UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 31, 2017 (October 30, 2017)

 

 

Andeavor Logistics LP

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-35143   27-4151603

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

19100 Ridgewood Pkwy

San Antonio, Texas

  78259-1828
(Address of principal executive offices)   (Zip Code)

(210) 626-6000

(Registrant’s telephone number, including area code)

Not Applicable

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

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Introductory Note:

On October 30, 2017 (the “Closing Date”) and effective as of 4:01 p.m. Eastern Time, pursuant to the Agreement and Plan of Merger (the “Merger Agreement”), dated as of August 13, 2017, by and among Andeavor Logistics LP, a Delaware limited partnership (“Andeavor Logistics”), Tesoro Logistics GP, LLC, a Delaware limited liability company and the general partner of Andeavor Logistics (“TLLP GP”), Western Refining Logistics, LP, a Delaware limited partnership (“WNRL”), Western Refining Logistics GP, LLC, a Delaware limited liability company and the general partner of WNRL (“WNRL GP”), WNRL Merger Sub LLC, a Delaware limited liability company and wholly-owned subsidiary of Andeavor Logistics (“LP Merger Sub”), and WNRL GP Merger Sub LLC, a Delaware limited liability company and wholly-owned-subsidiary of Andeavor Logistics (“GP Merger Sub”), (1) LP Merger Sub merged with and into WNRL (the “Merger”), with WNRL surviving such Merger as a wholly-owned subsidiary of Andeavor Logistics, and (2) GP Merger Sub merged with and into WNRL GP (the “GP Merger”), with WNRL GP surviving as a wholly-owned subsidiary of Andeavor Logistics.

 

Item 1.01 Entry into a Material Definitive Agreement

Fourth Amended and Restated Omnibus Agreement

Andeavor Logistics, Andeavor, a Delaware corporation (“Andeavor”), on behalf of itself and its affiliates, Tesoro Refining & Marketing Company LLC (“TRMC”), Tesoro Companies, Inc. (“TCI”), Tesoro Alaska Company LLC (“TAC”) and TLLP GP entered into a Fourth Amended and Restated Omnibus Agreement, dated October 30, 2017 (the “Amended Omnibus Agreement”), to amend and restate the Third Amended and Restated Omnibus Agreement dated July 1, 2014 (the “Prior Omnibus Agreement”), by and among the same parties. The Amended Omnibus Agreement addresses the following matters:

 

    Andeavor Logistics’ obligation to pay Andeavor a monthly administrative fee of $1.08 million, and certain other fees, for the provision by Andeavor and its subsidiaries of certain centralized corporate services. This fee is in addition to certain expenses of the TLLP GP and its affiliates (including Andeavor) that are reimbursed in accordance with Andeavor Logistics’ partnership agreement;

 

    Andeavor Logistics’ agreement to reimburse Andeavor for all other direct or allocated costs and expenses incurred by Andeavor or its affiliates on behalf Andeavor Logistics;

 

    the agreement of Andeavor and certain of its affiliates not to compete with TLLP GP under certain circumstances;

 

    Andeavor Logistics’ right of first offer to acquire certain logistics assets of Andeavor and certain of its affiliates;

 

    the obligation of TAC, TRMC and any other affiliates of Andeavor (other than Andeavor Logistics and TLLP GP) to indemnify Andeavor Logistics for certain claims, losses and expenses Andeavor Logistics incurs attributable to, among other matters, certain environmental, title, tax and other liabilities relating to assets contributed by Andeavor and its subsidiaries to Andeavor Logistics, and Andeavor Logistics’ obligation to indemnify Andeavor and its subsidiaries for certain claims, losses or expenses incurred by Andeavor or its subsidiaries attributable to the ownership and operation of Andeavor Logistics’ assets; and

 

    the granting of a license from Andeavor to Andeavor Logistics with respect to use of the Andeavor name and trademark.


The Amended Omnibus Agreement also incorporates the changes made in subsequent amendments to the Prior Omnibus Agreement and its amended schedules, clarifies the reimbursements to be made by Andeavor Logistics to Andeavor, and from Andeavor to the Andeavor Logistics, adds WNRL and its affiliates as parties, adds legacy employees of WNRL and its affiliates as employees covered by terms and provisions of the agreement, modifies the period for reimbursements solely related to bonuses for TLLP GP employees and extends the expense reimbursement period for certain repairs and maintenance performed to comply with updated industry and regulatory standards, among other things.

So long as Andeavor controls TLLP GP, the Amended Omnibus Agreement will remain in full force and effect unless terminated by the parties. If Andeavor ceases to control TLLP GP, either Andeavor or TLLP GP may terminate the Amended Omnibus Agreement, provided that the indemnification obligations of the parties made under the Amended Omnibus Agreement will remain in full force and effect in accordance with their terms.

The foregoing description is not complete and is qualified in its entirety by reference to the Amended Omnibus Agreement, which is filed as Exhibit 10.2 to this Current Report on Form 8-K and incorporated herein by reference.

First Amended and Restated Secondment and Logistics Services Agreement

Andeavor Logistics, TLLP GP, Tesoro Logistics Operations LLC (“TLO”), Andeavor, WNRL, WNRLGP and their direct and indirect subsidiaries entered into a First Amended and Restated Secondment and Logistics Services Agreement, dated October 30, 2017 (the “Amended Secondment Agreement”), to restate the prior Secondment and Logistics Agreement, dated July 1, 2014 (the “Prior Secondment Agreement”). The Amended Secondment Agreement governs the provision of seconded employees to or from the Andeavor Group (as defined in the Amended Secondment Agreement) and the Logistics Group (as defined in the Amended Secondment Agreement), as applicable. The Secondment Agreement also governs the use of certain facilities of the parties by the various entities. The services to be provided by such seconded employees, along with the fees for such services, will be provided on the service schedules to be attached to the Secondment Agreement. Specialized services and the use of various facilities, along with the fees for such services, will be provided for in service orders to be executed by parties requesting and receiving the service. All fees to be paid pursuant to the Secondment Agreement are indexed for inflation.

In addition, the Amended Secondment Agreement amends the Prior Secondment Agreement by incorporating the changes made in subsequent amendments thereto into the body of the agreement and adds WNRL and its affiliates as parties. The parties have separately agreed that the Amended Secondment Agreement will govern should there be any conflict with the terms of WNRL’s current operational services agreement.

The foregoing description is not complete and is qualified in its entirety by reference to the Amended Secondment Agreement, which is filed as Exhibit 10.3 to this Current Report on Form 8-K and incorporated herein by reference.

Relationships

Each of Andeavor Logistics, TLLP GP, TRMC, TCI, TAC, TLO and the other parties to the Amended Omnibus Agreement and the Amended Secondment Agreement is a direct or indirect subsidiary of Andeavor, including WNRL and its affiliates. As a result, certain individuals, including officers and directors of Andeavor and TLLP GP, serve as officers and/or directors of more than one of such other entities. TLLP GP, as the general partner of Andeavor Logistics, holds a non-economic general partner interest in, and common units of, Andeavor Logistics. Andeavor, together with TRMC, Carson Cogeneration Company, TAC and TLLP GP, also holds a majority limited partner interest in Andeavor Logistics.


Item 1.02 Termination of a Material Definitive Agreement

In connection with the Merger, on October 30, 2017, WNRL terminated all commitments and repaid all amounts outstanding, as applicable, under the Credit Agreement, dated as of October 16, 2013 (as amended, supplemented or otherwise modified to date), among WNRL, as borrower, Wells Fargo Bank, National Association, N.A., as administrative agent, swingline lender and letters of credit issuer, and the lenders party thereto from time to time.

Also in connection with the Merger, on October 30, 2017, pursuant to a notice delivered on September 29, 2017, WNRL and WNRL Finance Corp. redeemed all of the then outstanding 7.5% Senior Notes due 2023 (the “Notes”) issued under the Indenture, dated as of February 11, 2015 (the “Indenture”), among WNRL, WNRL Finance Corp. and U.S. Bank National Association, as trustee. As a result of the redemption, WNRL and WNRL Finance Corp. have been released from their respective obligations under the Indenture and the Notes.

 

Item 2.01 Completion of Acquisition or Disposition of Assets

The text set forth under “Introductory Note” above is incorporated herein by reference.

On the Closing Date, Andeavor Logistics completed the acquisition of WNRL through the Merger and the GP Merger. The Merger and the GP Merger became effective as of 4:01 p.m. Eastern Time.

Under the terms of the Merger Agreement, at the effective time of the Merger, (i) each common unit representing limited partnership interests in WNRL (each, a “WNRL Common Unit”) issued and outstanding immediately prior to the effective time of the Merger was converted into, and become exchangeable for, 0.5233 of a common unit representing limited partner interests in Andeavor Logistics (each, an “ANDX Common Unit”), (ii) each TexNew Mex Unit of WNRL representing limited partner interests in WNRL (each, a “WNRL TexNew Mex Unit”) was converted into a right for Western Refining Southwest, Inc., an Arizona corporation (“Southwest”) to receive a TexNew Mex Unit in Andeavor Logistics, a new class of limited partner units in Andeavor Logistics with substantially the same powers, preferences and rights to distributions as the WNRL TexNew Mex Units, and (iii) the WNRL incentive distribution rights outstanding immediately prior to the effective time of the Merger and 3,634,473 WNRL Common Units owned by Southwest were cancelled in exchange for the right of Southwest to receive a newly created special limited partner interest in Andeavor Logistics and any capital account in WNRL associated with such WNRL incentive distribution rights or such WNRL Common Units immediately prior to the Merger.

The issuance of ANDX Common Units in connection with the Merger was registered under the Securities Act of 1933 (the “Securities Act”) pursuant to Andeavor Logistics’ Registration Statement on Form S-4 (Reg No. (333-220088)), declared effective by the Securities and Exchange Commission (the “SEC”) on September 27, 2017. The joint consent statement/prospectus (the “Joint Consent Statement/Prospectus”) included in the registration statement contains additional information about the Merger, and incorporates by reference additional information about the Merger from Current Reports on Form 8-K filed by Andeavor Logistics and WNRL and incorporated by reference into the Joint Consent Statement/Prospectus.

Concurrently with the completion of the Merger, and pursuant to the terms of the Sponsor Equity Restructuring Agreement, dated as of August 13, 2017, by and among, Andeavor Logistics, Andeavor, a Delaware corporation, and TLLP GP (the “Sponsor Equity Restructuring Agreement”), Andeavor Logistics’ incentive distribution rights held by TLLP GP were cancelled and the 2% general partner interest in Andeavor Logistics held by TLLP GP was converted into a non-economic general partner interest in Andeavor Logistics (“GP/IDR Restructuring”). As a result of the GP/IDR Restructuring, TLLP GP received 78,000,000 ANDX Common Units.

On October 27, 2017, in order fund the Merger and to finance the repayments of amounts outstanding under WNRL’s credit agreement and senior notes, Andeavor Logistics utilized cash on hand and borrowed $355 million under Andeavor Logistics’ existing revolving credit facility, dated as of January 29, 2016, among Andeavor Logistics, Bank of America, N.A., as administrative agent, swing line lender and letters of credit issuer, and the lenders party thereto from time to time.


The foregoing description of the Merger, the Merger Agreement, and the Sponsor Equity Restructuring Agreement does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement and the Sponsor Equity Restructuring Agreement, copies of which were attached as Exhibit 2.1 and Exhibit 10.2, respectively, to Andeavor Logistics’ Current Report on Form 8-K filed with the SEC on August 14, 2017, and which are incorporated herein by reference.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On October 27, 2017, Tom O’Connor notified the Board of Directors (the “Board”) of TLLP GP, that he will resign as a member of the Board, effective January 1, 2018, including any committees of the Board on which he serves. Mr. O’Connor’s resignation is not due to any disagreement with Andeavor Logistics on any matter relating to its operations, policies or practices.

On October 27, 2017, Sigmund L. Cornelius and Ruth I. Dreessen were elected to the Board, effective January 1, 2018, and the size of the Board was increased to eight directors, also effective January 1, 2018. The Board expects to appoint Mr. Cornelius and Ms. Dreessen to Board committees at its next meeting. Each will receive compensation for his or her service on the Board consistent with that provided to our other non-employee directors, as previously disclosed in Part III, Item 11 of our Annual Report on Form 10-K for the year ended December 31, 2016.

There is no arrangement or understanding between either Mr. Cornelius or Ms. Dreessen and any other persons pursuant to which either was selected as a director. There are no related party transactions to which either Mr. Cornelius or Ms. Dreessen is a party.

Andeavor Logistics announced the departure of Mr. O’Connor and the election of Mr. Cornelius and Ms. Dreessen in its press release dated October 30, 2017, which is attached hereto as Exhibit 99.1.

 

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year

As contemplated by the Sponsor Equity Restructuring Agreement, simultaneous with the closing of the Merger on the Closing Date, TLLP GP executed and delivered the Second Amended and Restated Agreement of Limited Partnership of Andeavor Logistics (the “Second A&R ANDX LP Agreement”) to reflect the GP/IDR Restructuring. The Second A&R ANDX LP Agreement amends and restates the First Amended and Restated Agreement of Limited Partnership of Andeavor Logistics, dated as of April 26, 2011, as amended, in its entirety. The Second A&R ANDX LP Agreement also reflects Andeavor’s agreement to increase existing waivers on distributions to Andeavor and its affiliates by $60 million to an aggregate of $160 million of distribution waivers between 2017 and 2019, consisting of $50 million in distribution waivers in 2017, $60 million in distribution waivers in 2018 and $50 million of distribution waivers in 2019.

A copy of the Second A&R ANDX LP Agreement is filed as Exhibit 3.1 to this Current Report on Form 8-K and is incorporated herein by reference.

 

Item 8.01 Other Events

On October 30, 2017, Andeavor Logistics and Andeavor issued a joint press release announcing the consummation of the Merger and the GP/IDR Restructuring. A copy of the joint press release is filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.


Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits

 

Exhibit
Number

  

Description

  2.1    Agreement and Plan of Merger, dated as of August  13, 2017, by and among Andeavor Logistics, LP, Tesoro Logistics GP, LLC, Western Refining Logistics, LP, Western Refining Logistics GP, LLC, WNRL Merger Sub LLC and WNRL GP Merger Sub LLC (incorporated by reference herein to Exhibit 2.1 to Andeavor Logistics LP’s Current Report on Form 8-K filed on August 14, 2017, File No. 001-35143).
  3.1    Second Amended and Restated Limited Partnership Agreement of Andeavor Logistics LP, dated October 30, 2017.
10.1    Sponsor Equity Restructuring Agreement, dated as of August  13, 2017, among Andeavor, Andeavor Logistics LP and Tesoro Logistics GP, LLC (incorporated by reference herein to Exhibit 10.2 to Andeavor Logistics LP’s Current Report on Form 8-K filed on August  14, 2017, File No. 001-35143).
10.2    Fourth Amended and Restated Omnibus Agreement, dated as of October 30, 2017, among Andeavor, Tesoro Refining  & Marketing Company LLC, Tesoro Companies, Inc., Tesoro Alaska Company, LLC, Andeavor Logistics LP, Tesoro Logistics GP, LLC.
10.3    First Amended and Restated Secondment and Logistics Services Agreement, dated as of October 30, 2017, among Andeavor, Tesoro Companies, Inc., Tesoro Refining  & Marketing Company LLC, Tesoro Alaska Company LLC, Carson Cogeneration Company, Tesoro Great Plains Holdings Company LLC, Tesoro Great Plains Midstream LLC, Tesoro Great Plains Gathering  & Marketing LLC, BakkenLink Pipeline LLC, ND Land Holdings LLC, Dakota Prairie Refining Company, Western Refining Inc., Western Refining GP, LLC, Western Refining Southwest, Inc., Western Refining Company, L.P., NT InterHold Co., LLC, Northern Tier Energy GP LLC, Northern Tier Energy LP, Northern Tier Energy LLC, St. Paul Park Refining Co. LLC, Northern Tier Oil Transport LLC, Western Refining Conan Gathering Holdings, LLC, Western Refining Conan Gathering, LLC, Western Refining Delaware Basin Storage, LLC, Andeavor Logistics LP, Tesoro Logistics GP, LLC, Tesoro Logistics Operations LLC, Tesoro Logistics Pipelines LLC, Tesoro High Plains Pipeline Company LLC, Tesoro Logistics Northwest Pipeline LLC, Tesoro Alaska Pipeline Company LLC, Tesoro SoCal Pipeline Company LLC, Tesoro Alaska Terminals LLC, Andeavor Field Services, LLC, Andeavor Midstream Partners GP, LLC, Andeavor Midstream Partners Operating, LLC, Andeavor Gathering I, LLC, Rendezvous Pipeline Company, LLC, Green River Processing, LLC, Three Rivers Gathering LLC, Uinta Basin Field Services LLC, Rendezvous Gas Services LLC, Western Refining Logistics, LP, Western Refining Logistics GP, LLC, WNRL Energy GP, LLC, Western Refining Pipeline, LLC, Western Refining Wholesale, LLC, Western Refining Terminals, LLC and Western Refining Product Transport, LLC.
99.1    Press Release of Andeavor and Andeavor Logistics LP, dated October 30, 2017.


Forward Looking Statements

This communication contains certain statements that are “forward-looking” statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934. Words such as “may,” “will,” “could,” “anticipate,” “estimate,” “expect,” “predict,” “project,” “future,” “potential,” “intend,” “plan,” “assume,” “believe,” “forecast,” “look,” “build,” “focus,” “create,” “work” “continue” or the negative of such terms or other variations thereof and words and terms of similar substance used in connection with any discussion of future plans, actions, or events identify forward-looking statements, which involve risks, uncertainties and assumptions that are difficult to predict. These statements are not guarantees of future performance and actual outcomes and results may differ materially from what is expressed or implied in any forward-looking statement. The factors that might affect Andeavor’s or Andeavor Logistics’ performance include, but not limited to: the business environment and industry trends; conditions in global financial markets; domestic and international economic conditions; Andeavor Logistics’ ability to realize the anticipated benefits of the acquisition of WNRL within the expected time frame and efficiently integrate WNRL’s into Andeavor Logistics’ operations; the risk that problems may arise in successfully integrating the businesses of the companies, which may result in the combined company not operating as effectively and efficiently as expected, the risk that the combined company may be unable to achieve cost-cutting synergies or it may take longer than expected to achieve those synergies, the risk that the combined company may not buy back shares and the risk of the amount of any future distribution that Andeavor Logistics may issue. These factors are difficult to predict and are beyond Andeavor Logistics’ or Andeavor’s control, including those detailed in Andeavor Logistics’ annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and registration statement on Form S-4 (Reg. No. 333-220088) filed with the SEC on August 22, 2017, as amended (the “Form S-4”) that are available on its website at http://andeavorlogistics.com/ and on the SEC’s website at http://www.sec.gov, and those detailed in Andeavor’s website at http://andeavor.com and on the SEC’s website at http://www.sec.gov. Andeavor Logistics’ and Andeavor’s forward-looking statements are based on assumptions that Andeavor Logistics and Andeavor believe to be reasonable but that may not prove to be accurate. Andeavor Logistics and Andeavor undertake no obligation to publicly release the result of any revisions to any such forward-looking statements that may be made to reflect events or circumstances that occur, or which we become aware of, except as required by applicable law or regulation. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.


SIGNATURE

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

 

ANDEAVOR LOGISTICS LP
By:   Tesoro Logistics GP, LLC, its general partner
By:  

/s/ Blane W. Peery

Name:   Blane W. Peery
Title:   Vice President and Controller

Date: October 30, 2017

Exhibit 3.1

SECOND AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP

OF

ANDEAVOR LOGISTICS LP

Dated October 30, 2017

 

 

 


Article I DEFINITIONS

       7  

Section 1.1

  Definitions      7  

Section 1.2

  Construction      24  

Article II ORGANIZATION

     24  

Section 2.1

  Formation      24  

Section 2.2

  Name      24  

Section 2.3

  Registered Office; Registered Agent; Principal Office; Other Offices      24  

Section 2.4

  Purpose and Business      25  

Section 2.5

  Powers      25  

Section 2.6

  Term      25  

Section 2.7

  Title to Partnership Assets      25  

Article III RIGHTS OF LIMITED PARTNERS

     26  

Section 3.1

  Limitation of Liability      26  

Section 3.2

  Management of Business      26  

Section 3.3

  Outside Activities of the Limited Partners      26  

Section 3.4

  Rights of Limited Partners      26  

Article IV CERTIFICATES; RECORD HOLDERS; TRANSFER OF PARTNERSHIP INTERESTS; REDEMPTION OF PARTNERSHIP INTERESTS

     28  

Section 4.1

  Certificates      28  

Section 4.2

  Mutilated, Destroyed, Lost or Stolen Certificates      28  

Section 4.3

  Record Holders      29  

Section 4.4

  Transfer Generally      29  

Section 4.5

  Registration and Transfer of Limited Partner Interests      30  

Section 4.6

  Transfer of the General Partner’s General Partner Interest      31  

Section 4.7

  [Reserved]      31  

Section 4.8

  Restrictions on Transfers      31  

Section 4.9

  Eligibility Certificates; Ineligible Holders      33  

Section 4.10

  Redemption of Partnership Interests of Ineligible Holders      34  

Article V CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS

     35  

Section 5.1

  Conversion of the General Partner Interest and Cancellation of Incentive Distribution Rights      35  

Section 5.2

  Contributions by the General Partner      36  

Section 5.3

  Contributions by Limited Partners      36  

Section 5.4

  Interest and Withdrawal      36  

Section 5.5

  Capital Accounts      36  

Section 5.6

  Issuances of Additional Partnership Securities      39  

Section 5.7

  [Reserved]      40  

 

 

2


Section 5.8

  No Preemptive Right      40  

Section 5.9

  Splits and Combinations      40  

Section 5.10

  Fully Paid and Non-Assessable Nature of Limited Partner Interests      41  

Section 5.11

  [Reserved]      41  

Section 5.12

  Establishment of TexNew Mex Units      41  

Section 5.13

  Establishment of the Special Limited Partner Interest      43  

Article VI ALLOCATIONS AND DISTRIBUTIONS

     44  

Section 6.1

  Allocations for Capital Account Purposes      44  

Section 6.2

  Allocations for Tax Purposes      49  

Section 6.3

  Requirement and Characterization of Distributions; Distributions to Record Holders      50  

Section 6.4

  Reduction of Common Unit Distributions      51  

Article VII MANAGEMENT AND OPERATION OF BUSINESS

     52  

Section 7.1

  Management      52  

Section 7.2

  Certificate of Limited Partnership      54  

Section 7.3

  Restrictions on the General Partner’s Authority      54  

Section 7.4

  Reimbursement of the General Partner      55  

Section 7.5

  Outside Activities      56  

Section 7.6

  Loans from the General Partner; Loans or Contributions from the Partnership or Group Members      57  

Section 7.7

  Indemnification      58  

Section 7.8

  Liability of Indemnitees      59  

Section 7.9

  Resolution of Conflicts of Interest; Standards of Conduct and Modification of Duties      60  

Section 7.10

  Other Matters Concerning the General Partner      62  

Section 7.11

  Purchase or Sale of Partnership Securities      62  

Section 7.12

  Registration Rights of the General Partner and its Affiliates      62  

Section 7.13

  Reliance by Third Parties      65  

Article VIII BOOKS, RECORDS, ACCOUNTING AND REPORTS

     66  

Section 8.1

  Records and Accounting      66  

Section 8.2

  Fiscal Year      66  

Section 8.3

  Reports      66  

Article IX TAX MATTERS

     67  

Section 9.1

  Tax Returns and Information      67  

Section 9.2

  Tax Elections      67  

Section 9.3

  Tax Controversies      67  

Section 9.4

  Withholding      68  

Article X ADMISSION OF PARTNERS

     68  

 

3


Section 10.1

  Admission of Limited Partners      68  

Section 10.2

  Admission of Successor General Partner      69  

Section 10.3

  Amendment of Agreement and Certificate of Limited Partnership      69  

Article XI WITHDRAWAL OR REMOVAL OF PARTNERS

     69  

Section 11.1

  Withdrawal of the General Partner      69  

Section 11.2

  Removal of the General Partner      71  

Section 11.3

  Interest of Departing General Partner and Successor General Partner      72  

Section 11.4

  [Reserved]      73  

Section 11.5

  Withdrawal of Limited Partners      73  

Article XII DISSOLUTION AND LIQUIDATION

     73  

Section 12.1

  Dissolution      73  

Section 12.2

  Continuation of the Business of the Partnership After Dissolution      74  

Section 12.3

  Liquidator      74  

Section 12.4

  Liquidation      75  

Section 12.5

  Cancellation of Certificate of Limited Partnership      75  

Section 12.6

  Return of Contributions      76  

Section 12.7

  Waiver of Partition      76  

Section 12.8

  Capital Account Restoration      76  

Article XIII AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE

     76  

Section 13.1

  Amendments to be Adopted Solely by the General Partner      76  

Section 13.2

  Amendment Procedures      78  

Section 13.3

  Amendment Requirements      78  

Section 13.4

  Special Meetings      79  

Section 13.5

  Notice of a Meeting      79  

Section 13.6

  Record Date      80  

Section 13.7

  Adjournment      80  

Section 13.8

  Waiver of Notice; Approval of Meeting      80  

Section 13.9

  Quorum and Voting      80  

Section 13.10

  Conduct of a Meeting      81  

Section 13.11

  Action Without a Meeting      81  

Section 13.12

  Right to Vote and Related Matters      82  

Article XIV MERGER, CONSOLIDATION OR CONVERSION

     82  

Section 14.1

  Authority      82  

Section 14.2

  Procedure for Merger, Consolidation or Conversion      83  

Section 14.3

  Approval by Limited Partners      84  

Section 14.4

  Certificate of Merger or Articles of Conversion      86  

Section 14.5

  Effect of Merger, Consolidation or Conversion      86  

 

 

4


Article XV RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS

     87  

Section 15.1

  Right to Acquire Limited Partner Interests      87  

Article XVI GENERAL PROVISIONS

     89  

Section 16.1

  Addresses and Notices; Written Communications      89  

Section 16.2

  Further Action      90  

Section 16.3

  Binding Effect      90  

Section 16.4

  Integration      90  

Section 16.5

  Creditors      90  

Section 16.6

  Waiver      90  

Section 16.7

  Third-Party Beneficiaries      90  

Section 16.8

  Counterparts      90  

Section 16.9

  Applicable Law      91  

Section 16.10

  Invalidity of Provisions      91  

Section 16.11

  Consent of Partners      92  

Section 16.12

  Facsimile and Email Signatures      92  

 

 

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SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED

PARTNERSHIP OF ANDEAVOR LOGISTICS LP

THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF ANDEAVOR LOGISTICS LP dated as of October 30, 2017, is entered into by and between Tesoro Logistics GP, LLC, a Delaware limited liability company, as the General Partner, together with any other Persons who are or become Partners in the Partnership or parties hereto as provided herein.

WHEREAS, the General Partner, the Organizational Limited Partner, Tesoro Alaska and Tesoro R&M entered into that certain First Amended and Restated Agreement of Limited Partnership of Tesoro Logistics LP on April 26, 2011, as amended by Amendment No. 1 thereto, dated as of December 2, 2014, and Amendment No. 2 thereto, dated as of November 21, 2016 (as so amended, the “ Original Restated Agreement ”);

WHEREAS, the General Partner, without the approval of any Limited Partner, may amend any provision of the Partnership Agreement (i) pursuant to Section 13.1(d)(i) of the Partnership Agreement to reflect a change that does not adversely affect the Limited Partners (including any particular class of Partnership Interests as compared to other classes of Partnership Interests) in any material respect or (ii) pursuant to Section 13.1(g) of the Partnership Agreement to reflect an amendment that the General Partner determines to be necessary or appropriate in connection with the authorization of issuance of any class or series of Partnership Securities pursuant to Section 5.6 of the Partnership Agreement;

WHEREAS, on the date hereof, pursuant to that certain Agreement and Plan of Merger, dated as of August 13, 2017, by and among the Partnership, the General Partner, WNRL Merger Sub LLC, a Delaware limited liability company and wholly owned Subsidiary of the Partnership (“ LP Merger Sub ”), WNRL GP Merger Sub LLC, a Delaware limited liability company and wholly owned Subsidiary of the Partnership (“ GP Merger Sub ”), WNRL and WNRL GP (the “ WNRL Merger Agreement ”), (i) LP Merger Sub will merge with and into WNRL, with WNRL surviving as an indirect wholly owned subsidiary of the Partnership, and certain limited partner interests in WNRL will convert into the right to receive Partnership Interests, (ii) GP Merger Sub will merge with and into WNRL GP, with WNRL GP surviving as an indirect wholly owned subsidiary of the Partnership, and (iii) the Partnership will issue Partnership Interests designated as “ TexNew Mex Units ” having the rights, preferences and privileges set forth in this Agreement to Western Refining Southwest, in each case in accordance with, and with the terms specified in, the WNRL Merger Agreement;

WHEREAS, on the date hereof, pursuant to that certain Sponsor Equity Restructuring Agreement, dated as of August 13, 2017, by and among the Partnership, the General Partner and Andeavor (the “ Sponsor Equity Restructuring Agreement ”), the Partnership will issue 78,000,000 Common Units to the General Partner in consideration for (i) the cancellation of the General Partner’s interest in the Incentive Distribution Rights (as defined in the Original Restated Agreement) of the Partnership and (ii) the conversion of the General Partner Interest into a non-economic general partner interest in the Partnership, in each case in accordance with, and with the terms specified in, the Sponsor Equity Restructuring Agreement;

 

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WHEREAS, in connection with the closing of the transactions contemplated by the WNRL Merger Agreement and the Sponsor Equity Restructuring Agreement, Andeavor desires to waive its right to receive certain distributions with respect to its Common Units, for the periods and subject to and on the terms and conditions set forth herein; and

WHEREAS, the General Partner has adopted this Agreement pursuant to Section 13.1 of the Original Restated Agreement after having determined that the changes to the Original Restated Agreement effected by the adoption of this Agreement (i) do not adversely affect the Limited Partners (including any particular class of Partnership Interests as compared to other classes of Partnership Interests) in any material respect or (ii) are necessary or appropriate in connection with the authorization or issuance of a class of Partnership Securities pursuant to Section 5.6.

NOW, THEREFORE, in consideration of the covenants, conditions and agreements contained herein, the parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions

The following definitions shall be for all purposes, unless otherwise clearly indicated to the contrary, applied to the terms used in this Agreement.

Acquisition ” means any transaction in which any Group Member acquires (through an asset acquisition, merger, stock acquisition or other form of investment) control over all or a portion of the assets, properties or business of another Person for the purpose of increasing over the long-term the operating capacity or operating income of the Partnership Group from the operating capacity or operating income of the Partnership Group existing immediately prior to such transaction. For purposes of this definition, “long-term” generally refers to a period of not less than twelve months.

Actual TexNew Mex Maintenance Capital Expenditures ” means, with respect to any Quarter, the amount of Maintenance Capital Expenditures attributable to the TexNew Mex Shared Segment on a stand-alone basis, as determined by the General Partner, to the extent applicable, in accordance with U.S. GAAP.

Actual TexNew Mex Operating Expenses ” means, with respect to any Quarter, the amount of operating costs and expenses attributable to the TexNew Mex Shared Segment on a stand-alone basis, as determined by the General Partner, to the extent applicable, in accordance with U.S. GAAP, excluding any amounts attributable to depreciation and amortization expenses.

Actual TexNew Mex Volumes ” means, with respect to any Quarter, the total volume of crude oil actually transported on the TexNew Mex Pipeline Portion, during such Quarter, divided by the number of days in such Quarter.

 

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Adjusted Capital Account ” means the Capital Account maintained for each Partner as of the end of each taxable period of the Partnership, (a) increased by any amounts that such Partner is obligated to restore under the standards set by Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (or is deemed obligated to restore under Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5)) and (b) decreased by (i) the amount of all losses and deductions that, as of the end of such taxable period, are reasonably expected to be allocated to such Partner in subsequent taxable periods under Sections 704(e)(2) and 706(d) of the Code and Treasury Regulation Section 1.751-1(b)(2)(ii), and (ii) the amount of all distributions that, as of the end of such taxable period, are reasonably expected to be made to such Partner in subsequent taxable periods in accordance with the terms of this Agreement or otherwise to the extent they exceed offsetting increases to such Partner’s Capital Account that are reasonably expected to occur during (or prior to) the taxable period in which such distributions are reasonably expected to be made (other than increases as a result of a minimum gain chargeback pursuant to Section 6.1(d)(i) or 6.1(d)(ii)). The foregoing definition of Adjusted Capital Account is intended to comply with the provisions of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith. The “ Adjusted Capital Account ” of a Partner in respect of any Partnership Interest shall be the amount that such Adjusted Capital Account would be if such Partnership Interest were the only interest in the Partnership held by such Partner from and after the date on which such Partnership Interest was first issued.

Adjusted Property ” means any property the Carrying Value of which has been adjusted pursuant to Section 5.5(d).

Affiliate ” means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with, the Person in question. As used herein, the term “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.

Agreed Allocation ” means any allocation, other than a Required Allocation, of an item of income, gain, loss or deduction pursuant to the provisions of Section 6.1, including a Curative Allocation (if appropriate to the context in which the term “Agreed Allocation” is used).

Agreed Value ” of any Contributed Property means the fair market value of such property or other consideration at the time of contribution and in the case of an Adjusted Property, the fair market value of such Adjusted Property on the date of the revaluation event as described in Section 5.5(d), in both cases as determined by the General Partner. The General Partner shall use such method as it determines to be appropriate to allocate the aggregate Agreed Value of Contributed Properties contributed to the Partnership in a single or integrated transaction among each separate property on a basis proportional to the fair market value of each Contributed Property.

Agreement ” means this Second Amended and Restated Agreement of Limited Partnership of Andeavor Logistics LP, as it may be amended, supplemented or restated from time to time.

Andeavor ” means Andeavor, a Delaware corporation (formerly Tesoro Corporation).

 

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Associate ” means, when used to indicate a relationship with any Person, (a) any corporation or organization of which such Person is a director, officer, manager, member, general partner or managing member or is, directly or indirectly, the owner of 20% or more of any class of voting stock or other voting interest, (b) any trust or other estate in which such Person has at least a 20% beneficial interest or as to which such Person serves as trustee or in a similar fiduciary capacity, and (c) any relative or spouse of such Person, or any relative of such spouse, who has the same principal residence as such Person.

Available Cash ” means, with respect to any Quarter ending prior to the Liquidation Date:

(a) the sum of (i) all cash and cash equivalents of the Partnership Group (or the Partnership’s proportionate share of cash and cash equivalents in the case of Subsidiaries that are not wholly owned) on hand at the end of such Quarter, and (ii) if the General Partner so determines, all or any portion of additional cash and cash equivalents of the Partnership Group (or the Partnership’s proportionate share of cash and cash equivalents in the case of Subsidiaries that are not wholly owned) on hand on the date of determination of Available Cash with respect to such Quarter resulting from Working Capital Borrowings made subsequent to the end of such Quarter, less

(b) the amount of any cash reserves established by the General Partner (or the Partnership’s proportionate share of cash reserves in the case of Subsidiaries that are not wholly owned) to (i) provide for the proper conduct of the business of the Partnership Group (including reserves for future capital expenditures and for anticipated future credit needs of the Partnership Group) subsequent to such Quarter, (ii) comply with applicable law or any loan agreement, security agreement, mortgage, debt instrument or other agreement or obligation to which any Group Member is a party or by which it is bound or its assets are subject or (iii) provide funds for distributions under Section 5.12 or distributions to the holders of Common Units in respect of any one or more of the next four Quarters; provided, however , that disbursements made by a Group Member or cash reserves established, increased or reduced after the end of such Quarter but on or before the date of determination of Available Cash with respect to such Quarter shall be deemed to have been made, established, increased or reduced, for purposes of determining Available Cash, within such Quarter if the General Partner so determines.

Notwithstanding the foregoing, “ Available Cash ” with respect to the Quarter in which the Liquidation Date occurs and any subsequent Quarter shall equal zero.

Board of Directors ” means, with respect to the General Partner, its board of directors or board of managers, if the General Partner is a corporation or limited liability company, or the board of directors or board of managers of the general partner of the General Partner, if the General Partner is a limited partnership, as applicable.

Book-Tax Disparity ” means with respect to any item of Contributed Property or Adjusted Property, as of the date of any determination, the difference between the Carrying Value of such Contributed Property or Adjusted Property and the adjusted basis thereof for federal income tax purposes as of such date. A Partner’s share of the Partnership’s Book-Tax Disparities in all of its Contributed Property and Adjusted Property will be reflected by the difference

 

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between such Partner’s Capital Account balance as maintained pursuant to Section 5.5 and the hypothetical balance of such Partner’s Capital Account computed as if it had been maintained strictly in accordance with federal income tax accounting principles.

Business Day ” means Monday through Friday of each week, except that a legal holiday recognized as such by the government of the United States of America or the State of Texas shall not be regarded as a Business Day.

Capital Account ” means the capital account maintained for a Partner pursuant to Section 5.5. The “ Capital Account ” of a Partner in respect of any Partnership Interest shall be the amount that such Capital Account would be if such Partnership Interest were the only interest in the Partnership held by such Partner from and after the date on which such Partnership Interest was first issued.

Capital Contribution ” means any cash, cash equivalents or the Net Agreed Value of Contributed Property that a Partner contributes to the Partnership or that is contributed or deemed contributed to the Partnership on behalf of a Partner (including, in the case of an underwritten offering of Units, the amount of any underwriting discounts or commissions).

Capital Improvement ” means any (a) addition or improvement to the capital assets owned by any Group Member, (b) acquisition of existing, or the construction of new or the improvement or replacement of existing, capital assets (including pipelines, terminals, tankage, tanker trucks, docks, truck racks and other storage, distribution or transportation facilities and related or similar midstream or logistics assets) or (c) capital contribution by a Group Member to a Person that is not a Subsidiary in which a Group Member has an equity interest, or after such capital contribution will have an equity interest, to fund such Group Member’s pro rata share of the cost of the addition or improvement to, the acquisition of existing, the construction of new or the improvement or replacement of existing capital assets (including pipelines, terminals, tankage, tanker trucks, docks, truck racks and other storage, distribution or transportation facilities and related or similar midstream or logistics assets) by such Person, in each case if such addition, improvement, replacement, acquisition or construction is made to increase over the long-term the operating capacity or operating income of the Partnership Group, in the case of clauses (a) and (b), or such Person, in the case of clause (c), from the operating capacity or operating income of the Partnership Group or such Person, as the case may be, existing immediately prior to such addition, improvement, replacement, acquisition or construction. For purposes of this definition, “long-term” generally refers to a period of not less than twelve months.

Carrying Value ” means (a) with respect to a Contributed Property or Adjusted Property, the Agreed Value of such property reduced (but not below zero) by all depreciation, amortization and cost recovery deductions charged to the Partners’ Capital Accounts in respect of such property and (b) with respect to any other Partnership property, the adjusted basis of such property for federal income tax purposes, all as of the time of determination; provided that the Carrying Value of any property shall be adjusted from time to time in accordance with Sections 5.5(d)(i) and 5.5(d)(ii) and to reflect changes, additions or other adjustments to the Carrying Value for dispositions and acquisitions of Partnership properties, as deemed appropriate by the General Partner.

 

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Cause ” means a court of competent jurisdiction has entered a final, non-appealable judgment finding the General Partner liable for actual fraud or willful misconduct in its capacity as a general partner of the Partnership.

Certificate ” means (a) a certificate (i) substantially in the form of Exhibit A to this Agreement, (ii) issued in global form in accordance with the rules and regulations of the Depositary or (iii) in such other form as may be adopted by the General Partner, issued by the Partnership evidencing ownership of one or more Common Units or (b) a certificate, in such form as may be adopted by the General Partner, issued by the Partnership evidencing ownership of one or more other Partnership Securities.

Certificate of Limited Partnership ” means the Certificate of Limited Partnership of the Partnership filed with the Secretary of State of the State of Delaware as referenced in Section 7.2, as such Certificate of Limited Partnership may be amended, supplemented or restated from time to time.

Citizenship Eligibility Trigger ” is defined in Section 4.9(a)(ii).

claim ” (as used in Section 7.12(c)) has the meaning assigned to such term in Section 7.12(c).

Closing Date ” means the first date on which Common Units are sold by the Partnership to the Underwriters pursuant to the provisions of the Underwriting Agreement.

Closing Price ” has the meaning assigned to such term in Section 15.1(a).

Code ” means the Internal Revenue Code of 1986, as amended and in effect from time to time. Any reference herein to a specific section or sections of the Code shall be deemed to include a reference to any corresponding provision of any successor law.

Combined Interest ” has the meaning assigned to such term in Section 11.3(a).

Commences Commercial Service ” means the date upon which a Capital Improvement is first put into commercial service by a Group Member following completion of construction development and testing, as applicable.

Commission ” means the United States Securities and Exchange Commission.

Common Unit ” means a Partnership Security representing a fractional part of the Partnership Interests of all Limited Partners, and having the rights and obligations specified with respect to Common Units in this Agreement.

Conflicts Committee ” means a committee of the Board of Directors of the General Partner composed of one or more directors, each of whom (a) is not an officer or employee of the General Partner, (b) is not an officer, director or employee of any Affiliate of the General Partner (other than Group Members), (c) is not a holder of any ownership interest in the General Partner or its Affiliates or the Partnership Group other than Common Units and other awards that are granted to such director under the LTIP and (d) meets the independence standards required of directors who serve on an audit committee of a board of directors established by the Securities Exchange Act and the rules and regulations of the Commission thereunder and by the National Securities Exchange on which the Common Units are listed or admitted to trading.

 

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Contributed Property ” means each property or other asset, in such form as may be permitted by the Delaware Act, but excluding cash, contributed to the Partnership. Once the Carrying Value of a Contributed Property is adjusted pursuant to Section 5.5(d), such property or other assets shall no longer constitute a Contributed Property, but shall be deemed an Adjusted Property.

Contribution Agreement ” means that certain Contribution, Conveyance and Assumption Agreement, dated as of April 26, 2011, among the Partnership, the General Partner, Andeavor, Tesoro Alaska, Tesoro R&M and Tesoro High Plains, together with the additional conveyance documents and instruments contemplated or referenced thereunder, as such may be amended, supplemented or restated from time to time.

Curative Allocation ” means any allocation of an item of income, gain, deduction, loss or credit pursuant to the provisions of Section 6.1(d)(xi).

Current Market Price ” has the meaning assigned to such term in Section 15.1(a).

Delaware Act ” means the Delaware Revised Uniform Limited Partnership Act, 6 Del C. Section 17-101, et seq., as amended, supplemented or restated from time to time, and any successor to such statute.

Departing General Partner ” means a former general partner from and after the effective date of any withdrawal or removal of such former general partner pursuant to Section 11.1 or Section 11.2.

Depositary ” means, with respect to any Units issued in global form, The Depository Trust Company and its successors and permitted assigns.

Economic Risk of Loss ” has the meaning set forth in Treasury Regulation Section 1.752-2(a).

Effective TexNew Mex Tariff ” means, with respect to any Quarter, the volume weighted average TexNew Mex Allocated Tariff Portion payable by customers for transportation services on the TexNew Mex Pipeline Portion in respect of services rendered during such Quarter.

Eligibility Certificate ” is defined in Section 4.9(b).

Eligible Holder ” means a Limited Partner whose (a) federal income tax status would not, in the determination of the General Partner, have the material adverse effect described in Section 4.9(a)(i) or (b) nationality, citizenship or other related status would not, in the determination of the General Partner, create a substantial risk of cancellation or forfeiture as described in Section 4.9(a)(ii).

Event of Withdrawal ” has the meaning assigned to such term in Section 11.1(a).

 

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Excess Distribution ” is defined in Section 6.1(d)(iii).

Excess Distribution Unit ” is defined in Section 6.1(d)(iii).

Expansion Capital Expenditures ” means cash expenditures for Acquisitions or Capital Improvements. Expansion Capital Expenditures shall include interest (and related fees) on debt incurred to finance the construction or development of a Capital Improvement and paid during the period beginning on the date that a Group Member enters into a binding commitment to commence the construction or development of such Capital Improvement and ending on the earlier to occur of the date that such Capital Improvement Commences Commercial Service and the date that such Capital Improvement is abandoned or disposed of. Debt incurred to fund such construction or development period interest payments (including periodic net payments under related interest rate swap agreements) paid during such period shall also be deemed to be debt incurred to finance the construction or development of a Capital Improvement. Where cash expenditures are made in part for Expansion Capital Expenditures and in part for other purposes, the General Partner shall determine the allocation between the amounts paid for each.

FERC ” means the Federal Energy Regulatory Commission.

General Partner ” means Tesoro Logistics GP, LLC, a Delaware limited liability company, and its successors and permitted assigns that are admitted to the Partnership as general partner of the Partnership, in its capacity as general partner of the Partnership (except as the context otherwise requires).

General Partner Interest ” means the non-economic management interest of the General Partner in the Partnership (in its capacity as a general partner without reference to any Limited Partner Interest held by it), which is evidenced by General Partner Units, and includes any and all benefits to which the General Partner is entitled as provided in this Agreement, together with all obligations of the General Partner to comply with the terms and provisions of this Agreement. The General Partner Interest does not include any rights to receive distributions of Available Cash upon the liquidation or winding-up of the Partnership.

General Partner Unit ” means a fractional part of the General Partner Interest having the rights and obligations specified with respect to the General Partner Interest. A General Partner Unit is not a Unit.

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

Gross Liability Value ” means, with respect to any Liability of the Partnership described in Treasury Regulation Section 1.752-7(b)(3)(i), the amount of cash that a willing assignor would pay to a willing assignee to assume such Liability in an arm’s-length transaction.

Group ” means a Person that with or through any of its Affiliates or Associates has any contract, arrangement, understanding or relationship for the purpose of acquiring, holding, voting (except voting pursuant to a revocable proxy or consent given to such Person in response to a proxy or consent solicitation made to 10 or more Persons), exercising investment power or disposing of any Partnership Interests with any other Person that beneficially owns, or whose Affiliates or Associates beneficially own, directly or indirectly, Partnership Interests.

 

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Group Member ” means a member of the Partnership Group.

Group Member Agreement ” means the partnership agreement of any Group Member, other than the Partnership, that is a limited or general partnership, the limited liability company agreement of any Group Member that is a limited liability company, the certificate of incorporation and bylaws or similar organizational documents of any Group Member that is a corporation, the joint venture agreement or similar governing document of any Group Member that is a joint venture and the governing or organizational or similar documents of any other Group Member that is a Person other than a limited or general partnership, limited liability company, corporation or joint venture, as such may be amended, supplemented or restated from time to time.

Holdback Amounts ” has the meaning assigned to such term in Section 5.12(b)(iii)(B).

Holder ” as used in Section 7.12, has the meaning assigned to such term in Section 7.12(a).

Indemnified Persons ” has the meaning assigned to such term in Section 7.12(c).

Indemnitee ” means (a) the General Partner, (b) any Departing General Partner, (c) any Person who is or was an Affiliate of the General Partner or any Departing General Partner, (d) any Person who is or was a manager, managing member, director, officer, employee, agent, fiduciary or trustee of any Group Member, the General Partner or any Departing General Partner or any Affiliate of any Group Member, the General Partner or any Departing General Partner, (e) any Person who is or was serving at the request of the General Partner or any Departing General Partner or any Affiliate of the General Partner or any Departing General Partner as a manager, managing member, director, officer, employee, agent, fiduciary or trustee of another Person owing a fiduciary duty to any Group Member; provided that a Person shall not be an Indemnitee by reason of providing, on a fee-for-services basis, trustee, fiduciary or custodial services, and (f) any Person the General Partner designates as an “Indemnitee” for purposes of this Agreement.

Ineligible Holder ” has the meaning assigned to such term in Section 4.9(c).

Initial Limited Partners ” means the Organizational Limited Partner, the General Partner and the Underwriters upon the issuance by the Partnership of Common Units in connection with the Initial Offering.

Initial Offering ” means the initial offering and sale of Common Units to the public, as described in the Registration Statement.

Investment Capital Expenditures ” means capital expenditures other than Maintenance Capital Expenditures and Expansion Capital Expenditures.

Liability ” means any liability or obligation of any nature, whether accrued, contingent or otherwise.

 

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Limited Partner ” means, unless the context otherwise requires, the Organizational Limited Partner prior to its withdrawal from the Partnership, each Initial Limited Partner, each additional Person that becomes a Limited Partner pursuant to the terms of this Agreement and any Departing General Partner upon the change of its status from General Partner to Limited Partner pursuant to Section 11.3, in each case, in such Person’s capacity as a limited partner of the Partnership.

Limited Partner Interest ” means the ownership interest of a Limited Partner in the Partnership, which may be evidenced by Common Units, TexNew Mex Units or other Partnership Securities (other than a General Partner Unit) or a combination thereof or interest therein, and includes any and all benefits to which such Limited Partner is entitled as provided in this Agreement, together with all obligations of such Limited Partner to comply with the terms and provisions of this Agreement.

Liquidation Date ” means (a) in the case of an event giving rise to the dissolution of the Partnership of the type described in clauses (a) and (b) of the first sentence of Section 12.2, the date on which the applicable time period during which the holders of Outstanding Units have the right to elect to continue the business of the Partnership has expired without such an election being made and (b) in the case of any other event giving rise to the dissolution of the Partnership, the date on which such event occurs.

Liquidation or Sale Loss ” means any Net Loss recognized after the Liquidation Date or upon the sale, exchange or other disposition of all or substantially all of the assets of the Partnership Group, taken as a whole, in a single transaction or a series of related transactions (excluding any disposition to a member of the Partnership Group).

Liquidator ” means one or more Persons selected by the General Partner to perform the functions described in Section 12.4 as liquidating trustee of the Partnership within the meaning of the Delaware Act.

LP Merger Sub has the meaning assigned to such term in the recitals.

“Maintenance Capital Expenditures ” means cash expenditures (including expenditures for the addition or improvement to or replacement of the assets owned by any Group Member or for the acquisition of existing, or the construction or development of new, assets) made to maintain the long-term operating capacity of the assets of or the operating income of the Partnership Group.

Merger Agreement ” has the meaning assigned to such term in Section 14.1.

National Securities Exchange ” means an exchange registered with the Commission under Section 6(a) of the Securities Exchange Act (or any successor to such Section) and any other securities exchange (whether or not registered with the Commission under Section 6(a) (or successor to such Section) of the Securities Exchange Act) that the General Partner shall designate as a National Securities Exchange for purposes of this Agreement.

 

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Net Agreed Value ” means, (a) in the case of any Contributed Property, the Agreed Value of such property or other consideration reduced by any Liabilities either assumed by the Partnership upon such contribution or to which such property or other consideration is subject when contributed and (b) in the case of any property distributed to a Partner by the Partnership, the Partnership’s Carrying Value of such property (as adjusted pursuant to Section 5.5(d)(ii)) at the time such property is distributed, reduced by any Liability either assumed by such Partner upon such distribution or to which such property is subject at the time of distribution, in either case as determined and required by the Treasury Regulations promulgated under Section 704(b) of the Code.

Net Income ” means, for any taxable period, the excess, if any, of the Partnership’s items of income and gain for such taxable period over the Partnership’s items of loss and deduction for such taxable period. The items included in the calculation of Net Income shall be determined in accordance with Section 5.5(b) and shall not include any items specially allocated under Section 6.1(d).

Net Loss ” means, for any taxable period, the excess, if any, of the Partnership’s items of loss and deduction for such taxable period over the Partnership’s items of income and gain for such taxable period. The items included in the calculation of Net Loss shall be determined in accordance with Section 5.5(b) and shall not include any items specially allocated under Section 6.1(d).

Nonrecourse Built-in Gain ” means with respect to any Contributed Properties or Adjusted Properties that are subject to a mortgage or pledge securing a Nonrecourse Liability, the amount of any taxable gain that would be allocated to the Partners pursuant to Sections 6.2(b) if such properties were disposed of in a taxable transaction in full satisfaction of such liabilities and for no other consideration.

Nonrecourse Deductions ” means any and all items of loss, deduction or expenditure (including any expenditure described in Section 705(a)(2)(B) of the Code) that, in accordance with the principles of Treasury Regulation Section 1.704-2(b), are attributable to a Nonrecourse Liability.

Nonrecourse Liability ” has the meaning set forth in Treasury Regulation Section 1.752-1(a)(2). “Notice of Election to Purchase” has the meaning assigned to such term in Section 15.1(b).

Notice of Election to Purchase ” has the meaning assigned to such term in Section 15.1(b).

Omnibus Agreement ” means that certain Omnibus Agreement, dated as of April 26, 2011, among Andeavor, Tesoro R&M, Tesoro Companies, Inc., a Delaware corporation, Tesoro Alaska, the General Partner and the Partnership, as such agreement may be amended, supplemented or restated from time to time.

Operational Services Agreement ” means that certain Operational Services Agreement, dated as of April 26, 2011, among Andeavor, the Partnership, Tesoro Companies Inc., Tesoro R&M, Tesoro Alaska, Tesoro High Plains, Tesoro Logistics Operations LLC and the General Partner as such agreement may be amended, supplemented or restated from time to time.

 

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Opinion of Counsel ” means a written opinion of counsel (who may be regular counsel to the Partnership or the General Partner or any of its Affiliates) acceptable to the General Partner.

Organizational Limited Partner ” means Andeavor, in its capacity as the organizational limited partner of the Partnership pursuant to this Agreement.

Original Restated Agreement ” has the meaning assigned to such term in the recitals.

Outstanding ” means, with respect to Partnership Securities, all Partnership Securities that are issued by the Partnership and reflected as outstanding on the Partnership’s books and records as of the date of determination; provided, however , that if at any time any Person or Group (other than the General Partner or its Affiliates) beneficially owns 20% or more of the Outstanding Partnership Securities of any class then Outstanding, all Partnership Securities owned by such Person or Group shall not be entitled to be voted on any matter and shall not be considered to be Outstanding when sending notices of a meeting of Limited Partners to vote on any matter (unless otherwise required by law), calculating required votes, determining the presence of a quorum or for other similar purposes under this Agreement, except that Partnership Securities so owned shall be considered to be Outstanding for purposes of Section 11.1(b)(iv) (such Partnership Securities shall not, however, be treated as a separate class of Partnership Securities for purposes of this Agreement or the Delaware Act); provided , further , that the foregoing limitation shall not apply to (i) any Person or Group who acquired 20% or more of the Outstanding Partnership Securities of any class then Outstanding directly from the General Partner or its Affiliates (other than the Partnership), (ii) any Person or Group who acquired 20% or more of the Outstanding Partnership Securities of any class then Outstanding directly or indirectly from a Person or Group described in clause (i)  provided that, upon or prior to such acquisition, the General Partner shall have notified such Person or Group in writing that such limitation shall not apply, or (iii) any Person or Group who acquired 20% or more of any Partnership Securities issued by the Partnership with the prior approval of the Board of Directors of the General Partner.

