ASSET PURCHASE AGREEMENT

Exhibit 10.1

EXECUTION VERSION

 

ASSET PURCHASE AGREEMENT

By and Between

LONGHORN PARTNERS PIPELINE, L.P.

AS SELLER

And

MAGELLAN MIDSTREAM PARTNERS, L.P.

AS BUYER

Dated as of June 18, 2009

 

TABLE OF CONTENTS

 

 

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EXHIBITS

 

DISCLOSURE SCHEDULES

 

 

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ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this “ Agreement ”), dated as of June 18, 2009, is made by and between Longhorn Partners Pipeline, L.P., a Delaware limited partnership (“ Seller ”) and Magellan Midstream Partners, L.P., a Delaware limited partnership (“ Buyer ”). Capitalized terms used in this Agreement are defined or cross-referenced in Article 16 .

BACKGROUND INFORMATION

WHEREAS, Seller is a Subsidiary of Flying J Inc. (“ Flying J ”), a Utah corporation;

WHEREAS, on December 22, 2008 Flying J and certain of its Affiliates, including Seller, filed voluntary petitions for relief under the Bankruptcy Code in the Bankruptcy Court;

WHEREAS, on the terms and subject to the conditions set forth in this Agreement, Buyer desires to purchase from Seller, and Seller desires to sell to Buyer, the Acquired Assets, in a sale authorized by the Bankruptcy Court pursuant to, inter alia , Sections 105, 363, and 365 of the Bankruptcy Code;

WHEREAS, it is intended that the acquisition of the Acquired Assets would be accomplished through the sale, transfer and assignment of the Acquired Assets by Seller to Buyer;

WHEREAS, Buyer also desires to assume, and Seller desires to assign and transfer to Buyer, the Assumed Liabilities;

NOW, THEREFORE, in consideration of the foregoing and their respective representations, warranties, covenants and undertakings herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Buyer hereby agree as follows:

ARTICLE 1

PURCHASE AND SALE OF THE ACQUIRED ASSETS

1.1. Transfer of Acquired Assets . At the Closing, and upon the terms and conditions herein set forth, Seller shall sell, assign, transfer and convey to Buyer, and Buyer shall acquire from Seller, all of Seller’s right, title and interest in, to and under the Acquired Assets. “ Acquired Assets ” means solely the following properties and assets, but in all cases exclude the Excluded Assets:

(a) the real property owned by Seller and listed on Schedule 1.1(a) , together with any Improvements owned by Seller erected thereon (the “ Owned Real Property ”);

(b) all of Seller’s rights under (i) the leases of real property (the “ Real Property Leases ”) and (ii) the licenses of real property and other executory agreements for the right to use, access or occupy real property (the “ Real Property Licenses ”) listed on Schedule 1.1(b) (such real property in clauses (i) and (ii) collectively, the “Leased Real Property ”);

 

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(c) all of Seller’s rights under the easements, rights of way and other real property entitlements listed on Schedule 1.1(c) (the “ Real Property Easements ” and the real property covered thereby, together with the Owned Real Property and the Leased Real Property, the “ Real Property ”);

(d) all of Seller’s (i) owned equipment (including pumps, valves, launchers and receivers, tanks, meters, communication equipment, SCADA communications and control equipment, rectifiers, other cathodic protection equipment, tools, spare parts, machinery, furniture, fixtures, and other personal property) used exclusively in the Business, including Seller’s interest in shared systems and facilities, whether located on the Real Property, on the premises or in the possession of the Operator or in the possession of third parties (including but not limited to emergency response trailers at fire departments and any work product with engineering or consulting firms) (the “ Equipment ”), (ii) rights, to the extent transferable, to the warranties and licenses received from manufacturers and sellers of the Equipment, and (iii) interest in the Pipeline System;

(e) all of Seller’s rights under sales orders, service agreements, customer contracts or other similar Contracts entered into by Seller with the customers that are listed on Schedule 1.1(e) (“ Customer Contracts ”);

(f) all of Seller’s rights under outstanding purchase orders or other similar Contracts used in the Business and entered into by Seller with any supplier that are listed on Schedule 1.1(f) (“ Supplier Contracts ”);

(g) all of Seller’s rights under the Contracts that are listed on Schedule 1.1(g) (the “ Other Contracts ” and, together with the Real Property Leases, Real Property Licenses, the Customer Contracts and the Supplier Contracts, the “ Assigned Contracts ”); and, pursuant to a request from the Government, Seller shall novate to Buyer, rather than assign, those contracts listed on Schedule 1.1(X) (such novated contracts, the “ Government Contracts ”);

(h) all (i) supplies, materials and spares that are owned by Seller on the Closing Date and (x) located on the Real Property or on the premises or in the control of the Operator, or (y) in transit to the Real Property (the “ Inventory ”) and (ii) rights of Seller, to the extent transferable, to the warranties received from suppliers with respect to such Inventory; provided that, for the avoidance of doubt, in no event shall Inventory include any line fill, including the Main Line Fill and the Spur Line Fill (with it being understood and agreed that all line fill are Excluded Assets for purposes of this Agreement);

(i) any computer software or systems located at the Real Property and owned exclusively by Seller and licenses held exclusively by Seller, to the extent transferable, in each case that pertain solely to the Business;

 

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(j) copies of all Business Records; and

(k) Seller’s rights to, and goodwill represented by, the name “Longhorn Pipeline” and the domain name “longhornpipeline.com”; provided that nothing in this Section 1.1(k) will give Buyer any rights to any name that includes a Flying J Mark.

1.2. Excluded Assets . Notwithstanding anything to the contrary in this Agreement, the Acquired Assets are the only rights, properties and assets transferred to Buyer under this Agreement. Without limiting the generality of the foregoing, the Acquired Assets do not include (i) any right, title or interest of Flying J or any of its Subsidiaries (other than Seller) or any other Person, in any right, property or asset (whether or not listed or described in this Section 1.2 ), (ii) without limiting the generality of clause (i), the Main Line Fill, the Spur Line Fill or any other line fill in the Pipeline System or (iii) any right, property or asset of Seller listed or described in this Section 1.2 (all rights, properties and assets not being acquired by Buyer are herein referred to as the “ Excluded Assets ”):

(a) all of Seller’s cash and cash equivalents, marketable securities, surety accounts, deposits and other similar prepaid items, checks in transit and un-deposited checks;

(b) all accounts, notes and other receivables and all prepaid expenses of Seller or otherwise related to the operation of the Pipeline System or the Business prior to the Closing Date;

(c) assets and property, including manuals, financial information, process and data, owned by the Operator or its Affiliates used in the operation, maintenance and control of the Pipeline System, including all systems and software in the Operator’s Tulsa control center;

(d) forecasts, financial information or financial statements and proprietary manuals (except rights to use manuals specific to and necessary for the operation of the Business) prepared by or used by Seller or its Affiliates to the extent not relating exclusively to the Business;

(e) all of Seller’s rights under Contracts that are not Assigned Contracts, including (i) that certain Amended and Restated Membership Interest Purchase Agreement between Longhorn Pipeline Investors, LLC and Longhorn Pipeline, Inc., dated as of August 17, 2006 and (ii) all other Contracts listed on Schedule 1.2(x) , and all Equipment, services, drawings, specifications, work product and other assets delivered or to be delivered pursuant to the Contracts listed on Schedule 1.2(x) ;

(f) any property or rights retained by Exxon Pipeline Company or its Related Persons under the Contribution Agreement;

(g) subject to Sections 1.5 and 7.2 , any Real Property Easements which are not transferable or for which Consent to a transfer is required and not obtained;

 

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(h) all assets of any Employee Benefit Plan of Seller or any of its Related Persons;

(i) all rights to Claims, refunds or adjustments, all other refunds, and all other adjustments with respect to (i) Excluded Assets, (ii) any proceeding before any Government relating to the period prior to the Closing, except to the extent that any such proceeding relates to any Assumed Liability, and (iii) insurance proceeds or other insurance recoveries (x) that relate to, or are reimbursement for, Seller’s or any of Seller’s Affiliate’s expenditures made prior to the Closing Date for which insurance proceeds are available or due to Seller or Seller’s Affiliates, or (y) to the extent relating to Excluded Assets or Excluded Liabilities;

(j) every asset of Seller that would constitute an Acquired Asset (if owned by Seller on the Closing Date) that is conveyed or otherwise disposed of during the period from the date hereof until the Closing Date either (i) in the Ordinary Course of Business of Seller, (ii) at the direction of the Bankruptcy Court without any request to do so from Seller or its Related Persons or (iii) as otherwise permitted by the terms of this Agreement;

(k) all losses, loss carry forwards and rights to receive refunds, credits and loss carry forwards with respect to any and all Taxes of Seller incurred or accrued prior to the Closing Date, including interest receivable with respect to any of the foregoing;

(l) all Claims of Seller or its Related Person or their Related Persons, including Claims arising out of or relating in any way to the Chapter 11 Case or any of the transactions contemplated thereby or entered into as a consequence thereof, including any claims (as defined in Section 101(5) of the Bankruptcy Code) filed, scheduled or otherwise arising in the Chapter 11 Case;

(m) all shares of capital stock or other equity interests of Seller and all Affiliates of Seller;

(n) all rights of Seller arising under (i) this Agreement and (ii) any other agreement between Seller and Buyer entered into in connection with this Agreement;

(o) all rights to or goodwill represented by or pertaining to all names, marks, trade names, trademarks and service marks incorporating the name Flying J or any other name set forth on Schedule 1.2(o) (the “ Flying J Marks ”) and any brand names or derivatives thereof no matter how used, whether as a corporate name, domain name or otherwise and including the corporate design logo associated with any Flying J Mark or variant of any Flying J Mark other than the Longhorn Pipeline name;

(p) all rights of Flying J or it Affiliates under any Contract that has been guaranteed by Flying J or an Affiliate of Flying J or to which Flying J is a party, other than rights of Seller under an Assigned Contract;

 

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(q) all rights under any Contract that is, at the time of Closing, secured by any collateral owned by any of Seller’s Affiliates, Excluded Assets, or letters of credit other than an Assigned Contract;

(r) all Retained Books and Records;

(s) all of Seller’s rights to recovery of (i) cash collateral, (ii) security deposits and (iii) collateral given to obtain letters of credit and rights to recover amounts drawn or paid on letters of credit;

(t) all accounts receivable and other amounts due to Seller from any Affiliate of Seller and all rights and Claims of Seller against any Affiliate of Seller;

(u) Flying J skid racks at Crane Station;

(v) the Flying J card lock fueling facility and the truck lot adjacent to such facility at the El Paso Terminal;

(w) all bank accounts of Seller or any of its Affiliates;

(x) all assets set forth on Schedule 1.2(x) ;

(y) Seller’s rights under that certain pollution legal liability policy number PLL12436398 with American International Specialty Lines Insurance Company and that certain pollution legal liability excess policy number XEC001704202 with Indian Harbor Insurance Company (collectively, the “ Pollution Policies ”); and

(z) all reserved rights of the owners of outstanding oil, gas and mineral interests and/or their lessees to explore for, drill, extract, produce and develop said oil, gas and minerals in, on and under the lands associated with the Real Property, together with the right to use as much of the surface of said lands as is reasonably necessary to exercise such rights.

1.3. Assumption of Liabilities . Without limiting the rights of Buyer under Article 14 for breaches of any representations or warranties of Seller made in Article 4 , at the Closing, Buyer shall assume, and Buyer shall hereafter pay, perform and discharge when due, the following liabilities and obligations of Seller and no others (collectively, the “ Assumed Liabilities ”):

(a) all liabilities and obligations of Seller arising after the Effective Time under the Assigned Contracts, along with Buyer Cure Cost Obligations;

(b) all liabilities and obligations arising after the Effective Time under the Permits of Seller;

(c) all liabilities and obligations relating to or arising out of those Mitigation Commitments set forth on the Mitigation Plan that have not been completed prior to the Effective Time, are ongoing, or are required to be implemented after the Effective Time, which liabilities and obligations, to the Knowledge of Seller, are listed on Schedule 1.3(c) ;

 

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(d) all liabilities and obligations of Seller for Transaction Taxes payable in connection with the transactions contemplated by this Agreement;

(e) all liabilities and obligations of Seller arising under or relating to any environmental, health or safety matter (including any liability or obligation arising under any Environmental Law);

(f) all liabilities and obligations assumed by or agreed to be performed by Buyer or any of its Affiliates pursuant to this Agreement or any Ancillary Agreement;

(g) all liabilities and obligations of Seller relating to or arising from the operation of the Business or the ownership of the Acquired Assets, on and after the Effective Time;

(h) all liabilities and obligations of Seller to store, terminal or ship petroleum products of third parties; and

(i) Buyer’s portion of prorated Taxes, fees and expenses set forth in Article 11 .

Other than the Assumed Liabilities and the Permitted Encumbrances, the sale of the Acquired Assets shall be free and clear of any and all Encumbrances to the extent provided by the Bankruptcy Code (including Sections 105 and 363(f) thereof) or by order of the Bankruptcy Court.

1.4. Excluded Liabilities . Notwithstanding anything to the contrary contained in this Agreement, the Ancillary Agreements or any other agreement or instrument, other than the Assumed Liabilities, Buyer shall not assume or be liable with respect to any other liability or obligation of Seller and its Related Persons (such other liabilities and obligations, the “ Excluded Liabilities ”) and Seller and its Related Persons, as applicable, shall remain solely responsible and liable for all Excluded Liabilities. Excluded Liabilities shall include, but not be limited to, the following liabilities and obligations (other than in each case to the extent the same are Assumed Liabilities): (a) liabilities and obligations of Seller with respect to any note or other liability or obligation (including intercompany debt or intercompany accounts payable) owing from Seller to any of its Affiliates, (b) liabilities and obligations arising in connection with Excluded Assets, (c) liabilities and obligations of Seller resulting from the Valero Litigation, the Tanner Litigation and the Kinder Morgan Litigation, (d) liabilities and obligations that Seller has agreed to pay or perform pursuant to this Agreement, (e) liabilities and obligations of Seller in respect of indebtedness for borrowed money (including liabilities and obligations pursuant to the Pollution Policies Financing Agreement), (f) all Taxes, including penalties and interest thereon related to or imposed upon the Business, the Acquired Assets or the Excluded Assets prior to the Effective Date, including Seller’s portion of any prorated Taxes, fees and expenses in accordance with Article 11 , (g) liabilities of Seller for deferred revenue, (h) all accounts payable and accrued liabilities arising prior to the Closing Date, (i) the Seller Cure Cost Obligations, (j) all deficiency

 

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payments (the “ KM Pre-Effective Time Deficiency Obligations ”) due to Kinder Morgan pursuant to the Connection Agreement with respect to periods or partial periods ending prior to the Effective Time (assuming for purposes of this Agreement that, with respect to any partial period, the deficiency payment obligation is calculated with respect to a period that ends on the Closing Date (e.g., by taking the volume of commodities or other product required to be delivered by Seller during the one-year period in which the Closing occurs and multiplying such volume by a fraction, the numerator of which is the number of days from the September 1 immediately preceding the Closing Date through the day immediately preceding the Closing Date and the denominator of which is 365 and calculating the volume of commodities or other product actually delivered or credited as delivered in accordance with the Connection Agreement during the period from the September 1 immediately preceding the Closing Date through the day immediately preceding the Closing Date and calculating the deficiency payment accordingly)), (k) liabilities and obligations of Seller to third parties arising prior to the Effective Time from the 42-mile replacement project on the Pipeline System, and (l) those liabilities of Seller listed on Schedule 1.4 . For the avoidance of doubt, any liabilities and obligations of Seller arising from or relating to the Seller Note, the Merrill Lynch Agreements and the Seller’s debtor-in-possession financing are Excluded Liabilities.

1.5. Delayed Conveyance of Certain Property .

(a) Notwithstanding anything in this Agreement to the contrary, Seller shall not be obligated to assign, transfer, or convey (or cause to be assigned, transferred, or conveyed) to Buyer any Delayed Acquired Asset or Delayed Assumed Liability until such time as all Legal Impediments are removed and/or all Consents necessary for the legal transfer and/or assumption thereof are obtained or delivered in respect of such Delayed Acquired Asset or Delayed Assumed Liability, as applicable; provided that, for all purposes of this Section 1.5 , if the Bankruptcy Code (including Section 365 thereof) permits the assignment, transfer or conveyance without any other removal of any Legal Impediment or the obtaining or delivering of any such Consent, then the Parties shall take whatever action is reasonably necessary under the Bankruptcy Code to cause the assignment, transfer and conveyance of such Delayed Acquired Asset or Delayed Assumed Liability as of the Closing Date without such separate removal of any such Legal Impediment or such separate obtaining or delivery of any such Consent and such asset or liability, as the case may be, shall be transferred on the Closing Date and without regard to the other provisions of this Section 1.5 . Following such assignment, transfer, and conveyance of any Delayed Acquired Asset, or the assumption of any Delayed Assumed Liability, the applicable Delayed Acquired Asset or Delayed Assumed Liability shall be treated for all purposes of this Agreement as an “Acquired Asset” or as an “Assumed Liability,” as the case may be, and shall no longer be a “Delayed Acquired Asset” or a “Delayed Assumed Liability”. For all purposes hereof, unless otherwise waived in writing by Seller or transferred, assigned or conveyed as provided in this Section 1.5(a) , “Acquired Assets” shall not include any Delayed Acquired Asset and “Assumed Liabilities” shall not include any “Delayed Assumed Liability” until the Legal Impediments are removed and/or all Consents necessary for the legal transfer and/or assumption thereof are obtained or delivered in respect of such Delayed Acquired Asset or Delayed Assumed Liability.

 

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(b) To the extent permitted by Law and to the extent otherwise permissible in light of any Legal Impediment or required Consent, if the transfer, assignment or conveyance or assumption of any Delayed Acquired Asset or any Delayed Assumed Liability intended to be transferred, assigned or assumed hereunder is not consummated on the Closing Date, then Seller shall thereafter hold such Delayed Acquired Asset or such Delayed Assumed Liability for the use and benefit, to the extent it may lawfully do so, of Buyer (at the expense of Buyer). In addition, to the extent permitted by law and to the extent otherwise permissible in light of any Legal Impediment or required Consent, Seller shall take such other actions in order to place Buyer, to the extent it may lawfully do so, in the same position as if such Delayed Acquired Asset or such Delayed Assumed Liability had been transferred, assigned or conveyed or assumed as contemplated hereby and so that all the benefits and burdens relating to such Delayed Acquired Asset or such Delayed Assumed Liability, including possession, use, risk of loss, potential for gain, and dominion, control and command over such asset, are to inure from, and after the Closing Date to Buyer. To the extent permitted by law and to the extent otherwise permissible in light of any Legal Impediment or required Consent, Buyer shall be entitled to, and shall be responsible for, the management and the benefits and burdens of any Delayed Acquired Asset or any Delayed Assumed Liability not yet transferred to or assumed by it as a result of this Section 1.5 , and, subject to the other provisions of this Agreement, the parties hereto agree to use reasonable best efforts to cooperate and coordinate with respect to obtaining any Consent or removing any Legal Impediment, including by providing any financial information and pro forma financial information of the relevant party and its Affiliates reasonably required by the party from whom a Consent is sought to be obtained or from whom a Legal Impediment is sought to be removed. Each of the parties hereto agrees that, until a Delayed Assumed Liability is assumed by Buyer, Buyer shall indemnify and hold harmless Seller from such Delayed Assumed Liability. Nothing herein shall require Seller to expend any money or commence any litigation to obtain the removal of any Legal Impediment or obtain any required Consent.

(c) If and when the Legal Impediments and the Consents, the failure to remove or the absence of which caused the deferral of the transfer or assumption of any Delayed Acquired Asset or Delayed Assumed Liability, are removed or obtained, as the case may be, the transfer and assumption of the applicable Delayed Acquired Asset or Delayed Assumed Liability shall be promptly effected in accordance with the terms of this Agreement and/or any other applicable Ancillary Agreements, without the payment of additional consideration.

(d) In connection with Seller’s retention of a Delayed Acquired Asset or Delayed Assumed Liability due to the deferral of the transfer or assumption of such Delayed Acquired Asset or Delayed Assumed Liability pursuant to this Section 1.5 , Seller shall not be obligated to expend any money, unless the necessary funds are advanced by Buyer.

 

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ARTICLE 2

CONSIDERATION

2.1. Consideration . The aggregate consideration for the sale and transfer of the Acquired Assets is (i) the Purchase Price, which is payable and deliverable at the Closing in accordance with Section 3.3 plus (ii) the assumption by Buyer at the Closing of the Assumed Liabilities.

2.2. Deposit . On or prior to 12:00 p.m. central daylight time on the first calendar day after the date hereof (i.e., June 19, 2009), Buyer and Flying J shall execute and deliver the Purchase Notice and Buyer shall deposit with the Escrow Agent $12,500,000.00 (the “ Deposit ”). The Deposit shall be held and disbursed pursuant to the terms of the Master Escrow Agreement, the Purchase Notice and this Agreement.

ARTICLE 3

CLOSING AND DELIVERIES

3.1. Closing . The sale, transfer, assignment and delivery by Seller of the Acquired Assets to Buyer and the assumption by Buyer of the Assumed Liabilities (the “ Closing ”), will take place at the offices of Kirkland & Ellis LLP, 153 East 53 ^rd Street, New York, New York at 10:00 a.m. eastern prevailing time on the second Business Day following the satisfaction or waiver by the appropriate party of all the conditions contained in Article 12 (other than conditions which by their terms or their nature are to be performed or measured as of the Closing Date), or on such other date or at such other place and time as may be agreed to by the Parties (the “ Closing Date ”). The Closing will be deemed to be effective at the Effective Time.

3.2. Seller’s Deliveries .

(a) At the Closing, Seller shall, or shall cause one of its Affiliates to, deliver the following documents consistent with the terms of this Agreement:

(i) the Main Line Fill Purchase Agreement, duly executed by an Affiliate of Seller and in the form of Exhibit A-1 hereto;

(ii) the Spur Line Fill Purchase Agreement, duly executed by an Affiliate of Seller and in the form of Exhibit A-2 hereto;

(iii) a bill of sale with respect to the Acquired Assets (other than the Assigned Contracts, Real Property and assets set forth in Section 1.1(d)(ii) ), duly executed by Seller and in the form of Exhibit B-1 hereto;

(iv) an assignment and assumption agreement with respect to the Assigned Contracts (other than the Real Property Leases and the Real Property Licenses) and Assumed Liabilities, duly executed by Seller and in the form of Exhibit B-2 hereto;

 

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(v) a copy of the Business Records in Seller’s possession or control (it being understood that any Business Records located at the 3411 Richmond Avenue, Houston, Texas location (the “ Houston Office Site ”) need not be physically delivered, but will be deemed delivered at the Closing), provided that, for any Business Records not located at the Houston Office Site, Seller may deliver such Business Records to Buyer promptly after the Closing Date, but in no event later than one hundred twenty (120) days after the Closing Date;

(vi) one or more assignment and assumption agreements with regard to the Real Property Easements, duly executed by Seller and in the form of Exhibit B-3 hereto, as modified as necessary to meet the filing requirements for each recording jurisdiction;

(vii) an assignment and assumption agreement with regard to the Real Property Leases, duly executed by Seller and in the form of Exhibit B-4 hereto, as modified as necessary to meet the filing requirements for each recording jurisdiction;

(viii) an assignment and assumption agreement with regard to the Real Property Licenses duly executed by Seller and in the form of Exhibit B-5 hereto, as modified as necessary to meet the filing requirements for each recording jurisdiction;

(ix) one or more special warranty deeds with regard to each parcel of the Owned Real Property, duly executed by Seller and in the form of Exhibit B-6 hereto, as modified as necessary to meet the filing requirements for each recording jurisdiction;

(x) a secretary’s certificate certifying as to the resolutions of the general partner of Seller approving and authorizing this Agreement and the transactions contemplated by this Agreement and in the form of Exhibit B-7 hereto;

(xi) certificates of title, assignments of contracts and other instruments of transfer, conveyance and assignment as and to the extent agreed by Buyer and Seller to be necessary to evidence the transfer, conveyance and assignment of Seller’s right, title and interest in and to the Acquired Assets to Buyer (collectively, the “ Additional Asset Conveyance Documents ”);

(xii) such assignments of contracts and other instruments of assumption as and to the extent necessary to evidence the valid and effective assumption by Buyer of the Assumed Liabilities (collectively, the “ Additional Liabilities Assumption Documents ”);

 

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(xiii) an affidavit of non-foreign status that complies with Section 1445 of the Code, duly executed by Seller or Seller’s Affiliate, as applicable, and in the form of Exhibit B-8 hereto; and

(xiv) the Indemnity Escrow Agreement.

(b) Notwithstanding anything in this Agreement or any Ancillary Agreement to the contrary, Seller’s obligation to convey to Buyer all rights of Seller under the Permits or Crossing Permits consist of providing: (i) if required by Law, notices of intent to transfer the Permit to Buyer in accordance with the Government regulations governing such Permit transfer, and (ii) information as required by the Government regulations governing such Permit transfer. Furthermore, in no event shall Seller, any of its Related Persons or their Related Persons be required to deliver any Additional Asset Conveyance Document or Additional Liabilities Assumption Document that (i) requires Seller, any of its Related Persons or their Related Persons to make any additional representations, warranties or covenants, express or implied, not contained in this Agreement or (ii) otherwise expands the liabilities or obligations of Seller, any of its Related Persons or their Related Person related to the transactions contemplated hereby.

3.3. Buyer’s Deliveries .

(a) At Closing, the Escrow Agent shall cause $10,000,000 of the Deposit (the “ Initial Indemnity Escrow Fund ”) to be transferred to the escrow account established pursuant to the Indemnity Escrow Agreement (the “ Indemnity Escrow Account ”) and Buyer and Seller shall take all action required to cause such delivery of such portion of the Deposit to the Indemnity Escrow Account on the Closing Date and the Indemnity Escrow Funds shall become and shall continue to be held by the Escrow Agent and released in accordance with the provisions of Article 14 of this Agreement and the Indemnity Escrow Agreement;

(b) At Closing, (i) the Escrow Agent shall pay to Seller the excess of the Deposit minus the Initial Indemnity Escrow Fund in accordance with the terms of the Master Escrow Agreement and the Purchase Notice, by wire transfer of immediately available funds to a bank account designated by Seller in writing (the “ Seller’s Account ”) and each of Buyer and Seller shall take all action required to cause such delivery of such portion of the Deposit to Seller on the Closing Date to occur and (ii) subject only to adjustment in accordance with Section 11.4 , Buyer shall pay to Seller an amount equal to (x) the Purchase Price, minus (y) the Deposit, minus (z) the Deferred Fee Amount by wire transfer of immediately available funds to the Seller’s Account; provided that Seller shall have the right, but not the obligation, to pay, or cause to be paid, to any secured creditor any portion of the amount payable to Seller pursuant to this Section 3.3(b) and Seller shall comply with any orders of the Bankruptcy Court regarding the payment and/or allocation of such amount or other amounts payable hereunder or under the Ancillary Agreements;

(c) At or prior to Closing, Buyer shall deliver the following documents consistent with the terms of this Agreement

 

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(i) the Main Line Fill Purchase Agreement, duly executed by Buyer and in the form of Exhibit A-1 hereto;

(ii) the Spur Line Fill Purchase Agreement, duly executed by Buyer and in the form of Exhibit A-2 hereto;

(iii) an assignment and assumption agreement, duly executed by Buyer, in the form of Exhibit B-2 hereto;

(iv) one or more assignment and assumption agreements with regard to the Real Property Easements, duly executed by Buyer and in the form of Exhibit B-3 hereto, as modified as necessary to meet the filing requirements for each recording jurisdiction;

(v) an assignment and assumption agreement with regard to the Real Property Leases, duly executed by Buyer and in the form of Exhibit B-4 hereto, as modified as necessary to meet the filing requirements for each recording jurisdiction;

(vi) an assignment and assumption agreement with regard to the Real Property Licenses duly executed by Buyer and in the form of Exhibit B-5 hereto, as modified as necessary to meet the filing requirements for each recording jurisdiction;

(vii) a secretary’s certificate certifying as to the resolutions of Buyer approving and authorizing this Agreement and the transactions contemplated by this Agreement and in the form of Exhibit B-9 hereto;

(viii) each of the Additional Asset Conveyance Documents and Additional Liabilities Assumption Documents; and

(ix) the Indemnity Escrow Agreement.

3.4. Proceeds from Operations . All proceeds attributable to the operation, ownership, use or maintenance of, or otherwise relating to, the Business prior to the Closing Date shall be the property of Seller and to the extent received by Buyer or its Affiliates, Buyer shall promptly and fully disclose, account for and transmit same to Seller. All other proceeds attributable to the operation, ownership, use, or maintenance of, or otherwise relating to, the Business on and after the Closing Date shall be the property of Buyer and to the extent received by Seller or its Affiliates, Seller shall promptly and fully disclose, account for and transmit same to Buyer. For the avoidance of doubt, all proceeds collected or paid in respect of an Excluded Asset (including cash paid in respect of receivables or Inventory of Seller or relating to the operation, ownership, use or maintenance of the Business prior to the Closing Date) shall be the property of, and for the benefit of, Seller.

 

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ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF SELLER

Seller hereby represents and warrants to Buyer on the date hereof as follows, except in all cases as disclosed in the Disclosure Schedules:

4.1. Corporate Organization . Seller is duly organized and validly existing under the Laws of the State of Delaware and is duly qualified or licensed to do business in each jurisdiction in which the nature of its business or the ownership or leasing of its properties or operation of its assets makes such qualification or licensing necessary, except where the failure to be so qualified would not have a Material Adverse Effect. Subject to any necessary authority from the Bankruptcy Court, Seller has all requisite limited partnership power and authority to own its properties and assets and to conduct its business as now conducted.

4.2. Authorization and Validity . Subject to the Bankruptcy Court’s entry of the Sale Order and the receipt of the Consents set forth on Schedule 4.4 , Seller has all requisite limited partnership power and authority to enter into this Agreement and the Ancillary Agreements to which it is or will be a party and to carry out its obligations hereunder and thereunder. Subject to the Bankruptcy Court’s entry of the Sale Order, the execution and delivery of this Agreement and the Ancillary Agreements and the performance by Seller of its obligations hereunder and thereunder have been duly authorized by all necessary action by the general partner of Seller, and no other organizational proceedings on the part of Seller are necessary to authorize such execution, delivery and performance. This Agreement has been, and the Ancillary Agreements when delivered will be, duly executed by Seller and, subject to the Bankruptcy Court’s entry of the Sale Order, constitute or will constitute its valid and binding obligation, enforceable against it in accordance with the terms herein and therein, except that such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other similar laws affecting or relating to the enforcement of creditors’ rights generally, and is subject to general principles of equity.

4.3. No Conflict or Violation . Subject to the receipt of all Consents set forth on Schedule 4.4 and the receipt of the Antitrust Approvals, the execution, delivery and performance by Seller of this Agreement and the Ancillary Agreements do not and will not (a) violate or conflict with any provision of the limited partnership agreement (or equivalent organizational documents such as a certificate of incorporation or by-laws) (collectively, the “ Organizational Documents ”) of Seller, (b) subject to the Bankruptcy Court’s entry of the Sale Order, violate any provision of law, regulation, rule or other legal requirement of any Government (“ Law ”) or any order, judgment or decree of any court or Government (“ Order ”) applicable to Seller, or (c) subject to the Bankruptcy Court’s entry of the Sale Order, violate, result in a breach of or constitute (with due notice or lapse of time, or both) a default under any Assigned Contract, which violation, conflict, breach or default in the case of clauses (b) and (c) that would reasonably be expected to have a Material Adverse Effect.

4.4. Consents and Approvals . Other than Consents relating to Real Property Easements (the only representations to which are set forth in Section 4.12 ) and as may result from the Chapter 11 Case, Schedule 4.4 sets forth a true and correct list of each Consent and each declaration to, or filing or registration with, any Government that is required in connection

 

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with the execution and delivery of this Agreement and the Ancillary Agreements by Seller or the performance by Seller of its obligations hereunder or thereunder, the failure of which to obtain would reasonably be expected to have a Material Adverse Effect.

4.5. Compliance with Law . Except as would not reasonably be expected to result in a material liability of the Business after the Closing or materially impair the operation of the Business after the Closing or as otherwise set forth on Schedule 4.5 or Schedule 4.6 , (a) Seller is in compliance in all material respects with all Laws, (b) Seller has not received written notice of, nor to Seller’s Knowledge has Seller been under investigation for, any material violation of any Law, including Seller’s obligations to provide accurate information in its quarterly FERC Form 6 filings (other than with respect to Environmental Law, as to which the only representations and warranties made by Seller are those contained in Section 4.9 ), and (c) Seller is not in material default with respect to any Order, in all cases as applicable to the Acquired Assets, the Business or operation of the Pipeline System.

4.6. Litigation . As of the date of this Agreement and except (x) as a result of the Chapter 11 Case, (y) Claims made or to be made against Seller or any of its Related Persons in the Chapter 11 Case, or (z) as otherwise set forth on Schedules 4.6 or 4.9 , there are no Claims, suits or proceedings pending or, to the Knowledge of Seller, threatened, before any Government, brought by or against Seller, related to the Business or the Acquired Assets.

4.7. Material Contracts .

(a) Schedule 4.7(a) sets forth a complete and correct list of each of the Assigned Contracts that:

(i) relates to the maintenance, operation, refurbishment or expansion of the Pipeline System or the acquisition of goods, the construction of assets, the purchase, sale or lease of equipment or other personal property, or the provision of any services, which requires any future payment in excess of $250,000 in the aggregate during any 12 month period; or

(ii) the consequences of a default under or termination of such Assigned Contract would reasonably be expected to result in a Material Adverse Effect (clauses (i) and (ii) collectively, the “ Material Contracts ”).

(b) Other than as set forth on Schedule 4.7(b)(I) or in motions, other pleadings or similar items filed with the Bankruptcy Court, neither Seller nor, to Seller’s Knowledge, any other party to any of the Material Contracts is in breach or default under nor has commenced any action against any of the parties to such Material Contracts or given or received any written notice of any material default or violation under any Material Contract that was not withdrawn or dismissed, except only for those defaults that will be cured in accordance with the Sale Order (or that need not be cured under the Bankruptcy Code to permit the assumption and assignment of the Assigned Contracts). To Seller’s Knowledge, each of the Material Contracts is, or will be at the Closing, valid, binding and in full force and effect against Seller, except as otherwise set forth on Schedule 4.7(b)(II) .

 

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(c) Except for Consents or waivers which are not required as a result of the operation of the Bankruptcy Code or the Sale Order or as otherwise set forth on Schedule 4.7(c) , no Consent or waiver under any of the Assigned Contracts (including the Real Property Leases and the Real Property Licenses) or Real Property Easements is required to be obtained by Seller in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.

(d) Except as may arise related to the Chapter 11 Case or as set forth on Schedule 4.7(d) , none of the other parties under any of the Material Contracts has provided Seller with any written notice that it currently plans or intends to terminate any such Contract, or otherwise cease their performance thereunder related to such Contracts or the Business.

4.8. Permits . Schedule 4.8(I) sets forth a complete and correct list of all material Permits and all pending applications therefor obtained by Seller in connection with the operation of the Pipeline System, other than (a) the Environmental Permits, as to which the only representations and warranties made by Seller are those contained in Section 4.9 , and (b) the Crossing Permits, as to which the only representations and warranties made by Seller are those contained in Section 4.12(b) . As of the date of this Agreement, except as would not reasonably be expected to result in a material liability of the Business after the Closing or materially impair the operation of the Business after the Closing or as otherwise set forth on Schedule 4.8(II) , each such Permit is valid and in full force and effect, and is not subject to any pending or, to Seller’s Knowledge, threatened administrative or judicial proceeding to revoke, cancel, suspend or declare such Permit invalid in any respect. To Seller’s Knowledge, Schedule 4.8(I) sets forth all material Permits necessary for the operation of the Pipeline System as currently conducted.

4.9. Environmental Matters . Except as would not reasonably be expected to result in a material liability of the Business after the Closing or materially impair the operation of the Business after the Closing or as otherwise set forth on Schedule 4.9 , to Seller’s Knowledge, with respect to the Acquired Assets or the operation of the Pipeline System:

(a) Seller is in compliance with and, since September 1, 2006, has complied with all applicable Environmental Laws.

(b) Seller has obtained and since September 1, 2006 has complied with all Environmental Permits required for the operation of the Pipeline System; a list of such Environmental Permits is set forth on Schedule 4.9(b) . To Seller’s Knowledge, the Permits set forth on Schedule 4.9(b) are all of the material Environmental Permits necessary for the operation of the Pipeline System as currently conducted.

(c) Seller’s operation of the Pipeline System is not subject to any Order issued pursuant to Environmental Law.

(d) Since September 1, 2006, Seller has not received a written complaint, Order, directive, Claim, citation or notice of violation, suit or proceeding from any Government or any other Person with respect to any violation of Environmental Laws or any release, spill, leak, discharge or emission of any Hazardous Materials.

 

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(e) Seller has made available to Buyer copies of all Environmental Reports that are in the possession or within the reasonable control of Seller.

(f) The representations and warranties contained in this Section 4.9 are the only representations and warranties made by Seller with respect to matters arising under Environmental Laws or relating to Hazardous Materials.

4.10. [Intentionally Omitted] .

4.11. Owned Real Property . Schedule 1.1(a)(I) sets forth a complete and correct list of all material real property owned in whole or in part (and states the ownership percentage of all partially owned real property, if applicable) by Seller and used in connection with the operation of the Pipeline System. Seller has made available to Buyer all material existing surveys or topographical maps for the Owned Real Property and title policies in Seller’s possession or reasonably under its control. Except as set forth on Schedule 1.1(a)(II) and subject to the Existing Encumbrances, Seller has Good and Defensible Title to all Owned Real Property free and clear of Encumbrances arising by, through or under Seller.

4.12. Real Property Easements; Crossings .

(a) To Seller’s Knowledge, after reasonable inquiry, Schedule 1.1(c)(I) sets forth a complete and correct list of all easements, rights of way and other real property entitlements relating to the Pipeline System. Seller has made available to Buyer a true and complete copy of each Real Property Easement in its possession or control. Except as set forth on Schedule 1.1(c)(II) , subject to the Existing Encumbrances, Seller has Good and Defensible title to the Real Property Easements.

(b) To Seller’s Knowledge, after reasonable inquiry, Schedule 4.12(b) sets forth a list of Permits that Seller has obtained with respect to crossings of railroads, roads, waterways and similar crossings that the Pipeline System makes from Galena Park to El Paso, Texas and from Crane to Odessa, Texas (“ Crossing Permits ”). Except (i) matters known to Buyer’s Knowledge, (ii) those defaults that will be cured in accordance with the Sale Order (or that need not be cured under the Bankruptcy Code to permit the assumption and assignment of the Assigned Contracts), or (iii) as otherwise set forth on Schedule 4.12(b) , to Seller’s Knowledge, as of the date of this Agreement, neither Seller nor, to Seller’s Knowledge, any other party to any of the Crossing Permits is in material breach or default under any such Crossing Permit or given or received any written notice of any material default or violation under any Crossing Permit that was not withdrawn or dismissed and each such Crossing Permit is valid and in full force and effect, and is not subject to any pending or, to Seller’s Knowledge, threatened administrative or judicial proceeding to revoke, cancel, suspend or declare such Crossing Permit invalid in any respect.

4.13. Real Property Leases and Licenses . To Seller’s Knowledge, after reasonable inquiry, Schedule 1.1(b) sets forth a complete and correct list of all leases and licenses used by Seller relating to the Pipeline System. Seller has made available to Buyer a true and complete copy of each lease or license of real property relating to the Pipeline System and in its possession

 

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or control. Except (i) matters known to Buyer’s Knowledge, (ii) those defaults that will be cured in accordance with the Sale Order (or that need not be cured under the Bankruptcy Code to permit the assumption and assignment of the Assigned Contracts), or (iii) as otherwise set forth on Schedule 4.12(b) , to Seller’s Knowledge, as of the date of this Agreement, neither Seller nor, to Seller’s Knowledge, any other party to any of the leases and licenses is in material breach of or default under any Leases or Licenses or given or received any written notice of any material default or violation under any lease or license that was not withdrawn or dismissed and each such lease or license is valid and in full force and effect, and is not subject to any pending or, to Seller’s Knowledge, threatened administrative or judicial proceeding to revoke, cancel, suspend or declare such lease or license invalid in any respect.

4.14. Title to Assets . Other than Existing Encumbrances or as otherwise set forth on Schedule 4.14 , Seller has title to the personal property, other than the leased property, included in the Acquired Assets.

4.15. Business Records . Seller has made, or will make, available to Buyer those Business Records that are in the possession or control of Seller or its Affiliates which Buyer does not already have in its possession or control.

4.16. Intellectual Property . Seller owns or possesses licenses or other valid rights to use the intellectual property used in connection with the operation of the Business as currently conducted, except to the extent such intellectual property is provided by the Operator pursuant to its obligations under the O&M Agreement or where the failure to possess such licenses or valid rights to use would not, individually or in the aggregate, have a Material Adverse Effect. Except as set forth in Schedule 4.16 , to Seller’s Knowledge, the conduct of the operations of the Business as currently conducted does not infringe upon any intellectual property of any third party. To Seller’s Knowledge, no Person is infringing upon any intellectual property used in the conduct of the operation of the Business, except where such infringement would not, individually or in the aggregate, have a Material Adverse Effect.

4.17. Taxes . Except as would not reasonably be expected to result in a material liability to the Business after the Closing or as would result in an Encumbrance on the Acquired Assets that is not released at Closing, (a) Seller has filed in a timely manner all required federal, state, and local Tax returns related to the Acquired Assets, and has paid (except amounts being diligently contested in good faith by appropriate Proceedings and disclosed in Section 4.17 of the Disclosure Schedule) all required Tax or similar assessments arising from or related to the Acquired Assets, including any interest, penalties or additions attributable thereto shown as due on all such filings and (b) Taxes which Seller was required by Law to withhold or collect in respect of the Acquired Assets have been withheld or collected and have been paid over to the proper Government or are properly held by Seller for such payment when due and payable.

4.18. Assets Used in the Business . Except for (a) the Excluded Assets, (b) assets provided by the Operator, (c) assets associated with the provision of services to Seller including but not limited to tax, legal and accounting, (d) assets sold, transferred or otherwise disposed of in the Ordinary Course of Business, and (e) other assets set forth on Schedule 4.18 , at the Closing, the Acquired Assets will constitute all of the material assets used in the Business as conducted as of the date of this Agreement.

 

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ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer hereby represents and warrants to Seller as follows, except in all cases as disclosed in the Disclosure Schedules.

5.1. Corporate Organization . Buyer is a limited partnership, duly organized, validly existing and in good standing under the Laws of the jurisdiction of its organization, and has all requisite power and authority to own its properties and assets and to conduct its business as now conducted.

5.2. Authorization and Validity . Buyer has all requisite power and authority to enter into this Agreement and to execute and deliver any Ancillary Agreement to which it is or will be a party and to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement and the Ancillary Agreements and the performance of Buyer’s obligations hereunder and thereunder have been duly authorized by all necessary action by the board of directors of Buyer’s general partner, and no other proceedings on the part of Buyer are necessary to authorize such execution, delivery and performance. This Agreement has been, and the Ancillary Agreements when delivered will be duly executed by Buyer and do and will constitute its valid and binding obligation, enforceable against it in accordance with the terms herein and therein, except that such enforceability (a) may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other similar laws affecting or relating to the enforcement of creditors’ rights generally and (b) is subject to general principles of equity.

5.3. No Conflict or Violation . The execution, delivery and performance by Buyer of this Agreement and the Ancillary Agreements, and the operation of the Business by Buyer as it is constituted as of the Closing Date do not and will not (a) violate or conflict with any provision of the Organizational Documents of Buyer and (b) violate any provision of Law, or any Order applicable to Buyer, nor will they result in a breach of or constitute (with due notice or lapse of time or both) a default under any material contract to which Buyer is a party, by which it is bound or to which any of its properties or assets is subject.

5.4. Consents, Approvals and Notifications . The execution, delivery and performance by Buyer of this Agreement and the Ancillary Agreements, and the operation of the Business by Buyer as it is constituted as of the Closing Date do not require the Consent of, or filing with or notification of, any Government or any other Person except as required: (a) under any Antitrust Law; (b) for entry of the Sale Order by the Bankruptcy Court; or (c) for such Consents and filings, the failure to obtain or make would not reasonably be expected to have a material adverse effect on the ability of Buyer to consummate the transactions contemplated hereby.

5.5. Financing . On and after the Closing Date, Buyer will have sufficient funds available to finance and consummate the transactions contemplated by this Agreement and the Ancillary Agreements and to perform its obligations hereunder and thereunder. Without limiting the generality of the foregoing, on the date hereof, Buyer has delivered to Seller, true and correct copies of that certain $550,000,000 Second Amended and Restated Credit Agreement dated as of

 

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September 20, 2007 among Buyer, as Borrower, the Lenders party thereto and Wachovia Bank, N.A., as Administrative Agent, including all exhibits, schedules, annexes and amendments to such agreement in effect as of the date of this Agreement (the “ Credit Facility ”), pursuant to which and subject to the terms and conditions thereof each of the lenders party thereto, have severally agreed to provide the debt financing set forth therein on the terms and subject to the conditions specified therein. The Credit Facility has not been amended, restated or otherwise modified or waived (except as contemplated thereby) prior to the date of this Agreement and the respective obligations contained in the Credit Facility have not been withdrawn, modified or rescinded in any respect prior to the date of this Agreement. As of the date of this Agreement, the Credit Facility is in full force and effect and constitutes the legal, valid and binding obligation of each of the parties thereto and no consents, approvals or waivers of any lenders or other Person a party thereto needs to be obtained in order for Buyer to obtain funds under the Credit Facility. There are no conditions precedent to the funding of any borrowings under the Credit Facility, other than as expressly set forth in the Credit Facility. The available borrowings under the Credit Facility and, if applicable, the Supplemental Facility, together with other financial resources of Buyer (including cash on hand and marketable securities of Buyer) on the Closing Date, will, in the aggregate, be sufficient for the timely satisfaction of Buyer’s obligations under this Agreement and the Ancillary Agreements. As of the date of this Agreement, (a) no event has occurred which would constitute a breach or default (or an event which with notice or lapse of time or both would constitute a default), in each case, on the part of Buyer under the Credit Facility or any other party to the Credit Facility and (b) subject to the satisfaction of the conditions contained in Sections 12.1 and 12.3 hereof, Buyer has no reason to believe that the conditions (if any) to the Financing will not be satisfied. When used herein, the “ Financing ” means all borrowings necessary under the Credit Facility and, if applicable, any Supplemental Facility for Buyer to timely consummate the transactions contemplated by this Agreement and the Ancillary Agreements and to perform and pay Buyer’s obligations when required hereunder and thereunder. Buyer has fully paid all fees required to be paid prior to the date of this Agreement pursuant to the Credit Facility.

5.6. Adequate Assurances Regarding Assigned Contracts . Buyer is and, as of the Closing Date and thereafter, will be capable of satisfying the conditions contained in Sections 365(b) and 365(f) of the Bankruptcy Code with respect to the Assigned Contracts.

ARTICLE 6

COVENANTS OF SELLER

Seller hereby covenants to Buyer as follows:

6.1. Conduct of Business Before the Closing Date . Without the prior written consent of Buyer or, without any request to do so by Seller or any of its Related Person unless consented to by Buyer, the authorization of the Bankruptcy Court after notice and a hearing, between the date hereof through the Closing Date, Seller shall not, except as required or expressly permitted pursuant to the terms hereof or of any Ancillary Agreement, make any material change in the Acquired Assets, taken as a whole, or enter into any material transaction other than an Alternative Transaction, in each case other than in the Ordinary Course of Business. Without limiting the generality of the foregoing, except as may be required by the

 

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Bankruptcy Court without any request to do so from Seller or its Related Persons, from the date hereof until the Closing, Seller shall use commercially reasonable efforts to operate the Pipeline System and conduct the Business in substantially the same manner as conducted by Seller in the Ordinary Course of Business, taking into account business exigencies arising as a result of Seller’s financial condition, cash position and status as a filer under Chapter 11 of the Bankruptcy Code and Seller shall not enter into, amend or terminate any transportation, terminaling or interconnection agreements, or any other Material Contracts that are part of the Acquired Assets or file any revised tariffs without Buyer’s prior written consent, such consent not to be unreasonably withheld, delayed or conditioned; provided that Seller may enter into or amend such agreements in the Ordinary Course of Business if the term of such agreement or amendment is less than sixty days. Seller shall not be obligated to make any capital expenditures related to any expansion of the capacity of the Pipeline System. To the extent permitted by the Bankruptcy Court, Seller shall use commercially reasonable efforts to undertake any capital expenditures for the expansion of pipeline capacity currently contemplated in Seller’s annual budget and reasonably requested by Buyer if and to the extent that Buyer provides all funds necessary to undertake such activities, including for the procurement of equipment and third party services.

6.2. Obligations of Seller after Entry of Sale Order . From and after the date that the Sale Order is entered, Seller shall use reasonable best efforts to cause the Closing to occur as promptly as practicable, and Seller shall not, and shall not permit any of its Affiliates to, intentionally take any action that is reasonably likely to prevent or delay the consummation of the transactions contemplated hereby unless otherwise required by the Bankruptcy Court or Law. Without limiting or amending any covenant or agreement of Seller under this Agreement or any Ancillary Agreement which is not qualified by “reasonable best efforts”, when a covenant or agreement requires that Seller use its “reasonable best efforts”, such covenant or agreement shall not require Seller or any of its Related Person to expend any money to remedy any breach of any representation or warranty hereunder, to commence any litigation or arbitration proceeding, to offer or grant any accommodation (financial or otherwise) to any third party, to obtain any Consent required for the consummation of the transactions contemplated hereby or to provide financing to Buyer for the consummation of the transactions contemplated hereby; provided that, if Seller or any of its Affiliates remedies such breach prior to the Closing, Seller shall not be deemed to be in breach of such representation or warranty, or in violation of any covenant, for purposes of determining Buyer’s obligations to consummate the transactions contemplated by this Agreement.

6.3. Access to Properties and Records; Confidentiality . Prior to the Closing Date, unless an Alternative Transaction is approved in accordance with the Bidding Procedures, Seller shall afford to Buyer and to the accountants, counsel and representatives of Buyer, reasonable access during normal business hours throughout the period prior to the Closing Date (or the earlier termination of this Agreement pursuant to Article 13 ) to all books and records of Seller relating exclusively to the Business for purposes of assisting in the transition of the Acquired Assets and Assumed Liabilities to the Buyer at the Closing if (a) permitted under Law, (b) such books and records are not subject to confidentiality agreements, (c) disclosing such books and records would not adversely affect any attorney client privilege, work product or similar privilege and (d) such books and records do not relate to any confidential proprietary models or other information of Seller or any of its Affiliates pertaining to project evaluation, price curves or

 

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projections or other economic or other predictive models. Upon reasonable prior notice, Seller shall also afford Buyer reasonable access, during normal business hours, to the Business, to all operations of the Business and to all Acquired Assets throughout the period prior to the Closing Date for purposes of assisting in the transition of the Acquired Assets and the Assumed Liabilities to Buyer at the Closing. The rights of access contained in this Section 6.3 are granted subject to, and on, the following terms and conditions: (v) any such investigation shall not include physical testing or samplings and shall be exercised in such a manner as not to interfere unreasonably with the operation of the Business; (w) during the period from the date hereof through the Closing Date, all information provided to Buyer or its agents or representatives by or on behalf of Seller or their agents or representatives (whether pursuant to this Section 6.3 or otherwise) is governed by and subject to the Confidentiality Agreement, dated as of February 12, 2009, by and between Flying J and Buyer or an Affiliate of Buyer (the “ Confidentiality Agreement ”); (x) such rights of access shall not affect or modify the conditions set forth in Article 12 in any way; (y) all such rights of access are at Buyer’s sole cost, expense and risk; and Buyer shall indemnify Seller for any damages, suits, claims, proceedings, fines, judgments, costs or expenses (including attorneys’ fees and incidental, consequential or punitive damages) that Seller or any third party may suffer as a result of Buyer’s exercise of its rights under this Section 6.3 ; and (z) Buyer shall comply with and adhere to all of Seller’s safety policies and procedures.

6.4. Rejection of Assigned Contracts . Seller shall not reject any Assigned Contracts pursuant to the Chapter 11 Case without the prior written consent of Buyer.

6.5. Casualty Loss . Notwithstanding any provision in this Agreement to the contrary, if, before the Closing (a) all or any portion of the Acquired Assets is condemned or taken by eminent domain, or (b) a material portion is damaged or destroyed by fire or other casualty, Seller shall notify Buyer promptly in writing of such fact. In the case of condemnation or taking, Seller shall assign or pay, as the case may be, any proceeds thereof to Buyer at the Closing, and in the case of fire or other casualty, Seller shall either restore such damage or assign the insurance proceeds therefrom to Buyer at Closing. If Seller chooses to assign the insurance proceeds to Buyer, Seller agrees that the Purchase Price shall be reduced by the amount of the deductible for the insurance policy paying proceeds to Seller for such loss (with Buyer being responsible for payment of such deductible). Notwithstanding the foregoing, the provisions of this Section 6.5 do not in any way modify Buyer’s other rights under this Agreement, including any applicable right to terminate this Agreement if any condemnation, taking, damage or other destruction resulted in a Material Adverse Effect.

6.6. Provision of Data; Transfer of Software . Seller agrees to cooperate with such reasonable requests during normal business hours as Buyer may make prior to and following the Closing (which requests shall not interfere in any material respect with the responsibilities of the Business Employees), so as to assist Buyer, at Buyer’s sole cost and expense, with the integration, from and after the Closing, of the existing operational data, software and systems relating to the Pipeline System into Buyer’s software and systems. Notwithstanding the foregoing, the parties acknowledge and agree that Buyer is not acquiring any software or any computer or other electronic equipment transferred to Buyer as part of the Acquired Assets, unless and only to the extent that Buyer or Seller have obtained prior to the Closing any necessary licenses or rights to use such software from and after the Closing. Seller also agrees to cooperate with such reasonable requests during normal business hours as Buyer may make in

 

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order to facilitate Buyer’s acquisition of such licenses or rights, at no cost to Seller, but neither Seller nor any Affiliate of Seller shall have any obligation to assist Buyer to retain the services of any other Person, or to obtain any services provided by any such Person to support software or systems at any particular cost.

6.7. Further Assurances . Upon the request and at the sole expense of Buyer at any time after the Closing Date (but without additional consideration), Seller shall execute and deliver such documents as Buyer or its counsel may reasonably request to effectuate the transactions contemplated by this Agreement. Without limiting the foregoing, if at any time on or after the Closing, Seller or any of its Related Persons comes into possession or control of any Acquired Assets, Seller shall, subject in all respects to Section 1.5 with respect to Delayed Acquired Assets, promptly but in no event later than three (3) Business Days after coming into possession or control, return such Acquired Assets to Buyer for no additional consideration.

6.8. Seller’s Obligation to Perform . Seller shall pay, perform and discharge all Excluded Liabilities in accordance with Seller’s plan of reorganization or liquidation and as permitted by the Bankruptcy Court, as applicable, and will indemnify and hold Buyer and each of Buyer’s Related Persons harmless as provided in Article 14 for any and all Losses suffered by Buyer or any of its Related Persons from breach of the covenants and agreements of Seller in this Section 6.8 .

6.9. Title Insurance . At or prior to Closing, Buyer may obtain, at its sole cost and expense, extended coverage ALTA owner’s policies of title insurance or other title insurance policy insuring fee title in Buyer to the Owned Real Property. Seller shall cooperate with Buyer in obtaining such policies, including cooperating with Buyer, at Buyer’s sole cost and expense, to obtain or extend an abstract for the Owned Real Property and to obtain surveys of the Owned Real Property necessary to obtain such policies. In no event shall the Closing be delayed or prevented by operation of this Section 6.9 .

ARTICLE 7

COVENANTS OF BUYER

Buyer hereby covenants to Seller as follows:

7.1. Actions Before Closing Date . Subject to the express provisions of this Agreement, Buyer shall use reasonable best efforts (a) to perform and satisfy all conditions to each of Buyer’s and Seller’s obligations to consummate the transactions contemplated by this Agreement that are to be performed or satisfied by Buyer under this Agreement and (b) for the Closing to occur as promptly as practicable and Buyer shall not, and shall not permit any of its Affiliates to, intentionally take any action that is reasonably likely to prevent or delay the consummation of the transactions contemplated hereby. Without limiting or amending any covenant or agreement of Buyer under this Agreement or any Ancillary Agreement which is not qualified by “reasonable best efforts”, when a covenant or agreement requires that Buyer use its “reasonable best efforts”, such covenant or agreement shall not require Buyer or any of its Related Persons to expend any money to remedy any breach of any representation or warranty hereunder (other than the representations or warranties set forth in Section 5.5 and Section 5.6 ), to commence any litigation or arbitration proceeding, to offer or grant any accommodation

 

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(financial or otherwise) to any third party, to obtain any Consent required for the transactions contemplated hereby or to sell or agree to sell any of the Acquired Assets or any assets owned by Buyer or any of its Affiliates.

7.2. Consents . Buyer acknowledges that certain Consents to the transactions contemplated by this Agreement may be required from parties to Assigned Contracts to which Seller and/or its Affiliates are party and that such Consents have not been obtained and may not be obtained. Buyer agrees that neither Seller nor any of Seller’s Related Persons shall have any liability whatsoever to Buyer (and Buyer shall not be entitled to assert any claims) arising out of or relating to the failure to obtain any Consents that may have been, or may be, required in connection with the transactions contemplated by this Agreement, or because of the default, acceleration or termination of or loss of right under any such contract, lease, license or other agreement as a result of such failure. Buyer further agrees that no representation, warranty or covenant of Seller contained herein shall be breached or deemed breached and no condition of Buyer shall be deemed not to be satisfied as a result of the failure to obtain any Consent, as a result of any default, acceleration or termination or loss of right resulting from such failure, or as a result of any lawsuit, action, claim, proceeding or investigation commenced or threatened by or on behalf of any Person arising out of or relating to the failure to obtain any Consent or any default, acceleration or termination or loss of right resulting from such failure. Subject to the foregoing, at Buyer’s written request prior to the Closing, if such Consent is required notwithstanding the provisions of Section 365 of the Bankruptcy Code, Seller shall cooperate with Buyer in any reasonable manner in connection with Buyer’s obtaining any such Consents; provided that such cooperation shall not include any requirement of Seller or any of its Affiliates to expend money, commence any litigation or arbitration proceeding or offer or grant any accommodation (financial or otherwise) to any third party.

7.3. Adequate Assurances Regarding Assigned Contracts . With respect to each Assigned Contract, to the extent required by the Bankruptcy Court, Buyer shall provide the Bankruptcy Court, Seller or the counterparty to any such Contract, as the case may be, adequate assurance of the future performance of such Assigned Contract by Buyer.

7.4. Cure of Defaults . Except as provided below, Buyer shall, on or prior to the Closing, cure (or, to the extent permitted by the Bankruptcy Code, segregate funds sufficient to cure) any and all defaults under the Assigned Contracts that are required to be cured under the Bankruptcy Code, so that such Contracts may be assumed by Seller and assigned to Buyer in accordance with the provisions of Section 365 of the Bankruptcy Code. Notwithstanding the forgoing, Buyer shall not be obligated to pay more than the Buyer Cure Cost Obligations to cure any such defaults. On the Closing Date, Seller shall pay or, to the extent permitted by the Sale Order, segregate funds sufficient to pay, the Seller Cure Cost Obligations.

7.5. Support Obligations .

(a) Buyer recognizes that Seller may have provided credit support with respect to the Acquired Assets (collectively, the “ Support Obligations ”). As promptly as practicable after the Sale Order is entered by the Bankruptcy Court, Buyer shall use reasonable efforts to effect the full and unconditional release of Seller from any and all Support Obligations identified by Seller to Buyer by:

(i) furnishing letters of credit containing terms and conditions that are substantially identical to the terms and conditions of existing letters of credit and from lending institutions that are either investment grade institutions or have a credit rating commensurate with or better than that of lending institutions for existing letters of credit;

 

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(ii) instituting escrow arrangements with terms equal to, or more favorable to the counterparty than, the terms of existing escrow arrangements;

(iii) posting surety or performance bonds issued by an institution having a credit rating at least equal to those of the issuer of existing surety or performance bonds, and which replacement surety or performance bonds contain terms and conditions that are substantially identical to the terms and conditions of existing surety or performance bonds; and

(iv) providing substitute guaranties.

(b) Buyer and Seller shall use reasonable efforts to cause the beneficiary or beneficiaries of the Support Obligations to terminate and redeliver to Seller, prior to the Closing, each original copy of each original guaranty, letter of credit or other instrument constituting or evidencing such Support Obligations, to redeliver to Seller any cash collateral in respect of the Support Obligations and, as to any Support Obligations terminated after the Closing, promptly to redeliver such originals or cash to Seller, and in each case, to take such other actions as may be required to terminate such Support Obligations.

(c) If Buyer is not successful in obtaining the complete and unconditional release of Seller from the Support Obligations prior to the Closing, then Buyer shall indemnify, defend and hold harmless Seller from and against any and all costs, expenses, reimbursements or performance incurred by Seller in connection with the Support Obligations. Buyer shall, for so long as any Support Obligation remains outstanding, not effect any amendme