EXHIBIT 10.1
MEDIATION SETTLEMENT AGREEMENT
This Mediation Settlement Agreement (this "Agreement") is made and
entered into as of November 15, 2002, by, between and among:
A. Longhorn Partners Pipeline, L.P. ("Longhorn"); and
B. Holly Corporation, Navajo Refining Company, L.P., and Black Eagle,
Inc. ("the Xxxxx Entities").
Longhorn and the Xxxxx Entities are referred to herein collectively as
the "Parties." This Agreement is a binding contract, the terms of which are
delineated below.
Reference to "the El Paso lawsuit" refers to the lawsuit brought by
Longhorn in the 000xx Xxxxx Xxxxxxxx Xxxxx in El Paso County, Texas and assigned
cause number 98-2991. Reference to "the New Mexico lawsuit" refers to the
lawsuit brought by Navajo Refining Company, L.P. and Xxxxx Corporation assigned
cause number CV-2002-417 in the 5th Judicial District Court in Eddy County, New
Mexico.
1. Legal Actions. The Parties have or may have claims against the other
and, without admitting any validity to those claims, the Parties wish to settle
their disputes and hereby enter into this Agreement for that purpose.
2. Settlement. The Parties intend hereby to fully and finally settle
all disputes, claims, and causes of action which have been asserted in the El
Paso lawsuit and the New Mexico lawsuit, or which could have been asserted in
either lawsuit. The provisions of this Agreement set forth the terms of their
settlement.
3. Closing. On or before November 26, 2002 ("Closing"), the parties who
are signatories to each of the following will execute:
MEDIATION SETTLEMENT AGREEMENT - PAGE 1
A. A Throughput and Deficiency Agreement ("T&D Agreement")
containing the terms specified in Exhibit A hereto (the "T&D Terms")
and other terms and provisions customarily found in similar agreements
of this type which are not inconsistent with the T&D Terms;
B. A Promissory Note (the "Note") in the form attached hereto
at Exhibit B;
C. Mutual Releases of the El Paso and New Mexico lawsuits in
the forms attached hereto at Exhibits C-1 and C-2, provided, however,
that if an agreement is reached on or before November 25, 2002, to
resolve the lawsuit styled and numbered Xxxxxxx v. Longhorn Partners
Pipeline, L.P., et al., Cause No. 98-2089, now pending in the 198th
Judicial District Court of Xxxxxx County, Texas, then the forms of
release attached hereto at Exhibits C-1 and C-2 will be revised to
include Xxxxxx Xxxxxxx, the Estate of Xxxxxx Xxxxxxx, Max Xxxxx Xxxxx,
Xxx X. Xxxxxxxxxx, and the Xxxxxx Xxxxxxxxx law firm and its
predecessors and its present and former partners, officers, and
employees among the "Xxxxx Released Parties," and the signatories
(including Xxxxxx Xxxxxxx, the Estate of Xxxxxx Xxxxxxx, Max Xxxxx
Xxxxx, Xxx X. Xxxxxxxxxx, and R. Xxxxx Xxxxxx, Xx., for the Xxxxxx
Xxxxxxxxx law firm) will execute the forms of Mutual Release as so
revised, which shall contain an appropriate exclusion for (i) claims
now pending or that could be brought in the case styled and numbered
Xxxxxxx, et al. x. Xxxxxx, et al., No. A CA 255 SS in the United States
District Court for the Western District of Texas, among those who are
now parties to that case, and (ii) for any proposed signatories who do
not sign the revised Mutual Releases; and
D. An Arbitration Agreement in the form attached hereto at
Exhibit D. The documents referenced in subparagraphs A through D above
are hereinafter referred to as the "Closing Documents."
MEDIATION SETTLEMENT AGREEMENT - PAGE 2
4. Dismissal of Lawsuits. Within five (5) days of Closing and the
execution of the Closing Documents by all signatory parties thereto: (a)
Longhorn and the Xxxxx Entities will file a joint motion with the El Paso Court
seeking dismissal of the El Paso lawsuit with prejudice (including all claims
that could have been brought by those parties therein), and will thereafter
attempt to obtain an Order of Dismissal at the earliest practical date in
accordance with said motion; (b) the Xxxxx Entities, Longhorn and those other
parties who have signed the Release in the form of Exhibit C-2, will file a
joint motion with the New Mexico Court seeking dismissal of the New Mexico
lawsuit with prejudice with respect to claims between and among those parties
(including all claims that could have been brought among those parties therein),
and will thereafter attempt to obtain an Order of Dismissal at the earliest
practical date in accordance with said motion; and (c) the Xxxxx Entities will
file a withdrawal of their petition for review in their appeal from the El Paso
lawsuit to the Texas Supreme Court.
5. Press Release. The Parties agree to issue a joint press release
relating to this Agreement in the form of Exhibit E hereto, as soon as practical
after execution of this Agreement by all Parties.
6. Covenant Not To Xxx. Longhorn covenants not to institute any
litigation or other legal proceedings relating to the facts, events or
occurrences that form the basis of the disputes which are the subject of the El
Paso litigation or the New Mexico litigation against (a) the Xxxxxx Xxxxxxxxx
law firm or any of its present or former partners, officers or employees, or (b)
Xxxxxx Xxxxxxx or the Xxxxxx Xxxxxxx Estate. However, notwithstanding the
foregoing, Longhorn reserves the right to respond in any manner it deems to be
necessary or appropriate, in its sole discretion, including the assertion and
prosecution of counterclaims, in any existing litigation or future litigation
brought by or on behalf of any of said parties (unless brought solely in the
capacity as counsel for others, and in accordance with pertinent procedural and
disciplinary rules governing the conduct of attorneys)
MEDIATION SETTLEMENT AGREEMENT - PAGE 3
against Longhorn; any such counterclaims in any currently pending litigation,
however, shall be limited to (i) counterclaims previously asserted, (ii)
counterclaims in response to claims not asserted against Longhorn as of the date
of this Agreement, and (iii) counterclaims based on evidence discovered after
the date of this Agreement.
