Exhibit 10.5
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OMNIBUS AGREEMENT
among
SUNOCO, INC.
SUNOCO, INC. (R&M)
SUN PIPE LINE COMPANY OF DELAWARE
ATLANTIC PETROLEUM CORPORATION
SUNOCO LOGISTICS PARTNERS L.P.
SUNOCO LOGISTICS PARTNERS OPERATIONS L.P.
and
SUNOCO PARTNERS LLC
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OMNIBUS AGREEMENT
THIS OMNIBUS AGREEMENT is entered into on, and effective as of, the
Closing Date (as defined herein) among Sunoco, Inc., a Pennsylvania corporation
("Sunoco"), on behalf of itself and the other Sunoco Entities (as defined
herein), Sunoco, Inc. (R&M), a Pennsylvania corporation ("Sunoco R&M"), Sun Pipe
Line Company of Delaware, a Delaware corporation ("Sun Delaware"), Atlantic
Petroleum Corporation, a Delaware corporation ("Petroleum"), Sunoco Logistics
Partners L.P., a Delaware limited partnership (the "MLP"), Sunoco Logistics
Partners Operations L.P., a Delaware limited partnership (the "OLP"), and Sunoco
Partners LLC, a Pennsylvania limited liability company ("Sunoco Partners LLC").
[ADD LICENSORS WHO ARE NOT ALREADY PARTIES] The above-named entities are
sometimes referred to in this Agreement each as a "Party" and collectively as
the "Parties."
RECITALS:
1. The Parties desire by their execution of this Agreement to evidence
their understanding, as more fully set forth in Article II, with respect to (a)
those business opportunities that the Sunoco Entities as defined herein will not
engage in during the Applicable Period (as defined herein) unless the MLP has
declined to engage in any such business opportunity for its own account.
2. The Parties desire by their execution of this Agreement to evidence
their understanding, as more fully set forth in Article III, with respect to
certain indemnification obligations of the Parties to each other.
3. The Parties desire by their execution of this Agreement to evidence
their understanding, as more fully set forth in Article IV, with respect to the
amount to be paid by the MLP for the general and administrative services to be
performed by the General Partner and its Affiliates (as defined herein) for and
on behalf of the Partnership Group (as defined herein).
4. The Parties desire by their execution of this Agreement to evidence
their understanding, as more fully set forth in Article V, with respect to
grants of intellectual property from the Licensors (as defined herein) to the
Partnership Entities (as defined herein).
5. The Parties desire by their execution of this Agreement to evidence
their understanding, as more fully set forth in Article VI, with respect to
certain capital and other expenditures to be reimbursed by Sunoco to the
Partnership Group.
6. The Parties desire by their execution of this Agreement to evidence
their understanding, as more fully set forth in Article VII, with respect to the
Partnership Group's option to purchase certain assets retained by the Sunoco
Entities.
7. The Parties desire by their execution of this Agreement to evidence
their understanding, as more fully set forth in Article VIII, with respect to
the development and construction or acquisition of certain assets by the
Partnership Group.
In consideration of the premises and the covenants, conditions, and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties hereto
hereby agree as follows:
ARTICLE I
Definitions
1.1 Definitions.
(a) As used in this Agreement, the following
terms shall have the respective meanings set forth below:
"Active Option Assets" means the following assets:
(i) Mid-Valley Pipeline. The 55% interest in Mid-Valley
Pipeline Company (50% voting interest), owned by Sun
Delaware, a wholly owned subsidiary of Sunoco.
Mid-Valley Pipeline Company owns and operates a
994-mile crude oil pipeline from Longview, Texas to
Samaria, Michigan.
(ii) West Texas Gulf Pipeline. The 17% interest in West
Texas Gulf Pipeline Company owned by Sun Delaware, a
wholly owned subsidiary of Sunoco. West Texas Gulf
Pipeline Company owns and operates a 581-mile crude
oil pipeline from Colorado City, Texas and Nederland,
Texas to Longview, Texas.
(iii) Mesa Pipeline. The undivided 6% interest in the Mesa
pipeline, an 80-mile crude oil pipeline from Midland,
Texas to Colorado City, Texas, that is owned by Sun
Pipe Line Services Co., a wholly owned subsidiary of
Sun Delaware, a wholly owned subsidiary of Sunoco.
(iv) Inland Pipeline. The 10% interest in Inland
Corporation owned by Sun Delaware, a wholly owned
subsidiary of Sunoco. Inland Corporation owns and
operates a 611-mile refined products pipeline from
Lima and Toledo, Ohio to Canton, Cleveland, Columbus
and Dayton, Ohio.
"Administrative Fee" is defined in Section 4.2.
"Affiliate" is defined in the MLP Agreement.
"Agreement" means this Omnibus Agreement, as it may be
amended, modified, or supplemented from time to time.
"Applicable Period" means the period commencing on the Closing
Date and terminating on the date on which an Affiliate of Sunoco is no
longer a general partner of the MLP.
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"Assets" means all assets contributed by the Sunoco Entities
to the Partnership Group prior to or on the Closing Date and any assets
acquired by the Partnership Group pursuant to the exercise of the
purchase options granted under Article VII.
"Change of Control" means, with respect to any Person (the
"Applicable Person"), any of the following events: (i) any sale, lease,
exchange, or other transfer (in one transaction or a series of related
transactions) of all or substantially all of the Applicable Person's
assets to any other Person unless immediately following such sale,
lease, exchange, or other transfer such assets are owned, directly or
indirectly, by the Applicable Person; (ii) the consolidation or merger
of the Applicable Person with or into another Person pursuant to a
transaction in which the outstanding Voting Stock of the Applicable
Person is changed into or exchanged for cash, securities, or other
property, other than any such transaction where (a) the outstanding
Voting Stock of the Applicable Person is changed into or exchanged for
Voting Stock of the surviving corporation or its parent and (b) the
holders of the Voting Stock of the Applicable Person immediately prior
to such transaction own, directly or indirectly, not less than a
majority of the Voting Stock of the surviving corporation or its parent
immediately after such transaction; and (iii) a "person" or "group"
(within the meaning of Sections 13(d) or 14(d)(2) of the Exchange Act)
being or becoming the "beneficial owner" (as defined in Rules 13d-3 and
13d-5 under the Exchange Act) of more than 50% of all of the then
outstanding Voting Stock of the Applicable Person, except in a merger
or consolidation which would not constitute a Change of Control under
clause (ii) above.
"Closing Date" means the date of the closing of the initial
public offering of Common Units in the MLP.
"Conflicts Committee" is defined in the MLP Agreement.
"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.
"Covered Environmental Losses" is defined in Section 3.2.
"Environmental Laws" means all federal, state, and local laws,
statutes, rules, regulations, orders, and ordinances, now or hereafter
in effect, relating to protection of human health and the environment
including, without limitation, the federal Comprehensive Environmental
Response, Compensation, and Liability Act, the Superfund Amendments
Reauthorization Act, the Resource Conservation and Recovery Act, the
Clean Air Act, the Federal Water Pollution Control Act, the Toxic
Substances Control Act, the Oil Pollution Act, the Safe Drinking Water
Act, the Hazardous Materials Transportation Act, and other
environmental conservation and protection laws, each as amended from
time to time.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"General Partner" is defined in the MLP Agreement.
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"Inactive Option Assets" means the assets listed on Schedule V
to this Agreement.
"Indemnified Party" means the Partnership Group or the Sunoco
Entities, as the case may be, in its capacity as the party entitled to
Indemnification in accordance with Article III.
"Indemnifying Party" means either the Partnership Group or
Sunoco, as the case may be, in its capacity as the party from whom
indemnification may be sought in accordance with Article III.
"Licensees" means, for purposes of Article V, the Partnership
Entities.
"Licensors" means, for purposes of Article V, Sunoco and
[_________].
"Limited Partner" is defined in the MLP Agreement.
"Marks" means (i) all trademarks, tradenames, logos, and
service marks identified on Schedule III attached hereto and (ii) those
trademarks, tradenames, service marks, and logos associated with the
Licensors' Software or with the subject matter of other licenses
granted hereunder.
"MLP" is defined in the introduction to this Agreement.
"MLP Agreement" means the First Amended and Restated Agreement
of Limited Partnership of Sunoco Logistics Partners L.P., dated as of
the Closing Date, as such agreement is in effect on the Closing Date,
to which reference is hereby made for all purposes of this Agreement.
No amendment or modification to the MLP Agreement subsequent to the
Closing Date shall be given effect for the purposes of this Agreement
unless consented to by each of the Parties to this Agreement.
"OLP" is defined in the introduction to this Agreement.
"Offer" is defined in Section 2.4.
"Option Assets" means the Active Option Assets and the
Inactive Option Assets.
"Party" and "Parties" are defined in the introduction to this
Agreement.
"Partnership Entities" means the General Partner, the MLP, the
OLP and any Person controlled, directly or indirectly, by the General
Partner, the MLP, or the OLP; and "Partnership Entity" means any of the
Partnership Entities.
"Partnership Group" means the MLP and any Person controlled,
directly or indirectly, by the MLP; and "Partnership Group Member"
means any member of the Partnership Group.
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"Person" means an individual, corporation, partnership, joint
venture, trust, limited liability company, unincorporated organization,
or any other entity.
"Petroleum" is defined in the introduction to this Agreement.
"Retained Assets" means the assets retained by the Sunoco
Entities and not contributed to the Partnership Group.
"Software" means, with respect to the software programs
identified on Schedule III attached hereto as such exist on the Closing
Date, (i) the source code, the object code, any enhancements, upgrades,
modifications, and new versions and (ii) any documentation and
instructions regarding use.
"Subject Assets" is defined in Section 2.3.
"Sun Delaware" is defined in the introduction to this
Agreement.
"Sunoco" is defined in the introduction to this Agreement.
"Sunoco Entities" means Sunoco and any Person controlled,
directly or indirectly, by Sunoco other than the Partnership Entities;
and "Sunoco Entity" means any of the Sunoco Entities.
"Sunoco Partners LLC" is defined in the introduction to this
Agreement.
"Sunoco R&M" is defined in the introduction to this Agreement.
"Units" is defined in the MLP Agreement.
"Voting Stock" means securities of any class of Sunoco
entitling the holders thereof to vote on a regular basis in the
election of members of the board of directors of Sunoco.
ARTICLE II
Business Opportunities
2.1 Intent of Parties. [To come]
2.2 Restricted Activities. During the Applicable
Period and except as permitted by Section 2.3, each of the Sunoco Entities
shall be prohibited from engaging in or acquiring any business having assets
engaged in the following activities:
(a) the purchase of crude oil at the wellhead; or
(b) the operation of crude oil pipelines or
terminals, refined products pipelines or terminals, or liquefied
petroleum gas (LPG) terminals in the continental United States.
2.3 Permitted Exceptions.
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(a) Notwithstanding any provision of Section
2.2 to the contrary, the Sunoco Entities may engage in the following
activities under the following circumstances:
(i) the ownership and/or operation of any assets
retained by a Sunoco Entity on the Closing Date;
(ii) the ownership and/or operation of any
logistics asset, including without limitation any pipeline or
terminal, constructed by a Sunoco Entity within a manufacturing or
refining facility (including, without limitation, any chemical plant
or coke plant) of a Sunoco Entity in connection with the operation of
that facility;
(iii) the ownership and/or operation of any asset
or group of related assets used in the activities described in (a) or
(b) of Section 2.2 that are acquired or constructed by a Sunoco Entity
after the date of this Agreement (the "Subject Assets") if:
(A) the fair market value of the Subject Assets
(as determined by the Board of Directors, or other governing body, of
the Sunoco Entity that will own the Subject Assets)is less than
$5 million at the time of such acquisition by the Sunoco Entity or
completion of construction, as the case may be;
(B) in the case of an acquisition of Subject
Assets with a fair market value (as determined by the Board of
Directors, or other governing body, of the Sunoco Entity that will
own the Subject Assets) equal to or greater than $5 million at the time
of such acquisition by a Sunoco Entity, the MLP has been offered the
opportunity to purchase the Subject Assets in accordance with Section
2.4 and the MLP (with the concurrence of the Conflicts Committee) has
elected not to purchase the Subject Assets; or
(C) in the case of the construction of Subject
Assets with a fair market value Assets (as determined by the Board of
Directors, or other governing body, of the Sunoco Entity that will own
the Subject Assets) equal to or greater than $5 million at the time of
completion of construction, the MLP has been offered the opportunity
to purchase the Subject Assets in accordance with Section 2.4 and the
MLP (with the concurrence of the Conflicts Committee) has elected not
to purchase the Subject Assets.
2.4 Procedures.
(a) If a Sunoco Entity acquires or constructs Subject
Assets described in Section 2.3(a)(iii)(B) or (C), then not later than
six months after the consummation of the acquisition or the completion
of construction by such Sunoco Entity of the Subject Assets, as the
case may be, the Sunoco Entity shall notify the General Partner in
writing of such acquisition or construction and offer the Partnership
Group the opportunity to purchase such Subject Assets in accordance
with this Section 2.4 (the "Offer"). As soon as practicable, but in any
event within 60 days after receipt of such written notification, the
General Partner shall notify the Sunoco Entity in writing that either
(i) the General Partner has elected, with the approval of the Conflicts
Committee, not to cause a
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Partnership Group Member to purchase such Subject Assets, in which
event the Sunoco Entity shall be forever free to continue to own or
operate such Subject Assets, or (ii) the General Partner has elected to
cause a Partnership Group Member to purchase such Subject Assets, in
which event the procedures outlined in this Section 2.4 shall apply.
(b) If the Sunoco Entity and the General Partner are
able to agree on the fair market value of the Subject Assets that are
subject to the Offer within 60 days after receipt by the General
Partner of the Offer, a Partnership Group Member shall purchase the
Subject Assets for the agreed upon fair market value as soon as
commercially practicable after such agreement has been reached. The
purchase agreement for the Subject Assets will provide for the purchase
price to be paid, at the option of the Sunoco Entity, in cash, Units in
the MLP, or an interest-bearing promissory note (the interest rate and
other terms of which shall be mutually agreed upon by the Sunoco Entity
and the General Partner).
(c) If the Sunoco Entity and the General Partner are
unable to agree on the fair market value of the Subject Assets that are
subject to the Offer within 60 days after receipt by the General
Partner of the Offer, the Sunoco Entity and the General Partner will
engage a mutually agreed upon, nationally recognized investment
banking firm to determine the fair market value of the Subject Assets.
Such investment banking firm will determine the fair market value of
the Subject Assets within 30 days of its engagement and furnish the
Sunoco Entity and the General Partner its determination of such fair
market value. The fees of the investment banking firm will be split
equally between the Sunoco Entity and the Partnership Group. Once the
investment banking firm has submitted its determination of the fair
market value of the Subject Assets, the General Partner will have the
right, but not the obligation, subject to the approval of the Conflicts
Committee, to cause a Partnership Group Member to purchase the Subject
Assets for the fair market value determined by the investment banking
firm. If the General Partner elects to cause a Partnership Group Member
to purchase the Subject Assets, then the Partnership Group Member shall
purchase the Subject Assets for a purchase price equal to their fair
market value as determined by the investment banking firm as soon as
commercially practicable after such price has been so determined. The
purchase agreement for the Subject Assets will provide for the purchase
price to be paid, at the option of the Sunoco Entity, in cash, Units of
the MLP, or an interest-bearing promissory note (the interest rate and
other terms of which shall be mutually agreed upon by the Sunoco Entity
and the General Partner).
2.5 Scope of Prohibition. Except as provided in this
Article II and the MLP Agreement, each Sunoco Entity shall be free to engage in
any business activity, including those that may be in direct competition with
any Partnership Entity.
2.6 Enforcement. The Sunoco Entities agree and
acknowledge that the Partnership Group does not have an adequate remedy at law
for the breach by the Sunoco Entities of the covenants and agreements set forth
in this Article II, and that any breach by the Sunoco Entities of the covenants
and agreements set forth in this Article II would result in irreparable injury
to the Partnership Group. The Sunoco Entities further agree and acknowledge that
any member of the Partnership Group may, in addition to the other remedies which
may be
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available to the Partnership Group, file a suit in equity to enjoin the
Sunoco Entities from such breach, and consent to the issuance of injunctive
relief under this Agreement.
ARTICLE III
Indemnification
3.1 Intent of Parties. [To come]
3.2 Environmental Indemnification.
(a) Subject to Section 3.3, Sunoco shall indemnify,
defend and hold harmless the Partnership Group for 30 years after the
Closing Date from and against environmental and toxic tort losses,
costs, penalties, damages, and expenses arising from any correction of
violations of, or performance of remediation required by,
Environmental Laws due to events and conditions associated with the
operation of the Assets and occurring before the Closing Date
("Covered Environmental Losses") that are suffered or incurred by the
Partnership Group.
(b) The Partnership Group shall indemnify, defend and
hold harmless the Sunoco Entities for 30 years after the Closing Date
from and against environmental and toxic tort losses, costs,
penalties, damages, and expenses arising from any correction of
violations of, or performance of remediation required by,
Environmental Laws due to events and conditions associated with the
operation of the Assets and whether occurring before or after the
Closing Date that are suffered or incurred by the Sunoco Entities,
except to the extent that any of the foregoing are Covered
Environmental Losses for which the Partnership Group is entitled to
indemnification from Sunoco under this Article III.
3.3 Limitations Regarding Environmental Indemnification.
Sunoco shall be obligated to indemnify, defend and hold harmless the Partnership
Group for 100% of all Covered Environmental Losses asserted within the first 21
years after the Closing Date. Sunoco's obligation to indemnify, defend and hold
harmless the Partnership Group for Covered Environmental Losses asserted in any
given year thereafter shall decrease by 10% a year in accordance with Schedule I
attached hereto. For example, for a claim asserted during the 23rd year after
the Closing Date, Sunoco would be required to indemnify the Partnership Group
for 80% of its loss. There is no monetary cap on the amount of indemnity
coverage provided by Sunoco under Section 3.2(a).
3.4 Right of Way Indemnification. Sunoco shall indemnify,
defend and hold harmless the Partnership Group for a period of 10 years after
the Closing Date from and against any losses, costs, penalties, damages, and
expenses suffered or incurred by the Partnership Group as a result of (a) the
failure of the Partnership Group to be the owner of such valid and indefeasible
easement rights or fee ownership interests in and to the rights of way in which
any crude oil or refined products pipeline or related equipment conveyed or
contributed to the Partnership Group on the Closing Date is located as of the
Closing Date as are necessary to enable the Partnership Group to continue to own
and operate any such pipeline in the manner that such pipeline has been owned
and operated by the Sunoco Entities prior to the Closing Date;
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and (b) the failure of the Partnership Group to have the consents and permits
necessary to allow any such pipeline referred to in Clause (a) of this Section
3.4 to cross the roads, waterways, railroads and other areas upon which any such
pipeline is located as of the Closing Date.
3.5 Additional Indemnification. In addition to and not in
limitation of the indemnification provided under Sections 3.2(a) and 3.4, Sunoco
shall indemnify, defend, and hold harmless the Partnership Group from and
against any losses, costs, penalties, damages, and expenses suffered or incurred
by the Partnership Group as a result of (i) events and conditions associated
with the operation of the Assets and occurring before the Closing Date (other
than Covered Environmental Losses which are provided for under Sections 3.2 and
3.3) to the extent that Sunoco is notified of any of the foregoing within 10
years after the Closing Date, (ii) the currently pending legal actions against
the Sunoco Entities set forth on Schedule II attached hereto, and (iii) events
and conditions associated with the Retained Assets and whether occurring before
or after the Closing Date.
3.6 Indemnification Procedures.
(a) The Indemnified Party agrees that within a
reasonable period of time after it becomes aware of facts giving rise
to a claim for indemnification under this Article III, it will provide
notice thereof in writing to the Indemnifying Party, specifying the
nature of and specific basis for such claim.
(b) The Indemnifying Party shall have the right to
control all aspects of the defense of (and any counterclaims with
respect to) any claims brought against the Indemnified Party that are
covered by the indemnification under this Article III, including,
without limitation, the selection of counsel, determination of whether
to appeal any decision of any court and the settling of any such
matter or any issues relating thereto; provided, however, that no such
settlement shall be entered into without the consent of the
Indemnified Party unless it includes a full release of the Indemnified
Party from such matter or issues, as the case may be.
(c) The Indemnified Party agrees, at its own cost and
expense, to cooperate fully with the Indemnifying Party, with respect
to all aspects of the defense of any claims covered by the
indemnification under this Article III, including, without limitation,
the prompt furnishing to the Indemnifying Party of any correspondence
or other notice relating thereto that the Indemnified Party may
receive, permitting the name of the Indemnified Party to be utilized
in connection with such defense, the making available to the
Indemnifying Party of any files, records or other information of the
Indemnified Party that the Indemnifying Party considers relevant to
such defense and the making available to the Indemnifying Party of any
employees of the Indemnified Party; provided, however, that in
connection therewith the Indemnifying Party agrees to use reasonable
efforts to minimize the impact thereof on the operations of the
Indemnified Party. In no event shall the obligation of the Indemnified
Party to cooperate with the Indemnifying Party as set forth in the
immediately preceding sentence be construed as imposing upon the
Indemnified Party an obligation to hire and pay for counsel in
connection with the defense of any claims covered by the
indemnification set forth in this Article III; provided, however, that
the Indemnified Party may, at its own option, cost and
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expense, hire and pay for counsel in connection with any such defense.
The Indemnifying Party agrees to keep any such counsel hired by the
Indemnified Party reasonably informed as to the status of any such
defense, but the Indemnifying Party shall have the right to retain
sole control over such defense.
(d) In determining the amount of any loss, cost,
damage or expense for which the Indemnified Party is entitled to
indemnification under this Agreement, the gross amount of the
indemnification will be reduced by (i) any insurance proceeds realized
or to be realized by the Indemnified Party, and such correlative
insurance benefit shall be net of any incremental insurance premium
that becomes due and payable by the Indemnified Party as a result of
such claim and (ii) all amounts recovered or recoverable by the
Indemnified Party under contractual indemnities from third Persons.
(e) The date on which notification of a claim for
indemnification is received by the Indemnifying Party shall determine
whether such claim is timely made and the percentage of the
indemnification obligation that applies under Section 3.3, if
applicable.
ARTICLE IV
General and Administrative Expenses
4.1 Intent of Parties. [To come]
4.2 General.
(a) The MLP will pay the General Partner an
administrative fee (the "Administrative Fee") of $8.0 million per year
for the provision by the General Partner and its Affiliates for the
Partnership Group's benefit of all the general and administrative
services which Sunoco and its Affiliates have traditionally provided
in connection with the Assets. Sunoco may increase the Administrative
Fee on the second and third anniversary date of this Agreement by the
lesser of 2.5% or the Consumer Price Index -- All Urban Consumers,
U.S. City Average, Not Seasonally Adjusted for the applicable year.
The General Partner, with the approval and consent of its Conflicts
Committee, may agree on behalf of the MLP to further increases in the
Administrative Fee in connection with expansions of the operations of
the Partnership Group through the acquisition or construction of new
assets or businesses. After this three-year period, the General
Partner will determine the amount of general and administrative
expenses that will be properly allocated to the MLP in accordance with
the terms of the MLP Agreement.
(b) The Administrative Fee shall not include and
the Partnership Group shall reimburse the General Partner for:
(i) salaries of employees of the General
Partner, to the extent such employees perform services for the
Partnership Group; and
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(ii) the cost of employee benefits relating
to employees of the General Partner, such as 401(k), pension, and
health insurance benefits, to the extent such employees perform
services for the Partnership Group.
ARTICLE V
License Agreement
5.1 Intent of Parties. [To come]
5.2 Grant of License. Subject to the terms and conditions
herein, the Licensors hereby grant to each Licensee, and each Licensee hereby
accepts, a non-exclusive, world-wide, non-transferable, royalty-free, perpetual
license during the term of this Agreement on an "AS IS, WHERE IS" basis to use
the Software solely for the internal use by each employee or agent of each
Licensee for the benefit of such Licensee, any Person directly or indirectly
controlled by or under common control with such Licensee, but specifically
excluding disclosure to any third parties including, without limitation, any
customer of such Licensee.
5.3 Restrictions on Software.
(a) Each of the Licensees agrees that it shall
not sublicense, license, disclose or otherwise make available any part
of the Software to any person other than: (i) each of Licensees'
employees or agents who is required to have access to the Software;
and (ii) each of Licensees' consultants or agents who is required to
have access to the Software and who has executed a non-disclosure
agreement containing obligations of confidence consistent with the
restrictions set forth in this Agreement.
(b) Each Licensee shall keep the Software in a
secure environment and shall take reasonable commercial steps
necessary to protect the Software, or any part thereof, from
unauthorized disclosure or release.
(c) Each Licensee shall be entitled to create a
sufficient number of copies of the Software for backup and archival
purposes only provided that such Licensee reproduces and applies all
copyright notices and any other proprietary rights notices that appear
on the original copies supplied by Licensors. Licensees shall not be
permitted to adapt, create derivative works of, translate, perform or
display publicly, post or otherwise modify the Software.
(d) Each of the Licensees agrees that it shall
not use the Software for any development or analysis purposes
whatsoever and that it shall not decompile or reverse engineer the
Software.
(e) Each Licensee acknowledges and agrees that
Licensors shall own all intellectual property rights in and to the
Software.
5.4 Grant of License. Subject to the terms and
conditions herein, Licensors hereby grant to Licensees the right and license to
use the Marks solely in connection with the Licensees' businesses and the
services performed therewith within the United States during the term of this
Agreement.
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5.5 Restrictions on Marks. In order to ensure the
quality of uses under the Marks, and to protect the goodwill of the Marks,
Licensees agree as follows:
(a) Licensees will only use the Marks in
formats approved by Licensors and only in strict association with the
Licensees' businesses and the services performed therewith;
(b) Prior to publishing any new format or
appearance of the Marks or the advertising or promotional materials,
Licensees shall first provide such format, appearance or materials to
Licensors for its approval. If Licensors do not inform Licensees in
writing within 14 days from the date of the receipt of such new
format, appearance, or materials that such new format, appearance, or
materials is acceptable, then such new format, appearance or materials
shall be deemed to be unacceptable and disapproved by Licensors.
Licensors may withhold approval of any proposed changes to the format,
appearance or materials which Licensees propose to use in Licensors'
sole discretion;
(c) Licensees shall not use any other
trademarks, service marks, trade names or logos in connection with the
Marks or use the Marks or any trademark or servicemark confusingly
similar to the Marks after the termination of this Agreement.
Licensors will not use the Marks in such a manner so as to impair the
validity or enforceability of, or in any way disparage or dilute, the
Marks.
5.6 Ownership. Licensors shall own all right, title and
interest, including all goodwill relating thereto, in and to the Marks, and all
trademark rights embodied therein shall at all times be solely vested in
Licensors. Licensors shall also own all right, title, and interest in and to the
Software. Licensees have no right, title, interest or claim of ownership in the
Marks or the Software, except for the licenses granted in this Agreement. All
use of the Marks shall inure to the benefit of Licensors. Licensees agree that
they will not attack the title of Licensors in and to the Marks or the Software.
5.7 Confidentiality. The Licensees shall maintain in
strictest confidence all confidential or nonpublic information or material
disclosed by Licensors embodied in or reflected in the Software and in the
materials supplied hereunder in connection with the license of the Marks,
whether in writing or orally and whether or not marked as confidential. Such
confidential information includes, but is not limited to, algorithms,
inventions, ideas, processes, computer system architecture and design, operator
interfaces, operational systems, technical information, technical
specifications, training and instruction manuals, and the like. In furtherance
of the foregoing confidentiality obligation, Licensees shall limit disclosure of
such Software and other confidential information to those of their employees,
contractors or agents having a need to access the Software and confidential
information for the purpose of exercising rights granted hereunder.
5.8 Estoppel. Nothing in this Agreement shall be
construed as conferring by implication, estoppel, or otherwise upon Licensees
(a) any license or other right under the intellectual property rights of
Licensors other than the license granted herein to the Software and
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the Marks as set forth expressly herein or (b) any license rights other than
those expressly granted herein.
5.9 Warranties; Disclaimers.
(a) The Licensors represent and warrant that (i)
they own and have the right to license the Software and the Marks
licensed under this Agreement, (ii) the Marks do not infringe upon the
rights of any third parties and (iii) the Software includes all
software owned or licensed by Licensors that is necessary and
sufficient to operate the Assets in the manner in which they are
currently operated by the Licensors or their affiliates.
(b) EXCEPT FOR THE WARRANTIES AND REPRESENTATIONS
DESCRIBED IN SECTION 5.9(a), LICENSORS DISCLAIM ANY AND ALL
WARRANTIES, CONDITIONS OR REPRESENTATIONS (EXPRESS OR IMPLIED, ORAL OR
WRITTEN) WITH RESPECT TO THE SUBJECT MATTER HEREOF, OR ANY PART
THEREOF, INCLUDING ANY AND ALL IMPLIED WARRANTIES OF NON-INFRINGEMENT,
MERCHANTABILITY OR FITNESS OR SUITABILITY FOR ANY PURPOSE (WHETHER THE
PARTY KNOWS, HAS REASON TO KNOW, HAS BEEN ADVISED, OR IS OTHERWISE IN
FACT AWARE OF ANY SUCH PURPOSE) WHETHER ALLEGED TO ARISE BY LAW, BY
REASON OF CUSTOM OR USAGE IN THE TRADE OR BY COURSE OF DEALING. THE
SOFTWARE AND DOCUMENTATION LICENSED HEREUNDER IS LICENSED "AS IS" AND
LICENSEES AGREE THAT THE SOFTWARE MAY HAVE BUGS AND THAT INTERRUPTIONS
IN ITS OPERATION MAY OCCUR.
5.10 Indemnification.
(a) Each Licensee shall jointly and severally, and
to the fullest extent permitted by applicable law, defend, indemnify
and hold harmless the Licensors and their respective successors and
assigns authorized hereunder and any of their respective officers,
directors, employees, agents and representatives from and against any
and all claims, demands, damages, losses, costs and expenses arising
out of or related in any way to this Article V to the extent such
claims are attributable to such Licensee's failure to comply with its
obligations under this Article V or Licensee's negligence or the
negligence of Licensee's employees, agents, subcontractors or other
representatives regarding this Article V.
(b) Each Licensor shall jointly and severally, and
to the fullest extent permitted by applicable law, defend, indemnify
and hold harmless the Licensees and their respective successors and
assigns authorized hereunder and any of their respective officers,
directors, employees, agents and representatives from and against any
and all claims, demands, damages, losses, costs and expenses arising
out of or related in any way to this Article V to the extent such
claims are attributable to (i) Licensor's failure to comply with its
obligations under this Article V, (ii) any claim of infringement or
ownership asserted by a third party as to the Software or the Marks or
(iii) Licensor's
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negligence or the negligence of Licensor's employees, agents,
subcontractors or other representatives regarding this Article V.
ARTICLE VI
Capital and Other Expenditures
6.1 Intent of Parties. [To come]
6.2 Reimbursement of Maintenance Capital and Other
Expenditures for Pipeline Integrity Management. During the five-year period
commencing January 1, 2002, Sunoco will reimburse the Partnership Group for
maintenance capital and any other expenditures incurred by the Partnership Group
in order to comply with the U.S. Department of Transportation's Pipeline
Integrity Management Rule ________ [ADD SPECIFIC CITE TO DOT RULE] to the extent
such expenditures exceed $8.0 million in any calendar year, subject to a maximum
aggregate reimbursement by Sunoco of $15 million over this five-year period.
6.3 Completion of Tank Maintenance and Inspection Projects.
Sunoco R&M will, at its sole cost and expense, complete the tank maintenance and
inspection projects for the ▇▇▇▇▇ Creek Tank Farm and Marcus Hook Tank Farm that
are listed on Schedule IV to this Agreement.
6.4 Reimbursement For Expenditures For ▇▇▇▇▇ Creek Tank Farm
And Marcus Hook Tank Farm. Sunoco R&M will reimburse the Partnership Group
for up to $10 million in connection with expenditures required to conform the
▇▇▇▇▇ Creek Tank Farm and the Marcus Hook Tank Farm to industry standards or
regulatory requirements. This required maintenance shall include the following:
(i) cathodic protection upgrades in existence on the date of this Agreement;
(ii) raising tank farm pipelines above ground; (iii) repair or demolition of the
two riveted tanks at the Marcus Hook Tank Farm; and (iv) any other upgrades or
maintenance that are required to put these facilities in compliance with all
applicable industry standards and regulatory requirements as of the Closing
Date.
ARTICLE VII
Purchase Options
7.1 Intent of Parties. [To come]
7.2 Option to Purchase Certain Assets retained by Sunoco
Entities.
(a) Sunoco hereby grants to the Partnership Group the
unconditional right and option for a period of 10 years from the Closing
Date to purchase for fair market value at the time of purchase from the
applicable Sunoco Entity all of the respective Sunoco Entity's right title
and interest in, to and under the Active Option Assets.
(b) Sunoco hereby grants to the Partnership Group the
unconditional right and option for a period of 10 years from the
Closing Date to purchase for fair market value at the time of purchase
from the applicable Sunoco Entity all of the
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respective Sunoco Entity's right title and interest in, to and under the
Inactive Option Assets.
(c) Sunoco will take all action required to cause the Sunoco
Entities that own the Option Assets to comply with the terms of this
Article VII.
7.3 Procedures.
(a) If a Partnership Group Member desires to exercise its
option to purchase an Option Asset, it will provide written notice to Sunoco of
such exercise and the fair market value it proposes to pay for the Option Asset.
If the Partnership Group Member and Sunoco are unable to agree on the fair
market value of the Option Asset, the Partnership Group Member and Sunoco will
engage a mutually-agreed-upon, nationally recognized investment banking firm to
determine the fair market value of the Option Asset. The fees of the investment
banking firm will be split equally between Sunoco and the Partnership Group.
Once the investment bank submits its determination of the fair market value of
the Option Asset to Sunoco and the Partnership Group Member, the Partnership
Group Member will have the right, but not the obligation, to purchase the Option
Asset for the fair market value determined by the investment bank. The
Partnership Group Member will provide written notice of its decision to Sunoco
within 15 days after the investment bank has submitted its determination of fair
market value.
(b) If a Partnership Group Member chooses to exercise its
option to purchase an Option Asset under Section 7.3(a), this Agreement shall
become a contract of sale and purchase for the Option Asset pursuant to which
the Sunoco Entity shall be obligated to sell the Option Asset to the Partnership
Group Member and the Partnership Group Member shall be obligated to purchase the
Option Asset from the Sunoco Entity. The terms of the purchase and sale
agreement will include the following:
(i) the Partnership Group Member will deliver a cash
purchase price (unless the Partnership Group Member and Sunoco agree that the
consideration will be paid by means of Units in the MLP or an interest-bearing
promissory note);
(ii) the Option Asset will be entitled to the benefit of
the indemnification contained in Article III of this Agreement for the remaining
term of such indemnification with respect to events or conditions associated
with the operation of the Option Asset and occurring before the date of
acquisition of the Option Asset by the Partnership Group Member;
(iii) the applicable Sunoco Entity will represent that it
has good and valid title to the Option Asset, subject to all matters of record
in existence on the Closing Date, plus any other such matters as the Partnership
Group Member may approve, which approval will not be unreasonably withheld. If
the Partnership Group Member desires to obtain any title insurance with respect
to the Option Asset, the full cost and expense of obtaining the same (including
but not limited to the cost of title
-15-
examination, document duplication and policy premium) shall be borne by the
Partnership Group Member;
(iv) the Sunoco Entity will grant to the Partnership Group Member the
right, exercisable at the Partnership Group Member's risk and expense, to make
such surveys, tests and inspections of the Option Asset as the Partnership Group
Member may deem desirable, so long as such surveys, tests or inspections do not
damage the Option Asset or interfere with the activities of the Sunoco Entity
thereon and so long as the Partnership Group Member has furnished the Sunoco
Entity with evidence that adequate liability insurance is in full force and
effect;
(v) the Partnership Group Member will have the right to terminate its
obligation to purchase the Option Asset under this Article 7 if the results of
any searches, surveys, tests or inspections conducted pursuant to Section
7.3(b)(iii) or (iv) above are, in the reasonable opinion of the Partnership
Group, unsatisfactory;
(vi) the closing date for the purchase of the Option Asset shall occur
no later than 90 days following receipt by the Sunoco Entity of written notice
by the Partnership Group Member of its intention to exercise its option to
purchase the Option Asset pursuant to Section 7.3(a); and
(vii) the Sunoco Entity shall execute, have acknowledged and deliver to
the Partnership Group Member a special warranty deed, or comparable deed in the
applicable jurisdiction, on the closing date for the purchase of the Option
Asset conveying the Option Asset unto the Partnership Group Member free and
clear of all encumbrances other than those set forth in Section 7.3(b)(iii)
above.
(c) If a Partnership Group Member chooses not to exercise its option to
purchase an Option Asset at the price determined by the investment banking firm
under Section 7.3(a), all future rights to purchase such Option Asset by the
Partnership Group will be extinguished.
ARTICLE VIII
Development, Construction and Purchase of Assets
8.1 Intent of Parties. [To come]
8.2 Development, Construction and Purchase of Assets. Sunoco may at any
time propose to the Partnership Group that the Partnership Group develop,
construct, or acquire an asset, and if the General Partner determines in its
good faith judgment, with the concurrence of its Conflicts Committee, that the
development, construction, or acquisition of the asset, including the terms on
which a Sunoco Entity would agree to use the asset, will be beneficial on the
whole to the Partnership Group and that proceeding with the development,
construction, or acquisition of the asset will not effectively preclude the
Partnership Group from undertaking another project that will be more beneficial
to the Partnership Group, the Partnership Group will use its commercially
reasonable efforts to finance, develop, and construct the asset or acquire the
asset, as the case may be.
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ARTICLE IX
Miscellaneous
9.1 Choice of Law; Submission to Jurisdiction. This Agreement shall be
subject to and governed by the laws of the Commonwealth of Pennsylvania,
excluding any conflicts-of-law rule or principle that might refer the
construction or interpretation of this Agreement to the laws of another state.
Each Party hereby submits to the jurisdiction of the state and federal courts in
the Commonwealth of Pennsylvania and to venue in Philadelphia, Pennsylvania.
9.2 Notice. All notices or requests or consents provided for by, or
permitted to be given pursuant to, this Agreement must be in writing and must be
given by depositing same in the United States mail, addressed to the Person to
be notified, postpaid, and registered or certified with return receipt requested
or by delivering such notice in person or by telecopier or telegram to such
Party. Notice given by personal delivery or mail shall be effective upon actual
receipt. Notice given by telegram or telecopier shall be effective upon actual
receipt if received during the recipient's normal business hours or at the
beginning of the recipient's next business day after receipt if not received
during the recipient's normal business hours. All notices to be sent to a Party
pursuant to this Agreement shall be sent to or made at the address set forth
below such Party's signature to this Agreement or at such other address as such
Party may stipulate to the other Parties in the manner provided in this Section
9.3.
9.3 Entire Agreement. This Agreement constitutes the entire agreement of
the Parties relating to the matters contained herein, superseding all prior
contracts or agreements, whether oral or written, relating to the matters
contained herein.
9.4 Termination. This Agreement, other than the provisions of Articles III,
VI and VII, will terminate on the date on which an Affiliate of Sunoco is no
longer a general partner of the MLP. In addition, the provisions of Article II
of this Agreement may be terminated by Sunoco upon a Change of Control of
Sunoco. In the event of termination of this Agreement, the Licensees' right to
utilize or possess the Software and the Marks licensed under this Agreement
shall automatically cease. Within 15 days after the termination of this
Agreement, the Licensees shall (i) return to Licensors or destroy the original
and all copies, in any form, of all Software and Inventions, or parts thereof,
for which it has received a license hereunder and (ii) provide a certified
affidavit executed by an officer of the Licensees to the effect that the
destruction has been completed.
9.5 Effect of Waiver or Consent. No waiver or consent, express or implied,
by any Party to this Agreement or of any breach or default by any Person in the
performance by such Person of its obligations hereunder shall be deemed or
construed to be a consent or waiver to or of any other breach or default in the
performance by such Person of the same or any other obligations of such Person
hereunder. Failure on the part of a Party to complain of any act of any Person
or to declare any Person in default, irrespective of how long such failure
continues, shall not constitute a waiver by such Party of its rights hereunder
until the applicable statute of limitations period has run.
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9.6 Amendment or Modification. This Agreement may be amended or modified
from time to time only by the written agreement of all the Parties hereto;
provided, however, that the MLP may not, without the prior approval of the
Conflicts Committee, agree to any amendment or modification of this Agreement
that, in the reasonable discretion of the General Partner, will adversely affect
the holders of Common Units. Each such instrument shall be reduced to writing
and shall be designated on its face an "Amendment" or an "Addendum" to this
Agreement.
9.7 Assignment. No Party shall have the right to assign its rights or
obligations under this Agreement without the consent of the other Parties
hereto.
9.8 Counterparts This Agreement may be executed in any number of
counterparts with the same effect as if all signatory parties had signed the
same document. All counterparts shall be construed together and shall constitute
one and the same instrument.
9.9 Severability. If any provision of this Agreement or the application
thereof to any Person or circumstance shall be held invalid or unenforceable to
any extent, the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected thereby and
shall be enforced to the greatest extent permitted by law.
9.10 Gender, Parts, Articles and Sections. Whenever the context requires,
the gender of all words used in this Agreement shall include the masculine,
feminine and neuter, and the number of all words shall include the singular and
plural. All references to Article numbers and Section numbers refer to Articles
and Sections of this Agreement.
9.11 Further Assurances. In connection with this Agreement and all
transactions contemplated by this Agreement, each signatory party hereto agrees
to execute and deliver such additional documents and instruments and to perform
such additional acts as may be necessary or appropriate to effectuate, carry out
and perform all of the terms, provisions and conditions of this Agreement and
all such transactions.
9.12 Withholding or Granting of Consent. Each party may, with respect to
any consent or approval that it is entitled to grant pursuant to this Agreement,
grant or withhold such consent or approval in its sole and uncontrolled
discretion, with or without cause, and subject to such conditions as it shall
deem appropriate.
9.13 U.S. Currency. All sums and amounts payable to or to be payable
pursuant to the provisions of this Agreement shall be payable in coin or
currency of the United States of America that, at the time of payment, is legal
tender for the payment of public and private debts in the United States of
America.
9.14 Laws and Regulations. Notwithstanding any provision of this Agreement
to the contrary, no Party to this Agreement shall be required to take any act,
or refrain from taking any act, under this Agreement if the effect thereof would
be to cause such Party to be in violation of any applicable law, statute, rule
or regulation.
9.15 Rights of Limited Partners. The provisions of this Agreement are
enforceable solely by the Parties to this Agreement, and no Limited Partner of
the MLP shall
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have the right, separate and apart from the MLP, to enforce any provision of
this Agreement or to compel any Party to this Agreement to comply with the terms
of this Agreement.
-19-
IN WITNESS WHEREOF, the Parties have executed this Agreement on, and
effective as of, the Closing Date.
SUNOCO, INC.
By:
------------------------------------
Name:
Title:
Address for Notice:
------------------------------------
------------------------------------
------------------------------------
SUNOCO, INC. (R&M)
By:
------------------------------------
Name:
Title:
Address for Notice:
------------------------------------
------------------------------------
------------------------------------
SUN PIPE LINE COMPANY OF DELAWARE
By:
------------------------------------
Name:
Title:
Address for Notice:
------------------------------------
------------------------------------
------------------------------------
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ATLANTIC PETROELUM CORPORATION
By:
----------------------------------------------------
Name:
Title:
Address for Notice:
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
SUNOCO LOGISTICS PARTNERS L.P.
By: Sunoco Partners LLC, its general partner
By:
----------------------------------------------------
Name:
-----------------------------------------------
Title:
----------------------------------------------
Address for Notice:
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
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SUNOCO LOGISTICS PARTNERS
OPERATIONS L.P.
By: Sunoco Logistics Partners GP LLC, its
general partner
By:
-------------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
Address for Notice:
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
SUNOCO PARTNERS LLC
By:
-------------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
Address for Notice:
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
EX10_5.DOC
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DRAFT DATED 12/17/01
SCHEDULE I
Sunoco's and MLP's Respective Shares of Liability under Section 3.3 for Covered
Environmental Losses Arising more than 21 Years after the Closing Date
No. of Years After Closing Sunoco's Respective MLP's Respective
During which Covered Share of Liability Share of Liability
Environmental Loss is under Section 3.3 under Section 3.3
First Asserted .
----------------------------------------------------------------------------------------------------------------------
More than 0, but less than or equal to 21 100% 0%
More than 21, but less than or equal to 22 90% 10%
More than 22, but less than or equal to 23 80% 20%
More than 23, but less than or equal to 24 70% 30%
More than 24, but less than or equal to 25 60% 40%
More than 25, but less than or equal to 26 50% 50%
More than 26, but less than or equal to 27 40% 60%
More than 27, but less than or equal to 28 30% 70%
More than 28, but less than or equal to 29 20% 80%
More than 29, but less than or equal to 30 10% 90%
More than 30 0% 100%
EX10_5.DOC
Schedule I - 1
SCHEDULE II
Pending Litigation.
SCHEDULE III
Intellectual Property
Software and Inventions:
------------------------
[Discuss]
Marks:
------
The Sunoco name and logo necessary for the following MLP name and logo:
[Sunoco Logistics Logo]
SCHEDULE IV
Tanks Maintenance and Inspection Projects to be completed by Sunoco R&M at ▇▇▇▇▇
Creek Tank Farm and Marcus Hook Tank Farm.
▇▇▇▇▇ Creek Tank Farm:
Marcus Hook Tank Farm:
SCHEDULE V
Inactive Options Assets.
(i) The idled 370-mile, 6-inch refined product pipeline from
Icedale, Pennsylvania to Cleveland, Ohio that is owned by
_______, a wholly owned subsidiary of Sunoco.