OPTION AGREEMENT
THIS OPTION AGREEMENT (“Agreement”) is entered into as of January 31, 2008, and is by and
among Xxxxx Corporation, a Delaware corporation (“Xxxxx”), Xxxxx UNEV Pipeline Company, a Delaware
corporation (“Xxxxx UNEV”), Navajo Pipeline Co., L.P., a Delaware limited partnership, Xxxxx
Logistic Services, L.L.C., a Delaware limited liability company (“Xxxxx GP”), HEP Logistics
Holdings, L.P., a Delaware limited partnership (the “General Partner”), Xxxxx Energy Partners,
L.P., a Delaware limited partnership (the “Partnership”), HEP Logistics GP, L.L.C., a Delaware
limited liability company (the “OLP GP”), and Xxxxx Energy Partners–Operating, L.P., a Delaware
limited partnership (“HEP-Operating”). The above-named entities are sometimes referred to in this
Agreement each as a “Party” and collectively as the “Parties.”
R E C I T A L S:
1. Certain of the Parties are also parties to the Omnibus Agreement entered into as of
July 13, 2004, as amended as of the date hereof (the “Omnibus Agreement”).
2. The Omnibus Agreement restricts the Xxxxx Entities from engaging in any Restricted Business
(as such term is defined in the Omnibus Agreement) to the extent provided in Article II thereof.
3. Xxxxx has entered into a Memorandum of Understanding dated June 26, 2007 with Xxxxxxxx
Transportation Company (“Xxxxxxxx”) relating to the facilities and services required to initially
transport 62,000 barrels per day of refined petroleum products from Salt Lake City, Utah to Las
Vegas, Nevada, including a 12-inch diameter or greater pipeline with an ANSI 600# pressure rating
and a length of approximately 400 miles, along with terminals in or near the Cedar City area of
Southern Utah and Las Vegas, Nevada (the “UNEV Project”).
4. The Parties desire by their execution of this Agreement to evidence their agreement that
the provisions of Article II of the Omnibus Agreement shall not apply to the UNEV Project and are
hereby waived to such extent and in lieu thereof HEP-Operating shall have an option to purchase the
Xxxxx UNEV Interests on the terms and conditions set forth herein.
5. The Parties desire that the exercise price for the option shall be determined based on the
principle that HEP-Operating shall acquire the Xxxxx UNEV Interests in exchange for a cash payment
equal to the Option Purchase Price.
In consideration of the premises and the covenants, conditions, and agreements contained
herein, and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties hereto hereby agree as follows:
ARTICLE I
The Option
The Option
1.1 Grant of Option. Subject to the terms and conditions hereof, Xxxxx UNEV hereby grants to
HEP-Operating an irrevocable option (the “Option”) to purchase all of the Xxxxx UNEV Interests in
the manner set forth below at a purchase price equal to the Option Purchase Price plus or minus the
Closing Adjustment Amount payable in immediately available funds; provided,
however, that at the election of Xxxxx UNEV made at any time prior to 5:00 p.m. Central
time on the third business day prior to the Closing (as defined below), up to five percent of the
Option Purchase Price shall be payable in Common Units valued based on the average closing price
for the five trading days ending on the date immediately prior to the Closing (as defined below).
1.2 Exercise of Option. The Option may be exercised by HEP-Operating, in whole but not in
part, at any time after the Project Completion Date and on or before 5:00 p.m., Central time, on
the Expiration Date. In order to exercise the Option, HEP-Operating must send a written notice (an
“Exercise Notice”) to Xxxxx UNEV. Unless otherwise mutually agreed in writing by HEP-Operating and
Xxxxx UNEV, the closing (the “Closing”) of the exercise of the Option will take place on the first
day of the month following the month in which the Exercise Notice is delivered (the “Closing
Date”); provided, however, that if there are less than five business days from the
date the Exercise Notice is delivered until the first day of the month following the month in which
the Exercise Notice is delivered, the Closing Date shall be the first day of the month that is the
second month following the month in which the Exercise Notice is delivered. Upon receipt of an
Exercise Notice, Xxxxx UNEV will be obligated to deliver the Xxxxx UNEV Interests in accordance
with Section 1.3 of this Agreement, HEP-Operating will be obligated to deliver the Option
Purchase Price on the Closing Date (or if the Closing Date falls on a day that is not a business
day, the business day immediately prior to the Closing Date) and HEP-Operating or Xxxxx UNEV will
be obligated to deliver the Closing Adjustment Amount in accordance with Section 1.6 if
such amount is positive or negative, respectively. The Closing shall occur at the offices of
Xxxxxx & Xxxxxx L.L.P., 3700 Xxxxxxxx Xxxx Center, 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx, unless another
place is mutually agreed to in writing by HEP-Operating and Xxxxx UNEV.
1.3 Actions on the Closing Date. On the Closing Date, Xxxxx UNEV shall cause the Xxxxx UNEV
Interests to be transferred to HEP-Operating free and clear of all liens, claims, encumbrances and
security interests of any nature whatsoever against delivery of the Option Purchase Price in
immediately available funds.
1.4 Operations Amount Estimates. Xxxxx UNEV shall (1) no later than five business days after
the delivery of the Exercise Notice or the Termination Option Exercise Notice, deliver to
HEP-Operating an estimated income statement and balance sheet of UNEV Pipeline for the period
commencing on the Project Completion Date through 11:59 p.m. on the date immediately prior to the
Closing Date or Termination Option Closing (either such time, the “Effective Time”) and as of the
Effective Time, respectively, together with a certificate containing a good faith estimate of the
Operations Amount calculated from such estimated income statement and balance sheet, and (2) no
earlier than two days prior to the Closing or the Termination Option Closing, deliver to
HEP-Operating an estimated income statement and balance sheet of UNEV
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Pipeline for the period commencing on the Project Completion Date through the Effective Time
and as of the Effective Time, respectively (collectively, the “Closing Financial Statements”),
together with a certificate containing a good faith estimate of the Operations Amount calculated
from the Closing Financial Statements (the “Estimated Closing Operations Amount”) (which shall be
estimated prior to the application of any payments to be made under Section 1.2 or
Section 3.6(c)). The Closing Financial Statements shall be prepared in accordance with this
Agreement and GAAP.
1.5 Final Operations Amount Determination.
(a) As promptly as practicable after the Closing or the Termination Option Closing (but
in no event later than 45 days after the Closing or the Termination Option Closing),
HEP-Operating shall deliver to Xxxxx UNEV an income statement and balance sheet of UNEV
Pipeline for the period commencing on the Project Completion Date through the Effective Time
and as of the Effective Time, respectively (the “Final Closing Financial Statements”),
together with a certificate stating the Operations Amount calculated from the Final Closing
Financial Statements (the “Closing Operations Amount”). The Final Closing Financial
Statements shall be prepared in accordance with this Agreement and GAAP. Following the
delivery of the Final Closing Financial Statements to Xxxxx UNEV, HEP-Operating shall afford
Xxxxx UNEV and its representatives the opportunity to review the Final Closing Financial
Statements, and such supporting schedules, analyses, workpapers and other underlying records
or documentation as are reasonably necessary and appropriate. HEP-Operating shall,
cooperate fully and promptly with Xxxxx UNEV and its representatives in such examination
with respect to all reasonable requests related thereto, including providing answers to
questions asked by Xxxxx UNEV and its representatives, and HEP-Operating shall promptly make
available to Xxxxx UNEV and its representatives any records under HEP-Operating’s reasonable
control that are reasonably requested by Xxxxx UNEV and its representatives.
