<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported):
January 15, 1998
SHELL OIL COMPANY
(Exact name of Registrant as specified in its Charter)
Delaware 1-2475 13-1299890
(State of Incorporation) (Commission File Number) (IRS Employer I.D. Number)
One Shell Plaza, Houston, Texas 77002 (Address of
principal executive offices, including ZIP code)
(713) 241-6161
(Registrant's telephone number, including area code)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On January 15, 1998, Shell Oil Company (the "Company" and together with
its consolidated subsidiaries "Shell Oil") and certain of its subsidiaries and
Texaco Inc. reached agreement on the formation and operational start up of
Equilon Enterprises LLC, a Delaware limited liability company. Equilon is a
joint venture which combines major elements of both companies' western and
midwestern United States refining and marketing businesses and their nationwide
trading, transportation and lubricants businesses. Shell Oil owns 56 percent and
Texaco owns 44 percent of Equilon. The assets contributed by each party and
their affiliates and the covenants and agreements made and entered into by each
party and their affiliates in establishing the Equilon venture constitute full
consideration given and received by each party, respectively. The relative
values of such consideration, as determined in negotiations between the
companies, are reflected in such ownership percentages.
Equilon will continue to use these assets in the refining, marketing,
trading, transportation and lubricants businesses and will market petroleum and
other products directly and through independent wholesalers and retailers.
Equilon will have exclusive rights to use the Shell and Texaco brands on refined
oil product sales in those areas of the United States where Equilon is
authorized to conduct its respective businesses.
Under the terms of a consent agreement accepted by the Federal Trade
Commission and similar agreements with the attorneys general of California,
Hawaii, Oregon and Washington, certain assets will be divested, including Shell
Oil's Anacortes, Washington, refinery, certain Texaco and Shell Oil marketing
assets in southern California and Hawaii, and certain pipeline interests.
Texaco, Shell Oil and Saudi Refining, Inc. (a corporate affiliate of
Saudi Aramco) are finalizing agreements for a separate joint venture involving
their eastern United States and Gulf Coast refining and marketing businesses.
The parties are optimistic that this second transaction will be concluded early
in 1998. This venture is planned to be owned 35 percent by Shell Oil, 32.5
percent by Texaco and 32.5 percent by Saudi Refining, Inc. (such ownership to be
subject to adjustment in the future based on the performance of the assets.)
The exploration, production and chemical businesses of Shell Oil,
Texaco and Saudi Aramco companies and the assets of these companies outside the
United States are not included in the joint ventures.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) Pro Forma Financial Information
The following unaudited Pro Forma Condensed Consolidated Balance Sheet
of Shell Oil as of the interim period ended September 30, 1997, unaudited Pro
Forma Condensed Consolidated Statement of Income for the year ended December 31,
1996, and subsequent interim period ended September 30, 1997 (the "Pro Forma
Consolidated Financial Statements") are presented for the transaction as
described in Item 2 of this Current Report on Form 8-K.
The Pro Forma Consolidated Financial Statements have been prepared by
Shell Oil based on available information and upon certain assumptions which
management believes are reasonable. The Pro Forma Consolidated Financial
Statements are shown for illustrative purposes
2
<PAGE> 3
only and are not necessarily indicative of the future financial position or
future results of operations of Shell Oil, or of the financial position or
results of operations of Shell Oil that would have actually occurred had the
transaction been in effect as of the date or for the periods presented. The Pro
Forma Consolidated Financial Statements are based upon the historical audited
and unaudited consolidated financial statements of Shell Oil. All information
contained herein should be read in conjunction with the Consolidated Financial
Statements and the Notes thereto and the "Management's Discussion and Analysis
of Financial Condition and Results of Operations" included in Shell Oil's Annual
Report on Form 10-K for the year ended December 31, 1996, and the unaudited
Shell Oil Quarterly Report on Form 10-Q for the nine months ended September 30,
1997.
The equity earnings shown for Equilon are not necessarily indicative of
the future financial results or the results of operations that would have
occurred had the transaction been in effect for the periods presented.
Shell Oil Company
Unaudited Pro Forma Condensed Consolidated Balance Sheet at September 30, 1997
(millions of dollars)
<TABLE>
<CAPTION>
Pro Forma Adjustments
------------------------------
Historical Disposition Acquisition Pro Forma
---------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 520 $ 520
Receivables and prepayments, less
allowance for doubtful accounts 3,040 (1,012)(a) 2,028
Owing by related parties 302 302
Inventories of oils and chemicals 884 (312)(a) 572
Inventories of materials and supplies 212 (50)(a) 162
-------- -------- --------
Total Current Assets 4,958 (1,374) 3,584
Investments 6,531 (244)(a) 3,901 (b) 10,188
Long-Term Receivables and Deferred
Charges 1,106 (91)(a) 862 (c) 1,877
Property, Plant and Equipment at cost,
less accumulated depreciation, depletion
and amortization 16,489 (4,412)(a) -- 12,077
-------- -------- ------- --------
Total $ 29,084 $ (6,121) $ 4,763 $ 27,726
======== ======== ======= ========
LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities
Accounts payable - trade $ 1,856 (813)(a) $ 1,043
Other payables and accruals 1,328 (235)(a) 1,093
Owing to related parties 471 471
Short-term debt 3,291 -- 3,291
-------- -------- --------
Total Current Liabilities $ 6,946 $ (1,048) $ 5,898
Long-Term Debt 831 (244)(a) 587
Deferred Income Taxes 3,457 3,457
Long-Term Liabilities 2,252 (66)(a) 2,186
Minority Interest 898 898
Shareholder's Equity
Common stock - 1,000 shares of $10 per
share par value authorized and outstanding --
Capital in excess of par value 2,206 2,206
Earnings reinvested 12,494 12,494
-------- --------
Total Shareholder's Equity 14,700 14,700
-------- -------- ------- --------
Total $ 29,084 $ (1,358) $ 27,726
======== ======== ======= ========
</TABLE>
3
<PAGE> 4
Shell Oil Company
Unaudited Pro Forma Condensed Consolidated Statement of Income
for the year ended December 31, 1996
(millions of dollars)
<TABLE>
<CAPTION>
Pro Forma Adjustments
------------------------------
Historical Disposition Acquisition Pro Forma
---------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
REVENUES
Sales and other operating revenue $28,823 $(11,781)(a) $17,042
Equity earnings, interest and other income 328 (27)(a) $312 (c) 613
-- -- 52 (d) 52
------- -------- ---- -------
Total 29,151 (11,808) 364 17,707
------- -------- ---- -------
COSTS AND EXPENSES
Purchased raw materials and products 18,355 (10,165)(a) 8,190
Operating expenses 3,773 (627)(a) 3,146
Selling, general and administrative expenses 1,012 (381)(a) 631
Exploration, including exploratory dry holes 319 319
Research expenses 136 (16)(a) 120
Depreciation, depletion, amortization and
retirements 2,066 (266)(a) 1,800
Interest and discount amortization 203 (15)(a) 188
Operating taxes 452 -- -- 452
------- -------- ---- -------
Total 26,316 (11,470) 14,846
------- -------- ---- -------
INCOME BEFORE INCOME TAXES AND
MINORITY INTEREST $ 2,835 ($338) $364 $ 2,861
Federal and other income taxes 763 (125)(b) 135 (e) 773
Minority interest in income of subsidiaries 51 -- -- 51
------- -------- ---- -------
NET INCOME $ 2,021 $ (213) $229 $ 2,037
======= ========= ==== =======
</TABLE>
Shell Oil Company
Unaudited Pro Forma Condensed Consolidated Statement of Income
for the nine months ended September 30, 1997
(millions of dollars)
<TABLE>
<CAPTION>
Pro Forma Adjustments
------------------------------
Historical Disposition Acquisition Pro Forma
---------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
REVENUES
Sales and other operating revenue $21,342 $(8,139)(a) $13,203
Equity earnings, interest and other income $ 520 $ (27)(a) $270 (c) 763
-- -- 39 (d) 39
------- ------- ---- -------
Total 21,862 (8,166) 309 14,005
------- ------- ---- -------
COSTS AND EXPENSES
Purchased raw materials and products 13,978 (6,816)(a) 7,162
Operating expenses 2,673 (651)(a) 2,022
Selling, general and administrative expenses 750 (132)(a) 618
Exploration, including exploratory dry holes 224 224
Research expenses 121 (11)(a) 110
Depreciation, depletion, amortization and
retirements 1,418 (226)(a) 1,192
Interest and discount amortization 149 (11)(a) 138
Operating taxes 278 -- -- 278
------- ------- ---- -------
Total 19,591 (7,847) 11,744
------- ------- ---- -------
INCOME BEFORE INCOME TAXES AND
MINORITY INTEREST $ 2,271 $ (319) 309 $ 2,261
Federal and other income taxes 696 (118)(b) 114 (e) 692
Minority interest in income of subsidiaries 48 -- -- 48
------- ------- ---- -------
NET INCOME $ 1,527 $ (201) $195 $ 1,521
======= ======= ==== =======
</TABLE>
4
<PAGE> 5
SHELL OIL COMPANY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1996 AND THE
NINE MONTHS ENDED SEPTEMBER 30, 1997
Basis of Presentation
The Unaudited Pro Forma Condensed Consolidated Balance Sheet is
presented assuming the combination occurred on September 30, 1997. The Unaudited
Pro Forma Condensed Consolidated Statement of Income for the year ended December
31, 1996 and the nine months ended September 30, 1997 are presented as if the
combination occurred at the beginning of each period presented.
