ASSET PURCHASE AND SALE AGREEMENT
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(Refinery)
THIS PURCHASE AND SALE AGREEMENT ("Agreement") is made and entered into
as of the 4th day of August, 2000, by and between ULTRAMAR DIAMOND SHAMROCK
CORPORATION, a Delaware corporation, hereinafter referred to as "Buyer", and
TOSCO CORPORATION, a Nevada corporation, hereinafter referred to as "Seller".
W I T N E S S E T H:
WHEREAS, Seller or its Affiliate is the owner of a refinery, petroleum
coke terminal, and other related assets, commonly known as the Avon Refinery,
located in Contra Costa County, California (collectively, the "Refinery");
WHEREAS, Buyer desires to buy the Assets, and
WHEREAS, Seller desires to sell the Assets, on the terms and conditions
contained in this Agreement.
NOW, THEREFORE, in consideration of Ten Dollars U.S. ($10.00), the
mutual covenants and agreements hereinafter set forth and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Parties agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATIONS
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1.01 Definitions.
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Terms which are defined in Sections other than Article 1 of this
Agreement, shall have the meanings attributed to them where defined. As used in
this Agreement, the following terms shall have the meanings set forth below,
unless the context otherwise requires:
"1031 Exchange" shall have the meaning set forth in Section 12.02.
"1060 Forms" shall have the meaning set forth in Section 19.16
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"Acquired Employee" shall have the meaning set forth in Section
4.03(c).
"Affiliate" shall, with respect to Seller, mean any of its members or
owners and their respective parents, subsidiaries, affiliates, or joint
venturers, or any other Person directly or indirectly controlling, controlled
by, or under common control with, Seller; with respect to Buyer, the term shall
mean any Person directly or indirectly controlling, controlled by, or under
common control with, Buyer. For purposes of this definition, "control" shall
mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of an entity, whether through the
ownership of voting securities or interests or otherwise.
"Allocation" shall have the meaning set forth in Section 19.16.
"Applicable Law" means any applicable statute, law, ordinance, rule or
regulation.
"Assets" shall mean the Refinery, the Improvements, the Equipment, the
Refinery Land, the Seller Base Inventory, the Seller Feedstock Inventory, the
Seller Product Inventory, the Seller Other Inventory, Prepaid Expenses and
Deposits, Surplus Refinery Property, Refinery Records and the Seller Other
Assets, but shall exclude the Excluded Assets and Third Party Property.
"Base Rate" shall mean the lesser of (i) the per annum rate of interest
calculated on a daily basis using the 3-month Treasury Bill rate published in
the Wall Street Journal for the applicable day (with the rate for any day for
which such rate is not published being the rate most recently published) plus
two hundred (200) basis points; and (ii) the maximum nonusurious rate of
interest permitted by Applicable Law, such Base Rate to be adjusted
automatically as and to the extent that either (i) or (ii) immediately above
changes from time to time.
"Claim" shall have the meaning specified in Section 15.01.
"Claim Notice" shall have the meaning set forth in Section 14.02.
"Claiming Employee" shall have the meaning set forth in Section
4.09(c).
"Closing" means the closing of the purchase and sale contemplated
hereunder.
"Closing Date" means the time and date established for the Closing
pursuant to Section 3.01 hereof.
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"Closure" means the satisfaction of any one of the conditions set forth
in clauses (1), (2), (3) or (4) below:
(1) Receipt of written notice from governmental authorities
that no further active remediation of any SH&E Condition is required,
or
(2) Receipt of written notice from governmental authorities
that the approved remediation plan for any SH&E Condition has been
completed except for monitoring, testing or reporting and such
monitoring, testing or reporting continues for two years without the
requirement for active remediation; or
(3) A SH&E Condition is subject to an order from a
governmental authority and, for a period of two years, only monitoring,
testing or reporting is conducted without the requirement for active
remediation; or
(4) Seller has requested closure notice from the
governmental authorities, has not received any response of any kind to
its request for a closure notice for twelve (12) months and Seller has
determined that the soil and groundwater has been remediated in
accordance with Applicable Law based on four (4) successive quarterly
monitoring tests by a recognized environmental remediation contractor
that show the level of Hazardous Substances on the property as being
below or equal to the limit required by the governmental authorities
and Seller so notifies Buyer in writing.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collective Bargaining Agreements" shall have the meaning set forth in
Section 4.02.
"Committee" for purposes of Section 13.05, shall have the meaning set
forth in Section 13.05.
"Compensation Claims" shall have the meaning set forth in Section
4.09(c).
"Confidential Information" shall have the meaning set forth in Section
19.13(a).
"Contracts" means those Contracts listed on Schedule 1.01A hereto.
"Damages" shall mean (a) any and all obligations, liabilities, damages
(but excluding any indirect, special, punitive or exemplary damages, other than
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such damages as may be awarded to a third party against an Indemnified Party),
penalties, fines, assessments, deficiencies, losses (excluding lost profits),
Judgments, settlements, costs and reasonably incurred expenses, interest,
bonding and appellate costs and attorneys', accountants', engineers',
consultants' and investigators' reasonable fees and disbursements, in each case
after the application of any and all amounts actually recovered by the
Indemnified Party under insurance contracts or similar arrangements (but
excluding self-insurance arrangements) and from third parties by the Person
claiming indemnity and (b) interest on such aforesaid items consistent with
the Applicable Law at (i) the Base Rate beginning thirty (30) days after the
date on which the Indemnified Party makes a payment in respect of a claim
or demand asserted by a third party against the Indemnified Party for which the
Indemnified Party is entitled to indemnification hereunder or (ii) the Late
Payment Rate beginning on the date a final and non-appealable judgment or award
is entered in favor of the Indemnified Party, if such claim does not arise out
of a claim or demand asserted by a third party against the Indemnified Party.
"Deeds" shall have the meaning set forth in Section 3.02(a)(i).
"Default" shall have the meaning set forth in Section 16.04.
"Deliverable Items" means design manuals, operation manuals, blue
prints, engineering studies and engineering reports and with respect to computer
software, object code; user operations and system documentation; system
engineering and design information; and all associated data files and data bases
to the extent such systems exist for the operations of the Refinery and can be
delivered by a Party.
"Deposit" shall have the meaning set forth in Section 2.02(a).
"Disclosing Party" shall have the meaning set forth in Section
19.13(e).
"Effective Time" shall mean 12:01 A.M. Pacific Daylight Time or Pacific
Standard Time, as applicable, on the day of the Closing Date.
"Employees" shall have the meaning set forth in Section 4.01.
"Employment Commencement Date" shall mean the Effective Time.
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"Environmental Liability" shall mean any liability, claim, demand,
cause of action, loss, obligation, fine, penalty, cost (including expert and
attorneys fees), Damages, Judgments, awards, settlements and expenses incurred
under or pursuant to any SH&E Law. Environmental Liability includes, without
limitation, any Damage incurred with respect to (a) any investigation, study,
assessment, legal representation, cost recovery by governmental agency, or
monitoring or testing in connection therewith (but excluding general corporate
overhead), (b) any of the Assets as a result of actions or measures necessary to
implement or effectuate any such containment, removal, remediation, response,
clean up or abatement of any Hazardous Substance, and (c) the resolution of such
liabilities.
"Equipment" shall mean all furnishings, furniture, computer equipment
and hardware, fittings, equipment, machinery, refining process units, tools,
apparatus, tanks, pipelines, sewers, appliances, trucks, automobiles, other
vehicles and rolling stock, signs and other articles of personal property of
every kind whatsoever which in the normal course of business is located on the
Refinery Land and used primarily in the Operations of the Refinery.
"Excluded Assets" means (i) all of Seller's cash, deposits and bank
accounts; (ii) all accounts receivable or exchange balances owed to or by Seller
by reason of deliveries made by or to Seller or on account of the Assets prior
to the Effective Time; (iii) the financial books and records of Seller or its
Affiliates and the personnel, employment and other records of Seller as to their
former employees other than the Refinery Records; (iv) any claims or other
rights to receive monies arising prior to or after the date of execution hereof
which Seller has or may have which are attributable to its ownership of the
Assets prior to the Effective Time (other than insurance proceeds required to be
delivered to Buyer pursuant to Article 17 and to the extent included in the Net
Working Capital Adjustment); (v) all company minute books and similar materials
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related to maintenance of company records other than the Refinery Records; (vi)
all excess insurance proceeds under Article 17 of this Agreement; (vii) all
Intellectual Property and Trademarks not conveyed by this Agreement; and (viii)
those assets described on Schedule 1.01B or listed as Excluded Contracts on
Schedule 1.01H hereto, but in each case only to the extent not included in the
determination of the Net Working Capital Adjustment.
"Force Majeure Event" means any (1) fire, explosion, strike, lock-out,
breakdown of machinery or equipment, casualty or accident; (2) act of God,
including, without limitation, epidemic, hurricane, typhoon, earthquake, cyclone
or flood; (3) war, revolution, civil commotion, act of enemies, blockade, or
embargo; or (4) other similar occurrences or acts beyond the reasonable control
of a Party hereto, which act or occurrence shall make it impossible for the
Party concerned to carry out the obligations of such Party under this Agreement
(but lack of financial ability shall not be a Force Majeure Event). Those
provisions in this Agreement regarding Force Majeure Event shall only be
applicable in the specific situation(s) in which this Agreement expressly
provides they shall apply and in no other situations.
"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, MTBE, dioxins or any other substance regulated under or
defined by SH&E Laws.
"Improvements" shall mean any and all buildings or other improvements
attached or affixed to the Refinery Land.
"Indemnified Party" shall refer to the Person or Persons indemnified,
or entitled, or claiming to be entitled to be indemnified, pursuant to this
Agreement.
"Indemnifying Party" shall refer to the Person having the obligation to
indemnify pursuant to this Agreement.
"Independent Party" shall have the meaning set forth in Section
3.03(b)(iii)(B).
"Intangible Property" shall mean (i) any and all business trade secrets,
including, but not limited to, sales tools, and supplier lists and (ii) other
intangible properties, including, but not limited to, any goodwill or going
concern value associated with any of the foregoing, but excluding in each case
all Intellectual Property held by Seller or used in the Operations and any of
Seller's business or marketing plans.
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"Intellectual Property" means intellectual and similar property of
every kind and nature that was licensed by Seller on a non-exclusive basis for
Seller's Use and for which Seller enjoys a right to grant a sublicense to
certain purchasers of its assets or that which is owned by Seller and which
Seller has a right to grant a non-exclusive license to Use including, without
limitation patents, patent applications, inventions, invention disclosures,
copyrights, including registrations and applications to register copyrights,
formulae, processes, engineering data, designs, know-how, show-how, confidential
or proprietary technical information and trade secrets or other similar data or
information and computer software, but excluding Trademarks.
"Judgments" shall mean all judgments, orders, decisions, injunctions,
decrees or awards of any federal, state, local or foreign court, arbitrator or
administrative or governmental authority, bureau or agency.
"Known or Knowledge" or "To the knowledge of" or "Within the knowledge
of a Party as used herein" shall mean those facts, events or circumstances, if
actually known to an officer or a director of a Party to whom such phrase is
applied, and those other employees of Seller and Buyer that are set forth on
Schedule 1.01(I)
"Late Payment Rate" shall mean the lesser of (i) the Base Rate, plus
five hundred (500) basis points per annum, or (ii) the maximum rate of interest
permitted by Applicable Law, such rate to be adjusted automatically as and to
the extent that either (i) or (ii) immediately above changes from time to time.
"Leased Property" shall have the meaning set forth in Section 10.05(a).
"Leases and Easements" shall mean, collectively, those real property
leases and easements described on Schedule 1.01C.
"Legal Requirements" shall mean any and all (i) Applicable Laws; (ii)
applicable Judgments; (iii) contracts with any federal, state, local or foreign
court, arbitrator or administrative or governmental authority, bureau or
agency relating to compliance with matters described in (i) or (ii) above, and
(iv) applicable Permits; and as any of the foregoing matters described in
(i) through (iv) above may have been waived, amended, varied or otherwise
modified by any Permit or Permit-related proceedings or other applicable
proceedings.
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"Licensed Technology Rights" means intellectual and similar property of
every kind and nature, except Intellectual Property, licensed by third parties
to Seller before the Effective Time, including without limitation patents,
patent applications, inventions, invention disclosures, copyrights, including
registrations and applications to register copyrights, formulae, processes,
engineering data, designs, know-how, show-how, confidential or proprietary
technical information and trade secrets or other similar data or information and
computer software, but excluding all Trademarks.
"Liens" shall mean any and all liens, mortgages, charges, pledges,
security interests, burdens, easements, rights of way, zoning ordinances,
mineral exceptions or other encumbrances of any nature whatsoever, including,
but not limited to, such as may arise under any Contracts or Judgments.
"Material Adverse Change" shall mean the result of any act(s),
omission(s), conduct, occurrence(s), condition(s) or situation(s), or any
combination thereof if the same have or could reasonably result (either
individually or in the aggregate) (i) in a value in excess of $100 million or
(ii) on the Closing Date the Refinery is not capable of operating in the manner
that is materially similar to the Refinery's operation in the six months prior
to the Closing Date.
"Material Adverse Effect" shall mean the result of any act(s),
omission(s), conduct, occurrence(s), condition(s) or situation(s), or any
combination thereof if the same have or could reasonably result (either
individually or in the aggregate) in an actual material adverse effect on the
Assets or Operations when taken as a whole.
"Material Contracts" for purposes of Section 5.05, shall have the
meaning set forth in Section 5.05.
"Net Working Capital Adjustment" shall have the meaning specified in
Section 3.03(a).
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"Net Working Capital Estimate" shall have the meaning specified in
Section 3.03(b)(iii)(A).
"Net Working Capital Estimate Date" shall have the meaning set forth in
Section 3.03(b)(iii)(A).
"Non-Represented Employee" shall have the meaning set forth in Section
4.01(b).
"Operations" shall mean those activities conducted by Seller prior to
the Effective Time utilizing the Assets.
"Party" and "Parties" means each of Seller and Buyer and collectively
Seller and Buyer.
"Permits" shall mean any and all permits, temporary permits to
construct or operate, authorizations, approvals, registrations, rights of
way, orders, waivers, variances or other licenses issued or granted by any
federal, state or local administrative or governmental authority, bureau or
agency (i) under any Legal Requirement, including, but not limited to, SH&E Law;
or (ii) under or pursuant to any Judgment or any Contract with any such
administrative or governmental authority, bureau or agency relating in each case
to compliance with any Legal Requirement.
"Permitted Encumbrances" shall mean (i) Liens that are listed on
Schedule 1.01C and 1.01D; (ii) Liens that are caused or created by Buyer; (iii)
Liens for Taxes not yet due and payable or which are being contested in good
faith; (iv) Liens that do not materially interfere with the conduct of the
Operations in the manner conducted before the Closing; (v) mechanics',
carriers', workers', repairmen's or other similar Liens arising or incurred in
the ordinary course of business relating to liabilities that are not overdue;
(vi) Liens that arise under zoning, land use and other similar laws, (vii) Liens
set forth in the title reports provided to Buyer prior to the date of this
Agreement and (viii) Liens that do not have a Material Adverse Effect provided,
however, that unless Buyer has expressly agreed herein to assume liability for a
specific indebtedness, Permitted Encumbrances shall not include any
indebtedness, whether or not of record, which exist to Seller's knowledge and
are not disclosed to Buyer.
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"Person" means an individual, corporation, partnership, association,
trust, limited liability company or any other entity or organization, including
a government or political subdivision or agency, unit or instrumentality
thereof.
"Prepaid Expenses and Deposits" shall mean those expenses and deposits
listed on Schedule 1.01E.
"Refinery" shall have the meaning as specified in the first recital.
"Refinery Land" shall mean the tract (or parcel) of land described
in Schedule 1.01F, together with easements, appurtenances and other
hereditaments appurtenant to the Refinery Land and all the estates and rights of
Seller in and to said Refinery Land, subject to Permitted Encumbrances.
"Refinery Records" means all Deliverable Items, including Seller's
operational and technical records located at the Refinery and primarily relating
to the Operations or the Assets prior to the Effective Time and all personnel,
employment and medical records of the Acquired Employees, other than any such
records that may not be provided to Buyer under Applicable Law. For the
avoidance of doubt, Refinery Records specifically excludes (i) any of the
Seller's business plans, strategies and financial records which address or
reflect activities outside of the Refinery; and (ii) any of Seller's company
minute books and records, tax returns or other materials which do not pertain to
the Assets or ongoing day-to-day operation of the Operations.
"Related Agreements" shall mean the agreements listed in Section
3.02(c) and any other agreements or documents executed in connection with or as
required under this Agreement.
"Release" shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, migration, dumping or
disposing of any kind whatsoever of any Hazardous Substances into the
environment (including the abandonment or discarding of barrels, containers,
tanks or other receptacles containing or previously containing any Hazardous
Substance).
"Reported Encumbrance" shall have the meaning set forth in Section
10.05(b).
"Represented Employee" shall have the meaning specified in Section
4.01(a).
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"Seller Base Inventory" shall mean 800,000 barrels in proportionate
volumes of crude oil, feedstocks, intermediate petroleum products, refined
petroleum products, (excluding water and sludge), in tank bottoms, below low
suction, coke storage facilities, line fill and in process units owned by the
Seller and located at the Refinery Land.
"Seller Feedstock Inventory" shall mean that crude oil, feedstock and
intermediate petroleum product, excluding tank bottoms, line fill and in process
units as applicable but less water and sludge, owned by the Seller and located
at the Refinery Land or in terminals belonging to Seller or third parties and
specified to be sold, or which is in transit, to the Refinery.
"Seller Other Assets" shall mean any and all Intangible Property,
Contracts which are transferable to Buyer hereunder, Leases and Easements,
Permits which are transferable to Buyer hereunder, and Intellectual Property as
set forth in Schedule 5.15(a) or licenses therefor that are transferable to
Buyer in accordance with this Agreement and all other assets owned by Seller and
located in or on the Refinery Land and not an Excluded Asset.
"Seller Other Inventory" shall mean the catalysts, chemicals,
additives, spare parts, store stocks, supplies and personal property owned by
Seller that may be used in the Operations and that are located on the Refinery
Land and not an Excluded Asset.
"Seller Product Inventory" shall mean those certain refined products,
excluding tank bottoms, line fill and in process units as applicable but less
water and sludge, owned by the Seller and located at the Refinery.
"SH&E Condition" means a condition or circumstance resulting from one
or more related actions, omissions, or events with respect to a single facility
or location that exists with respect to air, land, groundwater, or surface or
sub-surface water or plant facilities, procedures, practices, or equipment
(whether occurring on-site or off-site or having off-site effects, including
off-site waste disposal, spills, surface water discharge, migration of
groundwater contamination, and other Releases) which is not or is alleged to be
not in compliance with or which is subject to remedy under SH&E Law. Soil,
surface water, or groundwater contamination arising from several sources, pieces
of equipment, or events (for example, one or more spills or leaks from a tank or
product loading or unloading apparatus) shall be considered a single SH&E
Condition only if such contamination is commingled. Contamination of more than
one environmental media (e.g., soil and groundwater) caused by the same actions,
omissions or events shall be considered a single SH&E Condition.
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"SH&E Law" means any Applicable Law relating to pollution, the
protection of the environment, release, emission, discharge, or disposal of any
material or substance, safety, health or environmental aspects of property
transfer, natural resource damage, pipeline closure, production registration,
hazard communication, or human health or safety.
"Surplus Refinery Property" shall mean the real property and Equipment
retired in place or not currently used in connection with the Operations.
"Survey" shall have the meaning set forth in Section 10.05(a).
"Taxes" shall mean all United States federal, state, local or foreign
income, profits, estimated, gross receipts, windfall profits, severance, real or
personal property, intangible property, occupation, production, franchise,
capital gains, employment, withholding, social security (or similar),
disability, registration, stamp, payroll, goods and services, alternative or
add-on minimum tax, or any other taxes, charges, fees, imposts, duties, levies,
withholdings or other assessments imposed by any governmental entity, including
environmental taxes imposed pursuant to Chapter 38 of the Code, and similar
state laws, excise taxes, customs duties, utility, property, sales, use, value
added, transfer and fuel taxes, or other like assessment or charge of any kind
whatsoever, together with any interest, fines, penalties or additions to tax
attributable to or imposed on or in respect thereof imposed by any governmental
authority, whether or not disputed, including all applicable sales, use, excise,
business, occupation or other tax, if any, relating to this or any other
service, supply or operating agreement.