(b) If within 45 days following delivery of the Final Closing Financial Statements to
Xxxxx UNEV, Xxxxx UNEV has not delivered to HEP-Operating written notice (the “Objection
Notice”) of its objections to the Closing Operations Amount certified by HEP–Operating (such
Objection Notice must contain a statement describing in reasonable detail the basis of such
objections and the amounts so disputed), then the Closing Operations Amount as calculated
from such Final Closing Financial Statements shall be deemed final and conclusive and shall
be “Final Operations Amount,” and each of the parties hereto agrees that such amounts shall
thereafter not be subject to any appeal or further challenge hereunder or otherwise. If
Xxxxx UNEV delivers the Objection Notice within such 45-day period, then HEP-Operating and
Xxxxx UNEV shall submit the objections set forth in the Objection Notice to binding
arbitration in accordance with Section 8.11 and “Final Operations Amount” will be
determined pursuant to binding arbitration.
1.6 Adjustment Payment. If the Final Operations Amount as determined pursuant to Section
1.5 would result in a (i) positive Closing Adjustment Amount, then HEP-Operating will promptly
pay an amount in cash to Xxxxx UNEV, in immediately available funds, equal to such
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excess, or (ii) negative Closing Adjustment Amount, then Xxxxx UNEV shall promptly pay an
amount in cash to HEP-Operating, in immediately available funds, equal to such shortfall.
1.7 Construction. The parties hereto covenant and agree that if any provision of Article
I of this Agreement requires an amount or calculation to be “determined in accordance with this
Agreement and GAAP” (or words of similar import), then to the extent that the terms of any
provision of Article I of this Agreement conflict with, or are inconsistent with, GAAP in
connection with such determination, the terms of Article I of this Agreement shall control.
ARTICLE II
Representations and Warranties
Representations and Warranties
2.1 Representations and Warranties of Xxxxx UNEV.
Xxxxx UNEV hereby represents and warrants to HEP-Operating that:
(a) Xxxxx UNEV has all necessary power and authority to enter into this Agreement and
to sell, assign, transfer and deliver to HEP-Operating, pursuant to the terms and conditions
of this Agreement, the Xxxxx UNEV Interests;
(b) Xxxxx UNEV owns beneficially and of record all of the Xxxxx UNEV Interests free and
clear of all liens, claims, encumbrances and security interests of any nature whatsoever.
Upon purchase of the Xxxxx UNEV Interests pursuant to this Agreement, HEP-Operating shall
receive good and marketable title to the Xxxxx UNEV Interests free and clear of all liens,
claims, encumbrances and security interests of any nature whatsoever other than those
created by or on behalf of the HEP Parties; and
(c) This Agreement is a legal, valid and binding agreement of Xxxxx UNEV enforceable
against Xxxxx UNEV in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, moratorium or other similar laws relating to creditors’ rights
generally and except that the availability of equitable remedies, including specific
performance, is subject to the discretion of the court before which any proceeding therefor
may be brought.
2.2 Representations and Warranties of the HEP Parties.
The HEP Parties hereby represent and warrant to Xxxxx UNEV that:
(a) HEP-Operating has all necessary power and authority to enter into this Agreement
and prior to the sending of the Exercise Notice or the Termination Option Exercise Notice
will have all necessary power and authority to buy the Xxxxx UNEV Interests from Xxxxx UNEV
pursuant to the terms and conditions of this Agreement; and
(b) This Agreement is a legal, valid and binding agreement of the HEP Parties
enforceable against them in accordance with its terms, except as enforcement may be limited
by bankruptcy, insolvency, moratorium or other similar laws relating to creditors’ rights
generally and except that the availability of equitable remedies, including specific
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performance, is subject to the discretion of the court before which any proceeding
therefor may be brought.
ARTICLE III
Covenants
Covenants
Unless otherwise indicated, each of the covenants contained in Article III shall
terminate and be of no further force or effect at the Closing or the Termination Option Closing, as
applicable.
3.1 Transfer of Xxxxx UNEV Interests. On and after the date hereof and until the earliest of
the (i) Closing, (ii) Termination Option Closing or (iii) termination of this Agreement pursuant to
Section 5.1, the Xxxxx Entities may transfer Xxxxx UNEV Interests only if immediately
following such transfer, the Xxxxx UNEV Share is at least 75%, unless such transfer is made
pursuant to the exercise of the Option or the Termination Option.
3.2 Conduct of the Project.
(a) Xxxxx UNEV shall use commercially reasonable efforts to have HEP-Operating
designated as the initial operator of the UNEV Project commencing on or before the Project
Completion Date, subject to the terms of any applicable operating agreement and any required
consent of Xxxxxxxx;
(b) From and after the delivery of an Exercise Notice pursuant to Section 1.2,
Xxxxx UNEV shall, to the extent within its control, cause UNEV Pipeline to continue to
maintain, operate, and administer the completed UNEV Project in a good and workmanlike
manner, consistent with industry standards and the good routine operation of the completed
UNEV Project in material compliance with all Applicable Laws except to the extent caused by
actions taken or omitted by HEP-Operating as the operator of the UNEV Project;
(c) Xxxxx UNEV shall cause UNEV Pipeline to maintain , in accordance with GAAP,
financial records and books of account with respect to the UNEV Project, including all
expenditures incurred in performing the UNEV Project, that accurately reflect the
transactions in the UNEV Project, and maintain proper and adequate system of internal
accounting controls that provide reasonable assurance that transactions are accurately
recorded in all material respects; and
(d) Pursuant to the Project Management Agreement to be executed concurrently with this
Agreement by Xxxxx UNEV and UNEV Pipeline (the “Project Management Agreement”), Xxxxx UNEV
shall invoice UNEV Pipeline on a monthly basis for Xxxxx UNEV’s services, which services
include, without limitation, (i) right of way services that include a charge for indirect
costs incurred by Xxxxx UNEV of 10% of the cost of right-of-way services, (ii)
pre-construction services that include a charge for indirect costs incurred by Xxxxx UNEV of
10% of the cost of the pre-construction services, and (iii) construction management
services for which Xxxxx UNEV is paid $75,000 per month. All employee costs relating to the
UNEV Project that are incurred by
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Xxxxx UNEV are intended to be covered by the fees paid under the Project Management
Agreement.
3.3 Consultation and Cooperation. Ninety (90) days prior to the estimated Project Completion
Date through the Expiration Date:
(a) Xxxxx UNEV shall provide HEP-Operating the right to examine and make copies of the
Records during normal business hours, upon reasonable advance notice to Xxxxx UNEV, and in a
manner so as not to unreasonably interfere with the normal business operations of UNEV
Pipeline. Such right may be exercised through any agent or employee of HEP-Operating
designated in writing by it, or by an independent accountant or attorney so designated.
