EXHIBIT 10.17
▇▇▇▇▇ ▇▇, ▇▇▇▇
▇▇▇▇▇ SALE AGREEMENT
for the
West Texas Pipeline System
Midland, Crane, Winkler, Ector, Upton and ▇▇▇▇ Counties, Texas
BETWEEN
CHEVRON PIPE LINE COMPANY
(As Seller)
and
PLAINS MARKETING, L.P.
(As Buyer)
TABLE OF CONTENTS
1. DEFINITIONS................................................. 1
2. PURCHASE AND SALE OF ASSETS................................. 7
3. PURCHASE PRICE AND DEPOSIT.................................. 8
4. CLOSING..................................................... 9
5. TITLE....................................................... 11
6. RIGHT-OF-WAY INTERESTS...................................... 11
7. FEE PROPERTY................................................ 12
8. TERMINATION FOR MATERIAL DEFECT............................. 12
9. DAMAGE OR CONDEMNATION PRIOR TO CLOSING..................... 14
10. SELLER'S REPRESENTATIONS AND WARRANTIES..................... 14
11. SELLER'S ADDITIONAL REPRESENTATIONS AND LIMITED WARRANTY.... 15
12. BUYER'S REPRESENTATIONS AND WARRANTIES...................... 18
13. BUYER'S INVESTIGATION AND RIGHT TO CANCEL................... 19
14. SELLER'S INVESTIGATION AND RIGHT TO CANCEL.................. 22
15. BUYER'S RIGHT OF ENTRY...................................... 22
16. LIQUIDATED DAMAGES.......................................... 23
17. INDEMNITY AND ASSUMPTION OF OBLIGATIONS..................... 25
18. INDEMNITY AND ASSUMPTION OF ENVIRONMENTAL RISKS............. 26
19. PROCEDURES FOR ASSERTING INDEMNITY CLAIMS................... 30
20. CONFLICTS OF INTEREST....................................... 32
21. CLOSING COSTS, TAXES AND COMMISSIONS........................ 32
22. OPERATION OF THE PIPELINE INTERESTS PRIOR TO CLOSING........ 33
23. EMPLOYEES AND BENEFITS...................................... 34
24. F.E.R.C. TARIFFS, T.R.C. TARIFFS, AND T.R.C. T-4 PERMIT..... 40
25. GOVERNMENT CONSENTS......................................... 41
26. TAX-DEFERRED EXCHANGE....................................... 41
27. FORCE MAJEURE............................................... 42
28. FURTHER ASSURANCES.......................................... 42
29. REMOVAL OF SIGNS AND MARKERS................................ 42
30. SURVIVAL OF AGREEMENTS ..................................... 43
31. CONDITIONS PRECEDENT TO CLOSING ............................ 43
32. MISCELLANEOUS .............................................. 43
33. DAMAGES .................................................... 47
34. NONDISCLOSURE .............................................. 48
35. SURVIVAL OF REPRESENTATIONS AND WARRANTIES ................. 48
EXHIBITS
EXHIBIT "A" DESCRIPTION OF PIPELINE INTERESTS
EXHIBIT "B" DESCRIPTION OF RIGHT-OF-WAY INTERESTS
EXHIBIT "C" DESCRIPTION OF FEE PROPERTY
EXHIBIT "D" ▇▇▇▇ OF SALE
EXHIBIT "E" PIPELINE DEED AND ASSIGNMENT OF RIGHT-OF-WAY INTERESTS
EXHIBIT "F" CORPORATION GRANT DEED
EXHIBIT "G" EASEMENT
EXHIBIT "H" DESCRIPTION OF CONTRACTS
EXHIBIT "I" ASSIGNMENT OF CONTRACTS
EXHIBIT "J" NONE
EXHIBIT "K" DISCLOSURE ITEMS
EXHIBIT "L" LIST OF CONTRACTS CPL IS PROHIBITED FROM TRANSFERRING
EXHIBIT "M" LIST OF RECORDS CPL IS PROHIBITED FROM TRANSFERRING
EXHIBIT "N" Y2K TESTING SUMMARY
EXHIBIT "O" SCADA LEASE TERMS
EXHIBIT "P" LIST OF RECORDS
ASSET SALE AGREEMENT
West Texas Pipeline System
This ASSET SALE AGREEMENT ("Agreement") is entered into this 16th day of April,
1999 ("Execution Date"), by and between CHEVRON PIPE LINE COMPANY, a Delaware
corporation ("Seller") with offices at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, and PLAINS MARKETING, L.P. a Delaware limited
partnership ("Buyer") having its principal place of business at ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase from
Seller, on the terms set forth herein, assets comprised of Seller's West Texas
Pipeline System and associated facilities and equipment, as more particularly
described in Exhibit "A" attached hereto and made a part hereof;
NOW, THEREFORE, in consideration of the premises and the terms and conditions
set forth herein, the parties agree as follows:
1. DEFINITIONS
Unless otherwise specifically stated in the text of this Agreement, the
following terms shall have the meaning indicated: (such meanings to be,
when appropriate, equally applicable to both the singular and plural forms
of the terms defined)
a) "Affected Employee" shall have that meaning set out in Section 23 (a)
(iii).
b) "Buyer Indemnitee" shall have that meaning set forth Section 17 (a).
c) "Buyer Liquidated Damages" shall have that meaning set forth in
Section 16(b).
d). "Closing" shall have the meaning set forth in Section 4.
e). "Closing Date" shall mean the date for Closing set forth in
Section 4(a).
f) "Corrective Action" shall mean any remedial, removal, response,
construction, closure, disposal or other corrective action.
g) "Curative Action" shall mean (i) obtaining the consent of the grantor
of a Right-of-Way Interest if such consent is required by the
agreement creating the Right-of-Way Interest; (ii) obtaining a new or
amended agreement for a Right-of-Way Interest if a new or amended
agreement is required to remedy a spatial gap in the Right-of-Way
Interest, secure approval for any part of the Pipeline Interest
located outside of a Right-of-Way Interest boundary to remain outside
the boundary or otherwise remedy a lack of compliance with the terms
and conditions of an
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agreement creating a Right-of-Way Interest; or (iii) any other
corrective action resulting in Buyer receiving good and defensible
title or right to the Real Property Interests that underlay the
Pipeline Interests and are necessary to the operations and maintenance
of the Pipeline Interests.
h) "Deposit" shall mean the amount of Six Million and no/100 dollars
($6,000,000.00)
i) "Easement" shall mean that easement to operate and maintain the
Pipeline Interests on certain fee property owned by Seller or its
affiliates not included in the sale in the form attached hereto as
Exhibit "G".
j) "Effective Date" shall mean the date upon which the Closing occurs.
k) "Effective Time" shall mean 7:00am Central Day Light Savings Time on
the Effective Date.
l) "Environmental Laws" shall mean any and all laws, statutes,
ordinances, rules regulations, orders or determinations of any
governmental authority heretofore or currently in effect in any
jurisdiction in which any of the Property is located pertaining to (i)
the control of certain hazardous substances and pollutants including,
without limitation, liquid hydrocarbons, petroleum or petroleum
products, or the protection of the air, water or land; (ii) the
generation, handling, treatment, remediation, storage, disposal or
transportation of solid, gaseous or liquid waste; or (c) exposure to
hazardous, toxic or other substances alleged to be harmful.
m) "Environmental Liability" shall mean any and all liabilities,
responsibilities, claims, suits, losses and costs (including
remediation, removal, response, abatement, clean up, investigation or
monitoring costs and any other related cost and expense), causes of
action, damages, settlements, expenses, charges, assessments, liens,
penalties, pre-judgement and post-judgement interest, attorney,
consulting and expert fees incurred or imposed and related to the Real
Property or the operation or maintenance of the Pipeline Interests (i)
pursuant to any agreement, order, notice, directive, injunction,
judgment or similar documents (including settlements) or due to
actions taken by Buyer which arise out of or are related to Seller's
noncompliance with Environmental Laws, or (ii) pursuant to a claim by
any
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governmental authority or other person, not a party to this Agreement
for damage to natural resources, remediation, or similar costs and
expenses incurred by such governmental authority or person pursuant to
common law or statute.
n) "Execution Date" shall mean the date first stated on which the parties
entered into this Agreement.
o) "Fee" shall mean the real property described in Exhibit C.
p) "Interest" shall mean interest applied at the Interest Rate calculated
on the actual number of days elapsed from the day the Deposit was
wired to Seller's account to the first to occur of (i) the Closing
Date, or (ii) the date this Agreement is terminated; or as otherwise
set forth with specificity in this Agreement, whichever is applicable.
q) "Interest Rate"shall mean the lesser of the interest rate announced
from time to time by the principal San Francisco, California office of
Bank of America N.T.&S.A. as its prime rate or reference rate or the
highest rate permitted by applicable law.
r) "Knowledge of Buyer" shall mean to the actual knowledge of ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇.
s) "Knowledge of Seller" shall mean to the actual knowledge of ▇. ▇▇▇▇▇▇,
▇. ▇. ▇▇▇▇▇▇, and ▇. ▇. ▇▇▇▇▇▇▇▇▇▇.
t) "Line Fill" shall mean all of the Shipper-owned crude oil in the
custody of CPL and held within the Pipeline Interests at the Effective
Time.
u) "Material Defect" shall have the meaning set forth in Section 8(b).
v) "Mesa Midland Header Lease Agreement" shall mean an agreement mutually
acceptable to Seller and Buyer which shall include the following terms
and conditions:
(i) Seller will lease to Buyer up to 115,000 barrels per day
capacity in Seller's undivided interest in the main header at
the Mesa Midland Station in order to accommodate Buyer's
deliveries from Buyer's tankage and leased tank working capacity
at Mesa Midland Station to connecting carriers;
(ii) The lease will have a twenty (20) year term with the option to
extend on a year to year basis if both parties mutually so
agree, and shall contain a Seller non-compete provision for the
Mesa Midland pump-over service during the term of the lease;
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(iii) There will be a $10.00 per year fee for the lease.
w) "Permitted Encumbrances" shall mean any of the following:
(i) liens for taxes or assessments not yet due or delinquent or, if
delinquent, that are being contested in good faith in the normal
course of business;
(ii) all rights to consent by, required notices to, filings with, or
other actions by governmental entities in connection with the
sale or conveyance of oil pipelines or interests therein, if the
same are customarily obtained subsequent to such sale or
conveyance, Seller has no reason to believe they cannot be
obtained and failure to obtain will not interfere with or limit
the operation or use of the Pipeline Interests by Buyer;
(iii) easements, road-use agreements, rights-of-way, servitudes,
permits, surface leases and other rights in respect of surface
operations, that do not materially interfere with Buyer's
operation or use of the Property;
(iv) zoning, planning and environmental laws to the extent valid and
applicable to the Property;
(v) liens of carriers, warehousemen, mechanics, workers, material
suppliers or other providers of materials or services arising by
operation of law in the ordinary course of business or incident
to the construction or improvement of any property in respect of
obligations which are not yet due.
x) "Pipeline Interests" shall mean that portion of Seller's West Texas
Pipeline System, as well as associated pumps, meters, valves,
controls, cathodic protection equipment, tanks, and other fixtures,
vehicles, equipment and tangible personal property used in or
incidental to the operation and maintenance of the West Texas Pipeline
System as more particularly described in Exhibit A attached hereto and
made a part hereof.
y) "Property" shall mean the Pipeline Interests, Right-of-Way Interests,
Fee, Records, Transferable Contracts and Software License.
z) "Prospective Employees" shall have that meaning set forth in Section
23(a)(i).
aa) "Purchase Price" shall have that meaning set forth in Section 3 (a).
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bb) "Real Property Interests" shall mean the Fee, the Right-of-Way
Interests, and all other rights and interests in real property
including, but not limited to the below-ground and above-ground
Pipeline Interests which are classified as real property under Texas
law.
cc) "Records" shall mean all of Seller's files, records, information and
materials relating to the ownership, operation or maintenance of the
Pipeline Interests, Right-of-Way Interests, and Fee that are necessary
for the current operation and maintenance of the Pipeline Interests
and which Seller is not prohibited from transferring to Buyer by law
or existing contractual relationship as more specifically set out in
Exhibit "P".
dd) "Remaining Employees" shall mean the Prospective Employees who do not
become Affected Employees.
ee) "Repair Liability" shall mean a defect in the Pipeline Interests which
without repair would result in (i) the immediate inability to operate
all or a part of the Pipeline Interests due to mechanical malfunction
or lack of pipeline integrity, or (ii) the requirement to lower
operating pressure unless and until a repair is affected, or (iii) the
obligation to make a physical repair or modification to the system to
achieve compliance with laws, rules or regulations and accepted
industry standards governing oil pipeline and storage facilities.
ff) "Right-of-Way Interests" shall mean all of those certain right-of-way
interests in real property underlying the Pipeline Interests which
interests are created by agreements, including but not limited to
permits, franchises, easements, leases, licenses and other agreements,
as more particularly described in Exhibit B attached hereto and made a
part hereof.
gg) "SCADA Lease" shall mean that six month lease under which Seller shall
remotely operate the West Texas Pipeline System for Buyer which
operation shall include but not be limited to coordination with
Buyer's scheduling and oil movements personnel to implement scheduled
and unscheduled receipts, deliveries, storage and use of the Pipeline
Interests, the major responsibilities of which are set out in Exhibit
"O" attached hereto.
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hh) "Seller Indemnitee" shall have that meaning set forth in Section 15
(b).
ii) "Seller Liquidated Damages" shall have the meaning set forth in
Section 16(a).
jj) "Settlement Statement Accounting" shall mean a financial statement
done as soon as reasonably practical but within one hundred twenty
(120) days of Closing for the purpose of making a post closing
adjustment to the Purchase Price for the following:
i). a decrease in the Purchase Price to the extent that the value of
the Linefill is less than the value shown in the shipper
accounts due to discrepancies in quality or quantity resulting
in a net loss to a shipper or shippers on the West Texas
Pipeline System as more particularly set out in Section 2(b);
ii). An increase in the Purchase Price if actual transfer taxes or
other charges specified in Section 3(e)(i) are greater than the
amount estimated or a decrease if less than the amount
estimated;
iii). An increase or a decrease to the Purchase Price for any tariff
revenues collected by one party but attributable to the account
of the other party; and
iv). An increase or a decrease to the Purchase Price for any
adjustments required by Section 32(a).
kk) "Software License" shall mean a non-exclusive license to Buyer to use
Seller's software nomination program and its archived and historical
database for a period of 120 days from the Effective Date, at no cost
to Buyer.
ll) "Tank Capacity Lease Agreement" shall mean an agreement mutually
acceptable to Seller and Buyer which shall include the following
terms and conditions:
(i) Seller will lease to Buyer up to 200,000 barrels of tank working
capacity at the Mesa Midland Station. The tank working capacity
leased to Buyer will be limited to 100,000 barrels each of
common stream WTI and WTS;
(ii) The volumes delivered to the Mesa Midland Station for storage
shall be delivered out in the same calendar month as it was
received;
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(iii) The lease will have a five (5) year term;
(iv) The fee for this lease shall be $10.00 per year.
mm) "Transferable Contracts" shall mean all of Seller's licenses,
permits, authorizations, contracts and agreements related to and
necessary for the operation and maintenance of the Pipeline Interests
which Seller is not prohibited from transferring to Buyer by law or
existing contractual relationship, as more particularly set out in
Exhibit H.