7. Opposition Efforts. The Xxxxx Entities and their affiliates will
immediately discontinue all direct and indirect opposition, and support of any
opposition (financial or otherwise), to the Longhorn Pipeline Project
(including, but not limited to, litigation, lobbying and public relations),
except to the extent, and only to the extent, Xxxxx is contractually obligated
to provide such support. Xxxxx will use its reasonable best efforts to negotiate
a termination of its (and any of its affiliates') existing contractual
obligations to provide such support at the earliest practical date and the Xxxxx
Entities and Longhorn will use their reasonable best efforts to arrange for the
easement litigation (including all claims and counterclaims that have been or
could have been brought by any party in that action) currently pending against
Longhorn in Xxxxxx County, Texas to be dismissed with prejudice at the earliest
practical date.
8. Representations of Authority and Approval. Each of Longhorn and the
Xxxxx Entities warrants and represents that it has the authority and has
obtained all approvals necessary to execute this Agreement and the Closing
Documents, and to perform its obligations thereunder.
9. Consideration Acknowledged. The Parties acknowledge that the
covenants contained in this Agreement provide good and sufficient consideration
for every promise, duty, release, obligation, and right contained in this
Agreement.
10. Notices. Any notice or other communication required or permitted
under the terms of this Agreement shall be in writing and shall be considered as
properly given or served if delivered
MEDIATION SETTLEMENT AGREEMENT - PAGE 4
to or sent by certified mail, return receipt requested, postage and charges
prepaid and addressed to the address of record, which unless changed by
appropriate notice is as follows:
(a) if to Longhorn: Jenkens & Xxxxxxxxx, P.C., 0000 Xxxx Xxxxxx, Xxxxx
0000, Xxxxxx, Xxxxx 00000; ATTN: Xx. Xxxxx X. Xxxxxxxx.
(b) if to the Xxxxx Entities: Carrington, Coleman, Xxxxxx & Xxxxxxxxxx,
L.L.P., 000 Xxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000; ATTN: Mr. Xxx
Xxxxxxx.
11. Independent Judgment. In consideration of the above promises, the
undersigned represent and warrant that each has consulted counsel and has acted
on his own judgment as to all matters addressed herein, including the value of
any property or interest required to be transferred hereby, and has not been
induced to enter into this Agreement by any statement, act, or representation of
any kind or character on the part of any other entity or person.
12. Denial of Liability. It is understood by the Parties that each of
them has denied and still denies the claims and allegations made against them by
the other and that this Agreement is being entered into purely as a compromise
of disputed matters for the purpose of avoiding the uncertainty of litigation,
costs of litigation, and the uncertainty of collection of any judgment which
might be obtained therein. The settlement of such claims and counterclaims which
might be asserted and the obligations created by this Agreement are not and
shall not be construed as an admission of liability by any of the Parties on any
claim or counterclaim.
13. Entirety and Amendments. This Agreement and attached exhibits
embody the entire agreement among the Parties, and supersede all prior
agreements and understandings, if any, relating to the subject matter hereof,
except for agreed court orders. Any amendment hereto must be in writing and
signed by the Parties in order to be effective.
MEDIATION SETTLEMENT AGREEMENT - PAGE 5
14. Multiple Counterparts. This Agreement may be executed in a number
of identical counterparts, all of which collectively constitute one agreement.
However, in making proof of this Agreement, it shall not be necessary to produce
or account for more than one such counterpart containing the signature of any
Party against which enforcement is sought.
15. Dispute Resolution. All disputes relating to or arising out of this
Agreement and the documents to be executed in connection herewith at Closing
shall be first submitted to mediation in Dallas, Dallas County, Texas to the
Xxxxxxxxx Xxxxxx X. Xxxxxx or, if he is not available, to another mediator
mutually acceptable to the parties. In the event that any disputes cannot be
settled through mediation, those disputes will be resolved through arbitration
pursuant to the terms set forth in the form of arbitration agreement attached
hereto at Exhibit D. Nothing herein, however, shall prevent any party from
taking such measures as are necessary and appropriate to preserve the status quo
pending such mediation and/or arbitration.
16. Non-Waiver. Failure of any party to exercise any right or option
arising out of a breach of this Agreement shall not be deemed a waiver of any
right or option with respect to any subsequent or different breach or the
continuance of any existing breach.
17. Law Governing. This Agreement is to be performed in Dallas County,
Texas, and the substantive laws of such state shall govern the validity,
construction, enforcement, and interpretation of this Agreement.
18. Parties Bound. This Agreement shall be binding upon and inure to
the benefit of the Parties, their respective heirs, successors, assigns,
employees, officers, directors, agents and affiliates.
19. Binding Agreement. The Parties agree to proceed promptly toward the
negotiation and execution of a definitive T&D Agreement containing the T&D Terms
set forth in Exhibit A and to consummate the Closing of this Settlement on or
before November 26, 2002. The Parties agree that
MEDIATION SETTLEMENT AGREEMENT - PAGE 6
this Agreement is intended to be a binding contract between the Parties. In the
event that for any reason any Party hereto attempts to withdraw from this
Agreement or refuses to acknowledge or comply with any material term hereof
prior to the execution and delivery of the Closing Documents, the other Party
may elect to either (a) enforce this Agreement or (b) terminate this Agreement
in its entirety.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.
LONGHORN PARTNERS PIPELINE, L.P. HOLLY CORPORATION
By: Longhorn Partners GP, L.L.C.
Its: General Partner
By: /s/ XXXXX XXXXXXXXXX
--------------------------
Its: Chairman of the Board and
Chief Executive Officer
--------------------------
By: /s/ XXXXXX X. XXXXXXXXXX
------------------------------
Xxxxxx X. Xxxxxxxxxx
President and
Chief Executive Officer
NAVAJO REFINING COMPANY, L.P.
By: /s/ XXXXXXX X. XXXXXXX
--------------------------
Its: President
--------------------------
BLACK EAGLE, INC.
By: /s/ XXXXXXX X. XXXXXXX
--------------------------
Its: President
--------------------------
MEDIATION SETTLEMENT AGREEMENT - PAGE 7
EXHIBIT A
PROPOSED TERMS AND CONDITIONS OF THROUGHPUT AND DEFICIENCY AGREEMENT
1. The T&D Agreement to be executed by Navajo will cover the shipment of
petroleum products from the origination of the Longhorn Pipeline at
GATX Terminals Corporation's terminal at Galena Park, Texas to a point
of destination in El Paso, Texas.
