ASSET PURCHASE AND SALE AGREEMENT
AMONG
FRONTIER EL DORADO REFINING COMPANY,
AS BUYER,
FRONTIER OIL CORPORATION,
AS GUARANTOR,
AND
EQUILON ENTERPRISES LLC,
AS SELLER
DATED AS OF
October 19, 1999
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS AND INTERPRETATIONS . . . . . . . . . . . . . . . 2
1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Acquired Employee. . . . . . . . . . . . . . . . . . . . . . . . . .2
Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Affiliate Employer . . . . . . . . . . . . . . . . . . . . . . . . .2
Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Base Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Claim. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Claim Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Collective Bargaining Agreement. . . . . . . . . . . . . . . . . . .3
Commitments. . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Contingency Earn-Up Payments . . . . . . . . . . . . . . . . . . . .3
Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Damages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Deliverables . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Due Diligence. . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Electing Party . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Employment Commencement Date . . . . . . . . . . . . . . . . . . . .5
Environmental Liability. . . . . . . . . . . . . . . . . . . . . . .5
Equilon Feedstock Inventory. . . . . . . . . . . . . . . . . . . . .6
Equilon Other Assets . . . . . . . . . . . . . . . . . . . . . . . .6
Equilon Other Inventory. . . . . . . . . . . . . . . . . . . . . . .6
Equilon Product Inventory. . . . . . . . . . . . . . . . . . . . . .6
Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Excluded Assets. . . . . . . . . . . . . . . . . . . . . . . . . . .7
Fair Market Value. . . . . . . . . . . . . . . . . . . . . . . . . .7
Force Majeure Event. . . . . . . . . . . . . . . . . . . . . . . . .7
Fundamental Agreements . . . . . . . . . . . . . . . . . . . . . . .8
Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Hazardous Substance. . . . . . . . . . . . . . . . . . . . . . . . .8
Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Indemnified Party. . . . . . . . . . . . . . . . . . . . . . . . . .8
Information Technology . . . . . . . . . . . . . . . . . . . . . . .8
Indemnifying Party . . . . . . . . . . . . . . . . . . . . . . . . .8
Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . .9
Judgments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Known, or Knowledge or To the knowledge of or Within the knowledge
of a Party. . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Late Payment Rate. . . . . . . . . . . . . . . . . . . . . . . . . .9
Leases and Easements . . . . . . . . . . . . . . . . . . . . . . . 10
Legal Requirements . . . . . . . . . . . . . . . . . . . . . . . . 10
License Period . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Licensed Technology Rights . . . . . . . . . . . . . . . . . . . . 10
Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Loaned Employee(s) . . . . . . . . . . . . . . . . . . . . . . . . 11
Material Adverse Effect. . . . . . . . . . . . . . . . . . . . . . 11
Net Working Capital Adjustment . . . . . . . . . . . . . . . . . . 11
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Net Working Capital Estimate . . . . . . . . . . . . . . . . . . . 11
Non-Represented Loaned Employee. . . . . . . . . . . . . . . . . . 11
Notice of Disposition. . . . . . . . . . . . . . . . . . . . . . . 11
Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Option Price . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Party and Parties. . . . . . . . . . . . . . . . . . . . . . . . . 11
Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Permitted Debts. . . . . . . . . . . . . . . . . . . . . . . . . . 12
Permitted Encumbrances . . . . . . . . . . . . . . . . . . . . . . 12
Permitted Liens. . . . . . . . . . . . . . . . . . . . . . . . . . 13
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Prepaid Expenses and Deposits. . . . . . . . . . . . . . . . . . . 13
Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Refinery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Refinery Land. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Refinery Records . . . . . . . . . . . . . . . . . . . . . . . . . 13
Related Agreements . . . . . . . . . . . . . . . . . . . . . . . . 14
Release. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Represented Loaned Employee. . . . . . . . . . . . . . . . . . . . 14
SH&E Condition . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SH&E Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Surplus Refinery Property. . . . . . . . . . . . . . . . . . . . . 15
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Testing Agents . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Third Party Claims . . . . . . . . . . . . . . . . . . . . . . . . 15
Third Party Property . . . . . . . . . . . . . . . . . . . . . . . 15
Trademarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Union. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Use. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Year 2000 Ready. . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.02 Interpretations . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 2 SALE AND PURCHASE; PURCHASE PRICE; METHOD OF PAYMENT;
LIMITED ASSUMPTION AND RETENTION OF LIABILITIES. . . . . . 17
2.01 Sale and Purchase . . . . . . . . . . . . . . . . . . . . . . . 17
2.02 Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . 17
2.03 Method of Payment . . . . . . . . . . . . . . . . . . . . . . . 19
2.04 Limited Assumption and Retention of Liabilities . . . . . . . . 19
ARTICLE 3 CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.01 Place and Time. . . . . . . . . . . . . . . . . . . . . . . . . 20
3.02 Transactions and Deliveries at or Prior to Closing. . . . . . . 20
3.03 Adjustments as of Closing . . . . . . . . . . . . . . . . . . . 25
ARTICLE 4 EMPLOYEES LOANED TO SELLER, EMPLOYMENT AND EMPLOYEE
BENEFITS. . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.01 Employees in General. . . . . . . . . . . . . . . . . . . . . . 27
4.02 Represented Loaned Employees. . . . . . . . . . . . . . . . . . 28
4.03 Offers of Employment. . . . . . . . . . . . . . . . . . . . . . 28
4.04 Employee Benefits for Acquired Employees. . . . . . . . . . . . 29
4.05 Liabilities and Indemnities . . . . . . . . . . . . . . . . . . 32
ARTICLE 5 SELLER'S REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . 33
5.01 Organization and Standing . . . . . . . . . . . . . . . . . . . 33
5.02 Authority and Binding Obligations . . . . . . . . . . . . . . . 33
5.03 Consent; Non-Contravention. . . . . . . . . . . . . . . . . . . 34
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5.04 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.05 Contracts and Commitments . . . . . . . . . . . . . . . . . . . 35
5.06 Leases and Easements. . . . . . . . . . . . . . . . . . . . . . 37
5.07 Condition of Improvements and Equipment . . . . . . . . . . . . 37
5.08 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . 38
5.09 Due Diligence . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.10 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.12 Intellectual Property . . . . . . . . . . . . . . . . . . . . . 39
5.13 No Knowledge of Breaches. . . . . . . . . . . . . . . . . . . . 39
5.14 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.15 Good and Marketable Title . . . . . . . . . . . . . . . . . . . 41
5.16 Condemnation. . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.17 Year 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.18 Transferred Assets. . . . . . . . . . . . . . . . . . . . . . . 43
5.19 Certain Environmental Matters . . . . . . . . . . . . . . . . . 43
ARTICLE 6 BUYER'S AND GUARANTOR'S REPRESENTATIONS AND WARRANTIES . . . 44
6.01 Buyer's Representations and Warranties. . . . . . . . . . . . . 44
(a) Organization and Standing . . . . . . . . . . . . . . . . . . 44
(b) Authority and Binding Obligations . . . . . . . . . . . . . . 45
(c) No Consent Required; Non-Contravention. . . . . . . . . . . . 45
(d) Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . 46
(e) No Breach . . . . . . . . . . . . . . . . . . . . . . . . . . 46
(f) Actions and Proceedings . . . . . . . . . . . . . . . . . . . 47
(g) Independent Decision. . . . . . . . . . . . . . . . . . . . . 47
(h) No Knowledge of Breaches. . . . . . . . . . . . . . . . . . . 48
(i) Financial Capacity; Future Performance. . . . . . . . . . . . 48
6.02 Guarantor's Representations and Warranties. . . . . . . . . . . 48
(a) Organization and Standing . . . . . . . . . . . . . . . . . . 48
(b) Authority and Binding Obligations . . . . . . . . . . . . . . 49
(c) No Consent Required; Non-Contravention. . . . . . . . . . . . 49
(d) Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . 50
(e) No Breach . . . . . . . . . . . . . . . . . . . . . . . . . . 50
(f) Actions and Proceedings . . . . . . . . . . . . . . . . . . . 51
(g) Independent Decision. . . . . . . . . . . . . . . . . . . . . 51
(h) No Knowledge of Breaches. . . . . . . . . . . . . . . . . . . 51
(i) Financial Capacity; Future Performance. . . . . . . . . . . . 51
ARTICLE 7 CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE. . . . . 52
7.01 Regulatory Approvals. . . . . . . . . . . . . . . . . . . . . . 52
7.02 Deliveries. . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.03 Required Consents and Authorizations. . . . . . . . . . . . . . 53
7.04 Taking of Assets. . . . . . . . . . . . . . . . . . . . . . . . 53
7.05 Adverse Change. . . . . . . . . . . . . . . . . . . . . . . . . 53
7.06 Representations and Warranties True; Covenants and
Agreements Performed . . . . . . . . . . . . . . . . . . . . . 54
7.07 Closing of Senior Note Offering . . . . . . . . . . . . . . . . 54
ARTICLE 8 CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE . . . . 55
8.01 Deliveries. . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.02 Representations and Warranties True; Covenants and
Agreements Performed . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE 9 JOINT CONDITIONS PRECEDENT TO CLOSING OBLIGATIONS. . . . . . 56
9.01 Governmental Consents . . . . . . . . . . . . . . . . . . . . . 56
9.02 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . 56
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9.03 Related Agreements Finalized. . . . . . . . . . . . . . . . . . 56
ARTICLE 10 COVENANTS AND AGREEMENTS OF SELLER. . . . . . . . . . . . . 57
10.01 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . 57
10.02 Access; Records . . . . . . . . . . . . . . . . . . . . . . . . 57
10.03 Consents to Assignment. . . . . . . . . . . . . . . . . . . . . 58
10.04 Intellectual Property . . . . . . . . . . . . . . . . . . . . . 59
10.05 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.06 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE 11 COVENANTS AND AGREEMENTS OF BUYER . . . . . . . . . . . . . 60
11.01 Access; Records . . . . . . . . . . . . . . . . . . . . . . . . 60
11.02 Performance of Assumed Obligations. . . . . . . . . . . . . . . 60
11.03 Qualifications, Approvals, Licenses and Permits . . . . . . . . 61
11.04 No Trademarks . . . . . . . . . . . . . . . . . . . . . . . . . 61
11.05 Right of First Refusal. . . . . . . . . . . . . . . . . . . . . 61
11.06 Third Party Property. . . . . . . . . . . . . . . . . . . . . . 63
11.07 No Liens or Encumbrances. . . . . . . . . . . . . . . . . . . . 64
11.08 Insurance and Financial Compliance Requirements . . . . . . . . 64
ARTICLE 12 COVENANTS OF BUYER AND SELLER . . . . . . . . . . . . . . . 65
12.01 Antitrust Compliance. . . . . . . . . . . . . . . . . . . . . . 65
12.02 Purchase Price Allocations. . . . . . . . . . . . . . . . . . . 66
12.03 Tax Election. . . . . . . . . . . . . . . . . . . . . . . . . . 66
12.04 Collection of Amounts Owed to a Party . . . . . . . . . . . . . 66
12.05 Payment of Transfer Taxes; Recording Fees . . . . . . . . . . . 67
12.06 Payment of Certain Expenses Due and Payable After
the Effective Time; Cooperation. . . . . . . . . . . . . . . . 68
12.07 Contracts, Leases and Easements or Permits Not Assigned
at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 69
12.08 Casualty Repair . . . . . . . . . . . . . . . . . . . . . . . . 70
12.09 Relationship of the Parties . . . . . . . . . . . . . . . . . . 70
12.10 Pursue Insurance Benefits.. . . . . . . . . . . . . . . . . . . 72
ARTICLE 13 ENVIRONMENTAL LIABILITIES. . . . . . . . . . . . . . . . . . 72
13.01 Environmental Liabilities . . . . . . . . . . . . . . . . . . . 72
13.02 Environmental Investigations. . . . . . . . . . . . . . . . . . 76
13.03 Waste Sites . . . . . . . . . . . . . . . . . . . . . . . . . . 77
13.04 Environmental Coordination Committee. . . . . . . . . . . . . . 78
13.05 Environmental Cooperation.. . . . . . . . . . . . . . . . . . . 78
13.06 Remediation by Buyer. . . . . . . . . . . . . . . . . . . . . . 79
13.07 Remediation by Seller.. . . . . . . . . . . . . . . . . . . . . 79
13.08 Payments and Reimbursements . . . . . . . . . . . . . . . . . . 80
13.09 Environmental Insurance . . . . . . . . . . . . . . . . . . . . 80
13.10 Insurance Recoveries. . . . . . . . . . . . . . . . . . . . . . 81
ARTICLE 13 ENVIRONMENTAL LIABILITIES . . . . . . . . . . . . . . . . . 81
ARTICLE 14 INDEMNIFICATION; SURVIVAL . . . . . . . . . . . . . . . . . 81
14.01 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 81
14.02 Notification and Third Party Claims . . . . . . . . . . . . . . 85
14.03 Limitation on Indemnification . . . . . . . . . . . . . . . . . 87
14.04 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
14.05 Coordination of Indemnification Rights. . . . . . . . . . . . . 88
14.06 Right to Cure . . . . . . . . . . . . . . . . . . . . . . . . . 90
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ARTICLE 15 ARBITRATION . . . . . . . . . . . . . . . . . . . . . . . . 90
15.01 Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . . 90
15.02 Place . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
15.03 Arbitrators . . . . . . . . . . . . . . . . . . . . . . . . . . 91
15.04 Statute of Limitations. . . . . . . . . . . . . . . . . . . . . 91
15.05 Discovery . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
15.06 Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
15.07 Breach. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
15.08 Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . 93
ARTICLE 16. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
16.01 Grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
16.02 Exclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
16.03 Licensed Technology Rights . . . . . . . . . . . . . . . . . . . 94
16.04 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . 96
16.05 Term and Termination . . . . . . . . . . . . . . . . . . . . . . 98
16.06 Representations and Warranties . . . . . . . . . . . . . . . . . 98
16.07 Access and Support . . . . . . . . . . . . . . . . . . . . . . .100
16.08 Export Control . . . . . . . . . . . . . . . . . . . . . . . . .100
16.09 Source Codes . . . . . . . . . . . . . . . . . . . . . . . . . .100
16.10 Transfer of Intellectual Property. . . . . . . . . . . . . . . .101
ARTICLE 17 RISK OF LOSS. . . . . . . . . . . . . . . . . . . . . . . .101
ARTICLE 18 COMMISSIONS AND FINDER'S FEES . . . . . . . . . . . . . . .102
ARTICLE 19 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . .102
19.01 Entire Agreement; Amendments. . . . . . . . . . . . . . . . . .102
19.02 Invalidity. . . . . . . . . . . . . . . . . . . . . . . . . . .103
19.03 Effect of Waiver or Consent . . . . . . . . . . . . . . . . . .103
19.04 Limitation on Benefits of this Agreement. . . . . . . . . . . .103
19.05 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . .104
19.06 Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . .106
19.07 Additional Actions and Documents. . . . . . . . . . . . . . . .106
19.08 Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . .106
19.09 Place of Transfer of Title and Possession . . . . . . . . . . .107
19.10 Execution in Counterparts . . . . . . . . . . . . . . . . . . .107
19.11 Choice of Law . . . . . . . . . . . . . . . . . . . . . . . . .107
19.12 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . .107
19.13 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . .108
19.14 Costs and Expenses. . . . . . . . . . . . . . . . . . . . . . .110
19.15 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . .111
19.16 Exclusivity.. . . . . . . . . . . . . . . . . . . . . . . . . .111
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SCHEDULES
Schedule 1.01A - Contracts
Schedule 1.01B - Excluded Assets
Schedule 1.01C - Persons with Knowledge
Schedule 1.01D - Leases and Easements
Schedule 1.01E - Permitted Encumbrances
Schedule 1.01F - Prepaid Expenses and the Deposits
Schedule 1.01G - Refinery Land
Schedule 3.03(a)(i) - Inventory Values
Schedule 3.03(a)(ii) - Net Working Capital Adjustment
Schedule 4.01 Loaned Employees
Schedule 4.02 - Collective Bargaining Agreement
Schedule 4.03 - Continuing Employment Offers by Seller
Schedule 4.04 - Transition Benefits
Schedule 5.03(a) - Consents - Seller
Schedule 5.03(b) - Non-Contravention - Seller
Schedule 5.04 - Litigation - Seller
Schedule 5.05 Excluded Contracts
Schedule 5.08 - Compliance with Laws
Schedule 5.10 - Permits
Schedule 5.12 - Infringement
Schedule 5.14 Labor Matters
Schedule 5.15 - Good and Marketable Title
Schedule 5.17 - Y2K
Schedule 6.01(c)(i) - Consents - Buyer
Schedule 6.01(c)(ii) - Non-Contravention - Buyer
Schedule 6.01(d) - Litigation - Buyer
Schedule 6.01(e) - No Breach
Schedule 6.01(f) - Actions and Proceedings - Buyer
Schedule 6.02(c)(i) - Consents Guarantor [no reference in 6.02(c)(i)]
Schedule 6.02(c)(ii) - Non-Contravention - Guarantor
Schedule 6.02(d) - Litigation - Guarantor
Schedule 6.02(e) - No Breach - Guarantor
Schedule 6.02(f) - Actions and Proceedings - Guarantor
Schedule 12.02 - Purchase Price Allocations
Schedule 13.01(a) Seller Environmental Liabilities
Schedule 16.01 - Technology Transfer Agreement
Schedule 16.03(a) - Assignable Licensed Technology
Schedule 16.03(b) - Nonassignable or Nontransferable Licensed
Technology
Schedule 16.09 - Source Code Escrow
- vi -
EXHIBITS
EXHIBIT A - Contingency Earn Up Payments
EXHIBIT B - Special Warranty Deed(s)
EXHIBIT C - Seller's Legal Opinion
EXHIBIT D - Buyer's Legal Opinion
EXHIBIT E - Guaranty
EXHIBIT F - Guarantor's Legal Opinion
EXHIBIT G - Frontier Products Offtake Agreement
EXHIBIT H - Intentionally Left Blank
EXHIBIT I - Terminal Agreement (El Dorado Tank Farm)
EXHIBIT J - Transition Services Agreement
EXHIBIT K - Foreign Crude Supply Agreement
EXHIBIT L - Cogeneration Sub-Sublease
EXHIBIT M - Hydrotreater Sublease
EXHIBIT N - Measurements Services Agreement
EXHIBIT O - Terminal Agreement (Jet Fuel - Boyer Terminal)
EXHIBIT P - Real Property Agreement
- vii -
ASSET PURCHASE AND SALE AGREEMENT
(EL DORADO REFINERY)
THIS PURCHASE AND SALE AGREEMENT ("Agreement") is made and entered
into as of the 19 day of October, 1999, by and among EQUILON ENTERPRISES
LLC, a Delaware limited liability company, hereinafter referred to as
"Seller," FRONTIER EL DORADO REFINING COMPANY, a Delaware corporation,
hereinafter referred to as "Buyer," and FRONTIER OIL CORPORATION, a Wyoming
corporation, hereinafter referred to as "Guarantor".
W I T N E S S E T H:
WHEREAS, Seller is the owner of a refinery commonly known as the El Dorado
Refinery in Butler County, Kansas (the "Refinery");
WHEREAS, Seller desires to sell the Assets, as hereinafter defined; and
WHEREAS, Buyer desires to buy the Assets on the terms and conditions
contained in this Agreement; and
WHEREAS, Guarantor agrees to guaranty Buyer's obligations under the
Fundamental Agreements.
NOW, THEREFORE, in consideration of Ten Dollars U.S. ($10), the mutual
covenants and agreements hereinafter set forth and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Parties agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATIONS
1.01 Definitions.
Terms which are defined in Sections other than Article 1 of this Agreement,
shall have the meanings attributed to them where defined. As used in this
Agreement, the following terms shall have the meanings set forth below, unless
the context otherwise requires:
"Acquired Employee" shall have the meaning specified in Section 4.03(c).
"Affiliate" shall, with respect to Seller, mean any of its members or
owners, and their respective parents, subsidiaries, affiliates, or joint
venturers, or any other Person directly or indirectly controlling, controlled
by, or under common control with, Seller; with respect to Buyer, the term shall
mean any Person directly or indirectly controlling, controlled by, or under
common control with, Buyer. For purposes of this definition, "control" shall
mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of an entity, whether through the
ownership of voting securities or interests or otherwise.
"Affiliate Employer" shall have the meaning specified in Section 4.01(b).
"Applicable Law" means any applicable federal, state, local and foreign
statute, law (including, without limitation, any judicial or common law, or
strict liability), ordinance, rule or regulation.
"Assets" shall mean the Improvements, the Equipment, the Refinery Land, the
Equilon Feedstock Inventory, the Equilon Product Inventory, the Equilon Other
Inventory, Prepaid Expenses and Deposits, Surplus Refinery Property, Refinery
Records and the Equilon Other Assets, but shall exclude (i) the Excluded Assets
and (ii) all of those assets now owned by Seller or hereafter acquired by Seller
and which are transferred, used or otherwise disposed of prior to Closing (x)
with the consent of Buyer, or (y) in the ordinary course of business in
accordance with the procedures set forth in Section 10.01.
- 2 -
"Base Rate" shall mean the lesser of (i) the per annum rate of interest
calculated on a daily basis using the 3-month Treasury Bill rate published in
the Wall Street Journal for the applicable day (with the rate for any day for
which such rate is not published being the rate most recently published) plus
two hundred (200) basis points; and (ii) the maximum non-usurious rate of
interest permitted by Applicable Law, such Base Rate to be adjusted
automatically as and to the extent that either (i) or (ii) immediately above
changes from time to time.
"Claim" shall have the meaning specified in Section 15.01.
"Claim Notice" shall have the meaning specified in Section 14.02.
"Closing" means the closing of the purchase and sale contemplated
hereunder.
"Closing Date" means the time and date established for the Closing pursuant
to Section 3.01 hereof.
"Collective Bargaining Agreement" shall have the meaning specified in
Section 4.02.
"Commitments" for purposes of Section 5.05, shall have the meaning
specified in Section 5.05.
"Committee" shall have the meaning specified in Section 13.04.
"Contingency Earn-Up Payments" shall have the meaning specified in Section
2.02(b).
