SECURITIES AND EXCHANGE COMMISSION
Washington, DC. 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) December 16, 1996
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UNOCAL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
1-8483 95-3825062
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(Commission File Number) (I.R.S. Employer Identification No.)
2141 Rosecrans Avenue, Suite 4000, El Segundo, California 90245
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(Address of Principal Executive Offices) (Zip Code)
(310) 726-7600
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(Registrant's Telephone Number, Including Area Code)
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Item 5. Other Events.
On December 16, 1996, the following news release was issued:
UNOCAL, TOSCO SIGN AGREEMENT FOR SALE
OF UNOCAL'S WEST COAST DOWNSTREAM ASSETS
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El Segundo, Calif., Dec. 16, 1996 -- Unocal Corporation today said that
its Union Oil Company of California subsidiary and Tosco Corporation signed a
definitive agreement for the sale of Unocal's West Coast petroleum refining,
marketing and transportation assets. The sale is valued at approximately $2
billion.
The assets to be sold are currently operated by Unocal's 76 Products
Company business unit, which is headquartered in Costa Mesa, Calif. The company
expects the sale to close in the first quarter 1997.
"This sale is an important step in Unocal's transition from a
mid-sized, regional integrated oil company to being the world's largest
independent oil and gas producer with a major focus on project development,"
said Roger C. Beach, Unocal chairman and chief executive officer. "With this
sale, we look to shifting significant resources to potentially high-return
opportunities in the fast-growing economies of Asia and strengthen our resource
base in the Louisiana/Gulf of Mexico region."
The company has said it expects to use the proceeds from the sale to
invest in new projects, reduce debt by about $800 million and buy back up to
$400 million of the company's common stock.
The fixed assets to be sold include Unocal's California refineries in
San Francisco, Santa Maria and Los Angeles, which have a combined capacity of
251,000-barrels per day; various terminals, bulk plants and pipelines; Unocal's
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lubricants business; Unocal's retail marketing business, including 1,100
controlled sites and 250 unbranded, non-controlled sites in six Western states;
the company's commercial and industrial petroleum products business; credit card
systems; and other assets.
Unocal expects to record a $375 million aftertax book loss in the fourth
quarter 1996 as a result of the sale.
The sale is subject to approval by Tosco shareholders and clearance by
various regulatory agencies, and the satisfaction of certain other conditions.
Tosco plans to use debt and equity financing for the purchase.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) EXHIBITS
2.1 Sale and Purchase Agreement for 76 Products Company, dated
December 14, 1996, between Union Oil Company of California and
Tosco Corporation (without attachments or schedules).
2.2 Form of Stock Purchase and Shareholder Agreement, to be dated as
of January 15, 1997, by and between Tosco Corporation and Union
Oil Company of California, together with form of Supplement No. 1
thereto.
2.3 Form of Environmental Agreement, to be dated as of the closing
date, by and between Union Oil Company of California and Tosco
Corporation (without schedules.
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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.
UNOCAL CORPORATION
(Registrant)
Date: January 3, 1997 By: /s/ CHARLES S. MCDOWELL
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Charles S. McDowell,
Vice President and Comptroller
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UNOCAL CORPORATION
EXHIBIT INDEX
2.1 Sale and Purchase Agreement for 76 Products Company, dated
December 14, 1996, between Union Oil Company of California and
Tosco Corporation (without attachments or schedules).
2.2 Form of Stock Purchase and Shareholder Agreement, to be dated as
of January 15, 1997, by and between Tosco Corporation and Union
Oil Company of California, together with form of Supplement No. 1
thereto.
2.3 Form of Environmental Agreement, to be dated as of the closing
date, by and between Union Oil Company of California and Tosco
Corporation (without schedules.
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EXHIBIT 2.1
SALE AND PURCHASE AGREEMENT
FOR
76 PRODUCTS COMPANY
BETWEEN
UNION OIL COMPANY OF CALIFORNIA
AND
TOSCO CORPORATION
December 14, 1996
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TABLE OF CONTENTS
Page
1. Sale and Purchase of Assets............................................. 1
2. Excluded Assets......................................................... 2
3. Purchase Price.......................................................... 3
4. Adjustments............................................................. 4
5. Payment of Purchase Price............................................... 4
6. Inventory............................................................... 6
7. Assumption of Obligations; Retained Liabilities......................... 6
8. Related Agreements...................................................... 8
9. Permits, Contracts, Etc................................................. 9
10. Closing................................................................. 9
11. Conditions Precedent to Closing......................................... 12
12. Cooperation............................................................. 14
13. Seller's Representations and Warranties................................. 15
14. Purchaser's Representations and Warranties.............................. 20
15. Environmental Agreement................................................. 21
16. Condition of Assets..................................................... 22
17. Objections to Title; Title Insurance.................................... 22
18. Opinions of Counsel..................................................... 23
19. Risk of Loss............................................................ 25
20. Termination; Remedies upon Default or Termination....................... 26
21. Updating of Representations and Warranties; Adjustment
of Purchase Price....................................................... 27
22. Indemnification......................................................... 27
23. Limitations of Liability................................................ 30
24. Records and Assistance.................................................. 30
25. Access to 76 Assets After Closing....................................... 31
26. Inspections............................................................. 31
27. Operations of the Products Company and Actions.......................... 32
28. Publicity............................................................... 32
29. Employees and Benefits.................................................. 32
30. Transfer of Permits..................................................... 35
31. Certain Tax Matters, Etc................................................ 35
32. Bulk Sales.............................................................. 37
33. Construction............................................................ 37
34. Entire Agreement........................................................ 37
35. Assignment.............................................................. 37
36. Further Assurances...................................................... 38
37. Payments................................................................ 38
38. Notices................................................................. 38
39. Counterparts............................................................ 39
40. Waiver.................................................................. 39
41. Amendments.............................................................. 39
42. Time of Essence......................................................... 39
43. Independent Decisions................................................... 39
44. Glossary................................................................ 40
i.
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INDEX TO ATTACHMENTS AND SCHEDULES
Attachment
No. Description Section References
I ....... Financial Statements .......................1(a), 13(t)
II ...... Real Property ..............................1(a), 13(e)
III ...... Pipelines ..................................1(a), 13(f)
IV ...... Equipment ..................................1(a), 13(h)
V ....... [Intentionally Omitted] ....................--
VI ...... Vessels ....................................1(a)
VII ...... Material Contracts and Franchises ..........1(a), 13(k), 13(l)(ii)
VIII ..... Subsidiaries and Investments ...............1(a), 13(a)(ii)
IX ...... Inventory Determination and Settlement .....1(a), 6
X ....... Title Exceptions ...........................1(b)
XI ...... Shared Software License Agreement ..........2(b), 8(a)(ii)
XII ...... Participation Payment Agreement ............3(c)
XIII ..... Escrow Agreement ...........................5(a)
XIV ...... Stock Purchase and Shareholder Agreement ...5(a)
XV ...... Intellectual Property Agreement ............8(a)
XVI ...... [Intentionally Omitted] ....................--
XVII ..... [Intentionally Omitted] ....................--
XVIII ..... Refineries Capacities ......................11(a)(vi)(1), 13(i)
XIX ...... [Intentionally Omitted] ....................--
XX ...... Permits and Consents .......................13(c)
XXI ...... Capital Projects ...........................13(g), 27
XXII ..... Environmental Agreement ....................15
XXIII ..... Major Refinery Turnarounds and Tank Work ...27
Schedule
No. Description Section References
13(d) ....Seller's Breach Exceptions ..................13(d)
13(j) ....Compliance with Laws ........................13(j)
13(l) ....Intellectual Property .......................13(l)
13(m) ....Actions and Proceedings .....................13(m)
13(n) ....Labor Relations .............................13(n)
14(c) ....Purchaser's Consents ........................14(c)
14(d) ....Purchaser's Breach Exceptions ...............14(d)
14(e) ....Purchaser's Action
and Proceedings .............................14(e)
27 .......Permitted Transactions ......................27
ii.
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SALE AND PURCHASE AGREEMENT
THIS AGREEMENT is made the 14th day of December, 1996, between
UNION OIL COMPANY OF CALIFORNIA, a corporation of the State of California, with
its principal place of business in California ("Seller"), and TOSCO CORPORATION,
a corporation of the State of Nevada, with its principal place of business in
Connecticut ("Purchaser").
W I T N E S S E T H
WHEREAS, Seller is engaged in refining, marketing and
transportation of petroleum products through its 76 Products Company business
segment ("Products Company");
WHEREAS, Seller desires to sell, and Purchaser desires to
purchase, the business and assets constituting the Products Company, except as
specifically excluded herein.
NOW, THEREFORE, in reliance on the representations and
warranties and the mutual promises and covenants hereinafter set forth, and
subject to the terms and conditions hereof, the parties hereto agree as follows:
1. Sale and Purchase of Assets. (a) At the Closing (as defined below),
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Seller shall sell, transfer, assign and deliver to Purchaser, and Purchaser
shall purchase and acquire from Seller, all of (i) the right, title and interest
of Seller and Seller's affiliates in and to the businesses and assets of the
Products Company (the "76 Assets") (other than Inventory described in clause
(ii) below), constituting generally the businesses and assets reflected in the
Audited Financial Statements (as defined in Section 13(t)) included in
Attachment I, subject to changes in the ordinary course of business, including,
without limitation, the real property set forth in Attachment II hereto (the
"Real Property") and the permanent structures and other improvements thereon
owned or leased by Seller (the "Improvements"), the pipelines described in
Attachment III hereto (the "Pipelines"), the equipment, including spare parts,
set forth in Attachment IV hereto (the "Equipment"), the intellectual property
owned by Seller or its affiliates and used in the business of Products Company
as set forth in the schedules to Attachment XV hereto (the "Intellectual
Property"), such transfer to be made in the form of an assignment or license as
specified in Section 8(a), the three oceangoing vessels as described on
Attachment VI (the "Vessels"), the contracts and franchises of the Products
Company (the "Contracts"), including those Material Contracts set forth in
Attachment VII hereto, all investments in subsidiaries and other entities
included in the operations of the Products Company as set forth on Attachment
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VIII ("Subsidiaries"), the assets, Contracts and systems constituting Seller's
credit card systems (including co-branded cards) and any other assets owned by
Seller which are part of the Products Company or necessary to the conduct of its
operations, including normal spare parts and service station merchandise and
certain tank bottoms and linefill; and (ii) the Products Company inventories of
hydrocarbons, usable catalysts and precious metals in storehouses, whether
onsite or offsite, determined as provided in Attachment IX (hereinafter, the
"Inventory").
(b) Seller shall convey to Purchaser marketable fee simple title or its
leasehold or other interests in and to the Real Property and the Improvements,
subject only to the encumbrances and other exceptions set forth in Attachment X
hereto and other encumbrances and liens, which together do not significantly
adversely affect the use of the Real Property and Improvements as presently used
by Seller, or otherwise as provided in Section 17 (the "Permitted Exceptions").
Purchaser shall have the right to obtain title insurance as provided in Section
17(d). Seller will use reasonable efforts, both pre-Closing and post-Closing, to
resolve any curable defects in title appearing of record, and Purchaser shall
cooperate in such efforts.
(c) The Equipment and the Inventory shall be free and clear of any defect
in title, and of any claim, charge, option, lien, chattel mortgage, security
interest, encumbrance, reservation or restriction.
(d) Seller shall assign to Purchaser the Contracts which are assignable, or
otherwise make available the benefits thereof as provided in Section 9 hereof,
and Purchaser agrees to assume, pay, perform and discharge when due Seller's
obligations under the Contracts to the extent provided in Sections 7(a) and
7(b).
(e) The assets conveyed to Purchaser by Seller hereunder shall include,
without limitation, all of Seller's warranties, books, records, files and data
relating to the 76 Assets.
(f) Seller shall, after collection of its accounts receivable from the
affected dealers and customers, transfer to Purchaser an amount of cash equal to
the aggregate amount of dealer and customer deposits with respect to the
obligations assumed by Purchaser pursuant to Section 7(a)(iii).
(g) Seller shall transfer to Purchaser all notes receivable from
distributors and dealers ("Self-Amortizing Notes").
2. Excluded Assets. Notwithstanding Section 1, it is agreed that Seller is
not selling, and Purchaser is not purchasing, hereunder the following assets of
Seller and its Subsidiaries (the "Excluded Assets"):
(a) Cash (except as provided in Section 1(f)) and marketable securities,
whether on deposit or in transit.
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(b) All Seller systems and software which are not used exclusively for or
necessary for operation of the 76 Assets; provided, however, that Seller will
grant a paid up, royalty free (for three years), license to use all proprietary
software owned by Seller and used jointly in both the 76 Assets and Seller's
other businesses on substantially the terms set forth on Attachment XI (the
"Shared Software License Agreement").
(c) Seller's confidential operating manuals and policy manuals except those
useful or necessary for the operation of the 76 Assets.
(d) Accounts and notes receivable and credit balances on accounts payable
relating to the businesses conducted using the 76 Assets prior to the Closing
Date; provided, however, that all amounts with respect to interest and
amortization payments (if any) by distributors and dealers on Self-Amortizing
Notes with respect to the period after the Closing shall be for the account of
Purchaser and the right to such payments is included in the Purchase Price;
provided, further that for a period of 120 days Purchaser shall cooperate with
Seller in collecting receivables outstanding as of the Closing Date for the
benefit of Seller, and Purchaser shall remit amounts which it receives on
account of such receivables to Seller not less frequently than weekly.
(e) Assets owned by Seller in the nature of central staff services (meaning
the legal, cash management, treasury, tax, insurance, health and safety,
environmental management and pension services), employee records, employee
benefits funds and plans presently provided to the 76 Assets by Seller or one of
its subsidiaries, including without limitation employee and other records
necessary to administer payrolls and benefit and welfare plans retained by
Seller and all information necessary to file tax returns; provided that Seller
shall make available its information with respect to employees as specified in
Section 29.
(f) Insurance proceeds and state underground storage tank reimbursement or
other reimbursements, except claims related to tank replacement paid for by
Purchaser.
(g) Tax and fee refunds arising out of taxes and fees paid by Seller.
(h) Seller's and its subsidiaries' employee benefit plans and all assets
related thereto.
(i) Books and records with respect to Excluded Assets, Retained
Liabilities, employees and former employees of Seller.
3. Purchase Price. Purchaser shall pay Seller for the Products Company the
following consideration (the "Purchase Price"):
(a) $1.4 billion in cash at closing or as set forth in Section 5 (subject
to adjustment as set forth in Section 4)(the "Base Purchase Price");
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(b) The value of the Inventory as provided in Section 6;
(c) Up to an additional $250 million in the form of participation payments
as set forth in Attachment XII (the "Participation Payment Agreement");
(d) Assumption of certain environmental liabilities as set forth in the
Environmental Agreement provided for in Section 15 below;
(e) The outstanding principal balance on all Self-Amortizing Notes issued
after the date of this Agreement in accordance with past practices and as
discussed with Purchaser; and
(f) Such additional amounts for employee severance payments as provided for
in Section 29 below.
4. Adjustments. The following items shall be apportioned between Seller and
Purchaser, with Seller obligated for any charges applicable for periods on or
before the Closing Date and Purchaser obligated for any charges applicable for
periods after the Closing Date:
(a) ad valorem taxes, real property taxes, personal property taxes, special
assessments, direct assessments, general assessments and similar obligations
(and any refunds, credits and the like) with respect to the 76 Assets;
(b) charges for gas, electricity, water, sewerage, telephone and all other
utilities;
(c) any other charges and credits which cover a period of time which begins
prior to the Closing Date and extends beyond the Closing Date; and
(d) interest, if any, accrued on the Self-Amortizing Notes.
If any of the amounts to be apportioned in this Section 4 are
not readily determinable as of the time of Closing, such apportionments shall,
to the extent necessary, be based on Seller's and Purchaser's reasonable
estimate thereof. Purchaser and Seller shall cooperate with each other in making
the calculations upon which amounts are to be allocated in favor of Seller or
Purchaser, as the case may be. Such apportionments made on the bases of
estimates shall be recalculated as soon as possible after the availability of
required information, and any overpayments or underpayments due either party
shall be adjusted by suitable payments of one to the other. The parties shall
cooperate to complete final apportionment within 60 days of the Closing Date, if
practicable.
5. Payment of Purchase. The Purchase Price for the 76 Assets shall be paid
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as follows:
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(a) Escrow Deposit on January 15, 1997. The parties shall enter into an
Escrow Agreement with Chase Manhattan Bank ("Escrow Agent") in the form attached
hereto as Attachment XIII (the "Escrow Agreement") on or prior to January 15,
1997 (the "Escrow"). On January 15, 1997, Purchaser shall deposit $1.4 billion
of value into the Escrow, of which at least $1.0 billion shall be cash. Instead
of delivering cash for the difference between the amount so deposited and $1.4
billion, Purchaser may elect to deposit a Stock Purchase and Shareholder
Agreement (the "Shareholder Agreement") in the form attached hereto as
Attachment XIV. Purchaser may deposit additional cash in the Escrow from time to
time on or prior to the Closing Date. The Shareholder Agreement provides for the
delivery to Seller of a number of shares of common stock of Purchaser (the
"Shares") on the Closing Date which would have a Market Value (defined below)
equal to the amount by which (i) the amount of cash then in the Escrow is less
than (ii) the Base Purchase Price due and owing to Seller on the Closing Date
pursuant to Section 3(a). However, Purchaser shall not be required to issue
Shares at a Market Price of less than $45. Purchaser shall use its best efforts
to obtain approval of its shareholders for the issuance of the Shares pursuant
to the Shareholder Agreement and to obtain approval of the New York Stock
Exchange for the listing of the Shares, subject only to official notice of
issuance, on or by February 17, 1997. "Market Price" shall mean the average of
the daily averages of the high and low trading prices for Purchaser's common
stock reported on the New York Stock Exchange Composite tape for the ten
business days preceding the Closing Date, and "Market Value" shall mean the
Market Price multiplied by the number of Shares to be delivered. If Purchaser
deposits the Shareholder Agreement in the Escrow, then until Purchaser deposits
a total of $1.4 billion in cash, Seller shall be permitted to conduct due
diligence with respect to Purchaser and its common stock. In conducting such due
diligence, Purchaser shall allow Seller and its employees, agents and advisors
access to Purchaser's facilities, refineries, and other physical assets, and
access to the books, records, management and executives of Purchaser, to the
extent Seller believes appropriate for a due diligence investigation by an
prudent investor or underwriter acquiring or underwriting $400 million of common
stock. Seller will execute an appropriate confidentiality agreement in
connection with such due diligence.
(b) Payments. At Closing and thereafter Purchaser shall pay the Purchase
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Price as follows:
(i) Payments at the Closing. At the Closing Purchaser and Seller shall
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deliver irrevocable instructions to the Escrow Agent to deliver to Seller all of
the cash in the escrow (up to the Base Purchase Price) and, if the amount of
cash in the Escrow is less than the Base Purchase Price, the Shareholder
Agreement. In addition, Purchaser shall deliver the number of Shares then called
for under the Shareholder Agreement, if any, at the Closing. Purchaser shall
deliver the other amounts due and owing in cash at the Closing by wire transfer
of immediately available funds. Inventory payments shall be determined in
accordance with the provisions of Section 6. At the Closing, Purchaser shall be
entitled to a credit, not to exceed $5 million, against the Purchase Price in an
amount equal to (A) 50 percent of the difference between the interest earned by
Purchaser on the funds in the Escrow and the interest paid by Purchaser with
respect thereto, and (B) 50 percent of the transaction fees incurred by
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Purchaser in obtaining the funds in the Escrow (other than the transaction fees
incurred by Purchaser in respect to $600 million of debt that Purchaser issues
in a public offering or in a private offering designed to allow resales under
Rule 144A, or if an irrevocable letter of credit is used in lieu of issuing such
$600 million of debt, the issuance fees for the letter of credit, which issuance
fees shall be for the account of Purchaser).
(ii) Payments after Closing. Purchaser shall pay any portion of the
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Purchase Price due after the Closing in accordance with the provisions of this
Agreement or other agreement covering such payment.
6. Inventory. At Closing and thereafter in accordance with the provisions
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of Attachment IX, Purchaser shall pay as consideration for the Inventory an
amount determined in accordance with the provisions of Attachment IX by wire
transfer of immediately available funds.