"Tax Return" shall mean any return, declaration, report or similar
statement required to be filed with respect to any Taxes (including any attached
schedules) including, without limitation, any information return, claim for
refund, amended return and declaration of estimated Tax.
"Testing Agents" shall have the meaning specified in Section 3.03
(b)(i).
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"Third Party Claims" shall have the meaning specified in Section 14.02.
"Third Party Property" shall mean Improvements, Equipment and inventory
located on the Refinery Land owned by Persons not a Party, that are not owned by
or leased to Seller and that are listed on Schedule 1.01G.
"Trademarks" shall mean with regard to Seller (i) any and all
trademarks, trademark registrations, trademark applications, service marks,
service mark registrations, service mark applications, trade dress, word marks,
word mark registrations, word mark applications and trade names, including,
without limitation, the names Tosco, Union, Union 76, 76, Circle K, Brown Bear,
BP, Exxon and Mobil, used or licensed to Seller in connection with any of the
Operations; and (ii) the goodwill of the Operations in connection with which
such Trademarks have been used.
"Union" shall have the meaning specified in Section 4.02.
"Use" or its derivative words means make, use, have made and sell,
import and reproduce, distribute, publicly perform, publicly display and make a
derivative work.
1.02 Interpretations
(a) All references herein to Sections, Exhibits and
Schedules are to Sections of and Exhibits and Schedules attached to and
forming part of this Agreement, unless the contrary is specifically
stated.
(b) Unless the context requires otherwise in this Agreement,
the singular shall include the plural and vice versa.
(c) The headings of the Sections and subsections of this
Agreement and the headings contained in the Exhibits and Schedules
hereto are inserted for convenience of reference only and shall not in
any way define or affect the meaning, construction, or scope of any of
the provisions hereof or thereof.
(d) In the event of any conflict between the main body of
the Agreement and the Exhibits/Schedules hereto, the provisions of the
main body of the Agreement shall prevail.
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(e) Except where specifically stated otherwise, any
reference to any statute, regulation, rule, or agreement shall be a
reference to the same as amended, supplemented or re-enacted from time
to time.
(f) Whenever the words "include," "including," or "includes"
appear in this Agreement, they shall be read to be followed by the
words "without limitation" or words having similar impart.
ARTICLE 2
SALE AND PURCHASE; PURCHASE PRICE; METHOD OF PAYMENT;
LIMITED ASSUMPTION AND RETENTION OF LIABILITIES
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2.01 Sale and Purchase.
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Subject to the conditions hereof, Seller agrees to sell, assign,
transfer, convey and deliver or cause the sale, assignment, transfer, conveyance
and delivery to Buyer, and Buyer agrees to purchase and accept from Seller, the
Assets at the Closing.
2.02 Purchase Price.
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For and in consideration of the respective conveyances, assignments,
representations, warranties and covenants described herein and entry into the
Agreements listed in Section 3.02(c) and performance of the terms thereof, Buyer
agrees to pay to Seller, and Seller agrees to accept from Buyer the purchase
price, and other consideration, as follows:
(a) Simultaneously with the execution of this Agreement,
Buyer shall deliver to Seller, in a form approved by Seller, an
irrevocable letter of credit in an amount equal to ten percent of the
Purchase Price ("Deposit") as a deposit against the Purchase Price.
(b) At Closing $650,000,000 plus the Net Working Capital
Adjustment provided for in Section 3.03 ("Purchase Price"); and
(c) Up to an additional $150,000,000 in the form of
participation payments as set forth in Schedule 2.02 (the "Participa-
tion Payments"),
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2.03 Method of Payment.
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All amounts to be disbursed at or, pursuant to the terms of this
Agreement, prior to the Closing or paid after Closing, shall be made in
immediately available U.S. funds, by wire transfer to a U.S. bank account
designated by Seller or by any other means agreed to by Seller.
2.04 Limited Assumption and Retention of Liabilities.
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(a) Upon the condition that the Closing shall occur, and
subject to the provisions of Article 13 hereof, Buyer shall assume and
agrees to discharge:
(i) all liabilities relating to or arising from the
ownership or operation of the Assets from and after the
Effective Time;
(ii) all Environmental Liabilities assumed by Buyer
pursuant to Article 13 hereof;
(iii) Obligations arising from and after the Effective
Time to be performed after the Effective Time under the
Contracts, Leases, Easements and Permits;
(iv) Taxes payable and other current liabilities
which are included in the Net Working Capital Adjustment;
(v) All liabilities assumed by Buyer pursuant to
Article 4 hereof; and
(vi) any liability or obligation with respect to
any litigation pending or asserted in the future against Seller
or Buyer with respect to the Operations (i) after the Effective
Time or (ii) prior to the Effective Time, to the extent assumed
by Buyer in this Agreement.
(b) Subject to the provisions of Article 13 hereof, Seller
shall retain and be liable for all liabilities and obligations relating
to the Assets or the Operations not expressly assumed by Buyer,
including the following:
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(i) all liabilities related to or arising from the
ownership or operation of the Assets prior to the Effective
Time;
(ii) Seller Environmental Liabilities retained by
Seller pursuant to Article 13;
(iii ) All Taxes payable and other current liabilities
of Seller arising or accruing prior to the Effective Time,
other than to the extent included in the Net Working Capital
Adjustment;
(iv) Obligations arising under the Contracts, Leases,
Easements and Permits that are required to be performed prior
the Effective Time or that result from Seller's breach of any
Contract, Lease, Easement or Permit prior to the Effective Time,
other than to the extent included in the Net Working Capital
Adjustment;
(v) any liability or obligation for salary, wages,
benefits, vacation, bonus or overtime for or on behalf of any
current or former employee of Seller pertaining to their
employment by Seller at the Assets prior to the Effective Time;
(vi) any injury or exposure suffered by any current
or former employee of Seller or Seller's contractors or sub-
contractors (to the extent the injury or exposure occurred prior
to Closing) pertaining to their employment by Seller or work
relating to the Assets prior to the Effective Time;
(vii) All liabilities retained by Seller pursuant to
Article 4 hereof;
(viii) any liability or obligation arising out of or
relating to any of the Excluded Assets; and
(ix) any liability or obligation with respect to
any litigation pending or asserted in the future against Seller
or Buyer with respect to the Operations prior to the Effective
Time, except to the extent assumed by Buyer in this Agreement.
<PAGE>
ARTICLE 3
CLOSING
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3.01 Place and Time.
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The Closing shall take place at the offices of Seller within three
Business Days after the satisfaction or waiver of all of the conditions set
forth in Sections 7, 8 and 9, or on such other date as Buyer and Seller may
mutually agree.
3.02 Transactions and Deliveries at or Prior to Closing.
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(a) At or prior to the Closing, Seller shall deliver to
Buyer:
(i) one or more properly executed and acknowledged
grant deeds (the "Deeds") conveying marketable title to the
Refinery Land, the Improvements thereon, and the appurtenances
thereto to Buyer, each such deed to be in the form of Exhibit
A and to contain certain agreed-upon use restrictions and
reservations of existing and future pipeline easements with
rights of reasonable access for maintenance, replacement and
removal. The Deeds shall be in recordable form for recording
the Deeds in the county in which the Refinery Land, the
Improvements thereon and the appurtenances thereto are located;
(ii) a properly executed and acknowledged assignment
and assumption or assignments and assumptions of the Contracts,
the Leases and Easements, and the Permits for which no consent
to assignment is required or for which any required consent to
assignment has been obtained or waived by the third party, each
such assignment and assumption to be in the form of Exhibit
B. Additionally the Parties agree to execute and deliver such
other forms of conveyance as may be required by any governmental
authority;
(iii) a properly executed and acknowledged general
conveyance of all of the Assets for which no specific conveyance
is clearly applicable;
(iv) copies of Seller's (and, if necessary, its
Affiliates which are a party to a Related Agreement)
resolutions, certified as being correct and complete and then
in full force and effect, authorizing the execution of this
Agreement and the Related Agreements to which it is a party
and the consummation of the transactions contemplated under
this Agreement and the Related Agreements to which it is a
party (in each case to the extent required by such Person's
organizational documents);
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(v) certificates of incumbency and specimen signa-
tures of the signatory officers of Seller and its Affiliates
which are a party to a Related Agreement;
(vi) a certificate of formation and good standing by
the State of Nevada, and copies of Seller's or its Affiliates
which are a party to a Related Agreement certificate of
registration to do business in the State of California as a
foreign company;
(vii) written opinion of counsel to Seller, covering,
in the aggregate, Seller's due organization, valid existence
and good standing as a corporation in Nevada, registration and
good standing in California, and the due authorization,
execution and delivery by Seller or its Affiliates as the case
may be of this Agreement and the Related Agreements, and the
validity and binding effect of this Agreement and the Related
Agreements, which opinion shall be in the form attached hereto
as Exhibit C; and
(viii) copies of consents of third parties required
to be obtained prior to the assignment of the Leases and
Easements, Permits and the Contracts to be assigned pursuant to
Section 3.02(a)(ii).
(b) At or prior to the Closing, Buyer shall deliver to Seller:
(i) the purchase price specified in Section 2.02(b),
adjusted as provided in Section 3.03 for the Net Working Capital
Estimate;
(ii) copies of Buyer's resolutions certified as being
correct and complete and then in full force and effect,
authorizing the execution of this Agreement and the Related
Agreements, and the consummation of the transactions
contemplated under this Agreement and the Related Agreements
(in each case to the extent required by such Person's
organizational documents);
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(iii) certificates of incumbency and specimen
signatures of the signatory officers of Buyer;
(iv) a written opinion of counsel to Buyer, as to
Buyer's due organization, valid existence and good standing as a
corporation in Delaware, registration and good standing in
California, and the due authorization, execution and delivery by
Buyer of this Agreement and the Related Agreements and the
validity and binding effect of this Agreement and the Related
Agreements, which opinion shall be in the form attached hereto
as Exhibit D; and
(v) certificate of existence and good standing
issued by the State of Delaware and a copy of Buyer's
certificate of registration to do business in the State
of California as a foreign company.
(c) At the Closing, Buyer and Seller or Seller's Affiliates
shall enter into the following agreements:
(i) Transition Services Agreements under which the
Seller or its Affiliates may provide services to Buyer, as set
forth in Exhibit E.
(ii) California SJV Heavy Crude Oil Supply Agreement,
as set forth in Exhibit F.
(iii) Elk Hills Crude Oil Supply Agreement, as set
forth in Exhibit G.
(iv) Product Offtake Agreement, as set forth in
Exhibit H.
(v) Transportation Agreement for TRPP Pipeline, as
set forth in Exhibit I.
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3.03 Adjustments as of Closing.
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(a) Actual Net Working Capital Calculation. The Net Working
Capital Adjustment ("Net Working Capital Adjustment") to the purchase
price shall be an amount equal to the sum of (A) the net balances as of
the Effective Time in the accounts marked as "Include in Net WC Adj" on
Schedule 3.03(a)(iii) (the "WC Adjustment Items") plus (B) the
Inventory Adjustment Amount. The "Inventory Adjustment Amount" shall be
calculated as follows:
(i) The quantities or volumes of Seller Feedstock
Inventory and Seller Product Inventory at the Effective Time
(calculated in the manner described in Section 3.03(c)) minus
Seller Base Inventory multiplied by the applicable values
determined in the manner set forth on Schedule 3.03(a)(i).
(b) Method of Inventory Determination.
---------------------------------
(i) For purposes of this Agreement, determination of
any volumes of Seller Feedstock Inventory and Seller Product
Inventory at the Effective Time shall be made by two
independent inspectors ("Testing Agents") appointed by Buyer
and Seller and mutually acceptable to both Parties. The
volumes determined by the Testing Agents shall be adjusted in
accordance with normal industry practice, based upon testing
by the Testing Agents, for water, contaminants, and sediment
using standard industry guidelines, including those relating
to temperature, pressure and specific gravity. The Testing
Agents shall issue a joint written report within twenty (20)
days after the Effective Time, setting forth the volumes and
quantities on a tank, vessel or location basis. In the event
the Testing Agents initially are unable to agree upon any
volumes of any inventory, then the Testing Agents shall retest
and re-measure until the Testing Agents are in agreement.
(ii) Presence at Inventory Determination. In addition
to the presence of such employees as is normal to the
Operations, and subject to the right of Seller to conduct the
Operations, each Party shall be entitled, at its own expense,
to have any employee, agent, consultant or other authorized
representative present for any inventory determination so long
as such employee, agent, consultant or other authorized
representative does not interfere with the tasks or
responsibilities of the Testing Agents.
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(iii) Estimate of Net Working Capital Adjustment.
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(A) Seller shall make a good faith estimate
of the Net Working Capital Adjustment and provide a copy
thereof to Buyer (the "Net Working Capital Estimate")
setting forth Seller's calculations thereof, including
Seller's good faith estimate of the ownership, types,
characteristics and volumes, on a tank, vessel or
location basis, of Seller Feedstock Inventory and Seller
Product Inventory and Seller's estimate of the WC
Adjustment Items, at least five (5) business days in
advance of the Closing Date (the "Net Working Capital
Estimate Date").
(B) If, within 30 days after the Closing
Date for Inventory and 60 days after the Closing Date
for other WC Adjustment Items, Buyer determines in good
faith that the Net Working Capital Adjustment has not
been prepared and determined correctly, Buyer will give
written notice to Seller within such 30 or 60 day
period, as applicable, (i) setting forth Buyer's
proposed changes to the Net Working Capital Adjustment,
as prepared by Seller and (ii) specifying in detail
Buyer's basis for disagreement with Seller's preparation
and determination of the Net Working Capital Adjustment.
The failure by Buyer to so express disagreement and
<PAGE>
provide such notice within such 30 or 60 day period,
as applicable, will constitute the acceptance of
Seller's determination of the Net Working Capital
Adjustment. If Buyer and Seller are unable to resolve
any disagreement between them with respect to the
determination of the Net Working Capital Adjustment
within 30 days after the giving of notice by Buyer to
Seller of such disagreement, the items in dispute will
be referred for determination to an independent "Big
5" accounting firm mutually agreeable to the Parties
(the "Independent Party") as promptly as practicable,
but not later than five days after the expiration of
such 30 day period. Buyer and Seller will use
reasonable efforts to cause the Independent Party to
render its decision as soon as practicable thereafter,
including, without limitation, by promptly complying
with all reasonable requests by the Independent Party
for information, books, records and similar items. The
Parties will instruct the Independent Party to make a
determination as to each of the items in dispute (but
only those items in dispute) (i) in writing, (ii) as
promptly as practicable after the items in dispute have
been referred to the Independent Party (but in no event
later than 30 days thereafter), and (iii) in accordance
with this Agreement. The Independent Party's determina-
tion will be conclusive and binding upon each of the
Parties hereto. Nothing herein will be construed to
authorize or permit the Independent Party to determine
any question or matter whatsoever under or in connection
with this Agreement, except the determination of what
adjustments, if any, must be made in one or more
disputed items. The fees and expenses of the Independent
Party will be paid equally by the Parties.
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(C) Buyer and its representatives will have
access to work papers prepared by or on behalf of Seller
and its representatives in connection with Seller's
determination of the Net Working Capital Adjustment. To
the extent any such work papers are in the control of
Buyer after the Closing Date, Buyer will grant Seller
and its representatives reciprocal access rights for
the purpose of finalizing the determination of such
amounts.
(c) Post Closing Adjustments.
Seller and/or Buyer shall make adjustment payments with respect
to the Net Working Capital Adjustment as follows:
(i) Not later than thirty (30) days after the
Closing Date, an adjustment payment shall be made based on the
differences between the inventory estimates described in
Section 3.03(b)(iii) and the amounts of inventory determined
by the Testing Agents as described in Section 3.03(b)(i);
(ii) Not later than five (5) days after the final
determination of the Net Working Capital Adjustment, an
adjustment payment shall be made based on the differences
between the Net Working Capital Adjustment determined by
Seller and the Net Working Capital Adjustment as finally
determined; and
(iii) Each adjustment payment shall be paid in
immediately available funds. Any amount not paid when due
shall bear interest at the Late Payment Rate for the period
past due.
<PAGE>
ARTICLE 4
EMPLOYMENT AND EMPLOYEE BENEFITS
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4.01 Employees in General.
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Schedule 4.01 contains a list of:
(a) the represented employees working at the Refinery as of
the date of this Agreement (each, a "Represented Employee");
(b) the regular, full-time and regular, part-time
non-represented employees working at the Refinery as of the date of
this Agreement (each, a "Non-Represented Employee"); which employees
are employees of Seller (collectively Represented Employees and Non-
Represented Employees, the "Employees"); and
(c) the employees at the Refinery who are classified as not
actively at work and have a long term disability that is permanent and
stationary and are not capable of meeting the essential functions of
the job with or without accommodation (each such employee an "Inactive
Employee").
4.02 Represented Employees.
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(a) Seller represents that it is bound by the Collective
Bargaining Agreements and the Memoranda of Agreement or Understanding,
which are listed on Schedule 4.02A ("Collective Bargaining Agree-
ments"), between Seller and the Paper, Allied-Industrial Chemical and
Energy Workers International Union and the Operating Engineers Local
Union No. 3 of the International Union of Operating Engineers, AFL-CIO
(collectively the "Unions"). Buyer agrees to recognize the Unions as
the exclusive representative for the respective bargaining unit
covered by the Collective Bargaining Agreements. Buyer shall adopt
the Collective Bargaining Agreements and maintain them in full force
and effect for their duration, except for changes mutually agreed to
between the Buyer and the Unions and except that Buyer shall not be
required to continue the existing employee benefits (as set out on
Schedule 4.02C) ("Seller's Union Benefits"), but shall be entitled to
establish such benefits as may be required by the Collective
Bargaining Agreements ("Buyer's Union Benefits") for employees
covered by the Collective Bargaining Agreements and hired by Buyer on
and after the Effective Time, and such employees shall be entitled
to participate in Buyer's Union Benefits, subject to the terms of the
applicable benefit plans and further subject to the approval of any
third-party plan providers. Buyer shall make every reasonable effort
to obtain the approval of all third party plan providers for partici-
pation in such plans by said Employees.
<PAGE>
4.03 Offers of Employment.
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(a) Offers of Employment by Buyer.
(i) Buyer shall offer regular, full-time or regular,
part-time employment to all Represented Employees in accordance
with the terms of the Collective Bargaining Agreement; and
(ii) Prior to or at the Effective Time, Buyer shall
offer regular, full-time or regular, part-time employment to
those Non-Represented Employees that Buyer desires to retain in
employment on and after the Effective Time. Except for those
employees to whom Seller offers employment pursuant to this
section, up to the Effective Time Seller shall make every
reasonable effort to retain in employment all employees to be
hired by Buyer. Seller may, with the prior consent of Buyer,
which will not be unreasonably withheld, make offers of
continuing employment with Seller or its Affiliates to the
Non-Represented Employees. Seller shall notify Buyer of the
acceptance of any employment offer made by Seller, within five
(5) business days of the acceptance of such offer.
Any such offer of employment by Buyer shall be at a base pay rate that
is at least equivalent to that the Employee had with the Seller as of
the last regularly scheduled workday immediately prior to the Effective
Time. Seller shall provide, and cause its Affiliates, as appropriate,
to provide Buyer with the title, employment history (including years of
service), and current salary, bonus and incentive opportunity, accrued
and used vacation, sick or short-term disability pay accrued and used,
and the job description and job grade of each Employee. Seller shall
retain responsibility and liability, if any, for all Inactive
Employees.
<PAGE>
(b) Notice of Offers. Buyer shall notify Seller of the
acceptance of any employment offer made by Buyer, within five (5)
business days of the acceptance of such offer.
(c) Orderly Transition. Buyer shall employ each Employee
who accepts Buyer's offer of employment. Seller agrees to use its
reasonable efforts to assist Buyer in the orderly transition to Buyer
of any such Employees. Each such accepting Employee shall, from the
Effective Time, be known as an "Acquired Employee".
