Exhibit 10.1
AGREEMENT FOR SALE AND PURCHASE OF ASSETS
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This Agreement for Sale and Purchase of Assets ("Agreement") is made and
entered into as of this 19th day of February, 1995 by and between WYCO PIPE
LINE COMPANY, a Delaware corporation having its principal office at One Mid
America Plaza, Suite 300, Oakbrook Terrace, Illinois 60181-7423 (referred to
herein as "Seller") and KANEB PIPE LINE OPERATING PARTNERSHIP, L.P., a Delaware
limited partnership having its principal office at 2435 North Central
Expressway, Suite 700, Richardson, Texas 75080 (referred to herein as "Buyer").
W I T N E S S E T H:
WHEREAS, Seller is the owner of a petroleum liquids pipeline running from
Casper, Wyoming to near Fountain, Colorado and from Douglas, Wyoming to Rapid
City, South Dakota, as shown on the map attached hereto and made a part hereof
as Schedule 1.1(a), together with the Related Property (as such term is defined
in Section 1.1(c) hereof), certain associated valves, pump stations, tanks,
metering facilities, and equipment located on the Related Property or used in
connection with the pipeline, and certain other assets related to or used in
connection with the pipeline;
WHEREAS, Seller desires to sell to Buyer and Buyer desires to purchase from
Seller, the pipeline and certain other assets related to the pipeline, upon the
terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing premises and of the
mutual covenants, conditions and agreements set forth herein, the parties hereby
agree as follows:
ARTICLE I - PURCHASE AND SALE OF ASSETS
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1.1 Assets To Be Transferred. Subject to, and upon the terms and
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conditions of this Agreement, Seller shall sell, transfer, convey, assign, set
over, and deliver to Buyer, and Buyer shall purchase, acquire and receive from
Seller, at the Closing (as such term is defined in Section 11.1 hereof), the
assets listed and described in subsections (a) through (g) below (collectively
referred to herein as the "Assets"):
(a) Pipeline. The pipeline as shown on Schedule 1.1(a) hereof (the
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"Pipeline").
(b) Pipeline Equipment. Subject to Section 1.2 hereof and subject to
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rights or interests of third parties reflected in the Contracts (as such
term is defined in Section 1.1(e) hereof), all facilities, equipment and
other personal property listed in Schedule 1.1(b) attached hereto and made
a part hereof (the "Pipeline Equipment"), except for items that
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are listed in Schedule 1.1(b) as "Excluded Items". The Pipeline Equipment
together with the Pipeline is collectively referred to herein as the
"Pipeline System".
(c) Related Property. Subject to Sections 1.3 and 1.5 hereof, the real
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property and buildings and improvements located thereon, and the
leaseholds, easements, rights-of-way, permits, licenses, grants and other
real property rights, related to or used in the operation of the Pipeline
System in the six (6) months preceding the date hereof, all as more fully
described in Schedule 1.1(c) attached hereto and made a part hereof (the
"Related Property").
(d) Licenses and Permits. Subject to Sections 1.2 and 1.6 hereof, all of
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Seller's rights under all governmental permits, licenses and approvals
(other than such which are Related Property, which are covered in Section
1.1(c)) listed in Schedule 1.1(d) attached hereto and made a part hereof
(the "Permits"), except for items that are listed in Schedule 1.1(d) as
"Excluded Items".
(e) Contracts. Subject to Sections 1.2 and 1.6 hereof, and to the
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contract assignment and assumption agreement to be executed by the parties
pursuant to Section 1.4(d) and Article XI hereof, all of Seller's rights in
all of the executory contracts, agreements, leases and commitments listed
in Schedule 1.1(e) attached hereto and made a part hereof (the
"Contracts"), except for items that are listed in Schedule 1.1(e) as
"Excluded Items".
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(f) Records. Except as otherwise provided in Section 1.2 hereof, all
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records, documents, contracts, correspondence, legal documents, lease, land
and title records, health, safety and environmental records, drawings,
specifications, designs, plans, technical data, and maintenance and repair
records relating to the assets described in the foregoing subsections
1.1(a) through (e) and necessary to or useable in the operation of the
Pipeline System after the Closing (the "Records"), except for items that
are identified on Schedule 1.1(f) as "Excluded Items"; it being understood
that Seller has the right to retain copies of any such Records.
(g) Trade Name. All of the right and interest in the name "Wyco" that
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Seller possesses and has the right to transfer (the "Trade Name").
1.2 Excluded Assets. The following rights, properties and assets (the
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"Excluded Assets") are not included in the Assets and their exclusion from sale
hereunder shall not affect the Purchase Price (as defined in Section 2.1 hereof)
and shall not prevent or delay the Closing:
(a) Unassignable Assets. Subject to the provisions of Section 1.6 hereof,
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those leases, contracts, licenses, permits, approvals, consents, agreements
and commitments included as an Asset but which by their express or implied
terms or by operation of law are not freely assignable by Seller to Buyer,
and any other assets, properties, rights or information that Seller and
Buyer may prior to the Closing agree in writing to exclude from the sale,
provided, however, that no Related Property shall be an Excluded Asset.
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(b) Records. All (i) records prepared specifically for use in connection
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with the sale of the Assets, including bids received from third
parties and information related to such bids, (ii) records identified
on Schedule 1.1(f) attached hereto as Excluded Items, and (iii)
records which relate solely to any liabilities which Buyer does not
assume pursuant to Article III of this Agreement.
(c) Third Party Product. Except as provided in Section 8.1(c) hereof, all
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line fill, tank and other inventories of petroleum liquids related to the
Pipeline System.
(d) Mandan Line. The 8" pipeline extending from Lignite, North Dakota to
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Black Slough, North Dakota and the 6" pipeline extending from Battleview,
North Dakota to Ramberg Junction, North Dakota, together with associated
licenses, permits, valves, fittings, meters, pumps, engines, electrical
equipment, other equipment, pump stations, tanks, metering facilities,
easements, rights-of-way, leases, other real property interests, contracts,
accounts receivables and records (the "Mandan Line").
(e) Accounts Receivable. All accounts receivable and notes receivable
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related to the Pipeline System, the Related Property, the Permits or the
Contracts ("Accounts Receivable") insofar as the event, matter or
performance giving rise to the receivable occurred prior to the Closing.
(f) Cash. All of Seller's cash on hand or on deposit.
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(g) Other. The items identified on Schedules 1.1(b), 1.1(d) and 1.1(e) as
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Excluded Items.
1.3 Unassignable and Missing Related Property. To the extent that Buyer
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identifies in writing (i) any Related Property which by its express or implied
terms or by operation of law is not capable of being validly assigned or
transferred by Seller to Buyer without the consent or waiver of the owner or
issuer thereof or the other party thereto, or any third person (including a
government or governmental unit), or (ii) any portion of the Pipeline System for
which Seller does not own valid rights-of-way, easements, permits, licenses,
grants, leaseholds or other real property rights necessary for the operation
thereof as conducted during the six (6) months preceding the date hereof, Seller
at its sole cost shall (1) with respect to those matters identified by Buyer
pursuant to clause (i) above, use its best efforts to obtain prior to the
Closing such consents and waivers in principle subject to verification of the
Closing having occurred, by means of letters substantially in the form of
Schedule 1.3 attached hereto and made a part hereof (with no material changes
thereto), and (2) with respect to those matters identified by Buyer pursuant to
clause (ii) above, use its best efforts to obtain such rights-of-way, easements,
permits, licenses, grants, leaseholds or other real property rights, prior to
the Closing. Seller shall not be obligated to pay any presently existing
periodic costs or fees associated with such Related Property which accrue for
periods after the Closing in order to obtain such consents and waivers in
principle; Seller shall, however, pay all other administrative and processing
costs required, whether before or after the Closing, in order for Buyer to
obtain after the Closing the formal consents and waivers described in the
consents and waivers in principle.
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1.4 Instruments of Conveyance, Transfer and Assignment. In order to
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accomplish the sale, assignment, transfer and conveyance contemplated herein,
Seller shall execute and deliver at the Closing deeds, bills of sale and other
documents or instruments of assignment, transfer and conveyance (the "Transfer
Documents") appropriate to transfer to Buyer the Assets, subject to Section 1.2,
as follows:
(a) Fee owned Related Property, by special warranty deed, in the form of
Exhibit A attached hereto and made a part hereof;
(b) Leasehold, easement, right-of-way and other interests in Related
Property (that are not customarily transferred by deed) by an assignment
and conveyance in the form of Exhibit B attached hereto and made a part
hereof;
(c) Pipeline, Pipeline Equipment, Records and Trade Name, by a bill of
sale in the form of Exhibit C attached hereto and made a part hereof;
(d) Contracts, by a contract assignment and assumption agreement in the
form of Exhibit D attached hereto and made a part hereof; and
(e) Permits, by an assignment in the form of Exhibit E attached hereto and
made a part hereof and such documents of transfer or assignment as the
appropriate authorities or parties may require.
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1.5 Title to Related Property.
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(a) Subject to the provisions of this Section 1.5, Seller shall convey to
Buyer, and Buyer shall accept from Seller, the Related Property subject to,
and only subject to: (i) all easements, covenants, conditions,
restrictions, exceptions, reservations and encumbrances (other than liens,
except for liens for real estate taxes not yet due and payable) of record;
(ii) all building, zoning, and other applicable ordinances and regulations
of any municipal, county, state or federal authority having jurisdiction
over the Related Property; (iii) ad valorem real and personal property
taxes and general and special assessments for the then current period as
are not due and payable prior to the Closing; (iv) all encroachments,
overlaps, and other matters which would be disclosed by an accurate current
survey; (v) title defects consisting of survey exceptions and other
recorded easements, licenses, rights-of-way or other restrictions as to the
use of the Related Property; (vi) rights or interests of third parties in
or to the Related Property which are reflected in the Contracts (not
including items listed in Schedule 1.1(e) as Excluded Items); and (vii)
such facts as would be revealed by an inspection of the Related Property
(the items described in clauses (i) through (vii) above collectively
referred to herein as "Title Exceptions").
(b) Buyer shall be entitled to obtain prior to the Closing, at Buyer's
option and sole cost, metes and bounds surveys made by a registered
surveyor setting forth the location of all
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buildings and permanent structures and the location of all recorded and
ascertainable easements and rights-of-way. Seller agrees to cooperate with
Buyer's efforts to obtain the surveys, including furnishing Buyer promptly
upon request copies of all surveys which Seller may have in its possession.
(c) Buyer shall be entitled to obtain prior to the date of the Closing, at
its option, a title insurance commitment agreeing to issue to Buyer, upon
recording of the deed and assignment to Buyer, owner's policies of title
insurance in an amount to be determined by Buyer, insuring the title of
Buyer to the Related Property subject only to the ALTA standard printed
exceptions in a policy issued by a title insurance company reasonably
acceptable to Buyer and to Title Exceptions which do not prevent the
current use of the Related Property. To the extent that such title
insurance commitment covers fee owned Related Property, the costs of same
shall be shared equally by Buyer and Seller; all other costs of any such
title insurance, including endorsements and title insurance policies, shall
be borne by Buyer. After the date hereof and until the Closing, Seller
shall not permit to be filed of record any instrument affecting title to
the Related Property without the consent of Buyer, such consent not to be
unreasonably withheld.
(d) After the Closing, Buyer shall be responsible for recording, at its
sole cost, the conveyance of the Related Property hereunder.
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(e) Nothing in this Section 1.5 shall limit the representations of Seller
set forth in Article VII below.
1.6 Restrictions on Transfer of Permits, Licenses, Leases and Contracts.
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(a) To the extent that any lease, contract, license, permit, approval,
consent, or other agreement or commitment (but not including such which are
Related Property) included as an Asset to be transferred to Buyer is by its
express or implied terms or by operation of law not capable of being
validly assigned or transferred without the consent or waiver of the issuer
thereof or the other party thereto, or any third person (including a
government or governmental unit), or if such assignment, transfer or
attempted assignment or transfer would constitute a termination or breach
thereof or a violation of any law, decree, order, regulation or other
governmental edict or is otherwise not practicable, this Agreement shall
not constitute an assignment or transfer thereof, or an attempted
assignment or transfer thereof. Any such lease, contract, license, permit,
approval, consent, agreement or commitment (but not including such which
are Related Property) identified by Buyer in writing prior to the Closing
is referred to herein as a "Restricted Asset".
(b) Seller shall be under no obligation to transfer, or attempt to obtain
necessary consents and waivers, with respect to any Restricted Asset which
is a Permit that is not capable of being assigned. Seller is not obligated
to transfer to Buyer any other
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Restricted Asset (an "Other Restricted Asset") without Seller and Buyer
first having obtained all necessary consents and waivers. Seller shall use
reasonable efforts for a twelve (12) month period, commencing on the date
hereof, and Buyer shall cooperate with Seller, to obtain the consents and
waivers necessary for Seller to convey to Buyer any such Other Restricted
Asset as soon as practicable; provided, however, that neither party shall
be obligated to pay any consideration therefor to the party from whom the
consent or waiver is requested.
(c) To the extent that the consents and waivers for Other Restricted
Assets referred to in Section 1.6(b) hereof are not obtained by Seller, or
until the impracticalities of transfer referred to therein are resolved,
Seller shall, during the twelve (12) month period commencing on the date
hereof or such longer period as Seller may desire (but, as to any
particular Other Restricted Asset, not longer than the term thereof,
including renewal options), use its reasonable efforts to (i) provide to
Buyer at Buyer's request the benefits of any Other Restricted Asset, but
only to the extent necessary to permit Buyer's ownership or use of the
Assets to the same or similar extent as owned or used by Seller in the six
(6) months immediately prior to the Closing, and (ii) cooperate in any
reasonable and lawful arrangement designed to provide such benefits to
Buyer. After Seller has fulfilled Seller's obligations set forth in
Section 1.6(b) hereof, Seller shall have no further obligations hereunder
with respect to assignment of such Other Restricted Asset, and the failure
to obtain any necessary consent or waiver with respect thereto shall not be
a breach of this Agreement. In no event shall Seller's obligations under
this
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Section 1.6 include any obligation to commence or prosecute litigation
against any third party. Buyer agrees to reimburse promptly Seller for its
reasonable costs incurred in connection with this Section 1.6(c).
