EXHIBIT 10.1
ASSET PURCHASE AND SALE AGREEMENT
BETWEEN
PHILLIPS PETROLEUM COMPANY
AS SELLER
AND
HOLLY CORPORATION
AS BUYER
DATED AS OF
DECEMBER 20, 2002
TABLE OF CONTENTS
<Table>
ARTICLE 1 DEFINITIONS AND INTERPRETATIONS.........................................................................2
1.1 Definitions...............................................................................................2
1.2 Interpretations..........................................................................................16
ARTICLE 2 SALE AND PURCHASE; DISCLAIMER OF WARRANTIES; PURCHASE PRICE; METHOD OF PAYMENT; LIMITED ASSUMPTION
AND RETENTION OF LIABILITIES.....................................................................................17
2.1 Sale and Purchase........................................................................................17
2.2 Disclaimer of Warranties.................................................................................19
2.3 Purchase Price...........................................................................................20
2.4 Method of Payment........................................................................................21
2.5 Limited Assumption and Retention of Liabilities..........................................................21
ARTICLE 3 CLOSING................................................................................................23
3.1 Place and Time...........................................................................................23
3.2 Transactions and Deliveries at or Prior to Closing.......................................................23
3.3 Inventory Adjustments....................................................................................28
3.4 Approval Required by Antitrust Regulatory Authorities....................................................32
ARTICLE 4 EMPLOYMENT AND EMPLOYEE BENEFITS.......................................................................34
4.1 Employees in General.....................................................................................34
4.2 Represented Employees....................................................................................35
4.3 Offers of Employment.....................................................................................35
4.4 Employee Benefits for Acquired Employees.................................................................38
4.5 Welfare Plan Coverage....................................................................................39
4.6 Pension..................................................................................................41
4.7 Defined Contribution Plan................................................................................42
4.8 Vacation.................................................................................................43
4.9 Liabilities and Indemnities..............................................................................44
4.10 Transition of Employees..................................................................................46
4.11 Pension Benefit Amount...................................................................................47
ARTICLE 5 SELLER'S REPRESENTATIONS AND WARRANTIES................................................................48
5.1 Organization and Standing................................................................................48
5.2 Authority and Binding Obligations........................................................................48
5.3 Consent; Non-Contravention...............................................................................49
5.4 No Material Violation of Judgments or Orders.............................................................50
5.5 No Material Default......................................................................................50
5.6 Litigation...............................................................................................50
5.7 Licenses and Permits.....................................................................................51
5.8 Condition of Assets......................................................................................51
5.9 Compliance with Laws.....................................................................................52
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<Table>
5.10 Due Diligence............................................................................................52
5.11 Taxes....................................................................................................52
5.12 Good and Marketable Title................................................................................53
5.13 Condemnation.............................................................................................54
5.14 Labor Matters............................................................................................54
5.15 Intellectual Property....................................................................................55
5.16 Maintenance of Assets....................................................................................56
5.17 Shared Assets............................................................................................57
5.18 Financial Statements.....................................................................................57
5.19 Instruments in Full Force and Effect.....................................................................57
5.20 Shipping History.........................................................................................58
5.21 Sufficiency of the Assets................................................................................58
5.22 Employee Benefit Matters.................................................................................59
5.23 Absence of Certain Business Practices....................................................................59
ARTICLE 6 BUYER'S REPRESENTATIONS AND WARRANTIES.................................................................59
6.1 Organization and Standing................................................................................60
6.2 Authority and Binding Obligations........................................................................60
6.3 No Consent Required; Non-Contravention...................................................................60
6.4 Litigation...............................................................................................61
6.5 No Breach................................................................................................61
6.6 Actions and Proceedings..................................................................................62
6.7 Independent Decision.....................................................................................62
ARTICLE 7 CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE;...................................................62
7.1 Regulatory Approvals.....................................................................................63
7.2 Deliveries...............................................................................................63
7.3 Required Consents and Authorizations.....................................................................63
7.4 Taking of Assets.........................................................................................63
7.5 Adverse Change...........................................................................................64
7.6 Representations and Warranties True; Covenants and Agreements Performed..................................64
7.7 Consents and Approvals of Antitrust Regulatory Authorities...............................................65
7.8 Pipeline Rights-of-Way...................................................................................65
7.9 Schedules................................................................................................65
ARTICLE 8 CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE...................................................65
8.1 Deliveries...............................................................................................66
8.2 Representations and Warranties True; Covenants and Agreements Performed..................................66
8.3 Consents and Approvals of Antitrust Regulatory Authorities...............................................66
ARTICLE 9 JOINT CONDITIONS PRECEDENT TO CLOSING OBLIGATIONS......................................................66
9.1 Governmental Orders......................................................................................66
9.2 Litigation...............................................................................................67
9.3 Related Agreements Finalized.............................................................................67
</Table>
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<Table>
ARTICLE 10 COVENANTS AND AGREEMENTS OF SELLER....................................................................67
10.1 Conduct of Business......................................................................................67
10.2 Access; Records..........................................................................................68
10.3 Consents to Assignment...................................................................................69
10.4 Taxes....................................................................................................69
10.5 Surveys; Title Opinion...................................................................................69
10.6 Inventories..............................................................................................70
10.7 Required SEC Financial Statements........................................................................70
ARTICLE 11 COVENANTS AND AGREEMENTS OF BUYER.....................................................................71
11.1 Access; Records..........................................................................................71
11.2 Qualifications, Approvals, Licenses and Permits..........................................................71
11.3 No Trademarks............................................................................................71
11.4 Third Party Property.....................................................................................72
ARTICLE 12 COVENANTS OF BUYER AND SELLER.........................................................................73
12.1 Antitrust Compliance.....................................................................................73
12.2 Purchase Price Allocations...............................................................................73
12.3 Tax Election.............................................................................................74
12.4 Collection of Amounts Owed to a Party....................................................................74
12.5 Payment of Transfer Taxes; Recording Fees................................................................75
12.6 Payment of Certain Expenses Due and Payable After the Effective Time; Cooperation........................75
12.7 Assets Not Assigned at Closing...........................................................................77
12.8 Relationship of the Parties..............................................................................77
12.9 PMPA Compliance..........................................................................................79
ARTICLE 13 ENVIRONMENTAL MATTERS.................................................................................80
13.1 Environmental Agreement..................................................................................80
ARTICLE 14 INDEMNIFICATION; SURVIVAL.............................................................................80
14.1 Indemnification..........................................................................................80
14.2 Notification and Third Party Claims......................................................................83
14.3 Limitation on Indemnification............................................................................85
14.4 Coordination of Indemnification Rights...................................................................86
14.5 Right to Cure............................................................................................88
14.6 Survival.................................................................................................88
ARTICLE 15 DISPUTE RESOLUTION....................................................................................88
15.1 Dispute Resolution.......................................................................................88
15.2 Place....................................................................................................89
15.3 Arbitrators..............................................................................................89
15.4 Statute of Limitations...................................................................................89
15.5 Discovery................................................................................................90
15.6 Costs....................................................................................................90
15.7 Breach...................................................................................................90
</Table>
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<Table>
15.8 Consent to Jurisdiction..................................................................................91
ARTICLE 16 TECHNOLOGY TRANSFER...................................................................................91
16.1 Intellectual Property....................................................................................91
16.2 Licensed Technology......................................................................................92
16.3 Confidential Technology Information......................................................................94
16.4. Limitation of Warranties.................................................................................96
16.5. Default..................................................................................................97
16.6. Export Control...........................................................................................97
ARTICLE 17 RISK OF LOSS..........................................................................................97
ARTICLE 18 COMMISSIONS AND FINDER'S FEES.........................................................................98
ARTICLE 19 TERMINATION...........................................................................................98
19.1 Termination..............................................................................................98
19.2 Effect of Termination....................................................................................99
19.3 Deposit..................................................................................................99
ARTICLE 20 MISCELLANEOUS........................................................................................100
20.1 Entire Agreement; Amendments............................................................................100
20.2 Invalidity..............................................................................................100
20.3 Effect of Waiver or Consent.............................................................................101
20.4 Limitation on Benefits of this Agreement................................................................101
20.5 Notices.................................................................................................101
20.6 Binding Effect..........................................................................................103
20.7 Additional Actions and Documents........................................................................103
20.8 Schedules...............................................................................................103
20.9 Place of Transfer of Title and Possession...............................................................104
20.10 Execution in Counterparts...............................................................................104
20.11 Choice of Law...........................................................................................104
20.12 Publicity...............................................................................................104
20.13 Confidentiality.........................................................................................105
20.14 Costs and Expenses......................................................................................108
20.15 Assignment..............................................................................................108
</Table>
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SCHEDULES
TO ASSET PURCHASE AND SALE AGREEMENT
REFINERY
2.1.1(a) Land and Buildings - including notice of any encumbrances
2.1.2(a) Equipment, Buildings and Other Plant Property
2.1.3(a) Rolling Stock and Motor Vehicles
2.1.4(a) Contracts
2.1.8(a) Capital Projects
2.1.9(a) Rights-of-Way, Easements and Permits Abutting the Refinery
2.1.10(a) Rail Cars
2.1.11 Seller's Knowledge
PIPELINE
2.1.1(b) Crude and Products Pipeline Connections To and From the Refinery
2.1.2(b) Pipeline Contracts
RETAIL SITES
2.1.1(c) Retail Sites
2.1.2(c) Retail Sites Equipment
2.1.3(c) Retail Sites Contracts
MARKETERS AGREEMENTS
2.1.4(c) List of Branded Marketers and Agreements
TERMINALS
2.1.1(d) Boise and Burley Terminals
2.1.2(d) Terminal Contracts
OPERATING PERMITS
2.1.1(e) Environmental Permits
2.1.2(e) Other Operating Permits and Licenses
EXCLUDED ASSETS
2.1.1(f) Excluded Assets
2.1.2(f) Excluded Rail Cars
INVENTORIES
2.1.1(g) Seller Feedstock and Product Inventory
2.1.2(g) Seller Non-Hydrocarbon Retail Site Inventory
2.1.3(g) Seller Retail Site Product Inventory
2.1.4(g) Third Party Inventory
2.1.5(g) Seller Other Inventory
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TAXES PAYABLE & OTHER CURRENT LIABILITIES ASSUMED BY BUYER
2.5(a) Taxes Payable & Other Current Liabilities Assumed by Buyer
VALUATION OF INVENTORIES
3.3(a)(i) Valuation of Seller Feedstock, Product and Retail Site Product
Inventories .3(a)(iii) Valuation of Prepaid Expenses and Deposits
3.3(a)(iv) Marketers' Loan & Other Reimbursement Agreements - and Balances
EMPLOYEES AND EMPLOYEE BENEFITS
4.1 List of Employees Employed at the Assets
4.2(a)(i) Collective Bargaining Agreements
4.2(b) Seller's Union Benefits
4.3(g) Merit Increases
4.4 Salaried Employee Benefits
4.11 Pension Benefit Adjustment Procedures
SELLER'S REPRESENTATIONS AND WARRANTIES
5.3(a) Consents, Waivers, Approvals, etc. Required for Seller to Enter into
this Agreement or Related Agreements
5.3(b) Any Agreements or Conditions Which Could Prevent or Materially Delay
Seller from Consummating Transactions Contemplated by this Agreement
or Performing its Obligations under this Agreement 5.4 Any Material
Violation of Law 5.5 Any Material Defaults by Seller 5.6 Pending
Litigation against Seller 5.8 Disclosed Conditions 5.9 Any
Non-Compliance with Applicable Laws 5.11 Any Open Tax Liens 5.12(b)
Encumbrances 5.13 Any Pending Condemnation Proceedings 5.14 Labor
Matters 5.15(a) Any Alleged Patent Infringement 5.17 Shared Assets
5.18 Unaudited Financial Statements 5.19 Instruments in Full Force
and Effect 5.20 Shipping History
BUYER'S REPRESENTATIONS AND WARRANTIES
6.3(a) Consents, Approvals, etc. Required by Buyer for Execution and
Performance of this Agreement
6.3(b) Any Agreement or Condition that Could Prevent or Materially Delay
Buyer from Consummating Transactions Contemplated or Performing Its
Obligations Under this Agreement
6.5 Any Material Defaults by Buyer
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COVENANTS AND AGREEMENTS OF BUYER
11.4(a) Third Party Property (Located on the Assets)
11.4(b) Seller Retained Assets (Located on the Assets)
COVENANTS OF BUYER AND SELLER
12.2 Allocation of Purchase Price
INTELLECTUAL PROPERTY
16.1(a) Patented Technology Owned by Seller
16.1(b) Licensed Technology Where Seller Has Unrestricted Right to Sublicense
16.1(c) Licensed Technology Where Seller Does Not Have Unrestricted Right to
Sublicense
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EXHIBITS
A Deed(s) covering the Land and Buildings
B Form of Bills of Sale for Pipeline, Personal Property, Equipment,
Inventories
C Form of Assignment & Assumption Agreement
D HF Alkylation Technology License Agreement
E Maxcat Coke Reduction Technology License Agreement
F Crude Assay Data License Agreement
G Credit Card Agreement
H Transition Services Agreement
I Trademark License Agreement
J Environmental Agreement
K Non-Foreign Certificate
L Phillips Branded Ancillary Products Purchase Agreement
viii
ASSET PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT ("Agreement") is made and
entered into as of the 20th day of December, 2002, by and between HOLLY
CORPORATION, a Delaware corporation ("Buyer"), and PHILLIPS PETROLEUM COMPANY, a
Delaware corporation ("Seller"). These entities are sometimes individually
referred to as "Party" and are sometimes collectively referred to as "Parties."
RECITALS:
Seller owns a petroleum refinery, commonly known as the Woods
Cross Refinery, located in Davis County, Utah ("Refinery"); a fifty percent
(50%) undivided interest in two petroleum products terminals located in Boise
and Burley, Idaho ("Terminals"); retail marketing assets consisting of owned and
leased branded service stations located in the states of Utah and Wyoming
("Retail Sites"); wholesale marketing agreements with branded and unbranded
jobbers located in the states of Utah, Wyoming, Idaho and Montana ("Marketers"),
which wholesale marketing agreements ("Marketer Agreements") provide for the
sale and delivery of gasoline and diesel fuel ("Motor Fuels") by Marketers to
retail service stations located in Utah, Wyoming, Idaho and Montana; and certain
crude oil and products pipelines connected to the Refinery located in Utah; and
Seller desires to sell, and Buyer desires to purchase the
assets, properties and rights defined as "Assets" in this Agreement, pursuant to
the terms and conditions contained in this Agreement.
Now, therefore, in consideration of the mutual agreements of
the Parties contained in this Agreement, and subject to the terms and conditions
contained in this Agreement, the Parties agree as follows:
1
ARTICLE 1
DEFINITIONS AND INTERPRETATIONS
1.1 Definitions.
Terms which are defined in Sections other than Article 1 of
this Agreement, shall have the meanings attributed to them where defined. As
used in this Agreement, the following terms shall have the meanings set forth
below, unless the context otherwise requires, and the meanings shall be equally
applied to both the singular and plural forms of the terms defined:
"1031 Exchange" shall have the meaning set forth in Section 12.3.
"1060 Forms" shall have the meaning set forth in Section 12.2.
"Acquired Employee" shall have the meaning set forth in Section 4.3(d).
"Affiliate" shall, with respect to each of Seller and Buyer, mean any
of its parents, subsidiaries, affiliates, or joint venturers, or any other
Person directly or indirectly controlling, controlled by, or under common
control with the Party.
"Allocation" shall have the meaning set forth in Section 12.2.
"Antitrust Regulatory Authorities" means the Federal Trade Commission,
the Department of Justice and all applicable agencies of the states of Utah and
Idaho with authority over antitrust proceedings or matters involving the Assets.
"Applicable Law" means any applicable statute, law, ordinance, rule or
regulation.
"Approved Investments" means (i) demand or time deposits, certificates
of deposit or acceptances of any financial institution that is a member of the
Federal Reserve System having combined capital and surplus and undivided profits
of not less than $250 million or (ii) any evidence of indebtedness issued or
directly and fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof (provided that the full faith and credit of
the United States of America is pledged in support thereof).
2
"Assets" means the Refinery located in Davis County, Utah, the Land on
which the Refinery is located and the related assets, Improvements and Equipment
used or held for use in the operation of the Refinery, including the loading
facility at the Refinery, as described in Schedules 2.1.1(a), 2.1.2(a),
2.1.3(a), 2.1.9(a) and 2.1.10(a); Seller's interest to the non-exclusive right
to use all patents, know-how and other Intellectual Property used or held for
use by Seller or its Affiliates in the Operations including the patents,
know-how and other intellectual property, listed in Schedules 16.1(a), 16.1(b)
and 16.1(c); all plans (including proposed and tentative plans, whether or not
adopted), specifications and drawings (including Seller's interest to use
patents, know-how and other Intellectual Property related to such plans) related
to the operation of the Refinery; the crude pipelines into and the product
pipelines from the Refinery ("Pipelines"), as described in Schedule 2.1.1(b);
Seller's interest in the Terminals, as described in Schedule 2.1.1(d); Seller's
interest in certain agreements and contracts (including the Contracts, the
Leases and Easements and that portion of the Marketer Agreements, which covers
the sale and delivery by Marketers of Motor Fuels to retail service stations
located in the States of Utah, Wyoming, Idaho and/or Montana), as listed in
Schedules 2.1.4(a), 2.1.2(b), 2.1.3(c), 2.1.4(c) and 2.1.2(d); Seller's interest
in the Retail Sites and the related assets, Improvements and Equipment located
on the Retail Sites, as described in Schedules 2.1.1(c) and 2.1.2(c); the Seller
Feedstock Inventory and the Seller Product inventory ,as generally estimated in
Schedule 2.1.1(g); the Seller Other Inventory, as generally estimated in
Schedule 2.1.5(g); Seller Non-Hydrocarbon Retail Site Inventory, as generally
estimated in Schedule 2.1.2(g); and Retail Site Product Inventory, as generally
estimated in Schedule 2.1.3(g), Seller's interest in Permits, listed
3
in Schedules 2.1.1(e) and 2.1.2(e); Prepaid Expenses and Deposits; the Records
and all other privileges, rights, interests, properties and assets of Seller or
its Affiliates of every kind and description and wherever located that are used
or intended for use in the Operations, but "Assets" shall exclude Seller's
proprietary trade names and trademarks (except as specifically granted by Seller
to Buyer in this Agreement and the Related Agreements); the Excluded Assets, as
described and/or listed in Schedule 2.1.1(f); the Excluded Rail Cars, as listed
in Schedule 2.1.2(f); Third Party Inventory as described in Schedule 2.1.4(g);
and Third Party Property, as described in Schedule 11.4(a). Buyer acknowledges
that certain of the Assets require third party consent to transfer and that the
Terminals are subject to a right of first refusal in favor of Sinclair
Marketing, Inc.; that the transfer of the Terminals will be subject to the
provisions of Section 2.1(c) hereof; the transfer of such Assets requiring third
party consents will be subject to the provisions of Sections 7.3 and 12.7
hereof; and governmental approval is required for the transfer of all
Environmental Permits (as defined in the Environmental Agreement) and other
operating licenses and permits issued by federal or state governmental agencies.
"Base Rate" shall mean the lesser of (i) the per annum rate of interest
calculated on a daily basis using the 3-month Treasury Bill rate published in
the Wall Street Journal for the applicable day (with the rate for any day for
which such rate is not published being the rate most recently published) plus
two hundred (200) basis points; and (ii) the maximum nonusurious rate of
interest permitted by Applicable Law, such Base Rate to be adjusted
automatically as and to the extent that either (i) or (ii) immediately above
changes from time to time.
"Claim" shall have the meaning specified in Section 15.1.
"Claim Notice" shall have the meaning set forth in Section 14.2.
"Claiming Employee" shall have the meaning set forth in Section 4.9(a).
4
"Closing" means the closing of the purchase and sale contemplated
hereunder.
"Closing Date" means the time and date established for the Closing
pursuant to Section 3.1 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or any
successor thereto, and the rules and regulations thereunder.
"Collective Bargaining Agreements" shall have the meaning set forth in
Section 4.2.
"Compensation Claims" shall have the meaning set forth in Section
4.9(a).
"Confidential Technology Information" shall have the meaning set forth
in Section 16.3(a).
"Contracts" shall mean those contracts and agreements listed on
Schedules 2.1.4(a), 2.1.2(b), 2.1.3(c), 2.1.4(c) and 2.1.2(d) and the Marketer
Agreements.
"Damages" shall mean (a) any and all obligations, claims, losses,
liabilities, damages (but excluding any indirect, special, consequential
punitive or exemplary damages, other than such damages as may be awarded to a
third party against an Indemnified Party), Taxes, penalties, fines, assessments,
deficiencies, losses (excluding lost profits), Judgments, settlements, costs and
reasonably incurred expenses, interest, bonding and appellate costs and
attorneys', accountants', engineers', consultants' and investigators' reasonable
fees and disbursements, in each case after the application of any and all
amounts actually recovered by the Indemnified Party under insurance contracts or
similar arrangements (but excluding self-insurance arrangements and net of
deductibles and increases in premiums or other increased costs of insurance
relating to or arising out of such recoveries,) and from third parties by the
Person claiming indemnity and (b) interest on such aforesaid items consistent
with the Applicable Law at (i) the Base Rate beginning thirty (30) days after
the date on which the Indemnified Party makes a payment in
5
respect of a claim or demand asserted by a third party against the Indemnified
Party for which the Indemnified Party is entitled to indemnification hereunder
or (ii) the Late Payment Rate beginning on the date a final and non-appealable
judgment or award is entered in favor of the Indemnified Party.