(d) Employment Assurances. For a period of one year
following the Effective Time, Buyer shall not reduce the Acquired
Employee's base pay, and shall not terminate such Acquired Employee's
employment except for "cause". For the purposes of this section,
"cause" shall include (i) any meaning ascribed to "cause" under
California law, (ii) the commission of an illegal act, (iii) negligence
or willful misconduct in carrying out (or failing to carry out) the
employee's duties or responsibilities, and (iv) any other failure to
comply with any of Buyer's policies or practices that could have
resulted in termination of such employee. At the Effective Time and
thereafter, Acquired Employees shall be treated no less favorably than
similarly situated employees of Buyer. Nothing in this Agreement shall
(i) prevent Buyer from exercising any reserved right contained in
any of its employee benefit plans to amend, modify, suspend, revoke, or
terminate any such plan, (ii) apply to any equity-based compensation
plan of Buyer, or (iii) require Buyer to assume any obligations or
liability with respect to any of Seller's existing employee benefits
and pension plans, agreements, arrangements or plans, whether or not
subject to the Employee Retirement Income Security Act of 1974
("ERISA"). No provision of this Agreement shall be deemed to constitute
an employment contract between Buyer and any Employee, or confer upon
any Employee any rights or cause of action against Buyer.
<PAGE>
4.04 Employee Benefits for Non-Represented Employees.
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Subject to the terms of the applicable benefit plans, Buyer shall
permit the Non-Represented Employees to participate in Buyer's employee pension
benefit plans (as that term is defined by Section 3(2) of ERISA, employee
welfare benefit plans (as that term is defined by Section 3(1) of ERISA), and
other benefit programs, policies, and practices, that are or will be generally
available to Buyer's similarly situated salaried employees. Subject to the terms
of the applicable benefit plans, Buyer shall provide each Acquired Employee with
the benefits that are set out on Schedule 4.04A ("Salaried Employee Benefits").
4.05 Welfare Plan Coverage. With respect to each Acquired Employee
who elects to participate in Buyer's employee welfare benefit plans, to the
extent permitted under the terms of the applicable plan, Buyer shall waive
any pre-existing condition exclusions to coverage, any evidence of insurability
provisions, and any waiting period requirements under its employee welfare
benefit plans that had been waived or otherwise satisfied under comparable
employee welfare benefit plans sponsored by the Seller, provided the Acquired
Employee enrolls within thirty-one (31) days of the Closing Date. To the extent
permitted under the terms of the applicable plan, for each Acquired Employee,
Buyer shall also apply towards any deductible requirements and out-of-pocket
maximum limits under its employee welfare benefit plans applicable to the year
of such Acquired Employee's employment commencement date, any amounts paid by
such Acquired Employee toward such requirements and limits under the Seller's
employee welfare benefit plans in which he or she participated during such year.
Seller will secure information from others and/or provide the information
necessary to establish any such amounts paid by Acquired Employees. After the
initial enrollment of Acquired Employees into Buyer's health plans, and
thereafter upon request of Seller (which request shall be no more frequently
than quarterly) until eighteen (18) months after Closing Date, Buyer shall
furnish Seller with the names of the Acquired Employees who enroll in any of
Buyer's health plans.
4.06 Past Service Credit. To the extent permitted under the terms of
the applicable plans, Buyer shall cause all those employee welfare benefit
plans, programs, policies, and practices in which the Acquired Employees
participate, including Buyer's vacation, disability and sick leave programs, to
recognize past service as recognized by the Seller's employee welfare benefit
plans (such past service as reflected in the personnel records furnished to
Buyer by Seller) for purposes of eligibility to participate, eligibility for
enrollment, eligibility for the commencement of benefits, and eligibility for
the levels of benefits where there are service-related benefit schedules. Buyer
shall cause its employee pension benefit plans (whether defined contribution
plans, as defined in Section 3(34) of ERISA, or defined benefit plans, as
defined in Section 3(35) of ERISA) to recognize past service as recognized by
the Seller's employee pension benefit plans for purposes of eligibility to
participate, eligibility for enrollment, eligibility for vesting, eligibility
for the commencement of benefits, eligibility for the forms of benefits, and
eligibility for the levels of benefits where contributions to the plan or
payments from the plan depend in whole or in part on service. Buyer shall be
required to recognize or cause its employee pension benefit plans to recognize
service recognized by the Seller's employee pension benefit plans for purposes
of benefit accruals.
<PAGE>
4.07 Vacation. On or before the Closing Date, year 2000 earned and
accrued vacation liabilities of Acquired Employees will be calculated and trued
up in accordance with the following: the days during 2000 that Seller owned the
Refinery will be calculated as will the number of days Buyer will own the
Refinery. Fractions will be calculated in which the numerators will be the
number of days during 2000 that Seller owned the Refinery and the number of days
during 2000 that Buyer will own the Refinery, respectively, and the denominators
will be the number of days in year 2000. These fractions will be multiplied by
the number of eligibility hours of vacation for Acquired Employees at the
Effective Time, whether already taken or not. This procedure will be applied
separately to hourly and salaried vacations. The resulting calculation will
yield the number of hours of vacation attributable to the account of both the
Buyer and the Seller. Actual remaining hours of vacation will be calculated
separately for salaried and hourly. To the extent the remaining vacation differs
from the amount of vacation attributable to the Parties, the total hours will be
multiplied by the average hourly rate (based on a group rate and not an
individual-by-individual rate analysis) or the average staff employee rate
(based on a group rate and not an individual-by-individual rate analysis). The
resulting dollar amount will be included in the true up process. Regardless of
anything to the contrary in this section, any carried over vacation from 1999 or
prior years shall be Seller's responsibility and shall not be included in the
calculation above.
4.08 Defined Contribution Plan. If administratively feasible, Buyer
agrees to accept as a plan-to-plan transfer each Acquired Employee's account
balances from Seller's savings plans for any Acquired Employee who so elects.
Acquired Employees will also have the option to leave their accounts in Seller's
savings plan or to request distribution of those portions of the accounts that
are currently distributable. Non-vested amounts not transferred to Buyer's plan
will be subject to forfeiture pursuant to Seller's savings plan provisions.
Buyer will have no obligation with respect to amounts attributable to Seller's
savings plan other than acceptance of the plan-to-plan transfers requested by
Acquired Employees. Seller and Buyer agree to cooperate to ensure a smooth
transition of the account balances from the Seller's defined contribution plan
to the Buyer's defined contribution plan.
<PAGE>
4.09 Liabilities and Indemnities.
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(a) WARN Act Indemnification. Buyer shall be responsible
for, and shall indemnify Seller and its Affiliates against, all
liabilities arising out of the notification or other requirements of
the Worker Adjustment and Retraining Notification Act of 1988, as
amended (the "WARN Act"), with respect to Seller's employees to whom
Buyer does not offer employment; provided that prior to Closing, except
as contemplated under this Agreement, Seller does not temporarily or
permanently close or shut down any "single site of employment" or any
"facility" or any "operating unit", "department" or "service" within
a single site of employment, as such terms are used in the WARN Act,
within or constituting part of the Assets and there is an "employment
loss" as such term is used in the WARN Act. Seller will cooperate with
Buyer in promptly providing to the Employees any notice required under
the WARN Act that has been provided to Seller by Buyerfor distribution
to Seller's Employees. On and after the Effective Time, Buyer shall
be responsible for all WARN Act obligations and liabilities respecting
Acquired Employees.
(b) Severance Benefits. Buyer shall be responsible for, and
shall indemnify Seller and its Affiliates against, all liabilities for
severance payments and other severance benefits (i) to which the
Acquired Employees become entitled because of termination of their
employment with and by Buyer after they become employees of Buyer or
an Affiliate of Buyer after the Effective Time (other than severance
payments and benefits that arise in connection with constructive
termination of any such Acquired Employee resulting from the terms
and conditions of the offer of employment made by Buyer in
compliance with this Article 4) and (ii) to which any of Seller's
Employees become entitled because of termination of their employment
with and by Seller after the date hereof and prior to the Effective
Time; provided that such termination has been approved by Buyer.
Schedule 4.09(b) contains a complete list and description of each
severance policy or benefit for which Seller's Employees may be
eligible, or with respect to which Seller has any liability or
obligation (other than liabilities under COBRA), whether actual or
contingent, respecting the Employees or their respective beneficiaries
(the "Seller Severance Benefits"). Prior to the Effective Time, Buyer
will not be responsible for incremental liability if Seller amends
changes or increases the amount of any Seller Severance Benefits
without the prior written consent of Buyer.
<PAGE>
(c) Workers' Compensation. Seller shall be responsible for
workers' compensation claims with respect to any Acquired Employee
if the incident or alleged incident giving rise to the claim occurred
on or prior to the Effective Time. Buyer shall be responsible for any
workers' compensation claims with respect to any Acquired Employee if
the incident or alleged incident giving rise to the claim occurs after
the Effective Time. In the event of doubt as to the date of the
occurrence of the incident or alleged incident, Buyer shall process the
claim. With respect to all workers' compensation or similar claims
(hereinafter "Compensation Claims") filed with an appropriate agency by
any Acquired Employee employed by Seller immediately prior to the
Effective Time and thereafter employed by Buyer (such employees are,
for purposes of this paragraph, hereinafter collectively referred to as
"Claiming Employee"), or by the spouse, dependent(s) or personal
representative of such Claiming Employee which is first filed after the
Effective Time, (A) Seller shall process, defend and be responsible
for, and shall indemnify Buyer against any such Compensation Claim if
the liability is alleged to have arisen prior to the Effective Time,
(B) Buyer shall process, defend and be responsible for, and shall
indemnify Seller against any such Compensation Claim if the liability
is alleged to have arisen only on or subsequent to the Effective Time,
and (C) in the event any such Compensation Claim is filed after the
Effective Time and the liability thereunder is alleged to have arisen
both prior and subsequent to the Effective Time, Buyer shall,
in consultation with Seller and taking into account Seller's reasonable
suggestions, process such claim (and Seller shall reimburse Buyer for
its allocable portion of the reasonable ost of defense), and the
liability of such claim as between the parties shall be based upon the
length of exposure (during employment with Seller and then with Buyer)
of the Claiming Employee to the product, practice, condition or other
circumstance claimed to have been the cause of the alleged liability
while employed by Seller and then by Buyer. Thus, as between the
parties, the proportionate share of liability shall equal a fraction
the denominator of which shall be the Claiming Employee's total length
of exposure to the product, practice, condition or other circumstance
claimed to have been the cause of the alleged liability, and the
numerator of which shall be in the case of Buyer, the Claiming
Employee's total length of exposure while employed by Buyer, and in the
case of Seller, the Claiming Employee's total length of exposure while
employed by the Seller.
<PAGE>
(d) Indemnities.
------------
(i) To the maximum extent permitted by Applicable
Law, Seller shall defend, indemnify, and hold harmless Buyer
from and against any Damages, and any fines, penalties and
assessments, arising out of (A) claims by Employees (other than
Acquired Employees) that arise prior to, on, or after the
Effective Time and relate to their employment with, or the
termination of their employment from, the Seller or its
Affiliates; and (B) claims by Acquired Employees that arise
prior to the Effective Time which relate to their employment
with, or the termination of their employment from, the Seller
or its Affiliates; and
(ii) To the maximum extent permitted by Applicable
Law, Buyer shall defend, indemnify, and hold harmless Seller and
its Affiliates from and against any Damages, and any fines,
penalties and assessments, arising out of claims by (i) the
Acquired Employees that arise on or after the Effective Time and
relate to their employment with, or the termination of their
employment from, the Buyer and (ii) employees at the Assets not
hired by Buyer with respect to any Damages, and any fines,
penalties and assessments, arising out of claims with respect
to any violations of applicable Federal, state, or local laws,
statutes, rules or regulations in the hiring process by Buyer.
<PAGE>
4.10 ERISA. Schedule 4.10 contains a complete list of each employee
benefit plan (the "ERISA Plans"), any vacation, holiday or other bonus practice
and any other employee pay practice, arrangement, agreement or commitments not
subject to ERISA (the "Payroll Practices/Employee Arrangement") maintained by
Seller, or with respect to which Seller has any liability or obligation, whether
actual or contingent, respecting the Employees or their respective
beneficiaries. Seller has not taken any action which may result in Buyer being a
party to, or bound by, any Seller ERISA Plan, and Buyer shall have no liability
under any Seller ERISA Plan or Payroll Practice/Employee Arrangement now or
following the Effective Time. Except as set forth in Schedule 4.10 Seller
warrants that no Seller ERISA Plan or other Payroll Practice/Arrangement of
Seller has provided, or provides, for the payment of retiree benefits by Buyer,
including any obligation to pay for the cost of any post-retirement health care
or life insurance or similar benefit under Seller's ERISA Plan or other Payroll
Practice/Arrangement. There have been no failures by Seller to provide COBRA
coverages. Seller shall provide eligible Employees at the Assets that are not
Acquired Employees with COBRA coverage upon their termination of employment with
Seller, upon the Closing or otherwise, according to ERISA requirements. Seller
does not and has not contributed to or maintained a "multi-employer plan" (as
defined in Section 3(37) of ERISA) relating to any of the Assets.
4.11 Covenant Not to Interfere. Unless this Agreement is terminated,
and for a period of two (2) years after the Effective Time, Seller hereby
covenants and agrees that it will not, whether for its account or for the
account of any other person or entity, endeavor to entice away from Buyer
any Acquired Employee, except with Buyer's prior written permission. Each
Party and its respective Affiliates agrees that for a period of two years from
the date of this Agreement, except within the terms of a specific prior written
consent of the other Party and except for any of the Acquired Employees, neither
it nor any such Affiliate or any of their respective representatives will
directly or indirectly solicit for employment or hire any director, officer or
employee of the other Party or any such Affiliate whose salary and bonus exceed
$150,000 in the aggregate in the year prior to the earlier of the date of such
solicitation or the date of hire, except that neither Party nor any such
Affiliates will be precluded from hiring any such employee who (i) responds
to a public advertisement placed by the other Party or its Affiliate or (ii) who
has been terminated involuntarily prior to commencement of solicitation of such
employee.
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4.12 Transition of Employees. From and after the Closing Date, Buyer
and Seller agree to cooperate to ensure an orderly transition and subsequent
administration of the Acquired Employees. Upon reasonable notice a Party will
provide, or cause to be provided, such information and assistance to the other
Party as may reasonably be requested by that Party in connection with any
employment-related litigation, claim, grievance, arbitration, discovery, or
other proceeding with respect to Employees or Acquired Employees, to which Buyer
or Seller or any of their affiliates is or may become a party.
ARTICLE 5
SELLER'S REPRESENTATIONS AND WARRANTIES.
----------------------------------------
Seller represents and warrants to Buyer to the Knowledge of Seller, except with
respect to Sections 5.01, 5.02, 5.04, 5.10, 5.11, 5.12, 5.13, 5.14 and 5.15
which shall not be limited to the Knowledge of Seller except as otherwise
expressly provided therein, as follows:
5.01 Organization and Standing.
-------------------------
Seller is a corporation duly formed and is validly existing, in good
standing under the laws of the State of Nevada and is in good standing as a
corporation in all jurisdictions where the nature of its properties or business
requires it. Seller has the necessary corporate power and authority to own and
operate the Assets.
5.02 Authority and Binding Obligations.
----------------------------------
Seller and each of its Affiliates which is a party to a Related
Agreement has the power and authority to execute, deliver and perform its
obligations under this Agreement and the Related Agreements, as applicable. The
execution, delivery, and performance of this Agreement and of the Related
Agreements by Seller or its Affiliate which is a party (a) have been duly
authorized by requisite company action and (b) do not conflict or result in a
violation or breach of any provision of (i) the organizational documents of the
Seller or the Affiliate which is a party, or (ii) any statute, regulation, rule,
order, writ, judgment or decree to which the Seller or the Affiliate is directly
or indirectly subject, except, in the case of clause (ii), for such conflicts
which could not reasonably be expected to have a Material Adverse Effect. Each
of this Agreement and the Related Agreements constitutes a legal, valid and
binding obligation of Seller and each of its Affiliates which is a party to a
Related Agreement, enforceable against Seller and each of its Affiliates which
is a party in accordance with their respective terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and
general principles of equity (regardless of whether enforceability is considered
in a proceeding at law or in equity).
<PAGE>
5.03 Consent; Non-Contravention.
--------------------------
(a) Except as otherwise set forth in Schedule 5.03(a), no
consent, waiver, approval, order, authorization or other action by or
filings with any governmental authority or other Person is required in
connection with the execution, delivery and performance by Seller
and each of its Affiliates which is a party to a Related Agreement,
of this Agreement or the Related Agreements.
(b) Except as specified in Schedule 5.03(b), neither the
execution and delivery of this Agreement or the Related Agreements by
Seller and each of its Affiliates which is a party to a Related
Agreement, nor the consummation of the transactions contemplated hereby
or thereby will breach, violate or conflict with any provision of, or
constitute a default (or an event, which, with notice or lapse of time,
would constitute a default) under, or result in the termination or
acceleration of rights, or benefits or payments under any agreement to
which the Seller or its Affiliates are directly or indirectly a party
or are directly or indirectly subject, except for such violations and
conflicts which will not (i) prevent or materially delay consummation
of the transactions contemplated by this Agreement or the Related
Agreements, (ii) prevent Seller or its Affiliate which is a party
from performing its obligations under this Agreement or the Related
Agreements, (iii) result in the creation of any Lien upon any of
the Assets, (iv) trigger any rights of first refusal, buy-sell or
similar rights applicable to the Assets; or (v) result in a Material
Adverse Effect.
<PAGE>
5.04 Litigation.
----------
(a) Except as set forth in Schedule 5.04 attached hereto,
there are no lawsuits or other proceedings pending or to the Knowledge
of the Seller threatened against or affecting the Seller or its
Affiliate which is a party to a Related Agreement, with respect to the
Operations or any of the Assets by or before any governmental authority
which, there is a reasonable probability if adversely determined that
would (i) have a Material Adverse Effect after the Effective Time, (ii)
individually result in liability or loss to Buyer in excess of $500,000
or in the aggregate result in liability or loss to Buyer in excess of
$1,000,000, or (iii) result in injunctive relief. Except as set forth
in Schedule 5.04 attached hereto, there are no decrees, injunctions,
liens or orders of any court or governmental authorities outstanding
against Seller or any Affiliate relating to or affecting the Assets or
Operations.
(b) Except as set forth in Schedule 5.04, no action, suit,
proceeding or claim is pending or, to the Knowledge of Seller,
threatened that seeks to restrain or prohibit this Agreement, any
Related Agreement, or any other agreement, instrument or transaction
contemplated hereby, or to obtain damages, a discovery order or other
relief in connection with this Agreement, any Related Agreement or any
other agreement, instrument or transaction contemplated hereby.
<PAGE>
5.05 Material Contracts.
------------------
Schedule 5.05 contains an accurate and complete list of each contract,
agreement or commitment relating to the Assets of the Seller or its Affiliates
not otherwise listed in Schedule 1.01C (Leases and Easements) or Schedule 1.01H
(Excluded Contracts) to which the Seller or its Affiliates are a party and which
(i) requires total payments to or by the Seller of at least One Million Dollars
($1,000,000) annually (other than spot crude contracts, spot product contracts,
transportation contracts, and crude supply contracts not fully dedicated to the
Refinery), (ii) is not terminable by Seller without penalty on not more than one
year's notice, (iii) provides for the sale of any material assets or the
acquisition of any material assets, other than Inventory in the ordinary course
of business, (iv) grants to any Person a preferential right to purchase any of
the Assets, (v) would restrict Buyer from operating the Assets in the manner
that the Assets are currently being operated in competition with any Person or
any line of business or geographic area, (vi) relates to the employment of any
Acquired Employee or would require the payment of severance or bonus by Buyer to
any Acquired Employee, or (vii) relates to indebtedness to be assumed by Buyer
(each, a "Material Contract"). Each Material Contract is a legal, valid and
binding obligation of the Seller or its Affiliates, enforceable against the
Seller or its Affiliate in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and general principles of equity (regardless of whether enforceability
is considered in a proceeding at law or in equity). Except as specified in
Schedule 5.05A, the Seller or its Affiliates are not, nor is any other party
thereto, in material default under any of the Material Contracts. Except as
specified in Schedule 5.05A, the Seller or its Affiliates have not received
written notice of cancellation or termination of any Material Contract from any
party thereto. To the Knowledge of the Seller, no material dispute exists with
respect to any of the Material Contracts. The Contracts listed on Schedule 1.01A
includes all Material Contracts related to the Assets or the Operations as
previously conducted by Seller.
