ASSET PURCHASE AGREEMENT
By and Among
TESORO REFINING AND MARKETING COMPANY
and
KANEB PIPE LINE OPERATING PARTNERSHIP L.P.
Dated as of
November 21, 2002
Relating to the
Purchase and Sale
of the Tesoro Northern Great Plains Product System
EXHIBITS
EXHIBIT DESCRIPTION
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A Form of Technology Agreement
B Form of Deeds for the Terminal Real Property
C Form of Assignment of Pipeline Agreements
D Form of Easement
E Mandan Pump Station Ground Lease
F Form of Pipeline Capacity Lease
G Form of Transition Services Agreement
H Form of Lease Agreement (Seller Office Space)
I Form of Assignment of Lease
J Form of Continuing Covenants Agreement
K Form of Terminal Capacity Lease - Jamestown Terminal
L Inventory Closing Procedure
M Seller Guaranty
N Form of Xxxx of Sale, Assignment, Transfer And Conveyance
SCHEDULES
SCHEDULE DESCRIPTION
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1 Description of Pipelines
1(a) Pipeline Agreements and Real Property
1(b) Improvements
1(c) Terminal Personal Property Assets
1(d) Terminal Real Property
1(e) Personal Property
1(i) Permits
2(c) Excluded Assets Related to Support and Other Services
Provided to the Pipeline Interest by the Seller
2(i) Excluded Assets Not Owned by Seller
2(j) Excluded Technology
2(r) Other Excluded Assets
2(s) Non-Assignable Rights and Obligations of Seller
2(v) Affiliate Contracts to be Assumed by Buyer
6(f)(1) Real Property Fee Interests
6(f)(2) Real Property Exceptions
6(f)(3) Third Party Rights to Terminal Property
6(h) Leased Machinery and Equipment
6(k) Actions and Proceedings Against Seller
6(l) Excluded Assets Needed to Operate Pipeline Interest
6(o) Material Contracts
6(q) Delinquent or Disputed Taxes
6(r) Statement of 2002 Terminal Liftings
6(s) Employee Benefit Plans
7(a) Disclosed Environmental Liabilities
7(b) Underground Storage Tanks
7(c) Environmental Reports
10(c)(ii)(A)(II) Matters to be Remedied by Seller
11(a) Employees
INDEX OF DEFINITIONS
Definitions Section Number
-------------------------------------------- ----------------------
Adverse Economic Effect 10(c)(ix)(A)
Affiliate 37
Agreement Introductory Paragraph
Assumed Liabilities 4(a)
Buyer Introductory Paragraph
Buyer Environmental Liabilities 4(c)(iv)
Buyer Indemnified Parties 15(b)
Casualty 10(c)(ix)(A)
CERCLA 4(c)(ii)
Closing 5(a)
Closing Date 5(a)
Code 5(b)(v)
Confidentiality Agreement 10(a)(i)
Data 10(a)(i)
Disclosed Environmental Liabilities 7(a)
Effective Date Introductory Paragraph
Employees 11(a)
Employment Sites 6(s)(viii)
Environmental Access Agreement 10(c)(viii)
Environmental Liabilities 4(c)(i)
Environmental Permits 1(i)
ERISA 6(s)(iii)
Excluded Agreements 15(d)
Excluded Assets 2
Health, Safety and Environmental Laws 4(c)(ii)
HSR Act 5(a)
Improvements 1(b)
Indemnification Notice 15(e)
Indemnified Party 15(e)
Indemnifying Party 15(e)
Knowledge 6
Leave 11(a)
Losses 15(m)
Material Contracts 6(o)(i)
Permits 1(i)
Permitted Liens 6(f)
Person 6(c)
Personal Property 1(e)
Pipeline Agreements 1(a)
Pipeline Interest Recitals
Pipelines 1
Plans 6(s)(iii)
Product Inventory 10(c)(x)
Purchase Price 3(c)(i)
Purchased Assets 1
Real Property 1(a)
Repair Period 10(c)(ix)(B)
Retained Liabilities 4(b)
Schedules 32
Seller Introductory Paragraph
Seller Entity 6(s)(iii)
Seller Entities 6(s)(iii)
Seller Environmental Liabilities 4(c)(iii)
Seller Indemnified Parties 15(a)
Seller Information 10(b)(i)(B)
Severance Plan 11(h)
Taxes 4(B)(ii)
Technology Agreement 1(j)
Terminal Assets 1(c)
Terminal Real Property 1(d)
Third Party Claim 15(f)(i)
Third Party Estimate 10(c)(ix)(C)
Transferred Employees 11(b)
WARN Act 11(i)
WARN Obligations 11(i)
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT for the purchase and sale of assets
("Agreement"), is made and entered into as of November 21, 2002, (the "Effective
Date") by and between Tesoro Refining and Marketing Company, a Delaware
corporation ("Seller"), and Kaneb Pipe Line Operating Partnership L.P., a
Delaware Limited Partnership ("Buyer").
WITNESSETH:
WHEREAS, upon and subject to the terms and conditions of this Agreement,
Seller wishes to sell its interest in the assets constituting those certain
pipelines, terminals and related assets and certain liabilities, each as further
described in Sections 1 and 4 (collectively, the "Pipeline Interest") located in
North Dakota and Minnesota, and used to transport petroleum products, and Buyer
wishes to purchase such assets and to assume certain liabilities relating
thereto, in each case upon the terms and subject to the conditions set forth
herein;
WHEREAS, concurrently with the execution and delivery of this Agreement,
Seller is causing Tesoro Petroleum Corporation to execute and deliver to Buyer a
Guaranty in the form attached hereto as Exhibit M, which guarantees Seller's
performance under this Agreement;
NOW, THEREFORE, in consideration of the mutual promises made herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby expressly acknowledged, and subject to the conditions hereinafter set
forth, the parties hereto agree as follows:
1. PURCHASE AND SALE OF THE PIPELINE INTEREST. Subject to the terms and
conditions of this Agreement, Seller agrees to sell, assign, convey, transfer
and deliver to Buyer at the Closing, and Buyer agrees to purchase and take
assignment and delivery from Seller at the Closing of all right, title and
interest in and to all of the assets that constitute, or are used primarily in
connection with, Seller's Northern Great Plains Products System as it has been
operated by Seller during the immediately preceding five (5) months,
(collectively, the "Purchased Assets"), whether real, personal or mixed
property, including, but not limited to, all right, title and interest in and to
the following described assets related to the ownership and operation of those
certain 8", 10" and railroad pipelines described in Schedule 1 (the
"Pipelines"), SAVE AND EXCEPT the Excluded Assets:
(a) all real property interests associated with the Pipelines, including
any fee interests and appurtenances thereto (the "Real Property"), and
all easements, rights-of-way, permits, licenses, leases and other
rights of access or use relating to the Pipelines (the "Pipeline
Agreements"), including without limitation those further described in
Schedule 1(a);
(b) all improvements, structures, fixtures and facilities located in, on
or under, and appurtenances to, the Real Property described in clause
(a) above and clauses (f) and (g) below including without limitation
the Pipelines and all buildings, pump stations and facilities of any
kind, and all lateral pipelines, described in Schedule 1(b) or
otherwise associated with the Pipelines (collectively, the
"Improvements");
(c) all personal property constituting and located at the distribution
terminals, including all loading racks, equipment and spare parts and
equipment, located in Jamestown, North Dakota; Moorhead, Minnesota;
Sauk Centre, Minnesota; and Roseville, Minnesota, including in each
case the items more particularly described on Schedule 1(c) attached
hereto (the "Terminal Assets");
(d) all real property on which the Terminal Assets are situated including
the real property more particularly described on Schedule 1(d)
attached hereto, including the improvements to such real property
together with all appurtenances thereto and fixtures thereon (the
"Terminal Real Property");
(e) to the extent the same do not constitute Improvements or Terminal Real
Property, any and all fittings, cathodic protection ground beds,
rectifiers, other cathodic or electric protection devices, machinery,
equipment, pumps, pump engine fuel, engines, pipes, valves,
connections, gates, scraper traps and extenders, telecommunications
facilities and equipment, lines, wires, computer hardware, vehicles,
and all other personal property used primarily in connection with or
necessary for the ownership and operation of the Pipelines or Terminal
Assets including, without limitation, the assets described in Schedule
1(e) (collectively, the "Personal Property");
(f) subject to and in accordance with an easement substantially in the
form attached hereto as Exhibit D, an easement for operation,
monitoring, control, maintenance, repair, removal and replacement of
(A) a railroad pipeline and related pumps and equipment and (B) the
10" pipeline, at, in and under Seller's Mandan, North Dakota refinery;
and
(g) a Ground Lease for the land surrounding the pump station for the 10"
pipeline at the Seller's Mandan, North Dakota refinery substantially
in the form attached hereto as Exhibit E;
(h) subject to Section 10(c)(ii), the rights and obligations of Seller
under the agreements, contracts, leases, licenses and similar
instruments relating to the Pipeline Interest including, without
limitation, those certain contracts listed in Schedule 6(o);
(i) all assignable or transferable permits or licenses of Seller from any
federal, state or local regulatory agencies which are necessary for
and used in connection with the ownership and operation of the
Pipeline Interest as it has been operated by Seller during the
immediately preceding five (5) months (excluding Pipeline Agreements)
(collectively, the "Permits"), including, without limitation, the
Permits described in Schedule 1(i) and any other approval,
registration, authorization, certificate, certificate of occupancy,
consent, exemption, license, order or permit or other similar
authorization of or filing with any governmental authority required by
applicable Health, Safety and Environmental Laws in effect on or prior
to the Closing Date, as they are enforced with respect to the Pipeline
Interest, for the ownership or operation of the Pipeline Interest as
it has been operated by Seller during the immediately preceding five
(5) months (collectively, the "Environmental Permits");
(j) subject to and in accordance with the Technology Transfer and License
Agreement attached hereto as Exhibit A (the "Technology Agreement"), a
nonexclusive, royalty-free license to use in connection with the
operation of the Pipeline Interest as it has been operated by Seller
during the immediately preceding five (5) months certain technology,
software, know-how and proprietary information owned by Seller,
whether patented or unpatented, as more specifically described in the
Technology Agreement;
(k) all operating records and data owned by or in possession of Seller and
relating primarily to or necessary for the operation of the Pipeline
Interest as it has been operated by Seller during the immediately
preceding five (5) months, including all books, records, cost and
pricing information, accounting records, supplier lists and records,
training materials and equipment, training records, maintenance and
inspection reports, copies of employment records for the Transferred
Employees (including without limitation drug and alcohol plan and
employee testing records as required by the United States Department
of Transportation), equipment lists, repair notes and archives (both
hard and electronic copies, if available but excluding e-mails), but
provided that Seller may retain copies of such records and data;
(l) subject to Section 10(c)(ii) and in accordance with the Technology
Agreement, all assignable or transferable technical drawings, (both
hard and electronic copies, if available) owned by or in possession of
Seller or located at the Purchased Assets and relating primarily to or
necessary for the operation of the Pipeline Interest as it has been
operated by Seller during the immediately preceding five (5) months,
but provided that Seller may retain copies of such drawings; and
(m) all other assignable or transferable active operating assets, owned or
leased by, or licensed to or used by Seller and used primarily in or
necessary for the operation of the Pipeline Interest as it has been
operated by Seller during the immediately preceding five (5) months;
provided that the Purchased Assets shall not include the Excluded Assets.
2. EXCLUDED ASSETS. The Purchased Assets shall not include the following
assets, each of which is specifically excluded from the Purchased Assets being
sold hereunder (collectively, the "Excluded Assets"):
(a) cash and cash equivalents (including marketable securities and
short-term investments);
(b) accounts and notes receivable accruing for goods and services provided
before 12:01 a.m., Central Time, on the Closing Date;
(c) employee and other records (including employee, personnel and medical
records) necessary to administer salaried payrolls and benefits for
Seller employees other than the Employees and welfare plans retained
by Seller and tax returns, assets related to certain support services
provided by the Seller to the Pipeline Interest as described on
Schedule 2(c) attached hereto and certain other specified assets not
used primarily in or necessary for the operation of the Pipeline
Interest as described on Schedule 2(c) attached hereto;
(d) tax refunds relating to the Purchased Assets, accruing to or for any
period, or portion thereof, ending prior to the Closing Date;
(e) all financial and/or accounting forecasts, reports, data, financial
information and/or financial statements and all copies of and
subscriptions to third-party reports;
(f) all proprietary manuals (except rights to use manuals specific to and
necessary for the operation of the Pipeline Interest as it has been
operated by Seller during the immediately preceding five (5) months)
prepared by or used by Seller to the extent not relating to the
Pipeline Interest;
(g) except as otherwise expressly provided in the Technology Agreement,
all proprietary computer systems and software of Seller;
(h) defenses and claims that Seller could assert against third parties,
except claims which Seller could assert on account of matters or acts
as to which Buyer has agreed to assume liability or matters for which
Buyer is entitled to be indemnified by Seller pursuant to this
Agreement;
(i) the assets, property improvements, appurtenances, fixtures, equipment
and goods located at the Purchased Assets which are not owned by
Seller as described in Schedule 2(i);
(j) except as otherwise expressly provided in the Technology Agreement and
to the extent not otherwise excluded, proprietary information,
intellectual property (including patents, inventions and trade
secrets, in each case, whether patentable or not, and copyrights) and
technology of Seller that either (i) was not used in the operation of
the Pipeline Interest as it has been operated by Seller during the
immediately preceding five (5) months or that (ii) was used in the
operation of the Pipeline Interest (other than for the control room)
during the preceding five months but is not otherwise assignable by
Seller, as described in Schedule 2(j);
(k) all service marks, trademarks, trade names, trade dress or other
indicia of origin of Seller and variants thereof;
(l) all books, documents, records and files prepared in connection with
the transactions contemplated by this Agreement, including bids
received from other parties and analyses relating in any way to the
Purchased Assets, the Assumed Liabilities and the Pipeline Interest;
(m) all rights of Seller under or pursuant to this Agreement and the other
agreements and transactions contemplated hereby;
(n) any assets, properties and rights of Seller which both (i) are not
used primarily in or necessary for the operation of the Pipeline
Interest as it has been operated by Seller during the immediately
preceding five (5) months and (ii) are not located at the Purchased
Assets;
(o) except as otherwise provided in the Technology Agreement, all
telecommunications facilities and equipment, lines, wires, and
computer hardware being used in connection with the operation of
Seller's Mandan, North Dakota refinery and Seller's Montana/North
Dakota crude oil pipeline;
(p) except as otherwise expressly provided in the Technology Agreement,
the pipeline control center equipment, and related computer and
communications equipment located at the Roseville, Minnesota terminal;
(q) except as otherwise expressly provided in the Technology Agreement,
all financial and accounting software and hardware being used by
Seller in connection with the Pipeline Interest;
(r) the assets, property and property improvements, appurtenances,
fixtures, equipment, goods and rights owned by Seller and listed on
Schedule 2(r) attached hereto;
(s) the rights and obligations of Seller under any agreements, contracts,
leases, licenses and similar instruments that do not relate primarily
to the Pipeline Interest or are not assignable by Seller as set forth
on Schedule 2(s) attached hereto, including but not limited to the
terminaling and throughput agreements with Amoco Oil Company;
(t) Any rights and obligations of Seller under collective bargaining
agreements;
(u) any rights under or amounts payable to Seller or its affiliates from
present or former insurance policies of Seller or its affiliates
applicable to the Pipeline Interest;
(v) all arrangements, contracts, agreements, understandings or
commitments, whether written or oral, by and among the Seller and its
affiliates (except those listed on Schedule 2(v) which will be assumed
by Buyer), it being understood and agreed to by Seller that all such
arrangements, contracts, agreements, understandings or commitments
affecting the Pipeline Interest will be terminated on or prior to
Closing;
(w) subject to Section 10(c)(x), all petroleum products and other
hydrocarbons, including without limitation all line fill, additives
and hydrocarbon inventories in the Pipelines and the Terminal Assets
excluding, however, pump engine fuel which is part of the Purchased
Assets; and
(x) all real property and structures, fixtures and equipment located
within the plot plan for Seller's Mandan, North Dakota refinery, (i)
except to the extent provided under the Easement attached hereto as
Exhibit "D" or the Lease attached hereto as Exhibit "E", and (ii)
except for the fixtures, equipment and structures listed on Schedule
1(b);,
To the extent that any Excluded Assets remain located at the Pipelines, the
Terminal Assets, the Terminal Real Property or any other owned or leased real
property constituting part of the Purchased Assets after the Closing Date, Buyer
shall grant to Seller and its representatives reasonable access to such property
from and after the Closing Date for a reasonable period of time not to exceed
180 days, in order to permit Seller and such persons to review and remove such
Excluded Assets and make any other appropriate arrangements with respect
thereto. Seller agrees that it will give Buyer written notice at least
forty-eight (48) hours in advance of taking any such actions (other than the
removal of petroleum products and hydrocarbons in the ordinary course of
business) following the Closing Date with a view towards establishing a mutually
agreeable plan for such review and removal so that these actions will not
unreasonably interfere with the normal operation of the Pipeline Interest.