HEP-Operating shall bear all actual out-of-pocket third person expenses incurred in
connection with any such examination or copying. Xxxxx UNEV shall make available to
HEP-Operating and its financing sources and other advisors, upon reasonable advance notice
to Xxxxx UNEV, during normal business hours, personnel of Xxxxx UNEV who are knowledgeable
with respect to the UNEV Project in order that HEP-Operating may make such diligence
investigation as HEP-Operating reasonably considers desirable for any purpose that relates
to the transactions contemplated by this Agreement, including, but not limited to,
HEP-Operating’s efforts to obtain financing for the Option Purchase Price or the Termination
Option Purchase Price, as applicable. Any information obtained by HEP-Operating, its
employees, representatives, consultants, attorneys, agents, and its financing sources and
other advisors under this Agreement (including, but not limited to, this
Section 3.3(a) and Section 3.3(c)) shall be maintained as confidential.
Notwithstanding the foregoing, Xxxxx UNEV shall not be required to, or required to cause
UNEV Pipeline or any of their Affiliates to, grant access or furnish information to
HEP-Operating or any of its agents or employees if such access or the furnishing of such
information is prohibited by Applicable Law or an existing contract; provided,
however, that Xxxxx UNEV shall use commercially reasonable efforts to cause such
access right to be granted to HEP-Operating and its representatives, but neither Xxxxx UNEV,
UNEV Pipeline nor any of their Affiliates shall be obligated to pay money to any third party
for such consent or waiver;
(b) Xxxxx UNEV will cause UNEV Pipeline to grant to HEP-Operating the right,
exercisable at HEP-Operating’s risk and expense, to make such surveys, tests and inspections
of the UNEV Project as HEP-Operating may deem desirable, so long as such surveys, tests or
inspections do not damage the UNEV Project or interfere in any material respect with the
activities of UNEV Pipeline thereon and so long as HEP-Operating has furnished Xxxxx UNEV
and UNEV Pipeline with evidence that adequate liability insurance is in full force and
effect;
(c) Xxxxx UNEV shall use its reasonable commercial efforts to provide to HEP-Operating
and any of its financing sources all cooperation reasonably requested by HEP-Operating or
such financing sources that is reasonably necessary or customary in connection with the
financing of the Option Purchase Price or the Termination Option Purchase Price, as
applicable (provided that such requested cooperation does not unreasonably interfere with
the business or operations of Xxxxx UNEV or UNEV
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Pipeline), including furnishing HEP-Operating, within a commercially reasonable amount
of time, with operational, financial and other pertinent information as may be reasonably
requested by HEP-Operating in connection with the financing; provided that neither
Xxxxx UNEV nor UNEV Pipeline shall be required to pay any commitment or other similar fee or
incur any other cost or expense in connection with such financing; provided,
further, that, neither Xxxxx UNEV nor UNEV Pipeline shall be required to incur any
liability in connection with any such financing. HEP-Operating shall, promptly upon request
by Xxxxx UNEV, reimburse Xxxxx UNEV for all reasonable documented out of pocket costs and
expenses incurred by Xxxxx UNEV and UNEV Pipeline in connection with such cooperation and
shall indemnify and hold harmless Xxxxx UNEV and UNEV Pipeline and their respective
representatives from and against any and all liabilities, losses, damages, claims, expenses,
interest, judgments and penalties suffered or incurred by them in connection with the
arrangement of any such financing and any information utilized in connection therewith
(other than information provided by Xxxxx UNEV in accordance with the terms hereof); and
(d) Xxxxx UNEV will, within a commercially reasonable amount of time, provide to
HEP-Operating true, correct and complete copies of (i) each of the Transaction Agreements,
and (ii) the annual budgets related to the UNEV Project and unaudited annual and quarterly
financial statements of UNEV Pipeline.
3.4 Additional Covenants.
(a) In connection with the UNEV Project, Xxxxx UNEV may make such Material
Modifications as Xxxxx UNEV deems appropriate or necessary and in furtherance of, and
consistent with, the overall intent and purpose of the UNEV Project. Xxxxx UNEV shall
notify HEP-Operating in writing promptly of any contemplated Material Modifications and
Xxxxx UNEV shall consult and discuss such Material Modifications with HEP-Operating to the
extent reasonably requested by HEP-Operating. After such consultation and discussion, Xxxxx
UNEV shall be entitled, in its sole discretion, to cause UNEV Pipeline to approve and
implement any Material Modification;
(b) Xxxxx UNEV shall keep HEP-Operating reasonably informed as to the status and
progress of the UNEV Project and the operations of UNEV Pipeline.
(c) Xxxxx UNEV shall promptly notify HEP-Operating in writing if Xxxxx UNEV determines
that there will be a material deviation in the Project Schedule that would result in
(i) Xxxxx UNEV failing to substantially complete a material milestone specified in the
Project Schedule by the date set forth therefor in the Project Schedule or (ii) the Project
Completion Date being materially delayed from the date set forth in the Project Schedule.
(d) Xxxxx UNEV shall promptly notify HEP-Operating in writing if Xxxxx UNEV determines
that the Total Investment will be materially higher than the budgeted amount of
$225,000,000.00.
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(e) Within 10 days following the Project Completion Date, Xxxxx UNEV will deliver to
HEP-Operating a reasonably detailed statement which calculates the Option Purchase Price as
of the Project Completion Date, and within 30 days following the Project Completion Date,
Xxxxx UNEV will deliver to HEP-Operating an unaudited balance sheet of UNEV Pipeline as of
the Project Completion Date and prepared in accordance with GAAP.
3.5 Limitation on the Activities of UNEV Pipeline. With respect to the activities of UNEV
Pipeline, Xxxxx UNEV will not consent to UNEV Pipeline engaging in any activities other than the
following: (i) the design, construction, development, maintenance, ownership and, after the Project
Completion Date, operation of the UNEV Project, and (ii) engaging in any other business or activity
that now or hereafter may be necessary, incidental, proper, advisable, or convenient to accomplish
the foregoing purposes, whether directly or indirectly through the ownership and management of one
or more Subsidiaries of UNEV Pipeline.