(7) Assumption of Obligations; Retained Liabilities.
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(a) Assumption of Obligations. Purchaser shall assume, and pay, perform and
-----------------------------
discharge when due, any liability or obligation (i) with respect to the 76
Assets and the Contracts but only to the extent such liability or obligation
arises out of or relates to the period from and after the Closing, (ii) as
provided in the Environmental Agreement, and (iii) with respect to deposits and
advances from customers and dealers, but only to the extent of the amount of
cash transferred to Purchaser pursuant to Section 1(f) as dealer and customer
deposits.
(b) Franchise and PMPA Obligations.
------------------------------
(i) Except as otherwise provided in section 7(b)(iv) below, Seller shall
assign and Purchaser shall assume and discharge all existing franchise and other
agreements and obligations of the Products Company with its franchisees as of
the Closing Date, including obligations under the Petroleum Marketing Practices
Act, as amended, 15 U.S.C. ss.ss.2801, et seq. ("PMPA"), and applicable
provisions of state law (Cal. Bus. & Prof. Code ss.ss.20999, et seq.; Wash. St.
ss.ss.19.100.101, et seq.; Ore. Rev. St. ss.ss.650.200, et seq., and Ore. Rev.
St. ss.ss.44-01551, et seq.; Nev. Rev. St. ss.ss.597.300, et seq.; Ha. Rev. St.
ss.ss.486H-I, et seq.; and Ak. Rev. St. ss.ss.45.50.800, et seq.).
(ii) Seller has determined, in good faith and in the ordinary course of
business, to withdraw from marketing motor fuel through retail outlets in the
states of California, Washington, Oregon, Nevada, Arizona, Alaska and Hawaii
("Withdrawal Area") in accordance with the requirements of the PMPA. Within ten
days of the date of this Agreement, Seller will provide written notice to all of
its PMPA franchisees in the Withdrawal Area of such withdrawal and of the
termination and non-renewal of their franchise agreements and franchise
relationship with Seller. Seller shall also give all other notices required by,
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and otherwise comply with, PMPA and any state law not preempted by Federal law,
in connection with such withdrawal and such termination and non-renewal. If the
franchise agreement of any such franchisee expires prior to the effective date
of such termination and non-renewal, Seller will extend the franchise agreement,
or offer the franchisee an "interim franchise" in accordance with the PMPA,
until such effective date. To the extent that it has the contractual and legal
right to do so, Seller will also terminate or non-renew any other agreement it
has with the franchisee which is related to the franchise, effective as of the
effective date of termination or non-renewal of the franchise agreement. Seller
will provide Purchaser with a copy of the form of the notice of termination and
non-renewal, and a list of the franchisees to whom it was sent.
(iii) Not less than seventy-five days prior to the date set forth in the
notices of termination and non-renewal referenced in section 7(b)(ii) hereof,
Purchaser shall: (1) in accordance with the provisions of the PMPA, 15 U.S.C.
ss.2802(b)(2)(E)(iii)(II), offer, in good faith, to each franchisee leasing a
retail outlet from Seller a franchise agreement of at least three years duration
on terms and conditions which are not discriminatory to the franchisee as
compared to franchises then currently being offered by Purchaser; and (2) offer,
in good faith, to each franchisee (other than those covered by Section
7(b)(iii)(1)) a branded supply contract for motor fuel of at least three years
duration on terms and conditions which are not discriminatory to the franchisee
as compared to franchises then currently being offered by Purchaser. Purchaser
agrees that these franchise agreements and branded supply contracts shall become
effective no later than the date set forth in the notices of termination and
non-renewal referenced in Section 7(b)(ii) hereof.
(iv) Liabilities and costs associated with franchise litigation or
threatened claims against Seller arising out of events prior to closing (and not
covered by the next sentence of this clause (iv)) shall be the responsibility of
Seller, and Seller will defend, indemnify and hold harmless Purchaser from such
litigation or claims. Purchaser will defend, indemnify and hold harmless Seller
from all franchise or related claims under the PMPA or state law which are
brought against Seller by any person as the result of Seller's participation in
the transactions contemplated hereby, including, but not limited to, claims
based on future intentional acts by Seller in violation of state statutes which
Purchaser and Seller contend are lawful acts because of preemption by the PMPA.
(c) Retained Liabilities. The following liabilities and obligations shall
---------------------
be the responsibility of Seller (the "Retained Liabilities"):
(i) except as otherwise provided herein, any liability or obligation of
Seller or the Subsidiaries, including without limitation any liability or
obligation in respect of the 76 Assets, whether known, unknown, accrued,
absolute, contingent or otherwise, which arises out of or relates to the period
prior to the Closing;
(ii) without limiting the foregoing, environmental liabilities and
obligations in respect of the 76 Assets, as and to the extent provided in the
Environmental Agreement;
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(iii) except as otherwise provided in Section 29 hereof, any liability or
obligation for salary, wages, benefits, vacation, severance, or overhead for or
on behalf of, or for any violations of law relating to the hiring, employment or
termination of employment (including, without limitation, any violations of the
Employee Retirement Income Security Act ("ERISA"), the Worker Adjustment and
Retraining Notification Act ("WARN"), continuation coverage ("COBRA coverage")
requirements of Section 4980B of the Internal Revenue Code of 1986, as amended,
or Part 6 of Title I of ERISA, worker's compensation laws, and any federal,
state, local or foreign laws relating to plant closings or termination of
employees) of any current or former employees of Seller pertaining to their
employment by Seller, and any other liability or obligation relating to any
employee or former employee of Seller pertaining to their employment by Seller;
(iv) any Taxes or levies (1) based upon the gross or net income or receipts
of Seller or any of its affiliates or otherwise in the nature of an income or
franchise Tax (as defined below), or (2) arising during, or relating to, any
period (or portion thereof) ended on or prior to the Closing;
(v) any liability or obligation arising out of or relating to any of the
Excluded Assets; and
(vi) liabilities and costs allocated to Seller by Section 7(b)(iv).
(8) Related Agreements. As provided below, Seller and Purchaser shall enter
----------------------
into the following agreements at the Closing in connection with the transactions
contemplated hereby:
(a) Intellectual Property. (i) Seller shall cause to be assigned or
----------------------
licensed to Purchaser the Intellectual Property pursuant to the terms of an
Intellectual Property Agreement (the "Intellectual Property Agreement") in the
form attached hereto as Attachment XV;
(ii) Seller shall cause to be provided to Purchaser the Shared Software
License Agreement on the terms set forth on Attachment XI.
(iii) to the extent it is able, Seller shall assign to Purchaser any
third-party intellectual property rights it has with respect to the 76 Assets.
Purchaser shall be responsible for any payments with respect thereto incurred on
or after Closing; and
(iv) Seller shall assist Purchaser in obtaining, to the extent practicable,
at Purchaser's expense, any rights from independent third-parties in respect of
the intellectual property not covered by Sections 8(a)(i), (ii) and (iii) above.
(b) Services. (i) Purchaser shall provide to Seller certain services (the
--------
"Purchaser Services") pursuant to one or more Purchaser Services Agreements in
the form to be reasonably agreed by the parties prior to Closing (the "Purchaser
8
<PAGE>
Services Agreement(s)").<F1>
(ii) Seller shall provide, or cause its affiliates to provide, to Purchaser
certain services (the "Seller Services") pursuant to one or more Seller Services
Agreements in the form to be reasonably agreed by the parties prior to Closing
(the "Seller Services Agreement(s)").<F2>
9. Permits, Contracts, Etc.. Seller shall assign to Purchaser all permits,
--------------------------
contracts, licenses, leases (including office leases) and other similar
entitlements and obligations with respect thereto relating to the 76 Assets to
the extent assignable by Seller; provided, however, that if a non-assignable
permit, license, lease, contract or other entitlement is material and reasonably
necessary for the operation of a facility, the parties shall cooperate to
provide to purchaser the benefits of such lease or contract by sublease or other
mechanism, and, if it is not possible to do so, the purchase price will be
adjusted if the lease or contract is material, subject to the limitations set
forth in Section 21. The parties will cooperate in good faith, both before and
after Closing, to obtain any Consents required.
(10) Closing.
(a) Date, Time and Place. The sale and purchase of the assets to be
-----------------------
conveyed hereunder shall occur at the Closing (the "Closing"), to be held at
Seller's executive offices at El Segundo, California, or such other location as
Seller may designate, on the close of business, February 28, 1997. Either party
may extend the Closing to a date as soon as reasonably practicable thereafter
(but not later than May 30, 1997) if all closing conditions specified herein
have not been satisfied or waived by February 28, 1997. As used herein the
"Closing Date" shall be the actual date of the Closing, and the Closing shall be
effective as of the close of business on such date. Any extensions beyond May
30, 1997 shall be upon mutual agreement of the parties.
- ----------
<F1> Purchaser Services to inlcude any services provided by the Products Company
to other operations of Seller after the Closing Date, and which services are
reasonably necessary for Seller to conduct such operations as conducted on the
date of this Agreement. Purchaser to provide such services to seller on a
commercially reasonable basis, and shall not be required to perform any such
services to the extent such performance would unreasonably interfere with the 76
Assets.
<F2> Seller Services to include any services provided to the 76 Assets by Seller
or any of its affiliates as of the date hereof which are reasonably necessary in
respect of the 76 Assets or to conduct the operations of the Products Company.
Seller to provide such services to Purchaser on a commercially reasonable basis.
9
<PAGE>
(b) Seller's Obligations. At the Closing, Seller shall execute and/or
deliver (as the case may be) to Purchaser (or, in the case of (xii) below,
Purchaser's title insurance companies) the following:
(i) one or more grant deeds (or equivalents with covenants against
grantor's acts) (the "Deed(s)") conveying Insurable and
marketable title to the Real Property and Improvements owned in
fee to Purchaser, subject only to the Permitted Exceptions, such
Deed(s) being in recordable form for recording same in the county
or counties in which the Real Property and improvements are
located, and such other assignments and instruments of conveyance
or transfer, in forms reasonably satisfactory to Purchaser, as
may be necessary to vest in Purchaser the interest in the Real
Property and the Improvements which are not owned in fee;
(ii) a bill of sale in the form reasonably satisfactory to Purchaser
("Bill of Sale"), stock powers conveying the shares of
Subsidiaries, together with the certificates evidencing such
shares, an Assignment and Assumption of Contracts in the form
reasonably satisfactory to Purchaser ("Assignment and
Assumption"), and such other bills of sale, assignments and other
instruments of conveyance and transfer, in forms reasonably
satisfactory to Purchaser, as are necessary to vest in Purchaser
title in and to the Inventory, Equipment and Contracts. Seller
shall (or where appropriate shall cause a subsidiary to) take or
cause to be taken such other steps as are required to put
Purchaser in actual possession and operating control of the 76
Assets and the operations of the Products Company;
(iii) the Intellectual Property Agreement;
(iv) the Shared Software License Agreement;
(v) the Seller Services Agreement(s);
(vi) the Purchaser Services Agreement(s);
(vii) the Environmental Agreement;
(viii) the Participation Payment Agreement;
(ix) the following certificates:
10
<PAGE>
(1) a certificate substantially to the effect of Sections
11(a)(i), (ii) and (iii), dated as of the Closing Date and
executed by a duly authorized officer of Seller;
(2) a certificate certifying the incumbency of any officer of
Seller executing this Agreement, or any agreement,
instrument or certificate delivered by Seller in connection
herewith, dated as of the Closing Date and executed by a
duly authorized officer of Seller;
(3) a certificate to the effect that, as of the Closing Date,
Seller is not a foreign person as defined in the Internal
Revenue Code of 1986, as amended, and Income Tax
Regulations, such certificate to be substantially in the
form described in Treasury Regulation Section
1.1445-2(b)(2)(iii)(B) or otherwise with the requirements of
Section 1.1445-2(b)(2) of that regulation, dated as of the
Closing Date and signed by a duly authorized officer of
Seller;
(x) the opinion of counsel of Seller described in Section 18 below;
(xi) any and all other documents, instruments and/or certificates
reasonably requested by Purchaser or otherwise contemplated by
this Agreement;
(xii)an owner's affidavit and such corporate certificates with
respect to good standing, incumbency, franchise Taxes, and the
authorization of the sale of the Real Property and Improvements
as title insurance companies may reasonably request in order to
omit requirements, exceptions and/or add affirmative coverage
endorsements from or to the coverage of the fee policies being
delivered at Closing with respect to all encumbrances, liens and
other matters affecting the Real Property and Improvements other
than the Permitted Exceptions; and
(xiii) such documents necessary to effect the transfer of the Vessels,
as required by U.S. Coast Guard regulations.
(c) Purchaser's Obligations. At the Closing, Purchaser shall execute and/or
-----------------------
deliver (as the case may be) to Seller the following:Purchaser's Obligations. At
the Closing, Purchaser shall execute and/or deliver (as the case may be) to
Seller the following:
(i) the amounts payable at the Closing in respect of the Base
Purchase Price, the Inventory and the outstanding principal
balance of Self- Amortizing Notes issued after the date hereof,
as set forth above;
11
<PAGE>
(ii) the Intellectual Property Agreement;
(iii) the Shared Software License Agreement;
(iv) the Seller Services Agreement(s);
(v) the Purchaser Services Agreement(s);
(vi) the Environmental Agreement;
(vii) the Participation Payment Agreement;
(viii) the following certificates:
(1) a certificate substantially to the effect of Sections
11(b)(i), (ii) and (iii), dated as of the Closing Date and
executed by a duly authorized officer of Purchaser;
(2) a certificate certifying the incumbency of any officer of
Purchaser executing this Agreement, or any agreement,
instrument or certificate executed by Purchaser in
connection herewith, dated as of the Closing Date and
executed by a duly authorized officer of Purchaser;
(ix) the opinion of counsel of Purchaser described in Section 18
below; and
(x) any and all other documents, instruments and/or certificates
reasonably requested by Seller or otherwise contemplated by
this Agreement.
11. Conditions Precedent to Closing. Subject to the terms hereof, the
---------------------------------
obligations of Seller and Purchaser at the Closing are subject to the
satisfaction or waiver at or prior to the Closing of each of the respective
conditions set forth below.
(a) Conditions to Purchaser's Obligations. The obligations of
------------------------------------------- Purchaser at the Closing
are subject to the following conditions:
(i) subject to Section 21, all representations and warranties of Seller
contained in this Agreement and any agreement, instrument or certificate
delivered by Seller pursuant hereto shall be true and correct in all material
respects, except to the extent waived by Purchaser;
(ii) Seller shall have performed all covenants required by this Agreement,
or by any agreement, instrument or certificate delivered by Seller pursuant
hereto, to be performed by it at or prior to the Closing;
12
<PAGE>
(iii) Seller shall have delivered to Purchaser all agreements, instruments,
certificates and documents required to be so delivered under this Agreement or
such other agreements or instruments, including without limitation those listed
in Section 10(b);
(iv) any applicable waiting periods or extensions thereof under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, shall have
expired;
(v) no injunction or order shall have been issued restraining or
prohibiting, nor shall there be any law or decision which would render Purchaser
unable to consummate, or which would bar or substantially delay (1) any
transaction contemplated by this Agreement, or (2) Purchaser's ownership or use
of the 76 Assets; nor shall any governmental agency have filed an action or
threatened to file an action seeking any of the foregoing;
(vi) the following specific conditions shall have been satisfied:
(1) the Improvements and the Equipment shall be in such
working condition that Purchaser will be able to
operate the refineries included in the 76 Assets at the
capacities set forth in Attachment XVIII, in compliance
in all material respects with all applicable laws and
Permits;
(2) Purchaser shall have obtained or have the benefit of
all material Permits and Consents necessary for the
normal operation of the 76 Assets by Purchaser;
(3) subject to Section 21, Purchaser's due diligence
investigation in respect of the condition and the
operations of the 76 Assets shall not have disclosed
material adverse matters as to the 76 Assets, taken as
a whole, not heretofore known by Purchaser. Purchaser
agrees that it will undertake and complete its due
diligence on the capacities of the major process units
at the refineries by January 15, 1997, on the Condition
of the refineries by February 7, 1997 and on all other
matters by February 25, 1997, and notify Seller of its
findings by such dates. Failure to complete such due
diligence and so notify Seller by such dates shall
constitute a waiver of the condition set forth in this
Section 11(a)(vi)(3) (but not any other provision of
this Agreement); and
(vii) as of the Closing, Purchaser shall have obtained all rights to all
Intellectual Property necessary to operate the 76 Assets or conduct the
operations of the Products Company.
13
<PAGE>
(b) Conditions to Seller's Obligations. The obligations of Seller at the
-----------------------------------
Closing are subject to the following conditions:
(i) all representations and warranties of Purchaser contained in this
Agreement and any agreement or instrument delivered by Purchaser pursuant hereto
shall be true and correct in all material respects, except to the extent waived
in writing by Seller;
(ii) Purchaser shall have performed all covenants required by this
Agreement, or by any agreement, instrument or certificate delivered by Purchaser
pursuant hereto, to be performed by it at or prior to the Closing;
(iii) Purchaser shall have delivered to Seller all agreements, instruments,
certificates and documents required to be so delivered under this Agreement or
such other agreements or instruments, including without limitation those listed
in Section 10(c);
(iv) any applicable waiting periods or extensions thereof under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, shall have
expired;
(v) no injunction or order shall have been issued restraining or
prohibiting, nor shall there be any law or decision which would render Seller
unable to consummate, or which would bar or substantially delay, any transaction
contemplated by this Agreement; nor shall any governmental agency have filed an
action or threatened to file an action seeking any of the foregoing;
(vi) all governmental approval, decision or permit required to complete the
transactions contemplated by this Agreement shall have been obtained; and
(vii) If Seller is entitled to receive Shares under the Escrow Agreement,
there shall not have occurred a material adverse change in the financial
condition of Purchaser after the date of its most recent publicly available
financial statements, and Purchaser's independent accountants shall not have
qualified their opinion to Purchaser's audited financial statements on a "scope
of audit" or "going concern" basis.
12. Cooperation. From the date hereof until the Closing, Seller and
-----------
Purchaser shall work together in the spirit of continuing cooperation to (a)
cause the conditions to Closing set forth in Section 11 to be satisfied as
quickly as is reasonably possible, and (b) obtain any Consent (as defined below)
required by Seller or Purchaser to consummate the transaction contemplated by
this Agreement, or otherwise in connection with Purchaser's ownership of the 76
Assets or its proposed business operations.
14
<PAGE>
13. Seller's Representations and Warranties. In order to induce Purchaser
-----------------------------------------
to enter into this Agreement, Seller, for itself and the Subsidiaries, hereby
warrants and represents to Purchaser that:
(a) Organization. (i) Seller is a corporation duly organized, validly
-------------
existing and in good standing under the laws of the State of California and has
the corporate power and authority to own, lease and operate the 76 Assets and to
conduct its business operations.
(ii) To Seller's knowledge, each of the Subsidiaries listed in Attachment
VIII is duly organized, validly existing and in good standing under the laws of
the state of its respective organization, and has the corporate power and
authority to own its assets and conduct its operations. Seller owns the equity
interests in the Subsidiaries set forth in Attachment VIII subject to no lien,
encumbrance or option in favor of any third party.
(b) Authority; Enforceability. Seller has the corporate power and authority
--------------------------
(i) to execute and deliver this Agreement and each agreement and instrument
delivered or to be delivered by Seller pursuant hereto, and to carry out its
obligations hereunder and thereunder and (ii) to own or lease and operate the 76
Assets and to conduct its business. The execution, delivery and performance of
this Agreement and each agreement and instrument delivered or to be delivered
pursuant hereto by Seller, and the consummation of the transactions provided for
hereby and thereby, have been duly authorized and approved by all requisite
corporate action of Seller and no other corporate act or proceeding on the part
of Seller or its affiliates or shareholders is necessary to authorize the
execution, delivery or performance of this Agreement or of such other agreements
and instruments, or the transactions contemplated hereby or thereby; and each of
this Agreement and such agreements and instruments is, or upon its execution and
delivery will be, legal, valid, binding and enforceable against Seller in
accordance with its respective terms. Neither Seller nor any of its affiliates
has any contractual obligation, to sell, lease or otherwise transfer, directly
or indirectly, the 76 Assets or any part thereof to any person other than
Purchaser or as permitted by Section 27.
