Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
Among
SHORE TERMINALS LLC,
KANEB PIPE LINE PARTNERS, L.P.
And
The SELLERS Named Herein
Dated as of SEPTEMBER 22, 2000
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TABLE OF CONTENTS
ARTICLE I Agreement of Purchase and Sale; Certain Definitions........1
1.1 Agreement..................................................1
1.2 Closing....................................................1
1.3 Consideration..............................................2
1.4 Payoff of Senior Bank Debt.................................2
1.5 Post-Closing Adjustment to Purchase Price..................2
1.6 Certain Definitions........................................3
ARTICLE II Representations and Warranties of Buyer....................6
2.1 Due Organization...........................................6
2.2 Due Authorization..........................................6
2.3 Brokers....................................................7
2.4 Investment Intent..........................................7
2.5 Units......................................................7
2.6 Buyer Information..........................................7
ARTICLE III Representations and Warranties of Lancewood, Inc. and Onyx.7
3.1 Ownership of Interests; No Liens on Interests..............7
3.2 Other Rights to Acquire Securities.........................8
3.3 Due Organization...........................................8
3.4 No Subsidiaries............................................8
3.5 Due Authorization..........................................8
3.6 Financial Statements.......................................9
3.7 Conduct of Business; Certain Actions.......................10
3.8 Properties.................................................11
3.9 Licenses and Permits.......................................12
3.10 Intellectual Rights........................................12
3.11 Compliance with Governmental Requirements..................12
3.12 Insurance..................................................13
3.13 Employee Benefit Plans.....................................13
3.14 Contracts and Agreements...................................15
3.15 Claims and Proceedings.....................................16
3.16 Taxes and Governmental Returns.............................17
3.17 Personnel..................................................18
3.18 Business Relations.........................................18
3.19 Accounts Receivable........................................18
3.20 Bank Accounts..............................................19
3.21 Agents.....................................................19
3.22 Indebtedness To and From Officers, Managers, Members
and Employees............................................19
3.23 Certain Consents...........................................19
3.24 Brokers....................................................19
3.25 Interest in Competitors, Suppliers and Customers...........19
3.26 Inventory..................................................20
3.27 Environmental Matters......................................20
3.28 Purchase of Units for Investment...........................20
3.29 Information Furnished......................................20
3.30 Tax Status of Lancewood....................................21
3.31 Accredited Investor Status.................................21
ARTICLE IV Representations and Warranties of the Sellers..............21
4.1 No Liens on Interests......................................21
4.2 Other Rights to Acquire Securities.........................21
4.3 Due Authorization..........................................21
4.4 Brokers....................................................22
4.5 Purchase of Units for Investment...........................22
4.6 Tax Status of Such Seller..................................23
ARTICLE V Covenants..................................................23
5.1 Inspection.................................................23
5.2 Compliance by the Company and Sellers......................23
5.3 Satisfaction of Conditions Precedent.......................23
5.4 No Solicitation............................................23
5.5 Notice of Developments.....................................24
5.6 Notice by Sellers and the Company of Breach................24
5.7 Notice by Sellers and the Company of Litigation............24
5.8 Continuation of Insurance Coverage.........................24
5.9 Maintenance of Credit Terms................................24
5.10 Financial Statements.......................................24
5.11 Interim Operations of the Company..........................24
5.12 HSR Act Filings............................................26
5.13 Resignations of Managers and Officers......................26
5.14 Compliance by Buyer........................................26
5.15 Satisfaction of Conditions Precedent.......................27
5.16 Notice by Buyer of Breach..................................27
5.17 Notice by Buyer of Litigation..............................27
5.18 Consents...................................................27
5.19 Registration Rights Agreement..............................27
5.20 Wickland Assumption........................................27
5.21 Contracts Update...........................................27
5.22 Release of Sellers.........................................28
5.23 Tax Certificates...........................................28
5.24 Delivery of Investment Letters.............................28
ARTICLE VI Conditions to Closing......................................28
6.1 Conditions to Obligations of Buyer.........................28
6.2 Conditions to Obligations of Sellers and the Company.......30
ARTICLE VII Termination................................................30
7.1 Termination................................................31
7.2 Effect of Termination......................................31
ARTICLE VIII Indemnification............................................31
8.1 Indemnification of Buyer...................................31
8.2 Indemnification of Sellers by Buyer........................33
8.3 Indemnification of Sellers by the Company..................34
8.4 Procedures Relating to Losses other than ThirdParty Claims.35
8.5 Notice and Defense of Third-Party Claims...................36
8.6 Limitations of Liability...................................36
8.7 Survival of Representations and Warranties.................38
8.8 Environmental Remediation by Sellers.......................38
8.9 Wickland and Time Indemnities..............................40
ARTICLE IX Testing and Gauging........................................40
9.1 Testing and Gauging........................................40
9.2 Wastes.....................................................41
ARTICLE X Damage, Destruction or Condemnation of Assets..............41
10.1 Damage, Destruction or Condemnation........................41
10.2 Cost Less Than or Equal to $1,600,000......................41
10.3 Cost Between $1,600,000 and $16,000,000....................42
10.4 Cost Greater than $16,000,000..............................42
ARTICLE XI Miscellaneous..............................................42
11.1 Collateral Agreements, Amendments and Waivers..............42
11.2 Successors and Assigns.....................................43
11.3 Expenses...................................................43
11.4 Invalid Provisions.........................................43
11.5 Information and Confidentiality............................43
11.6 Waiver.....................................................44
11.7 Notices....................................................44
11.8 Public Announcement........................................45
11.9 Waiver of Certain Rights...................................45
11.10 Further Assurances.........................................45
11.11 No Third-Party Beneficiaries...............................46
11.12 Governing Law..............................................46
11.13 Prevailing Party...........................................46
11.14 Arbitration................................................46
11.15 Gender; Numbers............................................46
11.16 Counterparts...............................................46
11.17 Telecopy Execution and Delivery............................47
11.18 No Strict Construction.....................................47
11.19 Guarantee by Onyx..........................................47
11.20 Nondisclosure of Confidential Information..................47
11.21 Decisions Regarding Sellers................................47
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SCHEDULES
1.3 List of Sellers
1.6(h) Environmental Reports
3.1 List of Sellers; Ownership of Interests
3.3 Foreign Qualification of the Company
3.7 Conduct of Business
3.7(c) Capital Expenditures
3.8 Real and Personal Properties
3.9 Licenses and Permits
3.10 Intellectual Rights
3.11 Compliance With Governmental Requirements
3.12 Insurance
3.13 Employee Benefit Plans
3.14 Contracts and Agreements
3.15 Claims and Proceedings
3.16(a) Tax Returns
3.16(b) Governmental Returns
3.17 Personnel
3.18 Business Relations
3.19 Accounts Receivable
3.20 Bank Accounts
3.21 Agents
3.22 Indebtedness to and from Officers, Managers, Members and Employees
3.23 Certain Consents
3.25 Interest in Competitors, Suppliers and Customers
3.26 Inventory
6.1(k) Required Consents, Approvals and Other Closing Matters
EXHIBITS
A - Assumption Agreement
B - Registration Rights Agreement
C - Member's Release
D - Investment Letter
<PAGE>
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "Agreement") is entered into
as of September 22, 2000, among Kaneb Pipe Line Partners, L.P., a Delaware
limited partnership ("Buyer"), Shore Terminals LLC, a Delaware limited liability
company (the "Company"), the individuals and entity identified as "Sellers" on
Schedule 1.3 (the "Sellers") and Onyx Holdings, Inc., a Delaware corporation
("Onyx"), the sole shareholder of Lancewood, Inc.
("Lancewood"), which is one of the Sellers.
The parties hereto agree as follows:
ARTICLE I Agreement of Purchase and Sale; Certain Definitions
1.1 Agreement. Upon the basis of the representations and warranties,
for the consideration, and subject to the terms and conditions set forth in this
Agreement, each of the Sellers agrees to sell all of his, her or its member
equity interest in the Company (collectively, the "Interests") to Buyer, and
Buyer agrees to purchase the Interests from the Sellers, for the consideration
described in, and payable in accordance with the terms of, this Agreement.
1.2 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Fulbright &
Jaworski L.L.P., 2200 Ross Avenue, Suite 2800, Dallas, Texas 75201, at 10:00
a.m., local time, on the second business day following the satisfaction or
waiver of all the conditions to Closing set forth in Article VI hereof, or at
such other time and place and/or on such other date as Buyer and Lancewood may
agree upon in writing. The date on which the Closing occurs is hereinafter
referred to as the "Closing Date".
1.3 Consideration. The aggregate consideration for the Interests shall
be $106,000,000 in cash, plus 2,000,000 Limited Partnership Units (the "Units")
of Buyer (subject to Buyer's obligation to substitute cash for Units allocated
to certain individual Sellers as described below). At least three (3) business
days prior to the Closing Date, Lancewood shall deliver to the Buyer a schedule
allocating the cash portion of the purchase price (net of the Payoff Amount as
defined herein) and the Units among the Sellers (the "Purchase Price Allocation
Schedule"). Each of the Sellers hereby agrees that they will be bound by the
determination of Lancewood with respect to such allocation and the Purchase
Price Allocation Schedule. At the Closing, Buyer shall deliver or cause to be
delivered to each Seller (a) by wire transfer of immediately available funds to
the account of such Seller to be designated by such Seller in writing not later
than three business days prior to the Closing Date, the amount of cash set forth
beside such Seller's name on the Purchase Price Allocation Schedule and (b) a
certificate representing the number of Units set forth beside such Seller's name
on the Purchase Price Allocation Schedule, registered in such Seller's name,
provided that with respect to any Units that are allocated to Sellers other than
Lancewood, Peter J. Jacullo, III, David L. Widener, Richard Shore, Jr., and
Michael J. Burgett, Buyer shall have the obligation, in lieu of delivery of
Units, to deliver to such Seller additional cash in the amount of the Designated
Value of the Units the Seller would otherwise be entitled to receive. For
purposes of the preceding sentence, the term "Designated Value" shall mean
$27.00 per Unit. Buyer and the Sellers agree to treat the transactions
contemplated by this Agreement as (i) a contribution to a partnership under
Section 721 of the Code to the extent the consideration for the Interests is
paid in Units, and (ii) a sale of property to a partnership pursuant to the
Treasury Regulations promulgated under Section 707 of the Code to the extent the
consideration for the Interests is paid in cash. Buyer and the Sellers agree to
file their respective tax returns consistent with this treatment.
1.4 Payoff of Senior Bank Debt. On or before the Closing Date, the
Sellers shall cause FleetBoston Financial Corporation, as lead lender under the
Company's senior bank facilities (the "Bank"), to deliver to the Buyer a payoff
letter (the "Payoff Letter"). Such Payoff Letter shall indicate the amount of
loan obligations of the Company to be discharged on the Closing Date (the
"Payoff Amount") and include an acknowledgement by the Bank that upon receipt of
such finds (i) all of the liabilities, indebtedness and other obligations of the
Company to the Bank will be paid in full and all loan facilities with the
Company terminated, and (ii) it thereupon releases all liens and security
interests encumbering any of the assets or equity interests of the Company and
it will forthwith execute and deliver to the Buyer for filing all termination
statements and take such other actions as may be necessary to discharge all
mortgages, deeds of trust and security interests granted by the Company in favor
of the Bank. At the Closing, the Buyer will cause to be delivered to the Bank by
wire transfer of immediately available funds an amount equal to the Payoff
Amount, and such delivery of funds shall be deemed for all purposes of this
Agreement as delivery of such funds to the Sellers.
1.5 Post-Closing Adjustment to Purchase Price.
(a) Post-Closing Adjustment. An adjustment amount ("Adjustment Amount")
shall be paid by the appropriate parties, in the manner and at the time
set forth in Section 1.5(d), after determination of the Adjustment
Amount, as set forth in Section 1.5(d).
(b) Preparation of Closing Date Balance Sheet. Within 45 days after the
Closing Date, Buyer shall prepare a balance sheet ("Closing Date
Balance Sheet") of the Company as of the Closing Date and determine
specifically the "net working capital" position of the Company as of
the Closing Date. The Closing Date Balance Sheet and the net working
capital position of the Company shall be prepared in accordance with
generally accepted accounting principles applied consistently with the
past audited financial statements of the Company delivered to Buyer;
provided, however, that "net working capital" will be computed as
current assets minus current liabilities (other than (i) the debt (and
related interest) that will be paid off pursuant to Section 1.4 and
(ii) any amounts owed under the earn-out payment to Wickland Oil
Company that is being assumed by Sellers in accordance with Section
5.20, but including any contingent or other liabilities related to (x)
late filings of, or failures to file, required Forms 5500 related to
the Company's employee plans or (y) demurrage or consequential claims
brought against the Company in connection with the Astra Oil Company,
Inc. matter disclosed on Schedule 3.15). Buyer shall cause a copy of
the Closing Date Balance Sheet to be delivered to Lancewood promptly
upon its completion.
(c) Procedure for Objecting to the Closing Date Balance Sheet. If Lancewood
has not given any notice of objection with respect to the Closing Date
Balance Sheet within 15 days after its delivery to Lancewood, then the
calculation of the net working capital position described in this
Section 1.5 shall be based on the Closing Date Balance Sheet. If,
however, Lancewood has given a written notice of objection with respect
to the Closing Date Balance Sheet within the applicable 15-day period,
then the parties shall attempt to resolve their differences. If the
parties cannot agree on appropriate changes to be made to the Closing
Date Balance Sheet within 10 days after the expiration of the 15-day
period, then the parties shall submit the Closing Date Balance Sheet,
along with the written objections of the parties, to the Dallas, Texas
office of KPMG LLP (the "Accounting Firm"). The parties shall request
the Accounting Firm to determine only those aspects of the Closing Date
Balance Sheet that are in controversy and to make that determination in
accordance with the terms of this Agreement within 30 days after the
request. The Adjustment Amount shall be based on the report and
calculation as adjusted to take into account the Accounting Firm's
determinations of those matters that are in controversy. Any fees of
the Accounting Firm shall be paid one-half (1/2) by Buyer and one-half
(1/2) by Lancewood.
(d) Payment of Adjustment Amount. If, following the resolution of any
disputes that may arise pursuant to Section 1.5(c) above, the net
working capital position of the Company as of the Closing Date is
greater than $1,200,000, Buyer shall pay the Sellers an Adjustment
Amount equal to the excess of the net working capital position of the
Company as of the Closing Date over $1,200,000; if the net working
capital position of the Company as of the Closing Date is less than
$1,200,000, the Sellers shall pay Buyer an Adjustment Amount equal to
the excess of $1,200,000 over the amount of the net working capital
position of the Company as of the Closing Date. The Adjustment Amount
shall be paid within five business days after its determination in
accordance with this Section 1.5 and shall be paid by interbank or wire
transfer of immediately available funds to the account designated by
the payee in writing to the payor.
1.6 Certain Definitions.
(a) Affiliate. "Affiliate" of any Person shall mean any Person Controlling,
Controlled by or under common Control with such Person.
(b) Best Knowledge. "Best Knowledge" shall mean both what a Person knew as
well as what the Person should have known had the Person exercised
reasonable diligence. When used with respect to any of Onyx, Lancewood
or the Company, the term "Best Knowledge" shall include matters that
are known only to Peter J. Jacullo, III, David L. Widener, Richard
Shore, Jr., Michael J. Burgett, Dawn M. West, Brian A. Hoff, Richard
Brandes and Marco Ullmer. When "Best Knowledge" is used with respect to
a list of more than one Person, the term shall mean what any of the
listed Persons knew as well as what any of them should have known had
all of the listed Persons exercised reasonable diligence (and this
shall be the meaning whether the list is stated in the conjunctive or
in the disjunctive).
(c) Code. "Code" means the Internal Revenue Code of 1986, as amended.
(d) Control. "Control" and all derivations thereof shall mean the ability
to either (i) vote (or direct the vote of) 50% or more of the voting
interests in any Person or (ii) direct the affairs of another, whether
through voting power, contract or otherwise.
(e) Environmental Laws. "Environmental Laws" shall mean all Governmental
Requirements relating to (i) the control of any potential pollutant,
protection of human health or protection of the environment, including
air, water or land, (ii) the generation, handling, treatment, storage,
disposal or transportation of waste materials, or (iii) the regulation
of or exposure to hazardous, toxic or other substances alleged to be
harmful. "Environmental Laws" shall include the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C.ss.
9601 et seq., the Emergency Planning and Community Right to Know Act,
42 U.S.C.ss. 11001 et seq., the Resource Conservation and Recovery Act,
42 U.S.C.ss. 6901 et seq., the Toxic Substances Control Act, 15
U.S.C.ss. 2601 et seq., the Federal Insecticide, Fungicide, and
Rodenticide Act, 7 U.S.C.ss.136 et seq., the Clean Air Act, 42
U.S.C.ss.7401 et seq., the Federal Water Pollution Control Act (Clean
Water Act), 33 U.S.C.ss. 1251 et seq., the Safe Drinking Water Act, 42
U.S.C.ss.300f et seq., the Occupational Safety and Health Act, 29
U.S.C.ss.651 et seq., the Hazardous Materials Transportation Act, 49
U.S.C.ss.5101 et seq., and any state or local law or regulation
addressing or concerning matters similar to those covered in the above
listed federal statutes.
