EXHIBIT 2.2
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
AGREEMENT AND PLAN OF DISTRIBUTION
DATED AS OF , 1997
BETWEEN
VALERO ENERGY CORPORATION
AND
VALERO REFINING AND MARKETING COMPANY
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
----
ARTICLE I
DEFINITIONS
1.1. Definitions................................................... B-1
ARTICLE II
TRANSACTIONS RELATING TO THE DISTRIBUTION..................... B-6
2.1. Intercorporate Reorganization................................. B-6
2.2. Assumption of Liabilities..................................... B-8
2.3. Repayment of Intercompany Indebtedness and Cash Dividend...... B-9
2.4. Resignations.................................................. B-10
VRM Certificate of Incorporation and By-Laws; Rights Plan;
2.5. Name Change................................................... B-10
2.6. Insurance..................................................... B-10
2.7. Nonassignable Contracts....................................... B-10
2.8. Interim Services Agreement.................................... B-11
2.9. Company Guarantees............................................ B-11
2.10. Conduct of Businesses......................................... B-11
ARTICLE III
MECHANICS OF DISTRIBUTION
3.1. Mechanics of Distribution..................................... B-11
3.2. Timing of Distribution........................................ B-12
ARTICLE IV
OTHER AGREEMENTS
4.1. Use of Names, Trademarks, etc................................. B-12
4.2. Intercompany Accounts as of the Time of Distribution.......... B-12
4.3. Hunting Lease................................................. B-12
4.4. Airplanes..................................................... B-12
4.5. Intercompany Arrangements..................................... B-12
4.6. Further Assurances............................................ B-13
ARTICLE V
TAX AND EMPLOYEE MATTERS
5.1. Tax Sharing; Exclusivity of Tax Sharing Agreement............. B-13
5.2. Employee Benefits............................................. B-13
5.3. Employees..................................................... B-13
5.4. Non-Competition Covenants..................................... B-13
ARTICLE VI
ACCESS TO INFORMATION
6.1. Provision of Records and Information.......................... B-15
6.2. Access to Information......................................... B-15
6.3. Production of Witnesses....................................... B-15
6.4. Retention of Records.......................................... B-15
6.5. Confidentiality............................................... B-15
i
TABLE OF CONTENTS, CONTINUED
PAGE
----
ARTICLE VII
CONDITIONS
7.1. Conditions to Obligations of the Company........................ B-16
ARTICLE VIII
INDEMNIFICATION
8.1. Indemnification by VRM.......................................... B-17
8.2. Indemnification by Retained Company............................. B-17
8.3. Procedures Relating to Indemnification.......................... B-17
8.4. Certain Limitations............................................. B-19
8.5. Express Negligence.............................................. B-19
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1. Modification or Amendment....................................... B-19
9.2. Waiver; Remedies................................................ B-19
9.3. Counterparts.................................................... B-19
9.4. Governing Law................................................... B-19
9.5. Notices......................................................... B-20
9.6. Entire Agreement................................................ B-20
9.7. Certain Obligations............................................. B-20
9.8. Assignment...................................................... B-20
9.9. Captions........................................................ B-21
9.10. Specific Performance............................................ B-21
9.11. Severability.................................................... B-21
9.12. Third Party Beneficiaries....................................... B-21
9.13. Schedules....................................................... B-21
9.14. Tax Sharing Agreement........................................... B-21
ii
AGREEMENT AND PLAN OF DISTRIBUTION, dated as of , 1997 (this
"Agreement"), between VALERO ENERGY CORPORATION, a Delaware corporation (the
"Company") and VALERO REFINING AND MARKETING COMPANY, a Delaware corporation
and as of the date hereof a wholly-owned subsidiary of the Company ("VRM").
W I T N E S S E T H :
WHEREAS, the Company, PG&E Corporation, a California corporation
("Acquiror"), and PG&E Acquisition Corporation, a Delaware corporation
("Sub"), have entered into an Agreement and Plan of Merger dated as of January
31, 1997 (the "Merger Agreement"), providing for the Merger (as defined in the
Merger Agreement) of Sub with and into the Company;
WHEREAS, immediately prior to the Effective Time (as defined in the Merger
Agreement), the Company's Board of Directors, subject to the approval of the
Company's stockholders, expects to distribute to the holders of common stock,
par value $1.00 per share, of the Company ("Company Common Stock"), other than
shares held in the treasury of the Company, on a pro rata basis all of the
issued and outstanding shares of common stock, par value $0.01 per share, of
VRM ("VRM Common Stock"), along with the associated VRM Rights (as defined in
the Merger Agreement) (the "Distribution");
WHEREAS, the purpose of the Distribution is to make possible the Merger by
divesting the Company of the businesses and operations to be conducted by VRM,
which Acquiror is unwilling to acquire;
WHEREAS, it is the intention of the parties to this Agreement that for
federal income tax purposes the Distribution shall qualify as a transaction
described in Section 355 of the Internal Revenue Code of 1986, as amended (the
"Code") and a "reorganization" within the meaning of Section 368(a)(1)(D) of
the Code; and
WHEREAS, this Agreement sets forth or provides for certain agreements by and
between the Company and VRM in consideration of the separation of the
ownership of the Company and VRM;
NOW, THEREFORE, in consideration of the premises, and of the respective
covenants and agreements set forth herein, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
1.1. Definitions. Capitalized terms used in this Agreement and not
otherwise defined herein shall have the meanings assigned to such terms in the
Merger Agreement. As used in this Agreement, the following terms shall have
the following respective meanings:
"Acts or Omissions" shall mean negligence, gross negligence, breaches of
express or implied warranties, premises liability, violations of the Texas
Deceptive Trade Practices Act, breaches of duties under the law of strict
liability in tort (including defects in design, manufacturing, marketing,
warnings, and distribution), defamation, false imprisonment or arrest,
malicious prosecution, or any other misfeasance, malfeasance, non-feasance,
breaches of legal duties, tortious conduct, intentional torts, malicious
conduct, false or misleading or deceptive or unconscionable conduct, or any
combination thereof.
"Airplanes" shall mean the airplanes to be co-owned by Valero Corporate
Services and Valero Management Company described on Schedule 2.1(b)(ii)(J).
"By-Laws" shall mean VRM's by-laws substantially in the form filed as an
Exhibit to the VRM Registration Statement.
B-1
"Cash Dividend" shall have the meaning set forth in Section 2.3(a).
"Certificate of Incorporation" shall mean VRM's amended and restated
certificate of incorporation substantially in the form filed as an Exhibit to
the VRM Registration Statement.
"Company Group" shall mean the Retained Company and the Retained
Subsidiaries, whether now or hereafter existing.
"Company Guarantees" shall mean, collectively, the guarantees of obligations
of the VRM Group by the Company or the Retained Subsidiaries, a complete and
accurate list of which is set forth on Schedule 1.1(a).
"Contract Rights" shall mean, as of any given date, any and all right, title
and interest of the Company and any of its Subsidiaries (other than VRM and
its Subsidiaries) in and to any and all of the Project Contracts and other
rights under, in and to contracts and agreements, written or oral, express or
implied, legal and equitable, of every kind or description, pertaining or
related in any way to the MTBE Project; and all estates, rights, privileges,
claims and causes of action, immunities, and other appurtenances and rights,
and all assets subject to liabilities connected to the above and which, in any
such case, is either (i) in force and effective at the date hereof, or (ii)
arises under or with respect to any document, paper, instrument or other
intangible interest of any of the types specified above, in force and effect
at the date hereof and pursuant to which any reversion, remainder, contingent
or other residual right, title, interest or liability remains in the Company,
and which in each case pertains or relates in any way to the MTBE Project;
together with all tolls, rents, revenues, issues, earnings, income, products
and profits thereof accruing on or after the date hereof.
"Distribution Date" shall mean the date determined by the Board of Directors
of the Company on which the Distribution is to be effected.
"Environmental Law" shall mean any and all applicable laws, statutes,
ordinances, rules, regulations, orders, or permits of any Governmental Entity
or agency regulating, relating to or pertaining to the protection of health,
or the environment, or the use, storage, treatment, generation,
transportation, handling, Release or disposal of Hazardous Substances, in
effect in any and all jurisdictions in which the Company is conducting or at
any time has conducted the business, including without limitation, the Oil
Pollution Act of 1990, the Clean Air Act, as amended, the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, the
Federal Water Pollution Control Act, as amended, the Occupational Safety and
Health Act of 1976, as amended, the Resource Conservation and Recovery Act of
1976, as amended, the Safe Drinking Water Act, as amended, the Toxic
Substances Control Act, as amended, the Superfund Amendments and
Reauthorization Act of 1986, as amended, the Emergency Planning and Community
Right-to-Know Act, the Hazardous Liquid Pipeline Safety Act, as amended, and
the Natural Gas Pipeline Safety Act of 1979, as amended, and regulations
adopted thereunder.
"Environmental Liabilities" shall mean all Liabilities relating to or
arising out of any Environmental Law or Environmental Permit or relating to
Hazardous Substances or environmental, health or safety matters (including
without limitation removal, remediation or cleanup costs, investigatory costs,
governmental response costs and administrative oversight costs, environmental
monitoring costs, natural resources damages, property damages, personal injury
damages, costs of compliance with any contractual obligation or settlement,
judgment or other determination of Liability and indemnity, contribution or
similar obligations).
"Filings" shall mean the Registration Statements, the Proxy Statement-
Prospectus, and any other document filed or required to be filed with the SEC
in connection with the transactions contemplated by the Reorganization
Agreements, or any preliminary or final form thereof or any amendment or
supplement thereto.
"Group" shall mean the Company Group or the VRM Group, as applicable.
