Exhibit 10.1

CONTRIBUTION AGREEMENT

dated as of November 11, 2015

and

effective as of October 1, 2015

by and among

SHELL PIPELINE COMPANY LP,

SHELL MIDSTREAM PARTNERS, L.P.

and

SHELL MIDSTREAM OPERATING LLC

 

 

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TABLE OF CONTENTS

 

ARTICLE I DEFINITIONS

     1   

Section 1.1 Definitions

     1   

Section 1.2 Construction

     9   

ARTICLE II CONVEYANCE AND CLOSING

     9   

Section 2.1 Conveyance

     9   

Section 2.2 Consideration

     9   

Section 2.3 Closing

     9   

Section 2.4 Purchase Price Adjustment

     11   

ARTICLE III REPRESENTATIONS AND WARRANTIES OF SPLC

     11   

Section 3.1 Organization

     11   

Section 3.2 Authority and Approval

     11   

Section 3.3 No Conflict; Consents

     12   

Section 3.4 Capitalization; Title to Subject Interests

     13   

Section 3.5 Financial Information; Undisclosed Liabilities

     13   

Section 3.6 Title to Pecten Properties; Condition of Assets

     14   

Section 3.7 Litigation; Laws and Regulations

     14   

Section 3.8 No Adverse Changes

     15   

Section 3.9 Taxes

     15   

Section 3.10 Licenses; Permits

     15   

Section 3.11 Material Contracts

     16   

Section 3.12 Employees

     17   

Section 3.13 Transactions with Affiliates

     17   

Section 3.14 Insurance

     17   

Section 3.15 Intellectual Property Rights

     17   

Section 3.16 Brokerage Arrangements

     18   

Section 3.17 Books and Records

     18   

Section 3.18 Regulatory Matters

     18   

Section 3.19 Management Projections and Budget

     18   

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SHLX AND OPERATING

     19   

Section 4.1 Organization and Existence

     19   

Section 4.2 Authority and Approval

     19   

Section 4.3 Validly Issued General Partner Units

     20   

Section 4.4 No Conflict; Consents

     20   

Section 4.5 Brokerage Arrangements

     20   

Section 4.6 Litigation

     21   

Section 4.7 Investment Intent

     21   

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ARTICLE V ADDITIONAL AGREEMENTS, COVENANTS, RIGHTS AND OBLIGATIONS

     21   

Section 5.1 Operation of Business

     21   

Section 5.2 Cooperation; Further Assurances

     23   

ARTICLE VI TAX MATTERS

     23   

Section 6.1 Liability for Taxes

     23   

Section 6.2 Pecten Tax Returns

     24   

Section 6.3 Transfer Taxes

     24   

Section 6.4 Allocation of Consideration

     25   

Section 6.5 Conflict

     25   

ARTICLE VII CONDITIONS TO CLOSING

     25   

Section 7.1 Conditions to the Obligations of SHLX

     25   

Section 7.2 Conditions to the Obligations of SPLC

     26   

ARTICLE VIII INDEMNIFICATION

     27   

Section 8.1 Indemnification of SHLX

     27   

Section 8.2 Indemnification of SPLC

     27   

Section 8.3 Environmental Indemnification

     28   

Section 8.4 Survival

     29   

Section 8.5 Indemnification Procedures

     29   

Section 8.6 Direct Claim

     30   

Section 8.7 Limitations on Indemnification

     31   

Section 8.8 Sole Remedy

     31   

ARTICLE IX MISCELLANEOUS

     32   

Section 9.1 Acknowledgements

     32   

Section 9.2 Cooperation; Further Assurances

     32   

Section 9.3 Expenses

     32   

Section 9.4 Notices

     32   

Section 9.5 Arbitration

     33   

Section 9.6 Governing Law

     34   

Section 9.7 Public Statements

     34   

Section 9.8 Entire Agreement; Amendments and Waivers

     35   

Section 9.9 Conflicting Provisions

     35   

Section 9.10 Binding Effect and Assignment

     35   

Section 9.11 Severability

     35   

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Section 9.12 Interpretation

     36   

Section 9.13 Headings and Disclosure Letter

     36   

Section 9.14 Multiple Counterparts

     36   

Section 9.15 Action by SHLX

     36   

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CONTRIBUTION AGREEMENT

This Contribution Agreement (this “Agreement”) is made as of November 11, 2015
and effective as of October 1, 2015, by and among Shell Pipeline Company LP, a
Delaware limited partnership (“SPLC”), Shell Midstream Partners, L.P., a
Delaware limited partnership (“SHLX”) and Shell Midstream Operating LLC, a
Delaware limited liability company that is wholly owned by SHLX (“Operating”).

RECITALS

WHEREAS, SPLC owns 100% of the issued and outstanding membership interests in
Pecten Midstream LLC, a Delaware limited liability company (“Pecten”); and

WHEREAS, SPLC desires to contribute to SHLX or its designee, and SHLX desires to
accept and acquire or to cause its designee to accept and acquire 100% of the
issued and outstanding membership interests in Pecten (the “Subject Interests”)
in accordance with the terms of this Agreement (the “Transaction”); and

WHEREAS, (a) the Conflicts Committee (the “Conflicts Committee”) of the Board of
Directors (the “Board of Directors”) of Shell Midstream Partners GP LLC, the
general partner of SHLX (the “General Partner”), has previously (i) received an
opinion of Evercore Group L.L.C., the financial advisor to the Conflicts
Committee (the “Financial Advisor”), that the consideration to be distributed by
SHLX pursuant to the Transaction is fair, from a financial point of view, to
SHLX and its unitholders, other than the General Partner, Shell Midstream LP
Holdings LLC and their respective affiliates and (ii) based on the belief of the
members of the Conflicts Committee that the consummation of the Transaction on
the terms and conditions set forth in this Agreement would be not adverse to the
best interests of the Partnership Group (as defined in the First Amended and
Restated Agreement of Limited Partnership of SHLX dated as of November 3, 2014
(the “Partnership Agreement”)), unanimously approved the Transaction, such
approval constituted “Special Approval” for purposes of the Partnership
Agreement, and unanimously recommended that the Board of Directors approve the
Transaction and (b) subsequently, the Board of Directors has approved the
Transaction.

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

ARTICLE I

DEFINITIONS

Section 1.1 Definitions.

The respective terms defined in this Section 1.1 shall, when used in this
Agreement, have the respective meanings specified herein, with each such
definition equally applicable to both singular and plural forms of the terms so
defined:

 

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“Affiliate,” means, with respect to any Person, any other Person that directly
or indirectly Controls, is Controlled by or is under common Control with such
Person; provided that such term when used (a) with respect to SPLC, means any
other Person that directly or indirectly Controls, is Controlled by or is under
common Control with SPLC, excluding SHLX, the General Partner, Operating and its
subsidiaries and equity interests and (b) with respect to SHLX, the term
“Affiliate” shall mean only the General Partner and Operating. No Person shall
be deemed an Affiliate of any Person solely by reason of the exercise or
existence of rights, interests or remedies under this Agreement.

“Agreement” has the meaning ascribed to such term in the preamble.

“Applicable Law” has the meaning ascribed to such term in Section 3.3(a).

“Assets” means all of the assets owned as of the Closing Date by Pecten,
including the Auger Pipeline System and the Lockport Terminal.

“Assignment Agreement” means the Assignment Agreement between SPLC, Shell
Pipeline GP LLC, Shell Midstream LP Holdings LLC, the General Partner, SHLX and
Operating dated as of the Closing Date.

“Auger Pipeline System” means the 174-mile pipeline that transports medium sour
crude oil and is connected to the Ship Shoal 22-inch sour crude pipeline, which
runs to Gibson Terminal and the associated 20-inch pipeline, which runs to St.
James Terminal, and all appurtenant facilities and equipment.

“Board of Directors” has the meaning ascribed to such term in the recitals.

“Business Day” means any day except a Saturday, a Sunday and any day in which in
Houston, Texas, United States shall be a legal holiday or a day on which banking
institutions are authorized or required by law or other government action to
close.

“Cash Consideration” has the meaning ascribed to such term in Section 2.2.

“Ceiling Amount” has the meaning ascribed to such term in Section 8.7(a).

“CERCLA” means the Comprehensive Environmental Response, Compensation, and
Liability Act.

“Closing” has the meaning ascribed to such term in Section 2.3(a).

“Closing Date” means the date on which the Closing occurs.

“Code” means the Internal Revenue Code of 1986, as amended.

“Common Units” means common units representing limited partner interests in
SHLX.

“Conflicts Committee” has the meaning ascribed to such term in the recitals.

 

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“Consideration” means Three Hundred Ninety Million Dollars ($390,000,000).

“Control” and its derivatives mean 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.

“Damages” means any losses, damages, liabilities, claims, demands, causes of
action, judgments, settlements, fines, penalties, costs and expenses (including
court costs and reasonable attorneys’ and expert’s fees) of any and every kind
or character, known or unknown, fixed or contingent.

“Deductible Amount” has the meaning ascribed to such term in Section 8.7(a).

“Delaware LLC Act” means the Delaware Limited Liability Company Act, as amended.

“Direct Claim” has the meaning ascribed to such term in Section 8.6.

“Disclosure Letter” has the meaning ascribed to such term in Article III.

“Dispute” has the meaning ascribed to such term in Section 9.5(a).

“Effective Time” means 12:01 a.m., Central Standard Time, on October 1, 2015.

“Environmental Laws” means, without limitation, the following laws, each as
amended or enacted from time to time: (a) the Resource Conservation and Recovery
Act; (b) the Clean Air Act; (c) CERCLA; (d) the Federal Water Pollution Control
Act; (e) the Safe Drinking Water Act; (f) the Toxic Substances Control Act;
(g) the Emergency Planning and Community Right-to-Know Act; (h) the National
Environmental Policy Act; (i) the Pollution Prevention Act of 1990; (j) the Oil
Pollution Act of 1990; (k) the Hazardous Materials Transportation Act; (l) the
Federal Insecticide, Fungicide and Rodenticide Act; (m) all laws, statutes,
rules, regulations, orders, judgments, decrees promulgated or issued with
respect to the foregoing Environmental Laws by Governmental Authorities with
jurisdiction in the premises; and (n) any other federal, state or local
statutes, laws, common laws, ordinances, rules, regulations, orders, codes,
decisions, injunctions or decrees that regulate or otherwise pertain to the
protection of the environment, including, but not limited to, the management,
control, discharge, emission, exposure, treatment, containment, handling,
removal, use, generation, permitting, migration, storage, release,
transportation, disposal, remediation, manufacture, processing or distribution
of Hazardous Materials that are or may present a threat to human health or the
environment.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“FERC” has the meaning ascribed to such term in Section 3.18.

“Financial Advisor” has the meaning ascribed to such term in the recitals.

“GAAP” means generally accepted accounting principles in the United States of
America.

“General Partner” has the meaning ascribed to such term in the recitals.

 

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“General Partner Subject Interests” has the meaning ascribed to such term in
Section 2.1(a).

“General Partner Unit Quantity” means that number of General Partner Units that,
when added to the number of General Partner Units owned by the General Partner
immediately prior to Closing of the Transaction, causes the percentage interest
of the General Partner to be 2%, after taking into account as outstanding the
Common Units issued, or to be issued, pursuant to the Offering (excluding Common
Units that are or may be issued upon exercise of the over-allotment option
granted by SHLX to the underwriters in connection with the Offering, except to
the extent such Common Units are issued on the Closing Date).

