EXHIBIT 2.2
================================================================================
STOCK PURCHASE AGREEMENT
(XXXXX)
BETWEEN
COSCOL PETROLEUM CORPORATION,
AND
VALERO ARUBA ACQUISITION COMPANY I, LTD.
EFFECTIVE AS OF
FEBRUARY 4, 2004
================================================================================
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.1 Definitions.....................................................................................1
Section 1.2 Other Defined Terms............................................................................10
Section 1.3 Construction...................................................................................10
ARTICLE II
PURCHASE AND SALE
Section 2.1 Transfer of Shares.............................................................................10
Section 2.2 Purchase Price.................................................................................10
Section 2.3 Closing; Closing Date..........................................................................10
Section 2.4 Deliveries at the Closing......................................................................10
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Section 3.1 Organization and Qualification.................................................................11
Section 3.2 Due Authority..................................................................................11
Section 3.3 Conflicts and Approvals........................................................................11
Section 3.4 Litigation.....................................................................................12
Section 3.5 Ownership of the Shares........................................................................12
Section 3.6 No Brokers.....................................................................................12
ARTICLE IV
REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY
Section 4.1 Organization and Qualification.................................................................12
Section 4.2 Ownership of the Transferred Subsidiary........................................................13
Section 4.3 Financial Statements...........................................................................13
Section 4.4 Assets.........................................................................................14
Section 4.5 Material Contracts.............................................................................14
Section 4.6 Authorizations.................................................................................16
Section 4.7 Compliance with Law............................................................................16
Section 4.8 Environmental Matters..........................................................................16
Section 4.9 Litigation.....................................................................................17
Section 4.10 Insurance......................................................................................17
Section 4.11 ERISA Matters..................................................................................17
Section 4.12 [Reserved].....................................................................................18
Section 4.13 Labor Matters..................................................................................18
Section 4.14 Taxes..........................................................................................18
Section 4.15 Intellectual Property..........................................................................19
Section 4.16 Conduct of the Business........................................................................19
Section 4.17 Disclaimer.....................................................................................19
Section 4.18 Inventory......................................................................................20
i
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Section 5.1 Organization and Qualification.................................................................20
Section 5.2 Due Authority..................................................................................20
Section 5.3 Conflicts and Approvals........................................................................20
Section 5.4 Litigation.....................................................................................20
Section 5.5 No Brokers.....................................................................................21
Section 5.6 Purchase as Investment.........................................................................21
ARTICLE VI
PRE-CLOSING COVENANTS
Section 6.1 Operation of the Business......................................................................21
Section 6.2 Appropriate Action; Consents; Filings. From the Execution Date until the Closing..............23
Section 6.3 Breach Notice..................................................................................25
Section 6.4 Right of Entry.................................................................................25
Section 6.5 Condition of the Company's Assets..............................................................25
Section 6.6 Independent Investigation......................................................................25
Section 6.7 Supplement to Disclosure Schedule..............................................................26
Section 6.8 Adjustments for Supplements and Breach Notice..................................................26
Section 6.9 Repayment of Synthetic Lease...................................................................27
ARTICLE VII
POST-CLOSING COVENANTS AND EMPLOYEE MATTERS
Section 7.1 Expatriate Employees...........................................................................27
Section 7.2 [Reserved].....................................................................................27
Section 7.3 [Reserved].....................................................................................27
Section 7.4 Other Insurance Matters........................................................................27
Section 7.5 Records; Tax Matters...........................................................................27
Section 7.6 2003 Audited Financial Statements..............................................................30
Section 7.7 [Reserved].....................................................................................30
Section 7.8 Tax Elections..................................................................................30
Section 7.9 [Reserved].....................................................................................30
Section 7.10 Restructuring..................................................................................30
Section 7.11 Further Assurances.............................................................................30
ARTICLE VIII
CLOSING CONDITIONS
Section 8.1 Conditions to Obligations of Each Party Under this Agreement...................................30
Section 8.2 Additional Conditions to Seller's Obligations..................................................31
Section 8.3 Additional Conditions to Buyer's Obligations...................................................31
ARTICLE IX TERMINATION
Section 9.1 Termination....................................................................................32
Section 9.2 Effect of Termination..........................................................................33
ii
ARTICLE X
INDEMNIFICATION AND REMEDIES
Section 10.1 Survival.......................................................................................33
Section 10.2 Certain Indemnification Provisions for Benefit of Buyer........................................33
Section 10.3 Other Indemnification Provisions for Benefit of Buyer..........................................34
Section 10.4 Certain Indemnification Provisions for Benefit of Seller.......................................34
Section 10.5 Indemnification Procedures; Matters Involving Third Parties....................................35
Section 10.6 Determination of Losses........................................................................36
Section 10.7 Limitations on Liability.......................................................................37
Section 10.8 Governing Law; Arbitration.....................................................................37
ARTICLE XI
MISCELLANEOUS
Section 11.1 Amendment......................................................................................39
Section 11.2 Waiver.........................................................................................39
Section 11.3 Notices........................................................................................39
Section 11.4 Intentionally Omitted..........................................................................40
Section 11.5 Public Announcements...........................................................................40
Section 11.6 Expenses.......................................................................................40
Section 11.7 Headings.......................................................................................40
Section 11.8 Severability...................................................................................40
Section 11.9 Assignment.....................................................................................41
Section 11.10 Parties in Interest............................................................................41
Section 11.11 Failure or Indulgence Not Waiver...............................................................41
Section 11.12 Disclosure Schedule............................................................................41
Section 11.13 Time of the Essence............................................................................41
Section 11.14 Counterparts...................................................................................41
Section 11.15 Entire Agreement...............................................................................41
EXHIBITS
Exhibit A Knowledge Individuals
DISCLOSURE SCHEDULE
Section 1.1(a) Xxxxx Facilities
Section 1.1(b) Officers and Directors
Section 1.1(c) Omitted
Section 1.1(d) Permitted Liens - Contested Statutory Liens
Section 1.1(e) Permitted Liens - Contested Tax Liens
Section 1.1(f) Permitted Liens - Reconveyance Obligations Under Aruban Leases
Section 1.1(g) Permitted Liens - Securing Performance Bonds
Section 1.1(h) Permitted Liens - Contested Judgment Liens
Section 1.1(i) Permitted Liens - Contested Mechanics' Liens
Section 3.3(b) Third Person Consents
Section 3.3(c) Governmental Authorizations
iii
Section 3.4 Seller Litigation
Section 4.1(b) Subsidiary Jurisdictions of Qualification
Section 4.2(a) Transferred Subsidiary Capitalization
Section 4.3 Indebtedness
Section 4.4 Liens
Section 4.5(a) Material Contracts
Section 4.5(c) Guaranteed Material Contracts
Section 4.7 Compliance Matters
Section 4.8 Environmental Matters
Section 4.9 Company Litigation
Section 4.11 ERISA Matters
Section 4.14 Taxes
Section 4.15 Intellectual Property
Section 4.16 Conduct of Business
Section 6.1(a) Seller's Operation of the Business
iv
STOCK PURCHASE AGREEMENT
This
STOCK PURCHASE AGREEMENT (this "Agreement") is effective as of
February 4, 2004 (the "Execution Date"), by and between COSCOL PETROLEUM
CORPORATION, a Delaware corporation ("Seller"), and VALERO ARUBA ACQUISITION
COMPANY I, LTD., a British Virgin Islands corporation ("Buyer").
RECITALS
Seller owns all of the Shares of the Company.
Seller desires to sell to Buyer, and Buyer desires to purchase from
Seller, the Shares.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, and covenants contained herein, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used in this Agreement (including in the
Recitals), the following terms shall have the following meanings:
"AAA" has the meaning given such term in Section 10.8(b).
"Affiliate" means any Person that directly, or indirectly through one
or more intermediaries, controls or is controlled by or is under common control
with the Person specified. For purposes of this definition, control of a Person
means the power, direct or indirect, to direct or cause the direction of the
management and policies of such Person whether by contract or otherwise, and
ownership of 50% or more of the voting securities of another Person shall create
a rebuttable presumption that such Person controls such other Person.
"Agreement" has the meaning given such term in the preamble of this
Agreement.
"Applicable Corporate Law" means the applicable corporate law for
companies in the jurisdiction in which they were organized.
"Applicable Rate" means a rate per annum which shall be equal to the
sum of LIBOR plus 2.00%.
"Assets" means the Shares, the Real Property Interests, and all of the
other tangible and intangible assets, and properties of the Company and the
Transferred Subsidiary (except for the assets and properties sold, consumed or
otherwise disposed of in the ordinary course of business since the Balance Sheet
Date), together with any and all rights of the Company or the Transferred
Subsidiary, or both, under the Material Contracts. "Assets" does not include the
assets of Coastal Aruba Holding Company N.V. and its Subsidiaries which are the
subject of the Other Agreement.
1
"Authorization" means any franchise, permit, license, authorization,
order, certificate, registration, or other consent or approval granted by any
Governmental Authority.
"Balance Sheet" means the unaudited interim balance sheet of the
Combined Companies as of December 31, 2003, included in the Financial
Statements.
"Balance Sheet Date" means December 31, 2003.
"Breach Notice" has the meaning given such term in Section 6.3.
"Business" means the business, subject to the liabilities and
obligations related thereto, currently conducted by the Company and the
Transferred Subsidiary, including the ownership and operation of the delayed
petroleum xxxxx units, the xxxxx interconnect/HV feeder, the waste-gas flare,
the 25 MW steam turbine generator, the desalinization plant, the naphtha feed
system, the coverage coke storage facility, and certain other improvements and
facilities more particularly described in Section 1.1(a) of the Disclosure
Schedule.
"Business Day" means a day other than Saturday, Sunday or any day on
which banks located in the States of New York and
Texas, the United States of
America, Aruba, Bermuda, or the Cayman Islands, are authorized or obligated to
close.
"Buyer" has the meaning given such term in the preamble of this
Agreement.
"Buyer Indemnification Ceiling" means an amount equal to 25% of the
Combined Purchase Price, less the aggregate amount of indemnification payments
made by the "Seller" (as such quoted term is defined in the Other Agreement) to
"Buyer Indemnitees" (as such quoted term is defined in the Other Agreement)
under the Other Agreement.
"Buyer Indemnification Threshold" means $1,500,000, less the aggregate
amount of non-indemnified Losses in excess of $5,000 that are incurred by "Buyer
Indemnitees" (as such quoted term is defined in the Other Agreement) under the
Other Agreement.
"Buyer Indemnitees" means Buyer, its Affiliates (including the Company
and the Transferred Subsidiary from and after the Closing Date), and their
respective officers, directors, employees, agents, representatives, successors
and assigns.
"CARC" means Coastal Aruba Refining Company, N.V.
"Claim" means any demand, claim, action, investigation, legal
proceeding or arbitration, whether or not ultimately determined to be valid.
"Closing" has the meaning given such term in Section 2.3.
"Closing Condition" means each of the conditions to the Closing set
forth in ARTICLE VIII.
"Closing Date" has the meaning given such term in Section 2.3.
2
"Code" means the Internal Revenue Code of 1986.
"Combined Companies" means Coastal Xxxxx Corporation Aruba N.V. and
Coastal Aruba Holding Company N.V., and its Subsidiaries, CARC, Coastal Aruba
Fuels Company N.V., Coastal Aruba Maintenance/Operations Company N.V., and
Bonaire Fuels Company N.V.
"Combined Purchase Price" means the Purchase Price plus the purchase
price under the Other Agreement.
"Company" means El Paso Aruba I Company, a Cayman Islands company.
"Confidentiality Agreement" means the Confidentiality Agreement, by and
between El Paso Corporation and Valero Energy Corporation, relating to the sale
of El Paso's interest in the Business.
"Contractor" means any Person (other than an Expatriate Employee or
Company Employee) engaged by any of the Company, or the Transferred Subsidiary,
or any of their Affiliates to provide goods or services.
"Data Room" means the locations in the El Paso building where the
Material Contracts and certain other agreements and documents are made available
for inspection by Buyer from time to time. The El Paso building is located at
0000 Xxxxxxxxx, Xxxxxxx, Xxxxx 00000.
"Diligence Representative" has the meaning given such term in Section
6.4.
"Disclosure Schedule" means the disclosure schedule delivered by Seller
to Buyer on the Execution Date and attached hereto. The Disclosure Schedule has
been arranged in sections corresponding to the numbered sections of this
Agreement.
"Dollars" and the symbol "$" mean the lawful currency of the United
States of America.
"El Paso" means El Paso Corporation, a Delaware corporation.
"El Paso CGP" means El Paso CGP Company, a Delaware corporation,
formerly known as The Coastal Corporation, and an Affiliate of Seller.
"El Paso Officers and Directors" means the individuals identified in
Section 1.1(b) of the Disclosure Schedule.
"Environmental Laws" mean any applicable statute, treaty, compact, law,
rules, order, ordinance, permit, regulation, judgment, binding decision, decree
or common decisional law (including principles of negligence, trespass,
nuisance, intentional tort, strict liability, contribution or indemnification)
or requirements of any Governmental Authority which relates to or imposes
liabilities, duties or obligations in connection with the environment, natural
resources, worker safety, wildlife or human health as may be modified or
controlled pursuant to the Refinery Agreement.
3
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Execution Date" has the meaning given such term in the preamble of
this Agreement.
"Expatriate Employees" has the meaning given such term in Section 7.1.
"Financial Statements" means (A) the audited combined financial
statements of the Combined Companies as of and for the years ended December 31,
2001 and December 31, 2002; (B) the unaudited combined financial statements of
the Combined Companies as of and for the year ended December 31, 2003, and (C)
the unaudited combined financial statements of the Combined Companies as of and
for the nine months ended September 30, 2002 and September 30, 2003.
"GAAP" means generally accepted accounting principles applicable in the
United States of America, consistently applied.
"Governmental Authority" means any governmental agency, authority,
administrative agency, regulatory body, commission, instrumentality, court, or
arbitral tribunal having or asserting jurisdiction or governmental or
quasi-governmental powers over the Business or any of the Company or the
Combined Companies, including the Aruban Parliament, the Aruban Council of
Ministers and the Ministers of Aruba; provided, however, that such term shall
not include any entity or organization that is engaged in industrial or
commercial operations and is wholly or partly owned by any government, to the
extent such entity is acting in a commercial capacity pursuant to a contract
between such entity and any of the Combined Companies.
