PURCHASE AND SALE AGREEMENT
dated
as of August 15, 2005
AMENDED
AND RESTATED as of August 15, 2006
between
PENN
OCTANE CORPORATION,
and
TRANSMONTAIGNE
PRODUCT SERVICES INC.
TABLE
OF CONTENTS
Page
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ARTICLE
I DEFINITIONS
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2
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SECTION
1.1.
|
Certain
Definitions
|
2
|
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ARTICLE
II THE CLOSING
|
10
|
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SECTION
2.1.
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Purchase
and Sale of the Assets.
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10
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SECTION
2.2.
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Closing
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10
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SECTION
2.3.
|
Deliveries
to Buyer
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10
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SECTION
2.4.
|
Deliveries
to Seller
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11
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SECTION
2.5.
|
Proceedings
at Closing
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11
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ARTICLE
III PURCHASE PRICE
|
11
|
|
SECTION
3.1.
|
Purchase
Price
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11
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SECTION
3.2.
|
Payment
of Consideration and Transfer of Assets at Closing
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12
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SECTION
3.3.
|
Allocation
|
12
|
ARTICLE
IV REPRESENTATIONS AND WARRANTIES OF SELLER
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12
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|
SECTION
4.1.
|
Organization;
Power and Authority
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12
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SECTION
4.2.
|
Authorizations;
Execution and Validity
|
13
|
SECTION
4.3.
|
No
Conflicts; Consents
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13
|
SECTION
4.4.
|
Litigation;
Orders
|
14
|
SECTION
4.5.
|
Environmental
Matters
|
14
|
SECTION
4.6.
|
Employee
and Benefit Matters.
|
14
|
SECTION
4.7.
|
Taxes
|
16
|
SECTION
4.8.
|
Title
to Assets
|
16
|
SECTION
4.9.
|
Assigned
Contracts
|
17
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SECTION
4.10.
|
Sufficiency
of Assets
|
17
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SECTION
4.11.
|
Insurance
|
17
|
SECTION
4.12.
|
Permits;
Compliance with Applicable Law
|
17
|
SECTION
4.13.
|
Absence
of Certain Changes
|
18
|
SECTION
4.14.
|
Fees
|
19
|
SECTION
4.15.
|
Disclaimer
|
19
|
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ARTICLE
V REPRESENTATIONS AND WARRANTIES OF BUYER
|
19 | |
SECTION
5.1.
|
Organization;
Power and Authority
|
19
|
SECTION
5.2.
|
Authorizations;
Execution and Validity
|
19
|
SECTION
5.3.
|
No
Conflicts; Consents
|
20
|
SECTION
5.4.
|
Litigation
|
20
|
SECTION
5.5.
|
Investment
Intent; Sophisticated Buyer
|
20
|
SECTION
5.6.
|
Financial
Ability
|
21
|
SECTION
5.7.
|
Fees
|
21
|
SECTION
5.8.
|
Disclaimer
|
21
|
i
ARTICLE
VI COVENANTS
|
21
|
|
SECTION
6.1.
|
Covenants
of Seller
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21
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SECTION
6.2.
|
Covenants
of Buyer
|
22
|
SECTION
6.3.
|
Other
Covenants
|
23
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ARTICLE
VII TAX MATTERS
|
27
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|
SECTION
7.1.
|
Preparation
and Filing of Tax Returns
|
27
|
SECTION
7.2.
|
Seller's
Tax Indemnification
|
27
|
SECTION
7.3.
|
Buyer's
Tax Indemnification
|
28
|
SECTION
7.4.
|
Tax
Indemnification Procedures
|
28
|
ARTICLE
VIII CONDITIONS PRECEDENT TO BUYER’S OBLIGATION
|
29
|
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SECTION
8.1.
|
Accuracy
of Representations and Warranties
|
29
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SECTION
8.2.
|
Performance
of Covenants
|
29
|
SECTION
8.3.
|
Officers’
Certificates
|
29
|
SECTION
8.4.
|
No
Order
|
29
|
SECTION
8.5.
|
Certified
Resolutions
|
29
|
SECTION
8.6.
|
Secretary’s
Certificate
|
29
|
SECTION
8.7.
|
Liens
and Secured Debt
|
30
|
SECTION
8.8.
|
Consents
|
30
|
SECTION
8.9.
|
Seadrift
Pipeline Lease
|
30
|
SECTION
8.10.
|
Authorization
to Assign
|
30
|
SECTION
8.11.
|
Due
Diligence
|
30
|
SECTION
8.12.
|
Exxon
Contract
|
30
|
SECTION
8.13
|
Concurrent
Closing with Rio
|
30
|
SECTION
8.14.
|
No
Change in Law
|
30
|
SECTION
8.15
|
Stockholder
Approval
|
31
|
SECTION
8.16
|
U.S.
Employees
|
31
|
SECTION
8.17
|
Pipeline
Tariff
|
31
|
SECTION
8.18
|
Dow
Tariff Letter
|
31
|
SECTION
8.19
|
Injunction
|
31
|
ARTICLE
IX CONDITIONS PRECEDENT TO SELLER’S OBLIGATION
|
31
|
|
SECTION
9.1.
|
Accuracy
of Representations and Warranties
|
31
|
SECTION
9.2.
|
Performance
of Covenants
|
32
|
SECTION
9.3.
|
Officer’s
Certificate
|
32
|
SECTION
9.4.
|
No
Order
|
32
|
SECTION
9.5.
|
Certified
Resolutions
|
32
|
SECTION
9.6.
|
Secretary’s
Certificate
|
32
|
SECTION
9.7
|
No
Change in Law
|
32
|
SECTION
9.8
|
Stockholder
Approval
|
33
|
ARTICLE
X TERMINATION
|
33
|
|
SECTION
10.1.
|
Termination
of Agreement
|
33
|
SECTION
10.2.
|
Effect
of Termination
|
33
|
ii
ARTICLE
XI INDEMNIFICATION
|
34
|
|
SECTION
11.1.
|
Seller
Indemnification
|
34
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SECTION
11.2.
|
Buyer
Indemnification
|
34
|
SECTION
11.3.
|
Indemnification
Procedures
|
35
|
SECTION
11.4.
|
Limits
on Indemnification
|
35
|
SECTION
11.5.
|
Certain
Damages
|
36
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SECTION
11.6
|
Exclusive
Remedy
|
36
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ARTICLE
XII GENERAL
|
37
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|
SECTION
12.1.
|
Amendments
|
37
|
SECTION
12.2.
|
Waivers
|
37
|
SECTION
12.3.
|
Notices
|
37
|
SECTION
12.4.
|
Successors
and Assigns; Parties in Interest
|
38
|
SECTION
12.5.
|
Severability
|
38
|
SECTION
12.6.
|
Entire
Agreement
|
39
|
SECTION
12.7.
|
Governing
Law, Consent to Jurisdiction
|
39
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SECTION
12.8.
|
Expenses
|
39
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SECTION
12.9.
|
Release
of Information; Confidentiality
|
39
|
SECTION
12.10.
|
Sole
Obligation
|
40
|
SECTION
12.11.
|
Certain
Construction Rules
|
40
|
SECTION
12.12.
|
Survival.
|
40
|
SECTION
12.13.
|
Counterparts
|
40
|
Exhibits
A
|
-
Intentionally Omitted
|
B
|
-
General Assignment, Conveyance and Xxxx of Sale
|
Annex
1 - Intentionally Omitted
|
|
Annex
2 - Leases
|
|
Annex
3 - Improvements
|
|
Annex
4 - Easements
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|
Annex
5 - Personal Property
|
|
Annex
6 - Assigned Contracts
|
|
Annex
7 - Permits
|
|
C
|
-
Assumption Agreement
|
D
|
-
Closing Settlement Statement as of August 22,
2006
|
iii
Schedules
1.1
|
-
Seller’s Individuals with Knowledge
|
4.3
|
-
No Conflicts/Consents
|
4.4
|
-
Legal Proceedings
|
4.5
|
-
Environmental Matters
|
4.6(a)
|
-
U.S. Employees
|
4.6(b)
|
-
Notice of Adverse Claim By Employee
|
4.6(c)
|
-
Seller’s Plans
|
4.7
|
-
Taxes
|
4.9
|
-
Contracts
|
4.11
|
-
Insurance
|
4.12
|
-
Permits Compliance
|
4.13
|
-
Certain Changes
|
4.14
|
-
Fees
|
5.3
|
-
Buyer’s Conflicts/Consents
|
6.3(d)(i)
|
-
Minimum Inventory Requirements - Penn
Octane
|
iv
PURCHASE
AND SALE AGREEMENT (AMENDED AND RESTATED)
This
PURCHASE AND SALE AGREEMENT, dated as of August 15, 2005, as amended and
restated on August 15, 2006 (this “Agreement”), is entered into by and between
PENN OCTANE CORPORATION, a Delaware corporation (“Seller” or “Penn”), and
TRANSMONTAIGNE PRODUCT SERVICES INC. (“Buyer”). Buyer and Seller may be referred
to herein individually as a “Party” or collectively as the
“Parties.”
RECITALS
Seller
is
the owner of various leases, contracts, a pumping station and other assets
used
by Seller in the purchase, transportation, marketing and sale of LPG, all of
such leases, contracts, pumping station and other assets being more particularly
described in the following provisions of this Agreement.
Seller
is
also an affiliate of Rio Vista Operating Partnership L.P. (“Rio”), which, in
turn, has concurrently executed a Purchase and Sale Agreement (as amended and
restated) with Buyer for the acquisition by Buyer of various leases, contracts,
and other assets used in the purchase, transportation, marketing and sale of
LPG.
The
Parties are parties to that certain Purchase and Sale Agreement (the
“Prior
Agreement”)
entered
into as of August 15, 2005, as amended, under which Buyer desired to purchase
from Seller, and Seller was willing to sell to Buyer the Assets as such terms
were further described in the Prior Agreement.
The
Parties wish to supercede, amend and restate the Prior Agreement pursuant to
this Agreement.
It
is the
intent of the Parties hereto that the Closing of the transaction contemplated
by
this Agreement is specifically contingent upon the concurrent Closing of the
transaction contemplated in the Purchase and Sale Agreement (as amended and
restated) between Rio and Buyer.
Buyer
desires to purchase from Seller, and Seller is willing to sell to Buyer the
Assets, as further described in this Agreement.
NOW,
THEREFORE, in consideration of the premises, the terms and provisions set forth
herein, the mutual benefits to be gained by the performance thereof and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:
ARTICLE
I
DEFINITIONS
SECTION
1.1 Certain
Definitions.
As
used
in this Agreement, the terms set forth below shall have the following respective
meanings:
“Adverse
Claim”
means,
with respect to any security or other financial instrument, an “adverse claim”
as defined in Section 8-102(a)(1) of the Uniform Commercial Code as in effect
in
the State of Texas.
“Affiliate”
means,
with respect to any Person, (a) any Subsidiary of such Person or (b) any other
Person that, directly or indirectly, controls, is controlled by, or is under
common control with, such Person, excepting from the foregoing TransMontaigne
Partners L.P. or any of its affiliates. For the purposes of this definition,
“control” means the possession of the power to direct or cause the direction of
management and policies of such Person, whether through the ownership of voting
securities, by contract, or otherwise.
“Agreement”
has the
meaning given in the Preamble.
