<PAGE>
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
Form 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) August 10, 1998
----------------
1-11392
(Commission File Number)
------------------------
CLARK REFINING & MARKETING, INC.
(Exact name of Registrant as specified in its charter)
Delaware 43-1491230
(State of incorporation) (I.R.S. Employer
Identification Number)
8182 Maryland Avenue, St. Louis, Missouri, 63105-3721
(Address of Registrant's principal executive office)
(314) 854-9696
(Registrant's telephone number)
- --------------------------------------------------------------------------------
<PAGE>
ITEM 2. ACQUISITION OF ASSETS
On August 10, 1998, Clark Refining & Marketing, Inc. ("Clark"), a wholly-
owned subsidiary of Clark USA, Inc. ("Clark USA") completed the purchase from BP
Exploration & Oil Inc., The Standard Oil Company, BP Oil Pipeline Company and BP
Chemicals Inc. (collectively, "BP") of BP's Lima, Ohio refinery, its Buckeye
Road crude oil terminal and Vine Street products terminal (collectively, the
"Lima Refinery") for $175 million, plus approximately $40 million for the
hydrocarbon inventory at the Lima Refinery on August 10, 1998 (the "Lima
Acquisition"). In addition, an estimated $50 million will be paid for crude oil
in transit currently owned by BP, the payment for which will occur over the two
months following August 10, 1998 as the crude oil is delivered to the Lima
Refinery. Such $50 million will be substantially funded through proceeds from
the sale of finished products over the same period.
The Lima Refinery is a single train, fully integrated coking refinery that
has a rated crude oil throughput capacity of approximately 170,000 barrels per
day ("bpd"), which is expected to increase Clark's crude oil throughput capacity
from its current 370,000 bpd to approximately 540,000 bpd. The Lima Refinery is
a highly automated, modern oil refinery with a Nelson complexity rating of 8.7
and an estimated replacement cost of $1.2 billion. The Midwest location of the
Lima Refinery has historically provided it with a transportation cost advantage
and less gross margin volatility than refineries in other regions since demand
for refined products has exceeded supply in the region. The Lima Refinery
complements Clark's existing assets in the region as it is located in existing
core retail and wholesale markets where Clark already has distribution
capability.
The Lima Refinery, which is located on a 650 acre site, was designed to
process light sweet crude oil and has historically run a predominately domestic
sweet crude oil slate. In addition to over five million barrels of on-site
storage and a rail products loading and unloading system, the Lima Refinery also
has access to a system of crude oil and product pipelines and terminals. At
approximately 170,000 bpd, the Lima Refinery is large enough to realize
economies of scale and other efficiencies. According to a 1994 industry study,
the Lima Refinery ranked in the 2nd quartile in terms of fixed costs and in the
1st quartile in operational availability, turnaround index and maintenance
index.
<TABLE>
<CAPTION>
Capacity (barrels per day,
Processing Unit except as noted)
--------------- --------------------------
<S> <C>
Crude unit................................. 170,000
Vacuum unit................................ 54,000
FCC unit................................... 40,000
Coker unit................................. 22,500
Reformer................................... 56,000
HDS........................................ 60,000
Isocracker................................. 26,000
Isomerization.............................. 18,500
Aromatics.................................. 25,500
Trolumen................................... 1,200
Hydrogen purification unit................. 1.2 mm scfh 90% H2
Sulfur recovery unit....................... 54 long tons
</TABLE>
Crude oil for the Lima Refinery can be obtained from a variety of sources
and transported through several crude oil pipelines. The Lima Refinery receives
100% of its crude oil supply via pipeline. Delivery routes include the Mid-
Valley, Salem-Stoy-Lima (SSL) and the Marathon pipeline systems as the three
crude pipeline systems with final delivery capability to the refinery, with
connections to Capline, Mobil, Ozark, IPL and other pipeline systems.
Historically, the Lima Refinery has been supplied by domestic crude oil moving
via the Mesa and West Texas Gulf pipeline into the Mid-Valley pipeline system.
Gulf Coast sourced foreign crude oil can be supplied to the Lima Refinery via
the LOOP/LOCAP system into Capline and then into the Lima Refinery either
through the SSL or Marathon pipeline systems. Canadian crude oil can be supplied
to the refinery through the IPL system which connects to the Marathon pipeline
system.
The Lima Refinery distributes products through several refined product
pipeline systems and by rail, truck or the adjacent Vine Street terminal. Most
refinery products are distributed by using the Buckeye or Inland Pipeline
Systems. The Buckeye Pipeline System is a publicly held, common carrier,
interstate pipeline system with connections throughout the Midwest. Through
Buckeye, the Lima Refinery has access to markets in Northern/Central Ohio,
Indiana, Michigan and Western Pennsylvania. The Inland Pipeline System is a
private intra-state system jointly owned by BP, Shell, Unocal and Sun and
available solely for their use.
The Lima Refinery is located in the U.S. Midwest PADD II (Petroleum Area
for Defense District), where demand for light products (gasoline and
distillates) has historically exceeded the region's refining production by
approximately 800,000 bpd. This light products shortfall has historically been
even more acute in Ohio. Ohio refining capacity is approximately 500,000 bpd.
However, even with this refining capacity, there are movements of approximately
130,000 bpd of light products into the state. Some of this additional light
product supply comes from
<PAGE>
refineries in adjoining states, including Michigan and Kentucky. Historically
there has been strong enough demand in Ohio to justify the cost of importing
production from other markets. Transportation costs for refined products from
the Gulf Coast to the Ohio market have averaged approximately $1.10 per barrel.
THE PURCHASE AGREEMENT
The following summary of the purchase agreement is qualified in its
entirety by reference to the applicable provisions of the Agreement for the
Purchase and Sale of Lima Oil Refinery, dated as of July 1, 1998, and the Letter
Amendment No. 1, dated August 10, 1998, to the Agreement for the Purchase and
Sale of Lima Oil Refinery, dated as of July 1, 1998, ("Purchase Agreement")
which are attached as exhibits hereto.
The Purchase Agreement provided for the purchase by Clark of all the
following: (i) the Lima Refinery, including all machinery and equipment used in
the operation of the Lima Refinery; (ii) the real property on which the Lima
Refinery is located, and certain related leased property; (iii) four crude oil
storage and blending tanks and the real property on which they are situated;
(iv) all hydrocarbon and non-hydrocarbon inventories at the Lima Refinery; (v) a
paid-up, nonexclusive, royalty-free license to use certain technology and
intellectual property of BP and its affiliates in the operation of the Lima
Refinery; and (vi) certain other assets as described in the Purchase Agreement
(collectively, the "Purchased Assets"). The purchase price for the Purchased
Assets equaled $175 million plus the market value of the hydrocarbon inventory
at the Lima Refinery at August 10, 1998, which is currently estimated at
approximately $40 million. In addition, an estimated $50 million will be paid
for crude oil in transit currently owned by BP, the payment for which will occur
over the two months following the Lima Acquisition as the crude oil is delivered
to the Lima Refinery. Such $50 million will be substantially funded through
proceeds from the sale of finished products over the same period. Clark also
agreed to assume and indemnify BP for all liabilities arising from the ownership
and operation of the Lima Refinery on or after August 10, 1998.
The Lima Refinery was purchased with limited representations, warranties
and closing conditions. Subject to certain terms and limitations set forth in
the Purchase Agreement, BP agreed to indemnify Clark for all environmental and
other liabilities and obligations arising from the ownership and operation of
the Lima Refinery prior to August 10, 1998 or from the breach by BP of any
representation, warranty or covenant contained in the Purchase Agreement.
Indemnity claims for breaches of representations and warranties (other than
environmental matters) and certain pre-acquisition covenants must be brought
within one year after the Closing. Certain environmental indemnity claims
(including for breaches of representations and warranties) must be brought
within 17 years after the Lima Acquisition. Except for environmental matters,
Clark will not have a claim against BP for breaches of representations and
warranties and certain pre-acquisition covenants until the aggregate of all
losses for such matters exceeds $3.5 million and BP's aggregate liability for
such losses will not exceed $25 million.
Clark has offered employment to the employees of the Lima Refinery.
However, because BP had previously announced that the Lima Refinery was to be
closed, many of such employees have accepted offers of employment with other
operations of BP. While BP has agreed to assist Clark in its efforts to retain
the Lima Refinery's employees, Clark has the risks associated with attracting
and retaining an appropriate workforce.
Clark agreed to convey to BP Chemicals Inc. ("BP Chemicals") 15 acres of
the Lima Refinery's property in order to permit BP Chemicals to proceed with the
previously announced construction of a 1:4 Butanediol Plant ("BDO Plant") at the
Lima Refinery site. The specific location of the BDO Plant will be mutually
agreed upon by Clark and BP Chemicals. In addition, Clark has assumed certain
agreements with BP Chemicals and BP Oil Pipeline Company providing for the
purchase and sale by the Lima Refinery of propylene and certain other chemicals.
Clark and the parties to such agreements agreed to negotiate in good faith to
seek to enter into new long-term agreements for the purchase and sale of
propylene and such other chemicals.
SUMMARY OF CLARK'S ESTIMATES REGARDING THE LIMA ACQUISITION
Introduction
BP has historically operated the Lima Refinery as a component of its
integrated global system and especially its Midwest refining and marketing
system. As a result, Clark believes that decisions such as those relating to
crude slate, yield, total throughput and capital expenditures were likely made
to optimize the performance of BP's entire integrated system, as opposed to that
of the Lima Refinery specifically. Clark is not acquiring the Lima Refinery's
sources of crude oil and other feedstocks, sales force, customer base or trade
names. There are no historical financial statements covering the Lima Refinery
on a stand-alone basis. Further, Clark believes any such financial statements
would not be meaningful for the reasons set forth above.
Clark's Estimates
Clark believes that the Lima Acquisition will provide an opportunity to
improve Clark's operating results and cash flow. Clark and an independent energy
consulting firm ("Independent Energy Consultant"), reviewed the historical and
proposed operation of the Lima Refinery. Clark's estimates represent the
operating results of the Lima Refinery as if Clark had acquired the assets on
January 1, 1997 and operated them during 1997 based on Clark's
2
<PAGE>
proposed operation of the Lima Refinery. Clark believes 1997 market prices are
appropriate since it is the last full year for which market prices are
available.
Clark's estimates, set forth below, were developed as follows: (i)
feedstocks and refined product yields were based on BP's linear program and
modified by Clark during due diligence based on the assets being acquired, and
results of the linear program were then compared to actual charges and yield
data (which resulted in higher crude oil throughput, but yields which were more
conservative than the actual yields generated by BP in 1997), (ii) gross margin
was calculated using the applicable 1997 market prices, (iii) operating expenses
were based on actual historical performance with adjustments for higher crude
oil throughput and Clark's expected mode of operation and (iv) general and
administrative costs were estimated for those services previously provided by
BP's corporate staff. As discussed above, because BP had previously announced
that the Lima Refinery was to be closed, many employees have accepted offers of
employment with other operations of BP. While BP has agreed to assist Clark in
its efforts to retain the Lima Refinery's employees, Clark assumed the risks
associated with attracting and retaining an appropriate workforce and may thus
incur higher employment-related costs initially.
Clark's estimates for the Lima Refinery included herein were not prepared
with a view toward compliance with published guidelines of the American
Institute of Certified Public Accountants or generally accepted accounting
principles. Neither Clark's independent auditors, nor any other independent
accountants, have compiled, examined or performed any procedures with respect to
Clark's or the Independent Energy Consultant's estimates regarding the Lima
Acquisition, contained herein, nor have they expressed any other form of
assurance on such information or its achievability, and assume no responsibility
for, and disclaim any association with the aforementioned estimates. These
figures represent Clark's best estimates of the operating and financial results
of the Lima Refinery had Clark operated it and the related assets in 1997 and
assuming Clark had been successful in implementing its anticipated changes and
expected mode of operation.
Clark's estimates and underlying assumptions were independently reviewed
and confirmed by the Independent Energy Consultant. The Independent Energy
Consultant was furnished with information concerning the Lima Refinery available
to Clark, conducted a site visit and discussed the operations of the Lima
Refinery with management of BP and of Clark. Clark did not place any limitations
upon the Independent Energy Consultant with respect to procedures followed or
factors considered by the Independent Energy Consultant in rendering its
opinion. In the Independent Energy Consultant's opinion, the assumptions
underlying Clark's estimates provide a reasonable basis for Clark's estimates,
and Clark's estimates are reasonable.
The success of Clark's planned operation of the Lima Refinery is subject to
uncertainties and contingencies beyond Clark's control, including business,
economic, regulatory and competitive uncertainties and contingencies. No
assurance can be given that the planned operations and anticipated benefits
would have been realized had Clark actually operated the Lima Refinery in 1997.
The gross margin and operating expense estimates are based on various
assumptions. Some of these assumptions may not materialize. Other assumptions
may materialize but in a subsequent period. Unanticipated events may occur
subsequent to the date of this document. The actual results achieved by Clark at
the Lima Refinery will vary from those set forth below and the variations may be
material. Consequently, the inclusion of the estimates herein should not be
regarded as a representation by Clark, the Independent Energy Consultant or any
other person that the estimates would have been achieved in 1997 or will be
achieved in the future. Prospective investors are cautioned not to place undue
reliance on these estimates.
Clark does not intend to update or otherwise revise the estimates to
reflect circumstances existing after the date hereof or to reflect the
occurrence of unanticipated events, even in the event that any or all of the
assumptions are shown to be in error. Furthermore, Clark does not intend to
update or revise the estimates to reflect changes in general economic or
industry conditions. Clark's regular quarterly and annual financial statements
will be included in Clark's Quarterly Reports on Form 10-Q and Annual Reports on
Form 10-K, which will be filed with the Securities and Exchange Commission.
Information contained in such financial statements will be deemed to supersede
the estimates.
Estimated 1997 Lima Refinery EBITDA
Clark estimates that the Lima Refinery would have generated $64.6 million
of earnings before interest, taxes, depreciation and amortization ("EBITDA") in
1997 after giving effect to the estimated processing rates, yields and operating
expenses. This estimate was based on (i) 1997 spot market prices for crude oil
and refined products adjusted for transportation differentials, (ii) feedstocks
and refined product yields based on the modification of BP's linear programming
model (which resulted in higher crude oil throughput, but yields which were more
conservative than the actual yields generated by BP in 1997), (iii) actual
historical operating expenses adjusted for higher throughput and Clark's mode of
operation and (iv) general and administrative costs estimated for those services
previously provided by BP's corporate staff.
Clark's estimates for the Lima Refinery based on 1997 market prices are as
follows:
3
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<TABLE>
<CAPTION>
1997 Estimate
---------------
($ in millions,
except as noted)
<S> <C>
Crude oil throughput (m bbls/day)........... 160.5
Production (m bbls/day)..................... 165.0
Gross margin ($/bbl of production).......... $ 2.82
Operating expenses ($/bbl of production).... 1.73
Gross margin................................ 170.1
Operating expenses.......................... 104.3
General and administrative costs............ 1.2
Refinery EBITDA (a)......................... $ 64.6
</TABLE>
- ------
(a) A $0.10 per barrel change in the realized gross margin or operating expenses
would have increased or decreased estimated operating cash flow by approximately
$6 million.
Refinery Feedstocks:
<TABLE>
<CAPTION>
1997 Actual 1997 Estimate
----------- -------------
(thousands of barrels per day) (thousands of barrels per day)
<S> <C> <C>
Light sweet crude oil........ 140.9 153.5
Light sour crude oil......... 12.5 7.0
Other........................ 7.7 3.6
===== =====
Total........................ 161.1 164.1
===== =====
Refinery Production:
1997 Actual 1997 Estimate
----------- -------------
(thousands of barrels per day) (thousands of barrels per day)
<S> <C> <C>
Gasoline..................... 82.6 81.7
Diesel fuel.................. 36.9 36.4
Jet fuel..................... 17.1 20.2
Petrochemical products....... 7.7 7.7
Other........................ 18.7 19.0
===== =====
Total........................ 163.0 165.0
===== =====
</TABLE>
Summary of Clark's Estimate Assumptions
In connection with the execution of the Purchase Agreement, Clark performed
limited due diligence on the Lima Refinery, including the review of information
provided by BP, discussions with the Lima Refinery manager and a preliminary
visit to the Lima Refinery. The results of this limited due diligence, together
with the more extensive due diligence performed in 1996, are the basis for
Clark's assumptions. The assumptions underlying the anticipated changes in
processing rates, yields and operating expenses are described below. The
estimates assume that (i) the Lima Acquisition occurred at January 1, 1997; (ii)
Clark successfully implemented its planned changes in processing rates, yields
and operating expenses; and (iii) BP assumed responsibility for environmental
remediation. Pursuant to the terms of the Purchase Agreement, Clark conduct a
more extensive due diligence review, including visits to the Lima Refinery and
interviews with key Lima Refinery personnel, between July 6 and July 10, 1998.
Feedstocks
Clark assumed that domestic and foreign crude oil would have been purchased
at market prices and transported via available pipeline routes at published
tariff rates for delivery to the Lima Refinery, which is consistent with
historical operation. The mix of foreign and domestic crude oil feedstocks was
consistent with
4
<PAGE>
historical throughputs. From 1995 to 1997, the Lima Refinery averaged
approximately 152,000 bpd of crude oil throughput and approximately 159,000 bpd
of total feedstocks. However, Clark believes the processing rates were limited
during this period due to the Lima Refinery's pending sale and closure. The
crude unit has a design capacity of approximately 170,000 bpd and processed
174,000 bpd for one week in November 1995. Therefore, Clark believes it can
achieve crude oil throughput of 160,500 bpd and total production of 165,000 bpd.
Clark believes there may be a further opportunity to optimize the crude oil
inputs into the Lima Refinery by selecting more optimal crude oil types, but
such opportunity was not included in Clark's estimates.
Yields
The Lima Refinery has historically been optimized as part of an integrated
system with BP's nearby Toledo refinery, the adjacent BP chemical operation and
the BP light product marketing network. As a result, Clark believes there is an
opportunity to optimize the Lima Refinery as a stand-alone operation to take
full advantage of the Lima Refinery's asset capability. Clark assumed the
products generated according to the linear programming model were sold at spot
market prices. The estimated product yields are more conservative than the
actual yields generated by BP in 1997.
Operating and General and Administrative Expenses
Clark adjusted historical operating expense levels of the Lima Refinery
principally for higher throughput levels and the replacement of self-insurance
with premium-based insurance. Incremental general and administrative costs were
added for functions previously provided by BP's corporate staff and not
allocated to the Lima Refinery.
Capital Investment
From 1991-1997, BP invested an aggregate of approximately $212 million in
the Lima Refinery. Based on due diligence, Clark expects mandatory capital
expenditures to average approximately $20 million per year for the period from
1999 to 2002 and turnaround expenses to cost approximately $30 million once
every five years. The Lima Refinery is scheduled to have the first such major
maintenance turnaround in 1999. Clark expects cash flows from the Lima Refinery
to be adequate to cover incremental financing and mandatory capital and
turnaround costs.