<PAGE>
5.06 Leases and Easements.
--------------------
(a) Except for Leases and Easements, the failure of which to
possess or hold would not have a Material Adverse Effect on the
Operations, Schedule 1.01C contains an accurate and complete list of
Leases and Easements held by Seller or its Affiliates and related to
the Refinery. All Leases and Easements are legal, valid and binding
obligations of the Seller, enforceable against the Seller in accordance
with their terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and
general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity), and are in full force
and effect. To the Knowledge of Seller, no material default exists
with respect to any such Lease or Easement. Except for matters that do
not materially interfere with the Seller's rights, the Seller enjoys
peaceful and undisturbed possession under the Easements and Leases.
(b) All pipelines, pipelines easements, utility lines,
utility easements and other easements, leaseholds and rights of way
burdening any of the Refinery Land are set forth on Schedule 1.01C. The
Refinery Land is also encumbered by the terms set forth on Schedule
1.01D.
5.07 Condition of Improvements and Equipment. Schedule 5.07 contains
an accurate and complete list of all Equipment having a present depreciated
accounting value on Seller financial records in excess of $500,000. Except as
expressly set forth in this Agreement or a Related Agreement, the Improvements,
Equipment, Seller Other Inventory and Surplus Refinery Property are being sold
"AS IS", WHERE IS, WITHOUT WARRANTY OF ANY KIND (EXCEPT AS TO TITLE) EXPRESS OR
IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY, CONDITION OR FITNESS, AND ALL
SUCH WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED. BUYER WAIVES THE UNIFORM
COMMERCIAL CODE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE WITH RESPECT TO SUCH IMPROVEMENTS AND EQUIPMENT. The Improvements and
Equipment which comprise a part of the Assets, other than the Surplus Refinery
Property, are in substantially the same condition and repair, ordinary wear and
tear excepted, as of the period prior to the Closing Date. Seller has maintained
the Assets prior to the Effective Time consistent in all material respects with
Seller's normal maintenance practices prior to the date hereof.
<PAGE>
5.08 Compliance with Laws
--------------------
As of the date of this Agreement, to Seller's Knowledge, Seller is in
compliance with all Applicable Laws relating to the Assets or the Operations,
except as set forth on Schedule 5.08, SH&E Laws (which are addressed in Section
13.02) or where the noncompliance with which would not reasonably result in a
Material Adverse Effect.
5.09 Due Diligence.
-------------
(a) Seller has (subject to any confidentiality agreements,
applicable legal restrictions and any applicable attorney and legal privileges)
(i) made available to Buyer all books, records, (including records relating to
Environmental Liabilities), financial statements, business plans, management
appraisals, documents, Contracts, Material Contracts, Leases and Easements,
Permits and other material information requested in writing by Buyer; (ii)
instructed its and its Affiliates employees, counsel, advisors and auditors to
respond in writing to all written inquiries from Buyer (subject to any
confidentiality agreements, applicable legal restrictions and any applicable
privileges); and (iii) to the extent requested in writing, provided full access
to the Assets, except, with respect to (i), (ii) and (iii) above where Seller
has expressly declined in writing to comply with any such request with respect
to identified items or categories of information; and
(b) No books, records, financial statements, documents,
Contracts, Material Contracts, Leases, Easements, Permits or other material
information requested in writing by Buyer which Seller failed to fully disclose
when so required would reasonably have a Material Adverse Effect.
<PAGE>
5.10 Permits.
-------
(a) Schedule 5.10(a) contains a true and complete list of
Seller's material Permits used in connection with the Assets, the
Operations, or the sale of refined product. Seller has all material
Permits required to Use the Assets in the manner presently conducted by
Seller except to the extent that any such failure to have a Permit
would not reasonably have a Material Adverse Effect.
(b) To the Knowledge of Seller, except as set forth in
Schedule 5.10(b), (i) in calendar year 1996 Seller had a total
feedstock charge at the Refinery of an average of 168,000 barrels per
stream day, (ii) in calendar year 1996 Seller had all applicable,
material Permits to operated the Refinery at a total feedstock
charge of an average of 168,000 barrels per stream day, (iii) the No. 3
crude unit at the Refinery was shut down in an orderly manner, in the
ordinary course of business, and (iv) the Permits referenced in 5.10(b)
(ii) have not materially changed.
(c) To the Knowledge of Seller, except as set forth in
Schedule 5.10(c), (i) in calendar year 1996 Seller had a formula
approved by the California Air Resources Board for the production
of CARB diesel which was designated as T-2 ("T-2"), (ii) in calendar
year 1996, as Seller had operated the Refinery, Seller produced an
average of 32,900 barrels per calender day of CARB diesel using the T-2
formula, (iii) in calendar year 1996, as Seller had operated the
Refinery, Seller produced an average of 2,300 barrels per calender day
of CARB diesel using the CARB ten percent formula, (iv) the T-2 formula
is currently approved by the California Air Resources Board for the
production of CARB diesel, and (v) utilizing the T-2 formula and with
similar feedstocks, equipment, operating conditions and processes used
by Seller to operate the Refinery in 1996, the Refinery is capable of
producing, of the diesel production at the Refinery, at least 85% CARB
diesel at a throughput of 157,500 barrels of feedstock charge per
stream day.
<PAGE>
5.11 Taxes.
-----
Except as set forth in Schedule 5.11, there are no Tax liens open,
pending against or, to the Knowledge of Seller, threatened against the Assets.
5.12 Good and Marketable Title.
-------------------------
(a) Schedule 1.01F contains a true and complete description
of the Refinery Land owned by Seller or its Affiliates and used in the
Operations, and such Refinery Land is described by metes and bounds and
the Deeds delivered at Closing shall be in recordable form.
(b) Except as specified in Schedule 5.12, Seller has good
and marketable title to all of the Assets, except for Assets sold,
consumed or otherwise disposed of in the ordinary course of business
in accordance with the procedures set forth in Section 10.01 and
consistent with past practices, free and clear of any Liens, other than
Permitted Encumbrances.
5.13 Condemnation.
------------
Except as set forth in Schedule 5.13, there are no pending or, to the
Knowledge of Seller, threatened condemnation or eminent domain proceedings or
contemplated sales in lieu thereof, involving a partial or total taking of any
of the Assets.
5.14 Labor Matters
-------------
Schedule 4.02A sets forth all Collective Bargaining Agreements covering
Represented Employees of the Assets. Except as set forth on Schedule 5.14, to
Seller's Knowledge Seller has not received any notification of any unfair labor
practice charges or complaints pending before any agency having jurisdiction
thereof nor are there any current union representation claims involving any of
the Employees. Seller does not have Knowledge of any strike, work stoppages,
work slowdowns, picketing, lockouts or similar labor activity or of any threats
thereof, except for routine grievance matters, by or with respect to any of the
Employees. Since January 1, 1998, there have been no significant labor disputes,
strikes, slowdowns, work stoppages, picketing, lockouts or similar labor
activity except for routine grievance matters involving Employees. Seller also
makes the representations and warranties set forth in Section 4.10.
<PAGE>
5.15 Intellectual Property.
---------------------
(a) Schedule 5.15(a) sets forth an accurate and complete
list of all material Intellectual Property owned by Seller and its
Affiliates which is used in the Operations. To the actual Knowledge
of Seller, except as disclosed on Schedule 5.15(a), (i) such
Intellectual Property does not infringe upon any intellectual property
of any third party (and Seller is not aware of any assertions made by
any third party alleging such an infringement or misappropriation) and
(ii) Seller's right to use such Intellectual Property is valid. Except
as disclosed on Schedule 5.15(a), 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, all such
Intellectual Property to Buyer in accordance with the terms of Article
16.
(b) Schedule 5.15(b) sets forth an accurate and complete
list of all material Intellectual Property owned by a third party and
licensed or sublicensed to Seller or its Affiliates which is used in
the Operations. Except as disclosed on Section 5.15(b), (i) Seller or
its Affiliate, as licensee or sublicensee, as the case may be, has the
right to use such Intellectual Property as it is currently being used
in connection with the Assets, and (ii) such licenses are valid,
binding, in full force and effect and enforceable against such third
party licensor or sublicensor in accordance with their terms. Except
as disclosed on Schedule 5.15(b), all such Intellectual Property may be
assigned or sublicensed to Buyer without the consent of any third party
5.16 Shared Assets
-------------
Schedule 5.16 lists all assets located at the Refinery that are shared
with other operations, facilities or Affiliates of Seller that will not be
included in the Assets transferred to Buyer at Closing.
<PAGE>
ARTICLE 6
BUYER'S REPRESENTATIONS AND WARRANTIES
--------------------------------------
Buyer represents and warrants to Seller to Buyer's Knowledge, except
with respect to Sections 6.01, 6.02, 6.04 and 6.06, except as expressly provided
therein, as follows:
6.01 Organization and Standing.
-------------------------
Buyer is a corporation duly organized, validly existing in good
standing under the laws of the State of Delaware and is in good standing as a
corporation in all jurisdictions where the nature of its properties or business
requires it.
6.02 Authority and Binding Obligations.
---------------------------------
Buyer has the corporate power and authority to execute, deliver and
perform its obligations under this Agreement and the Related Agreements, as
applicable. The execution, delivery, and performance of this Agreement and the
Related Agreements by Buyer (a) have been duly and validly authorized by all
necessary company action and (b) do not conflict or result in a violation or
breach of any provision of (i) the organizational documents of Buyer or (ii) any
statute, regulation, rule, order, writ, judgment or decree to which Buyer is
directly or indirectly subject. Each of this Agreement and the Related
Agreements constitutes a legal, valid and binding obligation of Buyer
enforceable against Buyer in accordance with their respective terms, except as
the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and general principles of equity (regardless of whether enforceability
is considered in a proceeding at law or in equity).
<PAGE>
6.03 No Consent Required; Non-Contravention
(a) Except as otherwise set forth in Schedule 6.03(a), no
consent, waiver, approval, order, authorization or other action by or
filings with any governmental authority or other Person is required in
connection with the execution, delivery and performance by Buyer of
this Agreement or the Related Agreements.
(b) Except as specified in Schedule 6.03(b), neither the
execution and delivery of this Agreement or the Related Agreements by
Buyer nor the consummation of the transactions contemplated hereby will
breach, violate or conflict with any provision of, or constitute a
default (or an event, which, with notice or lapse of time, would
constitute a default) under, or result in the termination or
acceleration of rights, or benefits or payments under any agreement to
which the Buyer is directly or indirectly a Party or is directly or
indirectly subject, except for such violations and conflicts which will
not (i) prevent or materially delay consummation of the transactions
contemplated by this Agreement or the Related Agreements, (ii) prevent
Buyer from performing its obligations under this Agreement, or (iii)
result in a Material Adverse Effect.
6.04 Litigation.
----------
Except as set forth in Schedule 6.04, no action, suit, proceeding or
claim is pending or, to the Knowledge of Buyer, threatened that seeks to
restrain or prohibit this Agreement, any Related Agreement, or any other
agreement, instrument or transaction contemplated hereby, or to obtain damages,
a discovery order or other relief in connection with this Agreement, any Related
Agreement or any other agreement, instrument or transaction contemplated hereby.
6.05 No Breach.
---------
Except as set forth in Schedule 6.05, the execution and delivery of
this Agreement by Buyer and the consummation of the transactions contemplated
hereby will not breach, violate or conflict with, or result in the acceleration
of rights, benefits or payments under (a) any statute, law, regulation or
governmental order to which the Buyer or the assets and properties of the Buyer
are bound or subject, (b) any commitment to which the Buyer is a party or by
which it or any of its properties may be bound or subject or (c) any agreement,
contract or commitment of the Buyer or to which it is a party or by which it or
any of its properties may be bound or subject, except for such violations and
conflicts which will not (i) prevent or materially delay consummation of the
transactions contemplated by this Agreement and other Related Agreements, (ii)
prevent Buyer from performing its obligations under this Agreement and other
Related Agreements or (iii) result in a Material Adverse Effect.
<PAGE>
6.06 Independent Decision.
--------------------
Buyer has made its own independent analysis and judgment of the
commercial potential and usefulness of the Assets, and is not relying upon any
projections from Seller regarding prospective operations of the Assets. Buyer
has such knowledge and experience in business and financial affairs in general
as to be capable of evaluating the merits and risks of purchasing the Assets.
ARTICLE 7
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
---------------------------------------------------
Buyer's obligation to close shall be subject to the satisfaction of
Buyer on or prior to the Closing Date, unless waived, of the conditions set
forth in this Article 7.
The conditions precedent to Buyer's obligation to close are as follows:
7.01 Regulatory Approvals.
--------------------
If required, Buyer shall have either received written notification from
the appropriate governmental authorities that it may operate temporarily under
the material Permits disclosed or required to be disclosed on Schedule 5.10(a)
until similar Permits are issued to Buyer; provided, however, that Buyer shall
use its best efforts to obtain such Permits.
7.02 Deliveries.
----------
Seller shall have executed and delivered to Buyer all of the documents
required to be delivered pursuant to Section 3.02(a) and the Related Agreements.
7.03 Required Consents and Authorizations.
------------------------------------
Seller shall have received (and shall have furnished copies thereof to
Buyer) all consents and authorizations of third parties required to transfer the
Contracts, Leases and Easements and Permits for which consent is required, and
which if not obtained would reasonably result in a Material Adverse Effect;
provided, however, if such consents are not obtained, Seller will use reasonable
efforts to provide an alternative mechanism to provide Buyer the value of such
Contracts, Leases and Easements and Permits until Buyer obtains the consents.
7.04 Adverse Change.
--------------
Prior to the Closing, there shall not have been any change, other than
changes affecting the economy generally or affecting the petroleum industry
(refining, marketing, transportation, terminalling and trading) generally or
regionally, in the Assets or Operations that has or there is a reasonable
probability of having a Material Adverse Change.
<PAGE>
7.05 Representations and Warranties True; Covenants and
Agreements Performed.
---------------------------------------------------
The representations and warranties of Seller shall have been true and
correct in all material respects as of the date of this Agreement and shall be
true and correct in all material respects on the Effective Time as if made on
such date or if changed, such change shall not have resulted in, a Material
Adverse Effect, and Seller shall have performed and complied in all material
respects with all covenants and agreements by Seller hereunder required to be
performed or complied with on or prior to the Effective Time, subject in each
case to the provisions of Section 12.09.
7.06 Defeasance of Mortgage Bonds. Seller shall have defeased in full
the mortgage bonds secured by the Refinery.
ARTICLE 8
CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
----------------------------------------------------
Seller's obligation to close shall be subject to the satisfaction of
Seller on or prior to the Closing Date, unless waived, of the conditions set
forth in this Article 8.
The conditions precedent to Seller's obligation to close are as
follows:
8.01 Deliveries.
----------
Buyer shall have made the payments and executed and delivered to Seller
all of the documents and instruments required pursuant to Sections 3.02(b) and
(c) and the Related Agreements.
8.02 Representations and Warranties True; Covenants and Agreements
Performed.
-------------------------------------------------------------
The representations and warranties of Buyer shall have been true and
correct in all material respects as of the date of this Agreement and shall be
true and correct in all material respects on the Effective Time as if made on
such date, and Buyer shall have performed and complied in all material respects
with all covenants and agreements by Buyer hereunder required to be performed or
complied with on or prior to the Effective Time, subject to the provisions of
Section 12.09.
ARTICLE 9
JOINT CONDITIONS PRECEDENT TO CLOSING OBLIGATIONS
-------------------------------------------------
The obligations of Buyer and Seller to close shall be subject to the
satisfaction, or waiver by both Parties, on or prior to the Closing Date of the
following conditions:
9.01 Governmental Consents.
---------------------
The applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act and any extension thereof shall have expired without a
challenge to the transaction or early termination of such waiting period shall
have been granted.
<PAGE>
9.02 Litigation.
----------
No order of any court or order or action of any government agency
purporting to restrain or prohibit the transactions contemplated hereby shall be
in effect and no new Applicable Law or regulation shall have been finally
enacted or taken effect which seeks to restrain or prohibit the transactions
contemplated hereby, or which has or reasonably could have a Material Adverse
Effect upon the right of Buyer to own, conduct or operate the Assets or the
Operations.
ARTICLE 10
COVENANTS AND AGREEMENTS OF SELLER
----------------------------------
Seller covenants and agrees as follows:
10.01 Conduct of Business.
-------------------
Prior to the Closing, unless the prior written consent of Buyer to a
contrary action is obtained (which consent shall not be unreasonably delayed or
withheld), and except as expressly permitted under this Agreement:
(a) Seller shall operate the Operations in its usual,
regular and ordinary manner and substantially in the same manner as
heretofore conducted.
(b) Seller shall (i) use commercially reasonable efforts to
preserve the Operations; (ii) maintain the Assets in their current
state of repair, order and condition, usual and ordinary wear and tear
excepted, and in accordance with Seller's usual maintenance practices
(both in timing and scope), (iii) not grant any increase in salaries,
commissions or other benefits payable to any of the Acquired Employees
except changes consistent with Seller's prior compensation practices;
(iv) not amend, terminate, waive or relinquish any material right under
any Contracts, Permit, Lease or Easement other than in the ordinary
course of business consistent with past practices; and (v) not sell,
mortgage, transfer or convey any material portion of the Assets, other
than Inventory and Seller's Other Inventory in the ordinary course of
business.
<PAGE>
10.02 Access; Records.
---------------
(a) Access for Inspection. Seller will afford Buyer and its
agents, consultants, and other authorized representatives full access
to the Assets, to Seller's records relating to the Assets or the
operation thereof, and to Seller's personnel, and Seller will cause its
officers and other agents to furnish or make available to Buyer such
operating data and other information with respect to the Assets and
the Operations as Buyer may from time to time reasonably request;
provided, however, that any inspection or investigation conducted by
Buyer, its agents, consultants, or other authorized representatives (i)
shall be conducted in such manner as not to interfere unreasonably with
the Operations or the Assets; or (ii) shall not entitle Buyer to drill
or penetrate the surface of the ground to investigate the condition of
soil contamination or ground water contamination, Buyer being limited
to the review of Seller's records or any other publicly available
materials or information with regard to these matters. Buyer, bears
the risk of injury to any of its employees or representatives
conducting an inspection or investigation of the Assets and Operations
and shall indemnify Seller for all Damages resulting from Buyer's
inspection or investigation. Seller will keep and maintain the records
to which Buyer or its representatives may request access pursuant to
this Section 10.02, such records to be maintained for a period of ten
(10) years from the Closing Date in the case of environmental records
and five (5) years for all other records or such longer period as may
be required by law or reasonably requested by Buyer.
(b) Access for Turnaround Activity Seller will afford Buyer
and its agents, consultants, contractors and other authorized
representatives access to the Assets for the limited purpose of
preparing for and conducting turnaround maintenance on the No. 3 Crude
Unit, Amorco Terminal and related facilities, which shall be solely at
Buyer cost, expense and risk; provided, however, that any turnaround
maintenance activity conducted by Buyer, its agents, consultants,
contractors or other authorized representatives (i) shall be conducted
in such manner as not to interfere unreasonably with the Operations or
the Assets; or (ii) shall not entitle Buyer to drill or penetrate the
surface of the ground to investigate the condition of soil contamina-
tion or ground water contamination, Buyer shall be responsible for,
pay, idemnify fully, hold harmless and defend Seller from and against
any and all Claims and/or Damages for personal injury or death or
Damage to property arising out of, relating to or resulting from any
turnaround maintenance activity.
<PAGE>
(c) Delivery of Documents. Seller shall deliver to Buyer
(in the manner reasonably directed by Buyer in writing) on the
Effective Time originals where available of all Leases and Easements
(unless the original is on file with the State of California or County
of Contra Costa in which case Seller shall deliver a copy) and of all
Contracts and Permits assigned to Buyer at the Closing. Seller also
shall furnish or otherwise make available to Buyer (in the manner
reasonably directed by Buyer in writing) originals or copies of all
Refinery Records.