"Hazardous Materials" means those pollutants, contaminants, chemicals
or toxic, hazardous, or petroleum hydrocarbon substances or wastes that are
regulated under applicable Environmental Laws.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Indemnified Party" has the meaning given such term in Section 10.5(a).
"Indemnifying Party" has the meaning given such term in Section
10.5(a).
"Intellectual Property" has the meaning given such term in Section
4.15.
"Intercompany Debt" means any indebtedness existing, from time to time,
but only for so long as such indebtedness is outstanding, between or among any
of the Company and the Transferred Subsidiary, Seller, and other Affiliates of
Seller, all of which will be eliminated on or before the Closing Date (other
than aggregate indebtedness between the Transferred Subsidiary and CARC of
$5,000,000 or less).
"Knowledge" means, in the case of Seller, the actual knowledge of the
individuals listed in Part I of Exhibit A, in their capacities as employees or
Contractors of Seller or any of its Affiliates, with reasonable investigation or
inquiry and, in the case of Buyer, the actual
4
knowledge of the individuals listed on Part II of Exhibit A hereto, in their
capacities as employees of Buyer or any of its Affiliates, with reasonable
investigation or inquiry.
"Law" means any applicable law, statute, or ordinance of any nation,
including Aruba, and any political subdivision thereof, any regulation, policy,
protocol, proclamation, or parliamentary or ministerial order promulgated by any
Governmental Authority, any rule or regulation of any self-regulatory
organization such as a securities exchange, or any applicable judgment, order,
decree, or decision of any court or other Governmental Authority having the
effect of law in Aruba or otherwise applicable to any of the Company, the
Transferred Subsidiary, or the Business.
"LIBOR" means for each applicable day, the rate stated in the "Money
Rates" section of The Wall Street Journal published on such day as the one month
London Interbank Offered Rate; and if The Wall Street Journal is not published
on such day, then the aforesaid rate in the most recent edition of The Wall
Street Journal preceding such day shall be utilized for such day.
"Lien" means any mortgage, pledge, security interest, lien, deed of
charge, floating charge, or other charge of any kind (including any agreement to
give any of the foregoing), any conditional sale or other title retention
agreement, or the filing of or agreement to give any security interest, charge,
or financing statement under the Laws of any jurisdiction.
"Loss" means all damages, dues, penalties, fines, costs, amounts paid
in settlement, liabilities, obligations, Taxes, Liens, losses, expenses, and
fees, including costs of investigation, court costs, costs of defense, and
reasonable attorneys' fees and expenses.
"Material Adverse Effect" means any condition, circumstance, event,
change, or effect that (i) when used with respect to a Person, would be material
and adverse to the business, assets, results of operations, or financial
condition of such Person or otherwise subject such Person to any criminal or
material civil liability, (ii) when used with respect to the Business, would be
material and adverse to the Business, and (iii) when used with respect to the
ability of a Person to perform its obligations under this Agreement, would
materially and adversely affect such ability; provided, however, that in no
event shall any condition, circumstance, event, change, or effect that results
from (1) this Agreement or any actions taken in compliance with this Agreement,
the transactions contemplated hereby, or the pendency or announcement thereof,
(2) changes or conditions generally affecting the industry in which the Company
operates, (3) changes in general economic, regulatory, or political conditions,
or (4) the Company's failure to meet internal expectations, be deemed to
constitute a Material Adverse Effect. For purposes of determining whether any
condition, circumstance, event, change, or effect would be material and adverse
under clauses (i), (ii), or (iii) above, (except with respect to Section 8.2(a),
Section 8.3(a) and Section 8.3(d)), the parties agree that a Material Adverse
Effect will be deemed to have occurred if it has caused, will cause or may be
reasonably expected to cause any Loss in excess of $1.5 million.
"Material Contract" has the meaning given such term in Section 4.5(a).
"1994 Agreement" means the correspondence among The Coastal Corporation
(now known as El Paso CGP), the Prime Minister of Aruba, Deloitte & Touche, and
the Inspectorate
5
of Taxes of Aruba, dated March 4, 1994 (Letter from The Coastal Corporation to
the Prime Minister of Aruba), dated March 4, 1994 (Telecopier Transmittal from
the Prime Minister of Aruba to The Coastal Corporation), March 9, 1994 (Letter
from the Coastal Corporation to the Prime Minister), November 1, 1994 (Letter
from Deloitte & Touche to the Tax Inspectorate of Aruba), and October 20, 1995
(Letter from the Inspectorate of Taxes of Aruba to Deloitte & Touche).
"Other Agreement" means that certain
Stock Purchase Agreement
(Refinery) of even date herewith, between Seller's Affiliates, Coastal Stock
Company Limited, a Bermuda corporation, Coastal Cayman Finance Ltd., a Cayman
Islands Company, Coastal Austral Ltd., a Cayman Islands Company, and Coastal Tdf
Ltd., a Cayman Islands Company, as sellers thereunder, and Buyer, as buyer
thereunder, relating to the refinery where the xxxxx units and other Assets are
located.
"Permitted Lien" means:
(i) inchoate Liens and charges imposed by law and that are the
obligation of the Company or the Transferred Subsidiary and incidental
to construction, maintenance, development or operation of the Company's
or the Transferred Subsidiary's properties, or the operation of the
Company's or the Transferred Subsidiary's business, in the ordinary
course of business if (a) payment of the obligation secured thereby is
not yet overdue, or the validity or amount of such obligation is being
contested in good faith by appropriate proceedings (in each case as set
forth in Section 1.1(d) of the Disclosure Schedule for any such Liens
currently being contested, or in a supplement to the Disclosure
Schedule delivered within five (5) Business Days after the Company or
the Transferred Subsidiary initiates a contest of any such Lien after
the Execution Date) by the Company or the Transferred Subsidiary and
(b) such contested obligation is reflected in the books and records of
the applicable Combined Companies as a Current Liability, if required
in accordance with GAAP; provided that any action to foreclose any such
Lien or attach any of the Assets as a result thereof is properly
stayed;
(ii) Liens for Taxes, assessments, obligations under workers'
compensation or other social welfare legislation or other requirements,
charges or levies of any Governmental Authority that are the obligation
of the Company or the Transferred Subsidiary, if (a) payment of the
obligation secured thereby is not yet overdue, or the validity or
amount of such obligation is being contested in good faith by
appropriate proceedings (in each case as set forth in Section 1.1(e) of
the Disclosure Schedule for any such Liens currently being contested,
or in a supplement to the Disclosure Schedule delivered within five (5)
Business Days after the Company or the Transferred Subsidiary initiates
a contest of any such Lien after the Execution Date) by the Company or
the Transferred Subsidiary and (b) such contested obligation is
reflected in the books and records of the Combined Companies as a
Current Liability, if required in accordance with GAAP; provided that
any action to foreclose any such Lien or attach any of the Assets as a
result thereof is properly stayed;
6
(iii) easements, servitudes, rights-of-way and other rights,
exceptions, reservations, conditions, limitations, covenants and other
restrictions that do not, individually or in the aggregate, materially
interfere with the operation, value or use of the Assets affected
thereby;
conventional provisions contained in any contracts or agreements affecting
properties under which the Company or the Transferred Subsidiary is required
immediately before the expiration, termination or abandonment of a particular
property to reassign to such Person's predecessor in title all or a portion of
such Person's rights, titles and interests in and to all or a portion of such
property, in each case as identified in Section 1.1(f) of the Disclosure
Schedule;
pledges and deposits to secure the performance of bids, tenders, trade or
government contracts (other than for repayment of borrowed money), leases,
licenses, statutory obligations, surety bonds, performance bonds, completion
bonds and other obligations of a like kind, in each case as set forth in Section
1.1(g) of the Disclosure Schedule or in a supplement to the Disclosure Schedule
delivered within five (5) Business Days after the Company or a Transferred
Subsidiary provides any such security;
any Lien consisting of (A) statutory landlord's liens under leases to which the
Company or the Transferred Subsidiary is a party or other Liens on leased
property reserved in leases thereof for rent which is not yet due or for
compliance after the Closing Date with the terms of such leases, (B) rights
reserved to or vested in any Governmental Authority to control or regulate any
property of the Company or the Transferred Subsidiary, or to limit the use of
such property in any manner which does not materially impair the use of such
property for the purposes for which it is held by the Company or the Transferred
Subsidiary, (C) obligations or duties to any Governmental Authority with respect
to any franchise, grant, license, lease or permit relating to any period after
Closing and the rights reserved or vested in any Governmental Authority to
terminate any such franchise, grant, license, lease or permit or to condemn or
expropriate any property, and (D) zoning or other land use or environmental laws
and ordinances of any Governmental Authority;
Liens in respect of judgments or awards with respect to which an appeal or other
proceeding for review is being prosecuted, which are reflected in the books and
records of the Combined Companies as a Current Liability, and with respect to
which a stay of execution pending such appeal or such proceeding for review has
been obtained; provided that any such appeal or proceeding is identified in
Section 1.1(h) of the Disclosure Schedule;
mechanics' and materialmen's Liens and similar charges not filed of record and
not delinquent or that are filed of record but are being contested in good faith
by appropriate proceedings (in each case as set forth in Section 1.1(i) of the
Disclosure Schedule for any such Liens currently being contested, or in a
supplement to the Disclosure Schedule delivered within five (5) Business Days
after the Company or the Transferred Subsidiary initiates a contest of any such
Lien after the Execution Date) by the Company or the Transferred Subsidiary;
provided that any action to foreclose any such Lien or attach any of the Assets
as a result thereof is properly stayed and such contested obligation is
reflected in the books and records of the Company or the applicable Combined
Companies as a Current Liability if required in accordance with GAAP; and
7
Liens that will be released on or prior to the Closing Date.
"Person" means an individual, partnership, limited liability company,
corporation, joint stock company, trust, estate, joint venture, association, or
unincorporated organization, or any other form of business or professional
entity.
"Post-Closing Covenant" has the meaning given such term in Section
10.1.
"Pre-Closing Covenant" has the meaning given such term in Section 10.1.
"Property Taxes" has the meaning given such term in Section 7.5(c).
"Purchase Price" has the meaning given such term in Section 2.2.
"Real Property Interests" means the real property owned, leased, or
otherwise used by the Company and the Transferred Subsidiary in the Business, as
described in Section 1.1(a) of the Disclosure Schedule, together with all
buildings and other structures, facilities or improvements currently or
hereafter located thereon, all fixtures, systems, equipment and items of
personal property attached or appurtenant thereto and all easements, licenses,
rights and appurtenances relating to the foregoing.
"Refinery Agreement" means, collectively (1) that certain agreement
dated as of October 19, 1989 by and between the legal entity Aruba, represented
by the Government of Aruba, and The Coastal Corporation, now known as El Paso
CGP Company (as amended by the 1994 Agreement), and (2) that certain agreement
dated as of July 30, 1998 between the Government of Aruba and The Coastal
Corporation.
"Restructuring" means (i) the transfer of the Transferred Subsidiary to
the Company, and (ii) the restructuring and reorganization of the Intercompany
Debt.
"Seller" has the meaning given such term in the preamble of this
Agreement.
"Seller Indemnification Ceiling" means an amount which is 25% of the
Combined Purchase Price, less the aggregate amount of indemnification payments
made by "Buyer" to "Seller Indemnitees" (as such quoted terms are defined in the
Other Agreement).
"Seller Indemnification Threshold" means $1,500,000, less the aggregate
amount of non-indemnified Losses in excess of $5,000 that are incurred by
"Seller Indemnitees," as such quoted term is defined in the Other Agreement
under the Other Agreement.
"Seller Indemnitees" means Seller, its Affiliates, and their respective
officers, directors, employees, agents, representatives (including any officers,
directors, employees, agents and representatives of the Company or the
Transferred Subsidiary appointed or otherwise acting at the direction of Seller
or its Affiliates prior to Closing), successors and assigns.
"Shares" has the meaning given such term in Section 3.5.
"Straddle Period" has the meaning given such term in Section 7.5(c).
8
"Subsidiary" means, with respect to any Person, any other Person (and
any successor to such other Person) of which such first Person owns, directly or
indirectly, more than 50% of the stock or other equity partnership or other
beneficial interests the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such corporation
or other legal entity.
"Synthetic Lease Documents" means that certain Amended and Restated
Participation Agreement, dated as of September 18, 1998, among Coscol Petroleum
Corporation, State Street Bank and Trust Company of Connecticut, National
Association, as Trustee, State Street Bank and Trust Company, as Collateral
Trustee, Seaboard Capital Corporation, the Persons named therein as Lenders,
Certificate Purchasers and APA Purchasers, Citibank, N.A, as Administrative
Agent and Syndication Agent, and Citicorp Securities, Inc., as Arranger and Book
Runner; together with (i) that certain Amended and Restated Lease I, dated as of
September 18, 1998, between State Street Bank and Trust Company of Connecticut,
National Association, as Lessor, and Coscol Petroleum Corporation, as Lessee;
(ii) that certain Amended and Restated Lease II, dated as of September 18, 1998,
between State Street Bank and Trust Company of Connecticut, National
Association, as Lessor, and Coscol Petroleum Corporation, as Lessee; (iii) that
certain Lease III, dated as of September 18, 1998, between State Street Bank and
Trust Company of Connecticut, National Association, as Lessor, and Coscol
Petroleum Corporation, as Lessee; and (iv) the other "Operative Documents" as
defined in the Amended and Restated Participation Agreement.
"Tax" means all taxes, however denominated, including any interest,
penalties, or other additions thereto that are imposed by a Taxing Authority,
and shall, for greater certainty, include all income and capital taxes, payroll
and employee withholding taxes, social security taxes, value added taxes,
facility charges, import duties, exchange taxes, withholding taxes, sales and
use taxes, ad valorem taxes, excise taxes, franchise taxes, gross receipts
taxes, business license taxes, occupation taxes, real and personal property
taxes, stamp taxes or stamp duties, transfer taxes, environmental taxes, and all
other amounts of the same or of a similar nature to any of the foregoing,
whether or not such amounts are described as taxes.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto or amendment thereof.
"Taxing Authority" means, with respect to any Tax, the Governmental
Authority that imposes such Tax and the Governmental Authority charged with the
collection of such Tax, including any Governmental Authority that imposes, or is
charged with collecting, social security or similar charges or premiums.