Shell Oil owns 56 percent of Equilon but will not exercise control and
therefore will account for its investment in Equilon on the equity basis of
accounting. The pro forma balance sheet reflects the reclassification of the
values of assets contributed to Equilon from the consolidated basis of
accounting to the equity basis of accounting. Similarly, the pro forma income
statements reflect the reclassification of revenues and expenses associated with
the assets contributed to Equilon from the consolidated basis of accounting to
the equity basis of accounting.
Under the terms of a consent agreement accepted by the Federal Trade
Commission and similar agreements with the attorneys general of California,
Hawaii, Oregon and Washington, certain assets will be divested, including Shell
Oil's Anacortes, Washington refinery. Pursuant to the agreement, the Anacortes
refinery must be kept separate from the results of operations of Shell and
Equilon. The parties to the joint venture have agreed that Equilon is entitled
to the net proceeds and any gain or loss which may result from the disposition
of the Anacortes refinery. The parties have also agreed to reimburse Shell Oil
for any loss which may result from the disposition of the refinery. The
Unaudited Pro Forma Condensed Consolidated Balance Sheet includes as a component
of Shell Oil's investment in Equilon, the net book value of the Anacortes
refining assets. The results of operations of the Anacortes refinery are
excluded from the pre-tax income of Equilon reflected in the pro forma condensed
statement of income.
Pro Forma Adjustments - Balance Sheet:
(a) To remove the values of assets and liabilities being contributed
to Equilon from the consolidated balance sheet.
(b) To record Shell Oil's equity investment in Equilon at the net book
value of net assets contributed:
<TABLE>
<S> <C>
Assets $ 6,121
Liabilities (1,358)
--------
Net before debt assumption $ 4,763
Debt assumption (862)
--------
Net Investment $ 3,901
========
</TABLE>
(c) To record note reflecting moneys owed to Shell Oil by Equilon for
debt retained by Shell Oil related to Equilon facilities.
5
<PAGE> 6
Pro Forma Adjustments - Income Statement:
(a) To remove from the fully consolidated income statement the
revenues and expenses associated with the assets contributed to
Equilon.
(b) To remove from the fully consolidated statement of income the
federal and state income tax expense at the statutory rate of 37%.
(c) To record on the equity basis of accounting Shell Oil's 56% share
of the pro forma income before income taxes of Equilon.
(d) To record interest income on debt assumed by Equilon.
(e) To record federal and state income tax expenses at the statutory
rate of 37% for Shell Oil's equity share of Equilon income.
(c) Exhibits
2.1 Asset Transfer and Liability Assumption Agreement as of January 15,
1998 between the companies.
6
<PAGE> 7
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SHELL OIL COMPANY
By: /s/ N. J. CARUSO
-------------------------
N. J. Caruso, Controller
(Principal Accounting and
Duly Authorized Officer)
Date: January 30, 1998
<PAGE> 8
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
2.1 Asset Transfer and Liability Assumption Agreement dated as of
January 15, 1998 between the companies.
</TABLE>
<PAGE> 1
EXHIBIT 2.1
ASSET TRANSFER AGREEMENT
ASSET TRANSFER
AND
LIABILITY ASSUMPTION AGREEMENT
AMONG
TEXACO INC.,
TEXACO REFINING AND MARKETING INC.,
TRMI HOLDINGS INC.,
TEXACO PIPELINE INC.,
TEXACO TRADING AND TRANSPORTATION INC.,
TEXACO CONVENT REFINING INC.,
TEXACO ANACORTES COGENERATION COMPANY,
SHELL OIL COMPANY,
SOPC HOLDINGS WEST LLC
AND
EQUILON ENTERPRISES LLC
dated as of
January 15, 1998
<PAGE> 2
ASSET TRANSFER AGREEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE 1
DEFINITIONS AND USAGE
SECTION 1.01. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2
CONTRIBUTIONS TO THE COMPANY
SECTION 2.01. Contribution of Certain Assets . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.02. Transfer Subject to Permitted Exceptions and Agreement Terms . . . . . . . . 6
SECTION 2.03. Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.04. Assignment of Contracts and Rights; Equitable Ownership . . . . . . . . . . 6
SECTION 2.05. Contribution of Pipeline Assets . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.06. Treatment of Transactions . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.07. Instruments of Transfer . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 3
ASSUMPTION OF LIABILITIES
SECTION 3.01. Assumed Liabilities and Obligations; Exclusions . . . . . . . . . . . . . 13
ARTICLE 4
SEPARATELY HELD ASSETS
SECTION 4.01. Separately Held Assets . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 5
CERTAIN POST-CLOSING MATTERS
SECTION 5.01. Post-closing Recordings . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.02. Access to and Retention of Records . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
<PAGE> 3
ASSET TRANSFER AGREEMENT
<TABLE>
<S> <C> <C>
SECTION 5.03. Availability of Personnel . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 5.04. Mail; Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 5.05. Existing Insurance Coverage . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
SECTION 6.01. Representations and Warranties of Shell Newco . . . . . . . . . . . . . . 19
SECTION 6.02. Representations and Warranties Regarding the Texaco
Principal Member Group . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE 7
MISCELLANEOUS
SECTION 7.01. Further Assurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 7.02. Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 7.03. Exclusivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
</TABLE>
SCHEDULES
Schedule A Intentionally Omitted
Schedule B Intentionally Omitted
Schedule C Shell Shared Assets
Schedule D Shell Common Contracts
Schedule E Texaco Common Contracts
Schedule 2.01A Shell Asset List
Schedule 2.01B Texaco Asset List
Schedule 2.03A Shell Excluded Assets
Schedule 2.03B Texaco Excluded Assets
Schedule 3.01A Shell Assumed Liabilities
Schedule 3.01B Texaco Assumed Liabilities
<PAGE> 4
ASSET TRANSFER AGREEMENT
ASSET TRANSFER AND LIABILITY ASSUMPTION AGREEMENT (the "ASSET TRANSFER
AGREEMENT"), dated as of January 15, 1998, among Texaco Inc., a Delaware
corporation ("TEXACO"), Texaco Refining and Marketing Inc., a Delaware
corporation ("TRMI"), TRMI Holdings Inc., a Delaware corporation ("TRMI
HOLDINGS"), Texaco Pipeline Inc., a Delaware corporation ("TEXACO PIPELINE"),
Texaco Trading and Transportation Inc., a Delaware corporation ("TEXACO
TRADING"), Texaco Convent Refining Inc., a Delaware corporation ("TEXACO
CONVENT"), Texaco Anacortes Cogeneration Company, a Delaware corporation
("TEXACO ANACORTES"), Shell Oil Company, a Delaware corporation ("SHELL"), SOPC
Holdings West LLC, a Delaware limited liability company ("SHELL NEWCO") and
Equilon Enterprises LLC, a Delaware limited liability company (the "COMPANY").
