Document:

TSO2Q2011-EX.10.14

Exhibit 10.14

EXECUTION VERSION

AMENDMENT NO. 2 TO CREDIT AGREEMENT AND CONSENT

This AMENDMENT NO. 2 TO CREDIT AGREEMENT AND CONSENT, is made this June 17, 2011 (this “Amendment”), by and among TESORO PANAMA COMPANY, S.A., a Panamanian company (the “Borrower”), each of the financial institutions listed on the signature pages hereto as a Lender (individually, a “Lender” and collectively, the “Lenders”), and BNP PARIBAS, as Administrative Agent, Letter of Credit Issuer, Swing Line Lender, and Daylight Overdraft Bank (in its capacity as Administrative Agent for the Lenders, together with its successors in such capacity, the “Administrative Agent”). Each initially capitalized term used but not otherwise defined herein shall have the meaning ascribed thereto in the Credit Agreement (as defined below).

W I T N E S S E T H:
WHEREAS:
A.    The Borrower, the Administrative Agent and the Lenders have entered into that certain Credit Agreement dated October 18, 2010 (together with any amendments, restatements or other modifications thereof, the “Credit Agreement”); 
B.    The Borrower has requested that the Administrative Agent and the Lenders amend certain provisions of the Credit Agreement; and
C.    The parties hereto wish to amend certain provisions of the Credit Agreement, as set forth and subject to the terms and conditions contained herein.
NOW, THEREFORE, the parties hereto hereby agree as follows:
Section 1.    Amendments to Credit Agreement.
1.1    This Amendment shall be deemed to be an amendment to the Credit Agreement and shall not be construed in any way as a replacement or substitution therefor.  All of the terms and conditions of, and terms defined in, this Amendment are hereby incorporated by reference into the Credit Agreement as if such terms and provisions were set forth in full therein.
1.2    The definition of “Collateral Pool” in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“Collateral Pool” shall mean at any time, an amount equal to the sum of:
100% of the face value of Cash Collateral (including cash held in lockbox accounts or concentration accounts in the name of the Borrower so long as the Collateral Agent has been granted a first priority perfected security interest in such lockbox accounts, subject only to Permitted Liens); plus

90% of Eligible Accounts Receivable; plus
90% of Fully Hedged Eligible Inventory; plus
90% of the amount of Net Liquidity Value in Eligible Brokerage Accounts; 
plus
90% of the Letters of Credit Issued for Pre-Sold/Fully Hedged Products Not Yet Delivered; plus
85% of Hedged Eligible Inventory (excluding Fully Hedged Eligible Inventory and Tier II Hedged Eligible Inventory); plus
80% of Tier II Hedged Eligible Inventory (excluding Fully Hedged Eligible Inventory); plus
85% of the Letters of Credit Issued for Hedged Products Not Yet Delivered; 
plus
80% of Eligible Net Unrealized Positive MTM Gains; minus
100% of Reserves; minus
120% of the Lenders' Swap Liability.
The value of the Collateral Pool shall be determined by reference to the most recently dated Collateral Pool Report prepared by the Borrower pursuant to Section 8.02(c) of this Agreement absent any error in such Collateral Pool Report as of the date delivered.  The value of each type of Collateral set forth above shall be computed in accordance with the provisions of the respective definitions provided in or otherwise by this Agreement.  Notwithstanding the foregoing, (i) the aggregate amount of Approved Affiliate Oil Cargo Receivables and any other Accounts for which the Account Debtor is an equity holder or Affiliate of the Borrower or the Parent included in the calculation of the Collateral Pool may not exceed an amount equal to 50% of the minimum Adjusted Tangible Net Worth of the Borrower required pursuant to Section 9.14 of this Agreement or 50% of the minimum Adjusted Net Working Capital of the Borrower required pursuant to Section 9.15 of this Agreement, and (ii) the aggregate amount of Hedged Eligible Inventory (excluding Tier II Hedged Eligible Inventory) included in the calculation of the Collateral Pool may not exceed an aggregate maximum volume of 1,000,000 Barrels at any time.  Notwithstanding any other provision of the Loan Documents, no asset shall be given positive value (i.e. be added to) in the Collateral Pool unless the Collateral Agent has been granted a first priority (subject to Permitted Liens) perfected security interest in such asset.  Notwithstanding any other provision of the Loan Documents, the Administrative Agent, in its sole and absolute discretion, shall have the right to permanently or temporarily decrease the Collateral Pool, or add or modify additional concentration or other limits affecting the Collateral Pool, at any time for any duration, effective upon verbal notification to the Borrower.  In the event of any such decrease, addition or 
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modification by the Administrative Agent, the Administrative Agent shall within one (1) Business Day give notice of such decrease, addition or modification to the Lenders.  Notwithstanding any other provision of the Loan Documents, no asset shall be included in the Collateral Pool in duplicate categories such that it would be counted towards the calculation of the Collateral Pool more than once.
1.3    The definition of “Collateral Pool Report” in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“Collateral Pool Report”  shall mean a certificate, executed by a Responsible Officer of the Borrower and substantially in the form of Exhibit A hereto, delivered to the Administrative Agent and the Lenders in accordance with the requirements of Section 8.02(c) of this Agreement, which shall have attached thereto schedules in form and substance (as to accuracy and completeness) acceptable to the Administrative Agent and the Lenders showing the following with respect to all Collateral comprising the Collateral Pool:
(a)     bank account statements reflecting Cash Collateral and other statements reflecting ownership and market value of Cash Equivalents; 
(b)     brokers account statements reflecting Net Liquidity Value in Eligible Brokerage Accounts; 
(c)     schedule of Eligible Accounts Receivable with details (including break outs of any Approved Affiliate Oil Cargo Receivables) and reconciliations as to any offsets, counterclaims or other applicable deductions as provided in the definition of Eligible Accounts Receivable as well as agings; 
(d)     schedule of Fully Hedged Eligible Inventory containing back-up information as to (i) location and pricing (calculated pursuant to a methodology acceptable to the Administrative Agent) of inventory (specifically setting out in-transit inventory, which shall be included as a separate line item on the Collateral Pool Report), (ii) weekly statements from third-party storage providers (including PTP) and inspection report for all Products in storage from an independent third-party firm in the Republic of Panama acceptable to the Administrative Agent that in each case includes confirmations of volume, (iii) schedule of negotiable documents of title representing such Fully Hedged Eligible Inventory, if applicable, and (iv) supporting documentation evidencing the hedges, including copies of the open strategy summary reports in form and substance acceptable to the Administrative Agent; 
(e)     schedule of Hedged Eligible Inventory and Tier II Hedged Eligible Inventory containing back-up information as to (i) location and pricing (calculated pursuant to a methodology acceptable to the Administrative Agent) of inventory (specifically setting out in-transit inventory, which shall be included as a separate line item on the Collateral Pool Report), (ii) weekly statements from third-party storage providers (including PTP) and inspection report for all Products in storage from an independent third-party firm in the Republic of Panama acceptable to the
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Administrative Agent that in each case includes confirmations of volume, and (iii) schedule of negotiable documents of title representing such Hedged Eligible Inventory, if applicable, and (iv) supporting documentation evidencing the hedges, and (v) a copy of the open strategy summary reports in form and substance acceptable to the Administrative Agent; 
(f)     evidence in form and substance acceptable to the Administrative Agent of committed available credit of the Parent; 
(g)     the value of any Letters of Credit Issued for Products Not Yet Delivered, broken down by Letters of Credit Issued for Hedged Products Not Yet Delivered and Letters of Credit Issued for Pre-Sold/Fully Hedged Products Not Yet Delivered and by counterparty and showing all related liabilities including accounts payable, accrued payables, and marked-to-market losses; 
(h)     the value of Eligible Net Unrealized Positive MTM Gains; 
(i)     copies of third-party statements of accounts confirming account or asset balances in brokerage and commodities used in the calculation of the Collateral Pool, and other similar counterparty confirmations supporting the calculation of the Collateral Pool; 
(j)     if any Eligible Account Receivable or the creation, attachment, perfection, or enforcement of any Lien on any Eligible Account Receivable is governed by Panama law, a copy (with original counterpart to follow promptly thereafter) of a “Supplemental Commercial Pledge Agreement” executed by a Responsible Officer of the Borrower in the form attached to that certain Commercial Pledge Agreement, dated as of the date hereof, between the Borrower and the Administrative Agent, with respect to each such Eligible Account Receivable; 
(k)     schedule of Reserves; 
(l)     schedule of all Lenders' Swap Liability together with all supporting documentation in respect thereof, 
(m)     schedule of Letters of Credit and Loans outstanding as of the relevant Collateral Pool Reporting Date; 
(n)     schedule of Facility B Aggregate Outstanding Extensions of Credit as of the relevant Collateral Pool Reporting Date, which shall include without limitation updated values for escalating clause letters of credit, 
(o)     the Facility B Maximum Amount then in effect; and 
(p)     as required by Section 8.02(d) of this Agreement, a Position Limit Report and a Mark to Market Report.