(d) To the extent that Buyer is provided the benefits pursuant to Section
1.6(c) hereof of any Other Restricted Asset, Buyer shall perform, for the
benefit of the issuer thereof or the other party or parties thereto, the
obligations of Seller thereunder or in connection therewith, but only to
the extent that (i) such action by Buyer would not result in any default
thereunder or in connection therewith, and (ii) such obligation would have
been assumed by Buyer pursuant to Article III hereof or pursuant to the
contract assignment and assumption agreement to be executed by the parties
pursuant to Section 1.4(d) and Article XI hereof, but for the
nonassignability or nontransferability thereof. If Buyer shall fail to
perform to the extent required herein, Seller shall cease to be obligated
under this Section 1.6 in respect of the instrument which is the subject of
such failure to perform unless and until such situation is remedied, and
Buyer shall indemnify, defend and hold Seller harmless from the
consequences of Buyer's failure to perform in accordance with the
provisions of Section 12.2 of this Agreement.
1.7 Destruction of the Assets.
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(a) In the event any of the Assets material to the operation of the
Pipeline System are damaged or destroyed by fire or other casualty, or are
condemned or threatened to be
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condemned, after the date hereof and prior to the Closing, Seller shall
promptly notify Buyer in writing of such, including reasonable detail
regarding the facts related thereto known to Seller.
(b) If in Seller's good faith judgment repair or replacement of such
Assets can be made at a cost not to exceed $1,355,000, then Seller, at
Seller's sole cost, shall promptly commence and diligently pursue the
repair or replacement of such Assets to Buyer's reasonable satisfaction and
return of the Pipeline System to its normal operating condition as operated
in the six (6) months preceding the date hereof. If in Seller's good faith
judgment the cost of such replacement or repair of such Assets may exceed
$1,355,000, then Seller shall elect to: (i) terminate this Agreement, or
(ii) subject to any rights of Buyer in Section 1.7(c), become obligated to
Buyer, at Seller's sole cost, promptly to commence and diligently pursue
the repair or replacement of such Assets to Buyer's reasonable satisfaction
and return of the Pipeline System to its normal operating condition as
operated in the six (6) months preceding the date hereof. Seller shall
notify Buyer of Seller's repair and replacement cost estimate and, if
applicable, its election under the preceding sentence within ten (10) days
of such loss, destruction, condemnation or threat of condemnation, which
notice shall include reasonable detail supporting such cost estimate.
(c) In the event any of the Assets material to the operation of the
Pipeline System are damaged or destroyed by fire or other casualty, or are
condemned or threatened to be
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condemned, after the date hereof and prior to the Closing and in Buyer's
good faith judgment the repair or replacement of such Assets and return of
the Pipeline System to its normal operating condition as operated in the
six (6) months preceding the date hereof may (i) exceed $4,065,000 in cost,
or (ii) take longer than ninety (90) days, then Buyer may elect to
terminate this Agreement by sending written notice of such election to
Seller within ten (10) days of Seller's notice under Section 1.7(b).
(d) If such loss, destruction, condemnation or threat of condemnation
occurs within the ten (10) day period prior to the Closing, the Closing
shall be delayed to the date ten (10) days after the giving of Seller's
notice under Section 1.7(b), to enable the applicable elections to be made,
or if such tenth (10th) day is a Saturday, Sunday or legal holiday in which
banks in Chicago, Illinois are not open for business, the Closing shall be
delayed to the first business day after such tenth (10th) day. If (i) any
damage, destruction, condemnation or threat of condemnation of any of the
Assets occurs after the date hereof and prior to the Closing, (ii) Seller
is obligated or elects to repair or replace such Assets pursuant to this
Section 1.7, (iii) Buyer does not exercise any right of termination of this
Agreement pursuant to this Section 1.7, and (iv) the repair or replacement
has not been completed prior to the scheduled time and date for the
Closing, then Buyer may, at its option, elect to either (1) delay the
Closing until the fifth (5th) business day after all the repairs and
replacements have been completed to Buyer's reasonable satisfaction and the
Pipeline System has been returned to its normal operating condition as
operated in the six (6) months preceding the date hereof, or (2) close the
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transactions contemplated by this Agreement on the scheduled date for the
Closing and require Seller to complete the repairs and replacements
contemplated by this Section 1.7 after the Closing.
ARTICLE II - PURCHASE PRICE
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2.1 Purchase Price. In consideration of the transfer of the Assets at the
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Closing and the other undertakings of Seller hereunder, Buyer shall pay to
Seller at the Closing twenty seven million, one hundred thousand dollars
($27,100,000.00) (the "Purchase Price").
2.2 Payment. At the Closing, Buyer shall deposit the Purchase Price in
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immediately available funds by bank wire transfer in an account or accounts (but
not more than two (2) accounts) at a national bank or banks located in the
United States designated by Seller. Seller shall give notice to Buyer of the
account or accounts and any other wire transfer instructions at least three (3)
days before the day of the Closing.
2.3 Prorations.
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(a) The following items relating to the Assets shall be prorated at the
Closing between Buyer and Seller and final payment made to the party to
whom it is due based on the respective period in which the parties own the
Assets during the calendar year which includes the Closing (the
"Prorations"):
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(i) all real estate, personal property and other ad valorem taxes and
assessments (excluding penalties and interest) assessed or levied against the
Related Property;
(ii) charges, if any, for utilities servicing the Pipeline System and
the Related Property;
(iii) payments, if any, under service and similar Contracts that are
assumed by Buyer;
(iv) prepaid rent, prepaid property taxes, prepaid supplies, advances
and other prepaid costs and deposits related to the Pipeline System, the Related
Property, the Permits or the Contracts; and
(v) all other charges and fees related to the Assets customarily
prorated and adjusted in similar transactions.
For purposes of making such prorations, Seller shall be deemed to have conveyed
the Assets as of 11:59 p.m. the day before the Closing. In the event that
accurate prorations and other adjustments cannot be made because current bills
are not obtainable at the Closing, the parties shall prorate on the best
available information, subject to the Post-Closing Adjustment set forth in
Section 2.4 below.
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(b) At the Closing, Seller shall pay Buyer four hundred eighty thousand,
six hundred eighty five dollars and twenty cents ($480,685.20) as a good
faith estimate by the parties of the amount to be reimbursed to Buyer for
the Prorations, subject to the Post-Closing Adjustment set forth in Section
2.4 below. At the Closing, Seller shall deposit the aforementioned amount
in immediately available funds by bank wire transfer in an account at a
national bank located in the United States designated by Buyer. Buyer
shall give notice to Seller of the account and any other wire transfer
instructions at least three (3) days before the day of the Closing.
2.4 Post-Closing Adjustment.
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(a) Buyer will provide to Seller copies of any invoices paid by Buyer
after the Closing that relate to Prorations. Within one hundred and twenty
(120) days after the Closing, Seller shall provide Buyer with a statement
of prorations based on final invoices or other final amounts setting forth
the prorations required by Section 2.3, certified by an officer of Seller
("Statement of Prorations"). Seller shall also provide any supporting
documentation reasonably requested by Buyer. If the Statement of
Prorations indicates that Buyer paid an excess amount at the Closing with
respect to the Prorations required by Section 2.3, the Statement of
Prorations shall be accompanied by a check in payment of the excess to
Buyer, plus interest from the later of (i) the date of the Closing or (ii)
the date of payment of the expense that is subject to proration, through
the date of payment of such excess to Buyer, calculated at an interest rate
equal to the most recently
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quoted (at the time of payment of such excess to Buyer) one month LIBOR
rate, compounded annually until paid.
(b) Within thirty (30) days of receipt of the Statement of Prorations and
any supporting documentation reasonably requested by Buyer, final payment
shall be made to the party to whom it is due for the difference between (i)
the good faith estimate of the Prorations paid at the Closing pursuant to
Section 2.1 herein, and (ii) the corresponding amounts reflected in the
Statement of Prorations, plus interest from the later of (i) the date of
the Closing or (ii) the date of payment of the expense that is subject to
proration, through the date of payment of such difference, calculated at an
interest rate equal to the most recently quoted (at the time of payment of
such difference) one month LIBOR rate, compounded annually until paid.
(c) Buyer shall have the right to conduct an audit of the relevant books
and records of Seller for the purpose of determining the accuracy of the
Statement of Prorations, provided that any audit must be completed and
written notice of contest of the Statement of Prorations must be given
within three (3) months after receipt of the Statement of Prorations by
Buyer or the Statement of Prorations as delivered by Seller shall be deemed
to be conclusive and binding on the parties. If as the result of any such
audit Buyer contests any portion of the Statement of Prorations within such
three (3) month period, Buyer and Seller shall cooperate in good faith to
reach agreement on a final Statement of Prorations. If Buyer and Seller
cannot agree within thirty (30) days of the date of the
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written notice of contest, the parties will submit the issue to binding
arbitration by a single arbitrator under the then-existing commercial
arbitration rules of the American Arbitration Association.
2.5 Like-Kind Exchange.
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(a) It is Seller's intention to exchange the Assets that are the subject
of this Agreement for other property of like-kind in a non-simultaneous
exchange ("Non-Simultaneous Exchange") under such terms and conditions as
qualify for nonrecognition of gain pursuant to Section 1031 of the Internal
Revenue Code of 1986, as amended. At Seller's election, made to Buyer
prior to the transfer of the Assets to Buyer at the Closing and pursuant to
an assignment in the form of Exhibit F attached hereto and made a part
hereof (the "Assignment"), Buyer's obligation to pay to Seller at the
Closing the Purchase Price shall be fulfilled by Buyer's deposit of such
amount at the Closing in immediately available funds by bank wire transfer
in a trust established with Chicago Title and Trust Company as trustee,
pursuant to an exchange trust agreement between Seller and Chicago Deferred
Exchange Corporation.
(b) Buyer agrees to execute a copy of the Assignment and return such copy
to Seller solely for the purpose of acknowledging receipt of the notice
from Seller that Seller intends to effectuate the Non-Simultaneous
Exchange.
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2.6 Payments Between Parties. In the event either party ("Recipient")
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receives payments or refunds to which the other party ("Beneficiary") is
entitled in whole or in part under this Agreement, the Recipient shall within
fifteen (15) days from the date of such receipt pay such amount to the
Beneficiary. All payments to be made under this Section 2.6 or under other
provisions of this Agreement (including Exhibits to be executed and delivered
pursuant to the Agreement) requiring a payment to be made at a time other than
the Closing, shall be made by check or wire transfer in immediately available
funds.
ARTICLE III - ALLOCATION OF LIABILITIES
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3.1 Known Pre-Closing Liabilities. Seller has knowledge of certain
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liabilities and obligations relating to or arising from the ownership,
operation, maintenance or use of the Assets by Seller prior to the Closing.
Such known liabilities and obligations shall be allocated as follows:
(a) Seller shall retain, without limit as to time or amount, all liability
and obligation relating to or arising from Kramer et al. v. Wyco Pipe Line
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Company, Civil Action No. 91CV2019, District Court, County of Adams, State
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of Colorado (the "Kramer Case").
(b) Seller shall retain, without limit as to time or amount, all liability
and obligation relating to or arising from the "Off-Site Dupont Plume", as
such term is defined in Schedule 3.1(b) attached hereto and made a part
hereof, and all liability and obligation
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relating to or arising from the "Rocky Mountain Arsenal Leak Site", as such
term is defined in Schedule 3.1(b) attached hereto and made a part hereof,
provided, however, that Seller shall not be liable or obligated for any
incremental liability or obligation relating to the Off-Site Dupont Plume
or the Rocky Mountain Arsenal Leak Site to the extent attributable to (i)
any failure by Buyer to implement the Agreed Remediation Plan (as such term
is defined in Section 3.1(c) hereof) in accordance with the time schedules
set forth in such plan, or negligence in the performance of the Agreed
Remediation Plan, or (ii) any release, spill, leak, discharge or other
emission affecting the soil or groundwater attributable to Buyer's
operations after the Closing. Such incremental liability or obligation
shall be Buyer's sole liability.
(c) The matters set forth on Schedule 3.1(c)1 attached hereto and made a
part hereof (the matters so set forth referred to herein as the "Known Pre-
Closing Contamination") are instances of contamination on the surface or in
the subsurface or groundwater of the Related Property, in existence on or
prior to the Closing and attributable to the ownership, operation,
maintenance or use of the Assets by Seller prior to the Closing, of which
Seller has sufficient knowledge to develop a plan of remediation. Seller
has shared such knowledge with Buyer, and Seller and Buyer have agreed to a
plan of remediation to be followed for the Known Pre-Closing Contamination,
which is set forth in Schedule 3.1(c)2 attached hereto and made a part
hereof (the "Agreed Remediation Plan"), and to the estimated costs
associated with such Agreed Remediation Plan, which are set forth in
Schedule 3.1(c)3 attached hereto and made a part hereof. At the Closing,
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Seller and Buyer shall each execute and deliver to the other a remediation
agreement covering remediation of the Known Pre-Closing Contamination,
substantially in the form attached hereto and made a part hereof as Exhibit
G (the "Remediation Agreement").
(d) The matters set forth on Schedule 3.1(d)1 attached hereto and made a
part hereof are instances of contamination on the surface or in the
subsurface or groundwater of the Related Property, in existence on or prior
to the Closing and attributable to the ownership, operation, maintenance or
use of the Assets by Seller prior to the Closing, of which Seller has some
knowledge, but insufficient knowledge to fully develop a plan of
remediation (the "Schedule 3.1(d) Contamination"). Seller has shared such
knowledge with Buyer, and Seller and Buyer have preliminarily devised a
provisional plan of remediation for the Schedule 3.1(d) Contamination,
which is set forth in Schedule 3.1(d)2 attached hereto and made a part
hereof, and have preliminarily estimated the costs associated with such
provisional remediation plan as set forth in Schedule 3.1(d)3 attached
hereto and made a part hereof. The present value of such estimated costs
(using a discount rate of 10%) is seven hundred sixty six thousand and two
hundred dollars ($766,200). At such time as, in the case of the Cheyenne
Terminal contamination reflected on Schedule 3.1(d)1, the relevant State of
Wyoming Environmental Agency approves a plan of remediation, but in no
event later than eighteen (18) months after the date of the Closing, and in
the case of the Rapid City contamination reflected on Schedule 3.1(d)1, the
relevant State of South Dakota Environmental Agency approves a plan of
remediation, but in no event later than eighteen (18) months after the date
of the
22
Closing, Seller and Buyer shall agree as to the plan of remediation to be
followed for the Schedule 3.1(d) Contamination and as to the estimated
costs associated with such plan of remediation (including amounts spent
since the Closing). If Seller and Buyer are unable to so agree within
eighteen (18) months of the date of the Closing, the parties will submit
the unresolved issues to binding arbitration by a single arbitrator under
the then-existing commercial arbitration rules of the American Arbitration
Association. The plan of remediation with respect to the Schedule 3.1(d)
Contamination and the estimated costs associated with such plan (including
amounts spent since the Closing), as agreed or determined by arbitration,
shall be reduced to writing and signed by representatives of Seller and
Buyer (the "3.1(d) Remediation Plan"), and such writing when so signed
shall be deemed a part of this Agreement. At the Closing, Seller and Buyer
shall each execute and deliver to the other a remediation agreement
covering remediation of the Schedule 3.1(d) Contamination, substantially in
the form attached hereto and made a part hereof as Exhibit G (the
"Remediation Agreement").
