SERVICES AGREEMENT
AMONG
PENNZOIL-QUAKER STATE COMPANY
PROBEX CORP.
AND
PROBEX FLUIDS RECOVERY, INC.
FOR
SES OPERATIONS
AT
SAN ANTONIO, TEXAS
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PENNZOIL-QUAKER STATE COMPANY - PROBEX FLUIDS RECOVERY, INC.
SERVICES AGREEMENT
San Antonio, Texas
TABLE OF CONTENTS
ARTICLE PAGE
I DEFINITIONS.................................................... 1
II TERM........................................................... 2
III SERVICES....................................................... 3
IV COST OF SERVICES............................................... 3
V INSURANCE...................................................... 4
VI CLAIMS......................................................... 4
VII FORCE MAJEURE.................................................. 4
VIII TAXES.......................................................... 5
IX ASSIGNMENT..................................................... 5
X NOTICE......................................................... 5
XI GOVERNING LAW.................................................. 6
XII TITLE.......................................................... 7
XIII INDEMNIFICATION................................................ 7
XIV MODIFICATIONS TO FACILITIES.................................... 12
XV ARBITRATION.................................................... 13
XVI MISCELLANEOUS PROVISIONS....................................... 14
EXHIBITS
EXHIBIT 3.1 GENERAL SERVICES
EXHIBIT 3.1A INCIDENT RESPONSE SERVICES
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This Agreement made this 29th day of September, 2000 ("Effective Date"),
among Pennzoil-Quaker State Company, a Delaware corporation ("PQS"), Probex
Fluids Recovery, Inc., a Delaware corporation ("Probex"), and Probex Corp., a
Delaware corporation ("Parent"). PQS, Probex and Parent are sometimes referred
to herein individually as a "Party" and collectively as the "Parties".
PURPOSE:
The purpose of this Agreement is to set out the terms and conditions
under which PQS will provide certain operating, management and administrative
services support to Probex.
NOW, THEREFORE, the Parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined). Capitalized terms used but not defined in this
Agreement have the respective meanings assigned to them in the Asset Purchase
Agreement.
Section 1.1 "Agreement" means this Services Agreement among PQS, Probex and
Parent, and all Exhibits attached hereto.
Section 1.2 "Asset Purchase Agreement" means the Asset Purchase Agreement
between PQS, Probex and Parent dated as of September 6, 2000,
as amended.
Section 1.3 "Facilities" means those facilities, equipment and other assets
owned or leased by Probex at the at the Location.
Section 1.4 "General Services" means the services PQS agrees to provide to
Probex described on Exhibit 3.1.
Section 1.5 "Incident Response Services" means the services PQS agrees to
provide to Probex described on Exhibit 3.1A.
Section 1.6 "Location" means the location at PQS' packaging plant in San
Antonio, Texas where PQS conducted a part of the Business prior
to Closing and where some of the Assets are located.
Section 1.7 "Month" means a calendar month.
Section 1.8 "Party" means either PQS, Probex or Parent.
Section 1.9 "Product" means those products received, stored, tested and/or
shipped by Probex at the Location which are comprised of used
oil collected for recycle, used oil filters for disposal
and used anti-freeze for recycle.
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Section 1.10 "Regulated Substance" means any substance regulated as of the
Closing Date or during the term of this Services Agreement
under any Environmental Law (as defined in Section 13.1.1),
whether as pollutants, contaminants, or chemicals, or as
industrial, toxic or hazardous substances or wastes, or
otherwise, including, but not limited to, petroleum and its
fractions, used oil, waste oil, or constituents thereof.
Section 1.11 "Services" means, collectively, the General Services and the
Incident Response Services.
ARTICLE II
TERM
Section 2.1 The initial term of this Agreement shall terminate on
December 31, 2010, and shall automatically renew for successive one (1) year
terms, unless written notice of termination is given by either party at least
six (6) months prior to the end of the initial term or any successive term. In
the event that PQS sells the Location, PQS shall include the assignment and
assumption of this Agreement to the purchaser of the Location as a condition of
such sale. If after the initial term such assignment cannot be consummated, this
Agreement shall terminate as of the date of the sale of the Location by PQS. In
the event that PQS chooses after the initial term, in its sole discretion, to
close the Location, PQS will give Probex at least twelve (12) month's written
notice of such closure, and this Agreement shall terminate upon at the end of
such twelve (12) month notice period. However, during this twelve (12) month
period prior to closure, PQS is willing to enter into negotiations with Probex
for the sale of the Location or for a lease at fair market value. Any costs to
make the Probex operations stand alone at the Facility would be borne by Probex.