"Deeds" shall have the meaning set forth in Section 3.2(a)(i).
"Default" shall have the meaning set forth in Section 16.5.
"Deliverable Items" shall mean design manuals, operation manuals, blue
prints, engineering studies and engineering reports and with respect to computer
software, object code; source code; user operations and system documentation;
system engineering and design information; and all associated data files and
data bases to the extent such systems are used in or exist for the operation of
the Assets and can be delivered by a Party (i.e., if software licenses are
assignable); except that Deliverable Items does not include Excluded Assets set
forth in Schedule 2.1.1(f).
"Deposit" shall have the meaning set forth in Section 2.3(b).
"Disclosing Party" shall have the meaning set forth in Section
20.13(e).
"Effective Time" shall mean 12:01 A.M. Mountain Time or Pacific
Standard Time, as applicable, on the Closing Date.
"Electing Party" shall have the meaning set forth in Section 12.3.
"Employees" shall have the meaning set forth in Section 4.1(b).
"Environmental Agreement" shall have the meaning set forth in Section
13.1.
"Equipment" shall mean all furnishings, furniture, computer equipment
and hardware, fittings, equipment, machinery, refining process units, tools,
apparatus, tanks, pipelines, gasoline and diesel dispensing pumps, cash
registers, signage, maintenance and janitorial equipment,
6
sewers, appliances, trucks, automobiles, other vehicles and rolling stock and
other articles of personal property of every kind whatsoever which is used or
held for use primarily in the operation of the Refinery, Terminals, Pipeline
and/or Retail Sites, except for any equipment listed in Schedules 2.1.1(f),
2.1.2(f), 11.4(a) and 11.4(b).
"Excluded Assets" means (i) all of Seller's cash, deposits and bank
accounts; (ii) all accounts receivable or exchange balances owed to or by Seller
by reason of deliveries made by or to Seller or on account of the Assets prior
to the Effective Time; (iii) the financial books and records of Seller or its
Affiliates and the personnel, employment and other records of Seller as to their
former employees other than the Records; (iv) any claims or other rights to
receive monies arising prior to or after the date of execution hereof which
Seller has or may have which are attributable to its ownership of the Assets
prior to the Effective Time; (v) all company minute books and similar materials
related to maintenance of company records other than the Records; (vi) all
Intellectual Property and Trademarks not expressly licensed or conveyed to Buyer
or its Affiliates by or pursuant to this Agreement or the Related Agreements;
and (vii) those assets described on Schedules 2.1.1(f), 2.1.2(f), 2.1.4(g),
11.4(a) and 11.4(b).
"Force Majeure Event" means any (1) fire, explosion, strike, lock-out,
breakdown of machinery or equipment, casualty or accident; (2) act of God,
including, without limitation, epidemic, hurricane, typhoon, earthquake, cyclone
or flood; (3) war, revolution, civil commotion, act of enemies, blockade, or
embargo; or (4) other similar occurrences or acts beyond the reasonable control
of a Party hereto, which act or occurrence shall make it impossible for the
Party concerned to carry out the obligations of such Party under this Agreement
(but lack of financial ability shall not be a Force Majeure Event). Those
provisions in this Agreement
7
regarding Force Majeure Event shall only be applicable in the specific
situation(s) in which this Agreement expressly provides they shall apply and in
no other situations.
"Improvements" shall mean any and all buildings, structures, fixtures
or other improvements attached or affixed to the Land.
"Indemnified Party" shall refer to the Person or Persons indemnified,
or entitled, or claiming to be entitled to be indemnified, pursuant to this
Agreement.
"Indemnifying Party" shall refer to the Person having the obligation to
indemnify pursuant to this Agreement.
"Intangible Property" shall mean (i) any and all business trade
secrets, including, but not limited to, sales tools, and supplier lists and (ii)
other intangible assets and properties, including, but not limited to, any
goodwill or going concern value associated with any of the foregoing, but
excluding in each case all Intellectual Property and any of Seller's business or
marketing plans.
"Intellectual Property" means technical information, technology
(including unpatented technology), software (including object and source code),
confidential information, trade secrets, know-how, including patents,
applications for patents, patentable or unpatentable inventions, copyrighted
works, works subject to copyright protection, and covenants not to compete. The
definition of "Intellectual Property" herein excludes Excluded Assets and
excludes trademarks and tradenames, except to the extent the use of trademarks
and tradenames is provided to Buyer under the Trademark License Agreement, the
form of which is attached hereto as Exhibit I.
"Judgments" shall mean all judgments, orders, decisions, injunctions,
decrees or awards of any federal, state, local or foreign court, arbitrator or
administrative or governmental authority, bureau or agency.
8
"Known or Knowledge" or "To the knowledge of" or "Within the knowledge
of" a Party, as used herein, shall, with respect to Seller, mean those facts,
events or circumstances, if actually known to the Persons listed on Schedule
2.1.11, provided such Persons shall make inquiry of and be responsible for the
actual knowledge of the managers and key employees under their supervision.
"Land" shall mean the tracts (or parcels) of land described in
Schedules 2.1.1(a), 2.1.1(b), 2.1.1(c) and 2.1.1(d) together with Improvements,
easements, appurtenances and other hereditaments appurtenant to the tracts or
parcels of land.
"Late Payment Rate" shall mean the lesser of (i) the Base Rate, plus
five hundred (500) basis points per annum, or (ii) the maximum rate of interest
permitted by Applicable Law, such rate to be adjusted automatically as and to
the extent that either (i) or (ii) immediately above changes from time to time.
"Leases and Easements" shall mean, collectively, those real property
leases, subleases, easements and similar agreements described on Schedules
2.1.1(a), 2.1.1(b), 2.1.1(c) and 2.1.1(d).
"Legal Requirements" shall mean any and all (i) Applicable Laws; (ii)
applicable Judgments; (iii) contracts with any federal, state, local or foreign
court, arbitrator or administrative or governmental authority, bureau or agency
relating to compliance with matters described in (i) or (ii) above, and (iv)
applicable Permits; and as any of the foregoing matters described in (i) through
(iv) above may have been waived, amended, varied or otherwise modified by any
Permit or Permit-related proceedings or other applicable proceedings.
"Licensed Technology" means any Intellectual Property rights, including
patents, technical information, data, technology, know-how and computer software
that is owned by a third party and licensed or sublicensed to Seller or its
Affiliates and is used or held for use in the operation of the Assets but
excluding Excluded Assets and Trademarks.
9
"Liens" shall mean any and all liens, mortgages, charges, pledges,
security interests, burdens, easements, rights of way, zoning ordinances,
mineral interests and exceptions, conditional sales contracts, options, rights
of first refusal or other encumbrances of any nature whatsoever, including, but
not limited to, such as may arise under any Contracts or Judgments.
"Marketers" shall have the meaning set forth in the first recital.
"Marketers Agreements" means those franchise agreements, motor fuel
sales agreements and other agreements constituting the distributor franchise
relationship between Phillips and the Marketers listed on Schedule 2.1.4(c). A
representative Marketer Agreement is contained in Schedule 2.1.4(c).
"Material Adverse Change" shall mean any casualty loss or damages to or
any incident, situation, condition or occurrence relating to the Assets or
Operations, which could reasonably be expected to (i) cost in excess of $5
million to repair or otherwise remedy (i.e. replace damaged hardware or unit,
etc.), (ii) render the Assets incapable, on the Closing Date, of operating in
the manner that is materially similar to the Asset's operation in the six months
prior to the execution date of this Agreement, or (3) materially and
substantially impair the ability of Buyer to conduct the business using the
Assets from and after the Effective Time in substantially the same manner as
conducted by Seller for the six months prior to the execution date of this
Agreement, but shall not include occurrences resulting from changes in the
economy or refining industry generally.
"Motor Fuels" shall have the meaning set forth in the first recital.
10
"Net Inventory Adjustment" means the true-up and adjustment of the
valuation of the Seller Inventories as described in Section 3.3(g).
"Net-Inventory Amount" means the valuation of the Seller Inventories to
be included in the Purchase Price of the Assets.
"Net Inventory Estimate" means Seller's good faith estimate of the Net
Inventory Amount, which estimate shall be included in the purchase price of the
Assets to be paid by Buyer to Seller at Closing, as described in Section 3.3(f).
"Net Inventory Estimate Date" shall have the meaning set forth in
Section 3.3(f).
"Non-Represented Employee" shall have the meaning set forth in Section
4.1(b).
"Operations" shall mean those activities conducted by Seller, including
the purchase, transportation, refining, processing, distribution, storage and
sale of petroleum products, as of August 2, 2002 and up to the Effective Time,
utilizing the Assets.
"Party" and "Parties" means each of Seller and Buyer and collectively
Seller and Buyer.
"Pension Benefit Adjustment" means the true-up and adjustment of the
Pension Benefit Amount as described in Section 4.11.
"Pension Benefit Amount" shall have the meaning set forth in Section
4.11.
"Pension Benefit Amount Estimate" means $3,805,000, which is Seller's
good faith estimate of the Pension Benefit Amount as of the date hereof.
"Permits" shall mean any and all permits, temporary permits to
construct or operate, authorizations, approvals, certificates, certificates of
approval, registrations, rights of way, orders, waivers, variances or other
licenses issued or granted by any federal, state or local administrative or
governmental authority, bureau or agency (i) under any Legal Requirement,
including, but not limited to, Environmental Laws (as defined in the
Environmental Agreement);
11
or (ii) under or pursuant to any Judgment or any Contract with any such
administrative or governmental authority, bureau or agency relating in each case
to compliance with any Legal Requirement.
"Permitted Encumbrances" shall mean (i) Liens that are caused or
created by Buyer; (ii) Liens for Taxes not yet due and payable or which are
being contested in good faith, and such contested liens have been fully
disclosed to Buyer on Schedule 5.11; (iii) non-monetary Liens that do not
materially interfere with the ability of Seller or Buyer to own and operate the
Assets in substantially the manner conducted before the Closing; (iv)
mechanics', carriers', workers', repairmen's or other similar Liens arising or
incurred in the ordinary course of business relating to liabilities that are not
overdue; (v) Liens that arise under zoning, land use and other similar laws,
none of which would materially interfere with the conduct of the operations of
the Assets by Buyer following the Effective Time, and (vi) non-monetary Liens
set forth in the title reports provided to Buyer prior to the date of this
Agreement; provided, however, that unless Buyer has expressly agreed herein to
assume liability for a specific indebtedness, Permitted Encumbrances shall not
include any indebtedness, whether or not of record, which are not disclosed to
and expressly assumed by Buyer.
"Person" means an individual, corporation, partnership, association,
trust, limited liability company or any other entity or organization, including
a government or political subdivision or agency, unit or instrumentality
thereof.
"Pipeline Agreements" shall mean leases, subleases, licenses, permits,
franchises, assignments, easements, rights-of-way and other agreements used in
the operation of or otherwise necessary to operate the Pipeline.
12
"Pipelines" shall have the meaning set forth in the first recital;
provided, Pipelines does not include Seller's system-wide, centralized
operations center or the system-wide hardware, software or databases used by
Seller for operations of Seller's pipelines.
"Prepaid Expenses and Deposits" shall mean those prepaid rentals,
prepaid expenses, bonds and deposits listed on Schedule 3.3(a)(iii).
"Purchase Price" shall have the meaning specified in Section 2.3(a).
"Refinery" shall have the meaning as specified in the first recital.
"Records" means Seller's operational and technical records, books,
papers and documents, including Deliverable Items, used by or for the operation
of the Assets up to the Effective Time, including without limitation,
specifications, surveys, building and machinery diagrams, financial records,
personnel and labor relations records, environmental records and reports, sales
and property tax records and customer data and supplier data. For the avoidance
of doubt, Records specifically excludes (i) any of the Seller's business plans,
strategies and financial records which address or reflect activities unrelated
to the Assets; (ii) any of Seller's company minute books and records, tax
returns or other materials which do not pertain to the Assets or ongoing
day-to-day operation of the Operations; and (iii) medical records for which the
Acquired Employees written consent to the release of such records is not
obtained. Unless otherwise specifically agreed to by Seller, Seller's obligation
to provide electronic Records to Buyer will only include Records maintained by
Seller for three years preceding Closing, except for Records required for Buyer
to comply with regulatory requirements or otherwise to operate the Assets.
"Related Agreements" shall mean the agreements listed in Section 3.2(c)
and any other agreements or documents executed in connection with or as required
under this Agreement.
13
"Represented Employee" shall have the meaning specified in Section
4.1(a).
"Retail Sites" shall have the meaning specified in the first recital.
"Seller Base Inventory" shall mean that crude oil, feedstock,
intermediate petroleum products, or refined petroleum products (excluding water
and sludge) that is contained in Refinery tank bottoms below low-suction,
Refinery line fill, or in Refinery process units owned by the Seller.
"Seller Feedstock Inventory" shall mean that crude oil, feedstock, or
intermediate petroleum product contained in storage tanks, line fill and in
process units as applicable (but less water and sludge) owned by the Seller and
located at the Refinery, Pipeline or Terminals or in terminals belonging to
third parties and specified to be sold, or which is in transit, to the Refinery.
"Seller Inventories" shall mean, collectively, the Seller Feedstock
Inventory, Seller Product Inventory, Seller Other Inventory, Seller Retail Site
Product Inventory and Seller Non-Hydrocarbon Retail Site Inventory.
"Seller Non-Hydrocarbon Retail Site Inventory" shall mean the inventory
of non-hydrocarbon products, wares, merchandise and materials and supplies
located at or otherwise held for use at the Retail Sites.
"Seller Other Inventory" shall mean the catalysts, chemicals,
additives, spare parts, store stocks, supplies and personal property owned by
Seller or its Affiliates and used in the Operations and that are located at or
otherwise held for use by the Refinery, the Terminals or the Retail Sites and
which is not an Excluded Asset.
14
"Seller Product Inventory" shall mean those certain refined products
contained in storage tanks, line fill, and in process units as applicable (but
less water and sludge) owned by the Seller and located at or otherwise held for
use by the Refinery, Pipeline and Terminals.
"Seller Retail Site Product Inventory" shall mean those certain refined
products including gasoline, diesel, motor oil and lubricants located at or
otherwise held for use by the Retail Sites.
"Taxes" shall mean all United States federal, state, local or foreign
income, profits, estimated, gross receipts, windfall profits, severance, real or
personal property, intangible property, occupation, production, franchise,
capital gains, employment, withholding, social security (or similar),
disability, registration, stamp, payroll, goods and services, alternative or
add-on minimum tax, or any other taxes, charges, fees, imposts, duties, levies,
withholdings or other assessments imposed by any governmental entity, including
environmental taxes imposed pursuant to Chapter 38 of the Code, and similar
state laws, excise taxes, customs duties, utility, property, sales, use, value
added, transfer and fuel taxes, or other like assessment or charge of any kind
whatsoever, together with any interest, fines, penalties or additions to tax
attributable to or imposed on or in respect thereof imposed by any governmental
authority, whether or not disputed, including all applicable sales, use, excise,
business, occupation or other tax, if any, relating to this or any other
service, supply or operating agreement.
"Tax Return" shall mean any return, declaration, report or similar
statement required to be filed with respect to any Taxes (including any attached
schedules) including, without limitation, any information return, claim for
refund, amended return and declaration of estimated Tax.
"Terminals" shall have the meaning as specified in the first recital.
"Testing Agents" shall have the meaning specified in Section 3.3
(b)(i).
15
"Third Party Claims" shall have the meaning specified in Section 14.2.
"Third Party Inventory" shall mean the inventory of products, ownership
of and title to which remains in third parties, maintained on the premises of
the Assets, such Third Party Inventory being described in Schedule 2.1.4(g).
"Third Party Property" shall mean Improvements, Equipment and inventory
located on the Land owned by Persons not a Party, that are not owned by or
leased to Seller or its Affiliates and that are listed on Schedule 11.4(a).
"Trademarks" shall mean with regard to Seller (i) any and all
trademarks, trademark registrations, trademark applications, service marks,
service mark registrations, service mark applications, trade dress, word marks,
word mark registrations, word mark applications and trade names, including,
without limitation, the names Phillips, Phillips 66, Kicks and Kicks 66 used or
licensed to Seller in connection with any of the Operations; and (ii) the
goodwill of the Operations to the extent relating to such Trademarks.
"Transaction Information" shall have the meaning specified in Section
20.13(a).
"Union" shall have the meaning specified in Section 4.2.
1.2 Interpretations.
(a) All references herein to Sections, Exhibits and Schedules
are to Sections of and Exhibits and Schedules attached to and forming
part of this Agreement, unless the contrary is specifically stated.
(b) Unless the context requires otherwise in this Agreement,
the singular shall include the plural and vice versa.
(c) The headings of the Sections and subsections of this
Agreement and the headings contained in the Exhibits and Schedules
hereto are inserted for convenience of
16
reference only and shall not in any way define or affect the meaning,
construction, or scope of any of the provisions hereof or thereof.
(d) In the event of any conflict between the main body of the
Agreement and the Exhibits/Schedules hereto, the provisions of the main
body of the Agreement shall prevail.
(e) Except where specifically stated otherwise, any reference
to any statute, regulation, rule, or agreement shall be a reference to
the same as amended, supplemented or re-enacted from time to time.
(f) Whenever the words "include," "including," or "includes"
appear in this Agreement, they shall be read to be followed by the
words "without limitation" or words having similar impart.
ARTICLE 2
SALE AND PURCHASE; DISCLAIMER OF WARRANTIES; PURCHASE PRICE;
METHOD OF PAYMENT; LIMITED ASSUMPTION AND RETENTION OF
LIABILITIES
2.1 Sale and Purchase.
(a) At Closing, subject to the conditions hereof, Seller
agrees to sell, assign, transfer, convey and deliver ("Transfer") to
Buyer, and Buyer agrees to accept, purchase and pay for ("Purchase")
the Assets. The Assets are subject to leases, easements, Permitted
Encumbrances and other encumbrances specifically listed on the
Schedules attached hereto. Some of the Assets are subject to rights of
first refusal by third parties or necessity of obtaining consent from
third parties for assignment, all as specifically listed in the
Schedules attached hereto or in this Agreement.
17
(b) The Assets being Transferred by Seller to Buyer exclude
the Third Party Inventory, described in Schedule 2.1.4(g), Third Party
Property, described in Schedule 11.4(a), and the Excluded Assets,
described in Schedules 2.1.1(f), and the Excluded Rail Cars, described
in Schedule 2.1.2(f).
(c) Buyer acknowledges that Sinclair Marketing, Inc.
("Sinclair") has a right-of-first-refusal ("ROFR") to purchase Seller's
interest in the two Terminals located at Boise and Burley, Idaho and
that waiver of Sinclair's ROFR must be obtained before Seller can
transfer its interest in the Terminals to Buyer. In the event that
Sinclair refuses to provide the waiver in advance of Closing, the
Terminals shall be removed from the Assets, and Seller shall enter into
an equivalent, substitute arrangement/agreement with Buyer, on terms
mutually acceptable to Buyer and Seller, subject to any required prior
approval by applicable Antitrust Regulatory Authorities, such as a
throughput agreement, lease agreement, license agreement or some other
arrangement to provide to Buyer the same commercial benefit it would
have acquired if it had purchased Seller's interest in the Terminals.
The documents evidencing any substitute arrangement will include a full
indemnity from Seller in favor of Buyer if such substitute arrangement
is challenged by Sinclair or any other Person or otherwise fails to
provide the required commercial benefit to Buyer.
(d) For Marketer Agreements, where the Marketer sells and
delivers Motor Fuels to retail service stations located in states other
than Utah, Wyoming, Idaho and Montana (as well as in these four
states), Seller shall assign to Buyer Seller's interest in that portion
of the Marketer Agreements, which covers the Marketers' sale and
delivery of Motor Fuels to retail service stations located in the
states of Utah, Wyoming, Idaho
18
and/or Montana. Such assignment shall be in form and content mutually
satisfactory to Buyer and Seller. Seller shall retain that portion of
the Marketer Agreements that covers the Marketers' sale and delivery of
Motor Fuels to retail service stations located in states other than
Utah, Wyoming, Idaho and Montana.
(e) Three of the Retail Sites in Wyoming are branded
"Coastal." Pursuant to the Trademark License Agreement between Seller
and El Paso CGP Corporation (formerly known as The Coastal
Corporation), Seller has the right to use the Coastal trademark at the
three Retail Sites in Wyoming until April 24, 2011. If Buyer chooses to
maintain the Coastal trademark at these three Retail Sites (until no
later than April 24, 2011), Seller will assign to Buyer Seller's right
to use the Coastal Trademark at these three sites until April 24, 2011.
(f) In addition to the Marketer Agreements, Seller is
obligated to provide price incentives to certain Marketers, and Seller
has entered into loan and reimbursement agreements, such price
incentive, loan and reimbursement arrangements being listed in Schedule
3.3(a)(iv). At Closing, Seller shall assign to Buyer and Buyer shall
assume the obligations under these price incentive agreements, and
Buyer shall receive a conveyance of and be entitled to receive
reimbursement from Marketers of any unamortized balances of the loan
and reimbursement agreements if Marketers breach these agreements or
switch suppliers before the loans or reimbursement obligations are
completely amortized.
