAWARE, OR (C) CAUSE TESORO LOGISTICS LP TO BE
TREATED AS AN ASSOCIATION TAXABLE AS A CORPORATION OR OTHERWISE TO BE TAXED AS AN
ENTITY FOR FEDERAL INCOME TAX PURPOSES (TO THE EXTENT NOT ALREADY SO TREATED OR
TAXED). TESORO LOGISTICS GP, LLC, THE GENERAL PARTNER OF TESORO LOGISTICS LP, MAY
IMPOSE ADDITIONAL RESTRICTIONS ON THE TRANSFER OF THIS SECURITY IF IT RECEIVES AN
OPINION OF COUNSEL THAT SUCH RESTRICTIONS ARE NECESSARY TO AVOID A SIGNIFICANT RISK
OF TESORO LOGISTICS LP BECOMING TAXABLE AS A CORPORATION OR OTHERWISE BECOMING
TAXABLE AS AN ENTITY FOR FEDERAL INCOME TAX PURPOSES. THE RESTRICTIONS SET FORTH
ABOVE SHALL NOT PRECLUDE THE SETTLEMENT OF ANY TRANSACTIONS INVOLVING THIS SECURITY
ENTERED INTO THROUGH THE FACILITIES OF ANY NATIONAL SECURITIES EXCHANGE ON WHICH
THIS SECURITY IS LISTED OR ADMITTED TO TRADING.
33
Section 4.9
Eligibility Certificates; Ineligible Holders.
(a) If at any time the General Partner determines, with the advice of counsel, that
(i) the Partnerships status other than as an association taxable as a
corporation for U.S. federal income tax purposes or the failure of the Partnership
otherwise to be subject to an entity-level tax for U.S. federal, state or local
income tax purposes, coupled with the tax status (or lack of proof of the federal
income tax status) of one or more Limited Partners, has or will reasonably likely
have a material adverse effect on the maximum applicable rate that can be charged to
customers by Subsidiaries of the Partnership (a
Rate Eligibility Trigger
); or
(ii) any Group Member is subject to any federal, state or local law or
regulation that would create a substantial risk of cancellation or forfeiture of any
property in which the Group Member has an interest based on the nationality,
citizenship or other related status of a Limited Partner (a
Citizenship Eligibility
Trigger
);
then, the General Partner may adopt such amendments to this Agreement as it determines to be
necessary or advisable to (x) in the case of a Rate Eligibility Trigger, obtain such proof of the
federal income tax status of the Limited Partners and, to the extent relevant, their beneficial
owners, as the General Partner determines to be necessary or advisable to establish those Limited
Partners whose federal income tax status does not or would not have a material adverse effect on
the maximum applicable rate that can be charged to customers by Subsidiaries of the Partnership or
(y) in the case of a Citizenship Eligibility Trigger, obtain such proof of the nationality,
citizenship or other related status (or, if the General Partner is a nominee holding for the
account of another Person, the nationality, citizenship or other related status of such Person) of
the Limited Partner as the General Partner determines to be necessary or advisable to establish and
those Limited Partners whose status as a Limited Partner does not or would not subject any Group
Member to a significant risk of cancellation or forfeiture of any of its properties or interests
therein.
(b) Such amendments may include provisions requiring all Limited Partners to certify as to
their (and their beneficial owners) status as Eligible Holders upon demand and on a regular basis,
as determined by the General Partner, and may require transferees of Units to so certify prior to
being admitted to the Partnership as a Limited Partner (any such required certificate, an
Eligibility Certificate
).
(c) Such amendments may provide that with respect to any Limited Partner (and its beneficial
owners) who fails to furnish to the General Partner within a reasonable period requested an
Eligibility Certificate and any other information, or if upon receipt of such Eligibility
Certificate or other requested information the General Partner determines that a Limited Partner is
not an Eligible Holder (such a Limited Partner an
Ineligible Holder
), the Limited Partner
Interests owned by such Limited Partner shall be subject to redemption in accordance with the
provisions of Section 4.10. In addition, the General Partner shall be
34
substituted for any Limited
Partner that is an Ineligible Holder as the Limited Partner in respect of the Ineligible Holders
Limited Partner Interests.
(d) The General Partner shall, in exercising voting rights in respect of Limited Partner
Interests held by it on behalf of Ineligible Holders, distribute the votes in the same ratios as
the votes of Limited Partners (including the General Partner and its Affiliates) in respect of
Limited Partner Interests other than those of Ineligible Holders are cast, either for, against or
abstaining as to the matter.
(e) Upon dissolution of the Partnership, an Ineligible Holder shall have no right to receive a
distribution in kind pursuant to Section 12.4 but shall be entitled to the cash equivalent thereof,
and the Partnership shall provide cash in exchange for an assignment of the Ineligible Holders
share of any distribution in kind. Such payment and assignment shall be treated for Partnership
purposes as a purchase by the Partnership from the Ineligible Holder of its Limited Partner
Interest (representing the right to receive its share of such distribution in kind).
(f) At any time after a holder can and does certify that it has become an Eligible Holder, an
Ineligible Holder may, upon application to the General Partner, request that with respect to any
Limited Partner Interests of such Ineligible Holder not redeemed pursuant to Section 4.10, such
Ineligible Holder upon approval of the General Partner, shall no longer constitute an Ineligible
Holder and the General Partner shall cease to be deemed to be the Limited Partner in respect of
such Limited Partner Interests.
Section 4.10
Redemption of Partnership Interests of Ineligible Holders.
(a) If at any time a Limited Partner fails to furnish an Eligibility Certificate or any other
information requested within a reasonable period of time specified in amendments adopted pursuant
to Section 4.9, or if upon receipt of such Eligibility Certificate or other information the General
Partner determines, with the advice of counsel, that a Limited Partner is an Ineligible Holder, the
Partnership may, unless the Limited Partner establishes to the satisfaction of the General Partner
that such Limited Partner is not an Ineligible Holder or has transferred his Limited Partner
Interests to a Person who is an Eligible Holder and who furnishes an Eligibility Certificate to the
General Partner prior to the date fixed for redemption as provided below, redeem the Limited
Partner Interest of such Limited Partner as follows:
(i) The General Partner shall, not later than the 30th day before the date
fixed for redemption, give notice of redemption to the Limited Partner, at his last
address designated on the records of the Partnership or the Transfer Agent, by
registered or certified mail, postage prepaid. The notice shall be deemed to have
been given when so mailed. The notice shall specify the Redeemable Interests, the
date fixed for redemption, the place of payment, that payment of the redemption
price will be made upon redemption of the Redeemable Interests (or, if later in the
case of Redeemable Interests evidenced by Certificates, upon surrender of the
Certificate evidencing the Redeemable Interests) and that on and after the date
fixed for redemption no further allocations or distributions to which the Limited
Partner would otherwise be entitled in respect of the Redeemable Interests will
accrue or be made.
35
(ii) The aggregate redemption price for Redeemable Interests shall be an amount
equal to the Current Market Price (the date of determination of which shall be the
date fixed for redemption) of Limited Partner Interests of the class to be so
redeemed multiplied by the number of Limited Partner Interests of each such class
included among the Redeemable Interests. The redemption price shall be paid, as
determined by the General Partner, in cash or by delivery of a promissory note of
the Partnership in the principal amount of the redemption price, bearing interest at
the rate of 5% annually and payable in three equal annual installments of principal
together with accrued interest, commencing one year after the redemption date.
(iii) The Limited Partner or his duly authorized representative shall be
entitled to receive the payment for the Redeemable Interests at the place of payment
specified in the notice of redemption on the redemption date (or, if later in the
case of Redeemable Interests evidenced by Certificates, upon surrender by
or on behalf of the Limited Partner or Transferee at the place specified in the
notice of redemption, of the Certificate evidencing the Redeemable Interests, duly
endorsed in blank or accompanied by an assignment duly executed in blank).
(iv) After the redemption date, Redeemable Interests shall no longer constitute
issued and Outstanding Limited Partner Interests.
(b) The provisions of this Section 4.10 shall also be applicable to Limited Partner Interests
held by a Limited Partner as nominee of a Person determined to be other than an Eligible Holder.
(c) Nothing in this Section 4.10 shall prevent the recipient of a notice of redemption from
transferring his Limited Partner Interest before the redemption date if such transfer is otherwise
permitted under this Agreement. Upon receipt of notice of such a transfer, the General Partner
shall withdraw the notice of redemption,
provided
the transferee of such Limited Partner Interest
certifies to the satisfaction of the General Partner that he is an Eligible Holder. If the
transferee fails to make such certification, such redemption shall be effected from the transferee
on the original redemption date.
ARTICLE V
CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS
Section 5.1
Organizational Contributions
.
In connection with the formation of the Partnership under the Delaware Act, the General
Partner made an initial Capital Contribution to the Partnership in the amount of $20.00, for a 2%
General Partner Interest in the Partnership and has been admitted as the General Partner of the
Partnership, and the Organizational Limited Partner made an initial Capital Contribution to the
Partnership in the amount of $980.00 for a 98% Limited Partner Interest in the Partnership and has
been admitted as a Limited Partner of the Partnership. On April 26, 2011, pursuant to the
Contribution Agreement, the interest of the Organizational Limited Partner was partially
36
redeemed
in exchange for the return of the initial Capital Contribution of the Organizational Limited
Partner. Ninety-eight percent of any interest or other profit that may have resulted from the
investment or other use of such initial Capital Contributions shall be allocated and distributed to
the Organizational Limited Partner, and the balance thereof shall be allocated and distributed to
the General Partner.
Section 5.2
Contributions by the General Partner
.
(a) On the Closing Date and pursuant to the Contribution Agreement, the General Partner
contributed to the Partnership, as a Capital Contribution, the HP Interest (as defined in the
Contribution Agreement), in exchange for (i) 622,649 General Partner Units representing a
continuation of its 2% General Partner Interest, subject to all of the rights,
privileges and duties of the General Partner under this Agreement and (ii) the Incentive
Distribution Rights.
(b) Upon the issuance of any additional Limited Partner Interests by the Partnership (other
than (i) the Common Units issued pursuant to the Over-Allotment Option, (ii) the Common Units and
Subordinated Units issued pursuant to Section 5.3(a), (iii) any Common Units issued pursuant to
Section 5.11 and (iv) any Common Units issued upon the conversion of any Partnership Securities),
the General Partner may, in exchange for a proportionate number of General Partner Units with
rights to allocations and distributions that correspond to those applicable to such additional
Limited Partner Interests, make additional Capital Contributions in an amount equal to the product
obtained by multiplying (A) the quotient determined by dividing (x) the General Partners
Percentage Interest immediately prior to the issuance of such additional Limited Partner Interests
by the Partnership by (y) 100 less the General Partners Percentage Interest immediately prior to
the issuance of such additional Limited Partner Interests by the Partnership times (B) the amount
contributed to the Partnership by the Limited Partners in exchange for such additional Limited
Partner Interests. Except as set forth in Article XII, the General Partner shall not be obligated
to make any additional Capital Contributions to the Partnership.
Section 5.3
Contributions by Limited Partners
.
(a) On the Closing Date, pursuant to and as described in the Contribution Agreement: (i)
Tesoro contributed to the Partnership, as a Capital Contribution, the Tesoro HP Interest (as
defined in the Contribution Agreement) in exchange for 1,002,938 Common Units and 6,785,124
Subordinated Units; (ii) Tesoro R&M contributed to the Partnership, as a Capital Contribution, the
Operating Company Interest (as defined in the Contribution Agreement) in exchange for 1,169,195
Common Units and 7,909,891 Subordinated Units; and (iii) Tesoro Alaska contributed to the
Partnership, as a Capital Contribution, the TAL Interest (as defined in the Contribution Agreement)
in exchange for 82,757 Common Units and 559,875 Subordinated Units.
(b) On the Closing Date and pursuant to the Underwriting Agreement, each Underwriter
contributed cash to the Partnership in exchange for the issuance by the Partnership of Common Units
to each Underwriter, all as set forth in the Underwriting Agreement.
37
(c) Upon the exercise, if any, of the Over-Allotment Option, each Underwriter shall contribute
cash to the Partnership on the Option Closing Date in exchange for the issuance by the Partnership
of Common Units to each Underwriter, all as set forth in the Underwriting Agreement.
(d) No Limited Partner Interests will be issued or issuable as of or at the Closing Date other
than (i) the Common Units and Subordinated Units issued to Tesoro, Tesoro R&M and Tesoro Alaska
pursuant to subparagraph (a) hereof, (ii) the Common Units issued to the Underwriters as described
in subparagraphs (b) and (c) hereof and (iii) the Incentive Distribution Rights issued to the
General Partner.
(e) No Limited Partner will be required to make any additional Capital Contribution to the
Partnership pursuant to this Agreement.
Section 5.4
Interest and Withdrawal
.
No interest shall be paid by the Partnership on Capital Contributions. No Partner shall be
entitled to the withdrawal or return of its Capital Contribution, except to the extent, if any,
that distributions made pursuant to this Agreement or upon termination of the Partnership may be
considered as such by law and then only to the extent provided for in this Agreement. Except to
the extent expressly provided in this Agreement, no Partner shall have priority over any other
Partner either as to the return of Capital Contributions or as to profits, losses or distributions.
Any such return shall be a compromise to which all Partners agree within the meaning of Section
17-502(b) of the Delaware Act.
Section 5.5
Capital Accounts
.
(a) The Partnership shall maintain for each Partner (or a beneficial owner of Partnership
Interests held by a nominee in any case in which the nominee has furnished the identity of such
owner to the Partnership in accordance with Section 6031(c) of the Code or any other method
acceptable to the General Partner) owning a Partnership Interest a separate Capital Account with
respect to such Partnership Interest in accordance with the rules of Treasury Regulation Section
1.704-1(b)(2)(iv). The initial Capital Account balance attributable to the General Partner Units
issued to the General Partner pursuant to Section 5.2(a) shall equal the Net Agreed Value of the
Capital Contribution specified in Section 5.2(a), which shall be deemed to equal the product of the
number of General Partner Units issued to the General Partner pursuant to Section 5.2(a) and the
Initial Unit Price for each Common Unit (and the initial Capital Account balance attributable to
each General Partner Unit shall equal the Initial Unit Price for each Common Unit). The initial
Capital Account balance attributable to the Common Units and Subordinated Units issued to each of
Tesoro, Tesoro R&M and Tesoro Alaska, respectively, pursuant to Section 5.3(a) shall equal the
respective Net Agreed Value of the Capital Contributions specified in Section 5.3(a), which shall
be deemed to equal the product of the number of Common Units and Subordinated Units issued to each
of Tesoro, Tesoro R&M and Tesoro Alaska, respectively, pursuant to Section 5.3(a) and the Initial
Unit Price for each such Common Unit and Subordinated Unit (and the initial Capital Account balance
attributable to each such Common Unit and Subordinated Unit shall equal its Initial Unit Price).
The initial Capital Account balance attributable to the Common Units issued to the Underwriters
pursuant
38
to Section 5.3(b) shall equal the product of the number of Common Units so issued to the
Underwriters and the Initial Unit Price for each such Common Unit (and the initial Capital Account
balance attributable to each such Common Unit shall equal its Initial Unit Price). The initial
Capital Account attributable to the Incentive Distribution Rights shall be zero. Thereafter, the
Capital Account shall in respect of each such Partnership Interest be increased by (i) the amount
of all Capital Contributions made to the Partnership with respect to such Partnership Interest and
(ii) all items of Partnership income and gain (including income and gain exempt
from tax) computed in accordance with Section 5.5(b) and allocated with respect to such
Partnership Interest pursuant to Section 6.1, and decreased by (x) the amount of cash or Net Agreed
Value of all actual and deemed distributions of cash or property made with respect to such
Partnership Interest and (y) all items of Partnership deduction and loss computed in accordance
with Section 5.5(b) and allocated with respect to such Partnership Interest pursuant to Section
6.1.
(b) For purposes of computing the amount of any item of income, gain, loss or deduction that
is to be allocated pursuant to Article VI and is to be reflected in the Partners Capital Accounts,
the determination, recognition and classification of any such item shall be the same as its
determination, recognition and classification for federal income tax purposes (including any method
of depreciation, cost recovery or amortization used for that purpose),
provided
, that:
(i) Solely for purposes of this Section 5.5, the Partnership shall be treated
as owning directly its proportionate share (as determined by the General Partner
based upon the provisions of the applicable Group Member Agreement or governing,
organizational or similar documents) of all property owned by (x) any other Group
Member that is classified as a partnership for federal income tax purposes and (y)
any other partnership, limited liability company, unincorporated business or other
entity classified as a partnership for federal income tax purposes of which a Group
Member is, directly or indirectly, a partner, member or other equity holder.
(ii) All fees and other expenses incurred by the Partnership to promote the
sale of (or to sell) a Partnership Interest that can neither be deducted nor
amortized under Section 709 of the Code, if any, shall, for purposes of Capital
Account maintenance, be treated as an item of deduction at the time such fees and
other expenses are incurred and shall be allocated among the Partners pursuant to
Section 6.1.
(iii) Except as otherwise provided in Treasury Regulation Section
1.704-1(b)(2)(iv)(m), the computation of all items of income, gain, loss and
deduction shall be made without regard to any election under Section 754 of the Code
that may be made by the Partnership. To the extent an adjustment to the adjusted
tax basis of any Partnership asset pursuant to Section 734(b) or 743(b) of the Code
is required, pursuant to Treasury Regulation Section 1.704- 1(b)(2)(iv)(m), to be
taken into account in determining Capital Accounts, the amount of such adjustment in
the Capital Accounts shall be treated as an item of gain or loss.
39
(iv) Any income, gain or loss attributable to the taxable disposition of any
Partnership property shall be determined as if the adjusted basis of such property
as of such date of disposition were equal in amount to the Partnerships Carrying
Value with respect to such property as of such date.
(v) An item of income of the Partnership that is described in Section
705(a)(1)(B) of the Code (with respect to items of income that are exempt from tax)
shall be treated as an item of income for the purpose of this Section 5.5(b), and an
item of expense of the Partnership that is described in Section 705(a)(2)(B) of the
Code (with respect to expenditures that are not deductible and not chargeable to
capital accounts), shall be treated as an item of deduction for the purpose of this
Section 5.5(b).
(vi) In accordance with the requirements of Section 704(b) of the Code, any
deductions for depreciation, cost recovery or amortization attributable to any
Contributed Property shall be determined as if the adjusted basis of such property
on the date it was acquired by the Partnership were equal to the Agreed Value of
such property. Upon an adjustment pursuant to Section 5.5(d) to the Carrying Value
of any Partnership property subject to depreciation, cost recovery or amortization,
any further deductions for such depreciation, cost recovery or amortization
attributable to such property shall be determined under the rules prescribed by
Treasury Regulation Section 1.704-3(d)(2) as if the adjusted basis of such property
were equal to the Carrying Value of such property immediately following such
adjustment.
(vii) The Gross Liability Value of each Liability of the Partnership described
in Treasury Regulation Section 1.752-7(b)(3)(i) shall be adjusted at such times as
provided in this Agreement for an adjustment to Carrying Values. The amount of any
such adjustment shall be treated for purposes hereof as an item of loss (if the
adjustment increases the Carrying Value of such Liability of the Partnership) or an
item of gain (if the adjustment decreases the Carrying Value of such Liability of
the Partnership).
(c) (i) A transferee of a Partnership Interest shall succeed to a pro rata portion of the
Capital Account of the transferor relating to the Partnership Interest so transferred.
(ii) Subject to Section 6.7(c), immediately prior to the transfer of a
Subordinated Unit or of a Subordinated Unit that has converted into a Common Unit
pursuant to Section 5.7 by a holder thereof (other than a transfer to an Affiliate
unless the General Partner elects to have this subparagraph 5.5(c)(ii) apply), the
Capital Account maintained for such Person with respect to its Subordinated Units or
converted Subordinated Units will (A) first, be allocated to the Subordinated Units
or converted Subordinated Units to be transferred in an amount equal to the product
of (x) the number of such Subordinated Units or converted Subordinated Units to be
transferred and (y) the Per Unit Capital Amount for a Common Unit, and (B) second,
any remaining balance in such Capital Account will be retained by the transferor,
regardless of whether it has
40
retained any Subordinated Units or converted
Subordinated Units (
Retained Converted Subordinated Units
). Following any such
allocation, the transferors Capital Account, if any, maintained with respect to the
retained Subordinated Units or Retained Converted Subordinated Units, if any, will
have a balance equal to the amount allocated under clause (B) hereinabove, and the
transferees Capital
Account established with respect to the transferred Subordinated Units or
converted Subordinated Units will have a balance equal to the amount allocated under
clause (A) hereinabove.
(d) (i) In accordance with Treasury Regulation Section 1.704- 1(b)(2)(iv)(f), on an issuance
of additional Partnership Interests for cash or Contributed Property, the issuance of Partnership
Interests as consideration for the provision of services, or the conversion of the General
Partners Combined Interest to Common Units pursuant to Section 11.3(b), the Capital Account of
each Partner and the Carrying Value of each Partnership property immediately prior to such issuance
shall be adjusted upward or downward to reflect any Unrealized Gain or Unrealized Loss attributable
to such Partnership property, and any such Unrealized Gain or Unrealized Loss shall be treated, for
purposes of maintaining Capital Accounts, as if it had been recognized on an actual sale of each
such property for an amount equal to its fair market value immediately prior to such issuance and
had been allocated among the Partners at such time pursuant to Section 6.1(c) and Section 6.1(d) in
the same manner as any item of gain or loss actually recognized following an event giving rise to
the dissolution of the Partnership would have been allocated;
provided, however
, that in the event
of an issuance of Partnership Interests for a de minimis amount of cash or Contributed Property, or
in the event of an issuance of a de minimis amount of Partnership Interests as consideration for
the provision of services, the General Partner may determine that such adjustments are unnecessary
for the proper administration of the Partnership. In determining such Unrealized Gain or
Unrealized Loss, the aggregate fair market value of all Partnership property (including cash or
cash equivalents) immediately prior to the issuance of additional Partnership Interests shall be
determined by the General Partner using such method of valuation as it may adopt. In making its
determination of the fair market values of individual properties, the General Partner may determine
that it is appropriate to first determine an aggregate value for the Partnership, derived from the
current trading price of the Common Units, and taking fully into account the fair market value of
the Partnership Interests of all Partners at such time, and then allocate such aggregate value
among the individual properties of the Partnership (in such manner as it determines appropriate).
(ii) In accordance with Treasury Regulation Section 1.704- 1(b)(2)(iv)(f),
immediately prior to any actual or deemed distribution to a Partner of any
Partnership property(other than a distribution of cash that is not in redemption or
retirement of a Partnership Interest), the Capital Accounts of all Partners and the
Carrying Value of all Partnership property shall be adjusted upward or downward to
reflect any Unrealized Gain or Unrealized Loss attributable to such Partnership
property, and any such Unrealized Gain or Unrealized Loss shall be treated, for
purposes of maintaining Capital Accounts, as if it had been recognized on an actual
sale of each such property immediately prior to such distribution for an amount
equal to its fair market value, and had been allocated among the Partners, at such
time, pursuant to Section 6.1(c)and Section 6.1(d) in the same manner as any item
of gain or loss actually recognized
41
following an event giving rise to the
dissolution of the Partnership would have been allocated. In determining such
Unrealized Gain or Unrealized Loss the aggregate fair market value of all
Partnership property (including cash or cash equivalents) immediately prior to a
distribution shall (A) in the case of an actual distribution that is not made
pursuant to Section 12.4 or in the case of a deemed
distribution, be determined in the same manner as that provided in Section
5.5(d)(i) or (B) in the case of a liquidating distribution pursuant to Section 12.4,
be determined by the Liquidator using such method of valuation as it may adopt.
Section 5.6
Issuances of Additional Partnership Securities
.
(a) The Partnership may issue additional Partnership Securities and options, rights, warrants
and appreciation rights relating to the Partnership Securities for any Partnership purpose at any
time and from time to time to such Persons for such consideration and on such terms and conditions
as the General Partner shall determine, all without the approval of any Limited Partners.
(b) Each additional Partnership Security authorized to be issued by the Partnership pursuant
to Section 5.6(a) may be issued in one or more classes, or one or more series of any such classes,
with such designations, preferences, rights, powers and duties (which may be senior to existing
classes and series of Partnership Securities), as shall be fixed by the General Partner, including
(i) the right to share in Partnership profits and losses or items thereof; (ii) the right to share
in Partnership distributions; (iii) the rights upon dissolution and liquidation of the Partnership;
(iv) whether, and the terms and conditions upon which, the Partnership may or shall be required to
redeem the Partnership Security; (v) whether such Partnership Security is issued with the privilege
of conversion or exchange and, if so, the terms and conditions of such conversion or exchange; (vi)
the terms and conditions upon which each Partnership Security will be issued, evidenced by
certificates and assigned or transferred; (vii) the method for determining the Percentage Interest
as to such Partnership Security; and (viii) the right, if any, of each such Partnership Security to
vote on Partnership matters, including matters relating to the relative rights, preferences and
privileges of such Partnership Security.
(c) The General Partner shall take all actions that it determines to be necessary or
appropriate in connection with (i) each issuance of Partnership Securities and options, rights,
warrants and appreciation rights relating to Partnership Securities pursuant to this Section 5.6,
(ii) the conversion of the General Partner Interest (represented by General Partner Units) or any
Incentive Distribution Rights into Units pursuant to the terms of this Agreement, (iii) reflecting
admission of such additional Limited Partners in the books and records of the Partnership as the
Record Holders of such Limited Partner Interests and (iv) all additional issuances of Partnership
Securities. The General Partner shall determine the relative rights, powers and duties of the
holders of the Units or other Partnership Securities being so issued. The General Partner shall do
all things necessary to comply with the Delaware Act and is authorized and directed to do all
things that it determines to be necessary or appropriate in connection with any future issuance of
Partnership Securities or in connection with the conversion of the General Partner Interest or any
Incentive Distribution Rights into Units pursuant to the terms of this Agreement, including
compliance with any statute, rule, regulation or guideline of any federal,
42
state or other
governmental agency or any National Securities Exchange on which the Units or other Partnership
Securities are listed or admitted to trading.
(d) No fractional Units shall be issued by the Partnership.
Section 5.7
Conversion of Subordinated Units
.
(a) All of the Subordinated Units shall convert into Common Units on a one-for-one basis on
the expiration of the Subordination Period.
(b) A Subordinated Unit that has converted into a Common Unit shall be subject to the
provisions of Section 6.7
Section 5.8
Limited Preemptive Right
.
Except as provided in this Section 5.8 and in Section 5.2 and Section 5.11, no Person shall
have any preemptive, preferential or other similar right with respect to the issuance of any
Partnership Security, whether unissued, held in the treasury or hereafter created. The General
Partner shall have the right, which it may from time to time assign in whole or in part to any of
its Affiliates, to purchase Partnership Securities from the Partnership whenever, and on the same
terms that, the Partnership issues Partnership Securities to Persons other than the General Partner
and its Affiliates, to the extent necessary to maintain the Percentage Interests of the General
Partner and its Affiliates equal to that which existed immediately prior to the issuance of such
Partnership Securities.
Section 5.9
Splits and Combinations
.
(a) Subject to Section 5.9(d), Section 6.6 and Section 6.9 (dealing with adjustments of
distribution levels), the Partnership may make a Pro Rata distribution of Partnership Securities to
all Record Holders or may effect a subdivision or combination of Partnership Securities so long as,
after any such event, each Partner shall have the same Percentage Interest in the Partnership as
before such event, and any amounts calculated on a per Unit basis (including any Common Unit
Arrearage or Cumulative Common Unit Arrearage) or stated as a number of Units are proportionately
adjusted.
(b) Whenever such a distribution, subdivision or combination of Partnership Securities is
declared, the General Partner shall select a Record Date as of which the distribution, subdivision
or combination shall be effective and shall send notice thereof at least 20 days prior to such
Record Date to each Record Holder as of a date not less than 10 days prior to the date of such
notice. The General Partner also may cause a firm of independent public accountants selected by it
to calculate the number of Partnership Securities to be held by each Record Holder after giving
effect to such distribution, subdivision or combination. The General Partner shall be entitled to
rely on any certificate provided by such firm as conclusive evidence of the accuracy of such
calculation.
(c) Promptly following any such distribution, subdivision or combination, the Partnership may
issue Certificates or uncertificated Partnership Securities to the Record Holders
of Partnership Securities as of the applicable Record Date representing the new number of
43
Partnership Securities held by such Record Holders, or the General Partner may adopt such other
procedures that it determines to be necessary or appropriate to reflect such changes. If any such
combination results in a smaller total number of Partnership Securities Outstanding, the
Partnership shall require, as a condition to the delivery to a Record Holder of such new
Certificate, the surrender of any Certificate held by such Record Holder immediately prior to such
Record Date.
(d) The Partnership shall not issue fractional Units upon any distribution, subdivision or
combination of Units. If a distribution, subdivision or combination of Units would result in the
issuance of fractional Units but for the provisions of Section 5.6(d) and this Section 5.9(d), each
fractional Unit shall be rounded to the nearest whole Unit (with fractional Units equal to or
greater than a 0.5 Unit being rounded to the next higher Unit).
Section 5.10
Fully Paid and Non-Assessable Nature of Limited Partner Interests
.
All Limited Partner Interests issued pursuant to, and in accordance with the requirements of,
this Article V shall be fully paid and non-assessable Limited Partner Interests in the Partnership,
except as such non-assessability may be affected by Sections 17-607 or 17-804 of the Delaware Act.
Section 5.11
Issuance of Common Units in Connection with Reset of Incentive Distribution Rights
.
(a) Subject to the provisions of this Section 5.11, the holder of the Incentive Distribution
Rights (or, if there is more than one holder of the Incentive Distribution Rights, the holders of a
majority in interest of the Incentive Distribution Rights) shall have the right, at any time when
there are no Subordinated Units outstanding and the Partnership has made a distribution pursuant to
Section 6.4(b)(v) for each of the four most recently completed Quarters and the amount of each such
distribution did not exceed Adjusted Operating Surplus for such Quarter, to make an election (the
IDR Reset Election
) to cause the Minimum Quarterly Distribution and the Target Distributions to
be reset in accordance with the provisions of Section 5.11(e) and, in connection therewith, the
holder or holders of the Incentive Distribution Rights will become entitled to receive their
respective proportionate share of a number of Common Units (the
IDR Reset Common Units
) derived
by dividing (i) the average amount of cash distributions made by the Partnership for the two full
Quarters immediately preceding the giving of the Reset Notice (as defined in Section 5.11(b)) in
respect of the Incentive Distribution Rights by (ii) the average of the cash distributions made by
the Partnership in respect of each Common Unit for the two full Quarters immediately preceding the
giving of the Reset Notice (the number of Common Units determined by such quotient is referred to
herein as the
Aggregate Quantity of IDR Reset Common Units
). If at the time of any IDR Reset
Election the General Partner and its Affiliates are not the holders of a majority interest of the
Incentive Distribution Rights, then the IDR Reset Election shall be subject to the prior written
concurrence of the General Partner
that the conditions described in the immediately preceding sentence have been satisfied. Upon
the issuance of such IDR Reset Common Units, the Partnership will issue to the General Partner that
number of additional General Partner Units equal to the product of (x) the quotient obtained by
dividing (A) the Percentage Interest of the General Partner immediately prior to such issuance by
(B) a percentage equal to 100% less such Percentage
44
Interest by (y) the number of such IDR Reset
Common Units, and the General Partner shall not be obligated to make any additional Capital
Contribution to the Partnership in exchange for such issuance. The making of the IDR Reset
Election in the manner specified in this Section 5.11 shall cause the Minimum Quarterly
Distribution and the Target Distributions to be reset in accordance with the provisions of Section
5.11(e) and, in connection therewith, the holder or holders of the Incentive Distribution Rights
will become entitled to receive Common Units and the General Partner will become entitled to
receive General Partner Units on the basis specified above, without any further approval required
by the General Partner or the Unitholders other than as set forth in this Section 5.11(a), at the
time specified in Section 5.11(c) unless the IDR Reset Election is rescinded pursuant to Section
5.11(d).
(b) To exercise the right specified in Section 5.11(a), the holder of the Incentive
Distribution Rights (or, if there is more than one holder of the Incentive Distribution Rights, the
holders of a majority in interest of the Incentive Distribution Rights) shall deliver a written
notice (the
Reset Notice
) to the Partnership. Within 10 Business Days after the receipt by the
Partnership of such Reset Notice, the Partnership shall deliver a written notice to the holder or
holders of the Incentive Distribution Rights of the Partnerships determination of the aggregate
number of Common Units that each holder of Incentive Distribution Rights will be entitled to
receive.
(c) The holder or holders of the Incentive Distribution Rights will be entitled to receive the
Aggregate Quantity of IDR Reset Common Units and the General Partner will be entitled to receive
the related additional General Partner Units on the fifteenth Business Day after receipt by the
Partnership of the Reset Notice;
provided
,
however
, that the issuance of Common Units to the holder
or holders of the Incentive Distribution Rights shall not occur prior to the approval of the
listing or admission for trading of such Common Units by the principal National Securities Exchange
upon which the Common Units are then listed or admitted for trading if any such approval is
required pursuant to the rules and regulations of such National Securities Exchange.
(d) If the principal National Securities Exchange upon which the Common Units are then traded
has not approved the listing or admission for trading of the Common Units to be issued pursuant to
this Section 5.11 on or before the 30th calendar day following the Partnerships receipt of the
Reset Notice and such approval is required by the rules and regulations of such National Securities
Exchange, then the holder of the Incentive Distribution Rights (or, if there is more than one
holder of the Incentive Distribution Rights, the holders of a majority in interest of the Incentive
Distribution Rights) shall have the right to either rescind the IDR Reset Election or elect to
receive other Partnership Securities having such terms as the General Partner may approve, with the
approval of the Conflicts Committee, that will provide (i) the same economic value, in the
aggregate, as the Aggregate Quantity of IDR Reset Common Units would have had at the time of the
Partnerships receipt of the Reset Notice, as determined by the General Partner, and (ii) for the
subsequent conversion of such Partnership Securities into
Common Units within not more than 12 months following the Partnerships receipt of the Reset
Notice upon the satisfaction of one or more conditions that are reasonably acceptable to the holder
of the Incentive Distribution Rights (or, if there is more than one holder of the Incentive
Distribution Rights, the holders of a majority in interest of the Incentive Distribution Rights).
45
(e) The Minimum Quarterly Distribution, First Target Distribution, Second Target Distribution
and Third Target Distribution shall be adjusted at the time of the issuance of Common Units or
other Partnership Securities pursuant to this Section 5.11 such that (i) the Minimum Quarterly
Distribution shall be reset to equal the average cash distribution amount per Common Unit for the
two Quarters immediately prior to the Partnerships receipt of the Reset Notice (the
Reset MQD
),
(ii) the First Target Distribution shall be reset to equal 115% of the Reset MQD, (iii) the Second
Target Distribution shall be reset to equal to 125% of the Reset MQD and (iv) the Third Target
Distribution shall be reset to equal 150% of the Reset MQD.
(f) Upon the issuance of IDR Reset Common Units pursuant to Section 5.11(a), the Capital
Account maintained with respect to the Incentive Distribution Rights will (i) first, be allocated
to IDR Reset Common Units in an amount equal to the product of (A) the Aggregate Quantity of IDR
Reset Common Units and (B) the Per Unit Capital Amount for an Initial Common Unit, and (ii) second,
as to any remaining balance in such Capital Account, will be retained by the holder of the
Incentive Distribution Rights. If there is not sufficient capital associated with the Incentive
Distribution Rights to allocate the full Per Unit Capital Amount for an Initial Common Unit to the
IDR Reset Common Units in accordance with clause (i) of this Section 5.11(f), the IDR Reset Common
Units shall be subject to Sections 6.1(d)(x)(B) and (C).
ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS
Section 6.1
Allocations for Capital Account Purposes
.
For purposes of maintaining the Capital Accounts and in determining the rights of the Partners
among themselves, the Partnerships items of income, gain, loss and deduction (computed in
accordance with Section 5.5(b)) for each taxable period shall be allocated among the Partners as
provided herein below.
(a)
Net Income
. After giving effect to the special allocations set forth in Section 6.1(d),
Net Income for each taxable period and all items of income, gain, loss and deduction taken into
account in computing Net Income for such taxable period shall be allocated as follows:
(i) First, to the General Partner until the aggregate of the Net Income
allocated to the General Partner pursuant to this Section 6.1(a)(i) and the Net
Termination Gain allocated to the General Partner pursuant to Section 6.1(c)(i)(A)
or Section 6.1(c)(iv)(A) for the current and all previous taxable periods is equal
to the aggregate of the Net Loss allocated to the General Partner pursuant to
Section 6.1(b)(ii) for all previous taxable periods and the Net Termination Loss
allocated
to the General Partner pursuant to Section 6.1(c)(ii)(D) or Section
6.1(c)(iii)(B) for the current and all previous taxable periods; and
(ii) The balance, if any, (x) to the General Partner in accordance with its
Percentage Interest, and (y) to all Unitholders, Pro Rata, a percentage equal to
100% less the percentage applicable to subclause (x).
46
(b)
Net Loss
. After giving effect to the special allocations set forth in Section 6.1(d), Net
Loss for each taxable period and all items of income, gain, loss and deduction taken into account
in computing Net Loss for such taxable period shall be allocated as follows:
(i) First, to the General Partner and the Unitholders, Pro Rata; provided, that
Net Losses shall not be allocated pursuant to this Section 6.1(b)(i) to the extent
that such allocation would cause any Unitholder to have a deficit balance in its
Adjusted Capital Account at the end of such taxable period (or increase any existing
deficit balance in its Adjusted Capital Account); and
(ii) The balance, if any, 100% to the General Partner.
(c)
Net Termination Gains and Losses
. After giving effect to the special allocations set
forth in Section 6.1(d), Net Termination Gain or Net Termination Loss (including a pro rata part of
each item of income, gain, loss and deduction taken into account in computing Net Termination Gain
or Net Termination Loss) for such taxable period shall be allocated in the manner set forth in this
Section 6.1(c). All allocations under this Section 6.1(c) shall be made after Capital Account
balances have been adjusted by all other allocations provided under this Section 6.1 and after all
distributions of Available Cash provided under Section 6.4 and Section 6.5 have been made;
provided, however, that solely for purposes of this Section 6.1(c), Capital Accounts shall not be
adjusted for distributions made pursuant to Section 12.4.
(i) Except as provided in Section 6.1(c)(iv), Net Termination Gain (including a
pro rata part of each item of income, gain, loss, and deduction taken into account
in computing Net Termination Gain) shall be allocated:
(A) First, to the General Partner until the aggregate of the Net Termination
Gain allocated to the General Partner pursuant to this Section 6.1(c)(i)(A) or
Section 6.1(c)(iv)(A) and the Net Income allocated to the General Partner pursuant
to Section 6.1(a)(i) for the current and all previous taxable periods is equal to
the aggregate of the Net Loss allocated to the General Partner pursuant to Section
6.1(b)(ii) for all previous taxable periods and the Net Termination Loss allocated
to the General Partner pursuant to Section 6.1(c)(ii)(D) or Section 6.1(c)(iii)(B)
for all previous taxable periods;
(B) Second, (x) to the General Partner in accordance with its Percentage
Interest and (y) to all Unitholders holding Common Units, Pro Rata, a percentage
equal to 100% less the General Partners Percentage Interest, until the Capital
Account in respect of each Common Unit then Outstanding is equal to the sum of (1)
its Unrecovered Initial Unit Price, (2) the Minimum Quarterly Distribution for the
Quarter during which the Liquidation Date occurs, reduced by
any distribution pursuant to Section 6.4(a)(i) or Section 6.4(b)(i) with
respect to such Common Unit for such Quarter (the amount determined pursuant to this
clause (2) is hereinafter defined as the
Unpaid MQD
) and (3) any then existing
Cumulative Common Unit Arrearage;
47
(C) Third, if such Net Termination Gain is recognized (or is deemed to be
recognized) prior to the conversion of the last Outstanding Subordinated Unit into a
Common Unit, (x) to the General Partner in accordance with its Percentage Interest
and (y) to all Unitholders holding Subordinated Units, Pro Rata, a percentage equal
to 100% less the General Partners Percentage Interest, until the Capital Account in
respect of each Subordinated Unit then Outstanding equals the sum of (1) its
Unrecovered Initial Unit Price, determined for the taxable period (or portion
thereof) to which this allocation of gain relates, and (2) the Minimum Quarterly
Distribution for the Quarter during which the Liquidation Date occurs, reduced by
any distribution pursuant to Section 6.4(a)(iii) with respect to such Subordinated
Unit for such Quarter;
(D) Fourth, 100% to the General Partner and all Unitholders, Pro Rata, until
the Capital Account in respect of each Common Unit then Outstanding is equal to the
sum of (1) its Unrecovered Initial Unit Price, (2) the Unpaid MQD, (3) any then
existing Cumulative Common Unit Arrearage, and (4) the excess of (aa) the First
Target Distribution less the Minimum Quarterly Distribution for each Quarter of the
Partnerships existence over (bb) the cumulative per Unit amount of any
distributions of Available Cash that is deemed to be Operating Surplus made pursuant
to Section 6.4(a)(iv) and Section 6.4(b)(ii) (the sum of (1), (2), (3) and (4) is
hereinafter referred to as the
First Liquidation Target Amount
);
(E) Fifth, (x) to the General Partner in accordance with its Percentage
Interest, (y) 13% to the holders of the Incentive Distribution Rights, Pro Rata, and
(z) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the
percentages applicable to subclauses (x) and (y) of this clause (E), until the
Capital Account in respect of each Common Unit then Outstanding is equal to the sum
of (1) the First Liquidation Target Amount, and (2) the excess of (aa) the Second
Target Distribution less the First Target Distribution for each Quarter of the
Partnerships existence over (bb) the cumulative per Unit amount of any
distributions of Available Cash that is deemed to be Operating Surplus made pursuant
to Section 6.4(a)(v) and Section 6.4(b)(iii) (the sum of (1) and (2) is hereinafter
referred to as the
Second Liquidation Target Amount
);
(F) Sixth, (x) to the General Partner in accordance with its Percentage
Interest, (y) 23% to the holders of the Incentive Distribution Rights, Pro Rata, and
(z) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the
percentages applicable to subclauses (x) and (y) of this clause (F), until the
Capital Account in respect of each Common Unit then Outstanding is equal to the sum
of (1) the Second Liquidation Target Amount, and (2) the excess of (aa) the Third
Target Distribution less the Second Target Distribution for each Quarter of
the Partnerships existence over (bb) the cumulative per Unit amount of any
distributions of Available Cash that is deemed to be Operating Surplus made pursuant
to Section 6.4(a)(vi) and Section 6.4(b)(iv); and
48
(G) Finally, (x) to the General Partner in accordance with its Percentage
Interest, (y) 48% to the holders of the Incentive Distribution Rights, Pro Rata, and
(z) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the
percentages applicable to subclauses (x) and (y) of this clause (G).
(ii) Except as otherwise provided by Section 6.1(c)(iii), Net Termination Loss
(including a pro rata part of each item of income, gain, loss, and deduction taken
into account in computing Net Termination Loss) shall be allocated:
(A) First, if Subordinated Units remain Outstanding, (x) to the General Partner
in accordance with its Percentage Interest and (y) to all Unitholders holding
Subordinated Units, Pro Rata, a percentage equal to 100% less the General Partners
Percentage Interest, until the Capital Account in respect of each Subordinated Unit
then Outstanding has been reduced to zero;
(B) Second, (x) to the General Partner in accordance with its Percentage
Interest and (y) to all Unitholders holding Common Units, Pro Rata, a percentage
equal to 100% less the General Partners Percentage Interest, until the Capital
Account in respect of each Common Unit then Outstanding has been reduced to zero;
(C) Third, to the General Partner and the Unitholders, Pro Rata; provided that
Net Termination Loss shall not be allocated pursuant to this Section 6.1(c)(ii)(C)
to the extent such allocation would cause any Unitholder to have a deficit balance
in its Adjusted Capital Account (or increase any existing deficit in its Adjusted
Capital Account); and
(D) Fourth, the balance, if any, 100% to the General Partner.
(iii) Any Net Termination Loss deemed recognized pursuant to Section 5.5(d)
prior to the Liquidation Date shall be allocated:
(A) First, to the General Partner and the Unitholders, Pro Rata; provided that
Net Termination Loss shall not be allocated pursuant to this Section 6.1(c)(iii)(A)
to the extent such allocation would cause any Unitholder to have a deficit balance
in its Adjusted Capital Account at the end of such taxable period (or increase any
existing deficit in its Adjusted Capital Account); and
(B)
The balance, if any, to the General Partner.
(iv) If a Net Termination Loss has been allocated pursuant to Section
6.1(c)(iii), subsequent Net Termination Gain deemed recognized pursuant to Section
5.5(d) prior to the Liquidation Date shall be allocated:
(A) First, to the General Partner until the aggregate Net Termination Gain
allocated to the General Partner pursuant to this
49
Section 6.1(c)(iv)(A) is equal to
the aggregate Net Termination Loss previously allocated pursuant to Section
6.1(c)(iii)(B);
(B) Second, to the General Partner and the Unitholders, Pro Rata, until the
aggregate Net Termination Gain allocated pursuant to this Section 6.1(c)(iv)(B) is
equal to the aggregate Net Termination Loss previously allocated pursuant to Section
6.1(c)(iii)(A); and
(C) The balance, if any, pursuant to the provisions of Section 6.1(c)(i).
(d)
Special Allocations
. Notwithstanding any other provision of this Section 6.1, the
following special allocations shall be made for such taxable period:
(i)
Partnership Minimum Gain Chargeback
. Notwithstanding any other provision
of this Section 6.1, if there is a net decrease in Partnership Minimum Gain during
any Partnership taxable period, each Partner shall be allocated items of Partnership
income and gain for such period (and, if necessary, subsequent periods) in the
manner and amounts provided in Treasury Regulation Sections 1.704- 2(f)(6),
1.704-2(g)(2) and 1.704-2(j)(2)(i), or any successor provision. For purposes of
this Section 6.1(d), each Partners Adjusted Capital Account balance shall be
determined, and the allocation of income or gain required hereunder shall be
effected, prior to the application of any other allocations pursuant to this Section
6.1(d) with respect to such taxable period (other than an allocation pursuant to
Section 6.1(d)(vi) and Section 6.1(d)(vii)). This Section 6.1(d)(i) is intended to
comply with the Partnership Minimum Gain chargeback requirement in Treasury
Regulation Section 1.704-2(f) and shall be interpreted consistently therewith.
(ii)
Chargeback of Partner Nonrecourse Debt Minimum Gain
. Notwithstanding the
other provisions of this Section 6.1 (other than Section 6.1(d)(i)), except as
provided in Treasury Regulation Section 1.704-2(i)(4), if there is a net decrease in
Partner Nonrecourse Debt Minimum Gain during any Partnership taxable period, any
Partner with a share of Partner Nonrecourse Debt Minimum Gain at the beginning of
such taxable period shall be allocated items of Partnership income and gain for such
period (and, if necessary, subsequent periods) in the manner and amounts provided in
Treasury Regulation Sections 1.704-2(i)(4) and 1.704-2(j)(2)(ii), or any successor
provisions. For purposes of this Section 6.1(d), each Partners Adjusted Capital
Account balance shall be determined, and the allocation of income or gain required
hereunder shall be effected, prior to the application of any other allocations
pursuant to this Section 6.1(d) and other than an allocation pursuant to Section
6.1(d)(i), Section 6.1(d)(vi) and Section 6.1(d)(vii) with respect to such taxable
period. This Section 6.1(d)(ii) is intended to comply with the chargeback of items
of income and gain requirement in Treasury Regulation Section 1.704-2(i)(4) and
shall be interpreted consistently therewith.
50
(iii)
Priority Allocations
.
(A) If the amount of cash or the Net Agreed Value of any property distributed (except cash or
property distributed pursuant to Section 12.4) with respect to a Unit exceeds the amount of cash or
the Net Agreed Value of property distributed with respect to another Unit (the amount of the
excess, an Excess Distribution and the Unit with respect to which the greater distribution is
paid, an Excess Distribution Unit), then (1) there shall be allocated gross income and gain to
each Unitholder receiving an Excess Distribution with respect to the Excess Distribution Unit until
the aggregate amount of such items allocated with respect to such Excess Distribution Unit pursuant
to this Section 6.1(d)(iii)(A) for the current taxable period and all previous taxable periods is
equal to the amount of the Excess Distribution; and (2) the General Partner shall be allocated
gross income and gain with respect to each such Excess Distribution in an amount equal to the
product obtained by multiplying (aa) the quotient determined by dividing (x) the General Partners
Percentage Interest at the time when the Excess Distribution occurs by (y) a percentage equal to
100% less the General Partners Percentage Interest at the time when the Excess Distribution
occurs, times (bb) the total amount allocated in clause (1) above with respect to such Excess
Distribution.
(B) After the application of Section 6.1(d)(iii)(A), all or any portion of the remaining items
of Partnership gross income or gain for the taxable period, if any, shall be allocated (1) to the
holders of Incentive Distribution Rights, Pro Rata, until the aggregate amount of such items
allocated to the holders of Incentive Distribution Rights pursuant to this Section 6.1(d)(iii)(B)
for the current taxable period and all previous taxable periods is equal to the cumulative amount
of all Incentive Distributions made to the holders of Incentive Distribution Rights from the
Closing Date to a date 45 days after the end of the current taxable period; and (2) to the General
Partner an amount equal to the product of (aa) an amount equal to the quotient determined by
dividing (x) the General Partners Percentage Interest by (y) the sum of 100 less the General
Partners Percentage Interest times (bb) the sum of the amounts allocated in clause (1) above.
(iv)
Qualified Income Offset
. In the event any Partner unexpectedly receives
any adjustments, allocations or distributions described in Treasury Regulation
Sections 1.704- 1(b)(2)(ii)(d)(4), 1.704- 1(b)(2)(ii)(d)(5), or 1.704-
1(b)(2)(ii)(d)(6), items of Partnership gross income and gain shall be specially
allocated to such Partner in an amount and manner sufficient to eliminate, to the
extent required by the Treasury Regulations promulgated under Section 704(b) of the
Code, the deficit balance, if any, in its Adjusted Capital Account created by such
adjustments, allocations or distributions as quickly as possible; provided, that an
allocation pursuant to this Section 6.1(d)(iv) shall be made only if and to the
extent that such Partner would have a deficit balance in its Adjusted Capital
Account as adjusted after all other allocations provided for in this Section 6.1
have been tentatively made as if this Section 6.1(d)(iv) were not in this Agreement.
(v)
Gross Income Allocation
. In the event any Partner has a deficit balance in
its Capital Account at the end of any taxable period in excess of the sum of (A) the
amount such Partner is required to restore pursuant to the provisions of this
Agreement and (B) the amount such Partner is deemed
51
obligated to restore pursuant to Treasury Regulation Sections 1.704-2(g) and
1.704-2(i)(5), such Partner shall be specially allocated items of Partnership gross
income and gain in the amount of such excess as quickly as possible; provided, that
an allocation pursuant to this Section 6.1(d)(v) shall be made only if and to the
extent that such Partner would have a deficit balance in its Capital Account as
adjusted after all other allocations provided for in this Section 6.1 have been
tentatively made as if Section 6.1(d)(iv) and this Section 6.1(d)(v) were not in
this Agreement.
(vi)
Nonrecourse Deductions
. Nonrecourse Deductions for any taxable period
shall be allocated to the Partners Pro Rata. If the General Partner determines that
the Partnerships Nonrecourse Deductions should be allocated in a different ratio to
satisfy the safe harbor requirements of the Treasury Regulations promulgated under
Section 704(b) of the Code, the General Partner is authorized, upon notice to the
other Partners, to revise the prescribed ratio to the numerically closest ratio that
does satisfy such requirements.
(vii)
Partner Nonrecourse Deductions
. Partner Nonrecourse Deductions for any
taxable period shall be allocated 100% to the Partner that bears the Economic Risk
of Loss with respect to the Partner Nonrecourse Debt to which such Partner
Nonrecourse Deductions are attributable in accordance with Treasury Regulation
Section 1.704-2(i). If more than one Partner bears the Economic Risk of Loss with
respect to a Partner Nonrecourse Debt, such Partner Nonrecourse Deductions
attributable thereto shall be allocated between or among such Partners in accordance
with the ratios in which they share such Economic Risk of Loss.
(viii)
Nonrecourse Liabilities
. For purposes of Treasury Regulation Section
1.752-3(a)(3), the Partners agree that Nonrecourse Liabilities of the Partnership in
excess of the sum of (A) the amount of Partnership Minimum Gain and (B) the total
amount of Nonrecourse Built-in Gain shall be allocated among the Partners Pro Rata.
(ix)
Code Section 754 Adjustments
. To the extent an adjustment to the adjusted
tax basis of any Partnership asset pursuant to Section 734(b) or 743(b) of the Code
is required, pursuant to Treasury Regulation Section 1.704- 1(b)(2)(iv)(m), to be
taken into account in determining Capital Accounts, the amount of such adjustment to
the Capital Accounts shall be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment decreases such basis),
and such item of gain or loss shall be specially allocated to the Partners in a
manner consistent with the manner in which their Capital Accounts are required to be
adjusted pursuant to such Section of the Treasury Regulations.
52
(x)
Economic Uniformity; Changes in Law
.
(A) At the election of the General Partner with respect to any taxable period
ending upon, or after, the termination of the Subordination Period, all or a portion
of the remaining items of Partnership gross income or gain for such taxable period,
after taking into account allocations pursuant to Section 6.1(d)(iii), shall be
allocated 100% to each Partner holding Subordinated Units that are Outstanding as of
the termination of the Subordination Period (
Final Subordinated Units
) in the
proportion of the number of Final Subordinated Units held by such Partner to the
total number of Final Subordinated Units then Outstanding, until each such Partner
has been allocated an amount of gross income or gain that increases the Capital
Account maintained with respect to such Final Subordinated Units to an amount that
after taking into account the other allocations of income, gain, loss and deduction
to be made with respect to such taxable period will equal the product of (A) the
number of Final Subordinated Units held by such Partner and (B) the Per Unit Capital
Amount for a Common Unit. The purpose of this allocation is to establish uniformity
between the Capital Accounts underlying Final Subordinated Units and the Capital
Accounts underlying Common Units held by Persons other than the General Partner and
its Affiliates immediately prior to the conversion of such Final Subordinated Units
into Common Units. This allocation method for establishing such economic uniformity
will be available to the General Partner only if the method for allocating the
Capital Account maintained with respect to the Subordinated Units between the
transferred and retained Subordinated Units pursuant to Section 5.5(c)(ii) does not
otherwise provide such economic uniformity to the Final Subordinated Units.
(B) With respect to an event triggering an adjustment to the Carrying Value of
Partnership property pursuant to Section 5.5(d) during any taxable period of the
Partnership ending upon, or after, the issuance of IDR Reset Common Units pursuant
to Section 5.11, after the application of Section 6.1(d)(x)(A), any Unrealized Gains
and Unrealized Losses shall be allocated among the Partners in a manner that to the
nearest extent possible results in the Capital Accounts maintained with respect to
such IDR Reset Common Units issued pursuant to Section 5.11 equaling the product of
(A) the Aggregate Quantity of IDR Reset Common Units and (B) the Per Unit Capital
Amount for an Initial Common Unit.
(C) With respect to any taxable period during which an IDR Reset Common Unit is
transferred to any Person who is not an Affiliate of the transferor, all or a
portion of the remaining items of Partnership gross income or gain for such taxable
period shall be allocated 100% to the transferor Partner of such transferred IDR
Reset Common Unit until such transferor Partner has been allocated an amount of
gross income or gain that increases the Capital Account maintained with respect to
such transferred IDR Reset Common Unit to an amount equal to the Per Unit Capital
Amount for an Initial Common Unit
53
(D) For the proper administration of the Partnership and for the preservation
of uniformity of the Limited Partner Interests (or any class or classes thereof),
the General Partner shall (i) adopt such conventions as it deems appropriate in
determining the amount of depreciation, amortization and cost recovery deductions;
(ii) make special allocations of income, gain, loss, deduction, Unrealized Gain or
Unrealized Loss; and (iii) amend the provisions of this Agreement as appropriate (x)
to reflect the proposal or promulgation of Treasury Regulations under Section 704(b)
or Section 704(c) of the Code or (y) otherwise to preserve or achieve uniformity of
the Limited Partner Interests (or any class or classes thereof). The General
Partner may adopt such conventions, make such allocations and make such amendments
to this Agreement as provided in this Section 6.1(d)(x)(D) only if such conventions,
allocations or amendments would not have a material adverse effect on the Partners,
the holders of any class or classes of Limited Partner Interests issued and
Outstanding or the Partnership, and if such allocations are consistent with the
principles of Section 704 of the Code.
(xi)
Curative Allocation
.
(A) Notwithstanding any other provision of this Section 6.1, other than the
Required Allocations, the Required Allocations shall be taken into account in making
the Agreed Allocations so that, to the extent possible, the net amount of items of
gross income, gain, loss and deduction allocated to each Partner pursuant to the
Required Allocations and the Agreed Allocations, together, shall be equal to the net
amount of such items that would have been allocated to each such Partner under the
Agreed Allocations had the Required Allocations and the related Curative Allocation
not otherwise been provided in this Section 6.1. Notwithstanding the preceding
sentence, Required Allocations relating to (1) Nonrecourse Deductions shall not be
taken into account except to the extent that there has been a decrease in
Partnership Minimum Gain and (2) Partner Nonrecourse Deductions shall not be taken
into account except to the extent that there has been a decrease in Partner
Nonrecourse Debt Minimum Gain. In exercising its discretion under this Section
6.1(d)(xi)(A), the General Partner may take into account future Required Allocations
that, although not yet made, are likely to offset other Required Allocations
previously made. Allocations pursuant to this Section 6.1(d)(xi)(A) shall only be
made with respect to Required Allocations to the extent the General Partner
determines that such allocations will otherwise be inconsistent with the economic
agreement among the Partners. Further, allocations pursuant to this Section
6.1(d)(xi)(A) shall be deferred with respect to allocations pursuant to clauses (1)
and (2) hereof to the extent the General Partner determines that such allocations
are likely to be offset by subsequent Required Allocations.
(B) The General Partner shall, with respect to each taxable period, (1) apply
the provisions of Section 6.1(d)(xi)(A) in whatever order is most likely to minimize
the economic distortions that might otherwise result from the Required Allocations,
and (2) divide all allocations pursuant to
54
Section 6.1(d)(xi)(A) among the Partners in a manner that is likely to minimize
such economic distortions.
(xii)
Corrective and Other Allocations
. In the event of any allocation of
Additional Book Basis Derivative Items or any Book-Down Event or any recognition of
a Net Termination Loss, the following rules shall apply:
(A) Except as provided in Section 6.1(d)(xii)(B), in the case of any allocation
of Additional Book Basis Derivative Items (other than an allocation of Unrealized
Gain or Unrealized Loss under Section 5.5(d) hereof), the General Partner shall
allocate such Additional Book Basis Derivative Items to (1) the holders of Incentive
Distribution Rights and the General Partner to the same extent that the Unrealized
Gain or Unrealized Loss giving rise to such Additional Book Basis Derivative Items
was allocated to them pursuant to Section 5.5(d) and (2) all Unitholders, Pro Rata,
to the extent that the Unrealized Gain or Unrealized Loss giving rise to such
Additional Book Basis Derivative Items was allocated to any Unitholders pursuant to
Section 5.5(d).
(B) In the case of any allocation of Additional Book Basis Derivative Items
(other than an allocation of Unrealized Gain or Unrealized Loss under Section 5.5(d)
hereof or an allocation of Net Termination Gain or Net Termination Loss pursuant to
Section 6.1(c) hereof) as a result of a sale or other taxable disposition of any
Partnership asset that is an Adjusted Property (Disposed of Adjusted Property),
the General Partner shall allocate (1) additional items of gross income and gain
(aa) away from the holders of Incentive Distribution Rights and (bb) to the
Unitholders, or (2) additional items of deduction and loss (aa) away from the
Unitholders and (bb) to the holders of Incentive Distribution Rights, to the extent
that the Additional Book Basis Derivative Items allocated to the Unitholders exceed
their Share of Additional Book Basis Derivative Items with respect to such Disposed
of Adjusted Property. Any allocation made pursuant to this Section 6.1(d)(xii)(B)
shall be made after all of the other Agreed Allocations have been made as if this
Section 6.1(d)(xii) were not in this Agreement and, to the extent necessary, shall
require the reallocation of items that have been allocated pursuant to such other
Agreed Allocations.
(C) In the case of any negative adjustments to the Capital Accounts of the
Partners resulting from a Book-Down Event or from the recognition of a Net
Termination Loss, such negative adjustment (1) shall first be allocated, to the
extent of the Aggregate Remaining Net Positive Adjustments, in such a manner, as
determined by the General Partner, that to the extent possible the aggregate Capital
Accounts of the Partners will equal the amount that would have been the Capital
Account balances of the Partners if no prior Book-Up Events had occurred, and (2)
any negative adjustment in excess of the Aggregate Remaining Net Positive
Adjustments shall be allocated pursuant to Section 6.1(c) hereof.
(D) For purposes of this Section 6.1(d)(xii), the Unitholders shall be treated
as being allocated Additional Book Basis Derivative Items to the extent
55
that such Additional Book Basis Derivative Items have reduced the amount of
income that would otherwise have been allocated to the Unitholders under this
Agreement. In making the allocations required under this Section 6.1(d)(xii), the
General Partner may apply whatever conventions or other methodology it determines
will satisfy the purpose of this Section 6.1(d)(xii). Without limiting the
foregoing, if an Adjusted Property is contributed by the Partnership to another
entity classified as a partnership for federal income tax purposes (the lower tier
partnership), the General Partner may make allocations similar to those described
in Sections 6.1(d)(xii)(A)(C) to the extent the General Partner determines such
allocations are necessary to account for the Partnerships allocable share of
income, gain, loss and deduction of the lower tier partnership that relate to the
contributed Adjusted Property in a manner that is consistent with the purpose of
this Section 6.1(d)(xii).
(xiii)
Special Curative Allocation in Event of Liquidation Prior to End of
Subordination Period
. Notwithstanding any other provision of this Section 6.1
(other than the Required Allocations), if the Liquidation Date occurs prior to the
conversion of the last Outstanding Subordinated Unit, then items of income, gain,
loss and deduction for the taxable period that includes the Liquidation Date (and,
if necessary, items arising in previous taxable periods to the extent the General
Partner determines such items may be so allocated), shall be specially allocated
among the Partners in the manner determined appropriate by the General Partner so as
to cause, to the maximum extent possible, the Capital Account in respect of each
Common Unit to equal the amount such Capital Account would have been if all prior
allocations of Net Termination Gain and Net Termination Loss had been made pursuant
to Section 6.1(c)(i) or Section 6.1(c)(ii), as applicable.
Section 6.2
Allocations for Tax Purposes
.
(a) Except as otherwise provided herein, for federal income tax purposes, each item of income,
gain, loss and deduction shall be allocated among the Partners in the same manner as its
correlative item of book income, gain, loss or deduction is allocated pursuant to Section 6.1.
(b) In an attempt to eliminate Book-Tax Disparities attributable to a Contributed Property or
Adjusted Property, items of income, gain, loss, depreciation, amortization and cost recovery
deductions shall be allocated for federal income tax purposes among the Partners in the manner
provided under Section 704(c) of the Code, and the Treasury Regulations promulgated under Section
704(b) and 704(c) of the Code, as determined appropriate by the General Partner (taking into
account the General Partners discretion under Section 6.1(d)(x)(D)); provided, that the General
Partner shall apply the principles of Treasury Regulation Section 1.704-3(d) in all events.
(c) The General Partner may determine to depreciate or amortize the portion of an adjustment
under Section 743(b) of the Code attributable to unrealized appreciation in any
Adjusted Property (to the extent of the unamortized Book-Tax Disparity) using a predetermined
rate derived from the depreciation or amortization method and useful life applied to the
56
unamortized Book-Tax Disparity of such property, despite any inconsistency of such approach with
Treasury Regulation Section 1.167(c)-l(a)(6) or any successor regulations thereto. If the General
Partner determines that such reporting position cannot reasonably be taken, the General Partner may
adopt depreciation and amortization conventions under which all purchasers acquiring Limited
Partner Interests in the same month would receive depreciation and amortization deductions, based
upon the same applicable rate as if they had purchased a direct interest in the Partnerships
property. If the General Partner chooses not to utilize such aggregate method, the General Partner
may use any other depreciation and amortization conventions to preserve the uniformity of the
intrinsic tax characteristics of any Limited Partner Interests, so long as such conventions would
not have a material adverse effect on the Limited Partners or the Record Holders of any class or
classes of Limited Partner Interests.
(d) In accordance with Treasury Regulation Sections 1.1245-1(e) and 1.1250-1(f), any gain
allocated to the Partners upon the sale or other taxable disposition of any Partnership asset
shall, to the extent possible, after taking into account other required allocations of gain
pursuant to this Section 6.2, be characterized as Recapture Income in the same proportions and to
the same extent as such Partners (or their predecessors in interest) have been allocated any
deductions directly or indirectly giving rise to the treatment of such gains as Recapture Income.
(e) All items of income, gain, loss, deduction and credit recognized by the Partnership for
federal income tax purposes and allocated to the Partners in accordance with the provisions hereof
shall be determined without regard to any election under Section 754 of the Code that may be made
by the Partnership;
provided
,
however
, that such allocations, once made, shall be adjusted (in the
manner determined by the General Partner) to take into account those adjustments permitted or
required by Sections 734 and 743 of the Code.