2. PURCHASE AND SALE OF ASSETS
a) Seller shall sell, assign, transfer, and convey to Buyer at Closing
(as defined in Section 4, CLOSING) all of Seller's right, title, and
interest in the following assets:
i) The Pipeline Interests;
ii) The Right of Way Interests;
iii) The Fee;
iv) The Easement;
v) The Records, but not the files, records, information and materials
relating to the Pipeline Interests that Seller is prohibited from
transferring which are described in Exhibit "M" hereto;
vi) The Transferable Contracts but not the contracts and agreements
that are related to the operation and maintenance of the Pipeline
Interests which Seller is prohibited by law or existing
contractual relationship from transferring which are set out in
Exhibit "L" hereto, or those Transferable Contracts identified by
Buyer pursuant to written notice to Seller no later than ten (10)
business days prior to Closing for which Buyer does not wish to
receive an assignment.
vii) The Software License.
viii) The SCADA Lease.
b) Seller shall transfer to Buyer at Closing custody of the Line Fill,
along with all related Line Fill and Shipper accounting records. In
the event the transferred crude oil does not conform in quantity and
quality to Seller's shipper accounting records a post Closing
adjustment shall be made to the Purchase Price and reflected in the
Settlement Statement Accounting to be provided pursuant to Section
32(a)(ii). Notwithstanding the foregoing, no Purchase Price adjustment
shall be made for the
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West Coast Heavy Crude diverted in February, 1999 by Plains All
American Pipeline, L.P.. to Seller's Tank Nos. 1644 and 1645 located
at the Wink East Station resulting in the contamination of West Texas
Sour ("WTS") in Seller's custody, for which Buyer shall assume all
liability to the affected shippers. The Line Fill shall be measured
and valued as follows: (i) Meter tickets will be pulled and tank
volumes will be determined at the Effective Time; (ii) volumes will be
corrected to a temperature of sixty degrees (60) Fahrenheit, less
deductions for impurities, in accordance with the latest API/ASTM
measurement standards, and at equilibrium vapor pressure; (iii) meter
tickets reflecting all oil delivered out of the system through the
first full month of operation shall be retained by Buyer. Any
discrepancies that exist between the Line Fill transferred to Buyer's
custody and that shown in shipper Line Fill accounts, except as
specifically excepted above, that result in a net loss to a shipper or
shippers will be valued at ▇▇▇▇▇'▇ average spot prices for WTS or West
Texas Intermediate ("WTI") if such loss is crude oil of WTS or WTI
quality, and at a mutually agreed delivery price for West Coast Sour
if such crude oil is of West Coast Sour quality, on the Effective
Date.
3. PURCHASE PRICE AND DEPOSIT
a) Subject to Closing and post-Closing adjustments, the purchase price
for the Property shall be Forty Million Five Hundred Thousand and
No/100 Dollars ($40,500,000.00) (the "Purchase Price").
b) Buyer shall deliver the Deposit to Seller's qualified exchange
intermediary, Salix Equity Exchange, Inc. on the next business day
following execution of this Agreement. The Deposit shall be paid in
United States dollars in immediately available funds by wire transfer
to the following wire instructions:
Union Bank of California, San Francisco, California
ABA # ▇▇▇▇-▇▇▇▇-▇
Attn: Domestic Custody
Further Credit to Salix Equity Exchange, Inc., Ref. #1
Client Account No. 250027150-01
Attn: ▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇▇ ▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
c) Seller need not segregate the Deposit in a separate account, and shall
not hold the Deposit in trust. If the Closing occurs, the principal
amount of the Deposit together with Interest on the Deposit, shall be
credited against the Purchase Price, as a Purchase Price adjustment.
d) In the event that Closing does not occur and Seller is required to
return the Deposit as provided for in this Agreement, Seller shall wire
transfer the Deposit plus Interest (adjusted for Liquidated Damages if
applicable) to Buyer no later than five (5) business days of demand by
Buyer. The refunded amount shall be paid in United States dollars in
immediately available funds by wire transfer to the credit of
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Buyer, Account No. 560-96260 at BankBoston, N.A., Boston,
Massachusetts, A.B.A. # 011000390.
e) On the Closing Date, Buyer shall pay to Seller, according to Seller's
wire instructions to be provided to Buyer at least five (5) business
days prior to Closing, the balance of the Purchase Price, Thirty-four
Million Five Hundred Thousand and No/100 Dollars ($34,500,000.00), plus
(i) an increase in the Purchase Price equal to the estimated
costs for any transfer taxes, sales and gross receipt taxes
on the tangible personal property, and such other charges
necessary to transfer the Property, if any, paid by Seller,
plus
(ii) a decrease for the amount of Interest accrued on the Deposit,
plus
(iii) a decrease for any loss of less than Five Hundred Thousand
dollars ($500,000.00), in the aggregate, due to casualty or
condemnation to the extent that Buyer does not receive proceeds
from insurance or condemnation;
4. CLOSING
a) The closing of the transaction contemplated hereby ("Closing") shall
occur when the Purchase Price is paid to Seller and the conveyancing
instruments referred to in Section c) below are delivered to Buyer.
Closing shall take place no later than 90 days from the Execution Date
of this Agreement or the next business day following ten (10) days
after Buyer and Seller have satisfied all of the conditions and
received the governmental approvals contemplated by Section 25 herein,
whichever is later (the "Closing Date"), unless mutually extended by
both parties, and shall take place at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ or other location and date mutually agreed upon
between the parties.
b) If the Closing does not take place within one hundred twenty (120)
days from the Execution Date for any reason then this Agreement shall
terminate and neither party shall have any further obligation to the
other party, except for the return of Buyer's Deposit with Interest
and the payment of Liquidated Damages, if applicable.
c) On the Closing Date, Seller shall take all such action and execute and
deliver to Buyer the following:
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i) A ▇▇▇▇ of Sale for conveyance of the Pipeline Interests which are
tangible personal property and Records in its possession
including Linefill and shipper accounting records in the form
attached hereto as Exhibit D;
ii) A Pipeline Deed And Assignment Of Right-of-Way Interests for
conveyance of the real property Pipeline Interests and the Right-
of-Way Interests in the form attached hereto as Exhibit E. Within
said Pipeline Deed And Assignment Of Right-of-Way Interests
Seller shall retain a non-exclusive license to enter upon any and
all Real Property Interests conveyed to Buyer by the Pipeline
Deed And Assignment Of Right-of-Way Interests for the purpose of
performing its obligations under this Agreement;
iii) A Corporation Grant Deed for the Fee in the form attached
hereto as Exhibit F. Within said Corporation Grant Deed Seller
shall retain a non-exclusive license to enter upon any and all
Real Property Interests conveyed to Buyer by the Corporation
Grant Deed for the purpose of performing its obligations under
this Agreement;
iv) An Easement to operate and maintain the Pipeline Interests on
certain fee property that will not be included in the sale in the
form attached hereto as Exhibit G; and
v) An Assignment of the Transferred Contracts in the form attached
hereto as Exhibit H.
vi) A statement of estimated closing charges and accounting of funds
received from Buyer, a copy of which shall be provided to Buyer
ten (10) days prior to Closing.
vii) A non-exclusive Software License.
viii) A title insurance policy covering the Fee, issued by a title
company acceptable to both Seller and Buyer, in the face amount
of the appraised value of the Fee and containing reasonable and
customary exceptions to title, at Seller's sole cost and expense,
or, at Seller's option, a General Warranty of Title from Seller
which General Warranty shall be incorporated into the Corporation
Grant Deed.
ix) The Mesa Midland Header Lease Agreement.
x) The Tank Capacity Lease Agreement.
xi) An officer's certificate of Seller in a form reasonably
satisfactory to Buyer to the effect that, to such officer's
actual knowledge the representations,
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warranties and limited warranties contained in Section 10 and
Section 11 are true and correct in all material respects on the
Closing Date.
d) On the Closing Date Buyer shall execute and deliver to Seller an
officer's certificate of Seller in a form reasonably satisfactory to
Seller to the effect that, to such officer's actual knowledge the
representations and warranties contained in Section 12 are true and
correct in all material respects on the Closing Date.
e) Buyer and Seller shall take all such action and execute and deliver
such other documents as may be necessary to effectuate the transfer
and assignment of the Property.
f) Buyer shall be entitled to possession of the Property upon the Closing
Date following payment of the Purchase Price as set forth in Section 3
(PURCHASE PRICE AND DEPOSIT) and Closing of the transaction.
5. TITLE
a) Other than as may be set forth in the Corporation Grant Deed, Seller
makes no general warranties of title to the Real Property Interests it
sells and agrees to sell only such interest or interests, if any, as
it may own in the Real Property Interests. Buyer shall, at its own
expense, conduct such examination of title as it deems appropriate and
shall either accept title and proceed with the purchase or notify
Seller of its intent to terminate this Agreement based on a Material
Defect in title, pursuant to Section 8.
b) The property files shall be made available as soon as practical and
Buyer shall have sixty (60) days from the date that the property files
which contain legal descriptions of the Real Property Interests listed
on Exhibits "B" and "C" are made available to Buyer to conduct such
title examination as it may desire and within which to confirm in
writing its desire to terminate this Agreement based upon a Material
Defect in title pursuant to Section 8. If no Material Defects exist
but Curative Actions are required, Buyer shall provide Seller with
written notice of the Real Property Interests requiring Curative
Actions and upon Seller's request, Buyer shall also provide Seller
with the results of any such examination of title including any title
reports.
6. RIGHT-OF-WAY INTERESTS
a) Seller is the owner of certain Right-of-Way Interests in real property
underlying the Pipeline Interests, but said Right-of-Way Interests may
not underlie all of the Pipeline Interests. Seller shall grant to
Buyer assignments of the Right-of-Way Interests subject to the
aforementioned possible gaps.
b) The Right-of-Way Interests being transferred to Buyer herein are more
particularly described in Exhibit B hereto.
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c) Buyer acknowledges that it is receiving from Seller only the interest
that Seller has in said Right-of-Way Interests and that Seller has not
represented or warranted that it has an interest in the entire length
of the real property underlying the Pipeline Interests, provided
however, Seller shall take commercially reasonable and diligent steps,
as more particularly set out in Section 6(e) and Section 8, to remedy
spatial gaps where it has no property rights or undertake Curative
Actions where Seller is not otherwise in compliance with the
agreements creating the Right-of-Way Interests underlying the Pipeline
Interests.
d) Buyer and Seller acknowledge that the Right of Way Interests shown in
Exhibit B may require consent of the landowner prior to assignment,
and that Seller shall use commercially reasonable and diligent efforts
to obtain all of said consents. Closing is contingent upon Seller
either (i) obtaining the grantor's written consent to Seller's
assignment of the right-of-way agreements set forth in Exhibit B, or
(ii) Seller completing all required Curative Actions for the Right of
Way Interests or (iii) Seller's and Buyer's agreement to proceed to
Closing and the pursuit of Curative Actions after Closing, pursuant to
Section 8.
e) Seller shall use commercially reasonable and diligent efforts to
obtain said consents or new or amended right-of-way agreements within
60 days from the day the property files specified in Section 5 (b) are
tendered to Buyer. Any payment obligation imposed by any grantor, in
order to gain consent, effect an assignment of the Right-of-Way
Interests, to replace or amend an existing right-of-way agreement or
related to other Curative Actions, will be paid by Seller at the time
said payment obligations become due to each applicable grantor,
subject, however, to the limitations set forth in Section 8(b).
7. FEE PROPERTY
In addition to the Right-of-Way Interests specified in Section 6 (RIGHT-OF-
WAY INTERESTS), Seller or its affiliate is the owner of real property
underlying the Pipeline Interests, some of which is not included in this
sale. All the Fee property to be included in the sale is described on
Exhibit "C." Seller shall grant or cause to be granted to Buyer, its
successors and assigns, at no additional cost to Buyer an Easement for that
portion of the Pipeline Interests that traverses property owned by Seller
or affiliates of Seller which is excluded from the sale. The Easement
shall be in the form as shown on Exhibit "G" to this Agreement.
8. TERMINATION FOR MATERIAL DEFECT
a) In the event that, thirty (30) days prior to Closing, the sum of the
actual and good faith estimated cost to complete all Curative Actions
undertaken by Seller or requested by Buyer is, in the aggregate, less
than Five Hundred Thousand dollars ($500,000.00), Buyer and Seller
shall be obligated to proceed to Closing and Seller
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shall be obligated, at Seller's expense, to complete all Curative
Actions prior to Closing or as soon thereafter as is reasonably
practical.
b) In the event that the sum of the estimated and actual cost for
Curative Actions undertaken by Seller or requested by Buyer, exceeds,
in the aggregate, Five Hundred Thousand dollars ($500,000.00) such
amount constituting a material defect ("Material Defect"), Seller or
Buyer may elect to terminate this Agreement by notifying the other
party in writing of its intent to terminate due to said Material
Defect. If Seller elects to terminate this Agreement based upon such
Material Defect, Buyer may, at its sole option, agree to be obligated
for any and all further Curative Actions and Seller shall be obligated
to proceed to Closing under the terms of this Agreement. If Seller and
Buyer do not elect to terminate this Agreement based upon such
Material Defect, Buyer shall be obligated to proceed with the purchase
under the terms of this Agreement and Seller shall complete all
Curative Action, at Seller's cost and expense, prior to Closing or as
soon as practical thereafter or Seller may elect by written notice to
Buyer to defer any and all Curative Actions in return for providing
Buyer with indemnity for damages arising as a result of Seller's
failure to complete the deferred Curative Actions. If Buyer elects to
terminate this Agreement, or if Seller elects to terminate this
Agreement and Buyer does not elect to be obligated for any and all
further Curative Actions, this Agreement shall terminate. If this
Agreement is terminated pursuant hereto the Deposit, with Interest,
shall be returned to Buyer and neither party shall have any further
obligation to the other party.
c) For a period of five years from and after the Closing Date, should
Buyer identify the need for Curative Action regarding the Right-of-Way
Interests and said Curative Action would have been required to provide
Buyer with good and defensible title on the Closing Date, Buyer shall
notify Seller in writing of the nature and location of the condition
requiring Curative Action. Seller, at Seller's sole cost and expense,
shall diligently undertake the Curative Action as necessary to remedy
such condition, or Seller shall provide Buyer with written notice of
Seller's election to defer the Curative Action in return for Seller
providing Buyer with indemnity for any and all damages, including
punitive damages asserted by third parties, not a party to this
Agreement, arising as a result of Seller's failure to complete the
deferred Curative Actions. At the expiration of five years, except for
those conditions for which Seller has received written notice from
Buyer or for which Seller has undertaken to indemnify Buyer within the
five year time period, Seller shall have no further obligation, duty
or responsibility to perform Curative Actions or to indemnify Buyer.
d) Buyer agrees to cooperate with Seller in furtherance of Seller's
efforts to perform Curative Actions, including but not limited to,
Buyer filing and pursuing condemnation actions when reasonably
requested by Seller and at Seller's cost. Subject to the limitations
set forth above in Section 8(c), Seller shall hold Buyer harmless from
and against any and all costs, expenses, demands, damages or causes of
action resulting from or related to (i) Seller's failure to have
Right-of-Way
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Interests underlying the Pipeline Interests, (ii) the presence of
spatial gaps in the Right-of-Way Interests, (iii) Seller's failure to
comply with the agreements creating the Right-of-Way Interests, or
(iv) Seller's Curative Actions.
e) Seller may not defer Curative Actions under Section 8(b) and 8(c) if
such deferral would result in loss of the right to utilize the
Pipeline Interest on the property for which Curative Actions have been
requested.