(c) Permits and Consents. To Seller's knowledge, Attachment XX and the
----------------------
schedules to Attachment XXII hereto set forth an accurate and complete list of
all permits, licenses, approvals and authorizations required under federal,
state, local and foreign laws, rules, regulations, orders, licenses, decrees or
judgments necessary for the operation of the Products Company ("Permits").
Except as set forth on Attachment XX and the schedules to Attachment XXII
hereto, to Seller's knowledge no consent, waiver, approval, authorization,
exemption, registration, license or declaration ("Consent") of or by, or filing
with, any other person is required with respect to Seller or any of its
affiliates in connection with the execution, delivery or enforceability of this
Agreement or any agreement or instrument delivered pursuant hereto by Seller,
and or the consummation of any of the transactions provided for hereby or
thereby, 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 significant,
15
<PAGE>
individually and in the aggregate, to the 76 Assets and/or the operations of the
Products Company, and (ii) filings made under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
(d) No Breach. Except as set forth on Schedule 13(d), the execution and
----------
delivery of this Agreement and each agreement and instrument delivered or to be
delivered pursuant hereto by Seller, and the consummation of the transactions
provided for hereby and thereby and the compliance by Seller with any of the
provisions hereof or thereof does not and will not (i) violate, or conflict
with, or result in a breach of, any provisions of, or constitute a default (or
an event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the performance
required by, or result in the creation of any lien upon any of the Real
Property, Improvements, Inventory, Equipment, Pipelines, Intellectual Property
or Contracts under, any of the terms, conditions or provisions of the Articles
of Incorporation or Bylaws of Seller or similar charter documents of any
Subsidiary or under any Material Contract (as defined in Section 13(k)) or other
agreement, instrument or obligation to which Seller is a party, or by which the
facility or any of the operations of the Products Company is otherwise bound, or
(ii) violate any order, injunction, statute, rule or regulation, or (iii)
trigger any rights of first refusal, or any buy/sell or similar rights.
(e) Real Property. Attachment II sets forth the address of each item of
---------------
Real Property and the nature and extent of Seller's ownership interest therein.
Seller has Insurable and marketable title in fee simple to the Real Property and
Improvements indicated thereon as owned in fee, which at Closing will be subject
only to the Permitted Exceptions, and the Deed(s) thereto will be in recordable
form with respect to all of such Real Property and Improvements therein
described. With respect to any Real Property or Improvements which is under
lease to Seller, such Attachment identifies the address, the landlord and the
date and terms of the lease; and, except as indicated in such Attachment, all
such leases are valid and are in full force and effect and are enforceable in
accordance with their terms, no material defaults exist with respect thereto,
are Insurable leasehold interests, and all such leases may be assigned and/or
sublet to Purchaser without the consent of the lessor thereunder or any third
party. With respect to any other interest in real property included in the
Products Company, such Attachment sets forth a description of such Real
Property, its owner, and the terms and conditions of use. To the best of
Seller's knowledge, other than as listed in Attachment II or Attachment III,
there are no material easements, covenants, restrictions, rights-of-way or other
interests or rights reasonably necessary for the operations of the Products
Company. The easements, rights-of-way and other interests and rights described
in such Attachment are valid and are in full force and effect and are
enforceable in accordance with their terms, and may be assigned or otherwise
transferred to Purchaser without the Consent of any third party, except as noted
in said Attachment.
(f) Pipelines. Attachment III sets forth a list of the pipelines which are
---------
included in the 76 Assets. To the best of Seller's knowledge, other than as
listed in Attachment III and other than Permitted Exceptions, Seller has all
16
<PAGE>
material easements, covenants, restrictions, rights-of-way or other interests or
rights that are reasonably necessary for the operation of the Pipelines as
conducted by Seller in 1996. Except as set forth on Attachment III, Seller has,
and as of the Closing Purchaser will have, title to the equipment constituting
the Pipelines free and clear of all liens and encumbrances other than Permitted
Exceptions.
(g) Capital Projects. Attachment XXI identifies and describes in reasonable
-----------------
detail all major capital projects pending or planned at or in respect of the 76
Assets in calendar year 1997, including the estimated final completion date and
estimated final cost thereof.
(h) Equipment. Attachment IV identifies each major item of equipment
---------
relating to the 76 Assets, including a general description of related spare
parts, and provides a summary description of each material item thereof, and
except as indicated in Attachment IV, Seller has, and as of the Closing
Purchaser will have, title to such Equipment, free and clear of all liens and
encumbrances.
(i) Refineries Capacities; Condition. The capacities of the refineries of
----------------------------------
the Products Company are set forth in Attachment XVIII. The condition of the 76
Assets, taken as a whole, is generally consistent with their respective ages and
stages of useful life (repair cycle).
(j) Compliance with Laws. To Seller's knowledge, except as set forth on
----------------------
Schedule 13(j), Seller and each of its affiliates is in compliance in all
material respects with all Permits, judgments, orders, injunctions, statutes,
rules, regulations and other legal requirements (other than Environmental Laws)
applicable to, or required in connection with, the 76 Assets or the operations
of the Products Company. Except as set forth in said Schedule, Seller has not
received (whether directly or indirectly) since January 1, 1996, any notice of
material violation of any such Permit, judgment, order, injunction, statute,
rule, regulation or other legal requirement.
(k) Contracts. (i) Attachment VII contains an accurate and complete list of
----------
all Material Contracts of the Products Company, including without limitation any
Material Contracts relating to any of the 76 Assets or by which the 76 Assets
are bound.
(ii) Except as specifically disclosed in Attachment VII, (1) all of the
Material Contracts are valid and are in full force and effect and are
enforceable in accordance with their terms, (2) to Seller's knowledge, no
material defaults exist with respect thereto, nor has any event occurred which,
with the lapse of time or the giving of notice, or both, would constitute a
default under any Material Contract, except where neither such a default nor the
loss of such Contract would have a material adverse effect upon the 76 Assets or
any of the operations of the Products Company, (3) all such Material Contracts
may be assigned to Purchaser without the Consent of any third party, and (4) to
17
<PAGE>
the best of Seller's knowledge, there exists no material dispute with any other
party with respect to any such Material Contract.
(iii) As used herein, "Material Contract" means a Contract which involves
the purchase, sale or lease of goods, services or property for $1 million or
more and is not terminable without penalty prior to June 30, 1997.
(1) Intellectual Property. (i) To Seller's knowledge, the schedules to
----------------------
Attachment XV contain an accurate and complete list of all Intellectual Property
owned by Seller and its affiliates which is used in, and is material to, the
business of Products Company. To Seller's knowledge, without independent
investigation, (A) such Intellectual Property does not infringe upon any patent,
trademark or service mark, or misappropriate any trade secret, of any third
party (and, except as disclosed on Schedule 13(l), Seller is not aware of any
assertions made by any third party alleging such an infringement or
misappropriation), and (B) Seller's right to use such Intellectual Property is
valid and such Intellectual Property is not being infringed upon or
misappropriated by any third party. Except as disclosed on Schedule 13(l), to
Seller's knowledge, Seller and its affiliates have the right to assign their
respective right, title and interest in and to, or to license the right to use,
the Intellectual Property to Purchaser in accordance with the terms of the
Intellectual Property Agreement.
(ii) To Seller's knowledge, without independent investigation, with respect
to any intellectual property owned by a third party and licensed or sublicensed
to Seller or its affiliates under a Contract set forth on Attachment VII, (A)
such Contract grants to Seller or its affiliate, as licensee or sublicensee, as
the case may be, the right to use such intellectual property as it is currently
being used in connection with the business of Products Company, (B) such
Contract is valid, binding, in full force and effect and enforceable against
such third party licensor or sublicensor in accordance with its terms, and (C)
such intellectual property is valid and is not being infringed upon or
misappropriated by Seller or its affiliates. Except as disclosed on Schedule
13(l), to Seller's knowledge, all such Contracts (relating to the license or
sublicense of intellectual property from a third party to Seller or its
affiliates) may be assigned or sublicensed to Purchaser without the consent of
any third party.
(m) Actions and Proceedings. (i) Except as set forth on Schedule 13(m),
-------------------------
there is no action, suit, proceeding or claim pending, or, to Seller's
knowledge, threatened against Seller or any of its affiliates, whether or not
the defense thereof or liability in respect thereof is covered by policies of
insurance, involving or affecting the 76 Assets or the operations of the
Products Company and seeking (A) compensation in an amount in excess of $250,000
in each case, or $1,000,000 in the aggregate, (B) compensation in an unspecified
amount, (C) relief or redress under Environmental Laws; or (D) any injunctive
relief, except for such injunctive relief that if granted would be immaterial,
individually and in the aggregate, to the 76 Assets and/or the operations of the
Products Company, nor is there any basis known to Seller for any such action,
suit, proceeding or claim; and there are no decrees, injunctions, liens or
18
<PAGE>
orders of any court or governmental department or agency outstanding against
Seller relating to or affecting the 76 Assets or the operations of the Products
Company.
(ii) To Seller's knowledge, except as set forth on Schedule 13(m), no
action, suit, 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 any such agreement, instrument, or transaction
contemplated hereby.
(n) Employee Relations. Except as set forth on Schedule 13(n), since
-------------------
January 1, 1996 there has not occurred, or to Seller's knowledge been seriously
threatened, any strikes, slowdowns, picketing, work stoppages or other similar
labor activities with respect to employees employed at the 76 Assets or in
connection with Seller's business operations thereat.
(o) Ordinary Course. Since October 1, 1996, except as permitted by this
----------------
Agreement, the 76 Assets have been used, operated and held by Seller only in the
ordinary course of business.
(9) Brokers. All negotiations relating to this Agreement, the agreements
-------
and instruments delivered pursuant hereto, and the transactions contemplated
hereby and thereby have been carried on without the intervention of any person
acting on behalf of Seller or its affiliates (other than Goldman, Sachs & Co.)
in such manner as to give rise to any valid claim against Purchaser for any
broker's or finder's fee or similar compensation in connection with the
transactions contemplated hereby or thereby. Seller agrees to pay and to
indemnify fully, hold harmless and defend Purchaser and its affiliates from and
against, and pay, any claims by Goldman, Sachs & Co. or any other person
alleging a right to a broker's or finder's fee based upon any actions of Seller
or its affiliates.
(q) Solvency. Seller is solvent, is not in the hands of a receiver, nor is
---------
any application of receivership pending and no proceedings are pending by or
against it for bankruptcy or reorganization in any state or federal
court.
(r) Disclosure. No representation or warranty made by Seller in this
----------
Agreement or in any agreement, instrument or schedule required hereunder
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained herein and therein not false or
misleading.
(s) Returns. Seller has filed (or will cause to be filed) all Non-Income
--------
Tax Returns (as defined in Section 31(j)) that are required to be filed with
respect to the 76 Assets or the Products Company through the Closing Date, and,
to the best of Seller's knowledge, such Returns are (and will be) true, correct
and complete in all material respects and were (and will be) prepared in
conformity with all applicable laws and regulations subject to Section 13(t)
19
<PAGE>
below, has paid (or will pay when due) all Taxes due on such Returns as owing
which are attributable to any taxable period or portion thereof that ends on or
before the Closing Date.
(t) Financial Statements. Attachment I contains the audited financial
---------------------
statements of the Products Company consisting of its consolidated balance sheet
as of December 31, 1995 and September 30, 1996, and the related consolidated
statements of operations, cash flows and parent company investment for the years
ending December 31, 1994 and 1995 and for the nine months ended September 30,
1996, and the report thereon of Coopers & Lybrand L.L.P. (the "Audited Financial
Statements"). The Audited Financial Statements fairly present the financial
condition and results of operations of the Products Company at the dates and for
the periods indicated in accordance with generally accepted accounting
principles ("GAAP") as described in the footnotes thereto.
14. Purchaser's Representations and Warranties. In order to induce Seller
--------------------------------------------
to enter into this Agreement, Purchaser hereby warrants and represents to Seller
that:
(a) Organization. Purchaser is a corporation duly organized, validly
-------------
existing and in good standing under the laws of the State of
Nevada.
(b) Authority; Enforceability. Purchaser has the corporate power and
---------------------------
authority (i) to execute and deliver this Agreement and each agreement and
instrument delivered or to be delivered by Purchaser pursuant hereto, and to
carry out its obligations hereunder and thereunder and (ii) to own or lease and
operate the 76 Assets and to conduct its business. The execution, delivery and
performance of this Agreement and each agreement and instrument delivered or to
be delivered pursuant hereto by Purchaser, and the consummation of the
transactions provided for hereby and thereby, have been duly authorized and
approved by all requisite corporate action of Purchaser and no other corporate
act or proceeding on the part of Purchaser or its affiliates or shareholders is
necessary to authorize the execution, delivery or performance of this Agreement
or of such other agreements and instruments, or of the transactions contemplated
hereby or thereby; and each of this Agreement and such agreements and
instruments is, or upon its execution and delivery will be, legal, valid,
binding and enforceable against Purchaser in accordance with its respective
terms.
(c) Consents. Except as set forth on Schedule 14(c), to Purchaser's
---------
knowledge, no Consent of or by, or filing with, any other person is required
with respect to Purchaser or any of its affiliates in connection with the
execution, delivery or enforceability of this Agreement or any agreement or
instrument delivered or to be delivered or to be delivered pursuant hereto by
Purchaser, or the consummation of any of the transactions provided for hereby or
thereby, other than (i) those for which any adverse consequences arising out of
the failure to obtain such Consent or to make such filing are immaterial,
individually and in the aggregate, to the 76 Assets and/or the operations of the
Products Company, (ii) filings made under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and (iii) approval of Purchaser's
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<PAGE>
shareholders for the issuance of any shares of Purchaser pursuant to Section
5(a).
(d) No Breach. Except as set forth on Schedule 14(d), the execution and
-----------
delivery of this agreement and each agreement and instrument delivered or to be
delivered pursuant hereto by Purchaser, and the consummation of the transactions
provided for hereby and thereby and the compliance by Purchaser with any of the
provisions hereof or thereof does not and will not (i) violate, or conflict
with, or result in a breach of any provisions of, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a default)
under, or result in the termination of, or accelerate the performance required
under, any of the terms, conditions or provisions of the Certificate of
Incorporation or By-laws of Purchaser or (ii) violate any order, injunction,
statute, rule or regulation, or (iii) trigger any rights of first refusal, or
any buy/sell or similar rights.
(e) Actions and Proceedings. To Purchaser's knowledge, except as set forth
-----------------------
on Schedule 14(e), no action, suit, 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 any such agreement,
instrument, or transaction contemplated hereby.
(f) Brokers. All negotiations relating to this Agreement, the agreements
-------
and instruments delivered pursuant hereto, and the transactions contemplated
hereby and thereby have been carried on without the intervention of any person
acting on behalf of Purchaser or its affiliates 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 or thereby.
Purchaser agrees to pay and to indemnify fully, hold harmless and defend Seller
and its affiliates from and against, and pay, any claims by any person alleging
a right to a broker's or finder's fee based upon any actions of Purchaser or its
affiliates.
(g) Solvency. Purchaser is solvent, is not in the hands of a receiver, nor
--------
is any application of receivership pending and no proceedings are pending by or
against it for bankruptcy or reorganization in any state or federal court.
(h) Disclosure. No representation or warranty made by Purchaser in this
----------
Agreement or in any agreement or instrument delivered pursuant hereto, or in any
schedule, written statement or certificate furnished to Seller in connection
herewith or therewith, contains any untrue statement of a material fact or omits
to state a material fact necessary to make the statements contained herein and
therein not false or misleading.
15. Environmental Agreement. Seller and Purchaser shall enter into the
------------------------
Environmental Agreement in the form of Attachment XXII (the "Environmental
Agreement") at Closing. The parties intend that the Environmental Agreement
shall be the sole and exclusive statement of the representations, warranties,
covenants, agreements and indemnities with respect to Environmental Laws and the
21
<PAGE>
Release of Hazardous Substances (as defined in the Environmental Agreement).
16. Condition of Assets.
--------------------
EXCEPT AS OTHERWISE SET FORTH HEREIN: ALL EQUIPMENT AND IMPROVEMENTS TO
BE CONVEYED HEREUNDER WILL BE CONVEYED ON AN "AS IS," "WHERE IS," AND "WITH ALL
FAULTS" BASIS AT THE CLOSING; AND SELLER MAKES NO WARRANTIES, EXPRESS OR
IMPLIED, CONCERNING THE PHYSICAL CONDITION, UTILITY OR OPERABILITY OF THE
EQUIPMENT OR IMPROVEMENTS (OTHER THAN SELLER'S INVENTORY), INCLUDING, BUT NOT
LIMITED TO, ANY WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR PARTICULAR OR
ORDINARY USES OR PURPOSES.
17. Objections to Title; Title Insurance. (a) Purchaser may, after the date
------------------------------------
hereof, (A) order an examination of title to the Real Property, and (B) procure
property searches with respect to the Improvements, Inventory, Pipelines and
Equipment, and (i) at Purchaser's sole option, order an as-built survey (the
"Survey") from a reputable surveying firm, complying with current ALTA/ACSM
standards, showing the Real Property, the material Improvements, easements,
licenses, rights-of-way and any other material recorded or unrecorded interest
in respect of the Real Property, reasonably acceptable to Purchaser. The cost of
any examination or search by Purchaser hereunder and title insurance shall be
paid by Purchaser. Seller shall cooperate with Purchaser and its authorized
representatives in respect of any examination, search or survey hereunder and,
to the extent available, deliver to Purchaser all existing title insurance
reports, copies of deeds, Tax bills and surveys relating to the Real Property,
the Improvements and the Pipelines.
(b) If (i) any material defect appears in such report or search, which is
not a Permitted Exception or any survey reveals (ii) (A) any state of facts
which is materially adverse to Purchaser's use of the Real Property or the
Pipelines, access to all public roads, waterways, loading facilities, utilities,
pipelines and other services and improvements necessary to, or otherwise used
for the benefit of, the 76 Assets, (B) any encroachments onto the Real Property,
projections off of the Real Property by the Improvements, or encroachments onto
the Real Property by structures not intended to be conveyed to Purchaser hereby,
or the violation of applicable zoning or set back requirements of the
Improvements, (C) any encroachment onto any easements or rights-of-way by the
Improvements, including encroachments onto otherwise acceptable Permitted
Exceptions, or (D) any gaps, overlaps or easements along the record lines and
the lots comprising the Real Property or on which the Pipelines are located, or
within the property lines (each matter referred to in clause (i) or (ii), a
"Reported Encumbrance"), Purchaser shall give written notice of such Reported
Encumbrance to Seller within a period ending on the later of January 15, 1997 or
10 business days after receiving the title report, Survey or other written
notice thereof (or any update or revision thereto). Seller shall have 30 days
following such notice in which to cure such Reported Encumbrance to Purchaser's
reasonable satisfaction, and if the Reported Encumbrance is not cured within
22
<PAGE>
such period, then the provisions of Section 21 shall be applicable thereto as if
it were an amendment to Seller's representations and warranties.
(c) If Seller cures any Reported Encumbrance to Purchaser's reasonable
satisfaction pursuant hereto, or if Purchaser fails to notify Seller thereof in
accordance with Section 17(b), then such Reported Encumbrance shall be deemed a
Permitted Exception for all purposes hereof.
(d) Title Insurance. The title to the portion of the Real Property and
Improvements owned by Seller in fee or leased by Seller and that is conveyed to
Purchaser hereunder shall be insurable (in the amount of the Purchase Price
allocated to such Real Property) at regular rates, subject only to the Permitted
Exceptions, by nationally recognized title insurance companies authorized to do
business in the state where the Real Property is located acceptable to Purchaser
("Insurable") pursuant to such coinsurance and/or reinsurance title policies
which Purchaser reasonably deems appropriate, which shall be at Purchaser's cost
and expense. Any such reinsurance title policies, as referenced in the
immediately preceding sentence, shall contain direct access provisions
reasonably acceptable to Purchaser.
