EXHIBIT 10.3
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (the "Agreement"), is entered into
effective the 21st day of June, 2005, by and between Texas-New Mexico
Pipe Line Company, a Delaware corporation ("Seller"), and Giant Pipeline
Company, a New Mexico corporation ("Buyer"). Seller and Buyer are
hereinafter sometimes referred to individually as a "Party" or
collectively as the "Parties". Other definitions used in this Agreement
are found in Annex A attached hereto and made a part hereof.
For and in consideration of the mutual covenants, obligations and
benefits made and contained herein, the Parties agree as follows:
Article 1
Purchase and Sale
A. Included Assets. Subject to the terms and conditions set forth
below, Seller agrees to sell and Buyer agrees to purchase all of Seller's
right, title and interest in and to the following real and personal
property interests, other than the Excluded Assets (the "Property"):
(1) the idle crude oil pipeline (the "Pipeline"), as shown on
Exhibits "A" - Map and "A-1" - System Description, attached hereto
and made a part hereof;
(2) all fee interests in real property described and shown on
Exhibit "B" attached hereto and made a part hereof ("Real Property");
(3) rights-of-way and permits appurtenant to or associated
with the Pipeline, as further described on Exhibit "C", attached
hereto and made a part hereof ("Rights-of-Way and Permits");
(4) the assigned contracts as further described on Exhibit
"D" attached hereto and made a part hereof ("Assigned Contracts");
(5) any and all pipe, pumps, motors, valves, fittings,
miscellaneous equipment and facilities, and buildings associated
with the Pipeline as further described on Exhibit "E" attached
hereto and made a part hereof ("Equipment"); and
(6) the Books and Records.
B. Signage. Buyer acknowledges that it shall have no rights with
respect to the use of the names "Texas-New Mexico Pipe Line Company",
"Shell Pipeline Company LP", or any and all variations and derivatives
thereof, all trademarks, service marks and logos associated therewith,
nor any "Goodwill" associated with any of the foregoing. Within sixty
(60) days after the Effective Time, Buyer shall remove or cause to be
removed, all such names, marks or logos from wherever they may appear on
the Property, including the removal of all Texas New Mexico Pipeline
Company line markers. Should Buyer fail to have such line markers removed
within sixty (60) days of the Effective Time, then Buyer shall pay to
Seller one hundred dollars ($100.00) per month for each of the line
markers with Seller's or its Affiliates name on it still on the Property
on or after the sixtieth (60th) day after the Effective Time.
C. One-Call. Buyer will promptly, but in no event later than sixty
(60) days after the Effective Time, contact every appropriate one-call
agency in the vicinity of any of the Property and have the contact
information for one-calls changed from Seller's name to Buyer's name.
This obligation of Buyer shall include sending revised maps to the one-
call agencies where appropriate or required. Buyer shall send Seller a
letter, to the Notices address contained in Article 24 of this Agreement,
when the one-call notification information has been changed. Should Buyer
fail to have the one-call information and maps changed to Buyer's name
within sixty (60) days of the Effective Time, then Buyer shall pay to
Seller one hundred dollars ($100.00) for each one-call received by Seller
for any of the Property on or after the sixtieth (60th) day after the
Effective Time.
Article 2
Purchase Price
A. Price. The price to be paid by Buyer to Seller for the Property
shall be Nine Million Dollars ($9,000,000.00) (the "Purchase Price")
payable at Closing (as defined below) less the Earnest Money held by
Seller, by wire transfer in immediately available funds to an account to
be designated by Seller. Seller shall prepare a Closing Statement,
substantially in the form attached hereto as Exhibit "F", detailing the
items which are to be added to or subtracted from the Purchase Price as
permitted under this Agreement in order to determine the amount of money
to be included in the wire transfer. Buyer and Seller shall agree to the
figures on the Closing Statement. The Purchase Price is subject to the
following conditions.
1. Within two hundred seventy (270) days of the Closing Date,
unless further delayed due to right-of-way issues, Buyer shall
hydrotest the Pipeline and determine the Total Recommissioning
Cost. If the Pipeline is unable to be recommissioned into crude
service by Buyer due to:
i) the cost or projected cost to make repairs to the Pipeline
exceeds the Estimate of Repair Costs by $1 million, or
ii) the Total Recommissioning Cost exceeds $11 million, or
iii) community objections that prevent or significantly delay
use of the Pipeline,
and Buyer elects to not proceed, then, at Seller's sole
discretion:
(1) Seller may negotiate a mutually acceptable purchase price
reduction with Buyer and Buyer will proceed with placing
the Pipeline in service , or
(2) Seller will refund $8 million to Buyer and Buyer will
retain ownership of the Pipeline and honor all terms,
conditions, representations, warranties, and indemnities,
or
(3) Seller will refund all monies, Buyer will reconvey
ownership of the Pipeline and all liabilities to Seller and
Seller will release Buyer from all obligations.
2. If Buyer notifies Seller that it is electing not to proceed
placing the Pipeline in service because either the cost or
projected cost to make repairs to the Pipeline exceed the
Estimate of Repair Costs by $1 million or the Total
Recommissioning Cost exceeds $11 million, then, at Seller's
sole cost and expense, Seller shall have the right to conduct
an audit of Buyer's records supporting the Estimate of Repair
Costs or the Total Recommissioning Cost, as applicable. Seller
shall have 15 business days from receipt of Buyer's notice to
inform Buyer of its intention to conduct an audit.
3. If the Pipeline is ever made operational by Buyer, its
Affiliates or assigns at any time after Seller shall have
refunded monies to Buyer, then Buyer will pay to Seller an
amount equal to the monies previously refunded to Buyer by
Seller.
B. Earnest Money. As evidence of Buyer's ability to perform this
Agreement and good faith intent to comply with the terms hereof, Buyer
has deposited with Seller an amount equal to five percent (5%) of the
Purchase Price as earnest money (hereinafter "Earnest Money"). The
Earnest Money shall accrue interest at a per annum rate calculated on a
daily basis using the three month treasury bill rate published by
Bloomberg Financial Services for any applicable day (with the rate for
any day for which a rate is not published being the rate most recently
published). All references to Earnest Money shall include interest on the
Earnest Money as calculated in accordance with the preceding sentence.
C. Distribution of the Earnest Money. The Earnest Money shall be
distributed as follows:
(1) If the Closing occurs, then the Earnest Money shall be
applied to and credited against the Purchase Price at Closing.
(2) In the event the transaction fails to close because any of
the conditions to Closing contained in Article 3A. are not satisfied through
no fault of either Party and this Agreement is terminated, Seller will
refund the Earnest Money to Buyer and Buyer and Seller shall each be
relieved of all liability hereunder.
(3) In the event the transaction fails to close because any of
the conditions to Closing in Article 3A. are not satisfied because Buyer has
violated the terms of this Agreement, Seller shall be entitled to retain the
Earnest Money, as liquidated damages and not as a penalty, and Buyer and
Seller shall each be relieved of all further liability hereunder.
Article 3
Closing
Closing shall take place on August 1, 2005, at Seller's offices in
Houston, Texas ("Closing"), or at such other time and place as agreed to
in writing by the Parties. Control of operations, risk of loss, and
transfer of title to the Property from Seller to Buyer shall be effective
as of 7:00 a.m. local time on the Closing Date.
A. Conditions to Closing. Except as expressly waived by the
Parties, the obligations of the Parties to close this transaction are
subject to the satisfaction, at or prior to Closing, of each of the
following conditions, which conditions the Parties intend to be
conditions precedent to Seller's obligation to convey the Property and to
Buyer's obligation to pay the Purchase Price:
(1) All representations and warranties of the Parties set forth
in this Agreement shall be true in all material respects as of the Closing
Date as if made on the Closing Date, and the Parties shall have performed
all covenants and conditions required by this Agreement to be performed
at or prior to Closing and shall have taken all other actions reasonably
necessary to close this transaction.
(2) No Law shall exist or shall have been enacted restricting
or substantially delaying this transaction.
(3) Neither Party shall have exercised any right it may have
to terminate this Agreement under the express terms hereof.
(4) The transaction described in this Agreement shall have
been approved by the Board of Directors of each of Seller, Buyer and
Giant Industries, Inc., the ultimate parent corporation of Buyer.
(5) If applicable, each Party shall have complied with the
requirements of federal and state securities Laws.
(6) No Casualty Loss shall have occurred between the date of
Buyer's notification to Seller that it has completed its pre-acquisition
review and Closing. The term "Casualty Loss" shall mean any single event
of loss or damage to the Property or any portion thereof which causes a
Material Adverse Environmental Condition or a Material Defect.