R E C I T A L S :
WHEREAS, Texaco and Shell have entered into a Master Agreement, dated
as of January 15, 1998, whereby they have agreed, inter alia, to enter into,
and to cause the Company, TRMI Holdings, TRMI, Texaco Pipeline, Texaco Trading,
Texaco Convent, Texaco Anacortes and Shell Newco to enter into this Asset
Transfer Agreement and certain other Equilon Joint Venture Documents for the
purpose of organizing and operating the Company.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, and for other good and valuable
consideration, the receipt and adequacy of which are acknowledged by each of
the parties hereto, the parties hereby agree as follows:
ARTICLE 1
DEFINITIONS AND USAGE
SECTION 1.1. Defined Terms. Unless the context shall otherwise
require, terms used and not defined herein shall have the meanings assigned
thereto in Schedule A to the Master Agreement and all rules as to usage set
forth therein shall apply hereto. Schedule B to the Master Agreement contains
provisions regarding the Procedural Conventions and Dispute Resolution which
shall govern this Asset Transfer Agreement. Such Schedules A and B are hereby
incorporated herein by reference. In addition, the following capitalized terms
shall have the respective meanings set forth below:
"AMBERJACK" means Amberjack Pipeline Company, a Texas general
partnership.
<PAGE> 5
ASSET TRANSFER AGREEMENT
"CALIFORNIA PIPECO" means California Pipeco LLC, a Delaware limited
liability company.
"CHASE" means Chase Transportation Company, a joint venture between
Texaco Pipeline and Chase Pipe Line Company, a Kansas corporation.
"COLONIAL" means Colonial Pipeline Company, a Delaware corporation.
"EXPLORER" means Explorer Pipeline Company, a Delaware corporation.
"FERC" means the Federal Energy Regulatory Commission.
"GAVIOTA" means Gaviota Terminal Company, a California general
partnership.
"INLAND" means Inland Corporation, an Ohio corporation.
"JOLLIET" means Jolliet Pipe Line Company, a Delaware general
partnership.
"LOCAP" means LOCAP Inc., a Delaware corporation.
"LOOP" means LOOP L.L.C., a Delaware limited liability company.
"MARS" means Mars Oil Pipeline Company, a Texas general partnership.
"ODYSSEY" means Odyssey Pipeline L.L.C., a Delaware limited liability
company.
"OPERATING EXPENSES" means all Indebtedness, liabilities and operating
expenses incurred by or arising from the Separately Held Assets on or after the
Effective Date.
"PEARSALL" means Pearsall Pipeline Company, a Texas general
partnership.
"PLANTATION" means Plantation Pipe Line Company, a Delaware and a
Virginia corporation.
"POSEIDON" means Poseidon Oil Pipeline Company, L.L.C., a Delaware
limited liability company.
"RAM/POWELL" means the 38% ownership interest in the 12-inch crude oil
pipeline from Viosca Knoll 956 to Main Pass 289C.
"SEASHELL" means Seashell Pipeline Company, a Delaware corporation.
"SHELL CALIFORNIA" means Shell California Pipeline Company, a
California corporation.
2
<PAGE> 6
ASSET TRANSFER AGREEMENT
"SHELL JOINT INTEREST STOCK COMPANIES" means, collectively, (i) Butte
Pipe Line Company, a Delaware corporation, (ii) Explorer, (iii) West Shore and
(iv) Wolverine Pipe Line Company, a Delaware corporation.
"SHELL PIPE" means Shell Pipe Line Corporation, a Maryland
corporation.
"SHELL PIPELINE ASSETS" means, collectively, the Shell Unregulated
Pipeline Assets and the Shell Regulated Pipeline Assets.
"SHELL PIPE LLC" means Shell Pipe LLC, a Delaware limited liability
company.
"SHELL PLANTATION INTEREST" means all of the interest of Shell and its
Affiliates in Plantation.
"SHELL REGULATED PIPELINE ASSETS" means, collectively, (i) the equity
interest of Shell and its Affiliates in each of the Shell Joint Interest Stock
Companies, Plantation, LOCAP, Shell California and Seashell, (ii) the ownership
interest of Shell and its Affiliates in each of MARS, Amberjack and Ship Shoal,
(iii) the prospective ownership interest of Shell in URSA, (iv) the ownership
interest of Shell and its Affiliates in each of the undivided interest
regulated pipelines that are included in Shell Contributed Assets, and (v) the
right, title and interest of Shell and its Affiliates in each of the
wholly-owned regulated pipelines that are included in Shell Contributed Assets
(including all related equipment, permits and rights of way).
"SHELL UNREGULATED PIPELINE ASSETS" means, collectively, (i) the
equity interest of Shell and its Affiliates in Inland, (ii) the ownership
interest of Shell and its Affiliates in each of Odyssey, LOOP and Ram/Powell,
and (iii) the right, title and interest of Shell and its Affiliates in each of
the wholly-owned unregulated pipelines that are included in Shell Contributed
Assets (including all related equipment, permits and rights of way).
"SHIP SHOAL" means Ship Shoal Pipeline Company, a Texas general
partnership.
"SPL HOLDINGS" means SPL Holdings Inc., a Delaware corporation.
"TEXACO CALIFORNIA" means Texaco California Pipe Line Inc., a
California corporation.
"TEXACO CALIFORNIA PIPECO" means Texaco California Pipeco LLC, a
Delaware limited liability company.
"TEXACO CO(2)" means Texaco CO(2) Pipeline Inc., a Delaware
corporation.
3
<PAGE> 7
ASSET TRANSFER AGREEMENT
"TEXACO COLONIAL INTEREST" means all of the interest of Texaco and its
Affiliates in Colonial.
"TEXACO JOINT INTEREST STOCK COMPANIES" means, collectively, (i)
Badger Pipe Line Company, a Delaware corporation, (ii) Butte Pipe Line Company,
a Delaware corporation, (iii) Explorer, (iv) Kaw Pipe Line Company, a Delaware
corporation, (v) LOCAP, (vi) Olympic Pipe Line Company, a Delaware corporation,
(vii) Osage Pipe Line Company, a Delaware corporation, (viii) Paloma Pipe Line
Company, (ix) Texas-New Mexico Pipe Line Company, a Delaware corporation, (x)
West Shore and (xi) Wolverine.
"TEXACO PIPELINE ASSETS" means, collectively, the Texaco Unregulated
Pipeline Assets and the Texaco Regulated Pipeline Assets.
"TEXACO REGULATED PIPELINE ASSETS" means, collectively, (i) the equity
interest of Texaco and its Affiliates in each of the Texaco Joint Interest
Stock Companies, Colonial and Texaco California, (ii) the ownership interest of
Texaco and its Affiliates in each of Chase, Gaviota, Jolliet and Pearsall,
(iii) the ownership interest of Texaco and its Affiliates in each of the
undivided interest regulated pipelines that are included in Texaco Contributed
Assets, and (iv) the right, title and interest of Texaco and its Affiliates in
each of the wholly-owned regulated pipelines that are included in Texaco
Contributed Assets (including all related equipment, permits and rights of
way).
"TEXACO TERMINALS" means Texaco Terminals LLC, a Delaware limited
liability company.
"TEXACO UNREGULATED PIPELINE ASSETS" means, collectively, (i) the
equity interest of Texaco and its Affiliates in Texaco CO(2), (ii) the
ownership interest of Texaco and its Affiliates in each of LOOP, Odyssey,
Poseidon and Texaco Terminals, and (iii) the right, title and interest of
Texaco and its Affiliates in each of the wholly-owned unregulated pipelines
that are included in Texaco Contributed Assets (including all related
equipment, permits and rights of way).
"URSA" means the appropriate ownership share (to be determined) in the
proposed 45 miles of 18-inch crude oil pipeline from Mississippi Canyon 810 to
West Delta 143.
"WEST SHORE" means West Shore Pipe Line Company, a Delaware
corporation.
"WOLVERINE" means Wolverine Pipe Line Company, a Delaware corporation.