18. Opinions of Counsel.
-------------------
(a) Counsel for Seller. Seller shall deliver to Purchaser at the Closing
------------------
the opinion of Dennis P.R. Codon, Esq., Vice President and General Counsel for
Seller, supplemented by opinions of designated counsel as appropriate, dated the
Closing Date and substantially to the effect that:
(i) Seller is duly organized, validly existing and in good standing under
the laws of the State of California and is duly qualified and in good standing
in California and in other jurisdictions where the ownership of the 76 Assets,
or the conduct of the operations of the Products Company, requires it to be so
qualified;
(ii) Seller has full corporate power and authority to enter into this
Agreement and each of the agreements specifically provided herein (together, the
"Seller's Agreements"), and to perform its obligations hereunder and thereunder;
(iii) Each of the Seller's Agreements delivered pursuant hereto by Seller
has been duly executed and delivered by Seller;
(iv) The execution, delivery and performance by Seller of each of the
Seller's Agreements by Seller will not result in any breach of Seller's Articles
of Incorporation or Bylaws;
(v) Each of the Seller's Agreements is, and in combination are, or will be,
valid agreements and obligations of Seller and legally binding upon it, except
23
<PAGE>
as the same may be limited by or subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
affecting the enforcement of creditors' rights generally or by general
principles of equity;
(vi) To such counsel's knowledge, there is no action, suit, proceeding or
claim pending or threatened against or relating to Seller which is reasonably
likely to prevent the carrying out of this Agreement or the agreements or
instruments delivered pursuant hereto, or the transactions contemplated hereby
or thereby, declare any such transactions unlawful, or cause such transactions
to be rescinded.
(b) Counsel for Purchaser. Purchaser shall deliver to Seller at the Closing
---------------------
an opinion of Wilkes McClave III, Esq., counsel for Purchaser, as supplemented
by opinions of designated counsel as appropriate, dated the Closing Date and
substantially to the effect that:
(i) Purchaser is duly organized, validly existing and in good standing
under the laws of the State of Nevada and has the corporate power to own all of
its properties and assets and to carry on its business as conducted immediately
prior to the Closing, and is duly qualified and in good standing in California;
(ii) Purchaser has full corporate power and authority to enter into this
Agreement and each of the other agreements specifically contemplated hereby
(collectively, the "Purchaser's Agreements"), and to perform its obligations
hereunder and thereunder;
(iii) Each of the Purchaser's Agreements deliver pursuant hereto by
Purchaser has been duly executed and delivered by Purchaser;
(iv) The execution, delivery and performance by Purchaser of each of the
Purchaser's Agreements will not result in any breach of Purchaser's Certificate
of Incorporation or By-laws;
(v) Each of the Purchaser's Agreements is, and in combination are, or will
be, valid agreements and obligations of Purchaser and legally binding upon it,
except as the same may be limited by or subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
affecting the enforcement of creditors' rights generally or by general
principles of equity;
(vi) To such counsel's knowledge, there is no action, suit, proceeding or
claim pending or threatened against or relating to Purchaser which is reasonably
likely to prevent the carrying out of this Agreement or the agreements or
instruments delivered pursuant hereto, or the transactions contemplated hereby
or thereby, declare any such transactions unlawful, or cause such transactions
to be rescinded.
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<PAGE>
19. Risk of Loss. (a) If a Material Loss Event (as defined below) shall
------------
occur prior to Closing, Seller shall immediately notify Purchaser and provide a
detailed report and the parties shall proceed as follows:
(i) If it appears the damage can reasonably be repaired within 60 days,
Seller shall immediately commence preparation to effect such repairs and the
Closing shall be delayed until the repairs are completed; provided, however,
either party, in turn, may promptly notify the other that it wishes to close the
transaction without such delay but with a reduction in the Purchase Price
reflecting the diminution in value caused by the damage. In such event, the
parties will negotiate in good faith an adjustment to the Purchase Price
reflecting the diminution in value caused by the Material Loss Event. If they
are unable to reach agreement, Seller shall complete the repairs in the required
time and the Closing shall be delayed until the repairs are completed.
(ii) If it appears repairs can not reasonably be completed within 60 days,
Seller shall immediately commence preparation to effect such repairs and the
parties shall negotiate in good faith an adjustment to the Purchase Price to
reflect the diminution in value of the 76 Assets caused by the damage. Either
party shall have the right to delay the date of Closing for up to 60 days (or
such shorter time as is necessary to remedy the loss). If the parties are not
able to agree on a reasonable price adjustment by the extended Closing Date,
Purchaser may terminate the transaction, amounts in the escrow account will be
returned to Purchaser, and both parties shall be released from the transaction
with no penalty.
(iii) In the event of destruction, damage, or other casualty of the 76
Assets prior to Closing which does not constitute a Material Loss Event, or in
the event of a taking of less than a Material portion thereof (in each case, as
defined below), Seller shall promptly notify Purchaser and provide a detailed
report thereof. In such event, Purchaser's obligation to close hereunder shall
not be affected, but Purchaser and Seller shall negotiate in good faith a
reduction in the Purchase Price to fairly reflect any diminution in value of the
76 Assets in excess of $5 million per event represented by the destruction,
damages, or other casualty. Seller may, in the alternative, delay the Closing
for up to 90 days (or such shorter time as is necessary to remedy the loss) and
rebuild, repair, replace or otherwise remedy the loss event, in which case there
shall be no reduction of the Purchase Price.
For purposes of this Section 19 only, a "Material Loss Event" shall be damage
and probable loss caused by fire, explosion, earthquake, breakdown of equipment,
environmental release that significantly adversely affects the operations of a
major facility, or other casualty to all or a portion of the 76 Assets, or a
taking of a material portion of the 76 Assets (for Real Property, more than 10%
of the area of the Real Property is so taken), for which the estimated
diminution in value (without taking into account any insurance or third party
contributions) is reasonably estimated to be more than One Hundred Million
Dollars ($100,000,000 million).
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<PAGE>
20. Termination; Remedies upon Default or Termination.
-------------------------------------------------
(a) Default by Seller. Except as provided in Sections 20(c), (d), (e) and
-----------------
(f) below, if Seller fails or refuses to close pursuant to this Agreement by the
appropriate date of Closing as provided in Section 10 for any reason other than
Purchaser's material breach (including without limitation, Purchaser's material
failure to cooperate with Seller to cause the closing conditions to be
satisfied), Purchaser shall be entitled to reimbursement for its reasonable
out-of-pocket costs paid in furtherance of this Agreement and the transactions
contemplated hereby, including reasonable attorneys' fees, and its damages for
such breach (subject to the limitations of Section 23(d)).
(b) Default by Purchaser. Except as provided in Section 20(f), if Purchaser
--------------------
fails or refuses to close pursuant to this Agreement by the appropriate date of
Closing as provided in Section 10 for any reason other than Seller's material
breach (including without limitation, Seller's material failure to cooperate
with Purchaser to cause the closing conditions to be satisfied), Seller shall be
entitled to reimbursement of its reasonable out-of-pocket costs paid in
furtherance of this Agreement and the transaction contemplated hereby, including
reasonable attorneys' fees, and its damages for such breach (subject to the
limitations of Section 23(d)).
(c) Failure to Fund Escrow. If Purchaser fails to make the deposits into
-----------------------
the Escrow on January 15, 1997, as required by Section 5, Purchaser or Seller
may terminate this Agreement and Purchaser shall pay $20 million to Seller by
wire transfer of immediately available funds, and that shall be the sole and
exclusive remedy of Seller.
(d) Failure to Obtain Shareholder Approval. If Purchaser has failed to
-----------------
deposit an amount in cash equal to the Base Purchase Price into the Escrow, and
if the Shareholders of Purchaser fail to approve the issuance of the Shares by
February 28, 1997 (or March 14, 1997, if the SEC reviews Purchaser's proxy
materials for its meeting of shareholders), Seller may terminate this Agreement
and Purchaser will pay $20 million to Seller. If Purchaser has made deposits
into the Escrow, Purchaser and Seller shall give instructions to the Escrow
Agent to deliver $20 million to Seller and the remainder of the Escrow to
Purchaser. If Purchaser has not made any deposit into the Escrow, Purchaser
shall pay Seller by wire transfer of $20 million in immediately available funds.
Receipt of $20 million hereunder by Seller shall be the sole and exclusive
remedy of Seller.
(e) Purchaser Stock Price. If the Market Price is less than $45, Purchaser
----------------------
may elect to issue Shares in accordance with the Shareholder Agreement. If
Purchaser does not elect to issue sufficient Shares in accordance with the
Shareholders Agreement such that the Market Value is at least equal to the
difference between the Base Purchase Price and the amount of cash deposited in
the Escrow, Seller may elect to terminate this Agreement upon payment to
Purchaser of a termination fee of $20 million. If Purchaser elects to issue
sufficient Shares in accordance with the Shareholder Agreement such that the
Market Value is at least equal to the difference between the Base Purchase Price
and the amount of cash deposited in the Escrow, and if Seller determines in good
26
<PAGE>
faith that there has been a material adverse change in the financial condition
of Purchaser, then Seller may elect to terminate this Agreement by paying to
Purchaser a termination fee of $20 million. Payment and receipt of $20 million
shall be the sole and exclusive remedy of both parties.
(f) Other Termination. If Seller and Purchaser are unable to close by May
------------------
30, 1997 pursuant to the terms of this Agreement for any reason other than as
provided above despite Purchaser's and Seller's mutual cooperation in all
material respects to cause the closing conditions to be satisfied, if Purchaser
or Seller elects to terminate the Agreement pursuant to Section 21, or if Seller
and Purchaser otherwise agree in writing to terminate this Agreement before the
Closing, this Agreement shall terminate and that shall be the sole and exclusive
remedy of both parties.
21. Updating of Representations and Warranties; Adjustment of Purchase
----------------------------------------------------------------------
Price. Each party may amend the schedules or disclosure Attachments referred to
in its representations and warranties as set forth herein at any time up to five
(5) business days prior to Closing, and each party will advise the other if it
determines that the representations or warranties of the other are not true and
correct in any material respect. The failure by a party to advise the other when
such party knows a representation and warranty of the other is not true or is
incorrect shall constitute a waiver thereof by such party. If a party amends the
schedules to representations and warranties as set forth herein, or if either
party determines that there is a breach of any representation or warranty and
such breach is not cured, Purchaser and Seller shall negotiate in good faith on
an appropriate adjustment to the Purchase Price for the 76 Assets. In such
event: (A) if the parties agree to an adjustment to the Purchase Price within
five (5) business days, the subject schedules to the representations and
warranties will be deemed amended for all purposes hereof, and (B) if the
parties cannot agree upon an adjustment to the Purchase Price within five (5)
business days, and if the amendment or breach is material, then the counter
party to the party making the amendment or committing the breach may elect (i)
to terminate this Agreement under the provisions of Section 20(f), or (ii) waive
any breach hereunder, or accept such amendment, and continue with the Closing.
Notwithstanding the foregoing, the Purchase Price shall not be reduced unless
the sum total of the agreed upon adjustments exceeds $30 million.
22. Indemnification.
---------------
(a) Indemnification by Seller. From and after the Closing, Seller agrees to
-------------------------
pay and indemnify fully, hold harmless and defend Purchaser and its officers,
directors, employees, shareholders and representatives from and against any and
all claims based upon Damages (as defined in (d) below), whether based on
negligent acts or omissions, statutory liability, strict liability or otherwise,
arising out of, resulting from or relating to:
relating to:
(i) any inaccuracy or breach as of the Closing Date of any representation
or warranty of Seller contained in this Agreement or any agreement, instrument
27
<PAGE>
or certificate delivered by Seller pursuant hereto and made at or as of the
Closing Date (other than the representations concerning environmental matters,
the sole remedy for which is set forth in the Environmental Agreement), or of
any covenant or agreement of Seller contained in this Agreement or any such
agreement or instrument;
(ii) Retained Liabilities, including without limitation any liability or
obligation in respect to the 76 Assets or the operations of the Products Company
prior to the Closing (subject in the case of environmental matters to the
provision of the Environmental Agreement);
(iii) Taxes in any manner relating to the 76 Assets or the operations of
the Products Company and attributable to any taxable period or portion thereof
that ends on or before the Closing Date; or
(iv) any claim by any securityholder of Seller's securities based on any
action taken or disclosure made or omitted by Seller.
(b) Indemnification by Purchaser. From and after the Closing, Purchaser
-----------------------------
agrees to pay and to indemnify fully, hold harmless and defend Seller and its
officers, directors, employees and representatives from and against any and all
claims based upon Damages, whether based on negligent acts or omissions,
statutory liability, strict liability or otherwise, arising out of, resulting
from or relating to:
(i) any inaccuracy or breach as of the Closing Date of any representation
or warranty of Purchaser contained in this Agreement or any agreement,
instrument or certificate delivered by Purchaser pursuant hereto and made at or
as of the Closing Date or of any covenant or agreement of Purchaser contained in
this Agreement or any such other agreement or instrument;
(ii) any liability or obligation assumed by Purchaser (A) pursuant to
Sections 7(a) and (b), and (B) any environmental liability or obligation for
which it is responsible under the Environmental Agreement.
(iii) any liability or obligation arising out of the ownership or operation
of the 76 Assets or the Products Company from and after the Closing (other than
Retained Liabilities as described in Section 22(a)(ii) above);
(iv) any claim by any securityholder of Purchaser's securities based on any
action taken or disclosure made or omitted by Purchaser (other than claims by
such securityholders against Seller based on misstatements in information
specifically provided by Seller for inclusion in a registration statement under
the Securities Act of 1933, as amended, and so included with Seller's consent);
or
28
<PAGE>
(v) any lien, penalty or interest imposed on Seller by any applicable
assessment jurisdiction with respect to any property tax returns filed by Tosco
or Tosco's Agent, or required to be so filed, with respect to the 76 Assets
after the Closing.
(c) Third-Party Claims. If any action, suit, proceeding or claim
--------------------
is commenced, or if any claim, demand or assessment is asserted, by a third
party in respect of which any person entitled to be indemnified under this
Agreement or any agreement or instrument delivered pursuant hereto (the
"Indemnified Party") proposes to demand indemnification from the other person
(the "Indemnifying Party") in connection herewith or therewith, the Indemnifying
Party shall be given prompt notice thereof (a "Claim Notice"), together with
copies of written information relating to such claims, and shall have the right
to assume control of the defense, compromise or settlement thereof. Unless
within 20 business days after such notice is given to the Indemnifying Party,
the Indemnifying Party gives the Indemnified Party notice of its election to
assume such control, the Indemnifying Party shall be deemed to have waived such
right. If the Indemnifying Party does elect to assume such control, (i) its
defense against the action, suit, proceeding or claim shall be conducted by the
Indemnifying Party and its counsel at its expense in a manner reasonably
satisfactory and effective to protect the Indemnified Party fully and (ii) the
Indemnifying Party and its counsel will keep the Indemnified Party fully advised
as to its conduct of such defense. If the Indemnifying Party shall undertake at
any time to compromise any action, suit, proceeding or claim, it shall promptly
notify the Indemnified Party of its intention to do so. The Indemnifying Party
shall not enter into any compromise or settlement hereunder without the prior
written consent of the Indemnified Party, which consent shall not be
unreasonably withheld.
If the Indemnifying Party should not elect to assume control of the
defense or should fail to defend against any such action, suit, proceeding or
claim, or if it should fail to conduct such defense in a manner reasonably
satisfactory and effective to protect the Indemnified Party fully, the
Indemnified Party may assume control of the defense and, with the consent of the
Indemnifying Party, which shall not be unreasonably withheld, settle the action,
suit, proceeding or claim at the Indemnifying Party's expense.
Notwithstanding the foregoing, each of the Indemnified Party and the
Indemnifying Party shall have the right at all times to participate in the
defense of any action, suit, proceeding, claims, demand or assessment hereunder
with its own counsel and at its own expense.
(d) Damages. For purposes hereof, "Damages" shall mean any liability,
--------
obligation, cost, damage, fine, penalty, charge or expense, including reasonable
legal fees and cost of defending any claim, to the extent not prohibited by
law.
29
<PAGE>
23. Limitations of Liability.
------------------------
(a) Subject to Section 23(b) hereof, with respect to any inaccuracy or
breach of any representation or warranty made by Seller in this Agreement, or
any other agreement, instrument or certificate delivered pursuant hereto, or any
other breach or the nonperformance of Seller's covenants and agreements under
this Agreement or such other agreements or instruments, Seller's maximum
liability to Purchaser shall not exceed Seven Hundred Fifty Million Dollars
($750,000,000).
(b) The limitation on Seller's liability set forth in Section 23(a) hereof
shall not apply with respect to, and shall be in addition to, all costs related
to Seller's environmental liabilities and obligations as provided for in the
Environmental Agreement and Retained Liabilities.
(c) Each claim against Seller after the Closing for breach of
representation or warranty shall be subject to a de minimus threshold of
$350,000, and Purchaser shall be entitled to recover claims which are in excess
of the de minimus threshold only to the extent the aggregate of such claims
exceed $10 million.
(d) Neither Seller nor Purchaser shall be liable for any special, punitive,
exemplary, consequential or indirect damages, or for lost profits.
(e) Seller's and Purchaser's representations and warranties in Section 13
and 14, respectively, and all liability with respect thereto, shall expire at
Closing, except that the following shall expire on the listed anniversary of the
Closing Date:
First Anniversary: 13(i), 13(k), 13(o)
Second Anniversary: 13(c), 13(d), 13(j), 13(l)(ii), 14(c), 14(d)
Third Anniversary: 13(h), 13(q), 13(t), 14(g)
Fifth Anniversary: 13(b), 13(e), 13(f), 13(l)(i), 13(p), 14(b), 14(f)
No Expiration: 13(a), 13(s), 14(a)
24. Records and Assistance. (a) Notwithstanding Section 1(e), Seller shall
----------------------
have the right to make copies of any records of the Products Company for which
it has, or may have, any business, technical or legal need, and Seller may have
the original of any record for which it has a particular need; provided that
Purchaser may make copies of any such records which Purchaser reasonably needs
for the continuing operation of the Products Company. To the extent that those
records, or any other information made available to Purchaser before or after
the Closing, contain proprietary or confidential business, technical or legal
information of Seller or its affiliates, Purchaser agrees to hold such records
in confidence and limit their use to the 76 Assets or the operations of the
Products Company.
30
<PAGE>
(b) Purchaser shall not destroy or otherwise dispose of any records
acquired hereunder for a period of seven years (except as to tax records, for
which the period shall be the time when the returns for the year in question
become final) following the Closing Date, except upon 30 days' prior written
notice to Seller, during which time Seller may elect to take such records and
after which time Purchaser may destroy the same. During such seven-year period,
Purchaser shall make such records available to Seller or its authorized
representatives for any business, legal or technical need in a manner which does
not unreasonably interfere with Purchaser's business operations. For a period of
seven years from the Closing Date, Purchaser will also afford, and will cause
its respective employees, agents, officers, directors, accountants and attorneys
to afford to the employees, agents, representatives, accountants and attorneys
of Seller, free and full access at all reasonable times to the assets,
properties, books and records of Purchaser related to the Products Company that
existed at or prior to the Closing Date, as Seller may from time to time
request, for the purposes of responding to any governmental inquiry or any audit
conducted by any government, including any governmental subdivisions, agencies
and instrumentalities.
(c) On reasonable notice, Purchaser shall permit (with appropriate
recompense to Purchaser if the time is extensive and in a manner so as to
minimize disruption) its employees who were former employees of Seller to
participate on Seller's behalf in any pending or subsequent litigation or
alternative dispute resolution proceeding on a matter concerning which such
employee has knowledge, and Purchaser shall respect and uphold any
attorney-client privilege or work product privilege that attaches to Seller's
former employees and documents.
25. Access to 76 Assets After Closing. Purchaser shall afford duly
-------------------------------------
authorized representatives of Seller reasonable access to the facilities
included in the 76 Assets with respect to any legal, technical or operational
matter relating to Seller's obligations under this Agreement, or Seller's
operation of the Products Company before Closing, including without limitation
removal of any Excluded Assets, provided that Seller gives Purchaser reasonable
--------
prior notice, and provided further that Seller's access does not unreasonably
-----------------
interfere with Purchaser's normal operations. It is understood and agreed that
Seller shall remove all Excluded Assets prior to the Closing, or, if necessary,
as soon as practicable thereafter.