3.2 Unknown Pre-Closing and Other Liabilities. For purposes of this
-----------------------------------------
Agreement, the term "Unknown Liability" shall refer collectively to the items
described in clauses (i), (ii) and (iii) below, specifically, (i) liability or
obligation relating to or arising from or as a result of a violation of or a
remedial or regulatory obligation imposed under Environmental Law (as such term
is defined in the Remediation Agreement) relating to or arising from or as a
result of an act, event or contamination that occurred or existed at or prior to
the Closing and was attributable or related to the ownership or use of the
Assets prior to the Closing ("Unknown
23
Environmental Liability"); (ii) liability or obligation relating to or arising
from the breach of any representation, warranty, covenant or other obligation of
Seller contained in this Agreement, including but not limited to the Remediation
Agreement; and (iii) all other liabilities or obligations of Seller relating to
or arising from the Assets, including, but not limited to, liability or
obligation for third party claims for personal injury or property damage, which
personal injury or property damage was caused by the ownership or use of the
Assets by Seller prior to the Closing, but excluding liabilities and obligations
assumed under the Contracts assigned to Buyer pursuant to the contract
assignment and assumption agreement to be executed by the parties pursuant to
Section 1.4(d) and Article XI hereof, and excluding obligations to be performed
by Buyer pursuant to Section 1.6(d) hereof (the liabilities and obligations
included in this clause (iii) being referred to herein as "Other Liability");
provided that Unknown Liability, Unknown Environmental Liability and Other
Liability shall not include any of the liabilities or obligations retained by
Seller pursuant to Sections 3.1(a) or (b) hereof or any of the costs for
remediation or fines or penalties assumed by or allocated to Buyer under the
Remediation Agreement that are not designated as an Unknown Environmental
Liability under the Remediation Agreement. This Section 3.2 sets forth the
extent to which and the conditions under which Seller shall retain liability for
Unknown Liability.
(a) With respect to Unknown Environmental Liability, if within four and
one-half (4 1/2) years after the Closing, (i) an Environmental Order (as
such term is defined in the Remediation Agreement) is issued, the effect of
which, if not contested, would be to impose a legal obligation to perform
remediation or to impose other legal liability or
24
obligation pursuant to Environmental Law with respect to any Unknown
Environmental Liability (or with respect to Known Pre-Closing Contamination
as set forth in Section 1 of the Remediation Agreement or with respect to
Schedule 3.1(d) Contamination as set forth in Section 2 of the Remediation
Agreement) (collectively, an "Order"), or (ii) a third party delivers a
written statement of claim, the clear purport of which is to assert
liability or damages against Seller or Buyer relating to any Unknown
Environmental Liability (a "Claim"), Seller shall retain liability under
Environmental Law in effect as of the date of the Closing, directly
relating to or arising from any such Order or to the third party making
such Claim (except in the case of an Order under the Remediation Agreement,
Seller shall retain liability only for the incremental cost necessary to
comply fully with such Order), subject to the following and also to
subsections (e), (f) and (g) of Section 3.2 hereof and to Section 3.3
hereof:
(i) Promptly upon becoming aware of any facts which have not yet but
may give rise to such an Order or Claim, Buyer shall provide Seller with
written notice thereof and the opportunity to participate in discussions
with the relevant Environmental Agencies (as such term is defined in the
Remediation Agreement) or third parties relating to such facts, and in
Seller's sole discretion and at its sole cost to appeal any preliminary
determination or finding of such Environmental Agencies, provided that,
subject to clause (ii) below, any delay or failure to provide such notice
promptly will not limit Seller's liability hereunder except to the extent
Seller is damaged or prejudiced by such delay or failure; and
25
(ii) For Seller to have any liability or obligation for any such
Unknown Environmental Liability, Buyer must give written notice of any such
Order or Claim, including copies thereof, in no event later than four and
one-half (4 1/2) years after the Closing (unless Seller otherwise has
received written notice of such Order or Claim, including a copy thereof,
prior to the end of such four and one-half (4 1/2) year period, in which
event Seller shall retain liability and obligation directly relating to or
arising from such Order or to the third party making such Claim as set
forth above, subject to subsections (e), (f) and (g) of Section 3.2 and to
Section 3.3 hereof, and shall promptly give notice of such Order or Claim
to Buyer). If such written notice is given after the expiration of such
four and one-half (4 1/2) year period, Seller shall have no liability or
obligation for such Unknown Environmental Liability, regardless of whether
Buyer could reasonably have known of such Unknown Environmental Liability
within such four and one-half (4 1/2) year period (unless Seller otherwise
has received written notice of such Order or Claim, including a copy
thereof, prior to the end of such four and one-half (4 1/2) year period, in
which event Seller shall retain liability and obligation directly relating
to or arising from such Order or to the third party making such Claim as
set forth above, subject to subsections (e), (f) and (g) of Section 3.2 and
to Section 3.3 hereof, and shall promptly give notice of such Order or
Claim to Buyer); and
(iii) If Buyer, subsequent to the Closing, sells, transfers, conveys,
assigns, sets over, leases or otherwise disposes of any of the Assets or
any part thereof to any person other than an Affiliate of Buyer (as such
term is defined in Section 15.14(ii) hereof)
26
("Resold Assets"), notwithstanding the foregoing, Seller shall have no
liability or obligation relating to or arising from Unknown Environmental
Liability associated with such Resold Assets, even if such sale, transfer,
or other disposition occurs within four and one-half (4 1/2) years after
the Closing; and
(iv) With respect to any particular such Unknown Environmental
Liability of which (1) Buyer has given written notice to Seller or Seller
has otherwise received written notice in accordance with clauses (i) and
(ii) above, and (2) Seller has agreed in writing that such Unknown
Environmental Liability is an Unknown Environmental Liability for which
Seller has retained liability in accordance with and subject to the
provisions of this Agreement, to the extent Seller is fully liable for such
Unknown Environmental Liability under this Section 3.2, Seller shall have
the right to perform or have performed at its cost (subject to Section
3.2(f) below) any required remediation, including dealing with any
Environmental Agency or Agencies with regard to the corrective action
required, clean-up standards and appropriate work plans. With respect to
any required remediation that Seller elects to perform, Seller may select,
subject to approval by Buyer (such approval not to be unreasonably
withheld), one or more environmental consultants to investigate and
characterize all environmental contamination potentially subject to
remediation, and to design and perform any required remediation. Buyer
shall have the right, at its cost, to participate in the planning and
design of any required remediation, and Buyer shall be provided, for review
and comment, a draft of any study, workplan, report or similar document to
be submitted to an Environmental
27
Agency at least ten (10) working days before Seller intends to submit it.
Seller will consider in good faith any comments made by Buyer with respect
to any such study, workplan, report or similar document and, to the extent
practicable, will incorporate such comments into the document submitted to
the Environmental Agency. Any required remediation will be designed and
performed by Seller in a manner that complies with all Environmental Laws,
minimizes any potential future liability of the site owner/operator, is
commercially reasonable and cost effective and does not unreasonably
interfere with Buyer's operations. Seller shall provide Buyer a copy of all
reports, plans and correspondence submitted to an Environmental Agency with
respect to an Unknown Environmental Liability or any required remediation
thereof. In addition, Buyer shall have the right, at its cost, to attend
and participate in any meetings, conferences or other sessions with the
Environmental Agency concerning the required remediation and will be
provided at least ten (10) days' notice of any such meetings (or the
maximum number of days as is practicable if the meeting date is not set at
least ten (10) days prior to the meeting). With respect to any remediation
performed by or on behalf of Seller pursuant to this clause (iv), Seller
shall be the generator of any wastes generated in connection with such
remediation and shall prepare all documents associated with such
remediation in a manner that clearly identifies Seller as the generator of
the waste, including, but not limited to, the use of identification numbers
issued to Seller. Upon completion of the required remediation, Seller shall
provide Buyer written confirmation that the remediation plan designed as
set forth above has been completed. To the extent that, pursuant to this
clause (iv), Seller or its representatives or consultants are provided
access to Buyer's
28
properties or the Pipeline System, Seller shall reimburse Buyer for, and
defend, indemnify and hold harmless Buyer from and against, any and all
loss, damage, costs (including reimbursement of all reasonable attorney
fees and other costs of defense), liability, claim or suit, whether for
bodily injury or death of any person (including Seller's employees, agents
and representatives), damage to or destruction or loss of property
(including damage to Buyer's property), or otherwise, arising in any manner
whatsoever out of Seller or its representatives or consultants being given
access to Buyer's properties or the Pipeline System, whether or not based
upon strict liability or caused by the sole or concurrent negligence
(ordinary or gross) of Buyer or any other person or entity, unless such
loss, damage, cost, liability, claim or suit was occasioned solely by the
negligence or intentional tort of Buyer or any officer, director or agent
thereof.
With respect to remediation that Seller has a right to perform
pursuant to this clause (iv), within ninety (90) days of notice to Seller
under clause (ii) above, Seller shall notify Buyer whether Seller will
perform the remediation itself. If Seller decides to perform the
remediation itself, Buyer shall cooperate with Seller to effectuate such
remediation in accordance with this clause (iv), including granting
reasonable access to the area requiring remediation. If Seller decides not
to perform the remediation itself, Buyer shall perform or have performed
the remediation and invoice Seller for reasonable and necessary costs
incurred for such remediation (such invoices to include supporting
documentation). With respect to any remediation performed by or on behalf
of Buyer
29
in respect of any Unknown Environmental Liability. Buyer shall be the
generator of any wastes generated in connection with such remediation and
shall prepare all documents associated with such remediation in a manner
that clearly identifies Buyer as the generator of the waste, including, but
not limited to, the use of identification numbers issued to Buyer. Subject
to Section 3.2(f) below, Seller shall pay properly submitted invoices
within thirty (30) days of receipt, and any such invoice not paid within
thirty (30) days shall bear interest calculated at a rate equal to the most
recently quoted (at the time such thirty (30) days expires) one month LIBOR
rate, compounded annually from the thirtieth (30th) day after receipt of
the invoice until paid; and
(v) Notwithstanding the foregoing, any incremental liability or
obligation relating to Unknown Environmental Liability to the extent
attributable to any release, spill, leak, discharge or other emission into
the environment attributable to Buyer's operations after the Closing, shall
not be an Unknown Environmental Liability but shall be Buyer's sole
liability.
(b) With respect to liability or obligation relating to or arising from
the breach of any representation, warranty, covenant or other obligation of
Seller contained in this Agreement, including but not limited to the
Remediation Agreement, Seller shall retain such liability and obligation,
subject to the following and also to subsections (e), (f) and (g) of
Section 3.2 hereof and to Section 3.3 hereof, except that any breach of any
30
covenant or other obligation of Seller contained in this Agreement and to
be performed by Seller after the Closing shall not be subject to subsection
(f) of this Section 3.2:
For Seller to have any liability or obligation for any such breach of
any representation, warranty, covenant or other obligation of Seller
contained in this Agreement, (i) there must be a Buyer Loss (as such term
is defined in Section 12.1 hereof) attributable to the breach, (ii) Buyer
must give written notice of any such breach, setting forth the basis of
such breach known to Buyer at such time in reasonable detail, promptly
after Buyer has knowledge of such breach, provided that, subject to clause
(iii) below, any delay or failure to provide such notice promptly will not
limit Seller's liability hereunder except to the extent Seller is damaged
or prejudiced by such delay or failure, and (iii) Buyer must give written
notice of any such breach (other than a breach of any covenant or other
obligation of Seller contained in this Agreement and to be performed by
Seller after the Closing) in no event later than four and one-half (4 1/2)
years after the Closing; if such written notice is given after the
expiration of such four and one-half (4 1/2) year period, Seller shall have
no liability or obligation for such breach (other than a breach of any
covenant or other obligation of Seller contained in this Agreement and to
be performed by Seller after the Closing), regardless of whether Buyer
could reasonably have known of such breach within such four and one-half (4
1/2) year period.
31
(c) With respect to Other Liability, if within four and one-half (4 1/2)
years after the Closing, a third party delivers a written statement of
claim, the clear purport of which is to assert liability or damages against
Seller or Buyer relating to any Other Liability (a "Demand"), Seller shall
retain liability and obligation to the third party making such Demand,
subject to the following and also to subsections (e), (f) and (g) of
Section 3.2 hereof and to Section 3.3 hereof:
For Seller to have any liability for any such Other Liability, (i)
promptly upon becoming aware of any facts which have not yet but may give
rise to such a Demand, Buyer shall provide Seller with written notice
thereof and the opportunity to participate in discussions with the relevant
third parties relating to such facts, provided that, subject to clause (ii)
below, any delay or failure to provide such notice promptly will not limit
Seller's liability hereunder except to the extent Seller is damaged or
prejudiced by such delay or failure, and (ii) Buyer must give written
notice of any such Demand, including a copy thereof, in no event later than
four and one-half (4 1/2) years after the Closing (unless Seller otherwise
has received written notice of such Demand, including a copy thereof, prior
to the end of such four and one-half (4 1/2) year period, in which event
Seller shall retain liability and obligation to the third party making such
Demand as set forth above, subject to subsections (e), (f) and (g) of
Section 3.2 and to Section 3.3 hereof, and shall promptly give notice of
such Demand to Buyer); if such written notice is given after the expiration
of such four and one-half (4 1/2) year period, Seller shall have no
liability or obligation for such Other Liability, regardless of whether
Buyer could
32
reasonably have known of such Other Liability within such four and one-half
(4 1/2) year period (unless Seller otherwise has received written notice of
such Demand, including a copy thereof, prior to the end of such four and
one-half (4 1/2) year period, in which event Seller shall retain liability
and obligation to the third party making such Demand as set forth above,
subject to subsections (e), (f) and (g) of Section 3.2 and to Section 3.3
hereof, and shall promptly give notice of such Demand to Buyer).
