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EXHIBIT 10.3
PURCHASE AGREEMENT BY AND AMONG
STEUART INVESTMENT COMPANY,
SUPPORT TERMINALS OPERATING PARTNERSHIP, L.P.
AND KANEB PIPE LINE OPERATING PARTNERSHIP, L.P.
FOR COCKPIT POINT
AUGUST 27, 1995
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TABLE CONTENTS
Page No.
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ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2 PURCHASE AND SALE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.1 Sale and Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.2 Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.3 Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.3.1 At Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.3.2 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.4 Allocation of Purchase Price Amongst Acquired Assets . . . . . . . . . . . . . . . . . . . 13
Section 2.5 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.6 Payment of Taxes and Closing Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.7 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 3 MATTERS PRIOR TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.1 Due Diligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.1.1 Examination of Records and Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.1.2 Environmental Due Diligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.2 Real Property Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.3 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.4 Hart-Scott-Rodino . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 3.5 Purchaser's Licenses, Permits and Approvals. . . . . . . . . . . . . . . . . . . . . . . . 22
Section 3.6 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 3.7 Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 3.8 Deferred Like-Kind Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 3.9 Actions Necessary to Consummate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE 4 OPERATION OF THE PROPERTY PRIOR TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.1 Ordinary Course . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.2 Certain Changes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE 5 CONDITIONS TO THE OBLIGATION OF PURCHASER TO CLOSE . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.2 Certificate Regarding Environmental Representations
and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.3 Compliance with this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.4 Purchase Permitted by Applicable Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.5 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.6 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(i)
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Section 5.7 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.8 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.9 Title Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.10 Satisfaction of Conditions to Closing Under the
Asset Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 6 CONDITIONS TO THE OBLIGATION OF THE COMPANY TO CLOSE . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.2 Compliance with this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.3 Sale Permitted by Applicable Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.4 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 6.5 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 6.6 Satisfaction of Conditions to Closing Under
the Asset Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 7.1 Existence and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 7.2 Corporate Authorization: No Contravention . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 7.3 Governmental Authorization: Third Party Consents . . . . . . . . . . . . . . . . . . . . . 29
Section 7.4 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 7.5 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 7.6 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 7.7 Title to Real Property and Real Property Leases . . . . . . . . . . . . . . . . . . . . . . 30
Section 7.8 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 7.9 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.10 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.11 No Material Adverse Change: Ordinary Course . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.12 Broker's, Finder's or Similar Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.13 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.14 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.15 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 7.16 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 7.17 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 7.18 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 7.19 Restrictive Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 7.20 List of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 7.21 Information Furnished . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 7.22 Intentionally Omitted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 7.23 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 7.24 Right-of-way Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE 8 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND THE GUARANTOR . . . . . . . . . . . . . . . . . 35
(ii)
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Section 8.1 Authorization: No Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 8.2 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 8.3 Broker's, Finder's or Similar Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.4 Governmental Authorization; Third Party Consent . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.5 Sufficient Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.6 Fraudulent Conveyance/Fraudulent Transfer Matters . . . . . . . . . . . . . . . . . . . . . 36
Section 8.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 9 CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 9.1.A Time and Place . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 9.1.B Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 9.2 Documents and Instruments to be Delivered by SPC . . . . . . . . . . . . . . . . . . . . . 38
Section 9.3.A Documents and Instruments to be Delivered by Purchaser . . . . . . . . . . . . . . . . . . 39
Section 9.3.B Documents and Instruments to be Delivered by Guarantor . . . . . . . . . . . . . . . . . . 39
Section 9.4 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE 10 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 10.1 Grounds for Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 10.2 Termination of the Asset Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 10.3 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE 11 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 11.1 Indemnification by SIC and SPC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 11.2 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 11.3 Indemnification by Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 11.4 Establishment of Escrow Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 11.5 Limits on Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 11.6 Minimum Claim Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 11.7 Special Environmental Indemnification and Post-Closing
Covenants by Purchaser. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 11.8 Notification; Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 11.9 Net Worth Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE 12 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 12.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 12.2 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 12.3 Amendment and Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 12.4 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 12.5 Jurisdiction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 12.6 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 12.7 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 12.8 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 12.9 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 12.10 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
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Section 12.11.A Post-Closing Access to Books and Records by Purchaser . . . . . . . . . . . . . . . . . . . 56
Section 12.11.B Post-Closing Access to Books and Records by SIC . . . . . . . . . . . . . . . . . . . . . . 57
Section 12.12 Treatment of Purchase Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 12.13 Capitalized Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 12.14 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 12.15 Prorations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 12.16 Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
(iv)
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PURCHASE AGREEMENT BY AND AMONG
STEUART INVESTMENT COMPANY, SUPPORT
TERMINALS OPERATING PARTNERSHIP, L.P. AND
KANEB PIPE LINE OPERATING PARTNERSHIP, L.P.
FOR COCKPIT POINT
This Purchase Agreement is made this 27th day of August, 1995, by and
among Steuart Investment Company, a Delaware corporation with its principal
place of business at 4646 Fortieth Street, N.W., Washington D.C. 20016 ("SIC" or
the "Company"), Support Terminals Operating Partnership, L.P., a Delaware
limited partnership with its principal place of business at 17304 Preston Road,
Suite 1000, Dallas, Texas 75252-5623 ("Purchaser") and Kaneb Pipe Line Operating
Partnership, L.P., a Delaware limited partnership with its principal place of
business at 2435 N. Central Expressway, Suite 700, Richardson, Texas 75080
("Guarantor").
RECITALS
A. SIC owns the Property. The Business conducted on the Real
Property is owned and operated by SPC. SIC leases the Property to SPC pursuant
to the Real Property Lease.
B. SPC and Purchaser have entered into the Asset Purchase
Agreement, pursuant to which, SPC has agreed to sell to Purchaser and
Purchaser has agreed to buy from Seller, among other things, the Business
conducted on the Real Property, including SPC's rights under the Real Property
Lease.
C. As part of the transactions contemplated by the Asset Purchase
Agreement, SIC has agreed to sell to Purchaser and Purchaser has agreed to buy
the Property, on the terms and subject to the conditions set forth in this
Agreement.
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Now, therefore, the parties agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, and unless
the context requires a different meaning, the following terms have the meanings
indicated:
"Adjusted Purchase Price" means the Purchase Price less any reductions
thereto made in accordance with this Agreement.
"Affiliate" means as to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with such
Person.
"Agreement" means this Agreement and the Schedules and Exhibits
attached hereto, as amended, supplemented or modified.
"Aggregate Purchase Price" means the sum of the Purchase Price set
forth in this Agreement, the Purchase Price set forth in the PPI Agreement and
the Purchase Price set forth in the Asset Purchase Agreement.
"Aggregate Adjusted Purchase Price" means the sum of the Adjusted
Purchase Price set forth in this Agreement, the Adjusted Purchase Price set
forth in the PPI Agreement and the Adjusted Purchase Price set forth in the
Asset Purchase Agreement.
"Applicable Law" means as to any Person, any Federal, state,
municipal, foreign or other law, treaty, order, ordinance, code, rule,
regulation, right, privilege, qualification, license or franchise or
determination of or promulgated by a Governmental Authority, applicable or
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binding on such Person or any of its property or to which such Person or any of
its property is subject or pertaining to any or all of the transactions
contemplated or referred to herein.
"Asset Purchase Agreement" means that certain Asset Purchase Agreement
By and Among Steuart Petroleum Company, SPC Terminals, Incorporated, Support
Terminals Operating Partnership, L.P. and Kaneb Pipe Line Operating
Partnership, L.P. of even date with this Agreement.
"Assumed Liabilities" has the meaning set forth in Section 2.2.
"Audit(s)" means such environmental due diligence as Purchaser chooses
to conduct, including without limitation a Phase I and/or Phase II
environmental audit.
"Average Monthly Revenue" shall be calculated by dividing the total
revenues generated from the Business for the twelve calendar months immediately
preceding the date of this Agreement by twelve.
"Business" means SPC's terminal operations at Cockpit Point.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in Dallas, Texas, the City of New York or
Washington, D.C. are authorized or required by Applicable Law or executive
order to close.
"Closing" has the meaning set forth in Section 9.1.A.
"Closing Date" means the date specified in Section 9.1.A.
"Cockpit Point" means the Real Property.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute thereto.
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"Contracts" means all contracts and agreements between SIC and
suppliers, vendors, customers and other third parties relating to the Property,
including without limitation Material Contracts, but not including the
Right-of-way Agreements.
"Current Title Information" has the meaning set forth in Section 3.2.
"Due Diligence Period" means the 60-day period commencing with the
date of this Agreement.
"Environmental Adjustment Request" means a request for a reduction in
the Purchase Price submitted by Purchaser pursuant to Section 3.1.2.2.
"Environmental Law" means any Federal, state or local law, statute,
ordinance, or regulation pertaining to health, industrial hygiene, or the
environmental conditions concerning the Property or any portion thereof,
including without limitation the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 ("CERCLA") as amended, 42 U.S.C.
Sections 6901 et seq.; the Resource Conservation and Recovery Act, 42 U.S.C.
Sections 6901 et seq. ("RCRA"); the Clean Air Act, 42 U.S.C. Sections 7401
et seq. ("CAA"); the Clean Water Act, 33 U.S.C. Sections 1251 et seq. ("CWA")
and similar laws of any Governmental Authority having jurisdiction over any
portion of the Property as such laws may be amended or supplemented from time
to time, and all regulations promulgated or orders issued pursuant to such
laws, but not including the Occupational Safety and Health Act, 29 U.S.C.
Section 651 et seq. ("OSHA") or other laws relating primarily to the
protection of workers.
"Excluded Assets" has the meaning set forth in Section 2.1.
"GAAP" means generally accepted United States accounting principles in
effect from time to time.
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"Governmental Authority" means the government of any nation, state,
city, locality or other political subdivision of any thereof, any federal,
state, local or other court or arbitral tribunal, and any entity (corporate or
otherwise) exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Hazardous Substance" includes without limitation:
(i) any substance included within the definition of
"hazardous waste" pursuant to Section 1004 of the RCRA and implementing
regulations;
(ii) any substance included within the definition of
"hazardous substance" pursuant to Section 101 of CERCLA and implementing
regulations;
(iii) any pollutant listed under the CAA, the CWA or
implementing regulations pursuant to the CAA or the CWA; and
(iv) petroleum and petroleum products.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976.
"Indemnified Party" means each SIC Indemnified Party or each Purchaser
Indemnified Party as determined by the context of the reference to "Indemnified
Party" herein.
"Knowledge" when used with respect to the Company, means the actual
knowledge of the officers of the Company, and when used with respect to the
Purchaser, means the actual knowledge of the officers of the general partner of
the Purchaser and the officers of ST Services, Inc.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, encumbrance, lien (statutory or other) or preference, priority,
right or other security interest or preferential arrangement of any kind or
nature whatsoever (excluding preferred stock and equity
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related preferences) including, without limitation, those created by, arising
under or evidenced by any conditional sale or other title retention agreement,
the interest of a lessor under a capital lease obligation, or any financing
lease having substantially the same economic effect as any of the foregoing,
except that "Lien" shall not include liens for taxes not due and payable at
Closing.
"Major Loss" means any loss, damage, breakdown, or casualty to the
whether from fire, flood, hurricane, or any other cause, in an amount
reasonably estimated to exceed Five Hundred Thousand Dollars ($500,000),
whether or not covered by insurance.
"Material Contracts" means Contracts that either (i) require an annual
payment by any party thereto in excess of $50,000, (ii) are not cancelable by
SIC (at no penalty to SIC) within twelve months, or (iii) have a material
effect on the operation or conduct of the Property, including without
limitation the Real Property Lease.