26. Inspections. (a) Seller agrees to give to Purchaser and its
-----------
representatives access during normal business hours to the facilities included
in the 76 Assets and to permit Purchaser to make, or cause to be made, such
investigations of such facilities and the operations of the Products Company
considers necessary or advisable; provided that (i) Purchaser shall give
--------
reasonable prior notice, (ii) such investigation shall not unreasonably
interfere with normal operations of Seller, and (iii) Seller shall have the
right to accompany Purchaser and its representatives during any such
investigation at the facilities included in the 76 Assets. Seller also agrees to
make available to Purchaser all such documents and copies of documents and
information with respect to the 76 Assets and the operations of the Products
Company as Purchaser from time to time may reasonably request.
31
<PAGE>
(b) In the event that the Closing contemplated by this Agreement shall not
occur, none of the information received by Purchaser or its representatives in
making such inspection or investigation shall at any time or in any manner be
thereafter utilized by Purchaser or be disclosed by Purchaser to any other
persons to the material detriment of Seller. Any written documents provided by
Seller shall, upon Seller's written notice, be destroyed or returned.
Notwithstanding the foregoing, Purchaser shall be free to utilize any such
information in connection with the exercise of its rights for any breach of this
Agreement by Seller.
27. Operations of the Products Company and Actions. Except as contemplated
----------------------------------------------
in, or provided for by, this Agreement or as required by any applicable law,
from the date hereof until the Closing, Seller agrees and covenants that the 76
Assets shall be operated, and the operations of the Products Company shall be
conducted, only in the ordinary course of business in material compliance with
all laws and regulations. Without limiting the foregoing, Seller shall not (i)
sell, mortgage, or otherwise transfer or convey any of the 76 Assets (other than
Inventory, minor matters in the ordinary course of business and those
transactions identified on Schedule 27), (ii) except in the ordinary course and
consistent with past practice in the conduct of the operations of the Products
Company, amend, modify, terminate or suspend any of operations of the Products
Company (except in immaterial respects); or (iii) except in the ordinary course
and consistent with past practice in the conduct of the operations of the
Products Company, waive or relinquish any material right (except in immaterial
respects) under any Contract, Permit or applicable law. Seller shall continue in
the ordinary course (x) all scheduled major refinery turnarounds and tank work
reasonably consistent in times and amounts with Attachment XXIII, (y) capital
expenditures reasonably consistent in times and amounts with Attachment XXI, and
(z) its advertising program in the ordinary course. Seller may, subject to
Purchaser's review and approval of specific plans, continue its program of
transferring the 76 Assets to one or more of the Subsidiaries.
28. Publicity. At all times prior to the Closing, neither party will make
---------
any press release or other public statement concerning this Agreement or the
transactions contemplated hereby, or disclose the terms hereof or thereof to any
third party, except upon mutual agreement, or as required by law or regulation,
or in connection with any Permit application in furtherance of this Agreement,
or as deemed necessary or appropriate. No public statement or third-party
disclosure will be made without advance notice to the other party.
29. Employees and Benefits. (a) Purchaser intends to give special
------------------------
consideration to hiring current employees of Seller. Therefore, not later than
December 31, 1996, Seller will furnish Purchaser with a complete and accurate
list of the employees whose employment is related primarily to Seller's conduct
of the operations ("Seller's Employees") as of the date hereof, and their
current respective base salary or wage rate, as well as a list of Seller's
Employees in management level positions to whom Seller will offer alternative
employment. Not later than February 14, 1997, Purchaser shall designate to
32
<PAGE>
Seller in writing the names of Seller's Employees to whom Purchaser has offered
or to whom Purchaser intends to offer employment as of the Closing Date. Within
30 days after the Closing Date, Purchaser will provide Seller with a final list
of all of Seller's Employees who accepted or rejected employment with Purchaser
and in each case their applicable base salary or wage rate. Seller's Employees
who accept employment with Purchaser as of the Closing Date or within 30 days
after the Closing Date are referred to herein as the "New Hires."
(b) The selection of the New Hires shall be entirely at the discretion of
Purchaser and therefore Purchaser agrees to defend, indemnify and hold harmless
Seller and its employees, officers and agents from any claims by Seller's
employees regarding the selection process undertaken by Purchaser (including the
provision by Seller of information in response to requests by Purchaser) and for
employment actions as to New Hires occurring subsequent to the Closing Date,
including Purchaser's alleged violations of Federal or State labor or
anti-disclosure laws.
(c) Purchaser assumes no obligations or liabilities with respect to any of
Seller's existing employee benefit and pension plans, programs, agreements,
arrangements or policies, whether or not subject to ERISA. Purchaser assumes no
obligations or liabilities with respect to any existing collective bargaining
agreement under which Seller is obligated. Purchaser understands that certain
groups of Seller's Employees are currently represented by various unions for
collective bargaining purposes. Seller shall give all necessary WARN Act notices
and other notices to employees required of Seller by law or labor agreements as
a result of the transactions contemplated hereby.
(d) All obligations or liabilities whatsoever whether accruing before or
after the Closing Date or at any time by reason of Seller (or any entity
required to be aggregated with Seller pursuant to Section 414 of the Internal
Revenue Code of 1986, as amended or Section 4001 of ERISA) contributing to,
maintaining, discontinuing, terminating, or ceasing participation in or
withdrawing from any employee benefit, welfare or pension plan or program,
including without limitation, severance pay obligations accruing during such
employee's employment by Seller, shall be and remain Seller's sole
responsibility and obligation except as otherwise specifically provided herein.
(e) Seller will make available to Purchaser a true and complete copy of (or
a description of) each employee benefit plan as defined in section 3(93) of
ERISA and each other employee benefit plan, arrangement, program or policy
maintained or contributed to by Seller for Seller's Employees, including
(without limitation) any arrangement providing for profit sharing, bonuses,
fringe benefits and executive compensation. Seller has delivered to Purchaser a
true and complete copy of each collective bargaining agreement pertaining to
Seller's Employees.
(f) Prior to the Closing Date, Seller shall make available to Purchaser
true, correct and complete copies of all payroll and benefit records of New
Hires necessary to effectuate such transfer of employment. Seller has obtained
and maintained a Form I-9 for each Employee if required by law and, prior to the
33
<PAGE>
Closing Date, Seller will afford Purchaser and its representatives reasonable
access to Seller's employees and such documents of Seller as will allow
Purchaser to verify this information with respect to New Hires.
(g) Seller shall not increase the base salary or wage rate of any employee
so as to render untrue the salary and wage information made available to
Purchaser pursuant to Section 29(a), other than regularly scheduled increases,
promotions in the normal course or pursuant to collective bargaining agreements.
(h) If Purchaser terminates any of the New Hires within one year of the
Closing Date for reasons other than misconduct, such employee shall be eligible
for the Severance Benefits he or she would have been eligible for had Seller
terminated such employee as of the Closing Date. "Severance Benefits" means the
Unocal Termination Allowance Plan benefits, the salary or wage portion of the
Unocal Employee Redeployment Program, tuition reimbursement up to $2500,
outplacement assistance, and subsidized COBRA rates in accordance with terms of
Seller's plans and programs as in effect on or before November 17, 1996.
(i) Seller shall be responsible for paying any retention incentives and
Severance Benefits with respect to Seller's Employees. Except for the subsidized
COBRA rates, Seller shall also be responsible for paying the Severance Benefits
of those covered under Section 29(h) above. However, Purchaser shall pay to
Seller an amount equal to the sum of (A) 50% of the amount of retention
incentives, plus (B) 50% of the amount of Severance Benefits paid by Seller
pursuant to Section 29(h), plus (C) 50% of the amount of Severance Benefits paid
by Seller pursuant to this Section 29(i) with respect to those employees who are
not offered employment by Purchaser nor offered continued employment with Seller
on or after the Closing Date, reduced by 50% (fifty percent) of any COBRA
subsidy provided by Purchaser.
(j) Seller will offer retiree medical coverage to those of the New Hires
who were at least 55 years of age with 10 years of Service and who would have
been eligible for retiree medical coverage as of the Closing Date or on their
Normal Retirement Date in accordance with the terms of Seller's applicable plan
as of the date any such employee shall elect said retiree medical coverage.
Purchaser will not offer retiree medical coverage to said employees, but
Purchaser shall offer retiree medical coverage to other New Hires on terms at
least as favorable as apply to similarly situated employees of Purchaser.
(k) Purchaser will recognize under its applicable retirement plans the New
Hire's service recognized by Seller as of the Closing Date for purposes of
eligibility, vesting, any waiting periods and benefit accruals, subject to an
offset for any benefits payable under Seller's retirement plan. Purchaser shall
recognize under its applicable retiree medical plan New Hire's service with
Seller for purposes of eligibility and benefit accruals under such Purchaser
plan, subject to Section 29(j) above. Purchaser shall recognize New Hire's
34
<PAGE>
service with Seller for purposes of eligibility and waiting periods under
Purchaser employee welfare benefit plans (including without limitation 401(k)
and other profit sharing plans) and for future vacation accruals under
Purchaser's vacation plan or policy applicable to such New Hire.
30. Transfer of Permits. It shall be Purchaser's responsibility to obtain
-------------------
the issuance or transfer of all environmental and other Permits; provided,
however, that Seller shall cooperate with any efforts of Purchaser to complete
the actions required in connection with transferring or obtaining the issuance
of all such Permits. During any interim between the Closing and the completion
of the transfer or issuance of any such Permit in Purchaser's name, Seller
agrees to provide Purchaser with the benefits of such Permit to the extent
permitted by applicable law and provided Purchaser assumes all responsibilities
and liabilities under any such Permit with respect to the period after Closing.
31. Certain Tax Matters, Etc.
------------------------
(a) Purchase Price Allocation. Purchaser and Seller hereby agree to attempt
-------------------------
to allocate in good faith the purchase price paid for the 76 Assets in
accordance with Section 1060 of the Internal Revenue Code of 1986, as amended,
among the properties and assets conveyed to Purchaser hereunder (including in
the case of any subsidiary for which a Section 338(h)(10) is made pursuant to
Section 31(h) below, the assets of such subsidiary), and the parties agree to
cooperate in good faith in the completion and filing of United States federal
income tax Form 8594 in accordance with the price allocation. Such allocation
shall also include an allocation of the Purchase Price to the Real Property for
purposes of Sections 17(d) and 31(b). The parties further agree that they will
report the tax consequences of the purchase and sale hereunder in a manner
consistent with the price allocation, if one has been agreed upon, and that they
will not take any position inconsistent therewith in connection with the filing
of any Return.
(b) Real Estate Transfer Fees. Purchaser shall pay any real estate transfer
-------------------------
fee imposed on the consideration from conveyance of realty under this Agreement
and shall be entitled to reimbursement therefrom from Seller or a credit against
the Purchase Price.
(c) Recording and Filing Fees. Purchaser shall pay any recording and filing
-------------------------
fees imposed in connection with the conveyance of realty under this
Agreement.
(d) Sales and Use Taxes. Seller shall pay all applicable sales taxes
-----------------------
imposed upon the sale of tangible personal property under this Agreement. It is
understood by Seller and Purchaser that delivery of vessels shall take place
outside of the State of California and Purchaser represents that said vessels
shall not enter the State of California other than in interstate commerce and
shall be used continuously in interstate commerce. It is further understood that
the consideration for the sale of tangible personal property is exempt from
California sales and use tax as a sale for resale as defined under California
Sales and Use Tax Law, to the extent said tangible personal property is included
in service station property leased to third parties or inventory. Purchaser
35
<PAGE>
shall issue a valid resale certificate with respect to all tangible personal
property which is eligible for an exemption from any tax in any state as a sale
for resale.
(e) Federal and State Taxes on Inventory. Taxes with respect to the
---------------------------------------
Inventory shall be governed by Section II.S. of Attachment IX.
(f) Computer Software Programs. The transfer of any prewritten computer
----------------------------
software program pursuant to this Agreement shall, to the extent practicable, be
by remote telecommunications from Seller's to Purchaser's computer and Purchaser
shall not obtain possession of any tangible personal property, such as storage
media, in any such transaction.
(g) Cooperation. Seller and Purchaser will provide each other with such
-----------
cooperation and information as each may reasonably request of the other with
regard to the preparation and filing of Returns, or the conduct of an audit or
other proceeding in respect of Taxes.
(h) Section 338(h)(10) Election. To the extent that the 76 Assets include
----------------------------
the stock of any subsidiary corporation, Seller will join with Purchaser in
making an election under Section 338(h)(10) of the Internal Revenue Code (and
any corresponding elections under state, local, or foreign tax law) with respect
to the purchase and sale of the stock of each subsidiary. Seller's return will
reflect any tax attributable to the making of the election under Section
338(h)(10).
(i) Property Taxes. All ad valorem taxes, real property taxes, personal
--------------
property taxes, special assessments, direct assessments, general assessments and
similar obligations (and any refunds, credits and the like) shall be apportioned
as of the Closing Date between Seller and Purchaser, pursuant to Section 4. Any
such tax, assessment or similar obligation with a payment delinquent date on or
before the Closing Date shall be paid by Seller, and any such item with a
payment delinquent date after the Closing Date shall be paid by Purchaser. To
the extent that the payments differ from the apportionments required by Section
4, appropriate adjustments shall be made pursuant to Section 4. Seller shall
file or cause to be filed all required reports and returns incident to such
taxes which are due on or before the Closing Date, and Purchaser shall file or
cause to be filed all required reports and returns incident to such taxes which
are due after Closing Date. The obligation for filing reports and returns or
payment of property taxes can be altered by the mutual agreement of Purchaser
and Seller. Notwithstanding any other provision hereof, any Taxes which may be
imposed by reason of the failure of a party to make a payment or file a report
or Return as above provided (or as otherwise agreed) shall be solely the
obligation of such party.
36
<PAGE>
(j) Definitions. For the purposes of this Agreement:
-----------
"Returns" shall mean all federal, state, local, foreign or other
governmental income and franchise returns and all sales, use, payroll,
withholding and other tax returns, and "Non-Income Tax Returns" shall mean all
such Returns other than net income tax returns; and
"Taxes" shall mean any and all federal, state, local and foreign taxes,
charges, fees, levies, imposts, assessments, withholdings, impositions, or other
similar governmental charges and any interest, liens, additions to tax or
penalties thereon.
32. Bulk Sales. Seller and Purchaser agree to waive compliance with any
----------
applicable bulk sales laws.
33. Construction. This Agreement shall be governed by and construed in
------------
accordance with the laws of the State of California without giving effect to its
conflicts-of-laws principles (other than any provisions thereof validating the
choice of the laws of the State of California as the governing law).
34. Entire Agreement. This Agreement, together with the Attachments and
-----------------
Schedules hereto, and the agreements and instructions contemplated herein,
constitutes the entire agreement among the parties pertaining to the subject
matter hereof and supersedes all prior or contemporaneous agreements relating to
the subject matter hereof. In case of any conflict between the body of this
Agreement and any such Attachment, Schedule, agreement or instrument, the terms
of the body of this Agreement shall prevail.
35. Assignment. (a) Subject to Section 35(b), hereof, this Agreement may
----------
not be assigned in whole or in part without the prior written consent of the
other party.
(b) Seller and Purchaser may each assign this Agreement, in whole or in
part, to one or more of their respective affiliates, upon prior notice to the
non-assigning party; provided, that the non-assigning party may require as a
--------
condition of such assignment that the assigning party reasonably demonstrate
and/or assure the assignee's financial and technical capability to perform its
proposed obligations hereunder. Any attempted assignment of this Agreement in
violation of this Section 35 shall be null and void. Notwithstanding the
foregoing, Purchaser's obligation under the Escrow Agreement and the
Shareholders Agreement may not be assigned.
(c) This Agreement shall inure to the benefit of, and be binding upon, the
parties hereto and their respective heirs, legal representatives, successors and
permitted assigns, except that any such assignment shall not relieve the
assigning party of its obligations hereunder. This Agreement is not intended to,
and does not create, any rights in any third parties.
37
<PAGE>
36. Further Assurances. Each of the parties hereto shall take such
-------------------
additional action, and shall cooperate with one another, as may be reasonably
necessary to effectuate the terms of this Agreement and any agreement or
instrument delivered pursuant hereto, including effecting the working transfer
of the 76 Assets and the operations of the Products Company to Purchaser.
37. Payments. (a) Unless otherwise specified herein, any payment to be made
----------
hereunder shall be made in U.S. dollars by wire transfer of immediately
available funds, without discount or deduction, or by such other means as the
parties may agree.
(b) Any amount not paid by either party when due hereunder shall bear
interest from the date upon which payment was due through the date of payment at
a rate equal to one percent (1%) above the prime rate of interest as announced
by Chase Manhattan Bank N.A. in New York City from time to time.
38. Notices. (a) All notices, requests, demands, consents and other
-------
communications required or permitted to be given or made hereunder shall be
deemed to have been duly given or made if delivered personally, or sent by
overnight courier delivery or by telecopy or similar facsimile transmission (and
confirmed in writing thereafter), or mailed by prepaid registered or certified
mail, return receipt requested, to the other party at the respective address set
forth below (or to such other address as a party shall designate for itself by
written notice given or made in accordance herewith):
(i) if to Seller, to it at:
UNOCAL Corporation
2141 Rosecrans Avenue, Suite 4000
El Segundo, California 90245
Attn: Neal E. Schmale,
Chief Financial Officer
(310) 726-7621 (Phone)
(310) 726-7806 (Fax)
cc: Dennis P.R. Codon, Esq.
General Counsel
(310) 726-7651
(310) 726-7815 (Fax)
38
<PAGE>
(ii) if to Purchaser, to it at:
Tosco Corporation
72 Cummings Point Road
Stamford, Connecticut 06902
Attn: Wilkes McClave III, Esq.
General Counsel
(203) 977-1005 (Phone)
(203) 964-3187 (Fax)
(b) Any notice, request or other communication hereunder shall be deemed
delivered and given or made on the seventh business day after the date of
mailing, if mailed by registered or certified mail, or on the first business day
after the date of transmittal, if sent by courier delivery or by telecopy or
similar facsimile transmission (and confirmed in writing thereafter), or on the
first business day after the date of delivery, if delivered personally.
39. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed to be an original instrument.
40. Waiver. It is agreed that any party to this Agreement may extend time
------
for performance by any other party hereto or waive the performance of any
obligation of any other party hereto or waive any inaccuracies in the
representations and warranties of any other party, but any such waiver shall be
in writing, unless a non-written waiver is expressly permitted, and shall not
constitute or be construed as a waiver of any other obligation, condition,
representation or warranty under this Agreement.
41. Amendments. This Agreement cannot be altered, amended, changed or
----------
modified in any respect or particular unless each such alteration, amendment,
change or modification shall have been agreed to by each of the parties hereto
and reduced to writing in its entirety and signed and delivered by each party.
42. Time of Essence. Time is of the essence in the performance of each
----------------
covenant and agreement of this Agreement.
43. Independent Decisions. Purchaser has made its own independent judgment
---------------------
of the commercial potential, condition and usefulness of the 76 Assets, taking
into consideration all current environmental laws and requirements and the
likelihood that such laws and requirements will change in the future. Purchaser
has such knowledge and experience in business and financial affairs in general,
and of the oil refining business as conducted and regulated in California in
particular, as to be capable of evaluating the merits and risks of purchasing
the 76 Assets, taking into account the accuracy of the representations and
39
<PAGE>
warranties contained in Section 13 hereof, and also the accuracy of the
information provided to Purchaser during the due diligence period.