(f) Environmental Liabilities. "Environmental Liabilities" shall mean any
and all Losses, as defined in Section 8.1 of this Agreement (including
any remedial, removal, response, abatement, cleanup, investigative
and/or monitoring costs and any other related costs and expenses),
incurred or imposed (i) pursuant to any agreement, order, notice of
responsibility, directive (including any directive embodied in
Environmental Laws), injunction, judgment or similar document
(including settlements) arising under or in connection with
Environmental Laws, or (ii) pursuant to any claim by a Governmental
Authority or other Person for personal injury, property damage, damage
to natural resources, remediation, or payment or reimbursement of
response costs incurred or asserted by such Governmental Authority or
Person pursuant to common law or statute and related to the use or
release, as such term is defined in Environmental Laws, of Hazardous
Materials.
(g) Environmental Permits. "Environmental Permits" shall mean any permit,
license, approval, registration, identification number or other
authorization required under Environmental Laws.
(h) Environmental Reports. "Environmental Reports" means the reports,
correspondence, summaries, agreements, documents, materials and other
information and data regarding environmental matters related to the
Company and its assets and business that are specifically listed on
Schedule 1.6(h). If a report, correspondence, summary, agreement,
document, or other material, information or data is referred to in an
Environmental Report, but is not specifically listed on Schedule
1.6(h), then such report, correspondence, summary, agreement, document,
material, information or data shall not be an Environmental Report for
purposes of this Agreement.
(i) ERISA. "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
(j) Fines and Penalties. "Fines and Penalties" means fines and penalties
imposed by any Governmental Authority.
(k) Governmental Authority. "Governmental Authority" shall mean any and all
foreign, federal, state or local governments, governmental
institutions, public authorities and governmental entities of any
nature whatsoever, and any subdivisions or instrumentalities thereof,
including departments, boards, bureaus, commissions, agencies, courts,
administrations and panels, and any divisions or instrumentalities
thereof, whether permanent or ad hoc.
(l) Governmental Requirement. "Governmental Requirement" shall mean any and
all laws (including applicable common law principles and duties),
statutes, ordinances, codes, rules, regulations, interpretations,
guidelines, directions, orders, judgments, writs, injunctions, decrees,
decisions or similar items or pronouncements, promulgated, issued,
passed or set forth by any Governmental Authority, as each such
Governmental Requirement is or was in effect and constituted on or
prior to the Closing Date.
(m) Hazardous Materials. "Hazardous Materials" shall mean (i) any substance
or material that is listed, defined or otherwise designated as a
"hazardous substance" under Section 101(14) of the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. ss.
9601 et seq., (ii) any substance or material that is listed, defined or
otherwise designated as a "hazardous waste" under the Resource
Conservation and Recovery Act, 42 U.S.C. ss. 6901 et seq., (iii) any
petroleum or petroleum product, (iv) any radioactive material, asbestos
or polychlorinated biphenyls, and (v) any other chemical, substance or
waste that is regulated or controlled in any manner under any
Environmental Law.
(n) Include. Unless the context otherwise requires, the terms "include" and
"including," and all derivations thereof, shall be deemed to have the
phrase "without limitation" added thereafter, and shall be interpreted
as introducing a non-exclusive listing, and not an exclusive listing.
(o) Person. "Person" shall mean any natural person, any Governmental
Authority and any entity the separate existence of which is recognized
by any Governmental Authority or Governmental Requirement, including
corporations, partnerships, limited liability companies, joint
ventures, joint stock companies, trusts, estates, companies and
associations, whether organized for profit or otherwise.
(p) Schedule. "Schedule" shall mean the Schedules to this Agreement, unless
otherwise stated. The Schedules to this Agreement may be attached to
this Agreement or may be set forth in a separate document denoted as
the Schedules to this Agreement, or both.
(q) Section. "Section" shall mean a Section of this Agreement, unless
otherwise stated.
(r) Taxes. "Tax" and "Taxes" shall mean any and all income, excise,
franchise or other taxes and all other charges or fees imposed or
collected by any Governmental Authority or pursuant to any Governmental
Requirement, and shall also include any and all penalties, interest,
deficiencies, assessments and other charges with respect thereto.
ARTICLE II Representations and Warranties of Buyer
Buyer represents and warrants to Sellers and the Company as follows
(with the understanding that Sellers and the Company are relying materially on
such representations and warranties in entering into and performing this
Agreement):
2.1 Due Organization. Buyer is a limited partnership, duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and has full partnership power and authority to enter into and perform this
Agreement and each other instrument, agreement and document to be executed by it
in connection herewith.
2.2 Due Authorization. The execution, delivery and performance of this
Agreement, the Registration Rights Agreement (as defined below) and such other
agreements, instruments and documents to be executed in connection herewith by
Buyer have been duly authorized by all requisite partnership action of Buyer.
This Agreement has been duly and validly executed and delivered by Buyer and
constitutes a valid and binding obligation of Buyer enforceable against Buyer in
accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization or other laws affecting the enforcement
of creditors' rights generally and the application of general principles of
equity. Upon its execution in accordance with this Agreement, the Registration
Rights Agreement will have been duly and validly executed and delivered by Buyer
and will constitute a valid and binding obligation of Buyer enforceable against
Buyer in accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization or other laws affecting the
enforcement of creditors' rights generally and the application of general
principles of equity. The execution, delivery and performance of this Agreement
and the Registration Rights Agreement by Buyer will not (a) violate any federal,
state, county or local law, rule or regulation applicable to Buyer or its
property, (b) violate or conflict with, or permit the cancellation of, any
agreement to which Buyer is a party or by which it or its property is bound, (c)
permit the acceleration of the maturity of any indebtedness of, or any
indebtedness secured by the property of, Buyer, or (d) violate or conflict with
any provision of Buyer's certificate of limited partnership or partnership
agreement. No action, consent or approval of or filing with any Governmental
Authority is required in connection with the execution, delivery or performance
of this Agreement (or any agreement or other document executed in connection
herewith by Buyer, including the Registration Rights Agreement to be executed by
Buyer and the Sellers in connection with the Closing (the "Registration Rights
Agreement")) by Buyer, except for (i) the filings described in Section 5.12
hereof, (ii) the filings and approvals contemplated by the Registration Rights
Agreement, and (iii) any third party consents or approvals and filings for
governmental licenses necessary for the Company to continue to own and operate
its assets and business after consummation of the transactions contemplated
hereby.
2.3 Brokers. Buyer has not engaged, or caused to be incurred any
liability to, any finder, broker or sales agent in connection with the
execution, delivery or performance of this Agreement or the transactions
contemplated hereby.
2.4 Investment Intent. Buyer is acquiring the Interests for its own
account for investment and not with a view toward resale or redistribution in a
manner which would require registration under the Securities Act of 1933 (the
"Securities Act") or the securities laws of any state, and Buyer does not
currently have any reason to anticipate any change in its circumstances or other
particular occasion or event which would cause it to sell the Interests or any
part thereof or interest therein. Buyer has not offered or sold the Interests or
any part thereof or interest therein, and, except for possible transfers to
wholly-owned subsidiaries, has no present intention of dividing the Interests
with others or of reselling or otherwise disposing of the Interests or any part
thereof or interest therein either currently or after the passage of a fixed or
determinable period of time or upon the occurrence or nonoccurrence of any
predetermined event or circumstance.
2.5 Units. The Units, when issued and delivered in accordance with the
terms of this Agreement, will be duly authorized, validly issued, fully paid and
non-assessable.
2.6 Buyer Information. Buyer has delivered to each Seller true and
correct copies of Buyer's most recent Annual Report on Form 10-K and Quarterly
Report on Form 10-Q and, as of the date hereof, such documents taken as a whole
do not contain any untrue statement of a material fact or omit any material fact
necessary to make the statements therein not misleading.
ARTICLE III Representations and Warranties of Lancewood, Inc. and Onyx
Lancewood, Inc., a Delaware corporation and the holder of a majority of
the Interests ("Lancewood"), and Onyx, the sole stockholder of Lancewood, hereby
jointly and severally represent and warrant to Buyer as follows (with the
understanding that Buyer is relying materially on each such representation and
warranty in entering into and performing this Agreement):
3.1 Ownership of Interests; No Liens on Interests. All of the Interests
are duly authorized, validly issued, fully paid and nonassessable. The Interests
in the aggregate constitute 100% of the issued and outstanding equity or other
ownership interests in the Company. All of the Interests are uncertificated, and
are not evidenced by any certificates or other documents except the limited
liability company agreement of the Company. All of the Interests are owned of
record and beneficially by the Sellers as set forth on Schedule 3.1. None of the
Interests were issued or will be transferred under this Agreement in violation
of any preemptive or preferential rights of any person. Lancewood is the true
and lawful owner, of record and beneficially, of the Interest set forth by its
name on Schedule 3.1, free and clear of any liens, restrictions, security
interests, claims, rights of another or encumbrances; none of the Interest owned
by Lancewood is subject to any outstanding options, warrants, calls or similar
rights of any other person to acquire the same; none of the Interest owned by
Lancewood is subject to any restrictions on transfer thereof; and Lancewood has
the full power and authority to convey, and will convey to Buyer at Closing,
good and marketable title to its Interest, free and clear of any liens,
restrictions, security interests, claims, rights of another or encumbrances.
3.2 Other Rights to Acquire Securities. There are no authorized or
outstanding warrants, options or rights of any kind to acquire from the Company
or from Lancewood any equity or debt securities of the Company or securities
convertible into or exchangeable for equity or debt securities of the Company.
3.3 Due Organization. The Company is a limited liability company, duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has full company power and authority to carry on its business as
now conducted. Complete and correct copies of the certificate of formation and
limited liability company agreement of the Company and all amendments thereto
have been delivered to Buyer. The Company is qualified to do business and is in
good standing in the jurisdictions set forth on Schedule 3.3, which
jurisdictions represent every jurisdiction where such qualification is required,
except where the failure to be so qualified would not have a material adverse
effect on the business, properties or assets of the Company. Except for the
employee in Illinois described on Schedule 3.3, the Company does not have, and
has not had in the past, any assets, employees or business in any states other
than California, Nevada, Washington and Oregon.
3.4 No Subsidiaries. The Company does not directly or indirectly have
(or possess any options or other rights to acquire) any subsidiaries or any
direct or indirect ownership interests in any person, business, corporation,
limited liability company, partnership, association, joint venture, trust or
other entity.
3.5 Due Authorization.
(a) Each of the Company, Lancewood and Onyx has full company or corporate
power and authority to enter into and perform this Agreement and each
other agreement, instrument and document required to be executed by it
in connection herewith (the "Ancillary Agreements"). The execution,
delivery and performance of this Agreement and the Ancillary Agreements
have been duly authorized by the Board of Managers of the Company and
by the Board of Directors of each of Lancewood and Onyx and by all
other necessary company or corporate action by or on behalf of each of
the Company, Lancewood and Onyx.
(b) This Agreement has been duly and validly executed and delivered by each
of the Company, Lancewood and Onyx and constitutes a valid and binding
obligation of each of the Company, Lancewood and Onyx enforceable
against each of them in accordance with its terms, except as the same
may be limited by applicable bankruptcy, insolvency, reorganization or
other laws affecting the enforcement of creditors' rights generally and
the application of general principles of equity.
(c) Upon its execution in accordance with this Agreement, each Ancillary
Agreement to which the Company is a party will have been duly and
validly executed and delivered by the Company and will constitute a
valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as the same may be limited
by applicable bankruptcy, insolvency, reorganization or other laws
affecting the enforcement of creditors' rights generally and the
application of general principles of equity.
(d) Upon its execution in accordance with this Agreement, each Ancillary
Agreement to which Lancewood is a party will have been duly and validly
executed and delivered by Lancewood and will constitute a valid and
binding obligation of Lancewood enforceable against Lancewood in
accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization or other laws
affecting the enforcement of creditors' rights generally and the
application of general principles of equity.
(e) Neither the execution, delivery and performance of this Agreement by
any of the Company, the Sellers or Onyx, nor the execution, delivery
and performance of any Ancillary Agreement by any of the Company, the
Sellers or Onyx, will (i) violate any federal, state, county or local
law, rule or regulation applicable to the Company, Lancewood or Onyx,
or their respective properties, (ii) violate or conflict with, or
permit the cancellation of, any agreement to which the Company,
Lancewood or Onyx is a party, or by which any of them or any of their
respective properties is bound, or result in the creation of any lien,
security interest, charge or encumbrance upon any of such properties,
(iii) permit the acceleration of the maturity of any indebtedness of,
or indebtedness secured by the property of, the Company, Lancewood or
Onyx (except for indebtedness outstanding under the Company's senior
credit facilities, which indebtedness will be paid in full by Sellers
at or prior to Closing), or (iv) violate or conflict with any provision
of the certificate of incorporation, certificate of formation, limited
liability company agreement or by-laws of the Company, Lancewood or
Onyx.
(f) No action, consent or approval of or filing with any Governmental
Authority is required in connection with the execution, delivery or
performance of this Agreement or any Ancillary Agreement by the
Company, Lancewood or Onyx, except for (i) the filings described in
Section 5.12 hereof, and (ii) the items set forth in Schedule 3.23 or
3.9.
3.6 Financial Statements. The following Financial Statements (herein so
called) of the Company have been delivered to Buyer by the Company:
(a) Audited balance sheets of the Company as of December 31, 1999 and
December 31, 1998, and the related statements of operations, changes in
members' equity and cash flows for the year then ended and the two
month period then ended, respectively, together with the notes thereto
and the report of Deloitte & Touche LLP with respect thereto
(collectively, the "Audited Financial Statements"); and
(b) An unaudited balance sheet and related statements of operations,
changes in members' equity and cash flows of the Company as of and for
the six months ended June 30, 2000 (collectively, the "Interim
Financial Statements").
The Financial Statements have been, and all later dated financial
statements of the Company delivered to Buyer pursuant to this Agreement ("Future
Financial Statements") will be, prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
indicated and present, and will present, fairly the financial position, results
of operations and changes in financial position of the Company as of the
indicated dates and for the indicated periods (except, in the case of the
Interim Financial Statements and Future Financial Statements, for the absence of
notes thereto and subject to normal year-end audit adjustments and accruals
required to be made in the ordinary course of business which are not materially
adverse and are consistent with past practices). Except to the extent reflected,
disclosed or provided for in the balance sheets included in the Interim
Financial Statements, the Company has no liabilities or obligations (whether
absolute, contingent or otherwise) that would be required to be reflected in the
Interim Financial Statements (including footnotes) of the Company prepared in
accordance with generally accepted accounting principles, and none of the
Company, Lancewood or Onyx has any Best Knowledge of any basis for the assertion
of any such liability or obligation. Since June 30, 2000, there has been no
adverse change in the financial position, assets, results of operations or
business of the Company. To the Best Knowledge of the Company, Lancewood and
Onyx, there are no pending or proposed statutes, rules or regulations nor any
current or pending developments or circumstances, which would have an adverse
effect on the financial position, assets, results of operations or business of
the Company.
3.7 Conduct of Business; Certain Actions. Except as set forth on Schedule 3.7,
since June 30, 2000, the Company has conducted its business and operations in
the ordinary course and consistent with past practices and has not (a) paid or
declared any dividend or distribution or purchased or retired any indebtedness
from any member or purchased, retired or redeemed any equity securities from any
member, (b) increased the compensation of any of the managers, officers or key
employees of, or consultants to, the Company or, except for wage and salary
increases made in the ordinary course of business and consistent with past
practices, increased the compensation of any other employees of the Company, (c)
made any capital expenditures (other than those described on Schedule 3.7(c))
exceeding $100,000 individually or $200,000 in the aggregate, (d) sold assets
with an aggregate sales price in excess of $50,000 in the aggregate, (e)
discharged or satisfied any lien or encumbrance or paid any obligation or
liability, absolute or contingent, other than (i) current liabilities incurred
and paid in the ordinary course of business, and (ii) indebtedness outstanding
under the Company's senior credit facilities, (f) made or guaranteed any loans
or advances to any Person, (g) suffered or permitted any lien, security
interest, claim, charge or other encumbrance to arise or be granted or created
against or upon any of the assets of the Company, real or personal, tangible or
intangible, (h) canceled, waived or released any of the Company's debts, rights
or claims against third parties, (i) amended the certificate of formation or
limited liability company agreement of the Company (except to remove or admit
members of the Company or to change the respective percentage interests of the
members in the Company), (j) made or paid any severance or termination payment
to any employee or consultant in excess of $25,000, (k) made any change in the
method of accounting of the Company, (l) made any investment or commitment
therefor in any Person, (m) made, entered into, amended or terminated any
written employment or consulting contract, created, made, amended or terminated
any bonus, stock option, pension, retirement, profit sharing or other employee
benefit plan or arrangement or withdrawn from any "multi-employer plan" (as
defined in Section 414(f) of the Code so as to create any liability under
Article IV of ERISA to any entity, (n) materially amended or experienced a
termination of any material contract, agreement, lease, franchise or license to
which the Company is a party, (o) borrowed any money, whether under new or
existing debt facilities or otherwise, factored any receivables or incurred any
debt obligation (except under the Company's presently existing senior credit
facilities, which will be paid in full at Closing pursuant to Section 1.4, and
trade payables and other obligations incurred in the ordinary course of
business, that will be included as current liabilities in the net working
capital calculation pursuant to Section 1.5), (p) entered into any other
material transactions not otherwise disclosed in the Schedules to this
Agreement, (q) entered into any contract, commitment, agreement or understanding
to do any acts described in the foregoing clauses (a)-(p) of this Section 3.7,
(r) suffered damage, destruction or loss (whether or not covered by insurance)
to assets that in the aggregate have or will cost more than $50,000 to repair or
replace, (s) experienced any strike, slowdown or demand for recognition by a
labor organization by or with respect to any of the employees of the Company, or
(t) experienced or effected any shutdown, slow-down or cessation of any
operations conducted by, or constituting part of, the Company.