2. The principal terms of the T&D Agreement are as follows:
a. The term of the T&D Agreement will be six (6) years and will
commence upon Startup of the Longhorn Pipeline Project (as
"Startup" is defined in the Promissory Note from Longhorn to
Navajo in the form attached as Exhibit B to the Settlement
Agreement (the "Note")).
b. Navajo Refining Company, L.P. will prepay Longhorn $25 million
at Closing in immediately available funds (the "Prepayment
Amount").
c. The tariff rate for shipments from the point of origin to El
Paso will be $.05 per gallon. Instead of billing Navajo for
volumes shipped through the pipeline, the amounts due from
Navajo for shipments from the point of origin to El Paso will
be deducted from the Prepayment Amount. Additionally,
terminalling charges due from Navajo at Longhorn's El Paso
terminal (21 cents per barrel) will be deducted from the
Prepayment Amount.
d. If during any 6 month (semi-annual)(1) time period, Navajo
does not ship at least an average of 7,000 barrels per day
(subject to adjustment for material curtailments and
prorationing), then the "deficiency" shall be deducted from
the Prepayment Amount at a rate of $2.10 per barrel.
e. If Navajo ships in excess of an average of 7,000 barrels per
day over a 6-month (semi-annual) period ("Excess Shipments"),
such Excess Shipments shall not be subject to the T&D
Agreement and shall not be deducted from the Prepayment
Amount, but shall instead be paid for at the spot price or
other mutually agreed price in effect on the date of shipment.
Notwithstanding the foregoing, if during prior periods Navajo
was prevented from shipping nominated volumes as a result of
material curtailments or prorationing ("Curtailed Nominated
Volumes"), then such Excess Shipments may used to recoup prior
Curtailed Nominated Volumes that have not been previously
recouped. Such recouped volumes shall be subject to the T&D
Agreement and shall be deducted from the Prepayment Amount.
----------
(1) The first such semi-annual period will commence on the first day of the
month following the date of the startup of the Longhorn Pipeline Project.
MEDIATION SETTLEMENT AGREEMENT - PAGE 8
f. The T&D Agreement shall terminate upon the earliest to occur
of (i) the last day of the calendar month in which Navajo has
exhausted its Prepayment Amount; (ii) Longhorn's exercise of
its "buy out" option specified in Paragraph 5 below; or (iii)
if Navajo so elects, upon any event that triggers the
obligation by Longhorn to pay the Contingent Payment Amount
under the Note.
3. If the T&D Agreement terminates at the end of six years and at that
time Navajo has not recouped all of its Prepayment Amount as a result
of Curtailed Nominated Volumes, then Longhorn will be obligated to pay
to Navajo the remaining balance of the Prepayment Amount plus interest
on that amount at the rate of 5.5% per annum (from the date of the
Closing of the Settlement to the date of payment).
4. Navajo is not required to ship any barrels on the Longhorn Pipeline.
However, in the event that Navajo does not ship an average of 7,000
barrels per day, barrels not shipped will be credited against its
Prepayment Amount, as provided in Paragraph 2(d) above. Additionally,
Navajo has no obligation to furnish linefill for the startup of the
pipeline.
5. Longhorn shall have the right at any time, upon 60 days prior written
notice, to "buy out" Navajo's prepaid T&D Agreement at a price equal to
the unrecouped balance of the Prepayment Amount plus interest on the
unrecouped balance of the Prepayment Amount at a rate of 5.5% per annum
from the date of the Closing of the Settlement to the date of payment.
6. The T&D Agreement shall contain such other terms and provisions as are
customarily found in similar agreements of this type and which are not
inconsistent with the terms described above.
7. If Longhorn is obligated by law to offer third parties the opportunity
to enter into a throughput and deficiency agreement with terms and
conditions comparable to those being made available to Navajo
("Comparable T&D Agreements"), and in the further event that third
party companies elect to enter into Comparable T&D Agreements, Navajo
acknowledges that its 7,000 barrel per day shipping volume could be
reduced. In the event of such reduction, the provisions of the T&D
Agreement will be modified to reflect such reduction and Longhorn will
promptly refund any portion of the Prepayment Amount attributable to
such reduction, with interest on that amount at the rate of 5.5% per
annum from the date of the Closing of the Settlement to the date of
Payment.
8. Prior to or contemporaneously with the execution of the definitive T&D
Agreement, Navajo will enter into a Terminal Use and Access Agreement
with Longhorn for Longhorn's El Paso Terminal in Longhorn's standard
form of terminal use and access agreement generally used by Longhorn
with shippers unrelated to Longhorn.
MEDIATION SETTLEMENT AGREEMENT - PAGE 9
EXHIBIT B
PROMISSORY NOTE
$25,000,000 Dallas, Texas November ___, 2002
This Promissory Note, dated as of November ____, 2002, is from LONGHORN
PARTNERS PIPELINE, L.P., a Delaware limited partnership ("Maker"), to NAVAJO
REFINING COMPANY, L.P. ("Payee").
Recitals:
A. Pursuant to a Mediation Settlement Agreement dated November ___,
2002 (the "Settlement Agreement") by and between Maker, Payee, Xxxxx
Corporation, and Black Eagle, Inc., Maker and Payee entered into a Throughput
and Deficiency Agreement dated November ___, 2002 (the "T&D Agreement"),
pursuant to which Payee prepaid the amount of $25,000,000 (the "Prepayment
Amount") in return for certain shipping entitlements for Navajo through Maker's
petroleum products pipeline.
B. Under the terms of Paragraph 3(B) of the Settlement Agreement, Maker
agreed to execute and deliver this Note to Payee to provide for Payee's
contingent repayment rights in the event that (1) Maker has not commenced
regular and ongoing transportation of refined petroleum products through its
pipeline to El Paso, Texas, on or before July 1, 2004, or prior thereto has
given unequivocal indication (by announcement or circumstance) that it will not
or cannot commence such operations, or if (2) Maker commences transporting
refined petroleum products through its pipeline on or before July 1, 2004, but
thereafter ceases transporting refined petroleum products through its pipeline
(i) for reasons other than Force Majeure, for a continuous period in excess of
180 days, or (ii) for a continuous period of more than one year for any reason
(regardless of Force Majeure), prior to the time the entire Prepayment Amount
has been recouped through transportation services under the terms of the T&D
Agreement, or if(3) an Event of Default occurs.