3. PURCHASE PRICE.
(a) Purchase Price. In consideration for the Purchased Assets, Buyer shall
pay, transfer and undertake to Seller as follows:
(i) Buyer shall pay to Seller a price of one hundred million dollars
($100,000,000.00), adjusted as provided in Section 16,
representing the agreed upon value of the Purchased Assets as of
the Closing Date (the "Purchase Price"); and
(ii) Buyer shall assume and agree to pay and perform and discharge
when due the Assumed Liabilities and the Buyer Environmental
Liabilities.
(b) Closing Date Payments. Buyer shall pay to Seller at Closing, in
immediately available funds, by wire transfer to an account designated
by Seller at least three (3) days prior to Closing, the Purchase
Price, adjusted for prorated ad valorem taxes, utility charges and
other apportionments as provided in Section 16.
4. LIABILITIES.
(a) Assumed Liabilities. Except as specifically set forth in this Section
4(a) or in Section 4(c) below, but subject to the indemnities set
forth in Section 15(a) Buyer shall not assume, or be deemed or treated
as having assumed, any liability or obligation of Seller or any
liability or obligation related to the Purchased Assets, as the
Purchased Assets exist at or before Closing. As of the Closing Date,
Buyer shall, without any further action on the part of Buyer or
Seller, assume and agree to pay, perform and discharge, each of the
following liabilities (collectively, the "Assumed Liabilities");
provided however, that the Assumed Liabilities shall not include the
Retained Liabilities or the Environmental Liabilities:
(i) Subject to Section 10(a)(ii), obligations for performance after
Closing under all the agreements, contracts, leases, or similar
instruments constituting part of the Purchased Assets including,
without limitation, the Pipeline Agreements, easements, rights of
way, and other rights of access constituting part of the
Purchased Assets, provided that Buyer shall not assume, or be
deemed or treated as having assumed, any obligation or liability
under these items to the extent such obligation or liability
relates to or arises out of any breach of such items at or prior
to Closing, or to any action or inaction of Seller prior to
Closing or any action of Seller after Closing;
(ii) Obligations for performance after Closing under the Permits
constituting part of the Purchased Assets, provided that Buyer
shall not assume, or be deemed or treated as having assumed, any
obligation or liability under these items to the extent such
obligation or liability relates to or arises out of any breach of
such items at or prior to Closing or to any action or inaction of
Seller prior to Closing;
(iii)Obligations for payment of ad valorem taxes, personal property
taxes, utility charges and other apportionments, as provided in
Section 16.
(b) Retained Liabilities. Except for items specifically assumed by Buyer
under Section 4(a) or Section 4(c), Seller shall retain and remain
solely responsible for all liabilities and obligations related to the
Purchased Assets or the Pipeline Interests as a result of acts,
events, omissions or conditions existing or occurring on or prior to
the Closing Date and for all other liabilities and obligations of
Seller. Without limiting the generality of the foregoing, and except
for Buyer Environmental Liabilities, the liabilities and obligations
of Seller transferred to Buyer shall not include, Buyer is not
assuming, and Seller shall retain the following liabilities
(collectively, the "Retained Liabilities"):
(i) all obligations, responsibilities, liabilities, costs and
expenses of whatever kind and nature, primary or secondary,
direct or indirect, absolute or contingent, whether based in
common law or statute or arising under written contract or
otherwise, known or unknown, liquidated or unliquidated, real or
potential, tangible or intangible, which accrue, are caused by,
arise out of, or are incurred in connection with the ownership of
the Purchased Assets or the operation of the Pipeline Interest at
any time prior to the Closing. Without limiting the generality of
the foregoing in this subparagraph (i), the Retained Liabilities
shall include all obligations, responsibilities, liabilities,
costs and expenses, save and except Environmental Liabilities,
which are covered by Section 4(c) below, of either Seller or
Buyer caused by, arising out of, or incurred in connection with
any of the following prior to the Closing Date:
(A) the Pipeline Interest (including the Pipelines, the Real
Property, the Terminal Assets, the Terminal Real Property
and the Personal Property);
(B) all of the agreements, contracts, leases, permits or similar
instruments, including the Pipeline Agreements, easements,
rights-of-way and other rights of access, constituting part
of the Purchased Assets;
(C) the Permits including those transferred to Buyer and those
not transferred hereunder;
(D) all accounts payable and accrued liabilities relating to
goods and/or services provided to the Pipeline Interest
prior to the Closing;
(E) the Employees and Retained Employees to the extent provided
in Section 11; and
(F) all actions, grievances, arbitrations, suits, liabilities,
obligations, proceedings and investigations incurred in
connection with, relating to or arising out of the business
or operations of the Pipeline Interest or any of the
Purchased Assets;
(ii) any liability or obligation for all taxes, charges, fees,
imposts, duties, levies, withholdings or other assessments
imposed by any governmental entity, including environmental
taxes, excise taxes, customs duties, utility, property, income,
sales, use, value added, transfer and fuel taxes, and any
interest, fines, penalties or additions to tax attributable to or
imposed on or with respect to any such assessment, including all
applicable income, sales, use, excise, business, occupation or
other tax, if any, relating in any way to this Agreement or any
other service, supply or operating agreement including
deficiencies, interest and penalties relating thereto
(collectively, "Taxes") accruing to or for any period ending on
or prior to the Closing Date, except to the extent provided
otherwise in Section 16;
(iii)any liability or obligation of Seller for any expenses, except
for Taxes as provided in Section 16, incurred in connection with
the transactions contemplated by this Agreement;
(iv) any brokerage or finder's fees payable by Seller in connection
with the transactions contemplated by this Agreement;
(v) any liability or obligation accruing prior to the Closing Date
for real property taxes and charges as prorated in accordance
with Section 16(b);
(vi) any liability or obligation with respect to any accounts payable,
in each case, determined in accordance with generally accepted
accounting principles as in effect in the United States at the
Closing Date;
(vii) any liability or obligation in respect of indebtedness for
borrowed money;
(viii)except as otherwise provided in this Agreement, all liabilities
or obligations relating to or incurred in connection with any
litigation, threatened litigation or claims against Seller to the
extent attributable to periods ending or from events occurring
prior to the Closing, including those set forth on Schedule 6(k)
attached hereto, provided that Buyer shall provide Seller with
reasonable access to (and permission to make copies of) all
records and reasonable access to all relevant personnel of the
Pipeline Interest in connection with the defense of any such
claims in accordance with the provisions of Section 17 hereof;
(ix) to the extent attributable to periods ending prior to the Closing
Date, all liabilities or obligations with respect to third party
bodily injury or wrongful death claims against Seller or any
prior owner of the Pipeline Interest, incurred in connection with
or relating to the pre-Closing operation of the Pipeline
Interest, and all liabilities and obligations with respect to
third party property damage claims incurred in connection with or
relating to the pre-Closing operation of the Pipeline Interest,
provided, that in both cases Buyer shall provide Seller with
reasonable access to (and permission to make copies of) all
records and reasonable access to all relevant personnel of the
Pipeline Interest in connection with the defense of any such
claims in accordance with the provisions of Section 17 hereof;
(x) all liabilities or obligations relating to any violations by
Seller or any prior owner of the Pipeline Interest of antitrust
laws prior to the Closing Date;
(xi) any responsibility for the payment of any criminal sanctions
against Seller or any prior owner of the Pipeline Interest
imposed at any time arising from the operation of the Purchased
Assets prior to the Closing; provided that Buyer shall provide
Seller with reasonable access to (and permission to make copies
of) all records and reasonable access to all relevant personnel
of the Pipeline Interest in connection with the defense of any
such claims in accordance with Section 17 hereof;
(xii) any liability or obligation related to an Excluded Asset; and
(xiii) all liabilities and obligations related to the Retained
Employees relating to periods prior to or subsequent to the
Closing.
(c) Environmental Liabilities. On and after Closing, Buyer and Seller
shall each respectively be responsible for Environmental Liabilities
as provided in this Section 4(c).
(i) As used in this Agreement, "Environmental Liabilities" shall
include all obligations, responsibilities, liabilities, costs and
expenses caused by, arising from, incurred in connection with,
relating in any way to or otherwise required or incurred to
achieve or maintain compliance with, Health, Safety and
Environmental Laws, as the same are in effect from time to time,
including (A) fines and penalties or other criminal sanctions
arising by reason of violations of Health, Safety and
Environmental Laws; (B) any responsibility for any litigation,
threatened litigation or claims arising under or by reason of
actual or alleged violations of Health, Safety and Environmental
Laws; (C) third party bodily injury or wrongful death claims
arising under or by reason of actual or alleged violations of
Health, Safety and Environmental Laws; (D) liabilities and
obligations with respect to third party property damage claims
relating to, arising under, or by reason of actual or alleged
violations of Health, Safety and Environmental Laws; (E) any and
all obligations, responsibilities, liabilities, costs and
expenses caused by, arising from, incurred in connection with or
relating in any way to the existence of asbestos and lead based
paint at, on or within the Pipeline Interest or the Purchased
Assets, including any incidental contamination resulting
therefrom; (F) liabilities or obligations arising under Health,
Safety and Environmental Laws with respect to or in connection
with the disposal prior to the Closing Date by Seller or any
prior owner of the Pipeline Interest (or by a third-party at the
express direction of Seller or such prior owner) at any location
other than the Purchased Assets of hazardous materials generated
as a result of or in connection with the operation of the
Pipeline Interest; and (G) any and all obligations,
responsibilities, liabilities, costs and expenses caused by,
arising from, incurred in connection with or relating in any way
to clean-up, restoration or remediation of any property under
Health, Safety and Environmental Laws,
(ii) As used in this Agreement, "Health, Safety and Environmental
Laws" shall mean any and all past or present local, state, and
federal laws, principles of common law, statutes, ordinances,
regulations, rules, orders, permits, standards, or requirements
(including consent decrees, judicial decisions, judgments,
injunctions and administrative orders issued or approved
thereunder), together with all related amendments and
implementing regulations and all common law, pertaining to or
regulating pollution, environmental protection, health and safety
of persons, pipeline safety, natural resource damages,
conservation of resources, wildlife, waste management, the use,
storage, generation, production, treatment, emission, discharge,
remediation, removal, disposal or transport or any other activity
related to a toxic or hazardous substance, waste or material
(including crude petroleum and its fractions or derivatives
thereof), or any other environmental matter, including: the
Comprehensive Environmental Response, Compensation and Liability
Act ("CERCLA"), 42 U.S.C. Section 9601 et. seq.; the Resource
Conservation and Recovery ------ Act, as amended, 42 U.S.C.
Section 6901 et. seq.; the Toxic Substances Control Act, as
amended, 15 U.S.C. Section 2601 et. seq.; the Clean Air Act, as
amended, 42 U.S.C. Section 7401 et. seq.; the Federal Water
Pollution Control Act, as amended, 33 U.S.C. Section 1251 et.
seq.; the Safe Drinking Water Act of 1974, as amended, 42 U.S.C.
Section 3009(f) et. seq.; the Emergency Planning and Community
Right-to-Know Act of 1986, as amended, 42 U.S.C. Section 11001 et
seq.; the Occupational Safety and Health Act of 1970, as amended,
29 U.S.C. Section 651 et. seq.; and the Hazardous Liquid Pipeline
Safety Act, as amended, 49 U.S.C. Section 60101 et. seq.
(iii)Seller shall retain and agrees to pay, perform and discharge the
following liabilities and obligations (collectively the "Seller
Environmental Liabilities"): (A) the Disclosed Environmental
Liabilities identified on Schedule 7(a); (B) any other
Environmental Liabilities incurred in connection with or relating
to the ownership or operation of the Purchased Assets prior to
the Closing that are within Seller's Knowledge as of the Closing
Date; (C) any Environmental Liabilities relating to ownership or
operation of Seller's Mandan, North Dakota refinery, SAVE AND
EXCEPT Environmental Liabilities that are proximately caused by a
release or discharge of hazardous substances from the Pipelines
(including pump stations) on or after the Closing Date; and Buyer
shall provide Seller with reasonable access to (and permission to
make copies of) all records and reasonable access to all relevant
personnel of the Pipeline Interest in connection with the defense
of any Seller Environmental Liabilities, in accordance with the
provisions of Section 17 hereof;
(iv) Buyer shall assume and agrees to pay, perform and discharge all
"Buyer Environmental Liabilities" which shall include any and all
Environmental Liabilities relating to, incurred in connection
with or by reason of the ownership or operation of the Purchased
Assets either before or after Closing, SAVE AND EXCEPT the Seller
Environmental Liabilities; provided however that Buyer shall be
responsible for any Environmental Liabilities relating to the
presence of hazardous substances (including without limitation
asbestos and lead based paint) at any location within the
boundaries of, or that have migrated from, Seller's Mandan, North
Dakota refinery only to the extent that such Environmental
Liabilities are proximately caused by a release or discharge of
hazardous substances from the Pipelines (including pump stations)
on or after the Closing Date.
(d) Liabilities From Post-Closing Operations. Except as otherwise set
forth in this Agreement or in the documents contemplated herein or
executed in connection with the transactions contemplated herein,
including the indemnity obligations of Seller set forth in Section
15(b), it is the intention of the Parties that Seller shall not be
responsible for liabilities, obligations, costs or expenses which are
caused by, arise out of, or are incurred in connection with, the
ownership of the Purchased Assets or the operation of the Pipeline
Interest at any time after Closing. In this regard, Buyer has agreed
to indemnify Seller as set forth in Section 15(a).
5. CLOSING.
(a) The closing and consummation of the transactions contemplated by this
Agreement (the "Closing") shall take place at 10:00 a.m., Central
Time, at the offices of Fulbright & Xxxxxxxx L.L.P., 0000 Xxxx Xxxxxx,
Xxxxx 0000, Xxxxxx, Xxxxx 00000, on the date which is five (5)
business days after the later of (i) the expiration or termination of
any applicable waiting periods, or any extension thereof (without a
material condition to such HSR termination or expiration), provided
for in the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of 1976, as
amended (the "HSR Act") and (ii) satisfaction or waiving of all of the
conditions precedent set forth in Sections 12 and 13. The date of the
Closing is referred to herein as the "Closing Date." Closing shall be
effective as of 12:01 a.m. on the Closing Date.
(b) On the Closing Date, Seller shall deliver to Buyer the following:
(i) duly executed special warranty deeds for the Terminal Real
Property and the Sauk Centre pump station, substantially in the
form contained in Exhibit B attached hereto, conveying fee simple
title to the Terminal Real Property and the Sauk Centre pump
station subject only to the Permitted Liens, and quitclaim deeds
substantially in the forms contained in Exhibit B for the other
fee simple properties listed in Schedule 6(f)(1);
(ii) appropriately executed instruments of sale, assignment, transfer
and conveyance evidencing and effecting the sale and transfer to
Buyer of the Purchased Assets, on the form attached hereto as
Exhibit N (it being expressly understood by the parties hereto,
however, that such instruments shall not require Seller or any
other Person to make any additional representations, warranties
or covenants, express or implied, not contained in this
Agreement);
(iii)a certified copy of the resolutions adopted by the Board of
Directors of Seller authorizing the transactions contemplated by
this Agreement and authorizing specified individuals to act on
behalf of Seller in connection therewith;
(iv) an incumbency certificate, duly executed by an authorized officer
of Seller attesting to the due appointment and authorization of
individuals signing this Agreement on behalf of Seller, any
agreement contemplated hereby or any agreement related to the
transactions contemplated hereby;
(v) the affidavit referred to in Section 1445(b)(2) of the Internal
Revenue Code of 1986, as amended, (the "Code") in customary form;
(vi) a certificate, duly executed by an authorized officer of Seller,
attesting that all representations and warranties of Seller
provided in this Agreement are true and correct in all material
respects as of the date of Closing, and that all covenants of
Seller in this Agreement have been performed in all material
respects at all times up through and including the Closing, and
that there has not been any material adverse change with respect
to the Purchased Assets or the Pipeline Interest, in each case as
required by Section 12;
(vii)The Guaranty by Tesoro Petroleum Corporation of Seller's
performance under this Agreement , on the form attached hereto as
Exhibit M;
(viii) a certified copy of the resolutions adopted by the Board of
Directors of Tesoro Petroleum Corporation authorizing the
Guaranty of Seller's performance under this Agreement and
authorizing specified individuals to act on behalf of Tesoro
Petroleum Corporation in connection therewith;
(ix) an incumbency certificate, duly executed by an authorized officer
of Tesoro Petroleum Corporation, attesting to the due appointment
and authorization of individuals signing the Guaranty of Seller's
performance under this Agreement; and
(x) Releases of deed of trust liens on the Terminal Real Property.
