ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (Agreement), dated as of October
23, 1998, between Questar Line 90 Company, a Utah corporation (Buyer),
and ARCO Pipe Line Company, a Delaware corporation (Seller).
WITNESSETH :
WHEREAS, Seller is in the oil pipeline business in the United
States and wishes to sell certain Assets, as hereinafter defined, to
Buyer by this Agreement; and
WHEREAS, Buyer wishes to purchase from Seller all of the assets
and properties necessary for, or material to, the operation of
Seller's Lines 90, 91 and 92 for the purchase price and upon the terms
and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants,
representations and warranties made in this Agreement, and of the
mutual benefits to be derived by such, the parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1. Definition of Certain Terms. The terms defined in this
Section 1.1, whenever used in this Agreement (including in the
Schedules and Exhibits), shall have the respective meanings indicated
below for all purposes of this Agreement. All references to a
Section, Article or Schedule are to a Section, Article or Schedule to
this Agreement, unless otherwise indicated.
Affiliate: of a Person means a Person that directly or
indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the Person.
"Control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly, of the
power to direct or cause the direction of the management policies of a
Person, whether through the ownership of voting securities, by
contract or credit arrangement, as trustee or executor, or otherwise.
Agreement: this Asset Purchase Agreement, including its
Schedules and Exhibits.
Applicable Laws: all applicable provisions in effect as of the
Closing Date, except for Environmental Laws which can be in effect at
any time, of all (i) constitutions, treaties, statutes, laws, rules,
regulations, ordinances, codes or orders of any Governmental
Authority, (ii) Governmental Approvals and (iii) orders, decisions,
injunctions, judgments, awards and decrees of or agreements with any
Governmental Authority.
Assets: as defined in Section 2.1.
Assumed Liabilities: as defined in Section 3.3.
Business Day: shall mean a day other than a Saturday, Sunday or
other day on which commercial banks in Los Angeles, California, are
authorized or required to close.
Buyer: as defined in the first paragraph of this Agreement.
Buyer Indemnitees: as defined in Section 10.1.
Closing: the closing of the transaction contemplated by this
Agreement.
Closing Date: as defined in Section 3.1.
Code: the Internal Revenue Code of 1986, as amended.
Collateral Agreements: the agreements, documents and instruments
on the Collateral Agreement Exhibit List to which Seller and Buyer are
Parties.
Consent: any consent, approval, authorization or waiver.
Contract: as identified in Section 4.11 and as set forth in
Schedule 4.11.
$ or dollars: lawful money of the United States.
Environmental Laws: All Applicable Laws relating to the
protection of the environment, without limitation, any laws relating
to (i) emissions, discharges, Releases or threatened Releases of
Hazardous Substances into the environment (including, without
limitation, air, surface water, sediment, groundwater and land) or
(ii) the presence, manufacturing, generating, refining, processing,
distribution, use, sale, treatment, recycling, receipt, storage,
disposal, transport, arranging for transportation, or handling of
Hazardous Substances. Environmental Laws shall include, without
limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA"), as amended; the Resource
Conservation and Recovery Act ("RCRA"), as amended; the Federal Water
Pollution Control Act ("FWPCA"), as amended; the Safe Drinking Water
Act ("SDWA"), as amended; the Clean Air Act ("CAA"), as amended; the
Toxic Substances Control Act ("TSCA"), as amended; the Hazardous
Materials Transportation Act ("HMTA"), as amended; the Occupational
Safety and Health Act of 1970 ("OSHA"), as amended; and all analogous
laws and regulations promulgated or issued by any state or other
governmental authority.
Environmental Liabilities: All claims, actions, causes of
action, damages, losses, liabilities, obligations, penalties, fines,
notices of violation, notices of potential liability, administrative
or judicial orders and decrees, litigation, demands, judgments,
amounts paid in settlement, suits, proceedings, costs, or expenses
(including, without limitation, attorneys' fees and costs,
accountants' fees and costs, experts' fees and costs, and consultants'
fees and costs) of any kind or nature whatsoever arising out of, or
related to, any person or entity alleging liability (including,
without limitation, liability for study, testing or investigatory
costs, cleanup costs, response costs, removal costs, remediation
costs, containment costs, restoration costs, corrective action costs,
closure costs, natural resource damages, property damages, business
losses, personal injuries, penalties or fines) based on or resulting
from (i) the presence, discharge, emission, Release or threatened
Release into the environment of Hazardous Substances existing on,
beneath, above, or emanating or migrating from, or threatening to
emanate or migrate from, the Seller's Business, the Property or the
Assets or (ii) the violation or alleged violation by Seller's
Business of any Environmental Laws, including, without limitation, all
Environmental Permits issued under or pursuant to such Environmental
Law.
Environmental Permits: Any federal, state, Native American
Nation or local permit, license, registration, consent, order,
administrative consent order, certificate, approval, bond, or other
authorization necessary for the conduct of Seller's Business as
currently conducted, or previously conducted under any Environmental
Law or regulation, or related to the Property or to the ownership,
operation and maintenance of the Assets.
ERISA: the Employee Retirement Income Security Act of 1974, as
amended.
Excluded Assets: as defined in Section 2.2.
Expected Closing Date: November 17, 1998.
Governmental Approval: any Consent of any Governmental
Authority.
Governmental Authority: any nation or government, including
Native American Nations, any state or political subdivision thereof,
any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, including,
without limitation, any government authority, agency, department,
board, council, commission or instrumentality of the United States,
any Native American Nation, any State of the United States or any
political subdivision thereof, and any tribunal or arbitrator(s) of
competent jurisdiction.
Hazardous Substances: Any substance including, without
limitation, (i) any "hazardous substances" as defined by CERCLA, as
amended, and rules and regulations promulgated thereunder; (ii) any
"hazardous waste" as defined by RCRA, as amended, and rules and
regulations promulgated thereunder; (iii) "pollutant" or "toxic
pollutant" under the FWPCA, as amended, and rules and regulations
promulgated thereunder; (iv) any "hazardous air pollutants" under the
CAA, as amended, and rules and regulations promulgated thereunder; (v)
any substance regulated by the TSCA, as amended, and rules and
regulations promulgated thereunder; (vi) any "hazardous materials"
under the HMTA, as amended, and rules and regulations promulgated
thereunder; (vii) asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum or petroleum-derived substances
or wastes, radon gas or related materials; (viii) any substances
regulated under the underground storage tank provisions of Subtitle I
of RCRA, as amended, and rules and regulations promulgated thereunder;
or (ix) any other substance, including, without limitation, toxic,
explosive, corrosive, flammable, infectious, radioactive, carcinogenic
or mutagenic substances, which is regulated by any Governmental
Authority or under any Environmental Laws.
HSR Act: the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
Indemnified Party: as defined in Section 10.4.
Indemnifying Party: as defined in Section 10.4.
Intellectual Property: the United States copyrights and trade
secrets used solely in the United States listed in Schedule 4.12
attached hereto ("U.S. Trade Secrets"), that are owned and/or used by
Seller as of the Closing Date that relate in any way, directly or
indirectly, to the Assets and were utilized by Seller as of the
Closing Date to operate, maintain and/or monitor the Assets.
Intellectual Property specifically excludes all trademarks, trade
names, or symbols of Seller, including by way of example, but not
limitation, "ARCO", "ARCO Pipe Line Company", and the ARCO "Spark"
design.
IRS: the Internal Revenue Service.
Knowledge: when used with reference to Seller means the actual
knowledge, or what knowledge a reasonable Person would have had in
performance of their ordinary duties and obligations, of any executive
officer or director of Seller or of any Person who reports directly to
any such executive officer or director of Seller.
Leases: means the real property leases and subleases as set
forth in Schedule 4.14(ii).
Lien: any mortgage, pledge, security interest, charge,
encroachment, judgment, lease, sublease, or encumbrance of any kind,
including any property interest or title of any vendor, lessor, lender
or other secured party under any conditional sale or contract or title
retention contract, that secures or is intended to secure an
obligation of any Person.
Lines 90, 91 and 92: as defined in Schedule 2.1
Losses: as defined in Sections 10.1 and 10.2.
Material Adverse Effect: any event, occurrence, fact, condition,
change or effect that is materially adverse to the business,
operations, prospects, results of operations, condition (financial or
otherwise), properties (including intangible properties), assets
(including intangible assets) or liabilities of the Assets.
Native American Nations: Native American Indian tribes that have
been granted sovereign nation status by the United States Government,
including the Navajo Nation, the Hopi Indian Tribe, the Fort Mojave
Indian Tribe and the Morongo Band of Mission Indians.
Permitted Liens: (i) liens for taxes, assessments and other
governmental charges, not yet due and payable, (ii) mechanics',
carriers', workmen, repairmen, or other like liens (inchoate or
otherwise) arising or incurred in the ordinary course of business in
respect of obligations which are not overdue, or which are being
contested by or on behalf of the Seller in good faith, (iii) rights
reserved to or vested in any Governmental Authority to control or
regulate any interest in any manner; (iv) all other Liens, contracts,
agreements, instruments, obligations, defects and irregularities that
are not such as to interfere materially with the use or operation of
the applicable Asset.
Person: any natural person, firm, Native American Nation,
partnership, association, corporation, company, trust, business trust,
Governmental Authority or other entity.
Personal Property: the personal property set forth in Schedule
4.14(iv)
Property: the Real Property, the real property Leases, the
Rights-of-Way and the Personal Property.
Purchase Price: as defined in Section 3.2.
Property Laws: as defined in Section 4.14(vii).
Real Property: all property owned in fee simple by Seller
necessary to operate the Seller's Business as set forth in Schedule
4.14(i).
Release: Any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, dumping, disposing,
leaching, transporting, seeping, dispersal or migration into the
environment (including, without limitation, air, surface water,
sediment, groundwater and land).
Remedial Action: all actions required by a supervisory
governmental agency or any commercially reasonable voluntary actions
commenced by Buyer to (i) clean up, remove, treat or in any other way
remediate any Hazardous Substances; (ii) prevent the Release or
threatened Release of Hazardous Substances so that they do not migrate
or endanger or threaten to endanger public health or welfare or the
environment; or (iii) perform studies or investigations related to any
remediation or prevention associated with Hazardous Substances.
Returns: as defined in Section 4.5.
Rights-of-Way: the rights-of-way set forth in Schedule 4.14(iii)
and such other property rights to which Seller may be legally entitled
with respect to the location of the Property and the Assets.
Seller: as defined in the first paragraph of this Agreement.
Seller Indemnitees: as defined in Section 10.2.
Seller's Business: the business conducted by Seller and its
predecessors solely with respect to the transportation of oil in Lines
90, 91 and 92 and the ownership, operation and maintenance of the
Assets.
Tax or Taxes: any federal, state, provincial, Native American
Nation, local, foreign or other income, alternative, minimum,
accumulated earnings, personal holding company, franchise, capital
stock, net worth, capital, profits, gross receipts, value added,
sales, use, goods and services, excise, customs duties, transfer,
conveyance, mortgage, registration, stamp, documentary, special
assessment, recording, premium, severance, environmental, real
property, personal property, ad valorem, intangibles, rent, occupancy,
license, occupational, employment, unemployment insurance, social
security, disability, workers' compensation, payroll, health care,
withholding, estimated or other tax, duty or other governmental charge
or assessment or deficiencies thereof (including all interest and
penalties thereon and additions thereto whether disputed or not).
Tax Return: any return, report, declaration, form, claim for
refund or information return or statement relating to Taxes, including
any schedule or attachment thereto, and including any amendment
thereof.
Technology: shall mean the information, data, software,
know-how, methods, techniques, systems and the like, listed in
Schedule 4.12, owned or controlled by Seller as of the Closing Date
that relate in any way, directly or indirectly, to the Assets and were
utilized by Seller as of the Closing Date to operate, maintain and/or
monitor the Assets.