(f) Each item of Partnership income, gain, loss and deduction, for federal income tax
purposes, shall be determined for each taxable period and prorated on a monthly basis and shall be
allocated to the Partners as of the opening of the National Securities Exchange on which the
Partnership Interests are listed or admitted to trading on the first Business Day of each month;
provided
,
however
, such items for the period beginning on the Closing Date and ending on the last
day of the month in which the last Option Closing Date or the expiration of the Over-Allotment
Option occurs shall be allocated to the Partners as of the opening of the National Securities
Exchange on which the Partnership Interests are listed or admitted to trading on the first Business
Day of the next succeeding month; and
provided
,
further
, that gain or loss on a sale or other
disposition of any assets of the Partnership or any other extraordinary item of income or loss
realized and recognized other than in the ordinary course of business, as determined by the General
Partner, shall be allocated to the Partners as of the opening of the National Securities Exchange
on which the Partnership Interests are listed or admitted to trading on the first Business Day of
the month in which such gain or loss is recognized for federal income tax purposes. The General
Partner may revise, alter or otherwise modify such methods of allocation to the extent permitted or
required by Section 706 of the Code and the regulations or rulings promulgated thereunder.
(g) Allocations that would otherwise be made to a Limited Partner under the provisions of this
Article VI shall instead be made to the beneficial owner of Limited Partner
57
Interests held by a
nominee in any case in which the nominee has furnished the identity of such owner to the
Partnership in accordance with Section 6031(c) of the Code or any other method determined by the
General Partner.
Section 6.3
Requirement and Characterization of Distributions; Distributions to Record Holders
.
(a) Within 45 days following the end of each Quarter commencing with the Quarter ending on
June 30, 2011, an amount equal to 100% of Available Cash with respect to such Quarter shall be
distributed in accordance with this Article VI by the Partnership to the Partners as of the Record
Date selected by the General Partner. The Record Date for the first distribution of Available Cash
shall not be prior to the final closing of the Over-Allotment Option. All amounts of Available
Cash distributed by the Partnership on any date from any source shall be deemed to be Operating
Surplus until the sum of all amounts of Available Cash theretofore distributed by the Partnership
to the Partners pursuant to Section 6.4 equals the Operating Surplus from the Closing Date through
the close of the immediately preceding Quarter. Any remaining amounts of Available Cash
distributed by the Partnership on such date shall, except as otherwise provided in Section 6.5, be
deemed to be
Capital Surplus
. Notwithstanding any provision to the contrary contained in this
Agreement, the Partnership shall not make a distribution to any Partner on account of its interest
in the Partnership if such distribution would violate the Delaware Act or any other applicable law.
Notwithstanding any other provision of this Agreement, all distributions required to be made under
this Agreement shall be made subject to Sections 17-607 and 17-804 of the Delaware Act.
(b) Notwithstanding Section 6.3(a), in the event of the dissolution and liquidation of the
Partnership, all cash received during or after the Quarter in which the Liquidation Date occurs
shall be applied and distributed solely in accordance with, and subject to the terms and conditions
of, Section 12.4.
(c) The General Partner may treat taxes paid by the Partnership on behalf of, or amounts
withheld with respect to, all or less than all of the Partners, as a distribution of Available Cash
to such Partners, as determined appropriate under the circumstances by the General Partner.
(d) Each distribution in respect of a Partnership Interest shall be paid by the Partnership,
directly or through the Transfer Agent or through any other Person or agent, only to the Record
Holder of such Partnership Interest as of the Record Date set for such distribution. Such payment
shall constitute full payment and satisfaction of the Partnerships liability in respect of such
payment, regardless of any claim of any Person who may have an interest in such payment by reason
of an assignment or otherwise.
Section 6.4
Distributions of Available Cash from Operating Surplus
.
(a)
During Subordination Period
. Available Cash with respect to any Quarter within the
Subordination Period that is deemed to be Operating Surplus pursuant to the provisions of Section
6.3 or 6.5 shall be distributed as follows, except as otherwise required in respect of additional
Partnership Securities issued pursuant to Section 5.6(b):
58
(i) First, (x) to the General Partner in accordance with its Percentage
Interest and (y) to the Unitholders holding Common Units, Pro Rata, a percentage
equal to 100% less the General Partners Percentage Interest, until there has been
distributed in respect of each Common Unit then Outstanding an amount equal to the
Minimum Quarterly Distribution for such Quarter;
(ii) Second, (x) to the General Partner in accordance with its Percentage
Interest and (y) to the Unitholders holding Common Units, Pro Rata, a percentage
equal to 100% less the General Partners Percentage Interest, until there has been
distributed in respect of each Common Unit then Outstanding an amount equal to the
Cumulative Common Unit Arrearage existing with respect to such Quarter;
(iii) Third, (x) to the General Partner in accordance with its Percentage
Interest and (y) to the Unitholders holding Subordinated Units, Pro Rata, a
percentage equal to 100% less the General Partners Percentage Interest, until there
has been distributed in respect of each Subordinated Unit then Outstanding an amount
equal to the Minimum Quarterly Distribution for such Quarter;
(iv) Fourth, to the General Partner and all Unitholders, Pro Rata, until there
has been distributed in respect of each Unit then Outstanding an amount equal to the
excess of the First Target Distribution over the Minimum Quarterly Distribution for
such Quarter;
(v) Fifth, (A) to the General Partner in accordance with its Percentage
Interest, (B) 13% to the holders of the Incentive Distribution Rights, Pro Rata, and
(C) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the
percentages applicable to subclauses (A) and (B) of this clause (v), until there has
been distributed in respect of each Unit then Outstanding an amount equal to the
excess of the Second Target Distribution over the First Target Distribution for such
Quarter;
(vi) Sixth, (A) to the General Partner in accordance with its Percentage
Interest, (B) 23% to the holders of the Incentive Distribution Rights, Pro Rata, and
(C) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the
percentages applicable to subclauses (A) and (B) of this clause (vi), until there
has been distributed in respect of each Unit then Outstanding an amount equal to the
excess of the Third Target Distribution over the Second Target Distribution for such
Quarter; and
(vii) Thereafter, (A) to the General Partner in accordance with its Percentage
Interest, (B) 48% to the holders of the Incentive Distribution Rights,
Pro Rata, and (C) to all Unitholders, Pro Rata, a percentage equal to 100% less
the sum of the percentages applicable to subclauses (A) and (B) of this clause
(vii);
provided
,
however
, if the Minimum Quarterly Distribution, the First Target Distribution, the Second
Target Distribution and the Third Target Distribution have been reduced to zero pursuant
59
to the
second sentence of Section 6.6(a), the distribution of Available Cash that is deemed to be
Operating Surplus with respect to any Quarter will be made solely in accordance with Section
6.4(a)(vii).
(b)
After Subordination Period
. Available Cash with respect to any Quarter after the
Subordination Period that is deemed to be Operating Surplus pursuant to the provisions of Section
6.3 or Section 6.5 shall be distributed as follows, except as otherwise required in respect of
additional Partnership Securities issued pursuant to Section 5.6(b):
(i) First, to the General Partner and all Unitholders, Pro Rata, until there
has been distributed in respect of each Unit then Outstanding an amount equal to the
Minimum Quarterly Distribution for such Quarter;
(ii) Second, to the General Partner and all Unitholders, Pro Rata, until there
has been distributed in respect of each Unit then Outstanding an amount equal to the
excess of the First Target Distribution over the Minimum Quarterly Distribution for
such Quarter;
(iii) Third, (A) to the General Partner in accordance with its Percentage
Interest, (B) 13% to the holders of the Incentive Distribution Rights, Pro Rata, and
(C) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the
percentages applicable to subclauses (A) and (B) of this clause (iii), until there
has been distributed in respect of each Unit then Outstanding an amount equal to the
excess of the Second Target Distribution over the First Target Distribution for such
Quarter;
(iv) Fourth, (A) to the General Partner in accordance with its Percentage
Interest, (B) 23% to the holders of the Incentive Distribution Rights, Pro Rata, and
(C) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the
percentages applicable to subclauses (A) and (B) of this clause (iv), until there
has been distributed in respect of each Unit then Outstanding an amount equal to the
excess of the Third Target Distribution over the Second Target Distribution for such
Quarter; and
(v) Thereafter, (A) to the General Partner in accordance with its Percentage
Interest, (B) 48% to the holders of the Incentive Distribution Rights, Pro Rata, and
(C) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the
percentages applicable to subclauses (A) and (B) of this clause (v);
provided
,
however
, if the Minimum Quarterly Distribution, the First Target Distribution, the Second
Target Distribution and the Third Target Distribution have been reduced to zero pursuant to the
second sentence of Section 6.6(a), the distribution of Available Cash that is deemed to be
Operating Surplus with respect to any Quarter will be made solely in accordance with Section
6.4(b)(v).
60
Section 6.5
Distributions of Available Cash from Capital Surplus
.
Available Cash that is deemed to be Capital Surplus pursuant to the provisions of Section
6.3(a) shall be distributed, unless the provisions of Section 6.3 require otherwise, to the General
Partner and the Unitholders, Pro Rata, until a hypothetical holder of a Common Unit acquired on the
Closing Date has received with respect to such Common Unit, during the period since the Closing
Date through such date, distributions of Available Cash that are deemed to be Capital Surplus in an
aggregate amount equal to the Initial Unit Price. Available Cash that is deemed to be Capital
Surplus shall then be distributed (A) to the General Partner in accordance with its Percentage
Interest and (B) to all Unitholders holding Common Units, Pro Rata, a percentage equal to 100% less
the General Partners Percentage Interest, until there has been distributed in respect of each
Common Unit then Outstanding an amount equal to the Cumulative Common Unit Arrearage. Thereafter,
all Available Cash shall be distributed as if it were Operating Surplus and shall be distributed in
accordance with Section 6.4.
Section 6.6
Adjustment of Minimum Quarterly Distribution and Target Distribution Levels
.
(a) The Minimum Quarterly Distribution, First Target Distribution, Second Target Distribution,
Third Target Distribution, Common Unit Arrearages and Cumulative Common Unit Arrearages shall be
proportionately adjusted in the event of any distribution, combination or subdivision (whether
effected by a distribution payable in Units or otherwise) of Units or other Partnership Securities
in accordance with Section 5.9. In the event of a distribution of Available Cash that is deemed to
be from Capital Surplus, the then applicable Minimum Quarterly Distribution, First Target
Distribution, Second Target Distribution and Third Target Distribution shall be adjusted
proportionately downward to equal the product obtained by multiplying the otherwise applicable
Minimum Quarterly Distribution, First Target Distribution, Second Target Distribution and Third
Target Distribution, as the case may be, by a fraction of which the numerator is the Unrecovered
Initial Unit Price of the Common Units immediately after giving effect to such distribution and of
which the denominator is the Unrecovered Initial Unit Price of the Common Units immediately prior
to giving effect to such distribution.
(b) The Minimum Quarterly Distribution, First Target Distribution, Second Target Distribution
and Third Target Distribution, shall also be subject to adjustment pursuant to Section 5.11 and
Section 6.9.
Section 6.7
Special Provisions Relating to the Holders of Subordinated Units
.
(a) Except with respect to the right to vote on or approve matters requiring the vote or
approval of a percentage of the holders of Outstanding Common Units and the right to
participate in allocations of income, gain, loss and deduction and distributions made with
respect to Common Units, the holder of a Subordinated Unit shall have all of the rights and
obligations of a Unitholder holding Common Units hereunder;
provided
,
however
, that immediately
upon the conversion of Subordinated Units into Common Units pursuant to Section 5.7, the Unitholder
holding a Subordinated Unit shall possess all of the rights and obligations of a Unitholder holding
Common Units hereunder with respect to such converted Subordinated Units, including the right to
vote as a Common Unitholder and the right to participate in allocations of income, gain, loss and
deduction and distributions made with respect to Common Units;
provided
,
61
however
, that such
converted Subordinated Units shall remain subject to the provisions of Sections 5.5(c)(ii),
6.1(d)(x)(A), 6.7(b) and 6.7(c).
(b) A Unitholder shall not be permitted to transfer a Subordinated Unit or a Subordinated Unit
that has converted into a Common Unit pursuant to Section 5.7 (other than a transfer to an
Affiliate) if the remaining balance in the transferring Unitholders Capital Account with respect
to the retained Subordinated Units or Retained Converted Subordinated Units would be negative after
giving effect to the allocation under Section 5.5(c)(ii)(B).
(c) The holder of a Common Unit that has resulted from the conversion of a Subordinated Unit
pursuant to Section 5.7 shall not be issued a Common Unit Certificate pursuant to Section 4.1 (if
the Common Units are represented by Certificates) and shall not be permitted to transfer such
Common Unit to a Person that is not an Affiliate of the holder until such time as the General
Partner determines, based on advice of counsel, that each such Common Unit should have, as a
substantive matter, like intrinsic economic and federal income tax characteristics, in all material
respects, to the intrinsic economic and federal income tax characteristics of an Initial Common
Unit. In connection with the condition imposed by this Section 6.7(c), the General Partner may
take whatever steps are required to provide economic uniformity to such Common Units in preparation
for a transfer of such Common Units, including the application of Sections 5.5(c)(ii) and
6.1(d)(x);
provided
,
however
, that no such steps may be taken that would have a material adverse
effect on the Unitholders holding Common Units.
Section 6.8
Special Provisions Relating to the Holders of Incentive Distribution Rights
.
Notwithstanding anything to the contrary set forth in this Agreement, the holders of the
Incentive Distribution Rights (a) shall (i) possess the rights and obligations provided in this
Agreement with respect to a Limited Partner pursuant to Article III and Article VII and (ii) have a
Capital Account as a Partner pursuant to Section 5.5 and all other provisions related thereto and
(b) shall not (i) be entitled to vote on any matters requiring the approval or vote of the holders
of Outstanding Units, except as provided by law, (ii) be entitled to any distributions other than
as provided in Sections 6.4(a)(v), (vi) and (vii), Sections 6.4(b)(iii), (iv) and (v), and Section
12.4 or (iii) be allocated items of income, gain, loss or deduction other than as specified in this
Article VI.
Section 6.9
Entity-Level Taxation
.
If legislation is enacted or the official interpretation of existing legislation is modified
by a governmental authority, which after giving effect to such enactment or modification, results
in a Group Member becoming subject to federal, state or local or non-U.S. income or withholding
taxes in excess of the amount of such taxes due from the Group Member prior to such enactment or
modification (including, for the avoidance of doubt, any increase in the rate of such taxation
applicable to the Group Member), then the General Partner may, at its option, reduce the Minimum
Quarterly Distribution, First Target Distribution, Second Target Distribution and Third Target
Distribution by the amount of income or withholding taxes that are payable by reason of any such
new legislation or interpretation (the
Incremental Income Taxes
), or any portion thereof selected
by the General Partner, in the manner provided in this Section 6.9. If the General Partner elects
to reduce the Minimum Quarterly Distribution, First Target Distribution,
62
Second Target Distribution
and Third Target Distribution for any Quarter with respect to all or a portion of any Incremental
Income Taxes, the General Partner shall estimate for such Quarter the Partnership Groups aggregate
liability (the
Estimated Incremental Quarterly Tax Amount
) for all (or the relevant portion of)
such Incremental Income Taxes; provided that any difference between such estimate and the actual
liability for Incremental Income Taxes (or the relevant portion thereof) for such Quarter may, to
the extent determined by the General Partner, be taken into account in determining the Estimated
Incremental Quarterly Tax Amount with respect to each Quarter in which any such difference can be
determined. For each such Quarter, the Minimum Quarterly Distribution, First Target Distribution,
Second Target Distribution and Third Target Distribution, shall be the product obtained by
multiplying (a) the amounts therefor that are set out herein prior to the application of this
Section 6.9 times (b) the quotient obtained by dividing (i) Available Cash with respect to such
Quarter by (ii) the sum of Available Cash with respect to such Quarter and the Estimated
Incremental Quarterly Tax Amount for such Quarter, as determined by the General Partner. For
purposes of the foregoing, Available Cash with respect to a Quarter will be deemed reduced by the
Estimated Incremental Quarterly Tax Amount for that Quarter.
ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS
Section 7.1
Management
.
(a) The General Partner shall conduct, direct and manage all activities of the Partnership.
Except as otherwise expressly provided in this Agreement, all management powers over the business
and affairs of the Partnership shall be exclusively vested in the General Partner, and no Limited
Partner shall have any management power over the business and affairs of the Partnership. In
addition to the powers now or hereafter granted a general partner of a limited partnership under
applicable law or that are granted to the General Partner under any other provision of this
Agreement, the General Partner, subject to Section 7.3, shall have full power and authority to do
all things and on such terms as it determines to be necessary or appropriate to conduct the
business of the Partnership, to exercise all powers set forth in Section 2.5 and to effectuate the
purposes set forth in Section 2.4, including the following:
(i) the making of any expenditures, the lending or borrowing of money, the
assumption or guarantee of, or other contracting for, indebtedness and other
liabilities, the issuance of evidences of indebtedness, including indebtedness that
is convertible into Partnership Securities, and the incurring of any other
obligations;
(ii) the making of tax, regulatory and other filings, or rendering of periodic
or other reports to governmental or other agencies having jurisdiction over the
business or assets of the Partnership;
(iii) the acquisition, disposition, mortgage, pledge, encumbrance,
hypothecation or exchange of any or all of the assets of the Partnership or the
merger or other combination of the Partnership with or into another Person (the
63
matters described in this clause (iii) being subject, however, to any prior approval
that may be required by Section 7.3 and Article XIV);
(iv) the use of the assets of the Partnership (including cash on hand) for any
purpose consistent with the terms of this Agreement, including the financing of the
conduct of the operations of the Partnership Group; subject to Section 7.6(a), the
lending of funds to other Persons (including other Group Members); the repayment or
guarantee of obligations of any Group Member; and the making of capital
contributions to any Group Member;
(v) the negotiation, execution and performance of any contracts, conveyances or
other instruments (including instruments that limit the liability of the Partnership
under contractual arrangements to all or particular assets of the Partnership, with
the other party to the contract to have no recourse against the General Partner or
its assets other than its interest in the Partnership, even if the same results in
the terms of the transaction being less favorable to the Partnership than would
otherwise be the case);
(vi) the distribution of Partnership cash;
(vii) the selection and dismissal of employees (including employees having
titles such as president, vice president, secretary and treasurer) and
agents, internal and outside attorneys, accountants, consultants and contractors and
the determination of their compensation and other terms of employment or hiring;
(viii) the maintenance of insurance for the benefit of the Partnership Group,
the Partners and Indemnitees;
(ix) the formation of, or acquisition of an interest in, and the contribution
of property and the making of loans to, any further limited or general partnerships,
joint ventures, corporations, limited liability companies or other entities or
relationships (including the acquisition of interests in, and the contributions of
property to, any Group Member from time to time) subject to the restrictions set
forth in Section 2.4;
(x) the control of any matters affecting the rights and obligations of the
Partnership, including the bringing and defending of actions at law or in equity and
otherwise engaging in the conduct of litigation, arbitration or mediation and the
incurring of legal expense and the settlement of claims and litigation;
(xi) the indemnification of any Person against liabilities and contingencies to
the extent permitted by law;
(xii) the entering into of listing agreements with any National Securities
Exchange and the delisting of some or all of the Limited Partner Interests from, or
64
requesting that trading be suspended on, any such exchange (subject to any prior
approval that may be required under Section 4.8);
(xiii) the purchase, sale or other acquisition or disposition of Partnership
Securities, or the issuance of options, rights, warrants, appreciation rights and
tracking and phantom interests relating to Partnership Securities;
(xiv) the undertaking of any action in connection with the Partnerships
participation in any Group Member; and
(xv) the entering into of agreements with any of its Affiliates to render
services to a Group Member or to itself in the discharge of its duties as General
Partner of the Partnership.
(b) Notwithstanding any other provision of this Agreement, any Group Member Agreement, the
Delaware Act or any applicable law, rule or regulation, each of the Partners and each other Person
who may acquire an interest in Partnership Securities hereby (i) approves, ratifies and confirms
the execution, delivery and performance by the parties thereto of this Agreement and the Group
Member Agreement of each other Group Member, the Underwriting Agreement, the Omnibus Agreement, the
Contribution Agreement, the Operational Services Agreement, and the other agreements described in
or filed as exhibits to the Registration Statement that are related to the transactions
contemplated by the Registration Statement (collectively, the
Transaction Documents
)(in each case
other than this Agreement, without giving effect to any amendments, supplements or restatements
thereof entered into after the date such Person becomes bound by the provisions of this Agreement);
(ii) agrees that the General Partner (on its own or on behalf of the Partnership) is authorized to
execute, deliver and perform the agreements referred to in clause (i) of this sentence and the
other agreements, acts, transactions and matters described in or contemplated by the Registration
Statement on behalf of the Partnership without any further act, approval or vote of the Partners or
the other Persons who may acquire an interest in Partnership Securities; and (iii) agrees that the
execution, delivery or performance by the General Partner, any Group Member or any Affiliate of any
of them of this Agreement or any agreement authorized or permitted under this Agreement (including
the exercise by the General Partner or any Affiliate of the General Partner of the rights accorded
pursuant to Article XV) shall not constitute a breach by the General Partner of any duty that the
General Partner may owe the Partnership or the Limited Partners or any other Persons under this
Agreement (or any other agreements) or of any duty existing at law, in equity or otherwise.
Section 7.2
Certificate of Limited Partnership
.
The General Partner has caused the Certificate of Limited Partnership to be filed with the
Secretary of State of the State of Delaware as required by the Delaware Act. The General Partner
shall use all reasonable efforts to cause to be filed such other certificates or documents that the
General Partner determines to be necessary or appropriate for the formation, continuation,
qualification and operation of a limited partnership (or a partnership in which the limited
partners have limited liability) in the State of Delaware or any other state in which the
Partnership may elect to do business or own property. To the extent the General Partner determines
such action to be necessary or appropriate, the General Partner shall file amendments
65
to and
restatements of the Certificate of Limited Partnership and do all things to maintain the
Partnership as a limited partnership (or a partnership or other entity in which the limited
partners have limited liability) under the laws of the State of Delaware or of any other state in
which the Partnership may elect to do business or own property. Subject to the terms of Section
3.4(a), the General Partner shall not be required, before or after filing, to deliver or mail a
copy of the Certificate of Limited Partnership, any qualification document or any amendment thereto
to any Limited Partner.
Section 7.3
Restrictions on the General Partners Authority
.
Except as provided in Article XII and Article XIV, the General Partner may not sell, exchange
or otherwise dispose of all or substantially all of the assets of the Partnership Group, taken as a
whole, in a single transaction or a series of related transactions (including by way of merger,
consolidation, other combination or sale of ownership interests of the Partnerships Subsidiaries)
without the approval of holders of a Unit Majority;
provided
,
however
, that this provision shall
not preclude or limit the General Partners ability to mortgage, pledge, hypothecate or grant a
security interest in all or substantially all of the assets of the Partnership Group and shall not
apply to any forced sale of any or all of the assets of the Partnership Group pursuant to the
foreclosure of, or other realization upon, any such encumbrance.
Section 7.4
Reimbursement of the General Partner
.
(a) Except as provided in this Section 7.4 and elsewhere in this Agreement, the General
Partner shall not be compensated for its services as a general partner or managing member of any
Group Member.
(b) Subject to the Omnibus Agreement, the General Partner shall be reimbursed on a monthly
basis, or such other basis as the General Partner may determine, for (i) all direct and indirect
expenses it incurs or payments it makes on behalf of the Partnership Group (including salary,
bonus, incentive compensation and other amounts paid to any Person, including Affiliates of the
General Partner to perform services for the Partnership Group or for the General Partner in the
discharge of its duties to the Partnership Group), and (ii) all other
expenses allocable to the Partnership Group or otherwise incurred by the General Partner in
connection with managing and operating the Partnership Groups business and affairs (including
expenses allocated to the General Partner by its Affiliates). The General Partner shall determine
the expenses that are allocable to the Partnership Group. Reimbursements pursuant to this Section
7.4 shall be in addition to any reimbursement to the General Partner as a result of indemnification
pursuant to Section 7.7.
(c) The General Partner, without the approval of the Limited Partners (who shall have no right
to vote in respect thereof), may propose and adopt on behalf of the Partnership employee benefit
plans, employee programs and employee practices (including plans, programs and practices involving
the issuance of Partnership Securities or options to purchase or rights, warrants or appreciation
rights or phantom or tracking interests relating to Partnership Securities), or cause the
Partnership to issue Partnership Securities in connection with, or pursuant to, any employee
benefit plan, employee program or employee practice maintained or sponsored by the General Partner
or any of its Affiliates in each case for the
66
benefit of employees and directors of the General
Partner or any of its Affiliates, in respect of services performed, directly or indirectly, for the
benefit of the Partnership Group. The Partnership agrees to issue and sell to the General Partner
or any of its Affiliates any Partnership Securities that the General Partner or such Affiliates are
obligated to provide to any employees and directors pursuant to any such employee benefit plans,
employee programs or employee practices. Expenses incurred by the General Partner in connection
with any such plans, programs and practices (including the net cost to the General Partner or such
Affiliates of Partnership Securities purchased by the General Partner or such Affiliates from the
Partnership to fulfill options or awards under such plans, programs and practices) shall be
reimbursed in accordance with Section 7.4(b). Any and all obligations of the General Partner under
any employee benefit plans, employee programs or employee practices adopted by the General Partner
as permitted by this Section 7.4(c) shall constitute obligations of the General Partner hereunder
and shall be assumed by any successor General Partner approved pursuant to Section 11.1 or Section
11.2 or the transferee of or successor to all of the General Partners General Partner Interest
(represented by General Partner Units) pursuant to Section 4.6.
(d) The General Partner and its Affiliates may charge any member of the Partnership
Group a management fee to the extent necessary to allow the Partnership Group to reduce the
amount of any state franchise or income tax or any tax based upon the revenues or gross
margin of any member of the Partnership Group if the tax benefit produced by the payment of
such management fee or fees exceeds the amount of such fee or fees.
Section 7.5
Outside Activities
.
(a) The General Partner, for so long as it is the General Partner of the Partnership (i)
agrees that its sole business will be to act as a general partner or managing member, as the case
may be, of the Partnership and any other partnership or limited liability company of which the
Partnership is, directly or indirectly, a partner or member and to undertake activities that are
ancillary or related thereto (including being a Limited Partner in the
Partnership) and (ii) shall not engage in any business or activity or incur any debts or
liabilities except in connection with or incidental to (A) its performance as general partner or
managing member, if any, of one or more Group Members or as described in or contemplated by the
Registration Statement, (B) the acquiring, owning or disposing of debt securities or equity
interests in any Group Member, (C) the guarantee of, and mortgage, pledge, or encumbrance of any or
all of its assets in connection with, any indebtedness of any Affiliate of the General Partner or
(D) subject to the limitations contained in the Omnibus Agreement, the performance of its
obligations under the Omnibus Agreement.
(b) Except as provided in the Omnibus Agreement, each Unrestricted Person (other than the
General Partner) shall have the right to engage in businesses of every type and description and
other activities for profit and to engage in and possess an interest in other business ventures of
any and every type or description, whether in businesses engaged in or anticipated to be engaged in
by any Group Member, independently or with others, including business interests and activities in
direct competition with the business and activities of any Group Member, and none of the same shall
constitute a breach of this Agreement or any duty otherwise existing at law, in equity or
otherwise, to any Group Member or any Partner. None of
67
any Group Member, any Limited Partner or any
other Person shall have any rights by virtue of this Agreement, any Group Member Agreement, or the
partnership relationship established hereby in any business ventures of any Unrestricted Person.
(c) Subject to the terms of Sections 7.5(a) and (b), but otherwise notwithstanding anything to
the contrary in this Agreement, (i) the engaging in competitive activities by any Unrestricted
Person (other than the General Partner) in accordance with the provisions of this Section 7.5 is
hereby approved by the Partnership and all Partners, (ii) it shall be deemed not to be a breach of
any fiduciary duty or any other obligation of any type whatsoever of the General Partner or any
other Unrestricted Person for the Unrestricted Persons (other than the General Partner) to engage
in such business interests and activities in preference to or to the exclusion of the Partnership
and (iii) the Unrestricted Persons shall have no obligation hereunder or as a result of any duty
otherwise existing at law, in equity or otherwise, to present business opportunities to the
Partnership. Notwithstanding anything to the contrary in this Agreement, the doctrine of corporate
opportunity, or any analogous doctrine, shall not apply to any Unrestricted Person (including the
General Partner). Except as provided in the Omnibus Agreement, no Unrestricted Person (including
the General Partner) who acquires knowledge of a potential transaction, agreement, arrangement or
other matter that may be an opportunity for the Partnership, shall have any duty to communicate or
offer such opportunity to the Partnership, and such Unrestricted Person (including the General
Partner) shall not be liable to the Partnership, to any Limited Partner or any other Person bound
by this Agreement for breach of any fiduciary or other duty by reason of the fact that such
Unrestricted Person (including the General Partner) pursues or acquires for itself, directs such
opportunity to another Person or does not communicate such opportunity or information to the
Partnership; provided such Unrestricted Person does not engage in such business or activity as a
result of or using confidential or proprietary information provided by or on behalf of the
Partnership to such Unrestricted Person.
(d) The General Partner and each of its Affiliates may acquire Units or other Partnership
Interests in addition to those acquired on the Closing Date and, except as otherwise provided in
this Agreement, shall be entitled to exercise, at their option, all rights relating to all
Units and/or other Partnership Interests acquired by them. The term Affiliates when used in
this Section 7.5(d) with respect to the General Partner shall not include any Group Member.
Section 7.6
Loans from the General Partner; Loans or Contributions from the Partnership or Group Members
.
(a) The General Partner or any of its Affiliates may lend to any Group Member, and any Group
Member may borrow from the General Partner or any of its Affiliates, funds needed or desired by the
Group Member for such periods of time and in such amounts as the General Partner may determine;
provided
,
however
, that in any such case the lending party may not charge the borrowing party
interest at a rate greater than the rate that would be charged the borrowing party or impose terms
less favorable to the borrowing party than would be charged or imposed on the borrowing party by
unrelated lenders on comparable loans made on an arms-length basis (without reference to the
lending partys financial abilities or guarantees), all as determined by the General Partner. The
borrowing party shall reimburse the lending party for any costs (other than any additional interest
costs) incurred by the lending party in connection with the borrowing of such funds. For purposes
of this Section 7.6(a) and Section 7.6(b), the
68
term Group Member shall include any Affiliate of a
Group Member that is controlled by the Group Member.
(b) The Partnership may lend or contribute to any Group Member, and any Group Member may
borrow from the Partnership, funds on terms and conditions determined by the General Partner. No
Group Member may lend funds to the General Partner or any of its Affiliates (other than another
Group Member).
(c) No borrowing by any Group Member or the approval thereof by the General Partner shall be
deemed to constitute a breach of any duty, expressed or implied, of the General Partner or its
Affiliates to the Partnership or the Limited Partners existing hereunder, or existing at law, in
equity or otherwise by reason of the fact that the purpose or effect of such borrowing is directly
or indirectly to (i) enable distributions to the General Partner or its Affiliates (including in
their capacities as Limited Partners) to exceed the General Partners Percentage Interest of the
total amount distributed to all partners or (ii) hasten the expiration of the Subordination Period
or the conversion of any Subordinated Units into Common Units.
Section 7.7
Indemnification
.
(a) To the fullest extent permitted by law but subject to the limitations expressly provided
in this Agreement, all Indemnitees shall be indemnified and held harmless by the Partnership from
and against any and all losses, claims, damages, liabilities, joint or several, expenses (including
legal fees and expenses), judgments, fines, penalties, interest, settlements or other amounts
arising from any and all threatened, pending or completed claims, demands, actions, suits or
proceedings, whether civil, criminal, administrative or investigative, and whether formal or
informal and including appeals, in which any Indemnitee may be involved, or is threatened to be
involved, as a party or otherwise, by reason of its status as an Indemnitee and
acting (or refraining to act) in such capacity on behalf of or for the benefit of the
Partnership; provided, that the Indemnitee shall not be indemnified and held harmless pursuant to
this Agreement if there has been a final and non-appealable judgment entered by a court of
competent jurisdiction determining that, in respect of the matter for which the Indemnitee is
seeking indemnification pursuant to this Agreement, the Indemnitee acted in bad faith or engaged in
fraud, willful misconduct or, in the case of a criminal matter, acted with knowledge that the
Indemnitees conduct was unlawful; provided, further, no indemnification pursuant to this Section
7.7 shall be available to any Affiliate of the General Partner (other than a Group Member), or to
any other Indemnitee, with respect to any such Affiliates obligations pursuant to the Transaction
Documents. Any indemnification pursuant to this Section 7.7 shall be made only out of the assets of
the Partnership, it being agreed that the General Partner shall not be personally liable for such
indemnification and shall have no obligation to contribute or loan any monies or property to the
Partnership to enable it to effectuate such indemnification.
(b) To the fullest extent permitted by law, expenses (including legal fees and expenses)
incurred by an Indemnitee who is indemnified pursuant to Section 7.7(a) in defending any claim,
demand, action, suit or proceeding shall, from time to time, be advanced by the Partnership prior
to a final and non-appealable judgment entered by a court of competent jurisdiction determining
that, in respect of the matter for which the Indemnitee is seeking indemnification pursuant to this
Section 7.7, the Indemnitee is not entitled to be indemnified
69
upon receipt by the Partnership of
any undertaking by or on behalf of the Indemnitee to repay such amount if it shall be ultimately
determined that the Indemnitee is not entitled to be indemnified as authorized by this Section 7.7.
(c) The indemnification provided by this Section 7.7 shall be in addition to any other rights
to which an Indemnitee may be entitled under any agreement, pursuant to any vote of the holders of
Outstanding Limited Partner Interests, as a matter of law, in equity or otherwise, both as to
actions in the Indemnitees capacity as an Indemnitee and as to actions in any other capacity
(including any capacity under the Underwriting Agreement), and shall continue as to an Indemnitee
who has ceased to serve in such capacity and shall inure to the benefit of the heirs, successors,
assigns and administrators of the Indemnitee.
(d) The Partnership may purchase and maintain (or reimburse the General Partner or its
Affiliates for the cost of) insurance, on behalf of the General Partner, its Affiliates and such
other Persons as the General Partner shall determine, against any liability that may be asserted
against, or expense that may be incurred by, such Person in connection with the Partnerships
activities or such Persons activities on behalf of the Partnership, regardless of whether the
Partnership would have the power to indemnify such Person against such liability under the
provisions of this Agreement.
(e) For purposes of this Section 7.7, the Partnership shall be deemed to have requested an
Indemnitee to serve as fiduciary of an employee benefit plan whenever the performance by it of its
duties to the Partnership also imposes duties on, or otherwise involves services by, it to the plan
or participants or beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect
to an employee benefit plan pursuant to applicable law shall constitute fines within the meaning
of Section 7.7(a); and action taken or omitted by it with respect to any employee benefit plan in
the performance of its duties for a purpose reasonably believed by
it to be in the best interest of the participants and beneficiaries of the plan shall be
deemed to be for a purpose that is in the best interests of the Partnership.
(f) In no event may an Indemnitee subject the Limited Partners to personal liability by reason
of the indemnification provisions set forth in this Agreement.
(g) An Indemnitee shall not be denied indemnification in whole or in part under this Section
7.7 because the Indemnitee had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 7.7 are for the benefit of the Indemnitees and their heirs,
successors, assigns, executors and administrators and shall not be deemed to create any rights for
the benefit of any other Persons.
(i) No amendment, modification or repeal of this Section 7.7 or any provision hereof shall in
any manner terminate, reduce or impair the right of any past, present or future Indemnitee to be
indemnified by the Partnership, nor the obligations of the Partnership to indemnify any such
Indemnitee under and in accordance with the provisions of this Section 7.7 as in effect immediately
prior to such amendment, modification or repeal with respect to claims
70
arising from or relating to
matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless
of when such claims may arise or be asserted.
Section 7.8
Liability of Indemnitees
.
(a) Notwithstanding anything to the contrary set forth in this Agreement, no Indemnitee shall
be liable for monetary damages to the Partnership, the Limited Partners, or any other Persons who
have acquired interests in the Partnership Securities, for losses sustained or liabilities incurred
as a result of any act or omission of an Indemnitee unless there has been a final and
non-appealable judgment entered by a court of competent jurisdiction determining that, in respect
of the matter in question, the Indemnitee acted in bad faith or engaged in fraud, willful
misconduct or, in the case of a criminal matter, acted with knowledge that the Indemnitees conduct
was criminal.
(b) Subject to its obligations and duties as General Partner set forth in Section 7.1(a), the
General Partner may exercise any of the powers granted to it by this Agreement and perform any of
the duties imposed upon it hereunder either directly or by or through its agents, and the General
Partner shall not be responsible for any misconduct or negligence on the part of any such agent
appointed by the General Partner in good faith.
(c) To the extent that, at law or in equity, an Indemnitee has duties (including fiduciary
duties) and liabilities relating thereto to the Partnership or to the Partners, the General Partner
and any other Indemnitee acting in connection with the Partnerships business or affairs shall not
be liable to the Partnership or to any Partner for its good faith reliance on the provisions of
this Agreement.
(d) Any amendment, modification or repeal of this Section 7.8 or any provision hereof shall be
prospective only and shall not in any way affect the limitations on the liability of the
Indemnitees under this Section 7.8 as in effect immediately prior to such amendment, modification
or repeal with respect to claims arising from or relating to matters occurring, in whole or in
part, prior to such amendment, modification or repeal, regardless of when such claims may arise or
be asserted.
Section 7.9
Resolution of Conflicts of Interest; Standards of Conduct and Modification of Duties
.
(a) Unless otherwise expressly provided in this Agreement or any Group Member Agreement,
whenever a potential conflict of interest exists or arises between the General Partner or any of
its Affiliates, on the one hand, and the Partnership, any Group Member or any Partner, on the
other, any resolution or course of action by the General Partner or its Affiliates in respect of
such conflict of interest shall be permitted and deemed approved by all Partners, and shall not
constitute a breach of this Agreement, of any Group Member Agreement, of any agreement contemplated
herein or therein, or of any duty stated or implied by law or equity, if the resolution or course
of action in respect of such conflict of interest is (i) approved by Special Approval, (ii)
approved by the vote of a majority of the Outstanding Common Units (excluding Common Units owned by
the General Partner and its Affiliates), (iii) on terms no less favorable to the Partnership than
those generally being provided to or available from unrelated
71
third parties or (iv) fair and
reasonable to the Partnership, taking into account the totality of the relationships between the
parties involved (including other transactions that may be particularly favorable or advantageous
to the Partnership). The General Partner shall be authorized but not required in connection with
its resolution of such conflict of interest to seek Special Approval or Unitholder approval of such
resolution, and the General Partner may also adopt a resolution or course of action that has not
received Special Approval or Unitholder approval. If Special Approval is sought, then it shall be
presumed that, in making its decision, the Conflicts Committee acted in good faith, and if neither
Special Approval nor Unitholder approval is sought and the Board of Directors of the General
Partner determines that the resolution or course of action taken with respect to a conflict of
interest satisfies either of the standards set forth in clauses (iii) or (iv) above, then it shall
be presumed that, in making its decision, the Board of Directors of the General Partner acted in
good faith, and in either case, in any proceeding brought by any Limited Partner or by or on behalf
of such Limited Partner or any other Limited Partner or the Partnership challenging such approval,
the Person bringing or prosecuting such proceeding shall have the burden of overcoming such
presumption. Notwithstanding anything to the contrary in this Agreement or any duty otherwise
existing at law or equity, the existence of the conflicts of interest described in the Registration
Statement are hereby approved by all Partners and shall not constitute a breach of this Agreement.
(b) Whenever the General Partner or the Board of Directors, or any committee thereof
(including the Conflicts Committee), makes a determination or takes or declines to take any other
action, or any Affiliate of the General Partner causes the General Partner to do so, in its
capacity as the general partner of the Partnership as opposed to in its individual capacity,
whether under this Agreement, any Group Member Agreement or any other agreement
contemplated hereby or otherwise, then, unless another express standard is provided for in
this Agreement, the General Partner, the Board of Directors or such committee or such Affiliates
causing the General Partner to do so, shall make such determination or take or decline to take such
other action in good faith and shall not be subject to any other or different standards (including
fiduciary standards) imposed by this Agreement, any Group Member Agreement, any other agreement
contemplated hereby or under the Delaware Act or any other law, rule or regulation or at equity.
In order for a determination or other action to be in good faith for purposes of this Agreement,
the Person or Persons making such determination or taking or declining to take such other action
must believe that the determination or other action is in, or not opposed to, the best interests of
the Partnership Group.
(c) Whenever the General Partner makes a determination or takes or declines to take any other
action, or any of its Affiliates causes it to do so, in its individual capacity as opposed to in
its capacity as the general partner of the Partnership, whether under this Agreement, any Group
Member Agreement or any other agreement contemplated hereby or otherwise, then the General Partner,
or such Affiliates causing it to do so, are entitled, to the fullest extent permitted by law, to
make such determination or to take or decline to take such other action free of any fiduciary duty
or obligation whatsoever to the Partnership, any Limited Partner, and the General Partner, or such
Affiliates causing it to do so, shall not, to the fullest extent permitted by law, be required to
act in good faith or pursuant to any other standard imposed by this Agreement, any Group Member
Agreement, any other agreement contemplated hereby or under the Delaware Act or any other law, rule
or regulation or at equity. By way of illustration and not of limitation, whenever the phrase, at
the option of the General Partner, or
72
some variation of that phrase, is used in this Agreement, it
indicates that the General Partner is acting in its individual capacity. For the avoidance of
doubt, whenever the General Partner votes or transfers its Partnership Interests, or refrains from
voting or transferring its Partnership Interests, it shall be acting in its individual capacity.
(d) The General Partners organizational documents may provide that determinations to take or
decline to take any action in its individual, rather than representative, capacity may or shall be
determined by its members, if the General Partner is a limited liability company, stockholders, if
the General Partner is a corporation, or the members or stockholders of the General Partners
general partner, if the General Partner is a partnership.
(e) Notwithstanding anything to the contrary in this Agreement, the General Partner and its
Affiliates shall have no duty or obligation, express or implied, to (i) sell or otherwise dispose
of any asset of the Partnership Group other than in the ordinary course of business or (ii) permit
any Group Member to use any facilities or assets of the General Partner and its Affiliates, except
as may be provided in contracts entered into from time to time specifically dealing with such use.
Any determination by the General Partner or any of its Affiliates to enter into such contracts
shall be at its option.
(f) Except as expressly set forth in this Agreement or required by the Delaware Act, neither
the General Partner nor any other Indemnitee shall have any duties or liabilities, including
fiduciary duties, to the Partnership or any Limited Partner and the provisions of this Agreement,
to the extent that they restrict, eliminate or otherwise modify the duties and liabilities,
including fiduciary duties, of the General Partner or any other Indemnitee otherwise
existing at law or in equity, are agreed by the Partners to replace such other duties and
liabilities of the General Partner or such other Indemnitee.
(g) The Unitholders hereby authorize the General Partner, on behalf of the Partnership as a
partner or member of a Group Member, to approve actions by the general partner or managing member
of such Group Member similar to those actions permitted to be taken by the General Partner pursuant
to this Section 7.9.
Section 7.10
Other Matters Concerning the General Partner
.
(a) The General Partner may rely and shall be protected in acting or refraining from acting
upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture or other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties.
(b) The General Partner may consult with legal counsel, accountants, appraisers, management
consultants, investment bankers and other consultants and advisers selected by it, and any act
taken or omitted to be taken in reliance upon the advice or opinion (including an Opinion of
Counsel) of such Persons as to matters that the General Partner reasonably believes to be within
such Persons professional or expert competence shall be conclusively presumed to have been done or
omitted in good faith and in accordance with such opinion.
73
(c) The General Partner shall have the right, in respect of any of its powers or obligations
hereunder, to act through any of its duly authorized officers, a duly appointed attorney or
attorneys- in- fact or the duly authorized officers of the Partnership or any Group Member.
Section 7.11
Purchase or Sale of Partnership Securities
.
The General Partner may cause the Partnership to purchase or otherwise acquire Partnership
Securities;
provided that
, except as permitted pursuant to Section 4.10, the General Partner may
not cause any Group Member to purchase Subordinated Units during the Subordination Period. As long
as Partnership Securities are held by any Group Member, such Partnership Securities shall not be
considered Outstanding for any purpose, except as otherwise provided herein. The General Partner
or any Affiliate of the General Partner may also purchase or otherwise acquire and sell or
otherwise dispose of Partnership Securities for its own account, subject to the provisions of
Articles IV and X.
Section 7.12
Registration Rights of the General Partner and its Affiliates
.
(a) If (i) the General Partner or any Affiliate of the General Partner (including for purposes
of this Section 7.12, any Person that is an Affiliate of the General Partner at the date hereof
notwithstanding that it may later cease to be an Affiliate of the General Partner, but excluding
individual Affiliates who are officers, directors or employees of the General Partner or any of its
Affiliates) holds Partnership Securities that it desires to sell and (ii) Rule 144 of the
Securities Act (or any successor rule or regulation to Rule 144) or another exemption from
registration is not available to enable such holder of Partnership Securities (the
Holder
) to
dispose of the number of Partnership Securities it desires to sell at the time it desires to do so
without registration under the Securities Act, then at the option and upon the request of the
Holder, the Partnership shall file with the Commission as promptly as practicable after receiving
such request, and use commercially reasonable efforts to cause to become effective and remain
effective for a period of not less than six months following its effective date or such shorter
period as shall terminate when all Partnership Securities covered by such registration statement
have been sold, a registration statement under the Securities Act registering the offering and sale
of the number of Partnership Securities specified by the Holder; provided, however, that the
Partnership shall not be required to effect more than three registrations pursuant to this Section
7.12(a); and
provided further
,
however
, that if the Conflicts Committee determines in good faith
that the requested registration would be materially detrimental to the Partnership and its Partners
because such registration would (x) materially interfere with a significant acquisition,
reorganization or other similar transaction involving the Partnership, (y) require premature
disclosure of material information that the Partnership has a bona fide business purpose for
preserving as confidential or (z) render the Partnership unable to comply with requirements under
applicable securities laws, then the Partnership shall have the right to postpone such requested
registration for a period of not more than six months after receipt of the Holders request, such
right pursuant to this Section 7.12(a) not to be utilized more than once in any twelve-month
period. In connection with any registration pursuant to the first sentence of this Section
7.12(a), the Partnership shall (i) promptly prepare and file (A) such documents as may be necessary
to register or qualify the securities subject to such registration under the securities laws of
such states as the Holder shall reasonably request;
provided
,
however
, that no such
74
qualification
shall be required in any jurisdiction where, as a result thereof, the Partnership would become
subject to general service of process or to taxation or qualification to do business as a foreign
corporation or partnership doing business in such jurisdiction solely as a result of such
registration, and (B) such documents as may be necessary to apply for listing or to list the
Partnership Securities subject to such registration on such National Securities Exchange as the
Holder shall reasonably request, and (ii) do any and all other acts and things that may be
necessary or appropriate to enable the Holder to consummate a public sale of such Partnership
Securities in such states. Except as set forth in Section 7.12(d), all costs and expenses of any
such registration and offering (other than the underwriting discounts and commissions) shall be
paid by the Partnership, without reimbursement by the Holder.
(b) If the Partnership shall at any time propose to file a registration statement under the
Securities Act for an offering of Partnership Securities for cash (other than an offering relating
solely to an employee benefit plan), the Partnership shall use all commercially reasonable efforts
to include such number or amount of Partnership Securities held by any Holder in such registration
statement as the Holder shall request;
provided
, that the Partnership is not required to make any
effort or take any action to so include the Partnership Securities of the Holder once the
registration statement is declared effective by the Commission or otherwise
becomes effective, including any registration statement providing for the offering from time
to time of Partnership Securities pursuant to Rule 415 of the Securities Act. If the proposed
offering pursuant to this Section 7.12(b) shall be an underwritten offering, then, in the event
that the managing underwriter or managing underwriters of such offering advise the Partnership and
the Holder in writing that in their opinion the inclusion of all or some of the Holders
Partnership Securities would adversely and materially affect the timing or success of the offering,
the Partnership shall include in such offering only that number or amount, if any, of Partnership
Securities held by the Holder that, in the opinion of the managing underwriter or managing
underwriters, will not so adversely and materially affect the offering. Except as set forth in
Section 7.12(c), all costs and expenses of any such registration and offering (other than the
underwriting discounts and commissions) shall be paid by the Partnership, without reimbursement by
the Holder.
(c) If underwriters are engaged in connection with any registration referred to in this
Section 7.12, the Partnership shall provide indemnification, representations, covenants, opinions
and other assurance to the underwriters in form and substance reasonably satisfactory to such
underwriters. Further, in addition to and not in limitation of the Partnerships obligation under
Section 7.7, the Partnership shall, to the fullest extent permitted by law, indemnify and hold
harmless the Holder, its officers, directors and each Person who controls the Holder (within the
meaning of the Securities Act) and any agent thereof (collectively,
Indemnified Persons
) from and
against any and all losses, claims, damages, liabilities, joint or several, expenses (including
legal fees and expenses), judgments, fines, penalties, interest, settlements or other amounts
arising from any and all claims, demands, actions, suits or proceedings, whether civil, criminal,
administrative or investigative, in which any Indemnified Person may be involved, or is threatened
to be involved, as a party or otherwise, under the Securities Act or otherwise (hereinafter
referred to in this Section 7.12(c) as a
claim
and in the plural as
claims
) based upon, arising
out of or resulting from any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which any Partnership Securities were registered
under the Securities Act or any state securities or Blue Sky
75
laws, in any preliminary prospectus
(if used prior to the effective date of such registration statement), or in any summary or final
prospectus or any free writing prospectus or in any amendment or supplement thereto (if used during
the period the Partnership is required to keep the registration statement current), or arising out
of, based upon or resulting from the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements made therein not misleading;
provided
,
however
, that the Partnership shall not be liable to any Indemnified Person to the extent
that any such claim arises out of, is based upon or results from an untrue statement or alleged
untrue statement or omission or alleged omission made in such registration statement, such
preliminary, summary or final prospectus or any free writing prospectus or such amendment or
supplement, in reliance upon and in conformity with written information furnished to the
Partnership by or on behalf of such Indemnified Person specifically for use in the preparation
thereof.
(d) The provisions of Section 7.12(a) and Section 7.12(b) shall continue to be applicable with
respect to the General Partner (and any of the General Partners Affiliates) after it ceases to be
a general partner of the Partnership, during a period of two years subsequent to the effective date
of such cessation and for so long thereafter as is required for the Holder to sell all of the
Partnership Securities with respect to which it has requested during such two-year period
inclusion in a registration statement otherwise filed or that a registration statement be
filed;
provided
,
however
, that the Partnership shall not be required to file successive
registration statements covering the same Partnership Securities for which registration was
demanded during such two-year period. The provisions of Section 7.12(c) shall continue in effect
thereafter.
(e) The rights to cause the Partnership to register Partnership Securities pursuant to this
Section 7.12 may be assigned (but only with all related obligations) by a Holder to a transferee or
assignee of such Partnership Securities, provided (i) the Partnership is, within a reasonable time
after such transfer, furnished with written notice of the name and address of such transferee or
assignee and the Partnership Securities with respect to which such registration rights are being
assigned; and (ii) such transferee or assignee agrees in writing to be bound by and subject to the
terms set forth in this Section 7.12.
(f) Any request to register Partnership Securities pursuant to this Section 7.12 shall (i)
specify the Partnership Securities intended to be offered and sold by the Person making the
request, (ii) express such Persons present intent to offer such Partnership Securities for
distribution, (iii) describe the nature or method of the proposed offer and sale of Partnership
Securities, and (iv) contain the undertaking of such Person to provide all such information and
materials and take all action as may be required in order to permit the Partnership to comply with
all applicable requirements in connection with the registration of such Partnership Securities.
Section 7.13
Reliance by Third Parties
.
Notwithstanding anything to the contrary in this Agreement, any Person dealing with the
Partnership shall be entitled to assume that the General Partner and any officer of the General
Partner authorized by the General Partner to act on behalf of and in the name of the Partnership
has full power and authority to encumber, sell or otherwise use in any manner any and all assets of
the Partnership and to enter into any authorized contracts on behalf of the Partnership, and such
Person shall be entitled to deal with the General Partner or any such officer as if it were the
76
Partnerships sole party in interest, both legally and beneficially. Each Limited Partner hereby
waives, to the fullest extent permitted by law, any and all defenses or other remedies that may be
available against such Person to contest, negate or disaffirm any action of the General Partner or
any such officer in connection with any such dealing. In no event shall any Person dealing with
the General Partner or any such officer or its representatives be obligated to ascertain that the
terms of this Agreement have been complied with or to inquire into the necessity or expedience of
any act or action of the General Partner or any such officer or its representatives. Each and
every certificate, document or other instrument executed on behalf of the Partnership by the
General Partner or its representatives shall be conclusive evidence in favor of any and every
Person relying thereon or claiming thereunder that (a) at the time of the execution and delivery of
such certificate, document or instrument, this Agreement was in full force and effect, (b) the
Person executing and delivering such certificate, document or instrument was duly authorized and
empowered to do so for and on behalf of the Partnership and (c) such certificate, document or
instrument was duly executed and delivered in accordance with the terms and provisions of this
Agreement and is binding upon the Partnership.
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 8.1
Records and Accounting
.
The General Partner shall keep or cause to be kept at the principal office of the Partnership
appropriate books and records with respect to the Partnerships business, including all books and
records necessary to provide to the Limited Partners any information required to be provided
pursuant to Section 3.4(a). Any books and records maintained by or on behalf of the Partnership in
the regular course of its business, including the record of the Record Holders of Units or other
Partnership Securities, books of account and records of Partnership proceedings, may be kept on, or
be in the form of, computer disks, hard drives, punch cards, magnetic tape, photographs,
micrographics or any other information storage device;
provided
, that the books and records so
maintained are convertible into clearly legible written form within a reasonable period of time.
The books of the Partnership shall be maintained, for financial reporting purposes, on an accrual
basis in accordance with U.S. GAAP. The Partnership shall not be required to keep books maintained
on a cash basis and the General Partner shall be permitted to calculate cash-based measures,
including Operating Surplus and Adjusted Operating Surplus, by making such adjustments to its
accrual basis books to account for non-cash items and other adjustments as the General Partner
determines to be necessary or appropriate.
Section 8.2
Fiscal Year
.
The fiscal year of the Partnership shall be a fiscal year ending December 31.
Section 8.3
Reports
.
(a) As soon as practicable, but in no event later than 90 days after the close of each fiscal
year of the Partnership, the General Partner shall cause to be mailed or made available, by any
reasonable means (including posting on or accessible through the Partnerships
77
or the SECs
website) to each Record Holder of a Unit as of a date selected by the General Partner, an annual
report containing financial statements of the Partnership for such fiscal year of the Partnership,
presented in accordance with U.S. GAAP, including a balance sheet and statements of operations,
Partnership equity and cash flows, such statements to be audited by a firm of independent public
accountants selected by the General Partner.
(b) As soon as practicable, but in no event later than 45 days after the close of each Quarter
except the last Quarter of each fiscal year, the General Partner shall cause to be mailed or made
available, by any reasonable means (including posting on or accessible through the Partnerships or
the SECs website) to each Record Holder of a Unit, as of a date selected by the General Partner, a
report containing unaudited financial statements of the Partnership and
such other information as may be required by applicable law, regulation or rule of any
National Securities Exchange on which the Units are listed or admitted to trading, or as the
General Partner determines to be necessary or appropriate.
ARTICLE IX
TAX MATTERS
Section 9.1
Tax Returns and Information
.
The Partnership shall timely file all returns of the Partnership that are required for
federal, state and local income tax purposes on the basis of the accrual method and the taxable
period or year that it is required by law to adopt, from time to time, as determined by the General
Partner. In the event the Partnership is required to use a taxable period other than a year ending
on December 31, the General Partner shall use reasonable efforts to change the taxable period of
the Partnership to a year ending on December 31. The tax information reasonably required by Record
Holders for federal and state income tax reporting purposes with respect to a taxable period shall
be furnished to them within 90 days of the close of the calendar year in which the Partnerships
taxable period ends. The classification, realization and recognition of income, gain, losses and
deductions and other items shall be on the accrual method of accounting for federal income tax
purposes.
Section 9.2
Tax Elections
.
(a) The Partnership shall make the election under Section 754 of the Code in accordance with
applicable regulations thereunder, subject to the reservation of the right to seek to revoke any
such election upon the General Partners determination that such revocation is in the best
interests of the Limited Partners. Notwithstanding any other provision herein contained, for the
purposes of computing the adjustments under Section 743(b) of the Code, the General Partner shall
be authorized (but not required) to adopt a convention whereby the price paid by a transferee of a
Limited Partner Interest will be deemed to be the lowest quoted closing price of the Limited
Partner Interests on any National Securities Exchange on which such Limited Partner Interests are
listed or admitted to trading during the calendar month in which such transfer is deemed to occur
pursuant to Section 6.2(f) without regard to the actual price paid by such transferee.
78
(b) Except as otherwise provided herein, the General Partner shall determine whether the
Partnership should make any other elections permitted by the Code.
Section 9.3
Tax Controversies
.
Subject to the provisions hereof, the General Partner is designated as the Tax Matters Partner
(as defined in the Code) and is authorized and required to represent the Partnership (at the
Partnerships expense) in connection with all examinations of the Partnerships affairs by tax
authorities, including resulting administrative and judicial proceedings, and to expend Partnership
funds for professional services and costs associated therewith. Each Partner agrees to cooperate
with the General Partner and to do or refrain from doing any or all things reasonably required by
the General Partner to conduct such proceedings.
Section 9.4
Withholding
.
Notwithstanding any other provision of this Agreement, the General Partner is authorized to
take any action that may be required to cause the Partnership and other Group Members to comply
with any withholding requirements established under the Code or any other federal, state or local
law including pursuant to Sections 1441, 1442, 1445 and 1446 of the Code, or established under any
foreign law. To the extent that the Partnership is required or elects to withhold and pay over to
any taxing authority any amount resulting from the allocation or distribution of income to any
Partner (including by reason of Section 1446 of the Code), the General Partner may treat the amount
withheld as a distribution of cash pursuant to Section 6.3 or Section 12.4(c) in the amount of such
withholding from such Partner.
ARTICLE X
ADMISSION OF PARTNERS
Section 10.1
Admission of Limited Partners
.
(a) Upon the issuance by the Partnership of Common Units, Subordinated Units and Incentive
Distribution Rights to the General Partner, Tesoro, Tesoro R&M, Tesoro Alaska and the Underwriters
as described in Article V, such parties shall, by acceptance of such Partnership Interests, and
upon being reflected in the books and records of the Partnership as the Record Holders of such
Partnership Interests, be admitted to the Partnership as Initial Limited Partners in respect of the
Common Units, Subordinated Units or Incentive Distribution Rights issued to them and be bound by
this Agreement, all with or without execution of this Agreement.
(b) By acceptance of the transfer of any Limited Partner Interests in accordance with Article
IV or the acceptance of any Limited Partner Interests issued pursuant to Article V or pursuant to a
merger or consolidation pursuant to Article XIV, and except as provided in Section 4.9, each
transferee of, or other such Person acquiring, a Limited Partner Interest (including any nominee
holder or an agent or representative acquiring such Limited Partner Interests for the account of
another Person) (i) shall be admitted to the Partnership as a Limited Partner with respect to the
Limited Partner Interests so transferred or issued to such Person when any such transfer, issuance
or admission is reflected in the books and records of the Partnership and such Limited Partner
becomes the Record Holder of the Limited Partner
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Interests so transferred, (ii) shall become bound,
and shall be deemed to have agreed to be
bound, by the terms of this Agreement, (iii) represents that the transferee has the capacity,
power and authority to enter into this Agreement, and (iv) makes any consents, acknowledgements or
waivers contained in this Agreement, all with or without execution of this Agreement by such
Person. The transfer of any Limited Partner Interests and the admission of any new Limited Partner
shall not constitute an amendment to this Agreement. A Person may become a Limited Partner or
Record Holder of a Limited Partner Interest without the consent or approval of any of the Partners.
A Person may not become a Limited Partner without acquiring a Limited Partner Interest and until
such Person is reflected in the books and records of the Partnership as the Record Holder of such
Limited Partner Interest. The rights and obligations of a Person who is an Ineligible Holder shall
be determined in accordance with Section 4.9.
(c) The name and mailing address of each Limited Partner shall be listed on the books and
records of the Partnership maintained for such purpose by the Partnership or the Transfer Agent.
The General Partner shall update the books and records of the Partnership from time to time as
necessary to reflect accurately the information therein (or shall cause the Transfer Agent to do
so, as applicable). A Limited Partner Interest may be represented by a Certificate, as provided in
Section 4.1.
(d) Any transfer of a Limited Partner Interest shall not entitle the transferee to share in
the profits and losses, to receive distributions, to receive allocations of income, gain, loss,
deduction or credit or any similar item or to any other rights to which the transferor was entitled
until the transferee becomes a Limited Partner pursuant to Section 10.1(b).
Section 10.2
Admission of Successor General Partner
.
A successor General Partner approved pursuant to Section 11.1 or Section 11.2 or the
transferee of or successor to all of the General Partner Interest (represented by General Partner
Units) pursuant to Section 4.6 who is proposed to be admitted as a successor General Partner shall
be admitted to the Partnership as the General Partner, effective immediately prior to the
withdrawal or removal of the predecessor or transferring General Partner, pursuant to Section 11.1
or 11.2 or the transfer of the General Partner Interest (represented by General Partner Units)
pursuant to Section 4.6,
provided
,
however
, that no such successor shall be admitted to the
Partnership until compliance with the terms of Section 4.6 has occurred and such successor has
executed and delivered such other documents or instruments as may be required to effect such
admission. Any such successor is hereby authorized to and shall, subject to the terms hereof,
carry on the business of the members of the Partnership Group without dissolution.
Section 10.3
Amendment of Agreement and Certificate of Limited Partnership
.
To effect the admission to the Partnership of any Partner, the General Partner shall take all
steps necessary or appropriate under the Delaware Act to amend the records of the Partnership to
reflect such admission and, if necessary, to prepare as soon as practicable an amendment to this
Agreement and, if required by law, the General Partner shall prepare and file an amendment to the
Certificate of Limited Partnership.
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ARTICLE XI
WITHDRAWAL OR REMOVAL OF PARTNERS
Section 11.1
Withdrawal of the General Partner
.
(a) The General Partner shall be deemed to have withdrawn from the Partnership upon the
occurrence of any one of the following events (each such event herein referred to as an
Event of
Withdrawal
);
(i) The General Partner voluntarily withdraws from the Partnership by giving
written notice to the other Partners;
(ii) The General Partner transfers all of its rights as General Partner
pursuant to Section 4.6;
(iii) The General Partner is removed pursuant to Section 11.2;
(iv) The General Partner (A) makes a general assignment for the benefit of
creditors; (B) files a voluntary bankruptcy petition for relief under Chapter 7 of
the United States Bankruptcy Code; (C) files a petition or answer seeking for itself
a liquidation, dissolution or similar relief (but not a reorganization) under any
law; (D) files an answer or other pleading admitting or failing to contest the
material allegations of a petition filed against the General Partner in a proceeding
of the type described in clauses (A)-(C) of this Section 11.1(a)(iv); or (E) seeks,
consents to or acquiesces in the appointment of a trustee (but not a debtor-
in-possession), receiver or liquidator of the General Partner or of all or any
substantial part of its properties;
(v) A final and non-appealable order of relief under Chapter 7 of the United
States Bankruptcy Code is entered by a court with appropriate jurisdiction pursuant
to a voluntary or involuntary petition by or against the General Partner; or
(vi) (A) if the General Partner is a corporation, a certificate of dissolution
or its equivalent is filed for the General Partner, or 90 days expire after the date
of notice to the General Partner of revocation of its charter without a
reinstatement of its charter, under the laws of its state of incorporation; (B) if
the General Partner is a partnership or a limited liability company, the dissolution
and commencement of winding up of the General Partner; (C) if the General Partner is
acting in such capacity by virtue of being a trustee of a trust, the termination of
the trust; (D) if the General Partner is a natural person, his death or adjudication
of incompetency; and (E) otherwise upon the termination of the General Partner.
If an Event of Withdrawal specified in Section 11.1(a)(iv), (v) or (vi)(A), (B), (C) or (E) occurs,
the withdrawing General Partner shall give notice to the Limited Partners within 30 days after
such occurrence. The Partners hereby agree that only the Events of Withdrawal described in this
Section 11.1 shall result in the withdrawal of the General Partner from the Partnership.
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(b) Withdrawal of the General Partner from the Partnership upon the occurrence of an Event of
Withdrawal shall not constitute a breach of this Agreement under the following circumstances: (i)
at any time during the period beginning on the Closing Date and ending at 12:00 midnight, Central
Time, on June 30, 2021 the General Partner voluntarily withdraws by giving at least 90 days
advance notice of its intention to withdraw to the Limited Partners;
provided
, that prior to the
effective date of such withdrawal, the withdrawal is approved by Unitholders holding at least a
majority of the Outstanding Common Units (excluding Common Units held by the General Partner and
its Affiliates) and the General Partner delivers to the Partnership an Opinion of Counsel
(
Withdrawal Opinion of Counsel
) that such withdrawal (following the selection of the successor
General Partner) would not result in the loss of the limited liability under the Delaware Act of
any Limited Partner or cause any Group Member to be treated as an association taxable as a
corporation or otherwise to be taxed as an entity for federal income tax purposes (to the extent
not already so treated or taxed); (ii) at any time after 12:00 midnight, Central Time, on June 30,
2021 the General Partner voluntarily withdraws by giving at least 90 days advance notice to the
Unitholders, such withdrawal to take effect on the date specified in such notice; (iii) at any time
that the General Partner ceases to be the General Partner pursuant to Section 11.1(a)(ii) or is
removed pursuant to Section 11.2; or (iv) notwithstanding clause (i) of this sentence, at any time
that the General Partner voluntarily withdraws by giving at least 90 days advance notice of its
intention to withdraw to the Limited Partners, such withdrawal to take effect on the date specified
in the notice, if at the time such notice is given one Person and its Affiliates (other than the
General Partner and its Affiliates) own beneficially or of record or control at least 50% of the
Outstanding Units. The withdrawal of the General Partner from the Partnership upon the occurrence
of an Event of Withdrawal shall also constitute the withdrawal of the General Partner as general
partner or managing member, if any, to the extent applicable, of the other Group Members. If the
General Partner gives a notice of withdrawal pursuant to Section 11.1(a)(i), the holders of a Unit
Majority, may, prior to the effective date of such withdrawal, elect a successor General Partner.