“General Partner Unit Value” means a dollar amount equal to (a) the General
Partner Unit Quantity multiplied by (b) the price at which the Common Units are
sold to the public in the Offering.

“General Partner Units” means general partner units representing general partner
interests in SHLX.

“Governmental Authority” means any federal, state, municipal or other
government, governmental court, department, commission, board, bureau, agency or
instrumentality, whether foreign or domestic.

“Hazardous Materials” means (a) any substance, whether solid, liquid or gaseous,
that (i) is listed, defined or regulated as a “hazardous material,” “hazardous
waste,” “solid waste,” “hazardous substance,” “toxic substance,” “pollutant” or
“contaminant,” or words of similar meaning or import found in any applicable
Environmental Law or (ii) is or contains asbestos, polychlorinated biphenyls,
radon, urea formaldehyde foam insulation, explosives, or radioactive materials;
(b) any petroleum, petroleum hydrocarbons, petroleum substances, petroleum or
petrochemical products, refined petroleum products, natural gas, crude oil and
any components, fractions, or derivatives thereof, any oil or gas exploration or
production waste, and any natural gas, synthetic gas and any mixtures thereof;
(c) naturally occurring radioactive material, radioactive material, waste and
pollutants, radiation, radionuclides and their progeny, or nuclear waste
including used nuclear fuel; or (d) any substance, whether solid, liquid or
gaseous, that causes or poses a threat to cause contamination or nuisance on any
properties, or any adjacent property or a hazard to the environment or to the
health or safety of persons on or about any properties.

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

“Indebtedness for Borrowed Money” means, with respect to any Person, without
duplication, (a) all obligations of such Person for borrowed money or with
respect to deposits or advances of any kind, (b) all obligations of such Person
evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such Person under conditional sale or other title retention
agreements relating to property acquired by such Person, (d) all obligations of
such Person in respect of the deferred purchase price of property or services or
any other similar obligation upon which interest charges are customarily paid
(excluding trade accounts payable incurred in the ordinary course of business),
(e) all Indebtedness for Borrowed Money of others secured by (or for which the
holder of such Indebtedness for Borrowed Money has an existing right, contingent

 

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or otherwise, to be secured by) any encumbrance on property owned or acquired by
such Person, whether or not the Indebtedness for Borrowed Money secured thereby
has been assumed, (f) all assurances by such Person of Indebtedness for Borrowed
Money of others, (g) all capital lease obligations of such Person, (h) all
obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty and (i) all obligations,
contingent or otherwise, of such Person in respect of bankers’ acceptances.

“Intellectual Property” means all intellectual or industrial property and rights
therein, however denominated, throughout the world, whether or not registered,
including all patent applications, patents, trademarks, service marks, trade
styles or dress, mask works, copyrights (including copyrights in computer
programs, software, computer code, documentation, drawings, specifications and
data), works of authorship, moral rights of authorship, rights in designs, trade
secrets, technology, inventions, invention disclosures, discoveries,
improvements, know-how, proprietary rights, formulae, processes, methods,
technical and business information, and confidential and proprietary
information, and all other intellectual and industrial property rights, whether
or not subject to statutory registration or protection and, with respect to each
of the foregoing, all registrations and applications for registration, renewals,
extensions, continuations, reexaminations, reissues, divisionals, improvements,
modifications, derivative works, goodwill, and common law rights, and causes of
action relating to any of the foregoing.

“Interstate Commerce Act” means the version of the Interstate Commerce Act under
which FERC regulates oil pipelines, 49 U.S.C. app. §§ 1, et seq. (1988), and the
regulations promulgated by the FERC thereunder.

“Knowledge,” as used in this Agreement with respect to a party hereof, means the
actual knowledge of that party’s designated personnel after due inquiry. The
designated personnel for SPLC and SHLX are set forth on Appendix A.

“Lien” means any mortgage, deed of trust, lien, security interest, pledge,
conditional sales contract, charge or encumbrance.

“Lockport Storm Water Project” means the storm water project at the Lockport
Terminal, which will improve the existing drainage system at the Lockport
Terminal to eliminate the crossing of storm water between the Lockport Terminal
and the Chevron Refinery properties. This project will create a stand-along
internal storm water drainage system at the Lockport Terminal, independent from
the Chevron Refinery properties.

“Lockport Tank Repair Project” means the API 653 inspection and tank repair
project of tank 19624 located at the Lockport Terminal, which will cover the
installation of a new welded steel bottom, a new thick film internal liner, and
a new internal floating roof seal.

“Lockport Terminal” means the approximately 128-acre terminal facility located
in Lockport, Illinois that is held by Pecten and which, as of the Closing Date,
has 16 tanks with a nominal capacity of approximately 2.0 million barrels of
crude oil.

“Material Contract” has the meaning ascribed to such term in Section 3.11(a).

 

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“Minimum Claim Amount” has the meaning ascribed to such term in Section 8.7(a).

“New General Partner Units” has the meaning ascribed to such term in
Section 2.2.

“Notice” has the meaning ascribed to such term in Section 9.4.

“Offering” means a firm commitment underwritten public offering of Common Units
registered under the Securities Act of 1933, as amended, effected by SHLX
contemporaneously with or immediately prior to Closing.

“Omnibus Agreement” means that certain Omnibus Agreement between SPLC, SHLX, the
General Partner, Operating and Shell Oil Company, dated as of November 3, 2014.

“Operating” has the meaning ascribed to such term in the preamble.

“Operating Agreement” means the Operating and Administrative Management
Agreement between Shell Pipeline Company LP and Pecten Midstream LLC, dated and
made effective on October 1, 2015.

“OCSLA” has the meaning ascribed to such term in Section 3.18.

“Partnership Agreement” has the meaning ascribed to such term in the recitals.

“Pecten” has the meaning ascribed to such term in the recitals.

“Pecten Financial Statements” has the meaning ascribed to such term in
Section 3.5(a).

“Pecten LLC Agreement” means the Limited Liability Company Agreement of Pecten
Midstream LLC, effective as of October 1, 2015.

“Pecten Permits” has the meaning ascribed to such term in Section 3.10(a).

“Permitted Liens” means all: (a) mechanics’, materialmen’s, repairmen’s,
employees’ contractors’ operators’, carriers’, workmen’s or other like Liens or
charges arising by operation of law, in the ordinary course of business or
incident to the construction or improvement of any of the Assets, in each case,
for amounts not yet delinquent (including any amounts being withheld as provided
by law); (b) Liens arising under original purchase price conditional sales
contracts and equipment leases with third parties entered into in the ordinary
course of business; (c) immaterial defects and irregularities in title,
encumbrances, exceptions and other matters that, singularly or in the aggregate,
will not materially interfere with the ownership, use, value, operation or
maintenance of the Assets to which they pertain or SPLC’s ability to perform its
obligations hereunder with respect thereto; (d) Liens for Taxes that are not yet
due and payable; (e) pipeline, utility and similar easements and other rights in
respect of surface operations; (f) Liens supporting surety bonds, performance
bonds and similar obligations issued in connection with the Assets; (g) all
rights to consent, by required notices to, filings with, or other actions by
Governmental Authorities or third parties in connection with the sale or
conveyance of easements, rights of way, licenses, facilities or interests
therein if they are customarily obtained subsequent to the sale or conveyance;
and (h) all Liens and interests described on Section 1.1 of the Disclosure
Letter.

 

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“Person” means an individual or entity, including any partnership, corporation,
association, trust, limited liability company, joint venture, unincorporated
organization or other entity.

“Rules” has the meaning ascribed to such term in Section 9.5(a).

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

“SHLX” has the meaning ascribed to such term in the preamble.

“SHLX Closing Certificate” has the meaning ascribed to such term in
Section 7.2(a).

“SHLX Indemnified Parties” has the meaning ascribed to such term in Section 8.1.

“SHLX Lockport Storm Water Project Costs and Expenses” means the amount of
direct, out-of-pocket costs and expenses incurred by Pecten from and after the
Effective Time for the execution of the Lockport Storm Water Project.
Notwithstanding the foregoing, the term “SHLX Lockport Storm Water Project Costs
and Expenses” shall exclude consequential damages and business interruption
losses; provided that such exclusion shall in no way limit any of SHLX’s rights
to pursuant to Section 8.7(c).

“SHLX Lockport Tank Repair Project Costs and Expenses” means the amount of
direct, out-of-pocket costs and expenses incurred by Pecten from and after the
Effective Time for the execution of the Lockport Tank Repair Project.
Notwithstanding the foregoing, the term “SHLX Lockport Tank Repair Project Costs
and Expenses” shall exclude consequential damages and business interruption
losses; provided that such exclusion shall in no way limit any of SHLX’s rights
to pursuant to Section 8.7(c).

“SHLX Material Adverse Effect” means a material adverse effect on or a material
adverse change in the ability of SHLX to perform its obligations under this
Agreement and the other Transaction Documents or to consummate the transactions
contemplated hereby or thereby.

“SPLC” has the meaning ascribed to such term in the preamble.

“SPLC Closing Certificate” has the meaning ascribed to such term in
Section 7.1(a).

“SPLC Indemnified Parties” has the meaning ascribed to such term in Section 8.2.

“SPLC Material Adverse Effect” means a material adverse effect on or a material
adverse change in (a) the value of the Assets, or the business, operations or
financial condition of Pecten, taken as a whole, other than any effect or change
(i) that impacts the offshore crude oil transportation or onshore crude storage
industry generally (including any change in the prices of crude oil or other
hydrocarbon products, industry margins or any regulatory changes or changes in
Applicable Law or GAAP), (ii) in United States or global political or economic
conditions or financial markets in general, or (iii) resulting from the
announcement of the transactions

 

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contemplated by this Agreement and the taking of any actions contemplated by
this Agreement, provided, that in the case of clauses (i) and (ii), the impact
on the Assets or the business, operations or financial condition of Pecten is
not materially disproportionate to the impact on similarly situated assets or
businesses in the offshore crude oil transportation or onshore crude storage
industry, or (b) the ability of SPLC to perform its obligations under this
Agreement and the other Transaction Documents to which SPLC is a party or to
consummate the transactions contemplated hereby or thereby.

“Subject Interests” has the meaning ascribed to such term in the recitals.

“Tax” means any and all U.S. federal, state, local or foreign net income, gross
income, gross receipts, sales, use, ad valorem, transfer, franchise, capital
stock, profits, margin, license, license fee, environmental, customs duty,
unclaimed property or escheat payments, alternative fuels, mercantile, lease,
service, withholding, payroll, employment, unemployment, social security,
disability, excise, severance, registration, stamp, occupation, premium,
property (real or personal), windfall profits, fuel, value added, alternative or
add on minimum, estimated or other similar taxes, duties, levies, customs,
tariffs, imposts or assessments (including public utility commission property
tax assessments) imposed by any Governmental Authority, together with any
interest, penalties or additions thereto payable to any Governmental Authority
in respect thereof or any liability for the payment of any amounts of any of the
foregoing types as a result of being a member of an affiliated, consolidated,
combined or unitary group, or being a party to any agreement or arrangement
whereby liability for payment of such amounts was determined or taken into
account with reference to the liability of any other Person.