"Hazardous Substance" shall mean any waste, substance, material, pollutant
or contaminant presently listed, defined, designated or classified as
hazardous or regulated, under any Environmental Law.
B-2
"Hunting Lease" shall mean the hunting lease described on Schedule
2.1(b)(ii)(K) to be assigned to Valero Corporate Services.
"Indemnifiable Losses" shall mean, subject to Section 8.4, all losses,
Liabilities, damages, deficiencies, obligations, fines, expenses, claims,
demands, actions, suits, proceedings, judgments or settlements, whether or not
resulting from Third Party Claims, including interest and penalties recovered
by a third party with respect thereto and out-of-pocket expenses and
reasonable attorneys' experts' and accountants', fees and expenses incurred in
the investigation or defense of any of the same or in asserting, preserving or
enforcing any of the Indemnitee's rights hereunder, suffered by an Indemnitee.
"Indemnitee" shall mean any of the Retained Company Indemnitees or the VRM
Indemnitees, as applicable, who or which may seek indemnification under this
Agreement.
"Information" shall mean all records, books, subscriptions, contracts,
instruments, computer data and other data and information.
"Intercompany Arrangement" shall have the meaning set forth in Section 4.5.
"Intercompany Note" shall have the meaning set forth in Section 2.3(b).
"Intercompany Reorganization" shall mean the actions taken prior to the
Distribution to separate the VRM Business and the Retained Business, including
without limitation, the actions set forth in Article II.
"IRBs" shall mean the 10.25% Refunding Revenue Bonds Series 1987A and the
10.625% Revenue Bonds Series 1987B, issued by the Industrial Development
Corporation of Port Corpus Christi, with VRM as the borrower and the Company
as guarantor.
"Liabilities" shall mean with respect to any Person, any and all debts,
liabilities, commitments and obligations, whether fixed, contingent or
absolute, matured or unmatured, liquidated or unliquidated, accrued or
unaccrued, known or unknown, whenever or however arising, including, without
limitation, all costs and expenses relating thereto, and including, without
limitation, those debts, liabilities and obligations arising under law, rule,
regulation, permits, action or proceeding before any court or regulatory
agency or administrative agency, order or consent decree or any award of any
arbitrator of any kind, and those arising under contract, commitment or
undertaking.
"MTBE Project" shall mean the installation of a plant in Mexico to produce
methyl tertiary butyl ether and transactions related thereto described on
Schedule 1.1(b).
"No-Action Letter" shall mean a letter from the staff of the SEC indicating,
among other things, that the Division of Corporation Finance will not
recommend enforcement action to the SEC if the VRM Common Stock is distributed
pursuant to the Distribution without registration under the Securities Act.
"Personal Property" shall mean, collectively, as of any given date, the
personal property owned by Valero Management Company including without
limitation computer hardware, communications equipment, auto, trucks, personal
computers, lamps, chairs, desks, artwork, office furniture, books and office
supplies.
"Project Contracts" shall mean, as of any given date, and include any con-
tract or agreement heretofore entered into for the provision of any money,
guarantee, debt, service, labor, materials or improvements, or any other good,
service, duty, obligation or thing of value pertaining or related to the MTBE
Project, including, without limitation, any and all contracts, agreements,
guarantees, letters, letters of intent, undertakings or understandings,
written or unwritten, in respect thereto, including, without limitation the
Letter of Intent, the Memorandum of Understanding, the PROESA-BANAMEX Letter,
the VEC-PEMEX Letter, the PIBSA Offer Letter, the XXXXXXX Letter, the
Association Agreement, the MTBE Sales Agreement, the Butane Supply Agreement,
the Construction Agreement, the Surety Agreement, the License Agreement, the
Technical Support
B-3
Agreement, the PEMEX Option, the UOP Agreements and the Negotiation Services
Agreement (in each case, as defined on Schedule 1.1(b)).
"Record Date" shall have the meaning set forth in Section 3.1.
"Release" shall have the meaning given such term in the Comprehensive
Environmental Response, Compensation and Liability Act 42 U.S.C. (S) 9601(22).
"Retained Assets" shall mean, collectively, as of any given date, any and
all of the assets, properties and rights, whether tangible or intangible,
whether real, personal or mixed, whether fixed, contingent or otherwise, and
wherever located, of the Company and its Subsidiaries (other than the VRM
Assets).
"Retained Business" shall mean the business heretofore and currently engaged
in by the Company and its Subsidiaries and their respective predecessors of
purchasing, gathering, processing, storing, transporting, selling, trading and
marketing natural gas, the business of extracting, processing, fractionating,
transporting, selling, trading and marketing natural gas liquids, and related
risk management, and the business of purchasing, wheeling, selling, marketing
and trading electric power and related risk management, each as currently
engaged in by the Company through VNG and its Subsidiaries.
"Retained Company Assumed Liabilities" shall mean, collectively, all
Liabilities relating to or arising in connection with the Retained Assets or
the Retained Business (other than such Liabilities expressly assumed or
retained by the VRM Group pursuant to this Agreement), whether arising before,
at or after the Time of Distribution, which are to be assumed by the Retained
Company or any Retained Subsidiary pursuant to the transactions contemplated
by this Agreement, including without limitation the Liabilities relating to or
arising out of the items set forth on Schedule 1.1(c), but in the any event,
excluding VRM Assumed Liabilities.
"Retained Company Indemnitees" shall mean the Retained Company (including
after the Effective Time the Acquiror), each Affiliate of the Retained
Company, including any of its direct or indirect Subsidiaries, and each of
their respective Representatives and each of the heirs, executors, successors
and assigns of any of the foregoing.
"Retained Liabilities" shall mean, collectively, all of (i) the
Environmental Liabilities relating to or arising in connection with the
Retained Business, (ii) the Liabilities of any member of the Company Group
under this Agreement, any other Reorganization Agreement or the Interim
Services Agreement, in each case, to which the Company is a party or will be a
party, (iii) the Liabilities relating to or arising in connection with the
businesses, assets or operations of the Company Group (other than the VRM
Assumed Liabilities), as heretofore, currently or hereafter conducted, (iv)
the Retained Company Assumed Liabilities and (v) the Liabilities retained or
assumed by the Company or any member of the Company Group pursuant to the
Employee Benefits Agreement.
"Tax" or "Taxes" shall have the meaning set forth in the Tax Sharing
Agreement.
"Teco Litigation" shall mean Teco Pipeline Company x. Xxxxxx Energy
Corporation, Valero Transmission, L.P., Valero Management Company, Valero
Hydrocarbons, L.P., VMGA Company, Valero Marketing, L.P., VNGC Holding
Company, Valero Industrial Gas, L.P., Valero Natural Gas Company, Valero Gas
Marketing, L.P., Valero Eastex Pipeline Company, VLDC, L.P., Valero
Transmission Company, Reata Industrial Gas, L.P., Valero Gas Marketing
Company, Valero Nortex, L.P., Valero Gas Storage Company, Valero Northern
Texas Company, Valero Hydrocarbons Company, West Texas Transmission Co., VT
Company, Valero Natural Gas Partners, L.P., Valero Management Partnership,
L.P., Xxxxxxx X. Xxxxxxx and Xxxx X. XxXxxxxxx; In the 215th Judicial District
Court of Xxxxxx County, Texas (Cause No. 96-020628) and any other action,
claim, lawsuit, arbitration or appeal to obtain or recover damages or any
other economic benefit as a result of any action or omission by any member of
the Company Group or any of its Representatives in connection with the
performance or exercise of duties or obligations, including statutory and
common law fiduciary duties, arising out of or related to the ownership,
operation, management or maintenance of the Valero-Teco West Texas System at
any time from February 28, 1985 to January 27, 1997.
B-4
"Third Party Claim" shall have the meaning set forth in Section 8.3(a).
"Time of Distribution" shall mean the time as of which the Distribution is
effective.
"Transfer Agent" shall mean Xxxxxx Trust and Savings Bank, the transfer
agent for the Company Common Stock.
"UOP Agreements" shall mean, collectively, (a) the Engineering Agreement,
dated as of July 1, 1993, between UOP and PROESA, (b) the Oleflex Process
License Agreement, dated November 21, 1994, between UOP and PROESA, (c) the
Merox Process Licenses Agreement, dated November 21, 1994, between UOP and
PROESA, (d) the UOP Oxygenate Removal Process License Agreement, dated
November 21, 1994, between UOP and PROESA, (e) the Xxxxx Complete Saturation
Process License Agreement, dated November 21, 1994, between UOP and PROESA,
(f) the Ethermax Process License Agreement, dated November 21, 1994, between
UOP and PROESA, (g) the Butamer Process License Agreement, dated November 21,
1994, between UOP and PROESA, (h) the Guarantee Agreement, dated November 21,
1994, between UOP and PROESA, and (i) the Supply Agreement, dated November 21,
1994, between UOP Equitec Services, Inc. and PROESA, as each of the same may
be from time to time amended, restated, supplemented, superseded or replaced.
"Valero Coal Company" shall mean Valero Coal Company, a Delaware corporation
and, as of the date of this Agreement, a wholly-owned Subsidiary of the
Company.
"Valero Corporate Services" shall mean Valero Corporate Services Company, a
Delaware corporation and, as of the date of this Agreement, a wholly-owned
Subsidiary of the Company.
"Valero Management Company" shall mean Valero Management Company, a Delaware
corporation and, as of the date of this Agreement, a wholly-owned Subsidiary
of the Company.
"Valero Producing Company" shall mean Valero Producing Company, a Delaware
corporation and, as of the date of this Agreement, a wholly-owned Subsidiary
of the Company.
"VMGA Company" shall mean the VMGA Company, a Texas corporation and, as of
the date of this Agreement, a wholly-owned Subsidiary of Valero Management
Company.