Partner Nonrecourse Debt ” has the meaning set forth in Treasury Regulation Section 1.704-2(b)(4).

Partner Nonrecourse Debt Minimum Gain ” has the meaning set forth in Treasury Regulation Section 1.704-2(i)(2).

Partner Nonrecourse Deductions ” means any and all items of loss, deduction or expenditure (including any expenditure described in Section 705(a)(2)(B) of the Code) that, in accordance with the principles of Treasury Regulation Section 1.704-2(i), are attributable to a Partner Nonrecourse Debt.

Partners ” means the General Partner and the Limited Partners.

Partnership ” means Andeavor Logistics LP, a Delaware limited partnership.

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

 

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Partnership Interest ” means an interest in the Partnership, which shall include the General Partner Interest and Limited Partner Interests.

Partnership Minimum Gain ” means that amount determined in accordance with the principles of Treasury Regulation Sections 1.704-2(b)(2) and 1.704-2(d).

Partnership Representative ” has the meaning assigned to such term in Section 9.3(b).

Partnership Security ” means any class or series of equity interest in the Partnership (but excluding any options, rights, warrants and appreciation rights relating to an equity interest in the Partnership), including Common Units, General Partner Units, TexNew Mex Units and the Special Limited Partner Interest.

Percentage Interest ” means as of any date of determination (a) as to any Unitholder with respect to Units, as the case may be, the product obtained by multiplying (i) 100% less the percentage applicable to clause (b) below by (ii) the quotient obtained by dividing (A) the number of Units held by such Unitholder by (B) the total number of Outstanding Units, and (b) as to the holders of other Partnership Securities issued by the Partnership in accordance with Section 5.6, the percentage established as a part of such issuance. The Percentage Interest with respect to (x) the General Partner Interest, (y) the TexNew Mex Units and (z) the Special Limited Partner Interest shall at all times be zero.

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

Pipeline and Gathering Services Agreement ” means the Pipeline and Gathering Services Agreement, dated as of October 16, 2013, by and among, Western Refining Company, L.P., a Delaware limited partnership, Western Refining Southwest, and Western Refining Pipeline, LLC, a Delaware limited liability company, as amended from time to time.

Plan of Conversion ” has the meaning assigned to such term in Section 14.1.

Pro Rata ” means (a) when used with respect to Units or any class thereof, apportioned equally among all designated Units in accordance with their relative Percentage Interests, (b) when used with respect to Partners or Record Holders, apportioned among all Partners or Record Holders in accordance with their relative Percentage Interests and (c) when used with respect to holders of TexNew Mex Units, apportioned equally among all holders of TexNew Mex Units in accordance with the relative number or percentage of TexNew Mex Units held by each such holder.

Purchase Date ” means the date determined by the General Partner as the date for purchase of all Outstanding Limited Partner Interests of a certain class (other than Limited Partner Interests owned by the General Partner and its Affiliates) pursuant to Article XV.

Quarter ” means, unless the context requires otherwise, a fiscal quarter of the Partnership.

 

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Rate Eligibility Trigger ” is defined in Section 4.9(a)(i).

Recapture Income ” means any gain recognized by the Partnership (computed without regard to any adjustment required by Section 734 or Section 743 of the Code) upon the disposition of any property or asset of the Partnership, which gain is characterized as ordinary income because it represents the recapture of deductions previously taken with respect to such property or asset.

Record Date ” means the date established by the General Partner or otherwise in accordance with this Agreement for determining (a) the identity of the Record Holders entitled to notice of, or to vote at, any meeting of Limited Partners or entitled to vote by ballot or give approval of Partnership action in writing without a meeting or entitled to exercise rights in respect of any lawful action of Limited Partners or (b) the identity of Record Holders entitled to receive any report or distribution or to participate in any offer.

Record Holder ” means (a) with respect to Partnership Securities of any class for which a Transfer Agent has been appointed, the Person in whose name a Partnership Security of such class is registered on the books of the Transfer Agent as of the opening of business on a particular Business Day or (b) with respect to other classes of Partnership Securities, the Person in whose name any such other Partnership Security is registered on the books that the General Partner has caused to be kept as of the opening of business on such Business Day.

Redeemable Interests ” means any Partnership Interests for which a redemption notice has been given, and has not been withdrawn, pursuant to Section 4.10.

Registration Statement ” means the Registration Statement on Form S-1 (File No. 333-171525) as it has been or as it may be amended or supplemented from time to time, filed by the Partnership with the Commission under the Securities Act to register the offering and sale of the Common Units in the Initial Offering.

Required Allocations ” means any allocation of an item of income, gain, loss or deduction pursuant to Section 6.1(d)(i), Section 6.1(d)(ii), Section 6.1(d)(iv), Section 6.1(d)(v), Section 6.1(d)(vi), Section 6.1(d)(vii) or Section 6.1(d)(ix).

Securities Act ” means the Securities Act of 1933, as amended, supplemented or restated from time to time and any successor to such statute.

Securities Exchange Act ” means the Securities Exchange Act of 1934, as amended, supplemented or restated from time to time and any successor to such statute.

Special Approval ” means approval by a majority of the members of the Conflicts Committee acting in good faith.

Special Limited Partner Interest ” means a Partnership Security which shall confer upon the holder thereof only the rights and obligations specifically provided in this Agreement with respect to the Special Limited Partner Interest (and no other rights otherwise available to holders of a Partnership Security).

 

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Sponsor Equity Restructuring Agreement ” has the meaning assigned to such term in the recitals.

Subsidiary ” means, with respect to any Person, (a) a corporation of which more than 50% of the voting power of shares entitled (without regard to the occurrence of any contingency) to vote in the election of directors or other governing body of such corporation is owned, directly or indirectly, at the date of determination, by such Person, by one or more Subsidiaries of such Person or a combination thereof, (b) a partnership (whether general or limited) in which such Person or a Subsidiary of such Person is, at the date of determination, a general or limited partner of such partnership, but only if more than 50% of the partnership interests of such partnership (considering all of the partnership interests of the partnership as a single class) is owned, directly or indirectly, at the date of determination, by such Person, by one or more Subsidiaries of such Person, or a combination thereof, or (c) any other Person (other than a corporation or a partnership) in which such Person, one or more Subsidiaries of such Person, or a combination thereof, directly or indirectly, at the date of determination, has (i) at least a majority ownership interest or (ii) the power to elect or direct the election of a majority of the directors or other governing body of such Person.

Surviving Business Entity ” has the meaning assigned to such term in Section 14.2(b).

Target TexNew Mex Maintenance Capital Expenditures ” means, initially, $484,455 per Quarter, subject to an increase on the last day of each calendar year, beginning on December 31, 2017, by a percentage equal to the annual change in the Producer Price Index for Finished Goods, seasonally adjusted, as published by the Department of Labor.

Target TexNew Mex Operating Expenses ” means, initially, $1,070,901 per Quarter, subject to an increase on the last day of each calendar year, beginning on December 31, 2017, by a percentage equal to the annual change in the Producer Price Index for Finished Goods, seasonally adjusted, as published by the Department of Labor.

Tesoro Alaska ” means Tesoro Alaska Company, a Delaware corporation.

Tesoro High Plains ” means Tesoro High Plains Pipeline Company LLC, a Delaware limited liability company.

Tesoro R&M ” means Tesoro Refining and Marketing Company, a Delaware corporation.

TexNew Mex Allocated Tariff Portion ” means 69.80% of the TexNew Mex Tariff in effect from time to time.

TexNew Mex Assets ” means the TexNew Mex Contributed Assets, as improved, expanded, or otherwise modified from time to time by the Partnership in its operation of the TexNew Mex Shared Segment.

TexNew Mex Base Amount ” means, initially, for each Quarter:

 

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(a) the product of (i) 13,000 multiplied by (ii) the number of days in the applicable Quarter multiplied by (iii) the Effective TexNew Mex Tariff with respect to such Quarter, minus

(b) the lesser of (i) Actual TexNew Mex Operating Expenses for such Quarter and (ii) Target TexNew Mex Operating Expenses for such Quarter, minus

(c) the lesser of (i) Actual TexNew Mex Maintenance Capital Expenditures for such Quarter and (ii) Target TexNew Mex Maintenance Capital Expenditures for such Quarter;

provided , however , that if at any time the Conflicts Committee approves an adjustment to the TexNew Mex Base Amount with the consent of holders of a majority of the TexNew Mex Units, such adjusted amount shall be the TexNew Mex Base Amount.

TexNew Mex Contributed Assets ” has the meaning given to such term in the TexNew Mex Contribution Agreement.

TexNew Mex Contribution Agreement ” means that certain Contribution, Conveyance and Assumption Agreement, dated as of October 30, 2015, by and among WNRL, WNRL GP, Western Refining, Inc., a Delaware corporation, and Western Refining Southwest.

TexNew Mex Contributed Percentage ” means 30.77% (being a fraction (expressed as a percentage) equal to the quotient of (i) $80,000,000 divided by (ii) $260,000,000).

TexNew Mex Pipeline ” means the FERC-regulated pipeline extending from WNRL’s crude oil station in Bisti, New Mexico in the Four Corners region to its T Station in Eddy County, New Mexico.

TexNew Mex Pipeline Portion ” means that portion of the TexNew Mex Pipeline comprised of the approximate 375-mile segment of the FERC-regulated pipeline extending from WNRL’s crude oil station in Star Lake, New Mexico in the Four Corners region to its T Station in Eddy County, New Mexico.

TexNew Mex Shared Segment ” means (i) the business and operation of the TexNew Mex Assets and (ii) all revenue and expenses attributable to the business and operation of the TexNew Mex Assets (including the portion of any joint tariffs attributable to the TexNew Mex Assets, but excluding any other portion of such joint tariffs).

TexNew Mex Shared Segment Distributable Cash Flow ” means, for each Quarter:

(a) the product of (i) Actual TexNew Mex Volumes for such Quarter multiplied by (ii) the number of days in such Quarter multiplied by (iii) the Effective TexNew Mex Tariff with respect to such Quarter, minus

(b) Actual TexNew Mex Operating Expenses for such Quarter, minus

(c) Actual TexNew Mex Maintenance Capital Expenditures for such Quarter,

 

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(d) plus any increase or minus any decrease in deferred revenue attributable to the TexNew Shared Segment with respect to such Quarter, plus

(e) any revenue attributable to the TexNew Mex Shared Segment during such Quarter due to the expiration of any TexNew Mex Credits (as such term is defined in the Pipeline and Gathering Services Agreement) or similar credits contemplated by any other transportation agreement entered into by WNRL and its Subsidiaries with respect to the provision of transportation services on the TexNew Mex Pipeline Portion.

In determining the TexNew Mex Shared Segment Distributable Cash Flow (including any input in the calculation of TexNew Mex Shared Segment Distributable Cash Flow), the General Partner may utilize any methods to allocate revenue, expenses and other items to the TexNew Mex Shared Segment as it determines to be reasonable and appropriate.

TexNew Mex Tariff ” means the per barrel rate on file with the FERC encompassing transportation of crude oil the full length of the TexNew Mex Pipeline terminating at the Partnership’s T Station and a segment of pipeline originating at the Partnership’s T Station and terminating at the Partnership’s Mason Station, as such tariff may be in effect from time to time.

TexNew Mex Unit ” means a Partnership Interest having the rights and obligations specified with respect to TexNew Mex Units in this Agreement. The term “Common Unit” does not refer to or include TexNew Mex Units.

Trading Day ” has the meaning assigned to such term in Section 15.1(a).

Transaction Documents ” has the meaning assigned to such term in Section 7.1(b).

transfer ” has the meaning assigned to such term in Section 4.4(a).

Transfer Agent ” means such bank, trust company or other Person (including the General Partner or one of its Affiliates) as may be appointed from time to time by the General Partner to act as registrar and transfer agent for any class of Partnership Securities; provided , that if no Transfer Agent is specifically designated for any class of Partnership Securities, the General Partner shall act in such capacity.

Underwriter ” means each Person named as an underwriter in Schedule I to the Underwriting Agreement who purchases Common Units pursuant thereto.

Underwriting Agreement ” means that certain Underwriting Agreement dated as of April 19, 2011 among the Underwriters, Andeavor, the Partnership, the General Partner, Tesoro R&M and Tesoro Alaska Company providing for the purchase of Common Units by the Underwriters.

Unit ” means a Partnership Security that is designated as a “Unit” and shall include Common Units but shall not include (i) General Partner Units (or the General Partner Interest represented thereby), (ii) the TexNew Mex Units or (iii) the Special Limited Partner Interest.

Unit Majority ” means at least a majority of the Outstanding Common Units.

 

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Unitholders ” means the holders of Units.

Unrealized Gain ” attributable to any item of Partnership property means, as of any date of determination, the excess, if any, of (a) the fair market value of such property as of such date (as determined under Section 5.5(d)) over (b) the Carrying Value of such property as of such date (prior to any adjustment to be made pursuant to Section 5.5(d) as of such date).

Unrealized Loss ” attributable to any item of Partnership property means, as of any date of determination, the excess, if any, of (a) the Carrying Value of such property as of such date (prior to any adjustment to be made pursuant to Section 5.5(d) as of such date) over (b) the fair market value of such property as of such date (as determined under Section 5.5(d)).

Unrestricted Person ” means (a) each Indemnitee, (b) each Partner, (c) each Person who is or was a member, partner, director, officer, employee or agent of any Group Member, a General Partner or any Departing General Partner or any Affiliate of any Group Member, a General Partner or any Departing General Partner and (d) any Person the General Partner designates as an “Unrestricted Person” for purposes of this Agreement.

U.S. GAAP ” means United States generally accepted accounting principles, as in effect from time to time, consistently applied.

Western Refining Southwest ” means Western Refining Southwest, Inc., an Arizona corporation.

Withdrawal Opinion of Counsel ” has the meaning assigned to such term in Section 11.1(b).

WMLP Incentive Distribution Rights ” has the meaning assigned to such term in the WNRL Merger Agreement.

WNRL ” means Western Refining Logistics, LP, a Delaware limited partnership.

WNRL GP ” means Western Refining Logistics GP, LLC, a Delaware limited liability company.

WNRL Merger Agreement ” has the meaning assigned to such term in the recitals.

Working Capital Borrowings ” means borrowings incurred pursuant to a credit facility, commercial paper facility or similar financing arrangement that are used solely for working capital purposes or to pay distributions to the Partners; provided that when such borrowings are incurred it is the intent of the borrower to repay such borrowings within 12 months from the date of such borrowings other than from additional Working Capital Borrowings.

 

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Section 1.2 Construction

Unless the context requires otherwise: (a) any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa; (b) references to Articles and Sections refer to Articles and Sections of this Agreement; (c) the terms “include,” “includes,” “including” or words of like import shall be deemed to be followed by the words “without limitation”; and (d) the terms “hereof,” “herein” or “hereunder” refer to this Agreement as a whole and not to any particular provision of this Agreement. The table of contents and headings contained in this Agreement are for reference purposes only, and shall not affect in any way the meaning or interpretation of this Agreement.

ARTICLE II

ORGANIZATION

Section 2.1 Formation

The General Partner and the Organizational Limited Partner have previously formed the Partnership as a limited partnership pursuant to the provisions of the Delaware Act and the General Partner hereby amends and restates the Original Restated Agreement in its entirety. This amendment and restatement shall become effective on the date of this Agreement. Except as expressly provided to the contrary in this Agreement, the rights, duties (including fiduciary duties), liabilities and obligations of the Partners and the administration, dissolution and termination of the Partnership shall be governed by the Delaware Act. All Partnership Interests shall constitute personal property of the owner thereof for all purposes.

Section 2.2 Name

The name of the Partnership shall be “ Andeavor Logistics LP ”. Subject to applicable law, the Partnership’s business may be conducted under any other name or names as determined by the General Partner, including the name of the General Partner. The words “Limited Partnership,” “L.P.,” “Ltd.” or similar words or letters shall be included in the Partnership’s name where necessary for the purpose of complying with the laws of any jurisdiction that so requires. The General Partner may change the name of the Partnership at any time and from time to time and shall notify the Limited Partners of such change in the next regular communication to the Limited Partners.

Section 2.3 Registered Office; Registered Agent; Principal Office; Other Offices

Unless and until changed by the General Partner, the registered office of the Partnership in the State of Delaware shall be located at 251 Little Falls Drive, Wilmington, Delaware 19808, and the registered agent for service of process on the Partnership in the State of Delaware at such registered office shall be Corporation Service Company. The principal office of the Partnership shall be located at 19100 Ridgeway Parkway, San Antonio, Texas 78259, or such other place as the General Partner may from time to time designate by notice to the Limited Partners. The Partnership may maintain offices at such other place or places within or outside the State of Delaware as the General Partner determines to be necessary or appropriate. The address of the General Partner shall be 19100 Ridgeway Parkway, San Antonio, Texas 78259, or such other place as the General Partner may from time to time designate by notice to the Limited Partners.

 

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Section 2.4 Purpose and Business

The purpose and nature of the business to be conducted by the Partnership shall be to (a) engage directly in, or enter into or form, hold and dispose of any corporation, partnership, joint venture, limited liability company or other arrangement to engage indirectly in, any business activity that is approved by the General Partner and that lawfully may be conducted by a limited partnership organized pursuant to the Delaware Act and, in connection therewith, to exercise all of the rights and powers conferred upon the Partnership pursuant to the agreements relating to such business activity, and (b) do anything necessary or appropriate to the foregoing, including the making of capital contributions or loans to a Group Member; provided, however , that the General Partner shall not cause the Partnership to engage, directly or indirectly, in any business activity that the General Partner determines would cause the Partnership to be treated as an association taxable as a corporation or otherwise taxable as an entity for federal income tax purposes. To the fullest extent permitted by law, the General Partner shall have no duty or obligation to propose or approve the conduct by the Partnership of any business and may decline to so propose or approve free of any fiduciary duty or obligation whatsoever to the Partnership or any Limited Partner and, in declining to so propose or approve, shall not be required to act in good faith or pursuant to any other standard imposed by this Agreement, any Group Member Agreement, any other agreement contemplated hereby or under the Delaware Act or any other law, rule or regulation or at equity.

Section 2.5 Powers

The Partnership shall be empowered to do any and all acts and things necessary or appropriate for the furtherance and accomplishment of the purposes and business described in Section 2.4 and for the protection and benefit of the Partnership.

Section 2.6 Term

The term of the Partnership commenced upon the filing of the Certificate of Limited Partnership in accordance with the Delaware Act and shall continue in existence until the dissolution of the Partnership in accordance with the provisions of Article XII. The existence of the Partnership as a separate legal entity shall continue until the cancellation of the Certificate of Limited Partnership as provided in the Delaware Act.

Section 2.7 Title to Partnership Assets

Title to Partnership assets, whether real, personal or mixed and whether tangible or intangible, shall be deemed to be owned by the Partnership as an entity, and no Partner, individually or collectively, shall have any ownership interest in such Partnership assets or any portion thereof. Title to any or all of the Partnership assets may be held in the name of the Partnership, the General Partner, one or more of its Affiliates or one or more nominees, as the General Partner may determine. The General Partner hereby declares and warrants that any Partnership assets for which record title is held in the name of the General Partner or one or more of its Affiliates or one or more nominees shall be held by the General Partner or such Affiliate or nominee for the use and benefit of the Partnership in accordance with the provisions of this Agreement; provided, however , that the General Partner shall use reasonable efforts to cause record title to such assets (other than those assets in respect of which the General Partner determines that the expense and difficulty of conveyancing makes transfer of record title to the

 

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Partnership impracticable) to be vested in the Partnership or one or more of the Partnership’s designated Affiliates as soon as reasonably practicable; provided , further , that, prior to the withdrawal or removal of the General Partner or as soon thereafter as practicable, the General Partner shall use reasonable efforts to effect the transfer of record title to the Partnership and, prior to any such transfer, will provide for the use of such assets in a manner satisfactory to the General Partner. All Partnership assets shall be recorded as the property of the Partnership in its books and records, irrespective of the name in which record title to such Partnership assets is held.

ARTICLE III

RIGHTS OF LIMITED PARTNERS

Section 3.1 Limitation of Liability

The Limited Partners shall have no liability under this Agreement except as expressly provided in this Agreement or the Delaware Act.

Section 3.2 Management of Business

No Limited Partner, in its capacity as such, shall participate in the operation, management or control (within the meaning of the Delaware Act) of the Partnership’s business, transact any business in the Partnership’s name or have the power to sign documents for or otherwise bind the Partnership. Any action taken by any Affiliate of the General Partner or any officer, director, employee, manager, member, general partner, agent or trustee of the General Partner or any of its Affiliates, or any officer, director, employee, manager, member, general partner, agent or trustee of a Group Member, in its capacity as such, shall not be deemed to be participating in the control of the business of the Partnership by a limited partner of the Partnership (within the meaning of Section 17-303(a) of the Delaware Act) and shall not affect, impair or eliminate the limitations on the liability of the Limited Partners under this Agreement.

Section 3.3 Outside Activities of the Limited Partners

Subject to the provisions of Section 7.5, which shall continue to be applicable to the Persons referred to therein, regardless of whether such Persons shall also be Limited Partners, any Limited Partner shall be entitled to and may have business interests and engage in business activities in addition to those relating to the Partnership, including business interests and activities in direct competition with the Partnership Group. Neither the Partnership nor any of the other Partners shall have any rights by virtue of this Agreement in any business ventures of any Limited Partner.

Section 3.4 Rights of Limited Partners

(a) In addition to other rights provided by this Agreement or by applicable law (other than Section 17-305 of the Delaware Act, which is restricted to the extent set forth below), and except as limited by Section 3.4(b), each Limited Partner shall have the right, for a purpose reasonably related to such Limited Partner’s interest as a Limited Partner in the Partnership, upon reasonable written demand stating the purpose of such demand, and at such Limited Partner’s own expense:

 

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(i) to obtain true and full information regarding the status of the business and financial condition of the Partnership; provided, however , that the requirements of this Section 3.4(a)(i) shall be satisfied by furnishing to a Limited Partner upon its demand pursuant to this Section 3.4(a)(i) either (A) the Partnership’s most recent filings with the Commission on Form 10-K and any subsequent filings on Form 10-Q and 8-K or (B) if the Partnership is no longer subject to the reporting requirements of the Securities Exchange Act, the information specified in, and meeting the requirements of, Rule 144A(d)(4) under the Securities Act;

(ii) promptly after its becoming available, to obtain a copy of the Partnership’s federal, state and local income tax returns for each year;

(iii) to obtain a current list of the name and last known business, residence or mailing address of each Partner;

(iv) to obtain a copy of this Agreement and the Certificate of Limited Partnership and all amendments thereto, together with copies of the executed copies of all powers of attorney pursuant to which this Agreement, the Certificate of Limited Partnership and all amendments thereto have been executed;

(v) to obtain true and full information regarding the amount of cash and a description and statement of the Net Agreed Value of any other Capital Contribution by each Partner and that each Partner has agreed to contribute in the future, and the date on which each became a Partner; and

(vi) to obtain such other information regarding the affairs of the Partnership as is just and reasonable.

(b) The General Partner may keep confidential from the Limited Partners, for such period of time as the General Partner deems reasonable, (i) any information that the General Partner reasonably believes to be in the nature of trade secrets or (ii) other information the disclosure of which the General Partner in good faith believes (A) is not in the best interests of the Partnership Group, (B) could damage the Partnership Group or its business or (C) that any Group Member is required by law or by agreement with any third party to keep confidential (other than agreements with Affiliates of the Partnership the primary purpose of which is to circumvent the obligations set forth in this Section 3.4).

 

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ARTICLE IV

CERTIFICATES; RECORD HOLDERS; TRANSFER OF PARTNERSHIP INTERESTS;

REDEMPTION OF PARTNERSHIP INTERESTS

Section 4.1 Certificates

Notwithstanding anything to the contrary in this Agreement, unless the General Partner shall determine otherwise in respect of some or all of any or all classes of Partnership Interests, Partnership Interests shall not be evidenced by physical certificates. Certificates that may be issued, if any, shall be executed on behalf of the Partnership by the Chairman of the Board, Chief Executive Officer, President, Chief Financial Officer or any Vice President and the Secretary, any Assistant Secretary, or other authorized officer or director of the General Partner. If a Transfer Agent has been appointed for a class of Partnership Interests, no Certificate for such class of Partnership Interests shall be valid for any purpose until it has been countersigned by the Transfer Agent; provided, however , that, if the General Partner elects to cause the Partnership to issue Partnership Interests of such class in global form, the Certificate shall be valid upon receipt of a certificate from the Transfer Agent certifying that the Partnership Interests have been duly registered in accordance with the directions of the Partnership. With respect to any Units outstanding prior to the effectiveness of this Agreement that are represented by physical certificates, the General Partner may determine that such Units will no longer be represented by physical certificates and may, upon written notice to the holders of such Units and subject to applicable law, take whatever actions it deems necessary or appropriate to cause such Units to be registered in book entry or global form and may cause such physical certificates to be cancelled or deemed cancelled.

Section 4.2 Mutilated, Destroyed, Lost or Stolen Certificates

(a) If any mutilated Certificate is surrendered to the Transfer Agent, the appropriate officers of the General Partner on behalf of the Partnership shall execute, and the Transfer Agent shall countersign and deliver in exchange therefor, a new Certificate evidencing the same number and type of Partnership Securities as the Certificate so surrendered.

(b) The appropriate officers of the General Partner on behalf of the Partnership shall execute and deliver, and the Transfer Agent shall countersign, a new Certificate in place of any Certificate previously issued, if the Record Holder of the Certificate:

(i) makes proof by affidavit, in form and substance satisfactory to the General Partner, that a previously issued Certificate has been lost, destroyed or stolen;

(ii) requests the issuance of a new Certificate before the General Partner has notice that the Certificate has been acquired by a purchaser for value in good faith and without notice of an adverse claim;

(iii) if requested by the General Partner, delivers to the General Partner a bond, in form and substance satisfactory to the General Partner, with surety or sureties and with fixed or open penalty as the General Partner may direct to indemnify the Partnership, the Partners, the General Partner and the Transfer Agent against any claim that may be made on account of the alleged loss, destruction or theft of the Certificate; and

(iv) satisfies any other reasonable requirements imposed by the General Partner.

 

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If a Limited Partner fails to notify the General Partner within a reasonable period of time after such Limited Partner has notice of the loss, destruction or theft of a Certificate, and a transfer of the Limited Partner Interests represented by the Certificate is registered before the Partnership, the General Partner or the Transfer Agent receives such notification, to the fullest extent permitted by law, the Limited Partner shall be precluded from making any claim against the Partnership, the General Partner or the Transfer Agent for such transfer or for a new Certificate.

(c) As a condition to the issuance of any new Certificate under this Section 4.2, the General Partner may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Transfer Agent) reasonably connected therewith.

Section 4.3 Record Holders

The Partnership shall be entitled to recognize the Record Holder as the Partner with respect to any Partnership Interest and, accordingly, shall not be bound to recognize any equitable or other claim to, or interest in, such Partnership Interest on the part of any other Person, regardless of whether the Partnership shall have actual or other notice thereof, except as otherwise provided by law or any applicable rule, regulation, guideline or requirement of any National Securities Exchange on which such Partnership Interests are listed or admitted to trading. Without limiting the foregoing, when a Person (such as a broker, dealer, bank, trust company or clearing corporation or an agent of any of the foregoing) is acting as nominee, agent or in some other representative capacity for another Person in acquiring and/or holding Partnership Interests, as between the Partnership on the one hand, and such other Persons on the other, such representative Person shall be (a) the Record Holder of such Partnership Interest and (b) bound by this Agreement and shall have the rights and obligations of a Partner hereunder as, and to the extent, provided herein.

Section 4.4 Transfer Generally

(a) The term “ transfer ,” when used in this Agreement with respect to a Partnership Interest, shall be deemed to refer to a transaction (i) by which the General Partner assigns its General Partner Units to another Person and includes a sale, assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange or any other disposition by law or otherwise or (ii) by which the holder of a Limited Partner Interest assigns such Limited Partner Interest to another Person who is or becomes a Limited Partner, and includes a sale, assignment, gift, exchange or any other disposition by law or otherwise, excluding a pledge, encumbrance, hypothecation or mortgage but including any transfer upon foreclosure of any pledge, encumbrance, hypothecation or mortgage.

(b) No Partnership Interest shall be transferred, in whole or in part, except in accordance with the terms and conditions set forth in this Article IV. Any transfer or purported transfer of a Partnership Interest not made in accordance with this Article IV shall be null and void.

(c) Nothing contained in this Agreement shall be construed to prevent a disposition by any stockholder, member, partner or other owner of the General Partner or any Limited Partner of any or all of the shares of stock, membership interests, partnership interests or other ownership interests in the General Partner or Limited Partner and the term “ transfer ” shall not mean any such disposition.

 

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Section 4.5 Registration and Transfer of Limited Partner Interests

(a) The General Partner shall keep or cause to be kept on behalf of the Partnership a register in which, subject to such reasonable regulations as it may prescribe and subject to the provisions of Section 4.5(b), the Partnership will provide for the registration and transfer of Limited Partner Interests. The Partnership shall not recognize transfers of Certificates evidencing Limited Partner Interests unless such transfers are effected in the manner described in this Section 4.5.

(b) The General Partner shall not recognize any transfer of Limited Partner Interests evidenced by Certificates until the Certificates evidencing such Limited Partner Interests are surrendered for registration of transfer. No charge shall be imposed by the General Partner for such transfer; provided , that as a condition to the issuance of any new Certificate under this Section 4.5, the General Partner may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed with respect thereto. Upon surrender of a Certificate for registration of transfer of any Limited Partner Interests evidenced by a Certificate, and subject to the provisions of this Section 4.5(b), the appropriate officers of the General Partner on behalf of the Partnership shall execute and deliver, and in the case of Certificates evidencing Limited Partner Interests for which a Transfer Agent has been appointed, the Transfer Agent shall countersign and deliver, in the name of the holder or the designated transferee or transferees, as required pursuant to the holder’s instructions, one or more new Certificates evidencing the same aggregate number and type of Limited Partner Interests as was evidenced by the Certificate so surrendered.

(c) Upon the receipt of proper transfer instructions from the registered owner of uncertificated Common Units, such uncertificated Common Units shall be cancelled, issuance of new equivalent uncertificated Common Units or Certificates shall be made to the holder of Common Units entitled thereto and the transaction shall be recorded upon the Partnership’s register.

(d) By acceptance of the transfer of any Limited Partner Interests in accordance with this Section 4.5 and except as provided in Section 4.9, each transferee of a Limited Partner Interest (including any nominee holder or an agent or representative acquiring such Limited Partner Interests for the account of another Person) (i) shall be admitted to the Partnership as a Limited Partner with respect to the Limited Partner Interests so transferred to such Person when any such transfer or admission is reflected in the books and records of the Partnership and such Limited Partner becomes the Record Holder of the Limited Partner Interests so transferred, (ii) shall become bound, and shall be deemed to have agreed to be bound, by the terms of this Agreement, (iii) represents that the transferee has the capacity, power and authority to enter into this Agreement and (iv) makes the consents, acknowledgements and waivers contained in this Agreement, all with or without execution of this Agreement by such Person. The transfer of any Limited Partner Interests and the admission of any new Limited Partner shall not constitute an amendment to this Agreement.

 

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(e) Subject to (i) the foregoing provisions of this Section 4.5, (ii) Section 4.3, (iii) Section 4.8, (iv) with respect to any class or series of Limited Partner Interests, the provisions of any statement of designations or an amendment to this Agreement establishing such class or series, (v) any contractual provisions binding on any Limited Partner and (vi) provisions of applicable law including the Securities Act, Limited Partner Interests shall be freely transferable.

(f) The General Partner and its Affiliates shall have the right at any time to transfer their Common Units to one or more Persons.

Section 4.6 Transfer of the General Partner’s General Partner Interest

(a) Subject to Section 4.6(c) below, prior to June 30, 2021 the General Partner shall not transfer all or any part of its General Partner Interest (represented by General Partner Units) to a Person unless such transfer (i) has been approved by the prior written consent or vote of the holders of at least a majority of the Outstanding Common Units (excluding Common Units held by the General Partner and its Affiliates) or (ii) is of all, but not less than all, of its General Partner Interest to (A) an Affiliate of the General Partner (other than an individual) or (B) another Person (other than an individual) in connection with the merger or consolidation of the General Partner with or into such other Person or the transfer by the General Partner of all or substantially all of its assets to such other Person.

(b) Subject to Section 4.6(c) below, on or after June 30, 2021 the General Partner may transfer all or any part of its General Partner Interest without Unitholder approval.

(c) Notwithstanding anything herein to the contrary, no transfer by the General Partner of all or any part of its General Partner Interest to another Person shall be permitted unless (i) the transferee agrees to assume the rights and duties of the General Partner under this Agreement and to be bound by the provisions of this Agreement, (ii) the Partnership receives an Opinion of Counsel that such transfer would not result in the loss of limited liability of any Limited Partner under the Delaware Act or cause the Partnership to be treated as an association taxable as a corporation or otherwise to be taxed as an entity for federal income tax purposes (to the extent not already so treated or taxed) and (iii) such transferee also agrees to purchase all (or the appropriate portion thereof, if applicable) of the partnership or membership interest of the General Partner as the general partner or managing member, if any, of each other Group Member. In the case of a transfer pursuant to and in compliance with this Section 4.6, the transferee or successor (as the case may be) shall, subject to compliance with the terms of Section 10.2, be admitted to the Partnership as the General Partner effective immediately prior to the transfer of the General Partner Interest, and the business of the Partnership shall continue without dissolution.

(d) For purposes of clarification, the conversion of the General Partner Interest into a non-economic general partner interest in the Partnership as of the date hereof is not a transfer of the General Partner Interest subject to this Section 4.6.

Section 4.7 [Reserved]

Section 4.8 Restrictions on Transfers

 

 

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(a) Except as provided in Section 4.8(d), notwithstanding the other provisions of this Article IV, no transfer of any Partnership Interests shall be made if such transfer would (i) violate the then applicable federal or state securities laws or rules and regulations of the Commission, any state securities commission or any other governmental authority with jurisdiction over such transfer, (ii) terminate the existence or qualification of the Partnership under the laws of the jurisdiction of its formation, or (iii) cause the Partnership to be treated as an association taxable as a corporation or otherwise to be taxed as an entity for federal income tax purposes (to the extent not already so treated or taxed).

(b) The General Partner may impose restrictions on the transfer of Partnership Interests if it receives an Opinion of Counsel that such restrictions are necessary to (i) avoid a significant risk of the Partnership becoming taxable as a corporation or otherwise becoming taxable as an entity for federal income tax purposes or (ii) preserve the uniformity of the Limited Partner Interests (or any class or classes thereof). The General Partner may impose such restrictions by amending this Agreement; provided, however , that any amendment that would result in the delisting or suspension of trading of any class of Limited Partner Interests on the principal National Securities Exchange on which such class of Limited Partner Interests is then listed or admitted to trading must be approved, prior to such amendment being effected, by the holders of at least a majority of the Outstanding Limited Partner Interests of such class.

(c) [Reserved]

(d) Nothing contained in this Article IV, or elsewhere in this Agreement, shall preclude the settlement of any transactions involving Partnership Interests entered into through the facilities of any National Securities Exchange on which such Partnership Interests are listed or admitted to trading.

(e) Each certificate evidencing Partnership Interests shall bear a conspicuous legend in substantially the following form:

THE HOLDER OF THIS SECURITY ACKNOWLEDGES FOR THE BENEFIT OF ANDEAVOR LOGISTICS LP THAT THIS SECURITY MAY NOT BE SOLD, OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED IF SUCH TRANSFER WOULD (A) VIOLATE THE THEN APPLICABLE FEDERAL OR STATE SECURITIES LAWS OR RULES AND REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER GOVERNMENTAL AUTHORITY WITH JURISDICTION OVER SUCH TRANSFER, (B) TERMINATE THE EXISTENCE OR QUALIFICATION OF ANDEAVOR LOGISTICS LP UNDER THE LAWS OF THE STATE OF DELAWARE, OR (C) CAUSE ANDEAVOR LOGISTICS LP TO BE TREATED AS AN ASSOCIATION TAXABLE AS A CORPORATION OR OTHERWISE TO BE TAXED AS AN ENTITY FOR FEDERAL INCOME TAX PURPOSES (TO THE EXTENT NOT ALREADY SO TREATED OR TAXED). TESORO LOGISTICS GP, LLC, THE GENERAL PARTNER OF ANDEAVOR LOGISTICS LP, MAY IMPOSE ADDITIONAL RESTRICTIONS ON THE TRANSFER OF THIS SECURITY IF IT RECEIVES AN OPINION OF COUNSEL THAT SUCH RESTRICTIONS ARE NECESSARY TO AVOID A SIGNIFICANT RISK OF

 

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ANDEAVOR LOGISTICS LP BECOMING TAXABLE AS A CORPORATION OR OTHERWISE BECOMING TAXABLE AS AN ENTITY FOR FEDERAL INCOME TAX PURPOSES. THE RESTRICTIONS SET FORTH ABOVE SHALL NOT PRECLUDE THE SETTLEMENT OF ANY TRANSACTIONS INVOLVING THIS SECURITY ENTERED INTO THROUGH THE FACILITIES OF ANY NATIONAL SECURITIES EXCHANGE ON WHICH THIS SECURITY IS LISTED OR ADMITTED TO TRADING.

Section 4.9 Eligibility Certificates; Ineligible Holders.

(a) If at any time the General Partner determines, with the advice of counsel, that

(i) the Partnership’s status other than as an association taxable as a corporation for U.S. federal income tax purposes or the failure of the Partnership otherwise to be subject to an entity-level tax for U.S. federal, state or local income tax purposes, coupled with the tax status (or lack of proof of the federal income tax status) of one or more Limited Partners, has or will reasonably likely have a material adverse effect on the maximum applicable rate that can be charged to customers by Subsidiaries of the Partnership (a “ Rate Eligibility Trigger ”); or

(ii) any Group Member is subject to any federal, state or local law or regulation that would create a substantial risk of cancellation or forfeiture of any property in which the Group Member has an interest based on the nationality, citizenship or other related status of a Limited Partner (a “ Citizenship Eligibility Trigger ”);

then, the General Partner may adopt such amendments to this Agreement as it determines to be necessary or advisable to (x) in the case of a Rate Eligibility Trigger, obtain such proof of the federal income tax status of the Limited Partners and, to the extent relevant, their beneficial owners, as the General Partner determines to be necessary or advisable to establish those Limited Partners whose federal income tax status does not or would not have a material adverse effect on the maximum applicable rate that can be charged to customers by Subsidiaries of the Partnership or (y) in the case of a Citizenship Eligibility Trigger, obtain such proof of the nationality, citizenship or other related status (or, if the General Partner is a nominee holding for the account of another Person, the nationality, citizenship or other related status of such Person) of the Limited Partner as the General Partner determines to be necessary or advisable to establish and those Limited Partners whose status as a Limited Partner does not or would not subject any Group Member to a significant risk of cancellation or forfeiture of any of its properties or interests therein.

(b) Such amendments may include provisions requiring all Limited Partners to certify as to their (and their beneficial owners’) status as Eligible Holders upon demand and on a regular basis, as determined by the General Partner, and may require transferees of Units to so certify prior to being admitted to the Partnership as a Limited Partner (any such required certificate, an “ Eligibility Certificate ”).

 

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(c) Such amendments may provide that with respect to any Limited Partner (and its beneficial owners) who fails to furnish to the General Partner within a reasonable period requested an Eligibility Certificate and any other information, or if upon receipt of such Eligibility Certificate or other requested information the General Partner determines that a Limited Partner is not an Eligible Holder (such a Limited Partner an “ Ineligible Holder ”), the Limited Partner Interests owned by such Limited Partner shall be subject to redemption in accordance with the provisions of Section 4.10. In addition, the General Partner shall be substituted for any Limited Partner that is an Ineligible Holder as the Limited Partner in respect of the Ineligible Holder’s Limited Partner Interests.

(d) The General Partner shall, in exercising voting rights in respect of Limited Partner Interests held by it on behalf of Ineligible Holders, distribute the votes in the same ratios as the votes of Limited Partners (including the General Partner and its Affiliates) in respect of Limited Partner Interests other than those of Ineligible Holders are cast, either for, against or abstaining as to the matter.

(e) Upon dissolution of the Partnership, an Ineligible Holder shall have no right to receive a distribution in kind pursuant to Section 12.4 but shall be entitled to the cash equivalent thereof, and the Partnership shall provide cash in exchange for an assignment of the Ineligible Holder’s share of any distribution in kind. Such payment and assignment shall be treated for Partnership purposes as a purchase by the Partnership from the Ineligible Holder of its Limited Partner Interest (representing the right to receive its share of such distribution in kind).

(f) At any time after a holder can and does certify that it has become an Eligible Holder, an Ineligible Holder may, upon application to the General Partner, request that with respect to any Limited Partner Interests of such Ineligible Holder not redeemed pursuant to Section 4.10, such Ineligible Holder upon approval of the General Partner, shall no longer constitute an Ineligible Holder and the General Partner shall cease to be deemed to be the Limited Partner in respect of such Limited Partner Interests.

Section 4.10 Redemption of Partnership Interests of Ineligible Holders.

(a) If at any time a Limited Partner fails to furnish an Eligibility Certificate or any other information requested within a reasonable period of time specified in amendments adopted pursuant to Section 4.9, or if upon receipt of such Eligibility Certificate or other information the General Partner determines, with the advice of counsel, that a Limited Partner is an Ineligible Holder, the Partnership may, unless the Limited Partner establishes to the satisfaction of the General Partner that such Limited Partner is not an Ineligible Holder or has transferred his Limited Partner Interests to a Person who is an Eligible Holder and who furnishes an Eligibility Certificate to the General Partner prior to the date fixed for redemption as provided below, redeem the Limited Partner Interest of such Limited Partner as follows:

(i) The General Partner shall, not later than the 30th day before the date fixed for redemption, give notice of redemption to the Limited Partner, at his last address designated on the records of the Partnership or the Transfer Agent, by registered or certified mail, postage prepaid. The notice shall be deemed to have been given when so mailed. The notice shall specify the Redeemable Interests, the date fixed for redemption, the place of payment, that payment of the redemption price will be made upon redemption of the Redeemable Interests (or, if later in the case of Redeemable Interests evidenced by Certificates, upon surrender of the Certificate evidencing the Redeemable Interests) and that on and after the date fixed for redemption no further allocations or distributions to which the Limited Partner would otherwise be entitled in respect of the Redeemable Interests will accrue or be made.

 

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(ii) The aggregate redemption price for Redeemable Interests shall be an amount equal to the Current Market Price (the date of determination of which shall be the date fixed for redemption) of Limited Partner Interests of the class to be so redeemed multiplied by the number of Limited Partner Interests of each such class included among the Redeemable Interests. The redemption price shall be paid, as determined by the General Partner, in cash or by delivery of a promissory note of the Partnership in the principal amount of the redemption price, bearing interest at the rate of 5% annually and payable in three equal annual installments of principal together with accrued interest, commencing one year after the redemption date.

(iii) The Limited Partner or his duly authorized representative shall be entitled to receive the payment for the Redeemable Interests at the place of payment specified in the notice of redemption on the redemption date (or, if later in the case of Redeemable Interests evidenced by Certificates, upon surrender by or on behalf of the Limited Partner or Transferee at the place specified in the notice of redemption, of the Certificate evidencing the Redeemable Interests, duly endorsed in blank or accompanied by an assignment duly executed in blank).

(iv) After the redemption date, Redeemable Interests shall no longer constitute issued and Outstanding Limited Partner Interests.

(b) The provisions of this Section 4.10 shall also be applicable to Limited Partner Interests held by a Limited Partner as nominee of a Person determined to be other than an Eligible Holder.

(c) Nothing in this Section 4.10 shall prevent the recipient of a notice of redemption from transferring his Limited Partner Interest before the redemption date if such transfer is otherwise permitted under this Agreement. Upon receipt of notice of such a transfer, the General Partner shall withdraw the notice of redemption, provided the transferee of such Limited Partner Interest certifies to the satisfaction of the General Partner that he is an Eligible Holder. If the transferee fails to make such certification, such redemption shall be effected from the transferee on the original redemption date.

ARTICLE V

CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS

Section 5.1 Conversion of the General Partner Interest and Cancellation of Incentive Distribution Rights

(a) Pursuant to this Agreement and the Sponsor Equity Restructuring Agreement, the General Partner Interest (as defined in the Original Restated Agreement) in the Partnership that existed immediately prior to the execution of this Agreement is hereby converted into a non-economic general partner interest in the Partnership. As of the execution of this Agreement, the General Partner hereby continues as general partner of the Partnership and holds the General Partner Interest and the Partnership is hereby continued without dissolution.

 

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(b) Concurrently with the execution of this Agreement and pursuant to this Agreement and the Sponsor Equity Restructuring Agreement, all outstanding Incentive Distribution Rights (as defined in the Original Restated Agreement) are being redeemed by the Partnership and such Incentive Distribution Rights are hereby cancelled.

(c) Pursuant to the Sponsor Equity Restructuring Agreement and in consideration for the transactions set forth in Section 5.1(a) and Section 5.1(b), the Partnership has issued 78,000,000 Common Units to the General Partner on the date hereof, which issuance is hereby ratified and approved.

Section 5.2 Contributions by the General Partner

Except as set forth in Article XII, the General Partner shall not be obligated to make any additional Capital Contributions to the Partnership.

Section 5.3 Contributions by Limited Partners

No Limited Partner will be required to make any additional Capital Contribution to the Partnership pursuant to this Agreement.

Section 5.4 Interest and Withdrawal

No interest shall be paid by the Partnership on Capital Contributions. No Partner shall be entitled to the withdrawal or return of its Capital Contribution, except to the extent, if any, that distributions made pursuant to this Agreement or upon termination of the Partnership may be considered as such by law and then only to the extent provided for in this Agreement. Except to the extent expressly provided in this Agreement, no Partner shall have priority over any other Partner either as to the return of Capital Contributions or as to profits, losses or distributions. Any such return shall be a compromise to which all Partners agree within the meaning of Section 17-502(b) of the Delaware Act.

Section 5.5 Capital Accounts

(a) The Partnership shall maintain for each Partner (or a beneficial owner of Partnership Interests held by a nominee in any case in which the nominee has furnished the identity of such owner to the Partnership in accordance with Section 6031(c) of the Code or any other method acceptable to the General Partner) owning a Partnership Interest a separate Capital Account with respect to such Partnership Interest in accordance with the rules of Treasury Regulation Section 1.704-1(b)(2)(iv). Such Capital Account shall be increased by (i) the amount of all Capital Contributions made to the Partnership with respect to such Partnership Interest and (ii) all items of Partnership income and gain (including income and gain exempt from tax) computed in accordance with Section 5.5(b) and allocated with respect to such Partnership Interest pursuant to Section 6.1, and decreased by (x) the amount of cash or Net Agreed Value of all actual and deemed distributions of cash or property made with respect to such Partnership Interest and (y) all items of Partnership deduction and loss computed in accordance with Section 5.5(b) and allocated with respect to such Partnership Interest pursuant to Section 6.1.

 

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(b) For purposes of computing the amount of any item of income, gain, loss or deduction that is to be allocated pursuant to Article VI and is to be reflected in the Partners’ Capital Accounts, the determination, recognition and classification of any such item shall be the same as its determination, recognition and classification for federal income tax purposes (including any method of depreciation, cost recovery or amortization used for that purpose), provided , that:

(i) Solely for purposes of this Section 5.5, the Partnership shall be treated as owning directly its proportionate share (as determined by the General Partner based upon the provisions of the applicable Group Member Agreement or governing, organizational or similar documents) of all property owned by (x) any other Group Member that is classified as a partnership for federal income tax purposes and (y) any other partnership, limited liability company, unincorporated business or other entity classified as a partnership for federal income tax purposes of which a Group Member is, directly or indirectly, a partner, member or other equity holder.

(ii) All fees and other expenses incurred by the Partnership to promote the sale of (or to sell) a Partnership Interest that can neither be deducted nor amortized under Section 709 of the Code, if any, shall, for purposes of Capital Account maintenance, be treated as an item of deduction at the time such fees and other expenses are incurred and shall be allocated among the Partners pursuant to Section 6.1.

(iii) Except as otherwise provided in Treasury Regulation Section 1.704-1(b)(2)(iv)(m), the computation of all items of income, gain, loss and deduction shall be made without regard to any election under Section 754 of the Code that may be made by the Partnership. To the extent an adjustment to the adjusted tax basis of any Partnership asset pursuant to Section 734(b) or 743(b) of the Code is required, pursuant to Treasury Regulation Section 1.704- 1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount of such adjustment in the Capital Accounts shall be treated as an item of gain or loss.

(iv) Any income, gain or loss attributable to the taxable disposition of any Partnership property shall be determined as if the adjusted basis of such property as of such date of disposition were equal in amount to the Partnership’s Carrying Value with respect to such property as of such date.

(v) An item of income of the Partnership that is described in Section 705(a)(1)(B) of the Code (with respect to items of income that are exempt from tax) shall be treated as an item of income for the purpose of this Section 5.5(b), and an item of expense of the Partnership that is described in Section 705(a)(2)(B) of the Code (with respect to expenditures that are not deductible and not chargeable to capital accounts), shall be treated as an item of deduction for the purpose of this Section 5.5(b).

 

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(vi) In accordance with the requirements of Section 704(b) of the Code, any deductions for depreciation, cost recovery or amortization attributable to any Contributed Property shall be determined as if the adjusted basis of such property on the date it was acquired by the Partnership were equal to the Agreed Value of such property. Upon an adjustment pursuant to Section 5.5(d) to the Carrying Value of any Partnership property subject to depreciation, cost recovery or amortization, any further deductions for such depreciation, cost recovery or amortization attributable to such property shall be determined under the rules prescribed by Treasury Regulation Section 1.704-3(d)(2) as if the adjusted basis of such property were equal to the Carrying Value of such property immediately following such adjustment.

(vii) The Gross Liability Value of each Liability of the Partnership described in Treasury Regulation Section 1.752-7(b)(3)(i) shall be adjusted at such times as provided in this Agreement for an adjustment to Carrying Values. The amount of any such adjustment shall be treated for purposes hereof as an item of loss (if the adjustment increases the Carrying Value of such Liability of the Partnership) or an item of gain (if the adjustment decreases the Carrying Value of such Liability of the Partnership).

(c) A transferee of a Partnership Interest shall succeed to a pro rata portion of the Capital Account of the transferor relating to the Partnership Interest so transferred.

(d) (i) In accordance with Treasury Regulation Section 1.704- 1(b)(2)(iv)(f), on an issuance of additional Partnership Interests for cash or Contributed Property, the issuance of Partnership Interests as consideration for the provision of services, or the conversion of the General Partner’s Combined Interest to Common Units pursuant to Section 11.3(a), the Capital Account of each Partner and the Carrying Value of each Partnership property immediately prior to such issuance shall be adjusted upward or downward to reflect any Unrealized Gain or Unrealized Loss attributable to such Partnership property, and any such Unrealized Gain or Unrealized Loss shall be treated, for purposes of maintaining Capital Accounts, as if it had been recognized on an actual sale of each such property for an amount equal to its fair market value immediately prior to such issuance and had been allocated among the Partners at such time pursuant to Section 6.1 in the same manner as any item of gain or loss actually recognized following an event giving rise to the dissolution of the Partnership would have been allocated; provided, however , that in the event of an issuance of Partnership Interests for a de minimis amount of cash or Contributed Property, or in the event of an issuance of a de minimis amount of Partnership Interests as consideration for the provision of services, the General Partner may determine that such adjustments are unnecessary for the proper administration of the Partnership. In determining such Unrealized Gain or Unrealized Loss, the aggregate fair market value of all Partnership property (including cash or cash equivalents) immediately prior to the issuance of additional Partnership Interests shall be determined by the General Partner using such method of valuation as it may adopt. In making its determination of the fair market values of individual properties, the General Partner may determine that it is appropriate to first determine an aggregate value for the Partnership, derived from the current trading price of the Common Units, and taking fully into account the fair market value of the Partnership Interests of all Partners at such time, including with respect to any adjustment pursuant to this Section 5.5(d)(i) during the taxable period (or portion thereof) that begins after December 31, 2016 and ends immediately after the closing of the transactions set forth in the Sponsor Equity Restructuring Agreement, a value for the Incentive Distribution Rights and the General Partner Interest owned by the General Partner that is equal to the current trading price of the Common Units received by the General Partner pursuant to the terms of the Sponsor Equity Restructuring Agreement, and then allocate such aggregate value among the individual properties of the Partnership (in such manner as it determines appropriate).

 

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(ii) In accordance with Treasury Regulation Section 1.704- 1(b)(2)(iv)(f), immediately prior to any actual or deemed distribution to a Partner of any Partnership property(other than a distribution of cash that is not in redemption or retirement of a Partnership Interest), the Capital Accounts of all Partners and the Carrying Value of all Partnership property shall be adjusted upward or downward to reflect any Unrealized Gain or Unrealized Loss attributable to such Partnership property, and any such Unrealized Gain or Unrealized Loss shall be treated, for purposes of maintaining Capital Accounts, as if it had been recognized on an actual sale of each such property immediately prior to such distribution for an amount equal to its fair market value, and had been allocated among the Partners, at such time, pursuant to Section 6.1(d) in the same manner as any item of gain or loss actually recognized following an event giving rise to the dissolution of the Partnership would have been allocated. In determining such Unrealized Gain or Unrealized Loss the aggregate fair market value of all Partnership property (including cash or cash equivalents) immediately prior to a distribution shall (A) in the case of an actual distribution that is not made pursuant to Section 12.4 or in the case of a deemed distribution, be determined in the same manner as that provided in Section 5.5(d)(i) or (B) in the case of a liquidating distribution pursuant to Section 12.4, be determined by the Liquidator using such method of valuation as it may adopt.

Section 5.6 Issuances of Additional Partnership Securities

(a) The Partnership may issue additional Partnership Securities and options, rights, warrants and appreciation rights relating to the Partnership Securities for any Partnership purpose at any time and from time to time to such Persons for such consideration and on such terms and conditions as the General Partner shall determine, all without the approval of any Limited Partners.