“Tax Return” means any return, declaration, report, statement, election, claim
for refund or other written document, together with all attachments, amendments
and supplements thereto, filed with or provided to, or required to be filed with
or provided to, a Governmental Authority in respect of Taxes.

“Taxing Authority” means, with respect to any Tax, the Governmental Authority
that imposes such Tax, and the agency (if any) charged with the collection of
such Tax for such entity or subdivision, including any governmental or
quasi-governmental entity or agency that imposes, or is charged with collecting,
social security or similar charges or premiums.

“Transaction” means (a) the contribution and transfer of the Subject Interests
and (b) the distribution of the Consideration.

“Transaction Documents” means this Agreement, the Assignment Agreement and any
other documents of conveyance or other related documents contemplated to be
entered into in connection with this Agreement and the transactions contemplated
hereby with respect to which SPLC and SHLX or Operating are parties. For the
avoidance of doubt, “Transaction Documents” shall not include any documents
entered into in connection with the contribution and transfer of the Assets to
Pecten from SPLC and Equilon Enterprises LLC (d/b/a Shell Oil Products US).

“Transfer Tax” has the meaning ascribed to such term in Section 6.3.

“Tribunal” has the meaning ascribed to such term in Section 9.5(b).

 

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Section 1.2 Construction.

In constructing this Agreement: (a) the word “includes” and its derivatives
means “includes, without limitation” and corresponding derivative expressions;
(b) the currency amounts referred to herein, unless otherwise specified, are in
United States dollars; (c) whenever this Agreement refers to a number of days,
such number shall refer to calendar days unless Business Days are specified;
(d) unless otherwise specified, all references in this Agreement to “Article,”
“Section,” “Disclosure Letter,” “Exhibit,” “preamble” or “recitals” shall be
references to an Article, Section, Disclosure Letter, Exhibit, preamble or
recitals hereto; and (e) whenever the context requires, the words used in this
Agreement shall include the masculine, feminine and neuter and singular and the
plural.

ARTICLE II

CONVEYANCE AND CLOSING

Section 2.1 Conveyance.

Upon the terms and subject to the conditions set forth in this Agreement and in
the other Transaction Documents at the Closing:

(a) SPLC shall contribute, transfer, assign, and convey (i) a percentage of the
Subject Interests equal to the quotient of the General Partner Unit Value
divided by the Consideration (the “General Partner Subject Interests”) to the
General Partner and (ii) the remaining Subject Interests to Operating;

(b) SPLC shall cause the General Partner to contribute, transfer, assign, and
convey the General Partner Subject Interests to Operating; and

(c) Operating, in its capacity as designee of SHLX, shall accept and acquire all
of the Subject Interests from SPLC and the General Partner,

in each case free and clear of all Liens (other than restrictions under
applicable federal and state securities laws).

Section 2.2 Consideration.

The aggregate amount of consideration for the Subject Interests to be
distributed by SHLX shall be the Consideration, which shall consist of (i) a
cash distribution to SPLC equal to the Consideration minus the General Partner
Unit Value (the “Cash Consideration”) and (ii) an issuance of a number of
General Partner Units equal to the General Partner Unit Quantity (the “New
General Partner Units”) to the General Partner.

Section 2.3 Closing.

(a) The closing of the Transaction (the “Closing”) shall take place as provided
in this Section 2.3, but the Transaction, including the transfer to SHLX of the
risk of loss and reward relating to the Subject Interests and the underlying
Assets, shall be effective as of the Effective Time. The Closing will be held at
the offices of SPLC at 910 Louisiana Street, Houston, Texas 77002 on
November 17, 2015, commencing at 9:00 a.m., Houston time, or such other place,
date and time as may be mutually agreed upon by the parties hereto.

 

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(b) At the Closing, SHLX or its designee shall deliver, or cause to be
delivered, the following:

 

  (i) to SPLC or its designee(s), the Cash Consideration by wire transfer in
immediately available funds;

 

  (ii) to SPLC, the Assignment Agreement duly executed by SHLX and the General
Partner;

 

  (iii) to the General Partner, the New General Partner Units issued in
book-entry form;

 

  (iv) to SPLC, a certificate of good standing of recent date of SHLX;

 

  (v) to SPLC, the SHLX Closing Certificate; and

 

  (vi) such other certificates, instruments of conveyance and documents as may
be reasonably requested by SPLC at least two (2) Business Days prior to the
Closing Date to carry out the intent and purposes of this Agreement.

(c) At the Closing, Operating or its designee shall deliver, or cause to be
delivered, the following:

 

  (i) to SPLC, the Assignment Agreement duly executed by Operating; and

 

  (ii) a duly executed counterpart to an amendment to the Pecten LLC Agreement,
which shall include an updated Exhibit reflecting the transfer of the Subject
Interests pursuant to this Agreement.

(d) At the Closing, SPLC or its designee shall deliver, or cause to be
delivered, to SHLX and Operating, the following:

 

  (i) the Assignment Agreement duly executed by SPLC and any of its Affiliates
party thereto;

 

  (ii) a certificate of good standing of recent date of each of SPLC and Pecten;

 

  (iii) foreign qualification certificates of recent date of Pecten;

 

  (iv) the SPLC Closing Certificate; and

 

  (v) such other certificates, instruments of conveyance and documents as may be
reasonably requested by SHLX at least two (2) Business Days prior to the Closing
Date to carry out the intent and purposes of this Agreement.

 

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Section 2.4 Purchase Price Adjustment.

(a) The parties agree that (i) SHLX intends to cause SPLC, as “Operator” under
the Operating Agreement, to undertake the Lockport Storm Water Project and
(ii) SPLC shall pay to SHLX an amount equal to any SHLX Lockport Storm Water
Project Costs and Expenses within 30 days after SHLX provides notice in writing
to SPLC specifying the nature of and specific basis for such SHLX Lockport Storm
Water Project Costs and Expenses.

(b) The parties agree that (i) SHLX intends to cause SPLC, as “Operator” under
the Operating Agreement, to undertake the Lockport Tank Repair Project and
(ii) SPLC shall pay to SHLX an amount equal to any SHLX Lockport Tank Repair
Project Costs and Expenses within 30 days after SHLX provides notice in writing
to SPLC specifying the nature of and specific basis for such SHLX Lockport Tank
Repair Project Costs and Expenses.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SPLC

SPLC hereby represents and warrants to SHLX that, except as disclosed in the
disclosure letter delivered to SHLX on the date of this Agreement (“Disclosure
Letter”) (it being understood that any information set forth on any section of
the Disclosure Letter shall be deemed to apply to and qualify all sections or
subsections of this Agreement to the extent that it is reasonably apparent on
its face that such information is relevant to such other sections or
subsections):

Section 3.1 Organization.

(a) SPLC is a limited partnership duly formed, validly existing and in good
standing under the laws of the State of Delaware and has all requisite limited
partnership power and authority to own, operate and lease its properties and
assets and to carry on its business as now conducted.

(b) Pecten is a limited liability company duly formed, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
limited liability company power and authority to own, operate and lease its
properties and assets and to carry on its business as now conducted. Pecten is
duly licensed or qualified to do business and is in good standing in the states
in which the character of the properties and assets owned or held by it or the
nature of the business conducted by it requires it to be so licensed or
qualified, except where the failure to be so qualified or in good standing would
not, individually or in the aggregate, reasonably be expected to have a SPLC
Material Adverse Effect. SPLC has made available to SHLX true and complete
copies of the organizational documents of Pecten as in effect as of the date of
this Agreement.

Section 3.2 Authority and Approval.

(a) SPLC has full limited partnership power and authority to execute and deliver
this Agreement and the other Transaction Documents to which SPLC is a party, to
consummate the transactions contemplated hereby and thereby and to perform all
of the obligations hereof and

 

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thereof to be performed by it. The execution and delivery by SPLC of this
Agreement and the other Transaction Documents to which SPLC is a party, the
consummation of the transactions contemplated hereby and thereby and the
performance of all of the obligations hereof and thereof to be performed by SPLC
have been duly authorized and approved by all requisite limited partnership
action on the part of SPLC.

(b) This Agreement has been duly executed and delivered by SPLC and constitutes
the valid and legally binding obligation of SPLC, enforceable against it in
accordance with its terms and, upon the execution of the other Transaction
Documents to which SPLC is a party, such other Transaction Documents will be
duly executed and delivered by or on behalf of SPLC and constitute the valid and
legally binding obligation of SPLC, enforceable against SPLC in accordance with
their terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other similar
laws affecting the enforcement of creditors’ rights and remedies generally and
by general principles of equity (whether applied in a proceeding at law or in
equity).

Section 3.3 No Conflict; Consents.

Except as set forth on Section 3.3 of the Disclosure Letter:

(a) The execution, delivery and performance of this Agreement and the other
Transaction Documents to which SPLC is a party by SPLC does not, and the
fulfillment and compliance with the terms and conditions hereof and thereof and
the consummation of the transactions contemplated hereby and thereby will not,
(i) violate, conflict with, result in any breach of, or require the consent of
any Person under, any of the terms, conditions or provisions of the certificate
of formation or limited partnership agreement or other organizational documents
of SPLC or Pecten; (ii) conflict with or violate any provision of any law or
administrative rule or regulation or any judicial, administrative or arbitration
order, award, judgment, writ, injunction or decree applicable to SPLC or Pecten
(“Applicable Law”); (iii) conflict with, result in a breach of, constitute a
default under (whether with notice or the lapse of time or both), or accelerate
or permit the acceleration of the performance required by, or require any
consent, authorization or approval under, or result in the suspension,
termination or cancellation of, or in a right of suspension, termination or
cancellation of, any indenture, mortgage, agreement, contract, commitment, right
of way, license, concession, permit, lease, joint venture or other instrument to
which SPLC or Pecten is a party or by which either of them or any of the Assets
are bound; or (iv) result in the creation of any Lien (other than Permitted
Liens) on any of the Assets or on the Subject Interests under any such
indenture, mortgage, agreement, contract, commitment, right of way, license,
concession, permit, lease, joint venture or other instrument, except in the case
of clauses (ii), (iii) and (iv) for those items which, individually or in the
aggregate, would not reasonably be expected to have a SPLC Material Adverse
Effect or result in any material liability or obligation of SHLX or Operating
(other than any liability or obligation hereunder); and

(b) No consent, approval, license, permit, order or authorization of any
Governmental Authority or other Person is required to be obtained or made by
SPLC or Pecten with respect to the Subject Interests or the Assets in connection
with the execution, delivery and performance of this Agreement and the other
Transaction Documents to which SPLC or Pecten is a party or the consummation of
the transactions contemplated hereby or thereby, except (i) as have been

 

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waived or obtained or with respect to which the time for asserting such right
has expired or (ii) for those which individually or in the aggregate would not
reasonably be expected to have a SPLC Material Adverse Effect (including such
consents, approvals, licenses, permits, orders or authorizations that are not
customarily obtained prior to the Closing and are reasonably expected to be
obtained in the ordinary course of business following the Closing).

Section 3.4 Capitalization; Title to Subject Interests.

(a) SPLC owns, beneficially and of record, the Subject Interests and will convey
good title, free and clear of all Liens, to the Subject Interests to SHLX or its
designee. Except (i) as expressly provided for in the Pecten LLC Agreement,
(ii) for the contribution of the Subject Interests contemplated by this
Agreement; and (iii) for restrictions under applicable federal and state
securities laws, the Subject Interests are not subject to any agreements or
understandings with respect to their voting or transfer, stockholders agreement,
pledge agreement, buy-sell agreement, right of first refusal, preemptive right
or proxy arrangement. The Subject Interests have been duly authorized and are
validly issued and fully paid and nonassessable (except as such nonassessability
may be affected by Sections 18-607 and 18-804 of the Delaware LLC Act).

