ASSET PURCHASE AGREEMENT
Exhibit 2.1
Execution Copy
By and Between
EQUILON ENTERPRISES LLC
d/b/a
SHELL OIL PRODUCTS US
(Seller)
d/b/a
SHELL OIL PRODUCTS US
(Seller)
and
TESORO REFINING AND MARKETING COMPANY
(Buyer)
(Buyer)
Purchase and Sale of the Shell Los Angeles Refinery and
Related Assets
January 29,
2007
4.16 | Financial Statements |
27 | ||||||
ARTICLE V | BUYER’S REPRESENTATIONS AND WARRANTIES |
27 | ||||||
5.01 | Organization and Good Standing |
27 | ||||||
5.02 | Authority |
27 | ||||||
5.03 | Consents |
28 | ||||||
5.04 | No Breach, Conflict |
28 | ||||||
5.05 | Litigation |
28 | ||||||
5.06 | Brokers |
28 | ||||||
5.07 | Availability of Funds |
28 | ||||||
5.08 | Independent Decision |
28 | ||||||
ARTICLE VI | COVENANTS AND AGREEMENTS OF SELLER |
29 | ||||||
6.01 | Access and Information |
29 | ||||||
6.02 | Conduct of Business |
29 | ||||||
6.03 | Schedules |
31 | ||||||
6.04 | Financial Statements |
31 | ||||||
6.05 | Turnaround Activities |
32 | ||||||
6.06 | HGU Xxxx |
00 | ||||||
6.07 | Easement Access |
32 | ||||||
ARTICLE VII | COVENANTS AND AGREEMENTS OF BUYER |
32 | ||||||
7.01 | Confidentiality |
32 | ||||||
7.02 | Pre-Closing Access and Inspections |
32 | ||||||
7.03 | Post-Closing Access |
33 | ||||||
7.04 | Litigation |
33 | ||||||
7.05 | Trademarks |
33 | ||||||
7.06 | Environmental Insurance Policy |
34 | ||||||
7.07 | Third Party Property |
34 | ||||||
ARTICLE VIII | COVENANTS AND AGREEMENTS OF SELLER AND BUYER |
34 | ||||||
8.01 | HSR |
34 | ||||||
8.02 | Assignments |
34 | ||||||
8.03 | Transition Services |
35 | ||||||
8.04 | Other Governmental Approvals |
36 | ||||||
8.05 | Other Actions |
36 | ||||||
8.06 | Collection of Amounts Owed to a Party |
36 | ||||||
8.07 | Repairs |
36 | ||||||
8.08 | Payment of
Certain Expenses Due and Payable After the
Closing Date |
37 |
-ii-
8.09 | Relationship of the Parties |
37 | ||||||
8.10 | Environmental Consents/Waivers/Amendments |
38 | ||||||
8.11 | Title Policies |
38 | ||||||
8.12 | POTW PERMIT |
38 | ||||||
8.13 | Further Assurances |
38 | ||||||
ARTICLE IX | TECHNOLOGY TRANSFER |
39 | ||||||
9.01 | Grants to Intellectual Property |
39 | ||||||
9.02 | Exclusions to Grant of Section 9.01 |
39 | ||||||
9.03 | Transfer of Intellectual Property |
39 | ||||||
9.04 | Licensed Technology Rights |
39 | ||||||
9.05 | Term and Termination |
41 | ||||||
9.06 | Representations and Warranties |
41 | ||||||
9.07 | Export Control |
41 | ||||||
9.08 | Miscellaneous |
41 | ||||||
ARTICLE X | EMPLOYEES |
42 | ||||||
10.01 | Employees and Employee Benefits |
42 | ||||||
ARTICLE XI | BUYER’S OBLIGATION TO CLOSE |
42 | ||||||
11.01 | Compliance with Agreement |
42 | ||||||
11.02 | Representations and Warranties |
42 | ||||||
11.03 | Closing Deliverables |
42 | ||||||
11.04 | Litigation |
42 | ||||||
11.05 | Governmental Consents |
43 | ||||||
11.06 | Taking of Purchased Assets |
43 | ||||||
11.07 | Adverse Change |
43 | ||||||
11.08 | Environmental Consents/ Waivers/Amendments |
43 | ||||||
11.09 | Required Consents and Authorizations |
44 | ||||||
11.10 | Regulatory Approvals |
44 | ||||||
11.11 | Turnaround Activities |
44 | ||||||
11.12 | Retail Asset Purchase |
44 | ||||||
11.13 | Title Policies |
44 | ||||||
11.14 | Surveys |
44 | ||||||
ARTICLE XII | SELLER’S OBLIGATION TO CLOSE |
44 | ||||||
12.01 | Compliance with Agreement |
44 | ||||||
12.02 | Representations and Warranties |
44 | ||||||
12.03 | Closing Deliverables |
45 |
-iii-
12.04 | Litigation |
45 | ||||||
12.05 | Governmental Consents |
45 | ||||||
12.06 | Environmental Consents/Waivers/Amendments |
45 | ||||||
12.07 | Retail Asset Purchase |
45 | ||||||
ARTICLE XIII | INDEMNIFICATION |
45 | ||||||
13.01 | Buyer’s Indemnification of Seller |
45 | ||||||
13.02 | Seller’s Indemnification of Buyer |
46 | ||||||
13.03 | Environmental Indemnifications |
47 | ||||||
13.04 | Exclusive Remedy |
47 | ||||||
13.05 | Procedures
Relating to Indemnification Between Buyer and Seller |
47 | ||||||
13.06 | Procedures Relating to Indemnification for Third Party Claims |
48 | ||||||
13.07 | Losses Net of Insurance |
49 | ||||||
13.08 | Survival of Representations and Warranties |
49 | ||||||
13.09 | Limitations on Indemnification |
49 | ||||||
13.10 | Mitigation |
50 | ||||||
13.11 | Subrogation |
50 | ||||||
ARTICLE XIV | TAXES |
50 | ||||||
14.01 | Transfer Taxes |
50 | ||||||
14.02 | Real Property Taxes |
51 | ||||||
14.03 | Personal Property Taxes |
51 | ||||||
14.04 | Tax Allocation |
51 | ||||||
14.05 | Tax Election |
51 | ||||||
14.06 | Tax Assistance |
51 | ||||||
14.07 | Operating Taxes |
52 | ||||||
14.08 | Childhood Lead Poisoning Prevention Fees |
52 | ||||||
ARTICLE XV | TERMINATION RIGHTS |
52 | ||||||
15.01 | Termination |
52 | ||||||
15.02 | Extended Termination Date |
52 | ||||||
15.03 | Notice of Termination |
53 | ||||||
15.04 | Effect of Termination |
53 | ||||||
15.05 | Specific Performance |
53 | ||||||
15.06 | Cross Default |
54 | ||||||
ARTICLE XVI | MEDIATION/ARBITRATION |
54 | ||||||
16.01 | Dispute Resolution |
54 | ||||||
16.02 | Seat of the Arbitration and Governing Law |
54 |
-iv-
16.03 | Selection
and Appointment of
Arbitrator(s) |
55 | ||||||
16.04 | Pre-Hearing
Procedure and
Disposition |
56 | ||||||
16.05 | Discovery |
56 | ||||||
16.06 | Awards and
Relief |
56 | ||||||
16.07 | Effect of
Failure to
Participate or to
Pay Advances of
Costs and Fees |
57 | ||||||
16.08 | Adherence to
Time Limits |
57 | ||||||
16.09 | Interim
Measures from the
Courts in Aid of
Arbitration |
58 | ||||||
16.10 | Consent to
Jurisdiction |
58 | ||||||
16.11 | Confidentiality |
58 | ||||||
16.12 | Survival |
58 | ||||||
ARTICLE XVII | MISCELLANEOUS |
58 | ||||||
17.01 | Notices |
58 | ||||||
17.02 | Governing
Law; Submission to
Jurisdiction |
59 | ||||||
17.03 | Publicity |
59 | ||||||
17.04 | Entire
Agreement |
60 | ||||||
17.05 | Assignment |
60 | ||||||
17.06 | Amendment
and Waiver |
60 | ||||||
17.07 | Expenses |
60 | ||||||
17.08 | Schedules |
61 | ||||||
17.09 | Representation By Counsel |
61 | ||||||
17.10 | Severability |
61 | ||||||
17.11 | Bulk
Transfer Laws |
61 | ||||||
17.12 | No Third
Party Beneficiaries |
61 | ||||||
17.13 | Binding
Effect |
61 | ||||||
17.14 | Confidentiality |
61 | ||||||
17.15 | Counterparts |
63 |
-v-
SCHEDULES
SCHEDULE | DESCRIPTION | |
1.01A
|
Blend Plant Personal Property | |
1.01B
|
Excluded Assets | |
1.01C
|
Excluded Contracts | |
1.01D
|
Knowledge Individuals | |
1.01E
|
Additional Permitted Encumbrances | |
1.01F
|
Personal Property | |
1.01G
|
Pipeline Assets | |
1.01H
|
Rolling Stock (Rail Cars) | |
1.01I
|
Third Party Property | |
1.01J
|
Emissions Credits | |
2.08(a)
|
Subdivision Map | |
4.03
|
Consents | |
4.04(a)
|
Refinery Real Property | |
4.04(b)
|
SRP Real Property | |
4.04(c)
|
LBT Real Property | |
4.04(d)
|
Pipeline Easements | |
4.04(i)
|
Condemnation Proceedings | |
4.06
|
Title Exceptions | |
4.08
|
Permits | |
4.09
|
Actions and Proceedings | |
4.10
|
Contracts and Commitments | |
4.13
|
Affiliate Agreements | |
4.15
|
Labor Matters | |
6.03(b)
|
Schedules to Be Provided |
-vi-
SCHEDULE | DESCRIPTION | |
6.05
|
Turnaround Activities | |
8.10
|
Environmental Consents, Waivers and Amendments | |
9.04(a)
|
Assignable Licensed Technology Rights | |
9.04(b)
|
Non-Assignable Licensed Technology Rights | |
9.06(b)
|
Representations and Warranties — Intellectual Property | |
10.01
|
Employees | |
11.09
|
Closing Consents | |
14.04
|
Tax Allocation |
EXHIBITS
EXHIBIT | DESCRIPTION | |
A-l |
Inventory Determination Procedures | |
A-2 |
Inventory Valuation Methodology | |
B |
Form of Deed for Refinery Real Property and SRP Real Property | |
C |
Form of Assignment and Assumption of LBT Lease | |
D |
Form of Blend Plant Lease | |
E |
Form of Blend Plant Memorandum of Right to Reconveyance | |
F |
Form of Transition Services Agreement | |
G |
Form of HSE Agreement | |
H |
Form of Blend Plant Shared Services Agreement | |
I |
Form of Crude Supply Agreement | |
J |
Form of Product Purchase Agreement | |
K |
Form of Terminalling Agreement | |
L |
Form of Products Exchange Agreement | |
M |
Technology Transfer Agreements |
-vii-
This ASSET PURCHASE AGREEMENT for the purchase and sale of assets (“Agreement”), is
made and entered into as of January 29, 2007, by and between EQUILON ENTERPRISES LLC d/b/a Shell
Oil Products US, a Delaware limited liability company (“Seller”), and TESORO REFINING AND
MARKETING COMPANY, a Delaware company (“Buyer”).
W I
T N E S S E T H:
WHEREAS, Seller is the owner of a crude oil refinery complex commonly known as the
Los Angeles Refinery located in the cities of Los Angeles, California and Wilmington, California;
WHEREAS, Seller desires to sell or cause the sale of the Purchased Assets, as hereinafter
defined; and
WHEREAS, Buyer desires to buy the Purchased Assets on the terms and conditions contained in
this Agreement.
NOW, THEREFORE, in consideration of the mutual promises made herein and for other good and
valuable consideration, the receipt and sufficiency of which is hereby expressly acknowledged, and
subject to the conditions hereinafter set forth, the Parties agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
1.01 Definitions. Terms that are defined in Sections other than this
Section 1.01 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:
“1031 Exchange” has the meaning set forth in Section
14.05.
“AAA Rules” has the meaning set forth in Section 16.01.
“Affiliate” means, with respect to any specified Person, any other Person that directly or
indirectly through one or more intermediaries controls, or is controlled by, or is under common
control with, such specified Person. For the purposes of this definition, “control” (including,
with correlative meanings, the terms “controlling,” “controlled by” and “under common control
with”), as used with respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such Person, whether
through the ownership of voting securities, by agreement or otherwise. It is understood that (i) an
entity (hereinafter referred to as the “parent entity”) directly “controls” another entity
(hereinafter referred to as the “controlled entity”) if the parent entity holds shares or
equivalent ownership interest or contractual rights carrying more than fifty percent (50%) of the
votes exercisable at a general meeting (or its equivalent) of the controlled entity or the right to
appoint a majority of the members of the board of directors (or its equivalent) of the controlled
entity, and (ii) a parent entity indirectly “controls” a controlled entity if a series of entities
can be specified beginning with the parent entity and ending with the controlled entity such that
each entity of the series owns, either directly or through one or more entities in the series, more
than a fifty percent (50%) interest in a later entity in the series or otherwise holds (directly or
indirectly) the rights with respect to the controlled entity.
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“Agreement” has the meaning set forth in the preamble.
“Applicable Law” means any applicable statute, law, ordinance, code (including the Code),
rule or regulation of any Governmental Authority and any applicable order, decision, injunction,
judgment, award and decree or consent of or agreement with any Governmental Authority.
“Arbitration Notice” has the meaning set forth in Section
16.01.
“Assumed Liabilities” has the meaning set forth in
Section 2.05(a).
“Blend Plant Assets” means the Blend Plant Real Property, the Blend Plant Improvements and
the Blend Plant Personal Property.
“Blend Plant Deed” has the meaning set forth in Section 2.08(c).
“Blend Plant Improvements” means any and all buildings, structures, fixtures or other
improvements owned by or leased to Seller that are attached or affixed to the Blend Plant Real
Property including blending units, storage tanks, control houses, loading racks and other
facilities.
“Blend Plant Lease” has the meaning set forth in Section 2.08(b)(v).
“Blend Plant Memorandum of Right to Reconveyance” has the meaning set forth in Section
2.08(e)
“Blend Plant Personal Property” means the lube oil blend plant located on the Blend Plant
Real Property and associated lube truck loading rack and lube tankage and all raw material,
intermediate product and finished product inventories, all as more particularly described on
Schedule 1.01 A, including furnishings, furniture, computer hardware, telecommunications
equipment, fittings, machinery, tools, spare parts, apparatus, tanks, meters, pumps, engines,
compressors, pipes, valves, connections, regulators, sewers, appliances, signs and all other
articles of tangible personal property of every kind whatsoever in all cases owned by or leased to
Seller that in the normal course of business are located on the Blend Plant Real Property or are
used in or held for use by Seller primarily in the operations of such blend plant.
“Blend Plant Real Property” has the meaning set forth in Section 2.08(a)(i).
“Business Day” means any day other than a Saturday, Sunday or other day on which commercial
banks in Los Angeles, California are authorized by law to close.
“Buyer” has the meaning set forth in the preamble.
“Buyer Indemnified Party(ies)” has the meaning set forth in Section 13.02.
“Casualty” means damage to or destruction by fire or other casualty to all or any portion of
the Refinery.
“Claim” means a dispute, claim, or controversy whether based on contract, tort, strict
liability, statute or other legal or equitable theory (including any claim of fraud,
misrepresentation or fraudulent inducement or any question of validity or effect of an agreement).
“Claim Notice” has the meaning set forth in Section 13.05.
“Closing” means the closing of the purchase and sale contemplated hereunder.
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“Closing Date” means the time and date established for the Closing pursuant to
Section 3.01.
“Closing Date Payment” has the meaning set forth in Section
2.03.
“Code” means the Internal Revenue Code of 1986, as amended.
“Commercial
Agreements” means the agreements listed in Section 3.02(c)(vii).
“Commitments”
has the meaning set forth in Section 4.10.
“Confidentiality Agreement” means that certain Confidentiality Agreement between Seller and
Buyer dated August 7, 2006.
“Confidential Information” has the meaning set forth in Section 17.14(a).
“Contemplated Transactions” means all of the transactions contemplated by this Agreement,
including: (A) the sale of the Purchased Assets to Buyer; (B) the execution and delivery of the
Related Agreements; (C) the performance by the Parties of their respective covenants and
obligations under this Agreement; and (D) Buyer’s acquisition and ownership of the Purchased
Assets. The term “Contemplated Transactions” does NOT include the transactions contemplated by
the Retail Asset Purchase Agreement.
“Contract” means any contract, agreement, commitment, lease or other obligation or
arrangement (whether written or oral), and any responsibility, liability, cost or expense of
whatever kind or nature relating to the foregoing in all cases that arise out of, or is incurred
in connection with, the ownership or use of the Purchased Assets or the Operations, but excluding
any Employee Benefit Plan and any Excluded Contract.
“Defaulting Party” has the meaning set forth in Section 15.06.
“Deliverable Items” has the meaning set forth in Section 9.08.
“Dispute” has the meaning set forth in Section 16.01.
“DOJ” has the meaning set forth in Section 8.01.
“Effective Time” has the meaning set forth in Section 3.03.
“Electing Party” has the meaning set forth in Section 14.05.
“Emissions Credits” means those emissions credits described on Schedule 1.01J.
“Employee” has the meaning set forth in Section 10.01(c) on Schedule 10.01.
“Employee Benefit Plan” means any “employee benefit plan”, as such term is defined in Section
3(3) of ERISA, whether or not subject to ERISA, and any bonus, incentive or deferred compensation,
severance, termination, retention, supplemental unemployment benefit, premium reduction, mortgage
assistance, employee loan, change of control, stock option, stock appreciation, stock purchase,
phantom stock or other equity-based, performance or other employee or retiree benefit or
compensation plan, program, arrangement, agreement, policy or understanding, whether written or
unwritten, funded or unfunded, registered or unregistered, that provides or may provide benefits or
compensation in respect of any Employee or the beneficiaries or dependents of any such Employee or
under which any Employee is
Refinery Asset Purchase Agreement
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or may become eligible to participate or derive a benefit and that is or has been
established, maintained or contributed to by Seller or its Affiliates.
“Employment Commencement Date” means the Effective Time, except that in the case of any
Transferred Employee who is an Inactive Employee at the Effective Time, “Employment Commencement
Date” shall mean the date, if ever, on which such Transferred Employee returns to active
employment in the Operations.
“Equipment” means all furnishings, furniture, computer hardware, telecommunications equipment,
fittings, machinery, refining process units, tools, spare parts, apparatus, tanks, meters, pumps,
engines, compressors, pipes, valves, connections, regulators, sewers, appliances, signs and all
other articles of tangible personal property of every kind whatsoever (excluding Improvements), in
all cases owned by or leased to Seller, that in the normal course of business are located on the
Real Property or are used in or held for use by Seller primarily in the Operations.
“ERISA” has the meaning set forth in Section 10.04(a) on
Schedule 10.01.
“Excluded Assets” means those assets described on Schedule 1.01B.
“Excluded Contracts” means those contracts described on Schedule
1.01C.
“Field Inspector” has the meaning set forth in Section 2.06(b).
“Field Inspector Report” has the meaning set forth in Section
2.06(b)
“Financial Statements” has the meaning set forth in Section 6.04.
“Force Majeure Event” means any (l)fire, explosion, casualty or accident; (2) act of God,
including epidemic, hurricane, tornado, 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, 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).
“FTC” has the meaning set forth in Section 8.01.
“Governmental Authority” means the United States and any foreign, state, county, city or
other political subdivision and any department, commission, board, bureau, agency, commission,
officer, official, court, tribunal, arbitrator, board or bureau or other instrumentality thereof
and any self-regulatory organization, such as a securities exchange.
“HGU Unit” means that certain 15 million standard cubic foot per day hydrogen generation unit
located on the Refinery Real Property including the unit boiler, steam turbine generator, surface
condenser and related equipment and all alterations or additions thereto and modifications or
replacements thereof.
“HSR Act” means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of 1976, as amended.
“HSE Agreement” has the meaning set forth in Section 3.02(c)(iv).
“HSE Claim” has the meaning set forth in the HSE Agreement.
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“HSE
Law” has the meaning as set forth in the HSE
Agreement.
“HSE
Permit” has the meaning set forth in the HSE
Agreement.
“Hydrocarbon Inventories” means all hydrocarbon inventories owned by Seller as of the
Effective Time for use in or resulting from the Operations including each of the following as of
the Effective Time (i) all crude oil, blendstock, feedstock and intermediate petroleum products
owned by Seller and that are located at the Refinery as of the Effective Time (in each case which
shall be measured and valued for all purposes of this Agreement in accordance with Exhibits
A-l and A-2) or, to the extent previously agreed in writing by the Parties, that are in
transit to the Refinery or held in off-site storage as of the Effective Time but excluding
hydrocarbons in process units or in interconnecting lines at the Refinery; (ii) all refined and
intermediate product inventories, including petroleum coke and sulfur; and (iii) all additives
(excluding additives used by Seller in finished products); but in all cases excluding all
finished and unfinished products that have left the Refinery and are en route to any customer
(including Seller’s Affiliate(s)) where title has passed to the customer. Hydrocarbon Inventories
shall include tank bottoms and heels.
“Improvements” means any and all buildings, structures, fixtures or other improvements owned
by or leased to Seller that are attached or affixed to the Refinery Real Property, the SRP Real
Property or the LBT Real Property including process units, storage tanks, control houses, office
buildings, laboratory facilities, warehouses, boiler houses, power plants, waste water treatment
facilities and other similar facilities (but excluding improvements comprising the Blend Plant
Improvements).
“Inactive Employee” means any Employee not actively at work in the Operations at the
Effective Time on account of (1) illness or injury, occupational or otherwise, except where the
Employee’s return to work from such illness or injury is reasonably expected at the Effective Time
within twelve (12) months of onset of illness or injury, or (2) military service.
“Indemnified Party” shall refer to the Person or Persons indemnified, or entitled, or
claiming to be entitled to be indemnified, held harmless or defended pursuant to this Agreement
including a Buyer Indemnified Party and a Seller Indemnified Party.
“Indemnifying Party” shall refer to the Party having the obligation to indemnify, defend and
hold harmless pursuant to this Agreement.
“Inspector” has the meaning set forth in Section 2.06(c).
“Intellectual Property” means intellectual and similar property of every kind and
nature that is being used in the Operations as of the Effective Time (i) that was licensed by
Texaco Inc. and certain of its Affiliates, or Shell Oil Company and certain of its Affiliates to
Seller on a non-exclusive basis for Seller’s Use and for which Seller enjoys a right to grant a
sublicense to a purchaser of the Purchased Assets or (ii) that is owned by Seller and that Seller
has a right to grant a non-exclusive license to Use including patents, patent applications and
divisions, continuations, continuations-in-part, extensions and reissues of same, inventions,
invention disclosures, copyrights, including registrations and applications to register
copyrights, moral rights, formulae, processes, engineering data, designs, know-how, show-how,
confidential or proprietary technical information and trade secrets or other similar data or
information and Software, but excluding Trademarks.
“Interim Period” means the period of time from the date of this Agreement until the earlier of
the Closing or the termination hereof.
Refinery Asset Purchase Agreement
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“Inventories” means the Hydrocarbon Inventories and the Non-Hydrocarbon Inventories.
“Inventory Balance” has the meaning set forth in Section 2.06(d).
“Inventory Deposit” has the meaning set forth in Section 2.06(a).
“Inventory Notice Date” has the meaning set forth in Section 2.06(c).
“Inventory Statement” has the meaning set forth in Section 2.06(c).
“Inventory Value” has the meaning set forth in Section 2.06(c).
“Judgments” means any judgments, orders, decisions, injunctions, decrees or awards of any
federal, state, local or foreign court, arbitrator or administrative or other Governmental
Authority.