"Contracts" means those contracts and agreements listed on Schedule 1.01A
hereto.
- 3 -
"Damages" shall mean (a) any and all obligations, liabilities, damages (but
excluding any indirect, special, punitive, exemplary and consequential damages
other than such damages as may be awarded to a third party against an
Indemnified Party), fines, natural resource damages, penalties, deficiencies,
losses (but excluding lost profits), Judgments, settlements, costs and
reasonably incurred expenses, interest, bonding and appellate costs and
attorneys', accountants', engineers', consultants' and investigators' reasonable
fees and disbursements, in each case after the application of any and all
amounts actually recovered (net of costs of recovery) under insurance contracts
or similar arrangements (but excluding self-insurance arrangements) and from
third parties by the Person claiming indemnity and (b) interest on such
aforesaid items consistent with the Applicable Law at (i) the Base Rate
beginning thirty (30) days after the date on which the Indemnified Party makes a
payment in respect of a claim or demand asserted by a third party against the
Indemnified Party for which the Indemnified Party is entitled to indemnification
hereunder or (ii) at the Base Rate beginning thirty (30) days after the date on
which the Indemnified Party submits the claim to the Indemnifying Party, if such
claim does not arise out of a claim or demand asserted by a third party against
the Indemnified Party and (iii) the Late Payment Rate beginning on the date a
Judgment is entered in favor of the Indemnified Party, if such claim does not
arise out of a claim or demand asserted by a third party against the Indemnified
Party, in such case net of interest awarded in any Judgment in favor of the
Indemnified Party.
"Deliverables" means design manuals, operation manuals, blue prints,
engineering studies and engineering reports and with respect to computer
software, object code; user operations and system documentation; job control
information; job control language; system engineering and design information;
and all associated data files and data bases to the extent such systems exist
for the operations of the Refinery and can be delivered by a Party.
- 4 -
"Due Diligence" for purposes of Section 5.17, shall have the meaning
specified in Section 5.17(c).
"Effective Time" shall mean 12:01 A.M. Central Time on the day following
the Closing Date.
"Electing Party" shall have the meaning specified in Section 12.03.
"Employment Commencement Date" shall mean the Effective Time. Depending on
the Closing Date and for ease of transition, Buyer and Seller agree, (despite
the fact Seller's employees who accept employment offers with Buyer will become
Acquired Employees at the Effective Time), that (i) Buyer may need the Acquired
Employees to remain on Seller's payroll and in Seller's benefit plans for a
short period of time or (ii) Seller may have already paid the Acquired Employees
or made benefit deductions for time they will be working for Buyer or (iii) the
Buyer may pay the Acquired Employees and provide benefits for time actually
worked for Seller. Buyer and Seller agree to cooperate on these issues to
provide a smooth transition and to true up any amount paid on the other Party's
behalf.
"Environmental Liability" shall mean any fines and penalties or reasonable
direct cost or expense of any nature whatsoever (but excluding any indirect,
special, punitive, exemplary and consequential damages other than such damages
as may be awarded to a third party against a Party) required by any third party
(including, but not limited to, any federal, state or local administrative or
governmental authority) under any SH&E Law or related Legal Requirement to
remedy any noncompliance or to contain, remove, remedy, respond to, clean up or
abate any known or unknown on-site Release or off-site migration of a Release of
Hazardous Substances, an SH&E Condition, or other contamination of surface
water, groundwater, land surface or subsurface strata arising out of, resulting
from, or relating to the Operations or any activities involving the Assets.
Environmental Liability includes, without limitation, any Damage reasonably
incurred with respect to (a) any investigation, study, assessment, legal
representation, cost recovery by governmental agency, or monitoring or testing
in connection therewith (but excluding cost of oversight of remedies performed
by other Parties or general corporate overhead); (b) any of the Assets as a
result of actions or measures necessary to implement or effectuate any such
containment, removal, remediation, response, cleanup or abatement of any
Hazardous Substance; and (c) the resolution of such liabilities.
- 5 -
"Equilon Feedstock Inventory" shall mean that crude oil, feedstock and
intermediate petroleum product, including tank bottoms and line fill as
applicable but less water and sludge, owned by the Seller or Equiva Trading
Company and located at the Refinery Land or in terminals belonging to Seller or
third parties and specified to be sold.
"Equilon Other Assets" shall mean any and all Contracts, Leases, Easements,
and Permits, which are transferred to Buyer hereunder and Intellectual Property
or license therefor and all other assets owned by Seller and located in or on
the Refinery Land and not an Excluded Asset.
"Equilon Other Inventory" shall mean the catalysts, chemicals, additives,
spare parts, store stocks, supplies and personal property owned by Seller that
may be used and consumed in the Operations and that is located on the Refinery
Land (which for purposes of this definition shall include any such property
which is temporarily offsite for repairs) and not an Excluded Asset.
"Equilon Product Inventory" shall mean that certain refined and chemical
products including tank bottoms and line fill as applicable owned by the Seller
or Equiva Trading Company and located at the Refinery or in tank cars or trucks
in transit to the customers as per shipping records.
- 6 -
"Equipment" shall mean all furnishings, furniture, computer equipment and
hardware, fittings, equipment, machinery, refining process units, testing
equipment, tools, apparatus, tanks, pipelines, pumping stations, booster pumps,
sewers, appliances, trucks, automobiles, other vehicles, signs and other
articles of personal property of every kind whatsoever which in the normal
course of business is located on the Refinery Land.
"Excluded Assets" means (i) all of Seller's cash, deposits and bank
accounts; (ii) all accounts receivable or exchange balances owed to Seller by
reason of deliveries made by Seller or on account of the Assets prior to the
Effective Time; (iii) the financial books and records of Seller or its
Affiliates and the personnel, employment and other records of Seller as to their
former employees other than the Refinery Records; (iv) any claims or other
rights to receive monies arising prior to or after the date of execution hereof
which Seller has or may have which are attributable to its ownership of the
Assets prior to the Effective Time; (v) all company minute books and similar
materials related to maintenance of company records other than the Refinery
Records; (vi) all excess insurance proceeds under Section 12.08 of this
Agreement; (vii) all Intellectual Property and Trademarks not conveyed by
Article 16 of this Agreement; and (viii) those assets described on Schedule
1.01B or listed as Excluded Contracts on Schedule 5.05 hereto.
"Fair Market Value" shall have the meaning specified in Section 11.05(d).
"Force Majeure Event" means any (i) fire, explosion, strike, lock-out,
casualty or accident; (ii) act of God, including, without limitation, epidemic,
hurricane, typhoon, earthquake, cyclone or flood; (iii) war, revolution, civil
commotion, act of enemies, blockade, or embargo; or (iv) other similar
occurrences or acts beyond the reasonable control of a Party hereto, which act
or occurrence shall make it impossible for the Party concerned to carry out the
obligations of such Party under this Agreement (but lack of financial ability
shall not be a Force Majeure Event). Those provisions in this Agreement
regarding Force Majeure Event shall only be applicable in the specific
situation(s) in which this Agreement expressly provides they shall apply and in
no other situations.
- 7 -
"Fundamental Agreements" shall mean the Agreement, the Frontier Products
Offtake Agreement, the Cogeneration Sub-Sublease, and the Foreign Crude Supply
Agreement.
"Guaranty" shall mean the Guaranty by Guarantor with Seller and Equiva
Trading Company as beneficiaries dated as of the date of this Agreement as
specified in Exhibit E.
"Hazardous Substance" is defined as the terms "Hazardous Substance,"
"Regulated Substance," and "Oil and Hazardous Substance" are respectively
defined as of the Effective Time in the U.S. Federal Comprehensive Environmental
Response, Compensation, and Liability Act, as amended, the Resource Conservation
and Recovery Act of 1976, as amended, and the Federal Water Pollution Control
Act, as amended.
"Improvements" shall mean any and all buildings, structures, fixtures or
other improvements attached or affixed to the Refinery Land.
"Indemnified Party" shall refer to the Person or Persons indemnified, or
entitled, or claiming to be entitled to be indemnified, pursuant to this
Agreement.
"Information Technology" shall have the meaning specified in Section
5.17(c).
"Indemnifying Party" shall refer to the Person having the obligation to
indemnify pursuant to this Agreement.
"Insurance" shall have the meaning specified in Section 11.08(a).
- 8 -
"Intellectual Property" means intellectual and similar property of every
kind and nature that was licensed by Texaco Inc. and certain of its affiliates
or Shell Oil Company and certain of its affiliates to Seller on a non-exclusive
basis for Seller's Use and for which Seller enjoys a right to grant a sublicense
to certain purchasers of its assets or that which is owned by Seller and which
Seller has a right to grant a non-exclusive license to Use including, without
limitation patents, patent applications, inventions, invention disclosures,
copyrights, including registrations and applications to register copyrights,
formulae, processes, engineering data, designs, know- how, show-how,
confidential or proprietary technical information and trade secrets or other
similar data or information and computer software, but excluding Trademarks.
"Judgments" shall mean all judgments, orders, decisions, injunctions,
decrees or awards of any federal, state, local or foreign court, arbitrator or
administrative or governmental authority, bureau or agency.
"Known", or "Knowledge" or "To the knowledge of" or "Within the knowledge
of a Party" shall mean those facts, events or circumstances, if actually known
to an officer, a manager or any supervisory employee of a Party to whom such
phrase is applied; provided, however, that in applying the preceding clause to
Seller on the one hand, or Buyer or Guarantor, on the other hand, the Parties
agree that the only officers, managers or supervising employees of Seller or
Buyer and Guarantor, who shall be considered or to whom any such knowledge
standard applies are the Persons identified on Schedule 1.01C.
"Late Payment Rate" shall mean the lesser of (i) the Base Rate, plus five
hundred (500) basis points per annum, or (ii) the maximum rate of interest
permitted by Applicable Law, such rate to be adjusted automatically as and to
the extent that either (i) or (ii) immediately above changes from time to time.
- 9 -
"Leases and Easements" shall mean, collectively, those real property leases
and easements described on Schedule 1.01D.
"Legal Requirements" shall mean any and all (i) Applicable Laws; (ii)
applicable Judgments; (iii) contracts with any federal, state, local or foreign
court, arbitrator or administrative or governmental authority, bureau or agency
relating to compliance with matters described in (i) or (ii) above, and (iv)
applicable Permits; and as any of the foregoing matters described in (i) through
(iv) above may have been waived, amended, varied or otherwise modified by any
Permit or Permit-related proceedings or other applicable proceedings.
"License Period" means the period of time beginning at the Effective Time.
"Licensed Technology Rights" means intellectual and similar property of
every kind and nature, except Intellectual Property, licensed by third parties
to Seller before the Effective Time, including without limitation patents,
patent applications, inventions, invention disclosures, copyrights, including
registrations and applications to register copyrights, formulae, processes,
engineering data, designs, know-how, show-how, confidential or proprietary
technical information and trade secrets or other similar data or information and
computer software but excluding all Trademarks.
"Liens" shall mean any and all liens, mortgages, charges, debentures,
pledges, security interests, burdens, easements, rights of way, zoning
ordinances, mineral exceptions, conditional sale contracts, rights of first
refusal and options or other encumbrances of any nature whatsoever, including,
but not limited to, such as may arise under any Contracts or Judgments.
- 10 -
"Loaned Employee(s)" shall have the meaning specified in Section 4.01(b).
"Material Adverse Effect" shall mean the result of any act(s), omission(s),
conduct, occurrence(s), condition(s) or situation(s), or any combination thereof
if the same have or could reasonably be expected to result (either individually
or in the aggregate) in an adverse effect in excess of Two Million Dollars
($2,000,000) annually with respect to cash flow before Taxes derived from the
operation of the Refinery on a recurring basis for a period of at least three
(3) years; or Five Million Dollars ($5,000,000) with respect to the value of any
of the Assets (for the types of purposes to which the same have been or could
lawfully have been devoted at any time during the 6-month period immediately
prior to the date of this Agreement);
"Net Working Capital Adjustment" shall have the meaning specified in
Section 3.03(a).
"Net Working Capital Estimate" shall have the meaning specified in Section
3.03(c).
"Non-Represented Loaned Employee" shall have the meaning specified in
Section 4.01(b).
"Notice of Disposition" shall have the meaning specified in Section
11.05(a).
"Operations" shall mean those activities conducted by Seller prior to the
Effective Time utilizing the Assets.
"Option Price" shall have the meaning specified in Section 11.05(c).
"Party" and "Parties" means each of Seller, Buyer and Guarantor and
collectively Seller, Buyer and Guarantor.
"Permits" shall mean any and all permits, temporary permits to construct or
operate, authorizations, approvals, registrations, rights of way, orders,
waivers, variances or other licenses issued or granted by any federal, state or
local administrative or governmental authority, bureau or agency (i) under any
Legal Requirement, including, but not limited to, SH&E Law; or (ii) under or
pursuant to any Judgment or any Contract with any such administrative or
governmental authority, bureau or agency relating in each case to compliance
with any Legal Requirement.
- 11 -
"Permitted Debts" shall mean (i) indebtedness which may, from time to
time, be incurred by Buyer under the Amended and Restated Revolving Credit
Agreement and Letter of Credit Agreement dated on or before the Closing Date
among Frontier Oil and Refining Company, certain banks and Union Bank of
California, N.A. ("Revolving Credit Agreement"), including any related notes,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, in each case as amended, restated, modified, supplemented,
extended, renewed, replaced, refinanced or restructured from time to time,
whether by the same or any other agent or lender, whether represented by one or
more agreement; provided that the aggregate principal amount at any one time
outstanding shall not exceed the Buyer's borrowing base under the Revolving
Credit Agreement; and (ii) short term intercompany advances for working capital
purposes.
"Permitted Encumbrances" shall mean any Liens that (i) are listed on
Schedule 1.01E; (ii) liens not securing monetary obligations and which do not
interfere in any material respect with Buyer's use of, or ownership of the
Assets; (iii) are reflected in the title policy or are shown on the survey
subject to Seller's obligations under the Real Property Agreement; (iv) are of
record as of the date hereof in Butler County, Kansas, or (v) are caused or
created by Buyer; provided, however, that unless Buyer has expressly agreed
herein to assume liability for a specific indebtedness, Permitted Encumbrances
shall not include any indebtedness, whether or not of record.
- 12 -
"Permitted Liens" shall mean liens and encumbrances permitted under the
Revolving Credit Agreement including without limitation Permitted Liens under
the Revolving Credit Agreement (as defined within the Permitted Debt
definition).
"Person" means an individual, corporation, partnership, association, trust,
limited liability company or any other entity or organization, including a
government or political subdivision or agency, unit or instrumentality thereof.
"Prepaid Expenses and Deposits" shall mean those expenses and deposits
listed on Schedule 1.01F.
"Purchase Price" shall have the meaning specified in Section 2.02.
"Refinery" shall have the meaning specified in the first recital.
"Refinery Land" shall mean the tract (or parcel) of land described in
Schedule 1.01G, together with easements, appurtenances and other hereditaments
appurtenant to the Refinery Land and all the estates and rights of Seller in and
to said Refinery Land, subject to Permitted Encumbrances and excluding mineral
rights thereon.
"Refinery Records" means Seller's operational and technical records located
at the Refinery or maintained by Seller or its Affiliates and exclusively used
by or for the Refinery relating to the Operations or the Assets up to the
Effective Time including, without limitation, specifications, plats, surveys,
engineering statements, maintenance and production records, process diagrams and
studies, personnel and labor records relating to Acquired Employees (except that
medical records will only be given to Buyer after Seller receives the Acquired
Employee's written consent to the release of such records) environmental records
and reports, toxicological and ecological data technical reports and property
tax files. For the avoidance of doubt, Refinery Records specifically excludes
(i) any of the Seller's business plans, strategies and financial records which
address or reflect activities outside of the Refinery; and (ii) any of Seller's
or its Affiliates company minute books and records, tax returns or other
materials which do not pertain to the Assets or ongoing day to day operation of
the Operations.
- 13 -
"Related Agreements" shall mean the Guaranty, the agreements listed in
Section 3.02(d) and any other agreements or documents executed in connection
with or required under this Agreement.
"Release" shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing of
any kind whatsoever of any Hazardous Substances into the environment (including
the abandonment or discarding of barrels, containers, tanks or other receptacles
containing or previously containing any Hazardous Substance).
"Represented Loaned Employee" shall have the meaning specified in Section
4.01(a).
"SH&E Condition" means a condition or circumstance resulting from one or
more related actions, omissions, or events with respect to a single facility or
location that exists or is alleged by a Person other than a Party or its
Affiliates to exist with respect to air, land, groundwater, or surface water or
plant facilities, procedures, practices, or equipment (whether occurring on-site
or off-site or having off-site effects, including off-site waste disposal,
spills, surface water discharge, migration of groundwater contamination, and
release to the air) which is not or is alleged to be not in compliance with or
which is subject to corrective action, remedy or other response action under
SH&E Law or related Legal Requirements. Soil, surface water, or groundwater
contamination arising from several sources, pieces of equipment, or events (for
example, one or more spills or leaks from a tank or product loading or unloading
apparatus) shall be considered a single SH&E Condition only if such
contamination is commingled. Contamination of more than one environmental media
(e.g., soil and groundwater) caused by the same actions, omissions or events
shall be considered a single SH&E Condition.
- 14 -
"SH&E Law" means any Applicable Law relating to pollution, the protection
of the environment or worker safety and health, release, emission, discharge, or
disposal of any material or substance, noise or odor control, safety, health, or
without limitation, environmental aspects of property transfer, natural resource
damage, pipeline operations and closure or product registration, or hazard
communication.
"Surplus Refinery Property" shall mean the real property and Equipment
retired in place or not currently used in connection with the Operations.
"Taxes" shall mean all taxes, charges, fees, imposts, duties, levies,
withholdings or other assessments imposed by any governmental entity, including
environmental taxes imposed pursuant to Chapter 38 of the Internal Revenue Code
of 1986, as amended, and similar state laws, excise taxes, customs duties,
utility, property, sales, use, value added, transfer and fuel taxes, and any
interest, fines, penalties or additions to tax attributable to or imposed on or
with respect to any such assessment, including all applicable sales, use,
excise, business, occupation or other tax, if any, relating to this or any other
service, supply or operating agreement.
"Testing Agents" shall have the meaning specified in Section 3.03 (b)(i).
"Third Party Claims" shall have the meaning specified in Section 14.02.
"Third Party Property" shall mean Improvements, Equipment and inventory
located on the Refinery Land owned by Persons not a Party, that are not owned by
or leased to Seller.
- 15 -
"Trademarks" shall mean with regard to Seller (i) any and all trademarks,
trademark registrations, trademark applications, service marks, service mark
registrations, service mark applications, trade dress, word marks, word mark
registrations, word mark applications and trade names, including, without
limitation, the names Shell, Texaco, Equilon Enterprises LLC, Equiva Trading
Company, Equiva Services LLC and the Pecten and Star logos respectively, of
Shell Oil Company and Texaco Inc., used or licensed to Seller in connection with
any of the Operations; and (ii) the goodwill of the Operations in connection
with which such Trademarks have been used.
"Union" shall have the meaning specified in Section 4.02.
"Use" or its derivative words means make, use, have made and sell, import
and reproduce, distribute, publicly perform, publicly display and make a
derivative work.
"Year 2000 Ready" shall have the meaning specified in Section 5.17(c).
1.02 Interpretations.
(a) All references herein to Sections, Exhibits and Schedules are to
Sections of and Exhibits and Schedules attached to and forming part of this
Agreement, unless the contrary is specifically stated.
(b) Unless the context requires otherwise in this Agreement, the
singular shall include the plural and vice versa.
(c) The headings of the Sections and subsections of this Agreement
and the headings contained in the Exhibits and Schedules hereto are inserted for
convenience of reference only and shall not in any way define or affect the
meaning, construction, or scope of any of the provisions hereof or thereof.
- 16 -
(d) Except for (i) the Cogeneration Sub-Sublease; and (ii) the
Hydrotreater Sublease, to the extent any of the Related Agreements conflict with
the specific terms of this Agreement in relation to the specific terms of this
Agreement, the terms of the Agreement shall control.
(e) Except where specifically stated otherwise, any reference to
any statute, regulation, rule, or agreement shall be a reference to the same as
amended, supplemented or re-enacted from time to time.
ARTICLE 2
SALE AND PURCHASE; PURCHASE PRICE; METHOD OF PAYMENT; LIMITED
ASSUMPTION AND RETENTION OF LIABILITIES
2.01 Sale and Purchase.
Subject to the conditions hereof, Seller agrees to sell, assign,
transfer, convey and deliver to Buyer, and Buyer agrees to purchase and accept
from Seller, the Assets at the Closing.
2.02 Purchase Price.
For and in consideration of the respective conveyances, assignments,
representations, warranties and covenants described herein Buyer or Guarantor
agrees to pay to Seller, and Seller agrees to accept from Buyer or Guarantor the
purchase price (the "Purchase Price") and other consideration, as follows:
(a) ONE HUNDRED SEVENTY MILLION DOLLARS ($170,000,000), to be
paid at the Closing, plus or minus the Net Working Capital Adjustment provided
for in Section 3.03; and
- 17 -
(b)
(i) Contingency Earn-Up Payments, as described herein and
as further set forth and illustrated in Exhibit A. "Contingency Earn-Up
Payments" shall mean annual payments by Buyer to Seller of fifty percent
(50%) of the amount by which the net margin from Buyer's previous year's
operation of the Refinery exceeds a base net margin of Sixty Million
Dollars ($60,000,000). Net margin as used herein shall mean gross product
margin minus refinery operating costs. Buyer shall provide Seller with an
annual calculation pursuant to Exhibit A no later than March 31st of each
year. Payments hereunder, if any, shall be made on March 31 of each year,
with the first payment being due no later than March 31, 2001 plus interest
at the Base Rate from January 1, and for a period of up to eight (8) years
from January 1, 2000; provided, however, that Buyer shall have the right to
make an estimated Contingency-Earn Up Payment before March 31st and
interest thereon shall cease to accrue from the date such payment is
received by Seller. If an estimated Contingency Earn-Up Payment is made,
Buyer shall calculate a true up on March 15th and the under or over payment
shall be paid by the appropriate Party no later than March 31st, plus
interest on the true up amount, at the Base Rate from January 1. Each
annual payment shall be a separate calculation, no annual payment made
hereunder shall exceed Seven Million Five Hundred Thousand Dollars
($7,500,000), and the aggregate of all payments hereunder shall not exceed
Forty Million Dollars ($40,000,000);
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(ii) Seller shall have the right at reasonable hours to
examine the books, records, and charts of Buyer to verify the accuracy of
any statement, payment, calculation or determination made pursuant to
Section 2.02(b)(i); provided, however, that Seller shall adequately protect
the confidentiality of proprietary information. If any such examination
shall reveal, or if Seller shall discover, any error or inaccuracy in
Buyer's statement, payment, calculation or determination, then proper
adjustment and correction thereof shall be made as promptly as practicable
after discovery thereof and in any event within fourteen (14) days after
Seller gives Buyer notice of error or inaccuracy; provided, that no
adjustment or correction shall be made and all records and payments shall
be conclusively presumed to be final unless notice of any such error or
inaccuracy is given within six (6) months from the end of the calendar year
during which such error or inaccuracy occurred; provided, however, that
such six (6) month period shall not preclude the correction of any error or
inaccuracy discovered in any governmental audit of Buyer or its Affiliates;
and
(c) Guarantor's executed Guaranty.