C. Capitalized terms used in this Note which are not defined in
Paragraph 1 below shall have the meanings assigned to those terms in the
Settlement Agreement.
NOW, THEREFORE, in consideration of the premises above and the mutual
covenants in the Settlement Agreement, Maker hereby agrees as follows:
1. Defined Terms. As used in this Note, the following terms have
the following meanings:
Applicable Rate means five and one-half percent (5.5%) per
annum.
Buyout means an exercise of Maker's rights provided for in the
T&D Agreement as described in Paragraph 5 of Exhibit A of the
Settlement Agreement to "buy out" the T&D Agreement by
repaying the remaining balance of the Prepayment Amount plus
interest thereon at the Applicable Rate.
MEDIATION SETTLEMENT AGREEMENT - PAGE 10
Contingent Payment Amount means (a) in the event of a Failure
to Commence Operations, $25,000,000 plus interest thereon at
the Applicable Rate from the date of this Promissory Note, and
(b) in the event of a Permanent Cessation of Operations or an
Event of Default, the Remaining Balance plus interest thereon
at the Applicable Rate from the date of this Promissory Note.
Contingent Payment Date means (a) July 1, 2004, if there has
been a Failure to Commence Operations, and (b) five (5)
business days after any Permanent Cessation of Operations or
Event of Default.
Event of Default means (i) any repudiation or rejection by
Maker or any successor of its obligations under the Note or of
its obligation to provide the services to Payee specified in
the T&D Agreement, including the announcement by Maker that it
will not Startup transporting refined products through its
pipeline on or before July 1, 2004 (or the functional
equivalent), or the announcement by Maker that it will have a
Permanent Cessation of Operations (or the functional
equivalent); (ii) Maker has had entered against it a judgment,
decree, or order for relief in an involuntary proceeding
commenced under any bankruptcy, insolvency, or similar law, or
has any such proceeding commenced against it which remains
undismissed for a period of sixty (60) days; (iii) Maker or
any related entity has commenced a case regarding Maker under
any bankruptcy, insolvency, or similar law, or makes a general
assignment for the benefit of creditors; or (iv) Maker suffers
the appointment of or taking possession or control by a
receiver, liquidator, custodian, trustee, or similar official,
of all or any substantial part of its assets.
Failure to Commence Operations means a failure by Maker to
Startup on or before July 1, 2004.
Force Majeure means an event or events beyond the reasonable
control of the party unable to perform hereunder, and includes
without limitation, acts of God; storm, flood, extreme
weather, fire, explosion, war, invasion, hostilities,
rebellion, terrorism, insurrection, riots, strikes, picketing
or other labor stoppages, whether of carrier's or shipper's
employees, agents, or otherwise; electrical or electronic
failure or malfunction; communications failure or malfunction;
computer hardware and or software failure, malfunction, or
inaccuracy; breakage or accident to machinery or equipment;
temporary restraining orders, injunctions, or compliance
orders issued by courts or governmental agencies; seizure or
destruction under quarantine or customs regulations, or
confiscation by order of any government or public authority,
or risks of contraband or illegal transportation or trade; or
any cause not due to fault or negligence or any cause
reasonably beyond the control of the parties; provided
however, it shall not include economic or financial events or
circumstances of Maker or its affiliates (including, without
limitation, the circumstances described as Events of Default,
above). Nothing herein shall be construed to require
settlement of labor disputes against the better judgment of
the party having the dispute.
MEDIATION SETTLEMENT AGREEMENT - PAGE 11
Permanent Cessation of Operations means a cessation of the
provision of transportation services for refined petroleum
products through Maker's pipeline for delivery to El Paso,
Texas, (i) for reasons other than Force Majeure, for a
continuous period in excess of 180 days, or (ii) for a
continuous period of more than one year for any reason
(regardless of Force Majeure), prior to the time the entire
Prepayment Amount has been recouped through transportation
services under the T&D Agreement, or the announcement by Maker
or any successor that such cessation will or is expected to
occur.
Remaining Balance means the amount of the Prepayment Amount
that still remains to be recovered by Payee under the T&D
Agreement at the time of a Permanent Cessation of Operations or
an Event of Default.
Senior Debt means all principal of, and any accrued and unpaid
interest, and all other amounts owing by Maker under the terms
of any financing obtained hereafter by Maker for the startup of
its Galena Park, Texas to El Paso, Texas petroleum products
pipeline project from any commercial banks, financial
institutions or other lenders, in an aggregate principal amount
not to exceed $150,000,000; provided, however, that no person
or entity holding any direct or indirect equity interest in
Maker ("Affiliated Parties") may provide financing as part of
the Senior Debt, except that (i) X. X. Xxxxxx Xxxxx may provide
financing of all or part of the Senior Debt, and (ii)
Affiliated Parties may provide up to 30% of the Senior Debt
financing if a party or parties other than an Affiliated Party
provides at least 70% of the Senior Debt financing.
Startup means for Maker to commence regular and ongoing
transportation of refined petroleum products through its
pipeline for delivery to El Paso, at a rate and on a basis
sufficient to ensure that Maker has the ability to perform
under the T&D Agreement.
2. Payment. In the event of a Failure to Commence Operations or a
Permanent Cessation of Operations or an Event of Default, Maker hereby promises
to pay to the order of Payee the Contingent Payment Amount on or before the
applicable Contingent Payment Date. All payments on this Note shall be due and
payable in lawful money of the United States of America at Payee's address
located at 0000 Xxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxx Xxxxx 00000-0000, or such
other address as the holder hereof may indicate in writing to Maker.
3. Termination of This Note. This Note shall terminate and have no
further force or effect in the event of Buyout, or on the date that the entire
Prepayment Amount has been recouped by Payee under the T&D Agreement.
4. Default Interest. In the event that a Failure to Commence Operations
or a Permanent Cessation of Operations occurs and Maker fails to pay the
Contingent Payment amount due on or before the Contingent Payment Date, then all
outstanding amounts due and payable under this Promissory Note shall thereafter
bear interest at a rate often percent (10%) per annum.