3.6 Termination of the Project.
(a) Notwithstanding any other provision of this Agreement, Xxxxx UNEV reserves the
right, without any liability or obligation to HEP-Operating whatsoever, to cause UNEV
Pipeline to terminate the UNEV Project at any time and for any reason if Xxxxx UNEV
determines in its sole discretion that continuation of the UNEV Project is not in Xxxxx
UNEV’s best interest. If Xxxxx UNEV decides to cause UNEV Pipeline to terminate the UNEV
Project, it shall send prompt written notice (the “Termination Notice”) to HEP-Operating of
such decision;
(b) Upon receipt of the Termination Notice and subject to the terms and conditions
hereof, HEP-Operating shall have an irrevocable option (the “Termination Option”) to
purchase all of the Xxxxx UNEV Interests in the manner set forth below at a purchase price
equal to the Termination Option Purchase Price plus or minus the Closing Adjustment Amount
payable in immediately available funds; provided, however, that at the
election of Xxxxx UNEV made at any time prior to 5:00 p.m. Central time on the third
business day prior to the Termination Option Closing (as defined below), up to five percent
of the Termination Option Purchase Price shall be payable in Common Units valued based on
the average closing price for the five trading days ending on the date immediately prior to
the Termination Option Closing (as defined below);
(c) The Termination Option may be exercised by HEP-Operating, in whole but not in part,
on or before 5:00 p.m., Central time, on the 30th day after the date of HEP-Operating’s
receipt of the Termination Notice (the “Termination Option Expiration Date”). In order to
exercise the Termination Option, HEP-Operating must send a written notice (a “Termination
Option Exercise Notice”) to Xxxxx UNEV. Unless otherwise mutually agreed in writing by
HEP-Operating and Xxxxx UNEV, the closing (the “Termination Option Closing”) of the exercise
of the Termination Option will take place on the first day of the month following the month
in which the Termination Option Exercise Notice is delivered (the “Termination Option
Closing Date”); provided, however, that if there are less than five business
days from the date the Termination Option Exercise Notice is delivered until the first day
of the month
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following the month in which the Termination Option Exercise Notice is delivered, the
Termination Option Closing Date shall be the first day of the month that is the second month
following the month in which the Termination Option Exercise Notice is delivered. Upon
receipt of a Termination Option Exercise Notice, Xxxxx UNEV will be obligated to deliver the
Xxxxx UNEV Interests in accordance with Section 3.6(d) of this Agreement,
HEP-Operating will be obligated to deliver the Termination Option Purchase Price on the
Termination Option Closing Date (or if the Termination Option Closing Date falls on a day
that is not a business day, the business day immediately prior to the Termination Option
Closing Date) and HEP-Operating or Xxxxx UNEV will be obligated to deliver the Closing
Adjustment Amount in accordance with Section 1.6 if such amount is positive or
negative, respectively. The Termination Option Closing shall occur at the offices of Xxxxxx
& Xxxxxx L.L.P., 3700 Xxxxxxxx Xxxx Center, 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx, unless another
place is mutually agreed to in writing by HEP-Operating and Xxxxx UNEV; and
(d) On the Termination Option Closing Date, Xxxxx UNEV shall cause the Xxxxx UNEV
Interests to be transferred to HEP-Operating free and clear of all liens, claims,
encumbrances and security interests of any nature whatsoever against delivery of the
Termination Option Purchase Price in immediately available funds.
3.7 Certain Additional Covenants.
(a) At the Closing or the Termination Option Closing, as applicable, HEP-Operating will
acknowledge in writing that except as otherwise provided in Section 2.1 hereof, UNEV
Pipeline’s assets and the Xxxxx UNEV Interests are being accepted on an “as is,” “where is”
and “with all faults” basis, and the instruments conveying the Xxxxx UNEV Interests shall
contain appropriate disclaimers;
(b) Upon the exercise of the Option or the Termination Option by HEP-Operating pursuant
to Section 1.2 or Section 3.6, respectively, Xxxxx UNEV and HEP-Operating
shall cooperate in good faith and use commercially reasonable efforts to obtain all
necessary governmental and other third person approvals, waivers and consents required for
the Closing or the Termination Option Closing, as applicable;
(c) Following the delivery of the Exercise Notice pursuant to Section 1.2 and
prior to the Closing, Xxxxx UNEV shall not cause UNEV Pipeline to make a Material Decision
without the prior written consent of HEP-Operating, which consent shall not be unreasonably
withheld, delayed, conditioned or denied; and
(d) Following the giving of notice of the exercise of the Option or the Termination
Option by HEP-Operating pursuant to Section 1.2 or Section 3.6,
respectively, and prior to the Closing or the Termination Option Closing, as applicable,
HEP-Operating shall offer and use commercially reasonable efforts to obtain the release of
each Xxxxx Entity, effective as of the Closing or the Termination Option Closing, as
applicable, from any and all obligations in respect of all letters of credit, guarantees,
surety bonds and the like (the “Guarantees”) given by each Xxxxx Entity in connection
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with the acquisition, construction, maintenance and operation of the UNEV Project,
including providing any reasonably requested Guarantees of any HEP Entity.
ARTICLE IV
Closing Conditions
Closing Conditions
4.1 HEP-Operating’s Conditions to the Closing. At the Closing or the Termination Option
Closing, as applicable, the obligation of HEP-Operating to purchase the Xxxxx UNEV Interests under
this Agreement shall be subject to the following conditions: (a) no preliminary or permanent
injunction or other decree or ruling issued by a court of competent jurisdiction in the United
States shall be in effect that would prevent the sale or purchase of the Xxxxx UNEV Interests being
purchased, (b) the waiting and review period (and any extension thereof) under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, shall have expired or been
terminated, (c) the representations and warranties of Xxxxx UNEV contained in Section 2.1
hereof shall be true and correct in all material respects as of the date hereof and at the time of
the Closing or the Termination Option Closing, as applicable, as if made on and as of such time,
(d) the Xxxxx Entities shall have performed their covenants contained in this Agreement in all
material respects and (e) at the Closing, since the date of the most recent financial statements of
UNEV Pipeline delivered to HEP-Operating pursuant to Section 3.4(e) prior to the giving of
the Exercise Notice, there shall have been no Material Adverse Change in the UNEV Project or UNEV
Pipeline.
4.2 Xxxxx UNEV’s Conditions to the Closing. At the Closing or the Termination Option Closing,
as applicable, the obligation of Xxxxx UNEV to sell the Xxxxx UNEV Interests under this Agreement
shall be subject to the conditions set forth in Sections 4.1(a) and 4.1(b) of this
Agreement and shall be further subject to the conditions that (a) the representations and
warranties of the HEP Parties contained in Section 2.2 hereof shall be true and correct in
all material respects as of the date hereof and at the time of the Closing or the Termination
Option Closing, as applicable, as if made on and as of such time, (b) the HEP Parties shall have
performed their covenants contained in this Agreement in all material respects and the HEP Parties
shall have fully released the Xxxxx Entities from any claims the HEP Parties may then or in the
future have, directly or indirectly, against the Xxxxx Entities arising out of or relating to the
UNEV Project or UNEV Pipeline except for any claim for a breach of the terms of this Agreement.
ARTICLE V
Termination
Termination
5.1 Termination.
(a) Right to Terminate. This Agreement may be terminated and the transactions
contemplated hereby abandoned at any time prior to the Closing or the Termination Option
Closing:
(i) by mutual written consent of Xxxxx UNEV and HEP-Operating;
(ii) by either Xxxxx UNEV or HEP-Operating if the Closing or the Termination
Option Closing, as applicable, has not occurred on or prior to the
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earliest of (A) December 31, 2009, subject to extension for Force Majeure
events as set forth below in Section 5.1(c), (B) the Termination Option Closing Date
if the Termination Option has been exercised pursuant to Section 3.6;
provided, however, that if the sole reason that the Termination
Option Closing has not occurred on or prior to the Termination Option Closing Date
is because of a failure of the condition set forth in Section 4.1(b),
neither Xxxxx UNEV nor HEP-Operating shall have the right to terminate this
Agreement until the date that is three (3) business days following the satisfaction
of the condition set forth in Section 4.1(b); provided,
further, however, that, notwithstanding the foregoing, either Xxxxx
UNEV or HEP-Operating shall have the right to terminate this Agreement at any time
on or after the 40th day following the Termination Option Expiration Date, or (C) 90
days after the delivery of the Exercise Notice pursuant to Section 1.2 (any
such date, the “Termination Date”); provided, however, that this
right to terminate this Agreement shall not be available to any Party whose
intentional breach of this Agreement or whose Affiliate’s intentional breach of this
Agreement has been the cause of, or resulted in, the failure of the Closing to occur
on or before the Termination Date;
(iii) by either Xxxxx UNEV or HEP-Operating (A) if the Option has not been
exercised prior to the Expiration Date or (B) if the Termination Notice is sent and
the Termination Option has not been exercised prior to the Termination Option
Expiration Date;
(iv) by either Xxxxx UNEV or HEP-Operating if a Governmental Authority shall
have issued an Order or taken any other action, in each case permanently
restraining, enjoining, or otherwise prohibiting the transactions contemplated by
this Agreement; or
(v) by either Xxxxx UNEV or HEP-Operating in the event of a breach by any HEP
Entity or Xxxxx Entity, as applicable, of any representation, warranty, covenant or
other agreement contained in this Agreement which (A) would give rise to the failure
of a condition set forth in Sections 4.1(c), 4.1(d) or
4.1(e) or Sections 4.2(a) or 4.2(b), as applicable, and
(B) cannot be or has not been cured before the earlier of (1) 30 days following
receipt by the breaching party of written notice of such breach or (2) the business
day immediately preceding the Termination Date.