(7) Each Party shall have received a certificate, dated as of
the Closing Date, signed by the other Party's Secretary or Assistant
Secretary certifying the incumbency of the officers executing this
Agreement, and any documents to be executed and delivered by it at the
Closing, on behalf of such Party.
(8) Seller shall have executed and delivered to Buyer the
Conveyance Documents, which are attached to this Agreement as Exhibits "G",
"H", "I", and "J".
(9) Seller's portion of the property Tax owed in accordance with
Article 6B shall have been deducted from the Purchase Price on the
Closing Statement.
(10) Seller shall have received from Buyer, or its Affiliate who
has been financially qualified by Seller, a guarantee of the performance, in
substantially the form attached hereto as Exhibit "K", of any Affiliate
of Buyer who has not been financially qualified by Seller to whom assets
are to be conveyed under this Agreement.
(11) Buyer shall provide an environmental insurance policy in
favor of Seller and satisfactory to Seller at Closing.
B. Termination. If any condition or obligation of a Party has not
been satisfied or waived, and Closing has not occurred by the close of
business on the Closing Date, the Party to whom said obligation is owed
may terminate this Agreement immediately upon the giving of written
notice thereof to the Party owing such obligation. Buyer shall promptly
return all records, maps, files, papers, and other property of Seller
then in its possession, and neither Party shall hereafter have any
liability under this Agreement. This provision shall not, however, apply
to limit the liability of a Party who has willfully caused termination
hereof by any act or failure to act in violation of the terms and
provisions of this Agreement.
Article 4
Allocation of Proceeds and Purchase Price
A. Proceeds from Operations. All proceeds attributable to the
operation, ownership, use or maintenance of or otherwise relating to the
Property prior to the Effective Time shall be the property of Seller and
to the extent received by Buyer or its Affiliates, Buyer shall promptly
and fully disclose, account for and transmit same to Seller. All proceeds
attributable to the operation, ownership, use, or maintenance of or
otherwise relating to the Property on and after the Effective Time shall
be the property of Buyer and to the extent received by Seller or its
Affiliates, Seller shall promptly and fully disclose, account for and
transmit same to Buyer.
B. Purchase Price Allocation. Buyer and Seller shall, prior to or
at Closing, agree to allocate the Purchase Price among the Property in
substantially the same form attached hereto as Exhibit "L" which will
represent a reasonable determination in good faith of the fair market
value of the Property. Seller and Buyer agree (i) to report the federal,
state and local income and other Tax consequences of the transactions
contemplated herein, and in particular to report the information required
by Section 1060(b) of the Code on Form 8594 in a manner consistent with
such allocation and (ii) not to take any position inconsistent therewith
upon examination of any Tax return, in any refund claim, in any
litigation, investigation or otherwise, unless required by applicable
Laws or with the consent of the other Party.
Article 5
Responsibility For Contractual Payments and Obligations
A. Contractual Payments. Seller shall be responsible for all costs
and expenses, arising in the ordinary course of business with respect to
the ownership, operation, use or maintenance of the Property prior to the
Effective Time. Buyer shall be responsible for all such costs and
expenses arising in the ordinary course of business with respect to the
ownership, operation, use or maintenance of the Property on and after the
Effective Time.
B. Assumption of Liabilities and Obligations Relating to the
Property. On and after the Effective Time, but subject to Seller's
indemnities set forth in Article 11, Buyer shall assume all liabilities
and perform all obligations of Seller relating to the Property (whether
such obligations are to a grantor, a Governmental Authority or any other
Person) and whether such liabilities or obligations are attributable to
periods of time prior to or after the Effective Time, including, but not
limited to, any obligations arising with respect to the abandonment or
removal (as the case may be) of any existing facilities, Pipeline,
appurtenant or associated Equipment or other personal property located on
and included in the Property.
C. Adjustments Regarding Utilities. To the extent utilities have not
been placed in Buyer's name as of the Effective Time, charges and credits
for water, electricity, sewage, gas and all other utilities shall be
adjusted and apportioned between Seller and Buyer through the Effective
Time. If Buyer receives invoices for utilities for any period of time prior
to the Effective Time, Buyer will promptly forward the invoices to Seller
for payment. Likewise, if Seller receives invoices for utilities for any
period of time on or after the Effective Time, Seller will promptly
forward the invoices to Buyer for payment. If new utility connections or
meters are required for Buyer's assumption of utility services, the cost
shall be borne by Buyer. After Closing, Buyer shall promptly place in its
own name all utilities associated with the Property.
Article 6
Taxes and Related Matters
A. Cooperation. Buyer and Seller agree to furnish, or cause to be
furnished, to each other, upon request, as promptly as practicable, such
information and assistance relating to the Property as is reasonably
necessary for the filing of all Tax matters, the preparation for any
audit by any taxing authority, and the prosecution or defense of any
Proceeding relating to any Tax matter. Seller and Buyer shall cooperate
with each other in the conduct of any audit or other Proceeding related
to Taxes involving the Property and each shall execute and deliver such
documents as are necessary to carry out the intent of this article.
B. Property Taxes. All real estate, ad valorem and personal property
taxes shall be prorated between Buyer and Seller as of the Closing Date
based upon the number of days during the applicable tax period each Party
owned the Property subject to such tax. For purposes of this Agreement,
general property Taxes in respect to the ownership or use of the Property
for the calendar year in which the Effective Time occurs shall be
prorated between Buyer and Seller as of the Effective Time regardless of
when such general property Taxes are actually billed and payable. At
Closing, Seller's portion of such general property Taxes attributable to
the period prior to the Effective Time shall be deducted from the
Purchase Price to be paid to Seller. Buyer shall actually pay to the
taxing authority all general property Taxes for the year of Closing which
are payable after the Closing. Notwithstanding anything in this Agreement
to the contrary, no further adjustment shall be made for such general
property Taxes due for the Tax year in which the Closing occurs and which
are payable after the Closing, and Buyer hereby agrees to assume the
payment of all such general property Taxes effective upon Closing.
C. Documentary Transfer Taxes. Buyer shall pay and bear all
documentary transfer Taxes, realty transfer Taxes and charges or fees
with respect to the transfer of Real Property or to the recordation of
the documents necessary for the transfer of Real Property that may be
required for the transfer of the Property from Seller to Buyer.
D. Other Transfer Taxes. Buyer shall pay and be responsible for any
other applicable transfer Taxes incurred in connection with the purchase
and sale of the Property, including, without limitation, any federal,
state or local sales, use, or excise Taxes, whether levied on Seller or
Buyer. Buyer shall be responsible for, and will file all necessary Tax
returns and other documentation with respect to all such Taxes and remit,
upon the request of Seller, copies of the portions of such returns
relevant to this Agreement and any necessary documentation to Seller.
E. Confidential Tax Information. Notwithstanding anything to the
contrary in this Agreement, neither Party shall be required at any time
to disclose to the other Party, or to any other Person, absent legal
constraint, any Tax return or other confidential Tax information.
F. Deferred Like-Kind Exchange Cooperation. If so requested by a
Party, the other Party shall, at no cost or obligation to such other
Party, cooperate in structuring and completing all or a portion of this
transaction so as to effect a disposition of "relinquished property" in
connection with a multiple party deferred like-kind exchange pursuant to
Section 1031 of the Code. In particular, Buyer hereby consents to the
assignment of an interest in the Property to a "qualified intermediary"
prior to the Closing hereunder and the assignment by Seller to such
"qualified intermediary" of Seller's right to receive the Purchase Price
hereunder. The terms "qualified intermediary", and "relinquished
property" as used herein shall have the meanings ascribed to them in
Treasury Regulations Section 1.1031(k)-1. The requesting Party agrees to
indemnify and hold harmless the other Party from any costs, expenses and
claims relating to its cooperation arising out of a like-kind exchange of
the requesting Party, which indemnity shall survive Closing. Nothing in
this Article 6F is intended to relieve any Party from its obligations
hereunder.
G. Certification of Non-Foreign Status. On the Closing Date, Seller
shall deliver to the Buyer a certificate in the form attached hereto as
Exhibit "M" (Certification of Non-Foreign Status) signed under penalty of
perjury (i) stating that it is not a foreign corporation, foreign
partnership, foreign trust or foreign estate, (ii) providing its U.S.
Employer Identification Number, and (iii) providing its address, all
pursuant to Section 1445 of the Code.
Article 7
Seller's Representations
Seller represents and warrants to Buyer the following:
A. No Brokers. Seller has not incurred any obligation or liability,
contingent or otherwise, nor made any agreement with respect to any
broker or finder's fees arising out of or in any way related to the
transaction contemplated by this Agreement for which Buyer will be in any
way liable.