3.8 Properties. Except as set forth in Schedule 3.8, the Company owns
or has the right to use, pursuant to a valid lease or license, all tangible and
intangible assets and properties (including easements and rights-of-way)
necessary for the Company to conduct its business and operations in the manner
they have been conducted during calendar year 2000. Attached hereto as Schedule
3.8 is a list and description of all real and personal properties (excluding, in
the case of personal properties, any asset having a book value of less than
$25,000 as of June 30, 2000) owned or leased by the Company as of the date
hereof. Except as set forth on Schedule 3.8, (a) the real and personal
properties of the Company are free and clear of all liens, security interests,
claims, rights of another and encumbrances, (b) the Company has good, full and
unrestricted legal and equitable title to, or a valid leasehold interest in, all
such properties, and (c) the operation of the properties and business of the
Company in the manner in which they are now and have been operated by the
Company (and, to the Best Knowledge of the Company and Lancewood, by the
Company's predecessors in interest) does not violate in any respect any zoning
ordinances, municipal regulations or other rules, regulations or laws (excluding
Environmental Laws, which are covered by Section 3.27). No covenants, easements,
rights-of-way or regulations of record impair in any material respect the uses
of the properties of the Company for the purposes for which they are now
operated. Except as set forth on Schedule 3.8, the plants, structures,
equipment, vehicles and other tangible properties owned, leased or licensed by
the Company are in as good of an operating condition and repair, normal wear and
tear excepted, as such items were in on June 26, 2000. Except as set forth on
Schedule 3.8, all plants, structures, equipment, vehicles and other tangible
properties of the Company, and the Company's past and present use of all such
items, conform to all applicable Governmental Requirements (excluding
Environmental Laws, which are covered by Section 3.27), and no notice of any
violation of any such Governmental Requirements (excluding Environmental Laws,
which are covered by Section 3.27) relating to such assets or their use has been
received by the Company. Neither the whole nor any portion of any real property
owned or leased by the Company has been condemned or otherwise taken by any
public authority, nor, to the Best Knowledge of the Company, Lancewood and Onyx,
is any such condemnation or taking threatened or planned.
3.9 Licenses and Permits. Attached hereto as Schedule 3.9 is a list of
all federal, state, county and local governmental licenses, certificates and
permits (including Environmental Permits) necessary for the conduct of the
Company's business as it has been conducted in calendar year 2000 ("Permits").
Except as set forth on Schedule 3.9, the Company has complied, and is in
compliance with the terms and conditions of all Permits and no violation of any
Permits or the laws or rules governing the issuance or continued validity
thereof has occurred. Except as set forth on Schedule 3.9, no additional
license, certificate or permit is required from any Governmental Authority in
connection with the conduct of the business of the Company as it has been
conducted in calendar year 2000. Except as set forth on Schedule 3.9, no claim
has been made by any Governmental Authority (and, to the Best Knowledge of the
Company, Lancewood and Onyx, no such claim is anticipated) to the effect that a
license, permit or order is necessary in respect of the business conducted by
the Company as it has been conducted in calendar year 2000. Except as set forth
on Schedule 3.9, the Company has issued to it and in its name all Permits, and
all such Permits are valid and in full force and effect and no consent or
approval of, or filing with, any Person or Governmental Authority is necessary
for such Permits to remain valid and in full force and effect after the Closing,
and there are no pending requests for abatement of any requirements under any
Permits. With respect to all Permits held by the Company, Schedule 3.9 lists the
present expiration, termination and renewal dates therefor. The Company has no
plan nor has it received notice from any Governmental Authority requiring it to
change its method of operation in such a manner that would require a
modification of any existing Permit or the issuance of any new Permit and the
Company has no reason to believe that any Permit held by the Company will not be
timely renewed.
3.10 Intellectual Rights. Attached hereto as Schedule 3.10 is a list of
all patents, trademarks, servicemarks, tradenames and copyrights and
applications therefor owned by or registered in the name of the Company or in
which the Company has any right, license or interest. Except as set forth on
Schedule 3.10, the Company is not a party to any license agreements, either as
licensor or licensee, with respect to any patents, trademarks, servicemarks,
tradenames or copyrights. The Company has good and marketable title to or the
right to use such assets and all inventions, processes, designs, formulae, trade
secrets and know-how necessary for the conduct of its business, as it has been
conducted during calendar year 2000, without the payment of any royalty or
similar payment. The Company is not infringing any patent, trademark,
servicemark, trade name or copyright of others, and none of the Company,
Lancewood or Onyx is aware of any infringement by others of any such rights
owned by the Company.
3.11 Compliance with Governmental Requirements. Except as set forth on
Schedule 3.11, the Company has complied and is in compliance, with all
Governmental Requirements applicable to its business (excluding Environmental
Laws, which are covered by Section 3.27) and has filed with the proper
authorities all statements and reports required by the laws, regulations and
orders to which the Company or any of its properties or operations are subject.
Except as set forth on Schedule 3.11, no claim has been made by any Governmental
Authority (and, to the Best Knowledge of the Company, Lancewood and Onyx, no
such claim is anticipated) to the effect that the business conducted by the
Company fails to comply, in any respect, with any Governmental Requirement
(excluding Environmental Laws, which are covered by Section 3.27).
3.12 Insurance. Attached hereto as Schedule 3.12 is a list of all
policies of fire, liability, business interruption and other forms of insurance
and all fidelity bonds held by or applicable to the Company at any time since
its inception, which schedule sets forth in respect of each such policy the
policy name, policy number, carrier, term, type of coverage, deductible amount
or self-insured retention amount, limits of coverage and annual premium. The
insurance currently held by the Company is in such amount and is of such type
and scope as is customary in the industry in which the Company is engaged and
the Company has had in full force and effect at all times since its inception
comparable insurance of similar type, amount and scope. Except as disclosed on
Schedule 3.12, there has been no change in the type of insurance coverage
maintained by the Company during the past three years which has resulted in any
period during which the Company had no insurance coverage. Excluding insurance
policies which have expired and been replaced, no insurance policy of the
Company has been canceled within the last three years and, to the Best Knowledge
of the Company, Lancewood and Onyx, no threat has been made to cancel any
insurance policy of the Company within such period.
3.13 Employee Benefit Plans.
(a) Schedule 3.13 contains a complete and correct list of (i) all employee
welfare benefit and employee pension benefit plans as defined in
sections 3(1) and 3(2) of ERISA, including, but not limited to, plans
that provide retirement income or result in a deferral of income by
employees for periods extending to termination of employment or beyond,
and plans that provide medical, surgical, or hospital care benefits or
benefits in the event of sickness, accident, disability, death or
unemployment and (ii) all other material employee benefit agreements or
arrangements, including without limitation deferred compensation plans,
incentive plans, bonus plans or arrangements, stock option plans, stock
purchase plans, stock award plans, golden parachute agreements,
severance pay plans, dependent care plans, cafeteria plans, employee
assistance programs, scholarship programs, employment contracts,
retention incentive agreements, noncompetition agreements, consulting
agreements, confidentiality agreements, vacation policies, and other
similar plans, agreements and arrangements that are currently in effect
or were maintained within three years of the date of this Agreement, or
have been approved before this date but are not yet effective, for the
benefit of directors, officers, employees or former employees (or their
beneficiaries) of the Company, or with respect to which the Company may
have any liability (collectively referred to as "Plans").
(b) With respect to each Plan, the Company, Onyx and Lancewood have
heretofore delivered to Buyer, as applicable, complete and correct
copies of each of the following documents:
(i) the Plan and any amendments thereto (or if the Plan is not a
written agreement, a description thereof);
(ii) the three most recent annual Form 5500 reports filed with the
Internal Revenue Service ("IRS");
(iii) the most recent statement filed with the Department of Labor
pursuant to 29 U.S.C.ss. 2520.104-23;
(iv) a written summary of the legal basis for an exemption from the
obligation to file annual Form 5500 reports;
(v) the three most recent annual Form 990 and 1041 reports filed
with the IRS;
(vi) the most recent summary plan description and summaries of
material modifications thereto;
(vii) the trust agreement, group annuity contract or other funding
agreement that provides for the funding of the Plan;
(viii) the most recent financial statement;
(ix) the most recent determination letter received from the IRS
with respect to each Plan that is intended to qualify under
section 401 of the Code; and
(x) any agreement pursuant to which the Company is obligated to
indemnify any person.
(c) Neither the Company nor any entity (whether or not incorporated) that
was at any time during the six-year period ending on the date of this
Agreement treated as a single employer together with the Company under
section 414 of the Code has ever maintained, had an obligation to
contribute to, contributed to, or incurred any liability with respect
to, a pension plan that is or was subject to Title IV of ERISA or
section 412 of the Code.
(d) Neither the Company nor any other entity has engaged in a transaction
that could result in the imposition upon the Company of a civil penalty
under section 409 or 502(i) of ERISA or a tax under section 4972, 4975,
4976, 4980B or 6652 of the Code with respect to any Plan, and no fact
or event exists that could give rise to any such liability.
(e) Each Plan has been operated and administered in all respects in
accordance with its terms and applicable laws, including but not
limited to ERISA and the Code.
(f) The terms of all Plans that are intended to qualify under section
401(a) of the Code (i) have been determined by the IRS to qualify under
section 401(a) of the Code or (ii) the applicable remedial amendment
periods under section 401(b) of the Code will not have expired prior to
the Closing Date. No event or circumstance has occurred that could
cause the IRS to disqualify any Plan that is intended to qualify under
section 401(a) of the Code.
(g) No Plan provides medical, surgical, hospitalization, or life insurance
benefits (whether or not insured by a third party) for employees or
former employees of the Company for periods extending beyond their
retirements or other terminations of service, other than (i) coverage
mandated by applicable law, (ii) death benefits under any pension
benefit plan as defined in section 3(1) of ERISA, or (iii) benefits the
full cost of which is borne by the current or former employee (or his
beneficiary).
(h) The consummation of the transactions contemplated by this Agreement,
either alone or in conjunction with another event (such as a
termination of employment), will not (i) entitle any current or former
employee or officer of the Company, to severance pay, or any other
payment under a Plan, (ii) accelerate the time of payment or vesting of
benefits under a Plan (except for the full vesting of Interests held by
Sellers whose Interests are subject to vesting schedules), or (iii)
increase the amount of compensation due any such employee or officer.
(i) There is no litigation, action, proceeding, audit, examination or claim
pending, or to the Best Knowledge of the Company, Lancewood and Onyx,
threatened or contemplated relating to any Plan (other than routine
claims for benefits).
3.14 Contracts and Agreements. Schedule 3.14 sets forth a true and
complete list of all of the following contracts, agreements, leases, licenses,
arrangements or commitments, written or oral, to which the Company is a party or
by which any of its assets are bound (including all amendments, supplements and
modifications thereto):
(a) all contracts, agreements, arrangements or commitments in respect of
the sale or provision of products or services by the Company;
(b) all sales, agency or distributorship agreements or franchises or
legally enforceable commitments or obligations with respect thereto;
(c) all collective bargaining agreements, union agreements, employment
agreements or consulting agreements;
(d) all loan or credit agreements, indentures, guarantees (other than
endorsements made for collection), mortgages, pledges, conditional
sales or other title retention agreements, and all equipment financing
obligations, lease and lease-purchase agreements;
(e) all leases and all other contracts, agreements or legally enforceable
commitments relating to or affecting real property or any interest
therein (other than covenants, easements, rights-of-way or the like
that are properly recorded in the applicable real property records);
(f) all performance bonds, bid bonds, surety bonds and the like, all
contracts and bids covered by such bonds, and all letters of credit and
guaranties;
(g) all consent decrees and other judgments, decrees or orders, settlement
agreements and agreements relating to competitive activities, requiring
or prohibiting any future action;
(h) all contracts or agreements of any nature with any of the Sellers or
their Affiliates;
(i) all contracts, agreements, leases, licenses, arrangements or
commitments entered into outside the ordinary course of the operation
of the business of the Company;
(j) all other contracts, agreements, leases, licenses, arrangements or
commitments that (i) can be reasonably expected to involve receipts or
expenditures of or by the Company in excess of $100,000 or (ii) have a
remaining term in excess of twelve months;
(k) all other contracts, agreements, leases, licenses, arrangements or
commitments that are material to the Company or its assets or its
business; and
(l) all offers, tenders or the like outstanding and capable of being
converted into an obligation of the Company described in clauses (a)
through (k) above.
All of such contracts, agreements, leases, licenses, arrangements, and
commitments and all other such items held or owned by the Company but not
specifically described above (collectively, the "Contracts") are valid, binding
and in full force and effect in accordance with their terms and conditions and
there is no existing default thereunder or breach thereof by the Company, or, to
the Best Knowledge of the Company, Lancewood or Onyx, by any other party to the
Contracts, or any conditions which, with the passage of time or the giving of
notice or both, might constitute such a default by the Company, or, to the Best
Knowledge of the Company, Lancewood and Onyx, by any other party to the
Contracts. Except as set forth on Schedule 3.14, the Contracts will not be
breached by or give any other party a right of termination as a result of the
transactions contemplated by this Agreement and no consent or approval by any
Person is necessary for any of such Contracts to remain in full force and effect
after the Closing. To the Best Knowledge of the Company, Lancewood and Onyx,
there is no reason why any of the Contracts (i) will result in a loss to the
Company on completion by performance or (ii) cannot readily be fulfilled or
performed by the Company with the assets presently owned, leased or licensed by
the Company on time without undue or unusual expenditure of money or effort.
Copies of all of the documents (or in the case of oral commitments, descriptions
of the material terms thereof) relevant to the Contracts listed in Schedule 3.14
have been delivered to the Buyer, and such copies and descriptions are true,
complete and accurate and include all amendments, supplements or modifications
thereto. The Company has not received any notice of cancellation of any
Contract, and to the Best Knowledge of the Company, Lancewood and Onyx, no
Person has threatened to deliver any notice of cancellation of any Contract.
3.15 Claims and Proceedings. Attached hereto as Schedule 3.15 is a list
of all claims, actions, suits, proceedings and investigations pending or, to the
Best Knowledge of the Company, Lancewood and Onyx, threatened against the
Company or any of its properties or assets, at law or in equity, or before or by
any Governmental Authority. Except as set forth on Schedule 3.15, there is no
basis for any such claim or action or any other claims or actions which would,
or could reasonably be expected to (individually or in the aggregate), have an
adverse effect on the business, operations or financial condition of the
Company, or result in a liability of the Company. Except as set forth on
Schedule 3.15, the Company is not now subject to any order, judgment, decree,
stipulation or consent of any Governmental Authority. No inquiry, action or
proceeding has been asserted, instituted or, to the Best Knowledge of the
Company, Lancewood or Onyx, threatened to restrain or prohibit the carrying out
of the transactions contemplated by this Agreement or to challenge the validity
of such transactions or any part thereof or seeking damages on account thereof.
3.16 Taxes and Governmental Returns.
(a) As of the date hereof, all Tax returns of every nature required by any
Governmental Authority or Governmental Requirement to be filed by the
Company or which include or should include the Company, including those
relating to Taxes of any nature to which the Company or any of its
business is subject ("Tax Returns"), have been filed for all periods
ending on or before the date hereof, and all Taxes shown to be due and
payable on such Tax Returns or on any assessments related to such Tax
Returns have been paid. All such Tax Returns and the information and
data contained therein have been properly and accurately compiled and
completed, fairly present the information purported to be shown
therein, and reflect all Tax liabilities of the Company for the periods
covered by such Tax Returns. Except as set forth on Schedule 3.16(a),
the Company has no unpaid liability for any Taxes of any nature
whatsoever for any period prior to the date hereof. Except as set forth
on Schedule 3.16(a), the Tax Returns of the Company or that include the
Company have not been audited, and are not now under audit, by any
Governmental Authority. Except as set forth on Schedule 3.16(a), there
are no agreements, waivers or other arrangements providing for an
extension of time with respect to the assessment of any Taxes of any
nature against the Company or with respect to any Tax Return filed by
the Company or that include the Company, or any suits or other actions,
proceedings, investigations or claims now pending or, to the Best
Knowledge of the Company, Lancewood and Onyx, threatened against the
Company with respect to any Taxes or any matters under discussion with
any Governmental Authority relating to any Taxes, or any claims for
additional Taxes asserted by any Governmental Authority.