“Xxxxxx Xxxxxx Pipeline Histories” means Seller’s rights to capacity on the Xxxxxx Xxxxxx
product system to the extent such rights arise directly out of Seller’s historic use of such
system, subject to applicable rules on file with appropriate Regulatory Agencies including FERC
and CPUC, as follows:
Shell Colton Terminal — Seller’s line time shipping history consideration on the
Xxxxxx Xxxxxx system to the Shell Colton Terminal required to support all volumes
associated with the “Purchased Premises” and the “Open Dealer Premises” as such terms are
defined in the Retail Asset Purchase Agreement, as determined by 2006 pipeline receipt and
lifting patterns.
Shell
San Diego Terminal — Seller’s line time shipping history consideration on the
Xxxxxx Xxxxxx system to the Shell San Diego Terminal required to support all volumes
associated with the “Purchased Premises” and the “Open Dealer Premises” as such terms are
defined in the Retail Asset Purchase Agreement, as determined by 2006 pipeline receipt and
lifting patterns.
“Known” “Knowledge” or “To
the Knowledge of” or “Within
the knowledge of” means in the case of
Seller, the actual knowledge after reasonable due inquiry of the indicated individuals listed on
Schedule 1.01D and, in the case of Buyer, the actual knowledge after reasonable due
inquiry of the indicated individuals listed on
Schedule 1.01D. For the avoidance of doubt, none of
the individuals listed on Schedule 1.01D is personally making any representations or
warranties herein.
“LBT Lease” means that certain Lease dated October 18, 1966 by and between the City of Long
Beach and Texaco, Inc., as amended and extended, related to the lease of the LBT Real Property.
“LBT Real Property” means the tract(s) (or parcel(s)) of land described on Schedule
4.04(c).
“Licensed Technology Rights” means intellectual and similar property of every kind and
nature, except Intellectual Property, licensed by third parties to Seller or its Affiliates before
the Effective Time, for the Operations including patents, patent applications and divisions,
continuations, continuations-in-part, extensions and reissues of same, inventions, invention
disclosures, copyrights, including registrations and applications to register copyrights, moral
rights, formulae, processes, engineering data, designs, know-how, show-how, confidential or
proprietary technical information and trade secrets or other similar data or information and
Software, but excluding all Trademarks.
“Liens” means any and all liens, mortgages, charges, pledges, security interests, burdens,
easements, rights of way, zoning ordinances, mineral exceptions, rights of first offer, rights of
first
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refusal, purchase options or other encumbrances of any nature whatsoever, including such as has
arisen under any Contracts.
“Long Beach Terminal” means the docking terminal at the LBT Real Property for the loading or
unloading of crude oil or products, all Improvements thereon and all other related Personal
Property.
“Losses” means any and all costs, Claims, losses (but excluding lost profits except to the
extent awarded to a non-Affiliate third party), liabilities, fines, penalties, obligations
(including corrective and remedial obligations), damages (but excluding any indirect, special,
punitive, exemplary and consequential damages other than such damages as may be awarded to a
non-Affiliate third party), and expenses (including reasonable legal fees and expenses and
reasonable fees and expenses of other consultants, in each case as may be incurred in the
investigation or defense of any of the same or in asserting any of their respective rights
hereunder).
“Material Adverse Effect” means the result of any act(s), omission(s), conduct,
occurrence(s), condition(s) or situation(s), or any combination thereof, if the same have or could
reasonably be expected to, individually or in the aggregate, (a) result in Losses with respect to
the value of the Purchased Assets in excess of One Million Dollars ($1,000,000), or (b) if not
quantifiable, materially impair the ownership or use of the Purchased Assets or the Operations,
each taken as a whole.
“Mediation Notice” has the meaning set forth in Section 16.01.
“Non-Hydrocarbon Inventories” means the non-hydrocarbon inventories owned by Seller as of the
Effective Time for use in the Operations consisting of (i) chemicals and catalyst inventories
located at the Refinery, (ii) any precious metals and other non-hydrocarbon inventories located at
the Refinery and held primarily for use in the Operations, and (iii) the stores inventories,
including maintenance and capital spares, joints, valves and parts are located (A) at the Refinery
and used primarily in the Operations, (B) at any off-site storage facility and used exclusively in
the Operations or (C) at any off-site storage facility used in the Operations and at Seller’s
other facilities to the extent that such off-site stores inventories can be allocated among the
Refinery and Seller’s other facilities in a manner that is fair and equitable.
“Non-Represented
Employee” has the meaning set forth in
Section 10.01(b) on Schedule
10.01.
“Obligations” means any duties, responsibilities, liabilities and obligations, costs and
expenses of whatever kind and nature, whether vested, absolute or contingent, primary or
secondary, direct or indirect, known or unknown, asserted or unasserted, accrued or unaccrued,
liquidated or unliquidated, due or to become due, and whether based in common law or statute or
arising under Contract or by action of any Government Authority or otherwise.
“Operations” means those activities conducted by Seller in the ordinary course of operating
the Refinery including activities associated with the intake of crude oil and the distribution of
refined products from the Refinery but excluding activities conducted in the operation of Excluded
Assets.
“Organizational Documents” means the articles of incorporation, certificate of incorporation,
charter, bylaws, articles or certificate of formation, regulations, operating or company agreement,
certificate of limited partnership, partnership agreement, and all other similar documents,
instruments or certificates executed, adopted, or filed in connection with the creation, formation,
or organization of a Person, including any amendments thereto.
“Party” and “Parties” means each of Seller and Buyer and collectively Seller and Buyer.
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“Permits” means any permits, temporary permits to construct or operate, licenses, approvals,
registrations, rights of way, orders, waivers, variances or other authorizations issued or
granted by any Governmental Authority.
“Permitted Encumbrances” means, with respect to the Purchased Assets, any of the following
matters:
(a) such items as set forth in Schedule 1.01E;
(b) any (i) undetermined or inchoate liens or charges constituting or securing the
payment of expenses which were incurred incidental to the conduct of the Operations or the
operation, repair, construction, improvement or maintenance of the Purchased Assets and (ii)
materialman’s, mechanics’, repairman’s, employees’, contractors’, operators’ or other
similar liens, security interests or charges for liquidated amounts arising in the ordinary
course of Operations incidental to the conduct of the Operations or the operation,
repair, construction, improvement or maintenance of the Purchased Assets, securing
amounts the payment of which is not delinquent and that will be paid by Seller in the
ordinary course of Operations or, if delinquent, that are being contested in good faith with
any action to foreclose or attach any of the Purchased Assets on account thereof properly
stayed; provided, that, Seller shall be responsible for, and shall promptly pay when due,
all amounts finally determined to be owed that are the subject of such contest, other than
amounts which are the obligation of Buyer pursuant to this Agreement;
(c) any Liens for Taxes not yet delinquent or, if delinquent, that are being contested
by Seller or its Affiliates in good faith with any pending action to foreclose any of the
Purchased Assets on account thereof properly stayed; provided, that, Seller shall be
responsible for, and shall promptly pay when due, all amounts finally determined to be owed
that are the subject of such contest, other than amounts which are the obligation of Buyer
pursuant to this Agreement;
(d)
any Liens created by Law or which arise from leases, easements, rights-of-way or
other real property interests for rental or for compliance with the terms of such leases,
rights-of- way or other real property interests, provided all payments by Seller of the
debt secured is not delinquent or, if delinquent, is being contested by Seller in good
faith in the ordinary course of Operations with any action to foreclose or attach any of
the Purchased Assets on account thereof properly stayed; provided, that, Seller shall be
responsible for, and shall promptly pay or perform when due, all amounts or obligations
finally determined to be owed that are the subject of such contest, other than amounts
which are the obligation of Buyer pursuant to this Agreement;
(e) all reservations of record of minerals (without right of surface entry) in and
under or that may be produced from any of the lands constituting part of the Real Property
or on which any of the Purchased Assets are located, other than mineral reservations that
materially interfere with the Operations;
(f) all easements, rights-of-way and restrictive covenants of record, and all
discrepancies, shortages in area, conflicts in boundary lines, encroachments or
protrusions, or overlapping of improvements, defects, irregularities and other matters
affecting the Real Property or the Improvements which individually or in the aggregate do
not (i) have a Material Adverse Effect on the ordinary operations of the Refinery as
conducted by Seller on an historical basis for the twelve (12) months prior to the Closing
Date or (ii) have a Material Adverse Effect on the value of the Refinery taken as a whole
as of the Closing Date;
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(g) any defect that has been cured by the applicable statutes of limitations or
statutes for prescription;
(h) any defect affecting (or the termination or expiration of) any easement,
right-of-way, leasehold interest, license or other real property interest which has been
replaced prior to Closing at Seller’s sole cost by an easement, right-of-way, leasehold
interest, license or other real property interest of record constituting part of the
Purchased Assets covering substantially the same rights to use the land or the portion
thereof used by Seller in connection with the Operations;
(i) rights reserved to or vested in any Governmental Authority to control or regulate
any of the Purchased Assets or the Operations and all Applicable Laws of such authorities,
including any building or zoning ordinances and all HSE Laws;
(k) existing leases, licenses and similar agreements to the extent such constitute
assumed Contracts;
(l) the exposure restrictions contained in the deeds attached hereto as Exhibit
B;
(m) the limitations on use of certain parcels of the Real Property for, inter alia,
residential, agricultural and day care uses, all as more particularly described in the
deeds attached hereto as Exhibit B;
(n) acts done or suffered to be done by, and judgments against, Buyer and those
claiming by, through or under Buyer;
(o) any agreement or contract entered into by the Parties in accordance with the terms
of this Agreement or the Related Agreements; and
(p) all matters of record as of the date hereof but excluding any monetary Liens,
purchase options and rights of first refusal, excepting there from all Taxes and assessment
liens which are not yet due and payable and which shall be prorated at the Closing pursuant
to Section 14.02.
“Person” means any individual, corporation, partnership, association, trust, limited
liability company or any other entity or organization, including a Governmental Authority or
instrumentality thereof.
“Personal Property” means the Equipment, Rolling Stock, and other tangible personal property
owned or leased by Seller and used or held for use primarily in the Operations (including idle
personal property located at the Refinery that has been used primarily in the Operations), as of
the Effective Time, including those items set forth in Schedule 1.01F.
“Pipeline Assets” means (i) those certain intrastate pipelines currently operated by Seller
and its Affiliates for the delivery or receipt of feedstock
or product to or from the Refinery,
whether owned by Seller or any of Seller’s Affiliates, set forth
in Schedule 1.01G, and
(ii) all related off-site meters and equipment (excluding meters located at Seller’s terminal
located in Carson, California).
“Pipeline Easements” means all easements, licenses and rights of way of Seller described in
Schedule 4.04(d).
“Post-Retirement Funds” has the meaning set forth in Section 10.04(f) on Schedule
10.01.
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“Processing Unit Real Property” has the meaning set forth in Section
2.08(a)(ii).
“Purchased Assets” means the properties, assets and rights of every nature, kind and
description, tangible and intangible (including goodwill), whether real, personal or mixed,
whether accrued, contingent or otherwise and whether now existing or hereafter acquired which are
primarily used or held for use by Seller at the Refinery, or in connection with the Operations,
as the same may exist on the date hereof and on the Closing Date. For the avoidance of doubt, the
term “Purchased Assets” includes the Real Property, the Improvements, the Personal Property, the
Pipeline Assets, the Refinery Records, the Emissions Credits, the Xxxxxx Xxxxxx Pipeline
Histories, and the Inventories, but excludes the Excluded Assets.
“Purchase Price” has the meaning set forth in Section 2.03.
“Real Property” means the Refinery Real Property, the SRP Real Property, the LBT Real
Property and the Pipeline Easements.
“Receiving Party” has the meaning set forth in Section 17.14.
“Refinery” means the crude oil refinery and related equipment and facilities of Seller
located on the Real Property including the Improvements. For the avoidance of doubt, the term
“Refinery” includes the Long Beach Terminal, the Wilmington Terminal and the Sulfur Plant, and
excludes the Blend Plant Assets.
“Refinery Collective Bargaining Agreement” has the meaning set forth in Section 10.02
on Schedule 10.01.
“Refinery Real Property” means the tract(s) (or parcel(s)) of
land described on Schedule 4.04(a) together with all easements, appurtenances, rights and leases, and other hereditaments
appurtenant to such land and all the estates and rights of Seller in and to such land and all
other easements, rights of way, licenses and similar rights used exclusively in connection with
the Operations, in each case subject to Permitted Encumbrances. For the avoidance of doubt, the
Blend Plant Real Property is not included in the definition of “Refinery Real Property” except to
the extent appropriate for purposes of Section 2.08.
“Refinery Records” means all operating records and data in the possession of Seller or any of
Seller’s Affiliates and relating primarily to and necessary for the Operations subject to Seller’s
record retention policy, including all books, records, cost and pricing information, accounting
records, supplier lists and records, training materials and equipment, training records (including
certifications), maintenance and inspection reports, equipment lists, repair notes and archives,
and technical drawings. Notwithstanding the preceding sentence, “Refinery Records” specifically
excludes (i) any of Seller’s or its Affiliates’ business plans, strategies and financial records
that address or reflect activities outside of the Operations; (ii) any of Seller’s or its
Affiliates’ company minute books and records, Tax Returns or other materials that do not pertain to
the Purchased Assets or ongoing day-to-day operation of the Operations; (iii) personnel or medical
records for which the Transferred Employee’s written consent to the release of such record is not
obtained; (iv) hiring exams for Refinery operators; and (v) materials that are subject to any
applicable legal privileges.
“Related Agreements” means the agreements listed in Section 3.02 and any other
agreements or documents executed in connection with or as required under this Agreement but
excluding the Retail Asset Purchase Agreement and any agreements or documents executed in
connection with or as required under the Retail Asset Purchase Agreement.
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“Represented Employee” has the meaning set forth in Section 10.01 (a) on
Schedule 10.01.
“Retail Asset Purchase Agreement” means that certain Asset Purchase Agreement dated as of
even date herewith between Buyer and Seller and relating to the purchase by Buyer from Seller of
Seller’s interest in and to approximately 250 retail gasoline stations located in the Southern
California region.
“Retail Closing” has the meaning set forth in Section 11.12.
“Retained Liabilities” has the meaning set forth in Section 2.05(c).
“Rolling Stock” means all vehicles, trucks, tractors, trailers, and rail cars, all whether
owned, leased or subject to a contract of purchase and sale, or lease commitment, that are
primarily used by Seller in the Operations, excluding trucks and trailers used for delivery of
refined petroleum products to retail gasoline stations. The rail cars that are included in the
term “Rolling Stock” are set forth in Schedule 1.01H.
“Seller” has the meaning set forth in the preamble.
“Seller Environmental Policies” has the meaning set forth in Section 7.06.
“Seller Indemnified Party(ies)” has the meaning set forth in Section 13.01.
“Seller Threshold Amount” has the meaning set forth in Section 13.09.
“Severance Benefit” has the meaning set forth in Section 10.04(e) on Schedule
10.01.
“Software” means computer software including computer programs, applications and databases in
any form, including source code and object code, operating systems and specifications, firmware,
data, databases, database management code, utilities, graphical user interfaces, menus, images,
icons, forms, methods of processing, software engines, platforms, data formats, internet web
sites, web content and links, all versions, updates, corrections, enhancements and modifications
thereof, and all related documentation, developer notes, comments and annotations.
“SRP Real Property” means the tract(s) (or parcel(s)) of land described on Schedule
4.04(b) together with all easements, appurtenances, rights and leases, and other hereditaments
appurtenant to such land and all the estates and rights of Seller in and to such land, subject to
Permitted Encumbrances.
“Subsidiary” of a Person means (i) any corporation more than 50% of the outstanding
securities having ordinary voting power of which shall at the time be owned or controlled,
directly or indirectly, by such Person or by one or more of its subsidiaries or by such Person and
one or more of its Subsidiaries, or (ii) any partnership, limited liability company, association,
joint venture or similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
“Subdivision Condition” has the meaning set forth in Section 2.08(a)(iii).
“Sulfur Plant” means the sulfur recovery plant at the SRP Real Property and all related
Improvements and Personal Property.
“Taking” means taken by condemnation or eminent domain or by agreement in lieu thereof with
any Person authorized to exercise such rights.
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“Tax Allocation” has the meaning set forth in Section 14.04.
“Taxes” means all United States federal, state, local or foreign income, profits, 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” means any return, declaration, report or similar statement required to be
filed with respect to any Taxes (including any attached schedules) including any information
return, claim for refund, amended return and declaration of estimated Taxes.
“Termination Date” has the meaning set forth in Section 15.01.
“Title Company” has the meaning set forth in Section 8.11.
“Title Policies” has the meaning set forth in Section 8.11.
“Title Policy Exceptions” means, with respect to the Real Property:
(a) all matters of record as of the date hereof that are set forth in Schedule B of
the title commitments for the Title Policies but excluding any monetary Liens, purchase
options and rights of first refusal, excepting there from all Taxes and assessment liens
which are not yet due and payable and which shall be prorated at the Closing pursuant to
Section 14.02;
(b) all discrepancies, shortages in area, conflicts in boundary lines,
encroachments or protrusions, or overlapping of improvements, defects, irregularities
and other matters affecting the Real Property or the Improvements which individually or
in the aggregate do not (i) have a Material Adverse Effect on the ordinary operations of
the Refinery as conducted by Seller on an historical basis for the twelve (12) months
prior to the Closing Date or (ii) have a Material Adverse Effect on the value of the
Refinery taken as a whole as of the Closing Date;
(c) existing leases, licenses and similar agreements to the extent such constitute
Contracts assumed by Buyer;
(d) acts done or suffered to be done by, and judgments against, Buyer and those
claiming by, through or under Buyer; and
(e) any agreement or contract entered into by the Parties in accordance with the
terms of this Agreement or the Related Agreements.
“Third Party Claim” has the meaning set forth in Section 13.06(a).
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“Third Party Property” means improvements, equipment, inventory and any other tangible
personal property located on the Real Property as of the Effective Time that arc not owned by or
leased or rented to Seller, including those items listed on Schedule 1.011.
“Trademarks” means with regard to Seller and Shell Trademark Management BV: (i) any and all
trademarks, trademark registrations, trademark applications, service marks, service xxxx
registrations, service xxxx applications, trade dress, word marks, word xxxx registrations, word
xxxx applications and trade names owned by Seller or Shell Trademark Management BV, including the
name Shell, and the Shell emblem and logos used by or licensed to Seller in connection with any of
the Operations; and (ii) the goodwill of the Operations in connection with which such Trademarks
have been used.
“Transferred Employee” has the meaning set forth in Section 10.03(c) on
Schedule 10.01.
“Transition Services Agreement” has the meaning of Section 8.03.
“TTA” has the meaning of Section 9.01.
“Turnaround Activities” has the meaning set forth in Section 6.05.
“Use” or its derivative words means make, use, have made and sell, offer to sell, import,
export and reproduce, distribute, publicly perform, publicly display and make a derivative work.
“USW” has the meaning set forth in Section 10.02 on Schedule 10.01.
“WARN Act” has the meaning set forth in Section 10.05(a) on Schedule 10.01.
“Wilmington Collective Bargaining Agreement” has the meaning set forth in Section 10.02 on Schedule 10.01.
“Wilmington Terminal” means that certain refined products loading rack terminal commonly
referred to as the “Wilmington Terminal” which is located on the Refinery Real Property.
1.02 Interpretation. Unless expressly provided for elsewhere in this Agreement,
this
Agreement shall be interpreted in accordance with the following provisions:
(a) All references herein to Articles, Sections, Exhibits and Schedules are
to
Articles and Sections of and Exhibits and Schedules attached to and forming part of this Agreement,
unless the contrary is specifically stated;
(b) The headings of the Articles, Sections and subsections of this Agreement
and the headings contained in the Exhibits and Schedules hereto are inserted for convenience of
reference only and shall not in any way define or affect the meaning, construction, or scope of any
of the provisions hereof or thereof;
(c) a defined term has its defined meaning throughout this Agreement and
each Exhibit and Schedule to this Agreement, regardless of whether it appears before or after the
place where it is defined;
(d) In the event of any conflict between the main body of this Agreement and the Exhibits and
Schedules hereto, the provisions of the main body of this Agreement shall prevail;
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(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 as if followed by the words “without limitation” or words having
similar import;
(g) Whenever the context may require, any pronoun used in this Agreement
shall include the corresponding masculine, feminine, or neuter forms, and the singular form of
nouns, pronouns and verbs shall include the plural and vice versa;
(h) A reference to any agreement or document (including a reference to this
Agreement) is to the agreement or document as amended, varied, supplemented, novated or replaced,
except to the extent prohibited by this Agreement or that other agreement or document;
(i) A reference to any party to this Agreement or another agreement or document
includes the party’s permitted successors and assigns;
(j) A reference to a writing includes a facsimile transmission of it and any means of
reproducing of its words in a tangible and permanently visible form;
(k) A reference to a statute, regulation or law shall include any amendment thereof or
any successor thereto and any rules and regulations promulgated thereunder;
(1) The words “hereof,” “herein” and “hereunder” and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement;
(m) The term “cost” includes expense and the term “expense” includes
cost;
(n) The word “or” will have the inclusive meaning represented by the phrase “and/or”;
(o) The phrase “and/or” when used in a conjunctive phrase, means any one
or more of the Persons specified in or the existence or occurrence of any one or more of the
events, conditions or circumstances set forth in that phrase; provided, however, that when used to
describe the obligation of one or more Persons to do any act, it means that the obligation is the
obligation of each of the Persons but that it may be satisfied by performance by any one or more of
them;
(p) “Shall” and “will” have equal force and effect;
(q) Unless otherwise specified, all references to a specific time of day in this
Agreement shall be based upon Central Standard Time or Central Daylight Savings Time, as
applicable on the date in question in Houston, Texas;
(r) References to “$” or to “dollars” means the lawful currency of the United States
of America; and
(s) All references to “day” or “days” means calendar days unless specified as a
“Business Day”.
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ARTICLE II
PURCHASE AND SALE OF THE PURCHASED ASSETS
2.1 Purchase and Sale. Subject to the terms and conditions of this Agreement,
Seller agrees to sell, assign, convey, transfer and deliver (or make available pursuant to
Section 8.02 or ARTICLE IX), or cause such sale, assignment, conveyance, transfer
and delivery by Seller’s Affiliates, to Buyer, as of the Effective Time, and Buyer agrees to
purchase and take assignment and delivery from Seller as of the Effective Time, of all of Seller’s
right, title and interest in and to the Purchased Assets.
2.2 Excluded Assets. The Purchased Assets shall not include any Excluded Assets.
Without limiting the generality of the foregoing, Seller (or, as applicable, any Affiliate of
Seller) shall retain and not sell, convey, transfer or deliver to Buyer, and Buyer shall not
purchase or have any rights in, the Excluded Assets. To the extent that any Excluded Assets
remain located at the Refinery or any other owned or leased real property constituting part of the
Purchased Assets after the Closing Date, (a) with respect to those Excluded Assets Seller will
remove from the Refinery, Buyer shall grant to Seller and its Affiliates and their respective
representatives reasonable access to such property from and after the Closing Date for a reasonable
period of time not to exceed one hundred-eighty (180) days to permit Seller and such persons to
review and remove such Excluded Assets and make any other appropriate arrangements with respect
thereto, and (b) with respect to those Excluded Assets that will remain at the Refinery, Buyer and
Seller will enter into appropriate access agreements (pursuant to Section 7.03) for
Seller’s access to such Excluded Assets. Seller agrees that it will consult with Buyer in advance
of taking any such actions following the Closing Date with a view towards establishing a mutually
agreeable plan for such review and removal so that these actions will not unreasonably interfere
with the normal operation of the Refinery.