(b) Each additional Partnership Security authorized to be issued by the Partnership pursuant to Section 5.6(a) may be issued in one or more classes, or one or more series of any such classes, with such designations, preferences, rights, powers and duties (which may be senior to existing classes and series of Partnership Securities), as shall be fixed by the General Partner, including (i) the right to share in Partnership profits and losses or items thereof; (ii) the right to share in Partnership distributions; (iii) the rights upon dissolution and liquidation of the Partnership; (iv) whether, and the terms and conditions upon which, the Partnership may or shall be required to redeem the Partnership Security; (v) whether such Partnership Security is issued with the privilege of conversion or exchange and, if so, the terms and conditions of such conversion or exchange; (vi) the terms and conditions upon which each Partnership Security will be issued, evidenced by certificates and assigned or transferred; (vii) the method for determining the Percentage Interest as to such Partnership Security; and (viii) the right, if any, of each such Partnership Security to vote on Partnership matters, including matters relating to the relative rights, preferences and privileges of such Partnership Security.

 

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(c) The General Partner shall take all actions that it determines to be necessary or appropriate in connection with (i) each issuance of Partnership Securities and options, rights, warrants and appreciation rights relating to Partnership Securities pursuant to this Section 5.6, (ii) the conversion of the General Partner Interest (represented by General Partner Units) into Units pursuant to the terms of this Agreement, (iii) reflecting admission of such additional Limited Partners in the books and records of the Partnership as the Record Holders of such Limited Partner Interests and (iv) all additional issuances of Partnership Securities. The General Partner shall determine the relative rights, powers and duties of the holders of the Units or other Partnership Securities being so issued. The General Partner shall do all things necessary to comply with the Delaware Act and is authorized and directed to do all things that it determines to be necessary or appropriate in connection with any future issuance of Partnership Securities or in connection with the conversion of the General Partner Interest into Units pursuant to the terms of this Agreement, including compliance with any statute, rule, regulation or guideline of any federal, state or other governmental agency or any National Securities Exchange on which the Units or other Partnership Securities are listed or admitted to trading.

(d) No fractional Units shall be issued by the Partnership.

Section 5.7 [Reserved]

Section 5.8 No Preemptive Right

No Person shall have any preemptive, preferential or other similar right with respect to the issuance of any Partnership Security, whether unissued, held in the treasury or hereafter created.

Section 5.9 Splits and Combinations

(a) Subject to Section 5.9(d), the Partnership may make a Pro Rata distribution of Partnership Securities to all Record Holders or may effect a subdivision or combination of Partnership Securities so long as, after any such event, each Partner shall have the same Percentage Interest in the Partnership as before such event, and any amounts calculated on a per Unit basis or stated as a number of Units are proportionately adjusted.

(b) Whenever such a distribution, subdivision or combination of Partnership Securities is declared, the General Partner shall select a Record Date as of which the distribution, subdivision or combination shall be effective and shall send notice thereof at least 20 days prior to such Record Date to each Record Holder as of a date not less than 10 days prior to the date of such notice. The General Partner also may cause a firm of independent public accountants selected by it to calculate the number of Partnership Securities to be held by each Record Holder after giving effect to such distribution, subdivision or combination. The General Partner shall be entitled to rely on any certificate provided by such firm as conclusive evidence of the accuracy of such calculation.

(c) Promptly following any such distribution, subdivision or combination, the Partnership may issue Certificates or uncertificated Partnership Securities to the Record Holders of Partnership Securities as of the applicable Record Date representing the new number of Partnership Securities held by such Record Holders, or the General Partner may adopt such other procedures that it determines to be necessary or appropriate to reflect such changes. If any such combination results in a smaller total number of Partnership Securities Outstanding, the Partnership shall require, as a condition to the delivery to a Record Holder of such new Certificate, the surrender of any Certificate held by such Record Holder immediately prior to such Record Date.

 

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(d) The Partnership shall not issue fractional Units upon any distribution, subdivision or combination of Units. If a distribution, subdivision or combination of Units would result in the issuance of fractional Units but for the provisions of Section 5.6(d) and this Section 5.9(d), each fractional Unit shall be rounded to the nearest whole Unit (with fractional Units equal to or greater than a 0.5 Unit being rounded to the next higher Unit).

Section 5.10 Fully Paid and Non-Assessable Nature of Limited Partner Interests

All Limited Partner Interests issued pursuant to, and in accordance with the requirements of, this Article V shall be fully paid and non-assessable Limited Partner Interests in the Partnership, except as such non-assessability may be affected by Sections 17-607 or 17-804 of the Delaware Act.

Section 5.11 [Reserved]

Section 5.12 Establishment of TexNew Mex Units

(a) General . The General Partner hereby designates and creates a class of Partnership Interests to be designated as “ TexNew Mex Units ” and initially consisting of a total of 80,000 TexNew Mex Units issued to Western Refining Southwest in accordance with the WNRL Merger Agreement. In accordance with Section 5.6, the General Partner shall have the power and authority to issue additional TexNew Mex Units in the future.

(b) Rights of TexNew Mex Units . The TexNew Mex Units shall have the following rights, preferences and privileges and shall be subject to the following duties and obligations:

(i) Initial Capital Account . The initial Capital Account with respect to each TexNew Mex Unit will be equal to $1,000.

(ii) Allocations . The TexNew Mex Units shall not be entitled to receive any (i) Net Income allocations pursuant to Section 6.1(a), (ii) Net Loss allocations pursuant to Section 6.1(b) or (iii) except as otherwise provided in Section 6.1(d)(xii), special allocations pursuant to Section 6.1(d) (other than Required Allocations).

(iii) Distributions .

(A) The holders of the TexNew Mex Units shall be entitled to receive distributions of Available Cash only to the extent set forth in Section 5.12(b)(iii)(B).

 

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(B) Prior to making any distributions of Available Cash with respect to any Quarter pursuant to Section 6.3, subject to Section 17-607 of the Delaware Act, Available Cash with respect to any Quarter will first be distributed to the holders of the TexNew Mex Units, Pro Rata, as of the Record Date established for distributions to Partners with respect to such Quarter, in an amount equal to eighty percent (80%) of the excess, if any, of (1) the TexNew Mex Shared Segment Distributable Cash Flow with respect to such Quarter over (2) the TexNew Mex Base Amount with respect to such Quarter, less any amounts reserved with the consent of holders of a majority of the TexNew Mex Units in accordance with Section 5.12(b)(iv)(C) to fund Expansion Capital Expenditures or Investment Capital Expenditures with respect to the TexNew Mex Shared Segment (any such amounts, “ Holdback Amounts ”).

(C) Promptly following any determination by the General Partner that it will not utilize any portion of any Holdback Amounts in the manner approved by the holders of TexNew Mex Units, the General Partner shall cause such Holdback Amounts to be distributed to the holders of the TexNew Mex Units as of the Record Date for the next regular distribution in accordance with this Section 5.12(b)(iii), Pro Rata, on the date of payment of the next regular distribution in accordance with this Section 5.12(b)(iii).

(iv) Voting Rights . Except as set forth in this Section 5.12(b)(iv) and Section 13.3(c) and except to the extent the Delaware Act requires that the TexNew Mex Units have a vote as a class on any matter, the TexNew Mex Units shall not have any voting rights. With respect to any matter on which the TexNew Mex Units are entitled to vote, each TexNew Mex Unit will be entitled to one vote on such matter. The General Partner shall not, without the affirmative vote or written consent of holders of a majority of the TexNew Mex Units then Outstanding:

(A) amend, alter, modify or change this Section 5.12 (or vote or consent or resolve to take such action) or amend, alter, modify or change any other provision of this Agreement in a manner that would have a material adverse effect on the rights or preferences of holders of TexNew Mex Units in relation other classes of Partnership Interests;

(B) authorize the issuance of any class or series of Partnership Interests with distribution rights that are senior to or on a parity with the TexNew Mex Units;

(C) reserve any Holdback Amounts or utilize any Holdback Amounts in a manner other than as approved by holders of TexNew Mex Units in accordance with this Section 5.12(b)(iv);

(D) sell, transfer or otherwise dispose of any material portion of the TexNew Mex Assets; or

(E) issue any additional TexNew Mex Units.

(v) Redemption and Conversion Rights . The TexNew Mex Units will be perpetual and shall not have any rights of redemption or conversion.

 

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(vi) Certificates; Book-Entry . Unless the General Partner shall determine otherwise, the TexNew Mex Units shall not be evidenced by certificates. Any certificates relating to the TexNew Mex Units that may be issued will be in such form as the General Partner may approve.

(vii) Transfer of TexNew Mex Units . No holder of any TexNew Mex Unit may transfer any or all of the TexNew Mex Units held by such holder without the prior written approval of the General Partner, unless the transfer complies with any applicable requirements set forth in Article IV and either (A) the transfer is to an Affiliate of the holder or (B) the transfer is to any Person who is, or will be substantially concurrently with the completion of the transfer, an Affiliate of the General Partner.

Section 5.13 Establishment of the Special Limited Partner Interest

(a) General . The General Partner hereby designates and creates a class of Partnership Securities to be designated as the “Special Limited Partner Interest,” having only the rights, preferences and privileges and shall be subject to the duties and obligations as set forth in this Section 5.13.

(b) Rights of the Special Limited Partner Interest . The Special Limited Partner Interest shall have the following rights, preferences and privileges and shall be subject to the following duties and obligations:

(i) Allocations . The Special Limited Partner Interest shall not be entitled to receive any (i) Net Income allocations pursuant to Section 6.1(a), (ii) Net Loss allocations pursuant to Section 6.1(b) or (iii) except as otherwise provided in Section 6.1(d)(xiii), special allocations pursuant to Section 6.1(d) (other than Required Allocations); provided , however , in the event of allocating Liquidation or Sale Loss, any such loss shall not be allocated pursuant to Section 6.1(b)(i) but instead shall be allocated to the holder of the Special Limited Partner Interest and to the Unitholders in accordance with, and in proportion to, the positive balances of their respective Capital Accounts (provided, that such loss shall not be allocated to any Unitholder to the extent that such allocations would cause any Unitholder to have a deficit balance in its Adjusted Capital Account at the end of such taxable period (or increase any existing deficit balance in its Adjusted Capital Account)); and then any remaining Liquidation or Sale Loss shall be allocated pursuant to Section 6.1(b)(ii).

(ii) Distributions . Except as set forth in Section 12.4 with respect to an event of dissolution and liquidation of the Partnership, the holder of the Special Limited Partner Interest shall not be entitled to any distributions.

(iii) Voting Rights . Unless otherwise required by the Delaware Act, the Special Limited Partner Interest shall not be entitled to vote on any matters, whether or not any other Partners are entitled to vote thereon.

(iv) No Certificates . Unless the General Partner shall determine otherwise, the Special Limited Partner Interest shall not be evidenced by certificates. Any certificate relating to the Special Limited Partner Interest that may be issued will be in such form as the General Partner may approve.

 

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ARTICLE VI

ALLOCATIONS AND DISTRIBUTIONS

Section 6.1 Allocations for Capital Account Purposes

For purposes of maintaining the Capital Accounts and in determining the rights of the Partners among themselves, the Partnership’s items of income, gain, loss and deduction (computed in accordance with Section 5.5(b)) for each taxable period shall be allocated among the Partners as provided herein below.

(a) Net Income. After giving effect to the special allocations set forth in Section 6.1(d), Net Income for each taxable period and all items of income, gain, loss and deduction taken into account in computing Net Income for such taxable period shall be allocated as follows:

(i) First, to the General Partner as necessary to eliminate any deficit balance in the General Partner’s Capital Account; and

(ii) Second, the balance, if any, to the Unitholders, Pro Rata.

(b) Net Loss. After giving effect to the special allocations set forth in Section 6.1(d), Net Loss for each taxable period and all items of income, gain, loss and deduction taken into account in computing Net Loss for such taxable period shall be allocated as follows:

(i) First, to the Unitholders, Pro Rata; provided , that Net Losses shall not be allocated pursuant to this Section 6.1(b)(i) to the extent that such allocation would cause any Unitholder to have a deficit balance in its Adjusted Capital Account at the end of such taxable period (or increase any existing deficit balance in its Adjusted Capital Account); and

(ii) Second, the balance, if any, 100% to the General Partner.

(c) [Reserved]

(d) Special Allocations . Notwithstanding any other provision of this Section 6.1, the following special allocations shall be made for such taxable period:

(i) Partnership Minimum Gain Chargeback . Notwithstanding any other provision of this Section 6.1, if there is a net decrease in Partnership Minimum Gain during any Partnership taxable period, each Partner shall be allocated items of Partnership income and gain for such period (and, if necessary, subsequent periods) in the manner and amounts provided in Treasury Regulation Sections 1.704- 2(f)(6), 1.704-2(g)(2) and 1.704-2(j)(2)(i), or any successor provision. For purposes of this Section 6.1(d), each Partner’s Adjusted Capital Account balance shall be determined, and the allocation

 

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of income or gain required hereunder shall be effected, prior to the application of any other allocations pursuant to this Section 6.1(d) with respect to such taxable period (other than an allocation pursuant to Section 6.1(d)(vi) and Section 6.1(d)(vii)). This Section 6.1(d)(i) is intended to comply with the Partnership Minimum Gain chargeback requirement in Treasury Regulation Section 1.704-2(f) and shall be interpreted consistently therewith.

(ii) Chargeback of Partner Nonrecourse Debt Minimum Gain . Notwithstanding the other provisions of this Section 6.1 (other than Section 6.1(d)(i)), except as provided in Treasury Regulation Section 1.704-2(i)(4), if there is a net decrease in Partner Nonrecourse Debt Minimum Gain during any Partnership taxable period, any Partner with a share of Partner Nonrecourse Debt Minimum Gain at the beginning of such taxable period shall be allocated items of Partnership income and gain for such period (and, if necessary, subsequent periods) in the manner and amounts provided in Treasury Regulation Sections 1.704-2(i)(4) and 1.704-2(j)(2)(ii), or any successor provisions. For purposes of this Section 6.1(d), each Partner’s Adjusted Capital Account balance shall be determined, and the allocation of income or gain required hereunder shall be effected, prior to the application of any other allocations pursuant to this Section 6.1(d) and other than an allocation pursuant to Section 6.1(d)(i), Section 6.1(d)(vi) and Section 6.1(d)(vii) with respect to such taxable period. This Section 6.1(d)(ii) is intended to comply with the chargeback of items of income and gain requirement in Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted consistently therewith.

(iii) Priority Allocations. If the amount of cash or the Net Agreed Value of any property distributed (except cash or property distributed pursuant to Section 12.4) with respect to a Unit exceeds the amount of cash or the Net Agreed Value of property distributed with respect to another Unit (the amount of the excess, an “ Excess Distribution ” and the Unit with respect to which the greater distribution is paid, an “ Excess Distribution Unit ”), then there shall be allocated gross income and gain to each Unitholder receiving an Excess Distribution with respect to the Excess Distribution Unit until the aggregate amount of such items allocated with respect to such Excess Distribution Unit pursuant to this Section 6.1(d)(iii) for the current taxable period and all previous taxable periods is equal to the amount of the Excess Distribution. For the avoidance of doubt, this Section 6.1(d)(iii) shall not apply with respect to any disparity between a distribution to a Unit compared to (A) a distribution to a TexNew Mex Unit or (B) a distribution to a Common Unit subject to the conditions imposed by Section 6.4.

(iv) Qualified Income Offset . In the event any Partner unexpectedly receives any adjustments, allocations or distributions described in Treasury Regulation Sections 1.704- 1(b)(2)(ii)(d)(4), 1.704- 1(b)(2)(ii)(d)(5), or 1.704- 1(b)(2)(ii)(d)(6), items of Partnership gross income and gain shall be specially allocated to such Partner in an amount and manner sufficient to eliminate, to the extent required by the Treasury Regulations promulgated under Section 704(b) of the Code, the deficit balance, if any, in its Adjusted Capital Account created by such adjustments, allocations or distributions as quickly as possible; provided , that an allocation pursuant to this Section 6.1(d)(iv) shall be made only if and to the extent that such Partner would have a deficit balance in its Adjusted Capital Account as adjusted after all other allocations provided for in this Section 6.1 have been tentatively made as if this Section 6.1(d)(iv) were not in this Agreement.

 

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(v) Gross Income Allocation . In the event any Partner has a deficit balance in its Capital Account at the end of any taxable period in excess of the sum of (A) the amount such Partner is required to restore pursuant to the provisions of this Agreement and (B) the amount such Partner is deemed obligated to restore pursuant to Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5), such Partner shall be specially allocated items of Partnership gross income and gain in the amount of such excess as quickly as possible; provided , that an allocation pursuant to this Section 6.1(d)(v) shall be made only if and to the extent that such Partner would have a deficit balance in its Capital Account as adjusted after all other allocations provided for in this Section 6.1 have been tentatively made as if Section 6.1(d)(iv) and this Section 6.1(d)(v) were not in this Agreement.

(vi) Nonrecourse Deductions . Nonrecourse Deductions for any taxable period shall be allocated to the Partners Pro Rata. If the General Partner determines that the Partnership’s Nonrecourse Deductions should be allocated in a different ratio to satisfy the safe harbor requirements of the Treasury Regulations promulgated under Section 704(b) of the Code, the General Partner is authorized, upon notice to the other Partners, to revise the prescribed ratio to the numerically closest ratio that does satisfy such requirements.

(vii) Partner Nonrecourse Deductions . Partner Nonrecourse Deductions for any taxable period shall be allocated 100% to the Partner that bears the Economic Risk of Loss with respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions are attributable in accordance with Treasury Regulation Section 1.704-2(i). If more than one Partner bears the Economic Risk of Loss with respect to a Partner Nonrecourse Debt, such Partner Nonrecourse Deductions attributable thereto shall be allocated between or among such Partners in accordance with the ratios in which they share such Economic Risk of Loss.

(viii) Nonrecourse Liabilities . For purposes of Treasury Regulation Section 1.752-3(a)(3), the Partners agree that Nonrecourse Liabilities of the Partnership in excess of the sum of (A) the amount of Partnership Minimum Gain and (B) the total amount of Nonrecourse Built-in Gain shall be allocated with and under any method approved by the applicable Treasury Regulations promulgated under Section 752 of the Code as chosen by the General Partner.

(ix) Code Section  754 Adjustments . To the extent an adjustment to the adjusted tax basis of any Partnership asset pursuant to Section 734(b) or 743(b) of the Code is required, pursuant to Treasury Regulation Section 1.704- 1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis), and such item of gain or loss shall be specially allocated to the Partners in a manner consistent with the manner in which their Capital Accounts are required to be adjusted pursuant to such Section of the Treasury Regulations.

 

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(x) Economic Uniformity; Changes in Law . For the proper administration of the Partnership and for the preservation of uniformity of the Limited Partner Interests (or any class or classes thereof), the General Partner shall (i) adopt such conventions as it deems appropriate in determining the amount of depreciation, amortization and cost recovery deductions; (ii) make special allocations of income, gain, loss, deduction, Unrealized Gain or Unrealized Loss; and (iii) amend the provisions of this Agreement as appropriate (x) to reflect the proposal or promulgation of Treasury Regulations under Section 704(b) or Section 704(c) of the Code or (y) otherwise to preserve or achieve uniformity of the Limited Partner Interests (or any class or classes thereof). The General Partner may adopt such conventions, make such allocations and make such amendments to this Agreement as provided in this Section 6.1(d)(x) only if such conventions, allocations or amendments would not have a material adverse effect on the Partners, the holders of any class or classes of Limited Partner Interests issued and Outstanding or the Partnership, and if such allocations are consistent with the principles of Section 704 of the Code. For the avoidance of doubt, the General Partner shall make special allocations of income, gain, loss, deduction, Unrealized Gain or Unrealized Loss to provide uniformity to Common Units subject to the conditions imposed by Section 6.4 in preparation for a transfer of such Common Units (other than a transfer to an Affiliate).

(xi) Curative Allocation .

(A) Notwithstanding any other provision of this Section 6.1, other than the Required Allocations, the Required Allocations shall be taken into account in making the Agreed Allocations so that, to the extent possible, the net amount of items of gross income, gain, loss and deduction allocated to each Partner pursuant to the Required Allocations and the Agreed Allocations, together, shall be equal to the net amount of such items that would have been allocated to each such Partner under the Agreed Allocations had the Required Allocations and the related Curative Allocation not otherwise been provided in this Section 6.1. Notwithstanding the preceding sentence, Required Allocations relating to (1) Nonrecourse Deductions shall not be taken into account except to the extent that there has been a decrease in Partnership Minimum Gain and (2) Partner Nonrecourse Deductions shall not be taken into account except to the extent that there has been a decrease in Partner Nonrecourse Debt Minimum Gain. In exercising its discretion under this Section 6.1(d)(xi)(A), the General Partner may take into account future Required Allocations that, although not yet made, are likely to offset other Required Allocations previously made. Allocations pursuant to this Section 6.1(d)(xi)(A) shall only be made with respect to Required Allocations to the extent the General Partner determines that such allocations will otherwise be inconsistent with the economic agreement among the Partners. Further, allocations pursuant to this Section 6.1(d)(xi)(A) shall be deferred with respect to allocations pursuant to clauses (1) and (2) hereof to the extent the General Partner determines that such allocations are likely to be offset by subsequent Required Allocations.

 

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(B) The General Partner shall, with respect to each taxable period, (1) apply the provisions of Section 6.1(d)(xii)(A) in whatever order is most likely to minimize the economic distortions that might otherwise result from the Required Allocations, and (2) divide all allocations pursuant to Section 6.1(d)(xii)(A) among the Partners in a manner that is likely to minimize such economic distortions.

(xii) Allocations for the TexNew Mex Shared Segment and the TexNew Mex Units .

(A) For each taxable period that any TexNew Mex Units are Outstanding, immediately following the application of Section 6.1(d)(iii), the holders of the TexNew Mex Units shall be allocated, Pro Rata, gross income or gain until the aggregate amount of such items allocated to the holders of the TexNew Mex Units pursuant to this Section 6.1(d)(xii)(A) for the current taxable period and all previous taxable periods is equal to the cumulative amount of all distributions made to the holders of the TexNew Mex Units pursuant to Section 5.12(b)(iii).

(B) For each taxable period that any TexNew Mex Units are Outstanding, the holders of TexNew Mex Units shall be allocated, Pro Rata, an amount equal to the sum of (1) the product of (x) the TexNew Mex Contributed Percentage times (y) the amount of depreciation, amortization, depletion or any other form of cost recovery attributable to the TexNew Mex Contributed Assets for such taxable period, plus (2) the amount of depreciation, amortization, depletion or any other form of cost recovery attributable to any Expansion Capital Expenditures or Investment Capital Expenditures funded by the Holdback Amounts. Any depreciation, amortization, depletion or any other form of cost recovery attributable to the TexNew Mex Contributed Assets or any Expansion Capital Expenditures or Investment Capital Expenditures not allocated pursuant to this Section 6.1(d)(xii)(B) shall be allocated to the Partners other than the holders of the TexNew Mex Units in accordance with Sections 6.1(a) through 6.1(c).

(C) For each taxable period that any TexNew Mex Units are Outstanding, any items of Unrealized Gain or Unrealized Loss associated with the TexNew Mex Assets, or gain or loss recognized from the sale, exchange or other disposition of all or substantially all of the TexNew Mex Assets, taken as a whole, in a single transaction or a series of related transactions (excluding any disposition to a member of the Partnership Group) shall be allocated among the holders of TexNew Mex Units, Pro Rata, and the Partners other than the holders of the TexNew Mex Units in a manner that is designed to provide that (1) the Partners other than the holders of the TexNew Mex Units will bear 100% of the economic benefits and burdens associated with the TexNew Mex Assets having a fair market value of $180,000,000 or less at the time of such allocation, (2) the holders of the TexNew Mex Units will bear 100% of the economic benefits and burdens associated with the TexNew Mex Assets having a fair market value of more than $180,000,000 but not more than $260,000,000 at the time of such allocation, and

 

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(3) the economic benefits associated with the TexNew Mex Assets having a fair market value of more than $260,000,000 at the time of such allocation being borne 80% by the holders of the TexNew Mex Units and 20% by the Partners other than the holders of the TexNew Mex Units. Any amounts allocable to the Partners other than the holders of the TexNew Mex Units pursuant to the principles set forth in this Section 6.1(d)(xii)(C) shall be allocated in accordance with Sections 6.1(a) through 6.1(c).

(xiii) Special Limited Partner Interest Cost Recovery Deductions . For any taxable period ending after the effective time of the transactions contemplated by the WNRL Merger Agreement, any and all cost recovery deductions available to the Partnership with respect to the underlying Partnership assets attributable to the prior capital account in WNRL associated with the WMLP Incentive Distribution Rights may, at the General Partner’s discretion, in whole or in part, be allocated to the holder of the Special Limited Partner Interest until the portion of the Capital Account with respect to such Special Limited Partner Interest that is attributable to the WMLP Incentive Distribution Rights is reduced to zero. In order to effect the allocations pursuant to this Section 6.1(d)(xiii) and in maintaining the Partnership’s Capital Accounts, the General Partner shall apply the “keep-your-own” method of accounting with respect to the portion of the Capital Account with respect to the Special Limited Partner Interest that is attributable to the WMLP Incentive Distribution Rights.

Section 6.2 Allocations for Tax Purposes

(a) Except as otherwise provided herein, for federal income tax purposes, each item of income, gain, loss and deduction shall be allocated among the Partners in the same manner as its correlative item of “book” income, gain, loss or deduction is allocated pursuant to Section 6.1.

(b) In an attempt to eliminate Book-Tax Disparities attributable to a Contributed Property or Adjusted Property, items of income, gain, loss, depreciation, amortization and cost recovery deductions shall be allocated for federal income tax purposes among the Partners in the manner provided under Section 704(c) of the Code, and the Treasury Regulations promulgated under Section 704(b) and 704(c) of the Code, as determined appropriate by the General Partner (taking into account the General Partner’s discretion under Section 6.1(d)(x)); provided , that the General Partner shall apply the principles of Treasury Regulation Section 1.704-3(d) in all events.

(c) The General Partner may determine to depreciate or amortize the portion of an adjustment under Section 743(b) of the Code attributable to unrealized appreciation in any Adjusted Property (to the extent of the unamortized Book-Tax Disparity) using a predetermined rate derived from the depreciation or amortization method and useful life applied to the unamortized Book-Tax Disparity of such property, despite any inconsistency of such approach with Treasury Regulation Section 1.167(c)-l(a)(6) or any successor regulations thereto. If the General Partner determines that such reporting position cannot reasonably be taken, the General Partner may adopt depreciation and amortization conventions under which all purchasers acquiring Limited Partner Interests in the same month would receive depreciation and amortization deductions, based upon the same applicable rate as if they had purchased a direct

 

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interest in the Partnership’s property. If the General Partner chooses not to utilize such aggregate method, the General Partner may use any other depreciation and amortization conventions to preserve the uniformity of the intrinsic tax characteristics of any Limited Partner Interests, so long as such conventions would not have a material adverse effect on the Limited Partners or the Record Holders of any class or classes of Limited Partner Interests.

(d) In accordance with Treasury Regulation Sections 1.1245-1(e) and 1.1250-1(f), any gain allocated to the Partners upon the sale or other taxable disposition of any Partnership asset shall, to the extent possible, after taking into account other required allocations of gain pursuant to this Section 6.2, be characterized as Recapture Income in the same proportions and to the same extent as such Partners (or their predecessors in interest) have been allocated any deductions directly or indirectly giving rise to the treatment of such gains as Recapture Income.

(e) All items of income, gain, loss, deduction and credit recognized by the Partnership for federal income tax purposes and allocated to the Partners in accordance with the provisions hereof shall be determined without regard to any election under Section 754 of the Code that may be made by the Partnership; provided, however , that such allocations, once made, shall be adjusted (in the manner determined by the General Partner) to take into account those adjustments permitted or required by Sections 734 and 743 of the Code.

(f) Each item of Partnership income, gain, loss and deduction, for federal income tax purposes, shall be determined for each taxable period and prorated on a monthly basis and shall be allocated to the Partners as of the opening of the National Securities Exchange on which the Partnership Interests are listed or admitted to trading on the first Business Day of each month; provided , however , that gain or loss on a sale or other disposition of any assets of the Partnership or any other extraordinary item of income or loss realized and recognized other than in the ordinary course of business, as determined by the General Partner, shall be allocated to the Partners as of the opening of the National Securities Exchange on which the Partnership Interests are listed or admitted to trading on the first Business Day of the month in which such gain or loss is recognized for federal income tax purposes. The General Partner may revise, alter or otherwise modify such methods of allocation to the extent permitted or required by Section 706 of the Code and the regulations or rulings promulgated thereunder.

(g) Allocations that would otherwise be made to a Limited Partner under the provisions of this Article VI shall instead be made to the beneficial owner of Limited Partner Interests held by a nominee in any case in which the nominee has furnished the identity of such owner to the Partnership in accordance with Section 6031(c) of the Code or any other method determined by the General Partner.

Section 6.3 Requirement and Characterization of Distributions; Distributions to Record Holders

(a) Within 45 days following the end of each Quarter, an amount equal to 100% of Available Cash with respect to such Quarter shall be distributed in accordance with Section 5.12 and this Article VI by the Partnership to the Partners, Pro Rata, as of the Record Date selected by the General Partner. Notwithstanding any provision to the contrary contained in this Agreement, the Partnership shall not make a distribution to any Partner on account of its interest in the

 

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Partnership if such distribution would violate the Delaware Act or any other applicable law. Notwithstanding any other provision of this Agreement, all distributions required to be made under this Agreement shall be made subject to Sections 17-607 and 17-804 of the Delaware Act. For the avoidance of doubt, the General Partner Units shall not be entitled to distributions made pursuant to this Section 6.3(a).

(b) Notwithstanding Section 6.3(a), in the event of the dissolution and liquidation of the Partnership, all cash received during or after the Quarter in which the Liquidation Date occurs shall be applied and distributed solely in accordance with, and subject to the terms and conditions of, Section 12.4.

(c) The General Partner may treat taxes paid by the Partnership on behalf of, or amounts withheld with respect to, all or less than all of the Partners, as a distribution of Available Cash to such Partners, as determined appropriate under the circumstances by the General Partner.

(d) Each distribution in respect of a Partnership Interest shall be paid by the Partnership, directly or through the Transfer Agent or through any other Person or agent, only to the Record Holder of such Partnership Interest as of the Record Date set for such distribution. Such payment shall constitute full payment and satisfaction of the Partnership’s liability in respect of such payment, regardless of any claim of any Person who may have an interest in such payment by reason of an assignment or otherwise.

Section 6.4 Reduction of Common Unit Distributions

(a) The aggregate quarterly distributions of Available Cash, if any, to Andeavor and its Affiliates in respect of the Common Units held by Andeavor and its Affiliates shall be reduced (in the aggregate) by the following amounts: (i) $12,500,000 per Quarter commencing with distributions with respect to the Quarter ending September 30, 2017 and ending with distributions with respect to the Quarter ending December 31, 2017; (ii) $15,000,000 per Quarter commencing with distributions with respect to the Quarter ending March 31, 2018 and ending with distributions with respect to the Quarter ending December 31, 2018; and (iii) $12,500,000 per Quarter commencing with distributions with respect to the Quarter ending March 31, 2019 and ending with distributions with respect to the Quarter ending December 31, 2019.

(b) Prior to the date following the record date related to distributions with respect to the Quarter ending December 31, 2019, Andeavor and its Affiliates shall not transfer any Common Units if such transfer will result in Andeavor and its Affiliates owning a number of Common Units less than the number of Common Units reasonably required to provide for the remaining reduction in distributions set forth in Section 6.4(a).

Section 6.5 Special Provisions Relating to the Holders of Certain Common Units

Andeavor and its Affiliates shall not be permitted to transfer any Common Unit to a Person that is not an Affiliate of Andeavor until such time as the General Partner determines, based on advice of counsel, that each such transferred Common Unit should have, as a substantive matter, like intrinsic economic and federal income tax characteristics, in all material respects, to the intrinsic economic and federal income tax characteristics of each Common Unit

 

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held by Unitholders other than Andeavor and its Affiliates. In connection with the condition imposed by this Section 6.5, the General Partner may take whatever steps are required to provide economic uniformity to such Common Units in preparation for a transfer of such Common Units, including the application of Section 6.1(d)(x); provided, however , that no such steps may be taken that would have a material adverse effect on the Unitholders other than Andeavor and its Affiliates.

ARTICLE VII

MANAGEMENT AND OPERATION OF BUSINESS

Section 7.1 Management

(a) The General Partner shall conduct, direct and manage all activities of the Partnership. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership shall be exclusively vested in the General Partner, and no Limited Partner shall have any management power over the business and affairs of the Partnership. In addition to the powers now or hereafter granted a general partner of a limited partnership under applicable law or that are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to Section 7.3, shall have full power and authority to do all things and on such terms as it determines to be necessary or appropriate to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 and to effectuate the purposes set forth in Section 2.4, including the following:

(i) the making of any expenditures, the lending or borrowing of money, the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtedness, including indebtedness that is convertible into Partnership Securities, and the incurring of any other obligations;

(ii) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership;

(iii) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any or all of the assets of the Partnership or the merger or other combination of the Partnership with or into another Person (the matters described in this clause (iii) being subject, however, to any prior approval that may be required by Section 7.3 and Article XIV);

(iv) the use of the assets of the Partnership (including cash on hand) for any purpose consistent with the terms of this Agreement, including the financing of the conduct of the operations of the Partnership Group; subject to Section 7.6(a), the lending of funds to other Persons (including other Group Members); the repayment or guarantee of obligations of any Group Member; and the making of capital contributions to any Group Member;

 

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(v) the negotiation, execution and performance of any contracts, conveyances or other instruments (including instruments that limit the liability of the Partnership under contractual arrangements to all or particular assets of the Partnership, with the other party to the contract to have no recourse against the General Partner or its assets other than its interest in the Partnership, even if the same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case);

(vi) the distribution of Partnership cash;

(vii) the selection and dismissal of employees (including employees having titles such as “president,” “vice president,” “secretary” and “treasurer”) and agents, internal and outside attorneys, accountants, consultants and contractors and the determination of their compensation and other terms of employment or hiring;

(viii) the maintenance of insurance for the benefit of the Partnership Group, the Partners and Indemnitees;

(ix) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any further limited or general partnerships, joint ventures, corporations, limited liability companies or other entities or relationships (including the acquisition of interests in, and the contributions of property to, any Group Member from time to time) subject to the restrictions set forth in Section 2.4;

(x) the control of any matters affecting the rights and obligations of the Partnership, including the bringing and defending of actions at law or in equity and otherwise engaging in the conduct of litigation, arbitration or mediation and the incurring of legal expense and the settlement of claims and litigation;

(xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law;

(xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8);

(xiii) the purchase, sale or other acquisition or disposition of Partnership Securities, or the issuance of options, rights, warrants, appreciation rights and tracking and phantom interests relating to Partnership Securities;

(xiv) the undertaking of any action in connection with the Partnership’s participation in any Group Member; and

(xv) the entering into of agreements with any of its Affiliates to render services to a Group Member or to itself in the discharge of its duties as General Partner of the Partnership.

 

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(b) Notwithstanding any other provision of this Agreement, any Group Member Agreement, the Delaware Act or any applicable law, rule or regulation, each of the Partners and each other Person who may acquire an interest in Partnership Securities hereby (i) approves, ratifies and confirms the execution, delivery and performance by the parties thereto of this Agreement and the Group Member Agreement of each other Group Member, the Underwriting Agreement, the Omnibus Agreement, the Contribution Agreement, the Operational Services Agreement, and the other agreements described in or filed as exhibits to the Registration Statement that are related to the transactions contemplated by the Registration Statement (collectively, the “ Transaction Documents ”) (in each case other than this Agreement, without giving effect to any amendments, supplements or restatements thereof entered into after the date such Person becomes bound by the provisions of this Agreement); (ii) agrees that the General Partner (on its own or on behalf of the Partnership) is authorized to execute, deliver and perform the agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners or the other Persons who may acquire an interest in Partnership Securities; and (iii) agrees that the execution, delivery or performance by the General Partner, any Group Member or any Affiliate of any of them of this Agreement or any agreement authorized or permitted under this Agreement (including the exercise by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV) shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement (or any other agreements) or of any duty existing at law, in equity or otherwise.

Section 7.2 Certificate of Limited Partnership

The General Partner has caused the Certificate of Limited Partnership to be filed with the Secretary of State of the State of Delaware as required by the Delaware Act. The General Partner shall use all reasonable efforts to cause to be filed such other certificates or documents that the General Partner determines to be necessary or appropriate for the formation, continuation, qualification and operation of a limited partnership (or a partnership in which the limited partners have limited liability) in the State of Delaware or any other state in which the Partnership may elect to do business or own property. To the extent the General Partner determines such action to be necessary or appropriate, the General Partner shall file amendments to and restatements of the Certificate of Limited Partnership and do all things to maintain the Partnership as a limited partnership (or a partnership or other entity in which the limited partners have limited liability) under the laws of the State of Delaware or of any other state in which the Partnership may elect to do business or own property. Subject to the terms of Section 3.4(a), the General Partner shall not be required, before or after filing, to deliver or mail a copy of the Certificate of Limited Partnership, any qualification document or any amendment thereto to any Limited Partner.

Section 7.3 Restrictions on the General Partner’s Authority

Except as provided in Article XII and Article XIV, the General Partner may not sell, exchange or otherwise dispose of all or substantially all of the assets of the Partnership Group, taken as a whole, in a single transaction or a series of related transactions (including by way of merger, consolidation, other combination or sale of ownership interests of the Partnership’s Subsidiaries) without the approval of holders of a Unit Majority; provided, however , that this provision shall not preclude or limit the General Partner’s ability to mortgage, pledge, hypothecate or grant a security interest in all or substantially all of the assets of the Partnership Group and shall not apply to any forced sale of any or all of the assets of the Partnership Group pursuant to the foreclosure of, or other realization upon, any such encumbrance.

 

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Section 7.4 Reimbursement of the General Partner

(a) Except as provided in this Section 7.4 and elsewhere in this Agreement, the General Partner shall not be compensated for its services as a general partner or managing member of any Group Member.

(b) Subject to the Omnibus Agreement, the General Partner shall be reimbursed on a monthly basis, or such other basis as the General Partner may determine, for (i) all direct and indirect expenses it incurs or payments it makes on behalf of the Partnership Group (including salary, bonus, incentive compensation and other amounts paid to any Person, including Affiliates of the General Partner to perform services for the Partnership Group or for the General Partner in the discharge of its duties to the Partnership Group), and (ii) all other expenses allocable to the Partnership Group or otherwise incurred by the General Partner in connection with managing and operating the Partnership Group’s business and affairs (including expenses allocated to the General Partner by its Affiliates). The General Partner shall determine the expenses that are allocable to the Partnership Group. Reimbursements pursuant to this Section 7.4 shall be in addition to any reimbursement to the General Partner as a result of indemnification pursuant to Section 7.7.

(c) The General Partner, without the approval of the Limited Partners (who shall have no right to vote in respect thereof), may propose and adopt on behalf of the Partnership employee benefit plans, employee programs and employee practices (including plans, programs and practices involving the issuance of Partnership Securities or options to purchase or rights, warrants or appreciation rights or phantom or tracking interests relating to Partnership Securities), or cause the Partnership to issue Partnership Securities in connection with, or pursuant to, any employee benefit plan, employee program or employee practice maintained or sponsored by the General Partner or any of its Affiliates in each case for the benefit of employees and directors of the General Partner or any of its Affiliates, in respect of services performed, directly or indirectly, for the benefit of the Partnership Group. The Partnership agrees to issue and sell to the General Partner or any of its Affiliates any Partnership Securities that the General Partner or such Affiliates are obligated to provide to any employees and directors pursuant to any such employee benefit plans, employee programs or employee practices. Expenses incurred by the General Partner in connection with any such plans, programs and practices (including the net cost to the General Partner or such Affiliates of Partnership Securities purchased by the General Partner or such Affiliates from the Partnership to fulfill options or awards under such plans, programs and practices) shall be reimbursed in accordance with Section 7.4(b). Any and all obligations of the General Partner under any employee benefit plans, employee programs or employee practices adopted by the General Partner as permitted by this Section 7.4(c) shall constitute obligations of the General Partner hereunder and shall be assumed by any successor General Partner approved pursuant to Section 11.1 or Section 11.2 or the transferee of or successor to all of the General Partner’s General Partner Interest (represented by General Partner Units) pursuant to Section 4.6.

 

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(d) The General Partner and its Affiliates may charge any member of the Partnership Group a management fee to the extent necessary to allow the Partnership Group to reduce the amount of any state franchise or income tax or any tax based upon the revenues or gross margin of any member of the Partnership Group if the tax benefit produced by the payment of such management fee or fees exceeds the amount of such fee or fees.

Section 7.5 Outside Activities

(a) The General Partner, for so long as it is the General Partner of the Partnership (i) agrees that its sole business will be to act as a general partner or managing member, as the case may be, of the Partnership and any other partnership or limited liability company of which the Partnership is, directly or indirectly, a partner or member and to undertake activities that are ancillary or related thereto (including being a Limited Partner in the Partnership) and (ii) shall not engage in any business or activity or incur any debts or liabilities except in connection with or incidental to (A) its performance as general partner or managing member, if any, of one or more Group Members or as described in or contemplated by the Registration Statement, (B) the acquiring, owning or disposing of debt securities or equity interests in any Group Member, (C) the guarantee of, and mortgage, pledge, or encumbrance of any or all of its assets in connection with, any indebtedness of any Affiliate of the General Partner or (D) subject to the limitations contained in the Omnibus Agreement, the performance of its obligations under the Omnibus Agreement.

(b) Except as provided in the Omnibus Agreement, each Unrestricted Person (other than the General Partner) shall have the right to engage in businesses of every type and description and other activities for profit and to engage in and possess an interest in other business ventures of any and every type or description, whether in businesses engaged in or anticipated to be engaged in by any Group Member, independently or with others, including business interests and activities in direct competition with the business and activities of any Group Member, and none of the same shall constitute a breach of this Agreement or any duty otherwise existing at law, in equity or otherwise, to any Group Member or any Partner. None of any Group Member, any Limited Partner or any other Person shall have any rights by virtue of this Agreement, any Group Member Agreement, or the partnership relationship established hereby in any business ventures of any Unrestricted Person.

(c) Subject to the terms of Sections Section 7.5(a) and Section 7.5(b), but otherwise notwithstanding anything to the contrary in this Agreement, (i) the engaging in competitive activities by any Unrestricted Person (other than the General Partner) in accordance with the provisions of this Section 7.5 is hereby approved by the Partnership and all Partners, (ii) it shall be deemed not to be a breach of any fiduciary duty or any other obligation of any type whatsoever of the General Partner or any other Unrestricted Person for the Unrestricted Persons (other than the General Partner) to engage in such business interests and activities in preference to or to the exclusion of the Partnership and (iii) the Unrestricted Persons shall have no obligation hereunder or as a result of any duty otherwise existing at law, in equity or otherwise, to present business opportunities to the Partnership. Notwithstanding anything to the contrary in this Agreement, the doctrine of corporate opportunity, or any analogous doctrine, shall not apply to any Unrestricted Person (including the General Partner). Except as provided in the Omnibus Agreement, no Unrestricted Person (including the General Partner) who acquires knowledge of a

 

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potential transaction, agreement, arrangement or other matter that may be an opportunity for the Partnership, shall have any duty to communicate or offer such opportunity to the Partnership, and such Unrestricted Person (including the General Partner) shall not be liable to the Partnership, to any Limited Partner or any other Person bound by this Agreement for breach of any fiduciary or other duty by reason of the fact that such Unrestricted Person (including the General Partner) pursues or acquires for itself, directs such opportunity to another Person or does not communicate such opportunity or information to the Partnership; provided such Unrestricted Person does not engage in such business or activity as a result of or using confidential or proprietary information provided by or on behalf of the Partnership to such Unrestricted Person.

(d) The General Partner and each of its Affiliates may acquire Units or other Partnership Interests in addition to those acquired on the Closing Date and, except as otherwise provided in this Agreement, shall be entitled to exercise, at their option, all rights relating to all Units and/or other Partnership Interests acquired by them. The term “ Affiliates ” when used in this Section 7.5(d) with respect to the General Partner shall not include any Group Member.

Section 7.6 Loans from the General Partner; Loans or Contributions from the Partnership or Group Members

(a) The General Partner or any of its Affiliates may lend to any Group Member, and any Group Member may borrow from the General Partner or any of its Affiliates, funds needed or desired by the Group Member for such periods of time and in such amounts as the General Partner may determine; provided, however , that in any such case the lending party may not charge the borrowing party interest at a rate greater than the rate that would be charged the borrowing party or impose terms less favorable to the borrowing party than would be charged or imposed on the borrowing party by unrelated lenders on comparable loans made on an arm’s-length basis (without reference to the lending party’s financial abilities or guarantees), all as determined by the General Partner. The borrowing party shall reimburse the lending party for any costs (other than any additional interest costs) incurred by the lending party in connection with the borrowing of such funds. For purposes of this Section 7.6(a) and Section 7.6(b), the term “ Group Member ” shall include any Affiliate of a Group Member that is controlled by the Group Member.

(b) The Partnership may lend or contribute to any Group Member, and any Group Member may borrow from the Partnership, funds on terms and conditions determined by the General Partner. No Group Member may lend funds to the General Partner or any of its Affiliates (other than another Group Member).

(c) No borrowing by any Group Member or the approval thereof by the General Partner shall be deemed to constitute a breach of any duty, expressed or implied, of the General Partner or its Affiliates to the Partnership or the Limited Partners existing hereunder, or existing at law, in equity or otherwise by reason of the fact that the purpose or effect of such borrowing is directly or indirectly to enable distributions to the General Partner or its Affiliates (in their capacities as Limited Partners) to exceed the General Partner’s Percentage Interest of the total amount distributed to all partners.

 

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Section 7.7 Indemnification

(a) To the fullest extent permitted by law but subject to the limitations expressly provided in this Agreement, all Indemnitees shall be indemnified and held harmless by the Partnership from and against any and all losses, claims, damages, liabilities, joint or several, expenses (including legal fees and expenses), judgments, fines, penalties, interest, settlements or other amounts arising from any and all threatened, pending or completed claims, demands, actions, suits or proceedings, whether civil, criminal, administrative or investigative, and whether formal or informal and including appeals, in which any Indemnitee may be involved, or is threatened to be involved, as a party or otherwise, by reason of its status as an Indemnitee and acting (or refraining to act) in such capacity on behalf of or for the benefit of the Partnership; provided , that the Indemnitee shall not be indemnified and held harmless pursuant to this Agreement if there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that, in respect of the matter for which the Indemnitee is seeking indemnification pursuant to this Agreement, the Indemnitee acted in bad faith or engaged in fraud, willful misconduct or, in the case of a criminal matter, acted with knowledge that the Indemnitee’s conduct was unlawful; provided , further , no indemnification pursuant to this Section 7.7 shall be available to any Affiliate of the General Partner (other than a Group Member), or to any other Indemnitee, with respect to any such Affiliate’s obligations pursuant to the Transaction Documents. Any indemnification pursuant to this Section 7.7 shall be made only out of the assets of the Partnership, it being agreed that the General Partner shall not be personally liable for such indemnification and shall have no obligation to contribute or loan any monies or property to the Partnership to enable it to effectuate such indemnification.

(b) To the fullest extent permitted by law, expenses (including legal fees and expenses) incurred by an Indemnitee who is indemnified pursuant to Section 7.7(a) in defending any claim, demand, action, suit or proceeding shall, from time to time, be advanced by the Partnership prior to a final and non-appealable judgment entered by a court of competent jurisdiction determining that, in respect of the matter for which the Indemnitee is seeking indemnification pursuant to this Section 7.7, the Indemnitee is not entitled to be indemnified upon receipt by the Partnership of any undertaking by or on behalf of the Indemnitee to repay such amount if it shall be ultimately determined that the Indemnitee is not entitled to be indemnified as authorized by this Section 7.7.

(c) The indemnification provided by this Section 7.7 shall be in addition to any other rights to which an Indemnitee may be entitled under any agreement, pursuant to any vote of the holders of Outstanding Limited Partner Interests, as a matter of law, in equity or otherwise, both as to actions in the Indemnitee’s capacity as an Indemnitee and as to actions in any other capacity (including any capacity under the Underwriting Agreement), and shall continue as to an Indemnitee who has ceased to serve in such capacity and shall inure to the benefit of the heirs, successors, assigns and administrators of the Indemnitee.

(d) The Partnership may purchase and maintain (or reimburse the General Partner or its Affiliates for the cost of) insurance, on behalf of the General Partner, its Affiliates and such other Persons as the General Partner shall determine, against any liability that may be asserted against, or expense that may be incurred by, such Person in connection with the Partnership’s activities or such Person’s activities on behalf of the Partnership, regardless of whether the Partnership would have the power to indemnify such Person against such liability under the provisions of this Agreement.

 

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(e) For purposes of this Section 7.7, the Partnership shall be deemed to have requested an Indemnitee to serve as fiduciary of an employee benefit plan whenever the performance by it of its duties to the Partnership also imposes duties on, or otherwise involves services by, it to the plan or participants or beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect to an employee benefit plan pursuant to applicable law shall constitute “fines” within the meaning of Section 7.7(a); and action taken or omitted by it with respect to any employee benefit plan in the performance of its duties for a purpose reasonably believed by it to be in the best interest of the participants and beneficiaries of the plan shall be deemed to be for a purpose that is in the best interests of the Partnership.

(f) In no event may an Indemnitee subject the Limited Partners to personal liability by reason of the indemnification provisions set forth in this Agreement.

(g) An Indemnitee shall not be denied indemnification in whole or in part under this Section 7.7 because the Indemnitee had an interest in the transaction with respect to which the indemnification applies if the transaction was otherwise permitted by the terms of this Agreement.

(h) The provisions of this Section 7.7 are for the benefit of the Indemnitees and their heirs, successors, assigns, executors and administrators and shall not be deemed to create any rights for the benefit of any other Persons.

(i) No amendment, modification or repeal of this Section 7.7 or any provision hereof shall in any manner terminate, reduce or impair the right of any past, present or future Indemnitee to be indemnified by the Partnership, nor the obligations of the Partnership to indemnify any such Indemnitee under and in accordance with the provisions of this Section 7.7 as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.

Section 7.8 Liability of Indemnitees

(a) Notwithstanding anything to the contrary set forth in this Agreement, no Indemnitee shall be liable for monetary damages to the Partnership, the Limited Partners, or any other Persons who have acquired interests in the Partnership Securities, for losses sustained or liabilities incurred as a result of any act or omission of an Indemnitee unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that, in respect of the matter in question, the Indemnitee acted in bad faith or engaged in fraud, willful misconduct or, in the case of a criminal matter, acted with knowledge that the Indemnitee’s conduct was criminal.

(b) Subject to its obligations and duties as General Partner set forth in Section 7.1(a), the General Partner may exercise any of the powers granted to it by this Agreement and perform any of the duties imposed upon it hereunder either directly or by or through its agents, and the General Partner shall not be responsible for any misconduct or negligence on the part of any such agent appointed by the General Partner in good faith.

 

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(c) To the extent that, at law or in equity, an Indemnitee has duties (including fiduciary duties) and liabilities relating thereto to the Partnership or to the Partners, the General Partner and any other Indemnitee acting in connection with the Partnership’s business or affairs shall not be liable to the Partnership or to any Partner for its good faith reliance on the provisions of this Agreement.

(d) Any amendment, modification or repeal of this Section 7.8 or any provision hereof shall be prospective only and shall not in any way affect the limitations on the liability of the Indemnitees under this Section 7.8 as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.

Section 7.9 Resolution of Conflicts of Interest; Standards of Conduct and Modification of Duties

(a) Unless otherwise expressly provided in this Agreement or any Group Member Agreement, whenever a potential conflict of interest exists or arises between the General Partner or any of its Affiliates, on the one hand, and the Partnership, any Group Member or any Partner, on the other, any resolution or course of action by the General Partner or its Affiliates in respect of such conflict of interest shall be permitted and deemed approved by all Partners, and shall not constitute a breach of this Agreement, of any Group Member Agreement, of any agreement contemplated herein or therein, or of any duty stated or implied by law or equity, if the resolution or course of action in respect of such conflict of interest is (i) approved by Special Approval, (ii) approved by the vote of a majority of the Outstanding Common Units (excluding Common Units owned by the General Partner and its Affiliates), (iii) on terms no less favorable to the Partnership than those generally being provided to or available from unrelated third parties or (iv) fair and reasonable to the Partnership, taking into account the totality of the relationships between the parties involved (including other transactions that may be particularly favorable or advantageous to the Partnership). The General Partner shall be authorized but not required in connection with its resolution of such conflict of interest to seek Special Approval or Unitholder approval of such resolution, and the General Partner may also adopt a resolution or course of action that has not received Special Approval or Unitholder approval. If Special Approval is sought, then it shall be presumed that, in making its decision, the Conflicts Committee acted in good faith, and if neither Special Approval nor Unitholder approval is sought and the Board of Directors of the General Partner determines that the resolution or course of action taken with respect to a conflict of interest satisfies either of the standards set forth in clauses (iii) or (iv) above, then it shall be presumed that, in making its decision, the Board of Directors of the General Partner acted in good faith, and in either case, in any proceeding brought by any Limited Partner or by or on behalf of such Limited Partner or any other Limited Partner or the Partnership challenging such approval, the Person bringing or prosecuting such proceeding shall have the burden of overcoming such presumption. Notwithstanding anything to the contrary in this Agreement or any duty otherwise existing at law or equity, the existence of the conflicts of interest described in the Registration Statement are hereby approved by all Partners and shall not constitute a breach of this Agreement.

 

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(b) Whenever the General Partner or the Board of Directors, or any committee thereof (including the Conflicts Committee), makes a determination or takes or declines to take any other action, or any Affiliate of the General Partner causes the General Partner to do so, in its capacity as the general partner of the Partnership as opposed to in its individual capacity, whether under this Agreement, any Group Member Agreement or any other agreement contemplated hereby or otherwise, then, unless another express standard is provided for in this Agreement, the General Partner, the Board of Directors or such committee or such Affiliates causing the General Partner to do so, shall make such determination or take or decline to take such other action in good faith and shall not be subject to any other or different standards (including fiduciary standards) imposed by this Agreement, any Group Member Agreement, any other agreement contemplated hereby or under the Delaware Act or any other law, rule or regulation or at equity. In order for a determination or other action to be in “good faith” for purposes of this Agreement, the Person or Persons making such determination or taking or declining to take such other action must believe that the determination or other action is in, or not opposed to, the best interests of the Partnership Group.