(b) There are (i) no authorized or outstanding subscriptions, warrants, options,
convertible securities or other rights (contingent or otherwise) to purchase or
otherwise acquire from Pecten any equity interests of or in Pecten, (ii) no
commitments on the part of Pecten to issue membership interests, shares,
subscriptions, warrants, options, convertible securities or other similar
rights, and (iii) no equity securities of Pecten reserved for issuance for any
such purpose. Pecten has no obligation (contingent or other) to purchase, redeem
or otherwise acquire any of its equity securities or interests. Except as
expressly provided in the Pecten LLC Agreement and in this Agreement, there is
no voting trust or agreement, stockholders agreement, pledge agreement, buy-sell
agreement, right of first refusal, preemptive right or proxy relating to any
equity securities of Pecten. Pecten owns no equity interests in any other
Person.

Section 3.5 Financial Information; Undisclosed Liabilities.

(a) SPLC has provided to SHLX a true and complete copy of the audited financial
statements as of December 31, 2014 of Pecten on a consolidated basis (the
“Pecten Financial Statements”). The Pecten Financial Statements present fairly
in all material respects the financial position of Pecten as of the date
thereof. There are no material off balance sheet arrangements of Pecten. The
Pecten Financial Statements have been prepared in accordance with GAAP
consistently applied throughout the periods presented.

(b) Except as set forth on Section 3.5(b) of the Disclosure Letter, there are no
liabilities or obligations of Pecten of any nature (whether known or unknown and
whether accrued, absolute, contingent or otherwise) and there are no facts or
circumstances that would reasonably be expected to result in any such
liabilities or obligations, whether arising in the context of federal, state or
local judicial, regulatory, administrative or permitting agency proceedings,
other than (i) liabilities or obligations reflected or reserved against in the
Pecten Financial Statements, (ii) current liabilities incurred in the ordinary
course of business since December 31, 2014, and (iii) liabilities or obligations
(whether known or unknown and whether accrued, absolute, contingent or
otherwise) that are not material.

 

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Section 3.6 Title to Pecten Properties; Condition of Assets.

(a) Pecten has (i) good and marketable fee simple title to the owned real
property used or held for use by Pecten for use, ownership, and operation of the
Assets in the same manner that they were used, owned, and operated by SPLC
immediately prior to the Effective Time, free and clear of any Liens (other than
Permitted Liens or as set forth on Section 3.6(a) of the Disclosure Letter),
(ii) a valid, binding and enforceable leasehold interest in each of the leased
properties used or held for use by Pecten for use, ownership, and operation of
the Assets in the same manner that they were used, owned, and operated by SPLC
immediately prior to the Effective Time, free and clear of any Liens (other than
Permitted Liens or as set forth on Section 3.6(a) of the Disclosure Letter), and
(iii) valid, binding, and enforceable rights of way necessary or required for
the ownership and operation of the Assets in the same manner that they were
used, owned, and operated by SPLC immediately prior to the Effective Time, free
and clear of any Liens (other than Permitted Liens or as set forth on
Section 3.6(a) of the Disclosure Letter).

(b) Except as set forth on Section 3.6(b) of the Disclosure Letter:

(i) the Assets are (x) in good operating condition and repair (normal wear and
tear excepted), (y) free from any material defects (other than Permitted Liens)
and (z) suitable for the purposes for which they are currently used;

(ii) none of the Assets is in need of maintenance or repairs except for
ordinary, routine maintenance and except for regularly scheduled overhauls from
time to time; and

(iii) Pecten has good and valid title to the Assets (including the Auger
Pipeline System and the Lockport Terminal but excluding the real property
interests that are the subject of Section 3.6(a)), free and clear of Liens
(other than Permitted Liens).

Section 3.7 Litigation; Laws and Regulations.

Except as set forth on Section 3.7 of the Disclosure Letter:

(a) there are no (i) civil, criminal or administrative actions, suits, claims,
hearings, arbitrations or proceedings pending or, to SPLC’s Knowledge,
threatened against Pecten, (ii) judgments, orders, decrees or injunctions of any
Governmental Authority, whether at law or in equity, against Pecten or
(iii) pending or, to SPLC’s Knowledge, threatened investigations by any
Governmental Authority against Pecten, except in each case, for those items that
would not, individually or in the aggregate, reasonably be expected to have a
SPLC Material Adverse Effect.

(b) Pecten is not in violation of or in default under any Applicable Law, except
as would not, individually or in the aggregate, reasonably be expected to have a
SPLC Material Adverse Effect.

 

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Section 3.8 No Adverse Changes.

Except as set forth on Section 3.8 of the Disclosure Letter:

(a) there has not been a SPLC Material Adverse Effect; and

(b) there has not been any damage, destruction or loss to any material portion
of the Assets, whether or not covered by insurance, in excess of One Million
Dollars ($1,000,000).

Section 3.9 Taxes.

(a) Except as would not reasonably be expected to have a SPLC Material Adverse
Effect, (i) all Tax Returns required to be filed by or with respect to Pecten,
the Assets or the operations of Pecten have been filed on a timely basis (taking
into account all extensions of due dates); (ii) all Taxes owed by Pecten, or any
of its Affiliates with respect to Pecten, the Assets or the operations of
Pecten, as applicable, which are or have become due, have been timely paid,
other than Taxes the amount or validity of which is being contested in good
faith by appropriate proceedings for which an adequate reserve has been
established therefor; (iii) there are no Liens on any of the Assets that arose
in connection with any failure (or alleged failure) to pay any Tax on Pecten or
the Assets other than Liens for Taxes not yet due and payable or the amount or
validity of which is being contested in good faith by appropriate proceedings
for which an adequate reserve has been established therefor; and (iv) there is
no pending action, proceeding or investigation for assessment or collection of
Taxes and no Tax assessment, deficiency or adjustment has been asserted or
proposed with respect to Pecten, the Assets or the operations of Pecten.

(b) Effective as of July 15, 2015, Pecten has been treated as disregarded as an
entity separate from SPLC for U.S. federal income tax purposes.

Section 3.10 Licenses; Permits.

Except as set forth on Section 3.10 of the Disclosure Letter:

(a) Pecten has all licenses, permits, certificates and authorizations issued or
granted or waived by Governmental Authorities that are necessary for the conduct
of its business as now being conducted (collectively, “Pecten Permits”), except,
in each case, for such items for which the failure to obtain or have waived
would not result in a SPLC Material Adverse Effect.

(b) All Pecten Permits are validly held by Pecten or its operator and are in
full force and effect, except as would not reasonably be expected to have a SPLC
Material Adverse Effect.

(c) Pecten has complied with all terms and conditions of the Pecten Permits,
except as would not reasonably be expected to have a SPLC Material Adverse
Effect.

(d) There is no outstanding written notice, nor, to the Knowledge of SPLC, any
other notice of revocation, cancellation or termination of any Pecten Permit,
except, in each case, as would not, individually or in the aggregate, reasonably
be expected to have a SPLC Material Adverse Effect.

 

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(e) No proceeding is pending or, to the Knowledge of SPLC, threatened with
respect to any alleged failure by Pecten to have any material Pecten Permit
necessary for the operation of any of the Assets or the conduct of Pecten’s
business.

Section 3.11 Material Contracts.

(a) Section 3.11(a) of the Disclosure Letter contains a true and complete
listing of the following contracts and other agreements to which Pecten as of
the date of this Agreement is a party or to which the Assets are subject (each
such contract or agreement, along with all amendments and supplements thereto,
being referred to herein as a “Material Contract”):

(i) contracts, agreements and instruments representing Indebtedness for Borrowed
Money and all guarantees thereof;

(ii) contracts containing covenants limiting the freedom of Pecten to engage in
any line of business or compete with any Person or operate at any location;

(iii) price swaps, hedges, futures or similar instruments;

(iv) contracts to which Pecten, on the one hand, and an Affiliate of Pecten, on
the other hand, is a party or is otherwise bound;

(v) contracts containing any preferential rights to purchase or similar rights
relating to any Assets;

(vi) joint venture or partnership agreements, including any agreement or
commitment to make any loan or capital contribution to any joint venture or
partnership;

(vii) contracts relating to the acquisition or disposition by Pecten of any
business (whether by acquisition or disposition of equity interests or assets)
pursuant to which Pecten has or will have any remaining material obligation or
liability or benefit;

(viii) contracts or agreements which, individually, require or entitle Pecten to
make or receive payments of at least Five Hundred Thousand Dollars ($500,000)
annually, provided that the calculation of the aggregate payments for any such
agreement or contract shall not include payments attributable to any renewal
periods or extensions for which Pecten may exercise a renewal or extension
option in its sole discretion;

(ix) contracts relating to the storage, transportation, treating, sale, or
purchase of hydrocarbons, or the provision of services related thereto; and

(x) licenses relating to Intellectual Property (whether as licensee or licensor)
other than licenses with respect to software used or accessed by Pecten under a
“shrink wrap,” “click wrap,” or “off the shelf” software license that is
generally commercially available on standard terms.

 

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(b) Subject to regulatory requirements of which SHLX has been informed, SPLC has
made available to SHLX a correct and complete copy of each Material Contract
listed on Section 3.11(a) of the Disclosure Letter.

(c) Except as would not reasonably be expected to result in a SPLC Material
Adverse Effect or as disclosed on Section 3.11(c) of the Disclosure Letter:
(i) each Material Contract is legal, valid and binding on and enforceable
against Pecten and, to the Knowledge of SPLC, each other party to such Material
Contract, and in full force and effect; (ii) each Material Contract will
continue to be legal, valid and binding on and enforceable against Pecten and,
to the Knowledge of SPLC, each other party to such Material Contract, and in
full force and effect on identical terms following the consummation of the
transactions contemplated by this Agreement; (iii) Pecten is not in breach or
default, and no event has occurred which with notice or lapse of time would
constitute a breach or default by Pecten, or permit termination, modification or
acceleration, under any Material Contract; and (iv) to SPLC’s Knowledge, no
other party to any Material Contract is in breach or default, and no event has
occurred which with notice or lapse of time would constitute a breach or default
by such other party, or permit termination, modification or acceleration, under
any Material Contract other than in accordance with its terms, nor has any other
party repudiated any provision of any Material Contract.

Section 3.12 Employees.

Pecten does not have, and has not had, any employees nor has it maintained or
contributed to, and is not subject to any liability in respect of, any employee
benefit or welfare plan of any nature, including plans subject to ERISA.

Section 3.13 Transactions with Affiliates.

Except as otherwise contemplated in this Agreement, Pecten is not and was not as
of the Effective Time, a party to any agreement, contract or arrangement with
any of its Affiliates, other than those disclosed on Section 3.11(a) of the
Disclosure Letter.

Section 3.14 Insurance.

Section 3.14 of the Disclosure Letter sets forth a list of the material
insurance policies that Pecten holds or SPLC holds with respect to Pecten, the
Subject Interests or the Assets, whether Pecten or SPLC is the beneficiary. Such
policies are in full force and effect, and all premiums due and payable under
such policies have been paid, Pecten has received no written notice of any
pending or threatened termination of, or indication of an intention not to
renew, such policies.