2.3 Purchase Price. In consideration for the Purchased Assets and the assets sold
and purchased pursuant to the Retail Asset Purchase Agreement: Buyer shall pay and perform the
following (collectively, the “Purchase
Price”):
(A) Pay ONE BILLION SIX HUNDRED THIRTY MILLION DOLLARS
($1,630,000,000) (the “Closing Xxxx Payment”), subject to adjustment pursuant to
Section 2.07: plus
(B) Pay the purchase price for the Hydrocarbon Inventory which shall be determined
and paid pursuant to Section 2.06; plus
(C) Assume and agree to pay and perform and discharge when due the Assumed
Liabilities as more particularly set forth in Section 2.05(a).
2.4 Method of Payment. All amounts to be disbursed pursuant to the terms of this
Agreement shall be made in immediately available U.S. funds, by wire transfer (i) to a U.S. bank
account designated by Seller or by any other means acceptable to Seller if payable to Seller and
(ii) to a U.S. bank account designated by Buyer or by any other means acceptable to by Buyer if
payable to Buyer.
2.5 Assumed Liabilities and Retained Liabilities.
(a) As of the Effective Time, Buyer shall, without any further action on the
part of Buyer or Seller, assume and agree to pay, perform and discharge when due, subject to the
other provisions of this Agreement and the Related Agreements, each of the
following Obligations
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(collectively, the “Assumed Liabilities”) (provided that the Assumed Liabilities shall not
include the Retained Liabilities):
(i) all Obligations to the extent arising out of, incurred in connection with or
related to the ownership or use of the Purchased Assets or the operation of the
Refinery after the Effective Time (excluding all Obligations related to or arising
from HSE Laws which are addressed in the HSE Agreement); and
(ii) all Obligations of Seller or any of its Affiliates to the extent arising out
of, incurred in connection with or related to the Contracts (excluding the Excluded
Contracts) but only such Obligations for goods or services received by or on behalf of
Buyer after the Effective Time or are otherwise performable on or after the Effective
Time.
(b) Buyer is not assuming, nor shall Buyer be deemed to have assumed, any
Obligation of Seller or its Affiliates of any kind or nature whatsoever, except as expressly
provided in this Section or as otherwise expressly provided for in this Agreement or in the Related
Agreements. Without limiting the forgoing, Buyer is not assuming Contracts or Obligations that by
their terms are not assignable to Buyer except that the process described in Section
8.02(b) shall be followed where permitted.
(c) Seller shall retain and agree to pay, perform and discharge when due,
subject to the other provisions of this Agreement and the Related Agreements, all Obligations of
Seller not specifically assumed by Buyer herein (excluding all Obligations related to or arising
from HSE Laws which are addressed in the HSE Agreement) (collectively, the “Retained Liabilities”).
2.06 Hydrocarbon Inventory.
(a) Seller shall make a good faith estimate five (5) Business Days prior to
the Closing Date of the estimated value of the Hydrocarbon Inventory as of such date and provide a
copy thereof to Buyer setting forth the ownership, types, characteristics and volumes, on a tank,
trunk, pipeline or other location basis, of all Hydrocarbon Inventory. Seller shall value the
Hydrocarbon Inventory in accordance with the measurement procedures set forth in Exhibit
A-l and in accordance with the valuation procedures set forth in Exhibit A-2. Buyer
shall be permitted to have representatives present to observe any measurements taken by Seller.
At the Closing, Buyer shall pay Seller an amount (the
“Inventory Deposit”) equal to 90% of such
estimated Inventory Value as reasonably estimated by Seller five (5) Business Days prior to the
Closing Date.
(b) An independent inspector (the “Field Inspector”) shall be engaged by
agreement of Seller and Buyer. The Field Inspector shall measure the Hydrocarbon Inventory as of
Effective Time at the respective locations of the Hydrocarbon Inventory on the Closing Date. The
Hydrocarbon Inventory shall be measured by the Field Inspector in accordance with the procedures
set forth in Exhibit A-l. The Field Inspector shall issue a written report (the “Field
Inspector Report”) to both Buyer and Seller within ten (10) Business Days after the Closing Date
setting forth the volumes and quantities of the Hydrocarbon Inventory as of the Effective Time.
The fees and expenses of the Field Inspector shall be borne fifty percent (50%) by Seller and fifty
percent (50%) by Buyer.
(c) As soon as practicable, but in any event no later than ten (10) days
following receipt of the Field Inspector Report, Seller shall cause to be prepared and delivered to
Buyer a statement, together with supporting calculations and information (the “Inventory
Statement”) setting forth the volume of the Hydrocarbon Inventory as measured by the Field
Inspector as of the Effective Time and the value of the Hydrocarbon Inventory (the “Inventory
Value”), which shall be determined in
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accordance with the procedures set forth in Exhibit A-2. Buyer shall give Seller notice
of its acceptance of or objection to the computations in the Inventory Statement no later than
twenty (20) days following its receipt of the Inventory Statement (the date of Seller’s receipt
of such acceptance or rejection, or the expiration of such 20 day period with no notice having
been given, shall be the “Inventory Notice Date”). If Buyer fails to give such notice before the
end of such twenty (20) day period, then the Inventory Statement will be deemed final and binding
upon the Parties. If Buyer gives such notice to Seller of Buyer’s objection within such twenty
(20) days, and Buyer and Seller are unable to resolve the issues in dispute within seven (7) days
after delivery of such notice of objection, each of Buyer’s and Seller’s positions with respect
to the computation of the Inventory Value will be submitted to an independent and qualified party
mutually selected by the Parties (the
“Inspector”) such as an accounting firm or independent
inspector, for final resolution. If the computation of the Inventory Value is submitted to the
Inspector for resolution, (x) each Party will furnish to the Inspector such work papers and other
documents and information relating to the disputed issues as the Inspector may request and are
available to that Party, and will be afforded the opportunity to present to the Inspector any
material relating to such issues and to discuss the same with the Inspector; (y) the Inspector’s
determination or computation of the Inventory Value shall be binding and conclusive on the
Parties and will be deemed to be the final Inventory Value (and judgment thereupon may be entered
in any court having jurisdiction over the Party against which the same is sought to be enforced);
and (z) the fees and expenses of the Inspector for such determination will be borne fifty percent
(50%) by Seller and fifty percent (50%) by Buyer.
(d) If the sum of the Inventory Value minus the Inventory Deposit (the
“Inventory Balance”) is greater than zero, then Buyer shall pay to Seller, without offset or
deduction, an amount equal to the Inventory Balance by wire transfer of immediately available funds
to such account or accounts of Seller, as may be designated by Seller. If the amount of the
Inventory Balance is less than zero, then Seller shall pay to Buyer, without offset or deduction,
an amount equal to such deficit by wire transfer of immediately available funds to such account or
accounts of Buyer, as may be designated by Buyer. All such undisputed amounts shall be paid by the
relevant Party to the other Party within five (5) Business Days of the Inventory Notice Date. All
disputed amounts shall be paid by the relevant Party to the other Party within five (5) Business
Days of the resolution of such disputed amounts. All amounts payable pursuant to this Section
2.06 (both disputed and undisputed amounts) shall bear interest from and including the date
payment is scheduled to be made to, but excluding, the date of payment at a rate per annum equal to
ten percent (10%) for the first thirty (30) days such payment is past due and at a rate per annum
equal to fifteen percent (15%) for all subsequent periods such payment is past due, in either event
not to exceed the maximum rate permitted by Applicable Law. Such interest shall be payable at the
same time as the payment to which it relates and shall be calculated on the basis of a year of 365
days and the actual number of days for which due.
(e) Each Party agrees that, following the Closing, it shall not take any
actions with respect to the accounting books, records, policies and procedures of itself or its
Affiliates that would obstruct or prevent the preparation of the Inventory Statement as provided in
this Section 2.06. From the Closing through the final determination of the Inventory Value
in accordance with this Section 2.0.6, (i) Seller shall provide Buyer with access at all
reasonable times to the personnel and working papers utilized in determining the Inventory
Statement for purposes of confirming Seller’s calculation of same and (ii) Seller and Buyer shall
provide one another access at all reasonable times to the personnel, properties, and books and
records of the Refinery for purposes of determining the Inventory Value, including permitting the
Parties and their respective advisors to participate in the taking of the physical inventory. The
Parties shall cooperate with each other in the preparation of the Inventory Statement, if requested
by another Party.
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(f) Except as expressly set forth in this Section 2.06, Buyer and Seller shall
each bear its own expenses incurred in connection with the preparation and review of the Inventory
Statement.
2.07 Closing Adjustments. At the Closing, the amount of the Closing Date Payment
payable by Buyer shall be adjusted by the following:
(a) Reduced by an amount equal to the credit, if any, payable pursuant to Section
8.07(b);
(b) Increased or reduced, as applicable, by an amount, if any, equal to the pro- ration of
lease and rental payments pursuant to Section 8.08(a);
(c) Reduced by an amount, if any, equal to the pro-ration of property Taxes pursuant to
Sections 14.02 and 14.03;
(d) Increased or reduced, as applicable, as set forth in the Retail Asset Purchase Agreement;
and
(e) Increased or reduced, as applicable, by any other amounts agreed to in writing by the
Parties.
2.08 Conveyance/Re-Conveyance of Blend Plant Property.
(a) As used in this Agreement, the following terms shall have the meanings set forth below:
(i) “Blend Plant Real Property” means that certain portion of the Refinery Real
Property labeled as “Parcel 1” on the subdivision map set forth in Schedule
2.08(a) that contains the Blend Plant Personal Property together with all
easements, appurtenances, rights and leases, and other hereditaments appurtenant to
such land and all the estates and rights of Seller in and to said land.
(ii) “Processing Unit Real Property” means that portion of the Refinery Real
Property other than the Blend Plant Real Property. The Processing Unit Real Property is
the portion of the Refinery Real Property labeled as “Parcel 2” on the subdivision map
set forth in Schedule 2.08(a).
(iii) “Subdivision Condition” means, and such condition shall be satisfied upon
the occurrence of, either (i) the recordation of a map approved by the County of Los
Angeles, State of California and any other applicable Governmental Authority that
subdivides the Refinery Real Property into two parcels one of which shall consist of
the Blend Plant Real Property and the other of which shall consist of the Processing
Unit Real Property, or (ii) such other action as may be taken or approved by the County
of Los Angeles and any other applicable Governmental Authority that allows the land
comprising the Processing Unit Real Property to be conveyed independent of the Blend
Plant Real Property, or the Blend Plant Real Property to be conveyed independent of the
land comprising the Processing Unit Real Property, without violating the California
Subdivision Map Act or any other Applicable Law.
(b) During the Interim Period, Seller will prepare and file an application with the County of
Los Angeles, State of California, or any other applicable Governing Authority to separately
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plat the Blend Plant Real Property and the Processing Unit Real Property. Buyer shall have the
right to review and approve such application prior to filing (such approval not to be unreasonably
withheld, conditioned or delayed). Because of certain public notice, hearing and other legal
requirements, the platting process may not be completed by the Closing Date, and therefore, the
Subdivision Condition may not be satisfied as of the Closing Date. In the event the Subdivision
Condition has not been satisfied as of the Closing Date, then, notwithstanding any provision to
the contrary contained in this Agreement, the entire Refinery Real Property (including the Blend
Plant Real Property) shall be conveyed to Buyer at the Closing, subject, however to the following
agreements:
(i) from and after the Closing, each of Seller and Buyer shall use commercially
reasonable efforts and cooperate with each other to facilitate the satisfaction of the
Subdivision Condition as soon as practicable thereafter;
(ii) Seller shall pay any filing fees and other governmental charges associated
with completion of the platting process, including any incremental sales, use, transfer
or similar Taxes, fees or charges that arise as a result of this Section 2.08,
and shall be responsible for paying for and fulfilling any and all conditions to
approval imposed by the County of Los Angeles, State of California, or any other
applicable Governing Authority in connection with the subdivision;
(iii) each Party shall promptly take such action, execute such documents, and do
so other things as may be reasonably necessary or expedient to complete the platting
requirement and satisfy the Subdivision Condition, provided Buyer shall not incur,
except as otherwise provided herein, any costs or obligations in connection therewith;
(iv) Buyer shall have the right to approve, which shall not be unreasonably
withheld, conditioned or delayed, any restrictions or commitments that would materially
affect Buyer’s use of the Refinery Real Property after the satisfaction of the
Subdivision Condition;
(v) Buyer and Seller shall enter into and execute and deliver a Blend Plant
Lease, substantially in the form of Exhibit D (the
“Blend Plant Lease”)
pursuant to which Buyer shall license the Blend Plant Real Property and lease the
Blend Plant Improvements to Seller from the Closing Date until the Subdivision
Condition has been satisfied; and
(vi) the Blend Plant Personal Property will be Excluded Assets and the Blend
Plant Real Property and the Blend Plant Improvements will not be Excluded Assets until
the Subdivision Condition is satisfied.
(c) Promptly after the Subdivision Condition has been satisfied, Buyer shall
execute and deliver to Seller without additional consideration, and Seller shall accept from Buyer,
a grant deed (the “Blend Plant Deed”) covering the Blend Plant Real Property (including the Blend
Plant Improvements) in form and content substantially similar to Exhibit B subject only to those
matters to which the Blend Plant Real Property was subject on the Closing Date (as modified
pursuant to real property rights granted pursuant to Section 2.08(f) and subject to matters
created or caused by Seller or any agreement or contract entered into by the Parties pursuant to
this Agreement) and such other documents or instruments reasonably requested by Seller to evidence
and effect the transfer and assignment to Seller of the Blend Plant Real Property and Blend Plant
Improvements. Seller shall pay all recording fees for recording the Blend Plant Deed and such other
transfer Taxes and documents.
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(d) Upon such recording of the Blend Plant Deed, the Blend Plant Lease
shall terminate and the Blend Plant Real Property and the Blend Plant Improvements will
automatically become Excluded Assets.
(e) Buyer agrees that it shall not lease the Blend Plant Real Property or the
Blend Plant Improvements or grant or create any right, Lien or other encumbrance thereon that
cannot and are not removed upon satisfaction of the Subdivision Condition or that are prior to
Seller’s right to purchase the Blend Plant Real Property and Blend Plant Improvements. In order to
protect Seller’s interest in the Blend Plant Real Property and the Blend Plant Improvements, Buyer
shall execute and deliver to Seller at Closing a Memorandum of Right to Reconveyance (the “Blend
Plant Memorandum of Right to Reconveyance”), substantially in the form of
Exhibit E, to be recorded
in the Official records of Los Angeles, California, immediately after the recordation of the Grant
Deed that conveys the Refinery Real Property from Seller to Buyer and prior to any monetary Liens
created by Buyer.
(f) Prior to the conveyance of the Blend Plant Real Property to Seller as
contemplated hereunder, Buyer and Seller shall grant to each other such easements and rights of way
on the Blend Plant Real Property and the Processing Unit Real Property the other party reasonably
requests in connection with its ownership and operation of the Processing Unit Real Property and
the Blend Plant Real Property, respectively.
(g)
Buyer and Seller each acknowledge that, subject to Section
2.08(b)(ii),
the consideration for the conveyance and re-conveyance of the Blend Plant Real Property and the
Blend Plant Improvements has been fully included in the Purchase Price, and that no further
consideration shall be paid by Buyer to Seller in the event the Blend Plant Real Property is
conveyed to Buyer at the Closing and no further consideration shall be paid by Seller to Buyer upon
the re-conveyance of the Blend Plant Real Property and the Blend Plant Improvements upon
satisfaction of the Subdivision Condition.
ARTICLE III
CLOSING
3.01
Place and Time. Subject to the Parties’ satisfaction or waiver of the
conditions precedent set forth in ARTICLE XI and ARTICLE
XII, the Closing shall
take place at 11:00 a.m., Central Time, at the offices of Seller’s counsel at 0000 XxXxxxxx, Xxxxx
0000, Xxxxxxx, XX 00000, on a Business Day that is either five (5) Business Days after the later
of (i) the expiration of the waiting period, or any extension thereof (without challenge), provided
for in the HSR Act or (ii) completion of the Turnaround Activities as provided pursuant to
Section 11.11, or on any later date on or prior to the Termination Date as the Parties may
otherwise agree.
3.02 Transactions and Deliveries at or Prior to Closing.
(a) At the Closing, Seller shall deliver to Buyer the
following:
(i) duly-executed grant deed(s) for the Refinery Real Property and the SRP Real
Property, substantially in the form of Exhibit B, conveying fee simple title to the
Refinery Real Property and the SRP Real Property, respectively, subject to the
Permitted Encumbrances (in the event the Subdivision Condition has not been satisfied
as of the Closing Date then the grant deed for the Refinery Real Property shall include
the Blend Plant Real Property);
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(ii) appropriately executed instruments of sale, assignment, transfer and conveyance
evidencing and effecting the sale and transfer to Buyer of the Purchased Assets (it being
expressly understood by the Parties, however, that such instruments shall not require Seller or
any other Person to make any additional representations, warranties or covenants, express or
implied, not contained in this Agreement or the Related Agreements);
(iii) a certificate dated as of the Closing Date and signed by an authorized officer of
Seller, certifying as to (A) the fulfillment by Seller of the conditions set forth in
Sections 11.01 and 11.02 and (B) the non-occurrence, to Seller’s Knowledge, of material
adverse changes to the Purchased Assets or the Operations to the extent provided pursuant to
Section 11.07;
(iv) an instrument to transfer and assign to Buyer, effective as of the Closing, the Xxxxxx
Xxxxxx Line Histories;
(v) copies of the resolutions of Seller and each Affiliate that is a party to a Related
Agreement, 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 Contemplated Transactions and the Related Agreements to which it is a party
(in each case to the extent required by such Person’s Organizational Documents);
(vi) an incumbency certificate, duly executed by an authorized officer of Seller attesting to
the due appointment and authorization of individuals signing this Agreement on behalf of Seller,
any agreement contemplated hereby or any agreement related to the Contemplated Transactions;
(vii) a short-form Good Standing Certificate issued by the Secretary of State for the State
of Delaware in respect of Seller;
(viii) a current certificate of Seller’s qualification to do business in California;
(ix) the affidavit referred to in Section 1445(b)(2) of the Code in customary form;
(x) copies of all consents and authorizations to assignments of Contracts and Permits,
Intellectual Property and Licensed Technology Rights obtained by Seller as contemplated hereunder.
(xi) grants of Intellectual Property as set forth in ARTICLE IX;
(xii) any other documents, instruments or agreements contemplated hereby or reasonably
necessary or appropriate to consummate the Contemplated Transactions (it being expressly understood
by the Parties, however, that such instruments shall not require Seller or any other Person to make
any additional representations, warranties or covenants, express or implied, not contained in or as
contemplated by this Agreement or the Related Agreements); and
(xiii) all rights of ownership and possession of the Purchased Assets.
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(b) At the Closing, Buyer shall deliver to Seller
the following:
(i) the payments specified in Section 2.03;
(ii) instruments of assumption evidencing and effecting the assumption by Buyer of
the Assumed Liabilities and such other documents as are required by this Agreement or
the Related Agreements (it being expressly understood by the Parties, however, that
such instruments shall not require Buyer or any other Person to make any additional
representations, warranties or covenants, express or implied, not contained in or as
contemplated by this Agreement or the Related Agreements);
(iii) a certificate dated as of the Closing Date and signed by an authorized
officer of Buyer, certifying as to the fulfillment of the conditions set forth in
Sections 12.01 and 12.02;
(iv) copies of the resolutions of Buyer and its Affiliate that is a party to a
Related Agreement, 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 Contemplated Transactions to which it is a
party (in each case to the extent required by such Person’s Organizational Documents);
(v) an incumbency certificate, duly executed by authorized officers of Buyer
attesting to the due appointment and authorization of individuals signing this Agreement
on behalf of Buyer, any agreement contemplated hereby or any agreement related to the
Contemplated Transactions;
(vi) a short-form Good Standing Certificate issued by the Secretary of State for
the State of Delaware in respect of Buyer:
(vii) current certificates of Buyer’s qualification to do business and good
standing in California;
(viii) a resale certificate and any other certificates or instruments necessary
for the sale and transfer of the Inventory without any sales, excise or use Taxes of
any Governmental Authority all to be in form reasonably satisfactory to Seller; and
(ix) any other documents, instruments or agreements contemplated hereby or
reasonably necessary or appropriate to consummate the Contemplated Transactions (it
being expressly understood by the Parties, however, that such instruments shall not
require Buyer or any other Person to make any additional representations, warranties or
covenants, express or implied, not contained in or as contemplated by this Agreement or
the Related Agreements).
(c) At the Closing, Seller or Seller’s Affiliates and Buyer shall enter into and
deliver to each other the following agreements:
(i) an Assignment and Assumption of Lease, substantially in the form of Exhibit
C, assigning and transferring the LBT Lease to Buyer;
(ii) the Blend Plant Lease, substantially
in the form of Exhibit D, in the event
the Subdivision Condition has not been satisfied as of the Closing Date;
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(iii) a Transition Services Agreement, substantially in the form of
Exhibit F;
(iv)
an HSE Agreement, substantially in the form of Exhibit G (the “HSE Agreement”);
(v) a Blend Plant Shared Services Agreement, substantially in the form of
Exhibit H;
(vi) the Blend Plant Memorandum of Right to Reconveyance;
(vii) each of the following Commercial Agreements:
(A) a Crude Supply Agreement, substantially in the form of
Exhibit I;
(B) a Product Purchase Agreement, substantially in the
form of Exhibit J;
(C) a Terminalling Agreement, substantially in the form of
Exhibit K;
(D) a Products Exchange Agreement, substantially in the form of
Exhibit L; and
(viii) any other documents, instruments or agreements contemplated hereby or
reasonably necessary or appropriate to consummate the Contemplated Transactions.
(d) All of the transactions identified in this Section 3.02 shall occur
simultaneously, and none shall be deemed completed until all are completed.
3.03 Possession and Control. Unless otherwise expressly provided for herein,
possession
and control of operations, risk of loss, and transfer of title to the Purchased Assets from Sellers
to Buyer shall be effective as of 11:59:59 p.m. Pacific Time on the Closing Date (the “Effective
Time”).
ARTICLE IV
SELLER’S REPRESENTATIONS AND WARRANTIES
Except for matters set forth in the Schedules referred to below, subject to Section 17.08,
Seller hereby represents and warrants to Buyer as follows:
4.1 Organization and Good Standing. Seller is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of Delaware, with full
limited liability company power and authority to carry on its business and to own or lease and to
operate its properties as and in the places where such business is conducted and such properties
are owned, leased or operated.
4.2 Authority. Seller has full limited liability company power and authority to
execute, deliver and enter into this Agreement, the Related Agreements and the Contemplated
Transactions, to
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fully perform its obligations hereunder and thereunder and to consummate the Contemplated
Transactions. The execution, delivery and performance of this Agreement, the Related Agreements
and the Contemplated Transactions have been duly authorized by all requisite limited liability
company action of Seller and this Agreement, the Related Agreements and the Contemplated
Transactions have been duly executed and delivered by Seller and constitute legal, valid and
binding agreements of Seller enforceable against Seller in accordance with respective terms,
except as such enforceability is limited by general principles of equity and applicable provisions
of bankruptcy, insolvency, moratorium, reorganization or similar laws (regardless of whether
enforceability is considered in a proceeding at law or in equity).
4.3 No Breach, Conflict. Except for (i) the HSR Act, (ii) obtaining the consents and
waivers set forth in Schedule 4.03, (iii) as otherwise contemplated in this Agreement and
in the Related Agreements, and (iv) such consents and waivers that, if not obtained prior to the
Effective Time as would not have a Material Adverse Effect, then the execution, delivery and
performance of this Agreement, the Related Agreements and the consummation of the Contemplated
Transactions and the compliance by Seller with any of the provisions hereof and thereof does not
and will not (A) violate or conflict with, or result in a breach of, any provision of, or
constitute a default (or an event which, with notice or lapse of time or both, would constitute a
default) under, or result in termination of, or accelerate the performance required by, or result
in the creation of any Lien upon the Purchased Assets under any of the terms, conditions or
provisions of the Organizational Documents of Seller or under any Contract to which Seller is a
party, or by which the Purchased Assets are otherwise bound, (B) violate any Applicable Law to
which Seller is subject, or by which Seller or its assets or properties may be bound or (C) require
the consent or approval of any third party Person.