Third-Party Obligations: shall mean any legal, contractual,
regulatory, statutory or other requirement or limit imposed on Seller
in respect of either the Technology or Intellectual Property, whenever
effective.
Third-Party Technology: shall mean the information, data,
software, know-how, methods, techniques, systems and the like, listed
in Schedule 4.12 and Intellectual Property rights relating to the same
which were licensed to Seller by a third party as of the Closing Date
and relate in any way, directly or indirectly, to the Assets and were
utilized by Seller as of the Closing Date to operate, maintain and/or
monitor the Assets.
ARTICLE 2
SALE AND PURCHASE OF THE ASSETS
2.1. Assets. Subject to and upon the terms and conditions set
forth in this Agreement, at Closing, Seller shall sell, transfer,
convey, assign and deliver to the Buyer, and Buyer shall purchase,
receive and pay for, all right, title and interest of Seller in and to
the Property, as set forth in Schedules 4.14(i), 4.14(ii), 4.14(iii)
and 4.14(iv), and Assets as set forth in Schedule 2.1 and the
associated rights of every nature, kind and description, tangible and
intangible, whether real, personal or mixed, whether accrued,
contingent or otherwise and whether now existing or hereinafter
acquired (other than the Excluded Assets as set forth in Schedule 2.2)
used or held for use exclusively in connection with the ownership,
operation and maintenance of Lines 90, 91 and 92, as the same may
exist on the Closing Date subject to changes in the ordinary course of
business (Assets).
2.2. Excluded Assets. Seller is not selling and Buyer is not
purchasing the assets listed on Schedule 2.2 (collectively, the
"Excluded Assets").
ARTICLE 3
THE CLOSING
3.1. Place and Date. The closing of the sale and purchase of the
Assets shall take place at 9:00 A.M. local time on the 17th day of
November, 1998 (the "Expected Closing Date"), at the offices of ARCO
Pipe Line Company, Long Beach, California, or such other time and
place upon which the parties may agree. The day on which the Closing
actually occurs is referred to as the "Closing Date.
3.2. Purchase Price. On the terms and subject to the conditions
set forth in this Agreement, Buyer agrees to pay or cause to be paid
at the Closing Date to Seller $38,000,000 (the "Purchase Price"), by
wire transfer in immediately available funds to the ARCO Pipe Line
Company, Account 00100285056 (ABA #113000609), at Chase Texas, Dallas
Texas.
3.3. Assumption of Liabilities. Buyer shall not assume or be
liable or obligated to pay any debts, liabilities, or obligations of
any kind related to the Assets, the Property or Seller's Business,
except the following (Assumed Liabilities):
(i) any and all liabilities, obligations and commitments
relating to the Assets that arise, accrue or are incurred after the
Closing by Buyer, except for the following category of liabilities
related to Seller's ownership of the Assets that arise, accrue or are
incurred after the Closing Date: (a) Environmental Liabilities for
periods prior to Buyer's ownership of the Assets whether arising
before or after the Closing Date, to the extent such Environmental
Liabilities are subject to Seller's indemnity under Section 10.1(vi);
(b) liabilities for Taxes relating to or arising out of the Seller's
Business or related to the Assets accruing, or with respect to any
event or time period occurring, at or prior to Closing; (c)
liabilities in respect of Seller's employees or employee plans; and
(d) intercompany accounts payable by Seller.
(ii) any and all liabilities, obligations and commitments arising
out of the agreements, Contracts and commitments set forth on Schedule
4.11.
(iii)any and all liabilities, obligations, and commitments
associated with any contract, agreement or instrument to which Seller
is a party, related to or arising out of the Real Property, Leases,
Rights-of-Way and Personal Property set forth in Schedules 4.14(i),
4.14(ii), 4.14(iii) and 4.14(iv).
Notwithstanding anything to the contrary in this Section 3.3,
Seller shall have the obligation to indemnify Buyer as provided for in
Section 10.1.
3.4. Consent of Third Parties. Notwithstanding anything to the
contrary in this Agreement, this Agreement shall not constitute an
agreement to assign or transfer any Governmental Approval, instrument,
contract, lease, permit or other agreement or arrangement or any
claim, right or benefit arising thereunder or resulting from such, if
an assignment or transfer or an attempt to make such an assignment or
transfer, without the consent of a third party, would constitute a
breach or violation of such or affect adversely the rights of Buyer or
Seller thereunder; and any transfer or assignment to Buyer by Seller
of any interest under any such instrument, contract, lease, permit or
other agreement or arrangement that requires the consent of a third
party shall be made subject to such consent or approval being
obtained. In the event any such consent or approval is not obtained
on or prior to the Closing Date, Seller and Buyer shall cooperate and
shall continue to use all reasonable efforts to obtain any such
approval or consent after the Closing Date until such time as such
consent or approval has been obtained, and Seller will cooperate with
Buyer in any lawful arrangement to provide that Buyer shall receive
the interest of Seller, as the case may be, in the benefits under any
such instrument, contract, certificate, lease or permit or other
agreement or arrangement, including performance by Seller, as the case
may be, as agent, provided that Buyer shall undertake to pay or
satisfy the corresponding liabilities for the enjoyment of such
benefit to the extent Buyer would have been responsible therefor if
such consent or approval had been obtained. Seller shall have no
obligation to pay or discharge, and shall have no obligation to
indemnify and hold Buyer harmless from and against, any and all costs
of seeking to obtain or obtaining any such Consent or Governmental
Approval whether before or after the Closing Date, except as provided
for in Article 10 Indemnification.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
4.1. Authorization. Seller has the corporate power and authority
to execute and deliver this Agreement and each of the Collateral
Agreements to which it will be a party, to perform fully its
obligations hereunder and thereunder, and to consummate the
transactions contemplated by this Agreement. The execution and
delivery by Seller of this Agreement, and the consummation of the
transactions contemplated hereby, have been, and on the Closing Date
will have been, duly authorized by all requisite corporate action of
Seller. Seller has duly executed and delivered this Agreement and on
the Closing Date will have duly executed and delivered each of the
Collateral Agreements. This Agreement is, and on the Closing Date
each of the Collateral Agreements will be, legal, valid and binding
obligations of Seller, enforceable against it in accordance with their
respective terms.
4.2. Corporate Status.
(i) Seller is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its
incorporation, with full corporate power and authority to carry on its
business and to own or lease and to operate its properties as and in
the places where such business is conducted and such properties are
owned, leased or operated.
(ii) Seller is duly qualified or licensed to do business and is
in good standing in each jurisdiction where it operates.
(iii)Seller has delivered to Buyer complete and correct copies of
its certificate of incorporation and bylaws or other organizational
documents, in each case, as amended and in effect on the date of this
Agreement. Seller is not in violation of any of the provisions of its
certificate of incorporation or bylaws or other organizational
documents.
4.3. No Conflicts, etc. Except as specified in Schedule 4.3, and
subject to the provisions of Section 3.4, (i) no Governmental Approval
is required to be obtained or made by Seller in connection with the
execution and delivery of this Agreement and the Collateral Agreements
and the consummation of the transactions contemplated by such and (ii)
the execution, delivery and performance by Seller of this Agreement
and each of the Collateral Agreements and the consummation of the
transactions contemplated in these Agreements, do not and will not
conflict with or result in a violation of or a default under (with or
without the giving of notice or the lapse of time or both) (a) any
Applicable Laws related to Seller or applicable to any of the
properties or assets of Seller (including but not limited to the
Assets), (b) the certificate of incorporation or bylaws or other
organizational documents of Seller or (c) any Contract or other
contract, agreement or other instrument to which Seller is a party or
by which Seller or any of its properties or assets, including but not
limited to the Assets, may be bound or affected.
4.4. Absence of Undisclosed Liabilities. To Seller's Knowledge,
Seller has no liabilities or obligations of any nature, whether
absolute, accrued, or contingent and whether due or to become due,
arising out of or relating to the Assets, except (i) as set forth in
Schedule 4.4, (ii) those incurred in the ordinary course of business
consistent with prior practice, or (iii) that are acquired by Buyer
pursuant to this Agreement.
4.5. Taxes.
(i) Seller has (or by the Closing will have) duly and timely
filed all Tax Returns relating to the Seller's Business with respect
to Taxes required to be filed on or before the Closing Date
("Returns"). Except for Taxes set forth on Schedule 4.5, which are
being contested in good faith and by appropriate proceedings, the
following Taxes have (or by the Closing Date will have) been duly and
timely paid or will be paid by Seller: (a) all Taxes shown to be due
on the Returns, (b) all deficiencies and assessments of Taxes of which
notice has (or by the Closing Date will have) been received by Seller
that are or may be chargeable as a lien upon the Assets and (c) all
other Taxes due and payable on or before the Closing Date for which
neither filing of Returns nor notice of deficiency or assessment is
required of which Seller is, or reasonably should be (or by the
Closing Date will be or reasonably should be) aware that are or may
become payable by Buyer or chargeable as a Lien upon the Assets. All
Taxes required to be withheld by or on behalf of Seller in connection
with amounts paid or owing to any employee, independent contractor,
creditor or other party with respect to Seller's Business or the
operation, ownership and maintenance of the Assets ("Withholding
Taxes") have been withheld, and such withheld Taxes have either been
duly and timely paid to the proper Governmental Authorities or set
aside in accounts for such purpose.
(ii) With respect to the Assets, except as set forth on Schedule
4.5, no agreement or other document extending, or having the effect of
extending, the period of assessment or collection of any Taxes, and no
power of attorney with respect to any such Taxes, has been filed with
the IRS or any other Governmental Authority.
(iii)With respect to the Assets, except as set forth on Schedule
4.5, (a) there are no Taxes asserted in writing by any Governmental
Authority to be due and (b) no issue has been raised in writing,
within the last three years, by any Governmental Authority in the
course of any audit with respect to Taxes. Except as set forth on
Schedule 4.5, no Taxes are currently under audit by any Governmental
Authority. Except as set forth on Schedule 4.5, neither the IRS nor
any other Governmental Authority is now asserting or, to Seller's
Knowledge, threatening to assert against Seller any deficiency or
claim for additional Taxes or any adjustment of Taxes that would, if
paid by Buyer, have a Material Adverse Effect on the ownership,
operation or maintenance of the Assets, and there is no reasonable
basis for any such assertion of which Seller is or reasonably should
be aware.
(iv) With respect to the Assets, except as set forth on Schedule
4.5, there is no litigation or administrative appeal pending or, to
Seller's Knowledge, threatened against or relating to Seller in
connection with Taxes.
4.6. Absence of Changes. Except as set forth in Schedule 4.6,
since January 1, 1998, Seller's Business has been conducted only in
the ordinary course consistent with prior practice and has not, on
behalf of, in connection with or relating to the Assets:
(i) suffered any Material Adverse Effect;
(ii) incurred any obligation or liability, absolute, accrued,
contingent or otherwise, whether due or to become due, except current
liabilities for trade or business obligations incurred in connection
with the purchase of goods or services in the ordinary course of
business consistent with prior practice;
(iii)mortgaged, pledged or subjected to Lien, any Property,
business or assets, tangible or intangible, held in connection with
the ownership, operation or maintenance of the Assets;
(iv) sold, transferred, leased to others or otherwise disposed of
any of the Assets, or canceled or compromised any claim, or waived or
released any right of substantial value, which, in any case or in the
aggregate, has had a Material Adverse Effect;
(v) received any notice of termination of any contract, lease or
other agreement or suffered any damage, destruction or loss with
respect to the Assets (whether or not covered by insurance) which, in
any case or in the aggregate, has had a Material Adverse Effect;
(vi) entered into any transaction, contract or commitment other
than in the ordinary course of business or paid or agreed to pay any
legal, accounting, brokerage, finder's fee, Taxes or other expenses in
connection with this Agreement or the transactions contemplated by
this Agreement; or
(vii)taken any action or omitted to take any action that would
result in the occurrence of any of the foregoing.