4
<PAGE> 8
ASSET TRANSFER AGREEMENT
ARTICLE 2
CONTRIBUTIONS TO THE COMPANY
SECTION 2.1. Contribution of Certain Assets. (a) On the Closing
Date, effective as of the Effective Time, Texaco, TRMI, TRMI Holdings, Texaco
Pipeline, Texaco Trading, Texaco Convent and Texaco Anacortes shall each
transfer or cause to be transferred directly to the Company all of its and its
Affiliates' right, title and interest in the Texaco Contributed Assets (other
than the Texaco Separately Held Assets and the Texaco Pipeline Assets).
(b) On the Closing Date, effective as of the Effective Time, Shell
or Shell Newco shall transfer or cause to be transferred directly to the
Company all of its and its Affiliates' right, title and interest in the Shell
Contributed Assets (other than the Shell Separately Held Assets and the Shell
Pipeline Assets).
SECTION 2.2. Transfer Subject to Permitted Exceptions and Agreement
Terms. The Contributed Assets shall be transferred to the Company subject to
Permitted Exceptions and in accordance with, and subject to, all provisions of
the Master Agreement and this Asset Transfer Agreement whether or not any of
the Transfer Instruments contains a specific exception for or reference to
Permitted Exceptions, the Master Agreement or this Asset Transfer Agreement.
SECTION 2.3. Excluded Assets. No party to this Asset Transfer
Agreement nor any of its Affiliates shall transfer any right, title or interest
with respect to the Excluded Assets.
SECTION 2.4. Assignment of Contracts and Rights; Equitable Ownership.
(a) Without limitation to any representation, warranty or indemnification
obligation set forth in the Master Agreement, this Asset Transfer Agreement
shall not constitute an agreement to assign or assume any Contributed Contract
or any claim, right, benefit, or liability thereunder, if such assignment,
without the approval or consent of a Third Party thereto, would be ineffective
or would constitute a breach or other contravention thereof or give rise to any
right of
5
<PAGE> 9
ASSET TRANSFER AGREEMENT
termination thereof and such approval or consent is not obtained. The party
required to contribute such Contributed Contract shall use its reasonable
efforts (which shall not require any payment of money to any Third Party by
such party or any of its Affiliates) to obtain the approval or consent of such
Third Party for the assignment to or assumption by the Company of any such
Contributed Contract, claim, right, benefit or liability arising thereunder.
If as of the Effective Time such assignment or assumption will be ineffective
or will give rise to any right of termination thereof or relates to a Common
Contract, the parties will cooperate in arranging a mutually agreeable
alternative to enable the Company to obtain the benefits and assume the
obligations under such Contributed Contract as of the Effective Time or as soon
as practicable thereafter (including through a sub-contracting, sub-licensing,
sub-participation or sub-leasing arrangement, or an arrangement under which the
Person contributing such Contributed Contract would enforce such Contract for
the benefit of the Company, with the Company, to the extent permissible,
assuming such Person's executory obligations and any and all rights of such
Person against the other party thereto). If the approval of the other party to
such Contributed Contract is obtained, such approval will, as between the
Person contributing such Contributed Contract and the Company, constitute a
confirmation (automatically and without further action of the parties) that
such Contributed Contract is assigned to the Company as of the Effective Time,
and (automatically and without further action of the parties) that the
liabilities with respect to such Contributed Contract are assumed as of the
Effective Time.
(b) The parties hereto agree that if any Contributed Assets (other
than any Separately Held Asset) or any claim, right, benefit or liability
thereunder are not transferred as provided hereunder to the Company at the
Effective Time as a result of any restriction under any Applicable Law or
Contract that prohibits such transfer or makes such transfer unduly burdensome,
the party required to contribute such Contributed Assets will use its
reasonable efforts (which shall not require any payment of money to any Third
Party by such party or any of its Affiliates) to obtain such Contractual
Consents or Governmental Consents as might be required to consummate the
contributions in respect of such assets as soon as practicable after the
Effective Time. During the period between the Effective Time and the
consummation of such contribution, such party shall operate all such assets
pursuant to instructions from the Company and all benefits of, and risks
arising out of or related to, the ownership and operation of such assets shall
be for the account of the Company. The parties hereto agree that, at or as
promptly as practicable after the Effective Time, they will enter (and will
cause the Company and each applicable Affiliate and Specified Subsidiary to
enter) into such agreements as might be reasonably required to carry out the
intent of the immediately preceding sentence, including agreements (i)
specifying, to the extent feasible, such assets, (ii) setting up separate
accounting systems for such assets, (iii) providing for undertaking by the
Company of any indemnity obligations of the contributing party in respect of
such assets (other than such obligations set forth in the Equilon Joint Venture
Documents), (iv)
6
<PAGE> 10
ASSET TRANSFER AGREEMENT
providing that until the legal ownership is transferred to the Company, each
party will treat such assets in every respect as being equitably owned by the
Company as of the Effective Time and (v) providing such further specific
assurances as the Company or another party may reasonably request.
SECTION 2.5. Contribution of Pipeline Assets. (a) At or prior to
the Closing Date:
(i) Formation of Pipeco. The Company shall form and
establish Pipeco LLC as a single-member limited liability company
under the Delaware Act.
(ii) Formation of California Pipeco. Shell shall cause SPL
Holdings to form and establish California Pipeco LLC as a
single-member limited liability company under the Delaware Act.
(b) On the Closing Date, effective as of the Effective Time:
(i) Shell Pipeline Assets -- Assignments. Shell shall
assign or cause to be assigned (1) to the Company, the Economic
Benefits and Detriments of Shell and its Affiliates in each of the
Shell Unregulated Pipeline Assets other than LOOP, and (2) to Pipeco,
the Economic Benefits and Detriments of Shell and its Affiliates in
each of the Shell Regulated Pipeline Assets.
(ii) Texaco Pipeline Assets -- Assignments. Texaco shall
assign or cause to be assigned, (1) to the Company, the Economic
Benefits and Detriments of Texaco and its Affiliates in each of the
Texaco Unregulated Pipeline Assets other than LOOP, and (2) to Pipeco,
the Economic Benefits and Detriments of Texaco and its Affiliates in
each of the Texaco Regulated Pipeline Assets.
(iii) Assumption by the Company and Pipeco of Economic
Benefits and Detriments.
(A) The Company shall assume the Economic Benefits
and Detriments of the Shell Unregulated Pipeline Assets and
the Texaco Unregulated Pipeline Assets assigned to it pursuant
to Sections 2.05(b)(i) and (ii). The assignment and
assumption of such Economic Benefits and Detriments shall be
made pursuant to the procedures described in Section 2.04(b);
and
7
<PAGE> 11
ASSET TRANSFER AGREEMENT
(B) Pipeco shall assume the Economic Benefits and
Detriments of the Shell Regulated Pipeline Assets and the
Texaco Regulated Pipeline Assets assigned to it pursuant to
Sections 2.05(a)(iii) and (iv). The assignment and assumption
of such Economic Benefits and Detriments shall be made
pursuant to the procedures described in Section 2.04(b).
(c) As promptly as practicable after the Closing Date, effective as
of the Effective Time, Shell shall transfer or cause to be transferred:
(i) to the Company, its ownership interest in Odyssey, its
equity interest in Inland and its Ram/Powell interest;
(ii) to the Company, the right, title and interest of Shell
and its Affiliates in each of the wholly- owned unregulated pipelines
that are included in Shell Contributed Assets (including all related
equipment, permits and rights of way), upon receipt of all the
consents from applicable Governmental Entities and property owners
required to transfer the rights of way (including land rights and
easements) for such pipeline to the Company; and
(iii) to Pipeco, (A) SPL Holdings' equity interest in LOCAP,
upon receipt of approval for such transfer from the other shareholders
of LOCAP, and (B) the equity interest of Shell and its Affiliates in
each of the Shell Joint Interest Stock Companies.