9. DAMAGE OR CONDEMNATION PRIOR TO CLOSING
Seller shall promptly notify Buyer of any casualty to the Property or any
condemnation proceeding commenced prior to the Closing. If any such damage
or proceeding relates to or may result in the loss of any material portion
of the Property ("material" shall mean in excess of Five Hundred Thousand
Dollars [$500,000.00] in value), Buyer may, at its option, elect to (a)
terminate this Agreement, in which event Seller shall refund the Deposit
with Interest, and neither party shall have any further rights or
obligations hereunder, or (b) with regard to condemnation, continue the
Agreement in effect, in which event upon the Closing, Buyer shall be
entitled to any compensation, awards, or other payments or relief resulting
from such condemnation proceeding whether payment is made before or after
Closing or (c) with regard to casualty, Buyer shall be entitled to either
the insurance proceeds or other payment resulting from such casualty or a
reduction in the Purchase Price by the amount required to restore the
property to the condition that existed prior to the casualty loss. To the
extent that the parties cannot agree to the cost to restore the property,
the parties shall mutually agree to a third party appraiser who shall
render an appraisal of the cost to restore the property which appraisal
shall be conclusive and binding for all purposes. If Buyer elects to
terminate this Agreement based upon such loss, Seller may at its option
repair or replace such Property to substantially the same condition as
existed prior to such loss within thirty (30) days after receipt of Buyer's
election to terminate, and if such cures are effected, Buyer shall be
obligated to proceed with the purchase under the terms of this Agreement
without a right to compensation or payment and without a Purchase Price
adjustment. If Seller does not elect to cure or, elects to cure but such
cure cannot be affected within thirty (30) days, and Buyer does not elect
to proceed with the purchase of the Property due to the damage to or loss
of the Property through casualty or condemnation proceedings, this
Agreement shall terminate. In the event of casualty or condemnation that
does not result in a material loss of Property, Seller shall not be
obligated to repair or replace the Property and Buyer shall not have the
right to terminate, provided however, Seller shall compensate Buyer to the
extent that it receives insurance proceeds or a condemnation award, or, if
not compensated or not fully compensated, such damage or loss shall be a
Purchase Price Adjustment.
10. SELLER'S REPRESENTATIONS AND WARRANTIES
Seller represents and warrants to Buyer as follows:
a) Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite
corporate power to carry on its business as it is now being conducted.
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b) Seller has the corporate power and authority to make and carry out this
Agreement and to be bound by any and all terms and conditions hereof.
All necessary corporate action on the part of Seller required for the
authorization, the execution and delivery of this Agreement and the
consummation of the transactions provided for herein has been duly
taken.
c) Seller is not a "foreign person" as such term is used in Section 1445
of the Internal Revenue Code ("IRC 1445").
d) Seller is qualified to do business and is in good standing in the State
of Texas.
e) Except as disclosed to Buyer in the attached Exhibit "K", as it may be
amended from time to time up to the Closing Date, there are no
threatened or pending claims, demands, suits or other legal proceedings
including governmental and administrative actions related to the
ownership, design, use, operation or maintenance of the Property or the
transactions contemplated by this Agreement.
11. SELLER'S ADDITIONAL REPRESENTATIONS AND LIMITED WARRANTY
Seller represents and warrants to Buyer to the extent, but only to the
extent set forth below in Section 11(m), as follows:
a) Except as disclosed to Buyer in the attached Exhibit "K", as it may be
amended from time to time up to the Closing Date, the agreements
creating the Right-of-Way Interests are in full force and effect, there
are no material defaults by Seller or events that with notice or the
lapse of time, or both, would constitute a material default of said
agreements by Seller; and Seller has not received any notice to either
remove or relocate any part of the Pipeline Interest or that any party
to any of the agreements creating the Right-of-Way Interests intends to
terminate such agreement.
b) Except as disclosed to Buyer in the attached Exhibit "K", as it may be
amended from time to time up to the Closing Date, the Transferable
Contracts are transferable and in full force and effect. There are no
material defaults by Seller under the Transferable Contracts, or events
that with notice or the lapse of time, or both, would constitute a
material default of the Transferable Contracts by Seller; and Seller
has not received any notice that any party to any of the Transferable
Contracts intends to terminate such agreement.
c) Except as disclosed to Buyer in the attached Exhibit "K", as it may be
amended from time to time up to the Closing Date, Seller has good and
defensible title to the Real Property Interests; Seller has not
conveyed any right, title or interest in the Property to any third
party; the Property owned by Seller is free and clear of
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mortgages, mechanics' liens and other forms of security interests
securing the financial obligations of Seller, or that are Permitted
Encumbrances; or, if such liens exist, they have been bonded or secured
against.
d) Except as disclosed to Buyer in the Attached Exhibit "K", as it may be
amended from time to time up to the Closing Date, on the Closing Date
the Property is not considered a "wetland" or located in a "flood
zone", to the Knowledge of Seller, does not contain naturally occurring
Radioactive Material ("NORM") as defined in Section 13(d).
e) Except as disclosed to Buyer in the Attached Exhibit "K", as it may be
amended from time to time up to the Closing Date, the assets that are
currently utilized in the operation of the Pipeline Interests, all of
which are included in Exhibit "A", are in working order and serviceable
condition on the Closing Date.
f) As of the Execution Date of this Agreement Seller has conducted Year
2000 compliance tests for Programmable Logic Control's ("PLC's") and
Human/Machine Interfaces ("HMI's") as listed in Exhibit "N". As a
result of said compliance tests the following equipment was found to be
non-compliant: (1) Wonderware HMI at Keystone Station (Serial Number
73279), (2) Wonderware HMI at Monahans Station (Serial Number 71264),
(3) RTMS HMI for the Crane Crude System. Seller will replace or modify
the aforementioned non-compliant equipment prior to the Closing Date of
this Agreement. To the Knowledge of Seller, Seller has disclosed to
Buyer all known material Year 2000 issues related to the Property.
g) Except as disclosed to Buyer in the Attached Exhibit "K", as it may be
amended from time to time up to the Closing Date, none of the records
or contracts which Seller is prohibited from transferring and which are
more particularly set out in Exhibits "L" and "M" are reasonably
necessary for the operation or maintenance of the Property.
h) As of the Closing Date the Pipeline Interests have only been utilized
for oil gathering and oil transportation services with the exception of
the following :
i) A portion of the Keystone to Wink pipeline was previously used to
transport butane to a gas plant in ▇▇▇▇▇▇;
ii) A portion of the ▇▇▇▇▇▇▇ gathering system was previously in natural
gas service.
i) Except as disclosed to Buyer in Exhibit "K", as it may be amended from
time to time up to the Closing Date, Seller's operation of the Property
is in substantial compliance with all federal, state and local
statutes, laws, ordinances, regulations, rules, judgements, orders and
decrees.
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j) Except as disclosed to Buyer in Exhibit "K", as it may be amended from
time to time up to the Closing Date, Seller is in substantial
compliance with all permits, licenses and other authorizations
reasonably necessary to the operation of the Pipeline Interests and
that such permits, licenses and authorizations are transferable to
Buyer.
k) Except as disclosed to Buyer in Exhibit "K", as it may be amended from
time to time up to the Closing Date, Seller is in substantial
compliance with all Environmental Laws and all health and safety laws,
rules and regulations regarding the Property; Seller is not subject to
any pending or threatened enforcement action or investigations
regarding the Property; there are to the Knowledge of Seller no
material Environmental Liabilities on or related to the Property; and,
with the exception of attorney work product or documents subject to
attorney client privilege (but not the underlying factual information
and data), Seller has made available to Buyer all of the files, records
and documents in its possession regarding the environmental condition
of the Property.
l) Except as specifically set forth in this Agreement, Seller makes no
representation or warranty whatsoever as to operative or proposed
governmental laws and regulations (including, but not limited to,
zoning, environmental, and land use laws and regulations) to which the
Property may be subject. Buyer acknowledges that Buyer has entered into
this Agreement on the basis of Buyer's own review and investigation of
the applicability and effect of such laws and regulations and except
for the representations and warranties of Seller set forth in this
Agreement, that Buyer assumes the risk that adverse matters may not
have been revealed by Buyer's investigation.
m) IF SUBSEQUENT TO THE CLOSING DATE, BUT PRIOR TO FIVE (5) YEARS AFTER
THE CLOSING DATE, BUYER BECOMES AWARE OF FACTS THAT CONTRADICT THE
SELLER'S REPRESENTATIONS AND LIMITED WARRANTIES AS SET FORTH ABOVE IN
THIS SECTION 11, SUCH THAT SELLER'S REPRESENTATION OR LIMITED WARRANTY
IS NO LONGER TRUE OR CORRECT IN ALL MATERIAL RESPECTS CONSTITUTING A
MISREPRESENTATION, SELLER SHALL REIMBURSE TO BUYER THE ACTUAL COSTS OR
DAMAGES INCURRED BY BUYER TO CORRECT THE FACTORS UNDERLYING THE
MISREPRESENTATION BY SELLER WHICH EXCEED IN THE AGGREGATE TWO HUNDRED
AND FIFTY THOUSAND DOLLARS ($250,000.00) (THE AGGREGATE OF COSTS AND
DAMAGES UP TO $250,000.00 SHALL BE BUYER'S RESPONSIBILITY) AND UP TO,
BUT NOT TO EXCEED, A TOTAL AGGREGATE COST TO SELLER OF FIVE MILLION
DOLLARS ($5,000,000.00). ANY COSTS AND DAMAGES INCURRED BY BUYER WHICH
EXCEED FIVE MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS ($5,250,000.00)
SHALL BE THE RESPONSIBILITY OF BUYER. THE FOREGOING PAYMENTS TO
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BE MADE BY SELLER TO BUYER SHALL CONSTITUTE BUYER'S SOLE REMEDY AS
AGAINST SELLER FOR MISREPRESENTATIONS, WHETHER MATERIAL OR IMMATERIAL,
MADE BY SELLER PURSUANT TO THIS SECTION 11. NOTWITHSTANDING THE
FOREGOING, THIS PROVISION DOES NOT APPLY TO THE BREACH OF SECTIONS
11(i) OR 11(j) TO THE EXTENT THAT NONCOMPLIANCE CREATES AN
ENVIRONMENTAL LIABILITY, OR SECTION 11(k), THE REMEDIES FOR ALL WHICH
ARE GOVERNED BY SECTION 18(a), OR TO BREACHES UNDER SECTIONS 11(a) AND
(c) WHICH ARE GOVERNED BY SECTION 8.
12. BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer represents and warrants to Seller the following:
a) Buyer is a partnership duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite
powers to carry on its business as it is now being conducted.
b) Buyer has the power and authority to make and carry out this Agreement
and to be bound by any and all terms and conditions hereof. All
necessary partnership action on the part of Buyer required for the
authorization of the transaction provided for herein has been duly
taken.
c) Buyer is qualified to do business in the State of Texas.
d) Buyer is not a "foreign person" as such term is used in Section 1445 of
the Internal Revenue Code ("IRC 1445").
e) Buyer or the affiliate of Buyer to whom this Agreement is assigned
under Section 32(b), whichever closes the transaction contemplated by
this Agreement, has sufficient financial resources to pay the Purchase
Price that are not contingent and to fulfill its obligations as
specified in this Agreement.
f) Buyer is and has been since its inception engaged primarily in the
business of transporting oil and owning interests in and operating oil
pipelines.
g) Buyer is an experienced and knowledgeable investor in the oil and gas
business. Prior to entering into this Agreement Buyer was advised by
its own legal, tax and other professional counsel concerning this
Agreement, the Property and the value thereof. Buyer is aware of the
risks and uncertainties of an investment in oil pipelines. Nothing
contained in the foregoing provisions of this paragraph however shall
change the substance of or the effect of the representations,
warranties and limited warranties of Seller set forth in this
Agreement.
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h) Buyer has disclosed to Seller in writing any and all material matters,
discovered by Buyer prior to Closing Date, or of which Buyer has
otherwise acquired knowledge prior to Closing, which should have been
disclosed as an amendment to Exhibit "K", but has not been so
disclosed, at least ten (10) days prior to the Closing Date or
immediately upon Knowledge of Buyer of such matter if it becomes known
or discovered by Buyer subsequent to the ten (10) days before the
Closing Date.
13. BUYER'S INVESTIGATION AND RIGHT TO CANCEL
a) Subject to the provisions of Section 15 (BUYER'S RIGHT OF ENTRY) of
this Agreement, Buyer may, at its option, conduct physical inspections
and health, environmental and safety evaluations of the Property (the
"HES Evaluation"), solely for the purpose of Buyer's verification of
the operational and physical integrity, health, environmental and
safety condition of the Property. If the HES Evaluation discloses
conditions that are likely to result in Repair Liabilities or
Environmental Liabilities which are of a nature that requires repair or
cleanup and are of such a substantial magnitude as to warrant a cost of
repair or cleanup in the aggregate in excess of One Million Dollars
($1,000,000.00), then Buyer may elect to cancel this Agreement by
providing Seller with a copy of the HES Evaluation together with
written notice of such election no later than the later of ten (10)
days after Seller is presented the internal inspection results in
Section 15 (a) or ninety (90) days after the Execution Date of this
Agreement. In no case shall Buyer be entitled to avail itself of an
option to cancel this Agreement under the provisions of this Section 13
if Buyer is indemnified for the costs of the repair or cleanup or
otherwise not obligated to incur the costs. Should Buyer terminate this
Agreement pursuant to this Section, Seller shall refund the Deposit
with Interest, as well as the reasonable costs associated with Buyer's
discovery of the Repair Liability or the Environmental Liability, and
neither party shall have any further rights or obligations hereunder.
b) Any Repair Liability or Environmental Liability not known to Seller
which Buyer discovers during its investigation under this Section,
shall be disclosed in writing to Seller prior to Closing. If such
Repair Liability or Environmental Liability discovered by Buyer are of
a nature that requires repair or cleanup and are of such a substantial
magnitude as to warrant a cost of repair or cleanup in the aggregate in
excess of One Million Dollars ($1,000,000.00), Seller, in its sole
discretion, may elect to terminate this Agreement, prior to Closing and
within twenty (20) days of receipt of the above disclosure from Buyer.
In no case shall Seller be entitled to avail itself of an option to
cancel this Agreement under the provisions of this Section 13 if the
Repair Liability or Environmental Liability were known to Seller on or
before the Execution Date of this Agreement, if Seller is indemnified
for such costs or otherwise not obligated to incur the costs, or if
Buyer has agreed to assume responsibility for the repair or cleanup.