“Assets”
means
the following assets of Penn, other than the Retained Assets:
(a) the
lessee’s or tenant’s entire interest under the Seadrift Pipeline Lease including
all rights thereunder to use the Seadrift Pipeline and the easements, rights
of
way, property use agreements, line rights, real property licenses and other
similar interests in real property or contractual rights permitting such
pipeline to be located in its present location;
(b) all
leases of real property, including the Seadrift Pipeline Lease (excluding the
four executive offices located in Houston, Texas, Xxxx Xxxxx, Xxxxxxxxxx, Xx
Xxxxxxx, Xxxxxxxxxx, and Palm Desert, California and all furniture, fixtures
and
equipment located therein) used in the conduct of the Business in the United
States, which leases are those described on Annex 2 to the General
Assignment (collectively, the “Leases”);
(c) the
Exxon
Contract;
(d) all
structures, fixtures, facilities, pumping facilities and appurtenances located
on or under the real property described in clauses (a) and (b) above including
those described on Annex 3 to the General Assignment (collectively, the
“Improvements”);
(e) all
easements and real property licenses (including right-of-way Permits from
railroads and road crossing Permits or other Permits from Governmental
Authorities) held by Penn in connection with the conduct of the Business in
the
United States including, without limitation, those described on Annex 4 to
the
General Assignment (the “Easements”);
(f)
to
the
extent the same do not constitute Improvements, any and all fittings, cathodic
protection ground beds, rectifiers, local supervisory control software (SCADA),
machinery, equipment, pumps, engines, pipes, valves, connections, gates,
computer hardware and all other tangible personal property used in the Business
including those described on Annex 5 to the General Assignment (the “Personal
Property”);
2
(g) the
contracts and agreements specifically related to the sale, purchase, marketing,
transportation and storage of LPG in connection with the Business (including
the
Exxon Contract, the Formosa Contract and the Dow Sales Contract) and any leases
of personal property to which Penn is a party and that are described on Annex
6
to the General Assignment (the “Assigned
Contracts”);
(h) all
permits, licenses, certificates, authorizations, registrations, orders, waivers,
variances and approvals granted by any Governmental Authorities or third Persons
to Penn or its predecessors in interest for the ownership or conduct of the
Business, in each case to the extent the same are assignable by Seller including
those listed on Annex 7 to the General Assignment (the “Permits”);
(i)
all
LPG
and any other hydrocarbons (in whatever physical state) owned by Penn in
connection with the Business (including any of the same classified as inventory)
and whether located in storage facilities, pipelines, or other facilities or
structures owned or leased by Penn or other Persons;
(j)
all
books, records and documents relating to the ownership or operation of the
Assets and Business (other than medical records of employees or medical records
of independent contractors of Penn for which written consent of the applicable
employee or independent contractor to the release of such records is not
obtained) including all contract, tax, financial, technical, insurance (past
and
present), pipeline, right of way, system mapping, engineering, environmental,
safety and permitting records, information and files (the “Books
and Records”);
excluding, however the records which will be retained by Seller (the
“Retained
Records”),
which
shall consist of (i) corporate records of Seller not directly related to the
operation of the Assets or Business (ii) records necessary for Seller’s
continued operations following the Closing and (iii) copies of any records
required in connection with preparation of any Tax Returns required to be filed
by Seller or Seller’s Affiliates;
(k) all
deposits and all service charges, utility bills and other goods or services
prepaid by Penn in connection with the Business;
(l)
all
claims, causes of action, rights and remedies arising out of the conduct of
the
Business or the ownership of the Assets;
(m) all
patents and patent applications, and other intellectual property rights, United
States or foreign, owned or licensed by Penn used in the conduct of the Business
(provided, however, that the Assets shall not include trademarks and service
marks, trademark and service xxxx registrations and applications, trade names,
logos, copyrights and copyright registrations and applications technology,
know-how, and processes utilized or owned by Seller);
(n) the
Formosa Contract; and
(o) the
Dow
Sales Contract.
3
“Assigned
Contracts”
has the
meaning given in the subsection (g) of the definition of Assets.
“Assumed
Liabilities”
means
the liabilities, obligations, or Losses that occur and require payment,
performance or resolution, as a result of and in the course of operation of
the
Business and the Assets during the period on or after the Closing Date.
“Assumption
Agreement”
has the
meaning given in Section 2.4(b).
“Basket
Amount”
has the
meaning given in Section 11.4(a).
“Benefit
Plan”
means:
(a) each “employee benefit plan,” as such term is defined in Section 3(3) of
ERISA, (b) each plan that would be an employee benefit plan if it was subject
to
ERISA, such as foreign plans and plans for directors, (c) each stock bonus,
stock ownership, stock option, stock purchase, stock appreciation rights,
phantom stock, or other stock plan (whether qualified or nonqualified), and
(d)
each bonus, deferred compensation, incentive compensation, vacation or
supplemental income plan, policy or arrangement.
“Books
and Records”
has the
meaning given in subsection (j) of the definition of Assets.
“Business”
shall
mean the business currently conducted by Penn with respect to the Seadrift
Pipeline, the Exxon Contract, the Formosa Contract, the Dow Sales Contract,
the
pumping station and the purchase, transportation, storage and marketing of
LPG,
but excluding Penn’s Refined Products resale business.
“Business
Day”
means
any day other than a Saturday, Sunday or day on which commercial banks in Texas
are authorized or required by Law to remain closed.
“Buyer”
has the
meaning given in the Preamble.
“Buyer
Confidentiality Agreement”
means
that certain letter agreement, dated as of June 6, 2005, by and between Rio
and
Buyer.
“Buyer
Employer”
has the
meaning given in Section 6.3(f)(i).
“Closing”
has the
meaning given in Section 2.2.
“Closing
Date”
has the
meaning given in Section 2.2.
“Continuing
Employee”
has the
meaning given in Section 6.3(f)(i).
“Contract”
means
any written contract, agreement, indenture, note, bond, loan, instrument, lease,
conditional sale contract, mortgage or insurance policy including any
partnership, joint venture or operating agreement, any contract or agreement
that grants a right of first refusal or right of first negotiation or other
preferential right to a third party, any contract or agreement containing
covenants limiting the freedom to engage in any line of business or to compete
with any Person, any collective bargaining agreement, any employment, personal
services, consulting, severance or similar agreement for any employees of Seller
including, without limitation, the Assigned Contracts, the Exxon Contract,
the
Formosa Contract, the Dow Sales Contract, and the Seadrift Pipeline
Lease.
4
“Deficiency
Amount”
means
the difference between the Minimum Requirement and actual LPG inventory at
the
Effective Time as determined pursuant to Schedule 6.3(d)(i) and in conjunction
with the Purchase and Sale Agreement between Buyer and Rio.
“Dow
Sales Contract”
means
that certain Dow Term Xxxxxxxx Xxxxxxxx Xx. 000000, dated May 17, 2006 between
Penn and Dow Hydrocarbons and Resources Inc.
“Easements”
has the
meaning given in the subsection (e) of the definition of Assets.
“Effective
Time”
means
12:01 a.m., central daylight time, on the Closing Date.
“Encumbrances” means
any
security interest, pledge, mortgage, lien (statutory or otherwise), charge,
encumbrance, trust, Adverse Claim, preferential arrangement or restriction
of
any kind, including any restriction on the use, transfer, or other exercise
of
any attributes of ownership.
“Environmental
Audit”
has the
meaning given in Section 6.3(e)(i).
“Environmental
Condition”
means:
(a) the
presence (or any Release) of a Hazardous Material from, in, on, under or onto
any properties or the environment in alleged violation of any Environmental
Laws;
(b) the
presence (or any Release) of a Hazardous Material from, in, on, under or onto
any property or the environment that results in any Losses;
(c) any
proceedings or investigatory, enforcement, cleanup, removal, containment,
remedial, or other private or governmental or regulatory action at any time
threatened in writing, instituted, or completed against or in respect to any
properties or any use or activity on any properties pursuant to any applicable
Environmental Laws relating to Hazardous Materials or alleged violation of
Environmental Laws;
(d) the
presence (or any Release) of a Hazardous Material from, in, on, under or onto
any properties or the environment resulting in a Material Adverse Effect;
or
(e) any
alleged violation of Environmental Laws that occurred prior to the Closing
Date.
“Environmental
Laws”
means
any Law or Order relating to protection of the environment, including, persons
or the public welfare from actual or potential exposure (or the effects of
exposure) to any actual or potential Release or regarding the manufacture,
processing, production, gathering, transportation, generation, use, treatment,
or storage of any Hazardous Materials.
5
“ERISA”
means
the Employee Retirement Income Security Act of 1974, as amended.
“ERISA
Affiliate”
means,
with respect to any Person, any other Person that is a member of a group
described in Section 414(b), (c), (m) or (o) of the Code or
Section 4001(b)(1) of ERISA that includes the first Person, or that is a
member of the same “controlled group” as the first Person pursuant to Section
4001(a)(14) of ERISA.
“Exxon
Contract”
means
the Agreement, dated October 1, 1999, as amended on January 20, 2000, February
29, 2000, April 1, 2005, and February 2, 2006, by and between Penn and Exxon
U.S.A., a division of Exxon Corporation for the purchase of LPG for the period
of October 1, 1999 through September 30, 2010, and any continuation, extension
or renewal thereof.
“Formosa
Contract”
means
the Purchase Sale Agreement for Propane King Ranch Gas Plant, dated May 1,
2006,
between Penn and Formosa Plastic Corporation.
“General
Conveyance”
has the
meaning given in Section 2.3(a).
“Governmental
Authority”
means
any U.S. federal, state, provincial or local government or governmental
regulatory body and any of their respective subdivisions, agencies,
instrumentalities, authorities or tribunals.
“Hazardous
Materials”
means
any substance, whether solid, liquid, gaseous, or any combination of the
foregoing or any other substance not expressly mentioned herein: (a) that is
listed, defined, or regulated as a “hazardous material,” “hazardous waste,”
“solid waste,” “hazardous substance,” “toxic substance,” “contaminant,” or
“pollutant” or otherwise classified as hazardous or toxic, in or pursuant to any
Environmental Laws or otherwise prohibited, limited or regulated under any
Environmental Laws; (b) that is or contains asbestos, polychlorinated biphenyls,
radon, urea formaldehyde foam insulation, or explosive or radioactive materials,
and (c) that is or contains petroleum hydrocarbons, petroleum products, natural
gas, crude oil, or any components, fractions, or derivatives thereof.
“Hire
Date”
has the
meaning given in Section 6.3(f)(i).
“Improvements”
has the
meaning given in the subsection (d) of the definition of Assets.
“Indemnified
Party”
has the
meaning given in Section 11.3.
“Indemnifying
Party”
has the
meaning given in Section 11.3.
“Knowledge”
means
with respect to Seller, the actual knowledge after due inquiry of any of the
individuals specified on Schedule 1.1.
“Law”
means
any U.S. federal, state, provincial or local law, statute, rule, ordinance,
code
or regulation.
“Leases”
has the
meaning given in the subsection (b) of the definition of Assets.
6
“Legal
Proceeding”
means
any judicial, administrative or arbitral action, suit, investigation or
proceeding (public or private) by or before any U.S. court or other Governmental
Authority.
“Lien”
means
any lien, pledge, mortgage, deed of trust, security interest, attachment, levy
or other similar encumbrance.
“Losses”
means
claims, judgments, causes of action, liabilities, obligations, damages, losses,
deficiencies, costs and expenses.
“LPG”
means
liquefied petroleum gas.
“Material
Adverse Effect”
means
any condition, circumstance, event or effect that would be material and adverse
to the operation or condition (financial or otherwise) of the Assets, including
any casualty loss to, or taking through an eminent domain procedure of any
of
the Assets, in an amount of $50,000 or more.
“Materiality
Requirement”
has the
meaning given in Section 11.4(d).
“Minimum
Requirement”
has the
meaning given in Section 6.3(d)(i).
“Order”
means
any order, judgment, injunction, ruling, or decree of any U.S. court or other
Governmental Authority.
“Party”
or
“Parties”
has the
meaning given in the Preamble.
“Penn”
has the
meaning given in the Preamble.
“Permits”
has the
meaning given in the subsection (h) of the definition of Assets.
“Permitted
Encumbrances”
shall
mean, with respect to or upon any of the Assets, any Liens, caveats, claims,
rights (including rights of Governmental Authorities), reservations, exceptions,
easements, rights of way, conditions, restrictions (including restrictive
covenants and zoning and land use restrictions imposed by applicable laws,
regulations and ordinances), leases, licenses and other similar title exceptions
or other imperfections of title, restrictions or encumbrances affecting such
Assets that were not incurred in the borrowing of money and, individually and
in
the aggregate, are not expected to have a Material Adverse Effect or materially
interfere with the use of the Assets in the ordinary conduct of the
Business.