(c) On the Closing Date, Buyer shall deliver to Seller the following:
(i) the payment specified in Section 3(b) hereof;
(ii) instruments of assumption evidencing and effecting the assumption
by Buyer of the Assumed Liabilities and such other documents as
are required by this Agreement;
(iii)a certified copy of the resolutions adopted by the governing
body of Buyer or its affiliates, as appropriate, authorizing the
transactions contemplated by this Agreement and authorizing
specified individuals to act on behalf of Buyer herewith;
(iv) an incumbency certificate, duly executed by an authorized officer
of Buyer's general partner attesting to the due appointment and
authorization of individuals signing this Agreement on behalf of
Buyer, any agreement contemplated hereby or any agreement related
to the transactions contemplated hereby;
(v) a certificate, duly executed by an authorized officer of Buyer,
attesting that all representations and warranties of Buyer
provided in this Agreement are true and correct in all material
respects as of the date of Closing, and that all covenants of
Buyer in this Agreement have been performed in all material
respects at all times up through and including the Closing, in
each case as required by Section 13;
(d) On the Closing Date, Buyer and Seller shall each deliver duly executed
counterparts by the appropriate parties of the following:
(i) the Technology Agreement substantially in the form of Exhibit A;
(ii) the Assignment of Pipeline Agreements substantially in the form
of Exhibit C attached hereto for the Pipeline Agreements;
(iii)duly executed easement as described in Section 1(f)
substantially in the form of Exhibit D attached hereto;
(iv) a Lease Agreement for the Mandan Pump Station substantially in
the form of Exhibit E attached hereto;
(v) the Terminal Capacity Lease for the Jamestown Terminal
substantially in the form of Exhibit K attached hereto;
(vi) a Pipeline Capacity Lease substantially in the form of Exhibit F
attached hereto which shall have been duly executed by Buyer and
Seller;
(vii)a Transition Services Agreement substantially in the form of
Exhibit G attached hereto;
(viii) a Lease Agreement substantially in the form of Exhibit H
attached hereto for the post-Closing lease from Buyer to Seller
of the office/storage space at the Roseville, Minnesota terminal
being conveyed to Seller hereunder as further described in
Exhibit H;
(ix) an Assignment of Lease in the form of Exhibit I attached hereto
for the assignment of the existing office space and parking lease
between Seller and BP Corporation North America Inc.;
(x) a Continuing Covenants Agreement substantially in the form of
Exhibit J attached hereto;
(xi) the Environmental Access Agreement to be negotiated in good faith
and entered into at Closing pursuant to Section 10(c)(vii);
(e) All of the transactions identified in this Section 5 shall occur
simultaneously, and none shall be deemed completed until all are
completed.
6. SELLER'S REPRESENTATIONS AND WARRANTIES. Subject to the exceptions,
disclaimers and other matters set forth in this Section 6 and in Section 8 below
and the matters set forth on the Schedules to this Agreement, Seller hereby
represents and warrants to Buyer as set forth below. For purposes of this
Agreement, "Knowledge," when used in the phrase "Seller's Knowledge" in this
Agreement or in similar context means, and shall be limited to, the actual
knowledge (without independent investigation) of (i) Xxxx Xxxxx, (ii) Xxxx
Xxxxxxxx, (iii) Xxx Xxxxxx, (iv) Xxxxx Xxxx and (v) Xxx Xxxxxxx (but only with
respect to Section 7), and including but not limited to any replacements of any
of the foregoing individuals prior to Closing. Buyer understands that none of
such individuals is making any representations or warranties to Buyer and that
such individuals shall have no personal liability to Buyer in connection with
the matters covered in this Section 6.
(a) Organization and Good Standing. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware.
(b) Authority. Seller has the corporate power and authority to enter into
this Agreement and the transactions contemplated hereby and to carry
out its obligations hereunder. The execution, delivery and performance
of this Agreement and the transactions contemplated hereby have been
duly authorized, and this Agreement has been duly executed and
delivered by Seller and constitutes a valid and binding agreement of
Seller enforceable against Seller in accordance with its terms, except
as such enforceability is limited by general principles of equity and
applicable provisions of bankruptcy, insolvency, moratorium,
reorganization or similar laws.
(c) Consents. Other than with respect to (i) the HSR Act; (ii) obtaining
the consents required in connection with the assignment of Pipeline
Agreements (iii) obtaining the consents for assignments set forth on
Schedule 6(o), (iv) obtaining the consents required in connection with
the assignment of agreements, contracts, licenses, and leases that are
included in the Purchased Assets but do not constitute Material
Contracts, (v) obtaining the consents required in connection with the
assignment of Permits and Environmental Permits, (vi) filing of
tariffs and other filings and approvals necessary for Buyer to operate
the Pipeline Interest as a common carrier; (vii) filings and approvals
required under Health, Safety and Environmental Laws; and (viii)
recording of instruments of conveyance, no consent, approval of or by,
or filing with or notice to any other individual, corporation,
partnership, association, trust, limited liability company or any
other entity or organization, including a government or political
subdivision or agency, unit or instrumentality thereof (a "Person") is
required with respect to Seller or the Purchased Assets in connection
with the execution, delivery or enforceability of this Agreement or
the consummation of the transactions provided for hereby.
(d) Third Party Purchase Rights. No rights of first refusal, preferential
rights to purchase, rights of first opportunity or similar rights or
agreements exist in connection with any of the Purchased Assets which
would in any way interfere with Buyer's ability to purchase the
Purchased Assets as provided herein, or which are in any way in
contravention of this Agreement.
(e) No Breach. Subject to obtaining the consents required in connection
with the Pipeline Agreements and certain agreements, contracts,
licenses, leases, easements, rights-of-way and permits as provided in
Section 10(c)(ii), the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby and the
compliance by Seller with any of the provisions hereof does not and
will not (i) violate or conflict with, or result in a breach of, or
constitute a default (or an event which, with notice or lapse of time
or both, would constitute a default) under, or result in termination
of, or accelerate the performance required by, or result in the
creation of any lien or other encumbrance upon the Purchased Assets
under, any of the terms, conditions or provisions of the Certificate
of Incorporation or By-Laws of Seller or any material agreement,
instrument or obligation to which Seller is a party, or by which the
Purchased Assets are otherwise bound, or (ii) violate any order,
injunction, judgment, decree or award, or federal, state, local or
foreign law, ordinance, statute, rule or regulation applicable to
Seller, the Purchased Assets or the Pipeline Interest.
(f) Real Property.
(i) Title to the Terminal Real Property and the other real property
listed on Schedule 6(f)(1) is owned in fee by Seller and, when
transferred to Buyer will be good and marketable.
(ii) A complete and accurate description of all Terminal Real Property
and other real property represented to be owned in fee simple by
Seller and currently or historically used in the operation of the
Pipeline Interest is set forth on Schedule 6(f)(1). Seller
leases, purportedly owns or otherwise validly occupies all
Terminal Real Property. The Terminal Real Property and all other
real property purportedly owned by Seller and currently or
historically used in the operation of the Pipeline Interest, SAVE
AND EXCEPT real property within the plot plan of Seller's Mandan
Refinery, is free and clear of all liens and encumbrances, except
for: (i) such items as are set forth on Schedule 6(f)(2) attached
hereto; (ii) mechanics', carriers', workmen's, repairmen's or
other like liens arising or incurred in the ordinary course of
business, relating to retained liabilities of Seller not
exceeding fifty thousand dollars ($50,000) in the aggregate;
(iii) liens arising under equipment leases with third parties
entered into in the ordinary course of business, (iv) liens for
ad valorem and personal property taxes which are not due and
payable or which may thereafter be paid without penalty; (v)
zoning, building, fire, health, environmental and pollution
control laws, ordinances, rules and safety regulations and other
similar restrictions; (vi) the rights of the owners of
outstanding oil, gas and mineral interests and/or their lessees,
to explore for, drill, produce and develop said oil, gas and
minerals owned by them in, on and under said lands, together with
the rights to use as much of the surface of said lands as is
reasonably necessary to exercise their rights to explore for and
extract said oil, gas and minerals from said lands; (vii) acts
done or suffered to be done by, and judgments against, Buyer and
those claiming by, through or under Buyer; (viii) liens which
will be fully released as to the Purchased Assets at or before
Closing, or (ix) any matters that are waived without reservation
in writing by Buyer (collectively, (i) through (ix) are referred
to herein as the "Permitted Liens"). Except as described in
Schedule 6(f)(3), which includes certain rights afforded to
BP/Amoco set forth therein, Seller has not granted a third party
possession of any Terminal Real Property or any right of way
related to the Pipelines or any portion thereof nor is Seller a
party to any lease, sublease, license, concession or other
contract granting to any third party the right to use or occupy
any portion of the Terminal Real Property or other fee properties
listed in Schedule 6(f)(1). The limited warranty set forth in the
deeds to be executed and delivered at Closing pursuant to Section
5(b)(i) shall be independent of and not merged into the
representations and warranties set forth above in this Section
6(f).
(iii)Seller has delivered to Buyer true and correct copies of all
instruments listed on Schedules 6(f)(1) and 6(f)(2), other than
instruments reflected in the title commitments referenced in such
Schedules.
(g) Brokers. Seller has not retained any broker or finder or incurred any
liability or obligation for any brokerage fees, commissions, finder's
fees or similar compensation with respect to this Agreement or the
transactions contemplated hereby.
(h) Title to Purchased Assets. Other than with respect to the items leased
from third parties described in Schedule 6(h) Seller has, and as of
the Closing Buyer will have, valid title to all the Purchased Assets,
including the Improvements, but specifically excluding Permits, the
Pipeline Agreements and other real property interests (but without
limiting clause (f) above), free and clear of all liens and
encumbrances, except for Permitted Liens.
(i) Compliance With Laws. The Purchased Assets are in compliance in all
material respects with all laws, governmental regulations, orders and
decrees, as they are currently enforced with respect to the operation
of the Pipeline Interest by Seller, other than Health, Safety and
Environmental Laws (which are addressed in Section 7).
(j) Permits. Schedule 1(i) sets forth a true and correct list of all
material Permits and other material governmental licenses, permits or
approvals that are necessary for the operation of the Pipeline
Interest as it has been operated by Seller during the immediately
preceding five (5) months. Seller possesses all Permits, and all other
governmental licenses, permits and approvals necessary for the
operation of the Pipeline Interest as it has been operated by Seller
during the immediately preceding five (5) months, and all such Permits
and other governmental licenses, permits and approvals are in full
force and effect, except for Environmental Permits (which are
addressed in Section 7).
(k) Actions and Proceedings. Except as set forth on Schedule 6(k) attached
hereto:
(i) there is no action, suit, arbitration, investigation or
regulatory proceeding or claim pending or, to Seller's Knowledge,
threatened against Seller involving or affecting the Purchased
Assets, and, other than Permitted Liens, except as set forth in
Schedule 7(a), there are no decrees, injunctions, liens, orders
or judgments of or with any court or governmental department or
agency outstanding against Seller relating to or affecting the
Purchased Assets;
(ii) no action, suit, arbitration or regulatory proceeding is pending
or, to Seller's Knowledge, threatened seeking to restrain or
prohibit this Agreement or any agreement, instrument or
transaction contemplated hereby, or to obtain damages, a
discovery order or other relief in connection with this Agreement
or the transactions contemplated hereby; and
(iii)there is no pending or, to Seller's Knowledge, threatened
condemnation or other governmental taking of any of the real
property included in the Purchased Assets. Further, there is no
pending or, to Seller's Knowledge, threatened fire, health,
safety, building, zoning or other land use regulatory
proceedings, lawsuits or administrative actions relating to any
portion of the real property included in the Purchased Assets nor
has Seller received notice of any pending or threatened special
assessment proceedings affecting any portion of the real property
included in the Purchased Assets.
(l) Assets. Except for (i) Excluded Assets and (ii) assets set forth on
Schedule 6(l), the Purchased Assets and the assets, properties and
rights provided to Buyer pursuant to this Agreement and the other
agreements contemplated hereby, include all assets, other than the
intellectual property assets, leases, licenses and other contracts
that are not transferable, which are reasonably required to operate
the Pipeline Interest immediately following the Closing Date
substantially in the manner in which the Pipeline Interest has been
operated by Seller during the immediately preceding five (5) months.
(m) Tangible Assets. To Seller's Knowledge, the Purchased Assets,
excluding the Real Property (other than the Improvements), are free
from material defects, have been maintained substantially in
accordance with normal industry practice, and are in substantially
good operating condition and repair for their age (taking account of
their nature, current usage, normal wear and tear and continued repair
and replacement in accordance with industry standards).
(n) Pipeline Agreement. Seller has not received notice of default under
any Pipeline Agreement.
(o) Material Contracts, Agreements, Plans and Commitments.
(i) Schedule 6(o) lists the following types of contracts constituting
a part of the Purchased Assets (collectively, the "Material
Contracts"): (i) any contract (other than Pipeline Agreements)
affecting the Purchased Assets that involves aggregate
expenditures by or payments to Seller of more than $50,000 per
annum; (ii) any contract for the transportation through the
Pipelines; (iii) any contract containing provisions that restrict
the right of Seller to engage in any type of business or compete
in any geographic area and which provisions will be binding on
Buyer following Closing; (iv) any contract affecting the
Purchased Assets, the performance of which by Seller is
guaranteed by an affiliate of Seller or secured by a letter of
credit, surety or other arrangements (other than contracts for
borrowed money of Seller or its affiliates); (v) any contract
affecting the Purchased Assets pursuant to which Seller has
guaranteed the performance by another party of any obligation of
such party; (vi) any partnership or joint venture agreement
covering the Purchased Assets; and (vii) any security agreement,
mortgage or other agreement creating an encumbrance (other than
Permitted Liens).
(ii) Seller has furnished or made available to Buyer complete and
correct copies of all written Material Contracts, together with
all amendments thereto, and accurate descriptions of all material
terms of any oral Material Contracts.
(iii)Each Material Contract is valid, binding and in full force and
effect in accordance with its terms. Seller is not in default
under any Material Contract. Seller has not received any written
communication from, or given any written communication to, any
other party indicating that Seller or such other party, as the
case may be, is in default under any Material Contract.
(iv) The sale of the Pipeline Interest pursuant to this Agreement will
not trigger a default or breach under the terms of any Material
Contract;
(v) Other than listed on Schedule 6(o), no consent or approval from a
third party is required to assign the rights of Seller under such
Material Contract under the terms provided in this Agreement.
(p) Prepaid Services. Seller has not received any prepayments for services
associated with the Pipeline Interest for which Buyer will be
responsible.
(q) Taxes. Except as set forth in Schedule 6(q), Seller has filed in a
timely manner all tax reports, returns and forms affecting the
Purchased Assets as may have been required under applicable law,
including all required federal, state and local income, sales, use,
property and franchise tax returns, and has paid (except amounts for
taxes being diligently contested in good faith by appropriate
procedures and disclosed in Schedule 6(q)) all required taxes or
similar assessments affecting the Purchased Assets, including any
interest, penalties or additions attributable thereto shown as due on
all such filings. No encumbrances (other than Permitted Liens),
proceedings, lawsuits, investigations, inquiries or other actions
which are pending, threatened or open seek the assessment or
collection of additional taxes of any kind from the Seller
specifically relating to any portion of the Purchased Assets, and to
the best of Seller's Knowledge, no other examination by the Internal
Revenue Service or any other taxing authority affecting any portion of
the Purchased Assets is now pending. Taxes which Seller was required
by law to withhold or collect in respect to the Purchased Assets have
been withheld or collected and have been paid over to the proper
governmental entities or are properly held by the Seller for such
payment when due and payable.
(r) Schedule 6(r) contains a true and correct statement of the metered
throughput volumes of petroleum products, excluding ethanol and other
additives blended at the Terminals, delivered from each Terminal
during each month from and including January, 2002 through September,
2002.
(s) Employee Matters.
(i) Schedule 11(a) contains a correct list of the Employees employed
by Seller on the Effective Date, along with such individual's
title and/or job description and service credit date. Seller has
separately provided Buyer with each such Employee's current
annual salary, bonus for the previous year and other
compensation. Except as otherwise stated in Schedule 11(a), none
of the Employees has provided Seller with notification that
he/she plans to terminate his/her employment during calendar year
2002, whether by reason of the transactions contemplated by this
Agreement or otherwise.
(ii) Employee Benefits Plans. Schedule 6(s) lists all of the employee
welfare benefit and employee pension benefit plans as defined in
Sections 3(1) and 3(2) of ERISA, including plans that provide
retirement income or result in a deferral of income by the
Employees for periods extending to termination of employment or
beyond and plans that provide medical, surgical or hospital care
benefits or benefits for sickness, accident, disability, death or
unemployment and all other employee benefit agreements or
arrangements, including deferred compensation plans, incentive
plans, bonus plans or arrangements, stock option plans stock
purchase plans, stock award plans, golden parachute agreements,
severance pay plans, dependent care plans, cafeteria plans,
employee assistance programs, scholarship programs, contracts
with any of the Employees, retention incentive agreements,
non-competition agreements with any of the Employees, consulting
agreements with any of the Employees, confidentiality agreements
with any of the Employees, vacation policies and similar plans,
agreements and arrangements that are currently in effect for the
benefit of the Employees or their beneficiaries (collectively,
the "Plans"). Buyer will have no liability with respect to any
Plans or other similar plans or arrangements of Seller or its
affiliates as a result of the transactions contemplated by this
Agreement.