5. Subordination. All payments of principal and interest under this
Note shall be fully subordinated to the prior payment in full of all Senior
Debt. Payee, by its acceptance hereof, agrees
MEDIATION SETTLEMENT AGREEMENT - PAGE 12
to execute, at the request of Maker, a separate agreement with any holder of
Senior Debt setting out Payee's agreement to subordinate all payments of
principal and interest hereunder to such holder's Senior Debt and to take all
such other action as such holder of Senior Debt may reasonably request to enable
such holder of Senior Debt to enforce all claims relating to such Senior Debt in
a manner which is prior to and in preference to Payee's claims under this Note.
Maker's obligations and Payee's rights under this Note shall not be subordinated
to any debt of Maker other than the Senior Debt. Payee's rights under this Note
shall be pari passu with the rights of the Lenders who have advanced funds prior
to November 15, 2002 (and with respect to such advances) under that certain
Credit Agreement dated as of August 29, 2001, as amended as of November 15,
2002, by and among Longhorn Partners Pipeline, L.P., Xxxxxxxx Holdings, L.P.,
LPP Holdings, L.P., ELPP Holdings, Inc., Amoco Longhorn Pipeline Company and
Longhorn Enterprises of Texas, Inc.
6. Governing Law. THIS NOTE SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE LAWS OF SUCH STATE AND
THE UNITED STATES OF AMERICA SHALL GOVERN THE RIGHTS AND DUTIES OF THE PARTIES
HERETO AND THE VALIDITY, CONSTRUCTION, ENFORCEMENT AND INTERPRETATION OF THIS
NOTE.
7. Successors and Assigns. This Note shall bind Maker and its
successors and assigns and shall inure to the benefit of the holder and its
successors and assigns.
EXECUTED as of the day and year first written above.
MAKER:
LONGHORN PARTNERS PIPELINE, L.P.
By: Longhorn Partners GP, L.L.C.
By:
-------------------------------------
Xxxxxx X. Xxxxxxxxxx
President and Chief Executive Officer
MEDIATION SETTLEMENT AGREEMENT - PAGE 13
EXHIBIT C-1
MUTUAL RELEASE
For and in consideration of the terms of the Mediation Settlement
Agreement (the "Settlement Agreement") entered into on the _________ day of
November, 2002, by and between Xxxxx Corporation, Navajo Refining Company, L.P.,
Black Eagle, Inc. (collectively, the "Xxxxx Entities") and Longhorn Partners
Pipeline, L.P. ("Longhorn"), as well as the covenants and/or promises contained
herein, the receipt and sufficiency of which are hereby acknowledged, the Xxxxx
Entities, on behalf of themselves and all who may claim by, through, or under
them, hereby fully, finally and forever RELEASE, ACQUIT and FOREVER DISCHARGE
Longhorn Partners Pipeline, L.P., its assigns, representatives, agents, and/or
heirs, if any, along with any successor companies, as well as its officers,
administrators, directors, employees and/or attorneys (collectively, the
"Longhorn Released Parties"), jointly and severally, from all claims, demands,
actions, causes of action, other liabilities, and/or damages, if any, known or
unknown, whether arising at law, by statute, or in equity, which the Xxxxx
Entities, or any other person or entity claiming by, through or under them, may
have or claim to have, jointly or severally, against the Longhorn Released
Parties that in any way arise out of or are connected with acts, omissions,
conduct, relationships, occurrences, dealings, communications, events, and/or
transactions relating in any way to the Longhorn pipeline, or the litigation
filed by Longhorn in the 120th Judicial District Court, El Paso County, Texas
and given cause number 98-2991 in that court, or the litigation filed by Xxxxx
Corporation and Navajo Refining Company, L.P. in the 5th Judicial District
Court, Eddy County, New Mexico, and given cause number CV-2002-417 in that
court, that have occurred on or before the date upon which the Xxxxx Entities
execute this Agreement; provided, however, this release does not include any
claims the Xxxxx Entities may have against the Longhorn Released Parties for any
failure to comply with or breach of any provision in this Mutual Release or the
Settlement Agreement or any documents executed in connection with the Settlement
Agreement.
For and in consideration of the terms of the Settlement Agreement, as
well as the covenants and/or promises contained herein, the receipt and
sufficiency of which are hereby acknowledged, Longhorn, on behalf of itself and
all who may claim by, through, or under it, hereby fully, finally and forever
RELEASES, ACQUITS and FOREVER DISCHARGES the Xxxxx Entities, and their assigns,
representatives, agents, and/or heirs along with any successor companies, as
well as their officers, administrators, directors, employees and/or attorneys
(collectively, the "Xxxxx Released Parties"), jointly and severally, from all
claims, demands, actions, causes of action, other liabilities, and/or damages,
if any, known or unknown, whether arising at law, by statute, or in equity,
which Longhorn, or any other person or entity claiming by, through or under it,
may have or claim to have, jointly or severally, against the Xxxxx Released
Parties that in any way arise out of or are connected with acts, omissions,
conduct, relationships, occurrences, dealings, communications, events, and/or
transactions relating in any way to the Longhorn pipeline, or the litigation
filed by Longhorn in the 120th Judicial District Court, El Paso County, Texas
and given cause number 98-2991 in that court, or the litigation filed by Xxxxx
Corporation and Navajo Refining Company, L.P. in the 5th Judicial District
Court, Eddy County, New Mexico, and given cause number CV-2002-417 in that
court, that have occurred on or before the date upon which Longhorn executes
this Agreement; provided, however, this release does not include any claims
Longhorn may have against the Xxxxx Released Parties for any failure to comply
MEDIATION SETTLEMENT AGREEMENT - PAGE 14
with or breach of any provision in this Mutual Release or the Settlement
Agreement or any documents executed in connection with the Settlement Agreement;
nor does it include a release of any of the parties identified in Paragraph 6 of
the Settlement Agreement.
Longhorn Partners Pipeline, L.P.
By:
-----------------------------
Its:
-----------------------------
Xxxxx Corporation
By:
-----------------------------
Its:
-----------------------------
Navajo Refining Company, L.P.