“Person”
means
any natural person, corporation, partnership, limited liability company, trust,
unincorporated organization or economic unit, Governmental Authority, government
instrumentality or other entity of any kind.
“Purchase
Price”
has the
meaning given in Section 3.1(a).
“Real
Property”
means
the real property covered by the Seadrift Pipeline Lease, the Leases, the
Improvements and the Easements.
7
“Refined
Products”
means
motor fuel, diesel fuel and jet fuel.
“Release”
means
any releasing, depositing, spilling, leaking, pumping, pouring, placing,
emitting, discarding, abandoning, emptying, discharging, migrating, injecting,
escaping, leaching, dumping or disposing.
“Retained
Assets”
means
all assets of Penn which are not intended to be transferred by Seller to Buyer
including but not limited to:
(a)
|
the
four executive offices located in Houston, Texas, Xxxx Xxxxx, Xxxxxxxxxx,
Xx Xxxxxxx, Xxxxxxxxxx, and Palm Desert, California and all furniture,
fixtures and equipment (including computers) located therein;
|
(b)
|
trademarks
and service marks, trademark and service xxxx registrations and
applications, trade names, logos, copyrights and copyright registrations
and applications technology, know-how, and processes utilized or
owned by
Seller;
|
(c)
|
the
Retained Records;
|
(d)
|
all
cash, accounts receivable, securities, notes receivable and other
assets
owned by Seller; and
|
(e)
|
all
assets used in Penn’s Refined Products resale
business.
|
“Retained
Liabilities”
means
all liabilities, obligations and Losses of Penn relating to periods before
the
Closing Date other than the Assumed Liabilities including but not limited
to:
(a)
|
all
liabilities, obligations or Losses arising out of violations by Seller
of
Laws, including Environmental Laws;
|
(b)
|
all
liabilities, obligations or Losses for criminal sanctions, fines,
penalties or assessments imposed at any time by any competent court
or
Governmental Authority with respect to the conduct of the Business
or
operation of the Assets;
|
(c)
|
all
liabilities, obligations or Losses arising from the transportation
and
disposal, or arrangement thereof, of Hazardous Materials by Seller
or its
agents off the Real Property or otherwise from Hazardous Materials
that
resulted from the Business that are Released or threatened to be
Released
from any non-Real Property;
|
(d)
|
all
liabilities, obligations or Losses arising out of the easements and
rights-of-way for the conduct of the Business or operation of the
Assets
prior to the Closing Date; and
|
(e)
|
all
obligations, liabilities or Losses (including accounts payable and
notes
payable) that occur , and require payment, performance or resolution
as a
result of and in the course of operation of the Business and the
Assets by
Seller during the period before the Closing
Date.
|
8
“Retained
Records”
has the
meaning given in subsection (j) of the definition of assets.
“Rio”
has the
meaning given in the Recitals.
“Seadrift
Pipeline Lease”
means
the Xxxx-Brownsville Pipeline Lease Agreement, dated as of August 1, 2006,
by
and between Seadrift Pipeline Corporation, a Delaware corporation and
Penn.
“Seadrift
Pipeline”
means
the pipeline covered by the Seadrift Pipeline Lease.
“Secured
Debt Facility”
means
the Amended and Restated Line Letter entered into between Seller, and RZB
Finance LLC, dated as of September 15, 2004, as the same may be amended,
modified or supplemented and all mortgages, guarantees, reimbursement
agreements, security agreements and other instruments, agreements or documents
entered into or delivered by Seller or any Affiliate of Seller in connection
therewith.
“Secured
Debt Lender”
means
RZB Finance LLC in its capacity as agent under the Secured Debt
Facility.
“Seller”
has the
meaning given in the Preamble.
“Seller
Group”
means
the affiliated group of corporations of which Seller is the common parent,
which
join in the filing of a consolidated federal income tax return (and any similar
group under state law).
“Seller
Plans”
means
all Benefit Plans that are sponsored, maintained or contributed to by Seller
or
an Affiliate of a Seller on behalf of the U.S. Employees.
“Subsidiary”
means,
with respect to any Person, any corporation, partnership, limited liability
company, whether incorporated in the U.S., or other entity of which a majority
of the Equity Interests having ordinary voting power to elect a majority of
the
board of directors, board of managers or other similar managing body of such
corporation, partnership, limited liability company, or other entity of any
kind
are owned by such Person.
“Tax”
or
“Taxes”
means
any U.S. federal, state or local income, gross receipts, value added, ad
valorem, sales and use, employment, social security, disability, occupation,
property, severance, transfer, capital stock, excise or other taxes imposed
by
or on behalf of any Taxing Authority, including any interest, penalty or
addition thereto.
“Tax
Indemnified Claim”
has the
meaning given in Section 7.4(a).
“Tax
Indemnified Party”
has the
meaning given in Section 7.4(a).
“Tax
Indemnifying Party”
has the
meaning given in Section 7.4(a).
9
“Tax
Items”
has the
meaning given in Section 7.1.
“Taxing
Authority”
means,
with respect to any Tax, the U.S. Governmental Authority that imposes such
Tax,
and the agency (if any) charged with the collection of such Tax for such
Governmental Authority.
“Tax
Return”
means
any U.S. return, declaration, report, claim for refund, or information return
or
statement relating to Taxes, including any schedule or attachment
thereto.
“U.S.
Employee”
means
any individual who is an employee of Seller and who is principally employed
in
the United States in connection with the Business, but excluding any employees
of Seller who occupy management positions or administrative positions and who
work in any of the Sellers four executive offices located in Houston, Texas,
Seal Beach, California, El Segundo, California, or Palm Desert,
California
ARTICLE
II
THE
CLOSING
SECTION
2.1 Purchase
and Sale of the Assets.
At
the
Closing, upon the terms and subject to the satisfaction of the conditions
precedent set forth in this Agreement, Seller shall sell, assign, transfer
and
convey to Buyer and Buyer shall purchase and acquire from the Seller, all right,
title and interest of Seller in and to the Assets free and clear of any Liens
or
Encumbrances (other than Permitted Encumbrances).
SECTION
2.2 Closing.
The
closing of the transaction contemplated hereby (the “Closing”)
shall
take place at the offices of Buyer in Denver, Colorado at 10:00 a.m. local
time,
on the first Business Day after the satisfaction or waiver of the conditions
set
forth in Articles VIII and IX , but no sooner than August 22, 2006, or at such
other time and date as the Parties may mutually agree (the “Closing
Date”).
SECTION
2.3 Deliveries
to Buyer.
At
the
Closing, Seller shall deliver, or shall cause to be delivered, to Buyer the
following:
(a) the
executed General Assignment, Conveyance and Xxxx of Sale in the form attached
as
Exhibit B (the “General
Conveyance”);
(b) the
certificates referred to in Sections 8.3, 8.5, 8.6 and 8.10;
(c) copies
of
the consents or approvals referenced in Section 8.8, 8.12, 8.15 and 6.3(b)
that
are required;
(d) copies
of
the release and termination documents referenced in Section 8.7;
10
(e) the
agreement required under Section 8.13;
(f)
a
copy of
the final tariff required under Section 8.17; and
(g) a
copy of
the executed letter required under Section 8.18.
SECTION
2.4 Deliveries
to Seller.
At
the
Closing, Buyer shall deliver to Seller the following:
(a) a
wire
transfer of immediately available funds (to such accounts as Penn shall have
specified to Buyer no later than one Business Day prior to the Closing) in
an
amount equal to the Purchase Price in accordance with Section
3.1(a);
(b) the
executed Assumption Agreement in the form of Exhibit C (the “Assumption
Agreement”);
(c) the
certificates referred to in Section 9.3, 9.5 and 9.6;
SECTION
2.5 Proceedings
at Closing.
All
proceedings to be taken and all documents to be executed and delivered by the
Parties at the Closing shall be deemed to have been taken and executed
simultaneously, and no proceedings shall be deemed taken nor any documents
executed or delivered until all have been taken, executed and
delivered.
ARTICLE
III
PURCHASE
PRICE
SECTION
3.1 Purchase
Price.
(a) The
purchase price, for the Assets, to be paid by Buyer to Seller at the Closing
will be $10,100,000 U.S. (as adjusted by Section 6.3 and Section 8.11 (the
“Purchase
Price”)).
Seller may instruct Buyer to pay a part of the Purchase Price directly to the
Secured Debt Lender and/or other lenders in order to obtain a release of the
Liens held by the Secured Debt Lender and/or other lenders, respectively, on
the
Assets.
(b) In
addition to the payment of the Purchase Price, at the Closing, Buyer (or its
designated Affiliate) shall assume the Assumed Liabilities pursuant to the
Assumption Agreement. Other than the Assumed Liabilities, Buyer shall not assume
any Liabilities or obligations of Seller.
(c) Seller
will bear the cost of any documentary, stamp, sales, excise or other Taxes
(if
any) payable in respect of the sale and transfer of the Assets, including any
such Taxes payable under the Texas Tax Code or Texas Administration
Code.
11
SECTION
3.2 Payment
of Consideration and Transfer of Assets at Closing.
At
the
Closing, Buyer shall pay the Purchase Price, as adjusted, to Seller and execute
and deliver to Seller the Assumption Agreement, and Seller shall execute and
deliver to Buyer the General Conveyance pursuant to which title to the Assets
is
transferred and conveyed to Buyer.
SECTION
3.3 Allocation.
Seller
and Buyer are each separately responsible for:
(a) preparing
Form 8594 Asset Acquisition Statement (the “Form”), under Section 1060 of the
Internal Revenue Code and the regulations promulgated thereunder, or any
successor form; and
(b) allocating
the amount of the Purchase Price for the Assets on the Form in which the Parties
will attempt to reach agreement as to allocation of the Purchase Price. However,
if they are unable to agree as to the allocation to any asset, each Party will
prepare its Form allocating the portion of the Purchase Price to each such
asset
upon which they disagree in the manner as each may determine in its sole
discretion without regard to the manner in which the other Party allocates
an
amount of the Purchase Price to such asset on its Form. Buyer and Seller hereby
agree that they will report the federal, state and other Tax consequences of
the
transaction contemplated by this Agreement in a manner consistent with the
allocation on each Party’s Form.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES
OF
SELLER
Seller
represents and warrants to Buyer as follows as of the Closing Date:
SECTION
4.1 Organization;
Power and Authority.
(a) Penn
is a
corporation duly incorporated, validly existing and in good standing under
the
Laws of the State of Delaware and is also qualified to transact business in
each
jurisdiction in which qualification is required.
(b) Penn
has
all requisite corporate power and authority to own and operate its assets and
properties and conduct its businesses and operations as presently being
conducted.
12
SECTION
4.2 Authorizations;
Execution and Validity.
(a) Except
with respect to the transfer to Buyer of the Assets, as of the date of execution
of this Agreement, Seller has all requisite corporate, and other power and
authority to execute and deliver and to perform its obligations under this
Agreement and to consummate the transaction contemplated hereby.
(b) As
of the
Closing Date, and subject to obtaining the approval of the holders of a majority
of the Equity Interests in Penn, Seller will have all requisite corporate,
and
other power and authority to consummate the transfer to Buyer of the
Assets.
(c) Except
with respect to the transfer to Buyer of the Assets, as of the date of execution
of this Agreement, the execution and delivery of this Agreement by Seller,
the
performance by Seller of its obligations hereunder, and the consummation by
Seller of the transaction contemplated hereby have been duly authorized by
all
necessary corporate, and other action on the part of Seller.
(d) Except
with respect to the transfer to Buyer of the Assets, as of the date of execution
of this Agreement, this Agreement has been duly and validly executed and
delivered by Seller and constitutes a valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms, except to the extent
that enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar Laws now or hereafter in effect affecting creditors'
rights generally or general principles of equity.
(e) As
of the
Closing Date, and
subject to obtaining the approval of the holders of a majority of the Equity
Interests in Penn, this
Agreement will constitute a valid and binding obligation of Seller with respect
to the performance by Seller of its obligation to consummate the transfer to
Buyer of the Assets, and such obligation shall be enforceable against Seller
in
accordance with the terms of this Agreement, except to the extent that
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar Laws now or hereafter in effect affecting creditors'
rights generally or general principles of equity.
SECTION
4.3 No
Conflicts; Consents.
Except
as
set forth on Schedule 4.3 or (in the case of (a), (c) or (d) below) as could
not
be reasonably expected to have a Material Adverse Effect, none of the execution
and delivery by Seller of this Agreement, the performance by Seller of its
obligations under this Agreement or the consummation by Seller of the
transaction contemplated hereby will:
(a) violate
any Law or Order;
(b) violate
the certificate of incorporation or bylaws of Penn;
(c) violate
any Contract to which Seller is a party or by which Seller, or its properties
are bound; or
(d) require
any consent from or filing with any Governmental Authority or any consent from
any other Person.
13
SECTION
4.4 Litigation;
Orders.
Schedule
4.4 lists all Legal Proceedings pending or, to Seller’s Knowledge, threatened
against Seller and arising out of or relating to the Business and the Assets.
Except as set forth in Schedule 4.4, there are no Legal Proceedings pending
against Seller or, to Seller’s Knowledge, threatened against Seller that
question the validity of this Agreement or any action taken or to be taken
by
Seller in connection with, or which seek to enjoin or obtain monetary damages
in
respect of, this Agreement or the consummation by Seller of the transaction
contemplated hereby.
SECTION
4.5 Environmental
Matters.
Except
as
set forth in Schedule 4.5 or as could not be reasonably expected to have a
Material Adverse Effect:
(a) the
operations and activities of Seller in respect of the Business and the Assets
are in compliance with all applicable Environmental Laws;
(b) Seller
(in respect of the Business and the Assets) is not subject to any existing,
pending or, to Seller’s Knowledge, threatened Legal Proceedings under any
Environmental Law;
(c) all
Permits, if any, required to be obtained or filed by Seller under any
Environmental Law in connection with the Business or their respective properties
and the Assets have been obtained or filed and are valid and currently in full
force and effect;
(d) there
has
been no Release created or caused by Seller of any Hazardous Material into
the
environment by Seller or, to the Knowledge of Seller, in connection with the
Business and the Assets;
(e) no
Environmental Condition created or caused by Seller exists at any of the Real
Property; and
(f) Seller
is
not subject to liability under applicable Environmental Laws arising in
connection with the transportation and off-site disposal or arrangement thereof
of any Hazardous Materials by Seller or any agent of Seller from Hazardous
Materials that resulted from the Business that are Released or threatened to
be
Released from any non-Real Property.
SECTION
4.6 Employee
and Benefit Matters.
(a) Schedule
4.6(a) sets forth a true, correct and complete list, as of the date set forth
therein, of all U.S. Employees and the name of each U.S. Employee’s employer.
The list described in the preceding sentence shows each such employee’s name,
job title, hire date, work location, employer’s name, accrued and unused
vacation, and current base salary or base wages. No changes in such base salary
or base wages for such employees have been made, promised or authorized since
August 15, 2005. There are no loans or other obligations payable or owing by
Seller to any such employee, except salaries, wages, bonuses and salary advances
and reimbursement of expenses incurred and accrued in the ordinary course of
business, nor are any loans or debts payable or owing by any such individuals
to
Seller nor has Seller guaranteed any of such individual’s respective loans or
obligations.
14
(b) With
respect to the U.S. Employees and except as set forth in Schedule
4.6(b):
(i)
|
none
are represented by a union or other collective bargaining
entity;
|
(ii)
|
there
has not occurred, nor, to Seller’s Knowledge has there been threatened, a
labor strike, request for representation, work stoppage or lockout
in the
past five years;
|
(iii)
|
Seller
has not received written notice of any charges before any Governmental
Authority responsible for the prevention of unlawful employment practices
and, to the Knowledge of Seller, no such charges are
threatened;
|
(iv)
|
Seller
has not received written notice of any claim relating to employment
or
loss of employment and, to the Knowledge of Seller, no such claims
are
threatened;
|
(v)
|
Seller
has not received written notice of any investigation by a Governmental
Authority responsible for the enforcement of labor or employment
regulations and, to Seller’s Knowledge, no such investigation is
threatened; and
|
(vi)
|
no
consent of any union, works council or other employee group is required
for, and no agreement restricts the execution of this Agreement,
the
consummation of the transaction contemplated hereby, or the closing
or
relocation of any facility.
|
(c) Seller
does not sponsor, maintain, contribute or have an obligation to contribute
to
any Benefit Plan. Schedule 4.6(c) sets forth a true, correct and complete list,
as of the date hereof, of all Seller Plans. On or before the date hereof, Seller
has delivered to Buyer copies of each of the Seller Plans and, to the extent
applicable, the most recent summary plan description relating to such
plans.
(d) With
respect to any employee benefit plan (within the meaning of Section 3(3) of
ERISA, that is sponsored, maintained or contributed to, or has been sponsored,
maintained or contributed to within six years prior to the date of this
Agreement, by Seller or any ERISA Affiliate of Seller):
(i)
|
no
withdrawal liability, within the meaning of Section 4201 of ERISA,
has
been incurred, which withdrawal liability has not been satisfied;
|
15
(ii)
|
no
liability to the Pension Benefit Guaranty Corporation has been incurred
by
any such entity, which liability has not been satisfied;
|
(iii)
|
no
accumulated funding deficiency, whether or not waived, within the
meaning
of Section 302 of ERISA or Section 412 of the Code has been incurred;
|
(iv)
|
all
contributions (including installments) to such plan required by Section
302 of ERISA and Section 412 of the Code have been timely made; and
|
(v)
|
no
condition exists or event or transaction has occurred with respect
to any
such plan which would reasonably be expected to result in Buyer incurring
any liability, fine or penalty.
|
SECTION
4.7 Taxes.
Except
as
set forth on Schedule 4.7 or as could not reasonably be expected to have a
Material Adverse Effect:
(a) all
Tax
Returns that are required to be filed on or before the Closing Date by Seller
have been duly and timely filed;
(b) all
Taxes
that are shown to be due on such Tax Returns have been timely paid in full
or
fully accrued;
(c) all
withholding Tax requirements imposed on Seller have been satisfied in full
in
all respects, except for amounts that are being contested in good faith (which
contested amounts are disclosed on Schedule 4.7);
(d) Seller
does not have in force any waiver of any statute of limitations in respect
of
Taxes or any extension of time with respect to a Tax assessment or deficiency;
and
(e) there
are
no pending proposed deficiencies or other written claims for unpaid Taxes of
Seller.
SECTION
4.8 Title
to Assets.
The
delivery by Seller to Buyer at the Closing of the General Conveyance in
accordance with the terms of this Agreement will vest in Buyer on the Closing
Date good and indefeasible title to the Assets free and clear of all
Encumbrances other than Permitted Encumbrances.
16
SECTION
4.9 Assigned
Contracts.
Each
Assigned Contract to which Seller is a party in connection with the conduct
of
the Business or by which any of the Assets are bound or encumbered by or subject
to (excluding the secured debt documents), and each Assigned Contract to which
Seller is a party or by which any asset or property of Seller is bound or
encumbered by or subject to, is described on Schedule 4.9. Seller has
provided or made available to Buyer true and correct copies of each Assigned
Contract identified on Schedule 4.9 and each amendment thereto. Except as
described on Schedule 4.9, Seller is not in breach or default in the
performance of its duties and obligations under any Assigned Contract that
could
reasonably be expected to have a Material Adverse Effect. To Seller’s Knowledge,
none of the other parties to any Assigned Contract described on
Schedule 4.9 is in breach or default in the performance of its duties and
obligations under such Assigned Contract that could reasonably be expected
to
have a Material Adverse Effect and none of such Assigned Contracts has been
terminated or revoked by any such other party.
SECTION
4.10 Sufficiency
of Assets.
The
Assets to be conveyed and transferred to Buyer at the Closing shall constitute
all of the tangible and intangible property, rights, benefits, privileges,
assets and entitlements that are necessary for Buyer to continue the Business
after the Closing on substantially the same basis as the Business has been
conducted over the 12 month period preceding the Closing Date; assuming,
however, that Buyer provides the necessary managerial, administrative and
accounting personnel and systems to oversee and administer the operation of
the
Business and the Assets.
SECTION
4.11 Insurance.
Schedule
4.11 lists all current insurance policies that are maintained by Seller for
the
benefit of the Business and the Assets. Except as set forth on Schedule 4.11,
all of the policies listed on Schedule 4.11 are in full force and effect, all
premiums due thereon have been paid, and Seller has complied in all material
respects with the provisions of such policies.
SECTION
4.12 Permits;
Compliance with Applicable Law.
Except
as
set forth in Schedule 4.12:
(a) Seller
holds all Permits necessary for the lawful conduct of the Business and operation
of the Assets under and pursuant to, and have complied with and are not in
default under or in violation of, any applicable Law, including, without
limitation, regulations of the Texas Railroad Commission and the Federal Energy
Regulatory Commission except in each case where the failure to hold such Permit
or such non-compliance or default could not reasonably be expected to cause
a
Material Adverse Effect. To Seller’s Knowledge, the Business and operation of
the Assets are not being conducted in violation of any applicable Law, Permit
or
any Order, except for any such violation which could not reasonably be expected
to have a Material Adverse Effect.
17
(b) Seller
has not received any notice or other communication from any Governmental
Authority asserting:
(i)
|
any
violation of Law arising out of the conduct of the Business and operation
of the Assets,
|
(ii)
|
any
violation of or failure to comply with the term or requirement of
any
Permits, or
|
(iii)
|
any
revocation, withdrawal, suspension, cancellation, termination or
modification of any Permit, except for violations, failures to comply,
revocations, withdrawals, suspensions, cancellations, terminations
or
modifications which could not reasonably be expected to have a Material
Adverse Effect.
|
SECTION
4.13 Absence
of Certain Changes.
Except
as
set forth on Schedule 4.13, since August 15, 2005, there has not been
any:
(a) damage
to
or destruction or loss of any material asset or property of Seller, including,
without limitation, the Assets;
(b) sale,
lease or disposition of any material asset or property of the Seller, including,
without limitation, the Assets, other than the sale of LPG in the ordinary
course of the Business;
(c) cancellation
or waiver of any claims or rights with respect to the Assets in excess of
$20,000;
(d) material
change in the accounting methods used by Seller with respect to the Assets,
except as required by Law, Order or generally accepted accounting practices
in
the United States;
(e) single
capital expenditure by Seller in excess of $20,000 for additions to property
or
equipment with respect to the Assets, or aggregate capital expenditures in
excess of $40,000;
(f) termination
or cancellation of a Contract with respect to the Assets that, prior to such
termination or cancellation, involved the payment to or receipt by Seller or
any
Affiliate of Seller of amounts in excess of $100,000;
(g) other
event or occurrence (whether or not covered by insurance) with respect to the
Assets that has resulted in a change that has a Material Adverse Effect or
could
reasonably be expected to result in a change that has a Material Adverse Effect;
or
(h) legal
commitment by Seller to any of the foregoing.
18
SECTION
4.14 Fees.
Except
as
set out in Schedule 4.14, Seller has not paid or become obligated to pay any
fee
or commission to any broker, finder or intermediary in connection with the
transaction contemplated hereby.
SECTION
4.15 Disclaimer.
Except
to
the extent expressly set forth in this Agreement, Seller makes no
representations or warranties whatsoever (whether express, implied, by statute,
common law or otherwise) and disclaims all liability and responsibility for
any
other representation, warranty, statement or information made or communicated
(orally or in writing) to Buyer. Without limiting the generality of the
foregoing, SELLER EXPRESSLY DISCLAIMS AND NEGATES ANY IMPLIED OR EXPRESS
WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT
TO THE ASSETS.
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES
OF
BUYER
Buyer
represents and warrants to Seller as follows as of the Closing
Date:
SECTION
5.1 Organization;
Power and Authority.
Buyer
is
a corporation duly organized, validly existing and in good standing under the
Laws of the State of Delaware. Buyer has all requisite corporate power and
authority to own and operate its assets and properties and conduct its business
and operations as presently being conducted.
SECTION
5.2 Authorizations;
Execution and Validity.
(a) As
of the
date of execution of this Agreement, the execution and delivery of this
Agreement by Buyer, the performance by Buyer of its obligations under this
Agreement and the consummation by Buyer of the transaction contemplated hereby
have been duly authorized by all necessary corporate action on the part of
the
Buyer.
(b) This
Agreement upon being executed and delivered by Buyer, constitutes a valid and
binding obligation of Buyer and is enforceable against Buyer in accordance
with
its terms, except to the extent that enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar Laws now or
hereafter in effect affecting creditors’ rights generally or general principles
of equity.
19
SECTION
5.3 No
Conflicts; Consents.
Except
as
set forth in Schedule 5.3, none of the execution and delivery by Buyer of this
Agreement, the performance by Buyer of its obligations under this Agreement
or
the consummation by Buyer of the transaction contemplated hereby
will:
(a) violate
any Law or Order, except as would not materially adversely affect the ability
of
Buyer to perform its obligations under and consummate the transaction
contemplated by this Agreement;
(b) violate
the certificate of incorporation, by-laws or other corporate governance
instruments of Buyer;
(c) require
any consent from or filing with any Governmental Authority, or any consent
from
any other Person, except as would not materially adversely affect the ability
of
Buyer to perform its obligations under and consummate the transaction
contemplated by this Agreement; or
(d) violate
or breach any material contract of Buyer, except as would not materially
adversely affect the ability of Buyer to perform its obligations under and
consummate the transaction contemplated by this Agreement.
SECTION
5.4 Litigation.
There
are
no Legal Proceedings pending or, to Buyer’s knowledge, threatened against Buyer
that question the validity of this Agreement or any action taken or to be taken
by Buyer in connection with, or which seek to enjoin or obtain monetary damages
in respect of, this Agreement or the consummation by Buyer of the transaction
contemplated hereby.
SECTION
5.5 Investment
Intent; Sophisticated Buyer.
Buyer:
(a) is
an
informed sophisticated Person with sufficient knowledge and experience in
investment and financial matters so as to be capable of evaluating the risks
and
merits of its purchase of the Assets;
(b) acknowledges
that the purchase of the Assets are consistent with its general investment
objectives;
(c) understands
that the purchase of the Assets involves a high degree of risk;
(d) is
financially able to bear the risks of purchasing the Assets;
(e) has
had
an opportunity to discuss the business, management and financial affairs of
the
Business and the Assets with Seller and, in entering into this Agreement, is
relying upon the representations, warranties and other terms and provisions
of
this Agreement and on its informed conclusions of its own investigations of
the
Business and the Assets.
20
SECTION
5.6 Financial
Ability.
Buyer
has, and will have as of the Closing Date, sufficient funds with which to pay
the Purchase Price and consummate the transaction contemplated by this
Agreement.
SECTION
5.7 Fees.
Buyer
has
not paid or become obligated to pay any fee or commission to any broker, finder
or intermediary in connection with the transaction contemplated
hereby.
SECTION
5.8 Disclaimer.
Except
to
the extent expressly set forth in this Agreement, Buyer makes no representations
or warranties whatsoever (whether express, implied, by statute, common law,
or
otherwise) and disclaims all liability and responsibility for any other
representation, warranty, statement or information made or communicated (orally
or in writing) to Seller.
ARTICLE
VI
COVENANTS
SECTION
6.1 Covenants
of Seller.
Seller
covenants and agrees that:
(a) Conduct
of Business.
Until
the Closing Date, Seller shall (unless Buyer shall otherwise consent in writing
or as necessary for Seller to carry out its obligations under the Assigned
Contracts set forth on Schedule 4.9, or as required by Law or Order, or as
otherwise specifically contemplated by this Agreement):
(i)
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use
its commercially reasonable efforts to operate the Assets and Business
in
the usual, regular and ordinary manner consistent with past practice,
and
use their commercially reasonable efforts to preserve their present
business operations, organization and goodwill, including, without
limitation, those involving the
Assets;
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(ii)
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maintain
books, accounts and records in the usual, regular and ordinary manner,
on
a basis consistent with prior years, and comply in all material respects
with all contractual and other obligations, including, without limitation,
those involving the Assigned
Contracts;
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(iii)
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comply
in all material respects with all applicable Laws to which the Assets
are
subject;
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21
(iv)
|
except
in connection with the Secured Debt Facility, not create, incur or
assume
any debt for borrowed money that is secured by a Lien on any of the
Assets, unless such debt provides for release by the creditor upon
the
Closing;
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(v)
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not
sell or dispose of any of the Assets;
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(vi)
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not
release or waive any material rights or benefits relating to the
Assets;
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(vii)
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not
make any material election with respect to Taxes with respect to
the
Assets;
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(viii)
|
not
agree to take any action or actions prohibited by any of the foregoing
clauses (i) through (vii).
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(b) Required
Approvals.
Concurrent with the execution of this Agreement, Seller will make all filings
with Governmental Authorities required to be made by them in order to consummate
the transaction contemplated by this Agreement for which purpose it shall have
the full cooperation and assistance of Buyer.
(c) Commercially
Reasonable Efforts.
Between
the date of this Agreement and the Closing Date, Seller will use its
commercially reasonable efforts to cause the conditions set forth in Article
VIII to be satisfied including obtaining consents to assignment, in a form
that
is mutually agreed to by both Parties, from the counterparties under each
Contract comprising a part of the Assets.
SECTION
6.2 Covenants
of Buyer.
Buyer
covenants and agrees that:
(a) Return
of Information.
In the
event of termination of this Agreement, Buyer will return or cause to be
returned to Seller all documents and other materials obtained from, or on behalf
of, Seller in connection with the transaction contemplated hereby and will
keep
confidential any such information in accordance with the terms of the Buyer
Confidentiality Agreement.
(b) Required
Approvals.
No later
than five (5) Business Days prior to the Closing Date, Buyer will make all
filings with Governmental Authorities required to be made by it in order to
consummate the transaction contemplated by this Agreement for which purpose
it
shall have the full cooperation and assistance of Seller. Between the date
of
this Agreement and the Closing, Buyer will cooperate with Seller with respect
to
all filings that Seller is required to make with Governmental Authorities in
connection with the transaction contemplated under this Agreement.
(c) Commercially
Reasonable Efforts.
Between
the date of this Agreement and the Closing Date, Buyer will use its commercially
reasonable efforts to cause the conditions set forth in Article IX to be
satisfied.
22
(d) Seller’s
Access to Documents; Preservation of Books and Records.
If
the
Closing occurs:
(i)
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For
a period of three years from the Closing Date, (A) Buyer shall not
dispose
of or destroy any of the Books and Records of Seller transferred
to Buyer
pursuant to this Agreement, without first offering to turn over possession
thereof to Seller by written notice to Seller at least 90 days prior
to
the proposed date of such disposition or destruction, and (B) Buyer
shall
allow Seller and its agents access to all Books and Records (provided,
however, that any such access or copying shall be had or done in
such a
manner so as not to unduly interfere with the normal conduct of Buyer’s
businesses);
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(ii)
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At
least 90 days prior to the completion of the aforesaid period, Seller
may
advise Buyer in writing whether Seller desires to obtain possession
of any
of the documents which were delivered to Buyer at Closing. To the
extent
that Buyer has decided to dispose of or destroy such documents and
not
continue to retain such documents pursuant to the provisions of Section
6.2 (d)(i), Seller shall be entitled to receive possession of such
documents upon its request as provided in this
subparagraph;
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(iii)
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The
three year period referred to in Section 6.2(d)(i) shall be extended
in
the event that Seller advises Buyer in writing that any Legal Proceeding
or investigation is pending or threatened at the termination of such
three
year period and such extension shall continue until any such Legal
Proceeding or investigation has been settled through judgment or
otherwise
and/or is no longer pending or
threatened.
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SECTION
6.3 Other
Covenants.
(a) Tax
Proration.
Ad
valorem and real and tangible personal property taxes with respect to the Assets
for the calendar year in which the Closing occurs shall be prorated between
Seller and Buyer as of the Closing Date. If the amount of such Taxes with
respect to any of the Assets for the calendar year in which the Closing occurs
has not been determined as of the Closing Date, then the Taxes with respect
to
such Assets for the preceding calendar year shall be used to calculate such
prorations. Seller’s portion of the prorated Taxes shall be applied as a credit
against (thus a reduction of) the Purchase Price due from Buyer at the Closing.
23
(b) Assignments
Requiring Consents.
To the
extent that any Contract, Permit, Easement or Lease is not assignable by the
terms thereof or consent to the assignment thereof cannot be obtained by Seller
prior to Closing, then if Buyer elects to proceed with the Closing without
obtaining such consent, such Contract, Permit, Easement or Lease shall be held
by Seller in trust for Buyer and shall be performed by Buyer in the name of
the
Seller and all benefits and obligations derived thereunder shall be for the
account of Buyer and at no cost to Buyer; provided, where entitlement of Buyer
to such Contract, Permit, Easement or Lease is not recognized by any third
Person, Seller shall at the request of Buyer and at Buyer’s expense, enforce, in
a reasonable manner and under the direction and control of Buyer, any and all
rights of Seller, or otherwise available under the same, against such third
Person.
(c) Removal
of Seller’s Name.
Within
90 days after the Closing Date, Buyer shall remove or cause to be removed the
name Penn Octane or any variations and derivations thereof or logos relating
thereto from the Assets and Buyer shall not thereafter make any use whatsoever
of such names or logos.
(d) Minimum
Requirement.
(i)
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The
Purchase Price has been determined based on the volume and quality
of LPG
inventory at the Assets. Such LPG inventory should be no less than
the
minimum levels and standards for LPG inventory as set forth on Schedule
6.3(d) (i) (the “Minimum
Requirement”).
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(ii)
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To
determine whether the Minimum Requirement is satisfied, Seller and
Buyer
shall cause the procedures described in Schedule 6.3(d)(i) to be
implemented within or by the periods of time indicated in such Schedule
6.3(d)(i). If pursuant to Schedule 6.3(d)(i) it is determined that
the
Minimum Requirement was not satisfied as of the Effective Time, then
Seller shall pay to Buyer the Deficiency Amount as described in and
determined pursuant to such Schedule 6.3(d)(i), such payment to be
made by
Seller to Buyer within five (5) Business Days of such determination.
If
pursuant to Schedule 6.3(d)(i) it is determined that the Minimum
Requirement was exceeded as of the Effective Time, then Buyer shall
pay to
Seller the Excess Amount as described in and determined pursuant
to such
Schedule 6.3(d)(i), such payment to be made by Buyer to Seller within
five
(5) Business Days of such
determination.
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(e) Environmental
Inspection.
(i)
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Buyer
acknowledges and agrees that it has fully exercised all of its rights,
pursuant to the Prior Agreement and otherwise, to investigate, inspect,
audit, study and test the Real Property, including the soil, groundwater
and all other physical features, for the existence of Environmental
Conditions and violations of Environmental Laws (the “Environmental
Audit”).
The Environmental Audit has been completed. The cost and expense
of the
Environmental Audit shall be borne by
Buyer.
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24
(ii)
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Buyer
has conferred with Governmental Authorities and reviewed and copied
all
records of Governmental Authorities with respect to the Real Property
in
connection with the Environmental
Audit.
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(iii)
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Buyer
has no further rights or options pursuant to the Prior Agreement
or this
Agreement with respect to the Environmental Audit.
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(f) Employee
and Benefit Matters.
(i)
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Seller
shall make available to Buyer all U.S. Employees, as set forth on
Schedule
4.6(a), to discuss potential employment with Buyer (such entity that
makes
employment offers being the“Buyer
Employer”).
Seller shall provide Buyer with an updated list of the U.S. Employees
within five (5) days of the date upon which any change therein has
occurred. On or before the Closing Date, but effective as of the
Closing
Date, and conditioned upon the occurrence of the Closing, Buyer shall
cause the Buyer Employer to make offers of employment to the U.S.
Employees who are employed by Seller or an Affiliate of Seller immediately
prior to the Closing Date and who are selected by the Buyer Employer
in
its sole discretion upon written notice to Seller at least five days
prior
to the Closing Date. The terms and conditions of each such offer
of
employment shall be on terms and conditions determined by the Buyer
Employer, in its sole discretion, that are consistent with the provisions
of this Section 6.3(f). All offers of employment shall be subject
to the
Buyer Employer’s policies concerning background and security checks and
drug/substance abuse testing. As used in this Agreement, the term
“Continuing
Employee”
means each U.S. Employee who accepts an offer of employment from
the Buyer
Employer as provided in the preceding provisions of this paragraph
and
reports to work and commences active duty for the Buyer Employer.
The
“Hire
Date”
for each U.S. Employee who accepts an employment offer from the Buyer
Employer pursuant to the terms of this paragraph and who actually
becomes
employed by the Buyer Employer in accordance with such offer shall
be the
Closing Date.
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(ii)
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For
a period of not less than one year beginning on the Closing Date,
Buyer
shall cause the Buyer Employer to provide the Continuing Employees
while
employed by the Buyer Employer during such period with employee benefits
on a basis substantially similar to those provided to similarly situated
employees of the Buyer Employer. From
and after the applicable Hire Date, for purposes of (x) eligibility
to
participate in, and vesting under, the employee benefit plans that
are
intended to be qualified under Section 401 of the Internal Revenue
Code
and that are maintained after such date by the Buyer Employer and
(y)
eligibility and benefit determination under the vacation policies
maintained by the Buyer Employer, Buyer shall cause the Buyer Employer
to
recognize each Continuing Employee’s years of service for corresponding
purposes that were credited prior to such Continuing Employee’s Hire Date
under the corresponding Seller Plans in which the Continuing Employee
participated immediately prior to the Closing Date. Promptly after
each
Continuing Employee’s Hire Date, Seller shall provide written notice to
Buyer of such prior service credit.
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25
(iii)
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On
or before each Continuing Employee’s Hire Date, Seller shall (A) take any
necessary action to fully vest as of such date the Continuing Employee’s
account balances and other accrued benefits under all Seller Plans
that
are intended to be qualified under Section 401 of the Internal Revenue
Code and (B) take such actions, if any, as may be necessary to permit
the
continuation of loan repayments after such date by the Continuing
Employee
if he or she has an outstanding loan from any such Seller Plan as
of such
date. Such loan repayments shall be made directly by the Continuing
Employee to the applicable Seller Plan, and shall be permitted so
long as
the Continuing Employee remains employed by the Buyer
Employer.
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(iv)
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Buyer
Employer shall not from and after the Closing Date, have any
responsibility or liability with respect to the Seller Plans. Any
and all
liabilities for severance payments and other amounts owed with respect
to
a U.S. Employee (a) who is not offered employment with the Buyer
Employer,
(b) who is otherwise not employed by the Buyer Employer, or (c) whose
employment with Seller is terminated for any reason whatsoever shall,
in
each such case, remain the responsibility of Seller.
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(v)
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Nothing
in this Agreement shall require or be construed or interpreted as
requiring the Buyer Employer to continue the employment of any of
Seller’s
employees following the Closing Date, or to prevent the Buyer Employer
from changing the terms and conditions of employment (including
compensation and benefits) of any of their employees following the
Closing
Date. Without limiting the generality of Section 12.4, this Section
6.3(f) is not intended to confer upon any U.S. Employee or Continuing
Employee any rights or remedies
hereunder.
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(g) Schedules.
If, on
the date on which this Agreement is executed by all Parties hereto, any schedule
to this Agreement has not been completed, then such schedule shall be completed
as promptly as commercially practical and such completed schedule shall be
treated as if it had been delivered on the date of this Agreement. No
representation or warranty contained in this Agreement shall be deemed breached
as of the date of the making of such representation or warranty by reason of
the
fact that the relevant schedule was incomplete as of such date, provided that
a
complete schedule that renders true such representation or warranty is delivered
pursuant to this Section 6.3 (g) at least five (5) Business Days before the
Closing.
26
(h) Post
Closing Transition.
For a
period of 90 days subsequent to the Closing Date,
(a)
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Seller
shall have the rent free use and access to the office facility at
the
Buyer’s Brownsville, Texas terminal facility,
and
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(b)
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Seller
shall pay the salary of Xxxxx Xxxxxx, the Seller’s Controller, to assist
Buyer in training its personnel to assume the day to day operation
of the
Buyer’s Brownsville, Texas terminal
facility.
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(i) Assets.
All
revenues
and
expenses,
whenever received or paid,
which
are attributable to the Assets
for the
period
prior to
the Effective Time shall belong to Seller and all revenues or expenses
attributable to the Assets for
the
period from
and
after the Effective Time shall belong to Buyer. If a Party receives or pays
any
monies from or to a third Person,
that
are owed
to the
other Party, the
receiving Party
will
promptly remit such monies to such
other
Party.
ARTICLE
VII
TAX
MATTERS
SECTION
7.1 Preparation
and Filing of Tax Returns.
Seller
shall cause to be included in the consolidated federal income Tax Returns (and
the state income Tax Returns of any state that permits consolidated, combined
or
unitary income Tax Returns, if any) of the Seller Group for all periods ending
on or before the Closing Date, all items of income, gain, loss, deduction or
credit (“Tax
Items”)
of
Seller and associated with the Assets that are required to be included therein,
shall cause such Tax Returns to be timely filed with the appropriate Taxing
Authorities, and shall be responsible for the timely payment (and entitled
to
any refund) of all Taxes due with respect to the periods covered by such Tax
Returns. A total of $55,970,
covering unpaid property taxes for the year 2005, plus interest and penalties,
will be retained from the Purchase Price by Seller’s attorney, Xxxxxx Xxxxxxx of
the firm of Xxxxxxx, Xxxxxxxxxxx & Xxxxxxx, Brownsville, Texas, in trust to
be paid by him after Closing and before additional interest or penalties accrue,
and Seller will take all necessary steps to remove any liens placed on the
Assets or the “Acquired Assets”, as the term is defined in the agreement of
effective date between Buyer and Rio, all of the foregoing obligations will
survive the Closing.
SECTION
7.2 Seller’s
Tax Indemnification.
Seller
hereby agrees to protect, defend, indemnify and hold harmless Buyer from and
against, and agrees to pay all Taxes associated with the Business and the Assets
for all periods ending on or before the Closing Date, including, without
limitation, Taxes under Section 3.1(c).
27
SECTION
7.3 Buyer’s
Tax Indemnification.
Buyer
hereby agrees to protect, defend, indemnify and hold harmless Seller from and
against, and agrees to pay, any Taxes associated with the Business and the
Assets attributable to the time period after the Closing Date.
SECTION
7.4 Tax
Indemnification Procedures.
(a) If
a
claim (“Tax
Indemnified Claim”)
shall
be made by any Taxing Authority that, if successful, would result in the
indemnification of a Party under this Agreement (referred to herein as the
“Tax
Indemnified Party”),
the
Tax Indemnified Party shall promptly notify the party obligated under this
Agreement to so indemnify (referred to herein as the “Tax
Indemnifying Party”)
in
writing of such fact.
(b) The
Tax
Indemnifying Party shall have the right, at its sole cost, to control the
defense, prosecution, settlement or compromise of the Tax Indemnified Claim,
and
the Tax Indemnified Party shall take such action in connection with contesting
a
Tax Indemnified Claim as the Tax Indemnifying Party shall reasonably request
in
writing from time to time, including the selection of counsel and experts and
the execution of powers of attorney, provided that the Tax Indemnifying Party
shall have agreed to pay to the Tax Indemnified Party all costs and expenses
that the Tax Indemnified Party incurs in connection with contesting such claim,
including reasonable attorneys’ and accountants’ fees and disbursements. The Tax
Indemnified Party shall not make any payment of such claim for at least 30
days
(or such shorter period as may be required by applicable Law) after the giving
of the notice required by Section 7.4(a), shall give to the Tax Indemnifying
Party any information reasonably requested relating to such claim, and otherwise
shall cooperate with the Tax Indemnifying Party in good faith in order to
contest effectively any such claim.
(c) Subject
to the provisions of Section 7.4(b), the Tax Indemnified Party shall only enter
into a settlement of such contest with the applicable Taxing Authority or
prosecute such contest to a determination in a court or other tribunal of
initial or appellate jurisdiction as instructed by the Tax Indemnifying
Party.
(d) If,
after
actual receipt by the Tax Indemnified Party of an amount advanced by the Tax
Indemnifying Party pursuant to this Section 7.4, the extent of the liability
of
the Tax Indemnified Party with respect to the claim shall be established by
the
final judgment or decree of a court or other tribunal or a final and binding
settlement with an administrative agency having jurisdiction thereof, the Tax
Indemnified Party shall promptly repay to the Tax Indemnifying Party the amount
advanced to the extent of any refund received by the Tax Indemnified Party
with
respect to the claim together with any interest received thereon from the
applicable Taxing Authority and any recovery of legal fees from such Taxing
Authority, net of any Taxes as are required to be paid by the Tax Indemnified
Party with respect to such refund, interest or legal fees (calculated at the
maximum applicable statutory rate of Tax in the year of recovery without regard
to any other Tax Items).
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ARTICLE
VIII
CONDITIONS
PRECEDENT TO BUYER’S OBLIGATION
The
obligation of Buyer to consummate the transaction contemplated hereby on the
Closing Date is subject to the satisfaction of each of the following conditions
at or prior to the Closing:
SECTION
8.1 Accuracy
of Representations and Warranties.
Each
of
the representations and warranties of Seller contained in Article IV of this
Agreement shall be true and correct, in each case at and as of the Closing
Date
as if made at and as of the Closing Date (except for the representations and
warranties that address matters only as of a particular date or only with
respect to a specific period of time, which need only be true and accurate
as of
such date or with respect to such period).
SECTION
8.2 Performance
of Covenants.
Seller
shall have performed and complied, in all material respects, with the covenants
and provisions of this Agreement, including, without limitation those in Section
6.1 and Section 6.3, required herein to be performed or complied with by Seller
between the date hereof and the Closing Date.
SECTION
8.3 Officers’
Certificates.
Buyer
shall have received a certificate from Penn to the effect set forth in Sections
8.1 and 8.2 hereof, dated as of the Closing Date, signed by a duly authorized
officer of Penn.
SECTION
8.4 No
Order.
No
Order
shall be in effect prohibiting, enjoining or restraining the consummation of
the
transaction contemplated
in this Agreement.
SECTION
8.5 Certified
Resolutions.
Buyer
shall have received a certificate of the Secretary or an Assistant Secretary
of
Penn, dated as of the Closing Date, setting forth the resolutions of the board
of directors of Penn, authorizing the execution and delivery of this Agreement
and the consummation of the transaction contemplated hereby, and certifying
that
such resolutions were duly adopted and have not been rescinded or amended as
of
the Closing Date.
SECTION
8.6 Secretary’s
Certificate.
Buyer
shall have received a certificate of the Secretary or an Assistant Secretary
of
Penn attesting as to the incumbency and signature of each director or officer
of
Penn who shall execute this Agreement.
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SECTION
8.7 Liens
and Secured Debt.
All
Liens
on the Assets securing any obligations under or with respect to the Secured
Debt
Facility shall have been released and terminated and copy of the documents
evidencing such release and termination shall have been provided to
Buyer.
SECTION
8.8 Consents.
Each
of
the consents identified in Schedule 4.3 shall have been obtained.
SECTION
8.9 Seadrift
Pipeline Lease.
Seadrift
Pipeline Corporation shall have approved of the assignment of the Seadrift
Pipeline Lease by Seller to Buyer or provided in writing assurance that Seadrift
Pipeline Corporation will approve such assignment.
SECTION
8.10 Authorization
to Assign.
Seller
shall have delivered to Buyer certified copies of the corporate resolutions
adopted by the Board of Directors and approved by the majority of the
Shareholders of Seller authorizing the transfer of the Assets.
SECTION
8.11 Due
Diligence.
Buyer’s
satisfaction with the results of the due diligence conducted by Buyer is no
longer a condition to Buyer’s obligation to consummate the transaction
contemplated hereby on the Closing Date. Exhibit
D
reflects
any agreed upon Purchase Price reduction due to Buyer’s due diligence
findings.
SECTION
8.12 Exxon
Contract.
Exxon
shall have approved of the assignment of the Exxon Contract by Seller to
Buyer.
SECTION
8.13 Concurrent
Closing with Rio.
The
Closing of the Purchase and Sale Agreement, as amended and restated, between
Rio
and Buyer must take place concurrent with the Closing under this
Agreement.
SECTION
8.14 No
Change In Law.
No
Law,
Order or Tax that was not in force as of the date of the execution of the Prior
Agreement and this Agreement shall have been adopted or imposed (or shall be
reasonably imminent in being adopted or imposed), and no increase in rates
of
taxation shall have occurred (or shall be reasonably imminent in occurring)
after the date of execution of the Prior Agreement and this Agreement, that,
in
any such event, would reasonably be expected to result in any Material Adverse
Effect.
30
SECTION
8.15 Stockholder
Approval.
Holders
of a majority of the outstanding common stock of Penn shall have approved the
principal terms of this Agreement and the transaction contemplated hereby,
as
required by applicable law and the certificate of incorporation of Penn.
SECTION
8.16 U.S.
Employees.
The
U.S.
Employees located in the United States, other than the Continuing Employees
who
have accepted the offer of employment made by Buyer, shall be subject to
termination on the Closing
Date
in
accordance with Section 6.3(f).
SECTION
8.17 Pipeline
Tariff.
Penn
shall have filed a tariff with the Federal Energy Regulatory Commission (“FERC”)
covering transportation of LPG in the Seadrift Pipeline, which tariff shall
not
have been rejected by the FERC and any applicable notice or review period
related to the tariff shall have been concluded.
SECTION
8.18 Dow
Tariff Letter.
Letter
from Penn to Mr. Xxx Xxxxxx, Dow Hydrocarbons (“Dow”) dated July 19, 2006
regarding “use by Penn Octane of Leased Xxxx Brownsville Pipeline Facility and
Xxxx Seadrift Pipeline” is executed by Mr. Xxx Xxxxxx or other representative of
Dow, and delivered to Buyer.
SECTION
8.19 Injunction.
Buyer
shall have received written evidence that Seller shall have caused the temporary
injunction issued June 13, 2006 as described in Schedule 4.4 to either be
rescinded or amended to the satisfaction of Buyer.
ARTICLE
IX
CONDITIONS
PRECEDENT TO SELLER’S OBLIGATION
The
obligation of Seller to consummate the transaction contemplated hereby on the
Closing Date is subject to the satisfaction of each of the following conditions
at or prior to the Closing:
SECTION
9.1 Accuracy
of Representations and Warranties.
Each
of
the representations and warranties of Buyer contained in Article V of this
Agreement shall be true and correct, in each case at and as of the Closing
Date
as if made at and as of the Closing Date (except for the representations and
warranties that address matters only as of a particular date or only with
respect to a specific period of time, which need only be true and accurate
as of
such date or with respect to such period).
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SECTION
9.2 Performance
of Covenants.
Buyer
shall have performed and complied, in all material respects, with the covenants
and provisions in this Agreement, including, without limitation those in
Sections 6.2 and 6.3, required herein to be performed or complied with by Buyer
until the Closing Date.
SECTION
9.3 Officer’s
Certificate.
Seller
shall have received a certificate from Buyer to the effect set forth in Sections
9.1 and 9.2 hereof, dated as of the Closing Date, signed by a duly authorized
officer of Buyer.
SECTION
9.4 No
Order.
No
Order
shall be in effect prohibiting, enjoining or restraining the consummation of
the
transaction contemplated in this Agreement.
SECTION
9.5 Certified
Resolutions.
Seller
shall have received a certificate of a duly authorized officer of Buyer, dated
as of the Closing Date, setting forth the resolutions of the board of directors
of Buyer authorizing the execution and delivery of this Agreement and the
consummation of the transaction contemplated hereby, and certifying that such
resolutions were duly adopted and have not been rescinded or amended as of
the
Closing Date.
SECTION
9.6 Secretary’s
Certificate.
Seller
shall have received a certificate of the Secretary or an Assistant Secretary
of
Buyer attesting as to the incumbency and signature of each officer of Buyer
who shall execute this Agreement.
SECTION
9.7 No
Change In Law.
No
Law,
Order or Tax that was not in force as of the date of the execution of the Prior
Agreement and this Agreement shall have been adopted or imposed (or shall be
reasonably imminent in being adopted or imposed), and no increase in rates
of
taxation shall have occurred (or shall be reasonably imminent in occurring)
after the date of execution of the Prior Agreement and this Agreement, that,
in
any such event, would reasonably be expected to result in any Material Adverse
Effect.
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SECTION
9.8 Stockholder
Approval.
Holders
of a majority of the outstanding common stock of Penn shall have approved the
principal terms of this Agreement and the transaction contemplated hereby,
as
required by applicable law and the certificate of incorporation of
Penn.
ARTICLE
X
TERMINATION
SECTION
10.1 Termination
of Agreement.
Anything
herein to the contrary notwithstanding, this Agreement and the transaction
contemplated hereby may be terminated at any time before the Closing Date as
follows:
(a) By
mutual
written consent of Seller and Buyer;
(b) By
Seller
or Buyer, if the Closing shall not have occurred prior to or on October 1,
2006
(which date may be extended in writing by the mutual agreement of Seller and
Buyer); or
(c) By
Seller
or Buyer, if consummation of the transaction contemplated hereby would violate
any non-appealable final Order of a Governmental Authority having competent
jurisdiction.
SECTION
10.2 Effect
of Termination.
(a) If
this
Agreement shall be terminated pursuant to Section 10.1, all further obligations
of the Parties shall terminate without further liability of any Party to another
and each Party shall pay all costs and expenses incident to its negotiation
and
preparation of this Agreement and to its performance of and compliance with
all
agreements and conditions contained herein on its part to be performed or
complied with, including the fees, expenses and disbursements of its counsel;
provided,
the
obligations of Buyer under the Buyer Confidentiality Agreement shall survive
any
such termination.
(b) Notwithstanding
the above, if all conditions precedent to the obligations of a Party set forth
in Article VIII or Article IX (as applicable) have been met (or the
non-breaching Party is ready, willing and able to satisfy such conditions)
and
the Closing does not occur on or before the date specified in Section 10.1(b)
because of the other Party being in breach of any of its representations,
warranties or obligations hereunder, then the breaching Party shall remain
liable for the breach of such representations, warranties and
obligations.
33
ARTICLE
XI
INDEMNIFICATION
SECTION
11.1 Seller
Indemnification.
(a) Subject
to the
limitations set forth in this Article XI, if the Closing occurs, then from
and
after the Closing Date, Seller shall indemnify and hold Buyer and their
respective officers, directors, partners, members, employees and agents thereof
harmless from and against any and all Losses arising out of, based upon,
attributable to or resulting from:
(i)
|
any
breach of any representation or warranty of Seller contained in Article
IV
or any inaccuracy in the certificate delivered to Buyer pursuant
to
Section 8.3;
|
(ii)
|
any
breach of any agreement or covenant on the part of Seller contained
in
this Agreement;
|
(iii)
|
any
Losses arising out of any act, event or omission occurring prior
to the
Closing Date (and not otherwise constituting an Assumed Liability)
in the
conduct by Seller of the Business, including, without limitation,
legal,
tax, title and ownership issues;
and
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(iv)
|
the
Retained Liabilities.
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(b) The
foregoing shall not apply to any breach of Seller’s representations and
warranties set forth in Section 4.7, or to any breach of Seller’s covenants set
forth in Article VII, it being agreed and understood that Buyer’s sole and
exclusive remedies for any matters relating to Taxes shall be as provided in
Article VII.
SECTION
11.2 Buyer
Indemnification.
(a) Subject
to the limitations set forth in this Article XI, if the Closing occurs, then
from and after the Closing Date, Buyer shall indemnify and hold Seller and
Seller’s Affiliates and their respective officers, directors, members, partners,
employees and agents thereof harmless from and against any and all Losses
arising out of, based upon, attributable to or resulting from:
(i)
|
any
breach of any representation or warranty of Buyer contained in this
Agreement or any inaccuracy in the certificate delivered to Seller
pursuant to Section 9.3;
|
(ii)
|
any
breach of any agreement or covenant on the part of Buyer contained
in this
Agreement;
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(iii)
|
any
Losses arising out of any act, event or omission occurring after
the
Closing Date (and not otherwise constituting a Retained Liability)
in the
conduct by Buyer or Buyer’s Affiliates (including TransMontaigne Partners
L.P.) of the Business or the operation and performance of the Assets
and
the Seadrift Pipeline Lease; and
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(iv)
|
the
Assumed Liabilities.
|
(b) The
foregoing shall not apply to any breach of Buyer’s covenants set forth in
Article VII, it being agreed and understood that Seller’s sole and exclusive
remedies for matters relating to Taxes shall be as provided in Article
VII.
SECTION
11.3 Indemnification
Procedures.
If
any
third Person (i.e., a Person other than a Party or any Affiliate of a Party)
asserts any claim against a Party which, if successful, would entitle the Party
to indemnification under this Article XI (the “Indemnified
Party”),
it
shall give notice of such claim to the Party from whom it intends to seek
indemnification (the “Indemnifying
Party”)
and the
Indemnifying Party shall have the right to assume the defense of such claim
at
its expense. If the Indemnifying Party does assume such defense, it shall
indemnify and hold the Indemnified Party harmless from and against any and
all
Losses caused by or arising out of any settlement or judgment of such claim.
In
addition, the Indemnified Party shall have the right to participate in the
defense of such claim at its expense, in which case (a) the Indemnifying Party
shall cooperate in providing information to and consulting with the Indemnified
Party about the claim, and (b) the Indemnifying Party shall not consent to
the
entry of judgment or enter into any settlement without the prior written consent
of the Indemnified Party, which shall not be unreasonably withheld. If the
Indemnifying Party fails to assume the defense of any such claim, the
Indemnified Party may defend against or settle such claim and the Indemnifying
Party shall be liable for any settlement of any such claim.
SECTION
11.4 Limits
on Indemnification.
Notwithstanding
anything to the contrary contained in this Agreement:
(a) Seller
shall not have any obligation to provide indemnification for Losses pursuant
to
Section 11.1 except to the extent that the aggregate amount of all such Losses
exceeds $50,000, in which case Seller shall be liable to Buyer only for such
Losses in excess of $50,000 (the “Basket
Amount”).
The
maximum obligation of Seller to provide indemnification for all Losses pursuant
to Section 11.1 shall be limited to an amount equal to the Purchase Price.
Notwithstanding the foregoing, the Basket Amount and such liability cap will
not
apply with respect to any breach of Seller’s representations and warranties set
forth in Sections 4.1, 4.2, 4.3, 4.8 4.14, and Item No. 1 in Schedule
4.12.
(b) Buyer
shall not have any obligation to provide indemnification for Losses indemnified
pursuant to Section 11.2 except to the extent that the aggregate amount of
all
such Losses exceeds the Basket Amount, in which case Buyer shall be liable
to
Seller only for such Losses in excess of the Basket Amount. The maximum
obligation of Buyer to provide indemnification for Losses pursuant to Section
11.2 shall be limited to an
amount
equal to the Purchase Price. Notwithstanding the foregoing, the Basket Amount
and such liability cap will not apply with respect to any breach of Buyer’s
representations and warranties set forth in Sections 5.1, 5.2, 5.3, 5.5 and
5.7.
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(c) Seller
shall not have any obligation to provide indemnification hereunder for any
Losses pursuant to Sections 11.1 unless a written notice of claim specifying
in
reasonable detail the specific nature and basis of the Losses and the estimated
amount of such Losses is delivered to Seller prior to 5:00 p.m., Houston, Texas
time, on the third anniversary of the Closing Date. Buyer shall not have any
obligation to provide indemnification hereunder for any Losses unless a written
notice of claim specifying in reasonable detail the specific nature and basis
of
the Losses and the estimated amount of such Losses is delivered to Buyer prior
to 5:00 p.m., Houston, Texas time, on the third anniversary of the Closing
Date.
(d) For
purposes of determining Losses in order to calculate the Basket Amount and
determine rights to indemnification under this Article XI, the representations
and warranties set forth in Articles IV and V shall be read without giving
effect to any Materiality Requirement set forth therein. As used in this
Agreement, a “Materiality
Requirement”
shall
mean any requirement in a representation or warranty that a condition, event
or
state of fact be “material,” correct or true in “all material respects,” have a
“Material Adverse Effect,” or be or not be “reasonably expected to have a
Material Adverse Effect” (or other words or phrases of similar effect or impact)
in order for such condition, event or state of facts to cause such
representation or warranty to be inaccurate.
SECTION
11.5 Certain
Damages.
NEITHER
PARTY NOR ANY OF THEIR RESPECTIVE AFFILIATES (INCLUDING
TRANSMONTAIGNE PARTNERS L.P.)
OR
REPRESENTATIVES SHALL BE LIABLE TO THE OTHER PARTY OR TO ANY OF ITS AFFILIATES
(INCLUDING TRANSMONTAIGNE PARTNERS L.P.) OR REPRESENTATIVES FOR PUNITIVE,
SPECIAL, EXEMPLARY, INCIDENTAL, INDIRECT, CONSEQUENTIAL, REMOTE OR SPECULATIVE
DAMAGES IN CONNECTION WITH THIS AGREEMENT AND THE TRANSACTION CONTEMPLATED
HEREBY, REGARDLESS OF WHETHER SUCH DAMAGES ARE BASED ON CONTRACT, TORT, STRICT
LIABILITY, VIOLATION OF LAW, OR ANY OTHER LEGAL OR EQUITABLE PRINCIPLE;
PROVIDED, THE FOREGOING SHALL NOT APPLY TO ANY SUCH DAMAGES FINALLY DETERMINED
TO BE PAYABLE TO A THIRD PERSON PURSUANT TO A CLAIM COVERED BY THE INDEMNITY
PROVIDED PURSUANT TO ARTICLE XI.
SECTION
11.6 Exclusive
Remedy.
(a) Except
for the tax indemnification provisions of Article VII, if the Closing occurs,
the sole and exclusive remedy of each of Buyer and Buyer’s Affiliates (including
TransMontaigne Partners L.P.), and Seller and Seller’s Affiliates, with respect
to the purchase and sale of the Assets shall be pursuant to the express
indemnification provisions of this Article XI and any and all (a) claims
relating to the representations, warranties, covenants and agreements contained
in this Agreement, (b) other claims pursuant to or in connection with this
Agreement, or (c) other claims relating to the Assets, shall be subject to
the
provisions set forth in this Article XI.
36
(b) Except
for claims made pursuant to the express indemnification provisions of this
Article XI, Buyer on behalf of each of Buyer and Buyer’s Affiliates
(including TransMontaigne Partners L.P.) shall be deemed to have waived, to
the
fullest extent permitted under applicable law, any right of contribution against
Seller or any of Seller’s Affiliates and any and all rights, claims and causes
of action it may have against Seller or any of Seller’s Affiliates, arising
under or based on any federal, state or local statute, law, ordinance, rule
or
regulation or common law or otherwise.
(c) Except
for claims made pursuant to the express indemnification provisions of this
Article XI, Seller on behalf of each of Seller and Seller’s Affiliates
shall be deemed to have waived, to the fullest extent permitted under applicable
law, any right of contribution against Buyer or any of Buyer’s Affiliates and
any and all rights, claims and causes of action it may have against Buyer or
any
of Buyer’s Affiliates, arising under or based on any federal, state or local
statute, law, ordinance, rule or regulation or common law or
otherwise.
ARTICLE
XII
GENERAL
SECTION
12.1 Amendments.
This
Agreement may only be amended by written instrument executed by Buyer and
Seller.
SECTION
12.2 Waivers.
The
observance of any term of this Agreement may be waived (either generally or
in a
particular instance and either retroactively or prospectively) by the Party
entitled to enforce such term, but such waiver shall be effective only if it
is
in a written instrument signed by the Party entitled to enforce such term and
against which such waiver is to be asserted. Unless otherwise expressly provided
in this Agreement, no delay or omission on the part of any Party in exercising
any right or privilege under this Agreement shall operate as a waiver thereof,
nor shall any waiver on the part of any Party of any right or privilege under
this Agreement operate as a waiver of any other right or privilege under this
Agreement, nor shall any single or partial exercise of any right or privilege
preclude any other or further exercise thereof or the exercise of any other
right or privilege under this Agreement.
SECTION
12.3 Notices.
Any
notices or other communications required or permitted hereunder shall be in
writing and shall be sufficiently given (and shall be deemed to have been duly
given upon receipt) if sent by overnight courier, express mail, registered
mail
or certified mail, postage prepaid, or by hand, to the Parties at the following
addresses (or at such other address for a Party as shall be specified by like
notice):
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If
to
Seller, to:
Penn
Octane Corporation
Attn:
Chief Executive Officer
000
Xxxxxxx Xxxx Xxxxx 0000
Xxxxxxx,
Xxxxx 00000
With
a
copy (which shall not constitute effective notice) to:
Penn
Octane Corporation
Attn:
Chief Financial Officer
000
Xxxxxx Xxxxxx Xxxxx 000
Xx
Xxxxxxx, XX 00000
If
to
Buyer, to:
TransMontaigne
Product Services Inc.
Attn:
President
0000
Xxxxxxxx, Xxxxx 0000
Xxxxxx,
Xxxxxxxx 00000
SECTION
12.4 Successors
and Assigns; Parties in Interest.
This
Agreement shall be binding upon and shall inure solely to the benefit of the
Parties and their respective successors and permitted assigns. Neither this
Agreement nor any rights or obligations hereunder may be assigned without the
written consent of the other Party, and any purported assignment made without
such written consent shall be void; provided, Buyer shall have the right to
designate one or more of its Affiliates (including TransMontaigne Partners
L.P.)
to be transferee(s) at the Closing of all or any part of the Assets. Except
as
expressly contemplated by Sections 11.1 and 11.2, nothing in this
Agreement, express or implied, is intended to or shall confer upon any Person,
other than the Parties and their respective successors, legal representatives,
and permitted assigns, any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement, and no Person shall be deemed a third
party beneficiary under or by reason of this Agreement.
SECTION
12.5 Severability.
If
any
provision of this Agreement or the application of any such provision to any
Person or circumstance shall be declared judicially to be invalid,
unenforceable, or void, such decision shall not have the effect of invalidating
or voiding the remainder of this Agreement, it being the intent and agreement
of
the Parties that this Agreement shall be deemed amended by modifying such
provision to the extent necessary to render it valid, legal and enforceable
while preserving its intent or, if such modification is not possible, by
substituting therefor another provision that is valid, legal, and enforceable
and that achieves the same objective.
38
SECTION
12.6 Entire
Agreement.
This
Agreement (including the Exhibits and Schedules hereto and the documents and
instruments executed and delivered in connection herewith) constitutes the
entire agreement between the Parties with respect to the subject matter hereof
and supersedes and replaces all prior and contemporaneous agreements and
understandings, whether written or oral, between the Parties with respect to
the
subject matter hereof, and there are no representations, understandings or
agreements relating to the subject matter hereof that are not fully expressed
in
this Agreement and the documents and instruments executed and delivered in
connection herewith; provided,
the
Buyer
Confidentiality Agreement shall remain in full force and effect according to
its
terms after the Closing except with respect to the Assets. All Exhibits and
Schedules attached to this Agreement are expressly made a part of, and
incorporated by reference into, this Agreement.
SECTION
12.7 Governing
Law,
Consent to Jurisdiction.
THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE
OF
TEXAS. Each Party irrevocably submits to the jurisdiction of any Texas state
court or any federal court sitting in Houston, Texas in any action arising
out
of or relating to this Agreement, and hereby irrevocably agrees that all claims
in respect of such action shall be heard and determined in such Houston, Texas
state or federal court. Each Party hereby irrevocably waives, to the fullest
extent it may effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding. The Parties further agree, to the
extent permitted by Law, that final and un-appealable judgment against any
of
them in any action or proceeding contemplated above shall be conclusive and
may
be enforced in any other jurisdiction within or outside the United States by
suit on the judgment, a certified copy of which shall be conclusive evidence
of
the fact and amount of such judgment. Each Party waives, to the fullest extent
permitted by applicable Law, any right it may have to a trial by jury in respect
of any action, suit or proceeding arising out of or relating to this Agreement.
Each Party certifies that it has been induced to enter into this Agreement
by,
among other things, the mutual waivers set forth in this
Section 12.7.
SECTION
12.8 Expenses.
Each
of
the Parties shall bear its own expenses (including fees and disbursements of
its
counsel, accountants and other experts) incurred by it in connection with the
preparation, negotiation, execution, delivery and performance of this Agreement,
each of the other documents and instruments executed in connection with or
contemplated by this Agreement and the consummation of the transaction
contemplated hereby.
SECTION
12.9 Release
of Information; Confidentiality.
The
Parties shall cooperate with each other in releasing information concerning
this
Agreement and the transaction contemplated hereby. No press releases or other
public announcements concerning the transaction contemplated by this Agreement
shall be made by any Party without prior consultation with, and agreement of,
the other Party, except for any legally required communication by any Party
and
then only with as much advance notice and consultation as is practicable under
the circumstances requiring any announcement, together with copies of the
proposed text.
39
SECTION
12.10 Sole
Obligation.
The
obligations of Seller under and pursuant to this Agreement shall be the sole
obligations of Penn.
SECTION
12.11 Certain
Construction Rules.
The
article and section headings and the table of contents contained in this
Agreement are for convenience of reference only and shall in no way define,
limit, extend or describe the scope or intent of any provisions of this
Agreement. Whenever the context may require, any pronoun used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns, and verbs shall include the plural and vice
versa. In addition, as used in this Agreement, unless otherwise provided to
the
contrary, (a) all references to days, months or years shall be deemed
references to calendar days, months or years, and (b) any reference to a
“Section,” “Article,” or “Schedule” shall be deemed to refer to a section or
article of this Agreement or a schedule attached to this Agreement. The words
“hereof,” “herein,” “hereunder” and words of similar import referring to this
Agreement refer to this Agreement as a whole and not to any particular provision
of this Agreement. Unless otherwise specifically provided for herein, the term
“or” shall not be deemed to be exclusive. The term “including” shall mean
“including without limitation.”
SECTION
12.12 Survival.
The
representations, warranties, covenants and agreements of the Parties set forth
herein or in any certificate delivered pursuant to the terms hereof shall
survive the Closing, and such representations and warranties shall be subject
to
the provisions of Article XI. The provisions of Sections 6.3 and 8.11 shall
survive the Closing.
SECTION
12.13 Counterparts.
This
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original and all of which taken together shall constitute one
instrument binding on Parties, notwithstanding that all Parties are not
signatories to the original or the same counterpart.
[Signatures
Contained on Following Page]
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IN
WITNESS WHEREOF, this Purchase and Sale Agreement, as herein amended and
restated, has been duly executed as of the date above written.
SELLER:
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||
PENN
OCTANE CORPORATION
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||
By:
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||
Name:
Xxxxxxx Xxxxxx
|
||
Title:
President
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||
BUYER:
|
||
TRANSMONTAIGNE
PRODUCT SERVICES INC.
|
||
By:
|
||
Name:
Xxxxxxx X. Xxxxxx
|
||
Title:
President
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