"Termination Date" has the meaning given such term in Section 9.1(d).
"Third-Party Claim" has the meaning given such term in Section 10.5(b).
"Third Person Consent" means any approval, consent, amendment, or
waiver of a Person that is required under any organizational document of Seller,
the Company, or Buyer or under any contract to which any of Seller, the Company,
or Buyer is a party or by which it or its assets
9
is bound in order to effect the transactions contemplated hereby or any part
thereof, including waivers and consents by lenders and waivers of transfer
restrictions.
"Transferred Subsidiary" means Coastal Xxxxx Corporation Aruba N.V.
"Transferred Subsidiary's Shares" has the meaning given such term in
Section 4.2(a).
Section 1.2 Other Defined Terms. Other terms defined in this Agreement
have the meanings so given them. Each accounting term not otherwise defined
herein shall have the meaning ascribed to it under GAAP.
Section 1.3 Construction. Whenever the context requires, the gender of
all words used in this Agreement includes the masculine, feminine, and neuter.
Terms defined in the singular have the corresponding meanings in the plural, and
vice versa. All references to Articles and Sections refer to articles and
sections of this Agreement, and all references to Exhibits refer to exhibits to
this Agreement, which are attached hereto and made a part hereof for all
purposes. The word "including" means "including, but not limited to." The words
"hereof," "hereby," "herein," "hereunder" and similar terms in this Agreement
shall refer to this Agreement as a whole and not any particular section or
article in which such words appear. Any reference to a statute, regulation or
law shall include any amendment thereof or any successor thereto and any rules
and regulations promulgated thereunder, all as in effect as of the Execution
Date. Currency amounts referenced herein, unless otherwise specified, are in
Dollars. Whenever this Agreement refers to a number of days, such number shall
refer to calendar days unless Business Days are specified.
ARTICLE II
PURCHASE AND SALE
Section 2.1 Transfer of Shares. Subject to and in accordance with the
terms and conditions of this Agreement, and in accordance with the Applicable
Corporate Laws, Seller agrees to sell, assign, transfer, convey and deliver the
Shares to Buyer, and Buyer agrees to purchase and accept the Shares from Seller,
for the consideration specified in Section 2.2.
Section 2.2 Purchase Price. At the Closing, Buyer agrees to pay to
Seller the purchase price of $100,000,000 (One Hundred Million Dollars)
(collectively, the "Purchase Price") for the Shares by delivery of cash in the
amount of the Purchase Price, payable by wire transfer or delivery of other
immediately available funds.
Section 2.3 Closing; Closing Date. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of El Paso in Houston,
Texas, or at such other place as Buyer and Seller may
mutually agree, at 9:00 A.M. Central time on the third Business Day after the
day on which the last to be fulfilled of the Closing Conditions (other than
Closing Conditions to be fulfilled at the Closing) is fulfilled or waived by the
relevant party or at such other date as Seller and Buyer may mutually agree (the
"Closing Date").
Section 2.4 Deliveries at the Closing.
10
(a) At the Closing, Buyer (i) will deliver to Seller the
certificate referred to in Section 8.2(a), (ii) will pay to Seller the Purchase
Price, and (iii) will accept the Shares from Seller.
(b) At the Closing, Seller will deliver, or cause to be
delivered, to Buyer (i) the certificate referred to in Section 8.3(a), (ii)
instruments of assignment and transfer as shall be necessary to transfer to
Buyer all of Seller's right, title and interest in and to the Shares, (iii) the
minute books, stock records and corporate seals of the Company and the
Transferred Subsidiary, (iv) executed resignation letters of (or resolutions
removing) the El Paso Officers and Directors from their respective positions on
the board and offices at the Company and the Transferred Subsidiary, (v) a
certificate of non-foreign status as described in Treasury Regulation Section
1.1445-2(b)(2), and (vi) Seller's possessory interests in and to the Shares.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer that the statements
contained in this ARTICLE III are correct and complete as of the Execution Date.
Exceptions to the representations and warranties set forth in this ARTICLE III
are referenced below and set forth in the Disclosure Schedule.
Section 3.1 Organization and Qualification. Seller is a Delaware
corporation duly organized and validly existing and in good standing under the
Laws of the jurisdiction of its organization. Seller has the requisite corporate
power and authority to carry on its business as it is now being conducted.
Seller is duly qualified as a foreign corporation and in good standing in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities makes such qualification necessary, except where
the failure to be so qualified would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect with respect to Seller.
Section 3.2 Due Authority. Seller has full corporate power and
authority to execute and perform this Agreement and to carry out the
transactions contemplated hereby. This Agreement has been duly and validly
executed by Seller and, assuming the due authorization, execution, and delivery
of this Agreement by Buyer, constitutes the legal, valid, and binding obligation
of Seller enforceable in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, or other similar Laws affecting the
enforcement of 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.
Section 3.3 Conflicts and Approvals. Except (a) as required in
connection with the HSR Act, (b) for the receipt of the Third Person Consents
set forth in Section 3.3(b) of the Disclosure Schedule, and (c) for the
effectuation of the filings and registrations with and the receipt of the
Authorizations from Governmental Authorities set forth in Section 3.3(c) of the
Disclosure Schedule, neither the execution and delivery by Seller of this
Agreement nor the performance by Seller of its obligations hereunder will (A)
violate or breach the terms of or cause a default under (i) any Law applicable
to Seller, (ii) the Certificate of Incorporation or By-
11
Laws or other organizational documents of Seller, or (iii) any Material Contract
or (B) with the passage of time, the giving of notice, or the taking of any
action by a third Person, have any of the effects set forth in clause (A) of
this Section 3.3, except for any matters described in this Section 3.3 that
would not reasonably be expected to have a Material Adverse Effect with respect
to (x) Seller and its Transferred Subsidiary, taken as a whole, (y) the
Business, or (z) the ability of Seller to perform its obligations under this
Agreement.
Section 3.4 Litigation. Except as set forth in Section 3.4 of the Disclosure
Schedule, as of the Execution Date, there are no actions, suits, proceedings,
arbitrations, or investigations pending or, to the Knowledge of Seller,
threatened against Seller except any that, individually or, with respect to
multiple actions, suits, proceedings, or arbitrations that allege similar
theories of recovery based on similar facts, in the aggregate, would not
reasonably be expected to have a Material Adverse Effect with respect to Seller
or the ability of Seller to perform its obligations under this Agreement.
Section 3.5 Ownership of the Shares. The authorized capital stock of the Company
consists of 50,000 shares of ordinary stock, $1.00 par value, of which 100
ordinary shares are issued and outstanding. The ordinary shares owned by Seller
represent all of the share capital of the Company (the "Shares"). As of the
Execution Date, no Shares were held in treasury. All of the issued and
outstanding Shares are validly issued, fully paid, and nonassessable and were
issued free of preemptive rights. As of the Execution Date, there are no bonds,
debentures, notes, or other evidences of indebtedness issued or outstanding
having the right to vote on any matters on which the holders of the Shares may
vote. Other than Buyer's rights as contemplated by this Agreement, as of the
Execution Date, there are no options, warrants, calls, or other rights or
agreements outstanding obligating the Company to issue, deliver, or sell shares
of its capital stock or debt securities, or obligating the Company to grant,
extend, or enter into any such option, warrant, call, or other such right or
agreement.
Section 3.6 No Brokers. No broker, finder, or investment banker is entitled to
any brokerage, finder's, or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Seller, except any thereof the fees and commissions for which will
be discharged by Seller.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY
Seller hereby represents and warrants to Buyer that the statements
contained in this ARTICLE IV are correct and complete as of the Execution Date,
unless a representation or warranty is specifically stated to be made as of
another date. Exceptions to the representations and warranties set forth in this
ARTICLE IV are referenced below and set forth in the Disclosure Schedule.
Section 4.1 Organization and Qualification..
(a) The Company is a corporation duly organized and validly
existing and in good standing under the Laws of the jurisdiction of its
organization. The Company has the requisite corporate power and authority to
carry on its business as it is now being conducted.
12
The Company is duly qualified as a foreign corporation and in good standing in
each jurisdiction where the character of its properties owned or held under
lease or the nature of its activities makes such qualification necessary, except
where the failure to be so qualified would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect with respect
to the Company or the Business. The Company has heretofore made available to
Buyer correct and complete copies of its organizational documents and its minute
books and stock records.
(b) The Transferred Subsidiary is duly organized and validly
existing and in good standing under the Laws of its jurisdiction of
organization. The Company and the Transferred Subsidiary has the requisite
organizational power and authority to carry on its business as it is now being
conducted. The Transferred Subsidiary is duly qualified and in good standing in
each jurisdiction where the character of its properties owned or held under
lease or the nature of its activities makes such qualification necessary, except
where the failure to be so qualified would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect with respect
to itself or the Business. Section 4.1(b) of the Disclosure Schedule sets forth
a list of jurisdictions in which the Transferred Subsidiary is qualified as of
the Execution Date. The Company has heretofore made available to Buyer correct
and complete copies of the organizational documents of the Transferred
Subsidiary and its minute books and stock records.
(c) Neither the Company nor the Transferred Subsidiary has, or
in the past had, any direct or indirect ownership in any other Person other than
the Company's ownership of the Transferred Subsidiary.
Section 4.2 Ownership of the Transferred Subsidiary.
(a) Section 4.2(a) of the Disclosure Schedule sets forth the
following for the Transferred Subsidiary, as of the Closing Date: the record
ownership of the Transferred Subsidiary; the number of authorized shares of each
class of stock of the Transferred Subsidiary; the total number of issued and
outstanding shares of each class of stock of the Transferred Subsidiary; and the
par value of the shares of each class of stock of the Transferred Subsidiary. As
of the Closing Date, (i) no shares of any class of stock of the Transferred
Subsidiary ("Transferred Subsidiary's Shares") will be held in treasury; (ii)
all of the issued and outstanding Transferred Subsidiary's Shares will be
validly issued, fully paid, and nonassessable and will be issued free of
preemptive rights; (iii) the Company will be the owner of all of the issued and
outstanding Transferred Subsidiary's Shares; and there will be no bonds,
debentures, notes, or other evidences of indebtedness issued or outstanding
having the right to vote on any matters on which the holders of the Transferred
Subsidiary's Shares may vote. As of the Closing Date, there will be no options,
warrants, calls, or other rights or agreements outstanding obligating the
Transferred Subsidiary to issue, deliver, or sell shares of its capital stock or
debt securities, or obligating the Transferred Subsidiary to grant, extend, or
enter into any such option, warrant, call, or other such right or agreement. If
any certificates were ever issued with respect to the Transferred Subsidiary's
Shares, such certificates have been lost.
(b) As of the Closing Date, the Transferred Subsidiary will be
direct or indirect, wholly owned Subsidiary of the Company, and neither the
Company nor the
13
Transferred Subsidiary will own any direct or indirect beneficial interest in
any Person other than the Company's ownership of the Transferred Subsidiary.
Section 4.3 Financial Statements. The Financial Statements have been
prepared in accordance with GAAP and fairly present the combined financial
position of the Combined Companies as of the dates thereof and the combined
results of operations of the Combined Companies for the periods covered thereby.
None of the Company nor any of the Combined Companies has any consolidated
liabilities or obligations, whether absolute or contingent, that would be
required to be reflected or reserved for under GAAP in a historical year-end
balance sheet as of the Closing Date, other than (a) liabilities or obligations
that are reflected or reserved for in the Balance Sheet, (b) liabilities or
obligations incurred in the ordinary course of business of the Company and the
Combined Companies since December 31, 2003, or (c) liabilities or obligations
that would not reasonably be expected to have a Material Adverse Effect with
respect to the Business or the Company and the Combined Companies, taken as a
whole. As of the Closing Date, neither the Company nor the Transferred
Subsidiary will have any indebtedness that would be required to be reflected as
such under GAAP in a historical year-end balance sheet other than (x) the
indebtedness set forth in Section 4.3 of the Disclosure Schedule and (y)
indebtedness to Affiliates of the Company (other than the Combined Companies)
that will be cancelled at the Closing.
Section 4.4 Assets. The Company and the Transferred Subsidiary,
collectively, have good and valid title (including leasehold title) to all
material Assets (or (i) in the case of their contract rights, have the right to
receive the benefits of the Assets and (ii) in the case of certain licenses,
patents, or similar intellectual property, the right to use such intellectual
property) and as of the Closing Date, such Assets will be, free and clear of all
Liens except (a) for Permitted Liens, or (b) as set forth in Section 4.4 of the
Disclosure Schedule.
Section 4.5 Material Contracts.
(a) Except for (x) the Synthetic Lease Documents and (y) the
contracts listed in Section 4.5(a) of the Disclosure Schedule (the "Material
Contracts"), complete and correct copies of which have been made available
(through the Data Room or otherwise) to Buyer, as of the Execution Date, the
Company nor the Transferred Subsidiary is a party to or bound by any of the
following:
(i) any contract relating to any borrowing by the
Company or by the Transferred Subsidiary of an amount in
excess of $50,000 that will not be paid on the Closing Date,
or the granting of any security by the Company or by the
Transferred Subsidiary for any such borrowing;
(ii) any contract whereby the Company or the
Transferred Subsidiary agrees to indemnify any Person, except
for any service contract or other contract, in each case,
entered into in the ordinary course of business;
(iii) any contract whereby the Company or the
Transferred Subsidiary guarantees an obligation of any other
Person;
14
(iv) any contract with an employee or consultant of
the Company or of the Transferred Subsidiary providing for
annual payment by the Company or the Transferred Subsidiary in
excess of $50,000 or a change in control severance benefit in
excess of $50,000;
(v) any contract with any Expatriate Employee or
officer or director of the Company or of the Transferred
Subsidiary;
(vi) any collective bargaining contract or other
contract with a labor union;
(VII) [RESERVED];
(viii) any contract for capital expenditures or for
the acquisition or construction of fixed assets that provides
for future payments by the Company or the Transferred
Subsidiary of more than $1,000,000;
(ix) any contract for the supply of goods or services
to the Company or the Transferred Subsidiary not covered in
Section 4.5(a)(viii) that provides for future payments by or
to the Company or the Transferred Subsidiary of more than
$500,000;
(x) any contract for the sale of any asset by the
Company or by the Transferred Subsidiary that provides for the
future payment by or to the Company or the Transferred
Subsidiary of more than $250,000;
(xi) (any lease under which the Company or the
Transferred Subsidiary is the lessor or lessee of real or
personal property that provides for an annual base rental to
or from the Company or the Transferred Subsidiary of more than
$250,000;
(xii) any derivative, option, hedge or futures
contract that provides for future payments by or to the
Company or the Transferred Subsidiary of more than $100,000;
(xiii) any joint venture or partnership or similar
contract; or
(xiv) any contract prohibiting the Company or the
Transferred Subsidiary from competing with another Person in
any business or area.