By:
-----------------------------
Its:
-----------------------------
Black Eagle, Inc.
By:
-----------------------------
Its:
-----------------------------
MEDIATION SETTLEMENT AGREEMENT - PAGE 15
EXHIBIT C-2
MUTUAL RELEASE
For and in consideration of the terms of the Mediation Settlement
Agreement (the "Settlement Agreement") entered into on the _____ day of
November, 2002 by and between Xxxxx Corporation, Navajo Refining Company, L.P.,
and Black Eagle, Inc. (collectively, the "Xxxxx Entities") and Longhorn Partners
Pipeline, L.P., as well as the covenants and/or promises contained herein, the
receipt and sufficiency of which are hereby acknowledged, the Xxxxx Entities, on
behalf of themselves and all who may claim by, through or under them, hereby
fully, finally and forever RELEASE, ACQUIT and FOREVER DISCHARGE each
of Longhorn Partners Pipeline GP, L.L.C., Exxon Mobil Pipeline Company, ELPP
Holdings, Inc., ELPP GP, Inc., Xxxxxxxx Pipeline Company, L.L.C., Longhorn
Enterprises of Texas, Inc., BP Pipeline (North America) Inc., Amoco Longhorn
Pipeline Company, Amoco Longhorn GP Pipeline Company, The Beacon Group Energy
Investment Fund L.P., and LPP Holdings, L.P., that signs this Mutual Release and
transmits such signed copy to Xxxxx Corporation by 5:00 p.m. November 26, 2002,
and any of their assigns, representatives, agents, and/or heirs, if any, along
with any successor companies, as well as their officers, administrators,
directors, employees and/or attorneys (collectively, the "Longhorn Released
Parties"), jointly and severally, from all claims, demands, actions, causes of
action, other liabilities, and/or damages, if any, known or unknown, whether
arising at law, by statute, or in equity, which the Xxxxx Entities, or any other
person or entity claiming by, through or under them, may have or claim to have,
jointly or severally, against the Longhorn Released Parties that in any way
arise out of or are connected with acts, omissions, conduct, relationships,
occurrences, dealings, communications, events, and/or transactions relating in
any way to the Longhorn pipeline, or the litigation filed by Longhorn Partners
Pipeline, L.P., in the 120th Judicial District Court, El Paso County, Texas, and
given cause number 98-2991 in that court, or the litigation filed by Xxxxx
Corporation and Navajo Refining Company, L.P. in the 0xx Xxxxxxxx Xxxxxxxx
Xxxxx, Xxxx Xxxxxx, Xxx Xxxxxx and given cause number CV-2002-417 in that court,
that have occurred on or before the date upon which the Xxxxx Entities execute
this Agreement; provided, however, this release does not include any claims the
Xxxxx Entities may have against the Longhorn Released Parties for any failure to
comply with or breach of any provision in this Mutual Release; provided further,
however that the "Longhorn Released Parties" excludes and does not include any
of Longhorn Partners Pipeline, G.P., L.L.C., Exxon Mobil Pipeline Company, ELPP
Holdings, Inc., ELPP G.P., Inc., Xxxxxxxx Pipeline Company, L.L.C., Longhorn
Enterprises of Texas, Inc., BP Pipeline (North America), Inc., Amoco Longhorn
Pipeline Company, Amoco Longhorn GP Pipeline Company, The Beacon Group Energy
Investment Fund, L.P., and/or LPP Holdings, L.P., that does not sign and
transmit to Xxxxx Corporation a signed copy of this Mutual Release on or before
5:00 p.m. November 26, 2002, or their assigns, representatives, agents, and/or
heirs, if any, or any successor companies, officers, administrators, directors,
employees, and/or attorneys, and the benefits and obligations of this Mutual
Release and of the Mutual Release signed November ____, 2002, by and between the
Xxxxx Entities and Longhorn Partners Pipeline, L.P., do not extend to them, or
any of them.
For and in consideration of the terms of the Settlement Agreement, as
well as the covenants and/or promises contained herein, the receipt and
sufficiency of which are hereby acknowledged, the
MEDIATION SETTLEMENT AGREEMENT - PAGE 16
Longhorn Released Parties, on behalf of themselves and all who may claim by,
through or under any of them, hereby fully, finally and forever RELEASE, ACQUIT
and FOREVER DISCHARGE the Xxxxx Entities, and their members, assigns, general or
limited partners, representatives, agents, and/or heirs along with any affiliate
and/or successor companies, as well as their officers, administrators,
directors, employees and/or attorneys (collectively, the "Xxxxx Released
Parties"), jointly and severally, from all claims, demands, actions, causes of
action, other liabilities, and/or damages, if any, known or unknown, whether
arising at law, by statute, or in equity, which the Longhorn Released Parties,
or any other person or entity claiming by, through or under them, may have or
claim to have, jointly or severally, against the Xxxxx Released Parties that in
any way arise out of or are connected with acts, omissions, conduct,
relationships, occurrences, dealings, communications, events, and/or
transactions relating in any way to the Longhorn pipeline or the litigation
filed by Longhorn Partners Pipeline, L.P., in the 120th Judicial District Court,
El Paso County, Texas, and given cause number 98-2991 in that court, or the
litigation filed by Xxxxx Corporation and Navajo Refining Company, L.P. in the
0xx Xxxxxxxx Xxxxxxxx Xxxxx, Xxxx Xxxxxx, Xxx Xxxxxx and given cause number
CV-2002-417 in that court, that have occurred on or before the date upon which
the Longhorn Released Parties execute this Mutual Release, provided, however,
this Mutual Release does not include any claims the Longhorn Released Parties
may have against the Xxxxx Released Parties for any failure to comply with or
breach of any provision in this Mutual Release. This Mutual Release does not
include a release of any of the parties identified in Paragraph 6 of the
Settlement Agreement but, not withstanding the foregoing, the Longhorn Released
Parties covenant not to institute any litigation or other legal proceedings
relating to the facts, events, or occurrences that form the basis of the
disputes which are the subject of the El Paso litigation or the New Mexico
litigation (referenced above) against (a) the Xxxxxx Xxxxxxxxx law firm or any
of its present or former partners, officers, or employees or (b) Xxxxxx Xxxxxxx
or the Estate of Xxxxxx Xxxxxxx; provided further that each of the Longhorn
Released Parties reserves the right to respond in any manner it deems to be
necessary or appropriate, in its sole discretion, including the assertion and
prosecution of counterclaims, in any existing litigation or future litigation
brought by or on behalf of any of said parties (unless brought solely in the
capacity as counsel for others, and in accordance with pertinent procedural and
disciplinary rules governing the conduct of attorneys) against said Longhorn
Released Party; any such counterclaims in any currently pending litigation,
however, shall be limited to (i) counterclaims previously asserted as of
November 15, 2002, (ii) counterclaims in response to claims not asserted against
such Longhorn Released Party as of the date of this Mutual Release, and (iii)
counterclaims based on evidence discovered after the date of this Mutual
Release.