(iii)Neither the consummation of this Agreement nor the employment by
Buyer of the Transferred Employees will result in any carryover
liability to Buyer for taxes, penalties, interest or any other
claims resulting from any employee pension benefit plan, employee
welfare benefit plan, or other employee benefit agreement or
arrangement of Seller or any of its affiliates (each a "Seller
Entity" and collectively the "Seller Entities"). With respect to
employee pension benefit plans of the Seller Entities covering
Transferred Employees: (1) no Seller Entity has a liability to
the PBGC under Section 4062, 4063 or 4064 of the Employee
Retirement Income Security Act of 1974 ("ERISA") for which a lien
could attach to the assets of Seller under Section 4068 of ERISA;
(2) no Seller Entity has ceased operations at a facility so as to
become subject to the provisions of Section 4062(e) of ERISA; and
(3) no Seller Entity has made a complete or partial withdrawal
from a multi-employer plan (as defined in Section 3(37) of ERISA)
so as to incur withdrawal liability as defined in Section 4201 of
ERISA.
(iv) Seller has complied with the group health plan continuation of
coverage requirements of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended.
(v) In connection with the Pipeline Interest, there is no labor
strike, work stoppage, lockout, or other material labor dispute
or slowdown pending, or to Seller's Knowledge, threatened in
writing against Seller and there has not been any such action
during the last one (1) year period. Other than as set forth in
Schedule 11(a), Seller is not a party to or bound by any
collective bargaining agreement or similar agreement or written
work rules or practices with any labor organization or employee
association covering the terms and conditions of employment of
any Employee. Other than as set forth in Schedule 11(a), to
Seller's Knowledge, no Employee is represented by any labor
organization and, to Seller's Knowledge, there are no current
union organizing activities among the Employees.
(vi) Other than wage increases in the ordinary course of business,
since January 1, 2002, Seller has not made any commitment or
agreement to increase the wages of any of the Employees.
(vii)With respect to each Employee hired by Seller after November 6,
1986 that is not a citizen of the United States, Seller shall
have required a copy of Form 1-9 to be completed pursuant to the
Immigration Reform and Control Act of 1986, and the rules and
regulations promulgated thereunder, and shall have retained a
copy of such Form 1-9 in its employee files.
(viii) During the one (1) year period immediately prior to the date
hereof, Seller has not effectuated (i) a "plant closing" (as
defined in the WARN Act) affecting any site of employment of any
of the facilities included in the Purchased Assets covered by
this transaction (the "Employment Sites"); or (ii) a "mass
layoff' (as defined in the WARN Act) affecting any of the
Employment Sites; nor has Seller been affected by any transaction
or engaged in layoffs or employment terminations sufficient in
number to trigger application of any similar state or local law
at any of the Employment Sites.
(t) Work Orders. There are no outstanding work orders or contracts
relating to any portion of the Purchased Assets from or required by
any policy of insurance, fire department, sanitation department,
health authority or other governmental body, nor is there any matter
under discussion with such Persons or authorities relating to such
work orders or contracts.
7. ENVIRONMENTAL MATTERS.
(a) Environmental Representations and Warranties. Subject to the
exceptions, disclaimers and other matters set forth in Section 6 and
Section 8 below and the matters set forth on Schedule 7(a) (the
"Disclosed Environmental Liabilities"), Seller hereby represents and
warrants to Buyer, as follows:
(i) all Environmental Permits necessary for the operation of the
Pipeline Interest as it has been operated by Seller during the
immediately preceding five (5) months, have been obtained and are
in effect and, where applicable, applications for renewal thereof
have been timely filed.
(ii) all environmental control equipment necessary for the operation
of the Pipeline Interest has been operated by Seller during the
immediately preceding five (5) months is in substantial
compliance with Health, Safety and Environmental Laws, as they
are currently enforced with respect to the operation of the
Pipeline Interest by Seller, is installed at the Purchased
Assets, and such equipment is operating in a manner sufficient to
achieve and maintain such compliance under normal operating
conditions; and
(iii)to Seller's Knowledge, there are no existing violations of
Health, Safety and Environmental Laws, as they are currently
enforced with respect to the operation of the Pipeline Interest
by Seller.
(iv) to Seller's Knowledge, except as set forth on Schedule 7(b),
there are no underground storage tanks in or under the Purchased
Assets on the Effective Date;
(v) to Seller's Knowledge, all prior spills of hazardous substances
on, from or related to the Pipeline Interests or the Purchased
Assets for which any future remediation might be required under
Health, Safety and Environmental Laws are listed on Schedule
7(a);
(vi) all reports and assessments, except those set forth in Schedule
7(c), created or performed for Seller or, to Seller's Knowledge,
in Seller's possession have been sent to Buyer, to the extent
that they pertain to the environmental condition of the Purchased
Assets.
(b) Limitation. The representations and warranties set forth in Section
7(a) represent the sole and exclusive representations and warranties
of Seller with respect to any matters arising under or relating to
Health, Safety and Environmental Laws.
8. DISCLAIMERS. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT
(INCLUDING BUT NOT LIMITED TO, THE EXPRESS REPRESENTATIONS AND WARRANTIES OF
SELLER SET FORTH IN SECTIONS 6 AND 7 ABOVE) AND THE INSTRUMENTS, DOCUMENTS AND
AGREEMENTS REFERRED TO HEREIN OR EXECUTED IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED HEREBY:
(a) SELLER MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE,
EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, WITH RESPECT TO ITSELF, THE
PIPELINE INTEREST, THE PURCHASED ASSETS OR THE ASSUMED LIABILITIES OR
ANY PORTION THEREOF, INCLUDING THE PIPELINES, THE TERMINAL ASSETS, THE
TERMINAL REAL PROPERTY OR ANY OTHER ASSET TRANSFERRED TO BUYER
PURSUANT TO THE TERMS OF THIS AGREEMENT, AND SELLER EXPRESSLY
DISCLAIMS ANY IMPLIED WARRANTIES, INCLUDING ANY IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ORDINARY
PURPOSE OR ANY REPRESENTATION OR WARRANTY AS TO VALUE;
(b) THE PURCHASED ASSETS, INCLUDING THE PIPELINES, THE TERMINAL ASSETS,
THE TERMINAL REAL PROPERTY AND ANY PORTION THEREOF AND ANY OTHER
ASSETS TRANSFERRED TO BUYER PURSUANT TO THE TERMS AND CONDITIONS OF
THIS AGREEMENT, ARE BEING TRANSFERRED "AS IS, WHERE IS" AND "WITH ALL
FAULTS," AND BUYER SHALL RELY UPON ITS OWN EXAMINATION THEREOF;
(c) SELLER MAKES NO REPRESENTATIONS OR WARRANTIES WITH RESPECT TO (I) THE
CONDITION OR MERCHANTABILITY OF ANY OF THE PURCHASED ASSETS, INCLUDING
THE PIPELINES, THE TERMINAL ASSETS, THE TERMINAL REAL PROPERTY AND ANY
PORTION THEREOF OR ANY OTHER ASSETS TRANSFERRED TO BUYER PURSUANT TO
THE TERMS AND CONDITIONS OF THIS AGREEMENT, (II) THE FITNESS OF ANY
ASSETS FOR ANY PURPOSE OR (III) THE ASSIGNABILITY, COMPLETENESS OR
CONTIGUITY OF ANY PIPELINE RIGHTS OF WAY, THE PIPELINE AGREEMENTS, THE
TERMINAL REAL PROPERTY, PERMITS, LICENSES AND OTHER PROPERTY RIGHTS,
AND SELLER EXPRESSLY DISCLAIMS ANY AND ALL SUCH REPRESENTATIONS AND
WARRANTIES OF ANY KIND OR NATURE;
(d) BUYER EXPRESSLY ACKNOWLEDGES THAT NEITHER SELLER NOR ANY OTHER PERSON
HAS MADE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR
IN EQUITY, AS TO THE ACCURACY OR COMPLETENESS OF ANY INFORMATION
REGARDING THE PIPELINE INTEREST, THE PURCHASED ASSETS OR THE ASSUMED
LIABILITIES, AND BUYER FURTHER AGREES THAT NEITHER SELLER NOR ANY
OTHER PERSON SHALL HAVE OR BE SUBJECT TO ANY LIABILITY (EXCEPT TO THE
EXTENT ARISING FROM THE FRAUDULENT MISCONDUCT OF SELLER, ITS EMPLOYEES
OR AGENTS) TO BUYER OR ANY OTHER PERSON RESULTING FROM THE
DISTRIBUTION TO BUYER, OR BUYER'S USE OF, ANY SUCH INFORMATION,
INCLUDING ANY CONFIDENTIAL INFORMATION MEMORANDUM, AND ANY
INFORMATION, DOCUMENT OR MATERIAL MADE AVAILABLE TO BUYER IN CERTAIN
"DATA ROOMS," MANAGEMENT PRESENTATIONS OR ANY OTHER FORM IN
EXPECTATION OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT; AND
(e) BUYER EXPRESSLY ACKNOWLEDGES THE DISCLAIMERS OF SELLER, INCLUDING
(I) THOSE SET FORTH IN SECTIONS 8(a), 8(b), 8(c) AND 8(d) ABOVE AND
(II) THAT THERE ARE UNCERTAINTIES INHERENT IN ANY ESTIMATES,
PROJECTIONS AND OTHER FORECASTS AND PLANS PROVIDED BY SELLER TO BUYER,
INCLUDING ANY SUCH INFORMATION CONTAINED IN ANY CONFIDENTIAL
INFORMATION MEMORANDUM MADE AVAILABLE TO BUYER IN EXPECTATION OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THAT BUYER IS AWARE OF
AND FAMILIAR WITH SUCH UNCERTAINTIES AND THAT BUYER TAKES FULL
RESPONSIBILITY FOR MAKING ITS OWN EVALUATION OF THE ADEQUACY AND
ACCURACY OF ANY SUCH ESTIMATES, PROJECTIONS AND OTHER FORECASTS AND
PLANS (INCLUDING THE REASONABLENESS OF THE ASSUMPTIONS UNDERLYING SUCH
ESTIMATES, PROJECTIONS AND FORECASTS) IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. ACCORDINGLY, SELLER MAKES
NO REPRESENTATIONS OR WARRANTIES WITH RESPECT TO SUCH ESTIMATES,
PROJECTIONS AND OTHER FORECASTS AND PLANS (INCLUDING THE
REASONABLENESS OF THE ASSUMPTIONS UNDERLYING SUCH ESTIMATES,
PROJECTIONS AND FORECASTS). BUYER ACKNOWLEDGES THAT IT HAS HAD
SUFFICIENT OPPORTUNITY TO MAKE WHATEVER INVESTIGATION IT HAS DEEMED
NECESSARY AND ADVISABLE FOR PURPOSES OF DETERMINING WHETHER OR NOT TO
ENTER INTO THIS AGREEMENT. NOTWITHSTANDING THE FOREGOING, THIS
PARAGRAPH SHALL NOT EXCUSE OR RELEASE SELLER FROM LIABILITY FOR THE
FRAUDULENT MISCONDUCT OF SELLER OR ITS EMPLOYEES OR AGENTS.
(f) Notwithstanding any other provisions of this Section 8, and for the
avoidance of doubt, Seller and Buyer agree that nothing in this
Section 8 shall in any way limit or eliminate Buyer's rights to (i)
seek damages or other remedies for any breach by Seller of any express
representation, warranty or covenant set forth in this Agreement or in
any instruments, documents or agreements referred to herein or
executed in connection with the transactions contemplated hereby, or
(ii) enforce Seller's indemnity obligations as set forth in this
Agreement or in any instruments, documents or agreements referred to
herein or executed in connection with the transactions contemplated
hereby.
9. BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer hereby represents and
warrants to Seller as set forth below:
(a) Organization and Good Standing. Buyer is a limited partnership duly
formed or organized, validly existing and in good standing under the
laws of the State of Delaware.
(b) Authority of Buyer. Buyer has the power and authority to enter into
this Agreement and the transactions contemplated hereby and to carry
out its obligations hereunder. The execution, delivery and performance
of this Agreement and the transactions contemplated hereby have been
duly authorized and this Agreement has been duly executed and
delivered by Buyer and this Agreement constitutes a valid and binding
agreement of Buyer enforceable against Buyer in accordance with its
terms, except as such enforceability is limited by general principles
of equity and applicable provisions of bankruptcy insolvency,
moratorium, reorganization or similar laws.
(c) Consents. Other than with respect to the HSR Act, no consent, approval
of or by, filing with, or notice to any other Persons is required with
respect to Buyer in connection with the execution, delivery or
enforceability of this Agreement or the consummation of the
transactions provided for hereby.
(d) No Breach. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and the
compliance by Buyer with any of the provisions hereof does not and
will not: (i) violate or conflict with, or result in a breach of, any
provisions of, or constitute a default (or an event which, with notice
or lapse of time or both, would constitute a default) under, or result
in termination of, or accelerate the performance required by any of
the terms, conditions or provisions of the organizational documents of
Buyer or any material agreement, instrument or obligation to which
Buyer is a party or (ii) violate any order, injunction, judgment,
decree or award applicable to Buyer, or any federal, state, local or
foreign law, ordinance, statute, rule or regulation applicable to
Buyer.
(e) Litigation. No action, suit, arbitration or regulatory proceeding is
pending or, to Buyer's Knowledge, threatened seeking to restrain or
prohibit this Agreement, or any agreement, instrument or transaction
contemplated hereby, or to obtain damages, a discovery order or other
relief in connection with this Agreement or the transactions
contemplated hereby.
(f) Brokers. Buyer has not retained any broker or finder or incurred any
liability or obligation for any brokerage fees, commissions, finders'
fees or similar compensation with respect to this Agreement or the
transactions contemplated hereby.
(g) Availability of Funds. Buyer will have sufficient cash available on or
before the Closing Date to enable it to consummate the transactions
contemplated by this Agreement.
10. COVENANTS.
(a) Covenants of Seller. Seller covenants and agrees as follows:
(i) Access and Information. Subject to the provisions of the letter
agreement between Buyer and Seller with respect to
confidentiality dated on or about May 20, 2002 (the
"Confidentiality Agreement") and upon reasonable notice, Seller
shall grant, or cause to be granted to, Buyer access during
normal business hours throughout the period between the date of
this Agreement and the Closing Date to the Purchased Assets and
the books and records and other information relating to the
operations of the Pipeline Interest. During this period, Seller
shall use all commercially reasonable efforts to furnish, or
cause to be furnished to, Buyer and its representatives all data
and information concerning the Purchased Assets and the operation
of the Pipeline Interest (the "Data") which may reasonably be
requested by Buyer and shall use all commercially reasonable
efforts to make available, or cause to be made available, such
personnel of Seller as may reasonably be requested for the
furnishing of such Data. During this period, Buyer shall not
contact or communicate with any employees, customers of or
suppliers to the Pipeline Interest without Seller's prior written
consent, which consent shall not be unreasonably withheld,
conditioned or delayed. Buyer shall indemnify and hold Seller and
its affiliates harmless against any and all Losses suffered as a
result of Buyer's or its employees' or agents' negligent acts or
omissions or intentional misconduct in connection with the
exercise of Buyer's rights under this Section 10(a)(i).
Notwithstanding any provision in this Agreement to the contrary,
Buyer's obligations under this Section 10(a)(i) shall survive the
termination of this Agreement and the consummation of the
transactions contemplated hereby.
(ii) Conduct of Business. From the date hereof through the Closing
Date, Seller shall: operate the Pipeline Interest in the ordinary
course of business consistent with past practice; use
commercially reasonable efforts to maintain satisfactory
relationships with employees, suppliers, distributors, customers
and others having business relationships with the Pipeline
Interest; use commercially reasonable efforts to maintain the
Purchased Assets in reasonably good operating condition, normal
wear and tear excepted; maintain its inventory of supplies, parts
and other materials and inventories and keep its books of account
records and files, in each case in the ordinary course of
business consistent with past practice; refrain from (A) entering
into, amending, modifying, waiving any rights under or
terminating (or allowing to terminate) any Material Contract,
other than allowing Material Contracts to expire in accordance
with their terms in the ordinary course of business, (B)
disposing of, encumbering, selling or otherwise transferring any
of the material assets constituting Purchased Assets or other
rights of the Pipeline Interest, (C) commencing any new capital
projects or making any additional commitments for capital
expenditures relating to the Pipeline Interest in excess of
twenty five thousand dollars ($25,000.00) in the aggregate, or
(D) granting or agreeing to grant any bonus or increase in
compensation to any employees of the Pipeline Interest, except
for those that Buyer would not be responsible for paying or as
otherwise provided in the Transition Services Agreement, or enter
into any contract of employment, collective bargaining agreement
or other labor contract with respect to any such employees;
provided that Seller may take any action to which Buyer consents
in advance and in writing (which consent shall not be
unreasonably withheld taking account of Buyer's and Seller's
commercial objectives with respect to the Purchased Assets).