(b) Except for any matter that would not reasonably be
expected to have a Material Adverse Effect with respect to the Business or the
Company and the Transferred Subsidiary, taken as a whole (i) neither the Company
nor the Transferred Subsidiary nor El Paso CGP has breached the terms of any
Material Contract, (ii) neither the Company nor the Transferred Subsidiary nor
El Paso CGP has received from any other party to any Material Contract written
notification that such Material Contract is not in full force and effect, that
the Company or the Transferred Subsidiary or El Paso CGP has failed to perform
its obligations thereunder to date, or that any other party thereto has not
performed its obligations thereunder to date, and (iii) no event has occurred,
and no circumstance or condition exists, that (with or
15
without notice or lapse of time) would reasonably be expected to result in a
breach or violation of, or a default under, the terms of any Material Contract.
(c) Section 4.5(c) of the Disclosure Schedule identifies all
Material Contracts under which the obligations of the Company or the Transferred
Subsidiary are guaranteed by, or supported through bonding by, or financial
assurances of, Seller or any Affiliate of Seller (other than the Company and the
Transferred Subsidiary).
Section 4.6 Authorizations. Except with respect to matters subject to
Section 4.8 or as would not reasonably be expected to have a Material Adverse
Effect with respect to the Business or the Company and the Transferred
Subsidiary, taken as a whole, (a) the Company or the Transferred Subsidiary has
obtained all Authorizations that are necessary to carry on the Business as
currently conducted, (b) no event has occurred, and no circumstance or condition
exists, that (with or without notice or lapse of time) would reasonably be
expected to constitute or result in a violation by the Company or the
Transferred Subsidiary of, or a failure on the part of the Company or the
Transferred Subsidiary to comply with the terms of, any Authorization, (c)
neither the Company nor the Transferred Subsidiary has received from any
Governmental Authority written notification that any Authorization (i) is not in
full force and effect, (ii) has been violated in any respect, or (iii) is
subject to any suspension, revocation, modification or cancellation, (d) there
is no action, suit, proceeding, arbitration, or investigation pending or, to the
Knowledge of Seller, threatened regarding suspension, revocation, modification
or cancellation of any of Authorization, and (e) except with regard to the
Refinery Agreement with respect to which no representation regarding consent
requirements is made, no consent pursuant to any Material Contract is required
in connection with the transactions contemplated by this Agreement to maintain
all Material Contracts in effect after the Closing.
Section 4.7 Compliance with Law. Except for the matters disclosed in
Section 4.7 of Disclosure Schedule and matters that would not reasonably be
expected to have a Material Adverse Effect with respect to the Business or the
Company and the Transferred Subsidiary, taken as a whole, (a) the Company and
the Transferred Subsidiary are in compliance with all applicable Laws and (b) no
event has occurred, and no circumstance or condition exists, that (with or
without notice or lapse of time) would reasonably be expected to constitute or
result in a failure of the Company or the Transferred Subsidiary to comply with
the terms of any applicable Law. Except for matters disclosed in Section 4.7 of
the Disclosure Schedule, neither the Company nor the Transferred Subsidiary has
received any written notification from any applicable Governmental Authority
that it is not in compliance with any applicable Laws.
Section 4.8 Environmental Matters. Except for (i) matters covered in
the Refinery Agreement, (ii) matters relating to the period prior to October 19,
1989, (iii) matters disclosed in Section 4.8 of the Disclosure Schedule, and
(iv) matters that would not reasonably be expected to have a Material Adverse
Effect with respect to the Business or the Company and the Transferred
Subsidiary, taken as a whole, since October 19, 1989:
(a) to the Knowledge of Seller, the Business, the Company, and
the Transferred Subsidiary are in compliance with all applicable Environmental
Laws;
16
(b) to the Knowledge of Seller, (i) all Authorizations, if
any, required to be obtained or filed by or complied with by the Company or the
Transferred Subsidiary under any applicable Environmental Law in connection with
its respective operations as they are currently being conducted, including those
relating to Hazardous Materials, have been duly obtained or filed for, and (ii)
the Company and the Transferred Subsidiary are in compliance with the terms and
conditions of all such Authorizations;
(c) there are no pending or, to the Knowledge of Seller,
threatened actions, suits, investigations, inquiries, or proceedings by or
before any Governmental Authority under any applicable Environmental Law
relating to the Business or the Company's or the Transferred Subsidiary's
properties;
(d) to the Knowledge of Seller, there have been no releases of
Hazardous Materials on or under the Company's properties by the Company or the
Transferred Subsidiary, or, to the Knowledge of Seller, at any offsite location
as a result of the Company's or the Transferred Subsidiary's operations that (i)
would require remediation after the Closing by the Company or the Transferred
Subsidiary under applicable Environmental Laws or otherwise or (ii) would
require remediation costing in excess of $5,000,000, individually or in the
aggregate, if the Company or the Transferred Subsidiary were to perform
remediation; and
(e) the Company has made available to Buyer all environmental
site assessment reports and all material environmental studies and
correspondence on environmental matters (in each case relevant to the Company
and the Transferred Subsidiary) in the Company's or the Transferred Subsidiary's
possession and relating to the Company's or the Transferred Subsidiary's
operations.
Section 4.9 Litigation. As of the Execution Date, there are no actions,
suits, proceedings, arbitrations, or investigations pending or, to the Knowledge
of Seller, threatened, against the Company or the Transferred Subsidiary,
including any involving a claim for indemnification pursuant to any statute,
organizational document or contract, or relating to any other action, suit,
proceeding, arbitration, or investigation, in any court or before or by any
other Governmental Authority, except Claims set forth in Section 4.9 of the
Disclosure Schedule or disclosed pursuant to Section 4.6, Section 4.7, Section
4.8 or Section 4.14, or that, individually or, with respect to Claims based on
similar facts, in the aggregate, for which there is a reasonable likelihood of
an adverse decision resulting in a Loss of $100,000 or more to the Company or
the Transferred Subsidiary.
Section 4.10 Insurance. Except for any matter that would not reasonably
be expected to have a Material Adverse Effect with respect to the Business or
the Company and the Transferred Subsidiary, taken as a whole, as of the
Execution Date, there is no claim outstanding under any insurance policy related
to the Business, the Company, or the Transferred Subsidiary.
Section 4.11 ERISA Matters. Neither the Company nor the Transferred
Subsidiary sponsors, maintains or contributes to, nor during the six-year period
preceding the Execution Date has the Company or the Transferred Subsidiary
sponsored, maintained or contributed to, any employee benefit plan subject to
ERISA. Except as set forth in Section 4.11 of the Disclosure Schedule, with
respect to any "employee benefit plan," within the meaning of Section
17
3(3) of ERISA, that is sponsored, maintained, or contributed to, or has been
sponsored, maintained, or contributed to within six years prior to the Execution
Date, by Seller or any corporation, trade, business, or entity that is
considered a single employer with Seller, the Company or the Transferred
Subsidiary, within the meaning of Section 414(b), (c), or (m) of the Code or
Section 4001 of ERISA, (a) no withdrawal liability, within the meaning of
Section 4201 of ERISA, has been incurred, which withdrawal liability has not
been satisfied, (b) no liability to the Pension Benefit Guaranty Corporation has
been incurred by any such entity, which liability has not been satisfied, (c) no
accumulated funding deficiency, whether or not waived, within the meaning of
Section 302 of ERISA or Section 412 of the Code has been incurred, and (d) all
contributions (including installments) to such plan required by Section 302 of
ERISA and Section 412 of the Code have been timely made.
SECTION 4.12 [RESERVED].
Section 4.13 Labor Matters. Neither the Company nor the Transferred
Subsidiary has any employees, nor will the Company or the Transferred Subsidiary
have any employees, as of the Closing Date.
Section 4.14 Taxes. Except as set forth in Section 4.14 of the
Disclosure Schedule or as would not reasonably be expected to have a material
adverse effect with respect to the Business or the Company and the Transferred
Subsidiary, taken as a whole:
(a) (i) all Tax Returns which were required to be filed by or
with respect to the Company and the Transferred Subsidiary have been prepared
correctly and completely in all material respects, and have been duly and timely
filed, (ii) all Taxes due and owed by the Company or the Transferred Subsidiary
(whether or not shown on each Tax Return) have been timely paid in full, (iii)
no penalty, interest, or other charge is or will become due with respect to the
late filing of any Tax Return or late payment of any Tax, and (iv) all Tax
withholding and deposit requirements imposed on or with respect to the Company
or the Transferred Subsidiary have been satisfied in full in all respects, (v)
neither the Company nor the Transferred Subsidiary is the beneficiary of any
extension of time within which to file a Tax Return, (vi) no claim has ever been
made by a Taxing Authority in any jurisdiction where the Company or the
Transferred Subsidiary does not file a Tax Return that it is or may be subject
to the assessment of Tax in that jurisdiction, and (vii) there are no security
interests in any of the assets of the Company or the Transferred Subsidiary that
arose in connection with any failure (or alleged failure) to pay any Tax.
(b) Neither the Company nor the Transferred Subsidiary has in
force, or agreed to put in force, any waiver of any statute of limitations in
respect of Taxes or any extension of time with respect to a Tax assessment or
deficiency.
(c) There are no pending written proposed deficiencies or
other written claims or, to the Knowledge of Seller threatened deficiencies or
claims, for unpaid Taxes of the Company or the Transferred Subsidiary, and
neither the Company nor the Transferred Subsidiary has any liability for the
Taxes of any other Person (other than the Company or the Transferred
Subsidiary).
18
(d) Except for current Tax audits of the El Paso Corporation,
as the same may relate to the Company or the Transferred Subsidiary, no Tax
Returns of the Company or the Transferred Subsidiary are currently being audited
by any applicable Taxing Authority or threatened with any such audit.
(e) Neither the Company nor the Transferred Subsidiary is
contesting the payment of any Taxes.
(f) The Company and the Transferred Subsidiary have withheld
and paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party.
(g) Section 4.14 of the Disclosure Schedule lists all Tax
Returns filed with respect to the Company or the Transferred Subsidiary for the
last three taxable years, indicates those Tax Returns that have been audited by
any Taxing Authority, and indicates those Tax Returns that currently are the
subject of audit. Seller has delivered to Buyer correct and complete copies of
all examination reports and statements of deficiencies assessed against or
agreed to by the Company and the Transferred Subsidiary since December 31, 1998.
(h) Neither the Company nor the Transferred Subsidiary is a
party to any Tax allocation or sharing agreement.
Section 4.15 Intellectual Property. Except as set forth in Section 4.15
of the Disclosure Schedule, the Company and the Transferred Subsidiary own, or
are licensed to use, all trademarks, tradenames, copyrights, technology,
know-how and processes necessary for the conduct of the Business as currently
conducted except for those the failure to own or license which could not
reasonably be expected to have a Material Adverse Effect (the "Intellectual
Property"). No Claim has been asserted and is pending by any Person challenging
or questioning the use of any such Intellectual Property or the validity or
effectiveness of any such Intellectual Property, nor, to the Knowledge of
Seller, is there any valid basis for any such Claim. The use of such
Intellectual Property by the Company and the Transferred Subsidiary does not
infringe on the rights of any Person, except for such claims and infringements
that, in the aggregate, do not have a Material Adverse Effect.
Section 4.16 Conduct of the Business. None of the Company nor any of
the Combined Companies engaged in any commercial operations prior to October 19,
1989. Since December 31, 2003, the Company and the Transferred Subsidiary have
operated the Business in the ordinary course of business. Except as set forth in
Section 4.16 of the Disclosure Schedule, since December 31, 2003, neither the
Company nor the Transferred Subsidiary has taken any action or failed to take
any action which, if such action were to occur after the execution of this
Agreement, would cause the Company or the Transferred Subsidiary to be in breach
of Section 6.1.
Section 4.17 Disclaimer. Except as set forth in Section 4.5(b) (as
Section 4.5(b) relates to the Refinery Agreement) notwithstanding any
representation, warranty, or covenant in this Agreement that would impose an
obligation on Seller or the Company or any condition or other limitation
hereunder that would excuse the performance of Buyer hereunder, (a) neither
Seller
19
nor the Company makes any representation or warranty, nor undertakes any
obligation, with respect to (i) the rights of the Company and the Transferred
Subsidiary under the Refinery Agreement or (ii) the Authorization of the
transactions contemplated hereunder by the Governmental Authorities of Aruba,
and (b) confirming such rights or obtaining such Authorization shall not be a
condition to Buyer's performance of its obligations hereunder.
Section 4.18 Inventory. Neither the Company nor the Transferred
Subsidiary owns any "Inventory" or "Parts and Supplies" (as such quoted terms
are defined in the Other Agreement), nor will the Company or the Transferred
Subsidiary own any Inventory or Parts and Supplies on the Closing Date.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller that the statements
contained in this ARTICLE V are correct and complete as of the Execution Date.
Section 5.1 Organization and Qualification. Buyer is a British Virgin
Islands corporation duly organized and validly existing and in good standing
under the Laws of the jurisdiction of its organization. Buyer has the requisite
corporate power and authority to carry on its business as it is now being
conducted. Buyer is duly qualified as a foreign corporation and in good standing
in each jurisdiction where the character of its properties owned or held under
lease or the nature of its activities makes such qualification necessary, except
where the failure to be so qualified would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect with respect
to Buyer.
Section 5.2 Due Authority. Buyer has full organizational power and
authority to execute and perform this Agreement and to carry out the
transactions contemplated hereby. This Agreement has been duly and validly
executed by Buyer and, assuming the due authorization, execution, and delivery
of this Agreement by Seller, constitutes the legal, valid, and binding
obligation of Buyer enforceable in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, or other similar Laws
affecting the enforcement of 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.