Section 2.2 If, after receiving written notice from PQS, pursuant to
Section 2.1, of PQS' intent to: (a) terminate this Agreement or (b) sell or
close the Location, Probex arranges to remain at the Location beyond the term of
this Agreement, it shall give written notice to PQS of its decision to remain at
the Location as soon as practicable, but in any event no later than thirty (30)
days prior to the date of termination, sale, or closure provided in the written
notice given by PQS pursuant to Section 2.1. After providing the written notice
to PQS pursuant to the preceding sentence, Probex may cause to be conducted at
its expense a Phase II environmental assessment and report, including, without
limitation, procedures recognized under American Society of Testing and
Materials Standards, for the purpose of assessing the presence or absence of
Regulated Substances in the soil or groundwater at any real property occupied or
used by Probex in connection with the Business at the Location, which shall be
prepared by a firm selected by Probex with the consent of PQS (which consent
shall not be unreasonably withheld). The environmental report shall be
completed, and Probex shall provide a full and complete copy of the
environmental report to PQS, no later than 30 days prior to the date of
termination, sale, or closure provided in the written notice given by PQS
pursuant to Section 2.1. The environmental assessment and report shall contain
such information as Probex deems necessary or advisable. The information
obtained pursuant to this Section 2.1.1 may include soil and ground water
sampling of any real property occupied or used by Probex in connection with the
Business at the Location. PQS agrees (to the extent reasonable and not
financially burdensome to PQS) to cooperate in the preparation of any such
environmental assessment and report.
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ARTICLE III
SERVICES
Section 3.1 PQS hereby agrees to perform the Services as described in
Exhibits 3.1 and 3.1A at the Location at Probex's reasonable direction.
Section 3.2 PQS's status shall be that of an independent contractor,
and the relationship of PQS and Probex shall not be construed as that of
principal and agent or that of master and servant.
Section 3.3 PQS shall exercise its reasonable judgment to provide the
Services in a professional manner consistent with past practices. In addition,
all actions will be consistent with PQS's policies and procedures relating to
operations, health, safety and security, copies of which have been furnished or
made available to Probex.
Section 3.4 Probex agrees and warrants that whenever any of its
employees are present or working at the Location such employees will fully
comply with all rules, regulations and procedures of PQS. These policies
include, but are not limited to, Abuse of Drugs and/or Alcohol and Harassment.
Section 3.5 PQS agrees to provide Probex with reasonable access to the
Facilities during the term of this Agreement.
ARTICLE IV
COST OF SERVICES
Section 4.1 Probex agrees to pay the costs for General Services as
specified in Exhibit 3.1. If at Probex's request, any of the General Services
described in Exhibit 3.1 cease to be provided by PQS, the Parties agree to
appropriately reduce the total monthly cost for the Services. Probex agrees to
pay the actual costs incurred by PQS in performing the Incident Response
Services described on Exhibit 3.1A. Beginning in the 2001 calendar year, the
costs referenced in Exhibit 3.1 will be reviewed in October of each year and the
costs will be revised to reflect actual costs with the revised costs effective
the following January 1.
Section 4.2 To the extent Probex requests services in addition to the
Services, Probex will bear the actual costs for the additional services.
Section 4.3 All costs and fees payable by Probex to PQS under this
Agreement will be due on presentment of invoice and payable within 30 days after
receipt of invoice.
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ARTICLE V
INSURANCE
The fee specified herein does not include any insurance on the
Facilities, Equipment or the Product covered by this Agreement while such
Products are located on PQS's property. It is understood and agreed that
insurance, if any be desired by Probex, shall be carried by Probex at Probex's
own expense. Each Party agrees to secure a waiver from its insurance carrier of
the insurance carrier's rights of subrogation against the other Party with
respect to matters covered by the indemnification provisions of this Agreement,
except that such waiver shall not apply to a Party's gross negligence or willful
misconduct.
ARTICLE VI
CLAIMS
In connection with performing the Services, PQS shall have no liability
to Probex for any loss or damage to the Facilities or Equipment or loss of or
defect in quality of the Product except as such loss or defect in quality was
caused by PQS's gross negligence or willful misconduct.
ARTICLE VII
FORCE MAJEURE
Section 7.1 Neither Party shall be liable to the other for failure or
delay in performance hereunder to the extent that the failure or delay is due to
force majeure, which is herein defined to include, but is not limited to, war
(whether declared or undeclared), fire, flood, lightning, earthquake, storm, or
any act of God; strikes, lockouts, or other labor difficulties; civil
disturbances, riot, sabotage, accident; any official order, directive, or
industry-wide request; or suggestion by any governmental authority or
instrumentality thereof which in the reasonable judgment of the Party affected
makes it necessary to cease or reduce performance; any disruption or breakdown
of labor; or any inability to secure materials by reason of or any other
contingency beyond the control of the affected Party which interferes with the
performance hereunder. Notwithstanding the foregoing, economic hardship alone
involving a Party shall not constitute a force majeure event.
Section 7.2 Performance under this Agreement shall be suspended (except
for the payment of money due or to become due for past performance hereunder)
during the period of such force majeure to the extent made necessary by the
force majeure; provided the settlement of strikes, lockouts, industrial
disputes, or disturbances shall be entirely within the discretion of the Party
so settling to accede to the demands of any opposing party when such course is
inadvisable in the discretion of the Party having the difficulty.
Section 7.3 No curtailment, suspension, or acceptance of performance
pursuant to this Article shall operate to extend the period of or to terminate
this Agreement. Performance under this Agreement shall resume to the extent made
possible by the end or amelioration of the force majeure event.