4.7. Litigation. Except as set forth on Schedule 4.7, there is
no action, claim, demand, suit, proceeding, arbitration, grievance,
citation, summons, subpoena, inquiry or investigation of any nature,
civil, criminal, regulatory or otherwise, in law or in equity, to
Seller's knowledge, pending or threatened against or relating to
Seller in connection with the Assets or Seller's Business or against
or relating to the transactions contemplated by this Agreement, and
Seller does not know or have reason to be aware of any basis for the
same. Except as set forth in such Schedule 4.7, no citations, fines
or penalties have been asserted against Seller with respect to
Seller's Business or the Assets since January 1, 1998, under any
Environmental Law or any foreign, federal, state, Native American
Nation or local law relating to occupational health or safety.
4.8. Compliance with Laws, Governmental Approvals and Consents.
(i) To Seller's Knowledge, except as disclosed in Schedule 4.8,
and except with respect to environmental matters as set forth in
Section 4.15, since January 1, 1998, Seller has complied in all
material respects with all Applicable Laws related to Seller's
Business and the Assets. Seller has not received any notice alleging
any violation, breach or default.
(ii) Except with respect to Property matters set forth in
Schedules 4.14(i), (ii) and (iii), and environmental matters set
forth in Schedule 4.15, Schedule 4.8 sets forth all Governmental
Approvals necessary for, or otherwise incident to, the ownership,
operation and maintenance of the Assets. Except as set forth in
Schedule 4.8, all such Governmental Approvals have been duly obtained
and are in full force and effect, and to Seller's Knowledge, Seller is
in compliance with each of such Governmental Approvals held by it with
respect to the Assets and to the Seller's Business.
(iii)Except with respect to Property matters set forth in
Schedules 4.14(i), (ii) and (iii), and environmental matters set forth
in Schedule 4.15, Schedule 4.8 sets forth all contracts with any
Governmental Authority.
(iv) To Seller's Knowledge, (a) there are no proposed laws,
rules, regulations or ordinances that would be applicable to the
ownership, operation or maintenance of the Assets and which might
adversely affect the properties, assets, liabilities, operations or
prospects of the Assets, as they may relate to the manner in which the
Assets are currently operated, before the Closing Date and (b) there
are no orders, judgments, decrees, governmental takings,
condemnations, or other proceedings that would be applicable to the
ownership, operation or maintenance of the Assets that might adversely
affect the Properties, Assets, operations or prospects of the Assets
before the Closing Date.
4.9. Operation of the Business. Except as set forth in Schedule
4.9, since September 1, 1976, (i) Seller has conducted Seller's
Business and owned, operated and maintained the Assets only through
Seller and not through any other divisions or any direct or indirect
subsidiary or Affiliate of Seller and (ii) no part of Seller's
Business has been operated by Seller through any entity other than
Seller.
4.10.Assets. Except as disclosed in Schedule 4.10 and Schedule
10.1(ix), Seller has good title to all Assets free and clear of any
and all Liens, debts, liabilities, obligations and guarantees, other
than Permitted Liens and liabilities, obligations and guarantees that
are set forth in any Governmental Approvals, instruments, contracts,
permits or other agreements or arrangements that are set forth in the
Schedules to this Agreement and that are assumed by Buyer. The Assets
are in all respects adequate for the purposes for which they are
currently used and, to Seller's Knowledge, are in reasonably good
repair and operating condition (subject to normal wear and tear) and,
to Seller's Knowledge, there are no facts or conditions affecting the
Assets that could, individually or in the aggregate, interfere in any
respect with the use, occupancy or operation of such as they are
currently used, occupied or operated. EXCEPT AS SET FORTH HEREIN:
ALL PROPERTY AND ASSETS TO BE CONVEYED HEREUNDER WILL BE CONVEYED ON
AN 'AS IS,' 'WHERE IS' AND 'WITH ALL FAULTS' BASIS AT CLOSING, AND
SELLER MAKES NO WARRANTIES, EXPRESS OR IMPLIED, CONCERNING THE UTILITY
OR OPERABILITY OF THE ASSETS FOR GASEOUS HYDROCARBON TRANSPORTATION,
OR THAT RIGHTS-OF-WAY CAN BE AMENDED OR OBTAINED TO PERMIT THE
TRANSPORTATION OF GASEOUS HYDROCARBONS.
4.11.Contracts.
(i) Schedule 4.11 contains a complete and correct list of all
agreements, contracts, commitments and other instruments and
arrangements (whether written or oral) other than those involving
Rights-of-Way, Real Property and Leases to be conveyed to Buyer at
Closing.
(ii) Seller will make available to Buyer complete and correct
copies of all written contracts, together with all amendments thereto,
and accurate descriptions of all material terms of all oral contracts,
as are set forth in Schedule 4.11, and will provide complete and
correct copies of specific contracts as Buyer may request.
(iii)To Seller's Knowledge, except as set forth in Schedule 4.11,
all contracts are in full force and effect and enforceable against
each party to each such contract set forth in Schedule 4.11, there
does not exist under any such contract any event of default or event
or condition that, after notice or lapse of time or both, would
constitute a violation, breach or event of default thereunder on the
part of Seller or any other party and except for such events or
conditions that, individually and in the aggregate, (a) have not had
or resulted in, and will not have or result in, a Material Adverse
Effect on Buyer's ownership, operation and maintenance of the Assets
and (b) have not and will not materially impair the ability of Seller
to perform its obligations under this Agreement and under the
Collateral Agreements. Except as set forth in Schedule 4.11, no
consent of any third party is required under any contract set forth in
Schedule 4.11 as a result of or in connection with, and the
enforceability of any such contract will not be affected in any manner
by, the execution, delivery and performance of this Agreement, any of
the Collateral Agreements or the consummation of the transactions
contemplated by such agreements.
(iv) Except as set forth in Schedule 4.11, Seller has no
outstanding power of attorney relating to the ownership, operation or
maintenance of the Assets.
4.12.Intellectual Property.
(i) Title. Schedule 4.12 contains a complete and correct list
of all Intellectual Property, Technology and Third-Party Technology to
be licensed by Buyer at closing.
(ii) Technology License. To the extent Seller is legally
authorized to do so without accounting to any third party, and subject
always to any and all Third Party Obligations, Seller agrees to grant
and does hereby grant to Buyer an irrevocable, paid up, transferable,
nonexclusive, limited to the United States only, license to make, have
made, use, or have used under the Technology, or otherwise employ
Technology for the benefit of Buyer, and the nonexclusive right to
grant nonexclusive sublicenses, directly or indirectly, to third
parties without accounting in any way to Seller.
(iii)Intellectual Property License. To the extent Seller is
legally authorized to do so without accounting to any third party, and
subject always to any and all Third Party Obligations, Seller agrees
to grant and does hereby grant to Buyer an irrevocable, paid up,
transferable, nonexclusive immunity from suit under the Intellectual
Property, together with the nonexclusive right to grant nonexclusive
sublicenses, directly or indirectly, to third parties without
accounting in any way to Seller.
(iv) Confidentiality. To the extent Technology or any part
thereof was protected on the Closing Date as a trade secret, each
party agrees to continue such trade secret protection in its sole
discretion without accounting to the other, each party in so doing
using the same standard of care such party normally uses to protect
its own confidential information and data of like nature. The parties
hereby agree that protection as a trade secret shall not extend to
Technology which is:
(a) as of the Closing Date, or subsequently becomes part of
the public knowledge, or
(b) after the Closing Date, received without binder of
secrecy from a third party who did not derive same from a party
hereto.
(v) Transfer of Third Party Technology. Upon the request of the
Buyer, to the extent and only to the extent Seller is legally
authorized to do so without accounting to any third party, and subject
always to any and all Third Party Obligations, Seller agrees to
transfer to Buyer the right to use Third Party Technology; provided,
however, in carrying out its obligation in this Section 4.12, Seller
agrees to use reasonable effort (other than acquisition of a new
license or payment of a fee or other value on behalf of or for the
benefit of Buyer) to obtain for Buyer the right to use Third Party
Technology.
Buyer agrees to abide by all the terms and conditions of any
third party license agreement(s), including all confidentiality
obligations therein, which relate to any rights transferred pursuant
to this Section 4.12.
(vi) Export of Technical Information. Buyer shall comply with
all governmental laws, rules and regulations in respect of the export
from the United States of any technical information or data
transferred hereunder.
(vii)Additional Warranties. Seller warrants that it has good and
sufficient rights in the Technology and Intellectual Property to make
the license grants expressly set forth herein. EXCEPT AS EXPRESSLY
SET FORTH IN THIS SECTION 4.12, SELLER DISCLAIMS AND MAKES NO OTHER
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, INCLUDING BUT NOT
LIMITED TO, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, INFRINGEMENT, ACCURACY, REPRODUCIBILITY, CORRECTNESS OF DATA
PRODUCED BY THE TECHNOLOGY OR THIRD PARTY TECHNOLOGY, COMPLETENESS, OR
THE LIKE. IN NO EVENT SHALL SELLER BE LIABLE FOR SPECIAL,
CONSEQUENTIAL OR INDIRECT DAMAGES INCLUDING BUT NOT LIMITED TO LOSS OF
PROFITS, OR RELATED EXPENSES, EVEN IF SELLER HAS BEEN NOTIFIED OF THE
PROBABILITY OF SUCH DAMAGES, ARISING OUT OF, OR IN CONNECTION WITH THE
USE, TRANSFER, ASSIGNMENT, LICENSE, RELIANCE OR OTHER EXPLOITATION OF
THE TECHNOLOGY, THIRD PARTY TECHNOLOGY, OR INTELLECTUAL PROPERTY.
Seller makes no representation or warranty and undertakes no
obligation to Buyer or its successors or assigns (i) to obtain or
maintain Technology, Intellectual Property or Third Party Technology
or (ii) police the use by third parties of Technology, or Intellectual
Property or any parts thereof, all of which functions Seller hereby
reserves in their entirety to Seller's sole discretion, cost and
risks. Buyer agrees that Seller, at its sole discretion, may
terminate or fail to renew third party agreements which relate in any
way, directly or indirectly, to Third Party Technology.
Nothing in this Agreement shall be construed as granting to Buyer
any rights or licenses under any patents, patent applications,
copyrights, trade secrets, or other intellectual property rights
except as expressly provided for herein.
4.13 Trademarks. In order to provide for a reasonable transition
period, Buyer may for a period of nine months after the Closing Date
use the "ARCO" and "ARCO Pipe Line Company" trademark, and trade name
and the ARCO "Spark" symbol in order to complete the removal of such
trademark, trade name and symbol from all of the Assets including but
not limited to pipeline signs and markers. Buyer shall not adopt any
name, mark or symbol that would be confusingly similar to such
trademark, trade name or symbol.
4.14.Property.
(i) Real Property. Schedule 4.14(i) contains a complete and
correct list of all Real Property to be conveyed to Buyer at Closing.
Except as set forth in Schedule 4.14(i), Seller has, or on the Closing
Date will have, good, valid and marketable title to, or the right to
use, the Real Property indicated on Schedule 4.14(i), free and clear
of all Liens except for (a) Permitted Liens, (b) easements,
encumbrances and reservations and restrictions of record, or those not
arising pursuant to an instrument of record, but that would be
disclosed by an accurate survey and (c) liabilities and obligations
that are assumed by Buyer as Assumed Liabilities. There are no
outstanding options or rights of first refusal to purchase any Real
Property.
