Exhibit 10.1

[Execution Copy]

PURCHASE AND SALE AGREEMENT

dated as of September 27, 2016

and

effective as of October 1, 2016

by and among

SHELL PIPELINE COMPANY LP,

EQUILON ENTERPRISES LLC D/B/A SHELL OIL PRODUCTS US,

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 PURCHASE AND SALE AND CLOSING
     9      Section 2.1      Purchase and Sale      9      Section 2.2     
Consideration      10      Section 2.3      Closing      10      Section 2.4
     Potential Post-Closing Adjustment      12      Section 2.5      Potential
Purchase Price Reduction      12    ARTICLE III REPRESENTATIONS AND WARRANTIES
OF SPLC AND SOPUS      13      Section 3.1      Organization      13     
Section 3.2      Authority and Approval      14      Section 3.3      No
Conflict; Consents      14      Section 3.4      Capitalization; Title to
Subject Interests      15      Section 3.5      Financial Information;
Undisclosed Liabilities      16      Section 3.6      Title to Mars and Odyssey
Properties      17      Section 3.7      Litigation; Laws and Regulations     
17      Section 3.8      No Adverse Changes      18      Section 3.9      Taxes
     18      Section 3.10      Environmental Matters      19      Section 3.11
     Licenses; Permits      20      Section 3.12      Material Contracts      21
     Section 3.13      Employees      22      Section 3.14      Transactions
with Affiliates      22      Section 3.15      Insurance      23      Section
3.16      Intellectual Property Rights      23      Section 3.17      Brokerage
Arrangements      24      Section 3.18      Books and Records      24     
Section 3.19      Regulatory Matters      24      Section 3.20      Management
Projections and Budget      24   

 

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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SHLX AND OPERATING    25   Section
4.1      Organization and Existence    25   Section 4.2      Authority and
Approval    25   Section 4.3      No Conflict; Consents    25   Section 4.4     
Brokerage Arrangements    26   Section 4.5      Litigation    26   Section 4.6
     Investment Intent    27 ARTICLE V ADDITIONAL AGREEMENTS, COVENANTS, RIGHTS
AND OBLIGATIONS    27   Section 5.1      Operation of Mars and Odyssey    27  
Section 5.2      Cooperation; Further Assurances    29 ARTICLE VI TAX MATTERS   
29   Section 6.1      Liability for Taxes    29   Section 6.2      Cooperation
   30   Section 6.3      Transfer Taxes    30   Section 6.4      Allocation of
Consideration    30   Section 6.5      Conflict    31 ARTICLE VII CONDITIONS TO
CLOSING    31   Section 7.1      Conditions to the Obligations of SHLX and
Operating    31   Section 7.2      Conditions to the Obligations of SPLC and
SOPUS    32 ARTICLE VIII INDEMNIFICATION    33   Section 8.1     
Indemnification of SHLX    33   Section 8.2      Indemnification of SPLC and
SOPUS    33   Section 8.3      Survival    34   Section 8.4      Indemnification
Procedures    34   Section 8.5      Direct Claim    35   Section 8.6     
Limitations on Indemnification    36   Section 8.7      Sole Remedy    36
ARTICLE IX MISCELLANEOUS    37   Section 9.1      Acknowledgements    37  
Section 9.2      Cooperation; Further Assurances    37   Section 9.3     
Expenses    37   Section 9.4      Notices    37   Section 9.5      Arbitration
   38   Section 9.6      Governing Law    39

 

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  Section 9.7      Public Statements    40   Section 9.8      Entire Agreement;
Amendments and Waivers    40   Section 9.9      Conflicting Provisions    40  
Section 9.10      Binding Effect and Assignment    40   Section 9.11     
Severability    41   Section 9.12      Interpretation    41   Section 9.13     
Headings and Disclosure Letter    41   Section 9.14      Multiple Counterparts
   41   Section 9.15      Action by SHLX    41

 

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PURCHASE AND SALE AGREEMENT

This Purchase and Sale Agreement (this “Agreement”) is made as of September 27,
2016, by and among Shell Pipeline Company LP, a Delaware limited partnership
(“SPLC”), Equilon Enterprises LLC d/b/a Shell Oil Products US, a Delaware
limited liability company (“SOPUS”), Shell Midstream Partners, L.P., a Delaware
limited partnership (“SHLX”), and Shell Midstream Operating LLC, a Delaware
limited liability company that is wholly owned by SHLX (“Operating”).

RECITALS

WHEREAS, SPLC owns 42.9% of the issued and outstanding partnership interests of
Mars Oil Pipeline Company, a Texas general partnership (“Mars”), and SOPUS owns
71.0% of the issued and outstanding membership interests of Odyssey Pipeline
L.L.C., a Delaware limited liability company (“Odyssey”); and

WHEREAS, Operating owns 28.6% of the issued and outstanding general partnership
interests in Mars; and

WHEREAS, SPLC and SOPUS desire to sell to SHLX or its designee, and SHLX desires
to accept and acquire or to cause its designee to accept and acquire their
respective interests in: (i) 20.0% of the issued and outstanding partnership
interests in Mars (the “Mars Subject Interests”) and (ii) 49.0% of the issued
and outstanding membership interests in Odyssey (the “Odyssey Subject Interests”
and, together with the Mars Subject Interests, the “Subject Interests”) in
accordance with the terms of this Agreement (the “Transaction”); and

WHEREAS, (a) the Conflicts Committee (the “Conflicts Committee”) of the Board of
Directors (the “Board of Directors”) of Shell Midstream Partners GP LLC, the
general partner of SHLX (the “General Partner”), has previously (i) received an
opinion of Evercore Group L.L.C., the financial advisor to the Conflicts
Committee (the “Financial Advisor”), that the consideration to be paid by SHLX
pursuant to the Transaction is fair, from a financial point of view, to SHLX and
its unitholders, other than the General Partner, Shell Midstream LP Holdings LLC
and their respective Affiliates and (ii) based on the belief of the members of
the Conflicts Committee that the consummation of the Transaction on the terms
and conditions set forth in this Agreement would 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 (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 such term when used (a) with respect to SPLC or SOPUS,
means any other Person that directly or indirectly Controls, is Controlled by or
is under common Control with SPLC or SOPUS, excluding SHLX, the General Partner,
Operating and its subsidiaries and equity interests, and (b) with respect to
SHLX, the term “Affiliate” shall mean only the General Partner, Operating and
Operating’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” has the meaning ascribed to such term in Section 3.3(a).

“Assets” means the Mars Assets and the Odyssey Assets, taken as a whole.

“Assignment Agreements” means (i) the Assignment Agreement among SPLC, SHLX, and
Operating dated as of the Closing Date relating to the Mars Subject Interests
(the “Mars Assignment Agreement”) and (ii) the Assignment Agreement among SOPUS,
SHLX, and Operating dated as of the Closing Date relating to the Odyssey Subject
Interests (the “Odyssey Assignment Agreement”).

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

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

“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.

 

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

“Consideration” means Three Hundred and Fifty Million Dollars ($350,000,000).

“Control” and its derivatives mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or
otherwise.

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

“Deductible Amount” has the meaning ascribed to such term in Section 8.6(a).

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

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

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

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

“Effective Time” means 12:01 a.m., Central Standard Time, on October 1, 2016.

“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,
decrees promulgated or issued with respect to the foregoing Environmental Laws
by Governmental Authorities; and (n) any other federal, state or local statutes,
laws, common laws, ordinances, rules, regulations, orders, codes, decisions,
injunctions or decrees that regulate or otherwise pertain to the protection of
the environment, including the management, control, discharge, emission,
exposure, treatment, containment, handling, removal, use, generation,
permitting, migration, storage, release, transportation, disposal, remediation,
manufacture, processing or distribution of Hazardous Materials that are or may
present a threat to human health or the environment.

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

“FERC” means the United States Federal Energy Regulatory Commission.

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

 

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

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

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

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

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

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

 

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

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

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

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

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

“Mars Agreement” means the Mars Oil Pipeline Company Partnership Agreement dated
April 15, 1996, as amended by the First Amendment to the Mars Oil Pipeline
Company Partnership Agreement dated March 14, 2011, the Second Amendment to the
Mars Oil Pipeline Company Partnership Agreement dated December 5, 2013 and the
Third Amendment to the Mars Oil Pipeline Company Partnership Agreement dated
November 3, 2014.

“Mars Assets” means all of the assets owned by Mars, including the Mars
Pipeline.

“Mars Closing Cash on Hand” means SHLX’s calculation of Mars’ cash on hand at
the Effective Time pursuant to Section 2.4.

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

“Mars Permits” has the meaning ascribed to such term in Section 3.11.

“Mars Pipeline” means the Mars crude pipeline system, comprised of approximately
163 miles of pipeline, a portion of which is regulated by the FERC and/or the
Louisiana Public Service Commission, terminating at LOOP LLC’s trading and
distribution hub in Clovelly, Louisiana, where Mars’ main storage cavern, leased
from LOOP LLC, completes the pipeline.

“Mars Post-Closing Adjustment” means an amount equal to 20.0% of the difference
between the Mars Target Cash on Hand minus the Mars Closing Cash on Hand, as
agreed between SPLC and SHLX, acting through the Conflicts Committee, pursuant
to Section 2.4.

 

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“Mars Storage Base Plan” means Twenty-Seven Million, Nine Hundred and
Ninety-Nine Thousand, Nine Hundred and Eighty-Four Dollars ($27,999,984), which
is described on Appendix B.

“Mars Storage Revenue” means the revenue generated by Mars (determined in
accordance with practices in effect as of the date of this Agreement) for the
provision of storage services for the calendar years 2017 – 2021 inclusive,
which as of the date hereof is reflected in the following three accounts of
Mars’ general ledger: “825000 Rental Revenue - 3rd Party,” “825002 Rental
Revenue - Affiliates” and “825004 Rental Revenue - Inter Group.”

“Mars Storage Revenue True-Up Amount” means a dollar amount determined as
follows:

(a) first determine the product of (Mars Storage Revenue less Mars Storage Base
Plan) times 20.0%;

(b) if the product calculated in accordance with clause (a) above equals or
exceeds Ten Million Dollars ($10,000,000), then the Mars Storage Revenue True-Up
Amount is zero;

(c) if the product calculated in accordance with clause (a) above is less than
Ten Million Dollars ($10,000,000), then the Mass Storage Revenue True-Up Amount
will be the lesser of (i) Ten Million Dollars ($10,000,000) or (ii) the
difference between Ten Million Dollars ($10,000,000) and such product.

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

“Mars Target Cash on Hand” means Twenty Million Dollars ($20,000,000).

“Mars Voting Agreement” means that certain Voting Agreement dated as of
November 3, 2014 by and between SHLX and SPLC.

“Material Contract” has the meaning ascribed to such term in Section 3.12(a).

“Minimum Claim Amount” has the meaning ascribed to such term in Section 8.6(a).

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

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

“Odyssey Agreement” means the Limited Liability Company Agreement of Odyssey
dated August 1, 1997, as amended by the First Amendment to the Limited Liability
Company Agreement of Odyssey dated July 15, 2002, the Amendment to Limited
Liability Company Agreement of Odyssey dated April 29, 2003 (second amendment),
the Amendment No. 2 to the Limited Liability Company Agreement of Odyssey dated
November 1, 2005 (third amendment), and the Fourth Amendment to the Limited
Liability Company Agreement of Odyssey dated June 22, 2016.

“Odyssey Assets” means all of the assets owned by Odyssey, including the Odyssey
Pipeline.

 

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

“Odyssey Permits” has the meaning ascribed to such term in Section 3.11.

“Odyssey Pipeline” means the Odyssey crude pipeline system, composed of
approximately 106 miles of pipeline in the eastern Gulf of Mexico.

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

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

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

“OCSLA” has the meaning ascribed to such term in Section 3.19.

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

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

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

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

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

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

 

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“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 its obligations
under this Agreement and the other Transaction Documents or to consummate the
transactions contemplated hereby or thereby.

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

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

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

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

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

“SPLC Material Adverse Effect” means a material adverse effect on or a material
adverse change in (a) the value of the Assets, taken as a whole, or the
business, operations or financial condition of Mars and Odyssey, taken as a
whole, other than any effect or change (i) that impacts the offshore or onshore
crude oil transportation or onshore crude storage industry generally (including
any change in the prices of crude oil or other hydrocarbon products, industry
margins or any regulatory changes or changes in Applicable Law or GAAP), (ii) in
United States or global political or economic conditions or financial markets in
general, or (iii) resulting from the announcement of the transactions
contemplated by this Agreement and the taking of any actions contemplated by
this Agreement, provided, that in the case of clauses (i) and (ii), the impact
on the Assets or the business, operations or financial condition of Mars and/or
Odyssey is not materially disproportionate to the impact on similarly situated
assets or businesses in the offshore or onshore crude oil transportation or
onshore crude storage industry, as applicable, or (b) the ability of SPLC and/or
SOPUS to perform their respective obligations under this Agreement and/or the
other Transaction Documents to which SPLC or SOPUS is a party or to consummate
the transactions contemplated hereby or thereby.

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

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

 

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

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

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

“Transaction Documents” means this Agreement, the Assignment Agreements, 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, SOPUS, SHLX or Operating are parties.

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

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

Section 1.2 Construction.

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

PURCHASE AND SALE AND CLOSING

Section 2.1 Purchase and Sale.

Upon the terms and subject to the conditions set forth in this Agreement and in
the Assignment Agreements, at the Closing, SPLC and SOPUS shall each sell,
transfer, assign, and convey its respective Subject Interests to Operating, free
and clear of all Liens (other than restrictions under applicable federal and
state securities laws), and Operating, in its capacity as designee of SHLX,
shall accept and acquire the Subject Interests from SPLC and SOPUS.

 

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Section 2.2 Consideration.

The aggregate amount of consideration for the Subject Interests to be paid by
SHLX shall be the Consideration.

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, in its capacity as designee of SHLX, of the risk of loss
and reward relating to the Subject Interests and the underlying Assets, shall be
effective as of the Effective Time. The Closing will be held at the offices of
SPLC at 910 Louisiana Street, Houston, Texas 77002 on October 3, 2016,
commencing at 9:00 a.m., Houston time, 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 or its designee shall deliver, or cause to be
delivered, the following:

 

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

 

  (ii) to SPLC and SOPUS, a duly executed counterpart of each of the Assignment
Agreements;

 

  (iii) to SPLC and SOPUS, a certificate of good standing of recent date of
SHLX;

 

  (iv) to SPLC and SOPUS, the SHLX Closing Certificate; and

 

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

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

 

  (i) to SPLC and SOPUS, a duly executed counterpart of each of the Assignment
Agreements;

 

  (ii) to SPLC, a duly executed counterpart of an amendment to the Mars
Agreement, creating an updated Exhibit reflecting the transfer of the Mars
Subject Interests pursuant to this Agreement; and

 

  (iii) to SOPUS, a duly executed counterpart of an amendment to the Odyssey
Agreement, creating an updated Exhibit reflecting the transfer of the Odyssey
Subject Interests pursuant to this Agreement.

 

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

 

  (i) a duly executed counterpart of the Mars Assignment Agreement;

 

  (ii) a duly executed notice of transfer to Mars delivered pursuant to the Mars
Agreement;

 

  (iii) a duly executed counterpart to an amendment to the Mars Agreement,
creating an updated Exhibit reflecting the transfer of the Mars Subject
Interests pursuant to this Agreement;

 

  (iv) a certificate of good standing of recent date of SPLC and a certificate
of tax account status of Mars;

 

  (v) foreign qualification certificates of recent date of Mars;

 

  (vi) the SPLC Closing Certificate, duly executed by SPLC; and

 

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

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

 

  (i) a duly executed counterpart of the Odyssey Assignment Agreement;

 

  (ii) a duly executed notice of transfer to Odyssey and the other member of
Odyssey, delivered pursuant to the Odyssey LLC Agreement;

 

  (iii) a duly executed counterpart to an amendment to the Odyssey Agreement,
creating an updated Exhibit reflecting the transfer of the Odyssey Subject
Interests pursuant to this Agreement;

 

  (iv) a certificate of good standing of recent date of each of SOPUS and
Odyssey;

 

  (v) foreign qualification certificates of recent date of Odyssey;

 

  (vi) the SOPUS Closing Certificate, duly executed by SOPUS; and

 

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

 

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Section 2.4 Potential Post-Closing Adjustment.

Within ten (10) Business Days after the Effective Time, SHLX, acting through the
Conflicts Committee, shall prepare and deliver to SPLC a statement detailing
SHLX’s calculation of the Mars Closing Cash on Hand, which calculation shall
include sufficient detail to substantiate the result to SPLC’s reasonable
satisfaction. SPLC shall provide notice in writing to SHLX within ten
(10) Business Days of receipt of the calculation and any required substantiation
of either (a) its agreement with the calculation, or (b) its disagreement with
the calculation, in which case SPLC shall provide SHLX, acting through the
Conflicts Committee, a detailed description of the nature of its disagreement.
If SPLC disagrees with the calculations, SPLC and SHLX, acting through the
Conflicts Committee, shall meet promptly and in good faith negotiate and resolve
the points of disagreement. If SPLC and SHLX, acting through the Conflicts
Committee, are unable to resolve the points of disagreement on or prior to the
60th day following the Effective Time, then SPLC or SHLX, acting through the
Conflicts Committee, may refer such dispute to Ernst & Young LLP or, if that
firm declines to act as provided in this Section 2.4, another firm of
independent public accountants, mutually acceptable to SPLC and SHLX, acting
through the Conflicts Committee, which firm shall make a final and binding
determination as to all matters in dispute on a timely basis and promptly shall
notify the parties and the Conflicts Committee in writing of its resolution.
Such accounting firm handling the dispute resolution shall not have the power to
modify or amend any term or provision of this Agreement. Each of SHLX and SPLC
shall bear and pay one-half of the fees and other costs charged by such
accounting firm.

If the Mars Closing Cash on Hand as determined in accordance with the foregoing
provision is less than the Mars Target Cash on Hand, SPLC shall pay to SHLX an
amount equal to the Mars Post-Closing Adjustment. SPLC shall deliver, or cause
to be delivered, to SHLX such Mars Post-Closing Adjustment within ten (10) days
after SPLC provides notice in writing to SHLX, acting through the Conflicts
Committee, of its agreement with SHLX’s determination of the Mars Post-Closing
Adjustment or the date any dispute relating to such calculation is resolved. The
parties agree that once SPLC pays the Mars Post-Closing Adjustment, to SHLX,
SPLC shall have no further liability to SHLX or the General Partner of any kind
in respect of this Section 2.4.

Section 2.5 Potential Purchase Price Reduction.

Within thirty (30) calendar days of receipt by SHLX of Mars’ audited financial
statements for the twelve-month period ending December 31, 2021, SHLX, acting
through the Conflicts Committee, shall prepare and deliver to SPLC a statement
detailing SHLX’s calculation of the Mars Storage Revenue True-Up Amount,
together with all audited financial statements for the twelve-month periods
ending December 31, 2017 through December 31, 2021. Such calculation shall
include sufficient detail to substantiate the result to SPLC’s reasonable
satisfaction. SPLC shall provide notice in writing to SHLX, acting through the
Conflicts Committee, within 10 Business Days of receipt of the calculation and
any required substantiation of either (a) its agreement with the calculation, or
(b) its disagreement with the calculation, in which case SPLC shall provide
SHLX, acting through the Conflicts Committee, a detailed description of the
nature of its disagreement. If SPLC disagrees with the calculations, SPLC and
SHLX, acting through the Conflicts Committee, shall meet promptly and in good
faith negotiate

 

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and resolve the points of disagreement. If SPLC and SHLX, acting through the
Conflicts Committee, are unable to resolve the points of disagreement on or
prior to the 60th day following the delivery of the statement detailing SHLX’s
calculation of the Mars Storage Revenue True-Up Amount to each of SPLC and SHLX,
acting through the Conflicts Committee, then SPLC or SHLX, acting through the
Conflicts Committee, may refer such dispute to Ernst & Young LLP or, if that
firm declines to act as provided in this Section 2.5, another firm of
independent public accountants, mutually acceptable to SPLC and SHLX, acting
through the Conflicts Committee, which firm shall make a final and binding
determination as to all matters in dispute on a timely basis and promptly shall
notify the parties and the Conflicts Committee in writing of its resolution.
Such accounting firm handling the dispute resolution shall not have the power to
modify or amend any term or provision of this Agreement. Each of SHLX and SPLC
shall bear and pay one-half of the fees and other costs charged by such
accounting firm.

If the Mars Storage Revenue True-Up Amount as determined in accordance with the
foregoing provision is greater than zero, SPLC shall pay to SHLX the Mars
Storage Revenue True-Up Amount. SPLC shall deliver, or cause to be delivered, to
SHLX such Mars Storage Revenue True-Up Amount within forty-five (45) days after
SPLC and the Conflicts Committee each provides notice in writing to SHLX of its
agreement with SHLX’s determination of the Mars Storage Revenue True-Up Amount
or the date any dispute relating to such calculation is resolved. The parties
agree that once SPLC pays the Mars Storage Revenue True-up Amount, if
applicable, to SHLX, SPLC shall have no further liability to SHLX or the General
Partner of any kind in respect of this Section 2.5.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SPLC AND SOPUS

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

Section 3.1 Organization.

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

(b) SOPUS 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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(c) Mars is a general partnership duly formed under the laws of the State of
Texas and has all requisite partnership power and authority to own, operate and
lease its properties and assets and to carry on its business as now conducted.

(d) Odyssey 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.

(e) SPLC and SOPUS have made available to SHLX true and complete copies of the
organizational documents of Mars and Odyssey, as applicable, 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 a party, the consummation of the transactions contemplated hereby and
thereby and the performance of all of the obligations hereof and thereof to be
performed by SPLC have been duly authorized and approved by all requisite
limited partnership action on the part of SPLC.

(b) SOPUS has full limited liability company power and authority to execute and
deliver this Agreement and the other Transaction Documents to which SOPUS 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 SOPUS of this Agreement and the other Transaction
Documents to which SOPUS is a party, the consummation of the transactions
contemplated hereby and thereby and the performance of all of the obligations
hereof and thereof to be performed by SOPUS have been duly authorized and
approved by all requisite limited liability company action on the part of SOPUS.

(c) This Agreement has been duly executed and delivered by each of SPLC and
SOPUS and constitutes the valid and legally binding obligation of each of SPLC
and SOPUS, enforceable against each entity in accordance with its terms, and,
upon the execution of the other Transaction Documents to which SPLC or SOPUS is
a party, such other Transaction Documents will be duly executed and delivered by
SPLC or SOPUS, as applicable, and constitute the valid and legally binding
obligations of SPLC or SOPUS, as applicable, enforceable against SPLC or SOPUS,
as applicable, 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:

 

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(a) The execution, delivery and performance of this Agreement and the other
Transaction Documents to which SPLC or SOPUS is a party by SPLC or SOPUS, 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 SPLC, SOPUS, Mars,
or Odyssey; (ii) conflict with or violate any provision of any law or
administrative rule or regulation or any judicial, administrative or arbitration
order, award, judgment, writ, injunction or decree applicable to SPLC, SOPUS,
Mars, Odyssey or the Assets (“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, SOPUS, Mars or Odyssey is a party or by which
any of them are bound or to which any of the Assets are subject; or (iv) result
in the creation of any Lien (other than Permitted Liens) on any of the Assets or
on the Subject Interests under any such indenture, mortgage, agreement,
contract, commitment, right of way, license, concession, permit, lease, joint
venture or other instrument, except in the case of clauses (ii), (iii) and
(iv) for those items which, individually or in the aggregate, would not
reasonably be expected to have a SPLC Material Adverse Effect or result in any
material liability or obligation of SHLX or Operating (other than any liability
or obligation hereunder); and

(b) No consent, approval, license, permit, order or authorization of any
Governmental Authority or other Person is required to be obtained or made by or
with respect to SPLC, SOPUS, Mars or Odyssey with respect to the Subject
Interests or the Assets in connection with the execution, delivery and
performance of this Agreement and the other Transaction Documents to which SPLC
or SOPUS is 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
individually or in the aggregate would not reasonably be expected to have a SPLC
Material Adverse Effect (including such consents, approvals, licenses, permits,
orders or authorizations that are not customarily obtained prior to the Closing
and are reasonably expected to be obtained in the ordinary course of business
following the Closing).

Section 3.4 Capitalization; Title to Subject Interests.

Except as described in Section 3.4 of the Disclosure Letter:

(a) SPLC and SOPUS own, beneficially and of record, respectively, the Mars
Subject Interests and the Odyssey Subject Interests and will each convey good
title, free and clear of all Liens, the Mars Subject Interests and the Odyssey
Subject Interests, respectively, to SHLX or its designee. Except: (i) as
expressly provided in the Mars Voting Agreement, (ii) for the sale of the
Subject Interests contemplated by this Agreement, and (iii) for restrictions
under applicable federal and state securities laws, the Subject Interests are
not subject to any agreements or understandings with respect to the voting or
transfer of any of the Subject Interests, stockholders agreements, pledge
agreements, buy-sell agreements, rights of first refusal, preemptive rights or

 

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proxy arrangements. The Mars Subject Interests have been duly authorized and are
validly issued. The Odyssey Subject Interests have been duly authorized and are
validly issued, fully paid and nonassessable (except as such nonassessability
may be affected by Sections 18-607 and 18-804 of the Delaware LLC Act).

(b) There are (i) no authorized or outstanding subscriptions, warrants, options,
convertible securities or other rights (contingent or otherwise) to purchase or
otherwise acquire from Mars any equity interests of or in Mars, (ii) no
commitments on the part of Mars to issue partnership interests, shares,
subscriptions, warrants, options, convertible securities or other similar
rights, and (iii) no equity securities of Mars reserved for issuance for any
such purpose. Mars has no obligation (contingent or other) to purchase, redeem
or otherwise acquire any of its equity securities or interests. Except for this
Agreement and the Mars Voting 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 Mars.
Mars owns no equity interests in any other Person.

(c) There are (i) no authorized or outstanding subscriptions, warrants, options,
convertible securities or other rights (contingent or otherwise) to purchase or
otherwise acquire from Odyssey any equity interests of or in Odyssey, (ii) no
commitments on the part of Odyssey to issue membership interests, shares,
subscriptions, warrants, options, convertible securities or other similar
rights, and (iii) no equity securities of Odyssey reserved for issuance for any
such purpose. Odyssey has no obligation (contingent or other) to purchase,
redeem or otherwise acquire any of its equity securities or interests. 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 Odyssey. Odyssey
owns no equity interests in any other Person.

Section 3.5 Financial Information; Undisclosed Liabilities.

(a) SPLC has provided to SHLX a true and complete copy of the audited financial
statements as of December 31, 2015 of Mars on a consolidated basis (the “Mars
Financial Statements”). The Mars Financial Statements present fairly in all
material respects the financial position of Mars as of the date thereof. There
are no material off-balance sheet arrangements of Mars. The Mars Financial
Statements have been prepared in accordance with GAAP consistently applied
throughout the periods presented.

(b) Except as set forth on Section 3.5(b) of the Disclosure Letter, there are no
liabilities or obligations of Mars 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
Mars Financial Statements, (ii) current liabilities incurred in the ordinary
course of business since December 31, 2015, and (iii) liabilities or obligations
(whether known or unknown and whether accrued, absolute, contingent or
otherwise) that are not material.

 

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(c) SOPUS has provided to SHLX a true and complete copy of the audited financial
statements as of December 31, 2015 of Odyssey on a consolidated basis (the
“Odyssey Financial Statements”). The Odyssey Financial Statements present fairly
in all material respects the financial position of Odyssey as of the date
thereof. There are no material off-balance sheet arrangements of Odyssey. The
Odyssey Financial Statements have been prepared in accordance with GAAP
consistently applied throughout the periods presented.

(d) Except as set forth on Section 3.5(d) of the Disclosure Letter, there are no
liabilities or obligations of Odyssey 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
Odyssey Financial Statements, (ii) current liabilities incurred in the ordinary
course of business since December 31, 2015, and (iii) liabilities or obligations
(whether known or unknown and whether accrued, absolute, contingent or
otherwise) that are not material.

Section 3.6 Title to Mars and Odyssey Properties.

(a) Mars has (i) good and marketable fee simple title to the owned real property
used or held for use by Mars for the conduct of Mars’ business, free and clear
of any Liens (other than Permitted Liens or as set forth on Section 3.6(a) of
the Disclosure Letter) and (ii) a valid, binding, and enforceable leasehold
interest in each of the leased properties used or held for use by Mars for the
conduct of Mars’ business, free and clear of any Liens (other than Permitted
Liens or as set forth on Section 3.6(a) of the Disclosure Letter).

(b) Odyssey has (i) good and marketable fee simple title to the owned real
property used or held for use by Odyssey for the conduct of Odyssey’s business,
free and clear of any Liens (other than Permitted Liens or as set forth on
Section 3.6(b) of the Disclosure Letter) and (ii) a valid, binding, and
enforceable leasehold interest in each of the leased properties used or held for
use by Odyssey for the conduct of Odyssey’s business, free and clear of any
Liens (other than Permitted Liens or as set forth on Section 3.6(b) of the
Disclosure Letter).

Section 3.7 Litigation; Laws and Regulations.

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

(a) there are no (i) civil, criminal or administrative actions, suits, claims,
hearings, arbitrations or proceedings pending or, to SPLC’s Knowledge,
threatened against Mars, (ii) judgments, orders, decrees or injunctions of any
Governmental Authority, whether at law or in equity, against Mars or
(iii) pending or, to SPLC’s Knowledge, threatened investigations by any
Governmental Authority against Mars, 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) Mars is not in violation of or in default under any Applicable Law, except
as would not, individually or in the aggregate, reasonably be expected to have a
SPLC Material Adverse Effect.

 

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

(c) there are no (i) civil, criminal or administrative actions, suits, claims,
hearings, arbitrations or proceedings pending or, to SOPUS’s Knowledge,
threatened against Odyssey, (ii) judgments, orders, decrees or injunctions of
any Governmental Authority, whether at law or in equity, against Odyssey or
(iii) pending or, to SOPUS’s Knowledge, threatened investigations by any
Governmental Authority against Odyssey, 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

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

Section 3.8 No Adverse Changes.

Except as set forth on Section 3.8 of the Disclosure Letter, since December 31,
2015:

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

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

Section 3.9 Taxes.

(a) Except as would not reasonably be expected to have a SPLC Material Adverse
Effect, (i) all Tax Returns required to be filed by or with respect to Mars,
Odyssey, the Assets or the operations of Mars or Odyssey have been filed on a
timely basis (taking into account all extensions of due dates); (ii) all Taxes
owed by Mars, Odyssey, or any of their Affiliates with respect to Mars, Odyssey,
the Assets or the operations of Mars or Odyssey, as applicable, which are or
have become due, have been timely paid, other than Taxes the amount or validity
of which is being contested in good faith by appropriate proceedings for which
an adequate reserve has been established therefor; (iii) there are no Liens on
any of the Assets that arose in connection with any failure (or alleged failure)
to pay any Tax on the Assets other than Liens for Taxes not yet due and payable
or the amount or validity of which is being contested in good faith by
appropriate proceedings for which an adequate reserve has been established
therefor; (iv) there is no pending action, proceeding or investigation for
assessment or collection of Taxes and no Tax assessment, deficiency or
adjustment has been asserted or proposed with respect to Mars, Odyssey, the
Assets, or the operations of Mars or Odyssey; (v) except with respect to
extensions of time to file Tax Returns obtained in the ordinary course of
business, there is not in force any outstanding agreement or waiver by or with
respect to Mars, Odyssey, the Assets or the operations of Mars or Odyssey
extending the period for assessment or collection of any Tax; and (vi) neither
Mars nor Odyssey is a party to any Tax allocation or Tax sharing agreement that
will be binding on such entity after Closing.

(b) Since November 3, 2014, each of Mars and Odyssey has been treated as a
partnership for U.S. federal income tax purposes and has in effect or shall be
eligible to make an election pursuant to Section 754 of the Code.

 

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Section 3.10 Environmental Matters.

Except as disclosed in Section 3.10 of the Disclosure Letter, or as would not
reasonably be expected, individually or in the aggregate, to have a SPLC
Material Adverse Effect:

(a) Mars and its assets, operations and business are 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 Mars or its assets, operations or
business that give rise to an obligation by Mars or its operators to investigate
or remediate the presence, on-site or offsite, of Hazardous Materials under any
applicable Environmental Laws;

(c) Mars has not received any written communication from a Governmental
Authority that remains unresolved alleging that it may be in violation of any
Environmental Law or any Permit issued pursuant to Environmental Law;

(d) none of Mars, or its assets, operations or business are subject to any
pending or, to the Knowledge of SPLC, 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 by Mars under any Environmental Law in
connection with its assets, operations and business have been duly obtained or
filed, are valid and currently in effect, and Mars and its assets, operations
and business are in compliance with such authorizations; and

(f) since January 1, 2014, there has been no release of any Hazardous Material
into the environment by Mars, or its assets, operations or business, or, to the
Knowledge of SPLC, by a third party except in compliance with applicable
Environmental Law.

Except as disclosed in Section 3.10 of the Disclosure Letter, or as would not
reasonably be expected, individually or in the aggregate, to have a SPLC
Material Adverse Effect:

(g) Odyssey and its assets, operations and business are 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;

(h) no circumstances exist with respect to Odyssey or its assets, operations or
business that give rise to an obligation by Odyssey or its operators to
investigate or remediate the presence, on-site or offsite, of Hazardous
Materials under any applicable Environmental Laws;

(i) Odyssey has not received any written communication from a Governmental
Authority that remains unresolved alleging that it may be in violation of any
Environmental Law or any Permit issued pursuant to Environmental Law;

(j) none of Odyssey, or its assets, operations or business are subject to any
pending or, to the Knowledge of SOPUS, 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);

 

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(k) all notices, permits, permit exemptions, licenses or similar authorizations,
if any, required to be obtained or filed by Odyssey under any Environmental Law
in connection with its assets, operations and business have been duly obtained
or filed, are valid and currently in effect, and Odyssey and its assets,
operations and business are in compliance with such authorizations; and

(l) since January 1, 2014, there has been no release of any Hazardous Material
into the environment by Odyssey, or its assets, operations or business, or, to
the Knowledge of SOPUS, by a third party except in compliance with applicable
Environmental Law.

Section 3.11 Licenses; Permits.

Except as set forth in Section 3.11 of the Disclosure Letter:

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

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

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

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

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

Except as set forth in Section 3.11 of the Disclosure Letter:

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

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

 

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

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

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

Section 3.12 Material Contracts.

(a) Section 3.12(a) of the Disclosure Letter contains a true and complete
listing (redacted as applicable to comply with regulatory requirements) of the
following contracts and other agreements to which, as of the date of this
Agreement, Mars or Odyssey is a party or to which the Mars Assets or Odyssey
Assets are subject (each such contract or agreement, along with all amendments
and supplements thereto, being referred to herein as a “Material Contract”):

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

  (viii)

contracts or agreements which, individually, require or entitle Mars or Odyssey
to make or receive payments of at least Twenty-Five Million Dollars
($25,000,000) annually, provided that the calculation of the aggregate payments
for any such agreement or contract shall not include

 

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  payments attributable to any renewal periods or extensions for which Mars or
Odyssey may exercise a renewal or extension option in its sole discretion; and

 

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

(b) Subject to regulatory requirements of which SHLX has been informed, SPLC and
SOPUS have made available to SHLX a correct and complete copy of each Material
Contract listed in Section 3.12(a) of the Disclosure Letter.

(c) Except as would not reasonably be expected to result in a SPLC Material
Adverse Effect or as disclosed on Section 3.12(c) of the Disclosure Letter:
(i) each Material Contract is legal, valid and binding on and enforceable
against Mars or Odyssey, as applicable, and in full force and effect; (ii) each
Material Contract will continue to be legal, valid and binding on and
enforceable against Mars or Odyssey, as applicable, and in full force and effect
on identical terms following the consummation of the transactions contemplated
by this Agreement; (iii) Mars is not in breach or default, and no event has
occurred which with notice or lapse of time would constitute a breach or default
by Mars, or permit termination, modification or acceleration, under any Material
Contract; (iv) Odyssey is not in breach or default, and no event has occurred
which with notice or lapse of time would constitute a breach or default by
Odyssey, or permit termination, modification or acceleration, under any Material
Contract; and (v) to SPLC’s Knowledge and to SOPUS’s Knowledge, no other party
to any Material Contract is in breach or default, and no event has occurred
which with notice or lapse of time would constitute a breach or default by such
other party, or permit termination, modification or acceleration, under any
Material Contract other than in accordance with its terms, nor has any other
party repudiated any provision of any Material Contract.

Section 3.13 Employees.

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

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

Section 3.14 Transactions with Affiliates.

Except as otherwise contemplated in this Agreement, Mars is not and was not as
of the Effective Time, a party to any agreement, contract or arrangement with
any of its Affiliates, other than those disclosed on Section 3.14 of the
Disclosure Letter.

 

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Except as otherwise contemplated in this Agreement, Odyssey is not and was not
as of the Effective Time, a party to any agreement, contract or arrangement with
any of its Affiliates, other than those disclosed on Section 3.14 of the
Disclosure Letter.

Section 3.15 Insurance.

Section 3.15 of the Disclosure Letter sets forth a list of the material
insurance policies that Mars holds or SPLC holds with respect to Mars, the Mars
Subject Interests or the Mars Assets whether Mars or SPLC is the beneficiary.
Such policies are in full force and effect, and all premiums due and payable
under such policies have been paid, SPLC has received no written notice of any
pending or threatened termination of, or indication of an intention not to
renew, such policies.

Section 3.15 of the Disclosure Letter sets forth a list of the material
insurance policies that Odyssey holds or SPLC or SOPUS holds with respect to
Odyssey, the Odyssey Subject Interests or the Odyssey Assets, whether Odyssey,
SPLC, or SOPUS is the beneficiary. Such policies are in full force and effect,
and all premiums due and payable under such policies have been paid, SPLC and
SOPUS have received no written notice of any pending or threatened termination
of, or indication of an intention not to renew, such policies.

Section 3.16 Intellectual Property Rights.

Mars and Odyssey each owns or has the right to use all Intellectual Property
necessary for or used in the conduct of their respective businesses as currently
conducted, and, to the Knowledge of SPLC and the Knowledge of SOPUS,
respectively, Mars and Odyssey’s products and services do not infringe upon,
misappropriate or otherwise violate any Intellectual Property of any third
party. All Intellectual Property owned by Mars or Odyssey, if any, is owned free
and clear of any Liens (other than Permitted Liens). Neither the execution and
delivery of this Agreement or the other Transaction Documents, nor the
consummation of the transactions contemplated hereby or thereby will, with or
without notice or lapse of time, result in, or give any other Person the right
or option to cause or declare, a breach or termination of, or cancellation or
reduction in, rights of Mars or Odyssey under any contract providing for the
license of any Intellectual Property to Mars or Odyssey, except for any such
terminations, cancellations or reductions that, individually or in the
aggregate, would not have a SPLC Material Adverse Effect. There is no
Intellectual Property-related action, suit, proceeding, hearing, investigation,
notice or complaint pending or, to SPLC’s Knowledge and to SOPUS’s Knowledge,
threatened by any third party before any court or tribunal (including, without
limitation, the United States Patent and Trademark Office or equivalent
authority anywhere in the world) relating to Mars or Odyssey or their respective
operations, nor has any claim or demand been made by any third party that
alleges any infringement, misappropriation or violation of any Intellectual
Property of any third party, or unfair competition or trade practices by Mars or
Odyssey. Except as would not result in a SPLC Material Adverse Effect, Mars and
Odyssey have taken reasonable measures to protect the confidentiality of all
material trade secrets.

 

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Section 3.17 Brokerage Arrangements.

Neither SPLC nor SOPUS has entered (directly or indirectly) into any agreement
with any Person that would obligate SPLC, SOPUS, or any of their Affiliates,
Mars or Odyssey, 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 Transaction contemplated hereby or thereby.

Section 3.18 Books and Records.

Accurate copies of the respective books of account, minute books and equity
record books of Mars and Odyssey and all books and records maintained by, or
made available to, SPLC or SOPUS with respect to Mars or Odyssey and the Subject
Interests have been made available for inspection to SHLX.

Section 3.19 Regulatory Matters.

Since January 1, 2016, as to the portion of the Mars Pipeline that is downstream
of block Bay Marchand 4 (BM4), inclusive of BM4, and is subject to the
Interstate Commerce Act and subject to regulation by the FERC and by any state
public utility commission, Mars (and its business, operations and assets) has
been in material compliance with (a) the applicable provisions of the Interstate
Commerce Act and (b) all applicable rules, regulations and orders of the FERC
and any state public utility commission having jurisdiction over any of Mars’s
business, operations or assets. Mars has duly filed all forms and reports
required to be filed by or with respect to Mars (and its business, operations
and assets) with the FERC and any state public utility commission having
jurisdiction over any of Mars’s business, operations or assets, and such forms
and reports have been prepared in accordance with Applicable Law, except to the
extent that any noncompliance, either individually or in the aggregate, would
not reasonably be expected to have a SPLC Material Adverse Effect.

Since January 1, 2016, the Mars Pipeline (as to the portion that is upstream of
BM4 and is not subject to regulation by the FERC and by any state public utility
commission) and the Odyssey Pipeline have not been subject to the jurisdiction
of, or regulation by, the FERC under the Interstate Commerce Act and were
operated by SPLC in compliance with the nondiscriminatory open access
transportation requirements under the Outer Continental Shelf Lands Act, as
amended (“OCSLA”). Odyssey is not subject to the jurisdiction of, or regulation
by, the FERC under the Interstate Commerce Act.

Section 3.20 Management Projections and Budget.

The projections and budgets regarding Mars and Odyssey identified on
Section 3.20 of the Disclosure Letter, which were provided to SHLX (including
those provided to the Financial Advisor) by SPLC, SOPUS, and their Affiliates as
part of SHLX’s review in connection with this Agreement, were prepared based
upon assumptions that SPLC’s management and SOPUS’s management believe to be
reasonable as of the date hereof and are consistent with SPLC’s management and
SOPUS’s management’s reasonable expectations as of the date hereof.

 

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF SHLX AND OPERATING

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

Section 4.1 Organization and Existence.

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

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

Section 4.2 Authority and Approval.

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

(b) This Agreement has been duly executed and delivered by or on behalf of each
of SHLX and Operating, and constitutes the valid and legally binding obligation
of SHLX and Operating, enforceable against each of SHLX and Operating in
accordance with its terms and, upon the execution of the other Transaction
Documents to which SHLX or Operating is a party, such other Transaction
Documents will be duly executed and delivered by or on behalf of SHLX and
Operating, as applicable, and constitute the valid and legally binding
obligation of SHLX and Operating, as applicable, enforceable against SHLX and
Operating, as applicable, 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 or Operating is a party by SHLX and
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,

 

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

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

Section 4.4 Brokerage Arrangements.

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

Section 4.5 Litigation.

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

 

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Section 4.6 Investment Intent.

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

ARTICLE V

ADDITIONAL AGREEMENTS, COVENANTS, RIGHTS AND OBLIGATIONS

Section 5.1 Operation of Mars and Odyssey.

(a) Except as provided by this Agreement, or as consented to by the other
parties to this Agreement, during the period from the date of this Agreement
through the Closing Date, in the event items are presented to the partners of
Mars or the members of Odyssey, (i) as to Mars, each of SHLX and SPLC shall, or
shall cause its representative(s) to, vote in favor of, and (ii) as to Odyssey,
SOPUS shall, or shall cause its representative(s) to, vote in favor of , taking
actions to:

 

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

 

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

Each of SHLX, SPLC and SOPUS shall, or shall cause its representatives to, vote
its interests in Mars or Odyssey, as applicable, in opposition to any actions
contrary to the foregoing.

(b) Except (i) as provided by this Agreement, (ii) as set forth on
Section 5.1(b) of the Disclosure Letter or (iii) as consented by the other
parties to this Agreement, during the period from the date of this Agreement
through the Closing Date, neither SPLC nor SHLX shall, and shall cause their
representative(s) not to, vote in favor of any action that would permit Mars to,
and SOPUS shall not, and shall cause its representative(s) not to, vote in favor
of any action that would permit Odyssey 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;

 

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

 

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

 

  (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 other than as set forth on Section 5.1(b)
of the Disclosure Letter;

 

  (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 and intercompany loans under SPLC’s
or SOPUS’s cash management system in accordance with past practice);

 

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

 

  (xv) with respect to Odyssey only, make any distribution with respect to its
equity interests;

 

  (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 Mars, the Mars Assets and Mars’s business, and Odyssey, the
Odyssey Assets and Odyssey’s business;

 

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

 

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

 

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

Section 5.2 Cooperation; Further Assurances.

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

ARTICLE VI

TAX MATTERS

Section 6.1 Liability for Taxes.

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

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

(c) Whenever it is necessary for purposes of this Article VI to determine the
amount of any Taxes imposed on or incurred by or with respect to the Subject
Interests or the assets related to the Subject Interests for a taxable period
beginning before and ending after the Closing Date which is allocable to the
period ending on or prior to the Closing Date and the allocation is not
otherwise prescribed by Applicable Law or agreement in effect as of the date
hereof, such amount shall be deemed to be the amount of such Tax for the entire
Tax period multiplied by a

 

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fraction, the numerator of which is the number of days in the Tax period ending
on (and including) the Closing Date and the denominator of which is the number
of days in the entire Tax period.

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

(e) For federal income tax purposes, the parties agree to report any payments
with respect to Section 2.4, Section 2.5, Section 6.1, Section 8.1 and Section
8.2 as an adjustment to the Consideration.

Section 6.2 Cooperation.

(a) 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 and SHLX
shall, and shall cause their respective Affiliates to, join in the execution of
any such Tax Returns and other documentation. The parties shall cooperate to
establish eligibility for any applicable exemption from any Transfer Tax.

Section 6.4 Allocation of Consideration.

The parties will use commercially reasonable efforts to agree upon an allocation
of the Consideration to the Subject Interests and further among the Mars Assets
and the Odyssey Assets for U.S. federal income tax purposes in compliance with
the principles of Section 1060 of the Code, and the Treasury Regulations
thereunder, and Treasury Regulation Section 1.755-1, as applicable.

 

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Section 6.5 Conflict.

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

ARTICLE VII

CONDITIONS TO CLOSING

Section 7.1 Conditions to the Obligations of SHLX and Operating.

The obligation 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:

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

(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.

 

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

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

Section 7.2 Conditions to the Obligations of SPLC and SOPUS.

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

(a) The representations and warranties of SHLX and Operating set forth in this
Agreement shall be true and correct (without giving effect to any materiality
standard or SHLX Material Adverse Effect qualification) as of the date of this
Agreement and on the Closing Date as if made on such date, or in the case of
representations and warranties that are made as of a specified date, such
representations and warranties shall be true and correct (without giving effect
to any materiality standard or SHLX Material Adverse Effect qualification) as of
such specified date, except, in each case, to the extent that failure of such
representations and warranties to be true and correct would not, individually or
in the aggregate, result in a SHLX Material Adverse Effect. SHLX 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
SHLX or Operating, as the case may be, by the time of the Closing. SHLX shall
have delivered to SPLC and SOPUS 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.

(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.

 

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

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

ARTICLE VIII

INDEMNIFICATION

Section 8.1 Indemnification of SHLX.

Subject to the limitations set forth in this Agreement, SPLC and SOPUS, jointly
and severally, shall indemnify, defend and hold SHLX, its subsidiaries and their
respective security holders, directors, officers, and employees, and the
officers, directors and employees of the General Partner, but otherwise
excluding SPLC, SOPUS, and their respective 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 or SOPUS in this Agreement
and (b) any breach of any agreement or covenant on the part of SPLC or SOPUS
made under this Agreement or in connection with the transactions contemplated
hereby or thereby; provided, however, that for purposes of determining the
amount of any Damages suffered or incurred by the SHLX Indemnified Parties,
Operating’s acquisition of only 49.0% of the membership interests of Odyssey and
20.0% of the partnership interests of Mars 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 49.0%
of the total of such Damages suffered by Odyssey and no more than 20.0% of the
total of such Damages suffered by Mars, as the case may be. Any indemnification
provided pursuant to this Agreement shall not be duplicative of any
indemnification provided pursuant to the Omnibus Agreement. Further, if entitled
to indemnification under this Section 8.1, the SHLX Indemnified Parties may seek
indemnification from either SPLC or SOPUS, as applicable, but may recover an
aggregate amount not to exceed the above specified percentage of the Damages and
subject to all other limitations set forth in this Agreement, including Article
VIII hereof.

Section 8.2 Indemnification of SPLC and SOPUS.

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

 

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Section 8.3 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 and
SOPUS set forth in Section 3.9 (Taxes) shall survive until the date that is
sixty (60) days after the expiration of the applicable statutes of limitations
(including all periods of extension and tolling), (b) the representations and
warranties of SPLC and SOPUS set forth in Section 3.10 (Environmental Matters)
shall terminate and expire on the third (3rd) anniversary of the Closing Date,
(c) the representations and warranties of SPLC and SOPUS set forth in Section
3.1 (Organization), Section 3.2 (Authority and Approval), Section 3.4(a)
(Capitalization; Title to Subject Interests) and Section 3.17 (Brokerage
Arrangements) shall survive until the expiration of the applicable statute of
limitations, and (d) the representations and warranties of SHLX set forth in
Section 4.1 (Organization and Existence), Section 4.2 (Authority and Approval)
and Section 4.5 (Brokerage Arrangements) shall survive until the expiration of
the applicable statute of limitations. 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 to control all aspects of the
defense of (and any counterclaims with respect to) any claims brought against
the indemnified party that are covered by the indemnification under this Article
VIII, including the selection of counsel, determination of whether to appeal any
decision of any court and the settling of any such claim 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

 

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release of the indemnified party from such claim; provided further, that no such
settlement containing any form of injunctive or similar relief shall be entered
into without the prior written consent of the indemnified party, which consent
shall not be unreasonably delayed or withheld.

(c) The indemnified party agrees to cooperate in good faith and in a
commercially reasonably manner with the indemnifying party, with respect to all
aspects of the defense of and pursuit of any counterclaims with respect to any
claims covered by the indemnification under this Article VIII, including the
prompt furnishing to the indemnifying party of any correspondence or other
notice relating thereto that the indemnified party may receive, permitting the
name of the indemnified party to be utilized in connection with such defense and
counterclaims, the making available to the indemnifying party of any files,
records or other information of the indemnified party that the indemnifying
party considers relevant to such defense and counterclaims, the making available
to the indemnifying party of any employees of the indemnified person and the
granting to the indemnifying party of reasonable access rights to the properties
and facilities of the indemnified party; provided, however, that in connection
therewith the indemnifying party agrees to use reasonable efforts to minimize
the impact thereof on the operations of the indemnified party and further agrees
to maintain the confidentiality of all files, records, and other information
furnished by the indemnified party pursuant to this Section. The obligation of
the indemnified party to cooperate with the indemnifying party as set forth in
the immediately preceding sentence shall not be construed as imposing upon the
indemnified party an obligation to hire and pay for counsel in connection with
the defense of and pursuit of any counterclaims with respect to any claims
covered by the indemnification set forth in this Article VIII, provided,
however, that the indemnified party may, at its own option, cost and expense,
hire and pay for counsel in connection with any such defense and counterclaims.
The indemnifying party agrees to keep any such counsel hired by the indemnified
party informed as to the status of any such defense or counterclaim, but the
indemnifying party shall have the right to retain sole control over such defense
and counterclaims so long as the indemnified party is still seeking
indemnification hereunder.

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

Section 8.5 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.

 

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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 and SOPUS, jointly
and severally, shall be liable only if (i) the Damages with respect to any
individual claim exceed One Hundred Thousand Dollars ($100,000) (the “Minimum
Claim Amount”) and (ii) the Damages for all claims that exceed the Minimum Claim
Amount exceed, in the aggregate, One Million Dollars ($1,000,000) (the
“Deductible Amount”), and then SPLC and SOPUS, jointly and severally, shall be
liable only for Damages to the extent of any excess over the Deductible Amount.
In no event shall SPLC’s and SOPUS’s aggregate liability to SHLX Indemnified
Parties under Section 8.1 exceed Thirty-Five Million Dollars ($35,000,000) (the
“Ceiling Amount”). Notwithstanding the foregoing, (i) SPLC’s and SOPUS’s
aggregate liability to SHLX Indemnified Parties under Section 8.1 for breaches
or inaccuracies of representations and warranties contained in Section 3.20
(Management Projections and Budget) shall not be subject to the Ceiling Amount
but shall not exceed One Hundred Seventy Five Million Dollars ($175,000,000) and
(ii) the Deductible Amount and the Ceiling Amount shall not apply to breaches or
inaccuracies of representations and warranties contained in Section 3.1
(Organization), Section 3.2 (Authority and Approval), Section 3.4
(Capitalization; Title to Subject Interests), Section 3.9 (Taxes), Section 3.17
(Brokerage Arrangements) and Section 3.18 (Books and Records), provided, that
SPLC’s and SOPUS’s aggregate liability for all claims under this Agreement,
including for breaches or inaccuracies of representations and warranties
contained in such sections described in clauses (i) and (ii) and for breaches of
covenants, shall not exceed the Consideration.

(b) For purposes of determining the amount of Damages, with respect to any
asserted claim for indemnification by a SHLX Indemnified Party, such
determination shall be made without regard to any qualifier as to “material,”
“materiality” or SPLC Material Adverse Effect expressly contained in Article III
(except in the case of the term “Material Contract”); provided that this
Section 8.6(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 nor SOPUS, on the one hand, nor SHLX and
Operating, on the other hand, will be liable as an indemnitor under this
Agreement for any consequential, incidental, special, indirect or exemplary
damages suffered or incurred by the indemnified party or parties except to the
extent resulting pursuant to third party indemnity claims.

Section 8.7 Sole Remedy.

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

 

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ARTICLE IX

MISCELLANEOUS

Section 9.1 Acknowledgements.

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

Section 9.2 Cooperation; Further Assurances.

SPLC, SOPUS, SHLX and Operating shall use their respective commercially
reasonable efforts to obtain all approvals and consents and 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 nothing in this Agreement will
require any party hereto to hold separate or make any divestiture not expressly
contemplated herein of any asset or otherwise agree to any restriction on its
operations or other burdensome condition which would in any such case be
material to its assets, liabilities or business in order to obtain any consent
or approval or other clearance required by this Agreement.

Section 9.3 Expenses.

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

Section 9.4 Notices.

Any notice, request, instruction, correspondence or other document to be given
hereunder by any party hereto to another party hereto (herein collectively
called “Notice”) shall be in writing and either 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:

 

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If to SPLC or to SOPUS, addressed to:

Shell Pipeline Company LP

One Shell Plaza

910 Louisiana Street

Houston, Texas 77002

Attn: Vice President-Operations

Email: greg.smith@shell.com

With a copy to: Assistant General Counsel-Downstream Americas

Email: nora.brooks@shell.com

Facsimile: (713) 241-6161

If to SHLX and/or Operating, addressed to:

Shell Midstream Partners, L.P.

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

One Shell Plaza

910 Louisiana Street

Houston, Texas 77002

Attn: Chief Executive Officer

Email: john.hollowell@shell.com

With a copy to: General Counsel

Email: lori.muratta@shell.com

Facsimile: (713) 241-6161

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

Section 9.5 Arbitration.

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

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

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

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

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

 

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

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

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

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

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

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

Section 9.6 Governing Law.

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

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

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

 

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Section 9.7 Public Statements.

The parties hereto shall consult with each other and no party shall issue any
public announcement or statement with respect to this Agreement or the
transactions contemplated hereby without the consent of the other 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 9.8 Entire Agreement; Amendments and Waivers.

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

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

Section 9.9 Conflicting Provisions.

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

Section 9.10 Binding Effect and Assignment.

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

 

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Section 9.11 Severability.

If any provision of this Agreement is rendered or declared illegal or
unenforceable by reason of any existing or subsequently enacted legislation or
by decree of a court of last resort, 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 9.12 Interpretation.

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

Section 9.13 Headings and Disclosure Letter.

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

Section 9.14 Multiple Counterparts.

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

Section 9.15 Action by SHLX.

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

 

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

/s/ Kevin M. Nichols

Name:   Kevin M. Nichols Title:   Vice President

Equilon Enterprises LLC

d/b/a Shell Oil Products US

By:  

/s/ Shawn J. Carsten

Name:   Shawn J. Carsten Title:   Vice President and Treasurer Shell Midstream
Partners, L.P. By:   Shell Midstream Partners GP LLC, its general partner By:  

/s/ John H. Hollowell

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

/s/ John H. Hollowell

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

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Appendix A

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

 

  •   John Hollowell

 

  •   Kevin Nichols

 

  •   Ryan Lockwood

 

  •   Humberto Orantes

 

  •   Michael Fleming

 

  •   Rebecca Wawak

 

  •   Geoff Gauthier

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Appendix B

[attached]