(d) On the first day of the month in which the appropriate FERC
adoption notices and Pipeco's new tariffs become effective and upon receipt of
permission from the Louisiana Public Service Commission to transfer the
pipeline assets it regulates:
(i) Shell shall:
(A) cause Seashell to be liquidated into SPL
Holdings and shall thereupon cause SPL Holdings to transfer
Seashell's assets to Pipeco;
(B) form and establish Shell Pipe LLC as a
single-member limited liability company under the Delaware
Act;
(C) cause Shell Pipe to be merged into Shell Pipe
LLC, transferring Shell Pipe's equity interest in SPL Holdings
to Shell; and
(D) cause Shell Pipe LLC to be merged into Pipeco.
8
<PAGE> 12
ASSET TRANSFER AGREEMENT
(ii) Texaco Trading shall cause Texaco Pipeline to be merged
into Pipeco.
(e) Promptly upon receipt of permission from the California Public
Utilities Commission to transfer the Shell Pipeline Assets or the Texaco
Pipeline Assets regulated by it and upon receipt of all the consents from
applicable Governmental Entities and property owners required to transfer the
rights of way (including land rights and easements) for all of such pipelines:
(i) Shell shall:
(A) cause Shell California to be merged into
California Pipeco; and
(B) cause SPL Holdings to transfer California
Pipeco to Pipeco.
(ii) Texaco Trading shall:
(A) form and establish Texaco California Pipeco as
a single-member limited liability company under the Delaware
Act;
(B) cause Texaco California to be merged into
Texaco California Pipeco; and
(C) cause Texaco California Pipeco to be merged
into California Pipeco following the transfer of California
Pipeco to Pipeco as set forth in Section 2.05(e)(i)(B).
(f) Promptly upon receipt of all the consents from applicable
Governmental Entities and property owners required to transfer the rights of
way (including land rights and easements) for all of the wholly-owned
unregulated pipelines that are included in Texaco Contributed Assets and in no
event prior to December 31, 1998,
(i) Texaco Trading shall cause Texaco CO(2) to be merged
into the Company;
(ii) TRMI Holdings shall cause Texaco Trading to be merged
into the Company, transferring to TRMI Holdings Texaco Trading's
equity interest in Texaco Oilport Holdings II, a Delaware corporation,
Colonial, Explorer, West Shore, Wolverine and any other Texaco Joint
Interest Stock Company with respect to which rights of first refusal
or governance issues remain outstanding; and
9
<PAGE> 13
ASSET TRANSFER AGREEMENT
(iii) the Company shall transfer to Pipeco the ownership
interest in Gaviota and the equity interest in any Texaco Joint
Interest Stock Company that was transferred to it pursuant to the
merger of Texaco Trading into the Company.
(g) Thereafter,
(i) subject to the adoption of revised governance provisions
for LOCAP satisfactory to the Company, TRMI shall transfer to Pipeco
its equity interest in LOCAP; and
(ii) subject to eliminating any rights of first refusal and
any governance issues with respect to any Texaco Joint Interest Stock
Company remaining with TRMI Holdings, TRMI Holdings shall transfer to
Pipeco its equity interest in such Texaco Joint Interest Stock
Company.
(h) On or after the date which is more than 12 months after any
other transfer of ownership interest in LOOP (by any member of LOOP) that would
in the aggregate constitute a transfer of 50% or more of the total interests in
LOOP, Shell and Texaco shall transfer to the Company each of their respective
ownership interest in LOOP or the Economic Benefits and Detriments of such
ownership interest.
(i) Colonial and Plantation.
(i) Shell shall transfer or cause to be transferred to
Pipeco, the equity interest of Shell and its Affiliates in Plantation,
as soon as practicable after the Closing Date, effective as of the
Effective Time, subject to the provisions of Section 4.01.
(ii) TRMI shall transfer or cause to be transferred to
Pipeco, the equity interest of Texaco and its Affiliates in Colonial,
as soon as practicable after the Effective Time, subject to the
provisions of Section 4.01.
(j) Interim Provisions relating to LOOP.
(i) Shell, Texaco and the Company agree that the Company
shall purchase (on a dollar for dollar basis) all of the advance
transportation credits acquired by Shell or Texaco as a result of the
September 1998 LOOP cash call
10
<PAGE> 14
ASSET TRANSFER AGREEMENT
which remain at the time of the transfer by Shell and Texaco of their
respective LOOP ownership interest to the Company.
(ii) The purchase of the advance transportation credits by
the Company shall take place within 30 days after the transfer by
Texaco or Shell of its respective LOOP ownership interest to the
Company.
SECTION 2.6. Treatment of Transactions. For all purposes under the
Code and the Regulations, for purposes of maintaining the capital accounts
under Article 4 of the LLC Agreement and for purposes of calculating financial
results of the Company and its Subsidiaries, the Separately Held Assets, the
Shell Plantation Interest, the Texaco Colonial Interest and all other assets
with respect to which Economic Benefits and Detriments were transferred in
accordance with this Agreement shall be deemed to be contributed to the Company
as of the Effective Time. After the Effective Time, all items of income, gain,
loss or deduction relating to such assets shall be deemed to be items derived
or incurred by the Company. No adjustments to capital accounts shall be made
with respect to any payments made pursuant to Section 4.01(c) or 4.01(d), as
the case may be.
SECTION 2.7. Instruments of Transfer. (a) At the Closing, Shell and
Shell Newco shall deliver such Shell Transfer Instruments (other than those to
be delivered at a later time pursuant to Section 2.05 or Section 5.01(a)), in
form and substance reasonably satisfactory to TRMI, as shall be necessary or
desirable to convey the Shell Contributed Assets to the Company.
(b) At the Closing, Texaco, TRMI, TRMI Holdings, Texaco Pipeline,
Texaco Trading, Texaco Convent and Texaco Anacortes shall deliver such Texaco
Transfer Instruments (other than those to be delivered at a later time pursuant
to Section 2.05 or Section 5.01(a)), in form and substance reasonably
satisfactory to Shell Newco, as shall be necessary or desirable to convey the
Texaco Contributed Assets to the Company.
11
<PAGE> 15
ASSET TRANSFER AGREEMENT
ARTICLE 3
ASSUMPTION OF LIABILITIES
SECTION 3.1. Assumed Liabilities and Obligations; Exclusions. (a)
On the Closing Date, effective as of the Effective Time, the Company shall
assume and thereafter pay, perform or discharge the Assumed Liabilities. Such
assumption may be effectuated by the Company making full payments in respect of
any Assumed Liability at the time of the discharge of such Assumed Liability to
any Person which, after the Effective Time, remained liable in respect of such
Assumed Liability and thereafter discharged such Assumed Liability in
accordance with the terms of the agreement or instrument under which such
Assumed Liability arose (but only to the extent that such discharge was in
accordance with the terms of the relevant agreement or instrument as in effect
at the Effective Time).
(b) Upon the terms and subject to the conditions hereof and in
consideration of the transfer of the Contributed Assets, the Company shall,
effective as of the Effective Time, perform and discharge all obligations of
Shell Newco, TRMI, TRMI Holdings, Texaco Pipeline, Texaco Convent and Texaco
Trading under the Contributed Contracts.
ARTICLE 4
SEPARATELY HELD ASSETS
4.1. Separately Held Assets. (a) (i) Promptly upon the consummation
of any sale of the Shell Oahu Distribution Assets (as defined in the Consent
Decree), Texaco or its Affiliates shall assign or cause to be assigned to the
Company all of its and its Affiliates' interest in the Texaco Oahu Distribution
Assets (as defined in the Consent Decree) or (ii) promptly upon the
consummation of any sale of the Texaco Oahu Distribution Assets, Shell Newco
shall assign or cause to be assigned to the Company all of its and its
Affiliates' interest in the Shell Oahu Distribution Assets.
(b) (i) Promptly upon the consummation of any sale of the Shell
Plantation Interest, Texaco or its Affiliates shall assign or cause to be
assigned to Pipeco the Texaco Colonial Interest, or (ii) promptly upon the
consummation of any sale of the Texaco Colonial Interest, Shell Newco shall
assign or cause to be assigned to Pipeco the Shell Plantation Interest,
subject, in each case, to the restrictions set forth in Section 2.05 of this
Agreement.