2.03 Method of Payment.
All amounts to be disbursed at or, pursuant to the terms of this
Agreement, prior to the Closing or paid after Closing, shall be made in
immediately available U.S. funds, by wire transfer to a U.S. bank account
designated by Seller (or Buyer, as the case may be) or by any other means agreed
to by Seller (or Buyer, as the case may be).
2.04 Limited Assumption and Retention of Liabilities.
(a) Upon the condition that the Closing shall occur, and subject to
the provisions of Article 13 hereof, Buyer shall assume and agrees to discharge
all liabilities relating to the ownership or operation of the Assets from and
after the Effective Time or arising from the ownership or operation of the
Assets from and after the Effective Time.
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(b) Seller shall retain and be liable for liabilities and obligations
of Seller and its Affiliates related to the ownership or operation of the Assets
prior to the Effective Time or arising from the ownership or operation of the
Assets prior to the Effective Time except:
(i) Damages for Environmental Liability expressly
assumed by Buyer pursuant to Section 13.01.
(ii) Taxes payable and other current liabilities which
are included in the Net Working Capital Adjustment; and
(iii) Obligations arising from and after the
Effective Time to be performed after the Effective Time under the
Contracts, Leases, Easements and Permits which are transferred to
Buyer.
(c) Seller acknowledges and agrees that Buyer is not assuming any
liabilities with respect to the Assets or Operations other than those
liabilities expressly assumed by Buyer pursuant to this Agreement and the
respective Related Agreements.
ARTICLE 3
CLOSING
3.01 Place and Time.
The Closing shall take place at the offices of Equilon Enterprises
LLC, 1100 Louisiana, Suite 2200, Houston, Texas 77002, on the earlier of (i)
five (5) days following satisfaction of all of the conditions to close contained
herein or (ii) December 1, 1999, or on such other date as Buyer and Seller may
mutually agree.
3.02 Transactions and Deliveries at or Prior to Closing.
(a) At or prior to the Closing, Seller shall deliver to Buyer:
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(i) a properly executed and acknowledged special warranty deed
or deeds to the Refinery Land, the Improvements thereon, and the
appurtenances thereto, each such deed to be in the form of Exhibit B and
will contain (x) reservations of existing and future pipeline easements
with rights of reasonable access for maintenance and removal and (y),
reservation of easement for the cogeneration facility with rights of
reasonable access;
(ii) a properly executed and acknowledged assignment or
assignments of the Contracts, the Leases and Easements, and the Permits for
which no consent to assignment is required or for which any required
consent to assignment has been obtained or waived by the third party.
Additionally the Parties agree to execute and deliver such other forms of
conveyance as may be required by any governmental authority;
(iii) a properly executed and acknowledged general conveyance
of all of the Assets for which no specific conveyance is clearly
applicable;
(iv) copies of Seller's and its Affiliate which is a party to a
Related Agreement resolutions, certified as being correct and complete and
then in full force and effect, authorizing the execution of this Agreement
and the Related Agreements to which it is a party, and the consummation of
the transactions contemplated under this Agreement and the Related
Agreements to which it is a party;
(v) certificates of incumbency and specimen signatures of the
signatory officers of Seller and its Affiliate which is a party to a
Related Agreement;
(vi) a certificate of formation and good standing by the State of
Delaware, and copies of Seller's or its Affiliate which is a party to a
Related Agreement certificate of registration to do business in the State
of Kansas as a foreign company;
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(vii) the properly executed purchase price allocation
schedule described in Section 12.02 hereof;
(viii) written opinion of counsel to Seller, covering, in the
aggregate, Seller's and its Affiliate which is a party to a Related
Agreement due organization, valid existence and good standing as a limited
liability company or partnership in Delaware, registration and good
standing in Kansas, and the due authorization, execution and delivery by
Seller or its Affiliates as the case may be of this Agreement and the
Related Agreements, and the validity and binding effect of this Agreement
and the Related Agreements, which opinion shall be in the form attached
hereto as Exhibit C; and
(ix) copies of consents of third parties required to be obtained
prior to the assignment of the Leases and Easements, Permits and the
Contracts to be assigned pursuant to Section 3.02(a)(ii).
(b) At or prior to the Closing, Buyer shall deliver to Seller:
(i) that portion of the purchase price specified in Section 2.02(a),
adjusted as provided in Section 3.03 for the Net Working Capital Estimate;
(ii) copies of Buyer's and its Affiliate which is a party to a Related
Agreement resolutions certified as being correct and complete and then in
full force and effect, authorizing the execution of this Agreement and the
Related Agreements to which it is a party, and the consummation of the
transactions contemplated under this Agreement and the Related Agreements
to which it is a party;
(iii) certificates of incumbency and specimen signatures of the
signatory officers of Buyer and its Affiliate which is a party to a Related
Agreement;
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(iv) a written opinion of counsel to Buyer, as to Buyer's and its
Affiliate which is a party to a Related Agreement due organization, valid
existence and good standing as a corporation in Delaware, registration and
good standing in Kansas, and the due authorization, execution and delivery
by Buyer or its Affiliates as the case may be of this Agreement and the
Related Agreements and the validity and binding effect of this Agreement
and the Related Agreements, which opinion shall be in the form attached
hereto as Exhibit D;
(v) a certificate of existence and good standing issued by the State
of Delaware and a copy of Buyer's or its Affiliate which is a party to a
Related Agreement certificate of registration to do business in the State
of Kansas as a foreign company;
(vi) the properly executed purchase price allocation schedule
described in Section 12.02 hereof;
(vii) proof of insurance required pursuant to Section 11.08 with
copies of the policy to be provided by Buyer to Seller as soon as
available;
(viii) proof of environmental insurance required pursuant to Section
13.09 with copies of the policy to be provided by Buyer to Seller as soon
as available; and
(ix) the surety bond in accordance with Article 16 of the Cogeneration
Sub-Sublease.
(c) At or prior to the Closing, Guarantor shall deliver to Seller:
(i) copies of resolutions of Guarantor's board of directors certified
as being correct and complete and then in full force and effect,
authorizing the execution of this Agreement, the Guaranty; and the
consummation of the transactions contemplated under this Agreement, and the
Guaranty;
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(ii) certificates of incumbency and specimen signatures of the
signatory officers of Guarantor;
(iii) a written opinion of counsel to Guarantor, as to Guarantor's
due organization, valid existence and good standing as a corporation in
Wyoming, registration and good standing in Kansas, the due authorization,
execution and delivery by Guarantor of this Agreement, and the Guaranty and
the validity and binding effect of this Agreement, and the Guaranty which
opinion shall be in the form attached hereto as Exhibit F;
(iv) a certificate of existence and good standing issued by the State
of Wyoming and a copy of Guarantor's certificate of registration to do
business in the State of Kansas as a foreign company; and
(v) the Guaranty as specified in Exhibit E.
(d) At the Closing, Buyer or Buyer's Affiliates and Seller or Seller's
Affiliates shall enter into the following agreements:
(i) the Frontier Products Offtake Agreement, as specified in Exhibit
G;
(ii) the Terminal Agreement, (El Dorado Tank Farm), as specified in
Exhibit I;
(iii) the Transition Services Agreements under which the Seller or
its Affiliates may provide services to Buyer, as specified in Exhibit J;
(iv) the Foreign Crude Supply Agreement, as specified in Exhibit K;
(v) the Cogeneration Sub-Sublease, as specified in Exhibit L;
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(vi) the Hydrotreater Sublease, as specified in Exhibit M;
(vii) the Measurements Services Agreement, as specified in Exhibit N;
(viii) the Terminal Agreement (Jet Fuel-Boyer Terminal), as specified
in Exhibit O; and
(ix) the Real Property Agreement, as specified in Exhibit P.
3.03 Adjustments as of Closing.
(a) Calculation. The Net Working Capital Adjustment ("Net Working
Capital Adjustment") to the purchase price shall be calculated as follows:
(i) The value of Equilon Feedstock Inventory and Equilon Product
Inventory, calculated by multiplying the quantities or volumes thereof
determined as of the Effective Time using the method of determination
described in Section 3.03(b) by the values determined as described on
Schedule 3.03(a)(i); plus
(ii) The net balances as of the Effective Time in the accounts
marked as "Include in Net WC Adj" on Schedule 3.03(a)(ii).
(b) Method of Inventory Determination.
(i) For purposes of this Agreement, any required
determination of volumes of Equilon Feedstock Inventory and Equilon Product
Inventory shall be made by two independent inspectors ("Testing Agents")
appointed by Buyer and Seller and mutually acceptable to both Parties. The
volumes determined by the Testing Agents shall be adjusted in accordance
with normal industry practice, based upon testing by the Testing Agents,
for water, contaminants and sediment using standard industry guidelines,
including ones relating to temperature, pressure and specific gravity. The
Testing Agents shall issue a joint written report within twenty (20) days
after the Effective Time, setting forth the volumes and quantities. In the
event the Testing Agents initially are unable to agree upon any volumes of
any inventory, then the Testing Agents shall retest and re-measure until
the Testing Agents are in agreement;
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(ii) Presence at Inventory Determination. In addition to
the presence of such employees as is normal to the Operations, and subject
to the right of Seller to conduct the Operations, each Party shall be
entitled, at its own expense, to have any employee, agent, consultant or
other authorized representative present for any inventory determination so
long as such employee, agent, consultant or other authorized representative
does not interfere with the tasks or responsibilities of the Testing
Agents; and
(iii) Estimate of Inventories. At least five (5) business
days in advance of the Closing Date, Seller shall make a good faith
estimate of the Seller's inventories and provide a copy thereof to Buyer
setting forth the ownership, types, characteristics and volumes, on a tank,
vessel or location basis, of Equilon Feedstock Inventory and Equilon
Product Inventory.
(c) Estimate of Net Working Capital Adjustment. The amount of the Net
Working Capital Adjustment to be included in the purchase price paid at the
Closing Date ("Net Working Capital Estimate") shall be estimated by Seller and
provided to Buyer at least five (5) business days in advance of the Closing Date
using the inventory estimates described in Section 3.03(b)(iii) applied to the
most currently available values calculated in accordance with Schedule
3.03(a)(i) and the amounts in accordance with Section 3.03(a)(ii) above.
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(d) Post Closing Adjustments. Seller and/or Buyer shall make
adjustment payments with respect to the Net Working Capital Adjustment as
follows:
(i) not later than thirty (30) days after the Closing
Date, an adjustment payment shall be made based on the differences between
the inventory estimates described in Section 3.03(b)(iii) and the amounts
of inventory determined by the Testing Agents as described in Section
3.03(b)(i) and any differences in value based on actual data for the
Closing Date calculated in accordance with Schedule 3.03(a)(i); and
(ii) each adjustment payment shall be paid in
immediately available funds. Any amount not paid when due shall bear
interest at the Late Payment Rate for the period past due.
ARTICLE 4
EMPLOYEES LOANED TO SELLER, EMPLOYMENT
AND EMPLOYEE BENEFITS
4.01 Employees in General.
Schedule 4.01 contains a true and complete list of:
(a) Each represented employee working at the Refinery as of the date
of this Agreement (each, a "Represented Loaned Employee"); and
(b) Each regular, full-time and regular, part-time non- represented
employee working at the Refinery as of the date of this Agreement (each, a
"Non-Represented Loaned Employee");
which employees are employees of Seller's Affiliate, Equiva Services LLC,
and who are currently on loan to Seller under a services agreement (collectively
the "Loaned Employees"). Equiva Services LLC shall be referred to in this
Article as "Affiliate Employer."
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4.02 Represented Loaned Employees.
The Buyer acknowledges that Seller and the Affiliate Employer are bound by
the Collective Bargaining Agreement and all existing Memoranda of Agreement or
Understanding, which are listed on Schedule 4.02 ("Collective Bargaining
Agreement"), between Seller and the Affiliate Employer and Local 5-241 of the
Paper, Allied Industrial, Chemical & Energy Workers International Union (the
"Union"). Buyer agrees to recognize the Union as the exclusive representative
for the bargaining unit covered by the Collective Bargaining Agreement. Buyer
shall adopt the Collective Bargaining Agreement in accordance with its terms.
4.03 Offers of Employment.
(a) Offers of Employment by Buyer.
(i) Buyer shall offer regular, full-time or regular, part-time
employment to each Represented Loaned Employee in accordance with the terms
of the Collective Bargaining Agreement; and
(ii) Buyer shall offer regular, full-time or regular, part-time
employment to each Non-Represented Loaned Employee. Seller may, at its
option, make offers of continuing employment with Seller or its Affiliates
to the Non-Represented Loaned Employees listed on Schedule 4.03.
Any such offer of employment by Buyer shall be at a base pay rate that
is at least equivalent at the Employment Commencement Date to that the Loaned
Employee had with the Affiliate Employer as of the last regularly scheduled
workday immediately prior to the Employment Commencement Date. Within three (3)
business days of signing this Agreement, Seller shall provide, and cause its
Affiliates, as appropriate, to provide, Buyer with the title, employment
history, and current salary of each Loaned Employee.
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(b) Notice of Offers. Buyer shall notify Seller of the acceptance of
any employment offer made by Buyer, within two (2) business days of the
acceptance of such offer.
(c) Orderly Transition. Buyer shall employ each Loaned Employee who
accepts Buyer's offer of employment. Seller agrees to use its reasonable
efforts to assist Buyer in the orderly transition to Buyer of any such Loaned
Employees. Each such accepting employee shall, from the Employment Commencement
Date, be known as an "Acquired Employee".
(d) Employment Assurances. For a period of one year following the
Employment Commencement Date of each Acquired Employee, Buyer shall not reduce
the Acquired Employee's base pay, and shall not terminate such Acquired
Employee's employment except for "cause". Further, Buyer shall provide
non-represented Acquired Employees with an opportunity for incentive
compensation offered to Buyer's similarly situated employees. For represented
Acquired Employees, Buyer shall provide gainsharing as set forth in the
Collective Bargaining Agreement. The fourth quarter 1999 gainsharing payment
will be shared proportionately by Buyer and Seller based on the number of days
in the quarter that the recipients were Seller's employees or Acquired
Employees.
4.04 Employee Benefits for Acquired Employees.
(a) Benefits Plans in General. As set forth in Schedule 4.04
(subject to collective bargaining), Buyer shall permit the Acquired
Employees to participate in all of the Buyer's employee pension
benefit plans (as that term is defined by Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA")), employee welfare benefit plans (as that term is defined
by Section 3(1) of ERISA), and other benefit programs, policies, and
practices that are or will be generally available to Buyer's
similarly situated employees. Further, as set forth in Schedule
4.04 (subject to collective bargaining), Buyer shall provide each
Acquired Employee with transition benefits.
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(b) Welfare Plan Coverage. With respect to each Acquired
Employee who elects to participate in Buyer's employee welfare
benefit plans, Buyer shall waive any pre-existing condition
exclusions to coverage, any evidence of insurability provisions, and
any waiting period requirements under its employee welfare benefit
plans that had been waived or otherwise satisfied under comparable
employee welfare benefit plans sponsored by the Affiliate Employer,
provided the Acquired Employee enrolls within thirty-one (31) days
of his or her Employment Commencement Date. For each Acquired
Employee, Buyer shall also apply towards any deductible requirements
and out-of-pocket maximum limits under its employee welfare benefit
plans applicable to the year of such Acquired Employee's Employment
Commencement Date, any amounts paid by such Acquired Employee toward
such requirements and limits under the Affiliate Employer's employee
welfare benefit plans in which he or she participated during such
year. Buyer shall notify Seller if an Acquired Employee fails to
enroll in one of Buyer's health plans. If an Acquired Employee
enrolls in one of Buyer's health plans within eighteen (18) months
of the Employment Commencement Date, Buyer shall notify Seller or
cause the Acquired Employee to notify Seller as soon as reasonably
practicable after such enrollment.
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(c) Past Service Credit. Buyer shall cause all those employee
welfare benefit plans, programs, policies, and practices in which
the Acquired Employees participate, including Buyer's vacation and
sick leave programs, to recognize past service as recognized by the
Affiliate Employer's employee welfare benefit plans, for purposes of
eligibility to participate, eligibility for enrollment, eligibility
for the commencement of benefits, and eligibility for the levels of
benefits where there are service-related benefit schedules. Buyer
shall cause its employee pension benefit plans (whether defined
contribution plans, as defined in Section 3(34) of ERISA, or defined
benefit plans, as defined in Section 3(35) of ERISA) to recognize
past service as recognized by the Affiliate Employer's employee
pension benefit plans for purposes of eligibility to participate,
eligibility for enrollment, eligibility for vesting, eligibility for
the commencement of benefits, eligibility for the forms of benefits,
and eligibility for the levels of benefits where contributions to
the plan or payments from the plan depend in whole or in part on
service. Buyer shall be required to recognize or cause its employee
pension benefit plan to recognize service recognized by the
Affiliate Employer's employee pension benefit plans for purposes of
benefit accruals.
(d) Vacation. On or before the Effective Time, vacation liabilities
will be calculated and trued up in accordance with the following:
the days during 1999 that Seller owned the Refinery will be
calculated as will the number of days Buyer will own the Refinery. A
fraction will be calculated. This fraction will be multiplied by the
number of 1999 annual eligibility hours for Refinery employees at the
Effective Time, whether already taken or not. This procedure will be
applied separately to hourly and staff vacations. The resulting
calculation will yield the number of hours of vacation attributable
to the account of both the Buyer and the Seller. Actual remaining
hours of vacation will be calculated separately for staff and hourly.
To the extent the remaining vacation differs from the amount of
vacation attributable to the Parties, the total hours will be
multiplied by the average hourly rate (based on a group rate and not
an individual-by-individual rate analysis) or the average staff
employee rate (based on a group rate and not an individual-by-
individual rate analysis). The resulting dollar amount will be
included in the true up process. All deferred vacation from previous
years will be paid by the Seller to the Acquired Employees as soon as
practicable after the Effective Time. All vacation for the year 2000
will be paid by the Buyer.
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4.05 Liabilities and Indemnities.
(a) WARN Act Indemnification. Buyer shall indemnify Seller and its
Affiliates against all liabilities arising out of the notification or other
requirements of the Worker Adjustment and Retraining Notification Act of 1988,
as amended (the "WARN Act"), with respect to the Acquired Employees in
connection with actions taken by Buyer at or after the Effective Time. Seller
shall indemnify Buyer against all liabilities under the WARN Act with respect to
Loaned Employees who do not become Acquired Employees in connection with actions
taken by Seller and/or the Affiliate Employer prior to the Effective Time.
(b) Workers' Compensation. The Affiliate Employer shall be
responsible for workers' compensation claims with respect to any Acquired
Employee if the incident or alleged incident giving rise to the claim occurred
on or prior to the Effective Time. Buyer shall be responsible for any workers'
compensation claims with respect to any Acquired Employee if the incident or
alleged incident giving rise to the claim occurs after the Effective Time. In
the event of doubt as to the date of the occurrence of the incident or alleged
incident, Buyer shall process the claim.
(c) Indemnities.
(i) To the maximum extent permitted by Applicable Law, Seller
shall defend, indemnify, and hold harmless Buyer from and against any
Damages, and any fines, penalties and assessments, arising out of (A)
claims by Loaned Employees (other than Acquired Employees) that arise prior
to, on, or after the Effective Time and relate to their employment with, or
the termination of their employment from, the Affiliate Employer; and (B)
claims by Acquired Employees that arise prior to the Effective Time which
relate to their employment with, or the termination of their employment
from, the Affiliate Employer; and
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(ii) To the maximum extent permitted by Applicable Law, Buyer
shall defend, indemnify, and hold harmless Seller and its Affiliates from
and against any Damages, and any fines, penalties and assessments, arising
out of claims by the Acquired Employees that arise on or after the
Effective Time and relate to their employment with, or the termination of
their employment from, the Buyer.
ARTICLE 5
SELLER'S REPRESENTATIONS AND WARRANTIES
Seller represents and warrants to Buyer to the Knowledge of Seller, except
with respect to Sections 5.01, 5.02 and 5.15 which shall not be limited to the
Knowledge of Seller, as follows:
5.01 Organization and Standing.
Seller or its Affiliate which is a party to a Related Agreement is a
limited liability company or a partnership duly formed and is validly existing,
in good standing under the laws of the State of Delaware and is in good standing
as a limited liability company or a partnership in all jurisdictions where the
nature of its properties or business requires it.
- 33 -
5.02 Authority and Binding Obligations.
Seller or its Affiliate which is a party has the power and authority
to execute, deliver and perform its obligations under this Agreement and the
Related Agreements. The execution, delivery, and performance of this Agreement
and of the Related Agreements by Seller or its Affiliate which is a party (i)
have been duly authorized by requisite company action; (ii) do not conflict or
result in a violation or breach of the organizational documents of the Seller or
the Affiliate which is a party; and (iii) do not conflict or result in a
violation or breach of any agreement, instrument, statute, regulation, rule,
order, writ, judgment or decree to which the Seller or Equiva Trading Company
are directly or indirectly a party. Each of this Agreement and the Related
Agreements constitutes a legal, valid and binding obligation of Seller or its
Affiliate which is a party, enforceable against Seller or its Affiliate which is
a party in accordance with its terms, except as the enforceability thereof may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and general principles of
equity (regardless of whether enforceability is considered in a proceeding at
law or in equity).
