As filed with the Securities and Exchange Commission on October 24, 2012

Registration No. 333-182631

 

 

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 4

to

Form S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Delek Logistics Partners, LP

(Exact Name of Registrant as Specified in its Charter)

 

Delaware   4610   45-5379027

(State or other Jurisdiction of

Incorporation or Organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(IRS Employer

Identification Number)

7102 Commerce Way

Brentwood, Tennessee 37027

(615) 771-6701

(Address, including Zip Code, and Telephone Number, including Area Code, of Registrant’s Principal Executive Offices)

Kent B. Thomas

7102 Commerce Way

Brentwood, Tennessee 37027

(615) 771-6701

(Name, Address, including Zip Code, and Telephone Number, including Area Code, of Agent for Service)

Copies to:

 

Gerald M. Spedale

Baker Botts L.L.P.

One Shell Plaza

910 Louisiana Street

Houston, Texas 77002-4995

(713) 229-1234

 

Catherine S. Gallagher

Adorys Velazquez

Vinson & Elkins L.L.P.

2200 Pennsylvania Avenue NW

Suite 500 West

Washington, D.C. 20037-1701

(202) 639-6500

Approximate date of commencement of proposed sale to the public : As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ¨

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer ¨   Accelerated filer ¨   Non-accelerated filer x   Smaller reporting company  ¨
    (Do not check if a smaller reporting company)  

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 


Explanatory Note

This Amendment No. 4 is being filed solely for the purpose of filing exhibits to the Registration Statement on Form S-1 (File No. 333-182631) and no changes or additions are being made hereby to the preliminary prospectus which forms a part of the Registration Statement or to Items 13, 14, 15 or 17 of Part II of the Registration Statement. Accordingly, the preliminary prospectus and Items 13, 14, 15 and 17 of Part II of the Registration Statement have been omitted from this filing.


Item 16.     Exhibits and Financial Statement Schedules .

The following documents are filed as exhibits to this registration statement:

 

Number

 

Description

  1.1   —Form of Underwriting Agreement
  3.1**   —Certificate of Limited Partnership of Delek Logistics Partners, LP
  3.2**   —Form of Amended and Restated Agreement of Limited Partnership of Delek Logistics Partners, LP (included as Appendix A to the prospectus)
  3.3**   —Certificate of Formation of Delek Logistics GP, LLC
  3.4**   —Form of Amended and Restated Limited Liability Company Agreement of Delek Logistics GP, LLC
  5.1**   —Form of Opinion of Baker Botts L.L.P. as to the legality of the securities being registered
  8.1**   —Form of Opinion of Baker Botts L.L.P. relating to tax matters
10.1   —Form of Contribution, Conveyance and Assumption Agreement
10.2   —Form of Omnibus Agreement
10.3**   —Form of Operation and Management Services Agreement
10.4*   —Form of Revolving Credit Agreement
10.5**   —Form of Long-Term Incentive Plan of General Partner
10.6**   —Form of Director Phantom Unit Award
10.7**   —Form of Employee Phantom Unit Award
10.8**#   —Form of Marketing Agreement
10.9**   —Form of Pipelines and Tankage Agreement (East Texas Crude Logistics System)
10.10**   —Form of Terminalling Services Agreement (Big Sandy)
10.11   —Form of Pipelines and Storage Facilities Agreement (Lion Pipeline System and SALA Gathering System)
10.12   —Form of Terminalling Services Agreement (Memphis)
10.13   —Form of Indemnification Agreement
21.1**   —List of Subsidiaries of Delek Logistics Partners, LP
23.1**   —Consent of Ernst & Young LLP
23.2*   —Consent of Baker Botts L.L.P. (contained in Exhibit 5.1)
23.3*   —Consent of Baker Botts L.L.P. (contained in Exhibit 8.1)
23.4**   —Consent of Director Nominee—Charles J. Brown III
23.5**   —Consent of Director Nominee—Gary M. Sullivan, Jr.
24.1**   —Powers of Attorney

 

* To be filed by amendment.
** Previously filed.
# Please note that this exhibit was filed with Amendment No. 2 to this registration statement using a different number designation. Exhibit 10.8 filed with this Amendment No. 4 was filed as Exhibit 10.6 to Amendment No. 2.

 

II-1


SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Brentwood, State of Tennessee, on October 24, 2012.

 

Delek Logistics Partners, LP

By:

  Delek Logistics GP, LLC
  its general partner

By:

 

/s/ Mark B. Cox

 

Mark B. Cox

  Executive Vice President and Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and the dates indicated.

 

Name

  

Title

 

Date

*

Ezra Uzi Yemin

  

Chief Executive Officer (Principal Executive Officer) and Chairman

 

  October 24, 2012

/s/ Mark B. Cox

Mark B. Cox

  

Executive Vice President, Chief Financial Officer (Principal Financial and Accounting
Officer) and Director

 

  October 24, 2012

*

Assaf Ginzburg

  

Director

 

  October 24, 2012

*

Frederec C. Green

  

Director

 

  October 24, 2012

 

* By:   /s/ Mark B. Cox
 

Mark B. Cox

Attorney-in-Fact

 

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INDEX TO EXHIBIT

 

Number

 

Description

  1.1   —Form of Underwriting Agreement
  3.1**   —Certificate of Limited Partnership of Delek Logistics Partners, LP
  3.2**   —Form of Amended and Restated Agreement of Limited Partnership of Delek Logistics Partners, LP (included as Appendix A to the prospectus)
  3.3**   —Certificate of Formation of Delek Logistics GP, LLC
  3.4**   —Form of Amended and Restated Limited Liability Company Agreement of Delek Logistics GP, LLC
  5.1**   —Form of Opinion of Baker Botts L.L.P. as to the legality of the securities being registered
  8.1**   —Form of Opinion of Baker Botts L.L.P. relating to tax matters
10.1   —Form of Contribution, Conveyance and Assumption Agreement
10.2   —Form of Omnibus Agreement
10.3**   —Form of Operation and Management Services Agreement
10.4*   —Form of Revolving Credit Agreement
10.5**   —Form of Long-Term Incentive Plan of General Partner
10.6**   —Form of Director Phantom Unit Award
10.7**   —Form of Employee Phantom Unit Award
10.8**#   —Form of Marketing Agreement
10.9**   —Form of Pipelines and Tankage Agreement (East Texas Crude Logistics System)
10.10**   —Form of Terminalling Services Agreement (Big Sandy)
10.11   —Form of Pipelines and Storage Facilities Agreement (Lion Pipeline System and SALA Gathering System)
10.12   —Form of Terminalling Services Agreement (Memphis)
10.13   —Form of Indemnification Agreement
21.1**   —List of Subsidiaries of Delek Logistics Partners, LP
23.1**   —Consent of Ernst & Young LLP
23.2*   —Consent of Baker Botts L.L.P. (contained in Exhibit 5.1)
23.3*   —Consent of Baker Botts L.L.P. (contained in Exhibit 8.1)
23.4**   —Consent of Director Nominee—Charles J. Brown III
23.5**   —Consent of Director Nominee—Gary M. Sullivan, Jr.
24.1**   —Powers of Attorney

 

* To be filed by amendment.
** Previously filed.
# Please note that this exhibit was filed with Amendment No. 2 to this registration statement using a different number designation. Exhibit 10.8 filed with this Amendment No. 4 was filed as Exhibit 10.6 to Amendment No. 2.

 

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Exhibit 1.1

DELEK LOGISTIC PARTNERS, LP

8,000,000 Common Units

Representing Limited Partner Interests

UNDERWRITING AGREEMENT

[ ], 2012

Merrill Lynch, Pierce, Fenner & Smith

Incorporated

Barclays Capital Inc.

as Representatives of the several Underwriters

c/o Merrill Lynch, Pierce, Fenner & Smith

                          Incorporated

One Bryant Park

New York, New York 10036

Ladies and Gentlemen:

Delek Logistics Partners, LP, a limited partnership organized under the laws of Delaware (the “ Partnership ”), confirms its agreement with Merrill Lynch, Pierce, Fenner & Smith Incorporated (“ Merrill Lynch ”) and each of the other underwriters named in Schedule A hereto (collectively, the “ Underwriters ,” which term shall also include any underwriter substituted as hereinafter provided in Section 10 hereof), for whom Merrill Lynch and Barclays Capital Inc. are acting as representatives (in such capacity, the “ Representatives ”), with respect to (i) the sale by the Partnership and the purchase by the Underwriters, acting severally and not jointly, of the respective numbers of common units representing limited partnership interests in the Partnership (the “ Common Units ”) set forth in Schedule A hereto and (ii) the grant by the Partnership to the Underwriters, acting severally and not jointly, of the option described in Section 2(b) hereof to purchase all or any part of 8,000,000 additional Common Units. The aforesaid 8,000,000 Common Units (the “ Firm Units ”) to be purchased by the Underwriters and all or any part of the 1,200,000 Common Units subject to the option described in Section 2(b) hereof (the “ Option Units ”) are herein called collectively, the “ Units .”

The Partnership and the Underwriters agree that up to 8,000,000 Firm Units to be purchased by the Underwriters (the “ Reserved Units ”) shall be reserved for sale by the Underwriters to certain persons designated by the Partnership (the “ Invitees ”), as part of the distribution of the Units by the Underwriters, subject to the terms of this Agreement, the applicable rules, regulations and interpretations of the Financial Industry Regulatory Authority, Inc. (“ FINRA ”) and all other applicable laws, rules and regulations. The Partnership determined, without any direct or indirect participation by the Underwriters, the Invitees who will be offered the Reserved Units to be sold by the Underwriters. To the extent that such Reserved Units are not orally confirmed for purchase by Invitees by 9:00 A.M. (New York City time) on the first business day after the date of this Agreement, such Reserved Units may be offered to the public as part of the public offering contemplated hereby.

It is understood and agreed to by all parties hereto that the Partnership was formed by Delek US Holdings, Inc., a Delaware corporation (“ Delek ”), to own, operate and acquire


crude oil and refined products logistics and marketing assets that are currently owned and operated directly or indirectly by Delek (the “ Delek Logistics LP Business ”), as described more particularly in the most recent preliminary prospectus (as defined below).

It is further understood and agreed to by all parties that as of the date hereof:

(a) Delek directly owns a 100% membership interest in Delek Logistics GP, LLC, a Delaware limited liability company and the sole general partner of the Partnership with a 2.0% general partner interest in the Partnership (the “ General Partner ”);

(b) Delek directly owns a 98.0% limited partner interest in the Partnership;

(c) The Partnership directly owns a 100% membership interest in Delek Logistics Operating, LLC, a Delaware limited liability company (the “ OLLC ”);

(d) Delek directly owns 100% of the capital stock of Lion Oil Company, an Arkansas corporation (“ Lion Oil ”);

(e) Lion Oil directly owns 100% of the membership interests in each of El Dorado Pipeline LLC, an [Arkansas] limited liability company (“ El Dorado LLC ”), Magnolia Pipeline LLC, an [Arkansas] limited liability company (“ Magnolia LLC ”) and [SALA Gathering Systems LLC], a Texas limited liability company (“ SALA Gathering LLC ’);

(f) Delek directly owns 100% of the capital stock of Delek Marketing & Supply, LLC, a Delaware corporation (“ Delek Marketing ”);

(g) Delek Marketing directly owns a 99.0% limited partner interest in Delek Marketing & Supply, LP, a Delaware limited partnership (“ Marketing LP ”), and a 100% membership interest in Delek Marketing GP, LLC, a Delaware limited liability company and the sole general partner of Marketing LP with a 1.0% general partner interest in Marketing LP (“ Marketing GP LLC ”);

(h) Marketing LP directly owns a 100% membership interest in Delek Crude Logistics, LLC, a Texas limited liability company (“ Crude Logistics ”);

(i) Crude Logistics directly owns a 100% membership interest in Delek Marketing – Big Sandy, LLC, a Texas limited liability company (“ Big Sandy ”); and

(j) Delek directly owns a 100% membership interest in Paline Pipeline Company, LLC, a Texas limited liability company (“ Paline LLC ”).

It is further understood and agreed to by all parties hereto that the following transactions have occurred or will occur on or immediately prior to the Closing Time (as defined below):

(a) Delek, the General Partner, the Partnership, Lion Oil and Delek Marketing will enter into a Contribution, Conveyance and Assumption Agreement, substantially in the form filed as an exhibit to the Registration Statement (including the other documents referred to therein, the “ Contribution Agreement ”) pursuant to which:

(i) Delek will contribute 100% of its interests in Paline LLC to the General Partner;

 

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(ii) the General Partner will contribute to the Partnership 100% of its interests in Paline LLC in exchange for (A) [ ] general partner units representing a continuation of its 2.0% general partner interest in the Partnership (the “ General Partner Units ”), (B) all of the incentive distribution rights (the “ IDRs ”) of the Partnership and (C) a $[ ] million distribution from the Partnership at the Closing Time;

(iii) Lion Oil will contribute two light products terminals, located in Memphis, Tennessee and Nashville, Tennessee, respectively (the “ Memphis and Nashville terminals ”), and 100% of its interests in each of SALA Gathering LLC, El Dorado LLC and Magnolia LLC to the Partnership in exchange for (A) [ ] subordinated units, each representing a limited partner interest in the Partnership (the “ Subordinated Units ”), representing an aggregate [ ]% limited partner interest in the Partnership and (B) [ ] Common Units representing an aggregate [ ]% limited partner interest in the Partnership (the Common Units and Subordinated Units referred to in (A) and (B) of this subclause (iii) are collectively referred to as the “ Lion Oil Units ”); and

(iv) Delek Marketing will contribute 100% of its interests in Marketing LP and Marketing GP LLC to the Partnership in exchange for (A) [ ] Subordinated Units representing an aggregate [ ]% limited partner interest in the Partnership, (B) [ ] Common Units representing an aggregate [ ]% limited partner interest in the Partnership (the Common Units and Subordinated Units referred to in (A) and (B) of this subclause (iv) are collectively referred to as the “ Delek Marketing Units ” and, together with the Lion Oil Units, the “ Sponsor Units ”); (C) a $[ ] million distribution from the Partnership at the Closing Time, and (D) the Deferred Issuance and Distribution (as defined in the Partnership Agreement).

The assets contributed to the Partnership as contemplated in subsections (i) through (iv) above are collectively referred to herein as the “ Partnership Contribution Assets .”

(b) The Partnership will contribute the Memphis and Nashville terminals and 100% of its interests in each of SALA Gathering LLC, El Dorado LLC, Magnolia LLC, Paline LLC, Marketing GP LLC and Marketing LP to the OLLC;

(c) The Partnership, the OLLC, Marketing GP LLC, Marketing LP, Crude Logistics, Big Sandy, Magnolia LLC, El Dorado LLC, SALA Gathering LLC, and Paline LLC, as co-borrowers, will enter into a revolving credit agreement with Fifth Third Bank, as administrative agent, and the lenders party thereto, substantially in the form filed as an exhibit to the Registration Statement (the “ Credit Agreement ”);

(d) The General Partner, the Partnership, the OLLC, Delek, Delek Refining, Ltd., a Texas limited partnership and a subsidiary of Delek (“ Delek Refining ”), Lion Oil, Crude Logistics, Big Sandy, Paline LLC, SALA Gathering LLC, El Dorado LLC, Magnolia LLC will enter into an omnibus agreement, substantially in the form filed as an exhibit to the Registration Statement (the “ Omnibus Agreement ”), which addresses the provision by Delek and certain of its affiliates of personnel and general and administrative services to the Partnership and certain indemnification matters;

(e) Delek Logistics Services Company, a Delaware corporation (“ Delek Services ”), the Partnership and the General Partner will enter into an operation and management services agreement, substantially in the form filed as an exhibit to the Registration Statement (the “ Operation and Management Services Agreement ”), which addresses the provision by Delek Services of operational and management services to the General Partner and certain subsidiaries of the Partnership;

 

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(f) Delek Refining and Marketing LP will enter into a marketing agreement, substantially in the form filed as an exhibit to the Registration Statement (the “ Marketing Agreement ”), under which Marketing LP will agree to market 100% of the output of Delek’s Tyler refinery (other than jet fuel and petroleum coke);

(g) Delek Refining and Crude Logistics will enter into a pipelines and tankage agreement, substantially in the form filed as an exhibit to the Registration Statement (the “ Pipelines and Tankage Agreement ”), under which Crude Logistics will provide crude oil transportation and storage services to Delek Refining;

(h) Lion Oil and the OLLC, and J. Aron & Company, a New York general partnership (“ J. Aron ”) (for the limited purposes set forth therein), will enter into a terminalling services agreement, substantially in the form filed as an exhibit to the Registration Statement (the “ Terminalling Services Agreement–Memphis Terminal ”), under which the OLLC will provide Lion Oil the exclusive use of the Memphis terminal;

(i) Delek Refining and Big Sandy will enter into a terminalling services agreement, substantially in the form filed as an exhibit to the Registration Statement (the “ Terminalling Services Agreement–Big Sandy Terminal ”), under which Big Sandy will provide Delek Refining the exclusive use of the Big Sandy terminal;

(j) Lion Oil, the Partnership, SALA Gathering LLC, El Dorado LLC and Magnolia LLC, and J. Aron (for the limited purposes set forth therein), will enter into a pipelines and storage facilities agreement, substantially in the form filed as an exhibit to the Registration Statement (the “ Pipelines and Storage Facilities Agreement ”), under which the Partnership, SALA Gathering LLC, El Dorado LLC and Magnolia LLC will provide transportation and storage services for the El Dorado refinery;

(k) The public offering of the Firm Units contemplated hereby (the “ Offering ”) will be consummated, and the net proceeds thereof will be delivered to the Partnership;

(l) The Partnership will use the net proceeds received from Offering as provided in the “Use of Proceeds” section of the Registration Statement;

(m) [The OLLC] will borrow $90.0 million under the Credit Agreement and distribute it to the Partnership to fund the Partnership’s distribution of $90.0 million to Delek Marketing. Delek Marketing will then lend the $90.0 million to Delek pursuant to an intercompany note (the “Delek Note”); and

(n) Delek Marketing will guarantee the $90.0 million borrowing under the Credit Agreement and will pledge the Delek Note to the creditors under the Credit Agreement.

The transactions contemplated in subsections (a) through (n) above are referred to herein as the “ Transactions .” The “ Transaction Documents ” shall mean the Contribution Agreement, the Credit Agreement, the Omnibus Agreement, the Operation and Management Services Agreement, the Marketing Agreement, the Pipelines and Tankage Agreement, the Terminalling Services Agreement-Memphis Terminal, the Terminalling Services Agreement-Big Sandy Terminal and the Pipelines and Storage Facilities Agreement.

Delek, the Partnership, the General Partner, Lion Oil and Delek Marketing are hereinafter referred to as the “ Delek Parties .” Paline LLC, SALA Gathering LLC, El Dorado

 

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LLC, Magnolia LLC, Marketing GP LLC, Marketing LP, Crude Logistics and Big Sandy are collectively called the “ Operating Subsidiaries .” The General Partner, the Partnership, the OLLC and the Operating Subsidiaries are collectively called the “ Partnership Entities ,” and, together with the Delek Parties and Delek Refining, the “ Delek Entities .”

The Partnership has filed with the Securities and Exchange Commission (the “ Commission ”) a registration statement on Form S-1 (No. 333-182631), including the related preliminary prospectus, covering the registration of the sale of the Units under the Securities Act of 1933, as amended (the “ 1933 Act ”). Promptly after execution and delivery of this Agreement, the Partnership will prepare and file a prospectus in accordance with the provisions of Rule 430A (“ Rule 430A ”) of the rules and regulations of the Commission under the 1933 Act (the “ 1933 Act Regulations ”) and Rule 424(b) (“ Rule 424(b) ”) of the 1933 Act Regulations. The information included in such prospectus that was omitted from such registration statement at the time it became effective but that is deemed to be part of such registration statement at the time it became effective pursuant to Rule 430A(b) is herein called the “ Rule 430A Information .” Such registration statement, including the amendments thereto, the exhibits thereto and any schedules thereto, at the time it became effective, and including the Rule 430A Information, is herein called the “ Registration Statement .” Any registration statement filed pursuant to Rule 462(b) of the 1933 Act Regulations is herein called the “ Rule 462(b) Registration Statement ” and, after such filing, the term “Registration Statement” shall include the Rule 462(b) Registration Statement. Each prospectus used prior to the Effective Date, and each prospectus that omitted the Rule 430A Information that was used after Effective Date and prior to the execution and delivery of this Agreement, is herein called a “ preliminary prospectus .” The final prospectus, in the form first furnished to the Underwriters for use in connection with the offering of the Units, is herein called the “ Prospectus .” For purposes of this Agreement, unless otherwise specified, all references to the Registration Statement, any preliminary prospectus, the Prospectus or any amendment or supplement to any of the foregoing shall be deemed to include the copy filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval system or any successor system (“ EDGAR ”).

As used in this Agreement:

Applicable Time ” means [ :00 p.m./a.m.], New York City time, on [INSERT DATE].

Effective Date ” means each date and time that the Registration Statement, any post-effective amendment or amendments thereto and any Rule 462(b) Registration Statement became or becomes effective.

General Disclosure Package ” means any Issuer General Use Free Writing Prospectuses issued at or prior to the Applicable Time and listed on Schedule B-2, the most recent preliminary prospectus that is distributed to investors prior to the Applicable Time and listed on Schedule B-2 and the information included on Schedule B-1 hereto, all considered together.

Issuer Free Writing Prospectus ” means any “issuer free writing prospectus,” as defined in Rule 433 of the 1933 Act Regulations (“ Rule 433 ”), including without limitation any “free writing prospectus” (as defined in Rule 405 of the 1933 Act Regulations (“ Rule 405 ”)) relating to the Units that is (i) required to be filed with the Commission by the Partnership, (ii) a “road show that is a written communication” within the meaning of Rule 433(d)(8)(i), whether or not required to be filed with the Commission, or (iii) exempt from filing with the Commission pursuant to Rule 433(d)(5)(i) because it contains a description of the Units or of the offering that does not

 

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reflect the final terms, in each case in the form filed or required to be filed with the Commission or, if not required to be filed, in the form retained in the Partnership’s records pursuant to Rule 433(g).

Issuer General Use Free Writing Prospectus ” means any Issuer Free Writing Prospectus that is intended for general distribution to prospective investors (other than a “ bona fide electronic road show,” as defined in Rule 433 (the “ Bona Fide Electronic Road Show ”)), as specified on Schedule B-2 hereto.

Issuer Limited Use Free Writing Prospectus ” means any Issuer Free Writing Prospectus that is not an Issuer General Use Free Writing Prospectus.

Testing-the-Waters Communication ” means any oral or written communication with potential investors undertaken in reliance on Section 5(d) of the 1933 Act.

Written Testing-the-Waters Communication ” means any Testing-the-Waters Communication that is a written communication within the meaning of Rule 405 under the 1933 Act Regulations.

The Delek Parties understand that the Underwriters propose to make a public offering of the Units as soon as the Representatives deem advisable after this Agreement has been executed and delivered.

SECTION 1. Representations and Warranties .

(a) Representations and Warranties by the Delek Parties . The Delek Parties, jointly and severally, represent and warrant to each Underwriter, and agree with each Underwriter, as follows:

(i) Registration Statement and Prospectuses . The Registration Statement has become effective under the 1933 Act. No stop order suspending the effectiveness of the Registration Statement, any post-effective amendment thereto or the Rule 462(b) Registration Statement has been issued under the 1933 Act, no order preventing or suspending the use of any preliminary prospectus or the Prospectus has been issued and no proceedings for any of those purposes have been instituted or are pending or, to the Delek Parties’ knowledge, threatened by the Commission. The Partnership has complied with each request (if any) from the Commission for additional information.

The Registration Statement complied, and any amendments thereto filed after the date hereof will comply, at the time it became effective, in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations. The most recent preliminary prospectus conformed, and the Prospectus will conform, at the time each was or will be filed with the Commission, in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations. Each preliminary prospectus delivered to the Underwriters for use in connection with this offering and the Prospectus was or will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.

(ii) Accurate Disclosure . Neither the Registration Statement, nor any amendment thereto filed after the date hereof, at its effective time, at the Closing Time or at any Date of Delivery, contained or will contain an untrue statement of a material fact or omitted or will omit to state a material fact required to be stated therein or necessary to make the statements therein

 

6


not misleading. As of the Applicable Time, none of (A) the General Disclosure Package, (B) any individual Issuer Limited Use Free Writing Prospectus, when considered together with the General Disclosure Package, (C) any Bona Fide Electronic Road Show or (D) any individual Written Testing-the-Waters Communication, when considered together with the General Disclosure Package, included an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Prospectus, as of its issue date, at the Closing Time and at any Date of Delivery, will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

The representations and warranties in this subsection shall not apply to statements in or omissions from the Registration Statement, the General Disclosure Package, any individual Issuer Limited Use Free Writing Prospectus, any individual Written Testing-the-Waters Communication, or the Prospectus made in reliance upon and in conformity with written information furnished to the Partnership by or on behalf of any Underwriter through the Representatives expressly for use therein. For purposes of this Agreement, the only information furnished by the Underwriters for inclusion in the Registration Statement, the General Disclosure Package, any Issuer Limited Use Free Writing Prospectus or any Written Testing-the-Waters Communication consists of [the information on the cover page of the Prospectus regarding delivery of the Units, the list of Underwriters and their respective participation in the sale of the Units, the information in the first paragraph under the heading “Underwriting–Commissions and Discounts,” the information in the last paragraph under the heading “Underwriting–New York Stock Exchange Listing,” the information in the second, third and fourth paragraphs under the heading “Underwriting–Price Stabilization, Short Positions and Penalty Bids” and the information under the heading “Underwriting–Electronic Distribution”] in each case contained in the Prospectus (collectively, the “ Underwriter Information ”).

(iii) Issuer Free Writing Prospectuses . No Issuer Free Writing Prospectus includes any information that conflicts or will conflict with the information contained in the Registration Statement or the Prospectus, and any preliminary or other prospectus deemed to be a part thereof that has not been superseded or modified. The Partnership has made available a Bona Fide Electronic Road Show in compliance with Rule 433(d)(8)(ii) such that no filing of any “road show” (as defined in Rule 433(h)) is required in connection with the offering of the Units.

(iv) Projections . Each of the statements made by the Partnership in the Registration Statement and the General Disclosure Package and to be made in the Prospectus (and any supplements thereto) within the coverage of Rule 175(b) under the 1933 Act, including (but not limited to) any statements with respect to projections or results of operations, estimated available cash and future cash distributions of the Partnership, and any statements made in support thereof or related thereto under the heading “Our Cash Distribution Policy and Restrictions on Distributions” or the anticipated ratio of taxable income to distributions, was made or will be made with a reasonable basis and in good faith.

(v) Eligible Issuer . At the time of filing the Registration Statement and at the Applicable Time, the Partnership was not and is not an “ineligible issuer,” as defined in Rule 405 of the 1933 Act Regulations.

(vi) Emerging Growth Company . From the time of the initial filing of the Registration Statement with the Commission (or, if earlier, the first date on which the Partnership engaged directly or through any Person authorized to act on its behalf in any Testing-the-Waters

 

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Communication) through the date hereof, the Partnership has been and is an “emerging growth company,” as defined in Section 2(a) of the Securities Act (an “Emerging Growth Company”).

(vii) Testing-the-Waters Communications . The Partnership (A) has not engaged in any Testing-the-Waters Communication and (B) has not authorized anyone other than the Representatives to engage in Testing-the-Waters Communications. The Partnership has not distributed any Written Testing-the-Waters Communications.

(viii) Good Standing . Each of the Delek Entities has been duly formed or incorporated and is validly existing as a limited partnership, limited liability company or corporation, as applicable, in good standing under the laws of its jurisdiction of organization with all requisite power and authority to enter into and perform its obligations under the Transaction Documents to which it is a party, to own or lease and to operate its properties currently owned or leased or to be owned or leased at the Closing Time and each Date of Delivery and conduct its business as currently conducted or as to be conducted at the Closing Time and each Date of Delivery, in each case as described in the General Disclosure Package and the Prospectus. Each of the Partnership Entities is, or at the Closing Time and each Date of Delivery will be, duly qualified to do business as a foreign limited partnership or limited liability company, as applicable, and is in good standing under the laws of each jurisdiction which requires, or at the Closing Time and each Date of Delivery will require, such qualification, except where the failure to be so qualified or registered would not reasonably be expected to have a material adverse effect on the condition (financial or otherwise), earnings, business, business prospects or properties of the Partnership Entities considered as one enterprise, whether or not arising in the ordinary course of business (a “ Material Adverse Effect ”), or subject the limited partners of the Partnership to any material liability or disability.

(ix) Authority of the General Partner . The General Partner has, and, at the Closing Time and each Date of Delivery, will have, all requisite power and authority to act as general partner of the Partnership in all material respects as described in the Registration Statement, the General Disclosure Package and Prospectus.

(x) Ownership of General Partner . At the Closing Time and each Date of Delivery, Delek will own all of the issued and outstanding membership interests of the General Partner; all of such membership interests have been duly authorized and validly issued in accordance with the limited liability company agreement of the General Partner (as the same may be amended or restated at or prior to the Closing Time, the “ GP LLC Agreement ”), and are fully paid (to the extent required by the GP LLC Agreement) and nonassessable (except as such nonassessability may be affected by Sections 18-303, 18-607 and 18-804 of the Delaware Limited Liability Company Act (the “ Delaware LLC Act ”)); and with the exception of [the pledge of membership interests as collateral under the Second Amended and Restated Credit Agreement dated as of December 10, 2009 between MAPCO Express, Inc. as borrower, Fifth Third Bank as arranger and administrative agent, Bank Leumi USA as co-administrative agent, SunTrust Bank as syndication agent and the lenders from time to time parties thereto, as amended (the “ Delek US Holdings Credit Agreement ”),] restrictions on transferability in the GP LLC Agreement or as described in the Registration Statement, the General Disclosure Package and the Prospectus, Delek will own such membership interests free and clear of all liens, encumbrances, security interests, charges or other claims (“ Liens ”).

(xi) Ownership of GP Interest . The General Partner is, and at the Closing Time and each Date of Delivery, will be, the sole general partner of the Partnership with a 2.0% general partner interest in the Partnership, such interest being represented by the General Partner Units;

 

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such General Partner Units will be duly authorized and validly issued in accordance with the agreement of limited partnership of the Partnership (as the same may be amended and/or restated at or prior to the Closing Time, the “ Partnership Agreement ”); and the General Partner owns such General Partner Units free and clear of all Liens (except restrictions on transferability contained in the Partnership Agreement or as described in the Registration Statement, the General Disclosure Package and the Prospectus or contained in the Delek US Holdings Credit Agreement).

(xii) Ownership of Sponsor Units and IDRs . Assuming no purchase by the Underwriters of the Option Units, at the Closing Time and each Date of Delivery, after giving effect to the Transactions, Lion Oil will own the Lion Oil Units, Delek Marketing will own the Delek Marketing Units and the General Partner will own 100% of the IDRs; all of such Sponsor Units and IDRs and the limited partner interests represented thereby will be duly authorized and validly issued in accordance with the Partnership Agreement, and will be fully paid (to the extent required under the Partnership Agreement) and nonassessable (except as such nonassessability may be affected by Sections 17-303, 17-607 and 17-804 of the Delaware Limited Partnership Act (the “ Delaware LP Act ”)); [with the exception of Liens arising under Delek US Holdings Credit Agreement], restrictions on transferability contained in the Partnership Agreement or as described in the Registration Statement, the General Disclosure Package and the Prospectus, Lion Oil will own the Lion Oil Units, Delek Marketing will own the Delek Marketing Units and the General Partner will own the IDRs, in each case free and clear of all Liens.

(xiii) Ownership of the OLLC . At the Closing Time and each Date of Delivery, the Partnership will own all of the issued and outstanding membership interests of the OLLC; such membership interests will be duly authorized and validly issued in accordance with the limited liability company agreement of the OLLC (as the same may be amended or restated at or prior to the Closing Time, the “ OLLC LLC Agreement ”), and will be fully paid (to the extent required by the OLLC LLC Agreement) and nonassessable (except as such nonassessability may be affected by Sections 18-303, 18-607 and 18-804 of the Delaware LLC Act); and [with the exception of Liens arising under the Credit Agreement,] restrictions on transferability in the OLLC LLC Agreement or as described in the Registration Statement, the General Disclosure Package and the Prospectus, the Partnership will own such membership interests free and clear of all Liens.

(xiv) Ownership of SALA Gathering LLC, El Dorado LLC, Magnolia LLC, Paline LLC, and Marketing GP LLC . At the Closing Time and each Date of Delivery, after giving effect to the Transactions, the OLLC will own all of the issued and outstanding membership interests of SALA Gathering LLC, El Dorado LLC, Magnolia LLC, Paline LLC, and Marketing GP LLC; such membership interests will be duly authorized and validly issued in accordance with the respective limited liability company agreements of SALA Gathering LLC, El Dorado LLC, Magnolia LLC, Paline LLC and Marketing GP LLC (as the same may be amended or restated at or prior to the Closing Time, collectively, the “ Operating Subsidiary LLC Agreements ”) and will be fully paid (to the extent required by the respective Operating Subsidiary LLC Agreements) and nonassessable (except as such nonassessability may be affected by (A) Sections 18-303, 18-607 and 18-804 of the Delaware LLC Act, in the case of Marketing GP LLC, (B) the Small Business Entity Tax Pass Through Act (the “ Arkansas LLC Act ”) in the case of El Dorado LLC and Magnolia LLC and (C) the Texas Limited Liability Company Act (the “ Texas LLC Act ”) in the case of SALA Gathering LLC and Paline LLC); and, with the exception of [Liens arising under the Credit Agreement,] restrictions on transferability in the respective Operating Subsidiary LLC Agreements or as described in the Registration Statement, the General Disclosure Package and the Prospectus, the OLLC will own such membership interests free and clear of all Liens.

 

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(xv) Ownership of Marketing LP . At the Closing Time and each Date of Delivery, after giving effect to the Transactions, the OLLC will own all of the issued and outstanding limited partner interests of Marketing LP; such limited partner interests will be duly authorized and validly issued in accordance with the agreement of limited partnership of Marketing LP (as the same may be amended or restated at or prior to the Closing Time, the “ Marketing LP Partnership Agreement ”), and will be fully paid (to the extent required under the Marketing LP Partnership Agreement) and nonassessable (except as such nonassessability may be affected by Sections 17-303, 17-607 and 17-804 of the Delaware LP Act); and, with the exception of [Liens arising under the Credit Agreement,] restrictions on transferability in the Marketing LP Partnership Agreement or as described in the Registration Statement, the General Disclosure Package and the Prospectus, the OLLC will own such limited partner interests free and clear of all Liens.

(xvi) Ownership of Marketing LP GP Interest . Marketing GP LLC is, and at the Closing Time and each Date of Delivery, will be, the sole general partner of Marketing LP with a 1.0% general partner interest in Marketing LP; such general partner interest has been duly authorized and validly issued in accordance with the Marketing LP Partnership Agreement; and, with the exception of [Liens arising under the Credit Agreement,] restrictions on transferability contained in the Marketing LP Partnership Agreement or as described in the Registration Statement, the General Disclosure Package and the Prospectus, Marketing GP LLC will own such general partner interest free and clear of all Liens.

(xvii) Ownership of Crude Logistics . At the Closing Time and each Date of Delivery, after giving effect to the Transactions, Marketing LP will own all of the issued and outstanding membership interests of Crude Logistics; such membership interests will be duly authorized and validly issued in accordance with the limited liability company agreement of Crude Logistics (the “ Crude Logistics LLC Agreement ”) and will be fully paid (to the extent required under the Crude Logistics LLC Agreement) and nonassessable (except as such nonassessability may be affected by the Texas LLC Act); and, with the exception of [Liens arising under the Credit Agreement,] restrictions on transferability in the Crude Logistics LLC Agreement or as described in the Registration Statement, the General Disclosure Package and the Prospectus, Marketing LP owns such membership interests free and clear of all Liens.

(xviii) Ownership of Big Sandy . At the Closing Time and each Date of Delivery, after giving effect to the Transactions, Crude Logistics will own all of the issued and outstanding membership interests of Big Sandy; such membership interests will be duly authorized and validly issued in accordance with the limited liability company agreement of Big Sandy (the “ Big Sandy LLC Agreement ”) and are fully paid (to the extent required under the Big Sandy LLC Agreement) and nonassessable (except as such nonassessability may be affected by the Texas LLC Act); and, with the exception of [Liens arising under the Credit Agreement,] restrictions on transferability in the Big Sandy LLC Agreement or as described in the Registration Statement, the General Disclosure Package and the Prospectus, Crude Logistics owns such membership interests free and clear of all Liens. The Partnership Agreement, the GP LLC Agreement, the OLLC LLC Agreement, the Operating Subsidiary LLC Agreements, the Marketing LP Partnership Agreement, the Crude Logistics LLC Agreement, the Big Sandy LLC Agreement and the Transaction Documents are herein collectively referred to as the “ Operative Agreements .”

(xix) Authorization of Units . The Units to be purchased by the Underwriters from the Partnership have been duly authorized for issuance and sale to the Underwriters pursuant to this Agreement and, when issued and delivered by the Partnership pursuant to this Agreement against payment of the consideration set forth herein on the Closing Date and each Date of Delivery, will

 

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be validly issued and fully paid (to the extent required under the Partnership Agreement) and nonassessable (except as such nonassessability may be affected by matters described in Sections 17-303, 17-607 and 17-804 of the Delaware LP Act).

(xx) Outstanding Partnership Interests . At the Closing Time, after giving effect to the Transactions and the offering of the Firm Units as contemplated by this Agreement, the issued and outstanding partnership interests of the Partnership will consist of [ ] Common Units, [ ] Subordinated Units, [ ] General Partner Units and the IDRs. Assuming no purchase by the Underwriters of the Option Units, other than (i) the Sponsor Units and (ii) the IDRs, the Firm Units will be the only limited partner interests of the Partnership issued and outstanding at the Closing Time and each Date of Delivery.

(xxi) No Other Equity Ownership . Other than its ownership of the General Partner Units and the IDRs, the General Partner will not, at the Closing Time and each Date of Delivery, own, directly or indirectly, any equity or long-term debt securities of any corporation, partnership, limited liability company, joint venture, association or other entity. Other than (i) the Partnership’s ownership of a 100% membership interest in the OLLC, (ii) the OLLC’s ownership of a 100% membership interest in each of SALA Gathering LLC, Big Sandy, Crude Logistics, El Dorado LLC, Magnolia LLC, Paline LLC and Marketing GP LLC, and (iii) the OLLC’s ownership of all the limited partner interests of Marketing LP, none of the Partnership, the OLLC or the Operating Subsidiaries will, at the Closing Time and each Date of Delivery, own, directly or indirectly, any equity or long-term debt securities of any corporation, partnership, limited liability company, joint venture, association or other entity.

(xxii) No Preemptive or Registration Rights . Except as described in the Registration Statement, the General Disclosure Package and the Prospectus, there are no (i) preemptive rights or other rights to subscribe for or to purchase, nor any restriction upon the voting or transfer of, any equity securities of the Partnership Entities or (ii) outstanding options or warrants to purchase any securities of the Partnership. Neither the filing of the Registration Statement nor the offering or sale of the Units as contemplated by this Agreement gives rise to any rights for or relating to the registration of any Common Units or other securities of the Partnership, except such rights as have been waived or satisfied.

(xxiii) Authorization of Transactions . Each of the Delek Parties has all requisite power and authority to execute and deliver this Agreement and perform its respective obligations hereunder. The Partnership has all requisite partnership power and authority to issue, sell and deliver (i) the Units, in accordance with and upon the terms and conditions set forth in this Agreement, the Partnership Agreement, the Registration Statement, the General Disclosure Package and the Prospectus and (ii) the Sponsor Units and IDRs, in accordance with and upon the terms and conditions set forth in the Partnership Agreement and the Contribution Agreement. At the Closing Time and each Date of Delivery, all corporate, limited partnership and limited liability company action, as the case may be, required to be taken by the Delek Parties or any of their stockholders, members or partners for the authorization, issuance, sale and delivery of the Units, the Sponsor Units and the IDRs, the execution and delivery by the Delek Parties of the Transaction Agreements to which they are a party and the consummation of the transactions (including the Transactions) contemplated by this Agreement and the Transactions Agreements, shall have been validly taken.

(xxiv) Authorization of Agreement . This Agreement has been duly authorized, executed and delivered by each of the Delek Parties.

 

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(xxv) Operative Agreements . At the Closing Time, after giving effect to the Transactions, each of the Operative Agreements will have been duly authorized, executed and delivered by the Delek Entities party thereto, and assuming due authorization by the other parties thereto (other than a Delek Entity), will be a valid and legally binding agreement of such Delek Entities, enforceable against such Delek Entities in accordance with its terms; provided , that, with respect to each agreement described in this Section 1(xxiv) , the enforceability thereof may be limited by (A) bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws relating to or affecting creditors’ rights generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and (B) public policy, any applicable law relating to fiduciary duties and indemnification and an implied covenant of good faith and fair dealing.

(xxvi) Independent Accountants . Ernst & Young LLP, who has certified certain financial statements and supporting schedules of the Partnership, the predecessor to the Partnership, Paline LLC and the Contributed Lion Oil Assets included in the Registration Statement, the General Disclosure Package and the Prospectus is an independent registered public accounting firm with respect to such entities as required by the 1933 Act, the 1933 Act Regulations and the Public Accounting Oversight Board.

(xxvii) Financial Statements; Non-GAAP Financial Measures . The historical combined financial statements of the predecessor to the Partnership included in the Registration Statement, the General Disclosure Package and the Prospectus, together with the related schedules and notes thereto, present fairly the financial position, results of operations and cash flows of the predecessor to the Partnership at the dates indicated and for the periods specified; said financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“ GAAP ”) applied on a consistent basis throughout the periods involved (except as otherwise noted therein). The pro forma combined financial statements of the Partnership and its consolidated subsidiaries included in the Registration Statement, the General Disclosure Package and the Prospectus comply as to form in all material respects with the applicable accounting requirements of the 1933 Act, the Securities Exchange Act of 1934, as amended (the “ 1934 Act ”), Item 10 under Regulation S-K and Financial Interpretation No. 46 and the pro forma adjustments have been properly applied to the historical amounts in the compilation of those statements. The summary historical and pro forma financial information set forth in the Registration Statement, the General Disclosure Package and the Prospectus under the caption “Summary—Summary Historical and Pro Forma Financial and Operating Data” and the selected historical and pro forma financial information set forth under the caption “Selected Historical and Pro Forma Combined Financial and Operating Data” in the Registration Statement, the General Disclosure Package and the Prospectus is accurately presented in all material respects and prepared on a basis consistent with the audited and unaudited historical financial statements and pro forma financial statements, as applicable, from which it has been derived, unless expressly noted otherwise. Except as included therein, no historical or pro forma financial statements or supporting schedules are required to be included in the Registration Statement, the General Disclosure Package or the Prospectus under the 1933 Act or the 1933 Act Regulations and the Partnership Entities do not have any material liabilities or obligations, direct or contingent (including any off-balance sheet obligations), not described in the Registration Statement (excluding the exhibits thereto), the General Disclosure Package and the Prospectus. All disclosures contained in the Registration Statement, the General Disclosure Package or the Prospectus regarding “non-GAAP financial measures” (as such term is defined by the rules and regulations of the Commission) comply with Regulation G of the 1934 Act, and Item 10 of Regulation S-K under the 1933 Act, to the extent applicable.

 

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(xxviii) No Material Adverse Change . Since the date of the most recent audited financial statements included in the Registration Statement, the General Disclosure Package and the Prospectus, the Partnership Contribution Assets have not sustained any loss or interference from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, investigation, order or decree, otherwise than as set forth or contemplated in the Registration Statement, the General Disclosure Package and the Prospectus and other than as would not reasonably be expected to have a Material Adverse Effect on or prevent or materially hinder or delay the performance of this Agreement or the consummation of any of the Transactions. Except as otherwise stated therein, since the respective dates as of which information is given in the Registration Statement, the General Disclosure Package or the Prospectus (in each case excluding any amendments or supplements thereto made after execution of this Agreement), (A) there has been no Material Adverse Effect, (B) there have been no transactions entered into by the Partnership Entities, other than those in the ordinary course of business, which are material with respect to the Partnership Entities considered as one enterprise, and (C) there has been no dividend or distribution of any kind declared, paid or made on the security interests of any of the Partnership Contribution Assets.

(xxix) Description of the Units . The Units, when issued and delivered in accordance with the terms of the Partnership Agreement and this Agreement against payment therefor as provided therein and herein, and the Sponsor Units, the General Partner Units and the IDRs, when issued and delivered in accordance with the terms of the Partnership Agreement, will conform, in all material respects to the descriptions thereof contained in the Registration Statement, the General Disclosure Package and the Prospectus.

(xxx) Absence of Violations and Defaults . None of the Delek Entities is (A) in violation of its charter, by-laws or similar organizational document, (B) in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease or other agreement or instrument relating to the Partnership Contribution Assets to which any of the Delek Entities is a party or by which any of them or any of their respective properties may be bound (collectively, “ Agreements and Instruments ”), except for such defaults that would not, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect, (C) in violation of any law, statute, rule, regulation, judgment, order, writ or decree of any arbitrator, court, governmental body, regulatory body, administrative agency or other authority, body or agency having jurisdiction over the Delek Entities or any of their respective properties, assets or operations (each, a “ Governmental Entity ”), except for such violations that would not, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect, or (D) in violation, breach or default of the Operative Agreements.

(xxxi) No Conflicts . None of (i) the offering, issuance or sale by the Partnership of the Units, (ii) the execution, delivery and performance of this Agreement and the Operative Agreements by the Delek Entities that are parties hereto or thereto, as the case may be, (iii) the consummation of the Transactions and any other transactions contemplated by this Agreement or the Transaction Documents or (iv) the application of the proceeds as described under the caption “Use of Proceeds” in the Registration Statement, the General Disclosure Package and the Prospectus (A) conflicts or will conflict with or constitutes or will constitute a violation of the partnership agreement, limited liability company agreement, certificate of formation or conversion, certificate or articles of incorporation, bylaws or other constituent document of any of the Delek Entities, (B) conflicts or will conflict with or constitutes or will constitute a breach or violation of, or a default (or an event that, with notice or lapse of time or both, would constitute such a default) under any Agreement and Instrument, (C) violates or will violate any order of any

 

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Governmental Entity or (D) results or will result in the creation or imposition of any Lien upon any property or assets of any of the Partnership Entities (other than Liens arising under the Credit Agreement) except, in the case of clauses (B), (C) and (D), where such breaches, violations, defaults or Liens would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or materially impair the ability of the Delek Entities to consummate the Transactions or any other transactions contemplated by this Agreement or the Transaction Documents.

(xxxii) Absence of Labor Dispute . Except as would not reasonably be expected to have a Material Adverse Effect, no labor dispute with the employees of any of the Delek Entities who are engaged in the Delek Logistics LP Business exists or, to the knowledge of the Delek Parties, is imminent.

(xxxiii) Absence of Proceedings . Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, there is no action, suit, proceeding, inquiry or investigation before or brought by any Governmental Entity now pending or, to the knowledge of the Delek Parties, threatened or contemplated, against any of the Delek Entities, which would reasonably be expected to have a Material Adverse Effect, or which could reasonably be expected to have a material adverse effect on the performance of this Agreement or any of the Operative Agreements or the consummation of any of the transactions contemplated herein or therein (including the Transactions).

(xxxiv) Accuracy of Exhibits . There are no franchises, contracts or documents which are required by the 1933 Act Regulations to be described in the Registration Statement, the General Disclosure Package or the Prospectus or to be filed as exhibits to the Registration Statement which have not been so described or filed as required.

(xxxv) Absence of Further Requirements . No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any Governmental Entity is necessary or required for the performance by the Delek Entities of their obligations hereunder, in connection with the offering, issuance or sale of the Units hereunder or the performance of this Agreement or any of the Operative Agreements or the consummation of any of the transactions contemplated herein or therein (including the Transactions), except (A) such as have been already obtained or will be obtained prior to the Closing Time, or as may be required under the 1933 Act, the 1933 Act Regulations, the 1934 Act, the 1934 Act Regulations, the rules of the New York Stock Exchange, state securities laws or the rules of FINRA, (B) such as have been obtained under the laws and regulations of jurisdictions outside the United States in which the Reserved Units were offered and (C) for any such filing, authorization, approval, consent, license, order, registration, qualification or decree that if not obtained, would not be reasonably be expected to have a Material Adverse Effect or prevent or materially hinder or delay the performance of this Agreement or the consummation of any of the Transactions.

(xxxvi) Possession of Licenses and Permits . At the Closing Time, after giving effect to the Transactions, the Delek Entities will possess such permits, licenses, approvals, consents and other authorizations (collectively, “ Governmental Licenses ”) issued by the appropriate Governmental Entities necessary to conduct the Delek Logistics LP Business, except [for Governmental Licenses relating to the Memphis and Nashville terminals and where the failure so to possess would not, singly or in the aggregate, be reasonably expected to have a Material Adverse Effect. At the Closing Time, the Delek Entities will be in compliance with the terms and conditions of all Governmental Licenses, except where the failure so to comply would not, singly or in the aggregate, be reasonably expected to have a Material Adverse Effect. At the Closing

 

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Time, all of the Governmental Licenses will be valid and in full force and effect, except when the invalidity of such Governmental Licenses or the failure of such Governmental Licenses to be in full force and effect would not, singly or in the aggregate, be reasonably expected to have a Material Adverse Effect. None of the Delek Entities has received any notice of proceedings relating to the revocation or modification of any Governmental Licenses which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would reasonably be expected to have a Material Adverse Effect.

(xxxvii) Title to Property . Following consummation of the Transactions, at the Closing Time and each Date of Delivery, the Partnership Entities will have indefeasible title to all real property and good title to all personal property described in the Registration Statement, the General Disclosure Package or the Prospectus as owned by the Partnership Entities, in each case, free and clear of all mortgages, pledges, liens, security interests, claims, restrictions or encumbrances of any kind except such as (A) are described in the Registration Statement, the General Disclosure Package and the Prospectus, (B) arise under the Credit Agreement or (C) do not, singly or in the aggregate, interfere with the use made and proposed to be made of such property by the Partnership Entities; and all of the leases and subleases material to the Delek Logistics LP Business, and under which any of the Partnership Entities holds properties described in the Registration Statement, the General Disclosure Package or the Prospectus, are in full force and effect, and none of the Partnership Entities has any written notice of any material claim that has been asserted by anyone adverse to the rights of the Partnership Entities under any of the leases or subleases mentioned above, or questioning the rights of the Partnership Entities to the continued possession of the leased or subleased premises under any such lease or sublease.