(c) (i) Promptly upon the consummation of any sale of any Separately
Held Assets, the Shell Plantation Interest or the Texaco Colonial Interest, the
party consummating such sale shall deliver to the Company the Net Proceeds of
such sale. With respect to the portion of the consideration which is received
in the form of other
12
<PAGE> 16
ASSET TRANSFER AGREEMENT
assets, (x) if the business conducted with such assets is within the scope of
the Company Business, such assets shall be contributed to the Company or (y) if
such assets are not within the scope of the Company Business, the Fair Market
Value of such assets shall be contributed to the Company.
If the parties cannot agree on the Fair Market Value of the securities
or assets included in the consideration received within 30 days of the
acquisition of such assets or securities, the Company shall select an IB Firm to
determine the Fair Market Value of such assets or securities. Such IB Firm
shall, within 45 days of its retention, determine the Fair Market Value of such
assets or securities, and such determination shall be final, binding and
conclusive upon the parties hereto. The fees and expenses of such IB Firm shall
be borne by the Company.
(d) In connection with any sale described in Section 4.01(c), the
Company shall assume all of the liabilities, obligations and indemnities of the
party that is selling assets and which arise under any agreement that provides
for the disposition of any Separately Held Assets. If the Operating Expenses
of such asset in the period between the Effective Time and the disposition
exceed the gross earnings from such asset during such period, the Company
shall, promptly upon the consummation of any disposition described in Section
4.01(c), pay to the party disposing of such asset the amount of such excess.
If the gross earnings from such asset in the period between the Effective Time
and the disposition exceed the Operating Expenses from such asset during such
period, the party disposing such asset shall, promptly upon the consummation of
any disposition described in Section 4.01(c), pay to the Company the amount of
such excess.
ARTICLE 5
CERTAIN POST-CLOSING MATTERS
SECTION 5.1. Post-closing Recordings. (a) Shell Newco (or the
applicable Affiliate of Shell Newco) will use its best efforts to (i) deliver
or cause to be delivered to the Company (x) deeds to be recorded for all real
property that is included in the Shell Contributed Assets, (y) all transfer and
gains tax returns required by any Governmental Entity in respect of the
properties transferred by such deeds, and (z) subject to Section 2.04 hereof,
assignments of lease to be recorded with respect to all leased real property
that is included in the Shell Contributed Assets and (ii) cause such deeds and
such assignments of leases (with respect to recorded leases) to be recorded, in
each case, within 180 days after the later of (A) the Closing Date or (B) the
date on which the Contributed Asset is transferred. Promptly upon receipt of
any
13
<PAGE> 17
ASSET TRANSFER AGREEMENT
evidence of recordation in connection with the recording of deeds provided for
in this Section 5.01(a), Shell Newco (or the applicable Affiliate of Shell
Newco) shall provide the Company with evidence of such recording. Costs of
title and survey documentation, recordation, transfer taxes, deed stamps, sales
taxes and similar charges relating to Shell Transfer Instruments delivered
under this Section 5.01(a) or otherwise arising out of the transfers
contemplated pursuant to this Asset Transfer Agreement shall be borne by Shell
Newco (or the applicable Affiliate of Shell Newco) .
(b) TRMI (or the applicable Affiliate of TRMI) will use its best
efforts to (i) deliver or cause to be delivered to the Company (x) deeds to be
recorded for all real property included in the Texaco Contributed Assets, (y)
all transfer and gains tax returns required by any Governmental Entity in
respect of the properties transferred by such deeds, and (z) subject to Section
2.04 hereof, assignments of lease to be recorded with respect to all leased
real property that is included in the Texaco Contributed Assets and (ii) cause
such deeds and such assignments of leases (with respect to recorded leases) to
be recorded, in each case, within 180 days after the later of (A) the Closing
Date or (B) the date on which the Contributed Asset is transferred. Promptly
upon receipt of any evidence of recordation in connection with the recording of
deeds provided for in this Section 5.01(b), TRMI (or the applicable Affiliate
of TRMI) shall provide the Company with evidence of such recording. Costs of
title and survey documentation, recordation, transfer taxes, deed stamps, sales
taxes and similar charges relating to Texaco Transfer Instruments delivered
under this Section 5.01(b) or otherwise arising out of the transfers
contemplated pursuant to this Asset Transfer Agreement shall be borne by TRMI
(or the applicable Affiliate of TRMI).
(c) Except with respect to Contributed Assets covered under Section
2.04, all deeds and assignments of lease shall be dated the Effective Time, and
notwithstanding the date of recordation thereof, as between the parties hereto
the date of transfer with respect to the Contributed Assets shall be the
Effective Time. Notwithstanding the foregoing, in the event that any penalties
or interest will be payable to any Governmental Entity with respect to any
recording or transfer tax or fee due to any difference in the date of the deeds
and the recorded assignments of lease and the date of actual recordation, the
party submitting such deed or assignment of lease may date such document as of
such later date as may be necessary to prevent the incurrence of such penalties
or interest, it being agreed that notwithstanding the date of such deed or
assignment of lease, as between the parties, the date of transfer shall be the
Effective Time. During the period between the Effective Time and the date of
recordation of the deeds and any recorded assignments of lease, the transferor
of the relevant Contributed Assets shall take no action adversely affecting the
Company's title thereto.
14
<PAGE> 18
ASSET TRANSFER AGREEMENT
SECTION 5.2. Access to and Retention of Records. As of the Effective
Time, the Company shall acquire and take possession of the Books and Records,
provided that if any part of such Books and Records cannot without unreasonable
effort be separated from books, records, files and other data that do not
constitute Books and Records or relate to services to be provided to the
Company, then Shell Newco, TRMI or their relevant Affiliates, as the case may
be, shall retain such part of the Books and Records and make such part
available to the Company as provided herein. Each of the parties hereto agrees
that it shall, and shall cause its relevant Affiliates to, (i) preserve and
keep the Books and Records or the parts thereof in its possession, as the case
may be, (A) in accordance with their respective records retention programs, or
(B) for any longer period as may be required by any Governmental Entity or
ongoing litigation or as required by any of the Equilon Joint Venture Documents
and (ii) during such period, subject to the Equilon Only Confidentiality
Agreement or the Confidentiality Agreement, shall as applicable, allow each
other party's counsel, accountants, officers, employees and other
representatives access to such Books and Records upon such other party's
reasonable request and during normal business hours for the purpose of
examining and, at the examining party's expense, copying them, to the extent
reasonably required by such party in connection with (A) any insurance claims
by, legal proceedings against or governmental investigations of, such party,
(B) the preparation of any tax return required to be filed by such party, the
defense of any audit, examination, administrative appeal or litigation of any
tax return, or (C) any other reasonable business purpose reasonably related to
such party's or its Affiliates' Ownership Interest.
SECTION 5.3. Availability of Personnel. Each of the parties hereto
shall afford, and shall cause their respective Affiliates to afford, to each
other on a reasonable basis their respective personnel as necessary to permit
the Company, as the case may be, to provide background information necessary to
(i) prepare tax returns, (ii) prosecute Claims or (iii) investigate, defend
against, or otherwise oppose any pending or threatened Claim against any party
or any of such party's Affiliates, as the case may be, in each case, in
connection with the Contributed Assets. The party affording its, or its
Affiliates', personnel shall be reimbursed by the other party for its
reasonable incremental out- of-pocket expenses of such personnel, but shall not
charge any other fee to any other party hereto.