5.03 Consent; Non-Contravention .
(a) Except as otherwise specified in Schedule 5.03(a), no consent,
waiver, approval, order, authorization or other action by or filings with any
governmental authority or other Person is required in connection with the
execution, delivery and performance by Seller, or its Affiliate which is a
party, of this Agreement or the Related Agreements.
(b) Except as specified in Schedule 5.03(b), neither the execution
and delivery of this Agreement or the Related Agreements by Seller, or its
Affiliate which is a party, nor the consummation of the transactions
contemplated hereby will violate or conflict with or result in the acceleration
of rights, or benefits or payments under any agreement, instrument, statute,
regulation, rule, order, writ, Judgment or decree to which the Seller or its
Affiliates are directly or indirectly a Party or are directly or indirectly
subject, except for such violations and conflicts which will not (i) prevent or
materially delay consummation of the transactions contemplated by this Agreement
or the Related Agreements, (ii) prevent Seller or its Affiliate which is a party
from performing its obligations under this Agreement or the Related Agreements;
or (iii) result in a Material Adverse Effect.
- 34 -
5.04 Litigation.
Except as specified in Schedule 5.04, there are no lawsuits, actions,
arbitrations or other proceedings pending or to the knowledge of the Seller
threatened by any Person against or affecting the Seller, the Operations or any
of the Assets by or before any court, arbitrator or governmental authority which
(i) would prohibit any of the transactions contemplated by this Agreement or
(ii) if adversely determined would have an adverse determination (individually
or in the aggregate) that would have a Material Adverse Effect.
5.05 Contracts and Commitments.
Schedule 1.01A contains an accurate and complete list of each
contract, agreement or commitment relating to the Assets of the Seller or its
Affiliates not otherwise listed in Schedule 1.01D or Schedule 5.05:
(a) to which the Seller or its Affiliates are a party and which
requires total payments to or by the Seller of at least Two Hundred Fifty
Thousand Dollars ($250,000) annually (other than spot crude contracts, spot
product contracts, transportation contracts, and crude supply contracts not
fully dedicated to the Refinery);
(b) to which the Seller or its Affiliates are a party which has a
remaining term longer than one (1) year, which requires total payments by the
Seller of at least Two Hundred Fifty Thousand Dollars ($250,000) during such
term and which is not terminable on thirty (30) or fewer days' notice without
penalty;
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(c) to which the Seller or its Affiliates are a party relating to
indebtedness for borrowed money, including capital leases, security agreements
relating thereto and any amendment or waiver thereof;
(d) to provide capital or funds by way of a loan or guaranty of a
loan or any other form of guaranty, assurance, funding agreement or other
arrangement intended to assure the payment or performance of any obligation by a
third party in excess of Two Hundred Fifty Thousand Dollars ($250,000); and
(e) involving any rights to throughput, process, refine
feedstocks or products at or from the Refinery;
(collectively items (a) through (e), other than contracts, agreements or
commitments of the Seller or any Affiliate of Seller which have expired or have
terminated at or prior to the Effective Time in accordance with the procedures
set forth in Section 10.01, the "Commitments"). Each Commitment is a legal,
valid and binding obligation of the Seller, or its Affiliates enforceable
against the Seller or its Affiliates in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and general principles of equity (regardless of whether enforceability
is considered in a proceeding at law or in equity). Except as specified in
Schedule 1.01A, the Seller or its Affiliates are not, nor is any other party
thereto, in default under any of the Commitments where such defaults would
result, in the aggregate, in a Material Adverse Effect. Except as specified in
Schedule 1.01A since the date of this Agreement, the Seller or its Affiliates
have not received written notice of cancellation or termination of any
Commitment from any party thereto.
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5.06 Leases and Easements.
(a) Except for Leases and Easements, the failure of which to possess
or hold would not in the aggregate have a Material Adverse Effect, Schedule
1.01D contains an accurate and complete list of Leases and Easements held by
Seller or its Affiliates that are related to the Refinery. All Leases and
Easements are legal, valid and binding obligations of the Seller, enforceable
against the Seller in accordance with their terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally and
general principles of equity (regardless of whether enforceability is considered
in a proceeding at law or inequity), and are in full force and effect. Except
for matters that do not materially interfere with the Seller's rights, the
Seller enjoys peaceful and undisturbed possession under the Easements and
Leases.
(b) All pipelines, pipeline easements, utility lines, utility
easements and other easements, leaseholds and rights of way burdening any of the
Refinery Land, except for such which would not in the aggregate have a Material
Adverse Effect, are set forth on Schedule 1.01D. The Refinery Land is also
encumbered by the items set forth on Schedule 1.01E.
5.07 Condition of Improvements and Equipment.
Except as set forth in the following sentence, the Improvements,
Equipment, Equilon Other Inventory and Surplus Refinery Property are being sold
"AS IS", WHERE IS, WITHOUT WARRANTY OF ANY KIND (EXCEPT AS TO TITLE) EXPRESS OR
IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY, CONDITION OR FITNESS, AND ALL
SUCH WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED. BUYER WAIVES THE UNIFORM
COMMERCIAL CODE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE WITH RESPECT TO SUCH IMPROVEMENTS AND EQUIPMENT. The Improvements and
Equipment which comprise a part of the Assets other than the Surplus Refinery
Property, are in substantially the same condition and repair, ordinary wear and
tear excepted, as of October 7, 1999.
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5.08 Compliance with Laws.
As of the date of this Agreement, Seller is in compliance with all
Applicable Laws relating to the Assets or the Operations, except as specified on
Schedule 5.08 or where the noncompliance with which would not, in the aggregate,
result in a Material Adverse Effect.
5.09 Due Diligence.
(a) Seller has:
(i) made available to Buyer all books, records, financial statements,
business plans, management appraisals, documents, Contracts, Leases and
Easements, Permits and other material information requested in writing by
Buyer;
(ii) instructed its and its Affiliates employees, counsel, advisors
and auditors to respond in writing to all written inquiries from Buyer
(subject to any confidentiality agreements, applicable legal restrictions
and any applicable privileges); and
(iii) to the extent requested in writing, provided full access to the
Assets, except, with respect to (i), (ii) and (iii) above where Seller has
expressly declined in writing to comply with any such request with respect
to identified items or categories of information.
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(b) No books, records, financial statements, documents, Contracts, Leases
and Easements, Permits or other material information requested in writing by
Buyer which Seller failed to fully disclose when so requested would have a
Material Adverse Effect provided that Seller shall have no liability to Buyer
for the breach of this representation or warranty to the extent that the facts
or circumstances that give rise to such breach were actually known to Buyer on
or prior to the Effective Time.
5.10 Permits.
Schedule 5.10 contains a true and complete list of Seller's material
Permits used in connection with the Assets, the Operations, or the sale of
refined product and identifies the material Permits which are not transferable
to Buyer.
5.11 Taxes.
There are no tax liens open, pending against or, to the Knowledge of
Seller, threatened against the Assets.
5.12 Intellectual Property.
All Intellectual Property transferred to Buyer from Seller shall be
made in accordance with the grant clauses of Sections 16.01 and 16.03.
5.13 No Knowledge of Breaches.
Except for any breaches of representations or covenants, the
consequences of which have been waived by Seller, Seller has no knowledge of any
breaches of any representation or covenant herein by Buyer.
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5.14 Labor Matters
(a) Seller is a Party to and bound by a Collective Bargaining
Agreement affecting approximately sixty-eight percent (68%) of Loaned Employees.
Except as set forth on Schedule 5.14, Seller has not received any notification
of any unfair labor practice charges or complaints pending before any agency
having jurisdiction thereof nor are there any current union representation
claims involving any of the Loaned Employees. Further, Seller is not aware of
any such threatened charges or claims by any of the Loaned Employees.
(b) Seller is not aware of any strikes, work stoppages, work
slowdowns or lockouts or of any threats thereof, except for routine grievance
matters, by or with respect to any of the Loaned Employees. Since January 1,
1998, there have been no significant labor disputes, strikes, slowdowns, work
stoppages, lockouts or similar matters except for routine grievance matters
involving Loaned Employees.
(c) Except as set forth in Schedule 5.14, there are no pending
grievances filed by Represented Loaned Employees. Further, there are no
arbitration decisions, settlement agreements, injunctions, consent decrees or
conciliation agreements which affect the Operations or Assets other than those
specifically listed in Schedule 5.14.
(d) Except as set forth in Schedule 5.14, there exists (i) no charge
of discrimination or lawsuit involving any alleged violation of any fair
employment law, wage payment law, occupational safety and health law, and (ii)
no pending or, to Seller's Knowledge, threatened litigation arising out of any
employment relationship, or other employment-related law, whether federal, state
or local, and (iii) no pending or, to Seller's Knowledge, threatened litigation
arising out of any employment relationship, by any Loaned Employee or any
representative of any such Person or Persons. No charge or claim involving any
of the Refinery or Loaned Employees is pending before any administrative agency,
local, state or federal, and no lawsuit involving any of the Refinery or Loaned
Employees is pending or, to Seller's Knowledge, threatened with respect to equal
employment opportunity, age discrimination, occupational safety, or any other
form of alleged employment practice or unfair labor practice.
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5.15 Good and Marketable Title.
(a) Schedule 1.01G contains a true and complete description of the
Refinery Land owned by Seller or its Affiliates and used in the Operations, and
such Refinery Land is described by metes and bounds.
(b) Except as specified in Schedule 5.15, Seller has good and
marketable title to all of the Assets, except for Assets sold, consumed or
otherwise disposed of in the ordinary course of business in accordance with the
procedures set forth in Section 10.01 and consistent with past practices, free
and clear of any Liens, other than Permitted Encumbrances.
5.16 Condemnation.
There are no pending or, to the Knowledge of Seller, threatened
condemnation or eminent domain proceedings or contemplated sales in lieu
thereof, involving a partial or total taking of any of the Assets.
5.17 Year 2000.
(a) Except as set forth on Schedule 5.17, the Information Technology
(as defined herein) is Year 2000 Ready (to the extent that any other Information
Technology, used in combination with such Information Technology, properly
exchanges date/time data with it).
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(b) Seller has undertaken the investigation of critical business
partners to review whether critical Information Technology, purchased, leased,
licensed or used by or in connection with the Operations or Assets, is Year 2000
Ready. Seller has demonstrated "Due Diligence" through the efforts expended in
executing the Year 2000 processes. Factors which could affect the ability to be
Year 2000 Ready by the end of 1999 include, but are not limited to the
following: (i) failure to identify critical systems which will experience
failures; (ii) errors in software; (iii) efforts to correct problems; (iv)
unexpected failures by key business partners; (v) extended failures by public
and private utility companies or common carriers supplying services to the
Refinery; (vi) failures in global banking systems and capital markets; and (vii)
other circumstances beyond the Refinery's control. While there can be no
assurance that all such modifications and plans will be successful, including
contingency plans for the Refinery's major business partners, it is not expected
that any material disruptions in operations will occur which adversely affect
the Refinery's overall financial position or results of operation. Excluding
items listed on Schedule 5.17, Seller is not aware of any areas in which the
Information Technology is not Year 2000 Ready which have not been remedied as of
the date hereof.
(c) For the purpose of this Agreement, "Year 2000 Ready", means that
Information Technology performance has been sufficiently tested and documented
to correctly process dates into and beyond January 1, 2000 or performs its
necessary functions without relying upon dates. For purposes of this Section
5.17, "Information Technology", includes applications, personal computers,
servers, telecommunications, embedded chips and control systems and software
system(s) that are used or relied on by Seller in the normal conduct of the
Operations. For this section, "Due Diligence", is what an ordinary reasonable
person would do given the same set of circumstances. In the case of Year 2000
Ready, this process would include: (i) identifying pieces of hardware/software
that might contain the problem; (ii) accessing the criticality of the
hardware/software items in the inventory; (iii) evaluating/testing the
hardware/software items in the inventory, (iv) remediating the critical items;
(v) determining and taking corrective actions/workarounds for the non-critical
items.
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5.18 Transferred Assets.
Except the Excluded Assets, Excluded Contracts, and for assets which
are not assigned due to failure to obtain third party consent, not material or
are disposed of in the ordinary course of business in accordance with the
procedures set forth in Section 10.01, as of the day before Closing the Assets
being transferred to Buyer constitute the assets and properties being used in
the Operations.
5.19 Certain Environmental Matters
(a) The Assets are in material compliance with SH&E Laws and
related Legal Requirements relating to asbestos-containing materials.
(b) All notices, disclosure and reports regarding the existence
of hazardous waste or solid waste management facilities, including without
limitation, underground storage tank systems, required to be filed or recorded
in connection with any of the Assets or their respective ownership or operation
have been filed or recorded with all appropriate governmental agencies,
including, but not limited to, recordation in deed records of appropriate
jurisdiction.
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(c) Exclusive of the waste water treatment plant considerations
including those addressed in Sections 13.01(a) and 13.01(c) and the High
Production Volume chemical testing program testing costs to be shared in
accordance with the provisions of Section 13.01(d), there are no material
obligations, undertakings or liabilities arising out of or relating to SH&E Laws
or related Legal Requirements which Seller has agreed to assume or retain, by
contract or otherwise, which would adversely impact Buyer or the Assets
following the Closing. For purposes of this Section 5.19(c), noncompliance with
SH&E Laws and related Legal Requirements, shall not be deemed to be an
obligation, undertaking or liability.
NOTWITHSTANDING ANY OF THE FOREGOING REPRESENTATIONS, IN NO EVENT SHALL ANY
PROJECTION AS TO THE FINANCIAL CONDITION, FINANCIAL RESULTS, STATUS OF ASSETS,
PROJECTS, AVAILABILITY OF FEEDSTOCK OR MARKETS OR ANY OTHER PROJECTIONS MADE BY
SELLER TO BUYER BE RELIED UPON BY BUYER, AND SELLER MAKES NO REPRESENTATION OR
WARRANTY AND SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY WITH REGARD
TO SAME.
ARTICLE 6
BUYER'S AND GUARANTOR'S REPRESENTATIONS AND WARRANTIES
6.01 Buyer's Representations and Warranties.
Buyer represents and warrants to Seller to the Knowledge of Buyer,
except with respect to Sections 6.01(a), 6.01(b) and 6.01(h) which shall not be
limited to the Knowledge of Buyer, as follows:
(a) Organization and Standing.
Buyer or its Affiliate which is a party to a Related Agreement is a
corporation duly organized, validly existing in good standing under the laws of
the State of Delaware and is in good standing as a corporation in all
jurisdictions where the nature of its properties or business requires it.
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(b) Authority and Binding Obligations.
Buyer or its Affiliate which is a party has the corporate power
and authority to execute, deliver and perform its obligations under this
Agreement and the Related Agreements. The execution, delivery, and performance
of this Agreement and the Related Agreements by Buyer or its Affiliate which is
a party have been duly and validly authorized by all necessary corporate action
and do not conflict or result in a violation or breach of the articles of
incorporation and by-laws of the Buyer or its Affiliate which is a party. Each
of this Agreement and the Related Agreements, constitutes a legal, valid and
binding obligation of Buyer or its Affiliate which is a party enforceable
against Buyer or its Affiliate which is a party, in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and general principles of equity (regardless of whether enforceability
is considered in a proceeding at law or in equity).
(c) No Consent Required; Non-Contravention.
(i) Except as otherwise specified in Schedule 6.01(c)(i),
no consent, waiver, approval, order, authorization or other action by or
filings with any governmental authority or other Person is required in
connection with the execution, delivery and performance by Buyer or its
Affiliate which is a party of this Agreement or the Related Agreements.
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(ii) Except as specified in Schedule 6.01(c)(ii), neither
the execution and delivery of this Agreement or the Related Agreements by
Buyer or its Affiliate which is a party nor the consummation of the
transactions contemplated hereby will violate or conflict with or result in
the acceleration of rights, or benefits or payments under any agreement,
instrument, statute, regulation, rule, order, writ, Judgment or decree to
which the Buyer or its Affiliate is directly or indirectly a Party or is
directly or indirectly subject, except for such violations and conflicts
which will not (x) prevent or materially delay consummation of the
transactions contemplated by this Agreement or the Related Agreements, (y)
prevent Buyer or its Affiliate which is a party from performing its
obligations under this Agreement or (z) result in a Material Adverse
Effect.
(d) Litigation.
Except as specified in Schedule 6.01(d), there are no lawsuits,
actions, arbitrations or other proceedings pending or to the knowledge of the
Buyer threatened by any Person against or affecting the Buyer by or before any
court, arbitrator or governmental authority which (i) would prohibit any of the
transactions contemplated by this Agreement or (ii) if adversely determined
would have an adverse determination (individually or in the aggregate) that
would have a Material Adverse Effect.
(e) No Breach.
Except as specified in Schedule 6.01(e), neither the execution
and delivery of this Agreement by Buyer, nor the consummation of the
transactions contemplated hereby will violate or conflict with, or result in the
acceleration of rights, benefits or payments under: (i) any provision of the
Buyer's articles of incorporation or bylaws; (ii) any statute, law, regulation
or governmental order to which the Buyer or the assets and properties of any
thereof are bound or subject; (iii) any commitment to which the Buyer is a Party
or by which it or any of its properties may be bound or subject; and (iv) any
agreement, contract or commitment of the Buyer or to which it is a Party or by
which it or any of its properties may be bound or subject, except, with respect
to clauses (ii), (iii) and (iv), for such violations and conflicts which will
not (x) prevent or materially delay consummation of the transactions
contemplated by this Agreement and other Related Agreements; (y) prevent Buyer
or its Affiliate which is a party from performing its obligations under this
Agreement and other Related Agreements; or (z) result in a Material Adverse
Effect.
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(f) Actions and Proceedings.
Except as specified in Schedule 6.01(f), no proceeding or
investigation is pending or threatened before any court, arbitrator or
administrator or governmental authority, bureau or agency to restrain or
prohibit, or to obtain damages, a discovery order or other relief in connection
with this Agreement or any of the Related Agreements or any material part of the
transactions contemplated hereby or thereby.
(g) Independent Decision.
Buyer has made its own independent analysis and judgment of the
commercial potential, condition and usefulness of the Assets, and is not relying
upon any projections from Seller regarding prospective operations of the Assets
in the future. Buyer has such knowledge and experience in business and
financial affairs in general as to be capable of evaluating the merits and risks
of purchasing the Assets.
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(h) No Knowledge of Breaches.
Except for any breaches of representations or covenants, the
consequences of which have been waived by Buyer, Buyer has no knowledge of any
breaches of any representation or covenant herein by Seller.
(i) Financial Capacity; Future Performance.
Upon closing of the senior notes offering referenced in Section
7.07 below, Buyer will have the financial capacity to consummate the purchase
and, to the knowledge of Buyer, to operate the Assets after the purchase. Buyer
is, as of the date hereof, not aware of any facts or circumstances that now or
in the future would have a Material Adverse Effect on its financial condition,
results of operations, business, properties, assets, or liabilities. Buyer is
solvent, is not in the hands of a receiver, nor is any receivership pending, and
no proceedings are pending by or against it for bankruptcy or reorganization in
any state or federal court.
6.02 Guarantor's Representations and Warranties.
Guarantor represents and warrants to Seller to the Knowledge of Guarantor,
except with respect to Sections 6.02(a), 6.02(b) and 6.02(h) which shall not be
limited to the Knowledge of Guarantor as follows:
(a) Organization and Standing.
Guarantor is a corporation duly organized, validly existing in
good standing under the laws of the State of Wyoming and is in good standing as
a corporation in all jurisdictions where the nature of its properties or
business requires it.
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(b) Authority and Binding Obligations.
Guarantor has the corporate power and authority to execute,
deliver and perform its obligations under this Agreement and the Guaranty. The
execution, delivery, and performance of this Agreement and the Guaranty by
Guarantor have been duly and validly authorized by all necessary corporate
action and do not conflict or result in a violation or breach of the articles of
incorporation and by-laws of the Guarantor. This Agreement and the Guaranty
constitute legal, valid and binding obligations of the Guarantor enforceable
against Guarantor in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and general principles
of equity (regardless of whether enforceability is considered in a proceeding at
law or equity).
(c) No Consent Required; Non-Contravention.
(i) Except as specified in Schedule 6.02(c)(i), no consent,
waiver, approval, order, authorization or other action by or filings with
any governmental authority or other entity is required in connection with
the execution, delivery and performance by Guarantor of this Agreement or
the Guaranty.
(ii) Except as specified in Schedule 6.02(c)(ii), neither
the execution and delivery of this Agreement or the Guaranty by Guarantor,
nor the consummation of the transactions contemplated hereby will violate
or conflict with or result in the acceleration of rights, or benefits or
payments under any agreement, instrument, statute, regulation, rule, order,
writ, judgment or decree to which the Guarantor is directly or indirectly a
party or is directly or indirectly subject, except for such violations and
conflicts which will not (x) prevent or materially delay consummation of
the transaction contemplated by this Agreement or the Guaranty; (y) prevent
Guarantor from performing its obligations under this Agreement or the
Guaranty; or (z) result in a Material Adverse Effect.
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(d) Litigation.
Except as specified in Schedule 6.02(d), there are no lawsuits,
actions, arbitrations or other proceedings pending or to the knowledge of the
Guarantor threatened by any Person against or affecting the Guarantor by or
before any court, arbitrator or governmental authority which (i) would prohibit
any of the transactions contemplated by this Agreement or the Guaranty, (ii) if
adversely determined would have an adverse determination (individually or in the
aggregate) that would have a Material Adverse Effect.
(e) No Breach.