(c) Whenever the General Partner makes a determination or takes or declines to take any other action, or any of its Affiliates causes it to do so, in its individual capacity as opposed to in its capacity as the general partner of the Partnership, whether under this Agreement, any Group Member Agreement or any other agreement contemplated hereby or otherwise, then the General Partner, or such Affiliates causing it to do so, are entitled, to the fullest extent permitted by law, to make such determination or to take or decline to take such other action free of any fiduciary duty or obligation whatsoever to the Partnership, any Limited Partner, and the General Partner, or such Affiliates causing it to do so, shall not, to the fullest extent permitted by law, be required to act in good faith or pursuant to any other standard imposed by this Agreement, any Group Member Agreement, any other agreement contemplated hereby or under the Delaware Act or any other law, rule or regulation or at equity. By way of illustration and not of limitation, whenever the phrase, “at the option of the General Partner,” or some variation of that phrase, is used in this Agreement, it indicates that the General Partner is acting in its individual capacity. For the avoidance of doubt, whenever the General Partner votes or transfers its Partnership Interests, or refrains from voting or transferring its Partnership Interests, it shall be acting in its individual capacity.

(d) The General Partner’s organizational documents may provide that determinations to take or decline to take any action in its individual, rather than representative, capacity may or shall be determined by its members, if the General Partner is a limited liability company, stockholders, if the General Partner is a corporation, or the members or stockholders of the General Partner’s general partner, if the General Partner is a partnership.

(e) Notwithstanding anything to the contrary in this Agreement, the General Partner and its Affiliates shall have no duty or obligation, express or implied, to (i) sell or otherwise dispose of any asset of the Partnership Group other than in the ordinary course of business or (ii) permit any Group Member to use any facilities or assets of the General Partner and its Affiliates, except as may be provided in contracts entered into from time to time specifically dealing with such use. Any determination by the General Partner or any of its Affiliates to enter into such contracts shall be at its option.

 

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(f) Except as expressly set forth in this Agreement or required by the Delaware Act, neither the General Partner nor any other Indemnitee shall have any duties or liabilities, including fiduciary duties, to the Partnership or any Limited Partner and the provisions of this Agreement, to the extent that they restrict, eliminate or otherwise modify the duties and liabilities, including fiduciary duties, of the General Partner or any other Indemnitee otherwise existing at law or in equity, are agreed by the Partners to replace such other duties and liabilities of the General Partner or such other Indemnitee.

(g) The Unitholders hereby authorize the General Partner, on behalf of the Partnership as a partner or member of a Group Member, to approve actions by the general partner or managing member of such Group Member similar to those actions permitted to be taken by the General Partner pursuant to this Section 7.9.

Section 7.10 Other Matters Concerning the General Partner

(a) The General Partner may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties.

(b) The General Partner may consult with legal counsel, accountants, appraisers, management consultants, investment bankers and other consultants and advisers selected by it, and any act taken or omitted to be taken in reliance upon the advice or opinion (including an Opinion of Counsel) of such Persons as to matters that the General Partner reasonably believes to be within such Person’s professional or expert competence shall be conclusively presumed to have been done or omitted in good faith and in accordance with such opinion.

(c) The General Partner shall have the right, in respect of any of its powers or obligations hereunder, to act through any of its duly authorized officers, a duly appointed attorney or attorneys- in- fact or the duly authorized officers of the Partnership or any Group Member.

Section 7.11 Purchase or Sale of Partnership Securities

The General Partner may cause the Partnership to purchase or otherwise acquire Partnership Securities. As long as Partnership Securities are held by any Group Member, such Partnership Securities shall not be considered Outstanding for any purpose, except as otherwise provided herein. The General Partner or any Affiliate of the General Partner may also purchase or otherwise acquire and sell or otherwise dispose of Partnership Securities for its own account, subject to the provisions of Articles IV and X.

Section 7.12 Registration Rights of the General Partner and its Affiliates

(a) If (i) the General Partner or any Affiliate of the General Partner (including for purposes of this Section 7.12, any Person that is an Affiliate of the General Partner at the date hereof notwithstanding that it may later cease to be an Affiliate of the General Partner, but excluding individual Affiliates who are officers, directors or employees of the General Partner or any of its Affiliates) holds Partnership Securities that it desires to sell and (ii) Rule 144 of the

 

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Securities Act (or any successor rule or regulation to Rule 144) or another exemption from registration is not available to enable such holder of Partnership Securities (the “ Holder ”) to dispose of the number of Partnership Securities it desires to sell at the time it desires to do so without registration under the Securities Act, then at the option and upon the request of the Holder, the Partnership shall file with the Commission as promptly as practicable after receiving such request, and use commercially reasonable efforts to cause to become effective and remain effective for a period of not less than six months following its effective date or such shorter period as shall terminate when all Partnership Securities covered by such registration statement have been sold, a registration statement under the Securities Act registering the offering and sale of the number of Partnership Securities specified by the Holder; provided, however , that the Partnership shall not be required to effect more than three registrations pursuant to this Section 7.12(a); and provided further , however , that if the Conflicts Committee determines in good faith that the requested registration would be materially detrimental to the Partnership and its Partners because such registration would (x) materially interfere with a significant acquisition, reorganization or other similar transaction involving the Partnership, (y) require premature disclosure of material information that the Partnership has a bona fide business purpose for preserving as confidential or (z) render the Partnership unable to comply with requirements under applicable securities laws, then the Partnership shall have the right to postpone such requested registration for a period of not more than six months after receipt of the Holder’s request, such right pursuant to this Section 7.12(a) not to be utilized more than once in any twelve-month period. In connection with any registration pursuant to the first sentence of this Section 7.12(a), the Partnership shall (i) promptly prepare and file (A) such documents as may be necessary to register or qualify the securities subject to such registration under the securities laws of such states as the Holder shall reasonably request; provided, however , that no such qualification shall be required in any jurisdiction where, as a result thereof, the Partnership would become subject to general service of process or to taxation or qualification to do business as a foreign corporation or partnership doing business in such jurisdiction solely as a result of such registration, and (B) such documents as may be necessary to apply for listing or to list the Partnership Securities subject to such registration on such National Securities Exchange as the Holder shall reasonably request, and (ii) do any and all other acts and things that may be necessary or appropriate to enable the Holder to consummate a public sale of such Partnership Securities in such states. Except as set forth in Section 7.12(d), all costs and expenses of any such registration and offering (other than the underwriting discounts and commissions) shall be paid by the Partnership, without reimbursement by the Holder.

(b) If the Partnership shall at any time propose to file a registration statement under the Securities Act for an offering of Partnership Securities for cash (other than an offering relating solely to an employee benefit plan), the Partnership shall use all commercially reasonable efforts to include such number or amount of Partnership Securities held by any Holder in such registration statement as the Holder shall request; provided , that the Partnership is not required to make any effort or take any action to so include the Partnership Securities of the Holder once the registration statement is declared effective by the Commission or otherwise becomes effective, including any registration statement providing for the offering from time to time of Partnership Securities pursuant to Rule 415 of the Securities Act. If the proposed offering pursuant to this Section 7.12(b) shall be an underwritten offering, then, in the event that the managing underwriter or managing underwriters of such offering advise the Partnership and the Holder in writing that in their opinion the inclusion of all or some of the Holder’s Partnership

 

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Securities would adversely and materially affect the timing or success of the offering, the Partnership shall include in such offering only that number or amount, if any, of Partnership Securities held by the Holder that, in the opinion of the managing underwriter or managing underwriters, will not so adversely and materially affect the offering. Except as set forth in Section 7.12(c), all costs and expenses of any such registration and offering (other than the underwriting discounts and commissions) shall be paid by the Partnership, without reimbursement by the Holder.

(c) If underwriters are engaged in connection with any registration referred to in this Section 7.12, the Partnership shall provide indemnification, representations, covenants, opinions and other assurance to the underwriters in form and substance reasonably satisfactory to such underwriters. Further, in addition to and not in limitation of the Partnership’s obligation under Section 7.7, the Partnership shall, to the fullest extent permitted by law, indemnify and hold harmless the Holder, its officers, directors and each Person who controls the Holder (within the meaning of the Securities Act) and any agent thereof (collectively, “ Indemnified Persons ”) from and against any and all losses, claims, damages, liabilities, joint or several, expenses (including legal fees and expenses), judgments, fines, penalties, interest, settlements or other amounts arising from any and all claims, demands, actions, suits or proceedings, whether civil, criminal, administrative or investigative, in which any Indemnified Person may be involved, or is threatened to be involved, as a party or otherwise, under the Securities Act or otherwise (hereinafter referred to in this Section 7.12(c) as a “claim” and in the plural as “claims”) based upon, arising out of or resulting from any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which any Partnership Securities were registered under the Securities Act or any state securities or Blue Sky laws, in any preliminary prospectus (if used prior to the effective date of such registration statement), or in any summary or final prospectus or any free writing prospectus or in any amendment or supplement thereto (if used during the period the Partnership is required to keep the registration statement current), or arising out of, based upon or resulting from the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements made therein not misleading; provided, however , that the Partnership shall not be liable to any Indemnified Person to the extent that any such claim arises out of, is based upon or results from an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, such preliminary, summary or final prospectus or any free writing prospectus or such amendment or supplement, in reliance upon and in conformity with written information furnished to the Partnership by or on behalf of such Indemnified Person specifically for use in the preparation thereof.

(d) The provisions of Section 7.12(a) and Section 7.12(b) shall continue to be applicable with respect to the General Partner (and any of the General Partner’s Affiliates) after it ceases to be a general partner of the Partnership, during a period of two years subsequent to the effective date of such cessation and for so long thereafter as is required for the Holder to sell all of the Partnership Securities with respect to which it has requested during such two-year period inclusion in a registration statement otherwise filed or that a registration statement be filed; provided, however , that the Partnership shall not be required to file successive registration statements covering the same Partnership Securities for which registration was demanded during such two-year period. The provisions of Section 7.12(c) shall continue in effect thereafter.

 

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(e) The rights to cause the Partnership to register Partnership Securities pursuant to this Section 7.12 may be assigned (but only with all related obligations) by a Holder to a transferee or assignee of such Partnership Securities, provided (i) the Partnership is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee or assignee and the Partnership Securities with respect to which such registration rights are being assigned; and (ii) such transferee or assignee agrees in writing to be bound by and subject to the terms set forth in this Section 7.12.

(f) Any request to register Partnership Securities pursuant to this Section 7.12 shall (i) specify the Partnership Securities intended to be offered and sold by the Person making the request, (ii) express such Person’s present intent to offer such Partnership Securities for distribution, (iii) describe the nature or method of the proposed offer and sale of Partnership Securities, and (iv) contain the undertaking of such Person to provide all such information and materials and take all action as may be required in order to permit the Partnership to comply with all applicable requirements in connection with the registration of such Partnership Securities.

Section 7.13 Reliance by Third Parties

Notwithstanding anything to the contrary in this Agreement, any Person dealing with the Partnership shall be entitled to assume that the General Partner and any officer of the General Partner authorized by the General Partner to act on behalf of and in the name of the Partnership has full power and authority to encumber, sell or otherwise use in any manner any and all assets of the Partnership and to enter into any authorized contracts on behalf of the Partnership, and such Person shall be entitled to deal with the General Partner or any such officer as if it were the Partnership’s sole party in interest, both legally and beneficially. Each Limited Partner hereby waives, to the fullest extent permitted by law, any and all defenses or other remedies that may be available against such Person to contest, negate or disaffirm any action of the General Partner or any such officer in connection with any such dealing. In no event shall any Person dealing with the General Partner or any such officer or its representatives be obligated to ascertain that the terms of this Agreement have been complied with or to inquire into the necessity or expedience of any act or action of the General Partner or any such officer or its representatives. Each and every certificate, document or other instrument executed on behalf of the Partnership by the General Partner or its representatives shall be conclusive evidence in favor of any and every Person relying thereon or claiming thereunder that (a) at the time of the execution and delivery of such certificate, document or instrument, this Agreement was in full force and effect, (b) the Person executing and delivering such certificate, document or instrument was duly authorized and empowered to do so for and on behalf of the Partnership and (c) such certificate, document or instrument was duly executed and delivered in accordance with the terms and provisions of this Agreement and is binding upon the Partnership.

 

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ARTICLE VIII

BOOKS, RECORDS, ACCOUNTING AND REPORTS

Section 8.1 Records and Accounting

The General Partner shall keep or cause to be kept at the principal office of the Partnership appropriate books and records with respect to the Partnership’s business, including all books and records necessary to provide to the Limited Partners any information required to be provided pursuant to Section 3.4(a). Any books and records maintained by or on behalf of the Partnership in the regular course of its business, including the record of the Record Holders of Units or other Partnership Securities, books of account and records of Partnership proceedings, may be kept on, or be in the form of, computer disks, hard drives, punch cards, magnetic tape, photographs, micrographics or any other information storage device; provided , that the books and records so maintained are convertible into clearly legible written form within a reasonable period of time. The books of the Partnership shall be maintained, for financial reporting purposes, on an accrual basis in accordance with U.S. GAAP. The Partnership shall not be required to keep books maintained on a cash basis and the General Partner shall be permitted to calculate cash-based measures by making such adjustments to its accrual basis books to account for non-cash items and other adjustments as the General Partner determines to be necessary or appropriate.

Section 8.2 Fiscal Year

The fiscal year of the Partnership shall be a fiscal year ending December 31.

Section 8.3 Reports

(a) As soon as practicable, but in no event later than 90 days after the close of each fiscal year of the Partnership, the General Partner shall cause to be mailed or made available, by any reasonable means (including posting on or accessible through the Partnership’s or the SEC’s website) to each Record Holder of a Unit as of a date selected by the General Partner, an annual report containing financial statements of the Partnership for such fiscal year of the Partnership, presented in accordance with U.S. GAAP, including a balance sheet and statements of operations, Partnership equity and cash flows, such statements to be audited by a firm of independent public accountants selected by the General Partner.

(b) As soon as practicable, but in no event later than 45 days after the close of each Quarter except the last Quarter of each fiscal year, the General Partner shall cause to be mailed or made available, by any reasonable means (including posting on or accessible through the Partnership’s or the Commission’s website) to each Record Holder of a Unit, as of a date selected by the General Partner, a report containing unaudited financial statements of the Partnership and such other information as may be required by applicable law, regulation or rule of any National Securities Exchange on which the Units are listed or admitted to trading, or as the General Partner determines to be necessary or appropriate.

 

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ARTICLE IX

TAX MATTERS

Section 9.1 Tax Returns and Information

The Partnership shall timely file all returns of the Partnership that are required for federal, state and local income tax purposes on the basis of the accrual method and the taxable period or year that it is required by law to adopt, from time to time, as determined by the General Partner. In the event the Partnership is required to use a taxable period other than a year ending on December 31, the General Partner shall use reasonable efforts to change the taxable period of the Partnership to a year ending on December 31. The tax information reasonably required by Record Holders for federal and state income tax reporting purposes with respect to a taxable period shall be furnished to them within 90 days of the close of the calendar year in which the Partnership’s taxable period ends. The classification, realization and recognition of income, gain, losses and deductions and other items shall be on the accrual method of accounting for federal income tax purposes.

Section 9.2 Tax Elections

(a) The Partnership shall make the election under Section 754 of the Code in accordance with applicable regulations thereunder, subject to the reservation of the right to seek to revoke any such election upon the General Partner’s determination that such revocation is in the best interests of the Limited Partners. Notwithstanding any other provision herein contained, for the purposes of computing the adjustments under Section 743(b) of the Code, the General Partner shall be authorized (but not required) to adopt a convention whereby the price paid by a transferee of a Limited Partner Interest will be deemed to be the lowest quoted closing price of the Limited Partner Interests on any National Securities Exchange on which such Limited Partner Interests are listed or admitted to trading during the calendar month in which such transfer is deemed to occur pursuant to Section 6.2(f) without regard to the actual price paid by such transferee.

(b) Except as otherwise provided herein, the General Partner shall determine whether the Partnership should make any other elections permitted by the Code.

Section 9.3 Tax Controversies

(a) Subject to the provisions hereof, the General Partner is designated as the Tax Matters Partner (as defined in the Code) and is authorized and required to represent the Partnership (at the Partnership’s expense) in connection with all examinations of the Partnership’s affairs by tax authorities, including resulting administrative and judicial proceedings, and to expend Partnership funds for professional services and costs associated therewith. Each Partner agrees to cooperate with the General Partner and to do or refrain from doing any or all things reasonably required by the General Partner to conduct such proceedings.

(b) With respect to tax returns filed for taxable years beginning on or after December 31, 2017, the General Partner is designated as the “partnership representative” in accordance with the rules prescribed pursuant to Section 6223 of the Code (the “Partnership Representative”) and shall have the sole authority to act on behalf of the Partnership in connection with all examinations of the Partnership’s affairs by tax authorities, including resulting administrative and judicial proceedings, and to expend Partnership funds for professional services and costs associated therewith. The General Partner shall exercise, in its sole discretion, any and all authority of the Partnership Representative under the Code, including, without limitation, (i) binding the Partnership and its Partners with respect to tax matters and (ii) determining whether to make any available election under Section 6226 of the Code. The General Partner shall amend the provisions of this Agreement as appropriate to reflect the proposal or promulgation of Treasury Regulations implementing the partnership audit, assessment and collection rules adopted by the Bipartisan Budget Act of 2015, including any amendments to those rules.

 

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Section 9.4 Withholding

Notwithstanding any other provision of this Agreement, the General Partner is authorized to take any action that may be required to cause the Partnership and other Group Members to comply with any withholding requirements established under the Code or any other federal, state or local law including pursuant to Sections 1441, 1442, 1445 and 1446 of the Code, or established under any foreign law. To the extent that the Partnership is required or elects to withhold and pay over to any taxing authority any amount resulting from the allocation or distribution of income to any Partner (including by reason of Section 1446 of the Code), the General Partner may treat the amount withheld as a distribution of cash pursuant to Section 6.3 or Section 12.4(c) in the amount of such withholding from such Partner.

ARTICLE X

ADMISSION OF PARTNERS

Section 10.1 Admission of Limited Partners

(a) A Person shall be admitted as a Limited Partner and shall become bound by the terms of this Agreement if such Person purchases or otherwise lawfully acquires any Limited Partner Interest and becomes the Record Holder of such Limited Partner Interests in accordance with the provisions of Article IV or Article V hereof. Upon the issuance of the TexNew Mex Units to Western Refining Southwest, Western Refining Southwest will be automatically admitted to the Partnership as a Limited Partner in respect of the TexNew Mex Units.

(b) By acceptance of the transfer of any Limited Partner Interests in accordance with Article IV or the acceptance of any Limited Partner Interests issued pursuant to Article V or pursuant to a merger or consolidation pursuant to Article XIV, and except as provided in Section 4.9, each transferee of, or other such Person acquiring, a Limited Partner Interest (including any nominee holder or an agent or representative acquiring such Limited Partner Interests for the account of another Person) (i) shall be admitted to the Partnership as a Limited Partner with respect to the Limited Partner Interests so transferred or issued to such Person when any such transfer, issuance or admission is reflected in the books and records of the Partnership and such Limited Partner becomes the Record Holder of the Limited Partner Interests so transferred, (ii) shall become bound, and shall be deemed to have agreed to be bound, by the terms of this Agreement, (iii) represents that the transferee has the capacity, power and authority to enter into this Agreement, and (iv) makes any consents, acknowledgements or waivers contained in this Agreement, all with or without execution of this Agreement by such Person. The transfer of any Limited Partner Interests and the admission of any new Limited Partner shall not constitute an amendment to this Agreement. A Person may become a Limited Partner or Record Holder of a Limited Partner Interest without the consent or approval of any of the Partners. A Person may not become a Limited Partner without acquiring a Limited Partner Interest and until such Person is reflected in the books and records of the Partnership as the Record Holder of such Limited Partner Interest. The rights and obligations of a Person who is an Ineligible Holder shall be determined in accordance with Section 4.9.

 

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(c) The name and mailing address of each Limited Partner shall be listed on the books and records of the Partnership maintained for such purpose by the Partnership or the Transfer Agent. The General Partner shall update the books and records of the Partnership from time to time as necessary to reflect accurately the information therein (or shall cause the Transfer Agent to do so, as applicable). A Limited Partner Interest may be represented by a Certificate, as provided in Section 4.1.

(d) Any transfer of a Limited Partner Interest shall not entitle the transferee to share in the profits and losses, to receive distributions, to receive allocations of income, gain, loss, deduction or credit or any similar item or to any other rights to which the transferor was entitled until the transferee becomes a Limited Partner pursuant to Section 10.1(b).

Section 10.2 Admission of Successor General Partner

A successor General Partner approved pursuant to Section 11.1 or Section 11.2 or the transferee of or successor to all of the General Partner Interest (represented by General Partner Units) pursuant to Section 4.6 who is proposed to be admitted as a successor General Partner shall be admitted to the Partnership as the General Partner, effective immediately prior to the withdrawal or removal of the predecessor or transferring General Partner, pursuant to Section 11.1 or 11.2 or the transfer of the General Partner Interest (represented by General Partner Units) pursuant to Section 4.6, provided, however , that no such successor shall be admitted to the Partnership until compliance with the terms of Section 4.6 has occurred and such successor has executed and delivered such other documents or instruments as may be required to effect such admission. Any such successor is hereby authorized to and shall, subject to the terms hereof, carry on the business of the members of the Partnership Group without dissolution.

Section 10.3 Amendment of Agreement and Certificate of Limited Partnership

To effect the admission to the Partnership of any Partner, the General Partner shall take all steps necessary or appropriate under the Delaware Act to amend the records of the Partnership to reflect such admission and, if necessary, to prepare as soon as practicable an amendment to this Agreement and, if required by law, the General Partner shall prepare and file an amendment to the Certificate of Limited Partnership.

ARTICLE XI

WITHDRAWAL OR REMOVAL OF PARTNERS

Section 11.1 Withdrawal of the General Partner

(a) The General Partner shall be deemed to have withdrawn from the Partnership upon the occurrence of any one of the following events (each such event herein referred to as an “ Event of Withdrawal ”);

 

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(i) The General Partner voluntarily withdraws from the Partnership by giving written notice to the other Partners;

(ii) The General Partner transfers all of its rights as General Partner pursuant to Section 4.6;

(iii) The General Partner is removed pursuant to Section 11.2;

(iv) The General Partner (A) makes a general assignment for the benefit of creditors; (B) files a voluntary bankruptcy petition for relief under Chapter 7 of the United States Bankruptcy Code; (C) files a petition or answer seeking for itself a liquidation, dissolution or similar relief (but not a reorganization) under any law; (D) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against the General Partner in a proceeding of the type described in clauses (A)-(C) of this Section 11.1(a)(iv); or (E) seeks, consents to or acquiesces in the appointment of a trustee (but not a debtor- in-possession), receiver or liquidator of the General Partner or of all or any substantial part of its properties;

(v) A final and non-appealable order of relief under Chapter 7 of the United States Bankruptcy Code is entered by a court with appropriate jurisdiction pursuant to a voluntary or involuntary petition by or against the General Partner; or

(vi) (A) if the General Partner is a corporation, a certificate of dissolution or its equivalent is filed for the General Partner, or 90 days expire after the date of notice to the General Partner of revocation of its charter without a reinstatement of its charter, under the laws of its state of incorporation; (B) if the General Partner is a partnership or a limited liability company, the dissolution and commencement of winding up of the General Partner; (C) if the General Partner is acting in such capacity by virtue of being a trustee of a trust, the termination of the trust; (D) if the General Partner is a natural person, his death or adjudication of incompetency; and (E) otherwise upon the termination of the General Partner.

If an Event of Withdrawal specified in Section 11.1(a)(iv), (v) or (vi)(A), (B), (C) or (E) occurs, the withdrawing General Partner shall give notice to the Limited Partners within 30 days after such occurrence. The Partners hereby agree that only the Events of Withdrawal described in this Section 11.1 shall result in the withdrawal of the General Partner from the Partnership.

(b) Withdrawal of the General Partner from the Partnership upon the occurrence of an Event of Withdrawal shall not constitute a breach of this Agreement under the following circumstances: (i) at any time during the period beginning on the Closing Date and ending at 12:00 midnight, Central Time, on June 30, 2021 the General Partner voluntarily withdraws by giving at least 90 days’ advance notice of its intention to withdraw to the Limited Partners; provided , that prior to the effective date of such withdrawal, the withdrawal is approved by Unitholders holding at least a majority of the Outstanding Common Units (excluding Common Units held by the General Partner and its Affiliates) and the General Partner delivers to the Partnership an Opinion of Counsel (“ Withdrawal Opinion of Counsel ”) that such withdrawal (following the selection of the successor General Partner) would not result in the loss of the

 

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limited liability under the Delaware Act of any Limited Partner or cause any Group Member to be treated as an association taxable as a corporation or otherwise to be taxed as an entity for federal income tax purposes (to the extent not already so treated or taxed); (ii) at any time after 12:00 midnight, Central Time, on June 30, 2021 the General Partner voluntarily withdraws by giving at least 90 days’ advance notice to the Unitholders, such withdrawal to take effect on the date specified in such notice; (iii) at any time that the General Partner ceases to be the General Partner pursuant to Section 11.1(a)(ii) or is removed pursuant to Section 11.2; or (iv) notwithstanding clause (i) of this sentence, at any time that the General Partner voluntarily withdraws by giving at least 90 days’ advance notice of its intention to withdraw to the Limited Partners, such withdrawal to take effect on the date specified in the notice, if at the time such notice is given one Person and its Affiliates (other than the General Partner and its Affiliates) own beneficially or of record or control at least 50% of the Outstanding Units. The withdrawal of the General Partner from the Partnership upon the occurrence of an Event of Withdrawal shall also constitute the withdrawal of the General Partner as general partner or managing member, if any, to the extent applicable, of the other Group Members. If the General Partner gives a notice of withdrawal pursuant to Section 11.1(a)(i), the holders of a Unit Majority, may, prior to the effective date of such withdrawal, elect a successor General Partner. The Person so elected as successor General Partner shall automatically become the successor general partner or managing member, to the extent applicable, of the other Group Members of which the General Partner is a general partner or a managing member. If, prior to the effective date of the General Partner’s withdrawal, a successor is not selected by the Unitholders as provided herein or the Partnership does not receive a Withdrawal Opinion of Counsel, the Partnership shall be dissolved in accordance with Section 12.1 unless the business of the Partnership is continued pursuant to Section 12.2. Any successor General Partner elected in accordance with the terms of this Section 11.1 shall be subject to the provisions of Section 10.2.

Section 11.2 Removal of the General Partner

The General Partner may be removed if such removal is approved by the Unitholders holding at least 66 2/3% of the Outstanding Units (including Units held by the General Partner and its Affiliates) voting as a single class. Any such action by such holders for removal of the General Partner must also provide for the election of a successor General Partner by the Unitholders holding a majority of the outstanding Common Units (including Common Units held by the General Partner and its Affiliates). Such removal shall be effective immediately following the admission of a successor General Partner pursuant to Section 10.2. The removal of the General Partner shall also automatically constitute the removal of the General Partner as general partner or managing member, to the extent applicable, of the other Group Members of which the General Partner is a general partner or a managing member. If a Person is elected as a successor General Partner in accordance with the terms of this Section 11.2, such Person shall, upon admission pursuant to Section 10.2, automatically become a successor general partner or managing member, to the extent applicable, of the other Group Members of which the General Partner is a general partner or a managing member. The right of the holders of Outstanding Units to remove the General Partner shall not exist or be exercised unless the Partnership has received an opinion opining as to the matters covered by a Withdrawal Opinion of Counsel. Any successor General Partner elected in accordance with the terms of this Section 11.2 shall be subject to the provisions of Section 10.2.

 

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Section 11.3 Interest of Departing General Partner and Successor General Partner

(a) In the event of (i) withdrawal of the General Partner under circumstances where such withdrawal does not violate this Agreement or (ii) removal of the General Partner by the holders of Outstanding Units under circumstances where Cause does not exist, if the successor General Partner is elected in accordance with the terms of Section 11.1 or Section 11.2, the Departing General Partner shall have the option, exercisable prior to the effective date of the withdrawal or removal of such Departing General Partner, to require its successor to purchase its General Partner Interest (represented by General Partner Units) and its general partner interest (or equivalent interest), if any, in the other Group Members (collectively, the “ Combined Interest ”) in exchange for an amount in cash equal to the fair market value of such Combined Interest, such amount to be determined and payable as of the effective date of its withdrawal or removal. If the General Partner is removed by the Unitholders under circumstances where Cause exists or if the General Partner withdraws under circumstances where such withdrawal violates this Agreement, and if a successor General Partner is elected in accordance with the terms of Section 11.1 or Section 11.2 (or if the business of the Partnership is continued pursuant to Section 12.2 and the successor General Partner is not the former General Partner), such successor shall have the option, exercisable prior to the effective date of the withdrawal or removal of such Departing General Partner (or, in the event the business of the Partnership is continued, prior to the date the business of the Partnership is continued), to purchase the Combined Interest for such fair market value of such Combined Interest. In either event, the Departing General Partner shall be entitled to receive all reimbursements due such Departing General Partner pursuant to Section 7.4, including any employee-related liabilities (including severance liabilities), incurred in connection with the termination of any employees employed by the Departing General Partner or its Affiliates (other than any Group Member) for the benefit of the Partnership or the other Group Members.

For purposes of this Section 11.3(a), the fair market value of the Combined Interest shall be determined by agreement between the Departing General Partner and its successor or, failing agreement within 30 days after the effective date of such Departing General Partner’s withdrawal or removal, by an independent investment banking firm or other independent expert selected by the Departing General Partner and its successor, which, in turn, may rely on other experts, and the determination of which shall be conclusive as to such matter. If such parties cannot agree upon one independent investment banking firm or other independent expert within 45 days after the effective date of such withdrawal or removal, then the Departing General Partner shall designate an independent investment banking firm or other independent expert, the Departing General Partner’s successor shall designate an independent investment banking firm or other independent expert, and such firms or experts shall mutually select a third independent investment banking firm or independent expert, which third independent investment banking firm or other independent expert shall determine the fair market value of the Combined Interest. In making its determination, such third independent investment banking firm or other independent expert may consider the then current trading price of Units on any National Securities Exchange on which Units are then listed or admitted to trading, the value of the Partnership’s assets, the rights and obligations of the Departing General Partner, the value of the General Partner Interest (represented by General Partner Units) and other factors it may deem relevant.

 

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If the Combined Interest is not purchased in the manner set forth in Section 11.3(a), the Departing General Partner (or its transferee) shall become a Limited Partner and its Combined Interest shall be converted into Common Units pursuant to a valuation made by an investment banking firm or other independent expert selected pursuant to Section 11.3(a), without reduction in such Partnership Interest (but subject to proportionate dilution by reason of the admission of its successor). Any successor General Partner shall indemnify the Departing General Partner (or its transferee) as to all debts and liabilities of the Partnership arising on or after the date on which the Departing General Partner (or its transferee) becomes a Limited Partner. For purposes of this Agreement, conversion of the Combined Interest of the Departing General Partner to Common Units will be characterized as if the Departing General Partner (or its transferee) contributed its Combined Interest to the Partnership in exchange for the newly issued Common Units.

Section 11.4 [Reserved]

Section 11.5 Withdrawal of Limited Partners

No Limited Partner shall have any right to withdraw from the Partnership; provided, however , that when a transferee of a Limited Partner’s Limited Partner Interest becomes a Record Holder of the Limited Partner Interest so transferred, such transferring Limited Partner shall cease to be a Limited Partner with respect to the Limited Partner Interest so transferred.

ARTICLE XII

DISSOLUTION AND LIQUIDATION

Section 12.1 Dissolution

The Partnership shall not be dissolved by the admission of additional Limited Partners or by the admission of a successor General Partner in accordance with the terms of this Agreement. Upon the removal or withdrawal of the General Partner, if a successor General Partner is elected pursuant to Section 11.1 or Section 11.2, the Partnership shall not be dissolved and such successor General Partner shall continue the business of the Partnership. The Partnership shall dissolve, and (subject to Section 12.2) its affairs shall be wound up, upon:

(a) an Event of Withdrawal of the General Partner as provided in Section 11.1(a) (other than Section 11.1(a)(ii)), unless a successor is elected and an Opinion of Counsel is received as provided in Section 11.1(b) or Section 11.2 and such successor is admitted to the Partnership pursuant to Section 10.2;

(b) an election to dissolve the Partnership by the General Partner that is approved by the holders of a Unit Majority;

(c) the entry of a decree of judicial dissolution of the Partnership pursuant to the provisions of the Delaware Act; or

(d) at any time there are no Limited Partners, unless the Partnership is continued without dissolution in accordance with the Delaware Act.

 

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Section 12.2 Continuation of the Business of the Partnership After Dissolution

Upon (a) dissolution of the Partnership following an Event of Withdrawal caused by the withdrawal or removal of the General Partner as provided in Section 11.1(a)(i) or (iii) and the failure of the Partners to select a successor to such Departing General Partner pursuant to Section 11.1 or Section 11.2, then within 90 days thereafter, or (b) dissolution of the Partnership upon an event constituting an Event of Withdrawal as defined in Section 11.1(a)(iv), (v) or (vi), then, to the maximum extent permitted by law, within 180 days thereafter, the holders of a Unit Majority may elect to continue the business of the Partnership on the same terms and conditions set forth in this Agreement by appointing as a successor General Partner a Person approved by the holders of a Unit Majority. Unless such an election is made within the applicable time period as set forth above, the Partnership shall conduct only activities necessary to wind up its affairs. If such an election is so made, then:

(i) the Partnership shall continue without dissolution unless earlier dissolved in accordance with this Article XII;

(ii) if the successor General Partner is not the former General Partner, then the interest of the former General Partner shall be treated in the manner provided in Section 11.3; and

(iii) the successor General Partner shall be admitted to the Partnership as General Partner, effective as of the Event of Withdrawal, by agreeing in writing to be bound by this Agreement;

provided , that the right of the holders of a Unit Majority to approve a successor General Partner and to continue the business of the Partnership shall not exist and may not be exercised unless the Partnership has received an Opinion of Counsel that (x) the exercise of the right would not result in the loss of limited liability of any Limited Partner under the Delaware Act and (y) neither the Partnership nor any Group Member would be treated as an association taxable as a corporation or otherwise be taxable as an entity for federal income tax purposes upon the exercise of such right to continue (to the extent not already so treated or taxed).

Section 12.3 Liquidator

Upon dissolution of the Partnership, unless the business of the Partnership is continued pursuant to Section 12.2, the General Partner shall select one or more Persons to act as Liquidator. The Liquidator (if other than the General Partner) shall be entitled to receive such compensation for its services as may be approved by holders of at least a majority of the Outstanding Common Units. The Liquidator (if other than the General Partner) shall agree not to resign at any time without 15 days’ prior notice and may be removed at any time, with or without cause, by notice of removal approved by holders of at least a majority of the Outstanding Common Units. Upon dissolution, removal or resignation of the Liquidator, a successor and substitute Liquidator (who shall have and succeed to all rights, powers and duties of the original Liquidator) shall within 30 days thereafter be approved by holders of at least a majority of the Outstanding Common Units. The right to approve a successor or substitute Liquidator in the manner provided herein shall be deemed to refer also to any such successor or substitute

 

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Liquidator approved in the manner herein provided. Except as expressly provided in this Article XII, the Liquidator approved in the manner provided herein shall have and may exercise, without further authorization or consent of any of the parties hereto, all of the powers conferred upon the General Partner under the terms of this Agreement (but subject to all of the applicable limitations, contractual and otherwise, upon the exercise of such powers, other than the limitation on sale set forth in Section 7.3) necessary or appropriate to carry out the duties and functions of the Liquidator hereunder for and during the period of time required to complete the winding up and liquidation of the Partnership as provided for herein.

Section 12.4 Liquidation

The Liquidator shall proceed to dispose of the assets of the Partnership, discharge its liabilities, and otherwise wind up its affairs in such manner and over such period as determined by the Liquidator, subject to Section 17-804 of the Delaware Act and the following:

(a) The assets may be disposed of by public or private sale or by distribution in kind to one or more Partners on such terms as the Liquidator and such Partner or Partners may agree. If any property is distributed in kind, the Partner receiving the property shall be deemed for purposes of Section 12.4(c) to have received cash equal to its fair market value; and contemporaneously therewith, appropriate cash distributions must be made to the other Partners. The Liquidator may defer liquidation or distribution of the Partnership’s assets for a reasonable time if it determines that an immediate sale or distribution of all or some of the Partnership’s assets would be impractical or would cause undue loss to the Partners. The Liquidator may distribute the Partnership’s assets, in whole or in part, in kind if it determines that a sale would be impractical or would cause undue loss to the Partners.

(b) Liabilities of the Partnership include amounts owed to the Liquidator as compensation for serving in such capacity (subject to the terms of Section 12.3) and amounts to Partners otherwise than in respect of their distribution rights under Article VI. With respect to any liability that is contingent, conditional or unmatured or is otherwise not yet due and payable, the Liquidator shall either settle such claim for such amount as it thinks appropriate or establish a reserve of cash or other assets to provide for its payment. When paid, any unused portion of the reserve shall be distributed as additional liquidation proceeds.

(c) All property and all cash in excess of that required to discharge liabilities as provided in Section 12.4(b) shall be distributed to the Partners in accordance with, and to the extent of, the positive balances in their respective Capital Accounts, as determined after taking into account all Capital Account adjustments (other than those made by reason of distributions pursuant to this Section 12.4(c)) for the taxable period of the Partnership during which the liquidation of the Partnership occurs (with such date of occurrence being determined pursuant to Treasury Regulation Section 1.704- 1(b)(2)(ii)(g)), and such distribution shall be made by the end of such taxable period (or, if later, within 90 days after said date of such occurrence).

Section 12.5 Cancellation of Certificate of Limited Partnership

Upon the completion of the distribution of Partnership cash and property as provided in Section 12.4 in connection with the liquidation of the Partnership, the Certificate of Limited Partnership and all qualifications of the Partnership as a foreign limited partnership in jurisdictions other than the State of Delaware shall be canceled and such other actions as may be necessary to terminate the Partnership shall be taken.

 

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Section 12.6 Return of Contributions

The General Partner shall not be personally liable for, and shall have no obligation to contribute or loan any monies or property to the Partnership to enable it to effectuate, the return of the Capital Contributions of the Limited Partners or Unitholders, or any portion thereof, it being expressly understood that any such return shall be made solely from Partnership assets.

Section 12.7 Waiver of Partition

To the maximum extent permitted by law, each Partner hereby waives any right to partition of the Partnership property.

Section 12.8 Capital Account Restoration

No Limited Partner shall have any obligation to restore any negative balance in its Capital Account upon liquidation of the Partnership. The General Partner shall be obligated to restore any negative balance in its Capital Account upon liquidation of its interest in the Partnership by the end of the taxable year of the Partnership during which such liquidation occurs, or, if later, within 90 days after the date of such liquidation.

ARTICLE XIII

AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE

Section 13.1 Amendments to be Adopted Solely by the General Partner

Each Partner agrees that the General Partner, without the approval of any Partner, may amend any provision of this Agreement and execute, swear to, acknowledge, deliver, file and record whatever documents may be required in connection therewith, to reflect:

(a) a change in the name of the Partnership, the location of the principal place of business of the Partnership, the registered agent of the Partnership or the registered office of the Partnership;

(b) admission, substitution, withdrawal or removal of Partners in accordance with this Agreement;

(c) a change that the General Partner determines to be necessary or appropriate to qualify or continue the qualification of the Partnership as a limited partnership or a partnership in which the Limited Partners have limited liability under the laws of any state or to ensure that the Group Members will not be treated as associations taxable as corporations or otherwise taxed as entities for federal income tax purposes;

 

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(d) a change that the General Partner determines, (i) does not adversely affect the Limited Partners (including any particular class of Partnership Interests as compared to other classes of Partnership Interests) in any material respect, (ii) to be necessary or appropriate to (A) satisfy any requirements, conditions or guidelines contained in any opinion, directive, order, ruling or regulation of any federal or state agency or judicial authority or contained in any federal or state statute (including the Delaware Act) or (B) facilitate the trading of the Units (including the division of any class or classes of Outstanding Units into different classes to facilitate uniformity of tax consequences within such classes of Units) or comply with any rule, regulation, guideline or requirement of any National Securities Exchange on which the Units are or will be listed or admitted to trading, (iii) to be necessary or appropriate in connection with action taken by the General Partner pursuant to Section 5.9 or (iv) is required to effect the intent expressed in the Registration Statement or the intent of the provisions of this Agreement or is otherwise contemplated by this Agreement;

(e) a change in the fiscal year or taxable year of the Partnership and any other changes that the General Partner determines to be necessary or appropriate as a result of a change in the fiscal year or taxable year of the Partnership including, if the General Partner shall so determine, a change in the definition of “ Quarter ” and the dates on which distributions are to be made by the Partnership;

(f) an amendment that is necessary, in the Opinion of Counsel, to prevent the Partnership, or the General Partner or its directors, officers, trustees or agents from in any manner being subjected to the provisions of the Investment Company Act of 1940, as amended, the Investment Advisers Act of 1940, as amended, or “plan asset” regulations adopted under the Employee Retirement Income Security Act of 1974, as amended, regardless of whether such are substantially similar to plan asset regulations currently applied or proposed by the United States Department of Labor;

(g) an amendment that the General Partner determines to be necessary or appropriate in connection with the authorization or issuance of any class or series of Partnership Securities pursuant to Section 5.6;

(h) any amendment expressly permitted in this Agreement to be made by the General Partner acting alone;

(i) an amendment effected, necessitated or contemplated by a Merger Agreement approved in accordance with Section 14.3;

(j) an amendment that the General Partner determines to be necessary or appropriate to reflect and account for the formation by the Partnership of, or investment by the Partnership in, any corporation, partnership, joint venture, limited liability company or other entity, in connection with the conduct by the Partnership of activities permitted by the terms of Section 2.4;

(k) a merger, conveyance or conversion pursuant to Section 14.3(d); or

(l) any other amendments substantially similar to the foregoing.

 

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Section 13.2 Amendment Procedures

Amendments to this Agreement may be proposed only by the General Partner. To the fullest extent permitted by law, the General Partner shall have no duty or obligation to propose or approve any amendment to this Agreement and may decline to do so in its sole discretion, and, in declining to propose or approve an amendment to this Agreement, to the fullest extent permitted by law shall not be required to act in good faith or pursuant to any other standard imposed by this Agreement, any Group Member Agreement, any other agreement contemplated hereby or under the Delaware Act or any other law, rule or regulation or at equity. An amendment to this Agreement shall be effective upon its approval by the General Partner and, except as otherwise provided by Section 13.1 or Section 13.3, the holders of a Unit Majority, unless a greater or different percentage of Outstanding Units is required under this Agreement or by Delaware law. Each proposed amendment that requires the approval of the holders of a specified percentage of Outstanding Units shall be set forth in a writing that contains the text of the proposed amendment. If such an amendment is proposed, the General Partner shall seek the written approval of the requisite percentage of Outstanding Units or call a meeting of the Unitholders to consider and vote on such proposed amendment. The General Partner shall notify all Record Holders upon final adoption of any amendments. The General Partner shall be deemed to have notified all Record Holders as required by this Section 13.2 if it has either (i) filed such amendment with the Commission via its Electronic Data Gathering, Analysis and Retrieval system and such amendment is publicly available on such system or (ii) made such amendment available on any publicly available website maintained by the Partnership.

Section 13.3 Amendment Requirements

(a) Notwithstanding the provisions of Section 13.1 and Section 13.2, no provision of this Agreement that establishes a percentage of Outstanding Units (including Units deemed owned by the General Partner) required to take any action shall be amended, altered, changed, repealed or rescinded in any respect that would have the effect of (i) in the case of any provision of this Agreement other than Section 11.2 or Section 13.4, reducing such percentage or (ii) in the case of Section 11.2 or Section 13.4, increasing such percentages, unless such amendment is approved by the written consent or the affirmative vote of holders of Outstanding Units whose aggregate Outstanding Units constitute (x) in the case of a reduction as described in subclause (a)(i) hereof, not less than the voting requirement sought to be reduced, (y) in the case of an increase in the percentage in Section 11.2, not less than 90% of the Outstanding Units, or (z) in the case of an increase in the percentage in Section 13.4, not less than a majority of the Outstanding Units.

(b) Notwithstanding the provisions of Section 13.1 and Section 13.2, no amendment to this Agreement may (i) enlarge the obligations of any Limited Partner without its consent, unless such shall be deemed to have occurred as a result of an amendment approved pursuant to Section 13.3(c) or (ii) enlarge the obligations of, restrict in any way any action by or rights of, or reduce in any way the amounts distributable, reimbursable or otherwise payable to, the General Partner or any of its Affiliates without its consent, which consent may be given or withheld at its option.

 

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(c) Except as provided in Section 14.3, and without limitation of the General Partner’s authority to adopt amendments to this Agreement without the approval of any Partners as contemplated in Section 13.1, any amendment that would have a material adverse effect on the rights or preferences of any class of Partnership Interests in relation to other classes of Partnership Interests must be approved by the holders of not less than a majority of the Outstanding Partnership Interests of the class affected.

(d) Notwithstanding any other provision of this Agreement, except for amendments pursuant to Section 13.1 and except as otherwise provided by Section 14.3(b), no amendments shall become effective without the approval of the holders of at least 90% of the Outstanding Units voting as a single class unless the Partnership obtains an Opinion of Counsel to the effect that such amendment will not affect the limited liability of any Limited Partner under applicable partnership law of the state under whose laws the Partnership is organized.

(e) Except as provided in Section 13.1, this Section 13.3 shall only be amended with the approval of the holders of at least 90% of the Outstanding Units.

Section 13.4 Special Meetings

All acts of Limited Partners to be taken pursuant to this Agreement shall be taken in the manner provided in this Article XIII. Special meetings of the Limited Partners may be called by the General Partner or by Limited Partners owning 20% or more of the Outstanding Units of the class or classes for which a meeting is proposed. Limited Partners shall call a special meeting by delivering to the General Partner one or more requests in writing stating that the signing Limited Partners wish to call a special meeting and indicating the general or specific purposes for which the special meeting is to be called. Within 60 days after receipt of such a call from Limited Partners or within such greater time as may be reasonably necessary for the Partnership to comply with any statutes, rules, regulations, listing agreements or similar requirements governing the holding of a meeting or the solicitation of proxies for use at such a meeting, the General Partner shall send a notice of the meeting to the Limited Partners either directly or indirectly through the Transfer Agent. A meeting shall be held at a time and place determined by the General Partner on a date not less than 10 days nor more than 60 days after the time notice of the meeting is given as provided in Section 16.1. Limited Partners shall not vote on matters that would cause the Limited Partners to be deemed to be taking part in the management and control of the business and affairs of the Partnership so as to jeopardize the Limited Partners’ limited liability under the Delaware Act or the law of any other state in which the Partnership is qualified to do business.

Section 13.5 Notice of a Meeting

Notice of a meeting called pursuant to Section 13.4 shall be given to the Record Holders of the class or classes of Units for which a meeting is proposed in writing by mail or other means of written communication in accordance with Section 16.1. The notice shall be deemed to have been given at the time when deposited in the mail or sent by other means of written communication.

 

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Section 13.6 Record Date

For purposes of determining the Limited Partners entitled to notice of or to vote at a meeting of the Limited Partners or to give approvals without a meeting as provided in Section 13.11 the General Partner may set a Record Date, which shall not be less than 10 nor more than 60 days before (a) the date of the meeting (unless such requirement conflicts with any rule, regulation, guideline or requirement of any National Securities Exchange on which the Units are listed or admitted to trading or U.S. federal securities laws, in which case the rule, regulation, guideline or requirement of such National Securities Exchange or U.S. federal securities laws shall govern) or (b) in the event that approvals are sought without a meeting, the date by which Limited Partners are requested in writing by the General Partner to give such approvals. If the General Partner does not set a Record Date, then (a) the Record Date for determining the Limited Partners entitled to notice of or to vote at a meeting of the Limited Partners shall be the close of business on the day next preceding the day on which notice is given, and (b) the Record Date for determining the Limited Partners entitled to give approvals without a meeting shall be the date the first written approval is deposited with the Partnership in care of the General Partner in accordance with Section 13.11.

Section 13.7 Adjournment

When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting and a new Record Date need not be fixed, if the time and place thereof are announced at the meeting at which the adjournment is taken, unless such adjournment shall be for more than 45 days. At the adjourned meeting, the Partnership may transact any business which might have been transacted at the original meeting. If the adjournment is for more than 45 days or if a new Record Date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given in accordance with this Article XIII.

Section 13.8 Waiver of Notice; Approval of Meeting

The transactions of any meeting of Limited Partners, however called and noticed, and whenever held, shall be as valid as if it had occurred at a meeting duly held after regular call and notice, if a quorum is present either in person or by proxy. Attendance of a Limited Partner at a meeting shall constitute a waiver of notice of the meeting, except when the Limited Partner attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened; and except that attendance at a meeting is not a waiver of any right to disapprove the consideration of matters required to be included in the notice of the meeting, but not so included, if the disapproval is expressly made at the meeting.

Section 13.9 Quorum and Voting

The holders of a majority of the Outstanding Units of the class or classes for which a meeting has been called (including Outstanding Units deemed owned by the General Partner) represented in person or by proxy shall constitute a quorum at a meeting of Limited Partners of such class or classes unless any such action by the Limited Partners requires approval by holders of a greater percentage of such Units, in which case the quorum shall be such greater percentage.

 

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At any meeting of the Limited Partners duly called and held in accordance with this Agreement at which a quorum is present, the act of Limited Partners holding Outstanding Units that in the aggregate represent a majority of the Outstanding Units entitled to vote and be present in person or by proxy at such meeting shall be deemed to constitute the act of all Limited Partners, unless a greater or different percentage is required with respect to such action under the provisions of this Agreement, in which case the act of the Limited Partners holding Outstanding Units that in the aggregate represent at least such greater or different percentage shall be required. The Limited Partners present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment, notwithstanding the withdrawal of enough Limited Partners to leave less than a quorum, if any action taken (other than adjournment) is approved by the required percentage of Outstanding Units specified in this Agreement (including Outstanding Units deemed owned by the General Partner). In the absence of a quorum any meeting of Limited Partners may be adjourned from time to time by the affirmative vote of holders of at least a majority of the Outstanding Units entitled to vote at such meeting (including Outstanding Units deemed owned by the General Partner) that are represented at such meeting either in person or by proxy, but no other business may be transacted, except as provided in Section 13.7.

Section 13.10 Conduct of a Meeting

The General Partner shall have full power and authority concerning the manner of conducting any meeting of the Limited Partners or solicitation of approvals in writing, including the determination of Persons entitled to vote, the existence of a quorum, the satisfaction of the requirements of Section 13.4, the conduct of voting, the validity and effect of any proxies and the determination of any controversies, votes or challenges arising in connection with or during the meeting or voting. The General Partner shall designate a Person to serve as chairman of any meeting and shall further designate a Person to take the minutes of any meeting. All minutes shall be kept with the records of the Partnership maintained by the General Partner. The General Partner may make such other regulations consistent with applicable law and this Agreement as it may deem advisable concerning the conduct of any meeting of the Limited Partners or solicitation of approvals in writing, including regulations in regard to the appointment of proxies, the appointment and duties of inspectors of votes and approvals, the submission and examination of proxies and other evidence of the right to vote, and the revocation of approvals in writing.

Section 13.11 Action Without a Meeting

If authorized by the General Partner, any action that may be taken at a meeting of the Limited Partners may be taken without a meeting if an approval in writing setting forth the action so taken is signed by Limited Partners owning not less than the minimum percentage of the Outstanding Units (including Units deemed owned by the General Partner) that would be necessary to authorize or take such action at a meeting at which all the Limited Partners were present and voted (unless such provision conflicts with any rule, regulation, guideline or requirement of any National Securities Exchange on which the Units are listed or admitted to trading, in which case the rule, regulation, guideline or requirement of such National Securities Exchange shall govern). Prompt notice of the taking of action without a meeting shall be given to the Limited Partners who have not approved in writing. The General Partner may specify that any written ballot submitted to Limited Partners for the purpose of taking any action without a meeting shall be returned to the Partnership within the time period, which shall be not less than

 

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20 days, specified by the General Partner. If a ballot returned to the Partnership does not vote all of the Units held by the Limited Partners, the Partnership shall be deemed to have failed to receive a ballot for the Units that were not voted. If approval of the taking of any action by the Limited Partners is solicited by any Person other than by or on behalf of the General Partner, the written approvals shall have no force and effect unless and until (a) they are deposited with the Partnership in care of the General Partner, (b) approvals sufficient to take the action proposed are dated as of a date not more than 90 days prior to the date sufficient approvals are deposited with the Partnership and (c) an Opinion of Counsel is delivered to the General Partner to the effect that the exercise of such right and the action proposed to be taken with respect to any particular matter (i) will not cause the Limited Partners to be deemed to be taking part in the management and control of the business and affairs of the Partnership so as to jeopardize the Limited Partners’ limited liability, and (ii) is otherwise permissible under the state statutes then governing the rights, duties and liabilities of the Partnership and the Partners.

Section 13.12 Right to Vote and Related Matters

(a) Only those Record Holders of the Outstanding Units on the Record Date set pursuant to Section 13.6 (and also subject to the limitations contained in the definition of “ Outstanding ”) shall be entitled to notice of, and to vote at, a meeting of Limited Partners or to act with respect to matters as to which the holders of the Outstanding Units have the right to vote or to act. All references in this Agreement to votes of, or other acts that may be taken by, the Outstanding Units shall be deemed to be references to the votes or acts of the Record Holders of such Outstanding Units.

(b) With respect to Units that are held for a Person’s account by another Person (such as a broker, dealer, bank, trust company or clearing corporation, or an agent of any of the foregoing), in whose name such Units are registered, such other Person shall, in exercising the voting rights in respect of such Units on any matter, and unless the arrangement between such Persons provides otherwise, vote such Units in favor of, and at the direction of, the Person who is the beneficial owner, and the Partnership shall be entitled to assume it is so acting without further inquiry. The provisions of this Section 13.12(b) (as well as all other provisions of this Agreement) are subject to the provisions of Section 4.3.

ARTICLE XIV

MERGER, CONSOLIDATION OR CONVERSION

Section 14.1 Authority

The Partnership may merge or consolidate with or into one or more corporations, limited liability companies, statutory trusts or associations, real estate investment trusts, common law trusts or unincorporated businesses, including a partnership (whether general or limited (including a limited liability partnership)) or convert into any such entity, whether such entity is formed under the laws of the State of Delaware or any other state of the United States of America, pursuant to a written plan of merger or consolidation (“ Merger Agreement ”) or a written plan of conversion (“ Plan of Conversion ”), as the case may be, in accordance with this Article XIV.