(iii)Confidentiality. Seller recognizes and acknowledges that it has
knowledge of certain confidential information regarding the
Purchased Assets and the Pipeline Interest which will be conveyed
to Buyer at Closing hereunder. Seller agrees that it will not
disclose, and will use reasonable commercial efforts to prevent
disclosure to any other Person of such confidential information
except to authorized representatives of Buyer. Seller recognizes
and agrees that violation of this provision may cause irreparable
damage or injury to Buyer, the exact amount of which may be
impossible to ascertain, and that Buyer may be entitled to an
injunction, without the necessity of posting a bond therefor,
restraining any further violation of this provision. Such rights
to any injunction shall be in addition to, and not in limitation
of, any other rights and remedies Buyer may have vis-a-vis
Seller; provided however, Seller shall be permitted to use or
disclose any confidential information as required to operate
Seller's ongoing business, or as required by law or regulation.
(iv) Pursuit of Claims Against Prior Owners. In the event that Buyer
incurs Losses for which no recovery is available from Seller
under the terms of this Agreement, but for which Seller has
legitimate claims for recovery from a prior owner of the Pipeline
Interest due to breach of warranty or otherwise, Seller agrees,
for a period of one year from the Closing Date (i) to use
commercially reasonable efforts to pursue all such claims on
Buyer's behalf and in consultation and cooperation with Buyer;
and (ii) that all amounts recovered from pursuit of such claims,
less the costs of any suit or other proceeding, attorney fees and
any and all other amounts expended or incurred by Seller or its
representatives or advisors in connection with the pursuit of
such claims, shall be paid over from Seller to Buyer upon
receipt. It is understood that pursuit of such claims by Seller
shall not include any requirement of Seller to expend any money
or commence any litigation, arbitration or other formal
proceeding in connection therewith. Notwithstanding anything
contained herein to the contrary, Seller shall not be obligated
to take any action pursuant to the foregoing and may immediately
terminate any action so undertaken, if Seller shall determine in
its sole discretion that pursuit of any such claim could
adversely affect either Seller's business interests or Seller's
customer relationships.
(v) Removal of Liens and Encumbrances. In the event there are liens
and encumbrances, other than Permitted Liens, against any of the
Purchased Assets, Seller shall cause the removal of such liens at
or before Closing, at its sole cost and expense. Seller's
obligations under this paragraph shall not be subject to Sections
15(j) through (m).
(vi) Certain Information. Subject to the Confidentiality Agreement,
Seller shall use commercially reasonable efforts to furnish, at
Buyer's expense, to Buyer such information, to the extent Seller
has such information available in its corporate records, as may
be necessary to permit Buyer to arrange for financing of the
transaction contemplated by this Agreement.
(vii)Lien Assistance. At and prior to Closing, Seller shall use
commercially reasonable efforts to assist and cooperate with
Buyer and its lenders as reasonably required to enable Buyer's
lenders to place liens and mortgages on the assets to be acquired
by Buyer from Seller pursuant to this Agreement at Closing. This
cooperation shall include, but not be limited to, making
necessary personnel reasonably available at Seller's offices
during normal business hours and execution and filing of all
deeds, assignments and other instruments necessary to vest title
to said assets in Buyer at Closing as contemplated herein.
(viii) Pressure Matters. Prior to Closing, Seller shall complete a
pipeline inspection tool run, as contemplated under 49 C.F.R.
ss.195.303, in the segment of the 10" Pipeline extending from
Medina, ND to Xxxxxxxx, ND.
(b) Covenants of Buyer. Buyer covenants and agrees as follows:
(i) Confidentiality.
(A) Buyer acknowledges that all information provided to any of it and
its affiliates, directors, officers, employees, counsel,
auditors, accountants, agents, advisors and other representatives
by Seller and its directors, officers, employees, counsel,
auditors, accountants, agents, advisors and other representatives
is subject to the terms of the Confidentiality Agreement, the
terms of which are hereby incorporated herein by reference.
Effective upon, and only upon, the Closing, the Confidentiality
Agreement shall terminate only with respect to information
provided to any of Buyer and its affiliates, directors, officers,
employees, counsel, auditors, accountants, agents, advisors and
other representatives that relates primarily to the Purchased
Assets, the Pipeline Interest, or the Assumed Liabilities.
(B) Buyer agrees that, from and after the Closing Date, all Seller
Information shall continue to be confidential information subject
to the terms, conditions and restrictions of the Confidentiality
Agreement. In connection with the Transferred Employees, Buyer
shall use commercially reasonable efforts, at Seller's request
and at Seller's expense, to cooperate with Buyer in the
enforcement of existing confidentiality agreements and rights
requiring employees to keep trade secrets confidential. For
purposes of this Agreement, "Seller Information" shall mean all
information concerning Seller, other than information that
relates primarily to the Pipeline Interest, the Purchased Assets
or the Assumed Liabilities and other than any such information
that is available to the public on the Closing Date, or
thereafter becomes available to the public, other than as a
result of a breach of this Section 10(b)(i).
(ii) Notification. From the date hereof through and including the
Closing Date, Buyer shall promptly notify Seller within a
reasonable period of time if to Buyer's Knowledge, any
representation or warranty of Seller in this Agreement or any
agreement contemplated hereby or information set forth in the
Schedules hereto is not true and correct in all material
respects, or if to Buyer's Knowledge, there are any material
errors in, or omissions from, the Schedules to this Agreement;
provided that any delay or failure by Buyer to so notify Seller
shall not in any way affect or limit Buyer's right to assert such
matters that were within Buyer's Knowledge as a breach of such
representations or warranties for purposes of exercising Buyer's
right to indemnification after the Closing Date, it being the
intention of the Parties that any delay or failure by Buyer to
notify Seller as required by this Section 10(b)(ii) shall operate
only to limit Buyer's right under Section 12(b) to claim such
failure of such representation and warranty to be true and
correct in all material respects as a condition to Closing. For
purposes of this Agreement, "Knowledge," when used in the phrase
"Buyer's Knowledge" in this Agreement or in similar context
means, and shall be limited to, the actual knowledge (without
independent investigation) of (i) Xxxxxx Xxxxxxx, (ii) Xxxxx
Xxxxxxxx, (iii) Xxx Xxxxxxxx, (iv) Xxxxx Xxxxxxxx and (v) Xxx
Childres, and including but not limited to any replacements of
any of the foregoing individuals prior to Closing.
(iii)Litigation. With respect to all litigation and other matters set
forth on the Schedules attached hereto and any other matters that
constitute Retained Liabilities and for so long as Seller is
contesting or defending such matter, Buyer shall cooperate in all
reasonable respects with Seller and its counsel in their efforts
to conduct or resolve such litigation, including by making
available to them at Seller's sole expense such documents and
witnesses as may be deemed necessary or useful therefor in
Seller's sole but reasonable discretion.
(iv) Title Policies. Buyer may procure, and shall pay the cost of the
premium for, commitments or policies from a title insurance
company selected by Buyer to provide owner's title insurance
policies with respect to the portions of the Purchased Assets
constituting real property, provided, however, that Buyer's
ability or inability to obtain title insurance (and without
regard to (i) any exceptions contained therein and (ii) any title
insurance premium Buyer is required to pay in order to obtain
such title insurance) on such real property shall not cause there
to be an adjustment to the Purchase Price; provided, however, the
foregoing shall not be deemed to mitigate Seller's obligations
set forth in Section 10(a)(v).
(v) Removal of Seller Marks. Buyer agrees that it shall use
commercially reasonable efforts to, within six (6) months after
the Closing Date, remove, obliterate, cover or replace, as
appropriate, all signs, billboards, containers, drums,
advertisements or other media containing any service marks, trade
names, trade dress or other indicia of origin of Seller located
on or appurtenant to any of the Purchased Assets, including
signs, billboards and advertisements or other media located at
offices and facilities related to the Pipeline Interest. In
addition, Buyer agrees that it shall use commercially reasonable
efforts to, within six (6) months after the Closing Date, replace
all signs located along each Pipeline, including at river
crossings, that identify Seller as the operator of such Pipeline.
(c) Mutual Covenants. Buyer and Seller covenant and agree as follows:
(i) HSR Act/State Regulatory Approvals. Buyer and Seller shall each
file or cause to be filed with the Federal Trade Commission and
the United States Department of Justice any notifications
required to be filed under the HSR Act, with respect to the
transactions contemplated hereby, and Buyer and Seller shall bear
the costs and expenses of their respective filings; provided that
Buyer and Seller shall each pay 50% of the filing fee in
connection therewith. Buyer and Seller shall use their respective
commercially reasonable efforts to make such filings promptly
(and in any event within seven (7) days) following the date
hereof, to respond promptly to any requests for additional
information and documentary materials made by either of such
agencies or any state regulatory authorities, to make any further
filings that may be necessary, proper or advisable in connection
therewith, to cause the waiting periods under the HSR Act to
terminate or expire at the earliest possible date and to resist
in good faith, at each of their respective cost and expense
(including the institution or defense of legal proceedings), any
assertion that the transactions contemplated hereby constitute a
violation of the antitrust laws or are adverse to the public
interest, all to the end of expediting consummation of the
transactions contemplated hereby. Each of Buyer, on the one hand,
and Seller, on the other, shall consult with the other prior to
any meetings, by telephone or in person, with the staff of the
applicable governmental authorities, and each of Buyer and Seller
shall have the right to have a representative present at any such
meeting. Notwithstanding anything to the contrary herein, this
paragraph shall not obligate Buyer to (A) divest or hold separate
any asset, (B) enter into any material agreement not contemplated
by this Agreement, or (C) materially modify this Agreement.
(ii) Assignments.
(A) (I) With respect to any agreement, contract, license, lease,
easement, right-of-way or Permit which (1) is not an
Excluded Asset, (2) is material to the operation of the
Pipeline Interest as it is currently and has been operated
by Seller during the immediately preceding five (5) months
and (3) requires consent for the assignment thereof to
Buyer, Seller shall take such actions as are necessary, and
Buyer shall cooperate fully with Seller in all commercially
reasonable respects, to effect assignment thereof to Buyer
as of the Closing Date. It is understood that such actions
by Seller shall not include any requirement of Seller to
commence any litigation or offer or grant any accommodation
(financial or otherwise) to any third party, but Seller
shall be required to expend money in connection therewith;
provided, however, that Buyer shall be obligated to pay
Seller any railroad application fees required to transfer
the rights of way, up to a maximum of sixty five thousand
dollars ($65,000). In the event that Seller is unable to
obtain the requisite approval for assignment of any such
agreement, contract, license, lease, easement, right-of-way
or Permit, or in the event such agreement, contract,
license, lease, easement, right-of-way or Permit is required
to be amended or supplemented and is not so amended or
supplemented as of the Closing Date, and such assignment is
reasonably necessary to conduct the operation of the
Pipeline Interest in the ordinary course of business, then,
on or before the Closing Date and except where such action
would be unlawful or prohibited by such agreement, contract,
license, lease, easement, right-of-way or Permit, Seller
shall (x) retain any such agreement, contract, license,
lease, easement, right-of-way or Permit and shall enter into
an arrangement with Buyer to provide Buyer with the benefits
of such agreement, contract, license, lease, easement,
right-of-way or Permit, provided, that Buyer shall perform
Seller's obligations thereunder arising after the Closing
(and indemnify Seller against Losses arising as a result of
Buyer causing a breach thereunder or Buyer failing to
perform Seller's obligations thereunder after the Closing)
until such agreement, contract, license, lease, easement,
right-of-way or Permit is assigned to Buyer or expires at
the earliest opportunity in accordance with its terms, or is
properly amended or supplemented, and (y) take all
commercially reasonable and necessary actions required to
assign to Buyer, or amend or supplement any such agreement,
contract, license, lease, easement, right-of-way or Permit
as soon as practicable after the Closing Date; and
(II) In addition to the obligations of Seller under Section
10(c)(ii)(A)(I) above, Seller shall take such actions as are
necessary, including expending money, and Seller shall
cooperate fully with Buyer in all commercially reasonable
respects, to remedy the matters set forth on Schedule
10(c)(ii)(A)(II).
(B) Notwithstanding Seller's obligations pursuant to Section
10(c)(ii)(A), the assignment of any agreement, contract, license,
lease, easement, right of way or Permit to be transferred to
Buyer which requires consent for assignment, or amendment or
supplement, may be effected after the Closing Date. The Purchase
Price shall not be subject to adjustment, and the Closing of the
transactions contemplated by this Agreement shall not be delayed,
by reason of any inability to obtain consent for assignment of
any agreement, contract, license, lease, easement, right of way
or Permit or any such amendment or supplement. Buyer agrees that
except as provided in Section 15(b)(iii), Seller shall not have
any liability whatsoever to Buyer arising out of or relating to
the failure to obtain any such consents that may have been or may
be required in connection with the transactions contemplated by
this Agreement or because of the default, acceleration or
termination of any such agreement, contract, license, lease,
easement, right of way or Permit as a result thereof (provided
that Seller has complied with its obligations under this Section
10(c)(ii)). Buyer further agrees that no representation, warranty
or covenant of Seller contained herein, shall be breached or
deemed breached and no condition of Buyer shall be deemed not to
be satisfied as a result of the failure to obtain any such
consent or as a result of any such default, acceleration or
termination or any lawsuit, action, claim, proceeding or
investigation commenced or threatened by or on behalf of any
Persons arising out of or relating to the failure to obtain any
such consent or any such default, acceleration or termination
(provided that Seller has complied with its obligations under
this Section 10(c)(ii)).
(iii)Other Governmental Approvals. Buyer and Seller shall cooperate
with each other and take all reasonable steps necessary to obtain
authorization for the sale of the Pipeline Interest from all
other applicable governmental authorities.
(iv) Other Actions. Buyer and Seller shall otherwise use their
respective commercially reasonable efforts to cause the
satisfaction of all conditions precedent in this Section 10 and
Sections 12 and 13 and the Closing to occur as soon as reasonably
practicable after the date of this Agreement.
(v) Pipeline Capacity Lease. At the Closing, Buyer and Seller shall
execute and deliver a Capacity Lease substantially in the form of
Exhibit F under which Buyer will lease to Seller capacity
post-Closing in the Buyer's pipeline intersecting the Pipelines,
between Mandan, North Dakota and certain terminals on Buyer's
Iowa/Dakota pipeline system.
(vi) Jamestown Terminal Capacity Lease. At the Closing, Buyer and
Seller shall execute and deliver a Capacity Lease substantially
in the form of Exhibit K under which Buyer will lease to Seller
capacity post-Closing in the Jamestown, North Dakota terminal
being purchased by Buyer under this Agreement.
(vii)Other Agreements. At the Closing, Buyer and Seller shall execute
and deliver each of the agreements substantially in the forms
attached hereto as Exhibits and, with respect to agreements
contemplated in Section 5(b)(ii) and Section 5(d) but not
attached hereto as Exhibits, the parties shall negotiate in good
faith and enter into such agreements at Closing.
(viii) Environmental Access Agreement. The parties shall negotiate in
good faith and enter into an environmental agreement to be
executed at Closing (the "Environmental Access Agreement"). The
Environmental Access Agreement shall include, or otherwise
provide, at a minimum, (i) for Seller's reasonable management and
control of the remediation of the Disclosed Environmental
Liabilities, (ii) for Seller's necessary and reasonable access to
the Purchased Assets after Closing, and (iii)for the expiration
of the Environmental Access Agreement as to a Disclosed
Environmental Liability upon remediation of that Disclosed
Environmental Liability to a remediation clean-up standard and in
a time frame no more stringent than required by the government
agencies with jurisdiction over the Disclosed Environmental
Liabilities (as demonstrated by receipt of a closure letter from
the applicable governmental agency(ies) or demonstration of the
clean-up standard being satisfied for a one-year period after a
good faith request for closure is requested); provided however,
that neither (A) the Environmental Access Agreement nor (B) any
closure letter or demonstration of any clean-up standard, whether
as contemplated by the parenthetical in clause (iii) of this
sentence or otherwise, shall reduce or limit the obligations of
Seller with respect to, or cause a termination of, Seller's
Environmental Liabilities provided in Section 4(c)(iii), nor
shall it reduce or limit the obligations of Buyer with respect
to, or cause a termination of, Buyer's Environmental Liabilities
provided in Section 4(c)(iv), nor shall it affect any Party's
rights or obligations under Section 15.