SECTION 5.4. Mail; Payments. (a) Each of Shell Newco, TRMI, TRMI
Holdings, Texaco Pipeline, Texaco Trading, Texaco Convent and Texaco Anacortes
authorizes and empowers the Company from and after the Effective Time to
receive and open all mail and other communications directed to any of Shell
Newco, TRMI, TRMI Holdings, Texaco Pipeline, Texaco Trading, Texaco Convent,
Texaco Anacortes or their Affiliates and received by the Company, and, except
for matters as to which Shell Newco or TRMI is providing
15
<PAGE> 19
ASSET TRANSFER AGREEMENT
indemnification under any Equilon Joint Venture Document, to act with respect
to such communications in such manner as the Company may elect if such
communications relate to the Contributed Assets. If such communications do not
relate to the Contributed Assets or relate to matters as to which Shell, Texaco
or any of their respective Affiliates is providing indemnification under any
Equilon Joint Venture Document, the Company shall forward the same promptly to
the party (or parties) providing such indemnification or to whom such
communications relate. Each of Shell Newco, TRMI, TRMI Holdings, Texaco
Pipeline, Texaco Trading, Texaco Convent and Texaco Anacortes shall, and shall
cause their respective Affiliates to, promptly deliver to the Company any cash,
checks, other instruments of payment and funds to which the Company is entitled
and shall hold such cash, checks, other instruments of payment and funds in
trust for the Company until such delivery. The Company shall promptly deliver
to Shell Newco, TRMI, TRMI Holdings, Texaco Pipeline, Texaco Trading, Texaco
Convent, Texaco Anacortes or their Affiliates, as applicable, any cash, checks
or other instruments of payment to which such entity is entitled and shall hold
such cash, checks or other instruments of payment in trust for such entity
until such delivery.
(b) The Company authorizes and empowers Shell Newco, TRMI, TRMI
Holdings, Texaco Pipeline, Texaco Trading, Texaco Convent and Texaco Anacortes
and their Affiliates from and after the Effective Time to receive and open all
mail and other communications directed to the Company and received by any such
entity, and to act with respect to such communications in such manner as such
entity may elect if such communications do not relate to the Contributed Assets
or do relate to matters as to which such entity or any of its Affiliates is
providing indemnification under any Equilon Joint Venture Document or, if such
communications do relate to the Contributed Assets and not to such indemnified
matters, to forward the same promptly to the Company.
5.5. Existing Insurance Coverage. If, after December 1, 1997, any of
Shell Newco, TRMI, TRMI Holdings, Texaco Pipeline, Texaco Trading, Texaco
Convent, Texaco Anacortes or their Affiliates receives, directly or indirectly,
from any insurer cash proceeds attributable to (i) casualty and property (but
not liability or business interruption for periods prior to the Effective Time)
insurance coverage applicable to any of the Contributed Assets with respect to
any occurrence or any series of related occurrences on or after December 1,
1997 or (ii) real property title insurance in respect of any of the Contributed
Assets, which proceeds, in either the case of clause (i) or (ii), aggregate in
excess of $1,000,000 for such occurrence or series of related occurrences, then
such recipient shall pay over such cash proceeds to the Company (net of any
deductible, co-payment, retro fees, premiums, costs or other charges payable to
the insurance carrier or obligations to reimburse the insurance carrier for
which it is liable and net of the cost of collection) except to the extent that
(x) the damage or loss incurred as a result of such occurrence or series of
occurrences was repaired, restored or
16
<PAGE> 20
ASSET TRANSFER AGREEMENT
reimbursed by or on behalf of such recipient prior to the Effective Time or
will be obligated to be reimbursed by such recipient pursuant to the Equilon
Joint Venture Documents or (y) Shell and Texaco have otherwise expressly agreed
in writing that such proceeds shall not be paid over to the Company. Any such
payment paid over to the Company shall reduce any amounts payable by such
recipient or its Affiliates with respect to such occurrence under Article 8 of
the Master Agreement. Any other insurance proceeds received by any of Shell
Newco, TRMI, TRMI Holdings, Texaco Pipeline, Texaco Trading, Texaco Convent,
Texaco Anacortes or their Affiliates with respect to any occurrence or series
of occurrences prior to the Effective Time shall be retained by such recipient.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
SECTION 6.1. Representations and Warranties of Shell Newco. Shell
Newco represents and warrants to each of the other parties hereto as follows;
provided that Shell Newco shall have no liability to any other party hereto or
any other Person (including any Person indemnified under Article 8 of the
Master Agreement) for the breach of any representation or warranty hereunder to
the extent that the facts or circumstances that gave rise to such breach:
(i) were actually disclosed in writing in the Due Diligence
Process to any of the Due Diligence Representatives of such other
party;
(ii) would reasonably be expected to be discovered by such
other party based on facts or circumstances so disclosed in writing
during the Due Diligence Process; or
(iii) were actually known to such other party or such other
party's Due Diligence Representatives on or prior to the Closing Date.
(a) Good, Indefeasible or Marketable Title. With such exceptions as
would not, individually and in the aggregate, have a Company Material Adverse
Effect, each entity contributing Shell Contributed Assets has good (and in the
case of interests in real property, indefeasible or marketable) title to all
Shell Contributed Assets so contributed thereby, free of all Liens other than
(x) Permitted Exceptions and (y) provisions in contracts, licenses and
agreements which prohibit or otherwise restrict assignment and,
17
<PAGE> 21
ASSET TRANSFER AGREEMENT
upon the granting of the deeds and other instruments of transfer provided for
herein, the Company shall receive good (and in the case of interests in real
property, indefeasible or marketable) title to the Shell Contributed Assets as
described above.
For the avoidance of doubt, in the event that any representation or
warranty with respect to title to the Shell Contributed Assets set forth in any
of the Shell Transfer Instruments or implied by Applicable Law may be
interpreted to create representations or warranties other than those set forth
in this Section 6.01(a), the representation and warranty set forth in this
Section 6.01(a) shall govern and such other representations and warranties
shall be without force or effect.
(b) Pro Forma Financial Information. With such exceptions as would
not, individually and in the aggregate, have a Company Material Adverse Effect:
(i) the Shell Pro Forma Financial Information represents
Shell's good faith allocation of the results of operations and cash
flows of Shell Oil Products Company's refining, marketing and
transportation business, for the periods indicated therein, among (A)
the Shell Valuated Units, (B) the businesses being contributed to
Eastco, (C) Shell's interest in the business conducted by DPRLP and
(D) the Shell Excluded Assets;
(ii) the Shell oil products business segment information
referred to in clause (i) was included in Shell's audited financial
statements for the periods indicated therein; and
(iii) the Shell Pro Forma Financial Information was not
necessarily prepared in accordance with GAAP, but was prepared with
due care after reasonable inquiry and is a fair presentation of the
financial performance of the Shell Valuated Units for the periods
indicated therein.
(c) Shell Contributed Assets. With such exceptions as would not,
individually and in the aggregate, have a Company Material Adverse Effect,
except for the Shell Excluded Assets and the Shell Intellectual Property
Rights, the Shell Contributed Assets constitute all of the assets used for or
necessary to the operation of the Shell Valuated Units in the ordinary course
of business and in substantially the same manner as such Shell Valuated Units
were operated as of December 1, 1997.
SECTION 6.2. Representations and Warranties Regarding the Texaco
Principal Member Group. Each of TRMI, TRMI Holdings, Texaco Pipeline, Texaco
Trading, Texaco Convent and Texaco Anacortes represents and warrants to Shell
18
<PAGE> 22
ASSET TRANSFER AGREEMENT
Newco as follows; provided that TRMI, TRMI Holdings, Texaco Pipeline, Texaco
Trading, Texaco Convent and Texaco Anacortes shall have no liability to any
other party hereto or any other Person (including any Person indemnified under
Article 8 of the Master Agreement) for the breach of any representation or
warranty hereunder to the extent that the facts or circumstances that gave rise
to such breach:
(i) were actually disclosed in writing in the Due Diligence
Process to any of the Due Diligence Representatives of such other
party;
(ii) would reasonably be expected to be discovered by such
other party based on facts or circumstances so disclosed in writing
during the Due Diligence Process; or
(iii) were actually known to such other party or such other
party's Due Diligence Representatives on or prior to the Closing Date.
(a) Good, Indefeasible or Marketable Title. With such exceptions as
would not, individually and in the aggregate, have a Company Material Adverse
Effect, each entity contributing Texaco Contributed Assets has good (and in the
case of interests in real property, indefeasible or marketable) title to all
Texaco Contributed Assets so contributed thereby, free of all Liens other than
(x) Permitted Exceptions and (y) provisions in contracts, licenses and
agreements which prohibit or otherwise restrict assignment and, upon the
granting of the deeds and other instruments of transfer provided for herein,
the Company shall receive good (and in the case of interests in real property,
indefeasible or marketable) title to the Texaco Contributed Assets as described
above.