Section 5.3 Conflicts and Approvals. Except as required in connection
with the HSR Act, neither the execution and delivery by Buyer of this Agreement
nor the performance by Buyer of its obligations hereunder will (a) violate or
breach the terms of or cause a default under (i) any Law applicable to Buyer,
(ii) the certificate of incorporation or by-laws or other organizational
documents of Buyer, or (iii) any contract or agreement to which Buyer is a party
or by which it or any of its properties or assets is bound or (b), with the
passage of time, the giving of notice, or the taking of any action by a third
Person, have any of the effects set forth in clause (a) of this Section 5.3,
except in each case for any matters described in this Section 5.3 that would not
reasonably be expected to have a Material Adverse Effect with respect to Buyer
or the ability of Buyer to perform its obligations under this Agreement.
20
Section 5.4 Litigation. As of the Execution Date, there are no actions,
suits, proceedings, arbitrations, or investigations pending or, to the Knowledge
of Buyer, threatened against Buyer except any that, individually or, with
respect to multiple actions, suits, proceedings, or arbitrations that allege
similar theories of recovery based on similar facts, in the aggregate, would not
reasonably be expected to have a Material Adverse Effect with respect to Buyer
or the ability of Buyer to perform its obligations under this Agreement in all
material respects.
Section 5.5 No Brokers. No broker, finder, or investment banker is
entitled to any brokerage, finder's, or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Buyer, except any thereof the fees and commissions for
which will be discharged by Buyer.
Section 5.6 Purchase as Investment. Buyer is purchasing the Shares for
its own account as an investment without the present intent to sell, transfer or
otherwise distribute the Shares to any other Person other than Affiliate(s) of
Buyer. Buyer, together with its directors, executive officers and advisors, is
familiar with investments of the nature of the Shares, understands that this
investment involves certain risks, has adequately investigated the Company and
the Transferred Subsidiary, and has substantial knowledge and experience in
financial and business matters such that it is capable of evaluating, and has
evaluated, the merits and risks inherent in purchasing the Shares, and is able
to bear the economic risks of such investment.
ARTICLE VI
PRE-CLOSING COVENANTS
Section 6.1 Operation of the Business. Except (A) as set forth in
Section 6.1(a) of the Disclosure Schedule, (B) as otherwise contemplated by this
Agreement, (C) the Restructuring, or (D) as otherwise consented to in writing by
Buyer, from the Execution Date until the Closing, Seller shall cause the Company
and the Transferred Subsidiary to:
(a) afford to Buyer and its agents, advisors, and
representatives reasonable access to the Data Room and the Company's and the
Transferred Subsidiary's properties, personnel, documents, and records and shall
furnish such information about the Company as Buyer shall reasonably request,
all upon reasonable notice to the Company and in a manner that does not
interfere in any material respect with the normal operations of the Business and
the Company and the Transferred Subsidiary;
(b) operate the Business in the usual and ordinary course
consistent with past practice;
(c) operate the Business substantially in accordance with all
Environmental Laws;
(d) maintain the insurance policies covering the Business as
of the Execution Date (or substantially comparable replacement policies);
21
(e) use all commercially reasonable efforts to preserve
substantially intact its business organization, to maintain its Authorizations,
rights, privileges, and immunities, and to maintain its relationships with its
customers and suppliers;
(f) not sell, lease, exchange, or otherwise dispose of, or
grant any Lien with respect to, any of the assets of the Company or the
Transferred Subsidiary, except for (i) dispositions of obsolete assets,
dispositions of assets with a value, individually, less than $5,000, or in the
aggregate, less than $50,000, and dispositions of inventories in the ordinary
course of business consistent with past practice, (ii) purchase money Liens
incurred in connection with the original acquisition of assets in the ordinary
course of business secured by such assets with a value, individually or in the
aggregate, less than $100,000, and (iii) Permitted Liens;
(g) [RESERVED];
(h) [RESERVED];
(i) not offer, sell, issue, or grant, or authorize the
offering, sale, issuance, or grant of, any securities nor declare or pay or
agree to declare or pay any dividends in kind (other than in connection with the
Restructuring) on any Shares or the Transferred Subsidiary Shares;
(j) not acquire, whether by merger or consolidation, by
purchasing an equity interest or otherwise, any business or any corporation,
partnership, association, or other business organization or division thereof;
(k) not acquire or construct any assets or properties other
than (i) any assets or properties that are not material to the Business, (ii)
repairs to existing facilities or other assets (including repair of casualty
losses and the application of insurance proceeds thereto) and (iii) acquisition
of assets (other than capital assets) from suppliers or vendors in the ordinary
course of business and consistent with past practice;
(l) not adopt any amendments to its organizational documents;
(m) not (i) make any change in any of its respective methods
of accounting in effect at September 30, 2003, except as may be required to
comply with GAAP, (ii) make or rescind any election relating to any Taxes (other
than any election that must be made periodically and that is made consistently
with past practice), or (iii) settle or compromise any claim, action, suit,
litigation, proceeding, arbitration, investigation, audit, or controversy
relating to Taxes or any Claims, except, in each case, as may be required by Law
and for matters that would not reasonably be expected to have a Material Adverse
Effect with respect to the Business or the Company and the Transferred
Subsidiary, taken as a whole;
(n) not incur any obligations for borrowed money or purchase
money indebtedness, whether or not evidenced by a note, bond, debenture, or
similar instrument, and enter into any guarantees, except (i) trade debt in the
ordinary course of business, and (ii) indebtedness to Affiliates of the Company
that will be settled prior to Closing;
22
(o) not destroy any books or records of the Company or of the
Transferred Subsidiary or otherwise related to the Business, or remove the books
and records located at the Real Property Interests;
(p) promptly notify Buyer of any material emergency or other
material change in the Business or the Assets;
(q) not amend, modify or terminate any Material Contract, or
otherwise waive, release or assign any material rights, claims or benefits of
the Company or the Transferred Subsidiary under any Material Contract or enter
into any derivative, option, hedge or futures contracts;
(r) not agree, resolve or commit to do any of the actions
prohibited in Section 6.1(f) through (o) or (q) that would, or the effects of
which would, survive the Closing.
Section 6.2 Appropriate Action; Consents; Filings. From the Execution
Date until the Closing.
(a) Seller and Buyer shall each use all commercially
reasonable efforts (i) to take, or to cause to be taken, all actions, and to do,
or to cause to be done, all things that, in either case, are necessary, proper,
or advisable under applicable Law or otherwise to consummate and make effective
the transactions contemplated by this Agreement, (ii) to obtain from the
relevant Governmental Authorities all Authorizations required to be obtained by
Seller or Buyer in connection with the authorization, execution, delivery, and
performance of this Agreement and the consummation of the transactions
contemplated hereby, and (iii) to make all necessary filings, and thereafter to
make any other required submissions, with respect to this Agreement and the
transactions contemplated hereby required under any applicable Law. Seller and
Buyer shall cooperate in connection with the making of all such filings,
through, among other means, providing copies of all such documents to the
nonfiling party and its advisors prior to filing and, if requested, accepting
all reasonable additions, deletions, or changes suggested in connection
therewith. Seller and Buyer shall furnish or cause to be furnished all
information required for any application or other filing to be made pursuant to
any applicable Law in connection with the transactions contemplated by this
Agreement. Notwithstanding the foregoing, upon reasonable, prior notice to
Seller, and after advising Seller concerning the subject matter of the proposed
negotiations, Buyer may negotiate directly with the Government of Aruba and all
Aruban Governmental Authorities regarding the transactions contemplated hereby,
and in connection with such negotiations (except as described in this sentence),
Buyer is not required to comply with the preceding two sentences.
(b) Without limiting the generality of Section 6.2(a), if
Seller and Buyer determine that notifications under the HSR Act are required in
connection with this Agreement, Seller and Buyer shall each use all commercially
reasonable efforts to cause its ultimate parent entity to file, as soon as
practicable following the execution of this Agreement, notifications under the
HSR Act in connection with the transactions contemplated hereby and to respond
as promptly as practicable to any inquiries received from the Federal Trade
Commission or the Antitrust Division of the Department of Justice for additional
information or documentation and to respond as promptly as practicable to all
inquiries and requests received from any other
23
Governmental Authority in connection with antitrust matters relating to the
transactions contemplated by this Agreement. Each of Seller and Buyer shall
provide to the other a copy of such filing materials under the HSR Act to the
other prior to making such filing and the parties hereto shall confer on the
matters set forth therein.
(c) Seller and Buyer shall each timely give or cause to be
given all notices to third Persons and use all commercially reasonable efforts
to obtain all Third Person Consents (i) required under any Material Contract in
connection with the consummation of the transactions contemplated hereby or (ii)
otherwise required to prevent a Material Adverse Effect with respect to the
Business or the Company and the Transferred Subsidiary, taken as a whole from
occurring prior to or after the Closing.
(d) Seller and Buyer shall each give prompt notice to the
other of the receipt of any written notice or other written communication (i)
from any Person alleging that the consent of such Person is or may be required
in connection with the transactions contemplated hereby, (ii) from any
Governmental Authority in connection with the transactions contemplated hereby
(including a general summary of communications between Buyer or Buyer's
Affiliates and any Aruban Governmental Authority consistent with Buyer's
obligations pursuant to Section 6.2(a)), (iii) from any Governmental Authority
or other Person regarding the initiation or threat of initiation of any claims,
actions, suits, proceedings, arbitrations, or investigations against, relating
to, or involving or otherwise affecting the Company, Buyer, or Seller that
relate to the consummation of the transactions contemplated hereby, and (iv)
from any Person regarding the occurrence or nonoccurrence of any event the
occurrence or nonoccurrence of which would be reasonably likely (A) to cause any
condition to the obligations of the other party to consummate the transactions
contemplated hereby not to be satisfied, (B) to cause a breach of the
representations, warranties, or covenants of such party under this Agreement, or
(C) to delay or impede the ability of either Buyer or Seller, respectively, to
consummate the transactions contemplated by this Agreement or to fulfill their
respective obligations set forth herein. No delivery of any notice pursuant to
clause (iv) of this Section 6.2(d) shall cure any breach of any representation
or warranty of the party hereto giving such notice contained in this Agreement
or otherwise limit or affect the remedies available hereunder to the party
hereto receiving such notice.
(e) Buyer and Seller each agree to cooperate and to use all
commercially reasonable efforts vigorously to contest and to resist any action,
including legislative, administrative, or judicial action, and to have vacated,
lifted, reversed, or overturned any order (whether temporary, preliminary, or
permanent) of any court or other Governmental Authority that is in effect and
that restricts, prevents, or prohibits the consummation of the transactions
contemplated by this Agreement, including the vigorous pursuit of all available
avenues of administrative and judicial appeal and all available legislative
action. Each of Buyer and Seller shall take, or cause to be taken, any and all
actions, other than the disposition of assets or the withdrawal from doing
business in particular jurisdictions, required by any Governmental Authority as
a condition to the granting of any Authorization necessary for the consummation
of the transactions contemplated hereby or as may be required to avoid, lift,
vacate, or reverse any legislative, administrative, or judicial action that
would otherwise cause any Closing Condition not to be satisfied.
24
Section 6.3 Breach Notice. If, prior to the Closing Date,
Buyer obtains Knowledge of a breach of any of Seller's representations,
warranties or covenants contained in this Agreement, Buyer shall notify Seller
in writing of such information (the "Breach Notice") within 10 Business Days of
such discovery or on the day prior to the Closing Date, whichever is earlier.
The Breach Notice shall contain reasonable details regarding the alleged breach
and Buyer's good faith estimate of the potential Losses associated with such
breach.
Section 6.4 Right of Entry. Buyer hereby acknowledges that any
access to the refinery and other assets of the Company and the Transferred
Subsidiary utilized by Buyer or any representative, consultant or other Person
acting by or on behalf of Buyer ("Diligence Representative") shall be at the
sole risk, cost, and expense of Buyer. Buyer shall and shall ensure that each
Diligence Representative complies with all safety and similar requirements
customarily imposed by the Company on its properties provided that the Company
has provided to Buyer a description of, such safety and other requirements.
Buyer shall assume and indemnify, defend and hold harmless the Seller
Indemnitees from and against any and all claims for personal injury, death or
property damage arising out of Buyer's or any Diligence Representative's entry
upon or access to the refinery and other assets of the Company and the
Transferred Subsidiary and all damages, losses, cost and expenses (including
reasonable attorneys' fees, costs of court and investigative fees) incurred by
the Seller Indemnitees with respect to each such claim, IN EACH CASE REGARDLESS
OF THE NEGLIGENCE OR OTHER FAULT (OTHER THAN THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF THE SELLER INDEMNITEES, THE COMPANY OR ANY EMPLOYEE OF ANY SUCH
PERSON) OF THE SELLER INDEMNITEES, THE COMPANY OR ANY EMPLOYEE OF ANY SUCH
PERSON.
Section 6.5 Condition of the Company's Assets. In consummating
the purchase and the sale of the Shares contemplated hereunder, Buyer
acknowledges that it will become the owner of the Company, the Transferred
Subsidiary and their respective assets and Buyer accepts such assets in their
AS-IS, WHERE-IS, CONDITION, WITH ALL FAULTS, WITHOUT ANY EXPRESS OR IMPLIED
COVENANT, WARRANTY AS TO TITLE, CONDITION (INCLUDING ANY ENVIRONMENTAL
CONDITION), MERCHANTABILITY, PERFORMANCE, FITNESS (BOTH GENERALLY AND FOR ANY
PARTICULAR PURPOSE) OR OTHERWISE (WHICH WARRANTIES SELLER HEREBY EXPRESSLY
DISCLAIMS), OR RECOURSE, OTHER THAN AS EXPRESSLY SET FORTH HEREIN OR IN ANY
DOCUMENTS DELIVERED AT CLOSING.