PURCHASE FINANCING
To fund the purchase of the Lima refinery and certain related assets, Clark
(i) issued $110 million of 8 5/8% Senior Notes Due 2008 (the "Notes") in a
private placement to "qualified institutional buyers" and to non "U.S. persons"
(as defined in Rule 144A and Regulation S, respectively, of the Securities Act),
(ii) borrowed $115 million under a term loan agreement, dated as of August 10,
1998, among Clark, certain lenders and Goldman Sachs Credit Partners L.P., as
agent and (iii) used $5 million of available cash.
The Notes will mature on August 15, 2008, and will be redeemable at the
option of Clark, in whole or in part, at any time on and after August 15, 2003
at 104.312% of principal amount thereof, plus accrued interest, reducing to
102.156% of principal amount thereof, plus accrued interest on August 15, 2004,
and to 100% of the principal amount thereof, plus accrued interest on August 15,
2005. In addition, up to 35% of the aggregate principal amount of the Notes may
be repurchased at a redemption price of 108.625% of the principal amount with
the proceeds from certain equity offerings.
Clark entered into the First Amended and Restated Credit Agreement dated as
of August 10, 1998 (the "Term Loan") with a group of lenders led by Goldman,
Sachs Credit Partners, L.P., as administrative agent. The Term Loan amends and
restates a credit agreement, dated as of November 21, 1997 and provides for an
unsecured term loan of $115 million. The proceeds of the loan were used to fund
a portion of the purchase price of the Lima Acquisition. Interest under the Term
Loan is a floating rate equal to the London Interbank Offered Rate plus 2.75%.
The loans are scheduled to be repaid by November 15, 2004.
The Notes and Term Loan contain covenants and conditions which, among other
things, limit dividends, indebtedness, liens, investments, asset sales and
mergers.
In order to support the increased crude oil requirements of the Lima
Refinery, Clark amended its revolving facility to increase its size from $400
million to the lesser of $700 million or the amount available under a borrowing
base, as defined, representing specified percentages of cash, investments,
accounts receivable, inventory and other working capital items. Clark also
increased the borrowing sublimit from $50 million to $150 million.
FORWARD-LOOKING STATEMENTS
The statements in this Form 8-K that are not historical information are
forward-looking statements within
5
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the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Words such as "expects," "intends," "plans,"
"projects," "believes," "estimates" and similar expressions are used to identify
such forward-looking statements. Any forward-looking statements are not
guarantees of future performance, involve significant risks and uncertainties
and actual results may vary materially from those in the forward-looking
statements as a result of various factors.
Among the factors that could cause actual results to differ materially are
changes in industry-wide refining margins, changes in crude oil and other raw
material costs, and world and regional events that could significantly increase
volatility in the marketplace. Clark's crude oil supply could be affected by
factors beyond its control, such as embargoes, the continued discovery and
production of light sweet crude oil, or military conflicts between (or internal
instability in) one or more oil-producing countries. Clark's business is also
affected by the continued availability of debt and equity financing, changes in
labor relations, general economic conditions (including recessionary trends,
inflation and interest rates), market supply and demand for Clark's products,
the reliability and efficiency of Clark's operating facilities, the level of
operating expenses and hazards common to operating facilities (including
equipment malfunctions, plant construction/repair delays, explosions, fires, oil
spills and severe weather effects), actions taken by competitors (including both
pricing and expansion and retirement of refinery capacity in response to market
conditions), and civil, criminal, regulatory or administrative actions, claims
or proceedings (including domestic and international political, legislative,
regulatory and legal actions and regulations dealing with protection of the
environment, including gasoline composition and characteristics). Unpredictable
or unknown factors not discussed herein could also have material adverse effects
on forward-looking statements.
Although Clark believes that its expectations regarding future events are
based on reasonable assumptions, it can give no assurance that these are all the
factors that could cause actual results to vary materially from the forward-
looking statements or that its expectations regarding future developments will
prove to be correct.
6
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<TABLE>
<CAPTION>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
Exhibit Number Title
- -------------- -----
<C> <S>
2.1 Agreement for the Purchase and Sale of Lima Oil Refinery, dated
as of July 1, 1998 between BP Exploration & Oil Inc., The
Standard Oil Company, BP Oil Pipeline Company, BP Chemicals Inc.
and Clark Refining & Marketing, Inc.
2.2 Letter Amendment No. 1, dated August 10, 1998, to Agreement for
Purchase and Sale of Lima Oil Refinery dated July 1, 1998.
</TABLE>
7
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CLARK REFINING & MARKETING, INC.
By: /s/ Maura J. Clark
----------------------------
Name: Maura J. Clark
Title: Executive Vice President,
Corporate Development and
Chief Financial Officer
Date: August 21, 1998
8
<PAGE>
<TABLE>
<CAPTION>
Exhibit Index
-------------
Exhibit Number Title
- -------------- -----
<C> <S>
2.1
Agreement for the Purchase and Sale of Lima Oil Refinery
between BP Exploration & Oil Inc., The Standard Oil Company,
BP Oil Pipeline Company, BP Chemicals Inc. and Clark
Refining & Marketing, Inc.
2.2
Letter Amendment No. 1, dated August 10, 1998, to Agreement
for Purchase and Sale of Lima Oil Refinery dated July 1,
1998.
</TABLE>
9
<PAGE>
EXHIBIT 2.1
AGREEMENT FOR THE PURCHASE
AND SALE OF LIMA OIL REFINERY
Between
BP EXPLORATION & OIL INC.
THE STANDARD OIL COMPANY
BP OIL PIPELINE COMPANY
BP CHEMICALS INC.
and
CLARK REFINING & MARKETING, INC.
<PAGE>
<TABLE>
<CAPTION>
INDEX
<S> <C>
Index......................................................................
Index to Schedules.........................................................
Index to Exhibits..........................................................
Table of Contents..........................................................
Index to Defined Terms.....................................................
Agreement For The Purchase And Sale of Lima Oil Refinery...................
</TABLE>
<PAGE>
INDEX TO SCHEDULES
<TABLE>
<CAPTION>
SCHEDULE DESCRIPTION SECTION REFERENCES
- -------- ----------- ------------------
<S> <C> <C>
A. Improvements, machinery and equipment 1.A., 7.G.
B. Material Contracts 1.F., 5.A., 7.J., 11.B.
C. Proprietary Rights 1.H., 7.K.
D. Support Services 2.C.
E. Inventory Valuation 1.D., 3.B., 4.
F. Consents/Non-Compliance with Laws 7.C., 7.H.
G. Motor Vehicles 1.E., 7.G.
H. Litigation/Claims 7.L., 10.D.
I. Environmental Disclosures 7.H., 7.L., 8., 10.D.
J. Collective Bargaining 7.M., 12.
K. Absence of Certain Changes 7.N., 11.B.
L Remediation Equipment 2.G., 8.G.
M. Benefit Plans 12.
N. Involuntary Separation Plan 12.B.(i)
O. Actuarial Assumptions 12.B.
P. Operating and Financial Information 7.P.
W. Required Consents 10.C.
X. Gross Margin Calculation 3.A.
</TABLE>
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION SECTION REFERENCES
- ------- ----------- ------------------
<S> <C> <C>
1. Refinery Deed 1.B., 1.C., 6.B., 7.E.
1.A. Vine Street Terminal Deed 1.B., 6.B.
2. Crude Oil Storage Tanks Property Deed 1.C., 6.B.
2.A. Assignment of Pipeline Agreements 6.D.
2.B. Sketch of Pipelines 1.C.
3. Technology Transfer and License
Agreement 1.H., 2.J., 6.D.
4. Bill of Sale 6.B.
4.A. Statement of Title 6.B.
5. Assignment of Leases/Licenses
(BPO is Lessee/Licensee) 1.B., 6.D., 7.E.
6. Assignment of Leases/Licenses
(BPO is Lessor/Licensor) 6.D., 7.E.
7. Assignment of Leases/Licenses
(BP Pipelines is Lessor/Licensor) 6.D., 7.E.
8. Intermediates and Unfinished
Products Supply Agreements 6.D.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
1. SALE OF REFINERY.................................................... 1
2. EXCLUDED ASSETS..................................................... 3
3. DEPOSIT AND PURCHASE PRICE.......................................... 5
4. HYDROCARBON INVENTORY VALUE......................................... 6
5. ASSUMPTION OF LIABILITIES........................................... 7
6. CLOSING............................................................. 9
7. SELLER'S REPRESENTATIONS AND WARRANTIES............................. 11
8. ENVIRONMENTAL....................................................... 17
9. DISCLAIMER.......................................................... 26
10. BUYER'S REPRESENTATIONS AND WARRANTIES.............................. 27
11. PARTIES' OBLIGATIONS PENDING THE CLOSING DATE....................... 28
12. EMPLOYEES and BENEFITS.............................................. 31
13. BUYER'S OBLIGATION TO CLOSE......................................... 37
14. SELLER'S OBLIGATION TO CLOSE........................................ 38
15. FURTHER ASSURANCES/BDO PLANT/PROPYLENE.............................. 39
16. INDEMNIFICATION..................................................... 42
17. TRANSFER TAXES/PRORATION............................................ 49
18. RECORDS/LITIGATION ASSISTANCE....................................... 49
19. TERMINATION RIGHTS.................................................. 50
20. INLAND SYSTEM....................................................... 50
21. CHANGE IN OWNERSHIP................................................. 50
22. NOTICES............................................................. 51
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C>
23. GOVERNING LAW....................................................... 51
24. PUBLICITY........................................................... 51
25. GENERAL............................................................. 51
26. NO THIRD PARTY BENEFICIARIES........................................ 53
INDEX...................................................................... i
INDEX TO SCHEDULES......................................................... ii
INDEX TO EXHIBITS.......................................................... iii
INDEX TO DEFINED TERMS..................................................... vi
</TABLE>
<PAGE>
Index To Defined Terms
<TABLE>
<CAPTION>
Term Section
- ---- -------
<S> <C>
ABO................................................................ 12.B.(iv)
affiliate.......................................................... 27.
Agreement.......................................................... Introduction
Assumed Liabilities................................................ 5.A.
Benefit Plans...................................................... 12.A.(i)
BPA Medical Plans.................................................. 12.B.(ii)
BPC................................................................ Introduction
BP Group........................................................... 2.C.
BP Pipelines....................................................... Introduction
BPO................................................................ Introduction
BDO Plant.......................................................... 15.B.
Buckeye Road Property.............................................. 1.C.
Buyer.............................................................. Introduction
Buyer Indemnified Party............................................ 16.B.
Central Staff Services............................................. 2.C.
CERCLA............................................................. 8.A.(iii)
Closing............................................................ 6.A.
Closing Date....................................................... 6.A.
Code............................................................... 3.C.
Compliance Action.................................................. 8.A.(i)
Confidentiality Agreement.......................................... 11.A.
Consent............................................................ 7.C.
Contained Hazardous Substances..................................... 8.C.(i)
Contracts.......................................................... 1.F.
Corrective Action.................................................. 8.A.(ii)
Data............................................................... 11.A.
DC Plans........................................................... 12.B.(v)
Deepwell Injection................................................. 8.C.(i)(b)
Deposit............................................................ 3.A.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Term Section
- ---- -------
<S> <C>
Deposit Return Event............................................ 3.A.
Employee(s)..................................................... 12.A.(i)
Environmental Laws.............................................. 8.A.(iii)
Environmental Permit............................................ 8.A.(iv)
ERISA........................................................... 12.A.
Estimated Inventories Value..................................... 4.
Excluded Assets................................................. 2.
Excluded Employees.............................................. 12.B.(i)
Excluded Liabilities............................................ 5.B.
FMLA............................................................ 12.B.(i)
FERC............................................................ 20.
Final Inventories Value......................................... 4.
H-S-R Act....................................................... 6.A.
Hazardous Substance............................................. 8.A.(v)
Hydrocarbon Inventories......................................... 1.D.(i)
including....................................................... 25.E.(v)
Indemnification................................................. 16.E.
Indemnified Party............................................... 16.E.(i)
Indemnify....................................................... 16.A.
Indemnifying Party.............................................. 16.E.(i)
Independent Consultant.......................................... 16.D.(iii)
Inland.......................................................... 20.
Inland System................................................... 20.
Inventories..................................................... 1.D.
Knowhow......................................................... 1.H.
Leased Property................................................. 1.B.
Licensee........................................................ 8.E.(i)
Loss(es)........................................................ 16.A.
LPF Spares...................................................... 1.D.2.
MHP............................................................. 12.B.(iv)
Major Contracts................................................. 7.J.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Term Section
- ---- -------
<S> <C>
Mirror Plans...................................................... 12.B.(iv)
Mirror Savings Plans.............................................. 12.B.(v)
Owner............................................................. 8.E.(i)
PBGC.............................................................. 12.A.(vi)(b)
Pension Plans..................................................... 12.A.(i)(b)
Permits........................................................... 1.G.
Person............................................................ 7.C.
Proprietary Rights................................................ 7.K.
PBGC.............................................................. 12.A.(vi)(b)
PUCO.............................................................. 20.
Purchased Assets.................................................. 1.
RAP............................................................... 12.B.(iv)
Records........................................................... 18.A.
Refinery.......................................................... Introduction
Refinery Costs.................................................... 7.P.(ii)
Refinery Property................................................. 1.B.
Related Agreements................................................ 25.E.
Represented Employees............................................. 12.B.(iv)
Resignees......................................................... 12.C.
Seller............................................................ Introduction
Seller Indemnified Party.......................................... 16.A.
Seller's Knowhow.................................................. 1.H.
Seller's Knowledge................................................ 7.
Solar Line........................................................ 1.C.
Standard.......................................................... Introduction
Tanks............................................................. 1.C.
Taxes............................................................. 7.0(i)
Technology Transfer and License Agreement......................... 1.H.
Threshold......................................................... 16.H.
to the best of Seller's knowledge................................. 7.
Transfer Amount................................................... 12.B.(iv)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Term Section
- ---- -------
<S> <C>
Transfer Date..................................................... 12.B.(v)
Transferred Employees............................................. 12.B.(i)
WARN.............................................................. 12.F.
Waste Unit........................................................ 8.A.(vi)
</TABLE>
<PAGE>
AGREEMENT FOR THE PURCHASE AND SALE OF
LIMA OIL REFINERY
THIS AGREEMENT for the purchase and sale of assets ("Agreement") is
made as of the 1st day of July, 1998 by and between BP Exploration & Oil Inc.,
an Ohio corporation ("BPO"), The Standard Oil Company, an Ohio corporation
("Standard"), and BP Oil Pipeline Company, a Delaware corporation ("BP
Pipelines") and BP Chemicals Inc., an Ohio corporation ("BPC") on the one hand
(collectively "Seller"), and Clark Refining & Marketing, Inc., a Delaware
corporation ("Buyer") on the other hand.
W I T N E S S E T H:
WHEREAS, Seller wishes to sell its Lima Oil Refinery and Vine Street
Terminal (collectively the "Refinery") and certain associated assets as further
described in Section 1 and Buyer wishes to purchase such on the terms herein set
forth;
NOW, THEREFORE, in consideration of the mutual promises made herein,
and subject to the conditions hereinafter set forth, the parties agree as
follows:
1. SALE OF REFINERY. Seller agrees to sell, assign (subject to the
provisions of Section 11.F.), convey, transfer and deliver to Buyer, as of the
Closing Date (as defined in Section 6.), and Buyer agrees to purchase from
Seller as of the Closing Date, all of Seller's rights, title and interest in the
following (the "Purchased Assets"):
A. The Refinery located in Shawnee Township, Ohio including all
machinery and equipment used by Seller in the operation of the
Refinery, major items of which are listed on Schedule A;
B. The real property on which the Refinery is situated as more
particularly described in the real property deeds attached as
Exhibit 1 and Exhibit 1.A. including the improvements to such
real property together with all appurtenances thereto and the
fixtures thereon (the "Refinery Property"), and the leased or
licensed property described on the Assignment of Leases/Licenses
(BP as Lessee/Licensee) attached as Exhibit 5 (the "Leased
Property");
C. Four crude oil storage and blending tanks (the "Tanks") and the
real property on which the Tanks are situated as more
particularly described in the real property deed attached as
Exhibit 2 together with all appurtenances thereto ("Buckeye Road
Property") and Seller's rights to (i) the crude oil pipeline
between the real property described in Exhibit 1 and the Tanks,
including all easements related thereto; (ii) the #3 and #6
product pipelines between the real property described in Exhibit
1. and the Buckeye Pipeline, including all easements related
thereto; (iii) the 20" crude line from the outside flange of the
wafer check valve on the manifold of the Marathon Terminal to the
Tanks, including all easements related thereto; and (iv) the
"Solar Line" running from the
<PAGE>
2
flange connection to the Marathon crude line to the valve
connection to the valve receiving crude from the SSL line,
including all easements related thereto; the pipelines referred
to in the foregoing subsections (i), (ii), (iii) and (iv) are
generally depicted on Exhibit 2.B. attached hereto; including all
real property rights appurtenant to such pipelines;
D. The hydrocarbon and non-hydrocarbon inventories of the Refinery
(collectively the "Inventories") as follows:
(i) the following hydrocarbon inventories (the "Hydrocarbon
Inventories") which will be measured and valued in
accordance with the provisions of Parts E.1. and E.2 of
Schedule E, all crude oil inventories at, or in transit to,
the Refinery, the inventories in the Tanks, the refined and
intermediate product inventories at the Refinery, the
additives at the Refinery and all butanes held for Seller's
account at TET's Todhunter facility, but excluding all
finished and unfinished products which have left the
Refinery and are enroute to any customer (including members
of the BP Group) as of the Closing Date; and
(ii) all non-hydrocarbon inventories located at the Refinery,
which will be the chemicals and catalyst inventories and the
stores inventory (which includes maintenance spares and
capital spares) but excluding inventories and parts on site
not affixed to the realty that were intended for
construction of the Lima Petrochemical Facility and Terminal
(the "LPF Spares"), all of which are included in the
Purchase Price;
E. All right, title and interest of Seller to the trucks, vehicles,
and other personal property used at the Refinery including, but
not limited to, the motor vehicles listed in Schedule G;
F. All of Seller's agreements, commitments or contracts
("Contracts") for Refinery or its operations, the material ones
of which are listed on Schedule B;
G. All assignable or transferable permits or licenses from any
federal, Ohio or local regulatory agencies which are necessary to
or used in connection with the ownership and operation of the
Refinery including the Environmental Permits ("Permits");
H. Subject to and in accordance with the technology transfer and
license agreement attached as Exhibit 3, (the "Technology
Transfer and License Agreement") a paid-up, nonexclusive, royalty
free license to use in the operation of the Refinery, proprietary
information of Seller and its affiliates, whether patented or
unpatented ("Seller's Knowhow"), and
<PAGE>
3
Seller's rights under any technology or knowhow licenses listed
on Schedule C. Seller's Knowhow and the rights under the
licenses listed on Schedule C are collectively referred to as the
"Know-How";
I. The Seller's computer and accounting systems located at the
Refinery used exclusively for the Refinery, and rights to license
from Seller pursuant to Section 1.H. certain of Seller's computer
and accounting systems which are not exclusively used for the
Refinery;
J. All other assets and other rights, excluding the Excluded Assets,
owned or leased by, or licensed to or used by Seller and located
at the Refinery or used in the operation of the Refinery as it is
currently operated in the ordinary course of business;
K. Subject to Section 2.E. below, all operating records, data and
other materials (in any form or medium) relating exclusively to
or necessary for the operation of the Refinery, including,
without limitation, all books, records, cost and pricing
information, accounting records, supplier lists and records;
training materials and equipment, training records and archives;
and technical publications and related data; and
L. PC has an unrecorded interest in certain parts of the
Refinery pursuant to that certain Asset Transfer and Use
Agreement with BPO dated effective as of January 1, 1998.
