Document mqmE0d0vb3p77OLBVd25d6J70

rCONTOBMED COFTi AGREEMENT dated as of August 28, 1969 BETWEEN UNION PACIFIC PETROLEUM CORPORATION (a Utah corporation) AND CELANESE CORPORATION (a Delaware corporation) Providing for the acquisition by Union Pacific Petroleum Corporation of all of the issued and outstanding capital stock of Champlin Petroleum Company and Pontiac Refining Corp. AGREEMENT dated as of the 28th day of August, 1969, between Celanese Corporation, a Delaware corporation (hereinafter called "Seller") and Union Pacific Petroleum Corporation, a Utah corporation (hereinafter called "Buyer").. WITNESSETH : Whereas, the Seller owns all of the issued and outstanding shares of capital stock of Champlin Petroleum Company, a Delaware corporation (hereinafter called "Champlin") and Pontiac Refining Corp., a Texas corporation (hereinafter called "Pontiac") (Champlin and Pontiac being hereinafter collectively called the "Companies") ; and Whereas, the Buyer desires to purchase from the Seller, and the Seller desires to sell to the Buyer, upon the terms and conditions herein set forth, all of the Stock (as hereinafter defined) of the Companies. Now, Therefore, the Seller and the Buyer, in consideration of the mutual, covenants, agreements and provisions set forth in this Agreement, hereby agree as follows: 1. Sale and Purchase of Stock. On the terms and subject to the conditions set forth in this Agreement, the Seller shall sell, assign, transfer, and deliver to the Buyer, at the Closing hereunder on the Closing Date (as defined in Section 5 hereof), and the Buyer shall purchase and acquire from the Seller at such Closing, all of the Stock of the Companies. 2. Seller's Representations and Warranties. The Seller hereby represents and warrants as follows: 2.1. Organization and Corporate Authority, (a) The Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and has all necessary power and authority, corporate and otherwise, to execute and deliver this Agreement and to perform its obligations hereunder. The Seller is not subject to any restriction contained in any charter, by-law, mortgage, lien, lease, agreement, instrument, order, statute, regulation, judgment or decree, or any other restriction of any kind or character, which would prevent the consummation of the transactions contemplated in this Agree ment. The execution and delivery and performance of this Agreement and the sale and purchase contem plated herein have been duly authorized by the Seller by all requisite corporate action and the Seller has delivered to Buyer true and complete copies of the resolutions adopted by its Board of Directors reflecting the grant of authority to execute, deliver and perform this Agreement, such copies having been certified by Seller's Secretary. - (b) Champlin and Pontiac are each duly organized and validly existing corporations in good standing under the laws of their respective states of incorporation and each has full power and authority, corporate and otherwise, to own or lease its properties and conduct its business as now being conducted, and is qualified to do business in each jurisdiction where the character of the properties owned or leased by it or the nature of the business transacted by it makes such qualification necessary. 2.2. Subsidiaries. The Companies have no subsidiaries other than the subsidiaries named below (hereinafter called "Subsidiaries"), each of which is wholly owned by Champlin: Subsidiary State of Incorporation Cycler Oil Company Harbor Service Stations, Inc. Midland Gasoline Corporation Star Oil Company, Inc. Missouri Oklahoma Texas North Dakota Each Subsidiary is duly organized, validiy existing and in good standing under the laws of its state of incorporation and each corporation has full power and authority, corporate and otherwise, to own or lease its properties and conduct its business as now being conducted, and is qualified to do business in each jurisdiction where the character of the properties owned or leased by it or the nature of the business transacted by it makes such qualification necessary. 2.3. Capitalization, (a) Champlin has an authorized capital stock of 50,000 shares of common stock, of a par value of $100 per share, of which 44,S47 shares are validly issued and outstanding, fully paid and non-assessable. Pontiac has an authorized capital stock of 140 shares of Class A common stock, of a par value of $10 per share, and 60 shares of Class B common stock, of a par value of $10 per share of which, 140 Class A and 60 Class B shares are validly issued and outstanding, fully paid and nonassessable (all of the issued and outstanding capital stock of Champlin and Pontiac being herein collectively called the "Stock"). (b) There are no outstanding subscriptions or other agreements, options, warrants or similar rights obligating either of the Companies or any Subsidiary to issue any additional shares of its capital stock of any class or classes. 2.4. Ownership of Shares. The Seller has valid title to all the Stock, and Champlin has valid title to all of the issued and outstanding capital stock of each of the Subsidiaries, free and clear of any and all claims, liens or encumbrances. > _ 2.5. Financial Statements. The Seller has delivered to the Buyer copies of the following financial statements (attached hereto as Exhibit I) prepared, and certified to (except in the case of the Balance Sheets dated as of June 30, 1969) by independent certified public accountants, all of which have been prepared in accordance with generally accepted accounting principles consistently followed throughout the periods indicated and, except as described in footnote 2 to the Interim Balance Sheet (as hereinafter defined), consistent with the principles followed in each respective preceding period: (a) Balance Sheets. Balance sheet of Pontiac, Consolidated Balance Sheet of Champlin and Subsidiaries, and Combined Balance Sheet of the Companies and Subsidiaries as of June 30, 1969, which present true and complete statements, as of said date, of the financial position of Pontiac and of Champlin and Subsidiaries and of the Companies and Subsidiaries respectively; and (b) Statements of Income and Retained Income. Statements of Income and Retained Income of Pontiac for the seven months ending December 31, 1967 and for the calendar year 1968 and Consolidated Income and Retained Income of Champlin and Subsidiaries for the calendar years 1964 through 1968, which present fairly for the periods covered thereby, the results of operations of Pontiac and of Champlin and Subsidiaries, respectively. 2.6. Absence of Undisclosed Liabilities. Except as and to the extent reflected or reserved against in the Balance Sheets, dated as of June 30, 1969, referred to in Section 2.5(a) (hereinafter collectively called the Interim Balance Sheets), the Companies and Subsidiaries, (i) had no liabilities or obligations secured or unsecured (whether accrued, absolute, contingent or otherwise) including, without limitation, any tax liabilities (see Section 2.7), any liabilities as guarantor or otherwise (see Section 2.18), any liabilities in respect of litigation (see Section 2.19), in respect.of or measured by income for any period prior to the close of business on June 30, 1969, or arising out of transactions entered into, or any state of facts existing, prior thereto; and (ii) had not, as of June 30, 1969, received payment for any oil, gas or other hydrocarbons sold from their properties which had not been actually delivered by said date (other than those products of Pontiac which were treated on the books of Pontiac as having been sold to Gulf Oil Company although not having been physically removed from the Pontiac premises) and were, as of June 30, 1969, under no obligation in respect of any production or transaction which occurred prior to the close of business on said date to make any payment as a working interest owner or otherwise, in respect of production costs or in the nature of a royalty, overriding royalty, carve-out or other production payment, net profit or other similar interest under any joint operating or unit agreement or other agreement, whether or not covering the properties of the Companies and the Subsidiaries, except for obligations to make such payments as, when taken in the aggregate, were not substantial in amount and did not materially adversely affect their financial position. 2 ^ a" ^ or CK: iU fil< ;r>i ca th ^ ^ at. ^ ^ o: p p< c $ ^ Y c t i t c I r : < < ' 1 2J. Tax Liabilities. Except as and to the extent reflected or reserved against in the Interim Balance Sheets, the Companies and Subsidiaries, as of June 30, 1969, had no liability (whether accrued, absolute, contingent or otherwise) to the Seller or to any taxing authority for the payment of any United States or Canadian, federal, state, provincial, county or local tax (whether or not disputed or theretofore assessed and whether or not in respect of or measured by income or revenues or real or personal property or sales or use) in respect of the period ended on June 30, 1969 and for all years prior thereto, or arising out of transactions entered into, or any state of facts existing on or prior to June 30, 1969; and the pro visions made for taxes in the Interim Balance Sheets are sufficient for the payment of any and all such taxes. The United States Federal income tax returns of Champlin and Subsidiaries have been filed on a consolidated basis with those of the Seller for the calendar tax years of 1965 through and including 1968, and the United States Federal income tax returns of Pontiac have been filed on a consolidated basis with those of the Seller for the taxable year September through December, 1967 and the calendar year 1968. None of the aforesaid consolidated United States Federal income tax returns of the Seller have been audited by the Federal Internal Revenue Service. The Federal income tax returns of Champlin and Subsidiaries through and including the calendar year 1964 and the Federal income tax returns of Pontiac through and including the taxable year ending August 31, 1967 have been audited by the Federal Internal Revenue Service and all deficiencies proposed as a result of such audits have been paid and settled. 