(xxxviii) Rights-of-Way . At the Closing Time and each Date of Delivery, after giving effect to the Transactions, the Partnership Entities will have such easements or rights-of-way from each person (collectively, “ rights-of-way ”) as are necessary to conduct their business in the manner described, and subject to the limitations contained, in the Registration Statement, the General Disclosure Package and the Prospectus, except for (i) qualifications, reservations and encumbrances that would not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect and (ii) such rights-of-way that, if not obtained, would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect; the Partnership Entities have, or following consummation of the Transactions will have, fulfilled and performed all their material obligations with respect to such rights-of-way and no event has occurred that allows, or after notice or lapse of time would allow, revocation or termination thereof or would result in any impairment of the rights of the holder of any such rights-of-way, except for such revocations, terminations and impairments that would not be reasonably expected to have a Material Adverse Effect.

(xxxix) Possession of Intellectual Property . The Delek Entities own or possess, or can acquire on reasonable terms, adequate patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks, trade names or other intellectual property (collectively, “Intellectual Property”) necessary to carry on the Delek Logistics LP Business, and none of the Delek Parties has received any notice or is otherwise aware of any infringement of or conflict with asserted rights of others with respect to any Intellectual Property or of any facts or circumstances which would render any Intellectual Property invalid or inadequate to protect the interest of the Delek Entities therein, and which infringement or conflict (if the subject of any unfavorable decision, ruling or finding) or invalidity or inadequacy, singly or in the aggregate, would result in a Material Adverse Effect.

 

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(xl) Certain Relationship and Related Transactions . No relationship, direct or indirect, exists between or among any Partnership Entity, on the one hand, and the directors, officers, stockholders, affiliates, customers or suppliers of any Partnership Entity, on the other hand, that is required to be described in the Registration Statement, the General Disclosure Package and the Prospectus and is not so described.

(xli) ERISA . Except as would not reasonably be expected to have a Material Adverse Effect, (i) the Delek Parties are in compliance in all material respects with all presently applicable provisions of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and published governmental interpretations thereunder (“ ERISA ”); (ii) no “reportable event” (as defined in Section 4043(c) of ERISA) has occurred with respect to any “pension plan” (as defined in Section 3(2) of ERISA) for which any Delek Party would have any liability, excluding any reportable event for which a waiver could apply; (iii) neither the Partnership nor any member of the Delek Parties has incurred, nor does any such entity expect to incur, liability under (a) Title IV of ERISA with respect to termination of, or withdrawal from, any “pension plan” or (b) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended, including the regulations and published governmental interpretations thereunder (the “ Code ”) with respect to any “pension plan”; (iv) each “pension plan” for which any Delek Party would have any liability that is intended to be qualified under Section 401(a) of the Code is the subject of a favorable determination or opinion letter from the Internal Revenue Service to the effect that it is so qualified and, to the knowledge of the Delek Parties, nothing has occurred, whether by action or by failure to act, which could reasonably be expected to cause the loss of such qualification; and (v) no Delek Party has incurred any unpaid liability to the Pension Benefit Guaranty Corporation (other than for payment of premiums in the ordinary course of business) for which any Delek Party could reasonably be expected to be liable.

(xlii) Environmental Laws . To the extent applicable to the Delek Logistics LP Business or the Partnership Contribution Assets, and except as described in the Registration Statement, the General Disclosure Package and the Prospectus or as would not, singly or in the aggregate, be reasonably expected to have a Material Adverse Effect, (A) none of the Delek Entities is in violation of any federal, state, local or foreign statute, law, rule, regulation, ordinance, code, policy or rule of common law or any judicial or administrative interpretation thereof, including any judicial or administrative order, consent, decree or judgment, relating to pollution or protection of human health, the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including, without limitation, laws and regulations relating to the release or threatened release of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum or petroleum products, asbestos-containing materials or mold (collectively, “ Hazardous Materials ”) or to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials (collectively, “ Environmental Laws ”), (B) the Delek Entities have all permits, authorizations and approvals required under any applicable Environmental Laws and are each in compliance with their requirements, (C) there are no pending or threatened administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigation or proceedings relating to any Environmental Law against the Delek Entities and (D) to the knowledge of the Delek Parties, there are no events or circumstances that would reasonably be expected to form the basis of an order for clean-up or remediation, or an action, suit or proceeding by any private party or Governmental Entity, against or affecting the Delek Entities relating to Hazardous Materials or any Environmental Laws. In the ordinary course of its business, the Delek Parties periodically review the effect of Environmental Laws on their business, operations and properties, in the course of which they identify and evaluates associated costs and liabilities (including, without limitation, any capital or

 

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operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws, or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties). On the basis of such review, the Delek Parties have concluded that such associated costs and liabilities would not, singly or in the aggregate, have a Material Adverse Effect, except as described in or contemplated in the Registration Statement, the General Disclosure Package and the Prospectus.

(xliii) Accounting Controls . The Partnership Entities maintain internal accounting controls sufficient to provide reasonable assurances that (A) transactions are executed in accordance with management’s general or specific authorization; (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain accountability for assets; (C) access to assets is permitted only in accordance with management’s general or specific authorization; and (D) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Partnership Entities’ internal controls over financial reporting are effective and none of the Partnership Entities are aware of any material weakness in their internal accounting controls.

(xliv) Disclosure Controls . The Partnership has established and maintains “disclosure controls and procedures” (as is defined in Rule 13a-15(e) under the Exchange Act); and (i) such disclosure controls and procedures are designed to ensure that the information required to be disclosed by the Partnership in the reports it files or will file or submit under the Exchange Act, as applicable, is accumulated and communicated to management of the General Partner, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure to be made and (ii) such disclosure controls and procedures are effective in all material respects to perform the functions for which they were established to the extent required by Rule 13a-15 of the Exchange Act.

(xlv) Compliance with the Sarbanes-Oxley Act. The Partnership Entities have taken all necessary actions to ensure that, upon the Effective Date, they will be in compliance in all material respects with all provisions of the Sarbanes-Oxley Act of 2002 and all rules and regulations promulgated thereunder or implementing the provisions thereof (the “ Sarbanes-Oxley Act ”) that are then in effect and with which the Partnership Entities are required to comply as of the Effective Date.

(xlvi) Contribution Agreement . The Contribution Agreement is in a form legally sufficient to transfer or convey to the Partnership Entities thereunder all of the right, title and interest of the transferor stated therein and to the ownership interests, assets and rights purported to be transferred thereby, as described in the Registration Statement, the General Disclosure Package and the Prospectus, subject to the conditions, reservations, encumbrances and limitations described in the Contribution Agreement. Upon execution and delivery of the Contribution Agreement, the Partnership Entities will succeed in all material respects to the business, assets, properties, liabilities and operations reflected by the pro forma combined financial statements of the Partnership.

(xlvii) Payment of Taxes . All United States federal income tax returns of the Partnership Entities required by law to be filed have been filed and all taxes shown by such returns or otherwise assessed, which are due and payable, have been paid, except assessments against which appeals have been or will be promptly taken and as to which adequate reserves have been provided. The Partnership Entities have filed all other tax returns that are required to have been filed by them pursuant to applicable foreign, state, local or other law except insofar as

 

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the failure to file such returns would not reasonably be expected to have a Material Adverse Effect, and has paid all taxes due pursuant to such returns or pursuant to any assessment received by the Partnership Entities, except for such taxes, if any, as are being contested in good faith and as to which adequate reserves have been established by the Partnership Entities.

(xlviii) Insurance . At the Closing Time, the Partnership Entities will carry or otherwise be entitled to the benefits of insurance relating to the Delek Logistics LP Business, with financially sound and reputable insurers, in such amounts and covering such risks as is generally maintained by companies of established repute engaged in the same or similar business, and all such insurance will be in full force and effect. The Delek Parties have no reason to believe that any of the Partnership Entities will not be able (A) to renew its existing insurance coverage as and when such policies expire or (B) to obtain comparable coverage from similar institutions as may be necessary or appropriate to conduct the Delek Logistics LP Business as now conducted and at a cost that would not reasonably be expected to have a Material Adverse Effect.

(xlix) Subsidiary Distributions . At the Closing Time and any Date of Delivery, after giving effect to the Transactions, no direct or indirect subsidiary of the Partnership will be prohibited, directly or indirectly, from paying any distributions to the Partnership, from making any other distribution on such subsidiary’s equity interests, from repaying to the Partnership any loans or advances to such subsidiary from the Partnership or from transferring any of such subsidiary’s property or assets to the Partnership or any other subsidiary of the Partnership, except as described in or contemplated by the Registration Statement, the General Disclosure Package and the Prospectus [or arising under the Credit Agreement or the Delek US Holdings Credit Agreement].

(l) Investment Company Act . None of the Partnership Entities is now, or immediately following the sale of the Units to be sold by the Partnership pursuant to this Agreement and application of the net proceeds from such sale as described in the Registration Statement, the General Disclosure Package and the Prospectus under the caption “Use of Proceeds” will be, an “investment company” as defined in the Investment Company Act of 1940, as amended (the “ 1940 Act ”).

(li) Absence of Manipulation . None of the Delek Entities has taken, nor will any Delek Entity take, directly or indirectly, any action which is designed, or would be reasonably likely, to cause or result in, or which constitutes, the stabilization or manipulation of the price of any security of the Partnership to facilitate the sale or resale of the Units.

(lii) Foreign Corrupt Practices Act . None of the Partnership Parties or, to the knowledge of the Delek Parties, any director, officer, agent, employee or affiliate of any of the Partnership Parties has taken any action, directly or indirectly, that would result in a violation by such persons of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (the “ FCPA ”), including, without limitation, making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any “foreign official” (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA and the Delek Entities, to the knowledge of the Delek Parties, have conducted their businesses in compliance with the FCPA and have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith.

 

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(liii) Money Laundering Laws . The operations of the Partnership Parties are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Entity (collectively, the “ Money Laundering Laws ”); and no action, suit or proceeding by or before any Governmental Entity involving any Partnership Party with respect to the Money Laundering Laws is pending or, to the knowledge of the Delek Parties, threatened.

(liv) OFAC . None of the Delek Entities or, to the knowledge of the Delek Parties, any director, officer, agent, employee, affiliate or representative of any Delek Party is an individual or entity (“ Person ”) currently the subject or target of any sanctions administered or enforced by the United States Government, including, without limitation, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“ OFAC ”), the United Nations Security Council, the European Union, Her Majesty’s Treasury, or other relevant sanctions authority (collectively, “ Sanctions ”), nor is any Delek Party located, organized or resident in a country or territory that is the subject of Sanctions; and the Delek Parties will not directly or indirectly use the proceeds of the sale of the Units, or lend, contribute or otherwise make available such proceeds to any subsidiaries, joint venture partners or other Person, to fund any activities of or business with any Person, or in any country or territory, that, at the time of such funding, is the subject of Sanctions or in any other manner that will result in a violation by any Person (including any Person participating in the transaction, whether as underwriter, advisor, investor or otherwise) of Sanctions.

(lv) Sales of Reserved Units . The Partnership has not offered, or caused the Representatives to offer, Reserved Units to any person with the specific intent to unlawfully influence (i) a customer or supplier of the Partnership or any of its affiliates to alter the customer’s or supplier’s level or type of business with the any of the Partnership Entities or (ii) a trade journalist or publication to write or publish favorable information about any of the Partnership Entities, or their respective businesses.

(lvi) Lending Relationship . Except as disclosed in the Registration Statement, the General Disclosure Package and the Prospectus, no Delek Entity (i) has any material lending or other relationship with any bank or lending affiliate of any Underwriter or (ii) intends to use any of the proceeds from the sale of the Units to repay any outstanding debt owed to any affiliate of any Underwriter.

(lvii) Private Placement. The issuance of the Sponsor Units to Lion Oil and Delek Marketing, the General Partner Units to the General Partner and the IDRs to the General Partner are exempt from the registration requirements of the 1933 Act, the rules and regulations and the securities laws of any state having jurisdiction with respect thereto, and none of the Delek Parties has taken or will take any action that would cause the loss of such exemption.

(lviii) Statistical and Market-Related Data . Any statistical and market-related data included in the Registration Statement, the General Disclosure Package or the Prospectus are based on or derived from sources that the Partnership believes to be reliable and accurate in all material respects and, to the extent required, the Partnership has obtained the written consent to the use of such data from such sources.

(lix) Offering Materials . None of the Delek Entities has distributed and, prior to the later to occur of the Closing Time or any Date of Delivery and completion of the distribution of

 

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the Units, will distribute any offering material in connection with the offering and sale of the Units other than any preliminary prospectus, the Prospectus, any Issuer Free Writing Prospectus to which the Representatives have consented in accordance with this Agreement, any other materials, if any, permitted by the 1933 Act, including Rule 134, and in connection with the Reserved Units, the enrollment materials prepared by Merrill Lynch.

(lx) NYSE Listing . The Units have been approved to be listed on the New York Stock Exchange (“ NYSE ”), subject only to official notice of issuance.

(lxi) FINRA . To the knowledge of the Delek Parties, there are no affiliations or associations between any member of FINRA and any of the General Partner’s officers or directors or the Partnership’s 5% or greater security holders, except as described in the Registration Statement, the General Disclosure Package and the Prospectus.

(b) Officer’s Certificates . Any certificate signed by any officer of the Delek Parties delivered to the Representatives or to counsel for the Underwriters shall be deemed a representation and warranty by the Delek Parties to each Underwriter as to the matters covered thereby.

SECTION 2. Sale and Delivery to Underwriters; Closing .

(a) Firm Units . On the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Partnership agrees to sell to each Underwriter, severally and not jointly, and each Underwriter, severally and not jointly, agrees to purchase from the Partnership, at the price per Unit set forth in Schedule A, that number of Firm Units set forth in Schedule A opposite the name of such Underwriter, plus any additional number of Firm Units which such Underwriter may become obligated to purchase pursuant to the provisions of Section 10 hereof, subject, in each case, to such adjustments among the Underwriters as the Representatives in their absolute discretion shall make to eliminate any sales or purchases of fractional Units.

(b) Option Units . In addition, on the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Partnership hereby grants an option to the Underwriters to purchase, severally and not jointly, up to an additional 1,200,000 Common Units, at the price per unit set forth in Schedule A, [less an amount per Unit equal to any dividends or distributions declared by the Partnership and payable on the Firm Units but not payable on the Option Units]. The option hereby granted may be exercised for 30 days after the date hereof and may be exercised in whole or in part at any time from time to time upon notice by the Representatives to the Partnership setting forth the number of Option Units as to which the several Underwriters are then exercising the option and the time and date of payment and delivery for such Option Units. Any such time and date of delivery (a “ Date of Delivery ”) shall be determined by the Representatives, but shall not be sooner than three full business days nor later than seven full business days after the exercise of said option, nor in any event prior to the Closing Time. If the option is exercised as to all or any portion of the Option Units, each of the Underwriters, acting severally and not jointly, will purchase that proportion of the total number of Option Units then being purchased which the number of Firm Units set forth in Schedule A opposite the name of such Underwriter bears to the total number of Firm Units, subject, in each case, to such adjustments as the Representatives in their absolute discretion shall make to eliminate any sales or purchases of fractional Units.

(c) Payment . Payment of the purchase price for, and delivery of, the Firm Units shall be made at the offices of Baker Botts L.L.P., One Shell Plaza, 910 Louisiana Street, Houston, TX 77002 or at such other place as shall be agreed upon by the Representatives and the Partnership, at 10:00 A.M. (New York City time) on the third (fourth, if the pricing occurs after 4:30 P.M. (New York City time) on

 

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any given day) business day after the date hereof (unless postponed in accordance with the provisions of Section 10), or such other time not later than ten business days after such date as shall be agreed upon by the Representatives and the Partnership (such time and date of payment and delivery being herein called “ Closing Time ”).

In addition, in the event that any or all of the Option Units are purchased by the Underwriters, payment of the purchase price for, and delivery of such Option Units shall be made at the above-mentioned offices, or at such other place as shall be agreed upon by the Representatives and the Partnership, on each Date of Delivery as specified in the notice from Merrill Lynch to the Partnership.

Payment shall be made to the Partnership by wire transfer of immediately available funds to a bank account designated by the Partnership against delivery to the Representatives for the respective accounts of the Underwriters for the Units to be purchased by them. It is understood that each Underwriter has authorized the Representatives, for its account, to accept delivery of, receipt for, and make payment of the purchase price for, the Firm Units and the Option Units, if any, which it has agreed to purchase. Merrill Lynch, individually and not as representative of the Underwriters, may (but shall not be obligated to) make payment of the purchase price for the Firm Units or the Option Units, if any, to be purchased by any Underwriter whose funds have not been received by the Closing Time or the relevant Date of Delivery, as the case may be, but such payment shall not relieve such Underwriter from its obligations hereunder. Delivery of the Firm Units and the Option Units shall be made through the facilities of The Depository Trust Company unless the Representatives shall otherwise instruct.

SECTION 3. Covenants of the Partnership . Each of the Delek Parties, jointly and severally, covenant with each Underwriter as follows:

(a) Compliance with Securities Regulations and Commission Requests . The Partnership, subject to Section 3(b), will comply with the requirements of Rule 430A, and will notify the Representatives promptly, and confirm the notice in writing, (i) when any post-effective amendment to the Registration Statement shall become effective or any amendment or supplement to the Prospectus shall have been filed, (ii) of the receipt of any comments on the Registration Statement from the Commission, (iii) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information, (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any post-effective amendment or of any order preventing or suspending the use of any preliminary prospectus or the Prospectus, or of the suspension of the qualification of the Units for offering or sale in any jurisdiction, or of the initiation or threatening of any proceedings for any of such purposes or of any examination pursuant to Section 8(d) or 8(e) of the 1933 Act concerning the Registration Statement and (v) if the Partnership becomes the subject of a proceeding under Section 8A of the 1933 Act in connection with the offering of the Units. The Partnership will effect all filings required under Rule 424(b), in the manner and within the time period required by Rule 424(b) (without reliance on Rule 424(b)(8)), and will take such steps as it deems necessary to ascertain promptly whether the form of prospectus transmitted for filing under Rule 424(b) was received for filing by the Commission and, in the event that it was not, it will promptly file such prospectus. The Partnership will make every reasonable effort to prevent the issuance of any stop order, prevention or suspension and, if any such order is issued, to obtain the lifting thereof as soon as practicable.

(b) Continued Compliance with Securities Laws . The Partnership will comply with the 1933 Act and the 1933 Act Regulations so as to permit the completion of the distribution of the Units as

 

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contemplated in this Agreement and in the Registration Statement, the General Disclosure Package and the Prospectus. If at any time when a prospectus relating to the Units is (or, but for the exception afforded by Rule 172 of the 1933 Act Regulations (“ Rule 172 ”), would be) required by the 1933 Act to be delivered in connection with sales of the Units, any event shall occur or condition shall exist as a result of which it is necessary, in the opinion of counsel for the Underwriters or for the Partnership, to (i) amend the Registration Statement in order that the Registration Statement will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) amend or supplement the General Disclosure Package or the Prospectus in order that the General Disclosure Package or the Prospectus, as the case may be, will not include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time it is delivered to a purchaser, not misleading or (iii) amend the Registration Statement or amend or supplement the General Disclosure Package or the Prospectus, as the case may be, in order to comply with the requirements of the 1933 Act or the 1933 Act Regulations, the Partnership will promptly (A) give the Representatives notice of such event, (B) prepare any amendment or supplement as may be necessary to correct such statement or omission or to make the Registration Statement, the General Disclosure Package or the Prospectus comply with such requirements and, at least one day prior to any proposed filing or use, furnish the Representatives with copies of any such amendment or supplement and (C) file with the Commission any such amendment or supplement, provided that the Partnership shall not file or use any such amendment or supplement to which the Representatives or counsel for the Underwriters shall object. The Partnership will furnish to the Underwriters such number of copies of such amendment or supplement as the Underwriters may reasonably request. The Partnership has given the Representatives notice of any filings made pursuant to the 1934 Act or 1934 Act Regulations within 48 hours prior to the Applicable Time; the Partnership will give the Representatives notice of its intention to make any such filing from the Applicable Time to the Closing Time and will furnish the Representatives with copies of any such documents a reasonable amount of time prior to such proposed filing, as the case may be, and will not file or use any such document to which the Representatives or counsel for the Underwriters shall reasonably object.

(c) Delivery of Registration Statements . The Partnership has furnished or will deliver, upon request, to the Representatives and counsel for the Underwriters, without charge, signed copies of the Registration Statement as originally filed and each amendment thereto (including exhibits filed therewith) and signed copies of all consents and certificates of experts, and will also deliver to the Representatives, upon request, without charge, a conformed copy of the Registration Statement as originally filed and each amendment thereto (without exhibits) for each of the Underwriters. Such copies of the Registration Statement and each amendment thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.

(d) Delivery of Prospectuses . The Partnership has delivered to each Underwriter, without charge, as many copies of each preliminary prospectus as such Underwriter reasonably requested, and the Partnership hereby consents to the use of such copies for purposes permitted by the 1933 Act. The Partnership will furnish to each Underwriter, without charge, during the period when a prospectus relating to the Units is (or, but for the exception afforded by Rule 172, would be) required to be delivered under the 1933 Act, such number of copies of the Prospectus (as amended or supplemented) as such Underwriter may reasonably request. The Prospectus and any amendments or supplements thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.

(e) Blue Sky Qualifications . The Partnership will use its reasonable best efforts, in cooperation with the Underwriters, to qualify the Units for offering and sale under the applicable

 

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securities laws of such states and other jurisdictions (domestic or foreign) as the Representatives may designate and to maintain such qualifications in effect so long as required to complete the distribution of the Units; provided, however, that the Partnership shall not be obligated to file any general consent to service of process or to qualify to do business or as a dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject.

(f) Rule 158 . The Partnership will timely file such reports pursuant to the 1934 Act as are necessary in order to make generally available to its securityholders as soon as practicable an earnings statement for the purposes of, and to provide to the Underwriters the benefits contemplated by, the last paragraph of Section 11(a) of the 1933 Act.

(g) Use of Proceeds . The Partnership will use the net proceeds received by it from the sale of the Units in the manner specified in the Registration Statement, the General Disclosure Package and the Prospectus under “Use of Proceeds.”

(h) Listing . The Partnership will use its reasonable best efforts to effect and maintain the listing of the Units on the NYSE.

(i) Restriction on Sale of Units . During a period of 180 days from the date of the Prospectus, the Partnership will not, without the prior written consent of Merrill Lynch, (i) directly or indirectly, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer or dispose of (or enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition (whether by actual disposition or effective economic disposition due to cash settlement or otherwise) by the Partnership, Lion Oil and Delek Marketing) any Common Units or any securities convertible into or exercisable or exchangeable for Common Units or file any registration statement under the 1933 Act with respect to any of the foregoing or (ii) enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the Common Units, whether any such swap or transaction described in clause (i) or (ii) above is to be settled by delivery of Common Units or such other securities, in cash or otherwise. The foregoing sentence shall not apply to (A) the Units to be sold hereunder, (B) any Common Units issued by the Partnership upon the exercise of an option or warrant or the conversion of a security outstanding on the date hereof and referred to in the Registration Statement, the General Disclosure Package and the Prospectus, (C) any Common Units issued or options to purchase Common Units granted pursuant to any employee benefit plan of the Partnership or the General Partner referred to in the Registration Statement, the General Disclosure Package and the Prospectus or the filing of a registration statement on Form S-8 in respect thereof or (D) any Common Units issued pursuant to any non-employee director stock plan or dividend reinvestment plan referred to in the Registration Statement, the General Disclosure Package and the Prospectus or the filing of a registration statement in respect thereof. Notwithstanding the foregoing, if (1) during the last 17 days of the 180-day restricted period the Partnership issues an earnings release or material news or a material event relating to the Partnership occurs or (2) prior to the expiration of the 180-day restricted period, the Partnership announces that it will issue an earnings release or becomes aware that material news or a material event will occur during the 16-day period beginning on the last day of the 180-day restricted period, the restrictions imposed in this clause (i) shall continue to apply until the expiration of the 18-day period beginning on the date of the issuance of the earnings release or the occurrence of the material news or material event, unless the Representatives waive, in writing, such extension.

(j) Reporting Requirements . The Partnership, during the period when a Prospectus relating to the Units is (or, but for the exception afforded by Rule 172, would be) required to be delivered under

 

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the 1933 Act, will file all documents required to be filed with the Commission pursuant to the 1934 Act within the time periods required by the 1934 Act and 1934 Act Regulations. Additionally, the Partnership shall report the use of proceeds from the issuance of the Units as may be required under Rule 463 under the 1933 Act.

(k) Issuer Free Writing Prospectuses . The Partnership agrees that, unless it obtains the prior written consent of the Representatives, and each Underwriter, severally and not jointly, agrees with the Partnership that unless it has or shall have obtained, as the case may be, the prior written consent of the General Partner, it has not made and will not make any offer relating to the Units that would constitute an Issuer Free Writing Prospectus or that would otherwise constitute a “free writing prospectus,” or a portion thereof, required to be filed by the Partnership with the Commission or retained by the Partnership under Rule 433; provided that consent will be deemed to have been given with respect to the Issuer Free Writing Prospectuses listed on Schedule B-2 hereto and any “road show that is a written communication” within the meaning of Rule 433(d)(8)(i) that has been reviewed by the Representatives and the Partnership. The Partnership represents that it has treated or agrees that it will treat each such free writing prospectus consented to, or deemed consented to, by the Representatives as an “issuer free writing prospectus,” as defined in Rule 433, and that it has complied and will comply with the applicable requirements of Rule 433 with respect thereto, including timely filing with the Commission where required, legending and record keeping. If at any time following issuance of an Issuer Free Writing Prospectus there occurred or occurs an event or development as a result of which such Issuer Free Writing Prospectus conflicted or would conflict with the information contained in the Registration Statement, the most recent preliminary prospectus or the Prospectus or included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at that time, not misleading, the Partnership will promptly notify the Representatives and will promptly amend or supplement, at its own expense, such Issuer Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission.

(l) Emerging Growth Company . The Partnership will notify promptly the Representatives if the Partnership ceases to be an Emerging Growth Company at any time prior to the later of (a) completion of the distribution of the Units within the meaning of the 1933 Act and (b) completion of the 180-day restricted period referred to in Section 3(i) hereof.

(m) Written Testing-the-Waters Communications. If at any time following the distribution of any Written Testing-the-Waters Communication there occurred or occurs an event or development as a result of which such Written Testing-the-Waters Communication included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at that time, not misleading, the Partnership will promptly notify the Representatives and will promptly amend or supplement, at its own expense, such Written Testing-the-Waters Communication to eliminate or correct such untrue statement or omission.

(n) Compliance with FINRA Rules . The Partnership hereby agrees that it will ensure that the Reserved Units will be restricted to the extent and as required by FINRA or the FINRA rules from sale, transfer, assignment, pledge or hypothecation for a period of three months following the date of this Agreement. The Underwriters will notify the Partnership as to which persons will need to be so restricted. At the request of the Underwriters, the Partnership will direct the transfer agent to place a stop transfer restriction upon such securities for such period of time. Should the Partnership release, or seek to release, from such restrictions any of the Reserved Units, the Partnership agrees to reimburse the Underwriters for any reasonable expenses (including, without limitation, reasonable legal expenses) they incur in connection with such release.

 

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SECTION 4. Payment of Expenses .

(a) Expenses . The Partnership will pay or cause to be paid all expenses incident to the performance of its obligations under this Agreement, including (i) the preparation, printing and filing of the Registration Statement (including financial statements and exhibits) as originally filed and each amendment thereto, (ii) the preparation, printing and delivery to the Underwriters of copies of each preliminary prospectus, each Issuer Free Writing Prospectus and the Prospectus and any amendments or supplements thereto, (iii) the preparation, issuance and delivery of the certificates for the Units to the Underwriters, if any, including any stock or other transfer taxes and any stamp or other duties payable upon the sale, issuance or delivery of the Units to the Underwriters, (iv) the fees and disbursements of the Partnership’s counsel, accountants and other advisors, (v) the qualification of the Units under securities laws in accordance with the provisions of Section 3(e) hereof, including filing fees and the reasonable fees and disbursements of counsel for the Underwriters in connection therewith and in connection with the preparation of the Blue Sky Survey and any supplement thereto, (vi) the fees and expenses of any transfer agent or registrar for the Units, (vii) the costs and expenses of the Partnership relating to investor presentations on any “road show” undertaken in connection with the marketing of the Units, including without limitation, expenses associated with the production of road show slides and graphics, fees and expenses of any consultants engaged in connection with the road show presentations, travel and lodging expenses of the representatives and officers of the Partnership and any such consultants, and 50% of the cost of aircraft and other transportation chartered in connection with the road show (and the Underwriters will pay 50% of the cost of such aircraft or other transportation), (viii) the filing fees incident to, and the reasonable fees and disbursements of counsel to the Underwriters in connection with, the review by FINRA of the terms of the sale of the Units (not to exceed $20,000), (ix) the fees and expenses incurred in connection with the listing of the Units on the NYSE and (x) all reasonable costs and expenses of the Underwriters, including the reasonable fees and disbursements of counsel for the Underwriters, in connection with matters related to the Reserved Units which are designated by the Partnership for sale to Invitees; and except as otherwise expressly provided herein, the Underwriters shall pay their own costs and expenses, including the costs and expenses of their counsel, transfer taxes on any resale of the Common Units by any Underwriter, 50% of the cost of aircraft and other transportation chartered in connection with the roadshow, any advertising expenses in connection with any offers they may make and the transportation, lodging and other expenses incurred by the Underwriters on their own behalf in connection with the roadshow and other presentations to prospective purchasers of the Common Units.

(b) Termination of Agreement . If this Agreement is terminated by the Representatives in accordance with the provisions of Section 5(l) or Section 9(a)(ii) or Section 10 hereof, the Partnership shall reimburse the Underwriters for all of their out-of-pocket expenses, including the reasonable fees and disbursements of counsel for the Underwriters.

SECTION 5. Conditions of Underwriters’ Obligations . The obligations of the several Underwriters hereunder are subject to the accuracy of the representations and warranties of the Partnership contained herein or in certificates of any officer of the Partnership or any of its subsidiaries delivered pursuant to the provisions hereof, to the performance by the Partnership of its covenants and other obligations hereunder, and to the following further conditions:

(a) Effectiveness of Registration Statement; Rule 430A Information . The Registration Statement, including any Rule 462(b) Registration Statement, has become effective and, at the Closing Time, no stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto will have been issued under the 1933 Act, no order preventing or suspending the use of any preliminary prospectus or the Prospectus will have been issued and no proceedings for any of those purposes will have been instituted, will be pending or, to the Partnership’s knowledge, contemplated; and the Partnership will have complied with each request (if any) from the Commission for additional

 

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information. A prospectus containing the Rule 430A Information shall have been filed with the Commission in the manner and within the time frame required by Rule 424(b) without reliance on Rule 424(b)(8) or a post-effective amendment providing such information shall have been filed with, and declared effective by, the Commission in accordance with the requirements of Rule 430A.

(b) Opinion of Counsel for the Delek Parties . At the Closing Time, the Representatives shall have received the opinions, each dated the Closing Time, of Baker Botts L.L.P., counsel for the Delek Parties, of Quattlebaum, Grooms, Tull & Burrow PLLC, special Arkansas counsel for the Delek Parties, of Bass, Berry & Sims PLC., credit facility counsel for the Delek Parties, and of the General Counsel of the General Partner, each in form and substance reasonably satisfactory to counsel for the Underwriters, together with signed or reproduced copies of such letters for each of the other Underwriters to the effect set forth in Exhibit A-1, Exhibit A-2, Exhibit A-3 and Exhibit A-4 hereto, respectively.

(c) Opinion of Counsel for Underwriters . At the Closing Time, the Representatives shall have received the favorable opinion, dated the Closing Time, of Vinson & Elkins L.L.P., counsel for the Underwriters, in form and substance satisfactory to the Representatives, together with signed or reproduced copies of such letter for each of the other Underwriters.

(d) Officers’ Certificate . At the Closing Time, the Representatives shall have received a certificate of the chief executive officer or the president of the General Partner and of the chief financial or chief accounting officer of the General Partner, dated the Closing Time, to the effect that (i) since the date of the most recent financial statements included in the Registration Statement, the General Disclosure Package or the Prospectus, there has not been a Material Adverse Effect, except as described in the Registration Statement, the General Disclosure Package and the Prospectus (exclusive of any supplement thereto), (ii) the representations and warranties of the Delek Parties in this Agreement are true and correct on and as of the Closing Time with the same force and effect as though expressly made at and as of the Closing Time, (iii) the Delek Parties have complied with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to the Closing Time, and (iv) no stop order suspending the effectiveness of the Registration Statement under the 1933 Act has been issued, no order preventing or suspending the use of any preliminary prospectus or the Prospectus has been issued and no proceedings for any of those purposes have been instituted or are pending or, to the knowledge of the Delek Parties, threatened or contemplated.

(e) Chief Financial Officer’s Certificate . At the Closing Time, the Representatives shall have received, in form and substance satisfactory to the Representatives, a written certificate executed by the chief financial officer of the General Partner, dated the Closing Time, the form of which is attached as Exhibit B.

(f) Accountant’s Comfort Letter . The Representatives shall have received from Ernst & Young LLP a letter, dated the date hereof, in form and substance reasonably satisfactory to the Representatives, together with signed or reproduced copies of such letter for each of the other Underwriters, containing statements and information of the type ordinarily included in accountants’ “comfort letters” to underwriters with respect to the financial statements and certain financial information contained in the Registration Statement, any preliminary prospectus, any Issuer Free Writing Prospectus and the Prospectus, and any amendments or supplements thereto.

(g) Bring-down Comfort Letter . At the Closing Time, the Representatives shall have received from Ernst & Young LLP a letter, dated as of the Closing Time, to the effect that they reaffirm the statements made in the letter furnished pursuant to subsection (e) of this Section, except that the specified date referred to shall be a date not more than three business days prior to the Closing Time.

 

26


(h) Approval of Listing . At the Closing Time, the Units shall have been approved for listing on the NYSE, subject only to official notice of issuance.

(i) No Objection . FINRA has confirmed that it has not raised any objection with respect to the fairness and reasonableness of the underwriting terms and arrangements relating to the offering of the Units.

(j) Lock-up Agreements . At the date of this Agreement, the Representatives shall have received agreements substantially in the form of Exhibit C hereto signed by the persons listed on Schedule C hereto.

(k) Maintenance of Rating . Since the execution of this Agreement, there shall not have been any decrease in or withdrawal of the rating of any securities of the Delek Parties by any “nationally recognized statistical rating organization” (as defined for purposes of Section 3(a)(62) of the 1934 Act) or any notice given of any intended or potential decrease in or withdrawal of any such rating or of a possible change in any such rating that does not indicate the direction of the possible change.

(l) IPO Transactions . The Delek Parties shall have furnished to the Representatives evidence reasonably satisfactory to the Representatives that each of the Transactions shall have occurred or will occur as of the Closing Time, including the closing of the new credit facility pursuant to the Credit Agreement, in each case as described in the Registration Statement, the General Disclosure Package and the Prospectus without material modification, change or waiver (excluding the waiver of any condition precedent to initial funding by the administrative agent and/or lenders under the Credit Agreement), except for such material modifications, changes or waivers as have been specifically identified to the Representatives and which, in the judgment of the Representatives, do not make it impracticable or inadvisable to proceed with the offering and delivery of the Units at the Closing Time on the terms and in the manner contemplated in the Registration Statement, the General Disclosure Package and the Prospectus.

(m) Conditions to Purchase of Option Units . In the event that the Underwriters exercise their option provided in Section 2(b) hereof to purchase all or any portion of the Option Units, the representations and warranties of the Delek Parties contained herein and the statements in any certificates furnished by the Partnership Entities hereunder shall be true and correct as of such Date of Delivery and, at the relevant Date of Delivery, the Representatives shall have received:

(i) Officers’ Certificate . A certificate, dated such Date of Delivery, of the chief executive officer or the president of the General Partner and of the chief financial or chief accounting officer of the General Partner confirming that the certificate delivered at the Closing Time pursuant to Section 5(d) hereof remains true and correct as of such Date of Delivery.

(ii) Opinion of Counsel for the Delek Parties . If requested by the Representatives, the opinion of Baker Botts L.L.P., counsel for the Delek Parties, together with the opinions of Quattlebaum, Grooms, Tull & Burrow PLLC, special Arkansas counsel for the Delek Parties, Bass, Berry & Sims PLC., credit facility counsel for the Delek Parties, and the General Counsel for the General Partner, each in form and substance reasonably satisfactory to counsel for the Underwriters, dated such Date of Delivery, relating to the Option Units to be purchased on such Date of Delivery and otherwise to the same effect as the opinion required by Section 5(b) hereof.

(iii) Opinion of Counsel for Underwriters . If requested by the Representatives, the favorable opinion of Vinson & Elkins LLP, counsel for the Underwriters, dated such Date of

 

27


Delivery, relating to the Option Units to be purchased on such Date of Delivery and otherwise to the same effect as the opinions required by Section 5(c) hereof.

(v) Bring-down Comfort Letter . If requested by the Representatives, a letter from Ernst & Young LLP, in form and substance satisfactory to the Representatives and dated such Date of Delivery, substantially in the same form and substance as the letter furnished to the Representatives pursuant to Section 5(f) hereof, except that the “specified date” in the letter furnished pursuant to this paragraph shall be a date not more than three business days prior to such Date of Delivery.

(n) Additional Documents . At the Closing Time and at each Date of Delivery (if any) counsel for the Underwriters shall have been furnished with such other documents as they may reasonably request.

(o) Termination of Agreement . If any condition specified in this Section shall not have been fulfilled when and as required to be fulfilled, this Agreement, or, in the case of any condition to the purchase of Option Units on a Date of Delivery which is after the Closing Time, the obligations of the several Underwriters to purchase the relevant Option Units, may be terminated by the Representatives by written notice to the Partnership at any time at or prior to Closing Time or such Date of Delivery, as the case may be, and such termination shall be without liability of any party to any other party except as provided in Section 4 and except that Sections 6, 7, 14 and 15 shall survive any such termination and remain in full force and effect.

SECTION 6. Indemnification .

(a) Indemnification of Underwriters . The Delek Parties, jointly and severally, agree to indemnify and hold harmless each Underwriter, each affiliate (as such term is defined in Rule 501(b) under the 1933 Act (each, an “Affiliate”)) of such Underwriter who has, or who is alleged to have, participated in the distribution of Units, its selling agents and each person, if any, who controls any Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:

(i) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment thereto), including the Rule 430A Information, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of any untrue statement or alleged untrue statement of a material fact included (A) in any preliminary prospectus, any Issuer Free Writing Prospectus, any Written Testing-the-Waters Communication, the General Disclosure Package, or the Prospectus (or any amendment or supplement thereto), or (B) in any materials or information provided to investors by, or with the approval of, the Delek Parties in connection with the marketing of the offering of the Units (“Marketing Materials”), including any roadshow or investor presentations made to investors by the Delek Parties (whether in person or electronically), or the omission or alleged omission in any preliminary prospectus, Issuer Free Writing Prospectus, any Written Testing-the-Waters Communication, the General Disclosure Package or the Prospectus or in any Marketing Materials of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;

(ii) against any and all loss, liability, claim, damage and expense whatsoever to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim

 

28


whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission; provided that (subject to Section 6(d) below) any such settlement is effected with the written consent of the Delek Parties; and

(iii) against any and all expense whatsoever (including the reasonable fees and disbursements of counsel chosen by Merrill Lynch), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under (i) or (ii) above;

provided, however, that this Section 6(a) shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made in the Registration Statement (or any amendment thereto), including the Rule 430A Information, any preliminary prospectus, any Written Testing-the-Waters Communication, the General Disclosure Package or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with the Underwriter Information.

(b) Indemnification of the Delek Parties and, Directors and Officers of the General Partner . Each Underwriter severally agrees to indemnify and hold harmless the Delek Parties, each of their directors, each of the officers who signed the Registration Statement, and each person, if any, who controls any Delek Party within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, against any and all loss, liability, claim, damage and expense described in the indemnity contained in subsection (a) of this Section, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment thereto), including the Rule 430A Information, the most recent preliminary prospectus, any Written Testing-the-Waters Communication, the General Disclosure Package, any Issuer Free Writing Prospectus or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with the Underwriter Information.

(c) Actions against Parties; Notification . Each indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve such indemnifying party from any liability hereunder to the extent it is not materially prejudiced as a result thereof and in any event shall not relieve it from any liability which it may have otherwise than on account of this Section 6. In the case of parties indemnified pursuant to Section 6(a) above, counsel to the indemnified parties shall be selected by Merrill Lynch, and, in the case of parties indemnified pursuant to Section 6(b) above, counsel to the indemnified parties shall be selected by the Delek Parties. An indemnifying party may participate at its own expense in the defense of any such action; provided, however, that counsel to the indemnifying party shall not (except with the consent of the indemnified party) also be counsel to the indemnified party. In no event shall the indemnifying parties be liable for fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in

 

29


respect of which indemnification or contribution could be sought under this Section 6 or Section 7 hereof (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.

(d) Settlement without Consent if Failure to Reimburse . If at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees that it shall be liable for any settlement of the nature contemplated by Section 6(a)(ii) or settlement of any claim in connection with any violation referred to in Section 6(f) effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least 30 days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement.

(e) Indemnification for Reserved Units . In connection with the offer and sale of the Reserved Units, the Delek Parties, jointly and severally, agree to indemnify and hold harmless the Underwriters, their Affiliates and selling agents and each person, if any, who controls any Underwriter within the meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act, from and against any and all loss, liability, claim, damage and expense (including, without limitation, any legal or other expenses reasonably incurred in connection with defending, investigating or settling any such action or claim), as incurred, (i) arising out of the violation of any applicable laws or regulations of foreign jurisdictions where Reserved Units have been offered, (ii) arising out of any untrue statement or alleged untrue statement of a material fact contained in any prospectus wrapper or other material prepared by or with the consent of the Delek Parties for distribution to Invitees in connection with the offering of the Reserved Units or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, (iii) caused by the failure of any Invitee to pay for and accept delivery of Reserved Units which have been orally confirmed for purchase by any Invitee by 9:00 A.M. (New York City time) on the first business day after the date of the Agreement or (iv) related to, or arising out of or in connection with, the offering of the Reserved Units; provided that no indemnification shall be available under this Section 6(e) for any loss, liability, claim, damage or expense which arises out of the gross negligence or willful misconduct of any of the Underwriters or any of their affiliates.

SECTION 7. Contribution . If the indemnification provided for in Section 6 hereof is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such indemnified party, as incurred, (i) in such proportion as is appropriate to reflect the relative benefits received by the Delek Parties, on the one hand, and the Underwriters, on the other hand, from the offering of the Units pursuant to this Agreement or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Delek Parties, on the one hand, and of the Underwriters, on the other hand, in connection with the statements or omissions, or in connection with any violation of the nature referred to in Section 6(e) hereof, which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations.

 

30


The relative benefits received by the Delek Parties, on the one hand, and the Underwriters, on the other hand, in connection with the offering of the Units pursuant to this Agreement shall be deemed to be in the same respective proportions as the total net proceeds from the offering of the Units pursuant to this Agreement (before deducting expenses) received by the Partnership, on the one hand, and the total underwriting discount received by the Underwriters, on the other hand, in each case as set forth on the cover of the Prospectus, bear to the aggregate initial public offering price of the Units as set forth on the cover of the Prospectus.

The relative fault of the Delek Parties, on the one hand, and the Underwriters, on the other hand, shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Delek Parties or by the Underwriters and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission or any violation of the nature referred to in Section 6(e) hereof.

The Delek Parties and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 7. The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an indemnified party and referred to above in this Section 7 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission.

Notwithstanding the provisions of this Section 7, no Underwriter shall be required to contribute any amount in excess of the underwriting commissions received by such Underwriter in connection with the Units underwritten by it and distributed to the public.

No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

For purposes of this Section 7, each person, if any, who controls an Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act and each Underwriter’s Affiliates and selling agents shall have the same rights to contribution as such Underwriter, and each director of the General Partner, each officer of the General Partner who signed the Registration Statement, and each person, if any, who controls the Delek Parties within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as the Delek Parties. The Underwriters’ respective obligations to contribute pursuant to this Section 7 are several in proportion to the number of Firm Units set forth opposite their respective names in Schedule A hereto and not joint.

SECTION 8. Representations, Warranties and Agreements to Survive . All representations, warranties and agreements contained in this Agreement or in certificates of officers of the Delek Parties submitted pursuant hereto, shall remain operative and in full force and effect regardless of (i) any investigation made by or on behalf of any Underwriter or its Affiliates or selling agents, any person

 

31


controlling any Underwriter, its officers or directors or any person controlling the Delek Parties and (ii) delivery of and payment for the Units.

SECTION 9. Termination of Agreement .

(a) Termination . The Representatives may terminate this Agreement, by notice to the Partnership, at any time at or prior to the Closing Time (i) if there has occurred any material adverse change in the financial markets in the United States or the international financial markets, any outbreak of hostilities or escalation thereof or other calamity or crisis or any change or development involving a prospective change in national or international political, financial or economic conditions, in each case the effect of which is such as to make it, in the judgment of the Representatives, impracticable or inadvisable to proceed with the completion of the offering or to enforce contracts for the sale of the Units, (ii) if trading in the Units of the Partnership has been suspended or materially limited by the Commission or the NYSE, (iii) if trading generally on the NYSE or in the Nasdaq Global Market has been suspended or materially limited, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices have been required, by any of said exchanges or by order of the Commission, FINRA or any other governmental authority, (iv) a material disruption has occurred in commercial banking or securities settlement or clearance services in the United States or with respect to Clearstream or Euroclear systems in Europe, or (v) if a banking moratorium has been declared by either Federal or New York authorities.

(b) Liabilities . If this Agreement is terminated pursuant to this Section, such termination shall be without liability of any party to any other party except as provided in Section 4 hereof, and provided further that Sections 6, 7, 14 and 15 shall survive such termination and remain in full force and effect.

SECTION 10. Default by One or More of the Underwriters . If one or more of the Underwriters shall fail at the Closing Time or a Date of Delivery to purchase the Units which it or they are obligated to purchase under this Agreement (the “ Defaulted Units ”), the Representatives shall have the right, within 24 hours thereafter, to make arrangements for one or more of the non-defaulting Underwriters, or any other underwriters, to purchase all, but not less than all, of the Defaulted Units in such amounts as may be agreed upon and upon the terms herein set forth; if, however, the Representatives shall not have completed such arrangements within such 24-hour period, then:

(i) if the number of Defaulted Units does not exceed 10% of the number of Units to be purchased on such date, each of the non-defaulting Underwriters shall be obligated, severally and not jointly, to purchase the full amount thereof in the proportions that their respective underwriting obligations hereunder bear to the underwriting obligations of all non-defaulting Underwriters, or

(ii) if the number of Defaulted Units exceeds 10% of the number of Units to be purchased on such date, the remaining Underwriters shall have the right to purchase all, but shall not be under any obligation to purchase any of the Defaulted Units and if such non-defaulting Underwriters do not elect to purchase all the Defaulted Units, this Agreement or, with respect to any Date of Delivery which occurs after the Closing Time, the obligation of the Underwriters to purchase, and the Partnership to sell, the Option Units to be purchased and sold on such Date of Delivery, shall terminate without liability on the part of any non-defaulting Underwriter.

No action taken pursuant to this Section shall relieve any defaulting Underwriter from liability in respect of its default.

 

32


In the event of any such default which does not result in a termination of this Agreement or, in the case of a Date of Delivery which is after the Closing Time, which does not result in a termination of the obligation of the Underwriters to purchase and the Partnership to sell the relevant Option Units, as the case may be, either the (i) Representatives or (ii) the Partnership shall have the right to postpone the Closing Time or the relevant Date of Delivery, as the case may be, for a period not exceeding seven days in order to effect any required changes in the Registration Statement, the General Disclosure Package or the Prospectus or in any other documents or arrangements. As used herein, the term “Underwriter” includes any person substituted for an Underwriter under this Section 10.

SECTION 11. Notices . All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to the Representatives shall be directed to Merrill Lynch at One Bryant Park, New York, New York 10036, attention of Syndicate Department (facsimile: (646) 855-3073), with a copy to ECM Legal (facsimile: (212) 230-8730) and to Barclays Capital Inc. at 745 Seventh Avenue, New York, New York 10019, attention of [ ]; notices to the Delek Parties shall be directed to them at 7102 Commerce Way, Brentwood, Tennessee 37027, attention of Kent B. Thomas.

SECTION 12. USA Patriot Act . In accordance with the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), the Underwriters are required to obtain, verify and record information that identifies their respective clients, including the Partnership, which information may include the name and address of their respective clients, as well as other information that will allow the Underwriters to properly identify their respective clients.

SECTION 13. No Advisory or Fiduciary Relationship . Each of the Partnership Parties acknowledges and agrees that (a) the purchase and sale of the Units pursuant to this Agreement, including the determination of the initial public offering price of the Units and any related discounts and commissions, is an arm’s-length commercial transaction between the Delek Parties, on the one hand, and the several Underwriters, on the other hand, (b) in connection with the offering of the Units and the process leading thereto, each Underwriter is and has been acting solely as a principal and is not the agent or fiduciary of the Delek Parties, any of their subsidiaries or their respective stockholders, creditors, employees or any other party, (c) no Underwriter has assumed or will assume an advisory or fiduciary responsibility in favor of the Delek Parties with respect to the offering of the Units or the process leading thereto (irrespective of whether such Underwriter has advised or is currently advising the Delek Parties or any of their subsidiaries on other matters) and no Underwriter has any obligation to the Delek Parties with respect to the offering of the Units except the obligations expressly set forth in this Agreement, (d) the Underwriters and their respective affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Delek Parties and (e) the Underwriters have not provided any legal, accounting, regulatory or tax advice with respect to the offering of the Units and the Delek Parties have consulted their own respective legal, accounting, regulatory and tax advisors to the extent they deemed appropriate.