(b) Effect of Investigation. The right of any Party to terminate this
Agreement pursuant to this Section 5.1 shall remain operative and in full force and
effect regardless of any investigation or the actual or constructive knowledge of such Party
regarding the subject matter giving rise to such right of termination.
(c) Force Majeure. The December 31, 2009 date set forth in Section
5.1(a)(ii)(A) shall be extended on a day for day basis for each day the Project Completion
Date is delayed due to acts of God; strikes, lockouts or other industrial disturbances; acts
of the public enemy, terrorist acts, wars, blockades, insurrections, civil disturbances,
riots; epidemics, landslides, lightning, earthquakes, fires, storms, floods, and washouts;
- 11 -
arrests, orders, directives, requisitions, and actions, rules, regulations or
restraints of any government and governmental agencies and instrumentalities, either federal
or state, civil or military; application of governmental curtailment rules and regulations;
explosions, breakage, or accident to machinery or lines of pipe; and, other causes, whether
of the kind herein enumerated or otherwise, not reasonably subject to being controlled or
prevented.
5.2 Effect of Termination. Upon termination of this Agreement pursuant to
Section 5.1, the undertakings of the Parties set forth in this Agreement shall forthwith be
of no further force and effect; provided, however, that no such termination shall
relieve any Party of liability for any intentional material breach of this Agreement;
provided, further, however, that Sections 6.1, 6.2,
8.1, 8.2, 8.4, 8.10, 8.11, 8.14 and the
confidentiality provisions of Section 3.3(a) shall survive such termination.
ARTICLE VI
Indemnification
Indemnification
6.1 Indemnification by HEP-Operating. From and after the Closing or the Termination Option
Closing, as applicable, HEP-Operating shall indemnify, defend and hold harmless any Xxxxx Entity
against any and all costs, fees, liabilities, expenses, claims, demands, suits, court costs,
settlements or judgments (collectively, “Losses”) for any third-party claim arising out of or
related to any event, circumstance, occurrence, result, effect, action or inaction prior to Closing
or the Termination Option Closing, as applicable, related to the UNEV Project; provided,
however, that HEP-Operating shall not be responsible to provide indemnity for any such
Losses that primarily result from or arise out of any Xxxxx Entity’s gross negligence, bad faith or
willful misconduct.
6.2 Indemnification for Guarantees. From and after the Closing or the Termination Option
Closing, as applicable, HEP-Operating shall indemnify, defend and hold harmless any Xxxxx Entity
against any Losses arising out of or related to any obligations under the Guarantees for which
HEP-Operating has not obtained the release of any Xxxxx Entity.
ARTICLE VII
Definitions
Definitions
7.1 Definitions.
As used in this Agreement, the following terms shall have the respective meanings set forth below:
“AAA” has the meaning given such term in Section 8.11(a).
“Agreement” has the meaning given such term in the Preamble.
“Affiliate” means, with respect to any Person, any other Person controlling, controlled by or
under common control with such Person. For purposes of this definition and this Agreement, the
term “control” (and correlative terms) means the power, whether by contract, equity ownership or
otherwise, to direct the policies or management of a person. Notwithstanding the
- 12 -
foregoing, for purposes of this Agreement, the Xxxxx Entities, on the one hand, and the HEP
Entities, on the other hand, shall not be considered Affiliates of each other.
“Applicable Laws” means, with respect to any Person, all laws, statutes, rules, regulations,
ordinances, judgments, orders, decrees, injunctions, and writs of any Governmental Authority having
jurisdiction over such Person, its Subsidiaries or the businesses, operations or assets of such
Person or its Subsidiaries.
“Arbitration Notice” has the meaning given such term in Section 8.11(a).
“Closing” has the meaning given such term in Section 1.2.
“Closing Adjustment Amount” means a cash amount, which may be a positive or negative number,
equal to (a) Final Operations Amount minus (b) Estimated Closing Operations Amount.
“Closing Date” has the meaning given such term in Section 1.2.
“Closing Financial Statements” has the meaning given such term in Section 1.4.
“Closing Operations Amount” has the meaning given such term in Section 1.5(a).
“Common Units” is defined in the First Amended and Restated Agreement of Limited Partnership
of Xxxxx Energy Partners, L.P., as such agreement is in effect on the date hereof, to which
reference is hereby made for all purposes of this Agreement.
“Dispute” has the meaning given such term in Section 8.11(a).
“Effective Time” has the meaning given such term in Section 1.4.
“Estimated Closing Operations Amount” has the meaning given such term in Section 1.4.
“Exercise Notice” has the meaning given such term in Section 1.2.
“Expiration Date” means the day which is 180 days after the Project Completion Date.
“Final Closing Financial Statements” has the meaning given such term in Section
1.5(a).
“Final Operations Amount” has the meaning given such term in Section 1.5(b).
“Free Cash Flow” means Net Income/Loss plus all depreciation and amortization included in the
calculation of Net Income/Loss for the applicable period, provided “Free Cash Flow” shall never be
less than $0.00.
“GAAP” means United States generally accepted accounting principles, consistently applied and
maintained through the applicable periods.
“General Partner” has the meaning given such term in the Preamble.
- 13 -
“Governmental Authority” means any legislative body, governmental department, commission,
board, bureau, instrumentality, court, arbitration panel, tribunal or organization or any
regulatory, administrative or other agency, whether foreign or domestic, of any country, nation,
republic, federation or similar entity or any state, county, parish or municipality, jurisdiction
or other political subdivision thereof.
“Guarantees” has the meaning given such term in Section 3.7(d).
“HEP Entities” means Xxxxx GP, the General Partner and each member of the HEP Group and “HEP
Entity” means any of the HEP Entities.
“HEP Group” means the Partnership, the OLP GP, the Operating Partnership and any Subsidiary of
any such Person.
“HEP-Operating” has the meaning given such term in the Preamble.
“HEP Parties” means each Party which is a member of the HEP Group.
“Xxxxx” has the meaning given such term in the Preamble.
“Xxxxx Entities” means Xxxxx and any Person controlled, directly or indirectly, by Xxxxx other
than the HEP Entities; and “Xxxxx Entity” means any of the Xxxxx Entities.
“Xxxxx GP” has the meaning given such term in the Preamble.
“Xxxxx UNEV” has the meaning given such term in the Preamble.
“Xxxxx UNEV Interests” means all equity interests owned by Xxxxx UNEV in UNEV Pipeline.
“Xxxxx UNEV Share” means Xxxxx UNEV’s percentage ownership interest in UNEV Pipeline.