(ii) Leases. Schedule 4.14(ii) contains a complete and correct
list of all Leases to be assigned to Buyer at Closing. Seller has
delivered to Buyer correct and complete copies of the Leases. Each
Lease is legal, valid, binding, enforceable, and in full force and
effect. To Seller's Knowledge, neither Seller nor any other party is
in default, violation or breach in any respect under any Lease, and no
event has occurred and is continuing that constitutes or, with notice
or the passage of time or both, would constitute a default, violation
or breach in any respect under any Lease. Each Lease grants the
tenant under the Lease the right to use and occupy the demised
premises. Except as set forth in Schedule 4.14(ii), Seller has good
and valid title to the leasehold estate under each Lease free and
clear of all Liens except for (a) Permitted Liens and (b) liabilities
and obligations that are assumed by Buyer as Assumed Liabilities.
Seller enjoys peaceful and undisturbed possession under its respective
Leases.
(iii)Rights-of-Way. Schedule 4.14(iii) contains a complete and
correct list of all rights-of-way to be assigned to Buyer at Closing.
Buyer has, or by the Closing Date will have, reviewed the books and
records pertaining to Seller's right, title and interest to the
easements, rights-of-way, permits, licenses and other grants granted
by such instruments (Rights-of-Way). Seller makes no representation
or warranty with respect to Seller's right, title and interest in and
to the Rights-of-Way, granted by such instruments other than to
represent and warrant that, except as set forth in Schedule 4.14(iii)
and Schedule 10.1(ix), Seller has, or on the Closing Date will have
the right to use the Rights-of-Way indicated on Schedule 4.14(iii),
free and clear of all Liens except for (a) Permitted Liens and (b)
liabilities and obligations that are assumed by Buyer as Assumed
Liabilities. There are no outstanding options or rights of first
refusal to purchase any Rights-of-Way. To Seller's Knowledge, except
as set forth in Schedule 4.14(iii) and Schedule 10.1(ix), Seller has
substantially continuous Rights-of-Way for the pipeline assets,
however Seller does not represent or warrant that it has a continuous
right-of-way therefor. Seller specifically warrants and agrees to
defend title, except as set forth in Schedule 4.14(iii) and Schedule
10.1 (ix), (x) to the Rights-of-Way against lawful claims of all
Persons claiming by, through or under Seller, and further, (y) agrees
to defend title to Rights-of-Way against lawful claims of all Persons
claiming against Seller or Buyer which such claims relate to the
Seller's ownership, operation and maintenance of the Assets after
September 1, 1976.
(iv) Personal Property. Schedule 4.14(iv) contains a true and
correct list of the Personal Property to be conveyed to Buyer at the
Closing Date. Such Personal Property is free and clear of all Liens,
of any nature whatsoever, except for (a) Permitted Liens and (b)
liabilities and obligations that are assumed by Buyer as Assumed
Liabilities.
(v) No Proceedings. To Seller's Knowledge, except as set forth
in Schedule 4.7, (a) there are no eminent domain or other similar
proceedings pending or threatened affecting any portion of the
Property, and (b) there is no writ, injunction, decree, order or
judgment outstanding, nor any action, claim, suit or proceeding,
pending or threatened, relating to the ownership, lease, use,
occupancy or operation by any Person of any Property.
(vi) Current Use. To Seller's Knowledge, except as set forth in
Schedule 4.7, (a) the use and operation of the Property in the conduct
of Seller's Business does not violate in any material respect any
instrument of record or agreement affecting the Property, and (b) no
damage or destruction has occurred with respect to any of the Property
that would, individually or in the aggregate, have a Material Adverse
Effect on Buyer's ownership, operation or maintenance of the Assets.
(vii)Compliance with Property Laws. To Seller's Knowledge,
except as set forth in Schedule 4.7, Schedule 4.14(iii) and Schedule
10.1(ix), and except with respect to environmental matters as set
forth in Section 4.15, the Property is in full compliance with all
applicable building, zoning, subdivision and other land use and
similar Applicable Laws affecting the Property (collectively, the
"Property Laws"), and Seller has not received any notice of violation
or claimed violation of any Property Law. To Seller's Knowledge,
except as set in Schedule 4.14(iii) and Schedule 10.1(ix), no current
use by Seller of the Property is dependent on a nonconforming use or
other Governmental Approval, the absence of which would materially
limit the use of such properties or Assets necessary for the conduct
of, or otherwise material to, the ownership, operation or maintenance
of the Assets as currently utilized by Seller.
4.15 Environmental Matters.
(i) Permits. All Environmental Permits currently in use are
identified in Schedule 4.15, and, to Seller's Knowledge, Seller
currently holds, and at all times has held, all such Environmental
Permits necessary for Seller's Business, the Property and for the
ownership, operation and maintenance of the Assets and all such
Environmental Permits, subject to the provisions of Section 3.4 and
except as provided in Schedule 4.15, shall be validly transferred to
Buyer on the Closing Date, to the extent such Environmental Permits
legally may be transferred. Seller has not been notified by any
relevant Governmental Authority that any Environmental Permit will be
modified, suspended, canceled or revoked, or cannot be renewed in the
ordinary course of business.
(ii) No Material Violations. To Seller's Knowledge, Seller has
complied in all material respects, and is in compliance in all
material respects, with all Environmental Permits and all applicable
Environmental Laws pertaining to Seller's Business, the Property and
the Assets. No Person has made an allegation that has not been
completely resolved regarding any violation by Seller of any
Environmental Permits or any applicable Environmental Law relating to
the conduct of Seller's Business, the Property, or the ownership,
operation or maintenance of the Assets, except as set forth in
Schedule 4.15.
(iii)No Environmental Liabilities. Except as set forth in
Schedule 4.15, to Seller's Knowledge, Seller has not used, generated,
treated, stored, disposed of or otherwise handled, nor to its
Knowledge has any of its lessees, sublessees, contractors or other
third parties used, generated, treated, stored, disposed of or
otherwise handled, Hazardous Substances in any manner that has caused
or contributed to the Release or threatened Release of any Hazardous
Substances, on the Property, the Assets, or other properties or
assets owned, leased or used by Seller in connection with, or
necessary for the conduct of, or otherwise material to Seller's
Business, the Property or the ownership, operation, and maintenance of
the Assets.
(iv) No Underground Storage Tanks. Except as set forth in
Schedule 4.15, to Seller's Knowledge, no underground storage tank or
sump for Hazardous Substances is currently located on, and there have
been no Releases of Hazardous Substances from any underground tank or
sump or piping related to any such underground tank or sump, on or
beneath the Property, the Assets, or other properties or assets owned,
leased or used by Seller in connection with, or necessary for the
conduct of, or otherwise material to Seller's Business, the Property
or the ownership, operation, and maintenance of the Assets.
(v) No Notice of Claims. Except as set forth in Schedule 4.15:
(a), Seller is not a party to any environmental claims, and (b) Seller
has not received any written notification nor has Knowledge of
alleged, actual or potential responsibility for, or any inquiry or
investigation regarding any Release or threatened Release of any
Hazardous Substances existing or arising beneath, above, emanating or
migrating, or threatening to emanate or migrate, from the Property,
the Assets, or other properties or assets owned, leased or used by
Seller in connection with or otherwise material to Seller's Business,
the Property or the ownership, operation, or the maintenance of the
Assets.
(vi) Other. Except as set forth in Schedule 4.15:
(a) With respect to the Property and Assets, Seller is not
subject to any outstanding order, judgment, injunction, decree or writ
from, or contractual or other obligation to or with, any Governmental
Authority or other Person in respect of which Buyer may be required to
incur any Environmental Liabilities arising from the Release or
threatened Release of a Hazardous Substance.
(b) To Seller's Knowledge, none of the Assets or Property
is, and neither Seller nor any of its Affiliates have transported or
arranged for transportation (directly or indirectly) of any Hazardous
Substances relating to Seller's Business, the Property or the Assets
to any location that is listed or proposed for listing, under CERCLA,
or on any similar list issued by any Governmental Authority, or the
subject of governmental enforcement actions or investigations.
(c) No work, repair, construction or capital expenditure is
required or planned in respect of the Property or the Assets pursuant
to or to comply with any Environmental Law, nor has Seller received
any notice of any such requirement.
(d) Seller has no Knowledge of any pending or contemplated
property damage, bodily injury, toxic tort, wrongful death or business
interference claims against Seller arising from its Release or
threatened Release of Hazardous Substances, relating to Seller's
Business, the Property or to the ownership, operation or maintenance
of the Assets.
(vii)Full Disclosure. To Seller's Knowledge, for the time period
beginning June 30, 1983, Seller has made available to Buyer all
information, including, without limitation, all studies, analyses and
test results, in the possession, custody or control of Seller relating
to the matters set forth in this Section 4.15, including without
limitation, (a) the Release or threatened Release of Hazardous
Substances on, under or about the Property or the Assets, and (b)
Hazardous Substances used, generated, treated, stored, disposed of,
released or otherwise handled by Seller or any other Person (including
any of Seller's lessees, sublessees, contractors or other similar
third-parties) on Seller's Business, the Property, the Assets, or
otherwise in connection with the use or operation of the properties or
assets used in or held for use in connection with the Seller's
Business, the Property or the ownership, operation or maintenance of
the Assets.
4.16.Employee and Employer Plans. None of the Assets are subject
to any liability, judgment, order, obligation, Lien or encumbrance in
connection with employee matters, labor matters, labor agreements, or
employee plans, as defined in Section 3(3) of ERISA, or any other
related matters. No employees of Seller are being transferred to
Buyer as part of the transactions contemplated by this Agreement and
the Collateral Agreements.
4.17.Brokers, Finders, etc. All negotiations relating to this
Agreement, the Collateral Agreements, and the transactions
contemplated thereby, have been carried on without the participation
of any Person acting on behalf of Seller in such manner as to give
rise to any valid claim against Buyer for any brokerage or finder's
commission, fee or similar compensation, or for any bonus payable to
any officer, director, employee, agent or sales representative of or
consultant to Seller upon consummation of the transactions
contemplated by this Agreement or the Collateral Agreements.
4.18.Disclosure. No representation or warranty by Seller
contained in this Agreement nor any statement or certificate furnished
or to be furnished by or on behalf of Seller to Buyer or its
representatives in connection with the transactions contemplated by
this Agreement and the Collateral Agreements, contains or will contain
any untrue statement of a material fact, or omits or will omit to
state any material fact required to make such statements not
misleading.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
5.1. Corporate Status; Authorization. Buyer is a corporation
duly organized, validly existing and in good standing, under the laws
of the State of Utah with full corporate power and authority to
execute and deliver this Agreement and the Collateral Agreements, to
perform its obligations thereunder and to consummate the transactions
contemplated thereby. The execution and delivery by Buyer of this
Agreement, and the consummation of the transactions contemplated
hereby, have been, and on the Closing Date the execution and delivery
will have been, duly authorized by all requisite corporate action of
Buyer. This Agreement is, and on the Closing Date each of the
Collateral Agreements will be, valid and legally binding obligations
of the Buyer, enforceable against Buyer in accordance with their
respective terms.
5.2. No Conflicts, etc. The execution, delivery and performance
by Buyer of this Agreement and each of the Collateral Agreements and
the consummation of the transactions contemplated thereby, do not and
will not conflict with or result in a violation of or under (with or
without the giving of notice or the lapse of time, or both) (i) the
certificate of incorporation or bylaws or other organizational
documents of Buyer, (ii) any Applicable Laws related to Buyer or any
of its properties or assets or (iii) any contract, agreement or other
instrument applicable to Buyer or any of its properties or assets,
except, in the case of clause (iii), for violations and defaults that,
individually and in the aggregate, have not and will not materially
impair the ability of Buyer to perform its obligations under this
Agreement or under any of the Collateral Agreements. Except as
specified in Schedule 5.2, no Governmental Approval or other Consent
is required to be obtained or made by Buyer in connection with the
execution and delivery of this Agreement or the Collateral Agreements
or the consummation of the transactions contemplated thereby.