2.2 Disclaimer of Warranties.
(a) Seller will Transfer the Assets to Buyer, and Buyer will
Purchase the Assets in an "AS IS", "WHERE IS" condition at Closing,
without representation or warranty of any kind, except as otherwise
specifically provided in this Agreement and in
19
the Related Agreements. Seller will transfer good and marketable title
to the Land and Improvements transferred by deed to Buyer (subject only
to leases, easements and Permitted Encumbrances specifically noted on
the Schedules) and to the personal property transferred by bill of sale
or other instrument of assignment or conveyance to Buyer.
(b) SELLER EXPRESSLY DISCLAIMS ANY AND ALL LIABILITY FOR ANY
IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR
PURPOSE OF THE ASSETS. BUYER WAIVES THE UNIFORM COMMERCIAL CODE
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE WITH
RESPECT TO SUCH IMPROVEMENTS AND EQUIPMENT, PROVIDED THIS WAIVER WILL
NOT LIMIT THE REPRESENTATIONS AND WARRANTIES OF SELLER CONTAINED IN
THIS AGREEMENT.
2.3 Purchase Price.
For and in consideration of the respective conveyances,
assignments, representations, warranties and covenants described herein, Buyer
agrees to pay to Seller, and Seller agrees to accept from Buyer the purchase
price, and other consideration, as follows:
(a) The purchase price ("Purchase Price") for the Assets is
$25 million, plus the Net Inventory Estimate provided for in Section
3.3 (as adjusted by the Net Inventory Adjustment) less the Pension
Benefit Amount Estimate provided for in Section 4.11 (as adjusted by
the Pension Benefit Adjustment).
(b) Simultaneously with the execution of this Agreement, Buyer
shall deliver to Seller $2.5 million, either in cash or an irrevocable
letter of credit in a form acceptable
20
to Seller ("Deposit"), as a deposit against the Purchase Price. If a
cash deposit is provided, then Seller will invest such amount in
Approved Investments as directed by Buyer pending Closing.
(c) At Closing, Buyer will pay to Seller $25 million plus the
Net Inventory Estimate provided for in Section 3.3 less the Pension
Benefit Amount Estimate reduced by the sum of the cash Deposit amount
and any accrued interest on such cash Deposit.
2.4 Method of Payment.
All amounts to be disbursed by a Party at or, pursuant to the
terms of this Agreement, prior to the Closing or paid after Closing, shall be
made in immediately available U.S. funds, by wire transfer to a U.S. bank
account designated by the receiving Party or by any other means agreed to by the
receiving Party.
2.5 Limited Assumption and Retention of Liabilities.
(a) Upon the condition that the Closing shall occur, and
subject to the provisions of the Environmental Agreement between the
Parties and the liabilities retained by Seller pursuant to Section
2.5(b), Buyer shall assume and agrees to discharge:
(i) all liabilities (other than environmental
liabilities which are addressed in the Environmental
Agreement) relating to or arising from the ownership
or operation by Buyer or its Affiliates of the Assets
from and after the Effective Time;
(ii) all liabilities and obligations specifically
assumed by Buyer pursuant to the Environmental
Agreement;
(iii) obligations arising from and after the
Effective Time to be performed after the Effective
Time under the Contracts, Leases,
21
Easements, Permits and licenses of Licensed
Technology, which are assigned or sublicensed by
Seller to Buyer at Closing;
(iv) Taxes payable and other current liabilities
which are specifically assumed by Buyer in this
Agreement and reflected on Schedule 2.5(a).
(v) All liabilities specifically assumed by Buyer
pursuant to Article 4 hereof; and
(vi) any liability or obligation with respect to any
litigation asserted in the future against Seller or
Buyer with respect to operation of the Assets by
Buyer or its Affiliates after the Effective Time.
(b) Subject to the provisions of the Environmental Agreement
between the Parties, Seller shall retain and be liable for the
following:
(i) all liabilities related to or arising from the
ownership or operation of the Assets prior to the
Effective Time;
(ii) all liabilities and obligations retained by
Seller pursuant to the Environmental Agreement
between the Parties;
(iii) all Taxes payable and other current liabilities
of Seller arising or accruing with respect to the
period ending on or before the Effective Time other
than those Taxes specifically assumed by Buyer in
this Agreement;
(iv) obligations arising under the Contracts, Leases,
Easements and Permits that are required to be
performed prior to the Effective Time;
(v) all liabilities retained by Seller pursuant to
Article 4 hereof;
(vi) any liability or obligation arising out of or
relating to any of the Excluded Assets;
22
(vii) any liability or obligation with respect to any
litigation pending or asserted in the future against
Seller or Buyer with respect to the ownership or
operation of the Assets prior to the Effective Time,
except to the extent specifically assumed by Buyer in
this Agreement or in a Related Agreement; and
(viii) any liabilities or obligations related to or
arising from the employee benefit plans or other
compensation or employee benefit arrangements
maintained by or on behalf of Seller or its
Affiliates for the benefit of Employees.
(c) Seller acknowledges and agrees that Buyer is not assuming
any liabilities with respect to the Assets or Operations other than
those liabilities expressly assumed by Buyer pursuant to this Agreement
and the Related Agreements.
ARTICLE 3
CLOSING
3.1 Place and Time.
The Closing shall take place at the offices of Vinson & Elkins
L.L.P., 3700 Trammell Crow Center, 2001 Ross Avenue, Dallas, Texas, the earlier
of (i) three Business Days following satisfaction of all of the conditions to
close contained herein or (ii) on such other date as Buyer and Seller may
mutually agree.
3.2 Transactions and Deliveries at or Prior to Closing.
(a) At or prior to the Closing, Seller shall deliver to Buyer:
(i) properly executed and acknowledged warranty deed
or deeds (the "Deeds") to the Land and the Retail Sites owned
in fee by Seller or its Affiliates,
23
the Improvements thereon, and the appurtenances thereto, each
such deed to be in substantially the form of Exhibit A,
covering the Land and the Retail Sites identified in Schedules
2.1.1(a), 2.1.1(b), 2.1.1(c) and 2.1.1(d) to be transferred to
Buyer. The Deeds will contain use restrictions to the extent
required by Utah law.
(ii) properly executed bills of sale in substantially
the form of Exhibit B, covering the Pipelines, Equipment and
personal property identified in Schedules 2.1.2(a), 2.1.3(a),
2.1.10(a), 2.1.1(b) and 2.1.2(c) and the Seller Inventories to
be transferred to Buyer, together with executed certificates
or ownership for all registered motor vehicles to be
transferred to Buyer.
(iii) properly executed and acknowledged assignments
and assumptions of Seller's interest in the Contracts listed
in Schedules 2.1.4(a), 2.1.2(b), 2.1.3(c), 2.1.4(c) and
2.1.2(d), including assignments for certain Marketer
Agreements, as explained in Section 2.1(d), the Leases and
Easements, rights-of-way, Permits and the Pipeline Agreements
listed in Schedules 2.1.9(a), 2.1.10(a), 2.1.1(b), 2.1.1(e)
and 2.1.2(e) for which no consent to assignment is required or
for which any required consent to assignment has been obtained
or waived by the third party, each such assignment and
assumption to be in substantially the form of Exhibit C.
Additionally the Parties agree to execute and deliver such
other forms of conveyance as may be required by any
governmental authority;
(iv) (a) any consents or approvals required or
desirable to enable Seller to sublicense the Licensed
Technology to Buyer pursuant to Section 16.2, along with
complete and accurate copies of each third party agreement
related to the Licensed Technology;
24
(b) an assignment of Seller's right to use
the Coastal Trademarks at three Retail Sites in
Wyoming, if Buyer elects to receive those rights on
or before the Closing pursuant to Section 2.1(e); and
(c) a license to use the KEAS technology
described in Section 16.1(c) from Waukesha in a form
acceptable to Buyer in such scope to allow the
continued use of the KEAS technology by Buyer as used
or held for use by Seller in the operation of the
Refinery by Seller, or such other alternative
arrangements or substitute equivalent assets as Buyer
may deem to be an acceptable alternative;
(v) a properly executed and acknowledged general
conveyance of all of the Assets for which no specific
conveyance is clearly applicable;
(vi) copies of Seller's resolutions, certified as
being correct and complete and then in full force and effect,
authorizing the execution of this Agreement and the Related
Agreements to which it is a party and the consummation of the
transactions contemplated under this Agreement and the Related
Agreements to which it is a party (in each case to the extent
required by such Person's organizational documents);
(vii) certificates of incumbency and specimen
signatures of the signatory officers of Seller;
(viii) a certificate of formation and good standing
by the State of Delaware, and copies of Seller's certificate
of registration to do business in the States of Utah, Wyoming,
Idaho and Montana as a foreign company;
25
(ix) the properly executed purchase price allocation
schedule described in Section 12.2 hereof;
(x) copies of consents of third parties required to
be obtained prior to the assignment of the Leases and
Easements, Permits and the Contracts to be assigned pursuant
to Section 3.2(a)(iii);
(xi) a certificate of non-foreign status as provided
in Treasury Regulation Section 1.1445-2(6), in substantially
the form attached hereto as Exhibit K;
(xii) Title Opinions and Surveys as required by
Section 10.5 hereof; and
(xiii) Such other agreements or assignments as may be
required to accomplish or fulfill the purposes and intent of
this Agreement.
(b) At or prior to the Closing, Buyer shall deliver to Seller:
(i) the Purchase Price payment specified in Section
2.3(c);
(ii) properly executed and acknowledged assignments
and assumptions of Seller's interest in the Contracts, the
Leases and Easements, the Permits and the Marketers
Agreements, for which no consent to assignment is required or
for which any required consent to assignment has been obtained
or waived by the third party, each such assignment and
assumption to be in substantially the form of Exhibit C.
Additionally the Parties agree to execute and deliver such
other forms of conveyance as may be required by any
governmental authority;
(iii) copies of Buyer's resolutions certified as
being correct and complete and then in full force and effect,
authorizing the execution of this Agreement and the Related
Agreements, and the consummation of the
26
transactions contemplated under this Agreement and the Related
Agreements (in each case to the extent required by such
Person's organizational documents);
(iv) certificates of incumbency and specimen
signatures of the signatory officers of Buyer; and
(v) certificate of existence and good standing issued
by the State of Delaware and a copy of Buyer's or its
operating Affiliate's certificate of registration to do
business in the States of Utah, Wyoming, Idaho and Montana as
a foreign company.
(c) At the Closing, Buyer and Seller or Seller's Affiliates
shall enter into the conveyance and assumption agreements referenced in
Section 3.2(a), (b) and (c) and all other agreements required by this
Agreement including the following agreements (collectively the "Related
Agreements"):
(i) HF Alkylation Technology License Agreement as set
forth in Exhibit D;
(ii) Maxcat Coke Reduction Technology License
Agreement as set forth in Exhibit E;
(iii) Crude Assays Database License Agreement as set
forth in Exhibit F;
(iv) Credit Card Agreement, as set forth in Exhibit
G;
(v) Transition Services Agreement under which the
Seller or its Affiliates may provide services to Buyer, as set
forth in Exhibit H;
(vi) Trademark License Agreement, as set forth in
Exhibit I;
(vii) Environmental Agreement, as set forth in
Exhibit J; and
27
(viii) Phillips Branded Ancillary Products Purchase
Agreement, as set forth in Exhibit L.
3.3 Inventory Adjustments.
(a) Calculation. The Net Inventory Amount shall include the
value of the Seller Inventories and the value of the Prepaid Expenses
and Deposits, which shall be calculated as follows:
(i) The value of Seller Feedstock Inventory, Seller
Product Inventory and Seller Retail Site Product Inventory
shall be calculated in accordance with Schedule 3.3(a)(i), as
of the Effective Time, using the method of determination and
the valuation guidelines described in Section 3.3(b)(i); plus
(ii) The value of Seller Non-Hydrocarbon Retail Site
Inventory shall be calculated using the method of
determination and the valuation guidelines described in
Section 3.3(b)(ii); plus
(iii) The value of Prepaid Expenses and Deposits, as
of the Effective Time, as prorated and calculated in
accordance with Schedule 3.3(a)(iii).
(iv) For purposes of calculating the Net Inventory
Amount and calculating the Net Inventory Adjustment, no value
will be attributed to the Seller Base Inventory or Seller
Other Inventory, it being the intent of the Parties that the
Purchase Price (without consideration of the Net Inventory
Amount) includes the Seller Base Inventory and the Seller
Other Inventory.
(b) Method of Inventory Determination.
(i) Determination of the volumes of Seller Feedstock
Inventory, Seller Product Inventory and Seller Retail Site
Product Inventory, at the Effective Time,
28
shall be made by independent inspectors ("Testing Agents")
appointed by Buyer and Seller at least ten (10) days prior to
the Closing Date and mutually acceptable to both Parties. The
volumes determined by the Testing Agents shall be adjusted in
accordance with normal industry practice, based upon testing
by the Testing Agents, for water, contaminants, and sediment
using standard industry guidelines, including those relating
to temperature, pressure and specific gravity. The Testing
Agents shall issue a written report within twenty (20) days
after the Closing Date, setting forth the volumes and
quantities on a tank, vessel, pipeline and/or location basis.
(ii) Determination of the Seller Non-Hydrocarbon
Retail Site Inventory, at the Effective Time, shall be
determined by an independent inventory service firm, retained
at least ten (10) days prior to the Closing Date at the mutual
agreement of Seller and Buyer. Commencing at or about 6:00
a.m. Mountain Standard Time, or such other time as the Parties
may establish, on the eve of the Closing Date, measurement of
Non-Hydrocarbon Retail Site Inventory at approximately
one-half of the total Retail Site locations shall be taken.
Inventory measurement at the remaining Retail Site locations
shall commence at or about 6:00 a.m. on the Closing Date. The
independent inventory service firm will be assigned to witness
the actual count of Non-Hydrocarbon Retail Site Inventory. Any
merchandise found during the conduct of the physical inventory
to be not suitable for resale and not returnable in the
opinion of the Buyer shall be excluded from the final
inventory count. The results of the physical inventory will be
binding and shall be mutually agreed upon in writing by Seller
and Buyer within
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five business days after the Closing Date. All sales after the
taking and witnessing of the Seller Non-Hydrocarbon Retain
Site Inventory shall be for the account of the Buyer.
(1) Seller agrees to allow Buyer the option
of purchasing up to $500 in cash at each Retail Site
location to use as a reserve fund for the first day
of operation under Buyer's control.
(2) Non-Hydrocarbon Retail Site Inventories
at the Retail Sites shall be valued at seventy
percent (70%) of the marked retail price, except for
beer and wine which shall be valued at seventy-five
percent (75%) of retail prices. Cigarettes will be
valued at 70% of the single pack retail price. Bags
of fountain syrup, cups, bags of coffee, and ice bags
will be valued at invoice cost. Car wash supplies
will be valued at cost at the time of the transfer.
(c) Cost of Performing Inventories. The cost of performing the
inventories, including the cost for the Testing Agents and the
independent inventory service firm, shall be borne 50 percent by the
Seller and 50 percent by the Buyer.
(d) Presence at Inventory Determination. Each Party shall be
entitled, at its own expense, to have any employee, agent, consultant
or other authorized representative present for any inventory
determination so long as such employee, agent, consultant or other
authorized representative does not interfere with the tasks or
responsibilities of the Testing Agents or independent inventory service
firm.
(e) Estimate of Seller Inventories. At least five (5) business
days in advance of the Closing Date, Seller shall make a good faith
estimate of the Seller Inventories and
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provide a copy thereof to Buyer setting forth the ownership, types,
characteristics and volumes, on a tank, vessel, pipeline and/or
location basis of the Seller Inventories.
(f) Net Inventory Estimate. The Net Inventory Estimate shall
be an amount estimated by Seller in good faith and provided to Buyer at
least five (5) business days in advance of the Closing Date ("Net
Inventory Estimate Date") using the Seller Inventories estimate
described in Section 3.3(e) applied to the most currently available
values calculated in accordance with Schedules 3.3(a)(i) and
Subsections 3.3b(i) and 3.3(b)(ii), and including the calculations of
Prepaid Expenses and Deposits in accordance with Schedule 3.3(a)(iii).
(g) Post Closing Adjustments. Seller and/or Buyer shall make
an adjustment payment pursuant to the Net Inventory Adjustment as
follows:
(i) Not later than forty-five (45) days after the
Closing Date, an adjustment payment shall be made based on the
difference between the Net Inventory Estimate and the finally
determined Net Inventory Amount, based on the differences
between the estimate of Seller Inventories described in
Section 3.3(e) and the amount of Seller Inventories determined
by the Testing Agents as described in Subsections 3.3(b)(i)
and the independent inventory service firm as described in
Subsection 3.3(b)(ii), as valued pursuant to Schedule
3.3(a)(i) and Subsection 3.3(b)(ii)(2); and
(ii) Each adjustment payment shall be paid in
immediately available funds within five (5) days following the
final determination of the final Net Inventory and the Net
Inventory Adjustment. Any amount not paid when due shall bear
interest at the Late Payment Rate for the period past due.
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(h) Credit Card Proceeds. Seller sells product to Marketers in
Utah, Wyoming, Idaho and Montana on certain credit terms. When the
Marketers resell the product to their customers, the Marketers submit
their credit card receipts to Seller to process. At the Effective Time,
when Seller's assignment to Buyer of Seller's supply agreements with
the Marketers in Utah, Wyoming, Idaho and Montana becomes effective,
many of these Marketers will owe Seller for product purchased from
Seller prior to the Effective Time. This amount due Seller shall be
part of Seller's accounts receivable. For up to thirty (30) days beyond
the Closing Date, Seller shall have the right to retain credit card
proceeds arising with respect to sales transactions executed prior to
the Effective Time from any Marketers in Utah, Wyoming, Idaho and
Montana who owe Seller any unpaid amounts due Seller for any products
sold by Seller to the Marketers prior to the Effective Time. After
Seller has been paid all amounts owing to it for the pre-Effective Time
accounts receivable, the remaining credit card proceeds will be
transferred to and become the property of Buyer.
3.4 Approval Required by Antitrust and Regulatory Authorities.
(a) The Antitrust Regulatory Authorities must approve the sale
of the Assets by Seller to Buyer, and this approval is a precondition
to Closing. The Parties each agree that it will reasonably cooperate
with the other Party and with the Antitrust Regulatory Authorities
towards obtaining the Antitrust Regulatory Authorities approval of
Seller's sale of the Assets to Buyer pursuant to the terms and
conditions of this Agreement and the Related Agreements.
(b) Seller has entered into a Hold Separate Order with the
Federal Trade Commission, by which the Assets, the Operations and
Seller's employees at the Assets
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are held separately and managed separately and independently from
Seller and Seller's other assets and business operations, from
September 10, 2002 until Closing (the "Held Separate Period"). During
the Held Separate Period, the Assets and the Operations will be under
the management of the trustee approved by the FTC ("Held Separate
Trustee") and the manager approved by the Federal Trade Commission
("Held Separate Manager"), and Seller's employees employed at the
Assets during this period will be "Held Separate Employees", who will
report to the Held Separate Manager. During the Held Separate Period,
Seller and Buyer will need to coordinate and cooperate with the Held
Separate Manager and Held Separate Employees with respect to certain
matters involving the Assets including gaining access to and inspecting
the Assets and Operations, interviewing Held Separate Employees and
conducting inventories of the Assets.
(c) Seller and Buyer agree to use all reasonable efforts to
obtain the approval of the Antitrust Regulatory Authorities to the
transactions contemplated by this Agreement. In this connection, Seller
will (i), as promptly as practicable after execution of this Agreement,
file with the applicable Antitrust and Regulatory Authorities all
reports and other documents required to be filed with such agencies
concerning the transactions contemplated hereby (ii) will promptly
comply with, or cause to be complied with, any requests by the
Antitrust Regulatory Authorities for additional information concerning
such transactions in each case so that approvals can be granted as soon
as practicable after the execution of this Agreement and (iii) take all
actions reasonably necessary and within Seller's control to obtain the
required approvals from Antitrust Regulatory Authorities as soon as
practicable following the execution of this Agreement.
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ARTICLE 4
EMPLOYMENT AND EMPLOYEE BENEFITS
4.1 Employees in General. Schedule 4.1 contains a list of:
(a) the employees, including Short-Term Inactive Employees as
defined below in paragraph 4.1(c), working at the Refinery as of the
date of this Agreement who are represented by the Union (each, a
"Represented Employee");
(b) the regular, full-time and regular, part-time employees,
including Short-Term Inactive Employees as defined below in paragraph
4.1(c), working at the Refinery, in marketing support and at the Retail
Sites as of the date of this Agreement who are not represented by the
Union ( each, a "Non-Represented Employee"), which employees are
employees of Seller (collectively Represented Employees and
Non-Represented Employees, the "Employees"); and
(c) the employees at the Refinery and in marketing support
who, as of the date of this Agreement, are not actively at work,
including those who are on inactive employee status or leave of absence
(each such employee an "Inactive Employee"). "Short-Term Inactive
Employee" shall mean an employee who is not actively at work due to
illness but who is not on inactive employee status or leave of absence
other than a Family Medical Leave. "Long-Term Inactive Employee" shall
mean an employee who is on inactive employee status or leave of absence
except a Family Medical Leave. Schedule 4.1 shall identify in separate
groupings the Short-Term Inactive Employees who are on Family Medical
Leave and all the Long-Term Inactive Employees, and the reason for such
inactive status, the date such Family Medical Leave, inactive employee
status
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or leave of absence began, and the date the Family Medical Leave,
inactive employee status or leave of absence is scheduled to end.
Schedule 4.1 will be updated 10 business days prior to Closing and
again at Closing.