(ix) Casualty Loss.
(A) If, between the Effective Date and the Closing Date, there
shall have occurred any damage, destruction or other
casualty losses (excluding routine wear and tear) (a
"Casualty") with respect to the Purchased Assets, Seller
shall promptly notify Buyer of the occurrence of such
Casualty, providing full details about the nature, location
and projected effect of such Casualty, the equipment and
facilities affected thereby and the expected duration of the
Casualty, together with the anticipated costs of repair and
the projected time until repairs can be completed, and an
itemization of repairs required to return such Purchased
Assets to their condition prior to such Casualty. Buyer
shall have the right to audit, inspect and evaluate the
Casualty and Seller's projections of necessary repairs. If
Buyer, in its reasonable commercial judgment determines that
such Casualty, or all Casualties combined, if more than one
has been identified, will cause an Adverse Economic Effect
upon the Purchased Assets, taken as a whole, as intended to
be operated by Buyer after Closing, then Buyer shall
promptly notify Seller accordingly, within 15 days of
Buyer's receipt of notice of a Casualty, stating the amount
of Buyer's projected Adverse Economic Effect and providing
documentation and calculations supporting such
determination. For purposes hereof, "Adverse Economic
Effect" means the sum of (x) the projected loss of tariff
revenues resulting from the Casualty, based upon a projected
reduction in throughput, plus (y) projected reductions in
lease payments resulting from the Casualty owed to Buyer
under the Pipeline Capacity Lease and Terminal Capacity
Lease as set forth in Exhibit F and Exhibit K, respectively,
less (z) Buyer's savings in power costs, resulting from the
Casualty.
(B) If the Adverse Economic Effect is determined to be two
hundred fifty thousand dollars ($250,000) or less, Seller
may (i) after providing two days prior written notice to
Buyer of its intent to do so, elect to terminate the
Agreement pursuant to Section 18(a)(vi), or (ii) elect to
repair all damage to the Purchased Assets at its sole cost
and expense in which event Buyer's obligation to close the
transactions contemplated hereunder will not be affected. If
such repairs are not completed by the Closing Date, Buyer
shall proceed to close the transactions contemplated
hereunder, and Seller shall complete such repairs as quickly
as reasonably practicable after Closing in accordance with
all applicable industry, legal and regulatory standards, in
which case Seller shall pay Buyer a Delay Fee for each day
during the Period, which begins on the Closing Date and
continues until the date repairs are completed (the "Repair
Period"). The Delay Fee shall be equal to the reduction in
Buyer's anticipated revenue from operation of the Pipeline
Interest, which shall be calculated as the difference
between (I) the revenue Buyer would have received if all
portions of the Pipeline Interest were operated at their
respective average throughput volumes during the sixty (60)
day period immediately prior to the occurrence of the
Casualty, minus (II) the revenue Buyer actually receives for
shipment of Petroleum Products during each day during the
Repair Period. Seller's indemnification obligations under
Section 15 for its breach of this Section 10(c)(ix) shall
not be subject to the deductibles or cap set forth in
Section 15(j) or Section 15(k).
(C) If the Adverse Economic Effect is determined to be greater
than two hundred fifty thousand dollars ($250,000), Seller
may (i) after providing two days prior written notice to
Buyer of its intent to do so, elect to terminate the
Agreement pursuant to Section 18(a)(vi), or (ii) elect to
request Fluor Corporation to evaluate the Purchased Assets
and deliver to Buyer and Seller its written estimate of the
Adverse Economic Effect plus the cost to repair all damage
to the Purchased Assets ("Third Party Estimate") within 30
days of being requested to do so by Seller. If the Third
Party Estimate is greater than two hundred fifty thousand
dollars ($250,000), the Parties shall negotiate in good
faith to attempt to agree upon a Purchase Price reduction to
compensate Buyer for the Adverse Economic Effect and the
cost to repair the damage to the Purchased Assets caused by
the Casualty. If the Parties cannot agree upon the amount of
such Purchase Price reduction within ten (10) days after the
issuance of the Third Party Estimate, either Party shall
have the right, after providing two days prior written
notice to the other party of its intent to do so, to
terminate this Agreement pursuant to Section 18(a)(vi). In
the event that Seller exercises its rights to terminate this
Agreement under Section 10(c)(ix)(B) or (C) , Buyer may
provide written notice to Seller within three days of
receipt of Seller's notice to terminate of Buyer's desire to
waive any and all obligation of Seller with respect to such
Casualty, in which event (x) the Parties shall proceed to
Closing, (y) Seller shall have no obligation to make any
repairs to the damaged Purchased Assets and there shall be
no Purchase Price reduction, and (z) the Casualty giving
rise to the Adverse Economic Effect shall be deemed not to
breach any representation or warranty or covenant and Buyer
shall not have any right to receive indemnification or other
compensation hereunder with respect thereto.
(D) In the event that any Casualty occurring prior to the
Closing (regardless of the amount of the associated Casualty
Loss) has been repaired in full prior to the Closing, the
foregoing provisions shall not apply and the parties shall
proceed to Closing as if such Casualty had never taken
place.
(E) Notwithstanding anything in this Agreement to the contrary,
in the event a Casualty occurs prior to the Closing, this
Section shall exclusively govern any termination rights that
may exist as a result of such Casualty and such Casualty
shall not have any effect on Seller's representations,
warranties or covenants set forth herein or cause a failure
of Buyer's conditions to close as set forth in Section 12 to
be satisfied.
(x) Product Inventory. At Closing, Buyer will take custody of all
petroleum products inventories contained in the Pipelines
linefill and Terminals linefill and tankage, and including
without limitation, additives (the "Product Inventory"). The
volume of such Product Inventory shall be determined in
accordance with an Inventory Closing Procedure attached hereto as
Exhibit L.
(xi) Name Change. Prior to Closing, Seller shall file all certificates
and other documentation required to legally reflect the change in
name of Seller from Tesoro West Coast Company to Tesoro Refining
and Marketing Company in all real property records related to the
Pipeline Agreement or the real property included in the Purchased
Assets.
11. EMPLOYEES.
(a) Employees. Schedule 11(a) attached hereto contains a list of all
employees (collectively, the "Employees") of Seller directly employed
in the operation of the Pipeline Interest, save and except those
employed in operation of the control room for the Pipeline System,
including employees who are receiving short-term disability benefits
or are on family and medical, administrative, or military leave or any
other type of leave that entitles the Employee to reinstatement upon
completion of the leave under the applicable leave policies of Seller
(collectively, "Leave"). Seller shall be entitled to update Schedule
11(a) as necessary at any time prior to Closing to reflect any and all
employment changes. Any reference to Buyer in this Section 11 shall
refer to Buyer and its affiliates. (b) Employment Offers to Active
Employees. During the fifteen (15) day period following the Effective
Date, Buyer shall offer to active Employees who are not on Leave
employment with Buyer to be effective as of the Closing Date, and to
Employees on short-term disability, employment with Buyer to be
effective upon the later of the Closing Date or each such Employee's
respective medical clearance to return to work, for all of the
Employees associated with the Pipeline Interest (not to exceed 26
employees), at substantially similar salaries or wages, with similar
duties and responsibilities, at the same location and on the same
status (e.g., full-time or part-time) as provided by Seller
immediately prior to the Closing Date. All Employees who accept
employment with Buyer pursuant to the offers described in this Section
11(b) are referred to herein as "Transferred Employees." Buyer shall
not reduce any Transferred Employee's initial salary or wages as an
employee of Buyer during the six (6) month period after the Closing
Date. Buyer will give each active Employee to whom it offers
employment no less than seven (7) days in which to accept or reject
Buyer's employment offer. Notwithstanding anything in this Agreement
to the contrary, Seller will not provide to Buyer any medical or other
records related to Transferred Employees until such time as any
consents required by law or regulation have been received from such
employees to transfer same.
(c) Transfer Time. All Transferred Employees shall become employees of
Buyer as of Closing and except as otherwise provided herein, at such
time, Buyer shall assume and be responsible for payment of all
salaries and benefits and all other costs and liabilities relating to
the Transferred Employees incurred from and after Closing.
(d) Level of Employee Benefits Provided by Buyer. Except as otherwise
provided herein, Buyer shall provide to all Transferred Employees
employee benefits in accordance with employee benefit plans (such as
defined contribution plans and welfare benefit plans), programs,
policies and pay practices (such as vacations, bonuses and short-term
disability leaves) that shall be the same as the benefits provided to
substantially similar employees of Buyer. No later than the Closing
Date, Seller will provide to Buyer the Transferred Employees'
recognized credited service, and participation, vesting and, as
applicable, benefit accrual periods of service amounts, with Seller as
of the day immediately prior to the Closing Date.
(e) Defined Contribution Pension Plans. Buyer agrees that, effective as of
the Closing Date, Buyer's defined contribution pension plans in which
Transferred Employees participate shall be amended to recognize such
Transferred Employees' participation and vesting periods of service
with or credited by Seller for purposes of determining participation,
vesting and the level of company contributions.
(f) Welfare Benefits and Other Benefits and Policies. For each Transferred
Employee who participates in any welfare benefit plan, or is subject
to any policy or pay practice, of Buyer, both Buyer and the applicable
welfare benefit, policy and pay practice shall:
(i) not require a physical examination or other proof of
insurability; and
(ii) subject to the satisfaction of the conditions described in this
Section 11(f)(ii) on the Closing Date, waive waiting periods,
pre-existing condition exclusions, deductibles (for the remainder
of 2002) and other limitations on participation otherwise
applicable to any Transferred Employee and qualified dependents
(who were covered by an employee welfare benefit plan of Seller
or its affiliates and immediately elects to be covered by an
employee welfare benefit plan of Buyer) under or with respect to
all employee welfare benefit plans maintained by Buyer. The
conditions for the waivers described in this Section 11(f)(ii)
are:
(A) Buyer will waive waiting periods to the extent service with
Seller would otherwise satisfy the waiting period and the
Transferred Employee is actively at work; for Long Term
Disability Insurance, the waiver is contingent upon
receiving a waiver from Buyer's insurance carrier;
(B) Buyer will waive pre-existing condition exclusions to the
extent a Certificate of Creditable Coverage is presented by
and for the Transferred Employee and all dependents showing
coverage for the eighteen (18) months immediately prior to
coverage under Buyer's plan; and
(C) Buyer will offset (waive or partially waive) deductibles to
the extent the Transferred Employee or dependent shows
reasonable evidence of satisfaction of the applicable
deductible with Seller during the same calendar year.
(g) Vacation. Seller shall be responsible for paying the Employees for any
vacation due as of the Closing Date under the applicable vacation
policy of Seller. Subject to Buyer's vacation scheduling policy,
between the Closing Date and the end of the year in which the Closing
occurs, Buyer shall permit all Transferred Employees to schedule and
take the same number of days of vacation on an unpaid basis as they
had scheduled and would have been eligible to take immediately prior
to the Closing Date under the Seller's Vacation Policy based upon the
recognized credited service amounts of such Transferred Employees with
Seller. All Transferred Employees will be eligible for paid vacation
under Buyer's vacation policy beginning January 1, 2003, based upon
their recognized transferred service.
(h) Severance. Buyer shall establish a severance policy substantially
similar to the 2002 Tesoro Special Severance Plan/Pipelines (the
"Severance Plan"), with respect to any Transferred Employee who has
actions taken against such Transferred Employee prior to March 7,
2003, that would make the Transferred Employee eligible for severance
benefits under the involuntary terminations section of the Severance
Plan. Buyer's severance policy established under this Section 11(h)
shall recognize the Transferred Employees' recognized credited service
amounts with Seller.
(i) WARN Act. Buyer represents and warrants to, and covenants with, Seller
that there will be no major employment losses as a consequence of the
transactions contemplated by this Agreement that might trigger
obligations under the Worker Adjustment and Retraining Notification
Act, 29 U.S.C. Section 2101 et. seq. (the "WARN Act"), or under any
similar provision of any federal, state, regional, foreign or local
law, rule or regulation (collectively, "WARN Obligations"). To the
extent that any WARN Obligations might arise as a consequence of the
transactions contemplated by this Agreement, Buyer shall be
responsible for, and shall indemnify the Seller Indemnified Parties
against any Losses caused by, arising from, incurred in connection
with or relating in any way to, any WARN Obligations arising as a
result of any employment losses occurring on or after the Closing
Date. For ninety (90) days following the Closing Date, Buyer shall not
engage in any mass layoff, plant closing or other action that might
trigger WARN Obligations of Seller.
(j) Service Credit. From and after the Closing Date, the Transferred
Employees shall be given credit for their service recognized by Seller
prior to the Closing Date for all purposes, including eligibility,
vesting and benefit determination and accrual under all applicable
plans and programs of Buyer, as well as for purposes of determining
any vacation, severance or other related benefits to be provided
pursuant to the manner described above.
(k) Benefits Miscellaneous. Notwithstanding the foregoing, Buyer shall not
be liable for any obligations arising out of participation by
Transferred Employees in the employee benefit plans of Seller.
12. BUYER'S OBLIGATION TO CLOSE. Buyer's obligation to close under this
Agreement is subject to the fulfillment on or prior to the Closing Date of each
of the following conditions (except to the extent that Buyer shall have
hereafter agreed in writing to waive one or more of such conditions).
(a) Compliance with Agreement. Seller shall have performed and complied in
all material respects with all covenants, agreements and conditions
required by this Agreement to be performed or complied with by Seller
prior to the Closing Date, and Seller shall have delivered to Buyer a
certificate executed by Seller to such effect.
(b) Representations and Warranties. The representations and warranties of
Seller made in this Agreement shall be true and correct in all
material respects as of the date hereof and on and as of the Closing
Date, as though made on and as of the Closing Date, and Seller shall
have delivered to Buyer a certificate executed by Seller to such
effect; provided, however, that breaches or inaccuracies in such
representations and warranties shall not result in a failure of this
condition to be satisfied unless the circumstances giving rise to all
such breaches or inaccuracies (considered collectively) are reasonably
expected to have an adverse effect on the Purchased Assets in excess
of one million dollars ($1,000,000). The foregoing is not intended in
any way to mitigate Seller's indemnity obligations in Section 15
resulting from any such breaches or inaccuracies.
(c) Litigation. There shall not be any judicial restraining order or
injunction, preliminary or otherwise, in effect prohibiting the
Closing of the transactions contemplated by this Agreement. There
shall not be pending or threatened any litigation or proceeding
instituted by any federal, state or foreign governmental agency to
restrain, prohibit or otherwise interfere with or obtain substantial
monetary damages in connection with the consummation of the
transactions contemplated by this Agreement, or operation of the
Pipeline Interest by Buyer after the Closing Date.
(d) Governmental Consents. All legal requirements under the HSR Act or any
equivalent state law for the valid occurrence of Closing (including
the expiration or termination of any applicable waiting periods
without a material condition) shall have been fulfilled.
(e) Material Adverse Change. Except for any Casualty Loss that is covered
by the provision of Section 10(c)(ix), there shall not have occurred
any material adverse changes to the Pipeline Interest or the Purchased
Assets or the business conducted therewith, which, in the aggregate,
are reasonably expected to have an adverse effect upon the Pipeline
Interest, the Purchased Assets or the business to be conducted by
Buyer therewith in excess of an aggregate of $1,000,000.
(f) No Financing Contingency. Buyer's obligation to close under this
Agreement is subject to any financing contingency.
13. SELLER'S OBLIGATION TO CLOSE. Seller's obligation to close under this
Agreement is subject to the fulfillment on or prior to the Closing Date of each
of the following conditions (except to the extent that Seller shall have
hereafter agreed in writing to waive one or more of such conditions).
(a) Compliance with Agreement. Buyer shall have performed and complied in
all material respects with all covenants, agreements and conditions
required by this Agreement to be performed or complied with by Buyer
prior to the Closing Date, and Buyer shall have delivered to Seller a
certificate executed by Buyer to such effect;
(b) Representations and Warranties. The representations and warranties of
Buyer made in this Agreement shall be true and correct in all material
respects as of the date hereof and on and as of the Closing Date, as
though made on and as of the Closing Date, and Buyer shall have
delivered to Seller a certificate executed by Buyer to such effect;
(c) Litigation. There shall not be any judicial restraining order or
injunction, preliminary or otherwise, in effect prohibiting the
Closing of the transactions contemplated by this Agreement. There
shall not be pending or threatened any litigation or proceeding
instituted by any federal, state or foreign governmental agency to
restrain, prohibit or otherwise interfere with or obtain substantial
monetary damages in connection with the consummation of the
transactions contemplated by this Agreement, or the operation of the
Pipeline Interest by Buyer after the Closing Date.
(d) Governmental Consents. All legal requirements under the HSR Act or any
equivalent state law for the valid occurrence of Closing (including
the expiration or termination of any applicable waiting periods
without a material condition) shall have been fulfilled.
