Exhibit 10.1

Execution Copy

CONTRIBUTION AGREEMENT

dated as of May 10, 2019,

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

     2  

Section 1.1

  Definitions      2  

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      10  

Section 2.4

  Subject Interest Distributions      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

  Litigation; Laws and Regulations      14  

Section 3.7

  No Adverse Changes      14  

Section 3.8

  Environmental Matters      14  

Section 3.9

  Joint Venture Contracts      15  

Section 3.10

  Insurance      15  

Section 3.11

  Brokerage Arrangements      16  

Section 3.12

  Investment Intent      16  

Article IV REPRESENTATIONS AND WARRANTIES OF SHLX AND OPERATING

     16  

Section 4.1

  Organization and Existence      16  

Section 4.2

  Authority and Approval      17  

Section 4.3

  No Conflict; Consents      17  

Section 4.4

  Brokerage Arrangements      18  

Section 4.5

  Litigation      18  

Section 4.6

  Investment Intent      18  

Article V ADDITIONAL AGREEMENTS, COVENANTS, RIGHTS AND OBLIGATIONS

     19  

Section 5.1

  Operation of Colonial and Explorer      19  

Section 5.2

  Supplemental Disclosure      21  

Section 5.3

  Cooperation; Further Assurances      21  

 

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Article VI TAX MATTERS

     21  

Section 6.1

  Liability for Taxes      21  

Section 6.2

  Cooperation      22  

Section 6.3

  Transfer Taxes      22  

Section 6.4

  Allocation of Consideration      22  

Section 6.5

  Conflict      22  

Section 6.6

  Tax Treatment      22  

Article VII CONDITIONS TO CLOSING

     23  

Section 7.1

  Conditions to the Obligations of SHLX and Operating      23  

Section 7.2

  Conditions to the Obligations of SPLC      24  

Article VIII INDEMNIFICATION

     25  

Section 8.1

  Indemnification of SHLX and Operating      25  

Section 8.2

  Indemnification of SPLC      25  

Section 8.3

  Survival      26  

Section 8.4

  Indemnification Procedures      26  

Section 8.5

  Direct Claim      28  

Section 8.6

  Limitations on Indemnification      28  

Section 8.7

  Sole Remedy      29  

Article IX TERMINATION

     29  

Section 9.1

  Termination      29  

Section 9.2

  Remedies upon Termination      29  

Article X MISCELLANEOUS

     29  

Section 10.1

  Acknowledgements      29  

Section 10.2

  Expenses      29  

Section 10.3

  Notices      30  

Section 10.4

  Arbitration      30  

Section 10.5

  Governing Law      31  

Section 10.6

  Public Statements      32  

Section 10.7

  Entire Agreement; Amendments and Waivers      32  

Section 10.8

  Conflicting Provisions      32  

Section 10.9

  Binding Effect and Assignment      32  

Section 10.10

  Severability      33  

Section 10.11

  Interpretation      33  

Section 10.12

  Headings and Disclosure Letter      33  

Section 10.13

  Multiple Counterparts      33  

Section 10.14

  Action by SHLX      33  

 

 

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CONTRIBUTION AGREEMENT

This CONTRIBUTION AGREEMENT (this “Agreement”) is made as of May 10, 2019, 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
(“Operating”).

RECITALS

WHEREAS, in a series of prior transactions, Operating has acquired from SPLC
(i) a six percent (6%) interest in Colonial Pipeline Company, a Delaware
corporation (“Colonial”), and (ii) a 12.62% interest in Explorer Pipeline
Company, a Delaware corporation (“Explorer”);

WHEREAS, SPLC owns (i) a 10.125% interest in Colonial (the “Colonial Subject
Interests”), and (ii) a 25.97% interest in Explorer ((the “Explorer Subject
Interests”, and together with the Colonial Subject Interests, the “Subject
Interests”).

WHEREAS, SPLC desires to contribute to SHLX or its designee Operating all of its
right, title and interest in and to the Subject Interests, and SHLX and its
designee Operating desires to accept and acquire 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 LLC, 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
(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 not be 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, as amended by Amendment No. 1 to the First
Amended and Restated Agreement of Limited Partnership of Shell Midstream
Partners, L.P. dated as of February 26, 2018, as further amended by Amendment
No. 2 to the First Amended and Restated Agreement of Limited Partnership of
Shell Midstream Partners, L.P. dated as of December 21, 2018 (the “Partnership
Agreement”)), unanimously approved the Transaction, such approval constituting
“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:

 

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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:

“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 when used (a) with respect to SPLC, the term “Affiliate”
shall mean any other Person that directly or indirectly Controls, is Controlled
by or is under common Control with SPLC, excluding SHLX, the General Partner and
SHLX’s subsidiaries and equity interests, including Operating, and (b) with
respect to SHLX or Operating, the term “Affiliate” shall mean only the General
Partner and SHLX’s subsidiaries and equity interests. 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” means any applicable statute, law (including common law),
ordinance, code, rule or regulation of any Governmental Authority and any
applicable order, decision, injunction, judgment, award and decree or consent of
or agreement with any Governmental Authority.