Except as specified in Schedule 6.02(e), neither the execution
and delivery of this Agreement or the Guaranty by Guarantor, nor the
consummation of the transactions contemplated hereby or thereby will violate or
conflict with, or result in the acceleration of rights, benefits or payments
under; (i) any provision of the Guarantor's articles of incorporation or bylaws;
(ii) any statute, law, regulation or governmental order to which the Guarantor
or the assets and properties of any thereof are bound or subject; (iii) any
commitment to which the Guarantor is a party or by which it or any of its
properties may be bound or subject; and (iv) any agreement, contract or
commitment of the Guarantor or to which it is a party or by which it or any of
its properties may be bound or subject, except, with respect to clauses (ii),
(iii) and (iv), for such violations and conflicts which will not (x) prevent or
materially delay consummation of the transactions contemplated by this
Agreement, and the Guaranty (y) prevent Guarantor from performing its
obligations under this Agreement, and the Guaranty, or (z) result in a Material
Adverse Effect.
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(f) Actions and Proceedings.
Except as specified in Schedule 6.02(f), no proceeding or
investigation is pending or threatened before any court, arbitrator or
administrator or governmental authority, bureau or agency to restrain or
prohibit, or to obtain damages, a discovery order or other relief in connection
with this Agreement, or the Guaranty or any material part of the transactions
contemplated hereby or thereby.
(g) Independent Decision.
Guarantor has made its own analysis and independent judgment of
the commercial potential, condition and usefulness of the Assets, and is not
relying upon any projections from Seller regarding prospective operations of the
Assets in the future. Guarantor has such knowledge and experience in business
and financial affairs in general as to be capable of evaluating the merits and
risks of guaranteeing the purchase of the Assets.
(h) No Knowledge of Breaches.
Except for any breaches of representations or covenants, the
consequences of which have been waived by Guarantor, Guarantor has no knowledge
of any breaches of any representation or covenant herein by Seller.
(i) Financial Capacity; Future Performance.
Upon closing of the senior notes offering referenced in Section
7.07 below, Guarantor will have the financial capacity to guaranty the purchase,
to the knowledge of the Guarantor, and operation of the Assets. Guarantor is,
not aware of any facts or circumstances that now or in the future would have a
Material Adverse Effect on its financial condition, results of operations,
business, properties, assets, or liabilities. Guarantor is solvent, is not in
the hands of a receiver, nor is any receivership pending, and no proceedings are
pending by or against it for bankruptcy or reorganization in any state or
federal court.
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ARTICLE 7
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
The obligations of Buyer to purchase the Assets are subject to the
satisfaction on or prior to the Closing Date, unless waived, of the conditions
specified in this Article 7. If Buyer actually knows at the time of Closing of
facts that in and of themselves cause a failure of a condition to be satisfied,
to such an extent that Buyer is not obligated to close, and if Buyer
nevertheless elects to close the transactions contemplated hereby, then Buyer
shall be deemed to have waived such unsatisfied condition and shall not be
entitled to make a claim against Seller based on such unsatisfied condition.
The conditions precedent to Buyer's obligation to close are as follows:
7.01 Regulatory Approvals.
Buyer shall have received all material Permits as required to operate
the Refinery or Buyer shall have received written notification from the
appropriate governmental authorities that it may operate temporarily under the
material Permits until similar Permits are issued to Buyer; provided, however,
that Buyer shall use its best efforts to obtain such Permits.
7.02 Deliveries.
Seller shall have delivered to Buyer all of the documents required to
be delivered pursuant to Section 3.02(a) and the Related Agreements.
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7.03 Required Consents and Authorizations.
Seller shall have received (and shall have furnished copies thereof to
Buyer) all consents and authorizations of third parties required to transfer the
Contracts, Leases and Easements and Permits for which consent is required, and
which if not obtained would result in a Material Adverse Effect to Buyer's
operations of the Refinery or the Assets; provided, however, if such consents
are not obtained, Seller and Buyer may agree to an arrangement where Seller
provides to Buyer the economic benefits of such Contracts, Leases and Easements
and Permits until Buyer obtains the consents.
7.04 Taking of Assets.
In the event that prior to Closing there shall be instituted or
threatened any proceeding or other action, including, without limitation,
eminent domain, condemnation or other governmental proceeding, that there is a
reasonable probability of Seller or Buyer (after Closing) losing any portion of
or interest in the Assets, Seller shall immediately notify Buyer, and Buyer, if
such proceeding or other action has or there is a reasonable probability of a
taking of property with a value in excess of Twenty-Five Million Dollars
($25,000,000), shall have the right to terminate this Agreement within ten (10)
days from the date of such notice, by giving notice to Seller of its election to
terminate. If Buyer is not entitled to or, if entitled, does not timely
terminate this Agreement, then Seller shall assign to Buyer at Closing any
rights Seller may have to receive any payments (net of any expenses) as a result
of any such proceeding or other action.
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7.05 Adverse Change.
Prior to the Closing, there shall not have been any change, other than
changes affecting the economy generally or affecting the petroleum industry
(refining, marketing, transportation, terminalling and trading) generally or
regionally, in the Assets or Operations that has or there is a reasonable
probability of having a value in excess of Twenty-Five Million Dollars
($25,000,000) (the Parties agreeing, however, that Seller shall have the right,
but not the obligation, to correct or cure any such change at its sole option
and cost prior to Closing), including, but not limited to, changes due to a
Force Majeure Event. Seller shall have the right, but not the obligation, to
extend the Closing Date for up to thirty (30) days but in no event later than
December 31, 1999 within which to use reasonable business efforts to cure or
correct any such adverse change. If Seller after the date of execution hereof
becomes entitled to receive any insurance proceeds with respect to changes in
the Assets that Seller has not corrected or cured to the same or a better
condition as prior to such change, Seller at Closing shall assign such insurance
proceeds to Buyer less the amount, if any, that Seller has incurred to correct
or cure the change in the Assets.
7.06 Representations and Warranties True; Covenants and Agreements
Performed.
The representations and warranties of Seller shall have been true and
correct in all material respects as of the date of this Agreement and shall be
true and correct in all material respects on the Closing Date as if made on such
date, and Seller shall have performed and complied in all material respects with
all covenants and agreements by Seller hereunder required to be performed or
complied with on or prior to the Closing Date.
7.07 Closing of Senior Note Offering.
Buyer shall have completed its contemplated issuance and sale of
senior notes pursuant to a private placement or registered offering in an amount
sufficient to meet the obligation of Buyer set forth in Section 3.02(b)(i).
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ARTICLE 8
CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
The obligations of Seller to sell, transfer, convey, and deliver the Assets
are subject to the satisfaction on or prior to the Closing Date, unless waived,
of the conditions specified in this Article 8. If Seller actually knows at the
time of Closing of facts that in and of themselves cause a failure of a
condition to be satisfied, to such an extent that Seller is not obligated to
close, and if Seller nevertheless elects to close the transactions contemplated
hereby, then Seller shall be deemed to have waived such unsatisfied condition
and shall not be entitled to make a claim against Buyer based on such
unsatisfied conditions.
The conditions precedent to Seller's obligation to close are as follows:
8.01 Deliveries.
Buyer and Guarantor shall have made the payments and delivered to
Seller all of the documents and instruments required pursuant to Sections
3.02(b) and (c) and the Related Agreements.
8.02 Representations and Warranties True; Covenants and Agreements
Performed.
The representations and warranties of Buyer and Guarantor shall have
been true and correct in all material respects as of the date of this Agreement
and shall be true and correct in all material respects on the Effective Time as
if made on such date, and Buyer and Guarantor shall have performed and complied
in all material respects with all covenants and agreements by Buyer and
Guarantor hereunder required to be performed or complied with on or prior to the
Effective Time.
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ARTICLE 9
JOINT CONDITIONS PRECEDENT TO CLOSING OBLIGATIONS
The obligations of Buyer and Seller to close shall be subject to the
satisfaction on or prior to the Closing Date of the following conditions:
9.01 Governmental Consents.
The applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act and any extension thereof shall have expired without a
challenge to the transaction, or early termination of such waiting period shall
have been granted. The approvals of Butler County, Kansas in connection with
the Hydrotreater Sublease and the Cogeneration Sub-Sublease shall have been
received.
9.02 Litigation.
No order of any court or order or action of any government agency
purporting to restrain or prohibit the transactions contemplated hereby shall be
threatened or in effect, and no action, suit, claim, arbitration, or proceeding
shall be pending by any government agency or other governmental authority, and
no new Applicable Law or regulation shall have been enacted or taken effect
which seeks to restrain or prohibit the transactions contemplated hereby, or
which has or reasonably could have a Material Adverse Effect upon the right of
Buyer to own, conduct or operate the Assets or the Operations, or which seeks to
subject Buyer or Seller to any penalty or material liability in connection with
this Agreement or the transactions contemplated hereby.
9.03 Related Agreements Finalized.
The Related Agreements shall have been executed and delivered by the
parties thereto.
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ARTICLE 10
COVENANTS AND AGREEMENTS OF SELLER
Seller covenants and agrees as follows:
10.01 Conduct of Business.
Prior to the Closing, unless the prior written consent of Buyer to a
contrary action is obtained (which consent shall not be unreasonably delayed or
withheld), and except as expressly permitted under this Agreement:
(a) Seller shall operate the Operations in its usual, regular
and ordinary manner and substantially in the same manner as
heretofore conducted and under the authorities granted to the
Refinery manager dated June 16, 1998 as supplemented on October
13, 1998.
(b) Seller shall use commercially reasonable efforts to
(i) preserve the Operations; and
(ii) maintain the Assets in their current state of repair,
order and condition, usual and ordinary wear and tear excepted
and subject to requirements in the ordinary course of business.
(c) Seller shall promptly notify Buyer of any emergency relating to
the Operations.
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10.02 Access; Records.
(a) Access. Seller has permitted Buyer's consultants to make a
preliminary engineering inspection and investigation of the Assets. Seller will
continue to afford Buyer and its agents, consultants, and other authorized
representatives full access to the Assets, to Seller's records relating to the
Assets or the operation thereof, and to Seller's personnel, and Seller will
cause its officers and other agents to furnish or make available to Buyer such
operating data and other information with respect to the Assets and the
Operations as Buyer may from time to time reasonably request; provided, however,
that any inspection or investigation conducted by Buyer, its agents,
consultants, or other authorized representatives (a) shall be conducted in such
manner as not to interfere unreasonably with the Operations or the Assets; or
(b) shall not entitle Buyer to drill or penetrate the surface of the ground to
investigate the condition of soil contamination or ground water contamination;
Buyer being limited to the review of Seller's records with regard to these
matters. Buyer bears the risk of injury to any of its employees or
representatives conducting an inspection or investigation of the Assets and
Operations and shall indemnify Seller for all Damages resulting from Buyer's
inspection or investigation other than Damages caused by or resulting from the
gross negligence or willful misconduct of Seller, Seller's Affiliates, employees
or agents.
(b) Delivery of Documents. Seller shall deliver to Buyer (in the manner
reasonably directed by Buyer in writing) on the Closing Date originals where
available or copies of all Leases and Easements (unless the original is on file
with the State of Kansas or County of Butler, Kansas) and of all Contracts
assigned to Buyer at the Closing. Seller also shall deliver to Buyer (in the
manner reasonably directed by Buyer in writing) originals or copies of all
Refinery Records.
10.03 Consents to Assignment.
Seller and Buyer agree to use reasonable business efforts to obtain
prior to Closing all consents to assignment of the Contracts, the Leases and
Easements and the Permits that are required to be obtained under this Agreement,
even though failure to obtain certain of the consents is not a condition
precedent to the Closing; provided, that neither Party shall be obligated to
make payments or incur obligations to third parties or governmental agencies to
obtain such consents except to pay such Party's reasonable expenses or to pay
normal fees to governmental agencies.
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10.04 Intellectual Property.
With respect to any Intellectual Property which exists and is owned by
Seller and which Seller has a right to license or sublicense and which is being
Used in the Operations as of the Effective Time or which is needed to be Used in
the operations of the Refinery after the Effective Time (in substantially the
same manner as used in the Operations) pursuant to Article 16, Seller shall
grant Buyer a non-exclusive, royalty-free, irrevocable, non-assignable, non-
transferable, and non-sublicensable license for Use of any such Intellectual
Property but only limited to the operation of the Refinery. With respect to any
Licensed Technology Rights licensed to Seller by third parties which is being
Used in the Operations of the Refinery as of the Effective Time, and which is
set forth in Article 16, Seller shall make a good faith attempt to secure the
transfer of such Licensed Technology Rights to Buyer, at no transfer cost to
Buyer except administrative cost of said attempt.
10.05 Inventories.
Prior to the Closing, Seller will maintain product and feedstock
inventories at reasonable levels sufficient to conduct the Operations in the
ordinary course of business.
10.06 Taxes.
Seller will file all tax returns and reports relating to the
Operations and Assets which are required to be filed with respect to all periods
ending on or prior to the Effective Time. Subject to the provisions of Section
3.03, Seller will pay when due all taxes relating to the Operations and Assets,
which accrue on or prior to or related to the period prior to the Effective
Time.
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ARTICLE 11
COVENANTS AND AGREEMENTS OF BUYER
Buyer covenants and agrees as follows:
11.01 Access; Records.
From and after the Effective Time, Buyer will afford to Seller and its
authorized representatives reasonable access during normal business hours to
personnel and to such properties and records which were transferred to Buyer
and, if requested, will furnish to Seller such additional information and
cooperate with Seller in such other respects, including the making of employees
available to Seller at Seller's expense as witnesses or deponents as Seller may
request for: (a) financial reporting; (b) tax or similar purposes; or (c)
purposes of investigating claims, or conducting litigation or administrative
proceedings with third parties or government agencies provided such access shall
not unduly interfere with the duties and responsibilities of such personnel to
Buyer. Buyer will keep and maintain the records to which Seller or its
representatives may request access pursuant to this Section 11.01, such records
to be maintained (i) for a period of six (6) years from the Effective Time; (ii)
such longer period as may be required by law; or (iii) such period as may be
requested by Seller provided that Buyer may at its option elect to at the end of
the six (6) year period deliver such records to Seller.
11.02 Performance of Assumed Obligations.
Buyer will cause all of the liabilities and obligations assumed by
Buyer in writing to be paid or performed or otherwise fully satisfied in a
timely manner.
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11.03 Qualifications, Approvals, Licenses and Permits.
Buyer shall proceed diligently and in good faith and shall use
reasonable business efforts at Buyer's expense to obtain all necessary United
States and State of Kansas Permits.
11.04 No Trademarks.
No license to any Trademarks is granted by this Agreement or by the
transfer of the Assets to Buyer, and Buyer is precluded from any use and agrees
not to make any use of Trademarks on or in connection with the sale of any of
its products or services as a means of identity or in any of its communications
or in connection with Buyer's operation of the Assets. Buyer acknowledges and
agrees with Seller that Seller and its Affiliates have the absolute and
exclusive right to the Trademarks, and all rights to which, and the goodwill
represented thereby and pertaining thereto, are being retained by Seller and its
Affiliates. Within sixty (60) days after the Effective Time, Buyer shall cease
using any Trademark and shall remove all Trademarks and refrain from further use
of all Trademarks. In the event that Buyer breaches this Section 11.04, Seller
shall be entitled to specific performance of this Section 11.04 and to
injunctive relief against further violations, as well as any other remedies at
law or in equity available to Seller.
11.05 Right of First Refusal.
Should Buyer in future propose or elect to sell the Assets (whether
offered as a package of assets, or offered as separate assets either
simultaneously or sequentially), Seller shall have a right of first refusal as
to any bona fide offer for the purchase of such Assets, except that, Seller
shall not have a right of first refusal, if Buyer forms a joint venture and
contributes, sells or otherwise transfers such Assets to the joint venture; and
(i) Buyer retains more than fifty percent (50%) of the outstanding voting
securities or other voting rights in the joint venture; or (ii) Buyer retains
more than twenty-five percent (25%) of the outstanding voting securities or
other voting rights in the joint venture and Buyer is designated as the
operator, general partner or managing member (as the case may be) of the joint
venture, as follows:
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(a) prior to the disposition of the Assets, Buyer shall give written
notice to Seller (hereinafter sometimes referred to as "Notice of Disposition")
which notice shall set forth;
(i) a general description of the Assets which Buyer desires
to sell;
(ii) the bona fide cash price or consideration, if any, to
be received by the Buyer in connection with such sale; and
(iii) a copy of the offer and the purchase and sale
agreement, if any, which include the terms upon which such sale is to be
made and the name of the Person or Persons to whom such sale is to be made.
In said notice Buyer shall irrevocably offer to sell and transfer all
of such Assets to Seller.
(b) Upon receipt by Seller of any such Notice of Disposition the
right to purchase the Assets covered by the Notice of Disposition shall be
exercisable for a period of sixty (60) days commencing on the date the Notice of
Disposition was received by Seller. Each sale and purchase in accordance with
the purchase rights so exercised shall be thereafter completed without avoidable
delay on such date as the purchasing party shall specify but in no event later
than the sixtieth (60th) day following exercise of the right to purchase.
(c) The "Option Price" as such term is used in this Section 11.05
shall be the bona fide cash price payable upon the terms, at the times and in
the manner, if any, specified in the Notice of Disposition, provided if no cash
purchase price is specified, the Option Price shall be a price mutually agreed
upon by Seller and Buyer, or, if agreement as to an Option Price is not made
within thirty (30) days after the event giving rise to the right of purchase
occurs, at the Fair Market Value (as defined below) of the Assets determined
pursuant to the procedures set forth in subsection (d) below.
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(d) "Fair Market Value" for purposes of this Section 11.05 shall be
determined by an independent appraisal conducted by a mutually agreed upon
professional firm.
(e) The rights of Seller to purchase Assets as provided in this
Section 11.05 may not be assigned by Seller, in whole or in part to any other
Person except to an Affiliate of Seller.
11.06 Third Party Property.
Buyer shall grant or continue to grant such rights-of-way, easements
or other rights of ingress or egress necessary to allow:
(a) Any third party which holds any Third Party Property on the
Refinery Land to have access to such Third Party Property for the purposes of
repairing, maintaining or otherwise utilizing such property, for so long as the
Third Party Property remains on the Refinery Land; and
(b) Seller or its Affiliates which hold any assets described on
Schedule 1.01B to have access to such assets for the purposes of operating,
repairing, maintaining or otherwise utilizing such assets.
(c) Furthermore, in the event that all or any portion of the Refinery
Land or any interest therein is hereinafter transferred to any Person, Buyer
shall as a condition precedent to such transfer, cause such Person to grant
Seller (for its benefit and the benefit of its Affiliates, successors and
assigns) an easement relating to the cogeneration facility as set out in the
Special Warranty Deed.
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11.07 No Liens or Encumbrances.
Until the expiration of eight years from the Effective Time, Buyer
shall (i) not create, assume or suffer to exist any Lien on the Assets other
than (a) artisans' or mechanics' Liens arising in the ordinary course of
business, (b) Liens securing indebtedness incurred pursuant to the definition of
Permitted Debts, (c) Permitted Encumbrances, or (d) Permitted Liens; (ii) not
contract for, create, incur or assume any debt, other than Permitted Debts; or
(iii) not enter into any agreement containing any provision which would be
violated or breached by the performance of Buyer's obligations under the
Agreement and the Cogeneration Sub-Sublease, or which would prohibit or
materially impair the ability of Buyer to perform its obligations under the
Agreement and the Cogeneration Sub-Sublease.
11.08 Insurance and Financial Compliance Requirements.
(a) Guarantor will maintain and cause Buyer to maintain, at its sole
cost and at all times, insurance with responsible and reputable insurance
companies satisfactory to Seller in such amounts and covering such risks as is
usually carried by companies engaged in similar businesses and owning similar
properties in the same general areas in which Guarantor or Buyer operates;
provided, however, that such insurance shall include at least the following
types and limits (the "Insurance"):
(i) General and Excess Liability Insurance with limits of
not less than Three Hundred Million Dollars ($300,000,000);
(ii) Aviation Product Liability Insurance with limits of not
less than One Hundred Million Dollars ($100,000,000);
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(iii) All Risk Property and Business Interruption Insurance,
to include Boiler and Machinery, on a replacement cost basis with limits of
not less than Five Hundred Million Dollars ($500,000,000).
(b) The Insurance required in this Section 11.08 shall schedule
Seller and each certificate evidencing the Insurance issued to Buyer shall name
Seller (and its Affiliates) as an additional insured without regard to the
allocation of liability provisions contained in this Agreement, to the extent of
(i) any claim, loss or liability within the scope of the required Insurance;
(ii) allowable by law; and (iii) as it relates to or arises out of continued
operation of the Refinery. Buyer shall provide to Seller: (i) proof of all
insurance required in this Section 11.08 at the inception of this Agreement,
with copies of the insurance policy to be provided to Seller as soon as
available; and (ii) copies of each renewal thereof during the term of the
Agreement.
ARTICLE 12
COVENANTS OF BUYER AND SELLER
Buyer and Seller each covenant as follows:
12.01 Antitrust Compliance.
Notwithstanding any other provision of this Agreement, either Party at
any time may terminate this Agreement upon notice to the other, without
liability to the other Party, if the Federal Trade Commission, State of Kansas,
or the Department of Justice advises Seller of its disapproval of the
transactions contemplated by this Agreement. Buyer shall cooperate with Seller
and shall promptly take all such reasonable action as may be required to
complete and submit any filing or supplemental information required by the
Hart-Scott-Rodino Antitrust Improvements Act.
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12.02 Purchase Price Allocations.
Schedule 12.02 is an allocation of the Purchase Price among the
Parties pursuant to the provisions of Section 1060 of the Internal Revenue Code
of 1986, as amended. Buyer and Seller shall not take any position on their
respective income tax returns that is inconsistent with the allocation of the
Purchase Price as specified in Schedule 12.02. Buyer and Seller shall duly
prepare and timely file such reports and information returns as may be required
under Section 1060 of the Internal Revenue Code of 1986, as amended, to report
the allocation of the Purchase Price among the Assets as specified in such
Schedule 12.02.