4.2 Represented Employees.
Seller represents that it is bound by the Collective
Bargaining Agreement, which is attached in Schedule 4.2(a)(i) ("Collective
Bargaining Agreement") between Seller and the Paper, Allied-Industrial Chemical
and Energy Workers International Union - Local 8-578 (the "Union"). Buyer agrees
to recognize the Union as the exclusive representative for the employees in the
bargaining unit covered by the Collective Bargaining Agreement. Subject to any
limitations imposed by Applicable Law, Buyer shall adopt the Collective
Bargaining Agreement and maintain it in full force and effect during its current
term, except for changes permitted under the Collective Bargaining Agreement or
mutually agreed to between the Buyer and the Union and except that Buyer shall
not be required to continue the existing employee benefits (as set out on
Schedule 4.2(b) ("Seller's Union Benefits"), but shall be entitled to establish
such benefits as may be allowed by the Collective Bargaining Agreement ("Buyer's
Union Benefits") for employees covered by the Collective Bargaining Agreement,
and such employees shall be entitled to participate in Buyer's Union Benefits.
Buyer shall make every commercially reasonable effort to obtain the approval of
all third party plan providers for participation in such plans by said
Employees.
4.3 Offers of Employment.
(a) Offers of Employment by Buyer.
(i) Buyer shall offer regular, full-time or regular,
part-time employment to all Represented Employees (excluding
Long-Term Inactive Employees but including Short-Term Inactive
Employees) on the terms provided
35
in the Collective Bargaining Agreement, except to the extent
otherwise permitted under Section 4.2; and
(ii) Except as otherwise agreed between Buyer and
Seller, Buyer shall offer regular, full-time or regular,
part-time employment to the Non-Represented Employees
(excluding Long-term Inactive Employees but including
Short-Term Inactive Employees). Seller shall make every
reasonable effort, prior to the Effective Time, to retain in
employment all Employees.
(iii) Buyer shall offer employment to Non-Represented
Employees at a monthly salary or hourly rate of pay ("Base Pay
Rate") that is at least equivalent to the Base Pay Rate that
the Employee had with the Seller as of the last regularly
scheduled workday immediately prior to the Effective Time.
Buyer shall establish a bonus plan for Non-Represented
Employees that is substantially comparable to the bonus plans
in place for such Non-Represented Employees prior to the
Effective Time. Buyer shall provide, for a period of one year
following the Effective Time, to the Non-Represented
Employees, which become employed by Buyer as of the Effective
Time and only to the extent such employees continue to be
employed by Buyer, benefits that are reasonably and
substantially comparable in the aggregate to the benefits
provided to the Non-Represented Employees by Seller
immediately prior to the Effective Time.
(b) Employment Data. Seller shall, at least ten (10) days
prior to Closing, provide Buyer with employment data, including, but
not limited to, the name, title, employment history (including years of
service), and current salary, bonus and incentive opportunity, accrued
and used vacation, sick or short-term disability pay accrued and
36
used, exempt or non-exempt status, and the job grade of each
Represented and Non-Represented Employee. Seller shall retain
responsibility and liability, if any, for all Long-Term Inactive
Employees.
(c) Notice of Offers. Buyer shall notify Seller of the
acceptance of any employment offer made by Buyer to the Employees,
within five (5) business days of the acceptance of such offer.
(d) Orderly Transition. Buyer shall employ each Employee who
accepts Buyer's offer of employment. Seller agrees to use its
reasonable efforts to assist Buyer in the orderly transition to Buyer
of any such Employees. Each such accepting Employee shall, from the
Effective Time, be referred to in this Agreement as an "Acquired
Employee".
(e) Employment Assurances. For a period of one year
following the Effective Time, Buyer shall not reduce the Acquired
Employee's Base Pay Rate, the type of benefits available to the
Acquired Employees, the dollar amount of the Buyer's contribution to
such benefits, the dollar amount of benefits available under such
benefits or any other rights of the Acquired Employees under such
benefits, and shall not terminate such Acquired Employee's employment
except for "cause". For the purposes of this section, "cause" shall
include (i) any meaning ascribed to "cause" under any Applicable Law,
(ii) the commission of an illegal or unethical act, (iii) negligence or
willful misconduct in carrying out (or failing to carry out) the
employee's duties or responsibilities, (iv) any other failure to comply
with any of Buyer's policies or practices that could have resulted in
termination of such employee, and (v) any other concept of cause which
could result in termination under Seller's general practices. At the
Effective
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Time and during the stated one year period, Acquired Employees shall be
treated no less favorably than similarly situated employees of Buyer.
(f) Seller waives any claims it may have under any employment,
confidentiality, non-disclosure, trade secret or non-competition
agreement, or similar agreement, to the extent that they would
otherwise limit any Acquired Employees in the performance of their
duties for Buyer.
(g) Seller plans to provide a merit increase to its
Non-Represented Employees' Base Pay Rates effective March 1, 2003 as
more particularly described in Schedule 4.3(g) (the "Merit Increase").
If the Effective Time occurs before March 1, 2003, Buyer shall,
effective on March 1, 2003, provide to the Acquired Employees the
equivalent Merit Increase to the Base Pay Rate, which the Acquired
Employees would have received from Seller if they were still employed
by Seller on March 1, 2003.
4.4 Employee Benefits for Acquired Employees.
(a) For a period of at least one year following the Effective
Time, Buyer shall permit the Non-Represented Employees, who become
Acquired Employees, to participate in Buyer's employee pension benefit
plans, as that term is defined by Section 3(2) of the Employee
Retirement Income Security Act of 1974 as amended ("ERISA"), employee
welfare benefit plans (as that term is defined by Section 3(1) of
ERISA), and other benefit and compensation programs, policies, and
practices, that are or will be generally available to Buyer's similarly
situated salaried employees. Buyer shall provide each Non-Represented
Employee with the benefits that are set out on Schedule 4.4 ("Salaried
Employee Benefits") on terms as are currently applicable to similarly
situated salaried employees, consistent with the Employment Assurances
in Section 4.3(e).
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(b) Buyer shall permit the Represented Employees to
participate in Buyer's benefit plans per Article VII of the Collective
Bargaining Agreement. Buyer shall permit the Represented Employees who
become Acquired Employees to participate in compensation programs,
policies and practices as per the Collective Bargaining Agreement.
4.5 Welfare Plan Coverage.
(a) With respect to each Acquired Employee who elects to
participate in Buyer's employee welfare benefit plans, Buyer shall, to
the extent allowed under Buyer's plans, waive any pre-existing
condition exclusions to coverage, any evidence of insurability
provisions, any active at work requirement and any waiting period or
service requirements under its employee welfare benefit plans that did
not exist or had been waived or otherwise satisfied under comparable
employee welfare benefit plans sponsored by the Seller, provided the
Acquired Employee enrolls within thirty-one (31) days of the Closing
Date. For each Acquired Employee, Buyer shall also apply towards any
deductible requirements and out-of-pocket maximum limits under its
employee welfare benefit plans applicable to the year of such Acquired
Employee's employment commencement date, any amounts paid by such
Acquired Employee toward such requirements and limits under the
Seller's employee welfare benefit plans in which he or she participated
during such year. Seller will secure information as has been received
by the welfare claims processors as of the last day of the calendar
month in which the Effective Time occurs, from others and/or provide
the information necessary within 14 days after the end of the calendar
month following the calendar month in which the Effective Time occurs
to establish any such amounts paid by Acquired Employees. After
39
the initial enrollment of Acquired Employees into Buyer's health plans,
and thereafter upon written request of Seller (which request shall be
no more frequently than quarterly) until eighteen (18) months after the
Closing Date, Buyer shall furnish Seller with the names of the Acquired
Employees who enroll in any of Buyer's health plans and specify the
health plans in which such Acquired Employees enroll.
(b) Buyer shall, to the extent permitted under Buyer's plans,
cause all those employee welfare benefit plans, programs, policies, and
practices in which the Acquired Employees participate, including but
not limited to, Buyer's vacation, severance pay plan (for any Acquired
Employees who did not receive benefits under the Workforce
Stabilization Plan), disability and sick leave programs, to recognize
past service as recognized by the Seller's employee welfare benefit
plans (such past service as reflected in the personnel records
furnished to Buyer by Seller) for purposes of eligibility to
participate, eligibility for enrollment, eligibility for the
commencement of benefits, and eligibility for the levels of benefits
where there are service-related benefit schedules.
(c) If Buyer establishes a flexible spending plan (the
"Buyer's FSP") Acquired Employees shall be eligible to participate in
Buyer's FSP following the Closing Date. As appropriate, Seller and the
Buyer shall take all reasonable steps necessary or appropriate so that
the account balances under the Seller's Flexible Spending Plan (the
"Seller's FSP") of each Acquired Employee who has elected to
participate therein in the year in which the Closing Date occurs shall
be transferred, as soon as practicable after the Closing Date, from the
Seller's FSP to the Buyer's FSP, and so that the contribution elections
of each such Acquired Employee as in effect immediately before the
Closing Date remain in effect under the Buyer's FSP immediately after
the transfer of such
40
account balance. If the aggregate amount of the transferred account
balances of the Acquired Employees is negative, then the Buyer shall
pay Seller the amount of such aggregate negative balance to the extent
recouped by the Buyer. From and after the date an Acquired Employee's
account in Seller's FSP is transferred in accordance with this Section
4.5, the Buyer shall be solely responsible for, and shall satisfy from
the Buyer's FSP, all claims, whether incurred before, on or after the
Closing Date, for which such Acquired Employee was entitled to seek
reimbursement under the Seller's FSP for the year in which the Closing
Date occurs.
4.6 Pension.
(a) Buyer shall cause its employee pension benefit plans
(whether defined contribution plans, as defined in Section 3(34) of
ERISA, or defined benefit plans, as defined in Section 3(35) of ERISA)
to recognize the past service of the Acquired Employees as recognized
by the Seller's employee pension benefit plans for purposes of
eligibility to participate, eligibility for enrollment, eligibility for
vesting, eligibility for the commencement of benefits, eligibility for
the forms of benefits, eligibility for early retirement subsidies and
eligibility for the levels of benefits where contributions to the plan
or payments from the plan depend in whole or in part on service. Buyer
shall cause its employee pension benefit plans to recognize service
recognized by the Seller's employee pension benefit plans for purposes
of benefit accruals.
(b) If the Buyer has an employee pension defined benefit plan
(as defined in Section 3(35) of ERISA), the Buyer may provide that the
Acquired Employee's accrued benefit in the Buyer's employee pension
plan, which would be payable at normal retirement age in straight life
annuity form (regardless of actual form of payment) will be
41
reduced by the accrued benefit payable at normal retirement age in
straight life annuity form in the Seller's employee pension defined
benefit plan (regardless of actual payment date or form). As soon as
practicable after the Effective Date, Seller will provide to Buyer a
list of the Acquired Employees' accrued benefits payable at normal
retirement age in straight life annuity form and lump sum form from
Seller's employee pension defined benefit plan.
(c) If the Buyer does not have an employee pension defined
benefit plan (as defined in Section 3(35) of ERISA), the Parties shall
negotiate and provide an appropriate provision such as would provide
the Acquired Employees with benefits that are reasonably and
substantially comparable in the AGGREGATE.
4.7 Defined Contribution Plan
If administratively feasible, and allowed pursuant to Buyer's
defined contribution plan, Buyer agrees to accept as a direct rollover each
Acquired Employee's distribution from Seller's savings plans for any Acquired
Employee who so elects, for at least seven months after Closing. Acquired
Employees will also have the option to leave their accounts in Seller's savings
plan(s) (except in the case of certain small accounts) or to request
distribution of those portions of the accounts that are currently distributable,
under the terms of the plan(s). Buyer will have no obligation with respect to
amounts attributable to Seller's savings plan other than acceptance of the
direct rollovers requested by Acquired Employees. Seller and Buyer agree to
cooperate to ensure a smooth transition/rollover of the account balances from
the Seller's defined contribution plan to the Buyer's defined contribution plan.
Buyer shall provide Seller with a copy of the most recent favorable
determination letter from the Internal Revenue Service with respect to the plan
of Buyer which will be receiving a direct rollover.
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4.8 Vacation.
(a) Seller shall compensate Acquired Employees for vacation
the Acquired Employees have carried over from prior years with Seller
up to through and including the Effective Time.
(b) Buyer shall honor the Acquired Employee's remaining
accrued vacation entitlement in and for the calendar year 2003, but not
any carry over amounts which shall be the responsibility of Seller. At
the beginning of the calendar year next succeeding the Closing Date
(i.e., calendar 2004), employees would be covered by the Buyer's
vacation schedule with recognition of past service to determine
vacation entitlement level. Within 30 days after the Effective Date,
Seller will provide to Buyer a list of the remaining accrued vacation
entitlement for the Acquired Employees.
(c) Within 30 days after the Closing Date, year 2003 earned
and accrued vacation liabilities of Acquired Employees will be
calculated as follows: the days during 2003 that Seller owned the
Assets will be calculated as will the number of days Buyer will own the
Assets. Fractions will be calculated in which the numerators will be
the number of days during 2003 that Seller owned the Assets and the
number of days during 2003 that Buyer will own the Assets,
respectively, and the denominators will be the number of days in year
2003. These fractions will be multiplied by the number of remaining
eligibility hours of vacation entitlement (not including carried over
vacation) for Acquired Employees at the Effective Time, whether already
taken or not. This procedure will be applied separately to hourly and
salaried Acquired Employee vacations. The resulting calculation will
yield the number of hours of vacation attributable to the account of
both the Buyer and the Seller. Actual remaining hours of vacation
entitlement (not including carried over vacation) will be calculated
separately for salaried and hourly Acquired Employees. To the extent
the total actual remaining vacation entitlement
43
(not including carried over vacation hours) to be taken in 2003 by
Acquired Employees is greater than the total number of vacation hours
attributable to the Buyer, Seller will pay Buyer the dollar amount of
the difference. This dollar amount will be calculated by multiplying
the total number of vacation hours (by which the total actual remaining
vacation entitlement less carried over vacation hours to be taken in
2003 exceeds the total number of vacation hours attributable to Buyer
in 2003) by the average hourly rate (based on a group rate and not an
individual-by-individual rate analysis) or the average staff employee
rate (based on a group rate and not an individual-by-individual rate
analysis). Seller will then pay the resulting dollar amount to Buyer
within thirty (30) days after the Closing Date.
4.9 Liabilities and Indemnities.
(a) Workers' Compensation. Seller shall be responsible for
workers' compensation claims with respect to any Acquired Employee if
the incident or alleged incident giving rise to the claim occurred at
or prior to the Effective Time. Buyer shall be responsible for any
workers' compensation claims with respect to any Acquired Employee if
the incident or alleged incident giving rise to the claim occurs after
the Effective Time. In the event of doubt as to the date of the
occurrence of the incident or alleged incident, Buyer shall process the
claim. With respect to all workers' compensation or similar claims
(hereinafter "Compensation Claims") filed with an appropriate agency by
or on behalf of any Acquired Employee employed by Seller immediately
prior to the Effective Time and thereafter employed by Buyer (such
44
employees are, for purposes of this paragraph, hereinafter collectively
referred to as "Claiming Employee"), or by the spouse, dependent(s) or
personal representative of such Claiming Employee which is first filed
after the Effective Time, (A) Seller shall process, defend and be
responsible for, and shall indemnify Buyer and its Affiliates against
any such Compensation Claim if the incident or alleged incident giving
rise to the claim is alleged to have occurred on or prior to the
Effective Time, (B) Buyer shall process, defend and be responsible for,
and shall indemnify Seller against any such Compensation Claim if the
incident or alleged incident giving rise to the claim is alleged to
have occurred subsequent to the Effective Time, and (C) in the event
any such Compensation Claim is filed after the Effective Time and the
incident or alleged incident giving rise to the claim is alleged to
have occurred both prior and subsequent to the Effective Time, Buyer
shall, in consultation with Seller and taking into account Seller's
reasonable suggestions, process such claim (and Seller shall reimburse
Buyer for its allocable portion of the reasonable cost of defense), and
the liability for such claim as between the parties shall be based upon
the length of exposure to such incident or alleged incident while
employed by Seller and then by Buyer. Thus, as between the parties, the
proportionate share of liability shall equal a fraction the denominator
of which shall be the Claiming Employee's total length of exposure to
such incident or alleged incident, and the numerator of which shall be
in the case of Buyer, the Claiming Employee's total length of exposure
while employed by Buyer, and in the case of Seller, the Claiming
Employee's total length of exposure while employed by the Seller.
45
(b) Indemnities.
(i) To the maximum extent permitted by Applicable
Law, Seller shall defend, indemnify, and hold harmless Buyer
and its Affiliates from and against any Damages, and any
fines, penalties and assessments, arising out of (a) claims by
Employees (other than Acquired Employees) that arise prior to,
on, or after the Effective Time and relate to their employment
with, or the termination of their employment from, the Seller
or its Affiliates; and (b) claims by Acquired Employees that
arise on or prior to the Effective Time which relate to their
employment with, or the termination of their employment from,
the Seller or its Affiliates; and
(ii) To the maximum extent permitted by Applicable
Law, Buyer shall defend, indemnify, and hold harmless Seller
and its Affiliates from and against any Damages, and any
fines, penalties and assessments, arising out of claims by the
Acquired Employees that arise after the Effective Time and
relate to their employment with, or the termination of their
employment from, the Buyer.
4.10 Transition of Employees.
From and after the Closing Date, Buyer and Seller agree to
cooperate to ensure an orderly transition and subsequent administration of the
Acquired Employees. Upon reasonable notice a Party will provide, or cause to be
provided, such information and assistance to the other Party as may reasonably
be requested by that Party in connection with any employment-related litigation,
claim, grievance, arbitration, discovery, or other proceeding with respect to
Employees or Acquired Employees, to which Buyer or Seller or any of their
Affiliates is or may become a party.
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4.11 Pension Benefit Amount.
(a) Calculation. As soon as practicable after Closing, but in
no event later than ninety (90) days after Closing, Seller will provide
to Buyer a schedule which reflects the final accrued benefits payable
at normal retirement age in straight life annuity form for each
Acquired Employee. As soon as practicable after receipt of this final
benefit information, Buyer and Seller shall, with the assistance of
their respective actuaries, determine the amount of the difference
between the projected benefit obligation and the accumulated benefit
obligation of the Seller's pension plan obligation with respect to the
final accrued benefits of the Acquired Employees (the "Pension Benefit
Amount"). The Pension Benefit Amount will be determined applying the
actuarial assumptions as set forth in Schedule 4.11 attached hereto.
(b) Cost of Actuaries. Each Party shall bear the cost of its
designated actuary in calculating the final Pension Benefit Amount.
(c) Pension Benefit Adjustment. Seller and Buyer agree to
adjust the Purchase Price by making a Pension Benefit Adjustment as
follows:
(1) If the final Pension Benefit Amount as determined
pursuant to subsection (a) above exceeds the Pension Benefit
Estimate, then Seller shall make a payment in the amount of
such difference to Buyer; and
(2) If the final Pension Benefit Amount as determined
pursuant to subsection (a) above is less than the Pension
Benefit Estimate then Buyer shall make a payment in the amount
of such difference to Seller; and
(3) Each payment required under this Section 4.11(c)
shall be made by wire transfer of funds to an account
specified by the receiving party within five
47
(5) days following calculation of the final Pension Benefit
Amount and the Pension Benefit Adjustment. Any amount not paid
when due shall bear interest at the Late Payment Rate for the
period past due.
(4) All payments made pursuant to this subsection
4.11(c) will be treated as an adjustment in the Purchase
Price.
ARTICLE 5
SELLER'S REPRESENTATIONS AND WARRANTIES
Seller represents and warrants to Buyer that the following are
true and correct on and as of the date of this Agreement and will be true and
correct through the Closing Date as if made on and as of such date as follows:
5.1 Organization and Standing.
Seller is a corporation duly formed and validly existing, in
good standing, under the laws of the State of Delaware and is in good standing
as a corporation in all jurisdictions where the nature of its properties or
business requires it.
5.2 Authority and Binding Obligations.
Seller, and each of its Affiliates as applicable, has the
power and authority to execute, deliver and perform its obligations under this
Agreement and the Related Agreements, as applicable. The execution, delivery,
and performance of this Agreement and of the Related Agreements by Seller, and
each of its Affiliates as applicable, (a) have been duly authorized by requisite
corporate action, (b) do not conflict or result in a violation or breach of any
provision of the organizational documents of Seller, any Seller Affiliate or any
agreement, instrument, statute, regulation, rule, order, writ, judgment, or
decree to which Seller or its Affiliates or the Assets is subject, or (c) do not
and will not result in any Lien against the Assets. Each of this Agreement
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and the Related Agreements constitutes a legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with their respective terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditor's rights
generally and general principles of equity (regardless of whether enforceability
is considered in a proceeding at law or in equity).
5.3 Consent; Non-Contravention.
(a) Except as otherwise set forth in Schedule 5.3(a), no
consent, waiver, approval, order, authorization or other action by or
filings with any governmental authority or other Person is required in
connection with the execution, delivery and performance by Seller and
its Affiliates of this Agreement or the Related Agreements including
the transfer, conveyance and assignment of the Assets to Buyer.