The Person so elected as successor General Partner shall automatically become the successor general
partner or managing member, to the extent applicable, of the other Group Members of which the
General Partner is a general partner or a managing member. If, prior to the effective date of the
General Partners withdrawal, a successor is not selected by the Unitholders as provided herein or
the Partnership does not receive a Withdrawal Opinion of Counsel, the Partnership shall be
dissolved in accordance with Section 12.1 unless the business of the Partnership is continued
pursuant to Section 12.2. Any successor General Partner elected in accordance with the terms of
this Section 11.1 shall be subject to the provisions of Section 10.3.
Section 11.2
Removal of the General Partner
. The General Partner may be removed if such removal is
approved by the Unitholders holding at least 66 2/3% of the Outstanding Units (including Units held
by the General Partner and its Affiliates) voting as a single class. Any such action by such
holders for removal of the General Partner must also provide for the election of a successor
General Partner by the Unitholders holding a majority of the outstanding Common Units voting as a
class and Unitholders holding a majority of the outstanding Subordinated Units (if any Subordinated
Units
are then Outstanding) voting as a class (including, in each case, Units held by the General
Partner and its Affiliates). Such removal shall be effective immediately following the admission
of a successor General Partner pursuant to Section 10.2. The removal of the General Partner shall
also automatically constitute the removal of the General Partner as general partner or managing
member, to the extent applicable, of the other Group Members of
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which the General Partner is a
general partner or a managing member. If a Person is elected as a successor General Partner in
accordance with the terms of this Section 11.2, such Person shall, upon admission pursuant to
Section 10.2, automatically become a successor general partner or managing member, to the extent
applicable, of the other Group Members of which the General Partner is a general partner or a
managing member. The right of the holders of Outstanding Units to remove the General Partner shall
not exist or be exercised unless the Partnership has received an opinion opining as to the matters
covered by a Withdrawal Opinion of Counsel. Any successor General Partner elected in accordance
with the terms of this Section 11.2 shall be subject to the provisions of Section 10.2.
Section 11.3
Interest of Departing General Partner and Successor General Partner
.
(a) In the event of (i) withdrawal of the General Partner under circumstances where such
withdrawal does not violate this Agreement or (ii) removal of the General Partner by the holders of
Outstanding Units under circumstances where Cause does not exist, if the successor General Partner
is elected in accordance with the terms of Section 11.1 or Section 11.2, the Departing General
Partner shall have the option, exercisable prior to the effective date of the withdrawal or removal
of such Departing General Partner, to require its successor to purchase its General Partner
Interest (represented by General Partner Units) and its general partner interest (or equivalent
interest), if any, in the other Group Members and all of its or its Affiliates Incentive
Distribution Rights (collectively, the
Combined Interest
) in exchange for an amount in cash equal
to the fair market value of such Combined Interest, such amount to be determined and payable as of
the effective date of its withdrawal or removal. If the General Partner is removed by the
Unitholders under circumstances where Cause exists or if the General Partner withdraws under
circumstances where such withdrawal violates this Agreement, and if a successor General Partner is
elected in accordance with the terms of Section 11.1 or Section 11.2 (or if the business of the
Partnership is continued pursuant to Section 12.2 and the successor General Partner is not the
former General Partner), such successor shall have the option, exercisable prior to the effective
date of the withdrawal or removal of such Departing General Partner (or, in the event the business
of the Partnership is continued, prior to the date the business of the Partnership is continued),
to purchase the Combined Interest for such fair market value of such Combined Interest. In either
event, the Departing General Partner shall be entitled to receive all reimbursements due such
Departing General Partner pursuant to Section 7.4, including any employee-related liabilities
(including severance liabilities), incurred in connection with the termination of any employees
employed by the Departing General Partner or its Affiliates (other than any Group Member) for the
benefit of the Partnership or the other Group Members.
For purposes of this Section 11.3(a), the fair market value of the Combined Interest shall be
determined by agreement between the Departing General Partner and its successor or, failing
agreement within 30 days after the effective date of such Departing General Partners
withdrawal or removal, by an independent investment banking firm or other independent expert
selected by the Departing General Partner and its successor, which, in turn, may rely on other
experts, and the determination of which shall be conclusive as to such matter. If such parties
cannot agree upon one independent investment banking firm or other independent expert within 45
days after the effective date of such withdrawal or removal, then the
Departing General Partner
shall designate an independent investment banking firm or other independent expert, the Departing
83
General Partners successor shall designate an independent investment banking firm or other
independent expert, and such firms or experts shall mutually select a third independent investment
banking firm or independent expert, which third independent investment banking firm or other
independent expert shall determine the fair market value of the Combined Interest. In making its
determination, such third independent investment banking firm or other independent expert may
consider the then current trading price of Units on any National Securities Exchange on which Units
are then listed or admitted to trading, the value of the Partnerships assets, the rights and
obligations of the Departing General Partner, the value of the Incentive Distribution Rights and
the General Partner Interest (represented by General Partner Units) and other factors it may deem
relevant.
(b) If the Combined Interest is not purchased in the manner set forth in Section 11.3(a), the
Departing General Partner (or its transferee) shall become a Limited Partner and its Combined
Interest shall be converted into Common Units pursuant to a valuation made by an investment banking
firm or other independent expert selected pursuant to Section 11.3(a), without reduction in such
Partnership Interest (but subject to proportionate dilution by reason of the admission of its
successor). Any successor General Partner shall indemnify the Departing General Partner (or its
transferee) as to all debts and liabilities of the Partnership arising on or after the date on
which the Departing General Partner (or its transferee) becomes a Limited Partner. For purposes of
this Agreement, conversion of the Combined Interest of the Departing General Partner to Common
Units will be characterized as if the Departing General Partner (or its transferee) contributed its
Combined Interest to the Partnership in exchange for the newly issued Common Units.
(c) If a successor General Partner is elected in accordance with the terms of Section 11.1 or
Section 11.2 (or if the business of the Partnership is continued pursuant to Section 12.2 and the
successor General Partner is not the former General Partner) and the option described in Section
11.3(a) is not exercised by the party entitled to do so, the successor General Partner shall, at
the effective date of its admission to the Partnership, contribute to the Partnership cash in the
amount equal to the product of (x) the quotient obtained by dividing (A) the Percentage Interest of
the General Partner Interest of the Departing General Partner by (B) a percentage equal to 100%
less the Percentage Interest of the General Partner Interest of the Departing General Partner and
(y) the Net Agreed Value of the Partnerships assets on such date. In such event, such successor
General Partner shall, subject to the following sentence, be entitled to its Percentage Interest of
all Partnership allocations and distributions to which the Departing General Partner was entitled.
In addition, the successor General Partner shall cause this Agreement to be amended to reflect
that, from and after the date of such successor General Partners admission, the successor General
Partners interest in all Partnership distributions and allocations shall be its Percentage
Interest.
Section 11.4
Termination of Subordination Period, Conversion of Subordinated Units and Extinguishment of
Cumulative Common Unit Arrearages
.
Notwithstanding any provision of this Agreement, if the General Partner is removed as general
partner of the Partnership under circumstances where Cause does not exist and Units held by the
General Partner and its Affiliates are not voted in favor of such removal, (i) the Subordination
Period will end and all Outstanding Subordinated Units will immediately and
84
automatically convert
into Common Units on a one-for-one basis, (ii) all Cumulative Common Unit Arrearages on the Common
Units will be extinguished and (iii) the General Partner will have the right to convert its General
Partner Interest (represented by General Partner Units) and its Incentive Distribution Rights into
Common Units or to receive cash in exchange therefor in accordance with Section 11.3.
Section 11.5
Withdrawal of Limited Partners
.
No Limited Partner shall have any right to withdraw from the Partnership;
provided
,
however
,
that when a transferee of a Limited Partners Limited Partner Interest becomes a Record Holder of
the Limited Partner Interest so transferred, such transferring Limited Partner shall cease to be a
Limited Partner with respect to the Limited Partner Interest so transferred.
ARTICLE XII
DISSOLUTION AND LIQUIDATION
Section 12.1
Dissolution
.
The Partnership shall not be dissolved by the admission of additional Limited Partners or by
the admission of a successor General Partner in accordance with the terms of this Agreement. Upon
the removal or withdrawal of the General Partner, if a successor General Partner is elected
pursuant to Section 11.1 or Section 11.2, the Partnership shall not be dissolved and such successor
General Partner shall continue the business of the Partnership. The Partnership shall dissolve,
and (subject to Section 12.2) its affairs shall be wound up, upon:
(a) an Event of Withdrawal of the General Partner as provided in Section 11.1(a) (other than
Section 11.1(a)(ii)), unless a successor is elected and an Opinion of Counsel is received as
provided in Section 11.1(b) or 11.2 and such successor is admitted to the Partnership pursuant to
Section 10.2;
(b) an election to dissolve the Partnership by the General Partner that is approved by the
holders of a Unit Majority;
(c) the entry of a decree of judicial dissolution of the Partnership pursuant to the
provisions of the Delaware Act; or
(d) at any time there are no Limited Partners, unless the Partnership is continued without
dissolution in accordance with the Delaware Act.
Section 12.2
Continuation of the Business of the Partnership After Dissolution
.
Upon (a) dissolution of the Partnership following an Event of Withdrawal caused by the
withdrawal or removal of the General Partner as provided in Section 11.1(a)(i) or (iii) and the
failure of the Partners to select a successor to such Departing General Partner pursuant to Section
11.1 or Section 11.2, then within 90 days thereafter, or (b) dissolution of the Partnership upon an
event constituting an Event of Withdrawal as defined in Section 11.1(a)(iv), (v) or (vi), then, to
the maximum extent permitted by law, within 180 days thereafter, the holders of a Unit
85
Majority may
elect to continue the business of the Partnership on the same terms and conditions set forth in
this Agreement by appointing as a successor General Partner a Person approved by the holders of a
Unit Majority. Unless such an election is made within the applicable time period as set forth
above, the Partnership shall conduct only activities necessary to wind up its affairs. If such an
election is so made, then:
(i) the Partnership shall continue without dissolution unless earlier dissolved
in accordance with this Article XII;
(ii) if the successor General Partner is not the former General Partner, then
the interest of the former General Partner shall be treated in the manner provided
in Section 11.3; and
(iii) the successor General Partner shall be admitted to the Partnership as
General Partner, effective as of the Event of Withdrawal, by agreeing in writing to
be bound by this Agreement;
provided
, that the right of the holders of a Unit Majority to approve a successor General
Partner and to continue the business of the Partnership shall not exist and may not be exercised
unless the Partnership has received an Opinion of Counsel that (x) the exercise of the right would
not result in the loss of limited liability of any Limited Partner under the Delaware Act and (y)
neither the Partnership nor any Group Member would be treated as an association taxable as a
corporation or otherwise be taxable as an entity for federal income tax purposes upon the exercise
of such right to continue (to the extent not already so treated or taxed).
Section 12.3
Liquidator
.
Upon dissolution of the Partnership, unless the business of the Partnership is continued
pursuant to Section 12.2, the General Partner shall select one or more Persons to act as
Liquidator. The Liquidator (if other than the General Partner) shall be entitled to receive such
compensation for its services as may be approved by holders of at least a majority of the
Outstanding Common Units and Subordinated Units voting as a single class. The Liquidator (if other
than the General Partner) shall agree not to resign at any time without 15 days prior notice and
may be removed at any time, with or without cause, by notice of removal approved by holders of at
least a majority of the Outstanding Common Units and Subordinated Units voting as a single class.
Upon dissolution, removal or resignation of the Liquidator, a successor and substitute Liquidator
(who shall have and succeed to all rights, powers and duties of the original Liquidator) shall
within 30 days thereafter be approved by holders of at least a majority of the Outstanding Common
Units and Subordinated Units voting as a single class. The right to approve a successor or
substitute Liquidator in the manner provided herein shall be deemed to refer also to any such
successor or substitute Liquidator approved in the manner herein provided. Except as expressly
provided in this Article XII, the Liquidator approved in the manner provided herein shall have and
may exercise, without further authorization or consent of any of the parties hereto, all of the
powers conferred upon the General Partner under the terms of this Agreement (but subject to all of
the applicable limitations, contractual and otherwise, upon the exercise of such powers, other than
the limitation on sale set forth in Section 7.3) necessary or appropriate to
86
carry out the duties
and functions of the Liquidator hereunder for and during the period of time required to complete
the winding up and liquidation of the Partnership as provided for herein.
Section 12.4
Liquidation
.
The Liquidator shall proceed to dispose of the assets of the Partnership, discharge its
liabilities, and otherwise wind up its affairs in such manner and over such period as determined by
the Liquidator, subject to Section 17-804 of the Delaware Act and the following:
(a) The assets may be disposed of by public or private sale or by distribution in kind to one
or more Partners on such terms as the Liquidator and such Partner or Partners may agree. If any
property is distributed in kind, the Partner receiving the property shall be deemed for purposes of
Section 12.4(c) to have received cash equal to its fair market value; and contemporaneously
therewith, appropriate cash distributions must be made to the other Partners. The Liquidator may
defer liquidation or distribution of the Partnerships assets for a reasonable time if it
determines that an immediate sale or distribution of all or some of the Partnerships assets would
be impractical or would cause undue loss to the Partners. The Liquidator may distribute the
Partnerships assets, in whole or in part, in kind if it determines that a sale would be
impractical or would cause undue loss to the Partners.
(b) Liabilities of the Partnership include amounts owed to the Liquidator as compensation for
serving in such capacity (subject to the terms of Section 12.3) and amounts to Partners otherwise
than in respect of their distribution rights under Article VI. With respect to any liability that
is contingent, conditional or unmatured or is otherwise not yet due and payable, the Liquidator
shall either settle such claim for such amount as it thinks appropriate or establish a reserve of
cash or other assets to provide for its payment. When paid, any unused portion of the reserve
shall be distributed as additional liquidation proceeds.
(c) All property and all cash in excess of that required to discharge liabilities as provided
in Section 12.4(b) shall be distributed to the Partners in accordance with, and to the extent of,
the positive balances in their respective Capital Accounts, as determined after taking into account
all Capital Account adjustments (other than those made by reason of distributions pursuant to this
Section 12.4(c)) for the taxable period of the Partnership during which the liquidation of the
Partnership occurs (with such date of occurrence being determined pursuant to Treasury Regulation
Section 1.704- 1(b)(2)(ii)(g)), and such distribution shall be made by the end of such taxable
period (or, if later, within 90 days after said date of such occurrence).
Section 12.5
Cancellation of Certificate of Limited Partnership
.
Upon the completion of the distribution of Partnership cash and property as provided in
Section 12.4 in connection with the liquidation of the Partnership, the Certificate of Limited
Partnership and all qualifications of the Partnership as a foreign limited partnership in
jurisdictions other than the State of Delaware shall be canceled and such other actions as may be
necessary to terminate the Partnership shall be taken.
87
Section 12.6
Return of Contributions
.
The General Partner shall not be personally liable for, and shall have no obligation to
contribute or loan any monies or property to the Partnership to enable it to effectuate, the return
of the Capital Contributions of the Limited Partners or Unitholders, or any portion thereof, it
being expressly understood that any such return shall be made solely from Partnership assets.
Section 12.7
Waiver of Partition
.
To the maximum extent permitted by law, each Partner hereby waives any right to partition of the
Partnership property.
Section 12.8
Capital Account Restoration
.
No Limited Partner shall have any obligation to restore any negative balance in its Capital
Account upon liquidation of the Partnership. The General Partner shall be obligated to restore any
negative balance in its Capital Account upon liquidation of its interest in the Partnership by the
end of the taxable year of the Partnership during which such liquidation occurs, or, if later,
within 90 days after the date of such liquidation.
ARTICLE XIII
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE
Section 13.1
Amendments to be Adopted Solely by the General Partner
.
Each Partner agrees that the General Partner, without the approval of any Partner, may amend
any provision of this Agreement and execute, swear to, acknowledge, deliver, file and record
whatever documents may be required in connection therewith, to reflect:
(a) a change in the name of the Partnership, the location of the principal place of business
of the Partnership, the registered agent of the Partnership or the registered office of the
Partnership;
(b) admission, substitution, withdrawal or removal of Partners in accordance with this
Agreement;
(c) a change that the General Partner determines to be necessary or appropriate to qualify or
continue the qualification of the Partnership as a limited partnership or a partnership in which
the Limited Partners have limited liability under the laws of any state or to ensure that the Group
Members will not be treated as associations taxable as corporations or otherwise taxed as entities
for federal income tax purposes;
(d) a change that the General Partner determines, (i) does not adversely affect the Limited
Partners (including any particular class of Partnership Interests as compared to other classes of
Partnership Interests) in any material respect, (ii) to be necessary or appropriate to (A) satisfy
any requirements, conditions or guidelines contained in any opinion, directive, order, ruling or
regulation of any federal or state agency or judicial authority or contained in any federal
88
or
state statute (including the Delaware Act) or (B) facilitate the trading of the Units (including
the division of any class or classes of Outstanding Units into different classes to facilitate
uniformity of tax consequences within such classes of Units) or comply with any rule, regulation,
guideline or requirement of any National Securities Exchange on which the Units are or will be
listed or admitted to trading, (iii) to be necessary or appropriate in connection with action taken
by the General Partner pursuant to Section 5.9 or (iv) is required to effect the intent expressed
in the Registration Statement or the intent of the provisions of this Agreement or is otherwise
contemplated by this Agreement;
(e) a change in the fiscal year or taxable year of the Partnership and any other changes that
the General Partner determines to be necessary or appropriate as a result of a change in the fiscal
year or taxable year of the Partnership including, if the General Partner shall so determine, a
change in the definition of Quarter and the dates on which distributions are to be made by the
Partnership;
(f) an amendment that is necessary, in the Opinion of Counsel, to prevent the Partnership, or
the General Partner or its directors, officers, trustees or agents from in any manner being
subjected to the provisions of the Investment Company Act of 1940, as amended,
the Investment Advisers Act of 1940, as amended, or plan asset regulations adopted under the
Employee Retirement Income Security Act of 1974, as amended, regardless of whether such are
substantially similar to plan asset regulations currently applied or proposed by the United States
Department of Labor;
(g) an amendment that the General Partner determines to be necessary or appropriate in
connection with the authorization or issuance of any class or series of Partnership Securities
pursuant to Section 5.6;
(h) any amendment expressly permitted in this Agreement to be made by the General Partner
acting alone;
(i) an amendment effected, necessitated or contemplated by a Merger Agreement approved in
accordance with Section 14.3;
(j) an amendment that the General Partner determines to be necessary or appropriate to reflect
and account for the formation by the Partnership of, or investment by the Partnership in, any
corporation, partnership, joint venture, limited liability company or other entity, in connection
with the conduct by the Partnership of activities permitted by the terms of Section 2.4;
(k) a merger, conveyance or conversion pursuant to Section 14.3(d); or
(l) any other amendments substantially similar to the foregoing.
Section 13.2
Amendment Procedures
.
Amendments to this Agreement may be proposed only by the General Partner. To the fullest
extent permitted by law, the General Partner shall have no duty or obligation to propose or approve
any amendment to this Agreement and may decline to do so in its sole discretion, and, in
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declining
to propose or approve an amendment to this Agreement, to the fullest extent permitted by law shall
not be required to act in good faith or pursuant to any other standard imposed by this Agreement,
any Group Member Agreement, any other agreement contemplated hereby or under the Delaware Act or
any other law, rule or regulation or at equity. An amendment to this Agreement shall be effective
upon its approval by the General Partner and, except as otherwise provided by Section 13.1 or
Section 13.3, the holders of a Unit Majority, unless a greater or different percentage of
Outstanding Units is required under this Agreement or by Delaware law. Each proposed amendment that
requires the approval of the holders of a specified percentage of Outstanding Units shall be set
forth in a writing that contains the text of the proposed amendment. If such an amendment is
proposed, the General Partner shall seek the written approval of the requisite percentage of
Outstanding Units or call a meeting of the Unitholders to consider and vote on such proposed
amendment. The General Partner shall notify all Record Holders upon final adoption of any
amendments. The General Partner shall be deemed to have notified all Record Holders as required by
this Section 13.2 if it has either (i) filed such amendment with the Commission via its Electronic
Data Gathering, Analysis and Retrieval
system and such amendment is publicly available on such system or (ii) made such amendment
available on any publicly available website maintained by the Partnership.
Section 13.3
Amendment Requirements
.
(a) Notwithstanding the provisions of Section 13.1 and Section 13.2, no provision of this
Agreement that establishes a percentage of Outstanding Units (including Units deemed owned by the
General Partner) required to take any action shall be amended, altered, changed, repealed or
rescinded in any respect that would have the effect of (i) in the case of any provision of this
Agreement other than Section 11.2 or Section 13.4, reducing such percentage or (ii) in the case of
Section 11.2 or Section 13.4, increasing such percentages, unless such amendment is approved by the
written consent or the affirmative vote of holders of Outstanding Units whose aggregate Outstanding
Units constitute (x) in the case of a reduction as described in subclause (a)(i) hereof, not less
than the voting requirement sought to be reduced, (y) in the case of an increase in the percentage
in Section 11.2, not less than 90% of the Outstanding Units, or (z) in the case of an increase in
the percentage in Section 13.4, not less than a majority of the Outstanding Units.
(b) Notwithstanding the provisions of Section 13.1 and Section 13.2, no amendment to this
Agreement may (i) enlarge the obligations of any Limited Partner without its consent, unless such
shall be deemed to have occurred as a result of an amendment approved pursuant to Section 13.3(c)
or (ii) enlarge the obligations of, restrict in any way any action by or rights of, or reduce in
any way the amounts distributable, reimbursable or otherwise payable to, the General Partner or any
of its Affiliates without its consent, which consent may be given or withheld at its option.
(c) Except as provided in Section 14.3, and without limitation of the General Partners
authority to adopt amendments to this Agreement without the approval of any Partners as
contemplated in Section 13.1, any amendment that would have a material adverse effect on the rights
or preferences of any class of Partnership Interests in relation to other classes of Partnership
Interests must be approved by the holders of not less than a majority of the Outstanding
Partnership Interests of the class affected.
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(d) Notwithstanding any other provision of this Agreement, except for amendments pursuant to
Section 13.1 and except as otherwise provided by Section 14.3(b), no amendments shall become
effective without the approval of the holders of at least 90% of the Outstanding Units voting as a
single class unless the Partnership obtains an Opinion of Counsel to the effect that such amendment
will not affect the limited liability of any Limited Partner under applicable partnership law of
the state under whose laws the Partnership is organized.
(e) Except as provided in Section 13.1, this Section 13.3 shall only be amended with the
approval of the holders of at least 90% of the Outstanding Units.
Section 13.4
Special Meetings
.
All acts of Limited Partners to be taken pursuant to this Agreement shall be taken in the
manner provided in this Article XIII. Special meetings of the Limited Partners may be called by
the General Partner or by Limited Partners owning 20% or more of the Outstanding Units of the class
or classes for which a meeting is proposed. Limited Partners shall call a special meeting by
delivering to the General Partner one or more requests in writing stating that the signing Limited
Partners wish to call a special meeting and indicating the general or specific purposes for which
the special meeting is to be called. Within 60 days after receipt of such a call from Limited
Partners or within such greater time as may be reasonably necessary for the Partnership to comply
with any statutes, rules, regulations, listing agreements or similar requirements governing the
holding of a meeting or the solicitation of proxies for use at such a meeting, the General Partner
shall send a notice of the meeting to the Limited Partners either directly or indirectly through
the Transfer Agent. A meeting shall be held at a time and place determined by the General Partner
on a date not less than 10 days nor more than 60 days after the time notice of the meeting is given
as provided in Section 16.1. Limited Partners shall not vote on matters that would cause the
Limited Partners to be deemed to be taking part in the management and control of the business and
affairs of the Partnership so as to jeopardize the Limited Partners limited liability under the
Delaware Act or the law of any other state in which the Partnership is qualified to do business.
Section 13.5
Notice of a Meeting
.
Notice of a meeting called pursuant to Section 13.4 shall be given to the Record Holders of
the class or classes of Units for which a meeting is proposed in writing by mail or other means of
written communication in accordance with Section 16.1. The notice shall be deemed to have been
given at the time when deposited in the mail or sent by other means of written communication.
Section 13.6
Record Date
.
For purposes of determining the Limited Partners entitled to notice of or to vote at a meeting
of the Limited Partners or to give approvals without a meeting as provided in Section 13.11 the
General Partner may set a Record Date, which shall not be less than 10 nor more than 60 days before
(a) the date of the meeting (unless such requirement conflicts with any rule, regulation, guideline
or requirement of any National Securities Exchange on which the Units are listed or admitted to
trading or U.S. federal securities laws, in which case the rule,
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regulation, guideline or
requirement of such National Securities Exchange or U.S. federal securities laws shall govern) or
(b) in the event that approvals are sought without a meeting, the date by which Limited Partners
are requested in writing by the General Partner to give such approvals. If the General Partner
does not set a Record Date, then (a) the Record Date for determining the Limited Partners entitled
to notice of or to vote at a meeting of the Limited Partners shall be the close of business on the
day next preceding the day on which notice is given, and (b) the Record Date for determining the
Limited Partners entitled to give approvals without a meeting shall be the date
the first written approval is deposited with the Partnership in care of the General Partner in
accordance with Section 13.11.
Section 13.7
Adjournment
.
When a meeting is adjourned to another time or place, notice need not be given of the
adjourned meeting and a new Record Date need not be fixed, if the time and place thereof are
announced at the meeting at which the adjournment is taken, unless such adjournment shall be for
more than 45 days. At the adjourned meeting, the Partnership may transact any business which might
have been transacted at the original meeting. If the adjournment is for more than 45 days or if a
new Record Date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given in accordance with this Article XIII.
Section 13.8
Waiver of Notice; Approval of Meeting
.
The transactions of any meeting of Limited Partners, however called and noticed, and whenever
held, shall be as valid as if it had occurred at a meeting duly held after regular call and notice,
if a quorum is present either in person or by proxy. Attendance of a Limited Partner at a meeting
shall constitute a waiver of notice of the meeting, except when the Limited Partner attends the
meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction
of any business because the meeting is not lawfully called or convened; and except that attendance
at a meeting is not a waiver of any right to disapprove the consideration of matters required to be
included in the notice of the meeting, but not so included, if the disapproval is expressly made at
the meeting.
Section 13.9
Quorum and Voting
.
The holders of a majority of the Outstanding Units of the class or classes for which a meeting
has been called (including Outstanding Units deemed owned by the General Partner) represented in
person or by proxy shall constitute a quorum at a meeting of Limited Partners of such class or
classes unless any such action by the Limited Partners requires approval by holders of a greater
percentage of such Units, in which case the quorum shall be such greater percentage. At any
meeting of the Limited Partners duly called and held in accordance with this Agreement at which a
quorum is present, the act of Limited Partners holding Outstanding Units that in the aggregate
represent a majority of the Outstanding Units entitled to vote and be present in person or by proxy
at such meeting shall be deemed to constitute the act of all Limited Partners, unless a greater or
different percentage is required with respect to such action under the provisions of this
Agreement, in which case the act of the Limited Partners holding Outstanding Units that in the
aggregate represent at least such greater or different percentage shall be required. The Limited
Partners present at a duly called or held meeting at which a quorum is
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present may continue to
transact business until adjournment, notwithstanding the withdrawal of enough Limited Partners to
leave less than a quorum, if any action taken (other than adjournment) is approved by the
required percentage of Outstanding Units specified in this Agreement (including Outstanding
Units deemed owned by the General Partner). In the absence of a quorum any meeting of Limited
Partners may be adjourned from time to time by the affirmative vote of holders of at least a
majority of the Outstanding Units entitled to vote at such meeting (including Outstanding Units
deemed owned by the General Partner) that are represented at such meeting either in person or by
proxy, but no other business may be transacted, except as provided in Section 13.7.
Section 13.10
Conduct of a Meeting
.
The General Partner shall have full power and authority concerning the manner of conducting
any meeting of the Limited Partners or solicitation of approvals in writing, including the
determination of Persons entitled to vote, the existence of a quorum, the satisfaction of the
requirements of Section 13.4, the conduct of voting, the validity and effect of any proxies and the
determination of any controversies, votes or challenges arising in connection with or during the
meeting or voting. The General Partner shall designate a Person to serve as chairman of any
meeting and shall further designate a Person to take the minutes of any meeting. All minutes shall
be kept with the records of the Partnership maintained by the General Partner. The General Partner
may make such other regulations consistent with applicable law and this Agreement as it may deem
advisable concerning the conduct of any meeting of the Limited Partners or solicitation of
approvals in writing, including regulations in regard to the appointment of proxies, the
appointment and duties of inspectors of votes and approvals, the submission and examination of
proxies and other evidence of the right to vote, and the revocation of approvals in writing.
Section 13.11
Action Without a Meeting
.
If authorized by the General Partner, any action that may be taken at a meeting of the Limited
Partners may be taken without a meeting if an approval in writing setting forth the action so taken
is signed by Limited Partners owning not less than the minimum percentage of the Outstanding Units
(including Units deemed owned by the General Partner) that would be necessary to authorize or take
such action at a meeting at which all the Limited Partners were present and voted (unless such
provision conflicts with any rule, regulation, guideline or requirement of any National Securities
Exchange on which the Units are listed or admitted to trading, in which case the rule, regulation,
guideline or requirement of such National Securities Exchange shall govern). Prompt notice of the
taking of action without a meeting shall be given to the Limited Partners who have not approved in
writing. The General Partner may specify that any written ballot submitted to Limited Partners for
the purpose of taking any action without a meeting shall be returned to the Partnership within the
time period, which shall be not less than 20 days, specified by the General Partner. If a ballot
returned to the Partnership does not vote all of the Units held by the Limited Partners, the
Partnership shall be deemed to have failed to receive a ballot for the Units that were not voted.
If approval of the taking of any action by the Limited Partners is solicited by any Person other
than by or on behalf of the General Partner, the written approvals shall have no force and effect
unless and until (a) they are deposited with the Partnership in care of the General Partner, (b)
approvals sufficient to take the action proposed are
dated as of a date not more than 90 days prior to the date sufficient approvals are deposited
with
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the Partnership and (c) an Opinion of Counsel is delivered to the General Partner to the
effect that the exercise of such right and the action proposed to be taken with respect to any
particular matter (i) will not cause the Limited Partners to be deemed to be taking part in the
management and control of the business and affairs of the Partnership so as to jeopardize the
Limited Partners limited liability, and (ii) is otherwise permissible under the state statutes
then governing the rights, duties and liabilities of the Partnership and the Partners.
Section 13.2
Right to Vote and Related Matters
.
(a) Only those Record Holders of the Outstanding Units on the Record Date set pursuant to
Section 13.6 (and also subject to the limitations contained in the definition of Outstanding)
shall be entitled to notice of, and to vote at, a meeting of Limited Partners or to act with
respect to matters as to which the holders of the Outstanding Units have the right to vote or to
act. All references in this Agreement to votes of, or other acts that may be taken by, the
Outstanding Units shall be deemed to be references to the votes or acts of the Record Holders of
such Outstanding Units.
(b) With respect to Units that are held for a Persons account by another Person (such as a
broker, dealer, bank, trust company or clearing corporation, or an agent of any of the foregoing),
in whose name such Units are registered, such other Person shall, in exercising the voting rights
in respect of such Units on any matter, and unless the arrangement between such Persons provides
otherwise, vote such Units in favor of, and at the direction of, the Person who is the beneficial
owner, and the Partnership shall be entitled to assume it is so acting without further inquiry.
The provisions of this Section 13.12(b) (as well as all other provisions of this Agreement) are
subject to the provisions of Section 4.3.
ARTICLE XIV
MERGER, CONSOLIDATION OR CONVERSION
Section 14.1
Authority
.
The Partnership may merge or consolidate with or into one or more corporations, limited
liability companies, statutory trusts or associations, real estate investment trusts, common law
trusts or unincorporated businesses, including a partnership (whether general or limited (including
a limited liability partnership)) or convert into any such entity, whether such entity is formed
under the laws of the State of Delaware or any other state of the United States of America,
pursuant to a written plan of merger or consolidation (
Merger Agreement
) or a written plan of
conversion (
Plan of Conversion
), as the case may be, in accordance with this Article XIV.
Section 14.2
Procedure for Merger, Consolidation or Conversion
.
(a) Merger, consolidation or conversion of the Partnership pursuant to this Article XIV
requires the prior consent of the General Partner,
provided
,
however
, that, to the fullest extent
permitted by law, the General Partner shall have no duty or obligation to consent to any merger,
consolidation or conversion of the Partnership and may decline to do so free of any fiduciary duty
or obligation whatsoever to the Partnership, any Limited Partner and, in declining
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to consent to a
merger, consolidation or conversion, shall not be required to act in good faith or pursuant to any
other standard imposed by this Agreement, any other agreement contemplated hereby or under the Act
or any other law, rule or regulation or at equity.
(b) If the General Partner shall determine to consent to the merger or consolidation, the
General Partner shall approve the Merger Agreement, which shall set forth:
(i) name and state of domicile of each of the business entities proposing to
merge or consolidate;
(ii) the name and state of domicile of the business entity that is to survive
the proposed merger or consolidation (the
Surviving Business Entity
);
(iii) the terms and conditions of the proposed merger or consolidation;
(iv) the manner and basis of exchanging or converting the equity securities of
each constituent business entity for, or into, cash, property or interests, rights,
securities or obligations of the Surviving Business Entity; and (i) if any general
or limited partner interests, securities or rights of any constituent business
entity are not to be exchanged or converted solely for, or into, cash, property or
general or limited partner interests, rights, securities or obligations of the
Surviving Business Entity, the cash, property or interests, rights, securities or
obligations of any general or limited partnership, corporation, trust, limited
liability company, unincorporated business or other entity (other than the Surviving
Business Entity) which the holders of such general or limited partner interests,
securities or rights are to receive in exchange for, or upon conversion of their
interests, securities or rights, and (ii) in the case of securities represented by
certificates, upon the surrender of such certificates, which cash, property or
general or limited partner interests, rights, securities or obligations of the
Surviving Business Entity or any general or limited partnership, corporation, trust,
limited liability company, unincorporated business or other entity (other than the
Surviving Business Entity), or evidences thereof, are to be delivered;
(v) a statement of any changes in the constituent documents or the adoption of
new constituent documents (the articles or certificate of incorporation, articles of
trust, declaration of trust, certificate or agreement of limited partnership,
operating agreement or other similar charter or governing document) of the Surviving
Business Entity to be effected by such merger or consolidation;
(vi) the effective time of the merger, which may be the date of the filing of
the certificate of merger pursuant to Section 14.4 or a later date specified in or
determinable in accordance with the Merger Agreement (
provided
, that if the
effective time of the merger is to be later than the date of the filing of such
certificate of merger, the effective time shall be fixed at a date or time certain
at or prior to the time of the filing of such certificate of merger and stated
therein); and
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(vii) such other provisions with respect to the proposed merger or
consolidation that the General Partner determines to be necessary or appropriate.
(c) If the General Partner shall determine to consent to the conversion, the General Partner
shall approve the Plan of Conversion, which shall set forth:
(i) the name of the converting entity and the converted entity;
(ii) a statement that the Partnership is continuing its existence in the
organizational form of the converted entity;
(iii) a statement as to the type of entity that the converted entity is to be
and the state or country under the laws of which the converted entity is to be
incorporated, formed or organized;
(iv) the manner and basis of exchanging or converting the equity securities of
each constituent business entity for, or into, cash, property or interests, rights,
securities or obligations of the converted entity;
(v) in an attachment or exhibit, the certificate of limited partnership of the
Partnership; and
(vi) in an attachment or exhibit, the certificate of limited partnership,
articles of incorporation, or other organizational documents of the converted
entity;
(vii) the effective time of the conversion, which may be the date of the filing
of the articles of conversion or a later date specified in or determinable in
accordance with the Plan of Conversion (
provided
, that if the effective time of the
conversion is to be later than the date of the filing of such articles of
conversion, the effective time shall be fixed at a date or time certain at or prior
to the time of the filing of such articles of conversion and stated therein); and
(viii) such other provisions with respect to the proposed conversion that the
General Partner determines to be necessary or appropriate.
Section 14.3
Approval by Limited Partners
.
(a) Except as provided in Section 14.3(d), the General Partner, upon its approval of the
Merger Agreement or the Plan of Conversion, as the case may be, shall direct that the Merger
Agreement or the Plan of Conversion, as applicable, be submitted to a vote of Limited Partners,
whether at a special meeting or by written consent, in either case in accordance with the
requirements of Article XIII. A copy or a summary of the Merger Agreement or the Plan of
Conversion, as the case may be, shall be included in or enclosed with the notice of a special
meeting or the written consent.
(b) Except as provided in Section 14.3(d) and Section 14.3(e), the Merger Agreement or Plan of
Conversion, as the case may be, shall be approved upon receiving the
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affirmative vote or consent of
the holders of a Unit Majority unless the Merger Agreement or Plan of Conversion, as the case may
be, effects an amendment to any provision of this Agreement that, if contained in an amendment to
this Agreement adopted pursuant to Article XIII, would require for its approval the vote or consent
of a greater percentage of the Outstanding Units or of any class of Limited Partners, in which case
such greater percentage vote or consent shall be required for approval of the Merger Agreement or
the Plan of Conversion, as the case may be.
(c) Except as provided in Section 14.3(d) and Section 14.3(e), after such approval by vote or
consent of the Limited Partners, and at any time prior to the filing of the certificate of merger
or articles of conversion pursuant to Section 14.4, the merger, consolidation or conversion may be
abandoned pursuant to provisions therefor, if any, set forth in the Merger Agreement or Plan of
Conversion, as the case may be.
(d) Notwithstanding anything else contained in this Article XIV or in this Agreement, the
General Partner is permitted, without Limited Partner approval, to convert the Partnership or any
Group Member into a new limited liability entity, to merge the Partnership or any Group Member
into, or convey all of the Partnerships assets to, another limited liability entity that shall be
newly formed and shall have no assets, liabilities or operations at the time of such conversion,
merger or conveyance other than those it receives from the Partnership or other Group Member if (i)
the General Partner has received an Opinion of Counsel that the conversion, merger or conveyance,
as the case may be, would not result in the loss of the limited liability of any Limited Partner as
compared to its limited liability under the Delaware Act or cause the Partnership to be treated as
an association taxable as a corporation or otherwise to be taxed as an entity for federal income
tax purposes (to the extent not previously treated as such), (ii) the sole purpose of such
conversion, merger, or conveyance is to effect a mere change in the legal form of the Partnership
into another limited liability entity and (iii) the General Partner determines that the governing
instruments of the new entity provide the Limited Partners and the General Partner with
substantially the same rights and obligations as are herein contained.
(e) Additionally, notwithstanding anything else contained in this Article XIV or in this
Agreement, the General Partner is permitted, without Limited Partner approval, to merge or
consolidate the Partnership with or into another entity if (A) the General Partner has received an
Opinion of Counsel that the merger or consolidation, as the case may be, would not result in the
loss of the limited liability of any Limited Partner as compared to its limited liability under the
Delaware Act or cause the Partnership to be treated as an association taxable as a corporation or
otherwise to be taxed as an entity for federal income tax purposes (to the extent
not previously treated as such), (B) the merger or consolidation would not result in an
amendment to this Agreement, other than any amendments that could be adopted pursuant to Section
13.1, (C) the Partnership is the Surviving Business Entity in such merger or consolidation, (D)
each Unit outstanding immediately prior to the effective date of the merger or consolidation is to
be an identical Unit of the Partnership after the effective date of the merger or consolidation,
and (E) the number of Partnership Securities to be issued by the Partnership in such merger or
consolidation does not exceed 20% of the Partnership Securities (other than Incentive Distribution
Rights) Outstanding immediately prior to the effective date of such merger or consolidation.
97
(f) Pursuant to Section 17-211(g) of the Delaware Act, an agreement of merger or consolidation
approved in accordance with this Article XIV may (a) effect any amendment to this Agreement or (b)
effect the adoption of a new partnership agreement for the Partnership if it is the Surviving
Business Entity. Any such amendment or adoption made pursuant to this Section 14.3 shall be
effective at the effective time or date of the merger or consolidation.
Section 14.4
Certificate of Merger or Articles of Conversion
.
Upon the required approval by the General Partner and the Unitholders of a Merger Agreement or
the Plan of Conversion, as the case may be, a certificate of merger or certificate of conversion,
as applicable, shall be executed and filed with the Secretary of State of the State of Delaware in
conformity with the requirements of the Delaware Act.
Section 14.5
Effect of Merger, Consolidation or Conversion
.
(a) At the effective time of the merger:
(i) all of the rights, privileges and powers of each of the business entities
that has merged or consolidated, and all property, real, personal and mixed, and all
debts due to any of those business entities and all other things and causes of
action belonging to each of those business entities, shall be vested in the
Surviving Business Entity and after the merger or consolidation shall be the
property of the Surviving Business Entity to the extent they were of each
constituent business entity;
(ii) the title to any real property vested by deed or otherwise in any of those
constituent business entities shall not revert and is not in any way impaired
because of the merger or consolidation;
(iii) all rights of creditors and all liens on or security interests in
property of any of those constituent business entities shall be preserved
unimpaired; and
(iv) all debts, liabilities and duties of those constituent business entities
shall attach to the Surviving Business Entity and may be enforced against it to the
same extent as if the debts, liabilities and duties had been incurred or contracted
by it.
(b) At the effective time of the conversion:
(i) the Partnership shall continue to exist, without interruption, but in the
organizational form of the converted entity rather than in its prior organizational
form;
(ii) all rights, title, and interests to all real estate and other property
owned by the Partnership shall continue to be owned by the converted entity in its
new organizational form without reversion or impairment, without further act or
98
deed, and without any transfer or assignment having occurred, but subject to any
existing liens or other encumbrances thereon;
(iii) all liabilities and obligations of the Partnership shall continue to be
liabilities and obligations of the converted entity in its new organizational form
without impairment or diminution by reason of the conversion;
(iv) all rights of creditors or other parties with respect to or against the
prior interest holders or other owners of the Partnership in their capacities as
such in existence as of the effective time of the conversion will continue in
existence as to those liabilities and obligations and may be pursued by such
creditors and obligees as if the conversion did not occur;
(v) a proceeding pending by or against the Partnership or by or against any of
Partners in their capacities as such may be continued by or against the converted
entity in its new organizational form and by or against the prior partners without
any need for substitution of parties; and
(vi) the Partnership Units that are to be converted into partnership interests,
shares, evidences of ownership, or other securities in the converted entity as
provided in the plan of conversion shall be so converted, and Partners shall be
entitled only to the rights provided in the Plan of Conversion.
ARTICLE XV
RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS
Section 15.1
Right to Acquire Limited Partner Interests
.
(a) Notwithstanding any other provision of this Agreement, if at any time the General Partner
and its Affiliates hold more than 75% of the total Limited Partner Interests of any class then
Outstanding, the General Partner shall then have the right, which right it may
assign and transfer in whole or in part to the Partnership or any Affiliate of the General
Partner, exercisable at its option, to purchase all, but not less than all, of such Limited Partner
Interests of such class then Outstanding held by Persons other than the General Partner and its
Affiliates, at the greater of (x) the Current Market Price as of the date three days prior to the
date that the notice described in Section 15.1(b) is mailed and (y) the highest price paid by the
General Partner or any of its Affiliates for any such Limited Partner Interest of such class
purchased during the 90-day period preceding the date that the notice described in Section 15.1(b)
is mailed. As used in this Agreement, (i)
Current Market Price
as of any date of any class of
Limited Partner Interests means the average of the daily Closing Prices (as hereinafter defined)
per Limited Partner Interest of such class for the 20 consecutive Trading Days (as hereinafter
defined) immediately prior to such date; (ii)
Closing Price
for any day means the last sale price
on such day, regular way, or in case no such sale takes place on such day, the average of the
closing bid and asked prices on such day, regular way, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal National Securities
Exchange (other than the Nasdaq Stock Market) on which such Limited
99
Partner Interests are listed or
admitted to trading or, if such Limited Partner Interests of such class are not listed or admitted
to trading on any National Securities Exchange (other than the Nasdaq Stock Market), the last
quoted price on such day or, if not so quoted, the average of the high bid and low asked prices on
such day in the over-the-counter market, as reported by the Nasdaq Stock Market or such other
system then in use, or, if on any such day such Limited Partner Interests of such class are not
quoted by any such organization, the average of the closing bid and asked prices on such day as
furnished by a professional market maker making a market in such Limited Partner Interests of such
class selected by the General Partner, or if on any such day no market maker is making a market in
such Limited Partner Interests of such class, the fair value of such Limited Partner Interests on
such day as determined by the General Partner; and (iii)
Trading Day
means a day on which the
principal National Securities Exchange on which such Limited Partner Interests of any class are
listed or admitted for trading is open for the transaction of business or, if Limited Partner
Interests of a class are not listed or admitted for trading on any National Securities Exchange, a
day on which banking institutions in New York City generally are open.
(b) If the General Partner, any Affiliate of the General Partner or the Partnership elects to
exercise the right to purchase Limited Partner Interests granted pursuant to Section 15.1(a), the
General Partner shall deliver to the Transfer Agent notice of such election to purchase (the
Notice of Election to Purchase
) and shall cause the Transfer Agent to mail a copy of such Notice
of Election to Purchase to the Record Holders of Limited Partner Interests of such class (as of a
Record Date selected by the General Partner) at least 10, but not more than 60, days prior to the
Purchase Date. Such Notice of Election to Purchase shall also be published for a period of at
least three consecutive days in at least two daily newspapers of general circulation printed in the
English language and published in the Borough of Manhattan, New York. The Notice of Election to
Purchase shall specify the Purchase Date and the price (determined in accordance with Section
15.1(a)) at which Limited Partner Interests will be purchased and state that the General Partner,
its Affiliate or the Partnership, as the case may be, elects to purchase such Limited Partner
Interests, upon surrender of Certificates representing such Limited Partner Interests in exchange
for payment, at such office or offices of the Transfer Agent as the Transfer Agent may specify, or
as may be required by any National Securities Exchange on which such Limited Partner Interests are
listed. Any such Notice of Election to Purchase mailed to a Record Holder of Limited Partner
Interests at his address as reflected in the records of the Transfer
Agent shall be conclusively presumed to have been given regardless of whether the owner
receives such notice. On or prior to the Purchase Date, the General Partner, its Affiliate or the
Partnership, as the case may be, shall deposit with the Transfer Agent cash in an amount sufficient
to pay the aggregate purchase price of all of such Limited Partner Interests to be purchased in
accordance with this Section 15.1. If the Notice of Election to Purchase shall have been duly
given as aforesaid at least 10 days prior to the Purchase Date, and if on or prior to the Purchase
Date the deposit described in the preceding sentence has been made for the benefit of the holders
of Limited Partner Interests subject to purchase as provided herein, then from and after the
Purchase Date, notwithstanding that any Certificate shall not have been surrendered for purchase,
all rights of the holders of such Limited Partner Interests (including any rights pursuant to
Article IV, Article V, Article VI, and Article XII) shall thereupon cease, except the right to
receive the purchase price (determined in accordance with Section 15.1(a)) for Limited Partner
Interests therefor, without interest, upon surrender to the Transfer Agent of the Certificates
representing such Limited Partner Interests, and such Limited Partner Interests shall thereupon
100
be
deemed to be transferred to the General Partner, its Affiliate or the Partnership, as the case may
be, on the record books of the Transfer Agent and the Partnership, and the General Partner or any
Affiliate of the General Partner, or the Partnership, as the case may be, shall be deemed to be the
owner of all such Limited Partner Interests from and after the Purchase Date and shall have all
rights as the owner of such Limited Partner Interests (including all rights as owner of such
Limited Partner Interests pursuant to Article IV, Article V, Article VI and Article XII).
(c) At any time from and after the Purchase Date, a holder of an Outstanding Limited Partner
Interest subject to purchase as provided in this Section 15.1 may surrender his Certificate
evidencing such Limited Partner Interest to the Transfer Agent in exchange for payment of the
amount described in Section 15.1(a), therefor, without interest thereon.
ARTICLE XVI
GENERAL PROVISIONS
Section 16.1
Addresses and Notices; Written Communications
.
(a) Any notice, demand, request, report or proxy materials required or permitted to be given
or made to a Partner under this Agreement shall be in writing and shall be deemed given or made
when delivered in person or when sent by first class United States mail or by other means of
written communication to the Partner at the address described below. Any notice, payment or report
to be given or made to a Partner hereunder shall be deemed conclusively to have been given or made,
and the obligation to give such notice or report or to make such payment shall be deemed
conclusively to have been fully satisfied, upon sending of such notice, payment or report to the
Record Holder of such Partnership Securities at his address as shown on the records of the Transfer
Agent or as otherwise shown on the records of the Partnership, regardless of any claim of any
Person who may have an interest in such Partnership Securities by reason of any assignment or
otherwise. An affidavit or certificate of making of any notice, payment or report in accordance
with the provisions of this Section 16.1 executed by the General Partner, the Transfer Agent or the
mailing organization shall be prima facie evidence of
the giving or making of such notice, payment or report. If any notice, payment or report
addressed to a Record Holder at the address of such Record Holder appearing on the books and
records of the Transfer Agent or the Partnership is returned by the United States Postal Service
marked to indicate that the United States Postal Service is unable to deliver it, such notice,
payment or report and any subsequent notices, payments and reports shall be deemed to have been
duly given or made without further mailing (until such time as such Record Holder or another Person
notifies the Transfer Agent or the Partnership of a change in his address) if they are available
for the Partner at the principal office of the Partnership for a period of one year from the date
of the giving or making of such notice, payment or report to the other Partners. Any notice to the
Partnership shall be deemed given if received by the General Partner at the principal office of the
Partnership designated pursuant to Section 2.3. The General Partner may rely and shall be
protected in relying on any notice or other document from a Partner or other Person if believed by
it to be genuine.
101
(b) The terms in writing, written communications, written notice and words of similar
import shall be deemed satisfied under this Agreement by use of e-mail and other forms of
electronic communication.
Section 16.2
Further Action
.
The parties shall execute and deliver all documents, provide all information and take or
refrain from taking action as may be necessary or appropriate to achieve the purposes of this
Agreement.
Section 16.3
Binding Effect
.
This Agreement shall be binding upon and inure to the benefit of the parties hereto and their
heirs, executors, administrators, successors, legal representatives and permitted assigns.
Section 16.4
Integration
.
This Agreement constitutes the entire agreement among the parties hereto pertaining to the
subject matter hereof and supersedes all prior agreements and understandings pertaining thereto.
Section 16.5
Creditors
.
None of the provisions of this Agreement shall be for the benefit of, or shall be enforceable
by, any creditor of the Partnership.
Section 16.6
Waiver
.
No failure by any party to insist upon the strict performance of any covenant, duty, agreement
or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof
shall constitute waiver of any such breach of any other covenant, duty, agreement or condition.
Section 16.7
Third-Party Beneficiaries
.
Each Partner agrees that (a) any Indemnitee shall be entitled to assert rights and remedies
hereunder as a third-party beneficiary hereto with respect to those provisions of this Agreement
affording a right, benefit or privilege to such Indemnitee and (b) any Unrestricted Person shall be
entitled to assert rights and remedies hereunder as a third-party beneficiary hereto with respect
to those provisions of this Agreement affording a right, benefit or privilege to such Unrestricted
Person.
Section 16.8
Counterparts
.
This Agreement may be executed in counterparts, all of which together shall constitute an
agreement binding on all the parties hereto, notwithstanding that all such parties are not
signatories to the original or the same counterpart. Each party shall become bound by this
102
Agreement immediately upon affixing its signature hereto or, in the case of a Person acquiring a
Limited Partner Interest, pursuant to Section 10.1(a) or (b) without execution hereof.
Section 16.9
Applicable Law
.
(a) This Agreement shall be construed in accordance with and governed by the laws of the State
of Delaware, without regard to the principles of conflicts of law.
(b) Each of the Partners and each Person holding any beneficial interest in the Partnership
(whether through a broker, dealer, bank, trust company or clearing corporation or an agent of any
of the foregoing or otherwise):
(i) irrevocably agrees that any claims, suits, actions or proceedings (A)
arising out of or relating in any way to this Agreement (including any claims, suits
or actions to interpret, apply or enforce the provisions of this Agreement or the
duties, obligations or liabilities among Partners or of Partners to the Partnership,
or the rights or powers of, or restrictions on, the Partners or the Partnership),
(B) brought in a derivative manner on behalf of the Partnership, (C) asserting a
claim of breach of a fiduciary duty owed by any director, officer, or
other employee of the Partnership or the General Partner, or owed by the
General Partner, to the Partnership or the Partners, (D) asserting a claim arising
pursuant to any provision of the Delaware Act or (E) asserting a claim governed by
the internal affairs doctrine shall be exclusively brought in the Court of Chancery
of the State of Delaware, in each case regardless of whether such claims, suits,
actions or proceedings sound in contract, tort, fraud or otherwise, are based on
common law, statutory, equitable, legal or other grounds, or are derivative or
direct claims;
(ii) irrevocably submits to the exclusive jurisdiction of the Court of Chancery
of the State of Delaware in connection with any such claim, suit, action or
proceeding;
(iii) agrees not to, and waives any right to, assert in any such claim, suit,
action or proceeding that (A) it is not personally subject to the jurisdiction of
the Court of Chancery of the State of Delaware or of any other court to which
proceedings in the Court of Chancery of the State of Delaware may be appealed, (B)
such claim, suit, action or proceeding is brought in an inconvenient forum, or (C)
the venue of such claim, suit, action or proceeding is improper;
(iv) expressly waives any requirement for the posting of a bond by a party
bringing such claim, suit, action or proceeding; and
(v) consents to process being served in any such claim, suit, action or
proceeding by mailing, certified mail, return receipt requested, a copy thereof to
such party at the address in effect for notices hereunder, and agrees that such
services shall constitute good and sufficient service of process and notice thereof;
provided
, nothing in clause (v) hereof shall affect or limit any right to serve
process in any other manner permitted by law.
103
Section 16.10
Invalidity of Provisions
.
If any provision or part of a provision of this Agreement is or becomes for any reason,
invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions and/or parts thereof contained herein shall not be affected thereby and this
Agreement shall, to the fullest extent permitted by law, be reformed and construed as if such
invalid, illegal or unenforceable provision, or part of a provision, had never been contained
herein, and such provisions and/or part shall be reformed so that it would be valid, legal and
enforceable to the maximum extent possible.
Section 16.11
Consent of Partners
Each Partner hereby expressly consents and agrees that, whenever in this Agreement it is
specified that an action may be taken upon the affirmative vote or consent of less than all of the
Partners, such action may be so taken upon the concurrence of less than all of the Partners and
each Partner shall be bound by the results of such action.
Section 16.12
Facsimile and Email Signatures
.
The use of facsimile signatures and signatures delivered by email in portable document format
(.pdf) affixed in the name and on behalf of the transfer agent and registrar of the Partnership on
certificates representing Common Units is expressly permitted by this Agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
104
IN WITNESS WHEREOF
, the parties hereto have executed this Agreement as of the date first
written above.
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GENERAL PARTNER:
TESORO LOGISTICS GP, LLC
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By:
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/s/ Phillip M. Anderson
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Phillip M. Anderson
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President
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ORGANIZATIONAL LIMITED PARTNER:
TESORO CORPORATION
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By:
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/s/ Gregory J. Goff
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Gregory J. Goff
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President
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LIMITED PARTNERS:
TESORO ALASKA COMPANY
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By:
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/s/ Gregory J. Goff
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Gregory J. Goff
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President
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TESORO REFINING AND MARKETING COMPANY
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By:
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/s/ Gregory J. Goff
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Gregory J. Goff
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President
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Signature
Page to First Amended and Restated Agreement of Limited
Partnership of Tesoro Logistics LP
EXHIBIT A
to the First Amended and Restated
Agreement of Limited Partnership of
Tesoro
Logistics LP
Certificate Evidencing Common Units
Representing Limited Partner Interests in
Tesoro Logistics LP
In accordance with Section 4.1 of the First Amended and Restated Agreement of Limited
Partnership of Tesoro Logistics LP, as amended, supplemented or restated from time to time (the
Partnership Agreement
), Tesoro Logistics LP, a Delaware limited partnership (the
Partnership
),
hereby certifies that (the
Holder
) is the registered owner of Common Units representing limited
partner interests in the Partnership (the
Common Units
) transferable on the books of the
Partnership, in person or by duly authorized attorney, upon surrender of this Certificate properly
endorsed. The rights, preferences and limitations of the Common Units are set forth in, and this
Certificate and the Common Units represented hereby are issued and shall in all respects be subject
to the terms and provisions of, the Partnership Agreement. Copies of the Partnership Agreement are
on file at, and will be furnished without charge on delivery of written request to the Partnership
at, the principal office of the Partnership located at 19100 Ridgewood Parkway, San Antonio, Texas
78259. Capitalized terms used herein but not defined shall have the meanings given them in the
Partnership Agreement.
THE HOLDER OF THIS SECURITY ACKNOWLEDGES FOR THE BENEFIT OF TESORO LOGISTICS LP THAT THIS
SECURITY MAY NOT BE SOLD, OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED IF SUCH TRANSFER WOULD
(A) VIOLATE THE THEN APPLICABLE FEDERAL OR STATE SECURITIES LAWS OR RULES AND REGULATIONS OF THE
SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER GOVERNMENTAL
AUTHORITY WITH JURISDICTION OVER SUCH TRANSFER, (B) TERMINATE THE EXISTENCE OR QUALIFICATION OF
TESORO LOGISTICS LP UNDER THE LAWS OF THE STATE OF DELAWARE, OR (C) CAUSE TESORO LOGISTICS LP TO BE
TREATED AS AN ASSOCIATION TAXABLE AS A CORPORATION OR OTHERWISE TO BE TAXED AS AN ENTITY FOR
FEDERAL INCOME TAX PURPOSES (TO THE EXTENT NOT ALREADY SO TREATED OR TAXED). TESORO LOGISTICS GP,
LLC, THE GENERAL PARTNER OF TESORO LOGISTICS LP, MAY IMPOSE ADDITIONAL RESTRICTIONS ON THE TRANSFER
OF THIS SECURITY IF IT RECEIVES AN OPINION OF COUNSEL THAT SUCH RESTRICTIONS ARE NECESSARY TO AVOID
A SIGNIFICANT RISK OF TESORO LOGISTICS LP BECOMING TAXABLE AS A CORPORATION OR OTHERWISE BECOMING
TAXABLE AS AN ENTITY FOR FEDERAL INCOME TAX PURPOSES. THE RESTRICTIONS SET FORTH ABOVE SHALL NOT
PRECLUDE THE SETTLEMENT OF ANY TRANSACTIONS INVOLVING THIS SECURITY ENTERED INTO THROUGH THE
FACILITIES OF ANY NATIONAL SECURITIES EXCHANGE ON WHICH THIS SECURITY IS LISTED OR ADMITTED TO
TRADING.
A-2
The Holder, by accepting this Certificate, is deemed to have (i) requested admission as, and
agreed to become, a Limited Partner and to have agreed to comply with and be bound by and to have
executed the Partnership Agreement, (ii) represented and warranted that the Holder has all right,
power and authority and, if an individual, the capacity necessary to enter into the Partnership
Agreement, (iii) granted the powers of attorney provided for in the Partnership Agreement and (iv)
made the waivers and given the consents and approvals contained in the Partnership Agreement.
This Certificate shall not be valid for any purpose unless it has been countersigned and
registered by the Transfer Agent and Registrar.
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Dated:
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Tesoro Logistics LP
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By:
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Tesoro Logistics GP, LLC
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By:
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Chief Executive Officer
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By:
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Secretary
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Countersigned and Registered by:
[_____________________]
as Transfer Agent and Registrar
A-3
[Reverse of Certificate]
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this Certificate,
shall be construed as follows according to applicable laws or regulations:
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TEN COM as tenants in common
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UNIF GIFT/TRANSFERS MIN ACT
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TEN ENT as tenants by the entireties
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Custodian
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(Cust)
(Minor)
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JT TEN as joint tenants with right
of survivorship and not as tenants in
common
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under Uniform Gifts/Transfers to
CD Minors Act (State)
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Additional abbreviations, though not in the above list, may also be used.
A-4
ASSIGNMENT OF COMMON UNITS OF
TESORO LOGISTICS LP
FOR VALUE RECEIVED, ________________hereby assigns, conveys, sells and transfers unto
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(Please print or typewrite name and
address of assignee)
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(Please insert Social Security or
other identifying number of
assignee)
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_____________ Common Units representing limited partner interests evidenced by this Certificate,
subject to the Partnership Agreement, and does hereby irrevocably constitute and appoint
____________ as its attorney-in-fact with full power of substitution to transfer the same on the
books of Tesoro Logistics LP.
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Date:
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NOTE:
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The signature to any endorsement hereon must correspond
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with the name as written upon the face of this Certificate in every particular, without alteration, enlargement or change.
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(Signature)
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(Signature)
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THE SIGNATURE(S) MUST BE
GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS
WITH MEMBERSHIP IN AN APPROVED
SIGNATURE GUARANTEE MEDALLION
PROGRAM), PURSUANT
TO S.E.C. RULE 17Ad-15
_______________________________________
No transfer of the Common Units evidenced hereby will be registered on the books of the
Partnership, unless the Certificate evidencing the Common Units to be transferred is surrendered
for registration or transfer.
A-5
Exhibit 10.1
[
Published CUSIP Number: ____
]
CREDIT AGREEMENT
Dated as of April 26, 2011
among
TESORO LOGISTICS LP,
as the Borrower
BANK OF AMERICA, N.A.,
as Administrative Agent and
L/C Issuer,
and
The Other Lenders Party Hereto
MERRILL, LYNCH, PIERCE, FENNER & SMITH INCORPORATED,
as Sole Lead Arranger and Sole Book Manager
TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
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1
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1.01 Defined Terms
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1
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1.02 Other Interpretive Provisions
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28
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1.03 Accounting Terms
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28
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1.04 Rounding
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29
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1.05 Times of Day
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29
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1.06 Letter of Credit Amounts
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29
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1.07 Currency Equivalents Generally
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29
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ARTICLE II THE COMMITMENTS AND CREDIT EXTENSIONS
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30
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2.01 The Loans
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30
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2.02 Borrowings, Conversions and Continuations of Loans
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30
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2.03 Letters of Credit
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31
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2.04 Prepayments
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40
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2.05 Termination or Reduction of Commitments
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40
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2.06 Repayment of Revolving Credit Loans
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41
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2.07 Interest
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41
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2.08 Fees
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41
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2.09 Computation of Interest and Fees; Retroactive Adjustments of Applicable Rate
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42
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2.10 Evidence of Debt
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43
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2.11 Payments Generally; Administrative Agents Clawback
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43
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2.12 Sharing of Payments by Lenders
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45
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2.13 Increase in Commitments
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46
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2.14 Cash Collateral
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2.15 Defaulting Lenders
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48
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ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY
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50
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3.01 Taxes
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50
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3.02 Illegality
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54
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3.03 Inability to Determine Rates
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54
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3.04 Increased Costs; Reserves on Eurodollar Rate Loans
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55
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-i-
TABLE OF CONTENTS
(continued)
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Page
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3.05 Compensation for Losses
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57
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3.06 Mitigation Obligations; Replacement of Lenders
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57
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3.07 Survival
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58
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ARTICLE IV CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
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58
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4.01 Conditions of Initial Credit Extension
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58
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4.02 Conditions to all Credit Extensions
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62
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ARTICLE V REPRESENTATIONS AND WARRANTIES
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63
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5.01 Existence, Qualification and Power
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5.02 Authorization; No Contravention
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63
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5.03 Governmental Authorization; Other Consents
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63
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5.04 Binding Effect
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64
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5.05 Financial Statements; No Material Adverse Effect
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64
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5.06 Litigation
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64
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5.07 No Default
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65
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5.08 Title; Etc.
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65
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5.09 Environmental Compliance; Permits
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67
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5.10 Insurance
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68
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5.11 Taxes
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68
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5.12 ERISA Compliance
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68
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5.13 Subsidiaries; Equity Interests; Loan Parties
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69
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5.14 Margin Regulations; Investment Company Act
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69
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5.15 Disclosure
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69
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5.16 Compliance with Laws
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70
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5.17 Intellectual Property; Licenses, Etc.
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70
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5.18 Solvency
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70
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5.19 [Intentionally Omitted]
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70
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5.20 Labor Matters
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70
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5.21 Collateral Documents
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70
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5.22 State and Federal Regulation
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71
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5.23 Title to Crude Oil and Refined Products
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73
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TABLE OF CONTENTS
(continued)
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Page
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ARTICLE VI AFFIRMATIVE COVENANTS
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73
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6.01 Financial Statements
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6.02 Certificates; Other Information
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74
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6.03 Notices
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77
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6.04 Payment of Obligations
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77
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6.05 Preservation of Existence, Etc.
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78
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6.06 Maintenance of Properties
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78
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6.07 Maintenance of Insurance; Insurance Proceeds
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79
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6.08 Compliance with Laws
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79
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6.09 Books and Records
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80
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6.10 Inspection Rights
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80
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6.11 Use of Proceeds
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80
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6.12 Covenant to Guarantee Obligations and Give Security
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80
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6.13 Compliance with Environmental Laws
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83
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6.14 Further Assurances
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83
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6.15 Compliance with Terms of Leaseholds
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84
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6.16 Material Contracts
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84
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6.17 Utah FERC Jurisdictional Requirement
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84
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6.18 Post Closing Agreement
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85
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ARTICLE VII NEGATIVE COVENANTS
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85
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7.01 Liens
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85
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7.02 Indebtedness
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86
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7.03 Investments
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88
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7.04 Fundamental Changes
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89
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7.05 Dispositions
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89
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7.06 Restricted Payments
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90
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7.07 Change in Nature of Business
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91
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7.08 Transactions with Affiliates
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91
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7.09 Burdensome Agreements
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91
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7.10 Use of Proceeds
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91
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-iii-
TABLE OF CONTENTS
(continued)
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Page
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7.11 Financial Covenants
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91
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7.12 [Intentionally Omitted]
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92
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7.13 Amendments of Organization Documents
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92
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7.14 Accounting Changes
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92
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7.15 Prepayments, Etc.
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92
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7.16 Amendment, Etc.
|
|
|
92
|
|
7.17 Limitation on Speculative Hedging
|
|
|
92
|
|
ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES
|
|
|
92
|
|
8.01 Events of Default
|
|
|
92
|
|
8.02 Remedies upon Event of Default
|
|
|
95
|
|
8.03 Application of Funds
|
|
|
95
|
|
ARTICLE IX ADMINISTRATIVE AGENT
|
|
|
97
|
|
9.01 Appointment and Authority
|
|
|
97
|
|
9.02 Rights as a Lender
|
|
|
97
|
|
9.03 Exculpatory Provisions
|
|
|
97
|
|
9.04 Reliance by Administrative Agent
|
|
|
98
|
|
9.05 Delegation of Duties
|
|
|
99
|
|
9.06 Resignation of Administrative Agent
|
|
|
99
|
|
9.07 Non-Reliance on Administrative Agent and Other Lenders
|
|
|
100
|
|
9.08 No Other Duties, Etc.
|
|
|
100
|
|
9.09 Administrative Agent May File Proofs of Claim
|
|
|
100
|
|
9.10 Collateral and Guaranty Matters
|
|
|
101
|
|
9.11 Secured Cash Management Agreements and Secured Hedge Agreements
|
|
|
102
|
|
ARTICLE X MISCELLANEOUS
|
|
|
102
|
|
10.01 Amendments, Etc.
|
|
|
102
|
|
10.02 Notices; Effectiveness; Electronic Communications
|
|
|
104
|
|
10.03 No Waiver; Cumulative Remedies; Enforcement
|
|
|
106
|
|
10.04 Expenses; Indemnity; Damage Waiver
|
|
|
106
|
|
10.05 Payments Set Aside
|
|
|
108
|
|
10.06 Successors and Assigns
|
|
|
108
|
|
-iv-
TABLE OF CONTENTS
(continued)
|
|
|
|
|
|
|
|
Page
|
|
10.07 Treatment of Certain Information; Confidentiality
|
|
|
113
|
|
10.08 Right of Setoff
|
|
|
113
|
|
10.09 Interest Rate Limitation
|
|
|
114
|
|
10.10 Counterparts; Integration; Effectiveness
|
|
|
114
|
|
10.11 Survival of Representations and Warranties
|
|
|
115
|
|
10.12 Severability
|
|
|
115
|
|
10.13 Replacement of Lenders
|
|
|
115
|
|
10.14 Governing Law; Jurisdiction; Etc.
|
|
|
116
|
|
10.15 Waiver of Jury Trial
|
|
|
117
|
|
10.16 No Advisory or Fiduciary Responsibility
|
|
|
117
|
|
10.17 Electronic Execution of Assignments and Certain Other Documents
|
|
|
117
|
|
10.18 USA PATRIOT Act
|
|
|
118
|
|
10.19 ENTIRE AGREEMENT
|
|
|
118
|
|
-v-
TABLE OF CONTENTS
(continued)
SCHEDULES
|
|
|
2.01
|
|
Commitments and Applicable Percentages
|
4.01(a)(iv)
|
|
Leased Real Properties
|
5.06
|
|
Litigation
|
5.09
|
|
Environmental Matters
|
5.11
|
|
Certain Tax Information
|
5.13
|
|
Subsidiaries and Other Equity Investments; Loan Parties
|
5.22(a)
|
|
Federal Regulation Matters
|
6.12
|
|
Subsidiary Guarantors
|
7.01
|
|
Existing Liens
|
7.02
|
|
Existing Indebtedness
|
7.03
|
|
Existing Investments
|
7.09
|
|
Burdensome Agreements
|
10.02
|
|
Administrative Agents Office, Certain Addresses for Notices
|
|
|
|
EXHIBITS
|
|
|
Form of
|
|
|
A
|
|
Revolving Credit Loan Notice
|
B
|
|
Note
|
C
|
|
Compliance Certificate
|
D-1
|
|
Assignment and Assumption
|
D-2
|
|
Administrative Questionnaire
|
E
|
|
Uniform System of Accounts
|
-vi-
CREDIT AGREEMENT
This CREDIT AGREEMENT (
Agreement
) is entered into as of April 26, 2011, among TESORO
LOGISTICS LP, a Delaware limited partnership (the
Borrower
), each lender from time to
time party hereto (collectively, the
Lenders
and individually, a
Lender
), and
BANK OF AMERICA, N.A., as Administrative Agent and L/C Issuer.
PRELIMINARY STATEMENTS:
The Borrower has requested that the Lenders provide a revolving credit facility, and the Lenders
have indicated their willingness to lend and the L/C Issuer has indicated its willingness to issue
letters of credit, in each case, on the terms and subject to the conditions set forth herein.
In consideration of the mutual covenants and agreements herein contained, the parties hereto
covenant and agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.01 Defined Terms
. As used in this Agreement, the following terms shall have the
meanings set forth below:
Acquisition
means the acquisition, directly or indirectly, by any Person of (a) a
majority of the Equity Interests of another Person, (b) all or substantially all of the assets of
another Person or (c) all or substantially all of a line of business or division of another Person,
in each case (i) whether or not involving a merger or a consolidation with such other Person and
(ii) whether in one transaction or a series of related transactions.
Acquisition Consideration
means, in connection with any Acquisition, the total cash
and noncash consideration (including the fair market value of all Equity Interests issued or
transferred to the sellers thereof, earnouts and other contingent payment obligations to, and all
assumptions of debt, liabilities and other obligations in connection therewith) paid by or on
behalf of the Borrower and its Subsidiaries for such Acquisition;
provided
, that any
contingent future payment shall be considered Acquisition Consideration only to the extent of the
reserve, if any, required under GAAP at the time of such sale to be established in respect thereof
by the Borrower or any Subsidiary.
Administrative Agent
means Bank of America in its capacity as administrative agent
under any of the Loan Documents, or any successor administrative agent.
Administrative Agents Office
means the Administrative Agents address and, as
appropriate, account as set forth on
Schedule 10.02
, or such other address or account as
the Administrative Agent may from time to time notify to the Borrower and the Lenders.
Administrative Questionnaire
means an Administrative Questionnaire in substantially
the form of
Exhibit D-2
or any other form approved by the Administrative Agent.
Affiliate
means, with respect to any Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or is under common
Control with the Person specified.
Aggregate Commitments
means the Commitments of all the Lenders.
Agreement
means this Credit Agreement.
Applicable Fee Rate
means, at any time, 0.50% per annum.
Applicable Percentage
means, with respect to any Lender at any time, the percentage
(carried out to the ninth decimal place) of the Aggregate Commitments represented by such Lenders
Commitment at such time, subject to adjustment as provided in
Section 2.15
. If the
commitment of each Lender to make Loans and the obligation of the L/C Issuers to make L/C Credit
Extensions have been terminated pursuant to
Section 8.02
, or if the Commitments have
expired, then the Applicable Percentage of each Lender in respect of the Aggregate Commitments
shall be determined based on the Applicable Percentage of such Lender in respect of the Aggregate
Commitments most recently in effect, giving effect to any subsequent assignments. The initial
Applicable Percentage of each Lender is set forth opposite the name of such Lender on
Schedule
2.01
or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto,
as applicable.
Applicable Rate
means (i) from the Closing Date to the date on which the
Administrative Agent receives a Compliance Certificate pursuant to
Section 6.02(b)
for the
fiscal quarter ending June 30, 2011, 1.50% per annum for Base Rate Loans and 2.50% per annum for
Eurodollar Rate Loans and Letter of Credit Fees and (ii) thereafter, the applicable percentage per
annum set forth below determined by reference to the Consolidated Leverage Ratio as set forth in
the most recent Compliance Certificate received by the Administrative Agent pursuant to
Section
6.02(b)
:
|
|
|
|
|
|
|
Applicable Rate
|
|
|
|
|
Eurodollar Rate
|
|
|
Pricing Level
|
|
Consolidated Leverage Ratio
|
|
(Letters of Credit)
|
|
Base Rate
|
1
|
|
< 2.25:1
|
|
2.50%
|
|
1.50%
|
2
|
|
≥ 2.25:1 but < 3.00:1
|
|
2.75%
|
|
1.75%
|
3
|
|
≥ 3.00:1 but < 3.75:1
|
|
3.00%
|
|
2.00%
|
4
|
|
≥ 3.75:1
|
|
3.25%
|
|
2.25%
|
Any increase or decrease in the Applicable Rate resulting from a change in the Consolidated
Leverage Ratio shall become effective as of the third Business Day immediately following the date a
Compliance Certificate is delivered pursuant to
Section 6.02(b)
;
provided
,
however
, that if a Compliance Certificate is not delivered when due in accordance with such
Section, then Pricing Level 4 shall apply as of the first Business Day after the date on which such
Compliance Certificate was required to have been delivered and in each case shall remain in effect
until the date on which such Compliance Certificate is delivered.
-2-
Notwithstanding anything to the contrary contained in this definition, the determination of the
Applicable Rate for any period shall be subject to the provisions of
Section 2.09(b)
.
Approved Fund
means any Fund that is administered or managed by (a) a Lender, (b) an
Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a
Lender.
Arranger
means Merrill, Lynch, Pierce, Fenner & Smith Incorporated, in its capacity
as sole lead arranger and sole book manager.
Assignee Group
means two or more Eligible Assignees that are Affiliates of one
another or two or more Approved Funds managed by the same investment advisor.
Assignment and Assumption
means an assignment and assumption entered into by a
Lender and an Eligible Assignee (with the consent of any party whose consent is required by
Section 10.06(b)
), and accepted by the Administrative Agent, in substantially the form of
Exhibit D-1
or any other form approved by the Administrative Agent.
Attributable Indebtedness
means, on any date, (a) in respect of any Capitalized
Lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such
Person prepared as of such date in accordance with GAAP, (b) in respect of any Synthetic Lease
Obligation, the capitalized amount of the remaining lease or similar payments under the relevant
lease or other applicable agreement or instrument that would appear on a balance sheet of such
Person prepared as of such date in accordance with GAAP if such lease or other agreement or
instrument were accounted for as a Capitalized Lease and (c) all Synthetic Debt of such Person.
Audited Financial Statements
means the audited combined balance sheet of Borrowers
Predecessor and its Subsidiaries for the fiscal year ended December 31, 2010, and the related
combined statements of income or operations, partners capital, retained earnings and cash flows
for such fiscal year of Borrowers Predecessor and its Subsidiaries, including the notes thereto.
Availability Period
means the period from and including the Closing Date to the
earliest of (i) the Maturity Date, (ii) the date of termination of the Commitments pursuant to
Section 2.05
, and (iii) the date of termination of the commitment of each Lender to make
Revolving Credit Loans and of the obligation of the L/C Issuers to make L/C Credit Extensions
pursuant to
Section 8.02
.
Available Cash
has the meaning set forth in the Borrower Partnership Agreement.
Bank of America
means Bank of America, N.A. and its successors.
Base Rate
means for any day a fluctuating rate per annum equal to the highest of (a)
the Federal Funds Rate
plus
1/2 of 1%, (b) the rate of interest in effect for such day as
publicly announced from time to time by Bank of America as its
prime rate
, and (c) the
Eurodollar Rate plus 1.00%. The
prime rate
is a rate set by Bank of America based upon
various factors including Bank of Americas costs and desired return, general economic conditions
and other factors, and is used as a reference point for pricing some loans, which may be priced at,
above, or below such announced rate. Any change in such prime rate announced by Bank of America
shall
-3-
take effect at the opening of business on the day specified in the public announcement of such
change.
Base Rate Loan
means a Revolving Credit Loan that bears interest based on the Base
Rate.
Borrower
has the meaning specified in the introductory paragraph hereto.
Borrower Partnership Agreement
means that certain First Amended and Restated
Agreement of Limited Partnership of Tesoro Logistics LP dated as of April 26, 2011, among the
General Partner, Tesoro, Tesoro Alaska, TRMC and the other limited partners party thereto.
Borrowers Predecessor
means Tesoro Logistics LP Predecessor, the Borrowers
predecessor for accounting purposes as set forth in the Registration Statement.
Business
means the ownership, operation, development and acquisition of Crude Oil
and Refined Products logistics assets.
Business Day
means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact closed in, the state
where the Administrative Agents Office is located and, if such day relates to any Eurodollar Rate
Loan, means any such day that is also a London Banking Day.
Capitalized Leases
means all leases that have been or should be, in accordance with
GAAP, recorded as capitalized leases.
Cash Collateralize
means to pledge and deposit with or deliver to the Administrative
Agent, for the benefit of the Administrative Agent or an L/C Issuer (as applicable) and the
Lenders, as collateral for L/C Obligations or obligations of Lenders to fund participations in
respect thereof (as the context may require), cash or deposit account balances or, if the
applicable L/C Issuer shall agree in its sole discretion, other credit support, in each case
pursuant to documentation in form and substance satisfactory to (a) the Administrative Agent and
(b) the applicable L/C Issuer.
Cash Collateral
shall have a meaning correlative to the
foregoing and shall include the proceeds of such cash collateral and other credit support.
Cash Equivalents
means any of the following types of Investments, to the extent
owned by the Borrower or any of its Subsidiaries free and clear of all Liens (other than Liens
created under the Collateral Documents and other Liens permitted hereunder):
(a) readily marketable obligations issued or directly and fully guaranteed or insured by
the United States of America or any agency or instrumentality thereof having maturities of not more
than 360 days from the date of acquisition thereof;
provided
that the full faith and credit
of the United States of America is pledged in support thereof;
(b) Dollar-denominated time deposits with, or Dollar-denominated insured certificates of
deposit or Dollar-denominated bankers acceptances of, any commercial bank that (i) (A) is a
Lender, or (B) is organized under the laws of the United States of America, any state thereof or
the District of Columbia or is the principal banking subsidiary of a bank holding
-4-
company organized under the laws of the United States of America, any state thereof or the District of
Columbia, and is a member of the Federal Reserve System; (ii) issues (or the parent of which
issues) commercial paper rated as described in clause (c) of this definition; and (iii) has
combined capital and surplus of at least $1,000,000,000, in each case with maturities of not more
than 180 days from the date of acquisition thereof;
(c) commercial paper issued by any Person organized under the laws of any state of the
United States of America and rated at least
Prime-1
(or the then equivalent grade) by
Moodys or at least
A-1
(or the then equivalent grade) by S&P, in each case with
maturities of not more than 180 days from the date of acquisition thereof; and
(d) Investments, classified in accordance with GAAP as current assets of the Borrower or
any of its Subsidiaries, in money market investment programs registered under the Investment
Company Act of 1940, which are administered by financial institutions that have the highest rating
obtainable from either Moodys or S&P, and the portfolios of which are limited solely to
Investments of the character, quality and maturity described in clauses (a), (b) and (c) of this
definition.
Cash Management Agreement
means any agreement to provide cash management services,
including treasury, depository, overdraft, credit or debit card, electronic funds transfer and
other cash management arrangements.
Cash Management Bank
means any Person that, at the time it enters into a Cash
Management Agreement, is a Lender or an Affiliate of a Lender, in its capacity as a party to such
Cash Management Agreement.
CERCLA
means the Comprehensive Environmental Response, Compensation and Liability
Act of 1980.
CERCLIS
means the Comprehensive Environmental Response, Compensation and Liability
Information System maintained by the U.S. Environmental Protection Agency.
CFC
means a Person that is a controlled foreign corporation under Section 957 of the
Code.
Change in Law
means the occurrence, after the date of this Agreement, of any of the
following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change
in any law, rule, regulation or treaty or in the administration, interpretation or application
thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or
directive (whether or not having the force of law) by any Governmental Authority;
provided
that notwithstanding anything herein to the contrary, the Dodd-Frank Wall Street Reform and
Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in
connection therewith shall be deemed to be a Change in Law, regardless of the date enacted,
adopted or issued.
Change of Control
means any of the following events or conditions: (a) the General
Partner shall cease to be the sole general partner of the Borrower; (b) Tesoro shall cease,
directly or indirectly, to own and control legally and beneficially more than 50% of the Equity
Interests
-5-
in the General Partner; or (c) the Borrower shall cease, directly or indirectly, to own and
control legally and beneficially all of the Equity Interests of Opco, Tesoro High Plains or any
other Subsidiary Guarantor.
Closing Date
means the first date all the conditions precedent in
Section
4.01
are satisfied or waived in accordance with
Section 10.01
.
Closing Date Distribution
means (a) the $50,000,000 distribution from the Borrower
to the General Partner on the date of the initial Revolving Credit Borrowing under this Agreement
and (b) the distributions of the net proceeds of the Common Units offering (after certain
deductions) from the Borrower to Tesoro and certain of its Affiliates on the date of the initial
Revolving Credit Borrowing under this Agreement, as further described in the Registration
Statement.
Code
means the Internal Revenue Code of 1986.
Collateral
means all of the
Collateral
and
Mortgaged Property
referred to in the Collateral Documents and all of the other property that is or is intended under
the terms of the Collateral Documents to be subject to Liens in favor of the Administrative Agent
for the benefit of the Secured Parties.
Collateral Documents
means, collectively, the Security Agreement, the Mortgages,
each of the mortgages, collateral assignments, Security Agreement Supplements, IP Security
Agreement Supplements, security agreements, pledge agreements or other similar agreements delivered
to the Administrative Agent pursuant to
Section 6.12
, and each of the other agreements,
instruments or documents that creates or purports to create a Lien in favor of the Administrative
Agent for the benefit of the Secured Parties.
Collateral Loss
means any loss, damage, destruction or other casualty to, or any
condemnation of, any Collateral.
Commitment
means, as to each Lender, its obligation to (a) make Revolving Credit
Loans to the Borrower pursuant to
Section 2.01
and (b) purchase participations in L/C
Obligations, in an aggregate principal amount at any one time outstanding not to exceed the amount
set forth opposite such Lenders name on
Schedule 2.01
under the caption
Commitment
or opposite such caption in the Assignment and Assumption pursuant to which
such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time
in accordance with this Agreement.
Common Units
means the common units and subordinated units representing limited
partner interests in the Borrower.
Compliance Certificate
means a certificate substantially in the form of
Exhibit
C
.
Consolidated EBITDA
means, at any date of determination, an amount equal to
Consolidated Net Income of the Borrower and its Subsidiaries on a consolidated basis for the most
recently completed Measurement Period
plus
(a) the following to the extent deducted in
calculating such Consolidated Net Income: (i) Consolidated Interest Charges, (ii) the provision
-6-
for Federal, state, local and foreign income taxes payable, (iii) depreciation and
amortization expense, (iv) any charges or expenses (other than depreciation or amortization
expense) directly incurred in connection with any Acquisition or Disposition permitted by this
Agreement, in an aggregate amount not to exceed 10% of Consolidated EBITDA (as shown on the
consolidated financial statements of the Borrower and its Subsidiaries most recently delivered to
the Administrative Agent in accordance with
Section 6.01
but without giving effect to this
clause (iv) in such calculation) for any Measurement Period, and (v) other expenses reducing such
Consolidated Net Income which do not represent a cash item in such period or any future period (in
each case of or by the Borrower and its Subsidiaries for such Measurement Period) and
minus
(b) the following to the extent included in calculating such Consolidated Net Income: (i) Federal,
state, local and foreign income tax credits and (ii) all non-cash items increasing Consolidated Net
Income (in each case of or by the Borrower and its Subsidiaries for such Measurement Period).
Consolidated EBITDA shall be calculated for each Measurement Period, on a pro forma basis, after
giving effect to, without duplication, any Acquisition, Disposition or Uncovered Collateral Loss
occurring during each period commencing on the first day of such period to and including the date
of such transaction (the
Reference Period
) as if such Acquisition, Disposition or
Uncovered Collateral Loss and any related incurrence or repayment of Indebtedness occurred on the
first day of the Reference Period. In making the calculation contemplated by the preceding
sentence, Consolidated EBITDA generated or to be generated by such acquired, divested or damaged or
condemned property or Person shall be determined in good faith by the Borrower based on reasonable
assumptions;
provided
, however, that (A) such pro forma calculations shall be reasonably
acceptable to the Administrative Agent if such pro forma adjustments to Consolidated EBITDA exceed
the lesser of (x) $20,000,000 for any one Acquisition or Disposition or Uncovered Collateral Loss,
as applicable, and (y) thirty percent (30%) of the Consolidated EBITDA for the Borrower and its
Subsidiaries on a consolidated basis prior to such adjustment and (B) no such pro forma adjustments
shall be allowed unless, not less than thirty (30) days after the end of such period, the
Administrative Agent shall have received such written documentation as the Administrative Agent may
reasonably request, all in form and substance reasonably satisfactory to the Administrative Agent,
supporting such pro forma adjustments.
Consolidated Funded Indebtedness
means, as of any date of determination, for the
Borrower and its Subsidiaries on a consolidated basis, the sum of (a) the outstanding principal
amount of all obligations, whether current or long-term, for borrowed money (including Obligations
hereunder) and all obligations evidenced by bonds, debentures, notes, loan agreements or other
similar instruments, (b) all purchase money Indebtedness, (c) all direct obligations arising under
letters of credit (including standby and commercial), bankers acceptances, bank guaranties, surety
bonds and similar instruments, (d) all obligations in respect of the deferred purchase price of
property or services (other than trade accounts payable in the ordinary course of business), (e)
all Attributable Indebtedness, (f) without duplication, all Guarantees with respect to outstanding
Indebtedness of the types specified in clauses (a) through (e) above of Persons other than the
Borrower or any Subsidiary, and (g) all Indebtedness of the types referred to in clauses (a)
through (f) above of any partnership or joint venture (other than a joint venture that is itself a
corporation or limited liability company) in which the Borrower or a Subsidiary is a general
partner or joint venturer, unless such Indebtedness is expressly made non-recourse to the Borrower
or such Subsidiary.
-7-
Consolidated Interest Charges
means, for any Measurement Period, the sum of (a) all
interest, premium payments, debt discount, fees, charges and related expenses in connection with
borrowed money (including capitalized interest) or in connection with the deferred purchase price
of assets, in each case to the extent (i) paid in cash or required to have been paid in cash and
(ii) treated as interest in accordance with GAAP, (b) all interest paid or payable with respect to
discontinued operations and (c) the portion of rent expense under Capitalized Leases that is
treated as interest in accordance with GAAP, in each case, of or by the Borrower and its
Subsidiaries on a consolidated basis for the most recently completed Measurement Period.
Consolidated Interest Coverage Ratio
means, as of any date of determination, the
ratio of (a) Consolidated EBITDA to (b) Consolidated Interest Charges, in each case, of or by the
Borrower and its Subsidiaries on a consolidated basis for the most recently completed Measurement
Period.
Consolidated Leverage Ratio
means, as of any date of determination, the ratio of (a)
Consolidated Funded Indebtedness as of such date to (b) Consolidated EBITDA of the Borrower and its
Subsidiaries on a consolidated basis for the most recently completed Measurement Period.
Consolidated Net Income
means, at any date of determination, the net income (or
loss) of the Borrower and its Subsidiaries on a consolidated basis for the most recently completed
Measurement Period;
provided
that Consolidated Net Income shall exclude (a) extraordinary
gains and extraordinary losses for such Measurement Period, (b) the net income of any Subsidiary
during such Measurement Period to the extent that the declaration or payment of dividends or
similar distributions by such Subsidiary of such income is not permitted by operation of the terms
of its Organization Documents or any agreement, instrument or Law applicable to such Subsidiary
during such Measurement Period, except that the Borrowers equity in any net loss of any such
Subsidiary for such Measurement Period shall be included in determining Consolidated Net Income,
and (c) any income (or loss) for such Measurement Period of any Person if such Person is not a
Subsidiary, except that the Borrowers equity in the net income of any such Person for such
Measurement Period shall be included in Consolidated Net Income up to the aggregate amount of cash
actually distributed by such Person during such Measurement Period to the Borrower or a Subsidiary
as a dividend or other distribution (and in the case of a dividend or other distribution to a
Subsidiary, such Subsidiary is not precluded from further distributing such amount to the Borrower
as described in clause (b) of this proviso).
Contractual Obligation
means, as to any Person, any provision of any security issued
by such Person or of any agreement, instrument or other undertaking to which such Person is a party
or by which it or any of its property is bound.
Contributed Assets
means the assets contributed or otherwise transferred by the
applicable Contributing Affiliate to any Loan Party, whether prior to or after the Closing Date,
including without limitation the assets contributed by certain Contributing Affiliates to the Loan
Parties on or prior to the Closing Date as described in the Registration Statement.
-8-
Contributing Affiliates
means Tesoro, TRMC, Tesoro Alaska and any other Affiliate of
Tesoro that contributes or otherwise transfers assets to any Loan Party, whether prior to or after
the Closing Date.
Contribution Agreement
means the Contribution, Conveyance and Assumption Agreement,
dated as of April 26, 2011 among the Borrower, the General Partner, OpCo, Tesoro, Tesoro Alaska,
TRMC and Tesoro High Plains.
Control
means the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through the ability to
exercise voting power, by contract or otherwise.
Controlling
and
Controlled
have meanings correlative thereto.
Credit Extension
means each of the following: (a) a Revolving Credit Borrowing and
(b) an L/C Credit Extension.
Crude Oil
means the unrefined mixture of liquid hydrocarbons, of any grade or
specific gravity, commonly known as petroleum or oil.
Debtor Relief Laws
means the Bankruptcy Code of the United States, and all other
liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium,
rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the
United States or other applicable jurisdictions from time to time in effect and affecting the
rights of creditors generally.
Default
means any event or condition that constitutes an Event of Default or that,
with the giving of any notice, the passage of time, or both, would, unless cured or waived during
any applicable grace or cure period, be an Event of Default.
Default Rate
means (a) when used with respect to Obligations other than Letter of
Credit Fees, an interest rate equal to (i) the Base Rate
plus
(ii) the Applicable Rate, if
any, applicable to Base Rate Loans
plus
(iii) 2% per annum;
provided
,
however
, that with respect to a Eurodollar Rate Loan, the Default Rate shall be an interest
rate equal to the interest rate (including any Applicable Rate) otherwise applicable to such Loan
plus
2% per annum and (b) when used with respect to Letter of Credit Fees, a rate equal to
the Applicable Rate
plus
2% per annum.
Defaulting Lender
means, subject to
Section 2.15(b)
, any Lender that, as
determined by the Administrative Agent, (a) has failed to perform any of its funding obligations
hereunder, including in respect of its Loans or participations in respect of Letters of Credit,
within three Business Days of the date required to be funded by it hereunder unless such Lender
notifies the Administrative Agent and the Borrower in writing that such failure is the result of
such Lenders good faith determination that one or more conditions precedent to funding (each of
which conditions precedent, together with any applicable Default, shall be specifically identified
in such writing) has not been satisfied, (b) has notified the Borrower, or the Administrative Agent
or any Lender in writing that it does not intend to comply with its funding obligations or has made
a public statement to that effect with respect to its funding obligations hereunder or generally
under other agreements in which it commits to extend credit, (c) has failed, within
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three Business Days after written request by the Administrative Agent, to confirm in writing
to the Administrative Agent that it will comply with its funding obligations, or (d) has, or has a
direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor
Relief Law, (ii) had a receiver, conservator, trustee, administrator, assignee for the benefit of
creditors or similar Person charged with reorganization or liquidation of its business or a
custodian appointed for it, or (iii) taken any action in furtherance of, or indicated its consent
to, approval of or acquiescence in any such proceeding or appointment;
provided
that a
Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any
equity interest in that Lender or any direct or indirect parent company thereof by a Governmental
Authority.
Disclosed Litigation
has the meaning set forth in
Section 5.06
.
Disposition
or
Dispose
means the sale, transfer, license, lease or other
disposition (including any sale and leaseback transaction) of any property by any Person (or the
granting of any option or other right to do any of the foregoing), including any sale, assignment,
transfer or other disposal, with or without recourse, of any notes or accounts receivable or any
rights and claims associated therewith.
Distribution Payments
means any cash distribution or dividend by the Borrower on, or
in respect of any retirement, purchase, redemption, or other acquisition of, any Equity Interests.
Dollar
and
$
mean lawful money of the United States.
Domestic Subsidiary
means any Subsidiary that is organized under the laws of any
political subdivision of the United States.
Eligible Assignee
means any Person that meets the requirements to be an assignee
under
Section 10.06(b)(iii)
and
(v)
(subject to such consents, if any, as may be
required under
Section 10.06(b)(iii)
).
Energy Policy Act
means the Energy Policy Act of 1992, Pub. L. No. 102-486, 106
Stat. 2776 (codified as amended in scattered sections of 15, 16, 25, 20, 42 U.S.C.).
Environmental Laws
means any and all Federal, state, local, and foreign statutes,
laws, regulations, ordinances, rules, judgments, orders, decrees, permits, or governmental
restrictions relating to pollution and the protection of the environment or the release of any
materials into the environment, including those related to hazardous substances or wastes, air
emissions and discharges to waste or public systems.
Environmental Liability
means any liability, contingent or otherwise (including any
liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the
Borrower, any other Loan Party, any of their respective Subsidiaries or any Contributing Affiliate
directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the
generation, use, handling, transportation, storage, treatment or disposal of any Hazardous
Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any
Hazardous Materials into the environment or (e) any contract, agreement or other consensual
arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
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Environmental Permit
means any permit, approval, identification number, license or
other authorization required under any Environmental Law.
Equity Interests
means, with respect to any Person, all of the shares of capital
stock of (or other ownership or profit interests in) such Person, all of the warrants, options or
other rights for the purchase or acquisition from such Person of shares of capital stock of (or
other ownership or profit interests in) such Person, all of the securities convertible into or
exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person
or warrants, rights or options for the purchase or acquisition from such Person of such shares (or
such other interests), and all of the other ownership or profit interests in such Person (including
partnership, member or trust interests therein), whether voting or nonvoting, and whether or not
such shares, warrants, options, rights or other interests are outstanding on any date of
determination (
provided
, however, that debt securities that are or by their terms may be
convertible or exchangeable into or for Equity Interests shall not constitute Equity Interests
prior to conversion or exchange thereof).
ERISA
means the Employee Retirement Income Security Act of 1974.
ERISA Affiliate
means any trade or business (whether or not incorporated) under
common control with the Borrower within the meaning of Sections 414(b) or (c) of the Code (and
Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the
Code).
ERISA Event
means (a) a Reportable Event with respect to a Pension Plan; (b) the
withdrawal of the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of
ERISA during a plan year in which such entity was a substantial employer as defined in Section
4001(a)(2) of ERISA or a cessation of operations that is treated as such a withdrawal under Section
4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from
a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing
of a notice of intent to terminate, the treatment of a Pension Plan amendment as a termination
under Section 4041 or 4041A of ERISA; (e) the institution by the PBGC of proceedings to terminate a
Pension Plan; (f) any event or condition which constitutes grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any Pension Plan; (g) the
determination that any Pension Plan is considered an at-risk plan or a plan in endangered or
critical status within the meaning of Sections 430, 431 and 432 of the Code or Sections 303, 304
and 305 of ERISA; or (h) the imposition of any liability under Title IV of ERISA, other than for
PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA
Affiliate.
Eurodollar Rate
means:
(a) for any Interest Period with respect to a Eurodollar Rate Loan, the rate per annum
equal to (i) the British Bankers Association LIBOR Rate (
BBA LIBOR
), as published by
Reuters (or such other commercially available source providing quotations of BBA LIBOR as may be
designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time,
two London Banking Days prior to the commencement of such Interest Period, for Dollar deposits (for
delivery on the first day of such Interest Period) with a term equivalent to
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such Interest Period or, (ii) if such rate is not available at such time for any reason, the
rate per annum determined by the Administrative Agent to be the rate at which deposits in Dollars
for delivery on the first day of such Interest Period in same day funds in the approximate amount
of the Eurodollar Rate Loan being made, continued or converted and with a term equivalent to such
Interest Period would be offered by Bank of Americas London Branch to major banks in the London
interbank eurodollar market at their request at approximately 11:00 a.m. (London time) two London
Banking Days prior to the commencement of such Interest Period; and
(b) for any interest calculation with respect to a Base Rate Loan on any date, the rate
per annum equal to (i) BBA LIBOR, at approximately 11:00 a.m., London time determined two London
Banking Days prior to such date for Dollar deposits being delivered in the London interbank market
for a term of one month commencing that day or (ii) if such published rate is not available at such
time for any reason, the rate per annum determined by the Administrative Agent to be the rate at
which deposits in Dollars for delivery on the date of determination in same day funds in the
approximate amount of the Base Rate Loan being made or maintained and with a term equal to one
month would be offered by Bank of Americas London Branch to major banks in the London interbank
Eurodollar market at their request at the date and time of determination.
Eurodollar Rate Loan
means a Revolving Credit Loan that bears interest at a rate
based on clause (a) of the definition of
Eurodollar Rate
.
Event of Default
has the meaning specified in
Section 8.01
.
Exchange Act
means the Securities Exchange Act of 1934.
Excluded Taxes
means, with respect to the Administrative Agent, any Lender, any L/C
Issuer or any other recipient of any payment to be made by or on account of any obligation of the
Borrower hereunder, (a) taxes imposed on or measured by its overall net income, profits, or capital
(however denominated), and franchise taxes imposed on it (in lieu of or in addition to net income,
profits, or capital taxes), by the jurisdiction (or any political subdivision thereof) under the
Laws of which such recipient is organized or in which its principal office is located or, in the
case of any Lender, in which its applicable Lending Office is located; (b) any branch profits taxes
imposed by the United States or any similar tax imposed by any other jurisdiction in which the
Borrower is located; (c) any backup withholding tax that is required by the Code to be withheld
from amounts payable to a Lender that has failed to comply with clause (A) of
Section
3.01(e)(ii)
; (d) in the case of a Foreign Lender (other than an assignee pursuant to a request
by the Borrower under
Section 10.13
), any United States withholding tax that is required to
be imposed on amounts payable to such Foreign Lender pursuant to the Laws in force at the time such
Foreign Lender becomes a party hereto (or designates a new Lending Office) or is attributable to
such Foreign Lenders failure or inability (other than as a result of a Change in Law) to comply
with clause (B) of
Section 3.01(e)(ii)
, except to the extent that such Foreign Lender (or
its assignor, if any) was entitled, at the time of designation of a new Lending Office (or
assignment), to receive additional amounts from the Borrower with respect to such withholding tax
pursuant to
Section 3.01(a)(ii)
; (e) any United States Federal taxes imposed pursuant to
FATCA; and (f) interest and penalties with respect to taxes referred to in clauses (a) through (e)
of this definition.
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FASB ASC
means the Accounting Standards Codification of the Financial Accounting
Standards Board.
FATCA
means Sections 1471 through 1474 of the Code and United States Treasury
Regulations or other published guidance with respect thereto.
Federal Funds Rate
means, for any day, the rate per annum equal to the weighted
average of the rates on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of
New York on the Business Day next succeeding such day;
provided
that (a) if such day is not
a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such
rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day
shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%)
charged to Bank of America on such day on such transactions as determined by the Administrative
Agent.
Fee Letter
means the letter agreement, dated February 9, 2011 among the Borrower,
the Administrative Agent and the Arranger.
FERC
means the Federal Energy Regulatory Commission or any of its successors.
Financial Officer
means the chief executive officer, chief financial officer,
treasurer or controller of a Loan Party.
Foreign Lender
means any Lender that is organized under the Laws of a jurisdiction
other than that in which the Borrower is resident for tax purposes (including such a Lender when
acting in the capacity of an L/C Issuer). For purposes of this definition, the United States, each
State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.
FRB
means the Board of Governors of the Federal Reserve System of the United States.
Fronting Exposure
means, at any time there is a Defaulting Lender, such Defaulting
Lenders Applicable Percentage of the outstanding L/C Obligations other than L/C Obligations as to
which such Defaulting Lenders participation obligation has been reallocated to other Lenders or
Cash Collateralized in accordance with the terms hereof.
Fund
means any Person (other than a natural person) that is (or will be) engaged in
making, purchasing, holding or otherwise investing in commercial loans and similar extensions of
credit in the ordinary course of its activities.
GAAP
means generally accepted accounting principles in the United States set forth
in the opinions and pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial Accounting
Standards Board or such other principles as may be approved by a significant segment of the
accounting profession in the United States, that are applicable to the circumstances as of the date
of determination, consistently applied.
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General Partner
means Tesoro Logistics GP, LLC, a Delaware limited liability
company.
Governmental Authority
means the government of the United States or any other
nation, or of any political subdivision thereof, whether state or local, and any agency, authority,
instrumentality, regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to
government (including any supra-national bodies such as the European Union or the European Central
Bank).
Guarantee
means, as to any Person, any (a) obligation, contingent or otherwise, of
such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other
obligation payable or performable by another Person (the
primary obligor
) in any manner,
whether directly or indirectly, and including any obligation of such Person, direct or indirect,
(i) to purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for
the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the
payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital,
equity capital or any other financial statement condition or liquidity or level of income or cash
flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other
obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in
respect of such Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or (b) Lien on any
assets of such Person securing any Indebtedness or other obligation of any other Person, whether or
not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or
otherwise, of any holder of such Indebtedness to obtain any such Lien). The amount of any
Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related
primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect thereof as
determined by the guaranteeing Person in good faith. The term
Guarantee
as a verb has a
corresponding meaning.
Hazardous Materials
means all substances, wastes or other pollutants identified as
hazardous or toxic pursuant to any Environmental Law, including petroleum or petroleum distillates,
asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or
medical wastes.
Hedge Bank
means any Person that, at the time it enters into an interest rate Swap
Contract that such Person reasonably believes is permitted under
Article VII
, is a Lender
or an Affiliate of a Lender, in its capacity as a party to such Swap Contract.
High Plains Trunkline
means (a) the Crude Oil pipelines located in North Dakota and
Montana owned by the Borrower or any of its Subsidiaries to the extent such pipelines are accounted
for, or if such pipelines were subject to the requirements of the Uniform System of Accounts, would
be accounted for, under account numbers 151-166, Trunk Lines, under the General Instructions for
Carrier Property Accounts of such Uniform System of Accounts, which
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are set forth on
Exhibit E
hereto and (b) all gathering receipt, relay and pump
stations connected or relating to such pipelines.
Indebtedness
means, as to any Person at a particular time, without duplication, all
of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:
(a) all obligations of such Person for borrowed money and all obligations of such Person
evidenced by bonds, debentures, notes, loan agreements or other similar instruments;
(b) the maximum amount of all direct or contingent obligations of such Person arising
under letters of credit (including standby and commercial), bankers acceptances, bank guaranties,
surety bonds and similar instruments;
(c) net obligations of such Person under any Swap Contract;
(d) all obligations of such Person to pay the deferred purchase price of property or
services (other than trade accounts payable in the ordinary course of business that are (i) not
unpaid for more than 90 days after the date on which such trade account payable was created or (ii)
being contested in good faith by appropriate proceedings diligently conducted and adequate reserves
in accordance with GAAP are being maintained by the applicable Person);
(e) indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned
or being purchased by such Person (including indebtedness arising under conditional sales or other
title retention agreements), whether or not such indebtedness shall have been assumed by such
Person or is limited in recourse;
(f) all Attributable Indebtedness in respect of Capitalized Leases and Synthetic Lease
Obligations of such Person and all Synthetic Debt of such Person;
(g) all obligations of such Person to purchase, redeem, retire, defease or otherwise make
any payment in respect of any Equity Interest in such Person or any other Person or any warrant,
right or option to acquire such Equity Interest, valued, in the case of a redeemable preferred
interest, at the greater of its voluntary or involuntary liquidation preference
plus
accrued and unpaid dividends; and
(h) all Guarantees of such Person in respect of any of the foregoing.
For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any
partnership or joint venture (other than a joint venture that is itself a corporation or limited
liability company) in which such Person is a general partner or a joint venturer, unless such
Indebtedness is expressly made non-recourse to such Person. The amount of any net obligation under
any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such
date.
Indemnified Taxes
means Taxes other than Excluded Taxes.
Indemnitees
has the meaning specified in
Section 10.04(b)
.
-15-
Information
has the meaning specified in
Section 10.07
.
Initial Terminals
means the ten Refined Products terminals and/or storage facilities
owned by the Borrower or any of its Subsidiaries as of the Closing Date that are used to provide
distribution primarily for Refined Products produced at refineries owned by Tesoro and its
Subsidiaries located in (i) Los Angeles, California; (ii) Stockton, California; (iii) Salt Lake
City, Utah; (iv) Anchorage, Alaska; (v) Vancouver, Washington; (vi) Mandan, North Dakota; (vii)
Boise, Idaho; and (viii) Burley, Idaho.
Interest Payment Date
means, (a) as to any Eurodollar Rate Loan, the last day of
each Interest Period applicable to such Loan and the Maturity Date;
provided
,
however
, that if any Interest Period for a Eurodollar Rate Loan exceeds three months, the
respective dates that fall every three months after the beginning of such Interest Period shall
also be Interest Payment Dates; and (b) as to any Base Rate Loan, the last Business Day of each
March, June, September and December and the Maturity Date.
Interest Period
means, as to each Eurodollar Rate Loan, the period commencing on the
date such Eurodollar Rate Loan is disbursed or converted to or continued as a Eurodollar Rate Loan
and ending on the date one, two, three or six months thereafter, as selected by the Borrower in its
Revolving Credit Loan Notice;
provided
that:
(a) any Interest Period that would otherwise end on a day that is not a Business Day shall
be extended to the next succeeding Business Day unless such Business Day falls in another calendar
month, in which case such Interest Period shall end on the next preceding Business Day;
(b) any Interest Period that begins on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of the calendar month at the end of such
Interest Period; and
(c) no Interest Period shall extend beyond the Maturity Date.
Interstate Commerce Act
means the body of law commonly known as the Interstate
Commerce Act (codified at 49 U.S.C. App. §§ 1 et seq. (1988)).
Investment
means, as to any Person, any direct or indirect acquisition or investment
by such Person, whether by means of (a) the purchase or other acquisition of Equity Interests of
another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of debt of,
or purchase or other acquisition of any other debt or interest in, another Person, or (c) an
Acquisition. For purposes of covenant compliance, the amount of any Investment shall be the amount
actually invested, without adjustment for subsequent increases or decreases in the value of such
Investment.
IP Security Agreement Supplements
means any Patent Security Agreement Supplement,
Trademark Security Agreement Supplement and Copyright Security Agreement Supplement (as such terms
are defined in the Security Agreement) executed by any Loan Party.
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IRS
means the United States Internal Revenue Service.
ISP
means, with respect to any Letter of Credit, the
International Standby
Practices 1998
published by the Institute of International Banking Law & Practice, Inc. (or
such later version thereof as may be in effect at the time of issuance).
Issuer Documents
means with respect to any Letter of Credit, the Letter of Credit
Application, and any other document, agreement and instrument entered into by an L/C Issuer and the
Borrower (or any Subsidiary) or in favor of such L/C Issuer and relating to such Letter of Credit.
Laws
means, collectively, all international, foreign, Federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or
judicial precedents or authorities, including the interpretation or administration thereof by any
Governmental Authority charged with the enforcement, interpretation or administration thereof, and
all applicable administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Authority, in each case whether or not having the
force of law.
L/C Advance
means, with respect to each Lender, such Lenders funding of its
participation in any L/C Borrowing in accordance with its Applicable Percentage.
L/C Borrowing
means an extension of credit resulting from a drawing under any Letter
of Credit which has not been reimbursed on the date when made or refinanced as a Revolving Credit
Borrowing.
L/C Credit Extension
means, with respect to any Letter of Credit, the issuance
thereof or extension of the expiry date thereof, or the increase of the amount thereof.
L/C Issuer
means each of Bank of America in its capacity as issuer of Letters of
Credit hereunder and any other Lenders selected by the Borrower that agree to become an L/C Issuer
hereunder, or any successor issuer or issuers of Letters of Credit hereunder.
L/C Obligations
means, as at any date of determination, the aggregate amount
available to be drawn under all outstanding Letters of Credit
plus
the aggregate of all
Unreimbursed Amounts, including all L/C Borrowings. For purposes of computing the amount available
to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in
accordance with
Section 1.06
. For all purposes of this Agreement, if on any date of
determination a Letter of Credit has expired by its terms but any amount may still be drawn
thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be
deemed to be
outstanding
in the amount so remaining available to be drawn.
Lender
has the meaning specified in the introductory paragraph hereto.
Lending Office
means, as to any Lender, the office or offices of such Lender
described as such in such Lenders Administrative Questionnaire, or such other office or offices as
a Lender may from time to time notify the Borrower and the Administrative Agent.
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Letter of Credit
means any standby letter of credit issued hereunder.
Letter of Credit Application
means an application and agreement for the issuance or
amendment of a Letter of Credit in the form from time to time in use by the applicable L/C Issuer.
Letter of Credit Expiration Date
means the day that is seven days prior to the
Maturity Date then in effect (or, if such day is not a Business Day, the next preceding Business
Day).
Letter of Credit Fee
has the meaning specified in
Section 2.03(h)
.
Letter of Credit Sublimit
means an amount equal to the Aggregate Commitments. The
Letter of Credit Sublimit is part of, and not in addition to, the Aggregate Commitments.
Lien
means any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), charge, or preference, priority or other security interest
or preferential arrangement in the nature of a security interest of any kind or nature whatsoever
(including any conditional sale or other title retention agreement, any easement, right of way or
other encumbrance on title to real property, and any financing lease having substantially the same
economic effect as any of the foregoing).
Loan
means an extension of credit by a Lender to the Borrower under
Article
II
in the form of a Revolving Credit Loan.
Loan Documents
means, collectively, (a) this Agreement, (b) the Notes, (c) the
Subsidiary Guaranty, (d) the Collateral Documents, (e) the Fee Letter, (f) each Issuer Document,
(g) any arrangements entered into by an L/C Issuer and the Borrower pursuant to
Section
2.03(a)(iii)
, (h) any agreement creating or perfecting rights in Cash Collateral pursuant to
the provisions of
Section 2.14
of this Agreement, (i) the Post Closing Agreement, (j) each
Secured Hedge Agreement and (k) each Secured Cash Management Agreement; provided that for purposes
of the definition of Material Adverse Effect and
Articles IV
through
X
(other
than
Section 8.03
,
Section 10.04
, and
Section 10.16
), Loan Documents
shall not include Secured Hedge Agreements or Secured Cash Management Agreements.
Loan Parties
means, collectively, the Borrower and each Subsidiary Guarantor.
London Banking Day
means any day on which dealings in Dollar deposits are conducted
by and between banks in the London interbank eurodollar market.
Master Terminalling Services Agreement
means that certain Master Terminalling
Services Agreement dated as of April 26, 2011, between TRMC, Tesoro Alaska, and Opco.
Material Adverse Effect
means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, liabilities (actual or contingent), or
financial condition of the Borrower and its Subsidiaries taken as a whole; (b) a material
impairment of the rights and remedies of the Administrative Agent or any Lender under any Loan
Document, or of the ability of any Loan Party to perform its obligations under any Loan Document to
which it is a
-18-
party; or (c) a material adverse effect upon the legality, validity, binding effect or
enforceability against any Loan Party of any Loan Document to which it is a party.
Material Contract
means (a) the Operational Services Agreement, the Omnibus
Agreement, the Pipeline Transportation Services Agreements, the Trucking Transportation Services
Agreement, the Master Terminalling Services Agreement, the Storage and Transportation Services
Agreement, the Short Haul Pipeline Agreement, and any similar type of agreement relating to any
future Contributed Assets, (b) any other agreement or instrument entered into on or after the date
of this Agreement to which any Loan Party is a party and which otherwise constitutes a material
agreement or material instrument relating to the acquisition of, or establishment of, material
assets (which assets would constitute 10% or more of the consolidated assets of the Loan Parties
after giving effect to such acquisition or establishment) or material operations (which operations
would constitute 10% or more of the anticipated revenues of the Loan Parties after giving effect to
such acquisition or establishment) by any Loan Party, and (c) any other material documents,
agreements or instruments related to any of the foregoing (i) to which any Loan Party is a party,
and (ii) which, if terminated or cancelled, could reasonably be expected to have a Material Adverse
Effect.
Material Pipeline Systems
means, collectively, (a) the High Plains Trunkline, (b)
the Utah Pipelines, and (c) any other pipelines owned by any Loan Party that are used in the
Business and that (i) are subject to any Material Contract or (ii) are accounted for, or if such
pipelines were subject to the requirements of the Uniform System of Accounts, would be accounted
for, under account numbers 151-166, Trunk Lines, under the General Instructions for Carrier
Property Accounts of such Uniform System of Accounts, which are set forth on
Exhibit E
hereto, and, in each case, all gathering receipt, relay and pump stations connected or relating to
such pipelines.
Material Real Property
means, as of any applicable date of determination, (a) the
real property owned or leased by the Borrower or any of its Subsidiaries, or in which the Borrower
or any of its Subsidiaries has an easement or other real property interest on which any Terminal or
Material Pipeline System is located; (b) any other contiguous parcels of real property owned or
leased by the Borrower or any of its Subsidiaries, or in which the Borrower or any of its
Subsidiaries has an easement or other real property interest in, that collectively have a fair
market value of $2,500,000 or more; and (c) if the aggregate fair market value of the real property
Collateral at any time is less than 80% of the aggregate fair market value of all of the real
property owned or leased by the Borrower and its Subsidiaries, then such other real property owned
or leased by the Borrower or any of its Subsidiaries as would, after giving effect to a Mortgage
thereon and such real propertys becoming Collateral, cause the aggregate fair market value of the
real property Collateral to be at least 80% of the aggregate fair market value of all of the real
property owned or leased by the Borrower and its Subsidiaries. As used herein, real property
includes, without limitation, all rights of way, servitudes, easements and other real property
interests of the Borrower or any Subsidiary.
Materials
has the meaning specified in
Section 6.02
.
Maturity Date
means April 25, 2014;
provided
,
however
, that if such
date is not a Business Day, the Maturity Date shall be the next preceding Business Day.
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Measurement Period
means, at any date of determination, the most recently completed
four fiscal quarters of the Borrower or, if fewer than four consecutive fiscal quarters of the
Borrower have been completed since the Closing Date, the fiscal quarters of the Borrower that have
been completed since the Closing Date;
provided
that: (a) for purposes of determining the
amount of Consolidated EBITDA to be included in the calculation of the Consolidated Leverage Ratio
for the fiscal quarter ended June 30, 2011, such amount for the Measurement Period then ended shall
equal Consolidated EBITDA for such fiscal quarter
multiplied
by four; (b) for purposes of
determining the amount of Consolidated EBITDA to be included in the calculation of the Consolidated
Leverage Ratio for the fiscal quarter ended September 30, 2011, such amount for the Measurement
Period then ended shall equal Consolidated EBITDA for the two fiscal quarters then ended
multiplied
by two; and (c) for purposes of determining the amount of Consolidated EBITDA to
be included in the calculation of the Consolidated Leverage Ratio for the fiscal quarter ended
December 31, 2011, such amount for the Measurement Period then ended shall equal Consolidated
EBITDA for the three fiscal quarters then ended
multiplied
by 4/3.
Moodys
means Moodys Investors Service, Inc. and any successor thereto.
Mortgage
has the meaning specified in
Section 4.01(a)(iv)
.
Mortgage Policy
has the meaning specified in
Section 4.01(a)(iv)(B)
.
Multiemployer Plan
means any employee benefit plan of the type described in Section
4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to make
contributions, or during the preceding five plan years, has made or been obligated to make
contributions.
Multiple Employer Plan
means a Plan which has two or more contributing sponsors
(including the Borrower or any ERISA Affiliate) at least two of whom are not under common control,
as such a plan is described in Section 4064 of ERISA.
NDPSC
has the meaning specified in
Section 5.22(b)
.
North Dakota Intrastate Pipeline Services
has the meaning specified in
Section
5.22(b)
.
Note
means a promissory note made by the Borrower in favor of a Lender evidencing
Revolving Credit Loans made by such Lender, substantially in the form of
Exhibit B
.
NPL
means the National Priorities List under CERCLA.
Obligations
means all advances to, and debts, liabilities, obligations, covenants
and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any
Loan, Letter of Credit, Secured Cash Management Agreement or Secured Hedge Agreement, in each case
whether direct or indirect (including those acquired by assumption), absolute or contingent, due or
to become due, now existing or hereafter arising and including interest and fees that accrue after
the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any
Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such
interest and fees are allowed claims in such proceeding.
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Omnibus Agreement
means that certain Omnibus Agreement dated as of April 26, 2011,
between Tesoro (on behalf of itself and certain of its Affiliates), TRMC, Tesoro Companies, Tesoro
Alaska, the Borrower, and the General Partner.
Opco
means Tesoro Logistics Operations LLC, a Delaware limited liability company.
Operational Services Agreement
means that certain Operational Services Agreement
dated as of April 26, 2011, by and among Tesoro Companies, TRMC, Tesoro Alaska, Opco, and Tesoro
High Plains.
Organization Documents
means, (a) with respect to any corporation, the certificate
or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents
with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the
certificate or articles of formation or organization and operating agreement; and (c) with respect
to any partnership, joint venture, trust or other form of business entity, the partnership, joint
venture or other applicable agreement of formation or organization and any agreement, instrument,
filing or notice with respect thereto filed in connection with its formation or organization with
the applicable Governmental Authority in the jurisdiction of its formation or organization and, if
applicable, any certificate or articles of formation or organization of such entity.
Other Taxes
means all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies arising from any payment made hereunder or
under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with
respect to, this Agreement or any other Loan Document.
Outstanding Amount
means (a) with respect to Revolving Credit Loans on any date, the
aggregate outstanding principal amount thereof after giving effect to any borrowings and
prepayments or repayments of Revolving Credit Loans occurring on such date; and (b) with respect to
any L/C Obligations on any date, the amount of such L/C Obligations on such date after giving
effect to any L/C Credit Extension occurring on such date and any other changes in the aggregate
amount of the L/C Obligations as of such date, including as a result of any reimbursements by the
Borrower of Unreimbursed Amounts.
Participant
has the meaning specified in
Section 10.06(d)
.
PBGC
means the Pension Benefit Guaranty Corporation.
Pension Act
means the Pension Protection Act of 2006.
Pension Funding Rules
means the rules of the Code and ERISA regarding minimum
required contributions (including any installment payment thereof) to Pension Plans and set forth
in, with respect to plan years ending prior to the effective date of the Pension Act, Section 412
of the Code and Section 302 of ERISA, each as in effect prior to the Pension Act and, thereafter,
Sections 412, 430, 431, 432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA.
Pension Plan
means any employee pension benefit plan (including a Multiple Employer
Plan or a Multiemployer Plan) that is maintained or is contributed to by the Borrower and any
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ERISA Affiliate and is either covered by Title IV of ERISA or is subject to the minimum
funding standards under Section 412 of the Code.
Permitted Encumbrances
has the meaning specified in the Mortgages.
Person
means any natural person, corporation, limited liability company, trust,
joint venture, association, company, partnership, Governmental Authority or other entity.
Pipeline Systems
means, collectively, (a) the approximately 700 miles of Crude Oil
pipelines located in North Dakota and Montana owned by the Borrower or any of its Subsidiaries
(including without limitation the High Plains Trunkline), (b) the Utah Pipelines, and (c) any other
gathering systems or pipelines owned by any Loan Party that are used in the Business, including in
each case any gathering receipt, relay, and pump stations connected or relating to any of the
foregoing.
Pipeline Transportation Services Agreements
means (a) that certain Transportation
Services Agreement (High Plains Pipeline System) dated as of April 26, 2011, between Tesoro High
Plains and TRMC; and (b) that certain Transportation Services Agreement (SLC Short Haul Pipelines)
dated as of April 26, 2011, between Opco and TRMC.
Plan
means any employee benefit plan within the meaning of Section 3(3) of ERISA
(including a Pension Plan), maintained for employees of the Borrower or any ERISA Affiliate or any
such Plan to which the Borrower or any ERISA Affiliate is required to contribute on behalf of any
of its employees.
Platform
has the meaning specified in
Section 6.02
.
Pledged Equity
has the meaning specified in
Section 1.3
of the Security
Agreement.
Post Closing Agreement
means the Post Closing Agreement dated as of the date hereof
among the Borrower, the other Loan Parties and the Administrative Agent.
Public Lender
has the meaning specified in
Section 6.02
.
Refined Products
means gasoline, diesel fuel, jet fuel, liquid petroleum gases,
asphalt and asphalt products, and other refined petroleum products.
Register
has the meaning specified in
Section 10.06(c)
.
Registration Statement
means that certain Form S-1 Registration Statement dated
January 4, 2011, as amended from time to time through April 13, 2011, in each case, filed with the
United States Securities and Exchange Commission with respect to the Common Units.
Related Parties
means, with respect to any Person, such Persons Affiliates and the
partners, directors, officers, employees, agents, trustees and advisors of such Person and of such
Persons Affiliates.
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Reportable Event
means any of the events set forth in Section 4043(c) of ERISA,
other than events for which the 30 day notice period has been waived.
Request for Credit Extension
means (a) with respect to a Revolving Credit Borrowing,
conversion or continuation of Revolving Credit Loans, a Revolving Credit Loan Notice and (b) with
respect to an L/C Credit Extension, a Letter of Credit Application.
Required Lenders
means, as of any date of determination, Lenders holding more than
50% of the sum of the (a) Total Outstandings (with the aggregate amount of each Lenders risk
participation and funded participation in L/C Obligations being deemed
held
by such
Lender for purposes of this definition) and (b) aggregate unused Commitments;
provided
that
the unused Commitment of, and the portion of the Total Outstandings held or deemed held by, any
Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.
Responsible Officer
means the chief executive officer, president, chief financial
officer, treasurer, assistant treasurer or controller of a Loan Party or the General Partner acting
on behalf of a Loan Party, and solely for purposes of the delivery of incumbency certificates
pursuant to
Section 4.01
, the secretary or any assistant secretary of a Loan Party or the
General Partner acting on behalf of a Loan Party and, solely for purposes of notices given pursuant
to
Article II
, any other officer or employee of the applicable Loan Party or the General
Partner acting on behalf of such Loan Party so designated by any of the foregoing officers in a
notice to the Administrative Agent. Any document delivered hereunder that is signed by a
Responsible Officer of a Loan Party or the General Partner acting on behalf of a Loan Party shall
be conclusively presumed to have been authorized by all necessary corporate, partnership and/or
other action on the part of such Loan Party and such Responsible Officer shall be conclusively
presumed to have acted on behalf of such Loan Party.
Restricted Payment
means any dividend or other distribution (whether in cash,
securities or other property) with respect to any capital stock or other Equity Interest of any
Person or any of its Subsidiaries, or any payment (whether in cash, securities or other property),
including any sinking fund or similar deposit, on account of the purchase, redemption, retirement,
defeasance, acquisition, cancellation or termination of any such capital stock or other Equity
Interest, or on account of any return of capital to any Persons stockholders, partners or members
(or the equivalent of any thereof), or any option, warrant or other right to acquire any such
dividend or other distribution or payment.
Revolving Credit Borrowing
means a borrowing consisting of simultaneous Revolving
Credit Loans of the same Type and, in the case of Eurodollar Rate Loans, having the same Interest
Period made by each of the Lenders pursuant to
Section 2.01
.
Revolving Credit Loan
has the meaning specified in
Section 2.01
.
Revolving Credit Loan Notice
means a notice of (a) a Revolving Credit Borrowing, (b)
a conversion of Loans from one Type to the other, or (c) a continuation of Eurodollar Rate Loans,
pursuant to
Section 2.02(a)
, which, if in writing, shall be substantially in the form of
Exhibit A
.
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S&P
means Standard & Poors Financial Services LLC, a subsidiary of The McGraw-Hill
Companies, Inc., and any successor thereto.
SEC
means the Securities and Exchange Commission, or any Governmental Authority
succeeding to any of its principal functions.
Secured Cash Management Agreement
means any Cash Management Agreement that is
entered into by and between any Loan Party and any Cash Management Bank.
Secured Hedge Agreement
means any interest rate Swap Contract permitted under
Article VII
that is entered into by and between any Loan Party and any Hedge Bank.
Secured Parties
means, collectively, the Administrative Agent, the Lenders, the L/C
Issuers, the Hedge Banks, the Cash Management Banks, each co-agent or sub-agent appointed by the
Administrative Agent from time to time pursuant to
Section 9.05
, and the other Persons the
Obligations owing to which are or are purported to be secured by the Collateral under the terms of
the Collateral Documents.
Security Agreement
has the meaning specified in
Section 4.01(a)(iii)
.
Security Agreement Supplement
means a Supplement to the Security Agreement in the
form attached as Annex I to the Security Agreement.
Short Haul Pipeline Agreement
means the Transportation Services Agreement (SLC
Short Haul Pipelines) dated as of April 26, 2011, between TRMC and Opco.
Solvent
and
Solvency
mean, with respect to any Person on any date of
determination, that on such date (a) the fair value of the property of such Person is greater than
the total amount of liabilities, including contingent liabilities, of such Person, (b) the present
fair salable value of the assets of such Person is not less than the amount that will be required
to pay the probable liability of such Person on its debts as they become absolute and matured, (c)
such Person does not intend to, and does not believe that it will, incur debts or liabilities
beyond such Persons ability to pay such debts and liabilities as they mature, (d) such Person is
not engaged in business or a transaction, and is not about to engage in business or a transaction,
for which such Persons property would constitute an unreasonably small capital, and (e) such
Person is able to pay its debts and liabilities, contingent obligations and other commitments as
they mature in the ordinary course of business. The amount of contingent liabilities at any time
shall be computed as the amount that, in the light of all the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an actual or matured
liability.
Specified Acquisition
means any Acquisition made by the Borrower or any of its
Subsidiaries in which the Acquisition Consideration therefor exceeds $40,000,000.
Specified Acquisition Period
means, upon Borrowers election pursuant to
Section
6.02(l)
, (a) the fiscal quarter during which the Borrower or any of its Subsidiaries
consummates a Specified Acquisition and (b) the two fiscal quarters immediately following the
fiscal quarter described in clause (a);
provided
, however, that (i) no more than one
Specified Acquisition Period may be in effect at any one time, (ii) no Specified Acquisition Period
may become
-24-
effective if the Borrower fails to timely elect such Specified Acquisition Period pursuant to
the terms of
Section 6.02(l)
and (iii) no more than one Specified Acquisition Period may be
elected with respect to any particular Specified Acquisition.
State Pipeline Regulatory Agencies
means, collectively, the North Dakota Public
Service Commission, the Montana Public Service Commission, the Public Service Commission of Utah,
any similar Governmental Authorities in other jurisdictions, and any successor Governmental
Authorities of any of the foregoing.
Storage and Transportation Services Agreement
means that certain Salt Lake City
Storage and Transportation Services Agreement dated as of April 26, 2011, between TRMC and Opco.
Subsidiary
of a Person means a corporation, partnership, joint venture, limited
liability company or other business entity of which a majority of the shares of securities or other
interests having ordinary voting power for the election of directors or other governing body (other
than securities or interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise controlled, directly,
or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise
specified, all references herein to a
Subsidiary
or to
Subsidiaries
shall refer
to a Subsidiary or Subsidiaries of the Borrower.
Subsidiary Guarantors
means the Subsidiaries of the Borrower listed on
Schedule
6.12
and each other Subsidiary of the Borrower that shall be required to execute and deliver a
guaranty or guaranty supplement pursuant to
Section 6.12
.
Subsidiary Guaranty
means the Guaranty made by the Subsidiary Guarantors in favor of
the Secured Parties, together with each other guaranty and guaranty supplement delivered pursuant
to
Section 6.12
.
Swap Contract
means (a) any and all rate swap transactions, basis swaps, credit
derivative transactions, forward rate transactions, commodity swaps, commodity options, forward
commodity contracts, equity or equity index swaps or options, bond or bond price or bond index
swaps or options or forward bond or forward bond price or forward bond index transactions, interest
rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap transactions, currency options,
spot contracts, or any other similar transactions or any combination of any of the foregoing
(including any options to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions of any kind, and
the related confirmations, which are subject to the terms and conditions of, or governed by, any
form of master agreement published by the International Swaps and Derivatives Association, Inc.,
any International Foreign Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a
Master Agreement
), including any such
obligations or liabilities under any Master Agreement.
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Swap Termination Value
means, in respect of any one or more Swap Contracts, after
taking into account the effect of any legally enforceable netting agreement relating to such Swap
Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and
termination value(s) determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market
value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily
available quotations provided by any recognized dealer in such Swap Contracts (which may include a
Lender or any Affiliate of a Lender).
Synthetic Debt
means, with respect to any Person as of any date of determination
thereof, all obligations of such Person in respect of transactions entered into by such Person that
are intended to function primarily as a borrowing of funds (including any minority interest
transactions that function primarily as a borrowing) but are not otherwise included in the
definition of
Indebtedness
or as a liability on the consolidated balance sheet of such
Person and its Subsidiaries in accordance with GAAP.
Synthetic Lease Obligation
means the monetary obligation of a Person under (a) a
so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or
possession of property (including sale and leaseback transactions), in each case, creating
obligations that do not appear on the balance sheet of such Person but which, upon the application
of any Debtor Relief Laws to such Person, would be characterized as the indebtedness of such Person
(without regard to accounting treatment).
Taxes
means all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges imposed by any
Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
Terminals
means, collectively (a) the Initial Terminals; and (b) any other
terminals, storage facilities, wharfage, tankage and loading racks owned or leased by any Loan
Party that are used in the Business.
Tesoro
means Tesoro Corporation, a Delaware corporation.
Tesoro Alaska
means Tesoro Alaska Company, a Delaware corporation.
Tesoro Companies
means Tesoro Companies, Inc., a Delaware corporation.
Tesoro Consent
means the Consent and Agreement dated as of April 26, 2011 among the
Borrower, Tesoro, Tesoro Companies, Tesoro Alaska, TRMC, the General Partner, Opco, Tesoro High
Plains and the Administrative Agent.
Tesoro High Plains
means Tesoro High Plains Pipeline Company LLC, a Delaware limited
liability company.
Threshold Amount
means $10,000,000.
Total Outstandings
means the aggregate Outstanding Amount of all Loans and all L/C
Obligations.
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Transaction
means, collectively, the contribution of Contributed Assets on or prior
to the Closing Date and the issuance of Common Units as described in the Registration Statement on
the Closing Date.
Transfer Documents
means, collectively, the Contribution Agreement and any other
material documents, agreements and instruments executed by a Loan Party or any Contributing
Affiliate in connection with the transfer of the Contributed Assets to the Loan Parties whether on,
prior to or after the Closing Date.
TRMC
means Tesoro Refining and Marketing Company, a Delaware corporation.
Trucking Transportation Services Agreement
means that certain Trucking and
Transportation Services Agreement dated as of April 26, 2011, between Opco and TRMC.
Type
means, with respect to a Loan, its character as a Base Rate Loan or a
Eurodollar Rate Loan.
UCC
means the Uniform Commercial Code as in effect in the State of New York;
provided
that, if perfection or the effect of perfection or non-perfection or the priority
of any security interest in any Collateral is governed by the Uniform Commercial Code as in effect
in a jurisdiction other than the State of New York,
UCC
means the Uniform Commercial Code
as in effect from time to time in such other jurisdiction for purposes of the provisions hereof
relating to such perfection, effect of perfection or non-perfection or priority.
Uncovered Collateral Loss
means a Collateral Loss to the extent that it is not
offset (on a dollar-for-dollar basis) by independent third-party business interruption insurance as
to which the insurer is rated at least
A
by A.M. Best Company, has been notified of the
potential claim and does not dispute coverage.
Uniform System of Accounts
means, under Part 352 of FERCs regulations, the Uniform
Systems of Accounts Prescribed For Oil Pipeline Companies Subject to the Provisions of the
Interstate Commerce Act.
United States
and
U.S.
mean the United States of America.
Unreimbursed Amount
has the meaning specified in
Section 2.03(c)(i)
.
U.S. Loan Party
means any Loan Party that is organized under the laws of one of the
states of the United States of America and that is not a CFC.
Utah FERC Jurisdictional Requirement
means, with respect to the Utah Pipelines, any
order or other requirement by the FERC, imposed at any time after the Closing Date, that requires
the Borrower or any of its Subsidiaries to take any action with respect to or as a result of a
finding that the Utah Pipelines are subject to FERC jurisdiction, including but not limited to any
requirement for the filing of reports and/or tariffs at the FERC with respect to the Utah
Pipelines, or any other FERC order or requirement that the Borrower or any of its Subsidiaries
comply with the regulations of the FERC with respect to the Utah Pipelines.
-27-
Utah Pipelines
means, collectively, (a) the three short-haul Crude Oil supply
pipelines located in Utah owned by the Borrower or any of its Subsidiaries, and (b) the two
short-haul Refined Product delivery pipelines located in Utah owned by the Borrower or any of its
Subsidiaries.
1.02 Other Interpretive Provisions
. With reference to this Agreement and each other Loan
Document, unless otherwise specified herein or in such other Loan Document:
(a) The definitions of terms herein shall apply equally to the singular and plural forms
of the terms defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words
include
,
includes
and
including
shall be deemed to be followed by the phrase
without limitation
. The word
will
shall be construed to have the same meaning
and effect as the word
shall
. Unless the context requires otherwise, (i) any definition
of or reference to any agreement, instrument or other document (including any Organization
Document) shall be construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any
reference herein to any Person shall be construed to include such Persons successors and assigns,
(iii) the words
herein
,
hereof
and
hereunder
, and words of similar
import when used in any Loan Document, shall be construed to refer to such Loan Document in its
entirety and not to any particular provision thereof, (iv) all references in a Loan Document to
Articles, Sections, Preliminary Statements, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Preliminary Statements, Exhibits and Schedules to, the Loan Document
in which such references appear, (v) any reference to any law shall include all statutory and
regulatory provisions consolidating, amending, replacing or interpreting such law and any reference
to any law or regulation shall, unless otherwise specified, refer to such law or regulation as
amended, modified or supplemented from time to time, and (vi) the words
asset
and
property
shall be construed to have the same meaning and effect and to refer to any and
all tangible and intangible assets and properties, including cash, securities, accounts and
contract rights.
(b) In the computation of periods of time from a specified date to a later specified date,
the word
from
means
from and including
; the words
to
and
until
each mean
to but excluding
; and the word
through
means
to
and including
.
(c) Section headings herein and in the other Loan Documents are included for convenience
of reference only and shall not affect the interpretation of this Agreement or any other Loan
Document.
1.03 Accounting Terms
. (a)
Generally
. All accounting terms not specifically or
completely defined herein shall be construed in conformity with, and all financial data (including
financial ratios and other financial calculations) required to be submitted pursuant to this
Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect
from time to time, applied in a manner consistent with that used in preparing the financial
statements from which the Audited Financial Statements were prepared,
except
as otherwise
specifically prescribed herein. Notwithstanding the foregoing, for purposes of determining
-28-
compliance with any covenant (including the computation of any financial covenant) contained
herein, Indebtedness of the Borrower and its Subsidiaries shall be deemed to be carried at 100% of
the outstanding principal amount thereof, and the effects of FASB ASC 825 and FASB ASC 470-20 on
financial liabilities shall be disregarded.
(b)
Changes in GAAP
. If at any time any change in GAAP would affect the
computation of any financial ratio or requirement set forth in any Loan Document, and either the
Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the
Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original
intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders);
provided
that, until so amended, (i) such ratio or requirement shall continue to be
computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide
to the Administrative Agent and the Lenders financial statements and other documents required under
this Agreement or as reasonably requested hereunder setting forth a reconciliation between
calculations of such ratio or requirement made before and after giving effect to such change in
GAAP.
(c)
Consolidation of Variable Interest Entities
. All references herein to
consolidated financial statements of the Borrower and its Subsidiaries or to the determination of
any amount for the Borrower and its Subsidiaries on a consolidated basis or any similar reference
shall, in each case, be deemed to include each variable interest entity that the Borrower is
required to consolidate pursuant to FASB ASC 810 as if such variable interest entity were a
Subsidiary as defined herein.
1.04 Rounding
. Any financial ratios required to be maintained by the Borrower pursuant to
this Agreement shall be calculated by dividing the appropriate component by the other component,
carrying the result to one place more than the number of places by which such ratio is expressed
herein and rounding the result up or down to the nearest number (with a rounding-up if there is no
nearest number).
1.05 Times of Day
. Unless otherwise specified, all references herein to times of day
shall be references to Central time (daylight or standard, as applicable).
1.06 Letter of Credit Amounts
. Unless otherwise specified herein, the amount of a Letter
of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at
such time;
provided
,
however
, that with respect to any Letter of Credit that, by
its terms or the terms of any Issuer Document related thereto, provides for one or more automatic
increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be
the maximum stated amount of such Letter of Credit after giving effect to all such increases,
whether or not such maximum stated amount is in effect at such time.
1.07 Currency Equivalents Generally
. Any amount specified in this Agreement (other than
in
Articles II
and
IX
) or any of the other Loan Documents to be in Dollars shall
also include the equivalent of such amount in any currency other than Dollars, such equivalent
amount thereof in the applicable currency to be determined by the Administrative Agent at such time
on the basis of the Spot Rate (as defined below) for the purchase of such currency with Dollars.
For purposes of this
Section 1.07
, the
Spot Rate
for a currency means the rate
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determined by the Administrative Agent to be the rate quoted by the Person acting in such
capacity as the spot rate for the purchase by such Person of such currency with another currency
through its principal foreign exchange trading office at approximately 10:00 a.m. on the date two
Business Days prior to the date of such determination;
provided
that the Administrative
Agent may obtain such spot rate from another financial institution designated by the Administrative
Agent if the Person acting in such capacity does not have as of the date of determination a spot
buying rate for any such currency.
ARTICLE II
THE COMMITMENTS AND CREDIT EXTENSIONS
2.01 The Loans
. Subject to the terms and conditions set forth herein, each Lender
severally agrees to make loans (each such loan, a
Revolving Credit Loan
) to the Borrower
from time to time, on any Business Day during the Availability Period, in an aggregate amount not
to exceed at any time outstanding the amount of such Lenders Commitment; provided, however, that
after giving effect to any Revolving Credit Borrowing, (i) the Total Outstandings shall not exceed
the Aggregate Commitments, and (ii) the aggregate Outstanding Amount of the Revolving Credit Loans
of any Lender, plus such Lenders Applicable Percentage of the Outstanding Amount of all L/C
Obligations shall not exceed such Lenders Commitment. Within the limits of each Lenders
Commitment, and subject to the other terms and conditions hereof, the Borrower may borrow under
this
Section 2.01
, prepay under
Section 2.04
, and reborrow under this
Section
2.01
. Revolving Credit Loans may be Base Rate Loans or Eurodollar Rate Loans, as further
provided herein.
2.02 Borrowings, Conversions and Continuations of Loans
. (a) Each Revolving Credit
Borrowing, each conversion of Revolving Credit Loans from one Type to the other, and each
continuation of Eurodollar Rate Loans shall be made upon the Borrowers irrevocable notice to the
Administrative Agent, which may be given by telephone. Each such notice must be received by the
Administrative Agent not later than noon (i) three Business Days prior to the requested date of any
Revolving Credit Borrowing of, conversion to or continuation of Eurodollar Rate Loans or of any
conversion of Eurodollar Rate Loans to Base Rate Loans, and (ii) on the requested date of any
Revolving Credit Borrowing of Base Rate Loans. Each telephonic notice by the Borrower pursuant to
this
Section 2.02(a)
must be confirmed promptly by delivery to the Administrative Agent of
a written Revolving Credit Loan Notice, appropriately completed and signed by a Responsible Officer
of the Borrower. Each Revolving Credit Borrowing of, conversion to or continuation of Eurodollar
Rate Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess
thereof. Except as provided in
Section 2.03(c)
, each Revolving Credit Borrowing of or
conversion to Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of
$100,000 in excess thereof. Each Revolving Credit Loan Notice (whether telephonic or written)
shall specify (i) whether the Borrower is requesting a Revolving Credit Borrowing, a conversion of
Revolving Credit Loans from one Type to the other, or a continuation of Eurodollar Rate Loans, (ii)
the requested date of the Revolving Credit Borrowing, conversion or continuation, as the case may
be (which shall be a Business Day), (iii) the principal amount of Loans to be borrowed, converted
or continued, (iv) the Type of Loans to be borrowed or to which existing Revolving Credit Loans are
to be converted, and (v) if applicable, the duration of the Interest Period with respect thereto.
If the Borrower fails to specify a Type of Loan in a Revolving Credit Loan
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Notice or if the Borrower fails to give a timely notice requesting a conversion or
continuation, then the Revolving Credit Loans shall be made as, or converted to, Base Rate Loans.
Any such automatic conversion to Base Rate Loans shall be effective as of the last day of the
Interest Period then in effect with respect to the applicable Eurodollar Rate Loans. If the
Borrower requests a Revolving Credit Borrowing of, conversion to, or continuation of Eurodollar
Rate Loans in any such Revolving Credit Loan Notice, but fails to specify an Interest Period, it
will be deemed to have specified an Interest Period of one month.
(b) Following receipt of a Revolving Credit Loan Notice, the Administrative Agent shall
promptly notify each Lender of the amount of its Applicable Percentage of the Revolving Credit
Loans, and if no timely notice of a conversion or continuation is provided by the Borrower, the
Administrative Agent shall notify each Lender of the details of any automatic conversion to Base
Rate Loans described in
Section 2.02(a)
. In the case of a Revolving Credit Borrowing, each
Lender shall make the amount of its Loan available to the Administrative Agent in immediately
available funds at the Administrative Agents Office not later than 2:00 p.m. on the Business Day
specified in the applicable Revolving Credit Loan Notice. Upon satisfaction of the applicable
conditions set forth in
Section 4.02
(and, if such Revolving Credit Borrowing is the
initial Credit Extension,
Section 4.01
), the Administrative Agent shall make all funds so
received available to the Borrower in like funds as received by the Administrative Agent either by
(i) crediting the account of the Borrower on the books of Bank of America with the amount of such
funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to
(and reasonably acceptable to) the Administrative Agent by the Borrower;
provided
,
however
, that if, on the date a Revolving Credit Loan Notice with respect to a Revolving
Credit Borrowing is given by the Borrower, there are L/C Borrowings outstanding, then the proceeds
of such Revolving Credit Borrowing,
first
, shall be applied to the payment in full of any
such L/C Borrowings, and
second
, shall be made available to the Borrower as provided above.
(c) Except as otherwise provided herein, a Eurodollar Rate Loan may be continued or
converted only on the last day of an Interest Period for such Eurodollar Rate Loan. During the
existence of a Default, no Loans may be requested as, converted to or continued as Eurodollar Rate
Loans without the consent of the Required Lenders.
(d) The Administrative Agent shall promptly notify the Borrower and the Lenders of the
interest rate applicable to any Interest Period for Eurodollar Rate Loans upon determination of
such interest rate. At any time that Base Rate Loans are outstanding, the Administrative Agent
shall notify the Borrower and the Lenders of any change in Bank of Americas prime rate used in
determining the Base Rate promptly following the public announcement of such change.
(e) After giving effect to all Revolving Credit Borrowings, all conversions of Revolving
Credit Loans from one Type to the other, and all continuations of Revolving Credit Loans as the
same Type, there shall not be more than ten (10) Interest Periods in effect with respect to
Revolving Credit Loans.
2.03 Letters of Credit
. (a)
The Letter of Credit Commitment
. (i) Subject to the
terms and conditions set forth herein, (A) each L/C Issuer severally agrees, in reliance upon the
agreements of the Lenders set forth in this
Section 2.03
, (1) from time to time on any
Business Day during the period from the Closing Date until the Letter of Credit Expiration Date, to
issue
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Letters of Credit for the account of the Borrower or its Subsidiaries, and to amend or extend
Letters of Credit previously issued by it, in accordance with
Section 2.03(b)
, and (2) to
honor drawings under the Letters of Credit issued by it; and (B) the Lenders severally agree to
participate in Letters of Credit issued for the account of the Borrower or its Subsidiaries and any
drawings thereunder;
provided
that after giving effect to any L/C Credit Extension with
respect to any Letter of Credit, (x) the Total Outstandings shall not exceed the Aggregate
Commitments, (y) the aggregate Outstanding Amount of the Revolving Credit Loans of any Lender,
plus
such Lenders Applicable Percentage of the Outstanding Amount of all L/C Obligations
shall not exceed such Lenders Commitment, and (z) the Outstanding Amount of the L/C Obligations
shall not exceed the Letter of Credit Sublimit. Each request by the Borrower for the issuance or
amendment of a Letter of Credit shall be deemed to be a representation by the Borrower that the L/C
Credit Extension so requested complies with the conditions set forth in the proviso to the
preceding sentence. Within the foregoing limits, and subject to the terms and conditions hereof,
the Borrowers ability to obtain Letters of Credit shall be fully revolving, and accordingly the
Borrower may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit
that have expired or that have been drawn upon and reimbursed.
(ii) No L/C Issuer shall issue any Letter of Credit if:
(A) subject to
Section 2.03(b)(iii)
, the expiry date of the
requested Letter of Credit would occur more than twelve months after the date of
issuance or last extension, unless the Required Lenders have approved such expiry
date; or
(B) the expiry date of the requested Letter of Credit would occur after the
Letter of Credit Expiration Date, unless all the Lenders have approved such expiry
date.
(iii) No L/C Issuer shall be under any obligation to issue any Letter of Credit if:
(A) any order, judgment or decree of any Governmental Authority or
arbitrator shall by its terms purport to enjoin or restrain such L/C Issuer from
issuing the Letter of Credit, or any Law applicable to such L/C Issuer or any
request or directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over such L/C Issuer shall prohibit, or request that
such L/C Issuer refrain from, the issuance of letters of credit generally or the
Letter of Credit in particular or shall impose upon such L/C Issuer with respect to
the Letter of Credit any restriction, reserve or capital requirement (for which such
L/C Issuer is not otherwise compensated hereunder) not in effect on the Closing
Date, or shall impose upon such L/C Issuer any unreimbursed loss, cost or expense
which was not applicable on the Closing Date and which such L/C Issuer in good faith
deems material to it;
(B) the issuance of the Letter of Credit would violate one or more policies
of such L/C Issuer applicable to letters of credit generally;
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(C) except as otherwise agreed by the Administrative Agent and such L/C
Issuer, the Letter of Credit is in an initial stated amount less than $100,000;
(D) the Letter of Credit is to be denominated in a currency other than
Dollars;
(E) any Lender is at that time a Defaulting Lender, unless such L/C Issuer
has entered into arrangements, including the delivery of Cash Collateral,
satisfactory to such L/C Issuer (in its sole discretion) with the Borrower or such
Lender to eliminate such L/C Issuers actual or potential Fronting Exposure (after
giving effect to
Section 2.15(a)(iv
)) with respect to the Defaulting Lender
arising from either the Letter of Credit then proposed to be issued or that Letter
of Credit and all other L/C Obligations as to which such L/C Issuer has actual or
potential Fronting Exposure, as it may elect in its sole discretion; or
(F) the Letter of Credit contains any provisions for automatic
reinstatement of the stated amount after any drawing thereunder.
(iv) No L/C Issuer shall amend any Letter of Credit if such L/C Issuer would not be
permitted at such time to issue the Letter of Credit in its amended form under the terms
hereof.
(v) No L/C Issuer shall be under any obligation to amend any Letter of Credit if
(A) such L/C Issuer would have no obligation at such time to issue the Letter of Credit in
its amended form under the terms hereof, or (B) the beneficiary of the Letter of Credit does
not accept the proposed amendment to the Letter of Credit.
(vi) Each L/C Issuer shall act on behalf of the Lenders with respect to any Letters
of Credit issued by it and the documents associated therewith, and each L/C Issuer shall
have all of the benefits and immunities (A) provided to the Administrative Agent in
Article IX
with respect to any acts taken or omissions suffered by such L/C Issuer
in connection with Letters of Credit issued by it or proposed to be issued by it and Issuer
Documents pertaining to such Letters of Credit as fully as if the term
Administrative
Agent
as used in
Article IX
included such L/C Issuer with respect to such acts
or omissions, and (B) as additionally provided herein with respect to the L/C Issuers.
(b)
Procedures for Issuance and Amendment of Letters of Credit; Auto-Extension Letters
of Credit
. (i) Each Letter of Credit shall be issued or amended, as the case may be, upon the
request of the Borrower delivered to the applicable L/C Issuer (with a copy to the Administrative
Agent) in the form of a Letter of Credit Application, appropriately completed and signed by a
Responsible Officer of the Borrower. Such Letter of Credit Application must be received by the
applicable L/C Issuer and the Administrative Agent not later than noon at least two Business Days
(or such later date and time as the Administrative Agent and the applicable L/C Issuer may agree in
a particular instance in their sole discretion) prior to the proposed issuance date or date of
amendment, as the case may be. In the case of a request for an initial issuance of a Letter of
Credit, such Letter of Credit Application shall specify in form and detail
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satisfactory to the
applicable L/C Issuer: (A) the proposed issuance date of the requested Letter of Credit (which
shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof; (D) the name and
address of the beneficiary thereof; (E) the documents to be presented by such
beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be
presented by such beneficiary in case of any drawing thereunder; (G) the purpose and nature of the
requested Letter of Credit; and (H) such other matters as such L/C Issuer may reasonably require.
In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of
Credit Application shall specify in form and detail satisfactory to the applicable L/C Issuer (1)
the Letter of Credit to be amended; (2) the proposed date of amendment thereof (which shall be a
Business Day); (3) the nature of the proposed amendment; and (4) such other matters as such L/C
Issuer may reasonably require. Additionally, the Borrower shall furnish to the applicable L/C
Issuer and the Administrative Agent such other documents and information pertaining to such
requested Letter of Credit issuance or amendment, including any Issuer Documents, as such L/C
Issuer or the Administrative Agent may require.
(ii) Promptly after receipt of any Letter of Credit Application, the applicable L/C
Issuer will confirm with the Administrative Agent (by telephone or in writing) that the
Administrative Agent has received a copy of such Letter of Credit Application from the
Borrower and, if not, such L/C Issuer will provide the Administrative Agent with a copy
thereof. Unless the applicable L/C Issuer has received written notice from any Lender, the
Administrative Agent or any Loan Party, at least one Business Day prior to the requested
date of issuance or amendment of the applicable Letter of Credit, that one or more
applicable conditions contained in
Article IV
shall not then be satisfied, then,
subject to the terms and conditions hereof, such L/C Issuer shall, on the requested date,
issue a Letter of Credit for the account of the Borrower (or the applicable Subsidiary) or
enter into the applicable amendment, as the case may be, in each case in accordance with
such L/C Issuers usual and customary business practices. Immediately upon the issuance of
each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the applicable L/C Issuer a risk participation in
such Letter of Credit in an amount equal to the product of such Lenders Applicable
Percentage
times
the amount of such Letter of Credit.
(iii) If the Borrower so requests in any applicable Letter of Credit Application,
the applicable L/C Issuer may, in its sole and absolute discretion, agree to issue a Letter
of Credit that has automatic extension provisions (each, an
Auto-Extension Letter of
Credit
);
provided
that any such Auto-Extension Letter of Credit must permit
such L/C Issuer to prevent any such extension at least once in each twelve-month period
(commencing with the date of issuance of such Letter of Credit) by giving prior notice to
the beneficiary thereof not later than a day (the
Non-Extension Notice Date
) in
each such twelve-month period to be agreed upon at the time such Letter of Credit is issued.
Unless otherwise directed by the applicable L/C Issuer, the Borrower shall not be required
to make a specific request to such L/C Issuer for any such extension. Once an
Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to have
authorized (but may not require) the applicable L/C Issuer to permit the extension of such
Letter of Credit at any time to an expiry date not later than the Letter of Credit
Expiration Date;
provided
,
however
, that such L/C Issuer shall not permit
any such extension if (A) such L/C Issuer has determined that it would not be permitted, or
would have no
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obligation at such time to issue such Letter of Credit in its revised form (as
extended) under the terms hereof (by reason of the provisions of clause (ii) or (iii) of
Section 2.03(a)
or otherwise), or (B) it has received notice (which may be by
telephone or in
writing) on or before the day that is seven Business Days before the Non-Extension
Notice Date (1) from the Administrative Agent that the Required Lenders have elected not to
permit such extension or (2) from the Administrative Agent, any Lender or the Borrower that
one or more of the applicable conditions specified in
Section 4.02
is not then
satisfied, and in each such case directing such L/C Issuer not to permit such extension.
(iv) Promptly after its delivery of any Letter of Credit or any amendment to a
Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the
applicable L/C Issuer will also deliver to the Borrower and the Administrative Agent a true
and complete copy of such Letter of Credit or amendment.
(c)
Drawings and Reimbursements; Funding of Participations
. (i) Upon receipt from
the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the
applicable L/C Issuer shall notify the Borrower and the Administrative Agent thereof. Not later
than 10:00 a.m. on the date of any payment by the applicable L/C Issuer under a Letter of Credit
(each such date, an
Honor Date
), the Borrower shall reimburse such L/C Issuer through the
Administrative Agent in an amount equal to the amount of such drawing. If the Borrower fails to so
reimburse such L/C Issuer by such time, the Administrative Agent shall promptly notify each Lender
of the Honor Date, the amount of the unreimbursed drawing (the
Unreimbursed Amount
), and
the amount of such Lenders Applicable Percentage thereof. In such event, the Borrower shall be
deemed to have requested a Revolving Credit Borrowing of Base Rate Loans to be disbursed on the
Honor Date in an amount equal to the Unreimbursed Amount, without regard to the minimum and
multiples specified in
Section 2.02
for the principal amount of Base Rate Loans, but
subject to the amount of the unutilized portion of the Commitments and the conditions set forth in
Section 4.02
(other than the delivery of a Revolving Credit Loan Notice). Any notice given
by an L/C Issuer or the Administrative Agent pursuant to this
Section 2.03(c)(i)
may be
given by telephone if immediately confirmed in writing;
provided
that the lack of such an
immediate confirmation shall not affect the conclusiveness or binding effect of such notice.
(ii) Each Lender shall upon any notice pursuant to
Section 2.03(c)(i)
make
funds available (and the Administrative Agent may apply Cash Collateral provided for this
purpose) for the account of the applicable L/C Issuer at the Administrative Agents Office
in an amount equal to its Applicable Percentage of the Unreimbursed Amount not later than
12:00 noon on the Business Day specified in such notice by the Administrative Agent,
whereupon, subject to the provisions of
Section 2.03(c)(iii)
, each Lender that so
makes funds available shall be deemed to have made a Base Rate Loan to the Borrower in such
amount. The Administrative Agent shall remit the funds so received to the applicable L/C
Issuer.
(iii) With respect to any Unreimbursed Amount that is not fully refinanced by a
Revolving Credit Borrowing of Base Rate Loans because the conditions set forth in
Section 4.02
cannot be satisfied or for any other reason, the Borrower shall be
deemed to have incurred from the applicable L/C Issuer an L/C Borrowing in the amount of the
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Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due and payable
on demand (together with interest) and shall bear interest at the Default Rate. In such
event, each Lenders payment to the Administrative Agent for the account of such
L/C Issuer pursuant to
Section 2.03(c)(ii)
shall be deemed payment in respect
of its participation in such L/C Borrowing and shall constitute an L/C Advance from such
Lender in satisfaction of its participation obligation under this
Section 2.03
.
(iv) Until each Lender funds its Revolving Credit Loan or L/C Advance pursuant to
this
Section 2.03(c)
to reimburse the applicable L/C Issuer for any amount drawn
under any Letter of Credit, interest in respect of such Lenders Applicable Percentage of
such amount shall be solely for the account of such L/C Issuer.
(v) Each Lenders obligation to make Revolving Credit Loans or L/C Advances to
reimburse the respective L/C Issuers for amounts drawn under Letters of Credit, as
contemplated by this
Section 2.03(c)
, shall be absolute and unconditional and shall
not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment,
defense or other right which such Lender may have against any L/C Issuer, the Borrower or
any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default,
or (C) any other occurrence, event or condition, whether or not similar to any of the
foregoing;
provided
,
however
, that each Lenders obligation to make
Revolving Credit Loans pursuant to this
Section 2.03(c)
is subject to the conditions
set forth in
Section 4.02
(other than delivery by the Borrower of a Revolving Credit
Loan Notice). No such making of an L/C Advance shall relieve or otherwise impair the
obligation of the Borrower to reimburse the applicable L/C Issuer for the amount of any
payment made by such L/C Issuer under any Letter of Credit issued by it, together with
interest as provided herein.
(vi) If any Lender fails to make available to the Administrative Agent for the
account of the applicable L/C Issuer any amount required to be paid by such Lender pursuant
to the foregoing provisions of this
Section 2.03(c)
by the time specified in
Section 2.03(c)(ii)
, then, without limiting the other provisions of this Agreement,
such L/C Issuer shall be entitled to recover from such Lender (acting through the
Administrative Agent), on demand, such amount with interest thereon for the period from the
date such payment is required to the date on which such payment is immediately available to
such L/C Issuer at a rate per annum equal to the greater of the Federal Funds Rate and a
rate determined by such L/C Issuer in accordance with banking industry rules on interbank
compensation, plus any administrative, processing or similar fees customarily charged by
such L/C Issuer in connection with the foregoing. If such Lender pays such amount (with
interest and fees as aforesaid), the amount so paid shall constitute such Lenders Revolving
Credit Loan included in the relevant Revolving Credit Borrowing or L/C Advance in respect of
the relevant L/C Borrowing, as the case may be. A certificate of the applicable L/C Issuer
submitted to any Lender (through the Administrative Agent) with respect to any amounts owing
under this
Section 2.03(c)(vi)
shall be conclusive absent manifest error.
(d)
Repayment of Participations
. (i) At any time after the applicable L/C Issuer
has made a payment under any Letter of Credit and has received from any Lender such Lenders L/C
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Advance in respect of such payment in accordance with
Section 2.03(c)
, if the
Administrative Agent receives for the account of such L/C Issuer any payment in respect of the
related Unreimbursed Amount or interest thereon (whether directly from the Borrower or otherwise,
including proceeds of Cash Collateral applied thereto by the Administrative Agent), the
Administrative Agent will distribute to such Lender its Applicable Percentage thereof in the same
funds as those received by the Administrative Agent.
(ii) If any payment received by the Administrative Agent for the account of an L/C
Issuer pursuant to
Section 2.03(c)(i)
is required to be returned under any of the
circumstances described in
Section 10.05
(including pursuant to any settlement
entered into by the applicable L/C Issuer in its discretion), each Lender shall pay to the
Administrative Agent for the account of the applicable L/C Issuer its Applicable Percentage
thereof on demand of the Administrative Agent,
plus
interest thereon from the date
of such demand to the date such amount is returned by such Lender, at a rate per annum equal
to the Federal Funds Rate from time to time in effect. The obligations of the Lenders under
this clause shall survive the payment in full of the Obligations and the termination of this
Agreement.
(e)
Obligations Absolute
. The obligation of the Borrower to reimburse the
applicable L/C Issuer for each drawing under each Letter of Credit issued by it and to repay each
L/C Borrowing shall be absolute, unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement under all circumstances, including the following:
(i) any lack of validity or enforceability of such Letter of Credit, this
Agreement, or any other Loan Document;
(ii) the existence of any claim, counterclaim, setoff, defense or other right that
the Borrower or any Subsidiary may have at any time against any beneficiary or any
transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such
transferee may be acting), such L/C Issuer or any other Person, whether in connection with
this Agreement, the transactions contemplated hereby or by such Letter of Credit or any
agreement or instrument relating thereto, or any unrelated transaction;
(iii) any draft, demand, certificate or other document presented under such Letter
of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect; or any loss or delay in the
transmission or otherwise of any document required in order to make a drawing under such
Letter of Credit;
(iv) any payment by such L/C Issuer under such Letter of Credit against
presentation of a draft or certificate that does not strictly comply with the terms of such
Letter of Credit; or any payment made by such L/C Issuer under such Letter of Credit to any
Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the
benefit of creditors, liquidator, receiver or other representative of or successor to any
beneficiary or any transferee of such Letter of Credit, including any arising in connection
with any proceeding under any Debtor Relief Law; or
-37-
(v) any other circumstance or happening whatsoever, whether or not similar to any
of the foregoing, including any other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Borrower or any of its Subsidiaries.
The Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto that
is delivered to it and, in the event of any claim of noncompliance with the Borrowers instructions
or other irregularity, the Borrower will immediately notify the applicable L/C Issuer. The
Borrower shall be conclusively deemed to have waived any such claim against the applicable L/C
Issuer and its correspondents unless such notice is given as aforesaid.
(f)
Role of L/C Issuer
. Each Lender and the Borrower agree that, in paying any
drawing under a Letter of Credit, the applicable L/C Issuer shall not have any responsibility to
obtain any document (other than any sight draft, certificates and documents expressly required by
the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such
document or the authority of the Person executing or delivering any such document. None of any L/C
Issuer, the Administrative Agent, any of their respective Related Parties nor any correspondent,
participant or assignee of an L/C Issuer shall be liable to any Lender for (i) any action taken or
omitted in connection herewith at the request or with the approval of the Lenders or the Required
Lenders, as applicable; (ii) any action taken or omitted in the absence of gross negligence or
willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any
document or instrument related to any Letter of Credit or Issuer Document. The Borrower hereby
assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use
of any Letter of Credit;
provided
,
however
, that this assumption is not intended
to, and shall not, preclude the Borrowers pursuing such rights and remedies as it may have against
the beneficiary or transferee at law or under any other agreement. None of any L/C Issuer, the
Administrative Agent, any of their respective Related Parties nor any correspondent, participant or
assignee of an L/C Issuer shall be liable or responsible for any of the matters described in
clauses (i) through (v) of
Section 2.03(e)
;
provided
,
however
, that
anything in such clauses to the contrary notwithstanding, the Borrower may have a claim against the
applicable L/C Issuer, and such L/C Issuer may be liable to the Borrower, to the extent, but only
to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by the
Borrower which the Borrower proves were caused by such L/C Issuers willful misconduct or gross
negligence or such L/C Issuers willful failure to pay under any Letter of Credit issued by it
after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly
complying with the terms and conditions of a Letter of Credit. In furtherance and not in
limitation of the foregoing, an L/C Issuer may accept documents that appear on their face to be in
order, without responsibility for further investigation, regardless of any notice or information to
the contrary, and the applicable L/C Issuer shall not be responsible for the validity or
sufficiency of any instrument transferring or assigning or purporting to transfer or assign a
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part,
which may prove to be invalid or ineffective for any reason.
(g)
Applicability of ISP
. Unless otherwise expressly agreed by the applicable L/C
Issuer and the Borrower when a Letter of Credit is issued, the rules of the ISP shall apply to each
Letter of Credit.
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(h)
Letter of Credit Fees
. The Borrower shall pay to the Administrative Agent for
the account of each Lender in accordance with its Applicable Percentage a Letter of Credit fee (the
Letter of Credit Fee
) for each Letter of Credit equal to the Applicable Rate
times
the daily amount available to be drawn under such Letter of Credit;
provided
,
however, any Letter of Credit Fees otherwise payable for the account of a Defaulting Lender with
respect to any Letter
of Credit as to which such Defaulting Lender has not provided Cash Collateral satisfactory to
the applicable L/C Issuer pursuant to this
Section 2.03
shall be payable, to the maximum
extent permitted by applicable Law, to the other Lenders in accordance with the upward adjustments
in their respective Applicable Percentages allocable to such Letter of Credit pursuant to
Section 2.15(a)(iv)
, with the balance of such fee, if any, payable to the applicable L/C
Issuer for its own account. For purposes of computing the daily amount available to be drawn under
any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with
Section 1.06
. Letter of Credit Fees shall be (i) due and payable on the first Business Day
after the end of each March, June, September and December, commencing with the first such date to
occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and
thereafter on demand and (ii) computed on a quarterly basis in arrears. If there is any change in
the Applicable Rate during any quarter, the daily amount available to be drawn under each Letter of
Credit shall be computed and multiplied by the Applicable Rate separately for each period during
such quarter that such Applicable Rate was in effect. Notwithstanding anything to the contrary
contained herein, upon the request of the Required Lenders, while any Event of Default exists, all
Letter of Credit Fees shall accrue at the Default Rate.
(i)
Fronting Fee and Documentary and Processing Charges Payable to L/C Issuer
.
The Borrower shall pay directly to the applicable L/C Issuer for its own account a fronting fee
with respect to each Letter of Credit issued by such L/C Issuer, at the rate per annum specified in
the Fee Letter, computed on the daily amount available to be drawn under such Letter of Credit on a
quarterly basis in arrears. Such fronting fee shall be due and payable on the tenth Business Day
after the end of each March, June, September and December in respect of the most recently-ended
quarterly period (or portion thereof, in the case of the first payment), commencing with the first
such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration
Date and thereafter on demand. For purposes of computing the daily amount available to be drawn
under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance
with
Section 1.06
. In addition, the Borrower shall pay directly to the applicable L/C
Issuer for its own account the customary issuance, presentation, amendment and other processing
fees, and other standard costs and charges, of such L/C Issuer relating to letters of credit as
from time to time in effect. Such customary fees and standard costs and charges are due and
payable on demand and are nonrefundable.
(j)
Conflict with Issuer Documents
. In the event of any conflict between the
terms hereof and the terms of any Issuer Document, the terms hereof shall control.
(k)
Letters of Credit Issued for Subsidiaries
. Notwithstanding that a Letter of
Credit issued or outstanding hereunder is in support of any obligations of, or is for the account
of, a Subsidiary, the Borrower shall be obligated to reimburse the applicable L/C Issuer hereunder
for any and all drawings under such Letter of Credit. The Borrower hereby acknowledges that the
issuance of Letters of Credit for the account of Subsidiaries inures to the benefit of the
Borrower,
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and that the Borrowers business derives substantial benefits from the businesses of such
Subsidiaries.
2.04 Prepayments
. (a)
Optional
. The Borrower may, upon notice to the
Administrative Agent, at any time or from time to time voluntarily prepay Revolving Credit Loans in
whole or in part without premium or penalty;
provided
that (A) such notice must be
received by the Administrative Agent not later than noon (1) three Business Days prior to any
date of prepayment of Eurodollar Rate Loans and (2) on the date of prepayment of Base Rate Loans;
(B) any prepayment of Eurodollar Rate Loans shall be in a principal amount of $5,000,000 or a whole
multiple of $1,000,000 in excess thereof; and (C) any prepayment of Base Rate Loans shall be in a
principal amount of $500,000 or a whole multiple of $100,000 in excess thereof or, in each case, if
less, the entire principal amount thereof then outstanding. Each such notice shall specify the
date and amount of such prepayment and the Type(s) of Loans to be prepaid and, if Eurodollar Rate
Loans are to be prepaid, the Interest Period(s) of such Loans. The Administrative Agent will
promptly notify each Lender of its receipt of each such notice, and of the amount of such Lenders
Applicable Percentage of such prepayment. If such notice is given by the Borrower, the Borrower
shall make such prepayment and the payment amount specified in such notice shall be due and payable
on the date specified therein. Any prepayment of a Eurodollar Rate Loan shall be accompanied by
all accrued interest on the amount prepaid, together with any additional amounts required pursuant
to
Section 3.05
. Subject to
Section 2.15
, each such prepayment shall be applied to
the Revolving Credit Loans of the Lenders in accordance with their respective Applicable
Percentages.
(b)
Mandatory
.
(i) If for any reason the Total Outstandings at any time exceed the Aggregate
Commitments at such time, the Borrower shall immediately prepay Revolving Credit Loans and
L/C Borrowings and/or Cash Collateralize the L/C Obligations (other than the L/C Borrowings)
in an aggregate amount equal to such excess.
(ii) The Borrower shall make prepayments as required by
Section 6.07(b)(i)
.
2.05 Termination or Reduction of Commitments
. The Borrower may, upon notice to the
Administrative Agent, terminate the Aggregate Commitments or the Letter of Credit Sublimit, or from
time to time permanently reduce the Aggregate Commitments or the Letter of Credit Sublimit;
provided
that (i) any such notice shall be received by the Administrative Agent not later
than noon five Business Days prior to the date of termination or reduction, (ii) any such partial
reduction shall be in an aggregate amount of $10,000,000 or any whole multiple of $1,000,000 in
excess thereof and (iii) the Borrower shall not terminate or reduce (A) the Aggregate Commitments
if, after giving effect thereto and to any concurrent prepayments hereunder, the Total Outstandings
would exceed the Aggregate Commitments, or (B) the Letter of Credit Sublimit if, after giving
effect thereto, the Outstanding Amount of L/C Obligations not fully Cash Collateralized hereunder
would exceed the Letter of Credit Sublimit. The Administrative Agent will promptly notify the
Lenders of any termination or reduction of the Letter of Credit Sublimit or the Aggregate
Commitments under this
Section 2.05
. Upon any reduction of the Aggregate Commitments, the
Commitment of each Lender shall be reduced by such Lenders Applicable Percentage of such reduction
amount. All fees accrued until the
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effective date of any termination of the Aggregate Commitments
shall be paid on the effective date of such termination.
2.06 Repayment of Revolving Credit Loans
. The Borrower shall repay to the Lenders on the
Maturity Date the aggregate principal amount of all Revolving Credit Loans outstanding on such
date.
2.07 Interest
. (a) Subject to the provisions of
Section 2.07(b)
, (i) each
Eurodollar Rate Loan shall bear interest on the outstanding principal amount thereof for each
Interest Period at a rate per annum equal to the Eurodollar Rate for such Interest Period
plus
the Applicable Rate; and (ii) each Base Rate Loan shall bear interest on the
outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal
to the Base Rate
plus
the Applicable Rate.
(b) (i) If any amount of principal of any Loan is not paid when due (without regard to
any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such
amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal
to the Default Rate to the fullest extent permitted by applicable Laws.
(ii) If any amount (other than principal of any Loan) payable by the Borrower under
any Loan Document is not paid when due (without regard to any applicable grace periods),
whether at stated maturity, by acceleration or otherwise, then upon the request of the
Required Lenders such amount shall thereafter bear interest at a fluctuating interest rate
per annum at all times equal to the Default Rate to the fullest extent permitted by
applicable Laws.
(iii) Upon the request of the Required Lenders, while any Event of Default exists,
the Borrower shall pay interest on the principal amount of all outstanding Obligations
hereunder at a fluctuating interest rate per annum at all times equal to the Default Rate to
the fullest extent permitted by applicable Laws.
(iv) Accrued and unpaid interest on past due amounts (including interest on past
due interest) shall be due and payable upon demand.
(c) Interest on each Loan shall be due and payable in arrears on each Interest Payment
Date applicable thereto and at such other times as may be specified herein. Interest hereunder
shall be due and payable in accordance with the terms hereof before and after judgment, and before
and after the commencement of any proceeding under any Debtor Relief Law.
2.08 Fees
. In addition to certain fees described in
Sections 2.03(h) and (i)
:
(a)
Commitment Fee
. The Borrower shall pay to the Administrative Agent for the
account of each Lender in accordance with its Applicable Percentage, a commitment fee equal to the
Applicable Fee Rate
times
the actual daily amount by which the Aggregate Commitments exceed
the sum of (i) the Outstanding Amount of Revolving Credit Loans and (ii) the Outstanding Amount of
L/C Obligations, subject to adjustment as provided in
Section 2.15
. The commitment fee
shall accrue at all times during the Availability Period, including at any time
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during which one or
more of the conditions in
Article IV
is not met, and shall be due and payable quarterly in
arrears on the last Business Day of each March, June, September and December, commencing with the
first such date to occur after the Closing Date, and on the last day of the Availability Period.
The commitment fee shall be calculated quarterly in arrears, and if there is any change in the
Applicable Fee Rate during any quarter, the actual daily amount shall be computed and multiplied by
the Applicable Fee Rate separately for each period during such quarter that such Applicable Fee
Rate was in effect.
(b)
Other Fees
. (i) The Borrower shall pay to the Arranger and the Administrative
Agent for their own respective accounts fees in the amounts and at the times specified in the Fee
Letter. Such fees shall be fully earned when paid and shall not be refundable for any reason
whatsoever.
(ii) The Borrower shall pay to the Lenders such fees as shall have been separately
agreed upon in writing in the amounts and at the times so specified. Such fees shall be
fully earned when paid and shall not be refundable for any reason whatsoever.
2.09 Computation of Interest and Fees; Retroactive Adjustments of Applicable Rate
.
(a) All computations of interest for Base Rate Loans (including Base Rate Loans determined
by reference to the Eurodollar Rate) shall be made on the basis of a year of 365 or 366 days, as
the case may be, and actual days elapsed. All other computations of fees and interest shall be
made on the basis of a 360-day year and actual days elapsed (which results in more fees or
interest, as applicable, being paid than if computed on the basis of a 365-day year). Interest
shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or
any portion thereof, for the day on which the Loan or such portion is paid,
provided
that
any Loan that is repaid on the same day on which it is made shall, subject to
Section
2.11(a)
, bear interest for one day. Each determination by the Administrative Agent of an
interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest
error.
(b) If, as a result of any restatement of or other adjustment to the financial statements
of the Borrower or for any other reason, the Borrower or the Lenders determine that (i) the
Consolidated Leverage Ratio as calculated by the Borrower as of any applicable date was inaccurate
and (ii) a proper calculation of the Consolidated Leverage Ratio would have resulted in different
pricing for such period, then (A) if the proper pricing for such period would have been higher,
then the Borrower shall immediately and retroactively be obligated to pay to the Administrative
Agent for the account of the applicable Lenders or the applicable L/C Issuers, as the case may be,
promptly on demand by the Administrative Agent (or, after the occurrence of an actual or deemed
entry of an order for relief with respect to the Borrower under the Bankruptcy Code of the United
States, automatically and without further action by the Administrative Agent, any Lender or any L/C
Issuer), an amount equal to the excess of the amount of interest and fees that should have been
paid for such period over the amount of interest and fees actually paid for such period, and (B) if
the proper pricing for such period would have been lower, the amount of any overpayment of interest
and fees actually made shall, upon delivery of a certificate from a Responsible Officer of the
Borrower to the Administrative Agent demonstrating the amount of such overpayment, be applied as a
credit to all subsequent payments due from any Loan Party
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under any Loan Document to the Lenders
that were party to this Agreement at the time of such overpayment, in accordance with each such
Lenders ratable share at the time of such overpayment, until the amount of such overpayment is
eliminated. This paragraph shall not limit the rights of the Administrative Agent, any Lender or
any L/C Issuer, as the case may be, under
Sections 2.03(c)(iii)
,
2.03(h)
or
2.07(b)
or under
Article VIII
. The Borrowers obligations under this paragraph
shall survive the termination of the Aggregate Commitments and the repayment of all other
Obligations hereunder.
2.10 Evidence of Debt
. (a) The Credit Extensions made by each Lender shall be evidenced
by one or more accounts or records maintained by such Lender and by the Administrative Agent in the
ordinary course of business. The accounts or records maintained by the Administrative Agent and
each Lender shall be conclusive absent manifest error of the amount of the Credit Extensions made
by the Lenders to the Borrower and the interest and payments thereon. Any failure to so record or
any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower
hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict
between the accounts and records maintained by any Lender and the accounts and records of the
Administrative Agent in respect of such matters, the accounts and records of the Administrative
Agent shall control in the absence of manifest error. Upon the request of any Lender made through
the Administrative Agent, the Borrower shall execute and deliver to such Lender (through the
Administrative Agent) a Note, which shall evidence such Lenders Loans in addition to such accounts
or records. Each Lender may attach schedules to its Note and endorse thereon the date, Type (if
applicable), amount and maturity of its Loans and payments with respect thereto.
(b) In addition to the accounts and records referred to in
Section 2.10(a)
, each
Lender and the Administrative Agent shall maintain in accordance with its usual practice accounts
or records evidencing the purchases and sales by such Lender of participations in Letters of
Credit. In the event of any conflict between the accounts and records maintained by the
Administrative Agent and the accounts and records of any Lender in respect of such matters, the
accounts and records of the Administrative Agent shall control in the absence of manifest error.
2.11 Payments Generally; Administrative Agents Clawback
. (a)
General
. All
payments to be made by the Borrower shall be made without condition or deduction for any
counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all
payments by the Borrower hereunder shall be made to the Administrative Agent, for the account of
the respective Lenders to which such payment is owed, at the Administrative Agents Office in
Dollars and in immediately available funds not later than 1:00 p.m. on the date specified herein.
The Administrative Agent will promptly distribute to each Lender its Applicable Percentage (or
other applicable share as provided herein) of such payment in like funds as received by wire
transfer to such Lenders Lending Office. All payments received by the Administrative Agent after
1:00 p.m. shall be deemed received on the next succeeding Business Day and any applicable interest
or fee shall continue to accrue. If any payment to be made by the Borrower shall come due on a day
other than a Business Day, payment shall be made on the next following Business Day, and such
extension of time shall be reflected on computing interest or fees, as the case may be.
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(b) (i)
Funding by Lenders; Presumption by Administrative Agent
. Unless the
Administrative Agent shall have received notice from a Lender prior to the proposed date of any
Revolving Credit Borrowing of Eurodollar Rate Loans (or, in the case of any Revolving Credit
Borrowing of Base Rate Loans, prior to 1:00 p.m. on the date of such Revolving Credit Borrowing)
that such Lender will not make available to the Administrative Agent such Lenders share of such
Revolving Credit Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with
Section 2.02
(or, in the case of a
Revolving Credit Borrowing of Base Rate Loans, that such Lender has made such share available in
accordance with and at the time required by
Section 2.02
) and may, in reliance upon
such assumption, make available to the Borrower a corresponding amount. In such event, if a
Lender has not in fact made its share of the applicable Revolving Credit Borrowing available to the
Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount in immediately available funds
with interest thereon, for each day from and including the date such amount is made available to
the Borrower to but excluding the date of payment to the Administrative Agent, at (A) in the case
of a payment to be made by such Lender, the greater of the Federal Funds Rate and a rate determined
by the Administrative Agent in accordance with banking industry rules on interbank compensation,
plus any administrative, processing or similar fees customarily charged by the Administrative Agent
in connection with the foregoing, and (B) in the case of a payment to be made by the Borrower, the
interest rate applicable to Base Rate Loans. If the Borrower and such Lender shall pay such
interest to the Administrative Agent for the same or an overlapping period, the Administrative
Agent shall promptly remit to the Borrower the amount of such interest paid by the Borrower for
such period. If such Lender pays its share of the applicable Revolving Credit Borrowing to the
Administrative Agent, then the amount so paid shall constitute such Lenders Loan included in such
Revolving Credit Borrowing. Any payment by the Borrower shall be without prejudice to any claim
the Borrower may have against a Lender that shall have failed to make such payment to the
Administrative Agent.
(ii)
Payments by Borrower; Presumptions by Administrative Agent
. Unless
the Administrative Agent shall have received notice from the Borrower prior to the time at
which any payment is due to the Administrative Agent for the account of the Lenders or an
L/C Issuer hereunder that the Borrower will not make such payment, the Administrative Agent
may assume that the Borrower has made such payment on such date in accordance herewith and
may, in reliance upon such assumption, distribute to the Lenders or the applicable L/C
Issuer, as the case may be, the amount due. In such event, if the Borrower has not in fact
made such payment, then each of the Lenders or the applicable L/C Issuer, as the case may
be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so
distributed to such Lender or such L/C Issuer, in immediately available funds with interest
thereon, for each day from and including the date such amount is distributed to it to but
excluding the date of payment to the Administrative Agent, at the greater of the Federal
Funds Rate and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation.
A notice of the Administrative Agent to any Lender or the Borrower with respect to any amount owing
under this subsection (b) shall be conclusive, absent manifest error.
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(c)
Failure to Satisfy Conditions Precedent
. If any Lender makes available to the
Administrative Agent funds for any Loan to be made by such Lender as provided in the foregoing
provisions of this
Article II
, and such funds are not made available to the Borrower by the
Administrative Agent because the conditions to the applicable Credit Extension set forth in
Article IV
are not satisfied or waived in accordance with the terms hereof, the
Administrative Agent shall return such funds (in like funds as received from such Lender) to such
Lender, without interest.
(d)
Obligations of Lenders Several
. The obligations of the Lenders hereunder to
make Revolving Credit Loans, to fund participations in Letters of Credit and to make payments
pursuant to
Section 10.04(c)
are several and not joint. The failure of any Lender to make
any Loan, to fund any such participation or to make any payment under
Section 10.04(c)
on
any date required hereunder shall not relieve any other Lender of its corresponding obligation to
do so on such date, and no Lender shall be responsible for the failure of any other Lender to so
make its Loan, to purchase its participation or to make its payment under
Section 10.04(c)
.
(e)
Funding Source
. Nothing herein shall be deemed to obligate any Lender to
obtain the funds for any Loan in any particular place or manner or to constitute a representation
by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or
manner.
(f)
Insufficient Funds
. If at any time insufficient funds are received by and
available to the Administrative Agent to pay fully all amounts of principal, L/C Borrowings,
interest and fees then due hereunder, such funds shall be applied (i)
first
, toward payment
of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance
with the amounts of interest and fees then due to such parties, and (ii)
second
, toward
payment of principal and L/C Borrowings then due hereunder, ratably among the parties entitled
thereto in accordance with the amounts of principal and L/C Borrowings then due to such parties.
2.12 Sharing of Payments by Lenders
. If any Lender shall, by exercising any right of
setoff or counterclaim or otherwise, obtain payment in respect of (a) Obligations in respect of any
Revolving Credit Loan or Letter of Credit due and payable to such Lender hereunder and under the
other Loan Documents at such time in excess of its ratable share (according to the proportion of
(i) the amount of such Obligations due and payable to such Lender at such time to (ii) the
aggregate amount of the Obligations in respect of Revolving Credit Loans and Letters of Credit due
and payable to all Lenders hereunder and under the other Loan Documents at such time) of payments
on account of the Obligations in respect of Revolving Credit Loans and Letters of Credit due and
payable to all Lenders hereunder and under the other Loan Documents at such time obtained by
all
the Lenders at such time or (b) Obligations in respect of any Revolving Credit Loan or Letter of
Credit owing (but not due and payable) to such Lender hereunder and under the other Loan Documents
at such time in excess of its ratable share (according to the proportion of (i) the amount of such
Obligations owing (but not due and payable) to such Lender at such time to (ii) the aggregate
amount of the Obligations in respect of Revolving Credit Loans and Letters of Credit owing (but not
due and payable) to all Lenders hereunder and under the other Loan Parties at such time) of payment
on account of the Obligations in respect of Revolving Credit Loans and Letters of Credit owing (but
not due and payable) to all Lenders hereunder and under the other Loan Documents at such time
obtained by
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all of the Lenders at such time then the Lender receiving such greater proportion shall
(a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value)
participations in the Revolving Credit Loans and subparticipations in L/C Obligations of the other
Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such
payments shall be shared by the Lenders ratably in accordance with the aggregate amount of
Obligations in respect of Revolving Credit Loans and Letters of Credit then due and payable to the
Lenders or owing (but not due and payable) to the Lenders, as the case may be,
provided
that:
(i) if any such participations or subparticipations are purchased and all or any
portion of the payment giving rise thereto is recovered, such participations or
subparticipations shall be rescinded and the purchase price restored to the extent of such
recovery, without interest; and
(ii) the provisions of this Section shall not be construed to apply to (A) any
payment made by or on behalf of the Borrower pursuant to and in accordance with the express
terms of this Agreement (including the application of funds arising from the existence of a
Defaulting Lender), (B) the application of Cash Collateral provided for in
Section
2.14
, or (C) any payment obtained by a Lender as consideration for the assignment of or
sale of a participation in any of its Loans or subparticipations in L/C Obligations to any
assignee or participant, other than an assignment to the Borrower or any Subsidiary or
Affiliate thereof (as to which the provisions of this Section shall apply).
The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under
applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements
may exercise against the Borrower rights of setoff and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of the Borrower in the amount of
such participation.
2.13 Increase in Commitments
. (a)
Request for Increase
. Provided there exists no
Default, upon notice to the Administrative Agent (which shall promptly notify the Lenders), the
Borrower may from time to time, request an increase in the Aggregate Commitments by an amount (for
all such requests) not exceeding $150,000,000;
provided
that any such request for an
increase shall be in a minimum amount of $30,000,000. At the time of sending such notice, the
Borrower (in consultation with the Administrative Agent) shall specify the time period within which
each Lender is requested to respond (which shall in no event be less than ten Business Days from
the date of delivery of such notice to the Lenders).
(b)
Lender Elections to Increase
. Each Lender shall notify the Administrative
Agent within such time period whether or not it agrees to increase its Commitment and, if so,
whether by an amount equal to, greater than, or less than its Applicable Percentage of such
requested increase. Any Lender not responding within such time period shall be deemed to have
declined to increase its Commitment.
(c)
Notification by Administrative Agent; Additional Lenders
. The Administrative
Agent shall notify the Borrower and each Lender of the Lenders responses to each request made
hereunder. To achieve the full amount of a requested increase, and subject to the approval of the
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Administrative Agent and each L/C Issuer (which approvals shall not be unreasonably withheld), the
Borrower may also invite additional Eligible Assignees to become Lenders pursuant to a joinder
agreement in form and substance satisfactory to the Administrative Agent and its counsel.
(d)
Effective Date and Allocations
. If the Aggregate Commitments are increased in
accordance with this Section, the Administrative Agent and the Borrower shall determine the
effective date (the
Revolving Credit Increase Effective Date
) and the final allocation of
such
increase. The Administrative Agent shall promptly notify the Borrower and the Lenders of the
final allocation of such increase and the Revolving Credit Increase Effective Date.
(e)
Conditions to Effectiveness of Increase
. As a condition precedent to such
increase, the Borrower shall deliver to the Administrative Agent a certificate of each Loan Party
dated as of the Revolving Credit Increase Effective Date (in sufficient copies for each Lender)
signed by a Responsible Officer of such Loan Party or the General Partner acting on behalf of such
Loan Party (x) certifying and attaching the resolutions adopted by such Loan Party approving or
consenting to such increase, and (y) in the case of the Borrower, certifying that, before and after
giving effect to such increase, (A) the representations and warranties contained in
Article
V
and the other Loan Documents are true and correct on and as of the Revolving Credit Increase
Effective Date, except to the extent that such representations and warranties specifically refer to
an earlier date, in which case they are true and correct as of such earlier date, and except that
for purposes of this
Section 2.13
, the representations and warranties contained in
subsections (a) and (b) of
Section 5.05
shall be deemed to refer to the most recent
statements furnished pursuant to clauses (a) and (b), respectively, of
Section 6.01
, and
(B) no Default exists or would result from such increase. The Borrower shall prepay any Revolving
Credit Loans outstanding on the Revolving Credit Increase Effective Date (and pay any additional
amounts required pursuant to
Section 3.05
) to the extent necessary to keep the outstanding
Revolving Credit Loans ratable with any revised Applicable Percentages arising from any nonratable
increase in the Commitments under this Section.
(f)
Conflicting Provisions
. This Section shall supersede any provisions in
Sections 2.12
or
10.01
to the contrary.
2.14 Cash Collateral
.
(a)
Certain Credit Support Events
. Upon the request of the Administrative Agent
or an L/C Issuer (i) if such L/C Issuer has honored any full or partial drawing request under any
Letter of Credit and such drawing has resulted in an L/C Borrowing, or (ii) if, as of the Letter of
Credit Expiration Date, any L/C Obligation for any reason remains outstanding, the Borrower shall,
in each case, immediately Cash Collateralize the then Outstanding Amount of all L/C Obligations.
At any time that there shall exist a Defaulting Lender, immediately upon the request of the
Administrative Agent or an L/C Issuer, the Borrower shall deliver to the Administrative Agent Cash
Collateral in an amount sufficient to cover all Fronting Exposure (after giving effect to
Section 2.15(a)(iv)
and any Cash Collateral provided by the Defaulting Lender).
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(b)
Grant of Security Interest
. All Cash Collateral (other than credit support
not constituting funds subject to deposit) shall be maintained in blocked, non-interest bearing
deposit accounts at Bank of America. The Borrower, and to the extent provided by any Lender, such
Lender, hereby grants to (and subjects to the control of) the Administrative Agent, for the benefit
of the Administrative Agent, the L/C Issuers and the Lenders, and agrees to maintain, a first
priority security interest in all such cash, deposit accounts and all balances therein, and all
other property so provided as collateral pursuant hereto, and in all proceeds of the foregoing, all
as security for the obligations to which such Cash Collateral may be applied pursuant to
Section 2.14(c)
. If at any time the Administrative Agent determines that Cash Collateral
is subject to any right or claim of any Person other than the Administrative Agent as herein
provided, or that the
total amount of such Cash Collateral is less than the applicable Fronting Exposure and other
obligations secured thereby, the Borrower or the relevant Defaulting Lender will, promptly upon
demand by the Administrative Agent, pay or provide to the Administrative Agent additional Cash
Collateral in an amount sufficient to eliminate such deficiency.
(c)
Application
. Notwithstanding anything to the contrary contained in this
Agreement, Cash Collateral provided under any of this
Section 2.14
or
Sections
2.03
,
2.04
,
2.05
,
2.15
or
8.02
in respect of Letters of Credit
shall be held and applied to the satisfaction of the specific L/C Obligations, obligations to fund
participations therein (including, as to Cash Collateral provided by a Defaulting Lender, any
interest accrued on such obligation) and other obligations for which the Cash Collateral was so
provided, prior to any other application of such property as may be provided for herein.
(d)
Release
. Cash Collateral (or the appropriate portion thereof) provided to
reduce Fronting Exposure or other obligations shall be released promptly following (i) the
elimination of the applicable Fronting Exposure or other obligations giving rise thereto (including
by the termination of Defaulting Lender status of the applicable Lender (or, as appropriate, its
assignee following compliance with
Section 10.06(b)(vi)
)) or (ii) the Administrative
Agents good faith determination that there exists excess Cash Collateral;
provided
,
however, (x) that Cash Collateral furnished by or on behalf of a Loan Party shall not be released
during the continuance of a Default or Event of Default (and following application as provided in
this
Section 2.14
may be otherwise applied in accordance with
Section 8.03
), and
(y) the Person providing Cash Collateral and the applicable L/C Issuer may agree that Cash
Collateral shall not be released but instead held to support future anticipated Fronting Exposure
or other obligations.
2.15 Defaulting Lenders
. (a)
Adjustments
. Notwithstanding anything to the
contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such
time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable Law:
(i)
Waivers and Amendments
. That Defaulting Lenders right to approve or
disapprove any amendment, waiver or consent with respect to this Agreement shall be
restricted as set forth in
Section 10.01
.
(ii)
Reallocation of Payments
. Any payment of principal, interest, fees or
other amounts received by the Administrative Agent for the account of that Defaulting Lender
(whether voluntary or mandatory, at maturity, pursuant to
Article VIII
or otherwise,
and including any amounts made available to the Administrative Agent by that
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Defaulting Lender pursuant to
Section 10.08
), shall be applied at such
time or times as may be determined by the Administrative Agent as follows: first, to the
payment of any amounts owing by that Defaulting Lender to the Administrative Agent
hereunder; second, to the payment on a pro rata basis of any amounts owing by that
Defaulting Lender to the L/C Issuers hereunder; third, if so determined by the
Administrative Agent or requested by an L/C Issuer, to be held as Cash Collateral for future
funding obligations of that Defaulting Lender of any participation in any Letter of Credit;
fourth, as the Borrower may request (so long as no Default or Event of Default exists), to
the funding of any Loan in respect of which that Defaulting Lender has failed to fund its
portion thereof as required by this Agreement, as determined by the Administrative Agent;
fifth, if so determined by the Administrative Agent and the Borrower, to be held in a
non-interest bearing deposit account and released in order to satisfy obligations of that
Defaulting Lender to fund Loans under this Agreement; sixth, to the payment of any amounts
owing to the Lenders or the L/C Issuers as a result of any judgment of a court of competent
jurisdiction obtained by any Lender or any L/C Issuer against that Defaulting Lender as a
result of that Defaulting Lenders breach of its obligations under this Agreement; seventh,
so long as no Default or Event of Default exists, to the payment of any amounts owing to the
Borrower as a result of any judgment of a court of competent jurisdiction obtained by the
Borrower against that Defaulting Lender as a result of that Defaulting Lenders breach of
its obligations under this Agreement; and eighth, to that Defaulting Lender or as otherwise
directed by a court of competent jurisdiction;
provided
that if (x) such payment is
a payment of the principal amount of any Loans or L/C Borrowings in respect of which that
Defaulting Lender has not fully funded its appropriate share and (y) such Loans or L/C
Borrowings were made at a time when the conditions set forth in
Section 4.02
were
satisfied or waived, such payment shall be applied solely to pay the Loans of, and L/C
Borrowings owed to, all non-Defaulting Lenders on a pro rata basis prior to being applied to
the payment of any Loans of, or L/C Borrowings owed to, that Defaulting Lender. Any
payments, prepayments or other amounts paid or payable to a Defaulting Lender that are
applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral
pursuant to this
Section 2.15(a)(ii)
shall be deemed paid to and redirected by that
Defaulting Lender, and each Lender irrevocably consents hereto.
(iii)
Certain Fees
. That Defaulting Lender (x) shall not be entitled to
receive any commitment fee pursuant to
Section 2.08(a)
for any period during which
that Lender is a Defaulting Lender (and the Borrower shall not be required to pay any such
fee that otherwise would have been required to have been paid to that Defaulting Lender) and
(y) shall be limited in its right to receive Letter of Credit Fees as provided in
Section 2.03(h)
.
(iv)
Reallocation of Applicable Percentages to Reduce Fronting Exposure
.
During any period in which there is a Defaulting Lender, for purposes of computing the
amount of the obligation of each non-Defaulting Lender to acquire, refinance or fund
participations in Letters of Credit pursuant to
Sections 2.03
, the
Applicable
Percentage
of each non-Defaulting Lender shall be computed without giving effect to the Commitment
of that Defaulting Lender;
provided
, that, (i) each such reallocation shall be given
effect only if, at the date the applicable Lender becomes a Defaulting Lender, no Default or
Event of Default exists; and (ii) the aggregate obligation of each non-Defaulting Lender to
acquire, refinance or fund participations in Letters of Credit shall
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not exceed the positive
difference, if any, of (1) the Commitment of that non-Defaulting Lender
minus
(2)
the aggregate Outstanding Amount of the Revolving Credit Loans of that Lender.
(b)
Defaulting Lender Cure
. If the Borrower, the Administrative Agent and the L/C
Issuers agree in writing in their sole discretion that a Defaulting Lender should no longer be
deemed to be a Defaulting Lender, the Administrative Agent will so notify the parties hereto,
whereupon as of the effective date specified in such notice and subject to any conditions set forth
therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to
the extent applicable, purchase that portion of outstanding Loans of the other Lenders or take such
other actions as the Administrative Agent may determine to be necessary to cause the Revolving
Credit Loans and funded and unfunded participations in Letters of Credit to be held on a pro rata
basis by the Lenders in accordance with their Applicable Percentages (without giving effect to
Section 2.15(a)(iv)
), whereupon that Lender will cease to be a Defaulting Lender;
provided
that no adjustments will be made retroactively with respect to fees accrued or
payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and
provided
,
further
, that except to the extent otherwise expressly agreed by the
affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or
release of any claim of any party hereunder arising from that Lenders having been a Defaulting
Lender.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 Taxes
. (a)
Payments Free of Taxes; Obligation to Withhold; Payments on Account of
Taxes
. (i) Any and all payments by or on account of any obligation of the Borrower hereunder
or under any other Loan Document shall to the extent permitted by applicable Law be made free and
clear of and without reduction or withholding for any Taxes. If, however, the Borrower or the
Administrative Agent is required by applicable Law to withhold or deduct any Tax, such Tax shall be
withheld or deducted in accordance with such Law as determined by the Borrower or the
Administrative Agent, as the case may be.