Should Seller terminate this Agreement pursuant to this Section, Seller
shall immediately refund Buyer's Deposit with Interest and the
reasonable costs associated with Buyer's discovery of the Repair
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Liability or Environmental Liability, and neither party shall have any
further rights or obligations hereunder.
c) Buyer acknowledges that (i) Buyer at Closing will acquire the Property
on the basis of it's own investigation of the physical condition of the
Property and assumes the risk that adverse conditions outside the scope
of Seller's representations, warranties, limited warranties and
indemnities set forth in this Agreement may not be revealed by Buyer's
own investigation, (ii) EXCEPT FOR AND TO THE EXTENT THAT MATTERS ARE
ADDRESSED IN SELLER'S REPRESENTATIONS, WARRANTIES, LIMITED WARRANTIES,
AND INDEMNITIES, BUYER IS ACQUIRING THE PROPERTY "AS IS WHERE IS,"
"WITH ALL FAULTS" AND WITHOUT WARRANTY OF FITNESS FOR ANY PARTICULAR
PURPOSE AND WITHOUT ANY WARRANTIES EXPRESS OR IMPLIED WHICH EXTEND
BEYOND THE FACE OF THIS AGREEMENT, AND (iii) EACH PARTY'S REMEDIES
AGAINST THE OTHER AND LIABILITIES TO THE OTHER FOR CONDITIONS
ASSOCIATED WITH THE TRANSFERRED PROPERTY ARE LIMITED TO THOSE PROVIDED
IN THIS AGREEMENT.
d) Buyer acknowledges that Seller has informed Buyer that the Property:
(i) could contain asbestos or other hazardous material as established
by the Environmental Protection Agency, Department of Environmental
Quality, or other governmental agencies; (ii) might contain petroleum
products; (iii) might contain Naturally Occurring Radioactive Material
("NORM"); (iv) might be considered as a "Wetland" as defined in the
"Federal Manual for Determining Jurisdictional Wetland" or by some
other governmental rules or regulations; (v) may be located in a "Flood
Zone" as defined by the U.S. FEMA Mapping System or other governmental
agencies; and therefore, Buyer waives any present or future claim or
cause of action against Seller arising from the conditions discussed
herein, other than as may be provided in Section 11(m) or Section 17
and Section 18. This provision shall survive the Closing.
e) On the Closing Date, Buyer shall assume all risk that the Property may
contain wastes or contaminants and that adverse physical conditions,
including the presence of wastes or contaminants, may not have been
revealed by Buyer's investigation other than as may be provided in
Section 11(m) or Section 17 and Section 18. This provision shall
survive the Closing.
f) On the Closing Date, all responsibility and liability related to
disposal, spills, leaks, waste, or contamination on and below the
Property shall be transferred from Seller to Buyer subject to Section
17 and Section 18. This provision shall survive the Closing.
g) Except as disclosed to Buyer in Section 11 (f) herein, Buyer expressly
acknowledges and agrees that: (1) Seller either has not assessed, or,
if it has
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assessed, has not (or may not have or not fully have) modified,
replaced or otherwise remediated the Property being sold, including any
components thereof or systems related thereto or embedded therein, to
determine whether they are Year 2000 or Date Compliant, as defined
herein. (2) IF ANY PORTION OF THE PROPERTY IS NOT YEAR 2000 OR DATE
COMPLIANT, ITS ABILITY TO FUNCTION OR OPERATE MAY BE AFFECTED, WITH A
RESULTING ADVERSE EFFECT ON BUYER'S BUSINESS. (3) As between Buyer and
Seller only, Buyer assumes and releases Seller from any costs, expenses
or losses incurred by Buyer arising from the Year 2000 or Date
Compliance status of the Property or any portion thereof other than
that for which a disclosure was made or for which a disclosure should
have been made in Section 11(f) and Seller shall have no liability
whatsoever for any costs, expenses, losses, damages, or problems Buyer
may incur or encounter arising from or associated in any way with the
Year 2000 or Date Compliance status of the Property or any portion
thereof. Buyer shall not release and indemnify Seller from costs,
expenses claims, damages or liabilities asserted by parties other than
the Buyer or Seller except to the extent that such costs, expenses,
claims, damages or liabilities are caused by the negligence of Buyer.
(4) Any disclosures other than contained in Section 11 (f) made by
Seller as to Year 2000 or Date Compliance (including but not limited to
disclosures as to Seller's or a manufacturer's/supplier's assessments,
inventories, testing, modification, replacement, etc.), whether made
orally or in writing, and whether made before or after execution of
this Agreement, are Year 2000 Readiness Disclosures, are for
informational purposes only and SUCH DISCLOSURES DO NOT AND SHALL NOT
CREATE, AND SHALL NOT BE CONSTRUED TO CREATE, ANY EXPRESS OR IMPLIED
WARRANTIES ON THE PART OF SELLER, AND SELLER EXPRESSLY DISCLAIMS ANY
SUCH EXPRESS OR IMPLIED WARRANTIES, INCLUDING BUT NOT LIMITED TO ANY
IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE. (5) "Year 2000 or Date Compliant" means the Property and its
component parts would: (i) Correctly process date information before,
on and after January 1, 2000 and in connection with the transition from
the year 1999 to the year 2000. This would include accepting date
input, providing date output, and performing calculations and
comparisons on dates or portions of dates. Date interpretation would be
correct for all valid date values within the applicable domain; (ii)
function accurately and without interruption before and after January
1, 2000 through January 1, 2005 without any change in operations
associated with the advent of the new century; (iii) respond to two-
digit input in a way that would resolve the ambiguity as to the century
in a disclosed, defined, and predetermined manner and interfacing
software would make the same century assumptions when processing the
two-digit years; (iv) process the Year 2000 as a leap year; (v)
correctly handle date fields containing non-date information and
correctly handle a date held in a non-date field; and (vi) correctly
process any date with a year specified as "99" and "00", regardless of
other subjective meanings attached to these values.
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14. SELLER'S INVESTIGATION AND RIGHT TO CANCEL
Seller may, at its option, conduct an environmental, health and safety
evaluation of the Property solely for Seller's use and information, to be
completed no later than twenty (20) days before Closing. If, in Seller's
good faith opinion, the evaluation results are unacceptable to Seller, then
Seller may elect to cancel this Agreement by providing Buyer with written
notice of such election no later than ten (10) days before Closing. Seller
shall provide Buyer with access to the results of any evaluation. Within
ten (10) business days of receipt of said written notice Buyer may elect to
have Seller proceed to Closing provided Buyer has agreed in writing to be
responsible for remediation of the Environmental Liabilities which were
unacceptable to Seller. If Buyer does not elect to proceed to Closing as
set forth above and Seller elects to terminate this Agreement pursuant to
this Section, Seller shall refund the Deposit with Interest and shall
reimburse Buyer for its reasonable cost for due diligence activity from the
Execution Date until termination and neither party shall have any further
rights or obligations hereunder.
15. BUYER'S RIGHT OF ENTRY
a) Seller hereby grants to Buyer, its agents, representatives, engineers
and surveyors, immediately upon execution of this Agreement by the
parties and upon reasonable notice to Seller, the right at Buyer's sole
risk to enter onto the Real Property Interests from time to time for
the purposes of inspection of the Property, including but not limited
to both internal and external inspection, evaluation and appraisal of
the Pipeline Interests. Such persons shall have the right to make
surveys, soils tests and such other tests as Buyer shall deem
desirable. If Buyer plans to perform any excavation, take soil samples
or conduct other activities on the Real Property Interests which may
affect Seller's pipeline operations, or impact Seller's rights-of-way,
Buyer shall provide Seller with written notification of such plans and
shall obtain Seller's written approval, which approval shall not be
unreasonably withheld or delayed, and shall secure all necessary
regulatory approvals prior to conducting any such activities. Buyer
shall restore the Property to its condition existing prior to Buyer's
operations or activities upon the Property pursuant hereto, including
repairs or maintenance as such are required as a result of Buyer's
operations or activities. If Buyer elects to perform internal pipe
inspections, such inspections shall be undertaken as soon as reasonably
practical after Buyer obtains the consent of Seller. Buyer shall
provide Seller with the results of the internal pipe inspections and
both Buyer and Seller shall have at least ten (10) business days to
review such results prior to Closing. If Seller fails to grant approval
of Buyer activities that are accepted practices in the pipeline
industry to assess pipe and tank integrity, equipment functionality
other potential Repair Liability and potential Environmental Liability
related to the Property within a reasonable period of time after
Seller's receipt of Buyer's notification as set forth above, Buyer may
terminate this Agreement and Seller shall immediately refund Buyer's
Deposit with Interest.
b) BUYER WAIVES AND RELEASES ALL CLAIMS AGAINST SELLER, CHEVRON
CORPORATION, ITS AND THEIR SUBSIDIARIES AND
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AFFILIATES, INCLUDING BUT NOT LIMITED TO ITS AND THEIR DIRECTORS,
OFFICERS, EMPLOYEES AND AGENTS (THE "SELLER INDEMNITEES") FOR INJURY TO
OR DEATH OF ANY PERSONS OR DAMAGE TO PROPERTY ARISING IN ANY WAY FROM
THE EXERCISE OF RIGHTS GRANTED TO BUYER BY THIS SECTION OR THE
ACTIVITIES PERFORMED PURSUANT TO THIS SECTION BY BUYER OR ITS EMPLOYEES
OR AGENTS ON THE PROPERTY.
c) BUYER SHALL RELEASE, DEFEND, INDEMNIFY AND HOLD SELLER INDEMNITEES
HARMLESS FROM AND AGAINST ANY AND ALL LOSS, COST, DAMAGE, EXPENSE OR
LIABILITY, INCLUDING REASONABLE ATTORNEYS' FEES, WHATSOEVER ARISING OUT
OF (I) ANY AND ALL STATUTORY OR COMMON LAW LIENS OR OTHER ENCUMBRANCES
FOR LABOR OR MATERIALS FURNISHED IN CONNECTION WITH SUCH RIGHTS GRANTED
HEREUNDER, INCLUDING BUT NOT LIMITED TO SAMPLINGS, STUDIES OR SURVEYS
THAT BUYER MAY CONDUCT WITH RESPECT TO THE PROPERTY PURSUANT TO THIS
SECTION, OR (II) ANY INJURY TO OR DEATH OF PERSONS OR DAMAGE TO
PROPERTY OCCURRING IN, ON OR ABOUT THE PROPERTY AS A RESULT OF SUCH
EXERCISE OF THE RIGHTS GRANTED HEREUNDER OR ACTIVITIES CONDUCTED
PURSUANT TO THIS SECTION. SUCH INDEMNITY SHALL APPLY WHETHER OR NOT A
SELLER INDEMNITEE WAS OR IS CLAIMED TO BE PASSIVELY, CONCURRENTLY, OR
ACTIVELY NEGLIGENT, AND REGARDLESS OF WHETHER LIABILITY WITHOUT FAULT
IS IMPOSED OR SOUGHT TO BE IMPOSED ON ONE OR MORE OF THE SELLER
INDEMNITEES. THIS INDEMNITY SHALL NOT APPLY TO THE EXTENT THAT IT IS
VOID OR OTHERWISE UNENFORCEABLE UNDER APPLICABLE LAW IN EFFECT ON OR
VALIDLY RETROACTIVE TO THE EXECUTION DATE OF THIS AGREEMENT AND SHALL
NOT APPLY WHERE SUCH LOSS, COST, DAMAGE, INJURY, LIABILITY OR CLAIM IS
THE RESULT OF THE SOLE NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY SELLER
INDEMNITEES. THE FOREGOING OBLIGATION OF INDEMNITY SHALL SURVIVE
CLOSING OF THE TRANSACTIONS CONTEMPLATED HEREBY, OR ANY TERMINATION OF
THIS AGREEMENT PRIOR TO THE CLOSING.
16. LIQUIDATED DAMAGES
a) IF THE PURCHASE AND SALE OF THE PROPERTY IS NOT CLOSED AS CONTEMPLATED
HEREIN BY REASON OF ANY BREACH OR DEFAULT OR FAILURE TO PROCEED BY
BUYER, EXCEPT AS SPECIFICALLY PROVIDED IN SECTIONS 5 (TITLE), 6 (RIGHT-
OF-WAY INTERESTS), 8 (TERMINATION FOR MATERIAL DEFECT), 9 (DAMAGE OR
CONDEMNATION PRIOR TO CLOSING), 13 (BUYER'S
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INVESTIGATION AND RIGHT TO CANCEL), 14(SELLER'S INVESTIGATION AND RIGHT
TO CANCEL), 15 (BUYER'S RIGHT OF ENTRY), 25 (GOVERNMENT CONSENTS), 27
(FORCE MAJEURE), 31 (CONDITIONS PRECEDENT TO CLOSING), OR BREACH,
DEFAULT OR FAILURE TO PROCEED ON THE PART OF SELLER, THEN SELLER SHALL
RETAIN ONE MILLION DOLLARS ($1,000,000.00) OF THE DEPOSIT WITH INTEREST
THEREON AS LIQUIDATED DAMAGES IN LIEU OF ALL OTHER DAMAGES (AND AS
SELLER'S SOLE REMEDY IN SUCH EVENT) ("SELLER LIQUIDATED DAMAGES").
ADDITIONALLY. SELLER SHALL RETURN TO BUYER THE REMAINDER OF THE DEPOSIT
AND THE REMAINING INTEREST THEREON.
b) IF THE PURCHASE AND SALE OF THE PROPERTY IS NOT CLOSED AS CONTEMPLATED
HEREIN BY REASON OF ANY BREACH OR DEFAULT OR FAILURE TO PROCEED BY
SELLER, EXCEPT AS SPECIFICALLY PROVIDED IN SECTIONS 6 (RIGHT-OF-WAY
INTERESTS), 8 (TERMINATION FOR MATERIAL DEFECT), 9 (DAMAGE OR
CONDEMNATION PRIOR TO CLOSING), 13 (BUYER'S INVESTIGATION AND RIGHT TO
CANCEL), 14 (SELLER'S INVESTIGATION AND RIGHT TO CANCEL), 25
(GOVERNMENT CONSENTS), 27 (FORCE MAJEURE), 31 (CONDITIONS PRECEDENT TO
CLOSING), OR BREACH, DEFAULT OR FAILURE TO PROCEED ON THE PART OF
BUYER, THEN IN ADDITION TO THE RETURN OF BUYER'S DEPOSIT WITH INTEREST,
SELLER SHALL PAY TO BUYER ONE MILLION DOLLARS ($1,000,000.00) WITH
INTEREST FROM THE EXECUTION DATE AS LIQUIDATED DAMAGES IN LIEU OF ALL
OTHER DAMAGES (AND AS BUYER'S SOLE REMEDY IN SUCH EVENT) ("BUYER
LIQUIDATED DAMAGES").
c) The parties agree that Seller will be entitled to the Seller Liquidated
Damages defined above in consideration of Seller holding the Property
off the market and the resulting inability of Seller to seek other
buyers during that period and that Buyer shall be entitled to the Buyer
Liquidated Damages defined above in consideration of Buyer forgoing
other business opportunities during that period. In addition, Buyer and
Seller acknowledge that they have made good faith reasonable efforts to
determine what damages would be in the event of a default by either and
they have been unable to arrive at any meaningful formula or measure of
damages for default. The parties hereby acknowledge that the extent of
damages to either party occasioned by such breach or default or failure
to proceed by the other would be impossible or extremely impracticable
to ascertain and that the amount of the Seller and Buyer Liquidated
Damages are a fair and reasonable estimate of such damages under the
circumstances.