Subject to the terms and conditions of this Agreement, BPC
hereby (without the need for any further action on the part
of Seller or Buyer) conveys to Buyer, effective at Closing,
with limited warranty covenants, all of BPC's right, title
and interest in the Purchased Assets, excluding the Excluded
Assets.
2. EXCLUDED ASSETS. Seller shall retain and not sell, convey,
transfer or deliver to Buyer, and Buyer shall not purchase from Seller the
following assets, each of which is specifically excluded from the Refinery being
sold hereunder (the "Excluded Assets"):
A. Cash and marketable securities, whether located at the Refinery,
on deposit, or in transit;
B. Accounts and notes receivable as of 12:01 a.m. Eastern time on
the Closing Date including, but not limited to, payments for all
finished and unfinished products which have left the Refinery and
are enroute to any customer (including members of the BP Group),
prior to the Closing Date, provided that all accounts receivable
with respect to any Inventories included or to be included in the
Final Inventories Value shall constitute Purchased Assets and
shall not be Excluded Assets;
<PAGE>
4
C. Assets owned by Central Staff Services of Seller, its parents,
subsidiaries or affiliates (the "BP Group") not located at the
Refinery; the term "Central Staff Services" meaning the legal,
government affairs, cash management, treasury, tax, insurance,
health and safety and staff development and pension services,
payroll, employee benefits funds and plans, recruiting provided
to the Refinery by the BP Group including employee and other
records necessary to administer salaried payrolls and benefits
and welfare plans retained by Seller and to file tax returns, and
the support services described on Schedule D;
D. Tax refunds arising out of Taxes relating to the Purchased Assets
accruing to or for any period, or portion thereof, ending on or
prior to the Closing Date;
E. All forecasts, financial information or financial statements and
proprietary manuals (except rights to use manuals specific to or
necessary for the operation of the Refinery) prepared by or used
by the BP Group to the extent not relating exclusively to the
Refinery or its operations, and copies of and subscriptions to
third-party reports (such as the Pace Report);
F. All proprietary BP Group computer systems and software, subject
to the provisions of Section 1.H.;
G. Remediation equipment used primarily for investigation, cleanup
or treatment of contamination in the soil or groundwater at the
Refinery as listed on Schedule L;
H. Defenses and claims that Seller could assert against third
parties other than claims which Seller could assert on account of
matters or acts as to which Buyer has agreed to assume liability
or as to matters to the extent Buyer is entitled to be
Indemnified by Seller pursuant to this Agreement;
I. Any assets, property improvements, equipment or goods located at
the Refinery which are not owned by Seller, such as leased office
equipment copiers, telephones, and other items of a type normally
leased the contracts and commitments for which are included in
the Contracts referenced in Sections 1.F. and 1.J.;
J. The items listed on Appendix B to Exhibit 3;
K. All service marks, trademarks, tradenames, trade dress or other
indicia of origin of Seller and variants thereof including but
not limited to the following: the letters BP, a shield device,
and the phrase BP Oil;
<PAGE>
5
L. Communications and computer equipment located at the real
property referred to in Section 1.C. used exclusively in the
business of BP Pipelines;
M. The Vine Street Terminal includes a garage, 3
technicians/mechanics, and 9 truck drivers which serve other BP
Group terminal activities in the region. These individuals, the
garage and any vehicles at the Vine Street garage will be
excluded from this transaction. Between the date hereof and the
Closing, Buyer and Seller will negotiate in good faith to agree
on the most efficient way of causing the exclusion of this
operation to take place with minimal mutual impact; and
N. The LPF Spares.
3. DEPOSIT AND PURCHASE PRICE.
A. Deposit. On the date hereof, the Buyer shall pay to the Seller in
immediately available funds, by wire transfer to Seller's account
number 2092551 at National City Bank, Cleveland (ABA or Transit
Routing Number 041000124) a non-refundable deposit against the
Purchase Price in an amount equal to ten percent (10%) of the
amount specified in Section 3.B(i) (the "Deposit"). The Deposit
shall be non-refundable in that it shall not be returned to the
Buyer under any circumstances except if this Agreement is
terminated and a Deposit Return Event (as defined below) has
occurred in which event the Seller shall promptly (and in no
event later than two business days after such termination)
transfer to Buyer, in immediately available funds by wire
transfer to an account designated by the Buyer, a cash amount
equal to the Deposit. Seller acknowledges and agrees that in the
event of any breach of a representation, warranty, covenant or
agreement by Buyer prior to the Closing, Seller's sole and
exclusive remedy shall be to terminate this Agreement to the
extent permitted by Section 19.A.(ii) and retain the Deposit as
liquidated damages. As used herein the term "Deposit Return
Event" means the occurrence of any of the following:
(i) Between the date hereof and the Closing there shall have
occurred any damage, destruction, or other casualty losses
with respect to the Purchased Assets that, individually or
in the aggregate, could reasonably be expected to either (1)
as determined pursuant to Schedule X, result in a Current
Gross Margin (as defined in Schedule X) less than the Base
Gross Margin (as defined in Schedule X) or (2) have an
estimated cost to repair or replace of more than Seventeen
Million Five Hundred Thousand Dollars $17.5 million;
(ii) Prior to the date hereof, there shall have occurred any
damage,
<PAGE>
6
destruction, or other casualty losses with respect to the
Refinery, any disposition or demolition of any assets used
at the Refinery or state of repair of the Purchased Assets
(excluding normal wear and tear and conditions normally
occurring between turnarounds and expected to be corrected
in the 1999 turnaround) that, individually or in the
aggregate, could reasonably be expected to either (1) as
determined pursuant to Schedule X, result in a Current Gross
Margin (as defined in Schedule X) less than the Base Gross
Margin (as defined in Schedule X) or (2) have an estimated
cost to repair or replace of more than Seventeen Million
Five Hundred Thousand Dollars $17.5 million;
B. Purchase Price. In consideration for the Purchased Assets, Buyer
shall pay to Seller or its affiliates on the Closing Date in
immediately available funds, by wire transfer to Seller's account
number 2092551 at National City Bank, Cleveland, Ohio (ABA or
Transit Routing Number 041000124) an amount equal to: (i) One
Hundred Seventy Five Million Dollars ($175,000,000.00), and (ii)
an amount equal to the Estimated Inventory Value, as defined in
Section 4 below, subject to adjustment for the Final Inventories
Value as specified in Schedule E, (iii) less an amount equal to
the Deposit; and (iv) assume and agree to pay and perform the
liabilities and obligations of Seller specified in Section 5
below relating to the Purchased Assets.
C. Purchase Price Allocation. Buyer and Seller shall agree on an
allocation of the Purchase Price (including any adjustments
thereto) among the parties pursuant to the provisions of Section
1060 of the Internal Revenue Code of 1986, as amended (the
"Code") and the regulations promulgated thereunder. Buyer and
Seller shall not take any position on their respective Tax
Returns that is inconsistent with the allocation of the Purchase
Price. Buyer and Seller shall duly prepare and timely file such
reports and information returns as may be required under Section
1060 of the Code and the regulations promulgated thereunder, and
report the allocation of the Purchase Price among the Assets as
so agreed. Any adjustments to Purchase Price shall be allocated
in the same manner.
4. HYDROCARBON INVENTORY VALUE. "Estimated Inventories Value" shall
mean an amount equal to Seller's good faith estimate of the value of the
Hydrocarbon Inventories at the Refinery and in the Tanks (Hydrocarbon
Inventories in transit to the Refinery will be valued and paid in accordance
with Schedule E.) using prices for crude oil, products and intermediate products
in effect on the eighth day prior to Closing to be provided to Buyer by Seller
by fax on a date not later than five (5) business days prior to the Closing
Date. The "Final Inventories Value" shall be the sum of final inventory value
for Hydrocarbon Inventories determined in accordance with Schedules E.1 and E.2.
If the Final
<PAGE>
7
Inventories Value is greater than the Estimated Inventories Value within five
(5) business days of the final determination of the value of the Hydrocarbon
Inventories in accordance with Schedule E, Buyer will pay Seller a sum of money
equal to such difference. If the Final Inventories Value is less than the
Estimated Inventories Value, Seller will pay Buyer a sum of money equal to such
amount within five (5) business days of the final determination of the value of
the Hydrocarbon Inventories in accordance with Schedule E., in either case on a
dollar for dollar basis in immediately available funds, plus interest from the
Closing Date until the payment is made at a rate seven percent (7%) per annum
from the Closing Date until a date which is thirty (30) days after final
determination of the value of the Hydrocarbon Inventories, and which thereafter
increases, on a cumulative basis, by an additional one percent (1%) per annum
per month, or part thereof, until the date the payment is made.
5. ASSUMPTION OF LIABILITIES.
-------------------------
A. On the Closing Date Buyer will, without the need for any further
action on the part of Buyer or Seller, be deemed to assume and
agree to pay and perform, and Indemnify, defend and hold Seller
harmless against all of the liabilities and obligations of Seller
arising out of or relating to the below listed liabilities (the
"Assumed Liabilities"):
(i) all liabilities or obligations to customers, suppliers and
other third parties, arising from the ownership of the
Purchased Assets or the operation of the Refinery after
the Closing Date other than the Excluded Liabilities, as
well as the terms and conditions to be observed, performed
or fulfilled on or after the Closing Date (other than
those required by their terms to be performed prior to the
Closing Date) for all of the Contracts including the Major
Contracts listed on Schedule B.; and
(ii) liabilities for compliance with the Permits transferred to
Buyer pursuant to the Agreement, including the
Environmental Permits transferred to Buyer pursuant to the
Agreement, after the Closing Date, except for liabilities
arising out of or related to Seller's non-compliance with
the Permits prior to the Closing Date.
B. The liabilities of the Seller transferred to Buyer shall exclude
any liabilities or other obligations other than the Assumed
Liabilities (the "Excluded Liabilities"). The Excluded
Liabilities include:
(i) any obligation or liabilities of Seller or its affiliates
for Taxes (including deficiencies, interest and penalties
relating thereto) accruing to or for any period ending on
or prior to the Closing Date except to the extent provided
otherwise in Section 17;
(ii) any obligation or liability for any expenses (including
without
<PAGE>
8
limitation, income/franchise and other Taxes and
attorneys' fees and accountants' fees other than as
provided in Section 17.B.) incurred in connection with the
transactions contemplated by this Agreement;
(iii) any brokerage or finder's fees payable by BP Group in
connection with the transactions contemplated hereby;
(iv) any obligation or liability if any arising out of death,
personal injury or property damage from events and/or
occurrences caused by or relating to the pre-Closing Date
operations of the Purchased Assets;
(v) liability for pre-closing real property taxes and charges
as prorated in accordance with Section 17.B.;
(vi) liabilities and obligations with respect to workers'
compensation claims by or on behalf of active or former
employees of the Purchased Assets for traumatic or
occupational injuries (including exposure claims)
occurring prior to the Closing Date. In the event that the
date of injury cannot be readily determined, the
controlling date of the event shall be determined by the
date of occurrence established or adjudicated by the Ohio
Industrial Commission;
(vii) liability for the lawsuit entitled Venture Coke Company v.
BP Oil Company, filed in the U.S. District Court, Southern
District of New York, Case 98 Civ. 1526;
(viii) any liability or obligation in respect of indebtedness for
borrowed money of the Seller or its affiliates;
(ix) any liability or obligation with respect to which Buyer is
Indemnified pursuant to Section 8 or 16.B.(iv) through
16.B.(viii);
(x) any liability or obligation with respect to any accounts
payable or except as provided in Section 12.B., employee
costs and expenses (including, without limitation, accrued
payroll expenses and payroll taxes and employee bonus and
benefits costs) relating to the Purchased Assets or its
operations as of or prior to the Closing Date, in each
case determined in accordance with generally accepted
accounting principles as in effect in the United States at
the Closing Date. Anything to the foregoing
notwithstanding (A) all accounts payable with respect to
any Inventories included or to be included in the Final
Inventories
<PAGE>
9
Value shall be an Excluded Liability and (B) except as
provided in Section 12.B., any bonus or employee benefit
cost payable after the Closing with respect to a service
period beginning prior to the Closing shall be included as
an Excluded Liability based on a pro rata allocation of such
cost determined by reference to the number of days in such
service period prior to the Closing Date and the number of
days in such service period on or after the Closing Date;
and
(xi) any other liability or obligation not set forth in clauses
(i) through (xi) arising from or in connection with, the
ownership of the Purchased Assets or the conduct of the
Refinery's operation prior to the Closing Date, provided
that for each calendar year after the Closing such
liabilities and obligations shall constitute Excluded
Liabilities only to the extent that the aggregate Losses
suffered by the Buyer Indemnified Parties in respect of such
liabilities and obligations is in excess of Fifty Thousand
Dollars ($50,000) in such calendar year (with the remainder
of 1998 being regarded as one calendar year).
6. CLOSING.
A. Subject to the parties' satisfaction with the conditions
precedent set forth in Sections 13 and 14, the Closing under this
Agreement (the "Closing") shall take place at 10 A.M. local time
at the offices of Seller at 200 Public Square, Cleveland, Ohio,
on a business day which is not later than the later of (x) five
(5) business days after the expiration of the waiting period, or
any extension thereof (without challenge), provided for in the
Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended
(the "H-S-R Act"), if a filing is required, or (y) any later date
on or prior to August 7, 1998 that Buyer may elect or as the
parties may otherwise agree. The date of the Closing is referred
to herein as the "Closing Date."
A. Seller shall deliver to Buyer on the Closing Date the following:
(i) duly executed limited warranty deeds for the real property
portion in the forms and in accordance with the substance
attached as Exhibits 1, 1.A. and 2;
(ii) a duly executed general bill of sale for the personal
property at the Refinery, in the form and in accordance
with the substance attached as Exhibit 4;
(iii) a certified copy of the resolution(s) adopted by the Board
of Directors of Seller authorizing the transactions
contemplated by
<PAGE>
10
this Agreement and authorizing specified individuals to act
on behalf of the Seller in connection therewith;
(iv) a current certificate of BPO's, BPC's and Standard's good
standing in Ohio and evidence of BP Pipelines'
qualification to do business in the Ohio;
(v) a FIRPTA affidavit in the customary form; and
(vi) statements of title in the forms and in accordance with the
substance attached as Exhibit 4.A.
B. Buyer shall deliver to Seller on the Closing Date the following:
(i) the cash specified in Section 3. hereof;
(ii) a certified copy of the resolution(s) adopted by the Board
of Directors of Buyer authorizing the transactions
contemplated by this Agreement and authorizing specified
individuals to act on behalf of the Buyer herewith; and
(iii) a current certificate of Buyer's good standing in the
state of its incorporation.
C. The Buyer and Seller shall each deliver duly executed
counterparts by the appropriate parties of
(i) the Technology Transfer and License Agreement in the form
and in accordance with the substance set forth as Exhibit
3;
(ii) duly executed Assignment of Pipeline Agreements in the form
and in accordance with the substance attached as Exhibit
2.A.;
(iii) duly executed Assignments of Leases/Licenses for the
unrecorded leases and licenses, in the forms and in
accordance with the substance attached as Exhibits 5, 6 and
7; and
(iv) Intermediates and Unfinished Products Supply Agreements; in
the forms and in accordance with the substance set forth in
Exhibit 8;
D. All of the transactions identified in this Section 6. shall occur
simultaneously, and none shall be deemed completed until all are
completed. All transfers of assets and liabilities shall be
deemed to have occurred at 12:01 a.m. Eastern Time on the Closing
Date.
<PAGE>
11
7. SELLER'S REPRESENTATIONS AND WARRANTIES. Seller hereby represents
and warrants to Buyer as of the date of this Agreement and the Closing Date and,
as to the schedules as prepared and amended in accordance with Section 11.C., as
of the Closing Date, as listed below. Whenever "Seller's knowledge" or "to the
best of Seller's knowledge" is referred to in this Agreement, it shall mean the
knowledge of David J. Atton, Joseph M. Cesarik, Mark E. Frena, Robert D.
Paisley, Donovan J. Kuenzli, Ralph A. DeLeonardis, Jane E. Zislin, Judy E.
Gilbert, Douglas F. Parish, Pat A. Langan, Paul G. Logsdon, Charles L.
Gasperetti and Bruce C. Gelsinger.
A. Organization and Good Standing. Standard and BPO are corporations
duly organized, validly existing and in good standing under the
laws of the State of Ohio. BP Pipelines is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Delaware. BPC is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Ohio.
B. Authority. Seller has the corporate power and authority to own
and operate the Purchased Assets and 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 executed by Seller and this Agreement and
transactions contemplated hereby constitute valid and binding
agreements of Seller enforceable against Seller in accordance
with their terms except as such enforceability is limited by
general principles of equity and applicable provisions of
bankruptcy law.
C. Consents. Except as set forth on Schedule F, no consent, approval
of or by, or filing with or notice to (collectively "Consent"),
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 in connection with the execution, delivery
or enforceability of this Agreement or the consummation of the
transactions provided for hereby, other than (i) those for which
any adverse consequences arising out of the failure to obtain
such Consent or to make such filing are not, individually or in
the aggregate, material to the Refinery; (ii) a possible filing
made under the H-S-R Act; and (iii) consents of third parties to
assignments of Contracts to Buyer.
D. No Breach. The execution and delivery of this Agreement and the
consummation of the transactions provided for 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, any provisions of, or constitute a default (or an event
which, with notice or
<PAGE>
12
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 Articles of Incorporation or Code of
Regulations or By Laws of Seller or under 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, federal, state,
local or foreign law, ordinance, statute, rule or regulation, or
(iii) trigger any rights of first refusal, or any buy/sell or
similar rights.
E. Real Property.
(i) Title to the Refinery Property (including the Vine Street
Terminal) and the Buckeye Road Property is owned in fee by
the Seller and when transferred to the Buyer shall be good
and marketable title free and clear of all liens,
encumbrances, and encroachments other than (a) such
easements, restrictions, reservations, covenants,
conditions, liens, encumbrances, and other matters of record
that do not materially adversely affect the present use or
occupancy of such real property, (b) the unrecorded leases
and licenses described in the Assignments of Leases/Licenses
attached as Exhibits 6 and 7, (c) all matters (including,
but not limited to, road, highway, pipeline, railroad and
utility easements and encumbrances and encroachments) which
would be disclosed by a survey and inspection such as do not
materially adversely affect the present use or occupancy of
such real property; (d) building and zoning ordinances,
laws, regulations and restrictions by municipal or other
governmental authorities; and (e) all real estate taxes and
assessments not yet due and payable. Seller has no knowledge
of the violation of any easement, restriction, covenant, or
condition relating to the Purchased Assets that would have a
material adverse effect on the present use or occupancy of
such real property. Except for the partial tax lots
described in Exhibit B of the deeds for the same, the
Refinery Property and the Buckeye Road Property are each
assessed separately (as one or more tax lots) for purposes
of real estate taxes. Title to the portion of the real
estate formerly known as the Wagner Farm shall be subject to
an Agreement for Right of First Refusal to Purchase or Lease
in accordance with the form and substance attached as
Exhibit "D" to the limited warranty deed attached as Exhibit
1.
(ii) The Purchased Assets include all of the real property and
appurtenant rights, including, but not limited to, rights of
access, of Seller and their affiliates used in or necessary
for the present
<PAGE>
13
ownership and operation of the Refinery, the Tanks, the
pipelines described in Section 1.C., and the Vine Street
Terminal, as currently conducted. Except for matters
which, individually or in the aggregate, would not have a
material adverse effect on the present ownership or
operation of the same, the Refinery, the Tanks, the
pipelines described in Section 1.C. and the Vine Street
Terminal are all located within the boundary lines of the
real property to be transferred to Buyer hereunder, and
there are no encroachments onto the Refinery Property or
the Buckeye Road Property of any improvements on any
adjoining property.
(iii) Exhibit 5 sets forth a complete list of all real property
which is leased or licensed by the Seller and used in
connection with the present ownership and operation of the
Refinery and describes each of the leases and licenses
(including any amendments thereto) pursuant to which
Seller leases or licenses such real property ("Real
Property Leases"). To the best knowledge of Seller, such
Real Property Leases are free of all liens, and such Real
Property Leases are in full force and effect and grant in
all respects the leasehold estates or rights of occupancy
or use they purport to grant.
(iv) To the best knowledge of Seller, all water, sewer, gas,
steam, electric, telephone, access and drainage facilities
and all other utilities required by law and by the normal
operation of the Refinery Property are installed to the
boundaries of the Refinery Property, are connected to the
Refinery Property where appropriate with valid permits,
and are adequate to service the Refinery Property for the
present operation of the Refinery and to permit full
compliance with all applicable law.
(v) To the best knowledge of Seller, Seller has legal and
practical access to the public roads, pipelines and
railroad tracks needed for the ownership and operation of
the Refinery as presently operated and Seller has not
received and to the best of Seller's knowledge there do
not exist any adverse claims to such access that would
have a material adverse effect on the present ownership
and operation of the Refinery.
F. Brokers. All negotiations relating to this Agreement, and the
transactions contemplated hereby have been carried on without the
intervention of any person acting on behalf of the BP Group in
such manner as to give rise to any valid claim against Buyer for
any broker's or finder's fee or similar compensation in
connection with the transactions contemplated hereby.
<PAGE>
14
G. Machinery and Equipment; Purchased Assets. All major items of
machinery and equipment included in the Purchased Assets are
listed on Schedule A. Schedule G contains a list of the major
trucks and vehicles included in the Purchased Assets. Other than
for items leased from third parties (in which case Seller has a
valid and enforceable leasehold interest in, subject to the
provisions of Section 11.F) Seller has, and as of the Closing
Buyer will have, valid title to the items listed on Schedules A
and G, and all other Purchased Assets constituting personal
property free and clear of all liens and encumbrances. The
Purchased Assets constitute all of the assets and other rights of
Seller and their affiliates used in or necessary for the
operation of the Refinery as currently conducted other than the
Excluded Assets.
H. Compliance With Laws. To the best of Seller's knowledge, except
as provided in Schedule F and except with respect to
Environmental Laws (which are dealt with in Section 8. and
Schedule I), the Purchased Assets are in compliance with all
material laws, governmental regulations, order and decrees.
I. Permits. The Seller possesses all permits, licenses and
governmental approvals, including the Environmental Permits
required by Seller in connection with the operation of the
Purchased Assets except for such permits, licenses and other
governmental approvals the failure to possess would not,
individually or in the aggregate, have a material adverse effect
on the present ownership, operation, use, or occupancy of the
Purchased Assets or the Assumed Liabilities.
J. Agreements. Schedule B lists or refers to all of the material
Contracts affecting the Purchased Assets. Schedule B includes,
but is not limited to Contracts (i) calling for payment by or to
Seller arising out of the Purchased Assets over $100,000, per
annum (ii) providing continuing obligations from or to any member
of BP Group (whether or not material), (iii) containing covenants
limiting the freedom of the Seller to compete in any line of
business or with any Person in any geographical area, (iv)
calling for the proposed acquisition of any operating business,
(v) relating to the proposed purchase or sale of any asset other
than in the ordinary course of business, (vi) involving any
commodity, currency or interest rate option, hedge or other
future or derivatives arrangement, or (vii) involving crude oil
or other inventory purchase agreements that extend beyond the
Closing Date (collectively "Major Contracts"). Neither the Seller
nor, to the best of Seller's knowledge, any party thereto, is in
default under, or in breach of any material term or provision of
any of the Major Contracts except as noted on Schedule B. Not
later than two business days prior to the end of the due
diligence period referred to in Section 13.E. Seller will deliver
to Buyer true and correct copies of all Major Contracts.
<PAGE>
15
K. Proprietary Rights, Other Intellectual Property. Schedule C
contains a list of all patents and pending applications therefor,
technology licenses and other agreements setting forth the items
owned by Seller and the items licensed from third parties.
Seller has the valid right to use the patents, patent
applications, copyrights, copyright registrations, applications
for the registration of copyrights, technical information,
industrial know-how, technology and trade secrets, in each case
owned or licensed by Seller or its affiliates in connection with
the ownership or operation of the Refinery and all licenses or
other agreements relating thereto ("Proprietary Rights") to the
extent necessary in the current operations of the Refinery or the
other Purchased Assets. To the best of Seller's knowledge, the
current operations of the Refinery and the other Purchased Assets
and the use of the Proprietary Rights do not infringe any valid
issued patent, or other right of any third party. No claim by
any third party contesting the validity, enforceability, use or
ownership of the Proprietary Rights is currently outstanding or,
to the best of Seller's knowledge, is threatened. Except as
disclosed on such Schedule, any such Proprietary Rights may be
assigned or sublicensed (with respect to those Proprietary Rights
to be sublicensed to Buyer pursuant to the Technology Transfer
and License Agreement) to Buyer without the consent of any third
party.
L. Actions and Proceedings.
(i) Except as set forth on Schedule H, there is no action, suit,
arbitration proceeding or claim pending, or, to Seller's
knowledge, threatened against Seller or any of its
affiliates, involving or affecting the Purchased Assets for
which Buyer will be responsible or which will adversely
affect the Buyer whether seeking relief or redress under
Environmental Laws or seeking any injunctive relief, except
for such injunctive relief that if granted would be
insignificant to any of the Purchased Assets, nor is there
any basis known to Seller for any such action, suit,
proceeding or claim; and, except as disclosed on Schedule H
or Schedule I 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; and
(ii) To Seller's knowledge, except as set forth on Schedule H or
Schedule I, no action, suit, arbitration proceeding or claim
is pending or 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.
<PAGE>
16
(iii) To the best knowledge of Seller, there is no pending or
threatened condemnation or other governmental taking of
any of the real property included in the Purchased Assets.
M. Employee Relations. The only collective bargaining agreements or
agreements with any labor organization covering employees of the
Refinery are listed on Schedule J. and no other such agreements
except as listed on Schedule J. are presently being negotiated.
Except as set forth in Schedule J, since January 1, 1996, there
has not occurred or to Seller's knowledge been threatened, any
strikes, slowdowns, picketing, or work stoppages with respect to
employees employed at the Refinery. Except as set forth on
Schedule J, Seller has not agreed to renew, or by failure to give
notice allowed to renew, any collective bargaining agreement
which would otherwise expire.
N. Absence of Certain Changes.
(i) Except as set forth on Schedule K or as provided for or
permitted by this Agreement, since January 1, 1996, the
Refinery and the other Purchased Assets have operated only
in the ordinary course of business; and
(ii) Except as set forth in such Schedule K or any other schedule
to this Agreement, since January 1, 1996, other than in the
ordinary course of business Seller has not sold, conveyed,
leased or otherwise transferred any of its right, title or
interest in any asset significant to the Refinery.
O. Taxes.
(i) Definitions. For purposes of this Agreement, "Taxes" shall
mean 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, 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 sales, use, excise, business, occupation or other
tax, if any, relating to this or any other service, supply
or operating agreement; and
(ii) None of the Purchased Assets is tax-exempt use property
within the meaning of Section 168(h) of the Code. None of
the Purchased Assets is property that is or will be required
to be treated as being owned by another person pursuant to
the provisions of Section 168(f)(8) of the Internal Revenue
Code of
<PAGE>
17
1954, as amended and in effect immediately prior to the
enactment of the Tax Reform Act of 1986.
P. Operating and Financial Information.
(i) The data attached hereto as Schedule P. reflects (i) the
volumes of crude oil and other hydrocarbon inputs processed
at the Refinery (exclusive of the assets described in
Section 1.C.) during the period January 1, 1991 to April
30, 1998 and refined into the volumes of product as
indicated; and (ii) the Refinery Costs during the period as
indicated above.
(ii) "Refinery Costs" means the costs incurred by the Refinery
(exclusive of the assets described in Section 1.C.)
exclusive of the costs incurred by Seller outside of the
Refinery (exclusive of the assets described in Section
1.C.) as more fully explained in the document dated April
1996 entitled "Confidential Information Memorandum, Lima
Oil Refinery."
(iii) Seller warrants that the data on Schedule P. is materially
true and complete.
8. ENVIRONMENTAL.
A. Definitions. Terms used in this Section 8. shall have the
meanings defined below.
(i) "Compliance Action" means any activity reasonably necessary
to cause any storage tank systems, any pollution control
equipment, structure, device, plan or process, or any other
equipment, structure, device, plan or process subject to
regulation pursuant to Environmental Laws, located at the
Refinery or the other Purchased Assets to be in compliance
with applicable Environmental Laws in effect at the Closing
Date. Compliance Action may include relaxation or
postponement of requirements;
(ii) "Corrective Action" means all activities, whether undertaken
pursuant to judicial or administrative order or otherwise,
reasonably necessary to comply with applicable Environmental
Laws, to investigate, monitor and, if required, clean up,
remove, treat, cover, protect from human or environmental
exposure or in any other way adjust Hazardous Substances in
the environment at the Refinery or the other Purchased
Assets. There can be more than one Corrective Action at the
Refinery or the other Purchased Assets. Corrective Action
shall exclude any changes or additions to the equipment or
improvements on the Refinery
<PAGE>
18
or the other Purchased Assets, other than those changes or
additions made in connection with a Corrective Action;
(iii) "Environmental Laws" means federal, state and local laws,
principles of common law, regulations and codes, as well as
memoranda of agreement, orders, decrees, judgments or
injunctions issued, promulgated, approved or entered
thereunder, relating to or regulating pollution or
protection of the environment (including, without
limitation, indoor air, ambient air, surface water,
groundwater, land surface, subsurface strata, or animal or
plant species). For avoidance of doubt, Environmental Laws
includes without limitation the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA");
(iv) "Environmental Permit" means any 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 Environmental Laws in
effect on or prior to the Closing Date for the ownership or
operation of the Refinery or the other Purchased Assets;
(v) "Hazardous Substance" means any toxic substance or waste,
pollutant, hazardous substance or waste, contaminant,
special waste, industrial substance or waste, petroleum
(including crude oil or any fraction thereof) or petroleum-
derived substance or waste, or any toxic or hazardous
constituent of any such substance or waste, including
without limitation any such substance regulated under or
defined by Environmental Laws; and
(vi) "Waste Unit" means any one or more of the approximately 69
Solid Waste Management Units identified in the Refinery's
Corrective Action Plan existing as of the Closing Date, or
one of the 6 hazardous waste units subject to closure
pursuant to the Resource Conservation and Recovery Act, or
the Ohio equivalent.
B. Representations By BP.
(i) Compliance with Law - Environmental Permits. Except for
matters set forth in Schedule I, to the best of Seller's
knowledge, as of the Closing Date based upon reasonable
inquiry:
(a) all Environmental Permits necessary for the operation
of
<PAGE>
19
the Refinery and the other Purchased Assets and the
Refinery's associated equipment as operated by Seller
on a recent historical basis have been obtained and are
in effect and, where applicable, applications for
renewal thereof have been timely filed, except where
the failure to obtain such Environmental Permits or
licenses or have them in effect or to file for such
renewals would, individually or in the aggregate, not
have a material adverse effect on the Refinery as the
Refinery has been operated on a recent historical
basis;
(b) all environmental control equipment required to operate
the Refinery and the other Purchased Assets, as
operated by Seller on a recent historical basis, in
compliance with Environmental Laws is installed at the
Refinery and the other Purchased Assets and such
equipment is operating in a manner sufficient to
achieve and maintain such compliance under normal
conditions, except where the failure to be in such
compliance would not have a material adverse effect on
the Refinery as it has been operated on a recent
historical basis;
(c) Seller is in compliance with the benzene NESHAP
regulation and with Environmental Laws applicable to
asbestos containing material at the Refinery and the
other Purchased Assets; and
(d) there are no existing or known violations of
Environmental Laws which, individually or in the
aggregate, would have a material adverse effect on the
Refinery as the Refinery has been operated on a recent
historical basis.
C. Environmental Provisions.
------------------------
(i) Division of Responsibility. As set forth in more detail
below, Seller shall retain sole responsibility for
Corrective Action associated with the approximately 75 Waste
Units. As set forth in more detail below, Buyer shall,
notwithstanding any provision of Section 8(F) or Section 16
hereof to the contrary, be solely responsible to conduct
Corrective Action attributable to Hazardous Substances in or
on process equipment, storage tanks, sewers and containment
devices or other equipment and improvements at the Refinery
or other Purchased Assets at the Closing Date to the extent
that the presence of said Hazardous Substances is in
compliance with Environmental Laws and the
<PAGE>
20
result of normal operations of the Refinery and the other
Purchased Assets as the Refinery and other Purchased Assets
have been operated on a recent historical basis ("Contained
Hazardous Substances"), or demonstrably attributable to
operation of the Refinery or other Purchased Assets after
the Closing Date. Buyer agrees to be responsible for any
Corrective Action attributable to Contained Hazardous
Substances present as of the Closing Date, and any
contamination caused by Contained Hazardous Substances or
related Corrective Action after the Closing Date. Seller
remains solely liable for any penalties relating to the
ownership or operation of the Refinery or any other
Purchased Assets prior to the Closing Date. Seller shall be
solely liable for any and all claims, no matter when
asserted, for its shipment of, or arranging the shipment of,
Hazardous Substances from the Refinery prior to the Closing
Date for offsite treatment, storage, processing, recycling,
reuse or disposal at any facility. Buyer is responsible for
Compliance Actions, and is solely liable for maintaining
compliance with requirements applicable to operation of the
Refinery and the other Purchased Assets after the Closing
Date, except to the extent that Indemnity is provided for
breach of a representation.;
(ii) Allocation.
(a) Presumption. Except as otherwise provided in this
Agreement, or specifically agreed in writing, the
presence or absence as of Closing of Hazardous
Substances in the soil or ground water at the Refinery
or other Purchased Assets, or that have migrated or may
migrate from the Refinery or other Purchased Assets as
a consequence of activities on or related to the
Refinery, shall be presumed to be attributable to
operation of the Refinery or other Purchased Assets
prior to the Closing Date, except as and to the extent
that such presence of Hazardous Substances can be shown
to be attributable to operation of the Refinery or
other Purchased Assets after the Closing Date. Seller
shall make available existing data and information
generated on or after January 1, 1994, or otherwise
relevant to the current environmental status of the
Refinery or other Purchased Assets; and
(b) Deepwell - Buyer acknowledges that underground
injection of material, including hazardous wastes
resulting from the local production of acrylonitrile,
hydrogen cyanide and other chemicals, ("Deepwell
Injection") is conducted by BPC, on property adjacent
to the Refinery,
<PAGE>
21
and that material and conditions associated with
Deepwell Injection may be encountered at depths of over
2,000 feet below the surface under part or all of the
Refinery, and that such conditions will exist for the
foreseeable future. Buyer hereby expressly releases the
BP Group, Seller and BPC, and their successors and
assigns from any claims or liability that Buyer might
be able to allege in connection with the Deepwell
Injection operation, or subsurface migration of
materials therefrom, including, without limitation, any
claims for diminution in use, enjoyment or value of the
Purchased Assets. Notwithstanding any contrary
provision herein, Seller agrees to Indemnify Buyer
Indemnified Parties against any Losses arising out of
or relating to any claims or liability alleged against
Buyer Indemnified Parties by any third party (including
but not limited to any governmental authority) in
connection with or arising out of the Deepwell
Injection operation, or subsurface migration of
materials therefrom
(c) Conduct of Corrective Action.
(d) Seller's Obligations For Waste Units. To the extent
that Corrective Action for Hazardous Substances
attributable to Waste Units as of the Closing Date is
required pursuant to any present or future
Environmental Law, as in effect and as applied,
recognizing the industrial status of the Refinery, at
the time of said Corrective Action, Seller shall, as
provided herein, undertake at its expense and (unless
otherwise agreed between the parties) under its control
to conduct such Corrective Action as may be required,
on such schedule as may be authorized by applicable
governmental authority or Environmental Law, and shall
be entitled to the benefit of any applicable
reimbursement funds. Any Corrective Action undertaken
by Seller may be pursuant to applicable provisions of
the Ohio Voluntary Action Program, ORC Sections
3746.01, et seq., and regulations promulgated
thereunder. Institutional controls not unreasonably
impairing the use of the Refinery and the other
Purchased Assets, including deed restrictions, may with
Buyer's consent (not to be unreasonably withheld) be
incorporated into the Corrective Action, to the extent
reasonably necessary to obtain a no further action
letter or other regulatory approval. In addition,
Seller shall be solely liable for any and all claims no
matter when asserted for its shipment of, or arranging
for the shipment of, Hazardous
<PAGE>
22
Substances in connection with Seller's conduct of
Corrective Action for offsite treatment, storage,
processing, recycling, reuse or disposal at any
facility;
(e) Buyer's Obligations. To the extent Buyer undertakes at
its expense (subject to any applicable Indemnity from
Seller, as provided below) and under its control to
conduct Corrective Action at the Refinery or other
Purchased Assets (including without limitation
Corrective Action with respect to Hazardous Substances
at or emanating from the Refinery or other Purchased
Assets not attributable to Waste Units as of the
Closing Date), Buyer shall be entitled to the benefit
of any applicable reimbursement funds. In the event of
releases of Hazardous Substances on or after the
Closing Date in locations or amounts not readily
distinguished from Hazardous Substances known or
presumed to be the result of operation of the Refinery
or other Purchased Assets prior to the Closing Date,
Buyer shall be responsible for the incremental costs of
Corrective Action attributable to such releases. Buyer
shall provide to Seller information about releases
subsequent to the Closing Date sufficient to estimate
the incremental costs due to such releases. Buyer and
Seller shall work together in good faith to estimate
such costs. In the event the parties are unable to
reach agreement, the matter may be referred for Dispute
Resolution pursuant to Section 16.D.(ii) hereof. Where
the projected incremental costs associated with the
subsequent release exceed the projected remaining costs
for Corrective Action for which Seller is responsible,
Buyer shall assume control of the Corrective Action,
and Seller shall be responsible only for the increment
of costs over the costs attributable to the subsequent
release. Seller may either reimburse Buyer for its
share of such costs, or may, if the parties so agree,
pay a lump sum equal to the present value of projected
costs sufficient to complete all corrective actions
attributable to Waste Unit conditions as of the Closing
Date, and have no further responsibility with respect
to such conditions. In the event Buyer assumes control
of a Corrective Action pursuation equipment owned by
Seller and both located and used at the site of the
contamination assumed by Buyer may, at Buyer's option,
be conveyed to Buyer in exchange for an agreed price;
<PAGE>
23
(f) Cleanup Incentive. Costs expended by or on behalf of
Seller for Corrective Action activities required by
Section 8. (other than costs to the extent attributable
to the Waste Units) shall be aggregated. Such costs
shall include any costs resulting from Seller's
Indemnification under Section 16.B., to the extent such
Indemnification is the result of Corrective Action
matters within the scope of Section 8. (other than
costs to the extent attributable to Waste Units).
Seller shall provide Buyer an annual statement showing
expenditures of such costs. Buyer shall have the right
to review such non-privileged documents as may be
necessary to audit such costs. As of the date twelve
years after the Closing Date, the aggregate amount of
such costs shall be subtracted from Twenty Million
Dollars ($20,000,000). Seller shall pay to Buyer within
45 days after the expiration of said twelve year period
and amount equal to one-half of the amount, if any, by
which Twenty Million Dollars ($20,000,000) exceeds the
aggregate of such costs. Nothing in this section
8.C.(iii.)(c.) shall be construed to limit Seller's
responsibility for Compliance Actions or Corrective
Actions under this Agreement.
D. Buyer's Notice of Intent. Buyer shall provide Seller with 90
day's advance notice, of Buyer's intent, prior to January 1,
2019, to sell the Refinery or to cease or substantially curtail
operations at the Refinery, or on 30 days' notice to change the
scope, method or nature of operations at the Refinery, including,
without limitation, the construction of new or modified
structures at the Refinery, or undertaking excavations or
geological investigations in connection with such construction,
where such would reasonably be expected to lead directly or
indirectly, including the consequence of the exercise of
governmental agency discretion, to a significant increase in the
cost of Corrective Action for which Seller is responsible, or to
an acceleration of the timing of Corrective Action, or both.
Buyer agrees to impose a similar obligation on purchasers of the
Refinery. The parties agree that they will negotiate in good
faith during the advance notice period to attempt to find
alternatives agreeable to both parties, including without
limitation re-purchase or throughput arrangements, which may
efficiently or cost-effectively postpone or avoid the incurrence
of additional remediation costs to the extent practicable.
Buyer's investigation of the Refinery intended to identify
contamination by Hazardous substances shall be limited to that
(i) required under Environmental Law or other applicable legal
requirements, or (ii) which a reasonable experienced refinery
operator would undertake considering the totality of the
circumstance, but disregarding the existence of any
<PAGE>
24
indemnity. It is the intent of Buyer and Seller that consistent
with Environmental Laws the costs of the Corrective Actions be
avoided or minimized. Buyer shall provide reasonable assistance
and cooperation to Seller in efforts to avoid or minimize such
costs.;
E. Access.
(i) Buyer and, if applicable, its designated representative
(herein "Owner") will permit access to and entry upon the
Refinery and other Purchased Assets to Seller and Seller's
designated representatives (herein "Licensee") as necessary
to conduct and complete Corrective Actions required pursuant
to this Agreement. In the event of a subsequent sale, lease
or other transfer of the Refinery and other Purchased
Assets, Buyer shall require that Buyer's transferee agree to
the access provisions of this Section 8. Such access shall,
where necessary, include access to utility connections,
easements for installation of treatment facilities and
associated pipelines and utilities and connections and use
of wastewater treatment facilities. Seller will pay Buyer a
reasonable fee pursuant to Utilities and Services Agreements
for such utility and treatment facility use and such access
will be done in a manner so as not to unreasonably interfere
with Buyer's business. Buyer will cooperate in good faith
with Seller to ensure adequate and cost effective
performance of Corrective Action, including, where
appropriate, reasonable institutional controls including
deed restrictions, in light of the property's use as an
industrial facility, and not unreasonably impairing its
value or use for those purposes. Buyer and Seller agree to
negotiate in good faith an appropriate Right of Entry
Agreement and Utilities and Services Agreement which would
provide for any necessary terms and conditions, beyond those
identified herein, under which such access and services will
be provided;
(ii) Except in the event of an emergency, Licensee shall provide
Owner with at least five (5) business days notice prior to
beginning any drilling, construction, and equipment
installation, as well as other activity that may disrupt
normal business operations on the Refinery or other
Purchased Assets . Licensee's activities shall not cause
undue disruption to Owner's business activities;
(iii) Owner shall use its reasonable efforts not to unreasonably
interfere with the Licensee while Licensee exercises its
rights of ingress and egress to perform the Corrective
Action. Licensee shall perform the Corrective Action in a
manner which
<PAGE>
25
minimizes disruption to Owner's business activities and to
the Refinery;
(iv) Promptly upon completion of a Corrective Action, and except
as the Corrective Action may require a change in the
appearance or condition of a portion of the Property,
Licensee shall restore the Refinery or other property to
substantially the condition which existed immediately prior
to the commencement of the Corrective Action;
(v) Seller shall provide to Owner copies of final reports,
drawings, maps, appropriate project, operating and
maintenance files, correspondence with any governmental
authority, and sampling data related to, or which result
from, any actions on the Refinery or other Purchased Assets.
Owner shall provide to Licensee copies of any correspondence
with or between Owner and any applicable governmental
authority which involves or relates to any matters described
in this Agreement or which could reasonably impact
Licensee's actions at the Refinery or other Purchased
Assets. Upon Licensee's reasonable request, Owner shall
provide Licensee with such non-privileged final reports,
drawings, maps and appropriate project, operating and
maintenance records as may be useful for Licensee to examine
to determine whether operation of the Refinery or other
Purchased Assets has changed after the Closing Date, and
whether contamination is or may be the result of operations
at the Refinery or other Purchased Assets on or after the
Closing Date. Owner shall permit Licensee to examine and
copy such financial records as may be useful in determining
the reasonableness of expenditures for which Indemnity or
reimbursement is claimed;
(vi) Prior to and during a Corrective Action, Licensee shall take
all steps which are reasonably necessary to prevent injury
to persons or damage to property resulting from or in any
way connected with the Corrective Action;
(vii) Seller shall Indemnify the Owner against any Losses incurred
by Owner, and any liens and encumbrances that may be filed
or attach against the Refinery or any other Purchased
Assets, in connection with actions that Licensee performs on
the Refinery or any other Purchased Assets. No contractor,
subcontractor, materialman, agent, officer, director or
employee of the Licensee shall have any right to a lien
against the Refinery or any other Purchased Assets or any
part thereof for any work, labor or materials furnished to
Licensee for the actions performed on the
<PAGE>
26
Refinery or any other Purchased Assets, unless otherwise
mandated by applicable law;
(viii) Buyer will pay any and all costs, claims, rents or charges
which Seller may incur if reasonable access to the Refinery
or any other Purchased Assets is not granted in accordance
with this Agreement;
(ix) Owner agrees to be responsible and reimburse Licensee for
any damage or loss that Owner, its employees, agents,
lessees, occupants of the Refinery or any other Purchased
Assets, contractors, successors or assigns cause, whether
sole, joint or concurrent, to any test or monitoring well,
remediation equipment and/or associated piping, or any other
property or equipment installed or otherwise used by
Licensee; and
(x) All equipment installed or used in the course of Corrective
Action shall remain the property of Licensee, and may be
removed upon completion of the Corrective Action.
F. Specific Matters. For avoidance of doubt, responsibility for the
following matters is allocated as described below:
(i) Groundwater Treatment - Except as otherwise agreed, Seller
shall continue to own, as necessary, and operate the
groundwater recovery and treatment facilities, listed on
Schedule L, at the Refinery. Buyer shall, at Seller's cost
and request, but subject to there being available capacity,
treat any recovered groundwater from Corrective Action
operations in the Refinery's wastewater treatment plant. The
cost charged by Buyer to Seller for such treatment will
equal Buyer's incremental cost of providing such treatment;
(ii) Construction - Where Buyer's plans for construction activity
will or may cause disturbance of soil, the parties will
consult to find the lowest total incremental cost method or
location of construction.
9. DISCLAIMER. Except as otherwise expressly set forth in this
Agreement and the instruments, documents and agreements referred to herein or
executed in connection with the transaction contemplated hereby:
(i) Seller makes no representations or warranties of any kind or
nature with respect to itself, the Refinery, any portion
thereof or ANY OTHER ASSET TRANSFERRED TO BUYER PURSUANT TO
THE TERMS OF THIS AGREEMENT and
<PAGE>
27
Seller hereby disclaims any implied warranties including
without limitation any implied warranties of merchantability
or fitness for a particular purpose;
(ii) the Refinery AND ANY OTHER ASSETS TRANSFERRED TO BUYER
PURSUANT TO THE TERMS OF THIS AGREEMENT, are being
transferred "AS IS" and "WITH ALL FAULTS;" and
(iii) Seller makes no warranty with respect to the condition of
any of the Refinery, the merchantability of the Refinery or
the fitness of any assets for any purpose and hereby
disclaims any and all warranties and representations of any
kind or nature.
10. BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer hereby represents
and warrants to Seller as of the date hereof and, as of the Closing Date, as
follows:
A. Organization and Good Standing. Buyer is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Delaware.
B. Authority of Buyer. Buyer has full corporate power 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 executed by Buyer and this
Agreement constitute valid and binding agreements of Buyer
enforceable against Buyer in accordance with their terms except
as such enforceability is limited by general principles of equity
and applicable provisions of bankruptcy law.
C. No Violations. Except as provided in Schedule W the execution and
delivery of this Agreement and the consummation of the
transactions provided for hereby and the compliance by Buyer with
any of the provisions hereof does not and will not: (i) violate
any of the provisions of the Certificate of Incorporation or By-
Laws of Buyer; (ii) result in the breach of, or constitute a
default under, any material agreement or other instrument to
which Buyer is a party or by which Buyer or any of its properties
is bound; (iii) violate any order, injunction, judgment, federal,
state, local or foreign law, ordinance, statute, rule or
regulation, decree or award; or (iv) constitute an event which,
with notice, lapse of time or both would result in any such
violation, breach or default.
D. Litigation. To Buyer's knowledge, except as set forth on Schedule
H or Schedule I, no action, suit, arbitration, proceeding or
claim is pending
<PAGE>
28
or 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.
E. Brokers. All negotiations relating to this Agreement, and the
transactions contemplated hereby have been carried on without the
intervention of any person acting on behalf of the Buyer in such
manner as to give rise to any valid claim against Seller for any
broker's or finder's fee or similar compensation in connection
with the transactions contemplated hereby.
11. PARTIES' OBLIGATIONS PENDING THE CLOSING DATE. The parties agree
that from the date of this Agreement until the Closing Date:
A. Access and Information. Subject to the provisions of the letter
agreement with respect to confidentiality dated June 11, 1998 and
the BUTANEDIOL Process Disclosure Agreement effective June 18,
1998 between Buyer and Seller (collectively the "Confidentiality
Agreement") Seller will grant Buyer and its financing sources and
their respective counsel, advisors and other representatives
reasonable access (considering the Buyer's need to perform
adequate due diligence in connection with this Agreement, to
obtain financing for such and to have an orderly transition of
the operation at Closing without disruption to the operations
consistent with the Seller's need to maintain control of its
business and avoid disruptions to the operations and all subject
to a to be agreed protocol) during normal business hours
throughout the period prior to the Closing Date to the Refinery
and all of the Purchased Assets, books and records and other
information relating to the operations of the Refinery and the
other Purchased Assets and shall cause to be furnished to Buyer
and its representatives all data and information concerning the
Refinery and the other Purchased Assets (the "Data") concerning
operations of the Refinery and the other Purchased Assets which
may reasonably be requested by Buyer and shall make available
such personnel of the Seller as may reasonably be requested for
the furnishing of such Data;
B. Conduct of Business. Except as provided on Schedule K, Seller
will operate the Refinery in the ordinary course consistent with
past practice and Schedule E including making supply decisions
and sales decisions use reasonable efforts to preserve intact its
business organization and to maintain satisfactory relationships
with suppliers, distributors, customers and others having
business relationships with it; use reasonable efforts to
maintain the Purchased Assets in good operating condition, normal
wear and tear expected (and recognizing that for the past two
years Seller has been planning to cease operating the Refinery);
maintain its
<PAGE>
29
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 without Buyer's consent which shall not be unreasonably
withheld from (A) amending, modifying, waiving any rights under
or terminating (or allowing to terminate) any of the Contracts
except in the ordinary course of business, (B) entering into any
Contract that would be required to be listed on Schedule B if
entered into prior to the date of this Agreement, (C) disposing
of, encumbering, selling or otherwise transferring any of the
assets or other rights of the Refinery except sales of inventory
in the ordinary course of business, (D) commencing any new
capital projects or making any additional commitments for capital
expenditures relating to the Refinery in excess of $100,000 in
the aggregate, or (E) grant or agree to grant any wage or salary
increases or any bonus or other similar compensation to any
employees of the Refinery except for any approved prior to the
date hereof, or enter into any contract of employment, collective
bargaining agreement or other labor contract with respect to any
such employees. Except for those Contracts disclosed on Schedule
B as of the date hereof, at Buyer's option, at Closing, Seller
wiy of its affiliates and the Refinery not listed on Schedule B;
C. Schedules. Seller will advise Buyer in writing of additions or
changes to the schedules to this Agreement required to reflect
events since the date of this Agreement or facts discovered by
Seller after the date hereof, so as to cause the representations
in Sections 7, 8.B. and 12.A. to be true and correct, as amended
on the Closing Date, which written notice from Seller shall set
forth in reasonable detail the relevant event and all relevant
facts relating thereto to enable Buyer to evaluate the possible
consequences thereof. If in the reasonable judgment of Buyer, the
said additions or changes individually or in the aggregate could
reasonably be expected to result in a material adverse change to
the Purchased Assets, Assumed Liabilities or the financial
prospects of the Refinery taken as a whole, the parties will
negotiate in good faith to determine a reasonable adjustment to
the Purchase Price to fully reflect the Losses of Buyer resulting
from such matters. If the parties fail to agree on an adjustment,
the Buyer may terminate this Agreement before Closing, and no
party shall have any liability to the others for such termination
except as provided in Section 3.A.;
D. Title Policies. Buyer may procure, and will pay the cost of the
premium for commitments from title insurance companies to provide
owner's title insurance policies of the portions of the Purchased
Assets constituting realty, subject to exceptions for charges,
assessments and taxes not yet due and payable, exceptions for
items which would be revealed by a survey and other standard
exceptions, and exceptions for
<PAGE>
30
items which would not significantly interfere with the existing
operations of the Refinery and providing that Buyer's ability or
inability to obtain title insurance on the Refinery for any
reason shall not be a pre-condition of the Closing;
E. H-S-R. If legally required, the parties will take all reasonable
and expeditious steps to file the application and ensure
expiration of the waiting period under the H-S-R Act without
challenge; and
F. Assignments. With respect to any Contract or Permit which is
intended to be assigned to Buyer hereunder and which requires
consent for the assignment thereof to Buyer, Seller shall take
such actions as are necessary, and Buyer shall cooperate with
Seller, to effect assignment thereof to Buyer at Closing at no
additional cost to Buyer or Seller and without any amendment or
modification thereof without the written consent of Buyer, which
consent will not be unreasonably withheld or delayed. In the
event that the Seller is unable to obtain the requisite approval
for assignment of any such Contract or Permit, or in the event
such Permit is required to be amended or supplemented and is not
so amended or supplemented as of the Closing Date, to Buyer, at
the request of Buyer, (except in the case of Permits where such
action would be unlawful), Seller shall (i) retain any such
Contract or Permit and shall enter into an arrangement with Buyer
to provide Buyer with the benefits of such Contract or Permit,
provided Buyer shall perform Seller's obligations thereunder
arising after the Closing Date with respect to the matter in
question until such Contract or Permit is assigned to Buyer or
expires at the earliest opportunity in accordance with its terms,
is properly amended or supplemented, and (ii) shall take all
action required to assign to Buyer, amend or supplement any such
Contract or Permit as soon as practicable after Closing.
G. Casualty Repair. Seller agrees that if any assets of the Refinery
or other Purchased Assets are destroyed or damaged, in whole or
in part, by fire or other casualty or are subject to a
condemnation or eminent domain order or proceeding prior to or on
the Closing Date, Seller shall repair or replace such assets with
reasonable promptness prior to the Closing Date, or at Seller's
option, Seller may assign to Buyer all proceeds of any insurance
net of expenses covering such assets and shall thereafter be
relieved of any obligation to repair or replace such assets. If
the insurance proceeds net of expenses are not sufficient to
repair the damaged assets, Seller will pay to Buyer an amount
equal to the replacement value of such asset less the insurance
proceeds transferred to Buyer. Notwithstanding anything to the
contrary herein, Seller shall not be obligated to expend an
amount in excess of Fifty Million Dollars ($50,000,000).
<PAGE>
31
H. Other Actions. Buyer and Seller shall otherwise use their
respective commercially reasonable efforts to cause the
satisfaction of all conditions precedent in Sections 13 and 14
and the Closing to occur as soon as reasonably practicable after
the date hereof.
12. EMPLOYEES and BENEFITS.
A. Representations and Warranties as to Employee Benefit Plans.
(i) Schedule M attached hereto contains a list of all of the
following employee benefit plans covered by the Employee
Retirement Income Security Act of 1974, as amended
("ERISA") as specified maintained or contributed to by the
Seller on behalf of employees of the Refinery including 2
hourly employees at Buckeye Road and 3 Vine Street
Terminal employees referred to in Section 2.M. (the
"Employees" pl. or "Employee"(s)) (collectively, the
"Benefit Plans") or on behalf of former United States
employees including retirees of the Refinery:
(a) nonqualified deferred compensation or retirement
plans subject to the ERISA;
(b) qualified defined contribution or defined benefit
plans which are employee pension benefit plans (as
defined in Section 3(2) of ERISA) (the "Pension
Plans"); and
(c) employee welfare benefit plans (as defined in Section
3(1) of ERISA).
(ii) The Seller Group makes no contributions on behalf of any
Employee to any multiemployer plans (as defined in Section
4001(a)(3) of ERISA) or has any withdrawal liabilities
with respect to any such multiemployer plans;
(iii) Seller Group has or will have made all employer
contributions required and due to be paid as of the
Closing Date with respect to any Pension Plan. The Pension
Plans have been funded in compliance with the applicable
minimum funding standards of ERISA, and Seller Group has
not sought a waiver of the minimum funding standards under
Section 412 of the Code;
(iv) The Pension Plans and their related trusts have been
maintained in compliance with the Code and the regulations
thereunder. Each of the Pension Plans and their related
trusts has been the subject of a favorable determination
letter under Sections 401(a) and 501(a) of the Code and no
such determination letter has
<PAGE>
32
been revoked, nor has revocation been threatened. Each
such Pension Plan has been administered and operated in
accordance with its terms and in such a manner as to
preserve its tax-qualified status. No such Pension Plan
had an "accumulated funding deficiency" within the meaning
of Section 412(a) of the Code as of the end of the most
recently completed plan year;
(v) All material reporting or disclosure requirements to
federal, state and local governments and governmental
agencies and to all Benefit Plan participants and
beneficiaries have been satisfied with respect to the
Benefit Plans, and the Benefit Plans and any related trust
have been maintained in substantial compliance with ERISA
and any other applicable laws and regulations;
(vi) Seller and certain members of the controlled group of
corporations (within the meaning of Section 414(b) and (c)
of the Code) of which Seller form a part, presently
maintain one or more qualified defined benefit pension
plans which are not multiemployer plans but which are
subject to the provisions of Title IV of ERISA. With
respect to each such plan:
(a) No asset of the Seller's is subject to a lien by
reason of the provisions of Section 412(n) of the
Code;
(b) To the best of Seller's knowledge, there exists no
ground upon which the Pension Benefit Guaranty
Corporation ("PBGC") would demand termination of such
plan or appointment of itself or its nominee as
trustee thereunder; and
(c) As of the Closing Date, no liability to the PBGC has
been incurred with respect to those Pension Plans
which are defined benefit plans other than premiums
due and not yet payable.
(vii) Except as disclosed in Schedule M, there are no pending
or, to the Seller's knowledge, threatened claims by or on
behalf of any of the Benefit Plans (as defined in Section
12.A.(i) above), by any employee or beneficiary covered
under such Benefit Plans (other than routine claims,
including appeals, for benefits) which could result in
liability against the Refinery.
B. Employee and Benefit Matters.
(i) On or prior to the Closing Date, Buyer shall offer
employment to all active Employees (including any employee
on leave under
<PAGE>
33
the Family Medical Leave Act or similar legislation
("FMLA"), after the Closing Date, if such former employee
is ordered reinstated pursuant to an award, or order of,
an arbitrator (but, at Seller's option, excluding up to
three non-represented Employees (the "Excluded
Employees")) with base pay equal to base pay with Seller
immediately prior to the Closing Date and total
compensation and benefits comparable in the aggregate for
all Employees taken as a whole to total compensation and
benefits (based solely on the plans and programs
identified on Schedule M) provided by Seller on the date
hereof (such Employees who accept offers of employment
being the "Transferred Employees"); provided, however,
that Buyer shall have no obligation to maintain any
specific plan, program or arrangement of Seller. Nothing
herein shall (i) require Buyer to offer employment to any
person on long or short term disability, layoff or leave
of absence (other than FMLA), or (ii) restrict or limit
Buyer's ability to terminate the employment of any
Transferred Employee for any reason at any time; provided,
however, Buyer shall offer employment to any Employees on
short or long term disability who is able to return to
work within one year of the Closing Date, and if any such
Employee accepts such offer and returns to work, Buyer and
Seller shall treat such Employees as Transferred Employees
hereunder. Buyer further agrees that it will provide
severance and related benefits to any non-represented
Employees who are later terminated by Buyer, other than
for cause, from employment with the Refinery or Buyer
within twelve months after the Closing Date under a plan
which contains the same benefit levels as the BP Oil
Company Lima Refinery 1996 Separation Program (summary
attached as Schedule N.) provided, however, that Seller
shall reimburse Buyer for one-half of Bpaid or provided to
or for the benefit of any such non-represented Employees
or their dependents separated from employment with the
Buyer within twelve months of the Closing Date. Seller
agrees that it shall work in good faith with Buyer to
assist Buyer to employ and retain the Employees it has
offered employment to and Seller shall not discourage such
Employees from accepting Buyer's offer of employment. The
Excluded Employees will be made available to Buyer by
Seller for a specified period following the Closing Date
through individual contractual arrangements to be
finalized on or before the Closing Date;
(ii) Each Transferred Employee shall be eligible to enroll in
Buyer's new or existing medical and dental plans or HMOs
which coverage shall be effective on a date which is the
first day of the month coincident with, or next following
the Closing Date.
<PAGE>
34
Buyer shall reimburse Seller for Seller's employer
contribution made on behalf of each Employee who accepted
Buyer's offer for any coverage by Seller between the
Closing Date and the effective date of Buyer's coverage.
Seller's medical and dental plans shall be liable for
covered expenses of the Employees (and covered dependents)
for medical and dental services provided through the last
day of the month in which the Closing occurs. Any
exclusions and benefit conditions for pre-existing
conditions under the terms of the Buyer's medical and
dental plans (and HMOs, if any) shall not apply if
comparable exclusions and limitations did not apply to
Employees, dependents or conditions immediately prior to
the effective date of Buyer's coverage under the Seller's
medical and dental plans or any applicable HMO (the "BPA
Medical Plans"). Further, annual maximum out-of-pocket co-
payments and deductibles under the Buyer's medical and
dental plans shall be calculated inclusive of payments
made by Employees during 1998, while participating in the
BPA Medical Plans;
(iii) Buyer will assume all liability for unused vacation
accrued for use in 1998 under Seller's applicable vacation
policies;
(iv) With respect to the BP America Retirement Accumulation
Plan (the "RAP") and (subject to the provisions of Section
12.D.) the BP America Master Hourly Plan for Represented
Employees ("MHP"), plan sponsorship shall be retained by
Seller Group and the active participation of the
Transferred Employees shall cease as of the Closing Date.
Seller shall fully vest such Transferred Employees in
their benefits accrued as of the Closing Date under the
RAP and MHP, as applicable. If requested by Buyer within
90 days of the Closing Date, effective as of the Closing
Date the accrued benefit liabilities and related assets
pertaining to the represented Transferred Employees under
the MHP shall be transferred in a manner complying with
Code Sections 411(d)(6) and 414(l) to a separate qualified
plan to be maintained by Buyer (the "Mirror Plan"). The
calculation of the value of the assets to be transferred
shall be made by Seller's actuary in accordance with the
actuarial assumptions in the attached Schedule O and
reviewed by Buyer's actuary and shall equal the sum of (1)
and (2) where (1) equals the accumulated benefit
obligation (the "ABO") and (2) equals one-half of the
excess of the projected benefit obligation over the ABO,
determined as of the Closing Date of the represented
Transferred Employees participating in the MHP as of the
Closing Date (the "Represented Employees") decreased for
benefit payments made after the Closing Date and before
the transfer date on behalf of
<PAGE>
35
the Represented Employees (the "Transfer Amount"). The
Transfer Amount shall accrue interest from the Closing
Date to the transfer date at a rate equal to the one-year
Treasury bill rate as of the Closing Date. The Transfer
Amount shall be transferred hereunder in the form of cash
or cash equivalents. The Mirror Plan and its related trust
shall be reasonably satisfactory to Sellers and its
counsel with respect to compliance with law and
qualification status only and Buyers shad, to maintain the
Mirror Plan and its related trust as qualified and tax-
exempt under Sections 401(a) and 501(a) of the Code and
further shall provide Sellers with such reasonable
assurances as Seller shall request of such tax-qualified
status prior to the transfer of assets and liabilities.
Sellers shall provide Buyer with such reasonable
assurances as Buyer shall request of the tax qualified
status of the MHP immediately prior to the transfer of
assets and liabilities. If required, Buyers and Sellers
shall each file IRS Form 5310-A. with respect to the
transfer at least thirty days prior thereto. Buyers and
Seller shall use their best efforts to effect the transfer
within a reasonable period after all requirements of this
Section 12.B.(ii) have been met. The Mirror Plan shall
vest the Employees in their accrued benefit as of the
Closing Date;
(v) With respect to the BP America Capital Accumulation Plan
and (subject to the provisions of Section 12.D.), the BP
America Savings and Investment Plan (the "DC Plans"), plan
sponsorship shall be retained by the Seller Group and the
liabilities and related assets pertaining to the account
balances of the Transferred Employees under such plans
shall be transferred within a reasonable time (i.e.,
approximately 120 days) after the Closing Date (the
"Transfer Date") in a manner complying with Code Sections
411 (d) (6) and 414 (l) to separate qualified plans to be
maintained by Buyer (the "Mirror Savings Plans"). Seller
shall cause the DC Plans to transfer to the Mirror Savings
Plans, in cash, the liquidation value of the aggregate
account balances of the Transferred Employees (including
employer contributions accrued based on pay and service
through the Closing Date and all earnings accrued as of
the Transfer Date but excluding any distributions or
withdrawals to the Transfer Date) received in order to
transfer on the Transfer Date. The Mirror Plans and their
related trusts must be reasonably satisfactory to Seller
and its counsel prior to the transfer of assets and
liabilities and Buyer shall take all actions required to
establish and to maintain the Mirror Savings Plans and
their related trusts as qualified and tax-exempt under
Sections 401(a) and 501(a) of the Code and further shall
provide Seller with such reasonable assurance as
<PAGE>
36
Seller shall request of such tax-qualified status prior to
the transfer of assets and liabilities. Seller shall
provide to Buyer such reasonable assurances as Buyer shall
request regarding the tax qualified status of the DC
Plans. If required, Buyer and Seller shall each file Form
5310-A with respect to the transfer at least thirty days
prior thereto. The Mirror Savings Plans shall vest the
Employees in their account balances as of the Transfer
Date;
(vi) From and after the Closing Date, the Employees shall be
given credit for their service recognized by Seller prior
to the Closing Date for purposes of eligibility and
vesting under all applicable plans and programs of Buyer
and, after the asset transfers described in Sections
12.B.(iv) (if any) and (v) above, benefit accruals under
the Mirror Plan and benefit service under the Mirror
Savings Plans; and
(vii) Notwithstanding anything to the contrary contained in this
Agreement, Buyer shall not be responsible for any of
Seller's obligations for post-retirement medical and/or
life insurance coverage to retirees former or current
employees under the Benefit Plans. Nor shall Buyer be
responsible for any of Seller's obligations under any of
non qualified, excess or supplemental pension benefit
plans or any other liabilities related to the Benefits
Plans which Buyer has not explicitly assumed herein.
C. Resignees. Approximately 35 Employees whose names will be
provided by Seller to Buyer had indicated an intention to Seller
to cease employment at the Refinery following Seller's previous
announcement of a planned Refinery closure (the "Resignees").
Buyer may retain any or all such Resignees in its employment
provided, however, Buyer must offer each such Resignee the option
to terminate employment on or before December 31, 1999, in which
case Buyer shall make payments to and provide benefits for the
Resignees on account of such resignation in accordance with
Schedule N, and Seller shall reimburse Buyer for its costs and
expenses in providing such benefits (excluding administrative
costs). The Resignees will be required to give ninety days notice
of their intention to accept such option to terminate employment.
Any Resignee who is employed or works as a contract worker after
December 31, 1999 will not be entitled to any payment funded by
Seller under this provision. The Buyer agrees that if it employs
or re-employs any Resignee either as an employee or as a contract
worker for a period of one year following the Resignee's
termination date with either the Seller or the Buyer, then Buyer
will reimburse the Seller for an amount equal to any benefits
provided and amounts paid by Seller for such Resignee under the
applicable
<PAGE>
37
separation program.
D. Employment Protocol. Except as otherwise provided in this Section
12. Buyer and Seller shall not, without consent of the other,
employ or offer employment to any employees of the other in Ohio
for a period ending one year following Closing. During this
period the Buyer and Seller will develop a mutually satisfactory
protocol concerning recruitment and retention of personnel and
recognizing BPC's need to offer employment to Refinery employees
in order to fill up to 15 positions at its planned BDO Plant
within forty-five days of Closing and, subject to the foregoing,
Buyer's need to have appropriate employees to run the operations
of the Refinery.
E. Successorship. The Buyer shall recognize the Oil, Chemical and
Atomic Workers International Union and its Local 7-624 as the
exclusive representative of the Represented Employees in the
Plant Unit and the Clerical Unit and shall adopt the Collective
Bargaining Agreements and all existing Memoranda of Agreements
currently in existence between the Seller and the Union. Such
Collective Bargaining Agreements shall remain in full force and
effect for their duration, except for mutually agreed to changes,
and continued employment with the Buyer shall not require any
form of a severance payment from the Seller. If requested by the
Union, the Buyer shall negotiate with the Union in good faith
regarding benefits.
F. WARN Act. The Seller shall not effect a "plant closing" or "mass
layoff" as those terms are defined in the Worker Adjustment and
Retaining Notification Act ("WARN"), affecting in whole or in
part any site of employment, facility, operating unit or employee
of the Refinery, with respect to the Refinery business, without
notifying the Buyer in advance and obtaining the advance approval
of the Buyer, and complying with all provisions of WARN.
Notwithstanding anything to the contrary herein, Seller makes no
warranty under this paragraph with respect to consummation of the
transactions contemplated hereby.
13. BUYER'S OBLIGATION TO CLOSE. Buyer's obligation to Close under
this Agreement is subject to the fulfillment, on 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;
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38
B. Representations and Warranties. The representations and
warranties of Seller contained in this Agreement, as amended by
Seller in accordance with Section 11.C. shall be, taken as a
whole, true and correct in all material respects on and as of the
Closing Date;
C. Litigation. There shall not be any judicial restraining order or
injunction, preliminary or otherwise in effect prohibiting the
Closing of the transaction. There shall not be pending or
threatened any litigation or proceeding instituted by any
federal, state or foreign governmental agency to restrain or
prohibit, otherwise interfere with or obtain substantial monetary
damages in connection with the consummation of the transactions
contemplated by this Agreement, or the ownership or conduct of
the Refinery by Buyer after the Closing Date; and
D. Governmental Consents. The applicable waiting period under the H-
S-R Act and any extension thereof shall have expired, without a
challenge to the transaction.
E. Additional Due Diligence. Buyer shall be satisfied with the
results of its additional due diligence of the Purchased Assets
and Assumed Liabilities to be conducted between Monday, July 6,
1998 and Friday, July 10, 1998.
F. Casualty Loss. There shall not be any destruction or damage (as
specified in Section 11.G.) that has not been repaired, replaced
or for which Seller has not offered to pay the replacement value,
less insurance proceeds, if any.
14. SELLER'S OBLIGATION TO CLOSE. The obligation of Seller to Close
under this Agreement is subject to the fulfillment on or prior to
the Closing Date of each of the following conditions (exception
to the extent that Seller shall have hereafter agreed in writing
to waive one or more of such conditions):
A. Litigation Affecting Closing. There shall be not be any judicial
restraining order or injunction, preliminary or otherwise, in
effect prohibiting the Closing of the transaction. There shall
not be pending or threatened any litigation or proceeding
instituted by any federal, state or foreign governmental agency
to restrain, prohibit, otherwise interfere with or obtain
substantial monetary damages in connection to the consummation of
the transactions contemplated by this Agreement, or the ownership
or conduct of the Refinery by Buyer after the Closing Date;
B. Compliance with Agreement. Buyer shall have performed and
complied in all material respects with all covenants, agreements
and conditions
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39
required by this Agreement to be performed or complied with by
Buyer prior to the Closing Date;
C. Representations and Warranties. The representations and
warranties of Buyer contained in this Agreement shall be, taken
as a whole, true and correct in all material respects on and as
of the Closing Date; and
D. Governmental Consents. The applicable waiting period under the H-
S-R Act and any extension thereof shall have expired, without a
challenge to the transaction.
E. Casualty Loss. There shall not be any destruction or damage (as
specified in Section 11.G.) that has not been repaired, replaced
or for which Seller shall be obligated to expend an amount in
excess of Fifty Million Dollars ($50,000,000), less insurance
proceeds, if any.
15. FURTHER ASSURANCES/BDO PLANT/PROPYLENE.
A. General. Each party agrees to execute such further instruments or
documents and to take or cause to be taken such further actions
as the other party may from time to time reasonably request in
order to confirm or carry out the transactions and obligations
contemplated in this Agreement. No such instrument or document
shall expand a party's liability beyond that contemplated in this
Agreement.
B. BDO Plant. Subject to the terms of this Section 15.B., BPC will
have the right to construct a 1:4 Butanediol Plant (the "BDO
Plant") at the Refinery. After the Closing, BPC and Buyer will
negotiate in good faith the form of appropriate BDO Plant
agreements in time to allow construction of a BDO Plant to start
in November 1998.
The BDO Plant agreements will include the following elements:
(i) Land - BPC will receive approximately 15 acres of land at
the Refinery for the project with independent access and
with rail proximity. The specific location of such land will
be determined by mutual agreement of BPC and Buyer and must
be acceptable to both parties. This land will either be
retained, net leased to BPC or deeded to BPC as BPC and
Buyer shall mutually agree. The purchase price for the land
will be $1 and BPC will receive such land on an "as is,
where is" basis without any representation, warranties,
covenants or Indemnities by Buyer and Seller shall Indemnify
Buyer for all environmental liability relating to such land.
BPC will be solely responsible for any Taxes arising out of
the transfer of the land. In the event that BPC leases the
land, BPC will be responsible for payment of
<PAGE>
40
any applicable real property taxes and all other costs,
and expenses relating to the land and will Indemnify Buyer
and the Buyer Indemnified Parties against all Losses
arising out of or relating to Buyer's ownership of such
land including environmental liabilities.
(ii) Butane - BPC anticipates that the BDO Plant will require a
supply of approximately 47 million gallons per year of
high-purity n-butane for the BDO Plant. Within one (1)
month of the Closing Date, Buyer will provide BP with a
specific proposal acceptable to Buyer to permit BP to
import and store the high-purity n-butane material on-site
(subject to available storage capacity) in time for the
BDO Plant to operate by December 31, 1999, on BPC's
schedule. At Buyer's option, BPC and Buyer will negotiate
for a supply of high-purity n-butane on terms acceptable
to both parties.
(iii) Key Utilities - The BDO Plant is a substantial steam
generator (estimated - 1,300 million lb./yr. HP Steam) and
BPC and the Buyer will negotiate with a view to achieving
the efficient and economic energy integration with the
Refinery on mutually acceptable terms. The BDO Plant may
also be able to provide surplus hydrogen for Refinery use
on mutually acceptable terms.
(iv) Equipment Re-Use/Sharing - It had been intended to re-use
various items of redundant Refinery equipment in the BDO
Plant e.g. Butane storage. BPC is prepared to discuss
arrangements including re-purchase, lease or operation
arrangements for such items with the Buyer, it being
understood that neither BPC nor Buyer is obligated to
enter into any such arrangement.
(v) Permits - BPC has an active permit application for the BDO
Plant which relies on Refinery shutdown emission credits
which shall no longer be available to BPC. BPC believes
there are specific opportunities (eg. CO boiler and steam
boilers) for reduction of Refinery emissions, either by
closure or improvement, which may allow an expedited
revised BDO Plant filing and which would not adversely
affect the Refinery. The Buyer agrees to work actively
with BPC to identify, within one (1) month of the Closing
Date, whether there are any low cost emission reductions
that do not adversely impact the Refinery and that can be
funded and made on terms acceptable to BPC and Buyer. BPC
would fund any agreed Refinery plant improvements to
facilitate the implementation of these reductions in
exchange for the associated emissions credits.
<PAGE>
41
C. Propylene. The Buyer and Seller agree to negotiate in good faith
with one another and BPC to agree to long term propylene supply
arrangements from BPO's Toledo refinery and from the Refinery to
BPC's Lima facility, and to agree to arrangements for long term
access by BPC to the propylene splitter, caverns, and rail and
truck rack facilities at the Refinery. Buyer and Seller to make
best endeavors to complete such negotiations on mutually
acceptable terms by September 30, 1998.
The propylene agreements will include the following:
(i) Propylene - The refinery grade propylene (~425 MM
contained pounds per year) fed to the splitter will be
purchases by Buyer from BPO Toledo Refinery, produced by
Buyer and purchased by BPC from other suppliers as
necessary. Terms of such purchases to be agreed and
acceptable to both parties.
(ii) Facilities - The following system capabilities are
expected to be made available to BPC at terms acceptable
to both parties:
. splitter - the debottlenecked splitter capable of
delivering a minimum of 425 MM contained pounds of
propylene as chemical grade with an average purity of
95%, with the capacity to upgrade up to 300 MM pounds
per year of refinery grade propylene at 70% purity
via pipeline transfer from BP Toledo. Both parties
acknowledge the existing terms and conditions
described in the current propylene contract apply to
the base historic volume. The terms and conditions
for the purchase/sale of incremental propylene shall
be subject to subsequent negotiations.
. caverns - the 304 and 305 storage caverns for
refinery and chemical grade propylene, or
alternatives of sufficient capacity to provide 7 days
on site storage for propylene with a minimum of 3
days as chemical grade.
. rail and truck racks - sufficient capacity is
required to load and unload both refinery and
chemical grade propylene at a rate not to exceed
12,000 B/D as refinery grade and 8,000 B/D as
chemical grade.
(iii) The Buyer will own and operate the above described
propylene facilities.
(iv) The negotiation of these arrangements will commence as
soon as
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42
is practical after the signing of this Agreement. It is
recognized the splitter expansion must be completed prior to
April 1, 1999.
D. Extraction of Benzene from Light Reformate.
The Buyer and Seller agree to negotiate in good faith to agree to
a Light Reformate Agreement that will detail long term
arrangements for the Buyer to: 1) purchase Light Reformate from
BP's Toledo refinery; 2) Extract benzene from such Light
Reformate; and 3) sell Toluene and Raffinate to BP's Toledo
refinery.
The Light Reformate Agreement will include the following:
. Agreement that the Buyer purchase up to 6000bpd of Light
Reformate from BP's Toledo Refinery.
. Agreement that the Buyer sell to BP's Toledo Refinery a
volume of Raffinate and Toluene approximately equal to the
volume of Light Reformate purchased from Toledo less the
volume of Benzene extracted from said Light Reformate.
. A mutual agreement by both parties to operate the system in
a manner that allows for normal operating fluctuations at
either parties site. Such agreements may reflect the need
for either party to store and hold such intermediates,
within their capabilities, to accommodate planned or
unplanned operating interruptions at either site.
Terms of such purchases and sales to be agreed and acceptable to both
parties. Buyer and Seller to make best endeavors to complete such negotiations
on mutually acceptable terms by September 30, 1998.
The Terms and Conditions as described in the Intermediates and
Unfinished Supply Agreements will remain in effect until such negotiations for
longer term arrangements are complete. Buyer acknowledges Sellers requirement to
have adequate lead time to complete alternative arrangements thus agrees to
advance discussions in a timely manner.
16. INDEMNIFICATION.
A. Buyer's Indemnification of Seller. Subject to the provisions of
this Section 16., on and after the Closing Date Buyer shall
indemnify, defend and save and hold harmless ("Indemnify"), the
BP Group, its affiliates and their respective officers,
directors, shareholders, partners, employees, and agents and each
of the heirs, executors, successors and assigns of any of the
foregoing (collectively for the purposes of Section 8. and
Section 16., "Seller Indemnified Party"), from and against any
<PAGE>
43
and all claims, damages, losses, expenses, costs, deficiencies,
penalties, liens, interest, fines, assessments, charges,
obligations or liabilities of any kind, including reasonable
attorneys' fees and court costs (collectively, the "Losses" and
individually "Loss") to the extent arising from or attributable
in any way to:
(i) the ownership or operation of the Refinery or any other
Purchased Assets after the Closing Date including without
limitation those arising under Environmental Laws such as
CERCLA or the release after Closing and subsequent migration
of contamination by Contained Hazardous Substances or by
Hazardous Substances not attributable to the Waste Units (in
each case except to the extent Seller has Indemnified Buyer
as provided below); and any cost or expense for which Buyer
has assumed responsibility pursuant to Section 8, any
federal or state workers compensation laws or any other
foreign, federal, state or local laws or regulations, or any
contract, warranty, tort, or other theory of law; provided,
however, that Buyer shall not be obligated to Indemnify the
Seller Indemnified Party with respect to any liability or
obligation to the extent to which Buyer is entitled to be
Indemnified by Seller pursuant to Section 16.B.;
(ii) (x) any breach of or failure to perform any covenant, or
agreement in this Agreement by Buyer, or (y) any breach of
any representation or warranty in this Agreement by Buyer;
or
(iii) the Assumed Liabilities.
B. Seller's Indemnification of Buyer. Subject to the provisions of
this Section 16., on and after the Closing Date Seller shall
Indemnify Buyer, its affiliates and their respective officers,
directors, shareholders, partners, employees, and agents and each
of the heirs, executors, successors and assigns of any of the
foregoing (collectively, for the purposes of Section 8. and
Section 16., "Buyer Indemnified Party") from and against any and
all Losses to the extent arising from or attributable in any way
to:
(i) the Excluded Liabilities;
(ii) (x) any breach of or failure to perform any covenant, or
agreement in this Agreement by Buyer or (y) any breach of
any representation or warranty in this Agreement by Seller;
(iii) failure by Seller to comply with the provisions, if any, of
state or local law requiring a seller to publish or notify
with respect to bulk sales
<PAGE>
44
(iv) any Losses arising from or attributable in any way to the
release or subsequent migration of contamination by
Hazardous Substances attributable to the Waste Units;
(v) any costs or expense for which Seller has assumed or
retained responsibility pursuant to Section 8;
(vi) any violation prior to the Closing Date of any Environmental
Law (including, without limitation, any violations
identified by the 1997 U.S. Environmental Protection Agency
Multimedia Audit of the Refinery),(vii) the presence or
release of any Hazardous Substances (other than Contained
Hazardous Substances), to the extent that the event or
condition relating to any such Loss (a) is existing at or
relating to the Refinery or any other Purchased Asset as of
or prior to the Closing Date, whether or not caused by
Seller or contributed to by Seller, (b) hereafter exists at
or arises out of the Refinery or any other Purchased Asset
to the extent caused or contributed to by a release prior to
the Closing Date, or (c) relates to or stems from the actual
or alleged offsite shipment of, or arrangement for the
treatment, storage, disposal or shipment of, Hazardous
Substances away from the Refinery prior to the Closing Date
including, but not limited to any offsite treatment,
storage, processing, recycling, reuse or disposal at any
facility.
C. Notwithstanding anything in Section 16.B.(iv) through (vi) to the
contrary, (a) Losses incurred by Buyer regarding any Corrective
Action voluntarily undertaken by Buyer shall be subject to
Indemnification by Seller hereunder only to the extent such
voluntary Corrective Action would have been undertaken by a
reasonable person considering the totality of the circumstances,
but disregarding the existence of an Indemnity, and (b) Losses
incurred by Buyer regarding any Corrective Action performed by
Buyer, whether undertaken voluntarily or not, shall be subject to
indemnification by Seller hereunder only to the extent such
Corrective Action is performed in a reasonably cost-effective
manner considering the totality of the circumstances.
D. Exclusive Remedy.
(i) Any claim or cause of action based on, relating to or
arising out of any of the transactions contemplated under
this Agreement 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. In the event an Indemnifying Party contests the
enforceability of this Section 16. (as opposed to contesting
the merits of any claim), then the
<PAGE>
45
preceding sentence shall not limit the rights of the
Indemnified Party. Except as otherwise provided in this
Agreement, each party hereby releases, remises and forever
discharges the other from any and all suits, legal or
administrative proceedings, claims, demands, damages,
losses, costs, liabilities, interest, or causes of action
whatsoever in law or in equity, known or unknown, which such
party might now or subsequently may have based on or
relating to, or arising out of this Agreement, Seller's use,
maintenance, ownership and operation of the Refinery, its
business, assets and liabilities or the condition, quality,
status or nature of the Refinery, its business, assets and
liabilities, including, without limitation, rights to
contribution under CERCLA, breaches of statutory or implied
warranties or otherwise, nuisance or other tort actions, and
common law rights of contribution. Anything in this
Agreement to the contrary notwithstanding, Seller's sole and
exclusive remedy for breach of this Agreement by Buyer prior
to Closing shall be the termination of this Agreement to the
extent permitted by Section 19. and the retention of the
Deposit as provided for in Section 3.(A).
(ii) Dispute Resolution. If a dispute arises between the parties
pursuant to the provisions of Section 8 and that dispute
cannot be resolved within a reasonable period of time,
either party hereto may notify the other party that the
dispute is to be submitted to arbitration, such arbitrations
to be held in Chicago, Illinois. In the event that notice of
submission of the dispute to arbitration is provided by
either party, the parties jointly shall select an
environmental consultant or engineer who has not rendered
service to such party or any of its Affiliates during the
previous three years and is reasonably qualified (including
at least 7 years' experience in the field) to arbitrate such
dispute (the "Independent Consultant"). Where the amount in
dispute exceeds $1 million, each side shall select an
Independent Consultant, and the two Independent Consultants
shall jointly select a third. The three Independent
Consultants shall hear and resolve the dispute.
Notwithstanding any other provision of the Agreement, the
parties shall each bear one-half of the cost of the
Independent Consultant(s). If the parties cannot agree on an
Independent Consultant, they shall apply to the American
Arbitration Association for the appointment of an
Independent Consultant qualified as described above. The
Independent Consultant(s) shall establish an expedited
procedure for hearing and resolving the dispute. Such
procedure shall include provision that the Independent
Consultant(s) shall be required to order each party to
propose a resolution of the matter. Unless
<PAGE>
46
the parties hereto agree otherwise, the Independent
Consultant(s) shall be required to render a decision
resolving the dispute, with a written opinion stating the
reasons therefor, no more than 60 days after the Independent
Consultant is retained. The decision of the Independent
Consultant shall be final and binding and a court of
competent jurisdiction may enter judgment thereon. The
dispute resolution procedures of Sve remedy of the parties
hereto with respect to any disputes arising out of Section
8.;
E. General Provisions. In the case of any claim brought under
Sections 8 or 16., sometimes referred to as a claim for
"Indemnification".
(i) The party entitled to Indemnification (the "Indemnified
Party") shall notify the party obligated to provide
Indemnification (the "Indemnifying Party") with reasonable
promptness of its discovery of any matter giving rise to
such claim, provided that failure to so notify will not
release the Indemnifying Party from liability except to the
extent such party is materially adversely affected by such
delay;
(ii) With respect to any third-party claim or action, or need for
Corrective Action pursuant to Section 8., the Indemnifying
Party shall, except as otherwise provided herein, be
entitled to assume the defense thereof with counsel, the
fees and expenses of which shall be paid by the Indemnifying
Party, reasonably satisfactory to the Indemnified Party; and
subsequent to such assumption of defense, the Indemnifying
Party shall not be liable to the Indemnified Party for any
fees or expenses of counsel subsequently incurred by the
Indemnified Party in connection with the defense thereof,
provided that an Indemnified Party shall have the right to
retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Party
unless (i) the Indemnifying Party and the Indemnified Party
shall have mutually agreed to the retention of such counsel
or (ii) the named parties to any such proceeding (including
any impleaded parties) include both the Indemnifying Party
and the Indemnified Party and representation of both parties
by the same counsel would be inappropriate due to actual or
potential differing interests between them. The Indemnifying
Party shall not, in connection with any proceeding or
related proceedings, be liable for the reasonable fees and
expenses of more than one such firm for all such Indemnified
Parties. The Indemnifying Party will not settle or
compromise any third party claim unless such settlement or
compromise involves solely the payment of money by the
Indemnifying Party and such settlement or compromise
includes as an unconditional term
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47
thereof the giving by the claimant of a release of the
Indemnified Party from all liability with respect to the
matters relating to such claim and does not involve any
admission of culpability;
(iii) The Indemnified Party and the Indemnifying Party will each
provide the other full cooperation in the defense of any
such action, and shall furnish any documents or endeavor to
make available any witnesses under its control;
(iv) Except with respect to third-party claims or actions, any
recovery from the Indemnifying Party shall be limited to the
actual direct Losses, and shall not include punitive
damages, consequential damages, lost profits or rents,
diminution in the value of real property or business
interruption losses incurred by the Indemnified Party;
(v) A Buyer Indemnified Party shall not be entitled to make a
claim against Seller under paragraph A.(ii) of this
Section 16. unless and until (a) Buyer shall have provided
Seller written notice of such default; and (b) Seller shall
have failed to cure such default within thirty (30) days
after Seller's receipt of Buyer's notice; and
(vi) A Seller Indemnified Party shall not be entitled to make a
claim against Buyer under paragraph B.(ii) of this Section
16. unless and until (a) Seller shall have provided Buyer
written notice of default; and (b) Buyer shall have failed
to cure such default within thirty (30) days after Buyer's
receipt of Seller's notice.
F. Attorney's Fees. In connection with any litigation arising out of
this Agreement or to enforce any claim pursuant to Sections 8 or
16. hereof, the prevailing party shall be entitled to recover
from the nonprevailing party its reasonable attorney's fees and
costs, on appeal or otherwise.
G. Time Limitation. Any claim under Section 16.A.(ii)(y), or
16.B.(ii)(y), for Indemnity arising under or out of this
Agreement or the transactions contemplated hereunder for breach
of warranty shall be brought within one year after the Closing
Date. Any claim under 16.B.(ii)(x) for Indemnity arising under or
out of this Agreement or the transactions contemplated hereunder
for breach of Section 11.B shall be brought within one year after
the Closing Date, unless prior to such breach Seller had
knowledge of the action to be taken resulting in the breach, in
which event this limitation shall not apply. Any claim under
Section 8. or Section 16.B.(v), (vi) or (vii) for Indemnity (in
each case except to the extent relating to any Waste Unit) shall
be brought within seventeen
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48
(17) years after the Closing Date. A claim shall be deemed to
have been brought only upon delivery of a written notice to the
other party (which notice may consist of a notice of breach
pursuant to paragraph E.(v) of this Section 16.) at the notice
address set forth in Section 20., stating with reasonable
specificity the basis for the claim. Any claim required to be
made within such one or seventeen year period not so timely made
will be forever barred. This provision shall not be deemed to
limit any claims or rights to Indemnification for third party
claims or pursuant to Sections 16.A.(i), 16.A.(iii), 16.B.(i) or
16.B.(ii)(x), (other than as provided above with respect to
Section 11.B), 16.B.(ii) or 16.B.(iv).
H. Monetary Limitation. The Buyer shall have no claim under Section
16.B.(ii)(y) or (except in the circumstances described in the
following sentence) under 16.B.(ii)(x) with respect to a breach
of Section 11.B. against Seller for any Losses unless and until
the aggregate of all such Losses incurred or sustained by the
Buyer exceeds Three Million Five Hundred Thousand Dollars
($3,500,000.00) and then only for the excess over Three Million
Five Hundred Thousand Dollars ($3,500,000.00) (the "Threshold").
Claims under Section 16.B.(ii)(x) with respect to a breach of
Section 11.B. shall not be subject to or be counted for purposes
of the preceding sentence if Seller had knowledge of the action
to be taken resulting in the breach, in which event the
limitation in the preceding sentence shall not apply. After the
Threshold has been reached, Seller shall have no obligation to
Indemnify the Buyer Indemnified Parties under this Section 16
with respect to matters subject to the limitations contained in
the first sentence of this Section 16.H for any Losses amounting
to less than Fifty Thousand Dollars ($50,000.00) in the aggregate
arising out of the same occurrence or matter. The monetary
limitations in this Section 16.H. will not apply to any Losses
arising pursuant to the provisions of Section 8. The provisions
of this Section 16.H. and of 16.I. shall not apply to any breach
of the last sentence of Section 7.G.
I. Limitation of Liability. Seller's aggregate liability for
Indemnification pursuant to Section 16.B.(ii)(y), or under
Section 16.B.(ii)(x) with respect to a breach of Section 11.B. in
circumstances where Seller did not have knowledge, prior to the
breach, of action taken that resulted in the breach of Section
11.B, shall in no event exceed an amount equal to Twenty Five
Million Dollars ($25,000,000.00). This provision shall not limit
Seller's liability for Excluded Liabilities or for Losses
pursuant to the provisions of Section 8.
J. Purchase Price Adjustment. Any Indemnity payments made hereunder
will be treated by the parties on their Tax Returns as an
adjustment to the Purchase Price.
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49
17. TRANSFER TAXES/PRORATION.
A. All real estate transfer taxes will be paid 50% by the Buyer and
50% by the Seller. All other similar taxes, including inventory
transfer taxes, motor fuel taxes, sales and use taxes, and all
other excise taxes imposed on or resulting from the transaction
contemplated hereby, including conveyance, documentary, stamp and
recording taxes or charges, (but in no event including Taxes
computed on the basis of Seller's income which shall be borne by
Seller) shall be borne 50% by Buyer and 50% by Seller. In the
event that one party pays any taxes covered under this Section
17, the other party shall reimburse the paying party for 50%
thereof immediately upon receipt of written notice of such
payment. In the event the use by Buyer of any of the Refinery
qualifies for exemption from otherwise applicable taxes covered
under this Section 17, Buyer and Seller shall provide all
appropriate exemption certifications in support of such
exemption.
B. All real and personal property taxes and assessments and water,
utility, lease, sewage and similar charges of the Refinery will
be prorated as of the Closing Date.
18. RECORDS/LITIGATION ASSISTANCE.
A. All the books and records at the Refinery other than tax,
financial records, Excluded Assets and Excluded Information (as
defined in Exhibit 3) (the "Records") will remain at the Refinery
after the Closing Date. Seller and its accountants and agents
shall have reasonable access to the Records related to the period
up to and including the Closing Date and Buyer shall notify
Seller at least thirty (30) days prior to the disposition of any
portion thereof for ten (10) years from the Closing Date unless
during that period Seller notifies Buyer of an audit by the
federal, state, or local tax or revenue authorities to which any
Records pertain, in which case access to such Records will be
permitted until such time as Buyer is notified of the conclusion
of the audit proceeding, and shall allow Seller to take the
originals or copies thereof. While the Records are in Seller's
possession, Buyer shall be allowed reasonable access thereto.
B. After the Closing Date, each party will provide such assistance
as the other parties 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 Refinery including making available employees for
interviews, litigation preparation and testimony.
<PAGE>
50
The requesting party will reimburse the assisting party for the
out-of-pocket costs incurred by the assisting party.
19. 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 consent of Buyer and Seller;
(ii) By either party, if not then in breach of this Agreement, if
the other party is in material breach of this Agreement so
that the conditions set forth in Section 13 or 14 will not
be capable of being satisfied if such breach continues and
such breach remains uncured 30 days after written notice
from the non-breaching party; or
(iii) By Buyer if a Deposit Return Event occurs.
B. If this Agreement is terminated by mutual consent or other than
by reason of a party's default, then neither party shall have a
claim for damages as a result of the termination. A party
rightfully terminating this Agreement as a result of the other
party's material breach shall retain any claim it may have for
damages arising from such breach.
20. INLAND SYSTEM. BP Pipelines owns shares in the Inland Corporation
("Inland"), an Ohio corporation which transports petroleum products in the State
of Ohio for the owners of Inland. BP Pipelines currently operates all pipelines
owned by Inland ("Inland System") and the Refinery is connected to six of BP
Pipelines product pipelines to the Inland Mainfold which in turn, connect to the
Inland System. Buyer acknowledges that the Inland System is a private pipeline
system which provides transportation services only to its owners; is not a
common carrier; and is not regulated by the Public Utilities Commission of Ohio
("PUCO") or the Federal Energy Regulatory Commission ("FERC"). Further, Buyer
acknowledges that Buyer has no right to transport petroleum products on or
through the Inland System. Buyer agrees to take no action or inspire or assist
another party in any action which: challenges the private status of the Inland
System; attempts to have the Inland System deemed to be a common carrier; or
attempts to subject the Inland System to regulation by the PUCO or the FERC. BP
Pipelines will permit Buyer's use, without charge, of any piping connection to
the Inland System which is retained by Seller for delivery of petroleum products
to any owner of Inland.
21. Change of Ownership. In addition to the obligations imposed on
Buyer pursuant to Section 8.D., Buyer will advise Seller should it decide to
sell or exchange the Refinery or all or substantially all of the assets acquired
hereunder to an unaffiliated entity or entities in order that Seller can discuss
its potential involvement in such a sale or exchange.
<PAGE>
51
22. NOTICES.
A. All notices, requests, demands and other communications required
or permitted to be given hereunder shall be deemed to have been
duly given if in writing and delivered personally, or faxed, and,
if faxed, confirmed by being mailed that same business day first
class, postage prepaid, registered or certified mail, as follows:
If to Buyer:
Clark Refining & Marketing, Inc.
8182 Maryland Avenue
St. Louis, Missouri 63105-3721
ATTN: Chief Financial Officer
If to Seller:
BP Exploration & Oil Inc.
200 Public Square, 11-3006
Cleveland, OH 44114-2375
ATTN: Corporate Secretary
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.
23. GOVERNING LAW. This Agreement and the obligations of the parties
hereunder shall be governed by and construed and enforced in accordance with the
substantive and procedural laws of the State of Ohio, without regard to rules on
choice of law. Any action to enforce the terms hereof may be properly venued in,
and shall be brought in, the federal or state courts in Cleveland, Ohio on a
non-exclusive basis.
24. PUBLICITY. The parties agree to consult with each other and to
disclose to each other the text of any announcement or public disclosures prior
to making any announcements or public disclosures prior to the Closing Date
concerning the transactions proposed in this Agreement, and to disclose to the
other the text of any announcement or public disclosure as early as possible
prior to its being released.
25. GENERAL.
A. This Agreement, the attached schedules and exhibits and the
agreements referred to herein or executed simultaneously, set
forth the entire agreement and understanding of the parties in
respect to the transactions contemplated hereby and supersede all
prior agreements, arrangements and undertakings relating to the
subject matter hereof (other than the Confidentiality Agreement).
No representation, promise, inducement or
<PAGE>
52
statement of intention has been made by any party which is not
embodied in or superseded by this Agreement or the
Confidentiality Agreement or in the documents referred to herein,
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 the Confidential Information Memorandum
for the Refinery or otherwise. Buyer's obligations under the
Confidentiality Agreement shall not survive the Closing.
B. All of the terms, covenants, representations, warranties and
conditions of this Agreement shall be binding upon, and inure to
the benefit of, and be enforceable by, the parties hereto and
their respective successors, heirs, and other legal
representatives. This Agreement and the rights and obligation
hereunder shall not be assigned by any party hereto except that
either party may assign its rights and duties to any affiliate
provided that the assigning party shall remain liable for any
such affiliate's duties, obligations and/or liabilities
hereunder, provided that with the prior written consent of Seller
(which consent will not be unreasonably withheld or delayed)
after the Closing Buyer may assign its rights and obligations
under this Agreement and (as to future obligations only) be
released therefrom to any purchaser of all or substantially all
of the assets of the Refinery. For purposes of the immediately
preceding proviso, Seller's withholding of consent will be deemed
unreasonable unless the financial strength or operating
capability of the proposed purchaser is reasonably expected to
increase Seller's liability or costs hereunder, or materially and
adversely affect Seller's ability to realize on the
Indemnification provided to Seller under Sections 8. and 16.
Competitive considerations will not enter into Seller's
assessment.
C. 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 wavier 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.
D. The section or paragraph headings contained in this Agreement are
for convenient reference only, and shall not in any way affect
the meaning or interpretation of this Agreement. This Agreement
may be executed
<PAGE>
53
simultaneously in two or more counterparts, each of which shall
be deemed an original, but all of which shall constitute but one.
E. Unless the context requires otherwise:
(i) this Agreement includes this Asset Purchase Agreement and
any other Agreement entered into by Buyer and Seller on the
Closing Date (the "Related Agreements");
(ii) 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;
(iii) references to Sections refers to sections of this Agreement;
(iv) references to Exhibits and Schedules are to exhibits and
schedules attached to this Agreement, each of which is made
a part of this Agreement for all purposes; and
(v) the word "including" means "including without limitation."
F. All representations and warranties of Seller hereunder are given
jointly and severally by each of BPO, Standard, BP Pipelines and
BPC and each of BPO, Standard, BP Pipelines and BPC shall be
jointly and severally liable for all obligations of Seller
hereunder.
26. NO THIRD PARTY BENEFICIARIES. Except as provided in Sections 8..
and 16. with respect to Indemnification of Indemnified parties hereunder,
nothing in this Agreement shall confer any rights upon any person or entity
other than the parties hereto and their respective heirs, successors and
permitted assigns.
27. 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,
<PAGE>
54
IN WITNESS WHEREOF, the parties have duly executed this instrument the
day and year first above written.
BP EXPLORATION & OIL INC. THE STANDARD OIL COMPANY
By: /s/ I.C. Conn By: /s/ I.C. Conn
---------------------------- --------------------------------------
I.C. Conn I.C. Conn
Title: Senior Vice President Title: Attorney-In-Fact
BP OIL PIPELINE COMPANY CLARK REFINING & MARKETING, INC.
By: /s/ I.C. Conn By: /s/ W.C. Rusnack
---------------------------- --------------------------------------
I.C. Conn W.C. Rusnack
Title: Attorney-In-Fact Title: President & Chief Executive Officer
BP CHEMICALS INC.
By: /s/ I.C. Conn
----------------------------
I.C. Conn
Title: Attorney-In-Fact
<PAGE>
August 10, 1998
EXHIBIT 2.2
Clark Refining & Marketing, Inc.
8182 Maryland Avenue
St. Louis, MO 63105
Re: Letter Amendment No. 1 to Agreement for Purchase and Sale of Lima Oil
Refinery dated July 1, 1998 (the "Agreement")
Dear Sir:
Whereas the parties to the Agreement wish to amend the same. It is agreed as
follows:
1. Addition of Section 1.M.
The following Section 1.M. is hereby added to the Agreement after Section
1.L.:
M. An ownership interest in the natural gas pipelines used to supply
natural gas to the Refinery and others in the Lima industrial complex,
in the form of a Capacity Lease Agreement to be agreed between the
parties.
2. Addition of Section 2.0.
The following Section 2.0. is hereby added to the Agreement after Section
2.N.:
O. An ownership interest in the electrical equipment used to supply
electricity to the Refinery and others in the Lima industrial complex,
in a form to be agreed between the parties.
3. Amendment of Sections 3.B. and 3.C.
Section 3.B. and 3.C. of the Agreement are hereby amended to read, in their
entirety, as follows:
B. Purchase Price. In consideration for the Purchased Assets, Buyer shall
pay to Seller or its affiliates on the Closing Date in immediately
available funds, by wire transfer to Seller's account number 2092551
at National City Bank, Cleveland, Ohio (ABA or Transit Routing Number
041000124) an amount equal to: (i) One Hundred Sixty Six Million Two
Hundred and Fifty Thousand Dollars ($166,250,000.00), and (ii) an
amount equal to the Estimated Inventory Value, as defined in Section 4
below, subject to adjustment for the Final Inventories Value as
specified in Schedule E, (iii) less an amount equal to the
<PAGE>
2
Deposit; and (iv) assume and agree to pay and perform the liabilities
and obligations of Seller specified in Section 5 below relating to the
Purchased Assets (the "Purchase Price"). Additionally, Buyer shall pay
by wire transfer to the Escrow Account of #2249491 Security Inc. at
National City Bank, Cleveland, Ohio (ABA or Transit Routing Number
041000124), reference Lima Oil Refinery, an amount equal to: Eight
Million, Seven Hundred Fifty Thousand Dollars ($8,750,000.00) in order
to facilitate a like-kind exchange under Section 1031 of the Code.
C. Purchase Price Allocation. Buyer and Seller shall agree on an
allocation of the Purchase Price (including any adjustments thereto)
among the parties pursuant to the provisions of Section 1060 of the
Internal Revenue Code of 1986, as amended (the "Code") and the
regulations promulgated thereunder. Seller and Buyer agree that the
fair market value of the land, land improvements and other real
property included in the Purchased Assets is $8.75 million, and that
accordingly, of the total Purchase Price, $8.75 million shall be
allocated to said property. Buyer and Seller shall not take any
position on their respective Tax Returns that is inconsistent with the
allocation of the Purchase Price. Buyer and Seller shall duly prepare
and timely file such reports and information returns as may be
required under Section 1060 of the Code and the regulations
promulgated thereunder, and report the allocation of the Purchase
Price among the Assets as so agreed. Any adjustments to Purchase Price
shall be allocated in the same manner.
4. Sections 16.G., 16.H. and 16.I. are hereby amended to read, in their
entirety, as follows:
16. Indemnification
G. Time Limitation. Any claim under Section 16.A.(ii)(y), or
16.B.(ii)(y), for Indemnity arising under or out of this Agreement or
the transactions contemplated hereunder (other than a breach of
Section 8, which will be subject to the 17 year time limitation set
forth below) for breach of warranty shall be brought within one year
after the Closing Date. Any claim under Section 16.B.(ii)(x) for
Indemnity arising under or out of this Agreement or the transactions
contemplated hereunder for breach of Section 11.B. shall be brought
within one year after the Closing Date, unless prior to such breach
Seller had knowledge of the action to be taken resulting in the
breach, in which event this limitation shall not apply. Any claim
under Section 8. or Section 16.B.(v), (vi) or (vii) for Indemnity (in
each case except to the extent relating to any Waste Unit) shall be
brought within seventeen (17) years after the Closing Date. a claim
shall be deemed to have been brought only upon delivery of a written
notice to the other party (which notice may consist of a notice of
breach pursuant to paragraph E.(v) of this Section 16.) at the notice
address set forth in Section 20., stating with reasonable specificity
the basis for the claim. Any claim required to be made within such one
or seventeen year
<PAGE>
3
period not so timely made will be forever barred. This provision shall
not be deemed to limit any claims or rights to Indemnification for
third party claims or pursuant to Sections 16.A.(i), 16.A.(iii),
16.B.(i) or 16.B.(ii)(x), (other than as provided above with respect
to Section 11.B), 16.B.(ii) or 16.B.(iv).
H. Monetary Limitation. The Buyer shall have no claim under Section
16.B.(ii)(y) or (except in the circumstances described in the
following sentence) under Section 16.B.(ii)(x) with respect to a
breach of Section 11.B. against Seller for any Losses unless and until
the aggregate of all such Losses incurred or sustained by the Buyer
exceeds Three Million Five Hundred Thousand Dollars ($3,500,000.00)
and then only for the excess over Three Million Five Hundred Thousand
Dollars ($3,500,000.00) (the "Threshold"). Claims under Section
16.B.(ii)(x) with respect to a breach of Section 11.B. shall not be
subject to or be counted for purposes of the preceding sentence if
Seller had knowledge of the action to be taken resulting in the
breach, in which event the limitation in the preceding sentence shall
not apply. After the Threshold has been reached, Seller shall have no
obligation to Indemnify the Buyer Indemnified Parties under this
Section 16. with respect to matters subject to the limitations
contained in the first sentence of this Section 16.H. for any Losses
amounting to less than Fifty Thousand Dollars ($50,000.00) in the
aggregate arising out of the same occurrence or matter. The monetary
limitations in this Section 16.H. will not apply to any Losses arising
pursuant to the provisions of Section 8. or out of a breach of
representation or warranty contained in Section 8. The provisions of
this Section 16.H. and of 16.I. shall not apply to any breach of the
last sentence of Section 7.G.
I. Limitation of Liability. Seller's aggregate liability for
Indemnification pursuant to Section 16.B.(ii)(y), or under Section
16.B(ii)(x) with respect to a breach of Section 11.B. in circumstances
where Seller did not have knowledge, prior to the breach, of action
taken that resulted in the breach of Section 11.B. shall in no event
exceed an amount equal to Twenty Five Million Dollars
($25,000,000.00). This provision shall not limit Seller's liability
for Excluded Liabilities or for Losses pursuant to the provisions of
Section 8 or out of a breach of representation or warranty contained
in Section 8.
5. Amendment of Section 25.B.
Section 25.B. of the Agreement is hereby amended to read, in its entirety,
as follows:
B. All of the terms, covenants, representations, warranties and
conditions of this Agreement shall be binding upon, and inure to the
benefit of, and be enforceable by, the parties hereto and their
respective successors, heirs, and other legal representatives. This
Agreement and the rights and obligation hereunder shall not be
assigned by any party hereto except that either party may assign its
rights and duties to any affiliate provided that the assigning party
shall remain liable for any such affiliate's duties, obligations
and/or
<PAGE>
4
liabilities hereunder, provided that with the prior written consent of
Seller (which consent will not be unreasonably withheld or delayed)
after the Closing Buyer may assign its rights and obligations under
this Agreement and (as to future obligations only) be released
therefrom to any purchaser of all or substantially all of the assets
of the Refinery. For purposes of the immediately preceding proviso,
Seller's withholding of consent will be deemed unreasonable unless the
financial strength or operating capability of the proposed purchaser
is reasonably expected to increase Seller's liability or costs
hereunder, or materially and adversely affect Seller's ability to
realize on the Indemnification provided to Seller under Sections 8.
and 16. Competitive considerations will not enter into Seller's
assessment.
Notwithstanding anything to the contrary herein, Seller shall have the
right to assign this Agreement, in whole or in part, to an
intermediary party for purposes of completing a like-kind exchange of
properties pursuant to Section 1031 of the Code. The parties
understand that the Seller desires to receive "replacement property"
(as that term is defined in Treasury Reg. (S)1.103(k)-
1(a))("Replacement Property") in full or partial exchange for the
Purchased Assets in a like-kind exchange under Section 1031 of the
Code if suitable Replacement Property can be identified and obtained.
Buyer agrees to take all reasonable steps to facilitate such like-kind
exchange, including executing any documents and instruments necessary
to consummate such like-kind exchange, as may be reasonably requested
by the Seller, provided that Buyer shall not be required hereby to
incur any additional liability or unreimbursed expense. The completion
of such like-kind exchange shall not alter the Buyer's rights
hereunder and Buyer shall have no obligation to find, select or obtain
any Replacement Property.
<PAGE>
5
6. Except as amended herein, and as provided in the letter from Clark dated 20
July 98 titled Resolution Of Due Diligence Issues, the Agreement remains in
full force and effect.
In witness whereof, the parties have duly executed this instrument the day and
year first above written.
BP EXPLORATION & OIL INC. THE STANDARD OIL COMPANY
By: /s/ D. J. Atton By: /s/ D. J. Atton
--------------------- ----------------------------
D.J. Atton D.J. Atton
Title: Vice President Title: Attorney-In-Fact
BP OIL PIPELINE COMPANY CLARK REFINING & MARKETING, INC.
By: /s/ D. J. Atton By: /s/ Maura J. Clark
--------------------- ----------------------------
D.J. Atton Maura J. Clark
Title: Attorney-In-Fact Title:
BY CHEMICALS, INC.
By: /s/ D. J. Atton
---------------------
D.J. Atton
Title: Attorney-In-Fact