B. Organization. Texas New Mexico Pipeline Company is a
corporation duly formed, validly existing and in good standing under the
Laws of the State of Delaware and duly qualified to carry on business in
the states in which its business requires it to be qualified.
C. Power and Authority. Seller has the power and authority necessary
to enter into and perform this Agreement and the transaction contemplated
hereby, and the execution, delivery and performance of this Agreement by
Seller, will not, with the passage of time or the giving of notice or both:
(1) violate any provision of the formation documents of Seller, (2)
materially violate any agreement or instrument to which Seller is a party or
by which Seller is bound, (3) materially violate any judgment, order, ruling
or decree applicable to Seller as a party in interest, (4) materially
violate any Law applicable to Seller or to this Agreement or (5) result in
the creation or imposition of any material Lien on any of the Property.
D. Authorization and Enforceability. The execution, delivery, and
performance by Seller of this Agreement and the consummation of the
transaction contemplated hereby have been duly authorized by all
requisite action on the part of Seller. This Agreement has been duly
executed and delivered on behalf of Seller, and, at the Closing, all
documents and instruments required hereunder to be executed and delivered
by Seller shall have been duly executed and delivered by Seller. This
Agreement does, and such documents and instruments shall, constitute
legal, valid and binding obligations of Seller enforceable in accordance
with their terms, subject, however, to the effect of bankruptcy,
insolvency, reorganization, moratorium and similar Laws from time to time
in effect relating to the rights and remedies of creditors, as well as to
general principles of equity (regardless of whether such enforceability
is considered in a Proceeding in equity or at law).
E. Investment Company Act; PUCHA. Seller is not (1) an "investment
company" or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended or (2) a
"holding company" or a "subsidiary company" of a "holding company" or an
"affiliate" of a "holding company" or of a "subsidiary company" of a
"holding company" within the meaning of the Public Utility Holding
Company Act of 1935, as amended or (3) a "foreign person" within the
meaning of Section 1445 of the Code.
F. Violations of Law. Except as set forth in the Disclosure
Schedule, to Seller's knowledge, Seller is not in material violation of any
Law in connection with its ownership and/or operation of the Property.
G. Taxes. Except as set forth in the Disclosure Schedule, to
Seller's knowledge, Seller has filed in a timely manner all required
federal, state, tribal, and local income, sales, use, property, and
franchise Tax returns related to the Property, and has paid (except amounts
being diligently contested in good faith by appropriate Proceedings and
disclosed in Section 7G of the Disclosure Schedule) all required Tax or
similar assessments arising from or related to the Property, including
any interest, penalties or additions attributable thereto shown as due on
all such filings. Taxes which Seller was required by Law to withhold or
collect in respect to the Property have been withheld or collected and
have been paid over to the proper Governmental Authorities or are
properly held by Seller for such payment when due and payable.
H. No Proceedings. Except as set forth in the Disclosure Schedule,
to Seller's knowledge, (1) there is no Proceeding directly affecting the
Property or Seller's ownership or operation thereof on the date hereof
that is still pending or threatened, and that, if adversely determined,
would impair or prohibit the consummation of the transaction contemplated
hereby and (2) there are no material orders, writs, judgments,
stipulations, injunctions, decrees, determinations, awards or other
decisions of any Governmental Authority, or any arbitrator or mediator,
outstanding against Seller pertaining to any portion of the Property.
I. Disclosure Schedule Updates. Seller will update the Disclosure
Schedule between the signing of this Agreement and Closing in order to
make these representations true as stated at Closing.
Article 8
Buyer's Representations
Buyer represents and warrants to Seller the following:
A. Independent Investigation. EXCEPT FOR THE REPRESENTATIONS AND
WARRANTIES OF SELLER EXPRESSLY SET FORTH IN ARTICLE 7 HEREOF, BUYER
ACKNOWLEDGES THAT (1) SELLER IS SELLING AND BUYER IS ACQUIRING THE
PROPERTY ON AN "AS IS", "WHERE IS" BASIS, WITHOUT ANY REPRESENTATIONS AND
WARRANTIES CONCERNING THE PROPERTY (EXPRESS, IMPLIED OR STATUTORY), (2)
SELLER HAS NOT MADE AND IS NOT MAKING ANY REPRESENTATION OR WARRANTY OF
TITLE, FITNESS FOR A PARTICULAR PURPOSE, MERCHANTABILITY OR OTHERWISE
WITH REGARD TO THE PROPERTY AND SELLER HAS EXPRESSLY DISCLAIMED ANY
WARRANTIES (EXPRESS, IMPLIED OR STATUTORY), AND (3) SELLER HAS NOT AND
DOES NOT WARRANT DESCRIPTION, VALUE, QUALITY, OR CONDITION OF ANY OF THE
PROPERTY (INCLUDING THE PIPELINES, TANKS, TERMINALS, APPURTENANT OR
ASSOCIATED EQUIPMENT OR OTHER REAL OR PERSONAL PROPERTY LOCATED ON OR
INCLUDED IN THE PROPERTY). BUYER FURTHER ACKNOWLEDGES THAT SELLER HAS NOT
MADE AND IS NOT MAKING ANY REPRESENTATION OR WARRANTY CONCERNING THE
PRESENT OR FUTURE VALUE OF THE POSSIBLE INCOME, COSTS OR PROFITS IF ANY,
TO BE DERIVED FROM THE PROPERTY. BUYER HAS MADE INDEPENDENT INSPECTIONS,
ESTIMATES, COMPUTATIONS, REPORTS, STUDIES, AND EVALUATIONS OF THE
PROPERTY AND HAS SATISFIED OR WILL SATISFY ITSELF PRIOR TO THE EXPIRATION
OF THE REVIEW PERIOD WITH RESPECT TO THE CONDITION OF THE PROPERTY.
FURTHER, BUYER ACKNOWLEDGES THAT THE PROPERTY HAS BEEN USED FOR THE
TRANSPORTATION OF REFINED PETROLEUM PRODUCTS OR CRUDE OIL AND MAY HAVE
BEEN THE SUBJECT OF ONE OR MORE RELEASES OF REFINED PETROLEUM PRODUCTS OR
CRUDE OIL AS A RESULT OF ITS USE.
B. Investment. Buyer is acquiring the Property for its own benefit
and account and not with the intent of distributing fractional undivided
interests thereof as would be subject to regulation by federal or state
securities Laws.
C. Evaluation by Buyer. By reason of Buyer's knowledge and
experience in the evaluation, acquisition and operation of similar
properties, Buyer has evaluated the merits and risks of purchasing the
Property and has formed an opinion based solely upon Buyer's knowledge and
experience and not upon any representations or warranties by Seller or any
of its representatives other than Seller's representations set forth in
Article 7 hereof.
D. Transfer Restrictions. Buyer assumes the risk of any transfer
restrictions or renegotiation requirements associated with, or the
expiration of, any Rights-of-Way, Permits, franchises, Assigned Contracts
or other agreements applicable to the Property.
E. Compliance with Laws. Buyer shall comply with all applicable Laws
and shall promptly obtain, or have transferred to its name, and maintain all
Permits or consents required by public or private parties in
connection with the Property purchased.
F. Organization. Buyer is a corporation duly formed, validly
existing and in good standing under the Laws of the State of New Mexico
and is duly qualified to carry on business in the states in which the
ownership of the Property requires it to be qualified.
G. No Brokers. Buyer has not incurred any obligation or liability,
contingent or otherwise, nor has it made any agreement with respect to
any broker or finder's fees arising out of or in any way related to the
transaction contemplated by this Agreement for which Seller will be in
any way liable.
H. Power and Authority. Buyer has the power and authority necessary
to enter into and perform this Agreement and the transaction contemplated
hereby, the execution, delivery and performance of this Agreement by
Buyer will not (1) violate any provision of the formation documents of
Buyer, (2) materially violate any agreement or instrument to which Buyer
is a party or by which Buyer is bound, (3) materially violate any
judgment, order, ruling or decree applicable to Buyer as a party in
interest or (4) materially violate any Law applicable to Buyer.
I. Authorization and Enforceability. The execution, delivery, and
performance by Buyer of this Agreement and the consummation of the
transaction contemplated hereby have been duly authorized by all
requisite action on the part of Buyer. This Agreement has been duly
executed and delivered on behalf of Buyer, and, at the Closing, all
documents and instruments required hereunder to be executed and delivered
by Buyer shall have been duly executed and delivered by Buyer. This
Agreement does, and such documents and instruments shall, constitute
legal, valid and binding obligations of Buyer enforceable in accordance
with their terms, subject, however, to the effect of bankruptcy,
insolvency, reorganization, moratorium and similar Laws from time to time
in effect relating to the rights and remedies of creditors, as well as to
general principles of equity (regardless of whether such enforceability
is considered in a Proceeding in equity or at law).
J. Investment Company Act and PUCHA. Buyer is not (1) an
"investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended or (2)
a "holding company" or a "subsidiary company" of a "holding company" or an
"affiliate" of a "holding company" or of a "subsidiary company" of a
"holding company" within the meaning of the Public Utility Holding
Company Act of 1935, as amended or (3) a "foreign person" within the
meaning of Section 1445 of the Code.
K. No Knowledge. Buyer's management responsible for the consummation
of this transaction has no knowledge that there exists any wrong or
inaccurate information, omissions, misrepresentations or mistakes on the
Disclosure Schedule.
Article 9
Pre-Acquisition Review
A. Review Period. During the period commencing on the date of this
Agreement and ending forty-five (45) days after the date of this
Agreement (the "Review Period"), Buyer and TEPPCO Crude Pipeline, LP.,
and their Affiliates and the employees, agents and consultants of either
shall have the right to do the following, at Buyer's expense and with the
cooperation and assistance of Seller, subject to Buyer's executed
confidentiality agreement ("Confidentiality Agreement"), and also subject
to Buyer supplying to Seller, prior to the end of the Review Period,
copies of any reports and/or assessments prepared by Buyer or its
Affiliates or the consultants of either, concerning the condition of the
Property which are relied upon as the basis of Buyer's termination option
under Article 9E, and allowing Seller to discuss the reports or
assessments with the Person who prepared them:
1. Enter all or part of the Property with Seller's
representative, including all or any easements, to view the Pipeline,
facilities, Equipment, and other operations conducted thereon, and to
conduct a surface only inspection and assessment, inventory, study and
examination of the same, independently of any documents, data or information
furnished by Seller hereunder; and
2. Inspect and review the Books and Records. Buyer acknowledges
that it shall not have access to (a) Seller's Pipeline Manuals used in the
operation of the Pipelines or (b) the process used by Seller for integrity
assessments, which are considered by Seller to be proprietary
property.
B. No Sampling. Buyer shall not have the right to perform any
sampling of any kind in connection with any site assessment, including, but
not limited to, any phase II site assessment on any portion of the Property.
C. Information is Confidential. Except as required by Law, all
information acquired by Buyer in any inspection, inventory, study, or
examination of the Property, and the results of any analysis thereof,
shall be kept confidential by Buyer from anyone other than Seller in
accordance with Buyer's executed Confidentiality Agreement. Should Buyer
be required by any Law to disclose any information concerning the
Property, Buyer shall notify Seller at least five (5) days (or as soon as
practical if five (5) days is not available) prior to Buyer's disclosure
of such information.
D. Indemnity. Buyer shall indemnify, defend and hold harmless Seller
and its Affiliates and their respective owners, officers, directors,
employees, attorneys, and agents from any and all Losses, liabilities,
attorneys' fees, court costs, liens, or encumbrances for labor or
materials, claims and causes of action arising out of any injury to or
death of any Persons or damage to property occurring to or on the
Property as a result of the exercise of Buyer's rights under this
article, except to the extent the indemnified event or occurrence arises
from or is caused by the sole negligence or fault of Seller. Seller shall
have the right at all times to participate in the preparation for and
conducting of any hearing or trial related to this indemnification
provision, as well as the right to appear on its own behalf or to retain
separate counsel to represent itself at any such hearing or trial.
E. Termination Option. Except as hereinafter provided, Buyer shall
have the option of terminating this Agreement by providing written notice
to Seller on or before the last day of the Review Period, in the event
Buyer determines, during the Review Period, that the Property is subject
to any: (1) Material Adverse Environmental Condition or (2) Material
Defect. To be effective, any such notice shall specifically identify and
describe the basis for such termination, and shall include substantial
evidence of the Material Defect or Material Adverse Environmental
Condition leading to the termination notice. Neither (i) a minor
deviation in the location of a Pipeline, relative to a defined Right-of-
Way in an easement, (ii) a gap in the Right-of-Way nor (iii) a minor
encroachment onto a Right-of-Way shall be deemed to constitute a Material
Defect for purposes of this Agreement.
F. Seller's Remedy. Notwithstanding the delivery of a notice of
termination by Buyer to Seller, this Agreement shall not be terminated
if, within thirty (30) days after Seller's receipt of such notice: (1)
Seller remedies or agrees to remedy, to a degree which is mutually agreed
during the referenced thirty (30) day period, such Material Adverse
Environmental Condition or Material Defect; or (2) Seller and Buyer
mutually agree on an adjustment to the Purchase Price.
G. Buyer's Termination. Notwithstanding the above, if Buyer can
provide substantial evidence that the Property is subject to Material
Adverse Environmental Conditions or Material Defects that, when totaled
together would expose Buyer to costs to remedy or cure, or the potential
for exposure for claims, damages, penalties, assessments or costs in
excess of ten percent (10%) of the Purchase Price, Buyer, in its sole
discretion, may terminate this Agreement.
H. Negotiation with Agencies. If Seller agrees to remedy any
specific Material Adverse Environmental Condition or Material Defect in the
Property, then all negotiations and contacts with Governmental Agencies
for approval and review of such remedial action shall be made by Seller,
and Buyer shall make no independent contacts with any of the Governmental
Agencies relative to such remedial action. Buyer shall receive copies of
all correspondence between Seller and any Governmental Agencies regarding
such remedial action.
I. Notice of End of Review Period. When the Review Period had
ended, or prior to that time if Buyer has completed its pre-acquisition
review, Buyer shall send Seller a notice, to the address provided in Article
24, that it has completed its pre-acquisition review.
J. Transition. When Buyer notifies Seller, in writing, that its pre-
acquisition review is complete, then Buyer and Seller shall enter into a
period of transition. During the transition period, Buyer's
representatives shall be allowed to "job-shadow" and/or consult with the
appropriate Seller employees for an agreed upon period of time. Seller
shall also make available to Buyer those of Seller's employees who are
interested in discussing employment with Buyer.
Article 10
Title
A. Conveyances. At Closing, Seller shall transfer to Buyer title to
the Property by means of the Conveyance Documents. In the case of the
Real Property and except as otherwise described in Article 10D. below, it
shall be free and clear at Closing of any lawful claims of any third
party claiming by, through or under Seller, but not otherwise, and
transfer shall be by means of a Special Warranty Deed in substantially
the form attached hereto as Exhibit "H".
B. Title Examination. During the period commencing on the date of
this Agreement and ending forty-five (45) days after the date of this
Agreement ("Title Examination Period"), Buyer and its Affiliates and
their employees, agents and contractors shall have full access to and the
right (subject to the executed Confidentiality Agreement) to examine all
of Seller's title records relating to the Property, including but not
limited to, those listed on Exhibits "B" and "C" attached hereto.
C. Notice of Significant Title Defect. On or before the last day
of the Title Examination Period, Buyer shall give Seller written notice
of the land and property interests included in the Property, if any,
which have a Significant Title Defect. None of the following shall be
deemed to constitute a Significant Title Defect for purposes of this
Agreement (i) a minor deviation in the location of a Pipeline, relative
to a defined Right-of-Way in an easement, (ii) a gap in a Right-of-Way or
(iii) a minor encroachment onto a Right-of-Way. If any Significant Title
Defect cannot be or is not cured by Seller prior to the Effective Time,
Buyer may, at its election, in writing: (1) terminate this Agreement
without further obligation or liability by giving written notice of
termination to Seller at any time prior to Closing; (2) offer to acquire
the Property, including the portion affected by the Significant Title
Defect, subject to the terms of this Agreement, but at a reduced Purchase
Price, which offer Seller may accept or reject in its sole discretion; or
(3) acquire the Property, including the portion affected by the
Significant Title Defect, without adjustment to the Purchase Price.
D. The Property is subject to senior and subordinated mortgages
granted in favor of Shell Pipeline Company LP. The mortgages are filed of
record in each of the counties where the Property is located. At Closing,
Seller will provide to Buyer fully executed Releases of Lien to be filed
by Buyer in substantially the form attached hereto as Exhibit "N".
Article 11
Seller's Responsibility for Claims Relating to the Property
A. Seller's Environmental Responsibilities shall be as follows:
(1) Ongoing Remedial Work.
(a) Unless otherwise agreed, Seller shall retain full
responsibility for all costs, including capital, operating and maintenance
costs, incurred in connection with (i) any investigation and monitoring of
Environmental Conditions or (ii) any clean-up, remedial, removal or
restoration work of those Environmental Conditions, either of which is
ongoing on the Closing Date and that is required by any Governmental
Authority with applicable jurisdiction because of the presence, suspected
presence, release or suspected release of a Hazardous Substance in the air,
soil, surface water, or groundwater on or emanating from the Property
(hereinafter the "Ongoing Remedial Work"). The Ongoing Remedial Work is
listed on the Disclosure Schedule. Any equipment associated with the Ongoing
Remedial Work will remain the property of Seller. The performance of Ongoing
Remedial Work will be by the Seller, in the name of the Seller. The Seller
will obtain all necessary licenses, manifests, permits and
approvals to perform such work. All Ongoing Remedial Work and the
disposal of all waste generated by the Ongoing Remedial Work will be
performed in accordance with all applicable Laws.
(b) Buyer grants to Seller, at no cost to Seller, ingress,
egress, access to the Property and use of the lands (including land farming
activities) and utilities, including, but not limited to, electricity and
water, as needed by Seller to complete any of the Ongoing Remedial Work
described in this Article 11A.(1).(a). Seller's responsibility for any
Ongoing Remedial Work shall terminate upon Seller's receipt from the
applicable Governmental Authority of one of the following: (i)
concurrence in any form that remediation efforts are complete and the
site may be closed; (ii) No Further Action Required Letter or a similar
document issued by a Governmental Authority exercising jurisdiction over
the Ongoing Remedial Work; (iii) concurrence with the results of Seller's
risk based corrective action plan; or (iv) regulatory concurrence that
active remediation may be discontinued subject only to periodic
monitoring. Seller will conduct all communications concerning Seller's
remediation activities with all Governmental Authorities having
jurisdiction. Seller will provide Buyer with copies of all correspondence
with the applicable Governmental Authorities concerning Seller's Ongoing
Remedial Work, but Buyer shall not communicate with the Governmental
Authorities concerning Seller's Ongoing Remedial Work.
(c) Buyer shall notify Seller within seventy-two (72) hours
of any release within 500 feet of any of Seller's Ongoing Remedial Work. If
such a release occurs, Seller shall, at Seller's sole discretion and
expense, have the right to be present during Buyer's release cleanup
activities, take photographs, take notes or take soil samples.
(d) Should Buyer have a reportable release that directly
impacts or affects Seller's Ongoing Remedial Work at a site, then Seller
will transfer to Buyer the net present value of the amount of money Seller's
remediation consultants or personnel determine is reasonably required for
the completion of such Ongoing Remedial Work at the site where Buyer's
release occurred. Buyer shall thereupon assume full responsibility for the
Ongoing Remedial Work at the specific site along with the remediation of
Buyer's own release.
(2) Post Closing Assessment. Buyer, and it Affiliates and
transferees, are prohibited from conducting post Closing environmental
assessments, except in those cases (i) where a reasonably prudent
pipeline operator, not afforded the indemnities provided in this
Agreement, would conduct such assessments in the ordinary course of
business, (ii) where required or directed by a Governmental Authority
having jurisdiction or (iii) due to any legal or contractual requirements
related to the Property. Notwithstanding anything to the contrary herein,
should Buyer, or its Affiliates or transferees, conduct a post Closing
environmental assessment which is neither (i) of a type which a
reasonably prudent pipeline operator, not afforded the indemnities
provided in this Agreement, would conduct in the ordinary course of
business or (ii) required or directed by a Governmental Authority having
jurisdiction or (iii) due to any legal or contractual requirements
related to the Property, then Buyer, or its Affiliates or transferees,
shall indemnify, defend and hold harmless Seller Indemnitees from any and
all Claims (including Claims for personal injury, death and/or property
damage) arising out of or resulting from such post Closing environmental
assessment.
(3) Seller shall not have any obligation to Buyer regarding any
environmental matter other than those obligations described in Article
11A.(1) above and is providing no environmental indemnity to Buyer under
this Agreement.
B. Seller is providing no general indemnity to Buyer under this
Agreement.
Article 12
Buyer's Responsibility for Claims Relating to the Property
A. Buyer's Environmental Responsibility shall be as follows:
(1) Future Remediation Sites. Regardless of when the release
causing the Environmental Condition occurred, Buyer agrees to accept full
responsibility for all costs, including capital, operating and
maintenance costs, incurred in connection with (i) any investigation or
monitoring of Environmental Conditions or (ii) any clean-up, remedial,
removal or restoration work of those Environmental Conditions, if any,
either of which may be necessary on or after the Effective Time and
required by any Governmental Authority with applicable jurisdiction
because of the presence, suspected presence, release or suspected release
of Hazardous Substances in the air, soil, surface water, or groundwater
on or emanating from the Property (hereinafter the "Future Remedial
Work"); provided however, that as long as Seller's Environmental
Indemnity of Buyer is in place, such indemnity shall apply to any
Environmental Condition which would be included under that indemnity. The
performance of any Future Remedial Work will be by the Buyer, in the name
of Buyer. The Buyer will obtain all necessary licenses, manifests,
permits and approvals to perform such work. All Future Remedial Work and
the disposal of all waste generated by the Future Remedial Work will be
in accordance with all applicable Laws. It is expressly understood that
Buyer, under this Article, does not assume any responsibility for Ongoing
Remedial Work as that work is set out in Article 11A.(1) above.
(2) Monitoring of Wells. At such time as testing of Monitoring
Wells is the only work left with regard to a site on which Ongoing Remedial
Work was being done at the Effective Time, Buyer assumes the obligation to
continue any required testing of any Monitoring Wells on
the Property for Environmental Conditions. Buyer will promptly file any
required reports and send a copy of same to Seller. In addition, Buyer
assumes, as of the Effective Time all responsibility, including all costs
and expenses, for the testing of and reporting related to any other
Monitoring Wells associated with the Property and shown on the Monitoring
Well List attached to the Disclosure Schedule. Buyer will conduct these
monitoring activities until site closure is obtained as outlined in
Article 11A.(1)(b).
(3) ENVIRONMENTAL INDEMNITY. BUYER HEREBY AGREES TO INDEMNIFY,
DEFEND AND HOLD SELLER AND ITS AFFILIATES AND THE DIRECTORS, OFFICERS,
SHAREHOLDERS, PARTNERS, OWNERS, EMPLOYEES, TENANTS, CONTRACTORS,
ATTORNEYS, AGENTS, SUCCESSORS AND ASSIGNS OF ANY OF THEM ("SELLER
INDEMNITEES") HARMLESS FROM ANY CLAIMS (INCLUDING WITHOUT LIMITATION
THIRD PARTY CLAIMS FOR PERSONAL INJURY OR DEATH, INCLUDING EXPOSURE, OR
REAL OR PERSONAL PROPERTY DAMAGE), ACTIONS, ADMINISTRATIVE PROCEEDINGS
(INCLUDING INFORMAL PROCEEDINGS), JUDGMENTS, DAMAGES, PENALTIES, FINES,
COSTS, LIABILITIES (INCLUDING SUMS PAID IN SETTLEMENT OF CLAIMS),
INTEREST OR LOSSES, CONSULTANT FEES, ATTORNEYS' FEES AND EXPERT FEES THAT
ARISE DIRECTLY OR INDIRECTLY FROM OR AS A RESULT OF (i) THE EXISTENCE OF
ENVIRONMENTAL CONDITIONS WHETHER FROM THE OPERATION OF THE PIPELINE OR
EQUIPMENT PRIOR TO, ON OR AFTER THE EFFECTIVE TIME OR (ii) VIOLATION OF
APPLICABLE ENVIRONMENTAL LAW IN CONNECTION WITH THE OPERATION OF THE
PIPELINE OR EQUIPMENT PRIOR TO, ON OR AFTER THE EFFECTIVE TIME. THIS
ARTICLE 12A.(3) SHALL SURVIVE IN PERPETUITY FROM AND AFTER THE EFFECTIVE
TIME.
B. PUNITIVE DAMAGES. THE FOREGOING INDEMNITIES BY BUYER UNDER THIS
ARTICLE 12 SHALL NOT COVER OR INCLUDE ANY PUNITIVE OR EXEMPLARY DAMAGES.
C. Environmental Insurance. Buyer shall provide an environmental
insurance policy in favor of Seller and satisfactory to Seller at
Closing.
D. BUYER'S GENERAL INDEMNITY OF SELLER. TO THE FULLEST EXTENT
PERMITTED BY LAW, BUT NO FURTHER, BUYER SHALL DEFEND, INDEMNIFY AND HOLD
HARMLESS SELLER INDEMNITEES FROM ANY AND ALL LOSSES, LIABILITIES, LIENS,
ENCUMBRANCES, DAMAGES, JUDGMENTS, DEMANDS, SUITS, CLAIMS, ASSESSMENTS,
CHARGES, FINES, PENALITES OR EXPENSES (INCLUDING ATTORNEYS' FEES AND
OTHER COSTS OF LITIGATION), WHICH RESULT FROM INJURIES TO OR DEATH OF ANY
PERSONS, OR DAMAGES TO PROPERTY OF ANY KIND OR CHARACTER WHICH OCCUR
PRIOR TO, ON OR AFTER THE EFFECTIVE TIME AND WHICH ARISE OUT OF, IN
CONNECTION WITH, OR RESULT FROM: (1) THE OWNERSHIP, POSSESSION,
OPERATION, USE OR MAINTENANCE OF THE PROPERTY PRIOR TO, ON AND AFTER THE
EFFECTIVE TIME; OR (2) THE MATERIAL BREACH BY BUYER OF ANY OF ITS
OBLIGATIONS OR REPRESENTATIONS HEREUNDER. SUCH INDEMNIFICATION SHALL
APPLY EVEN THOUGH THE INDEMNIFIED EVENT OR OCCURRENCE ARISES FROM OR IS
CAUSED BY THE SOLE, CONCURRENT OR CONTRIBUTORY NEGLIGENCE, OR BOTH
(WHETHER ACTIVE OR PASSIVE OR OF ANY KIND OR NATURE) OR FAULT OF SELLER,
BUT SUCH INDEMNIFICATION SHALL NOT APPLY IF CAUSED BY THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF SELLER. THIS PARAGRAPH SHALL NOT
APPLY TO ENVIRONMENTAL LIABILITIES AS SET OUT IN ARTICLE 12A.(3). THIS
ARTICLE 12D. SHALL SURVIVE IN PERPETUITY FROM AND AFTER THE EFFECTIVE
TIME.
Article 13
Exclusive Remedy
AS BETWEEN THE BUYER AND THE SELLER AFTER CLOSING, THE INDEMNIFICATION
PROVISIONS SET FORTH IN THIS AGREEMENT AND THE SPECIAL WARRANTY OF TITLE
SET FORTH IN THE SPECIAL WARRANTY DEED WILL BE THE SOLE AND EXCLUSIVE
RIGHTS, OBLIGATIONS AND REMEDIES OF THE PARTIES WITH RESPECT TO THIS
AGREEMENT, THE EVENTS GIVING RISE TO THIS AGREEMENT, AND THE TRANSACTIONS
CONTEMPLATED HEREBY. IF THE CLOSING OCCURS, NEITHER PARTY NOR ANY OF ITS
RESPECTIVE SUCCESSORS OR ASSIGNS SHALL HAVE ANY RIGHTS AGAINST THE OTHER
PARTY OR ITS AFFILIATES AFTER THE CLOSING DATE OTHER THAN AS IS EXPRESSLY
PROVIDED IN THIS AGREEMENT OR WITH RESPECT TO THE SPECIAL WARRANTY OF
TITLE SET FORTH IN THE SPECIAL WARRANTY DEED.
Article 14
Incidental Contamination and NORM
Buyer acknowledges that the Property may contain inter alia asbestos in
piping coating, undisplaced petroleum hydrocarbon products in pipelines,
coats of lead-based paints, PCB's in transformers or rectifiers, mercury
in electrical switches, and Naturally Occurring Radioactive Material
("NORM") in various potential forms. Buyer also expressly understands
that special procedures may be required for the remediation, removal,
transportation and disposal of these affixed or attached substances from
the inside or outside of the piping, Equipment or the Property.
Notwithstanding any contrary provision or definition contained herein, in
connection with these substances affixed to the inside or outside of the
piping, Equipment or the Property, Buyer expressly assumes all liability
for or in connection with the future abandonment and removal of the
Pipelines, tanks, Equipment and other personal property included in the
Property and the assessment, remediation, removal, transportation and
disposal of any such Pipelines, Equipment and personal property and
associated activities in accordance with all relevant rules, regulation
and requirements of Governmental Authorities.
Article 15
Cooperation
The Parties shall execute and deliver such additional documents and shall
use all Reasonable Efforts to take or cause to be taken all such actions
as may be necessary or advisable to close and make effective this
transaction. It shall be Buyer's responsibility to obtain all
governmental and Third Person consents and approvals necessary for the
issuance, reissuance or transfer of environmental and land use permits,
applications, Rights-of-Way, authorities to construct, Permits to
operate, authorizations and licenses used or held by Seller or otherwise
required in connection with the ownership, operation, use and maintenance
of the Property. Upon the request of Buyer, after Closing, Seller shall
assist, with no out of pocket expense to Seller, in obtaining consents
from Third Persons which are necessary or appropriate to transfer any
portion of the Property. After Closing, each Party, at the request of the
other Party, and without additional consideration, shall execute and
deliver, from time to time, such additional documents of conveyance and
transfer as may be necessary to accomplish the orderly transfer of the
Property to Buyer in the manner contemplated in this Agreement.
Article 16
Survival of Provisions
All representations and warranties, covenants of the Parties and the
indemnification obligations of the Parties set forth in this Agreement
shall survive in accordance with the provisions of this Agreement.
Article 17
Costs and Expenses
Each Party shall bear and pay its own costs and expenses, including but
not limited to attorneys' fees, incurred in connection with this
transaction.
Article 18
Risk of Loss
The risk of damage, destruction, or other casualty loss to or of the
Property shall remain with Seller from and after the execution of this
Agreement until the Effective Time, at which time Seller shall place
Buyer in possession of the Property; and from and after the Effective
Time, all risks of damage, destruction, or other casualty loss to or of
the Property shall be borne solely by Buyer.
Article 19
Joint Venture, Partnership and Agency
Nothing contained in this Agreement shall be deemed to create a joint
venture, partnership, Tax partnership or agency relationship between the
Parties.
Article 20
Books and Records
A. Delivery of Books and Records. Not later than ninety (90)
calendar days after Closing, Seller shall deliver to Buyer the Books and
Records. Buyer understands that there may be certain voluminous documents
included within the Books and Records, especially data from Seller's control
center. Seller will retain the control center data, on behalf of Buyer, for
the applicable Department of Transportation ("DOT") required record
retention period and will deliver it to Buyer in a timely manner when Buyer
requests the data for a DOT audit. Buyer will give Seller
reasonable notice of its need for the data. If this transaction is not
closed as to any portion of the Property, all of the Books and Records
obtained from Seller in connection with the exercise of Buyer's pre-
acquisition review, and related solely to that portion of the Property
not transferred as contemplated herein, shall be returned to Seller
within five (5) calendar days after Closing.
B. Retention of Books and Records. Notwithstanding the inclusion
of the Books and Records in the Property under Article 1, Seller shall
have the right to copy and retain any copies of any of the Books and
Records relating to the Property for which it has, or may have, any
business, technical or legal need. To the extent that those Books and
Records made available to Buyer before or after the Closing contain
proprietary business or technical information of Seller or its
Affiliates, Buyer agrees to hold such Books and Records in confidence and
limit their use to the Property. Buyer shall not destroy or otherwise
dispose of any of the Books and Records acquired hereunder for a period
of three (3) years following the Closing (except as to Tax records for
which the period shall be the applicable statute of limitations) except
upon thirty (30) days prior written notice to Seller. During such
periods, Buyer shall make such Books and Records, available to Seller or
its authorized representatives for any business, legal or technical need
in a manner which does not unreasonably interfere with Buyer's business
operations.
Article 21
Publicity
Seller and Buyer shall, and each shall use its Reasonable Efforts to
cause its Affiliates to, cooperate in the development and distribution of
all news releases and other public disclosures, irrespective of the form
of communication, relating to the proposed transaction described in this
Agreement, and to ensure that no such releases or disclosures are made
without prior notice to, and the consent of, the other Party; provided,
however, no news release or other disclosure whatsoever may disclose the
terms of this Agreement unless both Parties agree to the form and content
of such disclosure, including electronic communications, each being under
no obligation to agree and having the right to withhold agreement for any
reason; provided, however, that either Party may make all disclosures
which, in the written opinion of counsel, are required under applicable
Law, including, but not limited to, regulations of the Securities and
Exchange Commission, with the Party making the disclosure giving the
other Party as much advance notice thereof as is feasible.
Article 22
Recording and Filing
Except as may be required by Law, this Agreement shall not be recorded or
filed by either Party, or their successors or assigns, in or with any
Governmental Authority without the prior written consent of the other
Party.
Article 23
Confidentiality
Seller and Buyer (and their respective Affiliates) each acknowledge that
this Agreement and the transactions contemplated hereby are subject to
the Confidentiality Agreement. Buyer and Seller do not intend for any
obligations of confidentiality contained herein to limit disclosure of
the transaction in any way that would cause it to be treated as a
"confidential transaction" under Treasury Regulation 1.6011-4(b)(3).
Article 24
Notices
All notices and consents required or authorized hereunder shall be in
writing and shall be deemed to have been duly given by one Party if
delivered personally, faxed with receipt acknowledged, mailed by
registered or certified mail, delivered by a recognized commercial
courier or otherwise actually received by the other Party at the address
set forth below, or such other address as one Party shall have designated
by ten (10) calendar days prior written notice to the other Party:
Buyer's Address: Seller's Address:
Giant Pipeline Company Shell Pipeline Company LP
23733 N. Scottsdale Road 777 Walker Street
Scottsdale, Arizona 85255 Houston, Texas 77002
Attn: Vice President, Special Projects Attn: Portfolio Manager
Telephone: (480) 585-8829 Telephone: (713) 241-2122
Fax: (480) 585-8892 Fax: (713) 423-0471
Article 25
Time of Performance
Time is of the essence in the performance of all covenants and
obligations under this Agreement.
Article 26
Entire Agreement
This Agreement constitutes the entire agreement between the Parties with
respect to this transaction and supersedes all prior negotiations,
statements, representations, discussions, correspondence, offers,
agreements, and understandings relating to this transaction. This
Agreement may be modified, amended or supplemented only upon the prior
written agreement of the Parties.
Article 27
Assignment
Buyer may not sell, assign, transfer, convey, option, mortgage, pledge or
hypothecate its rights and obligations hereunder to any Third Person
without the prior written consent of Seller, which consent shall not be
unreasonably withheld. Upon any authorized sale, assignment, transfer,
conveyance, option, mortgage, pledge or hypothecation hereunder, all of
the terms, covenants and conditions of this Agreement shall be binding
upon and inure to the benefit of the respective successors and assigns of
Buyer, to the extent assignment is allowed under this Agreement, but
Buyer shall remain jointly liable for the performance of the Buyer's
obligations hereunder.
Article 28
Applicable Law
THIS AGREEMENT, OTHER DOCUMENTS EXECUTED AND DELIVERED PURSUANT HERETO,
AND THE LEGAL RELATIONS BETWEEN THE PARTIES WITH RESPECT TO THIS
AGREEMENT, SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF TEXAS WITHOUT REGARD TO RULES CONCERNING CONFLICTS OF LAWS.
THIS AGREEMENT SHALL BE PERFORMED IN HARRIS COUNTY, TEXAS.
Article 29
Headings
The headings used in this Agreement are inserted for convenience only and
shall be disregarded in construing it.
Article 30
Dispute Resolution
Any dispute, controversy or claim ("Dispute"), whether based on contract,
tort, statute or other legal or equitable theory (including, but not
limited to, any Dispute concerning any question of validity or effect of
this Agreement, including this Article) arising out of or related to this
Agreement, (including any amendments or extensions), the breach or
termination hereof or thereof, the subject matter of this Agreement, the
Property, and the relationship and dealings of the Parties with respect
to these matters, shall be settled by arbitration in accordance with the
then current CPR Institute for Dispute Resolution Rules for Non-
Administered Arbitration of Business Disputes and this provision The
arbitration shall be governed by the United States Arbitration Act 9
U.S.C. 1-16 to the exclusion of any provision of state law inconsistent
therewith or which would produce a different result and judgment upon the
award rendered by the arbitrator may be entered by any court having
jurisdiction. Buyer further covenants not to sue Seller or its Affiliates
and agrees that this Article 30 Dispute Resolution shall be Buyer's sole
and exclusive remedy for any and all Disputes or Claims related in any
manner to the transaction contemplated under this Agreement or the
Property, including, but not limited to, claims of fraud in the
inducement of this Agreement.
Article 31
No Third Person Beneficiaries
Except to the extent a Third Person is expressly given rights herein, any
agreement contained, expressed or implied in this Agreement shall be only
for the benefit of the Parties hereto and their respective legal
representatives, successors and permitted assigns, and such agreements
shall not inure to the benefit of the obligees of any indebtedness of
either Party hereto, it being the intention of the Parties hereto that no
Person shall be deemed a Third Person beneficiary of this Agreement,
except to the extent a Third Person is expressly given rights herein.
Notwithstanding anything herein to the contrary, nothing herein shall be
deemed to create any rights with respect to any employee of either Party
or any employee of any Affiliate of a Party.
Article 32
Counterparts and Facsimiles
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which shall constitute one
and the same instrument. A facsimile transmission of a signed copy of
this Agreement shall be deemed an original and shall have the same valid
and binding affect thereof.
Article 33
Covenants
Through the Closing Date, Seller covenants to continue doing the
following activities in the same manner as it currently conducts the
activities:
(1) One-Call Service for the Pipeline.
(2) Aerial surveillance of the Pipeline.
(3) Cathodic protection for the Pipeline.
(4) Maintain all Permits and Rights-of-Way applicable to the
Property.
Article 34
Exhibits
The Exhibits, Annex, and Schedule listed below are attached to this
Agreement and by this reference are fully incorporated herein:
Annex A Definitions
Exhibit "A" and "A-1" Maps and System Descriptions
Exhibit "B" Real Property
Exhibit "C" Rights-of-Way and Permits
Exhibit "D" Assigned Contracts
Exhibit "E" Equipment
Exhibit "F" Closing Statement
Exhibit "G" Assignment [Partial Assignment]
Exhibit "H" Special Warranty Deed
Exhibit "I" Bill of Sale
Exhibit "J" Assignment of Contracts
Exhibit "K" Performance Guarantee
Exhibit "L" Purchase Price Allocation
Exhibit "M" Certification of Non-Foreign Status
Exhibit "N" Release of Lien
Disclosure Schedule
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
TEXAS-NEW MEXICO PIPE LINE COMPANY
By: /s/ ROBERT M. HEISLER
------------------------------
Name: Robert M. Heisler
------------------------------
Title: President
------------------------------
GIANT PIPELINE COMPANY
By: /s/ LUKE K. WETHERS
------------------------------
Name: Luke K. Wethers
------------------------------
Title: VP, Special Projects
------------------------------
ANNEX A
Attached to and Made Part of
Purchase and Sale Agreement
Dated June 21, 2005 between
Texas-New Mexico Pipe Line Company
and
Giant Pipeline Company
Definitions
As used herein and in the Agreement, the following terms shall have the
meanings defined below:
Accounting Records shall include detail of property accounting records,
including records required to comply with Federal Energy Regulatory
Commission requirements, and up to two (2) years of shipper and customer
revenue invoices, subject to any objection from shippers or customers.
For a legal entity, the accounting records shall include current month
and prior year-end general ledger detail (property records, store stock
inventory, account receivable, trial balances,) account reconciliations,
two (2) years of bank statements, annual financial statements, property
tax records, shipper and customer invoices, subject to any objections
from shippers or customers, and three (3) years of income and excise tax
returns.
Affiliate shall mean, when used with respect to a specified Person, any
other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the specified Person as of the
time or for the time periods during which such determination is made. For
purposes of this definition "control", when used with respect to any
specified Person, means the power to direct the management and policies
of the Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise; and the terms "controlling"
and "controlled" have the meanings correlative to the foregoing.
Agreement shall mean this Purchase and Sale Agreement, including this
Annex, the Exhibits and the Disclosure Schedule attached hereto, as
amended, modified and supplemented from time to time.
Assigned Contracts shall mean those contracts that are a part of the
Property and are described on Exhibit "D", as the same have been amended,
modified and supplemented prior to the Closing.
Books and Records shall mean all non-privileged original files, records
and data (excluding any legal opinions) relating to the Property,
including, but not limited to, lease, land, and title records (including
abstracts of title, title opinions and title curative documents);
contracts; communications to and from any Governmental Authorities; Tax
and Accounting Records; permitting files; health, safety and
environmental records; and engineering and operating records relating to
the Pipeline. In the event that Seller claims that a document is
privileged, Seller shall notify Buyer of that fact in writing prior to
Closing. Unless related to obligations assumed by Buyer and Buyer is
required by Law to have original documentation, files relating to
litigation concerning the Property, shall not be considered to be Books
and Records. In addition, Pipeline Manuals used in the operation and
maintenance of the Pipeline and the process used by Seller for integrity
assessments also shall not be considered to be Books and Records.
Casualty Loss shall have the meaning set forth in Article 3A.(6).
Chemical Substance shall mean any chemical substance, including, but not
limited to, any sort of pollutants, contaminants, chemicals, raw
materials, intermediates, products, industrial or solid substances,
materials, wastes, or petroleum products, including crude oil or any
component or refraction hereof.
Claim shall mean any demand, claim, notice of noncompliance or violation,
loss, cost (including investigatory costs and attorneys' fees), damage,
expense, action, suit, Proceeding, judgment, or liability of any nature
whatsoever.
Closing shall mean the Closing of the purchase and sale of the Property
as contemplated by this Agreement.
Closing Date shall mean the date set for the Closing in accordance with
Article 3.
Closing Statement shall have the meaning set forth in Article 2.
Code shall mean the Internal Revenue Code of 1986, as amended.
Confidentiality Agreement shall mean the agreement executed by Seller and
Buyer on October 31, 2003.
Conveyance Documents shall mean all deeds, bills of sale, assignments and
other good and sufficient instruments of transfer, conveyance and
assignment, in such form as attached to this Agreement as Exhibits "G",
"H", "I", and "J.
Disclosure Schedule shall mean the disclosure schedule of even date with
this Agreement prepared, and delivered to Buyer, by Seller, as the same
is updated between the date of this Agreement and Closing.
Dispute shall have the meaning set forth in Article 30.
DOT shall have the meaning set forth in Article 20.
Earnest Money shall have the meaning set forth in Article 2B.
Effective Time shall mean 7:00 a.m. (local time), on the Closing Date.
Environmental Condition shall mean any Hazardous Substance or Chemical
Substance which is on or affects the Property or which is released,
emitted, or discharged from the Property.
Environmental Law shall include, but shall not be limited to, CERCLA,
RCRA, the Federal Water Pollution Control Act, 33 U.S.C. 1251 et seq.,
the Clean Air Act, 42 U.S.C., 8401, et seq., and the regulations
thereunder, and any other local, state, and/or federal Laws or
regulations, whether currently in effect, or promulgated or amended in
the future, that govern:
- - The existence, cleanup and/or remedy of contamination on the
Property;
- - The protection of the environment from spilled, deposited or
otherwise emplaced contamination;
- - The control of hazardous wastes; or
- - The use, generation, transport, treatment, disposal, removal or
recovery of Hazardous Substances or Chemical Substances, including
building materials.
Estimate of Repair Costs equal $1,000,000.00 and includes the cost or
projected costs to be incurred by Buyer to make repairs to the Pipeline
arising from conditions identified on the Disclosure Schedule or
discovered as a result of the hydrotest.
Equipment shall have the meaning set forth in Article 1A.(5).
Governmental Authority shall mean any entity of or pertaining to
government, including any federal, state, tribal, local, foreign, other
governmental or administrative authority, agency, court, tribunal,
arbitrator, commission, board or bureau.
Hazardous Substance shall mean any substance which at any time shall be
listed as "hazardous" or "toxic" in the regulations implementing the
Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA") 43 U.S.C. 6901 et seq., the Resource Conservation and Recovery
Act ("RCRA) 42 U.S.C.A. 6901 et. seq., the Toxic Substances Control Act
(TSCA) 15 U.S.C.A. 2601 et. seq., or the Emergency Planning and Community
Right to Know Act ("EPCRA") 42 U.S.C.A. 11001 et seq. or which has been
or shall be determined at any time by any agency or court to be a
hazardous or toxic substance and/or a threat to human health and/or the
environment and regulated under applicable Law. The term "Hazardous
Substance" shall also include, for purposes of this Agreement, without
limitation, the products of any manufacturing or other activities on the
subject Property.
Law shall mean all applicable local, state, tribal, federal and foreign
laws and rules, regulations, codes, and ordinances promulgated
thereunder, as well as case law, judgments, orders, consent orders, or
decrees.
Lien shall mean any lien, mortgage, pledge, security interest or options
other than Permitted Encumbrances.
Losses shall mean any and all damages, losses, liabilities, payments,
obligations, penalties, assessments, costs, disbursements or expenses
(including interest, awards, judgments, settlements, fines, costs of
redemption, diminutions in value, fees, disbursements and expenses of
attorneys, accountants and other professional advisors and of expert
witnesses and costs of investigation and preparation of any kind or
nature whatsoever) and court costs.
Material Adverse Environmental Condition shall mean a single
Environmental Condition which is not disclosed on the Disclosure Schedule
dated as of the execution date of this Agreement and requiring the
expenditure of in excess of ten percent (10%) of the Purchase Price to
cure or remedy.
Material Defect shall mean a single defect in the Property (other than a
title defect) which: (1) will significantly impair the operating
functions, safety, conversion, or use of the Property; (2) would cost in
excess of ten percent (10%) of the Purchase Price to cure or remedy and
(3) is not disclosed on the Disclosure Schedule dated as of the execution
date of this Agreement.
Monitoring Well shall mean a properly installed and completed well which
allows for the collection of groundwater information including, but not
limited to, both physical and chemical characteristics.
Ongoing Remedial Work shall have the meaning set forth in Article
11A.(1)(a).
Party and Parties shall have the meaning set forth in the preamble.
Permit shall mean any license, permit, concession, franchise, authority,
consent or approval granted by any Governmental Authority.
Permitted Encumbrances shall mean (a) the Liens described in Section 7K
of the Disclosure Schedule, and (b) Liens for current Taxes which are not
yet due and payable or which Seller is contesting in good faith.
Person shall mean any individual, corporation, partnership, joint
venture, association, joint stock company, limited partnership, trust,
unincorporated organization or Governmental Authority.
Pipeline Manuals shall mean the manuals developed by Seller, or its
predecessors, and used in the operation and maintenance of its pipeline
systems.
Pipeline shall have the meaning set forth in Article 1A.l.
Proceeding shall mean any action, suit, claim, investigation, review or
other proceeding, at law or in equity, before any Governmental Authority
or any arbitrator, board of arbitration or similar entity.
Property shall have the meaning set forth in Article 1A. of the
Agreement.
Purchase Price shall have the meaning set forth in Article 2.
Real Property shall have the meaning set forth in Article 1A.(2).
Reasonable Efforts shall mean efforts in accordance with reasonable
commercial practice and without the incurrence of unreasonable expense.
Review Period shall have the meaning set forth in Article 9A.
Right-of-Way shall mean any right-of-way, easement, license or
prescriptive right that is listed on Exhibit "C".
Seller Indemnitees shall have the meaning set forth in Article 12A.(3).
Significant Title Defect as used in this Agreement, includes, but is not
limited to, any single reservation, exception, limitation, restriction,
lien, encumbrance, or other defect which is not disclosed on the
Disclosure Schedule and which results in or could result in Buyer having
to expend in excess of ten percent (10%) of the Purchase Price to cure or
remedy. Neither (i) a minor deviation in the location of a Pipeline,
relative to a defined Right-of-Way in an easement, (ii) a gap in a Right-
of-Way nor (iii) a minor encroachment onto a Right-of-Way shall be deemed
to constitute a Significant Title Defect for purposes of this Agreement.
Tax shall mean, as relating to any of the Property, any federal, state,
tribal, or local income tax, ad valorem tax, excise tax, sales tax, use
tax, franchise tax, real or personal property tax, transfer tax, gross
receipts tax, or other tax, assessment, duty, fee, levy or other
governmental charge, together with and including, without limitation, any
and all interest, fines, penalties, assessments and additions to tax
resulting from, relating to, or incurred in connection with any such tax
or any contest or dispute thereof.
Third Person shall mean any Person other than Seller or Buyer or their
Affiliates.
Title Examination Period shall have the meaning set forth in Article 10B.
Total Recommissioning Costs includes the cost or projected costs to be
incurred by Buyer for all work necessary to place the Pipeline in crude
oil service for the transportation of crude oil between Jal and Bisti,
New Mexico.
Other Terms. Other terms may be defined elsewhere in the text of the
Agreement and shall have the meaning indicated throughout the Agreement.
Other Definitional Provisions
1. The words "hereof", "herein", and "hereunder" and words of similar
import, when used in this Agreement shall refer to this Agreement
as a whole and not to any particular provision of this Agreement.
2. The terms defined in the singular shall have a comparable meaning
when used in the plural, and vice versa.
3. Whenever a statement is qualified by the term "knowledge", or
similar term or phrase, it is intended to indicate actual
knowledge, or the possession of information, data or documents
that would give actual knowledge, on the part of a Person or its
officers, directors or employees with direct responsibility for
the matter.
4. Whenever the Parties have agreed that any approval or consent
shall not be "unreasonably withheld", such phrase shall also
include the Parties' agreement that the approval or consent shall
not be unreasonably delayed or conditioned.