"VRM Assets" shall mean, collectively, (i) all assets currently owned by VRM
and any of its Subsidiaries (other than any such assets which pursuant to, or
as a consequence of, this Agreement are to be transferred to, or retitled in
the name of the Company or one of the Retained Subsidiaries) and which, as of
and after the Time of Distribution are to be owned by the VRM Group and (ii)
all assets which are currently owned by the Company or one or more of the
Retained Subsidiaries and which pursuant to, or as a consequence of, this
Agreement are to be transferred to VRM or any of its Subsidiaries and which as
of and after the Time of Distribution are to be owned by a member of the VRM
Group.
"VRM Assumed Liabilities" shall mean, collectively, the Liabilities set
forth in Section 2.2(a).
"VRM Business" shall mean (i) the business of purchasing, transporting,
storing, processing, selling, trading, marketing and refining crude oils,
residual fuel oils and other refinery feedstocks, and of manufacturing,
transporting, storing, selling, trading and marketing gasolines, gasoline
blendstocks, butanes, liquefied petroleum gases, other refined products and
petrochemicals, as currently conducted by the Company through VRM and its
Subsidiaries, and related risk management (ii) certain insurance-related
operations as currently conducted through VMGA Company, (iii) certain coal-
seam gas and other coal-related operations as currently conducted through
Valero Coal Company, (iv) certain oil and gas exploration and production
operations as currently conducted through Valero Producing Company, (v)
certain real estate leasing operations as currently conducted through Valero
Management Company, and (vi) the business conducted with the Butane Splitter
and Debutanizer (but excluding any business conducted with the assets of the
VRM Business transferred or to be transferred to the Company Group pursuant to
this Agreement).
B-5
"VRM Common Stock" shall have the meaning set forth in the third paragraph
of this Agreement.
"VRM Group" shall mean VRM, its Subsidiaries, and that portion of any
Person, whether now or hereafter existing, which conduct the VRM Business
(after giving effect to the transfers set forth in Article II).
"VRM Indemnitees" shall mean VRM, each Affiliate of VRM from and after the
Time of Distribution and each of their respective Representatives and each of
the heirs, executors, successors and assigns of any of the foregoing.
"VRM Liabilities" shall mean, collectively, all of (i) the Environmental
Liabilities relating to or arising in connection with the VRM Business, (ii)
the Liabilities of any member of the VRM Group under this Agreement, any other
Reorganization Agreement, or the Interim Services Agreement and of VRM under
Section 7.10 of the Merger Agreement, in each case, to which VRM is a party or
will be a party, (iii) the Liabilities relating to or arising in connection
with the businesses, assets or operations of the VRM Group (other than the
Retained Company Assumed Liabilities), as heretofore, currently or hereafter
conducted, (iv) the VRM Assumed Liabilities, and (v) the Liabilities retained
or assumed by VRM or any member of the VRM Group pursuant to the Employee
Benefits Agreement.
ARTICLE II
TRANSACTIONS RELATING TO THE DISTRIBUTION
2.1. Intercorporate Reorganization.
(a) Prior to or at the Time of Distribution, the Company and VRM hereby
undertake to complete the actions specified in this Section 2.1, to (i)
transfer, or cause to be transferred, to VRM or one of its Subsidiaries, as
appropriate, effective as of or prior to the Time of Distribution, all of the
right, title and interest of the Company or any Retained Subsidiary (a list of
which is set forth on Schedule 2.1(a)), as appropriate, in any VRM Assets and
have VRM or one of its Subsidiaries, as appropriate, assume and agree to pay,
perform and discharge in due course each of the VRM Assumed Liabilities, and
(ii) transfer, or cause to be transferred, to the Company or a Retained
Subsidiary, as appropriate, effective as of or prior to the Time of
Distribution, all the right, title and interest of VRM or any VRM Subsidiary,
as appropriate, in any Retained Assets and have the Company or a Retained
Subsidiary, as appropriate, assume and agree to pay, perform and discharge in
due course each of the Retained Company Assumed Liabilities.
(b) Prior to the Time of Distribution, the Company and VRM each agree to
take, or cause to be taken, the following actions in connection with the
Distribution:
(i) Transfers of Capital Stock and Partnership Interests
(A) the Company shall transfer all of its right, title and interest in
the outstanding shares of capital stock of Valero Corporate Services to VRM
or one of its Subsidiaries;
(B) the Company shall cause Valero Management Company to transfer all of
its right, title and interest in the outstanding shares of capital stock of
VMGA Company to VRM or one of its Subsidiaries;
(C) the Company shall transfer all of its right, title and interest in
the outstanding shares of capital stock of Valero Coal Company to VRM or
one of its Subsidiaries;
(D) the Company shall transfer all of its right, title and interest in
the outstanding shares of capital stock of Valero Producing Company to VRM
or one of its Subsidiaries;
B-6
(ii) Other Transfers
(A) the Company shall transfer all of its right, title and interest in
the name "Valero" and the "Walking Flame" trademark each as described on
Schedule 4.1 to VRM;
(B) Valero Management Company shall transfer all of its right, title and
interest in the real estate set forth on Schedule 2.1(b)(ii)(B) to Valero
Corporate Services;
(C) Valero Management Company shall transfer all of its right, title and
interest in the promissory notes set forth on Schedule 2.1(b)(ii)(C) to
Valero Corporate Services;
(D) Valero Management Company shall transfer all of its right, title and
interest in the leases set forth on Schedule 2.1(b)(ii)(D) to Valero
Corporate Services;
(E) the Company shall transfer all of its right, title and interest in
its limited partnership interest in the San Antonio Spurs professional
basketball team to Valero Corporate Services;
(F) the Company shall transfer all of its right, title and interest in
season tickets to San Antonio Spurs and Houston Rockets professional
basketball games to Valero Corporate Services;
(G) Valero Management Company and the Company shall transfer all of their
right, title and interest in the computer software set forth in items A
through E on Schedule 2.1(b)(ii)(G) to Valero Corporate Services, and
Valero Corporate Services will also grant to Valero Management a
nonexclusive, freely transferable, fully paid, perpetual license to the
software set forth in item E on Schedule 2.1(b)(ii)(G) which includes, or
at the Time of Distribution such schedule shall be amended to include, all
material software developed by the Company and its Subsidiaries which is
used in the Retained Business;
(H) VNG shall transfer all of its right, title and interest in the Butane
Splitter and Debutanizer set forth on Schedule 2.1(b)(ii)(H) to Valero
Refining Company;
(I) Valero Management Company shall transfer all of its right, title and
interest in the Personal Property as reflected on Schedule 2.1(b)(ii)(I),
to Valero Corporate Services;
(J) Valero Management Company shall transfer a 50% interest in the
Airplanes to Valero Corporate Services so that each will be co-owners of
the Airplanes on the terms as set forth on Schedule 2.1(b)(ii)(J);
(K) Valero Management Company shall assign all of its right, title and
interest in the Hunting Lease to Valero Corporate Services;
(L) VNG shall transfer all of its right, title and interest in the
methanol pipeline segments set forth on Schedule 2.1(b)(ii)(L) to Valero
Refining Company;
(M) The Company shall assign all of its right, title and interest in the
Contract Rights to VRM;
(N) The Company will cause Valero Marketing and Supply to assign all
commodity swap contracts and similar contracts entered into by Valero
Marketing and Supply on behalf of the Retained Companies to the appropriate
members of the Company Group;
(O) The Company will cause Valero Marketing and Supply to transfer to
accounts designated by the Retained Company all commodities, commodity
futures, commodity options and other similar commodity contracts held by
Valero Marketing and Supply on behalf of any of the Retained Companies;
(P) The Company will transfer each of the Valero Charitable Trust, the
Valero Scholarship Trust, the Rulaine Xxxxxxx Memorial Scholarship Trust,
and the Valero Political Action Committee (VALPAC) to VRM;
B-7
(Q) The Company will take all actions necessary (including, without
limitation, executing such documents as may be necessary to change the
beneficiary thereof) to transfer, and will cause Valero Management Company
to transfer, to VRM or its designated subsidiary, their respective rights
in and to all policies of life insurance covering participants in the
Company's Executive Deferred Compensation Plan and Key Employee Deferred
Compensation Plan; and
(R) The Company shall assign to VRM or its designated Subsidiary all of
its right, title and interest in and to that certain lease Agreement, dated
March 17, 1991, between The Manufacturers Life Insurance Company, as
landlord, and Valero Industrial Gas Company, as lessee, as amended by that
certain Lease Modification and Amendment Agreement, dated January 28, 1994,
as the same may heretofore have or hereafter be amended, restated, modified
or supplemented, relating to the lease of office space in Washington, D.C.
(c) In connection with the transfers of assets other than capital stock and
the assumptions of Liabilities contemplated by subsection (a) and subsection
(b) of this Section, the Company and VRM shall execute or cause to be executed
by the appropriate entities the conveyance and assumption instruments in such
forms as the Company, VRM and the Acquiror shall reasonably agree; provided
that, the transfer of the real property shall be by warranty deed. The
transfer of capital stock shall be effected by means of delivery of stock
certificates duly endorsed or accompanied by duly executed stock powers and
notation on the stock records books of the corporation or other legal entities
involved and, to the extent required by applicable law, by notation on
appropriate registries.
(d) Each of the parties hereto understands and agrees that no party hereto
is, in this Agreement or in any other agreement or document contemplated by
this Agreement or otherwise, representing and warranting in any way as to the
title, value or freedom from encumbrance of, or any other matter concerning,
any assets of such party, it being agreed and understood that all assets are
being transferred "as is, where is", and that the real estate on Schedule
2.1(b)(ii)(B) shall be transferred by warranty deed.