(b) Except as specified in Schedule 5.3(b), neither the
execution and delivery of this Agreement or the Related Agreements by
Seller or its Affiliates, nor the consummation of the transactions
contemplated in, or the performance of, this Agreement or the Related
Agreements will breach, violate or conflict with any provision of, or
constitute a default (or an event, which, with notice or lapse of time,
would constitute a default) under, or result in the termination or
acceleration of rights, or benefits or payments under any agreement to
which Seller or its Affiliates is a party or subject, except for such
violations and conflicts which will not (i) prevent or materially delay
consummation of the transactions contemplated by this Agreement or the
Related Agreements, or (ii) prevent Seller or its Affiliates from
performing its or their obligations under this Agreement or the Related
Agreements.
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5.4 No Material Violation of Judgments or Orders.
Neither Seller nor any Affiliate is in material violation of
any judgment, order, writ, injunction, or decree of any court or governmental
agency having jurisdiction over the Assets or Operations, nor, to the Knowledge
of Seller, has Seller or any of its Affiliates received notice, except as
disclosed in Schedule 5.4, of any proceeding of any court or governmental agency
having jurisdiction over the operation of the Assets, which violation or
proceeding would, after exhaustion of all remedies at law, require Seller or any
of its Affiliates to make a material change in the Assets or Operations.
5.5 No Material Default.
To the Knowledge of Seller, neither Seller nor any Affiliate
is in material default under, nor has it committed any act or failed to perform
an act which, after notice or the passage of time or both, would constitute a
material default under, any of the Contracts, Leases and Easements, Marketer
Agreements, Permits, Pipeline Agreements and other agreements, franchises,
instruments, assignments, easements or rights-of-way which are part of the
Assets, except as specified in Schedule 5.5.
5.6 Litigation.
Except as set forth in Schedule 5.6, to the Knowledge of
Seller, there are no legal, equitable, arbitral or governmental claims, actions,
suits or proceedings, whether in equity or in law, pending, or to the Knowledge
of Seller threatened, to which Seller or an Affiliate of Seller is a party or to
which the Assets or Operations are subject, which could reasonably be expected
to materially adversely affect Seller's or any such Affiliate's ability to
complete Closing, materially and adversely impact Buyer's ability to operate the
Assets or impose any material obligations
50
upon Buyer following the Effective Time. There are no judgments outstanding and
unsatisfied against Seller or its Affiliates, except as set forth in Schedule
5.6.
5.7 Licenses and Permits.
Buyer has been provided copies of all licenses and permits,
franchises, variances, conditional use permits and other authorizations in
Seller's possession from all governmental agencies having the authority to
regulate the assets and Operations. Seller possesses all of the Permits to
Seller, or its Affiliates as applicable, listed in Schedules 2.1.1(a), 2.1.9(a),
2.1.1(b), 2.1.1(d), 2.1.1(e) and 2.1.2(e). To the Knowledge of Seller, such
Permits constitute all of the Permits necessary under Applicable Law or
otherwise for Seller, or its Affiliates as applicable, to conduct the
Operations. Seller, and each Affiliate as applicable, is in compliance in all
material respects, with the terms of such Permits. None of such Permits have
been or, to the Knowledge of Seller, are threatened to be revoked, cancelled
suspended or modified.
5.8 Condition of Assets.
Except as set forth on Schedule 5.8, to the Knowledge of the
Seller, the tangible Assets (i) are in good operating condition and repair,
subject to ordinary wear and tear, and have been maintained in accordance with
standard industry practice, (ii) are adequate for the purpose for which they are
being used and are capable of being used in the Operations as presently being
conducted without present need for repair or replacement except in the ordinary
course of business, (iii) conform in all material respects with all applicable
legal requirements, and (iv) in the aggregate provide the capacity to enable
Seller to engage in commercial operation on a continuous basis (subject to
normal maintenance and repair outages in the ordinary course).
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5.9 Compliance with Laws.
Seller is in compliance with all Applicable Laws, including
Environmental Laws (which are defined in the Environmental Agreement), relating
to the Assets, the Employees and the Operations, except as set forth on Schedule
5.9.
5.10 Due Diligence.
Seller has (i) made available to Buyer all books, records,
financial statements, business plans, management appraisals, documents,
Contracts, Leases and Easements, Permits and other material information
requested in writing by Buyer; (ii) instructed its and its employees, counsel,
advisors and auditors to respond in writing to all written inquiries from Buyer
(subject to any confidentiality agreements, applicable legal restrictions and
any applicable privileges); and (iii) to the extent requested in writing,
provided full access to the Assets, except, with respect to (i), (ii) and (iii)
above where Seller has expressly declined in writing to comply with any such
request with respect to identified items or categories of information. Seller
shall identify any category of documents not delivered as a result of
confidentiality, privilege or otherwise.
5.11 Taxes.
(a) Except as set forth in Schedule 5.11, there are no Liens
for Taxes open, pending against or, to the Knowledge of Seller,
threatened against the Assets.
(b) Seller has duly filed when due, including any extensions,
all Tax reports and returns in connection with and in respect of the
Assets, Seller's operation of the Assets, and employees involved in the
Operations, and have timely paid and discharged all Tax obligations
shown thereon, except for several small motor fuel tax deficiency
notices that amount to less than $10,000, which Seller is responsible
for resolving and will resolve.
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Seller has made available to Buyer, to the extent requested by Buyer,
all Tax reports and returns of Seller with respect to the Assets or its
operation of the Assets for at least the last three annual reporting
periods ending prior to the date of this Agreement. Seller has not
received any notice of any Tax deficiency outstanding, proposed or
assessed against or allocable to Seller with respect to the Assets or
its operation of the Assets (except for the motor fuel tax deficiencies
referenced above), nor has Seller executed any waiver of any statute of
limitations on the assessment or collection of any Tax or executed or
filed with the internal Revenue Service or any other governmental body
any agreement now in effect extending the period for assessment or
collection of any Taxes against Seller with respect to the Assets or
its operation of the Assets.
5.12 Good and Marketable Title.
(a) Schedules 2.1.1(a), 2.1.1(b), 2.1.1(c) and 2.1.1(d),
contain a true and complete description of the Land owned by Seller and
used in the Operations, and such Land is described by metes and bounds.
(b) Except as specified in the Schedules noted in Subsection
5.12(a) above and in Subsection 5.12 (c) below, Seller has good and
marketable title to all of the Assets, except for Assets sold, consumed
or otherwise disposed of in the ordinary course of business in
accordance with the procedures set forth in Section 10.1 and consistent
with past practices, subject only to the encumbrances noted in
Schedules 2.1.1(a), 2.1.9(a), 2.1.1(b), 2.1.1(c), 2.1.1(d) and 5.12(b).
(c) Seller is the owner of the Pipelines as set forth in
Schedule 2.1.1(b). Buyer has been provided with copies of all
agreements, leases, subleases, licenses, permits, franchises,
assignments, easements and rights-of-way in Seller's possession or
otherwise
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available to Seller relating to the Pipelines. Seller has no knowledge
of any claim by any third party that any of the Pipeline Agreements are
not valid and subsisting or that any portion of the Pipelines Assets is
not located within the area covered by one of the Pipeline Agreements.
Effective at Closing, all warranties or agreements to defend title,
which Seller may have received theretofore from third parties with
respect to the condition of title to the Pipelines Assets, are assigned
to Buyer, but any enforcement for breach will be at Buyer's risk and
expense. However, Seller will cooperate reasonably in any such
enforcement.
(d) To the Knowledge of Seller, Seller has and is transferring
to Buyer all rights-of-way, pipeline easements, licenses and land use
permits required to operate and use the Pipelines. The Seller is not
aware of any defects in or disputes relating to pipeline easements
affecting the Pipelines except as noted in Schedule 2.1.1(b). The
pipeline systems are contiguous to all points of delivery and receipt,
except for immaterial failures that, individually or in the aggregate
would not reasonably be expected to have a material and adverse effect
on the use and operation of the Pipelines.
5.13 Condemnation.
Except as set forth in Schedule 5.13, there are no pending or,
threatened condemnation or eminent domain proceedings or contemplated sales in
lieu thereof, involving a partial or total taking of any of the Assets.
5.14 Labor Matters.
Schedule 4.2(a)(i) sets forth all Collective Bargaining
Agreements covering any of the Employees. Except as set forth on Schedule 5.14,
to Seller's Knowledge, Seller has not received any notification of any unfair
labor practice charges or complaints pending before any
54
agency having jurisdiction thereof nor are there any current union
representation claims involving any of the Employees. Seller does not have
Knowledge of any strike, work stoppages, work slowdowns, picketing, lockouts or
similar labor activity or of any threats thereof, except for routine grievance
matters, by or with respect to any of the Employees. And, except as set forth in
Schedule 5.14, to the Knowledge of Seller, there exits no charge of
discrimination or lawsuit involving any alleged violation of any fair employment
law, wage payment law, occupational safety and health law, and no threatened or
pending litigation arising out of any employment relationship or other
employment-related law, whether federal, state or local.
5.15 Intellectual Property.
(a) Schedule 16.1(a) sets forth an accurate and complete list
of patented technology owned by Seller or its Affiliates, which is or
has been used or held for use in the Operations. Except as disclosed on
Schedule 5.15(a), (i) the use of any such patented technology does not,
to the Knowledge of Seller, infringe any Intellectual Property Rights
of any third party (and Seller is not aware of any assertions made by
any third party alleging such infringement), (ii) Seller's rights in
such patented technology are valid and unencumbered (except for the
exclusive license already provided to Waukesha for the KEAS
Technology), (iii) Seller has the right to assign its interest in, or
to license the right to use, all such patented technology to Buyer in
accordance with the terms of Article 16 and the Related Agreements
(Seller will obtain from Waukesha the right to license the KEAS
technology to Buyer), and (iv) no third party has rights in, or
otherwise has the right to restrict the Buyer's use of the patented
technology as of and following the Closing (except for the exclusive
license already provided to Waukesha for the KEAS technology as
described in Section 16.1(c) and noted in Schedule 16.1(a).
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(b) Schedules 16.1(b) and 16.1(c) set forth an accurate and
complete list of all Licensed Technology, which is used or held for use
in the operation of the Assets, owned by a third party and licensed or
sublicensed to Seller. Seller, as licensee or sublicensee, as the case
may be, has the right to use such Licensed Technology as it is
currently being used in connection with the Assets, and such licenses
are valid, binding, in full force and effect and enforceable against
such third party licensor or sublicensor in accordance with their
terms. Except for the Licensed Technology disclosed on Schedule
16.1(c), such Licensed Technology may be assigned or sublicensed to
Buyer without the consent of any third party.
(c) To Seller's Knowledge, no product, component, method,
process, or material (including computer software) used in Operations
infringes on, misappropriates, or otherwise violates the Intellectual
Property rights of any third party.
(d) There are no demands, actions or proceedings pending or to
Seller's Knowledge threatened, against Seller relating to the
Operations alleging infringement, misappropriation, or violation of any
Intellectual Property right of any Person, and Seller has no Knowledge
that the Operations infringe, misappropriate, or violate the
Intellectual Property rights of any Person. To Seller's Knowledge, no
Person is infringing, misappropriating, challenging or violating, the
Intellectual Property owned or used or held for use by Seller in
connection with the Operations.
5.16 Maintenance of Assets.
Seller will continue to perform until Closing, maintenance on
the Assets in accordance with its normal practices for all of its United States
refineries, pipelines, retail sites and equipment comparable to the Assets based
upon the use which has been and will be made of
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the Assets prior to Closing. Seller's normal maintenance practices are to
maintain adequately the Assets consistent with good order and repair and in a
reasonably safe condition.
5.17 Shared Assets.
Schedule 5.17 lists all assets located at the Refinery that
are shared with other operations, facilities or Affiliates of Seller that will
not be included in the Assets transferred to Buyer at Closing.
5.18 Financial Statements.
The unaudited financial statements with respect to the Assets
and the Operations attached as Schedule 5.18 have been delivered by Seller to
Buyer. Such financial statements are hereinafter referred to as the "Financial
Statements". The Financial Statements, including the related notes and
schedules, have been prepared from the books and records of Seller relating to
the Assets and Operations in conformity with United States generally accepted
accounting principles applied on a basis consistent with preceding years and
throughout the periods involved and present fairly the financial position and
results of operations of the Operations as of the dates of such statements.
5.19 Instruments in Full Force and Effect.
The contracts and agreements constituting a part of the Assets
including the Contracts, Leases and Easements, Marketer Agreements, Permits and
Pipeline Agreements ("Instruments") are valid, binding and in full force and
effect, have not been amended or supplemented in any manner or respect except as
disclosed on Schedule 5.19, and upon assignment and assumption, with applicable
consents if necessary, will be enforceable by Buyer in accordance with their
respective terms. There are no defaults by Seller thereunder and Seller knows of
no defaults thereunder by any other party thereto, and no event has occurred
that with
57
the lapse of time or action or inaction by any party thereto would result in a
violation thereof or a default thereunder. Subject to any required third party
consents, none of the rights under the Instruments will be impaired by the
consummation of the transactions contemplated by this Agreement, and all such
rights will inure to and be enforceable by Buyer after the Closing without the
authorization, consent, approval, permit or licenses of or filing with any other
Person. The Instruments constitute all material contracts and agreements used in
or relating to the Operations other than the contracts and agreements
specifically listed as Excluded Assets.
5.20 Shipping History.
The Assets assigned to Buyer at the Closing will include all
of Seller's and its Affiliates' rights to the shipping history of Seller and its
Affiliates for feedstocks into the Refinery and products out of the Refinery,
including shipping history on the Chevron crude and products pipeline and the
Pacific pipeline. In addition, Seller will use best efforts to obtain for Buyer
the shipping history on the Chevron crude and products pipeline and the Pacific
pipeline which has been used by others to supply the Assets or furnish offtake
from the Assets. Schedule 5.20 includes a description of Seller's pipeline
history and allocation of pipeline capacity with respect to the Refinery and
other Assets and Operations. Absent such assignment, Seller shall enter into an
equivalent, substitute arrangement/agreement with Buyer, on terms mutually
acceptable to Buyer, to provide Buyer with the same commercial benefit of such
assignment of capacity.
5.21 Sufficiency of the Assets.
Except for the Excluded Assets, the Assets being transferred
to Buyer by Seller at Closing include all properties, assets and rights used by
or held for use by the Seller in the Operations. Seller further represents that
(i) the Assets in use at the Refinery from August 2,
58
2002 through the Effective Time include, in all material respects, the same
assets, rights and properties used in the operation of the Refinery during the
period from January 1, 2002 through August 2, 2002 and (ii) since August 2,
2002, the Assets have been operated by Seller in the ordinary course of business
and Seller has not removed or retired any material assets or relinquished any
material rights used or held for use in the Refinery.
5.22 Employee Benefit Matters.
Buyer, from and after the Effective Time, will not have any
liability under or with respect to any of Seller's or its Affiliates "employee
plans" as such term is defined in Section 3(3) of ERISA or any other
compensation plan or arrangement prior or heretofore maintained by Seller or its
Affiliates.
5.23 Absence of Certain Business Practices.
Neither Seller nor any officer, employee or agent of Seller,
nor any other Person acting on its behalf, has, directly or indirectly, given or
agreed to give any gift or similar benefit to any customer, supplier, government
employee or other Person who is or may be in a position to help or hinder the
operation of the Assets (or to assist Seller in connection with any actual or
proposed transaction) which (1) might subject Seller to any damage or penalty in
any civil, criminal or governmental litigation or proceeding, (2) if not given
in the past, might have had a material adverse effect on the Assets or its
operation of the Assets, or (3) if not continued in the future, might materially
adversely effect the Assets.
ARTICLE 6
BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer represents and warrants to Seller to Buyer's knowledge
and belief as follows:
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6.1 Organization and Standing.
Buyer is a corporation duly organized, validly existing in
good standing under the laws of the State of Delaware and is in good standing as
a corporation in all jurisdictions where the nature of its properties or
business requires it.
6.2 Authority and Binding Obligations.
Buyer has the corporate power and authority to execute,
deliver and perform its obligations under this Agreement and the Related
Agreements, as applicable. The execution, delivery, and performance of this
Agreement and the Related Agreements by Buyer (a) have been duly and validly
authorized by all necessary company action and (b) do not conflict or result in
a violation or breach of the organizational documents of the Buyer. Each of this
Agreement and the Related Agreements constitutes a legal, valid and binding
obligation of Buyer enforceable against Buyer, in accordance with their
respective terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and general principles of equity
(regardless of whether enforceability is considered in a proceeding at law or in
equity).
6.3 No Consent Required; Non-Contravention.
(a) Except as otherwise set forth in Schedule 6.3(a), no
consent, waiver, approval, order, authorization or other action by or
filings with any governmental authority or other Person is required in
connection with the execution, delivery and performance by Buyer of
this Agreement or the Related Agreements.
(b) Except as specified in Schedule 6.3(b), neither the
execution and delivery of this Agreement or the Related Agreements by
Buyer nor the consummation of the transactions contemplated hereby will
violate or conflict with or result in the acceleration
60
of rights, or benefits or payments under any agreement, instrument,
statute, regulation, rule, order, writ, judgment or decree to which the
Buyer is directly or indirectly a Party or is directly or indirectly
subject, except for such violations and conflicts which will not (i)
prevent or materially delay consummation of the transactions
contemplated by this Agreement or the Related Agreements or (ii)
prevent Buyer from performing its obligations under this Agreement.
6.4 Litigation.
There are no lawsuits or other proceedings pending or to the
knowledge of the Buyer threatened against or affecting the Buyer by or before
any governmental authority which would materially adversely affect Buyer's
ability to complete Closing.
6.5 No Breach.
Except as set forth in Schedule 6.5, neither the execution and
delivery of this Agreement by Buyer, nor the consummation of the transactions
contemplated hereby will violate or conflict with, or result in the acceleration
of rights, benefits or payments under (a) any provision of the Buyer's
organizational documents; (b) any statute, law, regulation or governmental order
to which the Buyer or the assets and properties of any thereof are bound or
subject; (c) any commitment to which the Buyer is a Party or by which it or any
of its properties may be bound or subject; or (d) any agreement, contract or
commitment of the Buyer or to which it is a Party or by which it or any of its
properties may be bound or subject, except, with respect to clauses (b), (c) and
(d), for such violations and conflicts which will not (i) prevent or materially
delay consummation of the transactions contemplated by this Agreement and other
Related Agreements or (ii) prevent Buyer from performing its obligations under
this Agreement and other Related Agreements.
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6.6 Actions and Proceedings.
No proceeding or investigation is pending or, to the knowledge
of Buyer threatened against Buyer before any court, arbitrator or administrator
or governmental authority, bureau or agency to restrain or prohibit, or to
obtain damages, a discovery order or other relief in connection with this
Agreement or any of the Related Agreements or any material part of the
transactions contemplated hereby or thereby.
6.7 Independent Decision.
Buyer has made its own independent analysis and judgment of
the commercial potential, condition and usefulness of the Assets, taking into
consideration all current Legal Requirements and the likelihood that such laws
and requirements will change in the future, and is not relying upon any
projections from Seller regarding prospective operations of the Assets. Buyer
has such knowledge and experience in business and financial affairs in general
as to be capable of evaluating the merits and risks of purchasing the Assets.
Nothing in this Section 6.7 shall be construed as limiting the representations
and warranties of Seller made in this Agreement or the Related Agreements or
Seller's indemnification obligations under this Agreement and the Related
Agreements.
ARTICLE 7
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
The obligations of Buyer to purchase the Assets are subject to
the satisfaction of Buyer on or prior to the Closing Date, unless waived, of the
conditions set forth in this Article 7.
The conditions precedent to Buyer's obligation to close are as follows:
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7.1 Regulatory Approvals.
If required, Buyer shall have either received (i) an
assignment of all Permits or (ii) written notification from the appropriate
governmental authorities that it may operate temporarily under the existing
Permits until similar Permits are issued to Buyer and Buyer shall not have any
reason to believe that it will not be able to obtain all material Permits
required to conduct the operations from and after the Effective Date. Buyer
shall use its commercially reasonable efforts to obtain such Permits.
7.2 Deliveries.
Seller shall have delivered to Buyer all of the documents and
instruments required pursuant to Section 3.2 and the Related Agreements.
7.3 Required Consents and Authorizations.
Seller shall have received (and shall have furnished copies
thereof to Buyer) all consents and authorizations of third parties required to
transfer the Contracts, Leases and Easements and Permits and licenses described
in Article 16 or the Related Agreement for which consent is required, and which
if not obtained would materially adversely impact Buyer's operation of the
Assets.
7.4 Taking of Assets.
In the event that prior to Closing there shall be instituted
or threatened any proceeding or other action, including, without limitation,
eminent domain, condemnation or other governmental proceeding, that there is a
reasonable probability of Seller or Buyer (after Closing) losing any portion of
or interest in the Assets, Seller shall immediately notify Buyer, and Buyer, if
such proceeding or other action has or there is a reasonable probability of a
taking of property with a value in excess of $5 million or which would prohibit
or materially and
63
adversely impact Buyer's ability to operate the Refinery, the Retail Sites, the
Terminals, or other Assets from and after the Effective Time, shall have the
right to terminate this Agreement within ten (10) days from the date of such
notice, by giving notice to Seller of its election to terminate. If Buyer does
not timely terminate this Agreement, then Seller shall assign to Buyer at
Closing any rights Seller may have to receive any payments (net of any expenses)
as a result of any such proceeding or other action.