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d) By initialing or signing where indicated below, the parties
specifically approve these liquidated damages provisions.
________________ __________________
SELLER BUYER
Chevron Pipe Line Company Plains Marketing, L.P.
By its General Partner
Plains All American Inc.
17. INDEMNITY AND ASSUMPTION OF OBLIGATIONS
a) BUYER SHALL ASSUME FULL RESPONSIBILITY FOR THE PROPERTY AS OF THE
EFFECTIVE DATE INCLUDING, BUT NOT LIMITED TO, ALL PIPELINE OPERATIONS,
RIGHT-OF-WAY PAYMENTS AND ALL ACCOUNTING AND REPORTING THEREOF AND
SHALL INDEMNIFY, HOLD HARMLESS AND DEFEND SELLER INDEMNITEES FROM AND
AGAINST ANY AND ALL LOSS, COST, DAMAGE AND EXPENSE, (INCLUDING
ATTORNEYS' FEES AND EXPENSES) AND CAUSES OF ACTION ARISING WITH RESPECT
TO THE PROPERTY RELATED TO EVENTS OR CONDITIONS OCCURRING ON OR
SUBSEQUENT TO THE EFFECTIVE DATE. EXCEPT AS OTHERWISE PROVIDED IN
SECTION 15(C) AND SECTION 18 (A) OR AS OTHERWISE AGREED TO BY THE
PARTIES PURSUANT TO SECTION 8 (B), SECTION 9, SECTION 13 (B), OR
SECTION 14, SELLER SHALL RETAIN FULL RESPONSIBILITY FOR THE PROPERTY
PRIOR TO THE EFFECTIVE DATE INCLUDING, BUT NOT LIMITED TO, ALL PIPELINE
OPERATIONS, RIGHT-OF-WAY PAYMENTS AND ALL ACCOUNTING AND REPORTING
THEREOF AND SHALL INDEMNIFY, HOLD HARMLESS AND DEFEND BUYER ITS PARENT,
PARTNERS, SUBSIDIARIES, AFFILIATED COMPANIES AND THEIR OFFICERS,
DIRECTORS, PARTNERS, EMPLOYEES AND AGENTS ("BUYER INDEMNITEES") FROM
AND AGAINST ANY AND ALL LOSS, COST, DAMAGE AND EXPENSE, (INCLUDING
ATTORNEY'S FEE AND EXPENSES) AND CAUSES OF ACTION ARISING WITH RESPECT
TO THE PROPERTY RELATED TO EVENTS OR CONDITIONS OCCURRING BEFORE THE
EFFECTIVE DATE HEREIN.
b) BUYER SHALL RELEASE, DEFEND, INDEMNIFY, AND HOLD SELLER HARMLESS FROM
AND AGAINST ANY AND ALL LOSS, COST, DAMAGE AND EXPENSE, INCLUDING
REASONABLE ATTORNEYS' FEES, ASSERTED AGAINST SELLER BY ANY PERSON OTHER
THAN SELLER INDEMINITEES FOR (I) PERSONAL INJURY OR DEATH, OR FOR LOSS
OF OR DAMAGE TO PROPERTY, ARISING FROM EVENTS OR CONDITIONS OCCURRING
ON OR CONNECTED WITH THE PROPERTY, ON OR SUBSEQUENT TO THE EFFECTIVE
DATE
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HEREIN, OR (ii) BREACH OF ANY REPRESENTATION OR WARRANTY OF BUYER SET
FORTH IN SECTION 12. EXCEPT AS OTHERWISE PROVIDED IN SECTION 15(C) AND
SECTION 18 (A) OR AS OTHERWISE AGREED TO BY THE PARTIES PURSUANT TO
SECTION 8 (B), SECTION 9, SECTION 13 (B) OR SECTION 14, SELLER SHALL
RELEASE, DEFEND, INDEMNIFY AND HOLD BUYER HARMLESS FROM AND AGAINST ANY
AND ALL LOSS, COST, DAMAGE AND EXPENSE, INCLUDING REASONABLE ATTORNEY'S
FEES, ASSERTED AGAINST BUYER BY ANY PERSON OTHER THAN BUYER
INDEMINITEES FOR (i) PERSONAL INJURY OR DEATH, OR FOR LOSS OF OR DAMAGE
TO PROPERTY ARISING FROM EVENTS OR CONDITIONS OCCURRING ON OR CONNECTED
WITH THE PROPERTY PRIOR TO THE EFFECTIVE DATE HEREIN, OR, (ii) BREACH
OF ANY REPRESENTATION OR WARRANTY OF SELLER SET FORTH IN SECTION 10.
c) THE INDEMNITIES CONTAINED IN THIS SECTION 17 SHALL NOT APPLY TO THE
EXTENT THAT THEY ARE VOID OR OTHERWISE UNENFORCEABLE UNDER APPLICABLE
LAW IN EFFECT ON OR VALIDLY RETROACTIVE TO THE EXECUTION DATE OF THIS
AGREEMENT, AND SHALL NOT APPLY WHERE SUCH LOSS, DAMAGE, INJURY,
LIABILITY OR CLAIM IS THE RESULT OF THE NEGLIGENCE OR WILLFUL
MISCONDUCT OF AN INDEMNITEE AFTER CLOSING.
d) THESE OBLIGATIONS TO INDEMNIFY SHALL SURVIVE THE CLOSING AND THE
DELIVERY OF THE DEED AND ASSIGNMENT, PURSUANT TO THIS AGREEMENT, AND
SHALL REMAIN ENFORCEABLE THEREAFTER.
18. INDEMNITY AND ASSUMPTION OF ENVIRONMENTAL RISKS
a) BUYER SHALL RELEASE, DEFEND, INDEMNIFY, AND HOLD SELLER INDEMNITEES
HARMLESS FROM AND AGAINST ANY AND ALL LOSS, COST, DAMAGE AND EXPENSE,
INCLUDING REASONABLE ATTORNEYS' FEES, FOR CLAIMS ASSERTED AGAINST
SELLER FOR ANY ENVIRONMENTAL LIABILITIES WHICH ARISE OR ARE FIRST
ASSERTED ON OR AFTER THE EFFECTIVE DATE BUT ARE ATTRIBUTABLE TO EVENTS
THAT OCCURRED OR CONDITIONS THAT EXISTED PRIOR TO THE EFFECTIVE DATE,
REGARDLESS OF PAST CONTRIBUTION OR GENERATION BY SELLER. SUCH INDEMNITY
SHALL APPLY WHETHER OR NOT SELLER WAS OR IS CLAIMED TO BE PASSIVELY,
CONCURRENTLY, OR ACTIVELY NEGLIGENT, AND REGARDLESS OF WHETHER
LIABILITY WITHOUT FAULT IS IMPOSED OR SOUGHT TO BE IMPOSED ON SELLER.
THIS INDEMNITY SHALL NOT APPLY TO THE EXTENT
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THAT IT IS VOID OR OTHERWISE UNENFORCEABLE UNDER APPLICABLE LAW IN
EFFECT ON OR VALIDLY RETROACTIVE TO THE EFFECTIVE DATE OF THIS
AGREEMENT, AND SHALL NOT APPLY WHERE SUCH LOSS, DAMAGE, INJURY,
LIABILITY OR CLAIM IS THE RESULT OF THE WILLFUL MISCONDUCT OF SELLER OR
WHERE THE ENVIRONMENTAL LIABILITY WAS KNOWN TO SELLER PRIOR TO THE
EFFECTIVE DATE. PROVIDED HOWEVER, FOR A PERIOD OF THREE YEARS FROM THE
EFFECTIVE DATE, FOR ENVIRONMENTAL LIABILITIES DISCOVERED OR ARISING
AFTER THE EFFECTIVE DATE BUT ATTRIBUTABLE TO EVENTS THAT OCCURRED OR
CONDITIONS THAT EXISTED PRIOR TO THE EFFECTIVE DATE, BUYER SHALL BE
RESPONSIBLE FOR AND SHALL RELEASE, DEFEND, INDEMNIFY AND HOLD HARMLESS
SELLER FROM AND AGAINST THE FIRST ONE MILLION DOLLARS ($1,000,000.00)
OF ENVIRONMENTAL LIABILITY, IN THE AGGREGATE. SELLER SHALL BE
RESPONSIBLE FOR AND SHALL RELEASE, DEFEND, INDEMNIFY AND HOLD HARMLESS
BUYER FROM AND AGAINST ALL ENVIRONMENTAL LIABILITY DISCOVERED OR
ARISING AFTER THE EFFECTIVE DATE BUT ATTRIBUTABLE TO EVENTS THAT
OCCURRED OR CONDITIONS THAT EXISTED PRIOR TO THE EFFECTIVE DATE, BUT
ONLY TO THE EXTENT THAT THE ENVIRONMENTAL LIABILITY EXCEEDS ONE MILLION
DOLLARS ($1,000,000.00) IN THE AGGREGATE. SELLER SHALL REMAIN
RESPONSIBLE AND INDEMNIFY BUYER HEREUNDER FOR SUCH ENVIRONMENTAL
LIABILITY REGARDLESS OF WHETHER LOSSES, COSTS AND EXPENSES CONTINUE TO
BE INCURRED BEYOND THE THREE YEAR PERIOD. SELLER SHALL BE RESPONSIBLE
AND INDEMNIFY BUYER HEREUNDER FOR ALL ENVIRONMENTAL LIABILITY EXISTING
AND KNOWN TO SELLER PRIOR TO CLOSING AND NEITHER THE ONE MILLION DOLLAR
($1,000,000) NOR THE THREE YEAR TIME LIMITATION SHALL APPLY. ANY
ENVIRONMENTAL LIABILITY OF SELLER DISCOVERED OR ARISING MORE THAN THREE
YEARS FROM THE EFFECTIVE DATE BUT ATTRIBUTABLE TO EVENTS THAT OCCURRED
OR CONDITIONS THAT EXISTED PRIOR TO THE EFFECTIVE DATE, SHALL BE THE
FULL RESPONSIBILITY OF BUYER AND BUYER SHALL INDEMNIFY SELLER
INDEMNITEES PURSUANT TO THIS INDEMNITY PROVISION.
b) EXCEPT AS LIMITED BY SECTION 11(m), SECTION 17, AND SECTION 18 (a) OR
OTHER SECTION OF THIS AGREEMENT IN WHICH BUYER IS EXPRESSLY INDEMNIFIED
BY SELLER, BUYER WAIVES ITS RIGHT TO RECOVER FROM SELLER AND ITS
PREDECESSORS IN INTEREST, AND THEIR RESPECTIVE DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS, ANY AND ALL DAMAGES, LOSSES,
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LIABILITIES, COSTS OR EXPENSES WHATSOEVER (INCLUDING ATTORNEYS' FEES
AND COSTS), AND CLAIMS THEREOF, WHETHER DIRECT OR INDIRECT, KNOWN OR
UNKNOWN, FORESEEN OR UNFORESEEN, WHICH MAY ARISE ON ACCOUNT OF OR IN
ANY WAY GROWING OUT OF OR CONNECTED WITH THE PHYSICAL AND/OR
ENVIRONMENTAL CONDITION OF THE PROPERTY OR ANY LAW OR REGULATION
APPLICABLE THERETO, INCLUDING THE COMPREHENSIVE ENVIRONMENTAL RESPONSE,
COMPENSATION AND LIABILITY ACT OF 1980, AS AMENDED (42 U.S.C.
(S)(S)9601 ET SEQ.), THE RESOURCE CONSERVATION AND RECOVERY ACT OF 1976
(42 U.S.C. (S)(S)6901 ET SEQ.), THE CLEAN WATER ACT (33 U.S.C.
(S)(S)1401-1450), THE HAZARDOUS MATERIALS TRANSPORTATION ACT (49 U.S.C.
(S)(S)1801 ET SEQ.), THE TOXIC SUBSTANCE CONTROL ACT (15 U.S.C.
(S)(S)2601-2629).
c) THESE OBLIGATIONS TO INDEMNIFY SHALL SURVIVE THE CLOSING AND THE
DELIVERY OF THE DEED AND ASSIGNMENT, PURSUANT TO THIS AGREEMENT, AND
SHALL REMAIN FULLY ENFORCEABLE THEREAFTER.
d) BUYER WAIVES ITS RIGHTS UNDER THE TEXAS DECEPTIVE TRADE PRACTICES-
CONSUMER PROTECTION ACT, SECTION 17.41 ET SEQ., TEXAS BUSINESS &
COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND
PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY OF BUYER'S OWN
SELECTION, BUYER VOLUNTARILY CONSENTS TO THIS WAIVER.
IN ORDER TO EVIDENCE ITS ABILITY TO GRANT SUCH WAIVER, BUYER HEREBY
REPRESENTS AND WARRANTS TO SELLER THAT BUYER (I) IS IN THE BUSINESS OF
SEEKING OR ACQUIRING, BY PURCHASE OR LEASE, GOODS OR SERVICES FOR
COMMERCIAL OR BUSINESS USE, (II) HAS KNOWLEDGE AND EXPERIENCE IN
FINANCIAL AND BUSINESS MATTERS THAT ENABLE IT TO EVALUATE THE MERITS
AND RISKS OF THE TRANSACTION CONTEMPLATED HEREBY AND (III) IS NOT IN A
SIGNIFICANTLY DISPARATE BARGAINING POSITION.
e) AFTER THE EFFECTIVE DATE, EACH PARTY AGREES TO COOPERATE FULLY WITH THE
OTHER IN THE DEFENSE OF ANY CLAIM AND MAKE AVAILABLE UPON REASONABLE
REQUEST ITS PERSONNEL, AGENTS, INFORMATION AND RECORDS PERTAINING TO
ANY CLAIMS OR CAUSE OF ACTION.
f) IN THOSE INSTANCES WHERE SELLER ASSUMES RESPONSIBILITY FOR ALL OF AN
ENVIRONMENTAL LIABILITY SELLER SHALL
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HAVE THE RIGHT, BUT NOT THE OBLIGATION, TO HIRE INDEPENDENT COUNSEL TO
DEFEND SELLER AND CONDUCT THE DEFENSE, AND THE RIGHT TO CONDUCT ALL OF
THE REMEDIATION OF ENVIRONMENTAL DAMAGE RELATED THERETO, INCLUDING THE
FIRST ONE MILLION DOLLARS OF REMEDIATION THAT IS THE RESPONSIBILITY OF
BUYER.
g) Seller shall have the right of access to the Real Property Interests in
connection with (i) the right to respond to and conduct the remediation
of any Environmental Liabilities and (ii) the right to conduct the
defense of any claims for which Seller assumes an obligation of
indemnity under this Agreement. Such rights of Seller shall survive
Closing and shall be subject to the following terms and conditions:
i) Prior to commencing any Corrective Actions or related activities on
or with respect to the Property, Seller shall propose to Buyer a
plan for such work ("Plan"). Prior to the implementation of any
Plan or Plans, Seller shall provide Buyer with a comprehensive
schedule showing in reasonable detail the Corrective Action to be
taken by Seller to comply with such Plans and a budget showing the
estimated timing and, if requested by Buyer to address landowner or
governmental concerns, the estimated amount of expenditures
required to implement the Plans. At the request of Buyer from time
to time, Seller shall meet and consult fully with Buyer with
respect to each such Plan, schedule and budget. Once each calendar
quarter (commencing with the first full calendar quarter after
commencement of such Corrective Action), Seller shall provide Buyer
with a report showing in reasonable detail the current status of
all Corrective Actions undertaken by Seller since commencement of
such Corrective Actions, including expenditures to date. To the
extent that similar quarterly reports are filed by Seller with any
governmental agency, copies of such reports as provided to Buyer
shall satisfy this requirement. Seller shall be required to obtain
Buyer's prior written approval (which shall not be unreasonably
withheld or delayed) for each Plan prior to proceeding with any
Plan or filing any Plan with any applicable governmental authority
(except that, in the event of an emergency posing an imminent
threat of harm to the safety of persons or property, Seller may
take such immediate action as may be necessary under the
circumstances to protect the safety of persons or property, without
obtaining the prior approval of Buyer, provided that Seller shall
notify Buyer in writing of such action as soon thereafter as
practicable). Buyer shall be deemed to have approved such Plan
unless Buyer shall have objected thereto by notice to Seller within
thirty (30) days following Buyer's receipt thereof setting forth in
reasonable detail the basis for Buyer's objections. If Buyer
objects to such proposed Plan and Seller and Buyer do not reach
agreement on such objections, then Seller shall provide Buyer with
an alternative Plan as soon as reasonably practicable in light of
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the circumstances following Seller's receipt of a request therefor
from Buyer.
ii) Seller shall conduct all Corrective Actions and related activities
on or with respect to the Property in accordance with all
applicable laws, rules and regulations of government authorities
having jurisdiction and in such manner as shall not unreasonably
interfere with the operation of the Property and the Buyer's
business. Promptly upon completion of such activities, Seller shall
notify Buyer in writing of such completion.
iii) Seller shall defend, protect, indemnify and hold harmless the Buyer
Indemnitees from and against any and all penalties, claims,
demands, fines, assessments, damages, diminution in value, suits,
costs, judgments, settlements, expenses (including, without
limitation, court costs and reasonable attorneys', expert and
consultant fees) and losses of whatsoever kind or nature, for
personal injury or property damage that are incurred by or asserted
against any Buyer Indemnitee by any third party to the extent same
are caused by the acts or omissions of Seller or Seller's agents,
employees or consultants in conducting or performing any Corrective
Actions or related activities on or with respect to the Property.