14. FURTHER ASSURANCES. To the extent title to any of the Purchased Assets
is held by any affiliate of Seller, Seller shall cause title to such Purchased
Assets to be vested in Seller prior to Closing. From time to time, as and when
reasonably requested by any party hereto, the other party shall execute and
deliver, or cause to be executed and delivered, all such documents and
instruments and shall take, or cause to be taken, all such further or other
actions (subject to the limitations set forth in Section 10(c)(ii)), which
documents, instruments or actions are consistent with, and customary and
necessary for, the consummation of the transactions contemplated by this
Agreement.
15. INDEMNIFICATION.
(a) Buyer's Indemnification of Seller. Except as otherwise expressly
provided herein, and except for Environmental Liabilities, which are
addressed in Section 15(c) below, and subject to the provisions of
this Section 15, from and after the Closing Date, Buyer shall
indemnify, defend, save and hold harmless Seller and its directors,
officers, employees, shareholders, partners, counsel, agents, advisors
and other representatives and each of the heirs, executors, successors
and assigns of any of the foregoing, including without limitation
Tesoro Petroleum Corporation (collectively, the "Seller Indemnified
Parties"), from and against any and all Losses of any kind which are
caused by, or arise from:
(i) except to the extent Seller owes Buyer an indemnity pursuant to
Section 15(b) below, the ownership after Closing of the Purchased
Assets, including the Pipelines, the Terminal Assets and the
Terminal Real Property, and the operation of the Pipeline
Interest after the Closing, including those Losses arising under,
any foreign, federal, state or local laws or regulations, or any
contract, warranty, tort or other theory of law;
(ii) (A) Buyer's breach of or failure to perform any covenant or
agreement in this Agreement requiring performance by Buyer on or
after the Closing Date or (B) Buyer's breach of any
representation or warranty in this Agreement; or
(iii) the Assumed Liabilities.
(b) Seller's Indemnification of Buyer. Except as otherwise expressly
provided herein, and except for Environmental Liabilities, which are
addressed in Section 15(c) below, and subject to the provisions of
this Section 15, from and after the Closing Date, Seller shall
indemnify, defend, save and hold harmless Buyer, its affiliates and
their respective directors, officers, employees, shareholders,
partners, counsel, agents, advisors and other representatives and each
of the heirs, executors, successors and assigns of any of the
foregoing (collectively, the "Buyer Indemnified Parties") from and
against any and all Losses of any kind which are caused by, arise
from, are incurred in connection with or relate in any way to:
(i) except for Assumed Liabilities, the ownership prior to Closing of
the Purchased Assets, including the Pipelines, the Real Property,
the Terminal Assets and the Terminal Real Property, and the
operation of the Pipeline Interest prior to the Closing,
including those Losses arising under, any foreign, federal, state
or local laws or regulations, or any contract, warranty, tort or
other theory of law;
(ii) the Excluded Assets or the Retained Liabilities; provided that
with respect to Retained Liabilities, the provisions of Section
15(j) will not apply.
(iii)the cost to cure any defect in a Pipeline Interest or any
failure of the Pipeline Agreements to cover all of the required
right of way for location of the Pipelines, provided however,
that such defect or failure must be identified in writing by
notice from Kaneb to Tesoro within one year after the Closing
Date, and this indemnity shall not apply to any such defect or
failure that is not identified in such a notice;
(iv) (A) Seller's breach of or failure to perform any covenant or
agreement in this Agreement or the documents contemplated hereby
or executed in connection herewith (other than the Excluded
Agreements); or (B) Seller's breach of any representation or
warranty under this Agreement or the documents contemplated
hereby or executed in connection herewith (other than the
Excluded Agreements); or
(v) any failure by Seller to comply with the provisions, if any, of
state or local bulk sales laws;
(c) Environmental Indemnifications. Buyer and Seller shall provide the
environmental indemnifications specified below for Environmental
Liabilities:
(i) Seller shall indemnify, defend, save and hold harmless the Buyer
Indemnified Parties from and against any and all Losses of any
kind which are, or which related to or arise out, of Seller
Environmental Liabilities; and
(ii) Buyer shall assume responsibility for, and shall indemnify,
defend, save and hold harmless the Seller Indemnified Parties
from and against any and all Losses of any kind which (A) are, or
relate to or arise out of, Buyer Environmental Liabilities, or
(B) result from changes in, modifications to or amendments of
Health, Safety and Environmental Laws that were in effect prior
to the Closing Date or Health, Safety and Environmental Laws
promulgated, made or enacted on or after the Closing Date.
(d) Exclusive Remedy. Except for matters arising out of any fraud or
willful misconduct (which are not subject to this Section 15(d)), any
claim or cause of action based on, arising out of or relating in any
way to any of the transactions contemplated under this Agreement
(excluding the Environmental Access Agreement and the agreements and
documents described in Exhibits X, X, X, X, X, X, X, X, X, X, xxx L
(collectively the "Excluded Agreements"), which are not subject to
this Section 15(d), but including all other Exhibits and Schedules
attached hereto or referenced herein) must be brought by either party
in accordance with the provisions and limitations of this Agreement,
whether such claim arises out of any contract, tort or otherwise.
Except as otherwise provided in this Agreement and if Closing occurs,
the parties hereby waive to the fullest extent permitted under
applicable law, any and all rights, claims and causes of action they
may have against each other relating to the subject matter of this
Agreement and the other agreements contemplated hereby (except the
Excluded Agreements, which are not subject to this Section 15(d)),
arising under or based on any federal, state, provincial, local or
foreign statute, law, ordinance, rule or regulation or otherwise,
including such rights, claims and causes of action Buyer may have
against Seller under CERCLA, breaches of statutory or implied
warranties or otherwise, nuisance or other tort actions, and common
law rights of contribution. Without limiting the generality of the
foregoing, the parties hereto understand and agree that after Closing
occurs the rights accorded under this Section 15 are the sole and
exclusive remedies ---------- of such parties against the other party
hereto with respect to any matters relating to this Agreement (other
than matters arising out of any fraud or willful misconduct or out of
the Excluded Agreements), including but not limited to Health, Safety
and Environmental Laws. Except as provided in this Agreement, Buyer
hereby waives any right to seek contribution or other recovery from
Seller under such Health, Safety and Environmental Laws. For the
avoidance of doubt, the parties acknowledge that they may seek
remedies for breach of the Excluded Agreements under the terms of
those Excluded Agreements and under common or statutory law without
regard to the provisions of this Agreement, provided however, that the
Excluded Agreements, other than deeds and assignments, shall each
expressly exclude liability for punitive or exemplary damages.
(e) Procedures Relating to Indemnification between Buyer and Seller.
Following the discovery of any facts or conditions which could
reasonably be expected to give rise to a Loss or Losses for which
indemnification is provided under this Agreement, the party seeking
indemnification (the "Indemnified Party") shall, as promptly as
reasonably possible thereafter, provide written notice
("Indemnification Notice") to the party from whom indemnification is
sought (the "Indemnifying Party"), setting forth the specific facts
and circumstances, in reasonable detail, relating to such Loss or
Losses and the amount of Loss or Losses (or a reasonable, good-faith
estimate thereof if the actual amount is not known or not capable of
reasonable calculation); provided, however, that failure to give such
Indemnification Notice on a timely basis shall not affect the
indemnification provided hereunder except to the extent the
Indemnifying Party shall have been actually and materially prejudiced
as a result of such failure.
(f) Procedures Relating to Indemnification for Third Party Claims.
(i) After providing an Indemnification Notice in respect of, arising
out of or involving a claim or demand made by any Person against
the Indemnified Party (a "Third Party Claim"), the Indemnified
Party shall deliver to the Indemnifying Party, within ten (10)
business days after the Indemnified Party's receipt thereof,
copies of all notices and documents (including court papers)
received by the Indemnified Party relating to the Third Party
Claim; provided, however, that failure to provide an
Indemnification Notice or deliver copies of all notices and
documents on a timely manner shall not affect the indemnification
provided hereunder except to the extent the Indemnifying Party
shall have been actually prejudiced as a result of such failure.
(ii) If a Third Party Claim is made against an Indemnified Party, the
Indemnifying Party shall be entitled to participate in the
defense thereof and, if it so chooses and acknowledges its
obligation to indemnify the Indemnified Party therefore, to
assume (so long as it thereafter reasonably pursues) the defense
thereof with counsel selected by the Indemnifying Party and
reasonably satisfactory to the Indemnified Party. If the
Indemnifying Party acknowledges its obligation to indemnify the
Indemnified Party, the Indemnifying Party shall thereafter
continue to reasonably defend and/or settle the Third Party Claim
until final resolution and shall discharge all attendant
liabilities to the extent of its indemnity hereunder.
Notwithstanding any acknowledgment made pursuant to the
immediately preceding two sentences, the Indemnifying Party shall
continue to be entitled to assert any limitation on its
indemnification responsibility contained in Sections 15(j)
through 15(l). Should the Indemnifying Party assume and
reasonably pursue the defense of a Third Party Claim, the
Indemnifying Party shall not be liable to the Indemnified Party
for legal expenses subsequently incurred by the Indemnified Party
in connection with the defense thereof. If the Indemnifying Party
assumes such defense, the Indemnified Party shall have the right
to participate in the defense thereof and to employ counsel, at
its own expense, separate from the counsel employed by the
Indemnifying Party, it being understood, however, that the
Indemnifying Party shall control such defense. The Indemnifying
Party shall be liable for the fees and expenses of counsel
employed by the Indemnified Party for any period during which the
Indemnifying Party has not assumed and reasonably pursued the
defense thereof. Whether or not the Indemnifying Party chooses to
defend any Third Party Claim, all the parties hereto shall
cooperate in the defense or prosecution of such Third Party
Claim. Such cooperation shall include the retention and the
provision of records and information which are reasonably
relevant to such Third Party Claim, and making employees
available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder.
If the Indemnifying Party has assumed the defense of a Third
Party Claim, the Indemnified Party shall not admit any liability
with respect to, or settle, compromise or discharge, or consent
to the entry of any judgment with respect to, such Third Party
Claim without the Indemnifying Party's prior written consent
(which consent shall not be unreasonably withheld). If the
Indemnifying Party does not assume the defense of any Third Party
Claim, the Indemnified Party may settle or defend the Third Party
Claim in any manner it shall in its sole discretion determine
appropriate and any such settlement or defense shall not in any
way affect the Indemnifying Party's indemnity hereunder.
(g) Waiver of Subrogation. Each party hereby waives, or will procure the
waiver of, any subrogation rights that its insurer may have with
respect to any indemnifiable Losses to the extent reasonably possible.
(h) Attorneys' Fees. In connection with any litigation arising out of this
Agreement or to enforce any indemnification claim pursuant to this
Agreement, the prevailing party shall be entitled to recover from the
nonprevailing party its reasonable attorneys' fees and costs, on
appeal or otherwise.
(i) Time Limitation. Except as otherwise expressly provided herein, any
claim by any Buyer Indemnified Party for indemnity arising pursuant to
Sections 15(b)(iv)(B) shall be brought within two (2) years after the
Closing Date, except that any claim for indemnity related to tax
matters or third party bodily injury or wrongful death claims
(excluding liability for property damage) may be brought at any time
prior to the end of the applicable statute of limitations. All other
indemnity claims shall have no limit as to time. A claim shall be
deemed to have been brought only upon delivery of a proper
Indemnification Notice to the other party at the notice address set
forth in Section 20. Any claim required to be made within such
respective limitations period not so timely made shall be forever
barred.
(j) General Indemnity Deductible. Except as otherwise expressly provided
in this Agreement, Buyer shall have no claim under this Agreement
against Seller for any Losses unless and until the aggregate of all
such Losses, other than Losses that constitute, relate to, or arise
out of Environmental Liabilities (which are not subject to any
deductible), incurred or sustained by the Buyer Indemnified Parties
exceeds two hundred fifty thousand dollars ($250,000) and then only
for the excess over two hundred fifty thousand dollars ($250,000). If,
between the Effective Time and the Closing Date, Buyer notifies Seller
in writing of a breach of a representation or warranty of Seller in
this Agreement for which Buyer would be entitled to indemnification
under this Section 15, and Seller does not cure such breach prior to
the Closing, the deductibles in this Section 15(j) will not apply with
respect to any such indemnification claim by Buyer.
(k) Cap on Certain of Seller's Indemnification Liabilities. Except as
otherwise specifically provided in this Agreement, Seller's aggregate
liability for
(i) indemnification pursuant to Section 15(b)(iv)(B), to the extent
and only to the extent that the indemnification does not relate
to title to the Purchased Assets;
(ii) indemnification pursuant to Section 15(b)(v), to the extent and
only to the extent the indemnification does not relate to title
to the Purchased Assets; and
(iii)indemnification pursuant to Sections 15(b)(i) and 15(b)(ii), to
the extent and only to the extent the indemnification relates to
items covered by Section 4(b)(ix) that were not within Seller's
Knowledge as of the Closing Date, shall in no event exceed an
amount equal to twenty million dollars ($20,000,000); provided
that in no event shall this Section 15(k) apply to matters that
arise out of, are caused by or relate to Seller's fraud or
willful misconduct. For the avoidance of doubt, Seller's other
indemnification obligations set forth in this Agreement are not
subject to this Section 15(k).
(l) Mitigation. Each party hereto shall take all reasonable steps and use
all commercially reasonable efforts to mitigate any and all Losses.
(m) Losses. As used in this Agreement, "Losses" means any and all costs,
claims, losses, liabilities, obligations (including corrective and
remedial obligations), damages and expenses including reasonable legal
fees and expenses, and liability for consequential damages, lost
profits, or punitive damages to third parties whose claims are subject
to indemnification under this Agreement, but excluding any liability
to the other party to this Agreement for consequential damages, lost
profits or punitive damages suffered, incurred or claimed by such
other party.
16. TAXES AND OTHER PRORATIONS.
(a) Except as provided in this Section 16, Buyer shall be liable for and
pay all Taxes (other than taxes based in whole or part upon Seller's
income), utility charges or apportionments which arise as a result of
this Agreement or the consummation of the transactions contemplated
hereby or as a result of any purchase, sale, rental, lease, storage,
use, consumption or operation of the Purchased Assets by Buyer. Seller
agrees to cooperate with and assist Buyer in claiming any applicable
occasional sale or sales tax exemption; provided that Seller shall not
incur any unreimbursed third-party costs, expenses, fees or
liabilities as a result of or in any way relating to, the provision of
such assistance.
(b) General and special real estate and other ad valorem taxes and
assessments and other state or local taxes, fees, charges and
assessments in respect of real property on the basis of the fiscal
year in which the Closing occurs shall be prorated between Buyer and
Seller as of 12:01 a.m., Central Time, on the Closing Date. If the
Closing Date shall occur before the tax rate or assessment is fixed
for such fiscal year, the apportionment of such taxes and payments at
the Closing shall be based upon the most recently ascertainable tax
bills; provided, that Buyer and Seller shall recalculate and
re-prorate said taxes and payments and make the necessary cash
adjustments promptly upon the issuance, and on the basis, of the
actual tax bills received for the fiscal year in which the Closing
occurs and the amount of any payments in lieu of tax made with respect
to any such fiscal year.
(c) Personal property taxes, if any, on the basis of the fiscal year in
which the Closing occurs, utility charges and other items customarily
prorated in transaction of the type contemplated by this Agreement,
shall be prorated between Buyer and Seller as of 12:01 a.m., Central
Time, on the Closing Date. If the Closing Date shall occur before the
tax rate or assessment is fixed for such fiscal year, the
apportionment of such taxes at the Closing shall be based upon a
reasonable estimate mutually agreed upon by Buyer and Seller;
provided, that Buyer and Seller shall recalculate and re-prorate said
taxes and make the necessary cash adjustments promptly upon the
issuance of, and on the basis of, the actual tax bills received for
such fiscal year.
(d) Three days prior to Closing, Seller shall deliver to Buyer Seller's
good faith estimate of the prorations required by this Section 16,
which shall be used for purposes of Closing. As soon as practicable
after Closing, the estimated prorations shall be adjusted to reflect
actual charges, and any necessary reimbursements shall be made between
the Parties.
17. RECORDS/LITIGATION ASSISTANCE.
(a) For a period of seven (7) years following the Closing Date, Buyer
shall provide to Seller (and its counsel, auditors, accountants,
agents, advisors or other representatives) reasonable access to and
permission to make copies of any books, records or accounts relating
to the Pipeline Interest through and including the Closing Date; and
Buyer shall not destroy or dispose of any such books, records and
accounts for a period of at least seven (7) years after the Closing
Date without first offering to surrender to Seller such books, records
and accounts which Buyer may intend to destroy or dispose of. Seller
agrees that it will consult with Buyer in advance of taking any such
actions following the Closing Date with a view towards establishing a
mutually agreeable plan for such visits so that these actions will not
unreasonably interfere with the normal operation of the Pipeline
Interest.