(e) Prior to the Time of Distribution, the Company and VRM shall take all
steps necessary to increase the outstanding shares of VRM Common Stock so that
immediately prior to the Distribution, the Company will hold a number of
shares of VRM Common Stock equal to the total number of shares of the Company
Common Stock outstanding on the Record Date.
(f) If any assets that are used primarily in the Retained Business
including, without limitation, information systems, intellectual property
(including software licenses), microwave and other communications systems and
trading and risk management operations, would otherwise be held in a
Subsidiary that would not be owned directly or indirectly by the Company after
the Time of Distribution, then, notwithstanding the foregoing allocation, VRM
shall cause each such Subsidiary to contribute such assets to the appropriate
Subsidiary of the Company or as the Company otherwise directs as part of the
Intercompany Reorganization; provided, however, that the Company shall be
responsible for establishing new commodity accounts to accommodate the
Retained Business, risk management activities and/or transferring the assets
described in Sections 2.1(b)(ii)(N) and (O) to Acquiror accounts. Neither any
existing commodities account, nor any New York Mercantile Exchange seat held
by Valero Marketing and Supply, shall be transferred so as to be a part of the
Retained Business.
(g) The Retained Companies will, at the Effective Time, include all the
Company's right, title and interest in and to (a) all assets of the Company or
any of its Subsidiaries, including the information systems, that are used
primarily in or that are being held primarily for use in or that are otherwise
sufficient (including for this purpose the services to be provided pursuant to
the Interim Services Agreement) for the operation, as currently conducted, of
the Retained Business.
2.2. Assumption of Liabilities. (a) Subject to Section 2.2(b), and effective
as of the time of the Intercompany Reorganization, VRM and the VRM Group, in
partial consideration for the transfers set forth in
B-8
Section 2.1, hereby unconditionally assume and undertake to pay, satisfy and
discharge when due in accordance with their terms the VRM Assumed Liabilities,
including without limitation:
(i) all Liabilities relating to or arising from the VRM Assets or the VRM
Business (other than such Liabilities expressly assumed or retained by the
Company Group pursuant to this Agreement), whether arising before, at or
after the Time of Distribution;
(ii) all Liabilities (including, without limitation, indemnification
obligations) relating primarily to or arising primarily from (A) the
reports, registration statements and other documents filed by the Company
with the SEC prior to the Time of Distribution (including the Company's
consolidated financial statements for periods prior to the Time of
Distribution included or incorporated by reference therein) and (B) any
breach or alleged breach by any director or officer of the Company of his
fiduciary duties to the Company and its stockholders occurring at or prior
to the Effective Time;
(iii) any Liabilities to be assumed by VRM or any of its Subsidiaries
pursuant to the transactions contemplated by this Agreement, including
without limitation the Liabilities relating to or arising out of (A) the
MTBE Project, (B) the warranty deeds described in Sections 2.1(c) and
2.1(d) and (C) the VRM Assumed Liabilities set forth on Schedule 2.2(a);
(iv) the obligations of VRM pursuant to Section 2.2(c); and
(v) subject to Section 2.3(e) hereof, all Liabilities under the New Credit
Facility.
(b) Notwithstanding Section 2.2(a), the Company hereby retains, and the VRM
Group does not assume and will have no liability with respect to, the Retained
Liabilities.
(c) The provisions of Section 2.2(b) notwithstanding, within 45 days
following the entry of a final, nonappealable judgment in the TECO Litigation,
or execution of a settlement agreement with respect to the TECO Litigation
approved by VRM (such approval not to be unreasonably withheld or delayed),
VRM shall pay to Acquiror in immediately available funds an amount equal to
(i) 50% of the amount of such judgment or settlement with respect to that part
of any judgment or settlement amount not in excess of $30,000,000, and
(ii) 100% of that part of such judgment or settlement amount which is in
excess of $30,000,000, plus in each case interest thereon at the applicable
statutory rate from the date of such judgment until paid in full.
2.3. Repayment of Intercompany Indebtedness and Cash Dividend.
(a) Redemption Payment. Prior to the Time of Distribution, the Company will
redeem (or convert) the Company Convertible Preferred Stock in accordance with
Section 6.1(n) of the Merger Agreement. The redemption, if any of the Company
Convertible Preferred Stock will be funded by the Company with the proceeds of
borrowings under the New Credit Facility.
(b) Dividend Payment. Prior to the Time of Distribution, VRM shall pay a cash
dividend (the "Cash Dividend") to the Company in an amount equal to
$210,000,000.
(c) Intercompany Note. The Company and VRM shall (a) eliminate without payment
the $212,450,000 net amount of the intercompany note (the "Intercompany Note")
owing from the Company to VRM as of December 31, 1996 (which amount reflects
payment to VNG for the assets described in Section 2.1(b)(ii)(H); (b) refrain
from creating any obligations under the Intercompany Note after December 31,
1996, except in the ordinary course of business consistent with past practice or
as contemplated by the Reorganization Agreements and (c) satisfy by cash payment
at the Time of Distribution the full net amount of such note for the period from
January 1, 1997 to the Time of Distribution (which Intercompany Note, for
purposes of this Agreement, shall not reflect the assumption by VRM of
Liabilities related to the Company's acquisition of Basis Petroleum, Inc. and
redemption of the Company Convertible Preferred Stock).
B-9
Prior to the Time of Distribution, the Company and VRM shall agree on the
estimate of the net amount so payable. The Company and VRM shall use their
reasonable efforts within 60 days after the Time of Distribution to agree on the
actual amount so payable. If the actual amount so payable is different from such
estimated amount, the Company or VRM will promptly pay the difference to the
other, plus interest thereon at a floating rate equal to the prime rate (as in
effect from time to time) as reported in the Wall Street Journal from the Time
of Distribution to the date of payment. If the parties are unable to so agree on
the actual amount, any disputes will be resolved by an independent accounting
firm selected by the Company and VRM, the fees and expenses of which will be
borne equally by the Company and VRM. Once the actual amount is so agreed or
resolved, such amount shall be final and non-appealable.
(d) Cash Management. Prior to the Time of Distribution, the Company and VRM
shall establish and maintain a separate cash management system with respect to
the VRM Businesses in accordance with the terms set forth on Schedule 2.2(c)
so that bank accounts are accurately allocated and distributed to VRM and the
Company at the Time of Distribution.
(e) Intercompany Note Adjustment. Prior to the assumption by VRM of
Liabilities under the New Credit Facility as set forth in Section 2.2(a) (v),
all Liabilities under the New Credit Facility that are unrelated to (i) the
Company's acquisition of Basis Petroleum, Inc. or (ii) the redemption of the
Company Convertible Preferred Stock shall be transferred to the Uncommitted
Facilities or, to the extent capacity is not available thereunder, be borne by
the Company by reducing amounts owed by VRM (or increasing amounts owed by the
Company) under the Intercompany Note. Payments made under the New Credit
Facility shall be charged to VRM under the Intercompany Note to the extent
related to borrowings for (i) the Company's acquisition of Basis Petroleum, Inc.
or (ii) the redemption of the Company Convertible Preferred Stock.
2.4. Resignations. The Company shall cause all of its, and all the Company
Group entities', employees and directors to resign, not later than the Time of
Distribution, from all boards of directors or similar governing bodies of VRM
or any member of the VRM Group on which they serve, and from all positions as
officers of VRM or any member of the VRM Group in which they serve. VRM shall
cause all of its, and all VRM Group entities', employees and directors to
resign, not later than the Time of Distribution, from all boards of directors
or similar governing bodies of the Company or any member of the Company Group
on which they serve, and from all positions as officers of the Company or any
member of the Company Group in which they serve.
2.5. VRM Certificate of Incorporation and By-Laws; Rights Plan; Name
Change. Prior to the Distribution Date, (a) the VRM Board of Directors shall
(i) approve the Certificate of Incorporation and shall file the same with the
Secretary of State of the State of Delaware and (ii) adopt the By-Laws, and
(b) the Company, as sole stockholder of VRM, shall approve such Certificate of
Incorporation. Prior to the Distribution Date, VRM shall adopt the VRM Rights
Agreement. Prior to the Distribution Date, the Company shall approve as sole
stockholder VRM changing its name to "Valero Energy Corporation" following the
Effective Time and thereafter shall take any and all other action necessary to
be taken by the Company to effect such change.
2.6. Insurance. The Company maintains various forms of insurance coverages
(the "Policies") applicable to both the Retained Business and the VRM Business
and in which VRM and/or other members of the VRM Group are included as
insureds or named insureds. Effective as of the Time of Distribution, all such
Policies (including all prepaid premiums, deposits, refunds, dividends,
accrued claims (excluding claims related solely to the Retained Business) and
other rights therein) shall be assigned or transferred to VRM and the coverage
of the Company and the Retained Subsidiaries under the Policies shall cease
under the Policies as of the Time of Distribution; provided however the
Retained Companies shall receive a cash payment from VRM equivalent to the
prepaid premiums, deposits, refunds and dividends with respect to such
Policies at the Time of Distribution to the extent attributable to expenses
which have been charged to the Retained Business. From and after the Time of
Distribution, the Company and the Retained Subsidiaries shall be responsible
for obtaining and maintaining insurance coverages for their own account.
Insofar as any existing Policies may provide "claims made" or equivalent
coverage, the VRM Group shall, if requested, use reasonable best efforts to
assist or cooperate with the Company in purchasing (to the extent obtainable,
and at the Retained Companies' sole cost and expense) continuing coverages for
claims which are unknown, undiscovered and/or unreported at the Time of
Distribution (i.e. "long tail coverage"). Insofar as any claims made (in the
case of "claims made" or equivalent coverages) or accrued (in the case of
"occurrence" or equivalent coverages) under the Policies prior to the Time of
Distribution relate solely to the Retained Business, VRM shall use its
reasonable best efforts to assure that the Retained Company and the Retained
Subsidiaries can continue to make and/or pursue such claims under the
Policies, or that VRM can continue to make and/or pursue such claims on behalf
of the Retained Companies, notwithstanding assignment or transfer of the
Policies to VRM.
B-10
2.7. Nonassignable Contracts. Anything contained herein to the contrary
notwithstanding, this Agreement shall not constitute an agreement to assign
any lease, license agreement, contract, agreement, sales order, purchase
order, open bid or other commitment or asset if an assignment or attempted
assignment of the same without the consent or waiver of the other party or
parties thereto would constitute a breach thereof or in any way impair the
rights of the VRM Group or the Company Group thereunder. If any such consent
or waiver is not obtained or if an attempted assignment would be ineffective
or would impair either Group's rights under any such lease, license agreement,
contract, agreement, sales order, purchase order, open bid or other commitment
or asset so that the Company or VRM or a Subsidiary of either, as applicable,
would not receive all such rights, then (x) the Company or VRM, as applicable,
shall use reasonable best efforts to provide or cause to be provided to the
other or its Subsidiary, to the extent permitted by law, the benefits of any
such lease, license agreement, contract, agreement, sales order, purchase
order, open bid or other commitment or asset and the Company or VRM, as
applicable, shall promptly pay or cause to be paid to the other or its
Subsidiary when received all moneys received by the Company Group or VRM
Group, as applicable, with respect to any such lease, license agreement,
contract, agreement, sales order, purchase order, open bid or other commitment
or asset and (y) in consideration thereof the other party or its Subsidiary
shall pay, perform and discharge on behalf of such Group all of such Group's
debts, liabilities, obligations and commitments with respect thereto in a
timely manner and in accordance with the terms thereof. In addition, the
Company or VRM, as applicable, shall take such other actions (at the expense
of the other) as may reasonably be requested by the other in order to place
the other, insofar as reasonably possible, in the same position as if such
lease, license agreement, contract, agreement, sales order, purchase order,
open bid or other commitment or asset had been transferred as contemplated
hereby and so all the benefits and burdens relating thereto, including
possession, use, risk of loss, potential for gain and dominion, control and
command, shall inure to the applicable Group. If and when such consents and
approvals are obtained, the transfer of the applicable lease, license
agreement, contract, agreement, sales order, purchase order, open end or other
commitment or asset shall be effected in accordance with the terms of this
Agreement.
2.8. Interim Services Agreement. In connection with the Intercompany
Reorganization the Company and VRM shall enter into an Interim Services
Agreement in form and substance substantially the same as the Interim Services
Agreement attached hereto as Annex A.
2.9. Company Guarantees. (a) Neither VRM nor any member of the VRM Group
shall increase its outstanding obligations in excess of the aggregate amounts
of all obligations under the Company Guarantees as of January 31, 1997, set
forth on Schedule 1.1(a), nor shall VRM or any of the VRM Group renew or enter
into any additional obligations for which the Company would act as guarantor
unless such guarantee by its terms expires as to the Company and its
Subsidiaries without further liability at or prior to the Time of
Distribution. VRM agrees to use its reasonable best efforts to obtain any
amendments to, or consents with respect to, the Company Guarantees that are
necessary in order that the Company be released no later than the Time of
Distribution from any liability or obligation under the Company Guarantees;
provided that if any such release has not been obtained by the Time of
Distribution, VRM shall; (i) pursuant to Section 8.1 provide the Company with
a full indemnity with respect thereto; and (ii) continue to use its best
efforts to obtain such release as soon as practicable thereafter.
(b) VRM shall use its reasonable best efforts to refund the IRBs with
replacement industrial revenue bonds prior to the Time of Distribution, which
refunding shall eliminate the guarantee by the Company of the IRBs. In the
event VRM is unable to so refund the IRBs prior to the Time of Distribution,
for a period of up to 120 days following the Time of Distribution VRM shall
use its reasonable best efforts to so refund the IRBs and shall pursuant to
Section 8.1 provide the Company with a full indemnity with respect to the
Company's guarantee of the IRBs. In the event VRM is unable to so refund the
IRBs by the 120th day following the Time of Distribution, VRM shall prepay the
IRBs in full no later than such 120th day.
2.10. Conduct of Businesses. Except as otherwise provided in this Agreement
from and after December 31, 1996, the VRM Group and the Company Group have
carried on and shall carry on their respective businesses and activities
diligently and in substantially the same manner as they previously have been
carried
B-11
out and neither the VRM Group nor the Company Group shall make or institute
any methods of operation or accounting that vary materially from the methods
used by the VRM Group and the Company Group prior to the date hereof. Since
December 31, 1996 all intercompany transactions, including without limitation
asset transfers and intercompany loans have, and after the date hereof will
until the Time of Distribution be accounted for through the Intercompany Note.
ARTICLE III
MECHANICS OF DISTRIBUTION
3.1. Mechanics of Distribution. The Distribution shall be effected by the
distribution to each holder of record of Company Common Stock, as of the
record date designated for the Distribution by or pursuant to the
authorization of the Board of Directors of the Company (the "Record Date"), of
certificates representing one share of VRM Common Stock and associated VRM
Right for each share of Company Common Stock held by such holder.
3.2. Timing of Distribution. The Board of Directors of the Company shall
formally declare the Distribution and shall authorize the Company to pay it
immediately prior to the Effective Time, subject to the satisfaction or waiver
of the conditions set forth in Article VII, by delivery of certificates for
VRM Common Stock to the Transfer Agent for delivery to the holders entitled
thereto. The Distribution shall be deemed to be effective upon notification by
the Company to the Transfer Agent that the Distribution has been declared and
that the Transfer Agent is authorized to proceed with the distribution of VRM
Common Stock.
ARTICLE IV
OTHER AGREEMENTS
4.1. Use of Names, Trademarks, etc. (a) From and after the Time of
Distribution, VRM shall have all rights, including all intellectual property
rights in and exclusive use of the trademarks, trade names and service marks,
the U.S. federal and Mexican registrations and applications, the Internet
domain registration and exclusive use of the name "Valero", and any and all
other designs, logos and slogans, related to the names "Valero" and "Valero
Energy Corporation" and the "Walking Flame" service xxxx, all as more
particularly set forth on Schedule 4.1, attached hereto, and all other rights
(whether tangible or intangible, statutory, at common law or otherwise) in
connection therewith, whether alone or in combination with one or more other
words or marks in connection therewith. During the period from five business
days after January 31, 1997 to the Time of Distribution the VRM group shall
not affix the name "Valero" or any other design, logo, slogan, name related to
the names "Valero", or "Valero Energy Corporation" or the "Walking Flame"
service xxxx to any new or existing equipment (including without limitation
vehicles), or facilities which are Retained Assets. As promptly as practicable
after the Effective Time, but in any event no later than six months after the
Effective Time, the Company shall cease using the "Valero" name and xxxx or
service xxxx and the "Walking Flame" service xxxx, including without
limitation, on any signs, badges, parking stickers, letterhead, business
cards, invoices and other business forms, telephone directory listings, and
advertising and promotional materials; provided, however, that nothing herein
shall be construed to prohibit, and neither party shall hereafter take any
action which could have the effect of prohibiting, either the Company Group or
the VRM Group from continuing to use, after the Effective Time of the blue-
green color (PMS 315) now utilized by both the Company Group and the VRM Group
on their respective facilities.
4.2. Intercompany Accounts as of the Time of Distribution. From and after
the Time of Distribution all receivables and payables between VRM and any of
its Subsidiaries, on the one hand, and the Company and any Retained
Subsidiaries, on the other hand, which were intercompany receivables or
payables prior to the Time of Distribution and not subject to the intercompany
note shall be handled pursuant to the terms of the applicable Intercompany
Arrangement.
B-12
4.3. Hunting Lease. Subject to any necessary consents, Valero Corporate
Services and Valero Management Company shall assign to VRM its leasehold
interest in the Hunting Leases set forth on Schedule 2.1(b)(ii)(K).
4.4. Airplanes. The terms of ownership of the Airplanes shall be in
accordance with the terms and provisions substantially similar to those set
forth on Schedule 2.1(b)(ii)(J).
4.5. Intercompany Arrangements. All agreements, contracts, arrangements and
commitments, between a member of the VRM Group on the one hand, and a member
of the Company Group on the other hand, entered into prior to the Closing Date
for the purchase or sale of goods or services ("Intercompany Arrangements")
set forth on Schedule 4.5, shall remain in effect as of and after the Time of
Distribution. To the knowledge of the Company, the Intercompany Arrangements
set forth on Schedule 4.5, the Reorganization Agreements and the Interim
Services Agreement collectively comprise all agreements, contracts,
arrangements and commitments between a member of the VRM Group on the one
hand, and a member of the Company Group on the other hand entered into prior
to the date hereof for the purchase or sale of goods or services, except for
such agreements, contracts, arrangements or commitments entered into in the
ordinary course in accordance with past practice which agreements, contracts,
arrangements or commitments will terminate at or before the Time of
Distribution. If following the Time of Distribution any other such agreements,
contracts, arrangements or commitments are identified by either Group, then
(i) if any such agreement, contract, arrangement or commitment is oral, it
shall terminate as of the Time of Distribution and be of no further force and
effect, and (ii) if any such agreement, contract, arrangement or commitment is
in writing, either party thereto may terminate such agreement, contract,
arrangement or commitment upon 45 days written notice to the other party
thereto. Each of the Intercompany Arrangements was based on market terms at
the date of its inception, other than any interest rates provided for therein.
Complete and correct copies of each of the Intercompany Arrangements have been
delivered to the Acquiror.
4.6. Further Assurances. Each of the parties hereto, at its own cost and
expense, promptly shall execute such documents and other instruments and take
such further actions as may be reasonably required or desirable to carry out
the provisions hereof and to consummate the transactions contemplated hereby.
ARTICLE V
TAX AND EMPLOYEE MATTERS
5.1. Tax Sharing; Exclusivity of Tax Sharing Agreement. Prior to the Time of
Distribution, VRM and the Company shall enter into a Tax Sharing Agreement in
substantially the form attached as Annex C to the Merger Agreement which
agreement shall, notwithstanding anything in this Agreement to the contrary,
be the exclusive agreement among the parties hereto with respect to all Tax
matters, including without limitation indemnification of Tax matters.
5.2. Employee Benefits. Prior to the Time of Distribution, VRM and the
Company shall enter into an Employee Benefits Agreement in substantially the
form attached as Annex B to the Merger Agreement.
5.3. Employees. (a) The Company has made available to Acquiror a list of the
employees currently employed exclusively or primarily in the Retained Business
indicating the positions which they now hold, their current rates of
compensation and which employees, if any, are on short or long term
disability, family and medical, military, workers' compensation, or any other
type of leave of absence; and copies of all employee handbooks, and policy and
procedure manuals. The VRM Group shall use its reasonable efforts to see that
the employees on such list shall be transferred to or retained in the Company
Group at the Time of Distribution and such employees as shall be transferred
to or retained in the Company Group at the Time of Distribution shall include
all of the employees necessary to conduct the Retained Business as conducted
in the past. The Company and the Acquiror shall cooperate in good faith to
reach a mutually satisfactory agreement with respect to the employment of
employees whose employment involves both the VRM Group and the Company Group.
B-13
(b) With respect to the Retained Business, neither the Company nor any of
its Subsidiaries is a party to, or is bound by, any collective bargaining
agreement, contract, or other agreement or understanding with a labor union or
labor organization, nor is the Company or any of its Subsidiaries the subject
of any proceeding or organizing activity asserting that it or any such
Subsidiary has committed an unfair labor practice or seeking to compel it or
such Subsidiary to bargain with any labor organization as to wages and
conditions of employment, nor is there any strike, labor dispute, slow down or
stoppage involving the Company or any of its Subsidiaries pending or, to the
knowledge of the Company, threatened that, individually or in the aggregate,
are reasonably likely to have a material adverse effect on the Retained
Business taken as a whole.
5.4. Non-Competition Covenants. (a) From and after Distribution until the
second anniversary of the Closing Date, VRM shall not, and shall cause its
Affiliates and Subsidiaries not to, directly or indirectly, within the
geographic area in which such businesses are currently conducted by the
Company Group (i) engage in marketing natural gas, or marketing and trading
electric power (a "Competitive Business") (provided, that nothing herein shall
be construed to preclude VRM from marketing surplus electric power generated
at its refineries), (iii) sell, assign or otherwise transfer the trademarks,
trade names, service marks, the use of the name "Valero" or any and all other
designs, logos and slogans, related to the names "Valero" and "Valero Energy
Corporation" and the "Walking Flame" service xxxx or any other right set forth
on Schedule 4.1 to a Competitive Business, or (iv) invest in, as principal,
partner or stockholder (otherwise than through the ownership of less than 4%
of the outstanding voting securities of any corporation which are listed on a
national securities exchange or accepted for quotation of The Nasdaq Stock
Market), any person, partnership, firm, corporation or other business entity
which is engaged in a Competitive Business; provided, that nothing herein
shall be construed to preclude VRM from acquiring (or, thereafter, from
operating) a Competitive Business if the operations constituting a Competitive
Business are incidental to a larger acquisition of a business or entity whose
principal operations do not constitute a Competitive Business. From and after
the Distribution, until the second anniversary of the Time of Distribution,
VRM shall not, and shall cause its Affiliates and Subsidiaries not to,
directly or indirectly, solicit (other than through a general solicitation not
directed at a particular individual or group of individuals employed by the
Retained Business) for hire any employee, officer, director, executive or
consultant currently employed primarily in activities related to the Retained
Business or encourage any such employee, officer, director, executive or
consultant to leave such employment. Following the Closing, VRM shall not, and
shall cause its Affiliates and Subsidiaries not to, directly or indirectly,
disclose, divulge, communicate, use to the detriment of Acquiror or the
Retained Business or for the benefit of any other person or persons, any
confidential, proprietary or sensitive information or trade secrets of the
Retained Business, including, without limitation, any and all personnel
information, know-how, customer lists, price lists or other financial and
operating data relating to the Retained Assets and the Retained Business,
unless required to do so by law or legal process. In the event that such
disclosure is required by law or legal process, VRM shall immediately notify
the Company of the existence, terms and circumstances surrounding such
disclosure so that the Company may seek an appropriate protective order prior
to the disclosure of such information.
(b) VRM expressly agrees and understands that the remedy at law for any
breach by it or its Affiliates or Subsidiaries of this Section 5.4 will be
inadequate and that the damages flowing from such breach are not readily
susceptible to being measured in monetary terms. Accordingly, VRM acknowledges
that upon a violation of any provision of this Section 5.4, the Company shall
be entitled to immediate injunctive relief and may obtain a temporary
restraining order restraining any threatened or further breach and the Company
shall be further entitled to require VRM to account for and pay over to the
Company all compensation, profits, monies, accruals, or other benefits derived
or received by VRM during the period of, and resulting from, the breach of any
of the provisions of this Section 5.4. Nothing contained in this Section 5.4
shall be deemed to limit the Company's remedies at law or in equity for any
breach of the provisions of this Section 5.4 by VRM or its Affiliates or
Subsidiaries. Any covenant on VRM's part contained in this Section 5.4 which
may not be specifically enforceable shall nevertheless, if breached, give rise
to a cause of action for monetary damages.
(c) The parties hereto acknowledge that the covenants contained in this
Section 5.4 are independent covenants and shall not be affected by performance
or nonperformance of any other provision of this Agreement. VRM has carefully
considered the nature and extent of the restrictions upon them and their
Affiliates and
B-14
Subsidiaries and the rights and remedies conferred upon the Company under this
Section 5.4, and VRM has independently consulted with their counsel and after
such consultation acknowledges and agrees that the covenants set forth in this
Section 5.4 are reasonable in time and territory, are designed to eliminate
competition that would otherwise be inequitable to the Company and the
Retained Business, are fully required to protect the legitimate interests of
the Company and do not confer a benefit upon the Company disproportionate to
the detriment to VRM and its Affiliates and Subsidiaries. It is the desire and
intent of the parties that the provisions of this Section 5.4 shall be
enforced to the fullest extent permissible under applicable law.
ARTICLE VI
ACCESS TO INFORMATION
6.1. Provision of Records and Information. Prior to the Time of
Distribution: (i) the Company shall transfer to VRM all minute books and other
Information relating to the VRM Business, and (ii) the Company shall transfer
to VRM all Tax Records (as defined in the Tax Sharing Agreement) exclusively
related to the assets and activities of the VRM Group's Pre-Distribution
Periods (as defined in the Tax Sharing Agreement); provided that the
transferor of such documents may retain copies of such documents for its use.
The original minute books, Tax Records and Information shall be the property
of the transferee.
6.2. Access to Information. From and after the Time of Distribution, each of
the Company and VRM shall afford to the other and to the other's
Representatives reasonable access and duplicating rights (at the requesting
party's expense) during normal business hours and upon reasonable advance
notice to each such member all Information within the possession or control of
any member of the Company Group or the VRM Group, as the case may be, relating
to the business, assets or Liabilities as they existed prior to the Time of
Distribution or relating to or arising in connection with the relationship
between the constituent elements of the Groups on or prior to the Time of
Distribution, insofar as such access is reasonably required for a reasonable
business purpose. Without limiting the foregoing, Information may be requested
under this Section 6.2 for audit, accounting, claims, litigation and tax
purposes, as well as for purposes of fulfilling disclosure and reporting
obligations and for performing this Agreement and the other Reorganization
Agreements.
6.3. Production of Witnesses. After the Time of Distribution, each of the
Company and VRM shall, and shall cause each member of the Company Group and
the VRM Group, respectively, to, make available to VRM or any member of the
VRM Group or to the Company or any member of the Company Group, as the case
may be, upon written request and without charge (other than the reimbursement
by the requesting party of reasonable direct expenses incurred in performance
of the obligations described in this Section), such Group's directors,
officers, employees and agents as witnesses to the extent that any such Person
may reasonably be required in connection with any legal, administrative or
other proceedings in which the requesting party may from time to time be
involved and relating to the business of the VRM Group or the Company Group as
it existed prior to the Time of Distribution or relating to or in connection
with the relationship between the constituent elements of the Groups on or
prior to the Time of Distribution, provided that the same shall not
unreasonably interfere with the conduct of business by the Group of which the
request is made.
6.4. Retention of Records. Except as otherwise required by law or agreed to
in writing (including without limitation, in the Tax Sharing Agreement), if
any Information relating to the business, assets or Liabilities of a member of
a Group as they existed prior to the Time of Distribution is retained by a
member of the other Group, each of the Retained Company and VRM shall, and
shall cause the members of the Group of which it is a member to, retain all
such Information in such Group's possession or under its control until such
Information is at least six years old except that if, prior to the expiration
of such period, any member of either Group wishes to destroy or dispose of any
such Information that is at least three years old, prior to destroying or
disposing of any of such Information, (1) VRM or the Retained Company, on
behalf of the member of its Group that is proposing to dispose of or destroy
any such Information, shall provide no less than 30 days' prior written notice
to the other party, specifying the Information proposed to be destroyed or
disposed of, and (2) if, prior to the scheduled date for such destruction or
disposal, the other party requests in writing that any of the Information
proposed to be destroyed or disposed of be delivered to such other party, the
party whose Group is proposing to dispose of
B-15
or destroy such Information promptly shall arrange for the delivery of the
requested Information to a location specified by, and at the expense of, the
requesting party.
6.5. Confidentiality. From and after the Time of Distribution, each of the
Company Group and the VRM Group shall hold, and shall cause its Affiliates and
Representatives to hold, in strict confidence all Information concerning the
other party's Group obtained by it prior to the Time of Distribution or
furnished to it by such other party's Group pursuant to the Reorganization
Agreements and shall not release or disclose such Information to any other
Person, except its Affiliates and Representatives, who shall be bound by the
provisions of this Section 6.5, and each party shall be responsible for a
breach of this Section 6.5 by any of its Affiliates or Representatives;
provided, however, that any member of the Company Group or the VRM Group may
disclose such Information to the extent that (a) disclosure is compelled by
judicial or administrative process or, in the opinion of such Person's
counsel, by other requirements of law, or (b) such Person can show that such
Information was (i) available to such Person on a nonconfidential basis (other
than from a member of the other party's Group) prior to its disclosure by such
Person, (ii) in the public domain through no fault of such Person, (iii)
lawfully acquired by such Person from another source after the time that it
was furnished to such Person by the other party's Group, and not acquired from
such source subject to any confidentiality obligation on the part of such
source, or on the part of the acquiror, known to the acquiror, or (iv) treated
by such Person with the same care as such Person takes to preserve
confidentiality for its own similar Information; provided further that if
either Group is requested or required (by oral questions, interrogatories,
requests for information or documents in legal proceedings, subpoena, civil
investigative demand or other similar process) to disclose any such
Information, such Group shall provide the other Group with prompt written
notice of any such request or requirement so that such other Group may seek a
protective order or other appropriate remedy or waive compliance with the
provisions of this Agreement; if, in the absence of a protective order or
other remedy or the receipt of a waiver the Group which received such request
is, in the written opinion of its counsel, legally compelled to disclose
Information to any tribunal or else stand liable for contempt or suffer other
censure or penalty, such Group may, without liability hereunder, disclose to
such tribunal only that portion of the Information which such counsel advises
is legally required to be disclosed, provided that such Group exercises its
best efforts to preserve the confidentiality of the Information, including,
without limitation, by cooperating with the other Group to obtain an
appropriate protective order or other reliable assurance that confidential
treatment will be accorded the Information by such tribunal.
ARTICLE VII
CONDITIONS
7.1. Conditions to Obligations of the Company. The obligations of the
Company to consummate the Distribution hereunder shall be subject to the
fulfillment of each of the following conditions:
(a) Each of the covenants and provisions in this Agreement required to be
performed or complied with on or before the Time of Distribution shall have
been performed and complied with.
(b) Each condition to the Closing of the Merger Agreement set forth in
Article VIII thereof, other than the condition set forth in Sections 8.1(g)
thereof as to the consummation of the Distribution, shall have been fulfilled
or waived by the party for whose benefit such condition exists.
(c) The Board of Directors of the Company and the Acquiror shall be
satisfied that the Company's surplus would be sufficient to permit, without
violation of Section 170 of the DGCL, the Distribution and shall have given
final approval of the Distribution.
(d) The VRM Common Stock shall have been approved for listing, upon notice
of issuance, on the NYSE.
(e) The Distribution shall have been duly approved by the requisite vote of
the holders of Company Common Stock.
[(f) The No-action Letter shall have been issued and shall be in full force
and effect.]
(g) The Intercompany Reorganization shall have been completed as
contemplated by the terms of this Agreement.
B-16
ARTICLE VIII
INDEMNIFICATION
8.1. Indemnification by VRM. From and after the Effective Time, subject to
the provisions of this Article VIII, VRM, its successors and assigns, shall
indemnify, defend and hold harmless the Retained Company Indemnitees from and
against, and pay or reimburse the Retained Company Indemnitees for, all
Indemnifiable Losses, as incurred:
(i) relating to or arising from the VRM Assets or the VRM Liabilities
(including the failure by VRM or any VRM Company, as applicable, to pay,
perform or otherwise discharge such Liabilities in accordance with their
terms), whether such Indemnifiable Losses relate to or arise from events,
occurrences, actions, omissions, facts or circumstances occurring, existing
or asserted before, at or after the Time of Distribution;
(ii) arising from or based upon any untrue statement of a material fact
contained in any of the Filings, or any omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; but only in each case with respect to information
provided by the Company relating to the VRM Group contained in or omitted
from the Filings;
(iii) relating to the Company Guarantees and the Company's guarantee of
the IRBs
(iv) relating to the warranty deeds described in Sections 2.1(c) and
2.1(d);
(v) relating to any breach or violation of this Agreement by VRM or,
prior to the Time of Distribution, by the Company; any breach by VRM or,
prior to the Time of Distribution; by the Company of any of the
representations, warranties or covenants made in this Agreement, or any
inaccuracy or misrepresentation in the Schedules hereto or in any
certificate or document delivered in accordance with the terms of this
Agreement;
(vi) incurred in connection with the enforcement by any Retained Company
Indemnitees of their rights to be indemnified, defended and held harmless
under this Agreement.
8.2. Indemnification by Retained Company. From and after the Effective Time,
subject to the provisions of this Article VIII, the Retained Company, its
successors and assigns, shall indemnify, defend and hold harmless the VRM
Indemnitees from and against, and pay or reimburse the VRM Indemnitees for,
all Indemnifiable Losses, as incurred:
(i) relating to or arising from the Retained Assets or the Retained
Liabilities (including the failure by the Retained Companies to pay,
perform or otherwise discharge such Liabilities in accordance with their
terms), whether such Indemnifiable Losses relate to or arise from events,
occurrences, actions, omissions, facts or circumstances occurring, existing
or asserted before, at or after the Time of Distribution;
(ii) arising from or based upon any untrue statement of a material fact
contained in any Filings, or any omission to state therein a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
but only in each case with respect to information provided by Acquiror
relating to Acquiror or any of its Subsidiaries contained in or omitted
from the Filings;
(iii) incurred in connection with the enforcement by any VRM Indemnitees
of their rights to be indemnified, defended and held harmless under this
Agreement.
8.3. Procedures Relating to Indemnification. (a) In order for an Indemnitee
to be entitled to any indemnification provided for under this Agreement in
respect of, arising out of or involving a claim made by any Person who is not
an Indemnitee against the Indemnitee (a "Third Party Claim"), such Indemnitee
must notify the party who may become obligated to provide indemnification
hereunder (the "indemnifying party") in
B-17
writing, and in reasonable detail, of the Third Party Claim reasonably
promptly, and in any event within 20 days after receipt by such Indemnitee of
written notice of the Third Party Claim; provided, however, that failure to
give such notification shall not affect the indemnification provided hereunder
except to the extent the indemnifying party shall have been actually
prejudiced as a result of such failure (except that the indemnifying party
shall not be liable for any expenses incurred during the period in which the
Indemnitee failed to give such notice). After any required notification (if
applicable), the Indemnitee shall deliver to the indemnifying party, promptly
after the Indemnitee's receipt thereof, copies of all notices and documents
(including court papers) received by the Indemnitee relating to the Third
Party Claim.
(b) If a Third Party Claim is made against an Indemnitee, the indemnifying
party will be entitled to participate in the defense thereof and, if it so
chooses, to assume the defense thereof (at the expense of the indemnifying
party) with counsel selected by the indemnifying party and reasonably
satisfactory to the Indemnitee. Should the indemnifying party so elect to
assume the defense of a Third Party Claim, the indemnifying party will not be
liable to the Indemnitee for any legal expenses subsequently incurred by the
Indemnitee in connection with the defense thereof; provided, however, that if
the indemnifying party fails to take reasonable steps necessary to defend
diligently such Third Party Claim within 30 calendar days after receiving
written notice from the Indemnitee that the Indemnitee believes the
indemnifying party has failed to take such steps or if the indemnifying party
has not undertaken fully to indemnify the Indemnitee in respect of all
Indemnifiable Losses relating to the matter, the Indemnitee may assume its own
defense, and the Indemnifying Party will be liable for all reasonable costs or
expenses paid or incurred in connection therewith. If the indemnifying party
assumes such defense, the Indemnitee shall have the right to participate in
the defense thereof and to employ counsel, at its own expense, separate from
the counsel employed by the indemnifying party, it being understood that the
indemnifying party shall control such defense. The indemnifying party shall be
liable for the fees and expenses of counsel employed by the Indemnitee for any
period during which the indemnifying party has not assumed the defense thereof
(other than during any period in which the Indemnitee shall have failed to
give notice of the Third Party Claim as provided above). If the indemnifying
party chooses to defend or prosecute a Third Party Claim, all the parties
hereto shall cooperate in the defense or prosecution thereof, which
cooperation shall include the retention in accordance with this Agreement and
(upon the indemnifying party's request) the provision to the indemnifying
party of records and information which are reasonably relevant to such Third
Party Claim, and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder. If the indemnifying party chooses to defend or prosecute any Third
Party Claim, the Indemnitee will agree to any settlement, compromise or
discharge of such Third Party Claim which the indemnifying party may recommend
and which by its terms obligates the indemnifying party to pay the full amount
of liability in connection with such Third Party Claim; provided, however,
that, without the Indemnitee's consent, the indemnifying party shall not
consent to entry of any judgment or enter into any settlement that provides
for injunctive or other nonmonetary relief affecting the Indemnitee, that does
not include as an unconditional term thereof the giving by each claimant or
plaintiff to such Indemnitee of a release from all liability with respect to
such claim. Whether or not the indemnifying party shall have assumed the
defense of a Third Party Claim, the Indemnitee shall not admit any liability
with respect to, or settle, compromise or discharge, such Third Party Claim
without the indemnifying party's prior written consent (which consent shall
not be unreasonably withheld).
(c) In order for an Indemnitee to be entitled to any indemnification
provided for under this Agreement in respect of a claim that does not involve
a Third Party Claim, the Indemnitee shall deliver notice of such claim with
reasonable promptness to the indemnifying party. The failure by any Indemnitee
so to notify the indemnifying party shall not relieve the indemnifying party
from any liability which it may have to such Indemnitee under this Agreement,
except to the extent that the indemnifying party shall have been actually
prejudiced by such failure. If the indemnifying party has within 30 business
days from the receipt of such notice disputed its liability with respect to
such claim, as provided above, the indemnifying party and the Indemnitee shall
proceed in good faith to negotiate a resolution of such dispute and, if not
resolved through negotiations, such dispute shall be resolved by litigation in
an appropriate court of competent jurisdiction.
B-18
8.4. Certain Limitations. (a) The amount of any Indemnifiable Losses or
other liability for which indemnification is provided under this Agreement
shall be net of any amounts actually recovered by the Indemnitee from third
parties (including, without limitation, amounts actually recovered under
insurance policies) with respect to such Indemnifiable Losses or other
liability. Any indemnifying party hereunder shall be subrogated to the rights
of the Indemnitee upon payment in full of the amount of the relevant
Indemnifiable Loss. An insurer who would otherwise be obligated to pay any
claim shall not be relieved of the responsibility with respect thereto or,
solely by virtue of the indemnification provisions hereof, have any
subrogation rights with respect thereto. If any Indemnitee recovers an amount
from a third party in respect of an Indemnifiable Loss for which
indemnification is provided in this Agreement after the full amount of such
Indemnifiable Loss has been paid by an indemnifying party or after an
indemnifying party has made a partial payment of such Indemnifiable Loss and
the amount received from the third party exceeds the remaining unpaid balance
of such Indemnifiable Loss, then the Indemnitee shall promptly remit to the
indemnifying party the excess (if any) of (A) the sum of the amount
theretofore paid by the indemnifying party in respect of such Indemnifiable
Loss plus the amount received from the third party in respect thereof, less
(B) the full amount of such Indemnifiable Loss or other liability.
(b) The amount of any Indemnifiable Losses or other Liability for which
indemnification is provided under this Agreement or any other amounts payable
or reimbursable by one party to another under this Agreement shall be
increased or decreased to take account of any net Tax cost or any net Tax
benefit in a manner analogous to that described in the Tax Sharing Agreement.
8.5. Express Negligence. INSOFAR AS TEXAS LAW MAY APPLY, THE PARTIES
EXPRESSLY INTEND AND AGREE THAT THE INDEMNIFICATION OBLIGATIONS OF EACH SET
FORTH IN SECTIONS 8.1 AND 8.2 SHALL EXTEND TO AND INCLUDE, WITHOUT LIMITATION,
ACTIONS FOR INJURIES OR DAMAGES TO ANY PERSON, PARTY OR PROPERTY THAT WERE
CAUSED IN WHOLE OR IN PART BY THE INDEMNITEE'S OWN ACTS OR OMISSIONS
(SPECIFICALLY INCLUDING, BUT NOT LIMITED TO, NEGLIGENCE AND ACTS OR OMISSIONS
GIVING RISE TO STRICT LIABILITY).
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1. Modification or Amendment. The parties hereto may modify or amend this
Agreement only by written agreement executed and delivered by duly authorized
officers of the respective parties, and the written consent of the Acquiror
thereto.
9.2. Waiver; Remedies. The conditions to the Company's obligation to
consummate the Distribution are for the benefit of the Company and the
Acquiror and may be waived in whole or in part as may be agreed by the Company
and the Acquiror in writing and to the extent permitted by applicable law. No
delay on the part of any party hereto in exercising any right, power or
privilege hereunder will operate as a waiver thereof, nor will any waiver on
the part of any party hereto of any right, power or privilege hereunder
operate as a waiver of any other right, power or privilege hereunder, nor will
any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder. Unless otherwise provided, the rights and
remedies herein provided are cumulative and are not exclusive of any rights or
remedies which the parties may otherwise have at law or in equity.
9.3. Counterparts. For the convenience of the parties, this Agreement may be
executed in any number of separate counterparts each such counterpart being
deemed to be an original instrument, and all such counterparts shall together
constitute the same agreement.
9.4. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware applicable to
contracts made and to be performed entirely within such State, without regard
to the conflicts of law principles of such State.
B-19
9.5. Notices. Any notice, request, instruction or other communication to be
given hereunder by any party to any other party shall be in writing and shall
be deemed to have been duly given (i) on the date of delivery if delivered
personally, or by telecopy or telefacsimile, upon confirmation of receipt,
(ii) on the first business day following the date of dispatch if delivered by
Federal Express or other nationally reputable next-day courier service, or
(iii) on the third business day following the date of mailing if delivered by
registered or certified mail, return receipt requested, postage prepaid. All
notices hereunder shall be delivered as set forth below, or pursuant to such
other instructions as may be designated in writing by the party to receive
such notice:
(a) If to VRM:
Valero Refining and Marketing Company 000 XxXxxxxxxx Xxxxxx Xxx
Xxxxxxx, Xxxxx 00000 Attention: General Counsel Telecopy: (210) 246-
2354
with copies to:
Wachtell, Lipton, Xxxxx & Xxxx 00 Xxxx 00xx Xxxxxx Xxx Xxxx, Xxx Xxxx
00000 Attention: Xxxxxx X. Xxxxxxx, Esq. Telecopy: (000) 000-0000
(b) If to the Company:
Valero Energy Corporation c/o PG&E Corporation 00 Xxxxx Xxxxxx Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000 Attention: General Counsel Telecopy: (415)
973-8083
with copies to:
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx, LLP 000 Xxxxxxx Xxxxxx Xxx Xxxxxxxxx,
Xxxxxxxxxx 00000 Attention: Xxxxxx X. Xxx, Esq. Telecopy: (415) 773-
5759
9.6. Entire Agreement. The Reorganization Agreements (including the Annexes
and Schedules thereto) and the Interim Services Agreement (including the
Annexes and Schedules thereto) constitute the entire agreement, and supersede
all other prior agreements, understandings, representations and warranties,
both written and oral, among the parties, with respect to the subject matter
hereof and thereof.
9.7. Certain Obligations. Whenever this Agreement requires any of the
Subsidiaries of any party to take any action, this Agreement will be deemed to
include an undertaking on the part of such party to cause such Subsidiary to
take such action.
9.8. Assignment. No party to this Agreement shall convey, assign or
otherwise transfer any of its rights or obligations under this Agreement
without the express written consent of the other party hereto, which shall not
be unreasonably withheld or delayed, except that the Company may assign its
rights hereunder to an Affiliate or to a successor to all or substantially all
of the business of the Company as conducted at the time of the Intercompany
Reorganization.
B-20
9.9. Captions. The Article, Section and paragraph captions herein are for
convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
9.10. Specific Performance. In the event of any actual or threatened default
in, or breach of, any of the terms, conditions and provisions of this
Agreement, the party or parties who are or are to be thereby aggrieved shall
have the right of specific performance and injunctive relief giving effect to
its or their rights under this Agreement, in addition to any and all other
rights and remedies at law or in equity, and all such rights and remedies
shall be cumulative. The parties agree that the remedies at law for any breach
or threatened breach, including monetary damages, are inadequate compensation
for any loss and that any defense in any action for specific performance that
a remedy at law would be adequate is waived.
9.11. Severability. If any provision of this Agreement or the application
thereof to any person or circumstance is determined by a court of competent
jurisdiction to be invalid, void or unenforceable, the remaining provisions
hereof, or the application of such provision to persons or circumstances other
than those as to which it has been held invalid or unenforceable, shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated thereby, so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner adverse to any
party. Upon any such determination, the parties shall negotiate in good faith
in an effort to agree upon a suitable and equitable substitute provision to
effect the original intent of the parties.
9.12. Third Party Beneficiaries. Acquiror shall be a third party beneficiary
of this Agreement. Nothing contained in this Agreement is intended to confer
upon any Person or entity other than the parties hereto and their respective
successors and permitted assigns (other than Acquiror), any benefit, right or
remedies under or by reason of this Agreement, except that the provisions of
Article VIII hereof shall inure to the benefit of Indemnitees.
9.13. Schedules. All Schedules attached hereto or referred to herein are
hereby incorporated in and made a part of this Agreement as if set forth in
full herein. Matters reflected on the Schedules are not necessarily limited to
matters required by this Agreement to be reflected on such Schedules. Such
additional matters are set forth for informational purposes only and do not
necessarily include other matters of a similar nature. Capitalized terms used
in any Schedule but not otherwise defined therein shall have the respective
meanings assigned to such terms in this Agreement.
9.14. Tax Sharing Agreement. With respect to Tax matters, if there is a
conflict between this Agreement and the Tax Sharing Agreement the Tax Sharing
Agreement shall control.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of the parties hereto as of the date first
hereinabove written.
VALERO ENERGY CORPORATION
By:
----------------------------------
Name:
Title:
VALERO REFINING AND MARKETING COMPANY
By:
----------------------------------
Name:
Title:
B-21