44. Glossary. As used in this Agreement (or, if so indicated, with respect
--------
to particular Sections hereof), the following terms have the meanings defined
for such terms in the Sections set forth below:
Term Section
---- -------
76 Assets .............................................1(a)
Assignment and Assumption .............................10(b)(ii)
Audited Financial Statements ..........................13(t)
Base Purchase Price ...................................3(a)
Bill of Sale ..........................................10(b)(ii)
Claim Notice ..........................................22(c)
Closing ...............................................10(a)
Closing Date ..........................................10(a)
COBRA coverage ........................................7(c)(iii)
Consent ...............................................13(c)
Contracts .............................................1(a)
Damages .............................................. 22(d)
Deed(s) .............................................. 10(b)(i)
Environmental Agreement .............................. 15
Environmental Laws ................................... 15
Equipment ............................................ 1(a)
ERISA ................................................ 7(c)(iii)
Escrow ............................................... 5(a)
Escrow Agent ......................................... 5(a)
Escrow Agreement ..................................... 5(a)
Excluded Assets ...................................... 2
GAAP ................................................. 13(t)
Indemnified Party .................................... 22(c)
40
<PAGE>
Term Section
---- -------
Indemnifying Party ................................... 22(c)
Improvements ......................................... 1(a)
Insurable ............................................ 17(d)
Intellectual Property ................................ 1(a)
Intellectual Property Agreement ...................... 8(a)
Inventory ............................................ 1(a)
Market Price ......................................... 5(a)
Market Value ......................................... 5(a)
Material Loss Event (Section 19 only) ................ 19(a)
Material Contract .................................... 13(k)(iii)
New Hires ............................................ 29(a)
Non-Income Tax Returns ............................... 31(j)
Participation Payment Agreement ...................... 3(c)
Permits .............................................. 13(c)
Permitted Exceptions ................................. 1(b)
Pipelines ............................................ 1(a)
PMPA ................................................. 7(b)(i)
Products Company ..................................... Recitals
Purchase Price ....................................... 3
Purchaser ............................................ Recitals
Purchaser Services ................................... 8(b)(i)
Purchaser Services Agreement(s) ...................... 8(b)(i)
Purchaser's Agreements ............................... 18(b)(ii)
Real Property ........................................ 1(a)
Release of Hazardous Substances ...................... 15
Reported Encumbrance ................................. 17(b)
Retained Liabilities ................................. 7(c)
Returns .............................................. 31(j)
41
<PAGE>
Term Section
---- -------
Self-Amortizing Notes ................................ 1(g)
Seller ............................................... Recitals
Seller Services ...................................... 8(b)(ii)
Seller Services Agreement(s) ......................... 8(b)(ii)
Seller's Agreements .................................. 18(a)(ii)
Seller's Employees ................................... 29(a)
Severance Benefits ................................... 29(h)
Shared Software License Agreement .................... 2(b)
Shareholder Agreement ................................ 5(a)
Shares ............................................... 5(a)
Subsidiaries ......................................... 1(a)
Survey ............................................... 17(a)
Taxes ................................................ 31(j)
Vessels .............................................. 1(a)
WARN ................................................. 7(c)(iii)
Withdrawal Area ...................................... 7(b)(ii)
[SIGNATURE PAGE FOLLOWS]
42
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first written above.
ATTEST: UNION OIL COMPANY OF CALIFORNIA
/s/ Joseph A. Householder By: /s/ Roger C. Breach
- --------------------------- --------------------
JOSEPH A. HOUSEHOLDER ROGER C. BEACH
Vice President, Tax Chairman and Chief Executive Officer
ATTEST TOSCO CORPORATION
/s/ Wilkes McClave III By: /s/ Thomas D. O'Malley
- --------------------------- --------------------
WILKES MCCLAVE III THOMAS D. O'MALLEY
Senior Vice President Chairman and Chief Executive Officer
and General Counsel
EXHIBIT 2.2
ATTACHMENT XIV
------------------------------------------------------------------------
STOCK PURCHASE AND SHAREHOLDER AGREEMENT
By and Between
TOSCO CORPORATION
and
UNION OIL COMPANY OF CALIFORNIA
----------------------------
Dated as of January 15, 1997
----------------------------
<PAGE>
STOCK PURCHASE AND SHAREHOLDER AGREEMENT
THIS STOCK PURCHASE AND SHAREHOLDER AGREEMENT, is dated as of January 15,
1997 ( "Agreement"), between and among TOSCO CORPORATION, a Nevada corporation
("Tosco"), and UNION OIL COMPANY OF CALIFORNIA, a California corporation
("Union").
RECITALS
--------
WHEREAS, Tosco and Union have entered into a Sale and Purchase
Agreement for the business and assets of the 76 Products Company dated December
14, 1996 ("Sale and Purchase Agreement"), pursuant to which Tosco agreed to buy
and Union agreed to sell the business and assets that constitute the 76 Products
Company segment of Union ("76 Products' Business and Assets"); and
WHEREAS, the Sale and Purchase Agreement provides that a portion of
the purchase price for the 76 Products Business and Assets may be payable in
Common Stock of Tosco, $.75 par value; and
WHEREAS, Tosco and Union have entered into an Escrow Agreement dated
January 15, 1997 ("Escrow Agreement"), and, pursuant to the Sale and Purchase
Agreement, deposited this Agreement into escrow.
NOW, THEREFORE, the parties agree as follows:
1. Definitions. For all purposes of this Agreement, the following terms
shall have the following meanings (such meanings to be equally applied to both
the singular and plural forms of the terms defined); all terms of this Agreement
that are not defined specifically herein shall have the meaning assigned to them
in the Sale and Purchase Agreement:
"Affiliate" of any specified Person shall mean any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person.
"Agreement" shall have the meaning set forth in the preamble hereof.
"Board" shall mean the board of directors of Tosco.
"Business Day" shall mean a day, other than a Saturday or a Sunday,
when commercial banks are open for business in Los Angeles, California, and New
York City, New York.
1
<PAGE>
"Closing" shall have that meaning set forth in Section 10(a) of the
Sale and Purchase Agreement.
"Common Stock" shall mean the shares of Tosco common stock, par value
of $.75, delivered to Union pursuant to Section 2 of this Agreement and which at
the relevant date is beneficially owned by Union or an Affiliate of Union, and
all shares of such common stock issued pursuant to a stock split, dividend,
reorganization, reclassification, or recapitalization of such common stock.
"Derivative Security" shall mean a security issued by Union or any one
or more of its Affiliates which is convertible, exchangeable or exercisable for
Common Stock.
"Escrow Account" shall have the meaning set forth in Section 3(b) of
the Escrow Agreement.
"Escrow Agent" shall have the meaning set forth in the Preamble of the
Escrow Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended. Each reference to the Exchange Act or a rule or regulation adopted
under the Exchange Act shall mean the Exchange Act or the rule or regulation as
in effect at the time for application of a provision of this Agreement.
"Market Price" shall mean the average of the daily averages of the
high and low trading prices for Purchaser common stock reported on the New York
Stock Exchange Composite tape for the ten business days preceding the Closing
Date, but in no case less than $45 per share unless Tosco elects, by execution
and delivery of Supplement No. 1 attached to this Agreement, to issue sufficient
shares of Common Stock such that the Market Value is equal to (i) the Base
Purchase Price pursuant to Section 3(a) of the Sale and Purchase Agreement,
minus (ii) the fair market value of the cash and marketable securities (other
than the right to receive Common Stock) in the Escrow Account on the Closing
Date.
"Market Value" shall mean the Market Price multiplied by the number of
shares of Common Stock to be delivered.
"Person" shall mean any corporation, limited liability company,
natural person, firm, joint venture, partnership, trust, unincorporated
organization, enterprise, other legal entity, government or any department or
agency of any government.
"Securities Act" shall mean the Securities Act of 1933, as amended.
Each reference to the Securities Act or a rule or regulation adopted under the
Securities Act shall mean the Securities Act or the rule or regulation as in
effect at the time for application of a provision of this Agreement.
2
<PAGE>
"Shareholder" shall mean any holder of shares of Common Stock.
2. Purchase and Sale. At Closing, Tosco will deliver to Union, as partial
-----------------
consideration, a number of shares of Common Stock, to be determined as follows:
The number of shares shall equal:
(a) the Base Purchase Price pursuant to Section 3(a) of the Sale
and Purchase Agreement, minus the fair market value of cash and
marketable securities (other than the right to receive Common
Stock) in the Escrow Account on the Closing Date,
Divided by
(b) the Market Price.
3. Representations and Warranties of Union.
---------------------------------------
(a) Union (i) is a qualified institutional buyer, (ii) is aware that
the sale of the Common Stock to it is being made in reliance upon an exemption
to registration under the Securities Act, and (iii) is acquiring such Common
Stock for its own account;
(b) Union understands that the Common Stock has not been registered
under the Securities Act and may not be reoffered, resold, pledged or otherwise
transferred by Union except (a)(i) to a person who Union reasonably believes is
a qualified institutional buyer acquiring for its own account or for the account
of a qualified institutional buyer in a transaction meeting the requirements of
Rule 144A under the Securities Act, (ii) pursuant to an exemption from
registration under the Securities Act, (iii) in an offshore transaction
complying with Rule 903 or Rule 904 of Regulation S under the Securities Act; or
(iv) in a transaction registered under the Securities Act, and (b) in accordance
with all applicable securities laws of the states of the United States and other
jurisdictions;
(c) The certificates evidencing the Common Stock will bear legends to
the following effect, unless Tosco determines otherwise in compliance with
applicable law:
(i) "THE COMMON STOCK EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT
(A)(i) TO A PERSON WHO UNION REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER ACQUIRING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, (ii) PURSUANT TO
3
<PAGE>
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, (iii) IN AN
OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION
S UNDER THE SECURITIES ACT; OR (iv) IN A TRANSACTION REGISTERED UNDER
THE SECURITIES ACT, AND (B) IN ACCORDANCE WITH ALL APPLICABLE
SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER
JURISDICTIONS."
(ii) "THE SHARES EVIDENCED HEREBY ARE SUBJECT TO A STOCK PURCHASE AND
SHAREHOLDERS AGREEMENT, DATED AS OF JANUARY 15, 1997 (THE
"SHAREHOLDERS AGREEMENT", A COPY OF WHICH MAY BE OBTAINED FROM TOSCO),
THE SHARES ARE TRANSFERRABLE ONLY IN ACCORD WITH AND SUBJECT TO THE
CONDITIONS OF THE SHAREHOLDERS AGREEMENT, AND, ONCE TRANSFERRED BY
UNION TO ANY PERSON, NOT AN AFFILIATE OF UNION, OWNING LESS THAN 5% OF
TOSCO'S COMMON STOCK AFTER THE TRANSFER, ARE NOT SUBJECT TO THE
SHAREHOLDERS AGREEMENT."
4. Covenants of Union. Union agrees as follows:
------------------
(a) Promise to Liquidate. Union shall undertake to sell, distribute or
--------------------
otherwise dispose of the Common Stock as soon as reasonably practical in light
of market conditions so as to maximize the price received by Union upon
disposition of all of the Common Stock. In making its decisions concerning
timing and method of any disposition of Common Stock, Union shall consult with a
nationally recognized investment banking firm and be fully protected in relying
on the advice of any such firm.
(b) Share Voting. Union shall arrange for the Common Stock to be
-------------
present at all shareholders' meetings of Tosco and shall vote its shares in
proportion, for, against and in abstention, to the votes of the other
shareholders present at such meeting, if the vote relates to a matter on which
the interest of Union and the interests of the other shareholders are reasonably
similar. If any Person solicits written consent for action from shareholders of
Tosco, Union shall deliver to the Person soliciting such consent, a written
consent which shall, at a time that the written consent becomes effective,
consents to the action by a percentage of the Common Stock that is equal to the
percentage by which all other shares, not held by Union consented to the action.
(c) Standstill Provision. Union shall not acquire any common stock of
--------------------
Tosco or securities convertible into common stock of Tosco nor shall Union
propose to Tosco or any Person any acquisition transaction (excluding
transactions in the ordinary course of business of the type previously conducted
by Union and Tosco) between Union and Tosco and/or the Tosco security holders
involving any of their respective securities or assets unless Tosco shall have
requested in writing that Union make such a proposal.
4
<PAGE>
(d) Passivity Provision. Union shall not, directly or indirectly:
-------------------
(i) seek representation on or seek to influence Tosco's Board of Directors;
(ii) solicit or participate in soliciting proxies or actions by
written consent with respect to any matter presented to the shareholders of
Tosco;
(iii) encourage any third party to seek control of Tosco;
(iv) propose a slate of directors in opposition to any slate of nominees
proposed by management or the Board of Directors of Tosco; or
(v) without consent of Tosco, sell Common Stock to anyone who, after
completion of such sale, would own more than 5% of the common stock outstanding,
except in the case of sale into a public tender offer available to shareholders
generally and except a sale to underwriters who purchase in the ordinary course
of their business with a view toward subsequent resale (other than resale to
anyone who such underwriter knows, after completion of such sale, would own more
than 5% of the common stock outstanding).
5. Covenants of Tosco. Tosco agrees as follows:
------------------
(a) Share Listing. Tosco shall list the Common Stock on the New York Stock
-------------
Exchange.
(b) Best Efforts. Tosco shall use its best efforts to obtain shareholder
-------------
approval for the issuance of Common Stock.
(c) Accountant's Letters. Tosco shall deliver(i) to Union at Closing a
--------------------
letter from Tosco's independent public accountants which shall be in the form
permitted by Statement on Auditing Standards No. 75, and (ii) to each person who
would be entitled to receive, and who requests, a comfort letter pursuant to
Statement on Auditing Standards Nos. 72 and 76 at the closing of any other
transaction in Common Stock, in each case applying procedures no more burdensome
than those described in the form of comfort letter customarily delivered by
Tosco's independent public accountants in connection with underwritten public
offerings of Tosco common stock.
(d) Sale or Disposition of Common Stock. Tosco acknowledges that Union may
-----------------------------------
dispose of Common Stock in one or more of several methods, including but not
limited to: (i) a registered offering of Common Stock or Derivative Securities;
(ii) an offering of Common Stock or Derivative Securities under Rule 144A of the
Securities Act; (iii) an offering of Common Stock or Derivative Securities under
Regulation S of the Securities Act; or (iv) a distribution of Common Stock to
shareholders of Union and its Affiliates in a transaction which is either
required to be registered under the Securities Act or is exempt from
5
<PAGE>
registration under the Securities Act. Tosco shall do all things reasonable or
beneficial in order to assist Union in selling or disposing of the Common Stock,
including the following:
(i) If Union has sold Common Stock or Derivative Securities in
reliance on a private placement exemption, Tosco agrees that it will not solicit
any offer to buy or offer to sell the Common Stock by means of any form of
general solicitation or general advertising (as defined in Regulation D under
the Securities Act) or in any manner involving a public offering within the
meaning of 4(2) of the Securities Act ;
(ii) Tosco shall not engage in any directed selling efforts with
respect to the Common Stock within the meaning of Regulation S under the
Securities Act and Tosco and each such person acting on behalf of Tosco has
complied and will comply with the offering restrictions requirement of
Regulation S;
(iii) If Union sells Derivative Securities in a transaction
exempt from registration pursuant to Rule 144A under the Securities Act, then
during the three year period following the last closing date of a sale by Union,
Tosco shall make available, if it is not then subject to Section 13 or 15(d) of
the Exchange Act, upon request, to any seller of the Common Stock or Derivative
Securities, the information concerning Tosco specified in Rule 144A(d)(4) under
the Securities Act, (so long as such requirement is necessary in order to permit
holders of the Common Stock or Derivative Securities to effect resales under
Rule 144A); and
(iv) Tosco shall not sell, offer for sale or solicit offers to
buy or otherwise negotiate in respect of any security (as defined in the
Securities Act) which could be integrated with the sale of the Common Stock or
any Derivative Security in a manner which would require the registration of the
Common Stock or any Derivative Security under the Securities Act.
(e) Standstill Provision. Tosco shall not acquire any common stock of
--------------------
Unocal Corporation, a Delaware corporation and holder of all of the outstanding
stock of Union ("Unocal"), or securities convertible into common stock of Unocal
nor shall Tosco propose to Unocal or any Person any acquisition transaction
(excluding transactions in the ordinary course of business of the type
previously conducted by Union and Tosco) between Unocal and Tosco and/or their
security holders involving any of their respective securities or assets unless
Union shall have requested in writing that Tosco make such a proposal.
(f) Conflict with Articles or Bylaws. Tosco agrees that if any term or
--------------------------------
provision of this Agreement is inconsistent or in conflict with the terms and
provisions of its Articles of Incorporation or Bylaws, as may be amended from
time to time, Tosco shall abide by the terms and provisions hereof and, if
necessary, to the extent within its control, cause the conflicting provisions in
the Articles or Bylaws to be amended accordingly.
6
<PAGE>
6. Grant of Registration Rights.
----------------------------
(a) Union is entitled to demand registration of Common Stock for
aggregate proceeds of a minimum of $200 million per demand, except if Union
possesses less than a $200 million value of Common Stock in which case Union may
demand registration of its remaining balance of Common Stock, but, in any event,
Union is entitled to not less than two demand registrations. Notwithstanding the
foregoing:
(i) If Tosco shall furnish to Union, upon Union's request for a
demand registration, a certificate signed by the Chairman of the Board of Tosco
stating that in the good faith judgment of the Board of Directors, it would be
seriously detrimental to an equity or debt offering by Tosco or any other
corporate transaction by Tosco, in either case for which Tosco had made
substantial preparation before the date of receipt of Union's request for
registration pursuant to this Section and it is therefore essential to defer the
filing of such registration statement, Tosco shall have the right to defer such
filing for the minimum period of time necessary to eliminate the detriment to
Tosco, provided however that each such deferral shall not exceed a period of
more than ninety (90) days and all such deferrals in any twelve (12) month
period shall not exceed one hundred and twenty (120) days; and
(ii) Tosco shall not be required to make a registration statement
effective with the SEC pursuant to a demand registration by Union within one
hundred and eighty (180) days of the effective date of the registration
statement relating to a previous demand.
(b) If Tosco proposes to file any registration relating to a public
equity offering solely for cash, Tosco shall, at such time, promptly give Union
written notice of such registration. Upon the written request of Union given
within twenty (20) days after mailing of such notice by Tosco, Tosco shall cause
to be registered under the Securities Act all of the Common Stock that Union has
requested to be registered unless the registration statement relates to a firm
commitment underwriting arrangement. In that case, Tosco shall consult with the
managing underwriters and Union and shall use its best efforts to include the
shares of Common Stock requested to be registered by Union.
7. Mechanical Provisions. (a) Whenever required to effect the registration
---------------------
of any Common Stock, Tosco shall:
(i) Prepare and file with the SEC a registration statement, as
expeditiously as reasonably possible, and in any case within twenty (20) days,
with respect to such Common Stock and use its best efforts to cause such
registration statement to become effective, and, upon the request of Union, keep
such registration statement effective for up to ninety (90) days, unless in the
reasonable opinion of counsel to Union, some longer period is necessary to
effect the method of distribution of the Common Stock or Derivative Securities
selected by Union;
7
<PAGE>
(ii) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement;
(iii) Furnish to Union such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Common Stock owned by them;
(iv) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by Union, provided
that Tosco shall not be required in connection therewith or as a condition
thereto to qualify to do business or, except as required under the Securities
Act, to file a general consent to service of process in any such states or
jurisdictions;
(v) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form including indemnity obligations, with the managing underwriter of
such offering. Union shall also enter into and perform its obligations under
such an agreement;
(vi) Notify Union at any time when a prospectus relating thereto
is required to be delivered under the Securities Act of the happening of any
event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing;
(vii) Cause all Common Stock registered pursuant hereunder to be
listed on each securities exchange or automated quotation system on which
similar securities issued by Tosco are then listed; and
(viii) If the method of distribution selected by Union is an
underwritten public offering, and if the managing underwriter determines that a
roadshow would be beneficial to the success of the offering, prepare a roadshow
presentation and make those executive officers selected by the managing
underwriter available for meetings with investors and analysts in locations
selected by the managing underwriter.
(b) Union will make such information available to Tosco concerning the
76 Assets as is necessary in the opinion of counsel to Tosco to complete the
registration in compliance with the Securities Act.
8
<PAGE>
8. Indemnification; Contribution. In the event the sale or distribution of
------------------------------
any shares of Common Stock by Union are included in a registration statement
filed by Tosco:
(a) Tosco agrees to indemnify and hold harmless Union, its directors,
officers and each person, if any, who controls Union within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act from
and against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred by Union or
any such controlling person in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in the registration statement or any amendment
thereof, any preliminary prospectus or the final prospectus (as amended or
supplemented if Tosco shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to Union furnished
to Tosco in writing by Union expressly for use therein.
(b) Union agrees to indemnify and hold harmless Tosco, its directors,
its officers who sign the registration statement and each person, if any, who
controls Tosco within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from Tosco to Union, but only with reference to information relating to Union
furnished to Tosco in writing by Union expressly for use in the registration
statement (including any preliminary prospectus, the final prospectus or any
amendments or supplements thereto).
