Exhibit 10.3
INDEMNIFICATION
AGREEMENT
This Indemnification Agreement
(“Agreement”) is made and entered into as of
April 3, 2007 by and between Magellan Midstream Holdings,
L.P., a Delaware limited partnership (“MGG”) and MGG
Midstream Holdings, L.P., a Delaware limited partnership
(“MGGMH”).
WHEREAS, MGGMH has agreed to sell
certain common units representing limited partnership units in MGG
(the “Common Units”);
WHEREAS, in connection with
MGGMH’s sale of the Common Units expected to close on or
about April 3, 2007, MGGMH has requested that MGG enter into a
Registration Rights Agreement with the purchasers of the Common
Units (the “Purchasers”), pursuant to which MGG will
agree, among other things, to file a registration statement (the
“Registration Statement”) with the Securities and
Exchange Commission (“SEC”) covering the Common Units
sold and to maintain the effectiveness of that registration
statement for up to two years;
WHEREAS, the Registration Rights
Agreement will provide for certain penalties (the
“Pre-Effective Penalties”) if the Registration
Statement is not declared effective within 180 days of the closing
of the sale of the Common Units (the
“Closing”);
WHEREAS, the Registration Rights
Agreement will also provide that MGG may suspend the
Purchasers’ rights to use the Registration Statement, but may
not do so for more than 60 days in any 180 day period nor more than
90 days in any 365 day period (the “Delay Rights”);
and
WHEREAS, MGG is willing to enter
into the Registration Rights Agreement if MGGMH indemnifies it
against the Pre-Effective Penalties and certain liabilities related
to the Delay Rights on the terms provided in this
Agreement.
NOW, THEREFORE, in consideration of
the mutual covenants and agreements set forth herein and for good
and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged by each party hereto, the parties hereby agree
as follows:
1. Indemnification for
Pre-Effective Penalties .
(a) Indemnification . MGGMH
agrees to indemnify and hold harmless MGG, its subsidiaries, and
its general partner’s directors, officers, employees and
agents (the “Indemnified Parties”) from and against the
Pre-Effective Penalties and any and all other losses, actions,
suits, proceedings, demands and causes of actions that arise out of
or are related to the Pre-Effective Penalties and, in connection
therewith, and promptly upon demand, pay or reimburse each of the
Indemnified Parties for all reasonable costs, losses, liabilities,
damages, or expenses of any kind or nature whatsoever, including,
without limitation, the reasonable fees and disbursements of
counsel and all other
reasonable expenses incurred in
connection with investigating, defending or preparing to defend any
such matter that may be incurred by them or asserted against or
involve any of them as a result of, arising out of, or in any way
related to the Pre-Effective Penalties.
(b) Termination of
Indemnification . MGGMH’s indemnification obligation
pursuant to this Section 1 shall terminate on the date
the Registration Statement is declared effective; provided,
however, that MGGMH shall continue to be liable for any
Pre-Effective Penalties imposed before the Registration Statement
is declared effective.
(c) Retention of Assets .
Until MGGMH has fulfilled all of its obligations under this
Section 1 , MGGMH shall retain assets having a net
value of at least $57,100,000. Such retained assets shall be free
and clear of any and all liens and encumbrances.
2. Indemnification for Delay
Rights .
(a) Indemnification . MGGMH
agrees to indemnify the Indemnified Parties for one-half of any and
all costs, losses, and damages arising out of any actions, suits,
proceedings, demands and causes of actions related to the
Purchasers’ rights to use the Registratio