12.03 Tax Election.
Either Party may elect to structure the conveyance, transfer and/or
assignment of all or an applicable portion of the Assets as a tax-free exchange
pursuant to Section 1031 of the Internal Revenue Code of 1986 (a "1031
exchange"), provided that such Party gives notice of such election to the other
Party at least fifteen (15) days prior to the Effective Time, and provided that
Buyer shall not be required to take title to any other property or incur any
out-of-pocket expense in so doing. If such an exchange is elected by such Party
(the "Electing Party"), the Parties will execute all necessary 1031 exchange
documents, which shall be in a form mutually acceptable to the Parties. The
Electing Party will indemnify the other Party and its Affiliates, employees and
agents against any and all Damages which may be sustained by them on account of
or in connection with such election to structure the transaction as a 1031
exchange.
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12.04 Collection of Amounts Owed to a Party.
It is the intention of the Parties that, as between the Parties,
Seller shall be entitled to all income attributable to the operations conducted
prior to and including the Effective Time and Buyer shall be entitled to all
income attributable to the operations conducted after the Effective Time. Each
Party shall pay to the other Party, promptly after receipt thereof, any amount
received by said Party from any third party with respect to:
(a) rentals, fees or other revenues relating to the operations of the
Refinery and attributable to the ownership period of the other Party; and
(b) products delivered, services performed or other obligations performed
by the other Party and attributable to the ownership period of such other Party.
12.05 Payment of Transfer Taxes; Recording Fees.
Buyer and Seller shall each pay one-half of (or if paid or required to be
paid by Seller, reimburse Seller for one-half of) all Taxes which are assessed
or imposed on the transfer of the Assets from Seller to Buyer. By way of
example, but not exclusion, Buyer and Seller shall each pay one-half of all
real estate transfer taxes, or other excise taxes on real estate sales, all
sales taxes, business occupation taxes, applicable motor fuel taxes and
applicable environmental taxes and fees on all petroleum products transferred,
as well as any other Taxes assessed or imposed on the transfer or sale of the
assets, personal property or inventory included herein, and all costs to record
any deeds. Each Party shall cooperate with the other to take advantage of all
applicable tax exemptions and provide applicable tax exemption certificates.
Buyer and Seller shall each pay one-half of any title insurance premium due for
any title insurance policies obtained by Buyer or Seller and one half of the
costs of any required surveys.
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12.06 Payment of Certain Expenses Due and Payable After the Effective
Time; Cooperation.
(a) Buyer shall pay, as and when due, all emissions fees, permit fees
and utility bills due and payable after the Effective Time, and Seller shall
reimburse Buyer within thirty (30) days after invoice for any amounts under such
bills attributable to any period prior to the Effective Time. Buyer shall pay,
and be entitled to collect, any rents due subsequent to the Effective Time under
leases which are assumed Leases, and Seller shall either pay, or be entitled to
receive from Buyer, as the case may be, within thirty (30) days after invoice or
notice, any amounts attributable to any period prior to and including the
Effective Time.
(b) Buyer shall file, or cause to be filed, all required reports and
returns incident to all ad valorem taxes, real property taxes, personal property
taxes and similar obligations, which reports and returns are due on or after the
Effective Time and shall pay or cause to be paid to the taxing authorities all
such taxes reflected on such reports or returns even if same are for periods
prior to the Effective Time and Seller shall reimburse Buyer within thirty (30)
days after invoice for any such taxes and similar obligations which are
attributable to any period prior to the Effective Time.
(c) Seller and Buyer agree to cooperate with the other in the event
one of them is involved in a tax controversy concerning the Assets and the other
has either records or personnel which may be of assistance to the Party engaged
in the controversy. Seller and Buyer further agree that if, in such Party's
view, such cooperation becomes an unreasonable financial burden, they will agree
upon a reasonable method of reimbursement to the burdened Party.
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(d) Buyer shall pay the transfer tax or registration fee for all
vehicles transferred to Buyer as part of the Assets.
(e) If a Party hereto makes or has made any payment to a third party
pursuant to any assigned contract, lease, agreement or commitment; and (i) such
payment is made in respect of work performed, services provided or goods
delivered during a period of time which includes the Effective Time; or (ii) the
Effective Time intervenes between the making of such payment and the performance
of the work or services or delivery of goods, the Parties will allocate the
burden of such payment in a manner which reflects the relative benefit of such
work performed, services provided or goods delivered to each Party; provided,
however, it shall be presumed that any work performed, services provided or
goods delivered prior to and including the Effective Time are for the benefit of
Seller and any work performed, services provided or goods delivered after the
Effective Time are for the benefit of Buyer.
12.07 Contracts, Leases and Easements or Permits Not Assigned at Closing.
Except as set forth on Schedule 5.05, to the extent that any
Contracts, Leases and Easements or Permits that would otherwise be assigned
under this Agreement, as contemplated by Section 3.02(a)(ii), are not capable of
being assigned, transferred, subleased or sublicensed without the consent of, or
waiver by, any other party thereto or any other Person, or if such assignment,
transfer, sublease or sublicense or attempted assignment, transfer, sublease or
sublicense would constitute a breach thereof or a violation of any Legal
Requirement, this Agreement shall not constitute an assignment, transfer,
sublease or sublicense, or an attempted assignment, transfer, sublease or
sublicense of any such Contract, Lease or Easement or Permit. For a period of
ninety (90) days after Closing, Seller shall continue to use its reasonable
efforts to obtain a consent to an assignment from Seller to Buyer of each
Contract, each of the Leases and Easements and Permits that, but for the first
sentence of this Section 12.07, would be assigned; provided, however, that
Seller shall not be required to pay any consideration or suffer any financial
disadvantages to obtain such assignment.
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12.08 Casualty Repair.
Seller agrees that if any Assets are destroyed or damaged, in whole or
in part, by fire or other casualty prior to or on the Effective Time, Seller
shall repair or replace such Assets with reasonable promptness, Seller and Buyer
may agree that Seller may assign to Buyer all proceeds of any insurance net of
expenses covering such Assets and shall thereafter be relieved of any obligation
to repair or replace such Assets. If the insurance proceeds net of expenses do
not equal the allocated value of the damaged Asset as specified on Schedule
12.02, Seller may elect to pay to Buyer an amount equal to the value of such
Asset less the insurance proceeds or terminate this Agreement. Any insurance
proceeds exceeding the cost of repair of the damaged Asset shall be an Excluded
Asset. Notwithstanding the foregoing, prior to the Effective Time, if the value
of the Assets destroyed or damaged exceed Twenty-Five Million Dollars
($25,000,000), then Buyer may terminate this Agreement.
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12.09 Relationship of the Parties.
Nothing in this Agreement or the Related Agreements shall be construed
to create any joint venture, partnership, agency or other similar fiduciary
relationship between the parties hereto or thereto. The Parties and their
Affiliates under this Agreement and the Related Agreements are nothing other
than independent contractors for the sale or purchase of specific property,
goods or services. The Parties hereto acknowledge that, for purposes of this
Agreement and the Related Agreements, (i) none of the Parties or their
Affiliates shall be considered to be the agent, representative, employee,
master, or servant of the others for any purpose (ii) none of the Parties or
their Affiliates shall have any obligation to manage or operate any of their
respective businesses with any duty or standard of care to the other Party or
their Affiliates, and (iii) none of the Parties or their Affiliates have any
authority, right or power to enter into a contract or commitment, assume any
obligation or make any representation or warranty on behalf of the others
(except as expressly specified in this Agreement or the Related Agreements).
The Parties agree and acknowledge that except as expressly provided herein or in
the Related Agreements, none of the Parties or their Affiliates shall owe
duties, fiduciary or otherwise to the other. The Parties and their Affiliates
are, and will be after Closing, competitors with the right to pursue any
business opportunity for their respective individual benefit and make no
representation or warranty regarding the manner in which they will conduct their
respective businesses and operations. None of the Parties or their Affiliates
shall have any obligation to refrain from (i) engaging in the same or similar
activities or lines of business as the Parties or their Affiliates, (ii)
developing or marketing any products or services that compete, directly or
indirectly with those Parties or their Affiliates, (iii) investing or owning any
interest publicly or privately in, or developing a business relationship with,
any Person engaged in the same or similar activities or lines of business as, or
otherwise in direct or indirect competition with, the Parties or their
Affiliates, or (iv) doing business with any client or customer of the Parties or
their Affiliates. None of the Parties or their Affiliates shall have any
obligation to offer any business opportunity (except as expressly specified in
this Agreement or the Related Agreements) and may modify or otherwise change any
of their respective businesses or operations at any time.
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12.10 Pursue Insurance Benefits.
If an occurrence gives rise to an indemnification claim by a Party,
the Party (as the Indemnified Party) shall diligently pursue any claims for
recovery, under applicable insurance contracts or similar arrangements (but
excluding self-insurance arrangements) in favor of such Indemnified Party.
ARTICLE 13
ENVIRONMENTAL LIABILITIES
13.01 Environmental Liabilities.
(a) Seller shall be liable for those Damages for Environmental
Liability which are incurred on account of, or which are attributable to, any
SH&E Condition disclosed on Schedule 13.01(a) hereto. In the case of SH&E
Conditions that are covered by this Section 13.01(a), Seller, subject to the
liability limits in Section 13.01(f)(v) and Schedule 13.01(a), will retain,
after the Effective Time, one hundred percent (100%) of the liability for those
SH&E Conditions that are identified in Schedule 13.01(a) unless (i) Seller can
demonstrate that any such condition is fundamentally different, either
quantitatively or qualitatively, from that which would have prevailed had the
Assets not been transferred to Buyer, or (ii) the Parties agree otherwise in
writing.
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(b) Seller shall be liable for those Damages for Environmental
Liability which are incurred on account of, or which are attributable to, any
SH&E Condition arising out of, resulting from, or relating to the Operations or
any activities involving the Assets on or prior to the Effective Time which is
known or unknown at the Effective Time but is not determined to be in
noncompliance under SH&E Laws or related Legal Requirements until after the
Effective Time or subject to remedy or corrective action under SH&E Laws or
related Legal Requirements until after the Effective Time. In the case of SH&E
Conditions covered by this Section 13.01(b), Seller, subject to the liability
limits in Sections 13.01(f)(iii) and (f)(iv), and net of any insurance recovery
(but excluding self-insurance arrangements), will retain, after the Effective
Time, one hundred percent (100%) of the liability; provided that Buyer can
demonstrate that any such condition arises solely out of, results solely from,
or relates solely to the Operations or any activities involving the Assets prior
to the Effective Time. To the extent that the Kansas Department of Health and
Environment Order No. 87-E-26, dated August 31, 1988, and subsequent amendments,
address MTBE without triggering the need for system modifications or increased
cost, MTBE shall be subject to Section 13.01(a). Groundwater remediation system
modifications and increased groundwater remediation cost which are required
solely for the purpose of addressing MTBE contamination shall be covered under
this Section 13.01(b), provided that Buyer does not introduce MTBE to the site
or any contamination is not the result of migration from third parties after the
Effective Time.
(c) Seller and Buyer agree to share the cost of upgrades to the
waste water treatment plant, which are required by the state under paragraph
(C)(4) of the current NPDES permit (Kansas Water Pollution Control permit
I-WA09-P002, effective January 1, 1999) for the Asset, that are in excess of
those cost covered by the Two Million Dollars ($2,000,000) limitation set out in
Schedule 13.01(a), and subject to the liability limits in Section 13.01(f)(iii)
as follows:
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For cost less than One Million Dollars ($1,000,000), Seller and Buyer shall
split the cost on a 75:25 basis with Seller paying seventy-five percent (75%)
and Buyer paying twenty-five percent (25%) of the cost; for cost between One
Million Dollars ($1,000,000) but less than Two Million Dollars ($2,000,000),
Seller and Buyer shall split the cost on a 50:50 basis; for cost between Two
Million Dollars ($2,000,000) but less than Three Million Dollars ($3,000,000),
Seller and Buyer shall split the cost on a 25:75 basis with Seller paying
twenty-five percent (25%) and Buyer paying seventy-five percent (75%); and for
cost Three Million Dollars ($3,000,000) and above Buyer shall pay one hundred
percent (100%).
(d) For those Damages for Environmental Liability which are not
covered by Sections 13.01(a), 13.01(b), 13.01(c) and 13.01(e), the Parties,
subject to the liability limits in Section 13.01 (f)(iii) and (f)(iv), and net
of any insurance recovery (but excluding self insurance arrangements), shall
share such Damages, equally, unless the Parties agree otherwise. This Section
includes, but is not limited to, Damages for Environmental Liability (i) where
pre-Closing or post- Closing origin is indeterminate and (ii) High Production
Volume chemical testing program, a voluntary program under the guidance of the
US EPA, testing costs, where such testing costs shall not exceed Two Hundred
Seventy-Five Thousand Dollars ($275,000) in the aggregate over a five (5) year
period. This Section does not include Damages for Environmental Liabilities
which are known to be attributable to Buyer because they arise solely out of,
result solely from, or relate solely to the operations or any activities
involving the Assets after the Effective Time.
(e) Buyer shall be liable for those Damages for Environmental
Liability which are not imposed upon Seller under Sections 13.01(a), 13.01(b),
13.01(c) or 13.01(d) and to the extent Seller's liability is limited or
extinguished by Section 13.01(f).
(f) Any Seller liability and responsibility for Damages for
Environmental Liability incurred pursuant to this Section 13.01 shall arise if,
and only to the extent, that:
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(i) Damages are incurred pursuant to SH&E Laws or
related Legal Requirements in existence as of the Effective Time and, where
such Damages arise out of regulatory noncompliance or necessary
environmental remediation or response actions, encompass only work
reasonably necessary, as of the discovery of any SH&E Condition, to meet
the minimum requirements of SH&E Laws and related Legal Requirements in
existence at the Effective Time;
(ii) Buyer has given Seller written notice identifying
the SH&E Condition, or of any major site assessment or major investigation
that could lead to the discovery of an SH&E Condition, so that Seller may
participate, at its own expense, in any discussions or negotiations with
any applicable governmental authority concerning the design and
implementation of any remediation plan or project where Seller has, or is
reasonably likely to have, any liability or responsibility, and Buyer has
not proposed, discussed or agreed to any such plan or project without
Seller's prior written consent, which shall not be unreasonably withheld;
(iii) For purposes of Sections 13.01(b) and (d),
Seller's obligations under this Section 13.01 relate to Environmental
Liabilities identified and for which written notice of liability is given
by Buyer to Seller within four (4) years after the Effective Time,
regardless of when such amounts must be paid. With regard to Seller's
obligations under this Section 13.01 that relate to fines and penalties,
Buyer shall have an additional year to provide written notice to Seller;
(iv) Seller's total aggregate liability under Sections
13.01(b) and 13.01(d), for Environmental Liability collectively shall not
exceed Five Million Dollars ($5,000,000) and all amounts for which Seller
is obligated under Section 13.01 are net of any insurance recovery (but
excluding self-insurance arrangements) by Buyer; and
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(v) Notwithstanding anything to the contrary, (A) on
the tenth (10th) anniversary of the Effective Time, Seller may at its
discretion pay to Buyer a lump sum payment representing the present value
(calculated using a discount rate of seventeen percent (17%) real) as of
the date for all identified, reasonably estimated and unpaid projected
Damages for Environmental Liability with respect to environmental projects
which are ongoing on that date and which are subject to Section 13.01 of
this Agreement; and/or (B) prior to the tenth (10th) anniversary of the
Effective Time, and with the consent of Buyer, Seller may at its discretion
pay to Buyer a lump sum payment representing the present value (calculated
using a discount rate of seventeen percent (17%) real) as of such date for
some or all identified, reasonably estimated and unpaid projected Damages
for Environmental Liability which are subject to Section 13.01 of the
Agreement. Upon such lump sum payment pursuant to this Section
13.01(f)(v)(B) Seller shall have no further obligations to Buyer for
Damages for Environmental Liability under Section 13.01 for any
Environmental Liabilities addressed by such payment.
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13.02 Environmental Investigations.
For a period of four (4) years after the Effective Time, Buyer shall
not conduct any site assessment or investigation that could lead to the
discovery of an SH&E Condition and which would involve drilling or penetration
of the surface of the ground, unless (i) such site assessment or investigation
is performed in the ordinary course of business such as for geophysical studies
for equipment foundations, or (ii) ordered to conduct such an assessment or
investigation by any federal, state, or local governmental authority having
jurisdiction thereof.
13.03 Waste Sites.
Buyer and Seller hereby agree to each bear the risk of liability for
environmental cleanup or costs and natural resource damages for all open and
closed off-site waste sites operated by third parties on the following basis: if
both Parties have liability or potential liability at the site, and if liability
at the site is apportioned by (i) an administrative settlement or administrative
order with a governmental agency, or (ii) a Judgment, and both Buyer and Seller
are formal parties to the actions specified in clause (i) or (ii) of this
sentence, then the risk between them shall be allocated as provided for in such
action. If both Parties have liability or potential liability at the site and
either Party is not a formal party to an action specified in clauses (i) or (ii)
of the preceding sentence, and the Party named in such action is being held
responsible or potentially responsible for the other Party's liability, then the
Parties will divide the risk on a proportionate basis according to the
respective volume of Hazardous Substances deposited in such waste sites by Buyer
on or after the Effective Time, which shall be at Buyer's risk, or by Seller
prior to the Effective Time, which shall be Seller's risk. Notwithstanding
anything to the contrary in the Agreement (i) this Section 13.03 is an
independent risk allocation method not governed by, or subject to, Section
13.01, and (ii) this Section 13.03 shall continue in effect into perpetuity;
provided further that, in any case where only one of the Parties has contributed
waste at a site covered by this Section 13.03, such Party will remain solely
responsible for such contribution.
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13.04 Environmental Coordination Committee.
Within thirty (30) days of the Effective Time, each Party will
designate two representatives, one legal and one technical, to consult on
coordination of their respective obligations under Article 13. (The Parties may
change the identity of these representatives as necessary or desirable.) The
four representatives will collectively be referred to as the Frontier/Equilon
Environmental Coordination Committee (the "Committee"). The sole purpose of the
Committee will be to facilitate communication and coordination on environmental
matters between the Parties, and it will have no formal schedule, duties, or
powers other than as the duly authorized representatives of the Parties may from
time to time agree. If the Parties agree in writing, the Committee may, among
other things, discuss project management, cost reimbursement, and liability
allocation issues. Neither the establishment of the Committee, nor any of its
activities, shall be construed to make either Party responsible in any way for
the acts or omissions of the other Party.
13.05 Environmental Cooperation.
Buyer and Seller covenant with each other that they shall cooperate
fully with each other and act in good faith in implementing this Article 13.
Buyer and Seller agree that the performance required by the covenant set forth
in the preceding sentence shall include, but not be limited to: (a) providing
to the other timely notice of all potential Environmental Liabilities that they
believe are covered under this Article 13 about which they become aware; (b)
sharing with the other in a timely manner all material non-privileged
correspondence received from any third party that is relevant to such potential
Environmental Liabilities; (c) affording the other timely access to and an
opportunity to comment on (both draft and final versions) any material non-
privileged correspondence to third parties, non-privileged study protocols and
results, drawings, charts, data, field notes and remediation workplans or
reports, or other non-privileged documentation relating to such Environmental
Liabilities; (d) providing the other with timely notice of and an opportunity to
attend and participate in any meetings or hearings with governmental bodies or
courts relating to any Environmental Liabilities that they believe are covered
under this Article 13, subject to the permission or consent of such governmental
bodies or courts, if required; (e) preparing all material strategies and plans
in consultation with each other; (f) consulting with each other to ensure that
any work under this Article 13 is performed in a workmanlike and cost-effective
manner; (g) negotiating access agreements and scheduling all work to be
performed so as to minimize any unreasonable cost and inconvenience to each
other; and (h) performing all work under this Article 13 in accordance with all
applicable SH&E Laws or related Legal Requirements.
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13.06 Remediation by Buyer.
Buyer shall supervise and perform any remediation on any property of
Buyer or on any property contiguous to a property of Buyer, except such
remediation as Seller may elect to perform in accordance with Section 13.07.
13.07 Remediation by Seller.
(a) Seller's Election. Seller, at Seller's sole choice, may, by
timely notice to Buyer with respect to any Environmental Liabilities under
Section 13.01(a), supervise and perform any remediation on any property of Buyer
or any property contiguous to a property of Buyer, subject to Buyer's oversight
and approval and mutually acceptable access agreements.
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(b) Performance of Remediation. Seller, with the approval of
Buyer (which shall not be unreasonably withheld), may have access to and use of
the storage facilities, loading facilities, docks, rail sidings, and other plant
equipment or facilities, and waste water treatment plants and similar waste
treatment and disposal systems on the Asset in conjunction with any work
performed pursuant to Schedule 13.01(a) for purposes such as the disposal of
well development water and treated ground water, provided that (i) Seller's use
of such facilities and systems shall not interfere with or disrupt Buyer's
operations or Buyer's use of such facilities and systems (including by reducing
the capacity needed for Buyer's use), (ii) Seller's use of such facilities and
systems shall not violate any SH&E Laws or related Legal Requirements, (iii)
Seller shall be responsible for, and Buyer shall fully cooperate in, obtaining
all approvals required by any governmental bodies for such use and (iv) Seller
shall promptly perform any remediation or repair any malfunction or impairment
of performance of such facilities and systems to the extent resulting from
Seller's use of such facilities and systems.
13.08 Payments and Reimbursements.
Seller shall make payment to Buyer for work or other matters for which
Seller is liable under Section 13.01 according to one or more of the following
methods, at Seller's election: (i) direct payment to third parties; (ii)
reimbursement of Buyer; (iii) a combination of (i) and (ii).
13.09 Environmental Insurance
(a) The initial premiums for environmental insurance and
subsequent deductabilities shall be shared equally between the Parties. The
portion of the environmental deductible paid by Seller shall be included in and
credited towards the total aggregate liability amount set forth in Section
13.01(f)(iv).
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(b) If an occurrence gives rise to a liability for Damages for
Environmental Liability claim by a Party, the Party shall first pursue and
recover any claims under applicable environmental insurance contracts or similar
arrangements (but excluding self-insurance arrangements) in favor of such Party.
(c) The Parties acknowledge that the Buyer shall use best
efforts to obtain environmental insurance that will include Twenty-Five Million
Dollars ($25,000,000) average for a ten (10) year term with a Five Hundred
Thousand ($500,000) deductible.