10.03 Consents to Assignment.
----------------------
Seller and Buyer agree to use reasonable business efforts to obtain
prior to Closing all consents to assignment of the Contracts, the Leases and
Easements and the Permits that are required to be obtained under this Agreement,
even though failure to obtain certain of the consents is not a condition
precedent to the Closing; provided, that neither Party shall be obligated to
make payments or incur obligations to third parties or governmental agencies to
obtain such consents except to pay such Party's reasonable expenses or to pay
normal fees to governmental agencies.
10.04 Taxes.
-----
Seller will file all Tax returns and reports relating to its Operations
and Assets which are required to be filed with respect to all periods ending on
or prior to the Effective Time. Subject to the provisions of Section 3.03,
Seller will pay when due all Taxes relating to its Operations and Assets, which
accrue or relate to periods ending on or prior to the Effective Time.
10.05 Objections to Title; Title Insurance.
------------------------------------
(a) Buyer shall (i) no later than twenty (20) days after the date
hereof, (A) order an examination of title to the Refinery Land and
the real property covered by the Leases and Easements (the "Leased
Property") and procure property searches with respect thereto and (ii)
at Buyer's sole option, order an as-built survey (the "Survey") of the
Refinery Land and the Leased Property from a reputable surveying firm,
complying with current ALTA/ACSM standards, showing the Refinery Land,
the Leased Property, easements, licenses, rights-of-way and any other
material recorded or unrecorded interest in respect of the Refinery
Land or Leased Property, reasonably acceptable to Buyer. The cost of
any examination or search by Buyer hereunder shall be paid by Buyer.
Seller shall cooperate with Buyer and Buyer's authorized representa-
tives in respect of any examination, search or survey hereunder and, to
the extent available, deliver to Buyer all existing title insurance
policies, list of deeds and leaseholds, tax bills and surveys relating
to the Refinery Land, the Leased Property and the appurtenances
thereto.
<PAGE>
(b) If (i) any defect, claim, charge, option, lien,
mortgage, security interest, encumbrance, lease, encroachment,
reservation or restriction appears in such report or search which is
not a Permitted Encumbrance under this Agreement, or any survey reveals
(ii) (A) a state of facts which could reasonably be expected to have a
Material Adverse Effect on Buyer's Use of the Refinery Land or Leased
Property, or access to all public roads, waterways, loading facilities,
utilities, pipelines and other services and Improvements necessary to
Buyer's Use of the Assets or the Operations, (B) a encroachments on
the Refinery Land or Leased Property, projections off of the Refinery
Land or Leased Property by the Improvements, or encroachments on to the
Refinery Land or Leased Property by structures not intended to be
conveyed to Buyer hereby, or the violation of applicable zoning or set
back requirements of the Improvements, which could reasonably be
expected to have a Material Adverse Effect (C) a encroachment onto any
easements or rights-of-way by the Improvements, including encroachments
onto otherwise acceptable Permitted Encumbrances, which could
reasonably be expected to have a Material Adverse Effect, or (D)
a gaps, overlaps or easements along the record lines and the lots
comprising the Refinery Land or Leased Property or within the property
lines, which could reasonably be expected to have a Material Adverse
Effect (each matter referred to in clause (i) or (ii), a "Reported
Encumbrance"), Buyer shall give written notice of such Reported
Encumbrance to Seller or Seller's counsel within 10 business days after
receiving the title report, survey or other rewritten notice thereof
(or any update or revision thereto), but no later than 30 days prior to
Closing. Seller shall take all reasonable steps during the 30 days
following such notice to cure such Reported Encumbrance to
Buyer's reasonable satisfaction. If after the expiration of such 30
day period, the uncured Reported Encumbrances could, in the aggregate,
reasonably be expected to have an adverse effect on Buyer of less than
$5 million, Seller shall have no further obligation with respect to
such Reported Encumbrances and Seller and Buyer shall proceed with the
Closing without Buyer having been deemed to waive any right or remedy
it might have with respect to such Reported Encumbrance. If after the
expiration of such 30 day period, the uncured Reported Encumbrancs
could, in the aggregate, be reasonably be expected to have an adverse
effect on Buyer of greater than $5 million, then Buyer may at its
option (1) give Seller additional time to cure (and, if necessary, the
Closing shall be delayed by not more than 30 days), (2) continue with
the Closing having negotiated in good faith (as shall Seller) as to
arrangements reasonably necessary to make Buyer whole in respect of
such Reported Encumbrance, including, without limitation, special
indemnification arrangements with respect thereto, or (3) continue with
the Closing without having been deemed to waive any right or remedy it
might have with respect to such Reported Encumbrance hereunder.
(c) If Seller or Buyer cures any Reported Encumbrance
pursuant hereto, or if Buyer fails to notify Seller thereof in
accordance with Section 10.05(b), or if the Closing occurs as
contemplated by Section 10.05(b)(3), then such Reported Encumbrance
shall be deemed a Permitted Encumbrance for all purposes hereof.
<PAGE>
ARTICLE 11
COVENANTS AND AGREEMENTS OF BUYER
---------------------------------
Buyer covenants and agrees as follows:
11.01 Access; Records.
---------------
From and after the Effective Time, Buyer will afford to Seller and its
authorized representatives reasonable access during normal business hours to
personnel and to such properties and records which were transferred to Buyer
and, if requested, will furnish to Seller such additional information and
cooperate with Seller in such other respects, including the making of employees
available to Seller at Seller's expense as witnesses or deponents as Seller may
request for (a) financial reporting, (b) tax or similar purposes or (c) purposes
of investigating claims, or conducting litigation or administrative proceedings
with third parties or government agencies. Buyer will keep and maintain the
records to which Seller or its representatives may request access pursuant to
this Section 11.01, such records to be maintained for a period of ten (10) years
from the Closing Date in the case of environmental records and five (5) years
for all other records or such longer period as may be required by law or
reasonably requested by Seller.
11.02 Performance of Assumed Obligations.
----------------------------------
Buyer will cause all of the liabilities and obligations assumed by
Buyer in writing to be paid or performed or otherwise fully satisfied in a
timely manner.
11.03 Qualifications, Approvals, Licenses and Permits.
-----------------------------------------------
Buyer shall proceed diligently and in good faith and shall use best
efforts at Buyer's expense to obtain all necessary United States and State of
California Permits.
11.04 No Trademarks.
-------------
No license to any Trademarks is granted by this Agreement or by the
transfer of the Assets to Buyer, and Buyer is precluded from any use and agrees
not to make any use of Trademarks on or in connection with the sale of any of
its products or services as a means of identity or in any of its communications
or in connection with Buyer's operation of the Assets. Buyer acknowledges and
agrees with Seller that Seller and its Affiliates have the absolute and
exclusive right to the Trademarks, and all rights to which, and the goodwill
represented thereby and pertaining thereto, are being retained by Seller and its
Affiliates. Within thirty (30) days after the Effective Time, Buyer shall cease
using any Trademark and shall remove all Trademarks and refrain from further use
of all Trademarks. In the event that Buyer breaches this Section 11.04, Seller
shall be entitled to specific performance of this Section 11.04 and to
injunctive relief against further violations, as well as any other remedies at
law or in equity available to Seller.
<PAGE>
11.05 Third Party Property.
--------------------
Buyer shall grant or continue to grant such rights-of-way, easements or
other rights of ingress or egress necessary to allow (a) any third party which
holds any Third Party Property on the Refinery Land to have access to such Third
Party Property for the purposes of repairing, maintaining or otherwise utilizing
such property, for so long as the Third Party Property remains on the Refinery
Land; and (b) Seller or its Affiliates which hold any assets described on
Schedule 1.01B to have access to such assets for the purposes of operating,
repairing, maintaining or otherwise utilizing such assets.
ARTICLE 12
COVENANTS OF BUYER AND SELLER
-----------------------------
Buyer and Seller each covenant as follows:
12.01 Antitrust Compliance.
--------------------
Notwithstanding any other provision of this Agreement, either Party at
any time may terminate this Agreement upon notice to the other, without
liability to the other Party, if the Federal Trade Commission advises either
Party of its final disapproval (by the vote of the Commissioners) or the
Attorney General of the State of California advises either Party of its
disapproval of the transactions contemplated by this Agreement and has filed for
injunctive relief. Buyer and Seller shall cooperate and shall promptly take all
such reasonable action as may be required to complete and submit any filing or
supplemental information required by the Hart-Scott-Rodino Antitrust
Improvements Act.
12.02 Tax Election.
------------
Either Party may elect to structure the conveyance, transfer and/or
assignment of all or an applicable portion of the Assets as a tax-free exchange
pursuant to Section 1031 of the Code (a "1031 Exchange"), provided that such
Party gives notice of such election to the other Party at least fifteen (15)
days prior to the Effective Time, and provided that Buyer shall not be required
to take title to any other property. If such an exchange is elected by such
Party (the "Electing Party"), the Parties will execute all necessary 1031
Exchange documents, including Form 8824 (provided, that any costs and expenses
incurred shall be borne by the Electing Party), which shall be in a form
mutually acceptable to the Parties. The Electing Party will indemnify the other
Party and its Affiliates, employees and agents against any and all Damages which
may be sustained by them on account of or in connection with such election to
structure the transaction as a 1031 Exchange.
12.03 Collection of Amounts Owed to a Party.
-------------------------------------
It is the intention of the Parties that, as between the Parties, Seller
shall be entitled to all income attributable to the operations conducted prior
to the Effective Time and Buyer shall be entitled to all income attributable to
the operations conducted on and after the Effective Time. Each Party shall pay
to the other Party, promptly after receipt thereof, any amount received by said
Party from any third party with respect to (i) rentals, fees or other revenues
relating to the Operations and attributable to the ownership period of the other
Party; and (ii) products delivered, services performed or other obligations
performed by the other Party and attributable to the ownership period of such
other Party.
<PAGE>
12.04 Payment of Transfer Taxes; Recording Fees.
-----------------------------------------
Buyer shall pay (or if paid or required to be paid by Seller, reimburse
Seller for) all Taxes which are assessed or imposed on the transfer of the
Assets from Seller to Buyer. By way of example, but not exclusion, Buyer shall
pay real estate transfer taxes, or other excise taxes on real estate sales, all
sales taxes, business occupation taxes, applicable motor fuel taxes and
applicable environmental taxes and fees on all petroleum products transferred,
as well as any other Taxes assessed or imposed on the transfer or sale of the
assets, personal property or inventory included herein, and all costs to record
any deeds. Each Party shall cooperate with the other to take advantage of all
applicable tax exemptions and provide applicable tax exemption certificates.
Buyer shall pay any title insurance premium due for any title insurance policies
obtained by Buyer and Buyer shall pay the costs of any required surveys.
12.05 Payment of Certain Expenses Due and Payable After the
Effective Time; Cooperation.
-----------------------------------------------------
(a) Buyer shall pay, as and when due, all emissions fees,
permit fees and utility bills due and payable on and after the
Effective Time, and Seller shall reimburse Buyer within thirty (30)
days after invoice for any amounts under such bills attributable to any
period prior to the Effective Time. Buyer shall pay, and be entitled
to collect, any rents due on or subsequent to the Effective Time under
leases which are assumed Leases, and Seller shall either pay, or be
entitled to receive from Buyer, as the case may be, within thirty (30)
days after invoice or notice, any amounts attributable to any period
prior to the Effective Time.
(b) Buyer shall file, or cause to be filed, all required
reports and returns incident to all ad valorem taxes, real property
taxes, personal property taxes and similar obligations, which reports
and returns are due after the Effective Time and shall pay or cause
to be paid to the taxing authorities all such taxes reflected on such
reports or returns even if same are for periods prior to the Effective
Time and Seller shall reimburse Buyer within thirty (30) days after
invoice for any such taxes and similar obligations which are
attributable to any period prior to the Effective Time; however, under
no circumstances shall such reimbursement be greater than the result
of (i) the amount Seller would have paid if Seller had remained the
owner of the Assets, less (ii) any liabilities attributable to the
Assets which are paid by Seller directly to any unit of local
government or school district.
(c) Seller and Buyer agree to cooperate with the other in
the event one of them is involved in a tax controversy concerning the
Assets and the other has either records or personnel which may be of
assistance to the Party engaged in the controversy. Seller and Buyer
further agree that if, in such Party's view, such cooperation becomes
an unreasonable financial burden, they will agree upon a reasonable
method of reimbursement to the burdened Party.
(d) Buyer shall pay the transfer tax or registration fee for
all vehicles transferred to Buyer as part of the Assets.
<PAGE>
(e) Except to the extent included in the determination of
the Net Working Capital Adjustment and to the extent not resulting from
a breach by a Party of any covenant or agreement in this Agreement, and
subject to Section 2.04, if a Party hereto makes or has made any
payment to a third party pursuant to any assigned contract, lease,
agreement or commitment; and (i) such payment is made in respect of
work performed, services provided or goods delivered during a period of
time which includes the Effective Time; or (ii) the Effective Time
intervenes between the making of such payment and the performance of
the work or services or delivery of goods, the Parties will allocate
the burden of such payment in a manner which reflects the relative
benefit of such work performed, services provided or goods delivered
to each Party; provided, however, it shall be presumed that any work
performed, services provided or goods delivered prior to and including
the Effective Time are for the benefit of Seller and any work
performed, services provided or goods delivered after the Effective
Time are for the benefit of Buyer.
12.06 Contracts, Leases and Easements or Permits Not Assigned
at Closing.
-------------------------------------------------------
Except as set forth on Schedule 5.05, to the extent that any Contracts,
Leases and Easements or Permits that would otherwise be assigned under this
Agreement, as contemplated by Section 3.02(a)(ii), are not capable of being
assigned, transferred, subleased or sublicensed without the consent of, or
waiver by, any other Party thereto or any other Person, or if such assignment,
transfer, sublease or sublicense or attempted assignment, transfer, sublease or
sublicense would constitute a breach thereof or a violation of any Legal
Requirement, this Agreement shall not constitute an assignment, transfer,
sublease or sublicense, or an attempted assignment, transfer, sublease or
sublicense of any such Contract, Lease or Easement or Permit. For a period of
sixty (60) days after Closing, Seller shall continue to use its reasonable
efforts to obtain a consent to an assignment from Seller to Buyer of each
Contract, each of the Leases and Easements and Permits that, but for the first
sentence of this Section 12.06, would be assigned; provided, however, that
Seller shall not be required to pay any consideration or suffer any financial
disadvantages to obtain such assignment. During such period in which the
applicable Contract, Lease or Permit is not capable of being assigned to Buyer
due to the failure to obtain any required consent, Seller will make such
arrangements as may be necessary to enable Buyer to receive all the economic
benefits under such Contract, Lease or Permit accruing on and after the Closing
Date (including through a sub-contracting, sub-licensing, sub-participation or
sub-leasing arrangement, or an arrangement under which Seller would enforce such
Contract, Lease or Permit for the benefit of Buyer, with Buyer, to the extent
permissible, assuming Seller's executory obligations and any and all rights of
Seller against the other party thereto). If the approval of the other party to
such Contract, Lease or Permit is obtained, such approval will, as between
Seller and Buyer, constitute a confirmation (automatically and without further
action of the parties) that such Contract, Lease or Permit is assigned to Buyer
as of the Closing Date, and (automatically and without further action of the
parties) that the liabilities with respect to such Contract, Lease or Permit are
assumed as of the Closing Date.
<PAGE>
12.07 Relationship of the Parties.
---------------------------
Nothing in this Agreement or the Related Agreements shall be construed
to create any joint venture, partnership, agency or other similar fiduciary
relationship between the parties hereto or thereto. The Parties and their
Affiliates under this Agreement and the Related Agreements are nothing other
than independent contractors for the sale or purchase of specific property,
goods or services. The Parties hereto acknowledge that, for purposes of this
Agreement and the Related Agreements, (i) none of the Parties or their
Affiliates shall be considered to be the agent, representative, employee,
master, or servant of the others for any purpose, (ii) none of the Parties or
their Affiliates shall have any obligation to manage or operate any of their
respective businesses with any duty or standard of care to the other Party or
their Affiliates, and (iii) none of the Parties or their Affiliates have any
authority, right or power to enter into a contract or commitment, assume any
obligation or make any representation or warranty on behalf of the others
(except as expressly specified in this Agreement or the Related Agreements). The
Parties agree and acknowledge that except as expressly provided herein or in the
Related Agreements, none of the Parties or their Affiliates shall owe duties,
fiduciary or otherwise to the other. The Parties and their Affiliates are, and
will be after Closing, competitors with the right to pursue any business
opportunity for their respective individual benefit and make no representation
or warranty regarding the manner in which they will conduct their respective
businesses and operations. None of the Parties or their Affiliates shall have
any obligation to refrain from (i) engaging in the same or similar activities or
lines of business as the Parties or their Affiliates, (ii) developing or
marketing any products or services that compete, directly or indirectly with
those Parties or their Affiliates, (iii) investing or owning any interest
publicly or privately in, or developing a business relationship with, any Person
engaged in the same or similar activities or lines of business as, or otherwise
in direct or indirect competition with, the Parties or their Affiliates, or (iv)
doing business with any client or customer of the Parties or their Affiliates.
None of the Parties or their Affiliates shall have any obligation to offer any
business opportunity (except as expressly specified in this Agreement or the
Related Agreements) and may modify or otherwise change any of their respective
businesses or operations at any time.
12.08 Bulk Sales. Seller and Buyer agree to waive notice requirement
under any applicable bulk sales laws. Seller agrees to indemnify and hold Buyer
harmless from and against, and pay any and all claims arising out of or
resulting from any failure to comply with or perform any action in connection
with such bulk sales provisions.
<PAGE>
12.09 Notice of Breaches; Opportunity to Cure. Each of the Parties
will promptly provide notice to the other Party orally and in writing
if it has actual Knowledge of any failure of or breach by either
Party of any representation, warranty, condition or covenant made
by a Party in this Agreement, describing in reasonable detail the
nature of such failure or breach and the amount of Damages, if known,
and the method of computation thereof. If a Party has such Knowledge
and fails to provide such notice to the other Party, then the failure
of or breach of the representation, warranty, condition or covenant
shall be deemed to be waived by the Party that failed to provide
notice. If such notice is provided and the amount of such estimated
Damages, (a) is less than $5 million, both Parties shall proceed with
the Closing and no Party shall have waived any right to indemnification
under Article 14, subject to the terms, conditions and limitations in
Article 14 or (b) is greater than $5 million and less than $100
million, no Party shall have the right to terminate this Agreement or
refuse to consummate the transactions contemplated by this Agreement as
a result of any such failure or breach, subject to the breaching
Party's compliance with its obligations under this Section 12.09;
provided however, if the non-breaching Party does not waive the breach,
the Parties shall, (i) at the option of either Party extend the Closing
Date by up to 120 days (provided that the breaching Party is at all
times during such period taking reasonable steps to cure such breach),
or (ii) by mutual agreement proceed to Closing and agree on an
assignment of the proceeds from insurance for property damage and
business interruption coverage and an adjustment in the Purchase Price
in an amount equal to the deductible for the property insurance, or
(iii) by mutual agreement proceed to Closing and agree on an adjustment
in the Purchase Price in an amount equal to the aggregate amount of
such estimated Damages. If the breach or failure has not been cured
within any extension period and the Parties have not reached agreement
pursuant to subsections (b)(i) or (ii) above, the Parties shall proceed
with the Closing and no Party shall have waived any right to
indemnification under Article 14, subject to the terms, conditions and
limitations in Article 14.
Notwithstanding anything in this Agreement to the contrary, if the
Closing occurs, no Party shall be entitled to indemnification pursuant to
Article 14 for any breach for which notice has been given pursuant to Section
12.09, if such breach has either been cured to the reasonable satisfaction of
the non-breaching Party or for which there has been an adjustment to the
Purchase Price pursuant to this Section 12.09.