2.8. Accounts Receivable. The Accounts Receivable, Notes Receivable and Advances reflected on the Interim Balance Sheets either have been collected or paid or are good and collectible in the book amounts thereof, less the amount of the allowance for doubtful accounts as therein reflected. 2.9. Product Inventory. The inventory shown on the Interim Balance Sheets consists of products of a quality and quantity usable or salable in the normal course of business; the value of all products of below standard quality had then been written down to realizable market value or adequate reserves provided therefor; and the values at which such inventory is carried reflect the normal inventory valuation policy of the Companies and Subsidiaries. 2.10. Materials and Supplies. The materials and supplies shown on the Interim Balance Sheets consist of items of. a quality and quantity usable in the normal course of business and are reasonably suitable and fit for the purposes for which they were purchased. 2.11. `Prepaid Expenses. The prepaid expenses shown on the Interim Balance Sheets reflect payment of expenses necessary and proper in connection with the normal course of business. 2.12. Real Property; Hydrocarbon Reserves; Leaseholds. The Companies and the Subsidiaries have valid title in fee, or a valid leasehold interest, in the case of leasehold property, in all real properties on which are situated the refineries, natural gas processing plants, products pipeline terminals and office buildings described in Exhibit II hereto and to all buildings, improvements and fixtures thereon and are in lawful possession of all other real property used in the conduct of their respective businesses and of all buildings, improvements and fixtures thereon, all of which title and possessory interests are free and clear of any and all claims, liens and encumbrances, except' (i) as otherwise reflected in the Interim Balance Sheets, (ii) the lien of current taxes not yet due and payable, (iii) covenants, restrictions, reservations, easements and agreements contained in instruments of record affecting the properties, and zoning laws, ordinances, rules and regulations, if any, none of which materially adversely affects the use of the properties for the purposes for which they are now employed, and (iv) such other. claims,_lie.ns or encumbrances, if any, as are not in respect of the_ particular property substantial in character, amount or extent,"and do not materially detract from the value or interfere with the present or future use of^ the property subject thereto or affected thereby, or otherwise materially impair business operations. Neither the Seller nor the Companies nor any Subsidiary has received notice ot violation of any applicable zoning regulation, ordinance or other law, order, regulation or requirement relating to its operations or its owned or leased properties which would materially adversely affect the use of such properties for the purposes for which they are now employed and which has not been cured or otherwise satisfied and, so far as known to the Seller or the Companies or the Subsidiaries, there are no such violations and all 3 plants and other buildings conform with all applicable ordinances, codes and regulations. All of the hydrocarbon reserves,shown on Exhibit III hereto are net proven recoverable reserves and the Com panies and the Subsidiaries have the right to recover all such reserves tree and clear of any and all claims, liens and encumbrances, and there are no laws, ordinances, restrictions or rights of others (except for Federal and state proration regulations which may from time to time be in force and effect) which prevent the recovery of such reserves. All natural gas liquids from process acreage which are included in the hydrocarbon reserves shown on Exhibit III hereto are based on gas processing agree ments all of which are currently in full force and effect and valid and enforceable to their respective expiration dates. Neither the Seller nor the Companies has any knowledge of facts with respect to the foreseeable cancellation or non-renewal of any such gas processing agreement which involves any sub stantial amount of such natural gas liquids. All leases pursuant to which the Companies or any Subsidiary leases from others any real property or interest therein, are valid and enforceable to their respective lease expiration dates and said leases are not in default and are held free and clear of any and all claims, liens and encumbrances except as aforesaid. 2.13. Refineries and Processing Plants. Champlin owns and operates a crude oil refinery located at Enid, Oklahoma, and owns, alone or jointly with other interest owners; and operates, directly or through a subsidiary corporation, natural gas processing plants located at or near Enid, Oklahoma; Oklahoma City, Oklahoma; Carthage, Texas; Bishop, Texas; and Conroe, Texas. Pontiac owns and operates a crude oil refinery located at Corpus Christi, Texas. All of said refineries and natural gas processing plants are in good operating condition and there is no significant deferred maintenance with respect thereto. 2.14. Personal and Intangible Property. The Companies and the Subsidiaries own all of their personal and intangible property, including their machinery, rolling stock, motor vehicles and securities, free and clear of any and all claims, liens and encumbrances. 2.15. Easements and Rights-of-Way. The interests of the Companies and the Subsidiaries in their rights-of-way, easements, grants, profits-a-prendre, permits, consents and licenses, granted or issued by others than governmental political subdivisions or regulatory authorities for the construction, maintenance and operation of gathering lines, pipelines, distribution mains, service mains, meter stations, distribution stations, servicecenters and other facilities have been perfected to the extent permitted by law and are valid and enforceable. v 2.16. Pension Liability. The Companies and the Subsidiaries had, as of June 30, 1969, and in -respect of all service in employment prior thereto, (i) unfunded past service liability computed in accord ance with generally accepted actuarial standards in respect of all pension or other retirement benefit plans or any other liability under any post-retirement group life insurance plan of not in excess of $4,000,000 and (ii) funded vested benefits of $12,200,000 in respect of all such pension or other retirement benefit plans. 2.17. Accounts Payable. The accounts payable shown on the Interim Balance Sheets`represent indebtedness of the Companies and Subsidiaries incurred in connection with the acquisition of materials and supplies and the performance of services all in the ordinary course of business. .o'* 2.18. No Liabilities as Guarantor or Otherwise. Except as and to the extent reflected or reserved against in the Interim Balance Sheets, neither of the Companies nor any Subsidiary is directly or indirectly liable upon or with respect to (by discount, repurchase agreement or otherwise), or obligated in any other way to provide funds in respect of or to guarantee or assume, any debt, dividend or other obligation of any person, corporation, association, partnership or other entity, except endorsements made in the ordinary course of business in connection with the deposit of items for collection. 2.19. Litigation. There are no lawsuits, proceedings or governmental investigations pending, or threatened, against or relating to either of the Companies or any Subsidiary or the properties or business of any such company which will result in liability on the part of the Companies and any Subsidiaries in an aggregate amount in excess of the aggregate amount reflected or reserved against in the Interim Balance 4 Sheets. Neither of the Companies nor any Subsidiary is a party to or subject to the provisions of any order, writ, injunction or decree of any court or federal, state, municipal or other governmental depart ment, commission, board, bureau, agency or instrumentality, domestic or foreign, which would materially adversely affect their financial position or materially impair their operations. 2.20. Labor Matters. There are no strikes or work stoppages in effect or threatened against the Companies or any Subsidiary, nor have any such strikes or work stoppages been enjoined by any current order, writ, injunction or decree of any court or federal, state, municipal or other governmental agency or instrumentality. 2.21. Patents and Trademarks. All patents, patent applications therefor, tradenames, copyrights, copyright registrations and application therefor, presently owned, in whole or in part, by either of the Companies or any of the Subsidiaries are valid and in good standing. 222. Enforceability and Compliance with Terms of Material Contracts. The material contracts and agreements referred to in Section 2.24(b) hereof are valid and enforceable to their respective expira tion dates and the Companies and the Subsidiaries are not in default under the terms of any such material contract or agreement. 2.23. Minute Books. The minute books of each of the Companies and of the Subsidiaries contain the minutes of all meetings of the Directors and stockholders of each such company. 