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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
TransMontaigne Inc.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock
- --------------------------------------------------------------------------------
(Title of Class of Securities)
89393410
- --------------------------------------------------------------------------------
(CUSIP Number)
Andrew J. Connelly, Esq., General Counsel, Louis Dreyfus Corporation
10 Westport Road, P.O. Box 810, Wilton, CT 06897-0810, (203) 761-8444
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
October 30, 1998
------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box . / /
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
1
<PAGE> 2
SCHEDULE 13D
- ---------------------------
CUSIP NO. 89393410
- ---------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
S.A. Louis Dreyfus et Cie.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
Not Applicable
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO/AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
France
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY None
OWNED BY
EACH
REPORTING
PERSON
WITH
- --------------------------------------------------------------------------------
8 SHARED VOTING POWER
4,351,080 shares
- --------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
None
- --------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
4,351,080 shares
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,351,080 shares
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
Not Applicable / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.29%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
2
<PAGE> 3
SCHEDULE 13D
- ---------------------------
CUSIP NO. 89393410
- ---------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Louis Dreyfus Holding Company Inc.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
Not Applicable
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO/AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY None
OWNED BY
EACH
REPORTING
PERSON
WITH
- --------------------------------------------------------------------------------
8 SHARED VOTING POWER
4,351,080 shares
- --------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
None
- --------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
4,351,080 shares
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,351,080 shares
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
Not Applicable / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.29%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
3
<PAGE> 4
SCHEDULE 13D
- ---------------------------
CUSIP NO. 89393410
- ---------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Louis Dreyfus Corporation
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
Not Applicable
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY None
OWNED BY
EACH
REPORTING
PERSON
WITH
- --------------------------------------------------------------------------------
8 SHARED VOTING POWER
4,351,080 shares
- --------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
None
- --------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
4,351,080 shares
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,351,080 shares
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
Not Applicable / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.29%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
4
<PAGE> 5
ITEM 1. SECURITY AND ISSUER
This statement relates to the Common Stock, par value $.01 per share
(the "Common Stock"), of TransMontaigne Inc., a Delaware corporation (the
"Issuer"), which has its principal executive offices at 370 Seventeenth Street,
Suite 2750, Denver, Colorado 80202.
ITEM 2. IDENTITY AND BACKGROUND
This Statement is filed by S.A. Louis Dreyfus et Cie., a corporation
organized under the laws of France ("SALD"), Louis Dreyfus Holding Company Inc.,
a Delaware corporation ("LDHC"), and Louis Dreyfus Corporation, a New York
corporation ("LDC"). (SALD, LDHC and LDC, collectively, are sometimes referred
to herein as the "Louis Dreyfus Group").
SALD is a privately-held corporation engaged in various businesses,
including international merchandising and exporting of various commodities,
ownership and management of ocean vessels, real estate ownership, development
and management, manufacturing, and natural gas and petroleum product marketing.
SALD's principal business and office address is 87 Avenue de la Grande Armee,
75782 Paris, France.
LDHC is a wholly-owned subsidiary of SALD and is itself a holding
company of subsidiaries which engage principally in commodities trading and
merchandising and real estate activities. The principal business and office
address of LDHC is 10 Westport Road, Wilton, Connecticut 06897-0810.
LDC is a wholly-owned subsidiary of LDHC and is a company which
holds interests in various other corporations which engage principally in
commodities trading and merchandising activities. The principal business and
office address of LDC is 10 Westport Road, Wilton, Connecticut 06897-0810.
Information with respect to the executive officers and directors of
SALD, LDHC and LDC, including (a) name, (b) business address, (c) present
principal occupation or employment and the name, principal business and address
of any corporation or other organization in which such employment is conducted
and (d) citizenship, is listed on the Schedules attached hereto as Annexes A, B
and C, respectively, which are incorporated herein by reference.
None of SALD, LDHC and LDC, nor, to the best of their knowledge, any
executive officer or director of any of them, has during the last five years
been convicted in any criminal proceeding (excluding traffic violations or
similar misdemeanors) or been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and, as a result of such
proceeding, was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
5
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ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The Issuer and LDC entered into a Stock Purchase Agreement, dated as
of September 13, 1998 (the "Stock Purchase Agreement"), pursuant to which the
Issuer purchased from LDC all the issued and outstanding shares of common stock,
par value $1.00 per share (the "LDEC Shares"), of Louis Dreyfus Energy Corp., a
Delaware corporation and wholly-owned subsidiary of LDC ("LDEC"), and LDEC
became a wholly-owned subsidiary of the Issuer (the "Sale"). In consideration
for the Sale, LDC was entitled to receive 4,500,000 shares of the Common Stock,
$100,565,000 in cash and an amount equal to the Closing Net Working Capital (as
defined in the Stock Purchase Agreement). LDHC, as designee of LDC under the
Stock Purchase Agreement, acquired all 4,500,000 such shares of the Common
Stock, of which 148,920 shares were immediately transferred as described in Item
6 below (the "Transfer").
As a result of the Sale, and subsequent to the Transfer, LDC is the
direct beneficial owner of 4,351,080 shares of the Common Stock; LDHC owns such
4,351,080 shares of the Common Stock indirectly through LDC and also as a
registered owner thereof as nominee of LDC; and SALD owns such 4,351,080 shares
of the Common Stock indirectly through LDHC and LDC.
ITEM 4. PURPOSE OF TRANSACTION
LDC and LDHC acquired an aggregate 4,500,000 shares of the Common
Stock as partial consideration of LDC's sale of the LDEC Shares to the Issuer.
Pursuant to the Stock Purchase Agreement, Simon B. Rich, the Vice Chairman and
President of LDHC, has been appointed to the board of directors of the Issuer
(the "Board of Directors"). For so long as LDC and its affiliates maintain an
equity ownership interest in the Issuer equal to or greater than 10% of the
outstanding shares of the Common Stock, the Issuer shall use its reasonable best
efforts to nominate Simon B. Rich (or a substitute person designated by LDC who
is reasonably acceptable to the Board of Directors) to the Board of Directors.
The Louis Dreyfus Group does not maintain the ability to control the outcome of
matters upon which the Board of Directors or shareholders of the Issuer vote.
LDC has agreed to certain restrictions upon its ability to acquire
and dispose of its shares of the Common Stock, as described in Item 6 below.
Subject to such restrictions and depending upon market conditions, financial
considerations and other factors, the Louis Dreyfus Group may purchase or sell
additional shares of the Common Stock, if appropriate opportunities to do so are
available, at such times as the Louis Dreyfus Group considers advisable.
Subject to the foregoing and to the Transfer, none of SALD, LDHC or
LDC has any present plans or proposals which relate to or would result in:
(a) The acquisition by any person of additional securities of the
Issuer, or the disposition of securities of the Issuer;
(b) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of its subsidiaries;
6
<PAGE> 7
(c) A sale or transfer of a material amount of assets of the Issuer
or any of its subsidiaries;
(d) Any change in the present board of directors or management of
the Issuer, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board;
(e) Any material change in the present capitalization or dividend
policy of the Issuer;
(f) Any other material change in the Issuer's business or corporate
structure;
(g) Changes in the Issuer's charter, bylaws or instruments
corresponding thereto or other actions which may impede the acquisition of
control of the Issuer by any person;
(h) Causing a class of securities of the Issuer to be delisted from
a national securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association;
(i) A class of equity securities of the Issuer becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934; or
(j) Any action similar to any of those enumerated above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) As of the date hereof and subject to the arrangements described
in Item 6 below, LDC is the direct beneficial owner of 4,351,080 shares of the
Common Stock, representing approximately 14.29% of the issued and outstanding
shares of the Common Stock. LDHC is the indirect beneficial owner (as well as
registered owner as nominee of LDC) of such 4,351,080 shares, representing
approximately 14.29% of the issued and outstanding shares of the Common Stock.
SALD is the indirect beneficial owner of the 4,351,080 shares of the Common
Stock beneficially owned by LDHC, representing approximately 14.29% of the
issued and outstanding shares of the Common Stock.
To the best knowledge of SALD, LDHC and LDC, none of their
respective executive officers or directors (i) beneficially owns any Common
Stock (other than in his or her capacity as an executive officer or director of
such corporations) or (ii) has the right to acquire any Common Stock.
(b) SALD, LDHC and LDC share the power to vote or to direct the vote
and the power to dispose or to direct the disposition of the 4,351,080 shares of
the Common Stock which they beneficially own.
To the best knowledge of SALD, LDHC and LDC, none of their
respective executive officers or directors has the power to vote or to direct
the vote or to dispose or to direct the disposition of any shares of the Common
Stock beneficially owned by such corporations (other than in his or her capacity
as an executive officer or director of such corporations).
7
<PAGE> 8
(c) Other than the acquisition of the 4,500,000 shares of the Common
Stock and the Transfer pursuant to the Stock Purchase Agreement, the Louis
Dreyfus Group has not effected any transactions in the Common Stock in the past
60 days.
To the best knowledge of SALD, LDHC and LDC, none of their
respective executive officers or directors has effected any transactions in
shares of the Common Stock during the past 60 days.
(d) Subject to the arrangements described in Item 6 below, to the
best knowledge of SALD, LDHC and LDC, no other person has the right to receive
or the power to direct the receipt of dividends from, or the proceeds from the
sale of, the shares of the Common Stock beneficially owned by such corporations.
(e) Not Applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS
OR RELATIONSHIPS WITH RESPECT TO SECURITIES
OF THE ISSUER
Except as described below, there are no contracts, arrangements,
understandings or relationships (legal or otherwise) among any of SALD, LDHC and
LDC or, to the best of their knowledge, any executive officer or director of any
of them and any other person with respect to any securities of the Issuer,
including any contract, arrangement, understanding or relationship concerning
the transfer or the voting of any securities of the Issuer, finder's fees, joint
ventures, loan or option arrangements, puts or calls, guarantees of profits,
division of profits or loss, or the giving or withholding of proxies.
The Louis Dreyfus Group acquired beneficial ownership of 4,500,000
shares of the Common Stock pursuant to the Stock Purchase Agreement. The Stock
Purchase Agreement provides for Simon B. Rich's appointment as a director of the
Issuer. Under the Stock Purchase Agreement, until such time as LDC and its
affiliates no longer beneficially owns an aggregate of at least 10% of the
outstanding shares of the Common Stock, the Issuer will recommend Mr. Rich (or a
substitute person designated by LDC who is reasonably acceptable to the Board of
Directors) for election as a director of the Issuer, subject to the terms of the
Stock Purchase Agreement. The description of the Stock Purchase Agreement is
qualified by reference to the full text thereof, which is included as an exhibit
hereto and incorporated herein by reference.
Pursuant to the Registration Rights Agreement dated as of October
30, 1998 between LDC and the Issuer (the "Registration Rights Agreement"), the
Louis Dreyfus Group is entitled to certain registration rights with respect to
the shares beneficially owned by the Louis Dreyfus Group. Also pursuant to the
Registration Rights Agreement, LDC has agreed not to sell, transfer or otherwise
dispose of any portion of the shares of the Common Stock acquired in the Sale
(other than to other members of the Louis Dreyfus Group) (i) prior to December
31, 1999 or (ii) to the extent that, to LDC's knowledge, after giving effect to
such sale, transfer or other disposal, the acquiring person would hold in excess
of 5% of the voting power of all voting securities of the Issuer. Further, for a
period of five years from October 30, 1998, LDC has agreed to not purchase any
shares of the Common Stock if such purchase would result in its proportionate
equity ownership interest in the Issuer being equal to or in excess of 15%
without the Issuer's prior consent. Finally, under the Registration Rights
Agreement, LDC agreed to
8
<PAGE> 9
certain restrictions on its ability to participate in any proxy solicitation in
respect of the Issuer or any similar actions designed to influence the
management and control of the Issuer. The description of the Registration Rights
Agreement is qualified by reference to the full text of the agreement, which is
included as an exhibit hereto and incorporated herein by reference.
Pursuant to the Stock Purchase Agreement, LDHC, immediately upon
receipt, effected the Transfer to certain employees of LDEC as severance
compensation.
Pursuant to the Agreement re Share Issuance dated as of October 30,
1998 among the Issuer, LDC and LDHC, the Issuer has agreed that LDHC may
transfer record ownership of the 4,351,080 share of the Common Stock held by
LDHC to LDC. LDC intends to do so.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
1. Written Agreement of SALD, LDHC and LDC relating to the filing of
this Amendment as required by Rule 13d-1(f).
2. Stock Purchase Agreement dated as of September 13, 1998 between
the Issuer and LDC.
3. Registration Rights Agreement dated as of October 30, 1998
between the Issuer and LDC.
4. Agreement re Share Issuance dated as of October 30, 1998 among
the Issuer, LDC and LDHC.
9
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SIGNATURE
After reasonable inquiry and to the best of our knowledge and
belief, we certify that the information set forth in this statement is true,
correct and complete.
S.A. Louis Dreyfus et Cie.
November 6, 1998 By: /s/ Gerard Louis-Dreyfus
-------------------------------
Gerard Louis-Dreyfus
President
Louis Dreyfus Holding Company Inc.
November 6, 1998 By: /s/ Hal Wolkin
-------------------------------
Hal Wolkin
Vice President
Louis Dreyfus Corporation
November 6, 1998 By: /s/ Peter Griffin
-------------------------------
Peter Griffin
President
10
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ANNEX A
S.A. LOUIS DREYFUS ET CIE. ("SALD")
<TABLE>
<CAPTION>
Name and Business Address
(all business addresses are:
S.A. Louis Dreyfus et Cie.
87 Avenue de la Grande Armee
75782 Paris, France Present Principal Occupation or
unless otherwise indicated) Employment Citizenship
- --------------------------- ------------------------------- -----------
DIRECTORS
<S> <C> <C>
Bernard Baldensperger Directeur General of SALD France
Claude Boquin Retired France
Jean Louis-Dreyfus Vice President/ France
Directeur General of SALD
Gerard Louis-Dreyfus Chairman/President/ U.S.A.
Louis Dreyfus Corporation Directeur General of SALD
405 Lexington Avenue
New York, New York 10174
Pierre Louis-Dreyfus Vice President/ France
Directeur General of SALD
Jean-Hubert Pietra Retired France
Jean Pinchon Retired France
Philippe Poirier D'Orsay Directeur General of Groupe France
Louis Dreyfus
Ernest F. Steiner Chief Financial Officer of U.S.A.
Louis Dreyfus Holding Groupe Louis Dreyfus
Company Inc.
10 Westport Road
P.O. Box 810
Wilton, Connecticut 06897
EXECUTIVE OFFICERS
(who are not Directors)
Georges Gateff Directeur of SALD France
</TABLE>
11
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ANNEX B
LOUIS DREYFUS HOLDING COMPANY INC. ("LDHC")
<TABLE>
<CAPTION>
Name and Business Address
(all business addresses are:
Louis Dreyfus Holding
Company Inc.
10 Westport Road
P.O. Box 810
Wilton, Connecticut 06897 Present Principal Occupation or
unless otherwise indicated) Employment Citizenship
- -------------------------- ------------------------------------------ -----------
DIRECTORS
<S> <C> <C>
Daniel R. Finn, Jr. Executive Officer of LDHC U.S.A.
Gerard Louis-Dreyfus*
Simon B. Rich Vice Chairman and President of LDHC U.S.A.
Ernest F. Steiner*
EXECUTIVE OFFICERS
(who are not Directors)
- -----------------------
Robert L. Aiken Vice President of LDHC U.S.A.
Andrew J. Connelly Vice President and General Counsel of LDHC U.S.A.
Jerome F. Dubrowski Treasurer of LDHC U.S.A.
Jeffrey R. Gilman Vice President of LDHC U.S.A.
Deborah J. Neff Vice President and Associate Counsel of U.S.A.
LDHC
Hal Wolkin Vice President of LDHC U.S.A.
</TABLE>
- -----------------
* Individual's business address, present principal occupation and
citizenship are set forth in Annex A (SALD).
12
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ANNEX C
LOUIS DREYFUS CORPORATION ("LDC")
<TABLE>
<CAPTION>
Name and Business Address
(all business addresses are:
Louis Dreyfus Corporation
10 Westport Road
P.O. Box 810
Wilton, Connecticut 06897 Present Principal Occupation or
unless otherwise indicated) Employment Citizenship
- -------------------------- ------------------------------- -----------
DIRECTORS
<S> <C> <C>
Robert L. Aiken**
Daniel R. Finn, Jr.**
Jeffrey R. Gilman**
Peter B. Griffin President of LDC U.S.A.
Gerard Louis-Dreyfus*
Joseph Nicosia Executive Vice President of LDC U.S.A.
Bruce Ritter Executive Vice President of LDC U.S.A.
EXECUTIVE OFFICERS
(who are not Directors)
- ----------------------
Jerome F. Dubrowski**
William C. Kreussling Vice President of LDC U.S.A.
Ernest F. Steiner*
Clifford L. Wald Vice President of LDC U.S.A.
Hal Wolkin**
</TABLE>
- -------------
* Individual's business address, present principal occupation and
citizenship are set forth in Annex A (SALD).
** Individual's business address, present principal occupation and
citizenship are set forth in Annex B (LDHC).
13
<PAGE> 14
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Document Page
--- -------- ----
<S> <C> <C>
1 Written Agreement of SALD, LDHC and LDC relating to the filing of 15
this Agreement as required by Rule 13d-1(f).
2 Stock Purchase Agreement dated as of September 13, 1998 between the 16
Issuer and LDC.
3 Registration Rights Agreement dated as of October 30, 1998 between
the Issuer and LDC. 100
4 Agreement re Share Issuance dated as of October 30, 1998 among the
Issuer, LDC and LDHC. 125
</TABLE>
14
<PAGE> 1
Exhibit 1
---------
The undersigned agree that the foregoing Statement on Schedule 13D,
dated November 6, 1998, is being filed with the Securities and Exchange
Commission on behalf of each of S.A. Louis Dreyfus et Cie., a corporation
organized under the laws of France, Louis Dreyfus Holding Company Inc., a
Delaware corporation, and Louis Dreyfus Corporation, a New York corporation.
S.A. Louis Dreyfus et Cie.
November 6, 1998 By: /s/ GERARD LOUIS-DREYFUS
------------------------
Gerard Louis-Dreyfus
President
Louis Dreyfus Holding Company Inc.
November 6, 1998 By: /s/ ERNEST F. STEINER
------------------------
Ernest F. Steiner
Executive Vice President
Louis Dreyfus Corporation
November 6, 1998 By: /s/ PETER GRIFFIN
-----------------
Peter Griffin
President
<PAGE> 1
Exhibit 2
---------
===============================================================================
STOCK PURCHASE AGREEMENT
Between
LOUIS DREYFUS CORPORATION
and
TRANSMONTAIGNE INC.
Dated as of September 13, 1998
===============================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
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
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
(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
</TABLE>
ii
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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
</TABLE>
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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
</TABLE>
iv
<PAGE> 6
STOCK PURCHASE AGREEMENT dated as of September 13, 1998,
between Louis Dreyfus 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 Louis Dreyfus 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
<PAGE> 7
2
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 & Moore, Worldwide Plaza, 825 Eighth Avenue, New
York, New York, at 10:00 a.m. (local time) on
<PAGE> 8
3
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
<PAGE> 9
4
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
<PAGE> 10
5
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
<PAGE> 11
6
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
<PAGE> 12
7
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 Dewey Ballantine LLP, counsel to Seller, and Andrew J. Connelly,
Esq., General Counsel of Seller.
<PAGE> 13
8
(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 Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR
<PAGE> 14
9
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.
<PAGE> 15
10
(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 Robertson
Stephens 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"),
<PAGE> 16
11
(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. Louis
Dreyfus 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
<PAGE> 17
12
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 & Moore, counsel to Buyer, and Erik B. Carlson,
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.
<PAGE> 18
13
(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
<PAGE> 19
14
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
<PAGE> 20
15
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
<PAGE> 21
16
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
<PAGE> 22
17
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
<PAGE> 23
18
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
<PAGE> 24
19
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
<PAGE> 25
20
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,
<PAGE> 26
21
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
<PAGE> 27
22
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.
<PAGE> 28
23
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
<PAGE> 29
24
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.
<PAGE> 30
25
(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
<PAGE> 31
26
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
<PAGE> 32
27
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
<PAGE> 33
28
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
<PAGE> 34
29
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.
<PAGE> 35
30
(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 mark 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
<PAGE> 36
31
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
<PAGE> 37
32
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
<PAGE> 38
33
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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34
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;
<PAGE> 40
35
(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,
<PAGE> 41
36
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
<PAGE> 42
37
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
<PAGE> 43
38
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 Louis Dreyfus 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
<PAGE> 44
39
(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
<PAGE> 45
40
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
<PAGE> 46
41
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
<PAGE> 47
42
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
<PAGE> 48
43
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.
<PAGE> 49
44
(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 Simon Rich 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 Simon Rich (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
<PAGE> 50
45
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 mark or indication associated with Seller or any of its affiliates (or any
mark 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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46
(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,
<PAGE> 52
47
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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48
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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51
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.
<PAGE> 59
54
(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.
<PAGE> 60
55
(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
<PAGE> 61
56
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
<PAGE> 62
57
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
<PAGE> 63
58
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:
<PAGE> 64
59
<TABLE>
<CAPTION>
Percentage Share
Percentage Share of Environmental
Class of of Environmental Losses of Buyer
Environmental Losses Losses of Seller or Company
- -------------------- ---------------- ------------
<S> <C> <C>
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.
</TABLE>
(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,
<PAGE> 65
60
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
<PAGE> 66
61
(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
<PAGE> 67
62
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
<PAGE> 68
63
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
<PAGE> 69
64
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
<PAGE> 70
65
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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66
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 sue 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
<PAGE> 72
67
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
<PAGE> 73
68
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
<PAGE> 74
69
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
<PAGE> 75
70
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
<PAGE> 76
71
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
<PAGE> 77
72
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
<PAGE> 78
73
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
<PAGE> 79
74
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
<PAGE> 80
75
business day in the case of express mail or overnight courier service), as
follows:
(i) if to Buyer,
TransMontaigne Inc.
370 Seventeenth Street
Suite 2750
Denver, Colorado 80202
Phone: (303) 626-8200
Fax: (303) 626-8228
Attention: Erik B. Carlson, Esq.
Senior Vice President, General
Counsel and Corporate Secretary
with copies to:
TransMontaigne Inc.
280 North College Avenue
Suite 500
Fayettesville, Arkansas
Phone: (501) 521-5565
Fax: (501) 442-4650
Attention: W.A. Sikora
Executive Vice President
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Attention: Philip A. Gelston, Esq.; and
(ii) if to Seller,
Louis Dreyfus Corporation
Ten Westport Road
P.O. Box 810
Wilton, Connecticut 06897
Phone: (203) 761-8369
Fax: (203) 761-8085
Attention: Peter Griffin
President
<PAGE> 81
76
with copies to:
Louis Dreyfus Corporation
Ten Westport Road
P.O. Box 810
Wilton, Connecticut 06897
Phone: (203) 761-8317
Fax: (302) 761-8321
Attention: Andrew J. Connelly, Esq.
General Counsel; and
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019
Attention: Stanton J. Lovenworth, 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
<PAGE> 82
77
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 Louis Dreyfus 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
<PAGE> 83
78
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.
LOUIS DREYFUS CORPORATION,
by
/s/Peter Griffin
--------------------------------------
Name: Peter Griffin
Title: President
TRANSMONTAIGNE INC.,
by
/s/W.A. Sikora
--------------------------------------
Name: W.A. Sikora
Title: Executive Vice President
<PAGE> 84
Schedule 3(a)-I
David Cady
Chee Ooi
<PAGE> 85
Schedule 5(h)
David Cady
J. Alexander
Chee Ooi
Bob Young
Rick Eaton
Greg Pound
<PAGE> 1
Exhibit 3
---------
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT dated as of October 30,
1998, between TransMontaigne Inc., a Delaware corporation
(the "Company"), and Louis Dreyfus Corporation, a New York
corporation ("LDC").
WHEREAS, the Company and LDC have entered into a Stock
Purchase Agreement dated as of September 13, 1998 (the "Stock Purchase
Agreement"), pursuant to which the Company has agreed to purchase from LDC, and
LDC has agreed to sell to the Company, all of the issued and outstanding shares
of common stock, par value $1.00 per share, of Louis Dreyfus Energy Corp.
("LDEC"), a Delaware corporation and a wholly owned subsidiary of LDC (the
"Stock Purchase");
WHEREAS, a portion of the purchase price payable by the
Company to LDC in connection with the Stock Purchase consists of shares (the
"LDC Shares") of common stock, par value $.01 per share, of the Company (the
"Common Stock");
WHEREAS, pursuant to the Stock Purchase Agreement, the Company
has agreed to enter into this Agreement to, among other things, grant LDC (and
any Permitted Affiliate of LDC (as defined below) to whom LDC transfers any
portion of the LDC Shares) registration rights in respect of the LDC Shares
substantially comparable to the rights set forth in the Registration Rights
Agreement dated as of April 17, 1996 (the "Institutional Investor Registration
Rights Agreement") by and among the Company and the Institutional Investors
identified therein (the "Institutional Investors").
NOW, THEREFORE, in consideration of the aforesaid and the
mutual promises hereinafter made, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.1. Definitions. The following terms, as used herein, shall
have the following meanings:
"Advice" has the meaning set forth in Section 2.3.
"Affiliate" means, with respect to any specified person, any
other person directly or indirectly controlling, controlled by or under direct
or indirect common control with such specified person. For the purposes of this
definition, "control" when used with respect to any
<PAGE> 2
2
specified person means the power to direct the management and policies of such
person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Board" means the Board of Directors of the Company.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in New York, New
York, Boston, Massachusetts or Fayetteville, Arkansas are authorized or
obligated by law or executive order to close.
"Commission" means the Securities and Exchange Commission or
any other Federal agency from time to time administering the 1933 Act or the
Exchange Act.
"Common Stock" has the meaning set forth in the recitals to
this Agreement.
"Common Stock Equivalent" means any securities of any person
convertible into or exchangeable or exercisable for Common Stock (whether at the
option of such person or of the holder of such securities).
"Company" has the meaning set forth in the preamble to this
Agreement.
"Covered Employees" means those employees of LDEC who are to
receive an award of Employee Shares (as defined below).
"Demand Registration" has the meaning set forth in Section
2.2.1.
"Employee Shares" means that portion of the LDC Shares
(consisting of 148,920 shares) to be distributed to the Covered Employees
immediately following, and in connection with, the closing of the Stock
Purchase.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Institutional Investor Demand Registration" has the meaning
set forth in Section 2.2.1.
"Institutional Investor Notice" has the meaning set forth in
Section 2.2.1.
<PAGE> 3
3
"Institutional Investor Registration Rights Agreement" has the
meaning set forth in the recitals to this Agreement.
"Institutional Investors" has the meaning set forth in the
recitals to this Agreement.
"LDC" has the meaning set forth in the preamble to this
Agreement.
"LDC Demand Registration" has the meaning set forth in Section
2.2.1.
"LDC Holders" has the meaning set forth in Section
2.1.1.
"LDC Notice" has the meaning set forth in Section 2.2.1.
"LDC Shares" has the meaning set forth in the
recitals to this Agreement.
"LDEC" has the meaning set forth in the recitals to this
Agreement.
"1933 Act" means the Securities Act of 1933, as amended.
"Permitted Affiliate of LDC" means any entity that is and
continues to be at least 80% owned, directly or indirectly, by S.A. Louis
Dreyfus et Cie.
"Permitted Affiliate Section 3.1 Agreement" has the meaning
set forth in Section 3.1.
"person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
any other entity or organization, including a government, a political
subdivision or an agency or instrumentality thereof.
"Piggyback Registration" has the meaning set forth in Section
2.1.1.
"Registration" has the meaning set forth in Section 2.3.
"Registrable Securities" means any shares of Common Stock
acquired in connection with the Stock Purchase and owned by LDC or a Permitted
Affiliate of LDC and any shares of Common Stock which may be issued or
distributed in
<PAGE> 4
4
respect of such shares of Common Stock by way of concession, stock dividend or
stock split or other distribution, recapitalization or reclassification, but
with respect to such shares of Common Stock, only so long as such shares are
"Restricted Securities". A share of Common Stock shall be deemed to be a
"Restricted Security" until such time as such share (i) has been effectively
registered under the 1933 Act pursuant to a registration statement with respect
to the sale of such share and disposed of pursuant to such registration
statement, (ii) has been distributed to the public pursuant to Rule 144 (or any
similar provision then in force) under the 1933 Act, (iii) shall have been
otherwise transferred, new certificates for it not bearing a legend restricting
further transfer shall have been delivered by the Company and subsequent
disposition of it shall not require registration or qualification of it under
the 1933 Act or any state securities or blue sky law then in force or (iv) shall
have ceased to be outstanding.
"Request Notice" has the meaning set forth in Section 2.2.1.
"Share Transfer" has the meaning set forth in Section 3.1.
"Shelf Registration" has the meaning set forth in Section
2.2.1.
"Stock Purchase" has the meaning set forth in the recitals to
this Agreement.
"Stock Purchase Agreement" has the meaning set forth in the
recitals to this Agreement.
"Stop Order" has the meaning set forth in Section 2.2.3.
ARTICLE II
Registration and Related Rights
SECTION 2.1. Company Registration.
2.1.1. Right to Piggyback on Company Registration of Common
Stock. Subject to Section 2.1.3, if the Company proposes, on its own initiative,
to register any Common Stock under the 1933 Act in connection with the offering
of such Common Stock on any form other than Form S-4 or Form S-8 or any form
substituting therefor (except for a registration in connection with an exchange
offer of
<PAGE> 5
5
securities solely to existing securityholders of the Company) and such proposal
would result in the filing of a registration statement with the Commission in
connection therewith at any time on or after December 31, 1999, the Company
shall each such time promptly give LDC and each Permitted Affiliate of LDC then
owning Registrable Securities (collectively, the "LDC Holders") prior written
notice of such determination no later than 45 days prior to the proposed filing
date of the registration statement to be prepared in connection with such
proposed registration. Any LDC Holder wishing to register all or any portion of
such LDC Holder's Registrable Securities pursuant to such proposed registration
(a "Piggyback Registration") must give written notice to the Company of its
intent to participate in such proposed registration no less than 15 days after
the receipt of such notice. Subject to the pro rata allocations set forth in
Section 2.1.3, upon receipt of such written request of any such LDC Holder, the
Company will use its best efforts to effect the registration under the 1933 Act
of all Registrable Securities which the Company has been so requested to
register by the LDC Holders. Notwithstanding the fact that a Piggyback
Registration requested pursuant to this Section 2.1 involves an underwritten
public offering, any LDC Holder holding Registrable Securities that has
requested to be included in such registration may elect, in writing at least
three Business Days prior to the effective date of the registration statement
filed in connection with such registration, not to register such Registrable
Securities in connection with such registration.
2.1.2. Selection of Underwriters. If the Company in its sole
discretion decides a Piggyback Registration shall be underwritten, the Company
shall have sole discretion in the selection of any underwriter or underwriters
to manage such Piggyback Registration.
2.1.3. Priority on Piggyback Registrations. If the managing
underwriter or underwriters of a Piggyback Registration (or in the case of a
Piggyback Registration not being underwritten, holders of a majority of the
shares of Common Stock proposed to be registered by (x) the LDC Holders and (y)
the Institutional Investors pursuant to the Institutional Investor Registration
Rights Agreement) advise the Company in writing that in its or their opinion the
number of shares of Common Stock proposed to be sold in such Piggyback
Registration (including any shares proposed to be sold by Institutional
Investors pursuant to the Institutional Investor Registration Rights Agreement)
exceeds the number which can be sold, or would adversely affect the price at
which the Common Stock could be sold in such offering, the Company will include
in such registration
<PAGE> 6
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only that number of shares of Common Stock which, in the opinion of such
underwriter or underwriters (or holders of a majority of the shares of Common
Stock proposed to be registered by the LDC Holders and the Institutional
Investors, as the case may be), can be sold in such offering without so
affecting such price. The shares of Common Stock to be included in such
Piggyback Registration shall be apportioned (i) first, to any shares of Common
Stock that the Company proposes to sell, (ii) second, pro rata among any shares
of Common Stock proposed to be sold by (x) any LDC Holder or (y) any
Institutional Investor pursuant to the Institutional Investor Registration
Rights Agreement and (iii) third, pro rata among any other shares of Common
Stock proposed to be included in such Piggyback Registration, in each case
according to the total number of shares of Common Stock requested for inclusion
by the LDC Holders and the Institutional Investors, or in such other proportions
as shall mutually be agreed to among the LDC Holders and the Institutional
Investors.
SECTION 2.2. Demand Registration Rights.
2.2.1. Right to Demand. Subject to the following sentence, if,
at any time on or after December 31, 1999, any one or more of the LDC Holders
holding Registrable Securities representing ten percent (10%) or more in the
aggregate of the then outstanding Common Stock (assuming conversion or exercise
of all Common Stock Equivalents held by the LDC Holders into Registrable
Securities at the then conversion price or exercise price) submits a written
request (a "Request Notice") to the Company for registration with the Commission
under and in accordance with the provisions of the 1933 Act of all or part of
the Registrable Securities then owned by such LDC Holder or LDC Holders (an "LDC
Demand Registration"), the Company shall thereupon, as expeditiously as
possible, use its best efforts to file a registration statement with the
Commission and have the registration statement declared effective by the
Commission; provided, however, that the number of Registrable Securities as to
which such request is made shall represent not less than five percent (5%) of
the then outstanding Common Stock and Common Stock Equivalents. Notwithstanding
the foregoing, the LDC Holders shall have the right, even though they hold
Registrable Securities representing less than ten percent (10%) in the aggregate
of the then outstanding Common Stock, to initiate an LDC Demand Registration by
submitting a Request Notice to the Company at any time on or after December 31,
1999 if all of the following conditions are met: (i) the LDC Holders have not
previously submitted a Request Notice to the Company that resulted in an
effective LDC Demand Registration under the terms of this
<PAGE> 7
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Agreement, (ii) the Registrable Securities held by the LDC Holders represent
less than ten percent (10%) in the aggregate of the then outstanding Common
Stock as a result of additional issuances of Common Stock by the Company after
the date of this Agreement, (iii) the LDC Holders are not then eligible to sell
the Registrable Securities held by them pursuant to the provisions of paragraph
(k) of Rule 144 under the 1933 Act (or any successor provision) and (iv) such
Request Notice relates to the proposed sale by the LDC Holders of either (x)
Registrable Securities representing not less than five percent (5%) of the then
outstanding Common Stock and Common Stock Equivalents or (y) all of the
Registrable Securities then held by the LDC Holders. The LDC Holders acknowledge
that, within 10 days after receipt of such Request Notice, the Company will
serve written notice (the "Institutional Investor Notice") of such registration
request to all Institutional Investors who hold shares of Common Stock which
carry registration rights pursuant to the Institutional Investor Registration
Rights Agreement, and, subject to the pro rata allocations set forth in Section
2.2.4, the Company will include in such LDC Demand Registration all such shares
of Common Stock held by Institutional Investors with respect to which the
Company has received a written request for inclusion therein within 20 days
after the giving of the Institutional Investor Notice.
The Institutional Investors have rights to demand
registrations under the Institutional Investor Registration Rights Agreement
substantially comparable to those of the LDC Holders under this Agreement. The
Company agrees that, at any time on or after December 31, 1999, it shall, within
10 days after receipt of a demand registration request notice from any one or
more of the Institutional Investors pursuant to the Institutional Investor
Registration Rights Agreement (an "Institutional Investor Demand Registration",
with the terms "Institutional Investor Demand Registration" and "LDC Demand
Registration" being collectively referred to herein as a "Demand Registration"),
serve written notice (the "LDC Notice") of such registration request to all LDC
Holders holding Registrable Securities and, subject to the pro rata allocations
set forth in Section 2.2.4, the Company shall include in such Institutional
Investor Demand Registration all Registrable Securities held by LDC Holders with
respect to which the Company has received a written request for inclusion
therein within 20 days after the giving of the LDC Notice. The Company
represents that the Institutional Investors have agreed to the LDC Holders'
right to participate in Institutional Investor Demand Registrations on the terms
and conditions set forth in this Section 2.2.
<PAGE> 8
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All LDC Holders requesting registration of their Registrable
Securities pursuant to this Section 2.2.1 shall specify the aggregate number of
Registrable Securities proposed to be registered and the intended methods of
disposition thereof. The LDC Holders shall collectively be entitled to request
or participate in an Institutional Investor request for four Demand
Registrations (the last of which shall be a shelf registration pursuant to Rule
415 under the 1933 Act to be effective for not less than 180 days (the "Shelf
Registration")) pursuant to which a registration statement covering Registrable
Securities shall be filed with and declared effective by the Commission, the
expenses of which shall be borne by the Company in accordance with Section 2.4,
and no more than one LDC Demand Registration may be requested by any LDC Holder
in any 12-month period; provided, however, that if, following the effective date
of any registration statement filed pursuant to a Demand Registration, any LDC
Holder whose Registrable Securities are to be included in such Demand
Registration pursuant to this Section 2.2.1 elects, by giving written notice to
the Company not later than 90 days after such effective date, not to dispose of
its Registrable Securities because of a material adverse change in the business,
condition (financial or otherwise), assets or prospects of the Company and its
subsidiaries, taken as a whole, or because of a material adverse event with
respect to the Company and its subsidiaries, taken as a whole, not disclosed in
the final prospectus prepared in connection with such Demand Registration, then
such Demand Registration shall not count as one of the four Demand Registrations
permitted hereunder unless shares of Common Stock representing five percent (5%)
or more of the then outstanding Common Stock, including Common Stock
Equivalents, are sold pursuant to the registration statement prepared in
connection with such Demand Registration within 90 days of the effective date of
such registration statement and prior to the occurrence of such material adverse
change or event.
If at the time of any Request Notice (i) the Company is
engaged in a registered public offering as to which the LDC Holders had the
right to include their Registrable Securities, either as a Piggyback
Registration or pursuant to the LDC Holders' participation rights in respect of
an Institutional Investor Demand Registration, or which was made on Form S-4 or
any successor form, (ii) the Company is engaged in any other activity outside of
the ordinary course of business, such as a merger, consolidation,
recapitalization or acquisition which, in the good faith judgment of the Board,
would be materially and adversely affected by the requested registration or
<PAGE> 9
9
(iii) the Board makes a good faith determination that the public disclosures
required to be made in the requested registration statement would have a
material and adverse impact on the business, financial condition or prospects of
the Company, the Company may at its option direct that such request be delayed
for a period of not more than 90 days, which right to delay may be exercised by
the Company only one time in respect of each LDC Demand Registration.
The Company shall have the same rights to piggyback on an LDC
Demand Registration as an LDC Holder would have in a Piggyback Registration
permitted under Section 2.1.
2.2.2. Selection of Underwriters. If a proposed LDC Demand
Registration involves either a firm or best efforts underwritten offering, the
LDC Holder(s) giving the Request Notice with respect to such LDC Demand
Registration shall have the right, subject to approval by the Company (which
approval shall not be unreasonably withheld), to select the underwriter or
underwriters to manage such LDC Demand Registration.
2.2.3. Effective Registration Statement. A registration
requested pursuant to this Section 2.2 shall not be deemed to have been effected
unless the registration statement prepared in connection therewith has become
effective; provided, however, that if, within 75 days after such registration
statement has become effective (135 days in the case of the Shelf Registration),
the offering of Registrable Securities pursuant to such registration statement
is interfered with by any stop order, injunction or other order or requirement
of the SEC or other governmental agency or court (collectively, a "Stop Order"),
such registration shall be deemed not to have been effected. Notwithstanding the
preceding sentence, if any such Stop Order is rescinded, the effective period
shall continue upon such rescission and be extended by the number of days by
which such Stop Order reduced the effective period.
2.2.4. Priority on Demand Registrations. If the managing
underwriter or underwriters of a Demand Registration initiated under this
Agreement or the Institutional Investor Registration Rights Agreement advise the
Company in writing that in its or their opinion the number of shares of Common
Stock proposed to be sold in such Demand Registration exceeds the number which
can be sold, or would adversely affect the price at which the Common Stock could
be sold in such offering, the Company will include in such registration only
that number of shares of Common Stock which, in the opinion of such underwriter
or underwriters,
<PAGE> 10
10
can be sold in such offering without so affecting such price. The shares of
Common Stock to be included in such Demand Registration shall be apportioned (i)
first, pro rata among (x) the Registrable Securities of the LDC Holders who have
made a request to be included in such Demand Registration and (y) shares of
Common Stock held by Institutional Investors who have made a request to be
included in such Demand Registration and (ii) second, pro rata among any other
shares of Common Stock proposed to be included in such Demand Registration,
including any shares proposed to be sold by the Company pursuant to such Demand
Registration.
2.2.5. Approval of Institutional Investors. As evidenced by
the Amendment and Waiver dated as of October 30, 1998, entered into by and
between the Company and the Institutional Investors (a copy of which is attached
hereto as Annex A), the Company represents that the Institutional Investors have
approved of the Company's entering into of this Agreement and the granting to
the LDC Holders of registration rights in respect of Piggyback Registrations and
Demand Registrations on the terms and conditions set forth herein.
2.2.6. Additional Rights. If the Company at any time grants to
any other holders of Common Stock or Common Stock Equivalents any rights to
request the Company to effect the registration under the 1933 Act of any such
shares of Common Stock on terms more favorable to such holders than the terms
set forth in this Agreement, the terms of this Agreement shall be deemed amended
or supplemented to the extent necessary to provide the LDC Holders with the same
more favorable terms. The Company shall not grant any other person rights to
register securities of the Company on terms which could restrict in any way the
ability of the Company fully to perform its obligations to the LDC Holders
pursuant to this Agreement.
SECTION 2.3. Registration Procedures. It shall be a condition
precedent to the obligations of the Company and any underwriter or underwriters
to take any action pursuant to this Article II that the LDC Holders requesting
inclusion in any Piggyback Registration or Demand Registration (collectively
referred to as a "Registration") furnish to the Company such information
regarding them, the Registrable Securities held by them, the intended method of
disposition of such Registrable Securities, and such agreements regarding
indemnification, disposition of such securities and the other matters referred
to in this Article II as the Company may reasonably request and as may be
required in connection with any action to be taken by the
<PAGE> 11
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Company or any such underwriter. With respect to any Registration which includes
Registrable Securities held by a LDC Holder, the Company shall, subject to
Sections 2.1 and 2.2:
2.3.1. Prepare and file with the Commission a registration
statement on the appropriate form prescribed by the Commission within 60 days
after the end of the period within which requests for registration may be given
to the Company, file with the Commission any necessary amendments to the
registration statement with respect to such Registrable Securities and use its
best efforts to cause such registration statement to become effective; provided,
however, that at least five business days prior to filing a registration
statement or prospectus or any amendments or supplements thereto, including
documents incorporated by reference after the initial filing of the registration
statement, the Company shall furnish to the holders of the Registrable
Securities covered by such registration statement and the underwriter or
underwriters, if any, copies of or drafts of all such documents proposed to be
filed, which documents shall be subject to the reasonable review of such holders
and underwriters, if any, and the Company shall not file any registration
statement or amendment thereto or any prospectus or any supplement thereto or
any documents required to be incorporated by reference therein to which the LDC
Holders or the underwriters, if any, shall reasonably object;
2.3.2. Prepare and file with the Commission such amendments
and post-effective amendments to such registration statement and any documents
required to be incorporated by reference therein as may be necessary to keep the
registration statement effective for a period of time as necessary to complete
the offering, which period shall be not less than 90 days (or 180 days in the
case of the Shelf Registration) (or such shorter period that shall terminate
when all Registrable Securities covered by such registration statement have been
sold or withdrawn, but not prior to the expiration of the time period referred
to in Section 4(3) of the 1933 Act and Rule 174 thereunder, if applicable);
cause the prospectus to be supplemented by any required prospectus supplement,
and as so supplemented to be filed pursuant to Rule 424 under the 1933 Act (or
any successor rule); and comply with the provisions of the 1933 Act applicable
to it with respect to the disposition of all Registrable Securities covered by
such registration statement during the applicable period in accordance with the
intended methods of disposition by the sellers thereof set forth in such
registration statement or supplement to the prospectus;
<PAGE> 12
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2.3.3. Furnish to each such LDC Holder, without charge, at
least one conformed copy of the registration statement and any post-effective
amendment thereto, upon request, and such number of copies of the prospectus
(including each preliminary prospectus) and any amendments or supplements
thereto, and any exhibits or documents incorporated by reference therein as any
such LDC Holder or underwriter or underwriters, if any, may request in order to
facilitate the disposition of the securities being sold by any such LDC Holder
(it being understood that the Company consents to the use of the prospectus and
any amendment or supplement thereto by any such LDC Holder covered by the
registration statement and the underwriter or underwriters, if any, in
connection with the offering and sale of the securities covered by the
prospectus or any amendments or supplements thereto);
2.3.4. Immediately notify each such LDC Holder, at any time
when a prospectus relating thereto is required to be delivered under the 1933
Act, when the Company becomes aware of the happening of any event as a result of
which the prospectus included in such registration statement (as then in effect)
contains any untrue statement of material fact or omits to state a material fact
necessary to make the statements therein (in the case of the prospectus or any
preliminary prospectus, in light of the circumstances under which they were
made) not misleading and, as promptly as practicable thereafter, prepare and
file with the Commission and furnish a supplement or amendment to such
prospectus so that, as thereafter delivered to the LDC Holders (a reasonable
number of such amended and supplemented prospectuses having been delivered to
the LDC Holders), such prospectus will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading;
2.3.5. Use its best efforts to cause all securities included
in such registration statement to be listed, by the date of the first sale of
securities pursuant to such registration statement, on each national securities
exchange or market on which the Common Stock is then listed;
2.3.6. Make every reasonable effort to obtain the withdrawal
of any Stop Order suspending the effectiveness of the registration statement at
the earliest possible moment;
2.3.7. Subject to the time limitations specified in Section
2.3.2, if requested by the managing underwriter or underwriters or any such LDC
Holder, promptly incorporate in a prospectus supplement or post-effective
amendment such
<PAGE> 13
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information as the managing underwriter or underwriters or such LDC Holder
reasonably requests to be included therein, including, without limitation, with
respect to the number of shares being sold by such LDC Holder to such
underwriter or underwriters, the purchase price being paid therefor by such
underwriter or underwriters and with respect to any term of the underwritten
offering of the securities to be sold in such offering; and make all required
filings of such prospectus supplement or post-effective amendment as soon as
practicable after being notified of the matters to be incorporated in such
prospectus supplement or post-effective amendment;
2.3.8. As promptly as practicable after the filing with the
Commission of any document which is incorporated by reference into a
registration statement, deliver a reasonable number of copies of such document
to each such LDC Holder;
2.3.9. Prior to the date on which the registration statement
is declared effective, use its best efforts to register or qualify, and
cooperate with such LDC Holders, the underwriter or underwriters, if any, and
their counsel in connection with the registration or qualification of, the
securities covered by the registration statement for offer and sale under the
securities or blue sky laws of each state and other jurisdiction of the United
States as such LDC Holders or managing underwriter or underwriters, if any,
requests in writing, use its best efforts to keep each such registration or
qualification effective, including through new filings, or amendments or
renewals, during the period such registration statement is required to be kept
effective and do any and all other acts or things necessary or advisable to
enable the disposition in all such jurisdictions of the Registrable Securities
covered by the applicable registration statement; provided, however, that the
Company shall not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action which would
subject it to general service of process in any such jurisdiction where it is
not then so subject;
2.3.10. Enter into such customary agreements (including an
underwriting agreement in customary form) and take such other actions
customarily taken by registrants, if any, as the LDC Holders or the underwriters
may reasonably request in order to expedite or facilitate the disposition of
such Registrable Securities;
2.3.11. Obtain a "cold comfort" letter or letters
from the Company's independent public accountants in
<PAGE> 14
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customary form and covering matters of the type customarily covered by "cold
comfort" letters as the underwriters, if any, may reasonably request;
2.3.12. Make available for inspection by any LDC Holder
holding Registrable Securities covered by such registration statement, by any
underwriter participating in any disposition to be effected pursuant to such
registration statement and by any attorney, accountant or other agent retained
by any such seller or any such underwriter, all pertinent financial and other
records, pertinent corporate documents and properties of the Company, and cause
the Company's officers, directors and employees to supply all information
reasonably requested by any such LDC Holder, underwriter, attorney, accountant
or agent in connection with such registration statement;
2.3.13. Cooperate with such LDC Holders and the managing
underwriter or underwriters, if any, to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legends) representing
securities to be sold under the registration statement, and enable such
securities to be in such denominations and registered in such names as the LDC
Holders or the managing underwriter or underwriters, if any, may request; and
2.3.14. Use its best efforts to cause the securities covered
by the registration statement to be registered with or approved by such other
governmental agencies or authorities within the United States, including,
without limitation, the National Association of Securities Dealers, Inc., as may
be necessary to enable the seller or sellers thereof or the underwriter or
underwriters, if any, to consummate the disposition of such Registrable
Securities.
The LDC Holders, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 2.3.4, shall
forthwith discontinue disposition of the securities until the LDC Holders'
receipt of the copies of the supplemented or amended prospectus contemplated by
Section 2.3.4 or until they are advised in writing (the "Advice") by the Company
that the use of the prospectus may be resumed, and have received copies of any
additional or supplemental filings which are incorporated by reference in the
prospectus, and, if so directed by the Company, each LDC Holder shall, or shall
request the managing underwriter or underwriters, if any, to, deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in such LDC Holder's possession, of the prospectus covering such securities
which
<PAGE> 15
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is current at the time of receipt of such notice. In the event that the Company
gives any such notice, the time periods set forth in Section 2.3.4 shall be
extended by the number of days during the period from and including the date of
the giving of such notice to and including the date when each seller of
securities covered by such registration statement shall have received the copies
of the supplemented or amended prospectus contemplated by Section 2.3.4 or the
Advice.
SECTION 2.4. Registration Expenses. In the case of any
Registration, the Company shall bear all of the costs and expenses of such
Registration (including, without limitation, the expenses of preparing any
registration statement, Commission and state "blue sky" filings, registration
and qualification fees, the cost of providing any legal opinion or "cold
comfort" letters requested by the LDC Holders and printing costs) and legal fees
or expenses of one counsel for the LDC Holders and the Institutional Investors
mutually selected by the LDC Holders and the Institutional Investors (such
counsel being subject to the reasonable approval of the Company); provided,
however, that the Company shall not be responsible for registration or
qualification fees or underwriter's discounts or commissions that are
attributable to the Registrable Securities of an LDC Holder.
SECTION 2.5. Indemnification and Contribution.
2.5.1. Indemnification by the Company. The Company agrees to
indemnify and hold harmless each LDC Holder, its officers, directors and agents
and each person who controls (within the meaning of the 1933 Act and the
Exchange Act) such LDC Holder against all losses, claims, damages, liabilities
and expenses arising out of or based upon any untrue or alleged untrue statement
of a material fact contained in any registration statement, prospectus or
preliminary prospectus in which such LDC Holder is participating or in any
document incorporated by reference therein or any omission or alleged omission
to state therein a material fact necessary to make the statements therein (in
the case of the prospectus or any preliminary prospectus, in light of the
circumstances under which they were made) not misleading, except insofar as the
same are caused by, based upon or contained in any information with respect to
such LDC Holder furnished in writing to the Company by such LDC Holder expressly
for use therein; provided, however, that the foregoing indemnity agreement with
respect to any preliminary prospectus shall not inure to the benefit of any LDC
Holder from whom the person asserting such loss, claim, damage or liability
purchased shares of Common Stock if it
<PAGE> 16
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is determined that it was the responsibility of such LDC Holder to provide such
person with a current copy of the prospectus and such current copy of the
prospectus would have cured such loss, claim, damage or liability. The Company
shall also indemnify underwriters (as such term is defined in the 1933 Act),
their officers and directors and each person who controls such persons (within
the meaning of the 1933 Act and the Exchange Act) to the same extent as provided
above with respect to the indemnification of the LDC Holders.
2.5.2. Indemnification by LDC. In connection with any
Registration in which an LDC Holder is participating, such LDC Holder shall
furnish to the Company in writing such information and affidavits with respect
to such LDC Holder as the Company may reasonably request for use in connection
with any registration statement or prospectus and LDC agrees to indemnify and
hold harmless the Company, its directors, officers and agents and each person
who controls (within the meaning of the 1933 Act and the Exchange Act) the
Company against any losses, claims, damages, liabilities and expenses arising
out of or based upon any untrue statement of a material fact or any omission to
state a material fact necessary to make the statements in the registration
statement or prospectus or preliminary prospectus (in the case of the prospectus
or preliminary prospectus, in light of the circumstances under which they were
made) not misleading, to the extent, but only to the extent, that such untrue
statement or omission is contained in any information or affidavit with respect
to such LDC Holder furnished in writing to the Company by such LDC Holder
expressly for use therein; provided, however, that the amount recoverable by the
Company from LDC under this indemnification provision shall not exceed the
amount of net proceeds received by all LDC Holders from the sale of Registrable
Securities in connection with any such Registration; and provided further that
the indemnity agreement contained in this Section 2.5.2 shall not apply to
amounts paid in settlement of any loss, claim, damage, liability or action
arising pursuant to a Registration if such settlement is effected without the
consent of LDC (which consent shall not be unreasonably withheld). Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Company or any of the prospective sellers, or any of
their respective Affiliates, directors, officers or controlling persons and
shall survive the transfer of such securities by such seller.
2.5.3 Conduct of Indemnification Proceedings.
Any person entitled to indemnification hereunder shall
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(i) give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification and (ii) unless in such indemnified
party's reasonable judgment a conflict of interest may exist between such
indemnified and indemnifying party, permit the indemnifying party to assume the
defense of such claim, with counsel reasonably satisfactory to the indemnified
party. The failure to so notify the indemnifying party shall relieve the
indemnifying party from any liability hereunder with respect to the action to
the extent that such failure materially prejudices the indemnifying party.
Whether or not such defense is assumed by the indemnifying party, the
indemnifying party shall not be subject to any liability for any settlement made
without its consent (which consent shall not be unreasonably withheld). No
indemnifying party shall consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect of such claim or litigation. An indemnifying party who is
not entitled to, or elects not to, assume the defense of a claim shall not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim.
2.5.4. Contribution. If for any reason the indemnification
provided for in the preceding Sections 2.5.1 and 2.5.2 is unavailable to an
indemnified party as contemplated by the preceding Sections 2.5.1 and 2.5.2 for
any reason, then the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect not only the relative
benefits received by the indemnified party and the indemnifying party, but also
the relative fault of the indemnified party and the indemnifying party, as well
as any other relevant equitable considerations. Notwithstanding the foregoing,
if the indemnifying party is LDC, any contribution pursuant to this Section
2.5.4 shall be limited to the amount of net proceeds received by all LDC Holders
from the sale of Registrable Securities in connection with the applicable
Registration.
2.5.5. Other Indemnification. Indemnification similar to that
set forth in the preceding subdivisions of this Section 2.5 (with appropriate
modifications) shall be given by the Company and LDC with respect to any
required registration or other qualification of securities under any Federal or
state law or regulation or governmental authority other than the 1933 Act.
<PAGE> 18
18
SECTION 2.6. Exchange Act Reports. The Company agrees that it
will use its best efforts to file in a timely manner all reports required to be
filed by it pursuant to the Exchange Act to the extent the Company is required
to file such reports. Upon request of an LDC Holder, the Company will furnish
the requesting LDC Holder with such information as may be necessary to enable
such LDC Holder to effect sales pursuant to Rule 144A. Notwithstanding the
foregoing, the Company may deregister any class of its equity securities under
Section 12 of the Exchange Act or suspend its duty to file reports with respect
to any class of its securities pursuant to Section 15(d) of the Exchange Act if
it is then permitted to do so pursuant to the Exchange Act and rules and
regulations thereunder.
SECTION 2.7. Restrictions on Public Sale by
Holder of Securities.
2.7.1. To the extent not inconsistent with applicable law, any
LDC Holder whose Registrable Securities are included in a Registration relating
in whole or in part to an underwritten public offering agrees not to effect any
public sale or distribution of the issue being registered or any similar
security of the Company, or any securities convertible into or exchangeable or
exercisable for such securities, including a public sale pursuant to Rule 144
under the 1933 Act, during the 14 days prior to, and during the 180-day period
beginning on, the effective date of such registration statement (except as part
of such Registration); provided, however, that the foregoing shall only apply if
and to the extent requested by the managing underwriter or underwriters.
2.7.2. Each LDC Holder agrees that, in the event the Company
files a registration statement under the 1933 Act with respect to an
underwritten public offering of any shares of Common Stock or Common Stock
Equivalent, such LDC Holder shall not effect any public sale or distribution of
any Common Stock owned by it (other than as part of such underwritten public
offering) within 7 days prior to, and during the 180-day period beginning on,
the effective date of such registration statement and the Company hereby also so
agrees and agrees to use its best efforts to cause, as the managing underwriters
may require, each other holder of any equity security, or of any security
convertible into or exchangeable or exercisable for any equity security, of the
Company purchased from the Company (at any time other than in a public offering)
to so agree.
SECTION 2.8. Participation in Registrations. No LDC Holder
may participate in any Registration hereunder
<PAGE> 19
19
unless such LDC Holder (i) agrees to sell such LDC Holder's securities on the
basis provided in any underwriting arrangements approved by the persons entitled
hereunder to approve such arrangements and (ii) completes and executes all
questionnaires, powers of attorney, underwriting agreements and other documents
customarily required under the terms of such underwriting arrangements.
SECTION 2.9. Remedies. LDC shall have the right and remedy to
have the provisions of Sections 2.1 and 2.2 specifically enforced by any court
having jurisdiction in the event that the Company breaches such provisions, and
the Company shall reimburse LDC for the reasonable costs of the expenses for
counsel for LDC incurred in connection with such proceeding.
ARTICLE III
Restrictions on Transfer of
Common Stock by LDC; Standstill
SECTION 3.1. Restrictions on Transfer. Prior to December 31,
1999, LDC shall not sell, assign, transfer, pledge, hypothecate, deposit in a
voting trust or otherwise dispose of any portion of the LDC Shares (any such
disposition, a "Share Transfer"), other than (x) to a Covered Employee in
connection with the distribution of Bonus Shares or (y) to a Permitted Affiliate
of LDC that has agreed in writing (the "Permitted Affiliate Section 3.1
Agreement") to be bound by the terms and provisions of this Section 3.1 to the
same extent that LDC would be bound if it beneficially owned the shares of
Common Stock transferred to such Permitted Affiliate of LDC and acknowledging
the last sentence of Section 4.4. LDC shall promptly notify the Company of any
Share Transfer to a Permitted Affiliate of LDC, which notification shall include
a Permitted Affiliate Section 3.1 Agreement executed by each Permitted Affiliate
of LDC to whom any shares of Common Stock have been transferred. If any
Permitted Affiliate of LDC which owns any shares of Common Stock ceases for any
reason to be a Permitted Affiliate of LDC, LDC shall promptly thereupon cause
such former Permitted Affiliate of LDC to transfer all shares of Common Stock
held by it to LDC or a Permitted Affiliate of LDC, and in no event shall any
such former Permitted Affiliate of LDC effect any Share Transfer in a manner
that would be prohibited by this Section 3.1 if such Share Transfer were
effected by LDC. On or after December 31, 1999, LDC shall not, and shall not
permit any of its Affiliates to, directly or indirectly, effect any Share
Transfer (other than to a Permitted Affiliate of LDC)
<PAGE> 20
20
in a manner that would result in the acquisition by any other person to the
extent that, to LDC's knowledge after due inquiry (it being understood that no
such inquiry is required in respect of a non-prearranged sale over a securities
exchange or other transactions where it is not possible to determine who the
acquiror is, or in connection with a registered public offering where the
Company controls the placement of shares), after giving effect to such Share
Transfer, such acquiring person would hold in excess of five percent (5%) of the
total voting power of all voting securities of the Company.
SECTION 3.2. Standstill. For a period of five years from the
Closing Date (as such term is defined in Section 2(a)(i) of the Stock Purchase
Agreement), LDC shall not, and shall not permit any of its Affiliates to,
directly or indirectly, (i) without the prior written consent of the Company, by
purchase or otherwise, acquire, agree to acquire or offer to acquire beneficial
ownership of any voting securities of the Company or direct or indirect rights
or options to acquire such beneficial ownership (including, without limitation,
any voting trust certificates representing such securities) if such acquisition
would result in the aggregate beneficial ownership by LDC and all Affiliates of
LDC of voting securities having voting power equal to or in excess of 15% of the
then aggregate voting power of the Company, (ii) enter, propose to enter into,
solicit or support any merger or business combination or change of control or
other similar transaction involving the Company or any of its subsidiaries, or
purchase, acquire, propose to purchase or acquire or solicit or support the
purchase or acquisition of any portion of the business or assets of the Company
or any of its subsidiaries other than in the ordinary course of business, (iii)
initiate or propose any matter for submission to a vote of the shareholders of
the Company or make, or in any way participate in, any "solicitation" of
"proxies" (as such terms are used in the proxy rules promulgated by the SEC
under the Exchange Act) to vote, or seek to advise or influence any person with
respect to the voting of, the Common Stock or any other voting securities of the
Company or request or take any action to obtain any list of shareholders of the
Company for such purposes, (iv) form, join or in any way participate in any
group (other than a group composed solely of LDC and its Affiliates) formed for
the purpose of acquiring, holding, voting or disposing of or taking any other
action with respect to the Common Stock or any other voting securities of the
Company that would be required under Section 13(d) of the Exchange Act to file a
Schedule 13D with respect to such voting securities, (v) deposit any shares of
Common Stock or any other voting
<PAGE> 21
21
securities of the Company in a voting trust or enter into any voting agreement
or arrangement with respect thereto, (vi) seek representation on the Board
(other than as contemplated by Section 7(b) of the Stock Purchase Agreement),
the removal of any directors from the Board or a change in the size or
composition of the Board, (vii) make any request to amend or waive any provision
of this Section 3.2, which request would require public disclosure under
applicable law, rule or regulation, (viii) disclose any intent, purpose, plan,
arrangement or proposal inconsistent with the foregoing (including any such
intent, purpose, plan, arrangement or proposal that is conditioned on or would
require the waiver, amendment, nullification or invalidation of any of the
foregoing) or take any action that would require public disclosure of any such
intent, purpose, plan, arrangement or proposal, (ix) take any action challenging
the validity or enforceability of the foregoing, (x) assist, advise, encourage
or negotiate with any person with respect to, or seek to do, any of the
foregoing or (xi) take, or solicit, propose to or agree with any other person to
take, any similar actions designed to influence the management or control of the
Company.
Nothing in this Section 3.2 shall (i) prohibit or restrict LDC
or its Affiliates from responding to any inquiries from any shareholders of the
Company as to LDC's or any such Affiliate's intention with respect to the voting
of shares of Common Stock or any other voting securities of the Company
beneficially owned by LDC or such Affiliate so long as such response is
consistent with the terms of this Agreement, (ii) prohibit the purchase or other
acquisition of beneficial ownership of Common Stock or other voting securities
of the Company in compliance with Section 3.2(i) or (iii) restrict the right of
any director on the Board designated by LDC as contemplated by Section 7(b) of
the Stock Purchase Agreement to vote on any matter as such designee believes
appropriate in light of his duties as a director of the Company or the manner in
which such designee may participate in his capacity as a director of the Company
in deliberations or discussions at meetings of the Board or as a member of any
committee thereof.
ARTICLE IV
Miscellaneous
SECTION 4.1. 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
<PAGE> 22
22
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 business day in the case
of express mail or overnight courier service), as follows:
(i) if to the Company,
TransMontaigne Inc.
370 Seventeenth Street
Suite 2750
Denver, Colorado 80202
Phone: (303) 626-8200
Fax: (303) 626-8228
Attention: Richard E. Gathright
President and Chief Operating
Officer
with copies to:
TransMontaigne Inc.
370 Seventeenth Street
Suite 2750
Denver, Colorado 80202
Phone: (303) 626-8200
Fax: (303) 626-8228
Attention: Erik B. Carlson, Esq.
Senior Vice President, General
Counsel and Corporate Secretary
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Attention: Philip A. Gelston, Esq.; and
<PAGE> 23
23
(ii) if to LDC,
Louis Dreyfus Corporation
Ten Westport Road
P.O. Box 810
Wilton, Connecticut 06897
Phone: (203) 761-8369
Fax: (203) 761-8085
Attention: Peter Griffin
President
with copies to:
Louis Dreyfus Corporation
Ten Westport Road
P.O. Box 810
Wilton, Connecticut 06897
Phone: (203) 761-8317
Fax: (302) 761-8321
Attention: Andrew J. Connelly, Esq.
General Counsel; and
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019
Attention: Stanton J. Lovenworth, Esq.
SECTION 4.2. Binding Effect; Benefits. This Agreement shall be
binding upon and inure to the benefit of the parties to this Agreement and their
respective successors and permitted assigns. Nothing in this Agreement, express
or implied, is intended or shall be construed to give any person other than the
parties to this Agreement, the other LDC Holders, if any, and their respective
successors or assigns any legal or equitable right, remedy or claim under or in
respect of any agreement or any provision contained herein. This Agreement
constitutes the entire agreement and understanding, and supersedes and
terminates all prior agreements and understandings, both oral and written
(including those contained in the Stock Purchase Agreement), between the parties
hereto relating to the subject matter hereof.
SECTION 4.3. Waiver. Each party hereto may, by written
notice to the other party (i) extend the time for the performance of any of the
obligations or other actions
<PAGE> 24
24
of such other party under this Agreement; (ii) waive compliance with any of the
conditions or covenants of such other party contained in this Agreement; and
(iii) waive or modify performance of any of the obligations of such other party
under this Agreement. Except as provided in the preceding sentence, no action
taken pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representation,
warranty, covenant or agreement contained herein. Neither the waiver by either
party hereto of a breach of any provision hereof or any preceding or succeeding
breach nor the failure by either party to exercise any right or privilege
hereunder shall be deemed a waiver of such party's rights or privileges
hereunder nor shall it be deemed a waiver of such party's rights to exercise the
same at any subsequent time or times hereunder.
SECTION 4.4. 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. Any such amendment, modification or waiver in
respect of this Agreement executed by or on behalf of LDC shall bind each other
LDC Holder, if any, to the terms and conditions thereof.
SECTION 4.5. Assignability. Neither this Agreement nor any
right, remedy, obligation or liability arising hereunder or by reason hereof
shall be assignable by either the Company or LDC (other than, in the case of
LDC, to a Permitted Affiliate of LDC in connection with a transfer of a portion
of the LDC Shares).
SECTION 4.6. 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 and to be performed entirely within such State,
without regard to the conflicts of law principles of such State.
SECTION 4.7. 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 4.8. Section and Other Headings. The section and other
headings contained in this Agreement are
<PAGE> 25
25
for reference purposes only and shall not affect the meaning or interpretation
of this Agreement.
SECTION 4.9. 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.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the date first written above.
TRANSMONTAIGNE INC.,
by
--------------------------------------------
Name:
Title:
LOUIS DREYFUS CORPORATION,
by
------------------------------------------
Name:
Title:
<PAGE> 26
ANNEX A
[AMENDMENT AND WAIVER TO INSTITUTIONAL INVESTOR
REGISTRATION RIGHTS AGREEMENT--TO COME WHEN EXECUTED]
<PAGE> 1
Exhibit 4
---------
Agreement re Share Issuance
WHEREAS, Louis Dreyfus Corporation ("LDC") and
TransMontaigne Inc. ("TM") entered into a Stock Purchase Agreement
dated as of September 13, 1998 (the "Agreement") for the sale of all
outstanding shares of Louis Dreyfus Energy Corp. ("LDEC") by LDC to TM;
WHEREAS, the Agreement contemplates that part of the purchase price
paid by TM would be in the form of shares of TM (the "Shares");
WHEREAS, pursuant to the Agreement, in which LDC is defined as
"Seller," TM is required to deliver such Shares to LDC at the Closing
"registered in the name of the Seller or its designee";
WHEREAS, LDC requested that 148,920 Shares (the "Designee Shares")
be registered in the name of Louis Dreyfus Holding Company Inc. ("LDHC") as its
designee;
WHEREAS, all Shares to be delivered to LDC at the Closing were
inadvertently registered in the name of LDHC rather than solely the Designee
Shares, with the remainder in LDC's name; and
WHEREAS, LDC is willing to complete the scheduled Closing in spite
of this error upon the parties' recognition thereof as expressed in this
Agreement;
NOW, THEREFORE, the undersigned parties hereto hereby agree that LDC
is the direct owner of all outstanding shares of LDEC and, absent any
designation by LDC pursuant to the Agreement, is the sole party entitled to
receive and intended by the parties to receive the Buyer Shares (as defined in
the Agreement) other than the Designee Shares (as to which such a designation
has been made, as stated above), and LDC shall be deemed the recipient of the
Shares upon the Closing, it being understood by the parties that LDHC will be in
registered receipt of the Shares solely as nominee for LDC and without any other
interest of its own in the Shares other than as LDC's parent, and LDHC may
promptly transfer such Shares (other than the Designee Shares) to LDC.
<PAGE> 2
TRANSMONTAIGNE INC.
By_____________________
LOUIS DREYFUS CORPORATION
By____________________________
LOUIS DREYFUS HOLDING COMPANY INC.
By______________________________________
Date: October 30, 1998