4.4 Real Property.
(a) Schedule 4.04(a) sets forth a complete and correct legal description of the real
property included in the Refinery Real Property.
(b) Schedule 4.04(b) sets forth a complete and correct legal
description of
the real property included in the SRP Real Property except for matters as would not have a Material
Adverse Effect.
(c) Schedule 4.04(c) sets forth a complete and correct legal description of the real
property included in the LBT Lease except for matters as would not have a Material Adverse Effect.
(d) Schedule 4.04(d) sets forth a complete and correct description
of the
easements, licenses and rights of way of Seller uses in the operation of the Pipeline Assets except
for matters as would not have a Material Adverse Effect.
(e) Schedules 4.04(a). 4.04(b). and 4.04(c) list of all the real property
used
or held for use in the Operations. No portion of the Real Property is leased by or to Seller except
as set forth in the LBT Lease and as set forth in Schedule 1.01E.
(f) All water, sewer, gas, electric, telephone and drainage facilities and
all
other utilities necessary for the Operations are adequately available to service the Real Property
and the Operations (this is not a representation or warranty that such utilities will continue to
be available to Buyer after the Closing).
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(g) The Real Property (excluding Pipeline Easements) has access
to a public
street adjoining such Real Property, and such access is not dependent upon any land or other real
property interest that is not included in such Real Property.
(h) Seller has not received any written notice of any pending or, to Seller’s Knowledge,
contemplated special assessment or reassessment of any parcel included in the Real Property that
would result in a material increase in the real property Taxes with respect to such parcel
excluding any reassessment of the parcels included in the Real Property related to the
Contemplated Transactions.
(i) Except as set forth in Schedule 4.04(i), there are no
pending, or to
Seller’s Knowledge, threatened condemnation or eminent domain proceedings or contemplated sales in
lieu thereof, involving a partial or total taking of any of the Real Property.
4.05 Brokers. Seller has not retained any broker or finder or incurred any liability
or obligation for any brokerage fees, commissions, finder’s fees or similar compensation with
respect to this Agreement, the Related Agreements or the Contemplated Transactions.
4.06
Title. Except as set forth in
Schedule 4.06, Seller has good and indefeasible
title to, or a valid leasehold interest in, all of the Purchased Assets, except for Purchased Assets
sold, consumed or otherwise disposed of in the ordinary course of business in accordance with the
procedures set forth in Section 6.02 and consistent with past practices, free and clear of
any Liens, other than Permitted Encumbrances. The Permitted Encumbrances and the matters set forth
in Schedule 4.06 do not constitute a Material Adverse Effect.
4.07 Compliance With Laws. Other than with respect to HSE Laws (which
are addressed in the HSE Agreement), the Purchased Assets and the Operations are in compliance with
all Applicable Laws, as they are currently enforced, except for violations, non-compliance or other
matters, if any, that would not have a Material Adverse Effect.
4.08
Permits. Schedule 4.08 contains a true and complete list of Seller’s material
Permits (excluding HSE Permits) used in connection with the Purchased Assets or the Operations as of
the date of this Agreement; provided, however, Seller is not making any representation or warranty
that any such Permits can be transferred as of the Effective Time or can be maintained by Buyer from
and after the Closing. The Permits set forth in Schedule 4.08 are all of the Permits
(excluding HSE Permits) which are necessary for the Operations as of the date of this Agreement
except for such Permits with respect to which the failure to possess would not, individually or in
the aggregate, have a Material Adverse Effect. Seller has performed all obligations required to be
performed by it to date under the Permits set forth in Schedule 4.08, and is not in default
under any Obligation of any such Permits, except where such default would not have a Material
Adverse Effect.
4.09 Actions and Proceedings. Except for such matters as would not have a
Material Adverse Effect, and except as set forth in the Schedule 4.09:
(a) there is no Claim (excluding HSE Claims which are addressed in the
HSE Agreement), action, suit, demand, proceeding, arbitration, grievance, citation, summons,
subpoena or, to Seller’s Knowledge, any inquiry or investigation, of any nature, civil, criminal,
regulatory or otherwise, in law or in equity, pending, or to Seller’s Knowledge, threatened against
Seller or any of Seller’s Affiliates involving or affecting the Purchased Assets or the Operations,
and there are no Judgments (excluding Judgments related to HSE Laws which are addressed in the HSE
Agreement) outstanding against Seller or any of Seller’s Affiliates relating to or affecting the
Purchased Assets; and
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(b) no Claim, action, suit, demand, proceeding, arbitration,
grievance,
citation, summons, subpoena or to Seller’s Knowledge any inquiry or investigation, of any nature,
civil, criminal, administrative, regulatory or otherwise, in law or in equity, that is pending,
or to Seller’s Knowledge, threatened seeking to restrain or prohibit this Agreement, the Related
Agreements or any agreement, instrument or transaction contemplated hereby or thereby, or to
obtain damages, a discovery order or other relief in connection with this Agreement, the Related
Agreements or the Contemplated Transactions.
4.10
Contracts and Commitments. Schedule 4.10 contains an accurate and complete
list of each Contract as of the date of this Agreement but not otherwise listed in Schedule 1.01
C — Excluded Contracts to which Seller or any of its Affiliates is a party and that requires
total payments to or by Seller or any of its Affiliates of at least Five Hundred Thousand Dollars
($500,000) annually relating to the Operations or by which any of the Purchased Assets are bound
(other than crude contracts, product contracts, and transportation contracts (the “Commitments”).
The LBT Lease shall be deemed to be included in the definition of Commitments. Seller has delivered
to Buyer accurate and complete copies of all written Commitments, together with all amendments
thereto, and accurate descriptions of all material terms of all oral Commitments, set forth in
Schedule 4.10. Each Commitment is in full force and effect and is a legal, valid and binding
obligation of Seller, enforceable against Seller in accordance with
its terms (and to the Knowledge
of Seller, against each counterparty thereto), except as the
enforceability thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the
enforcement of creditors’ rights generally and general
principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity). Except as specified
in Schedule 4.10, Seller is not, nor, to Seller’s Knowledge, is any other party thereto, in default
under any of the Commitments where such defaults would result in a Material Adverse Effect. Except
as specified inSchedule 4.10, Seller has not received written notice of any actual or
threatened cancellation or termination of any Commitment from any party thereto. Seller shall be
permitted to supplement and amend Schedule 4.10 prior to the Closing with Commitments to
which Seller has entered in the normal course of business between the date of this Agreement and the
Closing.
4.11 Condition of Purchased Assets. Subject to the provisions of Section
8.07, the tangible Purchased Assets will be as of the Closing in substantially the same
condition and repair,ordinary wear and tear excepted, as of the date of this Agreement. EXCEPT AS
EXPRESSLY SET FORTH IN THIS AGREEMENT, SELLER HAS NOT MADE, AND
SELLER MAKES NO AND DISCLAIMS ANY
REPRESENTATION OR WARRANTY, WHETHER EXPRESS OR IMPLIED,AND WHETHER BY COMMON LAW,
STATUTE, OR OTHERWISE, REGARDING ANY PURCHASED ASSET’S (I) QUALITY,
CONDITION, OR OPERABILITY,(II) MERCHANTABILITY, (III) FITNESS FOR ANY
PARTICULAR PURPOSE, OR(IV) CONFORMITY TO MODELS, SAMPLES OF MATERIALS OR MANUFACTURER
DESIGN;ALL TANGIBLE PURCHASED ASSETS SHALL BE DELIVERED “AS IS, WHERE IS” IN THE CONDITION IN WHICH
THE SAME EXISTS AS OF THE CLOSING DATE.
4.12 Taxes. There are no tax Liens open, pending against or, to Seller’s
Knowledge threatened against the Purchased Assets. Neither the IRS nor any other Governmental
Authority is asserting or, to Seller’s Knowledge, threatening to assert against Seller or any of its
Affiliates any deficiency or claim for additional Taxes or any adjustment of Taxes that could result
in the placing of a tax Lien upon the Purchased Assets. Seller or its Affiliates have filed (or will
cause to be filed on or before the Closing Date) all Tax Returns relating to the Operations and
Purchased Assets that are required to be filed on or before the Closing Date, and such Tax Returns
are (and will be) true, correct and complete in all material respects and were (and will be)
prepared in conformity with all Applicable Law,and Seller or its Affiliates have paid (or will pay
when due) all Taxes whether or not shown as due on such Tax Returns that are attributable to any
taxable period or portion thereof that ends on or before the
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Closing Date except for amounts being contested in good faith by appropriate proceedings.
Buyer will not be liable, as a result of the Contemplated Transactions, for Taxes of Seller
whether by law, contract or otherwise except to the extent expressly provided in this Agreement
or the Related Agreements.
4.13 Affiliate Agreements. Except as set forth in Schedule 4.13, Seller is
not currently a party to any material Contract with any Affiliate of Seller that provides for the
purchase or sale of goods to or from, or the provision of services to or from, the Refinery
excluding Contracts for hydrocarbons or Contracts for administrative services provided by Shell Oil
Company in the areas of human resources, benefits management, legal, finance, risk and insurance,
public and governmental affairs, and other such administrative functions.
4.14 Employee Benefit Plans. No event has occurred and no condition exists
with respect to any Employee Benefit Plan, or any plan, program, arrangement otherwise within the
term “Employee Benefit Plan” but without regard to whether it benefits or may benefit an Employee,
that will subject Buyer or the Purchased Assets subsequent to the Closing to any Tax, Lien or Loss
under Applicable Laws.
4.15
Labor Matters. Except as set forth in Schedule 4.15, Seller has not
received any written charges of discrimination, notification of any unfair labor practice charges or
complaints pending before any court or agency having jurisdiction thereof nor are there any current
union representation claims involving any of the Employees. To Seller’s Knowledge, there are no
strikes, work stoppages, work slowdowns or lockouts or of any threats thereof, with respect to the
Operations except for routine grievance matters, by or with respect to any of the Employees. Since
January 1, 2006, there have been no significant labor disputes, strikes, slowdowns, work stoppages,
lockouts or similar matters except for routine grievance matters involving Employees.
4.16 Financial Statements. The Financial Statements have been prepared (or will
be prepared to the extent the Financial Statements are to be delivered after the Closing) on a
consistent basis throughout the periods covered thereby, are correct and complete, and are
consistent with the books and records of Seller.
ARTICLE V
BUYER’S REPRESENTATIONS AND WARRANTIES
Buyer hereby represents and warrants to Seller as follows:
5.01 Organization and Good Standing. Buyer is a Delaware corporation
duly organized, validly existing and in good standing under the laws of the State of Delaware, with
full corporate power and authority to carry on its business and to own or lease and to operate its
properties as and in the places where such business is conducted and such properties are owned,
leased or operated.
5.02 Authority. Buyer has full corporate power and authority to execute, deliver
and enter into this Agreement, the Related Agreements and the Contemplated Transactions, to fully
perform its obligations hereunder and thereunder and to consummate the Contemplated Transactions.
The execution, delivery and performance of this Agreement, the Related Agreements and the
Contemplated Transactions have been duly authorized by all requisite corporate action of Buyer and
this Agreement, the Related Agreements and the Contemplated Transactions have been duly executed and
delivered by Buyer and constitute legal, valid and binding agreements of Buyer enforceable against
Buyer in accordance with respective terms, except as such enforceability is limited by general
principles of equity and applicable
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provisions of bankruptcy, insolvency, moratorium, reorganization or similar laws (regardless of
whether enforceability is considered in a proceeding at law or in equity).
5.03 Consents. Other than with respect to the HSR Act or any other consents obtained
by Buyer prior to the date hereof, no consent, approval of or by, or filing with or notice to any
other Persons is required with respect to Buyer in connection with the execution, delivery or
enforceability of this Agreement or the consummation of the transactions provided for hereby. Other
than with respect to (i) the HSR Act, and (ii) as is otherwise contemplated in this Agreement and in
the Related Agreements, no consent, approval of or by, or filing with or notice to any other Person
is required to be obtained with respect to Buyer or any of its Affiliates in connection with the
execution, delivery or enforceability of this Agreement, the Related Agreements or the consummation
of the Contemplated Transactions, except where the failure to obtain such consent or approval, make
such filing or give such notice would not have a material adverse effect on Buyer’s ability to
consummate the Contemplated Transactions.
5.04 No Breach, Conflict. The execution, delivery and performance of this
Agreement, the Related Agreements and the consummation of the Contemplated Transactions and the
compliance by Buyer with any of the provisions hereof and thereof does not and will not (i) violate
or conflict with, or result in a breach of, any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under, or result in
termination of, or accelerate the performance required by any of the terms, conditions or provisions
of the Organizational Documents of Buyer or under any material agreement, instrument or obligation
to which Buyer is a party, or by which Buyer or its assets or properties may be bound, or (ii)
violate any Applicable Law to which Buyer is subject, or by which Buyer or its assets or properties
may be bound.
5.05 Litigation. No Claim, action, suit, demand, proceeding, arbitration,
grievance, citation, summons, subpoena or to Buyer’s Knowledge any inquiry or investigation, of any
nature, civil, criminal, regulatory or otherwise, in law or in equity, that is pending, or to
Buyer’s Knowledge, threatened seeking to restrain or prohibit this Agreement, the Related Agreements
or any agreement, instrument or transaction contemplated hereby or thereby, or to obtain damages, a
discovery order or other relief in connection with this Agreement, the Related
Agreements or the Contemplated Transactions.
5.06 Brokers. Buyer has not retained any broker or finder or incurred any liability
or obligation for any brokerage fees, commissions, finders’ fees or similar compensation with
respect to this Agreement, the Related Agreements or the Contemplated Transactions.
5.07 Availability of Funds. At Closing, Buyer will have cash available to enable it
to consummate the Contemplated Transactions.
5.08 Independent Decision. Buyer acknowledges that Buyer has made its
own independent analysis and judgment of the commercial potential, condition and usefulness of
the Purchased Assets, taking into consideration all current Applicable Laws 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 Purchased 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 Purchased Assets. Except as expressly provided in this Agreement or the
Related Agreements, in no event shall any projection as to the financial condition, financial
results, status of assets, projects, availability of feedstock or markets or any other projections
made by or on behalf of Seller to Buyer be relied upon by Buyer, and Buyer acknowledges that Seller
makes no representation or warranty and specifically disclaims any representation or warranty with
regard to same. BUYER ACKNOWLEDGES THAT THERE ARE NO REPRESENTATIONS OR WARRANTIES RELATED
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TO THE PURCHASED ASSETS OR THE OPERATIONS, EXPRESS OR IMPLIED, EXCEPT AS EXPRESSLY SET FORTH IN
THIS AGREEMENT AND THE RELATED AGREEMENTS.
Without limiting the generality of the preceding, Buyer acknowledges that, except as
provided herein, no representations or warranties are made by or on behalf of Seller with respect
to any information, documents or materials made available to Buyer in “data rooms,” management
presentations or any other form in expectation of the contemplated Transactions.
ARTICLE VI
COVENANTS AND AGREEMENTS OF SELLER
Seller covenants and agrees as follows:
6.01 Access and Information. Subject to the provisions of Section 17.14 and
upon reasonable notice, Seller shall grant, or cause to be granted to, Buyer and its representatives
access during normal business hours throughout the Interim Period to the Purchased Assets and the
books and records and other information relating to the Operations and the Purchased Assets (subject
to any confidentiality agreements, applicable legal restrictions and any applicable legal
privileges). During the Interim Period Seller shall use all commercially reasonable efforts to
furnish, or cause to be furnished to, Buyer and its representatives all data and information
concerning the Refinery and concerning operations of the Refinery that which may reasonably be
requested by Buyer and shall use all commercially reasonable efforts to make available, or cause to
be made available, such personnel of Seller as may reasonably be requested. Notwithstanding the
preceding sentences to the contrary, nothing in this Agreement shall
be construed to permit Buyer or
its representatives to have access to and the Refinery Records shall
not include any files, records,
contracts or documents of Seller or its Affiliates relating to
(i) Seller’s or its Affiliate’s
inter-company or intra-company feedstock and product pricing
information, internal transfer prices,
hedging activity records and hydrocarbon inventory valuation procedures and records or (ii)
the negotiation or execution of this Agreement.
6.02 Conduct of Business.
(a) During the Interim Period, Seller shall conduct the Operations in the ordinary course of
business consistent with Seller’s customary practices (taking into account the planned Turnaround
Activities) including routine maintenance and routine preventive maintenance activities, and
capital expenditures and projects as are in Seller’s operational plan for such period. Seller
shall use commercially reasonable efforts to maintain satisfactory relationships with employees,
suppliers, distributors, customers, collective bargaining units and others having business
relationships with the Refinery. Without limiting the generality of the preceding provisions,
Seller shall not during the Interim Period, without the prior written consent of Buyer, which
consent shall not be unreasonably withheld, conditioned or delayed.,
(i) sell, lease, exclusively license to others or otherwise dispose of any assets
that would constitute Purchased Assets if held as of the Effective Time, or
Intellectual Property or Licensed Technology Rights, except for Inventory sold in the
ordinary course of business consistent with past practice, or acquire any asset other
than in the ordinary course of business, consistent with past practice;
(ii) except as made in the ordinary course of Seller’s compensation program
(including annual consideration for increases in base salary and bonus pay), make any
material change in the rate of compensation, commission, bonus or other direct or
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indirect remuneration payable, or paid or agreed or orally promised to pay,
conditionally or otherwise, any bonus, incentive, retention or other compensation,
retirement, welfare, fringe or severance benefit or vacation pay, to or in respect of
any Employee (excluding retention and related bonuses paid or payable by Seller in
connection with the transition activities contemplated herein);
(iii) fail to maintain levels of catalyst, supplies and spare parts at levels
consistent with Seller’s practices;
(iv) enter into any settlement of any pending or threatened litigation, or enter
into any amendment of any existing settlement agreement, where the provisions thereof
will materially and adversely impact the Purchased Assets, the Intellectual Property or
Licensed Technology Rights or the ordinary operations of the Refinery as conducted by
Seller on an historical basis (Seller shall provide Buyer with reasonable prior notice
in the event Seller enters into any settlement of any pending or threatened litigation
related to the Operations, or enters into any amendment of any existing settlement
agreement, where the provisions thereof exceed Five Hundred Thousand Dollars
($500,000);
(v) enter into any settlement of any pending or threatened litigation, or enter
into any amendment of any existing settlement agreement, where the provisions thereof
would require Buyer to hire any former employee of Seller;
(vi) consent to the entry of (or amendment to) any decree or order by, or enter
into (or amend) any other agreements with, any Government Authority that will
materially and adversely impact the Purchased Assets, the Intellectual Property,
Licensed Technology Rights or the ordinary operations of the Refinery as conducted by
Seller on an historical basis;
(vii) amend existing Commitments or enter into additional Commitments where the
provisions thereof exceed Five Hundred Thousand Dollars ($500,000) without the consent
of Buyer, which shall not be unreasonably withheld, conditioned or delayed; or
(viii) take any action or omit to take any action that would result in the
occurrence of any of the foregoing.
(b) Seller
agrees to use commercially reasonable efforts to manage the Operations such that
Hydrocarbon Inventory levels as of the Effective Time approximate
such desired levels designated in
writing by Buyer with appropriate advance notice, in all cases taking
into account the planned
Turnaround Activities. Buyer and Seller acknowledge that Seller is not obligated to reach
such desired levels and nothing in this Section 6.02 shall modify, alter or impair Buyer’s
obligations regarding the purchase of Hydrocarbon Inventories
pursuant to Section 2.06.
(c) Buyer
and Seller acknowledge that the initial term of LBT Lease has terminated in
accordance with its terms, and that Seller is in negotiations for a new lease or lease extension
with the Port of Long Beach for use of the Long Beach Terminal. During the Interim Period, Seller
shall consult with Buyer on a regular basis as is necessary or desirable to keep Buyer informed as
to the status of such negotiations. Seller shall not enter into any new lease for the Long Beach
Terminal without the prior written consent of Buyer, which consent shall not be unreasonably
withheld, conditioned or delayed. The execution of a new lease or lease extension for the Long Beach
Terminal shall not be a condition to the consummation of the Contemplated Transactions. Rather, if
no such lease or extension shall have been
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entered into prior to the Closing Date, as of the Effective Time Buyer shall step into the
shoes of Seller in the continuing negotiations with the Port of Long Beach with respect to such
lease or renewal.
6.03
Schedules.
(a) Prior
to the Closing, Seller shall notify Buyer of additions or changes to the Schedules to
this Agreement or the HSE Agreement solely required to reflect events
occurring subsequent to the
date of this Agreement or facts discovered by Seller after the date hereof, so as to cause
Seller’s representations and warranties expressly contained herein or the HSE Agreement (other than
any which speak as to a particular date) to be true and correct in all material respects as of the
Closing Date. Subject to the following sentence, notices given by Seller pursuant to this
Section 6.03(a) will be deemed to have amended the Schedules, to have qualified the
representations and warranties contained in ARTICLE IV and in the HSE Agreement, and to have
corrected any misrepresentation or breach of warranty that otherwise might have existed hereunder by
reason of the fact, circumstance, event or development (with the result that no misrepresentation or
breach shall be deemed to have occurred), in each case to the extent of the disclosure contained in
such notice, including for purposes of Section 11.02. If
such additions or changes are reasonably
estimated (as determined by the Parties acting in good faith) to
result (individually or in the
aggregate) in a Material Adverse Effect, the Parties shall negotiate in good faith to determine
a reasonable adjustment to the Purchase Price to fully reflect any Losses estimated to be incurred
by Buyer resulting from such matters; provided, however, in the event such Losses are reasonably
estimated (as determined by the Parties acting in good faith) to exceed Fifty Million Dollars
($50,000,000) then either Party shall have the right to terminate this Agreement pursuant to
Section 15.01.
(b) Notwithstanding the provisions of Section 6.03(a) to the contrary, the
Parties acknowledge and agree that the Schedules described on Schedule 6.03(b) are not
complete as of the date hereof. Seller shall have the right to make additions and changes to such
Schedules to the extent provided on the applicable Schedule, and such additions and changes shall
have the effect of amending each affected Schedule as if the applicable additions and changes were
included or reflected on such Schedule as of the date hereof so long as such additions and changes
reflect facts and information that are consistent with and arise out of or are incidental to
Seller’s conduct of the Operations in the ordinary course of business consistent with Seller’s
customary practices (taking into account the planned Turnaround Activities) including routine
maintenance and routine preventive maintenance activities, and capital expenditures and projects as
arc in Seller’s operational plan for any applicable period.
6.04 Financial Statements. Seller shall cause to be prepared and delivered to Buyer
the following financial statements of the operations of the Refinery (collectively
the “Financial Statements”):
(a) audited
balance sheet, statement of income and retained earnings and a statement of cash
flow as of and for the fiscal year ended December 31, 2006 that
comply in all material respects with
the Securities and Exchange Commission’s Regulation S-X together with the opinion of
nationally recognized independent certified public accountants which shall be delivered to Buyer on
or before the Closing;
(b) unaudited
balance sheets, statements of income and retained earnings and statements
of cash flow as of and for the three (3) months ended
March 31, 2006, June 30, 2006 and March 31,
2007 all of which shall be delivered to Buyer on or before the Closing;
(c) unaudited
balance sheets, statements of income and retained earnings and statements of
cash flow as of and for the three (3) months ended June 30,
2007 which shall be delivered to Buyer
on or before September 30, 2007;
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6.05 Turnaround Activities. During the Interim Period, Seller shall, at its
expense,conduct at the Refinery the turnaround activities set forth in
Schedule 6.05 (collectively, the “Turnaround
Activities”).