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All amounts in the Collateral Pool Report will be calculated in Dollars and, to the extent any such amounts shall be converted from another currency, shall be so converted pursuant to a methodology approved by the Administrative Agent and the Required Lenders.
1.4    A new definition of “Second Amendment Date” is hereby added to Section 1.1 of the Credit Agreement in the appropriate alphabetical order to read in its entirety as follows: 

“Second Amendment Date” shall mean June 17, 2011.
1.5    A new definition of “Tier II Hedged Eligible Inventory” is hereby added to Section 1.1 of the Credit Agreement in the appropriate alphabetical order to read in its entirety as follows:

“Tier II Hedged Eligible Inventory” shall mean, with respect to each Collateral Pool Reporting Date, the aggregate Hedged Eligible Inventory in excess of 1,000,000 Barrels.
1.6    Sections 8.03(j) and (k) of the Credit Agreement are hereby amended and restated in their entirety to read as follows:

“(j)    within one (1) Business Day of the occurrence thereof, any violation of any of the limits set forth in Sections 8.13 and 8.14 of this Agreement, and the Borrower shall in addition provide a detailed explanation of the reason for such violation and the Borrower's plan for eliminating and/or preventing the reoccurrence of such violation;
(k)    [Reserved];”
1.7    Section 8.13 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:
“SECTION 8.13    Position Limits.

The Borrower shall at all times cause its Net Outright Position and Net Basis Position (provided that in each case all such positions shall include options on a Delta Equivalent Basis) not to exceed the applicable limits set forth on Schedule 8.13 attached hereto and incorporated herein as such corresponds to the then most recently reported Adjusted Tangible Net Worth.”
1.8    Section 8.14 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:
“SECTION 8.14    Stop Loss Limit and VAR Limit.

The Borrower shall at all times cause its daily stop loss, yearly stop loss and Value at Risk (as such term is defined in the Borrower's Risk Control Policy) not to
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exceed the applicable limits set forth on Schedule 8.14 attached hereto and incorporated herein as such corresponds to the then most recently reported Adjusted Tangible Net Worth.”
1.9    Section 9.19 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:
“SECTION 9.19    Risk Control Policy Changes.

The Borrower shall not, and shall not suffer or permit any Subsidiary to permit, any amendment or modification to the Risk Control Policy without the express written consent of the Administrative Agent (which consent will not be unreasonably withheld, conditioned, or delayed), and, with respect to any amendment or modification to the Risk Control Policy that is or is likely to be materially adverse to the interests of the Lenders, the Borrower shall not, and shall not suffer or permit any Subsidiary to, permit such amendment or modification without the express written consent of the Administrative Agent and the Required Lenders (which consent will not be unreasonably withheld, conditioned, or delayed).”  
1.10    Section 10.01(o) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:
“(o)    Position Limit Violations.  For any reason:

(i)     any violation of any of the daily or yearly stop loss limits set forth in Section 8.14 of this Agreement shall have occurred and, as of the second Business Day after the occurrence thereof in the case of violations of daily stop loss limits or the third Business Day after the occurrence thereof in the case of violations of yearly stop loss limits, such violation continues to exist; provided, however, that if such violation is with respect to a daily stop loss limit and the Parent shall have contributed new equity to the Borrower on or before such second Business Day or if such violation is with respect to a yearly stop loss limit and the Parent shall have contributed new equity to the Borrower on or before such third Business Day, in each case in an amount equal to the amount of such excess, on terms and conditions acceptable to the Administrative Agent, and in accordance with the plan delivered in respect thereof pursuant to Section 8.03(j) of this Agreement, such violation shall be deemed not to be continuing as of such third Business Day; or
(ii)     any violation of any of the limits set forth in Sections 8.13 or 8.14 of this Agreement (other than the daily or yearly stop loss limits set forth in Section 8.14 of this Agreement) shall have occurred and continues to exist as of the third Business Day after the occurrence thereof; or”
1.11    Exhibit A to the Credit Agreement (“Collateral Pool Report”) is hereby deleted in its entirety and replaced with Exhibit A attached hereto.
1.12    Exhibit G to the Credit Agreement (“Form of Position Limit Report”)is hereby deleted in its entirety and replaced with Exhibit G attached hereto.
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1.13    Exhibit H to the Credit Agreement (“Risk Control Policy”) is hereby deleted in its entirety and replaced with Exhibit H attached hereto.
1.14    A new Schedule 8.13 to the Credit Agreement (“Position Limits”) is hereby added to the Credit Agreement to and attached as Schedule 8.13 hereto.
1.15    A new Schedule 8.14 to the Credit Agreement (“Stop Loss Limit and VAR Limit”) is hereby added to the Credit Agreement to and attached as Schedule 8.14 hereto.
1.16    The Credit Agreement, the Loan Documents and all agreements, instruments and documents executed and delivered in connection with any of the foregoing, shall each be deemed to be amended hereby to the extent necessary, if any, to give effect to the provisions of this Amendment.  Except as so amended hereby, the Credit Agreement and the Loan Documents shall remain in full force and effect in accordance with their respective terms.

Section 2.    Consent to Amendment to Risk Control Policy
2.1    Amendment to Risk Control Policy.
Section 9.19 of the Credit Agreement, in pertinent part, requires the written consent of the Required Lenders for the Borrower to amend, modify or supplement the Risk Control Policy.  The Borrower has requested the consent of the Administrative Agent and the Lenders to amend the Risk Control Policy to provide for revised position limits for the Borrower.  In the exercise of their discretion as prudent lenders, the Administrative Agent and the Lenders hereby consent to the amendment of the Risk Control Policy to amend the position limits of the Borrower to the limits set forth in Exhibit H attached to the Credit Agreement, as amended by this Amendment.

Section 3.    Representations and Warranties of the Borrower.
The Borrower hereby represents and warrants to the Administrative Agent and the Lenders that:
3.1    After giving effect to the amendments of the Credit Agreement pursuant to and consents contained in this Amendment, and on the date hereof (i) each of the representations and warranties set forth in Article VII of the Credit Agreement is true and correct in all respects as if made on the date hereof (except with respect to representations or warranties that specifically relate to an earlier date, in which case such representations or warranties shall be true and correct in all respects as of such earlier date), and (ii) there exists no Default or Event of Default under the Credit Agreement after giving effect to this Amendment.
3.2    The Borrower has full corporate power and authority to execute and deliver this Amendment and to perform the obligations on its part to be performed thereunder and under the Credit Agreement as amended hereby.
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Section 4.    Conditions Precedent to Amendments.
The effectiveness of the amendments contained in Section 1 of this Amendment and the consent contained in Section 2 of this Amendment is subject to the satisfaction, in form and substance satisfactory to the Administrative Agent, of each of the following conditions precedent:
4.1    The Borrower, the Lenders, and the Administrative Agent shall have each duly executed and delivered to the Administrative Agent this Amendment.
4.2    The Facility B Agent shall have executed and delivered to the Administrative Agent all necessary consents to the amendments to the Credit Agreement contemplated herein.
4.3    In consideration of the Lenders' efforts in connection with this Amendment, the Borrower agrees to pay the Administrative Agent, for the benefit of each Lender that executes and agrees to this Amendment, an amendment fee equal to $7,500 (a “Closing Date Amendment Fee”), which Closing Date Amendment Fee shall be fully earned and due and payable on the Second Amendment Date, shall be nonrefundable for any reason whatsoever and shall be in addition to any other fees, costs and expenses payable pursuant to Credit Agreement or any other Loan Documents.  The Borrower's obligation to pay the foregoing fees will not be subject to counterclaim or setoff for, or be otherwise affected by, any claim or dispute the Borrower may have. 
4.4    No Default or Event of Default and be continuing as of the date hereof or as of the date that each of the other conditions in this Section 4 is satisfied.
4.5    The Administrative Agent and the Lenders shall have received such approvals, opinions or documents as each may reasonably request, the Borrower shall have taken all such other actions as the Administrative Agent may reasonably request, and all legal matters incident to the foregoing shall be satisfactory to the Administrative Agent and the Lenders.

Section 5.    Reference to and Effect Upon the Credit Agreement and other Loan Documents.
5.1    Except as specifically amended in Section 1 of this Amendment and consented to in Section 2 of this Amendment, the Credit Agreement and each of the other Loan Documents shall remain in full force and effect and each is hereby ratified and confirmed.
5.2    The execution, delivery and effect of this Amendment shall be limited precisely as written and shall not be deemed to (i) be a consent to any waiver of any term or condition or to any amendment or modification of any term or condition of the Credit Agreement or any other Loan Document, except upon the effectiveness of this Amendment, as specifically amended in Section 1 of this Amendment and consented to in Section 2 of this Amendment, (ii) impair, restrict, limit, or otherwise prejudice any right, power, privilege, or remedy that the Administrative Agent or any Lender now has or may

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have in the future under or in connection with the Credit Agreement, any other Loan Document, at law, or in equity, or (iii) constitute any course of dealing or other basis for altering any obligation of the Borrower or any right, power, privilege, or remedy of the Administrative Agent or the Lenders under the Credit Agreement or any of the other Loan Documents.  This Amendment embodies the entire agreement and understanding among the Borrower, the Lenders, and the Administrative Agent in respect of the amendment of the terms and conditions of the Credit Agreement and consent to the amendment of the Risk Control Policy, in each case as expressly provided herein.  Except as expressly stated herein, the Administrative Agent and the Lenders hereby reserve all rights, powers, privileges and remedies under the Credit Agreement and all other Loan Documents, at law, and in equity.  
5.3    The consent agreed to in Section 2.1 of this Amendment is strictly limited to the amendment of the Borrower's Risk Control Policy in the form attached as Exhibit H to the Credit Agreement, as amended hereby.
5.4    Upon the effectiveness of this Amendment, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or any other word or words of similar import shall mean and be a reference to the Credit Agreement as amended hereby, and each reference in any other Loan Document to the Credit Agreement or any word or words of similar import shall mean and be a reference to the Credit Agreement as amended hereby.
5.5    This Amendment constitutes a Loan Document (as defined in the Credit Agreement) and any breach of any representation or warranty made herein or covenant or agreement contained herein will constitute an Event of Default under the Credit Agreement.

Section 6.    Miscellaneous.
6.1    Counterparts.  This Amendment may be executed in any number of counterparts, each of which when so executed shall be deemed an original, but all such counterparts shall constitute one and the same instrument.  It is not necessary that any counterpart be signed by all of the parties hereto.  A facsimile copy of this Amendment and the signatures thereon shall be considered for all purposes as originals.
6.2    GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAW PROVISIONS) OF THE STATE OF NEW YORK.
6.3    Severability.  The illegality or unenforceability of any provision of this Amendment or any instrument or agreement required hereunder shall not in any way affect or impair the legality or enforceability of the remaining provisions of this Amendment or any instrument or agreement required hereunder.

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6.4    Modification and Waiver.  No waiver or modification of this Amendment shall be effective unless the same shall be in writing and signed by all parties hereto.
[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed on the date first above written.
                	
		
	TESORO PANAMA COMPANY, S.A., as

	Borrower

	 
	 

	 
	 

	By:
	/s/ TRACY D. JACKSON

	Name:
	Tracy D. Jackson

	Title:
	Vice-President, Finance and Treasurer

	 
	 

	 
	 

	 
	 

Signature Page to Amendment No. 2 to Credit Agreement

                	
		
	BNP PARIBAS, as Lender, Administrative Agent,

	Lead Arranger, Letter of Credit Issuer, Daylight

	Overdraft Bank, and Swing Line Lender

	 
	 

	By:
	/s/ MATTHEW L. ROSETTI

	Name:
	Matthew L. Rosetti

	Title:
	Director

	 
	 

	By:
	/s/ JANET KOEHNE

	Name:
	Janet Koehne

	Title:
	Director

Signature Page to Amendment No. 2 to Credit Agreement

                	
		
	SOCIÉTÉ GÉNÉRALE, as a Lender

	 
	 

	By:
	/s/ CHUNG-TAEK OH

	Name:
	Chung-Taek Oh

	Title:
	Director

	 
	 

	By:
	/s/ SEBASTIEN RIBATTO

	Name:
	Sebastien Ribatto

	Title:
	Managing Director

Signature Page to Amendment No. 2 to Credit Agreement

                	
		
	NATIXIS, NEW YORK BRANCH, as a Lender

	 
	 

	By:
	/s/ DAVID PERSHAD

	Name:
	David Pershad

	Title:
	Managing Director

	 
	 

	By:
	/s/ VINCENT LAURAS

	Name:
	Vincent Lauras

	Title:
	Senior Managing Director

Signature Page to Amendment No. 2 to Credit Agreement

 
                	
		
	CREDIT AGRICOLE CORPORATE AND

	INVESTMENT BANK, as a Lender

	 
	 

	By:
	/s/ ZALI WIN

	Name:
	Zali Win

	Title:
	Managing Director

	 
	 

	By:
	/s/ LOUIS PRIEUR

	Name:
	Louis Prieur

	Title:
	Vice President

Signature Page to Amendment No. 2 to Credit Agreement

EXECUTION VERSION
                	
		
	RB INTERNATIONAL FINANCE (USA) LLC, as

	a Lender

	 
	 

	By:
	/s/ ASTRID NOEBAUER

	Name:
	 Astrid Noebauer

	Title:
	Group Vice President

	 
	 

	By:
	/s/ SHIRLEY RITCH

	Name:
	Shirley Ritch

	Title:
	Vice President

Signature Page to Amendment No. 2 to Credit Agreement

                	
		
	CITIBANK N.A. PANAMA BRANCH, as a

	Lender

	 
	 

	By:
	/s/ RICARDO G. FERNANDEZ

	Name:
	Ricardo G. Fernandez

	Title:
	Director

Signature Page to Amendment No. 2 to Credit Agreement

                	
		
	THE BANK OF NOVA SCOTIA, PANAMA

	 BRANCH, as a Lender

	 
	 

	By:
	/s/ BRITTANNIA AMAYA

	Name:
	Brittannia Amaya

	Title:
	Credit Solutions, Director

Signature Page to Amendment No. 2 to Credit Agreement

                                

                
                	
		
	ABN AMRO BANK N.V., as a Lender

	 
	 

	By:
	/s/ L.G. ENGELSBEL-SPORISJEVA

	Name:
	L.G. Engelsbel-Sporisjeva

	Title:
	Head of Commodities Trade Services

	 
	 

	By:
	/s/ B. GREMEZ

	Name:
	B. Gremez

	Title:
	Global Head Energy Commodities

	 
	Managing Director

Signature Page to Amendment No. 2 to Credit Agreement

                	
		
	MACQUARIE BANK LIMITED, as a Lender

	 
	 

	By:
	/s/ STEPHEN BOWER

	Name:
	Stephen Bower

	Title:
	Associate Director

	 
	 

	By:
	/s/ ANDREW MCGRATH

	Name:
	Andrew McGrath

	Title:
	Division Director

Signature Page to Amendment No. 2 to Credit Agreement

Consented to and acknowledged by:

                	
		
	BNP PARIBAS (SUISSE) SA, for itself on behalf

	of the Facility B Lenders as Facility B Agent

	 
	 

	By:
	/s/ B. LE GOFF

	Name:
	B. Le Goff

	Title:
	 

	 
	 

	By:
	/s/ DANIEL HABEGGER

	Name:
	Daniel Habegger

	Title:
	 

 

Signature Page to Amendment No. 2 to Credit Agreement

EXHIBIT A

FORM OF

COLLATERAL POOL REPORT

_______ ___, 201__

BNP Paribas, as Administrative Agent
787 Seventh Avenue
New York, New York  10019
Attention:  Anne-Catherine Mathiot
      Matthew Rosetti
      Ed Tice
Facsimile:  212-471-6862

BNP Paribas (Suisse) SA
2 Place de Holland
CH-1204 Geneve
Switzerland
Attention:  M. Bernard Le Goff
Facsimile:  +41(0) 58 212 22 22

Re:    (i) That certain Uncommitted Revolving Credit Agreement (as modified, supplemented, amended, or restated from time to time, the “Facility A Credit Agreement”), dated as of October 18, 2010, by and among Tesoro Panama Company, S.A. (the “Borrower”), the lenders from time to time parties thereto (the “Facility A Lenders”), BNP Paribas, as Administrative Agent, Letter of Credit Issuer, Swing Line Lender, and Daylight Overdraft Bank (in such capacity, the “Facility A Agent”), Credit Agricole Corporate and Investment Bank, as Syndication Agent, and BNP Paribas Securities Corp., as Arranger; and (ii) that certain Facility Letter, dated as of October 18, 2010, by and among Borrower, the lenders from time to time parties thereto (the “Facility B Lenders”), and BNP Paribas (Suisse) SA, as agent for the Facility B Lenders (in such capacity, the “Facility B Agent”).

Ladies and Gentlemen:

The Borrower hereby delivers the attached Collateral Pool Report to the Facility A Agent and the Facility B Agent for the Collateral Pool Reporting Date ____________, 20__ in accordance with Section 8.02(c) of the Facility A Credit Agreement and as otherwise required by the Facility A Credit Agreement and certifies to the Facility A Agent and the Facility B Agent 

that (i) the Borrower is in compliance with the terms and covenants of the Facility A Credit Agreement and the Facility B Credit Agreement and all representations and warranties in Article VII of the Facility A Credit Agreement and in the Facility B Credit Agreement are true and correct as of the Reporting Date (except with respect to representations and warranties relating to an earlier date, in which case such representations and warranties shall be true as of such earlier date), (ii) the Aggregate Outstanding Extensions of Credit do not exceed the lesser of (A) the Maximum Availability Amount and (B) the Collateral Pool, (iii) the Combined Facilities Aggregate Outstanding Extensions of Credit shall not exceed the least of (X) the Combined Facilities Maximum Amount then in effect, (Y) the Collateral Pool, or (Z) $700,000,000; (iv) the undersigned has no knowledge of any Default or Event of Default under the Facility A Credit Agreement or any event of default described in Section 16 of the Facility B Credit Agreement, and (iv) the information contained in Annex I attached hereto and the other attachments to and the information indicated on this Collateral Pool Report were accurate and true as of such Collateral Pool Reporting Date.  Capitalized terms used but not defined herein shall have the meanings given to such terms in the Facility A Credit Agreement.
The statements made herein (and in the Schedules attached hereto) shall be deemed to be (i) representations and warranties made in a Loan Document for the purposes of Section 10.01(b) of the Facility A Credit Agreement and (ii) representations and warranties made under the Facility B Credit Agreement.

Very truly yours,

TESORO PANAMA COMPANY, S.A.,
a Panamanian corporation

By:                                                                    
Name:
Title:

Annexes

Calculation of Collateral Pool

Schedules (to be attached as applicable)

Bank Account Statements
Brokers Account Statements
Schedule of Eligible Accounts Receivable
Schedule of Fully Hedged Eligible Inventory (including without limitation copies of open strategy reports and identification of Platts or other publication utilized)
Schedule of Hedged Eligible Inventory and Tier II Hedged Eligible Inventory (including without limitation copies of open strategy reports and identification of Platts or other publication utilized)
Evidence of Committed Available Credit of the Parent
Value of Letters of Credit Issued for Products Not Yet Delivered 
Value of Eligible Net Unrealized Positive MTM Gains
Third-Party Statements of Accounts
Supplemental Commercial Pledge Agreement
Schedule of Reserves
Schedule of all Lenders' Swap Liability
Schedule of Facility A Aggregate Outstanding Extensions of Credit
Schedule of Facility B Aggregate Outstanding Extensions of Credit (with updated values of escalating letters of credit)
Position Limit Report
Mark to Market Report

ANNEX I

TESORO PANAMA COMPANY, S.A.
COLLATERAL POOL REPORT
as of [DATE]
	
					
	 
	 
	(A)
	(B)
	(C)

	 
	Collateral Pool Category:
	Value as of Collateral Pool Reporting Date:
	Advance Rate:
	Collateral Pool Amount
(A x B):

	I.
	Cash Collateral:
	$_____________
	100%
	$_____________

	 
	 
	 
	 
	 

	II.
	Eligible Accounts Receivable:
	$_____________
	90%
	$_____________1

	 
	 
	 
	 
	 

	III.
	Fully Hedged Eligible Inventory:
	$_____________
	90%
	$_____________

	 
	 
	 
	 
	 

	IV.
	Net Liquidity Value in Eligible Brokerage Accounts:
	$_____________
	90%
	$_____________

	 
	 
	 
	 
	 

	V.
	Letters of Credit Issued for Pre-Sold/Fully Hedged Products Not Yet Delivered:
	$_____________
	90%
	$_____________

	 
	 
	 
	 
	 

	VI.
	Hedged Eligible Inventory (excluding Fully Hedged Eligible Inventory and Tier II Hedged Eligible Inventory):
	$_____________
	85%
	$_____________2

	 
	 
	 
	 
	 

	VII.
	Tier II Hedged Eligible Inventory (excluding Fully Hedged Eligible Inventory):
	$_____________
	80%
	$_____________

	 
	 
	 
	 
	 

	VIII.
	Letters of Credit Issued for Hedged Products Not Yet Delivered:
	$_____________
	85%
	$_____________

	 
	 
	 
	 
	 

	IX.
	Eligible Net Unrealized Positive MTM Gains:
	$_____________
	80%
	$_____________

	 
	 
	 
	 
	 

	X.
	 
	Collateral Pool Subtotal:
(Sum of I through IX)
	$_____________

1.  The aggregate amount of Approved Affiliate Oil Cargo Receivables and any other Accounts for which the Account Debtor is an equity holder or Affiliate of the Borrower or the Parent included in the calculation of the Collateral Pool may not exceed an amount equal to 50% of the minimum Adjusted Tangible Net Worth of the Borrower required pursuant to Section 9.14 of this Agreement or 50% of the minimum Adjusted Net Working Capital of the Borrower required pursuant to Section 9.15 of this Agreement
2.  The aggregate amount of Hedged Eligible Inventory (excluding Tier II Hedged Eligible Inventory) included in the calculation of the Collateral Pool may not exceed an aggregate maximum volume of 1,000,000 Barrels at any time

	
					
	XI.
	Reserves:
	$_____________
	100%
	 

	 
	 
	 
	 
	 

	XII.
	Swap Liability:
	$_____________
	120%
	 

	 
	 
	 
	 
	 

	XIII.
	 
	Collateral Pool Total:
(X minus XI and XII)
	$_____________

	 
	 
	 
	 
	 

	XIV.
	Facility A Loans Outstanding:
	$_____________

	 
	 
	 

	XV.
	Facility A Letters of Credit Outstanding:
	$_____________

	 
	 
	 

	XVI.
	Facility A Aggregate Outstanding Extensions of Credit:
(Sum of XIV and XV)
	$_____________

	 
	 
	 

	XVII.
	Facility B Loans  Outstanding:
	$_____________

	 
	 
	 

	XVIII.
	Facility B Letters of Credit Outstanding:
	$_____________

	 
	 
	 

	XIX.
	Facility B Letters of Indemnity Outstanding:
	$_____________

	 
	 
	 

	XX.
	Facility B Aggregate Outstanding Extensions of Credit:
(Sum of XVII through XIX)
	$_____________

	 
	 
	 

	XXI.
	Combined Facility Aggregate Outstanding Extensions of Credit:
(Sum of XVI and XX)
	$_____________

	 
	 
	 

	XXII.
	Collateral Pool Available for Facility A or Facility B:
(XIII minus XXI)
	$_____________

Facility A Availability

	
			
	XXIII.
	Collateral Pool Available for Facility A:
(XIII minus XX)
	$_____________

	 
	 
	 

	XXIV.
	Maximum Availability Amount in effect:
	$_____________

	 
	 
	 

	XXV.
	 Facility A Availability:
(Lesser of XXII or XXIV minus XVI)
	$_____________***

Facility B Availability

	
			
	XXVI.
	Collateral Pool Available for Facility B:
(XIII minus XVI)
	$_____________

	 
	 
	 

	XXVII.
	Facility B Maximum Amount in effect:
	$_____________

	 
	 
	 

	XXVIII.
	 Facility B Availability:
(Lesser of XXII or XXVII minus XX)
	$_____________***

***  Notwithstanding anything to the contrary, the Facility A Availability set forth in Item XXV and the Facility B Availability set forth in Item XXVIII are each at all times subject to the combined facilities collateral pool availability limit set forth in Item XXII.  

EXHIBIT G
FORM OF
TESORO PANAMA COMPANY, S.A.
POSITION LIMIT REPORT
AS OF [DATE]

This report is delivered as a component of the Collateral Pool Report in accordance with the requirements of (i) Section 8.02(d) of the Uncommitted Revolving Credit Agreement (as modified, supplemented, amended, or restated from time to time, the “Facility A Credit Agreement”), dated as of October 18, 2010, by and among Tesoro Panama Company, S.A. (the “Borrower”), the lenders from time to time parties thereto (the “Facility A Lenders”), BNP Paribas, as Administrative Agent, Letter of Credit Issuer, Swing Line Lender, and Daylight Overdraft Bank (in such capacity, the “Facility A Agent”), Credit Agricole Corporate and Investment Bank, as Syndication Agent, and BNP Paribas Securities Corp., as Arranger (capitalized terms used herein that are not defined shall have the respective meanings ascribed thereto in the Facility A Credit Agreement); and (ii) the Facility Letter, dated as of October 18, 2010, by and among Borrower, the lenders from time to time parties thereto (the “Facility B Lenders”), BNP Paribas (Suisse) SA, as agent for the Facility B Lenders (in such capacity, the “Facility B Agent”).    
To the best of the knowledge of the Borrower at the time of preparation of the Position Limit Report attached hereto, the information presented therein was true and correct in all material respects as of the date hereof and no Default or Event of Default (as such terms are defined in the Facility A Credit Agreement) under the Facility A Credit Agreement or any event of default described in Section 16 of the Facility B Credit Agreement has occurred and is continuing.
During the Reporting Period, except as expressly disclosed to the Facility A Agent and the Facility A Lenders pursuant to Sections 8.03(j) of the Facility A Credit Agreement and to the Facility B Agent pursuant to the Facility B Credit Agreement, the Borrower has not been in violation of Sections 8.13 or 8.14 of the Facility A Credit Agreement.
As of the Reporting Date1:
A.        The Borrower's Adjusted Tangible Net Worth was: $____________
B.        The Borrower held on an aggregate basis:  
1.    As a Net Outright Position, _____________ Barrels of Product and the limit set forth in Schedule 8.13 of the Facility A Credit Agreement for Net Outright Position is _________ Barrels of Product; and
2.    As a Net Basis Position, _____________ Barrels of Product and the limit set forth in Schedule 8.13 of the Facility A Credit Agreement for Net Basis Position is ___________ Barrels of Product.

1. No violation of any of the following will result in an Event of Default unless such violation results in a Tolerance Limit Violation and is deemed an Event of Default under Section 10.01(o) of the Facility A Credit Agreement.

C.    The Borrower's daily stop loss was $____________ and the daily stop loss limit set forth in Schedule 8.14 of the Facility A Credit Agreement is $________.  
D.    The Borrower's yearly stop loss was $____________ and the yearly stop loss limit set forth in Schedule 8.14 of the Facility A Credit Agreement is $________.
E.    The Borrower had Value At Risk of $____________ and the Value at Risk set forth in Schedule 8.14 of the Facility A Credit Agreement is $________. 
The statements made herein (and in the Schedules hereto) shall be deemed to be (i) representations and warranties made in a Loan Document for the purposes of Sections 7.18 and 10.01(b) of the Facility A Credit Agreement and (ii) representations and warranties made under the Facility B Credit Agreement.

[See Attached Position Limit Report]

EXHIBIT H
TESORO PANAMA COMPANY, S.A.
RISK CONTROL POLICY

[See Attached]

Schedule 8.13
Position Limits

	
			
	Adjusted Tangible Net Worth
	Net Outright Position Limit (bbls)
	Net Basis Position Limit (bbls)

	≥$70,000,000
	200,000
	5,500,000

	≥$60,000,000 and <$70,000,000
	200,000
	4,500,000

	≥$50,000,000 and <$60,000,000
	150,000
	3,750,000

	≥$40,000,000 and <$50,000,000
	100,000
	3,250,000

	<$40,000,000
	100,000
	2,500,000

Schedule 8.14
Stop Loss Limits and VAR Limit

	
				
	Adjusted Tangible Net Worth
	Daily Stop Loss Limit
	Yearly Stop Loss Limit
	Value at Risk Limit

	≥$70,000,000
	$5,000,000
	$15,000,000
	$7,000,000

	≥$60,000,000 and <$70,000,000
	$4,250,000
	$13,000,000
	$6,000,000

	≥$50,000,000 and <$60,000,000
	$3,500,000
	$11,000,000
	$5,000,000

	≥$40,000,000 and <$50,000,000
	$3,000,000
	$9,000,000
	$4,000,000

	<$40,000,000
	$2,500,000
	$7,500,000
	$3,000,000ex10-3.htm

Exhibit 10.3

 

AMENDMENT TO EMPLOYEE MATTERS AGREEMENT

 

This Amendment to Employee Matters Agreement (this “Amendment”), dated as of June 30, 2011, is by and between Marathon Oil Corporation, a Delaware corporation (“Marathon Oil” or “MRO”), and Marathon Petroleum Corporation, a Delaware corporation (“Marathon Petroleum” or “MPC”, and together with Marathon Oil, the “Parties”).

 

 

PRELIMINARY STATEMENT

 

WHEREAS, the Parties are parties to an Employee Matters Agreement dated as of May 25, 2011 (the “Employee Matters Agreement”; capitalized terms used but not defined in this Amendment shall have the respective meanings given such terms in the Employee Matters Agreement); and

 

WHEREAS, the Employee Matters Agreement contains provisions relating to adjustments to equity-based awards held by MRO Participants, MPC Participants and other grantees, which adjustments are generally designed to preserve the intrinsic values of those awards on the Distribution Date;

 

WHEREAS, the Parties now desire to amend the Employee Matters Agreement as provided herein, to permit an Alternative Methodology for adjusting certain equity-based awards and provide specific provisions for holders of equity-based awards who are subject to the Income Tax Act (Canada);

 

NOW, THEREFORE, in consideration of the premises and of the respective agreements and covenants contained in this Amendment, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows:

 

1. Section 1.1 of the Employee Matters Agreement is hereby amended to add the following new definitions:

 

“Adjustment Time” shall have the meaning set forth in Section 13.2(d)(ii).

 

“Canadian Pre-Distribution Spread” means, for purposes of Section 13.2(d)(ii) and Section 13.3(c)(ii), with respect to a Person's MRO Unvested Options or MRO Vested Options, as applicable, the product of (a) the number of shares of MRO common stock subject to such MRO Unvested Options  or MRO Vested Options immediately prior to the Adjustment Time, and (b) the excess of the MRO Pre-Distribution Stock Value over the per-share exercise price for such MRO Unvested Options or MRO Vested Options immediately prior to the Adjustment Time.

 

“ITA” shall have the meaning set forth in Section 13.2(d)(ii).

 

“Post-Distribution Spread” means, (a) for purposes of Section 13.2(d)(ii), with respect to a Person's Remaining MRO Unvested Options or MPC Unvested Options, as applicable, the product of (a) the number of shares of MRO common stock or shares of MPC common stock, as applicable, subject to such Remaining MRO Unvested Options or MPC Unvested Options, as applicable, immediately after the Adjustment Time, and (b) the excess of the MRO Post-Distribution Stock Value or MPC Post-Distribution Stock Value, as applicable, over the per-share exercise price for such Remaining MRO Unvested Options or MPC Unvested Options, as applicable, immediately after the Adjustment Time and  (b) for purposes of Section 13.3(c)(ii), with respect to a Person's Remaining MRO Vested Options and MPC Vested Options, the sum of:  (A) the product of: (w) the number of shares of MRO common stock subject to such Remaining MRO Vested Options, immediately after the Adjustment Time, and (x) the excess of the MRO Post-Distribution Stock Value over the per-share exercise price for such Remaining MRO Vested Options, immediately after the Adjustment Time, and (B) the product of: (y) the number of shares of MPC common stock subject to such MPC Vested Options, immediately after the Adjustment Time, and (x) the excess of the MPC Post-Distribution Stock Value over the per-share exercise price for such MPC Vested Options, immediately after the Adjustment Time.

 

“Post-Distribution Value” means, with respect to a Person's MRO RSUs or MPC RSUs, as applicable, the product of (a) the number of shares of MRO common stock or shares of MPC common stock, as applicable, subject to such MRO RSUs or MPC RSUs, as applicable, immediately after the Adjustment Time, and (b) the MRO Post-Distribution Stock Value or MPC Post-Distribution Stock Value, as applicable.

 

“Pre-Distribution Value” means, with respect to a Person's MRO RSUs, the product of (a) the number of shares of MRO common stock subject to such MRO RSUs immediately prior to the Adjustment Time, and (b) the MRO Pre-Distribution Stock Value.

 

 

2.           A new Section 13.2(d) is added, as follows:

 

(d)           Special Rules.

 

(i) Alternative Conversion Methodology.  Notwithstanding the other provisions of this Section 13.2 respecting the conversion  of each MRO Unvested Option into a Remaining MRO Unvested Option or an MPC Unvested Option, the conversion for administrative convenience may be effected using any other reasonable methodology (an “Alternate Methodology”) recommended by or reasonably acceptable to the recordkeeper for the MRO Stock Plans provided (A) the conversion effected in accordance with the Alternate Methodology results in tax consequences for option holders which are no less favorable than the consequences to such option holders if the conversion was effected in accordance with the express provisions of this Section 13.2, (B) the conversion is (subject to Section 13.2(d)((ii)) effected on a uniform and consistent basis and (C) the difference for each option holder between the aggregate “spread” respecting his or her Remaining MRO Unvested Option (as determined using the MRO Post-Distribution Stock Value) or MPC Unvested Option (as determined using the MPC Stock Value) resulting from a conversion effected in accordance with the Alternative Methodology and the aggregate “spread” resulting from a conversion effected pursuant to the express provisions of this Section 13.2 is no more than one and two/tenths (1.2) percent.

 

(ii) Canadian Employees.  Notwithstanding the other provisions of this Section 13.2 (including, for greater certainty, Section 13.2(d)(i)), respecting the conversion or adjustment of each MRO Unvested Option into a Remaining MRO Unvested Option or an MPC Unvested Option, as applicable, if MRO Unvested Options are held by a Person who, for the purposes of the Income Tax Act (Canada) (the “ITA”), is a resident of Canada or who was granted such MRO Unvested Options in respect of, in the course of, or by virtue of employment in Canada, the conversion or adjustment of that Person’s MRO Unvested Options shall be effected with such modifications as may be required such that: (A) any action under Section 13.2(b) which is called for at or as of the Effective Time shall be taken or completed at the time that is immediately before the time that is immediately before the Effective Time (in this Section 13.2(d)(ii), the applicable time for the actions under Section 13.2 is the “Adjustment Time”), (B) if the Canadian Pre-Distribution Spread respecting such Person’s MRO Unvested Options is nil or positive, the Post-Distribution Spread of such Person's Remaining MRO Unvested Options or MPC Unvested Options, as applicable, shall be equal to or less than such Canadian Pre-Distribution Spread, and (C) if the Canadian Pre-Distribution Spread respecting such Person’s MRO Unvested Options is negative, the Post-Distribution Spread of such Person's Remaining MRO Unvested Options or MPC Unvested Options, as applicable, shall be less than nil.  Notwithstanding anything herein contained, it is the intention that subsection 7(1.4) of the ITA shall apply to the adjustments and conversions contemplated in this Section 13.2(d)(ii).  Accordingly, if at any time hereafter, for the purposes of the ITA (or any corresponding provincial income tax legislation) and determining the income tax consequences, if any, of the actions taken pursuant to this Section 13.2(d)(ii), it is finally determined, whether by a tribunal or a court of competent jurisdiction, or otherwise that (A) the total value of the shares of common stock which may be acquired pursuant to a Person's Remaining MRO Unvested Options or MPC Unvested Options, as applicable, less the aggregate exercise price payable under such options, as determined immediately after the Adjustment Time, exceeds (B) the total value of the shares of common stock that could be acquired under that Person's MRO Unvested Options, less the aggregate amount payable under such options, as determined immediately before the Adjustment Time, then the results of the adjustment or conversion undertaken pursuant to this Section 13.2 shall be altered in order to ensure that the excess is reduced to nil by changing: (i) the number of shares of common stock subject to the Remaining MRO Unvested Options or MPC Unvested Options, as applicable,  (ii) the exercise price payable under the Remaining MRO Unvested Options or MPC Unvested Options, as applicable,  or (iii) a combination of (i) and (ii).  Any changes made under (i), (ii), or (iii) will be deemed to be effective from and after the Adjustment Time.

 

3.           Section 13.3(b) is amended to read as follows:

 

(b) Any MRO Vested Option that is held by an MRO Employee who is an employee of Marathon Oil Canada Corporation (Canada), Marathon Oil Sands (USA) Inc., Marathon Petroleum Company Norway LLC, Marathon Services Company or Marathon Services (G.B.) Limited (England) shall be converted as provided in Section 13.2(a) or 13.2(d)(ii), as applicable, rather than as provided in this Section 13.3, and any MRO Vested Option that is held by an MPC Employee  to whom MRO common stock registered on Form S-8 cannot be issued shall be converted as provided in Section 13.2(b), rather than as provided in this Section 13.3.

 

4.           A new Section 13.3(c) is added, as follows:

 

(c) Special Rules.

 

(i) Alternative Conversion Methodology.  Notwithstanding the other provisions of this Section 13.3 respecting the conversion  of each MRO Vested Option into a Remaining MRO Vested Option or an MPC Vested Option, the conversion for administrative convenience may be effected using any other reasonable methodology (an “Alternate Methodology”) recommended by or reasonably acceptable to the recordkeeper for the MRO Stock Plans provided (A) the conversion effected in accordance with the Alternate Methodology results in tax consequences for option holders which are no less favorable than the consequences to such option holders if the conversion was effected in accordance with the express provisions of this Section 13.3, (B) the conversion is (subject to Section 13.3(b) and Section 13.3(c)((ii)) effected on a uniform and consistent basis and (C) the difference for each Person between the aggregate “spread” respecting such Person’s Remaining MRO Vested  Option (as determined using the MRO Post-Distribution Stock Value) and MPC Vested Option (as determined using the MPC Stock Value) resulting from a conversion effected in accordance with the Alternative Methodology and the aggregate “spread” resulting from a conversion effected pursuant to the express provisions of this Section 13.3 is no more than one and two/tenths (1.2) percent.

 

(ii) Canadian Employees.  Notwithstanding the express provisions of this Section 13.3, except for Section 13.3(b), respecting the adjustment of each MRO Vested Option into a Remaining MRO Vested Option and an MPC Vested Option, as applicable, if MRO Vested Options are held by a Person who, for the purposes of the ITA, is a resident of Canada or who was granted such MRO Vested Options in respect of, in the course of, or by virtue of employment in Canada, the  adjustment shall be effected with such modifications as may be required such that: (A) any action under this Section 13.3 which is called for at or as of the Effective Time shall be taken or completed at the Adjustment Time, (B) a proportionate number of that Person's MRO Vested Options shall be adjusted to become Remaining MRO Vested Options and a proportionate number of that Person's MRO Vested Options shall be adjusted to become MPC Vested Options, (C) if the Canadian Pre-Distribution Spread respecting such Person’s MRO Vested Options is nil or positive, the Post-Distribution Spread of such Person's Remaining MRO Vested Options and MPC Vested Options shall be equal to or less than such Canadian Pre-Distribution Spread, and (D) if the Canadian Pre-Distribution Spread respecting such Person’s MRO Vested Options is negative, the Post-Distribution Spread of such Person's Remaining MRO Vested Options and  MPC Vested Options shall be less than nil.  Notwithstanding anything herein contained, it is the intention that subsection 7(1.4) of the ITA shall apply to the adjustments contemplated in this Section 13.3(c)(ii).  Accordingly, if at any time hereafter, for the purposes of the ITA (or any corresponding provincial income tax legislation) and determining the income tax consequences, if any, of the actions taken pursuant to this Section 13.3(c)(ii), it is finally determined, whether by a tribunal or a court of competent jurisdiction, or otherwise that (A) the total value of the shares of common stock which may be acquired pursuant to a Person's Remaining MRO Vested Options and MPC Vested Options, less the aggregate exercise price payable under such options, as determined immediately after the Adjustment Time, exceeds (B) the total value of the shares of common stock that could be acquired under that Person's MRO Vested Options, less the aggregate amount payable under such options, as determined immediately before the Adjustment Time, then the results of the adjustment undertaken pursuant to this Section 13.3 shall be altered in order to ensure that the excess is reduced to nil by changing: (i) the number of shares of common stock subject to the Remaining MRO Vested Options or MPC Vested Options, (ii) the exercise price payable under the Remaining MRO Vested Options or MPC Vested Options, as applicable,  or (iii) a combination of (i) and (ii).  Any changes made under (i), (ii), or (iii) will be deemed to be effective from and after the Adjustment Time.

 

5.           A new Section 13.6(d) is added, as follows:

 

(d) Special Rule for Canadian RSU Holders.  Notwithstanding the other provisions of this Section 13.6, if MRO RSUs are held by a Person who, for the purposes of the ITA, is a resident of Canada or who was granted such MRO RSUs in respect of, in the course of, or by virtue of employment in Canada, the conversion or adjustment of that Person's MRO RSUs shall be effected such that: (A) any action under Section 13.6(b) which is called for at or as of the Effective Time shall be taken or completed at the Adjustment Time, (B) the Post-Distribution Value of such Person's MRO RSUs as adjusted under Section 13.6(a) or such Person's MPC RSUs, as applicable, shall be equal to or less than the Pre-Distribution Value of such Person's MRO RSUs determined immediately before the Adjustment Time.  Notwithstanding anything herein contained, it is the intention that the adjustments contemplated in this Section 13.6 be completed on a tax-neutral basis under the provisions of the ITA.  Accordingly, if at any time hereafter, for the purposes of the ITA (or any corresponding provincial income tax legislation) and determining the income tax consequences, if any, of the actions taken pursuant to this Section 13.6(c), it is finally determined, whether by a tribunal or a court of competent jurisdiction, or otherwise that (A) the total value of the shares of common stock which may be acquired pursuant to a Person's MRO RSUs (as adjusted under this Section 13.6) or MPC RSUs, as determined immediately after the Adjustment Time, exceeds (B) the total value of the shares of common stock that could be acquired under that Person's MRO RSUs, as determined immediately before the Adjustment Time, then the results of the adjustment undertaken pursuant to this Section 13.6 shall be altered in order to ensure that the excess is reduced to nil by changing the number of shares of common stock subject to the MRO RSUs (as adjusted under this Section 13.6) or MPC RSUs, as applicable.  Any such change will be deemed to be effective from and after the Adjustment Time.

 

6.           Miscellaneous.

 

This Amendment may be executed in two or more counterparts, each of which will be deemed an original but all of which together shall be considered one and the same amendment and shall become effective when counterparts have been signed by each of the Parties and delivered to the other Party, it being understood that each of the Parties need not sign the same counterpart.  When this Amendment becomes effective pursuant to the immediately preceding sentence, (i) all references to “this Agreement” in the Employee Matters Agreement shall be deemed to refer to the Employee Matters Agreement as amended by this Amendment, and (ii) all references to the “Employee Matters Agreement” in the Distribution Agreement shall be deemed to refer to the Employee Matters Agreement as amended by this Amendment, unless the context otherwise requires.  Except as amended hereby, all provisions of the Employee Matters Agreement are and will remain in full force and effect.  To the extent not preempted by applicable federal law, this Amendment shall be governed by, and construed and enforced in accordance with, the substantive laws of the State of New York, without regard to any conflicts of law provisions thereof that would result in the application of the laws of any other jurisdiction.

 

 

IN WITNESS WHEREOF, the Parties hereto have caused this Amendment to be executed by their authorized representatives as of the date first above written.

 

 

	  	
MARATHON OIL CORPORATION

	  	  
	  	
By:  /s/ Robert L. Sovine, Jr.

	  	
Name: Robert L. Sovine, Jr.

	  	
Title: Vice President, Human Resources

	  	  
	  	
MARATHON PETROLEUM CORPORATION

	  	  
	  	
By: /s/ Rodney P. Nichols

	  	
Name: Rodney P. Nichols

	  	
Title:  Vice President, Human Resources

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