(b) As of the date hereof, all information returns and governmental reports
of every nature (excluding Tax returns, which are covered by Section
3.16(a)) required by any Governmental Authority or Governmental
Requirement (excluding Environmental Laws, which are covered by Section
3.27) to be filed by the Company or which include or should include the
Company ("Governmental Returns"), have been filed for all periods
ending on or before the date hereof, and all fees, assessments and
other liabilities related to such Governmental Returns have been paid.
All such Governmental Returns and the information and data contained
therein have been properly and accurately compiled and completed,
fairly present the information purported to be shown therein and
reflect all fees, assessments and other liabilities of the Company with
respect thereto for the periods covered by such Governmental Returns.
Except as set forth on Schedule 3.16(b), the Company has no unpaid fee,
assessment or other liability with respect to any Governmental Return
for any period prior to the date hereof. Except as set forth on
Schedule 3.16(b), the Governmental Returns of the Company or that
include the Company have not been audited, and are not under audit, by
any Governmental Authority. Except as set forth on Schedule 3.16(b),
there are no agreements, waivers or other arrangements providing for an
extension of time with respect to the assessment of any fee, assessment
or other liability with respect to any such Governmental Return, or any
suits or other actions, proceedings, investigations or claims now
pending or, to the Best Knowledge of the Company, Lancewood and Onyx,
threatened against the Company with respect to any Governmental Returns
or any fees, assessments or other liabilities related thereto or any
matters under discussion with any Governmental Authority relating to
any Governmental Returns, or any claims for additional fees,
assessments or other liabilities asserted by any Governmental Authority
with respect to such Governmental Returns.
3.17 Personnel. Attached hereto as Schedule 3.17 is a list of the names
and annual rates of compensation of the managers, officers and employees of the
Company (including base salary, bonus and incentive pay). Schedule 3.17 also
summarizes the bonus, profit sharing, percentage compensation, company
automobile, club membership and other like benefits, if any, paid or payable to
such managers, officers and employees during the Company's 1999 fiscal year and
to the date hereof or under which such managers, officers and employees are
entitled to receive benefits. Except as set forth in Schedule 3.17, the Company
has not received any written notification that any of the employees of the
Company presently plans to terminate his or her employment during the 2000
calendar year, whether by reason of the transactions contemplated in this
Agreement or otherwise. Schedule 3.17 also lists all employment agreements,
consulting agreements and confidentiality agreements to which the Company is a
party, and all severance benefits which any manager, officer, consultant or
employee of the Company is or may be entitled to receive. The employee relations
of the Company are good and there is no pending or, to the Best Knowledge of the
Company, Lancewood and Onyx, threatened labor dispute. Except as set forth on
Schedule 3.17, none of the employees of the Company are represented by any labor
union or organization and, to the Best Knowledge of the Company, Lancewood and
Onyx, there are no current union organizing actions among the Company's
employees. The Company is in compliance in all material respects with all
federal and state laws respecting employment and employment practices, terms and
conditions of employment and wages and hours and is not engaged in any unfair
labor practices. There is no unfair labor practice claim against the Company
before the National Labor Relations Board or any strike, labor dispute, work
slowdown or work stoppage pending or, to the Best Knowledge of the Company,
Lancewood and Onyx, threatened against or involving the Company and there has
not been any such action during the last three years.
3.18 Business Relations. None of the Company, Lancewood or Onyx has any
Best Knowledge that any customer or supplier of the Company will, as a result of
the transactions contemplated hereby, cease to do business with the Company
after the consummation of the transactions contemplated hereby in the same
manner as previously conducted with the Company. Except as set forth on Schedule
3.18, the Company has not received notice from any of its customers or suppliers
that any such customer or supplier will, for any reason, cease to do business
with the Company after the date hereof in the same manner as previously
conducted with the Company. The Company has not received any notice of any
disruption (including delayed deliveries or allocations by suppliers) in the
availability of the materials or products used by the Company.
3.19 Accounts Receivable. Except as set forth on Schedule 3.19, all of
the accounts, notes and loans receivable (net of reserves) that have been
recorded on the books of the Company are bona fide and represent amounts validly
due. All of such accounts, notes and loans receivable are pledged to the
Company's senior bank lenders to secure the payment of indebtedness outstanding
under the Company's senior credit facilities, and will be released from such
liens at or prior to Closing. All of such accounts, notes and loans receivable
will be collected in full within 90 days after Closing, less any allowance for
doubtful accounts set forth on the balance sheet included in the Interim
Financial Statements or the Future Financial Statements. With respect to any
such accounts, notes and loans receivable that are not collected in full in
accordance with the immediately preceding sentence, the Buyer shall assign
(without recourse) the remaining portion of such account, note or loan
receivable to Lancewood and Onyx so long as (i) Lancewood and Onyx have paid to
the Buyer the amount required by the indemnification provisions of Section 8.1
as a result of such account, note or loan receivable not having been collected
in full accordance with the immediately preceding sentence, and (ii) Lancewood
and Onyx have delivered to the Buyer a written request for such assignment.
3.20 Bank Accounts. Attached hereto as Schedule 3.20 is a list of all
banks or other financial institutions with which the Company has an account or
maintains a safe deposit box, showing the type and account number of each such
account and safe deposit box and the names of the Persons authorized as
signatories thereon or to act or deal in connection therewith.
3.21 Agents. Except as set forth on Schedule 3.21, the Company has not
designated or appointed any person or other entity to act for it or on its
behalf pursuant to any power of attorney or any agency which is presently in
effect.
3.22 Indebtedness To and From Officers, Managers, Members and
Employees. Except as set forth on Schedule 3.22, the Company does not owe any
indebtedness to any of its officers, managers, members or employees (other than
accrued salaries or benefits payable in the ordinary course of business) nor
does it have indebtedness owed to it from any of its officers, managers, members
or employees, excluding indebtedness for travel advances or similar advances for
expenses incurred on behalf of and in the ordinary course of business of the
Company and consistent with the Company's past practices.
3.23 Certain Consents. Except as set forth on Schedule 3.23 and except
in connection with the filings to be made pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act"), there are no consents,
waivers or approvals required to be executed or obtained from any Person in
connection with the execution, delivery and performance by the Company or the
Sellers of this Agreement and the Ancillary Agreements or in connection with
consummation by the Company and the Sellers of the transactions contemplated
hereby or thereby.
3.24 Brokers. Neither Lancewood nor the Company has engaged, or caused
any liability to be incurred to, any finder, broker or sales agent in connection
with the execution, delivery or performance of this Agreement or the
transactions contemplated hereby.
3.25 Interest in Competitors, Suppliers and Customers. Except as set
forth on Schedule 3.25, no officer, member or manager of the Company or any
Affiliate of any such officer, member or manager has any ownership interest in
any competitor, supplier or customer of the Company or any property used in the
operation of the business of the Company.
3.26 Inventory. Except as set forth on Schedule 3.26, the inventories
shown on the balance sheet contained in the Interim Financial Statements consist
of (and the inventories of the Company on the Closing Date shall consist of)
items of a quality and quantity currently usable in the ordinary course of
business by the Company as such business has been conducted by the Company in
calendar year 2000.
3.27 Environmental Matters. Except as otherwise described in the
Environmental Reports, (i) the Company currently is in compliance with all
Environmental Laws, and (ii) no claim has been made by any Governmental
Authority (and, to the Best of Knowledge of the Company, Lancewood and Onyx, no
such claim has been threatened) to the effect that the business conducted by the
Company fails to comply, in any respect, with any Environmental Laws. Except as
provided in this Section 3.27, none of the Company, any Seller or Onyx makes any
representation or warranty as to the environmental condition of the assets or
properties of the Company or with respect to compliance with any Environmental
Law.
3.28 Purchase of Units for Investment. Lancewood is acquiring the Units
set forth beside its name on the Purchase Price Allocation Schedule for its own
account for investment with no present intention of, or view to, distribution of
such Units or any part thereof. Lancewood is an "accredited investor" as such
term is defined in Rule 501(a) of Regulation D promulgated by the Securities and
Exchange Commission pursuant to the Securities Act. Lancewood has been provided
with all information requested by Lancewood regarding Buyer and its subsidiaries
and their business and operations, and has had the opportunity to ask questions
of Buyer's management regarding any issues Lancewood considered relevant to its
decision to acquire the Units. Lancewood understands and agrees that the
certificates representing the Units acquired by Lancewood pursuant to this
Agreement will bear a legend in form and substance similar to the following:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and,
accordingly, may not be offered for sale, sold or otherwise transferred
except (i) upon effective registration of the securities represented by
the certificate under the Securities Act of 1933, as amended, or (ii)
upon receipt by the issuer of (A) an opinion of counsel, in such form
and by such counsel as shall be satisfactory to the issuer, or (B)
other documentation as shall be satisfactory to counsel for the issuer
that such registration is not required."
3.29 Information Furnished. Lancewood and the Company have made
available to Buyer and its partners, officers, attorneys, accountants and
representatives true and correct copies of all agreements, documents and other
items listed on the schedules to this Agreement and all books and records of the
Company, and neither this Agreement, the schedules attached hereto nor any
information, agreements or documents delivered to or made available to Buyer or
its partners, officers, attorneys, accountants or representatives pursuant to
this Agreement contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements herein or therein, as the
case may be, not misleading.
3.30 Tax Status of Lancewood. Lancewood is not a foreign person and no
Tax is required to be withheld from Lancewood pursuant to Section 1445 of the
Code as a result of the transfers contemplated by this Agreement.
3.31 Accredited Investor Status. Each of Lancewood, Peter J. Jacullo,
III, Richard Shore, Jr., Michael J. Burgett, and David L. Widener is an
"accredited investor," as such term is defined under Rule 501 of Regulation D
promulgated under the Securities Act.
ARTICLE IV Representations and Warranties of the Sellers
Each Seller (other than Lancewood) hereby severally (but not jointly)
represents and warrants to Buyer as follows (with the understanding that Buyer
is relying materially on each such representation and warranty in entering into
and performing this Agreement):
4.1 No Liens on Interests. Such Seller is the true and lawful owner, of
record and beneficially, of the Interest set forth beside his, her or its name
on Schedule 3.1, free and clear of any liens, restrictions, security interests,
claims, rights of another or encumbrances; none of the Interests owned by such
Seller is subject to any outstanding options, warrants, calls or similar rights
of any other person to acquire the same; none of the Interests owned by such
Seller is subject to any restrictions on the transfer thereof; and such Seller
has the full power and authority to convey, and will convey to Buyer at Closing,
good and marketable title to his, her or its Interest, free and clear of any
liens, restrictions, security interests, claims, rights of another or
encumbrances.
4.2 Other Rights to Acquire Securities. There are no authorized or
outstanding warrants, options or rights of any kind to acquire from such Seller
any equity or debt securities of the Company or securities convertible into or
exchangeable for equity or debt securities of the Company.
4.3 Due Authorization.
(a) Such Seller has full power and authority to enter into and perform this
Agreement and each other agreement, instrument and document required to
be executed by him, her or it in connection herewith (the "Other Seller
Ancillary Agreements"). The execution, delivery and performance of this
Agreement and the Other Seller Ancillary Agreements have been duly
authorized by all necessary action by or on behalf of such Seller.
(b) This Agreement has been duly and validly executed and delivered by such
Seller and constitutes a valid and binding obligation of such Seller
enforceable against such Seller in accordance with its terms, except as
the same may be limited by applicable bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors'
rights generally and the application of general principles of equity.
(c) Upon its execution in accordance with this Agreement, each Other Seller
Ancillary Agreement to which such Seller is a party will have been duly
and validly executed and delivered by such Seller and will constitute a
valid and binding obligation of such Seller enforceable against such
Seller in accordance with its terms, except as the same may be limited
by applicable bankruptcy, insolvency, reorganization or other laws
affecting the enforcement of creditors' rights generally and the
application of general principles of equity.
(d) Neither the execution, delivery and performance of this Agreement by
such Seller, nor the execution, delivery and performance of any Other
Seller Ancillary Agreements by such Seller, will (i) violate any
Governmental Requirement applicable to such Seller or his, her or its
properties, (ii) violate or conflict with, or permit the cancellation
of, any agreement to which such Seller is a party, or by which he, she
or it or any of his, her or its properties are bound, or result in the
creation of any lien, security interest, charge or encumbrance upon any
of such properties, (iii) permit the acceleration of the maturity of
any indebtedness of, or indebtedness secured by the property of, such
Seller, or (iv) if such Seller is not a natural person, violate or
conflict with any provision of the governing documents (including the
trust agreement) of such Seller.
(e) No action, consent or approval of, or filing with, any Governmental
Authority is required in connection with the execution, delivery or
performance of this Agreement or any Other Seller Ancillary Agreement
by such Seller.
4.4 Brokers. Such Seller has not engaged, or caused any liability to be
incurred to, any finder, broker or sales agent in connection with the execution,
delivery or performance of this Agreement or the transactions contemplated
hereby.
4.5 Purchase of Units for Investment. Such Seller, if he, she or it is
acquiring Units under this Agreement, is acquiring the Units set forth beside
his, her or its name on the Purchase Price Allocation Schedule for his, her or
its own account for investment with no present intention of, or view to,
distribution of such Units or any part thereof. Such Seller, if he, she or it is
acquiring Units, is an "accredited investor" as such term is defined in Rule
501(a) of Regulation D promulgated by the Securities and Exchange Commission
pursuant to the Securities Act. Such Seller, if he, she or it is acquiring
Units, has been provided with all information requested by such Seller regarding
Buyer and its subsidiaries and their business and operations, and has had the
opportunity to ask questions of Buyer's management regarding any issues such
Seller considered relevant to his, her or its decision to acquire the Units.
Such Seller, if he, she or it is acquiring Units, understands and agrees that
the certificates representing the Units acquired by such Seller pursuant to this
Agreement will bear a legend in form and substance similar to the following:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and,
accordingly, may not be offered for sale, sold or otherwise transferred
except (i) upon effective registration of the securities represented by
the certificate under the Securities Act of 1933, as amended, or (ii)
upon receipt by the issuer of (A) an opinion of counsel, in such form
and by such counsel as shall be satisfactory to the issuer, or (B)
other documentation as shall be satisfactory to counsel for the issuer
that such registration is not required."
4.6 Tax Status of Such Seller. Such Seller is not a foreign person and
no Tax is required to be withheld from such Seller pursuant to Section 1445 of
the Code as a result of the transfers contemplated by this Agreement.
ARTICLE V Covenants
5.1 Inspection. From the date hereof to the Closing, the Company shall
give (and Sellers shall cause the Company to give) to Buyer and its partners,
officers, attorneys, accountants and representatives free, full and complete
access during normal business hours to all books, records, returns, files,
correspondence, personnel, facilities and properties of the Company; provide
Buyer and its partners, officers, attorneys, accountants and representatives all
information and material pertaining to the business and affairs of the Company
as Buyer may deem necessary or appropriate; and use their reasonable best
efforts to afford Buyer and its partners, officers, attorneys, accountants and
representatives the opportunity to meet with the customers and suppliers of the
Company to discuss the business, condition (financial or otherwise), operations
and prospects of the Company; provided, however, that neither Buyer nor any of
its representatives shall contact any customer or supplier of the Company
without the prior written approval of the Company. At the Closing, the Company
shall deliver to Buyer the originals of all company records of the Company. Any
investigation by Buyer or its partners, officers, attorneys, accountants or
representatives shall not in any manner affect the representations and
warranties of Sellers and the Company contained herein.
5.2 Compliance by the Company and Sellers. From the date hereof to the
Closing, neither any Seller nor the Company shall take or fail to take any
action which action or failure to take such action shall cause the
representations and warranties made by Sellers and the Company herein to be
untrue or incorrect as of the Closing.
5.3 Satisfaction of Conditions Precedent. From the date hereof to the
Closing, each Seller and the Company shall use commercially reasonable efforts
to cause all conditions precedent to the obligations of Sellers and Buyer
hereunder to be satisfied by the Closing, including execution and delivery by
Sellers of documents reasonably necessary to satisfy the conditions precedent
set forth in Sections 6.1(a), (d), (f), (j), (l), (m), (n), and (o).