6.06 HGU Unit. During the Interim Period, Seller shall, at its expense, exercise its
right to purchase the HGU Unit and acquire indefeasible title to the HGU Unit. Seller shall
terminate that certain HGU Lease dated as of October 1, 1990 between Manufacturers Hanover Trust
Company of California (as Owner Trustee) and Texaco Refining and Marketing Inc. (as Lessee).
6.07 Easement Access. After the Closing, Seller shall use commercially
reasonable efforts to provide Buyer with access to any of Seller’s easements, rights of way,
licenses and similar rights that were used in and necessary to the Operations prior to Closing that
are not part of the Purchased
Assets.
ARTICLE VII
COVENANTS AND AGREEMENTS OF BUYER
Buyer covenants and agrees as follows:
7.01 Confidentiality. Buyer acknowledges that all information provided to any of it
and its Affiliates, directors, officers, employees, counsel, auditors, accountants, agents, advisors
and other representatives by Seller and its Affiliates and their respective directors, officers,
employees, counsel,auditors, accountants, agents, advisors and other representatives is subject to
the terms of Section 17.14.
7.02 Pre-Closing Access and Inspections.
(a) During the Interim Period, Buyer shall not contact or communicate with
any employees, customers, suppliers or distributors of the Refinery except as expressly provided in
this Agreement or with Seller’s prior written consent.
(b) Any inspection or investigation conducted by Buyer, its
agents,
consultants, or other authorized representatives prior to the Closing (i) shall be conducted in
accordance with Applicable Laws including any applicable HSE Laws and in such manner as not to
interfere unreasonably with the Operations or the Purchased Assets; or (ii) shall not entitle Buyer
to conduct Phase II environmental assessments or any other sampling or testing of soil or ground or
surface water at, or under, any real property associated with the Refinery or the other Purchased
Assets, without the prior written consent of Seller, Buyer being limited to the review of Seller’s
or its Affiliate’s records or any other publicly available materials or information with regard to
these matters. Buyer bears the risk of injury to any of its employees, agents or representatives
conducting any inspection or investigation of the Refinery, the other Purchased Assets or the
Operations and shall indemnify, defend and hold the Seller Indemnified Parties harmless (subject to
ARTICLE XIII) for all Losses to the extent caused by, arising from or related to the acts
or omissions of Buyer and its employees, agents or representatives in conducting any inspection or
investigation of the Refinery, the other Purchased Assets or the Operations (other than
notifications by Buyer of possible violations of HSE Laws or breaches of representations,
warranties or covenants of Seller contained herein).
(c) Notwithstanding any provision to the contrary contained in
this
Agreement. Buyer’s obligations under this Section 7.02 shall survive the termination of this
Agreement and the consummation of the Contemplated Transactions.
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7.03 Post-Closing Access. From and after the Effective Time, Buyer will, and will
cause its Affiliates to, afford to Seller and its representatives reasonable access during normal
business hours to personnel and to such properties and records that were transferred to Buyer and
permission to take from the Refinery copies of any books, records or accounts relating to the
Refinery through and including the Closing Date 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 reasonably
request for each of the following to the extent such matter does not involve a Dispute between Buyer
and Seller: (i) financial reporting, (ii) tax or similar purposes, (iii) purposes of investigating
claims, or conducting litigation or administrative proceedings with third parties or Governmental
Authorities or (iv) any other proper purpose, provided that
Seller shall indemnify, defend and hold
the Buyer Indemnified Parties harmless (subject to ARTICLE
XIII) for all Losses to the
extent caused by, arising from or related to the acts or omissions of
Seller and its representatives
from such access. Buyer will, and will cause its Affiliates to, keep
and maintain the records that
Seller and its representatives have access to pursuant to this Section 7.03, such records
to be maintained for a period of ten (10) years from the Closing Date or such longer periods as may
be required by Applicable Laws, provided that if Buyer desires to destroy or dispose of such records
during such period then Buyer will first offer to Seller in writing at least sixty (60) days before
such destruction or disposition to surrender them to Seller and if Seller does not accept such offer
within twenty (20) days after receipt of such offer, then Buyer may take such action. Seller’s right
to post-Closing access to the Refinery shall include the right to access Excluded Assets that remain
located at the Refinery pursuant toSection 2.02.
7.04 Litigation. With respect to all litigation and other matters set forth in the
Schedules and any other matters that constitute Retained Liabilities and for so long as Seller is
contesting or defending such matter, Buyer shall cooperate to the extent commercially reasonable
with Seller and Seller Affiliates and their respective counsel, at Seller’s expense, in their
efforts to conduct or resolve such litigation, including by making available to them such documents
and witnesses as may be deemed necessary or useful therefor in Seller’s sole but reasonable
discretion. With respect to any dispute or litigation involving any terminated Employee seeking
reinstatement, Buyer shall take such actions as are reasonably necessary for Seller to comply with
the terms of any judgment, decision or order of any proper authority issued in connection with such
dispute or litigation (including by offering to employ and employing, at Buyer’s expense, such
former Employee) and shall treat any former Employee who is ordered to be reinstated at the Refinery
as a Transferred Employee for all purposes hereunder. The preceding sentence shall not relieve
Seller from the obligations of Section 6.02(a)(v).
7.05 Trademarks. No license to any of the Trademarks is granted by this Agreement,
the Related Agreements or by the transfer of the Purchased Assets to Buyer, and Buyer is precluded
from any use and agrees not to make any use of Trademarks on or in connection with the sale of any
of its products or services as a means of identity or in any of its communications or in connection
with Buyer’s operation of the Purchased Assets. Buyer acknowledges and agrees with Seller that the
Trademarks, and all rights to which, and the goodwill represented thereby and pertaining thereto,
are being retained by Seller and its Affiliates. Without limiting the generality of the preceding,
Buyer will not be entitled to use the name“Shell” or any variations or derivations thereof
(including any logo, trademark or design containing such name) or any logo, service xxxx, trade name
or trademark that constitutes an Excluded Asset except to the extent as may be expressly provided
otherwise pursuant to the Retail Asset Purchase Agreement. Accordingly, as soon as reasonably
practical after the Closing, but in any event within sixty
(60) days after the Closing Date with
regards to Purchased Assets that are visible to the public, and
within one hundred eighty (180) days
after the Closing Date with regards to Purchased Assets that are not visible tothe general public,
Buyer shall remove from or paint or cover over, as appropriate, any logo, servicemark, trade name
or trademark indicating that such assets were owned or operated by
Seller or any of its Affiliates
(including signs displaying Seller’s or its Affiliate’s emergency contact telephone number or
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otherwise using or displaying the name “Shell”, in whole or in part). As promptly as practical
after the Closing but in any event within ten (10) days, Buyer shall post Buyer’s emergency
contact telephone number in place of Seller’s or its Affiliate’s emergency contact telephone
number. In the event that Buyer breaches this Section 7.05, Seller shall be entitled to
specific performance of this Section 7.05 and to injunctive relief against further
violations, as well as any other remedies at law or in equity available to Seller.
7.06 Environmental Insurance Policy. Seller shall have the right, but not the
obligation,to purchase and maintain, at its expense, pollution legal liability insurance and cost
containment insurance to insure Seller against Seller’s obligations pursuant to the HSE Agreement
(collectively, the “Seller Environmental Policies”).
Buyer agrees to provide reasonable assistance
to Seller in applying for and maintaining the Seller Environmental Policies including providing
Seller and its insurers reasonable access to the Purchased Assets after the Closing Date for
purposes of maintaining, monitoring, renewing or other proper purposes related to the Seller
Environmental Policies.
7.07 Third Party Property. Buyer shall grant or continue to grant such rights of
ingress or egress necessary to allow any third party that holds any Third Party Property 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 lawfully remains on the Real
Property.
ARTICLE VIII
COVENANTS AND AGREEMENTS OF SELLER AND BUYER
Buyer and Seller covenant and agree as follows:
8.01 HSR. Buyer and Seller shall each file or cause to be filed with the Federal
Trade Commission (the “FTC”) and the United States Department of Justice (“DOJ”) any notifications
or reports required to be filed under the HSR Act with respect to the Contemplated Transactions, and
shall provide copies of such notifications or reports to the Attorney General of any State upon
request by the State Attorney General. Any such notification and report form and supplemental
information will be in substantial compliance with the requirements of the HSR Act. Buyer and Seller
shall each bear the costs and expenses of their respective filings; provided that Buyer shall pay
100% of the filing fees in connection therewith. Buyer and Seller shall respectively use all
commercially reasonable efforts to make such filings promptly (and in any event within fifteen (15)
Business Days) following the date hereof, to respond promptly to any requests for additional
information and documentary materials made by either the DOJ or the FTC, or any State Attorney
General, to make any further filings that may be necessary, proper or advisable in connection
therewith and to cause the waiting periods under the HSR Act to terminate or expire at the earliest
possible date and to resist in good faith, at each of their
respective cost and expense (including
the institution or defense of legal proceedings), any assertion that
the Contemplated
Transactions constitute a violation of the antitrust laws, all to the
end of expediting consummation
of the Contemplated Transactions. Each of Buyer, on the one hand, and
Seller, on the other, shall
consult with the other prior to any meetings, by telephone or in person, with the staff of
the applicable governmental authorities, and each of Buyer and Seller shall have the right to have
a representative present at any such meeting.
8.02 Assignments.
(a) With respect to any Contract, easement, right-of-way or Permit that (1)
is intended to be assigned to Buyer hereunder and (2) requires consent for the assignment thereof
to Buyer, Seller shall take such actions as are commercially reasonable and necessary, and Buyer
shall
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cooperate with Seller in all commercially reasonable respects, to effect assignment thereof to
Buyer as of the Closing Date. It is understood that such actions by Seller shall not include any
requirement of Seller to expend money, commence any litigation or offer or grant any accommodation
(financial or otherwise) to any third party. Seller shall initiate termination procedures on any
Contracts requested by Buyer to be effective upon the Closing provided that such terminations do
not require Seller to expend money or grant any accommodation (financial or otherwise) to the
counter parties to such Contracts.
(b) In the event that Seller is unable to obtain the requisite approval for
assignment of any such Contract, easement, right-of-way or Permit, or in the event such Contract,
easement, right-of-way or Permit is required to be amended or supplemented and is not so amended or
supplemented as of the Closing Date, and such assignment is reasonably necessary to operate the
Refinery in the ordinary course of business as conducted by Seller on an historical basis for the
twelve (12) months prior to the Closing Date without giving rise to a material adverse affect on
the Purchased Assets or the operation of the Refinery, at the written request of Buyer on or before
the Closing Date or within thirty (30) days after the Closing Date (except where such action would
be unlawful or prohibited by such Contract, easement, right-of-way or Permit), Seller shall (x)
retain any such Contract, easement, right-of-way or Permit and shall enter into an arrangement with
Buyer (including, to the extent appropriate amending the Transition Services Agreement) to provide
Buyer with the economic and functional benefits of such Contract, easement, right-of-way or
Permit, provided, that Buyer shall perform Seller’s obligations thereunder arising on or after
the Closing Date (and indemnify, defend and hold Seller harmless, pursuant to ARTICLE XIII,
against Losses suffered in the event Buyer breaches any obligations thereunder) until such
Contract, casement, right-of-way or Permit is assigned to Buyer or expires at the earliest
opportunity in accordance with its terms, or is properly amended or supplemented, and (y) take all
commercially reasonable and necessary actions required to assign to Buyer, or amend or supplement,
any such Contract, easement, right-of-way or Permit as soon as practicable after the Closing Date.
(c) Notwithstanding Seller’s obligations pursuant to Section
8.02(a), the
assignment of any Contract, easement, right-of-way or Permit to be transferred to Buyer that
requires consent for assignment, or amendment or supplement, may be effected after the Closing
Date. Except as otherwise provided in this Agreement including
Section 11.09, the Purchase
Price shall not be subject to adjustment, and the Closing of the Contemplated Transactions shall
not be delayed, by reason of any inability to obtain consent for assignment of any Contract,
easement, right-of-way or Permit or any such amendment or supplement. Buyer acknowledges that
certain consents to the Contemplated Transactions may be required from parties to Contracts,
easements, rights-of-way or Permits (written or otherwise) to which any of Seller is a party, and
such consents may not be obtained (provided that Seller has complied with its obligations under
Section 8.02(b)). Except as otherwise provided in this Agreement, Buyer agrees that Seller
shall not have any liability whatsoever to Buyer arising out of or relating to the failure to
obtain any consents that may have been or may be required in connection with the Contemplated
Transactions by this Agreement or because of the default, acceleration or termination of any such
agreement, contract, license, lease, easement, right-of-way or permit as a result thereof (provided
that Seller has complied with its obligations under Section 8.02(b)). Buyer
further agrees that no representation, warranty or covenant of Seller contained herein shall
be breached or deemed breached and no condition of Buyer shall be deemed not to be satisfied (other
than pursuant to Section 11.09) as a result of the failure to obtain any consent or as a
result of any such default, acceleration or termination or any lawsuit, action, claim, proceeding
or investigation commenced or threatened by or on behalf of any persons arising out of or relating
to the failure to obtain any consent or any such default, acceleration or termination (provided
that Seller has complied with its obligations under Section 8.02(b)).
8.03 Transition Services. Promptly following the execution of this
Agreement,
representatives of Buyer and Seller shall meet to develop a transition plan which shall identify
services, service periods and service charges to be provided by Seller subsequent to the Closing.
Such services,
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service periods and service charges, if agreed, shall be added prior to Closing to the terms and
conditions of the Transition Services Agreement (the “Transition Services Agreement”), as set
forth in the form of Exhibit F.
8.04
Other Governmental Approvals. Buyer and Seller
shall cooperate with each other and
take all reasonable steps necessary to obtain authorization for the sale of the Purchased Assets
from all other applicable Governmental Authorities.
8.05 Other Actions. Buyer and Seller shall otherwise use their respective
commercially reasonable efforts to cause the satisfaction of all conditions precedent in this
ARTICLE VIII, ARTICLE XI and ARTICLE XII and the Closing to occur as soon as
reasonably practicable after the date of this Agreement.
8.06 Collection of Amounts Owed to a Party. In the event any Party receives any
funds or other property that belongs to another Party then the receiving Party shall receive and
hold such funds and property in trust for the benefit of the rightful Party and shall promptly
forward such funds and property to the rightful Party. It is the intention of the Parties that, as
between the Parties, Seller shall been titled to all income attributable to the operations conducted
prior to 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 Operations 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.
8.07 Repairs.
(a) Seller agrees that if any of the Purchased Assets (i) require repairs or
maintenance prior to the Effective Time outside of the normal scope of general repairs or
maintenance consistent with Seller’s operation of the Purchased Assets, or (ii) are destroyed or
damaged, in whole or in part, by fire or other casualty prior to the Closing Date then, Seller
shall repair or replace (with similar grade, quality and condition) such Purchased Assets with
reasonable promptness prior to the Closing Date, provided that (A) if the cost of such repairs or
replacements, individually or in the aggregate, are reasonably estimated (as determined by the
Parties in good faith) to exceed Fifty Million Dollars ($50,000,000), then Seller shall have the
option to terminate this Agreement pursuant to Section 15.01 and (B) if the cost of such
repairs or replacements, individually or in the aggregate, are reasonably estimated (as determined
by the Parties in good faith) to exceed Fifty Million Dollars ($50,000,000) and it is reasonably
estimated (as determined by the Parties in good faith) that such repairs or replacements cannot be
completed by June 1, 2007, then Buyer shall have the option to terminate this Agreement pursuant to
Section 15.01.
(b) Notwithstanding the provisions of Section 8.07(a) to the
contrary, in the
event the cost of such repairs or replacements, individually or in the aggregate, are reasonably
estimated to not exceed Fifty Million Dollars ($50,000,000), Buyer may elect to waive such repairs
or replacements by Seller and accept at the Closing either (i) a credit against the Purchase Price
or (ii) a payment by Seller (or an assignment at the Closing from Seller of insurance proceeds, if
any) in an amount equal to the estimated amount for such repairs or replacements. Any insurance
proceeds exceeding the cost of repair or replacement of the damaged Purchased Assets shall be an
Excluded Asset.
(c) Seller
and Buyer shall negotiate in good faith the estimated amount of such repairs or
replacements.
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(d) In the event Seller and Buyer disagree over the amount of such
estimated
Losses then the Parties will resolve such dispute pursuant to ARTICLE XVI. The
arbitrator(s) shall decide the amount of the estimated repairs or replacements based upon all facts
and circumstances.
8.08 Payment of Certain Expenses Due and Payable After the Closing Date.
(a) The
Closing Date Payment shall be increased by the pro-rated amount of all lease and
rental payments made by Seller prior to the Closing Date in respect
of the Purchased Assets but that
are attributable to periods after the Closing Date. The Closing Date Payment shall be decreased
by the pro-rated amount of all lease and rental payments in respect of the Purchased Assets to be
made by Buyer subsequent to the Closing Date but that are attributable to periods on or prior to the
Closing Date. The Parties shall share information among themselves prior to the Closing Date to
identify and pro-rate such amounts.
(b) Buyer
shall pay, as and when due, all emissions fees, permit fees and utility bills due and
payable after the Closing Date, 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.
(c) If
a Party makes any payment to a third party pursuant to any assigned Contract; and (i)
such payment is made in respect of work performed, services provided
or goods delivered during a
period of time that 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 that 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 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.
8.09 Relationship of the Parties. Nothing in this Agreement or the Related
Agreements
shall be construed to create any joint venture, partnership, agency or other similar fiduciary
relationship between the parties hereto or thereto. Under this Agreement and the Related Agreements
the Parties and their respective Affiliates 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 respective
Affiliates shall be considered to be the agent, representative, employee, master, or servant of the
others for any purpose, (ii) except as expressly provided in this Agreement, none of the Parties or
their respective 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 respective Affiliates, and
(iii) none of the Parties or their respective 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 respective Affiliates shall owe duties, fiduciary
or otherwise to the other. The Parties and their respective 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 that they will
conduct their respective businesses and operations. None of the Parties or their respective
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 respective Affiliates, (ii) developing or marketing
any products or services that compete, directly or indirectly with those Parties or their
respective 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
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respective Affiliates, or (iv) doing business with any client or customer of the Parties or their
respective Affiliates. None of the Parties or their respective Affiliates shall have any
obligation to offer any business opportunity (except as expressly specified in this Agreement or
the Related Agreements) and may modify or otherwise change any of their respective businesses or
operations at any time.
8.10
Environmental Consents/Waivers/Amendments. Promptly after the execution hereof,
Seller and Buyer shall use commercially reasonable efforts and shall assist each other to
obtain from all applicable Governmental Authorities the environmental consents, waivers and
amendments set forth in Schedule 8.10.
8.11 Title Policies. Promptly after the execution of this Agreement, the Parties
shall obtain from a nationally recognized title company mutually acceptable to the Parties (the
“TitleCompany”) a CLTA commitment (and deliver a copy thereof to Buyer) for owner’s title insurance
with respect to the Refinery Real Property and the SRP Real Property and leasehold title insurance
with respect to the LBT Real Property, insuring title subject only to the Title Policy Exceptions
(collectively, the“Title Policies”). Unless the Parties agree otherwise, the amount of such
insurance coverage for the respective properties shall be based upon the most recent assessed
property valuations from the applicable Governing Authority for ad valorem Tax purposes. The Parties
shall diligently cooperate in good faith to enable the Title Company to issue final/binding
commitments or actual policies for the Title Policies at Closing. Buyer and Seller shall each pay
fifty percent (50%) of the cost of the premium for the Title Policies. In the event Buyer elects to
purchase extended coverage/owner’s title policies (ALTA), the incremental cost of such
coverage/policies and any required surveys shall be paid solely by
Buyer. Additionally, Buyer shall
be solely responsible for the purchase of any lenders policies of title insurance. Nothing in this
Section 8.11 shall relieve Seller from a remedy Buyer may have from Seller’s breach of any
representation or warranty contained in ARTICLE IV; provided, however, Buyer agrees to use
all commercially reasonable efforts to pursue claims, if any, that it may have against the Title
Company pursuant to the Title Policies before making any claim against Seller for any breach of
Seller’s representations or warranties contained in Sections 4.04 and 4.06 related
to the Real Property; provided further that Buyer and Seller shall cooperate, including entering
into any tolling agreements and take any other action reasonably required to preserve Buyer’s claims
against Seller during the pendency of Buyer’s pursuit of claims against the Title Company.
8.12 POTW PERMIT. During the Interim Period and to the extent necessary, after
the Closing, Seller and Buyer will file a request with the Los Angeles County Sanitation District to
split Seller’s existing Permit for Industrial Waster Water Discharge that relates to both the
Refinery and to Seller’s Xxxxxx Terminal facility into two independent permits allocating the
capacity units to each facility such that each facility has adequate units for current operations.
In the event that the Los Angeles County Sanitation District charges a fee for such new permits,
Seller shall be responsible for payment of such fee; provided, however, that Buyer shall reasonably
cooperate in any actions that mitigate the cost to Seller so long as such actions are at no net cost
to Buyer.
8.13 Further Assurances. From time to time, as and when reasonably requested by
any Party, each Party shall execute and deliver, or cause to be executed and delivered, all such
documents and instruments and shall take, or cause to be taken, all such further actions which are
consistent with, and customary and necessary for, the consummation of the Contemplated Transactions.
Without limiting the generality of the preceding, Seller and Buyer shall contact all third parties
which currently have contractual arrangements with Seller and its Affiliates in respect of the
Purchased Assets or the Operations and which are anticipated to have commercial arrangements with
Buyer following the Closing to establish transition matters to be effective as of the Effective
Time.
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ARTICLE IX
TECHNOLOGY TRANSFER
9.01 Grants to Intellectual Property. Seller shall grant and hereby does grant
to Buyer and its Affiliates, effective as of the Effective Time, for Use by Buyer and its Affiliates
solely in the operations of the Refinery, a non-exclusive, irrevocable, royalty-free, fully paid-up
license or sublicense(both, as the case may be, without a right to sublicense or transfer except as
expressly provided in thisARTICLE IX or Section 17.05) to Intellectual Property,
which exists at the Effective Time and which is or has been in Use in the Operations. By executing
this Agreement, effective as of the Effective Time,Buyer is assuming the applicable and relevant
duties and obligations of Seller regarding the use of the Intellectual Property that is licensed
herein under the Technology Transfer Agreements (collectively,
the“TTA”) attached as Exhibit
H (comprised of two documents), including the confidentiality
obligations of Article VI
therein,
9.02
Exclusions to Grant of Section 9.01. For avoidance of doubt, in the
grant provisions of Section 9.01 sublicense of Intellectual Property described in clause (i) of the
definition thereof in Section 1.01. by Seller does not include any intellectual property
outside the grant of Section 2 of the TTA nor does it include any grants of rights of any kind to
any lubricant formulation or additive technology or Post-Effective or Pre-Effective Long Life
Coolant Technology both as defined in the TTA. For avoidance of doubt, Buyer shall receive no rights
to any improvements in Intellectual Property made by Seller subsequent to the Closing Date.
9.03 Transfer of Intellectual Property. Buyer shall have the right to sublicense
the Intellectual Property to any Person solely in connection with the operations of the Refinery;
but subject to an assumption in writing of such third party of all relevant duties and obligations
(including any confidentiality obligations) contained in the TTA, as applicable. In the event
Buyer sells, assigns,transfers or pledges to any Person, ownership of the Refinery, or any part
thereof, or in connection with a merger or sale of stock, or sale of substantially all the assets,
of Buyer, the license granted in Section 9.01may be extended, sublicensed, transferred or
assigned to such transferee or lender subject to outstanding obligations to third parties and
subject to an assumption in writing by such transferee or lender of
all relevant duties and
obligations under the applicable portions of this ARTICLE IX. Any obligations
of confidentiality in this Agreement or in the TTA, and any liability accrued hereunder by Buyer or
its Affiliates with respect thereto, shall survive such transfer.