Section 6.6 Independent Investigation. Buyer acknowledges and
affirms that (i) it has had full access to the Data Room, the information
contained in, or made available or provided with respect to materials contained
in, such Data Room, and to other information made available by Seller and its
representatives during the course of Buyer's due diligence investigation of the
Company and the Transferred Subsidiary and (ii) it has had access to the
personnel, officers, professional advisors, operations, and records of Seller
and the Company and the Transferred Subsidiary. As of Closing, Buyer will have
completed its independent investigation, verification, analysis, review and
evaluation of this Agreement, the Business, and the Company and the Transferred
Subsidiary, as Buyer has deemed necessary or appropriate. EXCEPT FOR THE
REPRESENTATIONS EXPRESSLY MADE BY SELLER IN THIS AGREEMENT OR IN ANY DOCUMENTS
DELIVERED AT CLOSING, BUYER ACKNOWLEDGES (a) THAT
25
THERE ARE NO REPRESENTATIONS, WARRANTIES, STATEMENTS, ASSURANCES OR GUARANTEES
MADE BY SELLER, EXPRESS OR IMPLIED, AS TO (i) THE COMPANY'S ASSETS, OR (ii) THE
LIABILITIES, BUSINESS, RESULTS OF OPERATIONS, CONDITION (FINANCIAL,
ENVIRONMENTAL OR OTHERWISE) OR PROSPECTS RELATING TO THE BUSINESS, AND THAT IN
MAKING ITS DECISION TO ENTER INTO THIS AGREEMENT AND TO CONSUMMATE THE PURCHASE
OF THE SHARES, BUYER HAS RELIED AND WILL RELY SOLELY UPON ITS OWN INDEPENDENT
INVESTIGATION, VERIFICATION, ANALYSIS AND EVALUATION; (b) THAT SELLER DISCLAIMS
ALL LIABILITY AND RESPONSIBILITY FOR ANY REPRESENTATION, WARRANTY, STATEMENT OR
INFORMATION ORALLY OR IN WRITING MADE OR COMMUNICATED TO BUYER INCLUDING ANY
OPINION, INFORMATION OR ADVICE WHICH MAY HAVE BEEN PROVIDED TO BUYER BY SELLER,
THE COMPANY OR ANY AFFILIATES OF SELLER; (c) THAT NEITHER SELLER NOR ANY
AFFILIATE OF SELLER HAS MADE AND SELLER HEREBY EXPRESSLY DISCLAIMS AND NEGATES,
ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, OR CONFORMITY TO MODELS OR SAMPLES AND ANY OTHER REPRESENTATION OR
WARRANTY, EXPRESS, STATUTORY OR IMPLIED, RELATING TO THE COMPANY'S ASSETS; AND
(d) THAT SELLER MAKES NO REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE USE
OR CONDITION (INCLUDING ENVIRONMENTAL USE OR CONDITION), THE PRESENCE OR ABSENCE
OF HAZARDOUS MATERIALS AT, ON OR UNDER ANY PORTION OF THE REFINERY OR THE
COMPANY'S OTHER ASSETS COMPLIANCE WITH APPLICABLE STATUTES, LAWS, CODES,
ORDINANCES, REGULATIONS OR REQUIREMENTS RELATING TO LEASING, ZONING,
SUBDIVISION, PLANNING, LAND USE, BUILDING, FIRE, SAFETY, HEALTH OR ENVIRONMENTAL
MATTERS, COMPLIANCE WITH COVENANTS, CONDITIONS AND RESTRICTIONS (WHETHER OR NOT
OF RECORD), OTHER INTERNATIONAL, NATIONAL, REGIONAL, FEDERAL, STATE, PROVINCIAL
OR LOCAL REQUIREMENTS OR OTHER STATUTES, LAWS, CODES, ORDINANCES, REGULATIONS OR
REQUIREMENTS, INCLUDING WITHOUT LIMITATION ENVIRONMENTAL LAWS AND PERMITS.
Section 6.7 Supplement to Disclosure Schedule. Seller may,
from time to time prior to the Closing by written notice to Buyer, supplement or
amend the Disclosure Schedule to this Agreement to correct any matter that would
constitute a breach of any representation or warranty of Seller in ARTICLE II or
ARTICLE IV. For purposes of determining whether Buyer's conditions set forth in
Section 8.3 have been fulfilled and subject to Section 6.8 and to the following
sentence, for purposes of asserting any claims for indemnification under Section
10.2, the Disclosure Schedule shall be deemed to include only that information
contained therein on the Execution Date and shall be deemed to exclude all
information contained in any supplement or amendment thereto.
Section 6.8 Adjustments for Supplements and Breach Notice. If
Buyer delivers a Breach Notice to Seller pursuant to Section 6.3 or Seller
supplements the Disclosure Schedule pursuant to Section 6.7, or both, Buyer and
Seller shall negotiate in good faith to agree upon an adjustment to the Purchase
Price to reflect the information provided in the Breach Notice or supplement. If
Buyer and Seller agree on an adjustment to the Purchase Price pursuant to this
26
Section 6.8, Buyer shall be deemed to waive any further right to make a claim
with respect thereto under this Agreement or otherwise.
Section 6.9 Repayment of Synthetic Lease. On or before the Closing,
Seller or Seller's Affiliates shall (i) repay in full the indebtedness evidenced
by the Synthetic Lease Documents; (ii) repurchase record title to the Real
Property Interests; and (iii) cause all Liens securing such indebtedness to be
released.
ARTICLE VII
POST-CLOSING COVENANTS AND EMPLOYEE MATTERS
Section 7.1 Expatriate Employees. The Expatriate Employees who have
been seconded to the Transferred Subsidiary as of the Execution Date are
identified in Section 7.1 of the Disclosure Schedule of the Other Agreement
(those so indicated, the "Expatriate Employees"). In order to describe labor,
liability and indemnity issues for the expatriate employees of the Combined
Companies on a collective basis, all such issues regarding expatriate employees
are addressed in the Other Agreement. Section 7.1 of the Disclosure Schedule of
the Other Agreement lists all employees of Seller and its Affiliates that have
been seconded to and regularly provide services to the Company and the
Transferred Subsidiary as of the Execution Date, including dates of hire of such
Expatriate Employees. Seller shall cause Section 7.1 of the Disclosure Schedule
of the Other Agreement to be updated as necessary prior to the Closing to
reflect all employment changes.
Section 7.2 [RESERVED]
Section 7.3 [RESERVED]
Section 7.4 Other Insurance Matters.
(a) The parties hereto agree that as of and after the Closing,
Seller will not be responsible for providing insurance coverage for the Business
or the Company or the Transferred Subsidiary.
(b) Seller will cause to be paid or remitted to Buyer (or
Buyer's designee) promptly upon receipt (i) property damage insurance proceeds
from third party insurers (excluding any captive insurance company Affiliates of
Seller) related to the Assets to the extent (A) an insured property damage loss
occurs prior to the Closing Date, and (B) such insurance proceeds have not been
applied to effect repairs prior to the Closing Date and (ii) business
interruption insurance proceeds from third party insurers (excluding any captive
insurance company Affiliates of Seller) related to the Assets to the extent (A)
the insured claim period covered by such business interruption insurance extends
past the Closing Date (it being understood that Seller shall have the right to
terminate coverage under its insurance policies effective as of the Closing
Date) and (B) the insurance proceeds only apply to the insured claim period
extending beyond the Closing Date.
Section 7.5 Records; Tax Matters.
27
(a) Records. Buyer and Seller shall not destroy or otherwise
dispose of any records acquired, removed, or retained hereunder for a period of
five (5) years following the Closing Date or such longer period as required by
applicable regulations, laws, statutes, or court orders, except upon 30 days
prior written notice to the other party. During such five-year period, each
party shall make such records available to the other party or its authorized
representatives for any business, legal or technical need in a manner that does
not unreasonably interfere with the record holder's business operations. Seller
agrees to cooperate with Buyer and to use best efforts to cause its independent
public accountants to cooperate with Buyer in the preparation of any financial
statements and pro forma financial statements required under applicable Law in
connection with the transactions provided under this Agreement and the Other
Agreement.
(b) Tax Returns.
(i) From and after the Closing Date, Seller and Buyer
will provide each other with such cooperation and information
as each may reasonably request of the other with regard to the
preparation and filing of Tax Returns related to the Business,
or the conduct of an audit or other proceeding in respect of
Taxes related to the Business. Such information includes
records and information reasonably requested with respect to
any periods prior to the Closing Date.
(ii) From the date of this Agreement through and
after the date of Closing, Seller shall prepare and file or
otherwise furnish in proper form to the appropriate Taxing
Authority (or cause to be prepared and filed or so furnished)
in a timely manner (taking into account all applicable
extensions) all Tax Returns relating to the Company and the
Transferred Subsidiary that are due on or before or related to
any statutory taxable period ending on or before the Closing
Date. Seller shall reimburse Buyer for Taxes of the Company
and the Transferred Subsidiary with respect to such periods
within 45 days after payment by Buyer or the Company and the
Transferred Subsidiary of such Taxes to the extent such Taxes
are not reflected in Current Liabilities. Buyer shall
reimburse Seller, within such 45 day period, to the extent the
Taxes of the Company reflected in Current Liabilities exceed
the Taxes of the Company and the Transferred Subsidiary with
respect to such periods.
(iii) From and after the Closing Date, Buyer shall
prepare and file or otherwise furnish, or cause to be
prepared, filed or otherwise furnished, in proper form to the
appropriate Taxing Authority in a timely manner (taking into
account all applicable extensions) all Tax Returns relating to
the Company and the Transferred Subsidiary that are due after
or related to any statutory period ending after the Closing
Date. Buyer shall (y) not take or advocate any position
inconsistent with this Agreement (including but not limited to
the allocation of the purchase price herein); and (z) not take
or advocate any position with respect to Taxes of Company and
the Transferred Subsidiary that reasonably could be expected
to adversely affect Seller or that would have the effect of
shifting income to a statutory taxable period ending on or
before Closing Date, unless, in each case, Seller shall have
consented in writing to such action by Buyer. Seller shall pay
to Buyer within 45 days after the date on which Taxes are paid
with respect to such periods an amount equal to the portion of
such Taxes allocable to the period ending on the day before
the Closing Date as calculated pursuant to Section 7.5(c) to
the extent such
28
Taxes are not reflected in Current Liabilities. Buyer shall
reimburse Seller, within such 45 day period, to the extent the
Taxes of the Company reflected in Current Liabilities exceed
an amount equal to the portion of such Taxes allocable to the
period ending on the day before the Closing Date as calculated
pursuant to Section 7.5(c).
(iv) Buyer shall not, with respect to any statutory
taxable period ending on or before the Closing Date, (y) file
any amended Tax Returns with respect to Company and the
Transferred Subsidiary; or (z) carry back any loss or other
Tax attribute of Company and the Transferred Subsidiary,
unless in each case, Seller shall have consented in writing to
such action by Buyer which consent will not be unreasonably
withheld.
(v) Without limiting any obligation of Buyer under
this Agreement, including Section 7.5(b)(iii), in the event
that Buyer makes an election pursuant to Section 338 of the
Code or similar provisions of state or local law, Buyer shall
use the allocations of the Purchase Price in this Agreement
for purposes of the election. In addition, no later than 90
days prior to the due date for filings relating to allocations
of the Purchase Price or other allocations pursuant to
Treasury Regulations promulgated under Section 338 of the
Code, Buyer shall prepare and furnish such filings to Seller
for Seller's review. Buyer and Seller shall cooperate in
making such allocation and Buyer and Seller shall agree in
writing to such allocation no later than 60 days prior to the
due date for the filing of such election. In the event Buyer
and Seller disagree with the allocations with respect to the
assets of the Company or the Transferred Subsidiary thereof
pursuant to Treasury Regulations promulgated under Section 338
of the Code, Buyer shall engage an accounting firm mutually
acceptable to both seller and Buyer ("Auditor") to determine
the proper allocations with respect to such assets. Decisions
made by Auditor with respect to the allocations as to the
assets shall be final, and the costs, expenses and fees of the
Auditor shall be borne equally between Buyer and Seller.
(c) In the case of any statutory taxable period that includes
(but does not end on) the Closing Date (a "Straddle Period"), (i) real, personal
and intangible property Taxes ("Property Taxes") allocable to the period ending
on the Closing Date shall be equal to the amount of such Property Taxes for the
entire Straddle Period multiplied by a fraction, the numerator of which is the
number of days during the Straddle Period that are before the Closing Date and
the denominator of which is the number of days in the Straddle Period; and (ii)
the Taxes relating to Company and the Transferred Subsidiary (other than
Property Taxes) allocable to the period ending on the day before the Closing
Date shall be computed as if such taxable period ended on the close of business
on the day before the Closing Date.
(d) Seller shall be entitled to the benefit of any refunds,
offsets or credits of Taxes paid with respect to the Company and the Transferred
Subsidiary attributable to or arising in statutory taxable periods ending on or
before the Closing Date (plus any interest received with respect thereto from
the applicable Tax Authority) and secured by the same legal entity (such status
determined under local Tax law) upon which such Tax was imposed. Buyer shall be
entitled to the benefit of any refunds, offsets or credits of Taxes paid with
respect to the Company and the Transferred Subsidiary attributable to or arising
in statutory taxable periods beginning after the Closing Date (plus any interest
received with respect thereto from the
29
applicable Tax Authority) and secured by the same legal entity (such status
determined under local Tax law) upon which such Tax was imposed. Any refunds,
credits or offsets attributable to or arising in the Straddle Period shall be
equitably apportioned between Buyer and Seller. Seller or Buyer may be entitled
to a payment equal to any refunds, offsets or credits only after the party which
has received an offset, credit or refund has actually secured the cash benefit
of such refund, offset or credit.
Section 7.6 2003 Audited Financial Statements. On or before April 15,
2004, Seller shall provide Buyer with audited combined financial statements of
the Combined Companies as of and for the year ended December 31, 2003. Buyer
shall reimburse Seller for one-half of all expenses incurred by Seller or that
are otherwise payable by Seller to third parties in connection with the
preparation of such financial statements. Seller shall provide management
representation letters in connection with such financial statements, which
letters shall be qualified to the knowledge of the individual's executing such
letters and shall be limited to the period from January 1, 2003 to the Closing
Date.
Section 7.7 [RESERVED]
Section 7.8 Tax Elections. Buyer, the Company, and their respective
Affiliates may make elections under Section 338 of the Code with respect to the
transactions contemplated by this Agreement.
Section 7.9 [RESERVED]
Section 7.10 Restructuring. Seller and Buyer shall cooperate with each
other to complete the Restructuring as expeditiously and efficiently as
reasonably practicable, regardless of whether the Restructuring is completed
before the Closing Date.
Section 7.11 Further Assurances. Seller and Buyer each agree that from
time to time after the Closing Date, they will execute and deliver, and will
cause their respective Affiliates to execute and deliver such further
instruments, and take, and cause their respective Affiliates to take such other
action, as may be reasonably necessary to carry out the purposes and intents of
this Agreement.
ARTICLE VIII
CLOSING CONDITIONS
Section 8.1 Conditions to Obligations of Each Party Under this
Agreement. The respective obligations of Buyer and Seller to consummate the
transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Closing of the following conditions, any or all of which may be
waived by the parties hereto, in whole or in part, to the extent permitted by
applicable Law:
(a) No Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any Law (whether temporary, preliminary, or
permanent) that is in effect and prohibits or renders illegal the transactions
contemplated hereby.
30
(b) Any waiting period applicable to the consummation of the
purchase and sale of the Shares contemplated hereunder under the HSR Act shall
have expired or been terminated.
(c) The transactions contemplated by the Other Agreement shall
be consummated simultaneously with the transactions contemplated hereunder.
Section 8.2 Additional Conditions to Seller's Obligations. The
obligations of Seller to effect the transactions contemplated hereby shall be
subject to the satisfaction at or prior to the Closing of the following
conditions, any or all of which may be waived by Seller, in whole or in part, to
the extent permitted by applicable Law:
(a) Each of the representations and warranties of Buyer
contained in this Agreement that is qualified as to materiality shall be true
and correct, and each of such representations and warranties that is not so
qualified shall be true and correct except for any failure of the same to be
true and correct that would not reasonably be expected to have a Material
Adverse Effect with respect to Buyer or the ability of Buyer to perform its
obligations under this Agreement, as of the Execution Date and as of the Closing
Date as though made again on and as of the Closing Date, and Seller shall have
received a certificate of an executive officer of Buyer, dated the Closing Date,
to such effect.
(b) Buyer shall have performed or complied in all material
respects with all agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the Closing Date, and Seller
shall have received a certificate of an executive officer of Buyer, dated the
Closing Date, to such effect.
(c) The Restructuring shall have been completed; provided that
if the Restructuring is not completed on or before March 12, 2004, then
completion of the Restructuring shall not be a condition to Seller's obligations
to effect the transactions contemplated by this Agreement.
(d) For purposes of determining whether failure of the
representations and warranties of Buyer to be true and correct (as described in
the first sentence of Section 8.2(a)) would be material and adverse under
clauses (i), (ii), or (iii) of the last sentence of the definition of "Material
Adverse Effect," the parties agree that a Material Adverse Effect will be deemed
to have occurred for purposes of Section 8.2(a) if it has caused, will cause, or
may reasonably be expected to cause any Loss in excess of $20 million.
Section 8.3 Additional Conditions to Buyer's Obligations. The
obligations of Buyer to effect the transactions contemplated hereby shall be
subject to the satisfaction at or prior to the Closing of the following
conditions, any or all of which may be waived by Buyer, in whole or in part, to
the extent permitted by applicable Law:
(a) Each of the representations and warranties of Seller
contained in this Agreement that is qualified as to materiality shall be true
and correct, and each of such representations and warranties that is not so
qualified shall be true and correct except for any failure of the same to be
true and correct that would not reasonably be expected to have a Material
Adverse Effect with respect to Seller, the Company, the Business, or the ability
of
31
Seller to perform its obligations under this Agreement, as of the Execution Date
and as of the Closing Date as though made again on and as of the Closing Date,
and Buyer shall have received a certificate of an executive officer of Seller,
dated the Closing Date, to such effect.
(b) Seller shall have performed or complied in all material
respects with all agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to Closing Date, and Buyer shall
have received a certificate of an executive officer of Seller, dated the Closing
Date, to such effect.
(c) All Third Person Consents and all Authorizations specified
in Section 3.3 of the Disclosure Schedule required for the consummation of the
transactions contemplated by this Agreement shall have been obtained.
(d) Since January 1, 2004, there shall have been no casualty
loss to the Assets, except any such casualty loss (i) that has been
substantially repaired or replaced, (ii) relating to other claims for which the
Company has received or is entitled to receive insurance proceeds sufficient to
pay the full cost of such repair and compensate for business interruption
losses, less any applicable retention amounts, or (iii) that would not
reasonably be expected to have a Material Adverse Effect with respect to the
Business or the Company and the Transferred Subsidiary, taken as a whole.
(e) Seller or Seller's Affiliates shall have (i) repaid in
full the indebtedness evidenced by the Synthetic Lease Documentation; (ii)
repurchased record title to the Real Property Interests; and (iii) caused all
Liens securing such indebtedness to be released.
(f) The Restructuring shall have been completed by Closing.
(g) For purposes of determining whether (i) a failure of the
representations and warranties of Seller to be true and correct (as described in
the first sentence of Section 8.3(a)) or (ii) a casualty loss to the Assets (as
described in Section 8.3(d)) would be material and adverse under clauses (i),
(ii), or (iii) of the last sentence of the definition of "Material Adverse
Effect," the parties agree that a Material Adverse Effect will be deemed to have
occurred for purposes of Section 8.3(a) or Section 8.3(d), as applicable, if it
has caused, will cause, or may reasonably be expected to cause any Loss in
excess of $20.0 million.
ARTICLE IX
TERMINATION
Section 9.1 Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) by mutual written consent of Seller and Buyer;
(b) by Seller upon notice to Buyer, if any of the conditions
in Section 8.1 or Section 8.2 cannot be satisfied on or prior to the Termination
Date;
(c) by Buyer upon notice to the Company, if any of the
conditions in Section 8.1 or Section 8.3 cannot be satisfied on or prior to the
Termination Date; or
32
(d) by either Seller or Buyer upon notice to the other, if the
Closing contemplated hereby shall not have occurred on or before June 30, 2004
(the "Termination Date").
Section 9.2 Effect of Termination. Except for Section 11.5, this
Section 9.2, ARTICLE X and Section 11.6, this Agreement shall, upon termination
hereof pursuant to Section 9.1, forthwith become of no further force or effect
and (a) there shall be no liability on the part of Seller, the Company or Buyer
or any of their respective officers or directors to any other party and (b) all
rights and obligations of any party hereto shall cease; provided, however, that
any such termination shall not relieve Seller, the Company, or Buyer from
liability for any willful and material breach of this Agreement occurring prior
to such termination.
ARTICLE X
INDEMNIFICATION AND REMEDIES
Section 10.1 Survival. Subject to the limitations and other provisions
of this Agreement: (a) the representations and warranties of the parties hereto
contained in this Agreement and the covenants and agreements of the parties
hereto contained in ARTICLE VI of this Agreement which by their terms are
required to be performed on or before the Closing (the "Pre-Closing Covenants")
shall survive the Closing and shall remain in full force and effect for a period
of 15 months after the Closing Date; provided that, with respect to the
representations set forth in Section 4.14, such representations shall survive
for a period of five years after the Closing Date, and (b) each covenant and
agreement of the parties hereto contained in ARTICLE VII and ARTICLE X of this
Agreement which by its terms requires performance after the Closing Date (a
"Post-Closing Covenant") shall survive the Closing and shall remain in full
force and effect until such covenant or agreement is fully performed. For the
avoidance of doubt, the survival of the indemnification obligations in ARTICLE X
shall not be deemed to extend the time for making a Claim for breach of the
representations and warranties of the parties hereto or for breach of the
covenants contained in ARTICLE VI, as provided in Section 10.1(a) above.
Section 10.2 Certain Indemnification Provisions for Benefit of Buyer.
(a) If the Closing occurs, Seller agrees to indemnify Buyer
Indemnitees from and against any Losses actually suffered or incurred by any of
them arising out of or related to (i) the breach of any representation or
warranty of Seller contained in ARTICLE III or ARTICLE IV or (ii) the breach of
any covenants of Seller contained in ARTICLE VI or ARTICLE VII. No claim may be
asserted nor may any action be commenced against Seller pursuant to clause (i)
or (ii) of this Section 10.2 for breach of any representation or warranty or
Pre-Closing Covenant, unless written notice of such claim or action is received
by Seller describing in reasonable detail the facts and circumstances with
respect to the subject matter of such claim or action on or prior to the date on
which the representation or warranty or Pre-Closing Covenant on which such claim
or action is based ceases to survive as set forth in Section 10.1; provided,
however, that no claim may be asserted nor may any action be commenced by Buyer
against Seller arising out of or related to a breach of any representation or
warranty of which Buyer had Knowledge on or prior to the Closing Date and for
which Buyer failed to deliver a Breach Notice in accordance with Section 6.3.
33
(b) No claim may be made against Seller for indemnification
pursuant to Section 10.2(a)(i) (x) with respect to any individual item (or group
of related items) of Loss unless such Loss exceeds $5,000 (nor shall any such
Loss be applied to or considered for purposes of calculating the aggregate
amount of the Buyer Indemnitees' Losses) and (y) unless the aggregate amount of
all Losses of the Buyer Indemnitees with respect to Section 10.2(a)(i) shall
exceed the Buyer Indemnification Threshold.
(c) The maximum amount that Seller shall be required to pay
pursuant to Section 10.2(a)(i) and Section 10.3(a) (in the aggregate) in respect
of all Losses by all Buyer Indemnitees is the Buyer Indemnification Ceiling
(after which point Seller will have no obligation to indemnify Buyer or any
Buyer Indemnitee from and against any further such Losses).
(d) For purposes of determining if a breach of a
representation or warranty qualified by Material Adverse Effect in this
Agreement has occurred, the Material Adverse Effect qualifier shall apply;
provided that for purposes of calculating the Loss incurred or suffered by the
Seller Indemnitee or Buyer Indemnitee (as applicable), the Material Adverse
Effect qualifier shall not apply.
(e) Subject to Section 9.2, except for the rights of
indemnification provided in Section 10.2(a) and Section 10.3, Buyer hereby
waives and releases any Claim or cause of action by Law or otherwise against
Seller or its Affiliates regarding obligations and liabilities of any nature
whatsoever that are attributable to the Business, the Shares or the Company or
the Transferred Subsidiary, whether arising before or after the Closing Date.
Section 10.3 Other Indemnification Provisions for Benefit of Buyer.
(a) Subject to the limitations set forth in Section 10.2(c),
Seller agrees to indemnify Buyer Indemnitees from and against any Losses
actually suffered or incurred by any of them arising out of or related to (i)
the offsite disposal, prior to Closing, by or on behalf of any of the Combined
Companies of any Hazardous Materials.
(b) Seller shall indemnify the Buyer Indemnitees for and
against any Loss related to any increase in the Buyer Indemnitees' Tax liability
resulting from the Restructuring.
Section 10.4 Certain Indemnification Provisions for Benefit of Seller.
(a) If the Closing occurs, Buyer agrees to indemnify Seller
Indemnitees from and against any Losses actually suffered or incurred by them
arising out of or related to (i) the breach of any representation or warranty of
Buyer contained in ARTICLE V or (ii) the breach of any covenants of Buyer
contained in ARTICLE VI or ARTICLE VII. No claim may be asserted nor may any
action be commenced against Buyer pursuant to clause (i) or (ii) of this Section
10.4 for breach of any representation or warranty or Pre-Closing Covenant,
unless written notice of such claim or action is received by Buyer describing in
reasonable detail the facts and circumstances with respect to the subject matter
of such claim or action on or prior to the date on which the representation or
warranty or Pre-Closing Covenant on which such claim or action is based ceases
to survive as set forth in Section 10.1.
34
(b) No claim may be made against Buyer for indemnification
pursuant to Section 10.4(a)(i) (x) with respect to any individual Loss (or group
of related items) of Loss unless such Loss exceeds $5,000 (nor shall any such
Loss be applied to or considered for purposes of calculating the aggregate
amount of the Seller Indemnitees' Losses) and (y) unless the aggregate amount of
all Losses of the Seller Indemnitees with respect to Section 10.4(a)(i) shall
exceed an amount equal to the Seller Indemnification Threshold.
(c) The maximum amount that Buyer shall be required to pay
pursuant to Section 10.4(a)(i) (in the aggregate) in respect of all Losses by
all Seller Indemnitees is the Seller Indemnification Ceiling (after which point
Buyer will have no obligation to indemnify Seller or any Seller Indemnitee from
and against any further such Losses).
(d) For purposes of determining if a breach of a
representation or warranty qualified by Material Adverse Effect in this
Agreement has occurred, the Material Adverse Effect qualifier shall apply;
provided that for purposes of calculating the Loss incurred or suffered by the
Seller Indemnitee or Buyer Indemnitee (as applicable), the Material Adverse
Effect qualifier shall not apply.
(e) Subject to Section 9.2, except for the rights of
indemnification provided in Section 10.4, Seller hereby waives and releases any
Claim or cause of action by Law or otherwise against Buyer or its Affiliates
regarding obligations and liabilities of any nature whatsoever that are
attributable to the Shares or the Company, whether arising before or after the
Closing Date.
Section 10.5 Indemnification Procedures; Matters Involving Third
Parties.
(a) A Seller Indemnitee or Buyer Indemnitee, as the case may
be (for purposes of this Section 10.5 an "Indemnified Party"), shall give the
indemnifying party under Section 10.2, Section 10.3 or Section 10.4, as
applicable (for purposes of this Section 10.5, an "Indemnifying Party"), prompt
written notice of any matter which it has determined has given or could give
rise to a right of indemnification under this Agreement stating the amount of
the Loss, if known, and method of computation thereof, containing a reference to
the provisions of this Agreement in respect of which such right of
indemnification is claimed or arises; provided, however, that the failure to
provide such notice shall not release the Indemnifying Party from its
obligations under this ARTICLE X except to the extent the Indemnifying Party is
prejudiced by such failure.
(b) If any third party shall notify an Indemnified Party with
respect to any matter (a "Third-Party Claim") that may give rise to a claim for
indemnification against the Indemnifying Party under this ARTICLE X, then the
Indemnified Party shall promptly (and in any event within five Business Days
after receiving notice of the Third-Party Claim) notify the Indemnifying Party
thereof in writing; provided, however, that the failure to provide such notice
shall not release the Indemnifying Party from its obligations under this ARTICLE
X except to the extent the Indemnifying Party is prejudiced by such failure.
(c) The Indemnifying Party will have the right to assume and
thereafter conduct the defense of the Third-Party Claim with counsel of its
choice reasonably satisfactory
35
to the Indemnified Party; provided, that the Indemnifying Party will not consent
to the entry of any judgment or enter into any settlement with respect to the
Third-Party Claim without the prior written consent of the Indemnified Party
(not to be withheld unreasonably) unless the judgment or proposed settlement
involves only the payment of money damages for which the Indemnifying Party is
liable hereunder and does not impose an injunction or other equitable relief
upon the Indemnified Party.
(d) Unless and until the Indemnifying Party assumes the
defense of the Third Party Claim as provided in Section 10.5(c), however, the
Indemnified Party may defend against the Third-Party Claim in any manner it may
reasonably deem appropriate.
(e) In no event will the Indemnified Party consent to the
entry of any judgment or enter into any settlement with respect to the
Third-Party Claim without the prior written consent of the Indemnifying Party
(not to be withheld unreasonably).
Section 10.6 Determination of Losses.
(a) The Losses giving rise to any indemnification obligation
hereunder shall be limited to the actual loss suffered by the Indemnified Party
(i.e., reduced by any insurance proceeds or other payment or recoupment
received, realized or retained by the Indemnified Party from any third party
insurance provider (excluding any captive insurance company Affiliate of the
Indemnified Party) as a result of the events giving rise to the claim for
indemnification net of any expenses related to the receipt of such proceeds,
payment or recoupment, including retrospective premium adjustments, if any. The
amount of the actual loss and the amount of the indemnity payment shall be
computed by taking into account the timing of the loss or payment, as
applicable, using the Applicable Rate, as appropriate. Upon the request of the
Indemnifying Party, the Indemnified Party shall provide the Indemnifying Party
with information sufficient to allow the Indemnifying Party to calculate the
amount of the indemnity payment in accordance with this Section 10.6. An
Indemnified Party shall take all reasonable steps to mitigate damages in respect
of any claim for which it is seeking indemnification and shall use reasonable
efforts to avoid any costs or expenses associated with such claim and, if such
costs and expenses cannot be avoided, to minimize the amount thereof.
(b) Any and all payments due pursuant to this ARTICLE X will
be (i) increased by an amount equal to any Additional Net Taxes (provided that
no such increase will be made with respect to any Additional Net Tax owed as a
result of receiving a payment under this clause (i)), and (ii) decreased in an
amount equal to the Net Tax Benefit. Additional Net Taxes is equal to the
greater of (A) all Taxes actually owed by the Indemnified Party as a result of
the inclusion of such payment in gross income under the Tax laws of any
jurisdiction or (B) the product of (x) the highest tax rate applicable in any
jurisdiction (taking into account that the applicable rate may be zero) in which
the gross income is recognized multiplied by (y) the amount of payments due
pursuant to this ARTICLE X. The Net Tax Benefit is equal to the greater of (A)
the reduction in Taxes actually recognized by the Indemnified Party as a result
of a deduction, amortization, exclusion from income or other allowance under the
Tax laws of any jurisdiction or (B) the product of (x) the highest tax rate
applicable in any jurisdiction (taking into account that the applicable rate may
be zero) which the deduction, amortization, or exclusion from income is
recognized multiplied by (y) the amount of the deduction,
36
amortization, or exclusion from income. Any indemnity payment under this
Agreement shall be treated as an adjustment to the Purchase Price for Tax
purposes, unless a final determination (which shall include the execution of a
closing agreement) with respect to the Indemnified Party or any of its
Affiliates causes any such payment not to be treated as an adjustment to the
Purchase Price for Tax purposes.
Section 10.7 Limitations on Liability.
(a) SUBJECT TO Section 9.2, BUYER AND SELLER ACKNOWLEDGE AND
AGREE THAT THE REMEDIES SET FORTH IN ARTICLE IX AND THIS ARTICLE X, INCLUDING
THE DEDUCTIBLES, LIABILITY LIMITS, AND SURVIVAL PERIODS SET FORTH ABOVE AND THE
DISCLAIMERS SET FORTH IN Section 4.17, Section 6.5 AND Section 6.6, ARE INTENDED
TO BE, AND SHALL BE, THE EXCLUSIVE REMEDIES OF BUYER AND SELLER WITH RESPECT TO
ANY ASPECT OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. SUBJECT TO
Section 9.2, BUYER AND SELLER EACH HEREBY RELEASES, WAIVES, AND DISCHARGES, AND
COVENANTS NOT TO XXX THE OTHER WITH RESPECT TO, ANY CAUSE OF ACTION OR CLAIM NOT
EXPRESSLY PROVIDED FOR IN THIS AGREEMENT TO THE MAXIMUM EXTENT PERMITTED BY LAW.
(b) Notwithstanding anything to the contrary contained in this
Agreement, no party hereto shall be entitled to recover from any other party
hereto any amount in respect of exemplary, punitive, special, indirect,
consequential, remote, or speculative damages, including lost profits; provided
that if (x) an Indemnified Party has become liable to a third party for amounts
constituting such types of damages and (y) such Indemnified Party would be
entitled to indemnification for such amounts under this ARTICLE X but for the
limitation set forth in this Section 10.7, such Indemnified Party will be
entitled to recover such damages from the Indemnifying Party.
(c) ALL RELEASES, DISCLAIMERS, LIMITATIONS ON LIABILITY, AND
INDEMNITIES IN THIS AGREEMENT, INCLUDING THOSE IN THIS ARTICLE X, SHALL APPLY
EVEN IN THE EVENT OF THE SOLE, JOINT, AND/OR CONCURRENT, ACTIVE OR PASSIVE
NEGLIGENCE, STRICT LIABILITY, OR FAULT OF THE PARTY WHOSE LIABILITY IS RELEASED,
DISCLAIMED, LIMITED, OR INDEMNIFIED.
Section 10.8 Governing Law; Arbitration.
(a) This Agreement shall be construed (both as to validity and
performance), interpreted, and enforced in accordance with, and governed by the
Laws of the State of
Texas.
(b) It is agreed, as a severable and independent arbitration
agreement separately enforceable from the remainder of this Agreement, that if
the parties hereto, the Seller Indemnitees, the Buyer Indemnitees or the
respective successors, assigns, heirs or legal representatives of any of the
foregoing are unable to amicably resolve any dispute or difference arising under
or out of, in relation to or in any way connected with this Agreement (whether
contractual, tortious, equitable, statutory or otherwise), such matter shall be
finally and exclusively referred to and settled by arbitration under the
Commercial Arbitration Rules of the
37
American Arbitration Association ("AAA"). In the event of any conflict between
the Commercial Arbitration Rules of the AAA and the provisions of this Section
10.8, the provisions of this Section 10.8 shall govern and control.
(c) The arbitration shall be heard and determined by three (3)
arbitrators. Each side shall appoint an arbitrator of its choice within fifteen
(15) days of the submission of a notice of arbitration. The party-appointed
arbitrators shall in turn appoint a presiding arbitrator of the tribunal within
fifteen (15) days following the appointment of both party-appointed arbitrators.
If the party-appointed arbitrators cannot reach agreement on a presiding
arbitrator of the tribunal and/or one party fails or refuses to appoint its
party-appointed arbitrator within the prescribed period, the appointing
authority for the presiding arbitrator and/or such party-appointed arbitrator
shall be the AAA, who, in each case, shall appoint an independent arbitrator who
does not have any financial interest in the dispute, controversy or claim or
bear any relationship to either party. If an arbitrator should die, withdraw or
otherwise become incapable of serving, or refuse to serve, a successor
arbitrator shall be selected and appointed in the same manner as the original
arbitrator.
(d) Unless otherwise expressly agreed in writing by the
parties to the arbitration proceedings:
(i) The arbitration proceedings shall be held in
Houston,
Texas;
(ii) The arbitrators shall be and remain at all times
wholly independent and impartial;
(iii) (The arbitration proceedings shall be conducted
under the Commercial Arbitration Rules of the AAA, as amended from time to time;
(iv) Any procedural issues not determined under the
arbitration rules selected pursuant to Section 10.8(d)(iii) shall be determined
by the arbitration act and any other Laws of the State of
Texas, other than
those laws which would refer the matter to another jurisdiction;
(v) All decisions and awards by the arbitration
tribunal shall be made by majority vote;
(vi) The decision of a majority of the arbitrators
shall be reduced to writing; shall be final and binding without the right of
appeal; and shall be the sole and exclusive remedy regarding any claims,
counterclaims, issues or accountings presented to the arbitrators; any damage
awards by the arbitrators shall be promptly paid free of any deduction or
offset; and any costs or fees incident to enforcing the award shall to the
maximum extent permitted by law be charged against the party resisting such
enforcement;
(vii) Consequential, indirect, special, exemplary,
punitive or other similar damages shall not be allowed except those payable to
third parties (and permitted under ARTICLE X) for which liability is allocated
among the parties by the arbitration award;
38
(viii) Any award of damages shall include interest
from the date of any breach or violation of this Agreement, as determined by the
arbitration award, and from the date of the award until paid in full, at the
Applicable Rate in effect at the end of the first trading day of each month
during which such amount was owed;
(ix) The costs of the arbitration proceedings
(including attorneys' fees and costs) shall be borne in the manner determined by
the arbitrator(s);
(x) Judgment upon the award may be entered in any
court having jurisdiction over the person or the assets of the party owing the
judgment, or application may be made to such court for a judicial acceptance of
the award and an order of enforcement, as the case may be;
(xi) The arbitration shall proceed in the absence of
a party who, after due notice, fails to answer or appear; an award shall not be
made solely on the default of a party, but the arbitrator(s) shall require the
party who is present to submit such evidence as the arbitrator(s) may determine
is reasonably required to make an award.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Amendment. This Agreement may not be amended except by an
instrument in writing authorized by Seller and Buyer and signed by Seller and
Buyer.
Section 11.2 Waiver. At any time prior to the Closing, either Seller or
Buyer may (a) extend the time for the performance of any of the obligations or
other acts of the other, (b) waive any inaccuracies in the representations and
warranties of the other contained herein or in any document delivered pursuant
hereto, and (c) waive compliance by the other with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid only if
set forth in an instrument in writing signed by the party to be bound thereby.
Section 11.3 Notices. All notices and other communications that are
required to be or may be given pursuant to this Agreement shall be in writing
and shall be deemed to have been duly given if delivered in person or by courier
or mailed by registered or certified mail (postage prepaid, return receipt
requested) to the relevant party hereto at the following addresses or sent by
facsimile to the following numbers:
IF TO SELLER, TO:
Coscol Petroleum Corporation
c/o El Paso Corporation
0000 Xxxxxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
39
IF TO BUYER, TO:
Valero Aruba Acquisition Company I, Ltd.
Xxx Xxxxxx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Vice President - Legal Services
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or to such other address or facsimile number as Seller or Buyer may, from time
to time, designate in a written notice given in accordance with this Section
11.3. Any such notice or communication shall be effective, (a) if delivered in
person or by courier, upon actual receipt by the intended recipient, (b) if sent
by facsimile transmission, 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 recipient's normal business
hours, or (c) if mailed, upon the earlier of five days after deposit in the mail
and the date of delivery as shown by the return receipt therefor.
Section 11.4 Intentionally Omitted
Section 11.5 Public Announcements. At all times prior to the Closing
Date, Seller and Buyer will not issue or make any press releases or similar
public announcements concerning the transactions contemplated hereby without the
other party's prior written consent, except as may be required by Law.
Section 11.6 Expenses. Except as otherwise expressly provided herein,
all costs and expenses incurred by Seller in connection with this Agreement and
the transactions contemplated hereby shall be paid by Seller, and all costs and
expenses incurred by Buyer in connection with this Agreement and the
transactions contemplated hereby shall be paid by Buyer. Buyer and Seller each
shall pay one-half (1/2) of any transfer tax imposed on the consideration from
conveyance of the Shares under this Agreement.
Section 11.7 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 11.8 Severability. If any term or other provision of this
Agreement is invalid, illegal, or incapable of being enforced by any rule of Law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal, or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties hereto as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are fulfilled
to the extent possible.
Section 11.9 Assignment. This Agreement shall not be assigned by any
party hereto except by operation of Law. Any purported assignment of this
Agreement in violation of this Section 11.9 shall be null and void.
40
Section 11.10 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and its successors, Seller
Indemnitees and Buyer Indemnitees, and nothing in this Agreement, express or
implied is intended to or shall confer upon any other Person any right, benefit,
or remedy of any nature whatsoever under or by reason of this Agreement.
Section 11.11 Failure or Indulgence Not Waiver. No failure or delay on
the part of any party hereto in the exercise of any right hereunder shall impair
such right or be construed to be a waiver of, or acquiescence in, any breach of
any representation, warranty, covenant, or agreement herein, nor shall any
single or partial exercise of any such right preclude other or further exercise
thereof or of any other right.
Section 11.12 Disclosure Schedule. Any matter disclosed by Seller or
the Company in the Disclosure Schedule pursuant to any Section of this Agreement
shall be deemed to have been disclosed by Seller or the Company for purposes of
each other Section of this Agreement to which such disclosure would reasonably
relate.
Section 11.13 Time of the Essence. Time is of the essence in this
Agreement. If the date specified in this Agreement for giving any notice or
taking any action is not a Business Day (or if the period during which any
notice is required to be given or any action taken expires on a date which is
not a Business Day), then the date for giving such notice or taking such action
(and the expiration date of such period during which notice is required to be
given or action taken) shall be the next day which is a Business Day.
Section 11.14 Counterparts. This Agreement may be executed in multiple
counterparts and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
Section 11.15 Entire Agreement. This Agreement (together with the
Exhibits and the Disclosure Schedule) constitute the entire agreement of the
parties hereto, and supersede all prior agreements and undertakings, both
written and oral, among the parties hereto, with respect to the subject matter
hereof (other than the Confidentiality Agreements, which shall terminate as of
the Closing).
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
41
SIGNATURE PAGE
STOCK PURCHASE AGREEMENT
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
COSCOL PETROLEUM CORPORATION
By: /s/ Xxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxxxx
--------------------------------
Title: Vice President
------------------------------
VALERO ARUBA ACQUISITION
COMPANY I, LTD.
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxx
--------------------------------
Title: Senior Vice President
------------------------------
SIGNATURE PAGE
STOCK PURCHASE AGREEMENT