"Net Remedial Cost" means the cost, estimated if necessary, to perform
any Remedial Work net of estimated insurance coverage and reimbursements from
trust funds maintained by any Governmental Authority.
"Notice" has the meaning set forth in Section 3.1.2.4.
"Ordinary Course of Business" means a course of business consistent
with the Company's past customs and practices with respect to the Property.
"Pepco" means Potomac Electric Power Company.
"Pepco Pipeline" means the 30 miles (approximately) of 16 inch
pipeline owned by Pepco extending from the Piney Point Terminal, in St. Mary's
County, Maryland to the Ryceville Pumping Station in Charles County, Maryland.
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"Permitted Encumbrances" shall mean:
(a) with respect to any property other than ROW Real
Estate (provided that item (iii) below shall only apply to Real Property) (i)
those matters described on Schedules 2.1(a) and 2.1(b) under the heading
"Permitted Encumbrances", (ii) liens for taxes not due and payable at Closing,
(iii) except for matters listed as Title Objections on Schedule 3.2,
imperfections of title, easements or restrictions that do not substantially
affect marketability, insurability, or use (but specifically excluding any Lien
or any claim of Lien related to an obligation to pay money with respect to a
debt, but including those Liens listed on Schedule 2.1(a)) and, (iv) any Liens
or other restrictions or title defects that are waived or consented to by
Purchaser; and
(b) with respect to ROW Real Estate (i) those matters
described on Schedules 2.1(a) and 2.1(b) under the heading "Permitted
Encumbrances", (ii) Liens for taxes that SIC is obligated to pay under any
Right-of-Way Agreement not due and payable at Closing, (iii) Liens on the ROW
Real Estate arising due to the acts or omissions of the owner or lessor of the
ROW Real Estate, (iv) any Lien on the ROW Real Estate that is not attributable
to an act or omission of SIC or its Affiliates, and (v) any Liens or other
restrictions that are waived or consented to by Purchaser.
"Person" means any individual, firm, corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
Governmental Authority or other entity of any kind, and shall include any
successor (by merger or otherwise) of such entity.
"PPI" means Piney Point Industries, Inc., a Maryland corporation.
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"PPI Agreement" means that certain Piney Point Pipeline Asset Purchase
Agreement By and Among Piney Point Industries, Inc., Support Terminals
Operating Partnership, L.P. and Kaneb Pipeline Operating Partnership, L.P. of
even date with this Agreement.
"Property" shall have the meaning set forth in Section 2.1.
"Purchase Agreements" means collectively this Agreement, the PPI
Agreement and the Asset Purchase Agreement.
"Purchase Price" has the meaning set forth in Section 2.3.1.
"Purchaser Indemnified Party" has the meaning set forth in Section
11.1.
"Purchaser's Consultant" means Think Tank, Inc., or any other
recognized environmental consulting firm selected by Purchaser and approved by
SIC, such approval not to be unreasonably withheld.
"Real Property" means that certain real property located at Cockpit
Point Road, Dumfries, Virginia and including the Tanks and all buildings,
structures, fixtures and other improvements located thereon, as described in
greater detail in Schedule 2.1(a), but not including any other real property
owned or leased by SIC and also not including the ROW Real Estate.
"Real Property Lease" means that certain Lease Agreement with respect
to the Real Property by and between SPC as lessee and SIC as lessor, dated
August 1, 1981, as amended by the First Amendment dated January 1, 1994, and
listed on Schedule 2.1(b).
"Real Property Matter" means, with respect to any parcel of Real
Property, (i) a Title Objection with respect to such parcel; (ii) an existing
or pending condemnation, expropriation, or public taking of all or any portion
of such parcel, which, (A) individually or in the aggregate,
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has, or is reasonably expected to have, a material adverse effect on the
operations of the Property, (B) has, or is reasonably expected to have, a
material adverse effect on the internal expansion of the Property or (C)
affects greater than ten percent (10%) of the acreage of the Property.
"Remedial Work" means any investigation, site monitoring, containment,
cleanup, removal, restoration, or other corrective action that is reasonably
necessary to remedy any non-compliance with Environmental Law, that is
reasonably necessary under Environmental Law, or that has been required by a
Governmental Authority.
"Right-of-way Agreement(s)" means the agreement(s) (whether in the
form of a license, easement, lease or other form of agreement) pursuant to
which SIC is granted the right to use real estate owned by third parties for
the Pepco Pipeline and the Business and the right-of-way agreements described
in Section 5.12 of the Asset Purchase Agreement. The Right-of-way Agreements
are more particularly described in Schedule 2.1(c).
"ROW Real Estate" means individually or in the aggregate, the real
estate on which the Pepco Pipeline is located that is described in, and subject
to the terms and conditions set forth in a Right-of-way Agreement.
"SIC Indemnified Party" has the meaning set forth in Section 11.3.
"SIC's Consultant" means Versar, Inc., or any other recognized
environmental firm selected by SIC and approved by Purchaser, such approval not
to be unreasonably withheld.
"SPC" means Steuart Petroleum Company, a Delaware corporation.
"Tank" means the four (4) storage tanks having a total shell capacity
of approximately 465,000 bbls and three (3) ancillary tanks located on and
comprising part of the Real Property.
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"Terminal(s)" means the various terminal operations owned or leased
and operated by SPC that offer petroleum product throughput and storage
capabilities as more fully described in the Asset Purchase Agreement.
"Title Objection" means (a) any Lien, restriction or title defect
that substantially impairs the marketability, insurability or use of any parcel
of Real Property, other than Permitted Encumbrances and (b) those matters
listed on Schedule 3.2.
ARTICLE 2
PURCHASE AND SALE OF ASSETS
Section 2.1 Sale and Purchase. At the Closing, SIC shall sell,
transfer, grant, assign, convey and deliver to Purchaser, and Purchaser shall
purchase and accept from SIC, all right, title and interest in and to the
following assets, properties, and rights, whether tangible or intangible, real,
personal or mixed, and wherever located (the "Property"), in each case free and
clear of all Liens and other restrictions, except for Permitted Encumbrances:
(a) the Real Property as listed on Schedule 2.1(a);
(b) SIC's rights under the Contracts, to the extent
transferable, including SIC's rights under the
Material Contracts listed on Schedule 2.1(b);
(c) SIC's rights under the Right-of-way Agreements,
including, but not limited to, those listed on
Schedule 2.1(c).
(d) all business records in the possession or under the
control of SIC relating to the Property including
without limitation the books and records of account
and customer and prospect lists, but excluding
financial records
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presently maintained at SIC's location at 4646
Fortieth Street, N.W., Washington, D.C. (which SIC
shall maintain and transfer to Purchaser in
accordance with the terms of Section 12.11); and
(e) to the extent transferable, all of SIC's right and
interest in any license, permits, consents, and
authorities relating to the Property, issued by any
Governmental Authority and any applications for such
items.
Notwithstanding anything herein to the contrary, the Property shall
not include and Purchaser shall not acquire (i) cash, bank accounts, accounts
receivable, certificates of deposit or other cash equivalents, (ii) any tax
refunds attributable to taxes paid by SIC, (iii) those assets listed on
Schedule 2.1 under the heading "Excluded Assets", (iv) the right to the Steuart
name, except as licensed under the Asset Purchase Agreement, (v) any insurance
retrospective rating adjustment applicable to periods prior to the Closing
Date, and (vi) any reimbursements from trust funds or insurance maintained by
any Governmental Authority for Remedial Work performed prior to the Closing
Date and paid for by SIC (the items listed in clauses (i) through (vi) being
referred to herein as the "Excluded Assets").
Section 2.2 Assumption of Liabilities.
(a) Purchaser shall assume at Closing:
(i) obligations of SIC under the Contracts and
Right-of-way Agreements attributable to periods of time commencing with the
Closing, provided, however, that (A) with respect to Material Contracts and
Right-of-way Agreements, Purchaser assumes such obligations only for Material
Contracts listed on Schedule 2.1(b) and Right-of-way Agreements listed on
Schedule 2.1(c) and only to the extent true and correct copies thereof and
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all amendments thereto have either been delivered to Purchaser as of the date
hereof, or are delivered to and consented to by Purchaser after the date
hereof, provided, however, that to the extent that a copy of an immaterial
amendment to such Material Contract or Right-of-way Agreement has not been
provided to Purchaser as of the date hereof, Purchaser shall assume such
obligations for such Material Contract or such Right-of way Agreement without
regard to the amendment not delivered to Purchaser and, in such event, SIC
shall be responsible for all liabilities of Purchaser with respect to the
amendment not delivered to Purchaser without regard to the limits set forth in
Section 11.5; and (B) Purchaser specifically does not assume, and shall not be
treated as having assumed, any liability or obligation under any Contract or
Right-of-way Agreement to the extent such liability or obligation relates to or
arises out of a breach of such Contract or Right-of way Agreement that occurs
prior to the Closing (provided that liability and obligation for Purchaser's
continuing breaches of such Contracts or such Right-of-way Agreements after
Closing and liability and obligation for breaches of such Contracts or
Right-of-way Agreements commenced by Purchaser after Closing shall be the
responsibility of Purchaser); and
(ii) except as expressly provided for otherwise
herein and in accordance with the provisions of Section 11.7, any amounts
payable to perform Remedial Work with respect to the Real Property, regardless
of when the events giving rise to the obligation to perform such Remedial Work
are alleged to have occurred.
The obligations assumed by Purchaser pursuant to subsection (a) of
this Section 2.2 are referred to herein collectively as the "Assumed
Liabilities".
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(b) Purchaser shall not assume any liabilities or
obligations of SIC not specifically assumed under subsection (a) of this
Section 2.2, except to the extent that Purchaser's covenants in Section 11.7
constitute an assumption of such liabilities or obligations. Nothing herein
shall be deemed to contravene the Purchaser's indemnification of SPC in
Sections 11.3 and 11.7, which shall remain in full force and effect.
Section 2.3 Payment of Purchase Price. The consideration for the
sale of the Property shall be the Purchase Price and the assumption by the
Purchaser of the Assumed Liabilities.
2.3.1 At Closing. At the Closing, Purchaser shall pay for
the Acquired Assets the sum of One Million Eight Hundred Eighty One Thousand
Dollars ($1,881,000) (the "Purchase Price") , or the Adjusted Purchase Price,
as the case may be. Notwithstanding any provision contained herein that may be
construed to the contrary, any adjustment to the Purchase Price pursuant to the
terms of this Agreement shall be calculated as part of the Aggregate Adjusted
Purchase Price for purposes of determining SPC's right to terminate the Asset
Purchase Agreement pursuant to Section 10.1(c) therein.
2.3.2 Intentionally Omitted.
Section 2.4 Allocation of Purchase Price Amongst Acquired Assets.
The Purchase Price shall be allocated amongst the Property in accordance with
the fair market values set forth on Schedule 2.4. Neither party shall take any
position inconsistent with Schedule 2.4 in any filing with the Internal Revenue
Service or for any other purpose.
Section 2.5 Intentionally Omitted.
Section 2.6 Payment of Taxes and Closing Costs. Purchaser shall
be responsible for and shall pay any and all state sales taxes (except with
respect to any sales tax in Virginia, which
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shall be shared equally by SIC and Purchaser) arising in connection with the
sale of the Property; provided, however, that all closing costs in connection
with the sale of the Real Property or transfer of the rights under the
Right-of-way Agreements including transfer taxes and recording fees, shall be
paid equally by SIC and Purchaser, except that title insurance premiums shall
be paid by Purchaser.
Section 2.7 Risk of Loss.
(a) The risk of loss of the Property shall pass to
Purchaser at Closing. If there is any loss, damage, breakdown, or casualty to
any of the Property prior to Closing that does not constitute either (i) a
loss, damage, breakdown, or casualty that has been repaired or replaced to the
reasonable satisfaction of Purchaser, or (ii) a loss, damage, breakdown, or
casualty fully covered by insurance proceeds which have been assigned to
Purchaser and insurance retentions paid by SIC to Purchaser, the Purchase Price
shall be reduced by the cost to repair or replace such assets, estimated if
necessary. If there is reasonable doubt whether a loss, damage, breakdown, or
casualty is fully covered by insurance and the payment of insurance retentions
by SIC, Purchaser may reduce the Purchase Price by the cost of repairing or
replacing such assets, in which case SIC shall not assign the insurance
proceeds or pay any insurance retentions to Purchaser. The cost of repairing
or replacing such assets shall be such cost or estimated cost as is agreed upon
between the parties.
(b) Notwithstanding the above provisions of this Section
2.7, if any repair or replacement is reasonably expected to cause the Average
Monthly Revenue to decrease by five percent (5%) or more during the month
immediately following Closing, Purchaser may, in lieu of accepting insurance
proceeds and any insurance retentions or a reduction in the Purchase
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Price, delay the Closing hereunder on the portion of the Property constituting
and relating to the Real Property and under the Asset Purchase Agreement on the
portion of the Acquired Assets thereunder constituting the Cockpit Terminal
until SPC has completed such repair or replacement to the reasonable
satisfaction of Purchaser, provided, however, that if Purchaser elects to delay
the Closing for the Cockpit Terminal, SIC, SPC and PPI, all, but not
separately, may elect to delay the Closing hereunder, the Closing with respect
to all of the Acquired Assets under the Asset Purchase Agreement and the
Closing contemplated under the PPI Agreement until such time as the Closing
under the Purchase Agreements can take place simultaneously.
ARTICLE 3
MATTERS PRIOR TO CLOSING
Section 3.1 Due Diligence.
3.1.1 Examination of Records and Assets. During the Due
Diligence Period, (i) Purchaser and its agents may examine the Property, and
such books, records, files, and documents of the Company as relate to the
Property, (ii) the Company shall make available to Purchaser and its agents for
review all information concerning the Property which they may request, and
(iii) the Company will make available to Purchaser the officers and any key
employees of the Company to answer questions and to discuss the Company and the
Property all in a manner that does not unduly disrupt the Property and the
operation of the Company's business. If the Closing does not occur, Purchaser
shall promptly return to the Company, at Purchaser's expense, (i) all documents
(including any copies thereof) received from the Company before, during or
after the Due Diligence Period, and (ii) any documents or materials
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that Purchaser or its advisers have generated that contain or disclose
information from the documents received from the Company. Prior to Closing,
except as required in connection with Kaneb Pipe Line Partners, L.P.'s
registration statement filed under the Securities Act of 1933 and the related
offering of partnership units, Purchaser shall maintain in confidence any
information or data received from the Company in the course of conducting its
due diligence, including without limitation the environmental due diligence
provided for in Section 3.1.2, and shall not use the same for any purpose
except in connection with the transaction contemplated by this Agreement,
provided, that the foregoing confidentiality requirement shall remain in effect
after the Closing with respect to the financial statements of the Company and
its Affiliates. Prior to Closing, and thereafter with respect to the financial
statements of the Company and its Affiliates, except as required in connection
with Kaneb Pipe Line Partners, L.P.'s registration statement filed under the
Securities Act of 1933 and the related offering of partnership units, Purchaser
shall not disclose any such information or data to any third person except to
the extent that (i) such information or data is already in the public domain,
or (ii) such disclosure is compelled or required by subpoena or similar legal
process.
3.1.2 Environmental Due Diligence.
3.1.2.1 Audits and Surveys. During the Due Diligence Period,
Purchaser may cause Audits to be conducted by the Purchaser's Consultant, at
its expense, of any of the Real Property, the Pepco Pipeline (to the extent
such Audits are permitted by Pepco) or ROW Real Estate (to the extent such
Audits are permitted under the applicable Right-of-way Agreement). The scope,
methodology, timing, and conduct of all such Audits shall be subject to the
prior approval of SIC, which approval shall not be unreasonably withheld,
except that it shall not be
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unreasonable for SIC to withhold its approval based on SIC's reasonable opinion
that such Audit is not permitted under the relevant Right-of-way Agreement.
All Audits shall be conducted so as to avoid unduly disrupting the Property or
the business of Pepco, SIC and/or SPC. All such Audits shall be completed
within the Due Diligence Period if, and to the extent that, Purchaser wishes to
rely on the results of such Audits in proposing any adjustment to the Purchase
Price under Section 3.1.2.2. The Purchaser shall cause the Purchaser's
Consultant to deliver simultaneously to SIC copies of all data, reports,
surveys, or audits, or drafts thereof that it delivers to Purchaser with
respect to the Property and deliver to SIC promptly after signing this
Agreement copies of all data, reports, surveys, audits, or drafts thereof
delivered to Purchaser with respect to the Property prior to the signing of
this Agreement.
3.1.2.2 Purchase Price Adjustment for Certain Remedial Work.
(a) If the Audits prepared by Purchaser's
Consultant disclose that Remedial Work is required with respect to the
Property, then Purchaser shall record and track such Remedial Work with any
Remedial Work disclosed pursuant to Section 3.1.2.2 of the Asset Purchase
Agreement and Section 3.1.2.2 of the PPI Agreement and Purchaser may deliver to
SIC and SPC an Environmental Adjustment Request to request an adjustment to the
Purchase Price subject to this subsection (a) and subsections (b), (c) and (d)
below. The Net Remedial Cost for Remedial Work with respect to the Property
disclosed pursuant to this Section 3.1.2.2 shall be aggregated with the Net
Remedial Cost for Remedial Work under Section 3.1.2.2 of the Asset Purchase
Agreement and Section 3.1.2.2 of the PPI Agreement for purposes of (i)
calculating the one million dollar ($1,000,000) threshold described in Section
3.1.2.2 of the Asset Purchase Agreement and the Remaining Threshold, (ii)
delivering an Environmental
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Adjustment Request to SPC under the Asset Purchase Agreement, to PPI under the
PPI Agreement and/or SIC under this Agreement, (iii) calculating the Net
Remedial Cost to determine Purchaser's right to terminate pursuant to Section
10.1(h) of the Asset Purchase Agreement, and (iv) calculating the Aggregate
Adjusted Purchase Price to determine SPC's right to terminate under Section
10.1(c) of the Asset Purchase Agreement.
(b) The time limitations and procedures for (i)
delivering an Environmental Adjustment Request, and (ii) determining the Net
Remedial Cost for Remedial Work required with respect to the Property set forth
in Section 3.1.2.2 of the Asset Purchase Agreement shall apply hereunder.
(c) Any Environmental Adjustment Request that
includes a description of Remedial Work required with respect to the Property
shall be delivered to SIC and SPC.
(d) To the extent, if any, that the Aggregate Net
Remedial Cost under the Purchase Agreements exceeds one million dollars
($1,000,000) and any of the excess amount of such Aggregate Net Remedial Cost
is attributable to the Property as determined in accordance with the procedures
set forth in Section 3.1.2.2(e) of the Asset Purchase Agreement, then the
Purchase Price shall be reduced by the amount of such excess in accordance with
Section 3.1.2.2 of the Asset Purchase Agreement.
3.1.2.3 Purchase Price Adjustment for Other Remedial Work.
Notwithstanding any terms contained in Sections 3.1.2.1 and 3.1.2.2, (i) if
there is a violation of Environmental Law that occurs after the date of this
Agreement and prior to Closing that requires Remedial Work with respect to the
Property that is not completed prior to Closing either to the reasonable
satisfaction of Purchaser or to the satisfaction of the applicable Governmental
Authority, or (ii)
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if after the Due Diligence Period and prior to Closing a violation of
Environmental Law that requires Remedial Work with respect to the Property is
discovered that could not reasonably have been discovered during the Due
Diligence Period by a Phase I and Phase II environmental audit and such
Remedial Work is not completed prior to Closing either to the reasonable
satisfaction of Purchaser or to the satisfaction of the applicable Governmental
Authority, then in each such case Purchaser shall be entitled to an adjustment
to the Aggregate Purchase Price determined in accordance with the procedures
set forth in Sections 3.1.2.2 and 3.1.2.3 of the Asset Purchase Agreement
without regard to the 75 day time period for proposing such adjustment.
3.1.2.4 Other Environmental Liabilities. If, prior to
Closing, Purchaser or SIC receives notice of a claim from, or discovers or
receives notice of any facts or circumstances reasonably expected by ICF Kaiser
to give rise to a claim by, any Person or Governmental Authority for liability
or obligation (other than for Remedial Work) related to an alleged violation of
Environmental Law with respect to the Property, it shall promptly notify the
other parties hereto (the "Notice"). Thereafter, SIC and Purchaser shall
attempt to agree on whether a Purchase Price adjustment or other agreeable
mechanism is warranted with respect to such claim. If the parties are unable
to agree, SIC may in its discretion assume responsibility for such claim and
provide Purchaser with an indemnification against such claim reasonably
satisfactory to Purchaser. If within thirty (30) days after delivery of the
Notice (i) the parties are unable to agree on an adjustment to the Purchase
Price or other agreeable mechanism, and (ii) SIC fails to assume responsibility
for such claim and provide an indemnification reasonably satisfactory to
Purchaser, then Purchaser shall have the right to terminate this Agreement.
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Section 3.2 Real Property Matters.
(a) Purchaser shall at its expense from the date of this
Agreement through Closing review the status of SIC's title to the Real
Property. As of the date of this Agreement, Purchaser has received (i) the
survey listed on the attached Schedule 3.2 and (ii) the current title binder
for the Real Property listed on the attached Schedule 3.2 obtained from
Commonwealth Land Title Insurance Company with respect to the Real Property
indicating therein Purchaser as the proposed insured (with the cost of any
update work necessary to cause the issuance of the current title binder to be
paid equally by Purchaser and SIC). The information set forth on such survey
and in such title binder (but only to the extent copies of the documents
referenced therein have been provided to Purchaser) is referred to herein as
the "Current Title Information". Purchaser shall have the right, at its
expense, to cause to be prepared to its satisfaction current surveys of any or
all of the parcels of Real Property.
(b) All Real Property Matters disclosed in the Current
Title Information are listed on Schedule 3.2 and Purchaser shall not have the
right or the opportunity to raise any other Real Property Matters based on the
Current Title Information.
(c) If Purchaser's review prior to Closing discloses a
Real Property Matter not disclosed in the Current Title Information, Purchaser
shall notify SIC thereof within four (4) Business Days of discovery.
(d) With respect to Real Property Matters listed on
Schedule 3.2 and any Real Property Matters for which notice is sent to SIC
under clause (c) above, SIC shall at its expense attempt to remedy or cure such
Real Property Matter, provided that, except for payments
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necessary to release existing mortgages and any Lien related to said mortgages
on Real Property owned by SIC, SIC shall have no obligation to spend any amount
in excess of five percent (5%) of the Purchase Price to remedy or cure a Real
Property Matter. If SIC is unable to remedy or cure one or more Real Property
Matters within 30 days from Purchaser's notification thereof, the parties shall
attempt in good faith to negotiate an adjustment in the Purchase Price that
will compensate Purchaser for the cost of curing or remedying the Real Property
Matter or for otherwise accepting the Real Property as is. If the parties are
unable to agree on an adjustment to the Purchase Price as a result of a Real
Property Matter this Agreement shall terminate with respect to all Property
other than the Right-of-way Agreements and the Purchase Price shall be reduced
to one dollar ($1.00) plus Purchaser's assumption with respect to the
Right-of-way Agreements under Section 2.2, in which event the Purchaser shall
still be obligated to acquire the Cockpit Terminal pursuant to the Asset
Purchase Agreement and the Purchaser shall be required to lease the Real
Property from SIC in accordance with the terms of a lease to be negotiated and
concluded at the appropriate time; provided, however, that the Purchaser shall
not be required to acquire the Cockpit Terminal pursuant to the Asset Purchase
Agreement or to lease the Real Property from SIC if SIC and the Purchaser
cannot agree on the terms of such lease.
Section 3.3 Consents. SIC shall use reasonable commercial
efforts promptly to obtain the consent, waiver or approval of each Person whose
consent, waiver, or approval is required to effect an assignment of any of the
Material Contracts or Right-of-way Agreements, or to transfer any of the
Property to Purchaser or otherwise in connection with this transaction, and,
where appropriate, to effect a novation of such Material Contracts or
Right-of-way Agreements.
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Purchaser shall cooperate with SIC in obtaining such items as reasonably
requested to do so by SIC.
Section 3.4 Hart-Scott-Rodino. SIC and Purchaser shall each
comply with the notification, waiting period and other requirements of the HSR
Act. Each party shall take reasonable steps to provide information to and
otherwise cooperate with the other party for the purposes of making required
filings under the HSR Act.
Section 3.5 Purchaser's Licenses, Permits and Approvals.
Purchaser shall exercise reasonable commercial efforts promptly to obtain all
licenses and permits required by Purchaser to purchase the Property.
Section 3.6 Intentionally Omitted.
Section 3.7 Notification. Each party shall promptly notify the
other parties if it has Knowledge of (i) any information indicating that any
representation or warranty of any other party is or may be untrue in any
material respect, (ii) any covenant to be performed by such other party that is
not being performed, or (iii) any circumstance that would impede or interfere
with the Closing, except that no party shall be liable for a breach of this
covenant unless and except to the extent that the affected party is materially
prejudiced or damaged thereby.
Section 3.8 Deferred Like-Kind Exchange. Upon the request of
SIC, made at least two Business Days prior to the Closing Date, Purchaser shall
execute such documents as may reasonably be required to acknowledge (i) notice
of SIC's intention to accomplish a deferred like-kind exchange of part or all
of the Property pursuant to Section 1031 of the Code and Treasury Regulation
1.1031(k)-1 and (ii) the assignment of part or all of SIC's right, title and
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interest in and to (but not SIC's obligations under) this Agreement to a
qualified intermediary (within the meaning of Treasury Regulation Section
1.1031(k)-1(g)(4)).
Section 3.9 Actions Necessary to Consummate. From and after the
date of this Agreement, each of the parties shall in good faith take such
action as may be commercially reasonable to consummate the transactions
contemplated by this Agreement.
ARTICLE 4
OPERATION OF THE PROPERTY PRIOR TO CLOSING
Section 4.1 Ordinary Course. Between the date of this Agreement
and the Closing, SIC shall (i) operate and maintain the Property diligently in
the Ordinary Course of Business and shall not institute any new methods of
accounting or pricing, or engage in any transaction or activity, or enter into
any agreement or make any commitment with respect to the Property except in the
Ordinary Course of Business; (ii) maintain the Property in good operating
condition consistent with past practice and comply timely with all provisions
of leases, agreements, contracts and commitments relating to the Property;
(iii) exercise reasonable efforts to preserve the Property and its
relationships with its customers, employees, and suppliers, to timely file all
reports required by any Governmental Authority and to pay all taxes, and to
comply with all Applicable Law. In addition, SIC shall have delivered to
Purchaser copies of appropriate financial information regarding the Property.
Section 4.2 Certain Changes. Without the prior consent of
Purchaser, such consent not to be unreasonably withheld, provided that such
consent shall be deemed to have been given unless it is denied within five (5)
Business Days of having been requested, SIC shall not: (i)
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permit or allow any of the Property to be subjected to any Lien; (ii) cancel or
waive any material claim or right relating to the Property; (iii) sell,
transfer, assign, distribute or otherwise dispose of any Property, except in
the Ordinary Course of Business; (iv) enter into any contract or commitment
with respect to the Property, the performance of which may extend beyond the
Closing Date, except in the Ordinary Course of Business; or (v) cause or permit
any of its current insurance or reinsurance policies with respect to the
Property to be canceled or terminated or any of the coverage thereunder to
lapse, unless simultaneously with such termination, cancellation, or lapse, the
Company obtains replacement policies from the same or comparable insurers
providing coverage which is the same or comparable to that provided under the
cancelled, terminated, or lapsed policies. Without the consent of Purchaser,
such consent not to be unreasonably withheld, SIC shall not enter into, amend
or modify any Material Contracts or any Right-of-way Agreements, provided that
such consent shall be deemed to have been given unless it is denied within five
(5) Business Days of having been requested.
ARTICLE 5
CONDITIONS TO THE OBLIGATION OF PURCHASER TO CLOSE
The obligation of the Purchaser to purchase the Property at Closing
shall be subject to the satisfaction of the following conditions on or before
the Closing Date, except as and to the extent that such satisfaction is waived
by Purchaser.
Section 5.1 Representations and Warranties. The representations
and warranties of the Company contained in Article 7 (other than Section 7.16)
shall be true and correct in all material
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respects at and as of the Closing Date and the Purchaser shall have received a
certificate to that effect signed by an officer of the Company.
Section 5.2 Certificate Regarding Environmental Representations
and Warranties. The Company shall have delivered to Purchaser a certificate
signed by an officer of the Company stating either (i) the representations and
warranties of the Company contained in Section 7.16 are true and correct at and
as of the Closing Date or (ii) the representations and warranties of the
Company contained in Section 7.16 are true and correct at and as of the Closing
Date except for matters disclosed in the certificate, which certificate shall
divide any such matters stated therein into matters for which a Purchase Price
adjustment is available under Sections 3.1.2.2, 3.1.2.3 or 3.1.2.4, and matters
for which a Purchase Price adjustment is not available under Section
3.1.2.3(ii).
Section 5.3 Compliance with this Agreement. The Company shall
have performed and complied in all material respects with all of their
agreements and covenants set forth or contemplated herein that are required to
be performed or complied with on or before the Closing Date and the Purchaser
shall have received a certificate to that effect signed by an officer of the
Company.
Section 5.4 Purchase Permitted by Applicable Laws. The purchase
of the Property shall not be prohibited by any Applicable Law or by any order
or ruling of any Governmental Authority, nor shall any condition have been
imposed on the Closing by any Governmental Authority which would subject either
party to penalties or other sanctions as a result of the Closing.
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Section 5.5 Opinion of Counsel. The Purchaser shall have
received an opinion of counsel to the Company, dated the Closing Date, opining
in substance on the matters set forth in Exhibit 5.5.
Section 5.6 Consents and Approvals. All material consents,
exemptions, authorizations, or other actions by, or notices to, or filings
with, any Person necessary or required in connection with the purchase of the
Property by Purchaser shall have been obtained and be in full force and effect
(including any required consent of a ROW Real Estate owner for the transfer or
assignment of a Right-of-way Agreement), and any waiting periods under any
Applicable Law shall have expired.
Section 5.7 Intentionally Omitted.
Section 5.8 No Material Adverse Change. Except as set forth on
Schedule 7.11 there shall have been no material adverse change in the Property
since December 31, 1994.
Section 5.9 Title Policy. Purchaser shall have obtained from
Commonwealth Land Title Insurance Company commitments to issue owner's policies
of title insurance providing that upon due recordation of an appropriate deed
such title company shall insure that the title to each parcel of the Real
Property shall be vested in Purchaser free and clear of any Real Property
Matter.
Section 5.10 Satisfaction of Conditions to Closing Under the Asset
Purchase Agreement. All the conditions to close set forth in Article 5 of the
Asset Purchase Agreement shall have been satisfied, except to the extent that
such satisfaction is waived by Purchaser.
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ARTICLE 6
CONDITIONS TO THE OBLIGATION OF THE COMPANY TO CLOSE
The obligations of the Company to sell the Property hereunder shall be
subject to the satisfaction of the following conditions on or before the
Closing Date, except as and to the extent that such satisfaction is waived by
the Company.
Section 6.1 Representations and Warranties. The representations
and warranties of the Purchaser and the Guarantor contained in Article 8 hereof
shall be true and correct in all material respects at and as of the Closing
Date, and the Company shall have received a certificate to that effect signed
by an officer of the general partner of the Purchaser and an officer of the
general partner of the Guarantor.
Section 6.2 Compliance with this Agreement. The Purchaser and
the Guarantor shall have performed and complied in all material respects with
all of their agreements and conditions set forth or contemplated herein that
are required to be performed or complied with by the Purchaser and the
Guarantor on or before the Closing Date, and the Company shall have received a
certificate to that effect signed by and officer of the general partner of the
Purchaser and an officer of the general partner of the Guarantor.
Section 6.3 Sale Permitted by Applicable Laws. The sale of the
Property by the Company hereunder shall not be prohibited by any Applicable Law
or Governmental Authority nor shall any condition have been imposed on the
Closing by any Governmental Authority which would subject either party to
penalties or other sanctions as a result of the Closing.
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Section 6.4 Opinion of Counsel. The Company shall have received
an opinion of counsel to the Purchaser, dated the Closing Date, opining in
substance on the matters set forth in Exhibit 6.4.
Section 6.5 Consents and Approvals. All consents, exemptions,
authorizations, waivers or other actions by, or notices to, or filings with,
any Person necessary or required in connection with the execution, delivery or
performance by the Purchaser of this Agreement shall have been obtained and be
in full force and effect.
Section 6.6 Satisfaction of Conditions to Closing Under the Asset
Purchase Agreement. All the conditions to close set forth in Article 6 of the
Asset Purchase Agreement shall have been satisfied by Purchaser, except to the
extent that such satisfaction is waived by SIC.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser, as of the
date of this Agreement and as of the Closing Date, as follows:
Section 7.1 Existence and Power. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. The Company: (a) has all requisite
corporate power and authority, as applicable, to own and operate its property,
and to conduct the business in which it is currently, or is currently proposed
to be, engaged; (b) is duly qualified as a foreign corporation and is in good
standing, under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business require such
qualification, except to the extent that the failure to do so would not have
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an adverse effect on the Property; and (c) has the corporate power and
authority to execute, deliver and perform its obligations under this Agreement.
Section 7.2 Corporate Authorization: No Contravention. The
execution, delivery and performance by the Company of this Agreement: (a) has
been duly authorized by all necessary corporate, and, if required, stockholder
action; (b) does not contravene the terms of the Company's Certificate of
Incorporation or By-Laws, or any amendment of either thereof, and (c) will not
violate Applicable Law, or conflict with or result in any breach of or default
under, or cause the creation of any Lien under, any contractual obligation of
the Company.
Section 7.3 Governmental Authorization: Third Party Consents. No
approval, consent, compliance, exemption, authorization, or other action by, or
notice to, or filing with, any Governmental Authority or any other Person, and
no lapse of a waiting period under an Applicable Law, is necessary or required
in connection with the execution, delivery or performance by the Company or
enforcement against the Company of this Agreement, other than compliance with
the HSR Act.
Section 7.4 Binding Effect. This Agreement has been duly
executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity relating to
enforceability.
Section 7.5 Litigation. Except as listed on Schedule 7.5, there
are no legal actions, suits, proceedings, or claims pending, or to the
Knowledge of the Company threatened, before any Governmental Authority against
or affecting the Company (a) with respect to this
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Agreement, or any of the transactions contemplated thereby, or (b) which would
be reasonably likely to have (i) an adverse effect on the Property or (ii) an
adverse effect on the ability of the Company to perform its obligations
hereunder. No injunction, writ, temporary restraining order, decree or any
order of any nature has been issued by any Governmental Authority purporting to
enjoin SIC or restrain SIC's execution, delivery or performance of this
Agreement.
Section 7.6 Compliance with Laws. The Company is in compliance
with all Applicable Law, except for any failure to comply which would not have
an adverse effect on the Property.
Section 7.7 Title to Real Property and Real Property Leases.
Schedule 2.1(a) sets forth a list of all parcels of real property, excluding
ROW Real Estate, upon which the Cockpit Terminal or its operations are located
(including a metes and bounds description thereof, to the extent available, or
a plat of subdivision designation) and also provides a true and correct
indication of whether each such parcel is owned or leased by the Company. The
Company has good and marketable title in fee simple to the Real Property, free
of Liens (other than Liens that will be released in full at Closing) and
subject to Permitted Encumbrances. The Company has delivered to the Purchaser
true and correct copies of the Real Property Lease, and any amendments thereto,
and such Real Property Lease is binding upon and enforceable against the
Company and SPC in accordance with its terms, and SIC's rights thereunder are
included in the Property. As of the Closing Date, the improvements located on
the Real Property are in as good a condition as they were on the date of
Purchaser's physical inspection of the Terminals as specified on Schedule 7.7,
ordinary wear and tear excepted.
Section 7.8 Intentionally Omitted.
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Section 7.9 Intentionally Omitted.
Section 7.10 Intentionally Omitted.
Section 7.11 No Material Adverse Change: Ordinary Course. Since
December 31, 1994, (i) there has not been any material adverse change in the
Property and (ii) the Company has operated the Property in the Ordinary Course
of Business, except as set forth on Schedule 7.11.
Section 7.12 Broker's, Finder's or Similar Fees. Except as set
forth on Schedule 7.12, no brokerage commissions, finder's fees or similar fees
are payable in connection with the transactions contemplated hereby. Purchaser
has no liability for any items set forth on Schedule 7.12.
Section 7.13 Intentionally Omitted.
Section 7.14 Material Contracts. The Company has delivered to
Purchaser true and correct copies of all Material Contracts, including all
amendments thereto. Schedule 2.1(b) lists all Material Contracts, and will be
updated at Closing to include any Material Contracts entered into or amended
between the date of this Agreement and the Closing Date. Except as disclosed
on Schedule 2.1(b), each Material Contract is in effect and has not been
amended or otherwise modified, and is binding upon and enforceable against the
Company and, to the Company's Knowledge, all parties thereto, in accordance
with its terms, and there is no default thereunder and to the Knowledge of the
Company no other party thereto has issued or threatened to issue a notice of
termination or cancellation. Except as set forth on Schedule 2.1(b), no
consent to the transfer or assignment of the Material Contracts to Purchaser is
required.
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Section 7.15 Permits. Except as set forth on Schedule 7.15, the
Company holds all licenses, permits, franchises, approvals, consents, waivers,
exemptions, authorizations, certificates of occupancy and similar rights and
privileges which are necessary for the operation of the Property.
Section 7.16 Environmental Matters.
(a) Except as set forth on Schedule 7.16, the Property
(i) does not violate any Environmental Law in effect on the date hereof, and
without regard for future modifications or amendments, (ii) is not subject to
any pending or threatened action, suit, investigation, or other proceeding by
any Governmental Authority with respect to an alleged violation of
Environmental Law, (iii) does not use, and there is not located on the Real
Property, any Hazardous Substances other than (x) those forming a part of the
supplies of the Company and (y) petroleum products owned by customers or by
SIC, which in each case are maintained in accordance with Environmental Law in
effect on the date hereof, and without regard for future modifications or
amendments and (iv) does not use, and there is not located on the ROW Real
Estate, any Hazardous Substances other than (x) those forming a part of the
supplies of the Company and (y) petroleum products owned by customers or by
SIC, which in case are maintained in accordance with Environmental Law in
affect on the date hereof, and without regard for future modifications or
amendments.
(b) Except as set forth on Schedule 7.16, (i) there
exists no condition arising from the presence, release, threat of release,
placement on or under the Real Property or the ROW Real Estate, use, storage,
handling, generation, or disposal of any Hazardous Substance such as would
require Remedial Work or give rise to other liability or obligation, (ii) the
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Company has been issued all material licenses, permits, and certificates
required under Environmental Law in effect on the date hereof for the conduct
of its business and (iii) there exists no past or present violation of
Environmental Law in effect on the date hereof with respect to the Property
that gives rise to liability or obligation now or in the future. Schedule 7.16
describes all conditions as to which, to the Knowledge of the Company Remedial
Work with respect to the Property is required, and the scope and methodology of
such Remedial Work as currently in process or contemplated by the Company. The
Company does not have any liability or obligation, accrued, contingent or
otherwise, with respect to the matters described on Schedule 7.16, except for
the obligation to complete Remedial Work. The representation and warranty
contained in this Section 7.16 is the only representation and warranty made by
SIC with respect to environmental matters or Environmental Law, and no other
representation or warranty made herein shall be applicable to such matters or
Environmental Law. Notwithstanding the disclosure to Purchaser on Schedule
7.16 or pursuant to Section 5.2 of any Remedial Work for which a Purchase Price
adjustment is not available pursuant to Section 3.1.2.3(ii), such Remedial Work
shall be regarded as a breach of this Section 7.16 for purposes of Section
11.7.1.
Section 7.17 Intentionally Omitted.
Section 7.18 Intentionally Omitted.
Section 7.19 Restrictive Agreements. Except as set forth on
Schedule 7.19, the Company is not a party to any agreements restricting or
limiting the use of the Property.
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Section 7.20 List of Assets. The Property includes, but is not
limited to, and there shall be transferred to Purchaser at Closing, all of the
assets listed on Schedules 2.1(a), 2.1(b) and 2.1(c).
Section 7.21 Information Furnished. Neither this Agreement nor
the Schedules or Exhibits hereto, nor any instrument or document furnished to
Purchaser hereunder, when considered as a whole, contains any untrue statement
of a material fact or omits to state any material fact necessary to make the
statements herein or therein, as the case may be, not misleading.
Section 7.22 Intentionally Omitted.
Section 7.23 Intentionally Omitted.
Section 7.24 Right-of-way Agreements.
(a) Schedule 2.1(c) sets forth a list of all the
Right-of-way Agreements. The Company has delivered to Purchaser true and
correct copies of the Right-of-way Agreements, and any amendments thereto.
Except as disclosed on Schedule 2.1(c), each such Right-of-way Agreement is (i)
in effect and has not been amended or otherwise modified, and (ii) is binding
upon and enforceable against the Company and, to the Company's Knowledge, all
parties thereto in accordance with its terms and there is no default thereunder
and, to the Knowledge of the Company, no other party thereto has issued or
threatened to issue a notice of termination or cancellation.
(b) Except as set forth on Schedule 2.1(c), no consent is
required for the transfer or assignment of SIC's rights and obligations under
the Right-of-way Agreements to
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Purchaser. The ROW Real Estate is free and clear of Liens (other than Liens,
if any, that will be released in full at Closing) and subject to Permitted
Encumbrances.
(c) The Right-of-way Agreements included in the Property
together with the easement agreement described in Exhibit 5.12 of the Asset
Purchase Agreement grant SIC a contiguous right-of-way from SPC's Piney Point
Terminal to the Ryceville Pumping Station and grant to SIC the right to operate
the Pepco Pipeline as it has been operated by SPC during the last twelve
months.
ARTICLE 8
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
AND THE GUARANTOR
The Purchaser and the Guarantor, jointly and severally, represent and
warrant to SIC as follows as of the date of this Agreement and as of the
Closing Date:
Section 8.1 Authorization: No Contravention. The execution,
delivery and performance by Purchaser and Guarantor of this Agreement: (a) is
within Purchaser's and Guarantor's partnership power and authority and has been
duly authorized by all necessary action; (b) does not contravene the terms of
Purchaser's or Guarantor's respective limited partnership agreements; and (c)
will not violate, conflict with or result in any breach or default under any
contractual obligation of Purchaser or Guarantor, or violate any Applicable
Law.
Section 8.2 Binding Effect. This Agreement has been duly
executed and delivered by Purchaser and Guarantor, and constitutes the legal,
valid and binding obligation of Purchaser and Guarantor enforceable against
each of them in accordance with its terms, except as enforceability
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may be limited by applicable bankruptcy, insolvency, or similar laws affecting
the enforcement of creditors rights generally or by equitable principles
relating to enforceability.
Section 8.3 Broker's, Finder's or Similar Fees. No brokerage
commissions, finders fees or similar fees are payable in connection with the
transactions contemplated hereby under any agreements made by or with
Purchaser.
Section 8.4 Governmental Authorization; Third Party Consent. No
approval, consent, compliance, exemption, authorization or other action by, or
notice to, or filing with, any Governmental Authority or any other Person in
respect of any Applicable Law, and no lapse of a waiting period under
Applicable Law, is necessary or required in connection with the execution,
delivery or performance by Purchaser or Guarantor (other than compliance with
the HSR Act) or enforcement against such Purchaser or Guarantor of this
Agreement.
Section 8.5 Sufficient Funds. As of the date hereof, Purchaser
has sufficient funds or has approved financing commitments which will enable it
to close the transactions contemplated under this Agreement. As of the Closing
Date, Purchaser will have funds available to it sufficient to close and to
fulfill its obligations hereunder.
Section 8.6 Fraudulent Conveyance/Fraudulent Transfer Matters.
After giving effect to the financing to be incurred by Purchaser in connection
with its consummation of the transactions contemplated hereby, Purchaser will
not be as of the Closing Date (i) "insolvent" nor will it become "insolvent" as
the result of such transactions, (ii) engaged in a business or transaction for
which any property or assets remaining with Purchaser would be "unreasonably
little" or "unreasonably small in relation to its business" or the transaction,
or (iii) in a position where it "intends to incur, or believes that it would
incur, debts that would be beyond its ability
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to pay as such debts mature," in each case as such quoted terms are used in
Section 548 of the United States Bankruptcy Code of 1978, as amended, the
Uniform Fraudulent Conveyances Act and the Uniform Fraudulent Transfer Act.
Section 8.7 Litigation. There are no legal actions, suits,
proceedings, or claims pending, or to the Knowledge of Purchaser or Guarantor,
threatened, before any Governmental Authority against or affecting Purchaser or
Guarantor (a) with respect to this Agreement, or any transactions contemplated
hereby, or (b) which would be reasonably likely to have an adverse effect on
the ability of the Purchaser or Guarantor to perform their respective
obligations hereunder. No injunction, writ, temporary restraining order,
decree or any order of any nature has been issued by any Governmental Authority
purporting to enjoin Purchaser or Guarantor with respect to, or restrain
Purchaser's or Guarantor's execution, delivery or performance of, this
Agreement.
ARTICLE 9
CLOSING
Section 9.1.A Time and Place. The consummation of the purchase and
sale of the Property (the "Closing") shall take place at the offices of
Ginsburg, Feldman & Bress at 1250 Connecticut Avenue, Washington, D.C. at 10:00
a.m. Washington time on October 31, 1995 (the "Closing Date"), or such other
date, time, and place as the parties shall agree. At Closing, Purchaser shall
be entitled to physical possession of the Property and SIC shall surrender the
same to Purchaser.
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Section 9.1.B Effective Date. The transactions contemplated by
this Agreement shall be effective at 12:01 A.M. on the Closing Date, without
regard to the date of recordation of deeds or other transfer documents.
Section 9.2 Documents and Instruments to be Delivered by SPC. At
Closing, SIC shall deliver to Purchaser (or, with respect to transfer documents
for the Real Property, deliver to the Presidential Title, Inc. sufficiently
prior to Closing to permit recording at the time of Closing):
(a) bills of sale, assignments, limited warranty deeds
and such other instruments as shall be required to transfer title to the
Property, free of Liens (except Permitted Encumbrances), all in form customary
in the jurisdiction which the Property is located and all to be in form
reasonably satisfactory to both parties;
(b) A certificate of an officer of SIC stating that (i)
SIC has complied with all of the covenants imposed on it by this Agreement to
the extent they are required to be complied with prior to the Closing, and (ii)
that the representations and warranties made by SIC are in all material
respects true and correct at Closing, all as required by Sections 5.1, 5.2 and
5.3;
(c) the legal opinion required by Section 5.5;
(d) copies of all consents, waivers and approvals
referred to in Section 5.6;
(e) copies of the resolutions of SIC's board of directors
and of any action required by SIC's stockholders authorizing the execution and
delivery of this Agreement, certified by SIC's secretary or assistant
secretary; and
(f) a good standing certificate from the State of
Delaware dated as of a date not more than 20 days prior to the Closing Date.
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Section 9.3.A Documents and Instruments to be Delivered by
Purchaser. At Closing, Purchaser shall deliver to SIC:
(a) the Purchase Price or Adjusted Purchase Price, as the
case may be, by bank check or wire transfer of immediately available funds, at
SIC's election, and, if by wire transfer, to such account as SIC may notify to
Purchaser not less than two Business Days prior to the Closing Date;
(b) the legal opinion required by Section 6.4;
(c) a certificate of an officer of the general partner of
the Purchaser stating that (i) Purchaser has complied with all of the covenants
imposed on it by this Agreement to the extent they are required to be complied
with prior to the Closing, and (ii) that the representations and warranties
made by Purchaser are in all material respects true and correct at Closing, all
as required by Sections 6.1 and 6.2; and
(d) copies of the resolutions of the board of directors
of Purchaser's general partner authorizing the execution and delivery of this
Agreement, certified by the secretary or an assistant secretary of Purchaser's
general partner.
Section 9.3.B Documents and Instruments to be Delivered by Guarantor.
At Closing, Guarantor shall deliver to SIC:
(a) the legal opinion required by Section 6.4;
(b) a certificate of an officer of the general partner of
the Guarantor stating that (i) Guarantor has complied with all of the covenants
imposed on it by this Agreement to the extent they are required to be complied
with prior to the Closing, and (ii) that the representations
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and warranties made by Guarantor are in all material respects true and correct
at Closing, all as required by Sections 6.1 and 6.2; and
(c) copies of the resolutions of the board of directors
of Guarantor's general partner authorizing the execution and delivery of this
Agreement, certified by the secretary or an assistant secretary of Guarantor's
general partner.
Section 9.4 Intentionally Omitted.
ARTICLE 10
TERMINATION
Section 10.1 Grounds for Termination. This Agreement may be
terminated as follows:
(a) by mutual agreement of the parties, at any time;
(b) by SIC at any time after November 30, 1995, if the
conditions to Closing set forth in Article 6 have not been met by that date,
unless the failure to meet such condition is attributable to any fault or
neglect of SIC;
(c) by Purchaser at any time after November 30, 1995, if
the conditions to Closing set forth in Article 5 have not been met by that
date, unless the failure to meet such condition is attributable to any fault or
neglect of Purchaser;
(d) by Purchaser if a Major Loss occurs, provided that
Purchaser gives notice of its intent to terminate within ten (10) Business Days
after it has received notice of such Major Loss;
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(e) by Purchaser if it discovers a material breach of any
representation or warranty made by SIC which SIC is unable to cure within
thirty (30) days after having received notice of such breach;
(f) by SIC if it discovers a material breach of any
representation or warranty made by Purchaser which Purchaser is unable to cure
within thirty (30) days after having received notice of such breach; and
(g) by Purchaser pursuant to Section 3.1.2.4.
If this Agreement terminates pursuant to the provisions of this
Section 10.1, the Asset Purchase Agreement and the PPI Agreement shall remain
in full force and effect, unless such agreements terminate by their own terms,
provided that the portions of the last sentence of Section 3.2 that deal with
the lease of the Real Property shall still apply.
Section 10.2 Termination of the Asset Purchase Agreement. This
Agreement shall automatically terminate if the Asset Purchase Agreement
terminates for any reason, unless SIC and Purchaser agree otherwise. If this
Agreement does not terminate, then SIC and Purchaser shall negotiate mutually
agreeable terms to adjust the indemnification limits and the Escrow Fund amount
referred to in Article 11 of the Asset Purchase Agreement consistent with the
amount of the Purchase Price and the terms and conditions of this Agreement.
Section 10.3 Effect of Termination. If this Agreement terminates:
(a) neither party shall have any obligation to the other
party, except that such termination shall be without prejudice to the rights of
any party resulting from the intentional or willful breach or violation of the
representations, warranties, covenants or agreements of the
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other party under this Agreement, provided that a failure by a party to close
when all of the conditions to such party's obligation to close have been met
shall be deemed to be an intentional breach of such party's covenants and
agreements hereunder.
(b) promptly upon termination for any reason, Purchaser
shall return to SIC at Purchaser's expense all documents (including copies
thereof) received from SIC prior to, during or after the Due Diligence Period;
(c) Purchaser shall not offer employment to any of SIC's
employees, without the prior consent of SIC, for two years following the date
of this Agreement; and
(d) the provisions of Section 3.1.1, Section 10.3, and
Sections 12.1, 12.2, 12.3, 12.4, 12.5, 12.6, 12.7, 12.8 and 12.9 and the
portion of the last sentence of Section 3.2 dealing with the lease of the Real
Property shall survive the termination of this Agreement and continue in full
force and effect.
ARTICLE 11
INDEMNIFICATION
Section 11.1 Indemnification by SIC and SPC.
(a) SIC, SPC and the Purchaser acknowledge and agree that
SPC's indemnification obligation under Section 11.1 of the Asset Purchase
Agreement is intended to and shall cover and include Liabilities of each
Purchaser Indemnified Party resulting from or arising out of (i) any breach of
any representation or warranty, covenant or agreement of SIC set forth in this
Agreement, except for a breach of a representation and warranty contained in
Sections 7.1, 7.2, 7.3, 7.4, 7.7, and 7.12, (ii) a breach of SPC's
representation and warranty
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contained in Section 7.16 of Asset Purchase Agreement as it applies to the Real
Property, (iii) non-compliance with any applicable transfer or bulk sales law,
and (iv) obligations or liabilities of the Company related to or arising out of
acts, events or omissions occurring prior to the Closing that are related to
the Property and not expressly assumed by Purchaser or indemnified against by
Purchaser hereunder or in the Asset Purchase Agreement, provided, however, that
SPC shall not be liable under this Section 11.1 to any Purchaser Indemnified
Party for any amount paid in settlement of claims without SPC's and SIC's
consent, unless such consent was requested and unreasonably withheld.
Therefore, SIC shall have no liability to Purchaser for any breach of any
representation or warranty, covenant or agreement of the Company set forth
herein, except a breach of those representations and warranties set forth in
Sections 7.1, 7.2, 7.3, 7.4, 7.7 and 7.12. The indemnification obligations
assumed by SPC under this Section 11.1 shall be subject to and treated in
accordance with Sections 11.2, 11.5, 11.6, 11.7 and 11.8 of the Asset Purchase
Agreement, as if such indemnification obligations were made under the Asset
Purchase Agreement.
(b) Subject to the provisions of this Article 11, the
Company agrees to indemnify, defend, and hold harmless the Purchaser and its
Affiliates, officers, directors, agents, shareholders, partners, and employees,
(each, a "Purchaser Indemnified Party") from and against any and all
liabilities, losses, claims (whether or not successful), damages, and expenses
(including reasonable fees, and disbursements of counsel) (collectively,
"Liabilities") resulting from or arising out of (i) any breach of any
representation or warranty, of the Company set forth in Sections 7.1, 7.2, 7.3,
7.4, 7.7 and 7.12 of this Agreement or (ii) liabilities or obligations related
to any amendment to a Material Contract or Right-of-way Agreement not delivered
to
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Purchaser prior to the date of this Agreement, unless such amendment is
subsequently delivered to and accepted by Purchaser, provided, however, that
the Company shall not be liable under this Section 11.1 to any Purchaser
Indemnified Party for any amount paid in settlement of claims without the
Company's consent, unless such consent was requested and unreasonably withheld.
Section 11.2 Survival of Representations and Warranties. The
representations and warranties set forth in Sections 7.1, 7.2, 7.3, 7.4, 7.7
and 7.12 shall survive the Closing without limitation of time. The
representations and warranties set forth in Section 7.16 (Environmental
Matters) shall survive the Closing and shall expire three years after the
Closing Date. All other representations and warranties shall survive the
Closing and shall expire two years after the Closing Date. Any right of
Purchaser to make a claim against the Company for a breach of any covenant or
agreement of the Company herein shall survive the Closing and shall expire one
hundred eighty (180) days after the date on which the Company was obligated to
comply with such covenant or agreement. Any claim for breach of a
representation and warranty, or covenant or agreement, must be made by
Purchaser by a demand for arbitration to the Company prior to the expiration of
such representation and warranty, or the right to make a claim for a breach of
such covenant or agreement, and any such claims covered by such demands made by
Purchaser to the Company within such time periods shall survive until resolved.
Section 11.3 Indemnification by Purchaser. Purchaser, it
successors and assigns, jointly and severally, agree to indemnify, defend, and
hold harmless the Company and their Affiliates, officers, directors,
shareholders, partners, warrant holders, agents, and employees, (each, an "SIC
Indemnified Party") from and against any and all Liabilities resulting from or
arising out
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of (i) any breach of any representation, warranty, covenant or agreement of
Purchaser or Guarantor set forth in this Agreement or (ii) obligations or
liabilities of the Purchaser with respect to the Property, including those
which may be imposed upon any SIC Indemnified Party, related to or arising out
of acts, events or omissions occurring after the Closing and not expressly
assumed by any SIC Indemnified Party hereunder and specifically including (but
not limited to) liabilities or obligations arising from the failure of
Purchaser to assume any post-Closing liabilities as required by Section 2.2,
provided, however, that Purchaser shall not be liable under this Section 11.3
to any SIC Indemnified Party for any amount paid in settlement of claims
without Purchaser's consent unless such consent was requested and unreasonably
withheld, and provided further that the right of the SIC Indemnified Parties to
make a claim for breach of any covenants or agreements of Purchaser herein
shall expire one hundred eighty (180) days after the date on which the
Purchaser was obligated to comply with the covenant or agreement.
Section 11.4 Establishment of Escrow Fund. SIC, SPC and Purchaser
acknowledge and agree that the Escrow Fund, established by SPC at Closing, will
be used to satisfy claims for indemnification under the Purchase Agreements,
including all indemnification claims under this Agreement, for which no limit
on liability has been established in accordance with the terms of Section 11.4
of the Asset Purchase Agreement. Purchaser shall follow the procedures set
forth in Section 11.4 of the Asset Purchase Agreement for making claims for
indemnification under this Agreement.
Section 11.5 Limits on Liability. With the exception of (i)
claims arising under Sections 7.1, 7.2, 7.3, 7.4, 7.7 (but only to the extent
that any claim is based on the specific wording
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in each of the limited warranty deeds by which the Real Property is conveyed)
and 7.12 (ii) claims for fines or penalties imposed by Governmental
Authorities, (iii) claims for Liens that are not Permitted Encumbrances, and
(iv) claims under Section 11.1(b)(ii), for which there shall be no limitation
of amount, the Company's maximum liability for Liabilities under the Company's
indemnifications under this Agreement, including without limitation Section
11.7.1.1, shall be the Escrow Fund, and neither the Company, nor any of their
Affiliates, shareholders, warrant holders, partners, officers, directors,
agents and employees shall have any liability for such Liabilities in excess
of the Escrow Fund.
Section 11.6 Minimum Claim Amount. With the exception of (i)
claims arising under Section 11.7.1.1, (ii) claims for fines or penalties
imposed by Governmental Authorities, (iii) claims for Liens that are not
Permitted Encumbrances, (iv) claims under Section 11.1(b)(ii), and (v) fifty
percent (50%) of any claim for indemnification with respect to a breach of the
representations and warranties set forth in Sections 7.24(a), (b) and (c) with
respect to the Pepco Pipeline, for which there shall be no minimum claim,
Purchaser shall not be entitled to assert any claim for indemnification
hereunder until the aggregate of all claims for indemnification under this
Agreement, the PPI Agreement and the Asset Purchase Agreement collectively
exceeds Seven Hundred and Fifty Thousand Dollars ($750,000) and then only for
amounts in excess of such Seven Hundred and Fifty Thousand Dollars ($750,000).
Purchaser shall follow the notice procedures set forth in Section 11.6 of the
Asset Purchase Agreement for making claims for indemnification hereunder.
Section 11.7 Special Environmental Indemnification and
Post-Closing Covenants by Purchaser.
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11.7.1.1 To the extent that, prior to the date three years
after the Closing Date, Purchaser discovers and notifies SIC and SPC of facts
or circumstances that give rise to Remedial Work (including Remedial Work
related to matters discovered prior to the Closing or disclosed on Schedule
7.16) with respect to the Property (except for Remedial Work attributable to
(i) changes in Environmental Law occurring after the Closing Date, or (ii)
events occurring or actions of Persons other than SIC, SPC, SPCT or PPI taken
after the Closing Date), the Net Remedial Cost for Remedial Work with respect
to the Property shall be calculated as part of the Aggregate Net Remedial Cost
determined pursuant to the terms of Section 11.7.1.1 of the Asset Purchase
Agreement and shall be paid in accordance with those terms, subject to the
limits set forth in Section 11.7.1.1 of the Asset Purchase Agreement.
Notwithstanding the preceding portions of this Section 11.7.1.1,
Purchaser shall not be liable for or be required to pay any Net Remedial Costs
resulting from or arising out of any action or omission after Closing of any
SIC Indemnified Party that constitutes or causes a violation of Environmental
Law with respect to the Property or gives rise to the need to perform Remedial
Work with respect thereto, unless otherwise agreed to in writing by Purchaser.
11.7.1.2 Purchaser shall not alter or change the scope or
methodology of Remedial Work described on Schedule 7.16 except as required by
Applicable Law or as approved by the Company, which approval shall not be
unreasonably withheld, provided, however, that an objection shall not be deemed
unreasonable solely because it is based on an increase in the cost for
performing such Remedial Work. For so long as SPC has any liability to
Purchaser under Section 11.7.1.1, Purchaser shall use commercially reasonable
efforts to perform and complete all such required Remedial Work and shall keep
SIC informed of the
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progress of such Remedial Work. In addition, before undertaking any such
Remedial Work Purchaser shall notify SIC of the scope and methodology of such
Remedial Work, sufficiently in advance (except as emergency conditions may
require otherwise) to permit SIC to comment on such scope and methodology.
Recognizing that the final decision on scope and methodology rests with
Purchaser, Purchaser shall nonetheless make a good faith effort to reach
agreement with SIC regarding such scope and methodology, recognizing SIC's
financial interest therein. Purchaser shall provide SIC with copies of all
plans, reports, and correspondence submitted to any Governmental Authority with
respect to such Remedial Work. Purchaser will not agree to any such Remedial
Work or other actions that commit or bind SIC or SPC (beyond the payment of
money hereunder) without the prior consent of SIC and SPC. Purchaser will
provide SIC with copies of all invoices rendered by Persons actually performing
such Remedial Work, and SIC shall be deemed to have accepted the validity and
reasonableness of such invoices if it does not notify Purchaser to the contrary
within ten (10) Business Days of receiving the same.
11.7.2 (a) Purchaser and Guarantor acknowledge that (i)
Purchaser has reviewed copies of all documents and other materials related to
environmental matters with respect to the Property that were provided by the
Company, (ii) the Company has specifically bargained for relief, as more
particularly described herein, from post-Closing liability resulting from
violations of Environmental Law or the performance of Remedial Work with
respect to the Property and (iii) the Purchase Price and Adjusted Purchase
Price, as the case may be, reflect Purchaser's willingness to accept liability
( and Guarantor's willingness to guarantee Purchaser's obligation to accept
such liability) with respect to such matters as more fully described below.
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(b) Purchaser has agreed to assume, and Guarantor
has agreed to guarantee the obligation of Purchaser to assume, as of the
Closing all obligations and liabilities resulting from or arising out of any
actual or alleged violation of Environmental Law related to the Property,
regardless of when such violation was supposed to have occurred, or the
performance of Remedial Work with respect to the Property, except for (i) fines
and penalties imposed by any Governmental Authority relating to violations of
Environmental Law that occurred prior to Closing with respect to the Property,
(ii) payments to be made to Purchaser pursuant to Section 11.7.1.1, (iii)
obligations or liabilities that result from or arise out of any act or omission
after the Closing of any SIC Indemnified Party that constitutes or causes a
violation of Environmental Law with respect to the Property or gives rise to
the need to perform Remedial Work with respect thereto, unless otherwise agreed
to in writing by Purchaser, and (iv) claims for a breach of the representations
and warranties set forth in Section 7.16 to the extent Purchaser is entitled to
indemnity under this Article 11.
(c) For the avoidance of any doubt, Purchaser,
Guarantor, and SIC confirm their agreement that SIC shall not have any
obligation or liability post-Closing resulting from or arising out of any
actual or alleged violation of Environmental Law related to the Property,
regardless of when such violation was supposed to have occurred, or the
performance of Remedial Work with respect to the Property except (i) fines and
penalties imposed by any Governmental Authority relating to violations of
Environmental Law that occurred prior to Closing with respect to the Property,
(ii) payments to be made to Purchaser pursuant to Section 11.7.1.1, (iii)
obligations or liabilities that result from or arise out of any act or omission
after Closing of any SIC Indemnified Party that constitutes or causes a
violation of Environmental
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Law with respect to the Property or gives rise to the need to perform Remedial
Work with respect thereto, unless otherwise agreed to in writing by Purchaser,
and (iv) claims for a breach of the representations and warranties set forth in
Section 7.16 to the extent Purchaser is entitled to indemnity under this
Article 11.
11.7.3 Purchaser, its successors and assigns, jointly and
severally, agree to indemnify, defend, and hold harmless each SIC Indemnified
Party from and against any and all Liabilities resulting from or arising out
of any actual or alleged violation of Environmental Law related to the
Property, regardless of when such violation was supposed to have occurred, or
the performance of Remedial Work with respect to the Property, except for (i)
fines and penalties imposed by any Governmental Authority relating to
violations of Environmental Law that occurred prior to Closing with respect to
the Property, (ii) payments to be made to Purchaser pursuant to Section
11.7.1.1, (iii) obligations or liabilities that result from or arise out of any
act or omission after Closing of any SIC Indemnified Party that constitutes or
causes a violation of Environmental Law with respect to the Property or gives
rise to the need to perform Remedial Work with respect thereto, unless
otherwise agreed to in writing by Purchaser, and (iv) claims for a breach of
the representations and warranties set forth in Section 7.16 to the extent
Purchaser is entitled to indemnity under this Article 11. Notwithstanding the
preceding provisions of this Section 11.7.3, Purchaser shall not be liable
under this Section 11.7.3 to any SIC Indemnified Party for any amount paid in
settlement without Purchaser's consent unless such consent was requested and
unreasonably withheld.
11.7.4 Purchaser shall, for a period of five (5) years after
Closing, notify the Company and SPC promptly of any claim made by any
Governmental Authority or by any
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Person that there has been a violation of Environmental Law in connection with
the Property, or occurring on or from the Real Property or the ROW Real Estate,
and shall thereafter keep the Company and SPC informed of actions being taken
and/or the conduct of proceedings with respect to such claim, provided that
once it has been reasonably determined to the satisfaction of SIC that the
amount required to resolve such claim (whether by performing Remedial Work or
otherwise) is less than $250,000, Purchaser shall no longer be obligated to
provide SIC and SPC with information about such claim.
Section 11.8 Notification; Counsel. Each Indemnified Party under
this Article 11 will, promptly after the receipt of notice of the commencement
of any action, investigation, claim or other proceeding against such
Indemnified Party in respect of which indemnity may be sought under this
Article 11, notify the Company and SPC or the Purchaser, as the case may be, in
writing of the commencement thereof. The failure of any Indemnified Party to
give such notice shall not relieve the indemnifying party from any liability
which it may have to such Indemnified Party unless, and only to the extent
that, such omission materially adversely affects the indemnifying party's
ability to defend in such action, claim or other proceeding. In case any such
action, claim or other proceeding shall be brought against any Indemnified
Party and it shall notify the indemnifying party of the commencement thereof,
and, except as otherwise stated herein, the indemnifying party shall be
entitled to assume the defense thereof at its own expense, with counsel
satisfactory to such Indemnified Party. Notwithstanding the foregoing, in any
action, claim or proceeding in which both an indemnifying party, on the one
hand, and an Indemnified Party, on the other hand, is, or is reasonably likely
to become, a party, such Indemnified Party shall have the right to employ
separate counsel at the indemnifying party's
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expense and to control its own defense of such action, claim or proceeding if,
in the reasonable opinion of counsel to such Indemnified Party, a conflict or
potential conflict exists between the indemnifying party, on the one hand, and
such Indemnified Party, on the other hand, that would make such separate
representation advisable. In any event, the Indemnified Party will reasonably
cooperate with the indemnifying party in any defense undertaken by an
indemnifying party.
Section 11.9 Net Worth Statement. SIC hereby represents and
warrants to Purchaser that as of the Closing Date it will have a net worth
(assets minus liabilities on a GAAP basis balance sheet adding back those
liabilities attributable to the above market portion of payment obligations
under the throughput agreements described in Section 5.7 of the Asset Purchase
Agreement and also deferred income taxes, if any, attributable to any like kind
exchange completed in accordance with Section 3.8 of any of the Purchase
Agreements) of not less than $30,000,000.
ARTICLE 12
MISCELLANEOUS
Section 12.1 Notices. All notices, requests, demands, consents,
approvals and other communications provided for or permitted hereunder shall be
made in writing and shall be delivered by hand or sent by telecopier or courier
service:
(a) if to Purchaser or Guarantor:
Kaneb Pipe Line Partners, L.P.
2435 N. Central Expressway, Suite 700
Richardson, TX 75080
Attn: Edward D. Doherty
Telecopier No.: (214) 699-1894
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with a copy to:
Support Terminal Services, Inc.
17304 Preston Road, Suite 1000
Dallas, TX 75252-5623
Attn: Fred Johnson
Telecopier No.: (214) 931-6526
with a copy to:
Fulbright & Jaworski, L.L.P.
2200 Ross Avenue, Suite 2800
Dallas, Texas 75201
Attn: Kenneth L. Stewart
Telecopier No.: (214) 855-8200
(b) if to SPC or SIC:
Steuart Petroleum Company
4646 40th Street, N.W.
Washington, D.C. 20016
Telecopier No.: (202) 244-5425
Attention: President, and
General Counsel
with a copy to:
Ginsburg, Feldman and Bress, Chartered
1250 Connecticut Avenue, N.W. Suite 800
Washington, D.C. 20036
Telecopier No.: (202) 637-9195
Attention: Lee R. Marks, Esq.
with a copy to:
Steuart Investment Company
4646 40th Street, N.W.
Washington, D.C. 20016
Telecopier No.: (202) 244-1221
Attention: Guy T. Steuart II, and
John R. Clark III, Esq.
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Section 12.2 Successors and Assigns. This Agreement shall inure
to the benefit of and be binding upon the successors and permitted assigns of
the parties hereto. No party hereto may assign its rights under this Agreement
without the consent of the other party, except that Purchaser may assign its
rights under this Agreement to any Affiliate, but such assignment shall not
relieve Purchaser or Guarantor of any of their obligations hereunder to the
extent such obligations are not performed by Purchaser's assignee.
Section 12.3 Amendment and Waiver.
(a) No failure or delay on the part of any party hereto
in exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to any party hereto
at law, in equity or otherwise.
(b) Any amendment, supplement or modification of or to
any provision of this Agreement, any waiver of any provision of this Agreement,
and any consent to any departure by any party hereto from the terms of any
provision of this Agreement, shall be effective (i) only if it is made or given
in writing and signed by all parties hereto, or, in the case of a waiver, by
the party waiving compliance, and (ii) only in the specific instance and for
the specific purpose for which made or given.
Section 12.4 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of New York, without regard to the
principles of conflicts of law of New York.
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Section 12.5 Jurisdiction. Any controversy or claim arising out
of or relating to this Agreement or any agreements or transactions
contemplated hereby shall be settled by arbitration in accordance with the
Commercial Rules of Arbitration of the American Arbitration Association in
effect on the date hereof, and any award rendered in such arbitration shall be
final and binding on the Parties. Judgment on any award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. Any
arbitration hereunder shall be decided by a single arbitrator, who shall be a
lawyer experienced in commercial matters. The parties shall attempt to agree on
an arbitrator but either party may at any time request that an arbitrator be
selected in accordance with the Commercial Arbitration Rules. Any arbitration
hereunder shall be held in New York City, New York. The prevailing party shall
be entitled in any arbitration hereunder to recover its reasonable attorney's
fees and all costs and expenses of the arbitration.
Section 12.6 Severability. If any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired, unless the
provisions held invalid, illegal or unenforceable shall substantially impair
the benefits of the remaining provisions hereof.
Section 12.7 Entire Agreement. The Purchase Agreements are a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. The Purchase
Agreements supersede all prior agreements and understandings between the
parties with respect to the subject matter contained herein.
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Section 12.8 Expenses. Each party will bear its own expenses
incurred in connection with the negotiation and execution of this Agreement,
and Purchaser shall pay its expenses incurred in carrying out due diligence,
including Audits.
Section 12.9 Publicity. Except as may be required by Applicable
Law, or as required in connection with Kaneb Pipe Line Partners L.P.'s
registration statement filed under the Securities Act of 1933 and the related
offering of partnership units, none of the parties shall issue a publicity
release or announcement or otherwise make any public disclosure concerning this
Agreement without the prior approval of the other party. If any announcement is
required by law to be made by either party , prior to making such announcement
such party will deliver a draft of such announcement to the other party and
shall give the other party an opportunity to comment thereon.
Section 12.10 Further Assurances. Each party shall execute such
documents and perform such further reasonable acts (including without
limitation reasonable action to obtain any consents, exemptions,
authorizations, or other actions by, or giving any notices to, or making any
filings with, any Governmental Authority or any other Person) as may be
reasonably required or desirable to carry out or to perform the provisions of
this Agreement.
Section 12.11.A Post-Closing Access to Books and Records by
Purchaser. For a period of five (5) years after the Closing Date, subject to
reasonable advance notice of time and purpose and to the execution by Purchaser
of reasonable confidentiality undertakings, Purchaser and its authorized
representatives may at Purchaser's expense have reasonable access during normal
business hours to the books and records related to the Property that are not
included in the Property and SIC will furnish to Purchaser such additional
information and will cooperate with
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Purchaser in such other respects as Purchaser may reasonably request, to the
extent that such access and disclosure of such information and cooperation are
required by Purchaser for financial reporting, tax, or similar purposes, or for
purposes of investigating matters which may be the subject of litigation or
administrative proceedings with third parties or Governmental Authorities, so
long as such disclosure, access, and cooperation do not violate the terms of
any agreement to which SIC is bound or any Applicable Law or result in the loss
of any attorney-client or work product privilege. SIC will use reasonable
efforts in accordance with SIC's normal record maintenance procedures to keep
and maintain all such books and records for a period of five (5) years from the
Closing or longer as may be required by statute, except that notwithstanding
any requirements of SIC's normal record maintenance procedures, SIC shall not
destroy such books and records during such five (5) year period. From and
after such five (5) year period, SIC shall give Purchaser sixty (60) days prior
notice before destroying any of such books and records, and Purchaser may at
any time during such sixty days take possession, at Purchaser's cost, of such
books and records, provided that if Purchaser does not take possession of any
of such books and records during such sixty days, SIC shall be free thereafter
to dispose of such books and records.
Section 12.11.B Post-Closing Access to Books and Records by SIC. For
a period of five (5) years after the Closing Date, subject to reasonable
advance notice of time and purpose and to the execution by SIC of reasonable
confidentiality undertakings, SIC and its authorized representatives may at
SIC's expense have reasonable access during normal business hours to the books
and records related to the Property that are included in the Property and
Purchaser will furnish to SIC such additional information and will cooperate
with SIC in such other
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respects as SIC may reasonably request, to the extent that such access and
disclosure of such information and cooperation are required by SIC for
financial reporting, tax, or similar purposes, or for purposes of investigating
matters which may be the subject of litigation or administrative proceedings
with third parties or Governmental Authorities, so long as such disclosure,
access, and cooperation do not violate the terms of any agreement to which
Purchaser is bound or any Applicable Law or result in the loss of any
attorney-client or work product privilege. Purchaser will use reasonable
efforts in accordance with Purchaser's normal record maintenance procedures to
keep and maintain all books and records transferred to Purchaser hereunder for
a period of five (5) years from the Closing or longer as may be required by
statute, except that notwithstanding any requirements of Purchaser's normal
record maintenance procedures, Purchaser shall not destroy such books and
records during such five (5) year period. From and after such five (5) year
period, Purchaser shall give SIC sixty (60) days prior notice before destroying
any of such books and records, and SIC may at any time during such sixty days
take possession, at SIC's cost, of such books and records, provided that if SIC
does not take possession of any of such books and records during such sixty
days, Purchaser shall be free thereafter to dispose of such books and records.
Section 12.12 Treatment of Purchase Agreements. Notwithstanding
any provision contained in any of the Purchase Agreements that may be construed
to the contrary, (i) the aggregate Liabilities of SPC, SPCT, PPI and SIC under
the Purchase Agreements that are subject to maximum liability limits pursuant
to the provisions of Section 11.5 of the Purchase Agreements shall be the
Escrow Fund, (ii) the maximum aggregate amount that will be paid to Purchaser
for the type of Remedial Work described in Section 11.7.1.1 pursuant to the
Purchase
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Agreements shall be the amount set forth in Section 11.7.1.1, and (iii) the
$1,000,000 threshold set forth in Section 3.1.2.2, the Remaining Threshold and
the $750,000 threshold set forth in Section 11.6 represent the aggregate
threshold amounts for applicable claims under the Purchase Agreements.
Section 12.13 Capitalized Terms. Terms having initial capitalized
letters not otherwise defined herein shall have the meaning given those terms
in the Asset Purchase Agreement.
Section 12.14 Intentionally Omitted.
Section 12.15 Prorations. Real Property property taxes and
assessments for which SIC is liable, water, sewer and utility charges, normal
operating expenses, annual permit or inspection fees (calculated on the basis
of the period covered), and all other charges and fees customarily prorated and
adjusted in similar transactions shall be prorated at Closing on the basis of a
365-day year. If any item subject to proration cannot be calculated accurately
on the Closing Date, then such item shall be calculated within thirty (30) days
after the Closing Date and any party owing another party a sum of money based
on such subsequent proration(s) shall promptly pay the sum owed, together with
interest thereon at the rate of seven percent (7%) per annum from the Closing
Date to the date of payment if payment is not made within ten (10) days after
delivery of an invoice therefor.
Section 12.16 Guaranty. Guarantor acknowledges and agrees that it
will derive substantial direct and indirect benefits from providing the
guaranty set forth in this Section 12.16 and Guarantor has determined that it
is in its best interest to provide this guaranty. Guarantor absolutely and
unconditionally guarantees to SIC and each SIC Indemnified Party the due and
punctual payment of all liabilities and obligations of Purchaser to SIC or each
SIC Indemnified
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Party, as appropriate, in accordance with the terms of this Agreement (and
specifically including the indemnification obligations set forth in Article
11). Guarantor guarantees to SIC and each SIC Indemnified Party the
performance of all of Purchaser's obligations, liabilities, covenants and
agreements (and specifically the indemnification obligations set forth in
Article 11) to SIC or each SIC Indemnified Party, as appropriate. Guarantor
agrees to indemnify and hold SIC and each SIC Indemnified Party harmless from
and against all liability and expense, including reasonable attorneys' fees,
sustained by SIC or any SIC Indemnified Party by reason of the failure of the
Purchaser to fully perform and comply with the terms and obligations of this
Agreement. Guarantor expressly waives any right to require SIC or any SIC
Indemnified Party to bring any action, or exhaust its rights, against Purchaser
or any other person, or to require that resort be had to any assets of
Purchaser before pursuing the Guarantor under this Section 12.16.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their authorized officers as of the date first above
written.
STEUART INVESTMENT COMPANY
By:/s/ GUY T. STEUART II
Name: Guy T. Steuart II
Title: President
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KANEB PIPE LINE OPERATING
PARTNERSHIP, L.P.
By: Kaneb Pipe Line Company, its
general partner
By:/s/ E. D. DOHERTY
Name: E. D. Doherty
Title: Chairman
SUPPORT TERMINALS OPERATING
PARTNERSHIP, L.P.
By: Support Terminal Services, Inc.,
its general partner
By:/s/ E. D. DOHERTY
Name: E. D. Doherty
Title: Chairman
By executing and delivering this Agreement, Steuart Petroleum Company
hereby acknowledges and assumes the obligations delegated to or imposed upon
Steuart Petroleum Company under this Agreement, including but not limited to
those payment obligations for indemnification claims that shall be made from
the Escrow Fund.
STEUART PETROLEUM COMPANY
By:/s/ JOHN C. JOHNSON
Name: John C. Johnson
Title: President and C.E.O.
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