9.04 Licensed Technology Rights.
(a) Assignable Licensed Technology Rights. All Licensed Technology
Rights that are freely transferable are listed on Schedule 9.04(a). Seller shall transfer
or cause the transfer of Licensed Technology Rights that are freely transferable and shall grant
all rights and interest in the Licensed Technology Rights listed on Schedule 9.04(a). by
assignment or sublicense as the case may be. Upon such transfer, Seller agrees that all royalties,
licensing fees and similar costs payable up to the Effective Time for such Licensed Technology
Rights shall be fully paid by Seller for Use by Buyer in the operations of the Refinery, it being
understood that Buyer shall be responsible for any such royalties, licensing fees and similar costs
payable by Buyer in connection with Buyer’s Use of such Licensed Technology Rights after the
Effective Time under the terms of the applicable licenses. Buyer is aware that these rights are
Licensed Technology Rights where (A) such rights are freely transferable without the permission of
the licensor or vendor, (B) such Licensed Technology Rights are or have been in Use by Seller or
its Affiliates at the Effective Time, and (C) such transfer would not require Seller or Shell Oil
Company or its Affiliates to forego future Use of the Licensed Technology Rights for its or their
own benefit as currently permitted under the Licensed Technology Rights. Buyer acknowledges that
the
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Licensed Technology Rights exclude any source code or other aspects of Software of third parties
unless such source code or other aspects of Software has been licensed to Seller pursuant to the
applicable license for such Licensed Technology Rights or where Seller does not have a right to
provide such other aspects of Software or source code in said license. Any fees or costs required
to be paid for such transfer shall be paid by Seller.
(b) Non-assignable or non-transferable Licensed Technology Rights.
All
non-assignable, non-transferable Licensed Technology Rights are listed on Schedule
9.04(b). Buyer recognizes that the Licensed Technology Rights listed on Schedule
9.04(b) are not freely assignable without the permission of the respective licensor or vendor.
Seller or its Affiliate, at the written request of Buyer, agrees to contact the licensor or vendor
and use commercially reasonable efforts to obtain a permitted transfer of the Licensed Technology
Rights or obtain, in consultation with Buyer, a new, non-transferable license for Use by Buyer
solely in the operations of the Refinery on such terms as are reasonably satisfactory to Buyer.
In that event, all fees and costs necessary to transfer the Licensed Technology Rights or to
acquire a new license commensurate therewith to Buyer, shall be paid by Buyer. Upon such transfer,
Seller agrees that all royalties, licensing fees and similar cost payable up to the Effective Time
for such Licensed Technology Rights listed on Schedule 9.04(b) shall be fully paid by
Seller for Use by Buyer in the operation of the Refinery, it being understood that Buyer shall be
responsible for any such royalties, licensing fees and similar costs payable by Buyer in connection
with Buyer’s Use of such Licensed Technology Rights after the Effective Time under the terms of the
applicable licenses. Seller shall or shall cause its Affiliates to make commercially reasonable
efforts to maintain the status quo of such non-assignable, non-transferable Licensed Technology
Rights until Buyer can secure transfer or a new license to Buyer.
(c) Licensed Technology Rights not on Schedule 9.04(a) or 9.04(b).
Both
Buyer and Seller recognize that, because of the complexity of the sale of the Refinery to Buyer,
some relevant Licensed Technology Rights for the operations of the Refinery may not be included on
Schedule 9.04(a) or 9.04(b). In that event, Seller agrees for a period of at least five (5)
years after the Closing Date to (i) identify such Licensed Technology Rights and to notify Buyer
thereof and (ii) at Buyer’s request, use commercially reasonable efforts to transfer such Licensed
Technology Rights to Buyer for Use solely in the internal operations of the Refinery, provided that
any fees necessary to implement such transfer shall be borne exclusively by Seller.
It is understood that Licensed Technology Rights were acquired by Seller subject to certain third
party obligations. In any assignment or issuance of a sublicense from Seller to Buyer of any such
third party Licensed Technology Rights under this Section, Buyer agrees to assume all applicable
obligations reasonable and necessary to enable Buyer to Use such Licensed Technology Rights in the
operations of the Refinery. For avoidance of doubt, Seller shall not be obligated to extend to
Buyer any source code or any other aspects of Software of third parties to the extent not licensed
to it under the applicable licenses for the Licensed Technology Rights or where Seller does not
have a right to provide such other aspects of Software or source code in said license or maintain
for Buyer such third party Licensed Technology Rights in the same manner and to the same extent as
practiced by Seller prior to the Effective Time, in each case where the extension or maintenance of
such rights would be to the detriment of the rights of Seller or any of its Affiliates to practice
under its own rights and licenses. Seller shall follow the procedures
described in Section 9.04(a) at Buyer’s expense, with respect to such non-assignable non-transferable third party Licensed
Technology Rights set forth in Schedule 9.04(b), or at Seller’s expense, with respect to
such third party Licensed Technology Rights not on Schedule 9.04(a) or 9.04(b).
Upon such transfer, Seller agrees that all royalties, licensing fees and similar cost payable up
to the Effective Time for such Licensed Technology Rights shall be fully paid for Use by Buyer in
the operation of the Refinery, it being understood that Buyer shall be responsible for any such
royalties, licensing fees
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and similar costs payable after the Effective Time for any period of Use by Buyer after
the Effective Time under the terms of the applicable licenses. For avoidance of doubt, Seller
shall be and remains responsible for any and all such royalties, licensing fees and similar costs
payable arising out of any Use of the Licensed Technology Rights up to the Effective Time.
9.05 Term and Termination. The grants made in this ARTICLE IX are perpetual
and shall not be subject to any term. Seller agrees that the licenses granted to the Seller and/or
its Affiliates under the TTA are perpetual and irrevocable. Without limiting the generality of the
foregoing, in the event of any termination of the Technology Transfer Agreement dated January 15,
1998, Seller agrees that all Intellectual Property owned by Texaco, Inc. and licensed to Seller
under the TTA, and all Intellectual Property owned by Seller, will each continue to be licensed to
Buyer on a perpetual basis, in accordance with the terms of this ARTICLE IX.
9.06 Representations and Warranties.
(a) Seller represents and warrants that it has the right to grant the
licenses of
Intellectual Property as set forth in Section 9.01 free and clear of any Liens, other than
Permitted Encumbrances; and that to the Knowledge of Seller no claim, action, suit, proceeding,
governmental or court order, or demand is pending or threatened with respect to any Intellectual
Property licensed pursuant to this ARTICLE IX.
(b) Seller represents and warrants that, to the Knowledge of Seller, (i)
there
are no facts that would support a claim that may result in losses having a Material Adverse Effect
on Buyer’s Use of the Intellectual Property licensed pursuant to this ARTICLE IX in the
operations of the Refinery in a manner substantially similar to the Operations and (ii) the
Intellectual Property licensed pursuant to this ARTICLE IX and the Use of the Intellectual
Property in accordance with such license has not and, does not infringe or otherwise violate any
intellectual property or other proprietary or contractual right of a third party except as provided
in Schedule 9.06(b).
Except for the representations and warranties and agreements contained in this ARTICLE IX
and this Agreement, any oral or written report, data or other information provided to Buyer
hereunder, whether provided under license or otherwise, shall be
provided on an “as is” basis
without any warranties, express or implied including the results or effects obtained through use
of information, or that it is fit for any use intended or can be used without infringing the
patent or copyright rights of a person. Without any limitation on the preceding, any implied
warranty of merchantability and fitness for a particular purpose is expressly excluded from this
ARTICLE IX. with respect to any information or Intellectual Property provided hereunder.
In no event will any Party be liable for loss of profits, or indirect, consequential (except for
breach of confidentiality and amounts payable in connection with Third Party Claims) or special
damages resulting from the other Party’s use or disclosure of any information or Intellectual
Property.
9.07 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
IX.
9.08 Miscellaneous. Buyer shall not be entitled to receive and Seller and its
Affiliates shall have no obligation to provide any modifications, enhancements or upgrades made by
Seller or its Affiliates to any Intellectual Property or Licensed Technology Rights subsequent to
the Closing. All rights not expressly granted in this ARTICLE
IX to Buyer are retained by Seller and
its Affiliates. If Buyer develops any improvements or modifications to the Intellectual Property
licensed to it underSection 9.01, Buyer shall retain all right, title and interest to such
improvements or modifications and
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related intellectual property rights therein. Seller shall deliver to Buyer copies of the
Deliverable Items for any software licensed pursuant to this ARTICLE IX within twenty (20)
days after the Closing Date. “Deliverable Items” means, with respect to Software, all object code,
source code (except for source code and other aspects of Software owned by a third party and not
licensed to Seller under the applicable license therefor) documentation (including all user and
operation manuals), job control information, job control language, system engineering and design
information, and all databases related to the operation of the Refinery that is being licensed in
Section 9.01.
ARTICLE X
EMPLOYEES
10.01 Employees and Employee Benefits. Seller and Buyer agree to the provisions
concerning employees and employee benefits as set forth in Schedule 10.01.
ARTICLE XI
BUYER’S OBLIGATION TO CLOSE
Buyer’s obligation to close the Contemplated Transactions is subject to the fulfillment, or waiver
by Buyer, on or prior to the Closing of each of the following:
11.01 Compliance with Agreement. Seller shall have performed and complied in
all material respects with all covenants, agreements and conditions required by this Agreement to
be performed or complied with by Seller prior to the Closing Date.
11.02 Representations and Warranties. The representations and warranties of Seller
made in this Agreement (as may be amended by Seller in accordance with Section 6.03) shall
be true and correct except to the extent such failures would not have a “Material Adverse Impact,”
in each case as of the date hereof and on and as of the Closing Date, as though made on and as of
the Closing Date, except for representations and warranties that speak as of a specific date or time
(which need only be true and correct as of such date or time). For purposes of the preceding
sentence, whether a representation and warranty has been satisfied will be determined without regard
to any qualifiers relating to materiality or Material Adverse Effect contained in the terms of such
representation and warranty. For purposes of
this Section 11.02 the term “Material Adverse Impact”
shall mean if the act(s), omission(s), conduct,occurrence(s), condition(s) or situation(s). are
reasonably expected to (i) result in Losses with respect to the value of the Purchased Assets in
excess of Fifty Million Dollars ($50,000,000), or (ii) if not quantifiable, materially impair the
ownership or use of the Purchased Assets or the Operations, taken as a whole.
11.03 Closing Deliverables. Seller shall be willing and able to enter into, and shall
have delivered or caused to be delivered, at the Closing the items set forth in Section 3.02
to which Seller is to be a signatory.
11.04 Litigation. There shall not be any judicial restraining order or
injunction,preliminary or otherwise, in effect prohibiting the Closing of the Contemplated
Transactions. There shall not be pending or threatened any litigation or proceeding instituted by
any Governmental Authority to restrain, prohibit or otherwise interfere with or obtain substantial
monetary damages in connection with
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the consummation of the Contemplated Transactions, or operation of the Refinery by Buyer after
the Closing Date.
11.05 Governmental Consents. The waiting period (and any extension thereof)
applicable to the consummation of the Contemplated Transactions shall have expired or been
terminated under the HSR Act and (ii) any mandatory waiting period or required consent under any
applicable state competition or antitrust law or regulation shall have expired or been obtained
except where the failure to observe such waiting period or obtain a consent referred to in this
clause (ii) would not reasonably be expected to delay or prevent the consummation of the
Contemplated Transactions or have a material adverse effect on the expected benefits of the
Contemplated Transactions to Buyer.
11.06 Taking of Purchased Assets. In the event that prior to Closing there shall
be instituted or threatened in writing any governmental proceeding or other governmental action,
including 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 Purchased
Assets, Seller shall promptly notify Buyer. Buyer shall have the right to terminate this Agreement
pursuant to Section 15.01within thirty (30) days from the date of such notice, by giving
notice to Seller of its election to terminate this Agreement if such proceeding or other action has
or there is a reasonable probability of a taking of property that either materially impacts
Operations or that has an estimated value (as determined by the Parties in good faith) in excess of
Fifty Million Dollars ($50,000.000). If Buyer is not entitled to or, if entitled, does not timely
terminate this Agreement, then Seller shall assign to Buyer at Closing any rights Seller may have to
receive any payments (net of any expenses) as a result of any such proceeding or other action. In
the event Seller and Buyer disagree over the probable economic impact of any such governmental
proceeding or action then the Parties will resolve such dispute pursuant to ARTICLE XVI.
11.07 Adverse Change. Prior to the Closing there shall not have been any material
adverse change(s) in the Purchased Assets or Operations (excluding changes due to the economy
generally or due to the petroleum industry (refining, marketing, transportation, terminalling and
trading) generally or regionally and excluding repairs or replacements made pursuant to Section
8.07) that has or there is a reasonable probability (as determined by the Parties in good faith)
of having a value, individually or in the aggregate, in excess of Fifty Million Dollars
($50,000,000). In the event Seller and Buyer disagree over the probable economic impact of any such
adverse change(s) then the Parties will resolve such dispute pursuant to ARTICLE XVI.
Notwithstanding the preceding sentences, Seller shall have the right, but not the obligation
to correct or cure any such material adverse change(s) over Fifty Million Dollars ($50,000,000) at
its sole option and cost prior to Closing, including material adverse change(s) due to a Force
Majeure Event. Seller shall have the right, but not the obligation, to extend the Closing Date for
up to thirty (30) days (but no later than the Termination Date) within which to use commercially
reasonable efforts to cure or correct any such material adverse change. The foregoing shall not
act to modify Seller’s obligations under Section 8.07.
If
Buyer shall waive the condition to Closing contained in this Section 11.07, then
Seller shall assign and transfer to Buyer on the Closing Date all of Seller’s right, title and
interest to any insurance proceeds paid to Seller on account and to the extent of such material
adverse change and Seller shall pay to Buyer the amount of any deductible under any applicable
insurance policies.
11.08 Environmental Consents/Waivers/Amendments. Seller and Buyer, as
applicable,shall have obtained the environmental consents, waivers and amendments set forth in
Schedule 8.10.
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11.09 Required Consents and Authorizations. Seller shall have received (and shall
have furnished copies thereof to Buyer) all consents and approvals of third parties required to
transfer any Contracts for which consent or approval is required, except where the failure to obtain
such consent or approval would not have a Material Adverse Effect, and provided Seller is unable to
provide Buyer with the economic and functional benefits of such Contracts pursuant to Section
8.02(b). Without limiting the generality of the preceding, Seller shall have received (and shall
have furnished copies thereof to Buyer) such consents and approvals as necessary for the transfer
and assignment of the Commitments set forth in Schedule 11.09.
11.10 Regulatory Approvals. Buyer shall have received either material
Permits (temporary or permanent) necessary for the operation of the Purchased Assets as they are
being operated as of the date hereof or written notification from the appropriate Governmental
Authorities that Buyer may operate temporarily under the material Permits of Seller or its
Affiliates until similar Permits are issued to Buyer; provided, however, that Buyer shall use all
commercially reasonable efforts to obtain such Permits including providing any required financial
deposits.
11.11 Turnaround Activities. Seller shall have completed the Turnaround Activities in
all material respects and the processing units related to the Turnaround Activities shall
have been successfully restarted after the completion of the Turnaround Activities.
11.12 Retail Asset Purchase. The closing of the transactions contemplated by the
Retail Asset Purchase Agreement (the “Retail
Closing”) shall have occurred concurrently with the
Closing of the Contemplated Transactions pursuant to this Agreement. For the avoidance of doubt,
under no circumstances shall either Party be obligated to consummate the Contemplated Transactions
unless the transactions contemplated pursuant to the Retail Asset Purchase Agreement
are concurrently consummated.
11.13 Title Policies. The Title Company shall be unconditionally committed to issue
the Title Policies.
11.14 Surveys. No surveys of the Real Property shall be required as a condition to
Closing.
ARTICLE XII
SELLER’S OBLIGATION TO CLOSE
Seller’s obligation to close the Contemplated Transactions is subject to the fulfillment, or waiver
by Seller, on or prior to the Closing of each of the following:
12.01 Compliance with Agreement. Buyer shall have performed and complied in
all material respects with all covenants, agreements and conditions required by this Agreement to
be performed or complied with by Buyer prior to the Closing Date.
12.02 Representations and Warranties. The representations and warranties of
Buyer made in this Agreement shall be true and correct in all material respects as of the date
hereof and on and as of the Closing Date, as though made on and as of the Closing Date, except for
representations and warranties that speak as of a specific date or time (which need only be true and
correct as of such date or time), except to the extent that such failure would not prevent Buyer to
consummate the Contemplated Transactions.
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12.03 Closing Deliverables. Buyer shall be willing and able to enter into, and shall
have delivered or caused to be delivered, at the Closing the items set forth in Section 3.02
to which Buyer is to be a signatory.
12.04 Litigation. There shall not be any judicial restraining order or
injunction, preliminary or otherwise, in effect prohibiting the Closing of the Contemplated
Transactions. There shall not be pending or threatened any litigation or proceeding instituted by
any Governmental Authority to restrain, prohibit or otherwise interfere with or obtain substantial
monetary damages in connection with the consummation of the Contemplated Transactions, or the
operation of the Refinery by Buyer after the Closing Date.
12.05 Governmental Consents. The waiting period (and any extension thereof)
applicable to the consummation of the Contemplated Transactions shall have expired or been
terminated under the HSR Act and (ii) any mandatory waiting period or required consent under any
applicable state competition or antitrust law or regulation shall have expired or been obtained
except where the failure to observe such waiting period or obtain a consent referred to in this
clause (ii) would not reasonably be expected to delay or prevent the consummation of the
Contemplated Transactions or have a material adverse effect on the expected benefits of the
Contemplated Transactions to Buyer.
12.06
Environmental Consents/Waivers/Amendments. Seller and Buyer, as
applicable,shall have obtained the environmental consents, waivers and amendments set forth in
Schedule 8.10.
12.07 Retail Asset Purchase. The Retail Closing shall have occurred concurrently
with the Closing of the Contemplated Transactions pursuant to this Agreement. For the avoidance of
doubt,under no circumstances shall either Party be obligated to consummate the Contemplated
Transaction sunless the transactions contemplated pursuant to the Retail Asset Purchase Agreement
are concurrently consummated.
ARTICLE XIII
INDEMNIFICATION
13.01 Buyer’s Indemnification of Seller. Except as otherwise provided herein
and subject
to the provisions of this ARTICLE XIII, from and after the Closing Date, Buyer shall
indemnify, defend, save and hold harmless, Seller, its Affiliates, and their respective directors,
officers, employees, shareholders, partners, counsel, auditors, accountants, agents, advisors and
other representatives and each of the heirs, executors, successors and permitted assigns of any of
the foregoing (collectively, the “Seller Indemnified
Parties”), from and against any and all
Losses to the extent caused by, arising from or incurred in connection with or relate to:
(i) Buyer’s modification of any Intellectual Property, software or Licensed
Technology Rights licensed to Buyer pursuant to this Agreement, which modification was
not made under the direction or at the suggestion of Seller, and only to the extent
that the claim would not have arisen but for such modification;
(ii) Buyer’s breach of or failure to perform any covenant or agreement in this
Agreement or the Related Agreements (excluding the HSE Agreement and the Commercial
Agreements);
(iii) Buyer’s breach of any representation or warranty in this Agreement or the
Related Agreements (excluding the HSE Agreement and the Commercial Agreements);
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provided, however, that Buyer shall not have any liability under this clause
(iii) for any breach of a representation or warranty contained in this Agreement or
the Related Agreements if Seller had Knowledge (without a duty of inquiry) of such
breach at the time of Closing and failed to notify Buyer in writing of such breach;
(iv) the Assumed Liabilities (other than any environmental matters related to
Excluded Assets or Retained Liabilities, which are governed by the HSE Agreement) but
excluding such Losses to the extent caused by, arising from or incurred in connection
with or relate to the post-Closing acts or omissions of the Seller Indemnified Parties
or their contractors, licensees and invitees; and
(v) to the extent Buyer offers securities to the public in connection with the
Contemplated Transactions, then any liability under the Securities Exchange Act of
1934, as amended, the Securities Act of 1933, as amended, or any other federal or
state “blue sky” or securities or other law or regulation, at common law or otherwise,
including any untrue statement or alleged untrue statement of a material fact relating
to or contained in any preliminary prospectus, registration statement or any
prospectus forming a part thereof, or any amendment thereof or supplement thereto, or
arising out of or based upon any omission or alleged omission to state a material fact
required to be stated or necessary to make the statements therein not misleading,
unless such information that was provided in writing by Seller was untrue, inaccurate
and not expressly disclaimed, it being agreed that the foregoing indemnity shall not
limit any rights under Section 13.02 that may apply in respect of the factual
circumstance that gave rise to such liability.
BUYER UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT SUCH INDEMNIFICATION MAY INCLUDE AN
INDEMNIFICATION OF THE SELLER INDEMNIFIED PARTIES FOR AND AGAINST EACH OF THEIR OWN PRE-CLOSING
NEGLIGENCE.
13.02 Seller’s Indemnification of Buyer. Except as otherwise provided herein and
subject
to the provisions of this ARTICLE XIII. from and after the Closing Date, Seller shall
indemnify, defend, save and hold harmless, Buyer, its Affiliates and their respective directors,
officers, employees, shareholders, partners, counsel, auditors, accountants, agents, advisors and
other representatives and each of the heirs, executors, successors and permitted assigns of any of
the foregoing (collectively, the “Buyer Indemnified
Parties”) from and against any and all Losses
to the extent caused by, arising from or incurred in connection with or relate to:
(i) the Excluded Assets and the Retained Liabilities (other than any environmental
matters related to Excluded Assets or Retained Liabilities, which are governed by the
HSE Agreement) but excluding such Losses to the extent caused by, arising from or
incurred in connection with or relate to the post-Closing acts or omissions of the
Buyer Indemnified Parties or their contractors, licensees and invitees;
(ii) Seller’s breach of or failure to perform any covenant or agreement in this
Agreement or the Related Agreements (excluding the HSE Agreement and the Commercial
Agreements);
(iii) Seller’s breach of any representation or warranty in this Agreement or the
Related Agreements (excluding the HSE Agreement and the Commercial Agreements);
provided, however, that Seller shall not have any liability under this clause (iii) for
any breach of a representation or warranty contained in this Agreement or the Related
Agreements if
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Buyer had Knowledge (without a duty of inquiry) of such breach at the time of
Closing and failed to notify Seller in writing of such breach;
(iv) any failure by Seller to comply with the provisions, if any, of state or
local bulk sales laws; and
(v) the Blend Plant Real Property and the Blend Plant Improvements (excluding HSE
Claims) in the event the Subdivision Condition has not been satisfied as of the Closing
Date but excluding such Losses to the extent caused by, arising from or incurred in
connection with or relate to the post-Closing acts or omissions of the Buyer
Indemnified Parties or their contractors, licensees and invitees.
13.03 Environmental Indemnifications. Seller’s and Buyer’s
environmental indemnifications are governed by the terms of the HSE Agreement.
13.04 Exclusive Remedy. Any Claim or cause of action based on, arising out of or
relating in any way to any of the Contemplated Transactions (including all Exhibits and Schedules or
referenced herein or therein, but excluding for this purpose the HSE Agreement and the Commercial
Agreements)must be brought by either Buyer or Seller in accordance with the provisions and
limitations of this Agreement, whether such claim arises out of any contract, tort or otherwise but
excluding in each case any Claim relating to fraud or intentional misrepresentation in the
negotiation or execution of this Agreement. Except as otherwise provided in this Agreement and if
the Closing occurs, each Party here by waives (on its behalf and on behalf of its other Indemnified
Parties) to the fullest extent permitted under Applicable Laws, any and all rights, claims and
causes of action they may have against one another relating to the subject matter of this Agreement
or the Related Agreements (excluding the HSE Agreement and the Commercial Agreements) arising under
or based on any Applicable Law, including such rights, claims and causes of action Buyer may have
against Seller under breaches of statutory or implied warranties or otherwise, nuisance or other
tort actions, and common law rights of contribution. Notwithstanding any provision to the contrary
contained in this Agreement, the rights accorded Buyer and Seller under the HSE Agreement are their
sole and exclusive remedies against each other or any of each other’s respective Affiliates with
respect to the matters contained therein.