<PAGE>
12.10 Public Announcements. The Parties agree that the initial press
release to be issued with respect to the transactions contemplated by this
Agreement shall be in the form heretofore agreed to by the Parties. Seller and
Buyer will consult with each other before issuing, and provide each other the
opportunity to review, comment upon and concur with, any subsequent press
release or other public statements with respect to the transactions
contemplated by this Agreement. Neither Party will issue any subsequent
press release or make any public statement that is inconsistent with the initial
press release, except as either Party may determine, upon the advice of
counsel, is required by applicable law, court process or by obligations
pursuant to any listing agreement with any national securities exchange.
12.11 Schedules. Buyer and Seller acknowledge that additions or
changes to the Schedules to this Agreement may be required to reflect events
since the date of this Agreement so as to cause the Representations and
Warranties contained herein to be true and correct in all material respects as
of the Closing. Each Party may amend the Schedules referred to in its Repre-
sentations and Warranties as set forth herein to reflect events since the date
of this Agreement at any time up to five (5) days prior to the Closing.
12.12 Diesel Patent. Buyer and Seller agree that, at Buyer's option,
the parties will negotiate in good faith for a license for Buyer to use at the
Refinery the U.S.patent for diesel fuel under patent Application No. 08/722,309
at a fair market value for such license to be agreed by the parties.
ARTICLE 13
ENVIRONMENTAL LIABILITIES
-------------------------
13.01 Refinery Baseline. The Refinery Baseline shall be determined by
reference to existing information contained in reviews and environmental site
assessments performed by or on behalf of Seller prior to the Closing Date with
respect to any SH&E Condition at the Refinery (the "Refinery Baseline"). Within
ninety (90) days after the Closing, Buyer may supplement the Refinery Baseline
with further investigation or site assessment that Buyer and Seller mutually
agree is reasonably necessary to establish the existence of any SH&E Condition
arising from or relating to the Operations or any activities involving the
Assets prior to the Effective Time. Such further investigation shall be
performed at Buyer's sole expense, based on information that existed prior to
the execution of this Agreement, not involve drilling or penetration of the
surface of the ground and be performed in compliance with Buyer's obligations
under Section 13.03. If the Parties can not agree on the inclusion of such
information in the Refinery Baseline, the dispute shall be resolved in
accordance with Section 13.10. Buyer will promptly provide Seller copies of all
such information that constitute supplements to the Refinery Baseline.
<PAGE>
13.02 Environmental Liabilities.
-------------------------
(a) Seller shall be liable for those Damages for Environmental
Liability that are incurred on account of, or that are attributable to, any SH&E
Condition (i) that is disclosed in the Refinery Baseline ("Disclosed Seller
Environmental Liabilities") or (ii) (A) that is not disclosed in the Refinery
Baseline, (B) that is discovered after the Closing Date other than in breach of
Section 13.03, and (C) that is demonstrated by Buyer by a preponderance of the
evidence to have arisen out of the Operations or any activities involving the
Assets prior to the Effective Time ("New Seller Environmental Liabilities",
together with Disclosed Seller Environmental Liabilities, "Seller Environmental
Liabilities").
(b) Buyer shall be liable for those Damages for Environmental
Liabilities that are incurred on account of, or that are attributable to, any
SH&E Condition arising from or relating to the Operations or any activities
involving the Assets (i) after the Effective Time or (ii) prior to the Effective
Time, but only in the case of this clause (ii) to the extent Seller has not
assumed liability under Sections 13.02(a) or 13.04, or Seller's liability is
extinguished pursuant to the limitations set forth in this Section 13 ("Buyer
Environmental Liabilities").
(c) If the origin (i.e., pre- or post- Closing) is indeterminate,
liability shall be determined in accordance with the arbitration procedures set
forth in Section 13.10.
(d) If the remediation of any SH&E Condition involves both Buyer
Environmental Liabilities and Seller Environmental Liabilities, the parties
shall apportion the cost of such remediation in proportion to each Parties share
of the total Environmental Liability for such location. If the Parties can not
agree on the allocation of such Environmental Liability, the dispute shall be
resolved in accordance with Section 13.10
Notwithstanding Section 13.08, if Buyer's fractional cost as so
calculated exceeds eleven-twentieths (11/20ths), Buyer shall, at Buyer's option
by notice to Seller, be entitled to take over the remediation efforts at the
site of such contamination with the costs of such remediation shared between
Buyer and Seller as set forth in this Section.
(e) Any Seller liability and responsibility for Damages for
Environmental Liability incurred pursuant to this Section 13.02 shall be subject
to the following limitations and conditions:
(i) Seller's obligation to remediate any SH&E Condition
shall be determined by reference to SH&E Laws or related Legal
Requirements in existence and as enforced at the date of Closing,
except to the extent such SH&E Laws or related Legal Requirements are
modified to establish a remediation standard which is in effect at the
time the Seller is engaged in active remediation of a SH&E Condition
which is Seller's Environmental Liability;
<PAGE>
(ii) Seller's obligation to remediate any SH&E Condition
shall cease when Closure is obtained;
(iii) Buyer shall have given Seller written notice identifying
the SH&E Condition, or of any major site assessment or major
investigation that could lead to the discovery of an SH&E Condition,
so that Seller may participate, at its own expense, in any discussions
or negotiations with any applicable governmental authority concerning
the design and implementation of any remediation plan or project where
Seller has, or is reasonably likely to have, any liability or
responsibility, and Buyer has not proposed, discussed or agreed to any
such plan or project without Seller's prior written consent, which
shall not be unreasonably withheld;
(iv) For purposes of Sections 13.02(a), Seller's obligations
under Section 13.02 for any Seller Environmental Liabilities will be
limited to Environmental Liabilities identified and for which Buyer is
under an order or requirement of an applicable governmental agency to
engage in active remediation (e.g. not monitoring, testing or
reporting) of a SH&E Condition or claims from third parties that
require Buyer to engage in active remediation (e.g. not monitoring,
testing or reporting) of a SH&E Condition and written notice of such
order or requirement and Seller's liability under Section 13.02(a) is
given by Buyer to Seller within ten (10) years after the Closing
Date, regardless of when such amounts must be paid;
<PAGE>
(v) Seller's total aggregate liability for Seller
Environmental Liabilities, including its indemnity obligation under
Section 14.01(a), incurred after the Effective Time on account of, or
that are attributable to, any SH&E Condition arising from or relating
to the Operations or any activities involving the Assets shall not
exceed $50 million in the aggregate. For purposes of example but not
in limitations (i) amounts paid by Seller that are reimbursed or paid
by any insurance (but excluding self-insurance arrangements), (ii)
amounts received by Seller in respect of claims of indemnity from
third parties (other than amounts from the prior owners of the
Refinery as set forth below), (iii) Damages in respect of third-party
claims (including, without limitation, tort claims, claims for personal
injury, claims for property damage, natural resource damage claims and
punitive damages), and (iv) Damages in respect of the Release by Seller
of dioxins into San Francisco Bay shall be included for purposes of
determining Seller's total aggregate liability of $50 million under
this Section 13.02(e)(v). Amounts paid by Seller in respect of fines,
penalties and assessments assessed by any governmental authority
(other than to the extent used for "supplemental environmental
projects" or other projects that benefit the Refinery) and amounts that
the prior owners of the Refinery have currently agreed to assume and
actually in the future pay for Environmental Liabilities shall not be
included for purposes of determining Seller's total aggregate liability
of $50 million under this Section 13.02(e)(v); and (vi) At the election
of Seller, Buyer and Seller will negotiate in good faith from time to
time to attempt to agree upon the cost of Seller's obligations under
Section 13.02 and the transfer of the responsibility for such Seller
Environmental Liabilities. If the Parties agree upon the cost of the
transfer of such Liabilities, Seller may pay to Buyer a lump sum
payment representing the present value (calculated using a discount
rate of Y percent (Y%) real) as of such date for some or all
identified, reasonably estimated and unpaid projected Damages for
Seller Environmental Liabilities, where Y shall equal the Base Rate
plus 100 basis points. Upon such lump sum payment pursuant to this
Section 13.02(e)(vii), Seller shall have no further obligations to
Buyer for Damages for the Seller Environmental Liabilities addressed by
such payment.
13.03 Environmental Investigations.
----------------------------
For a period of ten (10) years after the Closing Date, except
to make reports that are required by SH&E Law, Buyer shall not take any action
to request, initiate, encourage,or induce an applicable governmental agency to
require any site assessment or investigation that could lead to the discovery of
an SH&E Condition and Buyer shall not conduct any site assessment or
investigation that could lead to the discovery of an SH&E Condition and which
would involve drilling or penetration of the surface of the ground, unless (i)
such site assessment or investigation is performed in the ordinary course of
business such as for geophysical studies for equipment foundations or in
connection with construction, remodeling or demolish and rebuild work at the
Refinery, or (ii) ordered to conduct such an assessment or investigation by any
federal, state, or local governmental authority having jurisdiction thereof.
<PAGE>
13.04 Waste Sites.
-----------
Buyer and Seller hereby agree to each bear Environmental
Liabilities for all open and closed off-site waste sites operated by third
parties on the following basis: if both Parties have liability or potential
liability at the site, and if liability at the site is apportioned by (i) an
administrative settlement or administrative order with a governmental agency, or
(ii) a Judgment, and both Buyer and Seller are formal parties to the actions
specified in clause (i) or (ii) of this sentence, then the liability between
them shall be allocated as provided for in such action. If both Parties have
liability or potential liability at the site and either Party is not a formal
party to an action specified in clauses (i) or (ii) of the preceding sentence,
and the Party named in such action is being held responsible or potentially
responsible for the other Party's liability, then the Parties will divide the
liability on a proportionate basis according to the respective volume of
Hazardous Substances deposited in such waste sites by or on behalf of Buyer,
which shall be Buyer's liability, or by or on behalf of Seller, which shall be
Seller's liability. The limitations set forth in Section 13.02(e) shall not
apply to liabilities covered by this Section 13.04.
13.05 Environmental Coordination Committee.
------------------------------------
Within thirty (30) days of the Closing Date, each Party will
designate two representatives, one legal and one technical, to consult on
coordination of their respective obligations under Article 13 of this Agreement.
(The Parties may change the identity of these representatives as necessary or
desirable.) The four representatives will collectively be referred to as the
Tosco/UDS Corporation Environmental Coordination Committee (the "Committee").
The sole purpose of the Committee will be to facilitate communication and
coordination on environmental matters between the Parties, and it will have no
formal schedule, duties, or powers other than as the duly authorized
representatives of the Parties may from time to time agree. If the Parties agree
in writing, the Committee may, among other things, discuss project management,
cost reimbursement, and liability allocation issues. Neither the establishment
of the Committee, nor any of its activities, shall be construed to make either
Party responsible in any way for the acts or omissions of the other Party.
<PAGE>
13.06 Environmental Cooperation.
-------------------------
Buyer and Seller covenant with each other that they shall
cooperate fully with each other and act in good faith in implementing this
Article 13. Buyer and Seller agree that the performance required by the covenant
set forth in the preceding sentence shall include, but not be limited to: (a)
providing to the other timely notice of all potential Environmental Liabilities
that they believe are covered under this Article 13 about which they become
aware; (b) sharing with the other in a timely manner all material non-privileged
correspondence received from any third party that is relevant to such potential
Environmental Liabilities; (c) affording the other timely access to and an
opportunity to comment on (both draft and final versions) any material
non-privileged correspondence to third parties, non-privileged study protocols
and results, drawings, charts, data, field notes and remediation workplans or
reports, or other non-privileged documentation relating to such Environmental
Liabilities; (d) providing the other with timely notice of and an opportunity to
attend and participate in any meetings or hearings with governmental bodies or
courts relating to any Environmental Liabilities that they believe are covered
under this Article 13, subject to the permission or consent of such governmental
bodies or courts, if required; (e) preparing all material strategies and plans
in consultation with each other; (f) consulting with each other to ensure that
any work under this Article 13 is performed in a workmanlike and cost-effective
manner; (g) negotiating access agreements and scheduling all work to be
performed so as to minimize any unreasonable cost and inconvenience to each
other; and (h) performing all work under this Article 13 in accordance with all
applicable SH&E Laws or related Legal Requirements.
13.07 Remediation by Buyer.
--------------------
Buyer shall supervise and perform any remediation on any
property of Buyer or on any property contiguous to a property of Buyer, except
that Seller may elect to perform remediation in accordance with Section 13.08.
13.08 Remediation by Seller.
---------------------
(a) Seller's Election. Seller, at Seller's sole choice, may,
by timely notice to Buyer, supervise and perform any remediation on any
property of Buyer or any property contiguous to a property of Buyer
with respect to any Seller Environmental Liabilities for which Seller
is responsible for at least 50% of the estimated Environmental
Liabilities of such remediation, subject to Buyer's oversight and
approval and mutually acceptable access agreements.
<PAGE>
(b) Performance of Remediation. Seller, with the approval
of Buyer (which shall not be unreasonably withheld), may have access to
and use of the storage facilities, loading facilities, docks, rail
sidings, and other plant equipment or facilities, and waste water
treatment plants and similar waste treatment and disposal systems on
the Asset in conjunction with any work performed pursuant to Schedule
13.08(b) for purposes such as the disposal of well development water
and treated ground water, provided that (i) Seller's use of such
facilities and systems shall not interfere with or disrupt Buyer's
operations or Buyer's use of such facilities and systems (including by
reducing the capacity needed for Buyer's use), (ii) Seller's use of
such facilities and systems shall not violate any SH&E Laws or related
Legal Requirements, (iii) Seller shall be responsible for, and Buyer
shall fully cooperate in, obtaining all approvals required by any
governmental bodies for such use and (iv) Seller shall promptly perform
any remediation or repair any malfunction or impairment of performance
of such facilities and systems to the extent resulting from Seller's
use of such facilities and systems.
13.09 Payments and Reimbursements.
---------------------------
Seller shall make payment to Buyer for work or other matters
for which Seller is liable under Section 13.02 according to one or more of the
following methods, at Seller's election: (i) direct payment to third parties;
(ii) reimbursement of Buyer; or (iii) a combination of (i) and (ii). Such
payments shall be made within thirty (30) days after invoice by Buyer. Any
payments not paid when due shall bear interest at the Late Payment Rate.
13.10 Dispute Resolution.
------------------
If the Parties are unable to agree upon the allocation of
liability pursuant to this Article 13, including, without limitation, the
existence of any New Seller Environmental Liabilities or the achievement of
Closure, the Parties shall select an independent environmental consultant
satisfactory to both Parties to issue a determination with respect to the matter
in dispute. Within 30 days after the appointment of the consultant, each Party
will prepare and deliver to the consultant a written report setting forth such
Party's final and best offer regarding the allocation of such liabilities. The
consultant shall, within 30 days of the delivery of the last Party's report,
make his determination regarding the allocation of liability, which
determination shall be limited to selection of one of the Party's offer. Nothing
herein will be construed to authorize or permit the consultant to determine any
question or matter whatsoever in connection with this Agreement, other than the
selection of one of the Party's offer, which determination shall be final and
binding on the Parties and not subject to appeal. The consultant's fees and
expenses will be paid by the Party whose offer was not accepted. Any amounts
required to be paid in settlement of such dispute shall be paid within ten (10)
days of the consultant's determination. Any amount not paid when due will bear
interest at the Late Payment Rate.
<PAGE>
ARTICLE 14
INDEMNIFICATION; SURVIVAL
-------------------------
14.01 Indemnification.
---------------
(a) INDEMNIFICATION BY SELLER.
--------------------------
SELLER AGREES TO PAY AND TO INDEMNIFY FULLY, HOLD
HARMLESS AND DEFEND BUYER AND ITS RESPECTIVE AFFILIATES, OFFICERS,
DIRECTORS, PARTNERS, SUCCESSORS AND ASSIGNS (COLLECTIVELY CALLED
"BUYER INDEMNIFIED PARTIES") FROM AND AGAINST ANY AND ALL CLAIMS BASED
UPON ALLEGATIONS OF AND/OR DAMAGES (WHETHER BASED ON NEGLIGENT ACTS
OR OMISSIONS, STATUTORY LIABILITY, STRICT LIABILITY OR OTHERWISE)
ARISING OUT OF THE FOLLOWING:
(i) ANY INACCURACY OR BREACH OF ANY REPRESENTATION
OR WARRANTY OF SELLER CONTAINED IN THIS AGREEMENT OR ANY
CERTIFICATE DELIVERED PURSUANT HERETO AND MADE ON OR AS OF THE
EFFECTIVE TIME.
(ii) ANY BREACH BY SELLER OF ANY COVENANT OR
AGREEMENT OF SELLER CONTAINED IN THIS AGREEMENT.
(iii) ENVIRONMENTAL LIABILITY RETAINED BY SELLER,
PURSUANT TO THE TERMS OF ARTICLE 13.
(iv) LIABILITIES RETAINED BY SELLER IN SECTION
2.04(b) AND SECTION 4.09(c) AND (d).
(b) INDEMNIFICATION BY BUYER.
-------------------------
BUYER AGREES TO PAY AND TO INDEMNIFY FULLY, HOLD
HARMLESS AND DEFEND SELLER AND ITS RESPECTIVE AFFILIATES, OFFICERS,
DIRECTORS, PARTNERS, SUCCESSORS AND ASSIGNS (COLLECTIVELY CALLED
"SELLER INDEMNIFIED PARTIES") FROM AND AGAINST ANY AND ALL CLAIMS BASED
UPON ALLEGATIONS OF AND/OR DAMAGES (WHETHER BASED ON NEGLIGENT ACTS OR
OMISSIONS, STATUTORY LIABILITY, STRICT LIABILITY OR OTHERWISE) ARISING
OUT OF THE FOLLOWING:
<PAGE>
(i) ANY INACCURACY OR BREACH OF ANY REPRESENTATION
OR WARRANTY OF BUYER CONTAINED IN THIS AGREEMENT OR ANY
CERTIFICATE DELIVERED PURSUANT HERETO AND MADE ON OR AS OF THE
EFFECTIVE TIME.
(ii) ANY BREACH BY BUYER OF ANY COVENANT OR AGREEMENT
OF BUYER CONTAINED IN THIS AGREEMENT.
(iii) ENVIRONMENTAL LIABILITY ASSUMED BY BUYER PUR-
SUANT TO THE TERMS OF ARTICLE 13.
(iv) LIABILITIES ASSUMED BY BUYER IN SECTION 2.04 (a)
AND ARTICLE 4.
(c) No Party to this Agreement shall bring any action, suit
or proceeding (whether under any federal, state or local statute or
law) against any other Party, or seek to join any other Party to any
pending action, suit or proceeding which arises out of, relates
to or is connected with any matter indemnified under this Section
14.01, except to enforce the provisions of this Section 14.01.
14.02 Notification and Third Party Claims.
-----------------------------------
Within thirty (30) days following the determination thereof, an
Indemnified Party shall give the Indemnifying Party written notice of any matter
which an Indemnified Party has determined has given or could give rise to a
right of indemnification under this Agreement, stating the amount of the Damage,
if known, and method of computation thereof, all with reasonable particularity
and containing a reference to the provisions of this Agreement in respect of
which such right of indemnification is claimed or arises ("Claim Notice"),
provided that the failure of the Indemnified Party to provide such 30-day notice
shall only relieve the Indemnifying Party of its obligation to indemnify the
Indemnified Party to the extent that the Indemnifying Party is actually
prejudiced by such failure. The obligations and liabilities of an Indemnifying
Party under this Article 14 with respect to Damages arising from claims of any
third party that are subject to the indemnification provisions of this Article
14 ("Third Party Claims") shall be governed by and contingent upon the following
additional terms and conditions:
<PAGE>
(a) Within fifteen (15) days of the receipt of a Claim
Notice of a Third Party Claim, the Indemnifying Party shall notify
the Indemnified Party whether the Indemnifying Party elects to defend
such Third Party Claim. If the Indemnifying Party so elects, it
shall undertake the defense thereof by counsel of its own choosing,
which counsel shall be reasonably satisfactory to the Indemnified
Party; provided that if, in the Indemnified Party's and the
Indemnifying Party's reasonable judgment, a conflict of interest exists
between the Indemnified Party and the Indemnifying Party with respect
to such Third Party Claim, or if the Indemnifying Party elects not
to defend such Third Party Claim, or if the Indemnifying Party fails
to notify the Indemnified Party within the fifteen (15) day notice
period that it elects to defend such Claim, such Indemnified Party
shall be entitled to select counsel of its own choosing, in which event
the Indemnifying Party shall be obligated to pay the reasonable fees
and expenses of such counsel to the extent that the Indemnifying
Party is finally determined to be obligated to indemnify the
Indemnified Party under this Agreement. The Claim Notice of the Third
Party Claim by the Indemnified Party shall contain all material
information known to the Indemnified Party with respect to the Third
Party Claim and shall include copies of materials submitted to the
Indemnified Party by the relevant third party with respect to the Third
Party Claim.