For purposes of this Agreement, Seller's obligations with respect
to any such third-party claim shall be subject to the terms and
provisions of Section 19.
iv) If, within thirty (30) days after Seller's receipt of notice from a
Buyer Indemnitee of an Environmental Liability for which the Buyer
Indemnitee believes Seller is obligated to indemnify the Buyer
Indemnitee under Section 18, Seller does not notify Buyer that
Seller elects to respond to and conduct the remediation of such
Environmental Liability in accordance with the provisions of this
Section 18 (g), or gives such notice of election and thereafter
fails to respond to and conduct the remediation of such
Environmental Liability diligently and in good faith, then Seller's
right to respond to and conduct such remediation shall terminate
and the Buyer shall have the sole right to proceed with such
activities but shall not thereby waive any right to indemnity
therefore pursuant to this Agreement.
v) Such rights of Seller under this Section 18(g) shall in no event
preclude the Buyer Indemnitees at any time or times from conducting
such immediate Corrective Actions or related activities that, in
case of any emergency posing an imminent threat of harm to the
safety of persons or property, may be necessary under the
circumstances.
19. PROCEDURES FOR ASSERTING INDEMNITY CLAIMS.
a) A party seeking to assert a claim for indemnity under this Agreement
with respect to any claim, suit, action or proceeding (the "Indemnified
Party"), shall give prompt
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and timely notice to the other party (the "Indemnifying Party") of such
assertion or commencement, as soon as is practicable following the
receipt, by the manager responsible for the operation of the facility
involved in such claim, of oral or written notice of the claim or
action. Such notice shall describe in reasonable detail the nature of
the claim or action, an estimate of the amount of damages attributable
to the claim, and the basis for the Indemnified Party's request for
indemnification under this Agreement. Thereafter, the Indemnified Party
shall deliver to the Indemnifying Party copies of all notices and
documents (including court papers) received by the Indemnified Party
relating to the claim. Failure by the Indemnified Party to provide such
notice to the Indemnifying Party promptly shall not affect the right of
the Indemnified Party to indemnification hereunder except to the extent
the Indemnifying Party is prejudiced thereby.
b) The Indemnifying Party shall promptly assume the defense of any such
claim, suit, action or proceeding for which indemnity is required;
provided, however, that (i) the Indemnifying Party shall cooperate and
communicate with the Indemnified Party as to significant developments
in the matters being defended or handled, shall seek the advice and
opinions of the Indemnified Party, and shall give due regard to such
advice and opinions as to aspects of the matters being handled or
defended which relate to settlements thereof or are reasonably expected
to require the expenditure of substantial sums of money; (ii) the
Indemnified Party shall at all times have the right, at its option and
expense, to participate fully in the defense of any such claim, suit,
action, or proceeding; (iii) the Indemnifying Party shall not settle
any claim involving relief other than monetary relief that may affect
the Indemnified Party without the prior written consent of the
Indemnified Party; and (iv) if, within thirty (30) days after the
receipt of the Indemnified Party's notice of a claim of indemnity
hereunder, the Indemnifying Party does not notify the Indemnified Party
that it elects, at the Indemnifying Party's cost and expense, to
undertake the defense thereof and assume full responsibility for all
losses, liabilities and other amounts with respect thereto, or gives
such notice and thereafter fails to assume the defense of and indemnity
for such claim diligently and in good faith, the Indemnified Party
shall have the right to contest, settle or compromise the claim but
shall not thereby waive any right to indemnity therefor pursuant to
this Agreement.
c) The parties shall cooperate in defending any such claim, suit, action
or proceeding and each party shall have reasonable access to the books
and records, and personnel in the possession or control of the other
party which are pertinent to the defense. Any party shall have the
right to join another in any action, claim or proceeding brought by a
third party, as to which any right of indemnity created by this
Agreement would or might apply, for the purpose of enforcing its right
of indemnity granted hereunder.
d) In furtherance of the foregoing procedures, as soon as a party becomes
aware of circumstances that reasonably could be expected to lead to a
claim based upon
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Environmental Liabilities for which the other party owes an
indemnification obligation, the party shall:
(i) define the nature and extent of the claim for indemnity in
writing and, if based on Environmental Liabilities, include
copies of all reports to government agencies filed as of that
date, using a degree of detail reasonably necessary to inform the
Indemnifying Party of the nature and scope of, and the
justification for, any claim based on the Environmental
Liabilities; and
(ii) To the extent that the assessment involves discussions or
meetings with governmental authorities, the party seeking
indemnification shall provide the other party with timely notice
of and opportunity to participate in all such discussions or
meetings.
20. CONFLICTS OF INTEREST
Conflicts of interest relating to this Agreement are strictly prohibited.
Except as otherwise expressly provided herein, neither Buyer nor Seller,
nor any director, employee or agent of Buyer or Seller, shall give to or
receive from any director, employee or agent of Buyer or Seller any gift,
entertainment or other favor of significant value, or any commission, fee
or rebate. Likewise, neither Buyer nor Seller, nor any director, employee
or agent of Buyer or Seller shall enter into any business relationship with
any director, employee or agent of Buyer or Seller or of any affiliate of
Buyer or Seller, unless such person is acting for and on behalf of Buyer or
Seller, without prior written notification thereof to Seller or Buyer. Any
representative(s) authorized by Buyer or Seller may audit any and all
records of Buyer or Seller for the sole purpose of determining whether
there has been compliance with this Section.
21. CLOSING COSTS, TAXES AND COMMISSIONS
a) CLOSING COSTS
Seller shall pay the cost of a standard policy of title insurance from
a mutually agreed to title company containing reasonable and customary
exceptions to title if Seller elects to furnish a title policy under
Section 4(c) (viii). Each party shall pay its own attorneys' fees, if
any. In addition, Buyer shall pay all filing fees and costs of
recording. Each party shall pay its own attorneys' fees, if any,
related to the preparation and execution of this Agreement.
b) TAXES AND FEES
Ad valorem, real and personal property taxes, if any, imposed on the
Property and assessments of record shall be prorated between Seller and
Buyer as of the Closing Date of this transaction. Any other fees or
taxes imposed on the conveyance of the Property by any governmental
body shall be paid in accordance with the law or
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ordinance levying such tax or fee or, in the absence of a controlling
law or ordinance, shall be divided equally between Seller and Buyer.
c) Sales Tax and Use Taxes
i) Buyer shall be responsible for, and shall remit to the appropriate
taxing authority, all sales, use, transfer and similar taxes
arising out of the sale of the Property. Buyer shall hold harmless
and shall indemnify Seller for any sales or use taxes assessed
against Seller by any taxing authority in respect of this sale,
including the amounts of any penalties, interest and attorneys'
fees, unless such penalties, interest or attorneys' fees accrue
through the fault or negligence of Seller, in which case Buyer
shall not be obligated to hold harmless and indemnify Seller for
that portion of such penalties, interest or attorneys' fees that
are attributable to Seller's fault or negligence. Any legal
expenses incurred by Seller to reduce or avoid any of the
aforementioned taxes shall be paid or reimbursed by Buyer.
ii) The purchase and sale of the assets covered by this Agreement is
believed by the parties to constitute an isolated or occasional
sale as defined in Texas Tax Code ▇▇▇. Sec. 151.304. If the
transaction is subsequently deemed to be a taxable transaction, the
Buyer will hold Seller harmless and shall indemnify Seller for any
sales taxes assessed against Seller by any taxing authority in
respect of this sale, including the amounts of any penalties,
interest and attorney's fees.
d) COMMISSIONS
Buyer represents and warrants to Seller that it has not engaged,
utilized or dealt with any broker or finder in connection with this
Agreement or the transactions contemplated hereby. Seller represents
and warrants to Buyer that it has not engaged, utilized or dealt with
any broker or finder in connection with this Agreement or the
transactions contemplated hereby. Both Buyer and Seller shall indemnify
and hold the other harmless from and against all brokerage commissions
or finders' fees, and claims thereof, payable in connection with the
sale of the Property.
22. OPERATION OF THE PIPELINE INTERESTS PRIOR TO CLOSING
a) During the period subsequent to the execution of this Agreement and
prior to the Effective Date, Seller shall not be obligated to make
expenditures for purposes other than as required to operate and
maintain the Property in the ordinary course, consistent with prudent
operation and accepted industry standards and as necessary to respond
to emergencies.
b) Unless Buyer and Seller agree, Seller shall not materially alter the
Property (other than the use of supplies and consumables), with the
exception of individual assets (i)
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involving a fair market value of less than One Hundred Thousand Dollars
($100,000.00) and (ii) disposed of or consumed in the ordinary course
of business. Provided however, any assets that are disposed of which
have more than a Ten Thousand Dollar ($10,000.00) value shall be
credited against the Purchase Price at Closing. If Seller, because of
legally binding agreements which existed prior to the Execution Date
which agreements are set forth in Exhibit "H", acquires assets related
to the Pipeline Interests or otherwise improves the Property after the
Execution Date but prior to the Effective Date, and Buyer agrees that
such assets or improvements shall be included in the Property, the
Purchase Price shall be increased by an amount equal to the
consideration to be paid by Seller for such acquisition or improvement,
and the acquired asset or improvement shall be transferred hereunder.
Seller shall promptly notify Buyer of any material matter affecting the
Property known to Seller which arises from the Execution Date to the
Effective Date.
c) Seller shall not create or permit to exist any mortgage, pledge, lien
or encumbrance on the Property, other than Permitted Encumbrances.
d) Seller shall not, without the prior written consent of Buyer, make any
material contract or amend any existing contract or license that is to
be transferred hereunder.
e) Seller shall not file, alter, amend or withdraw any tariff rate, rule,
regulation or condition of service other than as may be required
pursuant to FERC Order 561 which adopted an indexing rate methodology
for petroleum pipelines.
f) Seller shall not solicit or accept any other bids or proposals for the
purchase and sale of the Property, unless and until this Agreement is
terminated.
g) To the extent that Seller is unable to transfer certain contracts that
are reasonably necessary to operate and maintain the Property, Seller
shall make commercially reasonable and diligent efforts to assist Buyer
in securing substantially similar benefits for Buyer. With respect to
contracts relating to electric power service, Seller shall arrange to
provide Buyer metered electric power at existing facilities where
Seller does not currently own or control such facilities. Buyer shall
be obligated to expend Forty Thousand dollars ($40,000.00), and all
other costs shall be for the account of Seller. In the event that
Seller provides electric power by arranging for the conveyance or
assignment of an undivided interest in existing facilities, such
conveyance shall be for a consideration of Ten dollars ($10.00) and
shall be subject to Buyer's obligation to reassign to the assignor upon
cessation of Buyer's need for power.
23. EMPLOYEES AND BENEFITS
a) OFFERS OF EMPLOYMENT.
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i) At least four (4) weeks before the Closing Date, Buyer in its sole
discretion and as it may determine shall select from and offer
employment with Buyer beginning on the Closing Date to those
employees of Seller currently assigned to operate the Pipeline
Interests, who are identified on a list Seller will provide Buyer
within five (5) working days after the Execution Date (the
"Prospective Employees"). Such list shall include all employees
whose work activity is wholly dedicated to operating and
maintaining the Property and shall also include the employee's
salary, job description, job location and hire date. Each such
employment offer shall be at a location that is 50 miles or less
from the Prospective Employee's current job location (provided
however, a Prospective Employee may be required to report to
Buyer's management in Wink, or Midland, Texas and may be required
to perform work at any location in which the Property is located)
and shall include salary or wages (including, as applicable, shift
differentials, incentives and premiums but excluding payments under
the Chevron Success Sharing program) at least equal to that
provided by Seller to the employee as shown on the list of
Prospective Employees. Buyer's offers of employment to the selected
Prospective Employees shall be made in writing, and a copy shall be
provided to Seller. Such offers may impose a deadline for response
not earlier than three (3) weeks prior to Closing. Buyer may
require that each Prospective Employee submit a formal application
for employment.
ii) Buyer shall have no obligation under this Agreement to employ any
Prospective Employee who has accepted its employment offer but is
not actively at work with Seller as of the Closing Date, unless (i)
such Employee is on vacation, scheduled time off, or other similar
Seller approved absence and commences active work with Buyer upon
the termination of such approved absence; or (ii) such Employee is
absent from work due to illness or injury and reports for active
work with Buyer within 30 days after the Closing Date. Any
Prospective Employee selected by Buyer who has accepted its
employment offer but is on vacation, scheduled time off, or on
other Seller-approved absence on the Closing Date shall become the
employee of Buyer upon reporting for active duty. Any Prospective
Employee selected by Buyer who is absent from work due to illness
or injury and who reports for active work with Buyer within 30 days
after the Closing Date shall become the employee of Buyer on the
date he or she reports for active work with Buyer. From and after
the date the Prospective Employee selected by Buyer returns to
active work, Buyer shall assume the employment reinstatement
obligations of Seller and its Affiliates under Seller's Family and
Medical Leave Act Policy with respect to any Prospective Employees
who are selected by Buyer but who are on leave under such policy on
the Closing Date.
