Document:

Exhibit 10.2

 

 

 

 

TRANSITION SERVICES AGREEMENT

 

by and between

 

MURPHY OIL CORPORATION

 

and

 

MURPHY USA INC.

 

Dated as of August 30, 2013

 

 

 

  

 

  

 

 

TABLE OF CONTENTS

 

	  	
Page

	
ARTICLE 1

	  
	
DEFINITIONS

	  
	
Section 1.01.  Definitions

	
1

	
ARTICLE 2

	  
	
PURCHASE AND SALE OF SERVICES

	  
	
Section 2.01.  Purchase and Sale of Services

	
5

	
Section 2.02.  Third Party Licenses and Consents

	
6

	
Section 2.03.  Third Party Providers

	
6

	
Section 2.04.  Cooperation

	
7

	
ARTICLE 3

	  
	
SERVICE COSTS; OTHER CHARGES

	  
	
Section 3.01.  Service Costs Generally

	
7

	
Section 3.02.  Taxes

	
7

	
Section 3.03.  Invoicing and Settlement

	
8

	
ARTICLE 4

	  
	
THE SERVICES

	  
	
Section 4.01.  Standards of Service

	
8

	
Section 4.02.  Changes to Services

	
9

	
Section 4.03.  Management of Services By Provider

	
9

	
Section 4.04.  Liaisons

	
9

	
ARTICLE 5

	  
	
DISCLAIMER, LIABILITY AND INDEMNIFICATION

	  
	
Section 5.01.  Exclusion Of Warranties

	
10

	
Section 5.02.  Limitation of Liability

	
10

	
Section 5.03.  Indemnification of Provider by Recipient

	
11

	
Section 5.04.  Indemnification of Recipient by Provider

	
11

	
Section 5.05.  Indemnification as Exclusive Remedy

	
11

	
Section 5.06.  Conduct of Proceedings

	
12

	
ARTICLE 6

	  
	
TERM AND TERMINATION

	  
	
Section 6.01.  Term

	
12

 

 

  

i

  

 

	
Section 6.02. Termination

	
12

	
Section 6.03.  Effect of Termination

	
13

	
ARTICLE 7

	  
	
ADDITIONAL AGREEMENTS

	  
	
Section 7.01.  Confidential Information

	
14

	
Section 7.02.  Ownership of Assets

	
15

	
Section 7.03.  Security

	
16

	
Section 7.04.  Access to Information and Audit

	
16

	
Section 7.05.  Compliance with Applicable Law

	
16

	
Section 7.06.  Labor Matters

	
16

	
Section 7.07.  Record Retention

	
17

	
ARTICLE 8

	  
	
MISCELLANEOUS

	  
	
Section 8.01.  No Agency; Independent Contractor Status

	
17

	
Section 8.02.  Subcontractors

	
17

	
Section 8.03.  Force Majeure

	
17

	
Section 8.04.  Entire Agreement

	
18

	
Section 8.05.  Notices

	
18

	
Section 8.06.  Governing Law

	
19

	
Section 8.07.  Jurisdiction.

	
19

	
Section 8.08.  Specific Performance

	
20

	
Section 8.09.  WAIVER OF JURY TRIAL

	
20

	
Section 8.10.  Severability

	
20

	
Section 8.11.  Amendments and Waivers

	
20

	
Section 8.12.  Successors and Assigns

	
20

	
Section 8.13.  Third Party Beneficiaries

	
21

	
Section 8.14.  Counterparts

	
21

	
Section 8.15.  Construction and Interpretation

	
21

	
Section 8.16.  Conflict of Terms

	
21

	  	  
	
Schedule A    Services

	  
	
Schedule B     Liaisons

	  

 

 

  

ii

  

 

TRANSITION SERVICES AGREEMENT

 

This TRANSITION SERVICES AGREEMENT (this “Agreement”) is entered into as of August 30, 2013 by and between Murphy Oil Corporation, a Delaware corporation (“Murphy Oil”) and Murphy USA Inc., a Delaware corporation (“Murphy USA”).

 

RECITALS

 

WHEREAS, Murphy Oil and Murphy USA have entered into a Separation and Distribution Agreement dated as of August 30, 2013 (as amended from time to time, the “Separation and Distribution Agreement”) providing for the distribution by Murphy Oil to its shareholders of all of the common stock of Murphy USA; and

 

WHEREAS, the Separation and Distribution contemplates that the parties hereto will enter into this Agreement, pursuant to which Murphy Oil will provide, or cause to be provided, certain services to Murphy USA (and if requested, one or more of its Subsidiaries) and Murphy USA will provide, or cause to be provided, certain services to Murphy Oil (and if requested, one or more of its Subsidiaries), on the terms and conditions set forth herein.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, for themselves, their successors and permitted assigns, hereby agree as follows:

 

 

ARTICLE 1

Definitions

 

Section 1.01.  Definitions.  (a)  Any capitalized term that is used herein but not defined herein shall have the meaning assigned to such term in the Separation and Distribution Agreement.

 

(b)      As used in this Agreement, the following terms shall have the following meanings, applicable both to the singular and the plural forms of the terms described:

 

“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such other Person.  For the purposes of this definition, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled”

 

 

  

 

have meanings correlative to the foregoing.  Notwithstanding any provision of this Agreement to the contrary (except where the relevant provision states explicitly to the contrary), no member of the Murphy Oil Group, on the one hand, and no member of the Murphy USA Group, on the other hand, shall be deemed to be an Affiliate of the other.

 “Applicable Law” means, with respect to any Person, any federal, state, local or foreign law (statutory, common or otherwise), constitution, treaty, convention, ordinance, code, rule, regulation, order, injunction, judgment, decree, ruling, directive, guidance, instruction, direction, permission, waiver, notice, condition, limitation, restriction or prohibition or other similar requirement enacted, adopted, promulgated, imposed, issued or applied by a Governmental Authority that is binding upon or applicable to such Person, its properties or assets or its business or operations, as amended unless expressly specified otherwise.

 

“Business Day” means a day, other than Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by Applicable Law to close.

 

“Change of Control” means, with respect to Murphy Oil or Murphy USA, the occurrence of any of the following: (i) a “Person” (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act) becomes a beneficial owner, directly or indirectly, of equity representing fifty percent (50%) or more of the total voting power of Murphy Oil’s or Murphy USA’s, as applicable, then outstanding equity capital; (ii) such entity merges into, is consolidated with or effects an amalgamation with another Person, or merges another Person into such entity, on a basis whereby less than fifty percent (50%) of the total voting power of the surviving Person immediately after such merger, consolidation or amalgamation is represented by equity held directly or indirectly by former equityholders of (and in respect of their former equity holdings in) such entity immediately prior to such merger, consolidation or amalgamation; and (iii) such entity directly or indirectly sells, transfers or exchanges all, or substantially all, of its assets to another Person unless at least fifty percent (50%) of the total voting power of the transferee is directly or indirectly owned by the equityholders of Murphy Oil or Murphy USA, as applicable, in respect of their former equity holdings in Murphy Oil or Murphy USA immediately prior to transfer; provided that in no event shall the consummation, execution or closing of the Spin-Off constitute a Change of Control with respect to Murphy Oil or Murphy USA.

 

“Distribution” has the meaning set forth in the Separation and Distribution Agreement.

 

“Distribution Time” has the meaning set forth in the Separation and Distribution Agreement.

 

 

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“Employee Costs” means with respect to the provision of the applicable Service by any employee, the product of (i) the hours attributable to the Service, (ii) such employee’s Hourly Rate and (iii) the Intercompany Charge-Out Rate applicable to such employee.

 

“Governmental Authority” means any multinational, foreign, federal, state, local or other governmental, statutory or administrative authority, regulatory body or commission or any court, tribunal or judicial or arbitral authority which has any jurisdiction or control over either party (or any of their Affiliates).

 

“Group” means, as the context requires, the Murphy USA Group or the Murphy Oil Group.

 

“Hourly Rate” means, (i) with respect to any salaried employee, (A) such employee’s annual salary as of the Distribution Date (or if such employee was not employed by the Provider or an Affiliate as of the Distribution Date, as of such employee’s initial hiring by the Provider or an Affiliate) divided by (B) 1800 and (ii) with respect to any hourly employee, such employee’s hourly (non-overtime) wage rate (regardless of whether any applicable hours providing Services are worked on an overtime basis) as of the Distribution Date (or if such employee was not employed by the Provider or an Affiliate as of the Distribution Date, as of such employee’s initial hiring by the Provider or an Affiliate).

 

“Insolvency Event” means with respect to either party, as applicable, (i) the making by such party of any assignment for the benefit of creditors of all or substantially all of its assets or the admission by such party in writing of its inability to pay all or substantially all of its debts as they become due; (ii) the adjudication of such party as bankrupt or insolvent or the filing by such party of a petition or application to any tribunal for the appointment of a trustee or receiver for such party or any substantial part of the assets of such party; or (iii) the commencement of any voluntary or involuntary bankruptcy proceedings (and, with respect to involuntary bankruptcy proceedings, the failure of such proceedings to be discharged within 60 days), reorganization proceedings or similar proceeding with respect to such party or the entry of an order appointing a trustee or receiver or approving a petition in any such proceeding.

 

“Intercompany Charge-Out Rate” means with respect to any employee, Provider’s departmental charge rate applicable to such employee as of the Distribution Date (or, if such employee was not employed by the Provider or an Affiliate as of the Distribution Date, the charge rate that would have been applicable to such employee on the Distribution Date if he or she had been an employee on such date).

 

“Murphy Oil Entity” means any member of the Murphy Oil Group.

 

 

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“Murphy Oil Group” means Murphy Oil and its Subsidiaries (other than any member of the Murphy USA Group), including all predecessors to such Persons.

 

“Murphy Oil Systems” means any computer hardware or software program or routine or part thereof owned, licensed or provided by any Murphy Oil Entity or any of their suppliers on any Murphy Oil Entity’s behalf, each as modified, maintained or enhanced from time to time by any Murphy Oil Entity, any Murphy USA Entity or any third party.

 

“Murphy USA Entity” means any member of the Murphy USA Group.

 

“Murphy USA Group” means Murphy USA and its Subsidiaries as of (and, except where the context clearly indicates otherwise, after) the Distribution Time and after giving effect to the Restructuring, including all predecessors to such Persons.

 

“Murphy USA Systems” means any computer hardware or software program or routine or part thereof owned, licensed or provided by any Murphy USA Entity or any of their suppliers on any Murphy USA Entity’s behalf, each as modified, maintained or enhanced from time to time by any Murphy USA Entity, any Murphy Oil Entity or any third party.

 

“Person” means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a Governmental Authority.

 

“Provider Group” means, as the context requires, the Murphy Oil Group, in the case of Services to be provided by Murphy Oil, or the Murphy USA Group, in the case of Services to be provided by Murphy USA.

 

“Recipient Entity” means any member of the Recipient Group.

 

“Recipient Group” means, as the context requires, the Murphy Oil Group, in the case of Services to be received by the Murphy Oil Group, or the Murphy USA Group, in the case of Services to be received by the Murphy USA Group.

 

“Schedule” means a Schedule attached hereto forming part of this Agreement.

 

“Service Costs” means the sum of the Provider Group’s (i) reasonable actual out-of-pocket costs attributable to the provision of the applicable Service and (ii) Provider’s Employee Costs.  For purposes of clause (i), and without limitation, the parties agree that such costs with respect to any given good or service will be considered reasonable if the relevant out-of-pocket cost for such good or service either (x) do not exceed the comparable cost being paid by

 

 

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Provider or an Affiliate for such good or service prior to the Distribution Time or (y) do not exceed the cost being paid by Provider or an Affiliate for such good or service being rendered to Provider or its Affiliates not in connection with the provision of the Services.

“Subsidiary” means, with respect to any Person, any other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by such Person.

 

 “Systems” means the Murphy Oil Systems or the Murphy USA Systems, individually, or the Murphy Oil Systems and the Murphy USA Systems, collectively, as the context may indicate or require.

 

(c)      Each of the following terms is defined in the Section set forth opposite such term:

 

	

Term

	 	

Section

	
Actions

	 	
5.03

	
Agreement

	 	
Preamble

	
Baseline Period

	 	
4.01(a)

	
Confidential Information

	 	
7.01

	
force majeure

	 	
8.03

	
Invoice Date

	 	
3.03(a)

	
Liaison

	 	
4.04(a)

	
Murphy Oil

	 	
Preamble

	
Murphy USA

	 	
Preamble

	
Payment Date

	 	
3.03(b)

	
Provider

	 	
2.01(a)

	
Provider Indemnified Person

	 	
5.02

	
Recipient

	 	
2.01(a)

	
Recipient Indemnified Person

	 	
5.04

	
Separation and Distribution Agreement

	 	
Recitals

	
Services

	 	
2.01(a)

 

ARTICLE 2

Purchase And Sale Of Services

 

Section 2.01.  Purchase and Sale of Services. (a) On the terms and subject to the conditions of this Agreement and in consideration of the payment of the Service Costs in accordance with Section 3.01, after the Distribution Time each of Murphy Oil and Murphy USA (each in its capacity as a provider of Services, “Provider”) agrees to provide to the other party (in its capacity as a recipient of Services, “Recipient”), or procure the provision to Recipient of, and Recipient

 

 

5

 

agrees to purchase from Provider, the transition services set forth on Schedule A as Services to be provided by the relevant Provider (the “Services”).

(b)      It is understood that (i) the Services to be provided to Recipient under this Agreement shall, at Recipient’s request, be provided to any Person that is a Subsidiary of Recipient (and to the extent Services are so provided, references to “Recipient” (and related references) shall be construed accordingly as the context requires) and (ii) Provider may satisfy its obligation to provide or procure Services hereunder by causing one or more of its Affiliates to provide or procure such Services (and, to the extent Services are so provided, references to “Provider” (and related references) shall be construed accordingly as the context requires), which Affiliates it may change at its discretion from time to time; provided that Provider shall remain responsible for the performance of such Affiliates.  With respect to Services provided to, or procured on behalf of, any Subsidiary of Recipient, Recipient agrees to pay on behalf of such Subsidiary, or cause such Subsidiary to pay, all amounts payable by or in respect of such Services pursuant to this Agreement.

 

(c)      Except for the Services expressly contemplated to be provided in accordance with this Section 2.01, Provider shall have no obligation under this Agreement to provide any services to the Recipient Group.  Provider agrees to consider in good faith any requests by Recipient for the provision of any additional services.  Any such additional services that Provider agrees to provide will be on such terms and conditions (including pricing) as the parties shall mutually and reasonably agree.

 

Section 2.02.  Third Party Licenses and Consents.  Provider and Recipient shall use commercially reasonable efforts to obtain, and to keep and maintain in effect, all governmental or third party licenses and consents required for the provision of any Service by Provider in accordance with the terms of this Agreement; provided that if Provider is unable to obtain any such license or consent, Provider shall promptly notify Recipient in writing and shall, and shall cause its Affiliates to, use commercially reasonable efforts to implement an appropriate alternative arrangement.  The costs relating to obtaining any such licenses or consents shall be borne by Recipient; provided that Provider shall not incur any such costs without the prior written consent of Recipient.  If any such license, consent or alternative arrangement is not available despite the commercially reasonable efforts of Provider and its Affiliates or as a result of Recipient failing to consent to the incurrence of costs relating to obtaining any such license or consent, Provider shall not be required to provide the affected Services.

 

Section 2.03.  Third Party Providers.  If Provider receives written notice from any third party service provider that such Person intends to terminate a service pursuant to which Provider provides a Service to Recipient, then Provider

 

 

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shall provide a copy of such written notice to Recipient and shall use commercially reasonable efforts to secure the continued provision of that service from such third party or an alternative service provider.  If Provider is unable to secure the continued provision of that service from such third party or an alternative service provider, Provider shall not be required to provide the affected Service.

Section 2.04.  Cooperation.  Provider and Recipient agree to cooperate in providing for an orderly transition of Services, including Services terminated pursuant to Section 6.02, to Recipient or a successor service provider designated by Recipient.  Such cooperation shall be subject to the provisions hereof relating to the provision of Services including that Recipient shall pay to Provider the Service Costs related thereto.

 

ARTICLE 3

Service Costs; Other Charges

 

Section 3.01.  Service Costs Generally.  Unless the applicable Schedule hereto expressly provides otherwise (in which event the parties agree to the costs set forth therein) or the parties agree in writing to a different arrangement, for each period in which Recipient receives a Service hereunder, Recipient shall pay Provider the Service Costs for the applicable Service. In the case of a termination of any or all Services prior to the End Date (other than (x) a termination under Section 6.02(c) or (y) a termination under Section 6.02(f) arising from Provider suffering an Insolvency Event), (i) Recipient shall continue to be responsible for the reasonable out-of-pocket costs associated with such Services until the End Date, (ii) Provider shall use reasonable efforts to eliminate such costs referenced in clause (i) as soon as possible and (iii) until such costs referenced in clause (i) are eliminated they will be treated as Service Costs relating to Services provided prior to termination and may be invoiced as incurred.  Provider may not rely on the prior sentence with respect to the costs for a given contract if the contract was entered into in connection with providing the Services and the term of the contract was more than three months unless Recipient approved Provider entering into such contract.

 

Section 3.02.  Taxes.  (a)  Recipient shall pay all applicable sales or use taxes incurred with respect to provision of the Services.  Such taxes shall be incremental to other payments or charges identified in this Agreement.

 

(b)      All sums payable under this Agreement shall be paid free and clear of all deductions or withholdings unless the deduction or withholding is required by Applicable Law, in which event the amount of the payment due from the party required to make such payment (other than amounts of interest) shall be increased to an amount which after any withholding or deduction leaves an amount equal to

 

 

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the payment which would have been due if no such deduction or withholding had been required.

Section 3.03.  Invoicing and Settlement.  (a) Unless any Schedule hereto indicates otherwise or the parties agree in writing to a different arrangement, Provider shall invoice or notify in writing the Recipient on a monthly basis (not later than 30 days after the end of each month) for the charges for Services hereunder for the prior month (the date of delivery of such invoice, the “Invoice Date”).

 

(b)      Recipient agrees to pay on or before the date (each, a “Payment Date”) that is 30 days after the Invoice Date by wire transfer of immediately available funds payable to the order of Provider to such account(s) designated by Provider all amounts invoiced by Provider pursuant to Section 3.03(a), except for any portion of those amounts reasonably disputed in good faith.  Payment for amounts reasonably disputed in good faith for any Services may be withheld beyond their due date by Recipient until such dispute is resolved pursuant to Section 4.04, in which event the relevant payment shall include interest at the Interest Rate from the date that is 15 days after the original relevant Payment Date to the actual payment date.  In the event of any overpayments by Recipient, Provider agrees to promptly refund any such overpaid amount to Recipient no later than 15 days from the date it is determined that there has been an overpayment.

 

ARTICLE 4

The Services

 

Section 4.01.  Standards of Service.  (a) The level or volume of any specific Service required to be provided to Recipient hereunder shall be at a level or volume consistent in all material respects with the level or volume, as the case may be, of such specific Service as utilized by the Recipient Group during the twelve month period prior to the Distribution Time (the “Baseline Period”).  Provider agrees to consider in good faith any requests by Recipient to modify the level or volume of any specific Service.  Any modification to which Provider agrees will be on such terms and conditions (including pricing) as the parties shall mutually and reasonably agree.

 

(b)      The manner, nature, quality and standard of care applicable to the delivery by Provider of the Services hereunder shall be substantially the same as that of similar services which Provider provided to the Recipient Group during the Baseline Period.

 

(c)      Provider shall have no obligation to provide any Services hereunder in respect of any business, assets or properties not forming part of the Recipient Group’s business as of the Distribution Time.  Provider agrees to consider in good

 

 

8

 

faith any requests by Recipient for the provision of any additional services that Recipient considers are reasonably necessary to accommodate normal growth in Recipient’s business.  Any such additional services to which Provider agrees will be on such terms and conditions (including pricing) as the parties shall mutually and reasonably agree.

Section 4.02.  Changes to Services.  It is understood and agreed that Provider may from time to time modify or change the manner, nature, quality and/or standard of care of any Service provided to Recipient to the extent Provider is making a similar change in the performance of such services for the Provider and its Affiliates and provided that any such modification, change or enhancement will not reasonably be expected to materially affect such Service.  Provider shall furnish to Recipient substantially the same notice (in content and timing), if any, as Provider furnishes to its own organization with respect to such modifications or changes.

 

Section 4.03.  Management of Services By Provider.  Except as may otherwise be expressly provided in this Agreement, the management of and control over the provision of the Services by Provider shall reside solely with Provider and notwithstanding anything to the contrary Provider shall be permitted to choose the personnel, methodology, systems, applications and third party providers it utilizes in the provision of such Services; provided that Provider shall remain responsible for the performance of the Services in accordance with this Agreement.  The provision, use of and access to the Services shall be subject to (i) Provider’s business, operational and technical environment, standards, policies and procedures as in effect from time to time, (ii) Applicable Law and (iii) the terms of this Agreement.

 

Section 4.04.  Liaisons.  (a)  Each party shall designate one representative to act as such party’s primary contact person in connection with the Services (each, a “Liaison”) and each party may also designate a separate liaison for each Service provided hereunder (who shall act as such party’s primary contact person in connection with the applicable Service).  The Liaisons will oversee the implementation and ongoing operation of this Agreement and shall attempt in good faith to resolve disputes between the parties.  The parties have designated their respective initial Liaisons and provided contact information therefor on Schedule B.  The parties shall ensure that their respective Liaisons shall meet in person or telephonically at such times as are reasonably requested by Provider or Recipient to review and discuss the status of, and any issues arising in connection with, the Services or this Agreement.  Each party may re-designate its Liaison from time to time; provided that it shall notify the other party in writing of the name and contact information for the newly designated Liaison in accordance with Section 8.05.

 

(b)      If the Liaisons are unable to make a decision, resolve a dispute or agree upon any necessary action, the unresolved matter shall be referred to the

 

 

9

 

senior legal officer of each of Murphy Oil and Murphy USA notified to the other party for such purpose from time to time, who shall attempt in good faith within a period of 14 days to conclusively resolve any such matter.  If such senior legal officers of the parties are unable to resolve the dispute within 30 days from the date such dispute was submitted for consideration or such longer period as the parties may agree, either party may pursue its remedies under Section 8.07.

 

ARTICLE 5

Disclaimer, Liability And Indemnification

 

Section 5.01.  EXCLUSION OF WARRANTIES.  EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE SERVICES ARE PROVIDED “AS-IS” WITH NO WARRANTIES, AND PROVIDER EXPRESSLY EXCLUDES AND DISCLAIMS ANY WARRANTIES UNDER OR ARISING AS A RESULT OF THIS AGREEMENT, WHETHER EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, NON-INFRINGEMENT OR ANY OTHER WARRANTY WHATSOEVER.

 

Section 5.02. Limitation of Liability.  (a) Recipient agrees that, except for the indemnity obligation set forth in Section 5.04, none of the Provider or its Affiliates or any of its or their respective directors, officers, agents, consultants, representatives and/or employees (each, a “Provider Indemnified Person”) shall have any liability, whether direct or indirect, in contract or tort or otherwise, to any Recipient Entity or any other Person for or in connection with the Services rendered or to be rendered by or on behalf of any Provider Indemnified Person pursuant to this Agreement, the transactions contemplated hereby or any actions or inactions by or on behalf of a Provider Indemnified Person in connection with any such Services or the transactions contemplated hereby, except to the extent any damages have resulted from such Provider Indemnified Person’s gross negligence or willful misconduct in connection with any such Services, actions or inactions.

 

(b)      Notwithstanding the provisions of Section 5.02(a), no Provider Indemnified Person or Recipient Indemnified Person shall be liable for any special, indirect, incidental, consequential or punitive damages of any kind whatsoever in any way due to, resulting from or arising in connection with any of the Services or the performance of or failure to perform Provider’s or Recipient’s obligations under this Agreement, as applicable, except to the extent the same are payable by a party or its Affiliates to an unaffiliated third party in respect of a claim by such third party and are covered by the other party’s indemnification obligations hereunder. This disclaimer applies without limitation (i) to claims arising from the provision of the Services or any failure or delay in connection therewith, (ii) to claims for lost profits or opportunities, (iii) regardless of the form of action, whether in

 

 

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contract, tort (including negligence), strict liability, or otherwise, and (iv) regardless of whether such damages are foreseeable or whether Provider or Recipient, as applicable, or any of its Affiliates has been advised of the possibility of such damages.

(c)      In addition to the foregoing, each party hereto agrees that it shall, in all circumstances, use commercially reasonable efforts to mitigate and otherwise minimize its damages and those of its Affiliates, whether direct or indirect, due to, resulting from or arising in connection with any failure by the other party to comply fully with its obligations under this Agreement.

 

Section 5.03. Indemnification of Provider by Recipient.  Recipient agrees to indemnify and hold harmless each Provider Indemnified Person from and against any damages, and to reimburse each Provider Indemnified Person for all costs, damages, liabilities and fees and expenses (including reasonable attorneys’ fees and expenses and any other expenses reasonably incurred in connection with investigating, prosecuting or defending any Action) (collectively, “Losses”) incurred in investigating, preparing, pursuing, or defending any claim, action, proceeding, or investigation, whether or not in connection with pending or threatened litigation and whether or not any Provider Indemnified Person is a party (collectively, “Actions”), arising out of or in connection with Services rendered or to be rendered by or on behalf of any Provider Indemnified Person pursuant to this Agreement, the transactions contemplated hereby or any actions or inactions by or on behalf of any Provider Indemnified Person in connection with any such Services or transactions; provided that Recipient shall not be responsible for any Losses of any Provider Indemnified Person to the extent such Losses have resulted from such Provider Indemnified Person’s gross negligence or willful misconduct in connection with any of such Services, actions or inactions.

 

Section 5.04. Indemnification of Recipient by Provider.  Provider agrees to indemnify and hold harmless the Recipient, each of its Affiliates and its and their respective directors, officers, agents, consultants, representatives and/or employees (each, a “Recipient Indemnified Person”) from and against any Losses incurred (including in investigating, preparing, or defending any Action) to the extent such Losses have arisen out of the gross negligence or willful misconduct of any Provider Indemnified Person in connection with the Services rendered or to be rendered pursuant to this Agreement.

 

Section 5.05.  Indemnification as Exclusive Remedy.  Without limitation to the termination rights provided under Sections 6.02(b) and 6.02(c) or to the rights under Section 8.08, the indemnification provisions of this Article 5 shall be the exclusive remedy for money damages for breach of this Agreement and any matters relating to this Agreement.

 

 

 

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Section 5.06.  Conduct of Proceedings.  Any proceedings relating to indemnification under Section 5.03 or 5.04 shall be conducted in accordance with the procedures set forth in Section 6.04 of the Separation and Distribution Agreement.

 

 

ARTICLE 6

Term and Termination

 

Section 6.01. Term.  Except as otherwise provided in this Article 6 or Section 8.03, the term of this Agreement with respect to each Service shall commence as of the Distribution Time, and shall cease on the earlier of (i) the date set forth in respect of such Service on the applicable Schedule hereto, (ii) the date that is 18 months after the Distribution Time (the “End Date,” unless extended pursuant to the proviso below) or (iii) such earlier date as determined in accordance with Section 6.02; provided that upon giving prior written notice to Provider at least 30 days prior to the then-applicable End Date, Recipient may extend the End Date until a date that is no more than 24 months after the Distribution Time.  This Agreement shall terminate in its entirety upon the expiration of the terms (as determined pursuant to the preceding sentence) of all Services; provided that the provisions of Articles 3, 5, 6 and 8 and Sections 7.01 and 7.02 shall survive any such termination indefinitely.

 

Section 6.02. Termination. (a) Recipient may from time to time terminate this Agreement with respect to one or more of the Services it receives, in whole or in part, upon giving at least 30 days’ prior notice to Provider.

 

(b)      Provider may terminate any Service or any part thereof it provides at any time if Recipient shall have failed to perform any of its material obligations under this Agreement relating to any such Service, Provider has notified Recipient in writing of such failure and such failure (i) shall have continued uncured for a period of 30 days after receipt by Recipient of written notice of such failure or (ii) is incapable of remedy.  For the avoidance of doubt, the failure by Recipient to pay the full amount of any invoiced amount when due shall be considered a breach of Recipient’s material obligations under this Agreement, unless such failure to pay results from a good faith dispute in accordance with and subject to Section 3.03(b).

 

(c)      Recipient may terminate any Service it receives as provided in the applicable Schedule or at any time if Provider shall have failed to perform any of its material obligations under this Agreement relating to any such Service, Recipient has notified Provider in writing of such failure, and such failure (i) shall have continued for a period of 30 days after receipt by Provider of written notice of such failure or (ii) is incapable of remedy.

 

 

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(d)      At any time following announcement of a transaction involving a Change of Control of Recipient, Provider may elect, by delivery of notice in writing to Recipient, to terminate any or all Services hereunder, such termination to take effect on the date or dates specified by Provider in such notice; provided that without the written consent of Recipient, no such termination of Service shall occur prior to the closing of such Change of Control transaction.

 

(e)      Upon completion of the sale or other disposition of any portion of the Recipient Group’s business, assets or properties, Provider’s obligation to provide any Service in respect of the business, assets or properties so disposed shall terminate automatically and without any notice or other action by Provider, and the aggregate level or volume of such Service required to be provided to the Recipient (and, in the case of a Service, if any, for which the cost is not the Service Cost, the service costs payable by Recipient) in respect thereof shall be reduced appropriately; provided that Provider’s obligation hereunder (if any) to provide Services relating to reporting obligations in respect of such disposed business, assets or properties shall, to the extent related to the period prior to such disposition, not so terminate but, except as the parties may otherwise agree, shall continue until the time they would have terminated absent this Section 6.02(e).

 

(f)      Either party may terminate this Agreement at any time with immediate effect upon serving written notice upon the other party if the other party suffers an Insolvency Event.

 

(g)      For the avoidance of doubt, any notice of termination under this Section 6.02 shall be delivered in accordance with Section 8.05.

 

Section 6.03. Effect of Termination.  (a) Other than as required by Applicable Law, upon termination of any Service pursuant to Section 6.02, Provider shall have no further obligation to provide the terminated Service and Recipient shall have no obligation to pay any fees relating to such Services; provided that, notwithstanding such termination, (i) Recipient shall remain liable to Provider for Service Costs and other fees owed and payable in respect of Services provided prior to the effective date of the termination and (ii) Recipient shall be responsible for the costs referred to in the second sentence to Section 3.01 to the extent set forth therein.

 

(b)      Termination of this Agreement as provided for herein shall not prejudice or affect any rights or remedies which shall have accrued to either party, a Recipient Indemnified Person or a Provider Indemnified Person in respect of Services provided or to have been provided prior to termination.

 

 

13

 

 

ARTICLE 7

Additional Agreements

 

Section 7.01.  Confidential Information.  (a) The parties hereby covenant and agree to keep, and to cause its Affiliates to keep, confidential all Confidential Information relating to the other party or any of such other party’s Affiliates.  Without limiting the generality of the foregoing, each party shall, and shall cause its Affiliates and its and their employees and agents to, exercise the same level of care with respect to Confidential Information relating to the other party or any of its Affiliates as it would with respect to proprietary information, materials and processes relating to itself or any of its Affiliates.  “Confidential Information” shall mean all confidential and proprietary information, materials and processes relating to a party or any Affiliate of such party obtained by the other party or any Affiliate of such other party at any time (whether prior to or after the date hereof) in any format whatsoever (whether orally, visually, in writing, electronically or in any other form) to the extent arising out of the rendering or receipt of Services hereunder (or preparations for the same or for the termination thereof) and shall include, but not be limited to, economic and business information or data, business plans, computer software and information relating to employees, vendors, customers, products, financial performance and projections, processes, strategies and systems but shall not include (i) information of the other party or its Affiliates which is or becomes generally available to the public other than by release in violation of the provisions of this Section 7.01(a), (ii) information of the other party or its Affiliates which is or becomes available on a non-confidential basis to a party from a source other than the other party or its Affiliates, provided the party in question reasonably believes that such source is not or was not bound by an obligation to the other party or one of its Affiliates to hold such information confidential and (iii) information developed independently by a party or its Affiliates without use or reference to otherwise Confidential Information of the other party or its Affiliates.  Except with the prior written consent of the other party, each party will, and will cause its Affiliates to, use the other party’s and its Affiliates’ Confidential Information only in connection with the performance of its obligations hereunder and each party shall, and shall cause its Affiliates to, use commercially reasonable efforts to restrict access to the other party’s and its Affiliates’ Confidential Information to those employees of such party and its Affiliates requiring access for the purpose of providing or receiving Services hereunder.  Notwithstanding any provision of this Section 7.01(a) to the contrary, a party may disclose such portion of the Confidential Information relating to the other party or its Affiliates to the extent, but only to the extent, the disclosing party reasonably believes that such disclosure is required under Applicable Law or the rules of a Governmental Authority; provided that if permissible under Applicable Law and practicable, the disclosing party shall first notify the other party hereto of such requirement and allow such party a reasonable opportunity to seek a protective order or other appropriate remedy to prevent such disclosure.  The

 

 

14

 

parties acknowledge that money damages would not be a sufficient remedy for any breach of the provisions of this Section 7.01(a) and that the non-breaching party shall be entitled to equitable relief in a court of law in the event of, or to prevent, a breach of this Section 7.01(a).  In the event that a party learns or has reason to believe that Confidential Information of the other party or its Affiliates has been disclosed or accessed by an unauthorized Person, such party will immediately give notice of such event to its Liaison at the other party.

 

(b)      Upon the termination of this Agreement, except to the extent otherwise required by Applicable Law and/or its internal policies and procedures, each party shall, at its election, promptly return to the other party or destroy all Confidential Information of the other received under or pursuant to the performance of this Agreement (including, to the extent practicable, all copies (in any and all media) and summaries thereof) that is within the such party’s or its Affiliates’ possession, power, custody or control; provided that any Confidential Information retained by such party or its Affiliates has shall continue to be subject to Section 7.01(a).  Promptly upon the request of a party, the other party shall confirm in writing to such first party that it has complied with this Section 7.01(b).

 

Section 7.02.  Ownership of Assets.  (a) Murphy Oil Systems and any and all enhancements thereof or improvements thereto are and shall remain the sole exclusive property of the Murphy Oil Entities and/or its Affiliates and/or its or their suppliers as applicable.

 

(b)      Murphy USA Systems and any and all enhancements thereof or improvements thereto are and shall remain the sole exclusive property of the Murphy USA Entities and/or its Affiliates and/or its or their suppliers as applicable.

 

(c)      With respect to any Systems that a Murphy Oil Entity, a Murphy USA Entity, or any of their respective Affiliates, as applicable, is required to maintain or enhance hereunder, as between the Murphy Oil Entities and the Murphy USA Entities, all right, title and interest in and to such enhancements and any related documentation, whether created by the party that provides the Service or any employee, contractor, Affiliate or supplier on such party’s behalf, shall be owned exclusively by and vested exclusively in the party or its Group member by whom the applicable System is owned, licensed or provided.

 

(d)      As between any Murphy Oil Entity, on the one hand, and any Murphy USA Entity, on the other hand, all right, title and interest in and to all data processed hereunder shall be owned exclusively by the Murphy Oil Entity or the Murphy USA Entity that originally supplied it to the other, provided that all data created hereunder in connection with the delivery of any Service to Recipient or otherwise on behalf of Recipient shall be owned exclusively by Recipient.  Each of Murphy Oil and Murphy USA hereby assign to the other, and shall cause any of its

 

 

15

 

respective employees, contractors, Affiliates, suppliers or third parties performing Services on its behalf pursuant to this Agreement to assign to the other, as applicable, all right, title and interest that any Murphy Oil Entity or any Murphy USA Entity, as applicable, may have in the other’s or its Affiliates’ data acquired hereunder.

 

Section 7.03.  Security.  Each party, its Affiliates and their respective employees, authorized agents and subcontractors shall only use or access such other party’s and its Affiliates’ Systems, premises or data to the extent such Person is authorized by the other party or pursuant to the terms hereof.  Each party, its Affiliates and their employees, authorized agents and subcontractors shall comply with the other party’s and its Affiliates’ policies and procedures in relation to the use and access of the other party’s and its Affiliates’ Systems provided that they do not conflict with the terms of this Agreement; provided that to the extent such policies and procedures of Recipient make the provision of a given Service impracticable, Provider will be relieved of the obligation to provide such Service; provided further that Provider will give reasonable advance notice prior to terminating any Services pursuant to the preceding proviso.

 

Section 7.04.  Access to Information and Audit.  Subject to Applicable Law, Recipient shall, and shall cause its Affiliates to, with respect to any Service during the term of such Service, upon reasonable advance notice, afford Provider and its representatives reasonable access, during normal business hours, to the employees, properties, books and records and other documents that are reasonably requested in connection with the provision and receipt of such Service hereunder.  Recipient or its representatives shall have reasonable access, after requesting such access in writing in advance, during normal business hours to such records for the purpose of auditing and verifying the accuracy of the invoices submitted regarding such amounts due.  Any such audits performed by or on behalf of Recipient shall be at Recipient’s sole cost and expense.  Recipient shall have the right to audit Provider’s books for a period of one (1) year after the month in which the Services were rendered, except in those circumstances where contracts by Provider or any of its Affiliates with third parties limit the audit period to less than one year.

 

Section 7.05.  Compliance with Applicable Law.  Each party shall (and shall cause its Affiliates to) at all times fully comply with all Applicable Law to which such party and its Affiliates (to the extent such Affiliates are engaged in the receipt or provision of Services) is subject in connection with the receipt or provision of Services hereunder, as applicable.

 

Section 7.06.  Labor Matters.  All labor matters relating to employees of Provider and its Affiliates (including, without limitation, employees involved in the provision of Services to Recipient or any of its Affiliates) shall be within the exclusive control of Provider, and Recipient shall not take any action affecting such matters.  Nothing in this Agreement is intended to transfer the employment of

 

 

16

 

employees engaged in the provision of any Service from one party or its Affiliates to the other or its Affiliates.  All employees and representatives of a party and any of its Affiliates will be deemed for all compensation, employee benefits, tax and social security contribution purposes to be employees or representatives of such party or its Affiliates (or their subcontractors) and not employees or representatives of the other party or any of its Affiliates (or their subcontractors).  In providing the Services, such employees and representatives of Provider and its Affiliates (or their subcontractors) will be under the direction, control and supervision of Provider or its Affiliates (or their subcontractors) and not of Recipient or its Affiliates.

 

Section 7.07.  Record Retention.  Each party shall take reasonable steps to preserve and maintain complete and accurate accounts, books, and records of and supporting documentation relating to the Services provided hereunder, which records shall be retained by such party and/or its Affiliates for the period of time specified in such party’s record retention policies and procedures (which shall comply with Applicable Law).

 

 

ARTICLE 8

Miscellaneous

 

Section 8.01. No Agency; Independent Contractor Status.  Nothing in this Agreement shall constitute or be deemed to constitute a partnership or joint venture between the parties hereto or constitute or be deemed to constitute any party the agent or employee of the other party for any purpose whatsoever and neither party shall have authority or power to bind the other or to contract in the name of, or create a liability against, the other in any way or for any purpose.  The parties hereto acknowledge and agree that Provider is an independent contractor in the performance of each and every part of this Agreement and nothing herein shall be construed to be inconsistent with this status.  Subject to the terms and conditions of this Agreement, Provider shall have the authority to select the means, methods and manner by which any Service is performed.

 

Section 8.02. Subcontractors.  Provider may hire or engage one or more subcontractors to perform all or any of its obligations under this Agreement; provided that, (i) Provider shall use the same degree of care in selecting any subcontractors as it would if such subcontractor was being retained to provide similar services to Provider and (ii) Provider shall in all cases remain responsible for ensuring that obligations with respect to the standards of services set forth in this Agreement are satisfied with respect to any Service provided by a subcontractor hired or engaged by Provider.

 

Section 8.03. Force Majeure. (a) For purposes of this Section 8.03, “force majeure” means an event beyond the reasonable control of either party, which by

 

 

17

 

its nature was not foreseen by such party, or, if it was foreseen, was not reasonably avoidable, and includes without limitation, acts of God, storms, floods, riots, fires, sabotage, civil commotion or civil unrest, interference by civil or military authorities, threat, declaration, continuation, escalation or acts of war (declared or undeclared) or acts of terrorism, failure or shortage of energy sources, raw materials or components, strike, walkout, lockout or other labor trouble or shortage, delays by unaffiliated suppliers or carriers, and acts, omissions or delays in acting by any Governmental Authority or the other party.

 

(b)      Without limiting the generality of Section 5.02, neither party shall be under any liability for failure to fulfill any obligation to provide Services under this Agreement, so long as and to the extent to which the fulfillment of such obligation is prevented, frustrated, hindered, or delayed as a consequence of circumstances of force majeure; provided that (i) such party shall have used commercially reasonable efforts to minimize to the extent practicable the effect of force majeure on its obligations hereunder and (ii) nothing in this Section 8.03 shall be construed to require the settlement of any strike, walkout, lockout or other labor dispute on terms which, in the reasonable judgment of the affected party, are contrary to its interests.  It is understood that the settlement of a strike, walkout, lockout or other labor dispute will be entirely within the discretion of the affected party.  The party affected by the force majeure event shall notify the other party of that fact as soon as practicable.

 

Section 8.04. Entire Agreement.  This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter hereof.

 

Section 8.05. Notices.  Any notice, instruction, direction or demand under the terms of this Agreement required to be in writing shall be duly given upon delivery, if delivered by hand, facsimile transmission, or mail, to the following addresses:

 

If to Murphy Oil to:

 

Murphy Oil Corporation

200 Peach Street

P.O. Box 7000

El Dorado, Arkansas 71731

Attn: General Counsel

Facsimile: 870-864-6489

 

18

 

 

If to Murphy USA to:

 

Murphy USA Inc.

200 Peach Street

P.O. Box 7300

El Dorado, Arkansas 71731

Attn: General Counsel

Facsimile: 870-881-6893

 

or such other address or facsimile number as such party may hereafter specify for the purpose by notice to the other party hereto; provided that any notice of termination under Section 6.02 must be signed by the applicable department head of the terminating party, or in the case of termination of more than one Service, the applicable department heads of the terminating party, for the relevant Service(s).  All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. in the place of receipt and such day is a Business Day in the place of receipt.  Otherwise, any such notice, request or communication shall be deemed not to have been received until the next succeeding Business Day in the place of receipt.

 

Section 8.06.  Governing Law.  This Agreement shall be governed by and construed in accordance with the law of the State of Arkansas, without regard to the conflicts of law rules of such state.

 

Section 8.07.  Jurisdiction. The parties hereto agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought in the United States District Court for the Western District of Arkansas, El Dorado Division or any Arkansas State court sitting in El Dorado, Arkansas, so long as one of such courts shall have subject matter jurisdiction over such suit, action or proceeding, and that any cause of action arising out of this Agreement shall be deemed to have arisen from the transaction of business in the State of Arkansas, and each of the parties hereby irrevocably consents to the exclusive jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.  Process in any such suit, action or proceeding may be served on any party at such party’s corporate headquarters.  Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 8.05 shall be deemed effective service of process on such party.

 

 

19

 

Section 8.08. Specific Performance.  The parties hereto agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof in any court set forth in Section 8.07, in addition to any other remedy to which they are entitled at law or in equity.

 

Section 8.09. WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

Section 8.10. Severability.  If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other Governmental Authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party.  Upon such a determination, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.

 

Section 8.11. Amendments and Waivers.  (a)  Any provision of this Agreement (including the Schedules hereto) may be amended or waived if, and only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by Murphy Oil and Murphy USA, or in the case of a waiver, by the party against whom the waiver is to be effective.

 

(b)      No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.   The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by Applicable Law.

 

Section 8.12.  Successors and Assigns.  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided that no party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the prior written consent of the other party hereto.

 

 

20

 

Section 8.13.  Third Party Beneficiaries.  Except as set forth in Sections 5.02, 5.03 and 5.04, no provision of this Agreement is intended to, or shall, confer any third party beneficiary or other rights or remedies upon any Person other than the parties hereto.

 

Section 8.14.  Counterparts.  This Agreement may be executed in any  number of counterparts, each of which shall be deemed an original and all of which, when taken together, shall constitute one agreement.

 

Section 8.15.  Construction and Interpretation.  The parties hereto agree that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be applied in the construction or interpretation of this Agreement.  Each party shall cause to be performed all actions, agreements and obligations set forth herein to be performed by any member of such party’s Group.

 

Section 8.16.  Conflict of Terms.  If the terms of this Agreement conflict with terms of the Separation and Distribution Agreement with respect to any matter, then the terms of this Agreement will control.

 

 

[Remainder of page intentionally left blank]

 

 

21

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.

 

 

	
MURPHY OIL CORPORATION

	
 

By:

	
/s/ Walter K. Compton

	  	
Name:

	
Walter K. Compton

	  	
Title:

	
Senior Vice President and General Counsel

 

	
MURPHY USA INC.

	
 

By:

	
/s/ John A. Moore

	  	
Name:

	
John A. Moore

	  	
Title:

	
Senior Vice President, General Counsel and Secretary

 

 

 

 

 

 

(Signature Page to Transition Services Agreement)

 

 

 

 

 

Schedule A

 

Services

 

	
TRANSITION SERVICES AGREEMENT – MASTER SCHEDULE OF SERVICES

 

	
UNIT

	
AREA/CC NAME

	
SERVICES PROVIDED

	
TERMS

	
 

TAX

	
 

Tax compliance, audit & provisioning

	
 

Services MUR will provide to MUSA:

 

A1)     Federal and state income tax planning and research support

A2)     Income tax provisioning support (monthly and/or quarterly)

A3)     Post-filing income tax return reconciliations to accrual support ("true-ups")

A4)     Assistance with income tax estimated payments and tax compliance support for federal income and state income and franchise tax return filings (tax elections, tax return reviews, CorpTax software application usage, and tax depreciation knowledge transfer)

A5)     Any other incidental income tax support services currently conducted for MUSA and its subsidiaries by the MUR income tax personnel

 

Services MUSA will provide to MUR:

 

B1)     Periodic assistance in knowledge transfer and support related to Sales/Use and Ad Valorem tax matters involving MUR or upstream assets, processes and records

B2)     MUSA income tax personnel will provide interim tax compliance support on any pre-spin 2013 (as well as any post-spin 2013) federal consolidated or state income tax filings (where they have past experience or unique 

 

	
 

1)    Services, whether by MUR or MUSA, will be provided during normal business hours of MUR and MUSA and may include overtime hour support, if necessary, to meet specific financial close or tax due date compliance deadlines

 

2)    MUR support to MUSA will be overseen by these key division personnel:

·      Income Tax Compliance (Mgr. Tax Compliance)

·      Income Tax Audits (Asst. Mgr. Audit and International Tax)

·      Income Tax Provisioning (Asst. Mgr. Financial Tax)

·      Excise/Sales/Ad Valorem Tax (Asst. Mgr. Excise and sales Tax)

·      Tax Research (Mgr. Research and Foreign Tax)

 

 3)   MUSA support to MUR will be overseen by the department head or employee designated most knowledgeable or most experienced regarding the subject:

 

·      Excise/Sales Tax Support

·      Ad Valorem Tax

·      Income Tax Compliance

 

 

 

 

 

 

 

 

A-1

 

 

 

	 	 	
individual knowledge) necessary for the remaining MUR income tax group to be tax compliant

	 

 

 

 

A-2

 

 

	  

AUDIT

	  

Internal audit

	  

Services MUR will provide to MUSA:

 

A1)   Consulting on historical audit activity as required

 

Services MUSA will provide to MUR:

 

B1)     Periodic assistance in knowledge transfer and support related to operated JV audit coordination activities

B2)     eriodic assistance in knowledge transfer and support related to non-operated JV audit activities including consulting on historical audit activity

	  

1)    Services, whether by MUR or MUSA, will be provided during normal business hours of MUR and MUSA and may include overtime hour support, if necessary, to meet specific due date deadlines

 

2)    MUR support to MUSA will be overseen by these key division personnel:

·      Chief Audit Executive responsibilities to include Audit Committee communications, risk assessment and strategic direction (Director – Internal Audit)

·      Quality Assurance and TeamMate Administration (Designee of the Director of Internal Audit)

 

3)    MUSA support to MUR will be overseen by the department head or employee designated most knowledgeable or most experienced regarding the subject :

    ·      Non-operated JV audits

    ·      Operated JV audits

	
 

ERM

	
 

Enterprise Risk Management

 

	
 

Services MUR will provide to MUSA:

 

A1)     Operation of Middle Office for Corn Hedging Program

A2)     Completion and delivery of Annual Enterprise Risk Assessment

A3)     Risk Analysis services as requested by MUSA

A4)     Facilitation of Business Continuity Planning with head of MUSA program

 

	
 

1)    Services provided by MUR to MUSA will be itemized in a written statement of work to be performed

 

2)    MUR support to MUSA will be overseen by the Director of Enterprise Risk Management

 

3)    Improvements will be offered to MUSA; however, MUSA remains responsible for implementation of suggested improvements

 

 

	  

EHS

	  

Enterprise Health and Safety

	   

Services MUR will provide to MUSA:

 

A1)    General EHS consulting as requested

A2)    EHS data support and analysis for any 

	  

1)    Services, whether by MUR or MUSA, will be provided during normal business hours of MUR and MUSA

 

 

A-3

 

 

	
 

	
 

	
transactions involving former MUR/MUSA Sites

A3)     Regulatory support as requested

A4)     Any other incidental EHS support services currently provided for MUSA by MUR EHS

 

Services MUSA will provide to MUR:

 

B1)     Periodic assistance in knowledge transfer and support related to EHS matters involving corporate or downstream assets, processes and records

B2)     Any EHS  filings (where MUSA EHS staff have past experience or unique individual knowledge) necessary for MUR legacy issues, as appropriate

	
2)    MUR support to MUSA will be overseen by the Director of Corporate EHS

 

3)    MUSA support to MUR will be overseen by these key division personnel: (a)EHS Manager with responsibility for any specific issue in question, including retail remediation and retail safety, and (b) Sr. Director, Midstream EHS

 

 

	
 

TREASURY

	
 

Treasury

	
 

MUR will provide to MUSA periodic assistance in knowledge transfer and support related to the following processes:

 

A1)    Cash disbursements

A2)    Cash receipts

A3)    Cash management

A4)    Bank account maintenance

A5)    Working capital management

A6)    Reporting

 

MUSA will provide to MUR periodic assistance in knowledge transfer and support related to the following processes:

 

B1)    Cash disbursements

B2)    Cash receipts

B3)    Cash management

B4)    Bank account maintenance

B5)    Working capital management

B6)    Reporting

	
 

 1)   Services, whether by MUR or MUSA, will be provided during normal business hours of MUR and MUSA and may include overtime hour support, if necessary, to meet specific due date deadlines

 

 

 

 

 

A-4

 

 

 

	
 

LAW

	
 

Legal

	
 

Services MUR will provide to MUSA:

 

A1)     Securities law consultation and assistance

A2)     Labor law/EEOC consultation and assistance

A3)     Clerical assistance

A4)     Any other incidental legal support services currently conducted for MUSA by MUR legal personnel

 

Services MUSA will provide to MUR:

 

B1)      Assistance with disposition of UK downstream assets (Murphy Petroleum)

B2)      Assistance with Lobbying Reporting/Corporate PAC/Governmental Affairs issues

B3)      Garnishment/Child Support

B4)      Clerical assistance

B5)      Any other incidental legal support services currently conducted for MUR by MUSA legal personnel

 

	
 

1)    Services, whether by MUR or MUSA, will be provided during normal business hours of MUR and MUSA and may include overtime hour support, if necessary, to meet specific due date compliance deadlines

 

2)    MUR support to MUSA will be overseen by these key division personnel:

•  Securities law (Sr. Attorney with knowledge)

•  Labor/EEOC (Mgr. Law and Sr. Attorney with knowledge)

•  Clerical assistance (staff)

 

3)    MUSA support to MUR will be overseen by these key division personnel:

•  UK Downstream  (Associate General Counsel)

•  Lobbying/PAC/Governmental Affairs (Associate General Counsel)

•  Garnishment/Child Support (staff)

•   Clerical assistance (staff)

 

 

	
 

FINANCE

	
 

Controller / Finance

	
 

Services MUR will provide to MUSA:

 

A1)     Knowledge sharing for Hyperion, JDE, and APX systems and subsystems as requested

A2)     Knowledge sharing for SEC reporting, 10-Q and 10-K prep, XBRL services, printing and administration of SEC reporting and all related ancillary services such as annual report printing

A3)     Assistance with reconciliation of information between accounting systems to ensure that both Company's systems are working properly from a financial reporting perspective

	
 

1)    Services, whether by MUR or MUSA, will be provided during normal business hours of MUR and MUSA and may include overtime hour support, if necessary, to meet specific financial close or tax due date compliance deadlines

 

2)    MUR support to MUSA will be overseen by key division personnel designated most knowledgeable or experienced regarding the following subjects:

·  Hyperion support and guidance

·  JDE support and guidance

·  APX system support and guidance

·  SEC reporting, 10-Q and 10-K prep, 

 

 

 

A-5

 

 

	 	 	  

A4)     Assistance in developing unclaimed property reporting for MUSA

A5)     Assistance with Sarbanes Oxley testing and results as requested for pre transaction periods as well as allowing access to records for MUSA SOX testing post transaction as requested

A6)     Provide employee time regarding Ethanol plant activities for transition of responsibilities.

 

Services MUSA will provide to MUR:

 

B1)      Knowledge sharing for Hyperion, JDE, and APX systems and related subsystems as requested

B2)      Audit support and access to historical data for any systems controlled by MUSA post transaction (i.e., Solarc, PDI, Reconnet, etc.)

B3)      Assistance with reconciliation of information between accounting systems to ensure that both Company's systems are working properly from a financial reporting perspective

B4)      Assistance with Sarbanes Oxley testing and results as requested for pre transaction periods as well as allowing access to records for Murphy SOX testing post transaction as requested

B5)      MUSA station banking group to assist with establishing a new bank account reconciliation function within Murphy Controller's department post spin

	
 

printing and admin of SEC reporting and other services

·  Reconciliation services between MUR and MUSA

·  XBRL services

·  Unclaimed Property

·  Sarbanes Oxley testing and results / TSA related testing between companies

 

3)    MUSA support to MUR will be overseen by the department head or employee designated most knowledgeable or experienced regarding the subject:

·   Hyperion support and guidance

·  JDE support and guidance

·  APX system support and guidance

·  Solarc, PDI, Great Plains and Reconnet along with any other downstream accounting systems

·  Reconciliation services between MUSA and MUR

·  Sarbanes Oxley testing and results

·  Station banking to assist with setup of reconciliation process for bank accounts

 

 

 

 

A-6

 

 

	
 

CORPORATE IT

	
 

Backup and Regulatory Audit Requests

	
 

Services MUR will provide to MUSA:

 

Restoration of files from backup tapes held by MUR. The availability of the requested files will be subject to MUR's normal tape retention policy

 

Both MUR and MUSA will provide, when requested, data, reports or information related to any IT regulatory compliance audits

	
 

1)    Services will be provided during MUR's normal business hours except in the event of a Declared Emergency. A Declared Emergency is defined as an event mutually identified by the designated MUR and MUSA management in which critical business systems are inoperative, impaired or otherwise unavailable for immediately essential business activity

 

2)    Best efforts will be made to respond to a Declared Emergency, as defined above, within two hours of the request.  Best efforts will be made to respond to all other requests for services within one business day of the request. No other SLA will be required or provided

 

3)    Support services will be overseen by the MUR Director Global IT Operations

 

4)    Services regarding regulatory compliance audit requests will be managed by each company’s respective head of IT

 

5)    Both parties will use diligent good faith efforts to respond to any regulatory compliance audit requests within five (5) business days, but there is no further SLA provided or required

	
 

CORPORATE IT

	
 

Oracle Hyperion

	
 

MUR and MUSA will provide services to each other requiring expert knowledge of the Oracle Hyperion system provided and to the extent that such knowledge exists within the requested IT organization at the time of the requested service. Services will include, but not be limited to, consultation, problem resolution and knowledge transfer. Services will not include ongoing routine system administration, maintenance, support, or development

	
 

1)    Services will be provided during MUR's normal business hours except in the event of a Declared Emergency, as defined above

 

2)    Best efforts will be made to respond to a Declared Emergency within two hours of the request. Best efforts will be made to respond to all other requests for services within one business day of the request. No other SLA will be required or provided

 

 

 

 

A-7

 

 

	 	 	 	
3)    Support services will be overseen by the MUR Director System Support and MUSA Manager

	
 

CORPORATE IT

	
 

Network

	
 

MUR will provide to MUSA services requiring expert knowledge of routers, switches and other network devices and systems provided and to the extent that such knowledge exists within the MUR IT organization at the time of the requested service. Services will include, but not be limited to, consultation, problem resolution and knowledge transfer. Services will not include ongoing routine system administration, maintenance, support, or development

	
 

1)    Services will be provided during MUR's normal business hours except in the event of a Declared Emergency, as defined above

 

2)    Best efforts will be made to respond to a Declared Emergency within two hours of the request. Best efforts will be made to respond to all other requests for services within one business day of the request. No other SLA will be required or provided

 

3)    Support services will be overseen by the MUR Director Global IT Operations

	
 

CORPORATE IT

	
 

COBOL

	
 

MUSA will provide to MUR support services requiring expert knowledge of the in-house developed HR/payroll related systems provided and to the extent that such knowledge exists within the MUSA IT organization at the time of the requested service. Services will include, but not be limited to, consultation, problem resolution and knowledge transfer. Services will not include ongoing routine system administration, maintenance, support, or development

	
 

1)    Services will be provided during MUR's normal business hours except in the event of a Declared Emergency, as defined above

 

2)    Best efforts will be made to respond to a Declared Emergency within two hours of the request. Best efforts will be made to respond to all other requests for services within one business day of the request. No other SLA will be required or provided

 

3)    Support services will be overseen by a MUSA IT Manager

	
 

CORPORATE IT

	
 

JD Edwards

	
 

MUR will provide to MUSA services requiring expert knowledge of the Oracle JD Edwards system provided and to the extent that such knowledge exists within the MUR IT organization at the time of the requested service. Services will include, but not be limited to, consultation, problem resolution and knowledge transfer. Services will not 

	
 

1)    Services will be provided during MUR's normal business hours except in the event of a Declared Emergency, as defined above

 

2)    Best efforts will be made to respond to a Declared Emergency within two hours of the request. Best efforts will be made to 

 

 

 

A-8

 

 

	 	 	include ongoing routine system administration, maintenance, support, or development	
       respond to all other requests for services within one business day of the request. No other SLA will be required or provided

 

3)    Support services will be overseen by the MUR Director Systems Support

	
 

CORPORATE IT

	
 

Vault

	
 

MUR will provide MUSA services requiring expert knowledge of the EMC Vault system provided and to the extent that such knowledge exists within the MUR IT organization at the time of the requested service. Services will include, but not be limited to, consultation, problem resolution and knowledge transfer. Services will not include ongoing routine system administration, maintenance, support, or development

	
 

1)    Services will be provided during MUR's normal business hours except in the event of a Declared Emergency, as defined above

 

2)    Best efforts will be made to respond to a Declared Emergency within two hours of the request. Best efforts will be made to respond to all other requests for services within one business day of the request. No other SLA will be required or provided

 

3)    Support services will be overseen by the MUR Director Global IT Operations

	
 

CORPORATE IT

	
 

Documentum

	
 

MUSA will provide to MUR support services requiring expert knowledge of the EMC Documentum/APX system provided and to the extent that the knowledge exists within the MUSA IT organization at the time of the requested service. Services will include, but not be limited to, consultation, problem resolution and knowledge transfer. Services will not include ongoing routine system administration, maintenance, support, or development

	
 

1)    Services will be provided during MUR's normal business hours except in the event of a Declared Emergency, as defined above

 

2)    Best efforts will be made to respond to a Declared Emergency within two hours of the request. Best efforts will be made to respond to all other requests for services within one business day of the request. No other SLA will be required or provided

 

3)    Support services will be overseen by a MUSA IT manager

 

 

 

A-9

 

 

 

	
 

CORPORATE IT

	
 

Lotus Notes

	
 

MUR will provide to MUSA services requiring expert knowledge of the IBM Lotus Notes system provided and to the extent that Such knowledge exists within the MUR IT organization at the time of the requested service. Services will include, but not be limited to, consultation, problem resolution and knowledge transfer. Services will not include ongoing routine system administration, maintenance, support, or development

	
 

1)    Services will be provided during MUR's normal business hours except in the event of a Declared Emergency, as defined above

 

2)    Best efforts will be made to respond to a Declared Emergency, within two hours of the request. Best efforts will be made to respond to all other requests for services within one business day of the request. No other SLA will be required or provided

 

3)    Support services will be overseen by the MUR Director Global IT Operations

	
 

ADMIN & FACILITIES

	
 

Administrative Services

	
 

The MUR Administrative Services group will function as it does prior to the  transaction, Details regarding Administrative Services are further set forth in the Lease Agreement regarding the building located at 200 Peach Street, El Dorado, AR

 

	
 

These services will be coordinated by MUR’s Director of Administrative Services and MUSA’s General Counsel

	
 

CREDIT

	
 

Credit

	
 

MUR and MUSA will each provide the other with the following services:

 

A1)     Financial analysis of current and new customers

A2)     Manage and handle negotiations of guarantees

A3)     Miscellaneous functions related to evaluating credit, risk mitigation, and   exposures for the other entity.

 

	
 

1)    Services, whether by MUR or MUSA, will be provided during normal business hours of MUR and MUSA and may include overtime hour support, if necessary

 

2)    Financial analysis and risk mitigation support will be managed by each company’s Manager and Supervisor of Credit

 

3)    Guarantee execution and negotiation support will be managed by each company’s Sr. Credit Assistant

 

4)    Administrative and collections support will be managed by each company’s Credit Analysts and Credit Assistants.

	PAYROLL	 Payroll 	 MUR will administer payroll for MUSA in	1)    Services will be provided during normal

 

 

 

A-10

 

 

	
 

 

	
 

Administration

	
 

the same manner as immediately prior to the transaction.  These services include, but are not limited to:

 

A1)     Banking Authorization

A2)     Deductions Tracking and Reporting

A3)     Deductions Not Taken Calculations and Tracking

A4)     Earnings Tracking and Management

A5)     Processing Imputed Income for Payroll

A6)     Disability Income Processing

A7)     Retro Pay Processing

A8)     Payroll Processing

A9)     Management of (Money Network) Pay Cards

A10)   Checks and Advices Creating and Mailing

A11)   Interim Check Processing

A12)   Accounting (e.g., Vacation Liability Calculation, General Ledger Interface Reconciliation)

A13)   Tax Filing

A14)   Year End Processing

A15)   Employee Support

A16)   Reporting

A17)   Garnishments Processing

A18)   Support outsourcing of the current MUSA payroll administration function in a consulting role by sharing knowledge on the current state scope, processes, and technology

	
 

business hours of MUR and MUSA and may include overtime hour support, if necessary, to meet specific due date deadlines

 

 

NOTE:  Printers will be ordered by MUR for the service recipient, which cannot be returned. These charges may be invoiced if service is terminated early.

 

 

 

 

A-11

 

 

	
 

HUMAN RESOURCES

	
 

Benefits Administration

	
 

Services MUR will provide to MUSA:

 

A1)     Assistance with benefits administration for all Employee Benefit programs that are currently offered to retail employees prior to the transaction date.  Includes all duplicated or newly created programs established as of the effective date of the transaction

A2)     Assistance with processing of benefit enrollments, changes, etc.

A3)     Assistance with payroll processing as it relates to benefit deductions, etc., including reconciling and processing vendor payments

A4)     Assistance with processing employee deductions and vendor premium payments and forwarding to various vendors

A5)     Assistance with FMLA and other sick leave administration

A6)     Assistance with employee questions

A7)     Assistance with annual renewals of employee benefit programs

A8)     Assistance with COBRA administration (initial notices and continuation benefits)

A9)     Assistance with compliance requirements such as 5500    reports, PBGC, ERISA, etc.

A10)   Assistance with annual census data

A11)   Assistance with developing and providing employee communications as requested for compliance purposes or as needed to communicate benefit plans

A12)   Assistance with year-end bonus, LTI and STI calculations

A13)   Assistance with 2014 AAP/EEO-1/Vets 100 reports.

A14)   Assistance with training of new benefits staff as needed

A15)   Assistance with Health Care Reform issues

	
 

1)    Services, whether by MUR or MUSA, will be provided during normal business hours of MUR and MUSA and may include overtime hour support, if necessary

 

 

 

 

 

A-12

 

 

	 	 	  

A16)   Advisory services on policies and programs, if required

A17)   Support outsourcing of the current MUSA benefit administration function in a consulting role by sharing knowledge on the current state scope, processes, and technology

 

Out of Scope Services MUR will not provide to MUSA:

 

AY)    Assistance with new benefit programs created after the transaction date, except as may be required due to national health care reform

AZ)    Assistance with modifying or changing existing programs after the transaction date, except as may be required due to national health care reform

 

Services MUSA will provide to MUR:

 

B1)     Providing access to employee data as needed

B2)     Providing access to Benefits Staff transferred to MUSA to allow for orderly transition on both sides

B3)     Advisory services on policies and programs, if requested

	 
	
 

INSURANCE

	
 

Corporate Insurance

	
 

Services MUR will provide to MUSA:

 

A1)    Assistance training personnel as requested

A2)    Policy renewal support

A3)    Assistance with contract review as requested

A4)    Assistance with administering claims as requested

 

Services MUSA will provide to MUR:

 

B1)     Assistance with training of replacement personnel as   requested

B2)     Policy renewal support

 

	
 

 1)   Services, whether by MUR or MUSA, will be provided during normal business hours of MUR and MUSA and may include overtime hour support, if necessary, to meet specific deadlines

 

 2)   MUR support to MUSA will be overseen by these key personnel:

· Assistance with training of replacement personnel as requested (Claims Mgr.)

· Policy renewal support (Director Corporate Insurance)

· Assistance with contract review (Director Corporate Insurance)

· Assistance with administering claims as 

 

 

 

A-13

 

 

	 	 	  

B3)    Assistance with contract review

B4)    Assistance with administering claims as requested

B5)    Administrative support as requested

	
 

needed (Claims Mgr.) 

 

 3)   MUSA support to MUR will be overseen by these key personnel:

·  Assistance with training of replacement personnel as needed (Insurance Asst.)

·  Policy renewal support (Mgr. Insurance)

·  Assistance with contract review (Claims Asst.)

·  Assistance with administering claims as needed (Sr. Insurance Analyst)

·  Administrative support as needed (Insurance Asst.)

 

NOTE: Lease of a satellite claims office (SCO) expires December 31, 2013.  The SCO houses both MUR and MUSA employees.  If requested by either MUR OR MUSA, the SCO lease will be extended to December 31, 2014 at a similar rate.  Afterwards, if either MUR or MUSA request, the SCO lease will be extended on a monthly basis.  At the end of the SCO lease, any/all files, furniture, and equipment at that location will be the property of MUSA

 

Lease and office equipment/supplies cost for the SCO will be invoiced monthly and should be settled within 30 days of the invoice date.  There will be one monthly invoice from each company to the other.  Costs for the SCO will be allocated 40% to MUR and 60% to MUSA

 

 

A-14

 

 

Schedule B

 

Liaisons

 

Murphy Oil: John Eckart

 

Murphy USA: Donald SmithEXHIBIT 10.3  

 

 

 

 

EMPLOYEE MATTERS AGREEMENT

 

 

by and between

 

 

MURPHY OIL CORPORATION

 

 

and

 

 

MURPHY USA INC.

 

 

 

Dated as of August 30, 2013

 

 

 

  

  

  

TABLE OF CONTENTS

 

Page

 

 

ARTICLE 1

 

Definitions

 

	
Section 1.01.  Definitions

	
1

	
ARTICLE 2

	
General Allocation of Liabilities

	 	 
	
Section 2.01.  Allocation of Liabilities Generally.

	
5

	
Section 2.02.  Method of Settlement

	
6

	
Section 2.03.  Further Assurances.

	
6

	
Section 2.04.  Assignment of Certain Rights; Non-Solicitation.

	
7

	 	 
	
ARTICLE 3

	
Employees; Assumption and/or Adoption of Plans; Option Adjustments

	 	 
	
Section 3.01.  Employees

	
8

	
Section 3.02.  Assumption by Murphy USA of Certain Plans

	
8

	
Section 3.03.  Adoption of Plans.

	
8

	
Section 3.04.  Murphy Oil Equity-Based Plan Retention; Option Adjustments; Bonus Payments; Murphy Oil ESPP.

	
8

	 	 
	
ARTICLE 4

	
Thrift, Supplemental and Retirement Plans

	 	 
	
Section 4.01.  The Thrift Plan.

	
11

	
Section 4.02.  Supplemental Plan.

	
11

	
Section 4.03.  Retirement Plan Liabilities

	
12

	 	 
	
ARTICLE 5

	
Health and Welfare Plans

	 	 
	
Section 5.01.  Assumption of Health and Welfare Plan Liabilities; General Provisions

	
12

	
Section 5.02.  Post-retirement Health and Retired Life Insurance Benefits

	
13

	
Section 5.03.  Effect of Change in Rates

	
13

	
Section 5.04.  COBRA and HIPPA.

	
13

	
Section 5.05.  Leave of Absence Programs and FMLA.

	
14

	
Section 5.06.  Murphy USA Workers’ Compensation Program.

	
14

	
Section 5.07.  Flexible Benefit Plans.

	
15

	
Section 5.08.  Application of Article 5 to the Murphy Oil Group

	
15

 

  

  

  

 

	
ARTICLE 6

	  
	
Indemnification

	  
	 	 
	 	 
	
ARTICLE 7

	  
	
General Provisions

	  
	 	 
	
Section 7.01.  Notices

	
16

	
Section 7.02.  Amendments; No Waivers

	
17

	
Section 7.03.  Successors and Assigns

	
17

	
Section 7.04.  Governing Law

	
17

	
Section 7.05.  Counterparts; Effectiveness

	
17

	
Section 7.06.  Entire Agreement; No Change in Control or Severance Event

	
17

	
Section 7.07.  Dispute Resolution

	
18

	
Section 7.08.  No Third Party Beneficiaries

	
18

	
Section 7.09.  Headings

	
18

	
Section 7.10.  Severability

	
18

	
Section 7.11.  Schedules

	
18

	
Section 7.12.  Cooperation and Coordination

	
18

	
Section 7.13.  Withholdings

	
18

  

ii

  

 

EMPLOYEE MATTERS AGREEMENT

 

EMPLOYEE MATTERS AGREEMENT (the “Agreement”) dated as of August 30, 2013, between Murphy Oil Corporation, a Delaware corporation (“Murphy Oil”) and Murphy USA Inc., a Delaware corporation (“Murphy USA”).

 

W I T N E S S E T H :

 

WHEREAS, Murphy Oil has decided to distribute the common stock of Murphy USA to the holders of Murphy Oil Common Stock, $1.00 par value, (the “Distribution”); and

 

WHEREAS, in furtherance of the foregoing, Murphy Oil and Murphy USA have entered into the Distribution Agreement (as defined below) and certain other agreements that will govern certain matters relating to the Distribution and the relationship of Murphy Oil and Murphy USA and their respective Subsidiaries following the Distribution; and

 

WHEREAS, pursuant to the Distribution Agreement, Murphy Oil and Murphy USA have agreed to enter into this Agreement for the purpose of allocating between them assets, liabilities, and responsibilities with respect to certain employee compensation and benefit plans and programs;

 

WHEREAS, Murphy Oil and Murphy USA have agreed that, except as otherwise specifically provided herein, the general approach and philosophy underlying this agreement is to allocate assets, liabilities and responsibilities between Murphy Oil and Murphy USA on the basis of the employment relationships in effect at the time of the Distribution;

 

NOW, THEREFORE, in consideration of the mutual promises contained herein and in the Distribution Agreement, the parties agree as follows:

 

 

ARTICLE 1

Definitions

 

Section 1.01.  Definitions.  (a) The following terms, as used herein, shall have the meanings set forth below, provided, however, that capitalized terms used and not defined herein shall have the meanings set forth in the Distribution Agreement:

 

“Applicable Law” shall have the meaning set forth in the Distribution Agreement.

 

“Close of the Distribution Date” means 11:59:59 P.M., Eastern Standard Time or Eastern Daylight Time (whichever shall then be in effect), on the Distribution Date.

 

“Code” shall have the meaning set forth in the Distribution Agreement.

 

  

  

  

 

“COBRA” means the continuation coverage requirements for “group health plans” under Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and as codified in Code § 4980B and ERISA §§ 601 through 608.

 

“Distribution” has the meaning set forth in the recitals to this Agreement.

 

“Distribution Agreement” means the Separation and Distribution Agreement by and between Murphy Oil Corporation and Murphy USA Inc., dated as of August 30, 2013, 2013, to which this Agreement is Exhibit A.

 

“Distribution Date” shall have the meaning set forth in the Distribution Agreement.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, or any successor federal labor or employment law. Reference to a specific ERISA provision also includes any proposed, temporary, or final regulation in force under that provision.

 

“FMLA” means the Family Leave and Medical Act of 1993, as amended.

 

“Immediately after the Distribution Date” means 12:00 A.M., Eastern Standard Time or Eastern Daylight Time (whichever shall then be in effect), on the day after the Distribution Date.

 

“Liabilities” shall have the meaning set forth in the Distribution Agreement.

 

“Murphy Oil Business” shall have the meaning set forth in the Distribution Agreement.

 

“Murphy Oil Common Stock” shall have the meaning set forth in the Distribution Agreement.

 

“Murphy Oil Employee” means each Person who, on the Distribution Date (a) is actively employed in the Murphy Oil Business and who is listed on the payroll records of any member of the Murphy Oil Group, (b) is on short-term disability leave, authorized leave of absence, military service or lay-off with recall rights and who was last actively employed in the Murphy Oil Business by any member of the Murphy Oil Group, (c) is an inactive or former employee and who was last actively employed in the Murphy Oil Business by any member of the Murphy Oil Group, including any former employee who has been on long-term disability leave or unauthorized leave of absence or who has terminated his or her employment, retired or died on or before the Distribution Date, and, in each case, their respective beneficiaries and dependents or (d) is an individual set forth on Schedule 1.01(a).  Murphy Oil Employees shall not include the individuals set forth on Schedule 1.01(b).

 

“Murphy Oil Equity-Based Plans” means the Murphy Oil Corporation 1992 Stock Incentive Plan, 2007 Long-Term Incentive Plan, 2012 Long-Term Incentive Plan, 2003 Stock Plan for Non-Employee Directors, 2008 Stock Plan for Non-Employee Directors and the 2013 Stock Plan for Non-Employee Directors.

 

  

2

  

 

“Murphy Oil ERISA Affiliate” means any entity that, together with Murphy Oil and after giving effect to the Distribution, would be treated as a single employer under Section 414(b) or (c) of the Code without regard to Sections 4069 and 4212(c) of ERISA.

 

“Murphy Oil ESPP” means the Murphy Oil Corporation Employee Stock Purchase Plan.

 

“Murphy Oil Group” shall have the meaning set forth in the Distribution Agreement.

 

“Murphy Oil Plans”: means the Murphy Oil Basic Life and Accidental Death and Dismemberment Plan (excluding retired life classes), the Murphy Oil Supplemental Life Plan, the Murphy Oil Occupational Life Plan, the Murphy Oil Business Travel Policy, the Murphy Oil Long Term Disability Plan, the Murphy Oil HCSAP, the Murphy Oil DCSAP, the Murphy Oil Medical Plan, the Murphy Oil Dental Plan, the Murphy Oil Vision Plan, the Thrift Plan, the Supplemental Plan, the Murphy Oil Vacation Policy for Corporate Employees, the Murphy Oil Service Awards Program, the Murphy Oil Employee Assistance Policy, the Murphy Oil Education Assistance Policy, and the Murphy Oil Occupational and Non-Occupational Illness Policy.

 

“Murphy USA Business” shall have the meaning set forth in the Distribution Agreement.

 

“Murphy USA Employee” means each Person who, on the Distribution Date, is or has at any time been employed in the Murphy USA Business who is not a Murphy Oil Employee.

 

“Murphy USA ERISA Affiliate” means any entity that, together with Murphy USA and after giving effect to the Distribution, would be treated as a single employer under Section 414(b) or (c) of the Code without regard to Sections 4069 and 4212(c) of ERISA.

 

“Murphy USA Group” shall have the meaning set forth in the Distribution Agreement.

 

“New Murphy USA Plans” means new, duplicate or mirror plans, policies or programs, as applicable, adopted or to be adopted by Murphy USA that correspond to the Murphy Oil Plans, with such changes therein as are necessary or appropriate to effectuate the terms of this Agreement.

 

“Profit Sharing Plan” means the Profit Sharing Plan for Employees of Murphy Oil Corporation.

 

“Retirement Plan” means the Retirement Plan for Employees of Murphy Oil Corporation.

 

“Specified Murphy Oil Rights” means any and all rights to enjoy, benefit from or enforce any and all restrictive covenants including, without limitation covenants relating to non-disclosure, non-solicitation, non-competition, confidentiality or trade

 

  

3

  

 

secrets, applicable or related, in whole or in part, to the Murphy Oil Business that are provided for, contained or set forth in the Murphy Oil Equity-Based Plans or any stock option or other award agreement issued thereunder, or pursuant to any non-competition, consulting, employment, termination, separation or severance agreement or arrangement with any Murphy USA Employee or Murphy Oil Employee and to which any member of the Murphy USA Group or the Murphy Oil Group is a party.

 

“Specified Murphy USA Rights” means any and all rights to enjoy, benefit from or enforce any and all restrictive covenants including, without limitation covenants relating to non-disclosure, non-solicitation, non-competition, confidentiality or trade secrets, applicable or related, in whole or in part, to the Murphy USA Business that are provided for, contained or set forth in the Murphy Oil Equity-Based Plans or any stock option or other award agreement issued thereunder, or pursuant to any non-competition, consulting, employment, termination, separation or severance agreement or arrangement with any Murphy USA Employee or Murphy Oil Employee and to which any member of the Murphy USA Group or Murphy Oil Group is a party.

 

“Supplemental Plan” means the Murphy Oil Corporation Supplemental Executive Retirement Plan.

 

“Tax Matters Agreement” shall have the meaning set forth in the Distribution Agreement.

 

“Thrift Plan” means the Thrift Plan for Employees of Murphy Oil Corporation.

 

(b)           Each of the following terms is defined in the Section set forth opposite such term:

 

	
TERMS

	
SECTION

	 	 
	
Employee Withholding Documents

	
7.13

	
Murphy Oil Retained Liabilities

	
2.01

	
Murphy Oil Bonus Liabilities

	
3.04

	
Murphy Oil DCSAP

	
5.07

	
Murphy Oil HCSAP

	
5.07

	
Murphy Oil Health and Welfare Liabilities

	
5.01

	
Murphy Oil Health and Welfare Plans

	
5.01

	
Murphy Oil 2012 AIP

	
3.04

	
Murphy Oil Retained Liabilities

	
2.01

	
Murphy Oil WCP Liabilities

	
5.06

	 
Murphy USA Assumed Plans

	3.02
	 
Murphy USA Assumed Liabilities

	2.01
	 
Murphy USA DC Plan

	4.01
	 
Murphy USA DC Plan Liabilities

	4.01
	 
Murphy USA Health and Welfare Liabilities

	5.01
	 
Murphy USA Assumed Liabilities

	2.01
	 
Murphy USA Supplemental Plan Liabilities

	4.02
	 
Murphy USA WCP Liabilities

	5.06

 

  

4

  

 

	
TERMS

	
SECTION

	 	 
	
New Murphy USA Health and Welfare Plans

	
5.01

	
PUs

	
3.04

	
Retained Murphy Oil Retiree Health

  and Life Liabilities

	
5.02

	
Retained Retiree Health and Life Liabilities

	
5.02

	
Retained Supplemental Plan Liabilities

	
4.02

	
Retained Thrift Plan Liabilities

	
4.01

	
RSUs

	
3.04

	
RSUCs

	
3.04

	
Standard Procedure

	
7.13

 

ARTICLE 2

General Allocation of Liabilities

 

Section 2.01.  Allocation of Liabilities Generally.

 

(a) Subject to the terms and conditions of this Agreement, effective as of the Close of the Distribution Date, Murphy Oil hereby assumes and agrees to pay when due, honor and discharge, the following Liabilities, whether incurred before, on or after the Distribution Date (“Murphy Oil Retained Liabilities”):

 

(i) all Liabilities arising under any employment, separation or retirement agreement or arrangement to the extent applicable to any Murphy Oil Employee;

 

(ii) the Murphy Oil Bonus Liabilities, Murphy Oil Deferred Compensation Liabilities, Murphy Oil WCP Liabilities, Retained Retiree Health and Life Liabilities, Murphy Oil Health and Welfare Liabilities, Retained Supplemental Plan Liabilities, Retained Thrift Plan Liabilities and all Liabilities arising under the Murphy Oil Equity-Based Plans, the Murphy Oil ESPP and the Retirement Plan;

 

(iii) all Liabilities arising under any other employee benefit plan or arrangement sponsored or maintained at any time after the Distribution Date by any of the Murphy Oil Companies to the extent applicable to any member of the Murphy Oil Group;

 

(iv) all Liabilities arising under any federal, state, local or foreign law, order or regulation (including, without limitation, ERISA and the Code) to the extent they relate to participation by any Murphy Oil Employee in any employee benefit plan sponsored or maintained by any member of the Murphy Oil Group, whether relating to events occurring on, prior to or after the Close of the Distribution Date or arising by reason of the transactions contemplated by this Agreement or otherwise;

 

  

5

  

 

(v) all statutory Liabilities to any Murphy Oil Employee, which arise, directly or indirectly, by reason of the transactions contemplated by this Agreement; and

 

(vi) all other Liabilities attributable to actions specified to be taken by Murphy Oil under this Agreement.

 

(b) Subject to the terms and conditions of this Agreement, effective as of Immediately after the Distribution Date, Murphy USA hereby assumes and agrees to pay when due, honor and discharge, the following Liabilities, whether incurred before, on or after the Distribution Date (“Murphy USA Assumed Liabilities”):

 

(i) all Liabilities arising under any employment, separation or retirement agreement or arrangement to the extent applicable to any Murphy USA Employee;

 

(ii) the New Murphy USA Plans, the Murphy USA Assumed Plans, Murphy USA Bonus Liabilities, Murphy USA DC Plan Liabilities, Murphy USA Health and Welfare Liabilities, Murphy USA Supplemental Plan Liabilities and the Murphy USA WCP Liabilities;

 

(iii) all Liabilities arising under any other employee benefit plan or arrangement sponsored or maintained at any time after the Distribution Date by any member of the Murphy USA Group;

 

(iv) all Liabilities arising under any federal, state, local or foreign law, order or regulation (including, without limitation, ERISA and the Code) to the extent they relate to participation by any Murphy USA Employee in any New Murphy USA Plan or other employee benefit plan sponsored or maintained by any member of the Murphy USA Group, relating to events occurring on or after the time Immediately after the Distribution Date;

 

(v) all statutory Liabilities to any Murphy USA Employee which arises, directly or indirectly, by reason of the transactions contemplated by this Agreement; and

 

(vi) all other Liabilities attributable to actions specified to be taken by Murphy USA under this Agreement.

 

Section 2.02.  Method of Settlement.  Notwithstanding anything herein to the contrary but except as set forth in Schedule 2.02, to the extent possible any transfer or assumption of Liabilities pursuant to this Article 2 shall be effected, prior to the Distribution Date or as soon thereafter as is reasonably practicable, through a corresponding adjustment in the relevant intercompany account balances of the parties hereto.

 

Section 2.03.  Further Assurances.

 

  

6

  

 

(a) On and after the date hereof, Murphy USA will, at the reasonable request of Murphy Oil, execute, acknowledge and deliver all such endorsements, assurances, consents, assignments, transfers, conveyances, powers of attorney and other instruments and documents, and take such other actions necessary (i) to assign, transfer, convey and deliver to Murphy Oil, acting in its fiduciary capacity, all the assets to be transferred to Murphy Oil pursuant to this Agreement and (ii) to assist Murphy Oil in obtaining the consent and approval of all Governmental Authorities and other Persons required to be obtained by Murphy Oil to effect the transfer thereof and the assumption of the Murphy Oil Retained Liabilities by Murphy Oil or otherwise appropriate to carry out the transactions contemplated hereby.

 

(b) On and after the date hereof, Murphy Oil will, at the reasonable request of Murphy USA, execute, acknowledge and deliver all such endorsements, assurances, consents, assignments, transfers, conveyances, powers of attorney and other instruments and documents, and take such other actions necessary (i) to assign, transfer, convey and deliver to Murphy USA, acting in its fiduciary capacity, all the assets to be transferred to Murphy USA pursuant to this Agreement, and (ii) to assist Murphy USA in obtaining the consent and approval of all Governmental Authorities and other Persons required to be obtained by Murphy USA to effect the transfer thereof and the assumption of the Murphy USA Assumed Liabilities by Murphy USA or otherwise appropriate to carry out the transactions contemplated hereby.

 

Section 2.04.  Assignment of Certain Rights; Non-Solicitation.

 

(a) To the extent permitted by applicable law, Murphy Oil hereby assigns, to the maximum extent possible, on behalf of itself and the Murphy Oil Group, the Specified Murphy USA Rights, to Murphy USA and Murphy Oil shall take such actions to effect such assignment pursuant to Section 2.03(b) as Murphy USA may reasonably request.

 

(b) To the extent permitted by applicable law, Murphy USA hereby assigns, to the maximum extent possible, on behalf of itself and the Murphy USA Group, the Specified Murphy Oil Rights, to Murphy Oil and Murphy USA shall take such actions to effect such assignment pursuant to Section 2.03(a) as Murphy Oil may reasonably request.

 

(c) Murphy Oil and Murphy USA agree that neither party shall, without the prior written approval of the other, directly or indirectly for 12 months after the Distribution Date, solicit any employee of the other party to terminate his or her relationship with any member of the Murphy USA Group or Murphy Oil Group, respectively, provided that the foregoing shall not apply to (i) the use of an independent employment agency (so long as the agency was not directed to solicit such person) or (ii) as a result of the use of a general solicitation (such as an advertisement) not specifically directed to employees of the other party.

 

  

7

  

 

ARTICLE 3

Employees; Assumption and/or Adoption of Plans; Option Adjustments

 

Section 3.01.  Employees.  No provision of this Agreement shall require Murphy Oil or Murphy USA or any of their respective Subsidiaries to continue the employment of any of their respective employees following the Distribution Date.

 

Section 3.02.  Assumption by Murphy USA of Certain Plans.  Effective as of the Close of the Distribution Date, Murphy USA hereby assumes responsibility for and becomes the sponsor of, and Murphy Oil or the relevant Murphy Oil Subsidiary hereby ceases, except as otherwise provided herein, to be responsible for, or be the sponsor of, and ceases to be a “participating employer” in or to otherwise have any Liability in respect of, the Group Insurance Plan for Retail Store Managers of Murphy Oil USA, Inc., Murphy USA Inc., Limited Liability Plan, the Profit Sharing Plan and any vacation credited under the Vacation Policy for Retail Marketing Assistant Store Managers and Cashiers (Policy 05-01-08A) (collectively, “Murphy USA Assumed Plans”).  Murphy Oil and Murphy USA agree to cooperate and take all reasonable actions necessary or appropriate to cause a change in the sponsor of any Murphy USA Assumed Plan or in the title thereof.

 

Section 3.03.  Adoption of Plans.

 

(a) Effective as of not later than Immediately after the Distribution Date, Murphy USA or a Murphy USA Affiliate shall adopt, or cause to be adopted, the New Murphy USA Plans, provided that nothing shall prevent Murphy USA from terminating or amending such plans except to the extent precluded by Applicable Law, as would result in the loss of grandfathered status under the Patient Protection and Affordable Care Act or as otherwise provided herein.

 

(b) The New Murphy USA Plans shall be, with respect to all Murphy USA Employees, in all respects the successors in interest to any corresponding Murphy Oil Plans.  With respect to Murphy USA Employees, each New Murphy USA Plan and any other benefit plan, arrangement or policy applicable after the Distribution Date for Murphy USA Employees shall provide that all service, compensation, and other benefit-affecting determinations, as of the Close of the Distribution Date, that were otherwise recognized under the corresponding Murphy Oil Plan (for periods ending on the Distribution Date) shall, as of Immediately after the Distribution Date, receive full recognition and credit to the extent the recognition or credit can validly be taken into account under the New Murphy USA Plan to the same extent as if those items occurred under the Murphy Oil Plans, except to the extent that duplication of benefits would result.  Murphy Oil shall provide appropriate data to Murphy USA about such past service.

 

Section 3.04.  Murphy Oil Equity-Based Plan Retention; Option Adjustments; Bonus Payments; Murphy Oil ESPP.

 

(a) In connection with the Distribution, Murphy Oil shall retain the Murphy Oil Equity-Based Plans and shall cause such actions to be taken under such Plans as are

 

  

8

  

 

necessary or appropriate to reflect the Distribution as provided in this Section 3.04 (a) and (b).

 

(i) In connection with the Distribution and effective as of the Distribution Date, all outstanding vested options to purchase shares of Murphy Oil Common Stock, whether held by a current or a former Murphy Oil Employee, a current or a former Murphy USA Employee or a current or former non-employee director of Murphy Oil will be adjusted pursuant to the terms of the applicable Murphy Oil Equity-Based Plan and Applicable Law to preserve the intrinsic value of each original option grant and the ratio of the exercise price to the fair market value of Murphy Oil Common Stock on the Distribution Date.  Such adjusted options held by Murphy USA Employees will be exercisable until the earlier of two years from the Distribution Date or the stated expiration date of the grant.

 

(ii) In connection with the Distribution and effective as of the Distribution Date, any outstanding unvested options to purchase Murphy Oil Common Stock which are held by Murphy Oil Employees will be adjusted as described in Section 3.04 (a)(i).  Murphy USA will replace any outstanding unvested options to purchase shares of Murphy Oil Common Stock which are held by Murphy USA Employees Immediately after the Distribution Date with long-term incentive awards of generally equivalent value under one or more long-term incentive plans to be adopted by Murphy USA.

 

(iii) In connection with the Distribution and effective as of the Distribution Date, any outstanding unvested stock appreciation rights related to Murphy Oil Common Stock which are held by Murphy Oil Employees will be adjusted as described in Section 3.04 (a)(i).  Murphy USA will replace any outstanding unvested stock appreciation rights related to Murphy Oil Common Stock which are held by Murphy USA Employees Immediately after the Distribution Date with long-term incentive awards of generally equivalent value under one or more long-term incentive plans to be adopted by Murphy USA.

 

(iv) In connection with the Distribution and effective as of the Distribution Date, similar adjustments as provided in Section 3.04(a)(i) will be made to the Murphy Oil non-employee director restricted stock unit awards granted under the applicable Murphy Oil Equity-Based Plan.

 

(v) In connection with the Distribution and effective as of the Distribution Date, phantom stock units granted under the applicable Murphy Oil Equity-Based Plan and held by Murphy Oil Employees will be adjusted as described in Section 3.04(a)(i).

 

(vi) In connection with the Distribution and effective as of the Distribution Date, restricted stock units (“RSUs”) whether held by a current or a former Murphy Oil Employee or a current or a former Murphy USA Employee will be adjusted pursuant to the terms of the applicable Murphy Oil Equity-Based Plan and Applicable Law to preserve the intrinsic value of each original grant on the Distribution Date.  RSUs that are held by Murphy USA Employees will be prorated based on the extent to which the applicable performance goals are attained as of

 

  

9

  

 

the Distribution Date, if at all, and will be paid out by Murphy Oil based on the number of months in the performance period ending on the Distribution Date divided by 36.  Murphy USA will replace the balance of the RSUs with long-term incentive awards of generally equivalent value under one or more long-term incentive plans to be adopted by Murphy USA.

 

(vii) In connection with the Distribution and effective as of the Distribution Date, cash-based restricted stock units (“RSUCs”) granted under the applicable Murphy Oil Equity-Based Plan whether held by a current or a former Murphy Oil Employee or a current or a former Murphy USA Employee will be adjusted pursuant to the terms of the applicable Murphy Oil Equity-Based Plan and Applicable Law to preserve the intrinsic value of each original grant on the Distribution Date.  RSUCs that are held by Murphy USA Employees will be prorated based on the extent to which the applicable performance goals are attained as of Distribution Date, if at all, and will be paid out by Murphy Oil based on the number of months in the performance period ending on the Distribution Date divided by 36.  Murphy USA will replace the balance of the RSUCs with long-term incentive awards of generally equivalent value under one or more long-term incentive plans to be adopted by Murphy USA.

 

(viii) In connection with the Distribution and effective as of the Distribution Date, cash based performance units (“PUs”) granted under the applicable Murphy Oil Equity-Based Plan that are held by Murphy USA Employees will be prorated based on the extent to which the applicable performance goals are attained as of Distribution Date, if at all, and will be paid out by Murphy Oil based on the number of months in the performance period ending on the Distribution Date divided by 36.  Murphy USA agrees to replace the balance of the PUs with long-term incentive awards of equivalent value under one or more long-term incentive plans to be adopted by Murphy USA.

 

(b) Murphy Oil hereby retains (i)  Liability for all annual bonus payments to Murphy Oil Employees under the Murphy Oil Corporation 2012 Annual Incentive Plan (the “Murphy Oil 2012 AIP”) and (ii)  Liability for all 2013 calendar year bonus payments under the Murphy Oil 2012 AIP to Murphy USA Employees as determined pursuant to the Murphy 2012 AIP and the applicable award agreement (all such Liabilities, the “Murphy Oil Bonus Liabilities”).

 

(c) The rights of, and continued participation in, if any, of Murphy Oil Employees and Murphy USA Employees under the Murphy Oil ESPP will be determined pursuant to the terms thereof.  For the avoidance of doubt, Murphy USA will not be under any obligation to replicate the Murphy Oil ESPP or to provide a similar benefit.

 

  

10

  

 

ARTICLE 4

Thrift, Supplemental and Retirement Plans

 

Section 4.01.  The Thrift Plan.

 

(a) Murphy Oil shall retain all Liabilities and obligations in respect of benefits accrued by each Murphy Oil Employee under the Thrift Plan.

 

(b) Effective as of not later than Immediately after the Distribution Date, Murphy USA or a Murphy USA ERISA Affiliate shall adopt a savings plan for the benefit of Murphy USA Employees that is substantially similar to the Thrift Plan and is intended to qualify under Section 401(a) of the Code (the “Murphy USA DC Plan”).  Not later than the end of the calendar year in which the Distribution Date occurs or as soon thereafter as is reasonably practicable, (1) Murphy Oil shall cause the Thrift Plan accounts of all Murphy USA Employees which are held by the Thrift Plan’s related trust to be transferred to the Murphy USA DC Plan and its related trust, and Murphy USA shall cause those transferred accounts, all of which shall be 100% vested as of the Distribution Date, to be accepted by the Murphy USA DC Plan and its related trust and (2) the Murphy USA DC Plan shall assume and be solely responsible for Liabilities only with respect to transferred accounts of such Murphy USA Employees (all such assumed liabilities, “Murphy USA DC Plan Liabilities”).  Such transfer shall be in-kind, including loans, to the maximum extent practicable and shall not favor participants who are Murphy Oil Employees over participants who are Murphy USA Employees.  Any Murphy USA DC Plan fund relating to Murphy Oil Common Stock shall be administered so as to permit transfers out of, but not additions to, such fund.

 

(c) After the Distribution Date, Murphy Oil shall retain all assets and Liabilities under the Thrift Plan except as otherwise provided in Section 4.01(b) (“Retained Thrift Plan Liabilities”).

 

Section 4.02.  Supplemental Plan.

 

(a) (i) Effective as of Immediately after the Distribution Date, all Liabilities accrued on the books and records of any member of the Murphy Oil Group or any member of the Murphy USA Group with respect to the Supplemental Plan to the extent applicable to any Murphy USA Employee, and assets allocable to such Liabilities, if any, shall be transferred to and assumed by Murphy USA, or retained by Murphy USA as the case may be, (“Murphy USA Supplemental Plan Liabilities”) under the New Murphy USA Plan that corresponds to the Supplemental Plan.

 

  (ii) All other Liabilities under the Supplemental Plan, and all related assets, if any, are hereby transferred to and assumed or otherwise retained by Murphy Oil (“Retained Supplemental Plan Liabilities”).

 

(b) Murphy USA and Murphy Oil shall cooperate to ensure that no deferred compensation amount is distributed prematurely in respect of any Murphy Oil Employee or Murphy USA Employee.

 

  

11

  

 

Section 4.03.  Retirement Plan Liabilities.  Murphy Oil shall retain and remain responsible for all assets and Liabilities under the Retirement Plan accrued in respect of Murphy Oil Employees and Murphy USA Employees pursuant to the terms of the Retirement Plan.  For the avoidance of doubt, no Murphy USA Employee shall accrue any benefit after the Distribution Date under the Retirement Plan.

 

 

ARTICLE 5

Health and Welfare Plans

 

Section 5.01.  Assumption of Health and Welfare Plan Liabilities; General Provisions.

 

(a) Effective as of Immediately after the Distribution Date and except to the extent provided in this Article 5, all Liabilities relating to claims incurred prior to, on or after the Distribution Date by each Murphy USA Employee under the “Murphy Oil Health and Welfare Plans” (designated as such on Schedule 5.01(a) hereto) shall cease to be Liabilities of the Murphy Oil Health and Welfare Plans and shall be transferred to and assumed by Murphy USA as of Immediately after the Distribution Date (“Murphy USA Health and Welfare Liabilities”) under the New Murphy USA Plans that correspond to the Murphy Oil Health and Welfare Plans (the “New Murphy USA Health and Welfare Plans”).  Murphy Oil shall retain all other Liabilities under the Murphy Oil Health and Welfare Plans (“Murphy Oil Health and Welfare Liabilities”).

 

(b) Murphy USA shall cause the New Murphy USA Health and Welfare Plans to recognize and maintain all coverage and contribution elections made by Murphy USA Employees under the Murphy Oil Health and Welfare Plans as of the Distribution Date and apply such elections under the New Murphy USA Health and Welfare Plans for the remainder of the period or periods for which such elections are by their terms applicable. The transfer or other movement of employment from Murphy Oil to Murphy USA at any time before the Close of the Distribution Date shall neither constitute nor be treated as a “status change” under the New Murphy USA Health and Welfare Plans or the Murphy Oil Health and Welfare Plans.

 

(c) Murphy USA shall cause the New Murphy USA Health and Welfare Plans to recognize and give credit for all amounts applied to deductibles, out-of-pocket maximums, and other applicable benefit coverage limits with respect to which such expenses have been incurred by Murphy USA Employees under the Murphy Oil Health and Welfare Plans for the remainder of the year in which the Distribution Date occurs to the extent recognized under the comparable Murphy Oil Health and Welfare Plans.

 

(d) Murphy USA shall provide coverage to Murphy USA Employees under the New Murphy USA Health and Welfare Plans without the need to undergo a physical examination or otherwise provide evidence of insurability to the extent provided under the comparable Murphy Oil Health and Welfare Plans.

 

(e) Murphy USA shall cause the New Murphy USA Health and Welfare Plans to recognize and credit all service of each Murphy USA Employee recognized by the

 

  

12

  

 

corresponding Murphy Oil Health and Welfare Plans before the Close of the Distribution Date for all purposes, including, but not limited to, severance, disability, vacation and paid time off.  On or as soon as reasonably practicable after the Distribution Date, Murphy Oil shall deliver to Murphy USA a schedule setting forth the accrued and unused vacation and paid time off for each Murphy USA Employee as of the Distribution Date, and Murphy USA shall assume and be responsible for all Liabilities therefor which, for the avoidance of doubt, shall be included in Murphy USA Health and Welfare Liabilities.

 

(f) Education or tuition reimbursement liabilities shall be the responsibility of the employer of the tuition reimbursement program participant at the time the education or tuition reimbursement request is formally submitted by the program participant in accordance with the terms and conditions of such program.

 

Section 5.02.  Post-retirement Health and Retired Life Insurance Benefits.  Murphy Oil shall be responsible for providing to Murphy USA Employees who are eligible to receive post-retirement medical or retired life insurance coverage under the Murphy Oil Health and Welfare Plans and retire prior to the Close of the Distribution Date and to all Murphy Oil Employees such coverage under the Murphy Oil Health and Welfare Plans (“Retained Retiree Health and Life Liabilities”), in each case pursuant to the terms of the applicable Murphy Oil Health and Welfare Plans.  Nothing shall prevent (i) Murphy Oil from amending or terminating such plans or (ii) notwithstanding Section 2.04(c) hereof, Murphy USA from actively employing any retired Murphy Oil Employees.

 

Section 5.03.  Effect of Change in Rates.  Murphy USA and Murphy Oil shall use their reasonable efforts to cause each of the insurance companies, HMOs, point-of-service vendors and third-party administrators providing services and benefits under the New Murphy USA Health and Welfare Plans and the Murphy Oil Health and Welfare Plans to maintain the premium and/or administrative rates based on the aggregate number of participants in both the New Murphy USA Health and Welfare Plans and the Murphy Oil Health and Welfare Plans through the expiration of the financial fee or rate guarantees in effect as of the Close of the Distribution Date under the respective contracts, policies, and agreements separately rated or adjusted for the demographics, experience or other relevant factors related to the covered participants of Murphy USA and Murphy Oil, respectively.  To the extent they are not successful in such efforts, Murphy USA and Murphy Oil shall each bear the revised premium or administrative rates attributable to the individuals covered by their respective health and welfare plans.

 

Section 5.04.  COBRA and HIPPA.

 

(a) Murphy Oil shall be solely responsible for administering compliance with the health care continuation coverage requirements of COBRA and the Murphy Oil Health and Welfare Plans (i) with respect to Murphy Oil Employees and, (ii) with respect to Murphy USA Employees and their dependents who incur a COBRA qualifying event other than under a Murphy USA Assumed Plan prior to the Distribution Date.

 

(b) Effective as of Immediately after the Distribution Date, Murphy USA shall solely be responsible for administering compliance with the health care continuation

 

  

13

  

 

coverage requirements of COBRA and the New Murphy USA Health and Welfare plans with respect to Murphy USA Employees and their dependents who incur a COBRA qualifying event (i) under a Murphy USA Assumed Plan prior to the Distribution Date, and (ii) in all cases on or after the Distribution Date.

 

(c) For periods before the Distribution Date, Murphy Oil shall be responsible for administering compliance with the portability requirements under the Health Insurance Portability and Accountability Act of 1996 with respect to Murphy USA Employees and beginning not later than Immediately after the Distribution Date Murphy USA shall be responsible for filing all necessary employee change notices with respect to in accordance with applicable Murphy Oil policies and procedures.  Effective as of Immediately after the Distribution Date, Murphy Oil shall be solely responsible for administering compliance with such health care continuation coverage and portability requirements with respect to Murphy Oil Employees, and Murphy USA shall be solely responsible for administering compliance with such requirements with respect to Murphy USA Employees.

 

Section 5.05.  Leave of Absence Programs and FMLA.

 

(a) Murphy USA shall be responsible for administering compliance with the Murphy USA leave of absence programs and FMLA with respect to Murphy USA Employees.

 

(b) Effective as of Immediately after the Distribution Date: (i) Murphy USA shall adopt, and shall cause each member of the Murphy USA Group to adopt, leave of absence programs; (ii) Murphy USA shall honor, and shall cause each member of the Murphy USA Group to honor, all terms and conditions of leaves of absence which have been granted to any Murphy USA Employee under a Murphy Oil leave of absence program or FMLA before the Distribution Date, including such leaves that are to commence after the Distribution Date; (iii) Murphy Oil and each member of the Murphy Oil Group shall be solely responsible for administering leaves of absence and compliance with FMLA with respect to their employees; and (iv) Murphy USA and each member of the Murphy USA Group shall recognize all periods of service of each Murphy USA Employee with the Murphy Oil Group to the extent such service is recognized by Murphy Oil for the purpose of eligibility for leave entitlement under the Murphy Oil leave of absence programs and FMLA.

 

(c) As soon as administratively possible and not later than the Close of the Distribution Date, Murphy Oil shall provide to Murphy USA copies of all records pertaining to the Murphy Oil leave of absence programs and FMLA with respect to all Murphy USA Employees to the extent such records have not been provided previously to Murphy USA or a member of the Murphy USA Group.

 

Section 5.06.  Murphy USA Workers’ Compensation Program.

 

(a) (i)  Effective as of Immediately after the Distribution Date, Murphy USA shall assume, retain and be responsible for all workers’ compensation Liabilities relating to Murphy USA Employees (the “Murphy USA WCP Liabilities”).

 

  

14

  

 

      (ii) Effective as of Immediately after the Distribution Date, Murphy Oil shall assume, retain and be responsible for all workers compensation Liabilities relating to Murphy Oil Employees (“Murphy Oil WCP Liabilities”).

 

      (iii) For the avoidance of doubt, workers’ compensation Liabilities in respect of any current or former employee shall be the responsibility of such employee’s employer on the Distribution Date or, in the case of former employees, any such former employee’s last employer prior to the Distribution Date.

 

(b) Murphy Oil and Murphy USA shall cooperate with respect to the issuance of new, or transfer of, existing workers’ compensation policies and licenses.

 

Section 5.07.  Flexible Benefit Plans.

 

(a) To the extent any Murphy USA Employee contributed to an account under the Murphy Oil Health Care Spending Account Plan (“Murphy Oil HCSAP”) during the calendar year that includes the Distribution Date, effective as of Immediately after the Distribution Date Murphy Oil shall transfer to the corresponding New Murphy USA Health and Welfare Plan the account balances of such Murphy USA Employees for such calendar year under the Murphy Oil HCSAP, regardless of whether the account balance is positive or negative.

 

(b) To the extent any Murphy USA Employee contributed to the Murphy Oil Dependent Care Spending Account Plan (“Murphy Oil DCSAP”) during the calendar year that includes the Distribution Date, effective as of Immediately after the Distribution Date, Murphy Oil shall transfer to the corresponding New Murphy USA Health and Welfare Plan the account balances of such Murphy USA Employees for such calendar year in the Murphy Oil DCSAP Plan, regardless of whether the account balance is positive or negative.

 

Section 5.08 .  Application of Article 5 to the Murphy Oil Group.  Any reference in this Article 5 to “Murphy USA” shall include a reference to the Murphy USA Group when and to the extent Murphy USA has caused a member of the Murphy USA Group to (a) become a party to a  vendor contract, group insurance contract, or HMO letter agreement associated with a New Murphy USA Health and Welfare Plan, (b) become a self-insured entity for the purposes of one or more New Murphy USA Health and Welfare Plans, (c) assume all or a portion of the Liabilities or administrative responsibilities for benefits which arose before the Distribution Date under a Murphy Oil Health and Welfare Plan and which were expressly assumed by Murphy USA pursuant to the terms of this Agreement, or (d) take any other action, extend any coverage, assume any other Liability or fulfill any other responsibility that Murphy USA would otherwise be required to take under the terms of this Article 5, unless it is clear from the context that the particular reference is not intended to include a member of the Murphy USA Group. In all such instances in which a reference in this Article 5 to “Murphy USA” includes a reference to a member of the Murphy USA Group, Murphy USA shall be responsible to Murphy Oil for ensuring that the member of the Murphy USA Group complies with the applicable terms of this Agreement.

 

  

15

  

 

ARTICLE 6

Indemnification

 

With respect to indemnification, the parties hereto agree as set forth in the Distribution Agreement.

 

 

ARTICLE 7 

General Provisions

 

Section 7.01.  Notices.  Any notice, instruction, direction or demand under the terms of this Agreement required to be in writing shall be duly given upon delivery, if delivered by hand, facsimile transmission, or mail, to the following addresses:

 

If to Murphy Oil, to:

 

Murphy Oil Corporation

200 Peach Street

P.O. Box 7000

El Dorado, Arkansas  71731-7000

Attn:  Walter Compton

Facsimile:  (870) 864-6220

With a copy to:

 

Davis Polk & Wardwell LLP

450 Lexington Avenue

New York, New York  10017

Attn:  William L. Taylor, Esq.

Facsimile:  (212) 701-5800

If to Murphy USA, to:

 

Murphy USA Inc.

200 Peach Street

P.O. Box 7300

El Dorado, Arkansas  71731-7300

Attn:  John A. Moore

Facsimile:  (870) 881-6893

or to such other addresses or telecopy numbers as may be specified by like notice to the other party.  All such notices, requests and other communications shall be deemed given, (a) when delivered in person or by courier or a courier services, (b) if sent by facsimile transmission (receipt confirmed) on a business day prior to 5 p.m. in the place of receipt, on the date of transmission (or, if sent after 5 p.m. or on a day other than a business day, on the following business day) or (c) if mailed by certified mail (return receipt requested), on the date specified on the return receipt.

 

  

16

  

 

Section 7.02.  Amendments; No Waivers.  (a) Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by Murphy Oil and Murphy USA, or in the case of a waiver, by the party against whom the waiver is to be effective.

 

(b) No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.   The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

 

Section 7.03.  Successors and Assigns.  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided that neither party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of the other parties hereto.

 

Section 7.04.  Governing Law.  This Agreement shall be construed in accordance with and governed by the law of the State of New York, without regard to the conflicts of laws rules thereof.

 

Section 7.05.  Counterparts; Effectiveness.  This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.  This Agreement shall become effective when each party hereto shall have received a counterpart hereof signed by the other party hereto.  Until and unless each party has received a counterpart hereof signed by the other party hereto, this Agreement shall have no effect and no party shall have any right or obligation hereunder (whether by virtue of any other oral or written agreement or other communication).

 

Section 7.06.  Entire Agreement; No Change in Control or Severance Event.  (a) This Agreement constitutes the entire understanding of the parties with respect to the subject matter hereof and thereof and supersedes all prior agreements, understandings and negotiations, both written and oral, between the parties with respect to the subject matter hereof and thereof.  No representation, inducement, promise, understanding, condition or warranty not set forth herein has been made or relied upon by any party hereto or any member of their Group with respect to the transactions contemplated by this Agreement.  To the extent that the provisions of this Agreement are inconsistent with the provisions of the Tax Matters Agreement, the provisions of the Tax Matters Agreement shall prevail.

 

(b) Neither the Distribution nor the consummation of the transactions contemplated herein or under the Distribution Agreement shall constitute a change in control for purposes of, or trigger or otherwise give rise to any severance obligations or entitlements under, any Murphy Oil or Murphy USA plan, program, agreement or arrangement.

 

  

17

  

 

Section 7.07.  Dispute Resolution.  Any dispute hereunder or with respect to the rights, duties and Liabilities of the parties hereto shall be resolved pursuant to the applicable provisions, including Article 8, of the Distribution Agreement.

 

Section 7.08.  No Third Party Beneficiaries.  Nothing contained in this Agreement is intended to constitute an amendment to any plan or arrangement governed by ERISA, or to confer upon any person or entity other than the parties hereto and their respective successors and permitted assigns, any benefit, right or remedies under or by reason of this Agreement.

 

Section 7.09.  Headings.  The section and other headings contained in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

 

Section 7.10.  Severability.  If any one or more of the provisions contained in this Agreement should be declared invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained in this Agreement shall not in any way be affected or impaired thereby so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party.  Upon such a declaration, the parties shall modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner so that the transactions contemplated hereby are consummated as originally contemplated to the fullest extent possible.

 

Section 7.11.  Schedules.  Murphy Oil and Murphy USA shall cooperate and mutually agree on each of the schedules to this Agreement.  Murphy Oil and Murphy USA shall have the right to amend or supplement the information set forth in any schedule hereto from time to time until two business days prior to the Distribution Date.

 

Section 7.12.  Cooperation and Coordination.  The parties agree to share, and furnish each other with, such information concerning employees and employee benefit plans, and to take all such other action, as is necessary and appropriate to effect the transactions contemplated hereby, and to coordinate, in advance, the time, form and content of communications to current and former employees of the parties relating to such transactions.

 

Section 7.13.  Withholdings.  (a) To the extent consistent with the terms of the Tax Matters Agreement, the party that is responsible for making a payment hereunder shall be responsible for making the appropriate withholdings, if any, attributable to such payments.

 

(b) Murphy Oil and Murphy USA agree to comply with the Standard Procedure described in Section 4 of Revenue Procedure 2004-53, 2004-2 C.B. 320 (the “Standard Procedure”).  With respect to each Murphy USA Employee, Murphy Oil shall, in accordance with Revenue Procedure 2004-53, assume all responsibility for preparing and filing Form W-2, Wage and Tax Statements; Form W-3, Transmittal of Income and Tax Statements; Form 941, Employer’s Quarterly Federal Tax Returns; Form W-4, Employee's Withholding Allowance Certificates; and Form W-5, Earned Income Credit

 

  

18

  

 

Advance Payment Certificates (collectively, the “Employee Withholding Documents”) with regard to wages paid during the period through the Close of the Distribution Date.  Murphy USA shall assume all responsibility for preparing and filing the Employee Withholding Documents with regard to wages paid to each Murphy USA Employee after the Close of the Distribution Date.  Murphy USA and Murphy Oil shall cooperate in good faith to the extent necessary to permit each of them to comply with the Standard Procedure.

 

[Signature Page Follows]

 

  

19

  

 

IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.

 

	

MURPHY OIL CORPORATION

	 
	 	 	 	 
	By:	

/s/ Walter K. Compton

	 
	 	Name: 	

Walter K. Compton

	 
	 	Title: 	

Senior Vice President and General Counsel

	 

 

 

	

MURPHY USA INC.

	 
	 	 	 	 
	By:	

/s/ John A. Moore

	 
	 	Name: 	

John A. Moore

	 
	 	Title: 	

Senior Vice President, General Counsel and Secretary

	 

 

 

 

[Signature Page to Employee Matters Agreement]

 

  

20

  

 

SCHEDULE 1.01(a)

 

Name

 

Brandon Lawrence

 

  

 

  

 

SCHEDULE 1.01(b)

 

[None.]

 

  

 

  

 

SCHEDULE 2.02

 

[None.]

 

  

 

  

 

SCHEDULE 5.01(a)

 

Murphy Oil Health and Welfare Plans:

 

	
·  

	
Murphy Oil Basic Life and Accidental Death and Dismemberment Plan (excluding retired life classes);

	
·  

	
Murphy Oil Supplemental Life Plan;

	
·  

	
Murphy Oil Occupational Life Plan;

	
·  

	
Murphy Oil Business Travel Policy;

	
·  

	
Murphy Oil Long Term Disability Plan;

	
·  

	
Murphy Oil HCSAP;

	
·  

	
Murphy Oil DCSAP;

	
·  

	
Murphy Oil Medical Plan;

	
·  

	
Murphy Oil Dental Plan;

	
·  

	
Murphy Oil Vision Plan;

	
·  

	
Murphy Oil Vacation Policy for Corporate Employees;

	
·  

	
Murphy Oil Service Awards Program;

	
·  

	
Murphy Oil Employee Assistance Policy;

	
·  

	
Murphy Oil Education Assistance Policy; and

	
·  

	
Murphy Oil Occupational and Non-Occupational Illness Policy.

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