Section 3.15 Intellectual Property Rights.

Pecten owns or has the right to use all Intellectual Property necessary for or
used in the conduct of its business as currently conducted by it, and, to SPLC’s
Knowledge, its products and services do not infringe upon, misappropriate or
otherwise violate any Intellectual Property of any third party. All Intellectual
Property owned by Pecten if any, is free and clear of any Liens (other than
Permitted Liens). Neither the execution and delivery of this Agreement or the
other Transaction Documents, nor the consummation of the transactions
contemplated hereby or thereby will, with

 

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or without notice or lapse of time, result in, or give any other Person the
right or option to cause or declare, a breach or termination of, or cancellation
or reduction in, rights of Pecten under any contract providing for the license
of any Intellectual Property to Pecten, except for any such terminations,
cancellations or reductions that, individually or in the aggregate, would not
have a SPLC Material Adverse Effect. There is no Intellectual Property-related
action, suit, proceeding, hearing, investigation, notice or complaint pending
or, to SPLC’s Knowledge, threatened by any third party before any court or
tribunal (including, without limitation, the United States Patent and Trademark
Office or equivalent authority anywhere in the world) relating to Pecten or its
operations, nor has any claim or demand been made by any third party that
alleges any infringement, misappropriation or violation of any Intellectual
Property of any third party, or unfair competition or trade practices by Pecten.
Except as would not result in a SPLC Material Adverse Effect, Pecten has taken
reasonable measures to protect the confidentiality of all material trade
secrets.

Section 3.16 Brokerage Arrangements.

SPLC has not entered (directly or indirectly) into any agreement with any Person
that would obligate SPLC or any of its Affiliates or Pecten, to pay any
commission, brokerage or “finder’s fee” or other similar fee in connection with
this Agreement or the other Transaction Documents or the transactions
contemplated hereby or thereby.

Section 3.17 Books and Records.

Accurate copies of all books of account, minute books and stock or other equity
record books of Pecten and all books and records maintained by, or made
available to, SPLC with respect to the Assets and the Subject Interests have
been made available for inspection to SHLX.

Section 3.18 Regulatory Matters.

Since October 1, 2014, Pecten and the Auger Pipeline System have not been
subject to the jurisdiction of, or regulation by, the Federal Energy Regulatory
Commission (“FERC”) under the Interstate Commerce Act. No approval or consent by
any federal or state regulatory authority is required in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except to the extent that any failure to obtain such
approval, either individually or in the aggregate, would not reasonably be
expected to have a SPLC Material Adverse Effect. Since October 1, 2014 through
the Effective Time, the Auger Pipeline System was operated by SPLC in compliance
with the nondiscriminatory open access transportation requirements under the
Outer Continental Shelf Lands Act, as amended (“OCSLA”). Since the Effective
Time, Pecten or SPLC, on behalf of Pecten as “Operator” under the Operating
Agreement, has operated the Auger Pipeline System in compliance with the
nondiscriminatory open access transportation requirements under the OCSLA.

Section 3.19 Management Projections and Budget.

The projections and budgets regarding Pecten identified on Section 3.19 of the
Disclosure Letter, which were provided to SHLX (including those provided to the
Financial Advisor) by SPLC and its Affiliates as part of SHLX’s review in
connection with this Agreement, were prepared based upon assumptions that SPLC’s
management believed to be reasonable as of the dates thereof and were consistent
with SPLC’s management’s reasonable expectations at the time they were prepared.

 

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF SHLX AND OPERATING

SHLX and Operating hereby jointly and severally represent and warrant to SPLC as
follows:

Section 4.1 Organization and Existence.

(a) SHLX is a limited partnership duly formed, validly existing and in good
standing under the laws of the State of Delaware and has all requisite limited
partnership power and authority to own, operate and lease its properties and
assets and to carry on its business as now conducted.

(b) Operating is a limited liability company duly formed, validly existing and
in good standing under the laws of the State of Delaware and has all requisite
limited liability company power and authority to own, operate and lease its
properties and assets and to carry on its business as now conducted.

Section 4.2 Authority and Approval.

(a) Each of SHLX and Operating has full limited partnership power and authority
or full limited liability company power and authority, as applicable, to execute
and deliver this Agreement, to consummate the transactions contemplated hereby
and to perform all of the obligations hereof to be performed by it. The
execution and delivery of this Agreement and the other Transaction Documents to
which SHLX or Operating is a party, the consummation of the transactions
contemplated hereby and thereby and the performance of all of the obligations
hereof and thereof to be performed by SHLX and Operating have been duly
authorized and approved by all requisite limited partnership or limited
liability company action of SHLX and Operating, as applicable.

(b) This Agreement has been duly executed and delivered by or on behalf of SHLX
and Operating, and constitutes the valid and legally binding obligation of SHLX
and Operating, enforceable against SHLX and Operating in accordance with its
terms and, upon the execution of the other Transaction Documents to which SHLX
or Operating is a party, such other Transaction Documents will be duly executed
and delivered by or on behalf of SHLX and Operating and constitute the valid and
legally binding obligation of SHLX and Operating, enforceable against SHLX and
Operating in accordance with their terms, except in each case as such
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws affecting the
enforcement of creditors’ rights and remedies generally and by general
principles of equity (whether applied in a proceeding at law or in equity).

 

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Section 4.3 Validly Issued General Partner Units.

Upon issuance in connection with the Closing, the New General Partner Units will
be validly issued, fully paid (to the extent required under the Partnership
Agreement) and free of any preemptive or similar rights.

Section 4.4 No Conflict; Consents.

(a) The execution, delivery and performance of this Agreement and the other
Transaction Documents to which SHLX or Operating is a party by SHLX and
Operating does not, and the fulfillment and compliance with the terms and
conditions hereof and thereof and the consummation of the transactions
contemplated hereby and thereby will not, (i) violate, conflict with, result in
any breach of, or require the consent of any Person under, any of the terms,
conditions or provisions of the certificate of limited partnership or limited
partnership agreement of SHLX or the certificate of formation or limited
liability company agreement of Operating; (ii) conflict with or violate any
provision of any law or administrative rule or regulation or any judicial,
administrative or arbitration order, award, judgment, writ, injunction or decree
applicable to SHLX, Operating or any property or asset of SHLX or Operating;
(iii) conflict with, result in a breach of, constitute a default under (whether
with notice or the lapse of time or both), or accelerate or permit the
acceleration of the performance required by, or require any consent,
authorization or approval under, any indenture, mortgage, agreement, contract,
commitment, license, concession, permit, right of way, lease, joint venture or
other instrument to which SHLX or Operating is a party or by which it is bound
or to which any of its property is subject, except in the case of clauses
(ii) and (iii) for those items which, individually or in the aggregate, would
not reasonably be expected to affect the ability of either SHLX or Operating to
perform its obligations under this Agreement and the other Transaction Documents
to which SHLX or Operating is a party or to consummate the transactions
contemplated hereby or thereby.

(b) No consent, approval, license, permit, order or authorization of any
Governmental Authority or other Person is required to be obtained or made by or
with respect to SHLX or Operating in connection with the execution, delivery,
and performance of this Agreement or the other Transaction Documents to which
SHLX or Operating is a party or the consummation of the transactions
contemplated hereby and thereby, except (i) as have been waived or obtained or
with respect to which the time for asserting such right has expired or (ii) for
those which individually or in the aggregate would not reasonably be expected to
affect the ability of either SHLX or Operating to perform its obligations under
this Agreement and the other Transaction Documents to which SHLX or Operating is
a party or to consummate the transactions contemplated hereby or thereby
(including such consents, approvals, licenses, permits, orders or authorizations
that are not customarily obtained prior to the Closing and are reasonably
expected to be obtained in the ordinary course of business following the
Closing).

Section 4.5 Brokerage Arrangements.

Neither SHLX nor Operating has entered (directly or indirectly) into any
agreement with any Person that would obligate SHLX. Operating or any of their
respective Affiliates to pay any commission, brokerage or “finder’s fee” or
other similar fee in connection with this Agreement or the other Transaction
Documents or the transactions contemplated hereby or thereby.

 

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Section 4.6 Litigation.

There are no civil, criminal or administrative actions, suits, claims, hearings,
arbitrations, investigations or proceedings pending or, or to SHLX’s Knowledge,
threatened that (a) question or involve the validity or enforceability of any of
SHLX’s or Operating’s obligations under this Agreement or (b) seek (or
reasonably might be expected to seek) (i) to prevent or delay the consummation
by SHLX or Operating of the transactions contemplated by this Agreement or
(ii) damages in connection with any such consummation.

Section 4.7 Investment Intent.

Operating is accepting the Subject Interests for its own account with the
present intention of holding the Subject Interests for investment purposes and
not with a view to, or for offer or sale in connection with, any distribution
thereof in violation of the Securities Act or state securities laws. SHLX and
Operating acknowledge that the Subject Interests will not be registered under
the Securities Act or any applicable state securities law, and that such Subject
Interests may not be transferred or sold except pursuant to the registration
provisions of the Securities Act or pursuant to an applicable exemption
therefrom and pursuant to state securities laws and regulations as applicable.

ARTICLE V

ADDITIONAL AGREEMENTS, COVENANTS, RIGHTS AND OBLIGATIONS

Section 5.1 Operation of Business.

(a) Except as provided by this Agreement or as consented to by SHLX, during the
period from the date of this Agreement through the Closing Date, SPLC shall
cause Pecten to:

 

  (i) conduct its business and operations in the usual and ordinary course
thereof; and

 

  (ii) preserve, maintain and protect the assets and operations of Pecten
related thereto as are now being conducted.

(b) Except (A) as provided by this Agreement, (B) as set forth on Section 5.1(b)
of the Disclosure Letter or (C) as consented by SHLX, during the period from the
date of this Agreement through the Closing Date, SPLC shall not permit Pecten
to:

 

  (i) amend its organizational documents;

 

  (ii) liquidate, dissolve, recapitalize or otherwise wind up its business;

 

  (i) make any material change in any method of accounting or accounting
principles, practices or policies other than those required by GAAP or
Applicable Law;

 

  (ii) make, amend or revoke any material election with respect to Taxes;

 

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  (iii) other than in the ordinary course of business, enter into any contract
or agreement that would be a Material Contract if entered into prior to the date
of this Agreement, terminate any Material Contract or amend any Material
Contract in any material respect;

 

  (iv) purchase or otherwise acquire (including by lease) any asset or business
of, or any equity interest in, any Person other than in the ordinary course of
business;

 

  (v) sell, lease, abandon or otherwise dispose of any asset other than in the
ordinary course of business;

 

  (vi) take any action, refrain from taking any action, or enter into any
agreement or contract that would result in the imposition of any Lien (other
than Permitted Liens) on any assets;

 

  (vii) file any material lawsuit;

 

  (viii) cancel, compromise, waive, release or settle any right, claim or
lawsuit other than immaterial rights and claims in the ordinary course of
business consistent with past practice;

 

  (ix) undertake any capital project, other than as set forth on Section 5.1(b)
of the Disclosure Letter;

 

  (x) merge, consolidate or enter into any other business combination with any
Person;

 

  (xi) make any loan to any Person (other than extensions of credit to customers
in the ordinary course of business and intercompany loans under SPLC’s cash
management system in accordance with past practice;

 

  (xii) issue or sell any equity interests, notes, bonds or other securities, or
any option, warrant or right to acquire the same or incur, assume or guarantee
any indebtedness for borrowed money;

 

  (xiii) make any distribution with respect to its equity interests or redeem,
purchase, or otherwise acquire any of its equity interests;

 

  (xiv) fail to maintain in full force and effect its current insurance policies
covering Pecten, the Assets and Pecten’s business;

 

  (xv) acquire, commence or conduct any activity or business that may generate
income for United States federal income tax purposes that may not be “qualifying
income” (as such term is defined pursuant to Section 7704 of the Code), except
to the extent such activity or business is being conducted on the date of this
Agreement;

 

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  (xvi)  take any action that would reasonably be expected to result in any
representation and warranty of SPLC set forth in this Agreement becoming untrue
in any material respect; or

 

  (xvii)  agree, whether in writing or otherwise, to do any of the foregoing.