13.10 Insurance Recoveries.
When used in Article 13, the term "net of any insurance recovery"
means (i) after subtraction of any amounts paid to a claimant Party by an
environmental insurance carrier (excluding any deductibles paid by the Parties
and any self-insurance arrangements), or (ii) $0.00, if any environmental
coverage claim by the Parties is denied by the insurance carrier, or (iii)
$0.00, if the insurance carrier has not settled a claim within twelve (12)
months of its submission; provided that, with respect to clauses (i) or (ii) of
this sentence, any amounts subsequently recovered, either through litigation or
settlement with the insurance carrier, will be promptly reimbursed to the liable
Party entitled to such reimbursement such that the claimant Party does not
receive a "double recovery."
ARTICLE 14
INDEMNIFICATION; SURVIVAL
14.01 Indemnification.
A. INDEMNIFICATION BY SELLER. SELLER AGREES TO PAY AND TO INDEMNIFY
FULLY, HOLD HARMLESS AND DEFEND BUYER AND ITS RESPECTIVE AFFILIATES, AGENTS,
OFFICERS, DIRECTORS, PARTNERS, EMPLOYEES, SERVANTS, CONSULTANTS,
REPRESENTATIVES, SUCCESSORS AND ASSIGNS FROM AND AGAINST ANY AND ALL CLAIMS
BASED UPON ALLEGATIONS OF AND/OR DAMAGES (WHETHER BASED ON NEGLIGENT ACTS OR
OMISSIONS, STATUTORY LIABILITY, STRICT LIABILITY OR OTHERWISE) ARISING OUT OF
THE FOLLOWING:
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(i) TO THE EXTENT NOT KNOWN TO BUYER OR TO THE EXTENT NOT
DISCLOSED IN THE DATA ROOM MATERIAL, ANY INACCURACY OR BREACH OF ANY
REPRESENTATION OR WARRANTY OF SELLER CONTAINED IN THIS AGREEMENT OR ANY
CERTIFICATE DELIVERED PURSUANT HERETO AND MADE AT OR AS OF THE EFFECTIVE
TIME, OR OF ANY COVENANT OF AGREEMENT OF SELLER CONTAINED IN THIS
AGREEMENT.
(ii) ENVIRONMENTAL LIABILITY RETAINED BY SELLER, PURSUANT TO THE
TERMS OF ARTICLE 13.
(iii) LIABILITIES ASSUMED BY SELLER IN SECTION 2.04(b) AND
SECTIONS 4.05(a) AND (c).
B. INDEMNIFICATION BY BUYER. BUYER AGREES TO PAY AND TO INDEMNIFY
FULLY, HOLD HARMLESS AND DEFEND SELLER AND ITS RESPECTIVE OWNERS, AFFILIATES,
AGENTS, OFFICERS, DIRECTORS, PARTNERS, EMPLOYEES, SERVANTS, CONSULTANTS,
REPRESENTATIVES, SUCCESSORS AND ASSIGNS FROM AND AGAINST ANY AND ALL CLAIMS
BASED UPON ALLEGATIONS OF AND/OR DAMAGES (WHETHER BASED ON NEGLIGENT ACTS OR
OMISSIONS, STATUTORY LIABILITY, STRICT LIABILITY OR OTHERWISE) ARISING OUT OF
THE FOLLOWING:
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(i) ANY INACCURACY OR BREACH OF ANY REPRESENTATION OR WARRANTY
OF BUYER CONTAINED IN THIS AGREEMENT OR ANY CERTIFICATE DELIVERED PURSUANT
HERETO AND MADE ON OR AS OF THE EFFECTIVE TIME, OR OF ANY COVENANT OR
AGREEMENT OF BUYER CONTAINED IN THIS AGREEMENT.
(ii) ANY LIABILITY WHATSOEVER (WHETHER KNOWN, UNKNOWN, ACCRUED,
ABSOLUTE, CONTINGENT OR OTHERWISE) INCURRED AS THE RESULT OF THE OWNERSHIP
OR OPERATION OF THE ASSETS BY BUYER AND ITS SUBSIDIARIES AFTER THE
EFFECTIVE TIME, EXCEPT AS SET FORTH IN ARTICLE 13.
(iii) ENVIRONMENTAL LIABILITY ASSUMED BY BUYER PURSUANT TO
ARTICLE 13.
(iv) EXCLUSIVE OF LIABILITY COVERED UNDER ARTICLE 13, ANY BUYER
ASSUMED LIABILITY, AND ANY LIABILITY WHICH RESULTS FROM ANY VIOLATION OF
ANY LEGAL REQUIREMENT WHICH OCCURS AFTER THE EFFECTIVE TIME.
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(v) ANY LIABILITY UNDER THE SECURITIES ACT, THE EXCHANGE ACT OR
ANY OTHER FEDERAL OR STATE "BLUE SKY" OR SECURITIES OR OTHER LAW OR
REGULATION, AT COMMON LAW OR OTHERWISE, OR ARISING OUT OF OR BASED UPON THE
OFFERING AND SALE OF THE SENIOR NOTES, INCLUDING ANY UNTRUE STATEMENT OR
ALLEGED UNTRUE STATEMENT OF A MATERIAL FACT RELATING TO OR CONTAINED IN ANY
PRELIMINARY PROSPECTUS, REGISTRATION STATEMENT OR ANY PROSPECTUS FORMING A
PART THEREOF, OR ANY AMENDMENT THEREOF OR SUPPLEMENT THERETO, OR ARISING
OUT OF OR BASED UPON ANY OMISSION OR ALLEGED OMISSION TO STATE A MATERIAL
FACT REQUIRED TO BE STATED OR NECESSARY TO MAKE THE STATEMENTS THEREIN NOT
MISLEADING, UNLESS SUCH INFORMATION WHICH WAS PROVIDED IN WRITING BY SELLER
WAS UNTRUE, INACCURATE OR AN EXPRESS DISCLAIMER OF ACCURACY AS SPECIFIED ON
MATERIALS PROVIDED TO BUYER IN CONNECTION WITH PRESENTATIONS TO INVESTMENT
BANKERS AND RATING AGENCIES.
C. No Party to this Agreement shall bring any action, suit or proceeding
(whether under any federal, state or local statute or law) against any other
Party, or seek to join any other Party to any pending action, suit or proceeding
which arises out of, relates to or is connected with any matter indemnified
under this Section 14.01, except to enforce the provisions of this Section
14.01.
D. IN ACKNOWLEDGMENT OF THE EXPRESS NEGLIGENCE DOCTRINE, THE PARTIES
AGREE AND CONFIRM THAT THE INDEMNIFICATIONS SET FORTH IN SECTIONS 14.01(A) AND
14.01(B) SHALL APPLY ACCORDING TO THEIR TERMS WHETHER OR NOT THE NEGLIGENCE OF
ANY INDEMNIFIED PARTY IS ALLEGED OR PROVEN.
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14.02 Notification and Third Party Claims.
Within thirty (30) days following the determination thereof, an
Indemnified Party shall give the Indemnifying Party written notice of any matter
which an Indemnified Party has determined has given or could give rise to a
right of indemnification under this Agreement, stating the amount of the Damage,
if known, and method of computation thereof, all with reasonable particularity
and containing a reference to the provisions of this Agreement in respect of
which such right of indemnification is claimed or arises ("Claim Notice")
provided that the failure of the Indemnified Party to provide such 30-day notice
shall only relieve the Indemnifying Party of its obligation to indemnify the
Indemnified Party to the extent that the Indemnifying Party is actually
prejudiced by such failure. The obligations and liabilities of an Indemnifying
Party under this Article 14 with respect to Damages arising from claims of any
third party that are subject to the indemnification provisions of this Article
14 ("Third Party Claims") shall be governed by and contingent upon the following
additional terms and conditions:
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(a) Within fifteen (15) days of the receipt of a Claim Notice of a Third
Party Claim, the Indemnifying Party shall notify the Indemnified Party whether
the Indemnifying Party elects to defend such Third Party Claim. If the
Indemnifying Party so elects, it shall undertake the defense thereof by counsel
of its own choosing, which counsel shall be reasonably satisfactory to the
Indemnified Party; provided that if, in the Indemnified Party's and the
Indemnifying Party's reasonable judgment, a conflict of interest exists between
the Indemnified Party and the Indemnifying Party with respect to such Third
Party Claim, or if the Indemnifying Party elects not to defend such Third Party
Claim, or if the Indemnifying Party fails to notify the Indemnified Party within
the fifteen (15) day notice period that it elects to defend such Third Party
Claim, such Indemnified Party shall be entitled to select counsel of its own
choosing, in which event the Indemnifying Party shall be obligated to pay the
reasonable fees and expenses of such counsel to the extent that the Indemnifying
Party is finally determined to be obligated to indemnify the Indemnified Party
under this Agreement. The Claim Notice of the Third Party Claim by the
Indemnified Party shall contain all material information known to the
Indemnified Party with respect to the Third Party Claim and shall include copies
of materials submitted to the Indemnified Party by the relevant third party with
respect to the Third Party Claim.
(b) If the Indemnifying Party refuses or fails at any time to defend the
Indemnified Party against any Third Party Claim, the Indemnified Party shall
have the right to undertake the defense, and to compromise or settle such Third
Party Claim on behalf of and for the account and at the risk of the Indemnifying
Party to the extent that the Indemnifying Party is finally determined to be
obligated to indemnify the Indemnified Party under this Agreement with respect
to such Third Party Claim.
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(c) If the Indemnifying Party elects to undertake and diligently pursues
the defense of a Third Party Claim hereunder, the Indemnifying Party shall
control all aspects of the defense and if the Indemnifying Party acknowledges in
writing its duty to provide full indemnification to the Indemnified Party
regarding such Third Party Claim, the Indemnifying Party may enter into a
settlement of such Third Party Claim and may settle, compromise or enter into a
judgment with respect to such Third Party Claim; provided, that the Indemnifying
Party shall not enter into any such settlement, compromise or judgment without
the prior written consent of the Indemnified Party if it would result in the
imposition of any non-monetary liability or obligation on the Indemnified Party.
If the Indemnified Party undertakes the defense of a Third Party Claim hereunder
for any reason other than that provided in Section 14.02(b) hereof, it shall not
settle, compromise or enter into any judgment with respect to a Third Party
Claim for which it is seeking or shall seek indemnification hereunder without
the prior written consent of the Indemnifying Party, which shall not be
unreasonably withheld or delayed.
(d) If the Indemnifying Party elects to undertake and diligently pursues
the defense of a Third Party Claim hereunder, the Indemnified Party shall
provide the Indemnifying Party with access to all reasonably requested
witnesses, records and documents of the Indemnified Party relating to any Third
Party Claim.
(e) The Indemnified Party may participate in the defense of any Third
Party Claim at its own expense.
14.03 LIMITATION ON INDEMNIFICATION.
WITH RESPECT OF ANY CLAIM BY A PARTY FOR INDEMNITY UNDER THIS ARTICLE 14
WHICH DOES NOT INVOLVE A THIRD PARTY CLAIM, NO PARTY TO THIS AGREEMENT SHALL
SEEK, AND AN ARBITRATOR APPOINTED UNDER ARTICLE 15 MAY NOT AWARD, ANY INDIRECT,
SPECIAL, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES. NOTHING IN THIS SECTION
14.03 SHALL LIMIT IN ANY WAY A PARTY'S INDEMNIFICATION OBLIGATIONS WITH RESPECT
TO A THIRD PARTY CLAIM.
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14.04 Survival.
The indemnification obligations specified in Sections 14.01 and 14.02
shall continue and be in effect for a period of three (3) years after the date
hereof except:
(a) As to any claim of which written notice was given to the
Indemnifying Party before the end of such time period; or
(b) The obligations with respect to Sections 5.11 and 10.06
shall continue and be in effect until thirty (30) days after the expiration of
the applicable statute of limitations with respect to such Taxes; or
(c) The obligations with respect to Section 5.15 shall continue
and be in effect for a period of ten (10) years after the Effective Time; or
(d) As otherwise provided in Article 13; or
(e) The obligations with respect to Article 16 shall continue and
be in effect for a period of five (5) years after the Effective Time.
14.05 Coordination of Indemnification Rights.
(a) Except for any action seeking specific performance and/or
injunctive relief for the breach of any covenant contained in this Agreement, or
for common law fraud or deceit, the indemnification provided any Person pursuant
to this Article 14 shall be such Person's sole remedy for any breach by any
Party hereto of any representation, warranty or covenant contained in this
Agreement, or in any certificate or document (to the extent such certificates or
documents relate to matters covered by the representations, warranties or
covenants contained herein) required to be delivered in connection herewith, or
in connection with the consummation of the transactions provided for hereby.
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(b) A Claim Notice in connection with any Section of this Article 14
shall be deemed to be a Claim Notice in connection with all Sections of this
Article 14, pursuant to which the Person asserting such claim has any right to
be indemnified, defended or held harmless.
(c) Notwithstanding any provisions to the contrary contained in this
Article 14, the right of any Person to be indemnified, defended or held harmless
in connection with any claim pursuant to any Section of this Article 14 shall be
reduced to the extent that such Person is or has been indemnified, defended
and/or held harmless, pursuant to any other provisions of this Agreement or any
of the Related Agreements.
(d) In the event that an Indemnified Party has a right of recovery
against any third party with respect to any Damages in connection with which a
payment is made to such Indemnified Party by an Indemnifying Party; then
(i) such Indemnifying Party shall, to the extent of such payment, be
subrogated to all of the rights of recovery of such Indemnified Party
against such third party with respect to such Damages; and
(ii) such Indemnified Party shall execute all papers required and take all
action necessary to secure such rights, including, but not limited to, the
execution of such documents as are necessary to enable such Indemnifying
Party to bring suit to enforce such rights.
(e) The Indemnifying Party, in its sole discretion and upon notice to
the Indemnified Party, may elect to set off any amount payable to the
Indemnified Party under this Agreement by the Indemnifying Party against any
amount for which the Indemnifying Party is entitled to indemnification under
this Article 14, provided that the Indemnified Party shall be indemnified in the
manner provided in this Article 14 for any indemnifiable amount not covered by
such set off.
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(f) In the event of any conflict between this Article 14 and any
other provisions of this Agreement, this Article 14 shall prevail.
14.06 Right to Cure.
Any Party that is obligated to indemnify, defend and/or hold harmless
any Person pursuant to any provision of this Article 14 shall have the right to
cure, within a reasonable time, not to exceed thirty (30) days after receipt of
written notice, and in a manner reasonably satisfactory to such Person, any
matter giving rise to such obligation; provided, however, that any such cure
shall not relieve or reduce any such obligation to the extent that such cure is
inadequate.
ARTICLE 15
ARBITRATION
15.01 Dispute Resolution.
Any controversy or claim ("Claim"), whether based on contract, tort,
statute or other legal or equitable theory (including but not limited to any
claim of fraud, misrepresentation or fraudulent inducement or any question of
validity or effect of this Agreement including this section) arising out of or
related to this Agreement (including any amendments or extensions), or the
breach or termination thereof, shall be settled by mediation and consultations
between the Parties initiated upon the Notice of any Party. In the event of
failure of such mediation and consultations to settle such Claim in a manner
acceptable to all Parties within thirty (30) days following the Notice, then any
such Claim shall be settled by binding arbitration in accordance with this
provision and the then current CPR Institute for Dispute Resolution Rules for
Non- Administered Arbitration of Business Disputes. The arbitration shall be
governed by the United States Arbitration Act, 9 U.S.C. Sections 1-16, to the
exclusion of any provision of state law inconsistent therewith or which would
produce a different result, and judgment upon the award rendered by the
arbitrator may be entered by any court having jurisdiction.
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15.02 Place.
The arbitration shall be held in Houston, Texas.
15.03 Arbitrators.
There shall be three (3) independent and impartial arbitrators of whom
Seller appoints one (1) and Buyer appoints one (1) and the third of which shall
be appointed by the two (2) Party-appointed arbitrators in accordance with the
arbitration rules. The arbitrators shall determine the Claims of the Parties
and render a final award in accordance with the substantive law of the State of
Texas, excluding the conflicts provisions of such law. The arbitrators shall
specify the reasons for the award in writing.
15.04 Statute of Limitations.
Subject to Section 14.04, any Claim by a Party shall be time-barred if
the asserting Party commences arbitration with respect to such Claim later than
two (2) years after the cause of action accrues. All statutes of limitations
and defenses based upon passage of time applicable to any Claim of a defending
Party (including any counterclaim or setoff) shall be tolled while the
arbitration is pending.
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15.05 Discovery.
The arbitrator shall order the Parties to promptly exchange copies of
all exhibits and witness lists, and, if requested by a Party, to produce other
relevant documents, to answer up to ten (10) interrogatories (including
subparts), to respond to up to ten (10) requests for admissions (which shall be
deemed admitted if not denied) and to produce for deposition and, if requested,
at the hearing all witnesses that such Party has listed and up to four (4) other
persons within such Party's control. Any additional discovery shall only occur
by agreement of the Parties or as ordered by the arbitrator upon a finding of
good cause.
15.06 Costs.
Each Party shall bear its own costs, expenses and attorneys' fees;
provided that if court proceedings to stay litigation or compel arbitration are
necessary, the Party who unsuccessfully opposes such proceedings shall pay all
reasonable associated costs, expenses, and attorneys' fees in connection with
such court proceeding.
15.07 Breach.
The Parties recognize that irreparable injury will result from a
breach of any provision of this Agreement and that money damages will be
inadequate to fully remedy the injury. In order to prevent such irreparable
injury, the arbitrator shall have the power to grant temporary or permanent
injunctive or other equitable relief. Prior to the appointment of an
arbitrator a Party may, notwithstanding any other provision of this Agreement,
seek temporary injunctive relief from any court of competent jurisdiction;
provided, that the Party seeking such relief shall (if arbitration has not
already been commenced) simultaneously commence arbitration. Such court ordered
relief shall not continue more than ten (10) days after the appointment of the
arbitrator (or in any event for longer than sixty (60) days).
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15.08 Consent to Jurisdiction.
The Parties hereby consent to the non-exclusive jurisdiction of the
state or federal courts of Texas for the enforcement of any award rendered by
the arbitrators.
ARTICLE 16
TECHNOLOGY
16.01 Grants.
Seller shall grant and hereby does grant to Buyer for Use in the operation
of the Refinery, a non-exclusive, irrevocable (except as provided in this
Article 16) royalty-free, paid-up license or sublicense (both, as the case may
be, without a right to sublicense or transfer except as expressly provided in
this Article 16) to Intellectual Property, which exists at the Effective Time
and which is in Use in the Operations or which is needed to be Used in the
Operations. By executing this Agreement, effective as of the Effective Time,
the Buyer is assuming all relevant duties and obligations of Seller with respect
to Intellectual Property under the Technology Transfer Agreement ("TTA")
attached as Schedule 16.01, including the confidentiality obligations of Article
6 therein but excluding any liability under Section 12(c) of the TTA unless such
liability arises as a result of the action or lack of action on behalf of Buyer
other than using the Intellectual Property in a manner substantially similar to
the manner in which it was used in Seller's Operations. For avoidance of doubt,
this grant is revoked in the event that Equilon repurchases the Refinery at the
time of said repurchase.
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16.02 Exclusions.
For avoidance of doubt, in the grant provisions of Section 16.01, the
sublicense of Intellectual Property by Seller does not include any intellectual
property outside the grant of Section 2 of the TTA and the License Agreement
between Seller and Texaco Development Corporation dated August 1, 1993. The
foregoing shall not be construed to limit or modify Equilon's representation or
warranty in Section 16.06 of this Agreement.
16.03 Licensed Technology Rights.
(a) Assignable and Transferable Licensed Technology Rights.
Seller agrees to transfer, as soon as reasonably possible, Licensed Technology
Rights which, for purposes of definition under this Section, comprise agreements
which are (i) freely transferable without the permission of the licensor or
vendor, (ii) not in use by Seller or its Affiliates at the Effective Time and
(iii) not required by Seller in the future for its own benefit. These Licensed
Technology Rights are listed on Schedule 16.03(a). This transfer shall be made
by assignment or sublicense as the case may be for all Licensed Technology
Rights on Schedule 16.03(a). Any fees required to be paid for such transfer
shall be paid solely by Buyer.
(b) Non-assignable or non-transferable Licensed Technology
Rights. Buyer recognizes that the Licensed Technology Rights listed on Schedule
16.03(b) are not freely assignable without the permission of the licensor or
vendor. Seller, at the written request of Buyer, agrees to contact the licensor
or vendor and seek a permitted transfer of the Licensed Technology Rights or
obtention of a new license for Buyer. In that event, all fees and costs
necessary to transfer the Licensed Technology Rights or to acquire a new license
commensurate therewith to Buyer, shall be paid solely by Buyer. Seller shall
make a good faith attempt to maintain the status quo of such non-assignable non-
transferable Licensed Technology Rights until Buyer can secure transfer or a new
license to Buyer.
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(c) It is the intent of Buyer and Seller that all Licensed
Technology Rights used in the Operations of the Refinery are included in either
Schedule 16.03(a) or Schedule 16.03(b). However, both Buyer and Seller
recognize that because of the complexity of the instant transaction it is
possible that some Licensed Technology Rights may not have been scheduled under
either Section 16.03(a) or (b). In that event, if any Licensed Technology
Rights are not included on Schedules 16.03(a) or (b) and, if the lack of such
Licensed Technology Rights results in a Material Adverse Effect on the
operations of the Refinery, then Buyer and Seller will cooperate to attain, at
the lowest possible cost, rights for Buyer to Use the Licensed Technology
Rights. Any fees necessary to obtain such Licensed Technology Rights shall be
shared equally by Buyer and Seller.
(d) In any assignment or issuance of a sublicense to Buyer of Licensed
Technology Rights, Buyer agrees to assume and will be subject to all applicable
obligations of the assigned license or the master license necessary to enable
Buyer to Use the Licensed Technology Rights in Buyer's operation of the
Refinery.
(e) Seller may terminate any assignment or sublicense made to Buyer under
Section 16.03 if Buyer is materially in default of any of the material
obligations undertaken by Buyer in the assignment or sublicense. Seller shall
give Buyer written notice at least 30 days prior to the date of termination.