“Losses” has the meaning given such term in Section 6.1.
“Material Adverse Change” means any result, occurrence, fact, change, event, effect or
condition that, individually or in the aggregate with any such other results, occurrences, facts,
changes, events, effects or conditions, has had or could reasonably be expected to have a material
adverse effect on the business, operations, assets, liabilities, financial condition or results of
operations of UNEV Pipeline or the UNEV Project, taken as a whole; provided,
however, that any adverse result, occurrence, fact, change, event, effect or condition
attributable to conditions affecting general economic or financial conditions or the oil and gas
industry shall not be taken into account in determining whether there has been a Material Adverse
Change.
“Material Decision” means a decision with respect to UNEV Pipeline to (i) incur any
indebtedness for borrowed money, (ii) incur, or commit to incur any liability or obligation to make
capital expenditures in excess of $1,000,000 in the aggregate, (iii) make any loans, advances or
capital contributions to or investments in any Person (other than UNEV Pipeline or
- 14 -
any of its direct or indirect wholly-owned Subsidiaries), (iv) sell, lease or convey any
assets associated with the UNEV Project and having a value in excess of $1,000,000 in the aggregate
or (v) enter into any contract that would be material to UNEV Pipeline.
“Material Modifications” means (i) any material change in the cost, size, scope or capability
of the UNEV Project, (ii) any material amendment or modification to the Transaction Agreements,
(iii) the execution of any transportation agreement relating to the UNEV Project, or (iv) the
execution of any material amendment or modification to any agreement between any of the Xxxxx
Entities and UNEV Pipeline.
“Net Income/Loss” shall be the net income or net loss of UNEV Pipeline as determined in
accordance with GAAP (as applied on a basis consistent with past practice and the preparation of
the financial statements delivered to HEP-Operating pursuant to Section 3.3(d) and 3.4(e).
“Objection Notice” has the meaning given such term in Section 1.5(b).
“OLP GP” has the meaning given such term in the Preamble.
“Omnibus Agreement” has the meaning given such term in the Recitals.
“Operations Amount” means the amount set forth in clause (iv) of the definition of Total
Investment.
“Option” has the meaning given such term in Section 1.1.
“Option Purchase Price” and “Termination Option Purchase Price” means the sum of (i) the Total
Investment and (ii) the Time Value Amount. For purposes of calculating the Option Purchase Price
or Termination Option Purchase Price to be paid pursuant to Section 1.2 or Section
3.6(c), respectively, the term Operations Amount as used in clause (iv) of the definition of
Total Investment shall equal the Estimated Closing Operations Amount calculated pursuant to
Section 1.4.
“Order” means all applicable writs, judgments, injunctions, decrees and other official acts of
or by any Governmental Authority.
“Party” or “Parties” has the meaning given such terms in the Preamble.
“Partnership” has the meaning give such term in the Preamble.
“Person” means an individual or a corporation, limited liability company, partnership, joint
venture, trust, unincorporated organization, association, government agency or political
subdivision thereof or other entity.
“Project Completion Date” means the first business day following the day on which the UNEV
Project is operational with a demonstrated sustainable rate of 2,600 barrels per hour (62,000
barrels per day) of refined petroleum products, which date shall be determined in good faith by
the Board of Directors of Xxxxx UNEV.
- 15 -
“Project Schedule” means Schedule B attached hereto.
“Records” means all files, documents, instruments, notes, work papers, ledgers, journals,
abstracts, records, correspondence, studies, surveys, reports, and other data directly relating to
the acquisition, construction, ownership, operation, maintenance, or use of the UNEV Project and
reasonably available to Xxxxx UNEV, including all contracts, tax records, permit files, originals
of all title records, financial and accounting records, pipeline and system maps, operational
records, engineering and design records, environmental and safety records, technical records,
litigation files and records, production and processing records, and right-of-way files and
contract files, whether in written or electronic form.
“Xxxxxxxx” has the meaning given such term in the Recitals.
“Subsidiary” means, with respect to any Person, (a) a corporation of which more than 50% of
the voting power of shares entitled (without regard to the occurrence of any contingency) to vote
in the election of directors or other governing body of such corporation is owned, directly or
indirectly, at the date of determination, by such Person, by one of more Subsidiaries of such
Person or a combination thereof, (b) a partnership (whether general or limited) in which such
Person or a Subsidiary of such Person is, at the date of determination, a general or limited
partner of such partnership, but only if more than 50% of the partnership interests of such
partnership (considering all of the partnership interests of the partnership as a single class) is
owned, directly or indirectly, at the date of determination, by such Person, by one or more
Subsidiaries of such Person, or a combination thereof, or (c) any other Person (other than a
corporation or a partnership) in which such Person, one or more Subsidiaries of such Person, or a
combination thereof, directly or indirectly, at the date of determination, has (i) at least a
majority ownership interest or (ii) the power to elect or direct the election of a majority of the
directors or other governing body of such Person.
“Termination Date” has the meaning given such term in Section 5.1(a)(ii).
“Termination Notice” has the meaning given such term in Section 3.6(a).
“Termination Option” has the meaning given such term in Section 3.6(b).
“Termination Option Closing” has the meaning given such term in Section 3.6(c).
“Termination Option Closing Date” has the meaning given such term in Section 3.6(c).
“Termination Option Exercise Notice” has the meaning given such term in Section 3.6(c)
“Termination Option Expiration Date” has the meaning given such term in
Section 3.6(c).
“Time Value Amount” means an amount equal to interest at the rate of 7% compounded annually on
the Total Investment (excluding subsection (iv) of the Total Investment) from (i) the date of each
deemed capital contribution as listed under the column entitled “Date of Contribution” on
Schedule C attached hereto, (ii) the date of each capital contribution of cash made by
Xxxxx UNEV to UNEV Pipeline until the date of the Closing or the Termination Option
- 16 -
Closing, as applicable, and (iii) the date of each advance of working capital made by Xxxxx
UNEV to UNEV Pipeline until the date of the Closing or the Termination Option Closing, as
applicable, with appropriate adjustments in the case of capital contributions, deemed capital
contributions or advances of working capital returned or repaid to Xxxxx UNEV.
“Total Investment” means the sum of (without duplication):
(i) all capital contributions deemed made by Xxxxx UNEV to UNEV Pipeline as listed on
Schedule C attached hereto, which contributions shall be treated as a contribution to UNEV
Pipeline in an amount equal to the amount under the column entitled “Cost”;
(ii) all other capital contributions of cash contributed by Xxxxx UNEV (and not previously
included on Schedule C) to UNEV Pipeline;
(iii) all working capital advances made by Xxxxx UNEV to UNEV Pipeline; and
(iv) Free Cash Flow for the period commencing on the Project Completion Date through the
Effective Time, multiplied by the Xxxxx UNEV Share.
The Total Investment shall be reduced by the amount of all distributions made to Xxxxx UNEV as
a member of UNEV Pipeline, all return of capital contributions and repayments of advances of
working capital made to Xxxxx UNEV, in each case for the period from the date hereof through the
Closing Date or the Termination Option Closing Date, as applicable. Receipt by Xxxxx UNEV of any
payments under the Project Management Agreement (including, without limitation, fees for the
services described in Section 3.2(d) of this Agreement) shall not be considered to be a
distribution, return of capital contribution or repayment of an advance of working capital. For
the avoidance of doubt, all capital contributions, deemed capital contributions and advances of
working capital made by Xxxxx UNEV to UNEV Pipeline in order to allow UNEV Pipeline to pay its
obligations under the Project Management Agreement shall be included in full in the definition of
Total Investment for purposes of calculating the Time Value Amount.