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to either paragraph (a) or (b) of this Section 8, such person
(the "indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any 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. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
9
<PAGE>
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by Union, in the case of parties indemnified pursuant to
paragraph (a) above, and by Tosco in the case of parties indemnified pursuant to
paragraph (b) above. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there is a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel as contemplated by the second and third sentences of this paragraph,
the indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
(d) To the extent the indemnification provided for in paragraph (a) or
(b) of this Section 8 is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
each indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative fault
of Tosco on the one hand and of Union on the other hand in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault of Tosco on the one hand and Union on the other hand shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by Tosco or by Union and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
(e) The obligations of Tosco and Union under this Section shall
survive the completion of any offering of Common Stock in a registration
statement under this Section, and otherwise.
9. Underwriting Expenses. Union shall bear and pay all third-party,
----------------------
out-of-pocket costs of the underwriting incurred by Tosco in the case of a
registration statement filed pursuant to Section 6(a), if those costs are
incurred in the same manner as Tosco would incur in an underwritten transaction
on its own behalf. Tosco shall be responsible for the expenses of the
10
<PAGE>
underwriting in the case of a registration statement filed pursuant to Section
6(b) other than those additional expenses (such as the additional registration
fee) that are incurred as a result of the inclusion of Common Stock. In advance
of filing a registration statement pursuant to Section 6(a), however, Tosco
shall present a good faith estimate to Union and shall meet and confer with
Union regarding the expenses to be incurred. In all cases, Union shall be
responsible for the underwriting discount and commission on the Common Stock
sold by Union.
10. Termination.
-----------
(a) The Agreement shall terminate and be of no further force and
effect as to each particular share of Common Stock, and the legend specified in
Section 3(c)(ii) shall be removed from any certificate evidencing such share,
immediately upon the earliest to occur of the following events: (i) the sale or
transfer by Union of such Common Stock to any Person or Persons, other than to a
Person that is an Affiliate of Union or (ii) January 15, 2007;
(b) The Agreement shall terminate and be of no further force and
effect as to Union immediately upon the earliest to occur of the following
events: (i) the sale or transfer by Union of that amount of Common Stock which
causes Union to own less than 5% of the outstanding shares of Common Stock or
(ii) January 15, 2007;
(c) Upon Termination of this Agreement as to Union or as to any
particular share of Common Stock, the legends defined in Section 3(c) of this
Agreement shall be removed from those shares which are no longer subject to this
Agreement;
(d) Notwithstanding the provisions of Section 10(a) or (b) above, the
registration rights granted in Section 6 of this Agreement shall terminate when
all of the Common Stock could be sold under Rule 144 (or successor rule) without
any volume limitations.
11. Agreement to Perform Necessary Acts. Union and Tosco shall do any and
------------------------------------
all things, take any and all actions, perform any further acts and execute and
deliver any further documents that may be reasonably necessary, whether under
any applicable law, the Articles and Bylaws of Tosco or otherwise, to carry out
and effectuate the provisions of this Agreement;
12. Governing Law. This Agreement shall be governed by and construed under
-------------
the laws of the State of New York.
13. Integration. This Agreement constitutes the entire agreement and
-----------
understanding of Tosco and Union with respect to the subject matter of this
Agreement and supersedes all prior agreements and understandings with respect
thereto.
11
<PAGE>
14. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
15. Titles and Subtitles. The titles and subtitles used in this Agreement
---------------------
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
16. Notices. Unless otherwise provided herein, any notice required or
-------
permitted under this Agreement shall be given in writing or by facsimile and
shall, subject to the provisos set forth below, be deemed effectively given (i)
upon personal delivery to the party to be notified at the address indicated for
such party on the signature page hereof, (ii) on the next Business Day after it
is deposited with a recognized overnight courier service servicing the locale of
the addressee, designated for overnight delivery, prepaid and addressed to the
party to be notified at the address indicated for such party on the signature
page hereof, or (iii) upon transmission to such party at its facsimile number
indicated for such party on the signature page hereof (with electronic
acknowledgment of receipt and a copy thereof sent by overnight courier in
accordance with clause (ii) above); provided, however, that any such notice
shall be sent to such other address or facsimile number as such party may
designate by ten (10) days' advance notice to the other party.
17. Enforcement Expenses. If any action at law or in equity is necessary to
--------------------
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
18. Amendments and Waivers. Except as expressly provided in this Agreement,
----------------------
neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than upon the written consent of all of (i) Tosco and (ii) the
holders of at least a majority of the Common Stock. Any amendment or waiver
effected in accordance with this paragraph shall be binding upon each holder of
Common Stock and Tosco. In the event that an underwriting agreement is entered
into between Tosco and any holder of Common Stock, and such underwriting
agreement contains terms differing from this Agreement as to any such holder,
the terms of such underwriting agreement shall govern.
19. No Reliance on Other Parties. Each party hereto has voluntarily
-------------------------------
undertaken its obligations to the other parties hereto under this Agreement and
each of the other contracts and instruments referred to herein. Each party
hereto represents and warrants that it has reviewed and understands each of this
Agreement and such other documents and has discussed each such document with its
legal counsel (and other advisors, if any) so that such party is satisfied that
it is aware of its risks and the significance of each such document. Each party
acknowledges and agrees that it is not relying upon any representation,
warranty, understanding or obligation of any other party hereto that is not
expressly stated in this Agreement or any other contract or instrument referred
to herein.
12
<PAGE>
20. Severability. If one or more provisions of this Agreement are held to
------------
be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
21. Business Days. If any date set forth herein as the final date (for
--------------
purposes of payment, notice or otherwise) is not a Business Day, then such final
date shall be deemed to be the next succeeding Business Day. Time is of the
essence under this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
TOSCO CORPORATION
a Nevada corporation
By
---------------------------------
Name:
Title:
Address for Notices:
Tosco Corporation
72 Cummings Point Road
Stamford, Connecticut 06902
Attn: Wilkes McClave III, Esq.
General Counsel
(203) 977-1005 (Phone)
(203) 964-3187 (Fax)
UNION OIL COMPANY OF CALIFORNIA
a California corporation
By
--------------------------------
Name:
Title:
Address for Notices:
UNOCAL Corporation
2141 Rosecrans Avenue, Suite 4000
El Segundo, California 90245
Attn: Neal E. Schmale
Chief Financial Officer
(310) 726-7621 (Phone)
(310) 726-7806 (Fax)
cc: Dennis P.R. Codon, Esq.
General Counsel
(310) 726-7651 (Phone)
(310) 726-7815 (Fax)
<PAGE>
SUPPLEMENT NO. 1 TO
STOCK PURCHASE AND SHAREHOLDER AGREEMENT
Tosco Corporation hereby elects that the $45 per share limitation
contained in the definition of Market Price set forth in Section 1, on page 2,
of the Stock Purchase and Shareholder Agreement dated January 15, 1997 shall not
apply.
IN WITNESS WHEREOF, Tosco Corporation has executed this as of the 15th
day of January, 1997.
TOSCO CORPORATION
a Nevada corporation
By
---------------------------------
Name:
Title:
EXHIBIT 2.3
ATTACHMENT XXII
----------
ENVIRONMENTAL AGREEMENT
By and Between
UNION OIL COMPANY OF CALIFORNIA
and
TOSCO CORPORATION
----------------------------
Dated as of [Closing Date]
----------------------------
<PAGE>
ENVIRONMENTAL AGREEMENT
THIS ENVIRONMENTAL AGREEMENT is dated as of [Closing Date]
("Agreement"), between UNION OIL COMPANY OF CALIFORNIA, a California corporation
and TOSCO CORPORATION, a Nevada Corporation.
RECITALS
WHEREAS, Seller and Purchaser have entered into a Sale and
Purchase Agreement For 76 Products Company dated December 14, 1996 ("Sale and
Purchase Agreement"), pursuant to which Purchaser agreed to buy and Seller
agreed to sell the business and assets that constitute the 76 Products Company
business segment of Seller; and
WHEREAS, the Sale and Purchase Agreement provides that Seller
and Purchaser will enter into an Environmental Agreement at Closing to be the
exclusive statement of the representations, warranties, covenants, agreements
and indemnities with respect to Environmental Laws as they apply to the 76
Products Company business segment.
NOW, THEREFORE, the parties agree as follows:
1. Definitions. For all purposes of this Agreement, the following terms
shall have the following meanings, and such meanings shall be equally applied to
both the singular and plural forms of the terms defined.
(a) "Allocated Overhead Costs" shall have the meaning specified in Section
1(n).
(b) "Baseline" shall mean all Releases in or to the atmosphere, soil,
surface water, subsurface strata or groundwater at or from the 76 Assets that
occurred prior to the Closing and shall include Releases, whenever occurring,
resulting from Hazardous Materials sent prior to Closing from the 76 Assets, as
they are comprised on the Closing Date, to a disposal site designated as a
"Superfund" site under the Comprehensive Environmental Response, Compensation
and Liability Act.
(c) "Baseline Amortizing Amount" shall have the meaning specified in
Section 4(a).
(d) "Baseline Corrective Action Costs" shall have the meaning specified in
Section 4(a).
(e) "Baseline Corrective Action Costs Quarterly Report" shall have the
meaning specified in Section 5(b)(ii).
1
<PAGE>
(f) "Baseline Development Period" shall have the meaning specified in
Section 4(b).
(g) "Category I Project" shall have the meaning specified in Section
5(c)(i).
(h) "Category II Projects" shall have the meaning specified in Section
5(c)(i).
(i) "Change Event" shall have the meaning specified in Section 4(a).
(j) "Claim Notice" shall have the meaning specified in Section 8(c).
(k) "Closing" shall mean the date and time that the 76 Assets are purchased
by Purchaser under the Sale and Purchase Agreement.
(l) "Compliance Action" shall mean any expenditure or activity
necessary to operate the 76 Assets in compliance with applicable Environmental
Laws.
(m) "Compliance Action Costs" shall have the meaning specified in Section
4(c).
(n) "Corrective Action" shall mean any expenditure or activity taken
pursuant to Environmental Laws to investigate, monitor and, if required, abate,
clean up, remove, treat, cover or in any other way remediate a Release at or
from the 76 Assets, including reasonably incurred removal, remediation or
cleanup costs, site investigation and assessment costs, government oversight and
response costs and, if applicable, allocated costs of in-house personnel
necessary to directly manage or support such activities ("Allocated Overhead
Costs"), but excluding any allocation of general corporate overhead; provided,
however, such allocated costs shall not exceed ten percent (10%) of Baseline
Corrective Action Costs. Corrective Action shall also mean any payment of a
third party's (including, but not limited to, any federal, state or local
government agency) claim for property damages, losses, expenses, costs,
deficiencies, penalties, liens, interests, fines, assessments, charges,
obligations or liabilities of any kind, including reasonable attorneys' fees and
court costs, arising out of or relating to a Release at or from the 76 Assets;
provided, however, Corrective Action shall not include Compliance Action,
Retained Environmental Liability, payment of a third party's claim for personal
injury (including, but not limited to, any claim for a person's physical,
mental, psychological, chemical or biological response to the exposure to a
Hazardous Substance) or punitive damages.
(o) "Corrective Action Plan" shall have the meaning specified in Section
5(b)(i).
(p) "Environmental Laws" shall mean any legal requirement relating to
pollution, protection or cleanup of the environment (including, but not limited
to, ambient air, surface water, groundwater, land surface or subsurface strata),
including, without limitation, the Comprehensive Environmental Response,
Compensation and
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Liability Act of 1980, as amended, the Resources Conservation and Recovery Act
of 1976, as amended, and any other federal, state and local legal requirements,
as such legal requirements exist on the Closing Date (except as such legal
requirements may be amended after the Closing Date to modify existing
remediation standards), relating to: (i) a Release or the containment, removal,
remediation, response, cleanup or abatement of a Hazardous Substance; (ii) the
manufacture, generation, formulation, processing, labeling, distribution,
introduction into commerce, use, treatment, handling, storage, or transportation
of a Hazardous Substance; (iii) exposure of persons, including employees, to a
Hazardous Substance; (iv) occupational safety or health matters; and (v) the
physical structure or condition of a building, facility, fixture or other
structure, including, without limitation, those relating to the management, use,
storage, disposal, cleanup or removal of asbestos, asbestos-containing
materials, polychlorinated biphenyls or any other Hazardous Substance.
(q) "Hazardous Substance" shall mean any toxic substance or waste,
pollutant, hazardous substance or waste, contaminant, special waste, industrial
substance or waste, petroleum or petroleum-derived substance or waste, or any
toxic or hazardous constituent of any such substance or waste, including,
without limitation, any substance regulated under or defined by Environmental
Laws.
(r) "Improvements" shall mean the permanent structures and other
improvements on the Real Property acquired by Purchaser pursuant to the Sale and
Purchase Agreement.
(s) "Indemnified Party" and "Indemnifying Party" shall have the respective
meanings specified in Section 8(c).
(t) "Independent Consultant" shall have the meaning specified in Section
10(b).
(u) "Permit" shall mean any approval, registration, authorization,
certificate, certificate of occupancy, consent, license, order, permit, variance
or other similar authorization of any government agency required by
Environmental Laws in effect on or prior to the Closing for the current
ownership, use or operation of the 76 Assets.
(v) "Purchaser" shall mean Tosco Corporation and its successors in
interest.
(w) "Real Property" shall mean the real property acquired by Purchaser
pursuant to the Sale and Purchase Agreement.
(x) "Release" shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, escaping, leaching, dumping or disposing of a Hazardous
Substance into the environment of any kind whatsoever, including, but not
limited to, the abandonment or discarding of barrels, containers, tanks or other
receptacles containing or previously containing a Hazardous Substance. Migration
of any pre-Closing Release shall not be considered a new Release for purposes of
this Environmental Agreement.
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(y) "Remediation Equipment" shall have the meaning specified in Section
7(d).
(z) "Reportable Quantity of a Hazardous Substance" shall mean a Release
which is required, pursuant to Environmental Laws, to be reported to a
government agency.
(aa) "Retail Site" shall mean Real Property and Improvements used for the
retail sale of motor fuel to the general public.
(bb) "Retained Environmental Liability" shall mean any liability imposed by
Environmental Laws arising out of Seller's pre-Closing activities other than
activities associated with the 76 Assets, and shall also include any liability
for any designated "Superfund" site as of the Closing Date under the
Comprehensive Environmental Response, Compensation and Liability Act for which
Seller has been named a "Potentially Responsible Party" as of the Closing Date.
Retained Environmental Liability shall not include Compliance Action or
Corrective Action.
(ac) "Sale and Purchase Agreement" shall have the meaning specified in the
first recital of this Agreement.
(ad) "Seller" shall mean Union Oil Company of California and its successors
in interest.
(ae) "Special Damages" shall have the meaning specified in Section 7(d).
(af) "UST Funds" shall have the meaning specified in Section 9(a).
(ag) "76 Assets" shall mean the business and assets of the 76 Products
Company business segment of Seller acquired by Purchaser pursuant to the Sale
and Purchase Agreement.
(ah) "$200 Million Cap" shall have the meaning specified in Section 4(a).
2. SELLER'S ENVIRONMENTAL REPRESENTATIONS. To Seller's knowledge, Schedule
2A sets forth an accurate and complete list of all Permits Seller has for
operation of the 76 Assets pursuant to applicable Environmental Laws. Except for
the items set forth in Schedule 2B to this Agreement, to the best of Seller's
knowledge as of the Closing:
(a) All Permits necessary for the operation of the 76 Assets,
as they are currently being operated by Seller, have been obtained and are in
effect and, where required, applications for renewal thereof have been timely
filed, except where the failure to obtain such Permits, individually or in the
aggregate, would not have a significant adverse effect upon the operation of the
76 Assets as they have been operated on a historical basis.
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(b) The 76 Assets are in compliance with applicable
Environmental Laws and Permits, except where the failure to be in such
compliance would not have a significant adverse effect on the operations of the
76 Assets as they have been operated on a historical basis.
3. PURCHASER'S ENVIRONMENTAL REPRESENTATIONS AFTER DUE DILIGENCE. Based on
Purchaser's inquiry and due diligence prior to the Closing, none of the
representations made above by Seller is inaccurate.
4. ENVIRONMENTAL PROVISIONS.
(a) ALLOCATION OF BASELINE CORRECTIVE ACTION COSTS. Except as
otherwise provided in this Agreement, Seller shall be responsible for Retained
Environmental Liability and the cost of Corrective Action arising out of or
related to the Baseline ("Baseline Corrective Action Costs"), and Purchaser
shall be responsible for all other Corrective Action; provided, however, that
Seller's obligation for Baseline Corrective Action Costs shall expire
twenty-five (25) years after the Closing, except as to unpaid amounts of
Baseline Corrective Action Costs invoiced to Seller for work performed prior to
such expiration and except Baseline Corrective Action Costs for a discrete
project begun prior to such expiration and to be completed within a reasonable
and definite time period (but excluding costs associated with monitoring of
environmental conditions and other ongoing non-remediation costs). Baseline
Corrective Action Costs shall include costs incurred to prevent or abate
migration of a pre-Closing Release at or from a 76 Assets to adjoining real
property owned, leased or used by a third party. Notwithstanding the foregoing,
Purchaser shall pay, during each calendar year, the first $7 million of Baseline
Corrective Action Costs and forty percent (40%) of the amount of Baseline
Corrective Action Costs (and Seller shall pay the remaining sixty percent (60%))
in excess of the $7 million, up to a lifetime aggregate of $200 million ("$200
Million Cap"). Upon and after the occurrence of a Change Event, Seller shall be
charged annually with its allocated share of the Baseline Amortizing Amount in
accordance with the allocation of responsibility for Baseline Corrective Action
Costs provided in this Section 4(a). Purchaser shall be responsible for all
Corrective Action costs in excess of the Baseline Amortizing Amount, and such
costs shall not be included in the calculation of the $200 Million Cap. Only
Purchaser's allocated share of the Baseline Amortizing Amount shall be included
in the calculation of the $200 Million Cap. "Baseline Amortizing Amount" means
the annual Baseline Corrective Action Costs with respect to a facility at which
a Change Event has occurred, estimated in good faith using the Corrective Action
Plan as a guideline and assuming that such Change Event had not occurred.
"Change Event" means: (i) the closure of a 76 Asset site (other than a Retail
Site); and/or (ii) the change in use of a 76 Asset (other than a Retail Site) to
a use outside the petroleum/chemical industry. For purposes of this Section,
closure means the termination of substantially all operations at a site which
results in an acceleration of or additional Baseline Corrective Action from what
is otherwise set forth in the Corrective Action Plan prior to the contemplation
of closure of such site, or if no such Corrective Action Plan exists prior to
such contemplation, Seller's existing plans for such site.
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(b) BASELINE DETERMINATION. The Baseline shall be determined by
reference to existing information from studies performed by or for Seller, such
as described in Seller's existing Environmental Remediation Services Business
Plans for Real Property and Improvements. Within six (6) months of the Closing
("Baseline Development Period"), the Baseline can be augmented by further
investigation that Purchaser determines in good faith is reasonably necessary to
establish the Baseline. Such further investigation shall be performed during the
Baseline Development Period (or if Seller in its sole discretion agrees to a
longer period than six (6) months, during the period as Seller agrees). Such
further investigation shall be performed at Purchaser's sole expense and shall
not be included in calculation of the $200 Million Cap. Purchaser may further
augment the Baseline after the six (6)-month period with in situ testing of the
76 Assets that Purchaser, during the Baseline Development Period, identifies is
reasonably necessary to establish that a Release should be included in the
Baseline, but only to the extent such testing is required by a lawful order of a
government agency (with jurisdiction) to conduct such testing on such site or
Seller agrees such testing is required under Environmental Laws (such agreement
not to be unreasonably withheld).
(c) COMPLIANCE ACTION COSTS. Except as otherwise provided in
this Section 4(c), Seller shall be responsible for the cost of Compliance Action
("Compliance Action Costs") which arise out of or result from operations or
conditions before the Closing. Purchaser shall be responsible for Compliance
Action Costs which arise out of or result from operations or conditions after
the Closing. Notwithstanding the foregoing, Purchaser shall be responsible for
Compliance Action Costs associated with the construction and operation of
facilities necessary to achieve selenium effluent limitations at Seller's San
Francisco Refinery and the construction and operation of vapor recovery
equipment at Seller's Los Angeles Refinery Marine Terminal to: (i) comply with
Environmental Laws; or (ii) as may be required in connection with the renewal of
Seller's existing lease for the Terminal.
