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

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   1-3473   95-0862768

(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 to fund the Merger and 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’s Current Report on Form 8-K filed with the SEC on August 14, 2017 and which are 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’s Current Report on Form 8-K filed on August 14, 2017, File No. 001-03473).
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’s Current Report on Form 8-K filed on August 14, 2017, File No. 001-03473).
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
By:  

/s/ Blane W. Peery

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

Date: October 30, 2017

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.

 

3


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