The notice shall specifically identify the obligation breached, the facts
constituting the default and state Seller's intent to terminate. If Buyer cures
such default prior to the expiration of the 30 day period, the sublicense or
assignment shall not terminate. The foregoing shall not apply to any assignment
pursuant to which Seller does not retain any future liability.
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16.04 Confidentiality.
(a) The confidentiality obligations of the Buyer with respect to
Confidential Information (which for purposes of this Article 16 shall mean any
technical proprietary, secret or confidential information relating to
Intellectual Property disclosed by Seller, directly or indirectly to Buyer)
under this Article 16 shall be as follows:
(i) Nothing in this Article 16 shall restrict in any way
the right of Seller or Seller's Affiliates to use or disclose or permit
others to use or disclose Confidential Information, which it possesses and
otherwise has a free right to use and disclose.
(ii) With respect to Confidential Information comprising
Intellectual Property, Buyer shall maintain such Confidential Information
in confidence, and shall Use it solely for the operations of the Refinery.
(iii) With respect to Licensed Technology Rights, each Party
may use and disclose Confidential Information comprising Licensed
Technology Rights but only to the extent permitted under the terms of any
agreement with the third party licensor of same, as the case may be.
(b) Except where provided otherwise with respect to Confidential
Information whose disclosure and Use in Section 16.04(a) is governed by an
agreement with a third party pertaining to Licensed Technology Rights, Buyer's
obligation of confidentiality and restricted use in Section 16.04(a) above shall
not apply to any information which Buyer can show by reasonable proof:
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(i) was available to the public prior to or becomes
available to the public subsequent to the receipt of such Confidential
Information by Buyer pursuant to this Article 16 and through no fault of
Buyer; or
(ii) was in the possession of Buyer prior to the receipt of
such Confidential Information by Buyer pursuant to this Article 16, and was
not acquired by Buyer from a third party under and existing obligation of
confidence; or
(iii) is subsequently received by Buyer from a third party
without an obligation of confidentiality; or
(iv) is independently developed by an employee or employees
of Buyer not having direct or indirect access to such Confidential
Information of another party.
For purposes of this Article 16, specific items of Confidential Information
made available to Buyer under this Article 16 shall not be deemed to fall within
any of the exceptions as set forth above merely because such items are embraced
by more general information which falls within one or more exceptions, nor shall
a combination of features be deemed to fall within such exceptions merely
because the individual features fall with such exceptions.
(c) Confidential Information, which is required to be disclosed, (i)
by any applicable law, stock exchange rules or by any applicable judgment, order
or decree of any governmental entity having jurisdiction or (ii) in connection
with the preparation of tax returns, communications with governmental
authorities with respect thereto or proceedings relating to taxes, may be
disclosed, provided that Buyer only discloses such Confidential Information to
the least extent practicable, and Buyer shall provide Seller with prompt and
reasonable notice thereof so that Seller may seek a suitable protective order or
other appropriate remedy and/or waive compliance with the provisions of this
Article 16. In the event that such protective order or other remedy is not
obtained or Seller waives compliance with the provisions of this Article 16, and
Buyer is required to disclose such Confidential Information, Buyer will furnish
only that portion of the Confidential Information which Buyer is required to
disclose and, to the extent practicable, Buyer will exercise its best efforts to
obtain reliable assurance that confidential treatment shall be accorded and such
Confidential Information so furnished.
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(d) Buyer shall have a right to disclose and Use with service
providers, consultants, independent contractors and government agencies, all
Confidential Information (unless prohibited by a Licensed Technology Right
obligation), received from Seller but only if such recipient agrees to be bound
pursuant to an obligation of confidentiality and nonuse comprising restrictions
at least as stringent as provided herein.
16.05 Term and Termination.
The grants made in Sections 16.01 and 16.03 shall not be subject to
any term unless Seller repurchases the Refinery.
16.06 Representations and Warranties.
Seller represents and warrants to Buyer as follows:
(a) Seller has the right to grant the licenses of Intellectual
Property as set forth in this Article 16;
(b) to the Knowledge of Seller, except as set forth on Schedule 5.12,
(i) there are no facts that would support a claim that Seller does not have the
right, immediately prior to the Effective Time, to Use the intellectual property
Used in Seller's Operations, which claim may result in a Material Adverse
Effect; (ii) there are no facts or claims of ownership to any Intellectual
Property having a Material Adverse Effect licensed or assigned to Buyer pursuant
to this Article 16; (iii) there are no facts that would support a claim that may
result in losses having a Material Adverse Effect, that Seller's Use of the
Intellectual Property in the Operations of the Refinery licensed pursuant to
this Article 16 has not infringed or otherwise violated any intellectual
property right of a third party; and (iv) there are no facts that would support
a claim that may result in losses having a Material Adverse Effect, that Use by
Buyer in the operations of the Refinery of the Intellectual Property licensed
pursuant to this Article 16 will infringe or otherwise violate any intellectual
property right of a third party.
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(c) Except as otherwise stated in this Article 16, ANY ORAL OR
WRITTEN REPORT, DATA OR OTHER INFORMATION PROVIDED TO BUYER HEREUNDER, WHETHER
PROVIDED UNDER LICENSE OR OTHERWISE, SHALL BE PROVIDED ON AN "AS IS" BASIS
WITHOUT ANY WARRANTIES, EXPRESS OR IMPLIED INCLUDING BUT NOT LIMITED TO THE
RESULTS OR EFFECTS OBTAINED THROUGH USE OF INFORMATION, OR THAT IT IS FIT FOR
ANY USE INTENDED OR CAN BE USED WITHOUT INFRINGING THE PATENT OR COPYRIGHT
RIGHTS OF A PERSON. Without any limitation on the preceding, ANY IMPLIED
WARRANTY OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE IS EXPRESSLY
EXCLUDED FROM THIS ARTICLE 16 WITH RESPECT TO ANY INFORMATION PROVIDED
HEREUNDER. Except as otherwise stated in this Article 16, Use in the operations
of the Refinery by Buyer of Intellectual Property or Confidential Information
disclosed hereunder by Seller to Buyer shall be solely at Buyer's own risk and
Seller shall not be liable for any damage resulting from inaccuracy,
incorrectness, unsoundness, and/or unreliability in the said Use thereof,
whether or not such liability is cause by the negligence of Seller.
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16.07 Access and Support.
(a) Buyer shall have access, during normal business hours and
,subject to conventional safety precautions, to facilities of Seller for the
purposes of the grant of license under Section 16.01 hereunder.
(b) Buyer shall be entitled to possession of Deliverables containing
Intellectual Property which are located at the Refinery without cost to Buyer.
Deliverables not located at the Refinery consisting of design manuals,
blueprints, operating manuals, engineering studies and object codes which were
developed specifically and exclusively for Use at the Refinery shall be
delivered to Buyer at Seller's expense at the written request of Buyer.
Deliverables not located at the Refinery that were not developed specifically or
exclusively for Use at the Refinery will be made available pursuant to Section
16.07(a) and provided to Buyer, at the written request of Buyer, at Buyer's
cost.
16.08 Export Control.
Buyer agrees to comply with any applicable U.S. export control laws and
regulations in regard to any information or data covered by this Article 16.
16.09 Source Codes.
Seller and Buyer recognize that source codes are not within the definition
of Deliverables in this Agreement. Notwithstanding, Seller recognizes that
Buyer may require access to source codes for the programs set out in Schedule
16.09. Buyer shall provide an escrow within ninety (90) days of the Effective
Time, to a commercial escrow site, of the source codes for the software set out
in Schedule 16.09. In the event that the Seller (i) enters into bankruptcy,
either voluntarily or involuntarily; (ii) is dissolved; or (iii) no longer
supports the specific source codes or fails to support the specific source code
or to offer to support the specific source code in each case, on reasonable
commercial terms and conditions, in regard to the above-referenced software,
then Buyer shall then be permitted access to said escrowed source codes with a
right to make derivative works thereof for Use in the operation of the Refinery.
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16.10 Transfer of Intellectual Property.
In the event that Buyer transfers or pledges to any person, ownership of
the Refinery, or any part thereof, the licenses granted herein under Section
16.01 may be extended to such transferee or lender, but only to the extent
necessary for Use of the Intellectual Property in the operation of the Refinery.
Any obligations of Buyer provided hereunder, including those accepted under the
TTA, including all confidentiality obligations of Article 6 therein, shall be
accepted by transferee or lender prior to any such grant from Buyer.
ARTICLE 17
RISK OF LOSS
The risk of damage, destruction, or other loss to or of the Assets shall
remain with Seller from and after the execution of this Agreement and until the
Effective Time, at which time Seller shall place Buyer in possession of the
Assets; and from and after the Effective Time, all risks of damage, destruction,
or other casualty loss to or of the Assets (to the extent not attributable to
any breaches of a representation, warranty, covenant or agreement of Seller
hereunder) shall be borne solely by Buyer.
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ARTICLE 18
COMMISSIONS AND FINDER'S FEES
Seller represents and warrants to Buyer, and Buyer represents and warrants
to Seller, that it has not engaged any broker, finder, or agent in connection
with the transactions contemplated hereunder and has not incurred any unpaid
liability to any broker, finder, or agent for any brokerage fees, finder's fees,
or commissions with respect to such transactions; and each agrees to indemnify
the other against any claims asserted against the other for any such fees or
commissions by any Person purporting to act or to have acted for or on behalf of
the Indemnifying Party.
ARTICLE 19
MISCELLANEOUS
19.01 Entire Agreement; Amendments.
This Agreement and the Related Agreements, including their Exhibits
and Schedules and other writings referred to herein or therein or delivered
pursuant hereto or thereto which form a part hereof, contain the entire
understanding of the Parties with respect to the subject matter hereof provided
that the Confidentiality Agreement between Seller and Guarantor dated February
17, 1999 is in effect until the Effective Time. There are no restrictions,
agreements, promises, warranties, covenants, or undertakings other than those
expressly specified herein or therein. This Agreement and the Related
Agreements supersede any and all prior agreements and understandings between the
Parties with respect to the subject matter hereof. This Agreement shall not be
amended, altered, or modified except by an instrument in writing duly executed
by the Parties.
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19.02 Invalidity.
If any provision of this Agreement is held to be illegal, invalid, or
unenforceable under any present or future laws, such provision shall be fully
severable; this Agreement shall be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part of this Agreement;
and the remaining provisions of this Agreement shall remain in full force and
effect, unaffected by the illegal, invalid or unenforceable provision or by its
severance from this Agreement. In lieu of such illegal, invalid, or
unenforceable provision, there shall be added automatically as a part of this
Agreement a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and enforceable.
19.03 Effect of Waiver or Consent.
No waiver or consent, express or implied, by any Party or of any
breach or default by any other Party in the performance by such other Party of
its obligations hereunder shall be deemed or construed to be a consent or waiver
to or of any other or subsequent breach or default in the performance by such
other Party of the same or any other obligations of such other Party hereunder.
Failure on the part of a Party to exercise its rights or to complain of any act
of the other Party or to declare the other Party 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.
19.04 Limitation on Benefits of this Agreement.
No person or entity other than the Parties (or their respective
successors or assigns as permitted hereunder) is or shall be entitled to bring
any action to enforce any provision of this Agreement against either of the
Parties, and the covenants, undertakings, and agreements specified in this
Agreement shall be solely for the benefit of, and shall be enforceable only by,
the Parties (or their respective successors and assigns as permitted hereunder).
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19.05 Notices.
All notices, demands, requests, or other communications which may be
or are required to be given, served, or sent by either Party to the other Party
pursuant to this Agreement shall be in writing and shall be:
(i) mailed by first-class, registered or certified mail, return receipt
requested, postage prepaid;
(ii) transmitted by hand or courier delivery; or
(iii) sent by telegram, facsimile, or telex, addressed in each case as
follows:
(a) If to Seller:
EQUILON ENTERPRISES LLC
1100 Louisiana, Room 2398
Houston, Texas 77002
Attention: Vice President Refining
Facsimile: (713) 277-9902
With a copy (which shall not constitute notice) to:
Equiva Services LLC
910 Louisiana, OSP 780
Houston, Texas 77002
Attention: Assistant General Counsel-Commercial
Facsimile: (713) 241-3444
(b) If to Buyer:
FRONTIER EL DORADO REFINING COMPANY
5340 S. Quebec Street
Suite 200N
Englewood, Colorado 80111
Attention: President
Facsimile: (303) 714-0163
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With a copy (which shall not constitute notice) to:
FRONTIER OIL CORPORATION
10000 Memorial Dr., Suite 600
Houston, Texas 77024
Attention: General Counsel
Facsimile: (713) 688-0616
(ii) If to Guarantor:
FRONTIER OIL CORPORATION
10000 Memorial Dr., Suite 600
Houston, Texas 77024
Attention: President
Facsimile: (713) 688-0616
With a copy (which shall not constitute notice) to:
FRONTIER OIL CORPORATION
10000 Memorial Dr., Suite 600
Houston, Texas 77024
Attention: General Counsel
Facsimile: (713) 688-0616
Each Party may designate by prior notice in writing a new address to which
any notice, demand, request, or communication may thereafter be so given,
served, or sent. Each notice, demand, request, or communication which shall be
mailed, delivered, or transmitted in the manner described above shall be deemed
sufficiently given, served, sent, and received for all purposes at such time as
it is actually delivered to the appropriate above listed or properly changed
address or at such time as delivery is refused upon actual presentation at such
address (with the return receipt, the delivery receipt, the affidavit of
messenger, or the facsimile answerback being deemed prima facie evidence of such
delivery).
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19.06 Binding Effect.
Subject to the provisions hereof restricting assignment, this
Agreement shall be binding upon and shall inure to the benefit of the Parties
hereto and their respective successors and permitted assigns.
19.07 Additional Actions and Documents.
Each of the Parties hereby agrees to take or cause to be taken such
further actions to execute, deliver and file or cause to be executed, delivered
and filed such further documents and instruments, and to use all reasonable
efforts to obtain such consents, as may be necessary or as may be reasonably
requested in order to fully effectuate the purposes, terms and conditions of
this Agreement, whether before, at or after the closing of transactions
contemplated by this Agreement, provided that neither Party shall be obligated
to make payments or incur obligations to third parties or governmental agencies
in connection therewith except to pay such Party's reasonable expenses or to pay
normal fees to governmental agencies.
19.08 Schedules.
The Schedules attached to this Agreement have been prepared to the
best of the Parties' knowledge, information and belief and shall be as complete
as possible as of the date hereof. However, each Party reserves the right to
make revisions, corrections, additions or other changes to any Schedule in a
supplement delivered to the other Party at any time prior to two days prior to
the Closing Date, provided that (i) the Party delivering any such supplement
provides prompt notice of such delivery to the other Party; and (ii) the other
Party consents to such supplement.
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19.09 Place of Transfer of Title and Possession.
Title to and possession of the Assets as of the Closing shall pass to
Buyer in the State of Kansas. Title to and possession of any Equilon Inventory
in Transit as of the Closing shall pass to Buyer at the place where it is then
situated.
19.10 Execution in Counterparts.
This Agreement may be executed simultaneously in several counterparts,
each of which shall be deemed to be an original and all of which together shall
constitute one and the same instrument.
19.11 Choice of Law.
This Agreement shall be governed by and construed in accordance with
the laws of Texas, without regard to the conflict of laws principles of Texas,
and applicable United States Federal Law.
19.12 Publicity.
At all times prior to the Effective Time, Seller and Buyer shall, and
shall use their reasonable efforts to cause their Affiliates to, cooperate in
the development and distribution of all news releases and other public
disclosures relating to the proposed transactions described in this Agreement,
and to ensure that no such releases or disclosures are made without prior notice
to, and the consent of, the other Party; provided, however, that at all times
prior to the Effective Time and after the Effective Time no news release or
other disclosure whatsoever may disclose the terms of this Agreement unless both
Parties agree to the form and content of such disclosure, each being under no
obligation to agree and having the right to withhold agreement for any reason;
provided, however, that either Party may make all disclosures which, in the
written opinion of counsel, are required under applicable Legal Requirements,
including, but not limited to, regulations of the Securities and Exchange
Commission with such Party giving the other Party as much advance notice thereof
as is feasible.
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19.13 Confidentiality.
(a) Each of Seller and Buyer (and their respective Affiliates)
acknowledges that the information and material, in whatever form, including but
not limited to this Agreement and the Related Agreements (collectively, the
Confidential Information) disclosed or made available to it by, and relating to,
the other (and its Affiliates) prior to the Effective Time is confidential.
Each of Seller and Buyer (and their respective Affiliates) further agrees that
it shall use reasonable efforts not to make disclosure of the Confidential
Information to any Person, other than its members or owners, officers,
employees, advisers and representatives to whom such disclosure is necessary or
convenient for the completion of the transactions contemplated by this
Agreement, or any of the Related Agreements, and except in an arbitration
proceeding as described in Article 15 or as may be required by a court of
competent jurisdiction. Each of Seller and Buyer (and their respective
Affiliates) shall appropriately notify each officer, employee, adviser and
representative to whom any such disclosure is made, that such disclosure is made
in confidence and shall be kept in confidence.
(b) Each of Seller and Buyer (and their respective Affiliates) agrees to
use diligent efforts in accordance with customary and reasonable commercial
practice, and at least with the same degree of skill and care that it would
manifest in protection of its own confidential information, to protect the
Confidential Information.
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(c) Each of the Parties (and their respective Affiliates) agrees to
notify the other promptly, in the event that it becomes aware of the
unauthorized possession or use of the Confidential Information (or any part
thereof) by any third Person, including any of its officers, employees, advisers
or representatives. Each of Seller and Buyer (and their respective Affiliates)
agrees to cooperate with the other in connection with the other's efforts to
terminate or prevent such unauthorized possession or use of its Confidential
Information. Each of Seller and Buyer (and their respective Affiliates) shall
pay the other's reasonable out-of-pocket expenses in so cooperating with the
payor in protecting its Confidential Information, unless the unauthorized
possession or use of the Confidential Information resulted from the willful
misconduct or gross negligence of the Party otherwise entitled to reimbursement
of its expenses.
(d) Each of Seller and Buyer (and their respective Affiliates)
acknowledges that the other will suffer injury for which the other will not have
an adequate remedy at law, in the event of a breach of the provisions of this
Section 19.13, and that the other shall be entitled to injunctive relief as is
reasonably necessary to prevent or curtail such breach, whether actual or
threatened; provided, that, in no event (including, but not limited to, a
willful breach of this Agreement by Seller or Buyer, respectively) shall Seller
or Buyer (or their respective Affiliates) be prevented from exercising all of
the rights granted to it hereunder.
(e) Notwithstanding any other provision of this Agreement, the
obligations of each of Seller and Buyer (and their respective Affiliates) to
maintain the confidentiality of the Confidential Information shall not apply to
any portion of the Confidential Information that:
(i) is or becomes generally available to the public through
no fault of Buyer or any of its representatives, including information in
the public domain;
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(ii) the Buyer receives from a source other than the Seller
without any requirement to keep such information secret;
(iii) the Buyer can prove was in its possession without any
obligation of secrecy at the time of its disclosure; or
(iv) the Buyer develops independently of and without
reference to or use of the Confidential Information.
(a) The provisions of this Section 19.13 shall remain in force
for a period of five (5) years from the Effective Time.
(b) Seller acknowledges and agrees that following the
consummation of the Closing, nothing herein shall restrict the use
by Buyer and its Affiliates of the Refinery Records, the same
becoming the property of the Buyer as a consequence of the
transactions contemplated herein. Except for the Refinery Records,
Buyer shall not use the Confidential Information for any other
purpose than the evaluation of the transactions contemplated
hereunder.
(c) In the event of any inconsistency between the provisions of
this Section 19.13 and the confidentiality provisions of any Related
Agreement the provisions of the Related Agreement shall control with
respect to any matters addressed by such Related Agreement.
(d) At the request of Seller, Buyer shall within twenty (20)
days after receiving such request return to Seller all written
Confidential Information which is not a Refinery Record, including
all photocopies of the same.
19.14 Costs and Expenses.
Except as expressly provided herein, or in any Related Agreement, each
of the parties to this Agreement and the Related Agreements, shall bear its own
expenses incurred in connection with the negotiation, preparation, execution and
Closing of this Agreement, and the Related Agreements, and the transactions
provided for hereby and thereby.
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19.15 Assignment.
Seller may upon notice to Buyer transfer or assign any of its rights
but not its obligations under this Agreement without prior consent of Buyer,
provided that, Seller may, upon notice to Buyer, assign its rights and
obligations under this Agreement to an Affiliate of Seller. Buyer may not
transfer or assign any of its rights or obligations under this Agreement without
the prior written consent of Seller. Even if consent is obtained, no Party may
make an assignment or delegation, above, unless such Party delivers to the other
Party hereto such written assumptions, affirmations and/or legal opinions as
such other Party may reasonably request to preserve their rights and remedies
hereunder. This Agreement shall inure to the benefit of and will be binding
upon the Parties hereto and their respective legal representatives, successors
and permitted assigns.
19.16 Exclusivity.
From now until the Closing or termination of this Agreement in
accordance with its terms, Seller shall not, directly or indirectly, through any
officer, director, shareholder, partner, principal, agent or representative
(including, without limitation, investment bankers, attorneys and accountants),
pursue, encourage or participate in any discussions, arrangements,
understandings or negotiations with any third party (including, without
limitation, providing information with respect to the Refinery or any of the
Assets to such person or other cooperating with such person) with respect to a
sale or transfer of all or any part of the Refinery or any of the Assets.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers or representatives of Buyer, Seller and Guarantor
as of the day and year first above written.
SELLER:
EQUILON ENTERPRISES LLC
By: /s/ J. M. Morgan
-----------------------------------
Name: James M. Morgan
Title: President and Chief Exective Officer
BUYER:
FRONTIER EL DORADO REFINING COMPANY
By: /s/ JRG
------------------------------------
Name: James R. Gibbs
Title: Vice President
GUARANTOR:
FRONTIER OIL CORPORATION
By: /s/ JRG
------------------------------------------
Name: James R. Gibbs
Title: Chairman of the Board, President and Chief
Exective Officer
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