2.24. Material Data. The Seller has delivered to the Buyer the following documents each of which is true and complete: (a) The Charter and By-Laws of each of the Companies and the Subsidiaries; (b) A list and summary description of every material contract or agreement to which either of the Companies or any Subsidiary is a party or has succeeded to a party by assumption or assignment or in which any such company has a beneficial interest. Without limiting the meaning of the term "material", any contract or agreement shall, for the purposes of this Section, be deemed material (i) if not made in the ordinary course of business, or (ii) if the business of either of the Companies or any Subsidiary is substantially dependent upon it, as in the case of continuing con tracts to sell the major part of production, or licenses to use processes, patents or formulas upon which business depends to a material degree, or (iii) if constituting a management contract or bonus or profit-sharing plan, contract or arrangement, or (iv) if any Director or officer of the Seller, either of the Companies, or any Subsidiary or any associate of any such Director or officer is directly or indirectly a party thereto, or (v) if it is a mortgage, deed of trust, pledge, loan, credit, or other borrowing agreement or other obligation for or relating to borrowed money, or (vi) is, in respect of the amount of such contract or agreement, or its importance to the business of the Companies and the Subsidiaries, material and the terms and conditions are of a nature of which the Buyer reasonably should be informed. [As used in clause (iv) hereinabove with respect to any such Director or officer, "associate" shall mean any member of his family, or any corporation, (other than a corporation whose securities are publicly traded) partnership, trust or other entity in- which he has an interest or is a Director, officer, partner or trustee.] (c) A list reflecting the names and current annual salary rates or other fee arrangements of all directors, officers, employees and consultants or agents of the Companies and each Subsidiary whose current annual salary rate or fee from the Companies and each Subsidiary is Twenty-Five Thousand Dollars ($25,000) or more, together with a summary of the bonuses, additional compensation and other like benefits, if any, paid or payable to such persons for the calendar year 1969; (d) A statement summarizing (i) with respect to each pension undertaking for the employees of the Companies and for the employees of each Subsidiary, both salaried and non-salaried, including any formal or informal plan, the actuarial assumptions employed with respect to determining the past and normal service costs of each undertaking, the extent to which such undertaking is funded and the nature of each such funding arrangement, if any, and (ii) any other undertaking with respect to such employees pursuant to any retirement life insurance, bonus, profit-sharing, retirement or 5 other employee benefit, arrangement or plan; and a copy of each actuarial report prepared by or for the Companies and Subsidiaries or any one of them and used or proposed to be used in determining past and normal service costs for each such undertaking. (e) A list of every lease with the United States covering Federal lands leased by either of the Companies or any Subsidiary under the Federal Mineral Leasing Act, reflecting, by the categories of minerals set forth in said Act, the States in which such leases are held and the total acreage in each. (f) A list and summary description of (i) the crude oil charge capacity of the refineries of the Companies located at Enid, Oklahoma and Corpus Christi, Texas, and (ii) the principal refining units and processes in use at such refineries and a detailed description of the types and quantity of each type of refined products so produced during the year 1968 and the six-month period ending June 30,1969. / "J 2.25. Absence of Certain Changes or Events. Since June 30, 1969, there has not been: 1 (a) Financial Condition. Any material adverse change in the financial position, or restilts of operations or employment of key personnel of either of the Companies or any Subsidiary; or, other than changes in the ordinary course of business not materially adverse, any damage, destruction, loss or seizure, whether as the result of an act of the Seller or from causes beyond its reasonable control, including but not limited to acts of God, acts of government such as embarkation, priorities and allocations, war and war conditions, riot or civil commotion, sabotage, flood or explosion, whether or not covered by insurance, or any taking of property by condemnation or eminent domain. (b) Capital Stock, Options, Dividends. Any change in the authorized or issued capital stock of the Companies or of any Subsidiary, any acceptance of any subscription or any other agreement or any grant of any option warrant or similar right, in respect of the issuance of any additional shares of capital stock of the Companies or any Subsidiary or any sale or change in ownership of any shares of the capital stock of the Companies or any Subsidiary, or any declaration, setting aside or payment of any dividend or making of any other distribution or payment in respect of the capital stock of the Companies or any Subsidiary, except for dividends declared and/or paid which, when added to dividends declared and/or paid prior to June 30, 1969, do not exceed in the aggregate $15,350,000 in dividends declared and/or paid for the calendar year 1969. (c) Mortgage or Pledge of Assets; Incurring of Indebtedness. Any mortgage or pledge of any of the properties or assets of either of the Companies or any Subsidiary other than in the ordinary course of business and not substantial in amount or such as may be required to comply with indentures or other agreements in force on the date of this Agreement, or any borrowing or other incurring of indebtedness by any such company other than in the ordinary course of business and maturing not more than one year from.the date of the borrowing or incurring of the indebtedness; and (d) Employee Benefit Plans and Certain Salaries. Any bonus, stock option, profit sharing, pension, retirement, or other similar arrangement or plan instituted by either of the Companies or any Subsidiary, or any change in any of such companies' bonus and pension plans as in effect on June 30, 1969 or any increase in the compensation payable or to become payable to any officer, employee or agent whose total compensation from the Companies and each Subsidiary was then at an annual rate of more than Twenty-Five Thousand Dollars ($25,000), or any bonus, percentage of compensation, or other like benefit accrued to, or for the credit of, any officer, employee or agent of any such company, or any bonus, pension, retirement or similar payment or arrangement made or agreed to by any of such companies other than pursuant to any bonus or pension plan as in effect on June 30, 1969. 3. Beyer's Representations and Warranties. The Buyer hereby represents and warrants as follows: 3.1. Organization and Good Standing. The Buyer is a wholly-owned subsidiary of Union Pacific Railroad Company and is a corporation duly organized, validly existing and in good standing under the laws of the State of Utah. The Buyer is not subject to any restriction contained in any charter, by-law, mortgage, lien, lease, agreement, instrument, order, statute, regulation, judgement or decree, or any other JT' restriction of any kind or character which would prevent the consummation of the transactions contem plated in this Agreement. The Buyer has all necessary power and authority, corporate and otherwise, to execute and deliver this Agreement and to perform its obligations hereunder. The execution and delivery and performance of this Agreement and the purchase contemplated herein, have been duly authorized by all requisite corporate action, and the Buyer has delivered to the Seller true and complete copies of the resolutions of its Board of Directors reflecting the grant of authority to execute, deliver and perform this Agreement, such copies having been certified by the Buyer's Secretary. 32. Acquisition of Stock for Investment. The Buyer proposes to acquire the Stock of the Com panies for investment and not with a view to, or for sale in connection with, the distribution thereof. 4. Conduct of Business Pending the Closing. Pending the Closing hereunder, except as otherwise consented to by Buyer in writing, Seller covenants, warrants and agrees that: 4.1. Business In Ordinary Course. Each of the Companies and the Subsidiaries shall refrain from (i) engaging in transactions other than in the ordinary course of business; (ii) entering into any agree s ment for the sale of any material part of their properties or assets including but not limited to the sale of any materially significant production payment; (iii) drilling any new wells or deepening or recom l, A pleting or making any substantial workover of any existing well involving any expenditure or abandoning iT any significant producing well or leasehold equipment currently used thereon, except to the extent any such action is provided for under the 1969 Exploration and Development Program of the Companies, a copy of which has heretofore been delivered by the Seller to the Buyer; (iv) waiving, compromising or ck :nt settling any substantial right or claim pertaining to such properties or assets having substantial value. aal 4.2. Certificate of Incorporation and By-Laws. No change shall be made in the Certificate of of Incorporation or By-Laws (jf any of the Companies or Subsidiaries. ing 4.3. Capital Stock, Options, Dividends. No change in the capital stock of the Companies or any th<* Subsidiaries or option grant or change in ownership or dividend or other distribution, all as hereinabove specified in Section 2.25(b), shall have been made or occurred, except that in respect of dividends, the g-a^O Seller shall be entitled to receive Fifteen Million Three Hundred Fifty Thousand Dollars ($15,350,000) ;e of l the mply ig or in aggregate dividends from the Companies during the calendar year 1969. 4.4. Mortgage or Pledge of Assets; Incurring of Indebtedness. No mortgage or pledge or bor rowing or other incurring of indebtedness all as hereinbefore specified in Section 2.25(c) shall be made. ,s and i 4.5. Employee Benefit Plans and Certain Salaries. No employee benefit arrangement or plan, >; and i all as hereinbefore specified in Section 2.25(d), shall be instituted or changed or compensation increased taring, ' or accrued or agreed to. There shall be no increase in the compensation payable or to become payable lies or to any officer, employee or agent of the Companies or Subsidiaries whose compensation from the Com effect panies and each Subsidiary on June 30, 1969 was at an annual rate of more than Twenty-Five Thousand officer, Dollars ($25,000). n. at an 4.6. Preservation of Business Organisation and Goodwill. The Companies and Subsidiaries shall tage of r agent use their best efforts to preserve their business organizations intact, to keep available to the Buyer the services of their present officers and employees; to maintain and keep their properties in good condition it made in effect and working order, to preserve all geological and geophysical exploratory data, to preserve in full force il and effect all of their oil, gas and mineral leases and any agreement entitling them to explore for and/or produce oil, gas or other hydrocarbons (except such leases as are deliberately released in the ordi .-rants i as j nary course of business), and perform all covenants and conditions imposed upon the Companies i or Subsidiaries thereunder; operate any of the properties of the Companies and Subsidiaries in a >n Pacific tr, under aw, other good workmanlike manner; to perform all obligations under all contracts relating to or affecting their properties including but not limited to ail material contracts or agreements referred to in Section 2.24(b) hereof; and to preserve for the Buyer the goodwill of the suppliers and customers of the Companies and Subsidiaries and others having business relations with them. I7 i i 4.7. Compliance With Law. The Companies and Subsidiaries shall duly comply with all laws applicable to them and to the conduct of their businesses, and conduct their businesses in such a manner that at the Closing Date the representations and warranties contained in this Agreement shall be true to the extent that such representations and warranties shall have been made again on and as of such date as contemplated by Section 6.1 of the Agreement. 4.8. Insurance. The Companies and the Subsidiaries will maintain insurance in effect upon all their properties and with respect to the conduct of their business in such amounts and of such kinds as are in effect on the date of this Agreement, provided that the coverage may be increased from time to time by the Companies and the Subsidiaries in their discretion. 5. Closing and Closing Date. The consummation of the sale and purchase of the Stock of the Companies (which consummation is herein called the "Closing"), shall take place in San Juan, Puerto Rico, or such other place as may be mutually agreed upon by Buyer and Seller, commencing at 11 o'clock a.m., New York time, on January 5, 1970 or on such other date as may be mutually agreed by Buyer and Seller (the "Closing Date"), but shall be effective as of January 1, 1970. 5.1. Sale and Delivery. At the Closing, the Seller, contemporaneously with performance by the Buyer of its obligations to be performed at such Closing, shall deliver to the Buyer the following: (i) Stock certificates representing all of the Stock of the Companies accompanied by stock powers endorsed in blank representing and warranting that the Stock is being sold, assigned, trans ferred and delivered to the Buyer free and clear of any and all claims, liens or encumbrances, with signatures on such stock powers guaranteed by a New York bank or trust company, or member firm of a national securities exchange, with all required (if any) federal, state and local documentary transfer stamps affixed. (ii) Such further certificates, documents and other instruments as shall be reasonably required by the Buyer to evidence compliance by the Seller with each of the conditions precedent to the Buyer's obligations at the Qosing, as contained in Section 6 hereof. At the Qosing, the Buyer contemporaneously with performance by" the Seller of its obligations to be performed at such Qosing, shall deliver to the Seller, in addition to the documents and instruments to be delivered by the Buyer pursuant to Section 5.2 hereof, such other certificates, documents and instru ments as shall be reasonably required by the Seller to evidence compliance by Buyer with each of the conditions precedent to Seller's obligations at the Closing contained in Section 7 hereof. 5.2. Purchase Price and Payment. At the Qosing, the Buyer, contemporaneously with the performance by the Seller of its obligations to be performed at such Qosing, shall pay to the Seller that portion of the purchase price for the Stock, being the sum of Two Hundred Forty Million Dollars ($240,000,000) (hereinafter called the "Purchase Price"), as follows: (a) At the Closing, the Buyer shall deliver to the Seller a certified or bank cashier's check drawn on a New York City branch of The Chase Manhattan Bank payable in Federal Funds to the order of the Seller in the amount of One Hundred Twenty Million Dollars ($120,000,000); and (b) Following the Closing, the Buyer shall complete payment of the Purchase Price by making three equal instalment payments (bv certified or bank cashier's check drawn on a New York City bank payable in Federal" Funds) of Forty Million Dollars ($40,000,000) each respectively on January 2, 1971, January 2, 1972 and January 2, 1973. Such instalment payments shall bear interest on the unpaid balance thereof from January 1, 1970 to the date of payment at the rate of nine percent (9%) per annum, payable upon the several payment dates hereinabove provided and shall not be subject to pre-payment, except that after January 2, 1971 the instalments due on January 2, 1972 and January 2, 1973 may be prepaid with interest by the Buyer at any time without penalty upon 30 days written notice to the Seller, such interest to be calculated to the date of pre-payment on the basis of a 360-day year of twelve 30-day months. 8 5.3. Further Assurances. At any time and from time to time, at or after the Closing, upon the request of the Seller or the Buyer, the Seller and Buyer agree to do, execute, acknowledge and deliver or shall cause to be done, executed, acknowledged and delivered, all such further acts, deeds, assignments, and assurances as may be required to consummate the transactions provided for in this Agreement. 6. Conditions Precedent To Buyer's Obligations. All obligations of Buyer under this Agree ment are subject to the fulfillment, prior to or at the Closing hereunder, subject to the provisions of Section 19 hereof, of each of the following conditions: 6.1. Seller's Representations True at Closing; Performance by Seller. The representations and warranties of the Seller set forth in Section 2 of this Agreement shall be deemed to have been made again at and as of the Closing Date (including but not limited to a reiteration of the representations and warranties with respect to the absence, as of the Qosing Date, of certain changes or events as set forth in Section 2.25) and, except as contemplated by Section 4 hereof, shall then be accurate in all material respects; the Seller shall have performed and complied with all agreements and conditions required by this Agreement to be performed or complied with by it prior to. or at the Qosing hereunder; and Buyer shall have been furnished with a certificate of appropriate officers of the Seller, dated the Qosing Date, certifying to the best of their knowledge, in such detail as Buyer may request, to the fulfillment of the foregoing conditions. 6.2. Examination and Report of Peat, Marwick, Mitchell & Co. Buyer shall have received from Peat, Marwick, Mitchell & Co., independent certified public accountants, at Champlin's expense, an opinion based upon their reading of the latest available unaudited interim financial statements of the Companies and Subsidiaries since June 30,1969, consultations with and inquiries of officers of the Seller and Companies and Subsidiaries responsible for financial and accounting matters as to transactions and events relating to the Companies and Subsidiaries since June 30, 1969, and a reading of the minutes of meetings of the Directors and stockholders of the Companies and Subsidiaries since June 30, 1969, (which procedures do not constitute an examination made in accordance with generally accepted auditing standards), that there is nothing which has come to their attention which gives them or has given them reason to believe that (a) the Interim Balance Sheets were not prepared in accordance with generally accepted accounting principles applied on a basis consistent with the preceding periods and (b) during the period from June 30, 1969, to November 30, 1969 there has been any material change in the capital stock or long-term debt of the Companies and Subsidiaries or any material adverse change in the financial position of the Companies and Subsidiaries taken as a whole as compared with the financial position reflected in the Interim Balance Sheets, or in the results of operations as compared with the corresponding period of the preceding year. 6.3. No Reduction in Net Worth. On the Qosing Date, the net worth of the Companies and Subsidiaries shall not be less than the net worth of the Companies and Subsidiaries at the close of business on June 30, 1969, as reflected in the Interim Balance Sheets, i.e., One Hundred Sixty Eight Million Six Hundred Thirty Four Thousand Dollars ($168,634,000). 6.4. Opinion of Seller's Counsel. Buyer shall have been furnished with an opinion, dated the Qosing Date, of counsel for the Seller and the Companies, to the effect that: (a) Organization and Good Standing. The Seller and the Companies and the Subsidiaries are corporations duly organized, validly existing and in good standing under the laws of the states of their incorporation and the Companies and the Subsidiaries are each duly qualified to do business in each jurisdiction in which the character of the properties owned or leased by each of them or the nature of the business transacted by each of them, respectively, makes such qualification necessary. (b) Corporate Authority Relative to this Agreement. The execution, delivery and performance of this Agreement by Seller has been duly authorized and approved by all requisite corporate action 9 of the Seller, no action by stockholders is required, and this Agreement has been duly executed and delivered by the Seller and constitutes a valid and binding obligation of Seller enforceable in accordance with its terms. (c) Capitalisation. The authorized, issued and outstanding capital stock of the Companies is as stated in Section 2.3, above, and the shares of capital stock of the Companies to be delivered to Buyer pursuant to Secton 5.1 above constitute all the issued and outstanding stock of the Companies and are validly issued, fully paid and non-assessable. (d) Title to Stock. Upon the delivery of the stock certificates and stock powers as contem plated by Section 5.1 (i), Buyer will be vested with valid title to the Stock of the Companies free and clear of any and all claims, liens or encumbrances. (e) Compliance by Seller with All Other Requirements. The consummation of the purchase and sale contemplated by this Agreement will not violate or conflict with any provision of Seller's certificate of incorporation or by-laws, or any provision of or result in the acceleration of any obligation under any mortgage, lien, lease, agreement, instrument, order, arbitration award, judgment or decree to which Seller or the Companies or Subsidiaries are parties or by which they are bound and will not violate any federal, state or local law or any other restriction of any other kind or character to which they are subject; all actions or proceedings required by law or this Agreement to be taken by Seller at or prior to the Closing hereunder in connection with this Agreement and the transactions provided for herein have been duly and validly taken; and no approval, consent or authorization of any governmental authority of the United States or Canada or of any state or province, governmental subdivision, agency or instrumentality thereof, or other person, not obtained, is necessary to the making or consummation of this Agreement or the continued operation and use of the businesses, assets, and properties of the Companies or the Subsidiaries in the ordinary course thereafter. (f) Litigation. To their knowledge, except as and to the extent reserved against in the Interim Balance Sheets, there is no litigation, proceeding or governmental investigation pending or threatened against or relating to either of the Companies or any Subsidiary, or the properties or business of any such Company which is materially adverse to the businesses of the respective companies or any legal impediment to the continued operation of such businesses and properties in the ordinary course following the consummation of the sale and purchase contemplated by this Agreement, and the aggregate amount of liability that may result therefrom will not, in their opinion, be material in relation to the assets and businesses of the Companies and Subsidiaries. 6.5. Title Opinions or Evidences of Title. Buyer shall have been furnished by Seller, at Seller's expense, with (i) legal opinions or other evidences, in form and substance satisfactory to it, to the effect that with respect to the properties on which are situated the refineries, natural gas processing plants, products pipeline terminals and office buildings described in Exhibit II hereto the Companies and Subsidiaries at the time of the Closing hereunder, _had valid title in fee to all of the real property described in said Exhibit II as fee property, free and clear ofany and all claims, liens and encumbrances except as otherwise stated in Section 2.12 hereto, and (ii) certificates executed by the respective lessors of all real property described in said Exhibit II as leasehold property to the effect that such leases are in full force and effect until their respective expiration dates and that there are no outstanding notices of default thereunder. 6.6. Opinion of Buyer's Counsel. Buyer shall have received an opinion, dated the Closing Date, of its counsel, to the effect that: (a) Corporate Authority Relative to this Agreement. The execution, delivery and performance of this Agreement have been duly authorized and approved by all requisite corporate action of the Seller and the Buyer, and this Agreement has been duly executed and delivered by such parties and constitutes a valid and binding obligation enforceable in accordance with its terms. 10 'W V (b) Compliance With All Other Requirements. All actions or proceedings required by law or this Agreement to be taken by the Seller at or prior to the Closing hereunder in connection with this Agreement and the transactions provided for herein have been duly and validly taken) and no approval, consent or authorization of any governmental authority of the United States or Canada or of any state or province, governmental subdivision, agency or instrumentality thereof, or other person, not obtained, is necessary to the making or consummation of this Agreement or the continued operations and use of the business, units, and properties of the Companies, or the Subsidiaries in the ordinary course thereafter. 6.7. Litigation Affecting Closing. At the Qosing Date no litigation, proceeding, or governmental investigation, shall be pending or threatened, against or relating to the Seller or the Buyer, or either of the Companies or any Subsidiary, in which it is sought to restrain or prohibit or to obtain damages or right of appraisal or other relief in connection with this Agreement or the consummation of the transactions contemplated hereby, including, without limitation, any action or claim alleging or claiming violation of the antitrust laws. 6.8. Report as to Condition of Refineries and Processing Plants. Buyer shall have received a report, satisfactory to it, from an independent engineering firm to the effect that the Companies' refineries located at Enid, Oklahoma and at Corpus Christi, Texas and the natural gas processing plants operated by the Companies, three of which are in Texas and two in Oklahoma, are in good operating condition and that there is no significant deferred maintenance in respect thereof. 6.9. Resignation of Officers and Directors of the Companies and the Subsidiaries. Buyer shall have received copies, certified by the appropriate secretary of each of the Companies and the Subsidiaries, of the resignations, effective as of the Closing Date, of such officers and directors of the Companies and the Subsidiaries as shall be designated prior to the Qosing Date by Buyer. 7. Conditions Precedent to Seller's Obligations Hereunder. All obligations of the Seller under this Agreement are subject to the fulfillment,' prior to or at the Qosing hereunder, subject to the provisions of Section 19 hereof, of each of the following conditions: 7.1. Buyer's Representations True at Closing; Performance by Buyer. The representations and warranties of the Buyer set forth in Section 3 of this Agreement shall be deemed to have been made again at and as of the Qosing Date and shall then be accurate in all material respects; Buyer shall have per formed and complied with all agreements and conditions required by this Agreement to be performed or complied with by it prior to or at the Qosing hereunder; and the Seller shall have been furnished with a certificate of appropriate officers of Buyer, dated the Qosing Date, certifying to the best of their knowledge, in. such detail as the Seller may request, to the fulfillment of the foregoing conditions. 7.2. Opinion of Buyers Counsel. Seller shall have been furnished with an opinion, dated the Closing Date, of Buyer's counsel, to the effect that: (a) Organization and Good Standing. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Utah; (b) Corporate Authority Relative to this Agreement. The execution, delivery and performance of this Agreement by Buyer has been duly, authorized and approved by all requisite corporate action of the Buyer, and this Agreement has been duly executed and delivered by the Buyer and constitutes the valid and binding obligation of Buyer enforceable in accordance with its terms; (c) Compliance by Buyer with All Other Requirements. The consummation of the purchase and sale contemplated by this Agreement will not violate or conflict with any provision of Buyer s certificate ot incorporation or by-laws; or any provision of or result in the acceleration of any obligation under anv mortgage, lease, agreement, instrument, order, aroitration award, judgment or decree to which Buyer is a party or by which it is bound and will not violate any federal, state or local law or any other restriction of any other kind or character to which it is subject; all actions 11 or proceedings required by law or this Agreement to be taken by Buyer at or prior to the Closing hereunder in connection with this Agreement and the transactions provided for herein have been duly and validly taken; and no approval, consent or authorization of any governmental authority of the United States or of any state, governmental subdivision, agency or instrumentality thereof, or other person, not obtained, is necessary to the making or consummation of this Agreement. 7.3. Litigation Affecting Closing Date. At the Closing Date no litigation, proceeding or govern mental investigation of the type referred to in Section 6.7 shall be pending or threatened. 7.4. Guaranty. Buyer shall deliver to Seller the Guaranty of Union Pacific Corporation in the form annexed as Exhibit IV duly executed by an officer of Union Pacific Corporation, together with true and complete copies of the resolutions adopted by the Board of Directors of Union Pacific Corpora tion reflecting the grant of authority to execute, deliver and perform said Guaranty, such copies having been certified by its Secretary, and an opinion of counsel for Union Pacific Corporation to the effect that the execution, delivery and performance of said Guaranty has been duly authorized and approved by all requisite corporate action of Union Pacific Corporation and that said Guaranty constitutes the valid and binding obligation of Union Pacific Corporation, enforceable in accordance with its terms. 8. Parties' Right to Remedy Unfulfilled Conditions Precedent In the event either party should determine at any time prior to the Closing that it intends to decline to proceed with the Closing because of unfulfilled conditions precedent under Section 6 or 7, it shall so notify the other party in writing immediately upon making such determination, to the end that such other party shall have the right to take such steps, at its expense, as may be necessary for the purpose of fulfilling the said condition precedent on or prior to the Closing Date. 9. Access To and Information Concerning Properties, Records, Etc. The Seller shall give to Buyer, its counsel, accountants, engineers and other representatives, full access throughout the period prior to the Closing Date hereunder, to all of the Companies' and Subsidiaries' properties, books, contracts, commitments and records, including all tax records of, and Federal, state and local tax returns filed by or on behalf of the Companies and the Subsidiaries, and the Seller shall furnish Buyer during such period with all such information concerning the Companies and the Subsidiaries and their affairs as Buyer may reasonably request . 10. Cooperation by Buyer. Following the Closing, Buyer shall give and shall cause Champlin and Pontiac to give Seller full cooperation in response to any request made by Seiler, its auditors or other representatives, for any assistance whatsoever in connection with any matter which relates, or arises out of, Seller's ownership of the Stock at any time prior to the Closing, or the operations of Champlin and Pontiac during the period of such ownership. Such assistance shall include, without limitation, the furnishing of full and complete financial and accounting records and all other records and documents which, in the judgment of Seller, are needed by it for financial, accounting or other . business purposes. 11. Nature and Survival of Seller's Representations, Entirety of Agreement. The Seller and Buyer agree that neither party has made any representation, warranty or covenant not set forth herein or in the certificates or other instruments deliverable pursuant hereto, and that this Agreement constitutes the entire agreement between the parties and supersedes any and all other agreements, oral or written, in respect of the subject matter of this Agreement. Seller and Buyer agree that this Agreement has been dated as of August 28, 1969, to give recognition to the fact that it specifically replaces and supersedes the earlier agreement with respect to the subject matter of this Agreement, dated such date, between Seller and Union Pacific Railroad Company. Seller and Buyer also agree that this Agreement be executed on October 27, 1969, and that all of the provisions of this Agreement, including the representa tions and warranties of the parties, shall speak as of such execution date to give recognition to the fact that Buyer was not incorporated until October 21, 1969. The representations and warranties by the Seller contained in Sections 2.1 through 2.5, 2.6 (to the extent that it does not relate to- tax liabilities), and 2.8 through 2.25 hereof, shall survive the .Closing until January 2, 1972, notwithstanding any investigation at any time made by or on behalf of the Buyer or the acceptance by the Buyer of any 12 r report or expert opinion contemplated in this Agreement or otherwise. The representations and warranties of the Seller contained in Subsections 2.6 and 2.7 hereof relating to tax liabilities shall survive the Closing, notwithstanding, any investigation or the like as aforesaid, until such time as the United States Federal Income Tax Returns of the Seller for the tax years 1965 through 1969, consolidating the Companies and the Subsidiaries (except in the case of Pontiac which has been consolidated with the Seller only in the years 1967 through 1969), have been audited by the Internal Revenue Service and closed by operation of law or otherwise, and all deficiencies with respect thereto have been paid or finally settled. The Seller shall have no liability with respect to any breach of (i) any of the following representations and warranties which, when taken collectively involve damages suffered by Buyer in an amount less than $250,000, (but the Seller shall have liability to the extent of the full amount thereof with respect to any such damages in excess of $250,000): that is Section '2.5(a) as to the Interim Balance Sheets, Sections 2.6 through 2.11 inclusive, Section 2.17 and Sections 2.18 and 2.19 to the extent related to Section 2.6 or (ii) any of the following representations and warranties which, when taken severally, involve damages suffered by Buyer in an amount less than $100,000, (but the Seller shall have liability to the extent of the full amount thereof with respect to any such damages in excess of $100,000): that is Sections 2.1 through 2.5 inclusive (except for Section 2.5(a) as to the Interim Balance Sheets), Sections 2.12 through 2.16 inclusive, 2.20 through 2.25 inclusive and Sections 2.18 and 2.19 to the extent they do not relate to Section 2.6; provided, however, that the Seller shall have no liability under this Section 11 in respect of any single matter or claim giving rise to a breach which involves damages, suffered by Buyer in an amount not in excess of $50,000 and any such matter shall not be recognized in the computation of damages under this Section 11. Except as aforesaid, the Seller agrees that after the Closing it will indemnify, protect and hold the Buyer harmless against any and all liability, claims, costs, demands, charges and expenses, including counsel fees, in any manner imposed or accruing against the Buyer arising out of any representation or warranty made by the Seller in Section 2 of this Agreement or in any certificate or other instrument delivered by or on behalf of the Seller pursuant to or in connection with this Agreement, including but not limited to any breach of representation or warranty with respect to taxes made under Section 2.7 of this Agreement. The representations and warranties of Buyer, other than those set forth in Section 3.2, shall expire with, and be terminated and extinguished by, the Closing under this Agreement on the Closing Date and the only remedy which shall accrue to the Seller on account of any breach of any representation, or warranty, relating to the Buyer set forth herein shall be the right of Seller to refuse to proceed with the Closing provided for in this Agreement, and there shall be no liability for such breach on the part of Buyer to the Seller. The representations and warranties of Buyer set forth in Section 3.2 of this Agreement shall survive the Closing until January 2, 1972. 12. Procedure for Payment of United States Federal Income Taxes. 12.1. Calendar Year 1969. The Federal income tax payable with respect to the net income of Champlin and Subsidiaries and with respect to the net income of Pontiac for the calendar year 1969 will be paid by Seller which files a consolidated Federal income tax return. After the close of the calendar year 1969, Seller shall determine the amount of Federal income tax which Champlin and Subsidiaries and which Pontiac would have paid for the calendar year 1969 if Champlin and Subsidiaries had filed a separate consolidated Federal income tax return and if Pontiac had filed a separate Federal income tax return, such determination to be made without allowance for any surtax exemption or investment credit with respect to used property. Seller shall send to Champlin a statement of the amount of Federal income tax so determined for Champlin and Subsidiaries, and Seller shall send to Pontiac a state ment of the amount of Federal income tax so determined for Pontiac. Buyer agrees to cause Champlin to pay to Seller in Federal Funds upon receipt of such statement the amount of Federal income tax so determined less any estimated Federal income taxes previously paid by Champlin and Subsidiaries for the year 1969 and to cause Pontiac to pay to Seller in Federal Funds, upon receipt of such statement, the amount of Federal income tax so determined less any estimated Federal income taxes previously paid by Pontiac for the year 1969. These provisions shail apply in the same manner to any excess of estimated tax payment over 1969 Federal income tax liability of the Companies and the Subsidiaries. 13 12.2. Audit Increases. If, upon audit of Seller's consolidated Federal income tax return for any of the taxable years 1965 through 1969, inclusive, Seller shall receive from the Internal Revenue Service a Revenue Agent Report and ,if such Report (i) increases the taxable income ot, or adversely affects items determined on a consolidated basis reasonably attributable to, Champlin and Subsidiaries and/or Pontiac for any such taxable year over the amount of such taxable income or consolidated items as disclosed in Seller's consoli dated Federal income tax return (hereinafter called the "Consolidated Return") as filed for such year; or (ii) decreases the investment tax credit and/or other tax credits (hereinafter called the "Tax Credits") of Champlin and Subsidiaries and/or Pontiac for any such taxable year below the amount of Tax Credits claims in Seller's Consolidated Return as filed for such year; then Seller shall notify Champlin and/or Pontiac, as the case may be, of such fact within thirty (30) days of Seller's receipt of such Revenue Agent Report. When and to the extent that the increase (s) in taxable income or decrease(s) in Tax Credits, if any, as described above, are finally determined ("Finally Determined" being a term defined in Section 12.7), Seller shall so notify Champlin and/or Pontiac, as the case may be. Upon receipt of such notice, Champlin and/or Pontiac, as the case may be, shall pay to Seller in Federal Funds an amount equal to the Federal Income Tax Deficiency (as deter mined under Section 12.3) for such taxable year together with interest thereon at the rate of six percent (6%) per annum computed from the 15th day of the third month following the close of the taxable year in question. 12.3. Federal Income Tax Deficiency. The Federal Income Tax Deficiency for any taxable year shall be equal to the sum of (i) the amount determined by multiplying (a) the Finally Determined increase(s) in taxable income (as described in Section 12.2) for such taxable year; by (b) such year's applicable Federal income tax rate (as defined in Section 12.6) ; and (ii) the Finally Determined decrease(s) in Tax Credits for such taxable year. 12.4. Audit Decreases. If, upon audit of Seller's Consolidated Return for any of the taxable years 1965 through 1969, inclusive, Seller shall receive from the Internal Revenue Service a Revenue Agent report, and if such Report (i) decreases the taxable income of or favorably affects items determined on a consolidated basis reasonably attributable to, Champlin and Subsidiaries and/or Pontiac for any such taxable year below the amount of such taxable income or consolidated items as disclosed in Seller's consolidated return as filed for such year; or (ii) increases the Tax Credits of Champlin and Subsidiaries and/or Pontiac for any such taxable year over the amount of Tax Credits claimed in Seller's Consolidated Return as filed for such year; then Seller shall notify Champlin and/or Pontiac, as the case may be, of such fact within thirty (30) days of Seller's receipt of such Revenue Agent Report. When and to the extent that the decrease(s) in taxable income or increase(s) in Tax Credits, if any, as described above, are Finally Determined, Seller shall pay in Federal Funds to Champlin and/or Pontiac, as the case may be, an amount equal to the Federal Income Tax Overpayment (as determined under Section 12.5) for such taxable year, together with interest thereon at the rate of six percent (6%) per annum computed from the 15th day of the third month following the close of the taxable year in question. 12.5. Federal Income Tax Overpayment. The Federal Income Tax Overpayment for any taxable year 1965 through 1969 inclusive shall be equal to the sum of (i) the amount determined by multiplying (a) the Finally Determined decrease(s) in taxable income for such payable year; by (b) such year applicable Federal Income Tax Rate (as defined in Section 12.6); and (ii) the Finally Determined increase(s) in Tax Credits for such taxable year. 14 12.6. Applicable Federal Income Tax Rate. years 1965 through 1969 shall be: Taxable Year The applicable Federal Income Tax Rate for the taxable Applicable Federal Income Tax Rate with Respect to Items of Income or Deduction Subject to Ordinary Income Tax Rates Applicable Federal Income Tax Rate with Respect to Items of Income or Deduction Subject to Capital Gains Tax Rates 1965 ................................................. 1966 ................................................. 1967 ................................................ 1968 ................................................ 1969 ................................................ 48% 48% -48% 52.8% 52.8% 25% 25% 25% 27.5% 27.5% In the event, however, that the U.S. Internal Revenue Code is amended so as to increase the statutory capital gains tax rate for 1969 above 25%, then the rate to be applied with respect to items of income or deduction subject to such increased rate shall be such increased rate appropriately adjusted to reflect the tax surcharge rate. 12.7. Finally Determined. The terms "Finally Determined" and "Final Determination" shall mean determined pursuant to any one or more of the following: (i) a decision by the Tax Court or a judgement, decree, or other order by a court of competent jurisdiction which has become final or if the time for appeal to the Tax Court or any court of com petent jurisdiction has expired; (ii) a dosing agreement made between the Seller and the Commissioner of Internal Revenue pursuant to Section 7221 of the Internal Revenue Code; or (ill) a final settlement of a suit, claim or other proceeding in a court or tribunal of competent jurisdiction; (iv) the expiration of the statute of limitations pertaining to the time within which a claim for refund of federal income tax may be filed; or (v) the execution by Seller and the acceptance by the Commissioner of Internal Revenue of U.S. Treasury Department, Form 870-AD, Offer of Waiver on Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment. 12.8. Retention and Access to Records. Buyer agrees to cause Champlin and the Champlin Sub sidiaries and Pontiac to retain all of their accounting books and records for each of the years 1965 through 1969 until such time as the Federal income tax liability of Seller for each such year is Finally Determined; to give Seller or its representatives full access to and the right to copy and make extracts from all such books and records; to provide the assistance of such Champlin and Pontiac personnel as may be necessary in examining and verifying such books and records; and to have Champlin and Pontiac personnel prepare the necessary workpapers as are prescribed by Seller for use in the preparation of its 1969 Consolidated Return and such other papers and reports as may be required with respect to Champlin, the Champlin Subsidiaries and Pontiac in the course of the audits of Seller's Consolidated Returns for the years 1965 through 1969. 12.9. Breach of. Tax Warranty. Within 120 days following Final Determinations with respect to Seller's consolidated Federal income tax liability for all years 1965 through 1969, Seller and Buyer shall agree upon the aggregate amount, if any, bv which the Accrued Federal Income Tax accounts (as that term is used in the Interim Balance Sheets) of the Companies and Subsidiaries as of December 31, 1969, have been decreased as a result of such Final Determinations with respect to investment credit and other "per manent differences", as that term is defined in Accounting Principles Board Opinion 11, dated December 1967 and consistently applied with respect to the Companies and Subsidiaries. To the extent that such amount exceeds the sum of (i) S433,333.33 plus (ii) the amount of any increase in future tax benefits to either of the Companies or any Subsidiary as a result of any such "permanent difference", it shall, for purposes of Section 1 i hereof, be considered a single matter or claim with respect to Seller's repre 15 sentations and warranties, contained in section 2 hereof, with respect to the Federal income tax liabilities of the Companies and Subsidiaries. For purposes of the preceding sentence, tax benefits shall be determined as if the- Companies and Subsidiaries had continued their respective corporate existences and operations and had taxable incomes at least equal to their taxable incomes for 1969. 12.10. Buyer Participation in Tax Audit. If Seller shall be notified by the Internal Revenue Service of an audit of the books and records of Champlin and Subsidiaries and/or of Pontiac for the taxable years 1965 through 1969- inclusive, Seller shall immediately notify Buyer in writing and shall permit Buyer to participate in such audit proceedings at Buyer's expense. Seiler shall not agree to or compro mise, settle or consent to any judgment, claim, set-off, assessment or deficiency or adjustment which would have the effect of increasing or decreasing the taxable income or income tax payable for Champlin and Subsidiaries or Pontiac unless either Buyer consents in writing in advance thereof or, if Buyer is unwilling to give such consent, Seller furnishes Buyer in advance thereof a written opinion of independent counsel of recognized competence in Federal income tax matters to the effect, that taking into considera tion all items disputed by the Internal Revenue Service with respect to the taxable year in question, and viewing such items as a whole, such agreement, compromise settlement or consent constitutes a reasonable settlement of the disputes with respect to the taxable year in question. 13. Brokerage. The Seller represents and warrants to the Buyer that all negotiations relative to this Agreement have been carried on by it directly with the Buyer, without the intervention of any person, firm or corporation, other than Boyden Industrial Services, Inc., which has acted for the Seller under a Letter Agreement dated August 7, 1969, a copy of which has been heretofore delivered to the Buyer, and under which Boyden Industrial Services, Inc. and Loeb, Rhoades, Inc. will be entitled to compensation from the Seller upon consummation of the transactions contemplated by this Agreement. The Seller does hereby undertake to indemnify the Buyer and hold it harmless against and in respect of any such claim for brokerage, finder's fees or other commissions or expenses relative to this Agreement, or to. the purchase and sale contemplated hereby, including but not limited to the compensation payable to Boyden Indus trial Services, Inc. and Loeb, Rhoades, as aforesaid. The Buyer represents and warrants to the Seller that all negotiations relative to this Agreement have been carried on by it directly with the Seller, without the intervention of any person, firm or corporation other than Boyden Industrial Services, Inc., as aforesaid, and does hereby undertake to indemnify the Seller and hold it harmless against and in respect of any such claim for brokerage, finders' fees or other commissions or expenses relative to this Agreement based upon any alleged agreement with Buyer. 14. Best Efforts To Obtain Satisfaction of Conditions. The Seller agrees to use its best efforts to obtain the satisfaction of the conditions specified in Section 6 hereof, and Buyer agrees to use its best efforts to obtain the satisfaction of the conditions specified in Section 7 hereof. 15. Change in Name of Champlin Pipe Line Company. Seller owns all of the issued and out standing stock of Champlin Pipe Line Company, a Texas corporation, which is not being purchased by Buyer. Within six months after the Closing, Seller will cause the corporate name of Champlin Pipe Line Company to be changed to a name which neither includes, nor is substantially similar to, the name "Champlin." <216. Celanese Marks. Effective as of the Closing, Buyer will cause Champlin and Subsidiaries and Pontiac to discontinue all use whatsoever of the logo and any and all trademarks, trade names or house marks owned, first used or originated by Seller and any of its affiliated companies (the "marks"), provided, however, that Champlin and Pontiac shall have the right to sell the inventory to which such marks have been applied by them prior to the Closing, and to use such marks during a limited period which may be necessary for the complete phasing out of all such marks, which shall in no event exceed one year from the Closing. 