SECTION 14. Parties . This Agreement shall inure to the benefit of and be binding upon the Underwriters and the Delek Parties and their respective successors. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, firm or corporation, other than the Underwriters and the Delek Parties and their respective successors and the controlling persons and officers and directors referred to in Sections 6 and 7 and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. This Agreement and all conditions and provisions hereof are intended to be for the sole and exclusive benefit of the Underwriters and the Delek Parties and their respective successors, and said controlling persons and officers and directors and their heirs and legal representatives, and for the benefit of no other

 

33


person, firm or corporation. No purchaser of Units from any Underwriter shall be deemed to be a successor by reason merely of such purchase.

SECTION 15. No Trial by Jury . The Delek Parties (on its behalf and, to the extent permitted by applicable law, on behalf of its stockholders and affiliates) and each of the Underwriters hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.

SECTION 16. GOVERNING LAW . THIS AGREEMENT AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF, THE STATE OF NEW YORK WITHOUT REGARD TO ITS CHOICE OF LAW PROVISIONS.

SECTION 17. Consent to Jurisdiction; Waiver of Immunity . Any legal suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated hereby (“ Related Proceedings ”) shall be instituted in (i) the federal courts of the United States of America located in the City and County of New York, Borough of Manhattan or (ii) the courts of the State of New York located in the City and County of New York, Borough of Manhattan (collectively, the “ Specified Courts ”), and each party irrevocably submits to the exclusive jurisdiction (except for proceedings instituted in regard to the enforcement of a judgment of any such court (a “ Related Judgment ”), as to which such jurisdiction is non-exclusive) of such courts in any such suit, action or proceeding. Service of any process, summons, notice or document by mail to such party’s address set forth above shall be effective service of process for any suit, action or other proceeding brought in any such court. The parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or other proceeding in the Specified Courts and irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such suit, action or other proceeding brought in any such court has been brought in an inconvenient forum.

SECTION 18. TIME . TIME SHALL BE OF THE ESSENCE OF THIS AGREEMENT. EXCEPT AS OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.

SECTION 19. Counterparts . This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same Agreement.

SECTION 20. Effect of Headings . The Section headings herein are for convenience only and shall not affect the construction hereof.

 

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If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Delek Parties a counterpart hereof, whereupon this instrument, along with all counterparts, will become a binding agreement among the Underwriters and the Delek Parties in accordance with its terms.

 

Very truly yours,
DELEK US HOLDINGS, INC.
By:    
  Name:
  Title:

 

LION OIL COMPANY
By:    
  Name:
  Title:

 

DELEK MARKETING & SUPPLY, INC.
By:    
  Name:
  Title:

 

 

DELEK LOGISTICS PARTNERS, LP
By:   Delek Logistics GP, LLC its general partner
By:    
  Name:
  Title:

 

DELEK LOGISTICS GP, LLC
By:    
  Name:
  Title:

 

35


CONFIRMED AND ACCEPTED,

as of the date first above written:

MERRILL LYNCH, PIERCE, FENNER & SMITH

     INCORPORATED

BARCLAYS CAPITAL INC.

For themselves and as Representative of the

other Underwriters named in Schedule A hereto.

MERRILL LYNCH, PIERCE, FENNER & SMITH

     INCORPORATED

 

By    
  Name:
  Title:

 

BARCLAYS CAPITAL INC.
By    
  Name:
  Title:


SCHEDULE A

The initial public offering price per unit shall be $[ ].

The purchase price per unit to be paid by the several Underwriters shall be $[ ], being an amount equal to the initial public offering price set forth above less $[ ] per unit, subject to adjustment in accordance with Section 2(b) for dividends or distributions declared by the Partnership and payable on the Firm Units but not payable on the Option Units.

 

Name of Underwriter    Number of
Firm Units
 

Merrill Lynch, Pierce, Fenner & Smith

  

                     Incorporated

  

Barclays Capital Inc.

  
  

 

 

 

Total

     8,000,000  
  

 

 

 

 

Sch A-1


SCHEDULE B-1

Pricing Terms

 

1. Firm Units: 8,000,000 Common Units.

 

2. Option Units: 1,200,000 Common Units.

 

3. The initial public offering price per Common Unit: $[ ].

[Preliminary Prospectus dated [            ], 2012

[SPECIFY EACH ISSUER GENERAL USE FREE WRITING PROSPECTUS INCLUDED IN THE GENERAL DISCLOSURE PACKAGE]

 

Sch B-1


SCHEDULE B-2

Free Writing Prospectuses

 

Sch B-2


SCHEDULE C

List of Persons and Entities Subject to Lock-up

Ezra Uzi Yemin

Mark B. Cox

Assaf Ginzburg

Frederec C. Green

Harry P. Daily

Kent B. Thomas

[More to come]

 

C-1

Exhibit 10.1

CONTRIBUTION, CONVEYANCE AND ASSUMPTION

AGREEMENT

By and Among

DELEK LOGISTICS PARTNERS, LP,

DELEK LOGISTICS GP, LLC,

DELEK LOGISTICS OPERATING, LLC,

DELEK CRUDE LOGISTICS, LLC,

DELEK US HOLDINGS, INC.,

DELEK MARKETING & SUPPLY, LLC,

DELEK MARKETING & SUPPLY LP,

LION OIL COMPANY

AND

DELEK LOGISTICS SERVICES COMPANY

 

 

Dated as of November [        ], 2012


CONTRIBUTION, CONVEYANCE AND ASSUMPTION

AGREEMENT

This Contribution, Conveyance and Assumption Agreement, dated as of November [        ], 2012 (this “ Agreement ”), is by and among Delek Logistics Partners, LP, a Delaware limited partnership (the “ Partnership ”), Delek Logistics GP, LLC, a Delaware limited liability company (the “ General Partner ”), Delek Logistics Operating, LLC, a Delaware limited liability company (“ OLLC ”), Delek Crude Logistics, LLC, a Texas limited liability company (“ Crude Logistics ”), Delek US Holdings, Inc., a Delaware corporation (“ Delek US ”), Delek Marketing & Supply, LLC, a Delaware limited liability company (“ Marketing LLC ”), Delek Marketing & Supply LP, a Delaware limited partnership (“ Marketing LP ”), Lion Oil Company, an Arkansas corporation (“ Lion Oil ”), and Delek Logistics Services Company, a Delaware corporation (“ Services Company ”). The above-named entities are sometimes referred to in this Agreement each as a “ Party ” and collectively as the “ Parties .” Capitalized terms used herein shall have the meanings assigned to such terms in Article I.

RECITALS

WHEREAS , the General Partner and Delek US have formed the Partnership, pursuant to the Delaware Revised Uniform Limited Partnership Act (the “ Delaware LP Act ”), for the purpose of engaging 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 LP Act.

WHEREAS , in order to accomplish the objectives and purposes in the preceding recital, each of the following actions has been taken prior to the date hereof:

 

  1. Delek US formed the General Partner under the terms of the Delaware Limited Liability Company Act (the “ Delaware LLC Act ”) and contributed $1,000 for all of the membership interests in the General Partner.

 

  2. The General Partner and Delek US formed the Partnership under the terms of the Delaware LP Act and contributed $20 and $980, respectively, in exchange for a 2.0% general partner interest and a 98.0% limited partner interest, respectively, in the Partnership.

 

  3. The Partnership formed OLLC under the terms of the Delaware LLC Act and contributed $1,000 for all of the membership interests in OLLC.

 

  4. Delek US formed Services Company under the terms of the Delaware General Corporation Law.

 

  5. El Dorado Pipeline Company, an Arkansas corporation, converted into a Delaware limited liability company (“ El Dorado LLC ”).

 

  6. Magnolia Pipeline Company, an Arkansas corporation, converted into a Delaware limited liability company (“ Magnolia LLC ”).

 

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  7. Lion Oil Trading & Transportation, Inc., an Arkansas corporation, converted into a Texas limited liability company (“ LOTT LLC ”).

 

  8. LOTT LLC effected a multiple survivor merger in accordance with the provisions of the Texas Business Organizations Code pursuant to which (i) [SALA Gathering Systems LLC], a Texas limited liability company (“ SALA Gathering LLC ”), was formed and (ii) and the assets and liabilities of LOTT LLC were allocated between SALA Gathering LLC and LOTT LLC.

 

  9. Marketing LLC converted into a Delaware limited liability company.

 

  10. Delek US contributed its 100% membership interest in Paline Pipeline Company, LLC, a Texas limited liability company (“ Paline LLC ”), to the General Partner.

WHEREAS , concurrently with the consummation of the transactions contemplated hereby, each of the following transactions will occur at the times specified hereunder:

 

  1. Crude Logistics and Marketing LP will distribute their respective accounts receivable (“ Accounts Receivable ”) [from affiliates and third-parties] to Marketing LLC.

 

  2. The General Partner will contribute its 100% membership interest in Paline LLC to the Partnership in exchange for (A) [            ] general partner units representing a continuation of its 2.0% general partner interest in the Partnership (the “ General Partner Units ”), (B) all of the Incentive Distribution Rights of the Partnership and (C) the right to receive the General Partner Distribution.

 

  3. Lion Oil will contribute the Memphis Terminal and the Nashville Terminal and 100% of its interests in each of SALA Gathering LLC, El Dorado LLC and Magnolia LLC to the Partnership in exchange for (A) [            ] Subordinated Units representing an aggregate [            ]% limited partner interest in the Partnership and (B) [            ] Common Units representing an aggregate [            ]% limited partner interest in the Partnership.

 

  4. Marketing LLC will contribute 100% of its interest in each of Marketing LP and Delek Marketing GP, LLC, a Delaware limited liability company (“ Marketing GP ”), to the Partnership in exchange for (A) [            ] Subordinated Units representing an aggregate [            ]% limited partner interest in the Partnership, (B) [            ] Common Units representing an aggregate [            ]% limited partner interest in the Partnership; (C) the right to receive the Borrowed Funds Distribution; (D) the right to receive the Marketing Distribution and (D) the right to receive the Deferred Issuance and Distribution. The Partnership will receive its 100% interest in each of Marketing LP and Marketing GP subject to (i) the working capital accounts payable of Marketing LP and Marketing GP of $[            ] (the “ Working Capital Borrowings ”) and (ii) indebtedness of $[            ] under the Existing Credit Agreement (the “ Existing Credit Agreement Debt ”).

 

  5. The Partnership will issue [            ] Common Units representing an aggregate [            ]% limited partner interest in the Partnership to the public in exchange for the contribution by the public, through the Underwriters, to the Partnership of gross proceeds of $[            ].

 

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  6. The Partnership will contribute the Memphis Terminal and the Nashville Terminal and 100% interests in each of SALA Gathering LLC, El Dorado LLC, Magnolia LLC, Paline LLC, Marketing LP and Marketing GP to OLLC.

 

  7. The Partnership will borrow the Borrowed Funds under the Credit Agreement, and Marketing LLC will guarantee such borrowings.

 

  8. The Partnership will distribute the Borrowed Funds to Marketing LLC (the “ Borrowed Funds Distribution ”), and Marketing LLC will loan the Borrowed Funds to Delek US and pledge the Note to the lenders under the Credit Agreement as security for its guarantee of such debt and agree to pledge any payment with respect to or proceeds from the sale of the Note in a cash collateralized account to secure its guarantee.

 

  9. The Partnership will use the proceeds from the Offering to (A) pay transaction expenses, estimated to be approximately $[            ] (excluding the underwriting discounts and the Structuring Fee); (B) pay the underwriting discounts; (C) pay the Structuring Fee to Merrill Lynch, Pierce, Fenner & Smith Incorporated and Barclays Capital Inc.; (D) distribute $[            ] to the General Partner (the “ General Partner Distribution ”) and $[            ] to Marketing LLC (the “ Marketing Distribution ”); (E) retire the Existing Credit Agreement Debt; and (E) replace the working capital lost in the distribution of Accounts Receivable to Marketing LLC.

 

  10. Delek US will contribute to Services Company, its 100% membership interest in the General Partner.

WHEREAS , the stockholders, members or partners of the Parties have taken all corporate, limited liability company action and partnership, as the case may be, required to approve the transactions contemplated by this Agreement.

NOW, THEREFORE , in consideration of the mutual covenants, representations, warranties and agreements herein contained, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

The terms set forth below in this Article I shall have the meanings ascribed to them below or in the part of this Agreement referred to below:

Accounts Receivable ” has the meaning assigned to such term in the recitals.

Agreement ” has the meaning assigned to such term in the preamble.

Big Sandy ” means Delek Marketing—Big Sandy, LLC, a Texas limited liability company.

Borrowed Funds ” has the meaning set forth in Section 2.8.

 

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Borrowed Funds Distribution ” has the meaning set forth in the recitals.

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.

Commission ” means the U.S. Securities and Exchange Commission.

Common Units ” has the meaning assigned to such term in the Partnership Agreement.

Credit Agreement ” means the revolving credit agreement among the Partnership, OLLC, Marketing GP, Marketing LP, Crude Logistics, Big Sandy, Magnolia LLC, El Dorado LLC, SALA Gathering LLC, and Paline LLC, as co-borrowers, Fifth Third Bank, as administrative agent, and the lenders party thereto, substantially in the form filed as an exhibit to the Registration Statement.

Crude Logistics ” has the meaning assigned to such term in the preamble.

Deferred Issuance and Distribution ” has the meaning assigned to such term in the Partnership Agreement.

Delaware LLC Act ” has the meaning assigned to such term in the recitals.

Delaware LP Act ” has the meaning assigned to such term in the recitals.

Delek US ” has the meaning assigned to such term in the preamble.

Effective Time ” means immediately prior to the closing of the initial public offering pursuant to the Underwriting Agreement.

El Dorado LLC ” has the meaning assigned to such term in the recitals.

Existing Credit Agreement ” means the Amended and Restated Credit Agreement dated December 19, 2007 by and between Marketing LP and various financial institutions from time to time party to the agreement, as lenders, and Fifth Third Bank, as administrative agent and L/C issuer, as amended.

Existing Credit Agreement Debt ” has the meaning assigned to such term in the recitals.

General Partner ” has the meaning assigned to such term in the preamble.

General Partner Distribution ” has the meaning assigned to such term in the recitals.

General Partner Units ” has the meaning assigned to such term in the recitals.

Incentive Distribution Rights ” has the meaning assigned to such term in the Partnership Agreement.

Lion Oil ” has the meaning assigned to such term in the preamble.

 

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LOTT LLC ” has the meaning assigned to such term in the recitals.

Magnolia LLC ” has the meaning assigned to such term in the recitals.

Marketing Distribution ” has the meaning assigned to such term in the recitals.

Marketing GP ” has the meaning assigned to such term in the recitals.

Marketing LLC ” has the meaning assigned to such term in the preamble.

Marketing LP ” has the meaning assigned to such term in the recitals.

Memphis Terminal ” means the light products terminal located in Memphis, Tennessee, currently owned by Lion Oil and used to support Lion Oil’s El Dorado, Arkansas refinery.

Nashville Terminal ” means the light products terminal located in Nashville, Tennessee, currently owned by Lion Oil and used to provide terminalling services to independent third parties and Delek US’s retail segment.

Note ” has the meaning assigned to such term in Section 2.9.

Offering ” means the initial public offering of the Partnership’s Common Units.

OLLC ” has the meaning assigned to such term in the preamble.

Option Closing Date ” has the meaning assigned to such term in the Partnership Agreement.

Option Period ” shall mean the period from the date hereof through [                    ], 2012.

Over-Allotment Option ” has the meaning assigned to such term in the Partnership Agreement.

Paline LLC ” has the meaning assigned to such term in the recitals.

Partnership Agreement ” means the First Amended and Restated Agreement of Limited Partnership of Delek Logistics Partners, LP dated as of [                    ], 2012.

Partnership ” has the meaning assigned to such term in the preamble.

Party ” and “ Parties ” has the meaning assigned to such term in the preamble.

Registration Statement ” means the Registration Statement on Form S-1 filed with the Commission (Registration No. 333-182631), as amended and effective at the Effective Time.

SALA Gathering LLC ” has the meaning assigned to such term in the recitals.

Services Company ” has the meaning assigned to such term in the recitals.

 

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Structuring Fee ” means a fee equal to [            ]% of the gross proceeds of the sale of Common Units pursuant to the Underwriting Agreement, including pursuant to any exercise of the Over-Allotment Option.

Subordinated Units ” has the meaning assigned to such term in the Partnership Agreement.

Treasury Regulation ” means the United States Treasury regulations promulgated under the Code.

Underwriters ” means those underwriters listed in the Underwriting Agreement.

Underwriting Agreement ” means that certain Underwriting Agreement between Merrill Lynch and Barclays Capital Inc., as representatives of the Underwriters, the General Partner, the Partnership, Delek US, Lion Oil and Marketing LLC dated as of [                    ], 2012.

Working Capital Borrowings ” has the meaning assigned to such term in the recitals.

ARTICLE II

CONTRIBUTION, ACKNOWLEDGEMENTS AND DISTRIBUTIONS

The following shall be completed immediately following the Effective Time in the order set forth herein:

Section 2.1 Conveyance by Crude Logistics of its Accounts Receivable to Marketing LLC . Crude Logistics hereby grants, contributes, bargains, conveys, assigns, transfers, sets over and delivers to Marketing LLC, its successors and its assigns, for its and their own use forever, all right, title and interest in and to its Accounts Receivable, and Marketing LLC hereby accepts such Accounts Receivable.

Section 2.2 Conveyance by Marketing LP of its Accounts Receivable to Marketing LLC . Marketing LP hereby grants, contributes, bargains, conveys, assigns, transfers, sets over and delivers to Marketing LLC, its successors and its assigns, for its and their own use forever, all right, title and interest in and to its Accounts Receivable, and Marketing LLC hereby accepts such Accounts Receivable.

Section 2.3 Payment and Contribution of Cash by the Public Through the Underwriters . The Parties acknowledge that the Partnership is undertaking the Offering and the public, through the Underwriters will, pursuant to the Underwriting Agreement, agree to make a capital contribution to the Partnership of approximately $[            ] in cash ($[            ] net to the Partnership after the underwriting discount of $[            ] and the Structuring Fee payable to Merrill Lynch, Pierce, Fenner & Smith Incorporated and Barclays Capital Inc.) in exchange for the issuance and sale of [            ] Common Units representing an aggregate [            ]% limited partner interest in the Partnership.

Section 2.4 Contribution by the General Partner of its 100% Membership Interest in Paline LLC to the Partnership . The General Partner hereby grants, contributes, bargains, conveys, assigns, transfers, sets over and delivers to the Partnership, its successors and

 

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its assigns, for its and their own use forever, all right, title and interest in and to its 100% membership interest in Paline LLC in exchange for (A) the General Partner Units, (B) the Incentive Distribution Rights and (C) the right to receive the General Partner Distribution, and the Partnership hereby accepts the 100% membership interest in Paline LLC.

Section 2.5 Contribution by Lion Oil of the Memphis Terminal and the Nashville Terminals and 100% membership interests in SALA Gathering LLC, El Dorado LLC and Magnolia LLC to the Partnership . Lion Oil hereby grants, contributes, bargains, conveys, assigns, transfers, sets over and delivers to the Partnership, its successors and its assigns, for its and their own use forever, all right, title and interest in and to the Memphis Terminal and Nashville Terminal and its 100% membership interest in each of SALA Gathering LLC, El Dorado LLC and Magnolia LLC, in exchange for (A) [            ] Subordinated Units representing an aggregate [            ]% limited partner interest in the Partnership and (B) [            ] Common Units representing an aggregate [            ]% limited partner interest in the Partnership, and the Partnership hereby accepts the Memphis Terminal and the Nashville Terminal and 100% membership interests in each of SALA Gathering LLC, El Dorado LLC and Magnolia LLC.

Section 2.6 Contribution by Marketing LLC of 100% of its interests in Marketing LP and Marketing GP to the Partnership . Marketing LLC hereby grants, contributes, bargains, conveys, assigns, transfers, sets over and delivers to the Partnership, its successors and its assigns, for its and their own use forever, all right, title and interest in and to 100% of its interest in each of Marketing LP and Marketing GP, in exchange for (A) [            ] Subordinated Units representing an aggregate [            ]% limited partner interest in the Partnership, (B) [            ] Common Units representing an aggregate [            ]% limited partner interest in the Partnership, (C) the right to receive the Marketing Distribution, (D) the right to receive the Borrowed Funds Distribution and (E) the right to receive the Deferred Issuance and Distribution, and the Partnership hereby accepts a 100% interest in each of Marketing LP and Marketing GP. The Partnership acknowledges that its 100% interest in each of Marketing LP and Marketing LP shall be subject to the Working Capital Borrowings and the Existing Credit Agreement Debt.

Section 2.7 Contribution by the Partnership of the Memphis Terminal and Nashville Terminal and 100% interests in each of SALA Gathering LLC, El Dorado LLC, Magnolia LLC, Paline LLC, Marketing LP and Marketing GP to OLLC . The Partnership hereby grants, contributes, bargains, conveys, assigns, transfers, sets over and delivers to OLLC, its successors and its assigns, for its and their own use forever, the Memphis Terminal and Nashville Terminal and 100% interests in each of SALA Gathering LLC, El Dorado LLC, Magnolia LLC, Paline LLC, Marketing LP and Marketing GP, and OLLC hereby accepts the Memphis Terminal and Nashville Terminal and 100% interests in each of SALA Gathering LLC, El Dorado LLC, Magnolia LLC, Paline LLC, Marketing LP and Marketing GP.

Section 2.8 Incurrence of Indebtedness and Guarantee by Marketing LLC . The Parties acknowledge that (a) the Partnership (i) is incurring $[            ] million in indebtedness pursuant to its Credit Agreement (the “ Borrowed Funds ”) and (ii) Marketing LLC is guaranteeing the Borrowed Funds and pledging the Note as security for the guarantee.

Section 2.9 Uses of Borrowed Funds . The Partnership is distributing the Borrowed Funds to Marketing LLC. Marketing LLC is loaning the Borrowed Funds to Delek US and

 

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Delek US is delivering to Marketing LLC a note evidencing the obligation (the “ Note ”). Marketing LLC is pledging the Note to the lenders under the Credit Agreement as security for its guarantee of the Borrowed Funds with an agreement to pledge any payments with respect to or proceeds from the sale of the Note in a cash collateralized account to secure such guarantee.

Section 2.10 Use of Equity Proceeds . The Parties acknowledge (a) the payment by the Partnership of transaction expenses in the amount of approximately $[                    ] (excluding the underwriting discounts and the Structuring Fee); (b) the distribution to the General Partner of the General Partner Distribution and to Marketing LLC of the Marketing Distribution; (c) the retirement of the Existing Credit Agreement Debt; and (d) the replacement of the working capital lost in the distribution of Accounts Receivable to Marketing LLC.

Section 2.11 Payment of the Structuring Fee . The Partnership agrees to pay Merrill Lynch, Pierce, Fenner & Smith Incorporated and Barclays Capital Inc. the applicable Structuring Fee.

Section 2.12 Redemption of the General Partner’s and Delek US’s Initial Interests . For and in consideration of the payment by the Partnership of $20 to the General Partner and $980 to Delek US as a refund of their respective initial contribution to the Partnership, along with 2.0% and 98.0%, respectively, of any interest or profit that resulted from the investment or other use of such capital contribution, the Partnership hereby redeems all of the initial interests of the General Partner and Delek US.

ARTICLE III

ADDITIONAL TRANSACTIONS

Section 3.1 Contribution of General Partner to Services Company . Effective immediately after the transactions described in Article II, Delek US hereby grants, contributes, bargains, conveys, assigns, transfers, sets over and delivers to Services Company, its successors and its assigns, for its and their own use forever, all right, title and interest in and to its 100% membership interest in the General Partner, and Services Company hereby accepts a 100% membership interest in the General Partner.

Section 3.2 Purchase of Additional Common Units . If the Over-Allotment Option is exercised in whole or in part, the Underwriters will contribute additional cash to the Partnership in exchange for up to an additional [            ] Common Units on the basis of the initial public offering price per Common Unit set forth in the Registration Statement less the amount of underwriting discounts and applicable Structuring Fee, and the Partnership shall make a cash distribution to Delek US equal to the amount contributed by the Underwriters to the Partnership on each such Option Closing Date.

Section 3.3 Issuance of Additional Common Units . Upon the expiration of the Option Period, the Partnership will issue to Marketing LLC a number of additional Common Units that is equal to the excess, if any, of (x) [            ] over (y) the aggregate number of Common Units, if any, actually purchased by and issued to the Underwriters pursuant to each exercise of the Over-Allotment Option.

 

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ARTICLE IV

FURTHER ASSURANCES

From time to time after the Effective Time, and without any further consideration, the Parties agree to execute, acknowledge and deliver all such additional deeds, assignments, bills of sale, conveyances, instruments, notices, releases, acquittances and other documents, and to do all such other acts and things, all in accordance with applicable law, as may be necessary or appropriate (i) more fully to assure that the applicable Parties own all of the properties, rights, titles, interests, estates, remedies, powers and privileges granted by this Agreement, or which are intended to be so granted, (ii) more fully and effectively to vest in the applicable Parties and their respective successors and assigns beneficial and record title to the interests contributed and assigned by this Agreement or intended to be so and (iii) more fully and effectively to carry out the purposes and intent of this Agreement.

ARTICLE V

EFFECTIVE TIME

Notwithstanding anything contained in this Agreement to the contrary, none of the provisions of Article II of this Agreement shall be operative or have any effect until the Effective Time, at which time all the provisions of Article II of this Agreement shall be effective and operative in accordance with Article VII, without further action by any Party hereto.

ARTICLE VI

COVENANTS

Section 6.1 Debt Covenant.

The Parties intend that (i) the distribution of the Borrowed Funds to Marketing LLC shall qualify as a “debt-financed transfer” under Treasury Regulations Section 1.707-5(b), and (ii) Marketing LLC’s share of the Partnership’s liabilities under the Credit Agreement with respect to the Borrowed Funds under Sections 1.752-2 and 1.707-5(a)(2)(i) of the Treasury Regulations shall be the entire amount of the Partnership’s liabilities under the Credit Agreement with respect to the Borrowed Funds. For purposes of this Section 6.1, Treasury Regulation Section 1.707-3(c) shall be applied by substituting the phrase “four-year” for the phrase “two-year” in each place the latter phrase appears therein. The Parties agree to act at all times in a manner consistent with the foregoing provisions of this Section 6.1, except with the prior written consent of Marketing LLC. For a period of four (4) years, the Partnership will not make any payment that would reduce the outstanding balance of the Partnership’s liabilities under the Credit Agreement below the amount of the Borrowed Funds, other than with the proceeds of a successor debt that (i) qualifies as, and is treated by the Partnership as, a continuation of the debt repaid under Section 1.707-5(c) of the Treasury Regulations, and (ii) is treated as allocable entirely to Marketing LLC under the principles of the debt-financed transfer exception to the disguised sale rules provided in Section 1.707-5(b) of the Treasury Regulations.

Section 6.2 Net Worth of Marketing LLC.

Marketing LLC covenants and agrees that it will, for a period of four years, maintain a net value (as determined pursuant to the principles of Treasury Regulation Section 1.752-2(k)(2))

 

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that is not less than the principal amount of the Partnership’s outstanding indebtedness immediately after the Effective Time that constitute recourse liabilities of Marketing LLC (within the meaning of Treasury Regulation Section 1.752-2), which amount will be reduced by principal payments by the Partnership on such indebtedness and which amount will not be increased by any new borrowings by the Partnership.

ARTICLE VII

MISCELLANEOUS

Section 7.1 Order of Completion of Transactions . The transactions provided for in Article II of this Agreement shall be completed immediately following the Effective Time in the order set forth therein. Following the completion of the transactions provided for in Article II, the transactions provided for in Article III, if they occur, shall be completed.

Section 7.2 Headings; References; Interpretation . All Article and Section headings in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any of the provisions hereof. The words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole, including, without limitation, all Schedules and Exhibits attached hereto, and not to any particular provision of this Agreement. All references herein to Articles, Sections, Schedules and Exhibits shall, unless the context requires a different construction, be deemed to be references to the Articles and Sections of this Agreement and the Schedules and Exhibits attached hereto, and all such Schedules and Exhibits attached hereto are hereby incorporated herein and made a part hereof for all purposes. All personal pronouns used in this Agreement, whether used in the masculine, feminine or neuter gender, shall include all other genders, and the singular shall include the plural and vice versa. The use herein of the word “including” following any general statement, term or matter shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not non-limiting language (such as “without limitation”, “but not limited to”, or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that could reasonably fall within the broadest possible scope of such general statement, term or matter.

Section 7.3 Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and assigns.

Section 7.4 No Third Party Rights . The provisions of this Agreement are intended to bind the Parties as to each other and are not intended to and do not create rights in any other person or confer upon any other person any benefits, rights or remedies, and no person is or is intended to be a third party beneficiary of any of the provisions of this Agreement.

Section 7.5 Counterparts . This Agreement may be executed in any number of counterparts with the same effect as if all signatory Parties had signed the same document. All counterparts shall be construed together and shall constitute one and the same instrument.

 

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Section 7.6 Choice of Law . This Agreement shall be subject to and governed by the laws of the Commonwealth of Pennsylvania. Each Party hereby submits to the jurisdiction of the state and federal courts in the Commonwealth of Pennsylvania and to venue in the state and federal courts in Allegheny County, Pennsylvania.

Section 7.7 Severability . If any of the provisions of this Agreement are held by any court of competent jurisdiction to contravene, or to be invalid under, the laws of any political body having jurisdiction over the subject matter hereof, such contravention or invalidity shall not invalidate the entire Agreement. Instead, this Agreement shall be construed as if it did not contain the particular provisions or provisions held to be invalid and an equitable adjustment shall be made and necessary provision added so as to give effect to the intention of the Parties as expressed in this Agreement at the time of execution of this Agreement.

Section 7.8 Amendment or Modification . This Agreement may be amended or modified from time to time only by the written agreement of all the Parties. Each such instrument shall be reduced to writing and shall be designated on its face as an amendment to this Agreement.

Section 7.9 Integration . This Agreement and the instruments referenced herein supersede all previous understandings or agreements among the Parties, whether oral or written, with respect to the subject matter of this Agreement and such instruments. This Agreement and such instruments contain the entire understanding of the Parties with respect to the subject matter hereof and thereof. No understanding, representation, promise or agreement, whether oral or written, is intended to be or shall be included in or form part of this Agreement unless it is contained in a written amendment hereto executed by the parties hereto after the date of this Agreement.

Section 7.10 Deed; Bill of Sale; Assignment . To the extent required and permitted by applicable law, this Agreement shall also constitute a “deed,” “bill of sale” or “assignment” of the assets and interests referenced herein.

 

 

 

[ Signature Pages Follow ]

 

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IN WITNESS WHEREOF , the parties to this Agreement have caused it to be duly executed as of the date first above written.

 

DELEK LOGISTICS PARTNERS, LP
By:      

Delek Logistics GP, LLC,

its general partner

  By:        
   

Name:

Title:

DELEK LOGISTICS GP, LLC
  By:        
   

Name:

Title:

DELEK LOGISTICS OPERATING, LLC
  By:        
   

Name:

Title:

DELEK CRUDE LOGISTICS, LLC
  By:        
   

Name:

Title:

DELEK US HOLDINGS, INC.
  By:        
   

Name:

Title:

 

 

 

Signature Page to Contribution, Conveyance and Assumption Agreement


LION OIL COMPANY
  By:        
   

Name:

Title:

DELEK MARKETING & SUPPLY LLC
  By:        
   

Name:

Title:

DELEK MARKETING & SUPPLY, LP
By:      

Delek Marketing GP, LLC

its general partner

  By:        
   

Name:

Title:

DELEK LOGISTICS SERVICES COMPANY
  By:        
   

Name:

Title:

 

 

 

Signature Page to Contribution, Conveyance and Assumption Agreement

Exhibit 10.2

OMNIBUS AGREEMENT

among

DELEK US HOLDINGS, INC.,

DELEK REFINING, LTD.,

LION OIL COMPANY,

DELEK LOGISTICS PARTNERS, LP,

PALINE PIPELINE COMPANY, LLC,

SALA GATHERING SYSTEMS, LLC,

MAGNOLIA PIPELINE COMPANY, LLC,

EL DORADO PIPELINE COMPANY, LLC,

DELEK CRUDE LOGISTICS, LLC,

DELEK MARKETING-BIG SANDY, LLC,

DELEK LOGISTICS OPERATING, LLC

and

DELEK LOGISTICS GP, LLC


Exhibit 10.2

OMNIBUS AGREEMENT

This OMNIBUS AGREEMENT (“ Agreement ”) is entered into on, and effective as of, the Closing Date (as defined herein) among Delek US Holdings, Inc., a Delaware corporation (“ Delek US ”), on behalf of itself and the other Delek Entities (as defined herein), Delek Refining, Ltd., a Texas Limited Partnership (“ Delek Refining ”), Lion Oil Company, an Arkansas corporation (“ Lion Oil ”), Delek Logistics Partners, LP, a Delaware limited partnership (the “ Partnership ”), Paline Pipeline Company, LLC, a Texas limited liability company (“ Paline ”), SALA Gathering Systems, LLC, a Texas limited liability company (“ SALA ”), Magnolia Pipeline Company, LLC, a Delaware limited liability company (“ Magnolia ”), El Dorado Pipeline Company, LLC, a Delaware limited liability company (“ El Dorado ”), Delek Crude Logistics, LLC, a Texas limited liability company (“ Crude Logistics ”), Delek Marketing-Big Sandy, LLC, a Texas limited liability company (“ Marketing-Big Sandy ”), Delek Logistics Operating, LLC, a Delaware limited liability company (“ OpCo ”), and Delek Logistics GP, LLC, a Delaware limited liability company (the “ General Partner ”). The above-named entities are sometimes referred to in this Agreement each as a “ Party ” and collectively as the “ Parties .”

RECITALS:

 

1. The Parties desire by their execution of this Agreement to evidence their understanding, as more fully set forth in Article II, with respect to certain business opportunities that the Delek Entities (as defined herein) will not engage in for so long as the Partnership is an Affiliate of Delek US.

 

2. The Parties desire by their execution of this Agreement to evidence their understanding, as more fully set forth in Article III, with respect to certain indemnification obligations of the Parties to each other.

 

3. The Parties desire by their execution of this Agreement to evidence their understanding, as more fully set forth in Article IV, with respect to the amount to be paid by the Partnership for the centralized corporate services to be performed by the General Partner and its Affiliates (as defined herein) for and on behalf of the Partnership Group (as defined herein).

 

4. The Parties desire by their execution of this Agreement to evidence their understanding, as more fully set forth in Article V, with respect to certain operating, maintenance capital and other expenditures to be reimbursed by Delek US to the Partnership Group.

 

5. The Parties desire by their execution of this Agreement to evidence their understanding, as more fully set forth in Article VI, with respect to the Partnership Group’s right of first offer with respect to the ROFO Assets (as defined herein).

 

6. The Parties desire by their execution of this Agreement to evidence their understanding, as more fully set forth in Article VII, with respect to Delek US’ right of first refusal with respect to certain Assets (as defined herein).

 

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7. The Parties desire by their execution of this Agreement to evidence their understanding, as more fully set forth in Article VIII, with respect to the granting of a license from Delek US to the Partnership Group and the General Partner.

In consideration of the premises and the covenants, conditions, and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS

1.1 Definitions . As used in this Agreement, the following terms shall have the respective meanings set forth below:

Acquisition Proposal ” is defined in Section 7.2(a)

Administrative Fee ” is defined in Section 4.1(a).

Affiliate ” is defined in the Partnership Agreement.

Annual Environmental Deductible ” is defined in Section 3.5(a).

Annual ROW Deductible ” is defined in Section 3.5(a).

Assets ” means all gathering pipelines, transportation pipelines, storage tanks, trucks, truck racks, terminal facilities, offices and related equipment, real estate and other assets, or portions thereof, conveyed, contributed or otherwise transferred or intended to be conveyed, contributed or otherwise transferred pursuant to the Contribution Agreement to any member of the Partnership Group, or owned by, leased by or necessary for the operation of the business, properties or assets of any member of the Partnership Group, prior to or as of the Closing Date.

Board of Directors ” means for any Person the board of directors or other governing body of such Person.

Closing Date ” means [                    ] , 2012.

Conflicts Committee ” is defined in the Partnership Agreement.

Contribution Agreement ” means that certain Contribution, Conveyance and Assumption Agreement, dated as of the Closing Date, among the General Partner, the Partnership, Delek US and certain other Delek Entities, together with the additional conveyance documents and instruments contemplated or referenced thereunder.

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

Covered Environmental Losses ” is defined in Section 3.1(a).

 

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Delek Entities ” means Delek US and any Person controlled, directly or indirectly, by Delek US other than the General Partner or a member of the Partnership Group; and “ Delek Entity ” means any of the Delek Entities.

Disposition Notice ” is defined in Section 7.2(a).

Environmental Laws ” means all federal, state, and local laws, statutes, rules, regulations, orders, judgments, ordinances, codes, injunctions, decrees, Environmental Permits and other legally enforceable requirements and rules of common law now or hereafter in effect, relating to pollution or protection of human health and the environment including, without limitation, the federal Comprehensive Environmental Response, Compensation, and Liability Act, the Superfund Amendments Reauthorization Act, the Resource Conservation and Recovery Act, the Clean Air Act, the Federal Water Pollution Control Act, the Toxic Substances Control Act, the Oil Pollution Act, the Safe Drinking Water Act, the Hazardous Materials Transportation Act, and other similar federal, state or local environmental conservation and protection laws, each as amended from time to time.

Environmental Permit ” means any permit, approval, identification number, license, registration, consent, exemption, variance or other authorization required under or issued pursuant to any applicable Environmental Law.

Exchange Act ” means the Securities Exchange Act of 1934, as amended.

First ROFR Acceptance Deadline ” is defined in Section 7.2(a).

First ROFR Capacity Acceptance Deadline ” is defined in Section 7.3(a).

HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

Hazardous Substance ” means (a) any substance that is designated, defined or classified as a hazardous waste, solid waste, hazardous material, pollutant, contaminant or toxic or hazardous substance, or terms of similar meaning, or that is otherwise regulated under any Environmental Law, including, without limitation, any hazardous substance as defined under the Comprehensive Environmental Response, Compensation, and Liability Act, as amended, and (b) petroleum, oil, gasoline, natural gas, fuel oil, motor oil, waste oil, diesel fuel, jet fuel, and other refined petroleum hydrocarbons.

Identification Deadline ” means [                    ] , 2017.

Indemnified Party ” means the Partnership Group or the Delek Entities, as the case may be, in its capacity as the party entitled to indemnification in accordance with Article III.

Indemnifying Party ” means either the Partnership Group or Delek US, as the case may be, in its capacity as the party from whom indemnification may be sought in accordance with Article III.

License ” is defined in Section 8.1.

 

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Limited Partner ” is defined in the Partnership Agreement.

Losses ” means any losses, damages, liabilities, claims, demands, causes of action, judgments, settlements, fines, penalties, costs and expenses (including, without limitation, court costs and reasonable attorney’s and expert’s fees) of any and every kind or character, known or unknown, fixed or contingent.

Marks ” is defined in Section 8.1.

Name ” is defined in Section 8.1.

Offer ” is defined in Section 2.3(a).

Offer Evaluation Period ” is defined in Section 2.3(a).

Offer Price ” is defined in Section 7.2(a).

Partnership Agreement ” means the First Amended and Restated Agreement of Limited Partnership of Delek Logistics Partners, LP, dated as of the Closing Date, as such agreement is in effect on the Closing Date, to which reference is hereby made for all purposes of this Agreement.

Partnership Change of Control ” means Delek US ceases to control the general partner of the Partnership.

Partnership Group ” means the Partnership and any of its Subsidiaries, treated as a single consolidated entity.

Partnership Group Member ” means any member of the Partnership Group.

Partnership Interest ” is defined in the Partnership Agreement.

Partnership Parties ” means the Partnership, Paline, SALA, Magnolia, El Dorado, Crude Logistics, Marketing-Big Sandy and OpCo.

Party ” and “ Parties ” are defined in the introduction to this Agreement.

Permitted Exceptions ” is defined in Section 2.2.

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

Pipeline Capacity Usage Agreement ” means the Pipeline Capacity Usage Agreement dated as of June 30, 2011 between Paline and a major integrated oil company and any extensions or renewals thereof.

Proposed Shipper ” is defined in Section 7.3(a).

Proposed Transaction ” is defined in Section 6.2(a).

 

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Proposed Transferee ” is defined in Section 7.2(a).

Prudent Industry Practice ” means such practices, methods, acts, techniques, and standards as are in effect at the time in question that are consistent with the higher of (a) the standards generally followed by the United States pipeline and terminalling industries and (b) the standards applied or followed by Delek US or its Affiliates in the performance of similar tasks or projects, or by the Partnership Group or its Affiliates in the performance of similar tasks or projects.

Registration Statement ” means the Registration Statement on Form S-1 filed by the Partnership with the United States Securities and Exchange Commission (Registration No. 333-182631), as amended.

Restricted Activities ” is defined in Section 2.1.

Retained Assets ” means all gathering pipelines, transportation pipelines, storage tanks, trucks, truck racks, terminal facilities, offices and related equipment, real estate and other related assets, or portions thereof, owned by any of the Delek Entities as of the Closing Date that were not directly or indirectly conveyed, contributed or otherwise transferred to the Partnership Group pursuant to the Contribution Agreement or the other documents referred to in the Contribution Agreement.

ROFO Asset Owner ” means, with respect to a ROFO Asset, the applicable Delek Entity set forth opposite such ROFO Asset on Schedule V to this Agreement.

ROFO Assets ” means the assets listed on Schedule V to this Agreement.

ROFO Governmental Approval Deadline ” is defined in Section 6.2(c).

ROFO Notice ” is defined in Section 6.2(a).

ROFO Period ” is defined in Section 6.1(a).

ROFO Response ” is defined in Section 6.2(a).

ROFR Assets ” means any assets of the Partnership Group that serve any refinery owned, acquired or constructed by a Delek Entity, including without limitation the assets listed on Schedule VI to this Agreement.

ROFR Capacity ” is defined in Section 7.1(a).

ROFR Capacity Notice ” is defined in Section 7.3(a).

ROFR Capacity Proposal ” is defined in Section 7.3(a).

ROFR Capacity Response ” is defined in Section 7.3(a).

ROFR Governmental Approval Deadline ” is defined in Section 7.2(c).

 

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ROFR Proposal Assets ” is defined in Section 7.3(a).

ROFR Response ” is defined in Section 7.2(a).

Sale Assets ” is defined in Section 7.2(a).

Second ROFR Acceptance Deadline ” is defined in Section 7.2(a).

Second ROFR Capacity Acceptance Deadline ” is defined in Section 7.3(a).

Subject Assets ” is defined in Section 2.2(c).

Transfer ” means to, directly or indirectly, sell, assign, lease, convey, transfer or otherwise dispose of, whether in one or a series of transactions.

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, managers or other governing body of such Person.

Voting Stock ” means securities of any class of a Person entitling the holders thereof to vote on a regular basis in the election of members of the Board of Directors of such Person.

ARTICLE II

BUSINESS OPPORTUNITIES

2.1 Restricted Activities . Except as permitted by Section 2.2, the General Partner and Delek US shall be prohibited from, and Delek US shall cause each of the Delek Entities to refrain from, owning, operating, engaging in, acquiring, or investing in any business that owns or operates crude oil or refined products pipelines, terminals or storage facilities in the United States (“Restricted Activities”).

2.2 Permitted Exceptions . Notwithstanding any provision of Section 2.1 to the contrary, the Delek Entities may engage in the following activities under the following circumstances (collectively, the “Permitted Exceptions”):

(a) the ownership and/or operation of any of the Retained Assets (including replacements or expansions of the Retained Assets);

 

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(b) the acquisition, ownership or operation of any logistics asset, including, without limitation, any crude oil or refined products pipeline, terminal or storage facility, that is (i) acquired or constructed by a Delek Entity and (ii) within, substantially dedicated to, or an integral part of, any refinery owned, acquired or constructed by a Delek Entity;

(c) the acquisition, ownership or operation of any asset or group of related assets used in the activities described in Section 2.1 that are acquired or constructed by a Delek Entity after the date of this Agreement (excluding assets acquired or constructed pursuant to Section 2.2(b) other than those assets described on Schedule VII) (the “ Subject Assets ”) if:

(i) the fair market value (as determined in good faith by the Board of Directors of the Delek Entity that will own the Subject Assets) of the Subject Assets (excluding for purposes of this Section 2.2(c)(i) any Subject Assets described on Schedule VII) is less than $5.0 million at the time of such acquisition by the Delek Entity or completion of construction, as the case may be;

(ii) in the case of an acquisition or the construction of the Subject Assets (excluding for purposes of this Section 2.2(c)(ii) any Subject Assets described on Schedule VII) with a fair market value (as determined in good faith by the Board of Directors of the Delek Entity that will own the Subject Assets) equal to or greater than $5.0 million at the time of such acquisition by a Delek Entity or the completion of construction, as applicable, the Partnership has been offered the opportunity to purchase the Subject Assets in accordance with Section 2.3 and the Partnership has elected not to purchase the Subject Assets; or

(iii) the Subject Assets are described on Schedule VII;

(d) the purchase and ownership of a non-controlling interest in any publicly traded entity engaged in any Restricted Activities; and

(e) the ownership of equity interests in the General Partner and the Partnership Group.

2.3 Procedures .

(a) If a Delek Entity acquires or constructs Subject Assets as described in Section 2.2(c)(ii), then not later than six months after the consummation of the acquisition or the completion of construction by such Delek Entity of the Subject Assets, as the case may be, the Delek Entity shall notify the General Partner in writing of such acquisition or construction and offer the Partnership Group the opportunity to purchase such Subject Assets in accordance with this Section 2.3 (the “ Offer ”). The Offer shall set forth the terms relating to the purchase of the Subject Assets and, if any Delek Entity desires to utilize the Subject Assets, the Offer will also include the terms on which the Partnership Group will provide services to the Delek Entity to enable the Delek Entity to utilize the Subject Assets. As soon as practicable, but in any event within 90 days after receipt by the General Partner of such written notification (the “ Offer Evaluation Period ”), the General Partner shall notify the Delek Entity in writing that either (i) the General Partner has elected not to cause a Partnership Group Member to purchase the Subject Assets, in which event (A) the Delek Entity shall be forever free to continue to own or operate

 

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such Subject Assets, (B) Schedule V shall automatically be amended to include such Subject Assets as ROFO Assets subject to Article VI and (C) if the Delek Entity that owns such Subject Assets is not a Party hereto, such Delek Entity shall execute a joinder agreement in the form attached hereto as Exhibit A , or (ii) the General Partner has elected to cause a Partnership Group Member to purchase the Subject Assets, in which event the procedures outlined in the remainder of this Section 2.3 shall apply.

(b) If, within the Offer Evaluation Period, the Delek Entity and the General Partner are able to agree on the fair market value of the Subject Assets that are subject to the Offer and the other terms of the Offer including, without limitation, the terms, if any, on which the Partnership Group will provide services to the Delek Entity to enable the Delek Entity to utilize the Subject Assets, a Partnership Group Member shall purchase the Subject Assets for the agreed upon fair market value as soon as commercially practicable after such agreement has been reached and, if applicable, enter into an agreement with the Delek Entity to provide services in a manner consistent with the Offer.

(c) If, within the Offer Evaluation Period, the Delek Entity and the General Partner are unable to agree on the fair market value of the Subject Assets that are subject to the Offer or the other terms of the Offer including, if applicable, the terms on which the Partnership Group will provide services to the Delek Entity to enable the Delek Entity to utilize the Subject Assets, the Delek Entity and the General Partner will engage a mutually agreed upon, nationally recognized investment banking firm to determine the fair market value of the Subject Assets and any other terms on which the Partnership Group and the Delek Entity are unable to agree. The investment banking firm will determine the fair market value of the Subject Assets and any other terms on which the Partnership Group and the Delek Entity are unable to agree within 30 days of its engagement and furnish the Delek Entity and the General Partner its determination. The fees of the investment banking firm will be split equally between the Delek Entity and the Partnership Group. Once the investment banking firm has submitted its determination of the fair market value of the Subject Assets and any other terms on which the Partnership Group and the Delek Entity are unable to agree, the General Partner will have the right, but not the obligation to cause the Partnership Group to purchase the Subject Assets pursuant to the Offer, as modified by the determination of the investment banking firm. If the General Partner elects to cause the Partnership Group to purchase the Subject Assets, then the Partnership Group shall purchase the Subject Assets under the terms of the Offer, as modified by the determination of the investment banking firm as soon as commercially practicable after such determination and, if applicable, enter into an agreement with the Delek Entity to provide services in a manner consistent with the Offer, as modified by the determination of the investment banking firm.

2.4 Scope of Prohibition . Except as provided in this Article II and the Partnership Agreement, each Delek Entity shall be free to engage in any business activity, including those that may be in direct competition with any Partnership Group Member.

2.5 Enforcement . The Delek Entities agree and acknowledge that the Partnership Group does not have an adequate remedy at law for the breach by the Delek Entities of the covenants and agreements set forth in this Article II, and that any breach by the Delek Entities of the covenants and agreements set forth in this Article II would result in irreparable injury to the Partnership Group. The Delek Entities further agree and acknowledge that any Partnership Group Member may, in addition to the other remedies which may be available to the Partnership Group, file a suit in equity to enjoin the Delek Entities from such breach, and consent to the issuance of injunctive relief under this Agreement.