“Assignment Agreement” means the Subject Interests Assignment Agreement between
SPLC and Operating dated as of the Closing Date, pursuant to which SPLC assigns,
transfers, contributes, grants, bargains, conveys, sets over and delivers to
Operating, all of SPLC’s right, title and interest in and to the Subject
Interests.

“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 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 8.6(a).

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

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

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

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

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

 

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“Colonial Assets” means all of the assets owned by Colonial, including the
refined products pipeline system, comprising approximately 5,500 miles of
pipeline connecting refineries along the Gulf Coast to approximately 270
marketing terminals located near major population centers throughout the
Southeast, Mid-Atlantic, and Northeast United States.

“Colonial Shareholders Agreement” means the Amended and Restated Shareholder
Agreement, effective as of October 3, 2013, by and among CDPQ Colonial Partners,
L.P., IFM (US) Colonial Pipeline 2 LLC, KKR-Keats Pipeline Investors LP, Koch
Capital Investments Company, LLC, Shell Pipeline Company LP, and Colonial
Pipeline Company, as amended to date.

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

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

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

“Consideration” means Eight Hundred Million United States Dollars ($800,000,000)
subject to adjustment pursuant to Section 2.4.

“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 8.6(a).

“Direct Claim” has the meaning ascribed to such term in Section 8.5.

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

“Dispute” has the meaning ascribed to such term in Section 10.4(a).

“Effective Time” means 12:01 a.m., Houston Time, on the Closing Date.

“Environmental Laws” means, without limitation, the following laws, in effect,
and as interpreted and enforced, as of the Closing Date: (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
or decrees promulgated or issued with respect to the foregoing Environmental
Laws by Governmental Authorities; and (n) any other federal, state

 

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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 or health and safety, including 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.

“Explorer” has the meaning ascribed to such term in the recitals

“Explorer Assets” means all of the assets owned by Explorer, including the
products pipeline system, comprising approximately 1,830 miles of pipeline that
primarily transports gasoline, diesel, diluent and jet fuel from the Gulf Coast
refining complex to the Midwest United States.

“Explorer Shareholders Agreement” means that certain Shareholders Agreement
dated January 1, 2016, between EXPL Pipeline Investment LLC, MPL Investment LLC,
Phillips 66 Partners Holdings LLC, Shell Pipeline Company LP, Sunoco Pipeline,
L.P. and Explorer Pipeline Company.

“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.

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

“General Partner Unit Quantity” means the 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
New Common Units.

“General Partner Unit Value” means a dollar amount equal to (a) the General
Partner Unit Quantity multiplied by (b) the Price Per Unit.

“General Partner Units” has the meaning ascribed to such term in the Partnership
Agreement.

“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,

 

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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 or 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
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, 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.

“Joint Venture Contract” means (a) every material contract to which Explorer or
Colonial is a party to which any Explorer Asset or Colonial Asset, as
applicable, is subject as of the date of this Agreement and which remains
executory in whole or in part, (b) the Colonial Shareholders’ Agreement and the
Colonial Pipeline Company Bylaws, and (c) the Explorer Shareholders Agreement
and the By-Laws of Explorer Pipeline Company.

 

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

“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;
provided, however, that with respect to the designated personnel of SPLC who are
appointed directors of Colonial, “Knowledge” shall be limited by protocols put
in place for directors of Colonial with respect to certain matters listed in
Section 3.6(a) of the Disclosure Letter.

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

“LP Holdings” means Shell Midstream LP Holdings LLC, a direct subsidiary of
SPLC.

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

“New Debt” has the meaning ascribed to such term in Section 6.6.

“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 10.3.

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

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

“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 Colonial Assets or
Explorer Assets, as applicable, 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
Colonial Assets or Explorer Assets, as applicable, 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 Colonial Assets or Explorer Assets, as applicable; (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.

“Price Per Unit” $20.68, which represents the volume weighted average sales
prices of the Common Units calculated for the five (5) trading day period ending
on April 30, 2019.

“Rules” has the meaning ascribed to such term in Section 10.4(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 Material Adverse Effect” means a material adverse effect on or a material
adverse change in the ability of SHLX or Operating to perform their respective
obligations under this Agreement and the other Transaction Documents or to
consummate the transactions contemplated hereby or thereby.

“SOPUS” means Equilon Enterprises LLC d/b/a SOPUS, a Delaware limited liability
company.

“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 or operation of the Colonial Assets, taken as a
whole, (b) the value or operation of the Explorer Assets, taken as a whole,
(c) the business, operations or financial condition of Colonial or Explorer,
other than any effect or change (i) that impacts the offshore or onshore crude
oil, natural gas or other hydrocarbon products transportation industry generally
(including any change in the prices of crude oil, natural gas 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 contemplated by this Agreement and the taking
of any actions contemplated by this Agreement (excluding any preferential
purchase right, right-of-first refusal, tag-along right or similar right
triggered as a result of this Agreement or the consummation of the transactions
contemplated hereby), provided, that in the case of clauses (i) and (ii), the
impact on any component of the Colonial Assets or the Explorer Assets is not
materially disproportionate to the impact on similarly situated assets in the
offshore or onshore crude oil, natural gas or other hydrocarbon products
transportation industry, as applicable, or (d) the ability of SPLC to perform
its obligations under this Agreement and/or the other Transaction Documents to
which it is a party or to consummate the transactions contemplated hereby or
thereby.

 

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

“Subject Interest Distributions” has the meaning ascribed to such term in
Section 2.4.

“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.

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

“Transaction Documents” means this Agreement, the Assignment Agreement, any
certificates delivered by any of the parties at the Closing 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, SHLX or Operating is a party.

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

“Tribunal” has the meaning ascribed to such term in Section 10.4(b).

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

“Unit Consideration Value” means a United States dollar amount equal to 25% of
the Consideration.

 

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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,” “preamble” or “recitals” shall be references to
an Article, Section, Disclosure Letter, preamble or recitals hereto;
(e) whenever the context requires, the words used in this Agreement shall
include the masculine, feminine and neuter and the singular and plural; and
(f) the terms “herein,” “hereby,” “hereunder,” “hereof,” “hereinafter,” “hereto”
and other equivalent words refer to this Agreement in its entirety and not
solely to the particular portion of the Agreement in which such word is used.

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) to the General
Partner 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”) and (ii) the remaining Subject Interests to Operating, as
designee of SHLX;

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

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

In consideration for the Subject Interests, the Consideration distributed from
SHLX shall consist of the Cash Consideration and the Unit Consideration. The
cash consideration shall be a cash payment from SHLX to SPLC in United States
dollars equal to the Consideration minus the Unit Consideration Value (“Cash
Consideration”), subject to adjustment pursuant to Section 2.4. The unit
consideration shall consist of (i) an issuance by SHLX of a number of Common
Units equal to (x) the Unit Consideration Value minus the General Partner Unit
Value, divided by (y) the Price Per Unit (the “New Common Units”) to LP
Holdings, and (ii) an issuance by SHLX of a number of General Partners Units
equal to the General Partner Unit Quantity (the “New General Partner Units,” and
together with the New Common Units, the “Unit Consideration”) to the General
Partner.

 

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Section 2.3 Closing.

(a) The closing of the Transaction (the “Closing”) shall take place as provided
in this Section 2.3; but if the Closing occurs, the Transaction, including the
transfer to Operating of the risk of loss and reward relating to the Subject
Interests, shall be effective as of the Effective Time. The Closing will be held
at the offices of SPLC at 150 N. Dairy Ashford, Houston, Texas 77079, on the
earlier of (i) July 24, 2019 or (ii) two (2) Business Days after satisfaction or
waiver, as applicable, of the conditions set forth in Section 7.1 and
Section 7.2, or such other place, date and time or means (including by
electronic means), as may be mutually agreed upon by the parties hereto.

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

 

  (i)

the Cash Consideration by wire transfer in immediately available funds to an
account of SPLC or of such designee(s) to be designated by SPLC not less than
two (2) Business Days prior to the Closing, which account(s) shall be designated
in writing to SPLC not less than two (2) Business Days prior to Closing;

 

  (ii)

the New Common Units to be issued by SHLX to LP Holdings;

 

  (iii)

the New General Partner Units to be issued by SHLX to the General Partner;

 

  (iv)

a duly executed counterpart of the Assignment Agreement by Operating to SPLC;

 

  (v)

a certificate of good standing as of a recent date of SHLX and Operating to
SPLC; and

 

  (vi)

the SHLX Closing Certificate to SPLC.

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

 

  (i)

a duly executed counterpart of the Assignment Agreement by SPLC;

 

  (ii)

a certificate of good standing as of a recent date for each of SPLC, Colonial
and Explorer;

 

  (iii)

a foreign qualification certificate as of a recent date for each of SPLC,
Colonial and Explorer;

 

  (iv)

a certification of non-foreign status in accordance with Treasury Regulation
Section 1.1445-2(b)(2) from SOPUS, on behalf of SPLC; and

 

  (v)

the SPLC Closing Certificate.

(d) The parties hereto agree to deliver such other certificates, instruments of
conveyance and documents as may be reasonably requested by another party hereto
not less than 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 Subject Interest Distributions.

For the avoidance of doubt, Operating shall be entitled to receive from SPLC any
and all dividends or distributions payable in cash, equity securities, or other
property declared, set aside or paid by Colonial or Explorer as they relate to
the Subject Interests with respect to the period beginning April 1, 2019 (and
such distributions are referred to herein as the “Subject Interest
Distributions”); provided, however, that if the Closing Date occurs after the
date upon which the Subject Interest Distributions are paid by either Explorer
or Colonial, such Subject Interest Distributions shall be treated as an
adjustment to the Consideration and the Consideration shall be reduced by the
amount of such Subject Interest Distributions.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SPLC

SPLC hereby represents and warrants to SHLX and Operating that, except as
disclosed in the disclosure letter delivered to SHLX on the date of this
Agreement (the “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) SPLC has made available to SHLX and Operating true and complete copies of
the organizational documents of Colonial and Explorer, in each case 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 thereof to be performed by it. The execution and
delivery by SPLC of this Agreement and the other Transaction Documents to which
SPLC is or will be 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.

 

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(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 SPLC and will constitute the valid and legally
binding obligations 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 or will be a party or by which SPLC is or
will be bound 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 organizational documents of SPLC, Colonial or
Explorer; (ii) conflict with or violate any 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 is a party or by which
SPLC is bound; or (iv) result in the creation of any Lien 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) and (iii) 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 or
with respect to SPLC with respect to the Subject Interests in connection with
the execution, delivery and performance of this Agreement and the other
Transaction Documents to which SPLC is or will be a party or the consummation of
the transactions contemplated hereby or 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, the failure to be obtained or made, would not,
individually or in the aggregate, 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).

 

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Section 3.4 Capitalization; Title to Subject Interests.

Except as set forth on Section 3.4 of the Disclosure Letter:

(a) SPLC owns, beneficially and of record, the Subject Interests and will convey
to Operating at Closing good title to the Subject Interests, free and clear of
all Liens. Except for (i) the conveyance of the Subject Interests contemplated
by this Agreement and (ii) restrictions under applicable federal and state
securities laws, the Subject Interests are not subject to any agreements or
understandings with respect to the voting or transfer of any of the Subject
Interests, stockholders’ agreements, pledge agreements, buy-sell agreements,
rights of first refusal, preemptive rights or proxy arrangements. To the
Knowledge of SPLC, the Subject Interests have been duly authorized and are
validly issued, fully paid and nonassessable.

(b) To the Knowledge of SPLC, there are (i) no authorized or outstanding
subscriptions, warrants, options, convertible securities or other rights
(contingent or otherwise) to purchase or otherwise acquire from either Colonial
or Explorer any equity interests of or in such entity, (ii) no commitments on
the part of either Colonial or Explorer to issue capital stock, shares,
subscriptions, warrants, options, convertible securities or other similar
rights, and (iii) no equity securities of either Colonial or Explorer reserved
for issuance for any such purpose. To the Knowledge of SPLC, neither Colonial
nor Explorer has any obligation (contingent or other) to purchase, redeem or
otherwise acquire any of its equity securities or interests. To the Knowledge of
SPLC, except for 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 either
Colonial or Explorer. To the Knowledge of SPLC, neither Colonial nor Explorer
owns any equity interests in any other Person except as set forth on Section 3.4
of the Disclosure Letter.

Section 3.5 Financial Information; Undisclosed Liabilities.

(a) SPLC has provided to Operating the audited consolidated financial statements
as of December 31, 2018 of each of Colonial and Explorer (the “Joint Venture
Financial Statements”). To the Knowledge of SPLC, the applicable Joint Venture
Financial Statements present fairly in all material respects the financial
position of Colonial and Explorer, respectively, as of the date thereof. To the
Knowledge of SPLC, there are no material off-balance sheet arrangements of
either Colonial or Explorer. To the Knowledge of SPLC, the Joint Venture
Financial Statements have been prepared in accordance with GAAP consistently
applied throughout the periods presented (except as may be indicated in the
notes thereto).

(b) Except as set forth on Section 3.5(b) of the Disclosure Letter and to the
Knowledge of SPLC, there are no liabilities or obligations of either Colonial or
Explorer 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 applicable Joint Venture
Financial Statements, (ii) current liabilities incurred in the ordinary course
of business since December 31, 2018, and (iii) liabilities or obligations
(whether accrued, absolute, contingent or otherwise) that, individually and in
the aggregate, are not material.

 

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Section 3.6 Litigation; Laws and Regulations.

(a) Except as set forth on Section 3.6(a) of the Disclosure Letter, to the
Knowledge of SPLC, there are no (i) civil, criminal or administrative actions,
complaints, suits, claims, hearings, arbitrations or proceedings pending or
threatened against either Colonial or Explorer, (ii) judgments, orders, decrees
or injunctions of any Governmental Authority, whether at law or in equity,
against either Colonial or Explorer or (iii) pending or threatened
investigations by any Governmental Authority against either Colonial or
Explorer, 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;
and

(b) To the Knowledge of SPLC, neither Colonial nor Explorer is 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 or
result in any liability or obligation of SHLX or Operating.

Section 3.7 No Adverse Changes.

Except as set forth on Section 3.7 of the Disclosure Letter, since December 31,
2018, to the Knowledge of SPLC:

(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 Colonial Assets or the Explorer Assets, whether or not covered by
insurance, in excess of One Million Dollars ($1,000,000).

Section 3.8 Environmental Matters.

To the Knowledge of SPLC, except as disclosed in Section 3.8 of the Disclosure
Letter, or as would not reasonably be expected, individually or in the
aggregate, to have a SPLC Material Adverse Effect:

(a) (i) Colonial and the Colonial Assets, operations and business, and
(ii) Explorer and the Explorer Assets, operations and business, are each in
compliance with applicable Environmental Laws, which compliance includes the
possession and maintenance of, and compliance with, all material permits
required under all Environmental Laws;

(b) no circumstances exist with respect to (i) Colonial and the Colonial Assets,
operations or business, or (ii) Explorer and the Explorer Assets, operations or
business, that give rise to an obligation or Damages of Colonial or Explorer or
their respective operators related to the investigation, remediation or other
action necessary to address the presence, on-site or offsite, of Hazardous
Materials under any applicable Environmental Laws;

(c) Neither (i) Colonial, with respect to Colonial or the Colonial Assets,
operations or business, (ii) nor Explorer, with respect to Explorer or the
Explorer Assets, operations or business, has received any written communication
from a Governmental Authority that remains unresolved alleging a violation or
potential violation of any Environmental Law or any Permit issued pursuant to
Environmental Law;

 

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(d) Neither Colonial and the Colonial Assets, operations or business, nor
Explorer and the Explorer Assets, operations or business, is subject to any
pending or threatened, claim, action, suit, investigation, inquiry or proceeding
under any Environmental Law (including designation as a potentially responsible
party under CERCLA or any similar local or state law);

(e) all notices, permits, permit exemptions, licenses or similar authorizations,
if any, required to be obtained or filed under any Environmental Law by
(i) Colonial, with respect to Colonial or the Colonial Assets, operations or
business and (ii) Explorer, with respect to Explorer or the Explorer Assets,
operations or business, have been duly obtained or filed, are valid and
currently in effect, and Colonial and the Colonial Assets, operations and
business, and Explorer and the Explorer Assets, operations and business are in
compliance with such authorizations; and

(f) since January 1, 2017, there has been no discharge, disposal or arrangement
for disposal of any Hazardous Material into the environment by (i) Colonial, or
the Colonial Assets, operations or business, and (ii) Explorer, or the Explorer
Assets, operations or business, or by a third party in connection with any of
the foregoing, except in compliance with applicable Environmental Law and in a
manner that has not and would not be expected to give rise to any material
liability under Environmental Laws.

Section 3.9 Joint Venture Contracts.

Except as set forth on Section 3.9 of the Disclosure Letter:

(a) To SPLC’s Knowledge, each Joint Venture Contract is valid, binding and
enforceable in full force and effect, subject to the effects of bankruptcy,
insolvency, reorganization, moratorium or similar Laws affecting creditors’
rights generally and to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or in law);

(b) To SPLC’s Knowledge, each Joint Venture Contract will continue to be valid,
binding and enforceable and in full force and effect on terms identical to those
contemplated in (a) above following the consummation of the transactions
contemplated by this Agreement;

(c) To the Knowledge of SPLC, (i) neither Colonial nor Explorer, nor any of
their respective counterparties to an applicable Joint Venture Contract, is in
breach or default of any Joint Venture Contract, and (ii) no event has occurred
that, with notice, lapse of time or both, would constitute a breach or default
under any Joint Venture Contract.

Section 3.10 Insurance.

To the Knowledge of SPLC, Section 3.10 of the Disclosure Letter sets forth a
list of the material insurance policies that Colonial and Explorer hold or SPLC
holds with respect to the Colonial Assets and the Explorer Assets, respectively.
To the Knowledge of SPLC, such policies are in full force and effect, and all
premiums due and payable under such policies have been paid, and SPLC has not
received written notice of any pending or threatened termination of, or
indication of an intention not to renew, such policies.

 

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Section 3.11 Brokerage Arrangements.

None of SPLC nor any of its Affiliates has entered (directly or indirectly) into
any agreement with any Person that would obligate either Operating or any of its
Affiliates, or Colonial or Explorer, 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.
For purposes of this Section 3.11, SHLX and its subsidiaries shall not
constitute Affiliates of SPLC or their respective Affiliates.

Section 3.12 Investment Intent.

(a) SPLC, together with its wholly owned subsidiary LP Holdings, is accepting
the Unit Consideration for its own account with the present intention of holding
the Unit Consideration 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. SPLC acknowledges that the Unit
Consideration constitute “restricted securities” and have not been registered
under the Securities Act or any applicable state securities laws, and that the
certificates representing the Unit Consideration will bear a restrictive legend
to that effect. SPLC further acknowledges that such Unit Consideration 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.

(b) LP Holdings is an “accredited investor,” as such term is defined in Rule
501(a) of Regulation D promulgated under the Securities Act and the investment
by LP Holdings in SHLX is for investment purposes for its own account and not
for the account of others. SPLC, together with its wholly owned subsidiary LP
Holdings, have such knowledge, sophistication and experience in business and
financial matters so as to be capable of evaluating the merits and risks of the
prospective investment in the Unit Consideration and has so evaluated the merits
and risks of such investment. LP Holdings is able to bear the economic risk of
an investment in the Unit Consideration and, at the present time and in the
foreseeable future, is able to afford a complete loss of such investment.

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.

 

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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
(including the issuance at the Closing to SPLC of the Unit Consideration) 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 and
Operating are or will be 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, as applicable, 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 all of the other Transaction Documents to which
SHLX or Operating is or will be a party, such other Transaction Documents will
be duly executed and delivered by or on behalf of SHLX and Operating and will
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).

Section 4.3 No Conflict; Consents.

(a) The execution, delivery and performance of this Agreement and the other
Transaction Documents to which SHLX and Operating are or will be a party by SHLX
or Operating, as applicable, 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 organizational documents of SHLX
or 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 or
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, 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 SHLX or Operating is a party
or by which it is bound or to which SHLX’s or Operating’s 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 or will be a party or
to consummate the transactions contemplated hereby or thereby.

 

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(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 or will be 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, the failure to be obtained or made, would not, individually or in
the aggregate, reasonably be expected to affect the ability of SHLX and
Operating to perform their respective obligations under this Agreement and the
other Transaction Documents to which SHLX or Operating are or will be 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 4.4 Valid Issuance of Unit Consideration.

When issued by SHLX at the Closing as contemplated in accordance with
Section 2.2, the Unit Consideration will be validly issued and fully paid, and
the new Common Units will be non-assessable (except as such non-assessability
may be affected by Sections 17-303(a), 17-607(b) or 17-804(c) of the Delaware
Revised Uniform Limited Partnership Act.

Section 4.5 Brokerage Arrangements.

Neither SHLX nor Operating has entered (directly or indirectly) into any
agreement with any Person that would obligate SPLC or any of its 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. For purposes of this Section 4.4,
SHLX and its subsidiaries shall not constitute Affiliates of SPLC or of SPLC’s
Affiliates.

Section 4.6 Litigation.

There are no civil, criminal or administrative actions, suits, claims, hearings,
arbitrations, investigations or proceedings pending or, to SHLX’s Knowledge,
threatened that (a) question or involve the validity or enforceability 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 and
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. Operating
acknowledges 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.

 

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ARTICLE V

ADDITIONAL AGREEMENTS, COVENANTS, RIGHTS AND OBLIGATIONS

Section 5.1 Operation of Colonial and Explorer.

(a) Except as expressly provided by this Agreement, or as consented to in
writing by SHLX and Operating, during the period from the date of this Agreement
through the Closing Date, (i) SPLC shall not 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 and (ii) in the
event that items are presented to the shareholders of either Colonial or
Explorer, SPLC shall, or shall cause its respective representative(s) to, vote
in favor of taking actions to:

 

  (i)

conduct its business and operations in the usual and ordinary course thereof
consistent with past practices; and

 

  (ii)

preserve, maintain and protect the Colonial Assets and operations or the
Explorer Assets and operations, as applicable, as are now being conducted.

SPLC shall, or shall cause its respective representative(s) to, vote its
interests in Colonial and Explorer in opposition to any actions contrary to the
foregoing.

(b) Except (i) as expressly provided by this Agreement, (ii) as set forth on
Section 5.1 of the Disclosure Letter or (iii) as consented to in writing by SHLX
and Operating, during the period from the date of this Agreement through the
Closing Date, SPLC shall cause its representative(s) to vote against any action
that would permit Colonial or Explorer, to:

 

  (i)

amend its organizational documents;

 

  (ii)

liquidate, dissolve, recapitalize or otherwise wind up its business;

 

  (iii)

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

 

  (iv)

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

 

  (v)

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

 

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  (vi)

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

 

  (vii)

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

 

  (viii)

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;

 

  (ix)

file any material lawsuit;

 

  (x)

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;

 

  (xi)

undertake any capital project;

 

  (xii)

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

 

  (xiii)

make any loan to any Person (other than extensions of credit to customers in the
ordinary course of business in accordance with past practice);

 

  (xiv)

issue or sell any equity interest, 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;

 

  (xv)

make any distribution with respect to its equity interests other than in the
ordinary course of business consistent with past practice;

 

  (xvi)

redeem, purchase or otherwise acquire any of its equity interests;

 

  (xvii)

fail to maintain in full force and effect its current insurance policies
covering Colonial, the Colonial Assets and Colonial’s business, or Explorer, the
Explorer Assets or Explorer’s business;

 

  (xviii)

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

 

  (xix)

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

 

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Section 5.2 Supplemental Disclosure.

As soon as reasonably practical following SPLC obtaining Knowledge of a relevant
disclosure, but in all cases no later than three Business Days prior to Closing,
by written notice to the Partnership, SPLC shall supplement or amend the
Disclosure Letter to this Agreement for matters which, if existing or known at
the date of this Agreement, would have been required to be set forth or
described in the Disclosure Letter. For all purposes of this Agreement,
including for purposes of determining whether the conditions set forth in
Article VII have been fulfilled, the Disclosure Letter shall be deemed to
include only that information contained therein on the date of this Agreement
and shall be deemed to exclude all information contained in any supplement or
amendment to the Disclosure Letter; and if the Closing shall occur, then all
matters disclosed pursuant to any such supplement or amendment at or prior to
the Closing shall not be waived and the Partnership and Operating shall be
entitled to make a claim thereon pursuant to the terms of this Agreement.

Section 5.3 Cooperation; Further Assurances.

(a) SPLC, on the one hand, and SHLX and Operating, on the other hand, shall use
their respective commercially reasonable efforts (i) 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, (ii) to ensure that all of the conditions to the respective obligations
of the SPLC, SHLX and Operating, as the case may be, contained in Section 7.1
and Section 7.2, respectively, are satisfied timely and (iv) to execute and
deliver all documents and instruments required by or necessary for the
consummation of 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 except as expressly set forth herein,
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 with respect to the Subject Interests attributable to any
taxable period (or portion thereof) ending 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 with respect to the Subject
Interests attributable to any taxable period (or portion thereof) beginning
after the Closing Date.

 

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(c) 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 Cooperation.

The Parties will cooperate fully with each other regarding Tax matters and the
preparation and filing of Tax Returns (including the execution of appropriate
powers of attorney) and will make available to the other as reasonably requested
all information, records and documents relating to Taxes governed by this
Agreement until the expiration of the applicable statute of limitations or
extension thereof or the conclusion of all audits, appeals or litigation with
respect to such Taxes.

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 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 shall file all necessary Tax Returns and other documentation with
respect to such Transfer Tax. If required by Applicable Law, SPLC, SHLX and
Operating 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 between the Colonial Subject Interests and the Explorer
Subject Interests for federal income tax purposes in compliance with the
principles of Code Section 1060 and the Treasury Regulations thereunder and
Treasury Regulation 1.755-1, as applicable.

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.

Section 6.6 Tax Treatment.

The Parties agree that the Transaction shall be treated for Tax purposes as a
contribution of property by SOPUS to SHLX subject to the disguised sale rules
under Code Section 707(a)(2)(B) and the Treasury Regulations promulgated
thereunder. SHLX may incur a borrowing or borrowings through a new loan from
Shell Treasury Center (West) Inc. (the “New Debt”) and/or through excess
capacity on its existing credit facilities with Shell Treasury Center (West)
Inc. to fund all or a portion of the Cash Consideration contemplated by the
Transaction. The Parties intend that (i) the distribution of the Cash
Consideration shall be treated, pursuant to

 

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Treasury Regulation Section 1.163-8T, as being made first out of proceeds of the
New Debt, if any, and such payment shall qualify to the maximum extent possible
as a “debt-financed transfer” under Treasury Regulation Section 1.707-5(b) and
(ii) SOPUS’s allocable share of the New Debt shall be determined under Treasury
Regulation Section 1.752-2 and Proposed Treasury Regulation
Section 1.707-5(a)(2). The Parties agree to act at all times in a manner
consistent with this intended treatment of the Transaction and the New Debt.

ARTICLE VII

CONDITIONS TO CLOSING

Section 7.1 Conditions to the Obligations of SHLX and Operating.

The obligations of SHLX and Operating 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 and Operating:

(a) The representations and warranties of SPLC set forth in (i) this Agreement
(other than the representations and warranties of SPLC set forth in Sections
3.1, 3.2, 3.4, and 3.11) shall be true and correct (without giving effect to any
materiality standard or SPLC Material Adverse Effect qualification, except with
respect to Section 3.7(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 3.7(a)) as
of such specified date, except to the extent that failure of such
representations and warranties to be true and correct would not, individually or
in the aggregate, result in an SPLC Material Adverse Effect and (ii) Sections
3.1, 3.2, 3.4, and 3.11 shall be true and correct in all respects as of the date
of this Agreement and on the Closing Date as if made on such date. 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 SPLC 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 signatory of SPLC’s general
partner (the “SPLC Closing Certificate”) confirming the foregoing matters set
forth in this Section 7.1(a).

(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.

(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.

 

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(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 an SPLC
Material Adverse Effect.

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

Section 7.2 Conditions to the Obligations of SPLC.

The obligations 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 the SPLC:

(a) The representations and warranties of SHLX and Operating set forth in
(i) this Agreement (other than the representations and warranties in Sections
4.1, 4.2, 4.4, and 4.5) 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
and (ii) Sections 4.1, 4.2, 4.4, and 4.5 shall be true and correct in all
respects as of the date of this Agreement and on the Closing Date as if made on
such date. SHLX and Operating 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 the 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, 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.

(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.

 

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(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 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 applicable provisions of Section 2.3.

ARTICLE VIII

INDEMNIFICATION

Section 8.1 Indemnification of SHLX and Operating.

Subject to the limitations set forth in this Agreement, SPLC shall indemnify,
defend and hold SHLX and Operating, their 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 or in any other Transaction Document to which SPLC is or
will be a party and (b) any breach of any agreement or covenant on the part of
SPLC made under this Agreement or in any other Transaction Document to which
SPLC is or will be a party; provided however, that for purposes of determining
the amount of any Damages suffered or incurred by the SHLX Indemnified Parties
in respect of a breach or inaccuracy of a representation or warranty of SPLC or
a breach of any covenant or agreement on the part of SPLC, in each case in
respect of the business, operations, assets, liabilities or financial condition
of Colonial or Explorer, Operating’s acquisition of only 10.125% of the
ownership interests in Colonial and 25.97% of the ownership interests in
Explorer shall be taken into account, such that the aggregate Damages described
in this Section 8.1 suffered or incurred by the SHLX Indemnified Parties, would
equal (where applicable) no more than 10.125% or 25.97% of the total of such
Damages suffered by all shareholders in Colonial and Explorer, respectively.

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 and its Affiliates
(other than any SHLX Indemnified Parties) and their respective securityholders,
directors, officers, agents, representatives and employees (the “SPLC
Indemnified Parties”) harmless from and against any

 

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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 in any other Transaction
Document to which SHLX or Operating is or will be a party or (b) any breach of
any agreement or covenant on the part of SHLX or Operating made under this
Agreement or in any other Transaction Document to which SHLX or Operating is or
will be a party .

Section 8.3 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 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 (a) the representations and warranties of SPLC set
forth in Section 3.8 (Environmental Matters) shall terminate and expire on the
third (3rd) anniversary of the Closing Date, (b) the representations and
warranties of SPLC set forth in Section 3.1 (Organization), Section 3.2
(Authority and Approval), Section 3.4 (Capitalization; Title to Subject
Interests) and Section 3.11 (Brokerage Arrangements) shall terminate and expire
on the second (2nd) anniversary of the Closing Date and (c) the representations
and warranties of SHLX and Operating set forth in Section 4.1 (Organization and
Existence), Section 4.2 (Authority and Approval), Section 4.4 (Valid Issuance of
Unit Consideration) and Section 4.5 (Brokerage Arrangements) shall terminate and
expire on the second (2nd) 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 8.3, 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 8.4 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 following receipt of notice from
the indemnified party of a proceeding for which such person may be entitled to
indemnification hereunder to assume control of 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 IX,
including the selection of counsel, the determination of whether to appeal

 

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any decision of any court and the settling of any such claim or any matter or
any issues relating thereto; provided, however, that no such settlement 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. Until the indemnifying party so assumes control of the
defense of any such claims, the indemnified party or indemnified parties may
control all aspects of the defense of any such claims.

(c) If the indemnifying party assumes the defense of any claim in respect of
which an indemnified party intends to or has asserted a claim for
indemnification under this Agreement, then such 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 IX, 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. 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 if the
indemnifying party has assumed the defense of any claim, 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.

 

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Section 8.5 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 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 8.6 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 for
Damages pursuant to Section 8.1(a) only if (i) the Damages with respect to any
individual claim pursuant to Section 8.1(a) exceed One Hundred Thousand Dollars
($100,000) and (ii) the Damages for all claims pursuant to Section 8.1(a)
(excluding any claim excluded pursuant to the preceding clause (i) of this
Section 8.6(a)) exceed, in the aggregate, One Million Dollars ($1,000,000) (the
“Deductible Amount”), and then SPLC shall be liable only for Damages pursuant to
Section 8.1(a) to the extent of any excess over the Deductible Amount. In no
event shall SPLC’s aggregate liability to SHLX Indemnified Parties under
(i) Section 8.1(a) exceed Eighty Million ($80,000,000) (the “Ceiling Amount”) or
Section 8.1(b) exceed the Consideration 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), and Section 3.11 (Brokerage
Arrangements), 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 described in this sentence and for
breaches of covenants, shall not exceed the Consideration, absent fraud;
provided, further, however, that the payment and indemnification obligations of
SPLC pursuant to Article VI shall not be subject to any limitation in this
Section 8.6(a) and shall be excluded from the determination of whether the
maximum indemnification amount specified in the immediately preceding proviso
has been reached or exceeded.

(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; provided that this Section 8.6(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 or 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.

 

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Section 8.7 Sole Remedy.

Following the Closing, 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).

ARTICLE IX

TERMINATION

Section 9.1 Termination.

(a) This Agreement and the transactions contemplated hereby may be terminated at
any time prior to the Closing with the mutual written consent of the parties.

(b) This Agreement and the transactions contemplated hereby will automatically
terminate if the Closing has not occurred on or before July 24, 2019, or such
later date as may be agreed by the parties.

Section 9.2 Remedies upon Termination.

(a) If this Agreement is terminated under Section 9.1, the parties shall then be
released from their respective obligations under this Agreement, except as
provided in this Section 9.2 and in Article X.

(b) If a Party fails, refuses, or is unable for any reason not permitted by this
Agreement to comply with its obligations under this Agreement, the
non-defaulting Party may pursue any rights and remedies (including the rights
and remedies available with respect to breaches of this Agreement prior to
termination) under this Agreement, at law or in equity.

ARTICLE X

MISCELLANEOUS

Section 10.1 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 10.2 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.

 

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Section 10.3 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 delivered (i) in person or by
courier service requiring acknowledgment of receipt of delivery or (ii) by
e-mail, 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

150 N. Dairy Ashford Rd.

Houston, Texas 77079

Attn: Vice President — Finance

Email:

With a copy to: Assistant General Counsel-Downstream Americas

Email:

Facsimile:

If to SHLX or Operating, addressed to:

Shell Midstream Partners, L.P.

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

150 N. Dairy Ashford Rd.

Houston, Texas 77079

Attn: Chief Executive Officer

Email:

With a copy to: General Counsel

Email:

Facsimile:

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 10.4 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.

 

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(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, 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 10.4 shall be construed as preventing any party from
seeking conservatory or similar interim relief from any court with competent
jurisdiction.

(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 10.4(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 10.5 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 or among 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 IX).

 

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Section 10.6 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 parties,
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.

Section 10.7 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 10.8 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 10.9 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. 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 IX.

 

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Section 10.10 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, the parties hereto 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.

Section 10.11 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 10.12 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 10.13 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 10.14 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 solely 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.

 

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

/s/ Shawn J. Carsten

Name:   Shawn J. Carsten Title:   Vice President — Finance

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SHLX: Shell Midstream Partners, L.P. By:   Shell Midstream Partners GP LLC, its
general partner By:  

/s/ Kevin M. Nichols

Name:   Kevin M. Nichols Title:   President and Chief Executive Officer
OPERATING: Shell Midstream Operating LLC By:  

/s/ Kevin M. Nichols

Name:   Kevin M. Nichols Title:   President and Chief Executive Officer