5.4 No Solicitation. From the date hereof to the Closing, neither the
Company nor any Seller shall offer any of the Interests of the Company (or a
material part of its assets in one transaction or a series of transactions) for
sale or lease, or solicit offers to buy or lease the Interests of the Company
(or a material part of its assets in one transaction or in a series of related
transactions), or hold discussions with any party (other than Buyer) looking
toward such an offer or solicitation or toward a merger, share exchange or
consolidation of the Company with or into another entity or any similar
transaction. From the date hereof to the Closing, Sellers shall not, and shall
not allow the Company to, enter into any agreement with any party other than
Buyer with respect to the sale, lease or other disposition of either the equity
securities or the assets of the Company or with respect to any merger, share
exchange, consolidation or similar transaction involving the Company.
5.5 Notice of Developments. From the date hereof to the Closing,
Sellers and the Company shall notify Buyer of any material problems or
developments with respect to the business, operations or prospects of the
Company which come to the Best Knowledge of Sellers or the Company.
5.6 Notice by Sellers and the Company of Breach. From the date hereof
to the Closing, Sellers, Onyx and the Company shall, immediately upon becoming
aware thereof, give detailed written notice to Buyer of the occurrence of, or
the impending or threatened occurrence of, any event which would cause or
constitute a breach, or would have caused or constituted a breach had such event
occurred or been known to any Seller, Onyx or the Company prior to the date of
this Agreement, of any of their covenants, agreements, representations or
warranties contained or referred to herein or in any document delivered in
accordance with the terms hereof.
5.7 Notice by Sellers and the Company of Litigation. From the date
hereof to the Closing, immediately upon becoming aware thereof, Sellers and the
Company shall notify Buyer of (a) any suit, action or proceeding (including,
without limitation, any Tax Action or any proceeding involving a labor dispute
or grievance or union recognition) to which the Company becomes a party or which
is threatened against the Company, (b) any order or decree or any complaint
praying for an order or decree restraining or enjoining the consummation of this
Agreement or the transactions contemplated hereby, or (c) any notice from any
tribunal of its intention to institute an investigation into, or to institute a
suit or proceeding to restrain or enjoin the consummation of, this Agreement or
the transactions contemplated hereby or to nullify or render ineffective this
Agreement or such transactions if consummated.
5.8 Continuation of Insurance Coverage. From the date hereof to the
Closing, Sellers shall cause the Company to keep in full force and effect
insurance coverage for the Company and its assets and operations comparable in
type, amount and scope to the coverage now maintained covering the Company and
its assets and operations.
5.9 Maintenance of Credit Terms. From the date hereof to the Closing,
Sellers shall cause the Company to continue to effect sales of its products and
services only on the terms that have historically been offered by the Company or
on such other terms as the Buyer shall approve (which approval shall not be
unreasonably withheld, conditioned or delayed).
5.10 Financial Statements. Until the Closing, as soon as available, and
in any event within 45 days after the end of each calendar month after June 30,
2000, the Company shall furnish to Buyer a balance sheet as of the last day of
such month, a statement of operations and a statement of cash flows of the
Company for such month, prepared in accordance with the generally accepted
accounting principles applied in the preparation of the Audited Financial
Statements (except for the absence of notes to such financial statements and
subject to normal year-end adjustments and accruals required to be made in the
ordinary course of business which are not materially adverse and are consistent
with past practices). Such financial statements shall fairly present the
financial position, results of operations and changes in financial position of
the Company as of the indicated dates and for the indicated periods.
5.11 Interim Operations of the Company.
(a) From the date hereof to the Closing, Sellers shall cause the Company to
conduct its business only in the ordinary course consistent with past
practices and the Company shall not, and Lancewood and Onyx shall cause
the Company not to, unless Buyer gives its prior written approval
(which approval shall not be unreasonably withheld, conditioned or
delayed), (i) amend or otherwise change its certificate of formation or
limited liability company agreement (except to remove or admit members
of the Company or to change the respective percentage interests of the
members in the Company), as each such document is in effect on the date
hereof, (ii) issue or sell, or authorize for issuance or sale,
additional equity interests or issue, grant or enter into any
subscription, option, warrant, right, convertible security or other
agreement or commitment of any character obligating the Company to
issue equity interests or securities, (iii) declare, set aside, make or
pay any dividend or other distribution with respect to its equity
securities, (iv) redeem, purchase or otherwise acquire, directly or
indirectly, any of its debtor equity securities, (v) authorize any
capital expenditures in excess of $50,000 individually or $100,000 in
the aggregate (other than the capital expenditures described on
Schedule 3.7(c), which Buyer hereby consents to) or sell, pledge,
dispose of or encumber, or agree to sell, pledge, dispose of or
encumber, any assets of the Company, (vi) acquire (by merger, share
exchange, consolidation, acquisition of stock or assets, or otherwise)
any interest in any Person or enter into any contract, agreement,
commitment or arrangement with respect to any of the foregoing, (vii)
borrow any money (whether under new or existing debt facilities or
otherwise), factor any receivables or incur any debt obligation (except
under the Company's presently existing senior credit facilities, which
will be paid in full at Closing pursuant to Section 1.4, and trade
payables and other obligations incurred in the ordinary course of
business that will be included as current liabilities in the net
working capital calculated pursuant to Section 1.5), or issue any debt
securities or enter into or modify any contract, agreement, commitment
or arrangement with respect to any items described in this clause
(vii), (viii) enter into, amend or terminate any employment or
consulting agreement with any manager, officer, consultant or key
employee of the Company, enter into, amend or terminate any employment
agreement with any other person, or take any action with respect to the
grant or payment of any severance or termination pay other than
pursuant to policies or agreements of the Company in effect on the date
hereof, (ix) enter into, extend or renew any lease for office or
manufacturing space, (x) except as required by law, adopt, amend or
terminate any bonus, profit sharing, compensation, stock option,
pension, retirement, deferred compensation, employment or other
employee benefit plan, agreement, trust, fund or arrangement for the
benefit or welfare of any officer or employee of the Company (except in
order to fully vest Interests held by Sellers whose Interests are
subject to vesting schedules) or withdraw from any multi-employer plan
so as to create any liability under Article IV of ERISA to any Person,
(xi) grant any increase in compensation, or grant or make any bonus or
other compensatory payments, to any manager, officer, consultant or key
employee of the Company, except as required by agreements in effect as
of the date of this Agreement, (xii) grant any increase in compensation
to any other employee of the Company, (xiii) enter into any contract,
agreement, commitment or arrangement for the sale or provision of goods
or services, or (xiv) enter into, amend or terminate any contract,
agreement, commitment or arrangement that can be reasonably expected to
(A) involve receipts or expenditures by the Company in excess of
$50,000, (B) have a term in excess of twelve months, or (C) involve an
indemnity or guaranty obligation of the Company.
(b) From the date hereof to the Closing, Sellers shall cause the Company to
use its reasonable best efforts to preserve intact the business
organization of the Company, to keep available in all material respects
the services of its present officers, consultants and key employees, to
preserve intact its banking relationships and credit facilities, to
preserve intact its relationships with its customers, suppliers and
distributors, to preserve the goodwill of those having business
relationships with it and to comply with all applicable laws.
(c) From the date of this Agreement through the earlier of (i) Closing and
(ii) termination of this Agreement, Buyer will make generally available
for approximately 35 hours per week during normal business hours at the
facilities of Seller located in Martinez, California, a representative
of Buyer ("Buyer's Contract Representative). With respect to any action
for which Buyer's prior written approval is required under Section
5.11(a)(xiii) or (xiv) (but not any other clause of that section) the
Sellers shall send or cause to be sent a written request for such
approval either (i) by personal delivery to Buyer's Contract
Representative at the Company's Martinez, California, facility if such
representative is physically present at such facility, or (ii) by
facsimile to the following Dallas office representatives of Buyer: Mr.
Fred Johnson (facsimile number 972/931-6526), Mr. Ron Rushton
(facsimile number 972/931-6526), and Mr. Ron Scoggins (facsimile number
972/699-1894). Such written request will be accompanied by a full and
complete copy of such contract (including any schedules and exhibits),
or, if no such contract is then available, such written request will
include a summary of the proposed contract in form and content
sufficient to describe to Buyer its material terms. The Sellers shall
also verbally confirm either in person with the Buyer's Contract
Representative or by telephone with at least one Dallas office
representative listed above receipt by such representative of such
written request. Upon receipt of such written request and accompanying
attachments, and after the completion of the in person or telephonic
confirmation described above, Buyer will have 24 hours from such time
to respond (either verbally or in writing) to the Sellers in order to
approve or disapprove of the proposed contract. If Buyer has not
responded within such 24 hour period, notwithstanding the requirements
of Section 5.11(a) for approvals to be in writing, such contract shall
be deemed approved by the Buyer. 5.12 HSR Act Filings. To the extent a
premerger notification under the HSR Act is required, each of the
Company (and to the extent required, Lancewood and Onyx) and Buyer
shall, and hereby agrees to, cause its ultimate parent entity to (a)
file a premerger notification under the HSR Act with the United States
Department of Justice and the Federal Trade Commission as promptly as
practical following the date hereof, (b) request early termination of
the waiting period under the HSR Act, and (c) promptly comply with any
requests for additional information or documentary material thereunder.
Seller and Buyer shall each pay one-half (1/2) of all filing fees
required in connection with any such filings made under this Section
5.12.
5.13 Resignations of Managers and Officers. Sellers shall either
terminate, or cause the delivery of resignations from, all members of the board
of managers of the Company (and such other employees of the Company as Buyer may
request) from their positions and employment with the Company, which
terminations and resignations shall be effective at or before the Closing and
shall be in form and substance reasonably satisfactory to Buyer.
5.14 Compliance by Buyer. From the date hereof to the Closing, Buyer
shall not take or fail to take any action which action or failure to take such
action shall cause the representations and warranties made by Buyer herein to be
untrue or incorrect as of the Closing.
5.15 Satisfaction of Conditions Precedent. From the date hereof to the
Closing, Buyer shall use commercially reasonable efforts to cause all conditions
precedent to the obligations of Buyer and Sellers hereunder to be satisfied by
the Closing, including execution and delivery by Buyer of documents reasonably
necessary to satisfy the conditions precedent set forth in Sections 6.2(a), (c),
(e) and (g).
5.16 Notice by Buyer of Breach. From the date hereof to the Closing,
Buyer shall, immediately upon becoming aware thereof, give detailed written
notice to Sellers and the Company of the occurrence of, or the impending or
threatened occurrence of, any event which would cause or constitute a breach, or
would have caused or constituted a breach had such event occurred or been known
to Buyer prior to the date of this Agreement, of any of its covenants,
agreements, representations or warranties contained or referred to herein or in
any document delivered in accordance with the terms hereof.
5.17 Notice by Buyer of Litigation. From the date hereof to the
Closing, immediately upon becoming aware thereof, Buyer shall notify Sellers and
the Company of (a) any order or decree or any complaint praying for an order or
decree restraining or enjoining the consummation of this Agreement or the
transactions contemplated hereby, or (b) any notice from any tribunal of its
intention to institute an investigation into, or to institute a suit or
proceeding to restrain or enjoin the consummation of, this Agreement or the
transactions contemplated hereby or to nullify or render ineffective this
Agreement or such transactions if consummated.
5.18 Consents. After the date hereof, Buyer shall use commercially
reasonable efforts to obtain the third party consents disclosed on Schedules 3.9
and 3.14 as being necessary in connection with the transactions contemplated
hereby. After the date hereof, the Company and Lancewood shall fully cooperate
with Buyer in its efforts to obtain such consents.
5.19 Registration Rights Agreement. Contemporaneous with the Closing,
Buyer and Lancewood, Peter J. Jacullo, III, Richard Shore, Jr., Michael J.
Burgett, and David L. Widener shall execute and deliver a Registration Rights
Agreement in the form attached hereto as Exhibit B.
5.20 Wickland Assumption. Contemporaneous with the Closing, Sellers
shall assume the Company's obligation to make an earn-out payment to Wickland
Oil Company pursuant to the Assumption Agreement in the form attached as Exhibit
A.
5.21 Contracts Update. At the end of the day prior to the Closing Date,
the Company, Lancewood and Onyx shall deliver to Buyer an accurate list showing
(a) all contracts, agreements, leases, licenses, arrangements and commitments,
written or oral, to which the Company is a party or by which any of its assets
are bound that are of a type that are either required to be listed on Schedule
3.14 or are required to be approved by Buyer pursuant to the terms of this
Agreement, and (b) all amendments, supplements and modifications to any
Contracts listed on Schedule 3.14, in each case to the extent such item was
entered into on or after the date of this Agreement.
5.22 Release of Sellers. On the Closing Date, each of the Sellers and,
except as to Lancewood and Onyx, their respective Affiliates, shall execute full
and complete releases of the Company with respect to any and all claims and
rights they might have against the Company in the form of Exhibit C attached
hereto.
5.23 Tax Certificates. Each Seller agrees to provide the Buyer a
certificate, in compliance with Section 1445 of the Code and the Treasury
regulations thereunder, that, as of the Closing Date, such Seller is not a
foreign person.
5.24 Delivery of Investment Letters. Contemporaneously with the
Closing, each of Lancewood, Peter J. Jacullo, III, Richard Shore, Jr., Michael
J. Burgett, and David L. Widener shall execute and deliver to Buyer an
Investment Letter in the form attached hereto as Exhibit D.
ARTICLE VI Conditions to Closing
6.1 Conditions to Obligations of Buyer. The obligations of Buyer to
consummate the transactions contemplated by this Agreement are subject to the
fulfillment of each of the following conditions (any of which may be waived by
Buyer):
(a) The representations and warranties of Sellers, Onyx and the Company
contained in this Agreement shall be true and correct in all material
respects at and as of the Closing Date with the same effect as though
such representations and warranties had been made on and as of the
Closing Date; Sellers, Onyx and the Company shall have performed and
complied with all agreements required by this Agreement to be performed
or complied with by Sellers, Onyx or the Company at or prior to the
Closing Date; and Buyer shall have received a certificate, dated as of
the Closing Date, signed by the Sellers and Onyx to the foregoing
effects;
(b) No action or proceeding shall have been instituted or threatened for
the purpose or with the probable or reasonably likely effect of
enjoining or preventing the consummation of this Agreement or seeking
damages on account thereof;
(c) Prior to the Closing, there shall have been no material adverse change
in the financial condition, business, properties, liabilities,
obligations or operations of the Company since June 30, 2000, or any
occurrence or event since the date hereof, that has caused a material
adverse change in the prospects of the Company;
(d) Buyer shall have received the company records contemplated by Section
5.1 hereof and the resignations contemplated by Section 5.13 hereof;
(e) If applicable, the waiting period under the HSR Act applicable to the
transactions contemplated hereby shall have expired or been terminated;
(f) All necessary action (corporate or otherwise) shall have been taken by
Sellers and the Company to authorize, approve and adopt this Agreement
and the consummation and performance of the transactions contemplated
hereby, and Buyer shall have received a certificate, dated as of the
Closing Date, of the Sellers and Onyx to the foregoing effect;
(g) All indebtedness outstanding under the Company's senior credit
facilities shall have been paid in full by the Sellers as contemplated
by Section 1.4, and the Buyer shall have received the Payoff Letter and
all related releases necessary to release the liens securing such
indebtedness;
(h) Sellers shall have assumed the Company's obligation to make an earnout
payment to Wickland Oil Company pursuant to the Assumption Agreement in
the form attached hereto as Exhibit A;
(i) The City of Los Angeles shall have consented to or approved in writing
the transactions contemplated by this Agreement and shall have
indicated in writing that the Permits numbers 712 and 713 covering the
lease of the Company's Los Angeles, California, facility, or
substitutes therefor, shall remain or be in full force and effect after
consummation of the transactions contemplated by this Agreement on
substantially the same terms, conditions and economic cost as are
presently in effect for such Permits;
(j) Sellers and the Company shall have delivered to Buyer such good
standing certificates, officers' certificates and similar documents and
certificates as counsel for Buyer shall have reasonably requested prior
to the Closing Date;
(k) Buyer shall have received evidence of the consents, approvals, notices,
filings and easement assignment listed on Schedule 6.1(k) in form and
substance reasonably acceptable to Buyer;
(l) Sellers shall have delivered to Buyer such duly executed transfer and
other documents as Buyer shall reasonably request to effect and
evidence the transfer of the Interests to Buyer, free and clear of any
liens or encumbrances of any nature whatsoever;
(m) Lancewood, Peter J. Jacullo, III, Richard Shore, Jr., Michael J.
Burgett and David L. Widener shall have executed and delivered the
Registration Rights Agreement;
(n) Each Seller shall have executed and delivered to the Company, with a
copy to Buyer, a Member's Release as required by Section 5.22; and
(o) The appropriate Sellers shall have executed and delivered Investment
Letters as required by Section 5.24.
The decision of Buyer to consummate the transaction contemplated by
this Agreement without the satisfaction of any of the preceding conditions shall
not constitute a waiver of any of Sellers' or Onyx's representations,
warranties, covenants or indemnities herein.
6.2 Conditions to Obligations of Sellers and the Company. The
respective obligations of Sellers and the Company to consummate the transactions
contemplated by this Agreement are subject to the fulfillment of each of the
following conditions (any of which may be waived by Lancewood, which waiver
shall be binding on all Sellers and the Company):
(a) Buyer's representations and warranties contained in this Agreement
shall be true and correct in all material respects at and as of the
Closing Date with the same effect as though such representations and
warranties had been made as of the Closing Date; Buyer shall have
performed and complied with all agreements required by this Agreement
to be performed or complied with by Buyer at or prior to the Closing
Date; and Sellers and the Company shall have received a certificate,
dated as of the Closing Date, signed by the General Partner of Buyer
(on behalf of Buyer) to the foregoing effects;
(b) No action or proceeding shall have been instituted or threatened for
the purpose or with the probable or reasonably likely effect of
enjoining or preventing the consummation of this Agreement or seeking
damages on account thereof;
(c) Buyer shall have executed and delivered the Registration Rights
Agreement;
(d) Buyer shall have delivered to Sellers the consideration for the
Interests in accordance with Section 1.3 hereof;
(e) All necessary action (partnership or otherwise) shall have been taken
by Buyer to authorize, approve and adopt this Agreement and the
consummation and performance of the transactions contemplated hereby,
and Sellers shall have received a certificate, dated as of the Closing
Date, of the General Partner of Buyer (on behalf of Buyer) to the
foregoing effect;
(f) If applicable, the waiting period under the HSR Act applicable to the
transactions contemplated hereby shall have expired or been terminated;
and
(g) Buyer shall have delivered to Sellers such good standing certificates,
officers' certificates and similar documents and certificates as
counsel for Sellers shall have reasonably requested prior to the
Closing Date.
The decision of Sellers and the Company to consummate the transaction
contemplated by this Agreement without the satisfaction of any of the preceding
conditions shall not constitute a waiver of any of Buyer's representations,
warranties, covenants or indemnities herein.
ARTICLE VII Termination
7.1 Termination. This Agreement may be terminated prior to the Closing
by (a) the mutual consent of Buyer and Lancewood, (b) Lancewood upon the failure
of Buyer to perform or comply with any of its material covenants or agreements
contained herein prior to the Closing or if the representations and warranties
of Buyer hereunder shall not have been true and correct in all material respects
as of the time at which such were made and as of Closing, (c) Buyer upon the
failure of the Company or any Seller to perform or comply with any of its, his
or her material covenants or agreements contained herein prior to the Closing or
if the representations and warranties of Sellers and the Company hereunder shall
not have been true and correct in all material respects as of the time at which
such were made and as of Closing, (d) either Lancewood or Buyer if the Closing
does not occur by December 31, 2000; provided, however, that no party may
terminate this Agreement pursuant to (b), (c) or (d) above if such party is, at
the time of any such attempted termination, in material breach of any material
term hereof, or (e) pursuant to the provisions of Article X hereof.
7.2 Effect of Termination. If this Agreement is terminated pursuant to
the provisions of Section 7.1, all further obligations of each party under this
Agreement shall terminate without further liability of such party; provided,
however, that such termination shall not constitute a waiver by any party of any
claim it may have for specific performance or for damages caused by reason of a
breach by any other party of a representation, warranty, covenant, or agreement
contained herein; and provided further, that, anything herein to the contrary
notwithstanding, the respective rights and obligations of the parties pursuant
to Article VIII and Article XI hereof shall survive the termination of this
Agreement.
ARTICLE VIII Indemnification
8.1 Indemnification of Buyer. Except as otherwise provided in this
Article VIII, from and after the Closing Lancewood and Onyx (the "Seller
Indemnitors") jointly and severally agree to and shall defend, indemnify and
hold harmless Buyer and its Affiliates, equityholders, partners, officers,
directors, employees, agents, consultants and representatives (and their
respective successors and assigns) and the Company (the "Buyer Indemnitees"),
from and against, and shall reimburse the Buyer Indemnitees for, any and all
actions, proceedings, assessments, penalties, demands, damages, losses,
liabilities, suits, costs, expenses (including reasonable attorneys' fees),
costs of any settlement or judgment, claims of any and every kind whatsoever,
refund obligations (including interest and penalties thereon), and remediation
costs (individually, a "Loss" and collectively, "Losses"), paid, incurred or
suffered by the Buyer Indemnitees, relating to, resulting from or arising out of
any of the following:
(a) any inaccuracy in any representation or warranty of any Seller or Onyx
under this Agreement, the schedules hereto, or any certificate,
agreement or other document delivered or to be delivered by the Company
or any Seller or Onyx under this Agreement;
(b) any breach or nonfulfillment of any covenant, agreement or other
obligation of the Company or any Seller or Onyx under this Agreement,
or any other agreement or document delivered or to be delivered by the
Company or any Seller or Onyx under this Agreement;
(c) any liability to Wickland Oil Company with respect to any earnout
payment owing to Wickland Oil Company by the Company;
(d) any liability to the Company's senior bank lenders in connection with
the Company's senior credit facilities as of the Closing Date;
(e) any liability or obligation of the Company (whether direct or as a
result of assumption, indemnity, reimbursement, guarantee or otherwise,
but excluding Environmental Liabilities that are covered by clauses (f)
and (g) below) that is based on, arises out of or in connection with,
relates to or is attributable to any act, event, omission, agreement,
occurrence or condition that occurs or exists at or prior to the
Closing and that is not specifically disclosed in this Agreement, the
Schedules hereto or the Financial Statements;
(f) any Fines and Penalties assessed to or paid or payable by the Company
or assessed against its assets or business (whether directly or as a
result of assumption, indemnity, reimbursement, guarantee or otherwise)
that are based on, arise out of or in connection with, relate to or are
attributable to (i) any violation or alleged violation of any
Environmental Law or Environmental Permit that is based on, arises out
of or in connection with, relates to or is attributable to any act,
omission, event, occurrence, release, condition, circumstance,
activity, practice or incident that occurs or exists at or prior to
Closing or (ii) any generation, transportation, use, treatment,
storage, release or disposal of Hazardous Materials that occurs or
exists at or prior to Closing;
(g) any Environmental Liabilities assessed to or paid or payable by the
Company or assessed against its assets or business (whether directly or
as a result of assumption, indemnity, reimbursement, guarantee or
otherwise) that are based on, arise out of or in connection with,
relate to or are attributable to (i) any violation or alleged violation
of any Environmental Law or Environmental Permit that is based on,
arises out of or in connection with, relates to or is attributable to
any act, omission, event, occurrence, release, condition, circumstance,
activity, practice or incident that occurs or exists at or prior to
Closing or (ii) any generation, transportation, use, treatment,
storage, release or disposal of Hazardous Materials that occurs or
exists at or prior to Closing, but in each case only to the extent that
the Environmental Liability is not based on or attributable to and does
not arise out of or in connection with or relate to any matter
described in the Environmental Reports;
(h) any severance, accrued vacation, deferred compensation, bonuses or
similar payments made by the Company to any employees of the Company
(including Richard Shore, Jr.) who resign or are terminated at or prior
to the Closing, and any liabilities of the Company with respect to or
as a result of any such resignation or termination, and any payments
made, or obligations owed, by the Company, or with respect to, to
Richard Shore, Jr., Michael J. Burgett, Dawn M. West, Brian A. Hoff,
Marco Ulmer or John M. Mackowiak that relate to the matters described
in clause (ii), (iii) or (iv) of the Member's Release for Richard
Shore, Jr., or clause (ii) or (iii) of the Member's Release for the
other individuals, each as attached hereto as Exhibit C (provided that
no indemnification will be required with respect to any matters
described in this clause (h) to the extent such liability has been
included as part of the net working capital adjustment to the purchase
price provided in Section 1.5);
(i) any claims made by any Affiliate of either Lancewood or Onyx against
the Company or its assets that relate to or arise out of (i) any acts,
events, omissions or conditions that occur or exist at or prior to
Closing, or (ii) any agreements, covenants or obligations that exist at
or prior to the Closing;
(j) any back rent for periods prior to the Closing payable by the Company
or Buyer in connection with the Company obtaining a valid dock lease at
the Company's Portland, Oregon facility or a valid harbor lease at the
Company's Tacoma, Washington facility, and any cost of the Company or
Buyer for obtaining a survey in connection with obtaining a valid dock
lease at the Company's Portland, Oregon facility;
(k) any liability or obligation of the Company (whether direct or as a
result of assumption, indemnity, reimbursement, guarantee or otherwise)
that is based on, arises out of or in connection with, relates to or is
attributable to (i) the lawsuit brought by Doug Manful disclosed on
Schedule 3.15, (ii) any demurrage or consequential claims brought
against the Company in connection with the Astra Oil Company, Inc.
matter disclosed on Schedule 3.15, (iii) taxes for pre-closing time
periods related to the tax matters disclosed on Schedule 3.16(a), or
(iv) the late filing of, or failure to file, required Forms 5500
related to the Company's employee plans (provided that no
indemnification will be required with respect to any matters described
in this clause (k) to the extent such liability has been included as
part of the net working capital adjustment to the purchase price
provided in Section 1.5); or
(l) a pro rata portion (based on the ratio of the number of days in the
year 2000 prior to Closing to 365) of any liability or obligation of
the Company with respect to the Company's year 2000 bonus obligations
to its employees (provided that no indemnification will be required
with respect to any matters described in this clause (l) to the extent
such liability has been included as part of the net working capital
adjustment to the purchase price provided in Section 1.5).
8.2 Indemnification of Sellers by Buyer. Except as otherwise provided
in this Article VIII, from and after the Closing, the Buyer agrees to and shall
defend, indemnify and hold harmless each Seller and his, her or its Affiliates,
equityholders, managers, directors, officers, employees, agents, consultants and
representatives (and their respective successors and assigns) (the "Seller
Indemnitees") from and against, and shall reimburse the Seller Indemnitees for,
each and every Loss paid, incurred or suffered by the Seller Indemnitees,
relating to, resulting from or arising out of any of the following:
(a) any inaccuracy in any representation or warranty of the Buyer under
this Agreement, or any certificate, agreement or other document
delivered or to be delivered by the Buyer under this Agreement; or
(b) any breach or nonfulfillment of any covenant, agreement or other
obligation of the Buyer under this Agreement, or any other agreement or
document delivered or to be delivered by the Buyer under this
Agreement.
8.3 Indemnification of Sellers by the Company. Except as otherwise
provided in this Article VIII, if the Closing is consummated, then from and
after the Closing the Company shall defend, indemnify and hold harmless the
Seller Indemnitees from and against, and shall reimburse the Seller Indemnitees
for, each and every Loss paid, incurred or suffered by the Seller Indemnitees,
relating to, resulting from or arising out of any Environmental Liability
assessed to or paid or payable by the Sellers or assessed against their assets
or business (whether directly or as a result of assumption, indemnity,
reimbursement, guarantee or otherwise) that is based on, arises out of or in
connection with, relates to or is attributable to (i) any violation or alleged
violation of any Environmental Law or Environmental Permit by the Company or its
predecessors that is based on, arises out of or in connection with, relates to
or is attributable to any act, omission, event, occurrence, release, condition,
circumstance, activity, practice or incident that occurs or exists at or prior
to Closing or (ii) any generation, transportation, use, treatment, storage,
release or disposal of Hazardous Materials by the Company or its predecessors
that occurs or exists at or prior to Closing, but in each case only to the
extent that the Environmental Liability is based on or attributable to or arises
out of or in connection with or relates to a matter described in the
Environmental Reports; provided, however, that this Section 8.3 shall not apply
to any Loss for which the Seller Indemnitors owe an indemnity pursuant to
Section 8.1. Except as otherwise provided in this Article VIII, if the Closing
is consummated, then from and after the Closing the Company shall defend,
indemnify and hold harmless the Seller Indemnitees from and against, and shall
reimburse the Seller Indemnitees for, each and every Loss paid, incurred or
suffered by the Seller Indemnitees, relating to, resulting from or arising out
of any Environmental Liability assessed to or paid or payable by the Sellers or
assessed against their assets or business (whether directly or as a result of
assumption, indemnity, reimbursement, guarantee or otherwise) that is based on,
arises out of or in connection with, relates to or is attributable to (i) any
violation or alleged violation of any Environmental Law or Environmental Permit
by the Company that is based on, arises out of or in connection with, relates to
or is attributable to any act, omission, event, occurrence, release, condition,
circumstance, activity, practice or incident that occurs or exists after Closing
or (ii) any generation, transportation, use, treatment, storage, release or
disposal of Hazardous Materials by the Company that occurs or exists after
Closing. In the event that the Company distributes assets to any owner thereof,
or engages in any merger, consolidation, or similar transaction, the result of
which, in any such cases, is that the net book value (assets minus liabilities)
determined in accordance with generally acceptable accounting principles, of the
Company is reduced below $60,000,000, then either (i) Buyer or (ii) an Affiliate
of Buyer that has a net book value (assets minus liabilities) determined in
accordance with generally accepted accounting principles in excess of
$60,000,000, will guarantee the Company's obligations under this Section 8.3 to
the extent of the first $60,000,000 of such obligations.
8.4 Procedures Relating to Losses other than Third-Party Claims. With
respect to matters for which indemnity is sought under this Agreement that do
not involve any judicial, administrative, arbitration, or investigatory
proceeding or other proceeding (collectively, a "Proceeding") or claim or
controversy (collectively, a "Claim") brought or asserted by third parties
(including any Governmental Authority), if within 30 business days after
receiving notification from any Buyer Indemnitee or Seller Indemnitee (an
"Indemnitee") supported by reasonable documentation setting forth the nature of
the circumstances entitling the Indemnitee to indemnity hereunder, the Buyer or
the Seller Indemnitors (as applicable) (an "Indemnitor") has not resolved such
matters in a manner reasonably acceptable to the Indemnitee, either party may
thereafter submit such dispute to non-binding mediation in Dallas, Texas. The
mediation proceedings shall be commenced by either party giving the other
written notice ("Mediation Notice") that the dispute will be submitted to
mediation. Within 10 business days from the date of receipt of the Mediation
Notice by the non-initiating party, the parties shall make a good faith effort
to select a person to mediate the dispute. If no mediator has been selected
under this procedure, the parties shall jointly request Judicial Arbitration and
Mediation Services (JAMS) to supply within 10 business days a list of potential
qualified attorney-mediators. Within five (5) business days of receipt of the
list, the parties shall rank the proposed mediators in numerical order of
preference, simultaneously exchange such list and select as the mediator the
individual receiving the highest combined ranking. If such mediator is not
available to serve, they shall proceed to contact the mediator who was next
highest in ranking until they select a mediator. In consultation with the
mediator selected, the parties shall promptly designate a mutually convenient
date and time for the mediation, such date to be no later than 30 days after
selection of the mediator. In the mediation, each party shall be represented by
persons with authority and discretion to negotiate a resolution of the dispute,
and may be represented by counsel. The mediator shall determine the format for
the meetings and the mediation sessions shall be in private. The mediator will
keep confidential all information learned in private caucus with any party
unless specifically authorized by such party to make disclosure of the
information to the other party. The parties agree that the mediation shall be
governed by such rules as the mediator shall reasonably prescribe (except that
the mediator shall not prescribe formal discovery). The fees and expenses of the
mediator shall be borne one-half (1/2) by the Buyer and one-half (1/2) by the
Seller Indemnitors. The mediator shall be disqualified as a witness, consultant,
expert or counsel for any party with respect to the dispute and any related
matters. Mediation is a compromise negotiation for purposes of federal and state
rules of evidence and constitutes privileged communications. The entire
mediation process is confidential, and such conduct, statement, promises,
offers, views and opinions shall not be discoverable or admissible in any
Proceeding for any purpose. If litigation or any other Proceeding is commenced
between the Indemnitor and any Indemnitee, the prevailing party in such
litigation or other Proceeding shall be entitled to recover all reasonable costs
and expenses incurred in connection with such litigation or other Proceeding,
including, without limitation, reasonable attorneys' fees. If litigation or any
other Proceeding is commenced or threatened by any third party for which any
Indemnitee is entitled to indemnification under Section 8.1 or 8.2, the
provisions of Section 8.4 shall control.