 

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Section 14.2 Procedure for Merger, Consolidation or Conversion

(a) Merger, consolidation or conversion of the Partnership pursuant to this Article XIV requires the prior consent of the General Partner, provided, however , that, to the fullest extent permitted by law, the General Partner shall have no duty or obligation to consent to any merger, consolidation or conversion of the Partnership and may decline to do so free of any fiduciary duty or obligation whatsoever to the Partnership, any Limited Partner and, in declining to consent to a merger, consolidation or conversion, shall not be required to act in good faith or pursuant to any other standard imposed by this Agreement, any other agreement contemplated hereby or under the Act or any other law, rule or regulation or at equity.

(b) If the General Partner shall determine to consent to the merger or consolidation, the General Partner shall approve the Merger Agreement, which shall set forth:

(i) name and state of domicile of each of the business entities proposing to merge or consolidate;

(ii) the name and state of domicile of the business entity that is to survive the proposed merger or consolidation (the “ Surviving Business Entity ”);

(iii) the terms and conditions of the proposed merger or consolidation;

(iv) the manner and basis of exchanging or converting the equity securities of each constituent business entity for, or into, cash, property or interests, rights, securities or obligations of the Surviving Business Entity; and (i) if any general or limited partner interests, securities or rights of any constituent business entity are not to be exchanged or converted solely for, or into, cash, property or general or limited partner interests, rights, securities or obligations of the Surviving Business Entity, the cash, property or interests, rights, securities or obligations of any general or limited partnership, corporation, trust, limited liability company, unincorporated business or other entity (other than the Surviving Business Entity) which the holders of such general or limited partner interests, securities or rights are to receive in exchange for, or upon conversion of their interests, securities or rights, and (ii) in the case of securities represented by certificates, upon the surrender of such certificates, which cash, property or general or limited partner interests, rights, securities or obligations of the Surviving Business Entity or any general or limited partnership, corporation, trust, limited liability company, unincorporated business or other entity (other than the Surviving Business Entity), or evidences thereof, are to be delivered;

(v) a statement of any changes in the constituent documents or the adoption of new constituent documents (the articles or certificate of incorporation, articles of trust, declaration of trust, certificate or agreement of limited partnership, operating agreement or other similar charter or governing document) of the Surviving Business Entity to be effected by such merger or consolidation;

(vi) the effective time of the merger, which may be the date of the filing of the certificate of merger pursuant to Section 14.4 or a later date specified in or determinable in accordance with the Merger Agreement ( provided , that if the effective time of the merger is to be later than the date of the filing of such certificate of merger, the effective time shall be fixed at a date or time certain at or prior to the time of the filing of such certificate of merger and stated therein); and

 

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(vii) such other provisions with respect to the proposed merger or consolidation that the General Partner determines to be necessary or appropriate.

(c) If the General Partner shall determine to consent to the conversion, the General Partner shall approve the Plan of Conversion, which shall set forth:

(i) the name of the converting entity and the converted entity;

(ii) a statement that the Partnership is continuing its existence in the organizational form of the converted

(iii) a statement as to the type of entity that the converted entity is to be and the state or country under the laws of which the converted entity is to be incorporated, formed or organized;

(iv) the manner and basis of exchanging or converting the equity securities of each constituent business entity for, or into, cash, property or interests, rights, securities or obligations of the converted entity;

(v) in an attachment or exhibit, the certificate of limited partnership of the Partnership; and in an attachment or exhibit, the certificate of limited partnership, articles of incorporation, or other organizational documents of the converted entity;

(vi) the effective time of the conversion, which may be the date of the filing of the articles of conversion or a later date specified in or determinable in accordance with the Plan of Conversion ( provided , that if the effective time of the conversion is to be later than the date of the filing of such articles of conversion, the effective time shall be fixed at a date or time certain at or prior to the time of the filing of such articles of conversion and stated therein); and

(vii) such other provisions with respect to the proposed conversion that the General Partner determines to be necessary or appropriate.

Section 14.3 Approval by Limited Partners

(a) Except as provided in Section 14.3(d), the General Partner, upon its approval of the Merger Agreement or the Plan of Conversion, as the case may be, shall direct that the Merger Agreement or the Plan of Conversion, as applicable, be submitted to a vote of Limited Partners, whether at a special meeting or by written consent, in either case in accordance with the requirements of Article XIII. A copy or a summary of the Merger Agreement or the Plan of Conversion, as the case may be, shall be included in or enclosed with the notice of a special meeting or the written consent.

 

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(b) Except as provided in Section 14.3(d) and Section 14.3(e), the Merger Agreement or Plan of Conversion, as the case may be, shall be approved upon receiving the affirmative vote or consent of the holders of a Unit Majority unless the Merger Agreement or Plan of Conversion, as the case may be, effects an amendment to any provision of this Agreement that, if contained in an amendment to this Agreement adopted pursuant to Article XIII, would require for its approval the vote or consent of a greater percentage of the Outstanding Units or of any class of Limited Partners, in which case such greater percentage vote or consent shall be required for approval of the Merger Agreement or the Plan of Conversion, as the case may be.

(c) Except as provided in Section 14.3(d) and Section 14.3(e), after such approval by vote or consent of the Limited Partners, and at any time prior to the filing of the certificate of merger or articles of conversion pursuant to Section 14.4, the merger, consolidation or conversion may be abandoned pursuant to provisions therefor, if any, set forth in the Merger Agreement or Plan of Conversion, as the case may be.

(d) Notwithstanding anything else contained in this Article XIV or in this Agreement, the General Partner is permitted, without Limited Partner approval, to convert the Partnership or any Group Member into a new limited liability entity, to merge the Partnership or any Group Member into, or convey all of the Partnership’s assets to, another limited liability entity that shall be newly formed and shall have no assets, liabilities or operations at the time of such conversion, merger or conveyance other than those it receives from the Partnership or other Group Member if (i) the General Partner has received an Opinion of Counsel that the conversion, merger or conveyance, as the case may be, would not result in the loss of the limited liability of any Limited Partner as compared to its limited liability under the Delaware Act or cause the Partnership to be treated as an association taxable as a corporation or otherwise to be taxed as an entity for federal income tax purposes (to the extent not previously treated as such), (ii) the sole purpose of such conversion, merger, or conveyance is to effect a mere change in the legal form of the Partnership into another limited liability entity and (iii) the General Partner determines that the governing instruments of the new entity provide the Limited Partners and the General Partner with substantially the same rights and obligations as are herein contained.

(e) Additionally, notwithstanding anything else contained in this Article XIV or in this Agreement, the General Partner is permitted, without Limited Partner approval, to merge or consolidate the Partnership with or into another entity if (A) the General Partner has received an Opinion of Counsel that the merger or consolidation, as the case may be, would not result in the loss of the limited liability of any Limited Partner as compared to its limited liability under the Delaware Act or cause the Partnership to be treated as an association taxable as a corporation or otherwise to be taxed as an entity for federal income tax purposes (to the extent not previously treated as such), (B) the merger or consolidation would not result in an amendment to this Agreement, other than any amendments that could be adopted pursuant to Section 13.1, (C) the Partnership is the Surviving Business Entity in such merger or consolidation, (D) each Unit outstanding immediately prior to the effective date of the merger or consolidation is to be an identical Unit of the Partnership after the effective date of the merger or consolidation, and (E) the number of Partnership Securities to be issued by the Partnership in such merger or consolidation does not exceed 20% of the Partnership Securities Outstanding immediately prior to the effective date of such merger or consolidation.

 

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(f) Pursuant to Section 17-211(g) of the Delaware Act, an agreement of merger or consolidation approved in accordance with this Article XIV may (a) effect any amendment to this Agreement or (b) effect the adoption of a new partnership agreement for the Partnership if it is the Surviving Business Entity. Any such amendment or adoption made pursuant to this Section 14.3 shall be effective at the effective time or date of the merger or consolidation.

Section 14.4 Certificate of Merger or Articles of Conversion

Upon the required approval by the General Partner and the Unitholders of a Merger Agreement or the Plan of Conversion, as the case may be, a certificate of merger or certificate of conversion, as applicable, shall be executed and filed with the Secretary of State of the State of Delaware in conformity with the requirements of the Delaware Act.

Section 14.5 Effect of Merger, Consolidation or Conversion

(a) At the effective time of the merger:

(i) all of the rights, privileges and powers of each of the business entities that has merged or consolidated, and all property, real, personal and mixed, and all debts due to any of those business entities and all other things and causes of action belonging to each of those business entities, shall be vested in the Surviving Business Entity and after the merger or consolidation shall be the property of the Surviving Business Entity to the extent they were of each constituent business entity;

(ii) the title to any real property vested by deed or otherwise in any of those constituent business entities shall not revert and is not in any way impaired because of the merger or consolidation;

(iii) all rights of creditors and all liens on or security interests in property of any of those constituent business entities shall be preserved unimpaired; and

(iv) all debts, liabilities and duties of those constituent business entities shall attach to the Surviving Business Entity and may be enforced against it to the same extent as if the debts, liabilities and duties had been incurred or contracted by it.

(b) At the effective time of the conversion:

(i) the Partnership shall continue to exist, without interruption, but in the organizational form of the converted entity rather than in its prior organizational form;

(ii) all rights, title, and interests to all real estate and other property owned by the Partnership shall continue to be owned by the converted entity in its new organizational form without reversion or impairment, without further act or deed, and without any transfer or assignment having occurred, but subject to any existing liens or other encumbrances thereon;

 

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(iii) all liabilities and obligations of the Partnership shall continue to be liabilities and obligations of the converted entity in its new organizational form without impairment or diminution by reason of the conversion;

(iv) all rights of creditors or other parties with respect to or against the prior interest holders or other owners of the Partnership in their capacities as such in existence as of the effective time of the conversion will continue in existence as to those liabilities and obligations and may be pursued by such creditors and obligees as if the conversion did not occur;

(v) a proceeding pending by or against the Partnership or by or against any of Partners in their capacities as such may be continued by or against the converted entity in its new organizational form and by or against the prior partners without any need for substitution of parties; and

(vi) the Partnership Units that are to be converted into partnership interests, shares, evidences of ownership, or other securities in the converted entity as provided in the plan of conversion shall be so converted, and Partners shall be entitled only to the rights provided in the Plan of Conversion.

ARTICLE XV

RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS

Section 15.1 Right to Acquire Limited Partner Interests

(a) Notwithstanding any other provision of this Agreement, if at any time the General Partner and its Affiliates hold more than 75% of the total Limited Partner Interests of any class then Outstanding, the General Partner shall then have the right, which right it may assign and transfer in whole or in part to the Partnership or any Affiliate of the General Partner, exercisable at its option, to purchase all, but not less than all, of such Limited Partner Interests of such class then Outstanding held by Persons other than the General Partner and its Affiliates, at the greater of (x) the Current Market Price as of the date three days prior to the date that the notice described in Section 15.1(b) is mailed and (y) the highest price paid by the General Partner or any of its Affiliates for any such Limited Partner Interest of such class purchased during the 90-day period preceding the date that the notice described in Section 15.1(b) is mailed. As used in this Agreement, (i) “ Current Market Price ” as of any date of any class of Limited Partner Interests means the average of the daily Closing Prices (as hereinafter defined) per Limited Partner Interest of such class for the 20 consecutive Trading Days (as hereinafter defined) immediately prior to such date; (ii) “ Closing Price ” for any day means the last sale price on such day, regular way, or in case no such sale takes place on such day, the average of the closing bid and asked prices on such day, regular way, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal National Securities Exchange (other than the Nasdaq Stock Market) on which such Limited Partner Interests are listed or admitted to trading or, if such Limited Partner Interests of such class are not listed or admitted to trading on any National Securities Exchange (other than the Nasdaq Stock Market), the last quoted price on such day or, if not so quoted, the average of the high bid and low asked prices on such day in the

 

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over-the-counter market, as reported by the Nasdaq Stock Market or such other system then in use, or, if on any such day such Limited Partner Interests of such class are not quoted by any such organization, the average of the closing bid and asked prices on such day as furnished by a professional market maker making a market in such Limited Partner Interests of such class selected by the General Partner, or if on any such day no market maker is making a market in such Limited Partner Interests of such class, the fair value of such Limited Partner Interests on such day as determined by the General Partner; and (iii) “ Trading Day ” means a day on which the principal National Securities Exchange on which such Limited Partner Interests of any class are listed or admitted for trading is open for the transaction of business or, if Limited Partner Interests of a class are not listed or admitted for trading on any National Securities Exchange, a day on which banking institutions in New York City generally are open.

(b) If the General Partner, any Affiliate of the General Partner or the Partnership elects to exercise the right to purchase Limited Partner Interests granted pursuant to Section 15.1(a), the General Partner shall deliver to the Transfer Agent notice of such election to purchase (the “ Notice of Election to Purchase ”) and shall cause the Transfer Agent to mail a copy of such Notice of Election to Purchase to the Record Holders of Limited Partner Interests of such class (as of a Record Date selected by the General Partner) at least 10, but not more than 60, days prior to the Purchase Date. Such Notice of Election to Purchase shall also be published for a period of at least three consecutive days in at least two daily newspapers of general circulation printed in the English language and published in the Borough of Manhattan, New York. The Notice of Election to Purchase shall specify the Purchase Date and the price (determined in accordance with Section 15.1(a)) at which Limited Partner Interests will be purchased and state that the General Partner, its Affiliate or the Partnership, as the case may be, elects to purchase such Limited Partner Interests, upon surrender of Certificates representing such Limited Partner Interests in exchange for payment, at such office or offices of the Transfer Agent as the Transfer Agent may specify, or as may be required by any National Securities Exchange on which such Limited Partner Interests are listed. Any such Notice of Election to Purchase mailed to a Record Holder of Limited Partner Interests at his address as reflected in the records of the Transfer Agent shall be conclusively presumed to have been given regardless of whether the owner receives such notice. On or prior to the Purchase Date, the General Partner, its Affiliate or the Partnership, as the case may be, shall deposit with the Transfer Agent cash in an amount sufficient to pay the aggregate purchase price of all of such Limited Partner Interests to be purchased in accordance with this Section 15.1. If the Notice of Election to Purchase shall have been duly given as aforesaid at least 10 days prior to the Purchase Date, and if on or prior to the Purchase Date the deposit described in the preceding sentence has been made for the benefit of the holders of Limited Partner Interests subject to purchase as provided herein, then from and after the Purchase Date, notwithstanding that any Certificate shall not have been surrendered for purchase, all rights of the holders of such Limited Partner Interests (including any rights pursuant to Article IV, Article V, Article VI, and Article XII) shall thereupon cease, except the right to receive the purchase price (determined in accordance with Section 15.1(a)) for Limited Partner Interests therefor, without interest, upon surrender to the Transfer Agent of the Certificates representing such Limited Partner Interests, and such Limited Partner Interests shall thereupon be deemed to be transferred to the General Partner, its Affiliate or the Partnership, as the case may be, on the record books of the Transfer Agent and the Partnership, and the General Partner or any Affiliate of the General Partner, or the Partnership, as the case may be, shall be deemed to be the owner of all such Limited Partner Interests from and after the Purchase Date and shall have all rights as the owner of such Limited Partner Interests (including all rights as owner of such Limited Partner Interests pursuant to Article IV, Article V, Article VI, and Article XII).

 

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(c) At any time from and after the Purchase Date, a holder of an Outstanding Limited Partner Interest subject to purchase as provided in this Section 15.1 may surrender his Certificate evidencing such Limited Partner Interest to the Transfer Agent in exchange for payment of the amount described in Section 15.1(a), therefor, without interest thereon.

ARTICLE XVI

GENERAL PROVISIONS

Section 16.1 Addresses and Notices; Written Communications

(a) Any notice, demand, request, report or proxy materials required or permitted to be given or made to a Partner under this Agreement shall be in writing and shall be deemed given or made when delivered in person or when sent by first class United States mail or by other means of written communication to the Partner at the address described below. Any notice, payment or report to be given or made to a Partner hereunder shall be deemed conclusively to have been given or made, and the obligation to give such notice or report or to make such payment shall be deemed conclusively to have been fully satisfied, upon sending of such notice, payment or report to the Record Holder of such Partnership Securities at his address as shown on the records of the Transfer Agent or as otherwise shown on the records of the Partnership, regardless of any claim of any Person who may have an interest in such Partnership Securities by reason of any assignment or otherwise. An affidavit or certificate of making of any notice, payment or report in accordance with the provisions of this Section 16.1 executed by the General Partner, the Transfer Agent or the mailing organization shall be prima facie evidence of the giving or making of such notice, payment or report. If any notice, payment or report addressed to a Record Holder at the address of such Record Holder appearing on the books and records of the Transfer Agent or the Partnership is returned by the United States Postal Service marked to indicate that the United States Postal Service is unable to deliver it, such notice, payment or report and any subsequent notices, payments and reports shall be deemed to have been duly given or made without further mailing (until such time as such Record Holder or another Person notifies the Transfer Agent or the Partnership of a change in his address) if they are available for the Partner at the principal office of the Partnership for a period of one year from the date of the giving or making of such notice, payment or report to the other Partners. Any notice to the Partnership shall be deemed given if received by the General Partner at the principal office of the Partnership designated pursuant to Section 2.3. The General Partner may rely and shall be protected in relying on any notice or other document from a Partner or other Person if believed by it to be genuine.

(b) The terms “in writing”, “written communications,” “written notice” and words of similar import shall be deemed satisfied under this Agreement by use of e-mail and other forms of electronic communication.

 

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Section 16.2 Further Action

The parties shall execute and deliver all documents, provide all information and take or refrain from taking action as may be necessary or appropriate to achieve the purposes of this Agreement.

Section 16.3 Binding Effect

This Agreement shall be binding upon and inure to the benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives and permitted assigns.

Section 16.4 Integration

This Agreement constitutes the entire agreement among the parties hereto pertaining to the subject matter hereof and supersedes all prior agreements and understandings pertaining thereto.

Section 16.5 Creditors

None of the provisions of this Agreement shall be for the benefit of, or shall be enforceable by, any creditor of the Partnership.

Section 16.6 Waiver

No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute waiver of any such breach of any other covenant, duty, agreement or condition.

Section 16.7 Third-Party Beneficiaries

Each Partner agrees that (a) any Indemnitee shall be entitled to assert rights and remedies hereunder as a third-party beneficiary hereto with respect to those provisions of this Agreement affording a right, benefit or privilege to such Indemnitee and (b) any Unrestricted Person shall be entitled to assert rights and remedies hereunder as a third-party beneficiary hereto with respect to those provisions of this Agreement affording a right, benefit or privilege to such Unrestricted Person.

Section 16.8 Counterparts

This Agreement may be executed in counterparts, all of which together shall constitute an agreement binding on all the parties hereto, notwithstanding that all such parties are not signatories to the original or the same counterpart. Each party shall become bound by this Agreement immediately upon affixing its signature hereto or, in the case of a Person acquiring a Limited Partner Interest, pursuant to Section 10.1(a) or (b) without execution hereof.

 

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Section 16.9 Applicable Law

(a) This Agreement shall be construed in accordance with and governed by the laws of the State of Delaware, without regard to the principles of conflicts of law.

(b) Each of the Partners and each Person holding any beneficial interest in the Partnership (whether through a broker, dealer, bank, trust company or clearing corporation or an agent of any of the foregoing or otherwise):

(i) irrevocably agrees that any claims, suits, actions or proceedings (A) arising out of or relating in any way to this Agreement (including any claims, suits or actions to interpret, apply or enforce the provisions of this Agreement or the duties, obligations or liabilities among Partners or of Partners to the Partnership, or the rights or powers of, or restrictions on, the Partners or the Partnership), (B) brought in a derivative manner on behalf of the Partnership, (C) asserting a claim of breach of a fiduciary duty owed by any director, officer, or other employee of the Partnership or the General Partner, or owed by the General Partner, to the Partnership or the Partners, (D) asserting a claim arising pursuant to any provision of the Delaware Act or (E) asserting a claim governed by the internal affairs doctrine shall be exclusively brought in the Court of Chancery of the State of Delaware, in each case regardless of whether such claims, suits, actions or proceedings sound in contract, tort, fraud or otherwise, are based on common law, statutory, equitable, legal or other grounds, or are derivative or direct claims;

(i) irrevocably submits to the exclusive jurisdiction of the Court of Chancery of the State of Delaware in connection with any such claim, suit, action or proceeding;

(ii) agrees not to, and waives any right to, assert in any such claim, suit, action or proceeding that (A) it is not personally subject to the jurisdiction of the Court of Chancery of the State of Delaware or of any other court to which proceedings in the Court of Chancery of the State of Delaware may be appealed, (B) such claim, suit, action or proceeding is brought in an inconvenient forum, or (C) the venue of such claim, suit, action or proceeding is improper;

(iii) expressly waives any requirement for the posting of a bond by a party bringing such claim, suit, action or proceeding; and

(iv) consents to process being served in any such claim, suit, action or proceeding by mailing, certified mail, return receipt requested, a copy thereof to such party at the address in effect for notices hereunder, and agrees that such services shall constitute good and sufficient service of process and notice thereof; provided , nothing in clause (v) hereof shall affect or limit any right to serve process in any other manner permitted by law.

Section 16.10 Invalidity of Provisions

If any provision or part of a provision of this Agreement is or becomes for any reason, invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions and/or parts thereof contained herein shall not be affected thereby and this

 

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Agreement shall, to the fullest extent permitted by law, be reformed and construed as if such invalid, illegal or unenforceable provision, or part of a provision, had never been contained herein, and such provisions and/or part shall be reformed so that it would be valid, legal and enforceable to the maximum extent possible.

Section 16.11 Consent of Partners

Each Partner hereby expressly consents and agrees that, whenever in this Agreement it is specified that an action may be taken upon the affirmative vote or consent of less than all of the Partners, such action may be so taken upon the concurrence of less than all of the Partners and each Partner shall be bound by the results of such action.

Section 16.12 Facsimile and Email Signatures

The use of facsimile signatures and signatures delivered by email in portable document format (.pdf) affixed in the name and on behalf of the transfer agent and registrar of the Partnership on certificates representing Common Units is expressly permitted by this Agreement.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]

 

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

 

GENERAL PARTNER:
TESORO LOGISTICS GP, LLC
By:  

/s/ Steven M. Sterin

Name: Steven M. Sterin
Title: President and Chief Financial Officer

 

LIMITED PARTNERS :
All Limited Partners now and hereafter admitted as Limited Partners of the Partnership, pursuant to powers of attorney now and hereafter executed in favor of, and granted and delivered to the General Partner

 

TESORO LOGISTICS GP, LLC
By:  

/s/ Steven M. Sterin

Name: Steven M. Sterin
Title: President and Chief Financial Officer

 

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EXHIBIT A

to the Second Amended and Restated

Agreement of Limited Partnership of

Andeavor Logistics LP

Certificate Evidencing Common Units

Representing Limited Partner Interests in

Andeavor Logistics LP

 

No.                          

  

                              Common Units

In accordance with Section 4.1 of the Second Amended and Restated Agreement of Limited Partnership of Andeavor Logistics LP, as amended, supplemented or restated from time to time (the “ Partnership Agreement ”), Andeavor Logistics LP, a Delaware limited partnership (the “ Partnership ”), hereby certifies that (the “ Holder ”) is the registered owner of Common Units representing limited partner interests in the Partnership (the “ Common Units ”) transferable on the books of the Partnership, in person or by duly authorized attorney, upon surrender of this Certificate properly endorsed. The rights, preferences and limitations of the Common Units are set forth in, and this Certificate and the Common Units represented hereby are issued and shall in all respects be subject to the terms and provisions of, the Partnership Agreement. Copies of the Partnership Agreement are on file at, and will be furnished without charge on delivery of written request to the Partnership at, the principal office of the Partnership located at 19100 Ridgewood Parkway, San Antonio, Texas 78259. Capitalized terms used herein but not defined shall have the meanings given them in the Partnership Agreement.

THE HOLDER OF THIS SECURITY ACKNOWLEDGES FOR THE BENEFIT OF ANDEAVOR LOGISTICS LP THAT THIS SECURITY MAY NOT BE SOLD, OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED IF SUCH TRANSFER WOULD (A) VIOLATE THE THEN APPLICABLE FEDERAL OR STATE SECURITIES LAWS OR RULES AND REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER GOVERNMENTAL AUTHORITY WITH JURISDICTION OVER SUCH TRANSFER, (B) TERMINATE THE EXISTENCE OR QUALIFICATION OF ANDEAVOR LOGISTICS LP UNDER THE LAWS OF THE STATE OF DELAWARE, OR (C) CAUSE ANDEAVOR LOGISTICS LP TO BE TREATED AS AN ASSOCIATION TAXABLE AS A CORPORATION OR OTHERWISE TO BE TAXED AS AN ENTITY FOR FEDERAL INCOME TAX PURPOSES (TO THE EXTENT NOT ALREADY SO TREATED OR TAXED). TESORO LOGISTICS GP, LLC, THE GENERAL PARTNER OF ANDEAVOR LOGISTICS LP, MAY IMPOSE ADDITIONAL RESTRICTIONS ON THE TRANSFER OF THIS SECURITY IF IT RECEIVES AN OPINION OF COUNSEL THAT SUCH RESTRICTIONS ARE NECESSARY TO AVOID A SIGNIFICANT RISK OF ANDEAVOR LOGISTICS LP BECOMING TAXABLE AS A CORPORATION OR OTHERWISE BECOMING TAXABLE AS AN ENTITY FOR FEDERAL INCOME TAX PURPOSES. THE RESTRICTIONS SET FORTH ABOVE SHALL NOT PRECLUDE THE SETTLEMENT OF ANY TRANSACTIONS INVOLVING THIS SECURITY ENTERED INTO THROUGH THE FACILITIES OF ANY NATIONAL SECURITIES EXCHANGE ON WHICH THIS SECURITY IS LISTED OR ADMITTED TO TRADING.

 

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The Holder, by accepting this Certificate, is deemed to have (i) requested admission as, and agreed to become, a Limited Partner and to have agreed to comply with and be bound by and to have executed the Partnership Agreement, (ii) represented and warranted that the Holder has all right, power and authority and, if an individual, the capacity necessary to enter into the Partnership Agreement, (iii) granted the powers of attorney provided for in the Partnership Agreement and (iv) made the waivers and given the consents and approvals contained in the Partnership Agreement.

This Certificate shall not be valid for any purpose unless it has been countersigned and registered by the Transfer Agent and Registrar.

 

Dated:                                    

Andeavor Logistics LP

 

By: Tesoro Logistics GP, LLC

 

By:                                                                  

    Chief Executive Officer

 

By:                                                                  

    Secretary

Countersigned and Registered by:

 

as Transfer Agent and Registrar

 

By:                                                              

    Authorized Signature

  

 

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[Reverse of Certificate]

ABBREVIATIONS

The following abbreviations, when used in the inscription on the face of this Certificate, shall be construed as follows according to applicable laws or regulations:

 

TEN COM - as tenants in common    UNIF GIFT/TRANSFERS MIN ACT
                                                      Custodian
TEN ENT - as tenants by the entireties   

 

   (Cust)                                                                          (Minor)
JT TEN - as joint tenants with right of survivorship and not as tenants in common    under Uniform Gifts/Transfers to CD Minors Act (State)

Additional abbreviations, though not in the above list, may also be used.

 

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ASSIGNMENT OF COMMON UNITS OF

ANDEAVOR LOGISTICS LP

FOR VALUE RECEIVED,                      hereby assigns, conveys, sells and transfers unto

 

    

 

(Please print or typewrite name and address of assignee)         (Please insert Social Security or other identifying number of assignee)

             Common Units representing limited partner interests evidenced by this Certificate, subject to the Partnership Agreement, and does hereby irrevocably constitute and appoint              as its attorney-in-fact with full power of substitution to transfer the same on the books of Andeavor Logistics LP.

 

  Date:                   

NOTE: The signature to any endorsement hereon must correspond with the name as written upon the face of this Certificate in every particular, without alteration, enlargement or change.

 

   

 

(Signature)

 

   

 

(Signature)

THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15

 

No transfer of the Common Units evidenced hereby will be registered on the books of the Partnership, unless the Certificate evidencing the Common Units to be transferred is surrendered for registration or transfer.

 

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Exhibit 10.2

Final Execution Version

FOURTH AMENDED AND RESTATED OMNIBUS AGREEMENT

This FOURTH AMENDED AND RESTATED OMNIBUS AGREEMENT (the “ Agreement ”) is entered into on, and effective as of October 30, 2017, among Andeavor, a Delaware corporation (“ Andeavor ”), on behalf of itself and the other Andeavor Entities (as defined herein), Tesoro Refining & Marketing Company LLC, a Delaware limited liability company and formerly known as Tesoro Refining and Marketing Company (“ TRMC ”), Tesoro Companies, Inc., a Delaware corporation (“ Tesoro Companies ”), Tesoro Alaska Company LLC, a Delaware limited liability company and formerly known as Tesoro Alaska Company (“ Tesoro Alaska ”), Andeavor Logistics LP, a Delaware limited partnership (the “ Partnership ”), and Tesoro 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 .”

R E C I T A L S:

1. The Parties executed that certain Third Amended and Restated Omnibus Agreement dated as of July 1, 2014, as amended by that certain Amendment No. 1 to Third Amended and Restated Omnibus Agreement dated as of February 20, 2015, and effective as of December 31, 2014, and Amendment No. 2 to Third Amended and Restated Omnibus Agreement dated as of August 3, 2015, and effective as of July 1, 2015 (collectively, the “ Third Omnibus Agreement ”).

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

3. The Parties desired by their execution of the Third Omnibus 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.

4. The Parties desired by their execution of the Third Omnibus 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 Andeavor Entities (as defined herein) for and on behalf of the Partnership Group (as defined herein).

5. The Parties desired by their execution of the Third Omnibus Agreement to evidence their understanding, as more fully set forth in Article V , with respect to certain maintenance capital and other expenditures to be reimbursed by the Andeavor Entities to the Partnership Group.

6. The Parties desired by their execution of the Third Omnibus 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).


7. The Parties desired by their execution of the Third Omnibus Agreement to evidence their understanding, as more fully set forth in Article VII , with respect to the granting of a license from Andeavor to the Partnership Group and the General Partner.

8. The Parties desired by their execution of the Third Omnibus Agreement to evidence their understanding, as more fully set forth in Article VIII , with respect to the transfer of the Represented Employees (as defined herein) from the Andeavor Entities to the General Partner and the Partnership Group’s right to use certain vehicles leased by the General Partner.

9. The Parties desire to amend and restate the Third Omnibus Agreement to allow, among other items, for the change of names from Tesoro Corporation to Andeavor and Tesoro Logistics LP to Andeavor Logistics LP, for the addition of additional companies into the Andeavor Entities and the Partnership Group.

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:

Administrative Fee ” is defined in Section 4.1 .

Affiliate ” is defined in the Partnership Agreement.

Andeavor Entities ” means Andeavor and any Person Controlled, directly or indirectly, by Andeavor other than the General Partner or a Partnership Group Member; and “ Andeavor Entity ” means any of the Andeavor Entities.

Andeavor Indemnifying Parties ” is defined in Section 3.1(a) .

Andeavor Indemnified Parties ” is defined in Section 3.4 .

Annual Environmental Deductible ” is defined in Section 3.7 .

Annual ROW Deductible ” is defined in Section 3.7 .

Assets ” means all logistics assets, including, but not limited to, all gathering pipelines, transportation pipelines, storage tanks, trucks, truck racks, terminal facilities, wharves, rail tracks, offices and related equipment, real estate and other assets, or portions thereof, (i) conveyed, contributed or otherwise transferred or intended to be conveyed, contributed or otherwise transferred pursuant to a Contribution Agreement to any member of the Partnership Group, or, with respect to a Contribution Agreement, 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 applicable Closing Date or (ii) owned by WNRL on the Closing Date of the Merger Agreement and acquired by the Partnership pursuant to the Merger Agreement by virtue of its acquisition of WNRL thereunder.

 

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Closing Date ” means the applicable date for each Contribution Agreement as set forth on Schedule VII to this Agreement, and October 30, 2017 for the Merger Agreement.

Conflicts Committee ” is defined in the Partnership Agreement.

Contribution Agreement ” means the applicable contribution agreement identified on Schedule VII to this Agreement as a Contribution Agreement, together with all the applicable additional conveyance documents and instruments contemplated or referenced thereunder, but specifically excluding the Merger Agreement.

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 (a) through ownership of 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 or other governing body of such Person, (b) by contract, or (c) otherwise.

Covered Environmental Losses ” is defined in Section 3.1 .

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 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.

First Deadline Date ” means the applicable date for each Contribution Agreement set forth on Schedule VII to this Agreement.

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.

 

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Identification Deadline ” means the later of (a) the First Deadline Date, and (b) the earlier of (i) the Second Deadline Date and (ii) the occurrence of a Partnership Change of Control.

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

Indemnifying Party ” means with respect to a Contribution Agreement or the Merger Agreement, the Partnership Group or the Andeavor Indemnifying Parties, as the case may be, in their respective capacity as the party from whom indemnification may be sought in accordance with Article III .

Legacy Western Employees ” means any employee employed by the Legacy Western Employers.

Legacy Western Employers ” mean Western Refining Company, L.P., Western Refining Southwest, Inc., or St. Paul Park Refining Co. LLC.

License ” is defined in Section 7.1 .

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 7.1 .

Merger Agreement ” means that certain Merger Agreement, dated as of August 13, 2017, by and among Andeavor Logistics LP, the General Partner, Western Refining Logistics, LP, Western Refining Logistics GP, LLC, WNRL Merger Sub LLC and WNRL GP Merger Sub LLC.

Names ” is defined in Section 7.1 .

Non-Covered Environmental Losses ” is defined in Section 3.1(b) .

Offer ” is defined in Section 2.3 .

Partnership Agreement ” means the Second Amended and Restated Agreement of Limited Partnership of Andeavor Logistics LP dated as of October 30, 2011.

Partnership Change of Control ” means Andeavor 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.

 

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

Partnership Security ” is defined in the Partnership Agreement.

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

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 Rate Regulatory Agencies ” means the applicable federal, state and local governmental or regulatory agencies having jurisdiction over rates to be charged for services provided with respect to the Assets contributed under a Contribution Agreement.

Proposed Transaction ” is defined in Section 6.2(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, terminalling and rail industries and (b) the standards applied or followed by the Andeavor Entities in the performance of similar tasks or projects, or by the General Partner or the Partnership Group in the performance of similar tasks or projects.

Represented Employees ” is defined in Section 8.1(a) .

Retained Assets ” means with respect to a particular Contribution Agreement, all assets owned by any of the Andeavor Entities that were not directly or indirectly conveyed, contributed or otherwise transferred to the Partnership Group pursuant to that Contribution Agreement or the other documents referred to in that Contribution Agreement; provided, however, that once any such assets have been directly or indirectly conveyed, contributed or otherwise transferred to the Partnership Group pursuant to any other Contribution Agreement or the other documents referred to in any other Contribution Agreement, such assets shall not be included in the definition of “Retained Assets” for purposes of the first-referenced Contribution Agreement in this definition with respect to the period on or after the Closing Date under that other Contribution Agreement.

ROFO Asset Owner ” means, with respect to a ROFO Asset, the applicable Andeavor 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 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) .

Second Deadline Date ” means the applicable date for each Contribution Agreement as set forth on Schedule VII to this Agreement.

 

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Schedules ” means Schedules I through VII attached to this Agreement, as may be amended and restated pursuant to Section 9.2 .

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

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.

Third Omnibus Agreement ” is defined in the recitals to this Agreement.

Third Deadline Date ” means the applicable date for each Contribution Agreement as set forth on Schedule VII to this Agreement.

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

WNRL ” means, collectively, Western Refining Logistics, LP, a Delaware limited partnership, Western Refining Logistics GP, LLC, a Delaware limited liability company, and their respective Subsidiaries.

ARTICLE II

BUSINESS OPPORTUNITIES

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

2.2 Permitted Exceptions . Notwithstanding any provision of Section 2.1 to the contrary, the Andeavor Entities may engage in the following activities under the following circumstances:

(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 acquired or constructed by an Andeavor Entity and that is (i) within, directly connected to, substantially dedicated to, or an integral part of, any refinery owned, acquired or constructed by an Andeavor Entity or (ii) acquired or constructed by an Andeavor Entity to replace an Asset of the Partnership Group that no longer provides services to any Andeavor Entity due to the occurrence of a force majeure event under a commercial contract between one or more Andeavor Entities and one or more members of the Partnership Group that prevents the Partnership Group from providing services under such commercial contract;

(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 an Andeavor Entity after April 26, 2011 (the “ Subject Assets ”) if:

(i) the fair market value of the Subject Assets (as determined in good faith by the Board of Directors, or other governing body, of the Andeavor Entity that will own the Subject Assets) is less than $5 million at the time of such acquisition by the Andeavor Entity or completion of construction, as the case may be; or

(ii) in the case of an acquisition or the construction of Subject Assets with a fair market value (as determined in good faith by the Board of Directors, or other governing body, of the Andeavor Entity that will own the Subject Assets) equal to or greater than $5 million at the time of such acquisition by an Andeavor 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; and

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

 

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2.3 Procedures .

(a) If an Andeavor 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 Andeavor Entity of the Subject Assets, as the case may be, the Andeavor 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 Andeavor Entity desires to utilize the Subject Assets, the Offer will also include the terms on which the Partnership Group will provide services to the Andeavor Entity to enable the Andeavor Entity to utilize the Subject Assets. As soon as practicable, but in any event within 60 days after receipt of the Offer, the General Partner shall notify the Andeavor 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 the Andeavor Entity shall be forever free to continue to own or operate such Subject Assets, 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 the Andeavor 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 Andeavor Entity to enable the Andeavor Entity to utilize the Subject Assets, within 60 days after receipt by the General Partner of the Offer, 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 Andeavor Entity to provide services in a manner consistent with the Offer.

(c) If the Andeavor 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 Andeavor Entity to enable the Andeavor Entity to utilize the Subject Assets, within 60 days after receipt by the General Partner of the Offer, the Andeavor 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 Andeavor 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 Andeavor Entity are unable to agree within 30 days of its engagement and furnish the Andeavor Entity and the General Partner its determination. The fees of the investment banking firm will be split equally between the Andeavor 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 Andeavor Entity are unable to agree, the General Partner will have the right, but not the obligation to cause a Partnership Group Member 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 a Partnership Group Member to purchase the Subject Assets, then the Partnership Group Member 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 Andeavor Entity to provide services in a manner consistent with the Offer, as modified by the determination of the investment banking firm.

 

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2.4 Scope of Prohibition . Except as provided in this Article II and the Partnership Agreement, each Andeavor 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 Andeavor Entities agree and acknowledge that the Partnership Group does not have an adequate remedy at law for the breach by the Andeavor Entities of the covenants and agreements set forth in this Article II , and that any breach by the Andeavor Entities of the covenants and agreements set forth in this Article II would result in irreparable injury to the Partnership Group. The Andeavor 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 Andeavor Entities from such breach, and consent to the issuance of injunctive relief under this Agreement.

ARTICLE III

INDEMNIFICATION

3.1 Environmental Indemnification .

(a) Subject to Section 3.2 and Section 3.7 and with respect to Assets conveyed, contributed or otherwise transferred pursuant to a Contribution Agreement, each of the Andeavor Entities set forth on Schedule VII attached to this Agreement with respect to that Contribution Agreement (the “ Andeavor Indemnifying Parties ”), severally and not jointly, 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 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 of any environmental or toxic tort pre-trial, trial, or appellate legal or litigation support work;

(iii) any event, condition or environmental matter or legal action pending as of the applicable Closing Date against the Andeavor Entities, a true and correct summary of which with respect to Assets conveyed, contributed or otherwise transferred pursuant to a particular Contribution Agreement is described on Schedule I to this Agreement; and

 

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(iv) any event, condition or environmental matter associated with or arising from the Retained Assets, whether occurring before or after the applicable 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 conveyed, contributed or otherwise transferred pursuant to a particular Contribution Agreement, the Andeavor Indemnifying Parties will be obligated to indemnify the Partnership Group only to the extent that such violation, event, condition or environmental matter (x) occurred before the Closing Date for that Contribution Agreement under then-applicable Environmental Laws and (y)(i) such violation, event, condition or environmental matter is set forth on Schedule II to this Agreement or (ii) Andeavor is notified in writing of such violation, event, condition or environmental matter prior to the applicable Identification Deadline ( Sections 3.1(a)(i) through (iv)  collectively, with respect to that Contribution Agreement being “ Covered Environmental Losses ”).

(b) The Partnership Group shall indemnify, defend and hold harmless the Andeavor Entities from and against any Losses suffered or incurred by the Andeavor Entities, 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 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 applicable 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 the Andeavor Indemnifying Parties under this Article III without giving effect to the Annual Environmental Deductible. The Losses covered by this Section 3.1(b) are hereinafter referred to as ‘ Non-Covered Environmental Losses .”

3.2 Right of Way Indemnification . Subject to Section 3.7 , and with respect to Assets conveyed, contributed or otherwise transferred pursuant to a particular Contribution Agreement, each of the Andeavor Indemnifying Parties as set forth on Schedule VII with respect to that Contribution Agreement, severally and not jointly, 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 (or other

 

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party specified on Schedule VII ) 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, wharf, storage tank, terminal, rail tracks or truck rack or any related facility or equipment conveyed or contributed to the applicable Partnership Group Member on the applicable Closing Date is located as of such 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 Andeavor Entity immediately prior to the applicable Closing Date; (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 applicable 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 Andeavor Entity immediately prior to such Closing Date; 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 Andeavor is notified in writing of any of the foregoing prior to the Identification Deadline.

3.3 Reserved .

3.4 Represented Employees . With respect to Assets conveyed, contributed or otherwise transferred pursuant to a particular Contribution Agreement or owned by WNRL on the Closing Date of the Merger Agreement, and if applicable, the General Partner shall indemnify, defend and hold harmless (a) each of the Andeavor Entities set forth on Schedule VII attached to this Agreement with respect to that Contribution Agreement and (b) the Legacy Western Employers (collectively, the “Andeavor Indemnified Parties”) from and against any Losses suffered or incurred by the Andeavor Indemnified Parties by reason of or arising out of the transfer of the Represented Employees to the General Partner pursuant to Section 8.1 and the employment of the Represented Employees by the General Partner, including any Losses suffered or incurred resulting from actions taken, or liabilities incurred by the Andeavor Indemnified Parties with respect to the Represented Employees in connection with applicable collective bargaining agreements covering such Represented Employees.

3.5 Additional Indemnification .

(a) In addition to and not in limitation of the indemnification provided under Sections 3.1(a) , 3.2 , and 3.3 and with respect to a respective Contribution Agreement, each of the Andeavor Indemnifying Parties, severally and not jointly, 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 (i) events and conditions associated with the ownership or operation of the Assets and occurring before the applicable Closing Date (other than Covered Environmental Losses and Non-Covered Environmental Losses, which are provided for under Sections 3.1 , and those Losses provided for under Section 3.2 ) to the extent that Andeavor is notified in writing of any of the foregoing prior to the Third Deadline Date, (ii) any pending (as of the applicable Closing Date) legal actions against the Andeavor Entities set forth on Schedule III to this Agreement, (iii) events and conditions associated with the Retained Assets and whether occurring before or after the applicable Closing Date, (iv) the failure to

 

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obtain any necessary consent from the Pipeline Rate Regulatory Agencies, if applicable, and (v) all federal, state and local income tax liabilities attributable to the ownership or operation of the Assets prior to the applicable 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 Andeavor 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 applicable Closing Date.

(b) In addition to and not in limitation of the indemnification provided under Section 3.1(b) or 3.4 or the Partnership Agreement, the Partnership Group shall indemnify, defend, and hold harmless the Andeavor Entities from and against any Losses suffered or incurred by the Andeavor Entities by reason of or arising out of events and conditions associated with the ownership or operation of the Assets and occurring after the applicable Closing Date (other than the Covered Environmental Losses and Non-Covered Environmental Losses which are provided for under Section 3.1 ), 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.

3.6 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 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 3.6 . In no event shall the obligation of the Indemnified Party to cooperate with the Indemnifying Party as set forth in the immediately

 

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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 Losses 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.

3.7 Limitations Regarding Indemnification .

(a) The Andeavor Indemnifying Parties 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 the amount listed on Schedule VIII under “Annual Environmental Deductible” (the “ Annual Environmental Deductible ”), at which time the Andeavor Indemnifying Parties 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. The Andeavor Indemnifying Parties 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 the amount listed on Schedule VIII under “Annual ROW Deductible” (the “ Annual ROW Deductible ”), at which time the Andeavor Indemnifying Parties 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) With respect to Sections 3.1 , 3.2 and 3.5(a) , each of the Andeavor Indemnifying Parties shall only be required to indemnify the Partnership Group for Covered Environmental Losses under Section 3.1 , Losses under Section 3.2 or Losses under Section 3.5(a) incurred in connection with or related to Assets conveyed, contributed or otherwise transferred to the Partnership Group by such Andeavor Indemnifying Party.

(c) 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 .

(d) 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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REGARDLESS OF WHETHER ANY SUCH CLAIM ARISES UNDER OR RESULTS FROM CONTRACT, NEGLIGENCE, OR STRICT LIABILITY OF THE PARTY WHOSE LIABILITY IS BEING WAIVED HEREBY; provided that the foregoing limitation is not intended and shall not affect special damages actually awarded to a third party or assessed by a governmental authority and for which a Party is properly entitled to indemnification pursuant to the express provisions of this Agreement.

3.8 The Parties agree to the special indemnification provisions set forth on Schedule IX .

ARTICLE IV

CORPORATE SERVICES

4.1 General .

(a) Andeavor agrees to provide, and agrees to cause the applicable Andeavor Entities to provide, on behalf of the General Partner, for the Partnership Group’s benefit all of the centralized corporate services that Andeavor and the applicable Andeavor Entities 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 Andeavor a monthly administrative fee in the amount set forth in Schedule VIII to this Agreement (the “ Administrative Fee ”), payable on or before the tenth business day of each month, commencing in the first month following the date hereof. Andeavor may increase the Administrative Fee on July 1 of each year, commencing on July 1, 2018, by a percentage equal to the positive change, if any, in the CPI-U (All Urban Consumers) for the prior calendar year, rounded to the nearest one-tenth (1/10) of one percent (1%), 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 the Andeavor Entities or the Partnership Group, including any interpretation of such laws, rules or regulations.

(b) At the end of each calendar year, the Partnership will have the right to submit to Andeavor 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 the Andeavor Entities 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 Andeavor, Andeavor 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 Andeavor shall promptly pay to the Partnership the amount of any reduction for that year.

(c) The Partnership Group shall reimburse Andeavor, without duplication of any reimbursements made pursuant to Section 7.4 of the Partnership Agreement, for all other direct or allocated costs and expenses incurred by the Andeavor Entities on behalf of the Partnership Group, including, but not limited to the following; provided, however, that the costs and expenses described in subsections (i) through (vi) below shall not apply with respect to employees of the General Partner or the Andeavor Entities that are providing the services listed on Schedule IV :

 

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(i) salaries of employees of the General Partner or the applicable Andeavor Entities, 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) except as otherwise provided in Section 4.1(c)(vi) below, the cost of employee benefits relating to employees of the General Partner or the applicable Andeavor Entities, including 401(k), pension, bonuses and health insurance benefits (but excluding Andeavor 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 the applicable Andeavor Entities for insurance coverage with respect to the Assets or the business of the Partnership Group;

(iv) all expenses and expenditures incurred by the applicable Andeavor Entities 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;

(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 the applicable Andeavor Entities to the Partnership Group pursuant to Section 4.1(a) ;

(vi) any severance or similar amounts (“ Severance Amounts ”) due to the President of the General Partner or the Vice President, Operations of the General Partner in the event of a Change of Control (or similar term, in each case as defined in the applicable management stability agreement) of Andeavor under the terms of their respective management stability agreements with Andeavor, provided that such reimbursement shall be based on the percentage of time spent by such employee on the business of the Partnership Group during the last completed payroll period immediately preceding the date of such Change of Control. Notwithstanding anything in this Agreement to the contrary, in no event will the Partnership Group reimburse Andeavor for, or otherwise in any way be responsible for, (A) any Severance Amounts due to any employee of the General Partner or the applicable Andeavor Entities (other than the President of the General Partner or the Vice President, Operations of the General Partner) in the event of a Change of Control (or similar term, in each case as defined in the applicable Employment Agreement) of Andeavor, or (B) any Andeavor stock-based compensation expense related to accelerated vesting of Andeavor equity awards. For the purposes of this Section 4.1(c)(vi) , the term “ Employment Agreement ” shall include any employment agreement, management stability agreement or similar agreement between Andeavor and any employee of the General Partner or the applicable Andeavor Entities; and

 

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(vii) any other expenses listed on Schedule IV and identified as applicable to this clause (vii).

Such reimbursements shall be made on or before the tenth business day of the month following the month such costs and expenses are incurred or accrued. 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 Maintenance Capital and Other Expenditures . Andeavor, TRMC or Tesoro Alaska, as applicable, will either reimburse the Partnership or reimburse the General Partner and the General Partner will reimburse the Partnership, as applicable, on a dollar-for-dollar basis, without duplication, for each of the following:

(a) During the period commencing on the date of the applicable Contribution Agreement for an Asset and ending on the Second Deadline Date, expenses incurred by the Partnership Group solely in order to comply with vapor recovery or combustion and spill containment requirements associated with such Assets;

(b) During the period commencing on the applicable Closing Date, and

(i) for Assets contributed under Contribution Agreements dated prior to July 1, 2016, ending on the fifth anniversary of the applicable Closing Date; and

(ii) for Assets contributed under Contribution Agreements dated on July 1, 2016 or later, ending on the twentieth anniversary of the applicable Closing Date,

the expenses incurred by the Partnership Group for repairs and maintenance to storage tanks, pressure vessels and pipelines included as part of the Assets and expenses that are made solely in order to comply with current minimum standards under:

(1) the U.S. Department of Transportation’s Pipeline Integrity Management Rule 49 CFR 195.452, including the 2013 PHMSA Interpretation thereof,

(2) American Petroleum Institute (API) Standard 653 for Aboveground Storage Tanks, and

(3) applicable pressure vessel codes as required to allow a terminal to provide services to TRMC under an applicable terminal service agreement;

but only if and to the extent that:

(A) for repairs and maintenance that can be identified only by internal inspections, hydrotests, invasive inspections or excavations, such repairs and maintenance are identified before, during or as a result of the first scheduled API 653 inspections, pressure vessel inspections or pipeline inspections or tests that occur after the applicable Closing Date, and

(B) for repairs and maintenance that can be identified by non-invasive or external inspections without excavation, such repairs and maintenance are identified before the earlier of fifth anniversary of the applicable Closing Date or the date specified in (A) above,

(C) and this Section 5.1(b) shall apply only to the Contribution Agreements indicated on Schedule VII as being subject to this Section 5.1(b).

 

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The Andeavor Entities shall remain responsible for costs of removal and disposal of all materials owned by such Andeavor Entities in tanks or pipelines inspected or repaired in connection with any API 653 inspections, pressure vessel inspection or pipeline inspections or tests API 653 inspections, pressure vessel inspections or pipeline inspections or tests.

For the avoidance of any doubt, potential dispute and/or admission of non-compliance with 49 CFR 195.452, the Parties hereby agree and acknowledge that the 2014 hydrotest costs and the hydrotest costs for the remaining segments on the High Plains System shall be covered by this Section 5.1(b), and that (i) TRMC will directly reimburse THPP for the 2014 hydrotest costs, and (ii) the hydrotest costs incurred for the remaining segments on the Tesoro High Plains Pipeline Company LLC pipeline system will be recouped by the Partnership Group through an adjusted tariff or settlement rate charged to TRMC under the High Plains Transportation Services Agreement dated April 26, 2011 (the “ High Plains TSA ”), such adjusted tariff or settlement rate to be negotiated memorialized by an amendment to the applicable tariff filing and/or High Plains TSA; and

(c) Those certain capital and expense projects related to the Assets and described on Schedule VI to this Agreement.

ARTICLE VI

RIGHT OF FIRST OFFER

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

(a) Each ROFO Asset Owner hereby grants to the Partnership Group a right of first offer until (i) for the Nikiski Dock and Storage Facilities, April 26, 2021, and (ii) for the Jal NGL Terminal, the earlier of (A) October 16, 2023 or (B) the date that the Partnership is no longer controlled by Andeavor (the “ROFO Period”) on any ROFO Asset set forth next to such ROFO Asset Owner’s name on Schedule V to this Agreement to the extent that such ROFO Asset Owner proposes to Transfer any ROFO Asset (other than to any other Andeavor Entity who agrees in writing that such ROFO Asset remains subject to the provisions of this Article VI and such Andeavor Entity assumes the obligations under this Article VI with respect to such ROFO Asset) or enter into any agreement to do any of the foregoing during the ROFO Period.

(b) The Parties acknowledge that any Transfer of ROFO Assets pursuant to the Partnership Group’s right of first offer is subject to the terms of all existing agreements with respect to the ROFO Assets; provided , however , that Andeavor 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.

6.2 Procedures .

(a) In the event a ROFO Asset Owner proposes to Transfer any applicable ROFO Asset (other than to another Andeavor Entity) 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

 

17


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-Andeavor Entities in connection with the Proposed Transaction. The Partnership Group shall have 60 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 an Andeavor Entity, the terms on which the Partnership Group Member will provide services to the Andeavor Entity to enable the Andeavor 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 60-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 60 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 Andeavor Entity setting forth the terms on which the Partnership Group Member will provide services to the Andeavor Entity to enable the Andeavor Entity to utilize the ROFO Asset. Unless otherwise agreed between the applicable Andeavor Entity and Partnership Group Member, the terms of the purchase and sale agreement will include the following:

(i) the Partnership Group Member will deliver the agreed purchase price (in cash, Partnership Securities, 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 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;

 

18


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

(v) 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

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

(c) 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 any 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.

ARTICLE VII

LICENSE OF NAME AND MARK

7.1 Grant of License . Upon the terms and conditions set forth in this Article VII , Andeavor 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 “Andeavor”, “Tesoro”, and/or “Western” (the “ Names ”) and any other trademarks owned by Andeavor which contain the Names (collectively, the “ Marks ”).

7.2 Ownership and Quality . The Partnership agrees that ownership of the Names and the Marks and the goodwill relating thereto shall remain vested in Andeavor 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 Andeavor’s ownership of the Names and Marks or any registration thereto by Andeavor. In connection with the use of the Names and the Marks, the Partnership and any other member of the Partnership Group shall not in any manner represent that they have any ownership in the Names and the Marks or registration thereof except as set forth herein, and the Partnership, on

 

19


behalf of itself and the other members of the Partnership Group, acknowledge that the use of the Names and the Marks shall not create any right, title or interest in or to the Names and the Mark, and all use of the Names and the Marks by the Partnership or any other member of the Partnership Group, shall inure to the benefit of Andeavor. The Partnership agrees, and agrees to cause the other members of the Partnership Group, to use the Names and Marks in accordance with such quality standards established by Andeavor 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 date hereof are of a quality that is acceptable to Andeavor and justifies the License.