(d) Notwithstanding the foregoing, except to the extent, if any, that any
breach by Seller of its representations set forth in Sections 7.1(n) and
(o) hereof relates to the physical condition or configuration of the
Assets, Seller shall retain no liability or obligation (i) for the physical
condition or configuration of the Pipeline System as of the Closing, or
(ii) with respect to any liability or obligation that accrues after the
Closing and that relates to the physical condition or configuration of the
Pipeline System as of the date of the Closing, including but not limited to
any liability or obligation to repair, replace, correct, upgrade,
refurbish, add to, move, supplement or change any part of the Pipeline
System.
(e) Any and all liabilities and obligations retained by Seller in
accordance with Sections 3.2(a) through (d) above, before taking into
account subsections (f) and (g) below, shall be referred to herein as
"Assigned Liabilities".
33
(f) Notwithstanding subsections (a) through (d) above, Seller shall have
no liability or obligation with respect to any Assigned Liabilities until
the aggregate cost thereof exceeds one hundred and fifty thousand dollars
($150,000); the first one hundred and fifty thousand dollars ($150,000) of
cost of Assigned Liabilities shall be paid by Buyer. After the aggregate
cost of all Assigned Liabilities exceeds one hundred and fifty thousand
dollars ($150,000), as supported with appropriate documentation provided to
Seller by Buyer, Seller shall be liable and obligated for such Assigned
Liabilities to the extent, but only to the extent, that the aggregate cost
of such Assigned Liabilities exceeds $150,000, provided that Seller and
Buyer shall share equally each dollar of the next nine hundred thousand
dollars ($900,000.00) of cost of Assigned Liabilities that are Unknown
Environmental Liability, and provided further that Seller shall not be
liable or obligated for Assigned Liabilities (including without limitation
Assigned Liabilities that are Unknown Environmental Liability) to the
extent the aggregate cost therefor exceeds two million, nine hundred and
fifty thousand dollars ($2,950,000) plus one-half of the first (after the
above-mentioned $150,000 is exceeded) $900,000 of Assigned Liabilities that
are Unknown Environmental Liability (the "Ceiling"). Seller shall not be
liable or obligated, and Buyer shall be liable and obligated (except for
those matters for which Seller has retained liability pursuant to Section
3.3 (a)(i)-(vi) below), for the first $150,000 of Assigned Liabilities and
for all Assigned Liabilities in excess of the Ceiling, except only if
Buyer's aggregate cost for Assigned Liabilities, as supported with
appropriate documentation provided to Seller by Buyer, reaches an amount
equal to the Purchase Price.
34
The maximum liability and obligation of Seller for Assigned Liabilities
shall be the Ceiling, except only if Buyer's aggregate liability and
obligation for Assigned Liabilities reaches an amount equal to the Purchase
Price, as supported with appropriate documentation provided to Seller by
Buyer, at which point liability and obligation for further Assigned
Liabilities to the extent above an amount equal to the Purchase Price shall
revert to and be retained by Seller. The maximum liability and obligation
of Buyer for Assigned Liabilities shall be an amount equal to the Purchase
Price. Liabilities and obligations assumed or incurred by Buyer related to
the Assets that are not Assigned Liabilities shall not count towards either
the $150,000 deductible provided for in this subsection (f) or towards the
Purchase Price cap on Buyer's liability and obligation for Assigned
Liabilities. At such time, if any, as Buyer reasonably determines that its
aggregate liability and obligation for Assigned Liabilities will reach an
amount equal to the Purchase Price, it shall provide Seller with written
notice thereof and shall make available to Seller supporting documentation
reasonably satisfactory to Seller.
Notwithstanding the foregoing, the Ceiling shall not apply to any
Assigned Liabilities relating to or arising from the breach of Section
7.1(d). Notwithstanding the foregoing, the Ceiling and the one hundred and
fifty thousand dollar ($150,000) deductible provided for in this subsection
(f) shall not apply to any Assigned Liabilities relating to or arising from
any breach by Seller of any covenant or other obligation of Seller
contained in this Agreement and to be performed by Seller after the
Closing. Notwithstanding any required notice provisions in Section 3.2(a),
(b) or (c), any
35
individual Assigned Liability that is paid by Buyer within four and one-
half (4 1/2) years after the Closing, in an amount less than ten thousand
dollars ($10,000), and for which notice was not given in accordance with
Section 3.2(a), (b) or (c), whichever applies, but for which Buyer could
have given the required notice to Seller within four and one-half (4 1/2)
years after the Closing, will be counted toward the one hundred and fifty
thousand dollar ($150,000) deductible provided for in this subsection (f)
if proper notice thereof is given to Seller at the time Buyer requests
payment by Seller hereunder of Assigned Liabilities.
For purposes of this Agreement, time expended by personnel of Seller
or Buyer, or affiliates of either, in connection with Assigned Liabilities
shall not be considered a cost of Assigned Liabilities. Reasonable
attorneys' and consultants' fees incurred in connection with an Assigned
Liability by the party that, pursuant to the provisions of this Agreement,
is responsible for dealing with the Assigned Liability, shall be considered
a cost of Assigned Liabilities for purposes of this Agreement; otherwise
attorneys' fees and consultants' fees shall not be considered a cost of
Assigned Liabilities.
(g) Other than liability and obligation for Assigned Liabilities within
the limitations set forth in subsections (a) through (f) above, and for
liability and obligation retained by Seller under either Section 3.1,
Section 3.3 or the Remediation Agreement, Seller shall have no liability or
obligation relating to or arising from the Assets, or the ownership,
36
operation or use thereof, including without limitation Unknown
Environmental Liability and Unknown Liability.
3.3 Liabilities Assumed by Buyer; Liabilities of Buyer.
--------------------------------------------------
(a) Buyer hereby assumes all liabilities and obligations of Seller
relating to or arising from the Assets, whether such liabilities and
obligations are to a governmental body or any other person, firm or entity,
whether based in whole or in part on strict liability, willful or
intentional misconduct, or ordinary or gross negligence, and whether known
or unknown, current or future, absolute or contingent, liquidated or
unliquidated, or due or to become due, and whether relating to the period
prior to or after the Closing, except those liabilities and obligations
expressly retained by Seller under this Agreement; provided that
notwithstanding any other provision of this Agreement, Buyer shall not
assume or be deemed to have assumed, and Seller shall retain liability for
and indemnify Buyer against, all liabilities, damages, costs (including
reasonable attorneys' fees) arising from or related to the following,
without limit as to time or amount:
(i) liabilities or obligations of Seller that are not Unknown
Liability as hereinabove defined;
(ii) liabilities or obligations of Seller for taxes based on income
or related penalties, interest, assessments or liabilities;
37
(iii) liabilities or obligations of Seller under contracts,
agreements, leases, commitments, and governmental permits, licenses and
approvals, or portions thereof, that have not been disclosed and delivered
to Buyer as provided for in this Agreement;
(iv) liabilities or obligations of Seller or Amoco Pipeline Company
under any employee welfare or benefit plans or under the Employee
Retirement Income Security Act of 1974 or for other employee related
liabilities except as set forth in Article V hereof;
(v) except as set forth in the Services Agreement (as such term is
defined in Article VI hereof), liabilities or obligations of Seller
relating to or arising from acts or omissions of Seller or its affiliates,
employees, representatives or agents after the Closing, provided that the
indemnity of Seller with respect to such acts or omissions that constitute
a breach of any representation or warranty of Seller contained in this
Agreement shall be limited as set forth in subsections (e), (f) and (g) of
Section 3.2 hereof; and
(vi) liabilities or obligations of Seller relating to or arising
from wilful or intentional violation of laws, rules, regulations or
governmental directives or pronouncements by Seller or its affiliates,
employees, representatives or agents.
(b) All liabilities and obligations directly or indirectly relating to or
arising from Buyer's ownership, operation, maintenance or use of the Assets
after the Closing, including without limitation all liabilities and
obligations under Environmental Law relating to or
38
arising from Buyer's acts, events or omissions, or contamination, occurring
after the Closing, shall be liabilities and obligations of Buyer.
3.4 Notice by Seller. If Seller, or either of its shareholders, Amoco
----------------
Pipeline Holding Company and GATX Pipeline Company, receives a Claim or a Demand
from a third party, Seller shall promptly send a copy of such to Buyer and shall
provide to Buyer such reasonable detail of information relating to the matters
set forth in such Claim or Demand as is available to Seller.
ARTICLE IV - TAXES
------------------
4.1 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 Assets as is reasonably necessary for
the filing of all tax returns, the preparation for any audit by any taxing
authority, and the prosection or defense of any claim, suit or proceeding
relating to any tax return. Seller and Buyer shall cooperate with each other in
the conduct of any audit or other proceeding related to taxes involving the
Assets.
4.2 Transfer Taxes. If and to the extent that any transfer, sales,
--------------
excise, use and other non-income taxes are or become due and payable upon
transfer of the Assets pursuant to this Agreement, such taxes shall be paid by
Buyer. In no event, however, shall Buyer be liable for any income, franchise or
similar tax on the income of the Seller or its shareholders resulting
39
from the transactions contemplated by this Agreement. Buyer shall also pay all
fees for any recording of instruments of conveyance relating to transfer of the
Assets pursuant to this Agreement.
4.3 Other Taxes. All ad valorem, real and personal property taxes and
-----------
general and special assessments (excluding penalties and interest) levied or
assessed against the Assets shall be prorated as of the Closing pursuant to
Section 2.3 hereof.
ARTICLE V - EMPLOYEES
---------------------
5.1 Offers of Employment. Certain employees of Amoco Pipeline Company
--------------------
("APL"), the operator of the Pipeline System, are currently engaged full-time or
part-time in the operation of the Pipeline System (herein referred to as the
"Employees"). Schedule 5.1 attached hereto and made a part hereof sets forth a
list of the Employees. Buyer may make offers of full-time regular employment to
such Employees. If any of the Employees are not offered employment by Buyer, or
are offered employment but do not accept, and such Employees are terminated by
APL, Buyer shall have no liability for any severance costs or other costs
relating to termination of such Employees, except that if, within one hundred
and twenty (120) days of the Closing, Buyer hires any Employee who received
severance payments from APL, Buyer shall reimburse APL for any severance
payments made by APL to any such hired Employees if the Employee does not return
such severance payments to APL as required by the APL severance plan (which is
set forth in Schedule 5.2 attached hereto and made a part hereof).
40
5.2 Severance Benefits. Buyer shall provide severance benefits at least
------------------
as generous as those provided in Schedule 5.2 attached hereto and made a part
hereof to any Employee hired by Buyer whose employment with Buyer is terminated
within twelve (12) months after the Closing as a result of the following
circumstances only: (i) any reduction in force effected by Buyer; (ii) any
plant or office location closing effected by Buyer; (iii) any relocation of the
Employee outside the Pipeline System without such Employee's consent; or (iv)
any reduction of personnel; but excluding any termination for "cause". For
purposes hereof, "cause" shall mean: (A) the failure of the Employee to perform
his or her duties at a level reasonably acceptable to Buyer; or (B) the
commission by the Employee of an act of fraud, embezzlement, violence or other
misconduct against Buyer or any of its employees or the Employee having been
convicted of a felony involving moral turpitude. For purposes of determining
"Credited Service" in Schedule 5.2, a severed Employee shall be credited with
service with APL and its affiliates in addition to such Employee's service with
Buyer and its affiliates in the amounts set forth in Schedule 5.2 for such
Employee.
ARTICLE VI - ANCILLARY TRANSACTIONS
-----------------------------------
At the Closing, APL and Buyer shall each execute and deliver to the other
an agreement, substantially in the form attached hereto as Exhibit H (the
"Services Agreement"), pursuant to which APL will provide to Buyer at Buyer's
cost certain post-Closing services relating to the operation of the Pipeline
System for a period not to exceed nine (9) months.
41
ARTICLE VII - REPRESENTATIONS AND WARRANTIES
--------------------------------------------
7.1 Seller's Representations and Warranties. Seller represents and
---------------------------------------
warrants to Buyer as follows:
(a) Corporate Organization. Seller is as of the date of this Agreement,
----------------------
and will be at the Closing, a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, and is
qualified as a foreign corporation in each jurisdiction in which the
character of its business or the location of its assets makes such
qualification necessary (except for those jurisdictions in which the
failure to be so qualified would not, taken in the aggregate, have a
material adverse effect on the Seller's ability to consummate the
transactions herein or in the Transfer Documents, or perform its
obligations hereunder or thereunder).
(b) Authorization. Seller has requisite corporate power and authority to
-------------
execute and deliver this Agreement and the Transfer Documents and to
consummate the transactions and perform its obligations hereunder and under
the Transfer Documents. The execution and delivery by the Seller of this
Agreement and the Transfer Documents and the consummation of the
transactions and the performance by the Seller of the obligations
contemplated hereby and thereby have been duly authorized by all requisite
corporate
42
action on the part of Seller. This Agreement has been, and the Transfer
Documents will be, duly executed and delivered by Seller, and this
Agreement constitutes, and each of the Transfer documents when fully
executed and delivered will constitute, legal, valid and binding
obligations of Seller, enforceable in accordance with their respective
terms, except (i) as limited by bankruptcy, insolvency, rearrangement,
reorganization, or similar debtor relief legislation affecting the rights
of creditors generally from time to time in effect, and (ii) that the
remedy of specific performance and injunctive and other forms of equitable
relief are subject to certain equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
(c) No Violation. Subject to (i) compliance with the requirements of the
------------
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
regulations promulgated thereunder (the "HSR Act"), (ii) the Wyoming PSC
and Colorado PUC consents referred to in Section 8.1(d) hereof, and (iii)
any approvals required for the transfer of any Restricted Asset, neither
the execution and delivery by Seller of this Agreement or the Transfer
Documents, nor the performance by Seller of its obligations under this
Agreement or the Transfer Documents, nor the consummation of the
transactions contemplated by this Agreement and the Transfer Documents
shall:
(A) conflict with any provision of the Articles of Incorporation or
By-Laws of Seller;
43
(B) result in a breach or default of, or result in the creation or
imposition of any lien or encumbrance upon the Assets under, any agreement
or commitment to which Seller is a party or by which Seller or any of the
Assets is bound; or
(C) to the knowledge of Seller, violate any statute or law or any
judgment, decree, order, regulation or rule of any court or governmental
authority to which Seller or any of the Assets is subject;
which violation, conflict, breach or default would (i) affect Seller's
ability to consummate the transactions contemplated by this Agreement and
the Transfer Documents or (ii) have an adverse effect on the Assets or the
operation of the Pipeline System.