 

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ARTICLE III

INDEMNIFICATION

3.1 Environmental Indemnification .

(a) Subject to Section 3.2 and Section 3.5, Delek US shall indemnify, defend and hold harmless the Partnership Group from and against any Losses suffered or incurred by the Partnership Group, directly or indirectly, or as a result of any claim by a third party, by reason of or arising out of:

(i) any violation or correction of violation of Environmental Laws;

(ii) any event, condition or environmental matter associated with or arising from the ownership or operation of the Assets (including, without limitation, the presence of Hazardous Substances on, under, about or migrating to or from such Assets or the disposal or release of Hazardous Substances generated by operation of such Assets at non-Asset locations) including, without limitation, (A) the cost and expense of any investigation, assessment, evaluation, monitoring, containment, cleanup, repair, restoration, remediation, or other corrective action required or necessary under Environmental Laws, (B) the cost or expense of the preparation and implementation of any closure, remedial, corrective action, or other plans required or necessary under Environmental Laws, and (C) the cost and expense of any environmental or toxic tort pre-trial, trial, or appellate legal or litigation support work;

(iii) any event, condition or environmental matter or currently pending legal action, a true and correct summary of which is described on Schedule I attached hereto; and

(iv) any event, condition or environmental matter associated with or arising from the Retained Assets, whether occurring before or after the Closing Date;

provided, however , that with respect to any violation under Section 3.1(a)(i) or any event, condition or environmental matter included under Section 3.1(a)(ii) that is associated with the ownership or operation of the Assets, Delek US will be obligated to indemnify the Partnership Group only to the extent that such violation, event, condition or environmental matter giving rise to the claim (x) occurred in whole or in part before the Closing Date under then-applicable Environmental Laws and (y)(i) such violation, event, condition or environmental matter is set forth on Schedule II attached hereto or (ii) Delek US is notified in writing of such violation, event, condition or environmental matter prior to the Identification Deadline (clauses (i) through (iv) collectively, “ Covered Environmental Losses ”).

(b) The Partnership Group shall indemnify, defend and hold harmless the Delek Entities from and against any Losses suffered or incurred by the Delek Entities, directly or indirectly, or as a result of any claim by a third party, by reason of or arising out of:

 

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(i) any violation or correction of violation of Environmental Laws associated with or arising from the ownership or operation of the Assets; and

(ii) any event, condition or environmental matter associated with or arising from the ownership or operation of the Assets (including, but not limited to, the presence of Hazardous Substances on, under, about or migrating to or from the Assets or the disposal or release of Hazardous Substances generated by operation of the Assets at non-Asset locations) including, without limitation, (A) the cost and expense of any investigation, assessment, evaluation, monitoring, containment, cleanup, repair, restoration, remediation, or other corrective action required or necessary under Environmental Laws, (B) the cost or expense of the preparation and implementation of any closure, remedial, corrective action, or other plans required or necessary under Environmental Laws, and (C) the cost and expense for any environmental or toxic tort pre-trial, trial, or appellate legal or litigation support work;

and regardless of whether such violation under Section 3.1(b)(i) or such event, condition or environmental matter included under Section 3.1(b)(ii) occurred before or after the Closing Date, in each case, to the extent that any of the foregoing are not Covered Environmental Losses for which the Partnership Group is entitled to indemnification from Delek US under this Article III without giving effect to the Annual Environmental Deductible.

3.2 Right of Way Indemnification . Subject to Section 3.5, Delek US shall indemnify, defend and hold harmless the Partnership Group from and against any Losses suffered or incurred by the Partnership Group by reason of or arising out of (a) the failure of the applicable Partnership Group Member to be the owner of such valid and indefeasible easement rights or fee ownership or leasehold interests in and to the lands on which any crude oil or refined products pipeline or related pump station, storage tank, terminal or truck rack or any related facility or equipment conveyed or contributed to the applicable Partnership Group Member on the Closing Date is located as of the Closing Date, and such failure renders the Partnership Group liable to a third party or unable to use or operate the Assets in substantially the same manner that the Assets were used and operated by the applicable Delek Entity immediately prior to the Closing Date as described in the Registration Statement; (b) the failure of the applicable Partnership Group Member to have the consents, licenses and permits necessary to allow any such pipeline referred to in clause (a) of this Section 3.2 to cross the roads, waterways, railroads and other areas upon which any such pipeline is located as of the Closing Date, and such failure renders the Partnership Group liable to a third party or unable to use or operate the Assets in substantially the same manner that the Assets were used and operated by the applicable Delek Entity immediately prior to the Closing Date as described in the Registration Statement; and (c) the cost of curing any condition set forth in clause (a) or (b) of this Section 3.2 that does not allow any Asset to be operated in accordance with Prudent Industry Practice, in each case to the extent that Delek US is notified in writing of any of the foregoing prior to the Identification Deadline.

3.3 Additional Indemnification .

(a) In addition to and not in limitation of the indemnification provided under Sections 3.1(a) and 3.2, Delek US shall indemnify, defend, and hold harmless the Partnership Group from and against any Losses suffered or incurred by the Partnership Group by reason of or

 

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arising out of (i) events and conditions associated with the ownership or operation of the Assets and occurring before the Closing Date (other than Covered Environmental Losses, which are provided for under Sections 3.1, and those Losses provided for under Section 3.2) to the extent that Delek US is notified in writing of any of the foregoing prior to [                    ], 2022, (ii) any currently pending legal actions set forth on Schedule III attached hereto, (iii) events and conditions associated with the Retained Assets whether occurring before or after the Closing Date, (iv) the failure to obtain any necessary consent from the Arkansas Public Service Commission, the Louisiana Public Service Commission, the Texas Railroad Commission or the Federal Energy Regulatory Commission for the conveyance to the Partnership Group of any pipelines located in Arkansas, Louisiana and Texas, if applicable, and (v) all federal, state and local income tax liabilities attributable to the ownership or operation of the Assets prior to the Closing Date, including under Treasury Regulation Section 1.1502-6 (or any similar provision of state or local law), and any such income tax liabilities of the Delek Entities that may result from the consummation of the formation transactions for the Partnership Group and the General Partner occurring on or prior to the Closing Date.

(b) In addition to and not in limitation of the indemnification provided under Section 3.1(b) or the Partnership Agreement, the Partnership Group shall indemnify, defend, and hold harmless the Delek Entities from and against any Losses suffered or incurred by the Delek Entities by reason of or arising out of events and conditions associated with the ownership or operation of the Assets and occurring after the Closing Date (other than Covered Environmental Losses which are provided for under Section 3.1(a)), unless such indemnification would not be permitted under the Partnership Agreement by reason of one of the provisos contained in Section 7.7(a) of the Partnership Agreement.

3.4 Indemnification Procedures .

(a) The Indemnified Party agrees that within a reasonable period of time after it becomes aware of facts giving rise to a claim for indemnification under this Article III, it will provide notice thereof in writing to the Indemnifying Party, specifying the nature of and specific basis for such claim.

(b) The Indemnifying Party shall have the right to control all aspects of the defense of (and any counterclaims with respect to) any claims brought against the Indemnified Party that are covered by the indemnification under this Article III, including, without limitation, the selection of counsel, determination of whether to appeal any decision of any court and the settling of any such claim or any matter or any issues relating thereto; provided, however , that no such settlement shall be entered into without the consent of the Indemnified Party unless it includes a full release of the Indemnified Party from such claim.

(c) The Indemnified Party agrees to cooperate in good faith and in a commercially reasonable manner with the Indemnifying Party, with respect to all aspects of the defense of any claims covered by the indemnification under this Article III, including, without limitation, the prompt furnishing to the Indemnifying Party of any correspondence or other notice relating thereto that the Indemnified Party may receive, permitting the name of the Indemnified Party to be utilized in connection with such defense, the making available to the Indemnifying Party of any files, records or other information of the Indemnified Party that the

 

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Indemnifying Party considers relevant to such defense, the making available to the Indemnifying Party of any employees of the Indemnified Party and the granting to the Indemnifying Party of reasonable access rights to the properties and facilities of the Indemnified Party; provided, however , that in connection therewith the Indemnifying Party agrees to use reasonable efforts to minimize the impact thereof on the operations of the Indemnified Party and further agrees to maintain the confidentiality of all files, records, and other information furnished by the Indemnified Party pursuant to this Section 3.4. In no event shall the obligation of the Indemnified Party to cooperate with the Indemnifying Party as set forth in the immediately preceding sentence be construed as imposing upon the Indemnified Party an obligation to hire and pay for counsel in connection with the defense of any claims covered by the indemnification set forth in this Article III; provided, however , that the Indemnified Party may, at its own option, cost and expense, hire and pay for counsel in connection with any such defense. The Indemnifying Party agrees to keep any such counsel hired by the Indemnified Party informed as to the status of any such defense, but the Indemnifying Party shall have the right to retain sole control over such defense.

(d) In determining the amount of any loss, cost, damage or expense for which the Indemnified Party is entitled to indemnification under this Agreement, the gross amount of the indemnification will be reduced by (i) any insurance proceeds realized by the Indemnified Party, and such correlative insurance benefit shall be net of any incremental insurance premium that becomes due and payable by the Indemnified Party as a result of such claim and (ii) all amounts recovered by the Indemnified Party under contractual indemnities from third Persons.

3.5 Limitations Regarding Indemnification .

(a) Delek US shall not, in any calendar year, be obligated to indemnify, defend and hold harmless the Partnership Group for a Covered Environmental Loss under Section 3.1(a)(ii) until such time as the aggregate amount of all Covered Environmental Losses in such calendar year exceeds $250,000 (the “ Annual Environmental Deductible ”), at which time Delek US shall be obligated to indemnify the Partnership Group for the amount of Covered Environmental Losses under Section 3.1(a)(ii) that are in excess of the Annual Environmental Deductible that are incurred by the Partnership Group in such calendar year. Delek US shall not, in any calendar year, be obligated to indemnify, defend and hold harmless the Partnership Group for any individual Loss under Section 3.2 until such time as the aggregate amount of all Losses under Section 3.2 that are in such calendar year exceeds $250,000 (the “ Annual ROW Deductible ”), at which time Delek US shall be obligated to indemnify the Partnership Group for all Losses under Section 3.2 in excess of the Annual ROW Deductible that are incurred by the Partnership Group in such calendar year.

(b) For the avoidance of doubt, there is no monetary cap on the amount of indemnity coverage provided by any Indemnifying Party under this Article III.

(c) NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IN NO EVENT SHALL ANY PARTY’S INDEMNIFICATION OBLIGATION HEREUNDER COVER OR INCLUDE CONSEQUENTIAL, INDIRECT, INCIDENTAL, PUNITIVE, EXEMPLARY, SPECIAL OR SIMILAR DAMAGES OR LOST PROFITS SUFFERED BY ANY OTHER PARTY ENTITLED TO INDEMNIFICATION UNDER THIS AGREEMENT.

 

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(d) THE FOREGOING INDEMNITIES ARE INTENDED TO BE ENFORCEABLE AGAINST THE PARTIES IN ACCORDANCE WITH THE EXPRESS TERMS AND SCOPE THEREOF NOTWITHSTANDING ANY EXPRESS NEGLIGENCE RULE OR ANY SIMILAR DIRECTIVE THAT WOULD PROHIBIT OR OTHERWISE LIMIT INDEMNITIES BECAUSE OF THE SOLE, CONCURRENT, ACTIVE OR PASSIVE NEGLIGENCE, STRICT LIABILITY OR FAULT OF ANY OF THE INDEMNIFIED PARTIES.

ARTICLE IV

CORPORATE SERVICES

4.1 General .

(a) Delek US agrees to provide, and agrees to cause its Affiliates to provide, on behalf of the General Partner, for the Partnership Group’s benefit of all the centralized corporate services that Delek US and its Affiliates have traditionally provided in connection with the Assets including, without limitation, the general and administrative services listed on Schedule IV to this Agreement. As consideration for such services, the Partnership will pay Delek US an administrative fee (the “ Administrative Fee ”) of $2.7 million per year, payable in equal monthly installments on or before the tenth business day of each month, commencing in the first month following the Closing Date. The Administrative Fee for the 2012 fiscal year will be prorated based on the number of days from the Closing Date to December 31, 2012. Delek US may increase or decrease the Administrative Fee on each anniversary of the Closing Date, commencing on the second anniversary date of the Closing Date, by a percentage equal to the change in the Consumer Price Index—All Urban Consumers, U.S. City Average, Not Seasonally Adjusted over the previous 12 calendar months or to reflect any increase in the cost of providing centralized corporate services to the Partnership Group due to changes in any law, rule or regulation applicable to Delek US or the Partnership Group, including any interpretation of such laws, rules or regulations. The General Partner may agree on behalf of the Partnership to increases in the Administrative Fee in connection with expansions of the operations of the Partnership Group through the acquisition or construction of new assets or businesses.

(b) At the end of each calendar year, the Partnership will have the right to submit to Delek US a proposal to reduce the amount of the Administrative Fee for that year if the Partnership believes, in good faith, that the centralized corporate services performed by Delek US and its Affiliates for the benefit of the Partnership Group for the year in question do not justify payment of the full Administrative Fee for that year. If the Partnership submits such a proposal to Delek US, Delek US agrees that it will negotiate in good faith with the Partnership to determine if the Administrative Fee for that year should be reduced and, if so, the amount of such reduction. If the Parties agree that the Administrative Fee for that year should be reduced, then Delek US shall promptly pay to the Partnership the amount of any reduction for that year.

(c) The Partnership Group shall reimburse Delek US for all other direct or allocated costs and expenses incurred by Delek US and its Affiliates on behalf of the Partnership Group including, but not limited to:

 

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(i) salaries of employees of the General Partner, Delek US or its Affiliates who devote 50% or more of their business time to the business and affairs of the Partnership Group, to the extent, but only to the extent, such employees perform services for the Partnership Group, provided that for employees that do not devote all of their business time to the Partnership Group, such expenses shall be based on the annual weighted average of time spent and number of employees devoting services to the Partnership Group;

(ii) the cost of employee benefits relating to employees of the General Partner, Delek US or its Affiliates who devote 50% or more of their business time to the business and affairs of the Partnership Group, including 401(k), pension, bonuses and health insurance benefits (but excluding Delek US stock-based compensation expense), to the extent, but only to the extent, such employees perform services for the Partnership Group, provided that for employees that do not devote all of their business time to the Partnership Group, such expenses shall be based on the annual weighted average of time spent and number of employees devoting their services to the Partnership Group;

(iii) any expenses incurred or payments made by Delek US or its Affiliates for insurance coverage with respect to the Assets or the business of the Partnership Group;

(iv) all expenses and expenditures incurred by Delek US or its Affiliates, if any, as a result of the Partnership becoming and continuing as a publicly traded entity, including, but not limited to, costs associated with annual and quarterly reports, independent auditor fees, partnership governance and compliance, registrar and transfer agent fees, tax return and Schedule K-1 preparation and distribution, legal fees and independent director compensation; and

(v) all sales, use, excise, value added or similar taxes, if any, that may be applicable from time to time with respect to the services provided by Delek US and its Affiliates to the Partnership Group pursuant to Section 4.1(a).

Such reimbursements shall be made on or before the tenth business day of the month following the month such costs and expenses are incurred, other than reimbursements solely related to bonuses for employees of the General Partner, which shall be reimbursed on or prior to the last business day of the month that such bonuses are paid. For the avoidance of doubt, the costs and expenses set forth in Section 4.1(c) shall be paid by the Partnership Group in addition to, and not as a part of or included in, the Administrative Fee.

ARTICLE V

CAPITAL AND OTHER EXPENDITURES

5.1 Reimbursement of Operating, Maintenance Capital and Other Expenditures . For five years following the Closing Date, Delek US will reimburse the Partnership Group on a dollar-for-dollar basis, without duplication, for each of the following:

(a) operating expenses in excess of $500,000 in any calendar year that are incurred by the Partnership Group for inspections, maintenance and repairs to any storage tanks

 

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included as part of the Assets and that are made solely in order to comply with current minimum standards under (i) the U.S. Department of Transportation’s Pipeline Integrity Management Rule 49 CFR 195.452 and (ii) American Petroleum Institute (API) Standard 653 for Aboveground Storage Tanks;

(b) expenses in excess of $1,000,000 per event (net of insurance recoveries, if any) incurred by the Partnership Group for the clean up or repair of any condition caused by the failure of any Asset prior to the fifth anniversary of the Closing Date; provided, however , that Delek US shall not be required to reimburse the Partnership Group for any expenses in excess of $20,000,000 per event;

(c) non-discretionary maintenance capital expenditures, other than those required to comply with applicable Environmental Laws, in excess of $3,000,000 during the twelve month period ending September 30, 2013 for which reimbursement has not been made pursuant to Section 5.1(b);

(d) non-discretionary maintenance capital expenditures, other than those required to comply with applicable Environmental Laws, in excess of $3,000,000 in any calendar year beginning with calendar year 2013 incurred by the Partnership Group with respect to the Assets for which reimbursment has not been made pursuant to Section 5.1(b); and

(e) capital expenditures in connection with those certain capital projects related to the Assets and described on Schedule VIII to this Agreement.

ARTICLE VI

RIGHT OF FIRST OFFER

6.1 Right of First Offer to Purchase Certain Assets retained by Delek Entities .

(a) Each ROFO Asset Owner hereby grants to the Partnership Group a right of first offer for a period of 10 years from the Closing Date (the “ ROFO Period ”) on any ROFO Asset set forth next to such ROFO Asset Owner’s name on Schedule V to the extent that such ROFO Asset Owner proposes to Transfer any ROFO Asset (other than (i) to an Affiliate who agrees in writing that such ROFO Asset remains subject to the provisions of this Article VI and such Affiliate assumes the obligations under this Article VI with respect to such ROFO Asset, (ii) in connection with a Transfer by the Delek Entities of the refinery with respect to which such ROFO Asset is within, substantially dedicated to or an integral part of or (iii) in connection with the foreclosure on such ROFO Asset by any lender under any credit arrangements of any Delek Entities in effect on the Closing Date) or enter into any agreement to do any of the foregoing during the ROFO Period.

(b) The Parties acknowledge that all potential Transfers of ROFO Assets pursuant to this Article VI are subject to obtaining any and all required written consents of governmental authorities and other third parties and to the terms of all existing agreements in respect of the ROFO Assets; provided, however , that Delek US represents and warrants that, to its knowledge after reasonable investigation, there are no terms in such agreements that would materially impair the rights granted to the Partnership Group pursuant to this Article VI with respect to any ROFO Asset.

 

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6.2 Procedures .

(a) In the event a ROFO Asset Owner proposes to Transfer any applicable ROFO Asset (other than (i) to an Affiliate as provided in Section 6.1(a), (ii) in connection with a Transfer by the Delek Entities of the refinery with respect to which such ROFO Asset is within, substantially dedicated to or an integral part of or (iii) in connection with the foreclosure on such ROFO Asset by any lender under any credit arrangements of any Delek Entities in effect on the Closing Date) during the ROFO Period (a “ Proposed Transaction ”), such ROFO Asset Owner shall, prior to entering into any such Proposed Transaction, first give notice in writing to the Partnership Group (the “ ROFO Notice ”) of its intention to enter into such Proposed Transaction. The ROFO Notice shall include any material terms, conditions and details as would be necessary for a Partnership Group Member to make a responsive offer to enter into the Proposed Transaction with the applicable ROFO Asset Owner, which terms, conditions and details shall at a minimum include any terms, condition or details that such ROFO Asset Owner would propose to provide to non-Affiliates in connection with the Proposed Transaction. The Partnership Group shall have 90 days following receipt of the ROFO Notice to propose an offer to enter into the Proposed Transaction with such ROFO Asset Owner (the “ ROFO Response ”). The ROFO Response shall set forth the terms and conditions (including, without limitation, the purchase price the applicable Partnership Group Member proposes to pay for the ROFO Asset and the other terms of the purchase including, if requested by a Delek Entity, the terms on which the Partnership Group Member will provide services to the Delek Entity to enable the Delek Entity to utilize the applicable ROFO Asset) pursuant to which the Partnership Group would be willing to enter into a binding agreement for the Proposed Transaction. The decision to issue the ROFO Response and the terms of the ROFO Response shall be subject to approval by the Conflicts Committee. If no ROFO Response is delivered by the Partnership Group within such 90-day period, then the Partnership Group shall be deemed to have waived its right of first offer with respect to such ROFO Asset.

(b) Unless the ROFO Response is rejected pursuant to written notice delivered by the applicable ROFO Asset Owner to the applicable Partnership Group Member within 90 days of the delivery of the ROFO Response, such ROFO Response shall be deemed to have been accepted by the applicable ROFO Asset Owner and such ROFO Asset Owner shall enter into an agreement with the applicable Partnership Group Member providing for the consummation of the Proposed Transaction upon the terms set forth in the ROFO Response and, if applicable, the Partnership Group Member will enter into an agreement with the Delek Entity setting forth the terms on which the Partnership Group Member will provide services to the Delek Entity to enable the Delek Entity to utilize the ROFO Asset. Unless otherwise agreed between the applicable Delek Entity and Partnership Group Member, the terms of the purchase and sale agreement will include the following:

(i) the Partnership Group Member will agree to deliver the purchase price (in cash, Partnership Interests, an interest-bearing promissory note, or any combination thereof);

(ii) the applicable ROFO Asset Owner will represent that it has title to the ROFO Assets that is sufficient to operate the ROFO Assets in accordance with their intended and historical use, subject to all recorded matters and all physical conditions in

 

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existence on the closing date for the purchase of the applicable ROFO Asset, plus any other such matters as the Partnership Group Member may approve. If the Partnership Group Member desires to obtain any title insurance with respect to the ROFO Asset, the full cost and expense of obtaining the same (including but not limited to the cost of title examination, document duplication and policy premium) shall be borne by the Partnership Group Member;

(iii) the applicable ROFO Asset Owner will grant to the Partnership Group Member the right, exercisable at the Partnership Group Member’s risk and expense prior to the delivery of the ROFO Response, to make such surveys, tests and inspections of the ROFO Asset as the Partnership Group Member may deem desirable, so long as such surveys, tests or inspections do not damage the ROFO Asset or interfere with the activities of the applicable ROFO Asset Owner;

(iv) the Partnership Group Member will have the right to terminate its obligation to purchase the ROFO Asset under this Article VI if the results of any searches under Section 6.2(b)(ii) or (iii) above are, in the reasonable opinion of the Partnership Group Member, unsatisfactory;

(v) the closing date for the purchase of the ROFO Asset shall occur no later than 180 days following receipt by Delek US of the ROFO Response pursuant to Section 6.2(a);

(vi) the applicable ROFO Asset Owner and Partnership Group Member shall use commercially reasonable efforts to do or cause to be done all things that may be reasonably necessary or advisable to effectuate the consummation of any transactions contemplated by this Section 6.2(b), including causing its respective Affiliates to execute, deliver and perform all documents, notices, amendments, certificates, instruments and consents required in connection therewith; and

(vii) neither the applicable ROFO Asset Owner nor the Partnership Group Member shall have any obligation to sell or buy the ROFO Assets if any of the consents referred to in Section 6.1(b) has not been obtained.

(c) The Partnership Group and the applicable ROFO Asset Owner shall cooperate in good faith in obtaining all necessary governmental and other third party approvals, waivers and consents required for the closing. Any such closing shall be delayed, to the extent required, until the third business day following the expiration of any required waiting periods under the HSR Act; provided, however , that such delay shall not exceed 60 days following the 180 days referred to in Section 6.2(b)(v) (the “ ROFO Governmental Approval Deadline ”) and, if governmental approvals and waiting periods shall not have been obtained or expired, as the case may be, by such ROFO Governmental Approval Deadline, then such ROFO Asset Owner shall be free to enter into a Proposed Transaction with any third party (i) on terms and conditions (excluding those relating to price) that are not more favorable in the aggregate to such third party than those proposed in respect of the Partnership Group in the ROFO Response and (ii) at a price equal to no less than 100% of the price offered by the applicable Partnership Group Member in the ROFO Response to such ROFO Asset Owner.

 

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(d) If the Partnership Group has not timely delivered a ROFO Response as specified above with respect to a Proposed Transaction that is subject to a ROFO Notice, the applicable ROFO Asset Owner shall be free to enter into a Proposed Transaction with any third party on terms and conditions no more favorable to such third party than those set forth in the ROFO Notice. If a ROFO Response with respect to such Proposed Transaction is rejected by the applicable ROFO Asset Owner, such ROFO Asset Owner shall be free to enter into a Proposed Transaction with any third party (i) on terms and conditions (excluding those relating to price) that are not more favorable in the aggregate to such third party than those proposed in respect of the Partnership Group in the ROFO Response and (ii) at a price equal to no less than 100% of the price offered by the applicable Partnership Group Member in the ROFO Response to such ROFO Asset Owner.

(e) If a Proposed Transaction with a third party is not consumated as provided in Section 6.2 within one year of, as applicable, the Partnership Group’s failure to timely deliver a ROFO Response with respect to such Proposed Transaction that is subject to a ROFO Notice, the rejection by the applicable ROFO Asset Owner of a ROFO Response with respect to such Proposed Transaction or the ROFO Governmental Approval Deadline, then, in each case, the applicable ROFO Asset Owner may not Transfer any ROFO Assets described in such ROFO Notice without complying again with the provisions of this Article VI, if and to the extent then applicable.

ARTICLE VII

RIGHT OF FIRST REFUSAL

7.1 Delek US Right of First Refusal .

(a) Each Partnership Party hereby grants to Delek US a right of first refusal on: (i) any proposed Transfer (other than a grant of a security interest to a bona fide third-party lender or a Transfer to another Partnership Group Member) of any ROFR Asset set forth next to such Partnership Party’s name on Schedule VI and (ii) the use of the available capacity of the Paline Pipeline’s 185-mile, 10-inch crude oil pipeline running between Longview, Texas to Nederland, Texas or any portion thereof (the “ ROFR Capacity ”) following the termination of the Pipeline Capacity Usage Agreement. The Parties acknowledge and agree that nothing in this Article VII shall prevent or restrict the Transfer of the capital stock, equity or ownership interests or other securities of the General Partner or the Partnership.

(b) The Parties acknowledge that all potential Transfers of ROFR Assets and any use of the ROFR Capacity pursuant to this Article VII are subject to obtaining any and all required written consents of governmental authorities and other third parties and to the terms of all existing agreements in respect of the ROFR Assets or the ROFR Capacity, as applicable; provided, however , that the Partnership represents and warrants that, to its knowledge after reasonable investigation, there are no terms in such agreements that would materially impair the rights granted to Delek US pursuant to this Article VII with respect to any ROFR Asset.

7.2 Procedures for Transfer of ROFR Asset .

 

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(a) In the event a Partnership Group Member proposes to Transfer any of the ROFR Assets (other than to an Affiliate) pursuant to a bona fide third-party offer (an “ Acquisition Proposal ”), then the Partnership shall, prior to entering into any such Acquisition Proposal, first give notice in writing to Delek US (a “ Disposition Notice ”) of its intention to enter into such Acquisition Proposal. The Disposition Notice shall include any material terms, conditions and details as would be necessary for Delek US to determine whether to exercise its right of first refusal with respect to the Acquisition Proposal, which terms, conditions and details shall at a minimum include: the name and address of the prospective acquiror (the “ Proposed Transferee ”), the ROFR Assets subject to the Acquisition Proposal (the “ Sale Assets ”), the purchase price offered by such Proposed Transferee (the “ Offer Price ”), reasonable detail concerning any non-cash portion of the proposed consideration, if any, to allow Delek US to reasonably determine the fair market value of such non-cash consideration, the Partnership Group’s estimate of the fair market value of any non-cash consideration and all other material terms and conditions of the Acquisition Proposal that are then known to the Partnership Group. To the extent the Proposed Transferee’s offer consists of consideration other than cash (or in addition to cash), the Offer Price shall be deemed equal to the amount of any such cash plus the fair market value of such non-cash consideration. In the event Delek US and the Partnership Group are able to agree on the fair market value of any non-cash consideration or if the consideration consists solely of cash, Delek US will provide written notice of its decision regarding the exercise of its right of first refusal to purchase the Sale Assets (the “ ROFR Response ”) to the Partnership Group within 60 days of its receipt of the Disposition Notice (the “ First ROFR Acceptance Deadline ”). In the event Delek US and the Partnership Group are unable to agree on the fair market value of any non-cash consideration prior to the First ROFR Acceptance Deadline, Delek US shall indicate its desire to determine the fair market value of such non-cash consideration pursuant to the procedures outlined in the remainder of this Section 7.2(a) in a ROFR Response delivered prior to the First ROFR Acceptance Deadline. If no ROFR Response is delivered by Delek US prior to the First ROFR Acceptance Deadline, then Delek US shall be deemed to have waived its right of first refusal with respect to such Sale Asset. In the event (i) Delek US’ determination of the fair market value of any non-cash consideration described in the Disposition Notice is less than the fair market value of such consideration as determined by the Partnership Group in the Disposition Notice and (ii) Delek US and the Partnership Group are unable to mutually agree upon the fair market value of such non-cash consideration within 60 days after Delek US notifies the Partnership Group of its determination thereof, the Partnership Group and Delek US will engage a mutually agreed upon, nationally recognized investment banking firm to determine the fair market value of the non-cash consideration. The investment banking firm will determine the fair market value of the non-cash consideration within 30 days of its engagement and furnish Delek US and the General Partner its determination. The fees of the investment banking firm will be split equally between the Delek Entities and the Partnership Group. Once the investment banking firm has submitted its determination of the fair market value of the non-cash consideration, Delek US will provide a ROFR Response to the Partnership Group within 30 days after the investment banking firm has submitted its determination (the “ Second ROFR Acceptance Deadline ”). If no ROFR Response is delivered by Delek US prior to the Second ROFR Acceptance Deadline, then Delek US shall be deemed to have waived its right of first refusal with respect to such Sale Asset.

(b) If Delek US elects in a ROFR Response delivered prior to the applicable ROFR Acceptance Deadline to exercise its right of first refusal with respect to a Sale Asset,

 

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within 60 days of the delivery of the ROFR Response, such ROFR Response shall be deemed to have been accepted by the applicable Partnership Group Member and such Partnership Group Member shall enter into an agreement with Delek US providing for the consummation of the Acquisition Proposal upon the terms set forth in the ROFR Response. Unless otherwise agreed between Delek US and the Partnership, the terms of the purchase and sale agreement will include the following:

(i) Delek US will agree to deliver the Offer Price in cash (unless Delek US and the Partnership Group agree that such consideration will be paid, in whole or in part, in equity securities of Delek US, an interest-bearing promissory note, or any combination thereof);

(ii) the applicable Partnership Group Member will represent that it has title to the Sale Asset that is sufficient to operate the Sale Assets in accordance with their intended and historical use, subject to all recorded matters and all physical conditions in existence on the closing date for the purchase of the applicable Sale Asset, plus any other such matters as Delek US may approve. If Delek US desires to obtain any title insurance with respect to the Sale Asset, the full cost and expense of obtaining the same (including but not limited to the cost of title examination, document duplication and policy premium) shall be borne by Delek US;

(iii) the applicable Partnership Group Member will grant to Delek US the right, exercisable at Delek US’ risk and expense prior to the delivery of the ROFR Response, to make such surveys, tests and inspections of the Sale Asset as Delek US may deem desirable, so long as such surveys, tests or inspections do not damage the Sale Asset or interfere with the activities of the applicable Partnership Group Member;

(iv) Delek US will have the right to terminate its obligation to purchase the Sale Asset under this Article VII if the results of any searches under Section 7.2(b)(ii) or (iii) above are, in the reasonable opinion of Delek US, unsatisfactory;

(v) the closing date for the purchase of the Sale Asset shall occur no later than 180 days following receipt by the Partnership of the ROFR Response pursuant to Section 7.2(a);

(vi) the Partnership Group Member and Delek US shall use commercially reasonable efforts to do or cause to be done all things that may be reasonably necessary or advisable to effectuate the consummation of any transactions contemplated by this Section 7.2(b), including causing its respective Affiliates to execute, deliver and perform all documents, notices, amendments, certificates, instruments and consents required in connection therewith; and

(vii) the sale of any Sale Assets shall be made on an “as is,” “where is” and “with all faults” basis, and the instruments conveying such Sale Assets shall contain appropriate disclaimers; and

 

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(viii) neither the Partnership Group nor Delek US shall have any obligation to sell or buy the Sale Assets if any of the consents referred to in Section 7.1(b) has not been obtained.

(c) Delek US and the Partnership Group shall cooperate in good faith in obtaining all necessary governmental and other third party approvals, waivers and consents required for the closing. Any such closing shall be delayed, to the extent required, until the third business day following the expiration of any required waiting periods under the HSR Act; provided, however , that such delay shall not exceed 60 days following the 180 days referred to in Section 7.2(b)(v) (the “ ROFR Governmental Approval Deadline ”) and, if governmental approvals and waiting periods shall not have been obtained or expired, as the case may be, by such ROFR Governmental Approval Deadline, then Delek US shall be deemed to have waived its right of first refusal with respect to the Sale Assets described in the Disposition Notice and thereafter the Partnership Group shall be free to consummate the Transfer to the Proposed Transferree, subject to Section 7.2(d)(ii).

(d) If the Transfer to the Proposed Transferee (i) in the case of a Transfer other than a Transfer permitted under Section 7.2(c), is not consummated in accordance with the terms of the Acquisition Proposal within the later of (A) 180 days after the applicable ROFR Acceptance Deadline and (B) three business days after the satisfaction of all governmental approval or filing requirements, if any, or (ii) in the case of a Transfer permitted under Section 7.2(c), is not consummated within the later of (A) 60 days after the ROFR Governmental Approval Deadline and (B) three business days after the satisfaction of all governmental approval or filing requirements, if any, then in each case the Acquisition Proposal shall be deemed to lapse, and the Partnership or member of the Partnership Group may not Transfer any of the Sale Assets described in the Disposition Notice without complying again with the provisions of this Article VII if and to the extent then applicable.

7.3 Procedures for Use of ROFR Capacity .

(a) In the event a Partnership Group Member proposes to enter into an agreement for the use of any of the ROFR Capacity (other than by an Affiliate) pursuant to a bona fide third-party offer (a “ ROFR Capacity Proposal ”), then the Partnership shall, prior to entering into any such ROFR Capacity Proposal, first give notice in writing to Delek US (a “ ROFR Capacity Notice ”) of its intention to enter into such ROFR Capacity Proposal. The ROFR Capacity Notice shall include any material terms, conditions and details as would be necessary for Delek US to determine whether to exercise its right of first refusal with respect to the ROFR Capacity Proposal, which terms, conditions and details shall at a minimum include: the name and address of the prospective contracting party (the “ Proposed Shipper ”), the portion of the ROFR Capacity subject to the ROFR Capacity Proposal (the “ ROFR Proposal Assets ”), the consideration offered by such Proposed Transferee (the “ Shipping Price ”), reasonable detail concerning any non-cash portion of the proposed consideration, if any, to allow Delek US to reasonably determine the fair market value of such non-cash consideration, the Partnership Group’s estimate of the fair market value of any non-cash consideration and all other material terms and conditions of the ROFR Capacity Proposal that are then known to the Partnership Group. To the extent the Proposed Transferee’s offer consists of consideration other than cash (or in addition to cash), the Shipping Price shall be deemed equal to the amount of any such cash

 

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plus the fair market value of such non-cash consideration. In the event Delek US and the Partnership Group are able to agree on the fair market value of any non-cash consideration or if the consideration consists solely of cash, Delek US will provide written notice of its decision regarding the exercise of its right of first refusal on the ROFR Proposal Assets (the “ ROFR Capacity Response ”) to the Partnership Group within 30 days of its receipt of the ROFR Capacity Notice (the “ First ROFR Capacity Acceptance Deadline ”). In the event Delek US and the Partnership Group are unable to agree on the fair market value of any non-cash consideration prior to the First ROFR Acceptance Deadline, Delek US shall indicate its desire to determine the fair market value of such non-cash consideration pursuant to the procedures outlined in the remainder of this Section 7.3(a) in a ROFR Capacity Response delivered prior to the First ROFR Acceptance Deadline. If no ROFR Response is delivered by Delek US prior to the First ROFR Capacity Acceptance Deadline, then Delek US shall be deemed to have waived its right of first refusal with respect to such ROFR Proposal Asset. In the event (i) Delek US’ determination of the fair market value of any non-cash consideration described in the ROFR Capacity Notice is less than the fair market value of such consideration as determined by the Partnership Group in the ROFR Capacity Notice and (ii) Delek US and the Partnership Group are unable to mutually agree upon the fair market value of such non-cash consideration within 30 days after Delek US notifies the Partnership Group of its determination thereof, the Partnership Group and Delek US will engage a mutually agreed upon, nationally recognized investment banking firm to determine the fair market value of the non-cash consideration. The investment banking firm will determine the fair market value of the non-cash consideration within 30 days of its engagement and furnish Delek US and the General Partner its determination. The fees of the investment banking firm will be split equally between the Delek Entities and the Partnership Group. Once the investment banking firm has submitted its determination of the fair market value of the non-cash consideration, Delek US will provide a ROFR Capacity Response to the Partnership Group within 30 days after the investment banking firm has submitted its determination (the “ Second ROFR Capacity Acceptance Deadline ”). If no ROFR Capacity Response is delivered by Delek US prior to the Second ROFR Capacity Acceptance Deadline, then Delek US shall be deemed to have waived its right of first refusal with respect to such ROFR Proposal Asset.

(b) If Delek US elects in a ROFR Capacity Response delivered prior to the applicable ROFR Capacity Acceptance Deadline to exercise its right of first refusal with respect to a ROFR Proposal Asset, such ROFR Capacity Response shall be deemed to have been accepted by the applicable Partnership Group Member and such Partnership Group Member shall enter into an agreement with Delek US providing for the consummation of the ROFR Capacity Proposal upon the terms set forth in the ROFR Capacity Response no later than 30 days following receipt by the Partnership of the ROFR Capacity Response pursuant to Section 7.3(a). Unless otherwise agreed between Delek US and the Partnership, the terms of the agreement will include the following:

(i) Delek US will agree to deliver the Shipping Price in cash;

(ii) the applicable Partnership Group Member will represent that it has title to the ROFR Proposal Asset that is sufficient to operate the ROFR Proposal Asset in accordance with its intended and historical use;

 

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(iii) the Partnership Group Member and Delek US shall use commercially reasonable efforts to do or cause to be done all things that may be reasonably necessary or advisable to effectuate the consummation of any transactions contemplated by this Section 7.3(b), including causing its respective Affiliates to execute, deliver and perform all documents, notices, amendments, certificates, instruments and consents required in connection therewith; and

(iv) neither the Partnership Group nor Delek US shall have any obligation to enter into any such agreement if any of the consents referred to in Section 7.1(b) has not been obtained.

(c) If the agreement with the Proposed Shipper is not consummated in accordance with the terms of the ROFR Capacity Proposal within the later of (A) 180 days after the applicable ROFR Capacity Acceptance Deadline and (B) three business days after the satisfaction of all governmental approval or filing requirements, if any, then the ROFR Capacity Proposal shall be deemed to lapse, and the Partnership or member of the Partnership Group may not enter into an agreement for the use of any of the ROFR Proposal Assets described in the ROFR Capacity Notice without complying again with the provisions of this Article VII if and to the extent then applicable.

ARTICLE VIII

LICENSE OF NAME AND MARK

8.1 Grant of License . Upon the terms and conditions set forth in this Article VIII, Delek US hereby grants and conveys to each of the entities currently or hereafter comprising a part of the Partnership Group a nontransferable, nonexclusive, royalty-free right and license (“License”) to use the name “Delek” (the “Name”) and any other trademarks owned by Delek US which contain the Name (collectively, the “Marks”).

8.2 Ownership and Quality .

(a) The Partnership agrees that ownership of the Name and the Marks and the goodwill relating thereto shall remain vested in Delek US both during the term of this License and thereafter, and the Partnership further agrees, and agrees to cause the other members of the Partnership Group, never to challenge, contest or question the validity of Delek US’ ownership of the Name and Marks or any registration thereto by Delek US. In connection with the use of the Name and the Mark, the Partnership and any other member of the Partnership Group shall not in any manner represent that they have any ownership in the Name and the Marks or registration thereof except as set forth herein, and the Partnership, on behalf of itself and the other members of the Partnership Group, acknowledges that the use of the Name and the Marks shall not create any right, title or interest in or to the Name and the Mark, and all use of the Name and the Marks by the Partnership or any other member of the Partnership Group, shall inure to the benefit of Delek US.

(b) The Partnership agrees, and agrees to cause the other members of the Partnership Group, to use the Name and Marks in accordance with such quality standards established by Delek US and communicated to the Partnership from time to time, it being understood that the products and services offered by the members of the Partnership Group immediately before the Closing Date are of a quality that is acceptable to Delek US and justifies the License.

 

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8.3 Termination . The License shall terminate upon a termination of this Agreement pursuant to Section 9.4.

ARTICLE IX

MISCELLANEOUS

9.1 Choice of Law; Submission to Jurisdiction . This Agreement shall be subject to and governed by the laws of the State of Texas, excluding any conflicts-of-law rule or principle that might refer the construction or interpretation of this Agreement to the laws of another state. Each Party hereby submits to the jurisdiction of the state and federal courts in the State of Texas and to venue in Houston, Texas.

9.2 Notice . All notices, requests, demands, and other communications hereunder will be in writing and will be deemed to have been duly given: (a) if by transmission by facsimile or hand delivery, when delivered; (b) if mailed via the official governmental mail system, five (5) business days after mailing, provided said notice is sent first class, postage pre-paid, via certified or registered mail, with a return receipt requested; (c) if mailed by an internationally-recognized overnight express mail service such as Federal Express, UPS, or DHL Worldwide, one (1) Business Day after deposit therewith prepaid; or (d) if by e-mail, one (1) business day after delivery with receipt confirmed. All notices will be addressed to the Parties at the respective addresses as follows:

If to the Delek Entities:

c/o Delek US Holdings, Inc.

7102 Commerce Way

Brentwood, TN 37027

Attn: General Counsel

Telecopy No: (615) 435-1271

Email:

with a copy, which shall not constitute notice, to:

c/o Delek US Holdings, Inc.

7102 Commerce Way

Brentwood, TN 37027

Attn: President

Telecopy No: (615) 435-1271

Email:

 

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If to the Partnership Group:

Delek Logistics Partners, LP

c/o Delek Logistics GP, LLC

7102 Commerce Way

Brentwood, TN 37027

Attn: General Counsel

Telecopy No: (615) 435-1271

Email:

with a copy, which shall not constitute notice, to:

Delek Logistics Partners, LP

c/o Delek Logistics GP, LLC

7102 Commerce Way

Brentwood, TN 37027

Attn: President

Telecopy No: (615) 435-1271

Email:

or to such other address or to such other person as either Party will have last designated by notice to the other Party.

9.3 Entire Agreement . This Agreement constitutes the entire agreement of the Parties relating to the matters contained herein, superseding all prior contracts or agreements, whether oral or written, relating to the matters contained herein.

9.4 Termination of Agreement . This Agreement, other than the provisions set forth in Article III hereof, may be terminated by Delek US or the Partnership upon a Partnership Change of Control. For the avoidance of doubt, the Parties’ indemnification obligations under Article III shall survive the termination of this Agreement in accordance with their respective terms.

9.5 Amendment or Modification . This Agreement may be amended or modified from time to time only by the written agreement of all the Parties hereto. Each such instrument shall be reduced to writing and shall be designated on its face an “Amendment” or an “Addendum” to this Agreement.

9.6 Assignment . No Party shall have the right to assign its rights or obligations under this Agreement without the consent of the other Parties hereto; provided, however , that (i) the Partnership may make a collateral assignment of this Agreement solely to secure financing for the Partnership Group and (ii) Delek US may assign its rights under Article VII to any Affiliate of Delek US.

9.7 Counterparts . This Agreement may be executed in any number of counterparts with the same effect as if all signatory parties had signed the same document. All counterparts shall be construed together and shall constitute one and the same instrument. Delivery of an executed signature page of this Agreement by facsimile transmission or in portable document format (.pdf) shall be effective as delivery of a manually executed counterpart hereof.

 

25


9.8 Severability . If any provision of this Agreement shall be held invalid or unenforceable by a court or regulatory body of competent jurisdiction, the remainder of this Agreement shall remain in full force and effect.

9.9 Further Assurances . In connection with this Agreement and all transactions contemplated by this Agreement, each signatory party hereto agrees to execute and deliver such additional documents and instruments and to perform such additional acts as may be necessary or appropriate to effectuate, carry out and perform all of the terms, provisions and conditions of this Agreement and all such transactions.

9.10 Rights of Limited Partners . The provisions of this Agreement are enforceable solely by the Parties to this Agreement, and no Limited Partner of the Partnership shall have the right, separate and apart from the Partnership, to enforce any provision of this Agreement or to compel any Party to this Agreement to comply with the terms of this Agreement.

9.11 Suspension of Certain Provisions in Certain Circumstances . The provisions of Article VI and Article VII shall be of no force and effect with respect to Delek US, Delek Refining or Lion Oil, as applicable, and such Party (i) shall have no rights or obligations under Article VI and Article VII if such Party shall institute any proceeding or voluntary case seeking to adjudicate it as bankrupt or insolvent, or seeking dissolution, liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency, reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for any such Person or for any substantial part of its property, (ii) shall be generally not paying its debts as such debts become due or shall admit in writing its inability to pay its debts generally, (iii) shall make a general assignment for the benefit of creditors, or (iv) shall take any action to authorize or effect any of the actions set forth above in this Section 9.11.

 

26


IN WITNESS WHEREOF , the Parties have executed this Agreement on, and effective as of, the Closing Date.

 

DELEK US HOLDINGS, INC.
By:    
Name:
Title:
By:    
Name:
Title:
DELEK REFINING, LTD.
By:    
Name:
Title:
By:    
Name:
Title:
LION OIL COMPANY
By:    
Name:
Title:
By:    
Name:
Title:

 

 

[Signature page to Omnibus Agreement]


DELEK LOGISTICS PARTNERS, LP
By:  

Delek Logistics GP, LLC,

its general partner

By:    
Name:
Title:
By:    
Name:
Title:
PALINE PIPELINE COMPANY, LLC
By:    
Name:
Title:
By:    
Name:
Title:
SALA GATHERING SYSTEMS, LLC
By:    
Name:
Title:
By:    
Name:
Title:

 

 

[Signature page to Omnibus Agreement]


MAGNOLIA PIPELINE COMPANY, LLC
By:    
Name:
Title:
By:    
Name:
Title:
EL DORADO PIPELINE COMPANY, LLC
By:    
Name:
Title:
By:    
Name:
Title:
DELEK CRUDE LOGISTICS, LLC
By:    
Name:
Title:
By:    
Name:
Title:
DELEK MARKETING-BIG SANDY, LLC
By:    
Name:
Title:
By:    
Name:
Title:

 

 

[Signature page to Omnibus Agreement]


DELEK LOGISTICS OPERATING, LLC
By:    
Name:
Title:
By:    
Name:
Title:
DELEK LOGISTICS GP, LLC
By:    
Name:
Title:
By:    
Name:
Title:

 

 

[Signature page to Omnibus Agreement]


Schedule I

Pending Environmental Litigation

 

(1) McMurrian v. Lion Oil Company , Circuit Court of Union County, Arkansas, Case No. CIV-2001-213.


Schedule II

Environmental Matters

 

(1) Subsurface plume at Big Sandy terminal


Schedule III

Pending Litigation

 

(1) Shell Trading (US) Company v. Lion Oil Trading & Transportation, Inc. , District Court of Harris County, Texas, Cause No. 2009-11659.


Schedule IV

General and Administrative Services

 

(1) Executive management services of Delek employees who devote less than 50% of their business time to the business and affairs of the Partnership Group, including Delek US stock-based compensation expense

 

(2) Financial and administrative services (including, but not limited to, treasury and accounting)

 

(3) Information technology services

 

(4) Legal services

 

(5) Health, safety and environmental services

 

(6) Human resources services

 

(7) Insurance administration


Schedule V

ROFO Assets

 

Asset    Owner
Tyler Refinery Refined Products Terminal . Located at the Tyler refinery, this terminal consists of a truck loading rack with three loading bays supplied by pipeline from storage tanks located at the refinery. Total throughput capacity for the terminal is estimated to be approximately 76,000 bpd.    Delek Refining
Tyler Storage Tanks . Located in Tyler, Texas adjacent to the Tyler refinery, these 86 storage tanks have an aggregate active shell capacity of approximately 1.8 million barrels.    Delek Refining
El Dorado Refined Products Terminal . Located at the El Dorado refinery, this terminal consists of a truck loading rack supplied by pipeline from storage tanks located at the refinery. Total throughput capacity for the terminal is estimated to be approximately 22,000 bpd, with approximately 9,600 bpd of refined products throughput for the year ended December 31, 2011.    Lion Oil
El Dorado Storage Tanks . Located at Sandhill Station and adjacent to the El Dorado refinery, these storage tanks have an aggregate active shell capacity of approximately 2.2 million barrels.    Lion Oil


Schedule VI

ROFR Assets

 

Asset    Owner
Paline Pipeline . The 185-mile, 10-inch crude oil pipeline running from Longview, Texas and the Chevron-operated Beaumont terminal in Nederland, Texas and an approximately seven-mile idle pipeline from Port Neches to Port Arthur, Texas.    Paline
SALA Gathering System . The approximately 600 miles of three- to eight-inch crude oil gathering and transportation lines in southern Arkansas and northern Louisiana located primarily within a 60-mile radius of the El Dorado refinery.    SALA
Magnolia Pipeline System . The 77-mile crude oil pipeline running between a connection with ExxonMobil’s North Line pipeline near Shreveport, Louisiana and our Magnolia Station.    Magnolia
El Dorado Pipeline System . The 28-mile crude oil pipeline, the 12-inch diesel line from the El Dorado refinery to the Enterprise system and the 10-inch gasoline line from the El Dorado refinery to the Enterprise system.    El Dorado
McMurrey Pipeline System . The 65-mile pipeline system that transports crude oil from inputs between the La Gloria Station and the Tyler refinery    Crude Logistics
Nettleton Pipeline System . The 36-mile pipeline that transports crude oil from Nettleton Station to the Tyler refinery.    Crude Logistics
Big Sandy Terminal . The terminal located in Big Sandy, Texas and the eight-inch Hopewell-Big Sandy Pipeline originating at Hopewell Junction, Texas and terminating at the Big Sandy Station in Big Sandy, Texas.    Marketing-Big Sandy
Memphis Terminal . The terminal located in Memphis, Tennessee supplied by the El Dorado refinery through the Enterprise TE Products Pipeline.    OpCo


Schedule VII

Certain Delek Projects

 

(1) That certain project related to AFE # [                    ], which provides for the construction of a new crude oil storage tank at Delek Refining’s Tyler, Texas refinery with aggregate shell capacity of approximately 300,000 bbls.