All disputes relating to or arising out of this Mutual Release and any
related documents shall be first submitted to mediation in Dallas, Dallas
County, Texas, to the Xxxxxxxxx Xxxxxx X. Xxxxxx, or, if he is not available, to
another mediator mutually acceptable to the Parties. In the event that any
disputes cannot be settled through mediation, those disputes will be resolved
through arbitration pursuant to the terms set forth in the form of Arbitration
Agreement attached hereto and Exhibit D to the Settlement Agreement.
LONGHORN PARTNERS PIPELINE GP, L.L.C.
By:
---------------------------------
Its:
--------------------------------
MEDIATION SETTLEMENT AGREEMENT - PAGE 17
EXXON MOBIL PIPELINE COMPANY
By:
-----------------------------
Its:
-----------------------------
ELPP HOLDINGS, INC.
By:
-----------------------------
Its:
-----------------------------
ELPP GP, INC.
By:
-----------------------------
Its:
-----------------------------
XXXXXXXX PIPE LINE COMPANY, L.L.C.
By:
-----------------------------
Its:
-----------------------------
LONGHORN ENTERPRISES OF TEXAS, INC.
By:
-----------------------------
Its:
-----------------------------
BP PIPELINE (NORTH AMERICA) INC.
By:
-----------------------------
Its:
-----------------------------
MEDIATION SETTLEMENT AGREEMENT - PAGE 18
AMOCO LONGHORN PIPELINE COMPANY
By:
-----------------------------
Its:
-----------------------------
AMOCO LONGHORN GP PIPELINE COMPANY
By:
-----------------------------
Its:
-----------------------------
THE BEACON GROUP ENERGY INVESTMENT FUND, L.P.
By:
-----------------------------
Its:
-----------------------------
LPP HOLDINGS, L.P.
By:
-----------------------------
Its:
-----------------------------
XXXXX CORPORATION
By:
-----------------------------
Its:
-----------------------------
NAVAJO REFINING COMPANY, L.P.
By:
-----------------------------
Its:
-----------------------------
MEDIATION SETTLEMENT AGREEMENT - PAGE 19
BLACK EAGLE, INC.
By:
-----------------------------
Its:
-----------------------------
MEDIATION SETTLEMENT AGREEMENT - PAGE 20
EXHIBIT D
ARBITRATION AGREEMENT
(a) Binding Arbitration. This Arbitration Agreement is attached to that
certain Mediation Settlement Agreement by and between Longhorn Partners
Pipeline, L.P. and Xxxxx Corporation, Navajo Refining Company, L.P. and Black
Eagle, Inc. dated November ___, 2002 (the "Settlement Agreement"). Capitalized
terms used herein that are not otherwise defined shall have the meanings
assigned to those terms in the Settlement Agreement. Upon the demand of any
Party, any Dispute (as defined below) shall be resolved by binding arbitration
in accordance with the terms of this Arbitration Agreement. A "Dispute" shall
include any action, dispute, claim or controversy of any kind (e.g., whether in
contract or in tort, statutory or common law, legal or equitable or otherwise)
now existing or hereafter arising between the Parties in any way arising out of,
pertaining to or in connection with the Settlement Agreement or any agreement,
document or instrument executed in connection therewith or pursuant thereto (the
"Settlement Documents"). Any Party to this Arbitration Agreement, by summary
proceedings (e.g., a plea in abatement or motion to stay further proceedings),
may bring any action in court to compel arbitration of any Disputes. Any Party
who fails or refuses to submit to binding arbitration following a lawful demand
by the opposing Party shall bear all costs and expenses incurred by the opposing
party in compelling arbitration of any Dispute. The Parties agree that by
engaging in activities with or involving each other as described above, they are
participating in transactions involving interstate commerce.
(b) Governing Rules. All Disputes between the Parties submitted to
arbitration shall be resolved by binding arbitration administered by the
American Arbitration Association (the "AAA") in accordance with, and in the
following order or priority: (1) the terms of this Arbitration Agreement, (2)
the Commercial Arbitration Rules of the AAA, (3) the Federal Arbitration Act
(Title 9 of the United States Code), and (4) to the extent the foregoing are
inapplicable, unenforceable or invalid, the laws of the State of Texas. The
validity and enforceability of this Arbitration Agreement shall be determined in
accordance with this same order of priority. In the event of any inconsistency
between this Arbitration Agreement and such rules and statutes, this Arbitration
Agreement shall control. Judgment upon any award rendered hereunder may be
entered in any court having jurisdiction.
(c) Arbitrator Powers and Qualifications; Modification or Vacation of
Award. Arbitrators are empowered to resolve Disputes by summary rulings
substantially similar to summary judgments and motions to dismiss. Arbitrators
shall resolve all Disputes in accordance with the applicable substantive law.