(b) After the Closing Date, each party shall provide such assistance as
the other party may from time to time reasonably request in connection
with the preparation of tax returns required to be filed, any audit or
other examination by any taxing authority, any judicial or
administrative proceeding relating to liability for taxes, or any
claim for refund in respect of such Taxes or in connection with any
litigation and proceedings or liabilities related to the Pipeline
Interest, including making available employees for interviews,
litigation preparation and testimony. The requesting party shall
reimburse the assisting party for the out-of-pocket costs incurred by
the assisting party.
(c) If Buyer, as a result of the transactions contemplated by this
Agreement, at any time within twelve (12) months after the Closing
Date, is required to file with the Securities and Exchange Commission
financial statements relating to the Pipeline Interest, Seller shall
provide such assistance as Buyer may reasonably request in connection
with the preparation of such financial statements, including providing
to Buyer Seller's books, records or accounts relating to the Pipeline
Interest and relevant personnel relating to the Pipeline Interest and
access to Seller's independent auditors from the date hereof through
and including the Closing Date and for a period of twelve (12) months
thereafter; provided that Seller shall not incur any unreimbursed
third-party costs, expenses, fees or liabilities as a result of or in
any way relating to, the provision of such assistance.
18. TERMINATION RIGHTS.
(a) This Agreement may be terminated at any time prior to the Closing Date
as follows and in no other manner:
(i) by mutual written consent of Buyer and Seller;
(ii) by Buyer, if any of the conditions set forth in Section 12 have
not been satisfied as of the Closing Date or if any of such
conditions shall become incapable of being satisfied and shall
not have been waived by Buyer (provided, however, that Buyer is
not in material breach of its obligations under this Agreement);
(iii)by Seller, if any of the conditions set forth in Section 13 have
not been satisfied as of the Closing Date or if any such
conditions shall become incapable of being satisfied and shall
not have been waived by Seller (provided, however, that Seller is
not in material breach of its obligations under this Agreement);
(iv) by Seller, if the Closing does not occur on or prior to January
31, 2003; provided that such failure of the Closing is not due to
Seller's material breach of its obligations under this Agreement;
(v) by Buyer, if the Closing does not occur on or prior to January
31, 2003; provided that such failure of the Closing is not due to
Buyer's material breach of its obligations under this Agreement;
or
(vi) by Buyer and/or Seller as provided if either makes an election to
terminate in Section 10(c)(ix).
(b) In the event of termination by Buyer or Seller pursuant to this
Section 18, written notice thereof shall forthwith be given to the
other party, and the transactions contemplated by this Agreement shall
be terminated without further action required by any party. If the
transactions contemplated by this Agreement are terminated as provided
herein:
(i) Buyer shall return to Seller all documents and copies and other
materials received from or on behalf of Seller relating to the
transactions contemplated hereby, whether so obtained before or
after the execution hereof; and
(ii) all confidential information received by Buyer with respect to
the Purchased Assets, the Assumed Liabilities and the Pipeline
Interest shall be treated in accordance with the terms and
conditions of the Confidentiality Agreement, which shall remain
in full force and effect notwithstanding the termination of this
Agreement.
(c) If this Agreement is terminated and the transactions contemplated
hereby are abandoned as described in this Section 18, this Agreement
shall become void and of no further force and effect, except for the
provisions of:
(i) Section 20, relating to Notices,
(ii) Section 21, relating to governing law and jurisdiction;
(iii) Section 24, relating to entirety;
(iv) Section 22 relating to publicity;
(v) Section 10(a)(i) relating to indemnification in connection with
the matters contemplated thereby;
(vi) Section 27 relating to certain expenses;
(vii)Sections 6(g) and 9(f) relating to finders' fees and brokers'
fees;
(viii) Section 15(h), relating to attorneys fees; and
(ix) this Section 18.
Nothing in this Section 18, including any termination of this Agreement,
shall be deemed to release any party from any liability for any breach by such
party of the terms and provisions of this Agreement.
19. SPECIFIC PERFORMANCE. Each party hereto acknowledges the unique nature
of the Purchased Assets and agrees that except as otherwise expressly provided
to the contrary in this Agreement, the other party shall be entitled to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the parties hereto and the matter (subject to the provisions
set forth in Section 21 below), in addition to any other remedy to which they
may be entitled, at law or in equity.
20. NOTICES.
(a) All notices or other communications required or permitted to be given
hereunder shall be in writing and shall be delivered by hand or sent
by prepaid facsimile, or sent, postage prepaid, by registered,
certified or express mail, or reputable overnight courier service and
shall be deemed given when delivered as follows:
If to Seller:
Tesoro Refining and Marketing Company
000 Xxxxxxx Xxxxx Xxxxx
Xxx Xxxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxx, Xx., General Counsel
Telecopy: (000) 000-0000
If to Buyer:
Kaneb Pipe Line Partners, L.P.
X.X. Xxx 000000
Xxxxxx, Xxxxx 00000-0000
0000 X. Xxxxxxx Xxxxxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxx 00000-0000
Attn: Chairman
Telecopy: 000-000-0000
with a copy to:
Kaneb Pipe Line Operating Partnership L.P.
0000 Xxxx 00xx Xxxxxx X., Xxxxx 000
Xxxxxxx Xxxxxx 00000
Attn: President
Telecopy: (000) 000-0000
and a copy to:
Fulbright & Xxxxxxxx L.L.P.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx
Telecopy: (000) 000-0000
(b) Any party may change the address to which such communications are to
be directed to it by giving written notice to the other in the manner
in paragraph (a) above.
21. GOVERNING LAW; SUBMISSION TO JURISDICTION. This Agreement and the
obligations of the parties hereunder shall be governed by and construed and
enforced in accordance with the substantive laws of the State of Texas, without
regard to rules on choice of law. Any action to enforce the terms hereof may be
brought in, and shall be considered properly venued in, the federal or state
courts located in Bexar County in the State of Texas. Each party hereto agrees
that it shall submit to the jurisdiction of such courts for purposes of actions
to enforce the terms of this Agreement.
22. PUBLICITY. Buyer and Seller agree that, from the date hereof through
and including the Closing Date, no public release or announcement concerning the
transactions contemplated hereby shall be issued or made by any party hereto
without the prior consent of the other party (which consent shall not be
unreasonably withheld), except (a) as such release or announcement may be
required by law or the rules or regulations of any securities exchange (or in
the opinion of counsel such release or announcement is appropriate or desirable
under or in light of such laws and regulations), in which case the party making
the release or announcement shall allow the other party reasonable time to
comment on such release or announcement in advance of such issuance, and (b)
that Seller and Buyer may each make such an announcement to its employees.
Notwithstanding the foregoing, Buyer and Seller shall cooperate to prepare a
joint press release to be issued on the Closing Date and, upon the request of
either Buyer or Seller, at the time of the signing of this Agreement. Buyer and
Seller agree to keep the terms of this Agreement confidential, except to the
extent required by applicable law, rule or regulation (including, but not
limited to, the filing requirements of the Securities Exchange Commission) or
for financial reporting purposes and except that the parties may disclose such
terms to their respective counsel, auditors, accountants, agents, advisors and
other representatives as necessary in connection with the ordinary conduct of
their respective businesses (so long as such Persons agree to keep the terms of
this Agreement confidential).
23. SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES. All
representations and warranties in this Agreement shall survive the Closing and
may be enforced for a period of two (2) years from and after the Closing Date,
except that (i) the environmental representations and warranties in Section 7
shall survive for a period of three (3) years after the Closing Date; (ii) any
representation and warranties related to tax matters in Section 6(q) and any
representation or warranty the breach of which would result in an indemnity
claim for third party bodily injury or wrongful death claims (excluding
liability for property damage) shall survive until the end of the applicable
statute of limitations; and (iii) the representations and warranties provided in
Section 6(f)(i) with respect to the Terminal Real Property shall not survive and
shall terminate at Closing; provided, however, the foregoing shall not be
interpreted to cause the limited warranty set forth in the deeds referred to in
Section 5(b)(i) to terminate at Closing. Notwithstanding the preceding sentence,
if prior to the applicable expiration of the time periods set forth above,
either Party provides the other Party with written notice of a specific alleged
breach of a representation or warranty, such representation and warranty, to the
extent that it relates to such specific alleged breach, shall survive until
final resolution of all matters related to such alleged breach. Unless otherwise
limited by this Agreement, the covenants in this Agreement shall survive Closing
so long as they are executory in nature. The parties agree and hereby state
their mutual intention that the representations, warranties and covenants under
this Agreement shall survive the parties' execution and delivery of the deeds,
bills of sale and assignment instruments to be executed under Section 5 at
Closing for the above periods and shall not be merged therein.
24. ENTIRE AGREEMENT. This Agreement, the attached Schedules and Exhibits
and the agreements referred to herein or executed in connection herewith, set
forth the entire agreement and understanding of the parties in respect to the
transactions contemplated hereby and thereby and supersede all prior agreements,
arrangements and undertakings, whether written or oral, relating to the subject
matter hereof (other than the Confidentiality Agreement, which shall continue in
effect). No representation, promise, inducement or statement of intention,
whether written or oral, has been made by any party which is not embodied in or
superseded by this Agreement or the Confidentiality Agreement or in the
documents attached hereto, referred to herein or executed in connection
herewith, and no party shall be bound by or liable for any alleged
representation, promise, inducement or statement of intention not so set forth
whether in any confidential information memorandum, in certain "data rooms,"
management presentations or any other form in expectation of the transactions
contemplated by this Agreement. Except as otherwise specifically provided in
this Agreement, no conditions, usage of trade, course of dealing or performance,
understanding or agreement purporting to modify, vary, explain or supplement the
terms or conditions of this Agreement will be binding unless hereafter made in
writing and signed by the party to be bound, and no modification will be
effected by the acknowledgment or acceptance of documents containing terms or
conditions at variance with or in addition to those set forth in this Agreement,
except as otherwise specifically agreed to by the parties in writing.
25. ASSIGNMENT. This Agreement and any rights and obligations hereunder
shall not be assignable or transferable by Buyer or Seller (including by
operation of law in connection with a merger or sale of stock, or sale of
substantially all the assets, of Buyer or Seller) without the prior written
consent of the other party and any purported assignment without such consent
shall be void and without effect; provided, however, that each of Buyer and
Seller may (a) assign any and all of its rights and interests hereunder to one
or more of its affiliates and (b) designate one or more of its affiliates to
perform its obligations hereunder; provided further that each of Buyer and
Seller shall remain responsible for the performance of all of its respective
obligations hereunder. Notwithstanding the foregoing, Seller may assign or
transfer any or all of its rights hereunder to any qualified intermediary in
order to complete an exchange of like-kind property under Section 1031 of the
Code and, at the request of Seller, Buyer shall execute such agreements and
other documents as may be necessary, in the reasonable opinion of Seller's
counsel, to complete and otherwise effectuate Seller's exchange of properties in
accordance with said Section 1031 of the Code and the regulations thereunder;
provided that Buyer shall not incur any unreimbursed third party costs,
expenses, fees or liabilities as a result of or connected with the exchange or
Seller's failure to obtain any desired tax treatment with respect thereto. The
rights, interests and obligations hereunder shall be binding upon the parties
hereto, their successor and their permitted assigns.
26. AMENDMENT AND WAIVER. This Agreement may be amended, modified,
superseded or canceled, and any of the terms, covenants, representations,
warranties or conditions hereof may be waived, only by a written instrument
executed by the parties hereto, or, in the case of a waiver, by or on behalf of
the party waiving compliance. The failure of any party at any time or times to
require performance of any provision hereof shall in no manner affect the right
at a later time to enforce the same. No waiver by any party of any condition, or
of any breach of any term, covenant, representation or warranty contained in
this Agreement, in any one or more instances, shall be deemed to be or construed
as a further or continuing waiver of any such condition or breach or a waiver of
any other condition or of any breach of any other term, covenant representation
or warranty. No course of dealing between or among any Persons having any
interest in this Agreement shall be deemed effective to modify, amend or
discharge any part of this Agreement or any rights or obligations of any Person
under or by reason of this Agreement.
27. EXPENSES. Whether or not the transactions contemplated hereby are
consummated, and except as otherwise specifically provided in this Agreement,
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby, including legal, due diligence, accounting and
investment banking fees and expenses, shall be paid by the party incurring such
costs or expenses.
28. HEADINGS. The section and paragraph headings contained in this
Agreement are for reference purposes only, and shall not in any way affect the
meaning or interpretation of this Agreement.
29. COUNTERPARTS. This Agreement may be executed simultaneously in one or
more counterparts (including by means of telecopied signature pages), all of
which shall be considered one and the same agreement, and shall become effective
when one or more such counterparts have been signed by each of the parties and
delivered to the other party.
30. INTERPRETATION. Unless the context requires otherwise:
(a) this Agreement includes this Asset Purchase Agreement and any other
agreement entered into by Buyer and Seller on the Closing Date or in
connection with the transactions contemplated hereby;
(b) the singular shall include the plural and the plural shall include the
singular and any gender shall include all other genders all as the
meaning and the context of the Agreement shall require;
(c) references to Sections and paragraphs refer to sections and
paragraphs, respectively, of this Agreement;
(d) references to Exhibits and Schedules are to exhibits and schedules
attached to this Agreement, each of which is hereby incorporated and
made a part of this Agreement for all purposes as if set forth in full
herein;
(e) the words "including," "include," "includes" and all variants thereof
mean "including, without limitation;"
(f) the words "hereof," "herein," "hereunder," "hereby," and other words
or similar import refer to this Agreement as a whole and not to any
particular Section, paragraph or sentence; and
(g) all references to "dollars" in this Agreement are to United States
dollars.
31. NO STRICT CONSTRUCTION. Notwithstanding the fact that this Agreement
has been drafted or prepared by one of the parties, Buyer and Seller confirm
that both they and their respective counsel have reviewed, negotiated and
adopted this Agreement as the joint agreement and understanding of the parties,
and the language used in this Agreement shall be deemed to be the language
chosen by the parties hereto to express their mutual intent, and no rule of
strict construction shall be applied against any Person.
32. SCHEDULES. As referenced herein, the word "Schedules" shall mean the
Schedules attached to this Agreement. The inclusion of information in the
Schedules hereto shall not be construed as an admission that such information is
material to the Pipeline Interest, the Purchased Assets, the Assumed Liabilities
or Seller. In addition, matters reflected in the Schedules are not necessarily
limited to matters required by this Agreement to be reflected in such Schedules.
Such additional matters are set forth for informational purposes only and do not
necessarily include other matters of a similar nature. The Schedules are
incorporated herein by reference and made a part hereof.
33. REPRESENTATION BY COUNSEL; INTERPRETATION. Buyer and Seller acknowledge
that each of them has been represented by counsel in connection with this
Agreement and the transactions contemplated hereby. Accordingly, any rule of law
or any legal decision that would require interpretation of any claimed
ambiguities in this Agreement against the party that drafted it has no
application and is expressly waived.
34. SEVERABILITY. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be valid and effective under applicable law,
but if any provision of this Agreement or the application of any such provision
to any Person or circumstance shall be held invalid, illegal or unenforceable in
any respect by a court of competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision hereof. In such event,
however, the parties shall negotiate in good faith to replace such invalid or
unenforceable provision with a valid and enforceable provision that places each
party in substantially the same position it would have been in had such original
provision been valid and enforceable.
35. BULK TRANSFER LAWS. Buyer hereby waives compliance by Seller with the
provisions of any so-called bulk transfer laws of any jurisdiction in connection
with the purchase and sale of the Purchased Assets; provided, however, that in
accordance with Section 15, Seller shall indemnify and hold Buyer harmless from
any Losses which Buyer may incur due to failure to comply with such laws.
36. NO THIRD PARTY BENEFICIARIES. Except as provided with respect to
indemnification as set forth in Section 15 and elsewhere in this Agreement,
nothing in this Agreement shall confer any rights upon any Person other than the
parties hereto and their respective successors and permitted assigns.
37. DEFINITION OF AFFILIATE. As used herein, the term "affiliate" shall
have the meaning set forth in Rule 405 promulgated under the Securities Act of
1933, as amended.
38. TIME OF ESSENCE. With regard to all rights and obligations of the
parties and all dates and time periods set forth or referred to in this
Agreement, time is of the essence.
39. NO CONDITIONS. For the avoidance of doubt, the only conditions to
closing are those set forth in Sections 12 and 13 herein, and no other covenants
or conditions set forth in this Agreement are intended to have any effect on the
Closing.
(Signatures on following page)
IN WITNESS WHEREOF, the parties have duly executed this instrument as of
the day and year first above written.
TESORO REFINING AND MARKETING COMPANY
By:
----------------------------------------
Name:
Title:
KANEB PIPE LINE OPERATING PARTNERSHIP L.P.
By: KANEB PIPE LINE COMPANY LLC,
its general partner
By:
----------------------------------------
Name:
Title:
