SHELL CO2 COMPANY, LTD.
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Shell CO2 General LLC
Shell CO2 LLC
Shell Western E&P Inc.
Shell Western Pipelines Inc.
Shell ▇▇▇▇▇▇ Pipeline Company
Shell Land & Energy Company
▇▇▇▇▇▇ ▇▇▇▇▇▇ CO2, LLC
▇▇▇▇▇▇ ▇▇▇▇▇▇ Operating L.P. "A"
ASSUMPTION AND INDEMNIFICATION AGREEMENT
TABLE OF CONTENTS
ARTICLE 1 CERTAIN DEFINITIONS.................................................1
CERTAIN DEFINITIONS..........................................................1
ARTICLE 2 PARTNERSHIP ASSETS..................................................7
PARTNERSHIP ASSETS...........................................................7
PARTNERSHIP ASSUMED MATTERS..................................................7
ARTICLE 3 RETAINED MATTERS....................................................9
SHELL RETAINED MATTERS.......................................................9
KM RETAINED MATTERS.........................................................10
PAYMENT.....................................................................11
ARTICLE 4 INDEMNIFICATION....................................................12
GENERAL INDEMNITY BY THE LIMITED PARTNERSHIP AS TO SHELL....................12
ENVIRONMENTAL INDEMNITY BY THE LIMITED PARTNERSHIP AS TO SHELL..............12
GENERAL INDEMNITY BY THE LIMITED PARTNERHSIP S TO KM........................13
ENVIRONMENTAL INDEMNITY BY THE LIMITED PARTNERSHIP AS TO KM.................13
GENERAL INDEMNITY BY SHELL..................................................14
ENVIRONMENTAL INDEMNITY BY SHELL............................................15
GENERAL INDEMNITY BY KM.....................................................15
ENVIRONMENTAL INDEMNITY BY KM...............................................16
LIMITATIONS.................................................................17
INDEMNIFICATION PROCEDURE...................................................18
ARTICLE 5 ARBITRATION PROCEDURES.............................................18
ARTICLE 6 MISCELLANEOUS......................................................18
NOTICES.....................................................................18
GOVERNING LAW...............................................................19
SEVERABILITY................................................................19
HEADINGS; REFERENCES........................................................20
ENTIRE AGREEMENT; RELATED AGREEMENTS; AMENDMENTS............................20
BINDING EFFECT..............................................................20
COUNTERPARTS................................................................20
NO RIGHTS IN THIRD PARTIES; NO THIRD PARTY BENEFICIARIES....................20
SPECIAL, EXEMPLARY, CONSEQUENTIAL OR PUNITIVE DAMAGES.......................21
AUDIT RIGHTS................................................................21
ACCESS TO RECORDS...........................................................21
ASSUMPTION AND INDEMNIFICATION AGREEMENT
THIS ASSUMPTION AND INDEMNIFICATION AGREEMENT (this "Agreement") effective
as of January 1, 1998, (the "Effective Date"), by and among the following
(collectively, the "Parties" and individually a "Party"):
Shell CO2 General LLC, a Delaware limited liability company (referred to
herein as "General Partner"), Shell CO2 LLC, a Delaware limited liability
company, Shell Western E&P Inc., a Delaware corporation, Shell Western Pipelines
Inc., a Delaware corporation, Shell ▇▇▇▇▇▇ Pipeline Company, a Delaware
corporation, and Shell Land & Energy Company, a Delaware corporation, (all of
which are collectively referred to herein as the "Shell Parties");
▇▇▇▇▇▇ ▇▇▇▇▇▇ CO2, LLC, a Delaware limited liability company, and ▇▇▇▇▇▇
▇▇▇▇▇▇ Operating L.P. "A", a Delaware limited partnership (collectively referred
to herein as the "KM Parties"); and
Shell CO2 Company, Ltd., a Texas limited partnership (referred to herein as
the "Limited Partnership").
In consideration of the mutual agreements herein contained, the Parties
hereby agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
1.1 Certain Definitions. As used herein, the following terms shall have the
respective meanings ascribed to them below:
1.1.1 Affiliate(s) shall have the meaning set forth in the Limited
Partnership Agreement.
1.1.2 Arise(s) an Environmental Claim or Environmental Cleanup Liability
shall be deemed to "Arise" upon (i) each discrete,
operationally-related Release of Chemical Substances, as occurring
or measured on a daily basis, or (ii) each discrete, operationally-
related occurrence of pollution, contamination or migration of
Chemical Substances, as occurring or measured on a daily basis.
1.1.3 Chemical Substances shall mean any chemical substances, including,
but not limited to, any sort of pollutants, contaminants, chemicals,
raw materials, intermediates, products, industrial, solid, toxic
materials or Hazardous Materials, wastes, petroleum products (including
crude oil or any component thereof), salt water, brine, asbestos, or
Naturally Occurring Radioactive Materials ("NORM").
1.1.4 Claims shall mean any and all claims, demands, loss, liability,
liens, judgments, settlements, suits, causes of action, fines,
penalties and/or compliance costs (and any costs, expenses and fees
associated with the investigation, defense and/or resolution
of all of the foregoing, including without limitation, reasonable
attorney's fees and legal costs) other than Environmental Claims and
Environmental Cleanup Liability. Claims may be based on any theory of
tort (including but not limited to negligent acts or omissions),
contract, strict liability, statutory liability (including, without
limitation, fines, penalties, obligations or requirements) or any other
basis for liability and shall include, without limitation, any Claims
arising, occurring or resulting from, related to or based on the
injury, disease, or death of any persons (including, without
limitation, the indemnifying Party's directors, officers, employees,
agents and representatives) or damage to, loss or destruction of any
property, real or personal (including, without limitation, the
indemnifying Party's property).
1.1.5 Claim Notice shall mean a notice delivered to a Party hereto, in
writing, that the Party serving the notice has received a Claim from a
party or been served with process by or on behalf of a party asserting
Claims, Environmental Claims or Environmental Cleanup Liability
indemnified hereunder.
1.1.6 Closing and Closing Date have the meanings as set forth in the Master
Agreement.
1.1.7 CO2 shall mean carbon dioxide gas.
1.1.8 Dispute means any dispute, controversy or claim (including, without
limitation, those based on tort, contract or statute or any other legal
or equitable theory) arising out of or relating to this Agreement or
the breach, validity or meaning thereof.
1.1.9 Environmental Claim shall mean any and all claims, demands, losses,
liabilities, judgments, settlements, suits, causes of action or
proceedings for the personal injury, disease or death of any person
(including, without limitation, an indemnifying Party's directors,
officers, employees, agents and representatives), damage to, loss or
destruction of any property, real or personal (including, without
limitation, an indemnifying Party's property), damage to the
environment, or damage to natural resources made, asserted or
prosecuted by or on behalf of any Third Party (whether based on any
theory of tort (including, but not limited to negligent acts or
omissions), contract, statutory liability, or strict liability without
fault or otherwise) which Arise or are alleged to Arise under any
Environmental Law. Environmental Claim includes any damages, settlement
amounts, fines and penalties assessed or costs of complying with any
orders or decrees of courts, administrative tribunals or other
governmental entities (other than those compliance costs related to
Environmental Cleanup Liability) associated with resolving such claims,
demands, actions, suits or proceedings and any costs, expenses and
fees, including, without limitation, reasonable attorneys' fees and
legal costs, incurred in the investigation, defense and resolution of
such claims, demands, actions, suits and proceedings.
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1.1.10 Environmental Cleanup Liability shall mean any and all costs or
expenses of any nature whatsoever incurred in order to comply with the
provisions of any Environmental Law or the provisions of any order or
decree of any court or administrative or regulatory tribunal or agency
enforcing any Environmental Law, to contain, remove, remedy, respond
to, clean up, or ▇▇▇▇▇ any Release of Chemical Substances or other
contamination or pollution of the air, surface water, groundwater, land
surface or subsurface strata related to the operation, use, possession,
maintenance, ownership or abandonment of the Shell Assigned Assets, the
KM Assigned Assets or the Partnership Assets, as applicable, whether
such Release, contamination or pollution is located on, within, under
or above real property included in such assets ("on site") or is
located off site, including, but not limited to, any Release of
Chemical Substances or other contamination or pollution arising out of
or resulting from the manufacture, generation, formulation, processing,
labeling, distribution, introduction into commerce, or on site or off
site use, treatment, handling, storage, disposal, or transportation of
any Chemical Substances. Environmental Cleanup Liability includes,
without limitation, any judgments, damages, settlements, costs or
expenses (including, without limitation, attorneys', consultants' and
experts' fees and expenses) incurred with respect to (i) any
investigation, study, assessment, legal representation, cost recovery
by a governmental agency or Third Party, or monitoring or testing in
connection therewith, (ii) either the Shell Assigned Assets, the KM
Assigned Assets or the Partnership Assets, as applicable, as a result
of actions or measures necessary to implement or effectuate any such
containment, removal, investigation, remediation, response, cleanup or
abatement, and (iii) the resolution of such liabilities.
1.1.11 Environmental Laws means all statutes, rules, regulations,
controlling judicial decisions or legal requirements relating to or
regulating the pollution, protection or cleanup of the environment or
damage to or remediation of damage to real property and natural
resources (including, but not limited to, ambient air, surface water,
groundwater, and land surface or subsurface strata) including, without
limitation, legal requirements contained in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. ss. 9601 et seq., as amended (CERCLA); the Resources
Conservation and Recovery Act of 1976, 42 U.S.C. ss. 6901, et seq., as
amended (RCRA); the Superfund Amendments and Reauthorization Act of
1986, Pub. L. 99-499, as amended (▇▇▇▇); the Clean Air Act, 42 U.S.C.
ss. 7401, et seq., as amended; the Federal Water Pollution Control Act,
33 U.S.C. ss. 2601 et seq., as amended; the National Environmental
Policy Act, 42 U.S.C. ss. 4321, et seq., as amended (NEPA); and the
Safe Drinking Water Act, 42 U.S.C. ss. 300 ▇-▇, et seq., as amended;
and/or any other federal, state or local laws, statutes, ordinances,
rules, regulations or orders (including decisions of any court or
administrative body) relating to the pollution, protection or cleanup
of the environment as specified above. "Environmental Laws" shall also
mean the Toxic Substance Control Act, 25 U.S.C. ss. 1502, et seq., as
amended (TSCA) and/or any other federal, state (including, without
limitation, laws with respect to trespass, nuisance and other torts or
similar legal theories which may be applied to establish
liability or responsibility for Environmental Cleanup Liability or
Environmental Claims) or local laws, statutes, ordinances, rules,
regulations or orders (including decisions of any court or
administrative body) relating to the following (solely as they pertain
to the pollution, protection or cleanup of the environment or
environmental damage to or remediation of environmental damage to real
property and natural resources including, but not limited to, ambient
air, surface water, groundwater, and land surface or subsurface
strata): (i) release, containment, management, use, storage, disposal,
removal, remediation, response, cleanup or abatement of any sort of
Chemical Substances, including, without limitation, asbestos,
asbestos-containing materials and/or polychlorinated biphenyls; (ii)
the manufacture, generation, formulation, processing, labeling,
distribution, introduction into commerce, use, treatment, handling,
storage, disposal or transportation of any Chemical Substances; (iii)
exposure of persons, including employees of the parties hereto, to any
Chemical Substances and other occupational safety or health matters; or
(iv) the physical structure or condition of a building, facility,
fixture or other structure.
1.1.12 Hazardous Materials shall mean any substance now or hereafter
defined as a "Hazardous Substance" or a "Hazardous Waste" under the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, 42 U.S.C.A. ss. 9601, as amended, or the Resource Conservation
and Recovery Act, 42 U.S.C.A. ss. 6901.
1.1.13 KM Assigned Assets has the meaning set forth in the KM General
Conveyance.
1.1.14 KM Employee Benefits Plans shall mean each Plan which is sponsored,
maintained or contributed to by the KM Parties for the benefit of
current or former employees of the divisions currently or formerly
owning or operating the KM Assigned Assets, or which has been so
sponsored, maintained or contributed to prior to the Effective Date.
1.1.15 KM Escrow Funds shall mean all those funds representing the
aggregate amount of all current suspense accounts of the KM Parties and
their Affiliates (because of a lack of identity or address of owners,
title questions, change of ownership or similar reasons) listed in
Schedule 1.1.15 for accrued and unpaid Royalties and Burdens on or
allocated to the KM Assigned Assets.
1.1.16 KM Executive Officers shall mean ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and Eashy Yang.
1.1.17 KM General Conveyance shall mean that certain General Conveyance,
Assignment and ▇▇▇▇ of Sale Agreement having the effective date of
January 1, 1998, from ▇▇▇▇▇▇ ▇▇▇▇▇▇ Operating L.P. "A" to the Limited
Partnership.
1.1.18 KM Indemnified Parties means ▇▇▇▇▇▇ ▇▇▇▇▇▇ CO2, LLC, in its
individual capacity (including its guarantor), and its Affiliates,
successors and assigns, and the
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respective officers, directors, employees, agents and representatives
of each.
1.1.19 KM Retained Matters has the meaning set forth in Section 3.2.
1.1.20 Limited Partners means Shell CO2 LLC and ▇▇▇▇▇▇ ▇▇▇▇▇▇ CO2, LLC, and
any other persons that may be admitted as additional limited partners
to the Limited Partnership from time to time.
1.1.21 LP Agreement means the First Amended and Restated Agreement of
Limited Partnership of Shell CO2 Company, Ltd., a Texas limited
partnership, dated March 5, 1998.
1.1.22 LP Indemnified Parties means the Limited Partnership, the General
Partner, in its capacity as the general partner of the Limited
Partnership, the Limited Partners, in their individual capacities as
the limited partners of the Limited Partnership (including the
guarantors of each), the successors and assigns of each, and the
respective officers, directors, employees, agents and representatives
of each.
1.1.23 Master Agreement means that certain Master Agreement having an
effective date of January 1, 1998, between ▇▇▇▇▇▇ ▇▇▇▇▇▇ Operating L.P.
"A", ▇▇▇▇▇▇ ▇▇▇▇▇▇ CO2, LLC, Shell Western E&P Inc., Shell Western
Pipelines Inc., Shell ▇▇▇▇▇▇ Pipeline Company, Shell Land & Energy
Company, Shell CO2 General LLC and Shell CO2 LLC.
1.1.24 Partnership Assets means the KM Assigned Assets and the Shell
Assigned Assets.
1.1.25 Person means any natural person, firm, partnership, limited
liability company, association, corporation, company, trust, entity,
public body, agency, government or governmental entity.
1.1.26 Plan means any "employee benefit plan", as such term is defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") (whether or not such plan is subject to the
provisions of ERISA), any personnel policy, pension plan, stock option
plan, bonus plan or arrangement, profit sharing plan or arrangement,
incentive award plan or arrangement, vacation policy, severance pay
plan, policy or agreement, deferred compensation agreement or
arrangement, executive compensation or supplemental income arrangement,
consulting agreement, employment agreement and any other employee
benefit plan, agreement, arrangement, program, practice or
understanding.
1.1.27 Release shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, escaping, leaching, dumping or
disposing of any Chemical Substances into the environment (including,
but not limited to, the ambient air, surface water, groundwater and
land surface or subsurface strata) of any kind whatsoever (including,
but not limited to, the abandonment or discarding of barrels,
containers,
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tanks or other receptacles containing or previously containing
any Chemical Substances).
1.1.28 Royalties and Burdens means any and all royalties, overriding
royalties, production payments, net profits interests, and other
payments out of or with respect to production from or with respect to
the KM Assigned Assets and the Shell Assigned Assets, respectively.
1.1.29 Shell Assigned Assets has the meaning set forth in the Shell General
Conveyance and shall also include those partnership interests included
within the definition of "Assigned Assets" in the Shell Partnership
Conveyance.
1.1.30 Shell Employee Benefits Plans shall mean each Plan which is
sponsored, maintained or contributed to by the Shell Parties for the
benefit of current or former employees of the divisions currently or
formerly owning or operating the Shell Assigned Assets, or which has
been so sponsored, maintained or contributed to prior to the Effective
Date.
1.1.31 Shell Escrow Funds shall mean all those funds representing the
aggregate amount of all current suspense accounts of the Shell Parties
and their Affiliates (because of a lack of identity or address of
owners, title questions, change of ownership or similar reasons) listed
in Schedule 1.1.31 for accrued and unpaid Royalties and Burdens on or
allocated to the Shell Assigned Assets.
1.1.32 Shell Executive Officers shall mean ▇. ▇. ▇▇▇▇▇▇▇, ▇. ▇. ▇▇▇▇▇▇ and
▇. ▇. ▇▇▇.
1.1.33 Shell General Conveyance shall mean that certain General Conveyance,
Assignment and ▇▇▇▇ of Sale Agreement having the effective date of
January 1, 1998, from Shell Western E&P Inc., Shell Western Pipelines
Inc. and Shell Land & Energy Company to the Limited Partnership.
1.1.34 Shell Indemnified Parties means Shell CO2 General LLC, Shell CO2
LLC, in their individual capacities (including the guarantors of each),
and the Affiliates, successors and assigns of each, and the respective
officers, directors, employees, agents and representatives of each.
1.1.35 Shell Partnership Conveyance shall mean that certain Assignment and
Conveyance of Partnership Interest having the effective date of January
1, 1998, from Shell ▇▇▇▇▇▇ Pipeline Company to the
Limited Partnership.
1.1.36 Shell Retained Matter has the meaning set forth in Section 3.1.
1.1.37 Third Party shall mean any person other than a signatory to this
Agreement, such signatory's Affiliates and other than the Limited
Partnership.
1.1.38 Transaction Documents has the meaning set forth in the Master
Agreement.
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Other terms defined in the recitals hereof and elsewhere in this Agreement shall
have the respective meanings so ascribed to them.
ARTICLE 2
PARTNERSHIP ASSETS
2.1 Partnership Assets. Pursuant to the terms of the Master Agreement, the
Parties have agreed to assign or convey, or transfer or make available the
beneficial use of, the Partnership Assets to the Limited Partnership. Pursuant
to the KM General Conveyance, Shell General Conveyance and the Master Agreement,
the Limited Partnership has assumed, or agreed to assume, the use, ownership,
possession, maintenance, operation or abandonment of the Partnership Assets.
2.2 Partnership Assumed Matters. Subject to the terms hereof and except as
provided to the contrary herein, the Limited Partnership hereby assumes and
shall be responsible for all of the following obligations and liabilities
arising out of the use, ownership, possession, maintenance, operation or
abandonment of the Partnership Assets from and after the Effective Date:
2.2.1 Subject to Articles 3 and 4 hereof, the Limited Partnership assumes,
and agrees to perform, at the Limited Partnership's sole cost and
expense, all of the following obligations and liabilities, to the
extent the following obligations and liabilities relate to the period
from and after the Effective Date, (i) in the case of obligations based
on other agreements or documents, to the extent the same are valid,
subsisting and enforceable, and (ii) in the case of obligations based
on laws, rules, orders or regulations, to the extent the same are valid
and enforceable:
(a) all obligations (including, without limitation, those based on
express or implied covenants of the KM Parties or the Shell Parties)
relating to either the KM Assigned Assets and/or the Shell Assigned
Assets (whether such obligations and covenants are to a lessor, a
governmental body or any other person or entity), including, but not
limited to, (1) any obligations arising from and after the Effective
Date with respect to the plugging and abandonment of all existing ▇▇▇▇▇
used primarily in connection with CO2 activities (whether or not such
▇▇▇▇▇ are active, inactive, idle, or have been previously abandoned as
of the Effective Date), (2) any obligations to file or submit
compliance reports, notices and documents required by governmental
bodies and having due dates following the Effective Date; provided,
however, the Parties shall cooperate with the Limited Partnership in
the completion of such reports, notices and documents to the extent the
same cover such periods prior to the Effective Date, (3) any
obligations arising from and after the Effective Date with respect to
the removal of related oil and gas (the term "gas" or "Gas" as used in
this Agreement includes CO2) equipment used primarily in connection
with CO2 activities, including, without limitation, platforms,
pipelines, sumps, concrete foundations, vessels, tanks (above or below
ground), and similar items of oil and gas field equipment and
facilities, whether
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the existence of same is known or unknown to the KM Parties, the Shell
Parties and/or the Limited Partnership at Closing, and (4) any
obligations arising from and after the Effective Date with respect to
the complete and lawful restoration and reclamation of the lands used
in connection with ▇▇▇▇▇ and related, platforms, pipelines, sumps,
concrete foundations, vessels, tanks (above or below ground), and other
similar items of oil and gas field equipment and facilities used
primarily in connection with CO2 activities. The Limited Partnership's
performance of the obligations described in (1) through (4) above shall
be in compliance with all federal, state and local laws, rules and
regulations, with respect to such plugging and abandonment, filing,
removal and restoration and reclamation of associated lands;
(b) all obligations under licenses, permits, franchises, leases,
easements, and rights-of-way associated with or included in the KM
Assigned Assets and/or the Shell Assigned Assets;
(c) any obligations with respect to the reabandonment of previously
abandoned ▇▇▇▇▇ on lands included in the KM Assigned Assets and the
Shell Assigned Assets;
(d) the respective obligations and liabilities of the KM Parties and
the Shell Parties with respect to KM Escrow Funds and Shell Escrow
Funds, including, without limitation, any obligation to search for an
owner's identity and/or address and any obligation to escheat funds to
an appropriate governmental entity, agency or administrative body (the
KM Escrow Funds and the Shell Escrow Funds shall be applied against and
reduce pro tanto the respective liabilities of the KM Parties and the
Shell Parties to the Limited Partnership for the unpaid royalties they
represent); provided, however, the Limited Partnership shall not assume
the respective obligations and liabilities of the KM Parties and/or the
Shell Parties with respect to either the KM Escrow Funds and/or the
Shell Escrow Funds until the KM Parties and/or the Shell Parties, as
applicable, shall have delivered to the Limited Partnership cash in an
amount equal to the KM Escrow Funds or the Shell Escrow Funds, as
applicable;]
(e) the respective obligations of the KM Parties and/or the Shell
Parties accruing under any and all existing operating agreements, unit
agreements, unit orders, purchase and sale agreements, transportation
agreements, gas balancing agreements, and gas processing agreements, as
well as any and all other agreements, including, without limitation,
overage/shortage agreements and exchange agreements to which the KM
Assigned Assets or the Shell Assigned Assets are subject; and
(f) the respective obligations of the KM Parties and/or the Shell
Parties to settle with other interest owners or customers (i.e.,
transporters or shippers) for any overages or shortages with respect to
any gas balancing, transportation or
8
other agreements, including but not limited to those set forth in
2.2.1(e), above, to which the KM Assigned Assets or the Shell Assigned
Assets are subject, but only if the same first become properly due and
payable to said interest owners or customers, or available as a credit
or refund to either the Shell Parties or the KM Parties, after the
Effective Date (if such overages or shortages with respect to a
particular KM Assigned Asset or Shell Assigned Asset is a net
liability, the Limited Partnership shall indemnify the KM Parties or
the Shell Parties, respectively, for that net liability);
2.2.2 THE LIMITED PARTNERSHIP SHALL DEFEND, INDEMNIFY AND HOLD THE KM
INDEMNIFIED PARTIES AND SHELL INDEMNIFIED PARTIES HARMLESS WITH RESPECT
TO THE PERFORMANCE OR FAILURE TO PERFORM OF THE LIMITED PARTNERSHIP'S
OBLIGATIONS UNDER SECTION 2.2 REGARDLESS OF THE NEGLIGENCE, FAULT OR
STRICT (INCLUDING STATUTORY) LIABILITY OF THE KM INDEMNIFIED PARTIES OR
THE SHELL INDEMNIFIED PARTIES.
ARTICLE 3
RETAINED MATTERS
3.1 Shell Retained Matters. As used herein, "Shell Retained Matters" means any
and all of the following:
3.1.1 all Claims, Environmental Claims and Environmental Cleanup
Liabilities ("Shell Claims") relating to the use, ownership,
possession, maintenance, operation or abandonment of the Shell Assigned
Assets prior to the Effective Date (i) that are identified in Schedule
3.1 hereto, or (ii) anticipated to exceed $100,000 of which the Shell
Executive Officers had knowledge and failed to disclose to the KM
Parties prior to the Closing Date. The amount of any Shell Claim
relating to a Shell Retained Matter described in this Subsection 3.1.1
is limited to liabilities accrued or attributable to time periods prior
to the Effective Date and does not extend to liabilities or damages
accruing or attributable to time periods subsequent to the Effective
Date, even though such liabilities or damages may arise out of the same
Shell Claim which is the subject of a Shell Retained Matter. To the
extent a Shell Retained Matter described in this Subsection 3.1.1
relates to or involves a claim against the ▇▇▇▇▇▇ Pipeline Company, a
Texas general partnership ("▇▇▇▇▇▇"), or any one or more of its general
partners, the amount of any Shell Claim relating to such matter shall
be an amount equal to 50% of the claims, demands, losses, liabilities,
liens, judgments, settlements, suits, fines, penalties and/or
compliance costs (and any costs, expenses and/or fees associated with
the investigation, defense and/or resolution of all of the foregoing,
including, without limitation, reasonable attorney's fees and legal
costs) paid by ▇▇▇▇▇▇; provided, however, to the extent such claims are
not satisfied in full from the partnership
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assets of ▇▇▇▇▇▇, the amount of any Shell Claim shall further include
any and all additional amounts directly or indirectly incurred by the
Limited Partnership as a general partner of ▇▇▇▇▇▇. As used in this
Subsection 3.1.1, and with respect to any Shell Claim, "knowledge"
means the personal actual knowledge of any Shell Executive Officer;
3.1.2 all liabilities under, or claims for benefits by current or former
employees and/or participants of the Shell Parties or their
predecessors (including the eligible dependents or other beneficiaries
of such employees and/or participants) under, Shell Employee Benefits
Plans, whether or not such events are reported or unreported as of the
Effective Date;
3.1.3 all liabilities with respect to claims for, or in connection with,
post-retirement coverage, including, but not limited to,
post-retirement medical, dental or life insurance coverages by any
current or former employees and/or participants of any of the Shell
Parties or its predecessors (including the eligible dependents or other
beneficiaries of such employees and/or participants) under the Shell
Employee Benefits Plans; and
3.1.4 all liabilities with respect to Taxes (as defined in the Master
Agreement and hereinafter referred to as the "Taxes") of any one or
more of the Shell Parties accruing or relating to periods prior to the
Effective Date and relating to the use, ownership, possession,
maintenance, operation or abandonment of the Shell Assigned Assets
prior to the Effective Date; and
3.1.5 payables with respect to expenses incurred in connection with the
operation of the Shell Assigned Assets and that accrued prior to the
Effective Date, (but excluding matters referred to in Section 2.2.1
(f)).
The Limited Partnership does not assume the Shell Retained Matters. All Shell
Retained Matters shall remain the responsibility of the Shell Parties. THE SHELL
PARTIES SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS THE LP INDEMNIFIED PARTIES AND
THE KM INDEMNIFIED PARTIES FROM AND AGAINST ALL SHELL RETAINED MATTERS
REGARDLESS OF THE NEGLIGENCE, FAULT OR STRICT (INCLUDING STATUTORY) LIABILITY OF
THE LP INDEMNIFIED PARTIES OR THE KM INDEMNIFIED PARTIES.
3.2 KM Retained Matters. As used herein, "KM Retained Matters" means any and all
of the following:
3.2.1 all Claims, Environmental Claims and Environmental Cleanup
Liabilities ("KM Claims") relating to the use, ownership, possession,
maintenance, operation or abandonment of the KM Assigned Assets prior
to the Effective Date (i) that are identified in Schedule 3.2 hereto,
or (ii) anticipated to exceed $100,000 of which the KM Executive
Officers had knowledge and failed to disclose to the Shell
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Parties prior to the Closing Date. The amount of any KM Claim relating
to a KM Retained Matter described in this Subsection 3.2.1 is limited
to liabilities accrued or attributable to time periods prior to the
Effective Date and does not extend to liabilities or damages accruing
or attributable to time periods subsequent to the Effective Date, even
though such liabilities or damages may arise out of the same KM Claim
which is the subject of a KM Retained Matter. As used in this
Subsection 3.2.1, and with respect to any KM Claim, "knowledge" means
the personal actual knowledge of any KM Executive Officer;
3.2.2 all liabilities under, or claims for benefits by current or former
employees and/or participants of the KM Parties or their predecessors
(including the eligible dependents or other beneficiaries of such
employees and/or participants) under, KM Employee Benefits Plans,
whether or not such events are reported or unreported as of the
Effective Date;
3.2.3 all liabilities with respect to claims for, or in connection with,
post-retirement coverage, including, but not limited to,
post-retirement medical, dental or life insurance coverages by any
current or former employees and/or participants of any of the KM
Parties or its predecessors (including the eligible dependents or other
beneficiaries of such employees and/or participants) under the KM
Employee Benefits Plans; and
3.2.4 all liabilities with respect to Taxes of any one or more of the KM
Parties accruing or relating to periods prior to the Effective Date and
relating to the use, ownership, possession, maintenance, operation or
abandonment of the KM Assigned Assets prior to the Effective Date.
3.2.5 payables with respect to expenses incurred in connection with the
operation of the KM Assigned Assets and that accrued prior to the
Effective Date, (but excluding matters referred to in Section 2.2.1
(f))
The Limited Partnership does not assume the KM Retained Matters. All KM Retained
Matters shall remain the responsibility of the KM Parties. THE KM PARTIES SHALL
DEFEND, INDEMNIFY AND HOLD HARMLESS THE LP INDEMNIFIED PARTIES AND THE SHELL
INDEMNIFIED PARTIES FROM AND AGAINST ALL KM RETAINED MATTERS REGARDLESS OF THE
NEGLIGENCE, FAULT OR STRICT (INCLUDING STATUTORY) LIABILITY OF THE LP
INDEMNIFIED PARTIES OR THE SHELL INDEMNIFIED PARTIES.
3.4 Payment. Upon receipt of a Claim Notice for indemnification of a KM Retained
Matter and/or a Shell Retained Matter and adequate supporting information and
evidence, the indemnifying Party shall promptly pay, within sixty (60) days of
receipt of the Claim Notice, or such other mutually agreeable period, the Party
or Parties claiming indemnification under this Article 3 all amounts for which
the indemnifying Party is liable hereunder. In the event a portion of a claim
for indemnification is disputed, the indemnifying Party shall nevertheless pay
the
11
undisputed portion within (60) days, or such other mutually agreeable period, of
its receipt of the Claim Notice.
ARTICLE 4
INDEMNIFICATION
It is recognized that there may be an overlapping of the rights,
obligations and liabilities set forth in this Article 4 with certain other
provisions of this Agreement, the Master Agreement, or any of the other
Transaction Documents (as defined in the Master Agreement) executed
contemporaneously herewith; however, it is the intent of the Parties that, to
the extent the terms of any of the foregoing documents conflict with the terms
and provisions of this Agreement, the relevant terms and provisions of this
Agreement shall control, and any overlapping provisions found elsewhere shall
not be applied in a manner that would restrict the application of this Agreement
or result in duplicate or multiple recoveries.
4.1 General Indemnity by the Limited Partnership as to Shell. To the fullest
extent permitted by law, but no further, the Limited Partnership shall defend,
indemnify and hold harmless the Shell Indemnified Parties, from any and all
Third Party Claims for which a claim for indemnification is made pursuant to
Section 4.10 hereof and which directly or indirectly arise or result from or are
caused by the use, operation, maintenance, possession, ownership or abandonment
of the Shell Assigned Assets (i) after the Effective Date, and/or (ii) before
the Effective Date, but only with respect to any Claims initially made against
or sought to be imposed upon the Shell Indemnified Parties two and one-half (2
1/2) years or more after the Effective Date, even though caused, or contributed
to, by the negligence, acts or omissions of the Shell Indemnified Parties,
except for:
4.1.1 Environmental Claims or Environmental Cleanup Liability as provided
for in Section 4.2 below;
4.1.2 any such Claims caused by the willful misconduct or gross negligence
of the Shell Indemnified Parties; and
4.1.3 those Shell Retained Matters indemnified by the Shell Parties
pursuant to Section 3.1.
4.2 Environmental Indemnity by the Limited Partnership as to Shell. To the
fullest extent permitted by law, but no further, the Limited Partnership shall
defend, indemnify and hold harmless the Shell Indemnified Parties from and
against any and all Environmental Claims or Environmental Cleanup Liabilities
for which a claim for indemnification is made pursuant to Section 4.10 hereof
and which directly or indirectly Arise or result from or are caused by the use,
operation, maintenance, possession, ownership or abandonment of the Shell
Assigned Assets (i) after the Effective Date, and/or (ii) before the Effective
Date, but only with respect to any Environmental Claims or Environmental Cleanup
Liabilities initially made against or sought to be imposed upon the Shell
Indemnified Parties two and one-half (2 1/2) years or more after the Effective
Date, even
12
though caused, or contributed to, by the negligence, acts or omissions of the
Shell Indemnified Parties, except for:
4.2.1 any such Environmental Claims or Environmental Cleanup Liabilities
caused by the willful misconduct or gross negligence of the Shell
Indemnified Parties; and
4.2.2 those Shell Retained Matters indemnified by the Shell Parties
pursuant to Section 3.1.
EXCEPT AS PROVIDED IN SECTIONS 4.1.2 AND 4.2.1, THE OBLIGATIONS SET FORTH UNDER
SECTIONS 4.1 AND 4.2 SHALL APPLY REGARDLESS OF THE NEGLIGENCE, FAULT OR THE
STRICT LIABILITY OF THE SHELL INDEMNIFIED PARTIES UNDER ANY LAW (INCLUDING
STATUTORY, REGULATORY AND CASE LAW), REGARDLESS OF WHETHER SUCH LAW WAS IN
EXISTENCE AS OF THE EFFECTIVE DATE. The Limited Partnership further covenants
and agrees to defend any suit(s) or administrative proceeding(s) brought against
the Shell Indemnified Parties on account of any such Claims, Environmental
Claims or Environmental Cleanup Liabilities indemnified hereunder and to pay or
discharge the full amount or obligation of such Claims, Environmental Claims or
Environmental Cleanup Liabilities incurred by, accruing to or imposed on the
Shell Indemnified Parties resulting from any such suit(s) or proceeding(s) or
any amounts resulting from the settlement or resolution of such suit(s) or
proceeding(s).
4.3 General Indemnity by the Limited Partnership as to KM. To the fullest extent
permitted by law, but no further, the Limited Partnership shall defend,
indemnify and hold harmless the KM Indemnified Parties, from any and all Third
Party Claims for which a claim for indemnification is made pursuant to Section
4.10 hereof and which directly or indirectly arise or result from or are caused
by the use, operation, maintenance, possession, ownership or abandonment of the
KM Assigned Assets (i) after the Effective Date, and/or (ii) before the
Effective Date, but only with respect to any Claims initially made against or
sought to be imposed upon the KM Indemnified Parties two and one-half (2 1/2)
years or more after the Effective Date, even though caused, or contributed to,
by the negligence, acts or omissions of the KM Indemnified Parties, except for:
4.3.1 Environmental Claims or Environmental Cleanup Liabilities as provided
for in Section 4.4 below;
4.3.2 any such Claims caused by the willful misconduct or gross negligence
of the KM Indemnified Parties; and
4.3.3 those KM Retained Matters indemnified by the KM Parties pursuant to
Section 3.2.
4.4 Environmental Indemnity by the Limited Partnership as to KM. To the fullest
extent permitted by law, but no further, the Limited Partnership shall defend,
indemnify and hold harmless the KM Indemnified Parties from and against any and
all Environmental Claims or Environmental Cleanup Liabilities for which a claim
for indemnification is made pursuant to Section 4.10 hereof and which directly
or indirectly Arise or result from or are caused by the use, operation,
13
maintenance, possession, ownership or abandonment of the KM Assigned Assets (i)
after the Effective Date, and/or (ii) before the Effective Date, but only with
respect to any Environmental Claims or Environmental Cleanup Liabilities
initially made against or sought to be imposed upon the KM Indemnified Parties
two and one-half (2 1/2) years or more after the Effective Date, even though
caused, or contributed to, by the negligence, acts or omissions of the KM
Indemnified Parties, except for:
4.4.1 any such Environmental Claims or Environmental Cleanup Liabilities
caused by the willful misconduct or gross negligence of the KM
Indemnified Parties; and
4.4.2 those KM Retained Matters indemnified by the KM Parties pursuant to
Section 3.2.
EXCEPT AS SET FORTH IN SECTIONS 4.3.2 AND 4.4.1, THE OBLIGATIONS SET FORTH UNDER
SECTIONS 4.3 AND 4.4 SHALL APPLY REGARDLESS OF THE NEGLIGENCE, FAULT OR THE
STRICT LIABILITY OF THE KM INDEMNIFIED PARTIES UNDER ANY LAW (INCLUDING
STATUTORY, REGULATORY AND CASE LAW), REGARDLESS OF WHETHER SUCH LAW WAS IN
EXISTENCE AS OF THE EFFECTIVE DATE. The Limited Partnership further covenants
and agrees to defend any suit(s) or administrative proceeding(s) brought against
the KM Indemnified Parties on account of any such Claims, Environmental Claims
or Environmental Cleanup Liabilities indemnified hereunder and to pay or
discharge the full amount or obligation of such Claims, Environmental Claims or
Environmental Cleanup Liabilities incurred by, accruing to or imposed on the KM
Indemnified Parties resulting from any such suit(s) or proceeding(s) or any
amounts resulting from the settlement or resolution of such suit(s) or
proceeding(s).
4.5 General Indemnity by Shell. To the fullest extent permitted by law, but no
further, and subject to the limitations set forth in Section 4.9 below, the
Shell Parties shall defend, indemnify and hold harmless the LP Indemnified
Parties from and against any and all Third Party Claims for which a claim for
indemnification is made pursuant to Section 4.10 hereof and (i) which directly
or indirectly arise or result from or are caused by the use, operation,
maintenance, possession, ownership or abandonment of the Shell Assigned Assets
by the Shell Parties prior to the Effective Date, but only with respect to any
Claims initially made or sought to be imposed upon the Shell Parties or the LP
Indemnified Parties within two and one-half (2 1/2) years after the Effective
Date; (ii) which are based on law (including statutory, regulatory and case law)
existing at the Effective Date and (iii) which are anticipated by the General
Partner to exceed $250,000 with regard to any single Third Party Claim, except
for:
4.5.1 Environmental Claims or Environmental Cleanup Liabilities as
provided for in Section 4.6; and
4.5.2 any such Third Party Claims to the extent caused by the willful
misconduct or gross negligence of the LP Indemnified Parties.
4.6 Environmental Indemnity by Shell. To the fullest extent permitted by law,
but no further, and subject to the limitations set forth in Section 4.9 below,
the Shell Parties shall defend,
14
indemnify and hold harmless the LP Indemnified Parties from and against any and
all Environmental Claims and Environmental Cleanup Liabilities for which a claim
for indemnification is made pursuant to Section 4.10 hereof and (i) which
directly or indirectly Arise or result from or are caused by the use, operation,
maintenance, possession, ownership or abandonment of the Shell Assigned Assets
by the Shell Parties prior to the Effective Date, but only with respect to any
Environmental Claims and Environmental Cleanup Liabilities initially made or
sought to be imposed upon the Shell Parties or the LP Indemnified Parties within
two and one-half (2 1/2) years after the Effective Date; (ii) which are based on
Environmental Law (including statutory, regulatory and case law) existing at the
Effective Date; and (iii) which are anticipated by the General Partner to exceed
$250,000 with regard to any single Environmental Claim or Environmental Cleanup
Liability, except for:
4.6.1 any such Environmental Claims or Environmental Cleanup Liabilities
caused by the willful misconduct or gross negligence of the LP
Indemnified Parties.
EXCEPT AS SET FORTH UNDER SECTIONS 4.5.2 AND 4.6.1, THE OBLIGATIONS SET FORTH
UNDER SECTIONS 4.5 AND 4.6 SHALL APPLY REGARDLESS OF THE NEGLIGENCE, FAULT OR
THE STRICT LIABILITY OF THE LP INDEMNIFIED PARTIES UNDER ANY LAW (INCLUDING
STATUTORY, REGULATORY AND CASE LAW), REGARDLESS OF WHETHER SUCH LAW WAS IN
EXISTENCE AS OF THE EFFECTIVE DATE. To the extent any Third Party Claim,
Environmental Claim or Environmental Cleanup Liability (each referred to herein
as a "Shell Indemnified Claim") described in Sections 4.5 and 4.6 relates to or
involves a claim against the ▇▇▇▇▇▇ Pipeline Company, a Texas general
partnership ("▇▇▇▇▇▇"), or any one or more of its general partners, the amount
of any Shell Indemnified Claim relating to such matter shall be an amount equal
to 50% of the claims, demands, losses, liabilities, liens, judgments,
settlements, suits, fines, penalties and/or compliance costs (and any costs,
expenses and/or fees associated with the investigation, defense and/or
resolution of all of the foregoing, including, without limitation, reasonable
attorney's fees and legal costs) paid by ▇▇▇▇▇▇; provided, however, to the
extent such claims are not satisfied in full from the partnership assets of
▇▇▇▇▇▇, the amount of any Shell Indemnified Claim shall further include any and
all additional amounts directly or indirectly incurred by the Limited
Partnership as a general partner of ▇▇▇▇▇▇. The Shell Parties further covenant
and agree to defend any suit(s) or administrative proceeding(s) brought against
the LP Indemnified Parties on account of any such Third Party Claims,
Environmental Claims or Environmental Cleanup Liabilities indemnified hereunder
and to pay or discharge the full amount or obligation of any such Third Party
Claims, Environmental Claims or Environmental Cleanup Liabilities incurred by,
accruing to or imposed upon the LP Indemnified Parties resulting from any such
suit(s) or proceeding(s) or any amounts resulting from the settlement or
resolution of such suit(s) or proceeding(s).
4.7 General Indemnity by KM. To the fullest extent permitted by law, but no
further, and subject to the limitations set forth in Section 4.9 below, the KM
Parties shall defend, indemnify and hold harmless the LP Indemnified Parties,
from and against any and all Third Party Claims for which a claim for
indemnification is made pursuant to Section 4.10 hereof and (i) which directly
or indirectly arise or result from or are caused by the use, operation,
maintenance, possession,
15
ownership or abandonment of the KM Assigned Assets by the KM Parties prior to
the Effective Date, but only with respect to any Claims initially made or sought
to be imposed upon the KM Parties or the LP Indemnified Parties within two and
one-half (2 1/2) years after the Effective Date; (ii) which are based on law
(including statutory, regulatory and case law) existing at the Effective Date
and (iii) which are anticipated by the General Partner to exceed $250,000 with
regard to any single Third Party Claim, except for:
4.7.1 Environmental Claims or Environmental Cleanup Liabilities as
provided for in Section 4.8; and
4.7.2 any such Third Party Claims to the extent caused by the willful
misconduct or gross negligence of the LP Indemnified Parties.
4.8 Environmental Indemnity by KM. To the fullest extent permitted by law, but
no further, and subject to the limitations set forth in Section 4.9 below, the
KM Parties shall defend, indemnify and hold harmless the LP Indemnified Parties
from and against any and all Environmental Claims and Environmental Cleanup
Liabilities for which a claim for indemnification is made pursuant to Section
4.10 hereof and (i) which directly or indirectly Arise or result from or are
caused by the use, operation, maintenance, possession, ownership or abandonment
of the KM Assigned Assets by the KM Parties prior to the Effective Date, but
only with respect to any Environmental Claims and Environmental Cleanup
Liabilities initially made or sought to be imposed upon the KM Parties or the LP
Indemnified Parties within two and one-half (2 1/2) years after the Effective
Date; (ii) which are based on Environmental Law (including statutory, regulatory
and case law) in effect at the Effective Date hereunder; and (iii) which are
anticipated by the General Partner to exceed $250,000 with regard to any single
Environmental Claim or Environmental Cleanup Liability, except for:
4.8.1 any such Environmental Claims or Environmental Cleanup Liabilities
caused by the willful misconduct or gross negligence of the LP
Indemnified Parties.
EXCEPT AS SET FORTH UNDER SECTIONS 4.7.2 AND 4.8.1, THE OBLIGATIONS SET FORTH
UNDER SECTIONS 4.7 AND 4.8 SHALL APPLY REGARDLESS OF THE NEGLIGENCE, FAULT OR
THE STRICT LIABILITY OF THE LP INDEMNIFIED PARTIES UNDER ANY LAW (INCLUDING
STATUTORY, REGULATORY AND CASE LAW), REGARDLESS OF WHETHER SUCH LAW WAS IN
EXISTENCE AS OF THE EFFECTIVE DATE. The KM Parties further covenant and agree to
defend any suit(s) or administrative proceeding(s) brought against the LP
Indemnified Parties on account of any such Third Party Claims, Environmental
Claims or Environmental Cleanup Liabilities indemnified hereunder and to pay or
discharge the full amount or obligation of any such Third Party Claims,
Environmental Claims or Environmental Cleanup Liabilities incurred by, accruing
to or imposed upon the LP Indemnified Parties resulting from any such suit(s) or
proceeding(s) or any amounts resulting from the settlement or resolution of such
suit(s) or proceeding(s).
4.9 Limitations. The indemnification obligations of the Shell Parties and the KM
Parties contained in Sections 4.5 through 4.8 shall be subject to the following
limitations and conditions:
16
4.9.1 Such indemnification obligations shall not limit the disclaimers of
warranties and acknowledgments of the Shell Parties and/or the KM
Parties, respectively, with respect to the Partnership Assets as
specified in either the KM General Conveyance or the Shell General
Conveyance, and the indemnities contained herein shall have no
application to matters of description, title (including, without
limitation, the existence or non-existence of easements, licenses,
rights-of-way, permits, franchises, liens, leases, unit agreements or
other encumbrances or other agreements or the failure to procure
governmental or necessary Third Party consents or approvals of
assignment of the Partnership Assets), quality, value, fitness for
purpose or merchantability of the Partnership Assets;
4.9.2 Such indemnification obligations shall not limit the Limited
Partnership's obligations (including indemnification obligations) under
Section 2.2.1(a) hereof and the indemnities by the Shell Parties and/or
the KM Parties contained herein shall have no application to any costs,
losses or liabilities incurred by the Limited Partnership in connection
with fulfilling any removal, abandonment and/or restoration obligations
to the extent assumed by the Limited Partnership under Section
2.2.1(a);
4.9.3 The Shell Parties' combined financial obligations under Sections 4.5
and 4.6 shall not exceed, in the aggregate, $30,000,000;
4.9.4 The KM Parties' combined financial obligations under Sections 4.7 and
4.8 shall not exceed, in the aggregate, $7,500,000;
4.9.5 The Shell Parties shall not have any financial obligations under said
Sections 4.5 and 4.6 unless and until the Limited Partnership has first
paid $50,000 with respect to each individual Third Party Claim,
Environmental Claim or Environmental Cleanup Liability for which the
Limited Partnership seeks to deliver a Claim Notice; provided, however,
this Subsection shall not otherwise act or be interpreted to limit the
indemnification obligations contained within said Sections;
4.9.6 The KM Parties shall not have any financial obligations under said
Sections 4.7 and 4.8 unless and until the Limited Partnership has first
paid $50,000 with respect to each individual Third Party Claim,
Environmental Claim or Environmental Cleanup Liability for which the
Limited Partnership seeks to deliver a Claim Notice; provided, however,
this Subsection shall not otherwise act or be interpreted to limit the
indemnification obligations contained within said Sections; and
4.10 Indemnification Procedure. Any Party seeking to be indemnified under this
Agreement shall, within sixty (60) days following notice of any Claim,
Environmental Claim or Environmental Cleanup Liability, give the Party from whom
indemnity is sought a Claim Notice, specifying in reasonable detail the nature
of the Claim, Environmental Claim or Environmental Cleanup Liability. The Party
seeking to be indemnified shall provide to the Party from whom indemnity is
sought, as promptly as practicable thereafter, and in any event within thirty
(30) days from the date
17
of written request therefor, all information and documentation reasonably
requested by the indemnifying Party to verify whether the Claim, Environmental
Claim or Environmental Cleanup Liability asserted is entitled to indemnity
hereunder. Unless otherwise agreed by the Parties, the indemnifying Party shall
assume the defense of the indemnified Claim, Environmental Claim or
Environmental Cleanup Liability. Any indemnified Party shall have the right, at
all times, if it so elects and without relieving the indemnifying Party of its
obligations to defend hereunder, to participate in, but not control or direct,
the preparation for and conducting of any proceeding, hearing or trial related
to these indemnified matters, as well as the right to appear on its own behalf
at any such proceeding, hearing or trial. Any such participation or appearance
by an indemnified Party shall be at its sole cost and expense.
An indemnified Party shall not execute a consent order nor accept any
settlement regarding an indemnified matter without the indemnifying Party's
prior written approval. The indemnified Party shall cooperate fully with the
indemnifying Party in the defense of any matter hereunder by the indemnifying
Party and shall take those actions reasonably within its power to take which are
reasonably necessary to preserve any legal defenses to indemnified matters
hereunder until the indemnifying Party has assumed the defense of the matter.
ARTICLE 5
ARBITRATION PROCEDURES
This Agreement shall be subject to the arbitration procedures provided for
and specified in the Limited Partnership Agreement, which terms are incorporated
by reference herein.
ARTICLE 6
MISCELLANEOUS
6.1 Notices. All notices, requests, demands, instructions and other
communications required or permitted to be given hereunder shall be in writing
and shall be delivered personally or mailed by registered mail, or certified
mail, return receipt requested, postage prepaid, or delivered by facsimile or
electronic transmission (receipt of such transmission to be acknowledged by the
recipient by facsimile or electronic transmission), as follows:
If to Shell CO2 General LLC, Shell CO2 LLC, Shell Western E&P Inc., Shell
Western Pipelines Inc., Shell ▇▇▇▇▇▇ Pipeline Co., Shell Land & Energy Company,
the Shell Parties or the Shell Indemnified Parties, addressed to:
Shell Western E&P Inc.
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇
P. O. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇. ▇. ▇▇▇▇▇▇▇
(Facsimile Transmission No. (▇▇▇)▇▇▇-▇▇▇▇)
18
If to ▇▇▇▇▇▇ ▇▇▇▇▇▇ CO2, LLC, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Operating L.P. "A", the KM Parties
or the KM Indemnified Parties, addressed to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ CO2, LLC
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(Facsimile Transmission No. (▇▇▇) ▇▇▇-▇▇▇▇)
If to General Partner, the Limited Partnership, or LP Indemnified Parties,
addressed to:
Shell CO2 Company, Ltd.
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇
P. O. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇. ▇. ▇▇▇▇▇▇▇
(Facsimile Transmission No. (▇▇▇)▇▇▇-▇▇▇▇)
or to such other place as any Party may designate as its address by written
notice to the others. All notices will be deemed given on the date of receipt at
the appropriate address, except in the case of facsimile or electronic
transmissions received after the normal close of business, which shall be deemed
given on the next business day.
6.2 Governing Law. The provisions of this Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, without regard to
any conflicts of law principles of said jurisdiction that might require the
application of the laws of another jurisdiction.
6.3 Severability. If any term, condition or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other terms, conditions and provisions hereof shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not adversely affected. Upon any binding
determination that any term, condition or other provision hereof is invalid,
illegal or incapable of being enforced, the Parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
Parties as closely as possible in an acceptable and legally enforceable manner,
to the end that the transactions contemplated by the Transaction Documents may
be completed to the extent possible.
6.4 Headings; References. The headings of the Articles and Sections of this
Agreement are for guidance and convenience of reference only and shall not limit
or otherwise affect any of the terms or provisions hereof. References herein to
an "Article" or a "Section" or an "Exhibit" or a "Schedule" shall be to an
Article or a Section or an Exhibit or a Schedule of this Agreement unless a
contrary intent is clearly stated; and references to terms or provisions
"herein" or
19
"hereof" shall be to terms or provisions of this Agreement.
6.5 Entire Agreement; Related Agreements; Amendments. This Agreement constitutes
the entire agreement between the Parties with respect to the subject matter
hereof, superseding any and all prior negotiations, discussions, agreements and
understandings, whether oral or written, relating to such subject matter,
including the terms of any of the Transaction Documents to the extent the same
conflict with the terms of this Agreement. Specifically, as to conflicts between
the "Shell Technology Agreement" and the "Shell License Agreement" (as such
terms are defined in the Master Agreement and referred to hereinafter as the
"Shell Technology Agreement" and the "Shell License Agreement", respectively),
on the one hand, this Agreement, on the other hand, this Agreement shall
control; provided, however, it being understood that, except as expressly
provided in the Shell Technology Agreement or the Shell License Agreement (if
any), there are no representations or warranties regarding the infringement or
misappropriation of any patents, copyrights, trade secrets or other proprietary
rights of any Third Party. It is recognized that the same act or conduct could
give rise to liability under such agreements; however, it is the intent of the
Parties that these agreements shall not be applied in a manner that would
restrict the application of this Agreement or result in duplicate or multiple
recoveries. This Agreement may not be modified or amended, and no rights
hereunder may be waived, except by a written document signed by the Party to be
charged with such amendment or waiver.
6.6 Binding Effect. This Agreement shall be binding upon and shall inure to the
benefit of the KM Parties, the Shell Parties, the Limited Partnership and the
General Partner and their respective Affiliates, permitted
successors and assigns.
6.7 Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original instrument, but all of which together
shall constitute one and the same agreement.
6.8 No Rights in Third Parties; No Third Party Beneficiaries. This Agreement,
among other things, is intended to allocate certain risks, obligations and
potential obligations as among the Parties. The provisions of this Agreement are
for the sole benefit of the Parties and are not intended to create, and shall
not create, any rights in any persons other than the Parties. There is no intent
that any Third Party should benefit from any provisions hereof, and no statement
herein as to Claims, Environmental Claims or Environmental Cleanup Liability
shall constitute any admission by any Party. SPECIFICALLY, BUT WITHOUT
LIMITATION, NO AGREEMENT TO INDEMNIFY, NO DETERMINATION OF RESPONSIBILITY, AND
NO APPORTIONMENT OF RESPONSIBILITY HEREIN OR UNDER THE TERMS HEREOF SHALL
CONSTITUTE ANY ACKNOWLEDGMENT OR ADMISSION OF FAULT OR LIABILITY BY ANY PARTY
HERETO OR AS TO ANY THIRD PARTY.
6.9 Special, Exemplary, Consequential Or Punitive Damages. Parties shall only be
entitled to recover actual damages for a breach or violation of this Agreement.
No Party shall be entitled to recover special, exemplary, consequential or
punitive damages from the other Parties for breach or violation of this
Agreement and each Party hereby waives any claim or right to special, exemplary,
consequential or punitive damages hereunder; provided, however, the
20
foregoing shall not limit any indemnification obligations hereunder or preclude
one Party from being indemnified by another Party against such types of damages
in the event they are awarded against a Party and such Party is entitled to
indemnification pursuant to the terms of this Agreement.
6.10 Audit Rights. The Parties hereto reserve the right to perform audits of all
reimbursable costs, billed by any Party to another, which relate to the rights
and obligations set forth in this Agreement. The billing Party shall retain all
records and documentation relating to any billing. Such records and
documentation shall be made available for inspection by the billed Party upon
request. Audits shall be performed within 180 days of submittal of any ▇▇▇▇▇▇▇▇.
Any disputes arising from audits shall be handled in accordance with the
provisions of Article 5 hereof.
6.11 Access to Records. The Parties hereto shall have access to such data and
records of the Limited Partnership as they may reasonably require for (i)
defending or evaluating any claims, causes of action, demands, suits,
proceedings, governmental investigations or audits, losses, liability, liens,
settlements, judgments, assessments, fines, penalties or administrative orders
made against, incurred by, or conferred upon the Parties arising out of or
connected in any manner to their ownership of any of the Partnership Assets
prior to the Effective Date, (ii) making or defending a claim for
indemnification under this Agreement, or (iii) asserting any rights or verifying
any obligations the Parties have under this Agreement.
EXECUTED as of the Closing Date stated herein.
[SIGNATURE PAGES TO FOLLOW]
21
SHELL CO2 GENERAL LLC, by ▇.▇. ▇▇▇▇▇▇▇, President
/s/ ▇. ▇. ▇▇▇▇▇▇▇
--------------------------------------
ADDITIONAL SIGNATURE PAGES TO FOLLOW
SHELL CO2 LLC, by ▇.▇. ▇▇▇▇▇▇▇▇▇▇, President
/s/ ▇. ▇. ▇▇▇▇▇▇▇▇▇▇
-------------------------------------
ADDITIONAL SIGNATURE PAGES TO FOLLOW
SHELL WESTERN E&P INC., by ▇.▇. ▇▇▇▇▇▇, President
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇
--------------------------------------
▇.▇. ▇▇▇▇▇▇▇, Attorney-in-Fact for ▇.▇. ▇▇▇▇▇▇
ADDITIONAL SIGNATURE PAGES TO FOLLOW
SHELL WESTERN PIPELINES INC., by ▇.▇. ▇▇▇▇▇▇▇, President
/s/ ▇. ▇. ▇▇▇▇▇▇▇
--------------------------------------
ADDITIONAL SIGNATURE PAGES TO FOLLOW
SHELL ▇▇▇▇▇▇ PIPELINE COMPANY, by ▇.▇. ▇▇▇▇▇▇▇, President
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇
--------------------------------------
ADDITIONAL SIGNATURE PAGES TO FOLLOW
SHELL LAND & ENERGY COMPANY, by ▇.▇. ▇▇▇▇▇▇, President
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇
--------------------------------------
▇.▇. ▇▇▇▇▇▇▇, Attorney-in-Fact for ▇.▇. ▇▇▇▇▇▇
ADDITIONAL SIGNATURE PAGES TO FOLLOW
▇▇▇▇▇▇ ▇▇▇▇▇▇ CO2, LLC, by Kinder ▇▇▇▇▇▇ ▇.▇. Inc, the sole general partner of
▇▇▇▇▇▇ ▇▇▇▇▇▇ Operating L.P. "A", the sole member and manager of ▇▇▇▇▇▇ ▇▇▇▇▇▇
CO2, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice Chairman
ADDITIONAL SIGNATURE PAGES TO FOLLOW
▇▇▇▇▇▇ ▇▇▇▇▇▇ OPERATING L.P. "A", by Kinder ▇▇▇▇▇▇ ▇.▇.,
Inc., its sole general partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice Chairman
ADDITIONAL SIGNATURE PAGES TO FOLLOW
SHELL CO2 COMPANY, LTD., by Shell CO2 General LLC, its
sole general partner
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇
--------------------------------------
▇.▇. ▇▇▇▇▇▇▇, President
SCHEDULE 3.1
Shell Retained Matters
----------------------
-----------------------------------------------------------
List No. Category Description/Comment
-----------------------------------------------------------
1 Litigation ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇ Oil Company v.
SWEPI - Royalty case involving
McElmo Dome and ▇▇▇▇▇▇ Pipeline.
-----------------------------------------------------------
2 Litigation ▇▇▇▇▇ ▇▇▇▇▇▇, et al. v.
SWEPI, et al. - Royalty
case involving Bravo Dome
and Bravo Pipeline.
-----------------------------------------------------------
3 Litigation ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇.▇. ▇▇▇▇ &
Company v. SWEPI and SOC -
Royalty case involving McElmo
Dome and ▇▇▇▇▇▇ Pipeline.
-----------------------------------------------------------
4 Litigation U.S. Government and CO2 Claims
Coalition, LLC v. SOC, SWEPI,
et al. Royalty case involving
McElmo Dome and ▇▇▇▇▇▇ Pipeline.
-----------------------------------------------------------
Schedule 3.1
Page 1 of 1
SCHEDULE 3.2
KM Retained Matters
-------------------
NONE
Schedule 3.2
Page 1 of 1
SCHEDULE 1.1.15
KM Escrow Funds
---------------
NONE
Schedule 1.1.15
Page 1 of 1
SCHEDULE 1.1.31
Shell Escrow Funds
Schedule 1.1.31
Page 1 of 1