5.3. Litigation. There is no action, claim, suit or proceeding
pending, or to Buyer's Knowledge threatened, by or against or
affecting Buyer in connection with or relating to the transactions
contemplated by this Agreement or of any action taken or to be taken
in connection herewith or the consummation of the transactions
contemplated hereby.
5.4. Brokers, Finders, etc. All negotiations relating to this
Agreement the Collateral Agreements, and the transactions contemplated
thereby have been carried on without the participation of any Person
acting on behalf of Buyer in such manner as to give rise to any valid
claim against Seller for any brokerage or finder's commissions, fee or
similar compensation, or for any bonus payable to any officer,
director, employee, agent or sales representative of or consultant to
Buyer upon consummation of the transaction contemplated by this
Agreement or the Collateral Agreements.
5.5. Investigation of Environmental Condition. Buyer
acknowledges that: (i) prior to the Closing Date it has had access to,
and an opportunity to inspect, the Assets; (ii) Seller has represented
to Buyer that it believes it has provided Buyer with all material
documents related to environmental issues related to the Assets; and
(iii) Buyer has been permitted to retain consultants to come upon the
Property and to review the Assets for the purposes of making various
environmental assessments. Notwithstanding any of the foregoing,
Buyer is relying on Seller's indemnity in Section 10.1(vi) related to
Environmental Liabilities for indemnification for matters associated
with Seller's Business and for the time period that Seller's Business
owned, operated and maintained the Assets and the Property.
ARTICLE 6
COVENANTS OF SELLER
Seller covenants to Buyer as follows:
6.1. Conduct of Business. From the date of this Agreement to the
Closing Date, except as provided in Schedule 6.1 or as expressly
permitted or required by this Agreement or as otherwise consented to
by Buyer in writing, Seller will use its best efforts to preserve the
Assets and to do no act to impair the Assets and will:
(i) carry on Seller's Business in, and only in, the
ordinary course, in substantially the same manner as heretofore
conducted, and use all reasonable efforts to maintain the Assets in
good operating condition and repair;
(ii) pay accounts payable and other obligations of the
Seller's Business when they become due and payable in the ordinary
course of business consistent with prior practice;
(iii)perform in all material respects all of its obligations
under all contracts and other agreements and instruments, including
renewing such material agreements relating to the Property or related
to the ownership, operation and maintenance of the Assets; and will
comply in all material respects with all Applicable Laws related to
the ownership, operation and maintenance of the Assets, the Property
and in operating Seller's Business;
(iv) not enter into or assume any material agreement,
contract or instrument relating to Seller's Business or relating to
the ownership, operation or maintenance of the Assets, or enter into
or permit any material amendment, supplement, waiver or other
modification in respect thereof;
(v) not take any action or omit to take any action, which
action or omission would result in a breach of any of the
representations and warranties set forth in Article 4;
(vi) as it relates to the ownership, operation and
maintenance of the Assets not (a) enter into or terminate any lease of
real estate, (b) create any subsidiary or (c) create any Liens other
than Permitted Liens;
(vii)not make any sale, assignment, transfer or other
conveyance or otherwise dispose of any of the Assets without replacing
them;
(viii)notify Buyer, and provide Buyer an opportunity to
comment, before filing motions, orders, briefs, settlement agreements
or other papers in any proceeding before any Governmental Authority or
any arbitrator (a) with respect to pending proceedings where positions
advanced are substantially inconsistent with previous positions or (b)
that would have the possibility of a Material Adverse Effect on the
business, financial condition or results of the ownership, operation
or maintenance of the Assets;
(ix) not incur any obligation or liability, absolute,
accrued, contingent or otherwise, with respect to the Assets, except
liabilities for taxes and current liabilities for trade or business
obligations incurred in connection with the purchase of goods or
services in the ordinary course of business consistent with prior
practice, none of which liabilities, in any case could have a Material
Adverse Effect on the ownership, operation and maintenance of the
Assets;
(x) as it relates to the Assets not institute, settle or
agree to settle any litigation action or proceeding before any court
or governmental body, other than in the ordinary course of business.
6.2. No Solicitation. Until December 31, 1998, neither Seller
nor any Person acting on its behalf, shall (i) solicit or encourage
any inquiries or proposals for, or enter into any discussions with
respect to, the acquisition of the Assets or (ii) furnish or cause to
be furnished any non-public information concerning the ownership,
operation and maintenance of the Assets to any Person (other than
Buyer and its agents and representatives), other than in the ordinary
course of business or pursuant to Applicable Laws. Seller shall not
sell, transfer or otherwise dispose of, grant any option or proxy to
any Person with respect to, create any Lien upon, or transfer any
interest in, any Asset, other than in the ordinary course of business
and consistent with this Agreement.
6.3. Access and Information.
(i) So long as this Agreement remains in effect, Seller will
give Buyer, the Buyer's prospective lenders and investors, if any, and
their respective accountants, counsel, consultants, employees and
agents, full access during normal business hours to, and furnish them
with all documents, records, work papers and information with respect
to, the properties, assets, books, contracts, commitments, reports and
records relating to the ownership, operation and maintenance of the
Assets, as Buyer shall from time to time reasonably request. In
addition, Seller will permit Buyer, the Buyer's prospective lenders
and investors, if any, and their respective accountants, counsel,
consultants, employees and agents, reasonable access to such personnel
of Seller during normal business hours as may be necessary or useful
to Buyer in its review of the Assets and the above-mentioned
documents, records and information. Seller will keep Buyer generally
informed as to the affairs of the ownership, operation and maintenance
of the Assets.
(ii) Seller will retain all books and records relating to the
ownership, operation and maintenance of the Assets in accordance with
Seller's record retention policies as presently in effect. During the
seven-year period beginning on the Closing Date, Seller shall not
dispose of or permit the disposal of any such books and records not
required to be retained under such policies without first giving 60
days' prior written notice to Buyer offering to surrender the same to
Buyer at Buyer's expense.
6.4. Public Announcements. Except as required by Applicable
Laws, or stock exchange requirements, Seller shall not make any public
announcement with respect to this Agreement or the transactions
contemplated hereby without the prior consent of Buyer.
6.5. Further Actions.
(i) Seller agrees to use all reasonable good faith efforts to
take all actions and to do all things necessary, proper or advisable,
to consummate the transactions contemplated by this Agreement and the
Collateral Agreements by the Expected Closing Date.
(ii) Seller will, as promptly as practicable, file or supply, or
cause to be filed or supplied, all applications, notifications and
information required to be filed or supplied by Seller pursuant to
Applicable Laws in connection with this Agreement and the Collateral
Agreements, including but not limited to, filings pursuant to the HSR
Act.
(iii)Seller will cooperate with Buyer in obtaining all Consents
(including, without limitation, all Governmental Approvals and any
Consents required under any Contract) necessary to be obtained in
order to consummate the sale and transfer of the Assets pursuant to
this Agreement and the consummation of the other transactions
contemplated thereby.
(iv) Seller will cooperate with Buyer in exchanging such
information and supplying such assistance as may be reasonably
requested by Buyer in connection with the filings and other actions
contemplated by this Agreement.
(v) Seller will assist Buyer in negotiations with all Native
American Nations on various issues including, but not limited to,
rights-of-way issues, prior to the Closing Date and will assist Buyer
to come to a resolution with Native American Nations on issues related
to the pipeline.
(vi) Seller will cooperate with Buyer with respect to regulatory
filings with Governmental Authorities related to the Closing of the
transaction.
6.6. Further Assurances. Following the Closing, Seller shall,
from time to time, execute and deliver such additional instruments,
documents, conveyances or assurances and take such other actions as
shall be necessary, or otherwise reasonably requested by the Buyer, to
confirm and assure the rights and obligations provided for in this
Agreement, and in the Collateral Agreements and render effective the
consummation of the transactions contemplated thereby.
6.7. Taxes. Except for sales taxes and transfer, conveyance,
recording and other similar taxes and fees related to this
transaction, for all periods up to the Closing Date Seller shall be
responsible for the timely payment of, and shall indemnify and hold
Buyer harmless against, all Taxes that Seller is legally obligated to
pay related to the transaction contemplated by this Agreement and by
the Collateral Agreements. Seller shall prepare and timely file all
tax returns required in respect to Taxes referred to in this Section
6.7, provided that Buyer shall be permitted to prepare any such Tax
Returns that are the primary responsibility of Buyer under the
Applicable Laws. The Buyer's preparation of any such Tax Returns
shall be subject to Seller approval, which approval shall not be
withheld unreasonably.
6.8. Purging of Pipeline Assets. Prior to Closing, Seller will
remove, to the extent practicable, crude oil from the pipeline portion
of the Assets and all other appurtenant facilities. After the
pipeline portions of the assets are purged of crude oil the pipeline
will be filled with nitrogen at a minimum pressure of 45 psi (crude
oil residue will remain in the pipeline). Buyer acknowledges that it
has been provided with a copy of the detailed purge plan prior to the
beginning of such process. Buyer will be permitted to have a
designated representative onsite during the purge operations.
6.9. Access Agreements. Seller shall execute with Buyer before
the Closing Date a License for Property Access Agreement to provide
Buyer with access to facilities and properties owned by Seller for
Buyer's access prior to the Closing of this transaction. Exhibit A is
the License for Property Access Agreement for such access. Seller
agrees to provide Buyer with a right-of-way on Seller owned or
controlled property, in Long Beach, California, as provided in the
Pipeline Easement Agreement attached as Exhibit B to this Agreement.
6.10.Payments Due Native American Nations. Seller shall be
responsible for all amounts due and payable to Native American
Nations, whether made on an annual, quarterly, monthly or some other
basis, up to the Closing Date. Buyer shall be responsible for all
payments due Native American Nations after the Closing Date. Payments
made by Seller for periods after the Closing Date will be refunded to
Seller by Buyer for periods after the Closing Date. Payments made by
Buyer for periods prior to the Closing Date will be refunded to Buyer
by Seller for periods prior to the Closing Date.
6.11.Removal of PCB-Laden Transformers. Seller shall be
responsible for the removal of all transformers containing PCBs
(polychlorinated biphenyls), in excess of 49 parts per million,
included in the Assets, whether owned by Seller or a third-party at a
time agreed to between Buyer and Seller. The activities to be
undertaken prior to the Closing Date are set forth in Schedule 6.11.
Seller has no obligation to replace transformers that have been
removed pursuant to this Section. Buyer acknowledges that the removal
of such transformers will cause cathodic protection to cease on the
Assets.
6.12.Cooperation on Reports. After the Closing Date, Seller
agrees to assist Buyer and to cooperate in making any reports to any
Governmental Authorities and to pay fees related to those reports
incident to the ownership, operation and maintenance of the Assets, to
the Property or to Seller's Business, for periods prior to the
Closing, and will cooperate in filing any reports that must be made on
a pro rata basis for any time period in which the Buyer and Seller
have reporting obligations.
6.13.Morongo Tribal Lands. Seller agrees that if Buyer does not
utilize the right of way and pipeline that crosses the Morongo Band of
Mission Indians (Morongo) tribal lands, Seller will pay for 50% of the
removal costs of any Assets that the Morongo require Buyer to remove
from tribal lands.
ARTICLE 7
COVENANTS OF BUYER
Buyer covenants to Seller as follows:
7.1. Public Announcements. Prior to the Closing, except as
required by Applicable Laws, or stock exchange requirements, Buyer
shall not make any public announcement with respect to this Agreement
or the transactions contemplated hereby without the prior consent of
Seller.
7.2. Taxes. For all periods after the Closing Date, Buyer shall
be responsible for the timely payment of, and shall indemnify and hold
Seller harmless against, all Taxes Buyer is legally obligated to pay
related to the transaction contemplated by this Agreement. Buyer
shall prepare and timely file all Tax Returns required in respect to
Taxes referred to in this Section 7.2, provided that Seller shall be
permitted to prepare any such Tax Returns that are the primary
responsibility of Seller under the Applicable Laws. Seller's
preparation of any such Tax Returns shall be subject to Buyer's
approval, which approval shall not be withheld unreasonably. Buyer
shall be responsible for the payment of all sales taxes, and transfer,
conveyance, recording and other similar taxes and fees related to this
transaction.
7.3. Further Actions.
(i) Buyer agrees to use all reasonable good faith efforts to
take all actions and to do all things necessary, proper or advisable
to consummate the transactions contemplated by this Agreement and the
Collateral Agreements by the Expected Closing Date.
(ii) Buyer will, as promptly as practicable, file or supply, or
cause to be filed or supplied, all applications, notifications and
information required to be filed or supplied by Buyer pursuant to
Applicable Laws in connection with this Agreement, and the Collateral
Agreements, including but not limited to filings pursuant to the HSR
Act.
(iii)Buyer will coordinate and cooperate with Seller in
exchanging such information and supplying such reasonable assistance
as may be reasonably requested by Seller in connection with the
filings and other actions contemplated by this Agreement.
(iv) After the Closing Date, Buyer shall inform Seller of any
proposed Remedial Action and shall cooperate with Seller in any
Remedial Action required, which cooperation includes, without
limitation, (a) providing reasonable access, upon reasonable notice,
to the Property and Assets to Seller and Seller's contractors and
agents, pursuant to the License for Property Access Agreement attached
as Exhibit C, and (b) cooperation in obtaining approval from any
governmental agency with jurisdiction for any Remedial Action plan
proposed by Seller, it being agreed that Seller may pursue the most
cost effective Remedial Action, so long as it uses reasonable efforts
to obtain any necessary Governmental Approval for such plan, including
without limitation risk based corrective action and natural
attenuation where applicable. However, nothing in this Section 7.3
will prevent Buyer from pursuing its indemnification from Seller set
forth in Section 10.1(vi) if Buyer is subjected to any Environmental
Liabilities.
7.4. Further Assurances. Following the Closing, Buyer shall,
from time to time, execute and deliver such additional instruments,
documents, conveyances or assurances and take such other actions as
shall be necessary, or otherwise reasonably requested by Seller, to
confirm and assure the rights and obligations provided for in this
Agreement and in the Collateral Agreements and render effective the
consummation of the transactions contemplated thereby.
7.5. Cooperation on Reports. After the Closing Date, Buyer
agrees to assist Seller and to cooperate in making any reports to any
Governmental Authorities and to pay fees related to those reports
incident to the ownership, operation and maintenance of the Assets or
to the Property, for periods after the Closing and will cooperate in
filing any reports that must be made on a pro-rata basis for any time
period in which the Buyer and Seller have reporting obligations.
ARTICLE 8
CONDITIONS PRECEDENT
8.1. Conditions to Obligations of Each Party. The obligations of
the parties to consummate the transactions contemplated hereby shall
be subject to the fulfillment on or prior to the Closing Date of the
following conditions:
(i) HSR Act Notification. In respect of the notifications of
Buyer and Seller pursuant to the HSR Act, the applicable waiting
period and any extensions of such shall have expired or been
terminated.
(ii) No Injunction, etc. Consummation of the transactions
contemplated hereby shall not have been restrained, enjoined or
otherwise prohibited by any Applicable Laws, including any order,
injunction, decree or judgment of any court or other Governmental
Authority. No court or other Governmental Authority shall have
determined any Applicable Laws to make illegal the consummation of the
transactions contemplated in this Agreement or by the Collateral
Agreements, and no proceeding with respect to the application of any
such Applicable Laws to such effect shall be pending or threatened.
(iii)Schedules and Collateral Agreements. Seller and Buyer shall
have approved any amendments to the Collateral Agreements, Schedules
and other closing documents referred to in this Agreement.
8.2. Conditions to Obligations of Buyer. The obligations of
Buyer to consummate the transactions contemplated hereby shall be
subject to the fulfillment (or waiver by the Buyer), on or prior to
the Closing Date, of the following additional conditions, which Seller
agrees to use reasonable good faith efforts to cause to be fulfilled:
(i) Representations, Performance. The representations and
warranties of Seller contained in this Agreement and in the Collateral
Agreements shall be true and correct in all material respects at and
as of the date hereof and shall be repeated and restated and shall be
true and correct in all material respects on and as of the Closing
Date with the same effect as though made on and as of the Closing
Date. Seller shall have duly performed and complied in all material
respects with all agreements, covenants and conditions required by
this Agreement and each of the Collateral Agreements to be performed
or complied with by it prior to or on the Closing Date. Seller shall
have delivered to Buyer a certificate, dated on the Closing Date and
signed by its duly authorized officers, to the foregoing effect.
(ii) Governmental Approvals. Buyer shall have obtained
permission to receive assignments of rights-of-way as set forth in
Schedule 8.2(ii).
(iii)No Material Adverse Effect. Except as set forth in Schedule
8.2(iii), no event, occurrence, fact, condition, change, development
or effect shall have occurred, exist or come to exist since January 1,
1998, that, individually or in the aggregate, has constituted or
resulted in, or could reasonably be expected to constitute or result
in, a Material Adverse Effect.
(iv) Collateral Agreements. Seller shall have entered into each
of the following agreements with the Buyer:
(a) a Pipeline Easement Agreement, in a form attached
hereto as Exhibit B, pursuant to which Seller will provide to Buyer
access to facilities and properties owned by Seller that are not
conveyed to Buyer as part of this transaction, which are necessary for
the ownership, operation and maintenance of the Assets;.
(b) a Transitional Services Agreement to be attached as
Exhibit D, pursuant to which Seller will provide to Buyer, for a
period of up to twelve months following the Closing Date, those rights
and services specified therein. Such Transitional Services Agreement
shall be approved by both parties five days prior to Closing.
(v) Opinion of Counsel. Buyer shall have received an opinion,
addressed to it and dated the Closing Date, from counsel to Seller,
Herbert A. Birenbaum, in substance and form reasonably satisfactory to
Buyer.
(vi) Corporate Proceedings. All corporate and other proceedings
of Seller in connection with this Agreement and the Collateral
Agreements and the transactions contemplated thereby, and all
documents and instruments incident thereto, shall be reasonably
satisfactory in substance and form to Buyer and its counsel, and Buyer
and its counsel shall have received all such documents and
instruments, or copies thereof, certified if requested, as may be
reasonably requested.
(vii)Transfer Documents. Seller shall have delivered to Buyer at
the Closing all documents, certificates and agreements, except for
Consents and Governmental Approvals, necessary to transfer to Buyer
good and marketable title to the Assets, free and clear of any and all
Liens thereon, other than Permitted Liens and subject to any
liabilities and obligations accepted by Buyer as Assumed Liabilities,
and subject to liabilities, obligations and guarantees that are set
forth in any Governmental Approval, instrument, Contract, Lease,
permit or other agreement or arrangement that are set forth in the
Schedules to this Agreement and are assumed by Buyer, including
without limitation:
(a) a bill of sale, assignment and general conveyance, in
form and substance reasonably satisfactory to the Buyer, dated the
Closing Date, with respect to the Assets, (other than any Asset to be
transferred pursuant to any of the instruments referred to in any
other clause of this Section 8.2(vii));
(b) assignments of all Contracts, and Rights-of-Way, dated
the Closing Date, assigning to Buyer all of Seller's right, title and
interest therein and thereto;
(c) Grant deeds, dated as of the Closing Date, with respect
to each parcel of Real Property transferable by deed in the form
attached as Exhibit E, together with any necessary transfer
declarations or other filings;
(d) an Assignment of Lease, dated as of the Closing Date,
with respect to each Lease in the form attached as Exhibit F, together
with any necessary transfer declarations or other filings.
(viii)Consents. Buyer shall have received Consents from the
lessor of each material Lease listed on Schedule 4.14(ii) to the
assignment of such Lease to Buyer and from all Persons from whom a
Consent is required to transfer all Real Property to Seller as listed
in Schedule 4.14(i).
(ix) FIRPTA Certificate. Buyer shall have received a certificate
of Seller, dated the Closing Date and sworn to under penalty of
perjury, setting forth the name, address and federal tax
identification number of Seller and stating that Seller is not a
"foreign person" within the meaning of Section 1445 of the Code, such
certificate to be in the form set forth in the Treasury Regulations
thereunder.
(x) Purge Operation. Seller shall have completed, to the
reasonable satisfaction of Buyer, the purging of the pipeline portion
of the Assets and other facilities as referenced in Section 6.8
pursuant to the July 28, 1998, purge plan.
8.3. Conditions to Obligations of Seller. The obligation of
Seller to consummate the transactions contemplated hereby shall be
subject to the fulfillment (or waiver by Seller), on or prior to the
Closing Date, of the following additional conditions, which Buyer
agrees to use reasonable good faith efforts to cause to be fulfilled.
(i) Representations, Performance, etc. The representations and
warranties of Buyer contained in this Agreement and the Collateral
Agreements shall be true and correct in all material respects at and
as of the date hereof and shall be repeated and shall be true and
correct in all material respects as of the Closing Date with the same
effect as though made at and as of such time. Buyer shall have duly
performed and complied in all material respects with all agreements,
covenants and conditions required by this Agreement and the Collateral
Agreements to be performed or complied with by it prior to or on the
Closing Date. Buyer shall have delivered to Seller a certificate,
dated the Closing Date and signed by its duly authorized officer, to
the foregoing effect.
(ii) Opinion of Counsel. Seller shall have received an opinion,
addressed to it and dated the Closing Date, of Charles E. Greenhawt,
counsel to Buyer, in form and substance reasonably satisfactory to
Seller.
(iii)Corporate Proceedings. All corporate proceedings of Buyer
in connection with this Agreement and the Collateral Agreements and
the transactions contemplated thereby, and all documents and
instruments incident thereto, shall be reasonably satisfactory in
substance and form to Seller and its counsel, and Seller and its
counsel shall have received all such documents and instruments, or
copies thereof, certified if requested, as may be reasonably
requested.
(iv) Governmental Approvals. Buyer shall have obtained all
Governmental Approvals necessary to consummate the transactions
contemplated hereby.
(v) Collateral Agreements. Buyer shall have entered into each
of the Collateral Agreements including a License for Property Access
Agreement, in the form attached hereto as Exhibit C pursuant to which
Buyer shall provide access to the Property to Seller after the Closing
Date, a Lease of a portion of the Farmington office in a form
attached hereto as Exhibit G pursuant to which Buyer shall lease to
Seller a portion of such office after Closing Date and the Guarantee
referenced in Section 11.13 of this Agreement.
ARTICLE 9
TERMINATION
9.1. Termination. This Agreement may be terminated at any time
prior to the Closing Date:
(i) by the written agreement of both Buyer and Seller;
(ii) by either Seller or Buyer by written notice to the other
party if the transactions contemplated hereby shall not have been
consummated pursuant hereto by 5:00 p.m. Long Beach, California time
on December 31, 1998, unless such date shall be extended by the mutual
written consent of Seller and Buyer;
(iii)by Buyer by written notice to Seller if (a) the
representations and warranties of Seller shall not have been true and
correct in all respects (in the case of any representation or warranty
containing any materiality qualification) or in all material respects
(in the case of any representation or warranty without any materiality
qualification) as of the date when made and as restated upon the
Closing Date or (b) if any of the conditions set forth in Sections 8.1
or 8.2 shall not have been, or if it becomes apparent that any of such
conditions will not be, fulfilled by 5:00 p.m. Long Beach, California
time on December 31, 1998, unless such failure shall be due to the
failure of Buyer to perform or comply with any of the covenants,
agreements or conditions hereof to be performed or complied with by it
prior to the Closing; or
(iv) by Seller by written notice to Buyer if (a) the
representations and warranties of Buyer shall not have been true and
correct in all respects (in the case of any representation or warranty
containing any materiality qualification) or in all material respects
(in the case of any representation or warranty without any materiality
qualification) as of the date when made and as restated upon the
Closing Date or (b) if any of the conditions set forth in Sections 8.1
or 8.3 shall not have been, or if it becomes apparent that any of such
conditions will not be, fulfilled by 5:00 p.m. Long Beach, California
time on December 31, 1998, unless such failure shall be due to the
failure of Seller to perform or comply with any of the covenants,
agreements or conditions hereof to be performed or complied with by it
prior to the Closing.
9.2. Effect of Termination. In the event of the termination of
this Agreement pursuant to the provisions of Section 9.1, this
Agreement shall become void and have no effect, without any liability
to any Person in respect hereof or of the transactions contemplated
hereby on the part of any party hereto, or any of its directors,
officers, employees, agents, consultants, representatives, advisers,
stockholders or Affiliates, except for any liability resulting from
any such party's breach of this Agreement.
ARTICLE 10
INDEMNIFICATION
10.1.By Seller. Seller covenants and agrees to defend, indemnify
and hold harmless Buyer, its officers, directors, employees, agents,
advisers, representatives, any wholly-owned subsidiary and any
Affiliate of Buyer to which the Assets are ultimately conveyed
(collectively, the "Buyer Indemnitees") from and against, and pay or
reimburse Buyer Indemnitees for, any and all claims, liabilities,
debts, obligations, judgments, losses, fines, costs, royalties,
proceedings, deficiencies or damages (whether absolute, accrued,
consequential, conditional or otherwise and whether or not resulting
from third party claims), including out-of-pocket expenses and
reasonable attorneys' and accountants' fees incurred in the
investigation or defense of any of the same or in asserting any of
their respective rights hereunder (collectively, "Losses"), resulting
from or arising out of:
(i) any inaccuracy of any representation or warranty made by
Seller herein or in the Collateral Agreements or in connection
herewith or therewith;
(ii) any failure of Seller to perform any covenant or agreement
hereunder or under any Collateral Agreement or fulfill any other
obligation in respect hereof or of any Collateral Agreement;
(iii) any Excluded Assets;
(iv) any and all Taxes of Seller, which Seller was legally
obligated to pay, relating to or arising out of the ownership,
operation and maintenance of the Assets, the Property or for
ownership of Seller's Business for periods prior to the Closing Date
on a pro-rata basis based on the time Buyer and Seller each actually
owned the Assets;
(v) any and all Losses in respect of Seller's employees,
related to Seller's employee benefit plans as defined in ERISA or
related to Seller's labor agreements;
(vi) all Environmental Liabilities (excluding (1) the presence
of crude oil within the pipeline portion of the Assets and the
associated piping and equipment in the pump stations and the removal
or release of crude oil from the pipeline portion of the Assets and
the associated piping and equipment in the pump stations, after the
Closing Date, and (2) asbestos that is part of the pipeline coating
except for that portion of the pipeline Assets on Morongo tribal
lands, which remediation is provided for in Section 6.13) relating to
the operation of Seller's Business prior to the Closing Date, the
Property or to the ownership, operation and maintenance of the Assets,
whether claims for such Environmental Liabilities arise prior to or
after the Closing Date. This indemnity operates as follows: (a) if
the Buyer, or any subsidiary or Affiliate of Buyer or any entity in
which Buyer retains an ownership interest, converts the Assets to the
transportation of liquid hydrocarbons this indemnity is no longer in
force and effect, but such indemnity does not terminate as to the
portion of the Assets that are continued to be used for the
transportation of gaseous hydrocarbons; (b) if Buyer elects to sell
all or any portion of the Assets to another Person to be used to
transport liquid hydrocarbons and Seller elects not to exercise its
right of first refusal set forth in Section 11.12 of this Agreement,
then Buyer continues to be indemnified under this provision without
any time limitation; (c) if Seller exercises its right of first
refusal to purchase the Assets pursuant to Section 11.12 of this
Agreement, this indemnification survives without any time limitation;
and (d) if Buyer operates this line for purposes of gaseous
hydrocarbon transportation, this indemnity survives without any time
limitation;
(vii) any failure of Seller to comply with applicable bulk sales
laws (in consideration of which indemnification obligation Buyer
hereby waives compliance by Seller with any applicable bulk sales
laws);
(viii) for Losses related solely to the following:
(a) for all mechanics, carriers, workmen, repairmen, or other
like liens (inchoate or otherwise); liabilities; obligations; charges;
encumbrances; contracts, agreements, or instruments, other than the
contracts, agreements and instruments, and liabilities, obligations,
charges and encumbrances related thereto, in Schedules 4.11, 4.14(i),
4.14(ii) and 4.14(iii); defects and irregularities in title;
mortgages; pledges; security interests; judgments; leases or
subleases; for or related to the ownership, operation or maintenance
of the Assets, the Property and for Seller's Business from September
1, 1976, to the Closing Date, whether a claim is made before or after
the Closing Date, when such Losses exceed, $10,000 individually and
$250,000 in the aggregate, but in no event for any individual claims
less than $10,000.
(b) for all mechanics, carriers, workmen, repairmen, or other
like liens (inchoate or otherwise); liabilities; obligations; charges;
encumbrances; contracts, agreements or instruments, other than the
contracts, agreements and instruments, and liabilities, obligations,
charges and encumbrances related thereto, in Schedules 4.11, 4.14(i),
4.14(ii) and 4.14(iii); defects and irregularities in title;
mortgages; pledges; security interests; judgments; leases or
subleases, for or related to the ownership, operation or maintenance
of the Assets, the Property and for Seller's Business prior to
September 1, 1976, whether a claim is made before or after the Closing
Date, when such Losses exceed $100,000 individually and $500,000 in
the aggregate, but in no event for any individual claims less than
$100,000.
(c) for all encroachments, gaps in Rights-of-Way, title defects
and irregularities in title, but excluding items listed as
miscellaneous issues, set forth in Schedule 10.1(ix), Seller shall
reimburse Buyer for the first $1,000,000 incurred by Buyer for Losses,
or for rerouting of the Assets related to such items. Such
application for reimbursement shall be made by using the same
mechanism provided for indemnification as set forth in this Article
10. Notwithstanding anything to the contrary in this Agreement,
indemnification for all items pursuant to this Section 10.1 (ix),
excluding items listed as miscellaneous issues, shall be limited to
$1,000,000.
Except for inaccuracies in the representations and warranties
contained in Sections 4.1, 4.2, 4.5 and 4.15, Seller shall not be
required to indemnify Buyer Indemnitees until the aggregate amount of
all claims against Seller exceeds $250,000, except as provided for in
Section 10.1(vi) for Environmental Liabilities, Section 10.1(viii) and
Section 10.1(ix).
10.2.By Buyer. Buyer covenants and agrees to defend, indemnify
and hold harmless Seller, its officers, directors, employees, agents,
advisers, representatives and Affiliates (collectively, the "Seller
Indemnitees") from and against, and pay or reimburse Seller
Indemnitees for, any and all claims, liabilities, debts, obligations,
judgments, losses, fines, costs, royalties, proceedings, deficiencies
or damages (whether absolute, accrued, consequential, conditional or
otherwise and whether or not resulting from third party claims),
including out-of-pocket expenses and reasonable attorneys' and
accountants' fees incurred in the investigation or defense of any of
the same or in asserting any of their respective rights hereunder
(collectively, "Losses"), resulting from or arising out of:
(i) any inaccuracy in any representation or warranty by
Buyer made or contained in this Agreement or any Collateral Agreement
or in connection therewith;
(ii) any failure of Buyer to perform any covenant or
agreement made or contained in this Agreement or any Collateral
Agreement or fulfill any other obligation in respect thereof;
(iii)the Assumed Liabilities;
(iv) the use by Buyer of Seller's trade names or trademarks
after the Closing Date, except as permitted by this Agreement;
(v) the ownership, operation or maintenance of the Assets
by Buyer after the Closing Date, except, to the extent of such Losses
for which Seller is required to indemnify Buyer Indemnitees under this
Agreement or are not Assumed Liabilities in Section 3.3; and
(vi) any and all Taxes of Buyer, which Buyer was legally
obligated to pay, relating to or arising out of the ownership,
operation and maintenance of the Assets by Buyer for periods after the
Closing Date on a pro-rata basis based on the time Seller and Buyer
each actually owned the Assets.
10.3.Adjustments to Indemnification Payments. Any payment made
by Seller to Buyer Indemnitees, on the one hand, or by Buyer to
Seller, on the other hand, pursuant to this Article 10 in respect of
any claim (i) shall be net of any insurance proceeds realized by and
paid to the Indemnified Party in respect of such claim, (ii) shall be
reduced by an amount equal to any Tax benefits attributable to such
claim and (iii) shall be increased by an amount equal to any Taxes
attributable to the receipt of such payment, but only to the extent
that such Tax benefits are actually realized, or such Taxes are
actually paid, as the case may be, by Seller or by Buyer or by any
consolidated, combined or unitary group of which Buyer or Seller is a
member. However, any taxes paid, as an adjustment pursuant to this
Article 10 shall not be deemed a payment for purposes of this Section
10.3. The Indemnified Party shall use its reasonable efforts to make
insurance claims relating to any claim for which it is seeking
indemnification pursuant to Section 10.3 provided that the Indemnified Party
shall not be obligated to make such an insurance claim if the Indemnified
Party in its reasonable judgment believes that the cost of pursuing such an
insurance claim together with any corresponding increase in insurance
premiums or other charge backs to the Indemnified Party, as the case
may be, would exceed the value of the claim for which the Indemnified
Party is seeking indemnification.
10.4.Indemnification Procedures. In the case of any claim
asserted by a third-party against a party entitled to indemnification
under this Agreement (the "Indemnified Party"), notice shall be given
by the Indemnified Party to the party required to provide
indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought, and the Indemnified Party shall permit the
Indemnifying Party (at the expense of such Indemnifying Party) to
assume the defense of any claim or any litigation resulting therefrom,
provided that (i) the counsel for the Indemnifying Party who shall
conduct the defense of such claim or litigation shall be reasonably
satisfactory to the Indemnified Party, (ii) the Indemnified Party may
participate in such defense at such Indemnified Party's expense and
(iii) the omission by any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its indemnification
obligation under this Agreement except to the extent that such
omission results in a failure of actual notice to the Indemnifying
Party and such Indemnifying Party is prejudiced as a result of such
failure to give notice. Except with the prior written consent of the
Indemnified Party, no Indemnifying Party, in the defense of any such
claim or litigation, shall consent to entry of any judgment or enter
into any settlement that provides for injunctive or other nonmonetary
relief affecting the Indemnified Party or that does not include as an
unconditional term thereof the giving by each claimant or plaintiff to
such Indemnified Party of a release from all liability with respect to
such claim or litigation. In the event that the Indemnifying Party
does not accept the defense of any matter as above provided, the
Indemnified Party shall have the full right to defend against any such
claim or demand and shall be entitled to settle or agree to pay in
full such claim or demand. In any event, the Indemnifying Party and
the Indemnified Party shall cooperate in the defense of any claim or
litigation subject to Section 10.4 and the records of each shall be
available to the other with respect to such defense.