17. Public Announcements. Prior to the Closing Date, except as otherwise required by law, no press release or public announcement in respect of the transactions contemplated by this Agreement will be made by either the Seller or the Buyer unless agreed upon in advance by both. 16 18. Expenses. Except as expressly provided herein, and whether or not the transactions con templated by this Agreement are consummated, each party hereto shall pay its own expenses incident to this Agreement or to its preparation for the consummation of said transactions. 19. Waiver. Each party may, at its option, waive in writing any and all of the conditions herein contained to which its obligations hereunder are subject. 20. Amendments. Seller and the Buyer, by mutual consent of their respective Board of Directors, or officers authorized by such Boards, may amend or modify this Agreement, in such manner as may be agreed upon, by a written instrument executed by Seller and Buyer.. 21. Section and Paragraph Headings. The section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 22. Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered or mailed first class, postage prepaid: (a) To The Seller. If to the Seller, to Celanese Corporation, 522 Fifth Avenue, New York, N. Y., Attention, James Scott Hill, Esq., or such other address as may be designated by the Seller. (b) To The Buyer. If to the Buyer, to Union Pacific Petroleum Corporation, 120 Broadway, New York, 'N. Y., or such other address as may be designated by the Buyer. 23. Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument 24. Parties In Interest This Agreement shall inure to the benefit of and be binding upon the parties named herein as the Seller and Buyer and their respective successors. Nothing in this Agreement, express or implied, is intended to confer upon any other person any rights or remedies under or by reason of this Agreement. 25. New York Law To Govern. This Agreement shall be construed and enforced in accordance with the laws of the State of New York. In Witness Whereof, the undersigned parties hereto have duly executed this Agreement as of the date first above written. CELANESE CORPORATION Attest: [Seal] /s/ J. Scott Hill Secretary By /s/ John W. Brooks President UNION PACIFIC PETROLEUM CORPORATION Attest. By /s/ Frank E. Barnett Chairman of the Board and Chief Executive Officer /s/ [Seal] C. W. Rossworn Secretary 17 EXHIBIT I CHAMPLIN PETROLEUM COMPANY (CONSOLIDATED) AND PONTIAC REFINING CORP. COMBINED BALANCE SHEET June 30, 1969 (M $) Chanaplin Cash and Short Term Securities............................................... Receivables (Note 2)................................................................... $ 11,014 18,276 Crude and Products Inventory (Note 3) (Note 8)................ 8,413 Materials and Supplies.................................. .............................. 1,231 Prepaid Expenses....................................................................... Total Current Assets........................................... Investments, Advances, Etc. (Note 4)..................................... 363 $ 39,297 $ 1,571 Property and Equipment (Note 5) (Note 9).......................... $302,157 Reserve for Depreciation, Depletion and Amortization.......... Net Property and Equipment............................. Other Assets ............................................................................... Total Assets........................................................ (168,134) $134,023 $ 434 $175,325 Accounts Payable....................................................................... Accrued Liabilities.................................... .................................. Accrued Federal Income Tax (Note 2) (Note 6) (Note 10) Total Current Liabilities..................................... Deferred Investment Credit (Note 6) (Note 10)................... Deferred Federal Taxes (Note 2) (Note 6) (Note 10)........ Deferred Gas Price Increase...................................................... $ 10,407 5,062 268 $ 15,737 $ 1,783 $ 1,646 $ 450 Stockholders' Equity: Capital Stock.......................................................................... Capital Contributed................................................................ Retained Earnings (Note 4)................................................ Total Equity....................................................... Total Liabilities and Stockholders' Equity............................ $ 4,485. 124,227 26,997 $155,709 $175,325 Pontiac $ 1,931 9,645 3,494 1,216 413 $ 16,699 ?-- $ 27,642 (21,672) $ 5,970 $_ $ 22,669 $ 7,628 724 953 $ 9,305 $ 224 $ 215 $-- Combined $ 12,945 27$21 11,907 2,447 776 $ 55$96 $ .1,571 $329,799 (189,806) $139,993 $ 434 $197,994 $ 18,035 5,786 1,221 $ 25,042 $ 2,007 $ 1,861 J>___ 450 $2 -- 12,923 $ 12,925 $ 22,669 $ 4,487 124,227 39,920 $168,634 $197,994 The accompanying principles and notes arc an integral part o these financial statements. NOTES TO FINANCIAL STATEMENTS CHAMPLIN PETROLEUM COMPANY AND SUBSIDIARIES (a wholly-owned subsidiary of Celanese Corporation) June 30, 1969 (1) Principles of Consolidation : The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Harbor Service Stations, Inc., Midland Gasoline Corporation, Star Oil Company, and Cycler Oil Company. All material intercompany accounts and transactions have been eliminated. (2) Receivables: Accounts Receivable and Accrued Federal Taxes have been credited in the approximate amount of Two and One Half Million Dollars ($2,500,000) and Deferred Federal Taxes has been charged by a like amount in order to eliminate the reflection of a certain claim for refund for Federal income taxes which claim was reflected in such balance sheet accounts at December 31, 1968. (3) Inventories: Inventories of crude oil and refined products are stated at average cost, which is less than market and does not include depreciation, depletion and amortization of property, plant and equipment (4) Advances and Retained Earnings: Advances and Retained Earnings have been reduced by $7 million and treated as a dividend. Although declaration has not been made the amount was advanced to Celanese prior to June 30, 1969. Included under the caption Investments, Advances, etc. are non-current notes receivables of SI,558,000. (5) Property, Plant and Equipment: Allowances for depreciation, depletion and amortization of producing oil properties and depreciation of producing gas properties are provided on a modified straight-line method over asset lives ranging from 1 to 15 years. Allowances for depletion and amortization of producing gas properties are provided on the unit-of-production method determined by reference to periodic estimates of the gas reserves of the respective properties. The remaining major classes of property, plant, and equipment are depreciated on a modified straight-line method. (6) Income Taxes: Significant variations in the relationship between the provision for Federal income taxes and income before taxes arise principally because of the deductions for tax purposes of intangible development costs and the excess of allowable depletion over cost depletion. Tax allocation accounting has been applied to all other material timing differences. The policy of the Company is to take the investment tax credit into income as a reduction in the provision for income taxes over the estimate useful lives of the related assets. The Company will join with its parent in the filing of a consolidated Federal income tax return for 1969. The policy of the Company is to accrue its share of the income tax payable and to make periodic remittances to Celanese Corporation. (7) Pension and Retirement Plans: . The Company has a pension plan and a retirement plan covering substantially all of its employees over 2995 years of age. Amortization of prior service costs is provided over periods ranging from 10 to 15 years. The Company's policy is to fund costs accrued. Based on actuarial determinations, the plans are fully funded with respect to all vested benefits. PONTIAC REFINING CORP. (a wholly-owned subsidiary of Celanese Corporation) (8) Inventories: Inventories of refined products and supplies at June 30, 1969 are stated at the lower of cost (average) or market. Inventories of crude oil at June 30,1969 are stated at the lower of cost (first-in, first-out) or market (9) Property, Plant and Equipment: Allowances for depreciation on property, plant and equipment are provided on the straight-line method over an estimated useful life of 10 years, except for transportation equipment, which has an estimated useful life of 4 years. (10) Income Taxes: The Company will join with its parent in the filing of a consolidated Federal income tax return for 1969. The policy of the Company is to accrue its share of the income tax payable and to make periodic remittances to Celanese Corporation. The policy of the Company is to take the investment tax credit into income as a reduction in the provision for income taxes over the estimated useful lives of the related assets. Deferred Federal Taxes arise principally from accelerated depreciation used for tax purposes, partially offset by provision for refinery turnarounds taken for financial purposes, (11) Sales and Crude Oil Supply Contracts: Substantially all of the Company's production of retmed products is sold to one customer under the terms of a contract expiring in 1972. Quantities of refined products to be delivered to that customer reduces substantially in the last year ot the contract. The Company purchases its supply of crude products under the terms of various contracts expiring in 1972 and 1977. (12) Retirement Plan: - The Company has retirement plans covering substantially all employees. Amortization of prior service costs is provided over periods ranging from 10 to 15 years. The Company s policy is to fund costs accrued. Based on actuarial determinations the plans are fully funded with respect to all vested benefits.