“Transaction Agreements” means the principal agreements with Xxxxxxxx (or any other investor
in UNEV Pipeline) relating to the UNEV Project and any material construction or transportation
agreements relating to the UNEV Project.
“UNEV Pipeline” means UNEV Pipeline, LLC, a Delaware limited liability company and the joint
venture entity formed to construct, own and operate the UNEV Project.
“UNEV Project” has the meaning given such item in the Recitals.
ARTICLE VIII
Miscellaneous
Miscellaneous
8.1 Choice of Law; Submission to Jurisdiction. This Agreement shall be subject to and
governed by the laws of the State of Texas, excluding any conflicts-of-law rule or principle that
might refer the construction or interpretation of this Agreement to the laws of another state.
- 17 -
Each Party hereby submits to the jurisdiction of the state and federal courts in the State of
Texas and to venue in Dallas, Texas.
8.2 Notice. All notices or requests or consents provided for by, or permitted to be given
pursuant to, this Agreement must be in writing and must be given by depositing same in the United
States mail, addressed to the Person to be notified, postpaid, and registered or certified with
return receipt requested or by delivering such notice in person or by telecopier or telegram to
such Party. Notice given by personal delivery or mail shall be effective upon actual receipt.
Notice given by telegram or telecopier shall be effective upon actual receipt if received during
the recipient’s normal business hours or at the beginning of the recipient’s next business day
after receipt if not received during the recipient’s normal business hours. All notices to be sent
to a Party pursuant to this Agreement shall be sent to or made at the address set forth below or at
such other address as such Party may stipulate to the other Parties in the manner provided in this
Section 8.2.
if to the Xxxxx Entities:
Xxxxx UNEV
000 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Senior Vice President
Fax: (000) 000-0000
000 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Senior Vice President
Fax: (000) 000-0000
if to the HEP Entities
Xxxxx Energy Partners-Operating, L.P.
000 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Senior Vice President
Fax: (000) 000-0000
000 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Senior Vice President
Fax: (000) 000-0000
8.3 Entire Agreement. This Agreement constitutes the entire agreement of the Parties relating
to the matters contained herein, superseding all prior contracts or agreements, whether oral or
written, relating to the matters contained herein.
8.4 Waiver of Article II. The provisions of Article II of the Omnibus Agreement are hereby
waived with respect to the UNEV Project.
8.5 Amendment or Modification. This Agreement may be amended or modified from time to time
only by the written agreement of all the Parties hereto. Each such instrument shall be reduced to
writing and shall be designated on its face an “Amendment” or an “Addendum” to this Agreement.
8.6 Assignment. No Party shall have the right to assign any of its rights or obligations
under this Agreement without the consent of the other Parties hereto; provided,
- 18 -
however, that HEP-Operating may assign all of its rights hereunder to any wholly owned
Subsidiary of HEP-Operating. No such assignment shall relieve HEP-Operating of its obligations
hereunder.
8.7 Counterparts. This Agreement may be executed in any number of counterparts with the same
effect as if all signatory parties had signed the same document. All counterparts shall be
construed together and shall constitute one and the same instrument.
8.8 Severability. If any provision of this Agreement shall be held invalid or unenforceable
by a court or regulatory body of competent jurisdiction, the remainder of this Agreement shall
remain in full force and effect.
8.9 Further Assurances. In connection with this Agreement and all transactions contemplated
by this Agreement, each signatory party hereto agrees to execute and deliver such additional
documents and instruments and to perform such additional acts as may be necessary or appropriate to
effectuate, carry out and perform all of the terms, provisions and conditions of this Agreement and
all such transactions.
8.10 Expenses. The Parties shall each pay all of their own fees, costs and expenses
(including all fees, costs and expenses of legal counsel, investment bankers, advisors,
accountants, brokers or other representatives and consultants and appraisal fees, costs and
expenses) incurred by such Party in connection with the preparation, negotiation, execution and
delivery of this Agreement and the consummation of the transactions contemplated hereby.
8.11 Mandatory Binding Arbitration.
(a) With respect to any claim, counterclaim, demand, cause of action, dispute, or any
other controversy arising out of or relating to this Agreement (collectively, a “Dispute”),
the party claiming such Dispute shall send notice of the Dispute to other party or parties
involved in such Dispute. If the parties cannot settle the Dispute within twenty (20) days
of the non-claiming party’s receipt of such notice, a binding arbitration will be held in
Dallas, Texas, upon notice by either party (the “Arbitration Notice”). Subject to the
provisions of this Section 8.11, the parties will agree upon the rules of the
arbitration prior to the arbitration based upon the nature of the disagreement. To the
extent that the parties cannot agree on the rules of the arbitration, the Commercial
Arbitration Rules of the American Arbitration Association (the “AAA”) will apply, and the
arbitration will be conducted on a confidential basis strictly in accordance with the terms
of this Agreement.
(b) The arbitration shall be conducted before a panel of three independent and
impartial arbitrators. Each party will be entitled to select one arbitrator within twenty
(20) days of the date of the Arbitration Notice. If a party fails to select an arbitrator
within such twenty (20) day period, the Dallas office of the AAA shall appoint an arbitrator
for such party. The two individuals so selected will then select the third arbitrator
within twenty (20) days. If the two individuals selected fail to select a third arbitrator
within such twenty (20) day period, the Dallas office of the AAA shall appoint a third
arbitrator. The panel of arbitrators will be selected no later than forty-five (45)
- 19 -
days after the date of the Arbitration Notice. Each member of the arbitration panel,
if possible, shall be experienced in legal and operational matters related to common carrier
pipelines.
(c) The arbitrators’ decision will be considered as a final and binding resolution of
the dispute. THE PARTIES HEREBY ACKNOWLEDGE AND AGREE THAT ANY FEDERAL COURT IN TEXAS SHALL
HAVE EXCLUSIVE JURISDICTION OVER THE PARTIES. FURTHER, THE PARTIES HEREBY ACKNOWLEDGE AND
AGREE THAT ANY DECISION BY AN ARBITRATOR SHALL BE ENTERED AS AN ORDER ONLY IN A FEDERAL
COURT IN TEXAS AND IF SUCH FEDERAL COURT DOES NOT HAVE JURISDICTION OR VENUE, THEN ANY STATE
COURT IN DALLAS, TEXAS. No party will xxx the other except for enforcement of the
arbitrator’s decision if the other party is not performing in accordance with the
arbitrator’s decision.
(d) The parties shall bear equally the fees and expenses of the arbitration unless
otherwise decided by the arbitrators. Each party will bear the costs of its own counsel,
witnesses (if any) and employees.
8.12 Certain Tax Matters. For U.S. federal income tax purposes, pursuant to Section 706(d) of
the Internal Revenue Code of 1986, as amended, Xxxxx UNEV and HEP-Operating’s distributive shares
of UNEV Pipeline’s federal income tax items for the taxable year of UNEV Pipeline that includes the
Closing or the Termination Option Closing, as applicable, shall be determined on the basis of an
interim closing of UNEV Pipeline’s books as of the close of business on the day of Closing or the
Termination Option Closing, as applicable.