13.05
Procedures Relating to Indemnification Between Buyer and Seller. Following the
discovery of any facts or conditions that could reasonably be expected to give rise to a Loss or
Losses for which indemnification is provided under this Agreement, the Indemnified Party shall, as
promptly as reasonably possible thereafter, provide written notice (a
“Claim Notice”) to the
Indemnifying Party setting forth the specific facts and circumstances, in reasonable detail,
relating to such Loss or Losses and the amount of Loss or Losses (or a good-faith estimate thereof
if the actual amount is not known or not capable of reasonable
calculation); provided, however, that
failure to give such Claim Notice on a timely basis shall not affect the indemnification provided
hereunder except to the extent that such Indemnifying Party shall have been actually and materially
prejudiced as a result of such failure to provide a Claim Notice. Notwithstanding the foregoing:
(i) a Buyer Indemnified Party shall not be entitled to indemnity hereunder against
Seller under Sections 13.02(ii) or 13.02(iii) unless and until (A) such
Indemnified Party shall have provided Seller written notice of such claim; and (B)
Seller shall have failed to cure such claim, if curable, within sixty (60) days
after Seller’s receipt of a Claim Notice; and
(ii) a Seller Indemnified Party shall not be entitled to indemnity hereunder against
Buyer under Sections 13.01(ii) or 13.01(iii) unless and until (A) such
Indemnified Party
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shall have provided Buyer written notice of such claim; and (B) Buyer shall have
failed to cure such claim, if curable, within sixty (60) days after Buyer’s
receipt of a Claim Notice.
13.06 Procedures Relating to Indemnification for Third Party Claims.
(a) With respect to any indemnification provided for under this
Agreement
in respect of, arising out of or involving a claim or demand made by any Person against an
Indemnified Party (a “Third Party Claim”), such Indemnified Party must provide a Claim Notice to
the Indemnifying Party of the Third Party Claim as promptly as reasonably practicable after receipt
by such Indemnified Party of notice of the Third Party Claim. Thereafter, the Indemnified Party
shall promptly deliver to the Indemnifying Party copies of all notices and documents (including
court papers) received by the Indemnified Party relating to the Third Party Claim; provided,
however, that the failure to provide a Claim Notice, or deliver copies of all notices and
documents, in a reasonably timely manner shall not affect the indemnification provided hereunder
except to the extent the Indemnifying Party shall have been actually and materially prejudiced as a
result of such failure.
(b) If a Third Party Claim is made against an Indemnified Party, the
Indemnified Party shall permit the Indemnifying Party to participate in the defense thereof (it
being understood that the Indemnified Party shall control such defense unless the Indemnifying
Party assumes such defense as provided herein) and, if the Indemnifying Party so chooses and
acknowledges its obligation to indemnify the Indemnified Party therefor, to assume the defense
thereof with counsel selected by the Indemnifying Party provided that such counsel is
reasonably satisfactory to the Indemnified Party. Notwithstanding any acknowledgment made pursuant
to the immediately preceding sentence, the Indemnifying Party shall continue to be
entitled to assert any limitation on its indemnification responsibility contained in
Sections 13,08 and 13.09. Should the Indemnifying Party so elect to assume the defense of
such Third Party Claim, the Indemnifying Party shall not be liable to the Indemnified Party for
legal expenses subsequently incurred by the Indemnified Party in connection with the defense
thereof provided the Indemnifying Party does not seek to assert any limitation on its
indemnification responsibility to the Indemnified Party. If the Indemnifying Party assumes such
defense, the Indemnified Party shall have the right to participate in the defense thereof and to
employ counsel, at its own expense, separate from the counsel employed by the Indemnifying Party,
it being understood, however, that the Indemnifying Party shall control such defense subject to the
agreement of the Indemnifying Party and the Indemnified Party to cooperate in the defense of such
Third Party Claim as provided below. The Indemnifying Party shall be liable for the fees and
expenses of counsel employed by the Indemnified Party for any period during which the Indemnifying
Party has not assumed the defense thereof or assumes the defense but asserts any limitation on its
obligation to indemnify or defend which reduces its indemnification actions. If the Indemnifying
Party chooses to defend any Third Party Claim, the Parties shall reasonably cooperate in the
defense or prosecution of such Third Party Claim. Such cooperation shall include the retention and
(upon the Indemnifying Party’s request) the provision to the Indemnifying Party of records and
information which are reasonably relevant to such Third Party Claim and making employees available
on a mutually convenient basis to provide additional information and explanation of any material
provided hereunder. Whether or not the Indemnifying Party shall have assumed the defense of a Third
Party Claim, the Indemnified Party shall not admit any liability with respect to, or settle,
compromise or discharge, or consent to the entry of any judgment with respect to such Third Party
Claim without the Indemnifying Party’s prior written consent (which consent shall not be
unreasonably withheld, conditioned or delayed). The Indemnifying Party shall not consent to the
entry of any judgment or enter into any settlement with respect to the Third Party Claim without
the Indemnified Party’s prior written consent (which consent shall not be unreasonably withheld,
conditioned or delayed); provided, however, such consent of the Indemnified Party shall not be
required in the event of the entry of such judgment or entering into a settlement with respect to
such Third Party Claim does not include (i)
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the admission of any liability or responsibility on behalf of the Indemnified Party, (ii)
any financial obligation to be paid by the Indemnified Party or (iii) any sanction or restriction
upon the conduct of any business of the Indemnified Party.
13.07 Losses Net of Insurance. The amount of any and all Losses under this
ARTICLE XIII and elsewhere under this Agreement (but excluding Losses related to the HSE
Agreement) shall be determined net of any amounts that are recovered by an Indemnified Party under
insurance policies with respect to such Losses. Each Party hereby waives, or will procure the waiver
of, any subrogation rights that its insurer may have with respect to any indemnifiable Losses.
13.08 Survival of Representations and Warranties. (i)All of the representations
and warranties of Seller contained in this Agreement (other than Sections 4.01. 4.02. 4.05.
4.06. 4.09. 4.12and 4.14) shall survive the Closing for a period of two (2) years after the
Closing Date; (ii) the representations and warranties of Seller in Sections 4.05 and 4.09
shall survive the Closing for a period off our (4) years after the Closing Date; (iii) the
representations and warranties in Sections 4.12 and 4.14shall survive the Closing
until the expiration of the statute of limitations applicable to the underlying matter giving rise
to that claim; and (iv) the representations and warranties of Seller in Sections 4.01, 4.02 and
4.06 shall survive the Closing forever. The representations and warranties of Buyer contained
in this Agreement shall survive the Closing for a period of two (2) years after the Closing Date;
provided,however, the representations and warranties of Buyer in Sections 5.01 and 5.02
shall survive the Closing forever. The expiration of representations and warranties of any Party
shall not limit or impair such Party’s covenants contained in this Agreement, which shall survive
the Closing in accordance with their respective terms. A claim shall be deemed to have been properly
brought only upon delivery of a proper Claim Notice to the other Party within the applicable time
periods provided above at the notice address set forth in Section 17.01. For the avoidance
of doubt, the initial date of delivery of a Claim Notice, and not the expiration of any cure period,
shall be deemed to be the date a claim is made. Any claim required to be made within an applicable
time period provided above that is not so timely made shall be forever barred.
13.09 Limitations on Indemnification.
(a) With respect of any claim by a Party for indemnity under this Agreement or the
Related Agreements (excluding the HSE Agreement and the Commercial Agreements) that does not involve
a Third Party Claim, no Party shall seek, and an arbitrator appointed under ARTICLE XVI
may not award, any indirect, special, punitive, exemplary or consequential damages or Losses.
Nothing in thisSection 13.09(a) shall limit in any way a Party’s indemnification
obligations with respect to a Third Party Claim or a Claim under the HSE Agreement or the Commercial
Agreements.
(b) Notwithstanding any provision to the contrary contained in this Agreement,the following
limitations shall apply with regard to Seller’s obligations to indemnify the Buyer Indemnified
Parties pursuant to Section 13.02(iii):
(i) Seller’s liability to indemnify pursuant to Section 13.02(iii) for any breach
by Seller of any of its representations or warranties herein shall never exceed, in the
aggregate, an amount equal to Seventy-Fifty Million Dollars ($75,000,000); provided,
however, such limit amount shall be reduced to the extent of Losses paid by Seller
pursuant to Sections 3.02(a) or 3.02(c) of the HSE Agreement. The
limitations on Seller’s indemnification obligations set forth in the preceding sentence
shall not apply to Losses resulting from (y) any breach or default by Seller of
Sections 4.01. 4.02. 4.05. 4.06 and 4.12 or (z) fraud or willful misconduct by Seller
in the negotiation or execution of this Agreement; provided, however, that Seller’s
liability for breaches or defaults of Sections 4.01, 4.02. 4.05.
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4.06 or 4.12 shall never exceed, when added to all other Losses paid by
Seller pursuant to the HSE Agreement (but excluding Losses paid by Seller pursuant to
Section 3.02(d) of the HSE Agreement), in the aggregate, an amount equal to
the Closing Date Payment.
(ii) Seller will not have any liability for any Losses for any breach by Seller of
any of its representations or warranties herein unless and until the aggregate Losses
for which Buyer is entitled to recover under this Agreement and under the HSE Agreement
for any breach by Seller of any of its representations or warranties contained herein
and therein, exceeds in the aggregate an amount equal to One Million Dollars
($1,000,000) (the “Seller Threshold Amount”). The Seller Threshold Amount shall not
apply to Losses resulting from fraud or willful misconduct by Seller in the negotiation
or execution of this Agreement. Once the applicable Losses exceed the Seller Threshold
Amount, Buyer will be entitled to recover all such Losses to which it is entitled in
excess of the Seller Threshold Amount. Notwithstanding the preceding sentences to the
contrary, the limitations on Seller’s indemnification obligations set forth in this
subparagraph (ii) shall not apply to Losses resulting from any breach by Seller of any
of its representations or warranties set forth in Sections 4.01. 4.02. 4.05. 4.06
and 4.12.
13.10 Mitigation. The indemnification obligations of an Indemnifying Party shall
be appropriately reduced to the extent an Indemnified Party does not use reasonable steps and
use commercially reasonable efforts to mitigate any and all Losses, it being understood and agreed
that to the extent any Indemnified Party undertakes such mitigation efforts, the costs of such
efforts may be included in the calculation of indemnifiable Losses hereunder.
13.11 Subrogation. In the event that an Indemnified Party has a right of recovery
against any third party non-insurers with respect to any Losses 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 Losses; and (ii) such Indemnified Party shall
execute all papers reasonably required and take all commercially reasonable action necessary to
secure such rights, including the execution of such documents as are necessary to enable such
Indemnifying Party to bring suit to enforce such rights.
ARTICLE XIV
TAXES
14.01 Transfer Taxes. Except as provided in this ARTICLE XIV, Buyer and
Seller shall
each be liable for and pay one-half of all sales, use, transfer or similar Taxes that arise as a
result of the transfer of the Purchased Assets. By way of example, but not exclusion, Buyer and
Seller shall each pay one-half of real estate transfer Taxes, sales Taxes, business occupation
Taxes, applicable motor fuel Taxes, applicable environmental Taxes on all petroleum products
transferred, and any other Taxes assessed or imposed in each case on the transfer or sale of the
Purchased Assets and all costs to record any deeds. To the extent such Taxes are paid by Seller,
Buyer shall reimburse Seller within thirty (30) days after invoice from Seller for any such Taxes.
Buyer shall file, or cause to be filed, all required reports and returns incident to all ad valorem
Taxes, real property Taxes, personal property Taxes and similar obligations, which reports and
returns are due after the Closing Date 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
Closing Date and Seller shall reimburse Buyer within thirty (30) days after invoice for any such
Taxes and similar obligations that are attributable to any period prior to the Closing Date.
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Notwithstanding the preceding to the contrary, Buyer shall pay all Taxes for the transfer of any
Permits including HSE Permits (but excluding transfer Taxes, if any, payable by Seller pursuant
to Section 8.12).
14.02 Real Property Taxes. General and special real estate and other ad valorem
Taxes and assessments and other state or local Taxes, fees, charges and assessments in respect of
real property on the basis of the fiscal year in which the Closing occurs shall be prorated between
Buyer and Seller as of the Closing Xxxx. If the Closing Date shall occur before the tax rate or
assessment is fixed for such fiscal year, the apportionment of such Taxes and payments at the
Closing shall be based upon the most recently ascertainable Tax bills; provided, that Buyer and
Seller shall recalculate and re-prorate said Taxes and payments and make the necessary cash
adjustments promptly upon the issuance, and on the basis, of the actual Tax bills received for the
fiscal year in which the Closing occurs and the amount of any payments in lieu of Tax made with
respect to any such fiscal year.
14.03 Personal Property Taxes. Personal property Taxes, if any, on the basis of the
fiscal year in which the Closing occurs shall be prorated between Buyer and Seller as of the Closing
Date. If the Closing Date shall occur before the tax rate or assessment is fixed for such fiscal
year, the apportionment of such Taxes at the Closing shall be based upon a reasonable estimate
agreed upon by Buyer and Seller;provided, that Buyer and Seller shall recalculate and re-prorate
said Taxes and make the necessary cash adjustments promptly upon the issuance of, and on the basis
of, the actual Tax bills received for such fiscal year.
14.04 Tax Allocation. Seller and Buyer shall negotiate in good faith prior to the
Closing to agree upon an allocation of the Closing Date Payment (the
“Tax Allocation”) in
the form of Schedule 14.04. In the event the Parties are unable to finalize the Tax
Allocation prior to the Closing then the Parties shall attempt to finalize the Tax Allocation within
sixty (60) days after the Closing Date,provided, however, the Parties shall not be obligated to
reach Agreement. If Agreement is reached, the Parties shall treat and report (and, if necessary, to
cause each of their respective Affiliates to so treat and report) the sale and purchase of the
Purchased Assets for all federal, state and local Tax purposes in a manner consistent with the Tax
Allocation and shall not take any position on their respective Tax Returns that is inconsistent with
the Tax Allocation. Without limiting the generality of the preceding sentence, the Tax Allocation
will be reflected in Form 8594 that will be filed by Seller and Buyer in accordance with Section
1060 of the Code and in any other filings under the Code. The Parties recognize that the
Tax Allocation does not include Buyer’s acquisition expenses and that Buyer will allocate such
expenses appropriately.
14.05 Tax Election. Either Party may elect to structure the conveyance, transfer
or assignment of all or an applicable portion of the Purchased Assets as a tax-free exchange
pursuant to Section 1031 of the Code (a “1031 Exchange”), provided that (i) such Party gives notice
of such election to the other Party at least fifteen (15) days prior to the Closing Date, (ii)
provided that Buyer shall not be required to take title to any other property and (iii) such
structure does not have any adverse effect on the on the other Party. If such an exchange is elected
by such Party (the “Electing Party”), the Parties will use commercially reasonable efforts to
execute all necessary 1031 Exchange documents (provided, that any costs and expenses incurred shall
be borne by the Electing Party), that shall be in a form mutually acceptable to the Parties. The
Electing Party will indemnify (subject to ARTICLE XIII) the other Party and its Affiliates,
employees and agents against Losses that may be sustained by them on account of or in connection
with such election to structure the transaction as a 1031 Exchange.
14.06 Tax Assistance. After the Closing Date, each Party shall provide such
assistance as the other Party may from time to time reasonably request in connection with the
preparation of Tax Returns required to be filed, any audit or other examination by any taxing
authority, any judicial or administrative proceeding relating to liability for Taxes, or any claim
for refund in respect of such Taxes
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or in connection with any litigation and proceedings or liabilities related to the
Purchased Assets, including making available employees for interviews, litigation preparation and
testimony. The requesting Party shall reimburse the assisting Party for the out-of-pocket costs
incurred by the assisting Party.
14.07 Operating Taxes. Except as provided in this ARTICLE XIV, Buyer shall be
liable for and pay all Taxes that arise as result of the sale, rental, lease, storage, use,
consumption or operation of the Purchased Assets by Buyer after the Effective Time.
14.08 Childhood Lead Poisoning Prevention Fees. Seller shall retain and agree to
pay,perform and discharge when due, payments of California Childhood Lead Poisoning Prevention Fees
to the extent assessed and issued to Seller. Buyer shall assume and agree to pay, perform and
discharge when due, payments of California Childhood Lead Poisoning Prevention Fees to the extent
assessed and issued to Buyer.
ARTICLE XV
TERMINATION RIGHTS
15.01 Termination. This Agreement may be terminated at any time prior to the
Closing
Date as follows and in no other manner:
(i) by mutual written consent of Buyer and Seller;
(ii) by Buyer in the event the Closing shall not have occurred on or before June
1, 2007 or such later date as the Parties agree in writing (the “Termination Date”)
(including due to non satisfaction or fulfillment of the conditions set forth in
ARTICLE XI) (but provided that such failure to close is not due (A) primarily
to Buyer breaching any representation, warranty or covenant of Buyer contained in this
Agreement or (B) to the failure to satisfy Section 11.05 as of June 1, 2007);
(iii) by Seller in the event the Closing shall not have occurred on or before the
Termination Date (including due to non satisfaction or fulfillment of the conditions
set forth in ARTICLE XI) (but provided that such failure to close is not due
(A) primarily to Seller breaching any representation, warranty or covenant contained
in this Agreement or (B) to the failure to satisfy
Section 12.05 as of June 1, 2007);
(iv)
by either Party pursuant to the provisions of Section
6.03;
(v) by Seller or Buyer pursuant to the provisions
of Section 8.07;
(vi) by Buyer pursuant to the provisions
of Section 11.06;
(vii)
by either Party if such terminating Party terminates the Retail Asset
Purchase Agreement pursuant to an express right to do so by the terminating Party
pursuant to the provisions of the Retail Asset Purchase Agreement.
15.02
Extended Termination Date. If all conditions to
Closing set forth in ARTICLE
XI and ARTICLE XII are satisfied other than the conditions set forth in Sections
11.05 and 12.05, then the Termination Date shall be extended to such date as the
Parties mutually agree, but in the event the Parties do not mutually agree, then the Termination
Date shall be extended to July 1, 2007 and after July 1, 2007 either Party may terminate this
Agreement by giving written notice in the event the Closing conditions set
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forth in this Agreement, including under Sections 11.05 and 12.05 have not been
satisfied by such extended Termination Date.
15.03 Notice of Termination. In the event of termination by Buyer or Seller pursuant
toSection 15.01, written notice thereof shall forthwith be given to the other Party and the
Contemplated Transactions shall be terminated, without further action by any Party. If the
Contemplated Transactions are terminated as provided herein:
(i) Buyer shall return to Seller all documents and copies and other materials
received from, or on behalf of, Seller relating to the Contemplated Transactions,
whether so obtained before or after the execution hereof; and
(ii) all confidential information received by Buyer with respect to the Purchased
Assets and the Assumed Liabilities shall be treated in accordance with the terms
and conditions of the Section 17.14, which shall remain in full force and
effect notwithstanding the termination of this Agreement.
15.04 Effect of Termination. If this Agreement is terminated and the
Contemplated Transactions are abandoned as described in this
ARTICLE XV. this Agreement shall have
no further force and effect, except for the provisions of:
(i) Sections 4.05 and 5.06 relating to finder’s
fees and broker’s fees;
(ii) Section 7.01 relating to the obligation of Buyer to keep
confidential certain information and data obtained by it;
(iii) Section 7.02 relating to indemnification in connection
with the matters contemplated thereby;
(iv)
this ARTICLE XV;
(v) ARTICLE XVI related to mediation and arbitration;
(vi) Section 17.02 relating to governing law, etc.;
(vii) Section 17.03 relating to publicity;
(viii) Section 17.07 relating to certain expenses; and
(ix) Section 17.14 related to confidentiality.
Nothing in this ARTICLE XV shall be deemed to release any Party from any liability for any
breach by such Party of the terms and provisions of this Agreement.
15.05 Specific Performance. In the event of the default or breach of this Agreement
(i) by Seller that results in the failure to consummate the sale of the Purchased Assets to Buyer or
(ii) by Buyer that results in the failure to consummate the re-conveyance of the Blend Plant Real
Property to Seller,then Buyer or Seller, as applicable, shall be entitled to seek specific
performance of such transactions as provided for herein in any action instituted in any court of the
United States or any state thereof having jurisdiction over the Parties and the matter (subject to
the provisions set forth in ARTICLE XVI and Section 17.02). in addition to any other remedy
to which a Party may be entitled, at law or in equity.
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Notwithstanding the preceding to the contrary, the remedy of specific performance shall only be
available to any Party if the transactions contemplated by both this Agreement and the Retail
Asset Purchase Agreement are consummated concurrently in connection with specific performance
relief.
15.06
Cross Default. Notwithstanding any provision to the contrary contained in
this
Agreement, in the event a Party (the “Defaulting Party”):
(i) breaches its obligation to consummate the Retail Closing without a
contractual right to refuse to consummate such transaction, then such breach shall
also constitute a breach of this Agreement by the Defaulting Party for which damages
may be asserted against the Defaulting Party or for which specific performance
pursuant to Section 15.05 may be sought in each case for the Defaulting
Party’s failure to close the Contemplated Transactions; or
(ii) breaches its representations, warranties or covenants contained in the
Retail Asset Purchase Agreement to the extent that permits the nonbreaching Party
(pursuant to the terms of the Retail Asset Purchase Agreement) to not consummate the
Retail Closing and which results in the failure of the Retail Closing to occur, then
such breach shall also constitute a breach of this Agreement by the Defaulting Party
for which damages may be asserted against the Defaulting Party for the failure of the
closing of the Contemplated Transactions.
ARTICLE XVI
MEDIATION/ARBITRATION
16.1 Dispute Resolution. Any Claim arising out of or relating to this Agreement,
the Related Agreements (excluding the Commercial Agreements which shall be governed by the
terms thereof), or the performance, breach, validity, interpretation, application, or termination
thereof (a“Dispute”) whether based on contract, tort, statute or other legal or equitable theory
(including any Claim of fraud, misrepresentation or fraudulent inducement or any question of
validity or effect of this Agreement including this section) shall be settled by mediation and
consultations between the Parties initiated upon the written notice
(the “Mediation 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 Mediation Notice, then any
such Claim shall be finally resolved by arbitration initiated upon the written notice (the
“Arbitration Notice”) of any Party. The arbitration
shall be conducted in accordance with this
Agreement and the then current American Arbitration Association
Commercial Arbitration Rules
including Procedures for Large, Complex Commercial Disputes and
Optional Rules for Emergency
Measures of Protection (collectively, the “AAA
Rules”), and judgment on the award may been tered in
any court having jurisdiction thereof.
16.2 Seat of the Arbitration and Governing Law.
(a) The
seat of the arbitration shall be Houston, Texas or such other major city as mutually
agreeable to the Parties.
(b) Upon
agreement of the Parties and the arbitrators, pre-hearing conferences and evidentiary
hearings may be held in other locations, however the seat of the
arbitration will be deemed to
remain unchanged and any awards or orders will be deemed to have been
made at the seat of the
arbitration.
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(c) The arbitrator(s) shall decide the issues submitted as arbitrators at law only and the
Panel shall base its award, and any interim awards, upon the terms of this Agreement and the
substantive laws of the State of Texas, excluding the conflicts provisions of such law. The Panel
is not empowered to and shall not act as amiable compositers or ex aequo el xxxx.
16.03 Selection and Appointment of Arbitrator(s).
(a) In the event that any Party’s claim or counterclaim equals or exceeds,directly or
indirectly, one million dollars ($l,000,000)(including a Claim for injunctive relief,
declaratory relief or other relief that is reasonably expected to have an economic impact on any
Party in excess of $1,000,000), exclusive of interest or attorneys’ fees, the Dispute shall be heard
and determined by three(3) arbitrators; otherwise, the Dispute shall be heard and determined by one
(1) arbitrator. Any and all arbitrators appointed hereunder shall be independent and impartial.