7.5 Adverse Change.
Prior to the Closing, there shall not have been any Material
Adverse Change in the condition of the Assets or the Operations; however, if
there should occur prior to Closing such Material Adverse Change in the
condition of the Assets or the Operations, Seller shall have the right, but not
the obligation, to correct or cure any such change (i.e. repair or replace any
damaged Assets) at its sole option and cost prior to Closing, including, but not
limited to, changes due to a Force Majeure Event. Seller shall have the right,
but not the obligation, to extend the Closing Date for up to thirty (30) days
(or such longer period as may be agreed to by Buyer) within which to use
reasonable business efforts to cure or correct any such adverse change.
7.6 Representations and Warranties True; Covenants and Agreements
Performed.
The representations and warranties of Seller shall have been
true and correct in all material respects as of the date of this Agreement and
shall be true and correct in all material respects as of the Effective Time, as
if made on such date. Seller shall have performed and complied in all material
respects with all covenants and agreements by Seller hereunder required to be
performed or complied with on or prior to the Effective Time.
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7.7 Consents and Approvals of Antitrust Regulatory Authorities.
All approvals required of applicable Antitrust Regulatory
Authorities to Seller's sale of the Assets to Buyer under all of the terms and
conditions set forth in this Agreement shall have been obtained.
7.8 Pipeline Rights-of-Way.
Buyer shall not, between the date hereof and Closing, have
become aware of any defects in the rights-of-way, easements, licenses and land
use permits required to operate and use the Pipelines which could materially
interfere with Buyer's operation of the Assets; provided, if Buyer becomes aware
of such defects it will notify Seller and provide Seller with a reasonable
opportunity to cure such defects prior to Closing.
7.9 Schedules.
Buyer shall have reviewed such agreements, instruments and
data included on Seller's schedules attached to this Agreement and shall not
have discovered any obligations or liabilities which would materially and
adversely impact Buyer's ability to own or operate the Assets or create any
material liability or exposure to Buyer or the Assets of which Buyer was not
aware prior to execution of this Agreement and which was not accounted for in
Buyer's assessment and valuation of the Assets.
ARTICLE 8
CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
The obligations of Seller to sell, transfer, convey, and
deliver the Assets are subject to the satisfaction of Seller on or prior to the
Closing Date, unless waived, of the conditions set forth in this Article 8.
The conditions precedent to Seller's obligation to close are
as follows:
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8.1 Deliveries.
Buyer shall have made the payments required in Section 2.3 and
delivered to Seller all of the documents and instruments required pursuant to
Sections 3.2(b) and the Related Agreements pursuant to Section 3.2(c).
8.2 Representations and Warranties True; Covenants and Agreements
Performed.
The representations and warranties of Buyer shall have been
true and correct in all material respects as of the date of this Agreement and
shall be true and correct in all material respects on the Effective Time as if
made on such date, and Buyer shall have performed and complied in all material
respects with all covenants and agreements by Buyer hereunder required to be
performed or complied with on or prior to the Effective Time.
8.3 Consents and Approvals of Antitrust Regulatory Authorities
All approvals required of applicable Antitrust Regulatory
Authorities to Seller's sale of the Assets to Buyer under all of the terms and
conditions set forth in this Agreement shall have been obtained.
ARTICLE 9
JOINT CONDITIONS PRECEDENT TO CLOSING OBLIGATIONS
Seller and Buyer each is obligated to consummate the
transactions contemplated in this Agreement, subject, in each instance, to the
fulfillment or written waiver of the following conditions at or prior to the
Closing:
9.1 Governmental Orders.
No temporary restraining order, preliminary injunction or
permanent injunction or other order preventing the consummation of the
transactions on the terms and conditions of this Agreement will have been issued
by any federal or state court or other governmental authority
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and remain in effect; and no statute, rule, regulation or executive order
promulgated or enacted by any federal or state governmental authority after the
date hereof that prohibits the consummation of the transactions on the terms and
conditions of this Agreement will be in effect.
9.2 Litigation.
No order of any court or order or action of any government
agency purporting to restrain or prohibit the transactions contemplated hereby
shall be in effect and no new Applicable Law or regulation shall have been
finally enacted or taken effect which seeks to restrain or prohibit the
transactions contemplated hereby.
9.3 Related Agreements Finalized.
The Related Agreements shall have been executed and delivered
by the parties thereto.
ARTICLE 10
COVENANTS AND AGREEMENTS OF SELLER
Seller covenants and agrees as follows:
10.1 Conduct of Business.
Prior to the Closing, unless the prior written consent of
Buyer to a contrary action is obtained (which consent shall not be unreasonably
delayed or withheld), and except as expressly permitted under this Agreement:
(a) Seller shall operate the Operations in its usual, regular
and ordinary manner and substantially in the same manner as heretofore
conducted.
(b) Seller shall use commercially reasonable efforts to (i)
preserve the Operations; (ii) maintain the Assets in their current
state of repair, order and condition,
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usual and ordinary wear and tear excepted and subject to requirements
in the ordinary course of business; and (iii) preserve beneficial
relationships with agents, lessors, suppliers, customers and employees;
and
(e) Seller shall prevent any Liens from attaching to any of
the Assets or shall have then promptly removed if any Liens are filed.
10.2 Access; Records.
(a) Access. Seller has permitted Buyer's representatives and
consultants to make a preliminary inspection and investigation of the
Assets. Seller will continue to afford Buyer and its agents,
consultants, and other authorized representatives full access to the
Assets, to Seller's records relating to the Assets or the operation
thereof, and to Seller's personnel, and Seller will cause its officers
and other agents to furnish or make available to Buyer such operating
data and other information with respect to the Assets and the
Operations as Buyer may from time to time reasonably request; provided,
however, that any inspection or investigation conducted by Buyer, its
agents, consultants, or other authorized representatives (i) shall be
conducted in such manner as not to interfere unreasonably with the
Operations or the Assets; or (ii) shall not entitle Buyer to drill or
penetrate the surface of the ground to investigate the condition of
soil contamination or ground water contamination except as provided in
the Environmental Agreement or pursuant to a site assessment plan as
mutually agreed between Seller and Buyer. Buyer bears the risk of
injury to any of its employees or representatives conducting an
inspection or investigation of the Assets and Operations and shall
indemnify Seller for all Damages resulting from Buyer's inspection or
investigation.
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(b) Delivery of Documents. Seller shall deliver to Buyer (in
the manner reasonably directed by Buyer in writing) on the Effective
Time originals where available of all Leases and Easements (unless the
original is on file with State or County authorities in which case
Seller shall deliver a copy) and of all Contracts assigned to Buyer at
the Closing. Seller also shall furnish or otherwise make available to
Buyer (in the manner reasonably directed by Buyer in writing) originals
or copies of all Records.
10.3 Consents to Assignment.
Seller and Buyer agree to use reasonable efforts to obtain
prior to Closing all consents to assignment of the Contracts, the Leases and
Easements and the Permits that are required to be obtained under this Agreement,
provided, that neither Party shall be obligated to make payments or incur
obligations to third parties or governmental agencies to obtain such consents
except to pay such Party's reasonable expenses or to pay normal fees to
governmental agencies.
10.4 Taxes.
Seller will file all tax returns and reports relating to the
Assets and its operation of the Assets, which are required to be filed with
respect to all periods ending on or prior to the Effective Time. Subject to the
provisions of Section 3.3, Seller will pay when due all Taxes relating to the
Assets and its operation of the Assets, which accrue or relate to periods ending
on or prior to the Effective Time.
10.5 Surveys; Title Opinions
Seller shall, no later than 45 days prior to Closing, obtain
and furnish to Buyer, the costs for which will be paid one-half each by Seller
and Buyer:
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(a) A survey sufficient to delete the standard printed survey
exceptions, prepared by First American Title Company, of all real
property included in the Assets (except for the Pipelines
right-of-way);
(b) Title opinions insuring good and marketable title to such
real property (except for the Pipelines right-of way) (including any
and all easement rights and leasehold interests) free of any Liens
other than Permitted Liens; and
(c) Recorded records search by First American Title Company to
verify that Seller has valid rights-of-way for the Pipelines.
10.6 Inventories
Prior to the Closing, Seller will maintain product and
feedstock inventories at reasonable levels sufficient to conduct the Operations
in the ordinary course of business.
10.7 Required SEC Financial Statements
Seller shall cooperate and assist Buyer in the preparation of
financial statements relating to Seller's operations involving the Assets in
such form and covering such periods as may be required by applicable securities
laws to be filed by Buyer or its Affiliates with the Securities and Exchange
Commission as a result of or in connection with the transactions contemplated by
this Agreement. Seller shall provide Buyer and its representatives full access
to Seller's personnel and books and records to the extent necessary to enable
Buyer and its representatives to prepare such financial statements.
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ARTICLE 11
COVENANTS AND AGREEMENTS OF BUYER
Buyer covenants and agrees as follows:
11.1 Access; Records.
For a period of ten (10) years after the Effective Time, Buyer
will afford to Seller and its authorized representatives reasonable access
during normal business hours to personnel and to such properties and records
which were transferred to Buyer and, if requested, will furnish to Seller such
additional information and cooperate with Seller in such other respects,
including the making of employees available to Seller at Seller's expense as
witnesses or deponents as Seller may request for (a) financial reporting, (b)
tax or similar purposes or (c) purposes of investigating claims, or conducting
litigation or administrative proceedings with third parties or government
agencies. Buyer will keep and maintain the records to which Seller or its
representatives may request access pursuant to this Section 11.1, such records
to be maintained for a period of ten (10) years from the Closing Date in the
case of environmental records and five (5) years for all other records or such
longer period as may be required by law or reasonably requested by Seller;
provided, if Buyer decides to dispose of or destroy such records prior to such
time periods it may do so provided it provides at least thirty (30) days notice
to Seller prior to such disposal or destruction and provides Seller with an
opportunity to take possession of such records.
11.2 Qualifications, Approvals, Licenses and Permits.
Buyer shall proceed diligently and in good faith and shall use
reasonable efforts at Buyer's expense to obtain all necessary United States and
State Permits required for Buyer to conduct the operations of the Assets from
and after the Effective Time.
11.3 No Trademarks
Except as specifically permitted under Article 16 and the
Trademark License Agreement, which is set forth in Exhibit I, no license to any
Trademarks is granted by this
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Agreement or by the transfer of the Assets to Buyer. Buyer acknowledges and
agrees that Seller and its Affiliates have the absolute and exclusive right to
the Trademarks (and signs, which identify or portray Seller's Trademarks), and
all rights to which, and the goodwill represented thereby and pertaining
thereto, are being retained by Seller and its Affiliates, subject however to
rights under the Trademark License Agreement. Consistent with the terms and
conditions of the Trademark License Agreement, Buyer shall be allowed to use
signage, which identifies or portrays such Trademarks and brand names of Seller.
Seller shall continue to retain ownership of these signs, which shall be loaned
to Buyer. Seller acknowledges that its right to signs cover only the proprietary
"facia" signage which actually includes or incorporates the proprietary
trademark or logo of Seller.
11.4 Third Party Property.
Buyer shall grant or continue to grant such rights-of-way,
easements or other rights of ingress or egress necessary to allow (a) any third
party which holds any Third Party Property, described in Schedule 11.4(a), on
the Land to have access to such Third Party Property for the purposes of
repairing, maintaining or otherwise utilizing such property, for so long as the
Third Party Property remains on the Land; and (b) Seller or its Affiliates which
hold any assets described on Schedule 11.4(b) to have access to such assets for
the purposes of operating, repairing, maintaining or otherwise utilizing such
assets.
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ARTICLE 12
COVENANTS OF BUYER AND SELLER
Buyer and Seller each covenant as follows:
12.1 Antitrust Compliance.
Notwithstanding any other provision of this Agreement, either
Party at any time may terminate this Agreement upon notice to the other, without
liability to the other Party, if the Antitrust Regulatory Authorities advise
Seller of their final disapproval (by the vote of the Commissioners) of the
transactions contemplated by this Agreement.
12.2 Purchase Price Allocations.
Schedule 12.2 is an allocation of the Purchase Price (the
"Allocation") among the Assets pursuant to the provisions of Section 1060 of the
Code and the Treasury Regulations promulgated thereunder. Any subsequent
adjustments to Purchase Price shall be reflected in Schedule 12.2, as revised by
Buyer, in a manner consistent with the Allocation and Section 1060 of the Code
and the Treasury Regulations promulgated thereunder. The parties recognize that
the Purchase Price does not include the Buyer's acquisition expenses and that
Buyer will allocate such expenses appropriately. Buyer and Seller shall not take
any position on their respective income tax returns that is inconsistent with
the allocation of the Purchase Price as set forth in Schedule 12.2. Buyer and
Seller shall duly prepare and timely file Internal Revenue Service Form 8594 and
Form 8824 and any comparable state, local or foreign forms (including any
successor forms) (collectively the "1060 Forms") and any required attachments
thereto required under Section 1060 of the Code, the Treasury Regulations
promulgated thereunder or any provisions of state, local, or foreign law in
accordance with the Allocation among the Assets as set forth in such Schedule
12.2. The Parties shall cooperate in the preparation of any 1060 Forms and shall
file such 1060 Forms in the manner required by applicable law.
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12.3 Tax Election.
Either Party may elect to structure the conveyance, transfer
and/or assignment of all or an applicable portion of the Assets as a tax-free
exchange pursuant to Section 1031 of the Code (a "1031 Exchange"), provided that
such Party gives notice of such election to the other Party at least fifteen
(15) days prior to the Effective Time, and provided that Seller or Buyer shall
not be required to take title to any other property. If such an exchange is
elected by such Party (the "Electing Party"), the Parties will execute all
necessary 1031 Exchange documents (provided, that any costs and expenses
incurred shall be borne by the Electing Party), which shall be in a form
mutually acceptable to the Parties. The Electing Party will indemnify the other
Party and its Affiliates, employees and agents against any and all Damages,
which may be sustained by them on account of or in connection with such election
to structure the transaction as a 1031 Exchange.
12.4 Collection of Amounts Owed to a Party.
It is the intention of the Parties that, as between the
Parties, Seller shall be entitled to all income attributable to the operations
conducted prior to and including the Effective Time and Buyer shall be entitled
to all income attributable to the operations conducted after the Effective Time.
Each Party shall pay to the other Party, promptly after receipt thereof, any
amount received by said Party from any third party with respect to (i) rentals,
fees or other revenues relating to the operation of the Assets and attributable
to the ownership period of the other Party; and (ii) products delivered,
services performed or other obligations performed by the other Party and
attributable to the ownership period of such other Party.
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12.5 Payment of Transfer Taxes; Recording Fees.
Buyer and Seller shall each pay one-half of all transfer
Taxes, which are assessed or imposed on the transfer of the Assets from Seller
to Buyer. By way of example, but not exclusion, Buyer and Seller shall share the
costs equally of all real estate transfer taxes, or other excise taxes on real
estate sales, all sales taxes, business occupation taxes, applicable motor fuel
taxes and applicable environmental taxes and fees on all petroleum products
transferred, as well as any other Taxes assessed or imposed on the transfer or
sale of the assets, personal property or inventory included herein, and all
costs to record any deeds. Each Party shall cooperate with the other to take
advantage of all applicable tax exemptions and provide applicable tax exemption
certificates. Buyer and Seller shall each pay one-half of any title insurance
premium due for any title insurance policies obtained by or for Buyer and
one-half of the costs of any required surveys.
12.6 Payment of Certain Expenses Due and Payable After the Effective Time;
Cooperation.
(a) Buyer shall pay, as and when due, all emissions fees,
permit fees and utility bills due and payable after the Effective Time,
and Seller shall reimburse Buyer within thirty (30) days after invoice
for any amounts under such bills attributable to any period prior to
the Effective Time. Buyer shall pay, and be entitled to collect, any
rents due subsequent to the Effective Time under leases which are
assumed Leases, and Seller shall either pay, or be entitled to receive
from Buyer, as the case may be, within thirty (30) days after invoice
or notice, any amounts attributable to any period prior to and
including the Effective Time.
(b) Buyer shall file, or cause to be filed, all required
reports and returns incident to all ad valorem taxes, real property
taxes, personal property taxes and similar
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obligations, which reports and returns are due on or after the
Effective Time and shall pay or cause to be paid to the taxing
authorities all such taxes reflected on such reports or returns even if
same are for periods prior to the Effective Time and Seller shall
reimburse Buyer within thirty (30) days after invoice for any such
taxes and similar obligations which are attributable to any period
prior to the Effective Time.
(c) Seller and Buyer agree to cooperate with the other in the
event one of them is involved in a tax controversy concerning the
Assets and the other has either records or personnel which may be of
assistance to the Party engaged in the controversy. Seller and Buyer
further agree that if, in such Party's view, such cooperation becomes
an unreasonable financial burden, they will agree upon a reasonable
method of reimbursement to the burdened Party.
(d) If a Party hereto makes or has made any payment to a third
party pursuant to any assigned contract, lease, agreement or
commitment; and (i) such payment is made in respect of work performed,
services provided or goods delivered during a period of time which
includes the Effective Time; or (ii) the Effective Time intervenes
between the making of such payment and the performance of the work or
services or delivery of goods, the Parties will allocate the burden of
such payment in a manner which reflects the relative benefit of such
work performed, services provided or goods delivered to each Party;
provided, however, it shall be presumed that any work performed,
services provided or goods delivered prior to and including the
Effective Time are for the benefit of Seller and any work performed,
services provided or goods delivered after the Effective Time are for
the benefit of Buyer.
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12.7 Assets Not Assigned at Closing.
To the extent that any of the Assets including Intellectual
Property, Licensed Technology, Contracts, Leases and Easements, Marketers
Agreements or Permits that would otherwise be assigned under this Agreement, as
contemplated by Section 3.2(a)(iii), are not capable of being assigned,
transferred, subleased or sublicensed without the consent of, or waiver by, any
other Party thereto or any other Person, or if such assignment, transfer,
sublease or sublicense or attempted assignment, transfer, sublease or sublicense
would constitute a breach thereof or a violation of any Legal Requirement, this
Agreement shall not constitute an assignment, transfer, sublease or sublicense,
or an attempted assignment, transfer, sublease or sublicense of any such Asset.
In the event Seller is unable to obtain a required consent, the Seller and Buyer
shall cooperate and use reasonable efforts to implement arrangements designed to
obtain for Buyer (without cost or expense to Buyer beyond that which Buyer would
otherwise pay in customary and ordinary license fees (but not transfer fees), if
any, to a third party licensor for assignment of the license to Buyer) the
benefits and privileges of the applicable asset, instrument, contract, license
or document and assuming implementation of such alternative agreement, the
failure to obtain the consent will not constitute a failure of a condition to
close. Even if Buyer waives the condition in Section 7.3 with respect to a
particular consent, Seller, for a period of ninety (90) days after Closing, will
continue to use its reasonable efforts with the assistance of Buyer to obtain a
consent to an assignment from Seller to Buyer of each of the Contracts, Leases,
Easements and Permits listed which assignments are not made at Closing.
12.8 Relationship of the Parties.
Nothing in this Agreement or the Related Agreements shall be
construed to create any joint venture, partnership, agency or other similar
fiduciary relationship between the Parties
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hereto or thereto. The Parties to this Agreement and the Related Agreements are
nothing other than independent contractors for the sale or purchase of specific
property, goods or services. The Parties acknowledge that, for purposes of this
Agreement and the Related Agreements, (i) none of the Parties or their
Affiliates shall be considered to be the agent, representative, employee,
master, or servant of the others for any purpose, (ii) none of the Parties or
their Affiliates shall have any obligation to manage or operate any of their
respective businesses with any duty or standard of care to the other Party or
their Affiliates, and (iii) none of the Parties or their Affiliates have any
authority, right or power to enter into a contract or commitment, assume any
obligation or make any representation or warranty on behalf of the others
(except as expressly specified in this Agreement or the Related Agreements). The
Parties agree and acknowledge that except as expressly provided herein or in the
Related Agreements, none of the Parties or their Affiliates shall owe duties,
fiduciary or otherwise to the other. The Parties and their Affiliates are, and
will be after Closing, competitors with the right to pursue any business
opportunity for their respective individual benefit and make no representation
or warranty regarding the manner in which they will conduct their respective
businesses and operations. None of the Parties or their Affiliates shall have
any obligation to refrain from (i) engaging in the same or similar activities or
lines of business as the Parties or their Affiliates, (ii) developing or
marketing any products or services that compete, directly or indirectly with
those Parties or their Affiliates, (iii) investing or owning any interest
publicly or privately in, or developing a business relationship with, any Person
engaged in the same or similar activities or lines of business as, or otherwise
in direct or indirect competition with, the Parties or their Affiliates, or (iv)
doing business with any client or customer of the Parties or their Affiliates.
None of the Parties or their Affiliates shall have any obligation to offer any
business opportunity (except as expressly specified in this
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Agreement or the Related Agreements) and may modify or otherwise change any of
their respective businesses or operations at any time.
12.9 PMPA Compliance.
(a) To the extent the Marketers Agreement constitute a
"franchise relationship," as that term is defined in the Petroleum
Marketing Practices Act, 15 U.S.C., Section 2801 et seq. ("PMPA"),
Seller and Buyer will comply with all aspects of the PMPA and any other
applicable law in the assignment and assumption of the Marketers
Agreement.
(b) Seller shall indemnify and hold Buyer, its Affiliates,
agents and employees harmless from and against each and every loss,
cost, claim, obligation, damage, liability, payment, fine, penalty
cause of action, judgment (including expert witness fees and attorneys'
fees awarded to any franchisees as part of a judgment), lien or
expense, including, but not limited to, reasonable attorneys' fees and
other litigation expense (a "PMPA Claim") to the extent that any such
PMPA Claim seeks to invalidate or claim the invalidity of Seller's
assignment of its franchise agreements to Buyer, unless such PMPA Claim
is based on any act or omission by Buyer occurring after the Closing
Date.