8.5 Notice and Defense of Third-Party Claims. If any Claim shall be
made or any Proceeding shall be brought or asserted by a third party (including,
without limitation, any Governmental Authority) against an indemnified party or
any successor thereto (the "Indemnified Person") in respect of which indemnity
may be sought under this Article VIII from an indemnifying party or any
successor thereto (the "Indemnifying Person"), the Indemnified Person shall give
prompt written notice of such Claim or Proceeding to the Indemnifying Person;
provided, that any delay or failure so to notify the Indemnifying Person shall
relieve the Indemnifying Person of its obligations hereunder only to the extent,
if at all, that it is prejudiced by reason of such delay or failure. In the
event that the Indemnifying Person, within 30 days after notice of any such
Claim or Proceeding, admits in writing to the Indemnified Person the obligation
of the Indemnifying Person to indemnify the Indemnified Person with respect
thereto and to assume the defense thereof, the Indemnifying Person shall have
the right to undertake the defense, compromise or settlement of such Claim or
Proceeding. Otherwise, the Indemnified Person shall have the right to undertake
the defense, compromise or settlement of such Claim or Proceeding, and the
Indemnifying Person shall be bound thereby, provided that if at any time
thereafter the Indemnifying Person admits in writing to the Indemnified Person
the obligation of the Indemnifying Person to indemnify the Indemnified Person
with respect to such Claim or Proceeding and to assume the defense thereof,
then, to the extent it does not materially prejudice the Indemnified Person with
respect to the Claim or Proceeding, the Indemnifying Person shall, after the
date of delivery of such writing to the Indemnified Person, have the right to
undertake the defense, compromise or settlement of such Claim or Proceeding, but
shall be bound by any actions of the Indemnified Person prior to such date. If
the Indemnifying Person undertakes the defense of the Claim or Proceeding
pursuant to either of the preceding two sentences, the Indemnified Person shall
have the right to employ separate counsel in such Claim or Proceeding and to
participate in the defense thereof, but the reasonable fees and expenses of such
counsel shall be at the expense of the Indemnified Person unless counsel for the
Indemnified Person shall have advised the Indemnified Person in writing that
there exists actual or potential conflicts of interest which make representation
by the same counsel inappropriate. The Indemnified Person's right to participate
in the defense or response to any Claim or Proceeding should not be deemed to
limit or otherwise modify its obligations under this Article VIII. If the
Indemnified Person undertakes the defense of the Claim or Proceeding, the
Indemnifying Person shall have the right, at the Indemnifying Person's expense,
to participate in the defense thereof. Anything in this Article VIII to the
contrary notwithstanding, the Indemnifying Person shall not, without the
Indemnified Person's prior written consent (which consent shall not be
unreasonably withheld, conditioned or delayed), settle or compromise any Claim
or Proceeding or consent to the entry of any judgment with respect to any Claim
or Proceeding unless the settlement or compromise involves only (i) payment of
money solely by the Indemnifying Person, and (ii) a full and complete release of
the Indemnified Person in form and substance reasonably acceptable to the
Indemnified Person. If the Indemnifying Person admits in writing to the
Indemnified Person the obligation of the Indemnifying Person to indemnify the
Indemnified Person with respect to a Claim or Proceeding and to assume the
defense thereof, and thereafter assumes the defense pursuant to the provisions
of this Section 8.5, then the Indemnified Person shall not thereafter, without
the Indemnifying Person's consent (which consent shall not be unreasonably
withheld, conditioned or delayed), settle or compromise such Claim or
Proceeding. Without regard to which party has undertaken the defense of any
Claim or Proceeding, the Indemnifying Person and the Indemnified Person shall
reasonably cooperate with each other regarding any Claim or Proceeding brought
or asserted by a third party.
8.6 Limitations of Liability.
(a) An Indemnifying Person or Indemnitor shall have no liability under
Section 8.1(a) or 8.2(a) unless written notice of a claim for
indemnity, or written notice of facts as to which an indemnifiable Loss
is expected to be incurred, shall have been given within two (2) years
after the Closing Date; provided that the Buyer Indemnitees may give
notice of and may make a claim relating to the representations and
warranties contained in Section 3.13 [Employee Benefit Plans] or
Section 3.16(a) [taxes and tax returns] at any time prior to the
expiration of the appropriate statute of limitation with respect to any
claim covered by the representations and warranties in such Sections,
and the Buyer Indemnitees may give notice of and make a claim relating
to the representations and warranties contained in Section 3.27
[Environmental Matters] at any time within four (4) years after the
Closing Date. Notwithstanding the foregoing, the Buyer Indemnitees may
give notice of and may make a claim relating to the representations and
warranties contained in Section 3.1 [Ownership of Interests; No Liens
on Interests], Section 3.2 [Other Rights to Acquire Securities],
Section 3.5 [Due Authorization], clause (b) of the third sentence of
Section 3.8 [title to the Company's properties], Section 3.28 [Purchase
of Units for Investment], Section 4.1 [No Liens on Interests], Section
4.2 [Other Rights to Acquire Securities], Section 4.3 [Due
Authorization] or Section 4.5 [Purchase of Units for Investment]
(collectively, the "Sellers' Fundamental Representations and
Warranties") at anytime after the date hereof without any applicable
limitation date. Notwithstanding the foregoing, the Seller Indemnitees
may give notice of and may make a claim relating to the representations
and warranties contained in Section 2.2 [Due Authorization], Section
2.4 [Investment Intent] or Section 2.5 [Units] (collectively, the
"Buyer's Fundamental Representations and Warranties") at anytime after
the date hereof without any applicable limitation date. No Seller
Indemnitor shall have liability under Section 8.1(e) unless written
notice of claim for indemnity, or written notice of facts as to which
an indemnifiable Loss is expected to be incurred, shall have been given
within three (3) years after the Closing Date. No Seller Indemnitor
shall have liability under Section 8.1(f) or 8.1(g) unless written
notice of a claim for indemnity, or written notice of facts as to which
an indemnifiable Loss is expected to be incurred, shall have been given
within four (4) years after the Closing Date.
(b) No Seller Indemnitor will have liability (for indemnification or
otherwise) with respect to the matters described in Section 8.1(a) or
8.1(e) until the total of all Losses incurred by the Buyer Indemnitees
hereunder exceeds $100,000 (the "Threshold"), but then will have
liability for all Losses from the first dollar, without regard to the
Threshold, and in no event will the Seller Indemnitors (collectively)
be liable for any Losses with respect to the matters described in
Section 8.1(a) (other than as they relate to Section 3.27
[Environmental Matters], which is subject to the separate Environmental
Cap described below) or Section 8.1(e) in excess of $25,000,000 (the
"General Cap"); provided, however, that neither the Threshold nor the
General Cap shall apply to any Loss resulting from or relating to
breaches of Section 3.16(a) [taxes and tax returns] or any of the
Sellers' Fundamental Representations and Warranties or to any Loss
arising from fraud or intentional misrepresentation by the Sellers or
Onyx. In no event will the Seller Indemnitors (collectively) be liable
for any Losses with respect to the matters described in Section 8.1(a)
(to the extent they relate to Section 3.27 [Environmental Matters]) or
8.1(f) or 8.1(g) in excess of $60,000,000 (the "Environmental Cap");
provided, however, that the Environmental Cap shall not apply to any
Loss arising from fraud or intentional misrepresentation by the Sellers
or Onyx. For the avoidance of doubt, the parties agree that the General
Cap and the Environmental Cap are separate caps, and that the Seller
Indemnitors may have liability for both up to $25,000,000 with respect
to matters covered by the General Cap and up to $60,000,000 for matters
covered by the Environmental Cap, for a total liability of up to
$85,000,000.
(c) Any payments made pursuant to this Article VIII shall be treated as
adjustments to the purchase price paid by Buyer for the Interests for
income tax purposes. In calculating the amount of any Loss for which
any Indemnifying Person or Indemnitor is liable under this Article
VIII, there shall be taken into consideration the amount of any
insurance recoveries the Indemnified Person or Indemnitee in fact
receives as a direct consequence of the circumstances to which the Loss
related or from which the Loss resulted or arose.
(d) If the Closing is consummated, except for the right to seek specific
performance of any of the agreements contained herein, the remedies of
the parties specifically provided for by this Article VIII shall be the
sole and exclusive remedies of the parties for (i) any breach or
inaccuracy of the representations and warranties contained in this
Agreement or in any certificates furnished or delivered pursuant
hereto, (ii) the failure to perform any covenants, agreements or
obligations contained in this Agreement or in any certificates
furnished or delivered pursuant hereto, and (iii) any Loss arising out
of any transaction consummated pursuant to this Agreement or any
certificates furnished or delivered pursuant hereto.
8.7 Survival of Representations and Warranties. The parties hereto
agree that, except as otherwise provided in this Section 8.7, all of their
respective representations and warranties contained in this Agreement shall
survive for a period of two (2) years after the Closing Date; provided that the
representations and warranties made in Sections 3.13 [Employee Benefit Plans]
and 3.16(a) [taxes and tax returns] shall survive for a period ending on the
expiration date of the appropriate statute of limitation with respect to any
claim covered by the representations and warranties in such Section; provided,
further, that the representations and warranties made in Section 3.27
[Environmental Matters] shall survive for a period of four (4) years after the
Closing Date; and provided further, that each of the Buyer's and the Sellers'
Fundamental Representations and Warranties shall not expire.
8.8 Environmental Remediation by Sellers. With respect to any
Environmental Liability for which the Sellers are required to indemnify and
defend the Buyer or the Company pursuant to the terms of this Agreement and that
requires any removal, remediation, response, clean up or other corrective action
("Remediation") on property owned by the Buyer or the Company to respond to,
remove or otherwise address such Environmental Liability, the Sellers may elect
to implement and complete such Remediation. If the Sellers elect to conduct the
Remediation,
(a) the Buyer and the Company shall have the right to be involved in the
planning and design of any such Remediation and the right to be
involved in any meetings with, hearings before or other sessions with
any Governmental Authority regarding the Remediation;
(b) the Sellers, in good faith, will coordinate the schedule of the
Remediation with the Buyer and the Company so that disruptions of the
business of the Company will be minimized;
(c) the Sellers will obtain the prior written approval of the Buyer and the
Company, which approval will not be unreasonably withheld, conditioned
or delayed, for any consultant or contractor retained by the Sellers to
design or implement the Remediation;
(d) the Sellers will conduct the Remediation in compliance with all
applicable Environmental Laws and as directed by the appropriate
Governmental Authority;
(e) the Sellers will use their commercially reasonable efforts to complete
the Remediation in a timely and professional manner; and
(f) the Sellers will not agree to or select any Remediation that imposes
any obligations on the Buyer or the Company, including, without
limitation, the obligation to sign manifests or obtain permits, without
the prior written consent of the Buyer and the Company, which consent
shall not be unreasonably withheld, conditioned or delayed.
If the Buyer and the Company agree in writing to a Remediation that
imposes obligations on the Buyer or the Company, and the Sellers fail, in the
reasonable opinion of the Buyer or the Company, to implement the Remediation in
a manner that will complete all obligations imposed on the Buyer or the Company
in a timely manner and in compliance with all Environmental Laws, the Buyer or
the Company may give written notice of such failure to the Sellers and, after
giving such notice, may assume control of the Remediation and implement and
complete such Remediation at the expense of the Sellers.
The Sellers shall attempt in good faith to provide the Buyer with draft
copies of any study, plan or report associated with the Remediation at least 14
days before it is submitted to any Government Authority (or shall provide the
Buyer and the Company such draft copies as soon as practical if at least 14 days
is not practical) and shall provide the Buyer and the Company with copies of all
reports, plans and correspondence submitted to a Governmental Authority. In
addition, the Sellers shall provide the Buyer and the Company seven days' notice
(or shall provide the Buyer and the Company notice as soon as practical if seven
days' notice is not practical) of any meeting with, hearing before or other
session with any Governmental Authority with respect to the Remediation. The
Sellers shall give due consideration to any comments, suggestions, or requests
of Buyer and the Company in connection with the finalization of such draft
copies and the conduct of such meetings, hearings, or other sessions.
During the period in which the Sellers are conducting a Remediation
pursuant to this Section 8.8 on property owned by the Buyer or the Company, the
Buyer and the Company shall provide the Sellers and their consultants and
contractors reasonable access to such property for the purpose of conducting the
activities related to the Remediation. Any such access shall be subject to any
commercially reasonable restrictions imposed by the Buyer or the Company,
including, without limitation, restrictions related to worker safety. The
Sellers 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. The Sellers or
their consultants and contractors shall provide the Buyer and the Company at
least five business days' notice of the activities to be conducted on the
property, which notice may be in the form of a schedule of activities. The
Sellers and Onyx agree to indemnify, protect, hold harmless and defend the Buyer
and the Company from and against all liabilities, claims, demands, damages and
costs that arise or result from or relate to the Remediation or any other
actions of Sellers or their agents, consultants or contractors on the property
of Buyer or the Company. Before beginning any Remediation or entering upon the
property of Buyer or the Company pursuant to the grant of access provided in
this Section 8.8, Sellers or their third party contractor shall furnish to the
Buyer and the Company satisfactory proof of liability insurance in an amount of
not less than $1,000,000 which names the Buyer and the Company as additional
insureds.
8.9 Wickland and Time Indemnities. In the event Buyer or the Company
notifies Sellers that Buyer or the Company is asserting a claim for indemnity
under this Article VIII, then for a period of fifteen (15) days after such
notice Lancewood shall have the right to notify Buyer in writing (the
"Wickland/Time Indemnity Notice") that Lancewood in good faith believes that the
Company is entitled to an indemnity with respect to the matters set forth in the
claim, either from Wickland Oil Company or its Affiliates (collectively,
"Wickland") or from Time Oil Co. or its Affiliates (collectively, "Time"). The
Wickland/Time Indemnity Notice shall specify whether the indemnity is owed by
Wickland or Time and the provisions of the relevant agreement pursuant to which
the indemnity is owed. The Wickland/Time Indemnity Notice shall also include a
proposed notice to be delivered by the Company to Wickland or Time, as
appropriate, with respect to such indemnity. If Lancewood delivers a complete
Wickland/Time Indemnity Notice to Buyer within the fifteen (15) day period
stated above, then (i) the notice from Buyer or the Company to Sellers with
respect to the claim shall be deemed to be satisfactory notice of Buyer's and
the Company's claim for all purposes of Section 8.6, (ii) each Buyer Indemnitee
shall refrain from pursuing against Sellers the claim covered by the
Wickland/Time Indemnity Notice for a period of six (6) months after the date of
the Wickland/Time Indemnity Notice (the "Delay Period"), (iii) Buyer shall
promptly deliver the proposed indemnity claim notice included in the
Wickland/Time Indemnity Notice (with such reasonable changes therein as the
Company and Buyer shall deem appropriate) to Wickland or Time, as appropriate,
and (iv) the Company and Buyer shall permit Lancewood to participate in the
discussions with Wickland or Time, as appropriate, with respect to the indemnity
claim. If any Buyer Indemnitee's indemnity claims against Sellers are not paid
in full prior to the end of the Delay Period, then after the end of the Delay
Period the Buyer Indemnitees may pursue all available remedies against Sellers
with respect to the indemnity claims. To the extent that the Buyer Indemnitees
receive in the aggregate from Sellers, Wickland and Time amounts with respect to
a claim covered by a Wickland/Time Indemnity Notice that are in excess of the
aggregate amounts of the Buyer Indemnitees' indemnity claims, the Buyer
Indemnitees shall reimburse to Sellers any indemnity payments made by Sellers
with respect to such claim, up to the extent of such excess.
ARTICLE IX Testing and Gauging
9.1 Testing and Gauging. Buyer and the Sellers agree that product
stored at the seven (7) bulk storage terminals owned by the Company (the
"Terminals") will be gauged (to determine the volume of liquid stored in each
tank) and sampled, as of the Closing Date, by a mutually acceptable independent
surveyor, whose written report with respect thereto setting forth the liquid
volumes found to be contained in each tank will be furnished to each of the
parties, and who will retain all samples to be analyzed in the event it becomes
useful to do so to resolve any issues that may arise after the Closing. Any
party may, upon request, keep a duplicate sample of each product analyzed,
provided that the sample held by the third party shall be the controlling sample
for all purposes of this Agreement. The Sellers and Onyx will be jointly and
severally responsible for and will indemnify Buyer against any and all
liabilities, obligations, damages and expenses suffered or incurred by Buyer or
the Company in connection with any claims by third parties (after accounting for
any contractual allowances set forth in the contractual arrangements between the
Company and any such third parties) as a result of any (i) shortfall in the
volume of liquid stored in the storage tanks, if such shortfall occurred prior
to the Closing as evidenced by the report of the independent surveyor referred
to above, or (ii) discrepancy between the quality of the product and the quality
required, if such discrepancy occurred prior to the Closing as evidenced by the
samples retained by the independent surveyor referred to above. The fees of the
independent surveyor shall be shared equally by Buyer and the Sellers. Buyer
shall promptly notify Lancewood of any such third party claim made against Buyer
or the Company, and shall permit Lancewood to participate in attempting to
resolve each such third party claim.
9.2 Wastes. Representatives of Buyer and the Sellers shall jointly
inventory all wastes (including waste water and ship tank cleansing) stored at
the facilities of the Company as of the Closing Date. The Sellers shall
reimburse Buyer for the costs, if any, incurred in the disposal of such volumes
of waste which cannot legally be disposed of through the existing systems at the
facilities of the Company to the extent the total aggregate cost exceeds five
thousand dollars ($5,000) after consideration of amounts, if any, paid by the
Company's customers. Buyer shall dispose of said wastes under the Company's
generator identification number as soon as reasonably practicable after the
Closing Date and shall submit copies of invoices and manifests to the Sellers
within thirty (30) days thereafter. The Sellers shall pay Buyer within thirty
(30) days of receipt of invoices. For purposes of this Section 9.2, "waste"
shall mean all material that meets the definition of "waste" under Environmental
Laws on the Closing Date, but specifically excludes any commercial product
(whether solid, semi-solid or liquid) contained in an operating tank or
pipeline.
