EXHIBIT 10.2
SECOND AMENDMENT
TO
OMNIBUS AGREEMENT
This Second Amendment ("Amendment") is made this 11th day of April 2002 to that
certain Omnibus Agreement among The Williams Companies Inc., a Delaware
corporation, Williams Energy Services, LLC, a Delaware limited liability
company, Williams Natural Gas Liquids, Inc., a Delaware corporation, Williams
Pipe Line Company, LLC, a Delaware limited liability company, Williams
Information Services Corporation, a Delaware limited liability company, Williams
Energy Partners, LP, a Delaware limited partnership, Williams GP LLC, a Delaware
limited liability company, and Williams OLP, LP, a Delaware limited partnership,
as amended by the first amendment thereto dated January 28, 2002 (the "Omnibus
Agreement").
WHEREAS on and effective as of the Effective Date, WES contributed and the MLP
acquired all of the membership interests in Williams Pipe Line; and
WHEREAS the parties desire to amend the Omnibus Agreement to evidence their
understanding as to pursuit of business opportunities, expense reimbursements
and other matters following the contribution of Williams Pipe Line to the MLP;
NOW THEREFORE, in consideration of the promises and 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:
1. DEFINITIONS.
(a) Capitalized terms used herein but not defined shall have the
meaning given them in the Omnibus Agreement.
(b) The following definitions are added to Article I of the
Omnibus Agreement:
"Blendstocks" means isobutane, normal butane, natural
gasoline, and refinery grade butane.
"Effective Date" means the date WES contributed and the MLP
acquired all of the membership interests in Williams Pipe
Line.
"MAPL" means the Mid-America Pipe Line .
"NGL" means natural gas liquids and includes ethane,
propane, naptha and Blendstocks.
"Refined Products" means all grades of motor gasoline,
distillate and aviation fuel.
"Restricted Assets" means assets or any business having
assets engaged or obligated to engage in the activities
prohibited by Section 2.1(a) or 2.1(b) .
"Partnership Restricted Assets" means assets or any business
having assets engaged or obligated to engage in the
activities prohibited by Section 2.4(a), 2.4(b), 2.4(c) or
2.4(d) as of the Effective Date.
(c) The following definitions in Article I of the Omnibus
Agreement are amended in their entirety to read as follows:
"Licensors" means, for purposes of Article V hereof,
Williams and WISC.
"Partnership Entities" means the General Partner, the MLP,
the OLP, Williams Pipe Line and any Person controlled by any
of the foregoing.
2. Section 2.1 of the Omnibus Agreement is amended in its entirety to read as
follows:
"2.1 Williams Entities Restrictions. (a) During the Applicable Period, each of
the Williams Entities shall be prohibited from engaging in or acquiring any
business having assets engaged in the following activities:
(i) the transportation, storage or distribution of ammonia or related
products in the United States; and
(ii) the ownership and operation of facilities for the terminalling
and storage of refined petroleum products in any state in the United
States, except Alaska and Hawaii.
(b) Until the earlier of April 1, 2005 or the termination of the Applicable
Period, each of the Williams Entities shall be prohibited from engaging in or
acquiring any business having assets engaged in the following activities:
(i) Refined Product transportation (including through joint tariff
arrangements or capacity leases or otherwise) to a delivery point
within a 50-mile radius of a Refined Products delivery point owned or
supplied by a Partnership Entity on the Effective Date; and
(ii) Refinery grade butane transportation from the Koch Pine Bend, MN,
refinery, Marathon St. Paul, MN refinery, ExxonMobil Joilet refinery,
BP Whiting, IN refinery and CITGO Lemont, IL refinery. ."
3. Section 2.2(a) of the Omnibus Agreement is amended in its entirety to read as
follows:
"(a) The Restricted Asset was owned, leased or operated by the Williams Entities
on the Effective Date."
4. A new Section 2.4 is added to the Omnibus Agreement that reads as follows:
"2.4 Partnership Entities Restrictions. Until the earlier of April 1, 2005 or
the termination of the Applicable Period, each of the Partnership Entities shall
be prohibited from engaging in or acquiring any business having assets engaged
in the following activities:
(a) NGL transportation (including through joint tariff arrangements or
capacity leases or otherwise) to a delivery point within a 50-mile radius of a
NGL delivery point owned or supplied by a Williams Entity on the Effective Date;
(b) Propane transportation into Williams Pipe Line's Carthage, MO
terminal other than on MAPL;
(c) Blendstock transportation into Williams Pipe Line's El Dorado, KS
connection point other than on MAPL; and
(d) Construct or otherwise acquire any connection to the Cochin
pipeline system."
5. A new Section 2.5 is added to the Omnibus Agreement that reads as follows:
"2.5 Partnership Permitted Exceptions. Notwithstanding any provision of Section
2.4 to the contrary, a Partnership Entity may own and operate Partnership
Restricted Assets under the following circumstances:
(a) The Partnership Restricted Assets were owned, leased or operated by
the Partnership Entities on the Effective Date.
(b) The value of the Partnership Restricted Assets acquired in a
transaction does not exceed $20 million at the time of the acquisition, as
determined by the General Partner, in its sole discretion.
(c) (i) The value of the Partnership Restricted Assets acquired in a
transaction exceeds $20 million at the time of acquisition, as determined by the
General Partner, in its sole discretion and (ii) WES has elected not to pursue
such opportunity in accordance with the procedures set forth in Section 2.6.
(d) The original cost of Partnership Restricted Assets constructed does
not exceed $20 million, as determined by the General Partner, in its sole
discretion.
(e) (i) The original cost of the Partnership Restricted Assets constructed by a
Partnership Entity exceeds $20 million, as determined by the General Partner, in
its sole discretion and (ii) WES has elected not to pursue such opportunity in
accordance with the procedures set forth in Section 2.6."
6. A new Section 2.6 is added to the Omnibus Agreement that reads as follows:
"2.6 Partnership Restricted Asset Procedures. In the event that any of the
Partnership Entities acquires or constructs Partnership Restricted Assets valued
or having an original cost in excess of $20 million at the time of the
acquisition or the completion of construction, as determined by the General
Partner, then not later than six months after the consummation of the
acquisition and not later than one year after the completion of construction by
such Partnership Entity of the Partnership Restricted Assets, such Partnership
Entity shall notify WES of such purchase or construction and offer WES the
opportunity to purchase such Partnership Restricted Assets. As soon as
practicable, but in any event, within 60 days after receipt of such
notification, WES shall notify the Partnership Entity that either (i) WES has
elected not to purchase such Partnership Restricted Assets, in which event the
Partnership Entity shall be forever free to continue to own or operate such
Partnership Restricted Assets, or (ii) WES has elected to purchase such
Partnership Restricted Assets, in which event the following procedures shall be
followed:
(a) Within 30 days of receipt of the notice from WES that it has elected to
purchase the Partnership Restricted Assets, the Partnership Entity shall submit
an offer, approved by the General Partner and the Conflicts Committee, to sell
the Partnership Restricted Assets (the "Offer") to WES on the terms and for the
consideration stated in the Offer.
(b) The Partnership Entity and WES shall negotiate after receipt of such Offer
the terms on which the Partnership Restricted Assets will be sold to WES. The
Partnership Entity shall provide all information concerning the business,
operations and finances of such Partnership Restricted Assets as may be
reasonably requested by WES.
(i) If the Partnership Entity, with the approval of the General
Partner and the Conflicts Committee, and WES agree on such terms
within 60 days after receipt of the Offer, WES shall purchase the
Partnership Restricted Assets on such terms as soon as commercially
practicable after such agreement has been reached.
(ii) If the Partnership Entity and WES are unable to agree on the
terms of a sale during the 60-day period after receipt of the Offer,
the Partnership Entity and WES will engage an independent investment
banking firm with a national reputation to determine the fair market
value of the Partnership Restricted Assets. In determining the fair
market value of the Partnership Restricted Assets, the investment
banking firm will have access to the proposed sale and purchase values
for the Partnership Restricted Assets submitted by the Partnership
Entity and WES, respectively. Such investment banking firm will
determine the value of the Partnership Restricted Assets within 30
days and furnish the Partnership Entity and WES its opinion of such
value. The fees of the investment banking firm's appraisal will be
split equally between Williams and the MLP. Upon receipt of such
opinion, WES will have the option, but not the obligation, to:
(A) purchase the Partnership Restricted Assets in accordance with the
following process:
(1) if the valuation of the investment banking firm is in the
range between the proposed sale/purchase values of the Partnership
Entity and WES, WES will have the right to purchase the Partnership
Restricted Assets at the valuation submitted by the investment banking
firm;
(2) if the valuation of the investment banking firm is less than
the proposed purchase value submitted by WES, WES will have the right
to purchase the Partnership Restricted Assets for the amount submitted
by WES; and
(3) if the valuation of the investment banking firm is greater
than the proposed sale value submitted by the Partnership Entity, WES
will have the right to purchase the Partnership Restricted Assets for
the amount submitted by the Partnership Entity; or
(B) decline to purchase such Partnership Restricted Assets, in which
event the Partnership Entity forever will be free to continue to own
and operate such Partnership Restricted Assets."
7. Section 2.4 of the Omnibus Agreement is renumbered as Section 2.7 and the
following sentence is added:
"Except as provided in this Article II and the Partnership
Agreement, as amended, each Partnership Entity shall be free
to engage in any business activity whatsoever, including those
that may be in direct competition with any Williams Entity."
8. Section 2.5 of the Omnibus Agreement is renumbered as Section 2.8 and the
following sentences are added:
"The Partnership Entities agree and acknowledge that the Williams
Entities do not have an adequate remedy at law for breach by the
Partnership Entities of the covenants and agreements set forth in this
Article II, and that any breach by the Partnership Entities of the
covenants and agreements set forth in Article II would result in
irreparable injury to the Williams Entities. The Partnership Entities
further agree and acknowledge that any Williams Entity may, in
addition to the other remedies which may be available to the Williams
Entities, file a suit in equity to enjoin the Partnership Entities
from such breach and consent to the issuance of injunctive relief
under this Agreement."
9. A new Section 2.9 is added to the Omnibus Agreement that reads as follows:
"2.9 Joint Tariffs. Until April 1, 2005, the Williams Entities and the
Partnership Entities Agree to use commercially reasonable efforts to maintain
the joint tariffs that existed between Williams Pipe Line and MAPL as of the
Effective Date (including using commercially reasonable efforts to maintain the
lease of the ARANCO pipeline)."
10. Section 4.1 of the Omnibus Agreement is amended to read as follows:
"4.1 Initial General and Administrative Expenses. The initial general
and administrative expenses, excluding general and administrative
expenses related to Williams Pipe Line, to be reimbursed by the
Partnership Group to Williams will not exceed $6 million for the year
2001, excluding expenses associated with any one-time award of WEG
restricted units under the Williams Energy Partners Long Term
Incentive Plan (the "Baseline G&A"). The Baseline G&A will be prorated
to reflect the actual number of months for which services are actually
provided to the Partnership Group by Williams, including the entirety
of the month in which such services begin."
11. Section 4.2 (b) of the Omnibus Agreement is deleted in its entirety. New
Sections 4.3 and 4.4 reading as follows are added following Section 4.2:
"4.3 Williams Pipe Line General and Administrative Expenses. (a)
The general and administrative expenses related to Williams
Pipe Line to be reimbursed by the Partnership Group to
Williams will not exceed $30 million for the year 2002,
excluding expenses associated with any one-time award of WEG
restricted units under the Williams Energy Partners Long
Term Incentive Plan ("Pipe Line G&A"). The Pipe Line G&A
will be prorated to reflect the actual number of weeks for
which services related to Williams Pipe Line are actually
provided to the Partnership Group by Williams, including the
entirety of the week in which such services begin.
(b) The Pipe Line G&A may increase only as follows:
(i) Beginning with the fiscal year beginning January
1, 2003 through the fiscal year ending December 31,
2017, the Pipe Line G&A (as adjusted annually in
accordance with this Article IV) may be increased by
no more than the lesser of 2.5% per year or the
percentage increase in the Consumer Price Index - All
Urban Consumers, U.S. City Average, Not Seasonally
Adjusted.
(ii) Beginning with the fiscal year beginning January
1, 2018 the Pipe Line G&A (as adjusted annually in
accordance with this Article IV) may be increased at
the discretion of the General Partner up to 20% per
year until the Pipe Line G&A equals the actual
general and administrative expenses directly charged
or allocated to the General Partner by Williams for
Williams Pipe Line.
4.4 Subsequent Acquisitions. If the Partnership Group makes a
subsequent acquisition, general and administrative expenses
to be reimbursed by the Partnership Group will be increased
by the amount of general and administrative expense included
in the valuation of such acquisition made by the General
Partner on a pro forma basis for the succeeding four fiscal
quarters. The portion of this pro forma amount that is
proportionate to the remainder of the MLP fiscal year in
which the acquisition is made will be added to the general
and administrative expenses payable for that year. General
and administrative expenses to be reimbursed by the
Partnership Group will be increased by the entire pro forma
amount in succeeding fiscal years."
13. Section 6.1 of the Omnibus Agreement is deleted in its entirety and the
following substituted therefor:
"Williams Reimbursement of Partnership Group Maintenance
Expenditures. (a) Williams will reimburse the Partnership
Group for maintenance capital expenditures made by the
Partnership Group in fiscal years 2001 and 2002 to maintain
the Assets to the extent such expenditures in either of
those years exceed $4.9 million, provided Williams shall not
be required to reimburse more than an aggregate of $15
million under this Section 6.1(a).
(b) Williams will reimburse the Partnership Group for
maintenance capital expenditures made by the Partnership
Group in fiscal years 2002, 2003, and 2004 to maintain
assets owned by Williams Pipe Line to the extent that such
expenditures in any of those years exceed $19 million,
provided Williams shall not be required to reimburse more
than an aggregate of $15 million under this Section 6.1
(b)."
14. Section 7.4 of the Omnibus Agreement is amended in its entirety to read as
follows:
"7.4 Termination. (a) This Agreement will terminate upon a Change in
Control of the General Partner. In addition, the provisions of Article
II of this Agreement may be terminated by Williams upon a Change of
Control of Williams. 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.
(b) Section 7.4(a) notwithstanding, in the event of termination of
this Agreement, the MLP may, at its option, require the Licensors to
transfer all right, title, and interest in Automated Transportation
Logistics Activity System a/k/a "Atlas 2000" to Williams Pipe Line at
no cost."
15. Except as expressly amended hereby, the Omnibus Agreement shall remain in
full force and effect without modification.
16. (a) Negotiation of Rights of Limited Partners, Assignees, and Third Parties.
The provisions of this Amendment are enforceable solely by the parties to this
Amendment, and no Limited Partner, Assignee or other Person of the MLP or the
OLP shall have the right, separate and apart from the MLP or the OLP, to enforce
any provision of this Amendment or to compel any party to this Amendment to
comply with the terms of this Amendment.
(b) Counterparts. This Amendment 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.
(c) Severability. If any provision of this Amendment or the application thereof
to any Person or circumstance shall be held invalid or unenforceable to any
extent, the remainder of this Amendment 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.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed as of the date first above written.
THE WILLIAMS COMPANIES, INC.
By: /s/ Mark D. Wilson
-------------------------------------
Name: Mark D. Wilson
Title: Vice President
WILLIAMS ENERGY SERVICES, LLC
By: /s/ Alan S. Armstrong
-------------------------------------
Name: Alan S. Armstrong
Title: Senior Vice President and General
Manager- Midstream Gas and Liquids
WILLIAMS NATURAL GAS LIQUIDS, INC.
By: /s/ Alan S. Armstrong
-------------------------------------
Name: Alan S. Armstrong
Title: Senior Vice President
WILLIAMS PIPE LINE COMPANY, LLC By
Williams Energy Partners L.P.,
Its Managing Member
By Williams GP, LLC, Its General Partner
By: /s/ Don R. Wellendorf
-------------------------------------
Name: Don R. Wellendorf
Title: Senior V.P., C.F.O. & Treasurer
WILLIAMS INFORMATION SERVICES CORPORATION
By: /s/ Gary R. Belitz
-------------------------------------
Name: Gary R. Belitz
Title: Controller
WILLIAMS ENERGY PARTNERS L.P.
By: WILLIAMS GP LLC, its general partner
By: /s/ Don R. Wellendorf
-------------------------------------
Name: Don R. Wellendorf
Title: Senior V.P., C.F.O. & Treasurer
WILLIAMS OLP, L.P.
By: WILLIAMS GP LLC, its general partner
By: /s/ Don R. Wellendorf
-------------------------------------
Name: Don R. Wellendorf
Title: Senior V.P., C.F.O. & Treasurer
WILLIAMS GP LLC
By: /s/ Don R. Wellendorf
-------------------------------------
Name: Don R. Wellendorf
Title: Senior V.P., C.F.O. & Treasurer