(d) Title to Certain Assets. Seller has good and marketable title to the
-----------------------
Pipeline, Pipeline Equipment and Records free and clear of any security
interests, liens or encumbrances, except for materialmen's liens,
mechanic's liens and other liens arising in the ordinary course of
business, all of which liens are listed on Schedule 7.1(d) and all of which
liens will be discharged and released at or prior to the Closing, and for
any consents necessary to transfer Restricted Assets.
(e) Litigation/Condemnation. Except as otherwise indicated in Section
-----------------------
3.1(a) or set forth in Schedule 7.1(e) attached hereto and made a part
hereof, (i) Seller is not a party to any pending suit or proceeding before
any court, governmental agency or arbitrator,
44
(ii) Seller has no knowledge of any threatened suit or proceeding before
any court, governmental agency or arbitrator, (iii) there is no outstanding
order, judgment or decree by any court, governmental authority or
arbitrator against Seller, (iv) Seller has no knowledge of any acts,
events, omissions or circumstances not otherwise disclosed in the Schedules
attached hereto and made a part hereof that Seller, as of the date of this
representation, reasonably anticipates will give rise to a suit or
proceeding before any court, governmental agency or arbitrator, and (v)
there is no pending, or to Seller's knowledge threatened, condemnation or
similar proceedings with respect to any of the Assets.
(f) Inclusion of all Assets. Except for Excluded Assets and Restricted
-----------------------
Assets, the Assets include all assets and properties used in the operation
of the Pipeline System in the six (6) months preceding the date hereof,
except for items consumed or disposed of in the ordinary course of business
of the Pipeline System. Seller has made available to Buyer all material
records that either (i) were created by Seller or the Employees, or (ii)
are in Seller's possession, which would ordinarily be expected to bear
directly on the physical condition of the Pipeline System and Related
Property, including, but not limited to, hydrostatic test and corrosion
records and environmental reports, and such records are true, accurate and
complete.
45
(g) Third Party Product. None of the products being transported in the
-------------------
Pipeline System or stored in connection with the Assets are owned by
Seller, and all of such items are owned by customers of the Pipeline
System.
(h) Financial Statements. Seller has delivered to Buyer copies of the
--------------------
following financial statements for Seller, all of which financial
statements are included in Schedule 7.1(h) attached hereto and made a part
hereof:
(i) unaudited transportation revenue and volumes by origin to
destination as of December 31, 1994, unaudited comparative income statement
as of December 31, 1994, and detailed income statement for the twelve month
period ending on December 31, 1994; and
(ii) audited balance sheets, income statements and statements of
changes in financial position for each of Seller's three (3) fiscal years
ending December 31, 1991, 1992 and 1993.
The financial statements referred to in (i) above present fairly, in
all material respects, the financial position of Seller at December 31,
1994, and the results of its operations and its cash flows for the time
period indicated in conformity with generally accepted accounting
principles, with the following qualifications: (1) such financial
statements assume a going concern principle; (2) such financial statements
do not contain footnotes and related disclosures, and year-end adjustments,
normally required under generally accepted accounting principles; (3) such
financial statements do not reflect
46
future remediation costs for identified environmental contamination, that
are reasonably estimable; and (4) such financial statements include income
related to the Mandan Line, which is an Excluded Asset (Section 1.2(d)).
The financial statements referred to in (ii) above present fairly, in
all material respects, the financial position of Seller at the dates
indicated, and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting
principles, with the following qualifications: (1) such financial
statements assume a going concern principle; and (2) such financial
statements are subject to certain notes and related disclosures contained
therein.
(i) Governmental Returns. To Seller's knowledge, there is no pending or
--------------------
threatened suit, action, proceeding, investigation or claim with respect to
any tax return or other return or filing, required to be filed by Seller by
any governmental agency prior to the date of this Agreement.
(j) Employee Matters. Except for personnel based in Tulsa, Oklahoma,
----------------
Oakbrook Terrace, Illinois and Chicago, Illinois, the Employees (listed in
Schedule 5.1) are all full-time and part-time personnel engaged as of the
date hereof in the operation of the Pipeline System. Buyer will have no
liability with respect to any employee welfare or benefit plans of APL or
Seller, as a result of the transactions contemplated by this Agreement.
The Employees are not now nor have they ever been covered by, and Seller
47
does not now nor has it ever contributed to, a "multiemployer plan" as
defined in section 4001(a)(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") with regard to any Employee which would
result in any liability to Buyer. Neither Seller nor such employer nor any
trustee, administrator, fiduciary, agent or employee thereof has at anytime
been involved in a transaction that would constitute a "prohibited
transaction" within the meaning of Section 406 of ERISA which would subject
the Buyer or any of its affiliates or any of its or their officers,
directors or employees to any taxes, penalties or other liabilities under
section 4975 of ERISA or under Sections 409 or 502(i) of ERISA. To the
best knowledge of Seller, no union-initiated work stoppages are pending or
threatened as of the date of this Agreement.
(k) Contracts and Agreements. Except for items listed in Schedule 1.1(e)
------------------------
as Excluded Items, the Contracts include all of the binding written
contracts and agreements (except for such which are Related Property) that
have been used in or relate to the operation of the Pipeline System in the
six (6) months preceding the date hereof, except for contracts and
agreements that have expired or been terminated in the ordinary course of
business of the Pipeline System. Except as set forth on Schedule 7.1(k)
attached hereto and made a part hereof, (i) all the Contracts are valid,
binding and in full force and effect as against Seller in accordance with
their terms, and to Seller's knowledge all the Contracts are valid, binding
and in full force and effect as against the other parties to the Contracts
("Third Parties") in accordance with their terms; (ii) there is no existing
default by Seller and Seller has no knowledge of any default by any Third
Party with respect to any of the
48
Contracts, which default would have an adverse effect on Seller's business
or the Assets; and (iii) copies of all the Contracts have been delivered to
Buyer, and such copies are true, complete and accurate.
(l) Intangible Property. The operation of the Assets as conducted as of
-------------------
the date hereof by Seller does not violate or infringe upon any patents,
inventions, trademarks, trade names, brand names, service marks or
copyrights owned by third parties.
(m) Licenses and Permits. Except for items listed on Schedule 1.1(d) as
--------------------
Excluded Items, the Permits are all of the governmental licenses and
permits (other than such which are Related Property) that have been part of
or relate to the operation of the Pipeline System in the six (6) months
preceding the date hereof, except for licenses or permits that have expired
or been terminated in the ordinary course of business of the Pipeline
System. All the Permits are validly issued to Seller, are in its name, and
as of the date of this Agreement are in full force and effect. True,
correct and complete copies of all the Permits have been delivered to
Buyer. There is no present violation in respect of the Permits, to
Seller's knowledge no proceeding is pending or threatened seeking the
revocation or limitation of any of the Permits or alleging a violation of
any of the Permits, and to Seller's knowledge no acts, events, omissions or
circumstances exist or have occurred that Seller, as of the date of this
representation, reasonably anticipates will constitute a violation of any
of the Permits or will give rise to revocation or limitation of any of the
Permits.
49
(n) Compliance with Governmental Requirements. To Seller's knowledge, and
-----------------------------------------
except as set forth in Schedule 7.1(n) attached hereto and made a part
hereof, as of the date of this representation Seller is not in violation of
any applicable local, state or federal laws, rules or regulations
("Governmental Requirements") (except for matters related to Environmental
Law, which are covered by Section 7.1(o)).
(o) Environmental Law. Except for those matters set forth on Schedules
-----------------
3.1(b), 3.1(c)1, 3.1(d)1 and 7.1 (o) attached hereto and made a part
hereof, to Seller's knowledge (i) there does not exist, as of the date of
this representation, any violation of any Environmental Law with respect to
the Assets, and (ii) no acts, events or contaminations have occurred on or
prior to the date of this representation that Seller, as of the date of
this representation, reasonably anticipates will give rise to any
violations of or remedial obligations under Environmental Law with respect
to the Assets.
(p) Easements. Except as set forth in Schedule 7.1(p) attached hereto and
---------
made a part hereof, Seller is not in receipt of any written notice from any
third party contesting the validity of any easement, right-of-way,
leasehold or other permit, license, grant or other right constituting a
right to use or operate a pipeline across any real property used in the
operation of the Pipeline System during the six (6) months preceding the
date hereof (collectively, the "Easements"). Except as set forth in
Schedule 7.1(p) attached hereto and made a part hereof, Seller has no
knowledge of any matter or circumstance that Seller, as of the date of this
representation, reasonably anticipates will adversely affect,
50
impair, limit or encumber any Easement. Seller has made available to Buyer
all material records relating to the Easements and such records are true,
accurate and complete.
7.2 Buyer's Representations and Warranties. Buyer represents and warrants
--------------------------------------
to Seller as follows:
(a) Organization. Buyer is as of the date of this Agreement, and will be
------------
at the Closing, a limited partnership duly organized, validly existing and
in good standing under the laws of the State of Delaware, and is qualified
as a foreign entity in each jurisdiction in which the character of its
business or the location of its assets makes such qualification necessary
(except for those jurisdictions in which the failure to be so qualified
would not, taken in the aggregate, have a material adverse effect on the
Buyer's ability to consummate the transactions herein or in the Transfer
Documents or perform its obligations hereunder or thereunder).
(b) Authorization. Buyer has requisite power and authority to execute and
-------------
deliver this Agreement and the Transfer Documents to which Buyer is a
party, and to consummate the transactions and perform its obligations
hereunder and under the Transfer Documents to which Buyer is a party. The
execution and delivery by the Buyer of this Agreement and the Transfer
Documents to which Buyer is a party and the consummation of the
transactions and the performance of the obligations contemplated hereby and
by the Transfer Documents to which Buyer is a party have been authorized by
all requisite
51
action on the part of the Buyer. This Agreement has been, and the Transfer
Documents to which Buyer is a party will be, duly executed and delivered by
Buyer, and this Agreement constitutes, and each of the Transfer Documents
to which Buyer is a party when fully executed and delivered will
constitute, legal, valid and binding obligations of Buyer, enforceable in
accordance with their respective terms, except (i) as limited by
bankruptcy, insolvency, rearrangement, reorganization, or similar debtor
relief legislation affecting the rights of creditors generally from time to
time in effect, and (ii) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding
therefor may be brought.
(c) No Violation. Subject to (i) compliance with the requirements of the
------------
HSR Act, (ii) the Wyoming PSC and Colorado PUC consents referred to in
Section 8.1(d) hereof, and (iii) any approvals required for the transfer of
any Restricted Asset, neither the execution and delivery by the Buyer of
this Agreement or the Transfer Documents to which Buyer is a party, nor the
performance by Buyer of its obligations under this Agreement or the
Transfer Documents to which Buyer is a party, nor the consummation of the
transactions contemplated by this Agreement and the Transfer Documents to
which Buyer is a party shall: (A) conflict with any provision of the
limited partnership agreement of Buyer; or (B) to the knowledge of Buyer,
violate any statute or law or any judgment, decree, order, regulation or
rule of any court of governmental authority to which Buyer is subject;
52
which violation or conflict would affect Buyer's ability to consummate the
transactions contemplated by this Agreement and the Transfer Documents.
7.3 Disclaimer of Warranties. Buyer acknowledges and affirms that prior
------------------------
to the Closing, Buyer has had a full opportunity to conduct whatever due
diligence Buyer has deemed appropriate to apprise itself of the Assets,
including without limitation, inspection, investigation, analysis and evaluation
of Seller's operations, maintenance and other business records, the
environmental condition of the Pipeline System and the Related Property and the
other rights and properties and liabilities to be transferred to or assumed by
Buyer hereunder. EXCEPT FOR THE EXPRESS REPRESENTATIONS AND WARRANTIES
CONTAINED IN SECTION 7.1 HEREOF, THE ASSETS TRANSFERRED HEREUNDER ARE SOLD AS
IS, WHERE IS, WITH ALL FAULTS, LIMITATIONS AND DEFECTS (HIDDEN AND APPARENT) AND
SELLER MAKES NO WARRANTY, EXPRESS OR IMPLIED AND SPECIFICALLY MAKES NO WARRANTY
(1) OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR (2) WITH REGARD
TO THE ACCURACY, COMPLETENESS, SUITABILITY OR COMPLIANCE WITH APPLICABLE LAW OF
ANY MANUALS (AS SUCH TERM IS DEFINED IN SCHEDULE 1.1(f) HERETO), AND NONE SHALL
BE IMPLIED. ALL REPRESENTATIONS AND WARRANTIES OTHER THAN THOSE SET FORTH IN
SECTION 7.1 HEREOF, EXPRESS OR IMPLIED, ARE EXCLUDED. SELLER DISCLAIMS ALL
LIABILITY AND RESPONSIBILITY FOR ANY OTHER REPRESENTATION, WARRANTY, STATEMENT
OR INFORMATION MADE OR COMMUNICATED (ORALLY OR IN WRITING) TO BUYER.
53
7.4 Survival of Representations and Warranties. The representations and
------------------------------------------
warranties contained in this Article VII shall survive the Closing only to the
extent indemnification for breach thereof is provided in Article XII (directly
or as a result of the allocation of liabilities set forth in Article III).
ARTICLE VIII - COVENANTS
------------------------
8.1 Seller's Covenants. Seller covenants and agrees as follows:
------------------
(a) Operation of the Pipeline System -- Negative Covenants. Except to the
------------------------------------------------------
extent expressly permitted by this Agreement, or as otherwise consented to
by an instrument in writing signed by Buyer (which consent shall not be
unreasonably withheld), Seller shall not, from the date hereof until the
Closing:
(i) operate the Pipeline System or use the Assets other than in the
ordinary course of business;
(ii) subject the Assets, or any part thereof, to any lien, claim,
encumbrance, right or other interest or suffer such to be imposed other
than as may arise in the ordinary course of business;
(iii) enter into any transaction other than in the ordinary course of
business;
54
(iv) dispose of any of the Assets other than in the ordinary course
of business;
or
(v) increase or decrease, or apply for approval for any increase or
decrease, of any tariffs, fees or other charges to customers related to the
Pipeline System.