10.5.Time Limitation. All claims for indemnification under
Sections 10.1 and 10.2 must be asserted no later than 30 days after
the termination of the respective survival periods set forth in
Section 10.6.
10.6.Survival of Representations, and Warranties, etc. The
representations, warranties, covenants and agreements contained in
this Agreement and the Collateral Agreements shall survive the
execution and delivery of this Agreement as follows:
(i) except as set forth in clauses (ii), (iii) and (iv)
below, the representations and warranties contained in Articles 4 and
5 and all covenants and agreements in this Agreement shall survive for
a period of three years following the Closing Date;
(ii) the representations and warranties contained in
Sections 4.1 and 4.2 shall survive without limitation;
(iii)the representations and warranties contained in Section
4.15 shall survive for a period of 10 years following the Closing
Date or at such time as the Assets or any portion thereof are used for
the transportation of any liquid (except water) including but not by
way of limitation, oil, petroleum, crude oil, or other non-gaseous
hydrocarbon substances, whichever shall first occur. The
indemnifications, covenants and agreements for Environmental
Liabilities shall survive for the periods set forth in Section
10.1(vi);
(iv) the representations and warranties of Seller contained
in Section 4.5 shall survive as to any Tax covered by such
representations and warranties for so long as any statute of
limitations for such Tax remains open, in whole or in part, including
without limitation by reason of waiver of such statute of limitations.
ARTICLE 11
MISCELLANEOUS PROVISIONS
11.1.Expenses. Seller, on the one hand, and Buyer, on the other
hand, shall bear their respective expenses, costs and fees (including
attorneys', auditors' and financing commitment fees) in connection
with the transactions contemplated hereby, including the preparation,
execution and delivery of this Agreement and compliance herewith (the
"Transaction Expenses"), and for all expenses, costs and fees for
obligations specifically agreed to be performed by either Seller or
Buyer pursuant to this Agreement whether or not the transactions
contemplated hereby shall be consummated.
11.2.Severability. If any provision of this Agreement, including
any phrase, sentence, clause, Article, Section or subsection is
inoperative or unenforceable for any reason, such circumstances shall
not have the effect of rendering the provision in question inoperative
or unenforceable in any other case or circumstance, or of rendering
any other provision or provisions herein contained invalid,
inoperative, or unenforceable to any extent whatsoever.
11.3.Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (i)
delivered personally, (ii) mailed by first-class, registered or
certified mail, return receipt requested, postage prepaid, (iii) sent
by next-day or overnight mail or delivery or (iv) sent by facsimile
(a) if to Buyer to,
Questar Line 90 Company with a copy to: Questar Line 90 Company
180 East 100 South 180 East 100 South
P.O. Box 45360 P.O. Box 45360
Salt Lake City, Utah 84145-0360 Salt Lake City, Utah 84145-0360
Attention: President Attention: Division Counsel
(b) if to Seller:
ARCO Pipe Line Company with a copy to: ARCO Pipe Line Company
15600 JFK Blvd., Suite 300 15600 JFK Blvd., Suite 300
Houston, Texas 77032 Houston, Texas 77032
Attention: President Attention: Legal Department
or, in each case, at such other address as may be specified in writing
to the other parties hereto.
All such notices, requests, demands, waivers and other
communications shall be deemed to have been received (i) if by
personal delivery on the day after such delivery, (ii) if by certified
or registered mail, on the seventh business day after the mailing
thereof, (iii) if by next-day or overnight mail or delivery, on the
day delivered or (iv) if by facsimile shall be effective upon actual
receipt if received and confirmed by return transmission, provided
that a copy is also sent by certified or registered mail.
11.4.Headings. The headings contained in this Agreement are for
purposes of convenience only and shall not affect the meaning or
interpretation of this Agreement.
11.5.Entire Agreement. This Agreement (including the Schedules
and Exhibits hereto) and the Collateral Agreements (when executed and
delivered) constitute the entire agreement and supersede all prior
agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof.
11.6.Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of
which shall together constitute one and the same instrument.
11.7.Governing Law, etc. This Agreement shall be governed in all
respects, including as to validity, interpretation and effect, by the
internal laws of the State of California without giving effect to its
conflict of laws rules. Buyer and Seller hereby irrevocably submit to
the jurisdiction of the courts of the State of California and the
Federal courts of the United States of America located in California
solely in respect of the interpretation and enforcement of the
provisions of this Agreement and of the documents referred to in this
Agreement, and hereby waive, and agree not to assert, as a defense in
any action, suit or proceeding for the interpretation or enforcement
hereof or of any such document, that it is not subject thereto or that
such action, suit or proceeding may not be brought or is not
maintainable in said courts or that the venue thereof may not be
appropriate or that this Agreement or any of such document may not be
enforced in or by said courts, and the parties hereto irrevocably
agree that all claims with respect to such action or proceeding shall
be heard and determined in such California State or Federal court.
Buyer and Seller hereby consent to and grant any such court
jurisdiction over the Person of such parties and over the subject
matter of any such dispute and agree that mailing of process or other
papers in connection with any such action or proceeding in the manner
provided in Section 11.3, or in such other manner as may be permitted
by law, shall be valid and sufficient service thereof.
11.8.Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
successors and permitted assigns.
11.9.Assignment. This Agreement shall not be assignable or
otherwise transferable by any party hereto without the prior written
consent of the other party hereto, provided that Buyer may assign this
Agreement to any Subsidiary or Affiliate of the Buyer.
11.10. No Third Party Beneficiaries. Except as provided in
Article 10 with respect to indemnification of Indemnified Parties
hereunder, nothing in this Agreement shall confer any rights upon any
Person or entity other than the parties hereto and their respective
heirs, successors and permitted assigns.
11.11. Amendment, Waivers, etc. No amendment, modification or
discharge of this Agreement, and no waiver hereunder, shall be valid
or binding unless set forth in writing and duly executed by the party
against whom enforcement of the amendment, modification, discharge or
waiver is sought. Any such waiver shall constitute a waiver only with
respect to the specific matter described in such writing and shall in
no way impair the rights of the party granting such waiver in any
other respect or at any other time. Neither the waiver by any of the
parties hereto of a breach of or a default under any of the provisions
of this Agreement, nor the failure by any of the parties, on one or
more occasions, to enforce any of the provisions of this Agreement or
to exercise any right or privilege hereunder, shall be construed as a
waiver of any other breach or default of a similar nature, or as a
waiver of any of such provisions, rights or privileges hereunder. The
rights and remedies herein provided are cumulative and are not
exclusive of any rights or remedies that any party may otherwise have
at law or in equity. The rights and remedies of any party based upon,
arising out of or otherwise in respect of any inaccuracy or breach of
any representation, warranty, covenant or agreement or failure to
fulfill any condition shall in no way be limited by the fact that the
act, omission, occurrence or other state of facts upon which any claim
of any such inaccuracy or breach is based may also be the subject
matter of any other representation, warranty, covenant, or agreement
as to which there is no inaccuracy or breach. The representations and
warranties of Seller shall not be affected or deemed waived by reason
of any investigation made by or on behalf of Buyer (including but not
limited to by any of its advisors, consultants or representatives) or
by reason of the fact that Buyer or any of such advisors, consultants
or representatives knew or should have known that any such
representation or warranty is or might be inaccurate. Provided,
however, Buyer shall inform Seller if it knows of or believes any
representation or warranty of Seller is inaccurate.
11.12. Seller's Right of First Refusal. If Buyer desires to
sell, lease or otherwise dispose of the Property or Assets to any
Person for purposes involving the transportation of primarily liquid
hydrocarbons, whether in whole or in part, Buyer shall give notice to
Seller and shall provide the proposed purchase price, the material
terms and conditions of sale, the name and address of the proposed
purchaser and shall certify that the purchase is in good faith and at
arm's length. Seller shall thereupon have the irrevocable right and
option to purchase the Property and Assets at the purchase price set
forth in such notice. Notice by Seller to Buyer of Seller's election
to exercise its option shall be provided to Buyer within 30 days of
Seller's receipt of the notice of sale from Buyer.
11.13. Parental Guarantee of Questar Pipeline Company. An
Affiliate of Buyer, Questar Pipeline Company, shall execute at closing
a guarantee substantially in form to that set forth in Exhibit H.
11.14. Parental Guarantee of Atlantic Richfield Company. An
Affiliate of Seller, Atlantic Richfield Company, shall execute at
closing a guarantee substantially in form to that set forth in Exhibit
I.
11.15. Title Policies. Buyer shall have the right to obtain at
its sole cost and expense from a nationally recognized title insurance
company (the "Title Company") satisfactory to Buyer (a) a fee owner's
title insurance policy issued to Buyer, with respect to Real Property
and (b) a leasehold title insurance policy issued to Buyer, with
respect to each Lease, in each case in form and substance satisfactory
to Buyer, together with endorsements reasonably requested by Buyer,
including, without limitation, access, zoning, full survey,
comprehensive, non-imputation and contiguity endorsements, in an
amount determined by Buyer, insuring Buyer and issued as of the
Closing Date by the Title Company, showing Buyer to have a fee simple
title to each parcel of Real Property held in fee simple, and a valid
leasehold estate in each Lease. Seller will use reasonable efforts
both pre-Closing and post-Closing to resolve any curable defects in
Title appearing of record, and Buyer shall cooperate in such efforts.
11.16. Surveys. Buyer shall have the right to obtain at its
sole cost and expense a survey of each parcel of Real Property held by
Seller in fee simple, dated within 30 days prior to the Closing Date,
prepared by a certified or registered surveyor reasonably acceptable
to Buyer and the Title Company and certified to the Buyer, the Title
Company and the Buyer's lenders, in form and substance satisfactory to
the Buyer, the Title Company and the Buyer's lenders, if any,
complying with the current Minimum Standard Detail Requirements for
ALTA/ACSM Land Title Surveys and (a) setting forth an accurate
description of each parcel of Real Property, (b) locating all
improvements, Liens (setting forth the recording information of any
recorded instruments), setback lines, alleys, streets and roads, (c)
showing any encroachments upon or by any improvements on the
Designated Property and (d) showing all dedicated public streets
providing access to the Real Property and the municipal address of any
improvements located on the Real Property.
11.17. Access to Records. After the Closing Date, Buyer shall
make available to Seller all books and records that were in existence
as of and on the Closing Date involving the Property and Assets, and
which were delivered to Buyer, upon reasonable request of Seller for a
period of 20 years (or such longer period as may be required by
applicable laws or governmental regulation) or until such time as
Seller's indemnity obligation terminates, whichever shall first occur.
For a period of 20 years after the Closing Date (or such longer
period as may be required by applicable laws or governmental
regulation) or until such time as Seller's indemnity obligation
terminates, whichever shall first occur, Buyer shall not destroy or
give up possession of any original or final copy of any of the books
and records that were in existence as of and on the Closing Date
involving the Property and Assets and which were delivered to Buyer,
without first offering the Seller the opportunity, at Seller's expense
(without any payment to Buyer), to obtain such original or copy
thereof. After the conclusion of such 20 year period or until such
time as Seller's indemnity obligation terminates, whichever shall
first occur, Buyer shall offer or deliver to Seller at Seller's
expense (without any payment to Buyer) all such books and records
prior to destroying same.
IN WITNESS WHEREOF, the parties have duly executed this Agreement
as of the date first above written.
QUESTAR LINE 90 COMPANY
By:___________________________________________
D. N. Rose
President & CEO
ARCO PIPE LINE COMPANY
By:___________________________________________
Larry E. Shakley
President