Section 5.2 Cooperation; Further Assurances.

SPLC and SHLX shall use their respective commercially reasonable efforts (a) to
obtain all approvals and consents required by or necessary for the transactions
contemplated by this Agreement, including, if required, any approvals and
consents required by the HSR Act, and (b) to ensure that all of the conditions
to the respective obligations of such parties contained in Section 7.1 and
Section 7.2, respectively, are satisfied timely; provided, however, that nothing
in this Agreement will require any party hereto to hold separate, or make any
divestiture not expressly contemplated herein of, any asset or otherwise agree
to any restriction on its operations or other burdensome condition which would
in any such case be material to its assets, liabilities or business in order to
obtain any consent or approval or other clearance required by this Agreement.

ARTICLE VI

TAX MATTERS

Section 6.1 Liability for Taxes.

(a) SPLC shall be liable for, and shall indemnify, defend and hold harmless SHLX
and Operating from any unpaid Taxes (including related penalties and interest)
imposed on or incurred by or with respect to the Subject Interests or the assets
related to the Subject Interests, attributable to any taxable period ending on
or prior to the Closing Date or portion thereof to the extent occurring on or
prior to the Closing Date.

(b) SHLX and Operating shall be liable for any Taxes (including related
penalties and interest) imposed on or incurred by or with respect to the Subject
Interests or the assets related to the Subject Interests attributable to any
taxable period beginning after the Closing Date or portion thereof to the extent
occurring after the Closing Date.

(c) Whenever it is necessary for purposes of this Article VI to determine the
amount of any Taxes imposed on or incurred by or with respect to the Subject
Interests or the assets related to the Subject Interests for a taxable period
beginning before and ending after the Closing Date which is allocable to the
period ending on or prior to the Closing Date, the portion of such Taxes that
relate to the pre-closing period (a) in the case of any property, ad valorem, or
similar Taxes, shall be deemed to be the amount of such Tax for the entire Tax
period multiplied by a fraction, the numerator of which is the number of days in
the Tax period ending on (and including) the Closing Date and the denominator of
which is the number of days in the entire Tax period, and (b) in the case of all
other Taxes, shall be deemed equal to the amount which would be payable as
computed on a “closing-of-the-books” basis if the relevant Tax period ended at
the close of business on the Closing Date.

 

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(d) If SHLX receives a refund of any Taxes (including related penalties and
interest) that SPLC is responsible for hereunder, or if SPLC receives a refund
of any income taxes (including related penalties and interest) that SHLX is
responsible for hereunder, the party receiving such refund shall, within ninety
(90) days after receipt of such refund, remit it to the party which has
responsibility for such Taxes hereunder. The parties shall cooperate in order to
take all necessary and reasonable steps to claim any such refund.

(e) For federal income tax purposes, the parties agree to report any payments
with respect to Section 2.4, Section 6.1, Section 8.1 and Section 8.2 as an
adjustment to the Consideration.

Section 6.2 Pecten Tax Returns.

(a) With respect to any Tax Return attributable to a taxable period ending on or
before the Closing Date that is required to be filed either before or after the
Closing Date with respect to Pecten or the Assets, SPLC shall cause such Tax
Return to be prepared, cause to be included in such Tax Return all items of
income, gain, loss, deduction and credit required to be included therein, cause
such Tax Return to be filed timely with the appropriate Taxing Authority, and be
responsible for the timely payment (and entitled to any refund) of all Taxes due
with respect to such Tax Return.

(b) With respect to any Tax Return attributable to a taxable period beginning on
or before the Closing Date and ending after the Closing Date that is required to
be filed after the Closing Date with respect to Pecten or the Assets, SHLX shall
cause such Tax Return to be prepared, cause to be included in such Tax Return
all items of income, gain, loss, deduction and credit required to be included
therein, furnish a copy of such Tax Return to SPLC, cause such Tax Return to be
filed timely with the appropriate Taxing Authority, and be responsible for the
timely payment of (and entitled to any refund for) all Taxes due with respect to
such Tax Return (but shall have a right to recover from SPLC the amount of Taxes
attributable to the portion of the taxable period covered by such Tax Return
ending on or prior to the Closing Date pursuant to Section 6.1(a)).

(c) With regard to any Tax Return not yet filed for any taxable period that
begins before the Closing Date with respect to Pecten or the Assets, the parties
shall cause each such Tax Return to be prepared in accordance with past Tax
accounting practices used with respect to the Tax Returns in question (unless
such past practices are no longer permissible under the Applicable Law), and to
the extent any items are not covered by past practices, in accordance with
reasonable tax accounting practices selected by the filing party with respect to
such Tax Return under this Agreement with the consent (not to be unreasonably
withheld or delayed) of the non-filing party.

Section 6.3 Transfer Taxes.

Any transfer, documentary, sales, use, stamp, registration and other similar
Taxes and/or fees arising out of or in connection with the transactions effected
pursuant to this Agreement (each such Tax or fee, a “Transfer Tax”) shall be
borne by the party to on whom such obligation is primarily imposed by Applicable
Law; provided, however, that SHLX shall bear any Transfer Tax for which SHLX is
jointly and severally liable, and for which no other party is primarily liable,
under Applicable Law. The party responsible for a Transfer Tax pursuant to this
Section 6.3

 

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shall file all necessary Tax Returns and other documentation with respect to
such Transfer Taxes. If required by Applicable Law, SPLC and SHLX shall, and
shall cause their respective Affiliates to, join in the execution of any such
Tax Returns and other documentation. The parties shall cooperate to establish
eligibility for any applicable exemption from any Transfer Tax.

Section 6.4 Allocation of Consideration.

The parties will use commercially reasonable efforts to agree upon an allocation
of the Consideration to the Subject Interests and further among the Assets for
U.S. federal income tax purposes in compliance with the principles of
Section 1060 of the Code, and the Treasury Regulations thereunder.

Section 6.5 Conflict.

In the event of a conflict between the provisions of this Article VI and any
other provisions of this Agreement, the provisions of this Article VI shall
control.

ARTICLE VII

CONDITIONS TO CLOSING

Section 7.1 Conditions to the Obligations of SHLX.

The obligation of SHLX to proceed with the Closing contemplated hereby is
subject to the satisfaction on or prior to the Closing Date of all of the
following conditions, any one or more of which may be waived, in whole or in
part, by SHLX:

(a) The representations and warranties of SPLC set forth in this Agreement shall
be true and correct (without giving effect to any materiality standard or SPLC
Material Adverse Effect qualification, except with respect to Section 3.8(a)) as
of the date of this Agreement and on the Closing Date as if made on such date,
or in the case of representations and warranties that are made as of a specified
date, such representations and warranties shall be true and correct (without
giving effect to any materiality standard or SPLC Material Adverse Effect
qualification, except with respect to Section 3.8(a)) as of such specified date,
except, in each case, to the extent that failure of such representations and
warranties to be true and correct would not, individually or in the aggregate,
result in a SPLC Material Adverse Effect. SPLC shall have performed or complied
in all material respects with all obligations and covenants required by this
Agreement to be performed or complied with by it by the time of the Closing.
SPLC shall have delivered to SHLX a certificate, dated as of the Closing Date
and signed by an authorized officer of SPLC, confirming the foregoing matters
set forth in this Section 7.1(a) (the “SPLC Closing Certificate”).

(b) All necessary filings with and consents, approvals, licenses, permits,
orders and authorizations of any Governmental Authority required for the
consummation of the transactions contemplated in this Agreement (including any
required by the HSR Act, if applicable) shall have been made and obtained, and
all waiting periods with respect to filings made with Governmental Authorities
in contemplation of the consummation of the transactions described herein shall
have expired or been terminated.

 

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(c) All necessary consents of any Person not a party hereto, other than any
Governmental Authority, required for the consummation of the transactions
contemplated in this Agreement shall have been made and obtained, including any
consents set forth on Section 7.1(c) of the Disclosure Letter.

(d) No statute, rule, regulation, executive order, decree, temporary restraining
order, preliminary or permanent injunction, judgment or other order shall have
been enacted, entered, promulgated, enforced or issued by any Governmental
Authority, or other legal restraint or prohibition preventing the consummation
of the transactions contemplated hereby shall be in effect, and no
investigation, action or proceeding before a Governmental Authority shall have
been instituted or threatened challenging or seeking to restrain or prohibit the
consummation of the transactions contemplated hereby or to recover damages in
connection herewith.

(e) Since the date of this Agreement, there shall not have occurred a SPLC
Material Adverse Effect.

(f) SPLC or its designee shall have delivered, or caused to be delivered, to
SHLX all of the documents, certificates and other instruments required to be
delivered under, and otherwise complied with the provisions of, Section 2.3(d).

Section 7.2 Conditions to the Obligations of SPLC.

The obligation of SPLC to proceed with the Closing contemplated hereby is
subject to the satisfaction on or prior to the Closing Date all of the following
conditions, any one or more of which may be waived in writing, in whole or in
part, by SPLC:

(a) The representations and warranties of SHLX set forth in this Agreement shall
be true and correct (without giving effect to any materiality standard or SHLX
Material Adverse Effect qualification) as of the date of this Agreement and on
the Closing Date as if made on such date, or in the case of representations and
warranties that are made as of a specified date, such representations and
warranties shall be true and correct (without giving effect to any materiality
standard or SHLX Material Adverse Effect qualification) as of such specified
date, except, in each case, to the extent that failure of such representations
and warranties to be true and correct would not, individually or in the
aggregate, result in a SHLX Material Adverse Effect. SHLX shall have performed
or complied in all material respects with all obligations and covenants required
by this Agreement to be performed or complied with by it by the time of the
Closing. SHLX shall have delivered to SPLC a certificate, dated as of the
Closing Date and signed by an authorized officer of SHLX or its general partner
confirming the foregoing matters set forth in this Section 7.2(a) (the “SHLX
Closing Certificate”).

(b) All necessary filings with and consents, approvals, licenses, permits,
orders and authorizations of any Governmental Authority required for the
consummation of the transactions contemplated in this Agreement (including any
required by the HSR Act) shall have been made and obtained, and all waiting
periods with respect to filings made with Governmental Authorities in
contemplation of the consummation of the transactions described herein shall
have expired or been terminated.

 

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(c) All necessary consents of any Person not a party hereto, other than any
Governmental Authority, required for the consummation of the transactions
contemplated in this Agreement shall have been made and obtained.