ARTICLE X Damage, Destruction or Condemnation of Assets
10.1 Damage, Destruction or Condemnation. In the event any of the
assets of the Company are damaged or destroyed by fire or other casualty, or are
condemned or threatened to be condemned, after the date hereof and prior to the
Closing, the Sellers shall promptly notify Buyer in writing of such, including
reasonable detail regarding the facts related thereto known to the Sellers, and
as soon thereafter as possible shall notify Buyer in writing of Sellers' good
faith judgment as to the repair or replacement costs for such assets (and, in
the event that Section 10.3 or 10.4 (but not Section 10.2) applies, the Closing
shall be delayed as is reasonably necessary to permit Sellers to deliver this
notice at least ten days prior to Closing).
10.2 Cost Less Than or Equal to $1,600,000. If in the Sellers' good
faith judgment repair or replacement of such assets can be made at a cost not to
exceed $1,600,000, then Closing may not be delayed by Buyer solely as a result
of such damage, destruction or condemnation, and Lancewood and Onyx shall be
obligated, at their sole cost, to promptly commence and diligently pursue the
repair or replacement of such assets to a condition that is substantially the
same as (or better than) the condition such assets were in immediately prior to
such damage, destruction or condemnation (a "Satisfactory Condition"), and,
during the period on or after Closing, promptly fund the cost of any such
activities undertaken by the Company or the Buyer. Any insurance proceeds
received by the Company or the Buyer as a result of any such damage, destruction
or condemnation for which Lancewood or Onyx has previously funded the covered
repairs or replacements shall be promptly refunded to Lancewood and Onyx. If
Sellers' written notice of their good faith judgment of the repair or
replacement cost of such assets states an amount of $1,600,000 or less, then
Lancewood and Onyx shall be jointly and severally responsible for the costs of
repair or replacement of such assets to a Satisfactory Condition, whether or not
such costs exceed $1,600,000.
10.3 Cost Between $1,600,000 and $16,000,000. If in the Sellers' good
faith judgment the cost to repair or replace such assets will exceed $1,600,000
but will be less than $16,000,000, then Lancewood and Onyx shall be obligated,
at their sole cost, to promptly commence and diligently pursue the repair or
replacement of such assets to a Satisfactory Condition, and Buyer shall have the
option, in its sole discretion, to either (i) delay Closing until such time as
the assets have been repaired or replaced to a Satisfactory Condition, or (ii)
proceed with Closing and require Lancewood and Onyx to promptly thereafter
repair and replace the assets to a Satisfactory Condition. Any insurance
proceeds received by the Company or the Buyer after Closing as a result of any
such damage, destruction or condemnation for which Lancewood or Onyx has
previously funded the covered repairs or replacements shall be promptly refunded
to Lancewood and Onyx. If Sellers' written notice of their good faith judgment
of the repair or replacement costs of such assets states an amount less than
$16,000,000, then Lancewood and Onyx shall be jointly and severally responsible
for the costs of repair or replacement of such assets to a Satisfactory
Condition, whether or not such costs exceed $16,000,000.
10.4 Cost Greater than $16,000,000. If in the good faith judgment of
either the Buyer or the Sellers the repair or replacement of such assets can not
be made at a cost of less than $16,000,000, then (i) either the Buyer or
Lancewood may elect to terminate this Agreement, (ii) the Buyer and Lancewood
may mutually agree to delay Closing until such time as such assets have been
repaired or replaced, at Lancewood's and Onyx's sole cost, to a Satisfactory
Condition, or (iii) the Buyer and Lancewood may mutually agree to proceed with
Closing, provided that Lancewood and Onyx will agree, during the period on or
after Closing, to promptly fund the costs incurred by the Company or the Buyer
in connection with the repair or replacement of such assets to a Satisfactory
Condition.
ARTICLE XI Miscellaneous
11.1 Collateral Agreements, Amendments and Waivers. This Agreement
(together with the documents delivered pursuant hereto) supersedes all prior
documents, understandings and agreements, oral or written, relating to this
transaction and constitutes the entire understanding among the parties with
respect to the subject matter hereof. No representation, promise, inducement or
statement of intention has been made by any party hereto which is not embodied
or referenced in this Agreement. Subject to the following sentence, any
modification or amendment to, or waiver of, any provision of this Agreement (or
any document delivered pursuant to this Agreement unless otherwise expressly
provided therein) may be made only by an instrument in writing executed by the
party against whom enforcement thereof is sought. In addition to the foregoing,
this Agreement may be amended prior to the Closing, but not thereafter, in any
respect by written agreement of Buyer and Lancewood, and no such amendment of
any nature shall require the consent (written or oral) of the Company or any
other Seller or Onyx to be effective against, and binding upon, the Company and
each other Seller and Onyx. Each of the Company and each Seller and Onyx
consents to the foregoing provisions of this Section 11.1 and acknowledges and
agrees that he, she or it is aware of and understands the implications thereof.
11.2 Successors and Assigns. None of Buyer's, the Company's, Onyx's or
any Seller's rights or obligations under this Agreement may be assigned without
the consent of the other parties hereto, provided that Buyer's rights and
obligations hereunder may be assigned to any Affiliate of Buyer without the
necessity of any consent from any person, provided that any such assignment
shall not relieve the Buyer of its obligations hereunder. Any assignment in
violation of the foregoing shall be null and void. Subject to the preceding
sentences of this Section 11.2, the provisions of this Agreement (and, unless
otherwise expressly provided therein, of any document delivered pursuant to this
Agreement) shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, legal representatives, successors and assigns.
11.3 Expenses. Whether or not the transactions contemplated hereby are
consummated, each of the parties hereto will pay all costs and expenses of his,
her or its performance of and compliance with this Agreement, provided, however,
the Sellers shall, promptly upon request, reimburse the Buyer for any filing and
recording fees and other reasonable out-of-pocket expenses (other than attorney
fees and expenses) incurred by Buyer in filing the releases contemplated by
Section 6.1(g).
11.4 Invalid Provisions. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under present or future laws, such
provision shall be fully severable, this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part of this Agreement and the remaining provisions of this
Agreement shall remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance from this
Agreement.
11.5 Information and Confidentiality. Each party hereto agrees that
such party shall hold in strict confidence all information and documents
received from any other party hereto, and if the Closing does not occur each
such party shall return to the other parties hereto all such documents then in
such receiving party's possession without retaining copies; provided, however,
that each party's obligations under this Section 11.5 shall not apply to (a) any
information or document required to be disclosed by law or Buyer's disclosure
requirements under the Securities Act or any state securities laws or the rules
and regulations thereunder, (b) any information or document in the public domain
other than because of the wrongful actions of the disclosing party, or (c) any
information or document that Buyer discloses to any potential lender to or
investor in Buyer or the Company, and provided further that from and after the
Closing this Section 11.5 shall not apply to Buyer with respect to any
information regarding the Company.
11.6 Waiver. No failure or delay on the part of any party in exercising
any right, power or privilege hereunder or under any of the documents delivered
in connection with this Agreement shall operate as a waiver of such right, power
or privilege; nor shall any single or partial exercise of any such right, power
or privilege preclude any other or future exercise thereof or the exercise of
any other right, power or privilege.
11.7 Notices. Any notices required or permitted to be given under this
Agreement (and, unless otherwise expressly provided therein, under any document
delivered pursuant to this Agreement) shall be given in writing and shall be
deemed received (a) when personally delivered to the relevant party at its
address as set forth below, (b) if sent by mail, on receipt at the relevant
party's address as set forth below, or (c) if sent by facsimile transmission to
the relevant party at its address indicated below, when electronic confirmation
is received by the transmitting party:
Buyer: Kaneb Pipe Line Partners, L.P.
2435 North Central Expressway, Suite 700
Richardson, Texas 75080-2731
Attn: Edward D. Doherty
Chairman of the Board and Chief Executive Officer
Fax: (972) 699-1894
With copies to: Support Terminals Operating Partnership, L.P.
17304 Preston Road, Suite 1000
Dallas, Texas 75252
Attn: Fred T. Johnson
Fax: (972) 931-6526
and
Fulbright & Jaworski L.L.P.
2200 Ross Avenue, Suite 2800
Dallas, Texas 75201
Attn: Kenneth L. Stewart
Fax: (214) 855-8200
The Company: Shore Terminals LLC
2801 Waterfront Road
Martinez, California 94553
Attn: Richard Shore, Jr., President
Fax: (925) 228-5617
With a copy to: Warren W. Garden
5531 Greenbrier Drive
Dallas, Texas 75209
Fax: (214) 352-3282
The Sellers: c/o Lancewood, Inc.
300 Delaware Avenue
9th Floor
Wilmington, Delaware 19801
Attn: Francis Jacobs
Fax: (302) 552-3128
With copies to: Richard Shore, Jr.
2801 Waterfront Road
Martinez, California 94553
Fax: (925) 228-5617
and
Warren W. Garden
5531 Greenbrier Drive
Dallas, Texas 75209
Fax: (214) 352-3282
Onyx: Northwest Bank Tower
2550 Middle Road
Suite 603
Bettendorf, Iowa 52722
Attn: David L. Widener
Each party may change its address for purposes of this Section 11.7 by
proper notice to the other parties. Sellers and Onyx hereby acknowledge and
agree that, in giving notice to any or all of the Sellers or to Onyx, Buyer need
only deliver one copy of such notice to Lancewood (who shall be responsible for
delivering copies of such notice to the other Sellers and to Onyx).
11.8 Public Announcement. Except as may be required by law or Buyer's
public company disclosure requirements, none of the Company or any Seller (or
any of their Affiliates) or Buyer (or any of its Affiliates) or Onyx (or any of
its Affiliates) shall make any public statements, including any press releases,
with respect to this Agreement or the transactions contemplated hereby without
the prior written consent of Buyer and Lancewood (which consent may not be
unreasonably withheld, conditioned or delayed). If Buyer determines that the law
or its public company disclosure requirements require it to issue a press
release or other public disclosure with respect to this Agreement or the
transactions contemplated hereby regardless of whether Lancewood consents, Buyer
shall furnish the draft text of the release to Lancewood and give Lancewood the
opportunity to review and make reasonable comments to such text.
11.9 Waiver of Certain Rights. Each Seller and the Company hereby
waives any rights of first refusal, preemptive rights or other rights of any
nature whatsoever which the Company or such Seller may have to purchase any of
the Interests or other equity securities of any nature of the Company.
11.10 Further Assurances. At, and from time to time after, the Closing,
at the request of Buyer but without further consideration, each Seller shall
execute and deliver such other instruments of conveyance, assignment, transfer
and delivery and take such other action as Buyer may reasonably request in order
more effectively to consummate the transactions contemplated hereby.
11.11 No Third-Party Beneficiaries. Other than the Indemnitees and the
Indemnified Persons not parties hereto, no Person not a party to this Agreement
shall be deemed to be a third-party beneficiary hereunder or entitled to any
rights hereunder.
11.12 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware.
11.13 Prevailing Party. If any legal action, arbitration or any other
proceeding is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach, default, or misrepresentation in connection with any of
the provisions of this Agreement, the successful or prevailing party or parties
shall be entitled to recover reasonable attorneys' fees and other costs incurred
in that action or proceeding, in addition to any other relief to which it or
they may be entitled.
11.14 Arbitration. Subject to and after complying with the provisions
of Section 8.3, if applicable, any controversy or claim arising out of or
relating to this Agreement, including, without limitation, the making,
performance, or interpretation of this Agreement, shall be settled by
arbitration. Unless otherwise agreed, the arbitration shall be conducted in
Dallas, Texas, in accordance with the then-current Commercial Arbitration Rules
of the American Arbitration Association. Unless otherwise agreed, the
arbitration shall be held before a single arbitrator. The arbitrator shall be
chosen from a panel of attorneys knowledgeable in the field of business law in
accordance with the then-current Commercial Arbitration Rules of the American
Arbitration Association. If the arbitration is commenced, the parties agree to
permit discovery proceedings of the type provided by the Federal Rules of Civil
Procedure both in advance of, and during recesses of, the arbitration hearings.
The parties agree that the arbitrator shall have no jurisdiction to consider
evidence with respect to or render an award or judgment for punitive damages (or
any other amount awarded for the purpose of imposing a penalty) or loss of
profits. The parties agree that all facts and other information relating to any
arbitration arising under this Agreement shall be kept confidential to the
fullest extent permitted by law. Any party may apply to any court of competent
jurisdiction for a judgment or decree enforcing the arbitral award. The parties
will advance jointly the arbitrators' fees and costs of arbitration. The
arbitrators may, in the arbitrators' discretion, award the prevailing party
reimbursement for its share of the arbitral fees and costs advanced. Any party
may, without inconsistency with this Agreement, seek from a court any interim or
provisional relief that may be necessary to protect the rights or property of
that party pending the selection of the arbitrators (or pending the arbitrators'
determination of the merits of the controversy or claim).
11.15 Gender; Numbers. All references in this Agreement to the
masculine, feminine or neuter genders shall, where appropriate, be deemed to
include all other genders. All plurals used in this Agreement shall, where
appropriate, be deemed to be singular, and vice versa.
11.16 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. This Agreement
shall be binding when one or more counterparts hereof, individually or taken
together, shall bear the signatures of all the parties reflected hereon as
signatories.
11.17 Telecopy Execution and Delivery. A facsimile, telecopy or other
reproduction of this Agreement may be executed by one or more parties hereto,
and an executed copy of this Agreement may be delivered by one or more parties
hereto by facsimile or similar electronic transmission device pursuant to which
the signature of or on behalf of such party can be seen, and such execution and
delivery shall be considered valid, binding and effective for all purposes. At
the request of any party hereto, all parties hereto agree to execute an original
of this Agreement as well as any facsimile, telecopy or other reproduction
hereof.
11.18 No Strict Construction. The parties have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises with respect to this Agreement or
any of the documents delivered pursuant hereto, this Agreement and such
documents shall be construed as if drafted jointly by the parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement or such
documents.
11.19 Guarantee by Onyx. Onyx hereby (i) unconditionally guarantees the
prompt performance and payment of the obligations and liabilities of the Sellers
under this Agreement, (ii) waives any requirements of notice, protest, demand or
grace with respect thereto, and (iii) agrees that Buyer shall not be required to
exhaust its remedies against any other Person (including Sellers) before
enforcing the provisions of this guarantee. Onyx acknowledges and agrees that
Buyer is relying materially on this guarantee in entering into and consummating
the transactions contemplated by this Agreement, and that but for this guarantee
Buyer would not enter into this Agreement or consummate the transactions
contemplated hereby.
11.20 Nondisclosure of Confidential Information. Each of the Sellers
and Onyx recognize and acknowledge that they have and will have access to
certain confidential information concerning the Company and its business that
after the consummation of the transactions contemplated hereby will be valuable,
special and unique property of the Company and Buyer. Each of the Sellers and
Onyx agree that they will not disclose, and they will use their reasonable
efforts to prevent disclosure by any other Person of, any such confidential
information to any Person for any purpose or reason whatsoever, except to
authorized representatives of Buyer or the Company. Each of the Sellers and Onyx
recognize and agree that violation of any of the agreements contained in this
Section 11.20 will cause irreparable damage or injury to Buyer and the Company,
the exact amount of which may be impossible to ascertain, and that, for such
reason, among others, Buyer and the Company shall be entitled to an injunction,
without the necessity of posting bond therefor, restraining any further
violation of such agreements. Such rights to any injunction shall be in addition
to, and not in limitation of, any other rights and remedies Buyer or the Company
may have against any Seller or Onyx.
11.21 Decisions Regarding Sellers. To the extent that Sellers have, or
are entitled to exercise, any rights under any provisions of this Agreement, or
are entitled to provide any approvals, consents or notices under any provisions
of this Agreement, Lancewood shall have the sole authority to make decisions
with respect thereto, exercise such rights, and provide such approvals, consents
and notices, in each case on behalf of all Sellers, and all Sellers agree that
they shall be bound by such decisions and actions of Lancewood and that Buyer
may rely thereon.
[Remainder of Page Intentionally Blank -- Signature Pages Follow]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement in one or more counterparts (all of which shall constitute one and the
same agreement) as of the day and year first above written.
THE BUYER:
KANEB PIPE LINE PARTNERS, L.P.
By: Kaneb Pipe Line Company,
its General Partner
By: ______________________________
Name: E.D. Doherty
Title: Chairman and Chief Executive Officer
THE COMPANY:
SHORE TERMINALS LLC
By: Richard Shore, Jr., President
THE SELLERS:
LANCEWOOD, INC.
By: Francis Jacobs, President
Richard Shore, Jr.
David L. Widener
Peter J. Jacullo, III
Michael J. Burgett
Dawn M. West
Brian A. Hoff
Marco Ullmer
John M. Mackowiak
ONYX:
ONYX HOLDINGS, INC.
By: David L. Widener, President
