EXHIBIT 2.8
PURCHASE AND SALE AGREEMENT
BY AND AMONG
▇▇▇▇▇▇ ▇▇▇▇▇▇ ENERGY PARTNERS, L.P.,
▇▇▇▇▇▇ ▇▇▇▇▇▇ OPERATIONS L.P. "C",
MOUNTAINEER COAL DEVELOPMENT COMPANY,
SHIPYARD RIVER COAL TERMINAL COMPANY
AND
▇▇▇▇▇▇▇ COAL HOLDING COMPANY
December 9, 1998
TABLE OF CONTENTS
-----------------
PAGE
----
ARTICLE I - PURCHASE AND SALE OF ASSETS
1.1 Purchase and Sale of Assets........................................ 1
1.2 Retained Assets.................................................... 3
1.3 Post-Closing Liabilities........................................... 4
1.4 Pre-Closing Liabilities............................................ 4
1.5 Nonassignable Licenses, Contracts and Leases....................... 5
1.6 Purchase Price..................................................... 6
1.7 Price Allocation................................................... 6
1.8 Taxes; Apportionments; Post-Closing Adjustments.................... 6
1.9 Time and Place of Closing.......................................... 7
1.10 Execution and Delivery of Documents of Title....................... 7
ARTICLE II - REPRESENTATIONS OF THE SELLERS AND THE SHAREHOLDER
2.1 Organization....................................................... 8
2.2 Execution and Delivery............................................. 8
2.3 Authority.......................................................... 8
2.4 No Conflicts....................................................... 8
2.5 Governmental Approvals and Filings................................. 9
2.6 Books and Records.................................................. 9
2.7 Financial Statement................................................ 9
2.8 Absence of Changes................................................. 10
2.9 No Undisclosed Liabilities......................................... 11
2.10 Taxes.............................................................. 12
2.11 Legal Proceedings.................................................. 12
2.12 Compliance With Laws and Orders.................................... 13
2.13 Benefit Plans/ERISA................................................ 13
2.14 Real Property...................................................... 13
2.15 Tangible Personal Property; Purchased Asset........................ 15
2.16 Intellectual Property Rights....................................... 16
2.17 Contracts.......................................................... 16
2.18 Licenses........................................................... 17
2.19 Insurance.......................................................... 18
2.20 Affiliate Transactions............................................. 18
2.21 Employees; Labor Relations......................................... 19
2.22 Environmental Matters.............................................. 19
2.23 Substantial Customers.............................................. 20
2.24 No Powers of Attorney.............................................. 20
2.25 Solvency........................................................... 20
2.26 Government Contracts............................................... 20
ARTICLE III- REPRESENTATIONS AND WARRANTIES
OF THE BUYER AND THE PARENT
3.1 Organization....................................................... 21
3.2 Execution and Delivery............................................. 21
3.3 Authority.......................................................... 21
3.4 No Conflicts....................................................... 22
3.5 Governmental Approvals and Filings................................. 22
3.6 Financial Ability to Perform....................................... 22
ARTICLE IV - CONDITIONS TO CLOSING
4.1 Conditions to Obligation of the Buyer to Close..................... 22
4.2 Conditions to Obligations of the Sellers and the
Shareholder to Close............................................... 25
ARTICLE V - COVENANTS
5.1 Conduct of the Terminals Pending the Acquisition................... 26
5.2 Books and Records; Access and Information.......................... 27
5.3 Notification of Certain Matter..................................... 28
5.4 Confidentiality.................................................... 28
5.5 Cooperation by the Parties......................................... 28
5.6 Antitrust Notification............................................. 29
5.7 The Sellers' Employees............................................. 30
5.8 Compliance with Agreements Regarding Industrial Revenue Bonds...... 30
5.9 Product Inventory.................................................. 31
ARTICLE VI- INDEMNIFICATION
6.1 Indemnification by the Sellers and the Shareholder................. 31
6.2 Indemnification by the Buyer and the Parent........................ 32
6.3 Procedures for Indemnification..................................... 33
6.4 Survival........................................................... 34
6.5 Limitations on Indemnification..................................... 34
6.6 Payment of Damages................................................. 35
ARTICLE VII - TERMINATION
7.1 Termination........................................................ 35
7.2 Effect of Termination.............................................. 36
ARTICLE VIII - MISCELLANEOUS
8.1 Expenses........................................................... 36
8.2 Notices............................................................ 36
8.3 Amendments......................................................... 37
8.4 Waiver............................................................. 37
8.5 Public Announcements............................................... 37
8.6 Head............................................................... 38
8.7 Nonassignability................................................... 38
8.8 Parties in Interest................................................ 38
8.9 Counterparts....................................................... 38
8.10 Governing Law; Consent to Jurisdiction............................. 38
8.11 Severability....................................................... 38
8.12 Entire Agreement................................................... 39
8.13 Arbitration........................................................ 39
PURCHASE AND SALE AGREEMENT
Purchase and Sale Agreement (the "Agreement'), dated as of December 9,
1998, by and among ▇▇▇▇▇▇ ▇▇▇▇▇▇ Energy Partners, L.P. (the "Parent"), ▇▇▇▇▇▇
▇▇▇▇▇▇ Operating L.P. "C", a Delaware limited partnership (the "Buyer"),
Mountaineer Coal Development Company, a West Virginia corporation
("Mountaineer"), Shipyard River Coal Terminal Company, a South Carolina
corporation ("SRCT", and with Mountaineer, the "Sellers"), and ▇▇▇▇▇▇▇ Coal
Holding Company, a Delaware corporation (the "Shareholder").
RECITALS
WHEREAS, the boards of directors of the Buyer, the Sellers, the Parent and
the Shareholder have determined that it is in their respective best interests
for (i) Mountaineer to sell to the Buyer and for the Buyer to buy from
Mountaineer certain assets (the "Pier IX Terminal") and (ii) SRCT to sell to the
Buyer and for the Buyer to buy from SRCT certain assets (the "Shipyard River
Terminal") on the terms and conditions contained in this Agreement (the
"Acquisition");
WHEREAS, the parties hereto desire to make certain representations,
warranties, covenants and agreements in connection with the Acquisition;
NOW THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements set forth herein, the Sellers, the Shareholder and the
Buyer agree as follows.
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 Purchase and Sale of Assets. Upon the terms and subject to the
---------------------------
conditions contained in this Agreement, at the Closing, the Sellers shall sell,
assign, transfer and convey to the Buyer, and the Buyer shall purchase, acquire
and accept from the Sellers the assets of the Sellers described below, free and
clear of all Liens except Permitted Liens, (the "Purchased Assets"):
(a) the Pier IX Terminal and the Shipyard River Terminal (together, the
"Terminals") and all tangible assets, personal property, fixtures and
equipment (the "Tangible Property") specifically listed in Section 1.1(a)
of the Disclosure Schedule, along with all Tangible Property located on the
Real Property on the date hereof or used primarily in the operation of the
Terminals; (excluding, however, any assets listed in Section 1.2(c) of the
Disclosure Schedule);
(b) good and indefeasible fee simple title in and to those tracts or
parcels of land described in Section 1.1(b) of the Disclosure Schedule
hereto together with (i) all of the interest of the Sellers in any land in
the beds of any public streets or public roads in front of or adjoining
indicated portions of such land; (ii) any easements or rights-of-way
appurtenant to such land and all water, wastewater, sewer, sanitary sewer
and other utility rights related to such land; (iii) any reversionary
rights attributable thereto; (iv) subject to Section 1.2(k), all claims or
demands whatsoever of the Sellers either in law or in equity in or to such
land except to the extent provided otherwise in this Agreement or in any
document executed herewith; (v) all buildings, improvements, fixtures,
storage tanks, pipelines, (along with all physical facilities used in
connection with the ownership or operation of such pipelines, including all
valves, meters, measurement stations, and equipment), electrical
facilities, storage and shipping facilities and other fixed assets and
personalty owned by the Sellers annexed, affixed or attached to such land,
in each case insofar as such real property relates to either Terminal; and
(vi) all of the Sellers' rights and interests in all personal property and
physical facilities used in connection with the ownership or operation of
the electrical facilities used in the Terminals including, without
limitation, all transformers, power lines, meters, rectifiers, busbars,
housings, circuit breakers and all other fixtures and equipment of every
type and description used in connection therewith (collectively, the "Owner
Real Property");
(c) all of the Sellers' rights and interest in all leases of real property
set forth in Schedule 1.1(c) of the Disclosure Schedule and all leases of
real property by the Sellers relating to the Terminals within five (5)
miles of the Owned Real Property (the "Assigned Leases"). The real
property subject to the Assigned Leases shall be referred to as the "Leased
Real Property"; and with the Owned Real Property shall be referred to as
the "Real Property";
(d) all of the Sellers' rights and interest in and to the Contracts set
forth in Section 1.1(d) of the Disclosure Schedule or used exclusively in
the operation of the Terminals (the "Assigned Contracts");
(e) any and all of the Sellers' books and records exclusively relating to
the Terminals (the "Assigned Books and Records"), excluding, by way of
clarification and not limitation, any Books and Records of the Sellers
which relate exclusively to (i) organizational or governance proceedings of
the Sellers, (ii) the Retained Assets, or (iii) the Pre-Closing
Liabilities;
(f) all of the Sellers' goodwill exclusively related to the Terminals;
(g) all of the Sellers' rights and interest in and to the Intellectual
Property set forth in Section 1.1(g) of the Disclosure Schedule;
(h) subject to Section 1.5, all Licenses used in the operation of the
Terminals or set forth in Section 1.1(h) of the Disclosure Schedule, to the
extent such Licenses are transferable to the Buyer (the "Assigned
Licenses");
(i) all of the Sellers' rights and interest in present and future
insurance proceeds which may be payable under the insurance policies listed
in Section 2.21 of the Disclosure Schedule insofar as such proceeds are
payable in connection with any event or events occurring subsequent to the
date hereof and affecting the Purchased Assets described in Section 1.1(a),
(b) or (c);
(k) any additional assets that fall within the categories listed above
from time to time acquired primarily for use by the Terminals in the
ordinary course of business between the
2
date hereof and the Closing Date, except for such property as may be used,
sold, consumed or disposed of by the Sellers in the ordinary course of
business prior to the Closing Date and in compliance with the terms and
conditions of this Agreement.
To the extent that any Purchased Assets of the Sellers primarily related to the
Terminals are intended to be transferred to Buyer pursuant to the language of
this Section 1.1 but are not listed the language of this Section 1.1 shall be
controlling and such Purchased Assets nonetheless shall be transferred to Buyer
for all purposes.
1.2 Retained Assets. The Sellers will retain ownership of all assets other
---------------
than the Purchased Assets, including, without limitation, the following
(collectively, the "Retained Assets"):
(a) the Sellers' Books and Records other than those set forth in Section
1.1(e) above;
(b) each Contract, Lease or License set forth in Section 1.2(b) of the
Disclosure Schedule or which requires the consent to assignment by a Person
other than the Sellers and which consents are not obtained on or before the
Closing Date;
(c) the personal items and equipment and furnishings unrelated to the
Terminals as set forth in Section 1.2(c) of the Disclosure Schedule;
(d) policies of insurance, fidelity, surety or similar bonds and the
coverage afforded thereby;
(e) the Sellers' rights under this Agreement;
(f) accounts receivable of the Terminals accrued prior to the Closing
Date;
(g) choses in action relating to the Terminals arising prior to the
Closing Date;
(h) cash and cash equivalents relating to the Terminals determined as of
the Closing Date;
(i) claims for refunds or reductions regarding any Tax paid or payable
relating to the Terminals or their operations prior to the Closing Date,
and whether payable by cash, credit or otherwise;
(j) all of the Sellers' rights and interest in and to the Intellectual
Property set forth in Section 1.2(j) of the Disclosure Schedule; and
(k) all claims or demands of the Sellers whatsoever relating to periods
prior to the Closing, either in law or in equity, in or to the Real
Property, except to the extent such claim or demand is a Purchased Asset
specifically set forth in Section 1.1.
1.3 Post-Closing Liabilities. Subject to the terms and conditions of this
------------------------
Agreement, or Closing, the Buyer will assume and agree to pay, perform and
discharge when due all Liabilities
3
(other than those for which the Sellers and the Shareholder are specifically
indemnifying the Buyer hereunder) which pertain to the ownership, operation or
conduct of the Terminals or Purchased Assets arising from any acts, omissions,
events, conditions or circumstances occurring after the Closing (the "Post-
Closing Liabilities").
1.4 Pre-Closing Liabilities. It is expressly understood and agreed that
-----------------------
the Buyer shall not be obligated to pay, perform or discharge, and the Sellers
shall retain, any and all Liabilities, of the Sellers (the "Pre-Closing
Liabilities"), whether or not (except as indicated below and subject to Section
1.3 above) such Liabilities were incurred before or after the Closing and
whether or not such Liabilities have been disclosed to the Buyer, including,
without limitation, Liabilities listed below, but excluding, however, the Post-
Closing Liabilities:
(a) Liabilities relating to indebtedness for borrowed money whether or not
such liabilities are reflected on the Financial Statements;
(b) Liabilities resulting from, constituting or relating to a breach of
any of the representations, warranties, covenants or agreements of the
Sellers or the Shareholder under this Agreement;
(c) Liabilities for federal, state, local, foreign and all other Taxes
incurred or relating to periods prior to the Closing, including Taxes
incurred in respect of or measured by the income of the Sellers earned on
or realized prior to the Closing.
(d) Liabilities for all environmental, ecological, natural resource,
health, safety, products liability (except as specifically referred to
herein) or other Claims, conditions or obligations pertaining to the
Terminals or the Purchased Assets which relate to time periods,
circumstances or events occurring prior to the Closing, including, without
limitation, any and all Losses (i) resulting from or arising out of any
Environmental Action that relates to any violations of Environmental Laws
or Environmental Permits prior to the Closing, or (ii) incurred as a result
of the presence of any Hazardous Materials at, in, on, under or around any
of the Purchased Assets prior to the Closing, or the disposal of any
Hazardous Materials generated in connection with the Terminals, prior to
the Closing (including, without limitation, any investigation, monitoring,
containment, remediation, cleanup or removal thereof after the Closing);
(e) Liabilities for warranty claims, quality-related claims or other
similar claims arising out of or relating to events or circumstances prior
to the Closing;
(f) Liabilities based on any actual or alleged tortuous or illegal conduct
by or on behalf of the Sellers;
(g) Liabilities incurred by the Sellers in connection with the
negotiation, execution or performance of this Agreement, including, without
limitation, all legal, accounting, brokers', finders' and other
professional fees and expenses;
4
(h) Liabilities incurred by the Sellers after the Closing Date;
(i) Liabilities with respect to any of the Sellers' employees (and
employees of their Affiliates), including, without limitation, salaries,
termination costs, accrued vacation and Liabilities under the Plans, all in
any way relating to (i) events occurring prior to the Closing or (ii) the
employment of employees by either Seller or their respective Affiliates
regardless of when any Claim relating to any such Liabilities may arise;
(j) Liabilities, including any Liability pursuant to any Claim, litigation
or proceeding (other than those for which either Seller or the Shareholder
are being indemnified by Buyer hereunder), which pertain to (i) contractual
or other obligations of the Sellers or (ii) the ownership, operation or
conduct of the Terminals or Purchased Assets, in each case arising from any
acts, omissions, events, conditions or circumstances occurring on or before
the Closing;
(k) Liabilities relating to the Real Property and/or any agreements,
easements, rights of way or other restrictions encumbering the Real
Property arising out of or relating to events or circumstances prior to the
Closing; and
(l) Subject to Section 5.8 hereof, Liabilities relating to the Bonds, as
defined in Section 5.8 hereof.
1.5 Nonassignable Licenses, Contracts and Leases. If any Licenses,
--------------------------------------------
Contracts or Leases are not by their respective terms assignable, the Sellers
and the Shareholder agree to use their reasonable best efforts to obtain, or
cause to be obtained, prior to the Closing Date, any written consents necessary
to convey to the Buyer the benefit thereof, provided, however, that, other than
with respect to consents required pursuant to Section 4.1(j), neither the
Sellers nor the Shareholder shall be required to pay any remuneration to any
third party in exchange for such party's consent or execution of a waiver or to
file any lawsuit or other action to obtain such consent or waiver. The Buyer
shall cooperate with the Sellers and the Shareholder, in such manner as may be
reasonably requested, in connection therewith, including without limitation,
discussions and negotiations with all Persons with the authority to grant or
withhold consent. To the extent that any such consents cannot be obtained, the
Sellers, the Shareholder and the Buyer will use their reasonable best efforts to
take such actions as may be possible without violation or breach of any such
nonassignable Assigned Licenses, Assigned Contracts or Assigned Leases to
effectively grant the Buyer the economic benefits of such Assigned Licenses,
Assigned Contracts and Assigned Leases.
1.6 Purchase Price. At the Closing, the Buyer shall pay to the Sellers
--------------
Thirty-five Million Dollars ($35,000,000.00) (the "Purchase Price"), which
Purchase Price shall be remitted by the Buyer to the Sellers in cash payable by
wire transfer of immediately available funds. The Purchase Price shall be
divided between the Sellers as agreed to by the parties on or prior to the
Closing or as soon thereafter as is reasonably possible.
1.7 Price Allocation. The Sellers and the Buyer agree to allocate the
----------------
Purchase Price for the Purchased Assets in accordance with the residual method
described in the Treasury Regulations
5
promulgated under Section 338(b)(5) of the Code, as amended (the "Price
Allocation"). The Sellers and the Buyer further agree to comply with all filing,
notice and reporting requirements described in Section 1060 of the Code and the
temporary Treasury Regulations promulgated thereunder. The Sellers and the Buyer
mutually agree to use their reasonable best efforts to agree to the Price
Allocation to be detailed (i) in Section 1.7 of the Disclosure Schedule to be
completed at Closing, and (ii) on the Form 8594 jointly completed and separately
filed with their respective income tax returns for the tax year in which the
Closing occurs. The failure to agree on the Price Allocation, however, shall not
constitute a default or breach of this Agreement by either party hereto. The
parties further agree that they will report the federal, state, municipal,
foreign and local and other tax consequences of the purchase and sale hereunder
in a manner consistent with the Price Allocation, and, if agreed upon, that they
will not take any position inconsistent therewith. If the Sellers and the Buyer
are unable to agree upon a Price Allocation within five (5) days after Closing,
any remaining disputed matters with respect to such Price Allocation will be
finally and conclusively determined by an independent accounting firm of
national standing (the "Allocation Arbiter") selected by the Buyer and the
Sellers, which firm will not be the regular accounting firm of the Buyer, either
Seller or the Shareholder. Promptly, but not later than ten (10) days after its
acceptance of its appointment, the Allocation Arbiter will determine (based
solely on presentations by the Buyer and the Sellers and not by independent
review) only those matters in dispute and will render a written report as to the
disputed matters and the resulting allocation of the Purchase Price, which
report will be conclusive and binding upon the parties. The fees and expenses of
the Allocation Arbiter shall be paid equally by the Buyer, on the one hand, and
the Sellers and the Shareholder on the other. The Buyer and the Sellers will,
subject to the requirements of any applicable tax law or election, file all Tax
Returns and reports consistent with the allocation provided in the determination
of the Allocation Arbiter.
1.8 Taxes; Apportionments; Post-Closing Adjustments. All duty or
-----------------------------------------------
recording costs imposed on the transfer of the Purchased Assets to the Buyer
shall be paid by the Buyer. All sales and transfer taxes imposed on the
transfer of the Purchased Assets shall be paid equally by the Buyer and the
Party, on the one hand, and the Sellers and the Shareholder on the other. The
parties hereto shall agree on the amount of any sales and transfer taxes payable
as a result of the purchase and sale of the Purchased Assets, and if the parties
hereto are able to agree on such amount prior to the Closing, a credit shall be
made against the Purchase Price to reflect the Sellers' and the Shareholder's
fifty percent share of such taxes. In the event the parties are unable to agree
on the amount of such taxes prior to the Closing, they shall do so as soon
thereafter as is practicable, and the Sellers and the Shareholder shall pay
their fifty percent share to the Buyer as soon thereafter as is practicable. In
either event, the Buyer in turn will pay the amount calculated by the parties to
relevant taxing authorities, it being agreed that the parties shall share any
amounts by which the amount calculated hereunder differs from the amounts
actually paid to relevant taxing authorities. At the Closing, the following
items, to the extent they relate to the Purchased Assets and except as otherwise
provided for in this Agreement, shall be apportioned as of 11:50 p.m. on the day
preceding the Closing Date: property taxes, utility charges and other state,
county and municipal taxes and assessments and charges, advances to employees,
rents, prepayments from customers, prepayments to suppliers and other
prepayments and expenses under any of the Assigned Contracts, Assigned Leases or
Assigned Licenses; and such other items as are customarily apportioned in
connection with the sale of similar property, all such items prior to such time
being for the account of the Sellers and all such items after such time being
the account of the Buyer. At the Closing, the Sellers or the Buyer, as the case
may
6
be, shall deliver to the other a check or wire transfer for the net amount owing
under this Section 1.8. If any such items cannot accurately be apportioned at
the Closing or prior thereto, or if it is later determined that such
apportionment at Closing was not accurate, such items shall be apportioned or
reapportioned, as the case may be, as soon as practicable after the Closing Date
or the date on which the apportionment error is discovered, as applicable, but
in no event more than one hundred twenty (120) days after the Closing Date. Any
amounts received by, or other consideration given to, the Buyer (or its
Affiliates) after the Closing with respect to either any Retained Asset or the
conduct of the Terminals prior to the Closing shall be held by the Buyer in
trust for the Sellers until promptly paid to the Sellers. Likewise, any amounts
received by, or other consideration given to, the Sellers (or their Affiliates)
after the Closing with respect to either any Purchased Asset or the conduct of
the Terminals after the Closing shall be held by the Sellers in trust for the
Buyer until promptly paid to the Buyer.
1.9 Time and Place of Closing. The closing of the transactions described
-------------------------
in this Article I (the "Closing") shall take place at the offices of ▇▇▇▇▇▇
▇▇▇▇▇▇ Energy Partners, L.P., ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ at
10:00 a.m. on December __, 1998, or at such other place or time as the parties
hereto may agree. The date and time at which the Closing actually occurs is
hereinafter referred to as the "Closing Date."
1.10 Execution and Delivery of Documents of Title. At the Closing, the
--------------------------------------------
Sellers and the Buyer shall execute and deliver a ▇▇▇▇ of Sale in form
reasonably agreed upon by the parties hereto (the "▇▇▇▇ of Sale"). In addition,
the Sellers will execute and deliver to the Buyer such special warranty deeds,
conveyances, certificates of title, assignments, assurances and other
instruments and documents as the Buyer and/or the Title Company (as hereinafter
defined) may reasonably request in order to effect the sale, conveyance, and
transfer of the Purchased Assets from the Sellers to the Buyer. Such instruments
and documents shall be sufficient to convey to the Buyer good and merchantable
title in all of the Purchased Assets, free and clear of any Liens other than
Permitted Liens. The Sellers will, from time to time after the Closing Date,
take such additional actions and execute and deliver such further documents as
the Buyer may reasonably request in order more effectively to sell, transfer and
convey the Purchased Assets to the Buyer and to place the Buyer in position to
operate and control all of the Purchased Assets.
ARTICLE II
REPRESENTATIONS OF THE SELLERS AND THE SHAREHOLDER
In order to induce the Buyer and the Parent to enter into this Agreement,
the Sellers and the Shareholder, jointly and severally, make the representations
and warranties set forth below which are true, correct and complete an the date
hereof (unless specified in such representation or warranty to be true, correct
and complete only as of the Closing) and shall be true, correct and complete as
of the Closing. Except as set forth in those sections of the Disclosure
Schedule corresponding to the sections below:
2.1 Organization. Each Seller is a corporation duly organized, validly
------------
existing and in good standing under the laws of its state of incorporation.
Each Seller has full power, authority and capacity to execute and deliver this
Agreement and the Related Agreements to which it is a party and
7
to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby.
2.2 Execution and Delivery. The execution, delivery and performance of
----------------------
this Agreement and the Related Agreements by the Sellers and the Shareholder and
the consummation of the transactions contemplated hereby and thereby, have been
duly authorized and approved by the Board of Directors of each Seller and the
Shareholder, and no other corporate action on the part of either Seller or the
Shareholder is necessary to authorize the execution, delivery and performance of
this Agreement and the Related Agreements by the Sellers and the Shareholder and
the consummation of the transactions contemplated hereby and thereby. This
Agreement has been duly and validly executed and delivered by each Seller and
the Shareholder and constitutes, and upon the execution and delivery by the
Sellers of the Related Agreements, the Related Agreements will constitute,
legal, valid and binding obligations of the Sellers and the Shareholder, as the
case may be, enforceable against each of them in accordance with their terms,
assuming valid execution and delivery of this Agreement and the Related
Agreements by the Buyer and the Parent, and except as enforceability may be
limited by bankruptcy, insolvency, reorganizations, moratorium or other Laws
affecting creditors' rights generally.
2.3 Authority. Mountaineer has full corporate power and authority to
---------
conduct the operations of the Pier DC Terminal is and to the extent now
conducted and to own, use and lease the Purchased Assets related to the Pier IX
Terminal. SRCT has full corporate power and authority to conduct the operations
of the Shipyard River Terminal as and to the extent now conducted and to own,
use and lease the Purchased Assets related to the Shipyard River Terminal. The
name of each director and officer of each Seller on the date hereof, and the
position with the Sellers held by each, are listed in Section 2.3 of the
Disclosure Schedule. The Sellers have, prior to the execution of this
Agreement, delivered to the Buyer true and complete copies of their respective
articles or certificate of incorporation and bylaws as in effect on the date
hereof.
2.4 No Conflicts. the execution and delivery by the Sellers and the
------------
Shareholder of this Agreement and the Related Agreements, the performance of
their respective obligations under this Agreement and such Related Agreements
and the consummation of the transactions contemplated hereby and thereby do not
and will not:
(a) conflict with or result in a violation or breach of any of the terms,
conditions or provisions of their respective articles of organization or
by-laws.
(b) subject to obtaining the consents, approvals and actions, making the
filings and giving the notices disclosed in Section 2.4(c) of the
Disclosure Schedule, conflict with cr result in a violation or breach of
any term or provision of any License, Law or Order applicable to either
Seller, the Shareholder or any of the Purchased Assets; or
(c) except as disclosed in Section 2.4(c) of the Disclosure Schedule, (i)
conflict with or result in a violation or breach of, (ii) constitute (with
or without notice or lapse of time or both) a default under, (iii) require
either Seller or the Shareholder to obtain any consent, approval or action
of, make any filing with or give any notice to any Person is a result or
8
under the terms of, (iv) result in or give to any Person any right of
termination, cancellation, acceleration or modification in or with respect
to, (v) result in or give to any Person any additional rights or
entitlement to increased, additional accelerated or guaranteed payments
under, or (vi) result in the creation or imposition of any Lien upon either
Seller or any of the Purchased Assets under any Assigned Contract, Assigned
Lease or Assigned License.
2.5 Governmental Approvals and Filings. Except as set forth in Section
----------------------------------
2.5 of the Disclosure Schedule, no consent, approval or action of, filing with
or notice to any Governmental or Regulatory Authority on the part of either
Seller or the Shareholder is required in connection with the execution, delivery
and performance of this Agreement or any of the Related Agreements or the
consummation of the transactions contemplated hereby or thereby.
2.6 Books and Records. To the knowledge of the Sellers and the
-----------------
Shareholder, the Assigned Books and Records of the Sellers as made available to
the Buyer prior to the execution of this Agreement are true and complete, and
the summaries of any minute books and other similar records of the Sellers
relating to the Terminals and provided to the Buyer contain a true and complete
record, in all material respects, of all action taken with respect to the
Terminals and all meetings, and by written consent, of the board of directors
and committees of the board of directors of the Sellers. The Sellers and the
Shareholder have made reasonable efforts to locate and make available to the
Buyer those portions of the books and records of the Sellers insofar as they
exclusively relate to the Purchased Assets. The Sellers do not have any of the
Assigned Books and Records recorded, stored, maintained, operated or otherwise
wholly or partly dependent upon or held by any means (including any electronic,
mechanical or photographic process, whether computerized or not) which
(including all means of access thereto and therefrom) are not under the
exclusive ownership and direct control of either Seller or an Affiliate.
2.7 Financial Statement
-------------------
(a) Prior to the execution of this Agreement, the Sellers have delivered to
the Buyer and complete copies of the following financial statements, each
relating solely to the Purchased Assets: (i) a balance sheet as of, and an
income statement for the year ended December 31, 1997 and (ii) a balance
sheet as of, and an income statement for the nine months ended, September
30, 1998 (the " Financial Statements") which are attached hereto as Section
2.7(a) of the Disclosure Schedule.
(b) Except as set forth in the notes thereto, the Financial Statements have
been prepared in accordance with GAAP and fairly present in all material
respects the financial condition and results of operations of the Purchased
Assets as of the respective dates thereof and for the respective periods
covered thereby.
(c) Prior to the execution of this Agreement, the Shareholder has delivered
to the Buyer the balance sheet as of, and income statement for the period
ended, October 31, 1998 of the Shareholder, which are attached hereto as
Section 2.7(c) of the Disclosure Schedule. Since the date of such
financial statements, the Shareholder has not incurred any Indebtedness,
nor
9
has it suffered or otherwise incurred any material adverse change on its
business, assets or financial condition.
2.8 Absence of Changes. Except for the execution and delivery of this
------------------
Agreement and the transactions to take place pursuant hereto on or prior to the
Closing Date, since September 30, 1998, and except as set forth in Section 2.8
of the Disclosure Schedule there has not been any change, event or development
which, individually or together with other such events, could reasonably be
expected to have a Material Adverse Effect on either Terminal or the Purchased
Assets. Without limiting the foregoing. except as set forth in Section 2.8 of
the Disclosure Schedule, there has not occurred between the Financial Statement
Date and the date hereof.
(a) any declaration, setting aside or payment of any dividend or other
distribution involving any Purchased Asset in respect of the capital stock
of either Seller;
(b) any increase in the salary, wages or other compensation of any officer,
employee or consultant of either Seller with respect to the Purchased
Assets whose annual salary is, or after giving effect to such change would
be, Fifty Thousand Dollars ($50,000.00) or more; (ii) with respect to the
Purchased Assets, any establishment or modification of salary ranges,
guidelines or similar provisions in respect of any Plan, employment-related
Contract or other employee compensation arrangement; or (iii) any adoption,
entering into or becoming bound by any Plan, employment-related Contract or
collective bargaining agreement, or amendment, modification or termination
(partial or complete) of any Plan, employment-related Contract or
collective bargaining agreement, except to the extent required by
applicable Law;
(c) any physical damage, destruction or other casualty loss (whether or not
covered by insurance) affecting any of the Purchased Assets in an aggregate
amount exceeding Fifty Thousand Dollars ($50,000.00), individually, or Two
Hundred Fifty Thousand Dollars (S250,000.00) in the aggregate;
(d) any write-off or write-down, or any determination to write off or write
down, any of the Purchased Assets in an amount exceeding Fifty Thousand
Dollars (S50,000.00) individually or Two Hundred Thousand Dollars
(S200,000.00) in the aggregate;
(e) any incurrence of a Lien (other than a Permitted Lien) on any Purchased
Asset;
(f) except as would not adversely affect the ability of any party hereto to
consummate the transactions contemplated hereby, any (i) amendment of the
articles or certificate of incorporation or by-laws of either Seller, (ii)
recapitalization, reorganization, liquidation or dissolution of either
Seller or (iii) merger or other business combination involving either
Seller;
(g) any entering into, or material amendment, modification, termination
(partial or complete) or granting of a waiver under or giving any consent
with respect to any Material Assigned Contract or Assigned Lease or any
material Assigned License;
10
(h) with respect to the operation of the Terminals, any capital
expenditures or commitments for additions to property, plant or equipment
of the Sellers constituting capital assets in an aggregate amount exceeding
Two Hundred Thousand Dollars ($200,000.00) individually or One Million
Dollars ($I,000,000.00) in the aggregate;
(i) any commencement or termination by either Seller of any line of
business conducted at the Terminals;
(j) with respect to the operation of the Terminals, any transaction by
either Seller with any officer, director or Affiliate of such Seller (i)
outside the ordinary course of business and not consistent with past
practice or (ii) other than on an arm's-length basis;
(k) any other material transaction involving or development affecting the
Purchased Assets outside the ordinary course of business consistent with
past practice, or
(l) any entering into a Contract to do or engage in any of the foregoing
after the data hereof
2.9 No Undisclosed Liabilities. Except as reflected or reserved against
--------------------------
in the balance sheet included in the Financial Statements or in the notes
thereto, there are no Liabilities against relating to or affecting the Purchased
Assets, other than Liabilities: (a) incurred in the ordinary course of business
consistent with past practice; (b) which, individually or in the aggregate, are
not material to the Purchased Assets; (c) under the Sellers' contracts; (d)
otherwise expressly disclosed in the Disclosure Schedule; or (e) in respect of
warranty obligations and general liability claims.
2.10 Taxes. All Tax Returns for all taxable years or periods that end
-----
on or before the Closing Date and, with respect to any taxable year or period
beginning before and ending after the Closing Date, the portion of such taxable
year or period ending on and including the Closing Date "Pre-Closing Period"),
which are required to be filed by or with respect to the Sellers have been or
will be filed when due in a timely fashion and such Tax Returns as filed are or
will accurate in all material respects. There are no exemptions with respect to
the Real Property such that any change in land ownership would result in
subsequent or additional assessments. All Taxes owed by the Sellers have been
paid (whether or not shown on any Tax Return). Except for any extensions or
waivers that may exist in connection with the disputes listed on Section 2.11 of
the Disclosure Schedule, there are no agreements for the extension or waiver of
the time for assessment of any Taxes relating to either Seller for any period
prior to the Closing, and neither has been requested to enter into any such
agreement or waiver. No Claim has ever been made by any authority in any
jurisdiction where either Seller does not file Tax Returns that it is or may be
subject to the imposition of any Tax by that jurisdiction. The Sellers have
withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, consultant, independent
contractor, creditor, stockholder or other third party. To the knowledge of the
Sellers or the Shareholder, there is no dispute or claim concerning any
liability for Taxes of either Seller). Except for any extensions or waivers
that may exist in connection with the disputes listed on the Disclosure
Schedule, neither Seller has waived any statute of limitations in respect of
Taxes or agreed to any extension of time with respect to a Tax assessment or
deficiency. The unpaid taxes of the Sellers (i) did not, as of the
11
date of the Monthly Financial Statements, exceed the reserve for Tax liabilities
(other than any reserve for deferred Taxes established to reflect differences
between book and tax income) set forth on the face of the Financial Statements
(other than in any notes thereto) and (ii) do not exceed that reserve as
adjusted for the passage of time through the Closing Date in accordance with the
past custom and practice of the Sellers in filing in Tax Returns. Neither Seller
is now a party to any Tax allocation or sharing agreement that could result in
any liability to the Buyer. Neither Seller has ever been a party to such an
agreement that could, to the knowledge of the Sellers or the Shareholder, result
in any Liability to the Buyer. The Pier IX Terminal, in the case of the Pier IX
Terminal Company, and the Shipyard River Terminal, in the case of SRCT, has been
accounted for as a separate division, of the indicated Seller. None of the
Purchased Assets is property which is required to be treated as being owned by
any other person pursuant to the "safe harbor lease" provisions cf former Code
Section 168(f)(8). None of the Purchased Assets is "tax-exempt use property"'
within the meaning of Code Section 168(h).
2.11 Legal Proceedings. Except as disclosed in Section 2.11 of the
-----------------
Disclosure Schedule (with paragraph references corresponding to those set forth
below):
(a) there are no Actions or Proceedings pending or, to the knowledge of
either Seller or the Shareholder, threatened against, relating to or
affecting either Seller or the Purchased Assets which (i) could reasonably
be expected to result in the issuance of an Order restraining, enjoining or
otherwise prohibiting or making illegal the consummation of any of the
transactions contemplated by this Agreement or any of the Related
Agreements, or (ii) could reasonably be expected to result in (A) any
injunction or other equitable relief against such Seller that would
interfere in any material respect with the business or operations of the
Terminals or (B) Losses by either Seller with respect to the Purchased
Assets, individually or in the aggregate with Losses in respect of other
such Actions or Proceedings, exceeding One Hundred Thousand Dollars
($100,000.00).
(b) with respect to the Purchased Assets, there are no Claims or, to the
knowledge: either Seller or the Shareholder, facts, conditions or
circumstances that could reasonably be expected to give rise to any Action
or Proceeding that would be required to be disclosed pursuant to clause (a)
above; and
(c) there are no Orders outstanding against either Seller with respect to
the Purchased Assets which provide for injunctive relief, or with respect
to monetary damages exceed One Hundred Thousand Dollars ($100,000.00).
2.12 Compliance With Laws and Orders. Neither Seller is, and neither
-------------------------------
Seller has, at any time within the last five (5) years, been, and has not
received any notice that it is or has any time within the last five (5) years
been, in violation of or in default under any Law, Assigned License or Order
applicable to the Sellers in connection with any of the Purchased Assets, exempt
as would not reasonably be expected to have a Material Adverse Effect on either
of the Terminals.
2.13 Benefit Plans/ERISA.
-------------------
12
(a) Each profit sharing, 401(k), disability, medical, dental, severance
pay, vacation pay, sick pay, stock purchase, stock option, deferred
compensation, incentive compensation, fringe benefit, stay-with-bonus,
change of control agreement or other employee benefit plan, program, or
agreement, including without limitation any employee benefit plan as
defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), which is maintained or contributed to by either
Seller or any organization which is a member of a controlled group of
organizations within the meaning of Code Sections 414(b), (c), (m) or (o)
of which either Seller is a member (the "Controlled Group") or under which
either Seller or any member of the Controlled, Group has any liability or
contingent liability, and which cover the employees of the Terminals, shall
hereinafter be known as the "Plans."
(b) There are no material liabilities, breaches, violations or defaults
under any Plan which would subject the Purchased Assets or the Buyer to any
tans, penalties or other liabilities.
(c) Except as disclosed in Section 2.13 of the Disclosure Schedule, none of
the Plans is or has been subject to Title IV of ERISA. Except as disclosed
in Section 2.13 of the Disclosure Schedule, none of either Seller or any
entity required to be aggregated with either Seller for purposes of Section
414 of the Code or Section 4001 of ERISA his ever maintained, contributed
to, or had any liability for any employee pension benefit plan (as defined
in Section 3(2) of ERISA) that is or has been subject to Title IV of ERISA.
2.14 Real Property.
-------------
(a) Section 1.1(b) of the Disclosure Schedule lists and describes briefly
all Real Property owned by the Sellers and related to the Purchased Assets.
With respect to each such parcel of Real Property: (i) the Sellers have
good and marketable title to the Real Property, free and clear of any Lien
except for Permitted Liens; (ii) there are no pending or, to the knowledge
of either Seller or the Shareholder, threatened, condemnation proceedings,
lawsuits, or administrative actions relating to the Real Property; (iii)
the legal description for Real Property contained in the deed thereof
describes such Real Property fully and adequately, the buildings and
improvements are located within the boundary lines of the described parcels
of land, are not in violation of applicable setback requirements, zoning
laws, and ordinances (and, to the knowledge of the Sellers and the
Shareholder, none of the Real Property or buildings or improvements thereon
are subject to "permitted non-conforming use" or "permitted non-conforming
structure" classification), and do not encroach on any easement which may
burden the land, and the land does not serve any adjoining property for any
purpose inconsistent with the use of the land, except as is set forth on
Section 2.14(a) of the Disclosure Schedule, the property is not located
within any flood plain or subject to any similar type restriction for which
any material Assigned Licenses have not been obtained and access to the
property is provided by paved public right of way with adequate curb cuts
available; and (iv) except as set forth in Section 2.14
13
(a) of the Disclosure Schedule, there are no Leases, subleases, Licenses,
concessions cr other agreements, written or oral, granting to any party or
parties the right of use of occupancy of any portion of the Real Property.
(b) Section 1.1(c) of the Disclosure Schedule contains a true and correct
list of each parcel of Real Property leased by Sellers that is used by
either Terminal. Seller has not assigned, transferred, conveyed, mortgaged,
deeded in trust or encumbered any interest in such Leases, except for
assignments, transfers, conveyances, mortgages, deeds of trust cr other
encumbrances which will be released prior to Closing. To the knowledge of
the Sellers and the Shareholder, the Sellers have adequate rights of
ingress and egress respect to the Real Property listed in Section 2.15(b)
of the Disclosure Schedule and a3, buildings, structures, facilities,
fixtures and other improvements thereon. None of such Real Property,
buildings, structures, facilities, fixtures or other improvements, or the
current use thereof, contravenes or violates any building or zoning Law,
or, to the knowledge of the Sellers and the Shareholder, any
administrative, occupational safety and health or other applicable Law, in
each case, in any material respect (whether or not permitted on the basis
of prior nonconforming use, waiver or variance).
(c) Each lease referred to in Section 2.14(b) above is a legal, valid and
binding agreement enforceable in accordance with its terms against each of
the Seller party thereto and, to the knowledge of the Sellers and the
Shareholder, each other Person that is a party thereto, and neither Seller
is in, and neither Seller has received notice of any, default (cr any
condition or event which, after notice or lapse of time or both, would
constitute a default) thereunder. To the knowledge of the Sellers and the
Shareholder, neither Seller nor any other party to any Assigned Lease is in
breach or default, and no event has occurred which, with notice or lapse of
time, could reasonably be expected to constitute such a material breach or
material default or permit termination, modification cr acceleration under
such Assigned Lease.
(d) The Sellers have delivered or made available to the Buyer prior to the
execution of this Agreement (or will deliver to the Buyer prior to the
Closing) true and complete copies of (i) all deeds, leases, mortgages,
deeds of trust, certificates of occupancy, title insurance policies, title
reports, surveys, easements, rights of way, restrictions and similar
documents, and all amendments thereof, with respect to the Real Property
owned by the Sellers and (ii) all leases (including any amendments and
renewal letters).
(e) Except as set forth in Section 1.1(c) of the Disclosure Schedule, there
are no tenants or other parties in possession of any Real Property included
in the Purchased Assets. No Person has any right to purchase, or holds any
right of first refusal to purchase, such properties; and
(f) To the knowledge of the Sellers and the Shareholder, all public
utilities, including without limitation, water and wastewater, have been
extended to a boundary line of each tract of the Real Property through
adjoining public streets, or if they pass through adjoining private land,
do so in accordance with validly existing easements permitting such use,
and all installation and connection charges necessary to use such public
utilities have been paid in full.
14
All facilities located an the Real Property are supplied with utilities and
other services, including gas, electricity, water, telephone, sanitary
sewer, and storm sewer as are necessary for their current use, all of which
services are in accordance with all applicable laws, ordinances, rules and
regulations and are provided via public roads or via permanent,
irrevocable, appurtenant easements benefiting the Real Property.
2.15 Tangible Personal Property; Purchased Asset.
-------------------------------------------
(a) Except for dispositions and acquisitions of assets in the ordinary
course of business, the Purchased Assets include all of the assets
historically used in the operation of the Terminals. The Sellers are in
possession of and have good title to, or have valid leasehold interests in
or valid rights under Contract to use, all Tangible Property included in
the Purchased Assets, including all tangible personal property reflected on
the balance sheet included in the Financial Statements and tangible
personal property acquired since the Financial Statement Date, other than
property disposed of since such date in the ordinary course of business
consistent with past practice. All such tangible personal property is free
and clear of all Liens, other than Permitted Liens and Liens disclosed in
Section 2.15 of the Disclosure Schedule and its use complies in all
material respects with all applicable Laws and Orders.
(b) No equity interest in any Person is included in the Purchased Assets.
Neither the Purchased Assets nor any portion thereof comprises all or
substantially all of the assets of either Seller.
2.16 Intellectual Property Rights. The Sellers have interests in or
----------------------------
use only the Intellectual Property disclosed in Sections 1.1(g) and 1.2(j) of
the Disclosure Schedule, each of which the Sellers either have all right, title
and interest in or a valid and binding right under Contract to use. To the
knowledge of the Sellers and the Shareholder, the Sellers have the right to use
the Intellectual Property disclosed in Section 1.1(g) of the Disclosure
Schedule. There are no restrictions on the direct or indirect transfer of any
Contract, or any interest therein, held by the Sellers in respect of such
Intellectual Property. Since January 1, 1997, the Sellers have taken reasonable
security measures to protect the secrecy, confidentiality and value of its trade
secrets. With respect to the Terminals, neither Seller is, and neither Seller
has received any notice that it is, in default (or with the giving of notice or
lapse of time or both, would be in default) under any Contract to use such
Intellectual Property. To the knowledge of the Sellers and the Shareholder, no
such Intellectual Property is being infringed by any other Person. Neither
Seller has received notice that it is infringing any Intellectual Property of
any other Person, no Claim is pending or has been made to such effect that has
not been resolved, and, to the knowledge of the Sellers and the Shareholder,
neither Seller is infringing any Intellectual Property of any other person with
respect to the Terminals.
2.17 Contracts.
---------
(a) The Sellers or the Shareholder have delivered to the Buyer all Assigned
Contracts, and have made available to the Buyer all contracts related to
the Terminals. Section 2.17(a) of the Disclosure Schedule (with paragraph
references corresponding to those set forth below)
15
contains a true and complete list of all. Assigned Contracts (true and
complete copies of which, together with all amendments and supplements
thereto and all waivers of any terms thereof have been delivered to the
Buyer prior to the execution of this Agreement) of the following types
(the"Material Assigned Contracts"):
(i) (A) all Material Assigned Contracts (excluding Plans) providing
for a commitment of employment or consultation services for a specified or
unspecified term or otherwise relating to employment or the termination of
employment; and (B) any written or unwritten representations, commitments,
promises, communications or courses of conduct (excluding Plans) and any
such Assigned Contracts referred to in clause (A) involving an obligation
of the Sellers to make payments in any year, other than with respect to
salary or incentive compensation payments in the ordinary course of
business, to any employee exceeding Fifty Thousand Dollars ($50,000.00);
(ii) (A) all Assigned Contracts with any Person containing any
provision or covenant prohibiting or limiting the ability of either Seller
to engage in any business activity or compete with any Person or
prohibiting or limiting the ability of any Person to compete with either
Seller,
(iii) all Contracts relating to Indebtedness of either Seller which
relate to the Purchased Assets;
(iv) all Assigned Contracts with distributors, dealers,
manufacturer's representatives, sales agencies or franchisees;
(v) all Assigned Contracts relating to the future disposition or
acquisition of any assets relating to the Terminals, other than
dispositions or acquisitions in the ordinary course of business consistent
with past practice;
(vi) all Assigned Contracts between either Seller, on the one hand,
and any Affiliate an the other hand, which shall survive the Closing;
(vii) all collective bargaining or similar labor Contracts which are
Assigned Contracts;
(viii) all Assigned Contracts that (A) contain provisions calling for
the sale or purchase of raw materials products or services at prices that
vary from the market prices of such raw materials, products and services
generally prevailing in customary third party markets; (B) include "take or
pay," "meet or release" "most favored nations" or similar pricing and
delivery arrangements;
(ix) all Assigned Contracts relating to preferential access to any
facility located at the Terminals; and
16
(x) all other Assigned Contracts (other than Plans and Assigned
Leases) that (A) involve the payment or potential payment, pursuant to the
terms of any such Contract, by or to either Seller of more than One Hundred
Fifty Thousand Dollar ($150,000.00) annually and (B) cannot be terminated
within thirty (30) days after giving notice of termination without
resulting in any material cost or penalty to either Seller.
(b) Each Material Assigned Contract is in full force and effect and,
assuming valid execution and delivery of such Material Assigned Contract by
the other parties thereto, constitutes legal, valid and binding obligations
of such Seller, enforceable against such Seller in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other Laws affecting creditors' rights
generally; and except as disclosed in Section 2.17(b) of the Disclosure
Schedule, neither the Sellers nor, to the knowledge of the Sellers and the
Shareholder, any other party to such Contract is, or has received notice
that it is in violation or breach of or default under any such Contract (or
with notice or lapse of time or both, would be in violation or breach of or
default under any such Contract) in any material respect.
2.18 Licenses. Section 1.1(h) of the Disclosure Schedule contains a true
--------
and complete list of all material Licenses and pending applications for material
Licenses required or used in the operation of the Terminals, setting forth the
grantor, the grantee, the function and the expiration and renewal date of each.
Prior to the execution of this Agreement, the Sellers have delivered to the
Buyer true and complete copies of all such Assigned Licenses. Except as
disclosed in Section 2.19 of the Disclosure Schedule:
(a) the Sellers own or validly hold all material Assigned Licenses.
(b) each Assigned License is valid, binding and in full force and effect
and transferable to the Buyer in accordance with this Agreement;
(c) neither Seller is, and neither Seller has received any written notice
that it is, in default (or with the giving of notice or lapse of time or
both, would be in default) under any Assigned License; and
(d) to the knowledge of either Seller or the Shareholder, there has been no
indication that Assigned License may be issued, renewed, modified or
revoked on terms or conditions that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse on either Terminal.
2.19 Insurance. Section 2.19 of the Disclosure Schedule contains a true
---------
and complete list (including the names of the insurers and the names of the
Persons to whom such policies have been issued) of all liability, property and
workers' compensation, insurance policies currently in effect that insure the
Terminals operations or employees working at or for the Terminals or affect or
relate to the ownership, use or operation of any of the Purchased Assets and
that (a) have been issued to either Seller or (b) have been issued to any Person
(other than the Sellers) for the benefit of either Seller. Each policy listed in
Section 2.19 of the Disclosure Schedule is, to the knowledge of the Sellers and
17
the Shareholder, valid and binding and in full force and effect. All premium due
under such policies have been paid, and neither Seller has received any written
notice of cancellation or termination in respect of any such policy or is in
default thereunder.
2.20 Affiliate Transactions.
----------------------
(a) Except as set forth in Section 2.20 of the Disclosure Schedule, with
respect to the Purchased Assets, (i) there are no intercompany Liabilities
between either Seller, on the one hand, and any Affiliate, on the other,
which shall survive the Closing, (ii) no Affiliate provides or causes to be
provided any assets, services or facilities to either Seller, (iii) neither
Seller provides or causes to be provided any assets, services or facilities
to any such Affiliate and (iv) neither Seller beneficially owns, directly
or indirectly, any Investment Assets issued by any such Affiliate.
(b) Since the Financial Statement Date, and with respect to the Purchased
Assets, all settlements of intercompany Liabilities between either Seller,
on the one hand, and any Affiliate on the other, have been made, and all
allocations of intercompany expenses have been applied in the ordinary
course of business consistent with past practices.
2.21 Employees; Labor Relations. With respect to the Purchased Assets.
--------------------------
(a) no employee of either Seller working at either Terminal is presently a
member of a collective bargaining unit, and, to the knowledge of either
Seller or the Shareholder, there are no threatened or contemplated attempts
to organize for collective bargaining purposes any of the employees of
either Seller, (b) no unfair labor practice complaint or sex, age, race or
other discrimination claim has been brought during the last five (5) years
against either Seller before the National Labor Relations Board, the Equal
Employment Opportunity Commission or any other Governmental or Regulatory
Authority and (c) since January 1, 1997, there has been no work stoppage,
strike or, to the knowledge of either Seller or the Shareholder, other
concerted action by such employees. During that period, the Sellers have
complied in all material respects with all applicable Laws relating to the
employment of labor, including, without limitation those relating to wages,
hours and collective bargaining.
2.22 Environmental Matters. With respect to the Purchased Assets.
---------------------
(a) Except as disclosed in Section 2.22 of the Disclosure Schedule, the
ownership, us-e and operation by the Sellers and, to the knowledge of the
Sellers and the Shareholder, all past owners and operators of the Terminals
have been, are and will be on the Closing Date, in compliance with all
Environmental Laws, and no Environmental Action has been filed, commenced
or threatened with or against any of them for failure to so comply.
(b) Except as would not have a Material Adverse Effect on the Purchased
Assets, the Sellers have made timely applications for and received all
Environmental Permits required to allow them to conduct their operations,
such Environmental Permits are valid and in effect, and the Sellers are in
compliance with such Environmental Permits.
18
(c) The Sellers have never disposed o& sent or arranged for the
transportation of Hazardous Materials at or to a site, or owned or operated
a site, which, pursuant to CERCLA or any similar or analogous state law,
has been placed or is proposed to be placed (by the United State
Environmental Protection Agency (the "EPA") or similar state authority) to
be an the "National Priorities List", as in effect as of the Closing date,
of hazardous waste sites or any similar state list.
(d) To the knowledge of the Sellers and the Shareholder (i) neither Seller
has been identified by the United States Environmental Protection Agency or
similar state authority as a potentially responsible party under CERCLA or
any similar or analogous state law with respect to any hazardous waste
sites; (ii) no Hazardous Material which has been generated, transported or
disposed of by or on behalf of either Seller has been found at any site
which a Person has conducted or has ordered that either Seller conduct a
remedial investigation, removal or other investigation, removal or other
response action pursuant to any Environmental Law; or (iii) neither Seller
is or shall be a named party to any Environmental Action arising out of any
Person's incurrence of costs, expenses, losses or damages of any kind
whatsoever in connection with the release of Hazardous Materials.
(e) Section 2.22 of the Disclosure Schedule lists all underground storage
tanks located at the Real Property included in the Purchased Assets.
(f) Except as set forth an Section 2.22 of the Disclosure Schedule, since
January 1, 1997, or to the knowledge of the Sellers or the Shareholder
prior to such date, there have been no Releases, or, to the knowledge of
the Sellers and the Shareholder, threatened Releases that are or at any
time were likely to occur, of Hazardous Materials on, upon, into or from
the Real Property, except in compliance with Environmental Laws, or except
as could not reasonably be expected to have a Material Adverse Effect.
(g) Except as set forth on Section 2.22 of the Disclosure Schedule, to the
knowledge of the Sellers and the Shareholder, there have been and are no
Releases on, upon, from or in any real property within a one-mile radius of
the Real Property, which, through the soil, groundwater or surface water
have come, or could reasonably be expected to come, to be located on, upon
or under the Real Property, except in compliance with Environmental Laws or
except as could not reasonably be expected to have a Material Adverse
Effect.
2.23 Substantial Customers.
---------------------
(a) Section 2.23(a) of the Disclosure Schedule lists the five (5) largest
customers of each Terminal, on the basis of projected revenues for services
provided in 1998.
(b) No such customer has ceased or materially reduced its use of the
services of either Terminal since the Financial Statement Date or, to the
knowledge of either Seller or the Shareholder, has threatened to cease or
materially reduce such purchases, use, sales or provision of services after
the date hereof.
19
(c) Except for relationships with Affiliates, with respect to the Purchased
Assets, neither Seller (nor any director, officer or employee of such
Seller) possesses, directly or indirectly, any financial interest in any
corporation, firm, association or business organization which is a
supplier, customer, lessor, lessee or competitor of either Seller.
2.24 No Powers of Attorney. As of the Closing, neither Seller will have
---------------------
any powers of attorney or comparable delegations of authority outstanding with
respect to any Purchased Asset.
2.25 Solvency. Neither Seller is entering into this Agreement with actual
--------
intent to hinder, delay or defraud creditors.
2.26 Government Contracts. Neither Seller, with respect to the Purchased
--------------------
Assets.
(a) has any Contracts with any agency of the Government of the United
States involving any information, technology or data which is classified
under Executive Order 12356 of April 2, 1982; or
(b) has any products or services (including research and development) with
respect to which such Seller (1) is a supplier, direct or indirect, to any
of the military services of the United States or the Department of Defense,
other than the United States Coast Guard, except the supply to individuals
of such military in their individual capacity, or (ii) has technology which
has or could have military applications.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER AND THE PARENT
In order to induce the Sellers and the Shareholder to enter into this
Agreement, the Buyer and the Parent make the representations and warranties set
forth below which are true, correct and complete on the date hereof and shall be
true correct and complete as of the Closing. Except as set forth in those
sections of the Disclosure Schedule corresponding to the sections below:
3.1 Organization. The Buyer is a limited partnership duly organized,
------------
validly existing and in good standing under the laws on the State of Delaware.
The Buyer has full power, authority and capacity to execute and deliver this
Agreement and the Related Agreements and to perform its obligations hereunder
and thereunder and to consummate the transactions contemplated hereby and
thereby.
3.2 Execution and Delivery. The execution, delivery and performance of
this Agreement and the Related Agreements by the Buyer and the Parent and the
consummation of the transactions contemplated hereby and thereby, have been duly
authorized and approved by the board of directors of the general partner of the
Buyer and the Parent, and no other action on the part of the Buyer or the Parent
is necessary to authorize the execution, delivery and performance of this
Agreement and the Related Agreements by the Buyer and the Parent and the
consummation of the transactions contemplated hereby and thereby. This Agreement
has been duly and validly executed and delivered
20
by the Buyer and the Parent and constitutes, and upon the and delivery by the
Buyer of the Related Agreements, the Related Agreements will constitute, legal,
valid and binding obligations of the Buyer and the Parent, as the case may be,
enforceable against the Buyer and the Parent in accordance with their terms,
assuming valid execution and delivery of this Agreement and the Related
Agreements by the Sellers and the Shareholder, and except as enforceability may
be limited by bankruptcy, insolvency, reorganizations, moratorium or other Laws
affecting creditors' rights generally.
3.3 Authority. The Buyer has full corporate power and authority to its
---------
business as and to the extent now conducted and to own, use and lease its Assets
and Properties. The Buyer his, prior to the execution of this Agreement,
delivered to the Sellers true and complete copies of the Certificate of Limited
Partnership and Agreement of Limited Partnership of the Buyer as in effect on
the date hereof. Upon Closing, the Buyer will be duly qualified, licensed or
admitted to do Business and is in good standing in those jurisdictions specified
in Section 3.3 of the Disclosure Schedule.
3.4 No Conflicts. The execution and delivery by the Buyer and the Parent
------------
of this Agreement and the Related Agreements, the performance of their
respective obligations under this Agreement and such Related Agreements and the
consummation of the transactions contemplated hereby and thereby do not and will
not:
(a) conflict with or result in a violation or breach of any of the terms,
conditions or provisions of their respective Certificates of Limited
Partnership or Agreements of Limited Partnership of the Buyer;
(b) subject to obtaining the consents, approvals and actions, making the
filings and giving, the notices disclosed in Section 3.4(c) of the
Disclosure Schedule, conflict with or result in a violation or breach of
any term or provision of any Law or Order applicable to the Buyer, the
Parent or any of their respective assets or properties; or
(c) except as disclosed in Section 3.4(c) of the Disclosure Schedule, (i)
conflict with or result in a violation or breach of, (ii) constitute (with
or without notice or lapse of time or both) a default under, (iii) require
the Buyer or the Parent to obtain any consent approval or action of, make
any filing with or give any notice to any Person as a result or under the
terms of, (iv) result in or give to any Person any right of termination
cancellation, acceleration or modification in or with respect to, (v)
result in or give to any Person any additional rights or entitlement to
increased, additional accelerated or guaranteed payments under, or (vi)
result in the creation or imposition of any Lien upon the Buyer or the
Parent or any of their respective assets or properties under any Contract
or License to which the Buyer or the Parent is a party or by which any of
the Buyer's or Parent's assets or properties is bound.
3.5 Governmental Approvals and Filings. Except as disclosed in Section
----------------------------------
3.5 of the Disclosure Schedule, no consent, approval or action of, fifing with
or notice to any Governmental or Regulatory Authority an the part of the Buyer
is required in connection with the execution delivery and performance of this
Agreement or any of the Related Agreements or the consummation of the
transactions contemplated hereby or thereby.
21
3.6 Financial Ability to Perform. The Buyer has available to it funds
----------------------------
sufficient to enable the Buyer to deliver the Purchase Price to the Sellers as
contemplated by this Agreement at the Closing and perform its obligations
hereunder.
ARTICLE IV
CONDITIONS TO CLOSING
4.1 Conditions to Obligation of the Buyer to Close. The obligation of the
----------------------------------------------
Buyer to effect the closing of the transactions contemplated by this Agreement
is subject to the satisfaction prior to or at the Closing of the following
conditions:
(a) Representations and Warranties. The representations and warranties of
------------------------------
the Sellers and the Shareholder under this Agreement shall be true and
correct in all material respects as of the Closing Date with the same
effect as though made on and as of the Closing Date; provided, however,
that the representations and warranties of the Sellers and the Shareholder
contained in Section 2.17 shall be deemed to be true and correct in all
material respects so long as (i) the aggregate amount of all Assigned
Contracts which were not disclosed to or made available to the Buyer prior
to the date hereof does not exceed Fifty Thousand Dollars ($50,000.00), or
(ii) any Assigned Contract which was not delivered to the Buyer is not
otherwise material to the conduct of the operations of either Terminal.
(b) Observance and Performance. The Sellers and the Shareholder shall have
--------------------------
performed and complied with all covenants and agreements required by this
Agreement to be performed and complied with by them prior to or as of the
Closing Date, including the execution and delivery of the Related
Agreements.
(c) No Adverse Change. There shall have occurred no event or events which
-----------------
individually or in the aggregate would constitute a Material Adverse Effect
an the Purchased Assets since the Financial Statement Date.
(d) Officer's and Shareholder's Certificate. The Sellers and the
---------------------------------------
Shareholder shall have delivered to the Buyer a certificate, dated the
Closing Date, executed by the President cf each Seller and an officer of
the Shareholder, and certifying to the satisfaction of the conditions
specified in Sections 4.1(a), (b), (c) and (h) hereof.
(e) Consents of Third Parties. The Sellers and the Shareholder shall have
-------------------------
delivered to the Buyer duly executed copies of those consents and
assignments listed in Section 4.1(e) of the Disclosure Schedule.
Additionally, any financing statement terminations shall have been filed as
necessary to remove any liens or security interests applicable to the Real
Property.
(f) Legal Opinion. The Buyer shall have received an opinion, dated the
-------------
Closing Date, from ▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇ PLLC, counsel to the Sellers, in
such form reasonably agreed upon by the parties hereto and such legal
opinions with respect to the Bonds as may reasonably request.
22
(g) Closing Documents. The Buyer shall have received such further
-----------------
instruments and documents, normal and customary for transactions such as
those contemplated by this Agreement as may be reasonably required for the
Buyer to consummate the transactions contemplated hereby.
(h) No Legal Actions. No Governmental or Regulatory Authority shall have
----------------
issued an order not subsequently vacated, restraining, enjoining or
otherwise prohibiting the consummation of the transactions contemplated by
this Agreement. No Person shall have instituted an action or proceeding
which shall not have been previously dismissed or otherwise settled seeking
to restrain, enjoin or prohibit the consummation of the transactions
contemplated by this Agreement or seeking damages with respect thereto.
(i) Proceeding. All corporate and other proceedings and actions taken in
----------
connection with the transactions contemplated hereby and all certificates
and opinions mentioned herein or incident to any such transaction shall be
reasonably satisfactory in form and substance to the Buyer and its counsel.
(j) Title Policies. The Sellers shall have provided to the Buyer (i) a
--------------
commitment for an ALTA Form B-1987 title policy issued by Lawyer's Title
Insurance Corporation or First American Title Insurance Corporation (each a
"Title Company") with respect to the Real Property insuring title of the
Real Property (and specifically insuring as an insured parcel any easements
benefiting the Real Property) to be in the Buyer as of the Closing Date,
subject only to those exceptions approved by the Buyer in writing prior to
the Closing which do not have a material adverse effect on the value of the
Real Property or Buyer's contemplated use of the Real Property and/or the
Terminals and (ii) legible (to the extent reasonably possible) copies of
the title exception documents referenced in the commitments with respect
thereto. At the Closing the Sellers, shall provide to the Buyer ALTA title
policies (the "Title Policies") insuring the Real Property (and
specifically insuring as an insured parcel any easements benefiting the
Real Property) subject only to those exceptions approved by the Buyer in
writing prior to the Closing which do not have a material adverse effect on
the value of the Real Property or Buyer's contemplated use of the Real
Property and/or the Terminals in the aggregate amount of Thirty Five
Million Dollars ($35,000,000.00) issued by the Title Companies. The Title
Policies, the down dates of the Title Policies and any endorsements
reasonably requested by the Buyer shall be in forms and in amounts and from
issuers reasonably satisfactory to the Buyer. Within(60) days after
Closing, the Sellers shall obtain and deliver to the Buyer, at the Sellers'
sale cost and expense, surveys of the Real Property as are necessary to
enable the Title Company to down date the Title Policies within one hundred
twenty (120) days after Closing, delete the survey exception from the Title
Policies (or otherwise provide a survey endorsement), delete any exceptions
which initially appeared on the Title Policies but which are revealed by a
survey to not encumber or adversely affect the Real Property on its current
or substantially similar use (regardless of whether the Buyer previously
approved the same) and provide (without obligation to provide any letters
of credit, bonds or other secured indemnities) such other affirmative
insurance or other endorsements, to the extent such are available at
commercially reasonable rates (it being agreed that the inability to
provide such affirmative insurance or other endorsements at
23
commercially reasonable rates shall not affect the indemnification
obligations of the Sellers and the Shareholder under Article VI of this
Agreement) as the Buyer reasonably may request based upon its review of the
surveys; such surveys shall be certified to the Buyer with a certificate
acceptable to the Buyer, shall be prepared in accordance with current with
current ALTA Minimum Detail Requirements for Land Surveys and shall not
disclose any material survey defect or encroachment which has not been
cured or insured over on the down dates of the Title Policies. The cost of
the policy premiums, endorsements and down dates shall be paid for by the
Sellers. The Sellers shall deliver to Buyer and the Title Companies any
further affidavits, agreements and assurances necessary to issue the Title
Policies. Time obligations of Sellers under this Section 4.16) shall
survive the Closing.
(k) Inventory. The product inventory referenced in Section 5.9 hereof
---------
shall have been completed.
(l) Real-Property Consents and Information. As soon as is practicable
--------------------------------------
after the date hereof, the Sellers and the Shareholder shall have delivered
to the Buyer such information and documents relating to the Real Property
as the Buyer reasonably may request in order to evaluate any restrictions,
easements and other interests relating to the Real Property. Within 2
business days of delivery to the Buyer of all documents reasonably
requested, the Buyer shall communicate to the Sellers those consents and/or
assignments under such documents as are reasonably material to the conduct
of each Terminal which the Buyer shall require to be delivered prior to the
Closing, and as a condition to the Buyer's obligations to effect the
Closing, the Buyer shall have received such consents and assignments.
4.2 Conditions to Obligations of the Sellers and the Shareholder to Close.
---------------------------------------------------------------------
The obligations of the Sellers and the Shareholder to affect the closing of the
transactions contemplated by this Agreement are subject to the satisfaction
prior to or at the Closing of the following conditions:
(a) Representations and Warranties. The representations and warranties of
------------------------------
the Buyer under this Agreement shall be true and correct. in all material
respects as of the Closing Date with the same effect as though made an and
as of the Closing Date.
(b) Observance and Performance. The Buyer shall have performed and
--------------------------
compiled with all covenants and agreements required by this Agreement to be
performed and completed with by it prior to or as of the Closing Date,
including the execution and delivery of the Related Agreements.
(c) Officer's Certificate. The Buyer shall have delivered to the Sellers
---------------------
and the Shareholder a certificate, dated the Closing Date, executed by an
officer of the Buyer and certifying to the satisfaction of the conditions
specified in Sections 4.2 (a), (b) and (e) hereof.
(d) Legal Opinion. The Sellers and the Shareholder shall have received an
-------------
opinion, dated the Closing Date, from ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, L.L.P, counsel
to the Buyer, in the form reasonably agreed upon by the parties hereto.
24
(e) No Legal Actions. No Governmental or Regulatory Authority shall have
----------------
issued an order, not subsequently vacated, restraining, enjoining or
otherwise prohibiting the consummation of the transactions contemplated by
this Agreement. No person, firm, corporation or governmental agency shall
have instituted an action or proceeding which shall not have been
previously dismissed seeking to restrain, enjoin or prohibit the
consummation of the transactions contemplated by this Agreement or seeking
damages with respect thereto.
(f) Closing Documents. The Sellers shall have received such further
-----------------
instruments and documents, normal and customary for transactions such as
those contemplated by this Agreement, as may be reasonably required for the
Sellers to consummate the transactions contemplated hereby.
(g) Proceedings. All corporate and other proceedings and actions taken in
-----------
connection with the transactions contemplated hereby and all certificates
and opinions mentioned herein or incident to any such transaction shall be
reasonably satisfactory in form and substance to the Sellers, the
Shareholder and their counsel.
(h) Inventory. The product inventory referenced in Section 5.9 hereof
---------
shall have been completed.
ARTICLE V
COVENANTS
5.1 Conduct of the Terminals Pending the Acquisition. The Sellers and the
------------------------------------------------
Shareholder agree that, from the date hereof until Closing, except to the went
that the Buyer shall. otherwise consent in writing:
(a) the Sellers shall (i) operate the Terminals in the ordinary course of
business consistent with past practice, and with respect to the Purchased
Assets, except as otherwise set forth in the Disclosure Schedule, use their
respective reasonable best efforts to preserve intact their respective
present business organizations and relationships with persons having
business relationships with them; (ii) maintain all, of the Purchased
Assets in substantially the same condition as such Purchased Assets exist
on the date hereof, ordinary wear and tear excepted; (iii) insure all of
the Purchased Assets in such amounts and of such kinds comparable to that
in effect on the date hereof, to the extent available at current premiums;
(iv) maintain the Books and Records in the usual, regular and ordinary
manner, on a basis consistent with past practice; and (v) not execute or
permit any easement, restriction, lease or other encumbrance of any nature
with respect to the Real Property.
(b) no amendment shall be made to the articles or certificate of
incorporation or the Bylaws of either Seller in any manner which would
adversely affect the consummation of the transactions contemplated hereby;
(c) neither Seller shall issue any capital stock, nor shall it grant any
Option in any manner which would adversely affect the consummation of the
transactions contemplated hereby,
25
(d) there shall not be any declaration or payment of any dividend or other
distribution in respect to the capital stock of either Seller insofar as
such distribution would include or involve Purchased Assets;
(e) neither Seller shall, (i) other than in the ordinary course of
business, with respect to the Purchased Assets, enter into any employment
contract or consulting agreement or make any offer of employment to any
persons or offer to engage any person as a consultant, or (U) other than
pursuant to any written Contract, increase the wages, salary, fees or other
compensation of any person(s) presently employed or rendering any
service(s) at the Terminals;
(f) except in the ordinary course of business, neither Seller shall enter
into, materially amend or renew, or waive or release any rights of material
value under, any Material Assigned Contract (including Real Property and
capital leases and contracts for the purchase and/or sale of capital
equipment), Assigned Lease or Assigned License;
(g) neither Seller shall take any action, directly or indirectly, to
negotiate or discuss with any Person or entity, or solicit from any person
or entity, any offer or indication of interest regarding (i) any sale,
transfer or disposition of Purchased Assets other than in the ordinary
course of business, or (ii) except as would not adversely affect the
consummation of the transactions contemplated hereby, (A) any merger or
consolidation of either Seller with any Person other than the Buyer, (B)
any equity or debt investment in either Seller by any Person other than the
Buyer, or (C) any sale or transfer by the shareholders of either Seller of
its capital stock;
(h) the Sellers shall not sell, transfer or dispose of any of the Purchased
Assets other than obsolete equipment or other assets sold, transferred or
disposed of in the ordinary course of business; provided, however, that any
sale, transfer or disposition of any Purchased Assets in the ordinary
course of business shall not exceed a value of more than Two Hundred
Thousand Dollars ($200,000.00) in the aggregate;
(i) the Sellers shall not grant any Lien (except a Permitted Lien) on any
of the Purchased Assets or allow any such Lien (except a Permitted Lien) to
occur or to be created;
(j) except in the ordinary course of business, the Sellers shall not
acquire any tangible properties or assets relating to the Terminals; and
(k) the Sellers shall not incur any Liability, guaranty or obligation
(fixed or contingent) relating to the Terminals other than in the ordinary
course of business.
5.2 Books and Records; Access and Information. From the date of this
-----------------------------------------
Agreement until the Closing, the Sellers and the Shareholder shall give to the
Buyer, its officers and representatives reasonable access to the premises, books
and records of the Sellers relating to the Purchased Assets, and provide the
Buyer with such financial and operating data and other information with respect
to the Terminals as it shall from time to time reasonably request, including,
without limitation, all interim
26
financial data as soon as it becomes available; provided, however, that any such
investigation shall be conducted in such manner as not to interfere unreasonably
with the operation of the Terminals.
5.3 Notification of Certain Matter. Subsequent to the date of this
------------------------------
Agreement and on or prior to the Closing, the Sellers and the Shareholder, on
the one hand, and the Buyer on the other, shall each promptly notify the other
of:
(a) the receipt of any notice of, or other communication relating to, a
default or event which, with notice or lapse of time or both, would become
a default under any Material Assigned Contract;
(b) the receipt of any notice or other communication from any third party
whose consent or approval is or may be required in connection with the
transactions contemplated by this Agreement, denying such consent or
approval;
(c) the receipt of any notice or other communication from any Governmental
or Regulatory Authority in connection with the transactions contemplated
hereby;
(d) any event or events which individually or in the aggregate would have
a Material Adverse Effect on the Purchased Assets; or
(e) any condition or fact which would not permit either of them to satisfy
a condition to the others obligation to effect the transactions
contemplated hereby, or any event or condition known to or discovered by
them, as applicable, which if it existed on the date of this Agreement or
on the Closing Date, would result in any of the representations and
warranties of the applicable party contained herein being untrue in any
material respect.
5.4 Confidentiality. Each of the parties hereto agrees that it shall, and
---------------
shall cause its subsidiaries and the officers, employees and authorized
representatives of each of them to hold in strict confidence all data and
information obtained by them from the other parties hereto (unless such
information is required to be disclosed in legal or administrative proceedings)
and shall not, and shall ensure that such subsidiaries, directors, officers,
employees and authorized representatives do not, disclose such information to
others without the prior written consent of the party from which such data or
information was obtained. In the event of the termination of this Agreement,
each of the parties will return or destroy all documents, work papers and other
materials (including all copies made thereof) obtained pursuant hereto.
5.5 Cooperation by the Parties.
--------------------------
(a) Consents. The parties hereto shall use their reasonable best efforts
--------
(which shall include such best efforts up to and after the Closing) to
cooperate with each other to secure all necessary consents, approvals,
authorizations, exemptions and waivers from third parties (including
consents and assignments under those agreements listed on Section 2.4(c) of
the Disclosure Schedule) as shall be required in order to enable the
parties to effect the transactions contemplated hereby, and the parties
hereto shall otherwise use their reasonable
27
best efforts to cause the consummation of such transactions in accordance
with the terms and conditions hereof and to cause all conditions contained
in this Agreement over which each of them respectively has control to be
satisfied; provided, however, that nothing contained herein shall require
the parties to pay any remuneration in order to obtain such consents or to
file a lawsuit or other action to obtain such consents. To the extent the
Title Policies are not finalized prior to Closing as agreed by the Sellers
and the Buyer, the Sellers and the Shareholder covenant to promptly comply
with the terms of Section 4.10) after Closing.
(b) Cooperation with Respect to Examinations and Controversies. The Buyer
----------------------------------------------------------
and the Sellers shall use all reasonable efforts to cooperate with each
other and their respective representatives, in a prompt and timely manner,
in conjunction with any inquiry, audit, examination, investigation, dispute
or litigation involving any Tax Return (collectively, the "Tax Disputes")
relating to the Purchased Assets and relating to any federal, state or
local Taxes (i) filed or required to be filed by or for the Sellers for any
taxable period beginning before the Closing Date, or (ii) filed or required
to be filed by or for the Buyer for any taxable period ending after the
Closing Date. Notwithstanding anything to the contrary herein, the Sellers
shall retain control of any Tax Dispute to the extent such Tax Dispute
arises out of or is related to events or circumstances prior to the Closing
and the Buyer shall retain control of any Tax Dispute to the extent such
Tax Dispute arises out of or is related to events or circumstances after
the Closing. Such cooperation shall include, but not be limited to,
reasonable access to the Terminals, making available to one another during
normal business hours, and within ten (10) days of any reasonable request
therefor, all books, records and information and the assistance of all
officers and employees., reasonably required in connection with any Tax
inquiry, audit, examination, investigation, dispute, litigation or any
other matter. The parties hereto agree to conduct any investigation or
examination hereunder without causing any material interference or
disruption of the operations of the business of any other party hereto or
their Affiliates. The Sellers will retain, until the expiration of the
applicable statutes of limitations (including any extensions thereof)
copies of all Tax Returns, supporting work schedules and other records
relating to Taxes for all taxable years or periods (or portions thereof)
ending on or prior to the Closing Date.
5.6 Antitrust Notification. The Buyer and the Sellers (or the "Ultimate
----------------------
Parent Entity or Entities" (as defined in the HSR Act) of the Sellers) have
filed with the United State Federal Trade Commission (the "FTC") and the United
States Department of Justice (the "DOJ") their portion of the notification and
report form required for the transactions contemplated hereby and any
supplemental information requested in connection therewith pursuant to the ▇▇▇▇-
▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of ▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇) in substantial
compliance with the requirements of the HSR Act. Each party shall furnish to
the other such necessary information and reasonable assistance as such other
party may reasonably request in connection with its preparation of any
supplemental filing or submission which is necessary under the HSR Act. Each
party shall keep the other apprised of the status of any communications with,
and inquiries cr requests for additional information from, the FTC or the DOJ
and shall comply with any such inquiry or request. Each party shall use its
best efforts to obtain any clearance required under the HSR Act for the purchase
and sale of the Purchased Assets. The parties have requested an early
termination of the waiting period
28
provided by Section 7A(b)(1) of the ▇▇▇▇▇▇▇ Act and Section 803.10(b) of the
pre-merger notification rules.
5.7 The Sellers' Employees. The Sellers have provided to the Buyer as of
----------------------
the date hereof a list of employees of the Sellers associated with the Terminals
setting forth the status of such employees and their compensation, who will be
full-time, active employees on the Closing Date, including those on temporary
leave for jury duty, family and short-term medical leave, vacation or military
duty. For purposes of this Section 5.7, ▇▇▇▇ Nues shall be considered as an
employee of the Sellers, though he is actually employed by one of their
corporate affiliates. The Buyer shall provide to the Sellers at least five (5)
days prior to the Closing Date a list of such employees to whom the Buyer will
offer employment (the "Employee List"). Employees of the Sellers who accept
offers of employment with the Buyer and become employees of the Buyer prior to
the Closing shall be referred to herein as "Transferred Employees." Employees
of the Sellers not offered employment or who decline employment, and Transferred
Employees who do not report for work with the Buyer shall remain the
responsibility of the Sellers. Except as expressly provided otherwise, herein,
the terms of the Transferred Employees' employment shall be upon such terms and
conditions as the Buyer, in its sole discretion, shall determine. The Buyer
shall count and credit each Transferred Employee's years of service with the
Sellers for purposes, of eligibility to participate in any benefits generally
available to the Buyer's employees. This provision shall not be construed to
create any third party beneficiaries nor to vest any rights in parties other
than those signatories to this Agreement.
5.8 Compliance with Agreements Regarding Industrial Revenue Bonds.
-------------------------------------------------------------
(a) In connection with the Sellers' existing obligations with respect to
the Industrial Revenue Refunding Bonds, Series 1997, issued by Charleston
County, South Carolina to finance the Shipyard River Terminal, and the
Port Facility Refunding Revenue Bonds, Series 1997, issued by Peninsula
Ports Authority of Virginia to finance the Pier IX Terminal (collectively,
the "Bonds"), the Buyer agrees to the following, for as long as the Buyer
shall operate the applicable Terminal:
(i) notwithstanding Section 3.8(b) below, the Buyer shall not
operate the Pier IX Terminal or the Shipyard River Terminal in a manner
inconsistent with their current operations.
(ii) the Buyer shall maintain, or cause to be maintained, the
Terminals and keep, or cause to be kept, the Terminals insured (by third
parry insurance, self-insurance or otherwise) against loss in accordance
with customary industry practices;
(iii) with respect to each Terminal, the Buyer shall take all steps
necessary to comply with the covenants set forth in this Section 5.8 for so
long as the Bonds applicable to such Terminal, or any substitutes therefor
or refinancing thereof, remain outstanding;
(iv) the Buyer shall, upon request of the Sellers, provide periodic
certification, in form and substance reasonably satisfactory to the
Sellers, that it is in compliance with the covenants set forth in this
Section 5.8.
29
(b) The provisions of this Section 5.8(a) are subject to the following
limitations: Subject to Section 5.8(i) above, if because of any force
majeure the Buyer is unable in whole or in part to carry out the agreements
of the Buyer listed in Section 5.8(a), the Buyer shall not be deemed in
default by reason of not carrying out said agreements during the
continuance of such inability so long as the Buyer shall make reasonable
effort to remedy with all reasonable dispatch the cause or causes
preventing it from carry out its agreements. The term "force majeure" as
used herein shall mean the following: Acts of God, strikes, lockouts or
other industrial disturbances; acts of public enemies; orders of any kind
of the Government of the United States or of the State or any of their
departments, agencies or officials, or any civil or military authority;
insurrections; riots; epidemics; landslides; earthquakes; fire; hurricanes;
storms; floods; washouts; droughts; tornadoes; arrests; restraint of
government and people; civil disturbances; explosions, breakage or accident
to machinery; partial or entire failure of utilities; or any other cause or
event not reasonably within the control of the Buyer, it being agreed that
the settlement of strikes, lockouts and other industrial disturbances shall
be entirely within the discretion of the Buyer, and the Buyer shall not be
required to make settlement of strikes, lockouts and other industrial
disturbances by acceding to the demands of the opposing party or parties
with such course is in the judgment of the Buyer unfavorable to the Buyer.
(c) Prior to the sale or other transfer of either Terminal, the Buyer will
require that any successor operator of the transferred Terminal agree in
writing to be bound by the obligations of this Section 5.8.
5.9 Product Inventory. Prior to the Closing, the parties hereto shall
-----------------
cooperate in performing and completing (or having performed and completed) an
assessment or inventory (the "Inventory") of the volume of products located at
each Terminal for terminaling or storage services. The cost of such Inventory
shall be borne equally the Sellers and the Shareholder, on the one hand, and the
Buyer and the Parent on the other. If the parties are unable to agree on the
Inventory, an independent consultant or expert shall be retained (with the cost
shared equally by the Buyers and the Parent, on the one hand, and the Sellers
and the Shareholder on the other) to conduct the Inventory. To the extent the
results of the Inventory reflect any product losses compared to the inventory of
product which, according to the records of the Terminals, should be located at
the Terminals, the Purchase Price shall be reduced to compensate the Buyer for
the shortfall.
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification by the Sellers and the Shareholder. The Sellers and
--------------------------------------------------
the Shareholder, jointly and severally, hereby agree to indemnify and hold
harmless the Buyer and its Affiliates (the "Buyer Indemnitees") from and after
the Closing Date from and against all damages, including penalties arising
pursuant to any statute, losses, deficiencies, costs, expenses, obligations,
fines, expenditures, Claims and liabilities, including reasonable counsel fees
and reasonable expenses of investigation, defending and prosecuting litigation
(but excluding consequential, punitive or exemplary damages other than any such
damages paid by or owing from the Buyer or the Parent or
30
to any third party) (collectively, the "Losses"), suffered by the Buyer
Indemnitees as a result of, caused by, arising out of, or in any way relating to
and with respect to any of the following:
(a) any misrepresentation or breach of warranty on the part of either
Seller or the Shareholder under this Agreement (including the Disclosure
Schedule) or any Related Agreement furnished or to be furnished to the
Buyer by either Seller or the Shareholder pursuant to the terms of this
Agreement;
(b) any non-fulfillment of any covenant or agreement on the pan of either
Seller or the Shareholder under this Agreement; and
(c) the Pre-Closing Liabilities;
(d) any matters revealed by (i) surveys of the Real Property which are
delivered to Buyer by the Sellers after Closing; (ii) the down dates of the
Title Policies required by Section 4.1(j) hereof, or (iii) title exception
documents delivered to Buyer by Seller after the date hereof to the extent
that any of the foregoing have a material adverse effect on the value of
the Real Property or the contemplated use thereof by the Buyer,
(e) any of the representations and warranties of the Sellers under Section
2.14 hereof being found to be untrue, incomplete or inaccurate in any
material respect;
(f) any breach by the Sellers or failure by the Sellers to perform their
obligations under Section 4.10(j) hereof, and
(g) failure of the Sellers to obtain any consents required to transfer the
Real Property to the Buyer, including without limitation all consents
(other than consents required pursuant to documents delivered to the Buyer
prior to Closing) necessary to transfer to the Buyer easements and rights
of way benefiting the Real Property, to the extent that failure to obtain
such consents has a material adverse effect on the value of the Real
Property or the contemplated use thereof by the Buyer.
6.2 Indemnification by the Buyer and the Parent. The Buyer and the
-------------------------------------------
Parent, jointly and severally, hereby agree to indemnify and hold harmless the
Sellers, the Shareholder and their Affiliates (the "Seller Indemnities") from
and after the Closing Date from and against all Losses suffered by the Seller
Indemnitees as a result of, caused by, arising out of, or in any way relating to
and with respect to any of the following:
(a) any misrepresentation or breach of warranty on the part of the Buyer
or the Parent under this Agreement (including the Disclosure Schedule) or
any Related Agreement furnished or to be furnished to the Sellers or the
Shareholder by the Buyer or the Parent pursuant to the terms of this
Agreement;
(b) any non-fulfillment of any covenant or agreement an the part of the
Buyer or the Parent under this Agreement; and
31
(c) the Post-Closing Liabilities.
6.3 Procedures for Indemnification.
------------------------------
(a) If there occurs an event which either party asserts is an
indemnifiable event pursuant to Section 6.1 or 6.2, the party seeking
indemnification (the "Indemnitee") shall provide notice (the "Notice of
Claim") to the other party or parties obligated to provide indemnification
(the "Indemnifying Party") promptly. Providing the Notice of Claim shall be
a condition precedent to any liability of the Indemnifying Party hereunder,
and the failure to provide prompt notice as provided herein will relieve
the Indemnifying Party of its obligations hereunder only to the extent that
such failure prejudices the Indemnifying Party hereunder. In case any such
action shall be brought against any Indemnitee and it shall provide a
Notice of Claim to the Indemnifying Party of the commencement thereof, the
Indemnifying Party shall be entitled to participate therein and, to the
extent that it shall wish, to assume the defense thereof, with counsel
reasonably satisfactory to such Indemnitee and, after notice from the
Indemnifying Party to such Indemnitee of such election so to assume the
defense thereof the Indemnifying Party shall not be liable to the
Indemnitee hereunder for any legal expenses of other counsel or any other
expenses, in each case subsequently incurred by the Indemnitee, in
connection with the defense thereof other than reasonable costs of
investigation. The Indemnitee agrees to cooperate fully with the
Indemnifying Party and its counsel in the defense against any such asserted
liability. In any event, the Indemnitee shall have the right to participate
at its own expense in the defense of such asserted liability. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnitee, consent to entry of any
judgment or enter into any settlement which does not include as an
unconditional term thereof the release from all liability in respect to
such claim or litigation. The Indemnifying Party agrees to afford the
Indemnitee and its counsel the opportunity to be present at, and to
participate in, conferences with all persons, including any Governmental
and Regulatory Authority, asserting any claim against the Indemnitee or
conferences with representatives of or counsel for such persons. In no
event shall the Indemnifying Party, without the consent of the Indemnitee,
settle any claim on terms which provide for (i) a criminal sanction against
the Indemnitee or (ii) injunctive relief materially and adversely affecting
the Indemnitee.
(b) Upon receipt of a Notice of Claim, the Indemnifying Party shall have
twenty (20) calendar days to contest its indemnification obligation with
respect to such claim, or the amount thereof, by written notice to the
Indemnitee (the "Contest Notice"); provided, however, that if, at the time
a Notice of Claim is submitted to the Indemnifying Party the amount of the
Loss in respect thereof has not yet been determined, such twenty (20) day
period shall not commence until a further written notice (the "Notice of
Liability") has been sent or delivered by the Indemnified Party to the
Indemnifying Party setting forth the amount of the Loss incurred by the
Indemnified Party that was the subject of the earlier Notice of Claim. Such
Contest Notice shall specify the reasons or bases for the objection of the
Indemnifying Party to the claim, and if the objection relates to the amount
of the Loss asserted, the amount, if any, which the Indemnifying Party,
believes is due the Indemnified Party. If no such Contest Notice is given
with such twenty (20) day period, the obligation
32
of the Indemnifying Party to pay the Indemnified Party the amount of the
Loss set forth in the Notice of Claim or subsequent Notice of Loss, shall
be deemed established and accepted by the Indemnifying Party.
(c) If the Indemnifying Party fags to assume the defense of such Claim or,
having assumed the defense and settlement of such Claim, fails reasonably
to contest such Claim in good faith, the Indemnitee, without waiving its
right to indemnification, may assume, a: the cost of the Indemnifying
Party, the defense and settlement of such Claim; provided however, that (i)
the Indemnifying Party shall be permitted to join in the defense and
settlement of such Claim and to employ counsel at its own expense, (ii) the
Indemnifying Party shall cooperate with the Indemnitee in the defense and
settlement of such Claim in any manner reasonably requested by the
Indemnitee, and (iii) the Indemnitee shall not settle such Claim without
soliciting the views of the Indemnifying Party and giving them due
consideration.
6.4 Survival.
--------
(a) The liability of the Sellers and the Shareholder for their
indemnification obligations arising under this Agreement shall be limited
to claims for which a Buyer Indemnitee delivers written notice to the
Sellers or the Shareholder on or before the second, anniversary date of the
Closing Date; provided, however that any indemnification obligation
relating to (i) Taxes shall be limited to claims for which a Buyer
Indemnitee delivers written notice to the Sellers or the Shareholder on or
before the expiration of any statute of limitations, (ii) title to the
Purchased Assets shall not be limited as to time, and (iii) Pre-Closing
Liabilities shall not be limited as to time.
(b) The liability of the Buyer and the Parent for the Buyer's and the
Parent's indemnification obligations arising out of Section 6.2 shall be
limited to claims for which a Seller Indemnitee delivers written notice to
the Buyer on or before the third anniversary date of the Closing Date;
provided, however, that any indemnification obligation relating to (i)
Post-Closing Liabilities and (ii) the Buyers and the Parent's obligations
under Section 5.8 shall not be limited as to time.
6.5 Limitations on Indemnification. No Indemnifying Party hereto shall be
------------------------------
liable to indemnify for Losses under Article VI hereof unless the aggregate
amount of Losses for which such Indemnifying Party would, but for the provisions
of this Section 6.5, be liable to indemnify exceeds, on an aggregate basis, One
Hundred Thousand Dollars ($100,000.00); provided, however, that such threshold
shall not apply to matters related to title to the Purchased Assets, Pre-Closing
Liabilities, Post-Closing Liabilities, Taxes or any of the matters described in
Section 5.8, 6.1(d), Section 6.1(e), 6.1(f) or 6.1(g) hereof. Notwithstanding
anything in this Agreement to the contrary, the maximum indemnification
liability of the Sellers and the Shareholder, on the one hand; and the Buyer and
the Parent on the other, shall not exceed Twelve Million Six Hundred Thirty-
eight Thousand Dollars ($12,638,000.00) in the aggregate, provided that such
limitations shall not apply to matters related to title to the Purchased Assets,
Pre-Closing Liabilities or any of the matters described in Section 6.1(d),
6.1(e), 6.1(f) or 6.1(g) hereof, in the case of the Sellers and the Shareholder,
or Post-Closing
33
Liabilities or the obligations of the Buyer contained in Section 5.8 hereof, in
the case of the Buyer and the Parent.
6.6 Payment of Damages. The Indemnifying Party shall pay to the
------------------
Indemnified Party in immediately available funds any amounts to which the
Indemnified Party may become entitled by reason of the provisions of this
Agreement subject to offset for any insurance proceeds actually received by the
Indemnified Party, such payment to be made within five days after any such
amounts are finally determined either by mutual agreement of the parties hereto
or pursuant to the final judgment of in arbitrator. The availability of
insurance proceeds shall not delay or postpone any indemnification payment
required hereunder. If the Indemnified Party both collects any such insurance
proceeds and receives a payment from the Indemnifying Party hereunder, and the
sum of such proceeds and payment is in excess of the amount payable with respect
to the matter that it's the subject of the indemnity, then the Indemnified Party
shall, promptly refund to the Indemnifying Party the amount of such excess, if
permitted by the applicable insurance policy(ies). Except as otherwise provided
in the preceding sentence, the Indemnified Party's receipt of any such insurance
proceeds shall not eliminate or reduce the obligations of the Indemnifying Party
or the rights of the Indemnified Party hereunder.
ARTICLE VII
TERMINATION
7.1 Termination. This Agreement may be terminated at any time prior to
-----------
the Closing Date:
(a) by mutual consent of the Buyer and the Sellers;
(b) by either the Sellers or the Buyer after December 15, 1998 (or such
later date as the Closing has been extended by mutual agreement of the
parties hereto) if the Closing has not occurred by such date, provided that
as of such date neither the Sellers, on one hand, and the Buyer, on the
other, is in default under this Agreement; or
(c) by either the Buyer, on the one hand, or the Sellers on the other,
without prejudice to other rights and remedies which the terminating party
may have (provided the terminating party is not otherwise in material
default or breach of this Agreement, or has not failed or refused to close
without justification hereunder), if the other party shall (i) materially
fail to perform its covenants or agreements contained herein required to be
performed on or prior to the Closing Date, or (ii) materially breach or
have breached any of its representations or warranties contained herein;
provided, however, that in the case of clause (i) or (ii), the defaulting
party shall have a period of ten (10) days following written notice from
the non-defaulting party to cure any breach of this Agreement, if such
breach is curable.
7.2 Effect of Termination. In the event of the termination of this
---------------------
Agreement by either the Buyer or the Sellers, as provided above, this Agreement
shall thereafter become void except as provided in Sections 5.4, 8.1, 8.2 and
8.10 hereof and except that any such termination shall be
34
without prejudice to the rights of any party hereto arising out of the willful
breach by any other party of any covenant or agreement contained in this
Agreement.
ARTICLE VIII
MISCELLANEOUS
8.1 Expenses. Whether or not the transactions contemplated hereby arm
--------
consummated, all costs and expenses (including without limitation the fees and
expenses of investment bankers, attorneys and accountants) incurred in
connection with this Agreement and transactions contemplated hereby shall be
borne by the Buyer, in the case of costs and expenses incurred by the Buyer, by
the Sellers in the case of costs and expenses incurred by the Sellers.
8.2 Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duty given if given) by hand delivery, transmitted by
telegram, telex or telecopy or mailed by registered or certified mail, postage
prepaid, return receipt requested, as follows:
(a) If to the Buyer to:
c/o ▇▇▇▇▇▇ ▇▇▇▇▇▇ Energy Partners, L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Bracewell & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Sellers to:
▇▇▇▇▇▇▇ Coal Holding Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
35
▇▇▇▇▇, ▇▇▇▇ & Heyburn PLLC
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Notice given by personal delivery, courier service or mail shall be effective
upon actual receipt. Notice given by telecopier shall be confirmed by
appropriate answer back and shall be effective actual receipt if received during
the recipient's normal business hours, or at the beginning of the recipient's
next business day after receipt if not received during the recipient's normal
business hours. Any party may change any address to which Notice is to be given
to it by giving Notice as provided above of such change of address.
8.3 Amendments. No supplement, modification or waiver of this Agreement
----------
shall binding unless executed in writing by the party to be bound thereby.
8.4 Waiver. At any time prior to the Closing, the Buyer or the Sellers
------
may (a) extend the time for the performance of any of the obligations or other
acts of the other party hereto, waive any inaccuracies in the representations
and warranties of the other party contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the obligations of the
other party or any of the conditions to its own obligations contained herein to
the extent permitted by law. Any agreement on the part of the Buyer, on the one
hand, and the Sellers on the other to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of the
Buyer and the Sellers. The failure of a party to exercise any right remedy
shall not be deemed or constitute a waiver of such right or remedy in the
future. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provision hereof (regardless of whether
similar), nor shall any such waiver constitute a continuing waiver unless
otherwise expressly provided.
8.5 Public Announcements. Prior to the Closing, except as required by
--------------------
applicable law or by any rule or regulation of the New York Stock Exchange, no
party hereto shall issue any press release or otherwise make any public
statement with respect to this Agreement and the transactions contemplated
hereby without the prior written consent of the other parties hereto, such
consent not to be unreasonably withheld. With respect to any public statement
of party that does not require the consent of the other party, the party making
such statement shall, prior to public disclosure thereof, first consult with and
provide the other party of a reasonable opportunity to review the contents of
such statement.
8.6 Head. The headings contained in this Agreement are for reference
----
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
8.7 Nonassignability. This Agreement shall not be assigned by operation
----------------
of law or otherwise without the prior written consent of all parties hereto;
provided, however, that the parties
36
specifically consent to (a) an assignment by the Buyer to ▇▇▇▇▇▇ ▇▇▇▇▇▇ Bulk
Terminals, Inc. and (b) an assignment by the Sellers and/or the Shareholder to
an Affiliate.
8.8 Parties in Interest. This Agreement shall be binding upon and inure
-------------------
solely to the benefit of the parties hereto and their successors and permitted
assigns, and nothing in this Agreement, expressed or implied, is intended to
confer upon any other person any rights or remedies of any nature under or by
reason of this Agreement.
8.9 Counterparts. This Agreement may be executed in one or more
------------
counterparts each of which shall be deemed to constitute an original and shall
become effective when one or more have been signed by each of the parties
hereto.
8.10 Governing Law; Consent to Jurisdiction. This Agreement shall be
--------------------------------------
governed by and construed and enforced in accordance with the laws of the State
of Delaware, without regard to its conflicts of law rules. Subject to Section
8.13, each of the parties hereto agrees that action or proceeding brought to
enforce the rights or obligations of any party hereto under this agreement may
be commenced and maintained in any court of competent jurisdiction located im
the State of Delaware, and that any Delaware State court or Federal court
sitting in the State of Delaware shall have non-exclusive jurisdiction over any
such action, suit or proceeding brought by any of the parties hereto. Each of
the parties hereto further agrees that process may be served upon it by
certified mail, return receipt requested, addressed as more generally provided
in Section 8.2 hereof, and consents to the exercise of jurisdiction over it and
its properties with respect to any action, suit or proceeding arising out of or
in connection with this Agreement or the transactions contemplated hereby or the
enforcement of any rights under this Agreement.
8.11 Severability. If any term, provision, covenant or restriction of
------------
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such which may be hereafter declared invalid, void or unenforceable. In such
case, the parties hereto shall promptly meet and negotiate substitute provisions
for those rendered or declared illegal or unenforceable so as to preserve nearly
as possible the contemplated economic effects of the transactions contemplated
hereby.
8.12 Entire Agreement. This Agreement and the exhibits and schedules
----------------
hereto and the Related Agreements constitute the entire agreement among the
parties hereto and supersede all prior agreements and understandings oral or
written, among the parties hereto with respect to three subject matter hereof
and thereof There are no warranties, representations or other agreements between
the parties in connection with the subject matter hereof except as set forth
specifically herein or contemplated hereby.
8.13 Arbitration.
-----------
37
(a) The parties hereby agree that all controversies which may arise among
the parties concerning any construction, performance or breach of this
Agreement or the Related Agreements which has not been resolved within
twenty (20) days after either the Buyer or the Sellers have notified the
other in writing of such controversy, dispute or claim shall be settled by
arbitration administered by the American Arbitration Association or any
successor thereof under its Commercial Arbitration rules (the "Rules") in
effect on the date hereof, except as such Rules may be modified by the
Agreement.
(b) The Buyer and the Sellers each shall select one (1) arbitrator (who
shall not be counsel for such party), and the two (2) so designated shall
select a third arbitrator. If either party shall fail to designate an
arbitrator within seven (7) calendar days after arbitration is requested,
or if the two (2) arbitrators shall fail to select a third arbitrator
within fourteen (14) calendar days after arbitration is requested, then
such arbitrator shall be selected by the AAA or any successor thereto upon
application of either party. Judgment upon any award of the majority of
arbitrators shall be binding and shall be entered in a court of competent
jurisdiction. Subject to the provisions of thus Agreement, including but
not limited to Section 8.17, the award of the arbitrators may grant any
relief that a court of general jurisdiction has authority to grant,
including, without limitation, an award of damages and/or injunctive
relief, and shall assess, in addition, the cost of the arbitration,
including the reasonable fees of the arbitrator, reasonable attorneys' fees
and costs of all prevailing parties, against all non-prevailing, parties.
(c) Nothing herein contained shall bar the right of any of the parties to
seek and obtain temporary injunctive relief from a court of competent
jurisdiction in accordance with applicable law against threatened conduct
that will cause loss or damage, pending completion of the arbitration, and
the prevailing party therein shall be entitled to an award of its
reasonable attorneys' fees and costs.
(d) The arbitration shall take place at a mutually agreeable site in
Wilmington, Delaware.
[PAGES 41 AND 42 MISSING]
"Books and Records" means all documents instruments, papers, books and
records, books of account, files and data (including customer and supplier
lists), catalogs, brochures, sales literature, promotional material,
certificates and other documents used in or associated with the conduct of the
Terminals or the ownership of the Purchased Assets, including without limitation
financial statements, Tax Returns, ledgers, minute books, copies of Contracts,
Licenses and Permits, operating data and environmental studies and plans.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. (S) 9601 et seq.).
"Claim" means any action, suit, proceeding, hearing, investigation,
litigation, charge, complaint, claim, Environmental Action or demand of which
either Seller has received written notice.
38
"Closing" has the meaning set forth in Section 1.9.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the regulations promulgated and rulings issued thereunder. Section
references to the Code are to the Code as in effect at the date of this
Agreement and any subsequent provisions of the Code amendatory thereof,
supplemental thereto or substituted therefor.
"Contract" means any agreement, lease, evidence of Indebtedness, mortgage,
indenture, security agreement or other contract (whether written or oral).
"Disclosure Schedule" means the schedules attached hereto and incorporated
herein by reference of the Sellers, the Shareholder, the Buyer and the Parent as
appropriate in the context and as referenced throughout this Agreement.
"Environmental Action" means any administrative, regulatory or judicial
action, suit, demand, claim, notice of non-compliance or violation,
investigation, request for information, proceeding, consent order or consent
agreement by any Person relating in any way to any Environmental Law or any
Environmental Permit.
"Environmental Laws" means any applicable federal, state or local law,
statute, rule, regulation or ordinance in effect on the date of this Agreement
relating to the environment, human health or safety, pollution or other
environmental degradation or Hazardous Materials.
"Environmental Permit" means any permit, approval, identification number,
certificate, registration, license or other authorization required under any
Environmental Law.
"Financial Statement Date" means September 30, 1998.
"Financial Statements" has the meaning set forth in Section 2.7(a).
"GAAP" means generally accepted accounting principles consistently applied
(as such term is used in the American Institute of Certified Public Accountants
Professional Standards) as of the date of the Financial Statements.
"Governmental or Regulatory Authority" means any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any domestic or foreign state, county,
city or other political subdivision.
"Hazardous Materials" means (a) petroleum or petroleum products, fractions,
derivatives or additives, natural or synthetic gas, asbestos, urea formaldehyde
foam insulation, polychlorinated biphenyls and radon gas, (b) any substances
defined as or included in the definition of "hazardous wastes," "hazardous
materials," "extremely hazardous wastes," "extremely hazardous substances,"
"restricted hazardous wastes," "toxic substances," toxic chemicals or "toxic
pollutants," "contaminants," or "pollutants" or words of similar import under
any Environmental Law, (c)
39
radioactive materials, substances and waste, and radiation, and (d) any other
substance exposure to which is regulated under any Environmental Law.
"Indebtedness" of any Person means any obligations of such Person (a) for
borrowed money, (b) evidenced by notes, bonds, indentures or similar
instruments, (c) for the deferred purchase price of goods and services (other
than trade payables incurred in the ordinary course of business), (d) under
capital leases and (e) in the nature of guarantees of the obligations ascribed
in clauses (a) through (d) above of any other Person.
"Intellectual Property" means all patents, copyright registrations,
trademark and service ▇▇▇▇ registrations, applications for any of the foregoing,
and whether or not registered, all designs, copyrights, trademarks, service
marks, trade names, secret formulae, trade secrets, secret, processes, computer
programs, and confidential information, including all rights to any such
property which is owned by and licensed from others and any goodwill associated
with any of the above.
"Investment Assets" means all debentures, notes and other evidence of
Indebtedness, stocks, securities (including rights to purchase and securities
convertible into or exchangeable for other securities), interests in joint
ventures and general and limited partnership, mortgage loans and other
investment or portfolio assets owned of record or beneficially by the Sellers
and issued by any Person other than the Sellers (other than trade receivables
generated in the ordinary course of business).
"Knowledge of the Buyer," "the Buyer's Knowledge," "Known to the Buyer" or
other like words mean the actual knowledge of the individuals set forth in
Section 9.1 of the Disclosure Schedule, without any duty of inquiry other than
the duty to review the representations and warranties of the Sellers, the
Shareholder and the Buyer contained herein as qualified by the Disclosure
Schedule.
"Knowledge of the Sellers and the Shareholder," "the Sellers' or the
Shareholder's Knowledge," "Known to the Sellers or the Shareholder," or other
like words mean the knowledge of the individuals set forth in Section 9.1 of the
Disclosure Schedule without duty of inquiry other than the duty to review the
Sellers' and the Shareholder's representations and warranties contained herein
as qualified by the Disclosure Schedule.
"Laws" means all laws, statutes, rules, regulations, ordinances and other
pronouncements in effect on the date of this Agreement having the effect of law
of the United States, any foreign country or any domestic or foreign state,
county, city or other political subdivision or of any Governmental or Regulatory
Authority and "Laws" includes, without Limitation, all Environmental Laws.
"Liabilities" means all Indebtedness and other liabilities and obligations
to pay, perform or discharge any costs, expenses and obligations of a Person
(whether known, unknown, absolute, accrued, contingent, fixed or otherwise or
whether due or to become due) and all costs, expenses and obligations related to
any of the foregoing.
40
"Licenses" means all licenses, permits, certificates of authority,
authorizations, approvals, registrations, franchises, Environmental Permits and
sm-lar consents granted or issued by any Person and are associated with or
necessary to operate the Purchased Assets or the Terminals.
"Liens" means any mortgage, pledge, assessment, security interest, lease,
lien, adverse claims, levy, charge, option, right of first refusal, charges,
debentures, indentures, deeds of trust, easements, rights-of-way, restrictions,
encroachments, licenses, Leases, Permits, security agreements, or other
encumbrance of any kind and other restrictions or limitations on the use or
ownership of real or personal property or irregularities in title thereto or any
conditional sale Contract, title retention Contract or other Contract to give
any of the foregoing.
"Losses" has the meaning set forth in Section 6.1.
"Material Adverse Effect" means with respect any Person, changes in the
business, assets, financial condition or results of operations of such Person
resulting in a loss therefrom in excess of Five Hundred Thousand Dollars
($500,000.00); provided that, to the extent Material Adverse Effect shall relate
to more than one Person, the such term shall mean, with respect to such group of
Persons, changes in the business, assets, financial condition or Five Hundred
Thousand Dollars ($500,000.00).
"Option" with respect to any person means any security, right,
subscription, warrant, option, "phantom" stock right or other Contract that
gives the right to (a) purchase or otherwise receive or be issued any shares of
capital stock of such person or any security of any kind convertible into or
exchangeable or exercisable for any shares of capital stock of such Person or
(b) receive or exercise any benefits or rights similar to any rights enjoyed by
or accruing to the holder of shares of capital stock of such Person, including
any rights to participate in the equity, or
income of such Person or to participate in or direct the election of any
directors or officers of such Person or the manner in which any shares of
capital stock of such Person are voted.
"Order" means any write, judgment, degree, injunction, or similar order of
any Governmental or Regulatory Authority (in each such case whether preliminary
or final).
"Permitted Lien" means (a) any Lien for Taxes not yet due or delinquent or
being contested in good faith by appropriate proceedings for which adequate
reserves have been established in accordance with GAAP, (b) liens in favor of
landlords, carriers, warehousesmen, mechanics, workmen and materialmen and
statutory construction or similar liens arising by operation of law or incurred
in the ordinary course of business for sums not yet due or that are being
contested in good faith as to which adequate reserves exist (to the extent such
reserves are required by GAAP), (c) water rights or claims or title to water,
whether or not shown by the public records, (d) any Lien created by the Buyer,
(e) any Liens which will be related or discharged as of or before Closing, (f)
liens in respect of pledges or deposits under workers' compensation laws or
similar legislation, unemployment insurance or other types of social security
or to secure the performance and return of money bonds and similar obligations,
(g) rights reserved to or vested in any Governmental Authority to control or
regulate any real property or interests therein in any manner, and all Laws of
any Governmental Authority, (h) matters of title respect the Real Property shown
on the Title
41
Policies, and (i) unrecorded easements, permits and other restrictions or
limitations on the use of the Real Property subject to such Lien(s) or the use
of the Real Property and/or the Terminals.
"Persons" means any natural person, corporation, general partnership,
limited partnership proprietorship, other business organization, trust, union,
association of Governmental or Regulatory Authority.
"Plans" has the meaning set forth in Section 2.13(a).
"Real Property" has the meaning set forth in Section 1.1(b).
"Related Agreements" means the ▇▇▇▇ of Sale, substantially in the form of
Exhibit A hereto, and any other agreement, certificate or similar document
executed pursuant to this Agreement.
"Release" means any release, issuance, disposal, discharge, dispersal,
leaching or migration into the indoor or outdoor environment or into or out of
any property, including the movement of Hazardous Materials through the air,
soil, surface water, ground water or property other than as specifically
authorized by (and then only to the extent in compliance with) all Environmental
Laws and Environmental Permits.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules, regulations and interpretations of the Securities and Exchange Commission
thereunder, all as shall be in effect at the time.
"Taxes" means any and all taxes, fees, levies, duties, tariffs, import and
other charges, imposed by any taxing authority, together with any related
interest, penalties or other additions to tax, or additional amounts imposed by
any taxing authority, and without limiting the generality of the foregoing,
shall include net income alternative or add-on minimum tax, gross income, gross
receipts, sales, use ad valorem, value added, franchise, profits, license,
transfer, recording, escheat, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property, windfall profit, environmental,
custom duty, or other tax, governmental fee or other like assessment or charge
of any kind whatsoever.
"Tax Return" means all returns, reports and forms required to be filed with
respect to Taxes.
9.2 Other Terms. Other terms may be defined elsewhere in the text of this
-----------
Agreement and shall have the meaning indicated throughout this Agreement.
9.3 Other Definitional Provisions.
-----------------------------
(a) The words "hereof," "herein" and "hereunder," and words of similar
import, when used in this Agreement, shall refer to this Agreement as a
whole and not any particular provision of this Agreement.
42
(b) The terms defined in the singular shall have a comparable meaning when
used in the plural, and vice versa.
(c) The terms defined in the neuter or masculine gender shall include the
feminine, neuter and masculine genders, unless the context clearly
indicates otherwise.
(d) For purposes of this Agreement, "ordinary course of business" shall
include, without limitation, spot service agreements and negotiating
contract renewals consistent with past practices.
43
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of the Buyer and the Sellers on the date first
above written.
BUYER:
▇▇▇▇▇▇ ▇▇▇▇▇▇ OPERATING L.P. "C"
By: Kinder ▇▇▇▇▇▇ ▇.▇., Inc.
its general partner
By: /s/
Name:
Title:
PARENT:
▇▇▇▇▇▇ ▇▇▇▇▇▇ ENERGY PARTNER, L.P.
By: Kinder ▇▇▇▇▇▇ ▇.▇., Inc.
its general partner
By: /s/
Name:
Title:
47
SELLERS:
MOUNTAINEER COAL DEVELOPMENT COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Name: Sec./Treas.
Title:
SHIPYARD RIVER COAL TERMINAL COMPANY
By: /s/ ▇▇▇ ▇▇▇▇▇
Name: ▇▇▇ ▇▇▇▇▇
Title: Treasurer
SHAREHOLDER:
▇▇▇▇▇▇▇ COAL HOLDING COMPANY
By: /s/ ▇▇▇ ▇▇▇▇▇
Name: ▇▇▇ ▇▇▇▇▇
Title: Treasurer
48
SELLER:
MOUNTAINEER COAL DEVELOPMENT
COMPANY
By: /s/ ▇▇▇ ▇▇▇▇▇
-------------------------------
Name: ▇▇▇ ▇▇▇▇▇
Title: Treasurer
SHIPYARD RIVER COAL TERMINAL
COMPANY
By: /s/ ▇▇▇ ▇▇▇▇▇
-------------------------------
Name: ▇▇▇ ▇▇▇▇▇
Title: Treasurer
SHAREHOLDER:
▇▇▇▇▇▇▇ COAL HOLDING COMPANY
By:________________________________
Name:
Title:
49