(b) Operation of the Pipeline System -- Affirmative Covenants. Except as
---------------------------------------------------------
otherwise expressly provided by this Agreement, or as otherwise consented
to by an instrument in writing signed by Buyer, Seller shall, from the date
hereof until the Closing:
(i) afford to Buyer and Buyer's authorized representatives, subject
to the Confidentiality Agreement (as defined in Section 15.7 hereof)
previously executed and delivered by Buyer, reasonable access during normal
business hours to the Pipeline System and the Related Property (including,
but not limited to, access for environmental inspection and audits), and to
the officers, management, properties, books and records related to the
operation of the Pipeline System and will furnish and make available to
Buyer such additional financial and operating data and other information
related to the operation of the Pipeline System as Buyer may reasonably
request; provided, however, Seller shall have no obligation to disclose any
of the items identified on Schedule 1.1(f) as Excluded Items or any of the
items covered under Section 1.2(b), and provided further that Buyer shall
reimburse Seller for, and defend, indemnify and hold harmless Seller
55
from and against, any and all loss, damage, costs (including reimbursement
of all reasonable attorney fees and other costs of defense), liability,
claim or suit, whether for bodily injury or death of any person (including
Buyer's employees, agents and representatives), damage to or destruction or
loss of property (including damage to Seller's property), or otherwise,
arising in any manner whatsoever out of Buyer or its representatives being
given access to the Pipeline System and the Related Property, whether or
not based upon strict liability or caused by the sole or concurrent
negligence (ordinary or gross) of Seller or any other person or entity,
unless such loss, damage, cost, liability, claim or suit was occasioned
solely by the negligence or intentional tort of Seller or any officer,
director or agent thereof;
(ii) if any of the representations or warranties of Seller hereunder
are determined by Seller to have been incorrect when made, or are
determined by Seller to be incorrect as of any date subsequent to the date
hereof until the Closing, or if any of the covenants of Seller contained in
this Agreement have not been complied with timely, promptly notify Buyer to
such effect (provided that such notice shall not limit Buyer's rights under
this Agreement); and
(iii) use commercially reasonable efforts to maintain and preserve
the business of Seller conducted with the Assets and retain its present
customers and suppliers.
56
(c) Third Party Product. At the Closing, the custody of all line fill,
-------------------
tank and other petroleum liquids inventories will be transferred to Buyer
and Buyer shall become responsible as of the Closing to applicable shippers
for such inventories, in accordance with the procedures set forth on
Schedule 8.1(c) attached hereto and made a part hereof.
(d) Wyoming Public Service Commission/Colorado Public Utilities
-----------------------------------------------------------
Commission. In connection with consummating the transactions contemplated
----------
by this Agreement, Seller shall file with the Public Service Commission of
Wyoming (referred to herein as "Wyoming PSC") an application seeking the
Wyoming PSC's authority for the sale of those facilities encompassed by
this Agreement which are subject to the Wyoming PSC's jurisdiction, shall
file with the Public Utilities Commission of Colorado (referred to herein
as the "Colorado PUC") an application seeking the Colorado PUC's authority
for the sale of those facilities encompassed by this Agreement which are
subject to the Colorado PUC's jurisdiction, and will diligently pursue
approval of such applications. Seller shall comply with Colorado PUC
Decision No. C95-44 adopted on January 11, 1995 in Docket No. 94A-610.
(e) Buyer's Access to Records Post-Closing. For a period of five (5)
--------------------------------------
years after the Closing, subject to the execution by Buyer of reasonable
confidentiality undertakings, Seller will furnish to Buyer and its
authorized representatives, upon the reasonable request of Buyer and at
Buyer's sole cost, copies of written financial and operating information
relating to the Assets, contained in Seller's books and records not
transferred
57
to Buyer, to the extent that such information has not been destroyed and is
required by Buyer or its authorized representatives for financial
reporting, tax or similar purposes, or for purposes of investigating
matters which may be the subject of litigation or administrative
proceedings with third parties or governmental agencies, so long as such
disclosure would not violate the terms of any agreement to which Seller is
bound or any applicable law or regulation or result in the loss of any
attorney-client or attorney work-product privilege. Seller will use
reasonable efforts in accordance with Seller's normal record maintenance
procedures to keep and maintain such written financial and operating
information relating to the Assets for a period of five (5) years from the
Closing or longer as required by statute. At the end of such five (5) year
period or such longer period as may be required by statute, if Seller
wishes to destroy any of such records, it shall first give sixty (60) days
prior written notice to Buyer. Buyer shall then have the right, at its
option, prior to the expiration of such sixty (60) day period, to notify
Seller in writing of Buyer's election to take possession, at Buyer's cost,
of said records or portions thereof, except for records or portions thereof
with respect to which disclosure would violate the terms of any agreement
to which Seller is bound or any applicable law or regulation or result in
the loss of any attorney-client or attorney work product privilege. In the
event Buyer does not notify Seller that Buyer is exercising its option to
acquire documents hereunder, Seller may destroy such records without
further obligation hereunder.
58
(f) Antitrust Notification. As soon as practicable, Seller shall file or
----------------------
cause to be filed with the United States Federal Trade Commission and the
United States Department of Justice the notification and report form
required for the transactions contemplated hereby and any supplemental or
additional information which may reasonably be requested in connection
therewith pursuant to the HSR Act and shall comply in all material respects
with the requirements of the HSR Act.
(g) Use of "Wyco" Name. Within a reasonable time after the Closing,
------------------
Seller shall amend its Articles of Incorporation to remove "Wyco" and all
derivatives thereof from its name, and shall also file all necessary
documents to amend its authorizations to do business in all jurisdictions
where it is so authorized, to remove "Wyco" from its name, and shall also
cease using the name "Wyco" and all derivatives thereof except as necessary
to complete required governmental filings.
(h) Medical Review Officer Records. Within a reasonable time after the
------------------------------
Closing, and in cooperation with Buyer, Seller shall cause its Medical
Review Officer to deliver to Buyer's Medical Review Officer possession of
the Medical Review Officer records for Employees that have accepted offers
of full-time or temporary employment from Buyer.
(i) Records. Within a reasonable time after the Closing, Seller shall
-------
deliver to Buyer possession of those Records sold to Buyer hereunder that
are not located on the Related Property.
59
8.2 Buyer's Covenants. Buyer covenants and agrees as follows:
-----------------
(a) Consents. Buyer shall take all appropriate steps in support of
--------
Seller's efforts pursuant to Sections 1.6(b) and 8.1(d) hereof.
(b) Third Party Product. At the Closing, Buyer shall accept and shall
-------------------
become responsible as of the Closing to applicable shippers for inventories
transferred to Buyer's custody by Seller pursuant to Section 8.1(c) hereof.
(c) Seller's Access to Properties and Records Post-Closing. For a period
------------------------------------------------------
of five (5) years after the Closing, subject to reasonable advance notice
of time and purpose and to the execution by Seller of reasonable
confidentiality undertakings, Buyer will afford to Seller and its
authorized representatives, upon the reasonable request of Seller and at
Seller's sole cost, reasonable access during normal business hours to the
properties transferred to Buyer, and to books and records relating to the
Assets transferred to Buyer (to the extent that such information has not
been destroyed), and Buyer will furnish to Seller such additional
information, and will cooperate with Seller in such other respects, as
Seller may reasonably request, to the extent that such access and
cooperation are required by Seller or its authorized representatives for
financial reporting, tax or similar purposes, or for purposes of removing
books and records not transferred to Buyer pursuant to this Agreement or
for purposes of investigating matters which may be the
60
subject of litigation or administrative proceedings with third parties or
governmental agencies so long as such disclosure would not violate the
terms of any agreement to which Buyer is bound or any applicable law or
regulation or result in the loss of any attorney-client or attorney work
product privilege. Buyer will use reasonable efforts in accordance with
Buyer's normal record maintenance procedures to keep and maintain all books
and records transferred to Buyer hereunder for a period of five (5) years
from the Closing or longer as may be required by statute. At the end of
such five (5) year period or such longer period as may be required by
statute, if Buyer wishes to destroy any of such records, it shall first
give sixty (60) days prior written notice to Seller. Seller shall then
have the right at its option, prior to the expiration of such sixty (60)
day period, to notify Buyer in writing of Seller's election to take
possession, at Seller's cost, of said records or portions thereof, except
for records or portions thereof with respect to which disclosure would
violate the terms of any agreement to which Buyer is bound or any
applicable law or regulation or result in the loss of any attorney-client
or attorney work product privilege. In the event Seller does not notify
Buyer that Seller is exercising its option to reacquire documents
hereunder, Buyer may destroy such records without further obligation
hereunder.
(d) Antitrust Notification. As soon as practicable, Buyer shall file or
----------------------
cause to be filed with the United States Federal Trade Commission and the
United States Department of Justice the notification and report form
required for the transactions contemplated hereby and any supplemental or
additional information which may reasonably be requested in
61
connection therewith pursuant to the HSR Act and shall comply in all
material respects with the requirements of the HSR Act.
(e) Reporting. If at any time within four and one-half (4 1/2) years
---------
after the Closing, Buyer becomes obligated to report, or in fact reports,
to any federal, state or local governmental agency any release, outage,
spill, leak, discharge, disposal, treatment, emission of or exposure to,
hazardous waste, hazardous substances, pollutants, contaminants, materials,
products or by-products relating to the Pipeline System or the Related
Property, Buyer shall send a copy of such report to Seller at the same time
it sends the report to the governmental agency. Buyer shall, upon request
by Seller, provide Seller with copies of all correspondence with any
Environmental Agency relating to any such release, outage, spill, leak,
discharge, disposal, treatment, emission or exposure. In addition, for an
additional two and one-half (2 1/2) years beyond the four and one-half (4
1/2) years specified above, with respect to the Dupont Terminal, if Buyer
becomes obligated to report any hydrocarbon release on the Dupont Terminal
property to any State of Colorado or Adams County, Colorado governmental
agency, and such report is available to the public under State of Colorado
law, Buyer shall send a copy of such report to Seller at the same time it
sends the report to the governmental agency. Further, Seller shall be
permitted to furnish copies of any reports it receives pursuant to the
previous two sentences to the plaintiffs in the Kramer Case, if but only if
such reports (i) were given to any State of Colorado or Adams County,
Colorado
62
governmental agency, (ii) relate to the Dupont Terminal, and (iii) are
available to the public under State of Colorado law.
(f) Licenses and Permits. Buyer shall use reasonable efforts to obtain by
--------------------
the Closing all governmental licenses and permits necessary for its
operation of the Pipeline System after the Closing (as distinct from
licenses and permits which are Related Property), and if Buyer is unable to
obtain any such licenses or permits, it shall give notice to that effect to
Seller within a reasonable period of time after Buyer has knowledge of such
inability and prior to the Closing.
(g) Pipeline Bridge. As of the date of this Agreement, a portion of the
---------------
six inch (6") segment of the Pipeline System is located on a pipeline
bridge over the North Platte River north of the Amoco Oil Company Casper
Refinery site (the "Pipeline Bridge"). The Pipeline Bridge also supports a
portion of the eight inch (8") pipeline segment of Sinclair Oil Corporation
("Sinclair"), previously sold by Seller to Sinclair, and a water pipeline
owned by Amoco Oil Company. In selling the 8" segment to Sinclair, Seller
gave certain rights to Sinclair with respect to the Pipeline Bridge. All
of those rights are set forth in Section 7.04 of the Agreement for Sale and
Purchase and Lease of Pipeline System by and between Seller and Wal-Mart
Stores, Inc., entered into as of the 30th day of August, 1993 (all of Wal-
Mart's rights, interests and obligations under such were assigned by Wal-
Mart to Sinclair), which Section 7.04 is attached hereto and made a part
hereof as Schedule 8.2(g) (it being understood that "Seller" in such
Section 7.04 is
63
"Seller" herein and "Buyer" in such Section 7.04 is Sinclair). Buyer
herein agrees that it purchases, acquires and receives the Pipeline Bridge
subject to the rights of Sinclair contained in such Section 7.04, and
subject to the rights of Amoco Oil Company contained in that Contract which
is item no. 18 on Schedule 1.1(e) hereto (the "Amoco Oil Contract"), and
further agrees that it assumes all rights, duties, liabilities and
obligations of Seller in, under or pursuant to such Section 7.04 and in,
under or pursuant to such Amoco Oil Contract, and agrees to perform,
discharge and comply with all terms and conditions of or under such Section
7.04 and of or under such Amoco Oil Contract, including without limitation
performance of all obligations to be performed thereunder, and Seller shall
have no further duty or obligation thereunder.
(h) Environmental Notification to Sinclair. In recognition of the fact
--------------------------------------
that the Pipeline and a pipeline segment previously sold by Seller to
Sinclair to a certain extent both run in the same Related Property (as more
particularly described in the Lease Agreement between Seller and Sinclair
which is item no. 14 on Schedule 1.1(e)), Buyer agrees to cooperate with
Sinclair in regard to environmental matters affecting said Related Property
and to inform Sinclair within twenty-four (24) hours of any release, spill,
leak, or discharge of any kind which might affect the environment. In the
event that Buyer decides to change the direction or type of material
through the Pipeline, or alter in any material way the Pipeline or its
operations, Buyer agrees that it will inform Sinclair in writing of any
such plans as far in advance as is practicable. The obligations of Buyer
64
contained in this subsection (h) shall terminate at such time as Buyer
enters into its own agreement with Sinclair covering the subject matter of
this subsection.
8.3 Mutual Covenants. Seller and Buyer covenant and agree as follows:
----------------
(a) Testing and Gauging. Seller and/or Buyer shall conduct sampling and
-------------------
testing of batches of liquids entering the Pipeline System, and gauging of
tanks, in accordance with the procedures set forth on Schedule 8.3(a)
attached hereto and made a part hereof.
(b) FERC Tariffs. It is Buyer's intent to file an adoption of Seller's
------------
Federal Energy Regulatory Commission ("FERC") tariffs governing the
transportation of materials in the Pipeline System. Seller and Buyer will
cooperate to coordinate such filings or publishings with the FERC necessary
to accomplish such, provided that in no event shall the Closing be
affected.
(c) State Tariffs. It is Buyer's intent to file adoptions of Seller's
-------------
state tariffs governing the transportation of materials in the Pipeline
System. Seller and Buyer will cooperate to coordinate such filings or
publishings with appropriate state agencies necessary to accomplish such,
provided that in no event shall the Closing be affected.