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

ARTICLE VIII

REPRESENTED EMPLOYEES; VEHICLE LEASES

8.1 Transfer of Represented Employees . The Parties acknowledge and agree that certain TRMC employees and certain Legacy Western Employees then covered by collective bargaining agreements with TRMC and the Legacy Western Employers existing as of an applicable Closing Date (the “Represented Employees”) have been or will be transferred to and shall become employees of the General Partner on or before the first day of the next fiscal year following the year in which that Closing Date occurred. The Parties agree to cooperate and shall take all action necessary to effectuate such transfer and shall comply with the terms of the applicable collective bargaining agreements with respect to the Represented Employees.

8.2 Vehicle Leases . The Parties acknowledge and agree that the members of the Partnership Group shall have the right to use any vehicles leased by the General Partner for use in the operation of the Partnership Group’s business.

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 San Antonio, Texas.

9.2 Notice . All notices or requests or consents provided for by, or permitted to be given pursuant to, this Agreement must be in writing and must be given by depositing same in the United States mail, addressed to the Person to be notified, postpaid, and registered or certified with return receipt requested or by delivering such notice in person or by facsimile to such Party. Notice given by personal delivery or mail shall be effective upon actual receipt. Notice given by facsimile shall be effective upon actual receipt if received during the recipient’s normal business hours or at the beginning of the recipient’s next business day after receipt if not received during the recipient’s normal business hours. All notices to be sent to a Party pursuant to this Agreement shall be sent to or made at the address set forth below or at such other address as such Party may stipulate to the other Parties in the manner provided in this Section 9.2 .

 

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If to the Andeavor Entities:

Andeavor

19100 Ridgewood Parkway

San Antonio, Texas 78259-1828

Attn: General Counsel

Facsimile: (210) 745-4494

If to the Partnership Group:

Andeavor Logistics LP

c/o Tesoro Logistics GP, LLC, its General Partner

19100 Ridgewood Parkway

San Antonio, Texas 78259-1828

Attn: General Counsel

Facsimile: (210) 745-4494

9.3 Entire Agreement . This Agreement together with the Schedules attached hereto (which are incorporated herein by reference) constitute 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 Andeavor 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 the Partnership may make a collateral assignment of this Agreement solely to secure working capital financing for the Partnership.

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.

 

21


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 Amendment and Restatement . This Agreement amends and restates the Third Omnibus Agreement in its entirety and the Parties agree that the terms and provisions of this Agreement replace the terms and provisions of the Third Omnibus Agreement, which is no longer in force, as of the date hereof.

9.12 Amendment of Schedules . The Parties may amend and restate the Schedules at any time without otherwise amending or restating this Agreement by the execution by all of the Parties of a cover page to the amended Schedules in the form attached hereto as Exhibit A . Such amended and restated Schedules shall replace the prior Schedules as of the date of execution of the cover page and shall be incorporated by reference into this Agreement for all purposes.

[ Signature Page Follows ]

 

22


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

 

ANDEAVOR
By:  

/s/ Gregory J. Goff

 

Gregory J. Goff

President and Chief Executive Officer

TESORO REFINING & MARKETING COMPANY LLC
By:  

/s/ Gregory J. Goff

 

Gregory J. Goff

President

TESORO COMPANIES, INC.
By:  

/s/ Gregory J. Goff

 

Gregory J. Goff

President

TESORO ALASKA COMPANY LLC
By:  

/s/ Gregory J. Goff

 

Gregory J. Goff

President

Signature Page 1 of 2 to

Fourth Amended and Restated Omnibus Agreement


ANDEAVOR LOGISTICS LP
By:   Tesoro Logistics GP, LLC,
  its general partner
By:  

/s/ Steven M. Sterin

 

Steven M. Sterin

President and Chief Financial Officer

TESORO LOGISTICS GP, LLC
By:  

/s/ Steven M. Sterin

 

Steven M. Sterin

President and Chief Financial Officer

Signature Page 2 of 2 to

Fourth Amended and Restated Omnibus Agreement


EXHIBIT A

FORM OF COVER PAGE FOR

AMENDMENT AND RESTATEMENT OF SCHEDULES

TO FOURTH AMENDED AND RESTATED OMNIBUS AGREEMENT

A Fourth Amended and Restated Omnibus Agreement was executed as of [            ] (the “Fourth Amended and Restated Omnibus Agreement”), among Andeavor, on behalf of itself and the other Andeavor Entities, Tesoro Refining & Marketing Company LLC, Tesoro Companies, Inc., Tesoro Alaska Company LLC, Andeavor Logistics LP and Tesoro Logistics GP, LLC. Capitalized terms not otherwise defined in this document shall have the terms set forth in the Fourth Amended and Restated Omnibus Agreement.

The Parties agree that the Schedules are hereby amended and restated in their entirety as of the date hereof to be as attached hereto. Pursuant to Section 9.12 of the Fourth Amended and Restated Omnibus Agreement, such amended and restated Schedules shall replace the prior Schedules as of the date hereof and shall be incorporated by reference into the Fourth Amended and Restated Omnibus Agreement for all purposes.

Executed as of             , 20            .

 

ANDEAVOR
By:                                                                               
Name:                                                                          
Title:                                                                            
TESORO REFINING & MARKETING COMPANY LLC
By:                                                                               
Name:                                                                          
Title:                                                                            
TESORO COMPANIES, INC.
By:                                                                               
Name:                                                                          
Title:                                                                            
TESORO ALASKA COMPANY LLC
By:                                                                               
Name:                                                                          
Title:                                                                            

Page 1 of 2 of

Exhibit A to Fourth Amended and Restated Omnibus Agreement


ANDEAVOR LOGISTICS LP
By: Tesoro Logistics GP, LLC,
        its general partner
By:                                                                               
Name:                                                                          
Title:                                                                            
TESORO LOGISTICS GP, LLC
By:                                                                               
Name:                                                                          
Title:                                                                            

Page 2 of 2 of

Exhibit A to Fourth Amended and Restated Omnibus Agreement


Schedule I

Pending Environmental Litigation

For Initial Contribution Agreement listed on Schedule VII :

None.

For Amorco Contribution Agreement listed on Schedule VII :

None.

For Long Beach Contribution Agreement listed on Schedule VII :

The soil and groundwater on the southern central portion of the site near the 24-inch crude oil line have been impacted with hydrocarbons from a release from the line first observed in September 2011. The California Regional Water Quality Control Board issued an Investigative Order dated September 30, 2011 and to date all requirements of the order have been met. Additional investigative or remedial activities may be required.

For Anacortes Rail Facility Contribution Agreement listed on Schedule VII :

None.

For BP Carson Tranche 1 Contribution Agreement listed on Schedule VII :

The environmental indemnification provisions of the Carson Assets Indemnity Agreement dated as of December 6, 2013 (“ Carson Assets Indemnity Agreement ”), among the Partnership, the General Partner, Tesoro Logistics Operations LLC (the “ Operating Company ”) and TRMC, supersede in their entirety the environmental indemnification provisions of Article III of the Fourth Amended and Restated Omnibus Agreement, except as otherwise expressly provided in the Carson Assets Indemnity Agreement.

For BP Carson Tranche 2 Contribution Agreement listed on Schedule VII :

The environmental indemnification provisions of the Carson Assets Indemnity Agreement supersede in their entirety the environmental indemnification provisions of Article III of the Fourth Amended and Restated Omnibus Agreement, except as otherwise expressly provided in the Carson Assets Indemnity Agreement.

For West Coast Assets Contribution Agreement listed on Schedule VII:

None.

For 2015 Line 88 and Carson Tankage Contribution Agreement listed on Schedule VII:

None.

Page 1/2 of Schedule I to Schedules to

Fourth Amended and Restated Omnibus Agreement


For 2016 Alaska Assets Contribution Agreement listed on Schedule VII:

KENAI TANKAGE: Andeavor, Tesoro Alaska, TRMC, the Partnership and the General Partner are subject to a pending consent decree with the United States Environmental Protection Agency and the Department of Justice pursuant to which injunctive relief will be ordered with respect a number of refineries (the “2016 Environmental Consent Decree”).

ANCHORAGE AND FAIRBANKS TERMINALS: Andeavor, Tesoro Alaska, TRMC, the Partnership and the General Partner are subject to the pending 2016 Environmental Consent Decree pursuant to which injunctive relief will be ordered with respect a number of refineries.

The indemnification obligations of the Andeavor Entities under Section 3.1(a) of the Fourth Amended and Restated Omnibus Agreement with regard to the 2016 Environmental Consent Decree are limited as provided in Schedule IX.

For Martinez Assets Contribution Agreement listed on Schedule VII:

Andeavor, Tesoro Alaska, TRMC, the Partnership and the General Partner are subject to the 2016 Environmental Consent Decree.

For Assets owned by WNRL on the Closing Date of the Merger Agreement and acquired by the Partnership pursuant to the Merger Agreement by virtue of its acquisition of WNRL thereunder:

The environmental indemnification provisions in Article VI of the Sponsor Equity Restructuring Agreement dated August 13, 2017 (“SERA”) between Andeavor, Andeavor Logistics LP and Tesoro Logistics GP, LLC supersede in their entirety the environmental indemnification provisions of Article III of the Fourth Amended and Restated Omnibus Agreement, other than Section 3.5(b), and shall be the exclusive provisions for all indemnification obligations relating to the subject matter of the indemnities so provided in Article VI of the SERA.

Page 2/2 of Schedule I to Schedules to

Fourth Amended and Restated Omnibus Agreement


Schedule II

Environmental Matters

For Initial Contribution Agreement set forth on Schedule VII :

1. Anchorage #1 Terminal soil and groundwater have been impacted by gasoline and diesel releases from previously buried pipelines. The site is considered characterized and is currently undergoing removal of product from the water table, groundwater treatment, and long-term monitoring.

2. Anchorage #2 Terminal soil and groundwater have been impacted by gasoline releases occurring prior to Andeavor’s purchase of the facility. The site is considered characterized and is currently undergoing groundwater monitoring and treatment. Off-site groundwater investigations are scheduled for 2012.

3. Stockton Terminal soil and groundwater have been impacted by gasoline and diesel releases from pipelines and/or product storage tanks. The site is considered substantially characterized and is undergoing groundwater treatment and groundwater monitoring. Off-site groundwater impacts are commingled with neighboring petroleum storage terminals.

4. Burley Terminal groundwater was impacted by gasoline releases occurring prior to Andeavor’s purchase of the facility. Groundwater impacts were commingled with neighboring petroleum storage terminals. Hydrocarbon concentrations in groundwater samples do not exceed previously established target levels for groundwater and surface water protection. Regulatory closure is pending.

5. Wilmington Sales Terminal soil and groundwater have been impacted by gasoline releases occurring prior to Andeavor’s purchase of the facility. Groundwater investigation and monitoring is on-going. Andeavor is indemnified by the previous owner for Investigation and remediation obligations.

6. Salt Lake City Terminal soil and groundwater have been impacted by gasoline and diesel releases from pipelines and/or product storage tanks occurring prior to Andeavor’s purchase of the facility. The site is considered characterized and is currently undergoing removal of product from the water table and long-term monitoring. There are no known soil or groundwater impacts at the Northwest Crude Oil tank farm.

7. The Stockton Terminal emits volatile organic compounds (VOCs) below “major source” emission criteria. In 2010, the San Joaquin Air Quality Management District announced it is reducing its major source threshold. When the Stockton Terminal expands its operations or increases throughput, the potential to emit VOC will increase and the Stockton terminal will become subject to regulation as a major source. This will require a Title V Air Operating Permit. In addition, the Stockton facility will be required to install an automated continuous emission monitor at a cost of approximately $75,000.

 

Page 1/8 of Schedule II to Schedules to

Fourth Amended and Restated Omnibus Agreement


For Amorco Contribution Agreement set forth on Schedule VII :

1. The soil and groundwater on the site of the Tankage, as defined in the Amorco Contribution Agreement, have been impacted by methyl tertiary butyl ether releases from previously buried pipelines. The site is considered characterized and is currently undergoing removal of methyl tertiary butyl ether from the water table, groundwater treatment, and long-term monitoring.

2. Any environmental violation or contamination due to SHPL, as defined in the Amorco Contribution Agreement, being underground prior to the Closing Date.

For Long Beach Contribution Agreement listed on Schedule VII :

1. Any environmental violation or contamination, as defined in the Long Beach Contribution Agreement, prior to the Closing Date.

2. Any anomalies in the Pipeline System that require repair as discovered by the first internal line inspection of any portion of the Pipeline System for which TRMC is notified in writing prior to the First Deadline Date.

For Anacortes Rail Facility Contribution Agreement listed on Schedule VII :

None.

For BP Carson Tranche 1 Contribution Agreement listed on Schedule VII :

The environmental indemnification provisions of the Carson Assets Indemnity Agreement supersede in their entirety the environmental indemnification provisions of Article III of the Fourth Amended and Restated Omnibus Agreement, except as otherwise expressly provided in the Carson Assets Indemnity Agreement.

For BP Carson Tranche 2 Contribution Agreement listed on Schedule VII :

The environmental indemnification provisions of the Carson Assets Indemnity Agreement supersede in their entirety the environmental indemnification provisions of Article III of the Fourth Amended and Restated Omnibus Agreement, except as otherwise expressly provided in the Carson Assets Indemnity Agreement.

 

Page 2/8 of Schedule II to Schedules to

Fourth Amended and Restated Omnibus Agreement


For West Coast Assets Contribution Agreement listed on Schedule VII:

1. Nikiski Terminal. Subsurface soil and groundwater has not been assessed at this facility. There have been no historic releases that have prompted a soil and groundwater investigations. The area within the tank containment berms was lined with low-permeability soils in the early 1990s. The loading rack, fuel filters and piping manifolds are above concrete secondary containment.

2. Anacortes Light Ends Rail Facility and planned diesel truck rack areas. Subsurface soil and groundwater has not been assessed at this area of the Anacortes refinery. There have been no historic releases that have prompted a soil and groundwater investigation.

3. Anacortes Storage Facility . Historic tank overtopping events and tank bottom corrosion releases have impacted soil and groundwater in the shore tank area of the Anacortes refinery. Groundwater near the shore tanks is monitored for natural attenuation. Groundwater between the tanks and the nearby shoreline has not been characterized, however the hydrocarbon concentrations in this area is not expected to be a threat to human health or the environment.

4. Martinez Refinery LPG Loading Area . Past waste disposal and hydrocarbon releases have impacted areas surrounding the Martinez Refinery LPG loading rack, pad and tanks. Areas north and northeast of the rack were used for past waste disposal. There are documented intra-refinery pipeline releases in the north and western boundaries of the LPG rack concrete pad. The refinery plans to excavate and cap the nearby waste disposal area in 2017. The pipeline releases are being remediated as part of the overall Martinez refinery cleanup. Soil and groundwater directly beneath the loading rack, propane tanks and truck pad have not been sampled.

5. Tesoro Alaska Pipeline.

 

    The pump station for the Tesoro Alaska Pipeline is adjacent to the Kenai Refinery Lower Tank Farm. Multiple historic tank and buried pipeline releases have impacted soil and groundwater in the area; however there are no documented releases from the pipeline pump station. The soil and groundwater surrounding the pump station is considered characterized and undergoing groundwater monitoring and treatment.

 

    A pipeline release in 2001 resulted in soil, groundwater and surface water impacts in an undeveloped area of the Kenai Peninsula. The quantity of the release is not known. Soil surrounding the release was excavated and stockpiled at the Kenai Refinery while groundwater and surface water were remediated on-site. The Alaska Department of Environmental Conservation issued a No Further Action letter for this cleanup effort in 2008. There are no other known release sites on the pipeline between the Kenai Refinery and Anchorage.

 

Page 3/8 of Schedule II to Schedules to

Fourth Amended and Restated Omnibus Agreement


    Historic spills and releases have impacted the Anchorage #1 terminal, including past releases from the Tesoro Alaska Pipeline receiving station. Groundwater remediation monitoring is ongoing across the Anchorage #1 terminal. In addition, a soil vapor venting system is being installed to address a flame suppressant compound detected in soils near the receiving station control room.

For 2015 Line 88 and Carson Tankage Contribution Agreement listed on Schedule VII:

None

For 2016 Alaska Assets Contribution Agreement listed on Schedule VII:

KENAI TANKAGE:

Area of significant groundwater and soil impacts: (1) lower tank farm groundwater impact source area including 1988 jet fuel release and unknown light products release in area of Tank 63, (2) process unit historic releases from oily water sewer system including releases from failed grout in subsurface sewer hubs, (3) groundwater issues generally 35 to 40 feet below ground surface and groundwater impacts in three water-bearing zones below refinery and off-site and (4) possible contributor to refinery-wide groundwater impacts.

ANCHORAGE AND FAIRBANKS TERMINALS:

Pursuant to the Contribution, Conveyance and Assumption Agreement effective as of July 1, 2016 (the “ Alaska Assets Contribution Agreement ”), among Tesoro Logistics LP, a Delaware limited partnership (the “ Partnership ”), Tesoro Logistics GP, LLC, a Delaware limited liability company and the general partner of the Partnership (the “ General Partner ”), Tesoro Logistics Operations LLC, a Delaware limited liability company (the “ Operating Company ”), Tesoro Alaska Company LLC, a Delaware limited liability company (“ TAC ”) and Tesoro Corporation, a Delaware corporation (“ Tesoro ”), TAC contributed 100% of the limited liability company interests (the “ TAT Interests ”) in Tesoro Alaska Terminals LLC, a Delaware limited liability company (“ TAT ”), to the General Partner, the General Partner contributed 100% of the TAT Interests to the Partnership, and the Partnership contributed 100% of the TAT Interests to the Operating Company, all on the terms and conditions set forth in that contribution agreement.

Prior to the date of the Alaska Assets Contribution Agreement, TAT acquired certain assets defined as the “Anchorage and Fairbanks Terminals” in the Alaska Assets Contribution Agreement from Flint Hills Resources Alaska, LLC pursuant to an Asset Purchase Agreement, dated November 20, 2015 (the “ Flint Hills APA ”), by and between Flint Hills Resources Alaska, LLC and TAC. As described in the Flint Hills APA, the following liabilities existed at the Anchorage and Fairbanks Terminals prior to the closing of the transactions contemplated under the Flint Hills APA:

Anchorage Terminal :

 

  1. Deviations reported under Anchorage Air Permit No. AQ0235TVP03, Issue Date: April 2, 2014, Effective Date: May 2, 2014

 

Page 4/8 of Schedule II to Schedules to

Fourth Amended and Restated Omnibus Agreement


    Flint Hills Resources Alaska, LLC did not submit a report as required under Condition 68 based upon defects listed in Condition 6.3 discovered during the out of service inspection conducted on T-4216 during July 2014. The deviation report covering this incident is set out in the Flint Hills Resources Alaska, LLC deviation report dated January 29, 2015.

 

    Flint Hills Resources Alaska, LLC did not report all emissions or operations that exceed or deviate from the requirements of its permit within 30 days of the end of the month in which the excess emission or deviation occurred. The deviation report covering this incident is set out in the Flint Hills Resources Alaska, LLC deviation report dated January 29, 2015.

 

    Flint Hills Resources Alaska, LLC did not perform preventative maintenance in accordance with 40 CFR Subpart ZZZZ within 365 days of effective date on EU IDs 7, 8, and 9. The maintenance was performed 2 days after that date. The deviation report covering this incident is set out in the Flint Hills Resources Alaska, LLC deviation report dated July 30, 2014.

 

    Flint Hills Resources Alaska, LLC did not report all emissions or operations that exceed or deviate from the requirements of this permit within 30 days of the end of the month in which the excess emissions or deviation occurred. The deviation report covering this incident is set out in the Flint Hills Resources Alaska, LLC deviation report dated January 29, 2015.

 

    On April 10, 2014. ADEC issued Flint Hills Resources Alaska, LLC a letter of Acceptance of the Anchorage Facility Compliance Certificate, and identified 4 deviations from the air permit.

 

  2. In a letter dated July 22, 2015, the ADEC indicated that the Anchorage Terminal Oil Discharge Prevention and Contingency Plan needed the additional information specified in the July 22, 2015 letter to be submitted in order for the plan renewal to be approved. On September 2, 2015, the facility submitted the requested information and is awaiting ADEC approval.

 

  3. On May 15, 2015 Flint Hills Resources Alaska, LLC received a notice of failure to pay Air Quality fees relating to Air Permit No. AQ0235TVP03. Those fees were paid on June 2, 2015.

 

  4. In a letter dated October 1, 2015, ADEC approved the facility’s request for a waiver of secondary containment, subject to the terms of the letter, until March 31, 2016.

 

  5. On July 24, 2014 ADEC issued a letter to Flint Hills Resources Alaska, LLC advising that Flint Hills Resources Alaska, LLC is a responsible party under Alaska law for the July 22, 2014 Anchorage Facility Jet Fuel release.

 

  6. On April 21, 2014, ADEC issued a letter to Flint Hills Resources Alaska, LLC advising it that Flint Hills Resources Alaska, LLC is a responsible party under Alaska law for the April 20, 2014 gasoline release.

 

Page 5/8 of Schedule II to Schedules to

Fourth Amended and Restated Omnibus Agreement


Fairbanks Terminal :

 

  (i) In a letter dated May 29, 2015, ADEC detailed items that needed correction related to ADEC’s May 19, 2015 inspection of the terminal and its Oil Discharge Prevention and Contingency Plan. The facility has submitted a response to ADEC and is working with the agency to correct the identified items.

 

  (ii) On April 24, 2014 ADEC advised Flint Hills Resources Alaska, LLC that the Primary Response Action Contractor is no longer an ADEC approved and registered contractor. Therefore, Flint Hills Resources Alaska, LLC’s Fairbanks Facility Oil Discharge Prevention and Contingency Plan was out of compliance and needed amendment.

 

  (iii) Two underground storage tanks are located at the Fairbank Terminal, both of which are used to store heating oil. One underground storage tank was removed from the Purchased Site prior to Flint Hills Resources Alaska, LLC’s leasehold.

 

  (iv) Asbestos materials has been identified and are known to be located at the Anchorage Facility in the following locations:

 

Material Type

  

Location(s)

  

EPA Category

Gray Caulk

(10% Chrysotile)

   Fire Pump Room, Warehouse    Category II

Sheetrock

(4% Chrysotile)

   Boiler Room, Warehouse    Category II

Brown Insulation

(5% Chrysotile)

   Heat Exchanger Building    Category I

Window Caulk

(3% Chrysotile)

   Warehouse    Category II

Gray Mastic

(10% Chrysotile)

   Concrete Pad Near Tank 4136    Category II

Black Mastic

(6% Chrysotile)

   Concrete Pad Near Tank 4136    Category II

Black Mastic

(17% Chrysotile)

   Exchanger on West Side of Asphalt Tank Farm    Category II

Black Mastic

(6% Chrysotile)

   Piping located near railroad tracks on Ocean Dock Road.    Category II

Black Mastic

(20% Chrysotile)

   Piping on side of Tank 4263, East Tank Farm    Category II

White Insulation

(60% Chrysotile)

   Piping on side of Tank 4263, East Tank Farm    Category I

Mastic/Insulation

(20% Chrysotile)

   Top skirt of Tank 4263, East Tank Farm    Category I

Mastic

(15% Chrysotile)

   Sections of buried pipelines    Category II

In the Flint Hills APA, Flint Hills Resources Alaska, LLC noted that it had no knowledge of other asbestos-containing material currently located at the sites purchased by TAT. However, Flint Hills Resources Alaska, LLC noted that asbestos material has been removed in the past during renovation and/or demolition work at the purchased sites.

 

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Flint Hills Resources Alaska, LLC stated in the Flint Hills APA that it has no knowledge of polychlorinated biphenyls (“ PCB ”) material or equipment containing PCBs existing at the purchased sites. Flint Hills Resources Alaska, LLC, however, noted that it understands that PCBs may have been present under prior lessees operations of the sites but has no direct knowledge of this.

Flint Hills Resources Alaska, LLC stated in the Flint Hills APA that it understands “disposal areas” to include areas where Hazardous Materials have been Released. See Section 3.11(h) of Seller Disclosure Schedule under the Flint Hills APA for Flint Hills Resources Alaska, LLC’s knowledge regarding disposal areas on the Purchased Sites. In addition, a significant amount of fill material was used to augment the elevation and stability of the soils beneath the Anchorage facility. This fill included debris and materials such as such as wood, metal, and concrete. Flint Hills Resources Alaska LLC stated in the Flint Hills APA that it has no knowledge that the fill material contained Hazardous Materials when it was placed on the site.

Flint Hills Resources Alaska, LLC stated in the Flint Hills APA that:

 

  1. On July 24, 2014 ADEC issued a letter to Flint Hills Resources Alaska, LLC advising that Flint Hills Resources Alaska, LLC is a responsible party under Alaska law for the July 22, 2014 Anchorage Facility Jet Fuel release.

 

  2. On April 21, 2014, ADEC issued a letter to Flint Hills Resources Alaska, LLC advising it that Flint Hills Resources Alaska, LLC is a responsible party under Alaska law for the April 20, 2014 gasoline release.

 

  3. In a letter dated July 22, 2015, ADEC indicated that the Anchorage Terminal Oil Discharge Prevention and Contingency Plan needed the additional information specified in the July 22 letter to be submitted in order for the plan renewal to be approved. On September 2, 2015, the facility submitted the requested information and is awaiting ADEC approval.

Flint Hills Resources Alaska, LLC assumed all environmental liabilities known at the time the Purchased Facilities were acquired from Williams in 2004.

For Martinez Assets Contribution Agreement listed on Schedule VII:

MARTINEZ TANKAGE:

The following pending refinery notices of violation:

 

  1. Notice issued April 16, 2013 by the Bay Area Air Quality Management District (“ BAAQMD ”) related to liquid discovered on internal floating roof of Tank 870;

 

  2. Notice issued February 11, 2014 by BAAQMD related to a leaking PV valve on Tract 3 VRS Tank 613; and

 

  3. Notice issued August 12, 2014 by BAAQMD related to a  1 2 inch gap at well sliding cover on Tank 692.

 

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Existing soil and groundwater contamination has been identified and is being managed under existing programs and agreements by TRMC and third parties, within three (3) solid waste management units located on Tract 3 of the Licensed Premises, on which the crude oil, feedstock and refined product storage tankage are situated, with such waste management units being identified as areas within red or green boundary lines on the WMU HAZARD MAP-Orientation Unit Or System Overall General Sheets, as reflected on the Golden Eagle Refinery Plat, Drawing Number 020-DA-518-001, as copy of which is shown below.

 

LOGO

For Assets owned by WNRL on the Closing Date of the Merger Agreement and acquired by the Partnership pursuant to the Merger Agreement by virtue of its acquisition of WNRL thereunder:

None. The environmental indemnification provisions in Article VI of the Sponsor Equity Restructuring Agreement dated August 13, 2017 (“SERA”) between Andeavor, Andeavor Logistics LP and Tesoro Logistics GP, LLC supersede in their entirety the environmental indemnification provisions of Article III of the Fourth Amended and Restated Omnibus Agreement, other than Section 3.5(b), and shall be the exclusive provisions for all indemnification obligations relating to the subject matter of the indemnities so provided in Article VI of the SERA.

 

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Schedule III

Pending Litigation

For Initial Contribution Agreement listed on Schedule VII :

None.

For Amorco Contribution Agreement listed on Schedule VII :

None.

For Long Beach Contribution Agreement listed on Schedule VII :

None.

For Anacortes Rail Facility Contribution Agreement listed on Schedule VII :

None.

For BP Carson Tranche 1 Contribution Agreement listed on Schedule VII:

None.

For BP Carson Tranche 2 Contribution Agreement listed on Schedule VII:

None.

For West Coast Assets Contribution Agreement listed on Schedule VII:

None.

For 2015 Line 88 and Carson Tankage Contribution Agreement listed on Schedule VII:

None.

For 2016 Alaska Assets Contribution Agreement listed on Schedule VII:

KENAI TANKAGE: None.

ANCHORAGE AND FAIRBANKS TERMINALS: None.

For Martinez Assets Contribution Agreement listed on Schedule VII:

None.

 

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For Assets owned by WNRL on the Closing Date of the Merger Agreement and acquired by the Partnership pursuant to the Merger Agreement by virtue of its acquisition of WNRL thereunder:

The Additional Indemnification provisions in Article VI of SERA supersede in their entirety the indemnification provisions of Section 3.5(a) of the Fourth Amended and Restated Omnibus Agreement, and shall be the exclusive provisions for all indemnification obligations relating to the subject matter of the indemnities so provided in of Section 3.5(a) of the Fourth Amended and Restated Omnibus Agreement.

 

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Schedule IV

Section 4.1(a): General and Administrative Services

 

(1) Executive management services of Andeavor employees who devote less than 50% of their business time to the business and affairs of the Partnership, including 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

Section 4.1(c)(vii): Other Reimbursable Expenses

For Initial Contribution Agreement listed on Schedule VII :

None.

For Amorco Contribution Agreement listed on Schedule VII :

None.

For Long Beach Contribution Agreement listed on Schedule VII :

None.

For Anacortes Rail Facility Contribution Agreement listed on Schedule VII :

None.

For BP Carson Tranche 1 Contribution Agreement listed on Schedule VII :

None.

For BP Carson Tranche 2 Contribution Agreement listed on Schedule VII :

None.

 

 

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For West Coast Assets Contribution Agreement listed on Schedule VII:

None.

For 2015 Line 88 and Carson Tankage Contribution Agreement listed on Schedule VII:

None.

For 2016 Alaska Assets Contribution Agreement listed on Schedule VII:

KENAI TANKAGE: None.

ANCHORAGE AND FAIRBANKS TERMINALS: None.

For Martinez Assets Contribution Agreement listed on Schedule VII:

None.

For Assets owned by WNRL on the Closing Date of the Merger Agreement and acquired by the Partnership pursuant to the Merger Agreement by virtue of its acquisition of WNRL thereunder:

None

 

 

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Schedule V

ROFO Assets

 

Asset

  

Owner

Nikiski Dock and Storage Facility (Nikiski, Alaska)

A single-berth dock and storage facility located at the Kenai Refinery that includes five crude oil storage tanks with a combined capacity of approximately 930,000 barrels, ballast water treatment capability and associated pipelines, pumps and metering stations. The dock and storage facility receives crude oil from marine tankers and from local production fields via pipeline and truck, and also delivers refined products from the refinery to marine vessels.

   Tesoro Alaska

Jal NGL Terminal (Lea County, New Mexico)

A terminal that receives, stores, and ships various light hydrocarbon products or natural gas liquids (“NGLs”) via truck, rail, and pipeline. Primary storage at the Jal NGL Terminal consists of four large NGL storage caverns, with combined storage capacity of approximately 562,000 barrels, that are connected to the Enterprise Products Partners L.P. (“Enterprise”) MAPL system connecting NGL hubs at Conway, Kansas and Mt. Belvieu, Texas. Brine ponds are available on site to support product movement in and out of the storage caverns. The terminal also includes 17 storage tanks with a combined shell storage capacity of approximately 15,000 barrels, and loading and unloading capacity of up to 6,000 bpd, utilizing either a three-bay truck rack or a rail loading facility located on the Texas-New Mexico Railroad that has 16 loading spots.

   Western Refining Company, LP

 

 

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Schedule VI

Existing Capital and Expense Projects

For Initial Contribution Agreement listed on Schedule VII :

Expense Projects

None.

Capital Projects

1. That certain project related to AFE # 102120001, which provides for side stream ethanol blending into all gasoline at the Salt Lake City terminal by adding truck ethanol unloading capability, utilizing the existing premium day tank for ethanol and delivering premium direct from the Salt Lake City refinery tankage. New ethanol truck unloading facilities will be installed. New Pumps will also be installed for delivering higher volumes of premium gasoline from the Salt Lake City refinery to the Salt Lake City terminal. An ethanol injection skid will be installed along with piping changing to the existing Salt Lake City terminal to allow the ethanol to be injected in the gasoline stream. This project has been completed.

2. That certain project AFE# 112120005 at the Mandan refinery, to update additive equipment to allow the offering of Shell additized gasoline. This project has been completed.

3. That certain project related to AFE # 107120005, which provides for ratio ethanol blending into gasoline on the rack at the Burley, Idaho Terminal by adding truck ethanol unloading capability, adding tankage for ethanol storage and installing new ethanol meters associated with each gasoline loading arm. New ethanol truck unloading facilities will also be installed.

4. That certain project AFE# 104100015-M at the Mandan refinery, to update the truck rack sprinkler system. This project has been completed.

5. That certain project number AFE# 122120002 (TCM Idea# 2010113017) at the Mandan refinery, to upgrade the rack blending hydraulic system to reduce/eliminate inaccurate blends at the load rack.

6. That certain project number TCM Idea # 2011433001 at the Mandan refinery, to move the JP8 to new bay and have three bays for loading product across the rack. This project has been cancelled.

7. That certain project number TCM Idea # 2011432602 at the Stockton terminal, install a continuous vapor emission monitor on the vapor recovery unit for compliance with air quality regulations.

 

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For Amorco Contribution Agreement listed on Schedule VII :

Expense Projects

All major expense projects that are within the scope of open Work Orders as of the applicable Closing Date.

Capital Projects

1. That certain project related to AFE# 097100014 and AFE# 107100014 at the Amorco terminal, which provide repairs and upgrades to the wharf regarding MOTEMS standards.

2. That certain project related to AFE# 112100001 at the Amorco terminal, which installs a jet mixer system for crude lab testing.

For Long Beach Contribution Agreement listed on Schedule VII :

Expense Projects

1. Any cost that may be incurred to adjust diesel fuel tank vents near light fixtures after a review is conducted and if action is deemed necessary.

2. Costs related to substantial repair or replacement project scheduled for 2012 and 2013 for the pipeline segments in the portion of the Southern California Edison right-of-way area immediately adjacent to the marine terminal to address corrosion, and include IO# 3021407 titled “SCA.Wilmington Edison Reroute” and IO# 3021749 titled “SCA.Edison Reroute 24 inch, 16 inch, 14 inch”.

Capital Projects

1. That certain project related to AFE# 072104079LBT titled “UG Piping – LBT” related to underground pipeline repairs at the Terminal. In addition, any subsequent new projects to address the same specific under-ground piping issues per AFE# 072104079LBT (i.e. a second phase UG Piping project) that would occur on or before the end of year 2015.

2. That certain project related to the TCM Idea# 2012433432 AFE# 125120020 titled “LBT Berth 84a Loading Arm Replacement” which repairs or replaces the loading arms at the Terminal and any related AFE project that will occur upon final project approval to substantially repair or replace the loading arms at the Terminal.

3. That certain project related to the TCM Idea# 2012433433 AFE# 125120021 titled “LBT Berth 86 Loading Arm Replacement” which repairs or replaces the loading arms at the Terminal and any related AFE project that will occur upon final project approval to substantially repair or replace the loading arms at the Terminal.

 

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4. Any remaining costs of those certain projects related to the leak detection on the Terminal and Terminal Pipelines which are substantially complete and include AFE# 107110002, AFE# 117110001, AFE# 117110003, AFE# 117110002, and AFE# 125120002.

For Anacortes Rail Facility Contribution Agreement listed on Schedule VII :

Expense Projects

None.

Capital Projects

Any capital costs or expenses that may be incurred for the installation of a custody transfer meter related to the AFE# 125120017 titled “CROF Custody Transfer Meter and Station”.

For BP Carson Tranche 1 Contribution Agreement listed on Schedule VII :

Expense Projects

Expenses associated with the API 653 internal inspection, the Carson Crude Terminal Tank 401 (AFE# 13E1219120001BP/WBS 19125.E012.975) scheduled to start in November 2013, including without limitation, cleaning of such Tank (including any waste removal) and any repairs to such Tank required as a result of such inspection.

Capital Projects

None.

For BP Carson Tranche 2 Contribution Agreement listed on Schedule VII :

Expense Projects

1. All 2013 and 2014 costs related to AFE# 136104215BP-M (PRISM ID 32503) for a partial replacement of Rhodia Sulfuric Acid Line 29 will be reimbursed by TRMC to cover the 2014 expenditure of $1.1 million for line neutralization, the pig run and tie-ins. Subject to confirmation with the refinery on exact outage dates, the bulk of this cost will be incurred in March and April.

2. All 2013 costs or 2013 carry-over costs related to AFE# 13E1012000002BP-M12 & 13E1012000002BP-M5 PRISM ID 32518 (under the 2013 AFE # 13E1012000002BP) for the Manual Entry Corrosion Program at Terminal 2 will be reimbursed by TRMC. All 2014 costs will be covered by the Partnership’s 2013 budget.

 

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3. All remaining 2013 inspection and repair costs related to AFE# 13E1012000002BP-M2 (PRISM ID 32549) associated with the Marine Terminal 2 – TK 218 – API 653 Internal Inspection only (not including repairs at this point) will be reimbursed by TRMC. TRMC shall review and approve the tank repair scope and review inspection reports to prevent unnecessary upgrades or “urban renewal.”

4. All remaining 2013 inspection and repair costs related to AFE# 13E1212000001-M (PRISM ID 31418) associated with the Marine Terminal 2 – TK 205 – API 653 Internal Inspection only (not including repairs at this point) will be reimbursed by TRMC. TRMC shall review and approve the tank repair scope and review inspection reports to prevent unnecessary upgrades or “urban renewal.”

5. Remaining expenses related to AFE# 13E1179000001-M (PRISM ID 32040) to upgrade PLC systems in the LA Basin will be reimbursed by TRMC.

6. All remaining 2013 inspection and repair costs related to AFE# 13E1212000002-M (PRISM ID 31419) associated with the Marine Terminal 2 – TK 217 – API 653 Internal Inspection only (not including repairs at this point) will be reimbursed by TRMC. TRMC shall review and approve the tank repair scope and review inspection reports to prevent unnecessary upgrades or “urban renewal.”

7. All remaining expenses related to AFE# 136104222BP-M (PRISM ID 32556) associated with the Pipeline OQ Verification will be reimbursed by TRMC.

8. All remaining 2013 inspection and repair costs related to AFE# 13E1012000006-M (PRISM ID 31409) associated with the Carson Products – TK VH1 – API 653 Inspection only (not including repairs at this point) will be reimbursed by TRMC. TRMC shall review and approve the tank repair scope and review inspection reports to prevent unnecessary upgrades or “urban renewal.

Capital Projects

1. Maintenance capital expenditures related to that certain AFE# 136104194BP-M (PRISM ID 32480) at Terminal 2 to replace all fire water piping at Berths 76, 77 and 78 areas of Terminal 2 in Long Beach, CA with new piping. This project will also replace all associated valves, fixtures, monitors, and fire-fighting accessories.

2. Maintenance capital expenditures related to that certain TCM Idea# 2013434229 (PRISM ID 25829) at Terminal 2 to replace the existing bladder type foam tank with two atmospheric tanks and foam skids located at either end of the facility along with new piping to support the installation.

 

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3. Maintenance capital expenditures related to that certain TCM Idea# 2013434243 (PRISM ID 20054) at Terminal 2 to replace the existing loading arms at T2’s Berth 77 and 78. The current parts are so old that they are no longer readily available, so in order to properly maintain this equipment to minimize down-time for repairs, these arms should be replaced with the newest models.

4. All capital expenditures related to that certain AFE# 136104077BP-M (PRISM ID 32481) for MOTEMS dock side piping upgrades at Terminal 2.

5. Maintenance capital expenditures related to that certain AFE# 145120008 (PRISM ID 32560) at Terminal 2 to replace the main 12kV electrical switchgear that experienced electrical damage due to several factors: nearing its equipment service life, component degradation, exposure to the elements. The main copper busbar component of the switchgear was recently replaced and dipped in epoxy coating. However, during the repairs, cracks on the insulation of the main horizontal operating bus were discovered. The exterior enclosure is slowly showing signs of corrosion and the glastic insulation materials are degrading.

6. Upon TRMC’s approval to complete the following projects, all capital costs incurred to connect the Los Angeles Wilmington and Carson refinery systems, as well as the crude and product pipeline systems: TCM Idea# 2013434786, AFE# 132110022-M (TCM Idea# 2013434419), TCM Idea# 2013434788, AFE# 132110023-M (TCM Idea# 2013434417), AFE# 132110025-M (TCM Idea# 2013434418), AFE# 132110030-M (TCM Idea# 2013434420), AFE# 132110031-M (TCM Idea# 2013434784), TCM Idea# 2013434785 and AFE# 132110026 (TCM Idea# 2013434137).

7. Upon TRMC’s approval to complete the project, all capital costs related to the project at Terminal 2 targeted to reduce Andeavor’s demurrage cost due to barge delivered additive alternative, under AFE# 132110024-M (TCM Idea# 2013434220).

8. All capital costs related to AFE# 131907046, the implementation of an equivalent solution using Andeavor ECC 6 MOC module, including necessary configuration changes and customization of interfaces to be completed and executed in line with other transformation projects identified as part of integrating other BP assets such as TMS5 to DTN Guardian3, Load Tracker, etc. in the Logistics area.

9. All capital costs related to AFE# 131907047. As a part of the BP Carson Tranche 1 Contribution Agreement, Andeavor acquired Maximo, i-Maintain, Maximo Mobile and Primavera. These applications are used for scheduling and managing routine maintenance tasks and planning capital projects (Primavera). These business functions will be transitioned to SAP PM (using GWOS) and a TSO instance of Primavera. This initiative should be performed in line with Maximo to SAP PM transformation project and with other logistics and refining projects.

 

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10. All capital costs related to AFE# 131907045. This project, in conjunction with Andeavor’s acquisition of the BP Carson City Refinery, is designed to transition and successfully integrate the Southwest’s Logistics Mechanical Integrity Inspection System Information Technology assets into the Andeavor Information Technology application landscape.

For West Coast Assets Contribution Agreement listed on Schedule VII:

Expense Projects

1. Nikiski Terminal . Tesoro Alaska shall reimburse the Partnership Group for any costs or expenses incurred by the Partnership Group to reinstate water supply to the Operating Company’s Nikiski Terminal in connection with the water suppression system.

2. Anacortes Light Ends Rail Facility. TRMC shall reimburse the Partnership Group for any costs and expenses incurred by the Partnership Group:

 

    to determine the adequacy of fire water at the facility;

 

    with respect to any modifications needed to be made to fire water system to provide adequate fire water; and

 

    for relocation of the knockout drum, if relocation is required.

3. Anacortes Storage Facility

• TRMC shall reimburse the Partnership Group for any costs and expenses incurred by the Partnership Group to restore Tank 135 to API 653 specifications. TRMC shall be deemed to be the generator of all hazardous waste and other waste removed from Tank 135 in connection with such cleaning and restoration and shall be responsible for all obligations arising as the generator of such hazardous waste and other waste.

• TRMC shall reimburse the Partnership Group for any costs and expenses incurred by the Partnership Group for decommissioning and repair of sewer lines for Tanks 165 and 166.

4. Martinez Light Ends Rail Facility . TRMC shall reimburse the Partnership Group for any costs and expenses incurred by the Partnership Group:

 

    to determine the adequacy of fire water at the facility; and

 

    with respect to any modifications needed to be made to fire water system to provide adequate fire water.

5. Martinez Clean Products Truck Rack . TRMC shall reimburse the Partnership Group for any costs and expenses incurred by the Partnership Group:

 

    if required to supplement data currently available in the baseline inspections records in order to properly document corrosion, to carry out new tank corrosion inspections on Tanks 777, 778 and 890, as well as any repairs resulting from such inspections to meet API 653 standards; and

 

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    with respect to Tank 777, the tank berm size and tank proximity evaluation scheduled to completed by year-end 2014, as well as any required adjustments resulting therefrom.

6. Martinez Light Ends Storage . If required to supplement data currently available in the baseline inspection records in order to properly document pipe integrity, TRMC shall reimburse the Partnership Group for any costs and expenses incurred by the Partnership Group for inspections and analyses conducted to confirm baseline pipe integrity by year-end 2014, as well as any repairs arising from defects identified through such inspections.

7. Tesoro Alaska Pipeline

• Andeavor shall reimburse the Partnership Group for any costs or expenses incurred by the Partnership Group to carry out the repairs and tests identified in the Coffman Engineers report dated May 8, 2014, including the planned hydro-test in 2015 and any resulting repairs therefrom.

• Andeavor shall reimburse the Partnership Group for any costs or expenses incurred by the Partnership Group to carry out repairs identified pursuant to the inspection on the Tesoro Alaska Pipeline as a result of the inspection scheduled to begin June 30, 2014.

Capital Projects

Martinez Capital Projects

1. All capital costs related to AFE# 127100012 – Design, procure, and install Biodiesel Blending Facility at existing Martinez Tract 3 Truck Loading Rack.

2. All capital costs related to AFE# 132100017 – Martinez gasoline loading rack filtration.

3. All capital costs related to AFE# TBD regarding Fall Protection for Top Loading Tank Cars and Trucks.

4. All capital costs related to AFE# 132100017 regarding the installation of a new Tract 3 Gasoline Loading Rack Filtration System to replace the existing rental units.

5. All capital costs related to AFE# PTS 12475 regarding LPG Tank Car Loading Rack Improvements.

6. All capital costs related to AFE# TBD regarding the installation of a system to add ExxonMobil additives to gasoline at the Tr. 3 truck loading rack.

7. All capital costs related to AFE# 145110009 regarding the implementation of Tesoro Alaska Pipeline mainline delivery strainer.

 

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Alaska Capital Projects

1. All capital costs related to AFE# 125100055 – Additive reservoir tank and pumping system for the Nikiski Terminal truck loading rack.

2. All capital costs related to AFE# 125110005 – Fabrication and installation of a skid-mounted clay treatment system at the Tesoro Alaska Pipeline Port of Anchorage delivery facility.

3. All capital costs related to AFE# 125110007 – Provision of inline strainers upstream of the Kenai Pump station pipeline pumps and upstream of the Anchorage receiving station control valve.

4. All capital costs related to AFE# 124100034 – Purchase and installation of (5) IP CCTV Cameras, and security video monitoring station for Tesoro Alaska Pipeline Anchorage control room (located at the Port of Anchorage Industrial Park), MLV 7 on Northern Lights Blvd, and the ASIG Filter Building located at Ted Stevens International Airport.

5. All capital costs related to AFE# 145110002 regarding the installation of semi-deep cathodic protection wells, a new rectifier and electrical service at the Tesoro Alaska Pipeline.

6. All capital costs related to AFE# 124100030 regarding new CCTV monitoring system at the Nikiski Terminal.

7. All capital costs related to AFE# 145120005 regarding a new cathodic protection anode bed and rectifier for the Nikiski Terminal.

 

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For 2015 Line 88 and Carson Tankage Contribution Agreement listed on Schedule VII:

Capital Projects

TRMC shall reimburse the Partnership Group for:

1. Upon mutual consent on project scope between TRMC and the Partnership, TRMC shall reimburse the Partnership Group for all capital costs incurred for the execution of the following piping systems projects: AFE# 136104160BP (TCM Idea# 2013218160), TCM Idea# 2013212538, TCM idea# 2013212540 and TCM Idea# 2013212539. For any such projects listed above in this section 1 that are required to maintain safe operation of the Assets, the Partnership shall determine the final project scope in its sole discretion.

2. Upon mutual consent on project scope between TRMC and the Partnership, TRMC shall reimburse the Partnership Group for all capital costs incurred for the execution of the following instrumentation and control projects: AFE# 154100014 (TCM Idea# 2014217001), TCM Idea #2014217008, AFE# 136104169BP (TCM Idea# 2013218169), AFE# 136104190BP (TCM Idea# 2013218190), TCM Idea# 2013212558, and TCM Idea # 2014217023. For any such projects listed above in this section 2 that are required to maintain safe operation of the Assets, the Partnership shall determine the final project scope in its sole discretion.

3. Upon mutual consent on project scope between TRMC and the Partnership, TRMC shall reimburse the Partnership Group for all capital costs incurred for the execution of the following tank improvements: TCM Idea# 2014217135 (tk 56), TCM Idea# 2013212585 (tk 1), TCM Idea# 2014217132 (tk 90), TCM Idea# 2014217133 (tk 11), TCM Idea# 2013212575 (tk 34), TCM Idea # 2013212587 (tk 35), TCM Idea# 2013212588 (tk 10), TCM Idea# 2013212589 (tk 58), TCM Idea# 2013212592 (tk 39), TCM Idea# 2013212593 (tk 968), TCM Idea# 2013212595 (tk 60), TCM Idea# 2013212596 (tk 69), TCM Idea # 2013212597 (tk 57), TCM Idea# 2013212599 (tk 51). For any such projects listed above in this section 3 that are required to maintain safe operation of the Assets, the Partnership shall determine the final project scope in its sole discretion.

4. All capital costs related to the repair or replacement of brick structure piping supports, with the scope of repairs to be developed in 2016 and the execution of such repairs to be completed in 2017.

5. All capital costs related to the upgrade or replacement of the cathodic protection system for the tanks as identified through a cathodic protection assessment to be completed prior to year end 2016. An action plan will be developed to address recommendations identified through the assessment. The program is expected to commence in 2016 and will be executed over a 4-year period.

6. All capital costs related to the multi-phase upgrade or replacement of tank level measurement and transmitter instruments, upon mutual consent of TRMC and the Partnership of the scope for the multi-year project. Notwithstanding the foregoing, the Partnership in its

 

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sole discretion shall determine the final scope of any element of the tank level instrument upgrade project required to maintain safe operation of the Assets. TRMC’s reimbursement to the Partnership Group for capital costs incurred during the Term to complete the tank level instrument upgrade or replacement project shall not exceed $15,000,000 in the aggregate.

Expense Projects

1. With respect to the Remaining Pipeline 88 Interest (as defined in the 2015 Line 88 and Carson Tankage Contribution Agreement listed on Schedule VII), TRMC shall reimburse the Partnership for any costs and expenses associated with curing any anomalies identified by the August 2015 in-line inspection thereof.

2. With respect to the Tankage (as defined in the 2015 Line 88 and Carson Tankage Contribution Agreement listed on Schedule VII), as well as the land on which such Tankage is located, TRMC shall reimburse the Partnership for any costs and expenses associated with any liabilities, costs and expenses that might be imposed upon the Partnership as operator of the Tankage and which relate to the environmental condition of the land on which the Tankage is located and surrounding lands, including but not limited to any government-imposed fines or remediation costs and natural resource damages, but excluding (i) any liabilities, costs and expenses that arise from any releases or discharges of hydrocarbons or other substances from the Tankage after the date hereof or (ii) any liabilities, costs and expenses that arise from negligent acts or omissions or willful misconduct of the Partnership and its agents, contractors and representatives.

3. Until the later of (i) November 12, 2020 or (ii) the completion of any repairs identified by any applicable non-invasive or external inspections that occurred prior to such date, TRMC shall reimburse the Partnership Group for any costs and expenses incurred by the Partnership Group to restore any tank included in the 2015 Line 88 and Carson Tankage Contribution Agreement listed on Schedule VII to API 653 or API 510 specifications that are identified through the Partnership Group’s non-invasive or external inspections.

4. During the term (including any extension thereof) of the Carson II Storage Services Agreement, dated as of November 12, 2015, by and among TRMC, the General Partner, the Partnership and the Operating Company (the “Carson II Storage Agreement”), TRMC shall reimburse the Partnership Group for any costs and expenses incurred by the Partnership Group to restore any tank included in the 2015 Line 88 and Carson Tankage Contribution Agreement listed on Schedule VII to API 653 or API 510 specifications, as determined by the results of the first scheduled internal inspection of any such tank after the date hereof (the “First Internal Inspection”). TRMC shall be deemed to be the generator of all hazardous waste and other waste removed from any such tanks in connection with such cleaning and restoration and shall be responsible for all obligations arising as the generator of such hazardous waste and other waste.

 

  a) TRMC and the Operating Company shall mutually agree on the inspection schedule and the duration of such inspections so as to minimize disruption within the Wilmington and Carson refinery systems, with TRMC having the right to approve the final inspection schedule.

 

Page 10/16 of Schedule VI to Schedules to

Fourth Amended and Restated Omnibus Agreement


  b) If TRMC fails to renew the Carson II Storage Services Agreement, prior to November 12, 2022, in accordance with the terms thereof, the Partnership Group may elect to accelerate API 653 or API 510 inspections prior to the expiration of the Carson II Storage Agreement.

5. Notwithstanding Sections 3 and 4 above, the parties agree that the following tanks included in the 2015 Line 88 and Carson Tankage Contribution Agreement listed on Schedule VII have been inspected, cleaned, and repaired to ensure compliance with API 653 or API 510 standards within the 24 months prior to the date of that Contribution Agreement, and are excluded from the reimbursement requirements listed above unless such actions fail to meet such compliance standards due to the negligence of TRMC:

 

Tank Number

   Year of Last
Inspection
 

53

     2013  

87

     2013  

41

     2013  

4

     2013  

88

     2013  

5

     2013  

24

     2013  

325

     2013  

326

     2013  

45

     2014  

65

     2014  

89

     2014  

276

     2014  

289

     2014  

303

     2014  

340

     2014  

50

     2014  

302

     2014  

138

     2014  

139

     2014  

289

     2015  

65

     2015  

969

     2015  

40

     2015  

955

     2015  

194

     2015  

 

Page 11/16 of Schedule II to Schedules to

Fourth Amended and Restated Omnibus Agreement


For 2016 Alaska Assets Contribution Agreement listed on Schedule VII:

KENAI TANKAGE:

Capital Projects

TAC shall reimburse the Partnership Group for:

 

  1. Upon mutual consent on project scope between TAC and the Partnership, TAC shall reimburse the Partnership Group for all capital costs incurred for the execution of the following instrumentation and control projects: AFE# 2012217023 (TCM Idea# 137100002), TCM Idea# 2014216018, TCM Idea# 2007002425. For any such projects listed above in this section 1 that are required to maintain safe operation of the Assets, the Partnership shall determine the final project scope in its sole discretion.

 

  2. All capital costs related to the assessment and upgrade or replacement of tank level measurement and transmitter instruments, upon mutual consent of TAC and the Partnership of the scope for the multi-year project. Notwithstanding the foregoing, the Partnership in its sole discretion shall determine the final scope of any element of the tank level instrument upgrade project required to maintain safe operation of the Assets.

 

  3. All capital costs related to installation of tank liners during first API 653 inspection cycle to bring each tank into conformance with Alaska Department of Environmental Conversation standards.

