EXHIBIT 2.1
CONFORMED COPY
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ASSET PURCHASE AGREEMENT
Among
▇▇▇▇▇▇ HYDROCARBONS & CHEMICALS, INC.,
▇▇▇▇▇▇ CORPORATION
and
SPECIFIED FUELS & CHEMICALS, L.L.C.
July 31, 1997
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TABLE OF CONTENTS
Page
ARTICLE I
CLOSING 1
ARTICLE II
PURCHASE AND SALE 2
Section 2.1 Purchased Assets and Excluded Assets 2
Section 2.2 Purchase Price 3
Section 2.3 Final Determination of Net Working Capital 3
Section 2.4 Payment of Adjusted Purchase Price 4
Section 2.5 Allocation of Purchase Price 5
Section 2.6 Prorations 5
Section 2.7 Additional Purchase Price Consideration 7
Section 2.8 Buyout of EBITDA Payments. 10
ARTICLE III
LIABILITIES AND OBLIGATIONS 11
Section 3.1 Obligations Assumed 11
Section 3.2 Obligations Not Assumed 12
Section 3.3 Certain Contracts 12
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT 12
Section 4.1 Corporate Status and Good Standing 12
Section 4.2 Authorization 12
Section 4.3 Non-Contravention 13
Section 4.4 Validity 13
Section 4.5 Broker Involvement 13
Section 4.6 Litigation 13
Section 4.7 Title 13
Section 4.8 No Defaults 15
Section 4.9 Permits 15
Section 4.10 Environmental Review 15
Section 4.11 Tax Matters. 15
Section 4.12 Financial Information. 17
Section 4.13 Solvency. 17
Section 4.14 Process Safety Management Plan. 17
Section 4.15 Employee Benefit Matters. 17
Section 4.16 Contracts and Receivables 18
Section 4.17 Disclaimer of Warranties 18
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER 19
Section 5.1 Corporate Status and Good Standing 19
Section 5.2 Authorization 19
Section 5.3 Non-Contravention 19
Section 5.4 Validity 19
Section 5.5 Broker Involvement 19
ARTICLE VI
COVENANTS 20
Section 6.1 Use of Name 20
Section 6.2 Failure to Obtain Consents 20
Section 6.3 Further Assurance 20
Section 6.4 Consents 20
Section 6.5 Confidentiality of Certain Reports 20
Section 6.6 No Implied Representation 20
Section 6.7 Inventory 21
Section 6.8 Assignment of Instruments 21
Section 6.9 Post-Closing Cooperation 21
Section 6.10 Employee Matters 22
Section 6.11 Tax Matters 24
Section 6.12 Post-Closing Operations 25
Section 6.13 Transitional Services 26
ARTICLE VII
CLOSING DELIVERIES 26
Section 7.1 Deliveries by Seller at the Closing 26
Section 7.2 Deliveries by Buyer at the Closing 27
ARTICLE VIII
INDEMNIFICATION 27
Section 8.1 Seller's Indemnity Obligations 27
Section 8.2 Buyer's Indemnity Obligations 28
Section 8.3 Limitations 28
Section 8.4 Indemnification Procedures 29
Section 8.5 Arbitration of Disputes 31
Section 8.6 General 31
ARTICLE IX
ENVIRONMENTAL MATTERS 31
Section 9.1 Definitions 31
Section 9.2 Indemnification for Claims of
Environmental Liability. 32
ARTICLE X
EXCLUSIVITY; OTHER MATTERS 35
Section 10.1 Exclusive Remedy 35
Section 10.2 Specific Performance 35
Section 10.3 No Right to Rescind 35
Section 10.4 No Setoff 35
ARTICLE XI
NON-COMPETITION AGREEMENT 36
Section 11.1 Covenants Not to Compete or Interfere 36
Section 11.2 Necessity and Reasonableness 38
Section 11.3 Enforcement 38
Section 11.4 Judicial Modification 38
ARTICLE XII
GENERAL PROVISIONS 39
Section 12.1 Expenses 39
Section 12.2 Entire Agreement 39
Section 12.3 Waivers and Consents 39
Section 12.4 Notices 39
Section 12.5 Successors and Assigns 39
Section 12.6 Knowledge, Gender and Certain References 40
Section 12.7 Rights of Parties 40
Section 12.8 Time of Essence. 40
Section 12.9 Governing Law 40
Section 12.9 Counterparts 40
SIGNATURES 35
SCHEDULES
Schedule 2.1.1 Fee Property
Schedule 2.1.2. Refining Facilities
Schedule 2.1.3 Permits
Schedule 2.1.5 Contracts
Schedule 2.1.6 Excluded Accounts Receivable
Schedule 2.1.7 Intellectual Property
Schedule 2.5 Allocation of Purchase Price
Schedule 2.6.8 Estimated Costs of Process Safety Management Plan
Schedule 2.6.9 Estimated Costs of Removing Cladding in CSR Unit
Schedule 4.1 Foreign Qualifications
Schedule 4.3 Consents and Approvals
Schedule 4.6 Litigation
Schedule 4.12 Financial Information
Schedule 4.14 Process Safety Management Plan
Schedule 4.15 Employee Benefit Plans
Schedule 4.16 Aged Accounts Receivable
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made this 31st day of July,
1997 by and between ▇▇▇▇▇▇ Hydrocarbons & Chemicals, Inc., a Delaware
corporation ("Seller"), ▇▇▇▇▇▇ Corporation, a Delaware corporation ("Parent"),
and Specified Fuels & Chemicals, L.L.C., a Texas limited liability company
("Buyer").
W I T N E S S E T H:
WHEREAS, Seller is principally engaged in the business of producing,
marketing and selling research and reference fuels and custom chemicals in the
United States (collectively, the "Business");
WHEREAS, Parent owns all of the issued and outstanding capital stock of
Seller;
WHEREAS, Parent desires to sell the Fee Property (as hereinafter defined)
to Buyer and to cause Seller to sell to Buyer substantially all of Seller's
assets used primarily in connection with the Business; and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, substantially all of the assets of Seller used primarily in
connection with the Business;
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements stated herein, the parties agree as
follows:
ARTICLE I
CLOSING
The closing of the purchase and sale provided for herein (the "Closing") is
taking place at 10:00 a.m. on the date hereof ("Closing Date") at the offices of
Bracewell & ▇▇▇▇▇▇▇▇▇, L.L.P., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇.
ARTICLE II
PURCHASE AND SALE
Section 2.1 Purchased Assets and Excluded Assets. Subject to the terms
and conditions of this Agreement, and on the basis of the representations,
warranties, covenants and indemnities hereinafter set forth, effective at
midnight on July 31, 1997 (i) Parent is selling, transferring, conveying,
assigning and delivering to Buyer, and Buyer is purchasing from Parent, the
parcel of land owned by Parent and described in Schedule 2.1.1 (the "Fee
Property") and (ii) Seller and Parent are selling, transferring, conveying,
assigning and delivering to Buyer, and Buyer is purchasing from Seller and
Parent, all of the assets of Seller and Parent, respectively, used in the
Business (together with the Fee Property collectively referred to as the
"Purchased Assets"), including but not limited to all of Seller's and Parent's
right, title and interest in and to the following:
2.1.1 All refining facilities located on the Fee Property,
including but not limited to all of the buildings, machinery, tools,
supplies, equipment, fixtures, laboratory equipment, furniture, vehicles
and other property described in Schedule 2.1.2 (the "Refining Facilities");
2.1.2 All easements, rights of way, railroad agreements, and
ingress and egress agreements, to the extent assignable with respect to the
Refining Facilities including but not limited to those described in the
Commitment for Title Insurance issued by Commonwealth Land Title Insurance
Company dated as of 8:00 a.m. on July 23, 1997 ("Title Commitment") (the
"Easements and Similar Agreements");
2.1.3 All permits, licenses and other governmental authorizations
related to the ownership or operation of the Business to the extent
assignable (the "Permits"), including but not limited to those listed in
Schedule 2.1.3;
2.1.4 All inventories of finished products, work in process, raw
materials, supplies, tanks, drums and packing and shipping material related
to the Business, including those located at the Fee Property and the
property leased by Seller in Michigan (collectively, the "Inventory");
2.1.5 All contracts and agreements listed in Schedule 2.1.5 (the
"Contracts");
2.1.6 Except for those accounts receivable set forth on
Schedule 2.1.6 (the "Excluded Accounts Receivable"), all accounts
receivable as of Closing Date arising from the operation of the Business
(the "Receivables");
2.1.7 All transferable intellectual property rights used primarily
in the Business, including patents, patent applications, trade names,
service marks, service ▇▇▇▇ applications, trademarks, trademark
applications, copyrights, copyright applications, trade secrets, know-how
and confidential business information (whether patentable or unpatentable)
(collectively, the "Intellectual Property") and the goodwill associated
therewith, including without limitation those rights listed in
Schedule 2.1.7; and
2.1.8 All business records of Seller related to the Purchased
Assets.
Notwithstanding the foregoing, the Purchased Assets shall not include, and Buyer
shall not purchase, (i) any insurance policies or insurance contracts of Seller
and claims for recovery thereunder, (ii) the minute books and stock records of
Seller, or any business records of Seller not relating to the Purchased Assets,
(iii) tax refunds applicable to periods prior to the Closing, (iv) the Excluded
Accounts Receivable, (v) deposits, cash, and cash equivalents, or (vi) any
right, title or interest in or other right to use the name of Seller or Parent
or any name similar thereto, including any associated logos and any right with
respect to any copyrights, trademarks and service marks (including in each case
applications therefor whenever filed) relating thereto, subject to the license
provided for in Section 6.1 (items (i) through (vi) collectively the "Excluded
Assets")
Section 2.2 Purchase Price. The purchase price (the "Purchase Price")
payable in consideration of the Purchased Assets is (i) the assumption by Buyer
of the Assumed Liabilities, as defined below, and (ii) an amount equal to the
sum of (a) Fourteen Million Eight Hundred Twenty Thousand Dollars ($14,820,000),
plus (b) cash equal to the amount of the Net Working Capital (as defined below),
plus (c) the right to the additional payments referred to in Sections 2.7
and 2.8. Buyer is paying to Seller at Closing, by wire transfer in immediately
available funds to an account previously designated by Seller, an amount equal
to the sum of (i) $4,738,464.51, representing Seller's good faith estimate of
the Net Working Capital (the "Estimated Working Capital"), plus (ii) Fourteen
Million Eight Hundred Twenty Thousand Dollars ($14,820,000). For purposes
hereof, the term "Net Working Capital" shall mean the value of the Inventory and
the Receivables as of the Closing Date minus the current accounts payable
included as part of the Assumed Liabilities (as defined below) as of the Closing
Date, all as determined in accordance with generally accepted accounting
principles ("GAAP"); provided, that finished goods and other Inventory shall be
valued for such purposes at Seller's cost; and further provided, that
Receivables shall be valued at the face amount thereof.
Section 2.3 Final Determination of Net Working Capital.
2.3.1 No later than forty-five (45) days after the Closing Date,
Seller shall prepare and deliver to Buyer an unaudited statement of Net
Working Capital as of the Closing Date (the "Statement of the Net Working
Capital"), showing the Net Working Capital.
2.3.2 After delivery to Buyer of the Statement of Net Working
Capital, Buyer and its representatives shall be afforded the opportunity to
review and inspect all of the financial records, work papers, schedules and
other supporting papers relating to the preparation of the Statement of Net
Working Capital and to consult with Seller and its representatives and
accountants, if necessary in Buyer's opinion, regarding the methods used in
the preparation of the Statement of Net Working Capital.
2.3.3 The Net Working Capital as shown on the Statement of Net
Working Capital prepared by Seller shall be final, conclusive and binding
for purposes of this Agreement, unless Buyer shall give written notice of
disagreement with any item thereon within twenty (20) business days
following its receipt of the Statement of Net Working Capital, specifying
in reasonable detail the nature and extent of such disagreement. Buyer
shall not be permitted to give a notice of disagreement with respect to the
Statement of Net Working Capital prepared by Seller unless the aggregate
amount in dispute exceeds Ten Thousand Dollars ($10,000).
2.3.4 If within twenty (20) business days following receipt by
Seller of a notice of the type referred to in Section 2.3.3 above, Seller
and Buyer are unable to resolve any disagreement with respect to the
Statement of Net Working Capital, the disagreement shall be submitted for
resolution to Ernst & Young (the "Neutral Accountants"). The Neutral
Accountants shall be engaged jointly by Seller, Parent and Buyer to act as
an arbitrator to determine and resolve only those issues still in dispute.
The engagement of the Neutral Accountants shall require that the Neutral
Accountants (i) resolve the matters in dispute within thirty (30) days of
their acceptance of the engagement, (ii) utilize GAAP in resolving the
dispute the principles utilized in preparing the Estimated Working Capital,
and (iii) evidence their decision in a written statement delivered to
Seller, Parent and Buyer. The decision of the Neutral Accountants as so
evidenced shall be final, conclusive and binding on Seller, Parent and
Buyer.
2.3.5 The fees and expenses of the Neutral Accountants in
connection with any such determination shall be apportioned between Seller
and Buyer by the Neutral Accountants based on the inverse proportion of
disputed amounts resolved in favor of each party (i.e., so that the
prevailing party bears a lesser amount of such fees and expenses).
Otherwise, Buyer and Seller shall each pay their own costs incurred in
connection with this Section 2.3, including the fees and expenses of their
respective attorneys, accountants, and other representatives, if any.
Section 2.4 Payment of Adjusted Purchase Price. Promptly following the
final determination of Net Working Capital as provided in Section 2.3, but in no
event later than ten (10) days after such determination, either:
2.4.1 Buyer shall wire transfer to Seller in immediately available
funds the amount by which the Net Working Capital exceeds the Estimated
Working Capital; or
2.4.2 Seller shall wire transfer to Buyer in immediately available
funds the amount by which the Estimated Working Capital exceeds the Net
Working Capital.
Any payment required to be made pursuant to this Section 2.4 shall be
made together with interest thereon from the Closing Date to the date of
payment at the rate of interest per annum equal to the prime rate in effect
on the Closing Date as reported in The Wall Street Journal. All wire
transfers hereunder shall be to such account as the recipient thereof may
designate in writing for that purpose.
Section 2.5 Allocation of Purchase Price. The parties agree that the
Purchase Price shall be allocated among the Purchased Assets hereof in
accordance with Schedule 2.5. Seller and Buyer agree to complete IRS Form 8594
consistently with such allocation and to furnish each other with a copy of such
form prepared in draft form within 45 days prior to the filing due date of such
form. Neither Seller nor Buyer shall file any return or take a position with
any taxing authority that is inconsistent with Schedule 2.5.
Section 2.6 Prorations.
2.6.1 On the Closing Date, or as promptly as practicable following
the Closing Date, but in no event later than sixty (60) days thereafter, to
the extent not included in the calculation of Net Working Capital, the
water, gas, electricity and other utility expenses incurred in operating
the Business and other similar periodic charges incurred in operating the
Business in the ordinary course shall be prorated for 1997 between Buyer
and Seller effective as of the Closing Date. To the extent practicable,
and to the extent not included in the calculation of Net Working Capital,
utility meter readings for the Fee Property shall be determined as of the
Closing Date.
2.6.2 Notwithstanding anything herein to the contrary but subject
to Section 2.6.3, any taxes not measured or measurable, in whole or in
part, by net or gross income or receipts (including, but not limited to,
real or personal property or ad valorem taxes) imposed on the Purchased
Assets that relate to a tax period beginning before the Closing Date and
ending after the Closing Date (an "Overlap Period") shall be apportioned as
of the Closing Date such that Seller shall be liable for (and shall
reimburse Buyer to the extent that Buyer shall have paid) that portion of
such taxes relating to, or arising in respect to, periods on or prior to
the Closing Date and Buyer shall be liable for (and shall reimburse Seller
to the extent Seller shall have paid) that portion of such taxes relating
to, or arising in respect to, periods after the Closing Date. Should any
amounts to be prorated not have been finally determined on the Closing
Date, a mutually satisfactory estimate of such amounts made on the basis of
the Seller's records shall be used as a basis for settlement at Closing,
and the amount finally determined will be prorated as of the Closing Date
and appropriate settlement made as soon as practicable after such final
determination; provided, however, that proration for ad valorem taxes for
1997 will be made after Buyer is invoiced by the taxing authorities and
Seller will pay to Buyer Seller's prorated share of such tax payment ten
days prior to the date such tax payment is due.
2.6.3 Seller and Parent shall pay and be responsible for 50% and
Buyer shall pay and be responsible for 50% of (i) all motor vehicle taxes
on the transfer of titled motor vehicles included in the Purchased Assets,
and (ii) all other sales, transfer or similar state or local taxes and all
recording Fees imposed as a result of the sale of the Purchased Assets.
Seller and Parent shall pay and remain responsible for all income taxes,
sales or use tax, franchise taxes, payroll taxes and any other taxes which
may be due in respect of operation of the Business before the Closing Date.
2.6.4 Seller and Parent shall pay and be responsible for all
salaries, wages, federal withholding and social security taxes, employee
benefit plans, workers' compensation, and unemployment compensation taxes
and other costs and expenses relating to employees employed in connection
with the Business or Purchased Assets in respect of periods on or before
the Closing Date and thereafter with respect to such employees which are
not Transferred Employees. Buyer shall pay and be responsible for all such
costs and expenses associated with any Transferred Employees that are
incurred in respect of periods after the Closing Date. If Buyer, on the
one hand, or Seller or Parent, on the other hand, receives an invoice for
any tax or other expense which is allocable to the other party in part or
in full hereunder, the recipient shall forward a copy of the invoice
promptly to the other party.
2.6.5 Seller and Parent shall be entitled to all revenues
attributable to the Purchased Assets before the Closing Date, to the extent
that such revenues are not Purchased Assets or proceeds thereof. Buyer
shall be entitled to all revenues which are (i) Purchased Assets or
proceeds thereof, or (ii) attributable to the Purchased Assets after the
Closing Date. If Buyer, on the one hand, or Seller or Parent, on the other
hand, receives a payment from a third party due in whole or in part to the
other party, it shall pay over such portion to the other party as soon as
practicable, but in any event within 10 days after receipt thereof.
2.6.6 Seller and Parent shall pay and be responsible for 50% and
Buyer shall pay and be responsible for 50% of the cost of an Owner Policy
of Title Insurance in the amount of $14,000,000 issued by Partners Title
Company ("Title Company") as agent for Commonwealth Land Title Insurance
Company (with such reinsurance as Buyer may require), insuring that Buyer
is the owner of the Fee Property and improvements thereon subject only to
Permitted Exceptions and the standard printed exceptions included in a
Texas standard form owner policy of title insurance; provided, however,
that (i) the standard exception for discrepancies, conflicts or shortages
in area shall be deleted except for "shortages in area," (ii) such policy
shall have "None of Record" endorsed regarding restrictions except for
restrictions that are Permitted Exceptions, (iii) the rights of parties in
possession shall be deleted, and (iv) the standard exception for taxes
shall be limited to calendar year 1997, marked "not yet due and payable,"
and subsequent years and subsequent taxes and assessments by any taxing
authority for prior years due to change in land usage or ownership.
2.6.7 Seller and Parent shall pay and be responsible for 50% and
Buyer shall pay and be responsible for 50% of the cost of a survey
consisting of a plat and field notes describing the Fee Property, prepared
by Terra Surveying Company ("Surveyor"), showing the location of the
outside boundaries of the Fee Property, all significant improvements
located thereon, all easements affecting the Fee Property, and in a form
reasonably satisfactory to Buyer and sufficient for Title Company to delete
the boundary exceptions except for "shortages in area."
2.6.8 With respect to the Process Safety Management Plan covered
by Section 4.14 below, Seller has in good faith estimated the costs
associated with related inspections required by the Occupational Safety and
Health Administration in attached Schedule 2.6.8. Seller and Parent shall
be jointly and severally liable for 100% of the costs identified in
Schedule 2.6.8. Seller and Parent shall be jointly and severally liable
for 50% and Buyer shall be liable for 50% of the amount by which the costs
associated with such inspections exceeds the amount shown on Schedule
2.6.8.
2.6.9 Seller has in good faith obtained an estimate of the costs
associated with removing the cladding in the CSR Unit on the Fee Property
in attached Schedule 2.6.9. Seller and Parent shall be jointly and
severally liable for 100% of the costs identified in Schedule 2.6.9 Seller
and Parent shall be jointly and severally liable for 50% and Buyer shall be
liable for 50% of the amount by which the costs associated with such
removal exceeds the amount shown on Schedule 2.6.9.
2.6.10 Subsequent to Closing Buyer will obtain, with Seller's
approval (which will not be unreasonably withheld), an estimate of the
costs associated with stabilizing the bolt mechanisms of the C-70
distillation tower on the Fee Property for delivery subsequent to Closing.
Seller and Parent shall be jointly and severally liable for 100% of the
costs identified in such estimate. Seller and Parent shall be jointly and
severally liable for 50% and Buyer shall be liable for 50% of the amount by
which the costs associated with such stabilization exceeds the amount shown
on the estimate.
Section 2.7 Additional Purchase Price Consideration. For each of the
twelve month periods ending June 30, 1998, 1999, 2000, 2001 and 2002, Buyer
shall pay to Seller a cash amount equal to 55% of the amount by which EBITDA (as
defined below) for such twelve-month period exceeds the "Minimum EBITDA" for
such twelve-month period, as set forth below (the "EBITDA Payment"):
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Twelve Month Period Ending June 30,
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1998 1999 2000 2001 2002
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Minimum EBITDA $5 $5.175 $5.35 $5.525 $5.7
million million million million million
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2.7.1 For purposes of this Agreement: the term "EBITDA" shall mean
the sum of (i) Net After-Tax Income (as defined below), plus (ii) the
amount of income taxes deducted from the net income from the operation of
the Refining Facilities to determine Net After-Tax Income, plus (iii) the
amount of depreciation and amortization deducted from the net income from
the operation of the Refining Facilities to determine Net After-Tax Income,
plus (iv) the amount of interest expense deducted from the net income from
the operation of the Refining Facilities to determine Net After-Tax Income
(the amounts in clauses (i) through (iv) to be determined in accordance
with GAAP; and the term "Net After-Tax Income" shall mean the net income
(or loss) from operations of the Refining Facilities for the period in
question after deduction for income, franchise, and other taxes and
without giving effect to extraordinary losses incurred in the operation of
the Refining Facilities, determined in accordance with GAAP; provided,
however, that the amount of depreciation and amortization to be used for
purposes of determining Net After-Tax Income for each of the following
twelve-month periods shall be as set forth below:
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Twelve Month Period Ending June 30,
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1998 1999 2000 2001 2002
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Amount of
Depreciation and
Amortization $2.3 $2.3 $2.1 $1.9 $1.9
million million million million million
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2.7.2 No later than August 31 of each year commencing in 1998,
Buyer shall pay to Seller a cash amount equal to Buyer's good faith
estimate of the EBITDA Payment due for the twelve months ended on the
immediately preceding June 30 ("Estimated EBITDA Payment"). Buyer shall
deliver to Seller, within 120 days after the end of each of Buyer's fiscal
years ending December 31, 1998, 1999, 2000, 2001 and 2002 audited financial
statements for and as of the end of each such year, prepared in accordance
with GAAP, with the report of Buyer's independent accountants with respect
thereto, together with a special report of such accountants ("EBITDA
Report") showing a calculation of EBITDA (in accordance with the terms of
this Agreement) for the twelve months ended June 30 of such fiscal year and
a calculation of the EBITDA Payment payable to Seller for such twelve-month
period ("Calculated EBITDA Payment").
2.7.3 After delivery to Seller of the EBITDA Report, Seller and
its representatives shall be afforded the opportunity to review and inspect
all of the financial records, work papers, schedules and other supporting
papers relating to the preparation of the EBITDA Report and to consult with
Buyer and its representatives, and independent accountants, if necessary in
Seller's opinion, regarding the methods used in the preparation of the
EBITDA Report. The Calculated EBITDA Payment as shown on the EBITDA Report
shall be final, conclusive and binding for purposes of this Agreement,
unless Seller shall give written notice of disagreement ("EBITDA Notice")
with any item thereon within twenty (20) business days following its
receipt of the EBITDA Report, specifying in reasonable detail the nature
and extent of such disagreement. Seller shall not be permitted to give a
notice of disagreement with respect to the EBITDA Report unless the
aggregate amount in dispute exceeds Ten Thousand Dollars ($10,000). If
within twenty (20) business days following receipt by Buyer of EBITDA
Notice, Seller and Buyer are unable to resolve any disagreement with
respect to the EBITDA Report, the disagreement shall be submitted for
resolution to the Neutral Accountants. The Neutral Accountants shall be
engaged jointly by Seller, Parent and Buyer to act as an arbitrator to
determine and resolve only those issues still in dispute. The engagement
of the Neutral Accountants shall require that the Neutral Accountants
(i) resolve the matters in dispute within thirty (30) days of their
acceptance of the engagement, (ii) utilize in resolving the dispute the
principles contained in the definition of EBITDA set forth in section 2.7.1
hereof, and (iii) evidence their decision in a written statement delivered
to Seller, Parent and Buyer. The decision of the Neutral Accountants as so
evidenced shall be final, conclusive and binding on Seller, Parent and
Buyer. The Calculated EBITDA Payment for any 12-month period, as it may be
adjusted by agreement of the parties or by the Neutral Accountants pursuant
hereto, is referred to herein as the "Final EBITDA Payment Amount" for such
period.
2.7.4 The fees and expenses of the Neutral Accountants in
connection with any such determination shall be apportioned between Seller
and Buyer by the Neutral Accountants based on the inverse proportion of
disputed amounts resolved in favor of each party (i.e., so that the
prevailing party bears a lesser amount of such fees and expenses).
Otherwise, Buyer and Seller shall each pay their own costs incurred in
connection with this Section 2.7, including the fees and expenses of their
respective accountants, if any.
2.7.5 Promptly following the final determination of the Final
EBITDA Payment Amount for any 12-month period as provided in this Section
2.7, but in no event later than ten (10) days after such determination,
either:
(i) Buyer shall wire transfer to Seller in immediately
available funds the amount by which the Final EBITDA Payment
Amount exceeds the Estimated EBITDA Payment for such period;
or
(ii) Seller shall wire transfer to Buyer in immediately
available funds the amount by which the Estimated EBITDA
Payment exceeds the Final EBITDA Payment Amount for such
period.
Any payment required to be made pursuant to this Section 2.7 shall be
made together with interest thereon from the date the Estimated EBITDA
Payment is due to the date of payment at the rate of interest per annum
equal to the prime rate in effect on the date the Estimated EBITDA Payment
is due as reported in The Wall Street Journal. All wire transfers
hereunder shall be to such account as the recipient thereof may designate
in writing for that purpose.
Section 2.8 Buyout of EBITDA Payments. At any time after June 30, 1998,
Buyer may purchase from Seller and Parent the right of Seller and Parent to
receive all, but not less than all, of the annual EBITDA Payments required to be
made by Buyer to Seller and Parent pursuant to Section 2.7 of this Agreement
(the "Buyout"). The amount to be paid by Buyer to Seller and Parent in
consideration of the Buyout shall be:
2.8.1 if the Buyout occurs during the 12 month period commencing
on July 1, 1998 and ending on June 30, 1999, the greater of (i) the product
obtained by multiplying the amount of the Final EBITDA Payment Amount made
by Buyer to Seller and Parent for the 12 month period ended June 30, 1999
by four, or (ii) $5,700,000;
2.8.2 if the Buyout occurs during the 12 month period commencing
on July 1, 1999 and ending on June 30, 2000, the greater of (i) the product
obtained by multiplying the amount of the Final EBITDA Payment Amount made
by Buyer to Seller and Parent for the 12 month period ended June 30, 1999
by three, or (ii) $4,200,000;
2.8.3 if the Buyout occurs during the 12 month period commencing
on July 1, 2000 and ending on June 30, 2001, the greater of (i) the product
obtained by multiplying the amount of the Final EBITDA Payment Amount made
by Buyer to Seller and Parent for the 12 month period ended June 30, 2000
by two, or (ii) $2,600,000; and
2.8.4 if the Buyout occurs during the 12 month period commencing
on July 1, 2001 and ending on June 30, 2002, the greater of (i) the amount
of the Final EBITDA Payment Amount made by Buyer to Seller and Parent for
the 12 month period ended June 30, 2001, or (ii) $1,200,000.
Buyer shall give Seller at least three business days notice of any proposed
payment pursuant to this Section 2.8. No Buyout may be made so long as any
dispute as to any EBITDA Payment for any period is outstanding. Any payment
made pursuant to this Section 2.8 shall be made by wire transfer to such account
as Seller and Parent shall designate.
ARTICLE III
LIABILITIES AND OBLIGATIONS
Section 3.1 Obligations Assumed. As partial consideration for
consummation of the transactions contemplated hereby, effective upon the
Closing, Buyer hereby assumes and agrees to hereafter perform when due and
discharge the following liabilities and obligations of Seller and Parent (the
"Assumed Liabilities") and no other liabilities or obligations of Seller or
Parent:
3.1.1 all obligations and liabilities of Parent for all ad valorem
property taxes on the Fee Property and other Purchased Assets which become
due and payable after the Closing Date (it being understood that, as
between Seller, Parent and Buyer, the proration provisions of Section 2.6
hereof shall govern);
3.1.2 all liabilities, obligations, costs and expenses arising out
of or relating to Buyer's ownership or operation of the Purchased Assets or
the Business after the Closing or which relate to or arise out of Buyer's
performance of the Easements and Similar Agreements, Permits, the Contracts
and Intellectual Property (collectively, the "Instruments") after the
Closing Date;
3.1.3 all accounts payable and all other nondelinquent current
liabilities of Seller of the nature included in the calculation of Net
Working Capital and incurred in the ordinary course of business, including
all obligations under purchase orders, attributable to the ownership or
operation of the Purchased Assets or the Business;
3.1.4 any Claim of Environmental Liability for which Buyer is
responsible under Article IX of this Agreement, subject to Seller's
obligations contained in Section 9.2.3;
3.1.5 all liabilities and obligations of Seller to hold, store or
retain finished goods located at the Fee Property for customers who have
previously purchased such goods;
3.1.6 any liability or obligation to the extent arising out of any
act or omission occurring, or condition or circumstance coming into
existence, after the Closing Date with respect to Buyer's ownership or
operation of the Purchased Assets or the Business, or any product sold or
manufactured by Buyer or any service provided by Buyer after the Closing
Date (including all product liability and warranty claims and product
returns with respect thereto); and
3.1.7 any liability or obligation arising out of any claim,
litigation or proceeding to the extent such claim, litigation or proceeding
is based on or caused by any act or omission occurring, or condition or
circumstances coming into existence after the Closing Date with respect to
the Purchased Assets or the Business.
Section 3.2 Obligations Not Assumed. Notwithstanding anything in this
Agreement to the contrary, Seller and Parent jointly and severally covenant and
agree that except for the Assumed Liabilities, Buyer shall not be liable for the
payment or performance of any tax or other liability or obligation of Seller or
Parent or for any liability relating to any Purchased Assets or Business, and
that Seller and Parent shall pay, discharge or perform when due and in
accordance with their respective terms all liabilities and obligations of Seller
or Parent or attributable to any Purchased Assets or Business which are not
Assumed Liabilities. Without limiting the generality of the immediately
preceding sentence, the Assumed Liabilities do not include any liability or
obligation (i) the existence of which constitutes a breach of any
representation, warranty or covenant of Seller or Parent in this Agreement,
(ii) arising out of or relating to the 1996 tank explosion on the Fee Property
and the matters described in Schedule 4.6, or (iii) any Claim of Environmental
Liability for which Buyer is not responsible under Article IX of this Agreement.
Section 3.3 Certain Contracts. As between Seller, Parent and Buyer,
this Article III shall control over any assignment or assumption agreement
entered into between Seller or Parent, Buyer and any third party pursuant to
which certain contracts included in the Purchased Assets are assigned to Buyer.
Accordingly, if there is any inconsistency or conflict between the terms of this
Article III and the terms of any such third-party agreement, this Article III
shall govern and control as between Seller or Parent and Buyer.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT
Seller and Parent jointly and severally represent and warrant to Buyer
the following:
Section 4.1 Corporate Status and Good Standing. Each of Seller and
Parent is a corporation duly incorporated, validly existing and in good standing
under the laws of the state of its incorporation, with full corporate power and
authority under its charter and bylaws to own and lease its properties and to
conduct its business as the same exists on the date hereof. Seller is duly
qualified to do business as a foreign corporation in all states in which the
nature of its business requires such qualification. Schedule 4.1 lists all
states in which Seller is qualified to do business as a foreign corporation.
Section 4.2 Authorization. Each of Seller and Parent has full corporate
power and authority under its charter and bylaws to execute and deliver this
Agreement and the exhibits and schedules hereto, to consummate the transactions
contemplated hereby and to take all actions required to be taken by Seller and
Parent pursuant to the provisions hereof and its board of directors and
shareholders have taken all necessary action to authorize same. This Agreement
constitutes the valid and binding obligation of Seller and Parent enforceable
against Seller and Parent in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, moratorium, reorganization or similar
laws affecting the rights of creditors generally.
Section 4.3 Non-Contravention. Except as set forth in Schedule 4.3
neither the execution, delivery and performance of this Agreement or any
documents executed in connection herewith by Seller or Parent, nor the
consummation by Seller or Parent of the transactions contemplated herein, does
or will (i) violate, conflict with, result in breach of or require notice or
consent under any law, the charter or bylaws of Seller or Parent, or any
provision of any Instrument or (ii) result in the creation of any Lien (as
defined below) upon any instrument or other agreement or Instrument included in
the Purchased Assets or Assumed Liabilities.
Section 4.4 Validity. There are no pending or threatened judicial or
administrative actions, proceedings or investigations which question the
validity of this Agreement or any action taken or contemplated by Seller or
Parent in connection with this Agreement.
Section 4.5 Broker Involvement. Neither Seller nor Parent has hired,
retained or dealt with any broker or finder in connection with the transactions
contemplated by this Agreement.
Section 4.6 Litigation. Except as disclosed on Schedule 4.6, there is
no investigation, claim or proceeding or litigation of any type pending or, to
the best knowledge of Seller and Parent, threatened against Seller and there is
no judgment, order, writ, injunction or decree of any court, government or
governmental agency, or arbitral tribunal against or involving Seller or any
Purchased Asset or Assumed Liabilities. Except as disclosed on Schedule 4.6,
there is no investigation, claim or proceeding or litigation of any type pending
or, to the best knowledge of Seller and Parent, threatened against Parent that
relates to the Purchased Assets, Assumed Liabilities or Business, and there is
no judgment, order, writ, injunction or decree of any court, government or
governmental agency, or arbitral tribunal against or involving Parent that
relates to the Purchased Assets, Assumed Liabilities or Business.
Section 4.7 Title. Immediately prior to the Closing, Parent had, and is
conveying to Buyer at the Closing, good and indefeasible title to the Fee
Property, and Seller had and is conveying to Buyer at the Closing good title to
the other Purchased Assets in each case, free and clear of any and all liens,
encumbrances, mortgages, deeds of trust, options, security interests,
restrictions, liabilities, pledges and assignments of any nature and description
(collectively, "Liens"), except the Permitted Exceptions (as defined below), and
each of Seller and Parent has the full right to sell and transfer to Buyer title
to Purchased Assets, being conveyed by it, free and clear of any and all Liens,
except for the Permitted Exceptions. The term "Permitted Exceptions" means:
4.7.1 all liens for taxes and assessments, both general and
special, and other governmental charges which are not yet due and payable
as of the Closing Date;
4.7.2 all land use (including environmental and wetlands),
building and zoning codes and ordinances, and other laws, ordinances,
regulations, rules, orders, licenses or determinations of any federal,
state, county, municipal or other governmental authority heretofore, now or
hereafter enacted, made or issued by any such authority;
4.7.3 all easements, rights-of-way, covenants, conditions,
restrictions, reservations, real property licenses and agreements of record
or referenced of record, and other matters of record, which individually or
in the aggregate will not result in a material adverse effect on the use or
ownership of the Purchased Assets taken as a whole;
4.7.4 as to the Fee Property, all encroachments, overlaps,
overhangs, unrecorded easements, or any other matters not of record as to
any property which would be disclosed by an accurate survey or inspection
which individually or in the aggregate will not result in a material
adverse effect of the use or ownership of the Purchased Assets taken as a
whole;
4.7.5 all electric power, telephone, gas, sanitary sewer, storm
sewer, water and other utility lines and pipelines, on, over or under the
Fee Property, and all licenses, easements, rights-of-way, and other
agreements relating thereto, provided none of the foregoing individually or
in the aggregate will result in a material adverse effect on the use or
ownership of the property affected hereby;
4.7.6 all existing public and private roads and streets (whether
dedicated or undedicated), and all railroad lines and rights-of-way
affecting the Fee Property, provided none of the foregoing individually or
in the aggregate will result in a material adverse effect on the use or
ownership of such Fee Property;
4.7.7 prior reservations or conveyances of record of mineral
rights or mineral leases of every kind and character (provided, however,
any rights held by the owner of any material rights or leases in and to the
surface of the property affected by such reservation or conveyance shall
not be deemed a Permitted Exception);
4.7.8 inchoate mechanic's and materialmen's liens for construction
in progress and workmen's, repairmen's, warehousemen's, carrier's and other
similar statutory liens arising in the ordinary course of business in
respect of obligations that are not yet due or that are being contested in
good faith by appropriate proceedings;
4.7.9 other imperfections of title, easements and encumbrances,
which will not result in a material adverse effect on the use of the
Purchased Assets taken as a whole; and
4.7.10 all exceptions to title referred to in the Title Commitment,
a copy of which has been provided by Buyer to Seller.
Section 4.8 No Defaults. Except as disclosed on Schedule 4.6, Seller is
not in violation of and has not violated any provision of any law (including
Environmental Laws), decree, order, regulation, permit, land use (including
environmental and wetlands), building or zoning code, deed restriction,
regulatory authorization or qualification. Parent is not in violation of, and
has not violated, any provision of any law (including Environmental Laws),
decree, order, regulation, permit, land use (including environmental and
wetlands), building or zoning code, deed restriction, regulatory authorization
or qualification that relates to the Purchased Assets, Business or Assumed
Liabilities. Neither Parent nor Seller is in default under, or in breach or
violation of, and no reason exists and no event has occurred which, with notice
or lapse of time or action by a third party, would result in a default under,
breach or violation of, or conflict with any of the Instruments or other
agreements or instruments included in the Purchased Assets or Assumed
Liabilities.
Section 4.9 Permits. All of the Permits are in full force and effect.
Section 4.10 Environmental Review. Seller has delivered to Buyer a true,
correct and complete copy of a Phase I Environmental Review of the Fee Property
and the Refinery Facilities prepared by Fugro Environmental Services, dated
May 8, 1996, as updated on April 12, 1997 by ENSR Corporation.
Section 4.11 Tax Matters.
4.11.1 Except where notices of extension have been timely filed,
(i) all Tax Returns for or on behalf of Seller required to be filed with
federal, foreign, state, local and other governmental authorities, and
(ii) all Tax Returns for and on behalf of Parent required to be filed, the
failure to file which would subject any of the Purchased Assets, or the
Business, to any Tax Lien, have been filed. All Taxes shown to be due on or
prior to the date hereof from or on behalf of Seller or Parent on such Tax
Returns or in connection with such extensions have been paid on a timely
basis. All such Tax Returns filed by or behalf of Seller or Parent are
true and correct in all material respects. Except for Taxes which are
subject to the proration provisions of Section 2.6 and for Taxes included
in the determination of Net Working Capital, Seller or Parent has no direct
or indirect liability for any Taxes of any Tax Affiliate, or any other
member of a consolidated group in which Seller has been or is a member,
particularly pursuant to Treasury Regulation Section 1.1502-6, which
liability would subject the Purchased Assets, or the Business, to any Tax
or other Lien.
4.11.2 Assuming that Buyer's registration on Treasury Form 637 is
in full force and effect on the Closing Date, no Tax liabilities exist with
respect to Seller which will subject any of the Purchased Assets, or the
Business, to any Lien for unpaid Taxes except for (i) Tax liabilities
included in the determination of Net Working Capital and (ii) Tax
liabilities which are subject to the proration provisions of Section 2.6.
4.11.3 There are no claims for Taxes presently being asserted for
which Seller or Parent may be directly or indirectly liable which will
subject any of the Purchased Assets, or the Business, taken as a whole to
any Lien for unpaid Taxes, and to the knowledge of Seller and Parent there
is no basis for the assertion of any such claim, except for (i) Tax claims
included in the determination of Net Working Capital and (ii) Tax claims
which are subject to the proration provisions of Section 2.6. Other than
(i) the proposal made by the City of Houston to Seller for Seller to create
an "industrial district" and pay certain annual fees in lieu of annexation,
a copy of which has been delivered to Seller, and (ii) the franchise tax
audit of Seller currently being conducted by the Texas Comptroller of
Public Accounts, neither Seller nor Parent has any knowledge of any
proposal for increasing the assessed value of any of the Purchased Assets
for tax purposes, or of any pending proceedings or public improvements
which could reasonably be expected to result in the levy of any special tax
or assessment against the Purchased Assets.
4.11.4 Seller is not a foreign person for purposes of Internal
Revenue Code of 1986 (the "Code") Section 1445, and Seller has delivered to
Buyer a non-foreign affidavit under Code Section 1445(b)(2).
4.11.5 The Purchased Assets constitute the entire operating assets
of Seller as defined by Texas Administrative Code Section 3.316(d).
4.11.6 As used in this Section 4.11, the following terms have the
indicated meanings:
(i) As used in the phrase "Tax Affiliate," "Affiliate" has
the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as
amended.
(ii) "Tax" means any federal, state, local or foreign
income, gross receipts, license, payroll, employment,
excise, severance, stamp, occupation, premium, windfall
profits, environmental (including taxes under Code Section
59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on
minimum, estimated or other tax of any kind whatsoever,
including any interest, penalty or addition thereto,
whether disputed or not.
(iii) "Tax Return" means any return, declaration, report,
claim for refund or information return or statement
relating to Taxes, including any schedule or attachment
thereto, and including any amendment thereof.
Section 4.12 Financial Information. Attached hereto as Schedule 4.12 is
the unaudited balance sheet of Seller as of December 31, 1996, and related
unaudited statements of income or loss and changes in stockholder's equity for
the fiscal year then ended (the "Financial Information"). The Financial
Information (i) is in accordance with Seller's books and records, (ii) fairly
presents Seller's financial position as of and for the periods indicated, (iii)
has been prepared in accordance with generally accepted accounting principles
applied on a basis consistent with prior periods, and (iv) does not include or
omit any material asset or liability (whether fixed, accrued, contingent or
other) the inclusion or omission of which renders the financial statements in
the Financial Information misleading or incomplete. Except as disclosed in the
Financial Information or pursuant to this Agreement, since December 31, 1996,
Seller has not changed any material accounting method or practice, or
experienced any material adverse change in, or event or condition that could
reasonably be expected to result in a material adverse change, in the Purchased
Assets, or the Business, taken as a whole.
Section 4.13 Solvency. Seller is not insolvent. Upon and immediately
after giving effect to consummation of the transactions contemplated by this
Agreement, Seller will (i) be solvent, (ii) be able to pay its debts and
obligations as they mature, (iii) have capital sufficient to carry on its
business and any business in which it is about to engage, and (iv) have assets
the present fair salable value of which is greater than the amount of its fixed
and contingent liabilities.
Section 4.14 Process Safety Management Plan. Seller has developed and
documented a cost estimate to complete a Process Safety Management Plan in
respect of the Purchased Assets and Business in accordance with requirements of
the Occupational Safety and Health Administration. True, complete and correct
copies of the Process Safety Management Plan and the cost estimate related
thereto are attached hereto as Schedules 4.14 and 2.6.8, respectively.
Section 4.15 Employee Benefit Matters.
4.15.1 Schedule 4.15 sets forth a list of all of the bonus,
deferred and incentive compensation, profit sharing, pension, retirement,
vacation, sick leave, leave of absence, hospitalization, severance, and
fringe benefit plans, all "employee pension benefit plans" (as defined in
Section 3(2) of ERISA) and all "employee welfare benefit plans" (as defined
in Section 3(1) of ERISA) which the Seller maintains, to which the Seller
contributes or has an obligation to contribute, in which the Transferred
Employees are participants or with respect to which the Seller has any
liability or reasonable expectation of liability (individually the "Plan"
and collectively the "Plans") as of the Closing Date. For purposes of this
Section 4.15, all references to the Seller shall be deemed to refer to the
Seller and any trade or business, whether or not incorporated, which
together with the Seller would be deemed or treated as a "single employer"
within the meaning of Section 414 of the Code or ERISA Section 4001.
4.15.2 No breach or violation of or default by Seller or Parent
under any Plan will subject Buyer or any of its benefit plans or the
Business to any taxes, penalties or claims.
4.15.3 None of the Plans (i) is subject to Title IV of ERISA or
the minimum funding requirements of Section 412 of the Code or Section 302 of
ERISA, (ii) is a plan of the type described in Section 4063 of ERISA or
Section 413(c) of the Code, (iii) is a "multiemployer plan" (as defined in
Section 3(37) of ERISA), or (iv) provides for medical or other insurance
benefits to current or future retired employees or former employees of the
Seller (other than as required for group health plan continuation coverage
under Code Section 4980B or applicable state law). During the five years
preceding the Closing Date, (i) no under funded pension plan subject to
Section 412 of the Code has been transferred out of the Seller and (ii) the
Seller has not participated in or contributed to, or had an obligation to
contribute to, any multiemployer plan (as defined in ERISA Section 3(37))
and has no withdrawal liability with respect to any multiemployer plan.
Section 4.16 Contracts and Receivables. The Contracts and other
agreements included in the Purchased Assets or Assumed Liabilities are in full
force and effect and constitute valid and subsisting obligations of the
respective parties thereto. The Receivables are itemized on Schedule 4.16 in an
aged receivables format. Neither Seller nor Parent is a party to any material
contract or agreement relating to the Business which is not disclosed on
Schedule 2.1.5.
Section 4.17 Disclaimer of Warranties. EXCEPT WITH RESPECT TO THE
WARRANTIES AND REPRESENTATIONS SPECIFICALLY SET FORTH IN THIS AGREEMENT AND THE
DEED CONVEYING, TRANSFERRING AND ASSIGNING THE FEE PROPERTY, NEITHER SELLER NOR
PARENT MAKES ANY WARRANTY, EXPRESS OR IMPLIED, WHETHER OF MERCHANTABILITY,
SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR QUALITY AS TO THE PURCHASED
ASSETS, OR ANY PART THEREOF, OR AS TO THE CONDITION OR WORKMANSHIP THEREOF, OR
THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER LATENT OR PATENT, IT BEING
UNDERSTOOD THAT, EXCEPT AS PROVIDED IN THIS AGREEMENT AND THE DEED CONVEYING,
TRANSFERRING AND ASSIGNING THE FEE PROPERTY, THE PURCHASED ASSETS ARE TO BE
CONVEYED HEREUNDER "AS IS" AND IN THEIR PRESENT CONDITION, AND BUYER SHALL RELY
UPON ITS OWN EXAMINATION THEREOF.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller and Parent the following:
Section 5.1 Corporate Status and Good Standing. Buyer is a limited
liability company duly organized, validly existing and in good standing under
the laws of the state of its organization, with full power and authority under
its articles of organization and regulations to own and lease its properties and
to conduct business currently conducted and proposed to be conducted by it.
Buyer is duly qualified to do business in all states in which the nature of its
business requires such qualification and the failure to do so would have a
material adverse effect on Buyer's operations taken as a whole.
Section 5.2 Authorization. Buyer has full power and authority under its
articles of organization and regulations to execute and deliver this Agreement
and the exhibits and schedules hereto, to consummate the transactions
contemplated hereby and to take all actions required to be taken by Buyer
pursuant to the provisions hereof, and its sole manager and members have taken
all necessary action to authorize same. Buyer's registration on U.S. Department
of the Treasury Form 637 is in full force and effect on the Closing Date. This
Agreement constitutes the valid and binding obligation of Buyer enforceable
against Buyer in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, moratorium, reorganization or similar laws
affecting the rights of creditors generally.
Section 5.3 Non-Contravention. Neither the execution, delivery and
performance of this Agreement or any documents executed in connection herewith
by Buyer, nor the consummation by Buyer of the transactions contemplated herein,
does or will (i) violate, conflict with, result in breach of or require any
undelivered or unobtained notice or consent under any law, the articles of
organization or regulations of Buyer or any provision of any material agreement
or instrument to which Buyer is a party, or (iii) excepting Liens imposed by
NationsBank of Texas, N.A. and Permitted Exceptions, result in the creation of
any Lien upon any material agreement or instrument to which Buyer is a party, in
each case which could reasonably be expected to have a material adverse effect
upon Buyer's operations taken as a whole.
Section 5.4 Validity. There are no pending or to Buyer's knowledge
threatened judicial or administrative actions, proceedings or investigations
which question the validity of this Agreement or any action taken or
contemplated by Buyer in connection with this Agreement.
Section 5.5 Broker Involvement. Buyer has not hired, retained or dealt
with any broker or finder in connection with the transactions contemplated by
this Agreement.
ARTICLE VI
COVENANTS
Section 6.1 Use of Name. For a five-year period after the Closing,
Buyer shall have the right to use the name "▇▇▇▇▇▇ Hydrocarbons & Chemicals" in
accordance with the terms of the License Agreement of even date herewith among
Seller, Parent and Buyer.
Section 6.2 Failure to Obtain Consents. In the event any consent to the
assignment of any Instrument is required in connection with the transactions
contemplated hereby has not been obtained before Closing, then until such
consent is obtained, Seller and Buyer shall cooperate in any arrangement
reasonably satisfactory to the parties designed to fulfill Seller's obligations
thereunder and to afford Buyer the benefits thereof so long as any such
arrangement does not cause a default hereunder or breach hereof. This Section
does not constitute any waiver by Buyer of any breach by Seller or Parent of any
representation, warranty or covenant made by Seller or Parent in this Agreement,
and does not supersede or modify any such representation, warranty or covenant.
Section 6.3 Further Assurance. Each of Seller, Parent and Buyer shall
execute and deliver from time to time after the Closing such instruments which
may be requested by the other parties and which is reasonably appropriate to
perfect or evidence any of the sales, assignments, transfers, conveyances or
assumptions contemplated by this Agreement or to transfer any Purchased Assets.
Section 6.4 Consents. After the Closing, each of Seller and Parent
will, upon request of Buyer, use its reasonable commercial efforts to obtain any
consents required in connection with the transactions contemplated hereby. This
Section does not constitute any waiver by Buyer of any breach by Seller or
Parent of any representation, warranty or covenant made by Seller or Parent in
this Agreement, and does not supersede or modify any such representation,
warranty or covenant.
Section 6.5 Confidentiality of Certain Reports. Except (i) as may be
required by law or to their respective attorneys and accountants, or (ii) with
the consent of the other parties hereto (which shall not be unreasonably
withheld), to persons who have provided financing or insurance to, or propose to
provide financing or insurance to, the parties hereto, each of Buyer, Seller and
Parent agree to keep all environmental audit reports and other environmental
information exchanged among the parties pursuant to this Agreement confidential
and not to disclose or use for any purpose not expressly contemplated by this
Agreement, or permit any other party to use for any purpose, any such reports or
information concerning the Fee Property.
Section 6.6 No Implied Representation. It is the explicit intent of
each party hereto that no party is making any representation or warranty
whatsoever, express or implied, beyond those expressly given in this Agreement
and the deed conveying, transferring and assigning the Fee Property. Without
limiting the generality of the foregoing, it is understood that any cost
estimates, forecasts, projections or other predictions contained or referred to
in this Agreement, any management presentations or other materials that have
been provided to Buyer are not and shall not be deemed to be representations or
warranties of Seller.
Section 6.7 Inventory. On the Closing Date, designees of Seller are
conducting, and Buyer or its representatives has been afforded the right to
observe, a physical inventory of the Inventory, the results of which shall be
included in the determination of Net Working Capital. Any dispute with respect
to such inventory shall be resolved in accordance with the procedures set forth
in Section 2.3 hereof.
Section 6.8 Assignment of Instruments. To the extent the assignment of
any Instruments to Buyer shall require the consent of any other person, this
Agreement shall not constitute a contract to assign the same if an attempted
assignment would constitute a breach thereof or give rise to any right of
acceleration or termination. This Section does not constitute any waiver by
Buyer of any breach by Seller or Parent of any representation, warranty or
covenant made by Seller or Parent in this Agreement, and does not supersede or
modify any such representation, warranty or covenant.
Section 6.9 Post-Closing Cooperation.
6.9.1 During the five year period after the Closing Date (the
"Access Period"), Buyer shall maintain in a reasonably accessible location
all books and records transferred by Seller to Buyer pursuant to this
Agreement. Buyer shall notify Seller prior to disposing of any such books
and records after the Access Period has expired and, upon request made by
Seller within sixty (60) days after receipt of such notice, Buyer shall
deliver such books and records to Seller at Seller's expense; provided,
however, that Buyer's obligations under this Section 6.9.1 shall expire on
the date beginning sixty (60) days after Seller's receipt of such notice
unless Seller has requested such books and records within such sixty-day
(60) period.
6.9.2 In recognition of Seller's obligations with respect to the
liabilities not assumed by Buyer and other legitimate business needs of
Seller, Buyer shall, upon three days prior written notice from Seller or
Parent to Buyer specifying the time, nature and legitimate business reason
therefor, during the Access Period: (i) afford the officers, employees and
authorized agents and representatives of Seller and Parent access, during
normal business hours, to the offices, properties, books and records of
Buyer with respect to the Purchased Assets and the Business in respect of
pre-Closing periods; (ii) furnish to the officers, employees and authorized
agents and representatives of Seller and Parent such additional financial
and other information regarding the operation of the Refining Facilities
and the Business for the period prior to the Closing as Buyer has in its
possession and as Seller may from time to time request; and (iii) make
available, without expense to Seller, the employees of Buyer whose
assistance, testimony or presence is necessary to assist Seller or Parent
in evaluation of and in defending any claims or litigation against Seller
or Parent not made by Buyer and concerning the Purchased Assets or the
Business, including assuring the presence of such persons as witnesses in
hearing or trials; provided, however, that Buyer shall be reimbursed for
its reasonable out-of-pocket expenses incurred in connection with clauses
(ii) and (iii) above, but such expenses shall not include expenses of
outside counsel, auditors or consultants in connection with the foregoing;
and provided further, that if the assistance, testimony or presence
pursuant to clause (iii) is necessary in connection with any claim or
litigation shall require the employees of Buyer to be absent from work for
more than 120 hours in the aggregate, Seller shall reimburse Buyer for a
pro rata portion of the salaries and benefits of the subject employees for
the hours in excess of such amount.
6.9.3 In recognition of Buyer's obligations with respect to the
Assumed Liabilities and other legitimate business needs of Buyer, Seller
and Parent shall, upon three days prior written notice from Buyer to Seller
or Parent specifying the time, nature and legitimate business reason
therefor, during the Access Period: (i) afford the offices, employees and
authorized agents and representatives of Buyer access, during normal
business hours, to offices, properties, books and records of Seller and
Parent with respect to the Purchased Assets and the Business in respect of
pre-Closing periods; (ii) furnish to the officers, employees and authorized
agents and representatives of Buyer such additional financial and other
information regarding the operation of the Refining Facilities and the
Business for the period prior to the Closing as Seller or Parent has in its
possession and as Buyer may from time to time request; and (iii) make
available, without expense to Buyer, the employees of Seller or Parent
whose assistance, testimony or presence is necessary to assist Buyer in
evaluation of and in defending any claims or litigation against Buyer not
made by Seller or Parent and concerning the Purchased Assets or the
Business, including assuring the presence of such persons as witnesses in
hearing or trials; provided, however, that Seller and Parent each shall be
reimbursed for its reasonable out-of-pocket expenses incurred in connection
with clauses (ii) and (iii) above, but such expenses shall not include
expenses of outside counsel, auditors or consultants in connection with the
foregoing; and provided, further, that if the assistance, testimony or
presence pursuant to clause (iii) is necessary in connection with any claim
or litigation shall require the employees of Seller or Parent to be absent
from work for more than 120 hours in the aggregate, Buyer shall reimburse
Seller and Parent for a pro rata portion of the salaries and benefits of
the employees of Seller and Parent for the hours in excess of such amount.
Section 6.10 Employee Matters.
6.10.1 Buyer has caused Staff Leasing, L.P. ("Employer") to offer
to hire, subject to Employer's standard hiring procedures and effective as
of the Closing Date, all of Seller's personnel employed at the Fee Property
or otherwise in connection with the ownership or operation of the Purchased
Assets immediately prior to the Closing Date (the "Employees") at a
comparable job and at a rate of pay (including commission structure) not
less than each such Employee's pay immediately prior to the Closing Date.
Employees who accept employment with Employer are referred to herein as
"Transferred Employees". Except for the obligations of Parent and Seller
under Parent's Simplified Employee Pension Plan (the "SEP"), Buyer will
cause Employer to be responsible for all employment-related obligations
with respect to the Transferred Employees in respect of periods and claims
incurred after the Closing Date. For purposes of this Section 6.10,
"employment-related obligations" shall include, without limitation,
compensation for services performed for Employer in the Business after the
Closing Date (and related employment and withholding taxes), benefits
accrued under any Employer-sponsored employee welfare or pension benefit
plan (as defined under the Employee Retirement Income Security Act of 1974,
as amended ["ERISA"] Sections 3(1) and 3(2), respectively) covering the
Transferred Employees after the Closing Date, (other than the SEP),
benefits accrued under any other employee benefit plan or arrangement of
Employer covering the Transferred Employees after the Closing Date and
workers compensation benefits with respect to claims incurred and filed
after the Closing Date. In reliance on Buyer's agreement to cause Employer
to offer to hire as of the Closing Date all of the Employees, Seller has
not given notifications under the Worker Adjustment and Retraining
Notification Act ("WARN") to any of its facilities. As between Buyer and
Seller or Parent, Buyer shall have sole responsibility for any obligations
or liabilities to the Transferred Employees under WARN for the Fee Property
location, and agrees to hold Seller and Parent harmless for same. Buyer's
indemnification of Seller in this regard specifically includes, but is not
limited to, any claim by such Employees for back pay, front pay, benefits,
or compensatory or punitive damages, any claim by any governmental unit for
penalties regarding any issue of prior notification (or any lack thereof)
of any plant closing or mass layoff, as well as the defense costs of Seller
and Parent, including reasonable attorneys' fees, in defending any such
claims.
6.10.2 "Past Service" means service (i) as an employee of Seller
or Parent or any of their respective affiliates and (ii) as an employee of
predecessor companies prior to the acquisition of the Fee Property by
Seller, but if and only to the extent that such service is recognized by
Seller for similar purposes immediately prior to the Closing Date.
6.10.3 From and after the Closing Date, the Transferred Employees
shall receive credit for Past Service and shall be entitled to retain and
take any paid vacation days accrued but not taken under the Seller's
vacation policies prior to the Closing Date.
6.10.4 Effective as of midnight on the Closing Date, the Buyer
shall cause Employer to make available or establish a group major medical
plan for the Transferred Employees and their dependents ("Employer's
Medical Plan"). The Employer's Medical Plan shall recognize Past Service
for purposes of any pre-existing condition limitations or coverage waiting
periods with respect to the Transferred Employees and shall give credit for
1997 claims incurred by the Transferred Employees under Seller's medical
and dental plans in determining whether the deductible, coinsurance and
maximum out-of-pocket provisions under Employer's Medical Plan are met for
1997. The Seller's or Parent's medical plan shall be responsible for the
payment of benefits to Transferred Employees and their dependents or
beneficiaries for any expenses incurred or accrued under the Seller's or
Parent's medical plan prior to the date the Transferred Employees become
employees of the Employer. The Employer's Medical Plan shall be liable for
the payment of claims of eligible Transferred Employees and their
dependents or beneficiaries for expenses incurred under the Employer's
Medical Plan on or after the date the Transferred Employees become
employees of Employer, notwithstanding the fact that any such expense may
be related to another expense that was paid or is eligible for payment
under the terms of the Seller's medical or dental plans or was related to
any treatment for any condition diagnosed or existing prior to the Closing
Date. Notwithstanding the foregoing provisions of this section, neither
Buyer nor Employer shall have any liability with respect to any claim for
coverage or benefits on behalf of any Transferred Employee, dependent or
beneficiary unless such claim is covered under an employee benefit plan
maintained by the Buyer or Employer on behalf of Buyer.
6.10.5 As of the Closing Date, the Buyer shall establish a plan
(the "Buyer's Profit Sharing Plan") pursuant to which Buyer shall set aside
5.5% of Buyer's net income after state taxes but before federal taxes for
payment of bonuses and shall continue such plan in effect through the end
of the 1997 calendar year. The amount that would be payable under the
Seller's profit sharing (incentive compensation) plan as of the Closing
Date shall be the starting point for the calculation of payments under the
Buyer's Profit Sharing Plan for 1997.
6.10.6 Nothing in this Section 6.10 or otherwise in this
Agreement, express or implied, shall confer upon any Transferred Employee or
other employee, or their dependents and beneficiaries, any rights or remedies of
any nature or kind, including but not limited, to any right to employment
or continued employment for any specified period, or make any such person a
third party beneficiary of this Agreement.
6.10.7 Nothing in this Section 6.10 or otherwise in this
Agreement, express or implied, shall be construed to prevent the Buyer or
Employer from terminating or modifying to any extent or in any respect at any
time any employee benefit or fringe benefit plan, policy program that the Buyer
or Employer sponsors or maintains or to which it may contribute or have an
obligation to contribute.
6.10.8 Buyer and Seller each agree to furnish each other with
appropriate records for each of the employees of the Seller, and their
dependents and beneficiaries, as may be necessary or appropriate to assist
in proper benefits or claims administration.
Section 6.11 Tax Matters.
6.11.1 After the Closing Date, Seller and Buyer will provide each
other with such cooperation and information as such parties reasonably may
request in filing any Tax Return, amended Tax Return or claim for refund,
determining a liability for Taxes or a right to a refund of Taxes or
participating in or conducting any audit or other proceeding in respect of
Taxes. Such cooperation and information shall include, without limitation,
providing copies of relevant Tax Returns or portions thereof, together with
accompanying schedules and related work papers and documents relating to
rulings or other determinations by Taxing authorities, but in no event
shall the parties be required to disclose to each other any information
relating to their business operations other than the operation of the
Purchased Assets for pre-Closing periods. Each party shall make its
employees available on a mutually convenient basis to provide explanations
of any documents or information provided hereunder. Any information
provided or obtained under this Section shall be kept confidential, except
as may otherwise be necessary in connection with the filing of Tax Returns
or claims for refund or in conducting an audit or other Tax proceeding. In
the event of any contest with a Taxing authority regarding property Taxes
relating to the Purchased Assets for any Tax or assessment period which is
subject to proration under Section 2, Buyer shall have the right to control
the contest and reasonable out-of-pocket expenses with respect to such
contest shall be borne by Buyer. The parties shall provide each other with
the requisite information to allow them to prepare federal, state and local
income Tax Returns for the period prior to and including the Closing Date.
Such information shall be provided in the Tax information reporting format
customarily used by Seller at its divisions, on or before 60 days after the
Closing Date.
6.11.2 The parties shall promptly notify each other in writing
upon receipt of notice of any pending or threatened Tax audits or assessments
relating to the Purchased Assets or to any member of Seller's or Buyer's
Affiliated Group (as defined in Section 1504 of the Code) in each case for
periods prior to the Closing or for Overlap Periods (as defined in Section
2.6.2).
6.11.3 Except for Tax returns required as a result of Seller
ceasing to conduct the Business or selling substantially all of its assets,
Buyer shall timely file all sales and use Tax or other such Tax Returns for
any Overlap Period (as defined in Section 2.6.2) and for periods ending on
or prior to the Closing Date where the due date for such Returns is a date
after the Closing Date, and Buyer shall pay the taxes shown as due on any
such returns. Seller shall pay to the Buyer Seller's share of any such
taxes (to the extent not already paid by Seller or included in the
determination of Net Working Capital) due pursuant to the filing of such
Tax Returns under the provisions of this subsection within thirty (30)
business days of receipt of notice of such filing and payment by Buyer,
which notice shall set forth in reasonable detail the calculations
determining Seller's share of such Taxes.
Section 6.12 Post-Closing Operations. Buyer agrees that, from the
Closing Date through the earlier of June 30, 2002 or the date upon which Buyer
pays to Seller all compensation which may become due pursuant to Section 2.8 of
this Agreement (a) it will operate the Purchased Assets as a business and will
conduct such business only in the ordinary course, in compliance in all material
respects with all applicable laws and regulations (including, without
limitation, Environmental Laws) and in the manner of a reasonably prudent
operator, and (b) it will not engage in any transaction of any kind with any
third party or Affiliate of Buyer, including without limitation any merger,
consolidation, sale or purchase of stock, statutory share exchange,
reorganization, recapitalization, sale of assets, pursuant to which (i) ▇▇▇ ▇.
▇▇▇▇▇ (or upon his death, his wife or children or their spouses collectively)
ceases to be directly involved in the day to day management of the business
conducted by Buyer using the Purchased Assets, or (ii) ▇▇▇ ▇. ▇▇▇▇▇ or ▇▇▇ ▇.
▇▇▇▇▇ and his spouse jointly (or upon his death, his wife or children or their
spouses collectively) cease to control directly or indirectly more then 50% of
the (A) equity interests in Buyer (or any permitted successor to Buyer not
organized as a corporation) that have the right to 50% or more of the profits
thereof, and the right in the event of dissolution to 50% or more of the assets
thereof, and the right presently to designate the individuals or entities that
exercise functions similar to the function of a board of directors, or (B)
securities of any permitted successor to Buyer organized as a corporation that
are entitled to vote generally in the election of directors, or (C) entity which
owns the Purchased Assets, or (iii) Buyer (or any permitted successor to Buyer)
ceases to own Purchased Assets necessary to operate the Business as it exists on
the Closing Date. Buyer agrees that, from the Closing Date through the earlier
to occur of June 30, 2002 or the date upon which Buyer pays to Seller all
compensation which may become due pursuant to Section 2.8 of this Agreement, it
will not (a) sell, exchange, swap, transfer or otherwise deliver any product
produced using the Purchased Assets to ▇▇▇ ▇. ▇▇▇▇▇ or any of his Affiliates, or
any member of the family of ▇▇▇ ▇. ▇▇▇▇▇ (including spouses of family members)
or any of their respective Affiliates except transactions done on an arms-length
basis on terms no less favorable to Buyer than terms that could be obtained from
an unaffiliated third party, or (b) enter into any reciprocal dealing
arrangement with any Person in which business, financial or other concessions
are granted by Buyer to any Person in contemplation of or exchange for business,
financial or other concessions being granted by the beneficiary of Buyer's
concession (including the Affiliates of such beneficiary) to a Person other than
Buyer.
Section 6.13 Transitional Services. As soon as practicable after
Closing, Parent shall install at the Fee Property the Data General 5600 computer
currently located at Parent's headquarters and being used in the Business.
During the 60 days after the installation thereof or for such shorter period as
Buyer may hereafter advise Parent, Parent shall assist Buyer in transitioning to
the use of such computer and shall provide to Buyer such other general and
administrative services of the type previously provided to Seller as Buyer may
reasonably request. Buyer shall reimburse Parent for its reasonable costs
incurred in providing any transition services other than computer transition
services.
ARTICLE VII
CLOSING DELIVERIES
Section 7.1 Deliveries by Seller at the Closing. At the Closing,
simultaneously with the deliveries by Buyer specified in Section 7.2 below, and
in addition to any other deliveries made by Seller pursuant to any other
transaction document at the Closing, Seller is delivering or causing to be
delivered to Buyer the following:
7.1.1 A Special Warranty Deed executed by Parent covering the Fee
Property and a general conveyance and ▇▇▇▇ of sale covering the other
Purchased Assets.
7.1.2 A License Agreement executed by Parent and Seller as
required by Section 6.1.
The consummation of the Closing shall not be deemed to be a waiver by
Seller or Parent of any of their rights or remedies against Buyer hereunder for
any breach of warranty, covenant or agreement by Buyer herein; provided,
however, that if Buyer has disclosed to Seller such a breach in this Agreement
or in any schedule to this Agreement, and Seller and Parent elect to consummate
the transactions contemplated hereby, Seller and Parent shall be deemed to have
waived their rights and remedies hereunder for, and Buyer shall have no
liability with respect to, any such specifically identified breach.
Section 7.2 Deliveries by Buyer at the Closing. At the Closing,
simultaneously with the deliveries by Seller specified in Section 7.1 above, and
in addition to any other deliveries made by Buyer pursuant to any other
transaction document at the Closing, Buyer is delivering or causing to be
delivered to Seller the following:
7.2.1 The cash payable to Seller at the Closing.
7.2.2 A License Agreement executed by Buyer as required by
Section 6.1.
The consummation of the Closing shall not be deemed to be a waiver by Buyer
of any of its rights or remedies against Seller or Parent hereunder for any
breach of warranty, covenant or agreement by Seller or Parent herein; provided,
however, that if Seller or Parent has disclosed to Buyer such a breach in this
Agreement or in any schedule to this Agreement, and Buyer shall elect to Close,
Buyer shall be deemed to have waived its rights and remedies hereunder for, and
Seller and Parent shall have no liability with respect to, any such specifically
identified breach.
ARTICLE VIII
INDEMNIFICATION
Section 8.1 Seller's Indemnity Obligations. Indemnification by Seller
and Parent with respect to all Environmental Matters shall be governed
exclusively by Article IX and no claim for indemnification from Seller or Parent
with respect to Environmental Matters shall be asserted under this Article VIII.
Subject to the foregoing and the limitations contained in Section 8.3, from and
after the Closing, Seller and Parent, jointly and severally, shall indemnify and
hold Buyer harmless from and against any and all claims, actions, causes of
action, arbitrations, proceedings, losses, damages, liabilities, judgments and
expenses (including, without limitation, reasonable attorneys' fees)
("Indemnified Amounts") incurred by Buyer as a result of (i) any breach of or
misrepresentation in any of the representations and warranties made by Seller or
Parent in this Agreement, (ii) any breach by Seller or Parent of any covenant of
Seller or Parent contained in this Agreement, and (iii) the liabilities of
Seller or Parent which are not Assumed Liabilities.
The representations and warranties of Seller and Parent in this Agreement,
other than those in Sections 4.2, 4.7, 4.8 and 4.11, shall expire on the second
anniversary of the Closing Date. The representations and warranties of Seller
and Parent contained in Sections 4.2, 4.7, 4.8 and 4.11 shall survive for the
maximum period permitted by applicable law; provided, that if a claim has been
made with respect to a breach of a representation or warranty prior to the
expiration thereof, and such claim has not been finally resolved as of the
expiration thereof, such representation or warranty shall survive until the
final resolution of such claim; and provided further, that the expiration of the
survival period of any representation or warranty shall not relieve Seller or
Parent of their respective liabilities and obligations under Section 3.2 of this
Agreement. The covenants and agreements of Seller and Parent contained in this
Agreement that do not expire by their terms on the Closing Date shall survive
the Closing for any time period specified therein or, if no time period is so
specified, indefinitely.
Section 8.2 Buyer's Indemnity Obligations. Indemnification by Buyer
with respect to all Environmental Matters shall be governed exclusively by
Article IX and no claim for indemnification from Buyer with respect to any
Environmental Matters shall be asserted under this Article VIII. Subject to the
foregoing and the limitations contained in Section 8.3, from and after the
Closing, Buyer shall indemnify and hold Seller and Parent harmless from and
against any and all Indemnified Amounts incurred by Seller or Parent as a result
of (i) any breach of or misrepresentation in any of the representations and
warranties made by Buyer in this Agreement, (ii) any breach by Buyer of any
covenant of Buyer contained in this Agreement, and (iii) the Assumed
Liabilities.
The representations and warranties of Buyer in this Agreement, other than
those in Sections 5.2 and 5.3, shall expire on the second anniversary of the
Closing Date. The representations and warranties of Buyer contained in Sections
5.2 and 5.3 shall survive for the maximum period permitted by applicable law;
provided, that if a claim has been made with respect to a breach of a
representation or warranty prior to the expiration thereof, and such claim has
not been finally resolved as of such expiration, such representation or warranty
shall survive until the final resolution of such claim; and provided further,
that the expiration of the survival period of any representation or warranty
shall not relieve Buyer of its liabilities and obligations under Section 3.1 of
this Agreement. The covenants and agreements of Buyer contained in this
Agreement that do not expire by their terms on the Closing Date shall survive
the Closing for any time period specified therein or, if no time period is so
specified, indefinitely.
Section 8.3 Limitations.
8.3.1 No party shall be liable under this Article VIII for the
breach of any representation or warranty until the aggregate amount of such
liability (for all such claims) exceeds $25,000 (the "Deductible Amount");
but once the Deductible Amount has been met, such party shall be liable
only for all such liability in excess of the Deductible Amount. Seller's
maximum liability under this Agreement for all claims made pursuant to this
Article VIII for breaches of representations and warranties shall not
exceed the sum of (i) $14,820,000, (ii) the amount of the Net Working
Capital actually paid to Seller pursuant to Section 2.3, (iii) the amount
paid to Seller pursuant to Sections 2.7 and 2.8. In no event shall this
Section 8.3.1 apply to the liabilities and obligations of Seller and Parent
under Section 3.2 of this Agreement or the liabilities and obligations of
Buyer under Section 3.1 of this Agreement.
8.3.2 The liability of any party under this Article VIII shall be
offset dollar for dollar by any recovery the party making a claim for
indemnity actually receives from any third party in respect of the same
claim; provided, however, that this Section 8.3.2 imposes no obligation or
condition that any such recovery be pursued.
8.3.3 The liability of Seller and Parent for a breach of the
representations and warranties with respect to any personal property shall
be limited to the book value of the affected personal property as of the
Closing Date, as reflected on Buyer's books and records.
8.3.4 Notwithstanding any provision of this Agreement, neither
Seller nor Parent shall be liable to Buyer for any Indemnified Amounts
arising out of any breach of any representation or warranty if such breach
has been disclosed in this Agreement or any schedule to this Agreement.
Notwithstanding any provisions of this Agreement, Buyer shall not be liable
to Seller or Parent for any Indemnified Amounts arising out of any breach
of any representation or warranty if such breach has been disclosed in this
Agreement or any schedule to this Agreement.
8.3.5 Neither Seller nor Parent shall have any obligation to
indemnify Buyer with respect to any matter that (i) was the subject of a
dispute regarding the Statement of Net Working Capital resolved by the
Neutral Accountants or (ii) could have been the subject matter of such a
dispute and was not asserted by Buyer in accordance with Section 2.3.
8.3.6 In no event shall Seller or Parent be liable to Buyer for
consequential damages and in no event shall Buyer be liable to Seller or
Parent for consequential damages; provided, that these limitations shall
not apply to consequential damages payable to a third party pursuant to a
Third Party Claim.
8.3.7 Anything in this Agreement to the contrary notwithstanding,
no claim may be asserted nor any action commenced against Seller or Parent
by Buyer or against Buyer by Seller or Parent for breach of any
representation, warranty, covenant or agreement contained herein, unless
written notice of such claim or action is received by Seller and Parent or
Buyer, as the case may be describing in reasonable detail the facts and
circumstances with respect to the subject matter of such claim or action on
or prior to the date on which the representation, warranty, covenant or
agreement on which such claim or action is based ceases to survive as set
forth in this Agreement, irrespective of whether the subject matter of such
claim or action shall have occurred before or after such date.
Section 8.4 Indemnification Procedures. All claims for indemnification
under this Article VIII shall be asserted and resolved as follows:
8.4.1 A party claiming indemnification under this Article VIII (an
"Indemnified Party") shall with reasonable promptness (i) notify the party
or parties from whom indemnification is sought (the "Indemnifying Party")
of any third-party claim or claims asserted against the Indemnified Party
("Third Party Claim") for which indemnification is sought and (ii) transmit
to the Indemnifying Party a copy of all papers served with respect to such
claim (if any) and a written notice dated on the date sent to the
Indemnifying Party ("Claim Notice") containing a description in reasonable
detail of the nature of the Third Party Claim, an estimate of the amount of
damages attributable to the Third Party Claim to the extent feasible (which
estimate shall not be conclusive of the final amount of such claim) and the
basis of the Indemnified Party's request for indemnification under this
Agreement.
Within 30 days after receipt of any Claim Notice (the "Election
Period"), the Indemnifying Party shall notify the Indemnified Party whether
the Indemnifying Party disputes its potential liability to the Indemnified
Party with respect to such Third Party Claim.
If the Indemnifying Party does not dispute its potential liability to
the Indemnified Party within the Election Period, the Indemnified Party
shall give the Indemnifying Party an opportunity to control negotiations
toward resolution of such claim without the necessity of litigation, and if
litigation ensues, to defend the same with counsel reasonably acceptable to
the Indemnified Party, at the Indemnifying Party's expense, and the
Indemnified Party shall extend reasonable cooperation in connection with
such defense. The Indemnified Party shall be entitled to participate in,
but not to control, the defense of any Third Party Claim resulting in
litigation, at its own cost and expense; provided, however, that if the
parties to any suit or proceeding shall include the Indemnifying Party as
well as the Indemnified Party and the Indemnified Party shall have been
advised by counsel that one or more legal defenses may be available to it
that may not be available to the Indemnifying Party, then the Indemnified
Party shall be entitled to participate in the defense of such suit or
proceeding along with the Indemnifying Party, but the Indemnified Party
shall be obligated to bear the fees and expenses of counsel of the
Indemnified Party, which shall be selected by the Indemnified Party in its
complete and sole discretion. If the Indemnifying Party does not dispute
its potential liability to the Indemnified Party within the Election Period
and the Indemnifying Party fails to assume control of the negotiations
prior to litigation or to defend such action within a reasonable time, the
Indemnified Party shall be entitled, but not obligated, to assume control
of such negotiations or defense of such action, and the Indemnifying Party
shall be liable to the Indemnified Party for its expenses reasonably
incurred or amounts paid in connection therewith. If the Indemnifying
Party disputes its potential liability to the Indemnified Party within the
Election Period, then the Indemnified Party shall be entitled to assume
control of such negotiations or defense of the action and the liability for
the expense thereof, as well as any liability with respect to such Third
Party Claim, shall be determined as provided in Section 8.5 below. Neither
the Indemnifying Party nor the Indemnified Party shall settle, compromise,
or make any other disposition of any Third Party Claim which would or might
result in any liability to the Indemnified Party or the Indemnifying Party
under this Article VIII without the written consent of such other party.
8.4.2 In the event any Indemnified Party should have a claim
against any Indemnifying Party hereunder that does not involve a Third
Party Claim, the Indemnified Party shall transmit to the Indemnifying Party
a written notice dated on the date sent to the Indemnifying Party (the
"Indemnity Notice") describing in reasonable detail the nature of the
claim, an estimate of the amount of damages attributable to such claim to
the extent feasible (which estimate shall not be conclusive of the final
amount of such claim) and the basis of the Indemnified Party's request for
indemnification under this Agreement. If the Indemnifying Party does not
notify the Indemnified Party within 30 days from its receipt of the
Indemnity Notice that the Indemnifying Party disputes such claim, the claim
specified by the Indemnified Party in the Indemnity Notice shall be deemed
a liability of the Indemnifying Party hereunder.
Section 8.5 Arbitration of Disputes. If the Indemnifying Party
disputes, either as to the amount or liability, that any claim described in a
Claim Notice or an Indemnity Notice, as the case may be, is covered by such
Indemnifying Party's covenant to indemnify contained in this Article VIII, then
the Indemnifying Party and the Indemnified Party agree to promptly negotiate in
good faith to resolve their differences and to mutually agree upon an amount (an
"Agreed Amount"), if any, owed to Indemnified Party by the Indemnifying Party
hereunder. If Indemnifying Party and Indemnified Party fail to agree within 30
days after the date of the Claim Notice or the Indemnity Notice, as the case may
be, the dispute shall be resolved (a "Final Determination") by binding and final
arbitration of a single arbitrator mutually agreed to by Buyer and Seller
conducted in Houston, Texas in accordance with the rules of commercial
arbitration of the American Arbitration Association. The prevailing party in
any such arbitration proceeding shall be entitled to attorney's fees and other
out-of-pocket expenses reasonably and necessarily incurred in connection with
such proceeding, the amounts of which shall be contained in the award of the
arbitrator. Any amount which is described in a Claim Notice which is not
disputed by the Indemnifying Party shall be paid promptly in cash upon receipt
of the Claim Notice by the Indemnifying Party.
Section 8.6 General. The indemnification obligations under this
Article VIII shall apply regardless of whether any suit or action results solely
or in part from the active, passive or concurrent negligence of the Indemnified
Party.
ARTICLE IX
ENVIRONMENTAL MATTERS
Section 9.1 Definitions. For purposes hereof, the following terms shall
have the following meanings:
9.1.1 "Claim of Environmental Liability" shall mean any and all
claims, liabilities, obligations, judgments, penalties, expenses, losses or
damages relating to (a) the Purchased Assets or the Business as to
liability of Buyer, Seller or Parent, (b) the Excluded Assets as to
liability of Seller or Parent, and (c) in the case of both (a) and (b),
(i) any suit, action, administrative proceeding, notice, investigation or
demand asserted or threatened by any third-party (including any
governmental agency or authority) arising under any Environmental Law, (ii)
requirements imposed by any Environmental Law, including costs of
remediation or costs incurred in obtaining applicable permits or complying
with Environmental Law, or (iii) the presence or release into the
environment of any Hazardous Substances, including worker or customer
exposure thereto.
9.1.2 "Environmental Law" shall mean any federal, state, or local
law (including common law), rule, regulation, order, ordinance, writ,
judgment, injunction, decree, or determination having the force of law
relating to the protection of human health or the environment, the release
of any Hazardous Substances into the environment, the generation,
management, transportation, storage, treatment and disposal of Hazardous
Substances, or the pollution of air, soil, groundwater or surface water
(including, without limitation, the Clean Air Act, the Toxic Substance
Control Act, the Clean Water Act, the Comprehensive Environmental Response,
Compensation and Liability Act, and the Resource Conservation and Recovery
Act, all as amended, or their state counterparts or analogues).
9.1.3 "Environmental Matters" shall mean matters or circumstances
relating to (i) any obligation or liability arising under any Environmental
Law, or (ii) any Claim of Environmental Liability.
9.1.4 "Hazardous Substance" shall mean any pollutant, contaminant,
petroleum or petroleum product, dangerous or toxic substance, hazardous or
extremely hazardous substance or chemical, solid or hazardous waste,
special, liquid, industrial or other waste, hazardous material, or other
material, substance or agent (whether in solid, liquid or gaseous form)
that is regulated in connection with the protection of the environment or
that is alleged by third parties or found to pose a threat to the safety or
health of humans.
Section 9.2 Indemnification for Claims of Environmental Liability.
9.2.1 Seller's Exclusive Responsibility. Indemnification of Buyer
by Seller or Parent for any Claims of Environmental Liability shall be
asserted exclusively pursuant to this Article IX. Subject to Buyer's
indemnification obligations and the limitations and sharing arrangements
set forth in this Article IX, Seller and Parent jointly and severally shall
indemnify and hold Buyer harmless from any and all Indemnified Amounts
which Buyer may suffer or incur by reason of any Claim of Environmental
Liability (i) the existence of which constitutes a breach of any
representation, warranty or covenant of Seller or Parent in this Agreement
relating to Environmental Matters regardless of whether the survival period
has expired, (ii) arising out of or relating to the 1996 tank explosion(s)
on the Fee Property, or (iii) resulting from an act, omission or event
occurring or circumstance or condition coming into existence before, the
Closing Date and not involving a Shared Material (as hereinafter defined).
As used in this Article IX, the term "Indemnified Amounts" has the meaning
given it in Section 8.1.
9.2.2 Buyer's Exclusive Responsibility. Indemnification of Seller
and Parent by Buyer for any Claims of Environmental Liability shall be
asserted exclusively pursuant to this Article IX. Subject to the
indemnification obligations and sharing arrangements of Seller and Parent
set forth in this Article IX, Buyer shall indemnify and hold Seller and
Parent harmless from any and all Indemnified Amounts which Seller or Parent
may suffer or incur by reason of any Claim of Environmental Liability
(i) the existence of which constitutes a breach of any representation,
warranty or covenant of Buyer in this Agreement relating to Environmental
Matters regardless of whether the survival period has expired, or
(ii) resulting from an act, omission or event occurring, or circumstance or
condition coming into existence, after the Closing Date and not involving a
Shared Material (as hereinafter defined).
9.2.3 Seller's and Buyer's Shared Responsibility. In connection
with any Indemnified Amount arising out of, or in connection with, any
Claim of Environmental Liability made or asserted during the five-year
period beginning immediately after 12:00 midnight on the Closing Date and
ending on the fifth anniversary of the Closing Date (the "Environmental
Claims Period"), if such Claim of Environmental Liability relates to any
raw material or feedstock used, or product sold or exchanged, by the Seller
in the Business prior to Closing and by the Buyer in the Business after
Closing (the "Shared Material"), then Buyer, on the one hand, and Seller
and Parent, on the other hand, shall be equally responsible and liable for
such Indemnified Amount. Any such Claim of Environmental Liability made or
asserted during the Environmental Claims Period shall survive the
expiration thereof for purposes of this Article IX as if such expiration
had not occurred. If any such Claim of Environmental Liability relating to
Shared Material is made or asserted after the expiration of the
Environmental Claims Period, then as between Buyer, Seller and Parent,
Buyer shall be solely responsible and liable for such claim.
9.2.4 Third Party Claim Procedures. A party claiming
indemnification under this Article IX (an "Indemnitee" shall, with
reasonable promptness (i) notify the party or parties from which
indemnification is sought (an "Indemnitor") of any claim or demand asserted
against the Indemnitee by a third party with respect to any matter as to
which the indemnities set forth in this Article IX do or could apply (an
"Environmental Third Party Claim"). Such notice shall include the details
of the Environmental Third Party Claim, including copies of all pleadings
and the pertinent documents. Within twenty (20) days of receipt of such
notice, the Indemnitor shall (i) pay the Environmental Third Party Claim
either in full or upon compromise agreed to by the Indemnitor, or (ii)
notify the Indemnitee that the Indemnitor disputes the Environmental Third
Party Claim and intends to defend against it, and thereafter so defend and
pay any adverse final judgment against the Indemnitor or the Indemnitee or
award or settlement amount in regard thereto, or (iii) notify the
Indemnitee that the Indemnitor does not accept any indemnification
obligation to the Indemnitee with respect to such Environmental Third Party
Claim, in which event the Indemnitor and the Indemnitee shall cooperate in
the joint defense of such Environmental Third Party Claim as described
below. Except when the parties are cooperating in a joint defense as
described below, the defense of any Environmental Third Party Claim shall
be controlled by the Indemnitor , and the cost of such defense shall be
borne by it, except that the Indemnitee shall have the right to participate
in such defense at its own expense. In the event (i) the Environmental
Third Party Claim is one to which Section 9.2.3 applies, or (ii) there is a
dispute as to whether the Indemnitor is obligated to indemnify the
Indemnitee hereunder with respect to such Environmental Third Party Claim,
and the parties are unable to agree upon their relative share of
responsibility, if any, for such claim, Buyer, Seller and Parent agree to
cooperate in the joint defense of such claim and not to ▇▇▇ or make any
cross-claim against one another with respect to the subject matters of such
dispute except to the extent necessary to resolve their respective
indemnity obligations hereunder.
9.2.5 Arbitration. The arbitration provisions of Section 8.5
shall apply to any disputes regarding the applicability of this Article IX.
9.2.6 Other Claim Procedures. In the event any Indemnified Party
should have a claim against any Indemnifying Party under this Article IX
that does not involve an Environmental Third Party Claim, the Indemnified
Party shall transmit to the Indemnifying Party an Indemnity Notice
describing in reasonable detail the nature of the claim, an estimate of the
amount of damages attributable to such claim to the extent feasible (which
estimate shall not be conclusive of the final amount of such claim) and the
basis of the Indemnified Party's request for indemnification under this
Article. If the Indemnifying Party does not notify the Indemnified Party
within 30 days from its receipt of the Indemnity Notice that the
Indemnifying Party disputes such claim, the claim specified by the
Indemnified Party in the Indemnity Notice shall be deemed a liability of
the Indemnifying Party hereunder.
9.2.7 Access. With respect to any claim for indemnification under
this Article IX, the Indemnitee will give to the Indemnitor and its
counsel, accountants and other representatives full and free access, during
normal business hours and upon the giving of reasonable prior notice, of
its books and records relating to such claims, and to its employees,
accountants, counsel and other representatives, all without charge to the
Indemnitor, except for reimbursement of reasonable out-of-pocket expenses.
In this regard, the Indemnitee agrees to maintain any of its books and
records which may relate to a claim for indemnification hereunder for such
period of time as may be necessary to enable the Indemnitor to resolve such
claim.
9.2.8 Standard of Conduct. The indemnification obligations of
Seller and Parent with respect to Claims of Environmental Liability
pursuant to this Article IX which involve remediation, rectification or
clean-up of any Environmental Matter shall be limited to those Indemnified
Amounts which would be reasonably incurred by a reasonable prudent owner or
operator under the same or similar circumstances operating with its own
funds to satisfy the remediation levels or performance standards imposed
under Environmental Laws or under Risk Reduction Standard Number 3
promulgated by the Texas Natural Resource Conservation Commission ("TNRCC")
at 30 T.A.C. Chapter 335, or similar risk-based standards subsequently
adopted by the TNRCC; provided, that if the remediation methods or
performance standards are imposed by a final administrative order or
judicial decree, those methods or standards shall control. Upon approval
of Seller, such remediation, rectification or clean-up may be performed
under the Voluntary Cleanup Program established by the TNRCC. Except as
required by Environmental Laws or an Environmental Agency, or by agreement
of Seller, Parent and Buyer, Seller and Buyer agree that neither Seller or
Parent nor Buyer will perform or instigate, or prompt an Environmental
Agency to perform or instigate, any invasive environmental investigation of
the Purchased Assets, including without limitation any subsurface or other
testing of the soil, surface water or groundwater related to the
Purchased Assets (an "Environmental Investigation"), during the
Environmental Claims Period; provided, however, that nothing in this
Section 9.2.8 shall preclude Buyer from operating its business in the
ordinary course, including, without limitation, conducting
(i) construction, dredging, maintenance, facilities modification or
expansion, or road building activities, or (ii) any Environmental
Investigation required by Environmental Laws in order to respond to any
release discovered in the course of such activities.
9.2.9 Limitations. The liability of any party under this
Article IX to pay any Indemnified Amount shall be offset dollar for dollar
by any recovery the party making a claim for indemnity actually receives
from any third party in respect of the same claim; provided, however, that
this Section 9.2.9 imposes no obligation or condition that any such
recovery be pursued.
ARTICLE X
EXCLUSIVITY; OTHER MATTERS
Section 10.1 Exclusive Remedy. Subject to Section 11.3, each of Buyer,
Seller and Parent hereby acknowledges and agrees that its sole and exclusive
remedy with respect to any and all claims relating to the breach by the other
party of its representations, warranties, covenants and agreements contained in
this Agreement shall be pursuant to the indemnification provisions set forth in
Article VIII and Article IX. Each of Buyer and Seller hereby waives, to the
fullest extent permitted under applicable law, any and all other rights, claims
and causes of action it may have against the other arising under or based upon
any federal, state or local statute, law, ordinance, rule or regulation
(including, without limitation, any such rights, claims or causes of action
arising under or based upon common law or otherwise) with respect to the
representations, warranties, covenants and agreements contained in this
Agreement.
Section 10.2 Specific Performance. Notwithstanding the foregoing Section
10.1, nothing contained in this Article X or the arbitration provisions of
Section 8.5 shall prevent any party hereto from seeking and obtaining specific
performance by the other party hereto of any of its obligations under this
Agreement or from seeking and obtaining injunctive relief against the other
party's activities in breach of this Agreement.
Section 10.3 No Right to Rescind. Anything herein to the contrary
notwithstanding no breach of any representation, warranty, covenant or agreement
contained herein shall give rise to any right on the part of Buyer after the
Closing to rescind this Agreement or any of the transactions contemplated
hereby.
Section 10.4 No Setoff. Neither Buyer nor Seller or Parent shall have
right to setoff against any amounts payable to Seller or Parent or to Buyer,
respectively, hereunder (including payments under Sections 2.7 or 2.8) any
amounts which have not been finally determined by the appropriate authority
designated in this Agreement, or if none, a court of competent jurisdiction, to
be payable hereunder.
ARTICLE XI
NON-COMPETITION AGREEMENT
Section 11.1 Covenants Not to Compete or Interfere.
11.1.1 For a period of five years after the Closing Date, Seller
and Parent will not, and Parent will not permit its Affiliates to:
(i) directly or indirectly engage or invest in, finance,
own, manage, operate, control or participate in the
ownership, management, operation or control of any Competing
Business (defined below); provided, however, that this
Section 11.1.1 shall not preclude Seller, Parent or any of
their respective Affiliates from (A) investing in the
securities of any enterprise engaged in a Competing Business
(but without otherwise participating in management of such
enterprise) if such securities are listed on any United
States national or regional securities exchange or have been
registered under Section 12(g) of the Securities Exchange
Act of 1934, provided that Seller, Parent and their
respective Affiliates combined do not purchase or hold
(directly or indirectly) an aggregate equity interest
of more than 5% in any such enterprise or (B) engaging or
participating in a Competing Business as the result of the
acquisition of all or substantially all of the assets of, or
all or any portion of the securities of, any enterprise
engaged in a business other than a Competing Business, but
which conducts a Competing Business in conjunction with its
conduct of such other business, if the purpose of such
acquisition was to acquire the non-Competing Business.
(ii) directly or indirectly, either as principal, agent,
independent contractor, consultant, (whether paid or
unpaid), stockholder, partner or in any other individual or
representative capacity whatsoever, either for its own
benefit or for the benefit of any other Person (defined
below), solicit, divert or take away from Buyer any customer
of the Business, who was a customer of the Business at any
time during 1995, 1996 or 1997 prior to the Closing Date,
for the sale to such customer of any product or service sold
by Seller to such customer prior to Closing; or
(iii) directly or indirectly, either as principal, agent,
independent contractor, consultant, (whether paid or
unpaid), stockholder, partner or in any other individual or
representative capacity whatsoever, either for its own
benefit or for the benefit of any other Person, either (a)
hire, attempt to hire, or solicit for employment any
Transferred Employee, (b) induce any such employee to
leave the employment of Buyer, or (iii) induce any
distributor, vendor, supplier, representative or agent of or
to Seller at any time during 1995, 1996 or 1997 prior to the
Closing Date, and who becomes a distributor, vendor,
supplier, representative or agent of or to Buyer in respect
of the Business, to terminate or modify its relationship
with Buyer as it relates to the Business.
11.1.2 As used in this Agreement, the following terms have the
indicated meaning:
"Affiliate" when used to indicate a relationship with any Person,
means: (i) any corporation or legal entity with respect to which such
Person is an executive officer or director (or, with respect to
unincorporated entities, a holder of a similar management position), or is
directly or indirectly the beneficial owner of at least 50% of the
outstanding shares of any class of equity securities or other equity
interest therein; or (ii) any trust or other estate in which such Person
directly or indirectly has a beneficial interest of 50% or more or as to
which such Person serves as trustee or in any similar fiduciary capacity.
"Competing Business" means any Person whose products or services
compete, in whole or in part, anywhere in the United States at any time
during the five years after the Closing Date, with the products or services
of the Business at any time during 1995, 1996 or 1997 through the Closing
Date.
"Person" means an individual, corporation, limited liability company,
partnership, limited partnership, joint venture, joint stock company, firm,
company, syndicate, trust, estate, association, governmental authority,
business, organization or any other incorporated or unincorporated entity.
11.1.3 None of Seller, Parent or any of their respective
Affiliates shall for itself, himself or herself or on behalf of any other Person
(whether as an individual, agent, servant, employee, employer, officer,
director, shareholder, investor, principal, consultant or in any other
capacity) use or disclose to any Person any of the following relating in
any way to any Purchased Assets, the Business, Buyer or its business:
trade secrets; proprietary information; "know-how;" marketing, distribution
and advertising plans and techniques; the existence or terms of contracts
or potential contracts with, or other information identifying or relating
to past, existing or prospective customers, distributors or vendors; cost
data, pricing policies, and financial and accounting information; or
matters pertaining to pending or threatened litigation or investigations;
provided, however, that (after reasonable measures have been taken to
maintain confidentiality and after giving reasonable notice to Buyer
specifying the information involved and the manner and extent of the
proposed disclosure thereof) any disclosure of such information may be made
to the extent required by applicable laws or judicial or regulatory
process; and provided further, that the prohibitions in this subsection
shall not apply to any information (i) which is or becomes publicly
available through no breach of this Agreement or other fault of Seller,
Parent or any of their Affiliates; (ii) is disclosed to Seller, Parent or
any of their Affiliates by a third party which, to the knowledge of Seller
after inquiry, is under no duty of confidentiality to Buyer with respect
thereto, or (iii) is developed independently by Seller, Parent or any of
their Affiliates without use of Buyer's confidential information.
Section XI.2 Necessity and Reasonableness. Seller and Parent hereby
jointly and severally specifically acknowledge, agree and represent to Buyer as
a material inducement for Buyer to enter into this Agreement: (i) the covenants
and agreements of Seller and Parent in this Article XI are necessary and
essential to the protection of the Business which Buyer will conduct with the
Purchased Assets, and to enable Buyer to realize and derive all of the benefits,
rights and expectations associated with this Agreement; (ii) Buyer will suffer
great loss and irreparable harm if Seller or Parent directly or indirectly
enters into a Competing Business; (iii) the temporal and other restrictions
contained in this Article XI are in all respects reasonable and necessary to
protect the business goodwill, trade secrets, prospects and other business
interests of Buyer in respect of the business which Buyer will conduct with the
Purchased Assets; (iv) the enforcement of this Article XI will not work an undue
or unfair hardship on Seller or Parent or otherwise be oppressive to any of
them, it being specifically acknowledged and agreed by Seller and Parent that
they have other business interests and opportunities which will provide each of
them adequate means of support if the provisions of this Article XI are
enforced; (vi) neither Seller nor Parent believe or will assert that the
enforcement of this Article XI will deprive the public of needed goods or
services or otherwise be injurious to the public; and (v) good and valuable
consideration exists for the agreement of Seller and Parent to be bound by the
covenants and agreements contained in this Article XI.
Section 11.3 Enforcement. Because of the unique nature of the Purchased
Assets, the business to be conducted and further developed by Buyer therewith,
and the confidential and proprietary information relating thereto, each of
Seller and Parent acknowledge, understand and agree that if Seller, Parent or
their respective Affiliates fail to comply with any of their respective
obligations under this Article XI, Buyer will suffer immediate and irreparable
harm and monetary damages will be inadequate to compensate Buyer for such
breach. Accordingly, each of Seller and Parent agree that Buyer shall, in
addition to any other remedies available to it hereunder, at law or in equity,
be entitled to temporary, preliminary, and permanent injunctive relief and
specific performance to enforce the terms of this Article XI without the
necessity of proving inadequacy of legal remedies or irreparable harm or posting
bond. This Section 11.3 does not, and shall not be construed to constitute a
waiver of the parties' rights and obligations under Section 8.5 with respect to
arbitration of disputes other than those relating to enforcement of this
Article XI.
Section 11.4 Judicial Modification. If any term, provision, covenant, or
restriction of this Article XI is held by a court of competent jurisdiction to
be invalid, void, or unenforceable, the remainder of this Article XI and the
other terms, provisions, covenants and restrictions of this Article XI 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 this Agreement had the terms, provisions,
covenants and restrictions which may be hereafter declared invalid, void, or
unenforceable not initially been included herein. If a court of competent
jurisdiction determines that the length of time or any other restriction, or
portion thereof, set forth in Article XI is overly restrictive and
unenforceable, the court may reduce or modify such restrictions to those which
it deems reasonable and enforceable under the circumstances, and the parties
agree to request the court to exercise such power, and, as so reduced or
modified, the parties hereto agree that the restrictions of this Article XI
shall remain in full force and effect, shall be enforceable and shall be
enforced.
ARTICLE XII
GENERAL PROVISIONS
Section 12.1 Expenses. Except as otherwise provided herein, Buyer and
Seller shall pay their own respective expenses, including the fees and
disbursements of their respective counsel in connection with the negotiation,
preparation and execution of this Agreement and the consummation of the
transactions contemplated herein.
Section 12.2 Entire Agreement. This Agreement, including all schedules
and exhibits hereto, constitutes the entire agreement of the parties with
respect to the subject matter hereof, and may not be modified, amended or
terminated except by a written instrument specifically referring to this
Agreement signed by the parties hereto.
Section 12.3 Waivers and Consents. All waivers and consents given
hereunder shall be in writing. No waiver by any party hereto of any breach or
anticipated breach of any provision hereof by any other party shall be deemed a
waiver of any other contemporaneous, preceding or succeeding breach or
anticipated breach, whether or not similar.
Section 12.4 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been received only if and when
(i) personally delivered or (ii) on the third day after mailing, by United
States mail, first class, postage prepaid, by certified mail return receipt
requested, addressed in each case as follows (or to such other address as may be
specified by like notice):
If to Buyer, to: Specified Fuels & Chemicals, L.L.C.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇▇
If to Seller or Parent: ▇▇▇▇▇▇ Corporation
▇▇▇▇▇▇ Hydrocarbons & Chemicals, Inc.
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Section 12.5 Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Neither this Agreement nor the rights
hereunder may be transferred or assigned by any party hereto without the prior
written consent of the other parties. No assignment shall release the assigning
party from its obligations hereunder, unless the other parties agree otherwise.
Section 12.6 Knowledge, Gender and Certain References. References herein
to the knowledge of Buyer, Seller or Parent also includes the knowledge or
belief of their respective directors and officers and independent accountants
and attorneys, regardless of whether the knowledge of such Person was obtained
outside of the course and scope of his employment by, or duties to Buyer, Seller
or Parent, and regardless of whether any such Person's interests are adverse to
Buyer, Seller or Parent in respect of the matters as to which his knowledge is
attributed to Buyer, Seller or Parent. Unless otherwise specified, all
references herein to days, weeks, months or years shall be to calendar days,
weeks, months or years. Whenever the context requires, the gender of all words
used herein shall include the masculine, feminine and neuter, and the number of
all words shall include the singular and plural. References to Articles or
Sections shall be to Articles or Sections of this Agreement unless otherwise
specified. The headings and captions used in this Agreement are solely for
convenient reference and shall not affect the meaning or interpretation of any
article, section or paragraph herein, or this Agreement. The terms "hereof,"
"herein" or "hereunder" shall refer to this Agreement as a whole and not to any
particular article, section or paragraph. The terms "including" or "include"
are used herein in an illustrative sense and not to limit a more general
statement. When computing time periods described by a number of days before or
after a stated date or event, the stated date or date on which the specified
event occurs shall not be counted and the last day of the period shall be
counted.
Section 12.7 Rights of Parties. Nothing in this Agreement, whether
express or implied, is intended to confer any rights or remedies under or by
reason of this Agreement on any Persons other than the parties hereto and their
respective successors and assigns, nor shall any provision give any third
Persons any right of subrogation or action over against any party to this
Agreement. Without limiting the generality of the foregoing, it is expressly
understood that this Agreement does not create any third party beneficiary
rights.
Section 12.8 Time of Essence. Time is of the essence in the performance
of this Agreement.
Section 12.9 Governing Law. This Agreement shall be governed by the
internal laws, and not the laws of conflict, of the State of Texas.
Section 12.9 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original and all which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
▇▇▇▇▇▇ CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief Operating Officer
▇▇▇▇▇▇ HYDROCARBONS & CHEMICALS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
SPECIFIED FUELS & CHEMICALS, L.L.C.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇
Title: Manager