8.13 Time of the Essence. With regard to all dates and time periods set forth or referred to
in this Agreement (including the schedule hereto), time is of the essence.
8.14 WAIVERS AND DISCLAIMERS. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS
AGREEMENT, EXCEPT FOR THE EXPRESS REPRESENTATIONS AND WARRANTIES AND OTHER COVENANTS AND AGREEMENTS
MADE BY THE PARTIES IN THIS AGREEMENT, THE PARTIES HERETO ACKNOWLEDGE AND AGREE THAT NONE OF THE
PARTIES HAS MADE, DOES NOT MAKE, AND EACH SUCH PARTY SPECIFICALLY NEGATES AND DISCLAIMS, AND IS NOT
RELYING ON ANY REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY
KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS, IMPLIED OR STATUTORY, ORAL OR WRITTEN, PAST OR
PRESENT, REGARDING (I) THE VALUE, NATURE, QUALITY OR CONDITION OF UNEV PIPELINE’S ASSETS AND THE
XXXXX UNEV INTERESTS INCLUDING, WITHOUT LIMITATION, THE WATER, SOIL, GEOLOGY OR ENVIRONMENTAL
CONDITION OF UNEV PIPELINE’S ASSETS GENERALLY, INCLUDING THE PRESENCE OR LACK OF HAZARDOUS
SUBSTANCES OR OTHER MATTERS ON UNEV PIPELINE’S ASSETS, (II) THE INCOME TO BE DERIVED FROM UNEV
PIPELINE’S ASSETS AND THE XXXXX UNEV INTERESTS, (III) THE SUITABILITY OF UNEV PIPELINE’S ASSETS FOR
ANY AND ALL ACTIVITIES AND USES THAT MAY BE CONDUCTED
- 20 -
THEREON, (IV) THE COMPLIANCE OF OR BY UNEV PIPELINE’S ASSETS OR THEIR OPERATION WITH ANY LAWS
(INCLUDING WITHOUT LIMITATION ANY ZONING, ENVIRONMENTAL PROTECTION, POLLUTION OR LAND USE LAWS,
RULES, REGULATIONS, ORDERS OR REQUIREMENTS), PERMITS, LICENSES, FORECASTS, RIGHTS-OF-WAY OR OTHER
AGREEMENTS OR (V) THE HABITABILITY, MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OF UNEV PIPELINE’S ASSETS OR THE XXXXX UNEV INTERESTS. EXCEPT TO THE EXTENT
EXPRESSLY PROVIDED IN THIS AGREEMENT, NONE OF THE PARTIES IS LIABLE OR BOUND IN ANY MANNER BY ANY
VERBAL OR WRITTEN STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO UNEV PIPELINE’S ASSETS
OR THE XXXXX UNEV INTERESTS FURNISHED BY ANY AGENT, EMPLOYEE, SERVANT OR THIRD PARTY. EXCEPT TO
THE EXTENT EXPRESSLY PROVIDED IN THIS AGREEMENT, EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT TO
THE MAXIMUM EXTENT PERMITTED BY LAW, THE TRANSFER AND CONVEYANCE OF THE XXXXX UNEV INTERESTS SHALL
BE MADE IN AN “AS IS,” “WHERE IS” CONDITION WITH ALL FAULTS, AND THE XXXXX UNEV INTERESTS ARE
TRANSFERRED AND CONVEYED SUBJECT TO ALL OF THE MATTERS CONTAINED IN THIS SECTION. THIS SECTION
SHALL SURVIVE SUCH TRANSFER AND CONVEYANCE OR THE TERMINATION OF THIS AGREEMENT. THE PROVISIONS OF
THIS SECTION HAVE BEEN NEGOTIATED BY THE PARTIES AFTER DUE CONSIDERATION AND ARE INTENDED TO BE A
COMPLETE EXCLUSION AND NEGATION OF ANY REPRESENTATIONS OR WARRANTIES, WHETHER EXPRESS, IMPLIED OR
STATUTORY, WITH RESPECT TO UNEV PIPELINE’S ASSETS AND THE XXXXX UNEV INTERESTS THAT MAY ARISE
PURSUANT TO ANY LAW NOW OR HEREAFTER IN EFFECT, OR OTHERWISE, EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT.
8.15 Access to Information. Notwithstanding the foregoing provisions of this Agreement, no
Party shall be required to, or to cause any of its Subsidiaries to, grant access or furnish
information to any other Party or any of their representatives to the extent that such information
is subject to an attorney/client or attorney work product privilege; provided,
however, that each Party shall, to the extent the same may be provided in a fashion
consistent with the maintenance of such privilege, endeavor in good faith to provide all
information and records reasonably requested by any other Party pursuant to a right of access to
such information granted to such Party in this Agreement.
Signatures begin on the following page.
- 21 -
IN WITNESS WHEREOF, the Parties have executed this Agreement on, and effective as of, the date
first written above.
| XXXXX CORPORATION |
||||
| By: | ||||
| Xxxxxxx X. XxXxxxxxx | ||||
| Vice President and Chief Financial Officer | ||||
| XXXXX UNEV PIPELINE COMPANY |
||||
| By: | ||||
| Xxxxxxx X. XxXxxxxxx | ||||
| Vice President and Chief Financial Officer | ||||
| NAVAJO PIPELINE CO., L.P. By Navajo Pipeline GP, L.L.C., Its General Partner |
||||
| By: | ||||
| Xxxxxxx X. XxXxxxxxx | ||||
| Vice President and Chief Financial Officer | ||||
| XXXXX LOGISTIC SERVICES, L.L.C. |
||||
| By: | ||||
| Xxxxx Xxxxx | ||||
| Senior Vice President | ||||
| HEP LOGISTIC HOLDINGS, L.P. By Xxxxx Logistic Services, L.L.C., Its General Partner |
||||
| By: | ||||
| Xxxxx Xxxxx | ||||
| Senior Vice President | ||||
| XXXXX ENERGY PARTNERS, L.P. By HEP Logistics Holdings, L.P. Its General Partner By Xxxxx Logistic Services, L.L.C. Its General Partner |
||||
| By: | ||||
| Xxxxx Xxxxx | ||||
| Senior Vice President | ||||
| HEP LOGISTICS GP, L.L.C. |
||||
| By: | ||||
| Xxxxx Xxxxx | ||||
| Senior Vice President | ||||
| XXXXX ENERGY PARTNERS–OPERATING, L.P. By HEP Logistics GP, L.L.C. Its General Partner |
||||
| By: | ||||
| Xxxxx Xxxxx | ||||
| Senior Vice President | ||||
Schedule A
Intentionally Deleted
Schedule B
Project Schedule
Schedule C
Deemed Capital Contributions
| Description of | ||||
| Capital Contribution | Cost | Date of Contribution | ||
Development management services
provided by Xxxxx UNEV or its
Affiliates prior to December 1,
2007 (provided HEP-Operating
shall have no other obligation to
reimburse Xxxxx UNEV for costs
incurred prior to such date for
services provided to
HEP-Operating by Xxxxx UNEV or
any of its Affiliates relating to
the UNEV Project) |
||||
[add description of pipes to be
contributed] |
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Cash Contributions prior to
December 1, 2007 |
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TOTAL Deemed Capital Contribution |