 

  4. All capital costs related to the assessment and necessary upgrades of cathodic protection system including:

 

    Additional anode ground beds

 

    Additional surface distributed anodes

 

    Additional amperes of cathodic protection for on-grade storage tanks

 

    Under tank monitoring systems

The program is expected to commence in 2016 and will be executed over a 3-year period.

 

  5. All capital costs related to internal inspection, assessment and repair of Tank 11 internal floating roof.

Expense Projects

 

  1. The parties agree that Tank 37 included in the Alaska Assets Contribution Agreement listed on Schedule VII have been inspected, cleaned, and repaired to ensure compliance with API 653 or API 510 standards within the 24 months prior to the date hereof, and are excluded from the reimbursement requirements listed above unless such actions fail to meet such compliance standards due to the negligence of TAC.

 

  2. Any costs or expenses related to:

 

Page 12/16 of Schedule VI to Schedules to

Fourth Amended and Restated Omnibus Agreement


    Completion of pressure relief documentation, expected to be complete by year-end 2016.

 

    Completion of area classification plans per NEC 500.4, expected to be complete by year-end 2017.

ANCHORAGE AND FAIRBANKS TERMINALS:

Capital Projects

TAC shall reimburse the Partnership Group for:

 

  1. All capital costs related to:

 

  a) Anchorage Terminal

 

    Installation of permanent fire water pipeline supports with proper coating; expected to be complete by year-end 2017.

 

    Assessment, evaluation and potential replacement of two deep anode ground beds (No. 2 and No. 5); expected to be completed within cathodic protection program by year-end 2018.

 

    Installation of third tank floor on Tank 4236 with either new cathodic protection system or an El Segundo system; expected to be complete by year-end 2020.

 

    Assessment and upgrades to add access platforms and roof protection to east side filter vessels; expected to be complete by year-end 2017.

 

  b) Fairbanks Terminal

 

    Assessment, evaluation and potential replacement of two deep anode ground beds and installation of two new rectifiers to allow ground beds to be operated independently; expected to be completed within cathodic protection program by year-end 2018.

Expense Projects

 

  1. Any costs or expenses related to:

 

  a. Anchorage Terminal

 

    Inspection and assessment of buried product pipeline; expected to be complete by year-end 2017.

 

    Assessment of manual operation of rail car sump tankage; expected to be complete by year-end 2017.

 

  b. Fairbanks Terminal – Any costs or expenses related to:

 

    Arc flash assessment; expected to be complete by year-end 2017.

Relief valve sizing and selection assessment; expected to be complete by year-end 2017.

 

Page 13/16 of Schedule VI to Schedules to

Fourth Amended and Restated Omnibus Agreement


For Martinez Assets Contribution Agreement listed on Schedule VII:

Capital Projects

TRMC shall reimburse the Partnership Group for:

1. Upon mutual consent on project scope between TRMC and the Partnership, TRMC shall reimburse the Partnership Group for all capital costs incurred for the execution of the following secondary containment projects identified for Tract 3 and Tract 6: AFE# 127100010 (TCM Idea# 2007000713), TCM Idea# 2012211027. In addition, TRMC shall reimburse the Partnership for any additional capital costs or expenses that are associated with the regulatory mandated validation of secondary containment volumes for the Spill Prevention Controls and Countermeasures Plan. For any such projects listed above in this section 1 that are required to maintain safe operation and compliance of the Assets, the Partnership shall determine the final project scope in its sole discretion.

2. Upon mutual consent on project scope between TRMC and the Partnership, TRMC shall reimburse the Partnership Group for all capital costs incurred for the execution of the following tank repairs, improvements and new build projects: AFE# 152100015 (TCM Idea# 2007000694), TCM Idea# 2007000701, TCM Idea# 2009001043, TCM Idea# 2012211055, TCM Idea# 2012211056, TCM Idea# 2012211080, TCM Idea# 2012211082, TCM Idea# 2013211049, TCM Idea# 2013211073, TCM Idea# 2014211011, TCM Idea# 2014211038, TCM Idea# 2014211040. For any such projects listed above in this section 2 that are required to maintain safe operation and compliance of the Assets, the Partnership shall determine the final project scope in its sole discretion.

3. Upon mutual consent on project scope between TRMC and the Partnership, TRMC shall reimburse the Partnership Group for all capital costs incurred for the execution of the Avon Warf Upgrade project (MOTEMS), AFE# 077100030 (TCM Idea# 2007001314), and the Avon Wharf Pipeline Surge Protection project, AFE # 154100001 (TCM Idea # 2012211075). In addition, TRMC shall reimburse the Partnership for any additional capital costs or expenses that are determined to be required to bring the Avon Wharf into compliance with MOTEMS at the time of the commencement of service of the replacement Wharf, but not for future MOTEMS that may be imposed after the replacement Wharf is approved and permitted for operation. For any such projects listed above in this section 3 that are required to maintain safe operation and compliance of the Assets, the Partnership shall determine the final project scope in its sole discretion.

4. Upon mutual consent on project scope between TRMC and the Partnership, TRMC shall reimburse the Partnership Group for all capital costs incurred for the execution of the following miscellaneous projects: TCM Idea# 2007001600, TCM Idea# 2014211008. For any such projects listed above in this section 4 that are required to maintain safe operation of the Assets, the Partnership shall determine the final project scope in its sole discretion.

5. All capital costs related to the replacement and associated initial permitting requirements of the Marine Vapor Control System.

 

Page 14/16 of Schedule VI to Schedules to

Fourth Amended and Restated Omnibus Agreement


6. All capital costs related to the upgrade or replacement of the cathodic protection system for the tanks as identified through a cathodic protection assessment. An action plan will be developed to address recommendations identified through the assessment. The program is expected to commence in 2017 and will be executed over a 4-year period.

7. All capital costs and expenses that may be associated with the Asset Retirement Obligations with respect to the existing Avon Wharf and its berths (but not including any future costs of demolition and retirement of the structures on the replacement Wharf now being constructed).

8. All capital costs and expenses that may be associated with the removal of abandoned pipelines in the Licensed Premises, but only to the extent that such abandoned pipelines have never been used to provide services under the Martinez Storage Services Agreement and such pipelines are then required to be removed pursuant to applicable law, regulation or governmental order.

9. All capital costs and expenses related to the Getty pipeline thermal expansion assessment and potential relocation of the pipeline above ground, per refinery inspection recommendation.

10. All capital costs and expenses related to the assessment and potential repairs to underground storm water piping.

Expense Projects

1. The parties agree that the following tanks included in the Martinez Tankage Contribution Agreement listed on Schedule VII have been inspected, cleaned, and repaired to ensure compliance with API 653 or API 510 standards within the 24 months prior to the date of that Contribution Agreement, or the next scheduled tank inspection falls beyond the year 2036, and such tanks are excluded from the reimbursement requirements listed in Section 5.1(a) of this Agreement, unless such actions fail to meet such compliance standards due to the negligence of TRMC.

 

Tank Number

026
258
517
601
612
641
690
701
702
709
710
711

 

Page 15/16 of Schedule VI to Schedules to

Fourth Amended and Restated Omnibus Agreement


For Assets owned by Western Refining, Inc. and Western Refining Logistics LP and their subsidiaries prior to the Closing Date of the Merger Agreement and acquired by the Partnership pursuant to the Merger Agreement by virtue of its acquisition of WNRL thereunder:

None, except as provided under the SERA, which and shall be the exclusive provisions for all such matters provided in the SERA.

 

Page 16/16 of Schedule VI to Schedules to

Fourth Amended and Restated Omnibus Agreement


Schedule VII

Contribution Agreements, Other Transactions and Applicable Terms

Initial Contribution Agreement

 

Contribution Agreement

  

Closing Date

  

First Deadline
Date

  

Second
Deadline
Date

  

Andeavor
Indemnifying
Parties

  

Andeavor
Indemnified
Parties

  

Third
Deadline
Date

  

Omnibus
Section
5.1(b)
Applies

Contribution, Conveyance and Assumption Agreement, dated as April 26, 2011, among the Partnership, the General Partner, the Operating Company, Andeavor, Tesoro Alaska, TRMC and Tesoro High Plains Pipeline Company LLC    April 26, 2011    April 26, 2013   

April 26,

2016

   TRMC and Tesoro Alaska    TRMC    April 26, 2021    Yes

 

Page 1 /11 of Schedule VII to Schedules to

Fourth Amended and Restated Omnibus Agreement


Amorco Contribution Agreement

 

Contribution Agreement

  

Closing Date

  

First Deadline
Date

  

Second
Deadline
Date

  

Andeavor
Indemnifying
Parties

  

Andeavor
Indemnified
Parties

  

Third
Deadline
Date

  

Omnibus
Section
5.1(b)
Applies

Contribution, Conveyance and Assumption Agreement dated as of April 1, 2012, among the Partnership, the General Partner, the Operating Company, Tesoro and TRMC    April 1, 2012    April 1, 2014    April 1, 2017    TRMC    TRMC    April 1, 2022    Yes

 

Page 2 /11 of Schedule VII to Schedules to

Fourth Amended and Restated Omnibus Agreement


Long Beach Contribution Agreement

 

Contribution Agreement

  

Closing Date

  

First
Deadline
Date

  

Second
Deadline
Date

  

Andeavor
Indemnifying
Parties

  

Andeavor
Indemnified
Parties

  

Third
Deadline
Date

  

Omnibus
Section
5.1(b)
Applies

Contribution, Conveyance and Assumption Agreement executed as of September 14, 2012, among the Partnership, the General Partner, the Operating Company, Andeavor and TRMC    Execution Date is September 14, 2012, and various Effective Times are upon receipt of the Long Beach Approval, the CDFG Approval and the Other Approvals as set forth in the agreement, as applicable    September 14, 2014    September 14, 2017    TRMC    TRMC    September 14, 2022    Yes

 

Page 3 /11 of Schedule VII to Schedules to

Fourth Amended and Restated Omnibus Agreement


Anacortes Rail Facility Contribution Agreement

 

Contribution Agreement

  

Closing Date

  

First Deadline
Date

  

Second
Deadline
Date

  

Andeavor
Indemnifying
Parties

  

Andeavor
Indemnified
Parties

  

Third Deadline
Date

  

Omnibus
Section
5.1(b)
Applies

Contribution, Conveyance and Assumption Agreement executed as of November 15, 2012, among the Partnership, the General Partner, the Operating Company, Andeavor and TRMC    November 15, 2012    November 15, 2014    November 15, 2017    TRMC    TRMC    November 15, 2022    No

 

Page 4 /11 of Schedule VII to Schedules to

Fourth Amended and Restated Omnibus Agreement


BP Carson Tranche 1 Contribution Agreement

 

Contribution Agreement

  

Closing Date

  

First
Deadline
Date

  

Second
Deadline
Date

  

Andeavor
Indemnifying
Parties

  

Andeavor
Indemnified
Parties

  

Third
Deadline
Date

  

Omnibus
Section
5.1(b)
Applies

Contribution, Conveyance and Assumption Agreement executed as of May 17, 2013, among the Partnership, the General Partner, the Operating Company, Andeavor and TRMC    June 1, 2013    Not Applicable    Not Applicable    Not Applicable    Not Applicable    Not Applicable    No

 

Page 5 /11 of Schedule VII to Schedules to

Fourth Amended and Restated Omnibus Agreement


BP Carson Tranche 2 Contribution Agreement

 

Contribution Agreement

  

Closing Date

  

First
Deadline
Date

  

Second
Deadline
Date

  

Andeavor
Indemnifying
Parties

  

Andeavor
Indemnified
Parties

  

Third
Deadline
Date

  

Omnibus
Section
5.1(b)
Applies

Contribution, Conveyance and Assumption Agreement executed as of November 18, 2013, among the Partnership, the General Partner, the Operating Company, Andeavor, TRMC and Carson Cogeneration Company    December 6, 2013    Not Applicable    Not Applicable    Not Applicable    Not Applicable    Not Applicable    No

 

Page 6 /11 of Schedule VII to Schedules to

Fourth Amended and Restated Omnibus Agreement


West Coast Assets Contribution Agreement

 

Contribution Agreement

  

Closing Date

  

First Deadline
Date

  

Second Deadline
Date

  

Andeavor
Indemnifying
Parties

  

Andeavor
Indemnified
Parties

  

Third Deadline
Date

  

Omnibus
Section
5.1(b)
Applies

Contribution, Conveyance and Assumption Agreement executed as of June 23, 2014, among the Partnership, the General Partner, the Operating Company, Tesoro Logistics Pipelines LLC, Andeavor, TRMC and Tesoro Alaska   

First Closing Date: July 1, 2014

 

Second Closing Date has the meaning set forth in the Contribution Agreement

   The second (2 nd ) anniversary of the First Closing Date or the Second Closing Date, as applicable   

With respect to Section 3.1(a): Not applicable

 

With respect to Section 3.2: The fifth (5 th ) anniversary of the First Closing Date or the Second Closing Date, as applicable

   Andeavor, TRMC, Tesoro Alaska    Andeavor, TRMC, Tesoro Alaska    The tenth (10 th ) anniversary of the First Closing Date or the Second Closing Date, as applicable.    Yes

 

Page 7 /11 of Schedule VII to Schedules to

Fourth Amended and Restated Omnibus Agreement


2015 Line 88 and Carson Tankage Contribution Agreement

 

Contribution Agreement

  

Closing Date

  

First Deadline
Date

  

Second Deadline
Date

  

Andeavor
Indemnifying
Parties

  

Andeavor
Indemnified
Parties

  

Third Deadline
Date

  

Omnibus
Section
5.1(b)
Applies

Contribution, Conveyance and Assumption Agreement effective as of November 12, 2015, among the Partnership, the General Partner, the Operating Company, Tesoro SoCal Pipeline Company LLC, Andeavor, TRMC and Carson Cogeneration Company    November 12, 2015    November 12, 2017    November 12, 2020    Andeavor, TRMC, Carson Cogen    Andeavor, TRMC, Carson Cogen    November 12, 2025    Yes

 

Page 8 /11 of Schedule VII to Schedules to

Fourth Amended and Restated Omnibus Agreement


2016 Alaska Assets Contribution Agreement

 

Contribution Agreement

  

Closing Date

  

First Deadline
Date

  

Second Deadline
Date

  

Andeavor
Indemnifying
Parties

  

Andeavor
Indemnified
Parties

  

Third Deadline
Date

  

Omnibus
Section
5.1(b)
Applies

Contribution, Conveyance and Assumption Agreement effective as of July 1, 2016, among the Partnership, the General Partner, the Operating Company, Tesoro Alaska Company LLC, and Andeavor

 

KENAI TANKAGE

 

   July 1, 2016    July 1, 2018    July 1, 2021    Tesoro Alaska Company LLC    Not applicable    July 1, 2026    Yes

Contribution, Conveyance and Assumption Agreement effective as of July 1, 2016, among the Partnership, the General Partner, the Operating Company, Tesoro Alaska Company LLC, and Andeavor

 

ANCHORAGE AND

FAIRBANKS TERMINALS

   September 16, 2016    September 16, 2018    September 16, 2023    Tesoro Alaska Company LLC    Not applicable    September 16, 2026    Yes

 

Page 9 /11 of Schedule VII to Schedules to

Fourth Amended and Restated Omnibus Agreement


Martinez Assets Contribution Agreement

 

Contribution Agreement

  

Closing Date

  

First Deadline
Date

  

Second Deadline
Date

  

Andeavor
Indemnifying
Parties

  

Andeavor
Indemnified
Parties

  

Third Deadline
Date

  

Omnibus
Section
5.1(b)
Applies

Contribution, Conveyance and Assumption Agreement effective as of November 21, 2016, among the Partnership, the General Partner, the Operating Company, TRMC and Andeavor    November 21, 2016    November 21, 2018    November 21, 2021    TRMC    Not applicable    November 21, 2026    Yes

 

Page 10 /11 of Schedule VII to Schedules to

Fourth Amended and Restated Omnibus Agreement


For Assets owned by Western Refining, Inc. and Western Refining Logistics LP and their subsidiaries prior to the Closing Date of the Merger Agreement and acquired by the Partnership pursuant to the Merger Agreement by virtue of its acquisition of WNRL thereunder:

 

Pre-Merger Agreement WNRL
Assets

  

Closing Date

  

First
Deadline
Date

  

Second
Deadline
Date

  

Andeavor
Indemnifying
Parties

  

Andeavor
Indemnified
Parties

  

Third
Deadline
Date

  

Omnibus
Section
5.1(b)
Applies

For Assets owned by WNRL on the Closing Date of the Merger Agreement and acquired by the Partnership pursuant to the Merger Agreement by virtue of its acquisition of WNRL thereunder    October 30, 2017    Not Applicable    Not Applicable    Not Applicable    Not Applicable    Not Applicable    No

 

Page 11 /11 of Schedule VII to Schedules to

Fourth Amended and Restated Omnibus Agreement


Schedule VIII

Administrative Fee and Indemnification Deductibles

Monthly Administrative Fee

$1,083,333

Annual Environmental Deductible

$800,000

Annual ROW Deductible

$800,000

 

Page 1/1 of Schedule VIII to Schedules to

Fourth Amended and Restated Omnibus Agreement


Schedule IX

Special Indemnification Provisions

For Initial Contribution Agreement listed on Schedule VII :

None.

For Amorco Contribution Agreement listed on Schedule VII :

Addition to Right of Way Indemnification . As of the Closing Date for the Amorco Contribution Agreement, TRMC shall own the leasehold rights in the “Wharf Lease” issued by the California State Lands Commission and the easements, rights of way and permits for the “SHPL,” all as defined in the Amorco Contribution Agreement, and the Partnership Group shall provide operational, maintenance and management services with respect to such Assets pursuant to the MTUTA. Title to Wharf Lease rights and the SHPL are scheduled to be contributed to the Partnership Group at a later date, as set forth in the Amorco Contribution Agreement. The Right of Way Indemnification set forth in Section 3.2 herein applies to the extent that a Loss arises with respect to a Partnership Group Member’s interests under the MTUTA before title to such Assets is contributed to the Partnership Group Member or with respect to a Partnership Group Member’s failure to become the owner of such valid and indefeasible easement rights or fee ownership or leasehold interests in such Assets after they are finally contributed to the Partnership Group as contemplated in the Amorco Contribution Agreement. The Closing Date provided for in this Agreement shall be as set forth above, without regard to when title to these Assets is finally contributed to a Partnership Group Member.

For Long Beach Contribution Agreement listed on Schedule VII :

Addition to Right of Way Indemnification . As of the Closing Date for the Long Beach Contribution Agreement, TRMC shall own the leasehold rights in the “Terminal Lease” issued by the Port of Long Beach and the easements, rights of way and permits for the “Terminal Pipelines,” all as defined in the Long Beach Contribution Agreement, and the Partnership Group shall provide operational, maintenance and management services with respect to such Assets pursuant to the Long Beach Operating Agreement, as defined in the Long Beach Contribution Agreement. Title to Terminal Lease rights and the Terminal Pipelines are scheduled to be contributed to the Partnership Group at a later date, as set forth in the Long Beach Contribution Agreement. The Right of Way Indemnification set forth in Section 3.2 herein applies to the extent that a Loss arises with respect to a Partnership Group Member’s interests under the BAUTA before title to such Assets is contributed to the Partnership Group Member or with respect to a Partnership Group Member’s failure to become the owner of such valid and indefeasible easement rights or fee ownership or leasehold interests in such Assets after they are finally contributed to the Partnership Group as contemplated in the Long Beach Contribution Agreement. The Closing Date provided for in this Agreement shall be as set forth above, without regard to when title to these Assets is finally contributed to a Partnership Group Member.

 

Page 1 / 5 of Schedule IX to Schedules to

Fourth Amended and Restated Omnibus Agreement


For Anacortes Rail Facility Contribution Agreement listed on Schedule VII :

Notwithstanding any other provisions of (i) the Fourth Amended and Restated Omnibus Agreement, (ii) the Anacortes Track Use and Throughput Agreement among the General Partner, the Partnership, the Operating Company and TRMC, (iii) the Anacortes Mutual Track Use Agreement among the General Partner, the Partnership, the Operating Company and TRMC, and (iv) the Ground Lease between TRMC and the Operating Company, all dated as of November 15, 2012, the parties hereto agree that the indemnification provisions of any of those agreements shall control over any of the other agreements to the extent the subject matter of the indemnification is specifically referenced or provided for in that agreement. For the avoidance of doubt, the indemnification provisions of the Fourth Amended and Restated Omnibus Agreement shall be subordinate to the respective indemnification provisions of each of the other agreements referenced above.

For BP Carson Tranche 1 Contribution Agreement listed on Schedule VII :

Notwithstanding any other provisions of (i) the Fourth Amended and Restated Omnibus Agreement, (ii) the BP Carson Tranche 1 Contribution Agreement listed on Schedule VII , (iii) the Master Terminalling Services Agreement – Southern California among TRMC, the General Partner, the Partnership and the Operating Company dated as of June 1, 2013, as amended, and (iv) the Carson Storage Services Agreement among TRMC, the General Partner, the Partnership and the Operating Company dated as of June 1, 2013, the parties hereto agree that the indemnification provisions of any of those agreements shall control over any of the other agreements to the extent the subject matter of the indemnification is specifically referenced or provided for in that agreement. In the event of a conflict of provisions of any of the above-referenced agreements and the Carson Assets Indemnity Agreement, the provisions of the Carson Assets Indemnity Agreement shall prevail with respect to issues related to the contribution of the assets described therein, but not with respect to the ordinary operations of such assets as set forth in the above-referenced agreements. Notwithstanding anything to the contrary in the Fourth Amended and Restated Omnibus Agreement, the indemnification provisions of Sections 3.2 and 3.5 thereof shall not apply to the Assets as defined in the BP Carson Tranche 1 Contribution Agreement listed on Schedule VII .

 

Page 2 / 5 of Schedule IX to Schedules to

Fourth Amended and Restated Omnibus Agreement


For BP Carson Tranche 2 Contribution Agreement listed on Schedule VII :

Notwithstanding any other provisions of (i) the Fourth Amended and Restated Omnibus Agreement, (ii) the BP Carson Tranche 2 Contribution Agreement listed on Schedule VII , (iii) the Amended and Restated Master Terminalling Services Agreement – Southern California among TRMC, the General Partner, the Partnership and the Operating Company dated as of December 6, 2013, (iv) the Long Beach Storage Services Agreement among TRMC, the General Partner, the Partnership and the Operating Company dated as of December 6, 2013, (v) the Berth 121 Operating Agreement between the Operating Company and Carson Cogeneration Company, dated as of December 6, 2013, (vi) the Terminals 2 and 3 Operating Agreement among the Partnership, the General Partner, the Operating Company and TRMC, dated as of December 6, 2013, (vii) the Amended and Restated Long Beach Berth Access Use and Throughput Agreement among the Partnership, the General Partner, the Operating Company and TRMC, dated as of December 6, 2013, (viii) the Long Beach Berth Throughput Agreement among the Partnership, the General Partner, the Operating Company, TRMC and Carson Cogeneration Company, dated as of December 6, 2013, (ix) the SoCal Transportation Services Agreement between TRMC and Tesoro SoCal Pipeline Company LLC, dated as of December 6, 2013, (x) the Long Beach Pipeline Throughput Agreement among the Partnership, the General Partner, the Operating Company and TRMC, dated as of December 6, 2013, (xi) the Carson Coke Handling Services Agreement among the Partnership, the General Partner, the Operating Company and TRMC, dated as of December 6, 2013, (xii) the Coke Barn Lease Agreement between the Operating Company and TRMC, dated as of December 6, 2013 and (xiii) the Terminals 2 and 3 Ground Lease between the Operating Company and TRMC, dated as of December 6, 2013, the parties hereto agree that the indemnification provisions of any of those agreements shall control over any of the other agreements to the extent the subject matter of the indemnification is specifically referenced or provided for in that agreement. In the event of a conflict of provisions of any of the above-referenced agreements and the Carson Assets Indemnity Agreement, the provisions of the Carson Assets Indemnity Agreement shall prevail with respect to issues related to the contribution of the assets described therein, but not with respect to the ordinary operations of such assets as set forth in the above-referenced agreements.

 

Page 3 / 5 of Schedule IX to Schedules to

Fourth Amended and Restated Omnibus Agreement


For West Coast Assets Contribution Agreement listed on Schedule VII:

Notwithstanding any other provisions of (i) the Fourth Amended and Restated Omnibus Agreement, (ii) the Terminalling Services Agreement – Nikiski, among the General Partner, the Partnership, the Operating Company and Tesoro Alaska, (iii) the Terminalling Services Agreement – Anacortes, among the General Partner, the Partnership, the Operating Company and TRMC, (iv) the Terminalling Services Agreement – Martinez, among the General Partner, the Partnership, the Operating Company and TRMC, and (v) the Storage Services Agreement – Anacortes, the Terminalling Services Agreement – Anacortes, among the General Partner, the Partnership, the Operating Company and TRMC, the parties hereto agree that the indemnification provisions of any of those agreements shall control over any of the other agreements to the extent the subject matter of the indemnification is specifically referenced or provided for in that agreement. In the event of a conflict of provisions of any of the above-referenced agreements and the Fourth Amended and Restated Omnibus Agreement, the provisions of the Fourth Amended and Restated Omnibus Agreement shall prevail with respect to issues related to the contribution of the assets described therein, but not with respect to the ordinary operations of such assets as set forth in the above-referenced agreements.

For 2015 Line 88 and Carson Tankage Contribution Agreement listed on Schedule VII:

Other . Notwithstanding any other provisions of (i) the Fourth Amended and Restated Omnibus Agreement, (ii) the Carson II Storage Agreement, and (iii) Amendment No. 1 to the (SoCal) Transportation Services Agreement dated November 12, 2015, between TRMC and Tesoro SoCal Pipeline Company LLC, the parties hereto agree that the indemnification provisions of any of those agreements shall control over any of the other agreements to the extent the subject matter of the indemnification is specifically referenced or provided for in that agreement. In the event of a conflict of provisions of any of the above-referenced agreements and the Fourth Amended and Restated Omnibus Agreement, the provisions of the Fourth Amended and Restated Omnibus Agreement shall prevail with respect to issues related to the contribution of the assets described therein, but not with respect to the ordinary operations of such assets as set forth in the above-referenced agreements.

For 2016 Alaska Assets Contribution Agreement listed on Schedule VII:

The Partnership Group agree that, after the Effective Date, they shall not knowingly breach any covenants of TAC contained in that certain Asset Purchase Agreement dated as of November 20, 2015 by and between Flint Hills Resources Alaska, LLC and TAC (the “Flint Hills APA”) as if the Partnership Group were parties thereto instead of TAC.

Notwithstanding any other provisions of (i) the Fourth Amended and Restated Omnibus Agreement, (ii) the Kenai Storage Services Agreement, and (iii) the Alaska Terminalling Services Agreement, the parties hereto agree that the indemnification provisions of any of those agreements shall control over any of the other agreements to the extent the subject matter of the indemnification is specifically referenced or provided for in that agreement. In the event of a conflict of provisions of any of the above-referenced agreements and the Fourth Amended and

 

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Fourth Amended and Restated Omnibus Agreement


Restated Omnibus Agreement, the provisions of the Fourth Amended and Restated Omnibus Agreement shall prevail with respect to issues related to the contribution of the assets described therein, but not with respect to the ordinary operations of such assets as set forth in the above-referenced agreements.

Notwithstanding any other provisions of the Fourth Amended and Restated Omnibus Agreement, the indemnification obligations of the Andeavor Entities under Section 3.1(a) of the Fourth Amended and Restated Omnibus Agreement with regard to the 2016 Environmental Consent Decree are limited to reimbursement for any capital expenditures that the Partnership Group may be required to make to comply therewith and any fines or other penalties which may be levied for any failure therewith (except to the extent such fines or other penalties are the result of the failure of the Partnership Group to comply therewith with regard to the contributed assets) and such indemnification obligations shall extend to or cover any increased ongoing operating or maintenance expenses incurred by the Partnership Group in connection with their compliance therewith.

For Martinez Assets Contribution Agreement listed on Schedule VII:

Notwithstanding any other provisions of (i) the Fourth Amended and Restated Omnibus Agreement, (ii) the Martinez Storage Services Agreement, dated as of November 21 2016, between TRMC and the Operating Company; (iii) the Avon Marine Terminal Operating Agreement, dated as of November 21 2016, between TRMC and the Operating Company; (iv) the License Agreement, dated as of November 21 2016, between TRMC and the Operating Company; and (v) the Avon Marine Terminal Sublease Agreement and the Avon Marine Terminal Use and Throughput Agreement to be entered into between TRMC and the Operating Company pursuant to Section 2.5 of the Martinez Assets Contribution Agreement, the parties hereto agree that the indemnification provisions of any of those agreements shall control over any of the other agreements to the extent the subject matter of the indemnification is specifically referenced or provided for in that agreement. In the event of a conflict of provisions of any of the above-referenced agreements and the Fourth Amended and Restated Omnibus Agreement, the provisions of the Fourth Amended and Restated Omnibus Agreement shall prevail with respect to issues related to the contribution of the assets described therein, but not with respect to the ordinary operations of such assets as set forth in the above-referenced agreements.

For Assets owned by WNRL on the Closing Date of the Merger Agreement and acquired by the Partnership pursuant to the Merger Agreement by virtue of its acquisition of WNRL thereunder:

Notwithstanding any other provisions of the Fourth Amended and Restated Omnibus Agreement, the Parties hereto agree that the indemnification provisions in Article VI of the SERA shall control and prevail over any of the provision of the Fourth Amended and Restated Omnibus Agreement, other than Section 3.5(b), and shall be the exclusive provisions for all indemnification obligations relating to the subject matter of the indemnities so provided in Article VI of the SERA.

 

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Fourth Amended and Restated Omnibus Agreement

Exhibit 10.3

Execution Version

FIRST AMENDED AND RESTATED SECONDMENT AND LOGISTICS SERVICES AGREEMENT

THIS FIRST AMENDED AND RESTATED SECONDMENT AND LOGISTICS SERVICES AGREEMENT (this “ Agreement ”), dated as of October 30, 2017, is made and entered into by and among the following entities, each of whom shall be referred to herein as a “Party” and collectively as the “Parties.”

Andeavor Group:

Andeavor, a Delaware corporation (“AND”), Tesoro Companies, Inc., a Delaware corporation (“TCI”), Tesoro Refining & Marketing Company LLC, a Delaware limited liability company (“TRMC”), Tesoro Alaska Company LLC, a Delaware limited liability company (“TAC”), Kenai Pipeline Company (“KPL”), a Delaware corporation, Carson Cogeneration Company, a Delaware corporation (CCC), Tesoro Great Plains Holdings Company LLC, a Delaware limited liability company (“TGPH”), Tesoro Great Plains Midstream LLC (“TGPM”), a Delaware limited liability company, Tesoro Great Plains Gathering & Marketing LLC, a Delaware limited liability company (“TGPGM”), BakkenLink Pipeline LLC, a Delaware limited liability company (“BLP”), ND Land Holdings LLC, a Delaware limited liability company (“NDLH”), and Dakota Prairie Refining Company, a Delaware limited liability company (“DPR”);

Western Refining Inc., a Delaware corporation (“WRI”), Western Refining GP, LLC, a Delaware limited liability company (“WRGP”), Western Refining Southwest, Inc. an Arizona corporation (“WRSW”), Western Refining Company, L.P., a Delaware limited partnership (“WRLP”), NT InterHold Co. LLC, a Delaware limited liability company (“NTI”), Northern Tier Energy GP LLC, a Delaware limited liability company (“NTEGP”), Northern Tier Energy LP, a Delaware limited partnership (“NTELP”), Northern Tier Energy LLC, a Delaware limited partnership (“NTE”), St. Paul Park Refining Co. LLC, a Delaware limited liability company (“SPPR”), Northern Tier Oil Transport LLC (“NTOT”), a Delaware limited liability company, Western Refining Conan Gathering Holdings, LLC, a Delaware limited liability company; (“WRCGH”), Western Refining Conan Gathering, LLC, a Delaware limited liability company (“WRCG”), Western Refining Delaware Basin Storage, LLC, a Delaware limited liability company (“WRDBS”) and,

(together with TCI, TRMC, TAC, KPL, CCC, TGPH, TGPM, BLP and NDLH, WRI, WRGP, WRSW, WRLP, NTI, NTEGP, NTELP, NTE, SPPR, NTOT, WRCGH, WRCG and WRDBS the “ Andeavor Group ”),

Logistics Group:

Andeavor Logistics LP (ANDX), a Delaware limited partnership, Tesoro Logistics GP, LLC, a Delaware limited liability company (the “General Partner”), Tesoro Logistics Operations LLC, a Delaware limited liability company (“TLO”), Tesoro Logistics Pipelines LLC, a Delaware limited liability company (“TLP”), Tesoro High Plains Pipeline Company LLC, a Delaware limited liability company (“THPPC”), Tesoro Logistics Northwest Pipeline LLC, a Delaware limited liability company (“TLNP”), Tesoro Alaska Pipeline Company LLC, a Delaware limited liability company, (“TAPL”) Tesoro SoCal Pipeline Company LLC, a Delaware limited liability company (“TSC”), Tesoro Alaska Terminals LLC, a Delaware limited liability company (“TAT”), Andeavor Field Services, LLC, a Delaware limited liability company (“AFS”), Andeavor Midstream Partners GP, LLC, a Delaware limited liability company (“Andeavor GP”), Andeavor Midstream Partners Operating, LLC, a Delaware limited liability company (“Andeavor OpCo”), Andeavor Gathering I, LLC, a Delaware limited liability company (“AGI”), Rendezvous Pipeline Company, LLC, a Colorado limited liability company (“Rendezvous”), Green River Processing, LLC, a Delaware limited liability company (“GRP”), and


Western Refining Logistics, LP, a Delaware limited partnership (“WRL”), Western Refining Logistics GP, LLC (“WNRLGP”), a Delaware limited liability company, WNRL Energy GP, LLC, a Delaware limited liability company (“WNRLEGP”), Western Refining Pipeline, LLC, a New Mexico limited liability company (“WRP”), Western Refining Wholesale, LLC, a Delaware limited liability company (“WRW”), Western Refining Terminals, LLC, a Delaware limited liability company (“WRT”), Western Refining Product Transport, LLC, a Delaware limited liability company (“WRPT”), and

(together with APC, ANDX, the General Partner, TLO, TLP, THPPC, TLNP, TAPL, SoCal Pipeline, TAT, Andeavor FS, Andeavor GP, Andeavor OpCo, Andeavor Gathering, Rendezvous, GRP, TRG, UFS, WRL, WNRLGP, WNRLEGP, WRP, WRW, WRT and WRPT the “ Logistics Group ”).

RECITALS:

WHEREAS , on July 1, 2014, certain of the Parties entered into that certain Secondment And Logistics Services Agreement (the “ Original Secondment Agreement ”) pursuant to which members of the Andeavor Group agreed to second certain of their personnel to the Logistics Group and members of the Logistics Group agreed to second certain of their personnel to the Andeavor Group, and the Andeavor Group agreed to provide to the Logistics Group certain materials, equipment, facilities, supplies and services necessary to operate, manage, maintain and report the operating results of the Logistics Group’s assets, including gathering pipelines, transportation pipelines, storage tanks, trucks, truck racks, terminal facilities, offices and related equipment, real estate and other assets or portions thereof of the Logistics Group, and the Logistics Group agreed to provide to the Andeavor Group certain materials, equipment, facilities, supplies and services necessary to operate, manage, maintain and report the operating results of the Andeavor Group’s refining and marketing and other commercial assets;

WHEREAS , subsequent to July, 1 2014, both the Andeavor Group and the Logistics Group have been expanded to include additional Parties, and the Original Secondment Agreement was amended by Amendment Number 1 dated as of December 2, 2014, by Amendment Number 2 dated as of March 31, 2016, and by Amendment Number 3 dated as of November 21, 2016;

WHEREAS , the Parties desire to supersede the Original Secondment Agreement, as previously amended, as of the date hereof and to enter into this Agreement to add additional Parties named above, among other things;

NOW, THEREFORE , in consideration of the premises and the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

1. DEFINITIONS

As used in this Agreement, the following capitalized terms have the meanings set forth below:

AFE ” shall mean an approval for expenditure.

Affiliate ” means, with respect to any Person, (a) any other Person directly or indirectly controlling, controlled by or under common control with such Person or (b) any Person owning or controlling fifty percent (50%) or more of the voting interests of such Person. For purposes of this definition, the term “controls,” “is controlled by” or “is under common control with” shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

 

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Agreement ” has the meaning set forth in the Preamble.

Allocation Percentage ” has the meaning set forth in Section 3(d) .

Andeavor Assets ” means the assets owned by, leased by or necessary for the operation of the business, properties or assets of any entity in the Andeavor Group.

Andeavor Group ” has the meaning set forth in the Preamble.

Andeavor Group Indemnified Parties ” has the meaning set forth in Section 11(b) .

Andeavor Seconded Employees ” has the meaning set forth in Section 2(a)(i) .

Andeavor Services ” means the Operational Services, Specialized Services and Other Services with respect to the Andeavor Assets either as set forth on the Service Schedules or as agreed upon by the applicable Parties pursuant to a Service Order.

Applicable Law ” means any applicable statute, law, regulation, ordinance, rule, determination, judgment, rule of law, order, decree, permit, approval, concession, grant, franchise, license, requirement, or any similar form of decision of, or any provision or condition of any permit, license or other operating authorization issued by any Governmental Authority having or asserting jurisdiction over the matter or matters in question, whether now or hereafter in effect.

Assets ” means the Logistics Assets and the Andeavor Assets.

Benefit Plans ” means each employee benefit plan, as defined in Section 3(3) of ERISA, and any other material plan, policy, program, practice, agreement, understanding or arrangement (whether written or oral) providing compensation or other benefits to any Seconded Employee (or to any dependent or beneficiary thereof), including, without limitation, any stock bonus, stock ownership, stock option, stock purchase, stock appreciation rights, phantom stock, restricted stock or other equity-based compensation plans, policies, programs, practices or arrangements, and any bonus or incentive compensation plan, deferred compensation, profit sharing, holiday, cafeteria, medical, disability or other employee benefit plan, program, policy, agreement or arrangement sponsored, maintained, or contributed to by the Andeavor Group or the General Partner, as the case may be, or any of their ERISA Affiliates, or under which either the Andeavor Group or the General Partner, or any ERISA Affiliate may have any obligation or liability, whether actual or contingent, in respect of or for the benefit of any Seconded Employee (but excluding workers’ compensation benefits (whether through insured or self-insured arrangements) and directors and officers liability insurance).

Business Day ” means a day, other than a Saturday or Sunday, on which banks in New York, New York are open for the general transaction of business.

Claim ” means any existing or threatened future claim, including third-party claims, demand, suit, action, investigation, proceeding, governmental action or cause of action of any kind or character (in each case, whether civil, criminal, investigative or administrative), known or unknown, under any theory, including those based on theories of contract, tort, statutory liability, strict liability, employer liability, premises liability, products liability, breach of warranty or malpractice.

 

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Confidential Information ” means all confidential, proprietary or non-public information of a Party, whether set forth in writing, orally or in any other manner, including all non-public information and material of such Party (and of companies with which such Party has entered into confidentiality agreements) that another Party obtains knowledge of or access to, including non-public information regarding products, processes, business strategies and plans, customer lists, research and development programs, computer programs, hardware configuration information, technical drawings, algorithms, know-how, formulas, processes, ideas, inventions (whether patentable or not), trade secrets, schematics and other technical, business, marketing and product development plans, revenues, expenses, earnings projections, forecasts, strategies, and other non-public business, technological, and financial information.

Contractor ” shall have the meaning set forth in Section 4(b).

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.

ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

ERISA Affiliate ” means any entity that would be treated as a single employer with such other entity under Sections 414(b), (c) or (m) of the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder or Section 4001(b)(1) of ERISA.

Extension Period ” has the meaning set forth in Section 6 .

Facilities ” means the facilities related to each of the entities in the Logistics Group.

Force Majeure ” means circumstances not reasonably within the control of the Service Provider and which, by the exercise of due diligence, the Service Provider is unable to prevent or overcome that prevent performance of the Service Provider’s obligations, including: acts of God, strikes, work stoppages, lockouts or other industrial disturbances, wars, riots, fires, floods, storms, orders of courts or Governmental Authorities, explosions, terrorist acts, breakage, accident to machinery, storage tanks or lines of pipe and inability to obtain or unavoidable delays in obtaining material or equipment and similar events.

Force Majeure Notice ” has the meaning set forth in Section 12(a) .

Fourth Amended and Restated Omnibus Agreement ” means that certain Fourth Amended and Restated Omnibus Agreement, entered into concurrently herewith, among Andeavor, TRMC, TCI, TAC, the General Partner and the Partnership, as such agreement may be amended, supplemented or restated from time to time.

General Partner ” means Tesoro Logistics GP, LLC, and its successors and assigns, who is 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.

Group ” shall mean either the Andeavor Group or the Logistics Group.

 

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Initial Term ” shall have the meaning set forth in Section 6 .

Licensed Premises ” shall have the meaning set forth in Section 4(c) .

Licensee Group ” shall have the meaning set forth in Section 4(c) .

Licensor Group ” shall have the meaning set forth in Section 4(c) .

Logistics Assets ” means the assets owned by, leased by or necessary for the operation of the business, properties or assets of any entity in the Logistics Group, and any future expansions thereof.

Logistics Group ” has the meaning set forth in the Preamble.

Logistics Group Indemnified Parties ” has the meaning set forth in Section 11(a) .

Logistics Services ” means the Operational Services, Specialized Services and Other Services with respect to the Logistics Assets either as set forth on the Service Schedules or as agreed upon by the applicable Parties pursuant to a Service Order.

Loss ” and “ Losses ” shall have the meaning set forth in Section 11(a) .

Operational Services ” means labor and other services performed for the purpose of providing operational and maintenance services related to the applicable Assets.

Original Secondment Agreement ” has the meaning set forth in the Recitals.

Other Services ” means services that are provided to directly support the applicable Assets that may be agreed upon between the Parties from time to time pursuant to a Service Order, in addition to Operational Services and Specialized Services.

Partnership ” means Andeavor Logistics LP, a Delaware limited partnership.

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

Partnership Seconded Employees ” has the meaning set forth in Section 2(a)(ii) .

Periods of Secondment ” has the meaning set forth in Section 2(d) .

Person ” means any individual, partnership, limited partnership, joint venture, corporation, limited liability company, limited liability partnership, trust, unincorporated organization or Governmental Authority or any department or agency thereof.

Receiving Party Personnel ” has the meaning set forth in Section 15(d) .

Seconded Employees ” means the Andeavor Seconded Employees and the Partnership Seconded Employees.

Seconded Employee Expenses ” has the meaning set forth in Section 3(b) .

Seconded Services ” shall mean the Logistics Services and/or the Andeavor Services, as applicable, performed by the applicable Seconded Employees.

 

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Secondment ” means each assignment of any Seconded Employees to a Secondment Recipient in accordance with the terms of this Agreement.

Secondment Provider ” has the meaning set forth in Section 3(a) .

Secondment Recipient ” has the meaning set forth in Section 3(a) .

Service Orders ” shall mean documents to be executed by the Parties with respect to the terms and conditions of professional and Logistics Services or Andeavor Services that may be agreed upon from time to time.

Services Reimbursement ” has the meaning set forth in Section 3(a) .

Service Schedules ” has the meaning set forth in Section 2(b)(i) .

Specialized Services ” means services requiring professional or other highly skilled and trained employees, which are provided to directly support the applicable Assets and repairs, replacements, improvements and expansions thereto, including engineering, procurement, environmental, safety and similar services.

Term ” shall have the meaning set forth in Section 6 .

Terminated Service ” has the meaning set forth in Section 9(a) .

Work ” “ has the meaning set forth in Section 4(a) .

2. SECONDED EMPLOYEES

(a) Employees .

(i) Subject to the terms of this Agreement, the Andeavor Group agrees to second the Andeavor Seconded Employees to the General Partner, and the General Partner agrees to accept the Secondment of the Andeavor Seconded Employees for the purpose of performing the Logistics Services. When used herein, the term “ Andeavor Seconded Employees ” means those employees of any member of the Andeavor Group who are engaged in providing the Logistics Services to the General Partner from time to time. The Andeavor Seconded Employees will remain at all times the employees of their respective employer in the Andeavor Group, but shall work under the direction, supervision and control of the General Partner when they are serving as Andeavor Seconded Employees.

(ii) Subject to the terms of this Agreement, the Logistics Group agrees to second the Partnership Seconded Employees to the Andeavor Group, and the Andeavor Group agrees to accept the Secondment of the Partnership Seconded Employees for the purpose of performing the Andeavor Services. When used herein, the term “ Partnership Seconded Employees ” means those employees of the General Partner or other member of the Logistics Group who are engaged in providing the Andeavor Services to the Andeavor Group from time to time. The Partnership Seconded Employees will remain at all times the employees of the of their respective employer in the Logistics Group, but shall work under the direction, supervision and control of the Andeavor Group when they are serving as Partnership Seconded Employees.

 

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(b) Services .

(i) The Andeavor Seconded Employees shall provide to the Logistics Group the Operational Services more particularly described in Schedule A attached to this Agreement for each respective Facility (the “ Service Schedules ”), which Operational Services, the Parties agree, shall be performed under the direction and control of the General Partner. In addition, the Parties acknowledge and agree that some Operational Services listed on the Service Schedules may be expanded, discontinued or modified in scope. These items will be negotiated in good faith by the Parties and the Service Schedules will be revised in writing by the Parties as required. Further, Andeavor Seconded Employees will provide assistance to the Logistics Group from time to time with respect to Specialized Services and Other Services. The terms applicable to Logistics Services will be negotiated in good faith by the applicable Parties and will be reflected in individual Service Orders executed by the applicable Parties identifying the specific Logistics Services to be provided, the timing of those Logistics Services, the method of compensation for those Logistics Services and other terms that may be applicable to those Logistics Services, in addition to the provisions of this Agreement and the other agreements among the Parties.

(ii) The Partnership Seconded Employees shall provide to the Andeavor Group the Andeavor Services more particularly described in the Service Schedules for each respective Facility, which Andeavor Services, the Parties agree, shall be performed under the direction and control of the Andeavor Group. The Parties may from time to time, by mutual agreement, agree on various Andeavor Services to be provided by the Partnership Seconded Employees. The Andeavor Services shall be exclusive of the primary services being provided by TLO to the Andeavor Group under the commercial agreements executed by the applicable Parties and the administrative services being provided under the Third Amended and Restated Omnibus Agreement. Specific terms applicable to Andeavor Services will be negotiated in good faith by the applicable Parties and will be reflected in individual Service Orders executed by the applicable Parties identifying the specific Andeavor Services to be provided, the timing of those Andeavor Services, the method of compensation for those Andeavor Services and other terms that may be applicable to those Andeavor Services, in addition to the provisions of this Agreement and the other agreements among the Parties.

(c) Authority; Former Seconded Employees . Andeavor Seconded Employees shall have no authority or apparent authority to act on behalf of the Andeavor Group while performing Logistics Services under Secondment to the General Partner, and Partnership Seconded Employees shall have no authority or apparent authority to act on behalf of the General Partner while performing Andeavor Services under the Secondment to the Andeavor Group. Those rights and obligations of the Parties under this Agreement that relate to individuals while performing as Seconded Employees will survive after such individuals are no longer serving as Seconded Employees, to the extent necessary to enforce such rights and obligations.

(d) Periods of Secondment . The Seconded Employees will be seconded hereunder from time to time to the General Partner or the Andeavor Group, respectively, starting on the date hereof and continuing, during the periods (and only during the periods) that the Seconded Employees are performing Seconded Services for the General Partner or the Andeavor Group (as applicable), until the earliest of:

(i) the end of the term of this Agreement;

(ii) such end date for any Seconded Services as may be mutually agreed by the applicable Parties;

 

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(iii) a withdrawal, departure, resignation or termination of such Seconded Employees performing Seconded Services hereunder; and

(iv) a termination of Secondment of such Seconded Employees under Section 2(f) .

The Parties acknowledge that the Seconded Employees will also provide services to their primary employer, and the Parties intend that such Seconded Employees shall only be seconded to the General Partner or the Andeavor Group, as the case may be, during those specific times when the Seconded Employees are performing Seconded Services hereunder for the Secondment Recipient, and that services performed for such Seconded Employees’ primary employer shall not be Seconded Services covered by this Agreement. The specific periods of time that any Seconded Employee is seconded by his or her employer to the General Partner or the Andeavor Group and is providing Logistics Services or Andeavor Services, as the case may be, is referred to herein as the “ Periods of Secondment .”

(e) Change of Seconded Employees . If any Seconded Employee tenders his or her resignation to his or her employer, or if the employment of any Seconded Employee is terminated by his or her employer, the employer will promptly replace such Seconded Employee with another Seconded Employee of equivalent skill and training as required to perform the Seconded Services. Unless otherwise specifically agreed in writing by the Parties, the Parties acknowledge and agree that multiple employees may be tasked to provide Seconded Services during any Periods of Secondment, and that the individual employees who provide such Seconded Services may change or rotate their assignments, and that the employees actually providing such Seconded Services shall be Seconded Employees during the period of time that they are actually providing such Seconded Services for the Secondment Recipient. Unless otherwise specifically agreed in writing by the Parties, the Secondment Provider shall have the right to designate which of its employees shall provide Seconded Services to the Secondment Recipient during any Periods of Secondment. The identification of Seconded Employees who may provide Specialized Services or Other Services shall be addressed in individual Service Orders covering such Seconded Services.

(f) Termination of Secondment . Subject to any restrictions contained in any collective bargaining agreement to which any member of the Andeavor Group is a party, the General Partner will have the right to terminate the Secondment of any Andeavor Seconded Employee for any reason at any time. The Andeavor Group will have the right to terminate the Secondment of any Partnership Seconded Employee for any reason at any time. Upon the termination of any Seconded Employee’s Periods of Secondment, the primary employer of such Seconded Employee will be solely liable for any costs or expenses associated with the termination of the Secondment, except as otherwise specifically set forth in this Agreement.

(g) Supervision of Andeavor Seconded Employees .

During each of the Periods of Secondment for Andeavor Seconded Employees, the General Partner shall:

(i) be ultimately and fully responsible for the work assignments of the Andeavor Seconded Employees during those times that the Andeavor Seconded Employees are performing Logistics Services for the Logistics Group hereunder, including supervision of normal work activities and performance consistent with the job functions associated with the Logistics Services;

(ii) set the hours of work and schedules in collaboration with the Andeavor Group; and

 

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(iii) have the right to determine training that should be received by the Andeavor Seconded Employees in order for them to properly perform their duties as Seconded Employees performing Logistics Services.

In the course and scope of performing any Andeavor Seconded Employee’s job functions, the Andeavor Seconded Employees will report into the General Partner’s management structure, and will be under the management and control of the General Partner during the Periods of Secondment in which such Seconded Employees are providing Logistics Services.

(h) Supervision of Partnership Seconded Employees .

During each of the Periods of Secondment for Partnership Seconded Employees, the applicable Andeavor Group entity shall:

(i) be ultimately and fully responsible for the work assignments of the Partnership Seconded Employees during those times that the Partnership Seconded Employees are performing services for a member of the Andeavor Group hereunder, including supervision of their normal work activities and performance consistent with the job functions associated with the Andeavor Services;

(ii) set the hours of work and schedules in collaboration with the General Partner; and

(iii) have the right to determine training that should be received by the Partnership Seconded Employees in order for them to properly perform their duties as Seconded Employees performing Andeavor Services.

In the course and scope of performing any Partnership Seconded Employee’s job functions, the Partnership Seconded Employees will report into such entity’s management structure, and will be under the management and control of the applicable Andeavor Group entity during the Periods of Secondment in which such Seconded Employees are providing Andeavor Services.

(i) Seconded Employees Qualifications; Approval . The Andeavor Group and the General Partner will each provide such suitably qualified and experienced Seconded Employees as they are reasonably able to make available to the General Partner and the Andeavor Group, respectively. To the extent that the Seconded Employees are required to undergo any training or certification to perform Seconded Services, the Secondment Provider shall be responsible for ensuring that such Seconded Employees have obtained such training and certifications, unless otherwise specified in a Service Order. The General Partner will have the right to approve such Andeavor Seconded Employees and the applicable entity in the Andeavor Group will have the right to approve such Partnership Seconded Employees.

(j) Workers Compensation . At all times, the Seconded Employee’s employer will maintain workers’ compensation or similar insurance (either through an insurance company or self-insured arrangement) applicable to the Seconded Employees, as required by applicable state and federal workers’ compensation and similar laws, and will name the General Partner or the applicable Andeavor Group entity, as the case may be, as an additional named insured under each such insurance policy

 

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(k) Benefit Plans .

(i) The Parties acknowledge that non-union represented employees of the Andeavor Group and employees of the Logistics Group are currently covered by a single Benefit Plan, and this Agreement and the Secondment is not intended to modify any existing matters related to such Benefit Plan or the application to individual employees. To the extent that the Andeavor Group and the Logistics Group should have separate Benefit Plans for any employees, then the Secondment of the Andeavor Seconded Employees shall not cause the General Partner or any member of the Logistics Group to be deemed to be a participating employer in any Benefit Plan of any member of the Andeavor Group during the Periods of Secondment. Subject to the General Partner’s reimbursement obligations hereunder, the Andeavor Group shall remain responsible for all obligations and liabilities arising under the express terms of the Benefit Plans of any member of the Andeavor Group as the employer of the Andeavor Seconded Employees, and the Andeavor Seconded Employees will be covered under the Benefit Plans of any member of the Andeavor Group subject to and in accordance with their respective terms and conditions, as they may be amended from time to time. The Andeavor Group and their ERISA Affiliates may amend or terminate any Benefit Plan of any member of the Andeavor Group in whole or in part at any time (subject to the applicable provisions of any collective bargaining agreement covering Andeavor Seconded Employees, if any). To the extent that the Andeavor Group and the Logistics Group should have separate Benefit Plans for any employees, then the Secondment of the Andeavor Seconded Employees shall not cause the General Partner or any member of the Logistics Group to assume any Benefit Plan of any member of the Andeavor Group or to have any obligations, liabilities or rights arising under the express terms of the Benefit Plans of any member of the Andeavor Group, in each case except for cost reimbursement pursuant to this Agreement.

(ii) The Secondment of the Partnership Seconded Employees, shall not cause the Andeavor Group entities to be deemed to be a participating employer in any Benefit Plan of the General Partner during the Periods of Secondment. Subject to the Andeavor Group’s reimbursement obligations hereunder, the General Partner shall remain responsible for all obligations and liabilities arising under the express terms of the Benefit Plans of the General Partner as the employer of the Andeavor Seconded Employees, and the Partnership Seconded Employees will be covered under their Benefit Plans subject to and in accordance with their respective terms and conditions, as they may be amended from time to time. The General Partner and its ERISA Affiliates may amend or terminate any Benefit Plan of the General Partner in whole or in part at any time. The Secondment of the Andeavor Seconded Employees shall not cause the Andeavor Group to assume any Benefit Plan of the General Partner or to have any obligations, liabilities or rights arising under the express terms of the Benefit Plans of the General Partner, in each case except for cost reimbursement pursuant to this Agreement.