(b) If the Indemnifying Party refuses or fails at any time
to defend the Indemnified Party against any Third Party Claim, the
Indemnified Party shall have the right to undertake the defense, and to
compromise or settle such Third Party Claim on behalf of and for the
account and at the risk of the Indemnifying Party to the extent that
the Indemnifying Party is finally determined to be obligated to
indemnify the Indemnified Party under this Agreement with respect to
such Third Party Claim.
(c) If the Indemnifying Party elects to undertake and
diligently pursues the defense of a Third Party Claim hereunder, the
Indemnifying Party shall control all aspects of the defense and if the
Indemnifying Party acknowledges in writing its duty to provide full
indemnification to the Indemnified Party regarding such Third Party
Claim, the Indemnifying Party may enter into a settlement of such Third
Party Claim and may settle, compromise or enter into a judgment with
respect to such Third Party Claim; provided that the Indemnifying Party
shall not enter into any such settlement, compromise or judgment
without the prior written consent of the Indemnified Party if it would
result in the imposition of any non-monetary liability or obligation on
the Indemnified Party. If the Indemnified Party undertakes the defense
of a Third Party Claim hereunder for any reason other than that
provided in Subsection (b) hereof, it shall not settle, compromise or
enter into any judgment with respect to a Third Party Claim for which
it is seeking or shall seek indemnification hereunder without the prior
written consent of the Indemnifying Party, which shall not be
unreasonably withheld or delayed.
<PAGE>
(d) If the Indemnifying Party elects to undertake and
diligently pursues the defense of a Third Party Claim hereunder, the
Indemnified Party shall provide the Indemnifying Party with access to
all reasonably requested witnesses, records and documents of the
Indemnified Party relating to any Third Party Claim.
(e) The Indemnified Party may participate in the defense
of any Third Party Claim at its own expense.
14.03 LIMITATION ON INDEMNIFICATION.
-----------------------------
(a) WITH RESPECT TO ANY CLAIM BY A PARTY FOR INDEMNITY UNDER
THIS ARTICLE 14 WHICH DOES NOT INVOLVE A THIRD PARTY CLAIM, NO PARTY TO
THIS AGREEMENT SHALL SEEK, AND AN ARBITRATOR APPOINTED UNDER ARTICLE
15 MAY NOT AWARD, ANY SPECIAL, PUNITIVE, CONSEQUENTIAL OR EXEMPLARY
DAMAGES OR LOST PROFITS. NOTHING IN THIS SECTION 14.03(a) SHALL LIMIT
IN ANY WAY A PARTY'S INDEMNIFICATION OBLIGATIONS WITH RESPECT TO A
THIRD PARTY CLAIM.
(b) A PARTY SHALL HAVE NO CLAIM FOR INDEMNITY UNDER SECTIONS
14.01(a)(i), AND 14.01(a)(ii), OR SECTIONS 14.01(b)(i), AND
14.01(b)(ii) FOR ANY DAMAGES ARISING OUT OF OR RELATING TO ANY
LIABILITY UNDER THIS AGREEMENT UNTIL THE AGGREGATE OF ALL SUCH DAMAGES
ACTUALLY INCURRED OR SUSTAINED BY THE PARTY EXCEEDS $5 MILLION (THE
"THRESHOLD"), AND THEN ONLY FOR SUCH DAMAGES THAT EXCEED THE THRESHOLD
AMOUNT. IN DETERMINING THE THRESHOLD AMOUNT AND ONCE THE THRESHOLD
IS EXCEEDED, A PARTY SHALL HAVE NO OBLIGATION TO INDEMNIFY THE OTHER
PARTY FOR DAMAGES FOR AN INDIVIDUAL CLAIM AMOUNTING TO LESS THAN
$100,000.
(c) A PARTY'S AGGREGATE LIABILITY FOR INDEMNIFICATION WITH
RESPECT TO ALL CLAIMS UNDER SECTION 14.01(a) OR SECTION 14.01(b) SHALL
NOT EXCEED AN AMOUNT EQUAL TO $200,000,000, PROVIDED HOWEVER, SELLER'S
AGGREGATE LIABILITY FOR ENVIRONMENTAL LIABILITY UNDER SECTION 14.01(a)
SHALL BE LIMITED TO $50,000,000.
14.04 Survival.
--------
The indemnification obligations set forth in Sections 14.01(a)(i) and
(ii), (except with respect to Section 10.02), 14.01(b)(i) and (ii), (except with
respect to Section 11.01) shall continue and be in effect for a period of two
(2) years after the Closing Date, except (a) as to any claim of which written
notice was given to the Indemnifying Party before the end of such time period;
(b) the obligations with respect to Section 5.11 shall continue and be in effect
until thirty (30) days after the expiration of the applicable statute of
limitations with respect to such Taxes; (c) the obligations with respect to
Section 5.13 shall continue and be in effect for a period of ten (10) years
after the Effective Time; and (d) as otherwise provided in Article 13.
<PAGE>
14.05 Coordination of Indemnification Rights.
--------------------------------------
(a) Except for any action seeking specific performance
and/or injunctive relief for the breach of any covenant contained in
this Agreement, or for common law fraud or deceit, the indemnification
provided any Person pursuant to this Article 14 shall be such Person's
sole remedy for any breach by any Party hereto of any representation,
warranty or covenant contained in this Agreement, or in any certificate
or document (to the extent such certificates or documents relate to
matters covered by the representations, warranties or covenants
contained herein) required to be delivered in connection herewith, or
in connection with the consummation of the transactions provided for
hereby.
(b) A Claim Notice in connection with any Section of this
Article 14 shall be deemed to be a Claim Notice in connection with all
Sections of this Article 14, pursuant to which the Person asserting
such claim has any right to be indemnified, defended or held harmless.
(c) Notwithstanding any provisions to the contrary contained
in this Article 14, the right of any Person to be indemnified, defended
or held harmless in connection with any claim pursuant to any Section
of this Article 14 shall be reduced to the extent that such Person
is or has been indemnified, defended and/or held harmless with respect
to such claim, pursuant to any other provisions of this Agreement or
any of the Related Agreements.
(d) In the event that an Indemnified Party has a right of
recovery against any third party with respect to any Damages in
connection with which a payment is made to such Indemnified Party by an
Indemnifying Party, then (i) such Indemnifying Party shall, to the
extent of such payment, be subrogated to all of the rights of recovery
of such Indemnified Party against such third party with respect to
such Damages and (ii) such Indemnified Party shall execute all papers
required and take all action reasonably necessary to secure such
rights, including, but not limited to, the execution of such documents
as are reasonably necessary to enable such Indemnifying Party to bring
suit to enforce such rights.
(e) In the event of any conflict between this Article 14 and
any other provisions of this Agreement, this Article 14 shall prevail.
14.06 Right to Cure
-------------
Any Party that is obligated to indemnify, defend and/or hold harmless
any Person pursuant to any provision of this Article 14 shall have the right to
cure, within a reasonable time, not to exceed thirty (30) days after receipt of
written notice, and in a manner reasonably satisfactory to such Person, any
matter giving rise to such obligation; provided, however, that any such cure
shall not relieve or reduce any such obligation to the extent that such cure is
inadequate.
<PAGE>
14.07 Section 1542 Waiver.
-------------------
Specifically, the Parties hereby expressly waive any and all rights
under Section 1542 of the California Civil Code, which reads in full as follows:
Section 1542. General Release. A general release does not extend to
claims which the creditor does not know or suspect to exist in his
favor at the time of executing the release, which if known by him must
have materially affected his settlement with the debtor.
The Parties acknowledges that they have separately bargained on the foregoing
waiver of Section 1542.
ARTICLE 15
ARBITRATION
-----------
15.01 Dispute Resolution.
------------------
Any controversy or claim ("Claim"), whether based on contract, tort,
statute or other legal or equitable theory (including but not limited to any
claim of fraud, misrepresentation or fraudulent inducement or any question of
validity or effect of this Agreement including this section) arising out of or
related to this Agreement (including any amendments or extensions), or the
breach or termination thereof, shall be settled by mediation and consultations
between the Parties initiated upon the Notice of any Party. In the event of
failure of such mediation and consultations to settle such Claim in a manner
acceptable to all Parties within thirty (30) days following the Notice, then any
such Claim shall be settled by binding arbitration in accordance with this
provision and the then current CPR Institute for Dispute Resolution Rules for
Non-Administered Arbitration of Business Disputes. The arbitration shall be
governed by the United States Arbitration Act, 9 U.S.C. Sections 1-16, to the
exclusion of any provision of state law inconsistent therewith or which would
produce a different result, and judgment upon the award rendered by the
arbitrator may be entered by any court having jurisdiction.
15.02 Place.
-----
The arbitration shall be held in New York, New York.
15.03 Arbitrators.
-----------
There shall be three (3) independent and impartial arbitrators of whom
Seller appoints one (1) and Buyer appoints one (1) and the third of which shall
be appointed by the two (2) Party-appointed arbitrators in accordance with the
arbitration rules. The arbitrators shall determine the Claims of the Parties and
render a final award in accordance with the substantive law of the State of New
York, excluding the conflicts provisions of such law. The arbitrators shall set
forth the reasons for the award in writing.
<PAGE>
15.04 Statute of Limitations.
----------------------
Subject to Section 14.04, any Claim by a Party shall be time-barred if
the asserting Party commences arbitration with respect to such Claim later than
three (3) years after the cause of action accrues. All statutes of limitations
and defenses based upon passage of time applicable to any Claim of a defending
Party (including any counterclaim or setoff) shall be tolled while the
arbitration is pending.
15.05 Discovery.
---------
The arbitrator shall order the Parties to promptly exchange copies of
all exhibits and witness lists, and, if requested by a Party, to produce other
relevant documents, to answer up to ten (10) interrogatories (including
subparts), to respond to up to ten (10) requests for admissions (which shall be
deemed admitted if not denied) and to produce for deposition and, if requested,
at the hearing all witnesses that such Party has listed and up to four (4) other
persons within such Party's control. Any additional discovery shall only occur
by agreement of the Parties or as ordered by the arbitrator upon a finding of
good cause.
15.06 Costs.
-----
Each Party shall bear its own costs, expenses and attorneys' fees;
provided that if court proceedings to stay litigation or compel arbitration are
necessary, the Party who unsuccessfully opposes such proceedings shall pay all
reasonable associated costs, expenses, and attorneys' fees in connection with
such court proceeding.
15.07 Breach.
------
The Parties recognize that irreparable injury will result from a breach
of any provision of this Agreement and that money damages will be inadequate to
fully remedy the injury. In order to prevent such irreparable injury, the
arbitrator shall have the power to grant temporary or permanent injunctive or
other equitable relief. Prior to the appointment of an arbitrator a Party may,
notwithstanding any other provision of this agreement, seek temporary injunctive
relief from any court of competent jurisdiction; provided that the Party seeking
such relief shall (if arbitration has not already been commenced) simultaneously
commence arbitration. Such court ordered relief shall not continue more than ten
(10) days after the appointment of the arbitrator (or in any event for longer
than sixty (60) days).
15.08 Consent to Jurisdiction.
-----------------------
The Parties hereby consent to the non-exclusive jurisdiction of the
state or federal courts of New York for the enforcement of any award rendered by
the arbitrators.
<PAGE>
ARTICLE 16
TECHNOLOGY TRANSFER
-------------------
16.01 Licensed Technology Rights.
--------------------------
(a) Assignable Licensed Technology Rights. Seller shall
transfer Licensed Technology Rights that are freely transferable and
shall grant all rights and interest in the Licensed Technology Rights
listed on Schedule 16.01(a), by assignment or sublicense as the case
may be. Buyer is aware that these rights are Licensed Technology
Rights where such rights are (i) freely transferable without the
permission of the licensor or vendor, (ii) such Licensed Technology
Rights are not in use by Seller or its Affiliates at the Effective Time
and (iii) where such transfer would not require Seller to forego
future use of the Licensed Technology Rights for its own benefit. Any
fees required to be paid for such transfer shall be paid solely by
Buyer.
(b) Non-assignable or non-transferable Licensed Technology
rights. Buyer recognizes that the Licensed Technology Rights listed
on Schedule 16.01(b) are not freely assignable without the permission
of the licensor or vendor. Seller, at the written request of Buyer,
agrees to contact the licensor or vendor and seek a permitted transfer
of the Licensed Technology Rights or obtaining of a new license for
Buyer. In that event, all fees and costs necessary to transfer the
Licensed Technology Rights or to acquire a new license commensurate
therewith to Buyer, shall be paid solely by Buyer. Seller shall make
a good faith attempt to maintain the status quo of such non-assignable
non-transferable Licensed Technology Rights until Buyer can secure
transfer or a new license to Buyer.
(c) Licensed Technology Rights not on Schedules 16.01(a)
and (b). Buyer and Seller agree to cooperate in the prompt transfer
after the Closing Date of all Licensed Technology Rights for the
Operations of the Refinery that are not listed on Schedule 16.01(a) or
16.01(b) at the lowest possible cost of transfer, provided that any
fees necessary to implement such transfer shall be borne equally by
Seller and Buyer.
<PAGE>
(d) It is understood that Licensed Technology Rights were
acquired by Seller subject to certain third party obligations. In any
assignment, or issuance of a sublicense or new license to Buyer of
any such third party Licensed Technology Rights under this Section,
Buyer agrees to assume all obligations related to Buyer's Use of such
Licensed Technology Rights in the Operations of the Refinery. For
avoidance of doubt, Seller shall not be obligated to extend to Buyer or
maintain for Buyer such third party Licensed Technology Rights in the
same manner and to the same extent as practiced by Seller prior to the
Effective Time, where the extension or maintenance of such rights would
be to the detriment of the rights of Seller or any of its Affiliates to
practice under its own rights and licenses.
(e) Seller shall have the right to terminate any extension
of any assignment or sublicense to Buyer under Section 16.01, at
any time, where Buyer is materially in default of any of the material
obligations undertaken by Buyer in connection with the extension of
such assignment or sublicense including, but not limited to, any
obligation on the part of Buyer to make payments, provided that no such
termination shall occur prior to thirty (30) days after notice to Buyer
identifying such assignment or sublicense and the and extent of the
default, further specifying the reasons for and intention to so
terminate and, provided further, that termination shall not occur if
Buyer cures said material default during such thirty (30) days notice
period.
16.02 Confidentiality.
---------------
(a) The confidentiality obligations of the Buyer with
respect to Confidential Information (which for purposes of this Article
16 shall mean any technical proprietary, secret or confidential
information relating to Intellectual Property disclosed by Seller,
directly or indirectly to Buyer) under this Article 16 shall be as
follows:
(i) Nothing in this Article 16 shall restrict in
any way the right of Seller or Seller Affiliates to use or
disclose or permit others to use or disclose Confidential
Information, which it possesses and otherwise has a free right
to use and disclose.
(ii) With respect to Confidential Information
comprising Intellectual Property, Buyer shall maintain such
Confidential Information in confidence, and, shall Use it solely
for the Operations of the Refinery.
(iii) With respect to Licensed Technology Rights,
each Party may use and disclose Confidential Information
comprising Licensed Technology Rights but only to the extent
permitted under the terms of any agreement with the third party
licensor of same as the case may be.
(b) Except where provided otherwise with respect to
Confidential Information whose disclosure and Use in Section 16.02(a)
is governed by an agreement with a third party pertaining to Licensed
Technology Rights, Buyer's obligation of confidentiality and restricted
use in Section 16.02(a) above shall not apply to any information which
Buyer can show by reasonable proof:
(i) was available to the public prior to or become
available to the public subsequent to the receipt of such
Confidential Information by Buyer pursuant to this Article 16
and through no fault of Buyer ; or
(ii) was in the possession of Buyer prior to the
receipt of such Confidential Information by Buyer pursuant to
this Article 16, and was not acquired by Buyer from a third
party under an existing obligation of confidence; or
(iii) is subsequently received by Buyer from a third
party without an obligation of confidentiality; or
(iv) is independently developed by an employee or
employees of Buyer not having direct or indirect access to such
Confidential Information of another party.
<PAGE>
For purposes of this Article 16, specific items of Confidential
Information made available to a Buyer under this Article 16 shall not be deemed
to fall within any of the exceptions as set forth above merely because such
items are embraced by more general information which falls within one or more
exceptions, nor shall a combination of features be deemed to fall within such
exceptions merely because the individual features fall with such exceptions.
(c) Confidential Information, which is required to be
disclosed, (i) by any applicable law, stock exchange rules or by any
applicable judgment, order or decree of any governmental entity having
jurisdiction or (ii) in connection with the preparation of tax returns,
communications with governmental authorities with respect thereto or
proceedings relating to taxes, may be disclosed, provided that
Buyer only discloses such Confidential Information to the least extent
practicable, and Buyer shall provide Seller with prompt and reasonable
notice thereof so that Seller may seek a suitable protective order
or other appropriate remedy and/or waive compliance with the provisions
of this Article 16. In the event that such protective order or other
remedy is not obtained or Seller waives compliance with the provisions
of this Article 16, and Buyer is required to disclose such Confidential
Information, Buyer will furnish only that portion of the Confidential
Information which Buyer is required to disclose and, to the extent
practicable, Buyer will exercise its best efforts to obtain reliable
assurance that confidential treatment shall be accorded to such
Confidential Information so furnished.
(d) Buyer Shall have a right to disclose and Use with
service providers, consultants, independent contractors and government
agencies, all Confidential Information (unless prohibited by a Licensed
Technology Right obligation), received from Seller but only if such
recipient agrees to be bound pursuant to a written obligation of
confidentiality and nonuse comprising restrictions at least as
stringent as provided herein.
16.03 Limitation of Warranties.
-------------------------
ANY ORAL OR WRITTEN REPORT, DATA OR OTHER INFORMATION PROVIDED
TO BUYER HEREUNDER, WHETHER PROVIDED UNDER LICENSE OR OTHERWISE, SHALL BE
PROVIDED ON AN "AS IS" BASIS WITHOUT ANY WARRANTIES, EXPRESS OR IMPLIED
INCLUDING BUT NOT LIMITED TO THE RESULTS OR EFFECTS OBTAINED THROUGH USE OF
INFORMATION, OR THAT IT IS FIT FOR ANY USE INTENDED OR CAN BE USED WITHOUT
INFRINGING THE PATENT OR COPYRIGHT RIGHTS OF A PERSON (unless Seller had
Knowledge of such infringement). WITHOUT ANY LIMITATION ON THE PRECEDING, ANY
IMPLIED WARRANTY OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE IS
EXPRESSLY EXCLUDED FROM THIS ARTICLE 16 WITH RESPECT TO ANY INFORMATION PROVIDED
HEREUNDER. IN NO EVENT WILL ANY PARTY BE LIABLE FOR LOSS OF PROFITS, OR
INDIRECT, CONSEQUENTIAL (EXCEPT FOR BREACH OF CONFIDENTIALITY) OR SPECIAL
DAMAGES RESULTING FROM THE OTHER PARTY'S USE OR DISCLOSURE OF ANY INFORMATION.
Except as set forth in the Related Agreements, the use by Buyer of Intellectual
Property or Confidential Information disclosed hereunder by Seller to Buyer
shall be solely at Buyer's own risk and Seller shall not be liable for any
damage resulting from inaccuracy, incorrectness, unsoundness, and/or
unreliability in the Use thereof, whether or not such liability is cause by the
negligence of Seller.