5. CONDUCT OF BASELINE CORRECTIVE ACTION.
(a) If Baseline Corrective Action is required, Purchaser shall conduct and
pay for such action, and Seller shall reimburse Purchaser in accordance with
Section 4(a). During the time Seller is obligated to pay all or any portion of
Baseline Corrective Action Costs, Purchaser shall, within twenty-four (24) hours
after reporting to the appropriate government agency, notify Seller of any
Reportable Quantity of a Hazardous Substance. If a Reportable Quantity of a
Hazardous Substance is discovered in the soil, surface water, subsurface strata
or groundwater at a 76 Asset after the Closing in an amount not readily
distinguishable from the Baseline, Purchaser shall be responsible for the
incremental Corrective Action costs associated therewith, and such costs shall
not be included in the calculation of the $200 million cap. Purchaser shall
provide to Seller information about such an event sufficient to estimate the
incremental Corrective Action costs attributable thereto. Purchaser and Seller
shall work together in good faith to agree on such incremental costs. In the
event the parties are unable to reach agreement on such incremental costs, the
dispute may be submitted for dispute resolution in accordance with Section 10.
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(b) Purchaser shall provide to Seller the following reports and information
in conjunction with Baseline Corrective Action conducted or planned to be
conducted by Purchaser:
(i) By September 30 of each calendar year during which Purchaser conducts
Baseline Corrective Action, Purchaser shall provide Seller with an expenditure
plan detailing its planned Baseline Corrective Action expenditures for each of
the next three (3) calendar years ("Corrective Action Plan"). The Corrective
Action Plan shall include separate detail supporting any project with
anticipated expenditures during the three (3)-year period in excess of $250,000
("Category I Project") and a summary total of all other projects with
anticipated expenditures during the three (3)-year period of less than $250,000
("Category II Projects").
(ii) Within thirty (30) days after the end of each calendar quarter,
Purchaser shall provide Seller with a status report of all Baseline Corrective
Action Costs Purchaser has incurred year-to-date ("Baseline Corrective Action
Costs Quarterly Report"). The Baseline Corrective Action Costs Quarterly Report
shall provide a summary of the total expenditures incurred for the previous
quarter, year-to-date and life-to-date for each Category I Project identified in
the Corrective Action Plan and a summary of the total expenditures incurred for
the previous quarter, year-to-date and life-to-date for the Category II
Projects. The expenditures reported shall segregate Baseline Corrective Action
Costs with a breakdown within each category between direct costs and Allocated
Overhead Costs, and a summary of the amount of all Baseline Corrective Action
Costs Purchaser contends should be included in calculating the $200 Million Cap.
The Baseline Corrective Action Costs Quarterly Report for each of the first
three quarters of the year shall include an update to the estimated expenditures
for each Category I Project and for all Category II Projects for the balance of
the current year. The Baseline Corrective Action Costs Quarterly Report for the
fourth quarter shall include an update for the following year (i.e. the 4th
quarter Baseline Corrective Action Costs Quarterly Report of 1997 will estimate
expenditures for each Category I Project and the Category II Projects for the
calendar year 1998). The Baseline Corrective Action Costs Quarterly Report shall
include an invoice to Seller for Seller's share of Baseline Corrective Action
Costs. Purchaser shall provide Seller with any documentation reasonably
requested by Seller that evidences the invoiced amounts.
(c) Seller shall reimburse Purchaser for Seller's share of the invoiced
Baseline Corrective Action Costs within thirty (30) days of Seller's receipt of
such invoice or, within such time, notify Purchaser in writing of disputed
invoiced amounts and withhold payment of those amounts. Only disputed amounts
may be withheld.
(d) Seller shall have the right, upon reasonable notice, to
audit the Baseline Corrective Action Costs Quarterly Reports. Any adjustments
identified by Seller through an audit will be presented to Purchaser in writing
for consideration to revise the Baseline Corrective Action Costs Quarterly
Reports and associated invoices. Purchaser and Seller shall together review
Seller's proposed adjustments and negotiate in good faith to resolve those
adjustments. If an agreement cannot be reached within sixty (60) days of the
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presentment of the proposed adjustments, the unresolved adjustments may be
submitted for dispute resolution in accordance with Section 10.
(e) Upon Seller's reasonable request, Purchaser shall provide Seller with a
copy of any information relating to Baseline Corrective Action, including, but
not limited to, soil assessment data, laboratory reports, field study results,
groundwater monitoring data, and operating and maintenance histories of
groundwater recovery equipment operated by Purchaser relating to Baseline
Corrective Action.
(f) Seller shall have the right, but not the obligation, to notify
Purchaser in writing within thirty (30) days of Seller's receipt of the
Corrective Action Plan of Seller's intent to participate directly in government
agency contacts and the development of a site assessment or remediation plan or
project for any Category I Project. Except in each case to the extent Purchaser
is required to take action pursuant to Environmental Laws before such agreement
can be reached, Purchaser and Seller shall reach agreement on communications
with the government agency and the scope of the plan or project, and Purchaser
shall not agree to a site assessment or remediation plan without Seller's
consent.
(g) If Purchaser's share of Baseline Corrective Action Costs reaches the
$200 Million Cap, Seller shall have the right, but not the obligation, to assume
control over all further Baseline Corrective Action, the cost for which Seller
is responsible under this Agreement, upon giving Purchaser ninety (90) days
prior written notice. Within a reasonable period of time following such notice,
Purchaser and Seller shall agree upon an orderly transition of control over such
Baseline Corrective Action, including, but not limited to, compensation for
equipment previously used by Purchaser in connection with Baseline Corrective
Action.
6. CASHOUT OF CERTAIN BASELINE CORRECTIVE ACTION OBLIGATIONS. Seller shall
have the option to extinguish its share of Baseline Corrective Action Costs for
a 76 Asset in exchange for an agreed lump-sum payment to Purchaser upon the sale
of a 76 Asset owned by Purchaser. Designation of such a 76 Asset shall be made
by written notice to Purchaser. Purchaser and Seller shall negotiate in good
faith in an attempt to agree on the appropriate lump-sum payment. In the event
the parties are unable to agree on the lump-sum payment, Seller shall have the
option to submit the matter for dispute resolution in accordance with Section
10. Upon payment of the agreed upon amount or the amount determined by the
Independent Consultant to be appropriate, Seller shall be released by Purchaser
from any further environmental obligation with respect to Baseline Corrective
Action for such a 76 Asset and shall be entitled to indemnification by Purchaser
pursuant to section 8(b)(vi). Only Purchaser's share of the projected Baseline
Corrective Action Costs used in determining the lump-sum payment shall be
included at that time in calculating the $200 Million Cap and shall not
otherwise be included in calculating the allocation of Baseline Corrective
Action Costs pursuant to Section 4(a).
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7. ACCESS.
(a) Upon reasonable notice, Purchaser shall permit, under the following
conditions specified in this Section, access to and entry upon a 76 Asset to
Seller and Seller's independent contractors as necessary: (i) to conduct
Baseline Corrective Action, if Seller elects to assume control of such action;
and (ii) to observe and monitor Baseline Corrective Action.
(b) If Seller assumes control of Baseline Corrective Action, except in the
event of an emergency, Seller shall provide Purchaser with at least five (5)
business days notice prior to commencement of any drilling, construction, or
equipment installation, and any other activity that may unreasonably disrupt
normal business operations at a 76 Asset. If any such activity will likely cause
an unreasonable disruption, Seller shall reschedule the activity to a reasonable
mutually convenient time in order to minimize the disruption. Purchaser shall
not unreasonably interfere with Seller while Seller exercises its rights of
ingress and egress to conduct Baseline Corrective Action. Seller shall use
reasonable efforts to conduct Baseline Corrective Action in a manner which
minimizes disruption to the business activities at a 76 Asset. Seller shall take
steps reasonably necessary to prevent injury to persons or damage to property
resulting from or in any way connected with such Baseline Corrective Action it
conducts, including adherence to Purchaser's safety rules and procedures.
(c) Within a reasonable period of time after completion of Baseline
Corrective Action at a 76 Asset where Seller has assumed control of such action,
Seller shall restore such 76 Asset to substantially the condition which existed
immediately prior to Seller's commencement of Baseline Corrective Action. No
claim for special, exemplary, consequential or indirect damages, or for lost
profits, shall be asserted by Purchaser against Seller in connection with
Baseline Corrective Action performed by an independent contractor. Purchaser
shall have the right to pursue such damage claims against the independent
contractor. No contractor, subcontractor, materialman, agent, officer, director
or employee of Seller shall have any right to a lien against a 76 Asset or any
part thereof for any work, labor or materials furnished to Seller for the
actions performed thereon, unless otherwise required by applicable law.
(d) Purchaser shall reimburse Seller for all damages, losses, costs,
penalties, fines and assessments which Seller incurs if reasonable access to a
76 Asset is not granted to Seller in accordance with this Agreement. Purchaser
shall reimburse Seller for any out-of-pocket damages in excess of $1,000 that
Purchaser and its employees, agents, lessees, occupants of a 76 Asset or
contractors cause, as a result of injury to any test or monitoring well,
remediation equipment and/or associated piping, or any other property or
equipment installed or otherwise used by Seller in connection with its Baseline
Corrective Action ("Remediation Equipment"), but no claim for special,
exemplary, consequential or indirect damages, or for lost profit shall be
asserted by Seller in connection therewith against Purchaser. However, Seller
shall have the right to pursue such damage claims against any independent
contractor. All Remediation Equipment owned by Seller shall remain the property
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of Seller and may be removed from a 76 Asset, upon completion of Baseline
Corrective Action at a 76 Asset.
8. INDEMNIFICATION.
(a) SELLER'S INDEMNIFICATION: Seller shall indemnify, defend and hold
harmless Purchaser from and against: (i) subject to Section 4(a), Baseline
Corrective Action Costs; (ii) Compliance Action Costs, except for that portion
of such costs to be paid by Purchaser pursuant to Section 4(c); (iii) migration
of a Hazardous Substance after the Closing which would not have occurred but for
Baseline Corrective Action conducted by Seller in a manner which constitutes
gross negligence or willful misconduct; (iv) subject to Section 10, any damage
resulting from any inaccuracy in any representation or warranty of Seller in
this Agreement; (v) Retained Environmental Liabilities; and (vi) any other
obligations for which Seller has assumed responsibility pursuant to this
Agreement.
(b) PURCHASER'S INDEMNIFICATION: Purchaser shall indemnify, defend and hold
harmless Seller from and against: (i) Corrective Action costs resulting from the
ownership or operation of the 76 Assets by Purchaser after the Closing which are
not included in Baseline Corrective Action Cost; (ii) Purchaser's share of
Baseline Corrective Action Costs as provided in Section 4(a); (iii) Compliance
Action Costs resulting from the ownership or operation of the 76 Assets by
Purchaser as provided in Section 4(c); (iv) migration of a Hazardous Substance
after the Closing which would not have occurred but for Baseline Corrective
Action conducted by Purchaser in a manner which constitutes gross negligence or
willful misconduct; (v) all Baseline Corrective Action Costs incurred more than
twenty-five (25) years after the Closing, except as provided in Section 4(a);
(vi) subject to Section 10, any damage resulting from any inaccuracy in any
representation or warranty of Purchaser in this Agreement; and (vii) any other
obligations for which Purchaser has assumed responsibility pursuant to this
Agreement.
(c) INDEMNIFICATION PROCEDURES.
Whenever Purchaser or Seller becomes aware of a claim with
respect to a 76 Asset ("Indemnified Party") for which the other party
("Indemnifying Party") is obligated to provide indemnification, the Indemnifying
Party shall, within a reasonable period of time, give prompt notice thereof (a
"Claim Notice"), together with copies of written information relating to such
claim, and shall have the right to assume responsibility for the obligation to
be indemnified. Unless within twenty (20) days after such notice is given to the
Indemnifying Party, the Indemnifying Party gives the Indemnified Party notice of
its election to assume the obligation, the Indemnifying Party shall be deemed to
have waived such right. If the Indemnifying Party elects to assume such
obligation, (i) the Indemnifying Party shall take such action as is reasonably
necessary to protect the Indemnified Party and (ii) the Indemnifying Party will
keep the Indemnified Party fully advised as to such actions. If the Indemnifying
Party elects to assume responsibility for the obligation to be indemnified, the
Indemnified Party may take action that is reasonably necessary to protect it
fully.
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9. UST FUNDS.
(a) Reimbursement claims have been and will continue to be
submitted to the California Petroleum Underground Storage Tank Cleanup Fund and
similar federal, state and local government funds ("UST Funds") to seek
reimbursement of Corrective Action costs. Purchaser and Seller shall have the
right to pursue, control, settle, waive or release reimbursement claims they
have filed with the UST Funds and for which they have paid Corrective Action
costs. Any reimbursement claim not on file as of the Closing shall be filed and
pursued by Seller, if Corrective Action is commenced prior to the Closing.
(b) Seller shall have the right to any reimbursement amount received from a
UST Fund as a result of Corrective Action costs incurred by Seller at a Real
Property prior to the Closing.
(c) Purchaser shall have the right to any reimbursement amount received
from a UST Fund as a result of Corrective Action costs incurred by Purchaser at
a Real Property after the Closing, but such amount shall reduce Purchaser's
share of the aggregate Baseline Corrective Action Costs for purposes of
calculating the $200 Million Cap.
(d) Purchaser and Seller shall cooperate with each other in the filing and
pursuit of their respective reimbursement claims. In the event of a dispute as
to whether a particular reimbursement claim should be submitted by Purchaser or
Seller, Seller shall have the right to submit such claim pending resolution of
the dispute in accordance with the dispute resolution provisions of Section 10.
If Purchaser is determined to have the right to such claim, Seller shall
promptly transfer control of the claim and execute any necessary authorization
in favor of Purchaser. Purchaser and Seller shall pay their respective costs
associated with the submission and pursuit of any reimbursement claim.
10. DISPUTE RESOLUTION AND LIMITATIONS OF LIABILITY.
(a) Purchaser and Seller agree that any disputed claim or demand against
the other arising out of or relating to this Agreement shall be resolved in
accordance with and subject to the procedures and limitations of Section 10.
(b) If a dispute arises between the parties under this Agreement and that
dispute is not resolved within a reasonable period of time, either party may
notify the other in writing that the dispute is to be submitted to arbitration.
Such arbitration shall be held in Los Angeles, California. The parties shall
jointly select an environmental consultant, engineer, or other professional
reasonably qualified (including at least 7 years' experience in the appropriate
environmental field) to arbitrate such dispute ("Independent Consultant"). If
the Independent Consultant is not an attorney, he or she shall have the right to
obtain the assistance of qualified legal counsel in arbitrating the dispute, if
the Independent Consultant determines that such assistance is necessary.
Notwithstanding any other provision hereof, the parties shall each bear their
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respective legal fees and costs, and one-half of the cost of the Independent
Consultant (and his or her attorney, if necessary). If the parties cannot agree
on the Independent Consultant within sixty (60) days, either party may apply to
the American Arbitration Association in Los Angeles for the appointment of the
Independent Consultant. The Independent Consultant shall establish an expedited
procedure for hearing and resolving the dispute. Each party shall have the right
to conduct discovery pursuant to California Code of Civil Procedure section
1283.05 within sixty (60) days of the appointment of the Independent Consultant.
Unless the parties agree otherwise, the Independent Consultant shall, no more
than one hundred twenty (120) days after the Independent Consultant is retained,
render a decision resolving the dispute, with a written opinion stating the
reasons therefor. The decision of the Independent Consultant shall be final and
binding, and a court of competent jurisdiction may enter judgment thereon.
Except as otherwise provided in Section 10(c), (d) and (e), the dispute
resolution procedures of this Section 10 shall constitute the exclusive remedy
of the parties hereto with respect to any disputes arising out of this
Agreement.
(c) If a dispute arises between the parties prior to Closing concerning any
representation in Section 2(a) or 3 under this Agreement, the dispute shall be
limited by and resolved in accordance with the procedures set forth in Section
21 of the Sale and Purchase Agreement.
(d) Notwithstanding Section 23(b) of the Sale and Purchase Agreement, each
claim against Seller after Closing for breach of representation shall be subject
to the de minimis threshold provisions of Section 23(c) of the Sale and Purchase
Agreement and shall be aggregated with all other claims subject to such Section
for purposes of calculating the $10 million threshold.
(e) Seller's and Purchaser's representations in Sections 2 and 3,
respectively, and all liability with respect thereto, shall expire on the second
anniversary of the Closing.
11. MISCELLANEOUS PROVISIONS.
(a) CONSTRUCTION. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without giving effect to its
conflicts-of-laws principles.
(b) ENTIRE AGREEMENT. This Agreement and the Schedules hereto constitute
the entire agreement among the parties pertaining to the subject matter hereof
and supersedes all prior or contemporaneous agreements relating to the subject
matter hereof. In case of any conflict between the body of this Agreement and
any such Schedule, the terms of the body of this Agreement shall prevail.
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(c) ASSIGNMENT.
(i) Subject to Section 11(c)(ii), this Agreement shall not be
assigned, in whole or in part, without the prior written consent of the
other party.
(ii) Seller and Purchaser may each assign this Agreement, in whole or
in part, to one or more of their respective affiliates, upon prior notice
to the non-assigning party; provided, however, that the non-assigning party
may require as a condition of such assignment that the assigning party
reasonably demonstrate and/or assure the assignee's financial and technical
capability to perform its obligations hereunder. Any attempted assignment
of this Agreement in violation of this Section 11(c)(ii) shall be null and
void.
(iii) This Agreement shall inure to the benefit of, and be binding
upon, the parties hereto and their respective heirs, legal representatives,
successors and permitted assigns, except that any such assignment shall not
relieve the assigning party of its obligations hereunder. This Agreement is
not intended to, and does not create, any rights in any third parties.
(d) FURTHER ASSURANCES. Each of the parties hereto shall take such
additional action, and shall cooperate with one another, as may be reasonably
necessary to effectuate the terms of this Agreement.
(e) NOTICES.
(i) All written notices required or permitted to be given or made
hereunder shall be deemed to have been duly given or made if delivered
personally, or sent by overnight courier delivery or by telecopy or similar
facsimile transmission (and confirmed in writing thereafter), or mailed by
prepaid registered or certified mail, return receipt requested, to the
other party at the respective address set forth below (or to such other
address as a party shall designate for itself by written notice given or
made in accordance herewith):
(1) if to Seller, to it at:
Unocal Corporation
2141 Rosecrans Avenue, Suite 4000
El Segundo, California 90245
Attn: Neal E. Schmale
Chief Financial Officer
(310) 726-7621 (Phone)
(310) 726-7806 (Fax)
cc: Dennis P.R. Codon, Esq.
General Counsel
(310) 726-7651 (Phone)
(310) 726-7815 (Fax)
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<PAGE>
(2) if to Purchaser, to it at:
Tosco Corporation
72 Cummings Point Road
Stamford, Connecticut 06902
Attn: Wilber McClave III, Esq.
General Counsel
(203) 977-1001 (Phone)
(203) 964-3187 (Fax)
cc: Duane B. Bordvick
Vice President Environmental and External Affairs
Tosco Corporation
2300 Clayton Road
Suite 1100
(510) 602-4050 (Phone)
(510) 602-4018 (Fax)
(ii) Any notice, request or other communication hereunder shall be
deemed delivered and given or made on the seventh business day after the
date of mailing, if mailed by registered or certified mail, or on the first
business day after the date of transmittal, if sent by courier delivery or
by telecopy or similar facsimile transmission (and confirmed in writing
thereafter), or on the first business day after the date of delivery, if
delivered personally.
(f) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original instrument.
(g) WAIVER. It is agreed that any party to this Agreement may extend time
for performance by any other party hereto or waive the performance of any
obligation of any other party hereto or waive any inaccuracies in the
representations and warranties of any other party, but any such waiver shall be
in writing, unless a non-written waiver is expressly permitted, and shall not
constitute or be construed as a waiver of any other obligation, condition,
representation or warranty under this Agreement.
(h) AMENDMENTS. This Agreement cannot be altered, amended, changed or
modified in any respect or particular unless each such alteration, amendment,
change or modification shall have been agreed to by each of the parties hereto
and reduced to writing in its entirety and signed and delivered by each party.
14
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Environmental Agreement as of the date first above written.
UNION OIL COMPANY OF CALIFORNIA
a California corporation
By
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Name:
Time:
TOSCO CORPORATION
a Nevada corporation
By
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Name:
Title:
