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Exhibit 2
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STOCK PURCHASE AGREEMENT
Between
▇▇▇▇▇ ▇▇▇▇▇▇▇ CORPORATION
and
TRANSMONTAIGNE INC.
Dated as of September 13, 1998
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TABLE OF CONTENTS
SECTION 1. Purchase and Sale of the Shares; Excluded
Assets; Retained Liabilities........................... 1
(a) Purchase and Sale................................. 1
(b) Excluded Assets................................... 1
(c) Retained Liabilities.............................. 2
SECTION 2. Closing; Net Working Capital............................... 2
(a) Closing.......................................... 2
(b) Net Working Capital.............................. 3
(i) Estimated Net Working Capital.............. 3
(ii) Establishment of Inventories and
Market Values........................... 4
(iii) Closing Net Working Capital................ 4
(iv) Review and Dispute Resolution.............. 5
(v) Net Working Capital True-Up................ 6
(vi) Accounts Receivable........................ 6
(vii) Cooperation and Access..................... 7
SECTION 3. Conditions to Closing...................................... 7
(a) Buyer's Obligation............................... 7
(b) Seller's Obligation.............................. 11
(c) Frustration of Closing Conditions................ 13
SECTION 4. Representations and Warranties of Seller................... 13
(a) Authority........................................ 13
(b) No Conflicts; Consents........................... 13
(c) The Shares....................................... 14
(d) Organization and Standing; Books and
Records......................................... 15
(e) Capital Stock of the Company..................... 15
(f) Equity Interests................................. 16
(g) Financial Information; Undisclosed
Liabilities................................... 16
(h) Taxes............................................ 17
(i) Assets Other than Real Property
Interests..................................... 18
(j) Title to Real Property........................... 19
(k) Intellectual Property............................ 20
(l) Contracts........................................ 20
(m) Litigation....................................... 23
(n) Insurance........................................ 24
(o) Benefit Plans.................................... 24
(p) Absence of Changes or Events..................... 26
(q) Compliance with Applicable Laws.................. 27
(r) Employee and Labor Matters....................... 28
(s) Customer Accounts Receivable;
Inventories................................... 29
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(t) Licenses; Permits................................ 30
(u) Accounts; Safe Deposit Boxes; Powers of
Attorney; Officers and Directors.............. 30
(v) Transactions with Affiliates..................... 30
(w) Effect of Transaction............................ 31
(x) Disclosure....................................... 31
(y) Suppliers........................................ 31
(z) Customers........................................ 32
(aa) Private Offering................................. 32
(bb) Transfer of Excluded Assets...................... 32
(cc) Securities Act................................... 32
(dd) Public Utility Holding Company Act............... 33
(ee) Brokerage Agreements............................. 33
SECTION 5. Covenants of Seller........................................ 33
(a) Access........................................... 33
(b) Ordinary Conduct................................. 33
(c) Confidentiality.................................. 36
(d) Insurance........................................ 36
(e) Resignations..................................... 37
(f) Supplemental Disclosure.......................... 37
(g) Certain Licenses and Permits..................... 37
(h) Severance Agreements............................. 37
(i) Transfer of Brokerage Accounts................... 38
(j) Audited Financial Statements..................... 38
(k) Non-Competition.................................. 38
(l) Program License Agreement........................ 39
(m) Schedules........................................ 39
SECTION 6. Representations and Warranties of Buyer.................... 40
(a) Authority........................................ 40
(b) No Conflicts; Consents........................... 40
(c) Buyer Shares..................................... 41
(d) Organization and Standing........................ 41
(e) Securities Act................................... 41
(f) Actions and Proceedings, etc..................... 41
(g) Availability of Funds............................ 42
(h) SEC Documents.................................... 42
(i) Capital Structure................................ 42
(j) Absence of Changes or Events..................... 43
(k) Private Offering................................. 43
(l) Brokerage Agreements............................. 44
(m) Disclosure....................................... 44
SECTION 7. Covenants of Buyer......................................... 44
(a) Confidentiality.................................. 44
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(b) Board of Directors of Buyer...................... 44
(c) Supplemental Disclosure.......................... 44
(d) Business Presence................................ 45
(e) Listing of Buyer Shares.......................... 45
(f) Employees of Seller.............................. 45
(g) Change of Company Name........................... 45
(h) Access........................................... 45
SECTION 8. Mutual Covenants........................................... 45
(a) Environmental Audit.............................. 46
(b) Cooperation...................................... 48
(c) Publicity........................................ 49
(d) Commercially Reasonable Best Efforts............. 49
(e) Antitrust Notification........................... 49
(f) Records.......................................... 50
SECTION 8A. Certain Post-Closing Cooperation.......................... 51
SECTION 9. Employee and Related Matters............................... 52
(a) Employment....................................... 52
(b) Employee Benefit Plans Post-Closing.............. 53
(c) Bonus/Incentive Compensation; Accrued
Vacation; Nonqualified Pension
Plans........................................ 54
(d) COBRA............................................ 54
(e) Workers Compensation............................. 54
(f) Pension/Savings Plans............................ 55
(g) Post-Retirement Health Obligations............... 55
SECTION 10. Further Assurances........................................ 55
SECTION 11. Indemnification........................................... 55
(a) Tax Indemnification.............................. 55
(b) Environmental Indemnification.................... 58
(c) Other Indemnification by Seller.................. 60
(d) Other Indemnification by Buyer................... 61
(e) Losses Net of Insurance, etc..................... 61
(f) Termination of Indemnification................... 62
(g) Procedures Relating to Indemnification
(Other than under Section 11(a)).............. 63
(h) Other Claims..................................... 65
(i) Procedures Relating to Indemnification
of Tax Claims................................. 65
(j) Mitigation....................................... 67
SECTION 12. Tax Matters............................................... 67
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SECTION 13. Assignment................................................ 71
SECTION 14. No Third-Party Beneficiaries.............................. 71
SECTION 15. Termination............................................... 72
SECTION 16. Survival of Representations............................... 74
SECTION 17. Expenses.................................................. 74
SECTION 18. Attorney Fees............................................. 74
SECTION 19. Amendments................................................ 74
SECTION 20. Notices................................................... 74
SECTION 21. Interpretation; Exhibits and Schedules;
Certain Definitions................................... 76
SECTION 22. Counterparts.............................................. 76
SECTION 23. Entire Agreement.......................................... 76
SECTION 24. Severability.............................................. 77
SECTION 25. Consent to Jurisdiction................................... 77
SECTION 26. Governing Law............................................. 77
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STOCK PURCHASE AGREEMENT dated as of September 13, 1998,
between ▇▇▇▇▇ ▇▇▇▇▇▇▇ Corporation, a New York corporation
("Seller"), and TransMontaigne Inc., a Delaware corporation
("Buyer").
Buyer desires to purchase from Seller, and Seller desires to sell to
Buyer, all the issued and outstanding shares of Common Stock, par value $1.00
per share (the "Shares"), of ▇▇▇▇▇ ▇▇▇▇▇▇▇ Energy Corp., a Delaware corporation
and wholly owned subsidiary of Seller (the "Company", which term shall, prior to
the Closing (as defined in Section 2(a)(ii)), unless the context otherwise
requires, include all subsidiaries of the Company).
Accordingly, Seller and Buyer hereby agree as follows:
SECTION 1. Purchase and Sale of the Shares; Excluded Assets;
Retained Liabilities. (a) Purchase and Sale. On the terms and subject to the
conditions of this Agreement, Seller shall sell, transfer and deliver or cause
to be sold, transferred and delivered to Buyer, and Buyer shall purchase from
Seller, the Shares for a purchase price (the "Purchase Price") of $161,000,000,
consisting of (A) 4,500,000 shares (subject to decrease as set forth in Section
2(a)(ii), the "Buyer Shares") of Common Stock, par value $.01 per share (the
"Buyer Common Stock"), of Buyer and (B) $100,565,000 payable in immediately
available funds (subject to increase as set forth in Section 2(a)(iii), the
"Cash Component"). In addition, Buyer shall pay Seller in immediately available
funds an amount equal to the amount of Closing Net Working Capital (as defined
in Section 2(b)(iii)) of the Company. All payments and deliveries shall be made
as set forth in Section 2(a)(i).
(b) Excluded Assets. At the Closing, the Company shall continue to
own all assets presently owned by the Company that are used, held for use or
intended to be used primarily in, or necessary for the conduct of, the current
Business (as defined below) of the Company, other than assets sold in the
ordinary course of business. Unless otherwise agreed by the parties as
contemplated by Section 8A, from and after the Closing, the Company shall not
continue to own (A) any assets relating to (I) the Company's Wilton,
Connecticut-based petroleum trading operation or (II) certain real estate
parcels located in Wilmington, Delaware, Norwich, Connecticut and Allentown,
Pennsylvania and (B) any stock in any subsidiary of the
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Company or assets owned by or relating to any such subsidiary, each to be more
particularly described in Schedule 1(b) (the "Excluded Assets") and none of
which is used, held for use or intended to be used primarily in, or is necessary
for the conduct of, the current Business of the Company. Unless otherwise agreed
by the parties as contemplated by Section 8A, the Excluded Assets shall be
transferred to Seller or an affiliate of Seller (other than the Company) prior
to the Closing in a manner that does not adversely affect the value of the
Business. For purposes of this Agreement, the term "Business" shall mean (i) the
supply, storage, terminaling, delivery, distribution, marketing, trading and
transportation of gasoline, diesel fuel, heating oil, kerosene and aviation
and/or jet fuels (collectively, the "Commodities"), (ii) the ownership, leasing
and/or operation of Commodities terminaling, storage, pipeline delivery
facilities and pipeline transportation facilities and (iii) the provision of
logistical services in connection with any of the activities described in
clauses (i) and (ii).
(c) Retained Liabilities. Except for the liabilities and obligations
described in the next sentence, Seller shall retain by assuming (both directly
through the Assumption Agreement (as defined in Section 3(a) and by operation of
the indemnification provisions of this Agreement), and be solely responsible for
and indemnify Buyer and the Company as and to the extent set forth in the
subsequent provisions of this Agreement against any and all liabilities or
obligations of the Company or any subsidiary of the Company of any nature
(whether accrued, absolute, contingent, known or unknown, unasserted or
otherwise) (i) existing immediately prior to the Closing or (ii) arising out of
the conduct of the businesses and operations of the Company at any time prior to
the Closing (the "Retained Liabilities"). The Retained Liabilities shall not
include (i) any liabilities or obligations (A) relating to Environmental Loss
(as defined in Section 11(b)) except as provided for in Section 11(b) or (B)
reflected in the calculation of Closing Net Working Capital as contemplated by
Section 2(b) or (ii) any obligations to be performed after the Closing under the
terms of any contract, agreement, lease, license, commitment, instrument or
binding arrangement of the Business that is not an Excluded Asset.
SECTION 2. Closing; Net Working Capital. (a) Closing. (i) The
closing (the "Closing") of the purchase and sale of the Shares shall be held at
the offices of Cravath, Swaine & ▇▇▇▇▇, Worldwide Plaza, 825 Eighth Avenue, New
York, New York, at 10:00 a.m. (local time) on
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the business day following the date on which all conditions to the Closing set
forth in Section 3 (other than conditions which by their terms are to be
satisfied at the Closing) shall have been satisfied. The date on which the
Closing shall occur is hereinafter referred to as the "Closing Date". At the
Closing, (A) Buyer shall deliver to Seller, by wire transfer to a bank account
designated in writing by Seller at least two business days prior to the Closing
Date, immediately available funds in an amount equal to the sum of (I) the Cash
Component (adjusted as set forth in Section 2(a)(iii)) and (II) the estimated
Net Working Capital (as defined in Section 2(b)(i)) of the Company, determined
in accordance with Section 2(b)(i) (such sum being hereinafter referred to as
the "Closing Date Amount"), (B) Buyer shall deliver or cause to be delivered to
Seller certificates, registered in the name of Seller or its designee,
representing the Buyer Shares and (C) Seller shall deliver or cause to be
delivered to Buyer certificates representing the Shares, duly endorsed in blank
or accompanied by stock powers duly endorsed in blank in proper form for
transfer, with appropriate transfer stamps, if any, affixed.
(ii) If the Closing Date Value (as defined below) of the Buyer
Common Stock is greater than $16.12, the number of shares constituting the Buyer
Shares deliverable at Closing shall be decreased from 4,500,000 to such number
of shares as shall have an aggregate Closing Date Value of $72,540,000.
(iii) If the Closing Date Value of the Buyer Common Stock is less
than $12.09, the Cash Component payable at Closing shall be increased by an
amount equal to the product of (A) 4,500,000 and (B) the difference between (I)
$13.43 and (II) the Closing Date Value of the Buyer Common Stock. For purposes
of this Agreement, the term "Closing Date Value" shall mean the average of the
last daily sale prices of the Buyer Common Stock (as reported by The Wall Street
Journal) for the five (5) consecutive trading days immediately preceding the
Closing Date.
(b) Net Working Capital. (i) Estimated Net Working Capital. For
purposes of determining the amount of immediately available funds to be paid by
Buyer on the Closing Date as consideration for the Net Working Capital of the
Company, Buyer and Seller shall jointly prepare an estimate of the amount of the
fair value of Net Working Capital of the Company as of the close of business on
the second business day preceding the Closing Date. In connection with the
preparation of such estimate, Buyer and Seller shall jointly prepare such
Schedules as to accounts receivable, inventory, open contracts, accounts payable
and
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other current assets and current liabilities as are jointly determined to be
needed to support such estimate. For purposes of this Agreement, "Net Working
Capital" shall mean the accounts receivable, inventories, market value of cash
options, unrealized gains and losses on open contracts, trade payables, accrued
liabilities and fuel taxes payable of the Business and other such current assets
and current liabilities relating to the Business, all determined in the manner
specified in this Section 2(b) and consistent with the determination of such
items in the Trial Balances (as defined in Section 4(g)).
(ii) Establishment of Inventories and Market Values. One week prior
to the Closing Date, Seller shall provide Buyer with a Schedule setting forth
book inventory quantities at all locations at which the Company owns inventory.
On the Closing Date, Buyer shall perform such physical inventory observations as
it deems necessary. On the Closing Date, Buyer and Seller shall jointly prepare
a Schedule, by location, of book inventory quantities of the Business as of the
close of business on the business day preceding the Closing Date. Such book
inventory quantities, subject to normal adjustments resulting from reconciling
book to physical inventory, shall be used in the calculation of Closing Net
Working Capital. Buyer shall promptly inform Seller of any differences between
book and physical inventories.
On the business day preceding the Closing Date, Buyer and Seller
shall prepare, and mutually agree upon the reasonableness of, a Schedule of
prevailing market values, as measured by their relationship to New York
Mercantile Exchange ("NYMEX") futures, prevailing as of the close of business on
the second business day preceding the Closing Date, for all relevant major
market locations, commodities, qualities, and delivery periods. Such market
values, determined using closing NYMEX futures prices as of the close of
business on the business day preceding the Closing Date, shall be used in the
calculation of Closing Net Working Capital.
(iii) Closing Net Working Capital. Within 60 days after the Closing
Date, Buyer shall prepare and deliver to Seller a statement (the "Statement")
setting forth Net Working Capital as of the close of business on the business
day preceding the Closing Date ("Closing Net Working Capital") certified by an
officer of Buyer to the effect that the Statement has been prepared in
accordance with the requirements of this Section 2(b). Closing Net Working
Capital is to be calculated at fair value in accordance with generally accepted
accounting principles. Inventories of
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the Business are to be valued at prevailing market prices as of the close of
business on the business day preceding the Closing Date. Open purchase and sale
contracts, including swaps, options and futures, are to be marked to market at
prevailing market prices as of the close of business on the business day
preceding the Closing Date.
(iv) Review and Dispute Resolution. During the 30-day period
following Seller's receipt of the Statement, Seller and its independent auditors
shall be permitted to review the working papers relating to the Statement. The
Statement shall become final and binding upon the parties on the thirtieth day
following delivery thereof, unless Seller gives written notice of its
disagreement with the Statement ("Notice of Disagreement") to Buyer prior to
such date. Any Notice of Disagreement shall (A) specify in reasonable detail the
nature of any disagreement so asserted and (B) only include disagreements based
on mathematical errors or based on Closing Net Working Capital not being
calculated in accordance with this Section 2. If a Notice of Disagreement is
received by Buyer in a timely manner, then the Statement (as revised in
accordance with clause (I) or (II) below) shall become final and binding upon
Seller and Buyer on the earlier of (I) the date Seller and Buyer resolve in
writing any differences they have with respect to the matters specified in the
Notice of Disagreement or (II) the date any disputed matters are finally
resolved in writing by the Accounting Firm (as defined below). The Statement,
upon becoming final and binding in accordance with this Section 2(b)(iii), and
as the same may be revised in accordance with clauses (I) or (II) of the
preceding sentence, is hereinafter referred to as the "Final Statement".
During the 30-day period following the delivery of a Notice of
Disagreement, Seller and Buyer shall seek in good faith to resolve in writing
any differences which they may have with respect to the matters specified in the
Notice of Disagreement. At the end of such 30-day period, Seller and Buyer shall
submit to an independent accounting firm (the "Accounting Firm") for review and
resolution any and all matters which remain in dispute and which were properly
included in the Notice of Disagreement. The Accounting Firm shall be a
nationally recognized independent public accounting firm as shall be agreed upon
by the parties in writing. Seller and Buyer shall use reasonable efforts to
cause the Accounting Firm to render a decision resolving the matters submitted
to the Accounting Firm within 30 days following submission of the disputed
matters to the Accounting Firm. Seller and Buyer agree that judgment may be
entered upon the determination of the Accounting Firm in
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any court having jurisdiction over the party against which such determination is
to be enforced. The cost of any arbitration (including the fees and expenses of
the Accounting Firm and reasonable attorney fees and expenses of the parties)
pursuant to this Section 2(b) shall be borne by Buyer and Seller in inverse
proportion as they may prevail on matters resolved by the Accounting Firm, which
proportionate allocations shall also be determined by the Accounting Firm at the
time the determination of the Accounting Firm is rendered on the merits of the
matters submitted. The fees and disbursements of Seller's independent auditors
incurred in connection with their review of the Statement and certification of
any Notice of Disagreement shall be borne by Seller, and the fees and
disbursements of Buyer's independent auditors incurred in connection with their
review of the Statement and any Notice of Disagreement shall be borne by Buyer.
(v) Net Working Capital True-Up. If the amount of Closing Net
Working Capital as determined pursuant to the Final Statement is more than the
estimated Net Working Capital amount paid at Closing, Buyer shall, or if the
amount of Closing Net Working Capital as determined pursuant to the Final
Statement is less than the estimated Net Working Capital amount paid at Closing,
Seller shall, within 10 business days after the Statement becomes final and
binding on the parties, make payment by wire transfer in immediately available
funds of the amount of such difference, together with interest thereon at a rate
equal to the rate of interest from time to time announced publicly by
BankBoston, N.A. as its prime rate, calculated on the basis of the actual number
of days elapsed over 365, from and including the Closing Date to but excluding
the date of payment.
(vi) Accounts Receivable. Within five business days after the 120th
day following the Closing Date, Seller shall pay Buyer in immediately available
funds an amount equal to all accounts receivable of the Company included in
Closing Net Working Capital that have not been collected by the close of
business on such 120th day following the Closing Date other than any receivables
the collectibility of which shall have been materially impaired by Buyer after
the Closing. Simultaneously upon receipt of such payment, Buyer shall assign to
Seller all rights to and interests in all such accounts receivable of the
Company. Buyer shall cause the Company after Closing to use commercially
reasonable efforts to collect the accounts receivable included in Closing Net
Working Capital, and to reasonably cooperate (without, however, being required
to incur any costs other than incidental expenses) with Seller in
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collecting any receivables assigned to Seller pursuant to the preceding
sentence.
(vii) Cooperation and Access. Buyer agrees that following the
Closing it shall not take any actions with respect to the accounting books and
records of the Company on which the Statement is to be based that would obstruct
or prevent the preparation of the Statement and the determination of Closing Net
Working Capital as provided in this Section 2(b).
During the period of time from and after the date of delivery of the
Statement to Seller through the resolution of any dispute as to the amount of
Closing Net Working Capital as contemplated by this Section 2(b), Buyer shall
cause the Company to afford to Seller, and any accountants, counsel or financial
advisers retained by Seller in connection with any such dispute, reasonable
access during normal business hours to the Company's books and records for the
purpose of allowing Seller to address such dispute.
SECTION 3. Conditions to Closing. (a) Buyer's Obligation. The
obligation of Buyer to purchase and pay for the Shares is subject to the
satisfaction (or waiver by Buyer) as of the Closing of the following conditions:
(i) The representations and warranties of Seller made in this
Agreement qualified as to materiality shall be true and correct, and those
not so qualified shall be true and correct in all material respects, as of
the date hereof and as of the time of the Closing as though made as of
such time, except to the extent such representations and warranties
expressly relate to an earlier date (in which case such representations
and warranties qualified as to materiality shall be true and correct, and
those not so qualified shall be true and correct in all material respects,
on and as of such earlier date). Seller shall have performed or complied
in all material respects with all obligations and covenants required by
this Agreement to be performed or complied with by Seller by the time of
the Closing. Seller shall have delivered to Buyer a certificate dated the
Closing Date and signed by an authorized officer of Seller confirming the
foregoing.
(ii) Buyer shall have received customary opinions dated the Closing
Date of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP, counsel to Seller, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Esq., General Counsel of Seller.
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(iii) No statute, rule, regulation, executive order, decree,
temporary restraining order, preliminary or permanent injunction or other
order enacted, entered, promulgated, enforced or issued by any Federal,
state, local or foreign government or any court of competent jurisdiction,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign (each, a "Governmental Entity") or
other legal restraint or prohibition preventing the purchase and sale of
the Shares shall be in effect.
(iv) There shall not be pending or threatened by any Governmental
Entity any suit, action or proceeding (or by any other person any suit,
action or proceeding which has a reasonable likelihood of success), (A)
challenging or seeking to restrain or prohibit the purchase and sale of
the Shares or any of the other transactions contemplated by this Agreement
or seeking to obtain from Buyer or any of its subsidiaries in connection
with the purchase and sale of the Shares any damages that are material in
relation to Buyer and its subsidiaries taken as a whole, (B) seeking to
prohibit or limit the ownership or operation by Buyer, the Company or any
of their respective subsidiaries of any material portion of the business
or assets of Buyer, the Company or any of their respective subsidiaries,
or to compel Buyer, the Company or any of their respective subsidiaries to
dispose of or hold separate any material portion of the business or assets
of Buyer, the Company or any of their respective subsidiaries, in each
case as a result of the purchase and sale of the Shares or any of the
other transactions contemplated by this Agreement, (C) seeking to impose
limitations on the ability of Buyer to acquire or hold, or exercise full
rights of ownership of, the Shares, including the right to vote the Shares
on all matters properly presented to the stockholders of the Company or
(D) seeking to prohibit Buyer or any of its subsidiaries from effectively
controlling the Business in any material respect; provided, however, that
this condition shall be deemed to be waived by Buyer as to any suit,
action or proceeding that seeks solely monetary damages (except for any
suit, action or proceeding by any Governmental Entity) if Seller provides
to Buyer indemnification in form and substance reasonably satisfactory to
Buyer and its counsel with respect to such suit, action or proceeding.
(v) The waiting period under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976 (the "HSR
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Act"), if applicable to the purchase and sale of the Shares, shall have
expired or been terminated.
(vi) Seller shall have entered into the Severance Agreements (as
defined in Section 5(h)) and Buyer shall have entered into employment
agreements with the two employees identified on Schedule 3(a)-I, in each
case on terms and conditions reasonably satisfactory to Buyer.
(vii) Seller and Buyer shall have entered into an agreement (the
"Seller Registration Rights Agreement") (A) providing that (I) Seller
shall not sell, transfer or otherwise dispose of any portion of the Buyer
Shares (other than to an Affiliate of Seller (as defined below)) prior to
September 30, 1999 and thereafter shall only sell, transfer or otherwise
dispose of any portion of the Buyer Shares (other than to an Affiliate of
Seller) in a manner that will not result in the acquisition by any other
person to the extent that, to Seller's knowledge, after giving effect to
such acquisition, such acquiring person would hold in excess of 5% of the
total voting power of all voting securities of Buyer, (II) for a period of
five years from the Closing Date, Seller shall not purchase any shares of
Buyer Common Stock if such purchase would result in Seller's proportionate
equity ownership interest in Buyer being equal to or in excess of 15%
without Buyer's prior consent and (III) for a period of five years from
the Closing Date, Seller shall not participate in any proxy solicitation
in respect of Buyer or take any similar actions designed to influence the
management and control of Buyer and (B) granting Seller (and any Affiliate
of Seller to whom Seller transfers any portion of the Buyer Shares)
registration rights in respect of the Buyer Shares substantially
comparable to the rights set forth in the Registration Rights Agreement
dated as of April 17, 1996 by and among Buyer and the Institutional
Investors identified therein (provided, however, that the Seller
Registration Rights Agreement shall grant Seller an initial demand right
in respect of the Buyer Shares and, for so long as Seller continues to own
10% or more of the outstanding shares of Buyer Common Stock, subsequent
demand rights).
(viii) Seller and Buyer shall have entered into an agreement (the
"Assumption Agreement") providing for the assumption by Seller of the
Retained Liabilities on terms and conditions reasonably satisfactory to
Buyer.
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(ix) Seller shall have obtained all third party consents or waivers
that are necessary or materially useful for the conduct of the Business or
to consummate the transactions contemplated by this Agreement, all such
consents and waivers being in form and substance satisfactory to Buyer.
(x) All licenses, permits and authorizations issued or granted to
the Company by Governmental Entities that are necessary or materially
useful for the conduct of the Business shall be in place and not be
subject to expiration, revocation or adverse change due to the Closing or
shall have been obtained by Buyer.
(xi) The Cost of Remediation (as defined in Section 8(a)) shall have
been finally determined.
(xii) Buyer shall have received an opinion of BancBoston ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Inc., financial advisor to Buyer, that the transactions
contemplated by this Agreement are fair, from a financial point of view,
to
Buyer.
(xiii) Buyer shall have received customary closing certificates
pertaining to the Company, including a certificate of good standing from
the Secretary of State of the State of Delaware and comparable
certificates from the Secretaries of State of each State in which the
Company is qualified to do business as a foreign corporation (except such
jurisdictions where the failure to be so qualified, individually or in the
aggregate, would not have a Seller Material Adverse Effect (as defined in
Section 4(b)), each dated as of a date reasonably prior to the Closing
Date.
(xiv) Buyer shall have received satisfactory assurances in respect
of (A) the maintenance of the Company's shipping rights on the Colonial
Pipeline System, the Plantation Pipeline System and the other pipeline
systems on which the Company holds shipping rights on the date hereof and
(B) the Company's continued operation of all Facilities (as defined in
Section 4(j)) operated by the Company on the date hereof.
(xv) (A) Buyer shall have established to its satisfaction that the
BP Relationship (as defined below) will continue on and after the Closing
Date in a manner that is consistent with the past business dealings of the
Company and BP Oil Company ("BP"),
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(B) there shall not have occurred any material adverse change in the BP
Relationship and (C) neither Seller, the Company nor Buyer shall have
received any notice of an assertion by BP that the BP Relationship is or
will be altered in a manner adverse to the Company or Buyer as a result of
the transactions contemplated by this Agreement (including any attempted
or purported exercise by BP of any alleged rights of first refusal in
respect of any Facility).
(xvi) The Buyer Shares shall have been approved for listing, subject
to receipt of official notice of listing, by the American Stock Exchange.
For purposes of this Agreement, (i) "Affiliate of Seller" shall mean
any entity that is at least 80% owned, directly or indirectly, by S.A. ▇▇▇▇▇
▇▇▇▇▇▇▇ et Cie and (ii) "BP Relationship" shall mean the course of conduct and
business dealings of the Company and BP to be described in summary form on
Schedule 3(a)-II arising from the unsigned agreement captioned Agreement --
Southeastern Pipeline Terminals, between The Pure Oil Company and Gulf Oil
Corporation and dated 1944, and the agreement captioned Statement of
Understanding -- Inventory Consolidation Program Southeast Terminals dated on or
about June 26, 1990, as amended by Amendment I dated on or about December 13,
1990 and Amendment II dated on or about February 26, 1991, each between Unocal
Corporation and BP.
(b) Seller's Obligation. The obligation of Seller to sell and
deliver the Shares to Buyer is subject to the satisfaction (or waiver by Seller)
as of the Closing of the following conditions:
(i) The representations and warranties of Buyer made in this
Agreement qualified as to materiality shall be true and correct, and those
not so qualified shall be true and correct in all material respects, as of
the date hereof and as of the time of the Closing as though made as of
such time, except to the extent such representations and warranties
expressly relate to an earlier date (in which case such representations
and warranties qualified as to materiality shall be true and correct, and
those not so qualified shall be true and correct in all material respects,
on and as of such earlier date). Buyer shall have performed or complied in
all material respects with all obligations and covenants required by this
Agreement to be performed or complied with by Buyer by the time of the
Closing. Buyer shall have delivered to Seller a certificate
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dated the Closing Date and signed by an authorized officer of Buyer
confirming the foregoing.
(ii) Seller shall have received customary opinions dated the Closing
Date of Cravath, Swaine & ▇▇▇▇▇, counsel to Buyer, and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Esq., Senior Vice President, General Counsel and Corporate Secretary of
the Buyer.
(iii) No statute, rule, regulation, executive order, decree,
temporary restraining order, preliminary or permanent injunction or other
order enacted, entered, promulgated, enforced or issued by any
Governmental Entity or other legal restraint or prohibition preventing the
purchase and sale of the Shares shall be in effect.
(iv) There shall not be pending or threatened by any Governmental
Entity any suit, action or proceeding (or by any other person any suit,
action or proceeding which has a reasonable likelihood of success),
challenging or seeking to restrain or prohibit the purchase and sale of
the Shares or any of the other transactions contemplated by this Agreement
or seeking to obtain from Seller or any of its subsidiaries in connection
with the purchase and sale of the Shares any damages that are material in
relation to Seller and its subsidiaries taken as a whole; provided,
however, that this condition shall be deemed to be waived by Seller as to
any suit, action or proceeding (except for any suit, action or proceeding
by any Governmental Entity) if Buyer provides to Seller indemnification in
form and substance reasonably satisfactory to Seller and its counsel with
respect to any such suit, action or proceeding.
(v) The waiting period under the HSR Act, if applicable to the
purchase and sale of the Shares, shall have expired or been terminated.
(vi) The Cost of Remediation shall have been finally determined.
(vii) The Buyer Shares shall have been approved for listing, subject
to receipt of official notice of listing, by the American Stock Exchange.
(viii) Seller and Buyer shall have entered into the Seller
Registration Rights Agreement.
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(ix) Seller shall have received customary closing certificates
pertaining to Buyer, including a certificate of good standing from the
Secretary of State of the State of Delaware dated as of a date reasonably
prior to the Closing Date.
(x) Seller shall have determined that the transfer of the Excluded
Assets can be accomplished in a manner that will not result in a material
adverse effect on the value of the Excluded Assets.
(c) Frustration of Closing Conditions. Neither Buyer nor Seller may
rely on the failure of any condition set forth in Section 3(a) or 3(b),
respectively, to be satisfied if such failure was caused by such party's failure
to act in good faith or to use its commercially reasonable best efforts to cause
the Closing to occur, as required by Section 8(d).
SECTION 4. Representations and Warranties of Seller. Except as shall
be set forth in the Schedules or other written disclosure materials to be
delivered by Seller on or before September 25, 1998 (each of which shall make
reference to the particular subsection of this Agreement to which exception is
being taken), Seller hereby represents and warrants to Buyer as follows:
(a) Authority. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York. Seller
has all requisite corporate power and authority to enter into this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. All corporate acts and other proceedings required to be
taken by Seller to authorize the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and properly taken. This Agreement has been, and the Seller Registration
Rights Agreement will be, duly executed and delivered by Seller and constitutes,
and the Seller Registration Rights Agreement will constitute, a legal, valid and
binding obligation of Seller, enforceable against Seller in accordance with its
terms.
(b) No Conflicts; Consents. The execution and delivery of this
Agreement by Seller do not, and the consummation of the transactions
contemplated hereby and compliance with the terms hereof will not, conflict
with, or result in any violation of or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancelation or
acceleration of any
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obligation or to loss of a material benefit under, or to increased, additional,
accelerated or guaranteed rights or entitlements of any person under, or result
in the creation of any lien, claim, encumbrance, security interest, option,
charge or restriction of any kind upon any of the properties or assets of the
Company under, any provision of (i) the Certificate of Incorporation or By-laws
of Seller or the Company, (ii) any material note, bond, mortgage, indenture,
deed of trust, license, lease, contract, commitment, agreement or arrangement to
which Seller or the Company is a party or by which any of their respective
properties or assets are bound (including all Contracts (as defined in Section
4(l)) to be identified pursuant to Section 4(l)) or (iii) any judgment, order or
decree, or statute, law, ordinance, rule or regulation applicable to Seller, the
Company or any of their respective properties or assets, other than, in the case
of clauses (ii) and (iii) above, any such items that, individually or in the
aggregate, would not have a material adverse effect on the business, assets,
condition (financial or otherwise), results of operations or prospects of the
Business or on the ability of Seller to consummate the transactions contemplated
hereby (a "Seller Material Adverse Effect"). No material consent, approval,
license, permit, order or authorization of, or registration, declaration or
filing with, any Governmental Entity is required to be obtained or made by or
with respect to Seller, the Company, their respective affiliates (or, with
respect to clause (B), Buyer) in connection with (A) the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby or (B) the conduct of the Business following the Closing as
conducted on the date hereof, other than compliance with and filings under the
HSR Act, if applicable.
(c) The Shares. Seller, directly or through one or more wholly owned
subsidiaries, has good and valid title to the Shares, free and clear of any
liens, claims, encumbrances, security interests, options, charges and
restrictions of any kind. Assuming Buyer has the requisite power and authority
to be the lawful owner of the Shares, upon delivery to Buyer at the Closing of
certificates representing the Shares, duly endorsed by Seller for transfer to
Buyer, and upon Seller's receipt of the Closing Date Amount, good and valid
title to the Shares will pass to Buyer, free and clear of any liens, claims,
encumbrances, security interests, options, charges and restrictions of any kind,
other than those arising from acts of Buyer or its affiliates. Other than this
Agreement, the Shares are not subject to any voting trust agreement or other
contract, agreement, arrangement, commitment or understanding, including any
such agreement, arrangement, commitment or
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understanding restricting or otherwise relating to the voting, dividend rights
or disposition of the Shares.
(d) Organization and Standing; Books and Records. (i) The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. The Company has full corporate power and
authority and possesses all governmental franchises, licenses, permits,
authorizations and approvals necessary to enable it to own, lease or otherwise
hold its properties and assets and to carry on its business as presently
conducted. The Company is duly qualified and in good standing to do business as
a foreign corporation in each jurisdiction in which the conduct or nature of its
business or the ownership, leasing or holding of its properties makes such
qualification necessary, except such jurisdictions where the failure to be so
qualified or in good standing, individually or in the aggregate, would not have
a Seller Material Adverse Effect.
Seller will deliver to Buyer true and complete copies of the
Certificate of Incorporation and By-laws, each as amended to date, of the
Company. The stock certificate and transfer books and the minute books of the
Company (which will be made available for inspection by Buyer prior to the date
hereof) are true and complete.
(e) Capital Stock of the Company. The authorized capital stock of
the Company consists of 1,000 shares of Common Stock, par value $1.00 per share,
of which 500 shares, constituting the Shares, are duly authorized and validly
issued and outstanding, fully paid and nonassessable. Seller is the record and
beneficial owner of the Shares. Except for the Shares, there are no shares of
capital stock or other equity securities of the Company outstanding. The Shares
have not been issued in violation of, and the Shares are not subject to, any
purchase option, call, right of first refusal, preemptive, subscription or
similar rights under any provision of applicable law, the Certificate of
Incorporation or By-laws of the Company, any contract, agreement or instrument
to which the Company is subject, bound or a party or otherwise. There are no
outstanding warrants, options, rights, "phantom" stock rights, agreements,
convertible or exchangeable securities or other commitments (other than this
Agreement) (i) pursuant to which Seller or the Company is or may become
obligated to issue, sell, purchase, return or redeem any shares of capital stock
or other securities of the Company or (ii) that give any person the right to
receive any benefits or rights similar to any rights enjoyed by or accruing to
the holders of shares of capital stock of the
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Company. Except as will be set forth in Schedule 4(e), there are no equity
securities of the Company reserved for issuance for any purpose. Except as will
be set forth in Schedule 4(e), there are no outstanding bonds, debentures, notes
or other indebtedness having the right to vote on any matters on which
stockholders of the Company may vote.
(f) Equity Interests. Except as will be set forth in Schedule 4(f),
the Company does not directly or indirectly own any capital stock of or other
equity interests in any corporation, partnership or other person and the Company
is not a member of or participant in any partnership, joint venture or similar
person.
(g) Financial Information; Undisclosed Liabilities. (i) Schedule
4(g) will set forth (A) unaudited trial balances of the Business as of May 31,
1998 and July 31, 1998 (the "Trial Balances"). The Trial Balances have been
prepared based upon the accounting practices, procedures and methods regularly
and consistently used by the Company for monthly reporting to Seller which are
consistent with generally accepted accounting principles.
(ii) The Business does not have any liabilities or obligations of
any nature (whether accrued, absolute, contingent, unasserted or otherwise) that
are not recorded on the Trial Balances of a nature which would be required by
generally accepted accounting principles to be reflected on a balance sheet of
the Business except for items that will be set forth in Schedule 4(g).
(iii) The financial position of the Business at May 31, 1998 and the
results of its operations and its cash flows for the year ended May 31, 1998,
that will be reflected in the audited balance sheet of the Business as of May
31, 1998 (the "Balance Sheet") and the audited statements of income and cash
flows for the year ended May 31, 1998 (together with the Balance Sheet and
including the notes thereto, the "Audited Financial Statements") to be prepared
and delivered pursuant to Section 5(j) will not be worse in any material respect
than the Business' financial position and the results of its operations and cash
flows at such dates and for such periods as are reflected in the Trial Balances,
with the exception of (A) incentive compensation paid during the 1998 fiscal
year of the Business, (B) provisions made for Federal and state income Taxes and
(C) allocations of corporate expenses between the Company and Seller.
(iv) The audited Financial Statements will be prepared in conformity
with generally accepted accounting
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principles and on that basis will fairly present the financial condition and
results of operations of the Business as of the respective dates thereof and for
the respective periods indicated.
(v) At the close of business on May 31, 1998 and July 31, 1998, the
estimated Net Working Capital of the Company was approximately $198,000,000 and
$201,000,000, respectively.
(h) Taxes. (i) For purposes of this Agreement, (A) "Tax" or "Taxes"
shall mean all Federal, state, local and foreign taxes and assessments,
including all interest, penalties and additions imposed with respect to such
amounts; (B) "Pre-Closing Tax Period" shall mean all taxable periods ending on
or before the Closing Date and the portion ending on the Closing Date of any
taxable period that includes (but does not end on) such day; and (C) "Code"
shall mean the Internal Revenue Code of 1986, as amended.
(ii) Except as will be set forth in Schedule 4(h), (A) the Company
and any affiliated group, within the meaning of Section 1504 of the Code, of
which the Company is or has been a member, has filed or caused to be filed all
material Tax returns, reports and forms required to be filed by the Code or by
applicable state, local or foreign Tax laws, (B) all Taxes shown to be due on
such returns, reports and forms have been paid in full or will be paid in full
and (C) no material Tax liens have been filed, and no material claims are being
asserted in writing, with respect to any Taxes payable by the Company or any
member of any such affiliated group.
The Federal consolidated income Tax returns in which the Company has
joined have been examined by the Internal Revenue Service for all taxable years
through the year ended May 31, 1984. All deficiencies resulting from such
examinations have either been paid or adequately provided for.
(iii) Except as will be set forth in Schedule 4(h), (A) neither
Seller nor any of its affiliates has made with respect to the Company, or any
property held by the Company, any consent under Section 341 of the Code, (B) no
property of the Company is "tax exempt use property" within the meaning of
Section 168(h) of the Code, and (C) the Company is not a party to any lease made
pursuant to Section 168(f)(8) of the Internal Revenue Code of 1954.
(iv) Except as will be set forth in Schedule 4(h), there are no
outstanding agreements or waivers extending the
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statutory period of limitation applicable to any material Tax returns required
to be filed with respect to the Company and neither the Company nor any
affiliated group, within the meaning of Section 1504 of the Code, of which the
Company is or has been a member, has requested any extension of time within
which to file any material Tax return, which return has not yet been filed.
(v) Seller is not a "foreign person" within the meaning of Section
1445 of the Code.
(i) Assets Other than Real Property Interests. The Company has good
and valid title to all assets of the Business that will be reflected on the
Balance Sheet to be included in the Audited Financial Statements or that were
acquired after May 31, 1998, including all assets reflected on the Trial
Balances, except those assets sold or otherwise disposed of for fair value since
May 31, 1998 in the ordinary course of business consistent with past practice
and not in violation of this Agreement, in each case free and clear of all
mortgages, liens, security interests or encumbrances of any kind except (i) such
as will be set forth in Schedule 4(i), (ii) mechanics', carriers', workmen's,
repairmen's or other like liens arising or incurred in the ordinary course of
business, liens arising under original purchase price conditional sales
contracts and equipment leases with third parties entered into in the ordinary
course of business and liens for Taxes which are not due and payable or which
may thereafter be paid without penalty or are being contested in good faith in
appropriate proceedings, (iii) mortgages, liens, security interests and
encumbrances which secure debt that has been disclosed to Buyer in writing prior
to the date hereof and (iv) other imperfections of title or encumbrances, if
any, which do not, individually or in the aggregate, materially impair the
continued use and operation of the assets to which they relate in the Business
(the mortgages, liens, security interests, encumbrances and imperfections of
title described in clauses (ii), (iii) and (iv) above are hereinafter referred
to collectively as "Permitted Liens").
All the material tangible personal property of the Company has been
maintained in all material respects in accordance with the past practice of the
Company and generally accepted industry practice. Each item of material tangible
personal property of the Company is in all material respects in good operating
condition and repair, ordinary wear and tear excepted. All material leased
personal property of the Company is in all material respects in the condition
required of such property by the terms of the
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lease applicable thereto during the term of the lease and upon the expiration
thereof.
This Section 4(i) does not relate to real property or interests in
real property, such items being the subject of Section 4(j).
(j) Title to Real Property. Schedule 4(j) will set forth a complete
list of all real property and interests in real property owned in fee by the
Company that are used, held for use or intended to be used primarily in, or
necessary for the conduct of, the current Business (individually, an "Owned
Property") and identifies any material reciprocal easement or operating
agreements relating thereto. Schedule 4(j) will set forth a complete list of all
real property and interests in real property leased by the Company that are
used, held for use or intended to be used primarily in, or necessary for the
conduct of, the current Business (individually, a "Leased Property") and
identifies any material base leases and reciprocal easement or operating
agreements relating thereto. The Company has (i) good and insurable fee title to
all Owned Property and (ii) good and valid title to the leasehold estates in all
Leased Property (an Owned Property or Leased Property being sometimes referred
to herein, individually, as a "Company Property" and, collectively, as "Company
Properties"), in each case free and clear of all mortgages, liens, security
interests, encumbrances, leases, assignments, subleases, easements, covenants,
rights-of-way and other similar restrictions of any nature whatsoever, except
(A) such as will be set forth in Schedule 4(j), (B) leases, subleases and
similar agreements that will be set forth in Schedule 4(l), (C) Permitted Liens,
(D) easements, covenants, rights-of-way, conditions, restrictions, reservations,
licenses and other similar restrictions of record, (E) (I) any conditions that
may be shown by a current, accurate survey or physical inspection of any Company
Property made prior to Closing and (II) all immaterial encroachments, overlaps,
boundary line disputes and shortages in area and (F) (I) all land use (including
environmental and wetlands) zoning, building and other similar restrictions,
(II) mortgages, liens, security interests, encumbrances, easements, covenants,
rights-of-way and other similar restrictions that have been placed by any owner,
developer, landlord, sublandlord or other third party on property over which the
Company has easement rights or on any Leased Property and subordination or
similar agreements relating thereto, and (III) unrecorded easements, covenants,
rights-of-way, conditions, restrictions, reservations, licenses and other
similar restrictions, none of which items set forth in clauses (I), (II) and
(III), individually or in
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the aggregate, materially impair the continued use and operation of the property
to which they relate in the business of the Company as presently conducted. The
current use by the Company of the petroleum products terminaling, storage and
pipeline facilities (each, a "Facility" and collectively, the "Facilities"),
offices and other facilities located on Company Property does not violate any
local zoning or similar land use or government regulations in any manner that
materially affects, or could reasonably be expected to materially affect, the
use or operation of any Facility.
(k) Intellectual Property. Schedule 4(k) will set forth a true and
complete list of all patents, trademarks (registered or unregistered), trade
names, service marks and registered copyrights and registrations and
applications therefor, domestic or foreign, owned by or registered in the name
of the Company or in or with respect to which the Company has any rights that
are used, held for use or intended to be used primarily in, or necessary for the
conduct of, the current Business, except for (A) such rights the loss of which,
individually or in the aggregate, would not have a Seller Material Adverse
Effect and (B) rights in off-the-shelf computer software. The Company owns or
holds licenses under all such patents, trademarks, trade names, service marks
and copyrights as are necessary for the conduct of its business as currently
conducted and neither Seller nor the Company is currently in receipt of any
notice of infringement or notice of conflict with the asserted rights of other
persons in any patents, trademarks, trade names, service marks or copyrights
owned or held by other persons, except, in each case, for matters that,
individually or in the aggregate, would not have a Seller Material Adverse
Effect.
(l) Contracts. Except as will be set forth in Schedule 4(l) or as
included in the Excluded Assets, the Company is not a party to or bound by any:
(i) employment agreement or employment contract that has an
aggregate future liability in excess of $50,000 and is not terminable by
the Company by notice of not more than 60 days for a cost of less than
$50,000;
(ii) employee collective bargaining agreement or other contract with
any labor union;
(iii) covenant of the Company not to compete (other than pursuant to
any radius restriction contained in any lease, reciprocal easement or
development,
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construction, operating or similar agreement) or other covenant of the
Company restricting the development, manufacture, marketing or
distribution of the products and services of the Company;
(iv) material agreement, contract or other arrangement with (A)
Seller or any affiliate of Seller or (B) any current or former officer,
director or employee of the Company, Seller or any affiliate of Seller
(other than employment agreements covered by clause (i) above);
(v) material lease, sublease or similar agreement with any person
under which the Company is a lessor or sublessor of, or makes available
for use to any person, (A) any Company Property or (B) any portion of any
premises otherwise occupied by the Company;
(vi) lease or similar agreement with any person under which (A) the
Company is lessee of, or holds or uses, any machinery, equipment, vehicle
or other tangible personal property owned by any person or (B) the Company
is a lessor or sublessor of, or makes available for use by any person, any
tangible personal property owned or leased by the Company, in any such
case which has an aggregate future liability or receivable, as the case
may be, in excess of $50,000 and is not terminable by the Company by
notice of not more than 60 days for a cost of less than $50,000;
(vii) (A) continuing contract for the future purchase of materials,
supplies or equipment, (B) management, service, consulting or other
similar type of contract or (C) advertising agreement or arrangement, in
any such case which has an aggregate future liability to any person in
excess of $50,000 and is not terminable by the Company by notice of not
more than 60 days for a cost of less than $50,000;
(viii) material license, option or other agreement relating in whole
or in part to the intellectual property to be set forth in Schedule 4(k)
(including any license or other agreement under which the Company is
licensee or licensor of any such intellectual property) or to trade
secrets, confidential information or proprietary rights and processes of
the Company or any other person;
(ix) agreement, contract or other instrument under which the Company
has borrowed any money from, or issued any note, bond, debenture or other
evidence of
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indebtedness to, any person or any other note, bond, debenture or other
evidence of indebtedness issued to any person in any such case which,
individually, is in excess of $50,000;
(x) agreement, contract or other instrument (including so-called
take-or-pay or keepwell agreements) under which (A) any person has
directly or indirectly guaranteed indebtedness, liabilities or obligations
of the Company or (B) the Company has directly or indirectly guaranteed
indebtedness, liabilities or obligations of any person (in each case other
than endorsements for the purpose of collection in the ordinary course of
business), in any such case which, individually, is in excess of $50,000;
(xi) agreement, contract or other instrument under which the Company
has, directly or indirectly, made any advance, loan, extension of credit
or capital contribution to, or other investment in, any person, in any
such case which, individually, is in excess of $50,000;
(xii) mortgage, pledge, security agreement, deed of trust or other
instrument granting a lien or other encumbrance upon any Company Property,
which lien or other encumbrance will not be set forth in Schedule 4(i) or
4(j);
(xiii) agreement or instrument providing for indemnification of any
person with respect to liabilities relating to any current or former
business of the Company or any predecessor person;
(xiv) joint venture agreement or arrangement which is material to
the business or operations of the Business; or
(xv) other agreement, contract, lease, license, commitment or
instrument to which the Company is a party or by or to which it or any of
its assets or business is bound or subject which has an aggregate future
liability to any person in excess of $50,000 and is not terminable by the
Company by notice of not more than 60 days for a cost of less than
$50,000, other than forward purchase and sale, futures, options and swaps
contracts having terms and conditions generally accepted in the petroleum
products trading and midstream logistics business.
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Except as will be set forth in Schedule 4(l), each agreement, contract, lease,
license, commitment or instrument of the Company to be listed in the Schedules
hereto (collectively, the "Contracts") is valid, binding and in full force and
effect and is enforceable by the Company in accordance with its terms. Except as
will be set forth in Schedule 4(l), Seller and the Company have performed all
material obligations required to be performed by them to date under the
Contracts and they are not (with or without the lapse of time or the giving of
notice, or both) in breach or default in any material respect thereunder and, to
the knowledge of Seller, no other party to any of the Contracts is (with or
without the lapse of time or the giving of notice, or both) in breach or default
in any material respect thereunder. Except as will be set forth in Schedule
4(l), no other party to any of the Contracts that is a supply or exchange
contract has informed Seller or the Company that such party does not intend to
renew the supply or exchange contract to which it is a party upon the expiration
of the term thereof.
(m) Litigation. Schedule 4(m) will set forth a list of all pending
lawsuits or claims, with respect to which Seller or the Company has been
contacted in writing by counsel for the plaintiff or claimant, against or
affecting the Company or any of its properties, assets, operations or business
(other than the Excluded Assets) and which (i) relate to or involve more than
$50,000, (ii) seek any material injunctive relief or (iii) relate to the
transactions contemplated by this Agreement. Except as will be set forth in
Schedule 4(m), none of the lawsuits or claims to be listed in Schedule 4(m) as
to which there is at least a reasonable possibility of adverse determination
would have, if so determined, individually or in the aggregate, a Seller
Material Adverse Effect. Except as will be set forth in Schedule 4(m), to the
knowledge of Seller, there are no unasserted claims of the type that would be
required to be disclosed in Schedule 4(m) if counsel for the claimant had
contacted Seller or the Company which if asserted would have at least a
reasonable possibility of an adverse determination. Except as will be set forth
in Schedule 4(m), the Company is not a party or subject to or in default under
any judgment, order, injunction or decree of any Governmental Entity or
arbitration tribunal applicable to it or any of its properties, assets,
operations or business. Except as will be set forth in Schedule 4(m), there is
no lawsuit or claim by the Company pending, or which the Company intends to
initiate, against any other person. Except as will be set forth in Schedule
4(m), there is no pending, or, to the knowledge of Seller, threatened,
investigation of or affecting the
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Company by any Governmental Entity. This Section 4(m) does not relate to matters
concerning Taxes, such items being the subject of Section 4(h).
(n) Insurance. Seller or the Company maintain policies of fire and
casualty, liability and other forms of insurance in such amounts, with such
deductibles and against such risks and losses as are reasonable for the business
and assets of the Company. The insurance policies maintained with respect to the
Company and its assets and properties or owned by the Company will be listed in
Schedule 4(n). All such policies are in full force and effect, all premiums due
and payable thereon have been paid (other than retroactive or retrospective
premium adjustments that are not yet, but may be, required to be paid with
respect to any period ending prior to the Closing Date under comprehensive
general liability and workmen's compensation insurance policies), and no notice
of cancelation or termination has been received with respect to any such policy
which has not been replaced on substantially similar terms prior to the date of
such cancelation. To the knowledge of Seller, the activities and operations of
the Company have been conducted in a manner so as to conform in all material
respects to all applicable provisions of such insurance policies.
(o) Benefit Plans. (i) Schedule 4(o) will contain a list of all
"employee pension benefit plans" (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) (sometimes
referred to herein as "Pension Plans"), "employee welfare benefit plans" (as
defined in Section 3(1) of ERISA), bonus, stock option, stock purchase, deferred
compensation plans or arrangements and other employee fringe benefit plans
maintained, or contributed to, by Seller or the Company for the benefit of any
employees of the Company (all the foregoing being herein referred to as "Benefit
Plans"). Seller will make available to Buyer true, complete and correct copies
of (A) each Benefit Plan (or, in the case of any unwritten Benefit Plans,
descriptions thereof), (B) the most recent annual report on Form 5500 filed with
the Internal Revenue Service with respect to each Benefit Plan (if any such
report was required), (C) the most recent summary plan description for each
Benefit Plan for which such a summary plan description is required and (D) each
trust agreement and group annuity contract relating to any Benefit Plan. None of
the Benefit Plans is sponsored or maintained by the Company (except to the
extent the Company is a participating employer in the Benefit Plans), and
neither Buyer nor the Company shall have any liability or obligation under any
Benefit Plan from and after the Closing except as specifically provided in
Section 9 hereof.
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(ii) Except as will be set forth in Schedule 4(o), (A) each Benefit
Plan has been administered in all material respects in accordance with its
terms, (B) the Company and all the Benefit Plans are in compliance in all
material respects with the applicable provisions of ERISA and the Code, and (C)
there are no lawsuits, actions, termination proceedings or other proceedings
pending, or, to the knowledge of Seller, threatened against or involving any
Benefit Plan and, to the knowledge of Seller, there are no investigations by any
Governmental Entity or other claims (except claims for benefits payable in the
normal operation of the Benefit Plans) pending or threatened against or
involving any Benefit Plan or asserting any rights to benefits under any Benefit
Plan which would, individually or in the aggregate, have a Seller Material
Adverse Effect.
(iii) Except as will be set forth in Schedule 4(o), (A) all
contributions to, and payments from, the Benefit Plans that may have been
required to be made in accordance with the Benefit Plans and, when applicable,
Section 302 of ERISA or Section 412 of the Code, have been timely made, (B)
there has been no application for or waiver of the minimum funding standards
imposed by Section 412 of the Code with respect to any Pension Plan, (C) no
Pension Plan has an "accumulated funding deficiency" within the meaning of
Section 412(a) of the Code as of the most recent plan year and (D) there are no
liens in respect of any Pension Plan to which the Company could be subject
pursuant to Section 412(n) of the Code or Sections 302(f) or 4068(a) of ERISA.
(iv) Except as will be set forth in Schedule 4(o), all Pension Plans
that are intended to be tax-qualified have been the subject of determination
letters from the Internal Revenue Service to the effect that such Pension Plans
are qualified and exempt from Federal income taxes under Sections 401(a) and
501(a), respectively, of the Code, and no such determination letter has been
revoked nor, to the knowledge of Seller, has revocation been threatened. No
amendment to any such Pension Plan has been adopted since the date of its most
recent determination letter that, to the knowledge of Seller, is likely to
adversely affect its qualification.
(v) No "prohibited transaction" (as defined in Section 4975 of the
Code or Section 406 of ERISA) has occurred that involves the assets of any
Benefit Plan and that could subject the Company or any of its employees to a
material tax or penalty on prohibited transactions imposed by Section 4975 of
ERISA or the sanctions imposed under Title I of ERISA. Except as will be set
forth in
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Schedule 4(o), none of the Pension Plans has been terminated nor have there been
any "reportable events" (as defined in Section 4043 of ERISA and the regulations
thereunder) with respect thereto for which the 30-day notice requirement under
Section 4043(a) of ERISA has not been waived by the Pension Benefit Guaranty
Corporation other than as a result of the transactions contemplated by this
Agreement. Neither Seller nor, to Seller's knowledge, any trustee, administrator
or other fiduciary of any Benefit Plan nor any agent of any of the foregoing has
engaged in any transaction or acted or failed to act in a manner that could
subject the Company to any liability for breach of fiduciary duty under ERISA or
any other applicable law which, individually or in the aggregate, would have a
Seller Material Adverse Effect.
(vi) With respect to any Pension Plan subject to Title IV of ERISA
(including for the purposes of this Section 4(o)(vi) any Pension Plan maintained
or contributed to by Seller or any other person under common control with
Seller), Seller has not incurred any liability to such Pension Plan or to the
Pension Benefit Guaranty Corporation that has not been satisfied, other than for
the payment of contributions or premiums, all of which have been paid when due.
(vii) Except as will be set forth in Schedule 4(o), at no time
within the five years preceding the Closing Date has Seller or the Company been
required to contribute to any "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA) for the benefit of any employees of the Company or incurred
any withdrawal liability, within the meaning of Section 4201 of ERISA, with
respect to any such multiemployer plan, which liability has not been fully paid
as of the date hereof, or announced an intention to withdraw, but not yet
completed such withdrawal, from any such multiemployer plan.
(viii) No employee or former employee of the Company will become
entitled to receive from Buyer or the Company any bonus, retirement, severance,
job security or similar benefit or any enhanced benefit solely as a result of
the transactions contemplated hereby.
(p) Absence of Changes or Events. Except as will be set forth in
Schedule 4(p), since May 31, 1998, there has not been any action, event or
occurrence that has had or would reasonably be expected to have a Seller
Material Adverse Effect. Except as will be set forth in Schedule 4(p), since May
31, 1998, Seller has caused the business of the Company to be conducted in the
ordinary course and in substantially the same manner as previously
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conducted. Except as will be set forth in Schedule 4(p), since May 31, 1998 to
the date of this Agreement, the Company has not taken any action that, if taken
after the date of this Agreement, would constitute a breach of any of the
covenants set forth in Section 5(b).
(q) Compliance with Applicable Laws. (i) The Company is in
compliance with all material applicable statutes, laws, ordinances, rules,
orders, permits and regulations of any Governmental Entity ("Applicable Laws"),
including those relating to occupational health and safety. Except as will be
set forth in Schedule 4(q), neither Seller nor the Company has received any
written communication within the past three years that has not been
satisfactorily resolved from a Governmental Entity that alleges that the Company
is not in compliance in any material respect with any Applicable Laws. This
Section 4(q)(i) does not relate to matters with respect to Taxes or to
environmental matters, which are the subject of Sections 4(h) and 4(q)(ii),
respectively.
(ii) Except as will be set forth in Schedule 4(q), (A) the Company
is in compliance in all material respects with Environmental Laws, (B) the
Company holds, and is in compliance in all material respects with, all permits,
licenses or governmental authorizations required under Environmental Laws for
the Company to conduct its operations, (C) neither Seller nor the Company has
received any written communication within the past three years that has not been
satisfactorily resolved from a Governmental Entity or other person that alleges
that the Company is not in compliance with or is subject to liability under any
Environmental Laws or that any investigation or cleanup of Hazardous Substances
is requested or demanded under any Environmental Law, (D) no real property
currently or formerly owned or operated by the Company is contaminated with, or
is subject to any Release of, any Hazardous Substance which contamination or
Release requires investigation or remediation under Environmental Law and which
investigation or remediation, individually or in the aggregate, would be
reasonably likely to result in material liability to the Company, (E) the
Company is not the subject of any written claim or notice regarding potential
responsibility for Hazardous Substance off-site disposal pursuant to the Federal
Comprehensive Environmental Response, Compensation, and Liability Act or any
other Environmental Law, and (F) Seller and/or the Company will have delivered
or made available to Buyer copies of all environmental reports, studies,
assessments, sampling data and other material environmental information in their
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possession relating to the Company and its current or former properties or
operations on or before September 25, 1998.
The terms "Environmental Law" and "Environmental Laws" shall mean
all applicable treaties, statutes, laws, ordinances, rules, orders, permits,
regulations, authorizations, common law or enforceable agency requirements
issued, promulgated or entered into by any Governmental Entity, relating to the
protection, investigation or restoration of the environment, public health or
safety or natural resources, or to the handling, use, presence, disposal,
Release or threatened Release of any Hazardous Substance, including any injury
or threat of injury to persons or property relating to any Hazardous Substance.
The term "Hazardous Substances" means all explosive or radioactive materials or
substances, hazardous or toxic substances, wastes or chemicals, petroleum
(including crude oil or any fraction thereof), asbestos or asbestos containing
materials, and all other materials or chemicals regulated pursuant to any
Environmental Law. The term "Release" means any spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching, emanation
or migration of any Hazardous Substance in, into, onto, or through the
environment (including ambient air, surface water, ground water, soils, land
surface, subsurface strata, workplace, or structure).
(r) Employee and Labor Matters. (i) Except as will be set forth in
Schedule 4(r), (i) there is, and during the past five years there has been, no
material labor strike, dispute, work stoppage or lockout pending, or, to the
knowledge of Seller, threatened, against or affecting the Company; (ii) to the
knowledge of Seller, no union organizational campaign is in progress with
respect to the employees of the Company and no question concerning
representation exists respecting such employees; (iii) to the knowledge of
Seller, the Company is not engaged in any unfair labor practice; (iv) there is
no unfair labor practice charge or complaint against the Company pending, or, to
the knowledge of Seller, threatened, before the National Labor Relations Board;
(v) there are no pending, or, to the knowledge of Seller, threatened, union
grievances against the Company as to which there is a reasonable possibility of
adverse determination and that, if so determined, individually or in the
aggregate, would have a Seller Material Adverse Effect; (vi) there are no
pending, or, to the knowledge of Seller, threatened, charges against the Company
or any current or former employee of the Company with respect to employment with
the Company before the Equal Employment Opportunity Commission or any state or
local agency responsible for the prevention of unlawful employment
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practices; and (vii) neither Seller nor the Company has received oral or written
notice during the past five years of the intent of any Governmental Entity
responsible for the enforcement of labor or employment laws to conduct an
investigation of or affecting the Company that has not been satisfactorily
resolved and, to the knowledge of Seller, no such investigation is in progress.
(ii) No officer of the Company is, and, to the knowledge of Seller,
no other employee of the Company is, a party to or bound by any contract,
license, covenant or agreement of any nature, or subject to any judgment, decree
or order of any Governmental Entity, that may interfere with the use of such
person's best efforts to promote the interests of the Business, conflict with
the Business or the transactions contemplated hereby or have a Seller Material
Adverse Effect. Without limiting the foregoing, no officer or employee of the
Company is a party to or bound by any employment agreement or employment
contract to which Seller is a party. To the knowledge of Seller, no activity of
any employee of the Company engaged in the conduct of the Business as or while
an employee of the Company has caused a violation within the past five years or
that is continuing of any employment contract, confidentiality agreement, patent
disclosure agreement, or other contract or agreement. To the knowledge of
Seller, neither the execution and delivery of this Agreement, nor the conduct of
the Business by the employees of the Company, will conflict with or result in a
breach of the terms, conditions or provisions of, or constitute a default under,
any contract, covenant or instrument under which any such employees are now
obligated.
(s) Customer Accounts Receivable; Inventories. (i) All customer
accounts receivable of the Company, whether reflected on the Trial Balances, the
Balance Sheet or subsequently created through the Closing Date, have arisen from
bona fide transactions in the ordinary course of business. To Seller's
knowledge, all such customer accounts receivable are good and collectible at the
aggregate recorded amounts thereof, net of any applicable reserves for doubtful
accounts reflected on the Trial Balances or taken account of in the calculation
of Closing Net Working Capital. The Company has good and marketable title to all
of its accounts receivable, free and clear of all liens, except as will be set
forth in Schedule 4(s). Since May 31, 1998, there have not been any write-offs
as uncollectible of any notes or accounts receivable of the Company, except for
write-offs in the ordinary course of business and consistent with past practice
which have not had, either individually or in the aggregate, a Seller Material
Adverse Effect.
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(ii) The inventories of the Company are reflected on the Trial
Balances and in the books and records of the Company and will be reflected on
the Balance Sheet on the ▇▇▇▇ to market method of accounting in accordance with
generally accepted accounting principles applied on a basis consistent with past
practice.
(t) Licenses; Permits. Schedule 4(t) will set forth a true and
complete list of all material licenses, permits and authorizations issued or
granted to the Company by Governmental Entities that are necessary or materially
useful for the conduct of the Business. Except as will be set forth in Schedule
4(t), all such licenses, permits and authorizations are validly held by the
Company, the Company has complied in all material respects with all terms and
conditions thereof and the same will not be subject to suspension, modification,
revocation or nonrenewal as a result of the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby. All such
licenses, permits and authorizations which are held in the name of any employee,
officer, director, stockholder, agent or otherwise on behalf of the Company
shall be deemed included under this warranty.
(u) Accounts; Safe Deposit Boxes; Powers of Attorney; Officers
and Directors. Schedule 4(u) will be set forth (i) a true and correct list of
all bank and savings accounts, certificates of deposit and safe deposit boxes of
the Company and those persons authorized to sign thereon, (ii) true and correct
copies of all corporate borrowing, depository and transfer resolutions and those
persons entitled to act thereunder, (iii) a true and correct list of all powers
of attorney granted by the Company in force as of the date hereof and those
persons authorized to act thereunder and (iv) a true and correct list of all
officers of the Company.
(v) Transactions with Affiliates. Except as will be set forth
in Schedule 4(v) or as may be otherwise agreed by the parties as contemplated by
Section 8A, none of the agreements, contracts or other arrangements between the
Company, on the one hand, and Seller or any of its affiliates, on the other
hand, will continue in effect subsequent to the Closing. Except as will be set
forth in Schedule 4(v) or as an indirect result of the ownership of the Buyer
Shares, after the Closing neither Seller nor any of its affiliates will have any
interest in any property (real or personal, tangible or intangible) or contract
used in or pertaining to the Business. Neither Seller nor, to the knowledge of
Seller, any of its affiliates has any direct or indirect ownership interest
(other than through
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the Company) in any person in which the Company has any direct or indirect
ownership interest or with which the Company competes or has a business
relationship other than the ownership of immaterial quantities of publicly
traded securities. Except as will be set forth in Schedule 4(v), Seller provides
no material services to the Company.
(w) Effect of Transaction. Except as will be set forth in
Schedule 4(w), no creditor, employee, client, customer or other person having a
material business relationship with the Company has informed Seller or the
Company that such person intends to change such relationship because of the
purchase and sale of the Shares or the consummation of any other transaction
contemplated hereby.
(x) Disclosure. (i) No representation or warranty of Seller
contained in this Agreement, and no statement contained in any document,
certificate or Schedule furnished or to be furnished by or on behalf of Seller
to Buyer or any of its representatives pursuant to this Agreement, contains or
will contain any untrue statement of a material fact, or omits or will omit to
state any material fact necessary, in light of the circumstances under which it
was or will be made, in order to make the statements herein or therein not
misleading or necessary in order to fully and fairly provide the information
required to be provided in any such document, certificate or Schedule.
(ii) The financial projections for the calendar year 1998 and
the period ending June 30, 1999 relating to the Business delivered to Buyer were
prepared on the basis of assumptions Seller reasonably believed in good faith at
the time of preparation to be reasonable and Seller has no knowledge of any fact
or information that would lead it to believe that such assumptions were
incorrect or misleading in any material respect as of the time of preparation.
(y) Suppliers. Except as will be set forth in Schedule 4(y),
between May 31, 1998 and the date of this Agreement, the Company has not entered
into or made any contract or commitment for the purchase of petroleum products
for the Business other than in the ordinary course of business consistent with
past practice. Except for the suppliers to be named in Schedule 4(y), the
Business does not have any supplier from whom it purchased more than 5% of the
petroleum products which it purchased during its most recent full fiscal year.
Except as will be set forth in Schedule 4(y), since May 31, 1998, there has not
been (i) any material adverse change in the business relationship of the Company
with any supplier of petroleum products to be named in Schedule 4(y) related to
the Business or (ii) any
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adverse change in any material term (including credit terms) of the supply
agreements or related arrangements with any such supplier related to the
Business.
(z) Customers. Except for the customers to be named in
Schedule 4(z), the Business does not have any customer from whom the Business
derived or received more than 5% of its revenues during its most recent full
fiscal year. Except as will be set forth in Schedule 4(z), since May 31, 1998,
there has not been (i) any material adverse change in the business relationship
of the Company with any customer to be named in Schedule 4(z) related to the
Business or (ii) any adverse change in any material term (including credit
terms) of the sales agreements or related agreements with any such customer
related to the Business. During the past year, the Company has received no
customer complaints, other than complaints in the ordinary course of business
which have not, and are not likely to have, individually or in the aggregate, a
Seller Material Adverse Effect.
(aa) Private Offering. Neither Seller, any of its affiliates
nor anyone acting on its or their behalf has issued, sold or offered any
security of the Company to any person under circumstances that would cause the
issuance and sale of the Shares, as contemplated by this Agreement, to be
subject to the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"). Neither Seller, any of its affiliates nor anyone
acting on its or their behalf will offer the Shares or any part thereof or any
similar securities for issuance or sale to, or solicit any offer to acquire any
of the same from, anyone so as to make the issuance and sale of the Shares
subject to the registration requirements of Section 5 of the Securities Act.
Assuming the representations of Buyer contained in Section 6(c) are true and
correct, the issuance, sale and delivery of the Shares hereunder are exempt from
the registration and prospectus delivery requirements of the Securities Act.
(bb) Transfer of Excluded Assets. After giving effect to the
transfer of the Excluded Assets, the Company shall continue to own all assets
presently owned by the Company that are used, held for use or intended to be
used primarily in the current Business or that are necessary for the conduct of
the Business consistent with past practice.
(cc) Securities Act. The Buyer Shares being acquired by Seller
pursuant to this Agreement are being acquired for investment only and not with a
view to any public distribution thereof (except pursuant to the Seller
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Registration Rights Agreement or otherwise in compliance with all applicable
securities laws), and Seller shall not offer to sell or otherwise dispose of the
Buyer Shares so acquired by it in violation of any of the registration
requirements of the Securities Act.
(dd) Public Utility Holding Company Act. The Company is not a
"holding company", a "public-utility company" or a "subsidiary company" or an
"affiliate" of a "holding company", in each case within the meaning of the
Public Utility Holding Company Act of 1935, as amended, and the rules and
regulations promulgated thereunder.
(ee) Brokerage Agreements. Neither the Seller nor the Company
has, directly or indirectly, entered into any agreement with any person that
would obligate the Company or Buyer to pay any compensation, brokerage fee or
"finder's fee" in connection with the transactions contemplated by this
Agreement.
SECTION 5. Covenants of Seller. Seller covenants and agrees as
follows:
(a) Access. Prior to the Closing, Seller shall, and shall
cause the Company to, give Buyer and its representatives, employees, counsel and
accountants reasonable access, during normal business hours and upon reasonable
notice, to the personnel, properties, books and records of the Company
(including for purposes of the Buyer's due diligence investigation of the
Business); provided, however, that such access does not unreasonably disrupt the
normal operations of Seller, the Company or any joint venture partner of the
Company.
(b) Ordinary Conduct. Except as will be set forth in Schedule
5(b) or otherwise expressly permitted by the terms of this Agreement, from the
date hereof to the Closing, Seller shall cause the Business to be conducted in
the ordinary course in substantially the same manner as presently conducted and
shall make all reasonable efforts consistent with past practices to preserve
their relationships with customers, suppliers, joint venture partners and others
with whom the Company deals. Seller shall not, and shall not permit the Company
to, take any action that would, or that could reasonably be expected to, result
in any of the conditions to the purchase and sale of the Shares set forth in
Section 3(a) not being satisfied. In addition, except as will be set forth in
Schedule 5(b) or
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otherwise expressly permitted by the terms of this Agreement, Seller shall not
permit the Company to do any of the following without the prior written consent
of Buyer:
(i) amend its Certificate of Incorporation or By-laws;
(ii) declare or pay any dividend or make any other
distribution to its stockholders whether or not upon or in respect of
any shares of its capital stock other than cash dividends or in
connection with the transfer to Seller or an affiliate of Seller (other
than the Company) of the Excluded Assets;
(iii) redeem or otherwise acquire any shares of its capital
stock or issue any capital stock or any option, warrant or right
relating thereto or any securities convertible into or exchangeable for
any shares of capital stock;
(iv) adopt or amend in any material respect any Benefit Plan
or collective bargaining agreement, except as required by law
(including Tax qualification requirements);
(v) grant to any executive officer or employee engaged in the
conduct of the Business any increase in compensation or benefits,
except in the ordinary course of business consistent with past
practice, as required by Section 5(j) or as may be required under
existing agreements and except for any increases for which Seller shall
be solely obligated;
(vi) except as related to the Excluded Assets and for which
the Company is fully indemnified, incur or assume any liabilities,
obligations or indebtedness for borrowed money or guarantee any such
liabilities, obligations or indebtedness, other than in the ordinary
course of business consistent with past practice; provided that in no
event shall the Company incur, assume or guarantee any long-term
indebtedness for borrowed money;
(vii) permit, allow or suffer any of its assets (other than
the Excluded Assets) to become subjected to any mortgage, lien,
security interest, encumbrance, easement, covenant, right-of-way or
other similar restriction of any nature whatsoever which would have
been required to be set forth in Schedule 4(i) or 4(j) if existing on
the date of this Agreement;
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(viii) cancel any material indebtedness (individually or in
the aggregate) or waive any claims or rights of substantial value;
(ix) except for the transfer to Seller or an affiliate of
Seller (other than the Company) of the Excluded Assets and intercompany
transactions in the ordinary course of business, pay, loan or advance
any amount to, or sell, transfer or lease any of its assets to, or
enter into any agreement or arrangement with, Seller or any of its
affiliates;
(x) make any change in any method of accounting or accounting
practice or policy other than those required by generally accepted
accounting principles;
(xi) acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, association or
other business organization or division thereof or otherwise acquire
any assets (other than inventory) which are material, individually or
in the aggregate, to the Company;
(xii) except for any capital expenditure that is currently
approved in writing or budgeted or required by an emergency, make or
incur any capital expenditure which, individually, is in excess of
$50,000 or make or incur any such expenditures which, in the aggregate,
are in excess of $500,000;
(xiii) sell, lease or otherwise dispose of any of its assets
(other than the Excluded Assets) which are material, individually or in
the aggregate, to the Company, except in the ordinary course of
business consistent with past practice; provided that in no event shall
the Company sell, lease, encumber or otherwise dispose of any Facility
or its interest in any Facility;
(xiv) acquire (whether by purchase, lease, exchange or
otherwise) any additional Facilities or any interest in any additional
Facilities;
(xv) enter into any lease of real property, except any
renewals of existing leases in the ordinary course of business with
respect to which Buyer shall have the right to participate;
(xvi) modify, amend, terminate or permit the lapse of any
lease of, or reciprocal easement agreement,
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operating agreement or other material agreement relating to, real
property (except modifications or amendments associated with renewals
of existing leases in the ordinary course of business with respect to
which Buyer shall have the right to participate);
(xvii) modify, amend or terminate the BP Relationship or any
other joint venture agreement or arrangement or any other Contract
which is material to the Business;
(xviii) alter in any material respect any aspects of its
petroleum products trading activities and practices, including in
respect of the manner in which, and the volumes on which, such
activities and practices are conducted;
(xix) grant any powers of attorney of the Company to any
person;
(xx) (A) make or rescind any express or deemed election
relating to Taxes if such action would create a material additional
liability for the Company in respect of any period beginning after the
Closing Date or (B) except as may be required by applicable law, change
in any respect any of its methods of reporting income or deductions for
income tax purposes from those employed in the preparation of its
income tax returns for the taxable year ended May 31, 1998 if such
change would create a material additional liability for the Company in
respect of any period beginning after the Closing Date; or
(xxi) agree, whether in writing or otherwise, to do any of the
foregoing.
(c) Confidentiality. Seller shall keep confidential, and cause
its affiliates and instruct its and their officers, directors, employees and
advisors to keep confidential, all confidential information relating to the
Business (other than in respect of the Retained Liabilities), except as required
by law or administrative process or to perform its obligations under this
Agreement and except for information which is available to the public on the
Closing Date, or thereafter becomes available to the public other than as a
result of a breach of this Section 5(c). The covenant set forth in this Section
5(c) shall terminate 5 years after the Closing Date.
(d) Insurance. Seller shall keep, or cause to be kept, all
insurance policies to be set forth in
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Schedule 4(n), or suitable replacements therefor, in full force and effect
through the close of business on the Closing Date.
(e) Resignations. On the Closing Date, Seller shall cause to
be delivered to Buyer duly signed resignations, effective immediately after the
Closing, of all officers of the Company and shall take such other action as is
necessary to accomplish the foregoing.
(f) Supplemental Disclosure. (i) Seller shall have the
continuing obligation until the Closing promptly to supplement or amend the
Schedules hereto with respect to any matter hereafter arising or discovered
which, if existing or known at September 25, 1998, would have been required to
be set forth or described in such Schedules; provided, however, that no
supplement or amendment to such Schedules after 8 business days following
Buyer's receipt of all completed Schedules or other written disclosure materials
to be prepared by Seller and delivered to Buyer as contemplated by Section 5(m)
shall have any effect for the purpose of determining the satisfaction of the
conditions set forth in Section 3(a) or for purposes of determining whether any
person is entitled to indemnification pursuant to Section 11.
(ii) Seller shall promptly notify Buyer of, and furnish Buyer
any information it may reasonably request with respect to, the occurrence to
Seller's knowledge of any event or condition or the existence to Seller's
knowledge of any fact that would cause any of the conditions to Buyer's
obligation to consummate the purchase and sale of the Shares not to be
fulfilled.
(g) Certain Licenses and Permits. Seller covenants that all
licenses, permits and authorizations which are held in the name of any employee,
officer, director, stockholder, agent or otherwise on behalf of the Company with
respect to the Business shall be duly and validly transferred to the Company
without consideration prior to the Closing and that the warranties,
representations, covenants and conditions contained in this Agreement shall
apply to the same as if held by the Company as of the date hereof.
(h) Severance Agreements. Seller shall use its commercially
reasonable best efforts to enter into severance agreements satisfactory to Buyer
(the "Severance Agreements") with the six employees identified on Schedule 5(h),
with terms previously discussed by Seller and Buyer. Any amount or securities
payable or deliverable
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under any Severance Agreement that is forfeited by the employee in accordance
with the terms thereof shall be returned by Seller to Buyer as a partial
reduction of the Purchase Price.
(i) Transfer of Brokerage Accounts. Seller shall use its
commercially reasonable best efforts to transfer all futures contracts on the
NYMEX that the Company has in accounts with a broker or brokerage unit
affiliated with Seller to one or more financial institutions that are not
affiliated with Seller designated by Buyer prior to or at Closing.
(j) Audited Financial Statements. As soon as practicable
following the date hereof, Seller shall prepare and deliver to Buyer the Audited
Financial Statements. In addition, not later than 70 days after the Closing
Date, Seller shall prepare and deliver to Buyer audited balance sheets of the
Business as of May 31, 1997 and May 31, 1996 and audited statements of income
and cash flows for the years ended May 31, 1997 and May 31, 1996. All financial
statements to be prepared and provided pursuant to this Section 5(j) shall be
prepared in accordance with generally accepted accounting principles (and shall
include all notes required by such principles), using the same methods of
accounting and accounting practices utilized in the preparation of the Trial
Balances and shall be accompanied by an unqualified opinion from Ernst & Young
LLP. Seller shall assist and cooperate in obtaining such reports from Ernst &
Young LLP and in addition shall obtain the consent of Ernst & Young LLP to the
inclusion of such reports in filings by Buyer with the Securities and Exchange
Commission ("SEC").
(k) Non-Competition. Seller shall not, and shall cause each of
its affiliates other than ▇▇▇▇▇ ▇▇▇▇▇▇▇ Natural Gas Corp. not to, directly or
indirectly:
(i) for a period of 4 years from the Closing Date, engage in
the Business within the United States of America (including for
purposes of this Section 5(k) any activities relating to or that would
have a detrimental impact upon the revenue streams derived from the
current activities of the Business involving the Commodities, except
that Seller may engage in the trading of Commodities if such activities
do not have a detrimental impact upon the revenue streams derived from
the current activities of the Business involving the Commodities); or
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(ii) for a period of two years from the Closing Date, (A)
solicit, recruit or hire any employee of Buyer, an affiliate of Buyer
or the Company or (B) solicit or encourage any employee of Buyer, an
affiliate of Buyer or the Company to leave the employment of Buyer,
such affiliate or the Company.
Notwithstanding anything to the contrary contained in this
Section 5(k), Buyer hereby agrees that the foregoing covenant shall not be
deemed breached as a result of the ownership by Seller or any affiliate of
Seller of: (i) less than an aggregate of 5% of any class of stock of a person
engaged, directly or indirectly, in the Business provided that such stock is
listed on a national securities exchange or is quoted on the National Market
System of NASDAQ; (ii) less than 10% in value of any instrument of indebtedness
of a person engaged, directly or indirectly, in the Business or (iii) a person
which engages, directly or indirectly, in the Business if such activities
account for less than 10% of such person's consolidated annual revenues.
(l) Program License Agreement. Seller and Company shall enter
into a personal, nonexclusive, royalty-free license agreement with a term ending
three years from the Closing Date whereby Seller shall license Company to use,
solely in the conduct of the Business at locations to be specified, Seller's
proprietary software program which supports the petroleum products and financial
products trading and transportation activities of the Business, including
monitoring and managing price risk, product delivery and credit risk and
processing transactions (the "Program"). Such agreement shall include a
representation that Seller has implemented a comprehensive, detailed program to
analyze and address the risk that the Program may be unable to recognize and
properly execute date-sensitive functions involving certain dates prior to and
any dates after December 31, 1999 (the "Year 2000 Problem") and a covenant that
Seller will use its commercially reasonable best efforts to remedy any such Year
2000 Problem on or before September 30, 1999. Such agreement shall not require
Seller to provide any support services of any kind to the Company with respect
to the Program other than the provision of any upgrade to the Program developed
by Seller to address the Year 2000 Problem. Such agreement shall contain other
commercially reasonable terms appropriate to a software license agreement
acceptable to Buyer and Seller.
(m) Schedules. As soon as practicable and in no event later
than September 25, 1998, Seller shall prepare and deliver to Buyer each of the
Schedules to this Agreement (other than those Schedules relating to
representations and
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warranties of Buyer) and all other written disclosure materials relating to this
Agreement on the transactions contemplated hereby, if any.
SECTION 6. Representations and Warranties of Buyer. Buyer
hereby represents and warrants to Seller as follows:
(a) Authority. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Buyer has
all requisite corporate power and authority to enter into this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. All corporate acts and other proceedings required to be
taken by Buyer to authorize the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and properly taken. This Agreement has been, and the Seller Registration
Rights Agreement will be, duly executed and delivered by Buyer and constitutes,
and the Seller Registration Rights Agreement will constitute, a legal, valid and
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms.
(b) No Conflicts; Consents. The execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated hereby
and compliance with the terms hereof shall not, conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancelation or acceleration of
any obligation or to loss of a material benefit under, or to increased,
additional, accelerated or guaranteed rights or entitlements of any person
under, or result in the creation of any lien, claim, encumbrance, security
interest, option, charge or restriction of any kind upon any of the properties
or assets of Buyer or any subsidiary of Buyer under, any provision of (i) the
Certificate of Incorporation or By-laws of Buyer or the comparable governing
instruments of any subsidiary of Buyer, (ii) any material note, bond, mortgage,
indenture, deed of trust, license, lease, contract, commitment, agreement or
arrangement to which Buyer or any subsidiary of Buyer is a party or by which any
of their respective properties or assets are bound, or (iii) any judgment,
order, or decree, or material statute, law, ordinance, rule or regulation
applicable to Buyer or any subsidiary of Buyer or their respective properties or
assets, other than, in the case of clauses (ii) and (iii) above, any such items
that, individually or in the aggregate, would not have a material adverse effect
on the business, assets, condition (financial or otherwise), results of
operations or prospects of Buyer
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or on the ability of Buyer to consummate the transactions contemplated hereby (a
"Buyer Material Adverse Effect". No material consent, approval, license, permit,
order or authorization of, or registration, declaration or filing with, any
Governmental Entity is required to be obtained or made by or with respect to
Buyer or any of its subsidiaries or their respective affiliates in connection
with the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby, other than (A) compliance
with and filings under the HSR Act, if applicable, and (B) compliance with and
filings under Section 13(a) or 15(d), as the case may be, of the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
(c) Buyer Shares. The Buyer Shares will be, when issued, (A)
duly authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights and (B) free and clear of any liens, claims, encumbrances,
security interests, options, charges and restrictions of any kind, other than
those arising from acts of Seller or its affiliates.
(d) Organization and Standing. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Buyer has full corporate power and authority and possesses all
governmental franchises, licenses, permits, authorizations and approvals
necessary to enable it to own, lease or otherwise hold its properties and assets
and to carry on its business as presently conducted. Buyer is duly qualified and
in good standing to do business as a foreign corporation in each jurisdiction in
which the conduct or nature of its business or the ownership, leasing or holding
of its properties makes such qualification necessary, except such jurisdictions
where the failure to be so qualified or in good standing, individually or in the
aggregate, would not have a Buyer Material Adverse Effect.
(e) Securities Act. The Shares purchased by Buyer pursuant to
this Agreement are being acquired for investment only and not with a view to any
public distribution thereof, and Buyer shall not offer to sell or otherwise
dispose of the Shares so acquired by it in violation of any of the registration
requirements of the Securities Act.
(f) Actions and Proceedings, etc. There are no (i) outstanding
judgments, orders, injunctions or decrees of any Governmental Entity or
arbitration tribunal against Buyer or any of its affiliates, (ii) lawsuits,
actions or
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proceedings pending or, to the knowledge of Buyer, threatened against Buyer or
any of its affiliates, or (iii) investigations by any Governmental Entity which
are, to the knowledge of Buyer, pending or threatened against Buyer or any of
its affiliates, and which, in the case of each of clauses (i), (ii) and (iii),
could have a material adverse effect on the ability of Buyer to consummate the
transactions contemplated hereby.
(g) Availability of Funds. Buyer has cash available or has
existing borrowing facilities or firm commitments which together are sufficient
to enable it to consummate the transactions contemplated by this Agreement.
(h) SEC Documents. Since June 30, 1997, Buyer has filed all
required reports, schedules, forms, statements and other documents (including
exhibits and all other information incorporated therein) with the SEC ("Buyer
SEC Documents"). As of their respective dates, the Buyer SEC Documents complied
in all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such Buyer SEC Documents, and no Buyer SEC
Document when filed (as amended and restated and as supplemented by subsequently
filed Buyer SEC Documents) contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of Buyer included in
the Buyer SEC Documents complied as to form, as of their respective dates of
filing with the SEC, in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with generally accepted accounting
principles (except, in the case of unaudited statements, as permitted by Form
10-Q of the SEC) applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly present the
consolidated financial position of Buyer and its consolidated subsidiaries as of
the dates thereof and the consolidated results of their operations and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments).
(i) Capital Structure. The authorized capital stock of Buyer
consists of 40,000,000 shares of Buyer Common Stock and 2,000,000 shares of
preferred stock, par value $.01 per share ("Buyer Preferred Stock"), of which,
as of the date hereof, no shares have been designated to
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constitute a particular series. At the close of business on August 31, 1998: (i)
25,965,724 shares of Buyer Common Stock were issued and outstanding, (ii) no
shares of Buyer Common Stock were held by Buyer in its treasury, (iii) 1,800,000
shares of Buyer Common Stock were reserved for issuance pursuant to the
TransMontaigne Oil Company Equity Incentive Plan and (iv) no shares of Buyer
Preferred Stock had been designated or issued or were held by Buyer in its
treasury. All outstanding shares of capital stock of Buyer are duly authorized,
validly issued, fully paid and nonassessable and are not subject to preemptive
rights. Except for the Antidilution Rights Agreement dated as of April 17, 1996
by and between Buyer and Waterwagon & Co. and awards issued under the
TransMontaigne Oil Company Equity Incentive Plan or as disclosed in the Buyer
SEC Documents, there are no outstanding warrants, options, rights, "phantom"
stock rights, agreements, convertible or exchangeable securities or other
commitments (other than this Agreement) (i) pursuant to which Buyer is or may
become obligated to issue, sell, purchase, return or redeem any shares of
capital stock or other securities of Buyer or (ii) that give any person the
right to receive any benefits or rights similar to any rights enjoyed by or
accruing to the holders of shares of capital stock of Buyer. Except as disclosed
in the Buyer SEC Documents, there are no outstanding bonds, debentures, notes or
other indebtedness having the right to vote on any matters on which stockholders
of Buyer may vote.
(j) Absence of Changes or Events. Since April 30, 1998, there
has not been any action, event or occurrence that has had or would reasonably be
expected to have a Buyer Material Adverse Effect.
(k) Private Offering. Neither Buyer, any of its affiliates nor
anyone acting on its or their behalf has issued, sold or offered any security of
Buyer to any person under circumstances that would cause the issuance of the
Buyer Shares, as contemplated by this Agreement, to be subject to the
registration requirements of the Securities Act. Neither Buyer, any of its
affiliates nor anyone acting on its or their behalf will offer the Buyer Shares
or any part thereof or any similar securities for issuance or sale to, or
solicit any offer to acquire any of the same from, anyone so as to make the
issuance of the Buyer Shares subject to the registration requirements of Section
5 of the Securities Act. Assuming the representations of Seller contained in
Section 4(cc) are true and correct, the issuance and delivery of the Buyer
Shares hereunder are exempt from the registration and prospectus delivery
requirements of the Securities Act.
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(l) Brokerage Agreements. Buyer has not, directly or
indirectly, entered into any agreement with any person that would obligate
Seller to pay any compensation, brokerage fee or "finder's fee" in connection
with the transactions contemplated by this Agreement.
(m) Disclosure. No representation or warranty of Buyer
contained in this Agreement contains or will contain any untrue statement of a
material fact, or omits or will omit to state any material fact necessary, in
light of the circumstances under which it was or will be made, in order to make
the statements herein not misleading.
SECTION 7. Covenants of Buyer. Buyer covenants and agrees as
follows:
(a) Confidentiality. Buyer acknowledges that the information
being provided to it in connection with the purchase and sale of the Shares and
the consummation of the other transactions contemplated hereby is subject to the
terms of a confidentiality agreement between Buyer and Seller (the
"Confidentiality Agreement"), the terms of which are incorporated herein by
reference. Effective upon, and only upon, the Closing, the Confidentiality
Agreement shall terminate with respect to information relating solely to the
Business; provided that Buyer acknowledges that any and all other information
provided to it by Seller or Seller's representatives concerning Seller shall
remain subject to the terms and conditions of the Confidentiality Agreement
after the Closing Date.
(b) Board of Directors of Buyer. The Board of Directors of
Buyer shall take such action as may be necessary (including increasing the size
of the Board of Directors of Buyer) to appoint ▇▇▇▇▇ ▇▇▇▇ to the Board of
Directors of Buyer after the Closing Date, effective on the Closing Date. For so
long as Seller maintains an equity ownership interest in Buyer equal to or
greater than 10% of the outstanding shares of Buyer Common Stock, Buyer shall
use its reasonable best efforts to nominate ▇▇▇▇▇ ▇▇▇▇ (or a substitute person
designated by Seller who is reasonably acceptable to the Board of Directors of
Buyer) to the Board of Directors of Buyer.
(c) Supplemental Disclosure. Buyer shall promptly notify
Seller of, and furnish Seller any information it may reasonably request with
respect to, the occurrence to Buyer's knowledge of any event or condition or the
existence to Buyer's knowledge of any fact that would cause any of the
conditions to Seller's obligation to
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consummate the purchase and sale of the Shares not to be fulfilled.
(d) Business Presence. Buyer shall maintain an office and
conduct a substantial portion of the Company's business activities in Roswell,
Georgia for a period of not less than one year following the Closing Date.
(e) Listing of Buyer Shares. Buyer shall submit an additional
listing application and use its best efforts to cause the Buyer Shares to be
listed on the American Stock Exchange.
(f) Employees of Seller. For a period of two years from the
Closing Date, Buyer shall not (A) solicit, recruit or hire any employee of
Seller or an affiliate of Seller or (B) solicit or encourage any employee of
Seller or an affiliate of Seller to leave the employment of Seller or such
affiliate; provided, however, that nothing herein shall limit in any manner
Buyer's ability to continue the employment as of the Closing of any employee of
the Company.
(g) Change of Company Name. Buyer shall (i) prepare and
immediately following the Closing take all necessary actions to file or cause to
be filed on the Closing Date an amendment to the Certificate of Incorporation of
the Company to change the name of the Company to a name designated by Buyer that
bears no association with Seller or any of its affiliates and (ii) within 90
days of the Closing Date, take all necessary actions to ensure that no name or
other ▇▇▇▇ or indication associated with Seller or any of its affiliates (or any
▇▇▇▇ or indication similar thereto) appears on or in relation to any Facility or
for any other purpose and Buyer may use the current marks and indications solely
to operate the Facilities during such period as operated through the date
hereof.
(h) Access. Prior to the Closing, Buyer shall give Seller and
its representatives, employees, counsel and accountants such reasonable access,
during normal business hours and upon reasonable notice, to the personnel and
books and records of Buyer as is reasonably necessary for Seller to verify the
accuracy of the representations and warranties of Buyer set forth in this
Agreement; provided, however, that such access does not unreasonably disrupt the
normal operations of Buyer. Nonpublic information obtained through such access
shall be subject to the Confidentiality Agreement.
SECTION 8. Mutual Covenants. Each of Seller and Buyer
covenants and agrees as follows:
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(a) Environmental Audit. (i) Buyer shall at its sole cost and
expense conduct a Phase I environmental site assessment of the Company's
facilities and shall prepare a written report of the results of such assessment;
provided, however, that such assessment shall not include any type of sampling
or intrusive testing (the "Phase I Environmental Report"). Subject to Buyer's
receipt of all third party reports commissioned by Buyer in connection with the
preparation of the Phase I Environmental Report, Buyer shall use commercially
reasonable best efforts to complete and deliver a copy of the Phase I
Environmental Report to Seller within 30 days of the date of this Agreement. The
scope of work for the Phase I Environmental Report shall be as Buyer shall
reasonably determine in its sole judgment, but shall at a minimum (A) identify
all matters that are not in compliance with, or require investigation or
remediation under, Environmental Law, (B) subject to subclause (D) below,
provide a good faith estimate of the Cost of Remediation (as defined below), (C)
provide such information and detail as is reasonably available and necessary for
Seller to evaluate the Cost of Remediation, (D) provide good faith
recommendations regarding the nature and scope of additional soil, groundwater
or other testing reasonably necessary, if at all ("Phase II Recommendations"),
in order to provide a good faith estimate of the Cost of Remediation, and (E)
provide a good faith estimate of the time necessary to complete all necessary
investigation work in connection with the matters identified in the Phase I
Environmental Report and Phase II Recommendations, as applicable. The term "Cost
of Remediation" shall mean all costs and expenses reasonably necessary to bring
the matters identified in the Phase I Environmental Report and, if necessary,
matters subsequently identified pursuant to any implementation of the Phase II
Recommendations, into compliance with Environmental Law in effect as of the
Closing consistent with the use and operation of the facilities in the Business,
including the cost of investigation and/or remediation of any Hazardous
Substances identified at such facilities, other than up to $1,000,000 in the
aggregate of individual matters requiring expenditures of less than $10,000
each.
(ii) Seller shall, and shall cause the Company to, cooperate
fully with Buyer regarding the environmental assessment activities contemplated
by subparagraph (i) above, including by providing all data and other information
in the possession of Seller or the Company reasonably requested by Buyer or any
of its representatives or materially relevant to such activities. All data and
other information provided by Seller or the Company in connection with the
conduct of such activities shall be complete and,
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with respect to materials prepared by Seller or the Company, to the Seller's
knowledge, accurate in all material respects.
(iii) If the Phase I Environmental Report contains Phase II
Recommendations, or if on one or more occasions prior to completion of the Phase
I Environmental Report Buyer concludes that the Phase I Environmental Report
will include Phase II Recommendations, Buyer shall confer with Seller as soon as
practicable regarding the nature, scope and estimated time of implementation of
such Phase II Recommendations proposed at that time. In the case of a proposed
Phase II Recommendation presented to Seller before completion of the Phase I
Environmental Report, Seller may defer its consideration of such Phase II
Recommendation and the beginning of the formal negotiation period contemplated
by the following sentence until completion of the Phase I Environmental Report
but if Seller approves any Phase II Recommendation it may not later oppose it.
If Seller objects to any proposed Phase II Recommendation, Seller and Buyer
shall negotiate for at least two business days concerning the appropriate
nature, scope and timing of implementing such Phase II Recommendation. After
such negotiation, Seller may confirm in writing to Buyer its continuing
opposition to any such proposed Phase II Recommendation not previously approved
by Seller (a "Phase II Opposition Notice"), in which event Buyer shall not
undertake the investigation contemplated by such Phase II Recommendation any
earlier than after the Closing, subject to its right to terminate this Agreement
in accordance with the provisions of Section 15. Subject to the preceding
sentence, Buyer, at its sole expense, shall use its commercially reasonable best
efforts to complete the investigations contemplated by the agreed Phase II
Recommendations as promptly as practicable.
(iv) Buyer shall provide Seller with the opportunity to
reasonably participate in the conduct of any environmental assessment work
conducted pursuant to this Section 8(a), including the opportunity to collect
split samples.
(v) In the event that a dispute arises between Buyer and
Seller with respect to the Cost of Remediation, then the Buyer and Seller shall
select a nationally recognized environmental consultant to arbitrate such
dispute in accordance with the procedures set forth in subparagraph (vi) below.
If the Buyer and Seller cannot agree on one such environmental consultant within
five business days, each party shall select its own nationally recognized
environmental consultant within five business
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days thereafter, which consultants shall be instructed to jointly select within
five business days a third environmental consultant to arbitrate such dispute.
The agreed upon or selected environmental consultant shall be deemed the
"Environmental Arbitrator." The arbitration provided for in this subparagraph
(v) and in subparagraph (vi) below shall be the parties' exclusive remedy in
respect of a dispute concerning the Cost of Remediation.
(vi) In accordance with the then current Expedited Procedures
of the Commercial Arbitration Rules of the American Arbitration Association,
Buyer and Seller shall submit disputes concerning the Cost of Remediation under
this Section 8(a) and their respective estimates of the applicable Cost of
Remediation to the Environmental Arbitrator for a final, binding resolution, and
the Environmental Arbitrator shall choose one or the other of such estimates as
the final amount of Cost of Remediation. The arbitration shall be conducted in a
location selected by the Environmental Arbitrator, with preference given to New
York, New York. No transcript or recording shall be made of any arbitration
session. The decision of the Environmental Arbitrator shall be final and binding
on the Buyer and Seller for all purposes and may be entered in any court of
competent jurisdiction. The losing party shall pay the expenses of the
Environmental Arbitrator.
(b) Cooperation. Without limiting Section 12, Buyer and Seller
shall cooperate with each other, and shall cause their respective affiliates,
officers, employees, agents, auditors and representatives to cooperate with each
other, for a period of 180 days after the Closing to ensure the orderly
transition of the Business from Seller to Buyer and to minimize any disruption
to the respective businesses of Seller, Buyer and the Company that might result
from the transactions contemplated hereby. After the Closing, upon reasonable
written notice, Buyer and Seller shall furnish or cause to be furnished to each
other and their employees, counsel, auditors and representatives access, during
normal business hours, to such information and assistance relating to the
Company as is reasonably necessary for financial reporting and accounting
matters, the preparation and filing of any tax returns, reports or forms or the
defense of any tax claim or assessment. Each party shall reimburse the other for
reasonable out-of-pocket costs and expenses incurred in assisting the other
pursuant to this Section 8(b). Neither party shall be required by this Section
8(b) to take any action that would unreasonably interfere with the conduct of
its business or unreasonably disrupt its normal operations (or, in the case of
Buyer, the Business).
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(c) Publicity. Seller and Buyer agree that, from the date
hereof through the Closing Date, no public release or announcement concerning
the transactions contemplated hereby shall be issued by either party without the
prior consent of the other party (which consent shall not be unreasonably
withheld), except as such release or announcement may be required by law or the
rules or regulations of any United States or foreign securities exchange, in
which case the party required to make the release or announcement shall allow
the other party reasonable time to comment on such release or announcement in
advance of such issuance; provided, however, that each of Buyer and Seller may
make internal announcements to its employees that are consistent with the
parties' prior public disclosures regarding the transactions contemplated hereby
after reasonable prior notice to and consultation with the other party.
(d) Commercially Reasonable Best Efforts. Subject to the terms
and conditions of this Agreement, each party shall use its commercially
reasonable best efforts to cause the Closing to occur.
(e) Antitrust Notification. Each of Seller and Buyer shall as
promptly as practicable, but in no event later than five business days following
the execution and delivery of this Agreement, file with the United States
Federal Trade Commission (the "FTC") and the United States Department of Justice
(the "DOJ") the notification and report form, if any, required for the
transactions contemplated hereby and any supplemental information requested in
connection therewith pursuant to the HSR Act. Any such notification and report
form and supplemental information shall be in substantial compliance with the
requirements of the HSR Act. Each of Buyer and Seller shall furnish to the other
such necessary information and reasonable assistance as the other may request in
connection with its preparation of any filing or submission which is necessary
under the HSR Act. Seller and Buyer shall keep each other apprised of the status
of any communications with, and any inquiries or requests for additional
information from, the FTC and the DOJ and shall comply promptly with any such
inquiry or request. Each of Seller and Buyer shall use its commercially
reasonable best efforts to obtain any clearance required under the HSR Act for
the purchase and sale of the Shares. For purposes of this Section 8(e) and of
Section 8(d), the "commercially reasonable best efforts" of Buyer shall not
require Buyer to agree to any prohibition, limitation or other requirement of
the type set forth in clauses (B), (C) and (D) of Section 3(a)(iv).
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(f) Records. (i) On the Closing Date, Seller shall deliver or
cause to be delivered to Buyer all original material agreements, documents,
books, records and files, including records and files stored on computer disks
or tapes or any other storage medium (collectively, "Records"), if any, in the
possession of Seller relating to the Business to the extent not then in the
possession of the Company, subject to the following exceptions:
(A) Buyer recognizes that certain Records may contain
incidental information relating to the Business or may relate primarily
to subsidiaries or divisions of Seller or the Company other than the
Business, and that Seller may retain such Records and shall provide
copies of the relevant portions thereof to Buyer; and
(B) Subject to clause (ii) below, Seller may retain any and
all Tax returns, reports or forms and other Tax Records relating to the
Company in its possession.
(ii) Seller and Buyer shall provide to each other, and Buyer
shall cause the Company to provide to Seller, at any reasonable time and from
time to time, at the business location at which the Records are maintained,
after the Closing Date, full access to such Tax Records of the Company as Seller
or Buyer, as the case may be, may from time to time reasonably request and shall
furnish, and request the independent accountants and legal counsel of Seller,
Buyer or the Company to furnish to Seller or Buyer, as the case may be, such
additional Tax and other information and documents in the possession of such
persons (excluding privileged materials) as Seller or Buyer may from time to
time reasonably request; provided, however, that Seller shall not be required to
furnish access to Records (or portions of any Records) or furnish, or request
its independent accountants or legal counsel to furnish, any information or
documents (or any portions thereof) that are not related to the Business. In
particular, but without limitation, (A) to the extent in its possession, Seller
shall provide to Buyer, to the extent requested by Buyer, true and complete
copies of all separate Tax returns (and related workpapers) of the Company and
such portions of the consolidated, combined or unitary returns of affiliated
groups of which the Company was a member (and related workpapers), in each case
to the extent such returns or such portions relate exclusively to the Business
(including redacted versions of such returns or portions thereof to the extent
that relate exclusively to the Business) and (B) to the extent in the possession
of Buyer or the Company, Buyer shall provide to Seller, or cause the Company to
provide to
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Seller, to the extent requested by Seller, true and complete copies of all Tax
returns, workpapers and other Records relating to Federal, state and local
sales, use and excise Taxes.
SECTION 8A. Certain Post-Closing Cooperation. (a) Seller shall
use its commercially reasonable best efforts to complete on or before the
Closing Date (i) the transfer of the Excluded Assets (including real property
and transactions under swap and option agreements) from the Company to Seller or
its affiliates or a third party and (ii) the termination or release of any
contracts or liabilities between the Company and, or guaranties by the Company
of any liabilities (including contingent liabilities) of, Seller and its
affiliates (including affiliates that are subsidiaries of the Company as of the
date of this Agreement) ("Seller Liabilities").
(b) Buyer recognizes that Seller and its Affiliates, directly
or through financial institutions, insurance companies or third parties, have
provided guaranties or have otherwise agreed to be liable for, liabilities
(including contingent liabilities) arising from the Business (the "Seller
Guaranties"). Buyer recognizes that Seller prefers to terminate the Seller
Guaranties as of the Closing Date. Buyer will use its commercially reasonable
best efforts to substitute, where required, the obligation of Buyer and its
affiliates, directly or through financial institutions, insurance companies or
other third parties, for the Seller Guaranties on or before the Closing Date.
(c) Seller and Buyer recognize that it may not be commercially
practicable to complete the actions contemplated to be taken by Seller and Buyer
under paragraphs (a) and (b) above, respectively, on or before the Closing Date
because, among other things, of the inability to obtain required consents of
third parties or Governmental Entities in a timely manner or on terms
commercially reasonably acceptable to Buyer or Seller, as applicable.
(d) In the event Seller believes it might not be able to
complete the actions contemplated to be taken by Seller under paragraph (a)
above on or before the Closing Date, Seller shall give written notice to Buyer
of such inability prior to the Closing Date and Buyer and Seller shall negotiate
in good faith to enter into agreements, as appropriate, (i) to transfer the
economic benefit and/or risk of such Excluded Assets or Seller Liabilities to
Seller or its affiliates including by means of back-to-back transactions, (ii)
to have the Company administer such
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Excluded Assets or Seller Liabilities as nominee for Seller or its affiliates
upon Seller's instructions, to pay over to Seller any income associated with
such Excluded Assets and to have Seller reimburse the Company for the costs of
such administration and (iii) to have the Company sell, transfer or dispose of
such Excluded Assets as nominee for Seller or its affiliates with the Seller
entitled to or liable for the results of such sale, transfer or disposition;
provided that Seller shall indemnify Buyer for all costs and liabilities that
arise from Buyer's actions under this Section 8A(d) (including any liabilities
for Taxes, including Taxes on the sale, disposition or transfer of such Excluded
Asset or Seller Liabilities, such Tax indemnity obligation of Seller to be
treated as an indemnity obligation of Seller under Section 11(a) (and related
provisions) as if set forth in such Section 11(a)) in a manner reasonably
acceptable to Buyer; and provided further that Seller shall continue to use its
commercially reasonable best efforts to complete the actions required to be
taken by Seller under paragraph (a) above.
(e) In the event Buyer believes it might not be able to
complete the actions contemplated to be taken by Buyer under paragraph (b) above
on or before the Closing Date, Buyer shall give written notice to Seller of such
inability prior to the Closing Date and Seller shall not terminate the Seller
Guaranties; provided that Buyer shall indemnify Seller for all liabilities on
Seller Guaranties that arise after the Closing Date (except to the extent that
such liabilities are Retained Liabilities) in a manner reasonably satisfactory
to Seller; and provided further that Buyer shall continue to use its
commercially reasonable best efforts to complete the actions required to be
taken by Buyer under paragraph (b) above.
(f) This Section 8A shall not obligate any party to incur any
costs (other than incidental expenses) or retain or assume any liabilities or
financial risks without indemnification satisfactory to such party.
SECTION 9. Employee and Related Matters. (a) Employment. Buyer
shall cause the Company to continue the employment as of the Closing of each
active employee of the Company ("Continuing Employees") in the same or a
comparable position and at an initial rate of base salary or wages at least
equal to such employee's rate of base salary or wages in effect as of the date
hereof (as will be set forth in Schedule 9(a) hereto). Each employee of the
Company who, on the Closing Date, is on medical, short-term disability or other
authorized leave of absence from the Company shall be considered one of the
"Continuing
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Employees" for purposes hereof and shall be permitted to return to employment
with the Company in accordance with the terms of the leave of absence policy of
Buyer in effect as of the date hereof which applies to such employee. To the
extent required by law, Buyer shall also cause the Company to reemploy any
employee of the Company who, on the Closing Date, is on long-term disability (an
"Inactive Employee") provided such Inactive Employee becomes able to return to
active employment. Prior to such reemployment by the Company, all liabilities
and obligations relating to Inactive Employees shall remain the responsibility
of Seller. Nothing herein shall be construed as requiring Buyer to continue the
employment, following the Closing, of any Continuing Employee or otherwise be
construed as modifying such employee's status as "at will".
(b) Employee Benefit Plans Post-Closing. Except as otherwise
specifically set forth herein, Seller shall retain all liabilities and
obligations under the Benefit Plans with respect to Continuing Employees and
former employees of the Company ("Former Employees") and their eligible
dependents and beneficiaries (including in respect of claims filed under Benefit
Plans that are employee welfare benefit plans after the Closing relating to
expenses incurred prior to the Closing). Following the Closing Date, Buyer shall
provide the Continuing Employees with the same employee benefit plans, programs
and arrangements provided to Buyer's employees as in effect from time to time.
Each employee benefit plan, program, policy or arrangement provided by Buyer to
Continuing Employees following the Closing shall give full credit, to the extent
credited under a comparable Benefit Plan, for each participant's period of
service (as recognized by the Company as of the Closing) prior to the Closing
Date for purposes of determining eligibility and vesting of benefits (but not
for benefit accrual purposes). Each employee welfare benefit plan provided by
Buyer to the Continuing Employees from and after the Closing Date shall (i) give
full credit for deductibles and out-of-pocket expenses under the Benefit Plans
with respect to the current plan year toward any deductibles for the remainder
of the plan year during which the Closing occurs, and (ii) shall waive any
pre-existing condition limitation for any such Continuing Employee immediately
prior to the Closing Date (to the extent waived under the applicable Benefit
Plan); provided, however, that if a Continuing Employee's condition is a
condition which is not currently covered under Buyer's group health plan, such
condition shall not be waived and Buyer shall have no obligation or liability
therefor.
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(c) Bonus/Incentive Compensation; Accrued Vacation;
Nonqualified Pension Plans. Seller shall pay prorated bonus and incentive
compensation to eligible Continuing Employees (and Former Employees, if
applicable) in respect of current performance periods based upon performance
through the Closing Date. For calendar year 1998, all vacation entitlement for
Continuing Employees shall be determined in accordance with the Seller's
vacation policy as extended to the Company, and any Continuing Employee with
accrued but unused vacation, personal or sick day entitlement as of the Closing
Date must (subject to applicable laws) schedule and take such vacation prior to
January 1, 1999 in accordance with Buyer's vacation policy. Subject to
applicable laws, all accrued but untaken vacation as well as unused personal and
sick days not taken prior to January 1, 1999 shall be forfeited and no
Continuing Employee shall receive any compensation therefor. Seller shall
reasonably permit Continuing Employees to use their accrued but untaken
vacation, personal and sick days prior to the Closing Date. Commencing January
1, 1999, the Continuing Employees shall accrue and be entitled to vacation
pursuant to Buyer's vacation policy, as in effect from time to time, giving
credit for their years of service with the Company or any of its affiliates.
(d) COBRA. Seller shall be solely responsible for compliance
with the health care continuation requirements of Section 4980B of the Code and
Part 6 of Title I of ERISA (hereinafter referred to as "COBRA") with respect to
all Former Employees who incurred a Qualifying Event (within the meaning of
Section 4980B(f)(3) of the Code and Section 603 of ERISA) prior to the Closing
Date. Seller shall be solely responsible for compliance with COBRA with respect
to all Former Employees who had elected COBRA continuation coverage prior to the
Closing, including such Former Employees who, or whose beneficiaries, incur a
subsequent Qualifying Event after the Closing Date. Buyer shall be solely
responsible for compliance with COBRA with respect to all Continuing Employees
who participate in Buyer's employee welfare benefit plans after the Closing, and
who, or whose beneficiaries, experience a Qualifying Event from and after the
Closing Date.
(e) Workers Compensation. Seller shall discharge all
liabilities for claims for workers compensation benefits for Continuing
Employees arising out of occurrences prior to the Closing Date. Buyer shall
discharge all liabilities for claims for workers compensation benefits for
Continuing Employees arising out of occurrences on or after the Closing Date.
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(f) Pension/Savings Plans. Seller shall, effective as of the
Closing, fully vest the account balance or accrued benefits (as applicable) of,
and terminate the participation of, each Continuing Employee in Seller's Pension
Plans in which such individual is then participating. Each affected Continuing
Employee shall be eligible to receive a distribution of his or her vested
account balance and accrued benefits, if any, as soon as practicable following
the Closing, subject to the terms of the applicable Pension Plan and to any
applicable legal requirements as determined by Seller in its sole discretion.
Buyer's tax-qualified 401(k) savings plan shall accept rollovers of the
distributions received by any Continuing Employee from Seller's tax-qualified
Pension Plans to the extent permitted under applicable law, provided that Seller
has provided Buyer with a copy of favorable Internal Revenue Service
determination letters with respect to each of Seller's tax-qualified Pension
Plans from which a rollover distribution is made.
(g) Post-Retirement Health Obligations. Seller shall retain
all liability and obligation for (and indemnify and hold harmless Buyer from and
against) all post-retirement health obligations relating to Continuing Employees
and Former Employees and their eligible dependents. Eligibility for
post-retirement health benefits shall be determined solely in accordance with
the terms of the applicable Benefit Plan, and nothing herein shall be construed
as limiting the right of Seller to amend or terminate any such Benefit Plan or
as requiring Seller to provide vesting of benefits or continuing service credit
under any such Benefit Plan as of or following the Closing Date.
SECTION 10. Further Assurances. From time to time, as and when
requested by either party hereto, the other party shall execute and deliver, or
cause to be executed and delivered, all such documents and instruments and shall
take, or cause to be taken, all such further or other actions (subject to the
provisions of Sections 8(c) and 8(d)), as such other party may reasonably deem
necessary or desirable to consummate the transactions contemplated by this
Agreement.
SECTION 11. Indemnification. (a) Tax Indemnification. Seller
shall indemnify Buyer and its affiliates (including the Company) and each of
their respective officers, directors, employees, stockholders, agents and
representatives and hold them harmless from (i) all liability for Taxes of the
Company for the Pre-Closing Tax Period (excluding any Taxes included in the
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calculation of Closing Net Working Capital (e.g., fuel taxes payable) and any
Taxes that are payable as a result of any transaction occurring on the Closing
Date but after the Closing with respect to the Company or Buyer or any of
Buyer's affiliates which is outside of the ordinary course of business, other
than any such transaction expressly required by (x) this Agreement or (y)
applicable law and the occurrence of which is outside of Buyer's control;
provided, however, that neither clause (x) nor clause (y) shall be applicable to
the extent that the transaction benefits Buyer (an "Extraordinary Event Tax")),
(ii) all liability (as a result of Treasury Regulation Section 1.1502-6(a) or
otherwise) for Taxes of Seller or any other corporation (other than the Company)
which is or has been affiliated with Seller, (iii) all liability of the Company
for Taxes resulting from the 338(h)(10) election (or any comparable election
under state or local Tax law) contemplated by Section 12(a) of this Agreement,
and (iv) all liability for reasonably necessary legal fees and expenses incurred
by Buyer in enforcing its rights under clause (i), (ii) or (iii) above.
Buyer shall, and shall cause the Company to, indemnify Seller
and its affiliates and each of their respective officers, directors, employees,
stockholders, agents and representatives and hold them harmless from (i) all
liability for Taxes of the Company for any taxable period ending after the
Closing Date (except to the extent such taxable period began before the Closing
Date, in which case Buyer's indemnity will cover only that portion of any such
Taxes that are not for the Pre-Closing Tax Period), (ii) all liability for an
Extraordinary Event Tax, (iii) all liability for Taxes attributable to a breach
by Buyer of its obligations under this Agreement and (iv) all liability for
reasonably necessary legal fees and expenses incurred by Seller in enforcing its
rights under clause (i), (ii) or (iii) above.
In the case of any taxable period that includes (but does not
end on) the Closing Date (a "Straddle Period"):
(i) real, personal and intangible property Taxes ("property
Taxes") of the Company for the Pre-Closing Tax Period shall be equal to
the amount of such property Taxes for the entire Straddle Period (the
"Full Year Property Taxes") multiplied by a fraction, the numerator of
which is the number of days during the Straddle Period that are in the
Pre-Closing Tax Period and the denominator of which is the number of
days in the Straddle Period; provided, however, that in applying this
provision with respect to any Taxes
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relating to inventories, the amount of such Full Year Property Taxes to
be allocated in accordance with the terms of this provision shall be
limited to the amount of such Taxes which would have been incurred on
the basis of the inventories existing on the Closing Date as if such
date were the assessment date of such Taxes; and
(ii) the Taxes of the Company (other than property Taxes) for
the Pre-Closing Tax Period shall be computed as if such taxable period
ended as of the close of business on the Closing Date.
Seller's indemnity obligation in respect of Taxes other than Income Taxes (as
defined below) for a Straddle Period shall initially be effected by its payment
to Buyer of the excess (the "Seller Reimbursement Amount") of (v) such Taxes for
the Pre-Closing Tax Period over (w) the amount of such Taxes paid by Seller or
any of its affiliates (other than the Company) at any time plus the amount of
such Taxes paid by the Company on or prior to the Closing Date (in the form of
estimated Tax payments or otherwise), in each case excluding amounts reflected
in the calculation of Closing Net Working Capital. Seller shall initially pay
the Seller Reimbursement Amount to Buyer within 30 days after the return, report
or form with respect to the final liability for such Taxes is required to be
filed (or, if later, is actually filed). If the amount described in clause (w)
above exceeds the amount described in clause (v) above, Buyer shall pay to
Seller the amount of such excess within 30 days after the return, report or form
with respect to the final liability for such Taxes is required to be filed.
Buyer's indemnity obligation in respect of Income Taxes for a Straddle Period
shall initially be effected by its payment to Seller of the excess (the "Buyer
Reimbursement Amount") of (x) such Taxes for the period after the Closing Date
over (y) such Taxes previously paid by Buyer or the Company after the Closing
Date (in the form of estimated tax payments or otherwise), in each case
excluding amounts reflected in the calculation of Closing Net Working Capital.
Buyer shall initially pay such Buyer Reimbursement Amount to Seller within 30
days after the return, report or form with respect to the final liability for
such Taxes is required to be filed (or, if later, is actually filed). If the
amount described in clause (y) above exceeds the amount described in clause (x)
above, Seller shall pay to Buyer the amount of such excess within 30 days after
the return, report or form with respect to the final liability for such Taxes is
required to be filed. The payments to be made pursuant to this paragraph by
Seller or Buyer with respect to a Straddle Period shall be appropriately
adjusted to reflect the
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outcome of any contest with respect to Straddle Period Taxes pursuant to Section
11(i).
For purposes of this Agreement, "Income Tax" or "Income Taxes"
shall mean all Taxes in whole or in part based on or measured by net or gross
income, gains or profits, and any Taxes (including franchise Taxes) imposed in
lieu thereof or similar thereto.
(b) Environmental Indemnification. (i) Seller shall indemnify
Buyer, its affiliates (including the Company) and each of their respective
officers, directors, employees, stockholders and representatives and hold them
harmless from any, loss, liability, claim, damage, charge, cost or expense
(including reasonable attorney and expert fees and expenses) suffered or
incurred by any such indemnified party related to any Environmental Law (in
effect as of the Closing) to the extent arising out of acts or omissions
occurring, or conditions existing (whether known or unknown), at or before the
Closing in connection with the ownership or operation of the Company
("Environmental Loss"), whether such Environmental Loss arises before or after
the Closing and whether arising on-site or off-site, including all Environmental
Losses in connection with (A) bringing the Company into compliance with
Environmental Laws in effect as of the Closing and (B) the investigation or
remediation of Hazardous Substance contamination at Company facilities;
provided, however, that Buyer or the Company shall share in Environmental
Losses, and Seller's aggregate liability hereunder for Environmental Losses
shall be limited to $17,400,000, as set forth in the following table:
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Percentage Share
Percentage Share of Environmental
Class of of Environmental Losses of Buyer
Environmental Losses Losses of Seller or Company
-------------------- ---------------- ------------
Individual matters 0% 100%
involving
Environmental Loss
of $10,000 or less
("Small Matters"),
so long as the
aggregate amount of
Small Matters is
$1,000,000 or less
Individual matters 80% 20%
involving
Environmental Loss
of more than $10,000
and the excess of
the aggregate amount
of Small Matters
over $1,000,000
("Shared Liabilities"),
up to $13,000,000
Shared Liabilities 50% 50%
exceeding
$13,000,000 up to
$27,000,000
Environmental Losses 0% 100%
after Shared
Liabilities exceed
$27,000,000.
(ii) Seller's liability under this Section 11(b) shall be
monetary only and Buyer shall not be entitled to make a claim for specific
performance with respect to any Remedial Action (as defined below).
(iii) Without limiting the other provisions of this Section
11, if Buyer has a claim against Seller related to an environmental matter,
Buyer shall manage any investigation, remediation, corrective action or other
activities ("Remedial Action") required to address the conditions giving rise to
such claim. Without limiting Buyer's right to make claims for indemnification
under Section 11(b), Buyer shall cooperate with Seller and shall,
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if reasonable, avoid taking any action that would have an adverse effect on
Seller's ability to seek reimbursement under any applicable insurance policy for
the benefit of Seller, or on Seller's ability to exercise any available
contractual rights of contribution or indemnification. Buyer or the Company
shall (A) provide Seller the opportunity to review in advance such Remedial
Action to be taken or implemented and the form and substance of any plan, report
or submission to be transmitted to any Governmental Entity regarding such
Remedial Action, and (B) provide Seller periodic written reports regarding the
status of such Remedial Action, including any correspondence with any
Governmental Entity regarding such Remedial Action, but Buyer's or the Company's
decisions after Closing on such matters shall not be subject to Seller's
approval.
(c) Other Indemnification by Seller. Seller shall indemnify
Buyer, its affiliates (including the Company) and each of their respective
officers, directors, employees, stockholders, agents and representatives against
and hold them harmless from any loss, liability, claim, damage or expense
(including reasonable legal fees and expenses) suffered or incurred by any such
indemnified party (other than any relating to Taxes and environmental matters,
for which indemnification provisions are set forth in Sections 11(a) and 11(b),
respectively) to the extent arising from, relating to or otherwise in respect of
(i) any breach of any representation or warranty of Seller which survives the
Closing contained in this Agreement or in any certificate delivered pursuant
hereto (it being agreed and acknowledged by the parties that for purposes of
Buyer's right to indemnification pursuant to this Section 11(c) the
representations and warranties of Seller contained herein shall not be deemed
qualified by any references herein to materiality generally or to whether or not
any such breach results or may result in a Seller Material Adverse Effect), (ii)
any breach of any covenant of Seller contained in this Agreement and (iii) all
Retained Liabilities; provided, however, that Seller shall not have any
liability under clause (i) above unless the aggregate of all losses,
liabilities, costs and expenses relating thereto for which Seller would, but for
this proviso, be liable exceeds on a cumulative basis an amount equal to
$1,600,000 (in which case Seller shall be liable for the full amount thereof);
provided further, however, that Seller shall not have any liability under clause
(i) above for any individual items where the loss, liability, cost or expense
relating thereto is less than $10,000 and such items shall not be aggregated for
purposes of the first proviso to this Section 11(c); and provided further,
however, that Seller's liability under clause (i) above shall in no event exceed
$16,000,000
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(except that this proviso shall not apply to any wilful breach of any covenant
by Seller). In no event shall Seller be obligated to indemnify Buyer or any
other person with respect to any matter to the extent that (A) Seller has
already provided indemnity for such matter pursuant to this Agreement or (B)
such matter was reflected in the calculation of Closing Net Working Capital
pursuant to Section 2(b).
(d) Other Indemnification by Buyer. Buyer shall, and shall
cause the Company to, indemnify Seller, its affiliates and each of their
respective officers, directors, employees, stockholders, agents and
representatives against and hold them harmless from any loss, liability, claim,
damage or expense (including reasonable legal fees and expenses) suffered or
incurred by any such indemnified party (other than any relating to Taxes, for
which indemnification provisions are set forth in paragraph (a) of this Section
11) to the extent arising from (i) any breach of any representation or warranty
of Buyer which survives the Closing contained in this Agreement or in any
certificate delivered pursuant hereto (it being agreed and acknowledged by the
parties that for purposes of Seller's right to indemnification pursuant to this
Section 11(d) the representations and warranties of Buyer contained herein shall
not be deemed qualified by any references herein to materiality generally), (ii)
any breach of any covenant of Buyer contained in this Agreement, (iii) all
obligations and liabilities of the Company, other than Retained Liabilities and
other items which Seller has expressly agreed to pay or perform pursuant to this
Agreement or for which indemnification is provided under Section 11(c), (iv) any
act or omission of Buyer, its officers, directors, employees, agents or
designated representatives in connection with Buyer's conduct of the
environmental assessment work at the Seller's facilities pursuant to Section
8(a), except to the extent of Seller's negligence or misconduct related that
environmental assessment work or the site, and (v) all Environmental Losses,
whether such Environmental Loss arises before or after Closing and whether
arising on-site or off-site, other than Environmental Losses for which Seller is
obligated to indemnify Buyer under Section 11(b).
(e) Losses Net of Insurance, etc. The amount of any loss,
liability, claim, damage, expense or Tax for which indemnification is provided
under this Section 11 shall be net of any amounts recovered or recoverable by
the indemnified party under insurance policies with respect to such loss,
liability, claim, damage, expense or Tax (collectively, a "Loss") and shall be
(i) increased to take
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account of any net Tax cost actually incurred by the indemnified party arising
from the receipt of indemnity payments hereunder (grossed up for such increase)
and (ii) reduced to take account of any net Tax benefit realized by the
indemnified party arising from the incurrence or payment of any such Loss or
events giving rise thereto. In computing the amount of any such Tax cost or Tax
benefit, the indemnified party shall be deemed to recognize all other items of
income, gain, loss, deduction or credit before recognizing any item arising from
the receipt of any indemnity payment hereunder or the incurrence or payment of
any indemnified Loss. Any indemnification payment hereunder shall initially be
made without regard to this paragraph and shall be increased or reduced to
reflect any such net Tax cost (including gross-up) or net Tax benefit only after
the indemnified party has actually realized such cost or benefit. For purposes
of this Agreement, an indemnified party shall be deemed to have "actually
realized" a net Tax cost or a net Tax benefit to the extent that, and at such
time as, the amount of Taxes payable by such indemnified party is increased
above or reduced below, as the case may be, the amount of Taxes that such
indemnified party would be required to pay but for the receipt of the indemnity
payment or the incurrence or payment of such Loss, as the case may be. The
amount of any increase or reduction hereunder shall be adjusted to reflect any
final determination (which shall include the execution of Form 870-AD or any
successor form) with respect to the indemnified party's liability for Taxes and
payments between Seller and Buyer to reflect such adjustment shall be made if
necessary. Any indemnity payment under this Agreement shall be treated as an
adjustment to the Purchase Price for Tax purposes, unless a final determination
(which shall include the execution of Form 870-AD or any successor form) with
respect to the indemnified party or any of its affiliates causes any such
payment not to be treated as an adjustment to the Purchase Price for United
States Federal income Tax purposes. Notwithstanding the foregoing, an
indemnifying party shall not be liable for any payment pursuant to a final
determination described in the preceding sentence to which it has not consented,
it being a condition to the withholding of such consent, however, that such
indemnifying party agree to bear the cost of any further contest (for which a
settlement or other final disposition otherwise has been proposed) it shall
request.
(f) Termination of Indemnification. The obligations to
indemnify and hold harmless a party hereto (i) pursuant to Section 11(a), shall
terminate at the time the applicable statutes of limitations with respect to the
Tax liabilities in question expire (giving effect to any
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extension thereof), (ii) pursuant to Section 11(b), shall terminate at the close
of business on the date that is three years after the Closing Date; (iii)
pursuant to Sections 11(c)(i) and 11(d)(i), shall terminate when the applicable
representation or warranty terminates pursuant to Section 16 and (iv) pursuant
to the other clauses Sections 11(c) and 11(d) shall not terminate; provided,
however, that as to clauses (i), (ii) and (iii) above such obligations to
indemnify and hold harmless shall not terminate with respect to any item as to
which the person to be indemnified or the related party thereto shall have,
before the expiration of the applicable period, previously made a claim by
delivering a notice of such claim (stating in reasonable detail the basis of
such claim) to the indemnifying party.
(g) Procedures Relating to Indemnification (Other than under
Section 11(a)). In order for a party (the "indemnified party") to be entitled to
any indemnification provided for under this Agreement (other than in relation to
Taxes, which matters are governed by Section 11(a)) in respect of, arising out
of or involving a claim or demand made by any person against the indemnified
party (a "Third Party Claim"), such indemnified party must notify the
indemnifying party in writing, and in reasonable detail, of the Third Party
Claim within 10 business days after receipt by such indemnified party of written
notice of the Third Party Claim; provided, however, that failure to give such
notification shall not affect the indemnification provided hereunder except to
the extent the indemnifying party shall have been actually prejudiced as a
result of such failure (except that the indemnifying party shall not be liable
for any expenses incurred during the period in which the indemnified party
failed to give such notice). Thereafter, the indemnified party shall deliver to
the indemnifying party, within five business days after the indemnified party's
receipt thereof, copies of all notices and documents (including court papers)
received by the indemnified party relating to the Third Party Claim.
If a Third Party Claim is made against an indemnified party,
the indemnifying party shall be entitled to participate in the defense thereof
and, if it so chooses and acknowledges its obligation to indemnify the
indemnified party therefor, to assume the defense thereof with counsel selected
by the indemnifying party; provided that such counsel is not reasonably objected
to by the indemnified party. Should the indemnifying party so elect to assume
the defense of a Third Party Claim, the indemnifying party shall not be liable
to the indemnified party for legal expenses subsequently incurred by the
indemnified party in connection
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with the defense thereof. If the indemnifying party assumes such defense, the
indemnified party shall have the right to participate in the defense thereof and
to employ counsel (not reasonably objected to by the indemnifying party), at its
own expense, separate from the counsel employed by the indemnifying party, it
being understood that the indemnifying party shall control such defense. The
indemnifying party shall be liable for the fees and expenses of counsel employed
by the indemnified party for any period during which the indemnifying party has
failed to assume the defense thereof (other than during the period prior to the
time the indemnified party shall have given notice of the Third Party Claim as
provided above).
If the indemnifying party so elects to assume the defense of
any Third Party Claim, all of the indemnified parties shall cooperate with the
indemnifying party in the defense or prosecution thereof. Such cooperation shall
include the retention and (upon the indemnifying party's request) the provision
to the indemnifying party of records and information which are reasonably
relevant to such Third Party Claim, and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder. Whether or not the indemnifying party shall have
assumed the defense of a Third Party Claim, the indemnified party shall not
admit any liability with respect to, or settle, compromise or discharge, such
Third Party Claim without the indemnifying party's prior written consent (which
consent shall not be unreasonably withheld). If the indemnifying party shall
have assumed the defense of a Third Party Claim, the indemnified party shall
agree to any settlement, compromise or discharge of a Third Party Claim which
the indemnifying party may recommend and which by its terms obligates the
indemnifying party to pay the full amount of the liability in connection with
such Third Party Claim, which releases the indemnifying party completely in
connection with such Third Party Claim and which would not otherwise adversely
affect the indemnified party.
Notwithstanding the foregoing, the indemnifying party shall
not be entitled to assume the defense of any Third Party Claim (and shall be
liable for the fees and expenses of counsel incurred by the indemnified party in
defending such Third Party Claim) if the Third Party Claim seeks an order,
injunction or other equitable relief or relief for other than money damages
against the indemnified party which the indemnified party reasonably determines,
after conferring with its outside counsel, cannot be separated from any related
claim for money damages. If such equitable relief or other relief portion of the
Third Party
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Claim can be so separated from that for money damages, the indemnifying party
shall be entitled to assume the defense of the portion relating to money
damages. The indemnification required by Sections 11(b), 11(c) and and 11(d)
shall be made by periodic payments of the amount thereof during the course of
the investigation, remediation or defense, as and when bills are received or
loss, liability, claim, damage or expense is incurred. All claims under Sections
11(b), 11(c) or 11(d) other than Third Party Claims shall be governed by Section
11(h). All Tax Claims (as defined in Section 11(i)) shall be governed by Section
11(i).
(h) Other Claims. In the event any indemnified party should
have a claim against any indemnifying party under Sections 11(b), 11(c) or 11(d)
that does not involve a Third Party Claim being asserted against or sought to be
collected from such indemnified party, the indemnified party shall deliver
notice of such claim with reasonable promptness to the indemnifying party. The
failure by any indemnified party so to notify the indemnifying party shall not
relieve the indemnifying party from any liability which it may have to such
indemnified party under Section 11(b), 11(c) or 11(d), except to the extent that
the indemnifying party demonstrates that it has been materially prejudiced by
such failure. If the indemnifying party does not notify the indemnified party
within 20 calendar days following its receipt of such notice that the
indemnifying party disputes its liability to the indemnified party under
Sections 11(b), ll(c) or 11(d), such claim specified by the indemnified party in
such notice shall be conclusively deemed a liability of the indemnifying party
under Section 11(b), 11(c) or 11(d) and the indemnifying party shall pay the
amount of such liability to the indemnified party on demand or, in the case of
any notice in which the amount of the claim (or any portion thereof) is
estimated, on such later date when the amount of such claim (or such portion
thereof) becomes finally determined. If the indemnifying party has timely
disputed its liability with respect to such claim, as provided above, the
indemnifying party and the indemnified party shall proceed in good faith to
negotiate a resolution of such dispute and, if not resolved through
negotiations, such dispute shall be resolved by litigation in an appropriate
court of competent jurisdiction; provided, however, that if such dispute
concerns indemnification for environmental matters under Section 11(b), it shall
be submitted to arbitration in accordance with the procedures set forth in
Section 11(b).
(i) Procedures Relating to Indemnification of Tax Claims.
Buyer or Seller, as the case may be, shall promptly
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notify the other in writing of the commencement of any claim, audit,
examination, or other proposed change or adjustment of which it or any of its
affiliates has been informed in writing by any taxing authority which may affect
the liability of the other party under this Section 11(a) (each, a "Tax Claim").
Such notice shall describe the asserted Tax Claim in reasonable detail and shall
include copies of any notices and other documents received from any taxing
authority in respect of any such asserted Tax Claim. If notice of a Tax Claim is
not given by a party to the other party within a sufficient period of time to
allow the other party to effectively contest such Tax Claim, or in reasonable
detail to apprise the other party of the nature of the Tax Claim or if an
indemnified party otherwise fails to follow the requirements of this Section
11(i), the other party shall not be liable to such party, any of its affiliates
or any of their respective officers, directors, employees, stockholders, agents
or representatives and the amount of any indemnity payment pursuant to Section
11(a) shall be reduced, to the extent that the other party is harmed or its
position is actually prejudiced as a result thereof.
With respect to any Tax Claim (other than a Tax Claim relating
solely to Taxes of the Company for a Straddle Period), at Seller's election (to
be made not later than 10 business days following Seller's receipt of a
notification from Buyer that (i) the Company has received from a taxing
authority a first offer of settlement or (ii) the Company proposes to make a
first offer of settlement to a taxing authority), Seller shall have the sole
right to represent the Company's interests in any Tax audit or administrative or
court proceeding and to employ counsel of its choice, and, without limiting the
foregoing, may in its sole discretion pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with any taxing
authority with respect thereto, and may, in its sole discretion, either pay the
Tax claimed and ▇▇▇ for a refund where applicable law permits such refund suits
or contest the Tax Claim in any permissible manner. Seller may settle any issues
and take any other actions in its discretion in connection with such audit or
proceedings, and the results of the exercise by Seller of such right shall be
final and binding on Buyer and its affiliates. Buyer shall cooperate fully with
Seller (including, but not limited to, by granting to Seller a power of attorney
reasonably necessary to represent the Company in any such audit or proceeding
and by causing the Company, at Seller's reasonable request, to take such
requested actions in the defense against or compromise of any claim in any Tax
audit or proceeding which Seller controls pursuant hereto), timely make
available to
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Seller all data and other information reasonably requested by Seller in
connection with such audit or proceedings and make employees available on a
mutually convenient basis to provide additional information or explanation of
any material provided hereunder or to testify at proceedings relating to such
Tax Claim. Seller and Buyer shall jointly control all proceedings taken in
connection with any Tax Claim relating solely to Taxes of the Company for a
Straddle Period.
In no case shall Buyer, the Company or any of their respective
officers, directors, employees, stockholders, agents or representatives settle
or otherwise compromise any Tax Claim without Seller's prior written consent.
Neither party shall settle a Tax Claim relating solely to Taxes of the Company
for a Straddle Period without the other party's prior written consent; provided,
however, that if either party shall refuse to consent to any settlement that the
other party proposed to accept (a "Proposed Settlement"), then (A) the liability
with respect to the subject matter of the Proposed Settlement of the party who
proposed to accept the Proposed Settlement shall be limited to the amount that
such liability would have been if the Proposed Settlement had been accepted and
(B) the other party shall be responsible for all expenses incurred thereafter in
connection with the contest of such Tax audit or proceeding except to the extent
that the final settlement imposes less liability on the party who proposed to
accept the Proposed Settlement than the Proposed Settlement would have imposed.
(j) Mitigation. Buyer and Seller shall cooperate with each
other with respect to resolving any claim or liability with respect to which one
party is obligated to indemnify the other party hereunder, including by making
commercially reasonably efforts to mitigate or resolve any such claim or
liability; provided that such party shall not be required to make such efforts
(other than in respect of Tax matters) if they would be detrimental in any
material respect to such party. In the event that Buyer or Seller shall fail to
make such commercially reasonably efforts to mitigate or resolve any claim or
liability, then (unless the proviso to the foregoing covenant shall be
applicable) notwithstanding anything else to the contrary contained herein, the
other party shall not be required to indemnify any person for any loss,
liability, claim, damage or expense that could reasonably be expected to have
been avoided if Buyer or Seller, as the case may be, had made such efforts.
SECTION 12. Tax Matters. (a) Seller and Buyer shall jointly
make (i) the joint election provided for in
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Section 338(h)(10) of the Code and Treasury Regulation Section 1.338(h)(10)-1(d)
with respect to the Company and (ii) such other similar elections under the laws
of any state or local jurisdiction analogous to the election provided for in
Section 338(h)(10) of the Code, which elections specifically exclude any
election under the laws of any state or local jurisdiction comparable to the
election under Section 338(g) of the Code in the absence of an election under
the laws of such state or local jurisdictions comparable to the election under
Section 338(h)(10) of the Code (the elections described in (i) and (ii),
collectively, the "Section 338 Elections"). Seller and Buyer shall comply fully
with all filing and other requirements necessary to effectuate the Section 338
Elections on a timely basis and agree to cooperate in good faith with each other
in the preparation and timely filing of any Tax returns required to be filed in
connection with the making of the Section 338 Elections, including the exchange
of information and the joint preparation and filing of all required Tax forms
and schedules.
Buyer shall not, for Federal income Tax purposes, make any
election under Section 338(g) of the Code in the absence of joining Seller in
making a joint election under Section 338(h)(10) of the Code pursuant to the
terms of this Section 12(a). Seller and Buyer shall endeavor in good faith to
agree upon the fair market value of the assets of the Company for purposes of
Section 338(h)(10) of the Code within 120 days after the Closing Date. In the
event such agreement is reached, neither Seller nor Buyer (nor any of their
respective affiliates), unless required pursuant to a final determination, shall
take any position on any Tax return or with any taxing authority that is
inconsistent with such agreement. If a party proposes a settlement or other
final disposition of a contest inconsistent, in whole or in part, with such
agreement, such party shall contest the matter further if requested by the other
party, provided that such other party agrees to bear the expense of such further
contest.
(b) In the case of Taxes other than Income Taxes, for any
taxable period of the Company that includes (but does not end on) the Closing
Date, Buyer shall prepare and timely file with the appropriate authorities all
Tax returns, reports and forms required to be filed and shall timely pay all
Taxes due with respect to such returns, reports and forms; provided that Seller
shall reimburse Buyer (in accordance with the procedures set forth in Section
11(a)) for any amount owed by Seller pursuant to Section 11(a) with respect to
the taxable periods covered by such returns, reports or forms. In the case of
Income
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Taxes, for any taxable period of the Company that includes (but does not end on)
the Closing Date, Seller shall prepare and timely file with the appropriate
authorities (or provide to Buyer for signature and filing) all Tax returns,
reports and forms required to be filed and shall timely pay (or remit to Buyer
for payment) the amount of all Taxes due with respect to such returns, reports
and forms; provided that Buyer shall reimburse Seller (in accordance with the
procedures set forth in Section 11(a)) for any amount owed by Buyer pursuant to
Section 11(a) with respect to the taxable period covered by such returns,
reports or forms. For any taxable period of the Company that ends on or before
the Closing Date, Seller shall prepare and timely file with the appropriate
authorities all Tax returns, reports and forms required to be filed, and shall
timely pay all Taxes due with respect to such returns, reports and forms. Buyer
and Seller agree to cause the Company to file all Tax returns, reports and forms
for the period including the Closing Date on the basis that the relevant taxable
period ended as of the close of business on the Closing Date, unless the
relevant taxing authority will not accept a return, report or form filed on that
basis. With respect to Tax filings to be made by Seller pursuant to the terms
hereof, Buyer shall cause the Company to prepare and provide to Seller packages
of tax information materials, including, but not limited to, federal and state
income tax information (the "Tax Packages"), which shall be completed in
accordance with past practice unless other instructions shall have been provided
by Seller, together with relevant work papers, for purposes of preparing all Tax
returns, reports and forms for the relevant period, together with all other
relevant materials and information reasonably requested by Seller for these
purposes. Buyer shall cause the Tax Packages and related work papers for such
taxable period of the Company to be delivered to Seller no later than 45 days
prior to the due date for filing any such return, report or form.
(c) Seller, the Company and Buyer shall reasonably cooperate,
and shall cause their respective affiliates, officers, employees, agents,
auditors and representatives reasonably to cooperate, in preparing and filing
all returns, reports and forms relating to Taxes, including maintaining and
making available to each other all records necessary in connection with Taxes
and in resolving all disputes and audits with respect to all taxable periods
relating to Taxes. Buyer and Seller recognize that Seller and its affiliates
will need access, from time to time, after the Closing Date, to certain
accounting and Tax records and information held by the Company to the extent
such records and information pertain to events occurring on or prior to the
Closing Date; therefore, Buyer agrees, and
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agrees to cause the Company, (i) to properly retain and maintain all potentially
relevant records until such time as Seller agrees in writing that such retention
and maintenance is no longer necessary, and (ii) to allow Seller and its agents
and representatives (and agents or representatives of any of its affiliates), at
times and dates mutually acceptable to the parties, to inspect, review and make
copies of such records as Seller may deem necessary or appropriate from time to
time, such activities to be conducted during normal business hours and at
Seller's expense.
(d) Any refunds or credits of Taxes of the Company for any
taxable period ending on or before the Closing Date, other than any amount
reflected in the calculation of Closing Net Working Capital, shall be for the
account of Seller, shall be treated as in the nature of an Excluded Asset and
shall be remitted to Seller as set forth herein. Any refunds or credits of Taxes
of the Company for any taxable period beginning after the Closing Date shall be
for the account of the Buyer. Any refunds or credits of Taxes of the Company for
any Straddle Period shall be equitably apportioned between Seller and Buyer.
Buyer shall, if Seller so requests and at Seller's expense, cause the Company to
file for and obtain any refunds or credits to which Seller is entitled under
this Section 12(d). Buyer shall permit Seller to control the prosecution of any
such refund claim and, where deemed appropriate by Seller, shall cause the
Company to authorize by appropriate powers of attorney such persons as Seller
shall designate to represent the Company with respect to such refund claim.
Buyer shall cause the Company to forward to Seller any such refund within 10
days after the refund is received (or reimburse Seller for any such credit
within 10 days after the credit is allowed or applied against other Tax
liability). Notwithstanding the foregoing, the control of the prosecution of a
claim for refund of Taxes paid pursuant to a deficiency assessed subsequent to
the Closing Date as a result of an audit shall be governed by the provisions of
Section 11(i).
(e) Seller shall be responsible for filing any amended
consolidated, combined or unitary Tax returns for taxable years ending on or
prior to the Closing Date which are required as a result of examination
adjustments made by the Internal Revenue Service or by the applicable state,
local or foreign taxing authorities for such taxable years as finally
determined. For those jurisdictions in which separate Tax returns are filed by
the Company, any required amended returns resulting from such examination
adjustments, as finally determined, shall be prepared by Seller and
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furnished to the Company for approval (which approval shall not be unreasonably
withheld), signature and filing at least 30 days prior to the due date for
filing such returns. Unless Buyer shall have first secured Seller's consent in
writing, Buyer shall not (i) file any amended Tax return related to the Company
with respect to any Pre-Closing Tax Period or any taxable period that begins
before and ends after the Closing Date, or (ii) carryback any loss or other Tax
attribute to a Pre-Closing Tax Period.
(f) All transfer, documentary, sales, use, registration and
other such Taxes (including all applicable real estate transfer or gains Taxes)
and related fees (including any penalties, interest and additions to Tax)
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by Buyer (except with respect to the Excluded Assets which
will be paid by Seller) and Seller and Buyer shall cooperate in timely making
all filings, returns, reports and forms as may be required to comply with the
provisions of such Tax laws.
(g) At the Closing, Seller shall deliver to Buyer, pursuant to
Section 1445(b)(2) of the Code and Treasury Regulation Section 1.1445-2(b)(2) a
duty executed certification of non-foreign status.
(h) Seller shall cause the provisions of any Tax sharing
agreement between Seller and any of its affiliates (other than the Company), on
the one hand, and the Company, on the other hand, to be terminated on or before
the Closing Date.
SECTION 13. Assignment. This Agreement and the rights and
obligations hereunder shall not be assignable or transferable by Buyer or Seller
(including by operation of law in connection with a merger, or sale of
substantially all the assets, of Buyer or Seller) without the prior written
consent of the other party hereto; provided, however, that Buyer may assign its
right to purchase the Shares hereunder to a subsidiary or an affiliate of Buyer
without the prior written consent of Seller and after the Closing, Buyer may
assign its rights under Section 11 to any entity that acquires all or a part of
the Business following written notice of such assignment to Seller; provided
further, however, that no assignment shall limit or affect the assignor's
obligations hereunder. Any attempted assignment in violation of this Section 13
shall be void.
SECTION 14. No Third-Party Beneficiaries. Except as provided
in Section 11, this Agreement is for the sole benefit of the parties hereto and
their permitted assigns
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and nothing herein expressed or implied shall give or be construed to give to
any person, other than the parties hereto and such assigns, any legal or
equitable rights hereunder.
SECTION 15. Termination. (a) Anything contained herein to the
contrary notwithstanding, this Agreement may be terminated and the transactions
contemplated hereby abandoned at any time prior to the Closing Date:
(i) by mutual written consent of Seller and Buyer;
(ii) by Seller if any of the conditions set forth in Section
3(b) shall have become incapable of fulfillment, and shall not have
been waived by Seller;
(iii) by Seller at any time after 10 business days following
Buyer's receipt of all completed Schedules or other written disclosure
materials to be prepared by Seller and delivered to Buyer as
contemplated by Section 5(m) (but not in any event earlier than October
10, 1998), unless Buyer shall have previously confirmed that it will
not exercise its right to terminate this Agreement pursuant to clause
(ix) below;
(iv) by Seller at any time after October 10, 1998, unless the
condition set forth in Section 3(a)(xii) shall have been previously
satisfied or waived by Buyer.
(v) by Buyer if any of the conditions set forth in Section
3(a) shall have become incapable of fulfillment, and shall not have
been waived by Buyer;
(vi) by Buyer upon notice of commencement of any material
condemnation proceeding by any Governmental Entity in respect of any
Company Property;
(vii) by Buyer if Seller delivers a Phase II Opposition
Notice;
(viii) by Buyer if the Cost of Remediation as finally
determined on the basis of the environmental audit to be conducted in
accordance with Section 8(a) (including any Phase II investigation
conducted in accordance with Section 8(a)) exceeds $27,000,000;
(ix) by Buyer if Buyer discovers during the course of its due
diligence investigation (including its review of any Schedules or any
supplemental disclosure
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materials delivered pursuant to Section 5(f)) of the Company any facts
or circumstances relating to the business, assets, condition (financial
or otherwise), results of operations or prospects of the Company,
which, in Buyer's sole judgment, adversely impact the value of the
Shares to Buyer (whether or not such facts or circumstances would be
indemnified by Seller under Section 11); or
(x) by either party if the Closing does not occur on or prior
to January 31, 1998;
provided, however, that the party seeking termination pursuant to clause (ii),
(iii), (iv), (v), (vi) or (x) is not in breach in any material respect of any of
its material representations, warranties, covenants or agreements contained in
this Agreement.
(b) In the event of termination by Seller or Buyer pursuant to
this Section 15, written notice thereof shall forthwith be given to the other
party and the transactions contemplated by this Agreement shall be terminated,
without further action by either party. If the transactions contemplated by this
Agreement are terminated as provided herein:
(i) Buyer shall return all documents and other material
received from Seller or the Company relating to the transactions
contemplated hereby, whether so obtained before or after the execution
hereof, to Seller; and
(ii) all confidential information received by Buyer with
respect to the business of the Company shall be treated in accordance
with the Confidentiality Agreement, which shall remain in full force
and effect notwithstanding the termination of this Agreement.
(c) If this Agreement is terminated and the transactions
contemplated hereby are abandoned as described in this Section 15, this
Agreement shall become null and void and of no further force or effect, except
for the provisions of (i) Section 7(a) relating to the obligation of Buyer to
keep confidential certain information and data obtained by it, (ii) Section 17
relating to certain expenses, (iii) Section 18 relating to attorney fees and
expenses, (iv) Section 8(c) relating to publicity and (v) this Section 15.
Nothing in this Section 15 shall be deemed to release either party from any
liability for any breach by such party of the terms and provisions of this
Agreement or to impair the right of either party to compel
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specific performance by the other party of its obligations under this Agreement.
SECTION 16. Survival of Representations. The representations
and warranties of Seller set forth in Sections 4(c), 4(d) and 4(e) shall not
terminate. The representations and warranties of Seller set forth in Sections
4(i) and 4(j) shall terminate at the close of business five years following the
Closing Date. All other representations and warranties in this Agreement and in
any certificate delivered pursuant hereto (in each case other than the
representations and warranties relating to Taxes and environmental matters)
shall survive the Closing and shall terminate at the close of business 24 months
following the Closing Date, except that because specific indemnification rights
and obligations are set forth in Sections 11(a) and 11(b), respectively,
representations and warranties relating to Taxes and environmental matters shall
not survive the Closing.
SECTION 17. Expenses. Whether or not the transactions
contemplated hereby are consummated, and except as otherwise specifically
provided in this Agreement, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such costs or expenses.
SECTION 18. Attorney Fees. A party in breach of this Agreement
shall, on demand, indemnify and hold harmless the other party for and against
all reasonable out-of-pocket expenses, including legal fees, incurred by such
other party by reason of the enforcement and protection of its rights under this
Agreement. The payment of such expenses is in addition to any other relief to
which such other party may be entitled.
SECTION 19. Amendments. No amendment, modification or waiver
in respect of this Agreement shall be effective unless it shall be in writing
and signed by both parties hereto.
SECTION 20. Notices. All notices or other communications
required or permitted to be given hereunder shall be in writing and shall be
delivered by hand or sent by prepaid telex, cable or telecopy or sent, postage
prepaid, by registered, certified or express mail or reputable overnight courier
service and shall be deemed given when so delivered by hand, telexed, cabled or
telecopied, or if mailed, three days after mailing (one
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business day in the case of express mail or overnight courier service), as
follows:
(i) if to Buyer,
TransMontaigne Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Senior Vice President, General
Counsel and Corporate Secretary
with copies to:
TransMontaigne Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: W.A. ▇▇▇▇▇▇
Executive Vice President
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.; and
(ii) if to Seller,
▇▇▇▇▇ ▇▇▇▇▇▇▇ Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
President
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with copies to:
▇▇▇▇▇ ▇▇▇▇▇▇▇ Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
General Counsel; and
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
SECTION 21. Interpretation; Exhibits and Schedules; Certain
Definitions. (a) The headings contained in this Agreement, in any Exhibit or
Schedule hereto and in the table of contents to this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. All Exhibits and Schedules annexed hereto or referred to herein
are hereby incorporated in and made a part of this Agreement as if set forth in
full herein. Any capitalized terms used in any Schedule or Exhibit but not
otherwise defined therein, shall have the meaning as defined in this Agreement.
(b) For all purposes hereof:
(i) "including" means including, without limitation; and
(ii) "person" means any individual, firm, corporation,
partnership, limited liability company, trust, joint venture,
Governmental Entity or other entity.
SECTION 22. Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more such counterparts have
been signed by each of the parties and delivered to the other party.
SECTION 23. Entire Agreement. This Agreement and the
Confidentiality Agreement contain the entire agreement
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and understanding between the parties hereto with respect to the subject matter
hereof and supersede all prior agreements and understandings relating to such
subject matter (including the Memorandum of Understanding dated August 13, 1998
between Buyer and ▇▇▇▇▇ ▇▇▇▇▇▇▇ Holding Company, Inc.). Neither party shall be
liable or bound to any other party in any manner by any representations,
warranties or covenants relating to such subject matter except as specifically
set forth herein or in the Confidentiality Agreement.
SECTION 24. Severability. If any provision of this Agreement
(or any portion thereof) or the application of any such provision (or any
portion thereof) to any person or circumstance shall be held invalid, illegal or
unenforceable in any respect by a court of competent jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
hereof (or the remaining portion thereof) or the application of such provision
to any other persons or circumstances.
SECTION 25. Consent to Jurisdiction. Each of Buyer and Seller
irrevocably submits to the jurisdiction of (a) the Supreme Court of the State of
New York, New York County, and (b) the United States District Court for the
Southern District of New York, for the purposes of any suit, action or other
proceeding arising out of this Agreement or any transaction contemplated hereby.
Each of Buyer and Seller further agrees that service of any process, summons,
notice or document by U.S. registered mail to such party's respective address
set forth above shall be effective service of process for any action, suit or
proceeding in New York with respect to any matters to which it has submitted to
jurisdiction in this Section 26. Each of Buyer and Seller irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby in (i) the Supreme Court of the State of New York, New York County, or
(ii) the United States District Court for the Southern District of New York, and
hereby further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such action, suit or proceeding brought in any
such court has been brought in an inconvenient forum.
SECTION 26. Governing Law. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of New York
applicable to agreements made
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and to be performed entirely within such State, without regard to the conflicts
of law principles of such State.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the date first written above.
▇▇▇▇▇ ▇▇▇▇▇▇▇ CORPORATION,
by
/s/▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
TRANSMONTAIGNE INC.,
by
/s/W.A. ▇▇▇▇▇▇
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Name: W.A. ▇▇▇▇▇▇
Title: Executive Vice President
84
Schedule 3(a)-I
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85
Schedule 5(h)
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