(ii) If the Borrower or the Administrative Agent shall be required by applicable Law to
withhold or deduct any Taxes, including both United States Federal backup withholding and
withholding taxes, from or in respect of any sum payable hereunder or under any other Loan
Document, then (A) the Borrower or the Administrative Agent shall withhold or make such
deductions as are determined by the Borrower or the Administrative Agent to be required, (B)
the Borrower or the Administrative Agent shall timely pay the full amount withheld or
deducted to the relevant Governmental Authority in accordance with applicable Law, and (C)
to the extent that the withholding or deduction is made on account of Indemnified Taxes or
Other Taxes, the sum payable by the Borrower shall be increased as necessary so that after
any required withholding or the making of all required deductions (including
deductions applicable to additional sums payable under this Section) the Administrative
Agent, Lender or L/C Issuer, as the case may be, receives an amount equal to the sum it
would have received had no such withholding or deduction been made.
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(b)
Payment of Other Taxes by the Borrower
. Without limiting the provisions of
subsection (a) above, the Borrower shall timely pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable Law.
(c)
Tax Indemnifications
. (i) Without limiting the provisions of subsection (a) or
(b) above, the Borrower shall, and does hereby, indemnify the Administrative Agent, each Lender and
each L/C Issuer, and shall make payment in respect thereof within 10 days after demand therefor,
for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other
Taxes imposed or asserted on or attributable to amounts payable under this Section) withheld or
deducted by the Borrower or the Administrative Agent or paid by the Administrative Agent, such
Lender or such L/C Issuer, as the case may be, and any penalties, interest and reasonable expenses
arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes
were correctly or legally imposed or asserted by the relevant Governmental Authority. The Borrower
shall also, and does hereby, indemnify the Administrative Agent, and shall make payment in respect
thereof within 10 days after demand therefor, for any amount which a Lender or an L/C Issuer for
any reason fails to pay indefeasibly to the Administrative Agent as required by clause (ii) of this
subsection. A certificate as to the amount of any such payment or liability delivered to the
Borrower by a Lender or an L/C Issuer (with a copy to the Administrative Agent), or by the
Administrative Agent on its own behalf or on behalf of a Lender or an L/C Issuer, shall be
conclusive absent manifest error.
(ii) Without limiting the provisions of subsection (a) or (b) above, each Lender and
each L/C Issuer shall, and does hereby, indemnify the Borrower and the Administrative Agent,
and shall make payment in respect thereof within 10 days after demand therefor, against any
and all Taxes and any and all related losses, claims, liabilities, penalties, interest and
expenses (including the fees, charges and disbursements of any counsel for the Borrower or
the Administrative Agent) incurred by or asserted against the Borrower or the Administrative
Agent by any Governmental Authority as a result of the failure by such Lender or such L/C
Issuer, as the case may be, to deliver, or as a result of the inaccuracy, inadequacy or
deficiency of, any documentation required to be delivered by such Lender or such L/C Issuer,
as the case may be, to the Borrower or the Administrative Agent pursuant to subsection (e).
Each Lender and each L/C Issuer hereby authorizes the Administrative Agent to set off and
apply any and all amounts at any time owing to such Lender or such L/C Issuer, as the case
may be, under this Agreement or any other Loan Document against any amount due to the
Administrative Agent under this clause (ii). The agreements in this clause (ii) shall
survive the resignation and/or replacement of the Administrative Agent, any assignment of
rights by, or the replacement of, a Lender or an L/C Issuer, the termination of the
Aggregate Commitments and the repayment, satisfaction or discharge of all other Obligations.
(d)
Evidence of Payments
. Upon request by the Borrower or the Administrative Agent,
as the case may be, after any payment of Taxes by the Borrower or the Administrative Agent to a
Governmental Authority as provided in this
Section 3.01
, the Borrower shall deliver
to the Administrative Agent or the Administrative Agent shall deliver to the Borrower, as the
case may be, the original or a certified copy of a receipt issued by such Governmental Authority
evidencing such payment, a copy of any return required by Law to report such payment or other
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evidence of such payment reasonably satisfactory to the Borrower or the Administrative Agent, as
the case may be.
(e)
Status of Lenders; Tax Documentation
. (i) Each Lender and each L/C Issuer shall
deliver to the Borrower and to the Administrative Agent, at the time or times prescribed by
applicable Law or when reasonably requested by the Borrower or the Administrative Agent, such
properly completed and executed documentation prescribed by applicable Law or by the taxing
authorities of any jurisdiction and such other reasonably requested information as will permit the
Borrower or the Administrative Agent, as the case may be, to determine (A) whether or not payments
made hereunder or under any other Loan Document are subject to Taxes, (B) if applicable, the
required rate of withholding or deduction, and (C) such Lenders or such L/C Issuers entitlement
to any available exemption from, or reduction of, applicable Taxes in respect of all payments to be
made to such Lender or such L/C Issuer by the Borrower pursuant to this Agreement or otherwise to
establish such Lenders or such L/C Issuers status for withholding tax purposes in the applicable
jurisdiction.
(ii) Without limiting the generality of the foregoing,
(A) any Lender or L/C Issuer that is a
United States person
within
the meaning of Section 7701(a)(30) of the Code shall deliver to the Borrower and the
Administrative Agent properly completed and executed originals of Internal Revenue
Service Form W-9 or such other documentation or information prescribed by applicable
Law or reasonably requested by the Borrower or the Administrative Agent as will
enable the Borrower or the Administrative Agent, as the case may be, to determine
whether or not such Lender is subject to backup withholding or information reporting
requirements; and
(B) each Foreign Lender that is entitled under the Code or any applicable
treaty to an exemption from or reduction of withholding tax with respect to payments
hereunder or under any other Loan Document shall deliver to the Borrower and the
Administrative Agent (in such number of copies as shall be requested by the
recipient) on or prior to the date on which such Foreign Lender becomes a Lender
under this Agreement (and from time to time thereafter upon the request of the
Borrower or the Administrative Agent, but only if such Foreign Lender is legally
entitled to do so), whichever of the following is applicable:
(1) properly completed and executed originals of Internal Revenue
Service Form W-8BEN claiming eligibility for benefits of an income tax
treaty to which the United States is a party,
(2) properly completed and executed originals of Internal Revenue
Service Form W-8ECI,
(3) properly completed and executed originals of Internal Revenue
Service Form W-8IMY and all required supporting documentation,
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(4) in the case of a Foreign Lender claiming the benefits of the
exemption for portfolio interest under section 881(c) of the Code, (x) a
certificate to the effect that such Foreign Lender is not (A) a
bank
within the meaning of section 881(c)(3)(A) of the Code, (B) a
10 percent shareholder
of the Borrower within the meaning of
section 881(c)(3)(B) of the Code or (C) a
controlled foreign
corporation
described in section 881(c)(3)(C) of the Code and (y)
properly completed and executed originals of Internal Revenue Service Form
W-8BEN, or
(5) properly completed and executed originals of any other form
prescribed by applicable Laws as a basis for claiming exemption from or a
reduction in United States Federal withholding tax together with such
supplementary documentation as may be prescribed by applicable Laws to
permit the Borrower or the Administrative Agent to determine the withholding
or deduction required to be made.
(iii) Each Lender shall promptly (A) notify the Borrower and the Administrative Agent of
any change in circumstances which would modify or render invalid any claimed exemption or
reduction, and (B) take such steps as shall not be materially disadvantageous to it, in the
reasonable judgment of such Lender, and as may be reasonably necessary (including the
re-designation of its Lending Office) to avoid any requirement of applicable Laws of any
jurisdiction that the Borrower or the Administrative Agent make any withholding or deduction
for taxes from amounts payable to such Lender.
(iv) If a payment made to a Lender or L/C Issuer hereunder or under any Loan Document
would be subject to United States Federal withholding Tax imposed by FATCA if such Lender or
L/C Issuer were to fail to comply with the applicable reporting requirements of FATCA (e.g.,
because the Revolving Credit Loans are not treated as grandfathered obligations under
FATCA), such Lender or L/C Issuer shall deliver to the Borrower and the Administrative
Agent, at the time or times prescribed by Law and at such time or times reasonably requested
by the Borrower and the Administrative Agent, such documentation prescribed by applicable
Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional
documentation reasonably requested by the Borrower or the Administrative Agent as may be
necessary for the Borrower or the Administrative Agent to comply with its obligations under
FATCA, to determine that such Lender or L/C Issuer has complied with its obligations under
FATCA or to determine the amount to deduct and withhold from such payment.
(f)
Treatment of Certain Refunds
. Unless required by applicable Law, at no time shall
the Administrative Agent have any obligation to file for or otherwise pursue on behalf of a Lender
or an L/C Issuer, or have any obligation to pay to any Lender or any L/C Issuer, any refund of
Taxes withheld or deducted from funds paid for the account of such Lender or such
L/C Issuer, as the case may be. If the Administrative Agent, any Lender or any L/C Issuer
determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to
which it has been indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section, it shall pay to the Borrower an amount equal to such
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refund (but only to the extent of indemnity payments made, or additional amounts paid, by the
Borrower under this Section with respect to the Taxes or Other Taxes giving rise to such refund),
net of all out-of-pocket expenses incurred by the Administrative Agent, such Lender or such L/C
Issuer, as the case may be, and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund),
provided
that the Borrower, upon the
request of the Administrative Agent, such Lender or such L/C Issuer, agrees to repay the amount
paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) to the Administrative Agent, such Lender or such L/C Issuer in the event
the Administrative Agent, such Lender or such L/C Issuer is required to repay such refund to such
Governmental Authority. This subsection shall not be construed to require the Administrative
Agent, any Lender or any L/C Issuer to make available its tax returns (or any other information
relating to its taxes that it deems confidential) to the Borrower or any other Person.
3.02 Illegality
. If any Lender determines that any Law has made it unlawful, or that any
Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending
Office to make, maintain or fund Loans whose interest is determined by reference to the Eurodollar
Rate, or to determine or charge interest rates based upon the Eurodollar Rate, or any Governmental
Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or
to take deposits of, Dollars in the London interbank market, then, on notice thereof by such Lender
to the Borrower through the Administrative Agent, (i) any obligation of such Lender to make or
continue Eurodollar Rate Loans or to convert Base Rate Loans to Eurodollar Rate Loans shall be
suspended, and (ii) if such notice asserts the illegality of such Lender making or maintaining Base
Rate Loans the interest rate on which is determined by reference to the Eurodollar Rate component
of the Base Rate, the interest rate on which Base Rate Loans of such Lender shall, if necessary to
avoid such illegality, be determined by the Administrative Agent without reference to the
Eurodollar Rate component of the Base Rate, in each case until such Lender notifies the
Administrative Agent and the Borrower that the circumstances giving rise to such determination no
longer exist. Upon receipt of such notice, (x) the Borrower shall, upon demand from such Lender
(with a copy to the Administrative Agent), prepay or, if applicable, convert all Eurodollar Rate
Loans of such Lender to Base Rate Loans (the interest rate on which Base Rate Loans of such Lender
shall, if necessary to avoid such illegality, be determined by the Administrative Agent without
reference to the Eurodollar Rate component of the Base Rate), either on the last day of the
Interest Period therefor, if such Lender may lawfully continue to maintain such Eurodollar Rate
Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such
Eurodollar Rate Loans and (y) if such notice asserts the illegality of such Lender determining or
charging interest rates based upon the Eurodollar Rate, the Administrative Agent shall during the
period of such suspension compute the Base Rate applicable to such Lender without reference to the
Eurodollar Rate component thereof until the Administrative is advised in writing by such Lender
that it is no longer illegal for such Lender to determine or charge interest rates based upon the
Eurodollar Rate. Upon any such prepayment or conversion, the Borrower shall also pay accrued
interest on the amount so prepaid or converted.
3.03 Inability to Determine Rates
. If the Required Lenders determine that for any reason in
connection with any request for a Eurodollar Rate Loan or a conversion to or continuation thereof
that (a) Dollar deposits are not being offered to banks in the London
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interbank eurodollar market
for the applicable amount and Interest Period of such Eurodollar Rate Loan, (b) adequate and
reasonable means do not exist for determining the Eurodollar Rate for any requested Interest Period
with respect to a proposed Eurodollar Rate Loan or in connection with an existing or proposed Base
Rate Loan, or (c) the Eurodollar Rate for any requested Interest Period with respect to a proposed
Eurodollar Rate Loan does not adequately and fairly reflect the cost to such Lenders of funding
such Loan, the Administrative Agent will promptly so notify the Borrower and each Lender.
Thereafter, (x) the obligation of the Lenders to make or maintain Eurodollar Rate Loans shall be
suspended, and (y) in the event of a determination described in the preceding sentence with respect
to the Eurodollar Rate component of the Base Rate, the utilization of the Eurodollar Rate component
in determining the Base Rate shall be suspended, in each case until the Administrative Agent (upon
the instruction of the Required Lenders) revokes such notice. Upon receipt of such notice, the
Borrower may revoke any pending request for a Revolving Credit Borrowing of, conversion to or
continuation of Eurodollar Rate Loans or, failing that, will be deemed to have converted such
request into a request for a Revolving Credit Borrowing of Base Rate Loans in the amount specified
therein.
3.04 Increased Costs; Reserves on Eurodollar Rate Loans
. (a)
Increased Costs
Generally
. If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan,
insurance charge or similar requirement against assets of, deposits with or for the account
of, or credit extended or participated in by, any Lender (except any reserve requirement
contemplated by
Section 3.04(e)
) or any L/C Issuer;
(ii) subject any Lender or any L/C Issuer to any tax of any kind whatsoever with
respect to this Agreement, any Letter of Credit, any participation in a Letter of Credit or
any Eurodollar Rate Loan made by it, or change the basis of taxation of payments to such
Lender or such L/C Issuer in respect thereof (except for Indemnified Taxes or Other Taxes
covered by
Section 3.01
and the imposition of, or any change in the rate of, any
Excluded Tax payable by such Lender or such L/C Issuer); or
(iii) impose on any Lender or any L/C Issuer or the London interbank market any other
condition, cost or expense affecting this Agreement or Eurodollar Rate Loans made by such
Lender or any Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to such Lender of making or
maintaining any Loan the interest on which is determined by reference to the Eurodollar Rate (or of
maintaining its obligation to make any such Loan), or to increase the cost to such Lender or such
L/C Issuer of participating in, issuing or maintaining any Letter of Credit (or of maintaining its
obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum
received or receivable by such Lender or such L/C Issuer hereunder (whether of principal, interest
or any other amount) then, upon request of such Lender or such L/C Issuer, the Borrower will pay to
such Lender or such L/C Issuer, as the case may be, such additional amount or
amounts as will compensate such Lender or such L/C Issuer, as the case may be, for such additional
costs incurred or reduction suffered.
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(b)
Capital Requirements
. If any Lender or any L/C Issuer determines that any Change
in Law affecting such Lender or such L/C Issuer or any Lending Office of such Lender or such
Lenders or such L/C Issuers holding company, if any, regarding capital requirements has or would
have the effect of reducing the rate of return on such Lenders or such L/C Issuers capital or on
the capital of such Lenders or such L/C Issuers holding company, if any, as a consequence of this
Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of
Credit held by, such Lender, or the Letters of Credit issued by such L/C Issuer, to a level below
that which such Lender or such L/C Issuer or such Lenders or such L/C Issuers holding company
could have achieved but for such Change in Law (taking into consideration such Lenders or such L/C
Issuers policies and the policies of such Lenders or such L/C Issuers holding company with
respect to capital adequacy), then from time to time the Borrower will pay to such Lender or such
L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or
such L/C Issuer or such Lenders or such L/C Issuers holding company for any such reduction
suffered.
(c)
Certificates for Reimbursement
. A certificate of a Lender or an L/C Issuer
setting forth the amount or amounts necessary to compensate such Lender or such L/C Issuer or its
holding company, as the case may be, as specified in subsection (a) or (b) of this Section and
delivered to the Borrower shall be conclusive absent manifest error. The Borrower shall pay such
Lender or such L/C Issuer, as the case may be, the amount shown as due on any such certificate
within 10 days after receipt thereof.
(d)
Delay in Requests
. Failure or delay on the part of any Lender or any L/C Issuer
to demand compensation pursuant to the foregoing provisions of this Section shall not constitute a
waiver of such Lenders or such L/C Issuers right to demand such compensation,
provided
that the Borrower shall not be required to compensate a Lender or an L/C Issuer pursuant to the
foregoing provisions of this Section for any increased costs incurred or reductions suffered more
than nine months prior to the date that such Lender or such L/C Issuer, as the case may be,
notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of
such Lenders or such L/C Issuers intention to claim compensation therefor (except that, if the
Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month
period referred to above shall be extended to include the period of retroactive effect thereof).
(e)
Reserves on Eurodollar Rate Loans
. The Borrower shall pay to each Lender, as long
as such Lender shall be required to maintain reserves with respect to liabilities or assets
consisting of or including Eurocurrency funds or deposits (currently known as
Eurocurrency
liabilities
), additional interest on the unpaid principal amount of each Eurodollar Rate Loan
equal to the actual costs of such reserves allocated to such Loan by such Lender (as determined by
such Lender in good faith, which determination shall be conclusive), which shall be due and payable
on each date on which interest is payable on such Loan,
provided
the Borrower shall have
received at least 10 days prior notice (with a copy to the Administrative Agent) of such
additional interest from such Lender. If a Lender fails to give notice 10 days prior to the
relevant
Interest Payment Date, such additional interest shall be due and payable 10 days from receipt
of such notice.
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3.05 Compensation for Losses
. Upon demand of any Lender (with a copy to the Administrative
Agent) from time to time, the Borrower shall promptly compensate such Lender for and hold such
Lender harmless from any loss, cost or expense incurred by it as a result of:
(a) any continuation, conversion, payment or prepayment of any Loan other than a Base Rate
Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary,
mandatory, automatic, by reason of acceleration, or otherwise);
(b) any failure by the Borrower (for a reason other than the failure of such Lender to make a
Loan) to prepay, borrow, continue or convert any Loan other than a Base Rate Loan on the date or in
the amount notified by the Borrower; or
(c) any assignment of a Eurodollar Rate Loan on a day other than the last day of the Interest
Period therefor as a result of a request by the Borrower pursuant to
Section 10.13
;
including any loss or expense (but not including loss of anticipated profits) and any loss or
expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan
or from fees payable to terminate the deposits from which such funds were obtained. The Borrower
shall also pay any customary administrative fees charged by such Lender in connection with the
foregoing.
For purposes of calculating amounts payable by the Borrower to the Lenders under this
Section
3.05
, each Lender shall be deemed to have funded each Eurodollar Rate Loan made by it at the
Eurodollar Rate for such Loan by a matching deposit or other borrowing in the London interbank
eurodollar market for a comparable amount and for a comparable period, whether or not such
Eurodollar Rate Loan was in fact so funded.
3.06 Mitigation Obligations; Replacement of Lenders
. (a)
Designation of a Different
Lending Office
. If any Lender requests compensation under
Section 3.04
, or the
Borrower is required to pay any additional amount to any Lender, any L/C Issuer, or any
Governmental Authority for the account of any Lender or any L/C Issuer pursuant to
Section
3.01
, or if any Lender gives a notice pursuant to
Section 3.02
, then such Lender or
such L/C Issuer shall, as applicable, use reasonable efforts to designate a different Lending
Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder
to another of its offices, branches or affiliates, if, in the judgment of such Lender or such L/C
Issuer, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to
Sections 3.01
or
3.04
, as the case may be, in the future, or eliminate the need for
the notice pursuant to
Section 3.02
, as applicable, and (ii) in each case, would not
subject such Lender or such L/C Issuer, as the case may be, to any unreimbursed cost or expense and
would not otherwise be disadvantageous to such Lender or such L/C Issuer, as the case may be. The
Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender or any L/C
Issuer in connection with any such designation or assignment.
(b)
Replacement of Lenders
. If any Lender requests compensation under
Section
3.04
, or if the Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to
Section 3.01
, the
Borrower may replace such Lender in accordance with
Section 10.13
.
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3.07 Survival
. All of the Borrowers obligations under this
Article III
shall survive
termination of the Aggregate Commitments, repayment of all other Obligations hereunder, and
resignation of the Administrative Agent.
ARTICLE IV
CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
4.01 Conditions of Initial Credit Extension
. The obligation of each L/C Issuer and each
Lender to make its initial Credit Extension hereunder is subject to satisfaction of the following
conditions precedent:
(a) The Administrative Agents receipt of the following, each of which shall be originals or
telecopies (followed promptly by originals) unless otherwise specified, each properly executed by a
Responsible Officer of the signing Loan Party or the General Partner acting on behalf of such Loan
Party, each dated the Closing Date (or, in the case of certificates of governmental officials, a
recent date before the Closing Date) and each in form and substance satisfactory to the
Administrative Agent and each of the Lenders:
(i) executed counterparts of this Agreement and the Subsidiary Guaranty, sufficient in
number for distribution to the Administrative Agent, each Lender and the Borrower;
(ii) a Note executed by the Borrower in favor of each Lender requesting a Note;
(iii) a pledge and security agreement (together with each other pledge and security
agreement and pledge and security agreement supplement delivered pursuant to
Section
6.12
, in each case as amended, the
Security Agreement
), duly executed by the
Borrower and each Subsidiary Guarantor, together with:
(A) certificates, if any, representing the Pledged Equity referred to therein
accompanied by undated stock powers executed in blank or registered in the name of
such nominee or nominees as the Administrative Agent shall specify and instruments,
if any, evidencing any Indebtedness pledged by the Loan Parties pursuant to the
Security Agreement indorsed in blank,
(B) proper Financing Statements in form appropriate for filing under the
Uniform Commercial Code of all jurisdictions that the Administrative Agent may deem
necessary or desirable in order to perfect the Liens created under the Security
Agreement, covering the Collateral described in the Security Agreement,
(C) completed requests for information, dated on or before the date of the
initial Credit Extension, listing all effective financing statements filed in the
jurisdictions referred to in clause (B) above that name the Borrower or any
Subsidiary as debtor, together with copies of such other financing statements,
(D) evidence of the completion of all other actions, recordings and filings of
or with respect to the Security Agreement that the Administrative Agent
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may deem
necessary or reasonably desirable in order to perfect the Liens created thereby,
(E) the account control agreements referred to in the Security Agreement and
duly executed by the appropriate parties,
(F) the Tesoro Consent, duly executed by each party thereto, and
(G) evidence that all other action that the Administrative Agent may deem
necessary or desirable in order to perfect the Liens created under the Security
Agreement has been taken (including receipt of duly executed payoff letters, UCC-3
termination statements and landlords and bailees waiver and consent agreements);
(iv) subject to the provisions of the Post Closing Agreement, deeds of trust, trust
deeds, deeds to secure debt, mortgages, leasehold mortgages and leasehold deeds of trust,
covering the fee and recorded leasehold estates and recorded easement interests owned by the
Borrower or any of its Subsidiaries in the land on which the Initial Terminals, the High
Plains Trunkline, and the Utah Pipelines are located, (together with the Assignments of
Leases and Rents referred to therein and each other mortgage delivered pursuant to
Section 6.12
, in each case as amended, the
Mortgages
), duly executed by
the appropriate Loan Party, together with:
(A) evidence that counterparts of the Mortgages have been duly executed,
acknowledged and delivered and are in form suitable for filing or recording in all
filing or recording offices that the Administrative Agent may deem necessary or
reasonably desirable in order to create a valid first and subsisting Lien on the
property described therein in favor of the Administrative Agent for the benefit of
the Secured Parties and that all filing, documentary, stamp, intangible and
recording taxes and fees have been paid (or arrangements therefor satisfactory to
the Administrative Agent have been made),
(B) with respect to the Initial Terminals, fully paid American Land Title
Association Lenders Extended Coverage title insurance policies (the
Mortgage
Policies
), with endorsements and in amounts acceptable to the Administrative
Agent, issued, coinsured and reinsured by title insurers acceptable to the
Administrative Agent, insuring the Mortgages to be valid first and subsisting Liens
on the property described therein, free and clear of all defects (including, but not
limited to, mechanics and materialmens Liens) and encumbrances, excepting only
Permitted Encumbrances and other Liens permitted under the Loan Documents, and
providing for such other affirmative insurance (including endorsements for future
advances under the Loan Documents, for mechanics and materialmens Liens and for
zoning of the applicable property to the extent available in the jurisdiction in
which such property is located) and such
coinsurance and direct access reinsurance as the Administrative Agent may deem
necessary or desirable,
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(C) estoppel and consent agreements executed by each of the lessors of the
leased real properties listed on
Schedule 4.01(a)(iv)
, and, if applicable,
any such lessors mortgagee, along with (1) a memorandum of lease in recordable form
with respect to such leasehold interest, executed and acknowledged by the owner of
the affected real property, as lessor, or (2) evidence that the applicable lease
with respect to such leasehold interest or a memorandum thereof has been recorded in
all places necessary or desirable, in the Administrative Agents reasonable
judgment, to give constructive notice to third-party purchasers of such leasehold
interest, or (3) if such leasehold interest was acquired or subleased from the
holder of a recorded leasehold interest, the applicable assignment or sublease
document, executed and acknowledged by such holder, in each case in form sufficient
to give such constructive notice upon recordation and otherwise in form satisfactory
to the Administrative Agent,
(D) evidence of the insurance required by the terms of the Mortgages, and
(E) evidence that all other action that the Administrative Agent may deem
necessary or desirable in order to create valid first and subsisting Liens on the
property described in the Mortgages has been taken;
(v) the Post Closing Agreement duly executed by each of the parties thereto;
(vi) such certificates of resolutions or other action, incumbency certificates and/or
other certificates of Responsible Officers of each Loan Party or the General Partner acting
on behalf of each Loan Party as the Administrative Agent may require evidencing the
identity, authority and capacity of each Responsible Officer thereof authorized to act as a
Responsible Officer in connection with this Agreement and the other Loan Documents to which
such Loan Party is a party or is to be a party;
(vii) such documents and certifications as the Administrative Agent may reasonably
require to evidence that each Loan Party is duly organized or formed, and that the Borrower
and each Subsidiary Guarantor is validly existing, in good standing and qualified to engage
in business in each jurisdiction where its ownership, lease or operation of properties or
the conduct of its business requires such qualification, except to the extent that failure
to do so could not reasonably be expected to have a Material Adverse Effect;
(viii) a favorable opinion of McGuireWoods LLP, counsel to the Loan Parties, addressed
to the Administrative Agent and each Lender, as to the matters concerning the Loan Parties
and the Loan Documents as the Required Lenders may reasonably request;
(ix) a favorable opinion of local counsel to the Loan Parties in each of Alaska,
California, Idaho, Montana, North Dakota, Utah and Washington addressed to the
Administrative Agent and each Lender, as to the matters concerning the Loan Parties and
the Loan Documents as the Required Lenders may reasonably request;
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(x) a certificate of a Responsible Officer of the General Partner on behalf of all Loan
Parties either (A) attaching copies of all consents, licenses and approvals required in
connection with the consummation by such Loan Party or Loan Parties of the Transaction and
the execution, delivery and performance by such Loan Party or Loan Parties and the validity
against such Loan Party or Loan Parties of the Loan Documents to which it is a party, and
such consents, licenses and approvals shall be in full force and effect, or (B) stating that
no such consents, licenses or approvals are so required;
(xi) a certificate signed by a Responsible Officer of the Borrower certifying (A) that
the conditions specified in
Sections 4.02(a)
and
(b)
have been satisfied and
(B) that there has been no event or circumstance since the date of the Audited Financial
Statements that has had or could be reasonably expected to have, either individually or in
the aggregate, a Material Adverse Effect;
(xii) a business plan and budget of the Borrower and its Subsidiaries on a consolidated
basis, including forecasts prepared by management of the Borrower, of consolidated balance
sheets and statements of income or operations and cash flows of the Borrower and its
Subsidiaries on a monthly basis for the first year following the Closing Date;
(xiii) a certificate attesting to the Solvency of the Loan Parties on a consolidated
basis before and after giving effect to the execution and delivery of the Loan Documents,
any Credit Extension to be made on the Closing Date and the consummation of the Transaction,
from the chief financial officer of the Borrower;
(xiv) all existing Phase I environmental assessments and other audits, assessments, or
reports relating to environmental conditions or compliance with Environmental Laws which
have been previously conducted or other reports, in each case to the extent in the
possession of the Borrower or to the extent existing and otherwise obtainable by the
Borrower, as the Administrative Agent may reasonably require and the Administrative Agent
shall be satisfied in its reasonable discretion with the condition of the properties of the
Borrower and its Subsidiaries with respect to the Borrowers and its Subsidiaries (or their
respective predecessors) compliance with Environmental Laws; and
(xv) evidence that all insurance required to be maintained pursuant to the Loan
Documents has been obtained and is in effect, together with the certificates of insurance,
naming the Administrative Agent, on behalf of the Lenders, as an additional insured or loss
payee, as the case may be, under all insurance policies maintained with respect to the
assets and properties of the Loan Parties that constitutes Collateral.
(b) (i) All fees required to be paid to the Administrative Agent and the Arranger on or before
the Closing Date shall have been paid and (ii) all fees required to be paid to the Lenders on or
before the Closing Date shall have been paid.
(c) Unless waived by the Administrative Agent, the Borrower shall have paid all fees, charges
and disbursements of counsel to the Administrative Agent (directly to such counsel if
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requested by
the Administrative Agent) to the extent invoiced prior to or on the Closing Date, plus such
additional amounts of such fees, charges and disbursements as shall constitute its reasonable
estimate of such fees, charges and disbursements incurred or to be incurred by it through the
closing proceedings (
provided
that such estimate shall not thereafter preclude a final
settling of accounts between the Borrower and the Administrative Agent).
(d) The Loan Parties shall have provided true, correct, and complete copies of all Material
Contracts to the Administrative Agent and the Lenders to the extent not previously provided (and
the Administrative Agent and the Lenders agree that any Material Contracts filed with the SEC in
connection with the Transaction shall be deemed delivered), and the Administrative Agent and the
Lenders shall be satisfied in their reasonable discretion with their review thereof. None of the
material terms or conditions to closing of any party set forth in the Material Contracts shall have
been amended, modified or supplemented without the prior written consent of the Administrative
Agent, and all conditions stated therein shall have been satisfied or, with the prior written
consent of the Administrative Agent, waived.
(e) The Transaction shall have been completed in accordance with the terms of the Transfer
Documents and applicable Law.
Without limiting the generality of the provisions of
Section 9.03(e)
, for purposes of
determining compliance with the conditions specified in this
Section 4.01
, each Lender that
has signed this Agreement shall be deemed to have consented to, approved or accepted or to be
satisfied with, each document or other matter required thereunder to be consented to or approved by
or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received
notice from such Lender prior to the proposed Closing Date specifying its objection thereto.
4.02 Conditions to all Credit Extensions
. The obligation of each Lender and each L/C Issuer
to honor any Request for Credit Extension (other than a Revolving Credit Loan Notice requesting
only a conversion of Revolving Credit Loans to the other Type, or a continuation of Eurodollar Rate
Loans) is subject to the following conditions precedent:
(a) The representations and warranties of the Borrower and each other Loan Party contained in
Article V
or any other Loan Document, or which are contained in any document furnished at
any time under or in connection herewith or therewith, shall be true and correct in all material
respects (except for such representations and warranties that have a materiality or Material
Adverse Effect qualification, which shall be true and correct in all respects) on and as of the
date of such Credit Extension, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they shall be true and correct in all material
respects (except for such representations and warranties that have a materiality or Material
Adverse Effect qualification, which shall be true and correct in all respects) as of such earlier
date, and except that for purposes of this
Section 4.02
, the representations and warranties
contained in
Sections 5.05(a)
and
(b)
shall be deemed to refer to the most recent
statements furnished pursuant to
Sections 6.01(a)
and
(b)
, respectively.
(b) No Default shall exist, or would result from such proposed Credit Extension or from the
application of the proceeds thereof.
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(c) The Administrative Agent and, if applicable, the applicable L/C Issuer shall have received
a Request for Credit Extension in accordance with the requirements hereof.
Each Request for Credit Extension (other than a Revolving Credit Loan Notice requesting only a
conversion of Revolving Credit Loans to the other Type or a continuation of Eurodollar Rate Loans)
submitted by the Borrower shall be deemed to be a representation and warranty that the conditions
specified in
Sections 4.02(a) and (b)
have been satisfied on and as of the date of the
applicable Credit Extension.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Administrative Agent and the Lenders that:
5.01 Existence, Qualification and Power
. Each Loan Party and each of its Subsidiaries (a) is
duly organized or formed, validly existing and, as applicable, in good standing under the Laws of
the jurisdiction of its incorporation or organization, (b) has all requisite power and authority
and all requisite governmental licenses, authorizations, consents and approvals (i) to own or lease
its assets and carry on its business and (ii) to execute, deliver and perform its obligations under
the Loan Documents and Transfer Documents to which it is a party and consummate the Transaction,
and (c) is duly qualified and is licensed and, as applicable, in good standing under the Laws of
each jurisdiction where its ownership, lease or operation of properties or the conduct of its
business requires such qualification or license; except in each case referred to in clause (b)(i)
or (c), to the extent that failure to do so could not reasonably be expected to have a Material
Adverse Effect.
5.02 Authorization; No Contravention
. The execution, delivery and performance by each Loan
Party of each Loan Document and Transfer Document to which such Person is or is to be a party have
been duly authorized by all necessary corporate or other organizational action, and do not and will
not (a) violate any of such Persons Organization Documents; (b) result in the creation of any Lien
not permitted by the Loan Documents or violate (i) any material Contractual Obligation to which
such Person is a party or by which it or any of its properties is bound or (ii) any order,
injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person
or its property is subject; or (c) violate any Law.
5.03 Governmental Authorization; Other Consents
. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any Governmental Authority or any
other Person is necessary or required in connection with (a) the execution, delivery or performance
by, or enforcement against, any Loan Party of this Agreement or any other Loan Document or Transfer
Document or for the consummation of the Transaction, (b) the grant by any Loan Party of the Liens
granted by it pursuant to the Collateral Documents, (c) the perfection or maintenance of the Liens
created under the Collateral Documents (including the first priority nature thereof, subject to
Liens permitted under
Section 7.01
and Permitted Encumbrances) or (d) the exercise by the
Administrative Agent or any Lender of its rights under
the Loan Documents or the remedies in respect of the Collateral pursuant to the Collateral
Documents, except (i) for the authorizations, approvals, actions, notices and filings which have
been duly obtained, taken, given or made and are in full force and effect and (ii) to the extent
that
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the failure of any approval, consent, exemption, authorization, or other action by, or notice
to, or filing with, any Governmental Authority or any other Person to have been duly obtained,
taken, given, or made or to be in full force and effect, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.
5.04 Binding Effect
. This Agreement has been, and each other Loan Document, when delivered
hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto.
This Agreement constitutes, and each other Loan Document when so delivered will constitute, a
legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is
party thereto in accordance with its terms, except as may be limited by any applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting creditors rights generally or by
general principles of equity.
5.05 Financial Statements; No Material Adverse Effect
. (a) The Audited Financial Statements
(i) were prepared in accordance with GAAP consistently applied throughout the period covered
thereby, except as otherwise expressly noted therein; (ii) fairly present the financial condition
of the Borrower and its Subsidiaries as of the date thereof and their results of operations for the
period covered thereby in accordance with GAAP consistently applied throughout the period covered
thereby, except as otherwise expressly noted therein; and (iii) show all material indebtedness and
other liabilities, direct or contingent, of the predecessor business of the Borrower and its
Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and
Indebtedness that would be required to be disclosed in consolidated financial statements of the
Borrower or the footnotes thereto prepared in accordance with GAAP.
(b) The unaudited pro forma combined balance sheet of Borrowers Predecessor and its
Subsidiaries for the three fiscal quarter period ending September 30, 2010 and the related pro
forma combined statements of income or operations, partners capital, retained earning and cash
flows for the three fiscal quarter period ended on that date (i) were prepared in accordance with
GAAP consistently applied throughout the period covered thereby, except as otherwise expressly
noted therein, and (ii) fairly present the financial condition of the Borrower and its Subsidiaries
as of the date thereof and their results of operations for the period covered thereby, subject to
the absence of footnotes and to normal year-end audit adjustments.
(c) Since the date of the Audited Financial Statements, there has been no event or
circumstance, either individually or in the aggregate, that has had or could reasonably be expected
to have a Material Adverse Effect.
(d) The consolidated forecasted balance sheet, statements of income and cash flows of the
Borrower and its Subsidiaries delivered pursuant to
Section 4.01
or
Section 6.01(c)
were prepared in good faith on the basis of the assumptions stated therein, which assumptions were
fair in light of the conditions existing at the time of delivery of such forecasts, and
represented, at the time of delivery, the Borrowers best estimate of its future financial
condition and performance.
5.06 Litigation
. There are no actions, suits, proceedings, claims or disputes pending or, to
the knowledge of the Borrower, threatened, at law, in equity, or in arbitration or before any
Governmental Authority (including, without limitation, FERC or any equivalent state regulatory
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authority), by or against the Borrower or any of its Subsidiaries or against any of their
properties or revenues that (a) purport to affect or pertain to this Agreement, any other Loan
Document, any Transfer Document or the consummation of the Transaction, or (b) except as
specifically disclosed in
Schedule 5.06
(the
Disclosed Litigation
), either
individually or in the aggregate, if determined adversely, could reasonably be expected to have a
Material Adverse Effect, and there has been no materially adverse change in the status, or
financial effect on any Loan Party or any Subsidiary thereof, of the matters described in
Schedule 5.06
.
5.07 No Default
. Neither any Loan Party nor any Subsidiary thereof is in default under any
Contractual Obligation that could, either individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. No Default has occurred and is continuing or would result from
the consummation of the transactions contemplated by this Agreement or any other Loan Document.
5.08 Title; Etc
. (a) The Borrower and each of its Subsidiaries has indefeasible title in fee
simple to, or valid leasehold or easement interests in, all of their respective real property, and
good title to all of their respective personal property, including, without limitation, the real
and personal property described in each of the Mortgages, as is necessary to operate the Business
except for defects that, individually or in the aggregate, (i) do not materially interfere with the
ordinary conduct of Business and (ii) do not have a Material Adverse Effect. None of such property
is subject to any Lien, except for Liens permitted by
Section 7.01
.
(b) The Pipeline Systems are covered by recorded fee deeds, rights of way, easements, leases,
servitudes, permits, licenses, or other instruments (collectively,
Pipeline Rights
) in
favor of the Borrower or its Subsidiaries, except where the failure of the Pipeline Systems to be
so covered, individually or in the aggregate, (i) does not materially interfere with the ordinary
conduct of Business and (ii) do not have a Material Adverse Effect. The Pipeline Rights establish
a contiguous and continuous right of way for the Pipeline Systems and grant the Borrower or its
Subsidiaries the right to construct, operate, and maintain the Pipeline Systems in, over, under, or
across the land covered thereby in the same way that a prudent owner and operator would inspect,
operate, repair, and maintain similar assets and in the same way as the Borrower or its
Subsidiaries have inspected, operated, repaired, and maintained the Pipeline Systems as reflected
in the Audited Financial Statements;
provided
, however, (A) some of the Pipeline Rights
granted to the Borrower or its Subsidiaries by private parties and Governmental Authorities are
revocable at the right of the applicable grantor or its successors-in-interest, (B) some of the
rights of way may cross properties that are subject to Liens, covenants, conditions, and
restrictions in favor of third parties that have not been subordinated to the Pipeline Rights; and
(C) some rights of way are subject to certain defects, limitations and restrictions;
provided
,
further
, that none of the limitations, defects, and restrictions
described in clauses (A), (B) and (C) above, individually or in the aggregate, (x) materially
interfere with the ordinary conduct of Business or (y) have a Material Adverse Effect.
(c) The Terminals are covered by fee deeds, real property leases, or other instruments
(collectively
Terminal Deeds
) in favor of the Borrower or its Subsidiaries. The Terminal
Deeds grant the Borrower or its Subsidiaries the right to construct, operate, and maintain the
Terminals in, over, under, and across the land covered thereby in the same way that a prudent owner
and operator would inspect, operate, repair, and maintain similar assets and in the same
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way as the
Borrower or its Subsidiaries have inspected, operated, repaired, and maintained the Terminals as
reflected in the Audited Financial Statements, subject to Permitted Encumbrances.
(d) There has been no and there is not presently any occurrence of any (i) breach or event of
default on the part of the Borrower or any of its Subsidiaries with respect to any Pipeline Right
or Terminal Deed, (ii) to the knowledge of the Borrower or any of its Subsidiaries, breach or event
of default on the part of any other party to any Pipeline Right or Terminal Deed, and (iii) event
that, with the giving of notice or lapse of time or both, would constitute such breach or event of
default on the part of the Borrower or any of its Subsidiaries with respect to any Pipeline Right
or Terminal Deed or, to the knowledge of the Borrower or any of its Subsidiaries, on the part of
any other party thereto, in each case, to the extent any such breach or default, individually or in
the aggregate, (A) materially interferes with the ordinary conduct of Business or (B) has a
Material Adverse Effect. The Pipeline Rights and Terminal Deeds (to the extent applicable) are in
full force and effect in all material respects and are valid and enforceable against the parties
thereto in accordance with their terms (subject to the effect of any applicable bankruptcy,
reorganization, insolvency, moratorium, fraudulent transfer, fraudulent conveyance or similar laws
effecting creditors rights generally and subject, as to enforceability to the effect of general
principles of equity) and all rental and other payments due thereunder by the Borrower, its
Subsidiaries, and their predecessors in interest have been duly paid in accordance with the terms
of the Pipeline Rights and Terminal Deeds, except to the extent that a failure to do so,
individually or in the aggregate, (x) does not materially interfere with the ordinary conduct of
Business and (y) does not have a Material Adverse Effect.
(e) The Pipeline Systems are located within the confines of the land covered by the Pipeline
Rights and do not encroach upon any adjoining property, except where the failure of any portion of
any of the Pipeline Systems to be so located, individually or in the aggregate, (i) does not
materially interfere with the ordinary conduct of Business and (ii) does not have a Material
Adverse Effect. The Terminals are located within the boundaries of the property affected by the
Terminal Deeds and do not encroach upon any adjoining property, except where the failure of the
Terminal Deeds to be so located, individually or in the aggregate, (i) does not materially
interfere with the ordinary conduct of Business and (ii) does not have a Material Adverse Effect.
The buildings and improvements owned or leased by the Borrower and its Subsidiaries, and the
operation and maintenance thereof, do not (i) contravene any applicable zoning or building law or
ordinance or other administrative regulation or (ii) violate any applicable restrictive covenant or
any applicable Law, the contravention or violation of which would materially affect the use of
such buildings and improvements.
(f) Neither the Borrower nor any of its Subsidiaries has received any written notice that any
eminent domain proceeding or taking has been commenced with respect to all or any portion of the
Pipeline Systems or the Terminals, and, to the knowledge of the Borrower and its Subsidiaries, no
such proceeding or taking is contemplated except for that which, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
(g) No portion of the Pipeline Systems or the Terminals has, since the Closing Date, suffered
any material damage by fire or other casualty loss that has not heretofore been repaired and
restored. No portion of the Terminals is located in a special flood hazard area as designated
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by
any Governmental Authority, except to the extent flood insurance is in force with respect to such
portion.
5.09 Environmental Compliance; Permits
. (a) The Loan Parties and their respective
Subsidiaries conduct in the ordinary course of business a review of the effect of existing and
proposed Environmental Laws and known or suspected Environmental Liabilities on their respective
businesses, operations and properties, and as a result thereof the Borrower has reasonably
concluded that, except as specifically disclosed in
Schedule 5.09
, such Environmental
Liabilities could not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Prior to contributing the applicable Contributed Assets, the Contributing
Affiliates conducted in the ordinary course of business a review of the effect of existing and
proposed Environmental Laws and known or suspected Environmental Liabilities on their respective
businesses, operations and properties, and as a result thereof the Borrower has concluded that,
except as specifically disclosed in
Schedule 5.09
, such Environmental Laws and
Environmental Liabilities could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(b) Except for matters that, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect, (i) the Loan Parties and their Subsidiaries are and
have been in compliance with all applicable Environmental Laws and are not subject to any pending
or threatened claim or proceeding relating to Environmental Laws or Hazardous Materials, and (ii)
prior to contributing the applicable Contributed Assets and with respect to the Contributed Assets
only, the Contributing Affiliates were in compliance with all applicable Environmental Laws and
were not subject to any pending or threatened claim or proceeding relating to Environmental Laws or
Hazardous Materials.
(c) Except for matters that, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect, none of the properties currently owned or operated by
any Loan Party or any of its Subsidiaries is listed or proposed for listing on the NPL or on the
CERCLIS or any analogous foreign, state or local list.
(d) Except for matters that, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect: (i) neither any Loan Party nor any of its Subsidiaries
is undertaking, and has not completed, either individually or together with other potentially
responsible parties, any investigation or assessment or remedial or response action relating to any
actual, threatened, or suspected release, discharge or disposal of Hazardous Materials at any site,
location or operation, either voluntarily or pursuant to the order of any Governmental Authority or
the requirements of any Environmental Law; and all Hazardous Materials generated, used, treated,
handled or stored at, or transported to or from, any property currently or formerly owned or
operated by any Loan Party or any of its Subsidiaries have been disposed of in a manner not
reasonably expected to result in any Environmental Liability to any Loan Party or any of its
Subsidiaries; and (ii) prior to contributing the applicable Contributed Assets, and with respect to
the Contributed Assets only, neither any Contributing Affiliate nor any of its Subsidiaries had
undertaken, and had not completed, either individually or together with other potentially
responsible parties, any investigation or assessment or remedial or response action relating
to any actual, threatened, or suspected release, discharge or disposal of Hazardous Materials at
any site, location or operation, either voluntarily or pursuant to the order of any Governmental
Authority
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or the requirements of any Environmental Law; and all Hazardous Materials generated,
used, treated, handled or stored at, or transported to or from, any property owned or operated at
or prior to the time of the contribution of the applicable Contributed Assets by any Contributing
Affiliate or any of its Subsidiaries were disposed of in a manner not reasonably expected to result
in any Environmental Liability to any Contributing Affiliate or any of its Subsidiaries.
(e) Except for matters that, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect, (i) the Borrower and each of its Subsidiaries (A) have
obtained all Environmental Permits necessary for the ownership and operation of its real properties
and the conduct of its Business, which are in full force and effect; (B) have been and are in
compliance with all terms and conditions of such Environmental Permits; and (C) have not received
written notice of any violation or alleged violation of any Environmental Permit, and (ii) prior to
contributing the applicable Contributed Assets, each of the Contributing Affiliates (A) had
obtained all Environmental Permits necessary for the ownership and operation of the Contributed
Assets, which were in full force and effect at such time; (B) were in compliance with all terms and
conditions of such Environmental Permits; and (C) had not received written notice of any violation
or alleged violation of any Environmental Permit.
5.10 Insurance
. The properties of the Borrower and its Subsidiaries are insured with
insurance companies not Affiliates of the Borrower, in such amounts (after giving effect to any
self-insurance compatible with the following standards), with such deductibles and covering such
risks as are customarily carried by companies engaged in similar businesses and owning similar
properties in localities where the Borrower or the applicable Subsidiary operates.
5.11 Taxes
. The Borrower and its Subsidiaries have filed all Federal, state and other
material tax returns and reports required to be filed, and have paid all Federal, state and other
material taxes, assessments, fees and other governmental charges levied or imposed upon them or
their properties, income or assets otherwise due and payable, except (a) those which are being
contested in good faith by appropriate proceedings diligently conducted and for which adequate
reserves have been provided in accordance with GAAP and (b) to the extent that the failure to do so
could not reasonably be expected to have a Material Adverse Effect. There is no proposed tax
assessment against the Borrower or any Subsidiary that would, individually or in the aggregate, if
made, have a Material Adverse Effect. Neither any Loan Party nor any Subsidiary thereof is party
to any tax sharing agreement except as set forth on
Schedule 5.11
.
5.12 ERISA Compliance
. (a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Federal or state laws. Each Plan that is
intended to be a qualified plan under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service to the effect that the form of such Plan is
qualified under Section 401(a) of the Code and the trust related thereto has been determined by the
Internal Revenue Service to be exempt from Federal income tax under Section 501(a) of the Code, or
an application for such a letter is currently being processed by the Internal Revenue Service. To
the best knowledge of the Borrower, nothing has occurred that would prevent or cause the loss of
such tax-qualified status.
(b) There are no pending or, to the best knowledge of the Borrower, threatened claims, actions
or lawsuits, or action by any Governmental Authority, with respect to any Plan
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that could
reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction
or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or
could reasonably be expected to result in a Material Adverse Effect.
(c) (i) No ERISA Event has occurred, and neither the Borrower nor any ERISA Affiliate is aware
of any fact, event or circumstance that could reasonably be expected to constitute or result in an
ERISA Event with respect to any Pension Plan; (ii) the Borrower and each ERISA Affiliate has met
all applicable requirements under the Pension Funding Rules in respect of each Pension Plan, and no
waiver of the minimum funding standards under the Pension Funding Rules has been applied for or
obtained; (iii) as of the most recent valuation date for any Pension Plan, the funding target
attainment percentage (as defined in Section 430(d)(2) of the Code) is 60% or higher and neither
the Borrower nor any ERISA Affiliate knows of any facts or circumstances that could reasonably be
expected to cause the funding target attainment percentage for any such plan to drop below 60% as
of the most recent valuation date; (iv) neither the Borrower nor any ERISA Affiliate has incurred
any liability to the PBGC other than for the payment of premiums, and there are no premium payments
which have become due that are unpaid; (v) neither the Borrower nor any ERISA Affiliate has engaged
in a transaction that could be subject to Section 4069 or Section 4212(c) of ERISA; and (vi) no
Pension Plan has been terminated by the plan administrator thereof nor by the PBGC, and no event or
circumstance has occurred or exists that could reasonably be expected to cause the PBGC to
institute proceedings under Title IV of ERISA to terminate any Pension Plan.
5.13 Subsidiaries; Equity Interests; Loan Parties
. As of the Closing Date, no Loan Party has
any Subsidiaries other than those specifically disclosed in Part (a) of
Schedule 5.13
, and
all of the outstanding Equity Interests in such Subsidiaries have been validly issued, are fully
paid and non-assessable and are owned by a Loan Party in the amounts specified on Part (a) of
Schedule 5.13
free and clear of all Liens except those created under the Collateral
Documents. As of the Closing Date, no Loan Party has any equity investments in any other
corporation or entity other than those specifically disclosed in Part (b) of
Schedule 5.13
.
Set forth on Part (c) of
Schedule 5.13
is a complete and accurate list of all Loan
Parties, showing as of the Closing Date (as to each Loan Party) the jurisdiction of its
incorporation, the address of its principal place of business and its U.S. taxpayer identification
number or, in the case of any non-U.S. Loan Party that does not have a U.S. taxpayer identification
number, its unique identification number issued to it by the jurisdiction of its incorporation.
5.14 Margin Regulations; Investment Company Act
. (a) The Borrower is not engaged and will not
engage, principally or as one of its important activities, in the business of purchasing or
carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit
for the purpose of purchasing or carrying margin stock.
(b) None of the Borrower, any Person Controlling the Borrower, or any Subsidiary is or is
required to be registered as an
investment company
under the Investment Company Act of
1940.
5.15 Disclosure
. The Borrower has disclosed to the Administrative Agent and the Lenders all
agreements, instruments, and corporate or other restrictions to which it or any of its Subsidiaries
is subject, and all other matters known to it, that, individually or in the aggregate,
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could
reasonably be expected to result in a Material Adverse Effect. No report, financial statement,
certificate or other written information furnished by or on behalf of any Loan Party to the
Administrative Agent or any Lender in connection with the transactions contemplated hereby and the
negotiation of this Agreement or delivered hereunder or under any other Loan Document (in each case
as modified or supplemented by other information so furnished), when taken as a whole, contains any
material misstatement of fact or omits to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading;
provided
that, with respect to projected financial information, the Borrower represents
only that such information was prepared in good faith based upon assumptions believed to be
reasonable at the time.
5.16 Compliance with Laws
. Each Loan Party and each Subsidiary thereof is in compliance in
all material respects with the requirements of all Laws and all orders, writs, injunctions and
decrees applicable to it or to its properties, except in such instances in which (a) such
requirement of Law or order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted or (b) the failure to comply therewith, either
individually or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
5.17 Intellectual Property; Licenses, Etc
. The Borrower and each of its Subsidiaries own, or
possess the right to use, all of the trademarks, service marks, trade names, copyrights, patents,
patent rights, franchises, licenses and other intellectual property rights that are reasonably
necessary for the operation of their respective businesses, without conflict with the rights of any
other Person, except, in each case, where the failure of the same, either individually or in the
aggregate, could not be reasonably be expected to have a Material Adverse Effect. No slogan or
other advertising device, product, process, method, substance, part or other material now employed,
or now contemplated to be employed, by the Borrower or any of its Subsidiaries infringes upon any
rights held by any other Person, which infringements, individually or in the aggregate, could
reasonably be excepted to have a Material Adverse Effect.
5.18 Solvency
. The Loan Parties are, on a consolidated basis, Solvent.
5.19 [Intentionally Omitted]
.
5.20 Labor Matters
. There are no strikes, slowdowns, work stoppages, or controversies pending
or, to the knowledge of the Borrower, threatened against the Borrower or any of its Subsidiaries
which could have, either individually or in the aggregate, a Material Adverse Effect.
5.21 Collateral Documents
. Tesoro High Plains is a transmitting utility within the meaning
of Section 9.501(b) of each of the North Dakota Uniform Commercial Code and the Montana Uniform
Commercial Code. Opco is a transmitting utility within the meaning of Section 9.501(b) of the
Utah Uniform Commercial Code. The provisions of the Collateral Documents are effective to create
in favor of the Administrative Agent for the benefit of the
Secured Parties a legal, valid and enforceable first priority Lien (subject to Liens permitted
by
Section 7.01
) on all right, title and interest of the respective Loan Parties in the
Collateral described therein. Except for filings completed prior to the Closing Date and as
contemplated
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hereby and by the Collateral Documents, no filing or other action will be necessary to
perfect such Liens.
5.22 State and Federal Regulation
.
(a) In order to comply with the Interstate Commerce Act, the Energy Policy Act, and
regulations promulgated by the FERC to implement those statutes, Borrower or Borrowers Affiliates,
as applicable, have on file with the FERC tariffs that govern the interstate transportation of
Crude Oil on the Pipeline Systems, except for any Utah FERC Jurisdictional Requirement that has
been ordered or imposed but for which time period for compliance therewith has not expired.
Except as set forth on
Schedule 5.22(a)
, neither the Borrower, any of the Borrowers
Subsidiaries, nor any other Person that now owns an interest in any of the Pipeline Systems has
been within the past three (3) years or is the subject of a complaint, investigation or other
proceeding at the FERC regarding their respective rates or practices with respect to the Pipeline
Systems. No complaint or investigation is currently pending before the FERC, nor to the knowledge
of any Loan Party is any such complaint or investigation currently contemplated, that could result
in, if adversely determined to the position or interest of the Borrower or its applicable
Subsidiaries, or could reasonably be expected to result in, a Material Adverse Effect.
(b) With respect to the intrastate common carrier pipeline services and operations that are
provided by the Pipeline Systems in the State of North Dakota (the
North Dakota Intrastate
Pipeline Services
), each Subsidiary of the Borrower which owns pipelines and conducts pipeline
operations in the State of North Dakota has filed with the North Dakota Public Service Commission
(
NDPSC
) tariffs applicable to such services that comply with Chapter 49-19 of the North
Dakota Century Code and regulations issued thereunder by the NDPSC. Except to the extent that any
of the following could not reasonably be expected to result in a Material Adverse Effect, (i) the
rates charged by the Borrowers Subsidiaries with respect to the North Dakota Intrastate Pipeline
Services have not been challenged, protested or subject to complaint in writing by the NDPSC or by
any shipper or potential shipper as being unreasonable, excessive or unlawfully discriminatory, or
otherwise unlawful and (ii) none of the NDPSC or any shipper or potential shipper has threatened in
writing to challenge, protest or complain that such rates are unreasonable, excessive or unlawfully
discriminatory, or otherwise unlawful. Neither the Borrower nor any of the Borrowers Subsidiaries
has been within the past three (3) years or is presently the subject of a written complaint,
investigation or other proceeding regarding their respective rates or practices with respect to
such services except to the extent the same could not reasonably be expected to result in a
Material Adverse Effect.
(c) With respect to those certain common carrier pipeline services and operations that are
provided by the Pipeline Systems in the State of Montana, each Subsidiary of the Borrower which
owns pipelines and conducts pipeline operations in the State of Montana has determined that no
tariff filing with any regulatory agency of the State of Montana is necessary because all pipeline
services within the State of Montana are interstate common carrier services that are governed
exclusively by the FERC. Except to the extent that any of the following could not
reasonably be expected to result in a Material Adverse Effect, neither the Borrower nor any
Subsidiary of the Borrower which owns pipelines and conducts pipeline services and operations in
the State of Montana has been subject to any written challenge, protest or complaint by any
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party,
including any agency of the State of Montana, with respect to (i) the jurisdiction of the State of
Montana or any agency thereof over such pipelines and pipeline services and operations in the State
of Montana, or (ii) the lack of a tariff filing with any regulatory agency of the State of Montana
regarding such pipeline services and operations.
(d) With respect to pipeline services and operations that are situated or conducted in the
State of Utah, each Subsidiary of the Borrower which owns such pipelines and conducts such pipeline
operations has determined that the rates and terms and conditions of shipment are not subject to
regulation by the State of Utah, any administrative agency of the State of Utah, or the FERC.
Except to the extent that any Utah FERC Jurisdictional Requirement has been ordered or imposed, the
Borrower and its Subsidiaries have determined that no tariff filing is required with respect to
pipeline services and operations within the State of Utah. Except to the extent that any of the
following could not reasonably be expected to result in a Material Adverse Effect, neither the
Borrower nor any Subsidiary of the Borrower which owns pipelines and conducts pipeline services and
operations in the State of Utah has been subject to any written challenge, protest or complaint by
any party, including any agency of the State of Utah or FERC, with respect to (i) the jurisdiction
of the State of Utah or any agency thereof over such pipelines and pipeline services and operations
in the State of Utah, (ii) the jurisdiction of FERC over such pipelines and pipeline services and
operations in the State of Utah, or (iii) with respect to the lack of a tariff filing with any
regulatory agency of the State of Utah or the FERC regarding such pipeline services and operations.
(e) With respect to those pipeline services and operations that are situated or conducted in
any State other than the States of North Dakota, Montana and Utah, except to the extent that any of
the following could not reasonably be expected to result in a Material Adverse Effect, (i) (A) each
Loan Party which owns such pipelines and conducts such pipeline operations has determined that the
rates and terms and conditions of shipment thereon are not subject to regulation by any State
Pipeline Regulatory Agency, any other administrative agency of the such State, or the FERC, and (B)
none of such Loan Parties has been subject to any written challenge, protest or complaint by any
party, including any agency of such State or FERC, with respect to (1) the jurisdiction of such
State or any agency thereof over such pipelines and pipeline services and operations, (2) the
jurisdiction of FERC over such pipelines and pipeline services and operations, or (3) with respect
to the lack of a tariff filing with any regulatory agency of the such State or the FERC regarding
such pipeline services and operations, or (ii) each Loan Party which owns such pipelines and
conducts such pipeline operations has filed with the applicable State Pipeline Regulatory Agency or
the FERC tariffs applicable to such services that comply with applicable Law and any regulations
issued thereunder by the State Pipeline Regulatory Agency or the FERC.
(f) Each of the Borrower and its Subsidiaries is in compliance with all rules, regulations and
orders of the FERC and all State Pipeline Regulatory Agencies applicable to the Pipeline Systems,
except for any Utah FERC Jurisdictional Requirement that has been ordered or imposed but for which
time period for compliance therewith has not expired, and except to the
extent that any noncompliance, either individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect.
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(g) Each of the Borrower and its Subsidiaries, to the extent applicable, is in compliance with
all Department of Transportation, Pipeline and Hazardous Materials Safety Administration
(
PHMSA
) regulations applicable to the Pipeline Systems, including but not limited to all
such regulations pertaining to pipeline safety and integrity, control room management, personnel
management and qualification, and annual and specific incident reports, except to the extent that
any noncompliance, either individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect. As of the Closing Date, none of the Contributing Affiliates has
been subject to any material enforcement or remedial action by or involving PHMSA within the past
three (3) years. Neither the Borrower nor any of its Subsidiaries, to the extent applicable, has
been subject to any material enforcement or remedial action by or involving PHMSA within the past
three (3) years, except to the extent that any such enforcement or remedial action, either
individually or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(h) As of the Closing Date, none of the Borrower or its Subsidiaries is liable for any
material refunds or interest thereon as a result of an order from the FERC or any other
Governmental Authority with jurisdiction over the Pipeline Systems.
(i) The Borrowers and any applicable Subsidiarys annual FERC Form No. 6 with respect to the
Pipeline Systems filed with the FERC since 2005 has been filed on a timely basis, except to the
extent that the time for filing any such annual form has been extended by the FERC.
(j) Without limiting the generality of
Section 5.03
of this Agreement, and except as
to tariffs on file at the FERC and at applicable State Pipeline Regulatory Agencies, no material
certificate, license, permit, consent, authorization or order (to the extent not otherwise
obtained) is required by the Borrower or any of its Subsidiaries from any Governmental Authority to
construct, own, operate and maintain the Pipeline Systems, or to transport and/or distribute Crude
Oil or Refined Products under existing contracts, agreements and tariffs as the Pipeline Systems
are presently owned, operated and maintained.
5.23 Title to Crude Oil and Refined Products
. None of the Borrower or any of its Subsidiaries
have title to any material portion of the Crude Oil, Refined Products or other petroleum products
that are stored or handled at any Terminal or that are transported through the Pipeline Systems.
The Borrower and its Subsidiaries require that each shipper whose Crude Oil, Refined Products or
other petroleum products are transported through the Pipeline Systems warrant that such shipper has
title, free and clear of all Liens, to all such Crude Oil, Refined Products or other petroleum
products tendered to the Pipeline System for transportation.
ARTICLE VI
AFFIRMATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder
shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding
(other than those as to which arrangements satisfactory to the Administrative Agent and the
applicable L/C Issuer shall have been made in accordance with
Section 9.10
), the Borrower
shall,
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and shall (except in the case of the covenants set forth in
Sections 6.01
,
6.02
,
6.03
and
6.11
) cause each of its Subsidiaries to:
6.01 Financial Statements
. Deliver to the Administrative Agent for further distribution to
each Lender:
(a) as soon as available, but in any event within 105 days after the end of each fiscal year
of the Borrower (or, if earlier, 15 days after the date required to be filed with the SEC (without
giving effect to any extension permitted by the SEC)), a consolidated balance sheet of the Borrower
and its Subsidiaries as at the end of such fiscal year, and the related consolidated statements of
income or operations, changes in partners capital, retained earnings and cash flows for such
fiscal year, setting forth in each case in comparative form the figures for the previous fiscal
year, all in reasonable detail and prepared in accordance with GAAP, such consolidated statements
to be audited and accompanied by a report and opinion of an independent certified public accountant
of nationally recognized standing reasonably acceptable to the Required Lenders, which report and
opinion shall be prepared in accordance with generally accepted auditing standards and shall not be
subject to any
going concern
or like qualification or exception or any qualification or
exception as to the scope of such audit;
(b) as soon as available, but in any event within 60 days after the end of each of the first
three fiscal quarters of each fiscal year of the Borrower (or, if earlier, 5 days after the date
required to be filed with the SEC (without giving effect to any extension permitted by the SEC))
(commencing with the fiscal quarter of the Borrower ending June 30, 2011), a consolidated balance
sheet of the Borrower and its Subsidiaries as at the end of such fiscal quarter, and the related
consolidated statements of income or operations, changes in partners capital, retained earnings
and cash flows for such fiscal quarter and for the portion of the Borrowers fiscal year then
ended, setting forth in each case in comparative form the figures for the corresponding fiscal
quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all
in reasonable detail, such consolidated statements to be certified by a Financial Officer of the
Borrower as fairly presenting the financial condition, results of operations, partners capital,
retained earnings and cash flows of the Borrower and its Subsidiaries in accordance with GAAP,
subject only to normal year-end audit adjustments and the absence of footnotes;
(c) as soon as available, but in any event at least 30 days after the end of each fiscal year
of the Borrower, an annual business plan and budget of the Borrower and its Subsidiaries on a
consolidated basis, including forecasts prepared by management of the Borrower, in form
satisfactory to the Administrative Agent and the Required Lenders, of consolidated balance sheets
and statements of income or operations and cash flows of the Borrower and its Subsidiaries on a
quarterly basis for the such fiscal year (including the fiscal year in which the Maturity Date
occurs).