(c) Buyer shall indemnify and hold Seller, its Affiliates,
agents and employees harmless from and against each and every PMPA
Claim of any kind or character which result from, arise out of, or are
in any way related to Buyer's failure to fulfill its obligations under
this Agreement or the PMPA, and Buyer's failure to fulfill any
obligations arising after the Effective Time contained in the Marketer
Agreements assigned to Buyer by Seller.
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(d) In any lawsuit brought by any franchisee, each Party shall
bear its own attorneys' fees and other costs of defense incurred in
such action, except as otherwise provided herein.
ARTICLE 13
ENVIRONMENTAL MATTERS
13.1 Environmental Agreement
Seller and Buyer shall enter into the Environmental Agreement
in the form of Exhibit J (the "Environmental Agreement") at Closing.
ARTICLE 14
INDEMNIFICATION; SURVIVAL
14.1 Indemnification.
(a) INDEMNIFICATION BY SELLER.
SELLER AGREES TO INDEMNIFY, HOLD HARMLESS AND DEFEND
BUYER AND ITS AFFILIATES, AGENTS, OFFICERS, DIRECTORS, PARTNERS,
EMPLOYEES, REPRESENTATIVES, SUCCESSORS AND ASSIGNS (COLLECTIVELY CALLED
"BUYER INDEMNIFIED PARTIES") FROM ANY DAMAGES ARISING OUT OF, RELATING
TO OR RESULTING FROM:
(i) ANY BREACH OR INACCURACY IN ANY REPRESENTATION
MADE BY SELLER OR THE BREACH OF ANY WARRANTY BY THE SELLER
CONTAINED IN THIS AGREEMENT OR ANY CERTIFICATE OR OTHER
DOCUMENTS DELIVERED PURSUANT TO THIS AGREEMENT AT CLOSING;
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(ii) ANY FAILURE BY THE SELLER TO PERFORM OR OBSERVE
ANY TERM, PROVISION, COVENANT OR AGREEMENT ON THE PART OF
SELLER TO BE PERFORMED OR OBSERVED UNDER THIS AGREEMENT;
(iii) ALL OBLIGATIONS ASSUMED OR RETAINED BY SELLER
IN THIS AGREEMENT AND THE RELATED ENVIRONMENTAL AGREEMENT
BETWEEN THE PARTIES;
(iv) EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN
THIS AGREEMENT OR THE RELATED ENVIRONMENTAL AGREEMENT, FROM
AND AGAINST ANY AND ALL CLAIMS AND LIABILITY (WHETHER KNOWN,
UNKNOWN, ACCRUED, ABSOLUTE, CONTINGENT OR OTHERWISE AND
WHETHER BASED UPON ALLEGATIONS OF NEGLIGENCE, STATUTORY
LIABILITY, STRICT LIABILITY OR OTHERWISE) ATTRIBUTABLE TO
SELLER'S OWNERSHIP OR OPERATION OF THE ASSETS PRIOR TO THE
EFFECTIVE TIME; AND
(v) THE EXCLUDED ASSETS.
(b) INDEMNIFICATION BY BUYER.
BUYER AGREES TO INDEMNIFY, HOLD HARMLESS AND DEFEND
SELLER AND ITS AFFILIATES, AGENTS, OFFICERS, DIRECTORS, PARTNERS,
EMPLOYEES, REPRESENTATIVES, SUCCESSORS AND ASSIGNS (COLLECTIVELY CALLED
"SELLER INDEMNIFIED PARTIES")
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FROM ANY DAMAGES ARISING OUT OF, RELATING TO OR RESULTING FROM:
(i) ANY BREACH OR INACCURACY IN ANY REPRESENTATION
MADE BY BUYER OR THE BREACH OF ANY WARRANTY BY BUYER CONTAINED
IN THIS AGREEMENT OR ANY CERTIFICATE OR OTHER DOCUMENTS
PURSUANT TO THIS AGREEMENT AT CLOSING;
(ii) ANY FAILURE BY THE BUYER TO PERFORM OR OBSERVE
ANY TERM, PROVISION, COVENANT OR AGREEMENT ON THE PART OF THE
BUYER TO BE PERFORMED OR OBSERVED UNDER THIS AGREEMENT;
(iii) ALL OBLIGATIONS ASSUMED BY BUYER IN THIS
AGREEMENT AND THE RELATED ENVIRONMENTAL AGREEMENT BETWEEN THE
PARTIES; AND
(iv) EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN
THIS AGREEMENT OR THE RELATED ENVIRONMENTAL AGREEMENT, FROM
AND AGAINST ANY AND ALL CLAIMS AND LIABILITY (WHETHER KNOWN,
UNKNOWN, ACCRUED, ABSOLUTE, CONTINGENT OR OTHERWISE AND
WHETHER BASED UPON ALLEGATIONS OF NEGLIGENCE, STATUTORY
LIABILITY, STRICT LIABILITY OR OTHERWISE) ATTRIBUTABLE TO
BUYER'S OWNERSHIP OR OPERATION OF THE ASSETS AFTER THE
EFFECTIVE TIME.
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(c) Absent common law fraud or deceit, no Party to this
Agreement shall, from and after the Closing, bring any action, suit or
proceeding (whether under any federal, state or local statute or law)
against any other Party, or seek to join any other Party to any pending
action, suit or proceeding which arises out of, relates to or is
connected with any matter indemnified under this Section 14.1, except
to enforce the provisions of this Section 14.1.
(d) THE PARTIES AGREE AND CONFIRM THAT THE INDEMNIFICATION
OBLIGATIONS SET FORTH IN THIS ARTICLE 14 SHALL APPLY ACCORDING TO THEIR
TERMS WHETHER OR NOT THE NEGLIGENCE OF ANY INDEMNIFIED PARTY IS ALLEGED
OR PROVEN.
14.2 Notification and Third Party Claims.
Within thirty (30) days following the determination thereof,
an Indemnified Party shall give the Indemnifying Party written notice of any
matter which an Indemnified Party has determined has given rise to a right of
indemnification under this Agreement, stating the amount of the Damage, if
known, and method of computation thereof, all with reasonable particularity and
containing a reference to the provisions of this Agreement in respect of which
such right of indemnification is claimed or arises ("Claim Notice"), provided
that the failure of the Indemnified Party to provide such 30-day notice shall
only relieve the Indemnifying Party of its obligation to indemnify the
Indemnified Party to the extent that the Indemnifying Party is actually
prejudiced by such failure. The obligations and liabilities of an Indemnifying
Party under this Article 14 with respect to Damages arising from claims of any
third party that are subject to the indemnification provisions of this Article
14 ("Third Party Claims") shall be governed by and contingent upon the following
additional terms and conditions:
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(a) Within thirty (30) days of the receipt of a Claim Notice
of a Third Party Claim, the Indemnifying Party shall notify the
Indemnified Party whether the Indemnifying Party elects to defend such
Third Party Claim. If the Indemnifying Party so elects, it shall
undertake the defense thereof by counsel of its own choosing, which
counsel shall be reasonably satisfactory to the Indemnified Party;
provided that if a conflict of interest exists between the Indemnified
Party and the Indemnifying Party with respect to such Third Party
Claim, or if the Indemnifying Party elects not to defend such Third
Party Claim, or if the Indemnifying Party fails to notify the
Indemnified Party within the thirty (30) day notice period that it
elects to defend such Claim, such Indemnified Party shall be entitled
to select counsel of its own choosing, in which event the Indemnifying
Party shall be obligated to pay the reasonable fees and expenses of
such counsel to the extent that the Indemnifying Party is finally
determined to be obligated to indemnify the Indemnified Party under
this Agreement. The Claim Notice of the Third Party Claim by the
Indemnified Party shall contain all material information known to the
Indemnified Party with respect to the Third Party Claim and shall
include copies of materials submitted to the Indemnified Party by the
relevant third party with respect to the Third Party Claim.
(b) If the Indemnifying Party refuses or fails at any time to
defend the Indemnified Party against any Third Party Claim, the
Indemnified Party shall have the right to undertake the defense, and to
compromise or settle such Third Party Claim. Such settlement shall be
on behalf of and for the account and at the risk of the Indemnifying
Party to the extent that the Indemnifying Party is finally determined
to be obligated to
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indemnify the Indemnified Party under this Agreement with respect to
such Third Party Claim.
(c) If the Indemnifying Party elects to undertake and
diligently pursues the defense of a Third Party Claim hereunder, the
Indemnifying Party shall control all aspects of the defense and if the
Indemnifying Party acknowledges in writing its duty to provide full
indemnification to the Indemnified Party regarding such Third Party
Claim, the Indemnifying Party may enter into a settlement of such Third
Party Claim and may settle, compromise or enter into a judgment with
respect to such Third Party Claim; provided that the Indemnifying Party
obtains a full and unconditional release of the Indemnified Party or
otherwise obtains the consent of the Indemnified Party, if it would
result in the imposition of any non-monetary liability or obligation on
the Indemnified Party.
(d) If the Indemnifying Party elects to undertake and
diligently pursues the defense of a Third Party Claim hereunder, the
Indemnified Party shall provide the Indemnifying Party with access to
all reasonably requested witnesses, records and documents of the
Indemnified Party relating to any Third Party Claim.
(e) The Indemnified Party may participate in the defense of
any Third Party Claim at its own expense.
14.3 LIMITATION ON INDEMNIFICATION.
(a) WITH RESPECT OF ANY CLAIM BY A PARTY FOR INDEMNITY UNDER
THIS ARTICLE 14 WHICH DOES NOT INVOLVE A THIRD PARTY CLAIM, NO PARTY TO
THIS AGREEMENT SHALL SEEK, AND AN ARBITRATOR APPOINTED UNDER ARTICLE 15
MAY NOT AWARD, ANY INDIRECT, SPECIAL, CONSEQUENTIAL, PUNITIVE OR
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EXEMPLARY DAMAGES. NOTHING IN THIS SECTION 14.3(a) SHALL LIMIT IN ANY
WAY A PARTY'S INDEMNIFICATION OBLIGATIONS WITH RESPECT TO A THIRD PARTY
CLAIM.
(b) SUBJECT TO SUBSECTION (d) BELOW, A PARTY SHALL HAVE NO
CLAIM FOR INDEMNITY UNDER SECTIONS 14.1(a)(i) OR 14.1(b)(i) OF THIS
ARTICLE 14 FOR DAMAGES ARISING OUT OF OR RELATING TO CLAIMS OR
LIABILITIES UNDER THIS AGREEMENT UNTIL THE AGGREGATE DAMAGES ACTUALLY
INCURRED OR SUSTAINED BY THE PARTY FOR ALL SUCH CLAIMS AND LIABILITIES
EXCEEDS $1 MILLION AND THEN ONLY FOR THE AMOUNT OVER SUCH $1 MILLION
(THE "THRESHOLD").
(c) A PARTY'S AGGREGATE LIABILITY FOR INDEMNIFICATION WITH
RESPECT TO ALL CLAIMS UNDER THIS AGREEMENT SHALL NOT EXCEED $25
MILLION.
(d) NOTWITHSTANDING THE FOREGOING, THE LIMITATIONS IMPOSED BY
SUBSECTIONS (b) AND (c) SHALL NOT BE APPLICABLE TO CLAIMS MADE BY BUYER
ARISING OUT OF A BREACH OF THE REPRESENTATIONS AND WARRANTIES CONTAINED
IN SECTIONS 5.2, 5.3, 5.11 AND 5.12 (THE "SPECIAL REPRESENTATIONS").
14.4 Coordination of Indemnification Rights.
(a) Except for any action seeking specific performance and/or
injunctive relief for the breach of any covenant contained in this
Agreement, or for common law fraud or deceit, the indemnification
provided any Person pursuant to this Article 14 shall be such
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Person's sole remedy for any breach by any Party hereto of any
representation, warranty or covenant contained in this Agreement, or in
any certificate (to the extent such certificates relate to matters
covered by the representations, warranties or covenants contained
herein) required to be delivered in connection herewith, or in
connection with the consummation of the transactions provided for
hereby.
(b) A Claim Notice in connection with any Section of this
Article 14 shall be deemed to be a Claim Notice in connection with all
Sections of this Article 14, pursuant to which the Person asserting
such claim has any right to be indemnified, defended or held harmless.
(c) Notwithstanding any provisions to the contrary contained
in this Article 14, the right of any Person to be indemnified, defended
or held harmless in connection with any claim pursuant to any Section
of this Article 14 shall be reduced to the extent that such Person is
or has been indemnified, defended and/or held harmless with respect to
such claim, pursuant to any other provisions of this Agreement or any
of the Related Agreements.
(d) In the event that an Indemnified Party has a right of
recovery against any third party with respect to any Damages in
connection with which a payment is made to such Indemnified Party by an
Indemnifying Party; then (i) such Indemnifying Party shall, to the
extent of such payment, be subrogated to all of the rights of recovery
of such Indemnified Party against such third party with respect to such
Damages; and (ii) such Indemnified Party shall execute all papers
required and take all action necessary to secure such rights,
including, but not limited to, the execution of such documents as are
necessary to enable such Indemnifying Party to bring suit to enforce
such rights.
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(e) In the event of any conflict between this Article 14 and
any other provisions of this Agreement, this Article 14 shall prevail,
provided this Article 14 shall be subject to the provisions of the
Environmental Agreement with respect to matters addressed in the
Environmental Agreement.
14.5 Right to Cure.
Any Party that is obligated to indemnify, defend and/or hold
harmless any Person pursuant to any provision of this Article 14 shall have the
right to cure, within a reasonable time, not to exceed thirty (30) days after
receipt of written notice, and in a manner reasonably satisfactory to such
Person, any matter giving rise to such obligation to the extent such matter
could reasonably be expected to be cured within such time period; provided,
however, that any such cure shall not relieve or reduce any such obligation to
the extent that such cure is inadequate.
14.6 Survival.
All of the representations, warranties and covenants of the
Parties set forth in this Agreement and the obligations of the Parties set forth
in this Article 14 shall survive the Closing.
ARTICLE 15
DISPUTE RESOLUTION
15.1 Dispute Resolution.
Any controversy or claim ("Claim"), whether based on contract,
tort, statute or other legal or equitable theory (including but not limited to
any claim of fraud, misrepresentation or fraudulent inducement or any question
of validity or effect of this Agreement including this section) arising out of
or related to this Agreement (including any amendments or extensions), or the
breach or termination thereof, shall be settled by mediation and consultations
between the
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Parties initiated upon the Notice of any Party. In the event of failure of such
mediation and consultations to settle such Claim in a manner acceptable to all
Parties within thirty (30) days following the Notice, then any such Claim shall
be settled by binding arbitration in accordance with this provision and the then
current CPR Institute for Dispute Resolution Rules for Non-Administered
Arbitration of Business Disputes. The arbitration shall be governed by the
United States Arbitration Act, 9 U.S.C. Sections 1-16, to the exclusion of any
provision of state law inconsistent therewith or which would produce a different
result, and judgment upon the award rendered by the arbitrator may be entered by
any court having proper jurisdiction.
15.2 Place.
The arbitration shall be in Houston, Texas.
15.3 Arbitrators.
There shall be three (3) independent and impartial arbitrators
of whom Seller appoints one (1) and Buyer appoints one (1) and the third of
which shall be appointed by the two (2) Party-appointed arbitrators in
accordance with the arbitration rules. The arbitrators shall determine the
Claims of the Parties and render a final award in accordance with the
substantive law of the State of Texas, excluding the conflicts provisions of
such law. The arbitrators shall set forth the reasons for the award in writing.
15.4 Statute of Limitations.
Subject to Section 14.4, any Claim by a Party for indemnity
under Sections 14(a)(i) or 14(b)(i) shall be time-barred if the asserting Party
commences arbitration with respect to such Claim later than two (2) years after
the Party becomes actually aware of such cause of action. All statutes of
limitations and defenses based upon passage of time applicable to any
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such Claim of a defending Party (including any counterclaim or setoff) shall be
tolled while the arbitration is pending.
15.5 Discovery.
The arbitrator shall order the Parties to promptly exchange
copies of all exhibits and witness lists, and, if requested by a Party, to
produce other relevant documents, to answer up to ten (10) interrogatories
(including subparts), to respond to up to ten (10) requests for admissions
(which shall be deemed admitted if not denied) and to produce for deposition
and, if requested, at the hearing all witnesses that such Party has listed and
up to four (4) other persons within such Party's control. Any additional
discovery shall only occur by agreement of the Parties or as ordered by the
arbitrator upon a finding of good cause.
15.6 Costs.
Unless otherwise specified by the arbitrator, each Party shall
bear its own costs, expenses and attorneys' fees; provided that if court
proceedings to stay litigation or compel arbitration are necessary, the Party
who unsuccessfully opposes such proceedings shall pay all reasonable associated
costs, expenses, and attorneys' fees in connection with such court proceeding.
15.7 Breach.
The Parties recognize that irreparable injury will result from
a breach of any provision of this Agreement and that money damages will be
inadequate to fully remedy the injury. In order to prevent such irreparable
injury, the arbitrator shall have the power to grant temporary or permanent
injunctive or other equitable relief. Prior to the appointment of an arbitrator
a Party may, notwithstanding any other provision of this Agreement, seek
temporary injunctive relief from any court of competent jurisdiction; provided
that the Party seeking such
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relief shall (if arbitration has not already been commenced) simultaneously
commence arbitration. Such court ordered relief shall not continue more than ten
(10) days after the appointment of the arbitrator (or in any event for longer
than sixty (60) days).
15.8 Consent to Jurisdiction.
The Parties hereby consent to the non-exclusive jurisdiction
of the state or federal courts of Texas for the enforcement of any award
rendered by the arbitrators.
ARTICLE 16
TECHNOLOGY TRANSFER
16.1 Intellectual Property Owned by Seller.
(a) Pursuant to the Related Agreements, Seller is licensing
certain Intellectual Property to Buyer for use at the Refinery and/or
in connection with the operation of the Assets, with respect to the
patented technology listed in Schedule 16.1(a): (i) HF Alkylation
Technology, (ii) Maxcat Coke Reduction Technology and (iii) Crude
Assays Database. The KEAS technology is provided for in Subsection
16.1(c) herein. Trademarks are excluded except as licensed under the
Trademark License Agreement.
(b) With respect to any other Intellectual Property owned by
Seller or its Affiliates and used or held for use in the Operations.
Seller hereby grants to Buyer a non-exclusive, royalty-free, fully
paid-up and perpetual license to use such Intellectual Property in
Buyer's operations. Such license rights shall be without the right of
Buyer to extend the use of such Intellectual Property to any other
activities, operations or facilities of Buyer and shall be without the
right of Buyer to sublicense such Intellectual Property to third
parties; however, such license shall be transferable by Buyer to any
subsequent owner of the Refinery without the consent of Seller.
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(c) Seller has rights to use Knock Engine Automation System
("KEAS") technology in Operations at the Refinery. Seller has
previously granted an exclusive license to this KEAS technology to
Waukesha Engine Division of Dresser Industries, Inc. ("Waukesha"). It
is understood that Seller will retain its rights to the KEAS technology
for use at other facilities but has no right to license this technology
to Buyer for use at the Refinery or otherwise; and therefore Buyer will
be required to obtain a license from the exclusive licensee (Waukesha)
in order to use this technology in Buyer's operation of the Assets.
Prior to Closing, Seller shall use reasonable efforts in an effort to
assist Buyer in obtaining a license to this technology from Waukesha in
a form and substance acceptable to Buyer. If Seller is unsuccessful in
obtaining a license from Waukesha for Buyer for this technology in a
form and substance satisfactory to Buyer, on or before Closing, Seller
will substitute equivalent assets or arrangement.
16.2 Licensed Technology.
(a) With respect to Licensed Technology used or held for use
in the Operations and that is held by Seller or its Affiliates with an
unrestricted right to sublicense to third parties (listed in Schedule
16.1(b) attached hereto), Seller hereby grants to Buyer a non-exclusive
sublicense, under each applicable license, to use such Licensed
Technology in Buyer's operations of the Assets. Such sublicense shall
be under the same terms and conditions under which Seller licenses the
Licensed Technology. Such sublicense shall be without the right to
extend to any other activities, operations or facilities of Buyer or to
any third parties. For the avoidance of doubt, Seller uses and will
continue to use this Licensed Technology in the operations of other
refineries of Seller.
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Such sublicense shall be transferable by Buyer to any subsequent owner
of the Refinery without the consent of Seller.
(b) With respect to any Licensed Technology used or held for
use in the Operations of the Assets and held by Seller or its
Affiliates without the unrestricted right to sublicense to third
parties (listed in Schedule 16.1(c) attached hereto), prior to Closing,
Seller agrees to use reasonable efforts to obtain from the licensor the
right of Buyer to continue to use such Licensed Technology in Buyer's
operations of the Assets under the same terms and conditions as those
under which Seller licenses such Licensed Technology provided that
Seller has provided such terms and conditions to Buyer. Any fees or
costs necessary to obtain such right on behalf of Buyer shall be paid
by Seller. Buyer may, at its option, notify Seller in writing of its
desire to negotiate directly with the licensor of such Licensed
Technology, and if Buyer enters into a direct licensing relationship
with such licensor, Seller shall be under no further obligation with
respect to such license.