65
ARTICLE IX - CONDITIONS TO BUYER'S OBLIGATIONS
----------------------------------------------
The obligations of Buyer under this Agreement to close the transactions
contemplated hereunder shall be subject to the satisfaction, on or prior to the
Closing, of each of the following conditions, any one or more of which may be
waived in writing, in whole or in part, by Buyer:
9.1 Accuracy of Representations and Warranties. The representations
------------------------------------------
and warranties of Seller contained in this Agreement shall be in all material
respects true and accurate as of the date hereof and at and as of the date of
the Closing as though such representations and warranties were made at and as of
such date, and Seller shall have delivered to Buyer a certificate to such effect
executed by a duly authorized officer of Seller.
9.2 Performance. Seller shall have performed and complied with, in
-----------
all material respects, all of its covenants, agreements and conditions contained
in this Agreement which Seller must perform or comply with at or prior to the
Closing, and Seller shall have delivered to Buyer a certificate to such effect
executed by a duly authorized officer of Seller.
9.3 Litigation. No injunction or any similar legal order prohibiting
----------
or restraining consummation of the transactions herein contemplated shall be in
effect.
9.4 Wyoming PSC/Colorado PUC. The consent of the Wyoming PSC for
------------------------
Seller to sell to Buyer those facilities encompassed by this Agreement which are
subject to the Wyoming
66
PSC's jurisdiction, and of the Colorado PUC for Seller to sell to Buyer those
facilities encompassed by this Agreement which are subject to the Colorado PUC's
jurisdiction, shall have been obtained.
9.5 HSR Act. All necessary filings and notifications under the HSR
-------
Act shall have been made, and the waiting period referred to in such Act
applicable to the transactions contemplated hereby shall have expired or been
terminated.
9.6 Due Execution and Delivery of Closing Documents. The documents
-----------------------------------------------
to be executed and delivered by Seller at the Closing shall have been properly
executed and delivered.
9.7 Legal Matters. All actions, proceedings, instruments and
-------------
documents required of Seller to carry out this Agreement and to consummate the
transactions contemplated hereby shall have been taken in a manner reasonably
satisfactory in form and substance to counsel for Buyer.
9.8 Unassignable Related Property. With respect to all Related
-----------------------------
Property identified by Buyer in writing pursuant to Section 1.3(i), consents and
waivers in principle contemplated by Section 1.3 shall have been obtained. With
respect to all portions of the Pipeline System identified by Buyer in writing
pursuant to Section 1.3(ii), all rights-of-way, easements, permits, licenses,
grants and leaseholds contemplated by Section 1.3 hereof shall have been
obtained.
67
9.9 No Material Adverse Change. No material adverse change in the
--------------------------
Assets or the operations thereof or the business of the Pipeline System shall
have occurred since the date hereof until the Closing.
9.10 Licenses and Permits. Buyer shall have obtained all
--------------------
governmental licenses and permits necessary for its operation of the Pipeline
System (as distinct from licenses and permits which are Related Property),
provided that Buyer shall have used reasonable efforts to obtain by the Closing
all such licenses and permits.
9.11 Guarantee. Both of the shareholders of Seller shall have
---------
executed and delivered to Buyer a guarantee substantially in the form of Exhibit
I attached hereto and made a part hereof (the "Guarantee").
9.12 Mortgages. Seller and Buyer shall have executed and delivered a
---------
letter agreement relating to the two mortgages on the Mule Creek Station Related
Property, satisfactory to Buyer.
ARTICLE X - CONDITIONS TO SELLER'S OBLIGATIONS
----------------------------------------------
The obligations of Seller under this Agreement to close the
transactions contemplated hereunder shall be subject to the satisfaction, on or
prior to the Closing, of each of the following conditions, any one or more of
which may be waived in writing, in whole or in part, by the Seller:
68
10.1 Accuracy of Representations and Warranties. The representations
------------------------------------------
and warranties of Buyer contained in this Agreement shall be in all material
respects true and accurate as of the date hereof and at and as of the date of
the Closing as though such representations and warranties were made at and as of
such date, and Buyer shall have delivered to Seller a certificate to such effect
executed by a duly authorized officer of Buyer.
10.2 Performance. Buyer shall have performed and complied with, in
-----------
all material respects, all of its covenants, agreements, and conditions
contained in this Agreement which Buyer must perform or comply with at or prior
to the Closing, and Buyer shall have delivered to Seller a certificate to such
effect executed by a duly authorized officer of Buyer.
10.3 Litigation. No injunction or any similar legal order prohibiting or
----------
restraining consummation of the transactions herein contemplated shall be in
effect.
10.4 Wyoming PSC/Colorado PUC. The consent of the Wyoming PSC for Seller
------------------------
to sell to Buyer those facilities encompassed by this Agreement which are
subject to the Wyoming PSC's jurisdiction, and of the Colorado PUC for Seller to
sell to Buyer those facilities encompassed by this Agreement which are subject
to the Colorado PUC's jurisdiction, shall have been obtained.
69
10.5 HSR Act. All necessary filings and notifications under the HSR
-------
Act shall have been made, and the waiting period referred to in such Act
applicable to the transactions contemplated hereby shall have expired or been
terminated.
10.6 Due Execution and Delivery of Closing Documents. The documents
-----------------------------------------------
to be executed and delivered by Buyer at the Closing shall have been properly
executed and delivered.
10.7 Legal Matters. All actions, proceedings, instruments and
-------------
documents required of Buyer to carry out this Agreement and to consummate the
transactions contemplated hereby shall have been taken in a manner reasonably
satisfactory in form and substance to counsel for Seller.
ARTICLE XI - CLOSING
--------------------
11.1 Closing. The closing of the transactions contemplated hereby
-------
("Closing") shall take place on February 24, 1995, at the offices of Seller in
Oakbrook Terrace, Illinois at 10:00 a.m. local time (or at such other place,
time or date as the parties may mutually agree in writing). Subject to Section
1.6 hereof, and unless otherwise agreed in writing between the parties, the
transfer of title to the Assets from Seller to Buyer shall be effective as of
the Closing.
70
11.2 Seller's Obligations. At the Closing, Seller shall deliver to
--------------------
Buyer the following:
(a) Conveyancing Documents. Executed Transfer Documents with respect to
----------------------
the Assets.
(b) Services Agreement. An executed Services Agreement.
------------------
(c) Remediation Agreement. An executed Remediation Agreement and payment
---------------------
of the amounts specified in the Remediation Agreement for payment at the
Closing in accordance with the Remediation Agreement.
(d) Opinion of Counsel. An opinion of an attorney for Amoco Pipeline
------------------
Company as counsel to Seller in connection with this transaction, dated as
of the Closing, addressed to Buyer, substantially in the form of Exhibit J
attached hereto and made a part hereof, an opinion of an attorney for Amoco
Pipeline Holding Company related to the Guarantee, dated as of the Closing,
addressed to Buyer, substantially in the form of Exhibit J1 attached hereto
and made a part hereof, and an opinion of an attorney for GATX Pipeline
Company related to the Guarantee, dated as of the Closing, addressed to
Buyer, substantially in the form of Exhibit J2 attached hereto and made a
part hereof.
(e) Board Resolutions. A certified copy of the resolutions of Seller's
-----------------
Board of Directors authorizing the transactions contemplated hereunder and
under the Transfer Documents.
71
(f) Receipts. Appropriate receipts for the Purchase Price to be paid by
--------
Buyer at the Closing.
(g) Certificates. The certificates referred to in Sections 9.1 and 9.2.
------------
(h) Acceptance of Transfer. An executed acceptance of transfer in the
----------------------
form required by the Colorado PUC, and an executed explanation of change in
account and transfer of experience rate in the form required by the Wyoming
Department of Employment.
(i) Drug Testing Records. Possession of all DOT drug testing records for
--------------------
Employees that have accepted offers of full-time or temporary employment
from Buyer.
(j) Guarantee. The Guarantee executed by both of Seller's shareholders.
---------
(k) Computer Contract Payment. Payment in immediately available funds by
-------------------------
bank wire transfer in an account at a national bank located in the United
States designated by Buyer, of the actual balance due as of the Closing
(supported by reasonable documentation) under that Contract which is item
no. 23 on Schedule 1.1(e) hereto, which is presently estimated to be three
hundred fifty six thousand, four hundred and seventy three dollars
($356,473) for Buyer's assumption of that Contract which is item no. 23 on
Schedule 1.1(e) hereto pursuant to the contract assignment and assumption
agreement to be executed by the parties pursuant to Section 1.4(d) and
Article XI hereof.
72
Buyer shall give notice to Seller of the account and any other wire
transfer instructions at least three (3) days before the day of the
Closing.
(l) Prorations. Payment of the amount specified in Section 2.3(b) hereof
----------
in accordance with Section 2.3(b).
11.3 Buyer's Obligations. At the Closing, Buyer shall deliver to Seller:
-------------------
(a) Purchase Price. The Purchase Price in accordance with Article II.
--------------
(b) Services Agreement. An executed Services Agreement.
------------------
(c) Remediation Agreement. An executed Remediation Agreement.
---------------------
(d) Instruments of Assumption. Executed Transfer Documents to which Buyer
-------------------------
is a party.
(e) Non-Simultaneous Exchange. An executed assignment in the form of
-------------------------
Exhibit F attached hereto and made a part hereof.
73
(f) Opinion of Counsel. An opinion of Stephen M. Hoffner, counsel to
------------------
Buyer, dated as of the Closing, addressed to Seller, substantially in the
form of Exhibit K attached hereto and made a part hereof.
(g) Board Resolutions. A certified copy of the resolutions of the Board
-----------------
of Directors of Buyer's general partner authorizing the transactions
contemplated hereunder and under the Transfer Documents.
(h) Certificates. The certificates referred to in Sections 10.1 and 10.2.
------------
(i) Acceptance of Transfer. An executed acceptance of transfer in the
----------------------
form required by the Colorado PUC, and an executed explanation of change in
account and transfer of experience rate in the form required by the Wyoming
Department of Employment.
ARTICLE XII - INDEMNIFICATION
-----------------------------
12.1 Indemnification by Seller.
-------------------------
(a) From and after the Closing, but subject to the conditions and
limitations set forth in this Agreement, Seller shall indemnify Buyer,
together with Buyer's parent companies, shareholders, partners,
subsidiaries, affiliates, officers, directors, employees and agents, and
defend and hold each of them harmless from and against, any and all costs,
claims,
74
damages (including punitive damages), suits, losses, fines, penalties,
causes of action, proceedings, judgments (including pre- and post-judgment
interest), obligations and liabilities (including reasonable attorneys'
fees and consultants' fees incurred in connection with any of the
foregoing) asserted against, incurred or required to be paid by Buyer, its
parent companies, shareholders, partners, subsidiaries, affiliates,
officers, directors, employees or agents (all of the foregoing collectively
referred to herein as a "Buyer Loss"), regardless of whether based in whole
or in part on strict liability, willful or intentional misconduct, or
ordinary or gross negligence of any indemnitee, which arise out of, relate
to or are caused by any liability or obligation retained by Seller under
this Agreement.
Seller's obligation of indemnification in this Section 12(a) is subject to
the allocation of liability set forth in Article III hereof.
(b) From and after the Closing, but subject to Section 12.3 hereof, Seller
shall indemnify Buyer, together with Buyer's parent companies,
shareholders, partners, subsidiaries, affiliates, officers, directors,
employees and agents, and defend and hold each of them harmless from and
against, any and all costs, claims, damages (including punitive damages),
suits, losses, fines, penalties, causes of action, proceedings, judgments
(including pre- and post-judgment interest), obligations and liabilities
(including reasonable attorneys' fees and consultants' fees incurred in
connection with any of the foregoing) asserted against, incurred or
required to be paid by Buyer, its
75
parent companies, shareholders, partners, subsidiaries, affiliates,
officers, directors, employees or agents, as a result of any claim of
adverse possession landowner Richard Cross may make with respect to Related
Property at Douglas Station, subject to the following:
(i) there must be a Buyer Loss attributable to such claim of adverse
possession;
(ii) Buyer must give written notice of such Buyer Loss promptly after
Buyer has knowledge of such Buyer Loss, provided that any delay or failure
to provide such notice promptly will not limit Seller's liability hereunder
except to the extent Seller is damaged or prejudiced by such delay or
failure; and
(iii) Seller's maximum liability under this Section 12(b) shall be
twenty five thousand dollars ($25,000).
12.2 Indemnification by Buyer. From and after the Closing, but subject to
------------------------
the conditions and limitations set forth in this Agreement, Buyer shall
indemnify Seller, together with Seller's parent companies, shareholders,
subsidiaries, affiliates, officers, directors, employees and agents, and defend
and hold each of them harmless from and against, any and all costs, claims,
damages (including punitive damages), suits, losses, fines, penalties, causes of
action, proceedings, judgments (including pre- and post-judgment interest),
obligations and liabilities (including reasonable attorneys' fees and
consultants' fees incurred in connection with
76
any of the foregoing) asserted against, incurred or required to be paid by
Seller, its parent companies, shareholders, subsidiaries, affiliates, officers,
directors, employees or agents, regardless of whether based in whole or in part
on strict liability, willful or intentional misconduct, or ordinary or gross
negligence of any indemnitee, which arise out of, relate to or are caused by:
(a) the breach of any representation, warranty, covenant or other obligation of
Buyer contained in this Agreement, including but not limited to the Remediation
Agreement and the contract assignment and assumption agreement to be executed by
the parties pursuant to Section 1.4(d) and Article XI hereof; (b) any duty,
liability or obligation assumed or had by Buyer pursuant to Section 3.1, Section
3.2, Section 3.3 or Section 8.2(g) hereof, or pursuant to the Remediation
Agreement or pursuant to the contract assignment and assumption agreement to be
executed by the parties pursuant to Section 1.4(d) and Article XI hereof; (c)
the ownership, use, maintenance, condition or operation of the Assets by Buyer
from and after the Closing (except to the extent relating to or arising from the
breach by Seller of any representation, warranty, covenant or other obligation
of Seller contained in this Agreement); or (d) liabilities or obligations to the
extent attributable to (i) actions of Buyer or its agents, consultants or
representatives in the implementation or performance of the Agreed Remediation
Plan or the 3.1(d) Remediation Plan, as they may be modified with the consent of
Buyer and Seller, or (ii) any failure by Buyer to implement the Agreed
Remediation Plan or the 3.1(d) Remediation Plan, as they may be modified with
the consent of Buyer and Seller, in accordance with the time schedules set forth
in such plans, or negligence in the performance of the Agreed Remediation Plan
or the 3.1(d) Remediation Plan, as they may be modified with the consent of
Buyer and Seller.