Section 7.4 As soon as practicable after the occurrence of any event of
the force majeure, the Party claiming force majeure shall notify the other Party
in writing of such event and, to the extent possible, inform the other Party of
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the expected duration of the force majeure event and the performance to be
affected by the suspension or curtailment under this Agreement.
Section 7.5 The Party claiming force majeure shall notify the other
Party in writing of the end of the force majeure event and shall provide the
other Party with a schedule for the resumption of performance under this
Agreement.
Section 7.6 In the event of disruption or breakdown of labor, the Party
affected will use reasonable efforts to allocate the available work force so as
to continue performance hereunder.
ARTICLE VIII
TAXES
Section 8.1 Any and all taxes, fees, or other charge, other than taxes
on income, imposed or assessed on PQS by governmental or regulatory bodies, the
taxable incident of which is the performance of Services hereunder, regardless
of the character or measure of the levy or assessment shall be borne by Probex.
Section 8.2 Notwithstanding any other provision of this Agreement, any
tax or governmental charge (except income taxes) or increase in the same which
becomes effective after the effective date of this Agreement, and which has the
effect of increasing the cost to PQS for providing Services will be added to the
direct expense and be borne by Probex; provided, that Probex agrees to pay only
that portion of such tax or governmental charge that is reasonably allocable to
operation of Probex's business at the location or PQS' performance of the
Services.
ARTICLE IX
ASSIGNMENT
Section 9.1 Except as provided in this Section 9.1, neither Party may
assign this Agreement (including by operation of law) without the prior written
consent of the other Party. PQS may assign this Agreement to any successor in
interest to substantially all of PQS's assets whether by merger, acquisition,
consolidation or otherwise, or to any successor in interest to real property on
which any of the services are being performed under this Agreement. Probex may
assign this Agreement to any successor in interest to substantially all of
Probex's assets whether by merger, acquisition, consolidation or otherwise,
provided that the successor is not a person reasonably deemed by PQS to be a
competitor. Neither Party shall unreasonably withhold its consent to an
assignment of this Agreement.
ARTICLE X
NOTICE
Section 10.1 Any notice, request, instruction, correspondence, or other
document to be given hereunder by either Party to the other (herein collectively
called "Notice") shall be in writing and delivered personally or mailed by
certified mail, postage prepaid and return receipt requested, overnight courier,
or by telegram or facsimile as follows:
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If to PQS, addressed to:
By Mail or Courier:
Pennzoil-Quaker State Company
Pennzoil Place
P.O. Box 2967
Houston, Texas 77252 - 2967
Attention: Vice President of Distribution
Facsimile: 713/217-3286
If to Probex or Parent, addressed to:
By Mail or Courier:
Probex Fluids Recovery, Inc.
One Galleria Tower, Suite 1200
13355 Noel Road
Dallas, Texas 75240
Attention: Chief Financial Officer
Facsimile: 972/466-1556
With a copy only for matters regarding Articles XIII and XV to:
Hallett & Perrin, P.C.
717 N. Harwood
Suite 1400
Dallas, TX 75201
Attention: Timothy R. Vaughan, Esq.
Facsimile: 214/922-4193
Section 10.2 Notice given by personal delivery or mail shall be
effective upon actual receipt. Notice given by telegram, facsimile, or telex
shall be effective upon actual receipt if received during the recipient's normal
business hours or at the beginning of the recipient's next business day after
receipt if not received during the recipient's normal business hours. Either
Party may change any address to which Notice is to be given to it by giving
notice as provided above of such change of address.
Section 10.3 The foregoing is not intended to preclude normal informal
communication with respect to operational matters.
ARTICLE XI
GOVERNING LAW
All provisions of this Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, excluding any conflicts-of-law
rule or principle that might apply the laws of another jurisdiction.
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ARTICLE XII
TITLE
Title and risk of loss to the Product handled hereunder shall always
remain in Probex while at the Facility even though Product is located on PQS's
property.
ARTICLE XIII
INDEMNIFICATION
Section 13.1 Special Definitions. As used in this Article 13, the following
terms have the meanings ascribed to them:
13.1.1 "Environmental Law" and/or "Environmental Laws" shall mean any and
all federal, state, local and foreign laws (including, without
limitation, common law) or rules, regulations, orders, decrees, or
judgments or Environmental Permits relating to (i) the environment
and/or to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances, toxic or hazardous wastes, petroleum and its fractions,
used oil, or waste oil into the environment including ambient air,
surface water, ground water, land, or otherwise, including all such
laws relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants;
and all such laws relating to any Regulated Substance; (ii) noise or
odors, (iii) wetlands protection, and (iv) worker safety and health.
13.1.2 "Environmental Liability" shall mean any Damages or other liability
of any kind relating to or arising out of (a) noise or odors; (b)
actual or threatened pollution or contamination of the ecology, air,
groundwater, surface water, land, soils or subsurface strata; (c)
solid, gaseous, or liquid waste generation, handling, treatment,
storage, disposal, or transportation; (d) any release of, or exposure
to, any Regulated Substances or related conditions; (e) the
manufacturing, processing, distribution in commerce, use, or storage
of chemical substances, petroleum or petroleum products, used oil or
waste oil; (f) working conditions and safety or health of employees;
(g) violations of, or requirements under, Environmental Laws; (h) the
off-site transportation, treatment, storage, or disposal from any of
the Assets or Business activities or operation of any Regulated
Substance; (i) Environmental Cleanup; or (j) wetlands or ecological
protection.
13.1.3 "PQS Environmental Claim" shall mean any and all claims,
liabilities, (including, without limitation, contractual liability and
strict liability), demands, rights, obligations, causes of action,
suits, contribution and indemnity actions, and other proceedings of
any kind or character, however denominated, of or by any Person
whether at law or at equity, known or unknown, potential, asserted or
unasserted, accrued or unaccrued, direct, indirect, contingent, third
party, or subrogated, or derivative of any of the above (including,
without limitation, any claims asserted by, or obligations imposed by,
any Governmental Body with actual or alleged jurisdiction over the
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Assets or the Business) that accrues during the term of this Agreement
with respect to the Assets or the operation of the Business at or from
the Location and relating to or arising out of Environmental
Liability, including, without limitation, all closure or post-closure
costs and obligations imposed under Environmental Laws, or otherwise,
on Probex or any other Person due to such Person's activities at the
Location or on account of an Environmental Permit held by Probex or
any other Person at the Location; provided, however, that "PQS
Environmental Claim" shall not include any claim, liability, demand,
right, obligation, cause of action, suit, contribution or indemnity
action, or other proceeding of any kind or character with respect to
which Probex is obligated to indemnify PQS pursuant to Section
13.2.2(iv), (v) or (vi) of this Agreement. For purposes of this
Agreement, a PQS Environmental Claim "accrues" when the event or
condition giving rise to the PQS Environmental Claim first occurs and
not when the event is first discovered or first becomes subject to
correction, abatement, regulatory enforcement, or response action.
Section 13.2 General Indemnification.
13.2.1 Subject to the terms and conditions of this Article
XIII, PQS shall indemnify, defend, and hold harmless
Probex, and any of its officers and directors, from
and against all Damages that may be asserted against,
resulting to, imposed upon, or incurred by any such
Person by reason of, relating to, or resulting from
any PQS Environmental Claim including, without
limitation, PQS' performance of the actions described
in Section 14.7.
13.2.2 Subject to the terms and conditions of this Article
XIII, Probex and Parent, jointly and severally, shall
indemnify, defend, and hold harmless PQS, and any of
its officers and directors, from and against all
Damages that may be asserted against, resulting to,
imposed upon, or incurred by any such Person by
reason of, relating to, or resulting from: (i) loss
of, damage to, or loss of use of, Facility and
Product unless caused by the gross negligence or
willful misconduct of PQS in performing the Services
or unless otherwise caused by PQS while engaging in
activities unrelated to performing the Services; (ii)
loss of, damage to, or loss of use of, equipment,
facilities and properties of PQS caused by Probex or
Parent or their employees, agents or representatives;
(iii) personal injury or death of PQS, Probex or
Parent employees, agents or representatives arising
in connection with the Services unless caused by the
gross negligence or willful misconduct of PQS; (iv)
the violation of any of the Environmental Laws by
Probex or Parent subsequent to the Closing in
connection with the Assets or the operation of the
Business, including but not limited to violations of
any such law by Probex or Parent with respect to the
use of, or activities conducted on or from the
Location, including the use by Probex of underground
storage tanks thereunder, but in cases where such
violations are caused by a release of Regulated
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Substances, or a release is itself a violation, only
to the extent such Damages are attributable to an
Identifiable Event; (v) an Identifiable Event; or
(vi) Probex's performance of the actions described in
Sections 14.5 and 14.6.
Section 13.3 Conditions of Indemnification. The obligations of PQS,
Probex or Parent, as the case may be (the "indemnifying Party") to other Persons
(the "Party to be indemnified") with respect to any claim or demand for
indemnification shall be subject to the following terms and conditions:
13.3.1 The Party to be indemnified shall promptly give notice
to the indemnifying Party of any claim, whether between the Parties or
brought by a third party, specifying both the basis for and the amount
of such claim, to the extent specified or otherwise known. If the claim
or demand for indemnification relates to a claim, action, suit, or
proceeding asserted or filed by a Third Party against the Party to be
indemnified (a "Third-Party Claim"), then such notice shall be given by
the Party to be indemnified within twenty (20) days of receipt thereof
(or such earlier time as might be required to avoid prejudicing the
indemnifying Party's position). The failure of the Party to be
indemnified to give such notice shall not relieve the indemnifying
Party of its obligations hereunder, except to the extent the
indemnifying Party is actually prejudiced thereby.
13.3.2 Following receipt of notice from the Party to be
indemnified of a claim or demand for indemnification, the indemnifying
Party shall have twenty (20) days to make such investigation of the
claim or demand as the indemnifying Party deems necessary or desirable.
For the purposes of such investigation, the Party to be indemnified
agrees to make available to the indemnifying Party (or its authorized
representatives) the information relied upon by the Party to be
indemnified to substantiate the claim or demand. If the Party to be
indemnified and the indemnifying Party agree at or before the
expiration of such twenty (20) day period (or any mutually agreed upon
extension thereof) to the validity and amount of such claim or demand,
then the indemnifying Party shall immediately pay to the Party to be
indemnified the full amount of the claim or demand to the extent that
such Party to be indemnified is entitled to indemnification pursuant to
this Section 13.3. If the Party to be indemnified and the indemnifying
Party do not agree within such period (or any mutually agreed upon
extension thereof), then the Party to be indemnified may pursue or
exercise any remedies or rights available to it.
13.3.3 After receipt of notice of commencement of any
Third-Party Claim evidenced by service of process or other legal
pleading, or with reasonable promptness after any other assertion in
writing of any Third-Party Claim, the Party to be indemnified shall
give the indemnifying Party written notice thereof together with a copy
of such claim, process, or other legal pleading within the period set
forth in the second sentence of Section 13.3.1. The failure of a Party
to be indemnified to give the indemnifying Party such notice shall not
relieve the indemnifying Party of its obligations under Section 13.3
except to the extent the indemnifying Party is actually prejudiced
thereby. The indemnifying Party shall have the right to undertake the
defense, compromise, or settlement of the Third-Party Claim, by
representatives of its own choosing and at its own expense so long as
the indemnifying Party agrees to assume and conduct, and diligently
conducts, such defense (or, if applicable, compromise or settlement).
In such event the Party to be indemnified may participate in the
defense, compromise, or settlement with counsel of its own choice and
at its own expense.
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13.3.4 If the indemnifying Party, by the thirtieth (30th) day
after receipt of notice of any such claim (or, if earlier, by the tenth
(10th) day preceding the day on which an answer or other pleading must
be served in order to prevent judgment by default in favor of the
plaintiff), does not elect to defend such Third-Party Claim, then the
Party to be indemnified shall have the right (upon further notice to
the indemnifying Party) to retain counsel and undertake the defense,
compromise, or settlement of such Third-Party Claim on behalf of, and
for the account and risk of, the indemnifying Party and at the
indemnifying Party's expense, subject to the right of the indemnifying
Party to participate, with its own counsel and at its own expense, in
the defense, settlement or compromise. If the Party to be indemnified
and the indemnifying Party agree at or before the expiration of the
period set forth in this Section 13.3.4 (or any mutually agreed upon
extension thereof) to the validity and amount of such Third-Party
Claim, then the indemnifying Party shall immediately pay to the Party
to be indemnified the amount so agreed.
13.3.5 If there is a conflict of interests which renders it
inappropriate for the same counsel to represent both the indemnifying
Party and the Party to be indemnified in defending, compromising, or
settling a Third-Party Claim, the indemnifying Party shall be
responsible for paying for separate counsel for the Party to be
indemnified. In such event, however, if there is more than one Party to
be indemnified, the indemnifying Party shall not be responsible for
paying for more than one separate counsel (which may be a firm of
attorneys) to represent the Parties to be indemnified, regardless of
the number of Parties to be indemnified.
13.3.6 The indemnifying Party may compromise, settle, or
resolve any Third-Party Claim without the consent of the Party to be
indemnified if such compromise, settlement, or resolution involves only
the payment of money by the indemnifying Party (whether on its own
behalf or on behalf of the Party to be indemnified) and the claimant
provides to the Party to be indemnified a release from all Liability in
respect of such claim. Otherwise, the indemnifying Party may not
compromise, settle, or resolve the claim without the prior written
consent of the Party to be indemnified, which consent may not be
unreasonably withheld.
13.3.7 The Party to be indemnified and the indemnifying Party
must cooperate with all reasonable requests of the other in the defense
of any Third-Party Claim.
13.3.8 Notwithstanding anything to the contrary in this
Section 13.3, with respect to an obligation of PQS to indemnify Probex
pursuant to Section 13.2.1 above with respect to a PQS Environmental
Claim that requires any Remediation, PQS may elect to implement and
complete such Remediation. If PQS elects to conduct the Remediation:
(i) PQS, in good faith, will coordinate the schedule of the
Remediation with Probex so that disruptions of Probex's
operations will be minimized;
(ii) PQS will obtain the prior written approval of Probex, which
approval will not be unreasonably withheld, for any consultant or
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contractor retained by PQS to investigate, design or implement
the Remediation;
(iii)PQS will conduct the Remediation in compliance with all
applicable federal, state and local laws and regulations and as
directed by the appropriate Governmental Body; and
(iv) PQS will not agree to or select any Remediation that imposes any
material obligation on Probex, including, without limitation, the
obligation to sign manifests or obtain permits, without the prior
written consent of the Probex, which consent shall not be
reasonably withheld.
(v) During the period in which PQS is conducting a Remediation
pursuant to this Section 13.3.8, Probex shall provide PQS and its
consultants and contractors reasonable access to the affected
property for the purpose of conducting activities related to the
Remediation, including where necessary the use of heavy
equipment. Any such access shall be subject to reasonable
restrictions imposed by Probex, including, without limitation,
restrictions related to worker safety. PQS shall expeditiously
remove from the property all drill cuttings, soil, debris or
liquids generated from or in connection with the Remediation and
shall restore the property and any existing structures or
equipment removed or damaged in the course of the Remediation to
a condition substantially the same as the condition that existed
immediately prior to the Remediation. PQS or their consultants
and contractors shall provide Probex at least five (5) business
days' notice of the activities to be conducted on the property,
which notice may be in the form of a schedule of activities.
(vi) PQS and Probex agree that any Remediation shall meet all
requirements of the Governmental Body or Bodies directing the
Remediation and shall not materially impede or increase the cost
of Probex's business operations on the affected property. Probex
acknowledges that the Remediation may be a "risk-based"
Remediation pursuant to, and consistent with applicable federal,
state and local laws and regulations, which may require the
establishment of certain restrictions or conditions affecting the
property on which the Remediation is being conducted. Probex
agrees not to object to any such "risk-based" Remediation unless
Probex's agreement will, in the good faith judgment of Probex,
expose Probex to liability to third parties.
(vii)PQS shall not take any action or make any communication which
has a material effect on the resolution or outcome of any
Environmental Claim which could lead to the filing of an
Environmental Claim against Probex, without providing at least
five (5) business days advance notice (unless otherwise required
by law) to Probex. Any material breach of this obligation shall
relieve Probex or Parent of Liabilities under this Agreement with
respect to the applicable Environmental Claim to the extent
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Probex or Parent has been prejudiced by the lack of timely and
adequate notice. This notification requirement shall not apply to
communications which are part of or relate to a judicial or
administrative proceeding in which the Parties are litigating
claims against each other.
Section 13.4 Express Negligence Acknowledgement. THE INDEMNIFICATION
PROVISIONS CONTAINED HEREIN ARE INTENDED TO, AND SHALL HAVE THE EFFECT OF,
INDEMNIFYING A PERSON AGAINST THE RESULTS OF ITS OWN NEGLIGENCE OTHER THAN GROSS
NEGLIGENCE AND WILLFUL MISCONDUCT. Nevertheless, no Person to be indemnified
shall be relieved of responsibility for any negligence in responding, once the
claim or demand for indemnification arises, to any matter that is the basis or
subject of any claim or demand for indemnification by such Person under this
Article XIII.
Section 13.5 No Special Damages. Neither party shall be liable to the
other under any circumstances for PUNITIVE, special, consequential or indirect
damages regardless of whether it has been advised of the possibility of such
damages.
ARTICLE XIV
MODIFICATIONS TO FACILITIES
Section 14.1 If improvements, alterations, or additions to the
Facilities are required to meet the needs of Probex's business during the Term
of this Agreement, Probex and PQS shall negotiate in good faith in an attempt to
agree to make such alterations, additions, and modifications in a safe,
expeditious, and cost efficient manner and in accordance with all local, state
and federal requirements. The expense of such alterations, additions, and
modifications shall be borne by Probex, using funds provided by Probex.
Section 14.2 If as a result of governmental rules, regulations, or
orders it becomes necessary to make improvements, alterations, or additions to
the Facilities during the Term of this Agreement in order for the Facilities to
continue to function in support of Probex's business, PQS shall cooperate with
Probex to make such alterations, additions, and modifications. To the extent
such alterations, additions, or modifications are to the sole benefit of Probex,
the expense of such alterations, additions, or modifications shall be borne by
Probex. If the required alterations, additions, or modifications are of benefit
to both Parties, then the expenses shall be borne proportionately by the Parties
to the use.
Section 14.3 If the cost to PQS of providing the Services to support
Probex's business should increase or decrease as a result of Section 14.1 or
14.2, PQS shall have the right, at PQS's sole discretion, to increase the fee
referred to in Article IV by the amount of the increase and the obligation to
decrease the fee by the amount of the actual decrease. The increase in fee will
be limited to actual costs incurred by PQS.
Section 14.4 Notwithstanding anything to the contrary contained in
Sections 14.1, 14.2 and 14.3 of this Agreement, Probex shall have no obligations
to pay or reimburse PQS for any alteration, addition, or modification referenced
in Sections 14.1, 14.2 and 14.3 to the extent such alteration, addition or
modification is covered by PQS' indemnity to Probex under Section 9.2(a) of the
Asset Purchase Agreement or Section 13.2.1 of this Agreement.
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<PAGE>
Section 14.5 Upon permanent removal of any of the Facilities from
service by or on behalf of Probex, or the vacation of the Location by Probex,
Probex will be solely responsible for (i) removal of tanks, piping, containment
walls, concrete, pumps, and pump sheds, (ii) loading of tanks and related
equipment on trucks, (iii) salvage of reusable parts, and (iv) removal of
related construction debris, and all costs and expenses related to these
responsibilities.
Section 14.6 At any time after the third anniversary of the date of
this Agreement, or if Probex chooses to vacate the Location prior to such third
anniversary due to reasons other than a PQS decision to sell or shut down the
Location, Probex will be solely responsible for removing Regulated Substances
from the interior of tanks and related pipelines and other Facilities, and the
subsequent transportation and disposal of such Regulated Substances, and all
costs and expenses related to these responsibilities.
Section 14.7 If at any time before the third anniversary of the date of
this Agreement, Probex vacates the Location due to a PQS decision to sell or
shut down the Location, PQS will be solely responsible for removing Regulated
Substances from the interior of tanks and related pipelines and other
Facilities, and the subsequent transportation and disposal of such Regulated
Substances, and all costs and expenses related to these responsibilities.