6.02 Certificates; Other Information
. Deliver to the Administrative Agent:
(a) concurrently with the delivery of the financial statements referred to in
Section
6.01(a)
, a certificate of its independent certified public accountants certifying such
financial
statements and stating that in making the examination necessary therefor no knowledge
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was
obtained of any Default under the financial covenants set forth herein or, if any such Default
shall exist, stating the nature and status of such event;
(b) concurrently with the delivery of the financial statements referred to in
Sections
6.01(a)
and
(b)
, a duly completed Compliance Certificate signed by a Financial Officer
of the Borrower (which delivery may, unless the Administrative Agent, or a Lender requests executed
originals, be by electronic communication including fax or email and shall be deemed to be an
original authentic counterpart thereof for all purposes);
(c) promptly after any reasonable request by the Administrative Agent or any Lender, copies of
any detailed audit reports, management letters or recommendations submitted to the board of
directors (or the audit committee of the board of directors) of any Loan Party by independent
accountants in connection with the accounts or books of any Loan Party or any of its Subsidiaries,
or any audit of any of them;
(d) promptly after the same are available, copies of each annual report, proxy or financial
statement or other report or communication sent to the stockholders, partners or members (or the
equivalent of any thereof) of any Loan Party, and copies of all annual, regular, periodic and
special reports and registration statements which the Borrower or any of its Subsidiaries may file
or be required to file with the SEC under Section 13 or 15(d) of the Exchange Act, or with any
national securities exchange, and in any case not otherwise required to be delivered to the
Administrative Agent pursuant hereto;
(e) promptly after the furnishing thereof, copies of any statement or report furnished to any
holder of debt securities of any Loan Party or of any of its Subsidiaries pursuant to the terms of
any indenture, loan or credit or similar agreement regarding or related to any breach or default by
any party thereto or any other event that could materially impair the value of the interests or the
rights of any Loan Party or otherwise have a Material Adverse Effect and not otherwise required to
be furnished to the Lenders pursuant to
Section 6.01
or any other clause of this
Section 6.02
;
(f) as soon as available, but in any event within 30 days after each annual renewal of the
applicable insurance policies, a certificate summarizing the insurance coverage (specifying type,
amount and carrier) in effect for the Borrower and its Subsidiaries and such additional information
regarding such insurance coverage as the Administrative Agent, or any Lender through the
Administrative Agent, may reasonably specify;
(g) promptly, and in any event within 15 days after receipt thereof by any Loan Party or any
Subsidiary thereof, copies of each notice or other correspondence received from the SEC (or
comparable agency in any applicable non-U.S. jurisdiction) concerning any investigation or other
material inquiry by such agency regarding financial or other operational results of any Loan Party
or any Subsidiary thereof;
(h) [intentionally omitted];
(i) promptly after the assertion or occurrence thereof, notice of any action or proceeding
against or of any noncompliance by any Loan Party or any of its Subsidiaries with
any Environmental Law or Environmental Permit or any action, investigation or proceeding
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relating to Hazardous Materials that could (i) reasonably be expected to have a Material Adverse
Effect or (ii) cause any property described in the Mortgages to be subject to any restrictions on
ownership, occupancy, use or transferability under any Environmental Law that would materially
interfere with or adversely impact the use of the affected property in the Business;
(j) as soon as available but in any event at least prior to the closing of any material
Acquisition (including any Specified Acquisition), copies of the definitive documents regarding the
acquired assets, including any schedules reflecting litigation liabilities, environmental
liabilities, and other assumed liabilities and any other information regarding the acquired assets
as the Administrative Agent may reasonably request;
(k) promptly and in any event within five Business Days after receipt thereof by the Borrower
and its Subsidiaries, a copy of any material notice, summons, citation, proceeding or order
received from the FERC or any other Governmental Authority concerning the regulation of any
material portion of the Pipeline Systems;
(l) if the Borrower elects to have a Specified Acquisition Period apply with respect to a
Specified Acquisition, written notice of such election within 30 days of the consummation of the
Specified Acquisition; and
(m) promptly, such additional information regarding the business, financial, legal or
corporate affairs of any Loan Party or any Subsidiary thereof, or compliance with the terms of the
Loan Documents, as the Administrative Agent may from time to time reasonably request.
Documents required to be delivered pursuant to
Section 6.01(a)
or
(b)
or
Section 6.02(c)
(to the extent any such documents are included in materials otherwise filed
with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been
delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto on
the Borrowers website on the Internet at the website address listed on
Schedule 10.02
; or
(ii) on which such documents are posted on the Borrowers behalf on an Internet or intranet
website, if any, to which each Lender and the Administrative Agent have access (whether a
commercial, third-party website or whether sponsored by the Administrative Agent);
provided
that the Borrower shall deliver paper copies of any Compliance Certificate to the Administrative
Agent upon its request to the Borrower to deliver such paper copies until a written request to
cease delivering paper copies is given by the Administrative Agent. The Administrative Agent shall
have no obligation to request the delivery of or to maintain paper copies of the documents referred
to above, and in any event shall have no responsibility to monitor compliance by the Borrower, as
applicable, with any such request by a Lender for delivery, and each Lender shall be solely
responsible for requesting delivery to it or maintaining its copies of such documents.
The Borrower hereby acknowledges that (a) the Administrative Agent and/or the Arranger will make
available to the Lenders and the L/C Issuers materials and/or information provided by or on behalf
of the Borrower hereunder (collectively,
Materials
) by posting the Materials on
IntraLinks or another similar electronic system (the
Platform
) and (b) certain of the
Lenders (each, a
Public Lender
) may have personnel who do not wish to receive material
non-public information with respect to the Borrower or its Affiliates, or the respective securities
of any of
the foregoing, and who may be engaged in investment and other market-related activities with
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respect to such Persons securities. The Borrower hereby agrees that it will use commercially
reasonable efforts to identify that portion of the Materials that may be distributed to the Public
Lenders and that (w) all such Materials shall be clearly and conspicuously marked
PUBLIC
which, at a minimum, shall mean that the word
PUBLIC
shall appear prominently on the
first page thereof; (x) by marking Materials
PUBLIC
, the Borrower shall be deemed to have
authorized the Administrative Agent, the Arranger, the L/C Issuers and the Lenders to treat such
Materials as not containing any material non-public information (although it may be sensitive and
proprietary) with respect to the Borrower or its securities for purposes of United States Federal
and state securities laws (
provided
,
however
, that to the extent such Materials
constitute Information, they shall be treated as set forth in
Section 10.07
); (y) all
Materials marked
PUBLIC
are permitted to be made available through a portion of the
Platform designated
Public Side Information
; and (z) the Administrative Agent and the
Arranger shall be entitled to treat any Materials that are not marked
PUBLIC
as being
suitable only for posting on a portion of the Platform not designated
Public Side
Information
. The Administrative Agent and the Borrower acknowledge that no Materials will be
marked
PUBLIC
other than publicly available information filed by the Loan Parties with
the SEC.
6.03 Notices
. Promptly notify the Administrative Agent:
(a) of the occurrence of any Default;
(b) of any matter that has resulted or could reasonably be expected to result in a Material
Adverse Effect, including (i) breach or non-performance of, or any default under, a Contractual
Obligation of the Borrower or any Subsidiary; (ii) any dispute, litigation, investigation,
proceeding or suspension between the Borrower or any Subsidiary and any Governmental Authority; or
(iii) the commencement of, or any material development in, any litigation, proceeding, or legal
requirement or regulation affecting the Borrower or any Subsidiary, including pursuant to any
applicable Environmental Laws;
(c) of the occurrence of any ERISA Event;
(d) of any material change in accounting policies or financial reporting practices by any Loan
Party or any Subsidiary thereof, including any determination by the Borrower referred to in
Section 2.09(b)
; and
(e) of any material Collateral Loss, including all Collateral Losses where the aggregate
damage to the Collateral and/or lost revenues of the Loan Parties could reasonably be expected to
exceed $10,000,000.
Each notice pursuant to this
Section 6.03
shall be accompanied by a statement of a
Responsible Officer of the Borrower setting forth details of the occurrence referred to therein and
stating what action the Borrower has taken and proposes to take with respect thereto. Each notice
pursuant to
Section 6.03(a)
shall describe with particularity any and all provisions of
this Agreement and any other Loan Document that have been breached.
6.04 Payment of Obligations
. Pay and discharge as the same shall become due and payable, all
its obligations and liabilities, including (a) all tax liabilities, assessments and
governmental charges or levies upon it or its properties or assets; (b) all lawful claims
which, if
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unpaid, would by law become a Lien upon its property; and (c) all Indebtedness, as and
when due and payable, but subject to any subordination provisions contained in any instrument or
agreement evidencing such Indebtedness; unless, with respect to any obligation or liability
described in clause (a), (b), or (c) above, such obligation or liability is being contested in good
faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP
are being maintained by the Borrower and each applicable Subsidiary, as applicable.
6.05 Preservation of Existence, Etc
. (a) Preserve, renew and maintain in full force and
effect its legal existence and good standing under the Laws of the jurisdiction of its organization
except in a transaction permitted by
Section 7.04
or
7.05
; and (b) take all
reasonable action to maintain all rights, privileges, permits, licenses (including intellectual
property licenses) and franchises necessary or desirable in the normal conduct of its business,
except to the extent that failure to do so could not reasonably be expected to have a Material
Adverse Effect.
6.06 Maintenance of Properties
.
(a) (i) Maintain, preserve and protect all of its material properties and equipment necessary
in the operation of its business in good working order and condition, ordinary wear and tear
excepted; (ii) make all necessary repairs thereto and renewals and replacements thereof except
where the failure to do so could not reasonably be expected to have a Material Adverse Effect; and
(iii) use the standard of care typical in the industry in the operation and maintenance of its
facilities.
(b) Without limiting
Section 6.06(a)
, (i) maintain or cause the maintenance of the
interests and rights which are necessary to maintain the Pipeline Systems and the Terminals, which
individually or in the aggregate, could, if not maintained, reasonably be expected to have a
Material Adverse Effect; (ii) subject to Permitted Encumbrances, maintain the Pipeline Systems
within the confines of the Pipeline Rights without encroachment upon any adjoining property and
maintain the Terminals within the boundaries of the Terminal Deeds and without encroachment upon
any adjoining property, except where the failure of the Pipeline Systems and Terminals to be so
maintained, individually or in the aggregate, (A) does not materially interfere with the ordinary
conduct of Business, (B) does not materially detract from the use of any of such Pipeline Systems
or Terminals and (C) could not reasonably be expected to have a Material Adverse Effect; (iii)
maintain such rights of ingress and egress necessary to permit the Borrower and its Subsidiaries to
inspect, operate, repair, and maintain the Pipeline Systems and the Terminals to the extent that
failure to maintain such rights, individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect and provided that the Borrower or any of its Subsidiaries may hire
third parties to perform these functions; and (iv) maintain all material agreements, licenses,
permits, and other rights required for any of the foregoing described in clauses (i), (ii), and
(iii) of this
Section 6.06(b
) in full force and effect in accordance with their terms,
timely make any payments due thereunder, and prevent any default thereunder which could result in a
termination or loss thereof, except any such failure to maintain or pay or any such default that
could not reasonably, individually or in the aggregate, be expected to cause a Material Adverse
Effect.
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6.07 Maintenance of Insurance; Insurance Proceeds
.
(a) Maintain with insurance companies not Affiliates of the Borrower, insurance with respect
to its properties and business against loss or damage of the kinds customarily insured against by
Persons engaged in the same or similar business, of such types and in such amounts (after giving
effect to any self-insurance compatible with the following standards) as are customarily carried
under similar circumstances by such other Persons and providing for not less than 30 days prior
notice to the Administrative Agent of termination, lapse or cancellation of such insurance.
(b) If the Borrower or any of its Subsidiaries receives any condemnation proceeds or insurance
proceeds (other than business interruption insurance proceeds) on account of any Collateral Loss,
then the following provisions shall apply:
(i) The Borrower shall, promptly upon receipt thereof, apply (or cause the applicable
Subsidiary to apply) such proceeds
first
, as a mandatory prepayment of the then
outstanding Revolving Credit Loans, and (A) if an Event of Default is continuing or (B)
until the Borrower delivers to the Administrative Agent a Compliance Certificate or a
certificate of a Financial Officer of the Borrower demonstrating that, after giving effect
to such Collateral Loss on a pro forma basis, the Borrower and its Subsidiaries would have
been in compliance with
Sections 7.11(a)
and
7.11(b)
as of the end of the
most recent fiscal quarter,
second
to Cash Collateralize the then Outstanding Amount
of all L/C Obligations in an amount equal to 100% of the amount thereof, and third, any
remaining amounts may be retained by the Borrower or the applicable Subsidiary.
(ii) Subject to the conditions set forth in
Section 4.02
, the Borrower may
request a Revolving Credit Borrowing to finance the rebuilding, restoration or replacement
of such Collateral or to invest in another capital project that, in the reasonable judgment
of the Borrower, would be more useful to the Business. If the Borrower elects to do any of
the foregoing, then the Borrower shall (A) promptly after making such election, give written
notice thereof to the Administrative Agent, (B) take all actions required by
Section
6.12
with respect to such Collateral or other capital project, and (C) work diligently
to complete such rebuilding, restoration, or replacement or such other capital project, as
applicable.
(iii) Upon the request of the Administrative Agent, after the occurrence and during the
continuance of any Event of Default, the Borrower or any such Subsidiary shall execute and
deliver to the Administrative Agent any additional assignments and other documents as may be
reasonably necessary to enable the Administrative Agent to directly collect any condemnation
proceeds or insurance proceeds.
6.08 Compliance with Laws
. Comply in all material respects with the requirements of all Laws
and all orders, writs, injunctions and decrees applicable to it or to its business or property,
except in such instances in which (a) such requirement of Law or order, writ, injunction or decree
is being contested in good faith by appropriate proceedings diligently conducted; or (b) the
failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.
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6.09 Books and Records
. (a) Maintain proper books of record and account, in which full, true
and correct entries in conformity with GAAP consistently applied shall be made of all financial
transactions and matters involving the assets and business of the Borrower or such Subsidiary, as
the case may be; and (b) maintain such books of record and account in material conformity with all
applicable requirements of any Governmental Authority having regulatory jurisdiction over the
Borrower or such Subsidiary, as the case may be.
6.10 Inspection Rights
. Permit representatives and an independent contractor of the
Administrative Agent to visit and inspect any of its properties once per calendar year, to examine
its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and
to discuss its affairs, finances and accounts with its directors, officers, and independent public
accountants, all at the expense of the Borrower and at such reasonable times during normal business
hours and as often as may be reasonably desired, upon reasonable advance notice to the Borrower;
provided
,
however
, that when an Event of Default exists the Administrative Agent or
any Lender (or any of their respective representatives or independent contractors) may do any of
the foregoing at the expense of the Borrower, at any time during normal business hours and without
advance notice and as many times during any calendar year as such Administrative Agent or Lender
shall so request. The Administrative Agent and each Lender shall conduct any such inspection or
examination (i) in reasonable accordance with the Borrowers or the applicable Subsidiarys safety
policies and procedures and (ii) so as not to unreasonably materially interfere with the Borrowers
or its Subsidiaries operations.
6.11 Use of Proceeds
. Use the proceeds of the Credit Extensions for working capital and
general corporate purposes, including, without limitation, the making of the Closing Date
Distribution, in each case, not in contravention of any Law or of any Loan Document.
6.12 Covenant to Guarantee Obligations and Give Security
. (a) Upon the formation or
acquisition of any new direct or indirect Subsidiary (other than any CFC or a Subsidiary that is
held directly or indirectly by a CFC) by the Borrower or any Subsidiary, then the Borrower shall,
at the Borrowers expense:
(i) within 30 days (or such longer period as the Administrative Agent may determine in
its sole discretion) after such formation or acquisition, cause such Subsidiary, and cause
each direct and indirect parent of such Subsidiary (if it has not already done so), to duly
execute and deliver to the Administrative Agent a guaranty or guaranty supplement, in form
and substance reasonably satisfactory to the Administrative Agent, guaranteeing the other
Loan Parties obligations under the Loan Documents,
(ii) within 30 days (or such longer period as the Administrative Agent may determine in
its sole discretion) after such formation or acquisition, furnish to the Administrative
Agent a description of the Material Real Properties and personal properties of such
Subsidiary, in detail reasonably satisfactory to the Administrative Agent,
(iii) within 30 days (or such longer period as the Administrative Agent may determine
in its sole discretion) after such formation or acquisition, cause such Subsidiary and each
direct and indirect parent of such Subsidiary (if it has not already
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done so) to duly execute and deliver to the Administrative Agent deeds of trust, trust
deeds, deeds to secure debt, mortgages, leasehold mortgages and leasehold deeds of trust
with respect to any Material Real Property owned or leased by such Subsidiary, Security
Agreement Supplements, IP Security Agreement Supplements and other security and pledge
agreements, as specified by and in form and substance reasonably satisfactory to the
Administrative Agent (including delivery of all Pledged Equity in and of such Subsidiary,
and other instruments of the type specified in
Section 4.01(a)(iii)
), securing
payment of all the Obligations of such Subsidiary or such parent, as the case may be, under
the Loan Documents and constituting Liens on all such personal properties and Material Real
Properties,
(iv) within 30 days (or such longer period as the Administrative Agent may determine in
its sole discretion) after such formation or acquisition, cause such Subsidiary and each
direct and indirect parent of such Subsidiary (if it has not already done so) to take
whatever action (including the recording of mortgages with respect to any Material Real
Property and the filing of Uniform Commercial Code financing statements) may be necessary or
advisable in the reasonable opinion of the Administrative Agent to vest in the
Administrative Agent (or in any representative of the Administrative Agent designated by it)
valid and subsisting Liens on the properties purported to be subject to the deeds of trust,
trust deeds, deeds to secure debt, mortgages, leasehold mortgages and leasehold deeds of
trust with respect to any Material Real Property, Security Agreement Supplements, IP
Security Agreement Supplements and security and pledge agreements delivered pursuant to this
Section 6.12
, enforceable against all third parties in accordance with their terms,
(v) within 60 days (or such longer period as the Administrative Agent may determine in
its sole discretion) after such formation or acquisition, deliver to the Administrative
Agent, upon the request of the Administrative Agent in its sole but reasonable discretion, a
signed copy of a favorable opinion, addressed to the Administrative Agent and the other
Secured Parties, of counsel for the Loan Parties reasonably acceptable to the Administrative
Agent as to the matters contained in clauses (i), (iii) and (iv) above, and as to such other
matters as the Administrative Agent may reasonably request, and
(vi) as promptly as practicable after such formation or acquisition of a Subsidiary
that owns or leases Material Real Property, deliver, upon the reasonable request of the
Administrative Agent in its sole but reasonable discretion, to the Administrative Agent with
respect to any Material Real Property owned or leased by such Subsidiary (A) with respect to
any Terminals or other Material Real Property (other than any Pipeline System and any real
property used solely in connection with any Pipeline System), documentation of the type set
forth in
Section 4.01(a)(iv)(B)
, and (B) the existing and most current title
reports, surveys and engineering, soils and other reports, and environmental assessment
reports obtained by the Borrower or any Subsidiary in connection with the formation or
acquisition of that Subsidiary.
(b) Upon the acquisition of any personal property (other than a CFC or a Subsidiary that is
held directly or indirectly by a CFC) or Material Real Property by the Borrower or any
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Subsidiary, if such property, in the reasonable judgment of the Administrative Agent, shall
not already be subject to a perfected first priority security interest in favor of the
Administrative Agent for the benefit of the Secured Parties, then the Borrower shall, at the
Borrowers expense:
(i) within 30 days (or such longer period as the Administrative Agent may determine in
its sole discretion) after such acquisition, furnish to the Administrative Agent a
description of the property so acquired in detail reasonably satisfactory to the
Administrative Agent,
(ii) within 30 days (or such longer period as the Administrative Agent may determine in
its sole discretion) after such acquisition, cause the applicable Loan Party to duly execute
and deliver to the Administrative Agent deeds of trust, trust deeds, deeds to secure debt,
mortgages, leasehold mortgages and leasehold deeds of trust with respect to any such
property that constitutes Material Real Property, Security Agreement Supplements, IP
Security Agreement Supplements and other security and pledge agreements, as specified by and
in form and substance reasonably satisfactory to the Administrative Agent, securing payment
of all the Obligations of the applicable Loan Party under the Loan Documents and
constituting Liens on all such personal properties and Material Real Properties,
(iii) within 30 days (or such longer period as the Administrative Agent may determine
in its sole discretion) after such acquisition, cause the applicable Loan Party to take
whatever action (including the recording of mortgages, the filing of Uniform Commercial Code
financing statements, the giving of notices and the endorsement of notices on title
documents) may be necessary or advisable in the reasonable opinion of the Administrative
Agent to vest in the Administrative Agent (or in any representative of the Administrative
Agent designated by it) valid and subsisting Liens on such personal property and Material
Real Property, enforceable against all third parties,
(iv) within 60 days (or such longer period as the Administrative Agent may determine in
its sole discretion) after such acquisition, deliver to the Administrative Agent, upon the
reasonable request of the Administrative Agent in its sole but reasonable discretion, a
signed copy of a favorable opinion, addressed to the Administrative Agent and the other
Secured Parties, of counsel for the Loan Parties reasonably acceptable to the Administrative
Agent as to the matters contained in clauses (ii) and (iii) above and as to such other
matters as the Administrative Agent may reasonably request, and
(v) as promptly as practicable after such acquisition of Material Real Property,
deliver, upon the reasonable request of the Administrative Agent in its sole but reasonable
discretion, to the Administrative Agent with respect to such Material Real Property (A) with
respect to any Terminals or other Material Real Property (other than any Pipeline System and
any real property used solely in connection with any Pipeline System), documentation of the
type set forth in
Section 4.01(a)(iv)(B)
, and (B) the existing and most current
title reports, surveys and engineering, soils and other reports, and environmental
assessment reports obtained by the Borrower or any Subsidiary in connection with the
acquisition of that Material Real Property.
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(c) Upon the formation or acquisition by the Borrower or any Subsidiary after the Closing Date
of any Subsidiary that is a CFC, the Borrower shall notify the Administrative Agent thereof within
30 days after such acquisition or formation and promptly (A) execute and deliver to the
Administrative Agent such Security Agreement Supplements or such other documents as the
Administrative Agent deems necessary or reasonably desirable and requests in order to grant to the
Administrative Agent a perfected first priority security interest (subject only to applicable
Permitted Liens) in the Equity Interests of such CFC Subsidiary that is owned by the applicable
Loan Party (provided that in no event shall more than 66% of the total voting power of the total
outstanding Equity Interests of any such CFC Subsidiary be required to be so pledged), and (B)
deliver to the Administrative Agent the certificates (if any) representing such Equity Interests,
together with undated stock powers or share transfer forms, in blank, executed and delivered by a
duly authorized officer of the applicable Loan Party, and take such other action as may be
necessary or reasonably requested by the Administrative Agent to perfect the Lien of the
Administrative Agent thereon, (C) take such other actions as necessary under applicable law
(including foreign law) or reasonably requested by the Administrative Agent to ensure the granting,
perfection, and priority of such security interest, and (D) for any CFC Subsidiary that, together
with its Subsidiaries, generates more than $2,000,000 in consolidated net income (measured as of
the quarter most recently ended on an annualized basis) or that holds consolidated assets with an
aggregate fair market value greater than $2,000,000 upon such formation or acquisition by the
Borrower or any Subsidiary, deliver to the Administrative Agent legal opinions relating to the
matters described above, which opinions shall be in form and substance, and from counsel,
reasonably satisfactory to the Administrative Agent, in each case within a reasonable time
following the applicable requests of the Administrative Agent and the receipt of any applicable
documents.
6.13 Compliance with Environmental Laws
.
(a) Comply, and cause all lessees and other Persons operating or occupying its properties to
comply, in all material respects, with all applicable Environmental Laws and Environmental Permits,
and obtain and renew all Environmental Permits necessary for its operations and properties.
(b) To the extent required by Governmental Authority, conduct any investigation, study,
sampling and testing, and undertake any cleanup, removal, remedial or other action necessary to
remove and clean up Hazardous Materials from any of its properties, in material compliance with the
requirements of such Governmental Authority;
provided
,
however
, that neither the
Borrower nor any of its Subsidiaries shall be required to undertake any such cleanup, removal,
remedial or other action to the extent that its obligation to do so is being contested in good
faith and by proper proceedings and appropriate reserves are being maintained with respect to such
circumstances in accordance with GAAP.
6.14 Further Assurances
.
(a) Promptly upon request by the Administrative Agent or the Required Lenders through the
Administrative Agent, (a) correct any material defect or error that may be discovered in any Loan
Document or in the execution, acknowledgment, filing or recordation thereof, and (b) do, execute,
acknowledge, deliver, record, re-record, file, re-file, register and re-register any
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and all such further acts, deeds, certificates, assurances and other instruments as the
Administrative Agent, or any Lender through the Administrative Agent, may reasonably require from
time to time in order to (i) carry out more effectively the purposes of the Loan Documents, (ii) to
the fullest extent permitted by applicable law, subject any Loan Partys or any of its
Subsidiaries properties, assets, rights or interests to the Liens now or hereafter intended to be
covered by any of the Collateral Documents, (iii) perfect and maintain the validity, effectiveness
and priority of any of the Collateral Documents and any of the Liens intended to be created
thereunder and (iv) assure, convey, grant, assign, transfer, preserve, protect and confirm more
effectively unto the Secured Parties the rights granted or now or hereafter intended to be granted
to the Secured Parties under any Loan Document or under any other instrument executed in connection
with any Loan Document to which any Loan Party or any of its Subsidiaries is or is to be a party,
and cause each of its Subsidiaries to do so.
(b) Within 30 days after a request by the Administrative Agent or the Required Lenders to cure
any title defects or exceptions which are not Liens permitted by
Section 7.01
and which,
individually or in the aggregate, (i) materially interfere with the ordinary conduct of Business,
(ii) materially detract from the value or the use of the portion of the Pipeline Systems affected
thereby, or (iii) could reasonably have a Material Adverse Effect, cure such title defects or
exceptions or substitute such Collateral with acceptable property of an equivalent value with no
title defects or exceptions and deliver to the Administrative Agent satisfactory title evidence in
form and substance acceptable to the Administrative Agent in its reasonable business judgment as to
the Borrowers and its Subsidiaries title in such property and the Administrative Agents Liens
and security interests therein.
6.15 Compliance with Terms of Leaseholds
. Make all payments and otherwise perform all
obligations in respect of all leases of real property to which the Borrower or any of its
Subsidiaries is a party, keep such leases in full force and effect and not allow such leases to
lapse or be terminated or any rights to renew such leases to be forfeited or cancelled, notify the
Administrative Agent of any default by any party with respect to such leases and cooperate with the
Administrative Agent in all respects to cure any such default, and cause each of its Subsidiaries
to do so, except, in any case, where the failure to do so, either individually or in the aggregate,
could not be reasonably expected to have a Material Adverse Effect.
6.16 Material Contracts
. Perform and observe all the terms and provisions of each Material
Contract to be performed or observed by it, maintain each such Material Contract in full force and
effect, enforce each such Material Contract in accordance with its terms, take all action to such
end as may be from time to time requested by the Administrative Agent and, upon the request of the
Administrative Agent, make to each other party to each such Material Contract such demands and
requests for information and reports or for action as any Loan Party or any of its Subsidiaries is
entitled to make under such Material Contract, and cause each of its Subsidiaries to do so, except,
in any case, where the failure to do so, either individually or in the aggregate, could not be
reasonably likely to have a Material Adverse Effect.
6.17 Utah FERC Jurisdictional Requirement
. In the event that the FERC orders or imposes any
Utah FERC Jurisdictional Requirement against the Borrower or any Subsidiary, the Borrower or such
Subsidiary shall promptly comply in all respects with all terms of such Utah FERC Jurisdictional
Requirement within the time period required thereby.
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6.18 Post Closing Agreement
. The Borrower and, to the extent applicable, each of the other
Loan Parties party thereto shall deliver to the Administrative Agent on or before the applicable
date set forth in the Post Closing Agreement all items required by such Post Closing Agreement.
ARTICLE VII
NEGATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder
shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding (other than
those as to which arrangements satisfactory to the Administrative Agent and the applicable L/C
Issuer shall have been made in accordance with
Section 9.10
), the Borrower shall not, nor
shall the Borrower permit any of its Subsidiaries to, directly or indirectly:
7.01 Liens
. Create, incur, assume or suffer to exist any Lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired, or assign any accounts or other right
to receive income, other than the following:
(a) Liens pursuant to any Loan Document;
(b) Liens existing on the date hereof and listed on
Schedule 7.01
and any renewals or
extensions thereof,
provided
that (i) the property covered thereby is not changed, (ii) the
amount secured or benefited thereby is not increased except as contemplated by
Section
7.02(d)
, (iii) the direct or any contingent obligor with respect thereto is not changed, and
(iv) any renewal or extension of the obligations secured or benefited thereby is permitted by
Section 7.02(d)
;
(c) Liens for taxes not yet due or which are being contested in good faith and by appropriate
proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the
books of the applicable Person in accordance with GAAP;
(d) carriers, warehousemens, mechanics, materialmens, repairmens or other like Liens
arising in the ordinary course of business which are not overdue for a period of more than 60 days
or which are being contested in good faith and by appropriate proceedings diligently conducted, if
adequate reserves with respect thereto are maintained on the books of the applicable Person;
(e) pledges or deposits in the ordinary course of business in connection with workers
compensation, unemployment insurance and other social security legislation, other than any Lien
imposed by ERISA;
(f) deposits to secure the performance of bids, trade contracts and leases (other than leases
constituting Indebtedness), statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature incurred in the ordinary course of business;
(g) Liens comprised of minor defects, irregularities, and deficiencies in title to, and
easements, rights-of-way, zoning restrictions and other similar restrictions, charges or
encumbrances, defects and irregularities in the physical placement and location of pipelines within
the areas covered by the easements, leases, licenses and other rights in real property in
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favor of the Borrower or any of its Subsidiaries which, individually and in the aggregate, do
not materially interfere with the ordinary conduct of the Business and do not materially detract
from the use of the property which they affect, and Permitted Encumbrances;
(h) Liens securing judgments for the payment of money not constituting an Event of Default
under
Section 8.01(h)
;
(i) Liens securing Indebtedness permitted under
Section 7.02(f)
;
provided
that
(i) such Liens do not at any time encumber any property other than the property financed by such
Indebtedness and (ii) the Indebtedness secured thereby does not exceed the cost or fair market
value, whichever is lower, of the property being acquired on the date of acquisition;
(j) Liens on property of a Person existing at the time such Person is merged into or
consolidated with the Borrower or any Subsidiary of the Borrower or becomes a Subsidiary of the
Borrower;
provided
that such Liens were not created in contemplation of such merger,
consolidation or Investment and do not extend to any assets other than those of the Person merged
into or consolidated with the Borrower or such Subsidiary or acquired by the Borrower or such
Subsidiary, and the applicable Indebtedness secured by such Lien is permitted under
Section
7.02(g)
;
(k) Liens arising solely by virtue of any statutory or common law provision relating to
bankers liens, rights of set-off or similar rights and remedies, or under general depositary
agreements, and burdening only deposit accounts or other funds maintained with a creditor
depository institution;
(l) any interest or title of a lessor under any lease entered into by the Borrower or any
Subsidiary in the ordinary course of its business covering only the assets so leased; and
(m) other Liens securing Indebtedness outstanding in an aggregate principal amount not to
exceed $10,000,000,
provided
that no such Lien shall extend to or cover any Collateral.
7.02 Indebtedness
. Create, incur, assume or suffer to exist any Indebtedness, except:
(a) obligations (contingent or otherwise) existing or arising under any Swap Contract,
provided
that (i) such obligations are (or were) entered into by such Person in the
ordinary course of business for the purpose of directly mitigating risks associated with
fluctuations in interest rates, foreign exchange rates or commodity prices and (ii) such Swap
Contract does not contain any provision exonerating the non-defaulting party from its obligation to
make payments on outstanding transactions to the defaulting party;
(b) Indebtedness of the Borrower owed to a Subsidiary, or of a Subsidiary of the Borrower owed
to the Borrower or a wholly-owned Subsidiary of the Borrower, which Indebtedness shall (i) in the
case of Indebtedness owed to a Loan Party, be pledged under the Security Agreement, (ii) be on
subordination terms reasonably acceptable to the Administrative Agent and (iii) be otherwise
permitted under the provisions of
Section 7.03
;
(c) Indebtedness under the Loan Documents;
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(d) Indebtedness outstanding on the date hereof and listed on
Schedule 7.02
and any
refinancings, refundings, renewals or extensions thereof;
provided
that the amount of such
Indebtedness is not increased at the time of such refinancing, refunding, renewal or extension
except by an amount equal to a reasonable premium or other reasonable amount paid, and fees and
expenses reasonably incurred, in connection with such refinancing and by an amount equal to any
existing commitments unutilized thereunder and the direct or any contingent obligor with respect
thereto is not changed, as a result of or in connection with such refinancing, refunding, renewal
or extension; and
provided
,
still
further
, that the terms relating to
principal amount, amortization, maturity, collateral (if any) and subordination (if any), and other
material terms taken as a whole, of any such refinancing, refunding, renewing or extending
Indebtedness, and of any agreement entered into and of any instrument issued in connection
therewith, are no less favorable in any material respect to the Loan Parties or the Lenders than
the terms of any agreement or instrument governing the Indebtedness being refinanced, refunded,
renewed or extended and the interest rate applicable to any such refinancing, refunding, renewing
or extending Indebtedness does not exceed the then applicable market interest rate;
(e) Guarantees of the Borrower or any Subsidiary in respect of Indebtedness otherwise
permitted hereunder of the Borrower or any Subsidiary Guarantor or the Indebtedness incurred by
joint ventures constituting Investments otherwise permitted hereunder;
provided
that with
respect to Guarantees of Indebtedness of joint ventures, the aggregate amount of Indebtedness
guaranteed pursuant to such Guarantees shall not exceed $25,000,000;
(f) Indebtedness in respect of Capitalized Leases, Synthetic Lease Obligations and purchase
money obligations for fixed or capital assets within the limitations set forth in
Section
7.01(i)
; provided, however, that the aggregate amount of all such Indebtedness at any one time
outstanding shall not exceed $30,000,000;
(g) Indebtedness of any Person that becomes a Subsidiary of the Borrower after the date hereof
in accordance with the terms of
Section 7.03(g)
, which Indebtedness is existing at the time
such Person becomes a Subsidiary of the Borrower (other than Indebtedness incurred solely in
contemplation of such Persons becoming a Subsidiary of the Borrower);
(h) unsecured Indebtedness issued by the Borrower or any of its Subsidiaries;
provided
that (i) immediately prior to and after giving effect to the issuance of such Indebtedness, there
would be no Default under this Agreement, (ii) such Indebtedness scheduled maturity is no earlier
than twelve (12) months after the Maturity Date, (iii) such Indebtedness does not require any
scheduled repayments, defeasance or redemption (or sinking fund therefor) of any principal amount
thereof prior to maturity, and (iv) the indenture or other agreement governing such Indebtedness
shall not contain (A) maintenance financial covenants or (B) other terms and conditions that are
materially more restrictive on the Borrower or any of its Subsidiaries than then available market
terms and conditions for comparable issuers and issuances, and any refinancings, refundings,
renewals or extensions thereof;
provided
that the terms of such refinancing, refunding,
renewing, or extending Indebtedness satisfy the requirements of
Section 7.02(h)
;
(i) Indebtedness in respect of insurance premium financing for insurance being acquired by the
Borrower or any Subsidiary under customary terms and conditions; and
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(j) other unsecured Indebtedness not otherwise permitted under this
Section 7.02
, in
an aggregate principal amount not to exceed $10,000,000 at any time outstanding.
7.03 Investments
. Make or hold any Investments, except:
(a) Investments held by the Borrower and its Subsidiaries in the form of Cash Equivalents;
(b) advances to officers, directors and employees of the Borrower and Subsidiaries in an
aggregate amount not to exceed $1,000,000 at any time outstanding, for travel, entertainment,
relocation and analogous ordinary business purposes;
(c) (i) Investments by the Borrower and its Subsidiaries in their respective Subsidiaries
outstanding on the date hereof, (ii) additional Investments by the Borrower and its Subsidiaries in
Loan Parties, and (iii) additional Investments by Subsidiaries that are not Loan Parties in other
Subsidiaries that are not Loan Parties;
(d) Investments consisting of extensions of credit in the nature of accounts receivable or
notes receivable arising from the grant of trade credit in the ordinary course of business, and
Investments received in satisfaction or partial satisfaction thereof from financially troubled
account debtors;
(e) Guarantees permitted by
Section 7.02
;
(f) Investments existing on the date hereof (other than those referred to in
Section
7.03(c)(i)
) and set forth on
Schedule 7.03
;
(g) Acquisitions (by purchase or merger)
provided
that (i) the Borrower or a
Subsidiary Guarantor is the acquiring or surviving entity; (ii) no Default or Event of Default
exists and the Acquisition could not reasonably be expected to cause a Default or Event of Default;
(iii) after giving effect to such Acquisition on a pro forma basis, the Borrower and its
Subsidiaries would have been in compliance with all of the covenants contained in this Agreement,
including, without limitation,
Sections 7.11(a)
and
7.11(b)
as of the end of the
most recent fiscal quarter; (iv) the requirements of
Sections 6.12
and
7.07
are
satisfied and the target is not hostile; (v) if such Acquisition is of Equity Interests, the issuer
of such Equity Interests shall be an entity organized under the laws of the United States; and (vi)
the Administrative Agent shall have received, at least five (5) Business Days prior to the date on
which any such Acquisition is to be consummated, a certificate of a Responsible Officer of the
Borrower, in form and substance reasonably satisfactory to the Administrative Agent and the
Required Lenders, certifying that all of the requirements set forth in this
Section 7.03(g)
have been satisfied or will be satisfied on or prior to the date on which such Acquisition is
consummated;
(h) Investments consisting of debt securities as partial consideration for the Disposition of
assets to the extent permitted by
Section 7.05(f)
;
(i) Investments by the Borrower and its Subsidiaries in joint ventures not exceeding
$25,000,000 in the aggregate;
provided
that any Equity Interests in any such joint venture
shall be pledged to the Administrative Agent for the ratable benefit of the Secured Parties under
the
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Security Agreement and the Administrative Agent shall have received such other items in
connection therewith as may be required by
Section 6.12(b)
; and
(j) so long as no Default has occurred and is continuing or would result from such Investment,
other Investments not exceeding $20,000,000 in the aggregate in any fiscal year of the Borrower.
7.04 Fundamental Changes
. Merge, dissolve, liquidate, consolidate with or into another
Person, or Dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any
Person, except that, so long as no Event of Default exists or would result therefrom:
(a) any of the Borrowers Subsidiaries may merge with any of its other Subsidiaries provided
that if any of such Subsidiaries is a Subsidiary Guarantor, a Subsidiary Guarantor shall be the
surviving Person;
(b) any Subsidiary Guarantor may Dispose of all or substantially all of its assets (upon
voluntary liquidation or otherwise) to the Borrower or to another Subsidiary Guarantor;
(c) any Subsidiary that is not a Loan Party may dispose of all or substantially all its assets
(including any Disposition that is in the nature of a liquidation) to (i) another Subsidiary that
is not a Loan Party or (ii) to the Borrower or any Subsidiary that is a Loan Party; and
(d) the Borrower or any Subsidiary Guarantor may merge or consolidate with any Person in
accordance with
Section 7.03(g)
.
7.05 Dispositions
. Make any Disposition or enter into any agreement to make any Disposition,
except:
(a) Dispositions of obsolete or worn out property, whether now owned or hereafter acquired, in
the ordinary course of business;
(b) ordinary-course-of-business Dispositions of (i) inventory; (ii) Cash Equivalents; (iii)
overdue accounts receivable in connection with the compromise or collection thereof (and not in
connection with any financing transaction); and (iv) leases, subleases, rights of way, easements,
licenses, and sublicenses that, individually and in the aggregate, do not materially interfere with
the ordinary conduct of the business of the Borrower or its Subsidiaries and do not materially
detract from the value or the use of the property which they affect;
(c) Dispositions of equipment to the extent that (i) such property is exchanged for credit
against the purchase price of similar replacement property or (ii) the proceeds of such Disposition
are reasonably promptly applied to the purchase price of such replacement property;
(d) Dispositions of property by any Subsidiary to the Borrower or to a wholly-owned
Subsidiary;
provided
that if the transferor of such property is a Subsidiary Guarantor, the
transferee thereof must either be the Borrower or a Subsidiary Guarantor;
(e) Dispositions permitted by
Section 7.04
;
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(f) Dispositions by the Borrower and its Subsidiaries not otherwise permitted under this
Section 7.05
, subject to the following conditions:
(i) that no Default exists at the time of such Disposition or would result from such
Disposition;
(ii) that the aggregate book value of all property Disposed of in reliance on this
clause (f) in any fiscal year shall not exceed $20,000,000; and
(iii) that at least 75% of the purchase price for such asset shall be paid to the
Borrower or such Subsidiary in cash;
(g) Dispositions of property (i) resulting from the condemnation thereof or (ii) that has
suffered a casualty (constituting a total loss or constructive total loss of such property), in
each case upon or after receipt of the condemnation proceeds or insurance proceeds of such
condemnation or casualty, as applicable, provided that the cash proceeds therefrom are applied in
accordance with
Section 2.04(b)(ii)
; and
(h) so long as no Default has occurred and is continuing, the grant of any option or other
right to purchase any asset in a transaction that would be permitted under the provisions of
Section 7.05(f)
,
provided
,
however
, that any Disposition pursuant to
Section 7.05(a)
,
(b)
,
(c)
,
(f)
, and
(g)
shall be for fair market value.
7.06 Restricted Payments
. Declare or make, directly or indirectly, any Restricted Payment, or
incur any obligation (contingent or otherwise) to do so, except that:
(a) each Subsidiary may make Restricted Payments to the Borrower, any Subsidiaries that are
Subsidiary Guarantors and any other Person that owns a direct Equity Interest in such Subsidiary,
ratably according to their respective holdings of the type of Equity Interest in respect of which
such Restricted Payment is being made;
(b) the Borrower and each Subsidiary may declare and make dividend payments or other
distributions payable solely in common or subordinated Equity Interests of such Person and the
Borrower may issue common Equity Interests upon the conversion of subordinated Equity Interests;
(c) the Borrower and each Subsidiary may purchase, redeem or otherwise acquire its Equity
Interests with the proceeds received from the substantially concurrent issue of new common or
subordinated Equity Interests;
(d) the Borrower may make the Closing Date Distribution; and
(e) so long as no Default has occurred and is continuing or would result therefrom, the
Borrower may make Restricted Payments with respect to any fiscal quarter in an aggregate amount not
to exceed Available Cash with respect to such fiscal quarter, so long as (i) the
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Borrower and its Subsidiaries shall be in compliance (after giving pro forma effect to the
making of such Restricted Payment) with all of the covenants contained in this Agreement,
including, without limitation,
Sections 7.11(a)
and
7.11(b)
and (ii) the Borrower
shall not use more than $20,000,000 from the proceeds of Revolving Credit Borrowings during any
fiscal quarter to make Distribution Payments.
7.07 Change in Nature of Business
. Engage in any material line of business substantially
different from those lines of business conducted by the Borrower and its Subsidiaries on the date
hereof or any business substantially related or incidental thereto.
7.08 Transactions with Affiliates
. Enter into any transaction of any kind with any Affiliate
of the Borrower, whether or not in the ordinary course of business, other than on fair and
reasonable terms substantially as favorable to the Borrower or such Subsidiary as would be
obtainable by the Borrower or such Subsidiary at the time in a comparable arms length transaction
with a Person other than an Affiliate;
provided
that the foregoing restriction shall not
apply to (i) transactions between or among the Loan Parties and (ii) transactions pursuant to the
Material Contracts as in effect on the date of this Agreement or, if applicable, to the extent
modified as permitted under this Agreement.
7.09 Burdensome Agreements
. Enter into or permit to exist any Contractual Obligation (other
than this Agreement or any other Loan Document) that (a) limits the ability (i) of any Subsidiary
to make Restricted Payments to the Borrower or any Subsidiary Guarantor or to otherwise transfer
property to or invest in the Borrower or any Subsidiary Guarantor, except for any agreement in
effect (A) on the date hereof and set forth on
Schedule 7.09
or (B) at the time any
Subsidiary becomes a Subsidiary of the Borrower, so long as such agreement was not entered into
solely in contemplation of such Person becoming a Subsidiary of the Borrower, (ii) of any
Subsidiary to Guarantee the Obligations of the Borrower or (iii) of the Borrower or any Subsidiary
to create, incur, assume or suffer to exist Liens on property of such Person to secure the
Obligations;
provided
,
however
, that this clause (iii) shall not prohibit (A) any
negative pledge incurred or provided in favor of any holder of Indebtedness permitted under
Sections 7.02(f)
or
(g)
solely to the extent any such negative pledge relates to
the property financed by or the subject of such Indebtedness or (B) customary non-assignment
provisions in purchase and sale or exchange agreements or similar operational agreements, or
provisions in licenses, easements or leases, in each case entered into in the ordinary course of
business and consistent with past practices, which restrict the transfer, assignment or encumbrance
thereof; or (b) requires the grant of a Lien to secure an obligation of such Person if a Lien is
granted to secure the Obligations.
7.10 Use of Proceeds
. Use the proceeds of any Credit Extension, whether directly or
indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock
(within the meaning of Regulation U of the FRB) or to extend credit to others for the purpose of
purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose.
7.11 Financial Covenants
. (a)
Consolidated Interest Coverage Ratio
. Permit the
Consolidated Interest Coverage Ratio as of the end of any fiscal quarter of the Borrower to be less
than 3.00 to 1.00.
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(b)
Consolidated Leverage Ratio
. Permit the Consolidated Leverage Ratio at any time
during any period of four fiscal quarters of the Borrower to be greater than (i) during a Specified
Acquisition Period, 4.50 to 1.00, and (ii) at all other times, 4.00 to 1.00.
7.12 [Intentionally Omitted]
.
7.13 Amendments of Organization Documents
. Amend any of its Organization Documents, unless
such amendments, modifications, or supplements could not reasonably be expected (i) to be
materially adverse to the rights of the Administrative Agent or the Lenders or (ii) to materially
decrease the economic benefit or other rights that any Loan Party would have otherwise received
pursuant to such agreements.
7.14 Accounting Changes
. Make any change in (a) accounting policies or reporting practices,
except to the extent consistent with GAAP, or (b) the fiscal year-end of any Loan Party.
7.15 Prepayments, Etc. of Indebtedness
. Prepay, redeem, purchase, defease or otherwise
satisfy prior to the scheduled maturity thereof in any manner, or make any payment in violation of
any subordination terms of, any Indebtedness incurred pursuant to
Section 7.02(h)
, except
for refinancings, refundings, extensions or renewals of such Indebtedness to the extent such
refinancing, refunding, extension or renewal is permitted by
Section 7.02(h)
.
7.16 Amendment, Etc. of Material Contracts
. Amend, modify, or supplement any of the Material
Contracts unless such amendments, modifications, or supplements, individually or in the aggregate,
could not reasonably be expected (i) to be materially adverse to the rights of the Administrative
Agent or the Lenders or (ii) to materially decrease the economic benefit or other rights that any
Loan Party would have otherwise received pursuant to such agreements.
7.17 Limitation on Speculative Hedging
. (a) Enter into any Swap Contract for speculative
purposes, or (b) be party to or otherwise enter into any Swap Contract which is entered into for
reasons other than as a part of its normal business operations as a risk management strategy and/or
hedge against changes resulting from market conditions related to the Borrowers or its
Subsidiaries operations.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
8.01 Events of Default
. Any of the following shall constitute an Event of Default:
(a)
Non-Payment
. The Borrower or any other Loan Party fails to (i) pay when and as
required to be paid herein, any amount of principal of any Loan or any L/C Obligation or deposit
any funds as Cash Collateral in respect of L/C Obligations, or (ii) pay within three days after the
same becomes due, any interest on any Loan or on any L/C Obligation, or any fee due hereunder, or
(iii) pay within five days after the same becomes due, any other amount payable hereunder or under
any other Loan Document; or
(b)
Specific Covenants
. The Borrower or any Loan Party (i) fails to perform or
observe any term, covenant or agreement contained in any of
Sections 6.01
,
6.02
,
and
6.10
and
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such failure continues for 5 days after the earlier to occur of (A) receipt of written notice
thereof from Administrative Agent or Required Lenders to the Borrower, or (B) a Responsible Officer
otherwise has actual knowledge of any such failure; or (ii) fails to perform or observe any term,
covenant or agreement contained in any of
Sections 6.03
,
6.05
(only with respect to
the Loan Parties),
6.07
,
6.11
,
6.12
,
6.16
,
6.18
or
Article VII
; or
(c)
Other Defaults
. Any Loan Party fails to perform or observe any other covenant or
agreement (not specified in
Sections 8.01(a)
or
(b)
above) contained in any Loan
Document on its part to be performed or observed and such failure continues for 30 days after the
earlier to occur of (i) receipt of written notice thereof from Administrative Agent or Required
Lenders to the Borrower, or (ii) a Responsible Officer otherwise has actual knowledge of any such
failure; or
(d)
Representations and Warranties
. (i) Any representation, warranty, certification
or statement of fact made or deemed made by or on behalf of the Borrower or any other Loan Party
herein, in any other Loan Document, or in any document delivered in connection herewith or
therewith that does not have a materiality or Material Adverse Effect qualification shall be
incorrect or misleading in any material respect when made or deemed made or (ii) any
representation, warranty, certification or statement of fact made or deemed made by or on behalf of
the Borrower or any other Loan Party herein, in any other Loan Document, or in any document
delivered in connection herewith or therewith that has a materiality or Material Adverse Effect
qualification shall be incorrect or misleading in any respect when made or deemed made; or
(e)
Cross-Default
. (i) Any Loan Party or any Subsidiary thereof (A) fails to make any
payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or
otherwise, but after giving effect to any applicable grace or cure periods) in respect of any
Indebtedness or Guarantee (other than Indebtedness hereunder and Indebtedness under Swap Contracts)
having an aggregate principal amount (including undrawn committed or available amounts and
including amounts owing to all creditors under any combined or syndicated credit arrangement) of
more than the Threshold Amount, or (B) fails to observe or perform any other agreement or condition
relating to any such Indebtedness or Guarantee or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event occurs, the effect of which default or
other event is to cause, or to permit the holder or holders of such Indebtedness or the beneficiary
or beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to
be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or
otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made,
prior to its stated maturity, or such Guarantee to become payable or cash collateral in respect
thereof to be demanded; or (ii) there occurs under any Swap Contract an Early Termination Date (as
defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as
to which a Loan Party or any Subsidiary thereof is the Defaulting Party (as defined in such Swap
Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which a Loan
Party or any Subsidiary thereof is an Affected Party (as so defined) and, in either event, the Swap
Termination Value owed by such Loan Party or such Subsidiary as a result thereof is greater than
the Threshold Amount; or
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(f)
Insolvency Proceedings, Etc
. Any Loan Party or any Subsidiary thereof institutes
or consents to the institution of any proceeding under any Debtor Relief Law, or makes an
assignment for the benefit of creditors; or applies for or consents to the appointment of any
receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or
for all or any material part of its property; or any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer is appointed without the application or consent of
such Person and the appointment continues undischarged or unstayed for 60 calendar days; or any
proceeding under any Debtor Relief Law relating to any such Person or to all or any material part
of its property is instituted without the consent of such Person and continues undismissed or
unstayed for 60 calendar days, or an order for relief is entered in any such proceeding; or
(g)
Inability to Pay Debts; Attachment
. (i) Any Loan Party or any Subsidiary thereof
becomes unable or admits in writing its inability or fails generally to pay its debts as they
become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or
levied against all or any material part of the property of any such Person and is not released,
vacated or fully bonded within 30 days after its issue or levy; or
(h)
Judgments
. There is entered against any Loan Party or any Subsidiary thereof (i)
one or more final judgments or orders for the payment of money in an aggregate amount (as to all
such judgments and orders) exceeding the Threshold Amount (to the extent not covered by independent
third-party insurance as to which the insurer is rated at least
A
by A.M. Best Company,
has been notified of the potential claim and does not dispute coverage), or (ii) any one or more
non-monetary final judgments that have, or could reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect and, in either case, (A) enforcement proceedings are
commenced by any creditor upon such judgment or order, or (B) there is a period of 10 consecutive
days during which a stay of enforcement of such judgment, by reason of a pending appeal or
otherwise, is not in effect; or
(i)
ERISA
. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer
Plan which has resulted or could reasonably be expected to result in liability of the Borrower
under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount
in excess of the Threshold Amount, or (ii) the Borrower or any ERISA Affiliate fails to pay when
due, after the expiration of any applicable grace period, any installment payment with respect to
its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate
amount in excess of the Threshold Amount; or
(j)
Invalidity of Loan Documents
. Any provision of any Loan Document, at any time
after its execution and delivery and for any reason other than as expressly permitted hereunder or
thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect;
or any Loan Party or any other Person contests in any manner the validity or enforceability of any
provision of any Loan Document; or any Loan Party denies that it has any or further liability or
obligation under any provision of any Loan Document, or purports to revoke, terminate or rescind
any provision of any Loan Document; or
(k)
Change of Control
. There occurs any Change of Control; or
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(l)
Collateral Documents
. Any Collateral Document after delivery thereof pursuant to
Sections 4.01
or
6.12
shall for any reason (other than pursuant to the terms
thereof) cease to create a valid and perfected first priority Lien (subject to Liens permitted by
Section 7.01
) on the Collateral purported to be covered thereby; or
(m)
Material Contracts
. (i) Any default or event of default shall have occurred under
any of the Material Contracts which has not been cured within any applicable grace period and which
default or event of default could, individually or in the aggregate with any other defaults or
events of default under the Material Contracts, reasonably be expected to have a Material Adverse
Effect, or (ii) any of the Material Contracts shall have terminated, which termination,
individually or in the aggregate with any other terminations of Material Contracts, could
reasonably be expected to have a Material Adverse Effect.
8.02 Remedies upon Event of Default
. If any Event of Default occurs and is continuing, the
Administrative Agent shall, at the request of, or may, with the consent of, the Required Lenders,
take any or all of the following actions:
(a) declare the commitment of each Lender to make Loans and any obligation of the L/C Issuers
to make L/C Credit Extensions to be terminated, whereupon such commitments and obligation shall be
terminated;
(b) declare the unpaid principal amount of all outstanding Loans, all interest accrued and
unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document
to be immediately due and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived by the Borrower;
(c) require that the Borrower Cash Collateralize the L/C Obligations (in an amount equal to
the then Outstanding Amount thereof); and
(d) exercise on behalf of itself, the Lenders and the L/C Issuers all rights and remedies
available to it, the Lenders and the L/C Issuers under the Loan Documents;
provided
,
however
, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to the Borrower under the Bankruptcy Code of the United States, the
obligation of each Lender to make Loans and any obligation of the L/C Issuers to make L/C Credit
Extensions shall automatically terminate, the unpaid principal amount of all outstanding Loans and
all interest and other amounts as aforesaid shall automatically become due and payable, and the
obligation of the Borrower to Cash Collateralize the L/C Obligations as aforesaid shall
automatically become effective, in each case without further act of the Administrative Agent or any
Lender.
8.03 Application of Funds
. After the exercise of remedies provided for in
Section
8.02
(or after the Loans have automatically become immediately due and payable and the L/C
Obligations have automatically been required to be Cash Collateralized as set forth in the proviso
to
Section 8.02
), any amounts received on account of the Obligations shall, subject to the
provisions of
Sections 2.14
and
2.15
, be applied by the Administrative Agent in the
following order:
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First
, to payment of that portion of the Obligations constituting fees, indemnities,
expenses and other amounts (including fees, charges and disbursements of counsel to the
Administrative Agent and amounts payable under
Article III
) payable to the Administrative
Agent in its capacity as such;
Second
, to payment of that portion of the Obligations constituting fees, indemnities
and other amounts (other than principal, interest and Letter of Credit Fees) payable to the Lenders
and the L/C Issuers (including fees, charges and disbursements of counsel to the respective Lenders
and the L/C Issuers (including fees and time charges for attorneys who may be employees of any
Lender or any L/C Issuer) arising under the Loan Documents and amounts payable under
Article
III
, ratably among them in proportion to the respective amounts described in this clause
Second
payable to them;
Third
, to payment of that portion of the Obligations constituting accrued and unpaid
Letter of Credit Fees and interest on the Loans, L/C Borrowings and other Obligations arising under
the Loan Documents, ratably among the Lenders and the L/C Issuers in proportion to the respective
amounts described in this clause
Third
payable to them;
Fourth
, to payment of that portion of the Obligations constituting unpaid principal of
the Loans, L/C Borrowings and Obligations then owing under Secured Hedge Agreements and Secured
Cash Management Agreements, ratably among the Lenders, the L/C Issuers, the Hedge Banks and the
Cash Management Banks in proportion to the respective amounts described in this clause
Fourth
held by them;
Fifth
, to the Administrative Agent for the account of the L/C Issuers, to Cash
Collateralize that portion of L/C Obligations comprised of the aggregate undrawn amount of Letters
of Credit to the extent not otherwise Cash Collateralized by the Borrower pursuant to
Sections
2.03
and
2.14
, ratably among the L/C Issuers in proportion to the respective amounts
described in this clause
Fifth
held by them; and
Last
, the balance, if any, after all of the Obligations have been indefeasibly paid in
full, to the Borrower or as otherwise required by Law.
Subject to
Sections 2.03(c)
and
2.14
, amounts used to Cash Collateralize the
aggregate undrawn amount of Letters of Credit pursuant to clause
Fifth
above shall be
applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on
deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired,
such remaining amount shall be applied to the other Obligations, if any, in the order set forth
above.
Notwithstanding the foregoing, Obligations arising under Secured Cash Management Agreements and
Secured Hedge Agreements shall be excluded from the application described above if the
Administrative Agent has not received written notice thereof, together with such supporting
documentation as the Administrative Agent may request, from the applicable Cash Management Bank or
Hedge Bank, as the case may be. Each Cash Management Bank or Hedge Bank not a party to the Credit
Agreement that has given the notice contemplated by the preceding sentence shall, by such notice,
be deemed to have acknowledged and accepted the
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appointment of the Administrative Agent pursuant to the terms of
Article IX
hereof for
itself and its Affiliates as if a
Lender
party hereto.
ARTICLE IX
ADMINISTRATIVE AGENT
9.01 Appointment and Authority
. (a) Each of the Lenders and the L/C Issuers hereby
irrevocably appoints Bank of America to act on its behalf as the Administrative Agent hereunder and
under the other Loan Documents and authorizes the Administrative Agent to take such actions on its
behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof
or thereof, together with such actions and powers as are reasonably incidental thereto. The
provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders and
the L/C Issuers, and the Borrower shall not have rights as a third party beneficiary of any of such
provisions.
(b) The Administrative Agent shall also act as the
collateral agent
under the Loan
Documents, and each of the Lenders (including in its capacities as a potential Hedge Bank and a
potential Cash Management Bank) and the L/C Issuers hereby irrevocably appoints and authorizes the
Administrative Agent to act as the agent of such Lender and such L/C Issuer for purposes of
acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Loan Parties
to secure any of the Obligations, together with such powers and discretion as are reasonably
incidental thereto. In this connection, the Administrative Agent, as
collateral agent
and any co-agents, sub-agents and attorneys-in-fact appointed by the Administrative Agent pursuant
to
Section 9.05
for purposes of holding or enforcing any Lien on the Collateral (or any
portion thereof) granted under the Collateral Documents, or for exercising any rights and remedies
thereunder at the direction of the Administrative Agent), shall be entitled to the benefits of all
provisions of this
Article IX
and
Article X
(including
Section 10.04(c)
, as
though such co-agents, sub-agents and attorneys-in-fact were the
collateral agent
under
the Loan Documents) as if set forth in full herein with respect thereto.
9.02 Rights as a Lender
. The Person serving as the Administrative Agent hereunder shall have
the same rights and powers in its capacity as a Lender as any other Lender and may exercise the
same as though it were not the Administrative Agent and the term
Lender
or
Lenders
shall, unless otherwise expressly indicated or unless the context otherwise
requires, include the Person serving as the Administrative Agent hereunder in its individual
capacity. Such Person and its Affiliates may accept deposits from, lend money to, act as the
financial advisor or in any other advisory capacity for and generally engage in any kind of
business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not
the Administrative Agent hereunder and without any duty to account therefor to the Lenders.
9.03 Exculpatory Provisions
. The Administrative Agent shall not have any duties or
obligations except those expressly set forth herein and in the other Loan Documents. Without
limiting the generality of the foregoing, the Administrative Agent:
(a) shall not be subject to any fiduciary or other implied duties, regardless of whether a
Default has occurred and is continuing;
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(b) shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly contemplated hereby or by
the other Loan Documents that the Administrative Agent is required to exercise as directed in
writing by the Required Lenders (or such other number or percentage of the Lenders as shall be
expressly provided for herein or in the other Loan Documents),
provided
that the
Administrative Agent shall not be required to take any action that, in its opinion or the opinion
of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan
Document or applicable law; and
(c) shall not, except as expressly set forth herein and in the other Loan Documents, have
any duty to disclose, and shall not be liable for the failure to disclose, any information relating
to the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving
as the Administrative Agent or any of its Affiliates in any capacity.
(d) The Administrative Agent shall not be liable for any action taken or not taken by it
(i) with the consent or at the request of the Required Lenders (or such other number or percentage
of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith
shall be necessary, under the circumstances as provided in
Sections 10.01
and
8.02
)
or (ii) in the absence of its own gross negligence or willful misconduct. The Administrative Agent
shall be deemed not to have knowledge of any Default unless and until notice describing such
Default is given to the Administrative Agent by the Borrower, a Lender or the applicable L/C
Issuer.
(e) The Administrative Agent shall not be responsible for or have any duty to ascertain or
inquire into (i) any statement, warranty or representation made in or in connection with this
Agreement or any other Loan Document, (ii) the contents of any certificate, report or other
document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the
performance or observance of any of the covenants, agreements or other terms or conditions set
forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability,
effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement,
instrument or document, or the creation, perfection or priority of any Lien purported to be created
by the Collateral Documents, (v) the value or the sufficiency of any Collateral, or (v) the
satisfaction of any condition set forth in
Article IV
or elsewhere herein, other than to
confirm receipt of items expressly required to be delivered to the Administrative Agent.
9.04 Reliance by Administrative Agent
. The Administrative Agent shall be entitled to rely
upon, and shall not incur any liability for relying upon, any notice, request, certificate,
consent, statement, instrument, document or other writing (including any electronic message,
Internet or intranet website posting or other distribution) believed by it to be genuine and to
have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed by it to have been
made by the proper Person, and shall not incur any liability for relying thereon. In determining
compliance with any condition hereunder to the making of a Loan, or the issuance of a Letter of
Credit, that by its terms must be fulfilled to the satisfaction of a Lender or an L/C Issuer, the
Administrative Agent may presume that such condition is satisfactory to such Lender or such L/C
Issuer unless the Administrative Agent shall have received notice to the contrary
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from such Lender
or such L/C Issuer prior to the making of such Loan or the issuance of such Letter of Credit. The
Administrative Agent may consult with legal counsel (who may be counsel for the Borrower),
independent accountants and other experts selected by it, and shall not be liable for any action
taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.
9.05 Delegation of Duties
. The Administrative Agent may perform any and all of its duties
and exercise its rights and powers hereunder or under any other Loan Document by or through any one
or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all of its duties and exercise its rights and powers by or through
their respective Related Parties. The exculpatory provisions of this Article shall apply to any
such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and
shall apply to their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.
9.06 Resignation of Administrative Agent
. The Administrative Agent may at any time give
notice of its resignation to the Lenders, the L/C Issuers and the Borrower. Upon receipt of any
such notice of resignation, the Required Lenders shall have the right, in consultation with the
Borrower, to appoint a successor, which shall be a bank with an office in the United States, or an
Affiliate of any such bank with an office in the United States. If no such successor shall have
been so appointed by the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Administrative Agent gives notice of its resignation, then the retiring
Administrative Agent may on behalf of the Lenders and the L/C Issuers, appoint a successor
Administrative Agent meeting the qualifications set forth above;
provided
that if the
Administrative Agent shall notify the Borrower and the Lenders that no qualifying Person has
accepted such appointment, then such resignation shall nonetheless become effective in accordance
with such notice and (a) the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder and under the other Loan Documents (except that in the case of any collateral
security held by the Administrative Agent on behalf of the Lenders or the L/C Issuers under any of
the Loan Documents, the retiring Administrative Agent shall continue to hold such collateral
security until such time as a successor Administrative Agent is appointed) and (b) all payments,
communications and determinations provided to be made by, to or through the Administrative Agent
shall instead be made by or to each Lender and the applicable L/C Issuer directly, until such time
as the Required Lenders appoint a successor Administrative Agent as provided for above in this
Section. Upon the acceptance of a successors appointment as Administrative Agent hereunder, such
successor shall succeed to and become vested with all of the rights, powers, privileges and duties
of the retiring (or retired) Administrative Agent, and the retiring Administrative Agent shall be
discharged from all of its duties and obligations hereunder or under the other Loan Documents (if
not already discharged therefrom as provided above in this Section). The fees payable by the
Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Borrower and such successor. After the retiring Administrative
Agents resignation hereunder and under the other Loan Documents, the provisions of this Article
and
Section 10.04
shall continue in effect for the benefit of such retiring Administrative
Agent, its sub-agents and their respective Related Parties in respect of any actions taken or
omitted to be taken by any of them while the retiring Administrative Agent was acting as
Administrative Agent.
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Any resignation by Bank of America as Administrative Agent pursuant to this Section shall also
constitute its resignation as L/C Issuer. Upon the acceptance of a successors appointment as
Administrative Agent hereunder, (i) such successor shall succeed to and become vested with all of
the rights, powers, privileges and duties of the retiring L/C Issuer, (ii) the retiring L/C Issuer
shall be discharged from all of its duties and obligations hereunder or under the other Loan
Documents, and (iii) the successor L/C Issuer shall issue letters of credit in substitution for the
Letters of Credit, if any, outstanding at the time of such succession or make other arrangements
satisfactory to the retiring L/C Issuer to effectively assume the obligations of the retiring L/C
Issuer with respect to such Letters of Credit.
9.07 Non-Reliance on Administrative Agent and Other Lenders
. Each Lender and each L/C
Issuer acknowledges that it has, independently and without reliance upon the Administrative Agent
or any other Lender or any of their Related Parties and based on such documents and information as
it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.
Each Lender and each L/C Issuer also acknowledges that it will, independently and without reliance
upon the Administrative Agent or any other Lender or any of their Related Parties and based on such
documents and information as it shall from time to time deem appropriate, continue to make its own
decisions in taking or not taking action under or based upon this Agreement, any other Loan
Document or any related agreement or any document furnished hereunder or thereunder.
9.08 No Other Duties, Etc
. Anything herein to the contrary notwithstanding, none of the
Bookrunners or Arrangers listed on the cover page hereof shall have any powers, duties or
responsibilities under this Agreement or any of the other Loan Documents, except in its capacity,
as applicable, as the Administrative Agent, a Lender or an L/C Issuer hereunder.