 

(2) That certain project related to AFE # [                    ], which provides for the construction of two crude oil unloading racks south of the metering skid at Lion Oil’s El Dorado, Arkansas refinery. The racks are designed to receive up to 32,000 bpd of light crude oil or 10,000 bpd of heavy crude oil delivered by rail to the El Dorado refinery.


Schedule VIII Existing Capital Projects

 

(1) That certain project related to AFE # [                    ], which provides for the construction of new crude oil pipeline that commences at the metering skid situated south of Tank #107 at Lion Oil’s El Dorado, Arkansas refinery and continues along the south side of Sandhill Station to its termination point at the tie-in to the Tank #192 fill line.

 

(2) That certain project related to AFE # [                    ], which provides for the completion of Phase IV of the reversal of the Paline Pipeline System.

 

(3) That certain project related to AFE # [                    ], which provides for the installation of piping and valves to enable bi-directional flow on the Nettleton Pipeline.


Exhibit A

Form of Joinder Agreement

This Joinder Agreement (this “ Agreement ”) is made as of the date written below by the undersigned (the “ Joining Party ”) in accordance with that certain Omnibus Agreement (the “ Omnibus Agreement ”) by and among Delek US Holdings, Inc., a Delaware corporation, on behalf of itself and the other Delek Entities, Delek Refining, Ltd., a Texas Limited Partnership, Lion Oil Company, an Arkansas corporation, Delek Logistics Partners, LP, a Delaware limited partnership, Paline Pipeline Company, LLC, a Texas limited liability company, SALA Gathering Systems, LLC, a Texas limited liability company, Magnolia Pipeline Company, LLC, a Delaware limited liability company, El Dorado Pipeline Company, LLC, a Delaware limited liability company, Delek Crude Logistics, LLC, a Texas limited liability company, Delek Marketing-Big Sandy, LLC, a Texas limited liability company, Delek Logistics Operating, LLC, a Delaware limited liability company, and Delek Logistics GP, LLC, a Delaware limited liability company. Capitalized terms not defined herein shall have the meanings given to such terms in the Omnibus Agreement.

The Joining Party hereby acknowledges, agrees and confirms that, by its execution of this Agreement, the Joining Party shall become a party to and “ROFO Asset Owner” under the Omnibus Agreement as of the date hereof, and (i) shall have all of the rights and obligations thereof as more fully set forth therein as if it had executed the Omnibus Agreement directly, and (ii) agrees to be bound by the terms, provisions and conditions pertaining thereto, as more fully set forth therein, as if it had executed the Omnibus Agreement directly.

IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the date written below.

 

Date:                
         
      By:        
        Name:  
        Title:  
      By:        
        Name:  
        Title:  

Exhibit 10.11

PIPELINES AND STORAGE FACILITIES AGREEMENT

This Pipelines and Storage Facilities Agreement is made and entered into as of the Commencement Date, by and among Lion Oil Company, an Arkansas corporation (the “ Company ”), Delek Logistics Partners, LP, a Delaware limited partnership (the “ Partnership” ), SALA Gathering Systems LLC, a Texas limited liability company (“ SALA ”), El Dorado Pipeline Company, LLC, a Delaware limited liability company (“ El Dorado ”), and Magnolia Pipeline Company, LLC, a Delaware limited liability company (“ Magnolia ”) (each of the Company, the Partnership, SALA, El Dorado and Magnolia referred to individually as a “ Party ” or collectively as the “ Parties ”), and, for the limited purposes specified in Article 28, J. Aron & Company, a New York general partnership (“ J. Aron ”).

WHEREAS, in connection with the Supply and Offtake Agreement, the Company, Lion Oil Trading & Transportation, Inc. and J. Aron entered into the Storage Facilities Agreement;

WHEREAS, pursuant to and subject to the terms of the Supply and Offtake Agreement, J. Aron will supply Crude Oil to the Company to be processed at the Refinery and purchase Products produced by the Company at the Refinery;

WHEREAS, on the Commencement Date, the Company contributed to the Partnership 100% of the membership interests in SALA, El Dorado and Magnolia, including rights, title and interest in the Pipelines and Crude Storage Tanks (the “ Contribution ”);

WHEREAS, in connection with the Contribution, (i) the Supply and Offtake Agreement is being amended to reflect the Contribution and the status of this Agreement thereunder, (ii) the Storage Facilities Agreement is being amended to remove therefrom the assets subject to the Contribution and the rights and obligations of the parties thereto related to such assets and (iii) the Parties are entering into this Agreement to provide for the rights and obligations of the Parties with respect to such assets; and

WHEREAS, the Company and the Partnership Parties desire to record the terms and conditions upon which the Company shall continue to use the Storage Facilities and Pipelines and the Partnership Parties shall serve as operators of the Crude Storage Tanks and the Pipelines and bailees of all Crude Oil and Products held therein and owned by the Company or its assignee;

NOW, THEREFORE, in consideration of the premises and the respective promises, conditions, terms and agreements contained herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties do hereby agree as follows:

 

1


1. Definitions and Construction.

1.1 Definitions . For purposes of this Agreement, including the foregoing recitals, the following terms shall have the meanings indicated below:

Actual Month End Crude Volume ” has the meaning specified in Section 6.10(a).

Actual Month End Product Volume ” has the meaning specified in Section 6.10(a).

Actual Shipments ” means the volume of Crude Oil or Products that is delivered on the applicable Pipeline under this Agreement.

Affiliate ” means, with to respect to a specified Person, any other Person controlling, controlled by or under common control with that first Person. As used in this definition, the term “ control ” includes (i) with respect to any Person having voting securities or the equivalent and elected directors, managers or Persons performing similar functions, the ownership of or power to vote, directly or indirectly, voting securities or the equivalent representing 50% or more of the power to vote in the election of directors, managers or Persons performing similar functions, (ii) ownership of 50% or more of the equity or equivalent interest in any Person and (iii) the ability to direct the business and affairs of any Person by acting as a general partner, manager or otherwise. Notwithstanding the foregoing, for purposes of this Agreement, Delek US and its subsidiaries (other than the Partnership and its subsidiaries), including the Company, on the one hand, and the Partnership and its subsidiaries, including the Partnership Parties, on the other hand, shall not be considered Affiliates of each other.

Applicable Law ” means any applicable statute, law, regulation, ordinance, rule, judgment, rule of law, order, decree, permit, approval, concession, grant, franchise, license, agreement, requirement, or other governmental restriction or any similar form of decision of, or any provision of condition of any permit, license or other operating authorization issued under any of the foregoing by, or any determination by any Governmental Authority having or asserting jurisdiction over the matter or matters in question, whether now or hereafter in effect and in each case as amended (including, without limitation, all of the terms and provisions of the common law of such Governmental Authority), as interpreted and enforced at the time in question.

Arbitrable Dispute ” means any and all disputes, controversies and other matters in question between the Partnership Parties, on the one hand, and the Company, on the other hand, required to be resolved by arbitration under this Agreement.

Bankrupt ” means a Person that (i) is dissolved, other than pursuant to a consolidation, amalgamation or merger, (ii) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due, (iii) makes a general assignment, arrangement or composition with or for the benefit of its creditors, (iv) institutes a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditor’s rights, or a petition is presented for its winding-up or liquidation, (v) has a resolution passed for its winding-up, official management or liquidation, other than pursuant to a consolidation, amalgamation or merger, (vi) seeks or becomes subject to the appointment of an administrator, provisional liquidator,

 

2


conservator, receiver, trustee, custodian or other similar official for all or substantially all of its assets, (vii) has a secured party take possession of all or substantially all of its assets, or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all of its assets, (viii) files an answer or other pleading admitting or failing to contest the allegations of a petition filed against it in any proceeding of the foregoing nature, (ix) causes or is subject to any event with respect to it which, under Applicable Law, has an analogous effect to any of the foregoing events, (x) has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy under any bankruptcy or insolvency law or other similar law affecting creditors’ rights and such proceeding is not dismissed within fifteen (15) days after the date of commencement or (xi) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing events.

Barrel ” means forty-two (42) net U.S. gallons, measured at 60° F.

bpd ” means Barrels per day.

Business Day ” means any day that is not a Saturday, Sunday or any other day on which banks in the State of New York are not open to transact regular business.

Capacity Resolution ” has the meaning specified in Section 6.3.

Capital Improvement ” means (a) any modification, improvement, expansion or increase in the capacity of the Pipelines or Storage Facilities or any portion thereof, or (b) any connection, or new point of receipt or delivery for Crude Oil or Products, including any terminals, lateral pipelines or extensions of the Pipelines.

Claimant ” has the meaning specified in Article 26.

Commencement Date ” means [            ], 2012.

Company ” has the meaning specified in the preamble to this Agreement.

Confidential Information ” means all information, documents, records and data that a Party furnishes or otherwise discloses to the other Party (including any such items furnished prior to the execution of this Agreement), together with all analyses, compilations, studies, memoranda, notes or other documents, records or data (in whatever form maintained, whether documentary, computer or other electronic storage or otherwise) prepared by the receiving Party which contain or otherwise reflect or are generated from such information, documents, records and data; provided, however, that the term “ Confidential Information ” does not include any information that (i) at the time of disclosure or thereafter is or becomes generally available to or known by the public (other than as a result of a disclosure by the receiving Party), (ii) is developed by the receiving Party without reliance on any Confidential Information or (iii) is or was available to the receiving Party on a nonconfidential basis from a source other than the disclosing Party that, insofar as is known to the receiving Party after reasonable inquiry, is not prohibited from transmitting the information to the recipient by a contractual, legal or fiduciary obligation to the disclosing Party.

 

3


Contract Quarter ” means a three-month period that commences on January 1, April 1, July 1 or October 1, and ends on March 31, June 30, September 30 or December 31, respectively, except that the initial Contract Quarter shall commence on the Commencement Date and end on December 31, 2012 and the final Contract Quarter shall end on the last day of the Term.

Contract Year ” means a year that commences on July 1 and ends on the last day of June in the following year, except that the initial Contract Year shall commence on the Commencement Date and the final Contract Year shall end on the last day of the Term.

Contribution ” has the meaning specified in the Recitals.

Control ” (including with correlative meaning, the term “ controlled by ”) means, as used with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

CPT ” means the prevailing time in the Central time zone.

Crude Delivery Point ” means (1) with respect to the Lion Crude Pipelines, the inlet flange of meters R-1, R-2 and R-3 located adjacent to the Refinery, (2) with respect to the Gathering System, [            ] and (3) with respect to any Capital Improvement, the delivery point agreed to by the Parties.

Crude Intake Point ” means the inlet flange of each Crude Storage Tank with respect to such Tank, and the inlet flange of each Crude Oil Pipeline with respect to such Pipeline.

Crude Oil Linefill ” means, at any time, the aggregate volume of Crude Oil linefill on the Crude Oil Pipelines for which the Company or its assignee is treated as the exclusive owner by the Crude Oil Pipelines; provided that such volume shall be determined by using the volumes reported on the most recent monthly or daily statements, as applicable, from the Crude Oil Pipelines.

Crude Oil ” means naturally recovered hydrocarbon mixtures, excluding recovered or recycled oils or any cracked materials.

Crude Oil Pipelines ” means the Lion Crude Pipelines and the Gathering System.

Crude Storage Tanks ” means the tanks owned by the Partnership or its subsidiaries that store Crude Oil, as further described on Schedule A .

Default ” means any Event of Default, which with notice or the passage of time, would constitute an Event of Default.

Defaulting Party ” has the meaning specified in Section 16.2.

Deficiency Notice ” has the meaning specified in Section 4.6(a).

Deficiency Payment ” has the meaning specified in Section 4.6(a).

 

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Delek US ” means Delek US Holdings, Inc., a Delaware corporation.

Designation Period ” has the meaning specified in Section 28.1.

Diesel Pipeline ” means El Dorado’s approximately 8-mile, 12-inch diameter diesel pipeline that commences at the pipeline inlet meter adjacent to the Refinery and terminates at the connection to the Enterprise TE Products System.

Diesel Pipeline Minimum Throughput Capacity ” means an aggregate amount of throughput capacity equal to 25,000 bpd multiplied by the number of calendar days in the Contract Quarter.

Duplicative Crude ” has the meaning specified in Section 4.2(b).

Early Termination Date ” has the meaning specified in Section 2.2.

El Dorado ” has the meaning specified in the preamble to this Agreement.

El Dorado Crude Pipeline ” means El Dorado’s approximately 28-mile, 12-inch diameter Crude Oil pipeline from Magnolia Station to Sandhill Station.

El Dorado Crude Pipeline Minimum Throughput Capacity ” means an aggregate amount of throughput capacity equal to 60,000 bpd multiplied by the number of calendar days in the Contract Quarter.

Environmental Law ” means all federal, state, and local laws, statutes, rules, regulations, orders, judgments, ordinances, codes, injunctions, decrees, Environmental Permits and other legally enforceable requirements and rules of common law now or hereafter in effect, relating to pollution or protection of human health and the environment, including, without limitation, the federal Comprehensive Environmental Response, Compensation, and Liability Act, the Superfund Amendments Reauthorization Act, the Resource Conservation and Recovery Act, the Clean Air Act, the Federal Water Pollution Control Act, the Toxic Substances Control Act, the Oil Pollution Act, the Safe Drinking Water Act, the Hazardous Materials Transportation Act, and other similar federal, state or local environmental conservation and protection laws, each as amended from time to time.

Environmental Permit ” means any permit, approval, identification number, license, registration, consent, exemption, variance or other authorization required under or issued pursuant to any applicable Environmental Law.

Event of Default ” has the meaning specified in Section 16.1.

Expiration Date ” means the “Expiration Date,” as defined in the Supply and Offtake Agreement, or, if later, the date on which all obligations thereunder are finally settled.

Facility ” has the meaning specified in Section 6.6.

FERC ” means the Federal Energy Regulatory Commission.

 

5


Force Majeure ” means acts of God, strikes, lockouts or other industrial disturbances, acts of the public enemy, wars, blockades, insurrections, riots, storms, floods, washouts, arrests, the order of any court or Governmental Authority having jurisdiction while the same is in force and effect, civil disturbances, explosions, breakage, accident to machinery, storage tanks or lines of pipe, inability to obtain or unavoidable delay in obtaining material or equipment, inability to obtain Crude Oil because of a failure of third-party pipelines, and any other causes whether of the kind herein enumerated or otherwise not reasonably within the control of the Party claiming suspension and which by the exercise of due diligence such Party is unable to prevent or overcome.

Force Majeure Notice ” has the meaning specified in Section 14.1.

Force Majeure Party ” has the meaning specified in Section 14.1.

Force Majeure Period ” has the meaning specified in Section 14.1.

Gasoline Pipeline ” means El Dorado’s approximately 8-mile, 10-inch diameter gasoline pipeline that commences at the pipeline inlet meter adjacent to the Refinery and terminates at the connection to the Enterprise TE Products System.

Gasoline Pipeline Minimum Throughput Capacity ” means an aggregate amount of throughput capacity equal to 25,000 bpd multiplied by the number of calendar days in the Contract Quarter.

Gathering System ” means SALA’s approximately 600-mile Crude Oil gathering pipeline system.

Gathering System Minimum Throughput Commitment ” shall mean an aggregate amount of Crude Oil equal to 14,000 bpd multiplied by the number of calendar days in the Contract Quarter.

Gathering System Tariff ” means the tariff [to be] published by SALA with respect to the Gathering System prior to the Commencement Date and filed with the FERC, including all current and future supplements to and successive issues thereof.

Gathering System Throughput Fee ” has the meaning specified in Section 4.2(c).

General Partner ” means the general partner of the Partnership.

Governmental Authority ” means any federal, state, local or foreign government or any provincial, departmental or other political subdivision thereof, or any entity, body or authority exercising executive, legislative, judicial, regulatory, administrative or other governmental functions or any court, department, commission, board, bureau, agency, instrumentality or administrative body of any of the foregoing.

Initial Term ” has the meaning specified in Section 2.1.

J. Aron ” has the meaning specified in the preamble to this Agreement.

 

6


J. Aron Materials ” has the meaning specified in Section 28.1.

Liabilities ” means any losses, liabilities, charges, damages, deficiencies, assessments, interests, fines, penalties, costs and expenses (collectively, “ Costs ”) of any kind (including reasonable attorneys’ fees and other fees, court costs and other disbursements), including any Costs directly or indirectly arising out of or related to any suit, proceeding, judgment, settlement or judicial or administrative order and any Costs arising from compliance or non-compliance with Environmental Law.

Lion Crude Minimum Throughput Commitment ” shall mean an aggregate amount of Crude Oil equal to 46,000 bpd multiplied by the number of calendar days in the Contract Quarter.

Lion Crude Pipelines ” means the Magnolia Pipeline, the El Dorado Crude Pipeline and the Rail Pipeline.

Lion Crude Tariffs ” means the individual and joint tariffs [to be] published by El Dorado, Magnolia and SALA with respect to the El Dorado Crude Pipeline, the Magnolia Pipeline and the Rail Pipeline, respectively, prior to the Commencement Date and filed with the FERC, including all current and future supplements to and successive issues thereof.

Lion Crude Throughput Fee ” has the meaning specified in Section 4.2(b).

Lion Indemnitees ” has the meaning specified in Section 17.1.

Magnolia ” has the meaning specified in the preamble to this Agreement.

Magnolia Pipeline ” means Magnolia’s approximately 77-mile Crude Oil pipeline from ExxonMobil’s North Line pipeline near Shreveport, Louisiana to Magnolia Station.

Magnolia Pipeline Minimum Throughput Capacity ” means an aggregate amount of throughput capacity equal to 30,000 bpd multiplied by the number of calendar days in the Contract Quarter.

Magnolia Station ” means Magnolia’s crude oil station near Magnolia, Arkansas.

Materials ” means any Crude Oil and/or Products transported or stored under this Agreement.

Minimum Throughput Capacity ” shall mean the Magnolia Pipeline Minimum Throughput Capacity, the El Dorado Crude Pipeline Minimum Throughput Capacity, the Diesel Pipeline Minimum Throughput Capacity and the Gasoline Pipeline Minimum Throughput Capacity, as applicable.

Minimum Throughput Commitment ” shall mean the Lion Crude Minimum Throughput Commitment, the Products Minimum Throughput Commitment and the Gathering System Minimum Throughput Commitment, as applicable.

 

7


Non-Defaulting Party ” means the Party other than the Defaulting Party.

Notice Period ” has the meaning specified in Section 15.1.

NSV ” means, with respect to any measurement of volume, the total liquid volume, excluding basic sediment and water and free water, corrected for the observed temperature to 60º F.

Open Assets ” has the meaning specified in Section 4.7.

Partnership Change of Control ” means Delek US ceases to Control the General Partner.

Partnership Indemnitees ” has the meaning specified in Section 17.2.

Partnership Parties ” means the Partnership, El Dorado, SALA and Magnolia.

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

Permitted Lien(s) ” means (a)(i) liens on real estate for real estate taxes, assessments, sewer and water charges and/or other governmental charges and levies not yet delinquent and (ii) liens for taxes, assessments, judgments, governmental charges or levies, or claims not yet delinquent or the non-payment of which is being diligently contested in good faith by appropriate proceedings and for which adequate reserves have been set aside; (b) liens of mechanics, laborers, suppliers, workers and materialmen incurred in the ordinary course of business for sums not yet due or being diligently contested in good faith; provided, however, that if a reserve or appropriate provision shall be required by GAAP, then such reserve or provision shall have been made therefor; (c) liens incurred in the ordinary course of business in connection with worker’s compensation and unemployment insurance or other types of social security benefits; and (d) liens securing rental, storage, throughput, handling or other fees or charges owing from time to time to common carriers, solely to the extent of such fees or charges.

Person ” means an individual, corporation, partnership, limited liability company, joint venture, trust or unincorporated organization, joint stock company or any other private entity or organization, Governmental Authority, court or any other legal entity, whether acting in an individual, fiduciary or other capacity.

Pipelines ” means the Crude Oil Pipelines and the Product Pipelines.

Prime Rate ” means the rate of interest quoted in The Wall Street Journal , Money Rates Section as the Prime Rate.

Product ” means any of the refined petroleum products listed on Schedule C , as from time to time amended by mutual agreement of the Parties.

Product Linefill ” means, at any time and for any grade of Product, the aggregate volume of linefill of that Product on the Product Pipelines for which the Company or its assignee is treated as the exclusive owner by the Product Pipelines; provided that such volume shall be determined by using the volumes reported on the most recent monthly or daily statements, as applicable, from the Product Pipelines.

 

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Product Pipelines ” means the Gasoline Pipeline and the Diesel Pipeline.

Products Delivery Point ” means the inlet flange of the meters of the Product Pipelines.

Products Minimum Throughput Commitment ” shall mean an aggregate amount of Products equal to 40,000 bpd multiplied by the number of days in the Contract Quarter.

Products Tariff ” means the tariff [to be] published by El Dorado with respect to the Product Pipelines prior to the Commencement Date and filed with the FERC, including all current and future supplements to and successive issues thereof.

Products Throughput Fee ” has the meaning specified in Section 4.2(a).

Rail Pipeline ” shall mean SALA’s [•]-inch diameter Crude Oil pipeline from a rail spur west of Sandhill Station to Tank 192.

Receiving Party Personnel ” has the meaning specified in Section 20.4.

Refinery ” means the petroleum refinery located in El Dorado, Arkansas owned and operated by the Company.

Renewal Term ” has the meaning specified in Section 2.1.

Required Permits ” has the meaning specified in Section 6.5.

Respondent ” has the meaning specified in Article 26.

Restoration ” has the meaning specified in Section 6.2.

SALA ” has the meaning specified in the preamble to this Agreement.

Shortfall Payment ” has the meaning specified in Section 4.3.

Services ” has the meaning specified in Section 8.1.

Special Damages ” has the meaning specified in Article 18.

Storage Facilities ” mean the Crude Storage Tanks and the land, piping, truck facilities, rail facilities and other facilities related thereto, together with existing or future modifications or additions.

Storage Facilities Agreement ” means the Storage Facilities Agreement by and among J. Aron, the Company and Lion Oil Trading & Transportation, Inc., dated as of April 29, 2011, as from time to time amended, modified and/or restated, and any replacement thereof.

 

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Supplier’s Inspector ” means any Person selected by the Company or its assignee to perform any and all inspections required by the Company in a commercially reasonable manner at the Company’s own cost and expense that is acting as an agent for the Company and that (1) is a Person who performs sampling, quality analysis and quantity determination of the Crude Oil and Products purchased and sold under the Supply and Offtake Agreement and is licensed to do so, (2) is not an Affiliate of any Party and (3) in the commercially reasonable judgment of the Company, is qualified and reputed to perform its services in accordance with Applicable Law and industry practice.

Supply and Offtake Agreement ” means the Supply and Offtake Agreement by and among J. Aron, the Company and Lion Oil Trading & Transportation, Inc., dated as of April 29, 2011, as from time to time amended, modified and/or restated, and any replacement thereof.

Suspension Notice ” has the meaning specified in Section 15.1.

Tank Maintenance ” has the meaning specified in Section 6.9(a).

Tariff ” means the Products Tariff, the Lion Crude Tariffs and the Gathering System Tariff, as applicable.

Term ” has the meaning specified in Section 2.1.

Termination Notice ” has the meaning specified in Section 14.2.

Throughput Fees ” has the meaning specified in Section 4.2(c).

Volume Determination Procedures ” mean the Partnership Parties’ ordinary month-end procedures for determining the NSV of Crude Oil in the Crude Storage Tanks, which for each Contract Quarter-end shall be based on manual gauge readings of each Crude Storage Tank as at the end of such Contract Quarter.

1.2 Construction of Agreement .

(a) Unless otherwise specified, all references herein are to the Articles, Sections and Exhibits of this Agreement and all Schedules and Exhibits are incorporated herein.

(b) All headings herein are intended solely for convenience of reference and shall not affect the meaning or interpretation of the provisions of this Agreement.

(c) Unless expressly provided otherwise, the word “including” as used herein does not limit the preceding words or terms and shall be read to be followed by the words “without limitation” or words having similar import.

(d) Unless expressly provided otherwise, all references to days, weeks, months and quarters mean calendar days, weeks, months and quarters, respectively.

 

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(e) Unless expressly provided otherwise, references herein to “consent” mean the prior written consent of the Party at issue, which shall not be unreasonably withheld, delayed or conditioned.

(f) A reference to any Party to this Agreement or another agreement or document includes the Party’s permitted successors and assigns.

(g) Unless the contrary clearly appears from the context, for purposes of this Agreement, the singular number includes the plural number and vice versa; and each gender includes the other gender.

(h) Except where specifically stated otherwise, any reference to any Applicable Law or agreement shall be a reference to the same as amended, supplemented or reenacted from time to time.

(i) The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.

1.3 The Parties acknowledge that they and their counsel have reviewed and revised this Agreement and that no presumption of contract interpretation or construction shall apply to the advantage or disadvantage of the drafter of this Agreement.

2. Term.

2.1 The initial term of this Agreement (the “ Initial Term ”) shall commence at 00:00:01 a.m., CPT, on the Commencement Date and continue until the fifth anniversary of the Commencement Date. Thereafter, the Company shall have a unilateral option to extend this Agreement for two additional five (5) year periods on the same terms and conditions set forth herein (each, a “ Renewal Term ”). The Initial Term and the Renewal Terms are sometimes referred to collectively herein as the “ Term .” In order to exercise its option to extend this Agreement for a Renewal Term, the Company shall notify the Partnership in writing not more than twenty-four (24) months and not less than twelve (12) months prior to the expiration of the Initial Term or any Renewal Term, as applicable.

2.2 The Parties may terminate this Agreement prior to the end of the Term (but are under no obligation to do so) (i) as they may mutually agree in writing, (ii) pursuant to a Termination Notice under Section 14.2, (iii) pursuant to Section 15.1 or (iv) pursuant to Section 16.2. The effective date of any such termination shall be the “ Early Termination Date .”

3. Shipping Rights. Subject to the terms and conditions hereof, the Company agrees to take service on the Pipelines in accordance with the terms, conditions and procedures set forth in the Tariff.

4. Minimum Throughput Commitments; Throughput Fees.

4.1 Minimum Throughput Commitments . During each Contract Quarter during the Term and subject to the terms and conditions of this Agreement, the Company agrees that commencing on the Commencement Date, the Company will ship on (i) the Lion Crude Pipelines, the Lion Crude Minimum Throughput Commitment, (ii) the Gathering System, the Gathering System Minimum Throughput Commitment and (iii) the Products Pipelines, the Product Minimum Throughput Commitment.

 

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4.2 Throughput Fees .

(a) The throughput fee applicable to transportation of Products on the Product Pipelines (the “ Products Throughput Fee ”) shall be the rate specified in the Products Tariff. Subject to Sections 4.3 and 4.4, the Company shall pay the Partnership an amount equal to the Products Throughput Fee multiplied by the Actual Shipments on the Product Pipelines.

(b) The throughput fee applicable to transportation of Crude Oil on the Lion Crude Pipelines (the “ Lion Crude Throughput Fee ”) shall be the applicable rate specified in the Lion Crude Tariffs; provided, however, that the Lion Crude Tariffs provide that no tariff or fee is payable with respect to any Crude Oil transported on the El Dorado Crude Pipeline that has previously been transported on the Magnolia Pipeline or the Gathering System and which the applicable Throughput Fee for such previous transportation is payable (the “ Duplicative Crude ”). Subject to Sections 4.3 and 4.4, the Company shall pay the Partnership an amount equal to the Crude Throughput Fee multiplied by the Actual Shipments on the Lion Crude Pipelines (other than the Duplicative Crude).

(c) The throughput fee applicable to transportation of Crude Oil on the Gathering System (the “ Gathering System Throughput Fee ” and, together with the Products Throughput Fee and the Lion Crude Throughput Fee, the “ Throughput Fees ”) shall be the rate specified in the Gathering System Tariff. Subject to Sections 4.3 and 4.4, the Company shall pay the Partnership an amount equal to the Gathering System Throughput Fee multiplied by the Actual Shipments on the Gathering System.

(d) All fees set forth in this Agreement shall be increased or decreased, as applicable, on July 1 of each year of the Term (i) by the change in any inflationary index promulgated by FERC in accordance with the FERC’s indexing methodology currently set forth at 18 CFR § 342.3, including future amendments or modifications thereof or (ii) in the event that the FERC terminates its indexing methodology during the Term of this Agreement, by a percentage equal to the change in the CPI-U (All Urban Consumers), as reported by the U.S. Bureau of Labor Statistics.

(e) During the Term, if new laws or regulations are enacted that require the Partnership Parties to make substantial and unanticipated capital expenditures (other than maintenance capital expenditures) with respect to any of the Pipelines or the Crude Storage Tanks, the Partnership Parties may seek authorization from the FERC to increase its Tariff rates to recover such expenditures. The Partnership Parties shall provide notice to the Company of their intention to request such a rate increase. Upon receipt of such notice, the Parties will negotiate in good faith to reach a settlement rate. If the Parties agree to a settlement rate within thirty (30) days, or within such additional time as mutually agreed to by the Parties, the Company shall agree in writing to the proposed rate change and the Partnership shall file the rate change with the FERC and submit a verified statement to the FERC indicating the support of the Company. If the Parties do not agree to a settlement rate, the Partnership reserves the right to file a cost-based rate increase with FERC to recover such capital expenditures.

 

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4.3 Shortfall Payments . If, for any Contract Quarter, Actual Shipments for such Contract Quarter on any Pipeline are less than the applicable Minimum Throughput Commitment, then the Company shall pay the Partnership Parties an amount (a “ Shortfall Payment ”) with respect to such Pipeline equal to the difference between (i) the applicable Minimum Throughput Commitment multiplied by the applicable Throughput Fee and (ii) the aggregate Throughput Fees for such Contract Quarter payable with respect to such Pipeline under Section 4.2. For purposes of calculating the Shortfall Payment with respect to any Pipeline, all Actual Shipments on any other Pipeline for such Contract Quarter shall be disregarded. The Parties acknowledge and agree that there shall be no carry-over of deficiency volumes with respect to the applicable Minimum Throughput Commitments and the payment of the Shortfall Payment shall relieve the Company of any obligation to meet such Minimum Throughput Commitments for the relevant Contract Quarter. The Parties further acknowledge and agree that there shall not be any carry-over of volumes in excess of the Minimum Throughput Commitments to any subsequent Contract Quarter.

4.4 Invoicing and Timing of Payments . The Partnership Parties shall invoice the Company monthly (or in the case of Shortfall Payments, quarterly). The Company will make payments to the Partnership Parties on a monthly basis (or in the case of Shortfall Payments, on a quarterly basis) during the Term with respect to services rendered by the Partnership Parties under this Agreement in the prior month (or in the case of Shortfall Payments, Contract Quarter) upon the later of (i) ten (10) days after its receipt of such invoice and (ii) thirty (30) days following the end of the calendar month or Contract Quarter, as applicable, during which the invoiced services were performed. Any past due payments owed to the Partnership Parties hereunder shall accrue interest, payable on demand, at the Prime Rate from the due date of the payment through the actual date of payment. Payment of any Throughput Fees or Shortfall Payment pursuant to this Section 4.4 shall be made by wire transfer of immediately available funds to an account designated in writing by Partnership. If any such fee shall be due and payable on a day that is not a Business Day, such payment shall be due and payable on the next succeeding Business Day.

4.5 Change in Pipelines’ Direction; Product Service or Origination and Destination; Capital Improvements .

(a) (i) Without the Company’s prior written consent, which shall not be unreasonably withheld, conditioned or delayed, the Partnership Parties shall not (A) reverse the direction of any of the Pipelines; (B) change, alter or modify the product service of any of the Pipeline operations; or (C) change, alter or modify the origination or destination of any of the Pipeline operations; provided, however, that the Partnership Parties may take any necessary emergency action to prevent or remedy a release of Crude Oil or Products from any of the Pipelines without obtaining the consent required by this Section 4.5(a)(i). The Company may request that the Partnership reverse the direction of any of the Pipelines, and the Partnership shall determine, in its sole discretion, whether to complete the proposed reversal.

 

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(ii) Should the Partnership determine to proceed with a Company proposed reversal, the Partnership will notify the Company of the total estimated costs necessary to complete the reversal and the proposed adjustment to the Throughput Fees and the Minimum Throughput Commitments or the Minimum Throughput Capacities required by the Partnership to recover such costs. The Partnership may seek authorization from FERC to increase its Tariff rates to recover such expenditures. The Partnership shall provide notice to the Company of their intention to request such a rate increase. Upon receipt of such notice, the Parties will negotiate in good faith to reach a settlement rate. If the Parties agree to a settlement rate within thirty (30) days, or within such additional time as mutually agreed to by the Parties, the Company shall agree in writing to the proposed rate change and the Partnership shall file the rate change with FERC and submit a verified statement to the FERC indicating the support of the Company. If the Parties do not agree to a settlement rate, the Partnership reserves the right to file a cost-based rate increase with FERC to recover such costs or to not proceed with the reversal.

(b) (i) During the term of this Agreement, the Company shall be entitled to designate Capital Improvements to be made to the Pipelines and the Storage Facilities. For any Capital Improvement designated by the Company, the Company shall submit a written proposal, including all specifications then available to it, for the proposed Capital Improvement to the Pipelines and/or the Storage Facilities, as the case may be. The Partnership will review such proposal to determine, in its sole discretion, whether it will consent to proceed with the proposed Capital Improvement. In connection with the construction of any Capital Improvement pursuant to this Section 4.5(b), the Company shall be entitled to participate in all stages of planning, scheduling, implementing, and oversight of the construction.

(ii) Should the Partnership determine to proceed and construct or cause to be constructed the approved Capital Improvement, the Partnership will obtain bids from two or more general contractors reasonably acceptable to the Company for the construction of the Capital Improvement. Based upon the bids, the Partnership will notify the Company of the total estimated amount necessary to construct such Capital Improvement (which amount shall include the costs of capital, a reasonable rate of return over the remaining Term and any other costs necessary to place such Capital Improvement in service) and the proposed adjustment to the Throughput Fees and the Minimum Throughput Commitments or the Minimum Throughput Capacities required by the Partnership to recover such costs. The Partnership may seek authorization from FERC to increase its Tariff rates to recover such expenditures. The Partnership shall provide notice to the Company of their intention to request such a rate increase. Upon receipt of such notice, the Parties will negotiate in good faith to reach a settlement rate. If the Parties agree to a settlement rate within thirty (30) days, or within such additional time as mutually agreed to by the Parties, the Company shall agree in writing to the proposed rate change and the Partnership shall file the rate change with FERC and submit a verified statement to the FERC indicating the support of the Company. If the Parties do not agree to a settlement rate, the Partnership reserves the right to file a cost-based rate increase with FERC to recover such capital expenditures or to not proceed with the construction of the Capital Improvement.

 

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(iii) Upon completion of the construction of any Capital Improvement, the Partnership will own such Capital Improvement, and will operate and maintain the Capital Improvement in accordance with Applicable Law and recognized industry standards.

4.6 Deficiency Payments .

(a) As soon as practicable following the end of each calendar month under this Agreement, the Partnership shall deliver to the Company a written notice (the “ Deficiency Notice ”) detailing any failure of the Company to meet its obligations under Section 4.1, Section 4.2, Section 4.3, Section 4.4, Section 6.3 or Article 8 of this Agreement. The Deficiency Notice shall (i) specify in reasonable detail the nature of any deficiency and (ii) specify the approximate dollar amount that the Partnership believes would have been paid to the Partnership if the Company had complied with its obligations under Section 4.1, Section 4.2, Section 4.3, Section 4.4, Section 6.3 and Article 8 of this Agreement (the “ Deficiency Payment ”). The Company shall pay the Deficiency Payment to the Partnership upon the later of: (A) ten (10) days after its receipt of the Deficiency Notice and (B) thirty (30) days following the end of the calendar month during which the Deficiency Notice was delivered.

(b) If the Company disagrees with the Deficiency Notice, then, following the payment of the undisputed portion of the Deficiency Payment to the Partnership, a senior officer of the Company and a senior officer of the Partnership shall meet or communicate by telephone at a mutually acceptable time, and thereafter as often as they reasonably deem necessary and shall negotiate in good faith to attempt to resolve any differences that they may have with respect to matters specified in the Deficiency Notice. If such differences are not resolved within thirty (30) days following the payment of any Deficiency Payment, the Company and the Partnership shall, within forty-five (45) days following the payment of such Deficiency Payment, submit any and all matters which remain in dispute and which were properly included in the Deficiency Notice to arbitration in accordance with Article 26. During the 60-day period following the receipt of any Deficiency Notice, the Company shall have the right to inspect and audit the working papers of the Partnership relating to such Deficiency Payment.

(c) If it is determined by arbitration in accordance with Article 26 that any or all of the disputed portion of the Deficiency Payment was required to be paid, the Company shall promptly pay to the Partnership such amount, together with interest thereon from the date provided in the last sentence of Section 4.6(a) at the Prime Rate, in immediately available funds.

4.7 Marketing of Transportation and Storage Services to Third Parties . From and after the Expiration Date, during the Term the Partnership Parties may market transportation services to third parties on the Pipelines and storage services to third parties in the Storage Facilities, provided that, (i) the provision of such transportation and storage services to third parties is not reasonably likely to negatively affect the Company’s ability to use any of the Pipelines or the Storage Facilities in accordance with the terms of this Agreement in any material respect, (ii) prior to marketing to any third party the use of either of the Pipelines or the Storage Facilities

 

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or the entry into any agreement with respect thereto, the applicable Partnership Party shall have received prior written consent from the Company with respect to such marketing or the entry into such agreement, as applicable, not to be unreasonably withheld, conditioned or delayed and (iii) to the extent such third-party usage reduces the ability of the Partnership Parties to provide the applicable Minimum Throughput Capacity, the applicable Minimum Throughput Commitment shall be proportionately reduced to the extent of the difference between the applicable Minimum Throughput Capacity and the amount that can be throughput in the applicable Pipelines (prorated for the portion of the Contract Quarter during which such Minimum Throughput Capacity was unavailable). Nothing in this Section 4.7 shall be construed to limit any obligation of the Partnership Parties under the Interstate Commerce Act. Notwithstanding the foregoing, to the extent the Partnership is not using any portion of the Pipelines (the “ Open Assets ”) during a Force Majeure event set forth in Article 14 or the twelve-month Notice Period set forth in Article 15, the Partnership Parties may market transportation services to third parties on the Open Assets pursuant to one or more third party agreements without the consent of the Company and the applicable Minimum Throughput Commitment will be proportionately reduced to the extent of such third party usage; provided that such third party agreements shall terminate following the end of the Force Majeure Period or the restoration of Refinery operations, as applicable.

5. Custody, Title and Risk of Loss.

5.1 Subject to Article 28, the Company shall, at all times during the Term, retain exclusive title to the Crude Oil and Products stored by it in the Storage Facilities or transported by it in the Pipelines, and such Crude Oil and Products shall remain the Company’s exclusive property. The Company hereby represents that, at all times during the Term, it holds exclusive title to the Crude Oil and Products stored by it in the Storage Facilities or transported by it in the Pipelines (including the Crude Oil Linefill and the Product Linefill), free and clear of any liens, security interests, encumbrances and claims whatsoever, other than (a) Permitted Liens and (b) any liens, security interests, encumbrances and claims with respect to which the Company has entered into an agreement reasonably acceptable to the Partnership Parties subordinating such lien, security interest, encumbrance or claim to any applicable rights of the Partnership Parties under the Tariffs.

5.2 During the time any Materials are held in any Storage Facilities or transported in any Pipelines, each Partnership Party, in its capacity as operator of the applicable Storage Facility or Pipeline, as the case may be, shall be solely responsible for compliance with all Applicable Laws, including all Environmental Laws, pertaining to the possession, handling, use and processing of such Materials.

5.3 Title and risk of loss to all of the Materials stored in the Storage Facilities or transported in the Pipelines shall remain at all times with the Company. The Company shall, during each month, (i) be entitled to all volumetric gains in the Storage Facilities and the Pipelines and (ii) be responsible for all volumetric losses in the Storage Facilities and the Pipelines up to a maximum of 0.25%. Notwithstanding the foregoing, the Partnership Parties shall be responsible for (i) any contamination of the Materials stored in the Storage Facilities or transported in the Pipelines during the Term and (ii) any other loss or damage to the Materials stored in the Storage Facilities or transported in the Pipelines during the Term to the extent such loss or damage is caused by or attributable to the negligence or willful misconduct of a Partnership Party or any of its employees or agents.

 

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5.4 During the Term, the Partnership Parties shall hold all Materials in the Storage Facilities and the Pipelines solely as bailee, and represent and warrant that when any such Materials are redelivered to the Company or any party designated by the Company, the Company or such designated party shall have good title thereto free and clear of any liens, security interests, encumbrances and claims of any kind whatsoever created or caused to be created by the Partnership Parties, other than Permitted Liens. During the Term, none of the Partnership Parties or any of their Affiliates shall (and the Partnership Parties shall not permit any of their Affiliates or any other Person to) use any such Materials for any purpose. Solely in its capacity as bailee, the Partnership Parties shall have custody of the Crude Oil stored or transported under this Agreement from the time such Crude Oil passes the Crude Intake Point until such time that the Crude Oil passes the applicable Crude Delivery Point.

6. Condition and Maintenance of Storage Facilities and Pipelines.

6.1 Interruption of Service . The Partnership shall use reasonable commercial efforts to minimize the interruption of service on the Pipelines or at the Storage Facilities and shall use its best efforts to minimize the impact of any such interruption on the Company. The Partnership shall inform the Company at least 60 days in advance (or promptly, in the case of an unplanned interruption) of any anticipated partial or complete interruption of service (i) on any Pipeline or (ii) of the Storage Facilities, including relevant information about the nature, extent, cause and expected duration of the interruption and the actions the Partnership is taking to resume full operations, provided that the Partnership shall not have any liability for any failure to notify, or delay in notifying, the Company of any such matters except to the extent the Company has been materially damaged by such failure or delay.

6.2 Maintenance and Repair Standards . Subject to Force Majeure and interruptions for planned repair and maintenance scheduled in advance and other routine repair and maintenance consistent with industry standards, the Partnership Parties shall maintain (i) the Magnolia Pipeline with sufficient aggregate capacity to throughput a volume of Crude Oil at least equal to the Magnolia Pipeline Minimum Throughput Capacity, (ii) the El Dorado Crude Pipeline with sufficient aggregate capacity to throughput a volume of Crude Oil at least equal to the El Dorado Crude Pipeline Minimum Throughput Capacity, (iii) the Diesel Pipeline with sufficient aggregate capacity to throughput a volume of Crude Oil at least equal to the Diesel Pipeline Minimum Throughput Capacity and (iv) the Gasoline Pipeline with sufficient capacity to throughput a volume of Crude Oil at least equal to the Gasoline Pipeline Minimum Throughput Capacity. The Partnership Parties’ obligations may be temporarily suspended during the occurrence of, and for the entire duration of, a Force Majeure or interruptions for routine repair and maintenance consistent with industry standards that prevent the Partnership Parties from providing the applicable Minimum Throughput Capacity. To the extent the Company is prevented for 30 or more days in any Contract Year from (i) throughputting volumes on the Magnolia Pipeline equal to the full Magnolia Pipeline Minimum Throughput Capacity and (ii) throughputting volumes on the Lion Crude Pipelines equal to at least the Lion Crude Minimum Throughput Commitment for reasons of Force Majeure or other interruption of service affecting the facilities or assets of the Partnership Parties, then the Lion Crude Minimum Throughput Commitment shall be proportionately reduced to the extent of the difference between the Lion Crude Minimum Throughput Capacity and the amount that the Partnership Parties can effectively throughput in the Lion Crude Pipelines (prorated for the portion of the Contract Quarter during which the Lion Crude Minimum Throughput Capacity was unavailable) regardless of whether actual throughput prior to the reduction was below the Lion Crude Minimum Throughput Commitment. To the extent the Company is prevented for 30 or more days in any Contract Year from (i) throughputting volumes on the El Dorado Crude Pipeline equal to at least the El Dorado Crude Pipeline Minimum Throughput Capacity or (ii) throughputting volumes on the Products Pipeline equal to at least the Products Minimum Throughput Commitment for reasons of Force Majeure or other interruption of service affecting the facilities or assets of the Partnership Parties, then the applicable Minimum

 

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Throughput Commitment shall be proportionately reduced to the extent of the difference between the applicable Minimum Throughput Capacity and the amount that the Partnership Parties can effectively throughput in such Pipelines (prorated for the portion of the Contract Quarter during which the applicable Minimum Throughput Capacity was unavailable) regardless of whether actual throughput amounts prior to the reduction were below the applicable Minimum Throughput Commitments. At such time as the Partnership Parties are capable of throughputting volumes equal to the full applicable Minimum Throughput Capacity, the Company’s obligation to throughput the full applicable Minimum Throughput Commitment shall be restored. If for any reason, including, without limitation, a Force Majeure event, the throughput of the Pipelines should fall below the applicable Minimum Throughput Capacity, then with due diligence and dispatch, the Partnership Parties shall make repairs to the Pipelines to restore the capacity of the Pipelines to that required for throughput of the applicable Minimum Throughput Capacity (“ Restoration ”). Except as provided below in Section 6.3, all of such Restoration shall be at the Partnership Parties’ cost and expense, unless the damage creating the need for such repairs was caused by the negligence or willful misconduct of the Company, its employees, agents or customers. The Partnership Parties shall maintain the Gathering System and the Rail Pipeline in good working order.

6.3 Capacity Resolution . In the event of the failure of the Partnership Parties to maintain the Pipelines with sufficient capacity to throughput the applicable Minimum Throughput Capacity, then either Party shall have the right to call a meeting between executives of both Parties by providing at least two (2) Business Days’ advance written notice. Any such meeting shall be held at a mutually agreeable location and will be attended by executives of both Parties each having sufficient authority to commit his or her respective Party to a Capacity Resolution (hereinafter defined). At the meeting, the Parties will negotiate in good faith with the objective of reaching a joint resolution for the Restoration which will, among other things, specify steps to be taken by the Partnership Parties to fully accomplish the Restoration and the deadlines by which the Restoration must be completed (the “ Capacity Resolution ”). Without limiting the generality of the foregoing, the Capacity Resolution shall set forth an agreed upon time schedule for the Restoration activities. Such time schedule shall be reasonable under the circumstances, consistent with customary pipeline transportation and terminal industry standards and shall take into consideration the Partnership Parties’ economic considerations relating to costs of the repairs and the Company’s requirements concerning its refining and marketing operations. The Partnership Parties shall use commercially reasonable efforts to continue to provide throughput of the Materials, to the extent the Pipelines have capability of doing so, during the period before Restoration is completed. In the event that the Company’s economic

 

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considerations justify incurring additional costs to complete the Restoration in a more expedited manner than the time schedule determined in accordance with the preceding sentence, the Company may require the Partnership Parties to expedite the Restoration to the extent reasonably possible, subject to the Company’s payment, in advance, of the estimated incremental costs to be incurred as a result of the expedited time schedule. In the event the Parties agree to an expedited Restoration plan wherein the Company agrees to fund a portion of the Restoration cost, then neither Party shall have the right to terminate this Agreement pursuant to Section 14.2 below so long as such Restoration is completed with due diligence and dispatch, and the Company shall pay its portion of the Restoration Cost to the Partnership in advance based on a good faith estimate based on reasonable engineering standards. Upon completion, the Company shall pay the difference between the actual portion of Restoration costs to be paid by the Company pursuant to this Section 6.3 and the estimated amount paid under the preceding sentence within thirty (30) days after receipt of the Partnership’s invoice therefor, or, if appropriate, the Partnership shall pay the Company the excess of the estimate paid by the Company over the Partnership Parties’ actual costs as previously described within thirty (30) days after completion of the Restoration.

6.4 The Partnership Parties will endeavor to ensure that no Materials shall be contaminated with scale or other materials, chemicals, water or any other impurities. In lieu of any obligation to indemnify the Lion Indemnitees pursuant to Section 17.1(i) with respect to any such contamination, the Partnership Parties may, at their sole option, require the Company, at the Partnership Parties’ sole expense, to reprocess or otherwise treat any such contaminated Products to restore those Products to salable condition.

6.5 During the Term of this Agreement, the Partnership Parties shall, at their sole cost and expense, take all actions reasonably necessary or appropriate to obtain, apply for, maintain, monitor, renew, and/or modify as appropriate, any license authorization, certification, filing, recording, permit, waiver, exception, variance, franchise, order or other approval with or of any governmental authority pertaining or relating to the operation of the Storage Facilities (the “ Required Permits ”) as presently operated. The Partnership Parties shall not do anything in connection with the performance of their obligations under this Agreement that causes a termination or suspension of the Required Permits.

6.6 The execution of this Agreement by the Parties does not confer any obligation or responsibility on the Company in connection with: (i) any existing or future environmental condition at the Storage Facilities (collectively, the “ Facility ”), including, but not limited to the presence of a regulated or hazardous substance on or in environment media at the Facility (including the presence in surface water, groundwater, soils or subsurface strata, or air), including the subsequent migration of any such substance; (ii) any environmental law; (iii) the Required Permits; or (iv) any requirements arising under or relating to any Applicable Law pertaining or relating to the operation of the Facility.

6.7 Notwithstanding anything to the contrary herein, the Partnership Parties shall be the operator of the Storage Facilities in all respects, and the Company shall have no power or authority to direct the activities of the Partnership Parties or to exert control over the operation of the Storage Facilities or any portion thereof.

 

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6.8 Materials may require the application of heat or steam by the Partnership Parties to maintain the same in a liquid free-flowing or pumpable state. The Partnership Parties agree to provide the required heat at the Partnership Parties’ cost. Recalibration, or strapping, of the Storage Facilities may be performed from time to time in accordance with the terms of the Supply and Offtake Agreement.

6.9 Tank Maintenance .

(a) The Parties agree to cooperate with each other in establishing the start date for any non-emergency maintenance on any of the Crude Storage Tanks that would result in such storage tank being taken out of service (“ Tank Maintenance ”) so as to not unnecessarily interfere with any of the Company’s purchase or sale commitments or to otherwise accommodate, to the extent reasonably practicable, other commercial or market considerations that the Company deems relevant.

(b) The Partnership Parties agree that they will use commercially reasonable efforts, consistent with good industry standards and practices, to complete (and to cause any third parties to complete) any Tank Maintenance as promptly as practicable. The Partnership shall provide the Company with an initial estimate of the period of any non-emergency Tank Maintenance and shall regularly update the Company as to the progress of such Tank Maintenance. If the Partnership determines that the expected completion date for Tank Maintenance has or is likely to change by 30 days or more, it shall promptly notify the Company of such determination.