(l) Represented Employees . The Parties acknowledge that certain employees of the Andeavor Group who may provide Logistics Services and certain employees of the General Partner who may provide Seconded Services hereunder are represented under one of more collective bargaining agreements with members of the Andeavor Group. This Agreement and the Secondment hereunder is not intended to interfere with or modify those collective bargaining agreements or the rights of the union represented employees or other parties thereto. To the extent that Seconded Services are provided hereunder by union represented employees, the Parties acknowledge that the terms of the collective employment agreements shall apply to such Seconded Services to the same extent that they would apply if such services were not being performed as Seconded Services, and that for purposes of any matters arising under the collective bargaining agreements with union represented employees, the members of the Andeavor Group who are parties to such collective bargaining agreements shall have the right to represent the interests of the Parties hereto.

 

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3. SERVICES REIMBURSEMENT

(a) Operational Expenses . The Party providing the Logistics Services or the Andeavor Services (the “ Secondment Provider ”), as the case may be, shall invoice the recipient of Logistics Services or Andeavor Services performed by the Seconded Employees (the “ Secondment Recipient ”) on or before the tenth (10 th ) Business Day after the end of each month during the Period of Secondment. The itemized invoice (in a form mutually agreed upon by the Parties) shall list the flat monthly fees for Operational Services, as provided under Section 3(e) and detail all other reimbursable Seconded Services, as provided under Section 3(b) that are incurred by the Secondment Recipient with respect to the Seconded Employees in connection with the performance of the applicable Seconded Services during the preceding month (the “ Services Reimbursement ”). The Secondment Recipient shall, within ten (10) calendar days of receipt, pay such invoice, except for any amounts therein being disputed in good faith by the Secondment Provider. Any amounts that the Secondment Provider has disputed in good faith and that are later determined by any court or other competent authority having jurisdiction, or by agreement of the Parties, to be owing from the Secondment Provider to the Secondment Recipient shall be paid in full within ten (10) days of such determination.

(b) Services Reimbursement . Subject to Sections 3(c) and 3(d) , the Services Reimbursement shall include reimbursement for costs and expenses incurred by the Secondment Provider for the Seconded Employees, including the following (collectively, the “ Seconded Employee Expenses ”):

 

  (i) salary and wages (including payroll and withholding taxes associated therewith);

 

  (ii) cash bonuses;

 

  (iii) costs of matching and other employer 401(k) contributions;

 

  (iv) costs of pension benefit accruals;

 

  (v) any cash expense associated with any deferred compensation plan;

 

  (vi) vacation, sick leave, personal leave, maternity leave and any other federal or state mandated leave;

 

  (vii) healthcare coverage, including medical, dental, vision and prescription drug coverage;

 

  (viii) flexible benefits plan, including medical care and dependent care expense reimbursement programs;

 

  (ix) short-term disability benefits and long-term disability insurance premiums;

 

  (x) workers’ compensation insurance;

 

  (xi) premiums for life insurance, accidental death and dismemberment insurance and any other insurance provided to the Seconded Employees;

 

  (xii) the vesting of any long-term incentive awards, whether granted before or during the Period of Secondment;

 

  (xiii) business travel expenses and other business expenses reimbursed in the normal course by the Secondment Provider, such as subscriptions to business-related periodicals and dues to professional business organizations;

 

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  (xiv) any other employee benefit or compensation arrangement customarily provided to all employees by the Secondment Provider for which the Secondment Provider incurs costs with respect to Seconded Employees; and

 

  (xv) any sales taxes imposed upon the provision of any taxable services provided under this Agreement; provided , however, that, the General Partner and the Andeavor Group contemplate that the services provided pursuant to this Agreement are not taxable services for sales and use tax purposes.

(c) Adjustments Based on Periods of Secondment . It is understood and agreed that the Secondment Recipient shall be liable for Seconded Employee Expenses to the extent, and only to the extent, they are attributable to the Seconded Services performed by such Seconded Employee.

(d) Adjustments . The Seconded Employee’s employer will determine in good faith the percentage of each Seconded Employee’s time spent providing services to a Secondment Recipient (the “ Allocation Percentage”) . The amount of the Services Reimbursement payable with respect to each Seconded Employee shall be determined by multiplying the Seconded Employee Expenses for such Seconded Employee times the Allocation Percentage for such Seconded Employee; provided, however, that certain Second Employee Expenses shall not be allocated based on the Allocation Percentage but rather shall be allocated as follows:

(i) travel expenses and other specific identifiable expenses incurred with respect to and/or reimbursable to a Seconded Employee shall be paid by the Andeavor Group or the Logistics Group for whom the Seconded Services related to such expenses were performed, except that expenses related to activities that benefit both the Andeavor Group and the Logistics Group shall be shared in accordance with the Allocation Percentage (or such other allocation as may be agreed between the affected Parties); and

(ii) the taxes described in Section 3(b)(xv)  shall be reimbursable in full by the Secondment Recipient.

(e) Allocations for Operational Services . The Parties shall determine an average amount of costs and expenses expected to be incurred for performance of Operational Services, (whether Logistics Services and Andeavor Services) based upon historical employee time spent on performing such services, the level of employees performing such Operational Services, the compensation factors outlined in Sections 3(b) , (c)  and (d)  above, any anticipated changes in the nature and level of Operational Services to be performed and any other reasonable factors used to determine the correct amount of reimbursement to cover the Secondment Provider’s costs of providing such Operational Services. Such amounts shall be fixed as a flat monthly fee for performance of each type of Operational Services at each Facility, and such flat monthly fee shall be invoiced and paid as provided in Section 3(a) above. The initial reimbursable fees payable for such Operational Services shall be as provided on Service Schedules executed by the Parties, which fees shall be increased on July 1 of each year of the Term, commencing on July 1, 2015, by a percentage equal to the greater of zero or the positive change, if any, in the CPI-U (All Urban Consumers) for the prior calendar year, as reported by the U.S. Bureau of Labor Statistics, and rounded to the nearest one-tenth (1/10) of one percent (1%). The Parties shall periodically, but not less than annually, review the existing fee structure for each Operational Service, to determine if it accurately reflects the actual costs and expenses incurred by the Secondment Provider in performing such Operational Services, and the Parties shall negotiate in good faith and make such adjustments as are appropriate to cause the fees for each such Operational Service to reflect the Secondment Provider’s actual costs and expenses in providing the Operational Services. In the event that the level of Operational Services are increased during any month above the anticipated levels used to determine the flat monthly fee, or if the

 

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Secondment Provider incurs any travel expense or other specific identifiable reimbursable expenses associated with providing Operational Services that are not included in the factors used to calculate flat monthly fees, then the Parties shall negotiate in good faith to determine an additional amount that the Secondment Provider may charge during such month to cover its increased costs of providing Operational Services during such month.

(f) Where it is not reasonably practicable to determine the amount of any such cost or expense described above, the Andeavor Group and the General Partner shall mutually agree on the method of determining or estimating such cost or expense, which may include the application of an agreed percentage benefit load to a Seconded Employee’s salary and wages in order to value certain of the benefits listed above. If the actual amount of any cost or expense, once known, varies from the estimate used for billing purposes hereunder, the difference, once determined, shall be reflected and adjusted in such manner as may be agreed upon between the Andeavor Group and the General Partner at the time such variance is identified.

4. FACILITIES, EQUIPMENT AND OFFICES

(a) Materials, Equipment and Supplies . Either Group may supply or provide contract labor, materials, equipment and supplies (collectively “ Work ”) associated with Logistics Services or Andeavor Services. In addition, a Party may incur costs and expenses relating to permits, licenses, utilities, communications, consultants, security, and similar matters that are related to Logistics Services or Andeavor Services. Where applicable and agreed upon among the affected Parties, such Work may be provided by a third party under such third party’s contract with one Party for the benefit and account of another Party hereto, such that a contract entered into by a member of the Andeavor Group may cover Work provided for the account and benefit of a member of the Logistics Group, and vice versa. In such instances, the Party named in the applicable contract shall administer the Work being performed under the contract as a representative of the Party for whose account and benefit the Work is being performed, and the management and supervision of such Work shall be by the Party for whose account and benefit the Work is being performed, with employees responsible for such management and supervision being seconded, as otherwise provided herein. Such management and supervision by seconded employees shall be Seconded Services hereunder. The Work must be approved by a person who has the authority delegated to approve the nature of the Work and the allocated costs and expenses of providing such items on behalf of the Party for whose account and benefit the Work is being performed, in accordance with the applicable policies and procedures of such Party. The Parties shall establish procedures whereby the costs and expenses of providing such items are allocated to and paid by the Parties in accordance with the extent to which each Party realizes the benefit of each such item. If one Party incurs the costs and expenses for any such item that is used solely for the benefit of another Party, then the Party that pays for such item shall be entitled to reimbursement from the Party who received the benefit of such item. If any items benefit both the Andeavor Group and the Logistics Group, then the Group who incurs the costs and expenses associated with such items shall be entitled to reimbursement from the other Group in proportion to the benefits received by each Group from the incurrence of such costs and expenses. The Parties shall negotiate such allocations in good faith with respect to each such item at the time the reimbursement is determined. For items that are associated with Operational Expenses, the allocation may be included in the flat monthly fees reflected on the Service Schedules.

(b) The Andeavor Group or the Logistics Group may from time to time utilize contractors (“ Contractors ”), in addition to Seconded Employees, to provide certain Operational Services, Specialized Services Other Services or Andeavor Services, as provided in the Agreement, as further set forth in Section 4(a) above. In such instances, the Contractors shall be subcontracted to the Party for whose benefit the Work is being performed during the period while they are performing such Work. The provisions of the Agreement shall apply to such Contractors to the same extent that they would apply if

 

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they were Seconded Employees, except as provided herein. In no event shall such subcontracting relationship cause the subcontracted personnel to become employees of any member of either the Andeavor Group or the Logistics Group, and such personnel shall remain contractors of the member of the Group who has so engaged them and subcontractors of the Party for whom such services are performed and shall not be entitled to any additional compensation or benefits by reason of their subcontractor status. The provisions of the Agreement regarding the compensation and benefits of Seconded Employees shall not apply to Contractors. To the extent that Contractors are subcontracted to provide Operational Services listed on the Service Schedules attached to the Agreement, the compensation owed by the applicable Group for such services shall be included within the lump sum amounts specified for such Operational Services on the Services Schedule, and the Logistics Group shall not be required to pay any additional amounts for such Operational Services performed by contractors. In the event that Contractors provide additional Seconded Services, then the Group who engaged such Contractors shall be entitled to be reimbursed for its actual costs of providing such Contractors, as will be provided in Service Orders covering such services. The Parties recognize that the Logistics Group provides services to the Andeavor Group under various commercial agreements, and that the Logistics Group and the Partnership Group may from time to time enter into contracts whereby a member of one Group may provide particular services to the other Group, and may serve as a Contractor in doing so. A contractor of a Group shall not become a Contractor under this Section 4(b) for work performed in the course and scope of providing services under such other agreements and contracts.

(c) Use of Offices, Facilities and Equipment . The Parties may agree, pursuant to a Service Order, to allow employees and contractors of one Group (the “ Licensee Group ”) to have access to and utilize certain offices, facilities and equipment (the “ Licensed Premises ”) of the other Group (the “ Licensor Group ”) for purposes of conducting Operational Services. These Operational Services may include both Seconded Services and other services that are performed by employees of the Licensee Group related to its own Assets. In the event that the Parties so agree pursuant to a Service Order, the employees and contractors of the Licensee Group shall have a license to access and use those offices, facilities and equipment. All such access to and use of the Licensed Premises shall be subject to all rules, policies and procedures of the Licensor Party regarding access and use of the Licensed Premises and adjacent areas by its own employees and contractors, including all reasonable security requirements applicable to accessing the premises and any systems, technologies, or assets of the Licensor Group. The Licensor Group shall have the right to exclude access to any employee or contractor of the Licensee Group who is in violation of such rules, policies and procedures. The Licensor Group shall have the right to designate on the Service Order, the specific areas, facilities and equipment that are within the Licensed Premises, to restrict access to and use of any areas, facilities and equipment that are not included within the Licensed Premises, and to designate specific routes for ingress and egress to the Licensed Premises. Unless otherwise specified on such Service Order, access to office space shall include access to common parking areas, restrooms and break areas that are utilized by employees of the Licensor Group occupying areas included within or immediately adjacent to the Licensed Premises, together with use of computer servers, telephone lines, other communication equipment, copiers and similar office equipment that serve the Licensed Premises. The Licensor Group may charge the Licensee Group a fee for providing such access in amount to be mutually agreed upon between the Parties pursuant to the applicable Service Order. The identification of the Licensed Premises, the fees to be charged for use of such Licensed Premises and any other special provisions or restrictions regarding use and access of the Licensed Premises shall be set forth in Services Orders entered into between the Parties.

 

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5. BOOKS AND RECORDS

The Parties shall keep books of account and other records, in reasonable detail and in accordance with generally accepted accounting principles and industry standards, consistently applied, with respect to the provision of the Seconded Services and the fees charged, as well as costs and expenses for Work, materials, equipment, supplies, communications, utilities and other charges that are charged by one Group to the other Group, including support for allocations. Allocations of Seconded Employee Expenses that are payable other than through flat monthly fees shall be documented by AFEs, Service Orders, Work Orders or other standard documentation to establish an Allocation Percentage and the amount of any reimbursable Seconded Employee Expenses. Books of account and other records shall be open for the Secondment Recipient’s inspection during normal business hours upon at least five (5) Business Days’ prior written notice for twelve (12) months following the end of the calendar year in which such Seconded Services were rendered. This inspection right will include the right of the Secondment Recipient to have its accountants or auditors review such books and records. If an audit reveals that the Secondment Recipient paid more than the applicable fees for any applicable audited period or service, the Secondment Provider shall reimburse the Secondment Recipient for any amounts overpaid together with interest at a rate equal to the prime rate of interest on the original due date published by The Wall Street Journal , accruing from the date paid by the Secondment Recipient to the date reimbursed by the Secondment Provider.

6. TERM; RENEWAL

This Agreement shall have a term beginning on October 30, 2017, and shall terminate on April 30, 2021 (the “ Initial Term ”). This Agreement may be extended by the Andeavor Group for up to two (2) renewal terms of five (5) years each (each, an “ Extension Period ,” and together with the Initial Term, the “ Term ”). To commence an Extension Period, the Andeavor Group shall provide written notice of its intent to the Logistics Group no less than ninety (90) days prior to the end of the Initial Term or the then-current Extension Period.

7. COVENANTS

(a) Access to Premises . In addition to the access to the Licensed Premises provided in Section 4 above, each Party shall give the other Parties reasonable access to its premises as may be required for the Seconded Employees to provide or receive the Seconded Services and other Work, as applicable, hereunder. Unless otherwise agreed to in writing by the Parties or in connection with use of the Licensed Premises, the Seconded Employees shall: (i) use the premises of the other Parties solely for the purpose of providing or receiving the Seconded Services and other Work and not to provide goods or services to or for the benefit of any third party or for any unlawful purpose; (ii) comply with all policies and procedures governing access to and use of such premises made known to such Party in advance, including all reasonable security requirements applicable to accessing the premises and any systems, technologies, or assets of the other Parties; (iii) instruct its employees and personnel, when visiting the premises, not to photograph or record, duplicate, remove, disclose, or transmit to a third party any of the other Parties’ Confidential Information, except as necessary to perform or receive the Seconded Services or Work; and (iv) return such space to the other Parties in the same condition it was in prior to such Party’s use of such space, ordinary wear and tear excepted.

(b) Data Back Up and Security . The Parties shall maintain industry standard data back up and recovery procedures, as well as an industry standard disaster avoidance and recovery plan, in connection with all of its systems used in performing the Seconded Services and Work. The Parties shall maintain and enforce physical, technical and logical security procedures with respect to the access and maintenance of any Confidential Information of the other Parties that is in the Secondment Provider’s possession, which procedures shall: (i) be at least equal to industry standards; (ii) be in full compliance with Applicable Law; and (iii) provide reasonably appropriate physical, technical and organizational safeguards against accidental or unlawful destruction, loss, alteration, unauthorized disclosure, theft or misuse.

 

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(c) Taxes . The Secondment Recipient shall pay or cause to be paid all taxes, levies, royalties, assessments, licenses, fees, charges, surcharges and sums due of any nature whatsoever (other than income taxes, gross receipt taxes and similar taxes) imposed by any federal, state or local government that the Secondment Provider incurs on its behalf for the Seconded Services and Work provided by the Seconded Employees under this Agreement. If the Secondment Provider is required to pay any of the foregoing, the Secondment Recipient shall promptly reimburse the Secondment Provider in accordance with the payment terms set forth in this Agreement.

8. STANDARD OF PERFORMANCE

The Parties shall cause the Seconded Employees shall perform the Seconded Services, as applicable, using at least the same level of care, quality, timeliness, skill and adherence to applicable industry standards, in providing the Seconded Services, as applicable, as such Parties do in providing the Seconded Services to such Party’s subsidiaries and Affiliates.

9. TERMINATION

(a) Termination for Convenience . Any specific Operational Service provided by Seconded Employees from the Service Schedules may be terminated by the Secondment Recipient (each such specific Operational Service that has been terminated by the Secondment Recipient, a “ Terminated Service ”) upon ninety (90) days’ prior written notice to the Secondment Provider.

(b) Termination for Default .

 

  (i) A Party shall be in default under this Agreement if:

(A) the Party materially breaches any provision of this Agreement and such breach is not cured within fifteen (15) Business Days after notice thereof (which notice shall describe such breach in reasonable detail) is received by such Party; or

(B) the Party (I) files a petition or otherwise commences, authorizes or acquiesces in the commencement of a proceeding or cause of action under any bankruptcy, insolvency, reorganization or similar Applicable Law, or has any such petition filed or commenced against it, (II) makes an assignment or any general arrangement for the benefit of creditors, (III) otherwise becomes bankrupt or insolvent (however evidenced) or (IV) has a liquidator, administrator, receiver, trustee, conservator or similar official appointed with respect to it or any substantial portion of its property or assets.

(ii) If any of the Parties is in default as described above, then the non-defaulting Party may: (A) terminate this Agreement upon notice to the defaulting Parties; (B) withhold any payments due to the defaulting Parties under this Agreement; and/or (C) pursue any other remedy at law or in equity.

(c) Effect of Termination . Upon expiration or termination of this Agreement, all rights and obligations of the Parties under this Agreement shall terminate; provided, however , that such termination shall not affect or excuse the performance of any Party (i) for any breach of this Agreement occurring prior to such termination, (ii) the payment of any amounts due but not yet payable under this Agreement, or (iii) under any of the following provisions of this Agreement that survive the termination of this Agreement indefinitely: Section 11 ; Section 15 ; and Section 16 . Upon expiration or termination of this

 

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Agreement or any Operational Service, each Party shall return to the other Party any equipment or other property or materials of such other Party (including but not limited to any materials containing Confidential Information) that are in the possession or control of such Party or any Seconded Employees (except to the extent they are required for use in connection with any non-terminated Operational Services provided by Seconded Employees).

10. RELATIONSHIP OF THE PARTIES AND TO OTHER AGREEMENTS

(a) This Agreement does not form a partnership or joint venture between the Parties. This Agreement does not make any member of the Andeavor Group an agent or a legal representative of any member of the Logistics Group or any member of the Logistics Group an agent or a legal representative of any member of the Andeavor Group. No member of the Andeavor Group shall assume or create any obligation, liability, or responsibility, expressed or implied, on behalf of or in the name of any member of the Logistics Group in connection with the transactions contemplated by this Agreement, except as specifically provided herein. No member of the Logistics Group shall assume or create any obligation, liability or responsibility, expressed or implied, on behalf of or in the name of any member of the Andeavor Group in connection with the transactions contemplated by this Agreement, except as specifically provided herein.

(b) Except for the Original Secondment Agreement, as previously amended, this Agreement does not amend or supersede any other agreements between the Parties that may relate to reimbursement or indemnities for costs and expenses, including the Fourth Amended and Restated Omnibus Agreement and the various commercial agreements between the Parties.

11. INDEMNIFICATION

(a) Indemnification by the Andeavor Group . The Andeavor Group, jointly and severally, shall indemnify and hold harmless the Logistics Group, and the officers, directors, employees, agents and representatives of each member of the Logistics Group (collectively, the “ Logistics Group Indemnified Parties ”) from and against all Claims, and upon demand by the Logistics Group, shall protect and defend the Logistics Group Indemnified Parties from the same, alleged, asserted or suffered by or arising in favor of any Person, and shall pay any and all judgments or settlements of any kind or nature (to include interest) as well as court costs, reasonable attorneys’ fees and expenses, and any expenses incurred in enforcing this indemnity provision (each a “ Loss ” and collectively, “ Losses ”), incurred by, imposed upon or rendered against one or more of the Logistics Group Indemnified Parties, whether based on contract, or tort, or pursuant to any statute, rule or regulation, and regardless of whether the Claims are foreseeable or unforeseeable, all to the extent that such Losses are in respect of or arise from (i) breaches by the Andeavor Group of this Agreement, or (ii) Claims by a third-party relating to (A) breaches by the Andeavor Group of this Agreement or (B) the Andeavor Group’s negligence, willful misconduct or violation of law in connection with the performance of the Logistics Services, PROVIDED THAT THE ANDEAVOR GROUP SHALL NOT BE OBLIGATED TO INDEMNIFY OR HOLD HARMLESS THE LOGISTICS GROUP INDEMNIFIED PARTIES FROM AND AGAINST ANY CLAIMS TO THE EXTENT THEY RESULT FROM THE BREACH OF CONTRACT, STRICT LIABILITY OR THE NEGLIGENT ACTS, ERRORS, OMISSIONS OR WILLFUL MISCONDUCT OF ANY LOGISTICS GROUP INDEMNIFIED PARTY. THE INDEMNITIES UNDER THIS SECTION 11(a) SHALL NOT APPLY TO CLAIMS OR LOSSES THAT ARE CAUSED BY ACTIONS OR OMISSIONS OF ANDEAVOR SECONDED EMPLOYEES WHILE ACTING IN THE COURSE OF SECONDMENT TO THE LOGISTICS GROUP.

 

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(b) Indemnification by the Logistics Group . The Logistics Group shall indemnify and hold harmless the Andeavor Group, and the officers, directors, employees, agents and representatives of the Andeavor Group (collectively, the “ Andeavor Group Indemnified Parties ”) from and against all Claims, and upon demand by the Andeavor Group, shall protect and defend the Andeavor Group Indemnified Parties from the same, alleged, asserted or suffered by or arising in favor of any Person, and shall pay any and all Losses incurred by, imposed upon or rendered against one or more of the Andeavor Group Indemnified Parties, whether based on contract, or tort, or pursuant to any statute, rule or regulation, and regardless of whether the Claims are foreseeable or unforeseeable, all to the extent that such Losses are in respect of or arise from (i) breaches by the Logistics Group of this Agreement or (ii) Claims by a third-party relating to (A) breaches by the Logistics Group of this Agreement or (B) the Logistics Group’s negligence, willful misconduct or violation of law in connection with the performance of the Andeavor Services, PROVIDED THAT THE LOGISTICS GROUP SHALL NOT BE OBLIGATED TO INDEMNIFY OR HOLD HARMLESS THE ANDEAVOR GROUP INDEMNIFIED PARTIES FROM AND AGAINST ANY CLAIMS TO THE EXTENT THEY RESULT FROM THE BREACH OF CONTRACT, STRICT LIABILITY OR THE NEGLIGENT ACTS, ERRORS, OMISSIONS OR WILLFUL MISCONDUCT OF ANY ANDEAVOR GROUP INDEMNIFIED PARTY. THE INDEMNITIES UNDER THIS SECTION 11(b) SHALL NOT APPLY TO CLAIMS OR LOSSES THAT ARE CAUSED BY ACTIONS OR OMISSIONS OF LOGISTICS SECONDED EMPLOYEES WHILE ACTING IN THE COURSE OF SECONDMENT TO THE LOGISTICS GROUP.

(c) The indemnifying Parties agree that, notwithstanding anything to the contrary contained in Sections 11(a) and 11(b):

(i) the Secondment Recipient shall indemnify and hold harmless the Secondment Provider and its officers, directors, employees, agents and representatives from and against any and all Losses and Claims brought or raised by any individual who is, or at one time was, a Seconded Employee relating to any act or omission of the Secondment Recipient, its officers, directors, employees, agents or representatives, including, without limitation, workers’ compensation, discrimination, harassment, constructive dismissal, wages paid and hours worked, or any other employment-related Claim; and

(ii) the Secondment Provider shall indemnify and hold harmless the Secondment Recipient and its officers, directors, employees, agents and representatives from and against any and all Losses and Claims brought or raised by any individual who is, or at one time was, a Seconded Employee relating to any act or omission of the Secondment Provider, its officers, directors, employees, agents or representatives, including, without limitation, workers’ compensation, discrimination, harassment, constructive dismissal, wages paid and hours worked, or any other employment-related Claim.

(d) Indemnification Procedure . 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 Section 11 , it will provide notice thereof in writing to the indemnifying Party, specifying the nature of and specific basis for such Claim.

(i) 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 Section 11 , 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.

 

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(ii) The indemnified Party agrees to cooperate fully with the indemnifying Party, with respect to all aspects of the defense of any Claims covered by the indemnification under this Section 11 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 indemnifying Party considers relevant to such defense and the making available to the indemnifying Party of any employees 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 11(d) . 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 Section 11 ; 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.

(iii) 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.

(e) Limitation on Liability . Notwithstanding anything to the contrary contained herein, no Party shall be liable or responsible to another Party or such other Party’s Affiliates for any consequential, incidental, or punitive damages, or for loss of profits or revenues (collectively referred to as “special damages”) incurred by such Party or its Affiliates 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.

12. FORCE MAJEURE

(a) Notice . A Secondment Provider’s obligations under this Agreement may be temporarily suspended during the occurrence of, and for the entire duration of, a Force Majeure. As soon as possible upon the occurrence of a Force Majeure, the affected Secondment Provider shall provide the Secondment Recipient with written notice of the occurrence of such Force Majeure (a “ Force Majeure Notice ”). The Secondment Provider shall identify in such Force Majeure Notice the approximate length of time that it reasonably believes in good faith such Force Majeure shall continue. During the period of the Force Majeure event, the Seconded Employees shall be excused from the performance with respect to its obligations related to the provision of the applicable Seconded Service(s) hereunder, but only to the extent that such Force Majeure event actually precludes such Seconded Employees from providing each Seconded Service. The Secondment Recipient shall not be required to pay fees for any affected Seconded Services during the period while its performance is precluded by the Force Majeure. The Secondment Provider shall use commercially reasonable efforts to mitigate and to overcome the effects of such event or circumstances and shall resume performance of its obligations as soon as practicable and shall continue to perform all Seconded Services that are not precluded by the Force Majeure.

 

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(b) Continuation . If a Force Majeure preventing performance of any of the Seconded Services hereunder continues for twelve (12) consecutive months or more, a Party shall have the right to terminate its obligations under this Agreement with respect to the applicable Seconded Service suspended by such Force Majeure.

13. ASSIGNMENT; PARTNERSHIP CHANGE OF CONTROL

(a) Assignment . Neither the Logistics Group nor the Andeavor Group may assign this Agreement without the prior written consent of the other Group; provided, however, that a Party may subcontract any of the Seconded Services and Work provided hereunder so long as such Seconded Services and Work continue to be provided in a manner consistent with past practices and industry standards and in accordance with Section 8 above. Notwithstanding the foregoing, the Logistics Group shall be permitted to make a collateral assignment of this Agreement solely to secure financing for TLO. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns.

(b) Partnership Change of Control . The Andeavor Group may terminate this Agreement upon a Partnership Change of Control. The Logistics Group shall provide the Andeavor Group with notice of any Partnership Change of Control at least sixty (60) days prior to the effective date thereof.

14. NOTICE

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 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) 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 Andeavor Group :

Andeavor

19100 Ridgewood Parkway

San Antonio, Texas 78259-1828

Attn: General Counsel

Facsimile: (210) 745-4494

If to Logistics Group:

Andeavor Logistics LP

c/o Tesoro Logistics GP, LLC, its General Partner

19100 Ridgewood Parkway

San Antonio, Texas 78259-1828

Attn: General Counsel

Facsimile: (210) 745-4494

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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15. CONFIDENTIAL INFORMATION

(a) Obligations . Each Party shall use reasonable efforts to retain the other Parties’ 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 15 . Each Party further agrees to take the same care with another Party’s Confidential Information as it does with its own, but in no event less than a reasonable degree of care. Excepted from these obligations of confidence and non-use is that information which:

(i) is available, or becomes available, to the general public without fault of the receiving Party;

(ii) was in the possession of the receiving Party on a non-confidential basis prior to receipt of the same from the disclosing Party (it being understood, for the avoidance of doubt, that this exception shall not apply to information of the Logistics Group that was in the possession of the Andeavor Group or any of its Affiliates as a result of their ownership or operation of the Logistics Assets prior to the date hereof);

(iii) is obtained by the receiving Party without an obligation of confidence from a third party who is rightfully in possession of such information and, to the receiving Party’s knowledge, is under no obligation of confidentiality to the disclosing Party; or

(iv) is independently developed by the receiving Party without reference to or use of the disclosing Party’s Confidential Information.

For the purpose of this Section 15 , a specific item of Confidential Information shall not be deemed to be within the foregoing exceptions merely because it is embraced by, or underlies, more general information in the public domain or in the possession of the receiving Party.

(b) Required Disclosure . Notwithstanding Section 15(a) above, if the receiving Party becomes legally compelled to disclose the Confidential Information by a court, Governmental Authority or Applicable Law, or is required to disclose by the listing standards of the New York Stock Exchange, 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.

(c) 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 15 , and such archived or back-up Confidential Information shall not be accessed except as required by Applicable Law.

 

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(d) 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. Seconded Employees who receive or access any Confidential Information of a Secondment Recipient shall be bound to protect such Confidential Information to the same extent and in the same manner as if they received or accessed such Confidential Information as direct employees of the Secondment Recipient, and they shall be representatives of the Secondment Recipient with respect to use or disclosure of the Confidential Information so received or accessed. 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.

(e) Survival . The obligation of confidentiality under this Section 15 shall survive the termination of this Agreement for a period of two (2) years.

16. MISCELLANEOUS

(a) Modification; Waiver . This Agreement may be terminated, amended or modified only by a written instrument executed by the Parties. Any of the terms and conditions of this Agreement may be waived in writing at any time by a Party entitled to the benefits thereof. No waiver of any of the terms and conditions of this Agreement, or any breach thereof, will be effective unless in writing signed by a duly authorized individual on behalf of the Party against which the waiver is sought to be enforced. No waiver of any term or condition or of any breach of this Agreement will be deemed or will constitute a waiver of any other term or condition or of any later breach (whether or not similar), nor will such waiver constitute a continuing waiver unless otherwise expressly provided.

(b) Integration . This Agreement, together with the Service Orders, Service Schedules and the other agreements executed on the date hereof in connection with the other documents executed among the Parties on the date of the Fourth Amended and Restated Omnibus 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. In the event of a conflict of provisions of this Agreement and the Fourth Amended and Restated Omnibus Agreement or amendments thereto, the provisions of the Fourth Amended and Restated Omnibus Agreement, as it may be amended, shall prevail with respect to issues related to the contribution of the assets described therein, but not with respect to the Seconded Services provided as set forth in this Agreement.

(c) Construction and Interpretation . In interpreting this Agreement, unless the context expressly requires otherwise, all of the following apply to the interpretation of this Agreement:

(i) Preparation of this Agreement has been a joint effort of the Parties and the resulting Agreement shall not be construed against one of the Parties as the drafting Party.

(ii) Plural and singular words each include the other.

 

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(iii) Masculine, feminine and neutral genders each include the others.

(iv) The word “or” is not exclusive and includes “and/or.”

(v) The words “includes” and “including” are not limiting.

(vi) References to the Parties include their respective successors and permitted assignees.

(vii) The headings in this Agreement are included for convenience and do not affect the construction or interpretation of any provision of, or the rights or obligations of a Party under, this Agreement.

(d) Governing Law; Jurisdiction . This Agreement shall be governed by the laws of the State of Texas without giving effect to its conflict of laws principles. Each Party hereby irrevocably submits to the exclusive jurisdiction of any federal court of competent jurisdiction situated in the United States District Court for the Western District of Texas, San Antonio Division, or if such federal court declines to exercise or does not have jurisdiction, in the district court of Bexar County, Texas. The Parties expressly and irrevocably submit to the jurisdiction of said Courts and irrevocably waive any objection which they may now or hereafter have to the laying of venue of any action, suit or proceeding arising out of or relating to this Agreement brought in such Courts, irrevocably waive any claim that any such action, suit or proceeding brought in any such Court has been brought in an inconvenient forum and further irrevocably waive the right to object, with respect to such Claim, action, suit or proceeding brought in any such Court, that such Court does not have jurisdiction over such Party. The Parties hereby irrevocably consent to the service of process by registered mail, postage prepaid, or by personal service within or without the State of Texas. Nothing contained herein shall affect the right to serve process in any manner permitted by law.

(e) Counterparts . 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.

(f) Severability . 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.

(g) No Third Party Beneficiaries . Except as specifically provided herein, including as set forth in Section 11 , 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.

(h) WAIVER OF JURY TRIAL . EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY PROCEEDINGS RELATING TO THIS AGREEMENT OR ANY PERFORMANCE OR FAILURE TO PERFORM OF ANY OBLIGATION HEREUNDER.

 

23


(i) Schedules and Amendment of Schedules . Each of the Service Schedules referred to herein and made subject to a cover page in the form of Exhibit A that is separately executed by the Parties effective as of the date of this Agreement is hereby incorporated in and made a part of this Agreement as if set forth in full herein. The Parties may amend and restate the Schedules at any time without otherwise amending or restating this Agreement by the execution by all of the Parties of a cover page to the amended Schedules in the form attached hereto as Exhibit A . Such amended and restated Schedules shall replace the prior Schedules as of the date of execution of the cover page and shall be incorporated by reference into this Agreement for all purposes.

(j) Original Secondment Agreement . This Agreement supersedes the Original Secondment Agreement, as previously amended, in its entirety and the Parties agree that the terms and provisions of this Agreement replace the terms and provisions of the Original Secondment Agreement, which is no longer in effect, as of the date hereof. Any references in any other agreements between the Parties and any of their Affiliates that reference the Original Secondment Agreement or the predecessor Operational Services Agreement, shall be deemed to refer to this Agreement as its successor.

[Signatures of the Parties follow on the next page.]

 

24


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

ANDEAVOR GROUP:

ANDEAVOR

TESORO COMPANIES, INC

TESORO REFINING & MARKETING COMPANY LLC

TESORO ALASKA COMPANY LLC

CARSON COGENERATION COMPANY

TESORO GREAT PLAINS HOLDINGS COMPANY LLC

TESORO GREAT PLAINS MIDSTREAM LLC

TESORO GREAT PLAINS GATHERING & MARKETING LLC

BAKKENLINK PIPELINE LLC

ND LAND HOLDINGS LLC

DAKOTA PRAIRIE REFINING COMPANY

WESTERN REFINING INC.

WESTERN REFINING SOUTHWEST, INC.

WESTERN REFINING GP, LLC, individually and on behalf of WESTERN REFINING COMPANY, L.P.

NT INTERHOLD CO LLC

NORTHERN TIER ENERGY GP LLC, individually and on behalf of NORTHERN TIER ENERGY LP

NORTHERN TIER ENERGY LLC

ST. PAUL PARK REFINING CO. LLC

NORTHERN TIER OIL TRANSPORT LLC

WESTERN REFINING CONAN GATHERING HOLDINGS, LLC

WESTERN REFINING CONAN GATHERING, LLC

WESTERN REFINING DELAWARE BASIN STORAGE, LLC

 

By: /s/ Gregory J. Goff                                           
      Gregory J. Goff
      President
KENAI PIPE LINE COMPANY
By: /s/ Cynthia J. Warner                                      
      Cynthia J. Warner
      President


LOGISTICS GROUP :

TESORO LOGISTICS GP, LLC, individually and on behalf of ANDEAVOR LOGISTICS LP

TESORO LOGISTICS OPERATIONS LLC

TESORO LOGISTICS PIPELINES LLC

TESORO HIGH PLAINS PIPELINE COMPANY LLC

TESORO LOGISTICS NORTHWEST PIPELINE LLC

TESORO ALASKA PIPELINE COMPANY LLC

TESORO SOCAL PIPELINE COMPANY LLC

TESORO ALASKA TERMINALS LLC

ANDEAVOR FIELD SERVICES, LLC

ANDEAVOR MIDSTREAM PARTNERS GP, LLC

ANDEAVOR MIDSTREAM PARTNERS OPERATING, LLC

ANDEAVOR GATHERING I, LLC

RENDEZVOUS PIPELINE COMPANY, LLC

GREEN RIVER PROCESSING, LLC

 

By: /s/ Steven M. Sterin                                        
      Steven M. Sterin
      President and Chief Financial Officer

WESTERN REFINING LOGISTICS GP, LLC, individually and on behalf of WESTERN REFINING LOGISTICS, LP

WNRL ENERGY GP, LLC

WESTERN REFINING PIPELINE, LLC

WESTERN REFINING WHOLESALE, LLC

WESTERN REFINING TERMINALS, LLC,

WESTERN REFINING PRODUCT TRANSPORT, LLC

 

By: /s/ Steven M. Sterin                                        
      Steven M. Sterin
      Executive Vice President and Chief Financial Officer


Execution Version

EXHIBIT A

FORM OF COVER PAGE FOR

AMENDMENT AND RESTATEMENT OF SERVICE SCHEDULES

TO SECONDMENT AND SERVICES AGREEMENT

A First Amended and Restated Secondment and Services Agreement was executed as of October 30, 2017 (the “Secondment Agreement”), among the following Parties:

Andeavor Group:

Andeavor, a Delaware corporation (“AND”), Tesoro Companies, Inc., a Delaware corporation (“TCI”), Tesoro Refining & Marketing Company LLC, a Delaware limited liability company (“TRMC”), Tesoro Alaska Company LLC, a Delaware limited liability company (“TAC”), Carson Cogeneration Company, a Delaware corporation (CCC), Tesoro Great Plains Holdings Company LLC (“TGPH”), Tesoro Great Plains Midstream LLC (“TGPM”), Tesoro Great Plains Gathering & Marketing LLC (“TGPGM”) a Delaware limited liability company, BakkenLink Pipeline LLC (“BLP”), a Delaware limited liability company, ND Land Holdings LLC (“NDLH”), a Delaware limited liability company and Dakota Prairie Refining Company (“DPR”), a Delaware limited liability company;

Western Refining Inc, a Delaware corporation (“WRI”); Western Refining GP, LLC, a Delaware limited liability company (“WRGP”); Western Refining Southwest, Inc. an Arizona corporation (“WRSW”); Western Refining Company, L.P., a Delaware limited partnership (“WRLP”); NT InterHold Co LLC, a Delaware limited liability company (“NTI”); Northern Tier Energy GP LLC, a Delaware limited liability company (“NTEGP”); Northern Tier Energy LP, a Delaware limited partnership (“NTELP”), Northern Tier Energy LLC, a Delaware limited partnership (“NTE”); St. Paul Park Refining Co. LLC, a Delaware limited liability company (“SPPR”); Northern Tier Oil Transport LLC(“NTOT”), a Delaware limited liability company; Western Refining Conan Gathering Holdings, LLC, a Delaware limited liability company; (“WRCGH”)Western Refining Conan Gathering, LLC, a Delaware limited liability company (“WRCG”); Western Refining Delaware Basin Storage, LLC, a Delaware limited liability company(“WRDBS”) and,

together with TCI, TRMC, TAC, CCC, TGPH, TGPM, BLP and NDLH, WRI, WRGP, WRSW, WRLP, NTI, NTEGP, NTELP, NTE, SPPR, NTOT, WRCGH, WRCG and WRDBS the “Andeavor Group ”),

Logistics Group:

Andeavor Logistics LP (ANDX), a Delaware limited partnership, Tesoro Logistics GP, LLC, a Delaware limited liability company (the “General Partner”), Tesoro Logistics Operations LLC, a Delaware limited liability company (“TLO”), Tesoro Logistics Pipelines LLC, a Delaware limited liability company (“TLP”), Tesoro High Plains Pipeline Company LLC, a Delaware limited liability company (“THPPC”), Tesoro Logistics Northwest Pipeline LLC, a Delaware limited liability company (“TLNP”), Tesoro Alaska Pipeline Company LLC, a Delaware limited liability company, (“TAPL”) Tesoro SoCal Pipeline Company LLC, a Delaware limited liability company (“TSC”), Tesoro Alaska Terminals LLC, (“TAT”), Andeavor Field Services, LLC, a Delaware limited liability company (“AFS”), Andeavor Midstream Partners GP, LLC, a Delaware limited liability company (“Andeavor GP”), Andeavor Midstream Partners Operating, LLC, a Delaware limited liability company (“Andeavor OpCo”), Andeavor Gathering I, LLC, a Delaware limited liability company (“AGI”), Rendezvous Pipeline Company, LLC, a Colorado limited liability company (“Rendezvous”), Green River Processing, LLC, a Delaware limited liability company (“GRP”), and

 

Exhibit A


Western Refining Logistics, LP, a Delaware limited partnership (“WRL”); Western Refining Logistics GP, LLC (“WNRLGP”), a Delaware limited liability company ; WNRL Energy GP, LLC, a Delaware limited liability company (“WNRLEGP”), Western Refining Pipeline, LLC, a New Mexico limited liability company (“WRP”); Western Refining Wholesale, LLC, a Delaware limited liability company (“WRW”); Western Refining Terminals, LLC, a Delaware limited liability company (“WRT”); Western Refining Product Transport, LLC, a Delaware limited liability company (“WRPT”), and

together with APC, ANDX, the General Partner, TLO, TLP, THPPC, TLNP, TAPL, SoCal Pipeline, TAT, Andeavor FS, Andeavor GP, Andeavor OpCo, Andeavor Gathering, Rendezvous, GRP, TRG, UFS, WRL, WNRLGP, WNRLEGP, WRP, WRW, WRT and WRPT the “ Logistics Group ”).

Capitalized terms not otherwise defined in this document shall have the terms set forth in the Secondment Agreement.

The Parties agree that the Service Schedules are hereby amended and restated in their entirety as of the date hereof to be as attached hereto. Pursuant to Section 16(j) of the First Amended and Restated Secondment Agreement, such amended and restated Service Schedules shall replace the prior Service Schedules as of the date hereof and shall be incorporated by reference into the Secondment Agreement for all purposes.

Executed as of                             , 20                    .

ANDEAVOR GROUP:

ANDEAVOR

TESORO COMPANIES, INC

TESORO REFINING & MARKETING COMPANY LLC

TESORO ALASKA COMPANY LLC

CARSON COGENERATION COMPANY

TESORO GREAT PLAINS HOLDINGS COMPANY LLC

TESORO GREAT PLAINS MIDSTREAM LLC

TESORO GREAT PLAINS GATHERING & MARKETING LLC

BAKKENLINK PIPELINE LLC

ND LAND HOLDINGS LLC

DAKOTA PRAIRIE REFINING COMPANY

WESTERN REFINING INC.

WESTERN REFINING SOUTHWEST, INC.

WESTERN REFINING GP, LLC, individually and on behalf of WESTERN REFINING COMPANY, L.P.

NT INTERHOLD CO LLC

NORTHERN TIER ENERGY GP LLC, individually and on behalf of NORTHERN TIER ENERGY LP

NORTHERN TIER ENERGY LLC

ST. PAUL PARK REFINING CO. LLC

NORTHERN TIER OIL TRANSPORT LLC

WESTERN REFINING CONAN GATHERING HOLDINGS, LLC

WESTERN REFINING CONAN GATHERING, LLC

WESTERN REFINING DELAWARE BASIN STORAGE, LLC


By:                                                                           
Name:                                                                      
Title:                                                                        

KENAI PIPE LINE COMPANY

 

By:                                                                           
Name:                                                                      
Title:                                                                        


LOGISTICS GROUP :

TESORO LOGISTICS GP, LLC, individually and on behalf of ANDEAVOR LOGISTICS LP

TESORO LOGISTICS OPERATIONS LLC

TESORO LOGISTICS PIPELINES LLC

TESORO HIGH PLAINS PIPELINE COMPANY LLC

TESORO LOGISTICS NORTHWEST PIPELINE LLC

TESORO ALASKA PIPELINE COMPANY LLC

TESORO SOCAL PIPELINE COMPANY LLC

TESORO ALASKA TERMINALS LLC

ANDEAVOR FIELD SERVICES, LLC

ANDEAVOR MIDSTREAM PARTNERS GP, LLC

ANDEAVOR MIDSTREAM PARTNERS OPERATING, LLC

ANDEAVOR GATHERING I, LLC

RENDEZVOUS PIPELINE COMPANY, LLC

GREEN RIVER PROCESSING, LLC

 

By:                                                                            
Name:                                                                        
Title:                                                                          

WESTERN REFINING LOGISTICS GP, LLC, individually and on behalf of WESTERN REFINING LOGISTICS, LP

WNRL ENERGY GP, LLC

WESTERN REFINING PIPELINE, LLC

WESTERN REFINING WHOLESALE, LLC

WESTERN REFINING TERMINALS, LLC,

WESTERN REFINING PRODUCT TRANSPORT, LLC

 

By:                                                                           
Name:                                                                      
Title:                                                                        

Exhibit 99.1

Andeavor Logistics Completes Acquisition of Western Refining Logistics and IDR Buy-In

SAN ANTONIO, TEXAS – October 30, 2017 – Andeavor Logistics LP (NYSE: ANDX) and Andeavor (NYSE: ANDV) today announced that Andeavor Logistics has completed its acquisition of Western Refining Logistics, LP (NYSE: WNRL) in a unit-for-unit transaction and assumption of $280 million of net debt for a total enterprise value of approximately $1.7 billion, based on Andeavor Logistics’ closing unit price of $45.90 on October 30, 2017. The strategic combination of the two companies further positions Andeavor Logistics as a growth-oriented, full-service and diversified midstream company with greater organic growth opportunities across the combined geographic footprint. As a result of this acquisition, Andeavor Logistics is well positioned to compete and grow organically in the highly attractive Permian Basin, principally in the Delaware basin where Andeavor and Andeavor Logistics have a strong logistics asset base, crude oil marketing capability and meaningful refining offtake.

Western Refining Logistics unitholders will receive the Andeavor Logistics quarterly cash distribution for the third quarter 2017 after they have exchanged their WNRL units for Andeavor Logistics units, but will not receive a separate quarterly cash distribution with respect to WNRL. The third quarter distribution will be paid November 14, 2017 to all Andeavor Logistics unitholders of record as of November 3, 2017. As previously announced on October 18, 2017, the distribution of $0.9852 per unit represents a 1.5% increase over the previous quarterly distribution.

Upon the closing of the merger between Andeavor Logistics and WNRL, Andeavor Logistics also issued 78.0 million of its common units to Andeavor in exchange for the cancellation of Andeavor Logistics’ incentive distribution rights and the conversion of its economic general partner interest into a non-economic general partner interest. Andeavor will continue to own the non-economic general partner interest in Andeavor Logistics and hold approximately 127 million Andeavor Logistics common units, representing approximately 59% of the common units outstanding. The 78.0 million Andeavor Logistics common units represent $3.6 billion in value based on Andeavor Logistics’ closing unit price of $45.90 on October 30, 2017. This financial repositioning enhances Andeavor Logistics’ capital structure, reduces the need for new public equity issuance and substantially reduces the cost of capital to support sustainable, long-term growth.

“We are excited about the completion of Andeavor Logistics’ acquisition of Western Refining Logistics and the IDR buy-in. These transactions reduce our cost of capital, improve our financial strength and position the business for continued strong growth,” said Greg Goff, Chairman and Chief Executive Officer of Andeavor, and Chief Executive Officer of Andeavor Logistics’ general partner. “These transactions also strengthen the credit profile of Andeavor Logistics and position it for an investment grade credit rating as well as create significant value for Andeavor shareholders and Andeavor Logistics unitholders.”


Andeavor Logistics continues to expect at least $1 billion of annual growth investments over the next several years consisting of at least $500 to $600 million in organic growth and acquisitions and the potential for $400 to $500 million in drop downs from Andeavor. Andeavor Logistics remains committed to achieving its targeted annual distribution growth of 6% or greater, distribution coverage ratio of approximately 1.1 times and debt-to-EBITDA at or below 4.0 times. As previously announced, Greg Goff will continue to serve as Chairman and Chief Executive Officer, and Steven Sterin will continue to serve as President and Chief Financial Officer of the general partner of Andeavor Logistics.

Andeavor Logistics also announced a transition in the board of directors of its general partner. Tom O’Connor gave notice that he will retire from the board of the general partner effective as of January 1, 2018. To succeed Mr. O’Connor, and to structure the board to lead the combined companies, Andeavor Logistics announced that Sigmund L. Cornelius and Ruth I. Dreessen will join the board effective as of January 1, 2018. This transition will bring the total number of directors on the board to eight.

“Tom O’Connor has been a strong leader and partner in our growth at Andeavor Logistics, and we are grateful for his leadership and valuable service,” said Goff. “We welcome Mr. Cornelius and Ms. Dreessen. Each has substantial skill and experience that strengthen our board and position it to successfully guide the combined companies going forward.”

Mr. Cornelius is President and Chief Operating Officer of Freeport LNG, L.P., a Texas-based owner and operator of a liquefied natural gas receiving and regasification terminal. Mr. Cornelius retired from ConocoPhillips in December 2010 after 30 years with the company, having served in many senior executive positions including most recently as Senior Vice President, Finance and Chief Financial Officer; Senior Vice President, Planning, Strategy and Corporate Affairs; President, Exploration and Production — Lower 48; President, Global Gas; and President, Lower 48, Latin America and Midstream. Mr. Cornelius currently serves on the boards of directors of Freeport LNG and CARBO Ceramics Inc. (NYSE: CRR), and previously served on the boards of Western Refining, Inc., DCP Midstream GP, LLC, USEC Inc., NiSource Inc., Columbia Pipeline Group, Inc. and Parallel Energy Trust.

Ms. Dreessen is Managing Director of Lion Chemical Partners, LLC, a private equity firm focused on the chemical and related industries. She previously served as Executive Vice President and Chief Financial Officer of TPC Group Inc., and as Senior Vice President, Chief Financial Officer and Director of Westlake Chemical Corporation. She spent 21 years at J.P. Morgan Securities and predecessor companies,


ultimately as Managing Director of chemicals investment banking. Ms. Dreessen currently serves on the board of directors of Gevo, Inc. (NASDAQ: GEVO), as Chairperson, and previously served on the boards of Targa Resources, L.P., Versar, Inc., Georgia Gulf Corporation, Westlake Chemical Corporation and the Better Minerals & Aggregates Corporation (U.S. Silica Holding).

About Andeavor

Andeavor is a premier, highly integrated marketing, logistics and refining company. Andeavor’s retail-marketing system includes more than 3,100 retail stations marketed under multiple well-known fuel brands, including ARCO ® , SUPERAMERICA ® , Shell ® , Exxon ® , Mobil ® , Tesoro ® , USA Gasoline(TM) and Giant ® . It also has ownership in Andeavor Logistics LP and its non-economic general partner. Andeavor operates 10 refineries with a combined capacity of approximately 1.2 million barrels per day in the mid-continent and western United States.

About Andeavor Logistics LP

Andeavor Logistics LP is a leading full-service logistics company operating primarily in the western and midcontinent regions of the United States. Andeavor Logistics owns and operates a network of crude oil, refined products and natural gas pipelines. Andeavor Logistics also owns and operates crude oil and refined products truck terminals, marine terminals and dedicated storage facilities. In addition, Andeavor Logistics owns and operates natural gas processing and fractionation complexes. Andeavor Logistics is a fee-based, growth oriented Delaware limited partnership formed by Andeavor.

Forward Looking Statements

This communication contains certain statements that are “forward-looking” statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934. Words such as “may,” “will,” “could,” “anticipate,” “estimate,” “expect,” “predict,” “project,” “future,” “potential,” “intend,” “plan,” “assume,” “believe,” “forecast,” “look,” “build,” “focus,” “create,” “work” “continue” or the negative of such terms or other variations thereof and words and terms of similar substance used in connection with any discussion of future plans, actions, or events identify forward-looking statements, which involve risks, uncertainties and assumptions that are difficult to predict. These statements are not guarantees of future performance and actual outcomes and results may differ materially from what is expressed or implied in any forward-looking statement. The factors that might affect Andeavor’s or Andeavor Logistics’ performance include, but are not limited to: the business environment and industry trends; conditions in global financial markets; domestic and international economic conditions; Andeavor Logistics’ ability to realize the anticipated benefits of the acquisition of WNRL within the expected time frame; the risk that problems may arise in successfully integrating the businesses of the companies, which may result in the combined company not operating as effectively and efficiently as expected; the risk that the combined company may be unable to achieve cost-cutting synergies or it may take longer than expected to achieve those synergies; the risk that the combined company may not buy back shares and the risk that any


future distribution that Andeavor Logistics may issue may be different than expected. These factors are difficult to predict and are beyond Andeavor Logistics’ or Andeavor’s control, including those detailed in Andeavor Logistics’ annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and registration statement on Form S-4 (Reg. No. 333-220088) filed with the SEC on August 22, 2017, as amended, available on its website at http://andeavorlogistics.com/ and on the SEC’s website at http://www.sec.gov, and those detailed in Andeavor’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, available on its website at http://andeavor.com and on the SEC’s website at http://www.sec.gov. Andeavor Logistics’ and Andeavor’s forward-looking statements are based on assumptions that Andeavor Logistics and Andeavor believe to be reasonable but that may not prove to be accurate. Andeavor Logistics and Andeavor undertake no obligation to publicly release the result of any revisions to any such forward-looking statements that may be made to reflect events or circumstances that occur, or which we become aware of, except as required by applicable law or regulation. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.

Contact:

Investors:

Andeavor: Brian Randecker, Investor Relations, (210) 626-4757

Andeavor Logistics LP: Andrew Woodward, Sr. Director, Finance and Investor Relations, (210) 626-7202

Media:

Andeavor Media Relations, media@andeavor.com , (210) 626-7702