(d) No statute, rule, regulation, executive order, decree, temporary restraining
order, preliminary or permanent injunction, judgment or other order shall have
been enacted, entered, promulgated, enforced or issued by any Governmental
Authority, or other legal restraint or prohibition preventing the consummation
of the transactions contemplated hereby shall be in effect, and no
investigation, action or proceeding before a Governmental Authority shall have
been instituted or threatened challenging or seeking to restrain or prohibit the
consummation of the transactions contemplated hereby or to recover damages in
connection herewith.

(e) Since the date of this Agreement, there shall not have occurred a SHLX
Material Adverse Effect.

(f) SHLX and Operating shall have delivered, or caused to be delivered, to SPLC
all of the documents, certificates and other instruments required to be
delivered under, and otherwise complied with the provisions of, Section 2.3(b)
and Section 2.3(c).

ARTICLE VIII

INDEMNIFICATION

Section 8.1 Indemnification of SHLX.

Subject to the limitations set forth in this Agreement, SPLC shall indemnify,
defend and hold SHLX, its subsidiaries and their respective security holders,
directors, officers, and employees, and the officers, directors and employees of
the General Partner, but otherwise excluding SPLC and its Affiliates (the “SHLX
Indemnified Parties”), harmless from and against any and all Damages suffered or
incurred by any SHLX Indemnified Party as a result of or arising out of (a) any
breach or inaccuracy of a representation or warranty of SPLC in this Agreement
and (b) any breach of any agreement or covenant on the part of SPLC made under
this Agreement or in connection with the transactions contemplated hereby or
thereby. Any indemnification provided pursuant to this Agreement shall not be
duplicative of any indemnification provided pursuant to the Omnibus Agreement.

Section 8.2 Indemnification of SPLC.

Subject to the limitations set forth in this Agreement, SHLX and Operating,
jointly and severally, shall indemnify, defend and hold SPLC, its Affiliates
(other than any of SHLX Indemnified Parties) and their respective
securityholders, directors, officers, agents, representatives and employees (the
“SPLC Indemnified Parties”) harmless from and against any and all Damages
suffered or incurred by the SPLC Indemnified Parties as a result of or arising
out of (a) any breach or inaccuracy of a representation or warranty of SHLX or
Operating in this Agreement, or (b) any breach of any agreement or covenant on
the part of SHLX or Operating made under this Agreement or in connection with
the transactions contemplated hereby or thereby. Any indemnification provided
pursuant to this Agreement shall not be duplicative of any indemnification
provided pursuant to the Omnibus Agreement.

 

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Section 8.3 Environmental Indemnification.

(a) To the fullest extent permitted by law, SPLC shall indemnify, defend and
hold harmless SHLX Indemnified Parties from and against any and all Damages
suffered or incurred by such SHLX Indemnified Party, directly or indirectly, by
reason of or arising out of:

 

  (i) any violation of Environmental Laws, in effect on or prior to the Closing
Date, associated with or arising from the ownership or operation of the Assets
on or prior to the Closing Date; and

 

  (ii) any environmental event, condition or matter associated with or arising
from the ownership or operation of the Assets occurring on or before the Closing
Date (including the presence of Hazardous Substances on, under, about or
migrating to or from the Assets or the disposal or the release of Hazardous
Substances generated by operation of the Assets at non-Asset locations),
including (A) the cost and expense of any investigation, assessment, evaluation,
monitoring, containment, cleanup, repair, restoration, remediation, risk-based
closure activities or other corrective action required or necessary under
Environmental Laws and (B) the cost and expense of the preparation and
implementation of any closure, remedial, corrective action or other plans
required or necessary under Environmental Laws as in effect on or prior to the
Closing Date.

(b) To the fullest extent permitted by law, SHLX and Operating shall indemnify,
defend and hold harmless SPLC Indemnified Parties from and against any and all
Damages suffered or incurred by such SPLC Indemnified Party, directly or
indirectly, by reason of or arising out of:

 

  (i) any violation of Environmental Laws, in effect after the Closing Date,
associated with or arising from the ownership or operation of the Assets after
the Closing Date;

 

  (ii) any environmental event, condition or matter associated with or arising
from the ownership or operation of the Assets occurring after the Closing Date
(including the presence of Hazardous Substances on, under, about or migrating to
or from the Assets or the disposal or the release of Hazardous Substances
generated by operation of the Assets at non-Asset locations), including (A) the
cost and expense of any investigation, assessment, evaluation, monitoring,
containment, cleanup, repair, restoration, remediation, risk-based closure
activities or other corrective action required or necessary under Environmental
Laws and (B) the cost and expense of the preparation and implementation of any
closure, remedial, corrective action or other plans required or necessary under
Environmental Laws as in effect after the Closing Date.

 

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(c) Any indemnification provided pursuant to this Section 8.3 shall be the
exclusive remedy with respect to environmental matters relating to the Assets
and shall not be duplicative of any rights to indemnification or other recovery
provided pursuant to any other provisions of this Agreement or the Omnibus
Agreement.

Section 8.4 Survival.

All the provisions of this Agreement shall survive the Closing, notwithstanding
any investigation at any time made by or on behalf of any party hereto, provided
that (a) the representations and warranties set forth in Article III and Article
IV shall terminate and expire on the date that is eighteen (18) months following
the Closing Date, except (i) the representations and warranties of SPLC set
forth in Section 3.9 (Taxes) shall survive until the date that is sixty
(60) days after the expiration of the applicable statutes of limitations
(including all periods of extension and tolling), (ii) the representations and
warranties of SPLC set forth in Section 3.1 (Organization), Section 3.2
(Authority and Approval), Section 3.4(a) (Capitalization; Title to Subject
Interests) and Section 3.16 (Brokerage Arrangements) shall survive until the
expiration of the applicable statute of limitations, and (iii) the
representations and warranties of SHLX set forth in Section 4.1 (Organization
and Existence), Section 4.2 (Authority and Approval) and Section 4.5 (Brokerage
Arrangements) shall survive until the expiration of the applicable statute of
limitations, (b) the indemnification obligations under Section 8.3, to the
extent they relate to the Auger Pipeline System, shall terminate and expire on
the third (3rd) anniversary of the Closing Date, and (c) the indemnification
obligations under Section 8.3, to the extent they relate to the Lockport
Terminal, shall terminate and expire on the fourth (4th) anniversary of the
Closing Date. After a representation and warranty has terminated and expired, no
indemnification shall or may be sought pursuant to this Article VIII on the
basis of that representation and warranty by any Person who would have been
entitled pursuant to this Article VIII to indemnification on the basis of that
representation and warranty prior to its termination and expiration, provided
that in the case of each representation and warranty that shall terminate and
expire as provided in this Section 8.4, no claim presented in writing for
indemnification pursuant to this Article VIII on the basis of that
representation and warranty prior to its termination and expiration shall be
affected in any way by that termination and expiration. The indemnification
obligations under this Article VIII or elsewhere in this Agreement shall apply
regardless of whether any suit or action results solely or in part from the
active, passive or concurrent negligence or strict liability of the indemnified
party. The covenants and agreements entered into pursuant to this Agreement to
be performed after the Closing shall survive the Closing.

Section 8.5 Indemnification Procedures.

(a) The indemnified party hereunder agrees that within a reasonable period of
time after it becomes aware of facts giving rise to a claim for indemnification
under this Article VIII, 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
VIII, including the selection of counsel, determination of whether to appeal any
decision of any court and the settling of any such claim

 

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or any matter or any issues relating thereto; provided, however, that no such
settlement for only the payment of money shall be entered into without the
consent of the indemnified party, which consent shall not be unreasonably
withheld, conditioned or delayed, unless it includes a full release of the
indemnified party from such claim; provided further, that no such settlement
containing any form of injunctive or similar relief shall be entered into
without the prior written consent of the indemnified party, which consent shall
not be unreasonably delayed or withheld.

(c) The indemnified party agrees to cooperate in good faith and in a
commercially reasonably manner with the indemnifying party, with respect to all
aspects of the defense of and pursuit of any counterclaims with respect to any
claims covered by the indemnification under this Article VIII, including 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 and
counterclaims, 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 counterclaims, the making available
to the indemnifying party of any employees of the indemnified person 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 8.4. The obligation
of the indemnified party to cooperate with the indemnifying party as set forth
in the immediately preceding sentence shall not be construed as imposing upon
the indemnified party an obligation to hire and pay for counsel in connection
with the defense of and pursuit of any counterclaims with respect to any claims
covered by the indemnification set forth in this Article VIII, 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 and counterclaims.
The indemnifying party agrees to keep any such counsel hired by the indemnified
party informed as to the status of any such defense or counterclaim, but the
indemnifying party shall have the right to retain sole control over such defense
and counterclaims so long as the indemnified party is still seeking
indemnification hereunder.

(d) In determining the amount of any Damages 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 person in respect of such Damages from third party insurers, and
such correlative insurance benefit shall be net of any expenses related to the
receipt of such proceeds, including any premium adjustments that become due and
payable by the indemnified party as a result of such claim, and (ii) all amounts
recovered by the indemnified party in respect of such Damages under contractual
indemnities from third persons.

Section 8.6 Direct Claim.

Any claim by an indemnified party with respect to any Damages which do not
result from a claim for indemnity involving a third party (a “Direct Claim”)
will be asserted by giving the indemnifying party reasonably prompt written
notice thereof, stating the nature of such claim in reasonable detail and
indicating the estimated amount, if practicable. The indemnifying party will
have a period of ninety (90) days from receipt of such Direct Claim within which
to respond

 

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to such Direct Claim. If the indemnifying party does not respond within such
ninety (90) day period, the indemnifying party will be deemed to have accepted
such Direct Claim. If the indemnifying party rejects such Direct Claim, the
indemnified party will be free to seek enforcement of its rights to
indemnification under this Agreement.

Section 8.7 Limitations on Indemnification.

(a) To the extent that SHLX Indemnified Parties would otherwise be entitled to
indemnification for Damages pursuant to Section 8.1(a), SPLC shall be liable
only if (i) the Damages with respect to any individual claim exceed One Hundred
Thousand Dollars ($100,000) (the “Minimum Claim Amount”) and (ii) the Damages
for all claims that exceed the Minimum Claim Amount exceed, in the aggregate,
One Million Dollars ($1,000,000) (the “Deductible Amount”), and then SPLC shall
be liable only for Damages to the extent of any excess over the Deductible
Amount. In no event shall SPLC’s aggregate liability to SHLX Indemnified Parties
under Section 8.1 and Section 8.3 exceed 20% of the Consideration (the “Ceiling
Amount”). Notwithstanding the foregoing, the Deductible Amount and the Ceiling
Amount shall not apply to breaches or inaccuracies of representations and
warranties contained in Section 3.1 (Organization), Section 3.2 (Authority and
Approval), Section 3.4 (Capitalization; Title to Subject Interests), Section 3.9
(Taxes), Section 3.16 (Brokerage Arrangements) and Section 3.17 (Books and
Records) or breaches of the covenants in Section 2.4 (Purchase Price
Adjustment), provided, that SPLC’s aggregate liability for all claims under this
Agreement, including for breaches or inaccuracies of representations and
warranties contained in such sections and for breaches of covenants, shall not
exceed the Consideration.

(b) For purposes of determining the amount of Damages, with respect to any
asserted claim for indemnification by a SHLX Indemnified Party, such
determination shall be made without regard to any qualifier as to “material,”
“materiality” or SPLC Material Adverse Effect expressly contained in Article III
(except in the case of the term Material Contract); provided that this
Section 8.7(b) shall not so modify the representations and warranties for
purposes of first determining whether a breach of any representation or warranty
has occurred.