(b) In
the event that one (1) arbitrator shall hear the Dispute, the Parties shall attempt to
agree upon a qualified individual to serve as arbitrator. If the Parties are unable to so
agree within thirty (30) days of the Arbitration Notice, then the Dispute shall be heard and
determined by (3)arbitrators selected and appointed in accordance with the procedure set out in
Section 16.03(c). The arbitrator selected shall be qualified by education, training, and
experience to hear and determine matters in the nature of the Dispute.
(c) In
the event that three (3) arbitrators shall hear the Dispute, the Parties shall, within
twenty (20) days after the Arbitration Notice (or after expiration of the initial thirty (30) days
if three (3) arbitrators are being appointed pursuant to
Section 16.03(b)), each select one person
to act as arbitrator. The two arbitrators so selected shall, within twenty (20) days of their
appointment, select a third arbitrator who shall serve as the chairperson of the Arbitral Panel. The
arbitrators selected shall be qualified by education, training, and experience to hear and determine
matters in the nature of the Dispute.
(d) If
there are multiple claimants or multiple respondents in any
arbitration having three
arbitrators, and such claimants or respondents are unable to agree
among themselves on the selection
and appointment of an arbitrator within twenty (20) days after the Arbitration Notice, then
that arbitrator shall be selected and appointed in accordance with the procedure set out in
Section 16.03(e) of this Agreement.
(e) If a Party fails to appoint an arbitrator as provided herein, or if the
arbitrators selected by the Parties are unable or fail to agree upon a third arbitrator within
twenty (20) days of their appointment, then that arbitrator shall be selected and appointed pursuant
to the selection procedure set forth in the AAA Rules; provided,
however, that such selection and
appointment shall be conducted on an expedited basis and shall be completed within twenty (20) days
from failure to appoint or to agree within the periods stated above.
(f) Should
an arbitrator die, resign, refuse to act, or become incapable of performing his or
her functions as an arbitrator, the AAA may declare a vacancy on the
Panel. The vacancy shall be
filled by the method by which that arbitrator was originally appointed.
(g) The
arbitrator(s) shall be bound by and shall follow the then current ABA/AAA Code
of Ethics for Arbitrators in Commercial Disputes.
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16.04 Pre-Hearing Procedure and Disposition.
(a) At the request of a Party, the Panel may take such interim measures and make such
interim orders as it deems necessary, including measures for the preservation of assets,
the conservation of goods, or the sale of perishable goods. The Panel may require appropriate
security as a condition of ordering such measures.
(b) At any time after the Panel is constituted and upon motion of any Party, the Panel may hear
and determine any preliminary issue of law asserted by a Party to be dispositive, in whole or in
part, of any claim or defense, pursuant to such procedures as the Panel deems appropriate.
(c) At any time after the Panel is constituted and upon motion of any Party, the Panel may
summarily determine and dismiss, in whole or in part, any claim or issue in dispute (i) if the Party
asserting it has failed to state a claim as a matter of law, or (ii) if the pleadings and evidence
show that no genuine issue of material fact exists with respect to any element of the claim or
defense and that the moving Party is entitled to disposition of the claim or defense as a matter of
law.
(d) If the Panel deems it appropriate, keeping in mind the expedited nature of arbitration
proceedings, the arbitral proceedings may be bifurcated according to claims or issues, and claims or
issues may be heard and determined separately as may be appropriate.
16.05 Discovery.
(a) The Parties shall 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. Any additional discovery shall only occur by
agreement of the Parties or as ordered by the Panel upon a finding of good cause.
(b) The Panel shall take into account applicable principles of legal privilege and related
protections, such as those involving the confidentiality of communications between a lawyer and
a client and the work product of a lawyer, and no Party or witness may be required to waive any
privilege recognized at law. The Panel shall issue orders as reasonably necessary to protect the
confidentiality of proprietary information, trade secrets, and other sensitive information
disclosed.
16.06 Awards and Relief.
(a) All awards shall be in writing, shall state the reasoning upon which the award rests
and shall be final and binding on the Parties. Any award shall be made and signed by at least
a majority of the arbitrators.
(b) The Parties hereby waive any claim to exemplary, punitive, or similar damages in excess of
compensatory damages, attorneys’ fees, costs, and expenses of arbitration, and the Panel is not
empowered to and shall not award exemplary, punitive, or similar damages in excess of compensatory
damages and attorneys’ fees, costs, and expenses of arbitration.
(c) The Panel is expressly empowered to grant any remedy or relief not expressly
prohibited herein available under the applicable law, including specific performance of
this Agreement to the extent allowed by law, declaration of the validity, meaning, and effect of
this Agreement and the rights or duties of the Parties hereunder, and, to the extent allowed by law,
prohibiting
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or mandating actions by a Party with respect to the performance of this Agreement or matters
arising out of or in connection therewith.
(d) In its award, the Panel may apportion the costs of arbitration between or among the Parties
in such manner as it deems reasonable, taking into account the circumstances of the case, the
conduct of the Parties during the proceedings, and the result of the arbitration,
including requiring one Party to bear all or the majority of such costs.
(e) In the event that any Party fails or refuses to participate in arbitration as provided
herein, the Panel is authorized to determine whether the failure to participate in the
arbitration was due to the bad faith of a Party, and if so may award to the other Party or Parties
all costs associated with the arbitration, including attorneys’ fees and costs, arbitrator’s fees,
and administrative fees.
(f) Unless otherwise ordered by the Panel as part of its award, each Party shall bear its own
costs and expenses and the costs of arbitration, and the fees and expenses of the arbitrators and of
any expert or other assistance engaged by the Panel shall be borne by the Parties to the
arbitration in equal shares.
16.07 Effect of Failure to Participate or to Pay Advances of Costs and Fees.
(a) The failure or refusal of any Party, having been given due notice thereof, to participate
at any stage of the dispute resolution proceedings shall not prevent the proceedings
from continuing, nor shall such failure or refusal impair the validity of the award or cause the
award to be void or voidable, nor shall it be a basis for challenge of the validity or
enforceability of the award or of the arbitration proceedings.
(b) If any Party fails to timely pay an advance on fees and costs ordered by the Panel or the
AAA within twenty (20) days after the date set for such deposit, that Party shall be deemed to be in
default. The Panel or the AAA shall then determine whether the funds on deposit are sufficient
to satisfy the anticipated estimated expenses for the proceeding to continue on an expedited basis
without the participation of the defaulting Party. If so, the proceeding will continue without the
participation of the defaulting Party, and the Panel may enter an award on default. Prior to
entering an award on default,the Panel shall require the non-defaulting Party to produce such
evidence and legal argument in support of its contentions as the Panel may deem appropriate. The
Panel may receive such evidence and argument without the defaulting Party’s presence or
participation. If the funds on deposit are deemed insufficient to satisfy the estimated costs of
continuing as provided herein, the non-defaulting Party may make all or part of the requested
deposit in an amount sufficient to allow the proceeding to continue without the participation of the
defaulting Party. If the non-defaulting Party chooses not to make the requested deposit, the
Panel may suspend or terminate the proceedings.
16.08 Adherence to Time Limits.
(a) In accepting appointment, the arbitrator(s) shall commit that their schedules permit them
to devote the reasonably necessary time and attention to the arbitration proceedings and
to resolving the Dispute within the time periods set by this Agreement and by the AAA Rules.
(b) Any time limits set out in this dispute resolution agreement or in the AAA Rules may be
modified upon written agreement of the Parties and the Panel or by order of the Panel.
(c) Any failure of the Panel to satisfy such time limits or to render a final award within the
time specified shall not impair the validity of the award or cause the award to be void or
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voidable, nor shall it be a basis for challenge of the validity or enforceability of the award or
of the arbitration proceedings.
16.09 Interim Measures from the Courts in Aid of Arbitration.
(a) At any time after submission of a written notice of arbitration, any Party
may request a court of competent jurisdiction to grant interim measures of protection: (a) to
preserve the status quo pending resolution of the Dispute; (b) to prevent the destruction of
documents and other information or things related to the Dispute; (c) to prevent the transfer,
dissipation, or hiding of assets; and/or (d) to aid the arbitral proceedings and the award. A
request for such interim measures to a judicial authority shall not be deemed incompatible with or a
waiver of a Party’s right to arbitrate a Dispute.
(b) The
Parties agree that a court at the seat of the arbitration at the request of a Party, or
the Panel with the consent of all Parties, may consolidate two or
more arbitral proceedings among
the Parties if there exist common questions of law or fact.
16.10 Consent to Jurisdiction. The Parties hereby consent to the jurisdiction of the
state and federal courts of Xxxxxx County, Texas for the enforcement of any award rendered by the
Panel.
16.11 Confidentiality. Unless the Parties agree otherwise, the Parties, the
arbitrator(s), and the AAA shall treat the dispute resolution proceedings provided for herein, any
related disclosures, and the decisions of the Panel, as confidential, except in connection with
judicial proceedings ancillary to the dispute resolution proceedings, such as a judicial challenge
to, or enforcement of, the arbitral award, and unless otherwise required by law to protect a legal
right of a Party.
16.12 Survival. The terms of this ARTICLE XVI shall survive the
termination or expiration of this Agreement.
ARTICLE XVII
MISCELLANEOUS
17.01 Notices. All notices or other communications required or permitted
to be given
hereunder shall be in writing and shall be delivered by hand or sent by prepaid telex or telecopy,
or sent, postage prepaid, by registered, certified or express mail, or reputable overnight courier
service and shall be deemed given when so delivered by hand, telexed or faxed, or if mailed, five
(5) days after mailing (one (1) Business Day in the case of express mail or overnight courier
service), as follows:
If to Buyer:
Tesoro Refining and Marketing Company
300 Xxxxxxx Xxxxx Xxxxx
Xxx Xxxxxxx, Xxxxx 00000
Xttn: Chief Operating Officer Fax: (000) 000-0000
300 Xxxxxxx Xxxxx Xxxxx
Xxx Xxxxxxx, Xxxxx 00000
Xttn: Chief Operating Officer Fax: (000) 000-0000
With a copy (which shall not constitute notice) to:
Tesoro Refining and Marketing Company
300 Xxxxxxx Xxxxx Xxxxx
Xxx Xxxxxxx, Xxxxx 00000
300 Xxxxxxx Xxxxx Xxxxx
Xxx Xxxxxxx, Xxxxx 00000
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Attn: General Counsel
Fax: (000) 000-0000
Fax: (000) 000-0000
If to Seller:
Shell Oil Products
Onx Xxxxx Xxxxx
000 Xxxxxxxxx
Xxxxxxx, Xxxxx 00000
Xttn: Vice President — Portfolio Americas
Fax: (000) 000-0000
Onx Xxxxx Xxxxx
000 Xxxxxxxxx
Xxxxxxx, Xxxxx 00000
Xttn: Vice President — Portfolio Americas
Fax: (000) 000-0000
With a copy (which shall not constitute notice) to:
Shell Oil Products
Onx Xxxxx Xxxxx
000 Xxxxxxxxx
Xxxxxxx, Xxxxx 00000
Xttn: General Counsel Fax: (000) 000-0000
Onx Xxxxx Xxxxx
000 Xxxxxxxxx
Xxxxxxx, Xxxxx 00000
Xttn: General Counsel Fax: (000) 000-0000
Any Party may change the address to which such communications are to be directed to it by
giving written notice to the other in the manner above.
17.02 Governing Law; Submission to Jurisdiction. This Agreement and the
Related Agreements (unless expressly provided otherwise therein) and the obligations of the Parties
hereunder and thereunder shall be governed by and construed and enforced in accordance with the
substantive and procedural laws of the State of Texas, without regard to rules on choice of law.
Subject
to and without limiting the provisions of ARTICLE XVI, any action to enforce the terms
hereof or the Related Agreements (unless expressly provided otherwise therein) may be properly
venued in, and shall be brought in, the federal or state courts located in Houston, Texas. Each
Party agrees that it shall irrevocably submit to the jurisdiction of such courts for purposes of
actions to enforce the terms of this Agreement and the Related Agreements (unless expressly
provided otherwise therein) and to service of process by certified mail, delivered to the
applicable Party at the address indicated herein. Each Party hereby irrevocably waives (on it own
behalf and on behalf of its other Indemnified Parties), to the fullest extent permitted by
Applicable Law, any objection to personal jurisdiction, whether on grounds of venue, residence or
domicile. In addition, each Party hereby irrevocably waives (on it own behalf and on behalf of its
other Indemnified Parties), to the fullest extent permitted by Applicable Law, any right it may
have to a trial by jury in respect of any proceedings relating to this Agreement or the Related
Agreements (unless expressly provided otherwise therein).
17.03 Publicity. Buyer and Seller agree that, from the date hereof through and
including the Closing Date, no public release or announcement concerning the Contemplated
Transactions shall be issued or made by any Party without the prior consent of each other Party
(which consent shall not be unreasonably withheld, conditioned or delayed), except as such release
or announcement may be required by Applicable Law, prior contractual obligations or the rules or
regulations of any securities exchange,whether in the United States or elsewhere, (or upon advice
of counsel such release or announcement is appropriate or desirable under or in light of such
contractual obligations, laws and regulations), in which case the Party making the release or
announcement shall allow each other Party reasonable time to
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comment on such release or announcement in advance of such issuance. Notwithstanding the
foregoing, Buyer and Seller shall cooperate to prepare a joint press release to be issued on the
Closing Date and, upon the request of either Buyer or Seller, at the time of the signing of this
Agreement. Buyer and Seller agree to keep the terms of this Agreement confidential, except to the
extent required by Applicable Law or prior contractual obligation or for financial reporting
purposes and except that the Parties may disclose such terms to their respective Affiliates,
counsel, auditors, accountants, agents, advisors and other representatives as necessary in
connection with the ordinary conduct of their respective businesses (so long as such Persons
agree to keep the terms of this Agreement confidential).
17.04 Entire Agreement. This Agreement, the Schedules and Exhibits and the
agreements referred to herein or executed simultaneously herewith, set forth the entire agreement
and under standing of the Parties in respect to the Contemplated Transactions and supersede
all prior agreements,arrangements and undertakings, whether written or oral, relating to the
subject matter hereof (including the Confidentiality Agreement which shall not continue in effect).
Except as otherwise specifically provided in this Agreement, no conditions, usage of
trade, course of dealing or performance, understanding or agreement purporting to modify,
vary, explain or supplement the terms or conditions of this Agreement will be binding unless
hereafter made in writing and signed by the Party to be bound, and no modification will be effected
by the acknowledgment or acceptance of documents containing terms or conditions at variance with or
in addition to those set forth in this Agreement, except as otherwise specifically agreed to by the
Parties in writing.
17.05 Assignment. This Agreement and the Related Agreements
(excluding the Commercial Agreements which shall be governed as provided therein) and, except as
otherwise provided in ARTICLE IX with respect to the Intellectual Property, any rights and
obligations hereunder or thereunder shall not be assignable or transferable by Buyer or Seller
without the prior written consent of the other Party (provided that Seller’s prior written consent
shall not be required in the event Buyer transfers its entire rights and obligations hereunder to
its parent company or a wholly owned Subsidiary of Buyer, as long as Buyer first fully guarantees
such parent company’s or Subsidiary’s performance of all of Buyer’s obligations under this Agreement
and under all of the agreements that are exhibits hereto) and any purported assignment without such
consent shall be void and without effect. Without limiting the generality of the preceding, the
indemnification Obligations of Seller and Buyer pursuant to this Agreement and the Related
Agreements (excluding the Commercial Agreements) shall not be transferable or assignable in whole or
in part without such Party’s prior written consent and any purported or attempted transfer or
assignment by an Indemnified Party shall be null and void without the prior written consent of the
Indemnifying Party. Notwithstanding the foregoing, Seller may assign or transfer any or all of its
rights hereunder to any qualified intermediary to complete a 1031 Exchange as contemplated in
this Agreement.
17.06 Amendment and Waiver. This Agreement may be amended, modified, superseded or
canceled, and any of the terms, covenants, representations, warranties or conditions hereof may
be waived, only by a written instrument executed by the Parties, or, in the case of a waiver, by or
on be half of the Party waiving compliance. The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right at a later time to enforce
the same. No waiver by any Party of any condition, or of any breach of any term, covenant,
representation or warranty contained in this Agreement, in any one or more instances, shall be
deemed to be or construed as a further or continuing waiver of any such condition or breach or a
waiver of any other condition or of any breach of any other term, covenant representation or
warranty.
17.07 Expenses. Whether or not the Contemplated Transactions are consummated,
and except as otherwise specifically provided in this Agreement, all costs and expenses incurred in
connection
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with this Agreement and the Contemplated Transactions, including legal, due diligence,
accounting and investment banking fees and expenses, shall be paid by
the Party incurring such
costs or expenses.
17.08 Schedules. Matters listed once on the Schedules shall be deemed disclosed
with reference to all sections of the Schedules (including any disclosures made in amendments made
pursuant to Section 6.03) to the extent the applicability of such information is readily
apparent. The inclusion of information in the Schedules shall not be construed as an admission that
such information is material to the Purchased Assets, the Assumed Liabilities or Seller. In
addition, matters reflected in the Schedules are not necessarily limited to matters required by this
Agreement to be reflected in such Schedules. Such additional matters are set forth for informational
purposes only and do not necessarily include other matters of a similar nature.
17.09 Representation By Counsel. Buyer and Seller acknowledge that each of them
has been represented by counsel in connection with this Agreement and the Contemplated
Transactions. Accordingly, any rule of law or any legal decision that would require interpretation
of any claimed ambiguities in this Agreement against the Party that drafted it has no application
and is expressly waived.
17.10 Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be valid and effective under Applicable Law, but if any
provision of this Agreement or the application of any such provision to any Person or circumstance
shall be held invalid,illegal or unenforceable in any respect by a court of competent jurisdiction,
such invalidity, illegality or unenforceability shall not affect any other provision hereof.
17.11 Bulk Transfer Laws. Buyer hereby waives compliance by Seller with
the provisions of any so-called bulk transfer laws of any jurisdiction in connection with the
purchase and sale of the Purchased Assets. Seller shall indemnify, defend and hold Buyer harmless
(subject to ARTICLE XIIJ) from any Losses Buyer may incur due to failure to so comply in
accordance with Section 13.02(iv).
17.12 No Third Party Beneficiaries. Except as provided with respect to
indemnification for Indemnified Parties as set forth in ARTICLE XIII and elsewhere in this
Agreement, nothing in this Agreement shall confer any rights upon any Person other than the Parties
and their respective permitted successors and assigns.
17.13 Binding Effect. Subject to the provisions hereof restricting assignment,
this Agreement shall be binding upon and shall inure to the benefit of the Parties and their
respective successors and permitted assigns.
17.14 Confidentiality.
(a) Each of Seller and Buyer (on behalf of themselves and each of their respective Affiliates)
acknowledges that the information and material, in whatever form, including this Agreement and the
Related Agreements (collectively, the “Confidential
Information”) disclosed or made available to it
by, and relating to, the other (and its Affiliates) prior to the Effective Time is confidential.
Each of Seller and Buyer (on behalf of themselves and each of their respective Affiliates) further
agrees that it shall use commercially reasonable efforts not to make or permit disclosure of the
Confidential Information to any Person, other than their Affiliates and their respective
stockholders, members or owners, officers, employees, advisers and representatives to whom such
disclosure is necessary or convenient for the completion of the Contemplated Transactions, and
except in an arbitration proceeding as described in ARTICLE XVI or as may be required by
Applicable Law or a court of competent jurisdiction. Each of Seller and Buyer (and their respective
Affiliates) shall appropriately notify each officer, employee, adviser and representative to whom
any such disclosure is made, that such disclosure is
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made in confidence and shall be kept in confidence and not to be used in any capacity
except for the operations of the Refinery by Buyer.
(b) Each
of Seller and Buyer (and their respective Affiliates) agrees to use diligent efforts
in accordance with customary and reasonable commercial practice, and
at least with the same degree
of skill and care that it would manifest in protection of its own confidential information,
to protect the Confidential Information.
(c) Each
of the Parties (on behalf of themselves and each of their respective Affiliate) agrees
to notify the other Party promptly, in the event that it becomes aware of the
unauthorized possession or use of the Confidential Information (or any part thereof) by any third
Person, including any of its officers, employees, advisers or representatives. Each of Seller and
Buyer (and their respective Affiliates) agrees to cooperate with the other in connection with the
other’s efforts to terminate or prevent such unauthorized possession or use of its Confidential
Information. Each of Seller and Buyer (on behalf of themselves and each of their respective
Affiliate) shall pay the other’s reasonable out-of-pocket expenses in so cooperating in protecting
its Confidential Information, unless the unauthorized possession or use of the Confidential
Information resulted from the willful misconduct or gross negligence
of the Party otherwise entitled
to reimbursement of its expenses.
(d) Each
of Seller and Buyer (on behalf of themselves and each of their respective Affiliate)
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 17.14, 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 a willful breach of
this Agreement by Seller or Buyer, respectively) shall Seller or Buyer (or their respective
Affiliates) be prevented from exercising all of the rights granted to it hereunder.
(e) Notwithstanding any provision to the contrary contained in this Agreement,the obligations
of each of Seller and Buyer (and their respective Affiliates) to
maintain the confidentiality of the
Confidential Information (each in such capacity a
“Receiving Party”) shall not apply to any
portion of the Confidential Information that:
(i) is or becomes generally available to the public through no fault of
the Receiving Party, including information in the public domain;
(ii) the Receiving Party receives from a third party
without any requirement to keep such information secret;
(iii) the Receiving Party can prove was in its possession without any
obligation of secrecy at the time of its disclosure; or
(iv) the Receiving Party develops independently of and without reference to
or use of the Confidential Information.
(f) Seller
acknowledges and agrees that, as of the Effective Time, nothing herein shall
restrict the use by Buyer and its Affiliates of the Refinery Records, the same becoming property
of Buyer as a consequence of the Closing. Except for Refinery Records, Buyer shall not use
the Confidential Information prior to the Closing for any other purpose other than the evaluation of
the Contemplated Transactions.
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(g) In the event of any inconsistency between the provisions of this Section
17.14 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) At the request of Seller, Buyer shall within twenty (20) days after receiving such
request return to Seller all written Confidential Information which is not a Refinery Record,
including all photocopies of the same.
(i) The provisions of this Section 17.14 shall remain in force for a period of five
(5) years from the later of the date hereof or the Closing Date. The terms of this Section
17.14 shall survive the termination or expiration of this Agreement.
(j) To the extent the Confidentiality Agreement conflicts with the terms of this Agreement,
the Confidentiality Agreement is hereby modified so that it is consistent with this Agreement. The
Confidentiality Agreement shall terminate and be of no further force or effect as of the date
hereof.
(k) If the Closing occurs, Seller agrees to treat information it possesses concerning the
historical operation of the Refinery as Confidential Information.
(1) Seller and Buyer do not intend for any obligations of confidentiality contained herein to
limit disclosure of the transaction in any way that would cause it to be treated as a
“confidential transaction” under Treasury Regulation 1.601 l-4(b)(3).
17.15 Counterparts. This Agreement may be executed simultaneously in one or more
counterparts (including by means of faxed signature pages), all of which shall be considered one
and the same agreement, and shall become effective when one or more such counterparts have been
signed by each of the Parties and delivered to the other Party.
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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.
SELLER: | EQUILON ENTERPRISES LLC | |||||||
d/b/a Shell Oil Products US, a Delaware limited | ||||||||
liability company | ||||||||
By: | /s/ Xxxxx X. Xxxxxx
|
|||||||
President | ||||||||
BUYER: | TESORO REFINING AND MARKETING | |||||||
COMPANY, a Delaware corporation | ||||||||
By: | ||||||||
/s/ Xxxxx X. Xxxxx |
||||||||
Chairman of the Board of Directors and | ||||||||
President |
Refinery Asset Purchase Agreement