iii) Those employees of Seller who accept Buyer's employment offers and
become employees of Buyer as of the Closing Date (or, in the case
of Employees described in (ii) above, within 30 days after the
Closing Date),
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are the "Affected Employees." The Prospective Employees who do not
become Affected Employees are the "Remaining Employees."
iv) Nothing in this Agreement shall affect Buyer's right to terminate
the employment of any Affected Employee on or after the date he or
she becomes an employee of Buyer, with or without cause, provided
that Buyer shall comply with the terms of the severance plan
described in Section 23 (c) below if the termination occurs without
cause as defined in such severance plan and within 12 months of the
Closing Date.
v) Buyer shall control and be responsible for the process of selecting
from the Prospective Employees those Prospective Employees to whom
it makes an offer of employment. Buyer may interview any
Prospective Employee during normal working hours (including
interviews on site) consistent with the operating requirements of
Seller or its Affiliates, and with the written permission of the
Prospective Employee, may review and retain copies of such
Prospective Employee's training, attendance and safety records (if
any) maintained by Seller or its Affiliates. All of the original
personnel records maintained by Seller or its Affiliates relating
to the Prospective Employees shall remain with Seller or its
Affiliates after the Closing Date and shall not be turned over to
Buyer. Buyer shall, however, have access to, use of and the right
to copy such records as may be required in connection with the
assumption of obligations pursuant to this Section 23 or the
prosecution or defense of any administrative or court claim, and
neither Seller nor its Affiliates shall destroy any such records
prior to the time such records are scheduled for destruction
pursuant to Seller's records retention policy applicable to records
of this type.
vi) Buyer and its Affiliates shall indemnify, defend, and hold Seller
and its Affiliates harmless from and against all claims, expenses
(including reasonable attorneys' fees), loss and liability arising
with respect to (A) the Affected Employees' employment with Buyer
and its Affiliates on or after the Closing Date (except for
Seller's continuing obligations described in Section 23(c)(i), (B)
Buyer's employee selection and offer process and actions taken by
Buyer or its Affiliates relating to Prospective and Affected
Employees and (C) Buyer's use of the Affected Employees' employment
records or other records maintained by Seller or its Affiliates
that have been provided to Buyer, but not claims and expenses
related to the content of Seller's records or Seller's preparation
thereof.
vii) Seller and its Affiliates shall indemnify, defend and hold Buyer
and its Affiliates harmless from and against all claims, expenses
(including reasonable attorneys' fees), loss and liability arising
with respect to (A) the Affected Employees' (or any other
employees') employment with Seller or its Affiliates before the
date any such employee becomes an employee of Buyer, (B) the
Remaining Employees' employment with Seller or its Affiliates and
any
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subsequent termination from Seller or its Affiliates, (C) the
application of Seller's employee benefit plans to Affected
Employees and Remaining Employees, and (D) claims and expenses
related to the content of Seller's employment records or Seller's
preparation thereof.
b) QUALIFIED DEFINED CONTRIBUTION PLANS.
i) The Chevron Corporation Profit Sharing/Savings Plan and the Chevron
Corporation Savings Plus Plan (together the "Seller's Defined
Contribution Plans") shall fully vest each Affected Employee who
has one or more years of service as of the date he or she becomes
an employee of Buyer and shall provide for the distribution to or
on behalf of the Affected Employees of their vested account
balances in accordance with such Plans' distribution rules for
employees whose employment with Seller and its Affiliates has
terminated.
ii) The Buyer's Defined Contribution Plan shall accept the direct
rollover of eligible rollover distributions of electing Affected
Employees' benefits in cash.
c) SEVERANCE PLANS.
i) Seller and its Affiliates presently maintain the Chevron
Corporation's 1999 S.I.T.E. Program for involuntary termination and
for demotion or transfer (the "Chevron Severance Plan") for the
benefit of eligible employees of Seller and its Affiliates. Seller
has provided Buyer with a summary of the Chevron Severance Plan
coincident with the execution of this Agreement. Seller shall apply
the Chevron Severance Plan to the Prospective Employees who are
eligible employees under the terms of those Plans.
ii) If, within 12 months after the Closing Date, any Affected Employee
is terminated by Buyer for reasons other than cause, or is required
to transfer to a job location that reports to other than Wink,
Midland or ▇▇▇▇▇▇▇ or to take a reduction in base rate of pay, but
refuses such transfer or reduction and terminates his or her
employment with Buyer, then Buyer shall provide a severance benefit
which is the financial equivalent to the benefit referenced in the
summary of the Chevron Severance Plan provided to Buyer pursuant to
Section 23(c)(i), including the continuation of Buyer's active
employee medical coverage for six months after termination of
employment with the same employee contribution amounts that apply
to Buyer's similarly situated active employees. Provided, however,
Buyer shall only be obligated to make a payment directly to such
Affected Employee and shall have no obligation to provide such
benefit on a pre-tax basis or as a contribution to a qualified
plan. Service used for this purpose shall be the sum of the service
recognized by Seller and the service with Buyer from the Closing
Date until termination of employment.
d) VACATION PAY.
Seller shall be responsible for all liabilities and claims with regard
to vacation pay for any periods prior to the Closing. After the
Closing, the Affected Employee
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shall transfer to Buyer's vacation plan under which the Affected
Employee's past service with the Seller shall be recognized and the
vacation days used by the Affected Employees in 1999 shall be deducted
from allowable vacation.
e) HEALTH CARE PLANS.
Each Affected Employee shall be eligible to enroll in the health care
plans of Buyer as of the date he or she becomes an employee of Buyer.
If such Affected Employee was enrolled in the corresponding plan of
Seller or its Affiliates immediately before the date he or she becomes
an employee of Buyer, Buyer shall cause Buyer's health care plans to:
(i) to the extent required by the Health Insurance Portability And
Accountability Act ("HIPAA"), or otherwise required by law, waive any
pre-existing condition limitations with respect to the Affected
Employee and his or her covered dependents, to the extent the covered
individuals had satisfied any pre-existing condition limitations under
the medical, mental health, substance abuse and dental plans of Seller
or its Affiliates before the date the Affected Employee becomes an
employee of Buyer; and (ii) to recognize each such Affected Employee's
(and his or her covered dependents') expenditures under the
corresponding Seller medical, mental health, substance abuse and dental
plans, if any are maintained by Seller, for the calendar year in which
the Affected Employee becomes an employee of Buyer toward any
applicable deductible and annual out-of-pocket limit for such calendar
year. With respect to the medical, mental health, substance abuse and
dental plans of Seller and its Affiliates, Seller shall cause the plans
of Seller and its Affiliates to be liable for the following covered
expenses of the Affected Employees and their dependents:
i) With respect to the medical, mental health, substance abuse and
dental plans of Seller and its Affiliates, covered expenses
incurred before the date the Affected Employee becomes an employee
of Buyer; and
ii) With respect to the medical and mental health and substance abuse
plans of Seller and its Affiliates, covered expenses incurred
within six months after the Closing Date relating to a condition
that caused the employee or covered dependent to be totally
disabled as of the Closing Date as determined under the terms of
the applicable Seller's plan.
f) POST-RETIREMENT WELFARE BENEFITS.
Seller and its Affiliates shall be responsible for all post-retirement
medical, mental health, substance abuse, dental and life insurance
coverage for any of its eligible employees or eligible former employees
who do not become Affected Employees. Seller or its Affiliates also
shall make available its post-retirement medical, mental health,
substance abuse, dental and life insurance benefit coverage to any
Affected Employee who as of the date he or she becomes an employee of
Buyer is eligible to receive such post--retirement welfare benefit
coverage of Seller or its Affiliates (the "Eligible Affected
Employees"). The Eligible Affected Employees shall be treated in the
same manner as other similarly situated employees of Seller or its
Affiliates
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who retired as of the Closing Date (and shall be subject to the rights
of Seller and its Affiliates to amend or terminate such coverage with
respect to such employees).
g) BUYER SICK PAY PLAN.
Each Affected Employee shall be credited under the Buyer's sick pay
plan with a bank of sick pay hours (for both occupational and non-
occupational disabilities, if distinct) based on service with Seller
and its Affiliates as of the date the Affected Employee becomes an
employee of Buyer. Provided however, Affected Employees shall not be
permitted to exceed the maximum allowable sick pay hours available to
Buyer's employees.
h) BUYER LIFE INSURANCE COVERAGE.
Buyer agrees that as of the date an Affected Employee becomes an
employee of Buyer, the Affected Employee shall be eligible to enroll in
Buyer's life insurance plan, including any supplemental life insurance
coverage on his or her life which is provided by Buyer, on the same
terms and conditions as such plans are available to Buyer's employees.
i) BUYER'S OTHER EMPLOYEE BENEFITS
Except as otherwise specifically provided in this Section 23, Buyer
agrees that as of the date an Affected Employee becomes an employee of
Buyer, he or she will be eligible to participate in employee benefit
plans and programs of Buyer which are generally applicable to employees
of Buyer under Buyer's employee benefit plans and programs, whether in
effect on the Closing Date or subsequently established by Buyer.
j) WARN ACT INDEMNIFICATION.
Buyer 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 ("WARN
Act"), with respect to the Affected Employees in connection with
actions taken by Buyer on or after the Closing Date. Seller shall
indemnify Buyer against all liabilities under the WARN Act with respect
to the Prospective Employees and actions taken by Seller prior to the
Closing Date, and with regard to Remaining Employees, actions taken by
Seller before, on or after the Closing Date.
k) GENERAL EMPLOYEE PROVISIONS.
i) Seller and Buyer shall give any notices required by law and take
whatever other actions with respect to the plans, programs and
policies described in this Section 23 as may be reasonably
necessary to carry out the arrangements described in this Section
23.
ii) Seller and Buyer shall provide each other with such plan documents
and descriptions, employee data or other information as may be
reasonably required to carry out the arrangements described in this
Section 23.
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iii) If any of the arrangements described in this Section 23 are
determined by the Internal Revenue Service or other applicable
governmental authority, or by a court of competent jurisdiction, to
be prohibited by law, Seller and Buyer shall modify such
arrangements to as closely as possible retain the intent and
economic benefits and burdens of the parties as reflected herein in
a manner which is not prohibited by law.
iv) As soon as reasonably practicable after selection of Affected
Employees but at least 10 business days before Closing, Seller will
provide to Buyer a list of all Affected Employees' service used
under any of the employee benefit plans or policies of Seller or
their Affiliates as well as out of pocket expenditures under health
plans and accumulated sick days.
v) At least thirty (30) days prior to Closing, Seller will deliver to
Buyer true, accurate, and complete copies of all agreements or
plans concerning retirement, pension, medical, health, life and
other insurance, bonus, profit sharing and similar employee benefit
plans covering the Affected Employees.
vi) In the event that Buyer hires any Remaining Employee within six
months after Closing and such remaining employee has received a
Chevron Severance Plan benefit from Seller, Buyer will notify
Seller of such event and shall reimburse Seller for any severance
pay paid by Seller to such Remaining Employee as soon as possible
after the hire date.
vii) At Closing, Seller will provide Buyer a list of Affected Employees
who have accepted employment with Buyer but who have taken leave
under Seller's Family and Medical Leave Policy within 12 months
prior to Closing, including the type and length of any such leave.
viii) Seller and Buyer do not intend to create any third party
beneficiary rights respecting any Affected Employee or Remaining
Employee as a result of the provisions herein and specifically
hereby negate any such intention.
24. F.E.R.C. TARIFFS, T.R.C. TARIFFS, AND T.R.C. T-4 PERMIT
a) The Pipeline Interests being conveyed hereunder are operated as a
common carrier pipeline system subject to Federal Energy Regulatory
Commission ("F.E.R.C.") Tariff No. 546 ("FERC Tariff") and Texas
Railroad Commission ("T.R.C.") Tariff T.R.S. 149 ("TRC Tariff"). Buyer
shall adopt, as soon as reasonably practical after the Closing Date,
Seller's FERC Tariff and TRC Tariff that are in effect on the Closing
Date.
b) Prior to the Closing Date Buyer shall apply for and obtain a T-4 Permit
from the T. R. C. covering the Pipeline Interests being conveyed to
Buyer pursuant to this Agreement, said permit to be effective on the
Closing Date of this transaction. Seller shall withdraw its T-4 Permit
on the Closing Date.
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c) The parties agree that each will provide the shippers of the other
party transfer of crude oil, without cost or fee, between Wink East
Station, to be owned by Buyer, and Wink West Station, owned by Seller,
to the extent that the existing facilities can accommodate such
transfers. Each party shall provide the other party with access to its
facilities in the event that modifications are required to provide this
service. However, in no event shall a party be obligated to incur costs
to install new facilities.
25. GOVERNMENT CONSENTS
The consummation of the transaction contemplated by this Agreement may be
subject to the pre-merger notification requirements of Section 7A of the
▇▇▇▇▇▇▇ Act (15 U.S.C. (S)18a) as enacted by Title II of the ▇▇▇▇-▇▇▇▇▇-
▇▇▇▇▇▇ Antitrust Improvements Act of ▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇"). Seller and
Buyer shall cooperate and promptly undertake all filings under the HSR and
shall promptly take other actions as may be required to comply with such
requirements. The Closing of this transaction is subject to the parties
obtaining appropriate approvals under the HSR Act. The HSR filing fees
shall be shared equally between Seller and Buyer.
26. TAX-DEFERRED EXCHANGE
a) BUYER'S EXCHANGE. In the event Buyer so elects, Seller agrees to
cooperate with Buyer in effecting a tax-deferred exchange of the
Property under Internal Revenue Code (S) 1031. Buyer shall have the
right to elect a tax-deferred exchange by giving Seller written notice
of such election prior to Closing. If Buyer so elects to effect a tax-
deferred exchange, Seller agrees to execute such escrow instructions,
documents, agreements or instruments to effect an exchange as Buyer may
reasonably request, it being understood that Seller shall not be
required to incur any additional costs, expenses, fees or liabilities,
not reimbursed or indemnified by Buyer, as a result of or connected
with an exchange. In no event shall Seller be required to acquire title
to other property as a consequence of Buyer's election to effect such
exchange. Buyer may assign its rights and delegate its duties under
this Agreement in whole or in part to a third party in order to effect
such an exchange; provided that Buyer shall remain responsible to
Seller for the full and prompt performance of any delegated duties.
Buyer shall indemnify and hold Seller and its affiliates harmless from
and against all claims, expenses (including reasonable attorneys'
fees), loss and liability resulting from Seller's participation in any
exchange undertaken pursuant to this Section 26(a).
b) SELLER'S EXCHANGE. In the event Seller so elects, Buyer agrees to
cooperate with Seller in effecting a tax-deferred exchange of the
Property under Internal Revenue Code (S) 1031. Seller shall have the
right to elect a tax-deferred exchange by giving Buyer written notice
of such election prior to Closing. If Seller so elects to effect a tax-
deferred exchange, Buyer agrees to execute such escrow instructions,
documents, agreements or instruments to effect an exchange as Seller
may reasonably request, it being understood that Buyer shall not be
required to incur any
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additional costs, expenses, fees or liabilities, not reimbursed or
indemnified by Seller, as a result of or connected with an exchange. In
no event shall Buyer be required to acquire title to other property as
a consequence of Seller's election to effect such exchange. Seller may
assign its rights and delegate its duties under this Agreement in whole
or in part to a third party in order to effect such an exchange;
provided that Seller shall remain responsible to Buyer for the full and
prompt performance of any delegated duties. Seller shall indemnify and
hold Buyer and its affiliates harmless from and against all claims,
expenses (including reasonable attorneys' fees), loss and liability
resulting from Buyer's participation in any exchange undertaken
pursuant to this Section 26(b).