(c) Additionally, neither SPLC, on the one hand, nor SHLX and Operating, on the
other hand, will be liable as an indemnitor under this Agreement for any
consequential, incidental, special, indirect or exemplary damages suffered or
incurred by the indemnified party or parties except to the extent resulting
pursuant to third party indemnity claims.

Section 8.8 Sole Remedy.

No party shall have liability under this Agreement or the transactions
contemplated hereby except as is provided in Article VI or this Article VIII
(other than claims or causes of action arising from fraud or willful
misconduct).

 

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ARTICLE IX

MISCELLANEOUS

Section 9.1 Acknowledgements.

Each party acknowledges that it has relied on the representations and warranties
of the other party expressly and specifically set forth in this Agreement,
including, in the case of SHLX and Operating, the Disclosure Letter attached
hereto. Such representations and warranties constitute the sole and exclusive
representations and warranties of the parties hereto in connection with the
transactions contemplated hereby, and the parties hereto understand, acknowledge
and agree that all other representations and warranties of any kind or nature,
whether expressed, implied or statutory, oral or written, past or present, are
specifically disclaimed.

Section 9.2 Cooperation; Further Assurances.

SPLC, SHLX and Operating shall use their respective commercially reasonable
efforts to obtain all approvals and consents required by or necessary for the
transactions contemplated by this Agreement. Each of the parties acknowledges
that certain actions may be necessary with respect to the matters and actions
contemplated by this Agreement such as making notifications and obtaining
consents or approvals or other clearances that are material to the consummation
of the transactions contemplated hereby, and each agrees to take all appropriate
action and to do all things necessary, proper or advisable under Applicable Laws
and regulations to make effective the transactions contemplated by this
Agreement; provided, however, that nothing in this Agreement will require any
party hereto to hold separate or make any divestiture not expressly contemplated
herein of any asset or otherwise agree to any restriction on its operations or
other burdensome condition which would in any such case be material to its
assets, liabilities or business in order to obtain any consent or approval or
other clearance required by this Agreement.

Section 9.3 Expenses.

Except as otherwise provided herein and regardless of whether the transactions
contemplated hereby are consummated, each party shall pay its own expenses
incident to this Agreement and all action taken in preparation for carrying this
Agreement into effect.

Section 9.4 Notices.

Any notice, request, instruction, correspondence or other document to be given
hereunder by any party hereto to another party hereto (herein collectively
called “Notice”) shall be in writing and either (i) delivered in person or by
courier service requiring acknowledgment of receipt of delivery or
(ii) by-email, with delivery deemed to have been duly given upon acknowledgment
of receipt of e-mail, as follows:

If to SPLC, addressed to:

Shell Pipeline Company LP

One Shell Plaza

910 Louisiana Street

Houston, Texas 77002

Attn: Vice President - Operations

With copy to: Assistant General Counsel-Downstream Americas

Email: nora.brooks@shell.com

 

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If to SHLX and/or Operating, addressed to:

Shell Midstream Partners, L.P.

c/o Shell Midstream Partners GP LLC, its general partner

One Shell Plaza

910 Louisiana Street

Houston, Texas 77002

Attn: Chief Executive Officer

With copy to: General Counsel

Email: lori.muratta@shell.com

Notice given by personal delivery or courier service shall be effective upon
actual receipt. Any party may change any address to which Notice is to be given
to it by giving Notice as provided above of such change of address.

Section 9.5 Arbitration.

(a) Any dispute, controversy or claim arising out of or in connection with this
Agreement or its subject matter or formation, whether in tort, contract, under
statute or otherwise, including any question regarding its existence, validity,
interpretation, breach or termination, and including any non-contractual claim
(a “Dispute”), shall be finally and exclusively resolved by arbitration under
the arbitration rules of the American Arbitration Association (the “Rules”),
which Rules are deemed to be incorporated by reference into this Agreement.

(b) The arbitral tribunal (the “Tribunal”) shall consist of three arbitrators,
to be appointed in accordance with the Rules.

(c) The seat of the arbitration shall be Houston, Texas.

(d) The language of the arbitration shall be English.

(e) Any award rendered by the Tribunal shall be made in writing and shall be
final and binding on the parties to this Agreement. The parties to this
Agreement undertake to carry out the award without delay.

(f) All aspects of the arbitration shall be confidential. Save to the extent
required by law or pursuant to any proceedings to enforce or challenge an award,
no aspect of the proceedings, documentation, or any partial or final award or
order or any other matter connected with the arbitration shall be disclosed to
any other person by either party or its counsel, agents, corporate parents,
affiliates or subsidiaries without the prior written consent of the other party
/ parties.

(g) Nothing in this Section 9.5 shall be construed as preventing any party from
seeking conservatory or similar interim relief from any court with competent
jurisdiction.

 

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(h) In respect of any Dispute, each party to this Agreement expressly waives any
right to claim or recover from the other party and the Tribunal is not empowered
to award punitive, exemplary, moral, multiple or similar non-compensatory
damages.

(i) Articles 3 and 9 of the International Bar Association (IBA) Rules on the
Taking of Evidence in International Arbitration shall apply to the arbitration.

(j) Each Party hereby waives, to the fullest extent permitted by law: (i) any
right under the laws of any jurisdiction to apply to any court or other judicial
authority to determine any preliminary point of law, except as expressly
provided in Section 9.5(g) and/or (ii) any right it may otherwise have under the
laws of any jurisdiction to appeal or otherwise challenge the award, other than
on the same grounds on which recognition and enforcement of an award may be
refused under Article V of the United Nations Convention on the Recognition and
Enforcement of Foreign Arbitral Awards of 1958.

(k) Judgment upon any award and/or order may be entered in any court having
jurisdiction thereof.

Section 9.6 Governing Law.

(a) This Agreement shall be subject to and governed by the laws of the State of
Texas. Each Party hereby submits to the exclusive jurisdiction of the state and
federal courts in the State of Texas and to venue in the state courts in Harris
County, Texas and in the federal courts of Harris County, Texas.

(b) Each of the parties to this Agreement irrevocably waives any and all right
to trial by jury in any legal proceeding between the parties arising out of or
relating to this Agreement or the transactions contemplated by this Agreement.

(c) Each party to this Agreement waives, to the fullest extent permitted by
Applicable Law, any right it may have to receive damages from any other party
based on any theory of liability for any special, indirect, consequential
(including lost profits), exemplary or punitive damages (except to the extent
that any such damages are included in indemnifiable losses resulting from a
third party claim in accordance with Article VIII).

Section 9.7 Public Statements.

The parties hereto shall consult with each other and no party shall issue any
public announcement or statement with respect to this Agreement or the
transactions contemplated hereby without the consent of the other party, unless
the party desiring to make such announcement or statement, after seeking such
consent from the other parties, obtains advice from legal counsel that a public
announcement or statement is required by Applicable Law or stock exchange
regulations.

 

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Section 9.8 Entire Agreement; Amendments and Waivers.

(a) This Agreement and the other Transaction Documents constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof. Each party to this
Agreement agrees that no other party to this Agreement (including its agents and
representatives) has made any representation, warranty, covenant or agreement to
or with such party relating to this Agreement or the transactions contemplated
hereby, other than those expressly set forth herein and in the other Transaction
Documents.

(b) No supplement, modification or waiver of this Agreement shall be binding
unless executed in writing by each party to be bound thereby. No waiver of any
of the provisions of this Agreement shall be deemed or shall constitute a waiver
of any other provision hereof (regardless of whether similar), nor shall any
such waiver constitute a continuing waiver unless otherwise expressly provided.

Section 9.9 Conflicting Provisions.

This Agreement and the other Transaction Documents, read as a whole, set forth
the parties’ rights, responsibilities and liabilities with respect to the
transactions contemplated by this Agreement. In this Agreement and the other
Transaction Documents, and as between them, specific provisions prevail over
general provisions. In the event of a conflict between this Agreement and any of
the other Transaction Documents, this Agreement shall control.

Section 9.10 Binding Effect and Assignment.

This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective permitted successors and assigns, but neither this
Agreement nor any of the rights, benefits or obligations hereunder shall be
assigned or transferred, by operation of law or otherwise, by any party hereto
without the prior written consent of each other party; provided that SHLX and
Operating may assign their right to receive the Subject Interests hereunder to a
wholly-owned subsidiary without the written consent of SPLC provided that SHLX
and Operating shall not be relieved of any obligations or liabilities hereunder
as a result of any such assignment. Nothing in this Agreement, express or
implied, is intended to confer upon any person or entity other than the parties
hereto and their respective permitted successors and assigns, any rights,
benefits or obligations hereunder, except for express language with respect to
SHLX Indemnified Parties and the SPLC Indemnified Parties contained in the
indemnification provisions of Article VIII.

Section 9.11 Severability.

If any provision of this Agreement is rendered or declared illegal or
unenforceable by reason of any existing or subsequently enacted legislation or
by decree of a court of last resort, SPLC and SHLX shall promptly meet and
negotiate substitute provisions for those rendered or declared illegal or
unenforceable, but all of the remaining provisions of this Agreement shall
remain in full force and effect.

 

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Section 9.12 Interpretation.

It is expressly agreed by the parties that this Agreement shall not be construed
against any party, and no consideration shall be given or presumption made, on
the basis of who drafted this Agreement or any provision hereof or who supplied
the form of this Agreement. Each party agrees that this Agreement has been
purposefully drawn and correctly reflects its understanding of the transactions
contemplated by this Agreement and, therefore, waives the application of any
law, regulation, holding or rule of construction providing that ambiguities in
an agreement or other document will be construed against the party drafting such
agreement or document.

Section 9.13 Headings and Disclosure Letter.

The headings of the several Articles and Sections herein are inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement. The Disclosure Letter and the
Exhibits referred to herein are attached hereto and incorporated herein by this
reference, and unless the context expressly requires otherwise, the Disclosure
Letter and such Exhibits are incorporated in the definition of “Agreement.”

Section 9.14 Multiple Counterparts.

This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.

Section 9.15 Action by SHLX.

With respect to any action, notice, consent, approval or waiver that is required
to be taken or given or that may be taken or given by SHLX with respect to the
transactions contemplated hereby, such action, notice, consent, approval or
waiver shall be taken or given by the Conflicts Committee on behalf of SHLX.

[Signature page follows.]

 

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

 

Shell Pipeline Company LP By: Shell Pipeline GP LLC, its general partner By:  

/s/ Kevin M. Nichols

Name:   Kevin M. Nichols Title:   Vice President Shell Midstream Partners, L.P.
By: Shell Midstream Partners GP LLC, its general partner By:  

/s/ John H. Hollowell

Name:   John H. Hollowell Title:   President and Chief Executive Officer Shell
Midstream Operating LLC By:  

/s/ John H. Hollowell

Name:   John H. Hollowell Title:   President and Chief Executive Officer

Signature Page to Contribution Agreement

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Appendix A

The designated personnel for SPLC and SHLX, for purposes of “Knowledge” in this
Agreement, are set forth below.

 

  1. John Hollowell

 

  2. Kevin Nichols

 

  3. Bob Headlee

 

  4. Tom Gates

 

  5. Timothy Geiger

Appendix A