9.09 Administrative Agent May File Proofs of Claim
. In case of the pendency of any
proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party,
the Administrative Agent (irrespective of whether the principal of any Loan or L/C Obligation shall
then be due and payable as herein expressed or by declaration or otherwise and irrespective of
whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and
empowered, by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of the principal and interest owing and
unpaid in respect of the Loans, L/C Obligations and all other Obligations that are owing and unpaid
and to file such other documents as may be necessary or advisable in order to have the claims of
the Lenders, the L/C Issuers and the Administrative Agent (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Lenders, the L/C Issuers and the
Administrative Agent and their respective agents and counsel and all other amounts due the Lenders,
the L/C Issuers and the Administrative Agent under
Sections 2.03(h)
and
(i)
,
2.08
and
10.04
) allowed in such judicial proceeding; and
(b) to collect and receive any monies or other property payable or deliverable on any such
claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Lender and each L/C Issuer to make
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such payments to the Administrative Agent and, if the Administrative Agent shall consent to the
making of such payments directly to the Lenders and the L/C Issuers, to pay to the Administrative
Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent
under
Sections 2.08
and
10.04
.
Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or
consent to or accept or adopt on behalf of any Lender or any L/C Issuer any plan of reorganization,
arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or any
L/C Issuer to authorize the Administrative Agent to vote in respect of the claim of any Lender or
any L/C Issuer or in any such proceeding.
Notwithstanding anything to the contrary contained herein, the Administrative Agent shall not be
entitled or empowered to, and shall have no obligation to, absent a written agreement between the
applicable Cash Management Bank or Hedge Bank and the Administrative Agent, take any of the actions
described in this
Section 9.09
with respect to Obligations on account of any Secured Cash
Management Agreement or Secured Hedge Agreement; provided that the Administrative Agent shall
provide to the Cash Management Banks and the Hedge Banks that have given notice in accordance with
Section 8.03
, a copy of any proof of claim filed by the Administrative Agent pursuant to
this
Section 9.09
.
9.10 Collateral and Guaranty Matters
. Each of the Lenders (including in its capacities as
a potential Cash Management Bank and a potential Hedge Bank) and the L/C Issuers irrevocably
authorize the Administrative Agent, at its option and in its discretion,
(a) to release any Lien on any property granted to or held by the Administrative Agent
under any Loan Document (i) upon termination of the Aggregate Commitments and payment in full of
all Obligations (other than (A) contingent indemnification obligations and (B) obligations and
liabilities under Secured Cash Management Agreements and Secured Hedge Agreements as to which
arrangements satisfactory to the applicable Cash Management Bank or Hedge Bank shall have been
made) and the expiration or termination of all Letters of Credit (other than Letters of Credit as
to which other arrangements satisfactory to the Administrative Agent and the applicable L/C Issuer
shall have been made), (ii) that is sold or to be sold as part of or in connection with any sale
permitted hereunder or under any other Loan Document, or (iii) if approved, authorized or ratified
in writing in accordance with
Section 10.01
;
(b) to release any Subsidiary Guarantor from its obligations under the Subsidiary Guaranty
if such Person ceases to be a Subsidiary as a result of a transaction permitted hereunder; and
(c) to subordinate any Lien on any property granted to or held by the Administrative Agent
under any Loan Document to the holder of any Lien on such property that is permitted by
Section
7.01(i)
.
Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing
the Administrative Agents authority to release or subordinate its interest in particular types or
items of property, or to release any Subsidiary Guarantor from its obligations under the
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Subsidiary
Guaranty pursuant to this
Section 9.10
. In each case as specified in this
Section
9.10
, the Administrative Agent will, at the Borrowers expense, execute and deliver to the
applicable Loan Party such documents as such Loan Party may reasonably request to evidence the
release of such item of Collateral from the assignment and security interest granted under the
Collateral Documents or to subordinate the Administrative Agents interest in such item, or to
release such Subsidiary Guarantor from its obligations under the Subsidiary Guaranty, in each case
in accordance with the terms of the Loan Documents and this
Section 9.10
.
9.11 Secured Cash Management Agreements and Secured Hedge Agreements
. No Cash Management
Bank or Hedge Bank that obtains the benefits of
Section 8.03
, the Subsidiary Guaranty or
any Collateral by virtue of the provisions hereof or of the Subsidiary Guaranty or any Collateral
Document shall have any right to notice of any action or to consent to, direct or object to any
action hereunder or under any other Loan Document or otherwise in respect of the Collateral
(including the release or impairment of any Collateral) other than in its capacity as a Lender and,
in such case, only to the extent expressly provided in the Loan Documents. Notwithstanding any
other provision of this
Article IX
to the contrary, the Administrative Agent shall not be
required to verify the payment of, or that other satisfactory arrangements have been made with
respect to, Obligations arising under Secured Cash Management Agreements and Secured Hedge
Agreements unless the Administrative Agent has received written notice of such Obligations,
together with such supporting documentation as the Administrative Agent may request, from the
applicable Cash Management Bank or Hedge Bank, as the case may be.
ARTICLE X
MISCELLANEOUS
10.01 Amendments, Etc
. No amendment or waiver of any provision of this Agreement or any
other Loan Document, and no consent to any departure by the Borrower or any other Loan Party
therefrom, shall be effective unless in writing signed by the Required Lenders and the Borrower or
the applicable Loan Party, as the case may be, and acknowledged by the Administrative Agent, and
each such waiver or consent shall be effective only in the specific instance and for the specific
purpose for which given;
provided
,
however
, that no such amendment, waiver or
consent shall:
(a) waive any condition set forth in
Section 4.01
(other than
Section
4.01(b)(i)
or
(c)
), or, in the case of the initial Credit Extension,
Section 4.02
, without the written consent of each Lender;
(b) extend or increase the Commitment of any Lender (or reinstate any Commitment
terminated pursuant to
Section 8.02
) without the written consent of such Lender;
(c) postpone any date fixed by this Agreement or any other Loan Document for any payment
(excluding mandatory prepayments) of principal, interest, fees or other amounts due to any Lender
without the written consent of such Lender;
(d) reduce the principal of, or the rate of interest specified herein on, any Loan or L/C
Borrowing, or (subject to clause (iii) of the second proviso to this
Section 10.01
) any
fees or other amounts payable hereunder or under any other Loan Document without the written
consent
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of each Lender entitled to such amount;
provided
,
however
, that only the
consent of the Required Lenders shall be necessary (i) to amend the definition of
Default
Rate
or to waive any obligation of the Borrower to pay interest or Letter of Credit Fees at
the Default Rate or (ii) to amend any financial covenant hereunder (or any defined term used
therein) even if the effect of such amendment would be to reduce the rate of interest on any Loan
or L/C Borrowing or to reduce any fee payable hereunder;
(e) change
Section 8.03
in a manner that would alter the pro rata sharing of
payments required thereby without the written consent of each Lender;
(f) change any provision of this
Section 10.01
or the definition of
Required
Lenders
or any other provision hereof specifying the number or percentage of Lenders required
to amend, waive or otherwise modify any rights hereunder or make any determination or grant any
consent hereunder without the written consent of each Lender;
(g) release all or substantially all of the Collateral in any transaction or series of
related transactions, without the written consent of each Lender; or
(h) release all or substantially all of the value of the Subsidiary Guaranty, without the
written consent of each Lender, except to the extent the release of any Subsidiary from the
Subsidiary Guaranty is permitted pursuant to
Section 9.10
(in which case such release may
be made by the Administrative Agent acting alone);
and
provided
,
further
, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the applicable L/C Issuer in addition to the Lenders required above, affect
the rights or duties of such L/C Issuer under this Agreement or any Issuer Document relating to any
Letter of Credit issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless
in writing and signed by the Administrative Agent in addition to the Lenders required above, affect
the rights or duties of the Administrative Agent under this Agreement or any other Loan Document;
and (iii) the Fee Letter may be amended, or rights or privileges thereunder waived, in a writing
executed only by the parties thereto. Notwithstanding anything to the contrary herein, no
Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent
hereunder (and any amendment, waiver or consent which by its terms requires the consent of all
Lenders or each affected Lender may be effected with the consent of the applicable Lenders other
than Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be
increased or extended or any amount owing to such Lender reduced (except in accordance with
Section 2.15
) or the final maturity thereof extended, in each case, without the consent of
such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or
each affected Lender that by its terms affects any Defaulting Lender more adversely than other
affected Lenders shall require the consent of such Defaulting Lender.
If any Lender does not consent to a proposed amendment, waiver, consent or release with respect to
any Loan Document that requires the consent of each Lender and that has been approved by the
Required Lenders, the Borrower may replace such non-consenting Lender in accordance with
Section 10.13
;
provided
that such amendment, waiver, consent or release can be
effected as a result of the assignment contemplated by such Section (together with all other such
assignments required by the Borrower to be made pursuant to this paragraph).
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10.02 Notices; Effectiveness; Electronic Communications
. (a)
Notices Generally
.
Except in the case of notices and other communications expressly permitted to be given by telephone
(and except as provided in subsection (b) below), all notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by
certified or registered mail or sent by telecopier as follows, and all notices and other
communications expressly permitted hereunder to be given by telephone shall be made to the
applicable telephone number, as follows:
(i) if to the Borrower, the Administrative Agent or an L/C Issuer, to the address,
telecopier number, electronic mail address or telephone number specified for such Person on
Schedule 10.02
; and
(ii) if to any other Lender, to the address, telecopier number, electronic mail
address or telephone number specified in its Administrative Questionnaire (including, as
appropriate, notices delivered solely to the Person designated by a Lender on its
Administrative Questionnaire then in effect for the delivery of notices that may contain
material non-public information relating to the Borrower).
Notices and other communications sent by hand or overnight courier service, or mailed by certified
or registered mail, shall be deemed to have been given when received; notices and other
communications sent by telecopier shall be deemed to have been given when sent (except that, if not
given during normal business hours for the recipient, shall be deemed to have been given at the
opening of business on the next business day for the recipient). Notices and other communications
delivered through electronic communications to the extent provided in subsection (b) below shall be
effective as provided in such subsection (b).
(b)
Electronic Communications
. Notices and other communications to the Lenders
and the L/C Issuers hereunder may be delivered or furnished by electronic communication (including
e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative
Agent,
provided
that the foregoing shall not apply to notices to any Lender or any L/C
Issuer pursuant to
Article II
if such Lender or such L/C Issuer, as applicable, has
notified the Administrative Agent that it is incapable of receiving notices under such Article by
electronic communication. The Administrative Agent or the Borrower may, in its discretion, agree
to accept notices and other communications to it hereunder by electronic communications pursuant to
procedures approved by it,
provided
that approval of such procedures may be limited to
particular notices or communications.
Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to
an e-mail address shall be deemed received upon the senders receipt of an acknowledgement from the
intended recipient (such as by the
return receipt requested
function, as available,
return e-mail or other written acknowledgement),
provided
that if such notice or other
communication is not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on the next business day
for the recipient, and (ii) notices or communications posted to an Internet or intranet website
shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as
described in the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.
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(c)
The Platform
. THE PLATFORM IS PROVIDED
AS IS
AND
AS
AVAILABLE
. THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS
OF THE MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR
OMISSIONS FROM THE MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING
ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY
RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH
THE MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of its Related
Parties (collectively, the
Agent Parties
) have any liability to the Borrower, any Lender,
any L/C Issuer or any other Person for losses, claims, damages, liabilities or expenses of any kind
(whether in tort, contract or otherwise) arising out of the Borrowers or the Administrative
Agents transmission of Materials through the Internet, except to the extent that such losses,
claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by a
final and nonappealable judgment to have resulted from the gross negligence or willful misconduct
of such Agent Party;
provided
,
however
, that in no event shall any Agent Party have
any liability to the Borrower, any Lender, any L/C Issuer or any other Person for indirect,
special, incidental, consequential or punitive damages (as opposed to direct or actual damages).
(d)
Change of Address, Etc
. Each of the Borrower, the Administrative Agent and
each L/C Issuer may change its address, telecopier or telephone number for notices and other
communications hereunder by notice to the other parties hereto. Each other Lender may change its
address, telecopier or telephone number for notices and other communications hereunder by notice to
the Borrower, the Administrative Agent and each other L/C Issuer. In addition, each Lender agrees
to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on
record (i) an effective address, contact name, telephone number, telecopier number and electronic
mail address to which notices and other communications may be sent and (ii) accurate wire
instructions for such Lender. Furthermore, each Public Lender agrees to cause at least one
individual at or on behalf of such Public Lender to at all times have selected the
Private
Side Information
or similar designation on the content declaration screen of the Platform in
order to enable such Public Lender or its delegate, in accordance with such Public Lenders
compliance procedures and applicable Law, including United States Federal and state securities
Laws, to make reference to Materials that are not made available through the
Public Side
Information
portion of the Platform and that may contain material non-public information with
respect to the Borrower or its securities for purposes of United States Federal or state securities
laws.
(e)
Reliance by Administrative Agent, L/C Issuers and Lenders
. The Administrative
Agent, the L/C Issuers and the Lenders shall be entitled to rely and act upon any notices
(including telephonic Revolving Credit Loan Notices) purportedly given by or on behalf of the
Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or
were not preceded or followed by any other form of notice specified herein, or (ii) the terms
thereof, as understood by the recipient, varied from any confirmation thereof. The Borrower shall
indemnify the Administrative Agent, each L/C Issuer, each Lender and the Related Parties of each of
them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on
each notice purportedly given by or on behalf of the Borrower. All telephonic notices
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to and other
telephonic communications with the Administrative Agent may be recorded by the Administrative
Agent, and each of the parties hereto hereby consents to such recording.
10.03 No Waiver; Cumulative Remedies; Enforcement
. No failure by any Lender, any L/C
Issuer or the Administrative Agent to exercise, and no delay by any such Person in exercising, any
right, remedy, power or privilege hereunder or under any other Loan Document shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege. The rights, remedies, powers and privileges herein provided, and
provided under each other Loan Document, are cumulative and not exclusive of any rights, remedies,
powers and privileges provided by law.
Notwithstanding anything to the contrary contained herein or in any other Loan Document, the
authority to enforce rights and remedies hereunder and under the other Loan Documents against the
Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law
in connection with such enforcement shall be instituted and maintained exclusively by, the
Administrative Agent in accordance with
Section 8.02
for the benefit of all the Lenders and
the L/C Issuers;
provided
,
however
, that the foregoing shall not prohibit (a) the
Administrative Agent from exercising on its own behalf the rights and remedies that inure to its
benefit (solely in its capacity as Administrative Agent) hereunder and under the other Loan
Documents, (b) any L/C Issuer from exercising the rights and remedies that inure to its benefit
(solely in its capacity as L/C Issuer) hereunder and under the other Loan Documents, (c) any Lender
from exercising setoff rights in accordance with
Section 10.08
(subject to the terms of
Section 2.12
), or (d) any Lender from filing proofs of claim or appearing and filing
pleadings on its own behalf during the pendency of a proceeding relative to any Loan Party under
any Debtor Relief Law; and
provided
,
further
, that if at any time there is no
Person acting as Administrative Agent hereunder and under the other Loan Documents, then (i) the
Required Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to
Section 8.02
and (ii) in addition to the matters set forth in clauses (b), (c) and (d) of
the preceding proviso and subject to
Section 2.12
, any Lender may, with the consent of the
Required Lenders, enforce any rights and remedies available to it and as authorized by the Required
Lenders.
10.04 Expenses; Indemnity; Damage Waiver
. (a)
Costs and Expenses
. The Borrower
shall pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent and its
Affiliates (including the reasonable fees, charges and disbursements of counsel for the
Administrative Agent), in connection with the syndication of the credit facilities provided for
herein, the preparation, negotiation, execution, delivery and administration of this Agreement and
the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or
thereof (whether or not the transactions contemplated hereby or thereby shall be consummated),
(ii) all reasonable out-of-pocket expenses incurred by any L/C Issuer in connection with the
issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment
thereunder and (iii) all out-of-pocket expenses incurred by the Administrative Agent, any Lender or
any L/C Issuer (including the fees, charges and disbursements of any counsel for the Administrative
Agent, any Lender or any L/C Issuer), and shall pay all fees and time charges for attorneys who may
be employees of the Administrative Agent, any Lender or any L/C Issuer, in connection with the
enforcement or protection of its rights (A) in connection with this Agreement and the other Loan
Documents, including its rights
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under this Section, or (B) in connection with Loans made or Letters
of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout,
restructuring or negotiations in respect of such Loans or Letters of Credit.
(b)
Indemnification by the Borrower
. The Borrower shall indemnify the
Administrative Agent (and any sub-agent thereof), each Lender and each L/C Issuer, and each Related
Party of any of the foregoing Persons (each such Person being called an
Indemnitee
)
against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities
and related expenses (including the fees, charges and disbursements of any counsel for any
Indemnitee) incurred by any Indemnitee or asserted against any Indemnitee by any third party or by
the Borrower or any other Loan Party arising out of, in connection with, or as a result of (i) the
execution or delivery of this Agreement, any other Loan Document or any agreement or instrument
contemplated hereby or thereby, the performance by the parties hereto of their respective
obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or
thereby, or, in the case of the Administrative Agent (and any sub-agent thereof) and its Related
Parties only, the administration of this Agreement and the other Loan Documents, (ii) any Loan or
Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by an
L/C Issuer to honor a demand for payment under a Letter of Credit if the documents presented in
connection with such demand do not strictly comply with the terms of such Letter of Credit),
(iii) any actual or alleged presence or release of Hazardous Materials on or from any property
owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability
related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective
claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory, whether brought by a third party or by the Borrower or any
other Loan Party or any of the Borrowers or such Loan Partys directors, shareholders or
creditors, and regardless of whether any Indemnitee is a party thereto,
IN ALL CASES, WHETHER OR
NOT CAUSED BY OR ARISING, IN WHOLE OR IN PART, OUT OF THE COMPARATIVE, CONTRIBUTORY OR SOLE
NEGLIGENCE OR THE STRICT LIABILITY OF THE INDEMNITEE
;
provided
that such indemnity shall
not, as to any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses (x) are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such
Indemnitee or (y) result from a claim brought by the Borrower or any other Loan Party against an
Indemnitee for breach in bad faith of such Indemnitees obligations hereunder or under any other
Loan Document, if the Borrower or such Loan Party has obtained a final and nonappealable judgment
in its favor on such claim as determined by a court of competent jurisdiction.
(c)
Reimbursement by Lenders
. To the extent that the Borrower for any reason
fails to indefeasibly pay any amount required under subsection (a) or (b) of this Section to be
paid by it to the Administrative Agent (or any sub-agent thereof), any L/C Issuer or any Related
Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or
any such sub-agent), such L/C Issuer or such Related Party, as the case may be, such Lenders
Applicable Percentage (determined as of the time that the applicable unreimbursed expense or
indemnity payment is sought) of such unpaid amount,
provided
that the unreimbursed expense
or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred
by or asserted against the Administrative Agent (or any such sub-agent) or such L/C Issuer in its
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capacity as such, or against any Related Party of any of the foregoing acting for the
Administrative Agent (or any such sub-agent) or such L/C Issuer in connection with such capacity.
The obligations of the Lenders under this subsection (c) are subject to the provisions of
Section 2.11(d)
.
(d)
Waiver of Consequential Damages, Etc
. To the fullest extent permitted by
applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee,
on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to
direct or actual damages) arising out of, in connection with, or as a result of, this Agreement,
any other Loan Document or any agreement or instrument contemplated hereby, the transactions
contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof.
No Indemnitee referred to in subsection (b) above shall be liable for any damages arising from the
use by unintended recipients of any information or other materials distributed to such unintended
recipients by such Indemnitee through telecommunications, electronic or other information
transmission systems in connection with this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby other than for direct or actual damages resulting from
the gross negligence or willful misconduct of such Indemnitee as determined by a final and
nonappealable judgment of a court of competent jurisdiction.
(e)
Payments
. All amounts due under this Section shall be payable not later than
ten Business Days after demand therefor.
(f)
Survival
. The agreements in this Section shall survive the resignation of the
Administrative Agent and the L/C Issuers, the replacement of any Lender, the termination of the
Aggregate Commitments and the repayment, satisfaction or discharge of all the other Obligations.
10.05 Payments Set Aside
. To the extent that any payment by or on behalf of the Borrower
is made to the Administrative Agent, any L/C Issuer or any Lender, or the Administrative Agent, any
L/C Issuer or any Lender exercises its right of setoff, and such payment or the proceeds of such
setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential,
set aside or required (including pursuant to any settlement entered into by the Administrative
Agent, such L/C Issuer or such Lender in its discretion) to be repaid to a trustee, receiver or any
other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a)
to the extent of such recovery, the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment had not been made or
such setoff had not occurred, and (b) each Lender and each L/C Issuer severally agrees to pay to
the Administrative Agent upon demand its applicable share (without duplication) of any amount so
recovered from or repaid by the Administrative Agent,
plus
interest thereon from the date
of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate
from time to time in effect. The obligations of the Lenders and the L/C Issuers under clause (b)
of the preceding sentence shall survive the payment in full of the Obligations and the termination
of this Agreement.
10.06 Successors and Assigns
. (a)
Successors and Assigns Generally
. The
provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby, except that the Borrower may not
assign or
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otherwise transfer any of its rights or obligations hereunder without the prior written
consent of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer
any of its rights or obligations hereunder except (i) to an assignee in accordance with the
provisions of
Section 10.06(b)
, (ii) by way of participation in accordance with the
provisions of
Section 10.06(d)
, or (iii) by way of pledge or assignment of a security
interest subject to the restrictions of
Section 10.06(f)
(and any other attempted
assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than the parties hereto,
their respective successors and assigns permitted hereby, Participants to the extent provided in
subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related
Parties of each of the Administrative Agent, the L/C Issuers and the Lenders) any legal or
equitable right, remedy or claim under or by reason of this Agreement.
(b)
Assignments by Lenders
. Any Lender may at any time assign to one or more
assignees all or a portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment(s) and the Loans (including for purposes of this
Section
10.06(b)
, participations in L/C Obligations) at the time owing to it);
provided
that
any such assignment shall be subject to the following conditions:
(i)
Minimum Amounts
.
(A) in the case of an assignment of the entire remaining amount of the
assigning Lenders Commitment and the Loans at the time owing to it or in the case
of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no
minimum amount need be assigned; and
(B) in any case not described in subsection (b)(i)(A) of this Section, the
aggregate amount of the Commitment (which for this purpose includes Loans
outstanding thereunder) or, if the Commitment is not then in effect, the principal
outstanding balance of the Loans of the assigning Lender subject to each such
assignment, determined as of the date the Assignment and Assumption with respect to
such assignment is delivered to the Administrative Agent or, if
Trade Date
is specified in the Assignment and Assumption, as of the Trade Date, shall not be
less than $5,000,000, unless each of the Administrative Agent and, so long as no
Event of Default has occurred and is continuing, the Borrower otherwise consents
(each such consent not to be unreasonably withheld or delayed);
provided
,
however
, that concurrent assignments to members of an Assignee Group and
concurrent assignments from members of an Assignee Group to a single Eligible
Assignee (or to an Eligible Assignee and members of its Assignee Group) will be
treated as a single assignment for purposes of determining whether such minimum
amount has been met.
(ii)
Proportionate Amounts
. Each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lenders rights and obligations
under this Agreement with respect to the Loans or the Commitment assigned.
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(iii)
Required Consents
. No consent shall be required for any assignment
except to the extent required by subsection (b)(i)(B) of this Section and, in addition:
(A) the consent of the Borrower (such consent not to be unreasonably
withheld or delayed) shall be required unless (1) an Event of Default has occurred
and is continuing at the time of such assignment or (2) such assignment is to a
Lender, an Affiliate of a Lender or an Approved Fund
provided
that the
Borrower shall be deemed to have consented to any such assignment unless it shall
object thereto by written notice to the Administrative Agent within five (5)
Business Days after having received notice thereof;
(B) the consent of the Administrative Agent (such consent not to be
unreasonably withheld or delayed) shall be required if such assignment is to a
Person that is not a Lender, an Affiliate of a Lender or an Approved Fund with
respect to a Lender; and
(C) the consent of the L/C Issuers (such consent not to be unreasonably
withheld or delayed) shall be required for any assignment that increases the
obligation of the assignee to participate in exposure under one or more Letters of
Credit (whether or not then outstanding).
(iv)
Assignment and Assumption
. The parties to each assignment shall
execute and deliver to the Administrative Agent an Assignment and Assumption, together with
a processing and recordation fee in the amount of $3,500;
provided
,
however
,
that the Administrative Agent may, in its sole discretion, elect to waive such processing
and recordation fee in the case of any assignment. The assignee, if it is not a Lender,
shall deliver to the Administrative Agent an Administrative Questionnaire.
(v)
No Assignment to Certain Persons
. No such assignment shall be made (A)
to the Borrower or any of the Borrowers Affiliates or Subsidiaries, or (B) to any
Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender
hereunder, would constitute any of the foregoing Persons described in this clause (B), or
(C) to a natural person.
(vi)
Certain Additional Payments
. In connection with any assignment of
rights and obligations of any Defaulting Lender hereunder, no such assignment shall be
effective unless and until, in addition to the other conditions thereto set forth herein,
the parties to the assignment shall make such additional payments to the Administrative
Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may
be outright payment, purchases by the assignee of participations or subparticipations, or
other compensating actions, including funding, with the consent of the Borrower and the
Administrative Agent, the applicable pro rata share of Loans previously requested but not
funded by the Defaulting Lender, to each of which the applicable assignee and assignor
hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then
owed by such Defaulting Lender to the Administrative Agent or any Lender hereunder (and
interest accrued thereon) and (y) acquire (and fund as appropriate) its full pro rata share
of all Loans and participations in Letters of Credit in
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accordance with its Applicable
Percentage. Notwithstanding the foregoing, in the event that any assignment of rights and
obligations of any Defaulting Lender hereunder shall become effective under applicable Law
without compliance with the provisions of this paragraph, then the assignee of such interest
shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such
compliance occurs.
Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c)
of this Section, from and after the effective date specified in each Assignment and Assumption, the
assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned
by such Assignment and Assumption, have the rights and obligations of a Lender under this
Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lenders rights and obligations
under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be
entitled to the benefits of
Sections 3.01
,
3.04
,
3.05
and
10.04
with respect to facts and circumstances occurring prior to the effective date of such assignment.
Upon request, the Borrower (at its expense) shall execute and deliver a Note to the assignee
Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that
does not comply with this subsection shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance with
Section
10.06(d)
. Any assignee under an Assignment and Assumption shall not be so entitled to receive
any greater payment under
Sections 3.01
or
3.04
than the applicable Lender would
have been entitled to receive with respect to its rights and obligations under this Agreement had
such Assignment and Assumption not been entered into, unless such Lenders inability to receive a
greater payment was on account of its failure to comply with
Section 3.01(e)(ii)
of this
Agreement and the assignee complies with the requirements of such Section.
(c)
Register
. The Administrative Agent, acting solely for this purpose as an
agent of the Borrower (and such agency being solely for tax purposes), shall maintain at the
Administrative Agents Office a copy of each Assignment and Assumption delivered to it and a
register for the recordation of the names and addresses of the Lenders, and the Commitments of, and
principal amounts of the Loans and L/C Obligations owing to, each Lender pursuant to the terms
hereof from time to time (the
Register
). The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose
name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all
purposes of this Agreement, notwithstanding notice to the contrary. In addition, the
Administrative Agent shall maintain on the Register information regarding the designation, and
revocation of designation, of any Lender as a Defaulting Lender. The Register shall be available
for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon
reasonable prior notice.
(d)
Participations
. Any Lender may at any time, without the consent of, or notice
to, the Borrower or the Administrative Agent, sell participations to any Person (other than a
natural person, a Defaulting Lender or the Borrower or any of the Borrowers Affiliates or
Subsidiaries) (each, a
Participant
) in all or a portion of such Lenders rights and/or
obligations under this Agreement (including all or a portion of its Commitment and/or the Loans
(including such Lenders participations in L/C Obligations) owing to it);
provided
that
(i) such Lenders
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obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of such obligations,
(iii) such Lender, acting solely for this purpose as an agent of the Borrower (and such agency
being solely for tax purposes) shall maintain a register on which it enters the name and address of
each Participant and the principal amounts (and stated interest) of each Participants interest in
the Commitments, and (iv) the Borrower, the Administrative Agent, the Lenders and the L/C Issuers
shall continue to deal solely and directly with such Lender in connection with such Lenders rights
and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells
such a participation shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision of this Agreement;
provided
that such agreement or instrument may provide that such Lender will not, without
the consent of the Participant, agree to any amendment, waiver or other modification described in
the first proviso to
Section 10.01
that affects such Participant. Subject to
subsection (e)
of this Section, the Borrower agrees that each Participant shall be entitled
to the benefits of
Sections 3.01
,
3.04
and
3.05
to the same extent as if it
were a Lender and had acquired its interest by assignment pursuant to
Section 10.06(b)
. To
the extent permitted by law, each Participant also shall be entitled to the benefits of
Section 10.08
as though it were a Lender,
provided
such Participant agrees to be
subject to
Section 2.12
as though it were a Lender.
(e)
Limitations upon Participant Rights
. A Participant shall not be entitled to
receive any greater payment under
Sections 3.01
or
3.04
than the applicable Lender
would have been entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the Borrowers prior written
consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to
the benefits of
Section 3.01
unless the Borrower is notified of the participation sold to
such Participant and such Participant agrees, for the benefit of the Borrower, to comply with
Section 3.01(e)
as though it were a Lender.
(f)
Certain Pledges
. Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement (including under its Note, if
any) to secure obligations of such Lender, including any pledge or assignment to secure obligations
to a Federal Reserve Bank;
provided
that no such pledge or assignment shall release such
Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.
(g)
Resignation as L/C Issuer after Assignment
. Notwithstanding anything to the
contrary contained herein, if at any time Bank of America assigns all of its Commitment and
Revolving Credit Loans pursuant to
Section 10.06(b)
, Bank of America may, upon 30 days
notice to the Borrower and the Lenders, resign as an L/C Issuer. In the event of any such
resignation as an L/C Issuer, the Borrower shall be entitled to appoint from among the Lenders a
successor L/C Issuer hereunder;
provided
,
however
, that no failure by the Borrower
to appoint any such successor shall affect the resignation of Bank of America as L/C Issuer. If
Bank of America resigns as an L/C Issuer, it shall retain all the rights, powers, privileges and
duties of an L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the
effective date of its resignation as an L/C Issuer and all L/C Obligations with respect thereto
(including the right to require the Lenders to make Base Rate Loans or fund risk participations in
Unreimbursed Amounts pursuant to
Section 2.03(c)
). Upon the appointment of a successor L/C
Issuer, (a) such
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successor shall succeed to and become vested with all of the rights, powers,
privileges and duties of the retiring L/C Issuer and (b) the successor L/C Issuer shall issue
letters of credit in substitution for the Letters of Credit, if any, issued by such retiring L/C
Issuer and outstanding at the time of such succession or make other arrangements satisfactory to
such retiring L/C Issuer to effectively assume the obligations of such retiring L/C Issuer with
respect to such Letters of Credit.
10.07 Treatment of Certain Information; Confidentiality
. Each of the Administrative
Agent, the Lenders and the L/C Issuers agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed (a) to its Affiliates and to its and
its Affiliates respective partners, directors, officers, employees, agents, trustees, advisors and
representatives (it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority purporting to have
jurisdiction over it (including any self-regulatory authority, such as the National Association of
Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any
subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the
exercise of any remedies hereunder or under any other Loan Document or any action or proceeding
relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or
thereunder, (f) subject to an agreement containing provisions substantially the same as those of
this Section, to (i) any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement or any Eligible Assignee
invited to be a Lender pursuant to
Section 2.13(c)
or (ii) any actual or prospective
counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and
its obligations, (g) with the consent of the Borrower or (h) to the extent such Information
(i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes
available to the Administrative Agent, any Lender, any L/C Issuer or any of their respective
Affiliates on a nonconfidential basis from a source other than the Borrower. For purposes of this
Section,
Information
means all information received from the Borrower or any Subsidiary
relating to the Borrower or any Subsidiary or any of their respective businesses, other than any
such information that is available to the Administrative Agent, any Lender or any L/C Issuer on a
nonconfidential basis prior to disclosure by the Borrower or any Subsidiary, provided that, in the
case of information received from the Borrower or any Subsidiary after the date hereof, such
information is clearly identified at the time of delivery as confidential. Any Person required to
maintain the confidentiality of Information as provided in this Section shall be considered to have
complied with its obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord to its own
confidential information.
Each of the Administrative Agent, the Lenders and the L/C Issuers acknowledges that (a) the
Information may include material non-public information concerning the Borrower or a Subsidiary, as
the case may be, (b) it has developed compliance procedures regarding the use of material
non-public information and (c) it will handle such material non-public information in accordance
with applicable Law, including United States Federal and state securities Laws.
10.08 Right of Setoff
. If an Event of Default shall have occurred and be continuing, each
Lender, each L/C Issuer and each of their respective Affiliates is hereby authorized at any
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time
and from time to time, after obtaining the prior written consent of the Administrative Agent, to
the fullest extent permitted by applicable law, to set off and apply any and all deposits (general
or special, time or demand, provisional or final, in whatever currency) at any time held and other
obligations (in whatever currency) at any time owing by such Lender, such L/C Issuer or any such
Affiliate to or for the credit or the account of the Borrower against any and all of the
obligations of the Borrower now or hereafter existing under this Agreement or any other Loan
Document to such Lender or such L/C Issuer, irrespective of whether or not such Lender or such L/C
Issuer shall have made any demand under this Agreement or any other Loan Document and although such
obligations of the Borrower may be contingent or unmatured or are owed to a branch or office of
such Lender or such L/C Issuer different from the branch or office holding such deposit or
obligated on such indebtedness; provided, that in the event that any Defaulting Lender shall
exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the
Administrative Agent for further application in accordance with the provisions of
Section 2.15
and, pending such payment, shall be segregated by such Defaulting Lender from
its other funds and deemed held in trust for the benefit of the Administrative Agent and the
Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a
statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to
which it exercised such right of setoff. The rights of each Lender, each L/C Issuer and their
respective Affiliates under this Section are in addition to other rights and remedies (including
other rights of setoff) that such Lender, such L/C Issuer or their respective Affiliates may have.
Each Lender and each L/C Issuer agrees to notify the Borrower and the Administrative Agent promptly
after any such setoff and application,
provided
that the failure to give such notice shall
not affect the validity of such setoff and application.
10.09 Interest Rate Limitation
. Notwithstanding anything to the contrary contained in any
Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the
maximum rate of non-usurious interest permitted by applicable Law (the
Maximum Rate
). If
the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum
Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such
unpaid principal, refunded to the Borrower. In determining whether the interest contracted for,
charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person
may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal
as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the
effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the
total amount of interest throughout the contemplated term of the Obligations hereunder.
10.10 Counterparts; Integration; Effectiveness
. This Agreement may be executed in
counterparts (and by different parties hereto in different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a single contract.
This Agreement and the other Loan Documents constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except as provided in
Section 4.01
, this Agreement shall become effective when it shall have been executed by the
Administrative Agent and when the Administrative Agent shall have received counterparts hereof
that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an
executed counterpart of a signature page of this Agreement by telecopy or other electronic
-114-
imaging
means shall be effective as delivery of a manually executed counterpart of this Agreement.
10.11 Survival of Representations and Warranties
. All representations and warranties made
hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or
in connection herewith or therewith shall survive the execution and delivery hereof and thereof.
Such representations and warranties have been or will be relied upon by the Administrative Agent
and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or
on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice
or knowledge of any Default at the time of any Credit Extension, and shall continue in full force
and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied
or any Letter of Credit shall remain outstanding.
10.12 Severability
. If any provision of this Agreement or the other Loan Documents is
held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the
remaining provisions of this Agreement and the other Loan Documents shall not be affected or
impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the
illegal, invalid or unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the illegal, invalid or unenforceable provisions. The
invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable
such provision in any other jurisdiction. Without limiting the foregoing provisions of this
Section 10.12
, if and to the extent that the enforceability of any provisions in this
Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined in
good faith by the Administrative Agent or an L/C Issuer, as applicable, then such provisions shall
be deemed to be in effect only to the extent not so limited.
10.13 Replacement of Lenders
. If any Lender requests compensation under
Section
3.04
, or if the Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to
Section 3.01
, or if any
Lender is a Defaulting Lender or if any other circumstance exists hereunder that gives the Borrower
the right to replace a Lender as a party hereto, then the Borrower may, at its sole expense and
effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and
delegate, without recourse (in accordance with and subject to the restrictions contained in, and
consents required by,
Section 10.06
), all of its interests, rights and obligations under
this Agreement and the related Loan Documents to an assignee that shall assume such obligations
(which assignee may be another Lender, if a Lender accepts such assignment),
provided
that:
(a) the Borrower shall have paid to the Administrative Agent the assignment fee specified
in
Section 10.06(b)
;
(b) such Lender shall have received payment of an amount equal to 100% of the outstanding
principal of its Loans and L/C Advances, accrued interest thereon, accrued fees and all other
amounts payable to it hereunder and under the other Loan Documents (including any amounts under
Section 3.05
) from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrower (in the case of all other amounts);
-115-
(c) in the case of any such assignment resulting from a claim for compensation under
Section 3.04
or payments required to be made pursuant to
Section 3.01
, such
assignment will result in a reduction in such compensation or payments thereafter; and
(d) such assignment does not conflict with applicable Laws.
A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require
such assignment and delegation cease to apply.
10.14 Governing Law; Jurisdiction; Etc
. (a)
GOVERNING LAW
. THIS AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
(b)
SUBMISSION TO JURISDICTION
. THE BORROWER IRREVOCABLY AND UNCONDITIONALLY
SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE
OF NEW YORK SITTING IN NEW YORK CITY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN
DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT
OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL
CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK
STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF
THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER
MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY
RIGHT THAT THE ADMINISTRATIVE AGENT, ANY LENDER OR ANY L/C ISSUER MAY OTHERWISE HAVE TO BRING ANY
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR
ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
(c)
WAIVER OF VENUE
. THE BORROWER IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF
AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
(d)
SERVICE OF PROCESS
. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS IN THE MANNER PROVIDED FOR NOTICES IN
-116-
SECTION 10.02
. NOTHING IN THIS AGREEMENT
WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
APPLICABLE LAW
10.15 Waiver of Jury Trial
. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY
OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE
OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
10.16 No Advisory or Fiduciary Responsibility
. In connection with all aspects of each
transaction contemplated hereby (including in connection with any amendment, waiver or other
modification hereof or of any other Loan Document), the Borrower acknowledges and agrees, and
acknowledges its Affiliates understanding, that: (i) (A) the arranging and other services
regarding this Agreement provided by the Administrative Agent and the Arranger, are arms-length
commercial transactions between the Borrower and its Affiliates, on the one hand, and the
Administrative Agent and the Arranger, on the other hand, (B) the Borrower has consulted its own
legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the
Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of
the transactions contemplated hereby and by the other Loan Documents; (ii) (A) the Administrative
Agent and the Arranger, each is and has been acting solely as a principal and, except as expressly
agreed in writing by the relevant parties, has not been, is not, and will not be acting as an
advisor, agent or fiduciary for the Borrower or any of its Affiliates, or any other Person and (B)
neither the Administrative Agent nor the Arranger has any obligation to the Borrower or any of its
Affiliates with respect to the transactions contemplated hereby except those obligations expressly
set forth herein and in the other Loan Documents; and (iii) the Administrative Agent and the
Arranger and their respective Affiliates may be engaged in a broad range of transactions that
involve interests that differ from those of the Borrower and its Affiliates, and neither the
Administrative Agent nor the Arranger has any obligation to disclose any of such interests to the
Borrower or its Affiliates. To the fullest extent permitted by law, the Borrower hereby waives and
releases any claims that it may have against the Administrative Agent and the Arranger with respect
to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any
transaction contemplated hereby.
10.17 Electronic Execution of Assignments and Certain Other Documents
. The words
execution
,
signed
,
signature
, and words of like import in any
Assignment and Assumption or in any amendment or other modification hereof (including waivers and
consents) shall be deemed to include electronic signatures or the keeping of records in electronic
form,
-117-
each of which shall be of the same legal effect, validity or enforceability as a manually
executed signature or the use of a paper-based recordkeeping system, as the case may be, to the
extent and as provided for in any applicable law, including the Federal Electronic Signatures in
Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any
other similar state laws based on the Uniform Electronic Transactions Act.
10.18 USA PATRIOT Act
. Each Lender that is subject to the Act (as hereinafter defined)
and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the
Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56
(signed into law October 26, 2001)) (the
Act
), it is required to obtain, verify and
record information that identifies each Loan Party, which information includes the name and address
of each Loan Party and other information that will allow such Lender or the Administrative Agent,
as applicable, to identify each Loan Party in accordance with the Act. The Borrower shall,
promptly following a request by the Administrative Agent or any Lender, provide all documentation
and other information that the Administrative Agent or such Lender requests in order to comply with
its ongoing obligations under applicable
know your customer
an anti-money laundering
rules and regulations, including the Act.
10.19 ENTIRE AGREEMENT
. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE
PARTIES.
-118-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed
as of the date first above written.
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TESORO LOGISTICS LP
By:
TESORO LOGISTICS GP, LLC
, its general partner
|
|
|
By:
|
/s/ G. Scott Spendlove
|
|
|
|
Name:
|
G. Scott Spendlove
|
|
|
|
Title:
|
Vice President and
Chief Financial Officer
|
|
|
Signature Page to Credit Agreement
|
|
|
|
|
|
BANK OF AMERICA, N.A., as
Administrative Agent
|
|
|
By:
|
/s/ Alan Tapley
|
|
|
|
Name:
|
Alan Tapley
|
|
|
|
Title:
|
Assistant Vice President
|
|
|
Signature Page to Credit Agreement
|
|
|
|
|
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BANK OF AMERICA, N.A., as a Lender and L/C Issuer
|
|
|
By:
|
/s/ Ronald E. McKaig
|
|
|
|
Name:
|
Ronald E. McKaig
|
|
|
|
Title:
|
Managing Director
|
|
|
Signature Page to Credit Agreement
|
|
|
|
|
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WELLS FARGO BANK, NATIONAL ASSOCIATION
|
|
|
By:
|
/s/ Shiloh Davila
|
|
|
|
Name:
|
Shiloh Davila
|
|
|
|
Title:
|
Assistant Vice President
|
|
|
Signature Page to Credit Agreement
|
|
|
|
|
|
CITIBANK, N.A.
|
|
|
By:
|
/s/ Todd Mogil
|
|
|
|
Name:
|
Todd Mogil
|
|
|
|
Title:
|
Vice President
|
|
|
Signature Page to Credit Agreement
|
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|
|
|
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DEUTSCHE BANK TRUST COMPANY AMERICAS
|
|
|
By:
|
/s/ Michael Getz
|
|
|
|
Name:
|
Michael Getz
|
|
|
|
Title:
|
Vice President
|
|
|
|
|
|
|
By:
|
/s/ Enrique Landaeta
|
|
|
|
Name:
|
Enrique Landaeta
|
|
|
|
Title:
|
Vice President
|
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|
Signature Page to Credit Agreement
|
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ROYAL BANK OF CANADA
|
|
|
By:
|
/s/ Jason S. York
|
|
|
|
Name:
|
Jason S. York
|
|
|
|
Title:
|
Authorized Signatory
|
|
|
Signature Page to Credit Agreement
|
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CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH
|
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By:
|
/s/ Mikhail Faybusovich
|
|
|
|
Name:
|
Mikhail Faybusovich
|
|
|
|
Title:
|
Director
|
|
|
|
|
|
|
By:
|
/s/ Rahul Parmar
|
|
|
|
Name:
|
Rahul Parmar
|
|
|
|
Title:
|
Associate
|
|
|
Signature Page to Credit Agreement
|
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|
|
|
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JPMORGAN CHASE BANK, N.A.
|
|
|
By:
|
/s/ Thomas Okamoto
|
|
|
|
Name:
|
Thomas Okamoto
|
|
|
|
Title:
|
Authorized Officer
|
|
|
Signature Page to Credit Agreement
|
|
|
|
|
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SUNTRUST BANK
|
|
|
By:
|
/s/ Carmen Malizia
|
|
|
|
Name:
|
Carmen Malizia
|
|
|
|
Title:
|
Vice President
|
|
|
Signature Page to Credit Agreement
|
|
|
|
|
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THE ROYAL BANK OF SCOTLAND PLC
|
|
|
By:
|
/s/ Brian D. Williams
|
|
|
|
Name:
|
Brian D. Williams
|
|
|
|
Title:
|
Vice President
|
|
|
Signature Page to Credit Agreement
|
|
|
|
|
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RAYMOND JAMES BANK, FSB
|
|
|
By:
|
/s/ Garrett McKinnon
|
|
|
|
Name:
|
Garrett McKinnon
|
|
|
|
Title:
|
Senior Vice President
|
|
|
Signature Page to Credit Agreement
|
|
|
|
|
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BARCLAYS BANK PLC
|
|
|
By:
|
/s/ Michael J. Mozer
|
|
|
|
Name:
|
Michael J. Mozer
|
|
|
|
Title:
|
Vice President
|
|
|
Signature Page to Credit Agreement
|
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|
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AMEGY BANK, N.A.
|
|
|
By:
|
/s/ Mark Serice
|
|
|
|
Name:
|
Mark Serice
|
|
|
|
Title:
|
Senior Vice President
|
|
|
Signature Page to Credit Agreement
|
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|
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REGIONS BANK
|
|
|
By:
|
/s/ William W. Brown
|
|
|
|
Name:
|
William W. Brown
|
|
|
|
Title:
|
Senior Vice President
|
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Signature Page to Credit Agreement
SCHEDULE 2.01
COMMITMENTS
AND APPLICABLE PERCENTAGES
|
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Lender
|
|
Commitment
|
|
|
Applicable Percentage
|
|
Bank of America, N.A.
|
|
$
|
15,000,000.00
|
|
|
|
10.000000000
|
%
|
Wells Fargo Bank, National Association
|
|
$
|
13,000,000.00
|
|
|
|
8.666666667
|
%
|
Citibank, N.A.
|
|
$
|
13,000,000.00
|
|
|
|
8.666666667
|
%
|
Deutsche Bank Trust Company Americas
|
|
$
|
13,000,000.00
|
|
|
|
8.666666667
|
%
|
Royal Bank of Canada
|
|
$
|
13,000,000.00
|
|
|
|
8.666666667
|
%
|
Credit Suisse AG, Cayman Islands Branch
|
|
$
|
13,000,000.00
|
|
|
|
8.666666667
|
%
|
JPMorgan Chase Bank, N.A.
|
|
$
|
13,000,000.00
|
|
|
|
8.666666667
|
%
|
SunTrust Bank
|
|
$
|
13,000,000.00
|
|
|
|
8.666666667
|
%
|
The Royal Bank of Scotland PLC
|
|
$
|
10,000,000.00
|
|
|
|
6.666666667
|
%
|
Raymond James Bank, FSB
|
|
$
|
10,000,000.00
|
|
|
|
6.666666667
|
%
|
Barclays Bank PLC
|
|
$
|
8,000,000.00
|
|
|
|
5.333333333
|
%
|
Amegy Bank, N.A.
|
|
$
|
8,000,000.00
|
|
|
|
5.333333333
|
%
|
Regions Bank
|
|
$
|
8,000,000.00
|
|
|
|
5.333333333
|
%
|
TOTAL
|
|
$
|
150,000,000.00
|
|
|
|
100.000000000
|
%
|
Schedule 2.01 to Credit Agreement
-1-
SCHEDULE 4.01(a)(iv)
LEASED REAL PROPERTIES
1. ANCHORAGE TERMINAL 1 (Anchorage, Alaska)
Terminal Sublease between Tesoro Alaska Company, as landlord, and Tesoro Alaska Logistics LLC, as
tenant
Said sublease affects the following real property:
A parcel of land located within Alaska Railroad Lease No. 4392 (recorded in Book 2267 on Page 547),
Alaska Railroad Terminal Reserve, Section 7, Township 13 North, Range 3 West, Seward Meridian,
Anchorage Recording District (A.R.D.), Third Judicial District, State of Alaska, and more
particularly described as follows:
Commencing at the Northeast corner of Lot 11A, Port of Anchorage Subdivision, Plat No. 70-309
A.R.D. marked with a 2 Aluminum Cap, being on the West Right of Way (R.O.W.) line of Anchorage
Port Road and the TRUE POINT OF BEGINNING; thence S 07°1949 W along said West R.O.W. line a
distance of 512.65 feet; thence N 82°4012 W a distance of 84.66 feet; thence S 58°1321 W a
distance of 74.22 feet; thence S 18°3942 W a distance of 24.07 feet; thence S 12°4923 W a
distance of 223.17 feet; thence N 89°0928 W a distance of 20.88 feet; thence N 00°4843 W a
distance of 12.18 feet; thence N 88°4126 W a distance of 130.57 feet to the West property line of
Lot 10, Port of Anchorage Subdivision, Plat No. 64-56 A.R.D; thence N 02°4922 W along said West
property line being contiguous with the West Property line of said Lot 11A distance of 742.30 feet;
thence N 19°5508 E along said West property line of Lot 11A a distance of 21.28 feet to the
Northwest corner of said Lot 11A, being on the South property line of Tract G, Port of Anchorage
Subdivision, Plat No. 2004-10 A.R.D.; thence N 89°5753 E along the property line of said Lot 11A
and said Tract G a distance of 450.60 feet to the Northeast corner of said Lot 11A and the TRUE
POINT of BEGINNING.
Containing 258,960 Square Feet (5.945 Acres), more or Less
2. ANCHORAGE TERMINAL 2 (Anchorage, Alaska)
Lease dated July 17, 1964 by and between the Municipality of Anchorage (as successor-in-interest to
City of Anchorage), as landlord, and Tesoro Alaska Logistics LLC (as ultimate successor-in-interest
to Texaco Inc.), as tenant, as amended by amendments dated September 5, 1973, April 5, 1994, July
13, 2005 and November 4, 2009
Said lease affects the following real property:
LOT 7B, PORT OF ANCHORAGE SUBDIVISION, according to the official plat thereof, filed under Plat
Number 71-32, Records of the Anchorage Recording District, Third Judicial District, State of
Alaska.
3. MANDAN TRUCK RACK (Mandan, North Dakota)
Schedule 4.01(a)(iv) to Credit Agreement
-1-
Lease by and between Tesoro Refining and Marketing Company, as landlord, and Tesoro Logistics
Operations LLC, as tenant
Said lease affects the following real property:
(a)
Leasehold Interest
:
ALL THAT PART OF THE NORTHWEST 1/4 OF SECTION 23, TOWNSHIP 139 NORTH, RANGE 81 WEST OF THE FIFTH
PRINCIPAL MERIDIAN, MORTON COUNTY, NORTH DAKOTA DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT THAT LIES NORTH 0 DEGREES 15 MINUTES 39 SECONDS EAST ALONG THE WEST LINE
OF SAID NORTHWEST 1/4 OF SECTION 23 A DISTANCE OF 1417.50 FEET AND NORTH 90 DEGREES 00 MINUTES 00
SECONDS EAST A DISTANCE OF 591.92 FEET FROM THE SOUTHWEST CORNER OF THE NORTHWEST 1/4 QUARTER OF
SECTION 23; THENCE FROM SAID POINT OF BEGINNING NORTH 0 DEGREES 00 MINUTES 00 SECONDS EAST A
DISTANCE OF 334.71 FEET; THENCE NORTH 90 DEGREES 00 MINUTES 00 SECONDS EAST A DISTANCE OF 312.05
FEET; THENCE SOUTH 0 DEGREES 00 MINUTES 00 SECONDS WEST A DISTANCE OF 334.71 FEET; THENCE SOUTH 90
DEGREES 00 MINUTES 00 SECONDS WEST A DISTANCE OF 312.05 FEET TO THE POINT OF BEGINNING.
THE ABOVE DESCRIBED TRACT CONTAINS 2.40 ACRES, MORE OR LESS.
(b)
Easement
:
ALL THAT PART OF THE NORTHWEST 1/4 SECTION 23, TOWNSHIP 139 NORTH, RANGE 81 WEST OF THE FIFTH
PRINCIPAL MERIDIAN, MORTON COUNTY, NORTH DAKOTA DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT THAT LIES NORTH 89 DEGREES 25 MINUTES 56 SECONDS EAST ALONG THE SOUTH
LINE OF SAID TRACT A DISTANCE OF 594.79 FEET FROM THE SOUTHWEST CORNER OF THE NORTHWEST 1/4 QUARTER
OF SECTION 23; THENCE NORTH 0 DEGREES 00 MINUTES 00 SECONDS EAST A DISTANCE OF 1250.08 FEET; THENCE
NORTH 90 DEGREES 00 MINUTES 00 SECONDS WEST A DISTANCE OF 44.25 FEET; THENCE NORTH 0 DEGREES 00
MINUTES 00 SECONDS EAST A DISTANCE OF 394.32 FEET; THENCE NORTH 90 DEGREES 00 MINUTES 00 SECONDS
EAST A DISTANCE OF 47.86 FEET; THENCE SOUTH 0 DEGREES 00 MINUTES 00 SECONDS WEST A DISTANCE OF
232.80 FEET; THENCE NORTH 90 DEGREES 00 MINUTES 00 SECONDS EAST A DISTANCE OF 58.19 FEET; THENCE
SOUTH 0 DEGREES 00 MINUTES 00 SECONDS WEST A DISTANCE OF 1410.98 FEET TO THE SOUTH LINE OF THE
NORTHWEST 1/4; THENCE SOUTH 89 DEGREES 25 MINUTES 56 SECONDS WEST ALONG SAID SOUTH LINE A DISTANCE
OF 61.81 FEET TO THE POINT OF BEGINNING.
THE ABOVE DESCRIBED TRACT CONTAINS 2.42 ACRES, MORE OR LESS.
(c)
Easement
:
Schedule 4.01(a)(iv) to Credit Agreement
-2-
ALL THAT PART OF THE NORTHWEST 1/4 OF SECTION 23, TOWNSHIP 139 NORTH, RANGE 81 WEST OF THE
FIFTH PRINCIPAL MERIDIAN, MORTON COUNTY, NORTH DAKOTA DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT THAT LIES NORTH 0 DEGREES 15 MINUTES 39 SECONDS EAST ALONG THE WEST LINE
OF SAID NORTHWEST 1/4 OF SECTION 23 A DISTANCE OF 1668.77 FEET AND NORTH 90 DEGREES 00 MINUTES 00
SECONDS EAST A DISTANCE OF 85.72 FEET FROM THE SOUTHWEST CORNER OF THE NORTHWEST 1/4 QUARTER OF
SECTION 23; THENCE FROM SAID POINT OF BEGINNING NORTH 0 DEGREES 00 MINUTES 00 SECONDS EAST A
DISTANCE OF 133.57 FEET; THENCE NORTH 90 DEGREES 00 MINUTES 00 SECONDS EAST A DISTANCE OF 277.32
FEET; THENCE NORTH 0 DEGREES 00 MINUTES 00 SECONDS EAST A DISTANCE OF 22.68 FEET; THENCE NORTH 90
DEGREES 00 MINUTES 00 SECONDS EAST A DISTANCE OF 307.54 FEET; THENCE NORTH 0 DEGREES 00 MINUTES 00
SECONDS EAST A DISTANCE OF 75.07 FEET; THENCE NORTH 90 DEGREES 00 MINUTES 00 SECONDS EAST A
DISTANCE OF 182.51 FEET; THENCE SOUTH 0 DEGREES 00 MINUTES 00 SECONDS WEST A DISTANCE OF 147.88
FEET; THENCE SOUTH 90 DEGREES 00 MINUTES 00 SECONDS WEST A DISTANCE OF 262.32 FEET; THENCE SOUTH 0
DEGREES 00 MINUTES 00 SECONDS WEST A DISTANCE OF 101.91 FEET; THENCE SOUTH 90 DEGREES 00 MINUTES 00
SECONDS WEST A DISTANCE OF 227.73 FEET; THENCE NORTH 0 DEGREES 00 MINUTES 00 SECONDS EAST A
DISTANCE OF 18.46 FEET; THENCE SOUTH 90 DEGREES 00 MINUTES 00 SECONDS WEST A DISTANCE OF 277.32
FEET TO THE POINT OF BEGINNING.
THE ABOVE DESCRIBED TRACT CONTAINS 2.52 ACRES, MORE OR LESS.
4. STOCKTON TERMINAL (Stockton, California)
Lease dated April 6, 2007 by and between the Stockton Port District, as landlord, and Tesoro
Logistics Operations LLC (successor-in-interest to Tesoro Refining and Marketing Company), as
tenant
Said lease affects the following real property in the City of Stockton, County of San Joaquin,
State of California, described as follows:
A tract of land situated in the County of San Joaquin, State of California, in Section 8, T. 1 N.
R. 6 E. M. D. B & M., and MORE particularly described as follows, to wit:
Commencing at a steel axle at the northwest corner of the 75/476 acre tract conveyed to Stockton
Port District by deed recorded in Book of Official Records of San Joaquin County, Volume 919, at
page 409, said axle bearing South 0° 10 East 149.7 feet from A U. S. E. D. Monument set in
concrete at the northeast corner of the 99 acre tract described in deed to the City of Stockton,
Parcel 4-S recorded in Book of Official Records of San Joaquin County, Volume 251, at page 138;
thence along the dividing line between said 75.476 acre tract and said 99 acre tract, Parcel 4-S,
South 0° 10 East 99.60 feet to a point in the northeasterly line of 60 foot County Road known aS
Access Road to Rough and Ready Island; thence along the northeasterly line of said
Schedule 4.01(a)(iv) to Credit Agreement
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County Road, South 40° 42 East 696.86 feet; thence North 49° 18 East 15.0 feet to the most
westerly corner and true point of beginning; Thence along a line parallel to and 15.0 feet
northeasterly from the northeasterly line of said 60 foot County Road, South 40° 42 East 300.0
feet, thence North 49° 18 East 500.0 feet; thence North 40° 42 West 300.0 feet; thence South 49°
18 West 500.0 feet to the true point of beginning.
APN: 145-030-09 (a portion)
5. VANCOUVER TERMINAL (Vancouver, Washington)
Lease Agreement dated October 22, 1996 by and between the Port of Vancouver, USA, as landlord, and
Tesoro Logistics Operations LLC (successor-in-interest to Tesoro Refining and Marketing Company),
as tenant, as amended by amendments effective May 1, 1999, November 1, 2006 and April 12, 2011.
Said lease affects the following real property in the City of Vancouver, County of Clark, State of
Washington, described as follows:
Real property situated in the City of Vancouver, Clark County, Washington, being a portion of the
George Malick Donation Land Claim, lying in the Southwest quarter of Section 21, Township 2 North,
Range 1 East of the Willamette Meridian, more particularly described as follows:
Beginning at a 2 inch diameter iron pipe marking the Northwest corner of the Amos Short Donation
Land Claim as shown in Book 39 of Surveys at Page 125, records of said county; thence along the
West line of said Short Donation Land Claim South 02° 19 42 West 712.40 feet to the Southeast
corner of the United States of America tract as described in Declaration of Taking, recorded under
Auditors File No. F0981, deed records, Clark County, Washington; thence North 88° 25 03 West
607.20 feet along the South line of said USA tract to the Northwest corner of the S.P.&S. Railway
Company tract as conveyed by instrument recorded under Auditors File No. G51049, deed records,
Clark County, Washington; thence continuing along the South line of said USA tract North 88° 25
03 West 308.92 feet to the TRUE POINT OF BEGINNING of the parcel to be described; thence
continuing along the South line of said USA tract North 88° 25 03 West 359.97 feet; thence South
10° 53 13 West 98.27 feet; thence North 87° 57 37 West 96.64 feet; thence South 02° 02 23
West 190.83 feet; thence South 00° 30 14 West 170.26 feet; thence South 09° 36 40 East 30.24
feet; thence South 52° 23 16 East 23.21 feet; thence South 11° 21 13 West 113.38 feet; thence
South 87° 16 01 East 248.98 feet; thence North 02° 43 59 East 41.36 feet; thence South 87° 54
32 East 242.89 feet; thence North 04° 03 52 East 183.39 feet; thence North 16° 11 21 East
118.66 feet; thence North 07° 06 59 East 171.30 feet; thence North 88° 23 11 West 82.16 feet;
thence North 01° 52 20 East 109.53 feet to the TRUE POINT OF BEGINNING.
Containing 294,030 square feet or approximately 6.750 acres.
Schedule 4.01(a)(iv) to Credit Agreement
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SCHEDULE 5.06
LITIGATION
None.
Schedule 5.06 to Credit Agreement
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SCHEDULE 5.09
ENVIRONMENTAL MATTERS
None.
Schedule 5.09 to Credit Agreement
-1-
SCHEDULE 5.11
CERTAIN TAX INFORMATION
None.
Schedule 5.11 to Credit Agreement
-1-
SCHEDULE 5.13
SUBSIDIARIES AND OTHER EQUITY INVESTMENTS; LOAN PARTIES
(a)
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Subsidiaries
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Tesoro Logistics Operations LLC, wholly-owned by Tesoro Logistics LP
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Tesoro High Plains Pipeline Company LLC, wholly-owned by Tesoro Logistics Operations
LLC
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(b)
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Equity Investments of Loan Parties
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Number & Type
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Percentage
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Certificate
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of Equity
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of Equity
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Loan Party
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Equity Interest
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#
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Interest
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Interest
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Tesoro Logistics LP
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Tesoro Logistics
Operations LLC
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N/A
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Membership Interests
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100
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%
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|
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|
|
|
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Tesoro Logistics
Operations LLC
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Tesoro High Plains
Pipeline Company LLC
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N/A
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Membership Interests
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100
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%
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|
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Chief Executive Office
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Address
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Organizational
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and
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Jurisdiction
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ID #
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Mailing Address (if
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of
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and
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different than CEO
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Full Legal Name
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Organization
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Federal Tax ID #
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Address)
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Tesoro Logistics LP
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Delaware
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4901711
27-4151603
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19100 Ridgewood
Parkway
San Antonio, TX 78259
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|
|
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Tesoro Logistics Operations LLC
|
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Delaware
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4890313
27-4151836
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19100 Ridgewood
Parkway
San Antonio, TX 78259
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Tesoro High Plains Pipeline Company LLC
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Delaware
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3416709
27-4152862
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19100 Ridgewood
Parkway
San Antonio, TX 78259
|
Schedule 5.13 to Credit Agreement
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SCHEDULE 5.22(a)
FEDERAL REGULATION MATTERS
Request of Tesoro Refining and Marketing Company and Tesoro Logistics Operations LLC for
Jurisdictional Determination, or in the alternative, Temporary Waiver of Tariff Filing and
Reporting Requirements, Docket No. OR11-4-000. Notice of the foregoing request was posted by the
FERC on March 7, 2011 and the protest/comment period ended March 22, 2011.
Schedule 5.22(a) to Credit Agreement
-1-
SCHEDULE 6.12
SUBSIDIARY GUARANTORS
Tesoro Logistics Operations LLC
Tesoro High Plains Pipeline Company LLC
Schedule 6.12 to Credit Agreement
-1-
SCHEDULE 7.01
EXISTING LIENS
That certain equipment lease by and between Tesoro High Plains Pipeline Company LLC and North
Central Rental & Leasing, LLC (Fargo, ND) for rental of: Caterpillar 246C S/N: 0JAY03333 M008939.
(DE SOS UCC-1 Filing #10297187, filed 1/26/11).
Schedule 7.01 to Credit Agreement
-1-
SCHEDULE 7.02
EXISTING INDEBTEDNESS
None.
Schedule 7.02 to Credit Agreement
-1-
SCHEDULE 7.03
EXISTING INVESTMENTS
All funds and Investments held under the follow accounts:
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Account Owner
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Bank
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Account Number
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Tesoro Logistics LP
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Bank of America, N.A.
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#004427149883
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Tesoro Logistics LP
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Bank of America, N.A.
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#3359484493
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Schedule 7.03 to Credit Agreement
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SCHEDULE 7.09
BURDENSOME AGREEMENTS
None.
Schedule 7.09 to Credit Agreement
-1-
SCHEDULE 10.02
ADMINISTRATIVE AGENTS OFFICE, CERTAIN ADDRESS FOR NOTICES
BORROWER:
Tesoro Logistics LP
19100 Ridgewood Parkway
San Antonio, Texas 78259
Attention: Brian Randecker
Telephone: 210-626-4757
Telecopier: (210) 745-4673
Electronic Mail:
brian.e.randecker@tsocorp.com
Website Address: www.tsocorp.com
U.S. Taxpayer Identification Number: 27-4151603
ADMINISTRATIVE AGENT
:
Administrative Agents Office
(for payments and Requests for Credit Extensions):
Bank of America, N.A.
901 Main Street
Mail Code: TX1-492-14-04
Dallas, Texas 75202-3714
Attention: Betty Coleman
Telephone: 214-209-0993
Telecopier: 214-290-9419
Electronic Mail:
betty.coleman@baml.com
Account No.: 1292000883
Ref: Tesoro Logistics LP
ABA# 026-009-593
Other Notices as Administrative Agent
:
Bank of America, N.A.
Agency Management
901 Main Street
Mail Code: TX1-492-14-11
Dallas, Texas 75202-3714
Attention: Alan Tapley
Telephone: 214-209-4125
Telecopier: 214-290-9507
Electronic Mail:
alan.tapley@baml.com
Schedule 10.02 to Credit Agreement
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L/C ISSUER
:
Bank of America, N.A.
Trade Operations
1 Fleet Way
Mail Code: PA6-580-02-30
Scranton, PA 18507
Attention: Mary J. Cooper
Telephone: 570-330-4235
Telecopier: 570-330-4186
Electronic Mail:
mary.j.cooper@baml.com
SWING LINE LENDER
:
Bank of America, N.A.
901 Main Street
Mail Code: TX1-492-14-04
Dallas, Texas 75202-3714
Attention: Betty Coleman
Telephone: 214-209-0993
Telecopier: 214-290-9419
Electronic Mail:
betty.coleman@baml.com
Account No.: 1292000883
Ref: Tesoro Logistics LP
ABA# 026-009-593
Schedule 10.2 to Credit Agreement
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