<PAGE>
16.04 Default.
--------
In the event that any Party hereunder for a period of thirty (30) days
fails materially to perform any of its material obligations or materially
violates any material provisions of this Article 16, a nondefaulting party may
give written notice to the other Party to this Article 16 specifying the
particulars of such failure or violation (hereinafter "Default") and, in the
event the defaulting party shall not remedy or begin to remedy such Default
within thirty (30) days after receipt of such notice, the nondefaulting party
may entirely at its option, in addition to any of the other rights and remedies
permitted under this Agreement, on ten (10) days' written notice to the other
party revoke the grants given. The failure of a Party to insist upon strict
adherence with respect to a Default shall not be construed as a waiver or
deprive the nondefaulting party of the right to insist upon strict adherence to
any provision of this Article 16 or to proceed under this Section 16.04 either
with respect to such alleged Default or similar subsequent Defaults.
16.05 Export Control
--------------
Buyer agrees to comply with any applicable U.S. export control
laws and regulations in regard to any information or data covered by this
Article 16.
ARTICLE 17
RISK OF LOSS
------------
17.01 The risk of damage, destruction, or other loss to or of the
Assets shall remain with Seller from and after the execution of this Agreement
and until the Effective Time, at which time Seller shall place Buyer in
possession of the Assets; and from and after the Effective Time, all risks of
damage, destruction, or other casualty loss to or of the Assets (to the extent
not attributable to any breaches of a representation, warranty, covenant or
agreement of Seller hereunder) shall be borne solely by Buyer.
17.02 In the event that prior to the Closing all or any "material"
portion of the Assets are damaged or destroyed by fire, casualty or other Force
Majeure Event (a "Casualty") or taken by condemnation or eminent domain or by
agreement in lieu thereof with any person or entity authorized to exercise such
rights (a "Taking"), Seller shall immediately notify Buyer thereof. Buyer may
terminate the Agreement upon a "material" Casualty or Taking. If Buyer does not
terminate the Agreement within ten days of notice of such Casualty or Taking,
Seller shall have the right to terminate the Agreement or rebuild, repair or
replace such lost or damaged portion of the Assets by giving Buyer written
notice of such election. The Closing will be delayed until such loss or damage
has been cured to the reasonable satisfaction of Buyer. If the Seller is unable
to cure such loss or damage within three (3) months after the date of such loss
or damage, Buyer may terminate this Agreement. If Buyer so terminates this
Agreement, both Parties shall be relieved of all liabilities and obligations
hereunder. For the purposes of this subsection only, a Casualty shall be deemed
"material" if the estimated cost of repairing the damage caused thereby (without
taking into account any insurance proceeds or third party contributions in
respect of such repair) shall exceed $100 million, and a Taking shall be deemed
a taking of a "material" portion of the Assets if more than 10% of the area of
the Refinery Land on which the process units are located is so taken; and in any
event, a Casualty or Taking shall be deemed "material" if the Operations would
be significantly curtailed for a period exceeding three (3) months as a result
of the rebuilding, repair or replacement thereof.
<PAGE>
17.03 In the event of a Casualty or Taking of less than a "material"
portion of the Assets (as defined in Section 17.02), Buyer's obligation to close
hereunder shall not be affected, but Buyer and Seller shall, before the Closing,
negotiate in good faith a reduction of the amount of the purchase price to
fairly reflect the diminution in the economic value of the Assets, caused by the
non-material Casualty or Taking. In case of a non-material Casualty or Taking,
Seller may, in the alternative, (i) rebuild, repair or replace the Assets
damaged or destroyed by the Casualty or Taking and/or (ii) assign to Buyer all
proceeds of insurance. If the insurance proceeds do not equal the replacement
cost of the damaged Asset, the purchase price will be reduced by such
difference. Any insurance proceeds exceeding the cost of repairs of the damaged
Asset will be an Excluded Asset. Any disputes regarding the amount of any
purchase price reduction pursuant to this Section 17.03 shall be resolved in the
manner provided in Section 15.
17.04 In the event of any reduction in the purchase price in
connection with a Taking, Buyer shall be entitled to collect from any condemnor
the entire award(s) that may be made in any such proceeding, without deduction,
to be paid out as follows: subject to actual receipt of such award(s) by Buyer,
Seller shall be entitled to receive from Buyer all such amounts, up to the
amount of such purchase price reduction, and Buyer shall be entitled to the
balance (if any) of such award(s). Seller hereby expressly assigns to Buyer
all of its right, title and interest in or to every such award, and also agrees
to execute any and all documents that may be required in order to facilitate
collection thereof by Buyer.
ARTICLE 18
COMMISSIONS AND FINDER'S FEES
-----------------------------
Seller represents and warrants to Buyer, and Buyer represents and
warrants to Seller, that it has not engaged any broker, finder, or agent in
connection with the transactions contemplated hereunder and has not incurred any
unpaid liability to any broker, finder, or agent for any brokerage fees,
finder's fees, or commissions with respect to such transactions; and each agrees
to indemnify the other against any claims asserted against the other for any
such fees or commissions by any Person purporting to act or to have acted for or
on behalf of the Indemnifying Party.
<PAGE>
ARTICLE 19
MISCELLANEOUS
-------------
19.01 Termination.
-----------
(a) This Agreement may be terminated at any time prior to
the Closing:
(i) By the mutual written consent of Buyer and
Seller;
(ii) By Buyer, if there has been a violation or
breach, that has a material adverse effect to the Assets or
Operation with a value in excess of $100,000,000, by Seller of
any covenant, representation or warranty contained in this
Agreement which has prevented the satisfaction of any condition
to the obligations of Buyer at the Closing, and such violation
or breach has not been waived by Buyer or, in the case of
a covenant breach, cured by Seller prior to Closing, after
written notice thereof from Buyer; provided however, the Closing
Date shall be extended 120 days to allow Seller to cure;
(iii) By Seller, if there has been a material
violation or breach that has a material adverse effect with a
value in excess of $100,000,000 by Buyer of any covenant,
representation or warranty contained in this Agreement which has
prevented the satisfaction of any condition to the obligations
of Seller at the Closing, and such violation or breach has not
been waived by Seller or, in the case of a covenant breach,
cured by Buyer prior to Closing after written notice thereof
from Seller provided however, the Closing Date shall be extended
120 days to allow Buyer to cure;
(iv) By Buyer or Seller if the transactions contem-
plated hereby have not been consummated by December 31, 2000; or
such later date if extended by the terms of this Agreement;
provided however, that neither Buyer nor Seller will be entitled
to terminate this Agreement pursuant to this Section
19.01(a)(iv) if such Person's breach of this Agreement has
prevented the consummation of the transactions contemplated
hereby; or
<PAGE>
(v) By Buyer or Seller, in accordance with Section
12.01 or Article 17.
(b) In the event that this Agreement is terminated pursuant
to Section 19.01(a), all further obligations of each party hereto under
this Agreement (other than pursuant to Section 12.07 and Articles 15,
18 and 19, which will continue in full force and effect) will terminate
without further liability or obligation of any party to the other
party hereunder; provided, however, that no party will be released from
liability hereunder if this Agreement is terminated and the
transactions abandoned by reason of (i) the failure of such party to
have performed its obligations hereunder or (ii) any misrepresentation
made by such party of any matter set forth herein.
(c) In the event that Buyer fails or refuses to Close and
such failure to Close is not excused under Section 19.01(a), Seller
shall be entitled to keep the Deposit as liquidated damages. The
foregoing shall be to sole and exclusive remedy of Seller.
(d) In the event that Seller fails or refuses to Close and
such failure to Close is not excused under Section 19.01(a), Buyer
shall be entitled to the return of the Deposit and for payment from
Seller of an amount equal to the Deposit as liquidated damages. The
foregoing shall be to sole and exclusive remedy of Buyer.
19.02 Entire Agreement; Amendments.
----------------------------
This Agreement and the Related Agreements, including their Exhibits and
Schedules, and other writings referred to herein or delivered pursuant hereto
which form a part hereof, including, without limitation, the Confidentiality
Agreement between Seller and Buyer dated , 2000, contain the entire
understanding of the Parties with respect to the subject matter hereof. There
are no restrictions, agreements, promises, warranties, covenants, or
undertakings other than those expressly set forth herein or therein. This
Agreement and the Related Agreements supersede any and all prior agreements and
understandings between the Parties with respect to the subject matter hereof.
This Agreement shall not be amended, altered, or modified except by an
instrument in writing duly executed by the Parties hereto.
<PAGE>
19.03 Invalidity.
----------
If any provision of this Agreement is held to be illegal, invalid, or
unenforceable under any present or future laws, such provision shall be fully
severable; this Agreement shall be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part of this Agreement;
and the remaining provisions of this Agreement shall remain in full force and
effect, unaffected by the illegal, invalid or unenforceable provision or by its
severance from this Agreement. In lieu of such illegal, invalid, or
unenforceable provision, there shall be added automatically as a part of this
Agreement a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and enforceable.
19.04 Effect of Waiver or Consent.
---------------------------
No waiver or consent, express or implied, by any Party to or of any
breach or default by any other Party in the performance by such other Party of
its obligations hereunder shall be effective unless in writing and signed by the
Party waiving such breach or default. No waiver or consent shall be deemed or
construed to be a consent or waiver to or of any other or subsequent breach or
default in the performance by such other Party of the same or any other
obligations of such other Party hereunder. Failure on the part of a Party to
exercise its rights or to complain of any act of the other Party or to declare
the other Party in default, irrespective of how long such failure continues,
shall not constitute a waiver by such Party of its rights hereunder until the
applicable statute of limitation period has run.
19.05 Limitation on Benefits of this Agreement.
----------------------------------------
No person or entity other than the Parties hereto (or their respective
successors or assigns as permitted hereunder) is or shall be entitled to bring
any action to enforce any provision of this Agreement against either of the
Parties hereto, and the covenants, undertakings, and agreements set forth in
this Agreement shall be solely for the benefit of, and shall be enforceable only
by, the Parties hereto (or their respective successors and assigns as permitted
hereunder).
<PAGE>
19.06 Notices.
-------
All notices, demands, requests, or other communications which may be or
are required to be given, served, or sent by either Party to the other Party
pursuant to this Agreement shall be in writing and shall be (i) mailed by
first-class, registered or certified mail, return receipt requested, postage
prepaid; (ii) transmitted by hand or courier delivery; or (iii) sent by
telegram, facsimile, or telex, addressed in each case as follows:
(i) If to Buyer:
ULTRAMAR DIAMOND SHAMROCK
Corporation
6000 N Loop 1604
San Antonio, Texas 78249
Attention: Timothy Fretthold
Facsimile:210-592-2143
(ii) If to Seller:
TOSCO Corporation
1700 East Putnam Road
Suite 500
Old Greenwich, Connecticut 06870
Attention: General Counsel
Facsimile:203-637-4877
With a copy (which shall notconstitute notice) to:
Tosco Refining Company
1400 Park Avenue
Linden, New Jersey 07036
Attention: Senior Vice President Refining
Facsimile: 908-523-5900
Each Party may designate by prior notice in writing a new address to
which any notice, demand, request, or communication may thereafter be so given,
served, or sent. Each notice, demand, request, or communication which shall be
mailed, delivered, or transmitted in the manner described above shall be deemed
sufficiently given, served, sent, and received for all purposes at such time as
it is actually delivered to the appropriate above listed or properly changed
address or at such time as delivery is refused upon actual presentation at such
address (with the return receipt, the delivery receipt, the affidavit of
messenger, or the facsimile answerback being deemed prima facie evidence of such
delivery).
<PAGE>
19.07 Binding Effect.
--------------
Subject to the provisions hereof restricting assignment, this Agreement
shall be binding upon and shall inure to the benefit of the Parties hereto and
their respective successors and permitted assigns.
19.08 Additional Actions and Documents.
--------------------------------
Each of the Parties hereby agrees to take or cause to be taken such
further actions to execute, deliver and file or cause to be executed, delivered
and filed such further documents and instruments, and to use all reasonable
efforts to obtain such consents, as may be necessary or as may be reasonably
requested in order to fully effectuate the purposes, terms and conditions of
this Agreement, whether before, at or after the closing of transactions
contemplated by this Agreement, provided that neither Party shall be obligated
to make payments or incur obligations to third Parties or governmental agencies
in connection therewith except to pay such Party's reasonable expenses or to pay
normal fees to governmental agencies.
19.09 Place of Transfer of Title and Possession.
-----------------------------------------
Title to and possession of the Assets as of the Closing shall pass to
Buyer in the State of California. Title to and possession of any Seller
inventory in transit as of the Closing shall pass to Buyer at the place where it
is then situated.
19.10 Execution in Counterparts.
-------------------------
This Agreement may be executed simultaneously in several counterparts,
each of which shall be deemed to be an original and all of which together shall
constitute one and the same instrument.
19.11 Choice of Law.
-------------
This Agreement shall be governed by and construed in accordance with
the laws of New York, without regard to the conflict of laws principles of New
York, and, with respect to environmental matters, applicable United States
federal law and California state law.
<PAGE>
19.12 Publicity.
---------
At all times prior to the Effective Time, Seller and Buyer shall, and
shall use their reasonable efforts to cause their Affiliates to, cooperate in
the development and distribution of all news releases and other public
disclosures relating to the proposed transactions described in this Agreement,
and to ensure that no such releases or disclosures are made without prior notice
to, and the consent of, the other Party; provided, however, that at all times
prior to the Effective Time and after the Effective Time no news release or
other disclosure whatsoever may disclose the terms of this Agreement unless both
Parties agree to the form and content of such disclosure, each being under no
obligation to agree and having the right to withhold agreement for any reason;
provided, however, that either Party may make all disclosures which it
determines are required under applicable Legal Requirements, including, but not
limited to, regulations of the Securities and Exchange Commission with such
Party giving the other Party as much advance notice thereof as is feasible.
19.13 Confidentiality.
---------------
(a) Each of Seller and Buyer (and their respective
Affiliates) acknowledges that the information and material, in whatever
form, including but not limited to this Agreement and the Related
Agreements (collectively, the "Confidential Information") disclosed
or made available to it by, and relating to, the other (and its
Affiliates) prior to the Effective Time is confidential. Each of Seller
and Buyer (and their respective Affiliates) further agrees that it
shall use reasonable efforts not to make disclosure of the Confidential
Information to any Person, other than its members or owners, officers,
employees, advisers and representatives to whom such disclosure is
necessary or convenient for the completion of the transactions
contemplated by this Agreement, or any of the Related Agreements,
and except in an arbitration proceeding as described in Article 15
or as may be required by a court of competent jurisdiction. Each of
Seller and Buyer (and their respective Affiliates) shall appropriately
notify each officer, employee, adviser and representative to whom any
such disclosure is made, that such disclosure is made in confidence and
shall be kept in confidence.
(b) Each of Seller and Buyer (and their respective
Affiliates) agrees to use diligent efforts in accordance with customary
and reasonable commercial practice, and at least with the same degree
of skill and care that it would manifest in protection of its own
confidential information, to protect the Confidential Information.
(c) Each of the Parties (and their respective Affiliates)
agrees to notify the other promptly, in the event that it becomes aware
of the unauthorized possession or use of the Confidential Information
(or any part thereof) by any third Person, including any of its
officers, employees, advisers or representatives. Each of Seller and
Buyer (and their respective Affiliates) agrees to cooperate with the
other in connection with the other's efforts to terminate or prevent
such unauthorized possession or use of its Confidential Information.
Each of Seller and Buyer (and their respective Affiliates) shall pay
the other's reasonable out-of-pocket expenses in so cooperating
in protecting its Confidential Information, unless the unauthorized
possession or use of the Confidential Information resulted from the
willful misconduct or gross negligence of the Party otherwise entitled
to reimbursement of its expenses.
<PAGE>
(d) Each of Seller and Buyer (and their respective
Affiliates) acknowledges that the other will suffer injury for which
the other will not have an adequate remedy at law, in the event of a
breach of the provisions of this Section 19.13, and that the other
shall be entitled to injunctive relief as is reasonably necessary to
prevent or curtail such breach, whether actual or threatened; provided,
that, in no event (including, but not limited to, a willful breach of
this Agreement by Seller or Buyer, respectively) shall Seller or Buyer
(or their respective Affiliates) be prevented from exercising all of
the rights granted to it hereunder.
(e) Notwithstanding any other provision of this Agreement,
the obligations of each of Seller and Buyer (and their respective
Affiliates) to maintain the confidentiality of the Confidential
Information (each in such capacity a "Disclosing Party") shall not
apply to any portion of the Confidential Information that:
(i) is or becomes generally available to the public
through no fault of the Disclosing Party, including information
in the public domain;
(ii) the Disclosing Party receives from a third party
without any requirement to keep such information secret;
(iii) the Disclosing Party can prove was in its
possession without any obligation of secrecy at the time of its
disclosure; or
(iv) the Disclosing Party develops independently of
and without reference to or use of the Confidential Information.
(f) Seller acknowledges and agrees that, as of the Effective
Time, nothing herein shall restrict the use by Buyer and its Affiliates
of the Refinery Records, the same becoming property of the Buyer as a
consequence of the transactions contemplated herein. Except for
Refinery Records, Buyer shall not use the Confidential Information for
any other purpose other than the evaluation of the transactions
contemplated hereunder.
<PAGE>
(g) In the event of any inconsistency between the provisions
of this Section 19.13 and the confidentiality provisions of any
Related Agreement, the provisions of the Related Agreement shall
control with respect to any matters addressed by such Related
Agreement.
(h) The provisions of this Section 19.13 shall remain in
force for a period of five (5) years from the Effective Time.
(i) At the request of Seller, Buyer shall within twenty (20)
days after receiving such request return to Seller all written
Confidential Information which is not a Refinery Record, including all
photocopies of the same.
19.14 Costs and Expenses.
------------------
Except as expressly provided herein, or in any Related Agreement, each
of the Parties to this Agreement, and the Related Agreements, shall bear its own
expenses incurred in connection with the negotiation, preparation, execution and
Closing of this Agreement, and the Related Agreements, and the transactions
provided for hereby and thereby.
19.15 Assignment.
----------
Seller may upon notice to Buyer transfer or assign any of its rights
but not its obligations under this Agreement without prior consent of Buyer,
provided that, Seller may, upon notice to Buyer, assign its rights and
obligations under this Agreement to an Affiliate of Seller. Buyer may not
transfer or assign any of its rights or obligations under this Agreement without
the prior written consent of Seller, except that Buyer will have the right to
assign to any Affiliate all rights and obligations of Buyer under this
Agreement. Even if consent is obtained, no Party may make an assignment or
delegation, above, unless such Party delivers to the other Party hereto such
written assumptions, affirmations and/or legal opinions as such other Party may
reasonably request to preserve their rights and remedies hereunder. No such
assignment or delegation will relieve Buyer or Seller from its obligations under
this Agreement. This Agreement shall inure to the benefit of and will be binding
upon the Parties hereto and their respective legal representatives, successors
and permitted assigns.
<PAGE>
19.16 Purchase Price Allocations.
--------------------------
Schedule 19.16 is an allocation of the Purchase Price (the
"Allocation") among the Parties pursuant to the provisions of Section 1060 of
the Code and the Treasury Regulations promulgated thereunder. Any subsequent
adjustments to Purchase Price shall be reflected in Schedule 19.16, as revised
by Buyer, in a manner consistent with the Allocation and Section 1060 of the
Code and the Treasury Regulations promulgated thereunder. The parties recognize
that the Purchase Price does not include the Buyer's acquisition expenses and
that Buyer will allocate such expenses appropriately. Buyer and Seller shall not
take any position on their respective income tax returns that is inconsistent
with the allocation of the Purchase Price as set forth in Schedule 19.16. Buyer
and Seller shall duly prepare and timely file Internal Revenue Service Form 8594
and Form 8824 and any comparable state, local or foreign forms (including any
successor forms) (collectively the "1060 Forms") and any required attachments
thereto required under Section 1060 of the Code, the Treasury Regulations
promulgated thereunder or any provisions of state, local, or foreign law in
accordance with the Allocation among the Assets as set forth in such Schedule
19.16. The Parties shall cooperate in the preparation of any 1060 Forms and
shall file such 1060 Forms in the manner required by applicable law.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers or representatives of Buyer and Seller as of the
day and year first above written.
BUYER: ULTRAMAR DIAMOND SHAMROCK CORPORATION
By: /s/ Jean Gaulin
Name: JEAN GAULIN
Title: Cheif Executive Officer
SELLER: TOSCO CORPORATION
By: /s/ Dwight L. Wiggins
Name: DWIGHT L. WIGGINS
Title: Executive Vice President