6.10 Month End Inventory .

(a) As of 11:59:59 p.m., CPT, on the last day of each month, the Partnership Parties shall apply the Volume Determination Procedures to the Crude Oil Pipelines, the Crude Storage Tanks and the Product Pipelines, and based thereon shall determine for such month (i) the aggregate volume of Crude Oil held in the Crude Storage Tanks at that time, plus the Crude Oil Linefill at that time (the “ Actual Month End Crude Volume ”) and (ii) for each Product, the aggregate volume of Product Linefill for such Product at that time (each, an “ Actual Month End Product Volume ”). The Partnership Parties shall notify the Company of the Actual Month End Crude Volume and each Actual Month End Product Volume by no later than 5:00 p.m., CPT, on the fifth Business Day thereafter.

(b) At the cost and expense of the Company, the Company may, or may have a Supplier’s Inspector, witness all or any aspects of the Volume Determination Procedures as the Company shall direct. If, in the judgment of the Company or a Supplier’s Inspector, the Volume Determination Procedures have not been applied correctly, then the Partnership Parties will cooperate with the Company, or such Supplier’s Inspector, to ensure the correct application of the Volume Determination Procedures, including making such revisions to the Actual Month End Crude Volume and any Actual Month End Product Volume as may be necessary to correct any such errors.

 

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7. Inspection and Access Rights.

7.1 At any reasonable times during normal business hours and upon reasonable prior notice, the Company and its representatives (including one or more Supplier’s Inspector) shall have the right to enter and exit a Partnership Party’s premises in order to have access to the Storage Facilities and the Pipelines, to observe the operations of the Storage Facilities and the Pipelines and to conduct such inspections as the Company may wish to have performed in connection with this Agreement, including the right to inspect, gauge, measure, take product samples or take readings at any of the Storage Facilities and the Pipelines on a spot basis. Without limiting the generality of the foregoing, the Partnership Parties shall regularly grant Supplier’s Inspector such access from the last day of each month until the third Business Day of the ensuing month. Notwithstanding any of the foregoing, if an Event of Default with respect to the Partnership Parties has occurred and is continuing, the Company and its representatives and agents shall have unlimited and unrestricted access to the Storage Facilities and the Pipelines for so long as such Event of Default continues.

7.2 When accessing the facilities of the Partnership Parties, the Company and its representatives (including one or more Supplier’s Inspectors) shall at all times comply with Applicable Law and such safety directives and guidelines as may be furnished to the Company by the Partnership Parties in writing from time to time.

8. Throughput and Handling Services.

8.1 From time to time during the Term, the Partnership Parties shall perform such additional throughput, handling and measuring services not provided in the Tariffs as the Company shall reasonably request (collectively, “ Services ”). If any Services are requested by the Company, then the Parties shall negotiate in good faith to determine whether such Services shall be provided and the appropriate rates to be charged for such Services.

8.2 The Company may, in its discretion, provide written instructions relating to specific Services it is requesting or provide standing written instructions relating to ongoing Services. The Company may, at any time on reasonable prior notice, revoke or modify any instruction it has previously given, whether such previous instructions relate to a specific Service or are instructions relating to an ongoing Service or Services. The Partnership Parties shall not be required to perform any requested Services that they reasonably believe violates Applicable Law or will materially adversely interfere with, or be detrimental to, the operation of the Storage Facilities or Refinery.

8.3 The Partnership Parties agree to keep the Storage Facilities, including the Pipelines, open for receipt and redelivery of the Company’s or its assignee’s Materials twenty-four (24) hours a day, seven (7) days a week.

9. Scheduling and Measurements.

9.1 The Company shall provide notice to the Partnership Parties prior to each calendar month as to the estimated quantities of Crude Oil that it expects to deliver to the Crude Storage Tanks, the estimated quantities of Crude Oil it expects to transport on the Crude Oil Pipelines and the estimated quantities of Products it expects to transport on the Product Pipelines.

 

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9.2 The volume of the Materials received into and redelivered out of the Storage Facilities shall be measured daily by the Partnership Parties, using the applicable tank gauges. The volume of the Materials transported on the Pipelines shall be measured daily by the Partnership Parties, using the applicable meters. Volume measurements shall be made as provided in Article 11 of the Supply and Offtake Agreement. The Partnership Parties shall provide the Company with (i) daily reports showing the tank gauges and meter readings for the prior day and (ii) monthly reports reflecting all Materials movements during that month.

9.3 The Partnership Parties shall provide the Company with reasonable prior notice of any periodic testing and calibration of any measurement facilities providing measurement of Materials at the Storage Facilities or the Pipelines, and the Partnership Parties shall permit the Company to observe such testing and calibration. In addition, the Partnership Parties shall provide the Company with any documentation regarding the testing and calibration of the measurement facilities.

10. Additional Covenants.

10.1 The Partnership Parties hereby:

(a) agree that they shall not sell, shall have no interest in and shall not permit the creation of, or suffer to exist, any security interest, lien, encumbrance, charge or other claim of any nature (other than Permitted Liens) with respect to any of the Materials;

(b) (i) confirm that they will post at the Storage Facilities such reasonable placards as the Company requests stating that the Company or its assignee is the owner of all Materials held in the Storage Facilities and (ii) agree that they will take all actions necessary to maintain such placards in place for the Term;

(c) acknowledge and agree that the Company may file a UCC-1 statement with respect to the Materials stored in the Storage Facilities, and the Partnership Parties shall cooperate with the Company in executing such financing statements as the Company deems necessary or appropriate;

(d) agree that no loss allowances shall be applied to the Materials held in the Storage Facilities or transported in the Pipelines;

(e) agree to provide all pumping and transfer services with respect to the Storage Facilities and the Pipelines as the Company may from time to time reasonably request with respect to any Material;

(f) agree to permit the Company’s personnel to have rights of access to and egress from the Facility by crossing over, around and about the Facility for any purpose related to this Agreement, including but not limited to enforcing its rights and interests under this Agreement; provided that (i) the Company’s personnel shall follow routes and paths designated by a Partnership Party or security personnel employed by a Partnership Party, (ii) the Company’s personnel shall observe all security, fire and safety regulations while, in around or about the Facility, and (iii) the Company shall be liable for any damage directly caused by the negligence or tortious conduct of such personnel;

 

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(g) agree to maintain all necessary leases, easements, licenses and rights-of-way necessary for the operation and maintenance of the Storage Facilities and the Pipelines;

(h) agree to replace, maintain and/or repair any part of the Storage Facilities or the Pipelines which may be destroyed or damaged by the elements, acts of God, fire, floods, or any other cause excluding damage or destruction caused by the negligence or tortious conduct of the Company’s personnel;

(i) agree to furnish any and all fuel, power and pumping equipment, together with all personnel necessary to transport Materials in accordance with the terms of this Agreement;

(j) agree that, in the event of any Crude Oil or Product spill, leak or discharge or any other environmental pollution caused by or in connection with the use of any Storage Facilities or Pipelines, the Partnership Parties shall promptly commence containment or clean-up operations as required by any Governmental Authorities or Applicable Law or as the Partnership Party deems appropriate or necessary and shall notify or arrange to notify the Company immediately of any such spill, leak or discharge and of any such operations;

(k) agree to refrain from changing the Tariff rates except in accordance with Sections 4.2(d), 4.2(e) and 4.5 of this Agreement or, in any case where an adjustment pursuant to Section 4.2(d) has reduced the rate below the Tariff rate in effect on the date hereof, in order to increase such Tariff rate to be equal to the rate in effect on the date hereof; and

(l) represent and confirm that all representations and warranties of the Partnership Parties contained herein shall be true and correct on and as of the Commencement Date.

10.2 The Company hereby agrees:

(a) to replace or repair, at its own expense, any part of the Pipelines and the Facility which may be destroyed or damaged through any negligent or tortious act or omission of the Company, its agents or employees;

(b) to not make any alteration, additions or improvements to the Pipelines and the Storage Facilities or remove any part thereof, without the prior written consent of the Partnership Party, such consent to be at the Partnership Party’s sole discretion;

(c) to refrain from challenging, and from encouraging or assisting any other Person in challenging, in any forum the Tariff rates and modifications to the Tariff rates in accordance with Section 10.1(k) of this Agreement; and

(d) to support any change to the Tariff rates in accordance with Section 10.1(k) of this Agreement, including through appropriate filings with the FERC.

 

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10.3 Each Party hereby agrees that:

(a) it shall, in the performance of its obligations under this Agreement, comply in all material respects with Applicable Law, including all Environmental Law. Each Party shall maintain the records required to be maintained by Environmental Law and shall make such records available to the other Parties upon reasonable request. Each Party also shall immediately notify the other Parties of any violation or alleged violation of any Environmental Law relating to any Materials stored under this Agreement and, upon request, shall provide to the other Parties all evidence of environmental inspections or audits by any Governmental Authority with respect to such Materials; and

(b) all records or documents provided by any Party to any of the other Parties shall, to the best knowledge of such Party, accurately and completely reflect the facts about the activities and transactions to which they relate. Each Party shall promptly notify the other Parties if at any time such Party has reason to believe that any records or documents previously provided to any of the other Parties no longer are accurate or complete.

11. Representations.

11.1 Each Partnership Party represents and warrants to the Company that (i) this Agreement, the rights obtained and the duties and obligations assumed by such Partnership Party hereunder, and the execution and performance of this Agreement by such Partnership Party, do not directly or indirectly violate any Applicable Law with respect to such Partnership Party or any of its properties or assets, the terms and provisions of any Partnership Party’s organizational documents or any agreement or instrument to which such Partnership Party or any of its properties or assets are bound or subject; (ii) the execution and delivery of this Agreement by such Partnership Party have been authorized by all necessary corporate or other action, (iii) such Partnership Party has the full and complete authority and power to enter into this Agreement and to provide the services to be provided by such Partnership Party hereunder and to allow the Company the exclusive use of the Storage Facilities, (iv) no further action on behalf of such Partnership Party, or consents of any other party, are necessary for the provision of services to be provided by such Partnership Party hereunder (except for the consents of any third party holding a mortgage on the Storage Facilities or having another interest therein which such Partnership Party covenants and represents it has obtained) and (v) upon execution and delivery by the Partnership Parties, this Agreement shall be a valid, binding and subsisting agreement of such Partnership Party enforceable in accordance with its terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors’ rights generally and subject, as to enforceability, to equitable principles of general application regardless of whether enforcement is sought in a proceeding in equity or at law).

11.2 The Company represents and warrants to the Partnership Parties that (i) this Agreement, the rights obtained and the duties and obligations assumed by the Company hereunder, and the execution and performance of this Agreement by the Company, do not directly or indirectly violate any Applicable Law with respect to the Company or any of its property or assets, the terms and provisions of the Company’s organizational documents or any agreement or instrument to which the Company or any of its property or assets are bound or subject; (ii) the execution and delivery of this Agreement by the Company has been authorized

 

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by all necessary corporate or other action, and (iii) upon execution and delivery by the Company, this Agreement shall be a valid, binding and subsisting agreement of the Company enforceable in accordance with its terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors’ rights generally and subject, as to enforceability, to equitable principles of general application regardless of whether enforcement is sought in a proceeding in equity or at law).

12. Insurance.

12.1 The Partnership shall procure and maintain in full force and effect throughout the Term insurance coverages of the following types and amounts and with insurance companies rated not less than A- by A.M. Best, or otherwise equivalent in respect of the Partnership’s properties and operations:

(a) Property damage coverage on an “all risk” basis in an amount sufficient to cover the market value or potential full replacement cost of all Materials owned by the Company in inventory in the Pipelines or the Crude Storage Tanks. In the event that the market value or potential full replacement cost of all Materials exceeds the insurance limits available at commercially reasonable rates in the insurance marketplace, the Partnership Parties will maintain the highest insurance limit available at commercially reasonable rates; provided, however, that the Partnership will promptly notify the Company of the Partnership’s inability to fully insure any Materials and provide full details of such inability. Such policies shall be endorsed to name the Company as a loss payee with respect to any of the Company’s Materials in the care, custody or control of the Partnership. Notwithstanding anything to the contrary herein, the Company, may, at its option and its sole expense, endeavor to procure and provide such property damage coverage for the Materials; provided that, to the extent any such insurance is duplicative with insurance procured by the Partnership, the insurance procured by the Partnership shall in all cases represent, and be written to be, the primary coverage.

(b) Comprehensive or commercial general liability coverage and umbrella or excess liability coverage, which includes bodily injury, broad form property damage and contractual liability, products and completed operations liability and “sudden and accidental pollution” liability coverage in the minimum amounts indicated on Schedule C . Such policies shall include the Company as an additional insured with respect to any of the Company’s Crude Oil or Products in the care, custody or control of the Partnership.

12.2 Additional Insurance Requirements .

(a) The foregoing policies shall include an endorsement that the underwriters waive all rights of subrogation against the Company.

(b) The Partnership shall cause its insurance carriers to furnish the Company with insurance certificates, in ACORD form or equivalent, evidencing the existence of the coverages and the endorsements required above. The Partnership shall provide thirty (30) days’ written notice prior to cancellation of insurance becoming effective. The Partnership also shall provide renewal certificates within thirty (30) days before expiration of the policy.

 

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(c) The mere purchase and existence of insurance shall not reduce or release either Party from any liability or other obligations incurred or assumed under this Agreement.

(d) The Partnership shall comply with all notice and reporting requirements in the foregoing policies and timely pay all premiums.

12.3 The provisions of Sections 12.1 and 12.2 shall terminate on the Expiration Date.

12.4 The Company shall maintain commercially reasonable business interruption insurance for the benefit of the Refinery, the Pipelines, and the Crude Storage Tanks for so long as the Partnership is a consolidated subsidiary of Delek US. Allocation of such benefits shall be proportionate to the loss in operating margin sustained by the Company and the Partnership as a result of the interruption.

13. [Reserved].

14. Force Majeure.

14.1 In the event that a Party is rendered unable, wholly or in part, by a Force Majeure event to perform its obligations under this Agreement, then upon the delivery by such Party (the “ Force Majeure Party ”) of written notice (a “ Force Majeure Notice ”) and full particulars of the Force Majeure event within a reasonable time after the occurrence of the Force Majeure event relied on, the obligations of the Parties, to the extent they are affected by the Force Majeure event, shall be suspended for the duration of any inability so caused; provided that (i) prior to the third anniversary of the Commencement Date, the Company shall be required to continue to make payments (1) for the Throughput Fees for volumes actually delivered under this Agreement, (2) for the fees, if any, for Services performed under Article 8 and (3) for any Shortfall Payments unless, in the case of (3), the Force Majeure event is an event that adversely affects the Partnership Parties’ ability to perform the services they are required to perform under this Agreement in which case, instead of Shortfall Payments, Throughput Fees shall only be paid as provided under (i)(1) above and (ii) from and after the third anniversary of the Commencement Date, the Company shall be required to continue to make payments (1) for the Throughput Fees for volumes actually delivered under this Agreement and (2) for the fees, if any, for Services provided under Article 8. The Force Majeure Party shall identify in such Force Majeure Notice the approximate length of time that it believes in good faith such Force Majeure event shall continue (the “ Force Majeure Period ”). The Company shall be required to pay any amounts accrued and due under this Agreement at the time of the Force Majeure event. The cause of the Force Majeure event shall so far as possible be remedied with all reasonable dispatch, except that no Party shall be compelled to resolve any strikes, lockouts or other industrial disputes other than as it shall determine to be in its best interests. Prior to the third anniversary of the Commencement Date, any suspension of the obligations of the Parties under this Section 14.1 as a result of a Force Majeure event that adversely affects the Partnership’s ability to perform the services it is required to perform under this Agreement shall extend the Term for the same period of time as such Force Majeure event continues (up to a maximum of one year) unless this Agreement is terminated under Section 14.2.

 

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14.2 If the Force Majeure Party advises in any Force Majeure Notice that it reasonably believes in good faith that the Force Majeure Period shall continue for more than twelve (12) consecutive months beyond the third anniversary of the Commencement Date, then at any time after the delivery of such Force Majeure Notice, either Party may deliver to the other Party a notice of termination (a “ Termination Notice ”), which Termination Notice shall become effective not earlier than twelve (12) months after the later to occur of (a) delivery of the Termination Notice and (b) the third anniversary of the Commencement Date; provided, however, that such Termination Notice shall be deemed cancelled and of no effect if the Force Majeure Period ends before the Termination Notice becomes effective; provided, further, that upon the cancellation of any Termination Notice, the Parties’ respective obligations hereunder shall resume as soon as reasonably practicable thereafter, and the Term shall be extended by the same period of time as is required for the Parties to resume such obligations. After (a) the third anniversary of the Commencement Date and (b) the Expiration Date and following delivery of a Termination Notice, the Partnership may terminate this Agreement, to the extent affected by the Force Majeure event, upon sixty (60) days prior written notice to the Company in order to enter into an agreement to provide any third party the services provided to the Company under this Agreement; provided, however, that the Partnership shall not have the right to terminate this Agreement for so long as the Company continues to make Shortfall Payments.

15. Suspension of Refinery Operations

15.1 From and after the second anniversary of the Commencement Date, in the event that the Company decides to permanently or indefinitely suspend refining operations at the Refinery for a period that shall continue for at least twelve (12) consecutive months, the Company may provide written notice to the Partnership of the Company’s intent to terminate this Agreement (the “ Suspension Notice ”). Such Suspension Notice shall be sent at any time (but not prior to the second anniversary of the Commencement Date) after the Company has notified the Partnership of such suspension and, upon the expiration of the period of twelve (12) months (which may run concurrently with the twelve (12) month period described in the immediately preceding sentence) following the date such notice is sent (the “ Notice Period ”), this Agreement shall terminate. If the Company notifies the Partnership, more than two months prior to the expiration of the Notice Period, of its intent to resume operations at the Refinery, then the Suspension Notice shall be deemed revoked and this Agreement shall continue in full force and effect as if such Suspension Notice had never been delivered. During the Notice Period, the Company shall remain liable for Shortfall Payments. Subject to Section 15.2 and after the Expiration Date, during the Notice Period the Partnership may terminate this Agreement upon sixty (60) days prior written notice to the Company in order to enter into an agreement to provide any third party the services provided to the Company under this Agreement.

15.2 If refining operations at the Refinery are suspended for any reason (including refinery turnaround operations and other scheduled maintenance), then the Company shall remain liable for Deficiency Payments under this Agreement for the duration of the suspension, unless and until this Agreement is terminated as provided above. The Company shall provide at least thirty (30) days’ prior written notice of any suspension of operations at the Refinery due to a planned turnaround or scheduled maintenance, provided that the Company shall not have any liability for any failure to notify, or delay in notifying, the Partnership of any such suspension except to the extent a Partnership Party has been materially damaged by such failure or delay.

 

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15.3 After the Expiration Date, in the event the operations of the Refinery are suspended under this Article 15 or as a result of a Force Majeure event, the Partnership Parties shall have the right to provide transportation and storage services to third parties on the terms and conditions set forth in Section 4.7.

16. Event of Default: Remedies Upon Event of Default.

16.1 Notwithstanding any other provision of this Agreement, the occurrence of any of the following shall constitute an “ Event of Default ”:

(a) Any Party fails to make payment when due (i) under Article 4 within one (1) Business Day after a written demand therefor or (ii) under any other provision hereof within five (5) Business Days thereafter; or

(b) Other than a default described in Section 16.1(a) or (c), the Company or any Partnership Party fails to perform any material obligation or covenant to the other under this Agreement, which is not cured to the reasonable satisfaction of any other Party (in its sole discretion) within ten (10) Business Days after the date that such Party receives written notice that such obligation or covenant has not been performed; or

(c) Any Party breaches any representation or warranty made or repeated or deemed to have been made or repeated by the Party, or any warranty or representation proves to have been incorrect or misleading in any material respect when made or repeated or deemed to have been made or repeated; provided, however, that if such breach is curable, such breach is not cured to the reasonable satisfaction of the other Party within ten (10) Business Days after the date that such Party receives notice that corrective action is needed; or

(d) Any Party becomes Bankrupt; or

(e) Any Partnership Party breaches in a material respect its obligations under Section 10.1(a).

16.2 Without limiting any other provision of this Agreement, if an Event of Default with respect to the Company or any Partnership Party (such defaulting Party, the “ Defaulting Party ”) has occurred and is continuing, the Non-Defaulting Party shall have the right, immediately and at any time(s) thereafter, to terminate this Agreement.

16.3 Without limiting any other rights or remedies hereunder, if an Event of Default occurs and the Company is the Non-Defaulting Party, the Company may, in its discretion, (i) withhold or suspend its obligations, including any of its delivery or payment obligations, under this Agreement, (ii) reclaim and repossess any and all of its Materials held at the Storage Facilities or elsewhere on the Partnership Party’s premises, and (iii) otherwise arrange for the disposition of any of its Materials in such manner as it elects.

16.4 If an Event of Default occurs, the Non-Defaulting Party may, without limitation on its rights under this Article 16, set off amounts which the Defaulting Party owes to it against any amounts which it owes to the Defaulting Party (whether hereunder, under any other agreement or contract or otherwise and whether or not then due). Any net amount due hereunder shall be payable by the Party owing such amount within one business day of termination.

 

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16.5 The Non-Defaulting Party’s rights under this Article 16 shall be in addition to, and not in limitation of, any other rights which the Non-Defaulting Party may have (whether by agreement, operation of law or otherwise), including without limitation any rights of recoupment, setoff, combination of accounts, as a secured party or under any other credit support. The Defaulting Party shall indemnify and hold the Non-Defaulting Party harmless from all costs and expenses, including reasonable attorney fees, incurred in the exercise of any remedies hereunder.

16.6 No delay or failure by the Non-Defaulting Party in exercising any right or remedy to which it may be entitled on account of any Event of Default shall constitute an abandonment of any such right, and the Non-Defaulting Party shall be entitled to exercise such right or remedy at any time during the continuance of an Event of Default.

17. Indemnification.

17.1 The Partnership Parties shall defend, indemnify and hold harmless the Company, its Affiliates, and their respective directors, officers, employees, representatives, agents, contractors, successors and permitted assigns (collectively, the “ Lion Indemnitees ”) from and against any Liabilities directly or indirectly arising out of (i) any breach by the Partnership Parties of any covenant or agreement contained herein or made in connection herewith or any representation or warranty of any Partnership Party made herein or in connection herewith proving to be false or misleading, (ii) any failure by the Partnership Parties, their Affiliates or any of their respective employees, representatives, agents or contractors to comply with or observe any Applicable Law, or (iii) injury, disease, or death of any Person or damage to or loss of any property, fine or penalty, any of which is caused by the Partnership Parties, their Affiliates or any of their respective employees, representatives, agents or contractors in the exercise of any of the rights granted hereunder or the handling, storage, transportation or disposal of any Materials hereunder, except to the extent that such injury, disease, death, or damage to or loss of property was caused by the gross negligence or willful misconduct on the part of the Lion Indemnitees, their Affiliates or any of their respective employees, representatives, agents or contractors. Notwithstanding the foregoing, the Partnership Parties’ liability to the Lion Indemnitees pursuant to this Section 17.1 shall be (x) subject to the rights of the Partnership Parties pursuant to Section 6.4 and (y) net of any insurance proceeds actually received by the Lion Indemnitees or any of their respective Affiliates from any third Person with respect to or on account of the damage or injury which is the subject of the indemnification claim. The Company agrees that it shall, and shall cause the other Lion Indemnitees to, (a) use all commercially reasonable efforts to pursue the collection of all insurance proceeds to which any of the Lion Indemnitees are entitled with respect to or on account of any such damage or injury, (b) notify the Partnership of all potential claims against any third Person for any such insurance proceeds, and (c) keep the Partnership fully informed of the efforts of the Lion Indemnitees in pursuing collection of such insurance proceeds.

 

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17.2 The Company shall defend, indemnify and hold harmless the Partnership Parties, their Affiliates, and their respective directors, officers, employees, representatives, agents, contractors, successors and permitted assigns (collectively, the “ Partnership Indemnitees ”) from and against any Liabilities directly or indirectly arising out of (i) any breach by the Company of any covenant or agreement contained herein or made in connection herewith or any representation or warranty of the Company made herein or in connection herewith proving to be false or misleading, (ii) any failure by the Company, its Affiliates or any of their respective employees, representatives, agents or contractors to comply with or observe any Applicable Law, or (iii) injury, disease, or death of any Person or damage to or loss of any property, fine or penalty, any of which is caused by the Company, its Affiliates or any of their respective employees, representatives, agents or contractors in the exercise of any of the rights granted hereunder or the handling, storage, transportation or disposal of any Materials hereunder, except to the extent that such injury, disease, death, or damage to or loss of property was caused by the gross negligence or willful misconduct on the part of the Partnership Indemnitees, their Affiliates or any of their respective employees, representatives, agents or contractors. Notwithstanding the foregoing, the Company’s liability to the Partnership Indemnitees pursuant to this Section 17.2 shall be net of any insurance proceeds actually received by the Partnership Indemnitees or any of their respective Affiliates from any third Person with respect to or on account of the damage or injury which is the subject of the indemnification claim. The Partnership agrees that it shall, and shall cause the other Partnership Indemnitees to, (a) use all commercially reasonable efforts to pursue the collection of all insurance proceeds to which any of the Partnership Indemnitees are entitled with respect to or on account of any such damage or injury, (b) notify the Company of all potential claims against any third Person for any such insurance proceeds, and (c) keep the Company fully informed of the efforts of the Partnership Indemnitees in pursuing collection of such insurance proceeds.

17.3 THE FOREGOING INDEMNITIES ARE INTENDED TO BE ENFORCEABLE AGAINST THE PARTIES IN ACCORDANCE WITH THE EXPRESS TERMS AND SCOPE THEREOF NOTWITHSTANDING ANY EXPRESS NEGLIGENCE RULE OR ANY SIMILAR DIRECTIVE THAT WOULD PROHIBIT OR OTHERWISE LIMIT INDEMNITIES BECAUSE OF THE SOLE, CONCURRENT, ACTIVE OR PASSIVE NEGLIGENCE, STRICT LIABILITY OR FAULT OF ANY OF THE INDEMNIFIED PARTIES (EXCLUDING, IN THE CASE OF SECTION 17.1(iii) AND SECTION 17.2(iii), GROSS NEGLIGENCE OR WILLFUL MISCONDUCT).

18. Limitation on Damages . Notwithstanding anything to the contrary contained herein, neither Party shall be liable or responsible to the other Party or such other Party’s affiliated Persons for any consequential, punitive, special, incidental or exemplary damages, or for loss of profits or revenues (collectively referred to as “ Special Damages ”) incurred by such Party or its affiliated Persons that arise out of or relate to this Agreement, regardless of whether any such claim arises under or results from contract, tort, or strict liability; provided that the foregoing limitation is not intended and shall not affect Special Damages imposed in favor of unaffiliated Persons that are not Parties to this Agreement.

19. Audit and Inspection. During the Term, the Company and its duly authorized representatives, upon reasonable notice and during normal working hours, shall have access to the accounting records and other documents maintained by the Partnership Parties, or any of their contractors and agents, which relate to this Agreement, and shall have the right to audit such records at any reasonable time or times during the Term of this Agreement and for a period

 

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of up to three years after termination of this Agreement. Claims as to shortage in quantity or defects in quality shall be made by written notice within thirty (30) days after the delivery in question or shall be deemed to have been waived. The right to inspect or audit such records shall survive termination of this Agreement for a period of two (2) years following the end of the Term. The Partnership Parties shall preserve, and shall cause all contractors or agents to preserve, all of the aforesaid documents for a period of at least two (2) years from the end of the Term.

20. Confidentiality.

20.1 Obligations . Each Party shall use commercially reasonable efforts to retain the other Party’s Confidential Information in confidence and not disclose the same to any third party nor use the same, except as authorized by the disclosing Party in writing or as expressly permitted in this Section 20.1. Each Party further agrees to take the same care with the other Party’s Confidential Information as it does with its own, but in no event less than a reasonable degree of care.

20.2 Required Disclosure . Notwithstanding Section 20.1 above, if the receiving Party becomes legally compelled to disclose the Confidential Information by a court, Governmental Authority or Applicable Law, including the rules and regulations of the Securities and Exchange Commission, or is required to disclose pursuant to the rules and regulations of any national securities exchange upon which the receiving Party or its parent entity is listed, any of the disclosing Party’s Confidential Information, the receiving Party shall promptly advise the disclosing Party of such requirement to disclose Confidential Information as soon as the receiving Party becomes aware that such a requirement to disclose might become effective, in order that, where possible, the disclosing Party may seek a protective order or such other remedy as the disclosing Party may consider appropriate in the circumstances. The receiving Party shall disclose only that portion of the disclosing Party’s Confidential Information that it is required to disclose and shall cooperate with the disclosing Party in allowing the disclosing Party to obtain such protective order or other relief.

20.3 Return of Information . Upon written request by the disclosing Party, all of the disclosing Party’s Confidential Information in whatever form shall be returned to the disclosing Party upon termination of this Agreement or destroyed with destruction certified by the receiving Party, without the receiving Party retaining copies thereof except that one copy of all such Confidential Information may be retained by a Party’s legal department solely to the extent that such Party is required to keep a copy of such Confidential Information pursuant to Applicable Law, and the receiving Party shall be entitled to retain any Confidential Information in the electronic form or stored on automatic computer back-up archiving systems during the period such backup or archived materials are retained under such Party’s customary procedures and policies; provided, however, that any Confidential Information retained by the receiving Party shall be maintained subject to confidentiality pursuant to the terms of this Section 20.3, and such archived or back-up Confidential Information shall not be accessed except as required by Applicable Law.

 

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20.4 Receiving Party Personnel . The receiving Party will limit access to the Confidential Information of the disclosing Party to those of its employees, attorneys and contractors that have a need to know such information in order for the receiving Party to exercise or perform its rights and obligations under this Agreement (the “ Receiving Party Personnel ”). The Receiving Party Personnel who have access to any Confidential Information of the disclosing Party will be made aware of the confidentiality provision of this Agreement, and will be required to abide by the terms thereof. Any third party contractors that are given access to Confidential Information of a disclosing Party pursuant to the terms hereof shall be required to sign a written agreement pursuant to which such Receiving Party Personnel agree to be bound by the provisions of this Agreement, which written agreement will expressly state that it is enforceable against such Receiving Party Personnel by the disclosing Party.

20.5 Survival . The obligation of confidentiality under this Article 20 shall survive the termination of this Agreement for a period of two (2) years.

21. Choice of Law; Interpretation.

21.1 This Agreement shall be subject to and governed by the laws of the State of Texas, excluding any conflicts-of-law rule or principle that might refer the construction or interpretation of this Agreement to the laws of another state.

21.2 To the extent that any provision of this Agreement conflicts with the provisions of any Tariff then in effect, the provisions of such Tariff shall control.

22. Assignment.

22.1 Except as set forth in Article 28, the Company shall not assign its rights or obligations hereunder without the Partnership’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed; provided , however , that (A) the Company may assign this Agreement without the Partnership’s consent in connection with a sale by the Company of all or substantially all of the Refinery, including by merger, equity sale, asset sale or otherwise, so long as the transferee: (1) agrees to assume all of the Company’s obligations under this Agreement and (2) is financially and operationally capable of fulfilling the terms of this Agreement, which determination shall be made by the Company in its reasonable judgment; and (B) the Company shall be permitted to make a collateral assignment of this Agreement solely to secure financing for Delek US and its Affiliates.

22.2 No Partnership Party shall assign its rights or obligations under this Agreement without the prior written consent of the Company, which consent shall not be unreasonably withheld, conditioned or delayed; provided , however , that (A) any Partnership Party may assign its rights under this Agreement without such consent in connection with a sale by such Partnership Party of all or substantially all of its Pipelines, including by merger, equity sale, asset sale or otherwise, so long as the transferee: (1) agrees to assume all of such Partnership Party’s obligations under this Agreement; (2) is financially and operationally capable of fulfilling the terms of this Agreement, which determination shall be made by the Partnership in its reasonable judgment; and (3) is not a competitor of the Company, as determined by the Company in good faith; and (B) any Partnership Party shall be permitted to make a collateral assignment of this Agreement solely to secure financing for the Partnership and its Affiliates.

 

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22.3 Any assignment that is not undertaken in accordance with the provisions set forth above shall be null and void ab initio . A Party making any assignment shall promptly notify the other Party of such assignment, regardless of whether consent is required.

22.4 This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns.

22.5 The Parties’ obligations hereunder shall not terminate in connection with a Partnership Change of Control; provided , however , that in the case of a Partnership Change of Control, the Company shall have the option to extend the Term of this Agreement as provided in Section 2.1, without regard to the notice periods provided in the fourth sentence of Section 2.1. The Partnership shall provide the Company with notice of any Partnership Change of Control at least sixty (60) days prior to the effective date thereof.

23. Notices. All notices, requests, demands, and other communications hereunder will be in writing and will be deemed to have been duly given: (i) if by transmission by facsimile or hand delivery, when delivered; (ii) if mailed via the official governmental mail system, five (5) Business Days after mailing, provided said notice is sent first class, postage pre-paid, via certified or registered mail, with a return receipt requested; (iii) if mailed by an internationally recognized overnight express mail service such as Federal Express, UPS, or DHL Worldwide, one (1) Business Day after deposit therewith prepaid; or (iv) if by e-mail, one Business Day after delivery with receipt confirmed. All notices will be addressed to the Parties at the respective addresses as follows:

if to the Company:

Lion Oil Company

c/o Delek US Holdings, Inc.

7102 Commerce Way

Brentwood, TN 37027

Attn: General Counsel

Telecopy No: (615) 435-1271

Email:

with a copy, which shall not constitute notice, to:

Lion Oil Company

c/o Delek US Holdings, Inc.

7102 Commerce Way

Brentwood, TN 37027

Attn: President

Telecopy No: (615) 435-1271

Email:

 

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if to any Partnership Party:

Delek Logistics Partners, LP

c/o Delek Logistics GP, LLC

7102 Commerce Way

Brentwood, TN 37027

Attn: General Counsel

Telecopy No: (615) 435-1271

Email:

with a copy, which shall not constitute notice, to:

Delek Logistics Partners, LP

c/o Delek Logistics GP, LLC

7102 Commerce Way

Brentwood, TN 37027

Attn: President

Telecopy No: (615) 435-1271

Email:

or to such other address or to such other person as any Party will have last designated by notice to the other Parties.

24. No Waiver; Cumulative Remedies.

24.1 The failure of a Party hereunder to assert a right or enforce an obligation of any of the other Parties shall not be deemed a waiver of such right or obligation. The waiver by any Party of a breach of any provision of, or Event of Default or Default under, this Agreement shall not operate or be construed as a waiver of any other breach of that provision or as a waiver of any breach of another provision of, Event of Default or potential Event of Default under, this Agreement, whether of a like kind or different nature.

24.2 Each and every right granted to the Parties under this Agreement or allowed it by law or equity, shall be cumulative and may be exercised from time to time in accordance with the terms thereof and Applicable Law.

25. Nature of Transaction and Relationship of Parties.

25.1 This Agreement shall not be construed as creating a partnership, association or joint venture among the Parties. It is understood that the Partnership Parties are independent contractors with complete charge of their employees and agents in the performance of their duties hereunder, and nothing herein shall be construed to make a Partnership Party, or any employee or agent of the Partnership Party, an agent or employee of the Company.

25.2 No Party shall have the right or authority to negotiate, conclude or execute any contract or legal document with any third person; to assume, create, or incur any liability of any kind, express or implied, against or in the name of any of the other Parties; or to otherwise act as the representative of any of the other Parties, unless expressly authorized in writing by such other Party.

 

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26. Arbitration Provision. Any and all Arbitrable Disputes shall be resolved through the use of binding arbitration using three arbitrators, in accordance with the Commercial Arbitration Rules of the American Arbitration Association, as supplemented to the extent necessary to determine any procedural appeal questions by the Federal Arbitration Act (Title 9 of the United States Code). If there is any inconsistency between this Article 26, the Commercial Arbitration Rules or the Federal Arbitration Act, the terms of this Article 26 will control the rights and obligations of the Parties. Arbitration must be initiated within the time limits set forth in this Agreement, or if no such limits apply, then within a reasonable time or the time period allowed by the applicable statute of limitations. Arbitration may be initiated by a Party (“ Claimant ”) serving written notice on the other Party (“ Respondent ”) that the Claimant elects to refer the Arbitrable Dispute to binding arbitration. Claimant’s notice initiating binding arbitration must identify the arbitrator Claimant has appointed. The Respondent shall respond to Claimant within thirty (30) days after receipt of Claimant’s notice, identifying the arbitrator Respondent has appointed. If the Respondent fails for any reason to name an arbitrator within the 30-day period, Claimant shall petition the American Arbitration Association for appointment of an arbitrator for Respondent’s account. The two arbitrators so chosen shall select a third arbitrator within thirty (30) days after the second arbitrator has been appointed. The Claimant will pay the compensation and expenses of the arbitrator named by or for it, and the Respondent will pay the compensation and expenses of the arbitrator named by or for it. The costs of petitioning for the appointment of an arbitrator, if any, shall be paid by Respondent. The Claimant and Respondent will each pay one-half of the compensation and expenses of the third arbitrator. All arbitrators must (i) be neutral parties who have never been officers, directors or employees of the Partnership Parties, the Company or any of their Affiliates and (ii) have not less than seven (7) years experience in the energy industry. The hearing will be conducted in Houston, Texas and commence within thirty (30) days after the selection of the third arbitrator. The Company, the Partnership Parties and the arbitrators shall proceed diligently and in good faith in order that the award may be made as promptly as possible. Except as provided in the Federal Arbitration Act, the decision of the arbitrators will be binding on and non-appealable by the Parties hereto. The arbitrators shall have no right to grant or award Special Damages.

27. Miscellaneous.

27.1 Whenever possible, each provision of this Agreement will be interpreted in such manner as to be valid and effective under Applicable Law, but if any provision of this Agreement or the application of any such provision to any person or circumstance will be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision hereof, and the Parties will negotiate in good faith with a view to substitute for such provision a suitable and equitable solution in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid, illegal or unenforceable provision.

27.2 This Agreement constitutes the entire agreement among the Parties pertaining to the subject matter hereof and supersedes all prior agreements and understandings of the Parties in connection therewith.

 

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27.3 No promise, representation or inducement has been made by any of the Parties that is not embodied in this Agreement, and none of the Parties shall be bound by or liable for any alleged representation, promise or inducement not so set forth.

27.4 Time is of the essence with respect to all aspects of each Party’s performance of any obligations under this Agreement.

27.5 It is expressly understood that the provisions of this Agreement do not impart enforceable rights in anyone who is not a Party or successor or permitted assignee of a Party.

27.6 In connection with this Agreement and all transactions contemplated by this Agreement, each signatory Party hereto agrees to execute and deliver such additional documents and instruments and to perform such additional acts as may be necessary or appropriate to effectuate, carry out and perform all of the terms, provisions and conditions of this Agreement and all such transactions.

27.7 All audit rights, payment, confidentiality and indemnification obligations and obligations under this Agreement shall survive the expiration or termination of this Agreement.

27.8 This Agreement may be executed in one or more counterparts (including by facsimile or portable document format (pdf)) for the convenience of the Parties hereto, each of which counterparts will be deemed an original, but all of which counterparts together will constitute one and the same agreement.

28. J. Aron.

28.1 Designated Assignment . For a period from and including the Commencement Date to the Expiration Date (the “ Designation Period ”), the Company hereby assigns to J. Aron all of the Company’s rights to use, hold Crude Oil and Products in, and transport Crude Oil and Products through, the Storage Facilities pursuant to this Agreement, subject to additional terms and conditions of this Section 28. During the Designation Period, the Partnership Parties shall note in their records and account separately for J. Aron’s ownership of Crude Oil and Products held in or transported through the Pipelines and Storage Facilities (collectively, the “ J. Aron Materials ”) until such time as J. Aron shall notify the Partnership Parties in writing that ownership in such J. Aron Materials has been transferred from J. Aron to the Company, it being the intention that the Partnership Parties shall not be required to recognize any other transfers of ownership of any J. Aron Materials (other than transfers from J. Aron to the Company) unless such transfer and recognition are agreed to in writing by the Partnership Parties in their reasonable discretion. The Company shall act as J. Aron’s sole agent for all purposes of this Agreement, and the Partnership Parties shall be entitled to follow the Company’s instructions with respect to all J. Aron Materials that are transported, stored or handled by the Partnership Parties pursuant to this Agreement unless and until the Partnership Parties are notified by J. Aron in writing that the Company is no longer authorized to act as J. Aron’s agent, in which case the Partnership Parties shall thereafter follow the instructions of J. Aron (or such other agent as J. Aron may appoint) with respect to all J. Aron Materials that are transported, stored or handled by the Partnership Parties pursuant to this Agreement. All volumes shipped by J. Aron will be taken into account in the determination of whether the Company has satisfied its Minimum Throughput Commitment.

 

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28.2 Measurements; Inventory Reports; Notices . The Company and J. Aron shall each have the measurement rights provided for in this Agreement for so long as any J. Aron Materials are located in the Pipeline or Storage Facilities. During any Designation Period, the Partnership Parties shall send all inventory and other reports described in this Agreement and notices delivered pursuant to this Agreement to J. Aron at the address provided below, with copies to the Company: J. Aron & Company, 200 West Street, New York, New York 10282-2198, Attention: Commodity Operations/Energy Logistics, ficc-jaron-oilops@gs.com.

28.3 All Provisions in Effect . During any Designation Period, all provisions of this Agreement, as amended or adjusted by this Article 28, shall be in full force and effect with respect to J. Aron and the J. Aron Materials as if J. Aron were Party hereto in place of the Company, subject however to the following:

(a) J. Aron’s sole payment obligation hereunder shall be to pay any amounts from time to time due under (i) Sections 4.2, 4.4 and 4.6 with respect to services actually rendered hereunder by the Partnership Parties with respect to the J. Aron Materials and (ii) Article 17 with respect to Liabilities directly or indirectly arising out of the activities of J. Aron under this Agreement; provided that if, at any time, J. Aron elects for any reason to make any payment to the Partnership Parties in respect of any amount owing by the Company to the Partnerships Parties hereunder, such payment shall not constitute, and shall not be deemed to result in, the assumption by J. Aron of any payment or other obligations of the Company under this Agreement;

(b) in no event shall J. Aron have any responsibility for the operations or maintenance of the Pipelines or the Storage Facilities or the handling of any Crude Oil or Products held in or transported through the Pipelines or the Storage Facilities or otherwise be deemed to have assumed any non-monetary obligations of the Company for such operations, maintenance or handling under this Agreement, all of which responsibilities and obligations shall remain exclusively responsibilities and obligations of the Partnership Parties and the Company, subject to any allocation of such responsibilities and obligations between such parties in accordance with the terms of this Agreement;

(c) the Company shall remain solely liable for, and J. Aron shall have no liability or obligation for, (1) meeting any Minimum Throughput Commitment under Section 4.1, (2) any Shortfall Payments under Section 4.3, (3) any fees payable under Section 4.5(a) or Section 4.5(b) (other than Throughput Fees for Actual Shipments of J. Aron Materials to the extent due under Section 4.2), (4) any Deficiency Payments under Section 4.6 (other than with respect to Throughput Fees for Actual Shipments of J. Aron Materials to the extent due under Section 4.2), or (5) any payment obligations in connection with a Capacity Resolution under Section 6.3, and the Partnership Parties shall invoice the Company directly for such amounts or obligations;

 

37


(d) without limiting the foregoing, the following rights and benefits will run in favor of J. Aron: (i) any rights with respect to custody and title to the J. Aron Materials subject to this Agreement, (ii) any obligations of the Partnership Parties with respect to the condition and maintenance of the Pipeline and Storage Facilities, (iii) any inspection and access rights and (iv) any rights relating to measurements and volume determinations, in all cases regardless of whether any specific provision in this Agreements makes any reference to the Company’s assignee or the assignability of the right or benefit provided for in such provision;

(e) in no event shall J. Aron have any of the rights or obligations of the Company provided in Section 4.5(a)(i), Section 4.5(b)(i), Section 6.2, Section 6.3, Section 12.4, Article 15, Article 16 and Article 22;

(f) during the Designation Period, J. Aron and its successors and assigns shall be included as additional insured parties under all insurance policies required to be maintained by the Partnership Parties under Section 12.1 above and endorsements confirming the foregoing shall be provided to J. Aron from time to time prior to the Expiration Date upon J. Aron’s reasonable request;

(g) during the Designation Period, the Company shall not agree to any waivers or consents hereunder, or amendments or modifications hereto, in each case, that would reasonably be expected to materially adversely affect J. Aron’s rights hereunder, without the prior express written agreement or consent of J. Aron; and

(h) to confirm its ownership of and rights with respect to all Materials on the Pipelines or at the Storage Facilities, the Partnership Parties and the Company agree that during the Designation Period (1) J. Aron is authorized and entitled to file, and maintain against each of such parties protective UCC filings (including making such amendments thereto as J. Aron deems necessary) showing J. Aron as owner of all J. Aron Materials from time to time located on the Pipelines or at the Storage Facilities and (2) they shall execute such other documents and instruments (in form and substance reasonably satisfactory to J. Aron) and take such further actions as J. Aron may reasonably request, including the execution and filing in the relevant real estate records of memoranda of access or similar documents.

28.4 J. Aron shall reasonably cooperate with the Partnership Parties and the Company in good faith in connection with any their inspection and audit rights hereunder and the resolution of any disputes between the Partnership Parties and the Company hereunder.

28.5 Nothing herein shall limit or be deemed to limit any obligations or liabilities of the Company to J. Aron under the Supply and Offtake Agreement or the other Transaction Documents (as defined therein).

28.6 J. Aron may, without any other party’s consent, assign and delegate all of J. Aron’s rights and obligations under this Section 28 to (i) any Affiliate of J. Aron, provided that the obligations of such Affiliate hereunder are guaranteed by The Goldman Sachs Group, Inc. or (ii) any non-Affiliate Person that succeeds to all or substantially all of its assets and business and assumes J. Aron’s obligations hereunder, whether by contract, operation of law or otherwise, provided that the creditworthiness of such successor entity is equal or superior to the creditworthiness of J. Aron (taking into account any credit support for J. Aron) immediately prior to such assignment, which determination shall be made by J. Aron in good faith. Any other assignment by J. Aron shall require the consent of the Company and the Partnership Parties.

 

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28.7 The provisions of this Article 28 shall terminate and have no further force or effect as of the end of the Designation Period. Notwithstanding anything in this Agreement to the contrary, J. Aron shall have no right to terminate this Agreement for any reason.

[ Remainder of Page Intentionally Left Blank ]

 

39


IN WITNESS WHEREOF, each Party hereto as caused this Agreement to be executed by its duly authorized representative as of the date first above written.

 

LION OIL COMPANY
By:  

 

Title:  

 

By:  

 

Title:  

 

 

DELEK LOGISTICS PARTNERS, LP

By: DELEK LOGISTICS GP, LLC

By:  

 

Title:  

 

By:  

 

Title:  

 

 

SALA GATHERING SYSTEMS, LLC
By:  

 

Title:  

 

By:  

 

Title:  

 


EL DORADO PIPELINE COMPANY, LLC
By:  

 

Title:  

 

By:  

 

Title:  

 

 

MAGNOLIA PIPELINE COMPANY, LLC
By:  

 

Title:  

 

By:  

 

Title:  

 

 

For the limited purposes specified in Article 28:
J. ARON & COMPANY
By:  

 

Title:  

 

Exhibit 10.12

TERMINALLING SERVICES AGREEMENT

(Memphis Terminal)

This Terminalling Services Agreement is made and entered into as of the Commencement Date, by and between Lion Oil Company, an Arkansas corporation (the “ Company ”), and Delek Logistics Operating, LLC, a Delaware limited liability company (the “ Operator ”) (each referred to individually as a “ Party ” or collectively as the “ Parties ”), and, for the limited purposes specified in Article 28, J. Aron & Company, a New York general partnership (“ J. Aron ”).

WHEREAS, in connection with the Supply and Offtake Agreement, the Company, Lion Oil Trading & Transportation, Inc. and J. Aron entered into the Storage Facilities Agreement;

WHEREAS, pursuant to and subject to the terms of the Supply and Offtake Agreement, J. Aron will supply crude oil to the Company to be processed at the Refinery and purchase Products produced by the Company at the Refinery;

WHEREAS, on the Commencement Date, the Company contributed to the Partnership all of its rights, title and interest in the Terminal (the “ Contribution ”);

WHEREAS, in connection with the Contribution, (i) the Supply and Offtake Agreement and the Storage Facilities Agreement are being amended to remove therefrom the assets contributed to the Partnership and the rights and obligations of the parties thereto related to such assets and (ii) the Parties are entering into this Agreement to provide the rights and obligations of the Parties with respect to the Terminal; and

WHEREAS, the Parties desire to record the terms and conditions upon which the Company shall continue to use the Terminal and the Operator shall serve as operator of the Terminal and bailee of all Products held therein and owned by the Company;

NOW, THEREFORE, in consideration of the premises and the respective promises, conditions, terms and agreements contained herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties do hereby agree as follows:

1. Definitions and Construction.

1.1 Definitions . For purposes of this Agreement, including the foregoing recitals, the following terms shall have the meanings indicated below:

Actual Month End Product Volume ” has the meaning specified in Section 5.10(a).

Affiliate ” means, with to respect to a specified Person, any other Person controlling, controlled by or under common control with that first Person. As used in this definition, the term “control” includes (i) with respect to any Person having voting securities or the equivalent and

 

1


elected directors, managers or Persons performing similar functions, the ownership of or power to vote, directly or indirectly, voting securities or the equivalent representing 50% or more of the power to vote in the election of directors, managers or Persons performing similar functions, (ii) ownership of 50% or more of the equity or equivalent interest in any Person and (iii) the ability to direct the business and affairs of any Person by acting as a general partner, manager or otherwise. Notwithstanding the foregoing, for purposes of this Agreement, Delek US and its subsidiaries (other than the Partnership and its subsidiaries), including the Company, on the one hand, and the Partnership and its subsidiaries, including the Operator, on the other hand, shall not be considered Affiliates of each other.

Ancillary Services ” means the following services to be provided by the Operator to the Company: truck rack blending, tank sampling, tank-to-tank transfers, ethanol receipt (rail and truck), ethanol storage, ethanol blending, generic gasoline additization, lubricity/conductivity additization, product receipt (barge), proprietary additive additization, red dye additization, and seasonal flow improver additization and similar services.

Ancillary Services Fee ” means, for any month during the Term of this Agreement, the fees set forth on Exhibit A to be paid by the Company pursuant to Section 3.3 during that month for Ancillary Services provided by the Operator.

Applicable Law ” means any applicable statute, law, regulation, ordinance, rule, judgment, rule of law, order, decree, permit, approval, concession, grant, franchise, license, agreement, requirement, or other governmental restriction or any similar form of decision of, or any provision of condition of any permit, license or other operating authorization issued under any of the foregoing by, or any determination by any Governmental Authority having or asserting jurisdiction over the matter or matters in question, whether now or hereafter in effect and in each case as amended (including, without limitation, all of the terms and provisions of the common law of such Governmental Authority), as interpreted and enforced at the time in question.

Arbitrable Dispute ” means any and all disputes, controversies and other matters in question between the Operator, on the one hand, and the Company, on the other hand, required to be resolved by arbitration under this Agreement.

Bankrupt ” means a Person that (i) is dissolved, other than pursuant to a consolidation, amalgamation or merger, (ii) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due, (iii) makes a general assignment, arrangement or composition with or for the benefit of its creditors, (iv) institutes a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditor’s rights, or a petition is presented for its winding-up or liquidation, (v) has a resolution passed for its winding-up, official management or liquidation, other than pursuant to a consolidation, amalgamation or merger, (vi) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for all or substantially all of its assets, (vii) has a secured party take possession of all or substantially all of its assets, or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all of its assets, (viii) files an answer or other pleading admitting or

 

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failing to contest the allegations of a petition filed against it in any proceeding of the foregoing nature, (ix) causes or is subject to any event with respect to it which, under Applicable Law, has an analogous effect to any of the foregoing events, (x) has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy under any bankruptcy or insolvency law or other similar law affecting creditors’ rights and such proceeding is not dismissed within fifteen (15) days or (xi) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing events.

Barrel ” means forty-two (42) net U.S. gallons, measured at 60° F.

bpd ” means Barrels per day.

Business Day ” means any day that is not a Saturday, Sunday, or other day on which banks are authorized or required to close in the State of New York.

Capacity Resolution ” has the meaning specified in Section 5.3.

Claimant ” has the meaning specified in Article 26.

Commencement Date ” means [            ], 2012.

Company ” has the meaning specified in the preamble to this Agreement.

Company Indemnitees ” has the meaning specified in Section 17.1.

Confidential Information ” means all information, documents, records and data that a Party furnishes or otherwise discloses to the other Party (including any such items furnished prior to the execution of this Agreement), together with all analyses, compilations, studies, memoranda, notes or other documents, records or data (in whatever form maintained, whether documentary, computer or other electronic storage or otherwise) prepared by the receiving Party which contain or otherwise reflect or are generated from such information, documents, records and data; provided, however, that the term “ Confidential Information ” does not include any information that (i) at the time of disclosure or thereafter is or becomes generally available to or known by the public (other than as a result of a disclosure by the receiving Party), (ii) is developed by the receiving Party without reliance on any Confidential Information or (iii) is or was available to the receiving Party on a nonconfidential basis from a source other than the disclosing Party that, insofar as is known to the receiving Party after reasonable inquiry, is not prohibited from transmitting the information to the recipient by a contractual, legal or fiduciary obligation to the disclosing Party.

Contract Quarter ” means a three-month period that commences on January 1, April 1, July 1 or October 1, and ends on March 31, June 30, September 30 or December 31, respectively, except that the initial Contract Quarter shall commence on the Commencement Date and end on December 31, 2012 and the final Contract Quarter shall end on the last day of the Term.

Contract Year ” means a year that commences on July 1 and ends on the last day of June in the following year, except that the initial Contract Year shall commence on the Commencement Date and the final Contract Year shall end on the last day of the Term.

 

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Contribution ” has the meaning specified in the Recitals.

Control ” (including with correlative meaning, the term “ controlled by ”) means, as used with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

CPT ” means the prevailing time in the Central time zone.

Default ” means any Event of Default, which with notice or the passage of time, would constitute an Event of Default.

Defaulting Party ” has the meaning specified in Section 16.2.

Deficiency Notice ” has the meaning specified in Section 3.9(a).

Deficiency Payment ” has the meaning specified in Section 3.9(a).

Delek US ” means Delek US Holdings, Inc., a Delaware corporation.

Delivery Point ” shall be the inlet flange connecting the Enterprise System to the Terminal.

Designation Period ” has the meaning specified in Section 28.1.

Early Termination Date ” has the meaning specified in Section 2.2.

Enterprise System ” means the Products pipeline system owned and operated by Enterprise TE Products Pipeline Company, Limited Partnership.

Environmental Law ” means all federal, state, and local laws, statutes, rules, regulations, orders, judgments, ordinances, codes, injunctions, decrees, Environmental Permits and other legally enforceable requirements and rules of common law now or hereafter in effect, relating to pollution or protection of human health and the environment including, without limitation, the federal Comprehensive Environmental Response, Compensation, and Liability Act, the Superfund Amendments Reauthorization Act, the Resource Conservation and Recovery Act, the Clean Air Act, the Federal Water Pollution Control Act, the Toxic Substances Control Act, the Oil Pollution Act, the Safe Drinking Water Act, the Hazardous Materials Transportation Act, and other similar federal, state or local environmental conservation and protection laws, each as amended from time to time.

Environmental Permit ” means any permit, approval, identification number, license, registration, consent, exemption, variance or other authorization required under or issued pursuant to any applicable Environmental Law.

Event of Default ” has the meaning specified in Section 16.1.

 

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Expiration Date ” means the “Expiration Date” as defined in the Supply and Offtake Agreement, or, if late, the date on which all obligations thereunder are finally settled.

FERC ” means the Federal Energy Regulatory Commission.

FERC Oil Pipeline Index ” means the FERC index system set forth in 18 C.F.R. § 342.318, as such regulations may be amended from time to time, or if the FERC Oil Pipeline Index is no longer published, any such successor index as agreed by the Parties or as determined by arbitration in accordance with Section 3.4.

Force Majeure ” means acts of God, strikes, lockouts or other industrial disturbances, acts of the public enemy, wars, blockades, insurrections, riots, storms, floods, washouts, arrests, the order of any court or Governmental Authority having jurisdiction while the same is in force and effect, civil disturbances, explosions, breakage, accident to machinery, storage tanks or lines of pipe, inability to obtain or unavoidable delay in obtaining material or equipment, inability to obtain Products because of a failure of third-party pipelines and any other causes whether of the kind herein enumerated or otherwise not reasonably within the control of the Party claiming suspension and which by the exercise of due diligence such Party is unable to prevent or overcome.

Force Majeure Notice ” has the meaning specified in Section 14.1.

Force Majeure Party ” has the meaning specified in Section 14.1.

Force Majeure Period ” has the meaning specified in Section 14.1.

General Partner ” means the general partner of the Partnership.

Governmental Authority ” means any federal, state, local or foreign government or any provincial, departmental or other political subdivision thereof, or any entity, body or authority exercising executive, legislative, judicial, regulatory, administrative or other governmental functions or any court, department, commission, board, bureau, agency, instrumentality or administrative body of any of the foregoing.

Initial Term ” has the meaning specified in Section 2.1.

J. Aron ” has the meaning specified in the preamble to this Agreement.

J. Aron Products ” has the meaning specified in Section 28.1.

Liabilities ” means any losses, liabilities, charges, damages, deficiencies, assessments, interests, fines, penalties, costs and expenses (collectively, “ Costs ”) of any kind (including reasonable attorneys’ fees and other fees, court costs and other disbursements), including any Costs directly or indirectly arising out of or related to any suit, proceeding, judgment, settlement or judicial or administrative order and any Costs arising from compliance or non-compliance with Environmental Law.

 

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Minimum Throughput Capacity ” means an aggregate amount of throughput capacity equal to 10,000 bpd of Products multiplied by the number of calendar days in the Contract Quarter.

Minimum Throughput Commitment ” means an aggregate amount of Products received at the Delivery Point equal to at least 10,000 bpd multiplied by the number of calendar days in the Contract Quarter.

Non-Defaulting Party ” means the Party other than the Defaulting Party.

Notice Period ” has the meaning specified in Section 15.1.

NSV ” means, with respect to any measurement of volume, the total liquid volume, excluding basic sediment and water and free water, corrected for the observed temperature to 60º F.

Operator ” has the meaning specified in the preamble to this Agreement.

Operator Indemnitees ” has the meaning specified in Section 17.2.

OPIS ” has the meaning specified in Section 4.3.

Partnership ” means Delek Logistics Partners, LP, a Delaware limited partnership.

Partnership Change of Control ” means Delek US ceases to Control the General Partner.

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

Permitted Lien(s) ” means (a)(i) liens on real estate for real estate taxes, assessments, sewer and water charges and/or other governmental charges and levies not yet delinquent and (ii) liens for taxes, assessments, judgments, governmental charges or levies, or claims not yet delinquent or the non-payment of which is being diligently contested in good faith by appropriate proceedings and for which adequate reserves have been set aside; (b) liens of mechanics, laborers, suppliers, workers and materialmen incurred in the ordinary course of business for sums not yet due or being diligently contested in good faith; provided, however, that if a reserve or appropriate provision shall be required by GAAP, then such reserve or provision shall have been made therefor; (c) liens incurred in the ordinary course of business in connection with worker’s compensation and unemployment insurance or other types of social security benefits; and (d) liens securing rental, storage, throughput, handling or other fees or charges owing from time to time to common carriers, solely to the extent of such fees or charges.

Person ” means an individual, corporation, partnership, limited liability company, joint venture, trust or unincorporated organization, joint stock company or any other private entity or organization, Governmental Authority, court or any other legal entity, whether acting in an individual, fiduciary or other capacity.

Prime Rate ” means the rate of interest quoted in The Wall Street Journal , Money Rates Section as the Prime Rate.

 

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Product ” means any of the refined petroleum products listed on Exhibit B, as from time to time amended by mutual agreement of the Parties.

Product Storage Tanks ” means the tanks located at the Terminal and owned by the Partnership and its subsidiaries that store Products.

Receiving Party Personnel ” shall have the meaning specified in Section 20.4.

Refinery ” means the petroleum refinery located in El Dorado, Arkansas owned and operated by the Company.

Renewal Term ” has the meaning specified in Section 2.1.

Required Permits ” has the meaning specified in Section 5.6.

Respondent ” has the meaning specified in Article 26.

Restoration ” has the meaning specified in Section 5.2.

Services ” has the meaning specified in Section 7.1.

Shortfall Payment ” has the meaning specified in Section 3.6.

Special Damages ” has the meaning specified in Article 18.

Storage Facilities Agreement ” means the Storage Facilities Agreement by and among J. Aron, the Company and Lion Oil Trading & Transportation, Inc., dated as of April 29, 2011, as from time to time amended, modified and/or restated.

Supplier’s Inspector ” means any Person selected by the Company to perform any and all inspections required by the Company in a commercially reasonable manner at the Company’s own cost and expense that is acting as an agent for the Company and that (1) is a Person who performs sampling, quality analysis and quantity determination of the Products purchased and sold under the Supply and Offtake Agreement and is licensed to do so, (2) is not an Affiliate of any Party and (3) in the reasonable judgment of the Company, is qualified and reputed to perform its services in accordance with Applicable Law and industry practice.

Supply and Offtake Agreement ” means the Supply and Offtake Agreement by and among J. Aron, the Company and Lion Oil Trading & Transportation, Inc., dated as of April 29, 2011, as from time to time amended, modified and/or restated, and any replacement thereof.

Suspension Notice ” has the meaning specified in Section 15.1.

Term ” has the meaning specified in Section 2.1.

Terminal ” means the Operator’s light products distribution terminal located in Memphis, Tennessee, including the storage, loading and offloading facilities owned, operated, leased or used pursuant to a contractual right of use by the Operator or any other subsidiary of the Operator including the Product Storage Tanks and the land, piping, marine facilities, truck facilities and other facilities related thereto, together with existing or future modifications or additions.

 

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Terminal Maintenance ” has the meaning specified in Section 5.9(a).

Terminalling Service Fee ” shall have the meaning set forth in Section 3.1.

Termination Notice ” has the meaning specified in Section 14.2.

Transmix ” has the meaning specified in Article 9.

Volume Determination Procedures ” mean the Operator’s ordinary month-end procedures for determining the NSV of Products held at the Terminal, which for each Contract Quarter-end shall be based on manual gauge readings of the Products Storage Tanks as at the end of such Contract Quarter.

1.2 Construction of Agreement.

(a) Unless otherwise specified, all references herein are to the Articles, Sections and Exhibits of this Agreement and all Schedules and Exhibits are incorporated herein.

(b) All headings herein are intended solely for convenience of reference and shall not affect the meaning or interpretation of the provisions of this Agreement.

(c) Unless expressly provided otherwise, the word “including” as used herein does not limit the preceding words or terms and shall be read to be followed by the words “without limitation” or words having similar import.

(d) Unless expressly provided otherwise, all references to days, weeks, months and quarters mean calendar days, weeks, months and quarters, respectively.

(e) Unless expressly provided otherwise, references herein to “consent” mean the prior written consent of the Party at issue, which shall not be unreasonably withheld, delayed or conditioned.

(f) A reference to any Party to this Agreement or another agreement or document includes the Party’s permitted successors and assigns.

(g) Unless the contrary clearly appears from the context, for purposes of this Agreement, the singular number includes the plural number and vice versa; and each gender includes the other gender.

(h) Except where specifically stated otherwise, any reference to any Applicable Law or agreement shall be a reference to the same as amended, supplemented or reenacted from time to time.

 

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(i) The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.

1.3 The Parties acknowledge that they and their counsel have reviewed and revised this Agreement and that no presumption of contract interpretation or construction shall apply to the advantage or disadvantage of the drafter of this Agreement.

2. Term.

2.1 The initial term of this Agreement (the “ Initial Term ”) shall commence at 00:00:01 a.m., CPT, on the Commencement Date and shall continue until the fifth anniversary of the Commencement Date. Thereafter, the Company shall have a unilateral option to extend this Agreement for two additional five (5) year periods on the same terms and conditions set forth herein (each, a “ Renewal Term ”). The Initial Term and the Renewal Terms are sometimes referred to collectively herein as the “ Term .” In order to exercise its option to extend this Agreement for a Renewal Term, the Company shall notify the Partnership in writing not more than twenty-four (24) months and not less than twelve (12) months prior to the expiration of the Initial Term or any Renewal Term, as applicable.

2.2 The Parties may terminate this Agreement prior to the end of the Term (but are under no obligation to do so) (i) as they may mutually agree in writing, (ii) pursuant to a Termination Notice under Section 14.2, (iii) pursuant to Section 15.1 or (iv) pursuant to Section 16.2. The effective date of any such termination shall be the “ Early Termination Date .”

3. Terminalling/Storage Rights; Ancillary Services.

3.1 During the Term, the Company shall have the exclusive right to inject, store and withdraw Products in the Product Storage Tanks, at all times at a level sufficient to throughput the Minimum Throughput Capacity. During each Contract Quarter during the Term, the Company shall throughput at least the Minimum Throughput Commitment at the Terminal and the Operator shall make available to the Company storage and throughput capacity at the Terminal, at all times sufficient to allow the Company to throughput the Minimum Throughput Capacity at the Terminal. The Company shall pay a terminalling services fee (the “ Terminalling Service Fee ”) for the volumes of Products it throughputs at the Terminal of $0.50 per Barrel. Allocation of storage and throughput capacity for separate Products at the Terminal shall be in accordance with current practices, or as otherwise may be mutually agreed among the Parties from time to time.

3.2 The Company may throughput volumes in excess of its Minimum Throughput Capacity, up to the then-available capacity of the Terminal, as determined by the Operator at any time. In accordance with Section 3.1, the Company shall pay the Operator the per-Barrel Terminalling Service Fee for any excess throughput volumes.

3.3 The Operator shall provide Ancillary Services to the Company at the Terminal. The Company shall pay the per-barrel Ancillary Services Fees listed on Exhibit A for such services. If any additional ancillary services are requested by the Company that are different in kind, scope or frequency from the Ancillary Services that have been historically provided, then

 

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the Parties shall negotiate in good faith to determine whether such services may be provided and the appropriate rates to be charged for such services. All fuel additives, dyes, de-icers and other additions requested to be added to the Products will be provided by the Company at no cost to the Operator.

3.4 All fees set forth in this Agreement, including the Terminalling Service Fee and the Ancillary Services Fee, shall be adjusted on July 1 of each Contract Year, commencing on July 1, 2013, by an amount equal to the increase or decrease, if any, in the FERC Oil Pipeline Index; provided, however, that no fee shall be decreased below the initial fee for such service provided in this Agreement. If the FERC Oil Pipeline Index is no longer published, the Company and the Operator shall negotiate in good faith to agree on a new index that gives comparable protection against inflation and the same method of adjustment for increases or decreases in the new index shall be used to calculate increases or decreases in the fees. If the Company and the Operator are unable to agree, a new index will be determined by arbitration in accordance with Article 26 and the same method of adjustment for increases or decreases in the new index shall be used to calculate increases in the Throughput Fees.

3.5 If, during the Term, new laws or regulations are enacted that require the Operator to make substantial and unanticipated capital expenditures (other than maintenance capital expenditures) with respect to the Terminal, the Operator and the Company will renegotiate the Terminalling Service Fee in good faith in order to compensate the Operator on account of such incremental capital costs. If the Operator and the Company are unable to agree, the amount of such fee increases will be determined by arbitration in accordance with Article 26.

3.6 If, during any Contract Quarter, the Company throughputs aggregate volumes less than the Minimum Throughput Commitment for such Contract Quarter, then the Company shall pay the Operator an amount (a “ Shortfall Payment ”) equal to the Terminalling Service Fee multiplied by the difference between (i) the Minimum Throughput Commitment and (ii) the volume of Products throughput at the Terminal by the Company during the applicable Contract Quarter. The Parties acknowledge and agree that there shall be no carry-over of deficiency volumes with respect to the Minimum Throughput Commitment and the payment by the Company of the Shortfall Payment shall relieve the Company of any obligation to meet such Minimum Throughput Commitment for the relevant Contract Quarter. The Parties further acknowledge and agree that there shall no be any carry-over of volumes in excess of the Minimum Throughput Commitment to any subsequent Contract Quarter.

3.7 The Operator shall invoice the Company monthly (or, in the case of any Shortfall Payments, quarterly). The Company will make payments to the Operator on a monthly (or in the case of Shortfall Payments, quarterly) basis during the Term with respect to services rendered by the Operator under this Agreement in the prior month (or in the case of Shortfall Payments, Contract Quarter) upon the later of (i) ten (10) days after its receipt of such invoice and (ii) thirty (30) days following the end of the calendar month or Contract Quarter, as applicable, during which the invoiced services were performed. Any past due payments owed to the Operator hereunder shall accrue interest, payable on demand, at the Prime Rate from the due date of the payment through the actual date of payment. Payment of any fee or Shortfall Payment pursuant to this Section 3.7 shall be made by wire transfer of immediately available funds to an account designated in writing by the Operator. If any such fee shall be due and payable on a day that is not a Business Day, such payment shall be due and payable on the next succeeding Business Day.

 

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3.8 Reimbursement

(a) The Company shall reimburse the Operator for the actual out-of-pocket cost of any third-party fees incurred in connection with carrying out the terms of this Agreement.

(b) The Company may request that the Operator make certain expansion capital expenditures or convert any tank to storage of a different Product, and the Operator shall determine, in its sole discretion, whether to make such expenditures or conversions, considering among other things, whether the Company agrees to bear, through adjustments to the Terminalling Service Fee or otherwise, the additional costs and expenses incurred by the Operator as a result of such expenditures or conversions, including in the case of a conversion of any tank to storage of a different Product, all costs to clean, degas or otherwise prepare the tank(s) including, without limitation, the cost of removal, processing, transportation or disposal of all waste and the cost of any taxes or charges the Operator may be required to pay in regard to such waste. Notwithstanding the foregoing, except as provided in the Omnibus Agreement maintenance capital expenditures required for the Operator to continue to provide the services specified hereunder shall be paid for by the Operator. In addition to the foregoing, the Company shall have the right to require the Operator to make expansion capital expenditures of up to $250,000 per Contract Year and shall reimburse the Operator for any such expansion capital expenditures; provided that such expansion capital project does not adversely affect the operation of the Terminal, as determined in the reasonable discretion of the Operator.

(c) All of the foregoing reimbursements shall be made in accordance with the payment terms set forth in Section 3.7 herein.

3.9 Deficiency Payments .

(a) As soon as practicable following the end of each calendar month under this Agreement, the Operator shall deliver to the Company a written notice (the “ Deficiency Notice ”) detailing any failure of the Company to meet its obligations under Section 3.1, Section 3.2, Section 3.3, Section 3.5, Section 3.6, Section 3.7, Section 3.8, Section 5.3 or Article 7 of this Agreement. The Deficiency Notice shall (i) specify in reasonable detail the nature of any deficiency and (ii) specify the approximate dollar amount that the Operator believes would have been paid by the Company to the Operator if the Company had complied with its obligations under Section 3.1, Section 3.2, Section 3.3, Section 3.5, Section 3.6, Section 3.7, Section 3.8, Section 5.3 and Article 7of this Agreement (the “ Deficiency Payment ”). The Company shall pay the Deficiency Payment to the Operator upon the later of: (A) ten (10) days after its receipt of the Deficiency Notice and (B) thirty (30) days following the end of the calendar month during which the Deficiency Notice was delivered.

(b) If the Company disagrees with the Deficiency Notice, then, following the payment of the undisputed portion of the Deficiency Payment to the Operator, a senior officer of the Company and the Operator shall meet or communicate by telephone at a mutually acceptable time, and thereafter as often as they reasonably deem necessary and shall negotiate in good faith

 

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to attempt to resolve any differences that they may have with respect to matters specified in the Deficiency Notice. If such differences are not resolved within thirty (30) days following the payment of any Deficiency Payment, the Company and the Operator shall, within forty-five (45) days following the payment of such Deficiency Payment, submit any and all matters which remain in dispute and which were properly included in the Deficiency Notice to arbitration in accordance with Article 26. During the 60-day period following the receipt of any Deficiency Notice, the Company-shall have the right to inspect and audit the working papers of the Operator relating to such Deficiency Payment.

(c) If it is determined by arbitration in accordance with Article 26 that any or all of the disputed portion of the Deficiency Payment was required to be paid, the Company shall promptly pay to the Operator such amount, together with interest thereon from the date provided in the last sentence of Section 3.9(a) at the Prime Rate, in immediately available funds.

4. Custody, Title and Risk of Loss.

4.1 Subject to Article 28, the Company shall, at all times during the Term, retain exclusive title to the Products stored or throughput by it at the Terminal, and such Products shall remain the Company’s exclusive property. The Company hereby represents that, at all times during the Term, it holds exclusive title to the Products throughput or stored by it at the Terminal, free and clear of any liens, security interests, encumbrances and claims whatsoever, other than (a) Permitted Liens and (b) any liens, security interests, encumbrances and claims with respect to which the Company has entered into an agreement reasonably acceptable to the Partnership Parties subordinating such lien, security interest, encumbrance or claim to any applicable rights of the Partnership Parties under this Agreement.

4.2 During the time any Products are held or throughput at the Terminal, the Operator, in its capacity as operator of the Terminal shall be solely responsible for compliance with all Applicable Laws, including all Environmental Laws, pertaining to the possession, handling, use and processing of such Products.

4.3 Title and risk of loss to all of the Products stored or throughput by the Company at the Terminal shall remain at all times with the Company. The Company shall, during each month, (i) be entitled to all volumetric gains in the Terminal and (ii) be responsible for all volumetric losses in the Terminal up to a maximum of 0.25%. If volume losses of any Product exceed 0.25% during any particular month, the Operator shall pay the Company for the difference between the actual loss and the 0.25% allowance at a price per barrel for that Product as reported by the Oil Price Information Service (“ OPIS ”) using the monthly average OPIS unbranded contract rack posting for that Product during the month in which the volume difference was accounted for.

4.4 During the Term, the Operator shall hold all Products at the Terminal solely as bailee, and represents and warrants that when any such Products are redelivered to the Company, the Company shall have good title thereto free and clear of any liens, security interests, encumbrances and claims of any kind whatsoever created or caused to be created by the Operator, other than Permitted Liens. During the Term, none of the Operator or any of its Affiliates shall (and the Operator shall not permit any of its Affiliates or any other Person to) use

 

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any such Products for any purpose. Solely in its capacity as bailee, the Operator shall have custody of the Products stored or transported under this Agreement from the time such Product passes the Delivery Point until such time that the Products pass the outlet flange of the Terminal.

5. Condition and Maintenance of the Terminal; Product Storage.

5.1 Interruption of Service . The Operator shall use reasonable commercial efforts to minimize the interruption of service at the Terminal and shall use its best efforts to minimize the impact of any such interruption on the Company. The Operator shall inform the Company at least 60 days in advance (or promptly, in the case of an unplanned interruption) of any anticipated partial or complete interruption of service at the Terminal, including relevant information about the nature, extent, cause and expected duration of the interruption and the actions the Operator is taking to resume full operations, provided that the Operator shall not have any liability for any failure to notify, or delay in notifying, the Company of any such matters except to the extent the Company has been materially damaged by such failure or delay.

5.2 Maintenance and Repair Standards . Subject to Force Majeure and interruptions for planned repair and maintenance scheduled in advance and other routine repair and maintenance consistent with industry standards, the Operator shall maintain the Terminal with sufficient aggregate capacity to throughput a volume of the Company’s Products at least equal to Minimum Throughput Capacity. The Operator’s obligations may be temporarily suspended during the occurrence of, and for the entire duration of, a Force Majeure or interruptions for routine repair and maintenance consistent with industry standards that prevent the Operator from providing the Minimum Throughput Capacity. To the extent the Company is prevented for 30 or more days in any Contract Year from throughputting volumes at the Terminal equal to the full Minimum Throughput Capacity for reasons of Force Majeure or other interruption of service affecting the facilities or assets of the Operator, then the Minimum Throughput Commitment shall be proportionately reduced to the extent of the difference between the Minimum Throughput Capacity and the amount that the Operator can effectively throughput at the Terminal (prorated for the portion of the Contract Quarter during which the Minimum Throughput Capacity was unavailable) regardless of whether actual throughput amounts prior to the reduction were below the Minimum Throughput Commitment. At such time as the Operator is capable of throughputting volumes equal to the full Minimum Throughput Capacity, the Company’s obligation to throughput the full Minimum Throughput Commitment shall be restored. If for any reason, including, without limitation, a Force Majeure event, the throughput at the Terminal should fall below the Minimum Throughput Capacity, then with due diligence and dispatch, the Operator shall make repairs at the Terminal to restore the capacity of the Terminal to that required for throughput of the Minimum Throughput Capacity (“ Restoration ”). Except as provided below in Section 5.3, all of such Restoration shall be at the Operator’s cost and expense, unless the damage creating the need for such repairs was caused by the negligence or willful misconduct of the Company, its employees, agents or customers.

5.3 Capacity Resolution . In the event of the failure of the Operator to maintain the Terminal with sufficient capacity to throughput the Minimum Throughput Capacity, then either Party shall have the right to call a meeting between executives of both Parties by providing at least two (2) Business Days’ advance written notice. Any such meeting shall be held at a mutually agreeable location and will be attended by executives of both Parties each having

 

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sufficient authority to commit his or her respective Party to a Capacity Resolution (hereinafter defined). At the meeting, the Parties will negotiate in good faith with the objective of reaching a joint resolution for the Restoration which will, among other things, specify steps to be taken by the Operator to fully accomplish the Restoration and the deadlines by which the Restoration must be completed (the “ Capacity Resolution ”). Without limiting the generality of the foregoing, the Capacity Resolution shall set forth an agreed upon time schedule for the Restoration activities. Such time schedule shall be reasonable under the circumstances, consistent with customary pipeline transportation and terminal industry standards and shall take into consideration the Operator’s economic considerations relating to costs of the repairs and the Company’s requirements concerning its refining and marketing operations. The Operator shall use commercially reasonable efforts to continue to throughput the Products, to the extent the Terminal has the capability of doing so, during the period before Restoration is completed. In the event that the Company’s economic considerations justify incurring additional costs to complete the Restoration in a more expedited manner than the time schedule determined in accordance with the preceding sentence, the Company may require the Operator to expedite the Restoration to the extent reasonably possible, subject to the Company’s payment, in advance, of the estimated incremental costs to be incurred as a result of the expedited time schedule. In the event the Parties agree to an expedited Restoration plan wherein the Company agrees to fund a portion of the Restoration cost, then neither Party shall have the right to terminate this Agreement pursuant to Section 14.2 below so long as such Restoration is completed with due diligence and dispatch, and the Company shall pay its portion of the Restoration Cost to the Operator in advance based on a good faith estimate based on reasonable engineering standards. Upon completion, the Company shall pay the difference between the actual portion of Restoration costs to be paid by the Company pursuant to this Section 5.3 and the estimated amount paid under the preceding sentence within thirty (30) days after receipt of the Operator’s invoice therefor, or, if appropriate, the Operator shall pay the Company the excess of the estimate paid by the Company over the Operator’s actual costs as previously described within thirty (30) days after completion of the Restoration.

5.4 The Company shall not deliver to the Terminal any Products which: (a) would in any way be injurious to the Terminal; or (b) may not be lawfully stored at the Terminal. Any and all Products that leave the Terminal shall meet all relevant ASTM, EPA, federal and state specifications, and shall not leave the Terminal in the form of a sub-octane grade product.

5.5 The Operator will store each grade of Product in separate Product Storage Tanks and avoid any contamination of one Product by another or any degradation of the quality of any Product that would impact the Company’s ability to market or sell such Product in a timely fashion. In addition, the Operator will endeavor to ensure that no Products shall be contaminated with scale or other materials, chemicals, water or any other impurities. In lieu of any obligation to indemnify the Company Indemnitees pursuant to Section 17.1(i) with respect to any such contamination, the Operator may, at its sole option, require the Company, at the Operator’s sole expense, to reprocess or otherwise treat any such contaminated Products to restore those Products to salable condition.

5.6 During the Term of this Agreement, the Operator shall, at its sole cost and expense, take all actions reasonably necessary or appropriate to obtain, apply for, maintain, monitor, renew, and/or modify as appropriate, any license authorization, certification, filing, recording, permit, waiver, exception, variance, franchise, order or other approval with or of any

 

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governmental authority pertaining or relating to the operation of the Terminal (the “ Required Permits ”) as presently operated. The Operator shall not do anything in connection with the performance of its obligations under this Agreement that causes a termination or suspension of the Required Permits.

5.7 The execution of this Agreement by the Parties does not confer any obligation or responsibility on the Company in connection with; (i) any existing or future environmental condition at the Terminal, including, but not limited to the presence of a regulated or hazardous substance on or in environment media at the Terminal (including the presence in surface water, groundwater, soils or subsurface strata, or air), including the subsequent migration of any such substance; (ii) any environmental law; (iii) the Required Permits; or (iv) any requirements arising under or relating to any Applicable Law pertaining or relating to the operation of the Terminal.

5.8 Notwithstanding anything to the contrary herein, the Operator shall be the operator of the Terminal in all respects, and the Company shall have no power or authority to direct the activities of the Operator or to exert control over the operation of the Terminal or any portion thereof.

5.9 Terminal Maintenance .

(a) The Parties agree to cooperate with each other in establishing the start date of any non-emergency maintenance of the Terminal that would result in any of part of the Terminal being out of service (“ Terminal Maintenance ”) so as to not unnecessarily interfere with any of the Company’s purchase or sale commitments or to otherwise accommodate, to the extent reasonably practicable, other commercial or market considerations that the Company deems relevant.

(b) The Operator agrees that it will use commercially reasonable efforts, consistent with good industry standards and practices, to complete (and to cause any third parties to complete) any non-emergency Terminal Maintenance as promptly as practicable. The Operator shall provide the Company with an initial estimate of the period of any non-emergency Terminal Maintenance and shall regularly update the Company as to the progress of such Terminal Maintenance. If the Operator determines that the expected completion date for Terminal Maintenance has or is likely to change by 30 days or more, it shall promptly notify the Company of such determination.

5.10 Month End Inventory .

(a) As of 11:59:59 p.m., CPT, on the last day of each month, the Operator shall apply the Volume Determination Procedures to the Terminal, and based thereon shall determine for such month for each Product, the aggregate volume of such Product held in the Terminal at that time (each, an “ Actual Month End Product Volume ”). The Operator shall notify the Company of each Actual Month End Product Volume by no later than 5:00 p.m., CPT, on the fifth Business Day thereafter.

(b) At the cost and expense of the Company, the Company may, or may have a Supplier’s Inspector, witness all or any aspects of the Volume Determination Procedures as the Company shall direct. If, in the judgment of the Company or a Supplier’s Inspector, the Volume

 

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Determination Procedures have not been applied correctly, then the Operator will cooperate with the Company, or such Supplier’s Inspector, to ensure the correct application of the Volume Determination Procedures, including making such revisions to any Actual Month End Product Volume as may be necessary to correct any such errors.

6. Inspection and Access Rights.

6.1 At any reasonable times during normal business hours and upon reasonable prior notice, the Company and its representatives (including one or more Supplier’s Inspector) shall have the right to enter and exit the Operator’s premises in order to have access to the Terminal, to observe the operations of the Terminal and to conduct such inspections as the Company may wish to have performed in connection with this Agreement, including the right to inspect, gauge, measure, take product samples or take readings at the Terminal on a spot basis. Without limiting the generality of the foregoing, the Operator shall regularly grant Supplier’s Inspector such access from the last day of each month until the third Business Day of the ensuing month. Notwithstanding any of the foregoing, if an Event of Default with respect to the Operator has occurred and is continuing, the Company and its representatives and agents shall have unlimited and unrestricted access to the Terminal as such Event of Default continues.

6.2 When accessing the facilities of the Operator, the Company and its representatives (including one or more Supplier’s Inspectors) shall at all times comply with Applicable Law and such safety directives and guidelines as may be furnished to the Company by the Operator in writing from time to time.

7. Throughput and Handling Services.

7.1 From time to time during the Term, the Operator shall perform such additional throughput, handling and measuring services as the Company shall reasonably request (collectively, “ Services ”). If any Services are requested by the Company, then the Parties shall negotiate in good faith to determine whether such Services shall be provided and the appropriate rates to be charged for such Services.

7.2 The Company may, in its discretion, provide written instructions relating to specific Services it is requesting or provide standing written instructions relating to ongoing Services. The Company may, at any time on reasonable prior notice, revoke or modify any instruction it has previously given, whether such previous instructions relate to a specific Service or are instructions relating to an ongoing Service or Services. The Operator shall not be required to perform any requested Services that they reasonably believe violates Applicable Law or will materially adversely interfere with, or be detrimental to, the operation of the Terminal or Refinery.

7.3 The Operator agrees to keep the Terminal open for receipt and redelivery of the Company’s Products twenty-four (24) hours a day, seven (7) days a week.

 

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8. Scheduling and Measurements.

8.1 The Company shall provide notice to the Operator prior to each calendar month as to the estimated quantities of Products that it expects to deliver to the Terminal during that month.

8.2 The volume of Products received into and redelivered out of the Terminal shall be measured daily by the Operator, using the applicable meter tickets, tank gauges and truck loading meters. Volume measurements shall be made as provided in Article 11 of the Supply and Offtake Agreement. The Operator shall provide the Company with (i) daily reports showing the tank gauges and meter readings for the prior day and (ii) monthly reports reflecting all Products movements during that month.

8.3 The Operator shall provide the Company with reasonable prior notice of any periodic testing and calibration of any measurement facilities providing measurement of Products at the Terminal, and the Operator shall permit the Company to observe such testing and calibration. In addition, the Operator shall provide the Company with any documentation regarding the testing and calibration of the measurement facilities.

9. Product Downgrade and Interface.

Product downgraded as a result of ordinary Terminal or pipeline operations including line flushing, rack meter provings or other necessary Terminal operations shall not constitute losses for which the Operator is liable to the Company. The Operator shall account for the volume of Product downgraded, and the Company’s inventory of Products and/or interface volumes (“ Transmix ”) shall be adjusted. If (i) the Operator does not have sufficient capacity at the Terminal for the Transmix and (ii) the Company fails to remove its Transmix upon notice from the Operator, then fifteen (15) days after the Company’s receipt of such notification, the Operator shall have the right to sell such Transmix at market rates and return any proceeds to the Company, less delivery costs in effect at the time of such sale.

10. Additional Covenants.

10.1 The Operator hereby:

(a) agrees that it shall not sell, shall have no interest in and shall not permit the creation of, or suffer to exist, any security interest, lien, encumbrance, charge or other claim of any nature (other than Permitted Liens) with respect to any of the Products;

(b) (i) confirms that it will post at the Terminal such reasonable placards as the Company requests stating that the Company is the owner of specific Products held at the Terminal and (ii) agrees that it will take all actions necessary to maintain such placards in place for the Term;

(c) acknowledges and agrees that the Company may file a UCC-1 statement with respect to the Products stored or throughput at the Terminal, and the Operator shall cooperate with the Company in executing such financing statements as the Company deems necessary or appropriate;

 

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(d) agrees that, subject to Article 9, no loss allowances shall be applied to the Products stored or throughput at the Terminal;

(e) agrees to permit the Company’s personnel to have rights of access to and egress from the Terminal by crossing over, around and about the Terminal for any purpose related to this Agreement, including but not limited to enforcing its rights and interests under this Agreement; provided that (i) the Company’s personnel shall follow routes and paths designated by the Operator or security personnel employed by the Operator, (ii) the Company’s personnel shall observe all security, fire and safety regulations while, in around or about the Terminal, and (iii) the Company shall be liable for any damage directly caused by the negligence or other tortious conduct of such personnel;

(f) agrees to maintain all necessary leases, easements, licenses and rights-of-way necessary for the operation and maintenance of the Terminal;

(g) agrees that, in the event of any Product spill, leak or discharge or any other environmental pollution caused by or in connection with the use of the Terminal, the Operator shall promptly commence containment or clean-up operations as required by any Governmental Authorities or Applicable Law or as the Operator deems appropriate or necessary and shall notify or arrange to notify the Company immediately of any such spill, leak or discharge and of any such operations; and

(h) represents and confirms that all representations and warranties of the Operator contained herein shall be true and correct on and as of the Commencement Date.

10.2 The Company hereby agrees:

(a) to replace or repair, at its own expense, any part of the Terminal which may be destroyed or damaged through any negligent or tortious act or omission of the Company, its agents or employees or any Supplier’s Inspector; and

(b) to not make any alteration, additions or improvements to the Terminal or remove any part thereof, without the prior written consent of the Operator, such consent to be at the Operator’s sole discretion.

10.3 Each Party hereby agrees that:

(a) it shall, in the performance of its obligations under this Agreement, comply in all material respects with Applicable Law, including all Environmental Law. Each Party shall maintain the records required to be maintained by Environmental Law and shall make such records available to the other Parties upon reasonable request. Each Party also shall immediately notify the other Parties of any violation or alleged violation of any Environmental Law relating to any Products stored under this Agreement and, upon request, shall provide to the other Parties all evidence of environmental inspections or audits by any Governmental Authority with respect to such Products; and

(b) all records or documents provided by any Party to any of the other Parties shall, to the best knowledge of such Party, accurately and completely reflect the facts about the activities and transactions to which they relate. Each Party shall promptly notify the other Parties if at any time such Party has reason to believe that any records or documents previously provided to any of the other Parties no longer are accurate or complete.

 

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11. Representations.

11.1 The Operator represents and warrants to the Company that (i) this Agreement, the rights obtained and the duties and obligations assumed by the Operator hereunder, and the execution and performance of this Agreement by the Operator, do not directly or indirectly violate any Applicable Law with respect to the Operator or any of its properties or assets, the terms and provisions of the Operator’s organizational documents or any agreement or instrument to which the Operator or any of its properties or assets are bound or subject; (ii) the execution and delivery of this Agreement by the Operator has been authorized by all necessary corporate or other action, (iii) the Operator has the full and complete authority and power to enter into this Agreement and to provide the services hereunder, (iv) no further action on behalf of the Operator, or consents of any other party, are necessary for the provision of services, hereunder (except for the consents of any third party holding a mortgage on the Terminal or having another interest therein which the Operator covenants and represents it has obtained) and (v) upon execution and delivery by the Operator, this Agreement shall be a valid, binding and subsisting agreement of the Operator enforceable in accordance with its terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors’ rights generally and subject, as to enforceability, to equitable principles of general application regardless of whether enforcement is sought in a proceeding in equity or at law).

11.2 The Company represents and warrants to the Operator that (i) this Agreement, the rights obtained and the duties and obligations assumed by the Company hereunder, and the execution and performance of this Agreement by the Company, do not directly or indirectly violate any Applicable Law with respect to the Company or any of its property or assets, the terms and provisions of the Company’s organizational documents or any agreement or instrument to which the Company or any of its property or assets are bound or subject; (ii) the execution and delivery of this Agreement by the Company has been authorized by all necessary corporate or other action; and (iii) upon execution and delivery by the Company, this Agreement shall be a valid, binding and subsisting agreement of the Company enforceable in accordance with its terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors’ rights generally and subject, as to enforceability, to equitable principles of general application regardless of whether enforcement is sought in a proceeding in equity or at law).

12. Insurance.

12.1 The Operator shall procure and maintain in full force and effect throughout the Term insurance coverages of the following types and amounts and with insurance companies rated not less than A- by A.M. Best, or otherwise equivalent in respect of the Operator’s properties and operations:

(a) Property damage coverage on an “all risk” basis in an amount sufficient to cover the market value or potential full replacement cost of all Products owned by the Company

 

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in inventory at the Terminal. In the event that the market value or potential full replacement cost of all such Products exceeds insurance limits available at commercially reasonable rates in the insurance marketplace, the Operator will maintain the highest insurance limit available at commercially reasonable rates; provided, however, that the Operator will promptly notify the Company of the Operator’s inability to fully insure any such Products and provide full details of such inability. Such policies shall be endorsed to name the Company as a loss payee with respect to any of the Company’s Products in the care, custody or control of the Operator. Notwithstanding anything to the contrary herein, the Company, may, at its option and its sole expense, endeavor to procure and provide such property damage coverage for such Products; provided that, to the extent any such insurance is duplicative with insurance procured by the Operator, the insurance procured by the Operator shall in all cases represent, and be written to be, the primary coverage.

(b) Comprehensive or commercial general liability coverage and umbrella or excess liability coverage, which includes bodily injury, broad form property damage and contractual liability, products and completed operations liability and “sudden and accidental pollution” liability coverage in the minimum amounts indicated on Schedule A . Such policies shall include the Company as an additional insured with respect to any of the Company’s Products in the care, custody or control of the Operator.

12.2 Additional Insurance Requirements .

(a) The foregoing policies shall include an endorsement that the underwriters waive all rights of subrogation against the Company.

(b) The Operator shall cause its insurance carriers to furnish the Company with insurance certificates, in ACORD form or equivalent, evidencing the existence of the coverages and the endorsements required above. The Operator shall provide thirty (30) days’ written notice prior to cancellation of insurance becoming effective. The Operator also shall provide renewal certificates within thirty (30) days before expiration of the policy.

(c) The mere purchase and existence of insurance shall not reduce or release either Party from any liability or other obligations incurred or assumed under this Agreement.

(d) The Operator shall comply with all notice and reporting requirements in the foregoing policies and timely pay all premiums.

12.3 The provisions of Sections 12.1 and 12.2 shall terminate on the Expiration Date.

12.4 The Company shall maintain commercially reasonable business interruption insurance for the benefit of the Terminal for so long as the Partnership is a consolidated subsidiary of Delek US. Allocation of such benefits shall be proportionate to the loss in operating margin sustained by the Company and the Operator as a result of the interruption.

 

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13. [Reserved].

14. Force Majeure.

14.1 In the event that a Party is rendered unable, wholly or in part, by a Force Majeure event to perform its obligations under this Agreement, then upon the delivery by such Party (the “ Force Majeure Party ”) of written notice (a “ Force Majeure Notice ”) and full particulars of the Force Majeure event within a reasonable time after the occurrence of the Force Majeure event relied on, the obligations of the Parties, to the extent they are affected by the Force Majeure event, shall be suspended for the duration of any inability so caused; provided that (i) prior to the third anniversary of the Effective Date, the Company shall be required to continue to make payments (1) for the Terminalling Service Fees for volumes actually throughput under this Agreement, (2) for the Ancillary Services Fee, if any, for services performed, (3) for the fees, if any, for Services performed under Article 7 and (4) for any Shortfall Payments unless, in the case of (4), the Force Majeure event is an event that adversely affects the Operator’s ability to perform the services it is required to perform under this Agreement, in which case instead of Shortfall Payments the Terminalling Service Fees shall only be paid as provided under (i)(1) above and (ii) from and after the third anniversary of the Commencement Date, the Company shall be required to continue to make payments (1) for the Terminalling Service Fees for volumes actually throughput under this Agreement, (2) for the Ancillary Services Fee, if any, for the services performed under this Agreement and (3) for the fees, if any, for Services performed under Article 7. The Force Majeure Party shall identify in such Force Majeure Notice the approximate length of time that it believes in good faith such Force Majeure event shall continue (the “ Force Majeure Period ”). The Company shall be required to pay any amounts accrued and due under this Agreement at the time of the Force Majeure event. The cause of the Force Majeure event shall so far as possible be remedied with all reasonable dispatch, except that no Party shall be compelled to resolve any strikes, lockouts or other industrial disputes other than as it shall determine to be in its best interests. Prior to the third anniversary of the Commencement Date, any suspension of the obligations of the Parties under this Section 14.1 as a result of a Force Majeure event that adversely affects the Operator’s ability to perform the services it is required to perform under this Agreement shall extend the Term for the same period of time as such Force Majeure event continues (up to a maximum of one year) unless this Agreement is terminated under Section 14.2.

14.2 If the Force Majeure Party advises in any Force Majeure Notice that it reasonably believes in good faith that the Force Majeure Period shall continue for more than twelve (12) consecutive months beyond the third anniversary of the Commencement Date, then at any time after the delivery of such Force Majeure Notice, either Party may deliver to the other Party a notice of termination (a “ Termination Notice ”), which Termination Notice shall become effective not earlier than twelve (12) months after the later to occur of (a) delivery of the Termination Notice and (b) the third anniversary of the Commencement Date; provided, however, that such Termination Notice shall be deemed cancelled and of no effect if the Force Majeure Period ends before the Termination Notice becomes effective; provided, further, that upon the cancellation of any Termination Notice, the Parties’ respective obligations hereunder shall resume as soon as reasonably practicable thereafter, and the Term shall be extended by the same period of time as is required for the Parties to resume such obligations. After (a) the third anniversary of the Commencement Date and (b) the Expiration Date and following delivery of a

 

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Termination Notice, the Operator may terminate this Agreement, to the extent affected by the Force Majeure event, upon sixty (60) days prior written notice to the Company in order to enter into an agreement to provide any third party the services provided to the Company under this Agreement; provided, however, that the Operator shall not have the right to terminate this Agreement for so long as the Company continues to make Shortfall Payments.

15. Suspension of Refinery Operations

15.1 From and after the second anniversary of the Commencement Date, in the event that the Company decides to permanently or indefinitely suspend refining operations at the Refinery for a period that shall continue for at least twelve (12) consecutive months, the Company may provide written notice to the Operator of the Company’s intent to terminate this Agreement (the “ Suspension Notice ”). Such Suspension Notice shall be sent at any time (but not prior to the second anniversary of the Commencement Date) after the Company has notified the Operator of such suspension and, upon the expiration of the period of twelve (12) months (which may run concurrently with the twelve (12) month period described in the immediately preceding sentence) following the date such notice is sent (the “ Notice Period ”), this Agreement shall terminate. If the Company notifies the Operator, more than two months prior to the expiration of the Notice Period, of its intent to resume operations at the Refinery, then the Suspension Notice shall be deemed revoked and this Agreement shall continue in full force and effect as if such Suspension Notice had never been delivered. During the Notice Period, the Company shall remain liable for Shortfall Payments. Subject to Section 15.2 and after the Expiration Date, during the Notice Period, the Operator may terminate this Agreement upon sixty (60) days prior written notice to the Company in order to enter into an agreement to provide any third party the services provided to the Company under this Agreement.

15.2 If refining operations at the Refinery are suspended for any reason (including refinery turnaround operations and other scheduled maintenance), then the Company shall remain liable for Shortfall Payments under this Agreement for the duration of the suspension, unless and until this Agreement is terminated as provided above. The Company shall provide at least thirty (30) days’ prior written notice of any suspension of operations at the Refinery due to a planned turnaround or scheduled maintenance, provided that the Company shall not have any liability for any failure to notify, or delay in notifying, the Operator of any such suspension except to the extent the Company or the Operator has been materially damaged by such failure or delay.

16. Event of Default: Remedies Upon Event of Default.

16.1 Notwithstanding any other provision of this Agreement, the occurrence of any of the following shall constitute an “ Event of Default ”:

(a) Any Party fails to make payment when due (i) under Article 3 within one (1) Business Day after a written demand therefor or (ii) under any other provision hereof within five (5) Business Days; or

(b) Other than a default described in Section 16.1(a) or (c), the Company or the Operator fails to perform any material obligation or covenant to the other under this Agreement, which is not cured to the reasonable satisfaction of any other Party (in its sole discretion) within ten (10) Business Days after the date that such Party receives written notice that such obligation or covenant has not been performed; or

 

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(c) Any Party breaches any representation or warranty made or repeated or deemed to have been made or repeated by the Party, or any warranty or representation proves to have been incorrect or misleading in any material respect when made or repeated or deemed to have been made or repeated; provided, however, that if such breach is curable, such breach is not cured to the reasonable satisfaction of the other Party within ten (10) Business Days after the date that such Party receives notice that corrective action is needed; or

(d) Any Party becomes Bankrupt; or

(e) The Operator breaches in a material respect its obligations under Section 10.1(a).

16.2 Without limiting any other provision of this Agreement, if an Event of Default with respect to the Company or the Operator (such defaulting Party, the “ Defaulting Party ”) has occurred and is continuing, the Non-Defaulting Party shall have the right, immediately and at any time(s) thereafter, to terminate this Agreement.

16.3 Without limiting any other rights or remedies hereunder, if an Event of Default occurs and the Company is the Non-Defaulting Party, the Company may, in its discretion, (i) withhold or suspend its obligations, including any of its delivery or payment obligations, under this Agreement, (ii) reclaim and repossess any and all of its Products held at the Terminal or elsewhere on the Operator’s premises, and (iii) otherwise arrange for the disposition of any of its Products in such manner as it elects.

16.4 If an Event of Default occurs, the Non-Defaulting Party may, without limitation on its rights under this Article 16, set off amounts which the Defaulting Party owes to it against any amounts which it owes to the Defaulting Party (whether hereunder, under any other agreement or contract or otherwise and whether or not then due). Any net amount due hereunder shall be payable by the Party owing such amount within one business day of termination.

16.5 The Non-Defaulting Party’s rights under this Article 16 shall be in addition to, and not in limitation of, any other rights which the Non-Defaulting Party may have (whether by agreement, operation of law or otherwise), including without limitation any rights of recoupment, setoff, combination of accounts, as a secured party or under any other credit support. The Defaulting Party shall indemnify and hold the Non-Defaulting Party harmless from all costs and expenses, including reasonable attorney fees, incurred in the exercise of any remedies hereunder.

16.6 No delay or failure by the Non-Defaulting Party in exercising any right or remedy to which it may be entitled on account of any Event of Default shall constitute an abandonment of any such right, and the Non-Defaulting Party shall be entitled to exercise such right or remedy at any time during the continuance of an Event of Default.

 

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17. Indemnification.

17.1 The Operator shall defend, indemnify and hold harmless the Company, its Affiliates, and their respective directors, officers, employees, representatives, agents, contractors, successors and permitted assigns (collectively, the “ Company Indemnitees ”) from and against any Liabilities directly or indirectly arising out of (i) any breach by the Operator of any covenant or agreement contained herein or made in connection herewith or any representation or warranty of the Operator made herein or in connection herewith proving to be false or misleading, (ii) any failure by the Operator, its Affiliates or any of their respective employees, representatives, agents or contractors to comply with or observe any Applicable Law, or (iii) injury, disease, or death of any Person or damage to or loss of any property, fine or penalty, any of which is caused by the Operator, its Affiliates or any of their respective employees, representatives, agents or contractors in the exercise of any of the rights granted hereunder or the handling, storage, transportation or disposal of any Products hereunder, except to the extent that such injury, disease, death, or damage to or loss of property was caused by the gross negligence or willful misconduct on the part of the Company Indemnitees, their Affiliates or any of their respective employees, representatives, agents or contractors. Notwithstanding the foregoing, the Operator’s liability to the Company Indemnitees pursuant to this Section 17.1 shall be (x) subject to the rights of the Operator pursuant to Section 5.6 and (y) net of any insurance proceeds actually received by the Company Indemnitees or any of their respective Affiliates from any third Person with respect to or on account of the damage or injury which is the subject of the indemnification claim. The Company agrees that it shall, and shall cause the other Company Indemnitees to, (a) use all commercially reasonable efforts to pursue the collection of all insurance proceeds to which any of the Company Indemnitees are entitled with respect to or on account of any such damage or injury, (b) notify the Operator of all potential claims against any third Person for any such insurance proceeds, and (c) keep the Operator fully informed of the efforts of the Company Indemnitees in pursuing collection of such insurance proceeds.

17.2 The Company shall defend, indemnify and hold harmless the Operator, its Affiliates, and their respective directors, officers, employees, representatives, agents, contractors, successors and permitted assigns (collectively, the “ Operator Indemnitees ”) from and against any Liabilities directly or indirectly arising out of (i) any breach by the Company of any covenant or agreement contained herein or made in connection herewith or any representation or warranty of the Company made herein or in connection herewith proving to be false or misleading, (ii) any failure by the Company, its Affiliates or any of their respective employees, representatives, agents or contractors to comply with or observe any Applicable Law, or (iii) injury, disease, or death of any Person or damage to or loss of any property, fine or penalty, any of which is caused by the Company, its Affiliates or any of their respective employees, representatives, agents or contractors in the exercise of any of the rights granted hereunder or the handling, storage, transportation or disposal of any Products hereunder, except to the extent that such injury, disease, death, or damage to or loss of property was caused by the gross negligence or willful misconduct on the part of the Operator Indemnitees, their Affiliates or any of their respective employees, representatives, agents or contractors. Notwithstanding the foregoing, the Company’s liability to the Operator Indemnitees pursuant to this Section 17.2 shall be net of any insurance proceeds actually received by the Operator Indemnitees or any of their respective Affiliates from any third Person with respect to or on account of the damage or injury which is the subject of the indemnification claim. The Operator agrees that it shall, and shall cause the other Operator

 

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Indemnitees to, (a) use all commercially reasonable efforts to pursue the collection of all insurance proceeds to which any of the Operator Indemnitees are entitled with respect to or on account of any such damage or injury, (b) notify the Company of all potential claims against any third Person for any such insurance proceeds, and (c) keep the Company fully informed of the efforts of the Operator Indemnitees in pursuing collection of such insurance proceeds.

17.3 THE FOREGOING INDEMNITIES ARE INTENDED TO BE ENFORCEABLE AGAINST THE PARTIES IN ACCORDANCE WITH THE EXPRESS TERMS AND SCOPE THEREOF NOTWITHSTANDING ANY EXPRESS NEGLIGENCE RULE OR ANY SIMILAR DIRECTIVE THAT WOULD PROHIBIT OR OTHERWISE LIMIT INDEMNITIES BECAUSE OF THE SOLE, CONCURRENT, ACTIVE OR PASSIVE NEGLIGENCE, STRICT LIABILITY OR FAULT OF ANY OF THE INDEMNIFIED PARTIES (EXCLUDING, IN THE CASE OF SECTION 17.1 (iii) AND SECTION 17.2 (iii), GROSS NEGLIGENCE OR WILLFUL MISCONDUCT).

18. Limitation on Damages. Notwithstanding anything to the contrary contained herein, neither Party shall be liable or responsible to the other Party or such other Party’s affiliated Persons for any consequential, punitive, special, incidental or exemplary damages, or for loss of profits or revenues (collectively referred to as “ Special Damages ”) incurred by such Party or its affiliated Persons that arise out of or relate to this Agreement, regardless of whether any such claim arises under or results from contract, tort, or strict liability; provided that the foregoing limitation is not intended and shall not affect Special Damages imposed in favor of unaffiliated Persons that are not Parties to this Agreement.

19. Audit and Inspection. During the Term, the Company and its duly authorized representatives, upon reasonable notice and during normal working hours, shall have access to the accounting records and other documents maintained by the Operator, or any of its contractors and agents, which relate to this Agreement, and shall have the right to audit such records at any reasonable time or times during the Term of this Agreement and for a period of up to three years after termination of this Agreement. Claims as to shortage in quantity or defects in quality shall be made by written notice within thirty (30) days after the delivery in question or shall be deemed to have been waived. The right to inspect or audit such records shall survive termination of this Agreement for a period of two (2) years following the end of the Term. The Operator shall preserve, and shall cause all contractors or agents to preserve, all of the aforesaid documents for a period of at least two (2) years from the end of the Term.

20. Confidentiality.

20.1 Obligations . Each Party shall use commercially reasonable efforts to retain the other Party’s Confidential Information in confidence and not disclose the same to any third party nor use the same, except as authorized by the disclosing Party in writing or as expressly permitted in this Section 20.1. Each Party further agrees to take the same care with the other Party’s Confidential Information as it does with its own, but in no event less than a reasonable degree of care.

 

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20.2 Required Disclosure . Notwithstanding Section 20.1 above, if the receiving Party becomes legally compelled to disclose the Confidential Information by a court, Governmental Authority or Applicable Law, including the rules and regulations of the Securities and Exchange Commission, or is required to disclose pursuant to the rules and regulations of any national securities exchange upon which the receiving Party or its parent entity is listed, any of the disclosing Party’s Confidential Information, the receiving Party shall promptly advise the disclosing Party of such requirement to disclose Confidential Information as soon as the receiving Party becomes aware that such a requirement to disclose might become effective, in order that, where possible, the disclosing Party may seek a protective order or such other remedy as the disclosing Party may consider appropriate in the circumstances. The receiving Party shall disclose only that portion of the disclosing Party’s Confidential Information that it is required to disclose and shall cooperate with the disclosing Party in allowing the disclosing Party to obtain such protective order or other relief.

20.3 Return of Information . Upon written request by the disclosing Party, all of the disclosing Party’s Confidential Information in whatever form shall be returned to the disclosing Party upon termination of this Agreement or destroyed with destruction certified by the receiving Party, without the receiving Party retaining copies thereof except that one copy of all such Confidential Information may be retained by a Party’s legal department solely to the extent that such Party is required to keep a copy of such Confidential Information pursuant to Applicable Law, and the receiving Party shall be entitled to retain any Confidential Information in the electronic form or stored on automatic computer back-up archiving systems during the period such backup or archived materials are retained under such Party’s customary procedures and policies; provided, however, that any Confidential Information retained by the receiving Party shall be maintained subject to confidentiality pursuant to the terms of this Section 20.3, and such archived or back-up Confidential Information shall not be accessed except as required by Applicable Law.

20.4 Receiving Party Personnel . The receiving Party will limit access to the Confidential Information of the disclosing Party to those of its employees, attorneys and contractors that have a need to know such information in order for the receiving Party to exercise or perform its rights and obligations under this Agreement (the “ Receiving Party Personnel ”). The Receiving Party Personnel who have access to any Confidential Information of the disclosing Party will be made aware of the confidentiality provision of this Agreement, and will be required to abide by the terms thereof. Any third party contractors that are given access to Confidential Information of a disclosing Party pursuant to the terms hereof shall be required to sign a written agreement pursuant to which such Receiving Party Personnel agree to be bound by the provisions of this Agreement, which written agreement will expressly state that it is enforceable against such Receiving Party Personnel by the disclosing Party.

20.5 Survival . The obligation of confidentiality under this Article 20 shall survive the termination of this Agreement for a period of two (2) years.

21. Choice of Law.

21.1 This Agreement shall be subject to and governed by the laws of the State of Texas, excluding any conflicts-of-law rule or principle that might refer the construction or interpretation of this Agreement to the laws of another state.

 

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22. Assignment.

22.1 Except as set forth in Article 28, the Company shall not assign its rights or obligations hereunder without the Operator’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed; provided , however , that (A) the Company may assign this Agreement without the Operator’s consent in connection with a sale by the Company of all or substantially all of the Refinery, including by merger, equity sale, asset sale or otherwise, so long as the transferee: (1) agrees to assume all of the Company’s obligations under this Agreement and (2) is financially and operationally capable of fulfilling the terms of this Agreement, which determination shall be made by the Company in its reasonable judgment; and (B) the Company shall be permitted to make a collateral assignment of this Agreement solely to secure financing for Delek US and its Affiliates.

22.2 The Operator shall not assign its rights or obligations under this Agreement without the prior written consent of the Company, which consent shall not be unreasonably withheld, conditioned or delayed; provided , however , that (A) the Operator may assign this Agreement without such consent in connection with a sale by the Operator of all or substantially all of the Terminal, including by merger, equity sale, asset sale or otherwise, so long as the transferee: (1) agrees to assume all of the Operator’s obligations under this Agreement; (2) is financially and operationally capable of fulfilling the terms of this Agreement, which determination shall be made by the Operator in its reasonable judgment; and (3) is not a competitor of the Company, as determined by the Company in good faith; and (B) the Operator shall be permitted to make a collateral assignment of this Agreement solely to secure financing for the Operator and its Affiliates.

22.3 Any assignment that is not undertaken in accordance with the provisions set forth above shall be null and void ab initio . A Party making any assignment shall promptly notify the other Party of such assignment, regardless of whether consent is required.

22.4 This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns.

22.5 The Parties’ obligations hereunder shall not terminate in connection with a Partnership Change of Control; provided , however , that in the case of a Partnership Change of Control, the Company shall have the option to extend the Term of this Agreement as provided in Section 2.1, without regard to the notice periods provided in the fourth sentence of Section 2.1. The Operator shall provide the Company with notice of any Partnership Change of Control at least sixty (60) days prior to the effective date thereof.

23. Notices. All notices, requests, demands, and other communications hereunder will be in writing and will be deemed to have been duly given: (i) if by transmission by facsimile or hand delivery, when delivered; (ii) if mailed via the official governmental mail system, five (5) Business Days after mailing, provided said notice is sent first class, postage pre-paid, via certified or registered mail, with a return receipt requested; (iii) if mailed by an internationally recognized overnight express mail service such as Federal Express, UPS, or DHL Worldwide, one (1) Business Day after deposit therewith prepaid; or (iv) if by e-mail, one Business Day after

 

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delivery with receipt confirmed. All notices will be addressed to the Parties at the respective addresses as follows:

If to the Company:

Lion Oil Company

c/o Delek US Holdings, Inc.

7102 Commerce Way

Brentwood, TN 37027

Attn: General Counsel

Telecopy No: (615) 435-1271

Email:

with a copy, which shall not constitute notice, to:

Lion Oil Company

c/o Delek US Holdings, Inc.

7102 Commerce Way

Brentwood, TN 37027

Attn: President

Telecopy No: (615) 435-1271

Email:

If to the Operator:

Delek Logistics Operating, LLC

7102 Commerce Way

Brentwood, TN 37027

Attn: General Counsel

Telecopy No: (615) 435-1271

Email:

with a copy, which shall not constitute notice, to:

Delek Logistics Operating, LLC

7102 Commerce Way

Brentwood, TN 37027

Attn: President

Telecopy No: (615) 435-1271

Email:

or to such other address or to such other person as either Party will have last designated by notice to the other Party.

 

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24. No Waiver; Cumulative Remedies.

24.1 The failure of a Party hereunder to assert a right or enforce an obligation of any of the other Parties shall not be deemed a waiver of such right or obligation. The waiver by any Party of a breach of any provision of, or Event of Default or Default under, this Agreement shall not operate or be construed as a waiver of any other breach of that provision or as a waiver of any breach of another provision of, Event of Default or potential Event of Default under, this Agreement, whether of a like kind or different nature.

24.2 Each and every right granted to the Parties under this Agreement or allowed it by law or equity, shall be cumulative and may be exercised from time to time in accordance with the terms thereof and Applicable Law.

25. Nature of Transaction and, Relationship of Parties.

25.1 This Agreement shall not be construed as creating a partnership, association or joint venture among the Parties. It is understood that the Operator is an independent contractor with complete charge of its employees and agents in the performance of its duties hereunder, and nothing herein shall be construed to make the Operator, or any employee or agent of the Operator, an agent or employee of the Company.

25.2 No Party shall have the right or authority to negotiate, conclude or execute any contract or legal document with any third person; to assume, create, or incur any liability of any kind, express or implied, against or in the name of any of the other Parties; or to otherwise act as the representative of any of the other Parties, unless expressly authorized in writing by such other Party.

26. Arbitration Provision. Any and all Arbitrable Disputes shall be resolved through the use of binding arbitration using three arbitrators, in accordance with the Commercial Arbitration Rules of the American Arbitration Association, as supplemented to the extent necessary to determine any procedural appeal questions by the Federal Arbitration Act (Title 9 of the United States Code). If there is any inconsistency between this Article 26 and the Commercial Arbitration Rules or the Federal Arbitration Act, the terms of this Article 26 will control the rights and obligations of the Parties. Arbitration must be initiated within the time limits set forth in this Agreement, or if no such limits apply, then within a reasonable time or the time period allowed by the applicable statute of limitations. Arbitration may be initiated by a Party (“ Claimant ”) serving written notice on the other Party (“ Respondent ”) that the Claimant elects to refer the Arbitrable Dispute to binding arbitration. Claimant’s notice initiating binding arbitration must identify the arbitrator Claimant has appointed. The Respondent shall respond to Claimant within thirty (30) days after receipt of Claimant’s notice, identifying the arbitrator Respondent has appointed. If the Respondent fails for any reason to name an arbitrator within the 30-day period, Claimant shall petition the American Arbitration Association for appointment of an arbitrator for Respondent’s account. The two arbitrators so chosen shall select a third arbitrator within thirty (30) days after the second arbitrator has been appointed. The Claimant will pay the compensation and expenses of the arbitrator named by or for it, and the Respondent will pay the compensation and expenses of the arbitrator named by or for it. The costs of petitioning for the appointment of an arbitrator, if any, shall be paid by Respondent. The Claimant and Respondent

 

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will each pay one-half of the compensation and expenses of the third arbitrator. All arbitrators must (i) be neutral parties who have never been officers, directors or employees of the Operator, the Company or any of their Affiliates and (ii) have not less than seven (7) years experience in the energy industry. The hearing will be conducted in Houston, Texas and commence within thirty (30) days after the selection of the third arbitrator. The Company, the Operator and the arbitrators shall proceed diligently and in good faith in order that the award may be made as promptly as possible. Except as provided in the Federal Arbitration Act, the decision of the arbitrators will be binding on and non-appealable by the Parties hereto. The arbitrators shall have no right to grant or award Special Damages.

27. Miscellaneous.

27.1 Whenever possible, each provision of this Agreement will be interpreted in such manner as to be valid and effective under Applicable Law, but if any provision of this Agreement or the application of any such provision to any person or circumstance will be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision hereof, and the Parties will negotiate in good faith with a view to substitute for such provision a suitable and equitable solution in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid, illegal or unenforceable provision.

27.2 This Agreement constitutes the entire agreement among the Parties pertaining to the subject matter hereof and supersedes all prior agreements and understandings of the Parties in connection therewith.

27.3 No promise, representation or inducement has been made by any of the Parties that is not embodied in this Agreement, and none of the Parties shall be bound by or liable for any alleged representation, promise or inducement not so set forth.

27.4 Time is of the essence with respect to all aspects of each Party’s performance of any obligations under this Agreement.

27.5 It is expressly understood that the provisions of this Agreement do not impart enforceable rights in anyone who is not a Party or successor or permitted assignee of a Party.

27.6 In connection with this Agreement and all transactions contemplated by this Agreement, each signatory Party hereto agrees to execute and deliver such additional documents and instruments and to perform such additional acts as may be necessary or appropriate to effectuate, carry out and perform all of the terms, provisions and conditions of this Agreement and all such transactions.

27.7 All audit rights, payment, confidentiality and indemnification obligations and obligations under this Agreement shall survive the expiration or termination of this Agreement.

27.8 This Agreement may be executed in one or more counterparts (including by facsimile or portable document format (pdf)) for the convenience of the Parties hereto, each of which counterparts will be deemed an original, but all of which counterparts together will constitute one and the same agreement.

 

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28. J. Aron.

28.1 Designated Assignment . For a period from and including the Commencement Date to the Expiration Date (the “ Designation Period ”), the Company hereby assigns to J. Aron all the Company’s rights to use, hold the Products in, and transport the Products through, the Terminal pursuant to this Agreement, subject to additional terms and conditions of this Section 28. During the Designation Period, the Operator shall note in its records and account separately for J. Aron’s ownership of the Products held in or transported through the Terminal (collectively, the “ J. Aron Products ”) until such time as J. Aron shall notify the Operator in writing that ownership in such J. Aron Products has been transferred from J. Aron to the Company, it being the intention that the Operator shall not be required to recognize any other transfers of ownership of any J. Aron Products (other than transfers from J. Aron to the Company) unless such transfer and recognition are agreed to in writing by the Operator in its reasonable discretion. The Company shall act as J. Aron’s sole agent for all purposes of this Agreement, and the Operator shall be entitled to follow the Company’s instructions with respect to all J. Aron Products that are transported, stored or handled by the Operator pursuant to this Agreement unless and until the Operator is notified by J. Aron in writing that the Company is no longer authorized to act as J. Aron’s agent, in which case the Operator shall thereafter follow the instructions of J. Aron (or such other agent as J. Aron may appoint) with respect to all J. Aron Products that are transported, stored or handled by the Operator pursuant to this Agreement. All volumes throughput by J. Aron will be taken into account in the determination of whether the Company has satisfied its Minimum Throughput Commitment.

28.2 Measurements; Inventory Reports; Notices . The Company and J. Aron shall each have the measurement rights provided for in this Agreement for so long as any J. Aron Products are located at the Terminal. During any Designation Period, the Operator shall send all inventory and other reports described in this Agreement and notices delivered pursuant to this Agreement to J. Aron at the address provided below, with copies to the Company: J. Aron & Company, 200 West Street, New York, New York 10282-2198, Attention: Commodity Operations/Energy Logistics, ficc-jaron-oilops@gs.com .

28.3 All Provisions in Effect. During any Designation Period, all provisions of this Agreement, as amended or adjusted by this Article 28, shall be in full force and effect with respect to J. Aron and the J. Aron Products as if J. Aron were Party hereto in place of the Company, subject however to the following:

(a) J. Aron’s sole payment obligation hereunder shall be to pay any amounts from time to time due under (i) Sections 3.1, 3.2, 3.3., 3.7, 3.8(c) and 3.9 with respect to services actually rendered hereunder by the Operator with respect to the J. Aron Products and (ii) Article 17 with respect to Liabilities directly or indirectly arising out of the activities of J. Aron under this Agreement; provided that if, at any time, J. Aron elects for any reason to make any payment to the Operator in respect of any amount owing by the Company to the Operator hereunder, such payment shall not constitute, and shall not be deemed to result in, the assumption by J. Aron of any payment or other obligations of the Company under this Agreement;

(b) in no event shall J. Aron have any responsibility for the operations or maintenance of the Terminal or the handling of any Products held in or transported through the

 

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Terminal or otherwise be deemed to have assumed any non-monetary obligations of the Company for such operations, maintenance or handling under this Agreement, all of which responsibilities and obligations shall remain exclusively responsibilities and obligations of the Operator and the Company, subject to any allocation of such responsibilities and obligations between such parties in accordance with the terms of this Agreement;

(c) the Company shall remain solely liable for, and J. Aron shall have no liability or obligation for, (1) meeting any Minimum Throughput Commitment under Section 3.1, (2) any Shortfall Payments under Section 3.6, (3) any amounts payable under Section 3.8(b), (4) any payment obligations in connection with a Capacity Resolution under Section 5.3 and (5) any Deficiency Payments under Section 3.9 that are related to (2), (3) or (4) above, and the Operator shall invoice the Company directly for such amounts or obligations; provided that if, at any time, J. Aron elects for any reason to make any payment to the Operator in respect of any amount owing by the Company to the Operator hereunder, such payment shall not constitute, and shall not be deemed to result in, the assumption by J. Aron of any payment or other obligations of the Company under this Agreement;

(d) without limiting the foregoing, the following rights and benefits will run in favor of J. Aron: (i) any rights with respect to custody and title to the J. Aron Products subject to this Agreement, (ii) any obligations of the Operator with respect to the condition and maintenance of the Terminal, (iii) any inspection and access rights and (iv) any rights relating to measurements and volume determinations, in all cases regardless of whether any specific provision in this Agreements makes any reference to the Company’s assignee or the assignability of the right or benefit provided for in such provision;

(e) in no event shall J. Aron have any of the rights or obligations of the Company provided in Section 3.8(b), Section 5.2, Section 5.3, Section 12.4, Article 15, Article 16 and Article 22;

(f) during the Designation Period, J. Aron and its successors and assigns shall be included as additional insured parties under all insurance policies required to be maintained by the Operator under Section 12.1 above and endorsements confirming the foregoing shall be provided to J. Aron from time to time prior to the Expiration Date upon J. Aron’s reasonable request;

(g) during the Designation Period, the Company shall not agree to any waivers or consents hereunder, or amendments or modifications hereto, in each case, that would reasonably be expected to materially adversely affect J. Aron’s rights hereunder, without the prior express written agreement or consent of J. Aron; and

(h) to confirm its ownership of and rights with respect to all Products at the Terminal, the Operator and the Company agree that during the Designation Period (1) J. Aron is authorized and entitled to file, and maintain against each of such parties protective UCC filings (including making such amendments thereto as J. Aron deems necessary) showing J. Aron as owner of all J. Aron Products from time to time located at the Terminal and (2) they shall execute such other documents and instruments (in form and substance reasonably satisfactory to J. Aron) and take such further actions as J. Aron may reasonably request, including the execution and filing in the relevant real estate records of memoranda of access or similar documents.

 

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28.4 J. Aron shall reasonably cooperate with the Operator and the Company in good faith in connection with any inspection and audit rights hereunder and the resolution of any disputes between the Operator and the Company hereunder.

28.5 Nothing herein shall limit or be deemed to limit any obligations or liabilities of the Company to J. Aron under the Supply and Offtake Agreement or the other Transaction Documents (as defined therein).

28.6 J. Aron may, without any other party’s consent, assign and delegate all of J. Aron’s rights and obligations under this Section 28 to (i) any Affiliate of J. Aron, provided that the obligations of such Affiliate hereunder are guaranteed by The Goldman Sachs Group, Inc. or (ii) any non-Affiliate Person that succeeds to all or substantially all of its assets and business and assumes J. Aron’s obligations hereunder, whether by contract, operation of law or otherwise, provided that the creditworthiness of such successor entity is equal or superior to the creditworthiness of J. Aron (taking into account any credit support for J. Aron) immediately prior to such assignment, which determination shall be made by J. Aron in good faith. Any other assignment by J. Aron shall require the consent of the Company and the Operator.

28.7 The provisions of this Article 28 shall terminate and have no further force or effect as of the Designation Period. Notwithstanding anything in this Agreement to the contrary, J. Aron shall have no right to terminate this Agreement for any reason.

[ Remainder of Page Intentionally Left Blank ]

 

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IN WITNESS WHEREOF, each Party hereto as caused this Agreement to be executed by its duly authorized representative as of the date first above written.

 

LION OIL COMPANY
By:    
Title:    
By:    
Title:    

 

DELEK LOGISTICS OPERATING, LLC
By:    
Title:    
By:    
Title:    

 

For the limited purposes specified in Article 28:

 

J. ARON & COMPANY

By:    
Title:    

Exhibit 10.13

INDEMNIFICATION AGREEMENT

This Indemnification Agreement (this “ Agreement ”) is made as of                     , 20         by and among DELEK LOGISTICS PARTNERS, LP, a Delaware limited partnership (the “Partnership”), DELEK LOGISTICS GP, LLC, a Delaware limited liability company and the general partner of the Partnership (the “ Company ”), and                                  (the “Indemnitee”).

Whereas, highly competent persons have become more reluctant to serve publicly-held entities as directors, officers or in other capacities unless they are provided with adequate protection through insurance and/or adequate indemnification against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of an entity;

Whereas, the uncertainties relating to such insurance and indemnification have increased the difficulty of attracting and retaining such persons;

Whereas, the Company’s Board of Directors (the “Board”) has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company and the Partnership and that the Company and the Partnership should act to assure such persons that there will be increased certainty of such protection in the future;

Whereas, although Indemnitee may be entitled to indemnification pursuant to (a) the Company’s First Amended and Restated Limited Liability Company Agreement dated [                ], 2012 (as the same may be amended and replaced from time to time, the “LLC Agreement”), (b) the Delaware Limited Liability Company Act (the “LLC Act”), (c) the Partnership’s First Amended and Restated Agreement of Limited Partnership dated [                ], 2012 (as the same may be amended and replaced from time to time, the “LP Agreement”) and (d) the Delaware Limited Partnership Act (the “LP Act”) , the LLC Agreement and the LP Agreement expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Partnership, the Company and members of the Board, officers and other persons with respect to indemnification;

Whereas, it is reasonable, prudent and necessary for the Company and the Partnership to contractually obligate themselves to indemnify, and to advance expenses on behalf of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company and the Partnership free from undue concern that they will not be so indemnified;

Whereas, this Agreement is a supplement to and in furtherance of the indemnification provisions in the LLC Agreement and the LP Agreement, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder;

Whereas, Indemnitee believes that this Agreement is desirable to augment the protection available under the LLC Agreement, the LP Agreement and applicable insurance, and may not be willing to serve as a director or officer or in other capacities without the additional protection provided for under this Agreement; and

Whereas, the Company and the Partnership desire Indemnitee to serve in such capacity and Indemnitee is willing to serve and continue to serve on the condition that he or she be so indemnified.

Now, therefore, in consideration of the premises and the covenants contained herein, the Indemnitee, the Partnership and the Company do hereby covenant and agree as follows:

1. Services to the Company . Indemnitee will serve or continue to serve, at the will of the Company and/or its sole member in accordance with the LLC Agreement, as a director or officer of one or more Enterprises for so long as Indemnitee is duly elected, appointed or requested or until Indemnitee tenders his or her resignation from all Enterprises.

2. Definitions . As used in this Agreement:


 

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(a) A “Change in Control” shall be deemed to occur upon the earliest to occur after the date of this Agreement of any of the following events:

(i) Change in Board of Directors. During any period of two consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in Sections 2(a)(ii) or 2(a)(iii)) appointed by the Company’s sole member, cease for any reason to constitute at least a majority of the members of the Board;

(ii) Corporate Transactions. The effective date of a merger or consolidation of the Company with any other entity (other than an affiliate of the Company), other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 51% of the combined voting power of the voting securities of the surviving entity outstanding immediately after such merger or consolidation and with the power to elect at least a majority of the board of directors or other governing body of such surviving entity;

(iii) Liquidation. The approval by the Company’s sole member of a complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; and

(iv) Other Events. There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar item on any similar schedule or form) promulgated under the Exchange Act (as defined below), whether or not the Company is then subject to such reporting requirement.

(b) “Corporate Status” describes the status of a person who is or was a director, officer, trustee, partner, manager, managing member, general partner, fiduciary, employee or agent of the Company or the Partnership or of any other corporation, limited liability company, limited or general partnership or joint venture, trust, employee benefit plan or other enterprise which such person is or was serving at the request of the Company.

(c) “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding (as defined below) in respect of which indemnification is sought by Indemnitee.

(d) “Enterprise” shall mean the Company, the Partnership and any other corporation, limited liability company, limited or general partnership, joint venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was serving at the request of the Company as a director, officer, trustee, partner, manager, managing member, general partner, employee, agent or fiduciary.

(e) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

(f) “Expenses” shall include all reasonable attorneys’ fees and expenses, retainers, court costs, transcript costs, fees of experts (including, without limitation, auditors and accountants), witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding. Expenses also shall include Expenses incurred in connection with any appeal(s) resulting from any Proceeding, including, without limitation, the premium, security for and other costs relating to any cost bond, supersedeas bond or other appeal bond or its equivalent. Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee. Should any payments by the Company or the Partnership to or for the account of an Indemnitee under this Agreement be determined to be subject to any federal, state or local income or excise tax, Expenses shall also include such amounts as are necessary to place Indemnitee in the same after-tax position after giving effect to all applicable taxes, Indemnitee would have been in had no such tax been determined to apply to those payments.


 

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(g) “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent: (i) any Enterprise or any affiliate thereof or Indemnitee in any matter material to any such party (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. The term Independent Counsel shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or the Partnership or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.

(h) The term “Proceeding” shall include any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought in the right of the Company, the Partnership or otherwise and whether of a civil, criminal, administrative or investigative nature, in which Indemnitee was, is or will be involved as a party or otherwise by reason of the fact that Indemnitee is or was a director or officer of the Company, by reason of any action taken (or failure to act) by him or her or any action (or failure to act) on his or her part while acting as a director or officer of the Company, or by reason of the fact that he or she is or was serving at the request of the Company as a director, officer, trustee, partner, manager, managing member, general partner, fiduciary, employee or agent of any Enterprise, in each case whether or not serving in such capacity at the time any liability or expense is incurred for which indemnification, reimbursement or advancement of expenses can be provided under this Agreement, except one initiated by Indemnitee to enforce his or her rights under this Agreement. The term Proceeding shall not include any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding by Indemnitee against the Company or the Partnership, including, without limitation, proceedings initiated by Indemnitee or involving a counterclaim by Indemnitee.

(i) Reference to “other enterprise” shall include employee benefit plans; references to “fines” shall include any excise tax assessed with respect to any employee benefit plan; references to “serving at the request of the Company” shall include any service as a director, officer, employee or agent of the Company or any of its affiliates which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he or she reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in manner “not opposed to the best interests of the Company and the Partnership” as referred to in this Agreement.

3. Indemnity .

(a) The Company and the Partnership hereby agree, to indemnify and hold harmless, to the fullest extent permitted by law but subject to the limitations expressly provided in the LLC Agreement and the the LP Agreement, Indemnitee from and against any and all losses, claims, damages, liabilities, joint or several, Expenses, judgments, fines, ERISA excise taxes, penalties, interest, settlements or other amounts arising from any and all threatened, pending or completed Proceedings in which Indemnitee may be involved, or is threatened to be involved, as a party or otherwise, by reason of the Indemnitee’s Corporate Status, and acting (or refraining to act) in such capacity on behalf of or for the benefit of the Company or the Partnership; provided, however, that Indemnitee shall not be indemnified and held harmless pursuant to this Agreement, the LP Agreement or the LLC 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 Indemnitee is seeking indemnification, Indemnitee acted in bad faith or engaged in fraud, willful misconduct or, in the case of a criminal matter, acted with knowledge that Indemnitee’s conduct was unlawful.

(b) For purposes of Section 3(a), the meaning of the phrase “to the fullest extent permitted by applicable law” shall include, but not be limited to: (i) to the fullest extent permitted by the provisions of the LLC Act and/or LP Act that authorize or contemplate additional indemnification by agreement, or the corresponding provision of


 

4

any amendment to or replacement of the LLC Act and/or LP Act; and (ii) to the fullest extent authorized or permitted by any amendments to or replacements of the LLC Act and/or LP Act adopted after the date of this Agreement that increase the extent to which a an applicable entity may indemnify its officers and directors and persons serving in certain other capacities at the request of the entity.

4. Exclusions . Notwithstanding any other provision in this Agreement, neither the Company nor the Partnership shall be obligated under this Agreement to make any indemnity in connection with any claim made against Indemnitee:

(a) for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or under another valid and enforceable indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision and except for any payments which are required to be disgorged by Indemnitee; or

(b) for an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Partnership within the meaning of Section 16(b) of the Exchange Act or similar provisions of other federal or state statutory law or common law; or

(c) except as otherwise provided in Section 9 (e), in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the directors, officers, employees or other indemnitees of the Company or the Partnership, unless (i) such indemnification is expressly required to be made by applicable law, (ii) the Board authorized the Proceeding (or any part of the Proceeding) prior to its initiation or (iii) the Company or the Partnership provides the indemnification, in the sole discretion of the Company, pursuant to the powers vested in the Company or the Partnership to the fullest extent permitted by applicable law.

5. Advances of Expenses . Notwithstanding any provision of this Agreement to the contrary, to the fullest extent permitted by law the Company and the Partnership agree to advance the expenses incurred by Indemnitee in connection with any Proceeding within 30 calendar days after the receipt by the Company of a statement or statements requesting such advances from time to time, whether prior to or after final disposition of any Proceeding. Advances shall be unsecured and interest free. Advances shall be made without regard to Indemnitee’s ability to repay the expenses and without regard to Indemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement. Advances shall include any and all reasonable Expenses incurred pursuing an action to enforce this right of advancement, including Expenses incurred preparing and forwarding statements to the Company to support the advances claimed. Indemnitee shall qualify for advances solely upon the execution and delivery to the Company of an undertaking providing that Indemnitee undertakes to repay the advance to the extent that it is ultimately determined that Indemnitee is not entitled to be indemnified by the Company or the Partnership. This Section 5 shall not apply to any claim made by Indemnitee for which indemnity is excluded pursuant to Section 4.

6. Procedure for Notification and Defense of Claim .

(a) Within 30 calendar days after service of process on Indemnitee relating to notice of the commencement of any Proceeding, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification. The omission to notify the Company within such 30 day period will not relieve the Company or the Partnership from any liability which it may have to Indemnitee under this Agreement except to the extent the failure of Indemnitee to provide such notice within 30 days after receipt by Indemnitee of notice of the commencement of any Proceeding adversely affects the Company’s or the Partnership’s rights, legal position, ability to defend or ability to obtain insurance coverage with respect to such Proceeding. The omission to notify the Company will not relieve the Company or the Partnership from any liability which it may have to Indemnitee otherwise than under this Agreement. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification.


 

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(b) If the Company and the Partnership shall be obligated to pay the Expenses of any Proceeding against Indemnitee, the Company and the Partnership shall be entitled to assume and control the defense of such Proceeding (with counsel consented to by Indemnitee, which consent shall not be unreasonably withheld), upon the delivery to Indemnitee of written notice of its election so to do. After delivery of such notice, consent to such counsel by Indemnitee and the retention of such counsel by the Company, neither the Company or the Partnership will be liable to Indemnitee under this Agreement for any fees of counsel subsequently incurred by Indemnitee with respect to the same Proceeding, provided that if (i) the employment of separate counsel by Indemnitee has been previously authorized by the Company, (ii) Indemnitee or counsel selected by the Company and the Partnership shall have concluded that there may be a conflict of interest between the Company or the Partnership, on one hand, and Indemnitee or among Indemnitees jointly represented in the conduct of any such defense, on the other hand, or (iii) the Company and the Partnership shall not, in fact, have employed counsel, to which Indemnitee has consented as aforesaid, to assume the defense of such Proceeding, then the reasonable fees and expenses of Indemnitee’s counsel shall be at the expense of the Company. Notwithstanding the foregoing, Indemnitee shall have the right to employ counsel in any such Proceeding at Indemnitee’s expense.

(c) The Company and the Partnership will be entitled to participate in the Proceeding at their own expense. Neither the Company nor the Partnership will, without prior written consent of Indemnitee, effect any settlement of a claim against Indemnitee in any threatened or pending Proceeding unless such settlement solely involves the payment of money and includes an unconditional release of Indemnitee from all liability on any claims that are or were threatened to be made against Indemnitee in the Proceeding.

7. Procedure Upon Application for Indemnification .

(a) Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 6(a), a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall be made in the specific case: (i) if a Change in Control shall have occurred, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee; or (ii) if a Change in Control shall not have occurred, (A) by a majority vote of the Disinterested Directors, even though less than a quorum of the Board, (B) by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than a quorum of the Board, (C) if there are no such Disinterested Directors or, if such Disinterested Directors so direct, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee or (D) if so directed by the Board, the sole member of the Company. If it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within 10 calendar days after such determination. Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any costs or expenses (including attorneys’ fees and expenses and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company or the Partnership (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company and the Partnership hereby agree to indemnify and to hold Indemnitee harmless therefrom.

(b) In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 7(a) hereof, the Independent Counsel shall be selected as provided in this Section 7(b). If a Change in Control shall not have occurred, the Independent Counsel shall be selected by the Board, and the Company shall give written notice to Indemnitee advising him or her of the identity of the Independent Counsel so selected. If a Change in Control shall have occurred, the Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board, in which event the preceding sentence shall apply), and Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected. In either event, Indemnitee or the Company, as the case may be, may, within 10 calendar days after such written notice of selection shall have been given, deliver to the Company or to Indemnitee, as the case may be, a written objection to such selection. Such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 2(g) of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If such written objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court of competent jurisdiction has determined that such objection is without merit. If, within 20 calendar days after submission by Indemnitee of a


 

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written request for indemnification pursuant to Section 6(a) hereof, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition a court of competent jurisdiction (the “ Court ”) for resolution of any objection which shall have been made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the Court or by such other person as the Court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 7(a) hereof. Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 9(a) of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).

(c) The Company and the Partnership agree to pay the reasonable fees and expenses of the Independent Counsel selected as provided in this Section 7 and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

8. Presumptions / Effect of Certain Proceedings .

(a) In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 6(a) of this Agreement, and the Company or the Partnership, as applicable, shall have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any determination contrary to that presumption. Neither the failure of the Company (including by its directors or independent legal counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company or the Partnership (including by its directors or independent legal counsel) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.

(b) If the person, persons or entity empowered or selected under Section 7 of this Agreement to determine whether Indemnitee is entitled to indemnification shall not have made a determination within 60 calendar days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled to such indemnification, absent a prohibition of such indemnification under applicable law. Such 60 day period shall be extended for a reasonable time, not to exceed an additional 30 calendar days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating of documentation and/or information relating thereto. The foregoing provisions of this Section 8(b) shall not apply if the determination of entitlement to indemnification is made by Independent Counsel pursuant to Section 7 of this Agreement.

(c) The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that indemnitee acted in bad faith or engaged in fraud, willful misconduct or, with respect to any criminal Proceeding, that Indemnitee had knowledge that his or her conduct was unlawful.

(d) For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected by the Enterprise. The provisions of this Section 8(d) shall not be deemed to be exclusive or to limit in any way the other circumstances in which Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement.

(e) The knowledge and/or actions, or failure to act, of any director, trustee, partner, managing member, fiduciary, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.


 

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9. Remedies of Indemnitee .

(a) In the event that (i) a determination is made pursuant to Section 7 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 5 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 7(a) of this Agreement within the time period specified in Section 8(b) of this Agreement, or (iv) payment of indemnification pursuant to Section 7 of this Agreement is not made within 10 calendar days after a determination has been made that Indemnitee is entitled to indemnification, Indemnitee shall be entitled to an adjudication by a court of his or her entitlement to such indemnification or advancement of Expenses. Alternatively, Indemnitee, at his or her sole option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Neither the Company nor the Partnership shall oppose Indemnitee’s right to seek any such adjudication or award in arbitration.

(b) In the event that a determination shall have been made pursuant to Section 7(a) of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 7 shall be conducted in all respects as a de novo trial, or arbitration, on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination. In any judicial proceeding or arbitration commenced pursuant to this Section 7, the Company and the Partnership shall have the burden of proving Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be.

(c) If a determination shall have been made pursuant to Section 7(a) of this Agreement that Indemnitee is entitled to indemnification, the Company and the Partnership shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 9, absent a prohibition of such indemnification under applicable law.

(d) The Company and the Partnership shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 9 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company or the Partnership, as applicable, is bound by all the provisions of this Agreement.

(e) The Company and the Partnership shall indemnify Indemnitee to the fullest extent permitted by law against any and all Expenses and, if requested by Indemnitee, shall (within 10 calendar days after receipt by the Company of a written request therefor) advance, to the extent not prohibited by Section 402 of the Sarbanes-Oxley Act of 2002 or other applicable law, such Expenses to Indemnitee which are incurred by Indemnitee in connection with any action brought by Indemnitee for indemnification or advance of Expenses from the Company or the Partnership under this Agreement, any other agreement or provision of the LLC Agreement, the LP Agreement or under any directors’ and officers’ liability insurance policies maintained by the Company or the Partnership, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of Expenses or insurance recovery, as the case may be.

10. Liability Insurance . The Company represents to Indemnitee that it presently has in place certain liability insurance policies covering the directors and officers of the Company and any other Enterprise for losses from wrongful acts. Subject only to the provisions of this Section 10, the Company agrees that for the duration of Indemnitee’s service as a director and/or officer of the Company and/or any other Enterprise, and thereafter for so long as Indemnitee shall be subject to any pending or possible Proceeding, the Company shall use commercially reasonable efforts (taking into account the scope and amount of coverage available relative to the cost thereof) to cause to be maintained in effect one or more policies of directors’ and officers’ liability insurance with reputable insurers providing coverage for directors and/or officers of the Company and any other Enterprise that is at least substantially comparable in scope and amount to that provided by the Company’s current policies of directors’ and officers’ liability insurance. Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain such insurance if the Company determines in good faith that such insurance is not reasonably available, that the premium costs for such insurance are disproportionate to the amount of coverage provided, that the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit, or that Indemnitee is covered by similar insurance maintained by a subsidiary or parent of the Company. The Company shall promptly notify Indemnitee of any good faith determination not to provide such coverage.


 

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11. Non-Exclusivity / Survival of Rights / Subrogation .

(a) The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the LLC Agreement, the LP Agreement, any other agreement or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his or her Corporate Status prior to such amendment, alteration or repeal. To the extent that a change in Delaware law, whether by statute or judicial decision, permits greater indemnification or advancement of Expenses than would be afforded currently under the LLC Agreement, the LP Agreement and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

(b) To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, trustees, partners, managing members, fiduciaries, employees or agents of the Company or of any other Enterprise which such person serves at the request of the Company, Indemnitee shall be an insured under such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, officer, trustee, partner, managing member, fiduciary, employee or agent under such policy or policies. The Company and the Partnership may, but will not be required to, create a trust fund, grant a security interest or use other means, including, without limitation, a letter of credit, to ensure the payment of such amounts as may be necessary to satisfy the obligations to indemnify and advance Expenses pursuant to this Agreement. If, at the time of the receipt of a notice of a claim pursuant to the terms hereof, the Company has directors’ and officers’ liability insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company and Indemnitee shall mutually cooperate and take all reasonable actions to cause such insurers to pay on behalf of the insureds, all amounts payable as a result of such proceeding in accordance with the terms of all applicable policies.

(c) In the event of any payment under this Agreement, the Company or the Partnership, as applicable, shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company or the Partnership to bring suit to enforce such rights.

(d) Neither the Company nor the Partnership shall be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder (or for which advancement is provided hereunder) if and to the extent that Indemnitee has otherwise actually received such payment under the LLC Agreement, the LP Agreement or any insurance policy, contract, agreement or otherwise.

(e) The Company’s and the Partnership’s obligations to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a director, officer, trustee, partner, managing member, fiduciary, employee or agent of any other Enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of expenses from such other Enterprise.

12. Duration of Agreement / Successors / Assigns . This Agreement shall continue until and terminate upon the later of: (a) 10 years after Indemnitee has ceased to occupy any positions or have any relationships described in Section 1 of this Agreement; and (b) the final termination of all actions, suits, proceedings or investigations pending or threatened during such 10 year period to which Indemnitee may be subject by reason of the fact that Indemnitee is or was a director or officer of the Company or is or was serving at the request of the Company as a director, officer, trustee, partner, managing member, fiduciary, employee or agent of any other Enterprise which Indemnitee served at the request


 

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of the Company or by reason of anything done or not done by Indemnitee in any such capacity. This Agreement shall be binding upon the Company, the Partnership and their successors and assigns and shall inure to the benefit of and be enforceable by Indemnitee and his or her personal and legal representatives, heirs, executors, administrators, distributees, legatees and other successors.

13. Severability . If any provision or provisions of this Agreement or any application of any provision hereof shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby. In the event that any court shall decline to reform a provision of the Agreement held to be invalid, unenforceable or otherwise illegal as contemplated by the preceding sentence, the parties hereto shall take all actions as may be necessary or appropriate to replace the provision so held to be invalid, unenforceable or otherwise illegal with one or more alternative provisions that effectuate the purpose and intent of the original provisions of this Agreement as fully as possible without being invalid, unenforceable or otherwise illegal.

14. Enforcement .

(a) The Company and the Partnership expressly confirm and agree that they have entered into this Agreement and assumed the obligations imposed on them hereby in order to induce Indemnitee to serve as a director or officer of one or more Enterprises. The Company and the Partnership acknowledge that Indemnitee is relying upon this Agreement in agreeing to serve and continuing to serve as a director or officer of one or more Enterprises.

(b) This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof. This Agreement is a supplement to and in furtherance of the LLC Agreement, the LP Agreement and applicable law, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder.

(c) The indemnification and advancement of Expenses provided by or granted pursuant to this Agreement shall apply to Indemnitee’s service as a (i) director or officer of the Company prior to the date of this Agreement and (ii) director, officer, trustee, partner, managing member, fiduciary, employee or agent of any other Enterprise which Indemnitee served at the request of the Company prior to the date of this Agreement.

15. Modification / Waiver . No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by the parties thereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement nor shall any waiver constitute a continuing waiver.

16. Notice by Indemnitee . Indemnitee agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification or advancement of Expenses covered hereunder. The failure of Indemnitee to so notify the Company shall not relieve the Company or the Partnership of any obligation which it may have to Indemnitee under this Agreement or otherwise.

17. Notices . Any notices, requests, demands or other communications required or permitted under, or otherwise in connection with this Agreement, shall be in writing and shall be deemed to have been duly given when delivered in person or upon confirmation of receipt when transmitted by facsimile transmission (but only if followed by transmittal by national overnight courier or hand for delivery on the next business day) or on receipt after dispatch by registered or certified mail, postage prepaid, addressed, or on the next business day if transmitted by national overnight courier, in each case as follows: (i) if to the Company, to Delek Logistics GP, LLC, 7102 Commerce Way, Brentwood,


 

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TN 37027, Attention: General Counsel (or Attention: Chief Executive Officer if the General Counsel is the Indemnitee), or to such other address as shall be furnished in writing to Indemnitee by the Company; and (ii) if to Indemnitee, to such address as set forth below Indemnitee’s name on the signature page to this Agreement, or to such other addresses as shall be furnished in writing by Indemnitee to the Company.

18. Contribution . To the fullest extent permissible by applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company and/or the Partnership, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (a) the relative benefits received by the Company, the Partnership and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (b) the relative fault of the Company (and its directors, officers, employees and agents), the Partnership and Indemnitee in connection with such event(s) and/or transaction(s).

19. Applicable Law / Consent to Jurisdiction . This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. Except with respect to any arbitration commenced by Indemnitee pursuant to Section 9 of this Agreement, the Company, the Partnership and Indemnitee hereby irrevocably and unconditionally (a) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Chancery Court of the State of Delaware (the “Delaware Court”), and not in any other state or federal court in the United States of America or any court in any other country, (b) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection with this Agreement, (c) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court, and (d) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum.

20. Joint and Several Liability . The indemnification obligations of the Partnership and the Company hereunder are joint and several; provided, however, that the Partnership and the Company hereby agree that, as between themselves, the Partnership shall pay and perform all such obligations to the greatest extent possible.

21. Counterparts . This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

22. Miscellaneous . Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of the day and year first above written.

 

DELEK LOGISTICS GP, LLC:     INDEMNITEE:
By:  

 

    By:  

 

Name:  

 

    Name:  

 

Title:  

 

    Address:  

 

       

 

DELEK LOGISTICS PARTNERS, LP      
By:   Delek Logistics GP, LLC, its general partner      
By:  

 

     
Name:  

 

     
Title: