Document:

TSOEX.10.4 6-3-2013

Exhibit 10.4

CARSON STORAGE 
SERVICES AGREEMENT

This Carson Storage Services Agreement (the “Agreement”) is dated as of June 1, 2013, by and between Tesoro Refining & Marketing Company LLC, a Delaware limited liability company (“TRMC”), Tesoro Logistics Operations LLC, a Delaware limited liability company (“TLO”), and for purposes of Section 25(a) only, Tesoro Logistics GP, LLC, a Delaware limited liability company (the “General Partner”), and Tesoro Logistics LP, a Delaware limited partnership (the “Partnership”).
RECITALS

WHEREAS, TRMC has agreed to purchase certain assets pursuant to the Purchase and Sale Agreement dated August 8, 2012 by and among the Sellers named therein and TRMC (the “BP Purchase Agreement”), which assets include the Storage Facility (the “Assets”); 
WHEREAS, on the Closing Date, immediately after TRMC’s acquisition of the Assets pursuant to the BP Purchase Agreement, TRMC desires to contribute the Assets to the General Partner, the General Partner desires to contribute the Assets to the Partnership and the Partnership desires to contribute the Assets to TLO, all on the terms and conditions set forth in that certain Contribution, Conveyance and Assumption Agreement dated May 17, 2013 (the “Contribution Agreement”);
WHEREAS, pursuant to the Contribution Agreement, TLO owns the storage facilities for crude oil, refinery feedstocks and refined products at the facility further described in Schedule A attached hereto (the “Storage Facility”), which includes without limitation the Tanks and Pipelines defined below;
WHEREAS, TLO desires to provide storage and handling services with respect to crude oil, refinery feedstocks and refined products owned by TRMC and stored in one or more of TLO’s Tanks (as defined below); 
WHEREAS, TLO’s Tanks (as defined below) at the Storage Facility have an aggregate Shell Capacity (as defined below) of 1,920,000 Barrels (as defined below);
WHEREAS, by virtue of its indirect ownership interests in the Partnership, TRMC has an economic interest in the financial and commercial success of the Partnership and its operating subsidiary, TLO; and
WHEREAS, TRMC and TLO desire to enter into this Agreement to memorialize the terms of their commercial relationship related to the subject matter hereof.
NOW, THEREFORE, in consideration of the covenants and obligations contained herein, the Parties (as defined below) to this Agreement hereby agree as follows:

		
	1.
	DEFINITIONS

Capitalized terms used throughout this Agreement shall have the meanings set forth below, unless otherwise specifically defined herein.
 “Agreement” has the meaning set forth in the Preamble.
“Applicable Law” means any applicable statute, law, regulation, ordinance, rule, determination, judgment, rule of law, order, decree, permit, approval, concession, grant, franchise, license, requirement, or any similar form of decision of, or any provision or condition of any permit, license or other operating authorization issued by any Governmental Authority having or asserting jurisdiction over the matter or matters in question, whether now or hereafter in effect.
“Barrel” means a volume equal to 42 U.S. gallons of 231 cubic inches each, at 60 degrees Fahrenheit under one atmosphere of pressure.  
“BP Purchase Agreement” has the meaning set forth in the Recitals.
 “Business Day” means a day, other than a Saturday or Sunday, on which banks in New York, New York are open for the general transaction of business.
“Capacity Resolution” has the meaning set forth in Section 7(b).
“Closing Date” means the date on which the transactions are consummated pursuant to the BP Purchase Agreement. 
“Commencement Date” has the meaning set forth in Section 3.
“Commitment” has the meaning set forth in Section 2(a).
“Confidential Information” means all confidential, proprietary or non-public information of a Party, whether set forth in writing, orally or in any other manner, including all non-public information and material of such Party (and of companies with which such Party has entered into confidentiality agreements) that another Party obtains knowledge of or access to, including non-public information regarding products, processes, business strategies and plans, customer lists, research and development programs, computer programs, hardware configuration information, technical drawings, algorithms, know-how, formulas, processes, ideas, inventions (whether patentable or not), trade secrets, schematics and other technical, business, marketing and product development plans, revenues, expenses, earnings projections, forecasts, strategies, and other non-public business, technological, and financial information.
“Construction Notice” has the meaning set forth in Section 17(a).
“Construction Project” has the meaning set forth in Section 17(a).
“Contribution Agreement” has the meaning set forth in the Recitals. 
“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract, or otherwise.

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“Extension Period” has the meaning set forth in Section 4.
“First Offer Period” has the meaning set forth in Section 22(b). 
“Force Majeure” means events or circumstances, whether foreseeable or not, which are not reasonably within the control of TLO and which, by the exercise of due diligence, TLO is unable to prevent or overcome, that prevent performance of TLO’s obligations, including: acts of God, strikes, lockouts or other industrial disturbances, wars, riots, fires, floods, storms, orders of Governmental Authorities, explosions, terrorist acts, breakage, accident to machinery, equipment, storage tanks or lines of pipe, and inability to obtain or unavoidable delays in obtaining material or equipment and similar events.  
“Force Majeure Notice” has the meaning set forth in Section 23(a).
“Force Majeure Period” has the meaning set forth in Section 23(a).
“General Partner” has the meaning set forth in the Preamble.
“Governmental Authority” means any federal, state, local or foreign government or any provincial, departmental or other political subdivision thereof, or any entity, body or authority exercising executive, legislative, judicial, regulatory, administrative or other governmental functions or any court, department, commission, board, bureau, agency, instrumentality or administrative body of any of the foregoing.
“Initial Lease Expiration Date” has the meaning set forth in Section 17(a).
“Lease Agreement” means that certain lease agreement of the Leased Premises, by and between Shippers Transport and BP West Coast Products, LLC, dated as of January 1, 2005, as amended from time to time, and as assigned by BP West Coast Products, LLC to TLO as of the date hereof.  
“Leased Premises” means approximately 59.11 acres of real property located South of Sepulveda Boulevard and East of Wilmington Avenue in the City of Carson and the State of California.
“Month” means the period commencing on the Commencement Date and ending on the last day of the calendar month in which service begins and each successive calendar month thereafter.
“Negotiation Period” has the meaning set forth in Section 17(a).
“New Lease” has the meaning set forth in Section 17(b).
“Operating Capacity” means the effective storage capacity of a Tank, taking into account accepted engineering principles, industry standards, American Petroleum Institute guidelines and Applicable Laws, only as to Products that such Tank is capable of storing, within the requirements of applicable permit requirements and under actual conditions as they may exist at any time.  The current Operating Capacity of each Tank shall be listed on the applicable Terminal Service Order as of the date of such Terminal Service Order. 
“Operating Procedures” has the meaning set forth in Section 15(a).
“Partnership” has the meaning set forth in the Preamble.

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“Partnership Change of Control” means Tesoro Corporation ceases to Control the General Partner.
“Party” or “Parties” means that each of TRMC and TLO is a “Party” and collectively are the “Parties” to this Agreement.  
“Person” means any individual, partnership, limited partnership, joint venture, corporation, limited liability company, limited liability partnership, trust, unincorporated organization or Governmental Authority or any department or agency thereof. 
“Pipeline” or “Pipelines” means those pipelines within the Storage Facility that connect the Tanks to one another and to the receiving and delivery flanges of the Storage Facility.
 “Product” or “Products” means crude oil, refinery feedstocks, refined products, and other materials stored in the Tanks in the ordinary course of business.
“Receiving Party Personnel” has the meaning set forth in Section 29(d).
“Refinery” means TRMC’s refining facility located in Los Angeles, California, including the refining facility formerly owned by BP West Coast Products, LLC, located in Carson, California, and the TRMC refining facility located in Wilmington, California.
“Replacement Customer” has the meaning set forth in Section 25(c).
“Restoration” has the meaning set forth in Section 7(a).
“Right of First Refusal” has the meaning set forth in Section 22(b). 
“ROFO Notice” has the meaning set forth in Section 17(b).
“ROFO Response” has the meaning set forth in Section 17(b).
“Shell Capacity” means the gross storage capacity of a Tank for each respective Product, based upon its dimensions, as set forth for each Tank on Schedule B attached hereto and in applicable Terminal Service Orders.
“Shippers Transport” means Shippers Transport Express, Inc., a California corporation. 
“Storage Facility” has the meaning set forth in the Recitals.
“Storage Services Fee” has the meaning set forth in Section 5(a).
“Surcharge” has the meaning set forth in Section 8(b)(i).
“Tank Heels” consist of the minimum quantity of Product which either (a) must remain in a Tank during all periods when the Tank is available for service to keep the Tank in regulatory compliance or (b) is necessary for physical operation of the Tank.  

 “Tanks” mean the tanks owned by TLO and listed on Schedule B attached hereto, each of which is used for the storage of Products and located at the Storage Facility. 

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“Term” and “Initial Term” each have the meaning set forth in Section 4.
“Terminal Service Order” has the meaning set forth in Section 6(a).
“Termination Notice” has the meaning set forth in Section 23(a).
“TLO” has the meaning set forth in the Preamble.
“TRMC” has the meaning set forth in the Preamble.
“TRMC Termination Notice” has the meaning set forth in Section 23(b).
		
	2.
	STORAGE COMMITMENT

(a)    Commitment. During the Term of this Agreement and subject to the terms and conditions of this Agreement and the effective Operating Capacity of each Tank and the Storage Facility as a whole, TLO shall, as applicable, store all Products tendered by TRMC at the Storage Facility (the “Commitment”).  
(b)    Dedicated Storage.  The Tanks identified on Schedule B attached hereto shall be dedicated and used exclusively for the storage of TRMC’s Products. TRMC shall be responsible for maintaining all Tank Heels required for operation of the Tanks.  Tank Heels cannot be withdrawn from any Tank without prior approval of TLO.  TRMC shall pay the fees specified in the applicable Terminal Service Order for the dedication of the Tanks. 
		
	3.
	COMMENCEMENT DATE

The “Commencement Date” will be June 1, 2013, which is the Closing Date. 
		
	4.
	TERM

The initial term of this Agreement shall commence on the Commencement Date and shall continue through May 31, 2023 (the “Initial Term”); provided, however, that TRMC may, at its option, extend the Initial Term for up to two (2) renewal terms of five (5) years each (each, an “Extension Period”) by providing written notice of its intent to TLO no less than three hundred sixty-five (365) calendar days prior to the end of the Initial Term or the then-current Extension Period. The Initial Term, and any extensions of this Agreement as provided above, shall be referred to herein as the “Term.” 
		
	5.
	STORAGE SERVICES FEE

(a)    Storage Services Fee.  TRMC shall pay a Monthly fee (the “Storage Services Fee”) to reserve, on a firm basis, all of the existing aggregate Shell Capacity of all of the Tanks in the Storage Facility.  Such fee shall include all storage, pumping, and transshipment between and among the Tanks.  Such fee shall be payable by TRMC on a Monthly basis throughout the Term of the Agreement, regardless of the actual volumes of Products stored by TLO on behalf of TRMC; provided, however, that the Parties shall from time to time negotiate an appropriate adjustment to such fee if the following conditions are met: (i) TRMC requires the full Operating Capacity of the Tanks, (ii) the full Operating Capacity of the Tanks is not available to TRMC for any reason (other than any reason resulting from or relating to actions or inactions by TRMC), and (iii) TLO is unable to otherwise accommodate the actual volumes of Products required to be stored by TRMC pursuant to the terms of this Agreement.  Unless 

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otherwise agreed, such adjustment shall be made in proportion to the reduction in Operating Capacity for any time period compared with the Operating Capacity then in effect for the affected Tank or Tanks pursuant to the mutually agreed Terminal Service Orders.  (For example, if the Storage Services Fee applicable to the Shell Capacity of the affected Tank is $0.80 per Barrel per month x 345,000 Barrels = $276,000, and if the Operating Capacity in the then-applicable Terminal Service Order is 301,000 Barrels, and if the Operating Capacity falls 10% to 270,900, then TRMC’s Storage Services Fee for the affected Tank during the period in which the full Operating Capacity of such Tank is not available to TRMC for any reason (other than any reason resulting from or relating to actions or inactions by TRMC) would be reduced by 10% to $248,400.)  Prior to the calculation of a reduced Storage Services Fee in the manner set forth above, there shall have been at least a consecutive twenty-four (24) hour interruption in service. The Parties recognize that the existing Operating Capacity of certain Tanks is less than the Shell Capacity of such Tanks, but the Parties acknowledge and agree that the Storage Services Fee shall be set in terms of a dollar-per-Barrel per Month rate based on Shell Capacity in the applicable Terminal Service Order.
(b)    Rate and Fee.  The Storage Services Fee shall be calculated using the per Barrel rate set forth on the Terminal Service Orders executed effective as of the Commencement Date for the then-existing aggregate Shell Capacity of all of the Tanks in the Storage Facility.  The Storage Services Fee owed during the Month in which the Commencement Date occurs, if less than a full calendar Month, shall be prorated in accordance with the ratio of (i) the number of days in such Month during which this Agreement is effective to (ii) the total number of days in such Month.
		
	6.
	TERMINAL SERVICE ORDERS

(a)    Description. TLO and TRMC shall enter into the Terminal Service Orders referred to in Section 5(b) and may enter into additional terminal service orders substantially in the form attached hereto as Schedule A (each, a “Terminal Service Order”).  Upon a request by TRMC pursuant to this Agreement or as deemed necessary or appropriate by TLO in connection with the services to be delivered pursuant hereto, TLO shall generate a Terminal Service Order to set forth the specific terms and conditions for providing the applicable services described therein and the applicable fees to be charged for such services.  No Terminal Service Order shall be effective until fully executed by both TLO and TRMC.
(b)    Included Items. Items available for inclusion on a Terminal Service Order include, but are not limited to, the following:
(i)    the Operating Capacity and Shell Capacity of each Tank;
(ii)    the Storage Services Fee pursuant to Section 5;
(iii)    any reimbursement pursuant to Section 8(a); 
(iv)     any Surcharge pursuant to Section 8(b); 
(v)    any modification, cleaning, or conversion of a Tank as requested by TRMC pursuant to Section 9(a); 
(vi)    any reimbursement related to newly imposed taxes and regulations pursuant to Section 10; and

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(vii)     any other services that may be agreed upon by the Parties. 
(c)    Fee Increases. Any fees of a fixed amount set forth in this Agreement and any Terminal Service Order shall be increased on January 1 of each year of the Term, commencing on January 1, 2014, by a percentage equal to the positive change, if any, in the CPI-U (All Urban Consumers) during the first twelve (12) Month period beginning fifteen (15) Months preceding such January 1, as reported by the Bureau of Labor Statistics.
(d)    Conflicts.  In case of any conflict between the terms of this Agreement and the terms of any Terminal Service Order, the terms of the applicable Terminal Service Order shall govern.
		
	7.
	CAPABILITIES OF FACILITIES

(a)    Maintenance and Repair.  Subject to Force Majeure and interruptions for routine repair and maintenance, consistent with customary terminal industry standards, TLO shall maintain each Tank and the Pipelines in a condition and with a capacity sufficient to store and handle a volume of TRMC’s Products at least equal to the current Operating Capacity for the Storage Facility as a whole.  TLO’s obligations may be temporarily suspended during the occurrence of, and for the entire duration of, a Force Majeure or other interruption of service, to the extent such Force Majeure or other interruption of service impairs TLO’s ability to perform such obligations.  If for any reason, including, without limitation, a Force Majeure event, the condition of any Tanks and/or associated Pipelines are below the level necessary for TLO to store and handle a volume of TRMC’s Products at least equal to the current Operating Capacity, then within a reasonable period of time thereafter, TLO shall make repairs to restore the capacity of such Tank and/or associated Pipeline(s) to ensure service at the current Operating Capacity (“Restoration”).  Except as provided below in Section 7(b), all of such Restoration shall be at TLO’s cost and expense unless the damage creating the need for such repairs was caused by the negligence or willful misconduct of TRMC, its employees, agents or customers. 
(b)    Capacity Resolution.    In the event of the failure of TLO to maintain any Pipeline or Tank in a condition and with a capacity sufficient to store and handle a volume of TRMC’s Products equal to its current Operating Capacity, then either Party shall have the right to call a meeting between executives of both Parties by providing at least two (2) Business Days’ advance written notice.  Any such meeting shall be held at a mutually agreeable location and will be attended by executives of both Parties each having sufficient authority to commit his or her respective Party to a Capacity Resolution (as defined below).  At the meeting, the Parties will negotiate in good faith with the objective of reaching a joint resolution for the Restoration of capacity of the Tank and/or its associated Pipeline(s) which will, among other things, specify steps to be taken by TLO to fully accomplish Restoration and the deadlines by which the Restoration must be completed (the “Capacity Resolution”).  Without limiting the generality of the foregoing, the Capacity Resolution shall set forth an agreed upon time schedule for the Restoration activities.  Such time schedule shall be reasonable under the circumstances, consistent with customary terminal industry standards and shall take into consideration TLO’s economic considerations relating to costs of the repairs and TRMC’s requirements concerning its refining and marketing operations.  TLO shall use commercially reasonable efforts to continue to provide storage of TRMC’s Products at the Storage Facility, to the extent the Storage Facility has the capability of doing so, during the period before Restoration is completed.  In the event that TRMC’s economic considerations justify incurring additional costs to restore the Tank and/or associated Pipeline(s) in a more expedited manner than the time schedule determined in accordance with the preceding sentences, TRMC may require TLO to expedite the Restoration to the extent reasonably possible, subject to TRMC’s payment upon the occurrence of mutually agreed upon milestones in the Restoration process. In the event that the Operating Capacity of a 

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Tank is reduced, and the Parties agree that the Restoration of such Tank to its full Operating Capacity is not justified under the standards set forth in the preceding sentences, then the Parties shall negotiate an appropriate adjustment to the Storage Services Fee to account for the reduced Operating Capacity available for TRMC’s use.  In the event the Parties agree to an expedited Restoration plan in which TRMC agrees to pay the Restoration costs based on milestone payments or if the Parties agree to a reduced Storage Services Fee, then neither Party shall have the right to terminate this Agreement or any applicable Terminal Service Order pursuant to Section 23 below, so long as any such Restoration is completed with due diligence.  
(c)    TRMC’s Right To Cure.  If at any time after the occurrence of (x) a Partnership Change of Control or (y) a sale of the Refinery, TLO either (i) refuses or fails to meet with TRMC within the period set forth in Section 7(b), (ii) fails to agree to perform a Capacity Resolution in accordance with the standards set forth in Section 7(b), or (iii) fails to perform its obligations in compliance with the terms of a Capacity Resolution, TRMC may, as its sole remedy for any breach by TLO of any of its obligations under Section 7(b), require TLO to complete a Restoration of the affected Pipeline or Tank, and the Storage Services Fee shall be reduced, as described in Section 7(b) above, to account for the reduced Operating Capacity available for TRMC’s use until such Restoration is completed.  Any such Restoration required under this Section 7(c) shall be completed by TLO at TRMC’s cost.  TLO shall use commercially reasonable efforts to continue to provide storage and throughput of TRMC’s Products at the affected Tank or Pipeline while such Restoration is being completed.  Any work performed by TLO pursuant to this Section 7(c) shall be performed and completed in a good and workmanlike manner consistent with applicable pipeline industry standards and in accordance with Applicable Law.  Additionally, during such period after the occurrence of (x) a Partnership Change of Control or (y) a sale of the Refinery, TRMC may exercise any remedies available to it under this Agreement or any Terminal Service Order (other than termination), including the right to immediately seek temporary and permanent injunctive relief for specific performance by TLO of the applicable provisions of this Agreement or any Terminal Service Order, including, without limitation, the obligation to make Restorations as described herein.  
		
	8.
	REIMBURSEMENT; SURCHARGES

(a)    Reimbursement.  TRMC shall reimburse TLO for all of the following: (i) the actual cost of any expenditures that TLO agrees to make upon TRMC’s request, and (ii) any cleaning, degassing or other preparation of the Tanks at the expiration of this Agreement.
(b)    Surcharges. 
(i)    If, during the Term, any existing laws or regulations are changed or any new laws or regulations are enacted that require TLO to make substantial and unanticipated expenditures (whether capitalized or otherwise) with respect to the Storage Facility or with respect to the services provided hereunder, TLO may, subject to the terms of this Section 8(b) impose a surcharge (a “Surcharge”) to cover TRMC’s pro rata share of the cost of complying with these laws or regulations, based upon the percentage of TRMC’s use of the services or facilities impacted by such new laws or regulations.  
(ii)    TLO shall notify TRMC of any proposed Surcharge to be imposed pursuant to Section 8(b)(i). TLO and TRMC then shall negotiate in good faith for up to thirty (30) days to mutually determine the effect of the change in law or regulation or new law or regulation, the cost thereof, and how such cost shall be amortized, with the understanding that TLO and TRMC shall 

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use their reasonable commercial efforts to mitigate the impact of, and comply with, these laws and regulations.  Without limiting the foregoing, if expenditures requiring a Surcharge may be avoided or reduced through changes in operations, then the Parties shall negotiate in good faith to set forth the appropriate changes to Operating Capacities or other performance standards set forth in a Terminal Service Order to evidence the reduction of the amount of a Surcharge while leaving the Parties in the same relative economic position they held before the laws or regulations were changed or enacted.
(iii)    In the event any Surcharge results in less than a fifteen percent (15%) increase in the applicable service fee, TRMC will be assessed such Surcharge on all future invoices during the period in which such Surcharge is in effect for the applicable amortization period, and TLO shall not terminate the affected service from this Agreement. 
(iv)    In the event any Surcharge results in a fifteen percent (15%) or more increase in the applicable service fee, TLO shall notify TRMC of the amount of the Monthly Surcharge required to reimburse TLO for its costs, plus carrying costs, together with reasonable supporting detail for the nature and amount of any such Surcharge.  
(A)    If within thirty (30) days of such notification provided in Section 8(b)(iv), TRMC does not agree to pay such Surcharge or to reimburse TLO up front for its costs, TLO may elect to either:
(1) require TRMC  to pay such Surcharge, up to a fifteen (15%) increase in the applicable service fee; or 
(2) terminate the Tank(s) or other facilities from this Agreement upon notice to TRMC. 
(B)    TLO’s performance obligations under this Agreement shall be suspended or reduced during the above thirty (30)-day period to the extent that TLO would be obligated to make such expenditures to continue performance during such period.  
(v)    TRMC may, at its option, elect to pay the Surcharge by one of the two following methods, to be selected within thirty (30) days of the date TLO notifies TRMC of the proposed Surcharge:
(A)    TRMC may pay the Surcharge to TLO in full upon completion of a project; or
(B)    TRMC may pay a Surcharge in Monthly installments pursuant to the following conditions:  
(1)    the Surcharge payment obligation shall commence upon completion of a project, with the first Surcharge payment to be made in accordance with the first invoice delivered by TLO following completion of the construction.
(2)    the outstanding principal balance of TRMC’s payment obligation shall bear interest at a per annum rate of nine percent (9%), and shall be repaid in equal Monthly installments of principal and interest, with such payment to be based on the outstanding principal balance amortized over (A) five (5) years, or (B) the  number of years remaining in the Term, whichever time period is shorter; provided, however, that if this Agreement is terminated pursuant to Sections 4, 21 or 22, then the remaining unpaid 

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principal balance of TRMC’s will be due and payable within thirty (30) days of the date of such termination hereunder.

		
	9.
	TANK MODIFICATION AND CLEANING; REMOVAL OF PRODUCT

(a)    Tank Modifications.  Each of the Tanks shall be used for its historical service, provided however, that TRMC may request that a Tank be changed for storage of a different grade or type of Product.  In such an instance, TLO shall agree in good faith to a change in such service, if the same can be accomplished in accordance with reasonable commercial standards, accepted industry and engineering guidelines, permit requirements and Applicable Law.  If any such modifications, improvements, vapor recovery, cleaning, degassing, or other preparation of the Tanks is performed by TLO at the request of TRMC, TRMC shall bear all direct costs attributable thereto, including, without limitation, the cost of removal, processing, transportation, and disposal of all waste and the cost of any taxes or mutually agreed charges TLO may be required to pay in regard to such waste (subject to subparagraph (c) below), which costs shall be set forth on the applicable Terminal Service Order.  TLO may require TRMC to pay all such amounts prior to commencement of any remodeling work on the Tanks, or by mutual agreement, the Parties may agree upon an increase in the Storage Services Fee to reimburse TLO for its costs of such modifications, plus a reasonable return on capital. 
(b)    Responsibility for Fees.  Should TLO take any of the Tanks out of service for regulatory requirements, repair, or maintenance, TRMC shall be solely responsible for any alternative storage or Product movements as required and all third-party fees associated with such movements that are not within the Storage Facility; provided that TLO shall not be reimbursed for any costs of transportation through TLO’s facilities that it might be entitled to collect under any tariff or agreement with TRMC.  Unless any Tank is removed specifically at TRMC’s request, TRMC shall not be responsible to TLO for any Storage Services Fees for any Tanks taken out of service during the period that such Tank is out of service.
(c)    Removal of Product. Materials stored in or removed from the Storage Facility shall at all times remain owned by TRMC or any applicable Replacement Customer, and the owner of the Product shall always remain responsible for, at the owner’s sole cost, receiving custody of all of its materials to be removed from the Storage Facility, making appropriate arrangements to receive custody at the Storage Facility in a manner acceptable to TLO, and disposal of such material after custody is returned to the owner. TRMC shall be responsible for any fees and costs associated with the disposal of hazardous waste (unless caused by TLO’s negligence). TLO shall have no obligations regarding disposition of such materials, other than to return custody to the owner at the Storage Facility.

		
	10.
	NEWLY IMPOSED TAXES AND REGULATIONS

TRMC shall promptly reimburse TLO for any newly imposed taxes, levies, royalties, assessments, licenses, fees, charges, surcharges and sums due of any nature whatsoever (other than income taxes, gross receipt taxes and similar taxes) by any federal, state or local government or agency that TLO incurs on TRMC’s behalf for the services provided by TLO under this Agreement or any applicable Terminal Service Order. If TLO is required to pay any of the foregoing, TRMC shall promptly reimburse TLO in accordance with the payment terms set forth in this Agreement. Any such newly imposed taxes shall be specified in an applicable Terminal Service Order.

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	11.
	PAYMENTS

TLO will invoice TRMC on a Monthly basis, and all amounts owed shall be due and payable no later than ten (10) days after TRMC’s receipt of TLO’s invoice.  Any past due payments owed by either Party shall accrue interest, payable on demand, at the lesser of (i) the rate of interest announced publicly by JPMorgan Chase Bank, in New York, New York, as JPMorgan Chase Bank’s prime rate (which Parties acknowledge and agree is announced by such bank and used by the Parties for reference purposes only and may not represent the lowest or best rate available to any of the customers of such bank or the Parties), plus four percent (4%), and (ii) the highest rate of interest (if any) permitted by Applicable Law, from the due date of the payment through the actual date of payment.  

		
	12.
	SCHEDULING

All scheduling of delivery into and redelivery out of the Tanks shall be decided by mutual agreement of the Parties.  TRMC shall identify to TLO prior to the delivery of any Product to the Storage Facility, the specific Tanks to be used for receiving and storing such Product.  
		
	13.
	SERVICES; VOLUME LOSSES

(a)    Services.  The services provided by TLO pursuant to this Agreement or any applicable Terminal Service Order shall only consist of storage of the Products at the Tanks.
(b)    Volume Losses.  From the date hereof for a period of six (6) Months, the Parties agree to adopt the applicable measurement and volume loss control practices of BP Plc at the Terminals as of the date hereof.  The Parties agree to renegotiate the applicable measurement and volume loss control practices at the end of the six (6) Month period.
		
	14.
	CUSTODY TRANSFER AND TITLE

TLO shall be deemed to have custody of the Product after it enters TLO’s fixed receiving flange and until the Product leaves the fixed delivery flange on the receiving manifold at the Storage Facility. TRMC shall be deemed to receive custody of the Product when it enters the delivery flange into the applicable pipeline which delivers Product into the Refinery. Upon re-delivery of any Product to TRMC’s account, TRMC shall become solely responsible for any loss, damage or injury to Person or property or the environment, arising out of transportation, possession or use of such Product after transfer of custody.  Title to all TRMC’s Products received in the Storage Facility shall remain with TRMC at all times.  Both Parties acknowledge that this Agreement and any Terminal Service Order represent a bailment of Products by TRMC to TLO and not a consignment of Products, it being understood that TLO has no authority hereunder to sell or seek purchasers for the Products of TRMC.  TRMC hereby warrants that it shall have good title to and the right to deliver, store and receive Products pursuant to the terms of this Agreement or any applicable Terminal Service Order.  TRMC acknowledges that, notwithstanding anything to the contrary contained in this Agreement or in any Terminal Service Order, TRMC acquires no right, title or interest in or to any of the Storage Facility), except the right to receive, deliver and store the Products in the Tanks.  TLO shall retain control of the Storage Facility.  
		
	15.
	OPERATING PROCEDURES; SERVICE INTERRUPTIONS

(a)    Operating Procedures for TRMC.  TRMC hereby agrees to strictly abide by any and all procedures (the “Operating Procedures”) relating to the operation and use of the Storage Facility 

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(including the Tanks) and the Pipelines that generally apply to receipt, delivery, storage, and movement of Products at the Storage Facility. TLO shall provide TRMC with a current copy of its Operating Procedures and shall provide TRMC with thirty (30) days’ prior written notice of any changes to the Operating Procedures, unless a shorter implementation of such revised Operating Procedures is required by Applicable Law. 
(b)    Operating Procedures for TLO.  TLO shall carry out the handling of the Products at the Storage Facility, the Tanks, and the Pipelines in accordance with the Operating Procedures.
(c)    Service Interruptions.  TLO shall use reasonable commercial efforts to minimize the interruption of service at each Tank and/or any of the associated Pipeline(s).  TLO shall promptly inform TRMC’s operational personnel of any anticipated partial or complete interruption of service at any Tank and/or associated Pipelines, including relevant information about the nature, extent, cause and expected duration of the interruption and the actions TLO is taking to resume full operations, provided that TLO shall not have any liability for any failure to notify, or delay in notifying, TRMC of any such matters except to the extent TRMC has been materially prejudiced or damaged by such failure or delay.   
		
	16.
	LIENS

TLO hereby waives, relinquishes and releases any and all liens, including without limitation, any and all warehouseman’s liens, custodian’s liens, rights of retention and/or similar rights under all applicable laws, which TLO would or might otherwise have under or with respect to all Products stored or handled hereunder.  TLO further agrees to furnish documents reasonably acceptable to TRMC and its lender(s) (if applicable), and to cooperate with TRMC in assuring and demonstrating that Product titled in TRMC’s name shall not be subject to any lien on the Storage Facility or TLO’s Product stored there.

		
	17.
	SHIPPERS TRANSPORT LEASE; STORAGE RIGHT OF FIRST REFUSAL

(a)    Initial Lease Agreement.  Unless it is otherwise extended, the Lease Agreement shall expire as of December 31, 2014 (the “Initial Lease Expiration Date”).  Under the Lease Agreement, Shippers Transport, the lessee, has the right to extend the Lease Agreement for an additional five (5) year term, subject to cancellation by TLO on 180 days’ notice.  The Parties acknowledge that TRMC shall have a right to request that the Leased Premises be instead used for construction of additional tanks or other uses associated with the Refinery (a “Construction Project”).  In such an instance, TRMC shall notify TLO, in writing (the “Construction Notice”), at least twelve (12) months prior to the proposed Lease Agreement cancellation date, of TRMC’s request to TLO that it terminate the Lease Agreement (in accordance with the terms therein and as described below).  TRMC and TLO shall negotiate in good faith for a period of up to 180 days from the date of the Construction Notice (the “Negotiation Period”) to determine the pricing and other primary terms regarding the Construction Project.  If the Parties agree upon mutually acceptable terms during the Negotiation Period, then TLO shall provide notice of cancellation of the Lease Agreement in accordance with its express terms, and TLO and TRMC shall enter into a Terminal Service Order that provides for TLO to provide additional services to TRMC on the Leased Premises under the negotiated terms.  
(b)    Subsequent Lease Agreements.  Upon termination of the Lease Agreement (with an extension for one five-year term beyond the Initial Lease Expiration date, if applicable), TLO shall have the right to enter into new or renewal leases or similar use agreements (each a “New Lease”) covering all or part of the Leased Premises, subject to the following conditions.  TLO shall provide TRMC with at least one hundred twenty (120) days advance notice (the “ROFO Notice”) of any New Lease proposed to 

12

be entered into within twenty (20) years of the date of this Agreement.  The ROFO Notice shall include any material terms, conditions and details as would be reasonably relevant for TRMC to consider in developing a responsive offer (the “ROFO Response”) proposing alternate terms for TLO to provide services to TRMC on the Leased Premises.  TRMC shall have the right to deliver the ROFO Response within sixty (60) days of its receipt of the ROFO Notice, and TLO shall not make any binding commitments for a New Lease during such sixty (60) day period, unless TRMC notifies TLO that it does not desire to make a ROFO Response.  If TRMC delivers a ROFO Response proposing for TLO to provide services to TRMC on the Leased Premises, then the Parties shall have a period of sixty (60) days to negotiate mutually acceptable terms for TRMC to provide such services on the Leased Premises.  Any such terms should provide TLO with equal or greater economic benefit than it would receive from the New Lease outlined in the ROFO Notice.  TLO shall be under no obligation to expend capital, make any improvements or otherwise alter or change the use of the Leased Premises, unless it elects to do.  If the Parties are able to reach agreement on terms for TLO to provide services to TRMC on the Leased Premises, then such terms shall be set forth in a Terminal Service Order, and such services shall be provided pursuant to this Agreement and the applicable Terminal Service Order.  If the Parties are unable to reach agreement on such terms within such sixty (60) day negotiating period, then TLO shall be entitled to execute a New Lease with a third- party, consistent with the terms set forth in the ROFO Notice, provided that no such New Lease entered into within fifteen (15) years of the date of this Agreement shall be for a term in excess of five (5) years, and if such New Lease provides a right for further extensions or renewals, then TRMC shall have a prior right to enter into a Terminal Service Order with TLO for alternate use of such lands on the terms outlined above prior to any such extension or renewal term becoming effective, and any provision in any such New Lease for an extension or renewal of the initial term shall be conditioned upon and subject to TRMC’s rights to make an alternative proposal on the terms set forth in this Section 17(b), the same as if such extension or renewal were a New Lease.
		
	18.
	COMPLIANCE WITH LAW AND GOVERNMENT REGULATIONS

(a)    Compliance With Law.  None of the Products covered by this Agreement or any Terminal Service Order shall be derived from any Product which was produced or withdrawn from storage in violation of any federal, state or other governmental law, nor in violation of any rule, regulation or promulgated by any governmental agency having jurisdiction.  
(b)    Licenses and Permits.  TLO shall maintain all necessary licenses and permits for the storage of Products at the Storage Facility. 
(c)     Applicable Law.  The Parties are entering into this Agreement and any Terminal Service Order in reliance upon and shall fully comply with all Applicable Law which directly or indirectly affects the Products hereunder, or any receipt, throughput delivery, transportation, handling or storage of Products hereunder or the ownership, operation or condition of the Storage Facility.  Each Party shall be responsible for compliance with all Applicable Laws associated with such Party’s respective performance hereunder and the operation of such Party’s facilities.  In the event any action or obligation imposed upon a Party under this Agreement and any Terminal Service Order shall at any time be in conflict with any requirement of Applicable Law, then this Agreement and any Terminal Service Order, shall immediately be modified to conform the action or obligation so adversely affected to the requirements of the Applicable Law, and all other provisions of this Agreement and any Terminal Service Order shall remain effective.  
(d)    New Or Changed Applicable Law.  If during the Term, any new Applicable Law becomes effective or any existing Applicable Law or its interpretation is materially changed, which change is not addressed by another provision of this Agreement or any Terminal Service Order and which 

13

has a material adverse economic impact upon a Party, then either Party, acting in good faith, shall have the option to request renegotiation of the relevant provisions of this Agreement or any Terminal Service Order with respect to future performance.  The Parties shall then meet and negotiate in good faith amendments to this Agreement or to an applicable Terminal Service Order that will conform to the new Applicable Law while preserving the Parties’ economic, operational, commercial and competitive arrangements in accordance with the understandings set forth herein.  
		
	19.
	LIMITATION ON LIABILITY

Notwithstanding anything to the contrary contained herein, except to the extent set forth herein, neither Party shall be liable or responsible to the other Party or such other Party’s affiliated Persons for any consequential, incidental, or punitive damages, or for loss of profits or revenues (collectively referred to as “special damages”) incurred by such Party or its affiliated Persons that arise out of or relate to this Agreement or any Terminal Service Order, REGARDLESS OF WHETHER ANY SUCH CLAIM ARISES UNDER OR RESULTS FROM CONTRACT, NEGLIGENCE, OR STRICT LIABILITY OF THE PARTY WHOSE LIABILITY IS BEING WAIVED HEREBY; provided that the foregoing limitation is not intended and shall not affect special damages imposed in favor of unaffiliated Persons that are not Parties to this Agreement.  
		
	20.
	INDEMNIFICATION

(a)    TLO Indemnities. Notwithstanding anything else contained in this Agreement or any Terminal Service Order, TLO shall release, defend, protect, indemnify, and hold harmless TRMC from and against any and all demands, claims (including third-party claims), losses, costs, suits, or causes of action (including, but not limited to, any judgments, losses, liabilities, fines, penalties, expenses, interest, reasonable legal fees, costs of suit, and damages, whether in law or equity and whether in contract, tort, or otherwise) for or relating to (i) personal or bodily injury to, or death of the employees of TRMC and, as applicable, its carriers, customers, representatives, and agents, (ii) loss of or damage to any property, products, material, and/or equipment belonging to TRMC and, as applicable, its carriers, customers, representatives, and agents, and each of their respective affiliates, contractors, and subcontractors (except for those volume losses of Products provided for herein), (iii) loss of or damage to any other property, products, material, and/or equipment of any other description (except for those volume losses of Products provided for herein), and/or personal or bodily injury to, or death of any other Person or Persons; and with respect to clauses (i) through (iii) above, which is caused by or resulting in whole or in part from the acts and omissions of TLO in connection with the ownership or operation of the Pipelines or the Storage Facility and the services provided hereunder, and, as applicable, its carriers, customers (other than TRMC), representatives, and agents, or those of their respective employees with respect to such matters, and (iv) any losses incurred by TRMC due to violations of this Agreement or any Terminal Service Order by TLO, or, as applicable, its customers (other than TRMC), representatives, and agents; PROVIDED THAT TLO SHALL NOT BE OBLIGATED TO INDEMNIFY OR HOLD HARMLESS TRMC FROM AND AGAINST ANY CLAIMS TO THE EXTENT THEY RESULT FROM THE BREACH OF CONTRACT, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF TRMC.

(b)    TRMC Indemnities. Notwithstanding anything else contained in this Agreement or any Terminal Service Order, TRMC shall release, defend, protect, indemnify, and hold harmless TLO and each of its affiliates, officers, directors, shareholders, agents, employees, successors-in-interest, and assignees from and against any and all demands, claims (including third-party claims), losses, costs, suits, or causes of action (including, but not limited to, any judgments, losses, liabilities, fines, penalties, expenses, interest, reasonable legal fees, costs of suit, and damages, whether in law or equity and whether 

14

in contract, tort, or otherwise) for or relating to (i) personal or bodily injury to, or death of the employees of TLO and, as applicable, its carriers, customers, representatives, and agents; (ii) loss of or damage to any property, products, material, and/or equipment belonging to TLO and, as applicable, its carriers, customers, representatives, and agents, and each of their respective affiliates, contractors, and subcontractors (except for those volume losses of Products provided for herein); (iii) loss of or damage to any other property, products, material, and/or equipment of any other description (except for those volume losses of Products provided for herein), and/or personal or bodily injury to, or death of any other Person or Persons; and with respect to clauses (i) through (iii) above, which is caused by or resulting in whole or in part from the acts and omissions of TRMC, in connection with TRMC’s use of the Pipelines or the Storage Facility and the services provided hereunder and TRMC’s Products stored hereunder, and, as applicable, its carriers, customers, representatives, and agents, or those of their respective employees with respect to such matters; and (iv) any losses incurred by TLO due to violations of this Agreement or any Terminal Service Order by TRMC, or, as applicable, its carriers, customers, representatives, and agents;  PROVIDED THAT TRMC SHALL NOT BE OBLIGATED TO INDEMNIFY OR HOLD HARMLESS TLO FROM AND AGAINST ANY CLAIMS TO THE EXTENT THEY RESULT FROM THE BREACH OF CONTRACT, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF TLO. For the avoidance of doubt, nothing herein shall constitute a release by TRMC of any volume losses that are caused by gross negligence, breach of this Agreement or any Terminal Service Order, or willful misconduct of TLO.    

		
	21.
	TERMINATION; RIGHT TO ENTER INTO A NEW AGREEMENT

(a)    Termination for Default.  A Party shall be in default under this Agreement or any Terminal Service Order if:
(i)    the Party breaches any provision of this Agreement or a Terminal Service Order, which breach has a material adverse effect on the other Party (with such material adverse effect being determined based on this Agreement and all Terminal Service Orders considered as a whole), and such breach is not excused by Force Majeure or cured within fifteen (15) Business Days after notice thereof (which notice shall describe such breach in reasonable detail) is received by such Party (unless such failure is not commercially reasonably capable of being cured in such fifteen (15) Business Day Period in which case such Party shall have commenced remedial action to cure such breach and shall continue to diligently and timely pursue the completion of such remedial action after such notice); or
(ii)    the Party (A) files a petition or otherwise commences, authorizes or acquiesces in the commencement of a proceeding or cause of action under any bankruptcy, insolvency, reorganization or similar Applicable Law, or has any such petition filed or commenced against it, (B) makes an assignment or any general arrangement for the benefit of creditors, (C) otherwise becomes bankrupt or insolvent (however evidenced) or (D) has a liquidator, administrator, receiver, trustee, conservator or similar official appointed with respect to it or any substantial portion of its property or assets.
If either Party is in default as described above, then (i) if TRMC is in default, TLO may or (ii) if TLO is in default, TRMC may: (1) terminate this Agreement and all applicable Terminal Service Orders upon notice to the defaulting Party; (2) withhold any payments due to the defaulting Party under this Agreement and the Terminal Service Orders; and/or (3) pursue any other remedy at law or in equity.

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(b)    If a Party breaches any provision of this Agreement or a Terminal Services Order, which breach does not have a material adverse effect on the other Party, the breaching Party shall still have the obligation to cure such breach.

(c)    Obligations at Termination.  Unless otherwise mutually agreed by the Parties, within thirty (30) days of the termination or expiration of this Agreement, (i) TRMC shall promptly remove all of its removable Products from the Storage Facility and (ii) TLO shall remove the remaining Tank Heels and tank bottoms and deliver them to TRMC or TRMC’s designee. In the event all of the Product is not removed within such thirty (30) day period, TRMC shall be assessed a holdover storage fee, calculated on the same basis as the Storage Services Fee, to all Products held in storage more than thirty (30) days beyond the termination or expiration of this Agreement until such time TRMC’s entire Product is removed from the Tanks and the Storage Facility; provided, however, that TRMC shall not be assessed any storage fees associated with the removal of Product to the extent that TRMC’s ability to remove such Product is delayed or hindered by TLO, its agents, or contractors for any reason.

		
	22.
	RIGHT TO ENTER INTO A NEW STORAGE AGREEMENT

(a)    Right to Enter New Agreement.  Upon termination of this Agreement for reasons other than (x) a default by TRMC and (y) any other termination of this Agreement initiated by TRMC pursuant to Section 21, TRMC shall have the right to require TLO to enter into a new storage services agreement (with ancillary Terminal Service Orders, as appropriate) with TRMC that (i) is consistent with the terms set forth in this Agreement and Terminal Service Orders in effect at the time of such termination, (ii) relates to the same Storage Facility and the Tanks that are the subject matter of this Agreement and applicable Terminal Service Orders, and (iii) has commercial terms that are, in the aggregate, equal to or more favorable to TLO than fair market value terms as would be agreed by similarly-situated parties negotiating at arm’s length; provided, however, that the term of any such new storage services agreement shall not extend beyond May 31, 2033.  
(b)    New Agreement; Right of First Refusal. In the event that TLO proposes to enter into a storage services agreement with a third party within two (2) years after the termination of this Agreement for reasons other than (x) by default by TRMC and (y) any other termination of this Agreement initiated by TRMC pursuant to Section 21, TLO shall give TRMC ninety (90) days’ prior written notice of any proposed new storage services agreement with a third party, including (i) details of all of the material terms and conditions thereof and (ii) a thirty (30)-day period (beginning upon TRMC’s receipt of such written notice) (the “First Offer Period”) in which TRMC may make a good faith offer to enter into a new storage services agreement with TLO (the “Right of First Refusal”).  If TRMC makes an offer on terms no less favorable to TLO than the third-party offer with respect to such storage services agreement during the First Offer Period, then TLO shall be obligated to enter into a storage services agreement with TRMC on the terms set forth in subsection (a) above. If TRMC does not exercise its Right of First Refusal in the manner set forth above, TLO may, for the next ninety (90) days, proceed with the negotiation of the third-party storage services agreement. If no third party agreement is consummated during such ninety-day period, the terms and conditions of this Section 22(b) shall again become effective. 
		
	23.
	FORCE MAJEURE 

(a)    Force Majeure Notice. As soon as possible upon the occurrence of a Force Majeure, TLO shall provide TRMC with written notice of the occurrence of such Force Majeure (a “Force Majeure Notice”).  TLO shall identify in such Force Majeure Notice the approximate length of time that TLO reasonably believes in good faith such Force Majeure shall continue (the “Force Majeure Period”).  For 

16

the duration of the Force Majeure Period, the Storage Services Fee shall be reduced by an amount equal to the Shell Capacity for each affected Tank, provided that if TRMC is able to continue to store Product in a Tank during the Force Majeure Period, but at a reduced Operating Capacity, the Storage Services Fee shall be reduced in proportion to the amount the effective Operating Capacity is reduced.  If TLO advises in any Force Majeure Notice that it reasonably believes in good faith that the Force Majeure Period shall continue for more than twelve (12) consecutive Months, then, subject to Section 7 above, at any time after TLO delivers such Force Majeure Notice, either Party may terminate that portion of this Agreement or any Terminal Service Order solely with respect to the affected Tank(s), but only upon delivery to the other Party of a notice (a “Termination Notice”) at least twelve (12) Months prior to the expiration of the Force Majeure Period; provided, however; that such Termination Notice shall be deemed cancelled and of no effect if the Force Majeure Period ends prior to the expiration of such twelve-Month period.  For the avoidance of doubt, neither Party may exercise its right under this Section 23(a) to terminate this Agreement or any Terminal Service Order as a result of a Force Majeure with respect to any machinery, storage, tanks, lines of pipe or other equipment that has been unaffected by, or has been restored to working order since, the applicable Force Majeure, including pursuant to a Restoration under Section 7.
(b)    Termination Notice. Notwithstanding the foregoing, if TRMC delivers a Termination Notice to TLO (the “TRMC Termination Notice”) and, within thirty (30) days after receiving such TRMC Termination Notice, TLO notifies TRMC that TLO reasonably believes in good faith that it shall be capable of fully performing its obligations under this Agreement or any Terminal Service Order within a reasonable period of time and TRMC mutually agrees, which agreement shall not be unreasonably withheld, then the TRMC Termination Notice shall be deemed revoked and the applicable portion of this Agreement or any Terminal Service Order shall continue in full force and effect as if such TRMC Termination Notice had never been given.
		
	24.
	SUSPENSION OF REFINERY OPERATIONS

This Agreement shall continue in full force and effect regardless of whether TRMC decides to permanently or temporarily suspend refining operations at the Refinery. TRMC is not permitted to suspend or reduce its obligations under this Agreement or any Terminal Service Order in connection with a shutdown of the Refinery for scheduled turnarounds or other regular servicing or maintenance.  If refining operations at the Refinery are suspended for any reason (including Refinery turnarounds and other scheduled maintenance), then TRMC shall remain liable for Storage Services Fees under this Agreement or any Terminal Service Order for the duration of the suspension.  TRMC shall provide at least thirty (30) days’ prior written notice of any suspension of operations at the Refinery due to a planned turnaround or scheduled maintenance.
		
	25.
	ASSIGNMENT; SUBCONTRACT; PARTNERSHIP CHANGE OF CONTROL

(a)    Assignment to TLO.  On the Commencement Date, the General Partner shall assign all of its rights and obligations under this Agreement to the Partnership.  The Partnership shall immediately assign its rights and obligations hereunder to TLO.  Upon such assignment to TLO, TLO shall have all of the respective rights and obligations set forth herein during the Term of this Agreement.
(b)    TRMC Assignment to Third Party. TRMC shall not assign any of its rights or obligations under this Agreement without TLO’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed; provided, however, that TRMC may assign this Agreement without TLO’s consent in connection with a sale by TRMC of the Refinery so long as the transferee: (i) agrees to assume all of TRMC’s obligations under this Agreement and (ii) is financially and operationally capable 

17

of fulfilling the terms of this Agreement, which determination shall be made by TRMC in its reasonable judgment. 
(c)    Subcontract. Should TRMC desire to subcontract to a third party (“Replacement Customer”) any dedicated storage subject to a Terminal Service Order, TRMC must notify TLO in writing prior to the proposed start of the subcontract.  TLO has the right to approve any Replacement Customer with such approval being conditioned only upon reasonable commercial standards. Unless otherwise agreed in writing between TRMC and TLO, and between Replacement Customer and TLO, TRMC will continue to be liable for all terms and conditions of this Agreement related to any subcontracted Tank, including, but not limited to, remittance of any fees set forth in a Terminal Service Order applicable to the subcontracted Tank.  TRMC shall be responsible for collection of any fees due to TRMC from the Replacement Customer.  TRMC and TLO may mutually agree that operational notices concerning scheduling and similar matters can be directly provided between TLO and any Replacement Customer.
(d)    TLO Assignment. TLO shall not assign any of its rights or obligations under this Agreement without TRMC’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed; provided, however, that (i) TLO may assign this Agreement without TRMC’s consent in connection with a sale by TLO of the Storage Facility so long as the transferee: (A) agrees to assume all of TLO’s obligations under this Agreement; (B) is financially and operationally capable of fulfilling the terms of this Agreement, which determination shall be made by TLO in its reasonable judgment; and (C) is not a competitor of TRMC; and (ii) TLO shall be permitted to make a collateral assignment of this Agreement solely to secure working capital financing for TLO.   
(e)    Notification of Assignment. Any assignment that is not undertaken in accordance with the provisions set forth above shall be null and void ab initio.  A Party making any assignment shall promptly notify the other Party of such assignment, regardless of whether consent is required.  This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns.
(f)    Partnership Change of Control. TRMC’s obligations hereunder shall not terminate in connection with a Partnership Change of Control, provided, however, that in the case of any Partnership Change of Control, TRMC shall have the option to extend the Term of this Agreement as provided in Section 4.  TLO shall provide TRMC with notice of any Partnership Change of Control at least sixty (60) days prior to the effective date thereof.
		
	26.
	ACCOUNTING PROVISIONS AND DOCUMENTATION; AUDIT

(a)    Storage Services Fee Documentation. Within ten (10) Business Days following the end of each Month, TLO shall furnish TRMC with a statement showing, by Tank, a calculation of all of TRMC’s Monthly Storage Services Fees.  TLO shall furnish all appropriate documentation to support the calculation of all fees, and, to the extent reasonably available, to document movement of Products through the Storage Facility.
(b)    Access. Each Party and its duly authorized agents and/or representatives shall have reasonable access to the accounting records and other documents maintained by the other Party which relate to this Agreement, and shall have the right to audit such records at any reasonable time or times during the Term and for a period of up to three years after termination of this Agreement.  Claims as to 

18

shortage in quantity or defects in quality shall be made by written notice within ninety (90) days after the delivery in question or shall be deemed to have been waived.
		
	27.
	INSURANCE 

(a)    Coverage. At all times during the Term and for a period of two (2) years after termination of this Agreement for any coverage maintained on a “claims-made” or “occurrence” basis, TRMC shall maintain at its expense the below listed insurance in the amounts specified below which are minimum requirements. Such insurance shall provide coverage to TLO and such policies, other than Worker’s Compensation Insurance, shall include TLO as an Additional Insured.  Each policy shall provide that it is primary to and not contributory with any other insurance, including any self-insured retention, maintained by TLO (which shall be excess) and each policy shall provide the full coverage required by this Agreement and any Terminal Service Order.  All such insurance shall be written with carriers and underwriters acceptable to TLO, and eligible to do business in the State of California and having and maintaining an A.M. Best financial strength rating of no less than “A-” and financial size rating no less than “VII”; provided that TRMC may procure worker’s compensation insurance from the State of California. All limits listed below are required MINIMUM LIMITS:
		
	(i)
	Workers Compensation and Occupational Disease Insurance which fully complies with Applicable Law of the State of California, in limits not less than statutory requirements; 

		
	(ii)
	Employers Liability Insurance with a minimum limit of $1,000,000 for each accident, covering injury or death to any employee which may be outside the scope of the worker’s compensation statute of the jurisdiction in which the worker’s service is performed, and in the aggregate as respects occupational disease; 

		
	(iii)
	Commercial General Liability Insurance, with minimum limits of $1,000,000 combined single limit per occurrence for bodily injury and property damage liability, or such higher limits as may be required by TLO or by Applicable Law from time to time.  This policy shall include Broad Form Contractual Liability insurance coverage which shall specifically apply to the obligations assumed in this Agreement and any Terminal Service Order by TRMC; 

		
	(iv)
	Automobile Liability Insurance covering all owned, non-owned and hired vehicles, with minimum limits of $1,000,000 combined single limit per occurrence for bodily injury and property damage liability, or such higher limit(s) as may be required by TRMC or by Applicable Law from time to time.  Limits of liability for this insurance must be not less than $1,000,000 per occurrence;

		
	(v)
	Excess (Umbrella) Liability Insurance with limits not less than $4,000,000 per occurrence.  Additional excess limits may be utilized to supplement inadequate limits in the primary policies required in items (ii), (iii), and (iv) above; 

(vi)       Pollution Legal Liability with limits not less than $25,000,000 per loss with an annual aggregate of $25,000,000.  Coverage shall apply to bodily injury and property damage including loss of use of damaged property and property that has not been physically injured; cleanup costs, defense, including costs and expenses incurred in the investigation, defense or settlement of claim; and
		
	(vii)
	Property Insurance, with a limit of no less than $1,000,000, which property insurance shall be first-party property insurance to adequately cover TRMC’s owned property; including personal property of others. 

19

(b)    Waiver of Subrogation. All such policies must be endorsed with a Waiver of Subrogation endorsement, effectively waiving rights of recovery under subrogation or otherwise, against TLO, and shall contain where applicable, a severability of interest clause and a standard cross liability clause. 
(c)    Insurance Certificates. Upon execution of this Agreement and prior to the operation of any equipment by TRMC, TRMC will furnish to TLO, and at least annually thereafter (or at any other times upon request by TLO) during the Term (and for any coverage maintained on a “claims-made” basis, for two (2) years after the termination of this Agreement or any applicable Terminal Service Order), insurance certificates and/or certified copies of the original policies to evidence the insurance required herein.  Such certificates shall be in the form of the “Accord” Certificate of Insurance, and reflect that they are for the benefit of TLO and shall provide that there will be no material change in or cancellation of the policies unless TLO is given at least thirty (30) days prior written notice.  Certificates providing evidence of renewal of coverage shall be furnished to TLO prior to policy expiration. 
(d)    Self-Insurance. TRMC shall be solely responsible for any deductibles or self-insured retention. 
		
	28.
	NOTICE

All notices, requests, demands, and other communications hereunder will be in writing and will be deemed to have been duly given: (i) if by transmission by hand delivery, when delivered; (ii) if mailed via the official governmental mail system, five (5) Business Days after mailing, provided said notice is sent first class, postage pre-paid, via certified or registered mail, with a return receipt requested; (iii) if mailed by an internationally recognized overnight express mail service such as Federal Express, UPS, or DHL Worldwide, one (1) Business Day after deposit therewith prepaid; or (iv) by e-mail one (1) Business Day after delivery with receipt confirmed.  All notices will be addressed to the Parties at the respective addresses as follows:

If to TRMC, to:

Tesoro Refining & Marketing Company LLC 
19100 Ridgewood Parkway
San Antonio, Texas 78259

For legal notices:
Attention:  Charles L. Magee, General Counsel
phone:  (253) 896-8766
email: charles.l.magee@tsocorp.com

For all other notices and communications:
Attention:  Paul E. Carlson, Director of Supply Operations 
phone:  (210) 626-4389
email: paul.e.carlson@tsocorp.com

If to TLO, to: 

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Tesoro Logistics Operations LLC
19100 Ridgewood Parkway
San Antonio, Texas 78259

For legal notices:
Attention:  Charles S. Parrish, General Counsel
phone:  (210) 626-4280
email: charles.s.parrish@tsocorp.com

For all other notices and communications:
Attention:  Rick D. Weyen, Vice President, Logistics
phone:  (210) 626-4379
email: rick.d.weyen@tsocorp.com

or to such other address or to such other Person as either Party will have last designated by notice to the other Party.

		
	29.
	CONFIDENTIAL INFORMATION

(a)    Obligations. Each Party shall use reasonable efforts to retain the other Parties’ Confidential Information in confidence and not disclose the same to any third party nor use the same, except as authorized by the disclosing Party in writing or as expressly permitted in this Section 29. Each Party further agrees to take the same care with the other Party’s Confidential Information as it does with its own, but in no event less than a reasonable degree of care. Excepted from these obligations of confidence and non-use is that information which:
(i)    is available, or become available, to the general public without fault of the receiving Party;
(ii)    was in the possession of the receiving Party on a non-confidential basis prior to receipt of the same from the disclosing Party;
(iii)    is obtained by the receiving Party without an obligation of confidence from a third party who is rightfully in possession of such information and, to the receiving Party’s knowledge, is under no obligation of confidentiality to the disclosing Party; or
(iv)    is independently developed by the receiving Party without reference to or use of the disclosing Party’s Confidential Information.
For the purpose of this Section 29, a specific item of Confidential Information shall not be deemed to be within the foregoing exceptions merely because it is embraced by, or underlies, more general information in the public domain or in the possession of the receiving Party.
(b)    Required Disclosure. Notwithstanding Section 29(a) above, if the receiving Party becomes legally compelled to disclose the Confidential Information by a court, Governmental Authority or Applicable Law, or is required to disclose by the listing standards of any applicable securities exchange of the disclosing Party’s Confidential Information, the receiving Party shall promptly advise the disclosing Party of such requirement to disclose Confidential Information as soon as the receiving Party becomes aware that such a requirement to disclose might become effective, in order that, where possible, 

21

the disclosing Party may seek a protective order or such other remedy as the disclosing Party may consider appropriate in the circumstances. The receiving Party shall disclose only that portion of the disclosing Party’s Confidential Information that it is required to disclose and shall cooperate with the disclosing Party in allowing the disclosing Party to obtain such protective order or other relief.
(c)    Return of Information. Upon written request by the disclosing Party, all of the disclosing Party’s Confidential Information in whatever form shall be returned to the disclosing Party or destroyed with destruction certified by the receiving Party upon termination of this Agreement, without the receiving Party retaining copies thereof except that one copy of all such Confidential Information may be retained by a Party’s legal department solely to the extent that such Party is required to keep a copy of such Confidential Information pursuant to Applicable Law, and the receiving Party shall be entitled to retain any Confidential Information in the electronic form or stored on automatic computer back-up archiving systems during the period such backup or archived materials are retained under such Party’s customary procedures and policies; provided, however, that any Confidential Information retained by the receiving Party shall be maintained subject to confidentiality pursuant to the terms of this Section 29, and such archived or back-up Confidential Information shall not be accessed except as required by Applicable Law.
(d)    Receiving Party Personnel. The receiving Party will limit access to the Confidential Information of the disclosing Party to those of its employees, attorneys and contractors that have a need to know such information in order for the receiving Party to exercise or perform its rights and obligations under this Agreement or any Terminal Service Order (the “Receiving Party Personnel”). The Receiving Party Personnel who have access to any Confidential Information of the disclosing Party will be made aware of the confidentiality provision of this Agreement, and will be required to abide by the terms thereof. Any third party contractors that are given access to Confidential Information of a disclosing Party pursuant to the terms hereof shall be required to sign a written agreement pursuant to which such Receiving Party Personnel agree to be bound by the provisions of this Agreement, which written agreement will expressly state that it is enforceable against such Receiving Party Personnel by the disclosing Party.
(e)    Survival. The obligation of confidentiality under this Section 29 shall survive the termination of this Agreement for a period of two (2) years.
		
	30.
	MISCELLANEOUS

(a)    Modification; Waiver.  This Agreement or any Terminal Service Order may be amended or modified only by a written instrument executed by the Parties.  Any of the terms and conditions of this Agreement or any Terminal Service Order may be waived in writing at any time by the Party entitled to the benefits thereof.  No waiver of any of the terms and conditions of this Agreement or any Terminal Service Order, or any breach thereof, will be effective unless in writing signed by a duly authorized individual on behalf of the Party against which the waiver is sought to be enforced.  No waiver of any term or condition or of any breach of this Agreement or any Terminal Service Order will be deemed or will constitute a waiver of any other term or condition or of any later breach (whether or not similar), nor will such waiver constitute a continuing waiver unless otherwise expressly provided.
(b)    Integration.  This Agreement, together with the Schedules and Terminal Service Orders, constitutes the entire agreement among the Parties pertaining to the subject matter hereof and supersedes all prior agreements and understandings of the Parties in connection therewith. The Parties acknowledge that they have executed other agreements on or prior to the Commencement Date, including the 

22

Contribution Agreement, Amendment No. 1 to the Second Amended and Restated Omnibus Agreement and the Amendment and Restatement of Schedules to the Second Amended and Restated Omnibus Agreement, the Master Terminalling Services Agreement – Southern California and the Amendment and Restatement of Schedules to the Amended and Restated Operational Services Agreement, each by and among the parties thereto. In the event of conflict with regard to the subject matter hereof between the above-referenced documents and this Agreement (together with the Schedules and Terminal Service Orders), this Agreement (together with the Schedules and Terminal Service Orders) shall control.
(c)    Governing Law; Jurisdiction.  This Agreement and any Terminal Service Order shall be governed by the laws of the State of Texas without giving effect to its conflict of laws principles. Each Party hereby irrevocably submits to the exclusive jurisdiction of any federal court of competent jurisdiction situated in the United States District Court for the Western District of Texas, San Antonio Division, or if such federal court declines to exercise or does not have jurisdiction, in the district court of Bexar County, Texas. The Parties expressly and irrevocably submit to the jurisdiction of said Courts and irrevocably waive any objection which they may now or hereafter have to the laying of venue of any action, suit or proceeding arising out of or relating to this Agreement or any Terminal Service Order brought in such Courts, irrevocably waive any claim that any such action, suit or proceeding brought in any such Court has been brought in an inconvenient forum and further irrevocably waive the right to object, with respect to such claim, action, suit or proceeding brought in any such Court, that such Court does not have jurisdiction over such Party.  The Parties hereby irrevocably consent to the service of process by registered mail, postage prepaid, or by personal service within or without the State of Texas.  Nothing contained herein shall affect the right to serve process in any manner permitted by law. 
(d)    Counterparts.  This Agreement and any Terminal Service Order may be executed in one or more counterparts (including by facsimile or portable document format (pdf)) for the convenience of the Parties hereto, each of which counterparts will be deemed an original, but all of which counterparts together will constitute one and the same agreement.
(e)    Severability.  Whenever possible, each provision of this Agreement and any Terminal Service Order will be interpreted in such manner as to be valid and effective under applicable law, but if any provision of this Agreement or any Terminal Service Order or the application of any such provision to any Person or circumstance will be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision hereof, and the Parties will negotiate in good faith with a view to substitute for such provision a suitable and equitable solution in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid, illegal or unenforceable provision.
(f)    No Third Party Beneficiaries.  It is expressly understood that the provisions of this Agreement and any Terminal Service Order do not impart enforceable rights in anyone who is not a Party or successor or permitted assignee of a Party.
(g)    WAIVER OF JURY TRIAL.  EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY PROCEEDINGS RELATING TO THIS AGREEMENT OR ANY PURCHASE ORDER OR ANY PERFORMANCE OR FAILURE TO PERFORM OF ANY OBLIGATION HEREUNDER.

23

(h)    Schedules and Terminal Service Orders(s).  Each of the Schedules and Terminal Service Order(s) attached hereto and referred to herein is hereby incorporated in and made a part of this Agreement as if set forth in full herein.

24

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

	
					
	TESORO LOGISTICS OPERATIONS  
LLC
	 
	TESORO REFINING & MARKETING
COMPANY LLC

	 
	 
	 
	 
	 

	By:
	 /s/ PHILLIP M. ANDERSON
	 
	By:
	 /s/ GREGORY J. GOFF

	 
	Phillip M. Anderson
	 
	 
	Gregory J. Goff

	

	President
	 
	 
	President

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	Solely with respect to Section 25(a):
	 
	Solely with respect to Section 25(a):

	TESORO LOGISTICS GP, LLC
	 
	TESORO LOGISTICS LP

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	By:
	 /s/ PHILLIP M. ANDERSON
	 
	 
	 

	 
	Phillip M. Anderson
	 
	By:
	Tesoro Logistics GP, LLC, its

	 
	President
	 
	 
	general partner

	 
	 
	 
	 
	 

	 
	 
	 
	By:
	 /s/ PHILLIP M. ANDERSON

	 
	 
	 
	 
	Phillip M. Anderson

	 
	 
	 
	 
	President

Signature Page to Carson Storage Services Agreement

SCHEDULE A
The crude oil storage facility located at 24696 South Wilmington in Carson, California, including 5 above-ground storage tanks, with approximately 117 acres of real property and a main office located thereon, and including the option to expand such facility to include the Leased Premises. 

Schedule A – 
Carson Storage Services Agreement

SCHEDULE B
TANKS
	
		
	TANK NUMBER
	SHELL CAPACITY (in Barrels)

	401
	345,000

	402
	350,000

	403
	350,000

	404
	434,000

	405
	441,000

	TOTAL:
	1,920,000

Schedule B – 
Carson Storage Services Agreement

EXHIBIT 1 
FORM OF TERMINAL SERVICE ORDER
(CARSON [  ]- ___, 20__)

This Terminal Service Order is entered as of ___, 20__, by and between Tesoro Refining & Marketing Company LLC, a Delaware limited liability company, and Tesoro Logistics Operations LLC, a Delaware limited liability company, pursuant to and in accordance with the terms of the Carson Storage Services Agreement dated as of __________, 2013, by and among such parties and Tesoro Logistics GP, LLC, a Delaware limited liability company, and Tesoro Logistics LP, a Delaware limited partnership (the “Agreement”).
Capitalized terms not otherwise defined herein shall have the meaning set forth in the Agreement.
Pursuant to Section 6 of the Agreement, the parties hereto agree to the following provisions:
(i)    the Operating Capacity and Shell Capacity of each Tank;
(ii)    the Storage Services Fee pursuant to Section 5;
(iii)    any reimbursement pursuant to Section 8(a); 
(iv)     any Surcharge pursuant to Section 8(b); 
(v)    any modification, cleaning, or conversion of a Tank as requested by TRMC pursuant to Section 9(a); 
(vi)    any reimbursement related to newly imposed taxes and regulations pursuant to Section 10; and
(vii)     any other services that may be agreed upon by the Parties. 
Except as set forth in this Terminal Service Order, the other terms of the Agreement shall continue in full force and effect and shall apply to the terms of this Terminal Service Order.

Exhibit 1 – 
Carson Storage Services Agreement

IN WITNESS WHEREOF, the parties hereto have duly executed this Terminal Service Order as of the date first written above.
	
			
	TESORO REFINING & MARKETING COMPANY LLC

	 
	 
	 

	 
	 
	 

	By:
	 
	 

	Name:
	 

	Title:
	 

	 
	 
	 

	 
	 
	 

	TESORO LOGISTICS OPERATIONS LLC
	 

	 
	 
	 

	 
	 
	 

	By:
	 
	 

	Name:
	 

	Title:
	 

Exhibit 1 – 
Carson Storage Services AgreementExhibit 10.1 - Feltheimer Employment Agreement

Exhibit 10.1
EMPLOYMENT AGREEMENT
This employment agreement (this “Agreement”) by and between Lions Gate Entertainment Corp.  (“Lions Gate”) and Jon Feltheimer (“Feltheimer”) is entered into as of May 30, 2013.  Lions Gate and Feltheimer agree that as of the Effective Date (as defined below), the terms of this Agreement shall replace and supersede the amended and restated employment agreement entered into as of December 30, 2008, between Feltheimer and Lions Gate (the “Prior Agreement”).
This Agreement relates to the terms and conditions of Feltheimer’s employment with Lions Gate for the term specified herein.
The parties hereby agree as follows:
1.Employment.  Lions Gate hereby employs Feltheimer to serve in the capacity of Chief Executive Officer of Lions Gate (“CEO”) on the terms and conditions set forth herein.  Feltheimer shall have such powers and authority with respect to the management of Lions Gate consistent with his position hereunder as shall be determined by the Board of Directors of Lions Gate (the “Board”).  All employees of Lions Gate, its divisions and subsidiaries shall report to Feltheimer, and he shall have hiring and firing authority over same; provided, however, that subject to prior good faith consultation with Feltheimer, the Board shall have the right to instruct Feltheimer to terminate any such employee with respect to whom it believes in good faith it has “cause” (as generally defined in Section 9(d) below) and may thereafter terminate such employee if Feltheimer elects not to do so.  Feltheimer shall be responsible to and report solely to the Board. 
2.    Term.  Feltheimer’s employment term under this Agreement shall commence on May 22, 2013 (the “Effective Date”) and continue through and including the fifth (5th) anniversary of the Effective Date (the “Expiration Date”), subject to early termination as provided in this Agreement (the “Term”).
3.    Base Salary.  Lions Gate shall pay Feltheimer an annual fixed salary of US$1,500,000 from the Effective Date through the end of the Term (“Base Salary”) payable in equal installments in accordance with Lions Gate’s standard payroll practices. 
4.    Discretionary Annual Bonus.
(a)    Bonus Opportunity.  During the Term, Feltheimer shall be eligible to receive a discretionary annual bonus (the “Discretionary Bonus”) based on Lions Gate’s fiscal year.  The Discretionary Bonus shall have a target of one hundred percent (100%) of Feltheimer’s Base Salary.  Lions Gate’s Compensation Committee (“Compensation Committee”) shall establish performance criteria upon which the determination of the Discretionary Bonus amount, if any, shall be made, such criteria to be established at the beginning of the applicable fiscal year.  For any fiscal year in which Feltheimer is employed for only a portion of that fiscal year, Feltheimer shall be eligible to receive a pro‐rata Discretionary Bonus following the end of and with respect to that fiscal year as provided herein.  The Discretionary Bonus (or portion thereof if Section 4(b) below applies), if any, that is payable in cash shall be payable in a timely manner, but in any event when bonuses, if any, are generally 

1

given to Lions Gate’s other senior-level employees and in all events within the “short-term deferral” period provided under Treasury Regulation Section 1.409A-1(a)(4).  
(b)    Equity Payment of Bonus Above $1.5 Million.  In the event that the total Discretionary Bonus awarded to Feltheimer for a given fiscal year is greater than one million five hundred thousand dollars (US$1,500,000), the Compensation Committee may provide that all or a portion of the total amount of such Discretionary Bonus that is greater than one million five hundred thousand dollars (US$1,500,000) will be paid in the form of an award of Lions Gate common shares (with the number of shares subject to any such award to be determined as provided in Section 4(c) below).  Any such shares awarded to Feltheimer pursuant to this Section 4(b) shall be fully vested on the date on which the Compensation Committee determines whether any such Discretionary Bonus will be paid to Feltheimer for such fiscal year (the date of any such determination by the Compensation Committee, the “Bonus Determination Date”).
(c)    Determination of Equity Awarded for Bonus.  If any portion of a Discretionary Bonus is to be paid to Feltheimer in the form of an award of fully vested Lions Gate common shares pursuant to this Section 4, the number of shares subject to such award shall be determined by the Compensation Committee on the applicable Bonus Determination Date based on the per-share closing price (in regular trading) of Lions Gate’s common shares on that date, and such shares shall be paid to Feltheimer at the same time cash bonuses for such fiscal year are paid as provided in Section 4(a).
5.    Equity Awards.
(a)    Grants of Options.  Subject to regulatory approval if required, Feltheimer shall be granted the following options to purchase common shares of Lions Gate (the “Options”):
		
	◦
	on or about the Effective Date, an Option to purchase 2,000,000 common shares of Lions Gate at a per-share exercise price established by the Committee at the time of grant of the Option;

		
	◦
	effective as of the first trading day in January 2014 (and subject to Feltheimer’s continued employment with Lions Gate through such date and the applicable share limits of Lions Gate’s stock incentive plan), an Option to purchase 250,000 shares of Lions Gate at a per-share exercise price equal to the closing price of a Lions Gate common share on the grant date of the Option (the “First January 2014 Option”); and

		
	◦
	effective as of the first trading day in January 2014 (and subject to Feltheimer’s continued employment with Lions Gate through such date and the applicable share limits of Lions Gate’s stock incentive plan), an Option to purchase 1,000,000 shares of Lions Gate at a per-share exercise price equal to the greater of (i) $30.00 or (ii) the closing price of a Lions Gate common share on the grant date of the Option (the “Second January 2014 Option”).

Each Option shall be evidenced by and subject to the terms of an option agreement in the form generally then used by Lions Gate to evidence grants of stock options under Lions Gate’s stock incentive plan.  

2

(b)    Grants of RSUs.  Subject to regulatory approval if required, Feltheimer shall be granted the following awards of restricted stock units with respect to common shares of Lions Gate (the “RSU Grants”):
		
	◦
	on or about the Effective Date, an RSU Grant with respect to 200,000 common shares of Lions Gate;

		
	◦
	if the per-share exercise price of the First January 2014 Option is greater than $26.55, effective as of the first trading day in January 2014 (and subject to Feltheimer’s continued employment with Lions Gate through such date and the applicable share limits of Lions Gate’s stock incentive plan), an RSU Grant with respect to a number of common shares of Lions Gate equal to (i) the product obtained by multiplying 250,000 by the amount by which the per-share exercise price of the First January 2014 Option exceeds $26.55, divided by (ii) the closing price of a Lions Gate common share on the grant date of the RSU Grant; and

		
	◦
	if the per-share exercise price of the Second January 2014 Option is greater than $30.00, effective as of the first trading day in January 2014 (and subject to Feltheimer’s continued employment with Lions Gate through such date and the applicable share limits of Lions Gate’s stock incentive plan), an RSU Grant with respect to a number of common shares of Lions Gate equal to (i) the product obtained by multiplying 1,000,000 by the amount by which the per-share exercise price of the Second January 2014 Option exceeds $30.00, divided by (ii) the closing price of a Lions Gate common share on the grant date of the RSU Grant.

Each RSU Grant shall be evidenced by and subject to the terms of a restricted stock unit agreement in the form generally then used by Lions Gate to evidence grants of restricted stock units under Lions Gate’s stock incentive plan.
(c)    Date of Vesting; Date Exercisable.  Subject to Feltheimer’s continued employment hereunder, each of the foregoing Options and RSU Grants shall vest and, in the case of the Options, become exercisable as to twenty-five percent (25%) of the shares subject to the award on each of May 23, 2014, May 23, 2015, May 23, 2016 and May 23, 2017; provided, however, if the vesting of such awards is accelerated pursuant to Section 6(b), 10(b) or 10(c) below, then the foregoing requirement that Feltheimer be an employee shall not apply with respect to any of the foregoing vesting dates.  If shareholder or regulatory approval of any Option or RSU Grant is necessary and Lions Gate is unable to obtain such approval for all or any portion of either such award, then Feltheimer shall be entitled to alternative commensurate compensation, the details of which shall be negotiated in good faith.  The number of common shares of the Options and the RSU Grants and, in the case of the Options, the exercise prices are in each case subject to customary adjustments upon the occurrence of stock splits and similar events. 
(d)    Pre-Existing and Other Equity.  The foregoing Options and RSU Grants shall be in addition to any equity awards granted to Feltheimer by Lions Gate prior to the Effective Date (the “Pre-Existing Equity”).  The Pre-Existing Equity will continue to be governed by its existing terms (subject to any express provision for acceleration of the Pre-Existing Equity provided herein).

3

6.    Change of Control.  In the event of a “Change of Control” as defined below, the following shall apply:
(a)    Change of Control definition.  For purposes of this Agreement, the term “Change of Control” shall mean:
		
	(i)
	if any person, other than (a) any person who holds or controls entities that, in the aggregate (including the holdings of such person), hold or control twenty-five percent (25%) or more of the outstanding shares of Lions Gate on the date of execution of this Agreement by each party hereto (collectively, a “Twenty-Five Percent Holder”) or (b) a trustee or other fiduciary holding securities of Lions Gate under an employee benefit plan of Lions Gate, becomes the beneficial owner, directly or indirectly, of securities of Lions Gate representing thirty-three percent (33%) or more of the outstanding shares as a result of one or more related transactions in the context of a merger, consolidation, sale or other disposition of equity interests or assets of Lions Gate, excluding any transactions or series of transactions involving a sale or other disposition of securities of Lions Gate by a Twenty-Five Percent Holder;

		
	(ii)
	if, as a result of one or more related transactions in the context of a merger, consolidation, sale or other disposition of equity interests or assets of Lions Gate, there is a sale or disposition of thirty-three percent (33%) or more of Lions Gate's assets (or consummation of any transaction, or series of related transactions, having similar effect);

		
	(iii)
	if, as a result of one or more related transactions in the context of a merger, consolidation, sale or other disposition of equity interests or assets of Lions Gate, there occurs a change or series of changes in the composition of the Board as a result of which half or less than half of the directors are incumbent directors;

		
	(iv)
	if, as a result of one or more related transactions in the context of a merger, consolidation, sale or other disposition of equity interests or assets of Lions Gate (excluding any sale or other disposition of securities of Lions Gate by a Twenty-Five Percent Holder in a single transaction or a series of transactions), a shareholder or group of shareholders acting in concert, other than a Twenty-Five Percent Holder in a single transaction or a series of transactions, obtain control of thirty-three percent (33%) or more of the outstanding shares of Lions Gate;

		
	(v)
	if, as a result of one or more related transactions in the context of a merger, consolidation, sale or other disposition of equity interests or assets of Lions Gate, a shareholder or group of shareholders acting in concert obtain control of at least half of the Board;

		
	(vi)
	if there is a dissolution or liquidation of Lions Gate; or

4

		
	(vii)
	if there is any transaction or series of related transactions that has the substantial effect of any one or more of the foregoing, excluding, if applicable, any transaction or series of transactions involving a Twenty-Five Percent Holder as and to the extent so excluded above.

(b)    Change in Control Severance.
(i)    If, upon or within twelve (12) months following a Change of Control, Lions Gate terminates Feltheimer’s employment without Cause pursuant to Section 9(f) or Feltheimer terminates his employment for Good Reason pursuant to Section 9(e)(iv), then, subject to Sections 10(d) and 11(b), Feltheimer shall be entitled, in addition to the Accrued Obligations (as defined below), to receive the Severance Benefits (as identified in Section 10(c) below and subject to the terms and conditions set forth therein); provided, however, that the amount of the cash severance payable to Feltheimer in connection with such a termination of his employment as provided in Section 10(c)(i) shall be equal to the greater of (1) the present value (using the then prevailing rate of interest charged to Lions Gate by its principal lender as the discount rate) of payment of Feltheimer’s Base Salary through the Expiration Date, or (2) US$4,500,000, such payment to be made as provided in Section 10(c)(i).
(ii)    As used herein, a “Separation from Service” occurs when Feltheimer dies, retires, or otherwise has a termination of employment with Lions Gate that constitutes a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h)(1), without regard to the optional alternative definitions available thereunder.
(c)    Definition of Accrued Obligations.  As used in this Agreement, “Accrued Obligations” means accrued but unpaid (i) Base Salary, (ii) expense reimbursement, (iii) vacation pay, if any, and (iv) vested equity awards.
7.    Benefits/Expenses.
(a)    During the Term, Feltheimer shall be eligible for all employee benefits (including health insurance and 401(k) or other retirement plans) per Lions Gate’s standard benefit program on terms not less favorable than those provided generally to other senior executives of Lions Gate.  Feltheimer shall be entitled to take paid time off without a reduction in salary, subject to the demands and requirements of Feltheimer’s duties and responsibilities under this Agreement.  Feltheimer shall not accrue any vacation.
(b)    During the Term, Lions Gate shall, consistent with its normal practice, promptly reimburse Feltheimer for all travel, entertainment and other reasonable business expenses incurred by him in promoting the business of Lions Gate.  In addition to the benefits provided in Section 7(a), Feltheimer shall be entitled to benefits commensurate with his position as Chief Executive Officer of a publicly held company in the entertainment industry.  Without limiting the foregoing, Feltheimer shall be permitted to use Lions Gate’s private plane on terms consistent with past practice and entitled to payment by Lions Gate of reasonable club membership dues.
(c)    During the Term, Lions Gate shall provide Feltheimer with life and disability insurance policies providing Feltheimer (or his estate, as applicable) with US$2,000,000 in benefits.  Feltheimer shall reasonably cooperate with Lions Gate in fulfilling its obligations to provide such policies.

5

(d)    Notwithstanding the foregoing, nothing contained in this Agreement shall obligate Lions Gate to adopt or implement any benefits, or prevent or limit Lions Gate from making any blanket amendments, changes, or modifications of the eligibility requirements or any other provisions of, or terminating, in its entirety, any benefit at any time, and Feltheimer’s participation in or entitlement under any such benefit shall at all times be subject in all respects thereto; provided, however, that Feltheimer shall be treated no less favorably than other senior executives of Lions Gate generally.
8.    Devotion of Time/Services.  Feltheimer recognizes that consistent with his position as CEO he is required to devote substantially all of his business time and services to the business and interests of Lions Gate and, due to Feltheimer’s high level position, failure to do so would cause a material and substantial disruption to Lions Gate’s operations.  Consistent with the foregoing, Feltheimer agrees that he shall not undertake any activity that is in direct conflict with the essential enterprise related interests of Lions Gate.  As long as Feltheimer’s meaningful business time is devoted to Lions Gate, Feltheimer may devote a reasonable amount of time to minimal outside consulting activities, management of personal investments and charitable, political and civic activities, so long as these activities do not directly conflict with Lions Gate’s interests or otherwise materially interfere with Feltheimer’s performance under this Agreement.
9.    Termination.  Feltheimer’s employment and the Term shall terminate upon the happening of any one or more of the following events:
(a)    upon mutual written agreement between Lions Gate and Feltheimer;
(b)    upon the death of Feltheimer;
(c)    by Lions Gate giving written notice of termination to Feltheimer during the continuance of any Disability (as defined below) at any time after he has been unable to perform the material services or material duties required of him in connection with his employment by Lions Gate as a result of physical or mental Disability (or disabilities) which has (or have) continued for a period of twelve (12) consecutive weeks, or for a period of sixteen (16) weeks in the aggregate, during any twelve (12) consecutive month period.  Notwithstanding any other provision herein, during any period of Disability hereunder which lasts for more than two (2) consecutive weeks, in its exercise of good faith business judgment, and in consultation with Feltheimer (if practical), the Board may appoint an interim CEO to fulfill the duties and responsibilities of Feltheimer and such appointment shall not be deemed a breach of this Agreement; provided, however, that upon the termination of Feltheimer’s Disability, Feltheimer shall immediately resume the position of sole CEO and his duties and responsibilities in accordance with the terms of this Agreement and the interim CEO shall cease serving in such capacity.  For purposes of this Agreement, “Disability” shall mean a physical or mental impairment which renders Feltheimer unable to perform the essential functions of his position, with even reasonable accommodation, which does not impose an undue hardship on Lions Gate.  Lions Gate reserves the right, acting reasonably and in good faith, to make the determination of Disability under this Agreement based upon information supplied by Feltheimer and/or his medical personnel, as well as information from medical personnel (or others) selected by Lions Gate or its insurers.  Feltheimer shall have ten (10) business days following written notice by Lions Gate to cure the Disability, if such Disability is capable of cure;
(d)    by giving written notice of termination for Cause.  “Cause,” as used herein, means that Feltheimer has engaged in or committed any of the following: (a) conviction of a felony, except a 

6

felony relating to a traffic accident or traffic violation; (b) gross negligence or willful misconduct with respect to Lions Gate, which shall include, but is not limited to theft, fraud or other illegal conduct, refusal or unwillingness to perform employment duties, sexual harassment, any willful (and not legally protected act) that is likely to and which does in fact have the effect of injuring the reputation, business or a business relationship of Lions Gate, violation of any fiduciary duty, and violation of any duty of loyalty; or (c) any material breach of this Agreement by Feltheimer; provided, however, Lions Gate shall not terminate Feltheimer’s employment hereunder pursuant to this Section 9(d) unless it shall first give Feltheimer written notice of the alleged defect and the same is not cured within fifteen (15) business days of such written notice;
(e)    by Feltheimer giving notice of his intention to terminate for one of the following reasons:
		
	(i)
	Feltheimer accepts a full time position with the federal or state government,

		
	(ii)
	Feltheimer accepts a full time position with a philanthropic or non-profit organization,

		
	(iii)
	Feltheimer moves his permanent residence from the U.S.  to another country, or

		
	(iv)
	Feltheimer terminates his employment with Lions Gate for Good Reason.  For purposes of this Agreement, “Good Reason” shall mean (in each case without the written consent of Feltheimer): 

		
	(A)
	a material diminution in Feltheimer’s position, authorities, duties or responsibilities from the level in effect on the Effective Date;

		
	(B)
	a material reduction of Feltheimer’s Base Salary or target Discretionary Bonus as in effect on the commencement of the Term or as the same may be increased from time to time;

		
	(C)
	a requirement by Lions Gate that Feltheimer report to anyone other than the Board; or

		
	(D)
	any material breach by Lions Gate of this Agreement or any other compensatory arrangement between Lions Gate and Feltheimer.

Good Reason shall not include death or Disability.  Feltheimer’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason hereunder; provided, however, that a termination of employment by Feltheimer shall not be considered a termination for Good Reason unless it occurs within eighteen (18) months following the event claimed to constitute Good Reason.  Feltheimer shall provide Lions Gate written notice of any event claimed to constitute Good Reason within ninety (90) days after the occurrence of the event (or, if later, the date on which Feltheimer knows or reasonably should know of such occurrence), and Lions Gate shall have an opportunity to cure any claimed event of Good Reason within thirty (30) days after its receipt of such notice from Feltheimer.  Lions Gate shall notify Feltheimer of the timely cure of any claimed event of Good Reason and the manner in which such cure was effected, and upon receipt of written notice from 

7

Feltheimer of his concurrence that a cure has been effectuated, any notice of termination delivered by Feltheimer based on such claimed Good Reason shall be deemed withdrawn and shall not be effective to terminate this Agreement.
(f)    by Lions Gate giving notice to Feltheimer of termination without Cause.
10.    Effect of Termination.
(a)    With Cause.  If Lions Gate terminates this Agreement pursuant to Section 9(d) above, Lions Gate shall have no further obligation to pay Feltheimer any compensation of any kind other than the Accrued Obligations. 
(b)    Death or Disability.  In the event of the termination of this Agreement pursuant to Section 9(b) or (c) above, Lions Gate shall have the obligation to pay Feltheimer’s estate or Feltheimer, as applicable, any Accrued Obligations.  In addition, in the event of the termination of this Agreement due to Feltheimer’s death (but not Disability), the Options, the RSU Grants and any Pre-Existing Equity, to the extent then outstanding and unvested, will be fully vested and, in the case of stock options, become exercisable upon the date of death.  In the event of a termination due to Feltheimer’s Disability, Lions Gate shall continue to pay the premiums for life and disability premiums for Feltheimer as contemplated by Section 7(c) above through the Expiration Date.
(c)    Termination Without Cause or by Feltheimer for Good Reason.  If Lions Gate terminates Feltheimer’s employment without Cause pursuant to Section 9(f) or Feltheimer terminates his employment with Lions Gate for Good Reason pursuant to Section 9(e)(iv) above and, in either case, the release requirement under Section 10(d) is met, then Lions Gate shall pay Feltheimer, subject to Section 11(b) and in addition to the Accrued Obligations, the following payments and benefits (collectively, the “Severance Benefits”):
		
	(i)
	except as provided in Section 6(b), a cash severance payment equal to the present value (using the then prevailing rate of interest charged to Lions Gate by its principal lender as the discount rate) of payment of Feltheimer’s Base Salary through the Expiration Date, such payment to be made in a lump sum as soon as practicable after (and in all events not more than sixty (60) days after) the date of Feltheimer’s Separation from Service; provided, however, that if the 60-day period following Feltheimer’s Separation From Service spans two calendar years, such payment shall be made within such 60-day period but in the second of the two calendar years;

		
	(ii)
	 if Feltheimer timely elects continued health coverage for himself (and, if applicable his eligible dependents) under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), Lions Gate will pay or reimburse Feltheimer’s COBRA premiums for up to six (6) months following his Separation from Service (provided that Lions Gate’s obligation to make any payment pursuant to this sentence shall cease upon the date Feltheimer becomes eligible for substantially similar coverage under the health plan of a future employer);

8

		
	(iii)
	the Options, the RSU Grants and any Pre-Existing Equity, to the extent then outstanding and unvested, will be fully vested and, in the case of stock options, become exercisable upon the date of Feltheimer’s Separation from Service;

		
	(iv)
	Feltheimer shall be entitled to payment of (a) any Discretionary Bonus that would otherwise have been paid to Feltheimer had his employment with Lions Gate not terminated with respect to any fiscal year that ended before the date of his termination (to the extent such bonus has not previously been paid) and (b) any Discretionary Bonus that would otherwise have been paid to Feltheimer had his employment with Lions Gate not terminated with respect to the fiscal year in which the date of his termination occurs, multiplied by a fraction, the numerator of which is the total number of days in such fiscal year on which Feltheimer was employed by Lions Gate and the denominator of which is the total number of days in such fiscal year;

		
	(v)
	Lions Gate shall continue to pay the premiums for life and disability insurance for Feltheimer as contemplated by Section 7(c) above through the Expiration Date; and

		
	(vi)
	in the event such a termination of Feltheimer’s employment occurs prior to the first trading day in January 2014, Feltheimer shall be entitled to an additional cash payment equal to the sum of (a) 250,000 multiplied by the amount (if any) by which the average of the per-share closing prices over the five (5) trading days ending on the day before the date of his termination of employment (the “Average Stock Price”) exceeds $26.55, and (b) 1,000,000 multiplied by the amount (if any) by which the Average Stock Price exceeds $30.00, such payment to be made in a cash lump sum at the same time as the cash severance payment described above.  For avoidance of doubt, no payment shall be made pursuant to this Section 10(c)(vi) as to any termination of Feltheimer’s employment that occurs on or after the grant of the First January 2014 Option and the Second January 2014 Option.

If Feltheimer’s employment with Lions Gate is terminated pursuant to Sections 6(b), 9(a) – (c) or 9(e) – (f) above, Feltheimer shall have no obligation to mitigate and Lions Gate shall have no right to offset any income thereafter received by Feltheimer against Lions Gate’s payment obligations to him.
(d)    Release.  Notwithstanding any other provision herein, Feltheimer’s right to receive any severance benefits pursuant to Section 6(b) or Section 10(c) of this Agreement shall be subject to his execution and delivery to Lions Gate of a general release of claims in substantially the form attached hereto as Exhibit A (with such changes as may be reasonably required to such form to help ensure its enforceability in light of any changes in applicable law) not more than twenty-one (21) days (forty-five (45) days if required under applicable law) after the date Lions Gate provides the final form of release to Feltheimer (and Feltheimer’s not revoking such release within any revocation period provided under applicable law).  Lions Gate shall provide the final form of release agreement to Feltheimer not later than seven (7) days following the termination date.

9

11.    Section 409A.
(a)    It is intended that any amounts payable under this Agreement and any exercise of authority or discretion hereunder by Lions Gate or Feltheimer shall comply with Section 409A of the Code (including the Treasury regulations and other published guidance relating thereto) (“Section 409A”) so as not to subject Feltheimer to payment of any interest or additional tax imposed under Section 409A.  To the extent that any amount payable under this Agreement would trigger the additional tax imposed by Section 409A, this Agreement shall be construed and interpreted in a manner to avoid such additional tax yet preserve (to the nearest extent reasonably possible) the intended benefit payable to Feltheimer.
(b)    Notwithstanding any other provision herein, if Feltheimer is a “specified employee” within the meaning of Treasury Regulation Section 1.409A-1(i) as of the date of Feltheimer’s Separation from Service, Feltheimer shall not be entitled to any payment or benefit pursuant to Section 6(b) or 10(c) above until the earlier of (i) the date which is six (6) months after his Separation from Service for any reason other than death, or (ii) the date of Feltheimer’s death.  Any amounts otherwise payable to Feltheimer upon or in the six (6) month period following Feltheimer’s Separation from Service that are not so paid by reason of this paragraph shall be paid as soon as practicable (and in all events within thirty (30) days) after the date that is six (6) months after Feltheimer’s Separation from Service (or, if earlier, as soon as practicable, and in all events within thirty (30) days, after the date of Feltheimer’s death) and any such payments shall be increased by an amount equal to interest on such payments for the period commencing with the date such payment would have otherwise been made but for this Section 11(b) (the “Original Payment Date”) and ending on the date such payment is actually made, at an interest rate equal to the prevailing rate of interest charged to Lions Gate by its principal lender in effect as of the Original Payment Date.  The provisions of this paragraph shall only apply if, and to the extent, required to avoid the imputation of any tax, penalty or interest pursuant to Section 409A of the Code.
(c)    To the extent that any benefits or reimbursements pursuant to Section 6(b), 7 or 10(c) are taxable to Feltheimer, any reimbursement payment due to Feltheimer pursuant to any such provision shall be paid to Feltheimer on or before the last day of Feltheimer’s taxable year following the taxable year in which the related expense was incurred.  The benefits and reimbursements pursuant to such provisions are not subject to liquidation or exchange for another benefit and the amount of such benefits and reimbursements that Feltheimer receives in one taxable year shall not affect the amount of such benefits or reimbursements that Feltheimer receives in any other taxable year.
12.    Indemnification.  Except with respect to claims resulting from Feltheimer’s willful misconduct or acts outside the scope of his employment hereunder, Feltheimer shall be defended, indemnified and held harmless by Lions Gate (whether during or after the Term) in respect of all claims arising from or in connection with his position or services as an officer of Lions Gate to the maximum extent permitted in accordance with Lions Gate’s Certificate of Incorporation, its By-Laws and under applicable law (including, without limitation and as applicable, attorney’s fees), and shall be covered by Lions Gate’s applicable directors and officers insurance policy, which coverage shall be no less favorable than that accorded any other officer or director of Lions Gate.
13.    Company Policies.  Feltheimer shall abide by the provisions of all policy statements, including without limitation any conflict of interest policy statement, of Lions Gate or adopted by Lions Gate from time to time during the Term and furnished to Feltheimer in writing or of which he has notice.

10

14.    Non-Solicitation.  Feltheimer shall not, during the Term and for a period of one (1) year thereafter, directly or indirectly, induce or attempt to induce any employee or contractor of Lions Gate or its affiliates (other than Feltheimer’s exclusive personal assistant), to leave Lions Gate or its affiliates or to render services for any other person, firm or corporation.
15.    Property of Lions Gate.  Feltheimer acknowledges that the relationship between the parties hereto is exclusively that of employer and employee and that Lions Gate’s obligations to him are exclusively contractual in nature.  Lions Gate and/or its affiliates shall be the sole owner or owners of all interests and proceeds of Feltheimer’s services hereunder, including without limitation, all ideas, concepts, formats, suggestions, developments, arrangements, designs, packages, programs, scripts, audio visual materials, promotional materials, photography and other intellectual properties and creative works which Feltheimer may prepare, create, produce or otherwise develop in connection with and during his employment hereunder, including without limitation, all copyrights and all rights to reproduce, use, authorize others to use and sell such properties or works at any time or place for any purpose, free and clear of any claims by Feltheimer (or anyone claiming under him) of any kind or character whatsoever (other than Feltheimer’s right to compensation hereunder).  Feltheimer shall have no right in or to such properties or works and shall not use such properties or works for his own benefit or the benefit of any other person.  Feltheimer shall, at the reasonable request of Lions Gate, execute such assignments, certificates, applications, filings, instruments or other documents consistent herewith as Lions Gate may from time to time reasonably deem necessary or desirable to evidence, establish, maintain, perfect, protect, enforce or defend its right, title and interest in or to such properties or works.  Notwithstanding anything to the contrary herein, Feltheimer’s personal rolodex shall remain his personal property during the Term of this Agreement and following its expiration or earlier termination.  Feltheimer’s assignment of rights in this paragraph does not apply to any invention which fully qualifies under Section 2870 of the California Labor Code.
16.    Confidential Information.  All memoranda, notes, records and other documents made or compiled by Feltheimer, or made available to him during his employment with Lions Gate concerning the business or affairs of Lions Gate or its affiliates shall be Lions Gate’s property and shall be delivered to Lions Gate on the termination of this Agreement or at any other time on request from Lions Gate.  Feltheimer shall keep in confidence and shall not use for himself or others, or divulge to others except in the performance of his duties hereunder, any information concerning the business or affairs of Lions Gate or its affiliates which is not otherwise publicly available and which is obtained by Feltheimer as a result of his employment, including without limitation, trade secrets or processes and information reasonably deemed by Lions Gate to be proprietary in nature, including without limitation, financial information, programming or plans of Lions Gate or its affiliates, unless disclosure is permitted by Lions Gate or required by law or legal process.
17.    Right to Use Name.  During the term, Lions Gate shall have the right to use Feltheimer’s approved biography, name and approved likeness in connection with its business, including in advertising its products and services, but not for use as a direct or indirect endorsement.
18.    Miscellaneous.
(a)    Governing Law.  This Agreement shall be governed and construed in accordance with the laws of the State of California without regard to principles of conflict of laws.

11

(b)    Amendments.  This Agreement may be amended or modified only by a written instrument executed by each of the parties hereto.
(c)    Titles and Headings.  Section or other headings contained herein are for convenience of reference only and shall not affect in any way the meaning or interpretation of any of the terms or provisions hereof.
(d)    Entire Agreement.  This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior agreements, negotiations and understandings of the parties in connection therewith (including, without limitation, the Prior Agreement, except as expressly provided herein).  Notwithstanding the foregoing, except as expressly set forth herein, the terms and conditions of the agreements that evidence equity-based awards granted by Lions Gate to Feltheimer that are outstanding as of the Effective Date are outside of the scope of the preceding provisions of this Section 18(d) and continue in effect.
(e)    Successors and Assigns.  This Agreement is binding upon the parties hereto and their respective successors, assigns, heirs and personal representatives.  Except as specifically provided herein, neither of the parties hereto may assign the rights and duties of this Agreement or any interest therein, by operation of law or otherwise, without the prior written consent of the other party, except that, without such consent, Lions Gate shall assign this Agreement to, and provide for the assumption thereof by, any successor to all or substantially all of its stock, assets and business by dissolution, merger, consolidation, transfer of assets or otherwise.
(f)    Arbitration.  In exchange for the benefits of the speedy, economical and impartial dispute resolution procedure of arbitration, Lions Gate and Feltheimer, with the advice and consent of their selected counsel, choose to forego their right to resolution of their disputes in a court of law by a judge or jury, and instead elect to treat their disputes, if any, pursuant to the Federal Arbitration Act and/or California Civil Procedure Code §§ 1281, et seq.
(i)    Feltheimer and Lions Gate agree that any and all claims or controversies whatsoever brought by Feltheimer or Lions Gate, arising out of or relating to this Agreement, Feltheimer’s employment with Lions Gate, or otherwise arising between Feltheimer and Lions Gate, will be settled by final and binding arbitration in accordance with the applicable rules and procedures of Judicial Arbitration and Mediation Services, Inc.  (“JAMS”).  This includes all claims whether arising in tort or contract and whether arising under statute or common law.  Such claims may include, but are not limited to, those relating to this Agreement, wrongful termination, retaliation, harassment, or any statutory claims under Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Fair Employment and Housing Act, the Age Discrimination in Employment Act, the Americans with Disabilities Act, or similar Federal or state statutes.  In addition, any claims arising out of the public policy of California, any claims of wrongful termination, employment discrimination, retaliation, or harassment of any kind, as well as any claim related to the termination or non-renewal of this Agreement shall be arbitrated under the terms of this Agreement.  The obligation to arbitrate such claims will survive the termination of this Agreement.  Lions Gate shall be responsible for all costs of the arbitration services, including the fees and costs of the arbitrator and court reporter fees, unless Feltheimer wishes to share such costs voluntarily.  To the extent permitted by law, the hearing and all filings and other proceedings shall be treated in a private and confidential manner by the arbitrator and all parties and representatives, and shall not be disclosed except as necessary for any related judicial proceedings.

12

(ii)    The arbitration will be conducted before an arbitrator who is a member of JAMS and mutually selected by the parties from the JAMS Panel.  In the event that the parties are unable to mutually agree upon an arbitrator, each party shall select an arbitrator from the JAMS Panel and the two selected arbitrators shall jointly select a third, and the arbitrators shall jointly preside over the arbitration.  The arbitrator(s) will have jurisdiction to determine the arbitrability of any claim.  The arbitrator(s) shall have a business office in or be a resident of Los Angeles County, California.  The arbitrator(s) shall have the authority to grant all monetary or equitable relief (including, without limitation, injunctive relief, ancillary costs and fees, and punitive damages) available under state and Federal law.  Either party shall have the right to appeal any adverse rulings or judgments to the JAMS Panel of Retired Appellate Court Justices.  Judgment on any award rendered by the arbitrator(s) may be entered and enforced by any court having jurisdiction thereof.
(iii)    Notwithstanding the foregoing, the parties agree to participate in non-binding mediation with a mutually selected mediator prior to initiation of any arbitration process, except that either party may file any formal arbitration demand as necessary to preserve their legal rights.
19.    Limit on Benefits.
(a)    Notwithstanding anything contained in this Agreement to the contrary, to the extent that the payments and benefits provided under this Agreement and benefits provided to, or for the benefit of, Feltheimer under any other Lions Gate plan or agreement (such payments or benefits are collectively referred to as the “Payments” for purposes of this Section 19) would be subject to the excise tax (the “Excise Tax”) imposed under Section 4999 of the U.S.  Internal Revenue Code of 1986, as amended (the “Code”), the Payments shall be reduced (but not below zero) if and to the extent that a reduction in the Payments would result in Feltheimer retaining a larger amount, on an after-tax basis (taking into account federal, state and local income taxes and the Excise Tax), than if Feltheimer received all of the Payments (such reduced amount is referred to hereinafter as the “Limited Benefit Amount”).  In such case, the Payments shall be reduced or eliminated by first reducing or eliminating cash severance payments, then by reducing or eliminating other cash payments, then by reducing or eliminating those payments or benefits which are not payable in cash, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the Determination (as hereinafter defined).  Any notice given by Feltheimer pursuant to the preceding sentence shall take precedence over the provisions of any other plan, arrangement or agreement governing Feltheimer’s rights and entitlements to any benefits or compensation.
(b)    A determination as to whether the Payments shall be reduced to the Limited Benefit Amount pursuant to this Agreement and the amount of such Limited Benefit Amount shall be made by Lions Gate’s independent public accountants or another certified public accounting firm of national reputation designated by Lions Gate (the “Accounting Firm”) at Lions Gate’s expense.  Lions Gate and Feltheimer shall use their reasonable efforts to cause the Accounting Firm to provide its determination (the “Determination”), together with detailed supporting calculations and documentation to Lions Gate and Feltheimer within five (5) days of the date of termination of Feltheimer’s employment, if applicable, or such other time as requested by Lions Gate or Feltheimer (provided Feltheimer reasonably believes that any of the Payments may be subject to the Excise Tax), and if the Accounting Firm determines that no Excise Tax is payable by Feltheimer with respect to any Payments, Lions Gate and Feltheimer shall use their reasonable efforts to cause the Accounting Firm to furnish Feltheimer with an opinion reasonably acceptable to Feltheimer that no Excise Tax will be imposed with respect to any such Payments.  Unless Feltheimer provides written notice to Lions Gate within thirty 

13

(30) days of the delivery of the Determination to Feltheimer that he disputes such Determination, the Determination shall be binding, final and conclusive upon Lions Gate and Feltheimer.
20.    Severability.  Each section, subsection and lesser portion of this Agreement constitutes a separate and distinct undertaking, covenant and/or provision hereof.  In the event that any provision of this Agreement shall finally be determined to be unlawful or unenforceable, such provision shall be deemed to be severed from this Agreement, but every other provision shall remain in full force and effect.
21.    Construction.  Each party has cooperated in the drafting and preparation of this Agreement.  Hence, in any construction to be made of this Agreement, the same shall not be construed against any party on the basis that the party was the drafter.
22.    Legal Counsel.  In entering this Agreement, the parties represent that they have relied upon the advice of their attorneys, who are attorneys of their own choice, and that the terms of this Agreement have been completely read and explained to them by their attorneys, and that those terms are fully understood and voluntarily accepted by them.
23.    Waiver.  No waiver of any breach of any term or provision of this Agreement shall be construed to be, nor shall be, a waiver of any other breach of this Agreement.  No waiver shall be binding unless in writing and signed by the party waiving the breach.
24.    Execution.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  Photographic and facsimile copies of such signed counterparts may be used in lieu of the originals for any purpose.
25.    Notices.  All notices to be given pursuant to this Agreement shall be effected either by mail or personal delivery in writing as follows:
Lions Gate:
Lions Gate Entertainment 
2700 Colorado Avenue, Suite 200 
Santa Monica, California  90404 
Attention:  General Counsel
Feltheimer:
Jon Feltheimer 
c/o Lions Gate Entertainment 
2700 Colorado Avenue, Suite 200 
Santa Monica, California  90404
w/ copy to:
Del, Shaw, Moonves, Tanaka, Finkelstein & Lezcano
2120 Colorado Avenue, Suite 200
Santa Monica, California 90404

14

Attention: Ernest Del, Esq. and Jeffrey S. Finkelstein, Esq.
26.    Tax Withholding.  Notwithstanding anything else herein to the contrary, Lions Gate may withhold (or cause there to be withheld, as the case may be) from any amounts otherwise due or payable under or pursuant to this Agreement such federal, state and local income, employment, or other taxes as may be required to be withheld pursuant to any applicable law or regulation.
[Remainder of page intentionally left blank]

15

In witness whereof, the parties hereto have executed this Agreement as of the date first above written.
“LIONS GATE” 
 
LIONS GATE ENTERTAINMENT CORP.,
By:  /s/ Wayne Levin     
Name: Wayne Levin  
Its:  General Counsel and Chief Strategic Officer 

“FELTHEIMER”
/s/ Jon Feltheimer     
Jon Feltheimer

16

EXHIBIT A
FORM OF GENERAL RELEASE AGREEMENT
1.    Release by Executive.  [____________] (“Executive”), on his own behalf and on behalf of his descendants, dependents, heirs, executors, administrators, assigns and successors, and each of them, hereby acknowledges full and complete satisfaction of and releases and discharges and covenants not to sue Lions Gate Entertainment Corp.  (the “Company”), its divisions, subsidiaries, parents, or affiliated corporations, past and present, and each of them, as well as its and their assignees, successors, directors, officers, stockholders, partners, representatives, attorneys, agents or employees, past or present, or any of them (individually and collectively, “Releasees”), from and with respect to any and all claims, agreements, obligations, demands and causes of action, known or unknown, suspected or unsuspected, arising out of or in any way connected with Executive’s employment or any other relationship with or interest in the Company or the termination thereof, including without limiting the generality of the foregoing, any claim for severance pay, profit sharing, bonus or similar benefit, pension, retirement, life insurance, health or medical insurance or any other fringe benefit, or disability, or any other claims, agreements, obligations, demands and causes of action, known or unknown, suspected or unsuspected resulting from any act or omission by or on the part of Releasees committed or omitted prior to the date of this General Release Agreement (this “Agreement”) set forth below, including, without limiting the generality of the foregoing, any claim under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Family and Medical Leave Act, the California Fair Employment and Housing Act, California Labor Code Section 132a, the California Family Rights Act, or any other federal, state or local law, regulation, ordinance, constitution or common law (collectively, the “Claims”); provided, however, that the foregoing release does not apply to any obligation of the Company to Executive pursuant to any of the following: (1) Section 6(b) or 10(c), as applicable (and including any related provisions referred to in the applicable section), of the Employment Agreement dated as of [__________, 2013] by and between the Company and Executive (the “Employment Agreement”); (2) any equity-based awards previously granted by the Company to Executive, to the extent that such awards continue after the termination of Executive’s employment with the Company in accordance with the applicable terms of such awards; (3) any right to indemnification that Executive may have pursuant to the Company’s bylaws, its corporate charter or under any written indemnification agreement with the Company (or any corresponding provision of any subsidiary or affiliate of the Company) with respect to any loss, damages or expenses (including but not limited to attorneys’ fees to the extent otherwise provided) that Executive may in the future incur with respect to his service as an employee, officer or director of the Company or any of its subsidiaries or affiliates; (4) with respect to any rights that Executive may have to insurance coverage for such losses, damages or expenses under any Company (or subsidiary or affiliate) directors and officers liability insurance policy; (5) any rights to continued medical and dental coverage that Executive may have under COBRA; (6) any rights to payment of benefits that Executive may have under a retirement plan sponsored or maintained by the Company that is intended to qualify under Section 401(a) of the Internal Revenue Code of 1986, as amended; or (7) any deferred compensation or supplemental retirement benefits that Executive may be entitled to under a nonqualified deferred compensation or supplemental retirement plan of the Company.  In addition, this release does not cover any Claim that cannot be so released as a matter of applicable law.  Notwithstanding anything to the contrary 

A-1

herein, nothing in this Agreement prohibits Executive from filing a charge with or participating in an investigation conducted by any state or federal government agencies.  Executive does waive, however, the right to receive any monetary or other recovery, should any agency or any other person pursue any claims on Executive’s behalf arising out of any claim released pursuant to this Agreement.  Executive acknowledges and agrees that he has received any and all leave and other benefits that he has been and is entitled to pursuant to the Family and Medical Leave Act of 1993.
2.    Acknowledgement of Payment of Wages.  Except for accrued vacation (which the parties agree totals approximately [____] days of pay) and salary for the current pay period, Executive acknowledges that he has received all amounts owed for his regular and usual salary (including, but not limited to, any bonus, severance, or other wages), and usual benefits through the date of this Agreement.
3.    Waiver of Civil Code Section 1542.  This Agreement is intended to be effective as a general release of and bar to each and every Claim hereinabove specified.  Accordingly, Executive hereby expressly waives any rights and benefits conferred by Section 1542 of the California Civil Code and any similar provision of any other applicable state law as to the Claims.  Section 1542 of the California Civil Code provides:
“A GENERAL RELEASE DOES NOT EXTEND TO A CLAIM WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”
Executive acknowledges that he later may discover claims, demands, causes of action or facts in addition to or different from those which Executive now knows or believes to exist with respect to the subject matter of this Agreement and which, if known or suspected at the time of executing this Agreement, may have materially affected its terms.  Nevertheless, Executive hereby waives, as to the Claims, any claims, demands, and causes of action that might arise as a result of such different or additional claims, demands, causes of action or facts.
4.    ADEA Waiver.  Executive expressly acknowledges and agrees that by entering into this Agreement, he is waiving any and all rights or claims that he may have arising under the Age Discrimination in Employment Act of 1967, as amended (“ADEA”), which have arisen on or before the date of execution of this Agreement.  Executive further expressly acknowledges and agrees that:
(i)    In return for this Agreement, he will receive consideration beyond that which he was already entitled to receive before entering into this Agreement;
(ii)    He is hereby advised in writing by this Agreement to consult with an attorney before signing this Agreement;
(iii)    He was given a copy of this Agreement on [____________] and informed that he had twenty-one (21) days within which to consider this Agreement and that if he wished to execute this Agreement prior to expiration of such 21-day period, he should execute the Acknowledgement and Waiver attached hereto as Exhibit A-1;

A-2

(iv)    Nothing in this Agreement prevents or precludes Executive from challenging or seeking a determination in good faith of the validity of this waiver under the ADEA, nor does it impose any condition precedent, penalties or costs from doing so, unless specifically authorized by federal law; and
(v)    He was informed that he has seven (7) days following the date of execution of this Agreement in which to revoke this Agreement, and this Agreement will become null and void if Executive elects revocation during that time.  Any revocation must be in writing and must be received by the Company during the seven-day revocation period.  In the event that Executive exercises his right of revocation, neither the Company nor Executive will have any obligations under this Agreement.
5.    No Transferred Claims.  Executive represents and warrants to the Company that he has not heretofore assigned or transferred to any person not a party to this Agreement any released matter or any part or portion thereof.
6.    Miscellaneous.  The following provisions shall apply for purposes of this Agreement:
(a)    Number and Gender.  Where the context requires, the singular shall include the plural, the plural shall include the singular, and any gender shall include all other genders.
(b)    Section Headings.  The section headings of, and titles of paragraphs and subparagraphs contained in, this Agreement are for the purpose of convenience only, and they neither form a part of this Agreement nor are they to be used in the construction or interpretation thereof.
(c)    Governing Law.  This Agreement, and all questions relating to its validity, interpretation, performance and enforcement, as well as the legal relations hereby created between the parties hereto, shall be governed by and construed under, and interpreted and enforced in accordance with, the laws of the State of California, notwithstanding any California or other conflict of law provision to the contrary.
(d)    Severability.  If any provision of this Agreement or the application thereof is held invalid, the invalidity shall not affect other provisions or applications of this Agreement which can be given effect without the invalid provisions or applications and to this end the provisions of this Agreement are declared to be severable.
(e)    Modifications.  This Agreement may not be amended, modified or changed (in whole or in part), except by a formal, definitive written agreement expressly referring to this Agreement, which agreement is executed by both of the parties hereto.
(f)    Waiver.  No waiver of any breach of any term or provision of this Agreement shall be construed to be, nor shall be, a waiver of any other breach of this Agreement.  No waiver shall be binding unless in writing and signed by the party waiving the breach.
(g)    Arbitration.  Any controversy arising out of or relating to this Agreement shall be submitted to arbitration in accordance with the arbitration provisions of the Employment Agreement.

A-3

(h)    Counterparts.  This Agreement may be executed in counterparts, and each counterpart, when executed, shall have the efficacy of a signed original.  Photographic copies of such signed counterparts may be used in lieu of the originals for any purpose.
[Remainder of page intentionally left blank]

A-4

The undersigned have read and understand the consequences of this Agreement and voluntarily sign it.  The undersigned declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.
EXECUTED this ________ day of ________ 20___, at ______________________ County, __________.
“EXECUTIVE”
 
[Name]
EXECUTED this ________ day of ________ 20___, at ______________________ County, __________.
“COMPANY”
Lions Gate Entertainment Corp.
By:                            
[Name]
[Title]

A-5

EXHIBIT A-1
ACKNOWLEDGMENT AND WAIVER
I, _____________, hereby acknowledge that I was given 21 days to consider the foregoing General Release Agreement and voluntarily chose to sign the General Release Agreement prior to the expiration of the 21-day period.
I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.
EXECUTED this ___ day of ____________ 20___, at ___________ County, _________.
                            
[Name]

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