27. FORCE MAJEURE
In the event that the performance required under the terms of this
Agreement by Buyer or Seller is delayed or prevented by fire; explosion;
act of God; breakdown of machinery or equipment; riots; strikes; labor
disputes; any order, regulation, request, or recommendation by any
governmental authority; or any similar cause which is reasonably outside
the control of the party or parties, such required performance shall be
excused for that period of time that the force majeure prevents
performance. In the event any delay due to force majeure occurs or is
anticipated, the affected party shall promptly notify the other party of
such delay and the cause and estimated duration of such delay. The
affected party shall exercise due diligence to shorten, avoid and mitigate
the effects of the delay and shall keep the other party advised as to the
affected party's efforts and its estimate of the continuance of the delay.
In no event shall either party be entitled to any damages of any kind
including without limitation, direct, consequential or otherwise, whether
based in contract, tort, (including negligence and strict liability) or
otherwise, or to any adjustment to the Purchase Price payable hereunder
because of any delay due to force majeure. Provided however, if the force
majeure occurs prior to Closing and continues for more than 120 days,
either party may terminate this Agreement without further liability or
obligation except for the return of the Deposit, with Interest to Buyer.
28. FURTHER ASSURANCES
On and after the Closing Date, Seller and Buyer will cause to be executed
and delivered from time to time at the request of the other all such
further instruments of conveyance, assignments and further assurances as
reasonably may be required to transfer and assign the Seller's title in
such Property to Buyer and to carry out the intent of this Agreement and
the transaction contemplated herein.
29. REMOVAL OF SIGNS AND MARKERS
Buyer shall, at its own expense and in a timely manner after the Closing
Date, remove or cause to be removed all pipeline signs and placards which
indicate Seller's prior ownership in the Property and erect or install
signs and placards as may be required by state or other governmental
agencies indicating Buyer or its designated operator, whichever is
applicable, as the owner-operator of the Property.
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30. SURVIVAL OF AGREEMENTS
Except as otherwise specifically provided in this Agreement, all covenants,
agreements, representations, guaranties, indemnities, and warranties shall
survive the Execution Date of this Agreement, Closing, and the delivery and
recordation of deeds, assignments or bills of sale which convey the
Property to Buyer.
31. CONDITIONS PRECEDENT TO CLOSING
Each party's obligation to consummate the transactions contemplated by this
Agreement is subject to the satisfaction or waiver by the other party of
the following conditions:
a) All requirements set forth in this Agreement shall be complied with at
or prior to Closing, unless otherwise specifically set forth that the
requirement may be complied with subsequent to the Closing Date.
b) All government approvals, if any, required for the consummation of the
transactions contemplated herein have been obtained.
c) No action or proceeding by or before any governmental authority shall
have been instituted or threatened (and not subsequently dismissed,
settled or otherwise terminated) which might restrain, prohibit or
invalidate any of the transactions contemplated by this Agreement,
other than an action or proceeding instituted or threatened by a party
or any of its affiliates.
d) The representations and warranties contained in Section 10(SELLER'S
REPRESENTATIONS AND WARRANTIES), Section 11(SELLER'S ADDITIONAL
REPRESENTATIONS AND LIMITED WARRANTIES) and Section 12 (BUYER'S
REPRESENTATIONS AND WARRANTIES) shall be true and correct in all
material respects on the Closing Date as though made on and as of the
Closing Date.
e) No amendment to Exhibit K has resulted in a material adverse effect the
result of which has not been addressed by Section 8 (TERMINATION FOR
MATERIAL DEFECT); Section 9 (DAMAGE OR CONDEMNATION PRIOR TO CLOSING;
or Section 13 (BUYER'S INVESTIGATION AND RIGHT TO CANCEL), either
individually or in the aggregate, on the Property, the operation or
maintenance of the Pipeline Interests or the financial performance of
the Property.
32. MISCELLANEOUS
a) DISPOSITION OF ACCOUNTS RECEIVABLE AND OTHER REVENUE
i) Accounts receivable or other revenue obligations associated with the
Property, to the extent that such accounts receivable and revenue
obligations are attributable to the performance of transactions
prior to the Effective Date, shall not be part of the sale but shall
remain the property of Seller. Accounts
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receivable or other revenue obligations associated with the
Property, to the extent that such accounts receivable or revenue
obligations are attributable to the performance of transactions on
or after the Effective Date, shall be part of the sale and the
property of Buyer. If the Effective Date is other than the first day
of the month, that month's business shall be equitably prorated
based on the number of days in the month that each party owned the
Property with deliveries deemed to be ratable.
ii) In accordance with generally accepted accounting principles, Seller
shall complete a Settlement Statement Accounting as promptly as
possible but no later than one hundred twenty (120) days after
Closing.
b) ASSIGNABILITY
Neither Seller nor Buyer shall assign any right granted it under this
Agreement or at any time attempt to delegate any duty to be performed
by it hereunder without the express written consent of the other, which
consent shall not be unreasonably withheld. Except that Buyer may
assign this Agreement to an affiliate partnership of which Plains
Marketing, L.P. is a limited partner and Plains All American Inc. is
the general partner provided that such affiliate assumes in writing all
of the obligations and duties of Buyer under this Agreement, and
provided Buyer agrees in writing that it shall remain secondarily
liable as to the indemnities provided to Seller under the terms of this
Agreement. Subject to the foregoing, all rights and duties of each
party hereunder shall inure to the benefit of and be binding upon its
successors and assigns. All covenants and conditions of this Agreement
shall survive the delivery of any document of transfer pursuant hereto
and inure to the benefit of, be binding upon and be enforceable
directly by and against every successor in ownership of the Property.
c) NOTICES.
All notices and other communications required or permitted to be given
or delivered hereunder shall be in writing and shall be delivered
personally or be sent by certified mail, postage prepaid and return
receipt requested, directed to the party intended at the address set
forth below, or at such other address as may be designated by such
party by notice given to the other party in the manner aforesaid, and
shall be effective upon receipt:
SELLER: BUYER:
Chevron Pipe Line Company Plains Marketing, L.P.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ c/o Plains All American, Inc.
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: Eastern Profit Center Manager Attn: President
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d) TIME
Time is of the essence of this Agreement; provided, however, that if
the date on which any action is required to be taken hereunder shall
fall on a day on which the party to perform is not open for business,
such action shall be taken on the next business day on which it is
open for business.
e) GOVERNING LAW AND DISPUTE RESOLUTION.
i) The interpretation and enforcement of this Agreement, and any
mediation pursuant to subparagraph (iii) below, shall be governed by
the substantive law of the State of Texas, without the application of
its conflict of law rules.
ii) Prior to any party hereto instituting a court proceeding to
enforce any provision hereof or for damages by reason of the breach,
default or liability of the other party arising out of any provision of
this Agreement or otherwise, the parties agree that such disputes,
controversies or claims arising out of or relating to this Agreement
(collectively "Disputes") shall be submitted to non-binding mediation
to be conducted in accordance with the following procedures:
A) The parties shall use all commercially reasonable efforts
to resolve Disputes through direct discussions. The
management of each party commits itself to respond promptly
to any communications concerning Disputes.
B) Within thirty (30) days of written notice that there is a
Dispute, representatives of the parties with authority to
settle the matter shall meet at a mutually acceptable time
and place in Houston, Texas or such other location as may be
agreed, and as often thereafter as they deem reasonably
necessary in an effort to reach an amicable resolution. If a
negotiator intends to be accompanied at a meeting by an
attorney, the other negotiator shall be given at least three
(3) business days' notice of such intention and may also be
accompanied by an attorney.
C) If no amicable resolution is reached as a result of the
procedure in subparagraph (b) hereof,
(1) Within sixty (60) days of the written notice referenced
in subparagraph (b), the parties shall exchange written
statements of their positions concerning the Dispute,
and thereafter shall participate in a final meeting for
the purpose of attempting to settle such Dispute. Each
party's written statement of position shall state
whether the party desires to present live witnesses
(and, if so, who) at the next meeting to resolve the
Dispute (described hereinafter);
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(2) Within three (3) weeks of the exchange of written
statements, the parties represented by the respective
presidents or vice presidents of Sellers and Buyers and
with the assistance of such counsel, experts and others
as may be appropriate, shall meet and again attempt to
reach an amicable resolution or settlement of the
Dispute.
D) If no amicable resolution or settlement is reached as a
result of the procedures in subparagraphs (a), (b) or (c)
herein, the Dispute shall be submitted for non-binding
mediation which shall be conducted expeditiously before a
mediator mutually agreed to by the parties. Unless the
parties and the mediator agree to an alternative process,
the mediator shall be provided with the written statements
and witness presentations, and the party representatives
described in subparagraph (c), or other representatives
with full settlement authority, shall be participate. The
parties shall endeavor to complete the mediation process
within ninety (90) days of the conclusion of the procedures
set forth in subparagraph (c) hereof.
iii) All negotiations, discussions and documents pursuant to or in
furtherance of dispute resolution under this provision are
confidential and shall be treated as compromise and settlement
negotiations for purposes of the Federal Rules of Evidence and state
rules of evidence.
iv) Each party is required to continue to perform its obligations under
this Agreement pending final resolution of any Dispute.
v) The parties desire to attempt to settle any dispute through mediation
and, in furtherance thereof, agree, if necessary, to enter into a
tolling agreement to prevent the loss or compromise of any right due
to the expiration of any applicable period of limitations. Should such
tolling agreement not be entered into in a timely basis, either party
hereto may file pleadings and pursue its claim or cause of action in
any court of competent jurisdiction consistent with Section 32 (e)
(vi).
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vi) Any judicial proceedings permitted to be brought with respect to
this Agreement shall be brought in any state or federal court of
competent jurisdiction in the State of Texas, and the parties
generally and unconditionally accept the exclusive jurisdiction of
such courts. The parties waive, to the fullest extent permitted by
applicable law, any objection which they may now or hereafter have
to the bringing of any such action or proceeding in such
jurisdiction.
f) NO RIGHTS IN THIRD PARTIES
This Agreement is not intended to, nor shall it be construed to create
in or give to any person other than the parties hereto and their
respective successors and permitted assignees, any claim, cause of
action, remedy or right of any kind.
g) ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof and may not be amended or
modified in any respect whatsoever except by an instrument in writing
signed by the parties hereto. If any provision hereof shall be held
invalid, such invalidity shall not affect any other provision of this
Agreement. This Agreement and the rights and obligations of the parties
hereunder shall survive the Closing of the purchase and sale of the
Property.
h) HEADINGS
The captions in this Agreement have been inserted for convenience of
reference only and shall not define or limit any of the terms and
provisions hereof.
i) ATTACHMENTS INCORPORATED
All schedules, exhibits, and attachments hereto are deemed a part of
this Agreement and are incorporated herein and made a part hereof.
Provided, however, that if a conflict exists between the terms and
conditions of this Agreement and the Exhibits attached hereto, this
Agreement shall prevail.
j) COUNTERPARTS
If this Agreement is executed in duplicate, each duplicate original
shall be considered an original for all purposes.
33. DAMAGES
THE PARTIES AGREE THAT, EXCEPT FOR THE LIQUIDATED DAMAGES SPECIFICALLY
PROVIDED FOR IN SECTION 16, THE RECOVERY BY EITHER PARTY HERETO OF ANY
DAMAGES SUFFERED OR INCURRED BY IT AS A RESULT OF ANY BREACH BY THE OTHER
PARTY OF ANY OF ITS REPRESENTATIONS, WARRANTIES LIMITED WARRANTIES OR
OBLIGATIONS UNDER THIS AGREEMENT SHALL BE LIMITED TO ACTUAL DAMAGES
SUFFERED OR INCURRED BY THE NON-BREACHING PARTY AS A RESULT OF THE BREACH
BY THE BREACHING PARTY OF ITS REPRESENTATIONS, WARRANTIES OR OBLIGATIONS
HEREUNDER AND
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IN NO EVENT SHALL THE BREACHING PARTY BE LIABLE TO THE NON-BREACHING PARTY
FOR ANY INDIRECT, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES SUFFERED OR
INCURRED BY THE NON-BREACHING PARTY AS A RESULT OF THE BREACH BY THE
BREACHING PARTY OR ANY OF ITS REPRESENTATIONS, WARRANTIES OR OBLIGATIONS
HEREUNDER OR FOR ACTUAL DAMAGES WHICH EXCEED THE LIMITATIONS SPECIFICALLY
SET FORTH IN OTHER PROVISIONS OF THIS AGREEMENT. For purposes of the
foregoing, actual damages may, however, include indirect, consequential,
special, exemplary or punitive damages to the extent (i) the injuries or
losses resulting in or giving rise to such damages are incurred or suffered
by a person that is not a Seller Indemnitee, a Buyer Indemnitee or an
affiliate of any of the foregoing and (ii) such damages are recovered
against an Indemnified Party by a person that is not a Seller Indemnitee, a
Buyer Indemnitee or an affiliate of any of the foregoing.
34. NONDISCLOSURE
Both parties to this Agreement especially acknowledge and agree that
neither they, nor any of their respective agents, servants, employees or
related affiliates and their respective agents, servants or employees shall
disclose to any third party, this Agreement or the terms of the purchase
and sale contemplated by this Agreement until a time subsequent to the
Execution Date. Notwithstanding the agreement of confidentiality and non-
disclosure, Seller expressly reserves the right to contact any property
owner upon which the pipeline may be situated in order to obtain the
consent or permission to the assignment of the right-of-way in accordance
with Section 6 (RIGHT-OF-WAY INTERESTS) and as contemplated by this
Agreement.
35. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
THE REPRESENTATIONS, WARRANTIES, LIMITED WARRANTIES AND COVENANTS SHALL
SURVIVE THE CLOSING FOR A PERIOD OF FIVE YEARS AFTER THE CLOSING DATE
EXCEPT THAT THOSE REPRESENTATIONS OF SELLER UNDER SECTION 10 (A), 10 (B)
AND 10 (C) AND THOSE REPRESENTATIONS OF BUYER UNDER SECTIONS 11 (A), 11 (B)
AND 11 (C) SHALL SURVIVE THE CLOSING UNTIL 90 DAYS FOLLOWING THE EXPIRATION
OF THE RELEVANT STATUTE OF LIMITATIONS (INCLUDING ALL EXTENSIONS THEREOF).
ANY CLAIM FOR BREACH OF REPRESENTATION, WARRANTY OR AGREEMENT SHALL SURVIVE
UNTIL SUCH CLAIMS ARE FULLY AND FINALLY RESOLVED UNDER THE PROVISIONS OF
THIS AGREEMENT.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
Execution Date first written hereinabove.
SELLER: BUYER:
CHEVRON PIPE LINE COMPANY PLAINS MARKETING, L.P.
a Delaware corporation BY ITS GENERAL PARTNER
PLAINS ALL AMERICAN INC.
By: /s/ ▇. ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------- -----------------------
Title: President Title: President
Date: 4/16/99 Date: 4/16/99
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