For the avoidance of doubt, in the event that any representation or
warranty with respect to title to the Texaco Contributed Assets set forth in
any of the Texaco Transfer Instruments or implied by Applicable Law may be
interpreted to create representations or warranties other than those set forth
in this Section 6.02(a), the representation and warranty set forth in this
Section 6.02(a) shall govern and such other representations and warranties
shall be without force or effect.
(b) Pro Forma Financial Information. With such exceptions as would
not, individually and in the aggregate, have a Company Material Adverse Effect:
(i) the Texaco Pro Forma Financial Information represents
Texaco's good faith allocation of the results of operations and cash
flows of TRMI's and Texaco Trading's refining, marketing and
transportation business, for the periods indicated therein, between
(A) the Texaco Valuated Units and (B) the Excluded Assets;
19
<PAGE> 23
ASSET TRANSFER AGREEMENT
(ii) the information referred to in clause (i) was included
in Texaco's consolidated audited financial statements for the periods
indicated therein; and
(iii) the Texaco Pro Forma Financial Information was not
necessarily prepared in accordance with GAAP, but was prepared with
due care after reasonable inquiry and is a fair presentation of the
financial performance of the Texaco Valuated Units for the periods
indicated therein.
(c) Texaco Contributed Assets. With such exceptions as would not,
individually and in the aggregate, have a Company Material Adverse Effect,
except for the Texaco Excluded Assets and the Texaco Intellectual Property
Rights, the Texaco Contributed Assets constitute all of the assets used for or
necessary to the operation of the Texaco Valuated Units in the ordinary course
of business and in substantially the same manner as such Texaco Valuated Units
were operated as of December 1, 1997.
ARTICLE 7
MISCELLANEOUS
SECTION 7.1. Further Assurance. From and after the Effective Time,
each of the parties hereto shall, at any time and from time to time, at the
request of any other party hereto, make, execute and deliver, or use its best
efforts to cause to be made, executed and delivered, such assignments,
conveyances, deeds, bills of sale, filings and other instruments, agreements
(including any agreements which may be necessary or desirable in connection
with the making of any filing or the obtaining of any approval in any
jurisdiction), consents and assurances and take or cause to be taken all such
action as the parties hereto may reasonably request for the effectual
consummation of this Asset Transfer Agreement and the Equilon Joint Venture
Transactions. It is understood that this Section 7.01 may be applied to
require the assignment or conveyance (i) to the Company of assets owned or
leased by any party or its Affiliates that constitute Shell Contributed Assets
or Texaco Contributed Assets but by mistake were not assigned or conveyed to
the Company at the Effective Time, or (ii) to any party or Affiliate of a party
of assets transferred to the Company that were not listed on the Asset List (or
was listed on the Asset List but was an Excluded Asset or the non-contributed
portion of a Shell Common Contract or Shell Shared Asset or a Texaco Common
Contract) and are not Shell Contributed Assets or Texaco Contributed Assets,
but were assigned or conveyed by mistake to the Company.
20
<PAGE> 24
ASSET TRANSFER AGREEMENT
SECTION 7.2. Effectiveness. This Asset Transfer Agreement shall be
effective as of the Effective Time.
SECTION 7.3. Exclusivity. For avoidance of doubt, Section 8.01 of
the Master Agreement shall constitute the exclusive remedy for any
misrepresentation or breach of warranty or covenant contained in or arising
under this Asset Transfer Agreement.
21
<PAGE> 25
ASSET TRANSFER AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Asset Transfer
Agreement to be duly executed as of the day and year first above written.
TEXACO INC.
By /s/ G. F. Tilton
----------------------------------
Name: G. F. Tilton
Title:
TEXACO REFINING AND MARKETING INC.
By /s/ L. Wilson Berry, Jr.
----------------------------------
Name: L. Wilson Berry, Jr.
Title:
TRMI HOLDINGS INC.
By /s/ G. F. Tilton
----------------------------------
Name: G. F. Tilton
Title:
TEXACO PIPELINE INC.
By /s/ Arthur Nicolette
----------------------------------
Name: Arthur Nicolette
Title:
TEXACO TRADING AND
TRANSPORTATION INC.
By /s/ Arthur Nicolette
----------------------------------
Name: Arthur Nicolette
Title:
22
<PAGE> 26
ASSET TRANSFER AGREEMENT
TEXACO CONVENT
REFINING COMPANY
By /s/ T. P. Dougherty, Jr
----------------------------------
Name: T. P. Dougherty, Jr
Title:
TEXACO ANACORTES
COGENERATION COMPANY
By /s/ Louise Nemanich
----------------------------------
Name: Louise Nemanich
Title:
SHELL OIL COMPANY
By /s/ J. M. Morgan
----------------------------------
Name: J. M. Morgan
Title:
SOPC HOLDINGS WEST LLC
By /s/ M. R. Williams
----------------------------------
Name: M. R. Williams
Title:
EQUILON ENTERPRISES LLC
By /s/ J. M. Morgan
----------------------------------
Name: J. M. Morgan
Title:
23
<PAGE> 27
CROSS-REFERENCE TARGET LIST
NOTE: DUE TO THE NUMBER OF TARGETS SOME TARGET NAMES MAY NOT APPEAR IN THE
TARGET PULL-DOWN LIST. (This list is for the use of the wordprocessor only, is
not a part of this document and may be discarded.)
<TABLE>
<CAPTION>
ARTICLE/SECTION TARGET NAME ARTICLE/SECTION TARGET NAME ARTICLE/SECTION TARGET NAME ARTICLE/SECTION
=============== =========== =============== =========== =============== =========== ===============
<S> <C>
1 . . . . . . . . . . . definitions
1.01 . . . . . . . . defined.terms
2 . . . . . . . . . . contributions
2.01 . . . . . contribution.asset
2.01(a) . . . contribution.asset.a
2.01(b) . . . contribution.asset.b
2.02 . . . . . . . . . . transfer
2.03 . . . . . . . excluded.assets
2.04 . . . . . . . . . assignment
2.04(a) . . . . . . . assignment.a
2.04(b) . . . . . . . assignment.b
2.05(e)(i)(B) . . . . . . cause.spl
3 . . . . . . . . . . . assumption
3.01 . . . . . . . . assumed.liab
3.01(a) . . . . . . assumed.liab.a
3.01(b) . . . . . . assumed.liab.b
? . . . . . . . . . assumed.liab.c
4 . . . . . . . . . . . instruments
4.01 . . . . . . shell.instruments
? . . . . . . . . . . . star.instr
5 . . . . . . . . . . . post.closing
5 . . . . . . . . . . . . . certain
5.01(a) . . . . . . . post.closing.a
5.01(b) . . . . . . . . best.efforts
5.01(c) . . . . . . . post.closing.c
5.02 . . . . . . . . . . . . access
5.03 . . . . . . . . . availability
5.04 . . . . . . . . . . mail.pymts
5.04(a) . . . . . . . . mail.pymts.a
5.04(b) . . . . . . . . mail.pymts.b
5.05 . . . . . . . . . . . existing
6 . . . . . . . . . . . . . . . reps
6.01(a) . . . . . . . . . . . reps.a
6.01(a)(i) . . . . . . . . . reps.i
6.01(a)(ii) . . . . . . . . reps.ii
6.01(a)(iii) . . . . . . . reps.iii
6.01(b) . . . . . . . . . . . reps.b
6.01(b)(i) . . . . . . . . reps.b.i
6.01(b)(ii) . . . . . . . reps.b.ii
6.01(b)(iii) . . . . . . reps.b.iii
6.01(c) . . . . . . . . . . . reps.c
6.02 . . . . . . . reps.warranties
6.02(a) . . . . . . . . . rep.warr.a
6.02(a)(i) . . . reps.warranties.1
6.02(a)(ii) . . . reps.warranties.2
6.02(a)(iii) . . reps.warranties.3
6.02(b) . . . . . . . . . rep.warr.b
6.02(c) . . . . . . . . . rep.warr.c
7 . . . . . . . . . . miscellaneous
7.01 . . . . . . . . fur.assurance
7.02 . . . . . . . . effectiveness
7.03 . . . . . . . . . exclusivity
</TABLE>
1