77
It is understood and agreed that Buyer's obligation to indemnify Seller,
its parent companies, shareholders, subsidiaries, affiliates, officers,
directors, employees and agents as set forth above in this Section 12.2 shall
survive the Closing without limit as to time or amount, except as limited by
Sections 3.2(f) and 3.3 hereof. Buyer's obligation of indemnification in this
Article XII is subject to the allocation of liability set forth in Article III
hereof.
12.3 Procedure for Third Party Claims.
--------------------------------
(a) If any third party shall notify Seller or Buyer (the "Indemnified
Party") with respect to any matter which may give rise to a claim for
indemnification against the other party under this Agreement (the
"Indemnifying Party") then the Indemnified Party shall notify the
Indemnifying Party thereof promptly in writing; provided, however, that,
-------- -------
subject to Article III, no delay in giving notice of such matter shall
relieve the Indemnifying Party from any obligation hereunder unless (and
then solely to the extent) the Indemnifying Party is thereby damaged or the
defense of any matter for which indemnification is claimed is prejudiced.
The Indemnifying Party shall notify the Indemnified Party in writing within
fifteen (15) days of receiving such notice whether the Indemnifying Party
accepts responsibility for such matter. If (i) the Indemnified Party does
not receive timely written notice that the Indemnifying Party accepts
responsibility for such matter, or (ii) if the Indemnifying Party accepts
responsibility but fails to diligently defend the Indemnified Party in such
matter, or (iii) if in the reasonable opinion of the Indemnified Party the
Indemnifying Party may lack the financial resources necessary to comply
with
78
its indemnity obligations in connection with such matter, then the
Indemnified Party may defend against or enter into any settlement with
respect to, such matter as it deems appropriate without relieving the
Indemnifying Party of any of its indemnification obligations with respect
to such matter. If the Indemnifying Party assumes responsibility for the
matter, then (A) the Indemnifying Party will defend the Indemnified Party
against the matter with counsel and consultants of its choice reasonably
satisfactory to the Indemnified Party, (B) the Indemnifying Party shall
have, subject to this Section 12.3, exclusive control of the defense and
settlement of the matter, (C) the Indemnified Party may retain separate co-
counsel and consultants at its sole cost, and (D) the Indemnifying Party
will not consent to the entry of any judgment or enter into any settlement
with respect to the matter which does not include a provision whereby the
plaintiff or claimant in the matter releases the Indemnified Party from all
liability with respect thereto at no cost to, and with no actions required
by and no future obligations imposed on, the Indemnified Party except for
such as may be agreed to in writing by the Indemnified Party.
(b) The Indemnified Party and the Indemnifying Party shall use their
reasonable efforts to cooperate, without prejudice to any rights they may
have against each other, in the compromise or defense of any third party
claim which is not entirely subject to indemnification by a single
Indemnifying Party.
79
12.4 Exclusive Remedy. The provisions of this Article XII, the provisions
----------------
of Article III, and the corresponding provisions in the Transfer Documents, if
any, are intended to be the exclusive remedy between the parties for the matters
covered by such provisions, and no party shall seek recovery from the other
party with respect to such matters under theories of strict liability,
negligence or other theory of recovery, whether under contract (other than under
this Article XII, Article III or the corresponding provisions of any Transfer
Document) or tort or at law or in equity.
ARTICLE XIII - BULK SALES LAW
-----------------------------
Buyer hereby waives compliance by Seller with any bulk sales law which may
be applicable.
ARTICLE XIV - TERMINATION
-------------------------
14.1 Grounds for Termination. This Agreement may be terminated at any
-----------------------
time prior to the Closing:
(a) By the mutual written agreement of Seller and the Buyer;
80
(b) By Seller or by Buyer if the purchase and sale contemplated hereby
shall not have closed by March 15, 1995, if the failure to close on or
before such date is not caused by any fault of the party electing to
terminate pursuant to this Section 14.1(b);
(c) By Seller or by Buyer if the purchase and sale of the Assets would
violate any nonappealable final order, decree or judgment of any United
States court or governmental body having competent jurisdiction;
(d) By notice from Seller to Buyer or Buyer to Seller pursuant to Section
1.7 hereof, electing to terminate this Agreement; or
(e) By notice from either party to the other if the conditions to such
party's obligations to close as set forth in Article IX and X,
respectively, are not satisfied or waived on or prior to the scheduled date
for the Closing.
14.2 Effect of Termination. If this Agreement is terminated by Seller or
---------------------
by Buyer as permitted under Section 14.1 hereof, such termination shall not
terminate (i) the rights or remedies of either party with respect to the breach
of any provision of this Agreement prior to termination, including breach of the
obligation to close, or (ii) the obligations of the parties under the
Confidentiality Agreement.
81
ARTICLE XV - MISCELLANEOUS
--------------------------
15.1 Further Assurance.
-----------------
(a) After the Closing, Seller shall from time to time, at Buyer's request
and without further cost to Buyer, prepare, execute and deliver to Buyer
such other instruments of conveyance and transfer (including without
limitation, additional assignments suitable for recording) and take such
other action (including but not limited to delivery of possession of Assets
for which title has passed hereunder) as Buyer may reasonably request so as
more effectively to sell, transfer, assign, deliver and vest in Buyer title
to and possession of the Assets as provided in this Agreement, and to
implement the covenants hereunder that are to be performed by Seller after
the Closing.
(b) After the Closing, Buyer shall from time to time, at Seller's request
and without further cost to Seller, prepare, execute and deliver to Seller
such other instruments of assumption and take such other action as Seller
may reasonably request so as to more effectively assume the contracts,
agreements, leases and commitments assumed by Buyer hereunder and to
implement the covenants hereunder that are to be performed by Buyer after
the Closing.
15.2 Brokers. Each of the parties hereto represents and warrants to the
-------
other that no broker or finder has acted on its behalf in connection with the
transactions contemplated by this
82
Agreement. Each of the parties agrees to indemnify, defend and hold the other
party harmless, in accordance with the provisions of Article XII hereof, from
any claim or demand for any commission, compensation or other payment by any
broker, finder or similar agent claiming to have been or that was in fact
employed by or on behalf of the first party.
15.3 Costs. Whether or not the transactions contemplated hereby are
-----
consummated, each party shall pay its own respective costs (including, without
limitation, the fees, disbursements and costs of its attorneys, accountants and
consultants if any) in connection with the negotiation, preparation and
execution of this Agreement and the transactions contemplated hereby, except as
otherwise provided in this Agreement.
15.4 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original instrument, but all such
counterparts together shall constitute but one agreement.
15.5 Schedules. All Schedules and Exhibits attached hereto, with the
---------
exception of Exhibit H (the Services Agreement), are incorporated herein and
expressly made a part of this Agreement as fully as though completely set forth
herein.
15.6 Waiver. The failure of any party at any time or times to enforce or
------
require performance of any provision hereof shall in no way operate as a waiver
or affect the right of such party at a later time to enforce the same. No
waiver by any party of any condition or the
83
breach of any term, covenant, representation or warranty contained in this
Agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed to be or construed as a further or continuing waiver of any such
condition or breach, or a waiver of any other condition or of any breach of any
other term, covenant, representation or warranty contained in this Agreement.
Any waiver of an obligation, agreement or condition contained herein shall be
valid and effective only if in writing and signed by the party to whom such
compliance is owed.
15.7 Confidentiality Agreement. The letter agreement entered into between
-------------------------
Seller and Buyer, dated April 6, 1992 relating to disclosure of Seller
information pertaining to the Assets (the "Confidentiality Agreement"), shall
terminate as of the Closing or according to its terms, whichever shall last
occur. From and after the Closing, Seller shall, and shall cause its
shareholders and the employees, agents and representatives of Seller and its
shareholders to not disclose to any third party not affiliated with Seller any
information regarding the Assets or the operation thereof in such party's
possession, except to the extent required by applicable law or court order.
15.8 Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed effective and given only upon receipt, when
delivered personally, by facsimile transmission, by overnight courier, by telex
or by registered or certified mail (return receipt requested), postage prepaid,
to the parties at the following addresses (or at such other addresses
84
for a party as shall be specified by like notice; provided that notices of a
change of address shall be effective only upon receipt thereof):
If to Seller to: Wyco Pipe Line Company
Attn.: Manager, Business Development
One Mid America Plaza, Suite 300
Oakbrook Terrace, IL 60181-4723
Facsimile No.: (708) 990-4985
with a copy to: GATX Terminals Corporation
Attn.: President
500 West Monroe Street
Chicago, IL 60661-3676
Facsimile No.: (312) 621-6647
If to Buyer to: Kaneb Pipe Line Operating Partnership, L.P.
Attn: Edward D. Doherty
2435 North Central Expressway
Suite 700
Richardson, Texas 75080
Facsimile No.: (214) 699-1894
with copies to: Kaneb Pipe Line Operating Partnership, L.P.
Attn: Leon B. Hutchens
100 N. Broadway, Suite 550
Wichita, Kansas 67202
Facsimile No.: (316) 262-0726
and
Kenneth L. Stewart, Esq.
Fulbright & Jaworski
2200 Ross Avenue
28th Floor
Dallas, Texas 75201
Facsimile No.: (214) 855-8200
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15.9 Entire Agreement. This Agreement, including the Schedules and
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Exhibits hereto, the Transfer Documents, the Confidentiality Agreement and the
letter agreement relating to the two mortgages on the Mule Creek Station Related
Property constitute the entire agreement between the parties hereto pertaining
to the subject matter hereof and supersede all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the parties relating
to the subject matter hereof. There are no warranties, representations or other
agreements between the parties in connection with the subject matter hereof
except as specifically set forth herein or in the Schedules and Exhibits hereto
or in the Transfer Documents or the Confidentiality Agreement. No supplement,
modification, waiver or termination of this Agreement or any Schedule or Exhibit
shall be binding unless executed in writing by the party to be bound thereby.
15.10 Severability. If any provision of this Agreement shall hereafter be
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held to be invalid or unenforceable for any reason, that provision shall be
reformed to the maximum extent permitted to come as close as possible in its
effects to the invalid or unenforceable provision, failing which, it shall be
ineffective to the extent of such invalidity or unenforceability only, with the
balance of the provision and of the Agreement continuing in full force and
effect. Such occurrence shall not have the effect of rendering the provision in
question invalid in any other jurisdiction or in any other case or
circumstances, or of rendering invalid any other provisions contained herein to
the extent that such other provisions are not themselves actually in conflict
with any applicable law.
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15.11 Knowledge. Except as otherwise specifically provided for herein,
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whenever a matter is expressed "to the knowledge of" a party or to a party's
"knowledge", or whenever it is said that a party has or does not have
"knowledge" of a matter, such knowledge shall mean to the knowledge as of the
date of this Agreement (and as of the Closing with respect to the truth and
accuracy of the representations and warranties set forth in this Agreement to be
certified pursuant to Sections 9.1 and 10.1), of the directors, officers and
employees of the party serving in such capacities as of the date of this
Agreement (and as of the Closing with respect to the truth and accuracy of the
representations and warranties set forth in this Agreement to be certified
pursuant to Sections 9.1 and 10.1) and, with repect to Seller, those persons
listed on Schedule 5.1.
15.12 Transfer. Seller and Buyer shall cooperate and take such action as
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may be reasonably requested by the other to effect an orderly transfer of the
Assets with a minimum of disruption to the operations of the parties and their
employees.
15.13 Publicity. Any public announcements with respect hereto or the
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transactions contemplated hereby shall be made at such time and in such manner
as Seller and Buyer shall mutually agree; provided, however, that nothing herein
shall prevent any party from making such public announcements as such party may
consider necessary to satisfy such party's legal or contractual obligations but
in such event the party intending to make such disclosure shall advise the other
party in advance of such disclosure and provide such other party with a copy of
the text of the information to be disclosed; and further provided that nothing
in this Section
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15.13 shall in any way limit or restrict Seller's or Buyer's communications with
its employees, customers, or suppliers.
15.14 Assignment. Except for
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(i) an assignment by Seller in connection with a Non-Simultaneous
Exchange, as referred to in Section 2.5 hereof, which Seller may make at
its election, and
(ii) an assignment by Buyer of this Agreement in its entirety only
(prior to the Closing) or in whole or in part (after the Closing), to any
entity that controls, is controlled by or is under common control with
Buyer (an "Affiliate"), which Buyer may make at its election, provided that
Buyer shall not be relieved thereby of its obligations hereunder,
neither party to this Agreement shall assign this Agreement, directly or
indirectly, or any part thereof without the prior written consent of the other
party, and any attempt to do so will be of no force or effect. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. For purposes of the foregoing,
"control" shall mean ownership of more than fifty percent (50%) of the issued
voting rights or interests of the entity or entities in question.
15.15 Captions. The captions in this Agreement are for convenience only
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and shall not be considered a part of or affect the construction or
interpretation of any provision of this Agreement.
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15.16 Gender. Whenever appropriate herein, the singular number shall
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include the plural, the plural shall include the singular, and the use of any
gender shall include all genders.
15.17 No Third Party Beneficiaries. Nothing in this Agreement shall
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entitle any person other than Seller or Buyer and their respective successors
and assigns permitted hereby to any claim, cause of action, remedy or right of
any kind.
15.18 Governing Law. This Agreement and the legal relations between the
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parties shall be governed by and construed in accordance with the law of the
State of Delaware, excluding any choice of law rules which may direct the
application of the laws of any other jurisdiction.
15.19 Force Majeure. Neither party shall be liable to the other for
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failure to carry out the terms and provisions of this Agreement to the extent
such failure arises out of, relates to or is caused by strikes, fire, acts of
God, or other causes, whether similar or dissimilar to the foregoing, beyond the
reasonable control of such party.
15.20 Telecopy Execution and Delivery. A facsimile, telecopy or other
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reproduction of this Agreement may be executed by one or more parties hereto,
and an executed copy of this Agreement may be delivered by one or more parties
hereto by facsimile or similar instantaneous electronic transmission device
pursuant to which the signature of or on behalf of such party can be seen, and
such execution and delivery shall be considered valid, binding and effective for
all
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purposes. At the request of either party hereto, all parties hereto agree to
execute an original of this Agreement as well as any facsimile, telecopy or
other reproduction hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed.
WYCO PIPE LINE COMPANY
By: /s/ TM Brogan
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Title: Director
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KANEB PIPE LINE OPERATING
PARTNERSHIP, L.P.
By Kaneb Pipe Line Company,
General Partner
By: /s/ Edward D. Doherty
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Title: Chairman
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