(c) It is understood that Licensed Technology was acquired by
Seller subject to certain third party obligations. In any sublicense by
Seller to Buyer for the right to use any such third party Licensed
Technology under this Section, Buyer agrees to assume all obligations
related to Buyer's use of such Licensed Technology in its operations of
the Assets. In the event that Seller's rights to the Licensed
Technology are terminated, then Seller shall provide notice to Buyer of
such termination, as much before such termination as is reasonably
practicable under the circumstances, and in such event Seller will use
its reasonable efforts to accommodate Buyer's reasonable requests that
would enable Buyer to continue to use such Licensed Technology. The
foregoing shall not, however, obligate
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Seller to extend to Buyer or maintain for Buyer the right to use such
third party Licensed Technology in the same manner and to the same
extent as practiced by Seller prior to the Closing Date, where the
extension or maintenance of such right would be to the detriment of the
rights of Seller or any of its Affiliates to practice under its own
rights and licenses.
16.3 Confidential Technology Information
(a) "Confidential Technology Information" shall mean any
technical information or trade secrets of Seller that are made
available to Buyer for its use after Closing pursuant to Section
16.1(b) and that are marked confidential or which by their nature or
content should be reasonably understood to be confidential; provided,
however Confidential Technology Information shall not include any
information that: (i) was available to the public prior to, or becomes
available to the public subsequent to, the receipt of such Confidential
Technology Information by Buyer and through no fault of Buyer; or (ii)
was in the possession of Buyer prior to the receipt of such
Confidential Technology Information and was not acquired by Buyer from
a third party under an existing obligation of confidence; or (iii) is
subsequently received by Buyer from a third party without an obligation
of confidentiality; or (iv) is independently developed by an employee
or employees of Buyer not having direct access to such Confidential
Technology Information.
(b) For two years after the Closing Date, Buyer shall
maintain the Confidential Technology Information in confidence; shall
restrict the disclosure of Confidential Technology Information to only
those of its employees who require it in connection with Buyer's
operation of the Refinery and other Assets; shall not disclose
Confidential Technology Information to any third party; and shall not
use Confidential
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Technology Information for any purpose other than in connection with
Buyer's operation of the Refinery and other Assets.
(c) Nothing in this Article 16 shall restrict in any way the
right of Seller or its Affiliates to use or disclose or permit others
to use or disclose Confidential Technology Information which it
possesses and otherwise has a free right to use and disclose.
(d) Confidential Technology Information, which is required to
be disclosed, (i) by any applicable law, stock exchange rules or by any
applicable judgment, order or decree of any governmental entity having
jurisdiction or (ii) in connection with the preparation of tax returns,
communications with governmental authorities with respect thereto or
proceedings relating to taxes, may be disclosed, provided that Buyer
discloses such Confidential Technology Information to the least extent
practicable, and Buyer provides Seller with prompt and reasonable
notice thereof so that Seller may seek a suitable protective order or
other appropriate remedy and/or waive compliance with the provisions of
this Article 16. In the event that such protective order or other
remedy is not obtained or Seller waives compliance with the provisions
of this Article 16, and Buyer is required to disclose such Confidential
Technology Information, Buyer will furnish only that portion of the
Confidential Technology Information which Buyer is required to disclose
and, to the extent practicable, Buyer will exercise its best efforts to
obtain reliable assurance that confidential treatment shall be accorded
and such Confidential Technology Information so furnished.
(e) Buyer shall have a right to disclose Confidential
Technology Information to service providers, consultants, independent
contractors and government agencies, as required to operate the Assets
in the normal course of business (except that any Licensed
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Technology that is prohibited from disclosure pursuant to the terms of
the third party license agreement covering such confidential
information shall be subject to the restrictions on disclosure set
forth in such license agreement), but only if such recipient agrees to
be bound pursuant to a written obligation of confidentiality and nonuse
comprising restrictions at least as stringent as provided herein, and
provided that Buyer and the recipients comply with the restrictions and
obligations of any grants, assignments, licenses or sublicenses of any
Intellectual Property or Licensed Technology.
16.4 Limitation of Warranties.
ANY ORAL OR WRITTEN REPORT, DATA OR OTHER INFORMATION PROVIDED
TO BUYER PURSUANT TO THIS ARTICLE 16, WHETHER PROVIDED UNDER LICENSE OR
OTHERWISE, SHALL BE PROVIDED ON AN "AS IS" BASIS WITHOUT ANY WARRANTIES, EXPRESS
OR IMPLIED INCLUDING BUT NOT LIMITED TO THE RESULTS OR EFFECTS OBTAINED THROUGH
USE OF INFORMATION, OR THAT IT IS FIT FOR ANY USE INTENDED OR CAN BE USED
WITHOUT INFRINGING THE PATENT OR COPYRIGHT RIGHTS OF A PERSON. WITHOUT ANY
LIMITATION ON THE PRECEDING, ANY IMPLIED WARRANTY OR MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE IS EXPRESSLY EXCLUDED FROM THIS ARTICLE 16 WITH RESPECT
TO ANY INFORMATION PROVIDED UNDER THIS ARTICLE 16. IN NO EVENT WILL ANY PARTY BE
LIABLE FOR LOSS OF PROFITS, OR INDIRECT, CONSEQUENTIAL (EXCEPT FOR BREACH OF
CONFIDENTIALITY) OR SPECIAL DAMAGES RESULTING FROM THE OTHER PARTY'S USE OR
DISCLOSURE OF ANY INFORMATION. The use by Buyer of Intellectual Property or
Confidential Technology Information disclosed under this Article 16 by
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Seller to Buyer shall be solely at Buyer's own risk and Seller shall not be
liable for any damage resulting from inaccuracy, incorrectness, unsoundness,
and/or unreliability in the use thereof, whether or not such liability is cause
by the negligence of Seller.
16.5 Default.
In the event that any Party hereunder for a period of thirty
(30) days fails materially to perform any of its material obligations or
materially violates any material provisions of this Article 16, a nondefaulting
party may give written notice to the other Party to this Article 16 specifying
the particulars of such failure or violation (hereinafter "Default") and, in the
event the defaulting party shall not remedy or begin to remedy such Default
within thirty (30) days after receipt of such notice, the nondefaulting party
may entirely at its option, in addition to any of the other rights and remedies
permitted under this Agreement, on ten (10) days' written notice to the other
party seek specific performance and/or damages pursuant to the Dispute
Resolution provisions of Article 15. The failure of a Party to insist upon
strict adherence with respect to a Default shall not be construed as a waiver or
deprive the nondefaulting party of the right to insist upon strict adherence to
any provision of this Article 16 or to proceed under this Section 16.5 either
with respect to such alleged Default or similar subsequent Defaults.
16.6 Export Control.
Buyer agrees to comply with any applicable U.S. export control
laws and regulations in regard to any information or data covered by this
Article 16.
ARTICLE 17
RISK OF LOSS
The risk of damage, destruction, or other loss to or of the
Assets shall remain with Seller from and after the execution of this Agreement
and until the Effective Time, at which time
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Seller shall place Buyer in possession of the Assets; and from and after the
Effective Time, all risks of damage, destruction, or other casualty loss to or
of the Assets (to the extent not attributable to any breaches of a
representation, warranty, covenant or agreement of Seller hereunder or under the
Related Agreements) shall be borne solely by Buyer.
ARTICLE 18
COMMISSIONS AND FINDER'S FEES
With the exception of Bank of America Securities LLC, whose
services have been retained by Seller, Seller represents and warrants to Buyer,
and Buyer represents and warrants to Seller, that it has not engaged any broker,
finder, or agent in connection with the transactions contemplated hereunder and
has not incurred any unpaid liability to any broker, finder, or agent for any
brokerage fees, finder's fees, or commissions with respect to such transactions;
and each agrees to indemnify the other against any claims asserted against the
other for any such fees or commissions by any Person purporting to act or to
have acted for or on behalf of the Indemnifying Party.
ARTICLE 19
TERMINATION
19.1 Termination.
This Agreement and the transactions contemplated hereby may be
terminated at any time prior to the Closing:
(a) by mutual consent of Seller and Buyer;
(b) by Seller or Buyer by written notice to the other provided
that the Party desiring to terminate this Agreement is not in material
default of any of its obligations hereunder, if the Closing shall not
have occurred on or before May 1, 2003;
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(c) by Seller or Buyer if the other Party fails to materially
comply with its covenants and obligations in this Agreement; provided
that the Terminating Party must give the defaulting Party at least
thirty (30) days prior notice of such failure and the failure is not,
or cannot be cured before expiration of such thirty (30) day period; or
(d) Seller or Buyer may terminate this Agreement by written
notice to the other, if the Antitrust Regulatory Authorities reject the
sale of the Assets by Seller to Buyer; or
(e) Seller may terminate this Agreement by written notice to
the Buyer if Seller has not otherwise received approval by the
Antitrust Regulatory Authorities for the sale of the Assets by Seller
to Buyer within ninety (90) days following the completion of all
required filings by the Parties with the Applicable Regulatory
Authorities.
19.2 Effect of Termination.
If a Party terminates this Agreement under Section 19.1, then
this Agreement shall become null and void and have no effect, except that the
agreements contained in this Article 19 and 20.13 and 20.14 shall survive the
termination hereof. Nothing in this Section 19.2 shall relieve either Party from
liability as a result of a willful breach of this Agreement.
19.3 Deposit.
Upon any termination of this Agreement pursuant to this
Article 19 the Deposit shall, within five (5) business days of such termination
be returned to Buyer with interest at the Base Rate, unless (i) Seller has
satisfied all of its obligations under this Agreement, (ii) all conditions
precedent to Buyer's obligation to close as set forth in Article 7 hereof have
been satisfied but for such failure or condition resulting from the willful
breach of Buyer and (iii) the termination is due to the willful breach of Buyer,
whereupon, Seller will be entitled to retain the
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Deposit plus the accrued interest thereon. Upon Closing of the transactions
contemplated by this Agreement, the Deposit plus accrued interest at the thereon
will be credited against the Purchase Price.
ARTICLE 20
MISCELLANEOUS
20.1 Entire Agreement; Amendments.
This Agreement and the Related Agreements, including their
Exhibits and Schedules, and other writings referred to herein or delivered
pursuant hereto which form a part hereof, including, without limitation, the
Confidentiality Agreement between Seller and Buyer dated June ____, 2002,
contain the entire understanding of the Parties with respect to the subject
matter hereof. There are no restrictions, agreements, promises, warranties,
covenants, or undertakings other than those expressly set forth herein or
therein. This Agreement and the Related Agreements supersede any and all prior
agreements and understandings between the Parties with respect to the subject
matter hereof. This Agreement shall not be amended, altered, or modified except
by an instrument in writing duly executed by the Parties hereto.
20.2 Invalidity.
If any provision of this Agreement is held to be illegal,
invalid, or unenforceable under any present or future laws, such provision shall
be fully severable; this Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part of this
Agreement; and the remaining provisions of this Agreement shall remain in full
force and effect, unaffected by the illegal, invalid or unenforceable provision
or by its severance from this Agreement. In lieu of such illegal, invalid, or
unenforceable provision, there shall be
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added automatically as a part of this Agreement a provision as similar in terms
to such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
20.3 Effect of Waiver or Consent.
No waiver or consent, express or implied, by any Party to or
of any breach or default by any other Party in the performance by such other
Party of its obligations hereunder shall be deemed or construed to be a consent
or waiver to or of any other or subsequent breach or default in the performance
by such other Party of the same or any other obligations of such other Party
hereunder. Failure on the part of a Party to exercise its rights or to complain
of any act of the other Party or to declare the other Party in default,
irrespective of how long such failure continues, shall not constitute a waiver
by such Party of its rights hereunder until the applicable statute of limitation
period has run.
20.4 Limitation on Benefits of this Agreement.
No person or entity other than the Parties hereto (or their
respective successors or assigns as permitted hereunder) is or shall be entitled
to bring any action to enforce any provision of this Agreement against either of
the Parties hereto, and the covenants, undertakings, and agreements set forth in
this Agreement shall be solely for the benefit of, and shall be enforceable only
by, the Parties hereto (or their respective successors and assigns as permitted
hereunder).
20.5 Notices.
All notices, demands, requests, or other communications which
may be or are required to be given, served, or sent by either Party to the other
Party pursuant to this Agreement shall be in writing and shall be (i) mailed by
first-class, registered or certified mail, return receipt requested, postage
prepaid; (ii) transmitted by hand or courier delivery; or (iii) sent by
telegram, facsimile, or telex, addressed in each case as follows:
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(i) If to Buyer: HOLLY CORPORATION
100 Crescent Court, Suite 1600
Dallas, TX 75201-6927
Attn: General Counsel
Facsimile: 214-871-3523
With a copy (which shall not constitute notice) to:
Alan Bogdanow, Esq.
Vinson & Elkins L.L.P.
3700 Trammell Crow Center
2001 Ross Avenue
Dallas, TX 75201
Facsimile: 214-220-7716
(ii) If to Seller:
William L. McClain
Deputy General Counsel
ConocoPhillips Legal Department
600 North Dairy Ashford
Houston, Texas 77079
Facsimile: 281-293-3700
With a copy (which shall not constitute notice) to:
John Barr, Manager
Downstream Strategy and
Business Development
ConocoPhillips Legal Department
600 North Dairy Ashford
Houston, Texas 77079
Facsimile: 281-293-6947
Each Party may designate by prior notice in writing a new
address to which any notice, demand, request, or communication may thereafter be
so given, served, or sent. Each notice, demand, request, or communication which
shall be mailed, delivered, or transmitted in the manner described above shall
be deemed sufficiently given, served, sent, and received for all purposes at
such time as it is actually delivered to the appropriate above listed or
properly changed address or at such time as delivery is refused upon actual
presentation at such address
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(with the return receipt, the delivery receipt, the affidavit of messenger, or
the facsimile answerback being deemed prima facie evidence of such delivery).
20.6 Binding Effect.
Subject to the provisions hereof restricting assignment, this
Agreement shall be binding upon and shall inure to the benefit of the Parties
hereto and their respective successors and permitted assigns.
20.7 Additional Actions and Documents.
Each of the Parties hereby agrees to take or cause to be taken
such further actions to execute, deliver and file or cause to be executed,
delivered and filed such further documents and instruments, and to use all
reasonable efforts to obtain such consents, as may be necessary or as may be
reasonably requested in order to fully effectuate the purposes, terms and
conditions of this Agreement, whether before, at or after the closing of
transactions contemplated by this Agreement, provided that neither Party shall
be obligated to make payments or incur obligations to third Parties or
governmental agencies in connection therewith except to pay such Party's
reasonable expenses or to pay normal fees to governmental agencies.
20.8 Schedules.
Each Party reserves the right to supplement any schedule to
make revisions, corrections, additions or other changes at any time prior to
Closing necessary to make such Schedule accurate and complete, provided that (i)
any such revisions, corrections, additions or other changes do not have a
material adverse impact on the operation or value of the Assets and (ii) the
other Party consents to such supplement.
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20.9 Place of Transfer of Title and Possession.
Title to and possession of the Assets as of the Closing shall
pass to Buyer in the States of Colorado and Wyoming. Title to and possession of
any Seller inventory in transit as of the Closing shall pass to Buyer at the
place where it is then situated.
20.10 Execution in Counterparts.
This Agreement may be executed simultaneously in several
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
20.11 Choice of Law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, without regard to the conflict
of laws principles of Texas, and applicable United States federal law.
20.12 Publicity.
At all times prior to the Effective Time, Seller and Buyer
shall, and shall use their reasonable efforts to cause their Affiliates to,
cooperate in the development and distribution of all news releases and other
public disclosures relating to the proposed transactions described in this
Agreement, and to ensure that no such releases or disclosures are made without
prior notice to, and the consent of, the other Party; provided, however, that at
all times prior to the Effective Time and after the Effective Time no news
release or other disclosure whatsoever may disclose the terms of this Agreement
unless both Parties agree to the form and content of such disclosure, each being
under no obligation to agree and having the right to withhold agreement for any
reason; provided, however, that either Party may make all disclosures which are
required under applicable Legal Requirements, including, but not limited to,
regulations of the Securities and
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Exchange Commission with such Party giving the other Party as much advance
notice thereof as is feasible.
20.13 Confidentiality.
(a) This Agreement, the Related Agreements, the data and
information provided by Seller to Buyer related to the Assets and the
sale of the Assets to Buyer, and the discussions and negotiations
between Seller and Buyer related to this transaction (collectively,
"Transaction Information") are confidential, and Seller and Buyer shall
each maintain the confidentiality of the Transaction Information until
the Effective Time. Seller and Buyer shall use reasonable efforts not
to make disclosure of the Transaction Information to any Person, other
than its officers, employees, advisers and representatives (or the
Antitrust Regulatory Authorities) to whom such disclosure is necessary
or convenient for the completion of the transactions contemplated by
this Agreement, or any of the Related Agreements, and except in an
arbitration proceeding as described in Article 15 or as may be required
by a court of competent jurisdiction. Seller and Buyer shall
appropriately notify each officer, employee, adviser and representative
to whom any such disclosure is made, that such disclosure is made in
confidence and shall be kept in confidence. Nothing herein shall
prohibit the Parties from disclosing the Transaction Information as may
be required under applicable securities laws or regulations.
(b) Each of Seller and Buyer shall use diligent efforts in
accordance with customary and reasonable commercial practice, and at
least with the same degree of skill and care that it would manifest in
protection of its own confidential information, to protect the
Transaction Information.
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(c) Each of the Parties shall notify the other promptly, in
the event that it becomes aware of the unauthorized possession or use
of the Transaction Information (or any part thereof) by any third
Person, including any of its officers, employees, advisers or
representatives. Seller and Buyer shall cooperate with the other in
connection with the other's efforts to terminate or prevent such
unauthorized possession or use of its Transaction Information. The
Party which allowed or made the disclosure of Transaction Information
to an unauthorized third party shall pay the other's reasonable
out-of-pocket expenses in so cooperating in protecting its Transaction
Information, unless the unauthorized possession or use of the
Transaction Information resulted from the willful misconduct or gross
negligence of the Party otherwise entitled to reimbursement of its
expenses.
(d) Each of Seller and Buyer acknowledges that the other will
suffer injury for which the other will not have an adequate remedy at
law, in the event of a breach of the provisions of this Section 20.13,
and that the other shall be entitled to injunctive relief as is
reasonably necessary to prevent or curtail such breach, whether actual
or threatened; provided, that, in no event (including, but not limited
to, a willful breach of this Agreement by Seller or Buyer,
respectively) shall Seller or Buyer be prevented from exercising all of
the rights granted to it hereunder.
(e) Notwithstanding any other provision of this Agreement, the
obligations of each of Seller and Buyer to maintain the confidentiality
of the Transaction Information (each in such capacity a "Disclosing
Party") shall not apply to any portion of the Transaction Information
that:
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(i) is or becomes generally available to the public
through no fault of the Disclosing Party, including
information in the public domain;
(ii) the Disclosing Party receives from a third party
without any requirement to keep such information secret;
(iii) the Disclosing Party can prove was in its
possession without any obligation of secrecy at the time of
its disclosure; or
(iv) the Disclosing Party develops independently of
and without reference to or use of the Transaction
Information.
(f) Seller acknowledges and agrees that, as of the Effective
Time, nothing herein shall restrict the use by Buyer of the Records,
the same becoming property of the Buyer as a consequence of the
transactions contemplated herein. Except for Records, Buyer shall not
use the Transaction Information for any purpose other than the
evaluation of the transactions contemplated hereunder.
(g) In the event of any inconsistency between the provisions
of this Section 20.13 and the confidentiality provisions of any Related
Agreement, the provisions of the Related Agreement shall control with
respect to any matters addressed by such Related Agreement.
(h) The provisions of this Section 20.13 shall remain in force
for a period of two (2) years from the Effective Time.
(i) If the Closing does not occur, Buyer shall within twenty
(20) days after receiving a written request from Seller return to
Seller all written Confidential Technical Information which is not a
Record, including all photocopies of the same.
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20.14 Costs and Expenses.
Except as expressly provided herein, or in any Related
Agreement, each of the Parties to this Agreement, and the Related Agreements,
shall bear its own expenses incurred in connection with the negotiation,
preparation, execution and Closing of this Agreement, and the Related
Agreements, and the transactions provided for hereby and thereby.
20.15 Assignment.
Seller may upon written notice to Buyer transfer or assign any of its
rights but not its obligations under this Agreement to an Affiliate of Seller
which is directly or indirectly wholly- owned by ConocoPhillips. Buyer may upon
written notice to Seller transfer its rights and obligations under this
Agreement to a direct or indirect wholly owned subsidiary of Buyer. Even if
consent is obtained, no Party may make an assignment or delegation, above,
unless such Party delivers to the other Party hereto such written assumptions,
affirmations and/or legal opinions as such other Party may reasonably request to
preserve their rights and remedies hereunder, and Seller and Buyer shall remain
liable to each other for their respective obligations under this and the related
Agreements, notwithstanding any assignment, unless otherwise relieved in writing
by the other Party. This Agreement shall inure to the benefit of and will be
binding upon the Parties hereto and their respective legal representatives,
successors and permitted assigns.
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers or representatives of Buyer and Seller
as of the day and year first above written.
BUYER: HOLLY CORPORATION
By: /s/ MATTEW P. CLIFTON
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Name: MATTEW P. CLIFTON
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Title: PRESIDENT
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SELLER: PHILLIPS PETROLEUM COMPANY
By: /s/ ROBERT HOLTSMITH
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Name: ROBERT HOLTSMITH
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Title: MANAGER, BUSINESS DEVELOPMENT
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