Any arbitrator selected shall be required to be (i) neutral, (ii) a practicing
attorney licensed to practice law in the State of Texas, and (iii) experienced
and knowledgeable in the substantive laws applicable to the subject matter of
the Dispute. With respect to a Dispute in which the claims or amounts in
controversy do not exceed $250,000, a single arbitrator shall be chosen and
shall resolve the Dispute. In such case, the arbitrator shall be required to
make specific, written findings of fact and conclusions of law, and shall have
authority to render an award up to but not to exceed $250,000, including all
damages of any kind, including costs, fees and expenses. A Dispute involving
claims or amounts in controversy exceeding $250,000 or involving claims or
amounts in controversy where the parties cannot agree that the amount in
controversy is less than $250,000, shall
MEDIATION SETTLEMENT AGREEMENT - PAGE 21
be decided by a majority vote of a panel of three arbitrators (an "Arbitration
Panel"), the determination of any two of the three arbitrators constituting the
determination of the Arbitration Panel, provided, however, that all three
Arbitrators on the Arbitration Panel must actively participate in all hearings
and deliberations. Arbitrators, including any Arbitration Panel, may grant any
remedy or relief deemed just and equitable and within the scope of this
Arbitration Agreement and may also grant such ancillary relief as is necessary
to make effective any award. Arbitration Panels shall be required to make
specific, written findings of fact and conclusions of law and shall be required
to render awards within 30 days after the conclusion of hearings, or within 30
days following the submission of final briefs of the Parties if a briefing
schedule is established following the hearings.
(d) Consequential or Punitive Damages. The Parties agree that in no
event shall any Party be liable to another Party for consequential, incidental
or indirect damages or punitive damages of any kind and that the Arbitrator (or
the Arbitration Panel as appropriate) shall have no power to award any such
damages hereunder.
(e) Timing and Discovery. To the maximum extent practicable, the AAA,
the Arbitrator (or the Arbitration Panel, as appropriate) and the Parties shall
take any action necessary to require that an arbitration proceeding hereunder
shall be concluded within 180 days of the filing of the Dispute with the AAA.
Hearings shall be limited to no more than 10 business days, which the Parties
shall endeavor to conduct consecutively. Arbitration proceedings hereunder shall
be conducted in Dallas, Texas. Arbitrators shall be empowered to impose
sanctions and to take such other actions as they deem necessary to the same
extent a judge could pursuant to the Federal Rules of Civil Procedure, the Texas
Rules of Civil Procedure and applicable law. With respect to any Dispute, each
Party agrees that all discovery activities shall be expressly limited to matters
directly relevant to the Dispute and any Arbitrator, Arbitration Panel and the
AAA shall be required to fully enforce this requirement. Document requests shall
be limited to no more than 15 items or categories of documents. The Parties
shall be allowed no more than five depositions per side in connection with any
Dispute with durations of not more than four hours each. Additional document
requests, depositions or extensions of time for depositions shall only be
allowed if (i) agreed to by the Parties, or (ii) permitted by the Arbitrator
(or the Arbitration Panel, as appropriate) upon an express finding that such
additional discovery is required as a result of a party's failure to participate
in the discovery process in good faith.
(f) Other Matters and Miscellaneous. This Arbitration Agreement
constitutes the entire agreement of the Parties with respect to its subject
matter and supersedes all prior discussions, arrangements, negotiations and
other communications on dispute resolution. To the extent permitted by
applicable law, Arbitrators, including any Arbitration Panel, shall have the
power to award recovery of all costs and fees (including attorneys' fees,
administrative fees and arbitrators' fees) to the prevailing party. This
Arbitration Agreement may be amended, changed or modified only by the express
provisions of a writing which specifically refers to this Arbitration Agreement
and which is signed by all the Parties hereto. If any term, covenant, condition
or provision of this Arbitration Agreement is found to be unlawful, invalid or
unenforceable, such illegality, or invalidity or unenforceability shall not
affect the legality, validity or enforceability of the remaining parts of this
Arbitration Agreement, and all such remaining parts hereof shall be valid and
enforceable and have full force and effect as if the illegal, invalid or
unenforceable part had not been included. Each Party agrees to keep all Disputes
and arbitration proceedings strictly confidential, except for disclosure of
MEDIATION SETTLEMENT AGREEMENT - PAGE 22
information required in the ordinary course of business of the parties or by
applicable law or regulation.
Longhorn Partners Pipeline, L.P.
By: Longhorn Partners GP, L.L.C.
Its: General Partner
By:
---------------------------------
Xxxxxx X. Xxxxxxxxxx
President and
Chief Executive Officer
Xxxxx Corporation
By:
----------------------------
Its:
----------------------------
Navajo Refining Company, L.P.
By:
----------------------------
Its:
----------------------------
Black Eagle, Inc.
By:
----------------------------
Its:
----------------------------
MEDIATION SETTLEMENT AGREEMENT - PAGE 23
EXHIBIT E
FORM OF JOINT PRESS RELEASE
XXXXX CORPORATION AND LONGHORN PARTNERS PIPELINE, L.P.
ANNOUNCE SETTLEMENT OF LITIGATION
Dallas, Texas, November 15, 2002 -- Xxxxx Corporation (AMEX "HOC") and
Longhorn Partners Pipeline, L.P. today jointly announced an agreement, developed
in voluntary mediation, to settle pending litigation.
Xxxxx and Longhorn Partners have entered into a binding agreement to
terminate litigation brought in August 1998 by Longhorn Partners against Xxxxx
and certain subsidiaries in a state court in El Paso, Texas and to terminate
litigation brought in August 2002 by Xxxxx and a subsidiary against Longhorn
Partners and related parties in a state court in Carlsbad, New Mexico.
Under the agreement, Xxxxx will pay $25 million to Longhorn Partners as
a prepayment for the transportation of 7,000 barrels per day of refined products
from the Gulf Coast to El Paso in a period of up to 6 years from the date of the
Longhorn Pipeline's start-up. The agreement provides that Longhorn Partners will
issue to Xxxxx an unsecured promissory note, subordinated to certain other
indebtedness, that would become payable with interest in the event that the
Longhorn Pipeline does not begin operations by July 1, 2004 or to the extent
Longhorn Partners is unable to provide Xxxxx the full amount of the agreed
transportation services.
Final documentation to implement the settlement is expected to be
completed by late November, at which time the $25 million payment will be made
by Xxxxx to Longhorn Partners.
Xxxxx Corporation, through its affiliates, Navajo Refining Company and
Montana Refining Company, is engaged in the refining, transportation,
terminalling and marketing of petroleum products.
Longhorn Partners Pipeline, L.P., a limited partnership based in
Dallas, is developing the 700-mile Longhorn Pipeline to transport gasoline,
diesel and aviation fuel from the Texas Gulf Coast to Odessa and El Paso, Texas.
MEDIATION SETTLEMENT AGREEMENT - PAGE 24