ARTICLE XV
ARBITRATION
Section 15.1 Negotiation. If any dispute relating to this Agreement
arises between the Parties, the Parties will first enter into good faith
negotiations to resolve the dispute in a commercially reasonable manner. The
negotiations will be held by representatives of each Party who have the
authority to settle any claims arising out of the dispute.
Section 15.2 Arbitration. If a dispute cannot be resolved through good
faith negotiations, the dispute will be submitted for resolution by a panel of
three arbitrators in accordance with the Commercial Arbitration Rules of the
American Arbitration Association. The arbitrators will apply the laws of the
State of Texas to resolve the dispute. The arbitration will take place in
Houston, Texas, no later than one hundred twenty (120) days after a request for
arbitration is filed by a Party with the American Arbitration Association.
Judgement upon an arbitration award shall be final and may be entered in any
court having jurisdiction over the Party against which enforcement thereof is
sought. All fees and expenses of the arbitration shall be borne by the parties
equally. However, each party shall bear the expense of its own counsel, experts,
witnesses and preparation of proofs. This arbitration provision will survive the
termination of this Agreement and the dissolution of the Parties.
Section 15.3 Alternative Arbitration. As an alternative to the
arbitration procedure set forth in paragraph 15.2 above, the Parties may (but
will not be required to) agree to an expedited dispute resolution process which
will be completed no later than thirty (30) days after the date the Parties
agree in writing to pursue this expedited process. Under the expedited process,
the dispute will be submitted to a panel consisting of one executive level
manager from each Party who has the authority to settle any claims arising out
of the dispute. These managers will attempt to resolve the dispute within seven
(7) business days after the date the Parties agree to pursue the expedited
process. If the managers are unable to resolve the dispute with this time
period, such dispute will be submitted to a single arbitrator from a
pre-approved list of qualified, independent arbitrators. The arbitrator will
13
<PAGE>
conduct the remainder of the expedited process in Houston, Texas, and will apply
the laws of the State of Texas and the Commercial Arbitration Rules of the
American Arbitration Association to resolve the dispute. The decision of the
arbitrator will be final and may be entered into any court having jurisdiction
over the Party against which enforcement thereof is sought. All fees and
expenses of the arbitration shall be borne by the parties equally. However, each
party shall bear the expense of its own counsel, experts, witnesses and
preparation of proofs.
Section 15.4 Performance Pending Arbitration. The Parties agree
that their respective obligations under this Agreement, including, without
limitation, PQS' obligation to provide the Services and to perform its other
obligations hereunder, and Probex's obligation to pay for the Services and
perform its other obligations hereunder, shall not be excused by the existence
of any dispute that the Parties are, in good faith, endeavoring to resolve
pursuant to, and in accordance with, the provisions of this Article XV.
ARTICLE XVI
MISCELLANEOUS PROVISIONS
Section 16.1 The section headings contained in this Agreement are for
the convenience of the Parties only and shall not be interpreted as part of this
Agreement.
Section 16.2 This Agreement shall not be modified except by written
instrument executed by duly authorized representatives of the respective
Parties.
Section 16.3 Waiver by one Party of the other's breach of any provision
of this Agreement shall not be deemed a waiver of any subsequent or continuing
breach of such provision or of the breach of any other provision or provisions
hereof.
Section 16.4 In the event of a conflict between the terms of this
Agreement and any Exhibit attached hereto, the terms of the Agreement shall be
controlling.
Section 16.5 Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
Section 16.6 This Agreement may be executed in any number of
counterparts, and each of such counterparts shall for all purposes be deemed to
be an original.
Section 16.7 This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of the respective Parties hereto.
Section 16.8 The provisions of Articles I, V, VI, X, XI, XII, XIII, XV
and XVI, and Sections 14.5 and 14.6, will remain in full force and effect and
survive after the term of this Agreement or any termination of this Agreement.
Also, any amounts owed by a Party to the other Party on termination will
continue to be obligations of the owing Party and nothing in this Agreement
shall relieve either Party from liability to the other Party for any breach of
this Agreement, and each Party will be entitled to any remedies in this
Agreement, at law or in equity, or otherwise for any such breach.
14
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
the day and year first above written.
PENNZOIL-QUAKER STATE COMPANY
By:___________________________
Printed Name:_________________
Title:________________________
PROBEX FLUIDS RECOVERY, INC.
By:___________________________
Printed Name:_________________
Title:________________________
PROBEX CORP.
By:___________________________
Printed Name:_________________
Title:________________________
15
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 3.1
GENERAL SERVICES
AT THE LOCATION
Monthly Charge
-----------------
<S> <C>
Tank Farm Access / Space $100
o Located outside. Separate from new oil tank farm. Need to make lease
arrangements or move tank farm. Tank farm occupies 5603 sq. ft.
Warehouse Access / Space $163
o Located inside. 650 sq. ft. will be allocated to SES.
o Box truck can be parked at DC.
Administrative Support $2,080
o Order Entry
o Ticket and Manifest Preparation
o Record Keeping
o Sample Mailing and Log
o Drum Ordering
o Outbound Transportation Coordination
Management Support $3,990
o Driver Coordination
o Asset Oversight (Truck tags, tank maintenance, etc.)
o Problem Resolution Coordination
Bulk Support $2,600
o Tank Management (day tanks to outbound tanks)
o Sample Taking
o Outbound Loading
Warehouse Support $867
o Empty drum unloading
o Outbound drum loading
o Daily pick-up put away
o Empty drum staging loading for route trucks
Utilities/Other Expenses
o Specific identifiable expenses (long distance phone calls postage, uniforms
on PQS contract, etc.) (Bill per specific invoice)
o Wastewater Handling (No additional charge -
See Attachment I)
TOTAL MONTHLY CHARGE: $9,800
=====
</TABLE>
<PAGE>
ATTACHMENT I
TO EXHIBIT 3.1
GENERAL SERVICES AND COSTS OF SERVICES
1. AT THE LOCATION Commencing on the Closing Date, PQS agrees to receive and
discharge, in compliance with applicable laws, regulations, and other
legally enforceable requirements, wastewater originating on the premises
occupied or used by Probex pursuant to the Agreement ("Premises") and
delivered to PQS by Probex through the existing wastewater line to PQS's
wastewater handling and treatment facilities ("Facilities"), subject to the
following conditions:
a. all wastewater received by the Facilities shall be strictly limited to
(i) boiler blowdown; (ii) wastewater periodically generated by washing
down, through the use of municipally-supplied water only, the tank
farm and other areas associated with Probex operations on the
Premises; and (iii) stormwater generated on the Premises.
b. Probex shall remain the owner of and be responsible for all wastewater
received by PQS from the Premises.
c. all wastewater received by PQS will not interfere with the normal
operation of the Facilities and will not cause a violation of: (i)
PQS's NPDES permit, (ii) any other permit issued to PQS by the United
States Environmental Protection Agency ("EPA") or the State of Texas
or any of its subdivisions, or (iii) any other applicable law,
regulation, or other legally enforceable requirement.
d. all wastewater received by PQS shall be free of any used oil, used
antifreeze, or any other substances regulated as solid or hazardous
wastes pursuant to applicable laws, regulations, or other legally
enforceable requirements, except to the extent the presence of such
substances in the wastewater does not cause a violation of any
applicable law, regulation, or other legally enforceable requirement.
e. Probex shall demonstrate on a monthly basis to PQS's reasonable
satisfaction, through chemical analysis or other means reasonably
acceptable to PQS, that all wastewater received by PQS satisfies all
conditions and requirements specified in this Services Agreement.
2. PQS shall have no obligation to receive or discharge any wastewater
generated by Probex unless all conditions specified at section 1 above are
satisfied at all times. Moreover, PQS shall have no obligation to receive
or discharge wastewater from Probex if at any time its receipt of such
wastewater (a) causes the Facilities to become a privately owned treatment
works as defined at 40 CFR 122.2, (b) requires PQS to obtain a new NPDES
permit or to amend or modify its current NPDES permit, (c) requires PQS to
obtain an additional permit or authorization for the Facilities or for the
discharge of wastewater from the Facilities, or (d) causes PQS to violate
the terms of its NPDES permit or any other law, regulation, or other
legally enforceable requirement, unless Probex agrees to pay the cost of
any actions required to eliminate such violations or to obtain any new,
additional, amended, or modified permit. PQS and Probex shall cooperate in
good faith to evaluate any potential issues of the nature described in the
preceding sentence and to identify methods to avoid such issues. In
addition, PQS shall not be required to receive or discharge wastewater for
<PAGE>
Probex if modifications or improvements are required to the Facilities to
discharge Probex's wastewater in compliance with PQS's NPDES permit and any
other applicable law, regulation, or other legally enforceable requirement,
unless Probex agrees to pay the cost of any such modifications or
improvements.
3. PQS's obligation to receive and discharge wastewater received from Probex
shall terminate upon the occurrence of any of the following:
a. the failure of any condition specified at 1. above to be satisfied;
b. Probex's cessation of operations at or vacation of the Premises;
c. any change in the operations of Probex after the Closing Date which
has a material effect on the quantity or quality of the wastewater
received by PQS, unless such change is accomplished to PQS's
reasonable satisfaction through the procedures described in 2. above;
or
d. the expiration of this Services Agreement as provided in Section 2.1
of the Services Agreement.
<PAGE>
EXHIBIT 3.1A
INCIDENT RESPONSE SERVICES
Incident Response $(Bill per specific invoice)
o PQS will implement the appropriate portions of the facility's Spill
Prevention Control and Countermeasure Plan and/or Facility Response Plan
with respect to an incident requiring a response pursuant to such plans
upon: (i) receipt of timely notification of the incident by Probex or any
other person, or (ii) discovery of the incident by an employee of PQS. The
response may include the use of a third party response contractor engaged
by PQS. As soon as practicable, PQS will notify Probex whether it believes
the incident constitutes an Identifiable Event as defined at Section 1.1 of
the Asset Purchase Agreement. Probex will reimburse PQS, within 30 days of
receipt of an invoice, for all costs associated with response to an
Identifiable Event.
